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(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KINARK CORPORATION
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(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[_] $125 per Exhcange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exhcnage Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock - $.10 par value per share
(2) Aggregate number of securities to which transactions applies:
6,712,209 Shares of Common Stock
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: 1
______________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________
[_] Check box if any part of the fee is offset as provided by Exhange
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:
________________________________________________________________________________
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April 9, 2003
ANNUAL MEETING - MAY 14, 2003
Dear Kinark Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders on
Wednesday, May 14, 2003 at 11:00 a.m. The meeting will be held at the American
Stock Exchange in New York City.
The business expected to be conducted at the meeting is presented in the
accompanying Notice of the Annual Meeting and Proxy Statement. Members of
management will report on the Company's operations. After the business
presentation, the Directors and Management will be available for your questions.
Your vote is important. Please ensure that your shares will be represented
at the meeting by signing and returning your Proxy Card now, even if you plan to
attend the meeting.
On behalf of the Board of Directors, thank you for your continued interest
in the Company. We look forward to seeing you at the annual meeting.
Ronald J. Evans
President and Chief Executive Officer
NOTICE OF ANNUAL MEETING
NEW YORK, NY, MAY 14, 2003
To the Stockholders of K1NARK CORPORATION:
The Annual Meeting of the Stockholders of KINARK CORPORATION (the
"Company") will be held at the American Stock Exchange in the Boardroom - 14th
Floor, 86 Trinity Place, New York, NY on Wednesday, May 14, 2003 at 11:00 A.M.
local time, for the following purposes:
1. ELECTION OF DIRECTORS. To elect eight directors to serve for a term of
one year.
2. CORPORATE NAME CHANGE. To amend the Company's Certificate of
Incorporation to provide for the change of the Company's name from Kinark
Corporation to "North American Galvanizing & Coatings, Inc."
3. RATIFICATION OF AUDITORS. To ratify the Board of Directors appointment
of Deloitte & Touche LLP as our independent accountants for the year ending
December 31, 2003.
4. OTHER BUSINESS. To transact such other business as may properly come
before the meeting or any adjournment or adjournments thereof.
The Board of Directors fixed April 1, 2003 as the record date for
determining stockholders entitled to notice of and to vote at the meeting. A
list of those stockholders will be open for examination at the offices of the
Company for a period of ten (10) days prior to the meeting and also will be
available for inspection at the meeting. A copy of the Company's Annual Report
for the year ended December 31, 2002, is enclosed with this Notice.
We have provided you a choice of voting your shares by Internet or
Telephone or Mail, as outlined on the enclosed proxy card. Whichever method of
voting you choose, it is important that your shares be represented at the
meeting regardless of the number you may hold. If you do attend the meeting, you
may vote or change your vote in person at the meeting even through you have
previously voted your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Paul R. Chastain,
Vice President & Secretary
April 9, 2003
KINARK CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 2003
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Kinark Corporation ("Kinark" or the
"Company") for use at the Annual Meeting of Stockholders to be held May 14,
2003, at 11:00 a.m., local time, at the American Stock Exchange in New York
City, N.Y., or at any adjournments thereof (the "Annual Meeting").
On April 1, 2003, the record date for determination of stockholders of the
Company entitled to vote at the Annual Meeting (the "Record Date"), there were
6,736,919 shares of the Company's common stock outstanding (the "Common Stock"),
each share of which entitles the holder thereof to one vote on all matters.
The holders of a majority of the Common Stock present in person or
represented by proxy will constitute a quorum for transaction of business at the
Annual Meeting. Abstentions and broker non-votes are counted to determine the
presence or absence of a quorum at the Annual Meeting. No cumulative voting
rights are authorized and dissenters' rights are not applicable to the matters
being proposed.
This Proxy Statement and the accompanying Proxy are being mailed to the
Company's stockholders on or about April 9, 2003.
The Company's principal executive office is located at 2250 East 73rd
Street, Suite 300, Tulsa, Oklahoma 74136-6832.
The Company's Amended and Restated Bylaws (the "Bylaws") require the
affirmative vote of a majority of the shares of Common Stock represented at the
Annual Meeting and entitled to vote thereon to elect the directors nominated for
election at the Annual Meeting, as set forth in this Proxy Statement. Under
Delaware General Corporation Law, a majority of the shares of Common Stock
outstanding and entitled to vote are required to amend the Certificate of
Incorporation.
Abstentions will have no effect with respect to the election of directors.
Under the rules of the American Stock Exchange, brokers who hold shares of
Common Stock in street name for customers have "discretionary" authority to vote
on certain items in their discretion, on behalf of their clients, if they do not
receive instructions within ten days of the Annual Meeting.
You may revoke your proxy at any time before it is voted by executing and
filing, with the Company or its proxy solicitor, a revocation of your proxy or a
subsequently dated proxy or by voting in person at the Annual Meeting. Shares
represented by properly executed proxies will be voted at the Annual Meeting as
specified, unless such proxies are subsequently revoked as provided above. If no
choice is specified on a valid, unrevoked proxy, the shares will be voted for
election of the Directors as recommended by the Board. Proxies will also
authorize the shares represented thereby to be voted on any matters not known as
of the date of this Proxy Statement that may properly be presented for action at
the Annual Meeting.
