SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Reunion Industries, Inc.
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Notes:
REUNION INDUSTRIES, INC.
11 Stanwix Street - Suite 1400
Pittsburgh, Pennsylvania 15222
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held June 21, 2005
Notice is hereby given that the Annual Meeting of the Stockholders of
Reunion Industries, Inc., a Delaware corporation ("Reunion Industries",
"Reunion" or "the Company"), will be held at Reunion Industries' offices, 11
Stanwix Street, Pittsburgh, Pennsylvania 15222 on June 21, 2005, at 10:00 A.M.
local time, for the following purposes:
1. To elect a board of seven directors to serve until the next Annual
Meeting of stockholders or until their successors are elected; and
2. To consider and act upon such other business as may properly be
presented to the meeting.
Your Board of Directors recommends that you vote for all director
nominees. The Board is not aware of any other proposals for the Annual
Meeting.
A record of stockholders has been taken as of the close of business on
April 29, 2005, and only those stockholders of record on that date will be
entitled to notice of and to vote at the meeting. A stockholders' list will
be available at, and may be inspected during, the meeting.
Whether or not you expect to be present at the meeting, please sign and
date the enclosed proxy and return it promptly in the enclosed envelope which
has been provided for your convenience.
By Order of the Board of Directors
/s/ John M. Froehlich
----------------------------------
John M. Froehlich
Secretary
May 12, 2005
REUNION INDUSTRIES, INC.
PROXY STATEMENT
General
This proxy statement is being mailed to stockholders commencing on or
about May 12, 2005 in connection with the solicitation by the board of
directors of Reunion Industries, Inc., a Delaware corporation ("Reunion
Industries", "Reunion" or the "Company"), of proxies to be voted at its Annual
Meeting of Stockholders to be held at Reunion Industries' offices, 11 Stanwix
Street, Pittsburgh, Pennsylvania 15222 on Tuesday, June 21, 2005 (the Annual
Meeting"), and at any adjournment thereof, for the purposes set forth in the
accompanying Notice. Proxies will be voted in accordance with the directions
specified thereon and otherwise in accordance with the judgment of the persons
designated as proxies. Any signed proxy on which no direction is specified
will be voted for the election of the nominees named herein to the board of
directors. Any proxy may be revoked at any time before its exercise by
delivery to the corporate secretary of a written revocation of the proxy or a
duly executed proxy bearing a later date.
Reunion Industries will pay the costs of soliciting proxies pursuant to
this Proxy Statement. Reunion Industries will also reimburse brokerage firms
and other custodians, nominees, and fiduciaries for their reasonable out-of-
pocket expenses for sending management's proxy materials to stockholders and
obtaining their proxies.
As of April 29, 2005, the record date for the determination of
stockholders entitled to vote at the Annual Meeting, there were 16,278,579
outstanding shares of common stock of Reunion Industries. Each share of
common stock entitles the holder to one vote on all matters presented at the
annual meeting.
Voting Procedures
As a stockholder of Reunion, you have a right to vote on certain business
matters affecting Reunion. The proposal that will be presented at the Annual
Meeting and upon which you are being asked to vote is the election of
directors, which is discussed below under the section entitled "Proposal:
Election of Directors." The Company is not aware of any other matters to be
presented to and voted upon at the Annual Meeting. Each share of Reunion's
common stock you own entitles you to one vote on each matter properly
presented at the Annual Meeting.
Methods of Voting
You may vote by mail or in person at the Annual Meeting.
Voting by Mail. By signing and returning the proxy card in the
enclosed prepaid and addressed envelope, you are authorizing the individuals
named on the proxy card (known as "proxies") to vote your shares at the Annual
Meeting in the manner you indicate. We encourage you to sign and return the
proxy card even if you plan to attend the meeting. In this way, your shares
will be voted if you are unable to attend the meeting. If you received more
than one proxy card, it is an indication that your shares are held in multiple
accounts. Please sign and return all proxy cards to ensure that all of your
shares are voted.
Voting in Person at the Meeting. If you plan to attend the Annual
Meeting and vote in person, we will provide you with a ballot at the meeting.
If your shares are registered directly in your name, you are considered the
stockholder of record and you have the right to vote in person at the meeting.
If your shares are held in the name of your broker or other nominee, you are
considered the beneficial owner of shares held in street name. As a beneficial
owner, if you wish to vote at the meeting, you will need to bring with you to
the meeting a legal proxy from your broker or other nominee authorizing you to
vote such shares.
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Your shares will be voted in accordance with the instructions you
provide. If you sign and return your proxy card without providing your voting
instructions, your shares will be voted "for" the seven named nominees for
directors and in the discretion of the proxies as to other matters that may
properly come before the meeting.
Revoking Your Proxy
You may revoke your proxy at any time before it is voted at the meeting.
To do this, you must:
- enter a new vote by signing, dating and returning another proxy card at a
later date;
- provide written notice of the revocation to Reunion's Secretary;
- or attend the meeting and vote in person.
Quorum Requirement
A quorum, which is a majority of the outstanding shares entitled to vote
as of the record date, April 29, 2005, must be present in order to hold the
meeting and to conduct business. Shares are counted as being present at the
meeting if you appear in person at the meeting or if you vote your shares by
submitting a properly executed proxy card. Both abstentions and broker non-
votes are counted as present for the purpose of determining a quorum.
Votes Required for the Election of Directors
The seven nominees receiving the highest number of votes, in person or by
proxy, will be elected as directors. You may vote "for" the nominees for
election as directors or you may "withhold" your vote with respect to one or
more nominees. There is no cumulative voting with respect to the election of
directors. If you return a proxy card that withholds your vote from the
election of all directors, your shares will be counted as present for the
purpose of determining a quorum, but will not be counted in the vote on the
proposal.
Broker Non-Votes
For the proposal to elect seven directors, if your shares are held in
street name and you do not instruct your broker on how to vote your shares,
your brokerage firm may either leave your shares unvoted or vote your shares
on this matter. To the extent your brokerage firm votes your shares on your
behalf on this proposal, your shares will be counted as present for the
purpose of determining a quorum.
Voting Confidentiality
Proxies, ballots and voting tabulations are handled on a confidential
basis to protect your voting privacy. This information will not be disclosed,
except as required by law.
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Voting Results
Votes will be tabulated by Registrar and Transfer Company, the transfer
agent and registrar for Reunion Industries' common stock, and the results will
be certified by an election inspector who is required to resolve impartially
any interpretive questions as to the conduct of the vote. Results will be
published in Reunion's Quarterly Report on Form 10-Q for the period ended June
30, 2005. You also may request the voting results by written request to
Reunion's Secretary.
PROPOSAL: ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders of Reunion Industries will be
asked to vote for the election of seven directors to its board of directors.
The candidates proposed for election at the annual meeting are Thomas N.
