SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(3) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Reunion Industries, Inc.
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(Name of Registrant as Specified In Its Charter)
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REUNION INDUSTRIES, INC.
11 Stanwix Street - Suite 1400
Pittsburgh, Pennsylvania 15222
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held July 18, 2006
Notice is hereby given that the Annual Meeting of the Stockholders of
Reunion Industries, Inc., a Delaware corporation ("the Company"), will be held
at the Company's offices, 11 Stanwix Street, Pittsburgh, Pennsylvania 15222 on
July 18, 2006, 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
May 22, 2006, 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
June 6, 2006
REUNION INDUSTRIES, INC.
PROXY STATEMENT
General
This proxy statement is being mailed to stockholders commencing on or
about June 5, 2006 in connection with the solicitation by the Board of
Directors of Reunion Industries, Inc., a Delaware corporation (the
"Company"), of proxies to be voted at its Annual Meeting of Stockholders to be
held at the Company's offices, 11 Stanwix Street, Pittsburgh, Pennsylvania
15222 at 10:00 a.m., local time, on Tuesday, July 18, 2006 (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.
The Company will pay the costs of soliciting proxies pursuant to this
Proxy Statement. The Company 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 May 22, 2006, the record date for the determination of stockholders
entitled to vote at the Annual Meeting, there were 17,419,019 outstanding
shares of common stock of the Company. 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 the Company, you have a right to vote on certain
business matters affecting the Company. 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.
- 1 -
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 the Company'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, May 22, 2006, 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 the Company's 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 the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 2006. You also may request the voting results by written
request to Reunion's Secretary.
PROPOSAL: ELECTION OF DIRECTORS
At the Annual Meeting, the Company's stockholders 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 the Company, and would hold office
until their successors are duly elected and qualified at the Company's next
annual meeting of stockholders 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 the Company and have previously been elected by the stockholders.
Mr. Charles E. Bradley, Sr. is the father of Mr. Kimball J. Bradley. The
Company 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 62 1992
Charles E. Bradley, Sr. Director, 76 1995
Kimball J. Bradley Director, Chairman & CEO 40 2000
Thomas L. Cassidy(1)(2) Director 77 1995
David E. Jackson(1)(2) Director 47 2003
Joseph C. Lawyer Director and Vice Chairman 61 2000
John G. Poole Director 63 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 the Company 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 the Company 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. He is also Chairman of the Board of
TODCO, a provider of contract oil and gas drilling services, and serves on the
Board of Directors and is a member of the Audit Committee of Bristow Group,
Inc., a global provider of helicopter services. Both TODCO and Bristow are
listed on the New York Stock Exchange.
- 3 -
CHARLES E. BRADLEY, SR. became a director of the Company on June 20, 1995
and was appointed its President and Chief Executive Officer on October 26,
1995. He became Chairman effective March 16, 2000 and served in that capacity
until March 2, 2006 when he resigned his officership as Chairman and CEO. He
continues to serve as a director of the Company. 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 the Company 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.
KIMBALL J. BRADLEY became President and Chief Operating Officer of the
Company effective May 1, 2000. Effective March 2, 2006, the Board of
Directors elected him Chairman of the Board and Chief Executive Officer. Mr.
Bradley continues to serve as President of the Company. He was Executive Vice
President of Operations of the Company following the Chatwins Group merger and
was a Senior Vice President of Chatwins Group from August 1998 until the
merger. Mr. Bradley is the son of Charles E. Bradley, Sr.
THOMAS L. CASSIDY became a director of the Company 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.
DAVID E. JACKSON became a director of the Company 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 the Company effective May 1,
2000. He was President and Chief Operating Officer of the Company 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 the Company 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
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.
Board and Committee Activity
During 2005, the Board held three regularly scheduled meetings, its Audit
Committee held four meetings and its Compensation Committee held two meetings.
Each of the directors attended all of the meetings of the Board and of each
committee on which he served during 2005, except that Mr. Amonett and Mr.
Cassidy each missed one meeting of the Audit Committee, although not the same
meeting. The Company expects the directors to attend its annual meetings of
stockholders. All directors attended the last meeting, held on June 21, 2005.
- 4 -
The Company'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 the Company'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. Jackson (chairman), Amonett and
Cassidy assists the Board in assuring that the Company's accounting and
reporting practices 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 has adopted a written charter for
the Audit Committee.
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 or individual directors
should direct recommendations and other communications to the Board of
Directors or individual director, as applicable, at the Company's principal
offices.
Director Compensation
Directors not otherwise compensated by the Company 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 2005 for service in all Board capacities aggregated $86,000. 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 2005.