ANNUAL REPORT
The Company's Annual Report to Stockholders and Form 10-K, covering the
fiscal year ended December 31, 2002, including audited financial statements are
enclosed with this Proxy Statement, but neither the report nor the financial
statements are incorporated in this Proxy Statement or are deemed to be a part
of the material for the solicitation of proxies.
PROPOSAL 1
ELECTION OF DIRECTORS
Eight directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting, in accordance with the Bylaws, to serve until the
2004 Annual Meeting or until their respective successors have been elected. All
of the current directors, Linwood J. Bundy, Paul R. Chastain, Ronald J. Evans,
Gilbert L. Klemann, II, Patrick J. Lynch, Joseph J. Morrow, John H. Sununu and
Mark E. Walker have been nominated for reelection at the Annual Meeting for a
term expiring at the 2004 Annual Meeting, and each of them has agreed to serve,
if elected. The shares of Common Stock represented by proxies at the Annual
Meeting will be voted in favor of (unless otherwise directed) the election of
the nominees named below. While it is not anticipated, if any nominee is unable
or should decline to serve as a director at the date of the Annual Meeting, such
proxies will be voted for persons proposed by the Board.
NOMINEES FOR ELECTION AS DIRECTORS TO SERVE UNTIL NEXT ANNUAL MEETING
The experience and background of each of the nominees are set forth below.
LINWOOD J. BUNDY (60), first elected to Kinark's Board in 2000. Since 1993
President, Chief Executive Officer and member of the Board of Directors of
Bundy, Inc., a privately-owned development, entertainment and investment company
located in Iowa. From 1978 to 1998, President and Chief Executive Officer of
Iowa State Ready Mix Concrete, Inc., a privately-owned concrete company located
in Ames, Iowa. Past owner of Hallet Materials, a sand and gravel operation in
Iowa and Texas (1986-1998). Mr. Bundy serves on the Board of Directors of
Firststar Bank in Ames, Iowa. He is a past member of the Board of Trustees of
Mary Greeley Medical Center, a member of the Order of the Knoll, an Iowa State
University Foundation, and past member of a number of civic and professional
organizations in Iowa. He is a member of the Audit and Compensation Committees.
PAUL R. CHASTAIN (68), first elected to Kinark's Board in 1975, was
appointed Vice President and Chief Financial Officer of Kinark in February 1996
and Secretary in January 2000. Mr. Chastain served as President and Chief
Executive Officer of Kinark from July 1993 to February 1996. Chairman and Chief
Executive Officer of Kinark from June 1991 through July 1993; and Co-Chairman
and Co-Chief Executive Officer of Kinark from June 1990 through June 1991. From
1976 until June 1990, Executive Vice President and Treasurer of the Company.
From 1973 until 1976, Vice President of Finance and Secretary of the Company.
3
RONALD J. EVANS (53), first appointed to Kinark's Board in 1995, was
appointed President of Kinark in February 1996 and Chief Executive Officer in
November 1999. Private investor from May 1995 to February 1996. From July 1989
to May 1995, Vice President and General Manager of Deltech Corporation, a
privately-owned specialty chemicals producer, From January 1989 to July 1989,
Vice President of Sales and Marketing for Deltech Corporation. Manager from 1976
to 1989 for Hoechst Celanese Corporation. He is a member of the Executive
Committee.
GILBERT L. KLEMANN, II (52), Senior Vice President, General Counsel and
Secretary of Avon Products Inc. since January 2001. During 2000, Mr. Klemann was
of Counsel for the international law firm of Chadbourne & Parke LLP, New York
City. From 1991 to 1999, Mr. Klemann was an Executive Officer and General
Counsel of Fortune Brands, Inc. (formerly American Brands, Inc.), a
publicly-owned consumer products holding company, where he also was a member of
the Board of Directors. Prior to 1990 he was a partner in the law firm of
Chadbourne & Parke LLP. He is a member of the Board of Directors of New York
Lawyers For The Public Interest, Inc. Mr. Klemann was appointed to the Board of
Directors of Kinark Corporation in August 2000 and serves on the Company's
Executive Committee.
PATRICK J. LYNCH (65), Private investor and formerly Senior Vice President
and Chief Financial Officer of Texaco Inc., a publicly-owned oil and
petrochemicals company, from 1997 to 2001. For more than five years, Mr. Lynch
was actively engaged in the business of Texaco Inc. or one of its subsidiaries
or affiliated companies. He was a member of the Trustees of The American
Petroleum Institute, The Conference Board Financial Executives and CFO Advisory
Council, and serves as Chairman of the Board of Trustees for lone College in New
Rochelle, New York. Mr. Lynch was appointed to the Board of Directors of Kinark
Corporation in February 2001 and is a member of the Audit and Compensation
Committees and serves as Chairman of the Audit Committee.