Amonett, Charles E. Bradley, Sr., Kimball J. Bradley, Thomas L. Cassidy, David
E. Jackson, Joseph C. Lawyer, and John G. Poole. If elected, the proposed
candidates would comprise the entire board of directors of Reunion Industries,
and would hold office until their successors are duly elected and qualified at
the next annual meeting of stockholders of Reunion Industries or until they
earlier die, resign or are removed from office in accordance with the
Company's By-Laws and applicable law.
Nominees
All persons nominated for election at the annual meeting currently are
directors of Reunion Industries and have previously been elected by the
stockholders. Mr. Charles E. Bradley, Sr. is the father of Mr. Kimball J.
Bradley. Reunion Industries knows of no other family relationships between any
director, executive officer or nominee and any other director, executive
officer or nominee. There are no arrangements or understandings between any
nominee for director and any other person pursuant to which such person was
selected as a nominee.
Principal Position with
Name Reunion Industries, Inc. Age Director Since
----------------------- -------------------------- --- --------------
Thomas N. Amonett(1)(2) Director 61 1992
Charles E. Bradley, Sr. Director, Chairman & CEO 75 1995
Kimball J. Bradley Director, President & COO 39 2000
Thomas L. Cassidy(1)(2) Director 76 1995
David E. Jackson(1)(2) Director 46 2003
Joseph C. Lawyer Director and Vice Chairman 59 2000
John G. Poole Director 62 1996
(1) Member, Compensation Committee of the Board of Directors
(2) Member, Audit Committee of the Board of Directors
THOMAS N. AMONETT has served as a director of Reunion Industries since
July 1, 1992 and served as its President and Chief Executive Officer from
July 1, 1992 until October 26, 1995. He also served as the President of
Reunion Energy Company, then a wholly-owned subsidiary of Reunion Industries
in the oil and gas operating business, from July 1, 1992 until May 24, 1996.
Mr. Amonett is President and Chief Executive Officer of Champion Technologies,
Inc., a manufacturer and distributor of specialty chemicals and related
services, primarily to the oil and gas industry. From November 1998 to
June 1999, he was President, Chief Executive Officer and a director of
American Residential Services, Inc., a company providing equipment and
services relating to residential heating, ventilating, air conditioning,
plumbing, electrical and indoor air quality systems and appliances. From July
1996 until June 1997, Mr. Amonett was Interim President and Chief Executive
-3-
Officer of Weatherford Enterra, Inc., an energy services and manufacturing
company. Mr. Amonett serves as a director of Petro Corp. Incorporated, a
Houston-based oil and gas company, and Stelmar Shipping Ltd., an international
provider of petroleum product and crude oil transportation services.
CHARLES E. BRADLEY, SR. became a director of Reunion Industries on
June 20, 1995 and was appointed President and Chief Executive Officer of
Reunion Industries on October 26, 1995. He became Chairman effective March
16, 2000. Mr. Bradley, Sr. was a co-founder of Stanwich Consulting Corp.,
formerly known as Stanwich Partners, Inc. ("SPI"), in 1982 and has served as
its President since that time. SPI is a private investment company. He was a
director of Chatwins Group, Inc. ("Chatwins Group") from 1986 until its merger
with Reunion Industries on March 16, 2000 and was Chairman of the Board of
Chatwins Group from 1988 until the merger. Mr. Bradley, Sr. is currently the
President and a director of Sanitas, Inc. and Texon Energy Corporation, both
inactive companies. Since May 1997, he has been President and sole director
of Stanwich Financial Services Corp. ("SFSC"), which, on June 25, 2001, filed
a voluntary petition in the United States Bankruptcy Court for the District of
Connecticut for reorganization under Chapter 11 of the United States
Bankruptcy Code. SFSC was in the structured settlement business. Mr. Bradley
is the father of Kimball J. Bradley.
KIMBALL J. BRADLEY became President and Chief Operating Officer of
Reunion Industries effective May 1, 2000. He was Executive Vice President of
Operations of Reunion Industries following the Chatwins Group merger and was a
Senior Vice President of Chatwins Group from August 1998 until the merger and
a Vice President of Chatwins Group from January 1996 to August 1998. From
November 1995 until August 1998, Mr. Bradley was President of the Auto-Lok
division of Chatwins Group, having served as acting President of Auto-Lok
beginning in August 1995. Prior to assuming that position, he managed various
special projects at Chatwins Group's corporate office beginning in
November 1993 and at Chatwins Group's CP Industries division from
February 1993 to November 1993. Mr. Bradley is the son of Charles E. Bradley,
Sr.
THOMAS L. CASSIDY became a director of Reunion Industries on June 20,
1995. He was a Managing Director of Trust Company of the West, an investment
management firm, from 1984 until his retirement in 1999. Mr. Cassidy is a
Partner of TCW Capital, an affiliate of Trust Company of the West. Mr.
Cassidy was a director of Chatwins Group from March 1993 to June 1997.
DAVID E. JACKSON became a director of Reunion Industries on June 26,
2003. He is the CEO of Bingo Country Holdings, Ltd. in Toronto, Canada. He
has over fifteen years experience as a portfolio manager investing in
distressed securities having worked as a portfolio manager with Avenue Capital
Management, Oppenheimer & Co. Inc., EBF & Associates and Cargill, Inc.
JOSEPH C. LAWYER became Vice Chairman of Reunion Industries effective May
1, 2000. He was President and Chief Operating Officer of Reunion Industries
following the Chatwins Group merger and was President, Chief Executive Officer
and a director of Chatwins Group from 1988 until the merger. Mr. Lawyer is a
director of Respironics, Inc., a company engaged in design, manufacture and
sale of home and hospital respiratory medical products.
JOHN G. POOLE became a director of Reunion Industries on April 19, 1996.
Mr. Poole is a private investor. He was a co-founder of SPI with Charles E.
Bradley, Sr. in 1982 and served as its Vice President until 2001. Mr. Poole
was a director of Chatwins Group from 1988 until the merger. He is also a
director of Consumer Portfolio Services, Inc., engaged in the business of
purchasing, selling and servicing retail automobile installment sales
contracts.
The Board of Directors recommends a vote for all nominees for the board
of directors.
-4-
Board and Committee Activity
During 2004, the board held three regularly scheduled meetings and the
audit committee held four meetings. There was no regular meeting of the
compensation committee in year 2004. Each of the directors attended all of the
meetings of the board and of each committee on which he served during 2004.
The Company expects the directors to attend its annual meetings of
stockholders. All directors attended the last meeting, held on December 15,
2004.
Reunion's operations are managed under the general supervision and
direction of the board of directors, which has the ultimate responsibility for
the establishment and implementation of Reunion's general operating
philosophy, objectives, goals and policies. Pursuant to delegated authority,
certain board functions may be discharged by one or more standing committees
of the board.
The compensation committee, comprised of Messrs. Amonett (chairman),
Cassidy and Jackson, is responsible for the formulation and adoption of all
executive compensation, benefit and insurance programs, subject to full board
approval where legally required or in those instances where the underlying
benefit philosophy might be at variance with preexisting board policies. The
compensation committee also supervises the administration of all executive
compensation and benefit programs, including the establishment of any specific
criteria against which all annual performance based benefits are to be
measured.
