Proxy
The primary and secondary criteria Radford used in selecting the peer group was tool and equipment
manufacturing companies with: • Primary Criteria: o Last fiscal year revenues of 1/3 to three times the Company’s revenues of approximately $250 million ($80 million – $800 million)
• Secondary Criteria: o Market capitalization between $50 million and $300 million based on the Company’s current capitalization of approximately $90 million
o Employee size of 1/4 to four times the Company’s fiscal 2011 headcount of 1,951 employees (500 – 8,000)
o Geography outside of major metropolitan/high cost of living areas o Global footprint with multi-national operations
Radford considered the following survey sources in its analysis: • 2011 Radford Global Technology Survey using a select group of public US manufacturing-focused companies with revenue between $50 million and $1.5 billion (operating in the non-high tech space and not based in California)
• Towers Watson General Industry Top Management Survey - Durable goods manufacturing companies with between $100 million and $450 million in revenue
Based on the selection criteria, Radford proposed, and the Compensation Committee approved, the following
group of peer companies used in the analysis: Altra Holdings
Blount International Cascade
Columbus McKinnon Douglas Dynamics Eastern Company Flow International
GSI Group Hardinge Hurco Kadant
Key Technology LeCroy Lydall
Measurement Specialists Newport NN, Inc.
ROFIN-SINAR Smith & Wesson Twin Disc Zygo
The Compensation Committee has the opportunity to work closely with each executive officer during the year
at various board and committee meetings and has a good understanding and working knowledge of each individual’s contributions and talents. However, the Compensation Committee discusses with the CEO the performance and contributions of each executive officer and seeks his advice and recommendations when setting compensation. The CEO is not present when the Compensation Committee discusses his compensation.
Compensation Philosophy Our compensation practices are relatively simple, straightforward and transparent. Setting compensation is
not done by a strict formula. It is a subjective judgment based on a number of factors. We do not look at the performance for just one year, but for a number of years, and consider the economic climate in all areas of the world where we operate. We look at how stockholders, employees and stakeholders at all locations have fared during these periods. In particular, we look at measures affecting stockholders’ equity such as sales revenues and net profit margins, which are key indicators of stockholder value. We also consider stock price movement, bearing in mind that the stock market is generally short-term oriented and subject to pressures that are not under the control of executive officers.
Our executive officers currently do not have employment contracts or company-paid memberships or
professional services. For fiscal year 2012 (i.e., the fiscal year ending on June 30, 2012) compensation consisted primarily of base salary and cash incentive compensation. In fiscal year 2012, long-term equity (stock) incentives for our executives are available to our employees on the same basis through our employee stock purchase plan. Please see the description of our new long term incentive plan, which stockholders are being asked to approve at this Annual Meeting.
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