JOSEPH J. MORROW (63), first elected to Kinark's Board in 1996, was
appointed Non-Executive Chairman of the Board of Kinark in November 1999. Chief
Executive Officer of Morrow & Co., Inc., a privately-owned proxy solicitation
firm, since 1972. Chief Executive Officer of Proxy Services Corporation from
1972 to 1992. Chairman of Proxy Services Corporation from 1992 to present.
JOHN H. SUNUNU (63), first elected to Kinark's Board in 1996, is President
of JHS Associates, Ltd. since June 1992 and a former partner in Trinity
International Partners, both private financial firms, and served as co-host of
CNN's "Crossfire", a news/public affairs discussion program, from March 1992
until February 1998. From January 1989 until March 1992, Chief of Staff to the
President of the United States. From January 1983 to January 1989, Governor of
the State of New Hampshire. From 1963 until his election as Governor, President
of JHS Engineering Company and Thermal Research Inc. Helped establish and served
as chief engineer for Astro Dynamics Inc. from 1960 until 1965. From 1968 until
1973, Governor Sununu was Associate Dean of the College of Engineering at Tufts
University and Associate Professor of Mechanical Engineering. Served on the
Advisory Board of the Technology and Policy Program at MIT from 1984 until 1989.
A member of the National Academy of Engineering and the Board of Trustees for
the George Bush Presidential Library Foundation. He is a member of the Executive
Committee and serves as its Chairman.
MARK E. WALKER (47), first elected to Kinark's Board in 1993, is President
and Director since 1991 of Ocean's Window, Inc., a privately-owned recreation
services firm and President and Director of Ocean's Window Travel Services since
1995. Manager from 1965 until 1992 for DSC Communications Corporation. Manager
from 1978 until 1984 for Texas Instruments Incorporated. He is a member of the
Audit and Compensation Committees and serves as Chairman of the Compensation
Committee.
4
With the exception of Messrs. Chastain and Evans, none of the directors
are, or have been, employed by any parent, subsidiary or other affiliate of the
Company. There are no family relationships between any directors or executive
officers.
The election of the nominees requires the affirmative vote of a majority of
the shares of Common Stock represented at the Annual Meeting and entitled to
vote thereon.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE NOMINEES LISTED ABOVE.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors presently consists of eight directors. The
Board meets on a regularly scheduled basis during the Company's fiscal year to
review significant developments affecting the Company and to act on matters
requiring Board approval. It also holds special meetings when necessary between
scheduled meetings.
The Board met seven times in 2002 (including regularly scheduled and
special telephonic meetings). All of the incumbent directors attended at least
90% of the total meetings of the Board of Directors and the committees on which
they were members.
DIRECTOR'S COMPENSATION
Directors who are also employees of the Company receive no compensation
beyond their normal salary for their Board and committee services. All
directors, including employee/Board members, are reimbursed by the Company for
travel expenses incurred by them in connection with their attendance at Board or
committee meetings or other business of the Company.
Non-employee directors receive an annual fee of $20,000, payable in
quarterly installments and receive no additional compensation for committee
services beyond their annual fee. A director may elect to receive the annual fee
in cash or shares of the Company's common stock, or a combination thereof. Under
the Company's 1996 Stock Option Plan, each non-employee director who is serving
as such on July 1 of each year receives a grant of options to purchase 5,000
shares of the Company's Common Stock (the "Non-Employee Director Options").
Under the 1996 Stock Option Plan, the exercise price of Non-Employee Director
Options is 100% of the fair market value of the Company's Common Stock on the
date of the grant. Non-Employee Director Options are not exercisable until six
months following the date of the grant and such options cease to be exercisable
ten years after the date of the grant.
COMMITTEES OF THE BOARD
The Board of Directors has established standing Executive, Audit and
Compensation Committees. The membership of each of these committees is
determined from time to time by the Board.
EXECUTIVE COMMITTEE. The Executive Committee is delegated authority to act
on behalf of the Board in certain operational and personnel matters, and to
approve capital expenditures within limits authorized by the Board. The
functions customarily attributable to a nominating committee are generally
performed by the Executive Committee, which evaluates the qualifications of
Board candidates for consideration of nomination by the Board of Directors.
Messrs. Evans, Sununu, and Walker are the present members of the Executive
Committee and Mr. Sununu acts as Chairman. The Executive Committee held four (4)
meetings in 2002.
5
COMPENSATION COMMITTEE. The Compensation Committee considers remuneration
of the corporate and subsidiary officers of the Company, and administers the
Company's incentive compensation plans and its 1996 Stock Option Plans. Outside
directors Messrs. Bundy, Lynch and Walker are the present members of the
Compensation Committee and Mr. Walker acts as Chairman. The Compensation
Committee met two (2) times in 2002.