The audit committee, comprised of Messrs. Amonett, Cassidy and Jackson
(chairman), assists the board in assuring that the accounting and reporting
practices of Reunion Industries are in accordance with all applicable
requirements. Each member of the audit committee meets the independence and
financial experience requirements under the rules of both the Securities and
Exchange Commission (SEC) and American Stock Exchange (AMEX), where the
Company's stock is listed. In addition, the Board has determined that David
E. Jackson is an "audit committee financial expert" as defined by SEC rules.
Mr. Jackson's business experience is described above under the caption
"PROPOSAL: ELECTION OF DIRECTORS". The audit committee reviews with the
auditors the scope of the proposed audit work and meets with the auditors to
discuss matters relating to the audit and any other matter which the committee
or the auditors may wish to discuss. In addition, the audit committee
recommends the appointment of auditors to the board of directors each year and
would recommend the appointment of new auditors if future circumstances were
to indicate that such action is desirable.
The board of directors does not maintain executive or nominating
committees. Nominations for directorships are considered by the entire board.
The board believes that, in view of the small number of directors (7) and the
desirability of all directors, including "independent directors",
participating in the process, it is unnecessary to have a separate nominating
committee. The Company does not have a formal written policy or charter
concerning nominations. However, in evaluating a potential nominee, including
a nominee recommended by a stockholder, the board will consider the benefits
to the Company of such nomination, based on the nominee's skills and
experience related to managing a significant business, the willingness of the
person to serve and such person's character and reputation. Stockholders who
wish to suggest individuals for possible future consideration for board
positions or otherwise to communicate with the Board should direct
recommendations and other communications to the board of directors at the
Company's principal offices.
-5-
Director Compensation
Directors not otherwise compensated by Reunion receive annual retainers
of $18,000 for service on the board and $500 for each board or committee
meeting attended. Compensation paid to non-employee directors during 2004 for
service in all board capacities aggregated $84,000. Directors are reimbursed
for the actual cost of any travel expenses incurred. In addition to his
director's fees, Mr. Poole received $42,000 for consulting services during
2004.
Non-employee directors of Reunion Industries are eligible for awards
under the 1998 and 2004 Stock Option Plans. There were no options granted
during 2004.
Key Person Insurance
As of June 29, 1994, Chatwins Group and Charles E. Bradley, Sr. agreed to
a split-dollar life insurance arrangement. Pursuant to this arrangement,
Chatwins Group agreed to maintain three universal type life policies on Mr.
Bradley, Sr. and his wife. Chatwins Group will be reimbursed for the premiums
it pays for such policies from either the death benefit of the policies or
their cash surrender value. Mr. Bradley, Sr. agreed with Chatwins Group that
if the policy proceeds are insufficient to reimburse Chatwins Group for the
full amount of premiums paid, he would pay the shortfall to Chatwins Group.
This arrangement was assumed by Reunion in connection with the merger of
Chatwins Group with and into Reunion Industries on March 16, 2000. No
premiums were paid by the Company on these policies in 2004.
As of October 24, 1994, Chatwins Group and Joseph C. Lawyer agreed to a
split-dollar life insurance arrangement. Pursuant to this arrangement,
Chatwins Group agreed to maintain a universal type life policy on Mr. Lawyer.
Chatwins Group will be reimbursed for the premiums it pays for such policy
from either the death benefit of the policy or its cash surrender value. Mr.
Lawyer agreed with Chatwins Group that if the policy proceeds are insufficient
to reimburse Chatwins Group for the full amount of premiums paid, he would pay
the shortfall to Chatwins Group. This arrangement was assumed by Reunion in
connection with the merger of Chatwins Group with and into Reunion on March
16, 2000. No premiums were paid by the Company on this policy in 2004.
As of December 12, 1995, Chatwins Group and John G. Poole agreed to a
split-dollar life insurance arrangement. Pursuant to this arrangement,
Chatwins Group agreed to maintain two universal type life policies on Mr.
Poole. Chatwins Group will be reimbursed for the premiums it pays for these
policies from either the death benefit of the policies or their cash surrender
value. Mr. Poole agreed with Chatwins Group that if the policy proceeds are
insufficient to reimburse Chatwins Group for the full amount of premiums paid,
he would pay the shortfall to Chatwins Group. This arrangement was assumed by
Reunion in connection with the merger of Chatwins Group with and into Reunion
on March 16, 2000. No premiums were paid by the Company on these policies in
2004.
Compensation Committee Interlocks and Insider Participation
Messrs. Amonett, Cassidy and Jackson are members of the Compensation
Committee. Mr. Amonett served as Reunion Industries' President and Chief
Executive Officer from July 1, 1992 until October 26, 1995. He also served as
the President of Reunion Energy Company, then a wholly-owned subsidiary of
Reunion Industries in the oil and gas operating business, from July 1, 1992
until May 24, 1996.
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MANAGEMENT INFORMATION
Executive Officers
The following individuals serve as our executive officers:
Name Age Position
----------------------- --- ----------------------------------------------
Charles E. Bradley, Sr. 75 Director, Chairman and Chief Executive Officer
Joseph C. Lawyer 59 Director and Vice Chairman
Kimball J. Bradley 39 Director, President and Chief Operating Officer
John M. Froehlich 62 Executive Vice President, Chief Financial
Officer and Secretary
Jack T. Croushore 59 President, CP Industries Division
The business experience of Charles E. Bradley, Sr., Kimball J. Bradley
and Joseph C. Lawyer is described above in the section entitled "PROPOSAL:
ELECTION OF DIRECTORS."
JOHN M. FROEHLICH became Executive Vice President of Finance and Chief
Financial Officer of Reunion Industries on March 16, 2000. He became
Secretary on June 12, 2002. He was a Vice President of Chatwins Group from
1989 until the merger of Chatwins Group and Reunion Industries on March 16,
2000 and its Chief Financial Officer and Treasurer from 1988 until the merger.
JACK T. CROUSHORE became Division President of the CP Industries division
during 1988. From 1984 to 1988 he was Executive Vice President and Chief
Operating Officer of CP Industries, Inc. and its predecessor division of USX
Corporation. He was also a Vice President of Chatwins Group from 1988 to
2000.
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Executive Compensation
The following table reflects all forms of compensation for services to
Reunion Industries by our executive officers for the last three completed
fiscal years. There was no other annual compensation for any executive of the
Company in the last three completed fiscal years.