The Company's non-employee directors are eligible for awards under the
1998 and 2004 Stock Option Plans. During the year ended December 31, 2005,
the Company granted options to purchase 40,000 shares of the Company's common
stock to non-employee directors.
- 5 -
Key Person Insurance
The Company has split-dollar life insurance arrangements with directors
Charles E. Bradley, Sr., Joseph C. Lawyer and John G. Poole. Under such
arrangements, the Company maintains three universal type life insurance
policies on Mr. Bradley, Sr. and his wife, two such policies on Mr. Poole and
one such policy on Mr. Lawyer. The Company is entitled to be reimbursed for
the premiums it pays on such policies from either the death benefits under the
policies or from their cash surrender values. If the proceeds from the
policies are insufficient to reimburse the Company in full, each of the
insured director is obligated to pay to the Company the amount of the
shortfall with respect to the policies on his life. The Company did not pay
any premiums on such policies in 2005.
Compensation Committee Interlocks and Insider Participation
Messrs. Amonett, Cassidy and Jackson are members of the Compensation
Committee. Mr. Amonett served as the Company's 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 the
Company in the oil and gas operating business, from July 1, 1992 until May 24,
1996.
MANAGEMENT INFORMATION
Executive Officers
Currently, the following individuals serve as our executive officers:
Name Age Position
----------------------- --- ----------------------------------------------
Kimball J. Bradley 40 Director, Chairman, Chief Executive Officer
President and Chief Operating
Officer
John M. Froehlich 63 Executive Vice President, Chief Financial
Officer and Secretary
Jack T. Croushore 61 President, CP Industries Division
The business experience of Kimball J. Bradley 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 the Company on March 16, 2000. He became Secretary on
June 12, 2002. He was a Vice President of Chatwins Group from 1989 until its
merger into the Company on March 16, 2000 and served as its Chief Financial
Officer and Treasurer from 1988 until the merger.
JACK T. CROUSHORE became Division President of the CP Industries division
during 1988. He was also a Vice President of Chatwins Group from 1988 to 2000.
- 6 -
Executive Compensation
The following table reflects all forms of compensation for services to
the Company by our executive officers for the last three completed fiscal
years. There was no other annual compensation for any executive officer of
the Company in the last three completed fiscal years.
Long-Term
Compensation
------------
Annual Compensation Shares
Name and Position as ------------------- Underlying All Other
of December 31,2005 Year Salary Bonus(1) Stock Option Compensation
----------------------- ---- -------- -------- ------------ ------------
Charles E. Bradley, Sr. 2005 $308,352 $ 0 100,000 $ 900(2)
Chairman and Chief 2004 $377,107 $ 0 0 $ 930(2)
Executive Officer 2003 $400,024 0 100,000 1,020(2)
Joseph C. Lawyer 2005 77,083 0 0 900(3)
Vice Chairman 2004 143,750 0 0 930(3)
2003 200,000 0 0 1,020(3)
Kimball J. Bradley 2005 371,349 0 300,000 30,201(4)
President and Chief 2004 372,884 0 0 30,147(4)
Operating Officer 2003 366,819 0 400,000 25,285(4)
John M. Froehlich 2005 219,064 0 100,000 11,275(5)
Executive Vice 2004 219,064 0 0 11,305(5)
President of Finance 2003 210,001 0 0 8,801(5)
and Chief Financial
Officer
Jack T. Croushore 2005 209,000 0 100,000 6,900(6)
President,CPI Division 2004 209,000 0 0 7,020(6)
2003 209,000 0 50,000 7,020(6)
(1) There have been no bonuses awarded in the periods presented.
(2) Consists solely of healthcare benefit credits.
(3) Consists solely of healthcare benefit credits.
(4) Includes payments of life insurance premiums of $19,496, $19,412 and
$14,460 in 2005, 2004 and 2003, respectively, car allowances of $9,805 in each
of those same years and healthcare benefit credits of $900, $930 and $1,020 in
those same years, respectively.
(5) Includes payments of life insurance premiums of $10,375, $10,375 and
$7,781 in 2005, 2004 and 2003, respectively, and healthcare benefit credits of
$900, $930 and $1,020 in those same years, respectively.
(6) Includes a car allowance of $6,000 in 2005, 2004 and 2003 and healthcare
benefit credits of $900 in 2005, $930 in 2004 and $1,020 in 2003.
- 7 -
Option Grants
During the year ended December 31, 2005, the Company granted options to
employees to purchase 760,000 shares of the Company's common stock and options
to non-employee directors to purchase 40,000 such shares. 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 shares of the Company's common stock granted to the named executive
officers during the fiscal year ended December 31, 2005.