AUDIT COMMITTEE. The Audit Committee reviews the scope of the annual audit
and recommendations of the independent audit firm, evaluates overall risk
exposure and reviews the adequacy of overall internal control functions of the
Company. The Audit Committee is composed entirely of independent directors who
are not employees of the Company or any of its subsidiaries. Additional
financial expertise on the Audit Committee is provided by audit committee
chairman Patrick J. Lynch, retired Senior Vice President and Chief Financial
Officer of Texaco Inc., who is independent of management. Messrs. Bundy, Lynch
and Walker are the present members of the Audit Committee. The Audit Committee
held five (5) meetings in 2002.
The Company's Bylaws require that a stockholder who desires to nominate a
candidate for election to the Board at the Annual Meeting or present business to
be considered at the Annual Meeting must give the Board advance notice of such
nomination or proposed business. To be timely, a stockholder's notice must be
received at the principal executive offices of the Company not less than 90 days
prior to the meeting. However, in the event that the date of the next annual
meeting is advanced more than 30 days or delayed more than 60 days from the date
of the anniversary of the preceding year's annual meeting, notice by the
stockholder to be timely must be so delivered not later than the close of
business on the later of the 60th day prior to such annual meeting or the 10th
day following the date notice of such meeting is first given to stockholders in
a press release reported by the Dow Jones News Service, Associated Press or
comparable national news service or in a document filed by the Company with the
Securities and Exchange Commission ("SEC"). The Company's Bylaws require that
the notice contain certain information with respect to the proposed nominee or
business and the stockholder giving the notice. The Executive Committee will
consider nominees proposed by stockholders in compliance with this procedure.
The Company will furnish on request to any stockholder a copy of the relevant
section of the Bylaws.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 2003,
regarding the beneficial ownership of the Company's Common Stock by (a) all
persons who are beneficial owners of five percent or more of the Common Stock,
(b) each director of the Company, (c) each executive officer of the Company, and
(d) all directors and officers of the Company as a group. Unless otherwise
noted, the persons named below have sole voting and investment power with
respect to such shares:
6
AMOUNT AND NATURE PERCENTAGE OF
NAME OF STOCKHOLDER OF BENEFICIAL OWNERSHIP COMMON STOCK (1)
--------------------------------------------------------------------------------
Linwood J. Bundy 123,058 (2) 1.8
Paul R. Chastain 39,139 (3) 0.6
Ronald J. Evans 340,016 (4) 4.8
Gilbert L. Klemann, II 106,407 (5) 1.6
Patrick J. Lynch 67,034 (6) 1.0
Joseph J. Morrow 2,074,886 (7) 30.1
John H. Sununu 296,952 (8) 4.3
Mark E. Walker 439,530 (9) 6.5
Robert G. and Pauline B. Walker
Revocable Trust 345,724 (10) 5.1
Edmund A. Schwesinger, Jr. 397,900 (11) 5.9
All Kinark Directors and
Officers as Group (8 persons) 3,487,022 (12) 46.2
Each person named above has sole voting and dispositive power with respect
to all the shares listed opposite such person's name, unless indicated
otherwise.
(1) Based on 6,736,919 shares of the Company's Common Stock outstanding as of
March 31, 2003 plus any currently exercisable warrants and stock options or
stock options which become exercisable within 60 days. The address for each
Director of the Company is: c/o Kinark Corporation, 2250 East 73rd Street,
Suite 300, Tulsa, Oklahoma 74136-6832.
(2) Includes 82,291 shares subject to options and warrants exercisable.
(3) Includes 6,000 shares subject to options exercisable.
(4) includes 289,583 shares subject to options and warrants exercisable.
(5) Includes 81,249 shares subject to options and warrants exercisable.
(6) Includes 46,458 shares subject to options and warrants exercisable.
(7) Includes 168,332 shares subject to options and warrants exercisable. The
shares listed for Mr. Morrow include 55,536 shares owned by his wife. Mr.
Morrow disclaims beneficial ownership of these shares.
(8) Includes 101,666 shares subject to options and warrants exercisable.
(9) Includes 35,000 shares subject to options exercisable. The shares listed
for Mr. Walker include 8,000 shares of Common Stock owned by a trust for
Mr. Walker's son, of which Mr. Walker is trustee, and 345,724 shares owned
by the Robert G. and Pauline B. Walker Revocable Trust. Mr. Walker
disclaims beneficial ownership of such shares and shares of Common Stock
owned by other members of the Walker family.
7
(10) Information based on Schedule 13D of the Robert G. and Paufine B. Walker
Revocable Trust, the Pauline B. Walker Revocable Trust A and the Robert G.
Walker Irrevocable Trust B filed with the SEC dated December 14, 1996. The
Robert G. and Pauline B. Walker Revocable Trust, together with two
affiliated trusts, the Pauline B. Walker Revocable Trust A and the Robert
G. Walker Irrevocable Trust B, beneficially own 345,724 shares. Paufine B.
Walker is the sole trustee of all three trusts.
(11) Information based on Schedule 13G of Mr. Edmund A. Schwesinger, Jr., 94
Cutler Road, Greenwich, Connecticut 06831, filed with the SEC.