Long-Term
Compensation
------------
Annual Compensation Shares
------------------- Underlying All Other
Name and Position Year Salary Bonus(1) Stock Option Compensation
----------------------- ---- -------- -------- ------------ ------------
Charles E. Bradley, Sr. 2004 $377,107 $ 0 0 $ 930(2)
Chairman and Chief 2003 $400,024 0 100,000 1,020(2)
Executive Officer 2002 400,024 0 0 6,516(2)
Joseph C. Lawyer 2004 143,750 0 0 930(3)
Vice Chairman 2003 200,000 0 0 1,020(3)
2002 245,830 0 0 1,020(3)
Kimball J. Bradley 2004 372,884 0 0 20,342(4)
President and Chief 2003 366,819 0 400,000 15,480(4)
Operating Officer 2002 347,765 0 0 1,020(4)
John M. Froehlich 2004 219,064 0 0 11,305(5)
Executive Vice 2003 210,001 0 0 8,801(5)
President of Finance 2002 206,246 0 0 1,020(5)
and Chief Financial
Officer
Jack T. Croushore 2004 209,000 0 50,000 7,020(6)
President,CPI Division 2003 209,000 0 50,000 7,020(6)
2002 209,000 0 0 6,476(6)
(1) Amounts shown for bonuses are amounts earned for the period shown,
although bonuses are generally paid in subsequent years.
(2) Includes a 401(k) matching payment of $5,496 in 2002 and healthcare
benefit credits of $930 in 2004 and $1,020 in 2003 and 2002.
(3) Consists of healthcare benefit credits of $930 in 2004 and $1,020 in 2003
and 2002.
(4) Includes payments of life insurance premiums of $19,412 and $14,460 in
2004 and 2003, respectively, and healthcare benefit credits of $930 in 2004
and $1,020 in 2003 and 2002.
(5) Includes payments of life insurance premiums of $10,375 and $7,781 in
2004 and 2003, respectively, and healthcare benefit credits of $930 in 2004
and $1,020 in 2003 and 2002.
(6) Includes a car allowance of $6,000 in 2004 and 2003, a 401(k) matching
payment of $5,456 in 2002 and healthcare benefit credits of $930 in 2004 and
$1,020 in 2003 and 2002.
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Option Grants
The Company did not grant any options in the year ended December 31,
2004. During the year ended December 31, 2003, the Company granted options to
employees to purchase 550,000 shares of the Company's common stock and an
option to a non-employee director to purchase 20,000 such shares. The
following table shows all options to acquire Reunion Industries common stock
granted to the named executive officers during the fiscal year ended December
31, 2003.
Individual Grants(1) Projected
------------------------------------- Realizable Value
at Rates of
Number of Options Stock Price
Shares Granted to Exercise Appreciation for
Underlying Employees Price Option Term(2)
Options in Fiscal Per ----------------
Name Granted Year Share Expires 5% 10%
-------------------- ---------- ---------- ------- -------- ----------------
Charles Bradley, Sr. 100,000(3) 18.18% $0.3520 12/01/08 $ 5,641 $16,336
Kimball J Bradley 100,000(4) 18.18% $0.2750 06/26/08 $ 4,407 $12,763
Kimball J. Bradley 300,000(3) 54.55% $0.3520 12/01/08 $16,923 $49,009
Jack T. Croushore 50,000(5) 9.09% $0.2500 06/26/13 $ 7,861 $19,722
(1) Options granted to Charles E. Bradley, Sr. and Kimball J. Bradley have an
exercise price equal to 110% of the fair market value of Reunion Industries'
common stock on the grant date. The remaining options have an exercise price
of 100% of the fair market value on the grant date. Reunion Industries has
not issued any stock appreciation rights.
(2) As required by SEC rules, these columns show potential gains that may
exist for the respective options, assuming that the market price for Reunion's
common stock appreciated from the grant date to the end of the option terms at
rates of 5% and 10%, respectively. The amounts are not estimates of Reunion's
future stock price performance and are not necessarily indicative of Reunion's
future stock performance. If the price of Reunion's common stock does not
increase above the exercise price, no value will be realized from these
options.
(3) These options were granted on December 1, 2003. Assuming continued
employment with Reunion, these options have a 5-year term and will become
exercisable in one-third increments on the first, second and third
anniversaries of their issuance.
(4) These options were granted on June 26, 2003. Assuming continued
employment with Reunion, these options have a 5-year term and will become
exercisable in one-third increments on the first, second and third
anniversaries of their issuance.
(5) These options were granted on June 26, 2003. Assuming continued
employment with Reunion, these options have a 10-year term and will become
exercisable in one-third increments on the first, second and third
anniversaries of their issuance.
Option Exercises and Year-End Values
There were no options exercised in the years ended December 31, 2004 or
2003.
-9-
Equity Compensation Plan Information
The following table summarizes information with respect to options under
Reunion's equity compensation plans on December 31, 2004:
Equity Compensation Plans
---------------------------
Approved by Not Approved
Security by Security
Holders Holders
------------ ------------
Number of common stock shares to be issued
Upon exercise of outstanding options 614,000 -
========= =========
Weighted-average exercise price per share
of outstanding options $0.51 -
========= =========
Number of common stock shares remaining available
for future issuance under equity
compensation plans (excluding outstanding
options) 1,161,100 -
========= =========
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Compensation Committee Report
The compensation committee of the board of directors has furnished the
following report on executive compensation for 2004:
The board of directors pursues a philosophy of seeking to improve Reunion
Industries' performance and to maximize shareholder value by, among other
things, relating executive compensation and stock-based benefits to the
Company's performance. In general, executive financial rewards may be
segregated into the following significant components: base compensation,
bonus, and stock option and other benefit plans.
Base compensation for senior executives is generally intended to be
competitive with that paid at comparable companies. However, no comparability
studies were conducted for executive salaries paid in 2004, and the committee
bases its base salary determinations primarily on its knowledge of
compensation paid to senior executives at other companies. The committee also
takes into account the responsibilities and individual performance of the
executives in setting base salaries and the committee may set the base
compensation for certain executives at a premium level if they are viewed as
essential to the organization. The committee uses these same criteria to
establish compensation for the chief executive officer and has not established
any quantitative criteria for his compensation. The Company has agreed with
the holders of its 13% Senior Notes that it will not increase the compensation
of any executive officer in 2005 over that paid in 2004.
Under the supervision of the compensation committee, annual bonuses
reflect a policy of requiring a specified level of company performance for the
year before any bonuses are earned by senior executives, with bonuses for
achieving higher levels of performance directly related to the level achieved.
In setting performance criteria, the committee will consider the total
compensation payable or potentially available to the chief executive and other
executive officers. While the development of any business necessarily
involves numerous factors, the board's primary emphasis will be on encouraging
management to increase Reunion Industries' net assets and cash flow, and in
certain instances, rationalization of certain company businesses or assets.
The board of directors believes that properly designed and administered
long-term, stock-based incentives for senior executives closely align the
executives' economic interest with those of stockholders and provide a direct
and continuing focus upon the goal of constantly striving to maximize
stockholder value. The compensation committee intends, with any necessary
concurrence of the board of directors and stockholders, to continue to
consider alternate forms of stock-based incentives designed to achieve the
maximum possible performance based benefit to all senior executives at the
least possible cost and the greatest attainable economic efficiency to Reunion
Industries, with such benefits designed as nearly as practicable to directly
align the economic interests of professional managers with those of Reunion
Industries' stockholders. In 2002, the board, including certain current
members of the compensation committee, directed Reunion's management to take
action to possibly improve the value of outstanding stock options as an
incentive to the Company's employees that held stock options, including
executive management. The board approved management's plan of repricing the
outstanding stock options to an amount closer to then recent trade amounts,
which ultimately gave executive management a larger ownership stake in Reunion
and an increased incentive to remain with the Company.