Individual Grants(1) Projected
------------------------------------- Realizable Value
% of Total 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) 13.16% $0.200 6/21/10 $ 3,000 $ 9,000
Kimball J Bradley 300,000(3) 39.47% $0.200 6/21/10 $ 9,000 $27,000
John M. Froehlich 100,000(4) 13.16% $0.180 6/21/15 $11,300 $28,700
Jack T. Croushore 50,000(4) 13.16% $0.180 6/21/15 $11,300 $28,700
(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 the Company's common
stock on the grant date. The remaining options have an exercise price of 100%
of the fair market value on the grant date. The Company 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 the
Company'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 the Company's future stock price performance and are not
necessarily indicative of the Company's future stock performance. If the
price of the Company's common stock does not increase above the exercise
price, no value will be realized from these options.
(3) These options were granted on June 21, 2005. Assuming continued
employment with the Company, these options have a 5-year term. These options
vest one-third at grant date and in one-third increments on the first and
second anniversary dates of their issuance.
(4) These options were granted on June 21, 2005. Assuming continued
employment with the Company, these options have a 10-year term. These options
vest one-third at grant date and in one-third increments on the first and
second anniversary dates of their issuance.
- 8 -
Option Exercises and Year-End Values
There were no options exercised in the year ended December 31, 2005.
Equity Compensation Plan Information
The following table summarizes information with respect to options under
the Company's equity compensation plans on December 31, 2005:
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 1,370,000 -
========= =========
Weighted-average exercise price per share
of outstanding options $0.25 -
========= =========
Number of common stock shares remaining available
for future issuance under equity
compensation plans (excluding outstanding
options) 354,600 -
========= =========
Long-Term Incentive Plan or Defined Benefit Plan
The Company has no long-term incentive plan and has no defined benefit
plan applicable to any of its executive officers.
Compensation Committee Report
The Compensation Committee 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.
Each year the Compensation Committee reviews the compensation levels of
the Company's executive officers and other key employees as deemed appropriate
by the committee. The compensation level of the CEO is determined based on a
variety of factors that, due to the financial difficulties that the Company
has experienced, are more skewed toward qualitative and not quantitative
results. Such qualitative factors included, but were not limited to,
relationships with independent sources in the financial arena, knowledge and
experience in the acquisition and divestiture of companies and debt
restructurings and overall tax and accounting expertise. Compensation levels
paid to executive officers in the year 2005 were deemed to be appropriate for
the circumstances in which the Company operates.
Members of the Compensation Committee
Thomas N. Amonett, Chairman
Thomas L. Cassidy,
David E. Jackson
- 9 -
OWNERSHIP INFORMATION
Security Ownership of Certain Beneficial Owners and Management
The Company had 17,419,019 shares of common stock outstanding as of May
22, 2006. 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 the Company, (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 and Address Shares Owned Shares
-------------------------------- ------------------------- -----------
Kimball J. Bradley 6,629,802 (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 (2) 24.7%
c/o Stanwich Consulting Corp.
62 Southfield Ave.
One Stamford Landing
Stamford, CT 06902
Stanwich Financial Services Corp. 1,651,697 (3) 9.5%
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 (2)(4) 8.6%
One Rye Road
Portchester, NY 10573
Amanda Poole, David Poole and
Jesse Poole 1,499,747 (4) 8.6%
c/o John G. Poole
One Rye Road
Portchester, NY 10573
LCC Capital Master Fund, Ltd. 1,714,093 (5) 9.0%
c/o Lampe Conway 7 Co., LLC
730 Fifth Avenue
New York, NY 10019
John G. Poole 839,428 (6) 4.8%
Charles E. Bradley, Sr. 478,810 (7)(8)(9) 2.7%
Joseph C. Lawyer 712,131 (10) 4.1%
Thomas N. Amonett 88,000 (11) <1.0%
Thomas L. Cassidy 100,167 (12) <1.0%
David E. Jackson 45,464 (13) <1.0%
John M. Froehlich 145,626 (14) <1.0%
Jack T. Croushore 311,855 (15) 1.8%
All Officers and Directors as
a group (9 individuals) 9,351,283 (16) 50.9%
(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 in which he holds a 14.17% interest and (b)
500,000 shares subject to options exercisable currently or within 60 days.
(2) 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
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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.
(3) 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.
(4) 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.
(5) Represents shares subject to currently exercisable warrants.