(12) All directors and officers as a group held in the aggregate presently
exercisable stock options and warrants to acquire 810,579 shares. On the
Record Date, directors and officers as a group owned 2,676,443 shares, or
39.7% of the 6,736,919 shares outstanding and entitled to vote, not
including presently exercisable stock options and warrants.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------------------------------------------
OTHER UNDER- ALL OTHER
ANNUAL RESTRICTED LYING COMPEN-
NAME AND COMPEN- STOCK OPTIONS/ LTIP SATION
PRINCIPAL POSITION YEAR SALARY BONUS SATION AWARD(S) SARS(#) PAYOUTS (A)
----------------------------------------------------------------------------------------------------------
Paul R. Chastain, 2002 $141,600 -- -- -- -- -- $8,921
Vice President and 2001 141,600 -- -- -- -- -- 8,921
CFO and Secretary 2000 141,600 -- -- -- -- -- 8,921
Ronald J. Evans 2002 $150,000 $33,020 -- -- -- -- $8,662
Ronald J. Evans 2001 100,000 -- -- -- -- -- 6,300
President and CEO 2000 100,000 -- -- -- -- -- 6,300
(A) All compensation shown in this column represents the Company's matching
contributions to its 401(k) defined contribution retirement plan.
8
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZATION
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM (1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------
GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5% 10%
--------------------------------------------------------------------------------------------------------------
Ronald J. Evans (2) 25,000 55.6% $1.00 3/06/12 $15,772 $39,944
Note (1) The assumed values result from certain prescribed rates of stock price
appreciation. Values were calculated based on a ten-year exercise period. The
actual value of the option grant is dependent on future performance of the
Common Stock and overall stock market conditions. There is no assurance that the
values reflected in this table will be achieved. The Company did not use an
alternative formula for a grant date valuation, as it is not aware of any
formula which will determine with reasonable accuracy a present value based on
future unknown or volatile factors.
Note (2) Options become exercisable over a four year period, with 25% of the
shares becoming exercisable on each anniversary of the grant date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE (SHARES) FISCAL YEAR-END ($)
ON EXERCISE REALIZED -------------------------------------------------------------
NAME # ($) (A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------------------------------------------------------------------------------------------
Paul R. Chastain (B) 0 0 6,000 0 0 0
Ronald J. Evans (C) 0 0 233,000 0 0 0
Ronald J. Evans (D) 0 0 17,000 0 0 0
Ronald J. Evans (E) 0 0 0 25,000 0 $11,750
(A) Market value of underlying securities at December 31, 2002 minus the
exercise price of "in-the-money" options.
(B) Option granted February 16, 1994 pursuant to the Company's 1988 Stock Option
Plan at an exercise price of $4.50 per share was not "in-the-money" at
December 31, 2002.
(C) Option granted April 3, 1996 pursuant to the Company's 1988 Stock Option
Plan at an exercise price of 2.50 per share was not "in-the-money" at
December 31, 2002.
(D) Option granted July 18, 1996 pursuant to the Company's 1996 Stock Option
Plan at an exercise price of $3.50 per share was not "in-the-money" at
December 31, 2002.
(E) Option granted March 6, 2002 pursuant to the Company's 1996 Stock Option
Plan at an exercise price of $1.00 per share.
9
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board reviews the general compensation
policies of the Company and the compensation plans and specific compensation
levels for executive officers. All decisions by the Compensation Committee
relating to the compensation of the Company's executive officers are reviewed by
the full Board.
In accordance with SEC rules designed to enhance disclosure of companies'
policies toward executive compensation, the following is a report submitted by
the Compensation Committee members addressing the Company's compensation policy
as it related to the named executive officers for fiscal 2002.
The Company's objective is to ensure that executive compensation is
directly linked to ongoing improvement in corporate performance and increasing
shareholder value. The following objectives are guidelines for compensation
decisions:
CLASSIFICATION. The company assigns a job grade to each salaried position,
and each job grade has a salary range which is based on national salary surveys.
These salary ranges are reviewed annually to determine parity with national
compensation trends, and to ensure that the Company maintains a reasonably
competitive compensation structure.
COMPETITIVE SALARY BASE. Actual salaries are based on individual
performance contributions within a competitive salary range for each position
established through job evaluation and market comparisons. The salary of each
subsidiary key officer and senior managers and corporate officer is reviewed
annually by the president and chief executive officer who may recommend an
increase for approval by the Compensation Committee. The president and chief
executive officer's salary is determined by the Board based on a review and
recommendation by the Compensation Committee.
ANNUAL INCENTIVE COMPENSATION. The Company's officers and key subsidiary
personnel are eligible to participate in an annual incentive compensation plan
with awards based primarily on achievement of profit performance targets. Awards
are subject to decrease or increase on the basis of the Company's performance
and at the discretion of the Compensation Committee. In 2002, the Compensation
Committee recommended for Board approval payment of incentive awards totaling
$123,020 to the Company's executive officers and key managers of the galvanizing
subsidiary, comprising twenty-four (24) persons.