As of April 29, 2005, members of the compensation committee were deemed to
own beneficially an aggregate of 147,029 shares of Reunion's common stock, or
less than 1% of such stock. See "OWNERSHIP INFORMATION - Security Ownership
of Certain Beneficial Owners and Management".
The Compensation Committee
Thomas N. Amonett, Chairman; Thomas L. Cassidy; David E. Jackson
-11-
OWNERSHIP INFORMATION
Security Ownership of Certain Beneficial Owners and Management
Reunion Industries had 16,278,519 shares of common stock outstanding as
of April 29, 2005. The following table sets forth information regarding the
beneficial ownership of our common stock by (i) each stockholder known to us
to own 5% or more of our common stock, (ii) each director of Reunion
Industries, (iii) each of the chief executive officer and the other named
executives, and (iv) all current directors and executive officers as a group.
Except as set forth in the footnotes to the following table, each stockholder
has sole dispositive and voting power with respect to the shares of our common
stock shown as owned by such stockholder.
% of
Outstanding
Beneficial Owner Shares Owned Shares
-------------------------------- ------------------------- -----------
Kimball J. Bradley 6,078,468 (1) 37.0%
c/o Reunion Industries, Inc.
11 Stanwix Street, suite 1400
Pittsburgh, PA 15222
The Charles E. Bradley, Sr.
Family Limited Partnership 4,310,813 (6) 26.5%
c/o Stanwich Consulting Corp.
62 Southfield Ave.
One Stamford Landing
Stamford, CT 06902
Stanwich Financial Services Corp. 1,651,697 (5) 10.1%
c/o Melissa Neier, Esq.
Ivey, Barnum & O'Mara
170 Mason Street
Greenwich, CT 06830
The John Grier Poole Family
Limited Partnership 1,499,747 (6)(7) 9.2%
One Rye Road
Portchester, NY 10573
Amanda Poole, David Poole and
Jesse Poole 1,499,747 (6) 9.2%
c/o John G. Poole
One Rye Road
Portchester, NY 10573
LCC Capital Master Fund, Ltd. 1,250,000 (13) 7.1%
c/o Lampe Conway 7 Co., LLC
730 Fifth Avenue
New York, NY 10019
Charles E. Bradley, Sr. 258,810 (2)(3)(4) 1.6%
c/o Stanwich Consulting Corp.
62 Southfield Ave.
One Stamford Landing
Stamford, CT 06902
Thomas N. Amonett 78,000 0.5%
Thomas L. Cassidy 62,362 0.4%
David E. Jackson 13,333 (8) <0.1%
Joseph C. Lawyer 701,751 (9) 4.3%
John G. Poole 757,438 (10) 4.7%
John M. Froehlich 74,008 0.5%
Jack T. Croushore 228,521 (11) 1.4%
All Officers and Directors as
a group (9 individuals) 8,252,691 (12) 49.9%
(1) Includes (a) 4,310,813 shares owned by The Charles E. Bradley, Sr. Family
Limited Partnership (the "Bradley Partnership") of which Kimball J. Bradley is
general partner and (b) 166,666 shares subject to options exercisable
currently or within 60 days of the record date.
-12-
(2) Mr. Bradley, Sr. and his wife own, respectively, a 28% and a 1% limited
partnership interest in the Bradley Partnership, which in turn beneficially
owns 4,310,813 shares of common stock. Because Mr. Bradley, Sr. and his wife
have no voting or dispositive power as to the shares owned by the Bradley
Partnership, he disclaims any beneficial ownership thereof, and none of such
shares are included as being beneficially owned by him in the table above.
(3) Excludes 1,651,697 shares owned by Stanwich Financial Services Corp.,
with which Mr. Bradley, Sr. is the indirect sole shareholder. He has no
voting or dispositive powers as to these shares. See note (5) below.
(4) Includes 100,000 shares owned by Hanna Investment Corporation, with which
Mr. Bradley, Sr. shares voting and dispositive power. Mr. Bradley, Sr. is the
controlling stockholder of the parent company of Hanna Investment Corporation
and may be deemed to be the beneficial owner of these shares.
(5) The voting and dispositive powers as to these shares are held by the
Liquidating Agent and the Executive Committee (subject to court oversight)
appointed in the bankruptcy proceeding of Stanwich Financial Services Corp.
(6) Pursuant to the Securities Pledge Agreement dated as of May 1, 1993 among
the Charles E. Bradley, Sr. Family Limited Partnership, the John Grier Poole
Family Limited Partnership, and U.S. Bank, National Association, as successor
Collateral Agent to State Street Bank and Trust Company and the First National
Bank of Boston, the Bradley Partnership pledged 4,145,247 shares and the Poole
Partnership pledged 552,703 shares to secure the obligations of Reunion
Industries under the Indenture, dated as of May 1, 1993, between Reunion and
the Collateral Agent relating to certain Senior Notes issued by Reunion
Industries in 1993.
(7) These shares are owned by the John Grier Poole Family Limited
Partnership. Amanda Poole, David Poole and Jesse Poole are co-general
partners (and limited partners) of such partnership. As such, they share
voting and dispositive powers as to such shares with each other and with such
partnership.
(8) Represents shares subject to options exercisable currently or within 60
days of the record date.
(9) Includes 3,567 shares beneficially owned by Mr. Lawyer's wife, as to
which he has no voting or dispositive power. Mr. Lawyer may be deemed to be
the beneficial owner of these shares.
(10) Includes 139,808 shares as to which Mr. Poole has voting rights, but not
dispositive rights.
(11) Includes 33,333 shares subject to options exercisable currently or
within 60 days of the record date.
(12) Includes 246,665 shares subject to options exercisable currently or
within 60 days of the record date.
(13) Represents shares subject to currently exercisable warrants.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires Reunion's directors and officers and persons who own beneficially
more than 10% of the common stock of Reunion Industries to file with the
Securities and Exchange Commission and the American Stock Exchange initial
reports of beneficial ownership and reports of changes in beneficial ownership
of the common stock of Reunion Industries. Directors, officers and persons
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owning more than 10% of the common stock of Reunion Industries are required to
furnish Reunion Industries with copies of all such reports. Based solely on
Reunion's review of the copies of such forms it has received and
representations from certain persons that they were not required to file
reports on Form 5 during 2004, Reunion Industries believes that all its
officers, directors and greater than 10% beneficial owners complied with all
filing requirements applicable to them with respect to transactions during
2004, except that (1) Mr. Bradley, Sr. filed a Form 4 late for one transaction
and (2) Mr. Kimball J. Bradley file a Form 4 late for 12 transactions.