(6) Includes 139,808 shares as to which Mr. Poole has voting rights, but not
dispositive rights, 71,990 currently exercisable warrants and 10,000 shares
subject to options exercisable currently or within 60 days.
(7) 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.
(8) 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.
(9) 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.
Also includes 133,333 shares subject to options exercisable currently or
within 60 days.
(10) Includes 3,698 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. Also includes 380 currently exercisable
warrants and 10,000 shares subject to options exercisable currently or within
60 days.
(11) Includes 10,000 shares subject to options exercisable currently or
within 60 days.
(12) Includes 27,805 currently exercisable warrants and 10,000 shares subject
to options exercisable currently or within 60 days.
(13) Includes 15,464 currently exercisable warrants and 30,000 shares subject
to options exercisable currently or within 60 days.
(14) Includes 4,951 currently exercisable warrants and 66,667 shares subject
to options exercisable currently or within 60 days.
(15) Includes 116,667 shares subject to options exercisable currently or
within 60 days.
(16) Includes 120,590 currently exercisable warrants and 820,000 shares
subject to options exercisable currently or within 60 days.
- 11 -
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers and persons who own beneficially
more than 10% of the Company's common stock to file with the SEC and the
AMEX initial reports of beneficial ownership and reports of changes in
beneficial ownership of the common stock of the Company. Directors, officers
and persons owning more than 10% of the common stock of the Company are
required to furnish the Company with copies of all such reports. Based solely
on the Company'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 2005, the Company 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 2005,
except that Mr. Bradley, Sr. filed a Form 4 late for one transaction and Mr.
Kimball J. Bradley filed a Form 4 late for two transactions.
OTHER INFORMATION
Common Stock Performance Graph
The following graph illustrates the yearly percentage change in the
cumulative total stockholder return on the Company's common stock, compared
with the cumulative total return on the 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:
Fiscal Year Ending
----------------------------------------------
2000 2001 2002 2003 2004 2005
------ ------ ------ ------ ------ ------
Reunion Industries, Inc. 100.00 22.46 10.87 41.30 26.09 24.64
AMEX Composite Index 100.00 93.08 76.08 102.98 119.00 128.79
Industrial Manufacturing
Index 100.00 79.89 60.23 106.40 113.24 159.98
- 12 -
(1) Tabular data assumes that the value of the investment in the Company's
common stock and each index was $100.00 at December 31, 2000 and that all
dividends, if any, were reinvested. The Company paid no dividends in any
period presented.
Certain Relationships and Related Transactions
Related Parties
Reunion Industries, Inc. - The Company is a publicly traded Delaware
corporation headquartered in Pittsburgh, Pennsylvania. Charles E. Bradley,
Sr. ("Mr. C. Bradley") was Chairman of the Board and Chief Executive Officer
of the Company until March 2, 2006. Kimball Bradley ("Mr. K. Bradley") was
President, Chief Operating Officer, a director of the Company until March 2,
2006. On March 2, 2006, Mr. C. Bradley resigned as Chairman of the Board and
CEO, and Mr. K. Bradley was elected Chairman of the Board and CEO. Mr. K.
Bradley also retained his office of President. Mr. C. Bradley continues to
serve as a director of the Company.
Stanwich Financial Services Corp. ("SFSC") - SFSC is a privately held,
currently inactive, corporation that was formerly in the structured settlement
business. SFSC is owned 100% by Mr. C. Bradley. Prior to May 10, 2004, this
company 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. C. 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.
Transactions and Balances
SFSC Indebtedness
At December 31, 2005 the Company was indebted to SFSC in the amount of
$4,995,000, including $705,000 of interest, of which $429,000 accrued in 2005.
Pursuant to an agreement entered into in March 2006, the Company settled this
indebtedness for $1,125,000, which the Company has paid. The settlement will
result in a gain on debt extinguishment of $4,000,000 in the second quarter of
2006.
Cash Surrender Value of Life Insurance Policies
The Company pays the premiums on life insurance policies covering Mr. C.
Bradley and two directors, Mr. Joseph C. Lawyer ("Mr. Lawyer") and Mr. John G.
Poole ("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, 2005 and 2004, premiums paid by the
Company in excess of the cash surrender values of the policies totaled
$891,000 and $919,000, respectively, and are included in due from related
parties in the Company's consolidated balance sheets.
Mr. C. Bradley Note Payable
In January 2003, Mr. C. Bradley made a $500,000 payment on behalf of the
Company to Shaw NapTech, Inc. This payment was applied to reduce by $500,000
the Company's indebtedness to Shaw NapTech, Inc. To evidence this loan by Mr.