STOCK OPTION PROGRAM. The purpose of this program is to provide additional
incentives to employees to work to maximize growth of the Company and
shareholder value. The stock option program may utilize vesting periods to
encourage key employees to continue in the employ of the Company. The number of
options granted is determined by the subjective evaluation of the executive's
ability to influence the Company's long-term growth and profitability. All
options have been granted at the current market price at the time of the grant.
The Compensation Committee works to achieve equitable compensation objectives
for key employees. In 2002, the Compensation Committee approved stock option
grants totaling 45,000 shares of the Company's Common Stock to the Company's
president and key galvanizing subsidiary officers.
10
The Compensation Committee believes that its objectives of linking
executive compensation to corporate performance results in alignment of
compensation with corporate goals and shareholder interest. The committee
believes that compensation levels during 2002 adequately reflect the Company's
compensation goals and policies.
The Compensation Committee:
MARK E. WALKER
LINWOOD J. BUNDY
PATRICK J. LYNCH
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's 1996 Stock Option Plan and Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, require that at least two of the Compensation
Committee members be non-employee directors. The Compensation Committee is
presently comprised of Directors Messrs. Lynch, Bundy, and Walker, none of whom
are employees of Kinark.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Kinark's Audit Committee consists of three directors, all of whom are
independent in accordance with and meet the other requirements of the American
Stock Exchange. The Audit Committee operates under a written charter adopted by
the Board of Directors and is responsible for, among other things, reviewing
with our independent auditors the scope and results of their audit engagement.
In connection with the fiscal 2002 audit, the Audit Committee has:
o reviewed and discussed with Deloitte & Touche, LLP, our independent
auditors ("Deloitte & Touche"), and with management Kinark's audited
financial statements to be included in our annual report on Form 10-K
for the year ended December 31, 2002,
o discussed with Deloitte & Touche the matters required by Statement of
Accounting Standards No. 61, and
o received from and discussed with Deloitte & Touche the written
disclosures and letter from Deloitte & Touche required by Independence
Standards Board Standard No. 1 as modified or supplemented, regarding
their independence.
Based on the review and the discussions described in the preceding bullet
points, the Audit Committee has recommended to the Board of Directors that the
audited financial statements be included in our Annual Report on Form 10-K for
the year ended December 31, 2002 for filing with the SEC.
The Audit Committee:
PATRICK J. LYNCH
LINWOOD J. BUNDY
MARK E. WALKER
THE FOREGOING REPORT SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT OR REFERENCE TO THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, EXCEPT TO THE EXTENT THAT KINARK SPECIFICALLY INCORPORATES
THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER
SUCH ACTS.
11
PROPOSAL 2
AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO
CHANGE THE COMPANY'S NAME
The Board has unanimously adopted a resolution approving and recommending
to the Company's stockholders for their adoption an amendment (the"Amendment")
to Article First of the Certificate of Incorporation to change the name of the
Company from Kinark Corporation to "North American Galvanizing & Coatings, Inc."
In all other respects the terms and provisions of the Company's Certificate of
Incorporation will remain unaltered.
The Board believes that the name "North American Galvanizing & Coatings,
Inc." better describes the core business and reflects the culmination of
strategically refocusing the company on hot dip galvanizing and coatings. The
Board also believes the Company has developed a very recognizable brand name
with North American Galvanizing, a name reflecting quality of product and
service, and is positioned to capitalize on that asset.
The Amendment requires the approval of a majority of the shares of Common
Stock outstanding as of the Record Date and, if the Amendment is so approved at
the Annual Meeting, the Company intends for the Amendment to become effective on
or about July 1, 2003, upon filing with the Secretary of the State of Delaware.
The text of Article First of the Certificate of Incorporation as proposed
to be mended is set forth in Exhibit 1 hereto.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company, upon the recommendation of the Audit
Committee has appointed Deloitte & Touche LLP as independent accountants to
examine the financial statements of the Company for the year ending December 31,
2003. The Board of Directors has directed that such appointment be submitted for
ratification by the stockholders at the meeting.
Deloitte & Touche LLP has served as the independent accountant for the
Company since 1990. A representative of Deloitte & Touche LLP is expected to be
present at the Meeting and will have the opportunity to make a statement if he
or she desires to do so and will be available to respond to appropriate
questions.
12
AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP for professional
services rendered for the audit of the Company's 2002 annual financial
statements and for the reviews of the financial statements included in the
Company's 2002 Quarterly Reports on Form 10-Q were $127,052, including expenses.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no professional services rendered by Deloitte & Touche in the
2002 fiscal year relating to financial information systems design and
implementation.
ALL OTHER FEES
The aggregate fees, including expenses, billed for all other services
rendered by Deloitte & Touche related to the 2002 fiscal year was $85,927 and
can be sub-categorized as follows:
Attestation Fees. The aggregate fees billed for attestation services
rendered by Deloitte & Touche for matters such as consents related to SEC
and other registration statements, audits of employee benefit plans and
consultation on accounting standards or transactions was $9,700.