OTHER INFORMATION
Common Stock Performance Graph
The following graph illustrates the yearly percentage change in the
cumulative total stockholder return on Reunion Industries' common stock,
compared with the cumulative total return on the American Stock Exchange
(AMEX) Composite Index and the Industrial Manufacturing Index published by The
Center for research in Security Prices at the University of Chicago, published
by the AMEX for use by AMEX listed companies:
Five Year Total Return (1)
[FIVE YEAR PERFORMANCE GRAPH APPEARS HERE]
Fiscal Year Ending
----------------------------------------------
1999 2000 2001 2002 2003 2004
------ ------ ------ ------ ------ ------
Reunion Industries, Inc. 100.00 78.86 17.71 8.57 32.57 20.57
AMEX Composite Index 100.00 92.76 86.34 70.57 95.52 110.39
Industrial Manufacturing
Index 100.00 123.33 98.53 74.28 131.22 139.66
(1) Tabular data assumes that the value of the investment in Reunion
Industries' common stock and each index was $100.00 at December 31, 1999 and
that all dividends, if any, were reinvested. The Company paid no dividends in
any period presented.
-14-
Certain Relationships and Related Transactions
Related Parties
Reunion Industries, Inc. - Reunion is a publicly traded Delaware
corporation headquartered in Pittsburgh, Pennsylvania. Charles E. Bradley,
Sr. (Mr. Bradley) is chairman of the board and Chief Executive Officer of
Reunion. Kimball J. Bradley is President, Chief Operating Officer, a director
of Reunion and son of Mr. Bradley. John G. Poole (?Mr. Poole?) and Joseph C.
Lawyer (?Mr. Lawyer?) are directors of Reunion.
Stanwich Consulting Corp. - Stanwich Consulting Corp. , formerly known as
Stanwich Partners, Inc. (?SPI?), was formerly engaged in the business of
investment banking and consulting. Mr. Bradley is the President of SCC.
Stanwich Financial Services Corp. - Stanwich Financial Services Corp.
(?SFSC?) is a privately held, currently inactive, corporation that was
formerly in the structured settlement business. SFSC is owned 100% by Mr.
Bradley. Prior to May 10, 2004, SFSC was a related party to Reunion. On that
date, management control of SFSC was vested in a liquidating trustee and an
executive committee, of which Mr. Bradley is not a member, in accordance with
SFSC?s plan of reorganization in its proceeding under Chapter 11 of the
Bankruptcy Code. Accordingly, SFSC is no longer a related party.
NPS Acquisition Corp. - NPS Acquisition Corp. (NPSAC) was formed by Mr.
Bradley to acquire and hold NAPTech Pressure Systems (NAPTech). NAPTech was
based in Clearfield, Utah and engaged in the business of manufacturing
seamless steel pressure vessels, an existing Metals product line. In January
2001, NPSAC was merged into the Company.
CPS Leasing, Inc. - CPS Leasing, Inc. (CPSL) is a subsidiary of Consumer
Portfolio Services, Inc. (CPS). Mr. Bradley and Mr. Poole are stockholders of
CPS. Mr. Poole is a director of CPS and Mr. Bradley was a director until July
2001. Charles E. Bradley Jr., Mr. Bradley's son and Kimball J. Bradley's
brother, is President of CPS. CPSL is primarily engaged in machinery and
equipment lease financing.
Transactions and Balances
SPI Consulting Agreement - Reunion had a consulting agreement with SPI,
which was terminated effective September 30, 2002. During 2002, $225,000 was
expensed related to this agreement. At December 31, 2003 $117,205 was owed to
SPI under this agreement. Such amount was forgiven in 2004.
SFSC Settlement ? Effective May 10, 2004, the Company?s indebtedness to
and from SFSC was settled on the following terms: (1) pursuant to the
judgment referred to below, the Company is obligated to pay SFSC the sum of
$4.29 million on or before December 31, 2006 plus interest on such sum at the
rate of 10% per annum from such effective date, in satisfaction of the
Company?s indebtedness to SFSC, (2) SFSC?s indebtedness to the Company in the
amount of $310,000 plus interest was cancelled and (3) provided it performs
its obligations under the settlement and the judgment, the Company will be
released from the claims of SFSC?s creditors. As contemplated by the
settlement agreement, a judgment has been entered against the Company for the
settlement amount by the United States Bankruptcy Court for the District of
Connecticut in SFSC?s pending Chapter 11 Bankruptcy Proceeding. The
settlement amount does not constitute a new liability of the Company, as it
relates to indebtedness and a note receivable that had previously been
recorded on the Company?s balance sheet. The settlement resulted in a gain
for the Company of $3.3 million on debt extinguishment.
-15-
CPS Leasing, Inc. - Reunion entered into various operating lease
agreements with CPSL. During 2003 and 2002, lease payments totaling $336,000
and $580,000, respectively, were paid to or accrued for CPSL. At December 31,
2003, the Company has future minimum rental commitments under noncancellable
operating leases with CPSL totaling $1,460,000.
Cash Surrender Value of Life Insurance Policies - The Company pays the
premiums on life insurance policies covering Mr. Bradley, Mr. Joseph C. Lawyer
(Mr. Lawyer), the Company's vice chairman and a director, and Mr. Poole.
Pursuant to these arrangements, the Company will be reimbursed for the
premiums it pays for such policies from either the death benefit of the policy
or their cash surrender value. The covered individuals have agreed with the
Company that if the policy proceeds are insufficient to reimburse the Company
for the full amount of the premiums paid, they will cover the shortfall. As
of December 31, 2004 and 2003, premiums paid by the Company in excess of the
cash surrender values of the policies totaled $919,000 and $940,000,
respectively, and are included in due from related parties in the Company's
consolidated balance sheet at December 31, 2003.
Mr. Bradley Note Payable - In January 2003, Mr. Bradley made a $500,000
payment on behalf of the Company to NAPTech. This payment was applied to
reduce by $500,000 the Company?s indebtedness to NAPTech. To evidence this
loan by Mr. Bradley, the Company issued to him its unsecured $500,000 10% note
payable. The note payable became due on October 31, 2004. No principal or
interest payments have been made on this note. At December 31, 2004 and 2003,
accrued and unpaid interest related to this note totaled $100,000 and $50,000,
respectively. Mr. Bradley?s rights under this note are subordinate to the
Company?s indebtedness to Congress Financial Corporation (?Congress
Financial?).
Mr. Bradley Guarantees - To facilitate the closing of the refinancing of
the Company's bank debt with Congress Financial in December 2003, Mr. Bradley
provided a personal guarantee of $1.5 million of the revolving credit portion
of the new facilities. In exchange for his guarantee, the Board of Directors
approved a 2% guarantee fee to be paid to Mr. Bradley during the time period
such guarantee is in place. Amounts payable under this arrangement are being
offset against an employee advance previously received by Mr. Bradley and owed
to the Company. Such advance totaled $58,000 at the time of the refinancing
and, through December 31, 2004, $29,917 of guarantee fees had been offset
against such advance. See "Employee Advances" below.