C. 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. In June 2005, Mr. C. Bradley agreed to
- 13 -
forgive $98,400 of the interest payable to him and to convert an additional
$21,600 of such interest payable to him into 120,000 shares of the Company's
common stock. At December 31, 2005 and 2004, accrued and unpaid interest
related to this note totaled $30,000 and $100,000, respectively, and are
included in due to related parties in the Company's consolidated balance
sheets. Mr. C. Bradley's rights under this note are subordinate to the
Company's indebtedness to Wachovia Bank, N.A. ("Wachovia").
Mr. C. Bradley Guarantees
To facilitate the closing of the Company's refinancing with Wachovia in
December 2003, Mr. C. Bradley provided a personal guarantee of $1.5 million of
the revolving credit portion of the Wachovia Loan Facility. In exchange for
his guarantee, the Board of Directors approved a 2% per annum guarantee fee to
be paid to Mr. C. Bradley during the time period such guarantee is in place.
Amounts payable under this arrangement were offset against an employee advance
previously received by Mr. C. Bradley and owed to the Company. Such advance
totaled $58,000 at the time of the refinancing, which advance has now been
fully recovered by offsets of $25,699, $29,917 and $2,384 in years ended
December 31, 2005, 2004 and 2003, respectively. As of December 31, 2005,
$4,219 is included in Due to related party in the Company's consolidated
balance sheet.
Mr. K. 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 Wachovia in
December 2003, Mr. K. 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 Wachovia facilities. In
exchange for his guarantees, the Board of Directors approved 2% per annum
guarantee fees to be paid to Mr. K. Bradley during the time period such
guarantees are in place. In June 2005, Mr. K. Bradley agreed to forgive
$211,560 of the guarantee fees payable to him and to convert an additional
$46,440 of such guarantee fees payable to him into 278,000 shares of the
Company's common stock. At December 31, 2005 and 2004, $105,351 and $184,841,
respectively, of such fees are included in Due to related parties in the
Company's consolidated balance sheets.
INDEPENDENT PUBLIC ACCOUNTANT FEES AND SERVICES
Mahoney Cohen & Company, CPA, P.C. have been the Company's auditors for
the more than two years. Fees paid by the Company for professional services
rendered by Mahoney Cohen & Company, CPA, P.C. for the years ended December
31, 2005 and 2004 totaled $194,000 and $181,000, respectively. Such fees
related solely to audit fees for professional services rendered for the audit
of the Company's 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.
All services provided by Mahoney Cohen & Company, CPA, P.C. are subject
to pre-approval by the Audit Committee. The Audit Committee may authorize the
Committee chairman to approve services in the event there is a need for such
approval prior to the next full Audit Committee meeting. However, the Audit
Committee must review such approval at its next scheduled meeting. The Audit
Committee gives due consideration to whether approval of any proposed service
will have a detrimental impact on the auditor's independence.
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.
- 14 -
Audit Committee Report
The Audit Committee of the Board of Directors has furnished the following
report on its activities during 2005:
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 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,
SEC rules and other profession standards; and
- reviewed the written disclosures and the letter from the independent
accountants required by the Independence Standards Board's Standards No. 1,
No. 2 and No. 3, 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, 2005, as filed with the SEC.
Members of the Audit Committee
David E. Jackson, Chairman
Thomas N. Amonett
Thomas L. Cassidy
Limitation on Incorporation by Reference
Notwithstanding any reference in prior or future filings of the Company
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".
- 15 -
Form 10-K
The Company's Annual Report on Form 10-K for the year ended December 31,
2005, which report also serves as the Company's Annual Report to Stockholders
for 2005, has been mailed with this proxy statement to each stockholder
entitled to vote at the Annual Meeting. The Company 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 the Company's 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, 2006 (the "2006 annual
meeting"), the Company intends to hold the meeting in mid-2007. The Company
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 the
Company intended to be presented at the 2006 annual meeting must be received
by the Company's Secretary at 11 Stanwix Street, Pittsburgh, Pennsylvania
15222 by no later than February 2, 2007. Any proposal received after February
2, 2007 will not be included in the Company's proxy statement for the 2006
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 2006 annual meeting of stockholders.
If a stockholder intends to present a proposal at the 2006 annual meeting
of stockholders without seeking to include the proposal in the Company's proxy
statement, management proxies will be entitled to use the discretionary voting
authority that will be contained in the proxies for the 2006 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
June 6, 2006
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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 JULY 18, 2006
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 18, 2006 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
as said proxies deem advisable on such other matters as may properly come
before the meeting and any postponements and adjournments thereof.
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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