Other Fees, The aggregate fees billed for all other services, such as
consultation related to tax planning and compliance rendered by Deloitte &
Touche in the 2002 fiscal year was approximately $76,227. The Audit
Committee of the Company's Board of Directors has considered whether the
provision of non-audit services by Deloitte & Touche LLP for the year ended
December 31, 2002 is compatible with maintaining the principal auditor's
independence.
The affirmative vote of a majority of the shares of common stock present,
in person or by proxy, and entitled to vote at the meeting, is required for
ratification of the appointment of Deloitte & Touche LLP as the independent
accountants.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP.
13
COMPANY PERFORMANCE
The following performance graph compares cumulative total stockholder
returns on the Company's Common Stock compared to the Dow Jones Diversified
Industrials Index and the Dow Jones Equity Market Index calculated at the end of
each fiscal year, December 31, 1997 through December 31, 2002. The graph assumes
$100 was invested December 31, 1997, in the Company's Common Stock and in each
of the referenced indices and assumes the reinvestment of dividends.
STOCK PERFORMANCE
(Dollars)
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG KINARK CORPORATION, THE DOW JONES US TOTAL MARKET INDEX
AND THE DOW JONES US INDUSTRIAL, DIVERSIFIED INDEX
[GRAPH APPEARS HERE]
Cumulative Total Return
----------------------------------------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1997 1998 1999 2000 2001 2002
Kinark Corporation 100.00 72.92 50.00 29.17 32.33 49.00
Dow Jones US Total Market 100.00 124.90 153.28 139.07 122.50 95.45
Dow Jones US Industrial, 100.00 128.61 174.24 175.49 157.77 102.45
Diversified
RELATED PARTY TRANSACTIONS
In February 2001, the Company offered a private placement of subordinated
debt and warrants (together, the "Private Securities") to certain of its
directors and to accredited shareholders holding at least 100,000 shares of
Common Stock. The exercise price of $.856 a share for the Warrant was determined
based on the average closing market price for the Common Stock on the American
Stock Exchange for the 20 business day period beginning three business days
after February 17, 2001. A special committee of the Board of Directors approved
the offering of the Private Securities and the special committee received an
opinion from The Robinson-Humphrey Company, LLC that the consideration to be
paid in the offering was fair to the Company from a financial point of view. The
following directors and nominees for reelection participated in the offering as
indicated:
14
Linwood J. Bundy - 10% Subordinated Note for $100,000 and Warrant to
purchase 66,666 shares of Common Stock.
Ronald J. Evans (President) - 10% Subordinated Note for $50,000 and Warrant
to purchase 33,333 shares of Common Stock.
Gilbert L. Klemann, II - 10% Subordinated Note for $100,000 and Warrant to
purchase 66,666 shares of Common Stock.
Patrick J. Lynch - 10% Subordinated Note for $50,000 and Warrant to
purchase 33,333 shares of Common Stock.
Joseph J. Morrow - 10% Subordinated Note for $100,000 and Warrant to
purchase 66,666 shares of Common Stock.
John H. Sununu - 10% Subordinated Note for $100,000 and Warrant to purchase
66,666 shares of Common Stock.
The Morrow Foundation - 10% Subordinated Note for $100,000 and Warrant to
purchase 66,666 shares of Common Stock.
Mr. Joseph J. Morrow, a director of the Company and a nominee for
reelection, is the chief executive officer of Morrow & Co., Inc., which provides
proxy solicitation and other stockholder related services to the Company as
described in the section titled "Other Matters" in this Proxy Statement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities,
to file reports of securities ownership and changes in such owner ship with the
SEC. Officers, directors and greater than ten-percent beneficial owners also are
required by rules promulgated by the SEC to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to the
Company, the Company believes that, during the last fiscal year, its executive
officers, directors and greater than ten-percent beneficial owners complied with
all applicable Section 16(a) filing requirements.
STOCKHOLDER PROPOSALS
If any stockholder wishes to submit a proposal for inclusion in the Proxy
Statement for the Company's 2004 Annual Meeting, such proposal must be received
at the Company's principal executive office by January 13, 2004. Such proposal
should be directed to Kinark Corporation, Attention: Secretary, 2250 East 73rd
Street, Suite 300, Tulsa, Oklahoma 74136. No stockholder proposals were received
for inclusion in this Proxy Statement.
15
OTHER MATTERS
Management is not aware of any other business to be presented at the
meeting. However, should any additional matters properly come before the
meeting, it is the intention of the persons named in the accompanying proxy to
vote on such matters in accordance with their best judgment. The enclosed proxy
confers discretionary authority to take action with respect to any additional
matters which may come before the meeting.
All expenses in connection with solicitation of proxies will be borne by
the Company. In addition to solicitation by mail, proxies may be solicited
personally by telephone, telecopy or telegraph by Company officers and
employees. The Company has also retained Morrow & Co., Inc., 445 Park Avenue,
New York, New York 10022, to assist in such solicitation. We expect to pay
Morrow & Co. a fee of $7,500 for its services and will reimburse Morrow for
certain out-of-pocket expenses estimated to be $6,000. Brokers, banks, nominees,
fiduciaries and other custodians will be requested to solicit beneficial owners
of shares and will be reimbursed for their expenses.