Kimball Bradley Guarantees - To facilitate obtaining new financing with
two private investment funds and the closing of the refinancing of the
Company's bank debt with Congress in December 2003, Kimball Bradley provided
personal guarantees totaling $9.2 million, including guarantees of two notes
payable totaling $7.7 million and $1.5 of the revolving credit portion of the
new Congress facilities. In exchange for his guarantees, the Board of
Directors approved 2% guarantee fees to be paid to Kimball Bradley during the
time period such guarantees are in place. Amounts payable under these
arrangements are being offset against an employee advance previously received
by Kimball Bradley and owed to the Company. Such advance totaled $55,000 at
the time of the refinancing. In addition, Kimball Bradley owed the Company
$19,000 for the December 2002 exercise of 95,000 options which had been
repriced to $0.20. Through December 31, 2004, guarantee fees totaling
$183,878 had been incurred by the Company, of which $74,000 was offset in 2003
against amounts due from Kimball Bradley. See "Employee Advances" below.
Employee Advances - At December 31, 2003, the Company had non-interest
bearing advances due from Mr. Bradley and Kimball Bradley totaling $56,000 in
the aggregate. The highest balance on these advances during 2004 was $56,000.
The highest balance during 2003 was $113,000.
-16-
Previous Independent Accountants
On July 21, 2003, with the approval of the audit committee of the board
of directors, the Company replaced Ernst & Young LLP as its independent
accountants. The reports of Ernst & Young LLP on the financial statements for
the fiscal year ended December 31, 2002 contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to audit scope or
accounting principle. The report of Ernst & Young LLP on the financial
statements for the fiscal year ended December 31, 2002 was modified as to
uncertainty concerning Reunion's ability to continue as a going concern. In
connection with its audit for the such fiscal year ended December 31, 2002 and
through July 21, 2003, there were no disagreements with Ernst & Young 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 Ernst & Young LLP, would have caused them to
make reference thereto in their report on the financial statements for such
year. During the fiscal year ended December 31, 2002 and through July 21,
2003, there were no reportable events (as defined in SEC Regulation S-K, Item
304 (a)(1)(v)).
Independent Accountants for 2003
On July 21, 2003, Wiss & Company LLP was selected by the audit committee
of the board of directors to audit Reunion Industries' financial statements
for the fiscal year ending December 31, 2003. In its letter to Reunion
September 30, 2003, Wiss & Company, LLP, the Registrant's then independent
accountants, informed the Company of its decision to discontinue providing
audit services to registrants with the SEC. A copy of Wiss & Company's
September 30, 2003 letter was filed as Exhibit 99 to the Company's Current
Report on Form 8-K filed with the SEC on October 29, 2003. Having only
provided financial statement review services to the Company relating to the
filing of its Quarterly Report on Form 10-Q for the period ended June 30, 2003
as filed with the SEC on August 14, 2003, Wiss & Company, LLP did not issue
any reports on the Company's financial statements for any fiscal year. In
connection with its review of the Company's financial statements for the
period ended June 30, 2003 and through October 28, 2003, there have been no
disagreements with Wiss & Company, LLP on any matter of accounting principles
or practices, financial statement disclosure, or review scope or procedure.
During the period ended June 30, 2003 and through October 28, 2003, there have
been no reportable events (as defined in SEC Regulation S-K, Item 304
(a)(1)(v)).
Effective on October 28, 2003, Reunion engaged Mahoney Cohen & Company,
CPA, P.C. (Mahoney) as its new independent accountants for the 2003 calendar
year. The selection of Mahoney by Reunion was based on several factors,
including the departure to Mahoney from Wiss & Company of the audit engagement
management formerly responsible for providing auditing services to the Company
and our desire to maintain continuity of engagement staffing. Prior to their
appointment as independent accountants, Mahoney had not been consulted by the
Company on any matters.
All services provided by Mahoney are subject to pre-approval by the
audit committee of the board of directors. Effective on May 25, 2004,
Reunion, through its audit committee, engaged Mahoney as it independent
accountants for the 2004 calendar year. The audit committee will meet in May
2005 to discuss the selection of independent auditors for calendar year 2005.
-17-
Representatives of Mahoney Cohen & Company, CPA, P.C. are expected to be
present at the Annual Meeting to respond to appropriate questions and to make
a statement if they desire to do so.
Fees paid by Reunion Industries for professional services rendered by
Mahoney Cohen & Company, CPA, P.C. for the years ended December 31, 2004 and
2003 totaled $181,000 and $169,500, respectively. Such fees related solely to
audit fees for professional services rendered for the audit of Reunion
Industries' consolidated financial statements and review of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided in connection with statutory and regulatory filings
or engagements.
-18-
Audit Committee Report
The audit committee of the board of directors has furnished the following
report on its activities during 2004:
The audit committee consists of three of Reunion Industries' outside
directors. The board of directors and the audit committee believe that the
audit committee's membership satisfies the American Stock Exchange rules
concerning audit committee membership, including the requirements that members
be independent and have financial sophistication. The Board of Directors has
adopted a formal written audit committee charter, a copy of which is attached
as Appendix A to this proxy statement, and the audit committee performs a
review and reassessment of the adequacy of the charter on an annual basis.
In accordance with its written charter, the audit committee assists the
board of directors in fulfilling its oversight responsibilities by reviewing
the financial information that will be provided to the stockholders and
others, the systems of internal controls, and all audit processes.
In discharging its oversight responsibilities regarding the audit
process, the audit committee:
- reviewed and discussed the audited financial statements with
management;
- discussed with the independent accountants the material required to be
discussed by Statement on Auditing Standards No. 61, as currently in effect;
and
- reviewed the written disclosures and the letter from the independent
accountants required by the Independence Standards Board's Standard No. 1, as
currently in effect, and discussed with the independent accountants any
relationships that may impact their objectivity and independence.
Based upon the review and discussions referred to above, the audit
committee recommended to the board of directors that the audited financial
statements be included in the company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2004, as filed with the Securities and Exchange
Commission.
Members of the Audit Committee
David E. Jackson, Chairman
Thomas N. Amonett
Thomas L. Cassidy
-19-
Limitation on Incorporation by Reference
Notwithstanding any reference in prior or future filings of Reunion
Industries with the SEC which purports to incorporate this proxy statement by
reference into another filing, such incorporation shall not include any
material included herein under the captions "Management Information -
Compensation Committee Report", "Other Information - Common Stock Performance
Graph" or "Other Information - Audit Committee Report".
Form 10-K
The Company?s Annual Report on Form 10-K for the year ended December 31,
2004 (as filed with the SEC, but excluding [most of] the exhibits to such Form
10-K), which report also serves as the Company?s Annual Report to Stockholders
for 2004, has been mailed with this proxy statement to each stockholder
entitled to vote at the Annual Meeting. Reunion Industries will furnish to
stockholders any excluded exhibits to its Annual Report on Form 10-K upon
written request and upon payment of a fee limited to Reunion Industries'
reasonable expenses in furnishing such exhibit. Written requests may be
directed to Reunion Industries, Inc., attn: Investor Relations, 11 Stanwix
Street, Suite 1400, Pittsburgh, Pennsylvania 15222.
Deadline for Stockholder Proposals
Although it has not yet determined a date for its annual meeting of
stockholders for the year ending December 31, 2005 (the ?2005 annual
meeting?), Reunion Industries intends to hold the meeting in mid-2006.
Reunion Industries will inform stockholders of the date of such meeting in a
future periodic or current report to be filed with the SEC. Proposals of
stockholders of Reunion Industries intended to be presented at the 2005 annual
meeting must be received by the Secretary of Reunion Industries at 11 Stanwix
Street, Pittsburgh, Pennsylvania 15222 by no later than January 12, 2006. Any
proposal received after January 12, 2006 will not be included in the Company's
proxy statement for the 2005 annual meeting. If such proposals are in
compliance with all of the requirements of the SEC?s rules, including SEC Rule
14a-8, and other applicable law, they will be included in the proxy statement
and set forth on the form of proxy issued for the 2005 annual meeting of
stockholders.
If a stockholder intends to present a proposal at the 2005 annual meeting
of stockholders without seeking to include the proposal in Reunion Industries'
proxy statement, management proxies will be entitled to use the discretionary
voting authority that will be contained in the proxies for the 2005 annual
meeting of stockholders to vote on the stockholder's proposal at such meeting.
Proxies
The persons designated as proxies to vote shares at the meeting intend to
exercise their judgment in voting such shares on other matters that may
properly come before the meeting. Management does not expect that any matters
other than those referred to in this proxy statement will be presented for
action at the meeting.
By Order of the Board of Directors
/s/ John M. Froehlich
----------------------------------
John M. Froehlich
Secretary
May 12, 2005
-20-
APPENDIX A
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the
Corporation to any governmental body or the public; the Corporation?s
systems of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have established;
and the Corporation?s auditing, accounting and financial reporting
processes generally. Consistent with this function, the Audit Committee
should encourage continuous improvement of, and should foster adherence
to, the corporation?s policies, procedures and practices at all levels.
The audit committee?s primary duties and responsibilities are to:
* Serve as an independent and objective party to monitor the
Corporation?s financial reporting process and internal control
system.
* Review and appraise the audit efforts of the Corporation?s
independent accountants and internal auditing department.
* Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV. of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and
free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a
member of the Committee. [Restate here, Board?s definition of
?independence.?] All members of the Committee shall have a working
familiarity with basic finance and accounting practices, and at least one
member of the Committee shall have accounting or related financial
management expertise. Committee members may enhance their familiarity
with finance and accounting by participating in educational programs
conducted by the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chair is elected by the full
Board, the members of the committee may designate a Chair by majority
vote of the full Committee membership.
-21-
III. MEETINGS
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Committee should meet at least annually with
management, the director of the internal auditing department and the
independent accountants in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be
discussed privately. In addition, the Committee or at least its Chair
should meet with the independent accountants and management quarterly to
review the Corporations financials consistent with IV.4. below).
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization?s annual financial statements and any reports or
other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered
by the independent accountants.
3. Review the regular internal reports to management prepared by the
internal auditing department and management?s response.
4. Review with financial management and the independent accountants the 10-
Q prior to its filing or prior to the release of earnings. The Chair of
the Committee may represent the entire Committee for purposes of this
review.
Independent Accountants
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Corporation to determine the accountants? independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
7. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization?s financial statements.
Financial Reporting Processes
8. In consultation with the independent accountants and the internal
auditors, review the integrity of the organization?s financial reporting
processes, both internal and external.
9. Consider the independent accountants? judgments about the quality and
appropriateness of the Corporation?s accounting principles as applied in
its financial reporting.
-22-
10. Consider and approve, if appropriate, major changes to the Corporation?s
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditing
department.
Process Improvement
11. Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountants and the
internal auditors regarding any significant judgments made in management
preparation of the financial statements and the view of each as to
appropriateness of such judgments.
11. Following completion of the annual audit, review separately with each of
management, the independent accountants and the internal auditing
department any significant difficulties encountered during the course of
the audit, including any restrictions on the scope of work or access to
required information.
12. Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
13. Review with the independent accountants, the internal auditing
department and management the extent to which changes or improvements in
financial or accounting practices, as approved by the Audit committee,
have been implemented. (This review should be conducted at an
appropriate of time subsequent to implementation of changes or
improvements, as decided by the Committee.)
Ethical and Legal Compliance
14. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
15. Review management?s monitoring of the Corporation?s compliance with the
organization?s Ethical Code, and ensure that management has the proper
review system in place to ensure that Corporation?s financial
statements, reports and other financial information disseminated to
governmental organizations, and the public satisfy legal requirements.
16. Review activities, organizational structure, and qualifications of the
internal audit department.
17. Review, with the organization?s counsel, legal compliance matters
including corporate securities trading policies.
18. Review, with the organization?s counsel, any legal matter that could
have a significant impact on the organization?s financial statements.
19. Perform any other activities consistent with this Charter, the
Corporation?s By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
-23-
REVOCABLE PROXY
REUNION INDUSTRIES, INC.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 21, 2005
The undersigned stockholder of Reunion Industries, Inc. (the "Company")
hereby appoints Charles E. Bradley, Sr., Kimball J. Bradley, and Joseph C.
Lawyer, or any of them, attorneys and proxies of the undersigned; each with
full power of substitution, to vote on behalf of the undersigned at the Annual
Meeting of Stockholders of the Company to be held at the Company's offices, 11
Stanwix Street, Pittsburgh, Pennsylvania 15222, on Tuesday, July 13, 2004 and
any postponements or adjournments of such meeting, as set forth below, and in
their discretion to consider and act upon such other business as may properly
be presented at such meeting (and any postponements or adjournments thereof).
Please be sure to sign below and date this Proxy.
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| Date |
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| |
| |
----Stockholder sign above-----------Co-holder (if any) sign above-----
With- For All
1. The election as directors (except as For hold Except
indicated below) of all nominees. [_] [_] [_]
THOMAS N. AMONETT THOMAS L. CASSIDY JOSEPH C. LAWYER
CHARLES E. BRADLEY, SR. DAVID E. JACKSON JOHN G. POOLE
KIMBALL J. BRADLEY
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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2. To transact such other business as may properly come before the meeting
or any adjournment(s) thereof.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING:------------->[_]
The Board of Directors recommends a vote "FOR" the election as directors
of all nominees. This proxy will be voted as specified or, if no choice is
specified, said proxies will vote "FOR" the election of all such nominees and
will consider and act upon such other business as may be properly presented to
the meeting.
The above signed hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and the Proxy Statement furnished herewith.
Signature should agree with name printed hereon. If Stock is held in the
name of more than one person, EACH joint owner should sign. Executors,
administrators, trustees, guardians and attorneys should indicate the capacity
in which they sign. Attorneys should submit powers of attorney.
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^DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.^
REUNION INDUSTRIES, INC.
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| PLEASE ACT PROMPTLY |
| SIGN, DATE & MAIL YOUR PROXY CARD TODAY |
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IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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