Mellon Investor Services LLC has been retained to receive and tabulate
proxies and to provide a representative to act as inspector of election for this
Annual Meeting of Stockholders.
By order of the Board of Directors
Paul R. Chastain
Vice President & Secretary
Tulsa, Oklahoma
April 9, 2003
16
EXHIBIT 1
PROPOSED ARTICLE FIRST OF THE
RESTATED CERTIFICATE OF INCORPORATION
"FIRST: The name of the Corporation is NORTH AMERICAN GALVANIZING & COATINGS,
INC."
17
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES Please
LISTED BELOW AND FOR THE PROPOSALS LISTED BELOW. Mark Here
for Address |_|
Change or
Comments
SEE REVERSE SIDE
--------------------------------------------------------------------------------
1. Election of the following nominees as Directors: 01 Linwood J. Bundy, 02
Paul R. Chastain, 03 Ronald J. Evans, 04 Gilbert L. Klemann, II, 05
Patrick J. Lynch, 06 Joseph J. Morrow, 07 John H. Sununu, 08 Mark E.
Walker.
FOR all WITHHOLD
nominees listed AUTHORITY
(except as marked to to vote for all
the contrary) nominees listed
|_| |_|
INSTRUCTIONS: To vote FOR or WITHHOLD AUTHORITY to vote for the election of all
candidates, check the appropriate box hereon. To withhold authority to the
election of any candidate(s), write the name(s) of such candidate(s) in the
following space:
________________________________________________________________________________
If no box is marked hereon, the undersigned will be deemed to vote FOR each
candidate except that the undersigned will not be deemed to consent to the
election of any candidate whose name is written in the space provided above.
--------------------------------------------------------------------------------
2. Amend Article First of the Company's Restated Certificate of Incorporation
to change the Company's name from Kinark Corporation to North American
Galvanizing & Coatings, Inc.
FOR AGAINST ABSTAIN
|_| |_| |_|
--------------------------------------------------------------------------------
3. Ratify appointment of Deloitte & Touche LLP as independent accountants.
FOR AGAINST ABSTAIN
|_| |_| |_|
--------------------------------------------------------------------------------
4. In their discretion, upon such other matters as may properly come before
the Annual Meeting.
FOR AGAINST ABSTAIN
|_| |_| |_|
--------------------------------------------------------------------------------
**THIS IS YOUR PROXY CARD**
PLEASE SIGN, DATE AND RETURN THIS PROXY
PROMPTLY, USING THE ENCLOSED ENVELOPE.
IF NO BOX IS MARKED ABOVE WITH RESPECT TO
PROPOSALS 2, 3 AND/OR 4, THE UNDERSIGNED WILL
BE DEEMED TO HAVE VOTED FOR SUCH PROPOSALS.
Signature________________________ Signature________________________ Date________
Please sign below exactly as name appears on this Proxy. If shares are
registered in more than one name, all such persons should sign. A corporation
should sign in its full corporate name by a duly authorized officer, stating his
title. Trustees, guardians, executors and administrators should sign in their
official capacity, giving their full title as such. If a partnership, please
sign in the partnership name by authorized persons. Make sure that the name on
your stock certificate(s) is exactly as you indicate below.
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
------------------------------------ ------------------------------------ ---------------------
Internet Telephone Mail
http://www.eproxy.com/kin 1-800-435-6710
Use the Internet to vote your proxy. Use any touch-tone telephone to Mark, sign and date
Have your proxy card in hand when vote your proxy. Have your proxy your proxy card
you access the web site. You will be OR card in hand when you call. You will OR and
prompted to enter your control be prompted to enter your control return it in the
number, located in the box below, to number, located in the box below, enclosed postage-paid
create and submit an electronic and then follow the directions envelope.
ballot. given.
------------------------------------ ------------------------------------ ---------------------
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
KINARK CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF THE DIRECTORS
For the Annual Meeting of Stockholders on May 14, 2003
The undersigned, a stockholder of record of Kinark Corporation (the
"Company") on April 1, 2003 (the "Record Date"), hereby appoints Linwood J.
Bundy, Ronald J. Evans and Paul R. Chastain, or any of them with full power of
substitution, as proxies for the undersigned, to vote all shares of common
stock, $.10 par value per share (the "Common Stock"), of the Company, which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on May 14, 2003, and at any adjournments or postponements thereof, on the
following matters.
(Continued, and to be marked, dated and signed, on the reverse side)
The invalidity, illegality or enforceability of any particular provision
of this Proxy shall be construed in all respects as if such invalid, illegal or
unenforceable provision were omitted without affecting the validity, legality or
enforceability of the remaining provisions hereof.
________________________________________________________________________________
Address Change/Comments (Mark the corresponding box on the reverse side)
________________________________________________________________________________
________________________________________________________________________________
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Annual Meeting
of
Kinark Corporation Stockholders
Wednesday, May 14, 2003
11:00 a.m.
American Stock Exchange
Boardroom - 14th Floor
86 Trinity Place
New York, NY