UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss. 240.14a-12
NUCO2 INC.
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(Name of Registrant as Specified in Its Charter)
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NUCO2 INC.
2800 S.E. MARKET PLACE
STUART, FLORIDA 34997
October 31, 2007
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
NuCO2 Inc. on Tuesday, December 4, 2007, beginning at 10:00 a.m., local time, at
the Hutchinson Island Marriott Beach Resort and Marina, 555 N.E. Ocean
Boulevard, Stuart, Florida 34996. I look forward to greeting those of you who
are able to attend.
At the Annual Meeting, you will be asked to elect two directors and to
ratify the appointment of Ernst & Young LLP as our independent registered public
accounting firm for fiscal 2008. Your Board of Directors recommends that all
shareholders vote in favor of the election of the nominated directors and for
ratification of the appointment of Ernst & Young LLP as our independent
registered public accounting firm for fiscal 2008.
Your vote is important. Whether or not you plan to attend the Annual
Meeting and regardless of the number of shares you own, after reading the
enclosed Proxy Statement, please vote. Many shareholders have a choice of voting
by telephone, over the Internet or by using a traditional proxy card or voting
instruction form. Check your proxy materials to see which options are available
to you.
We value your support as owners of our company, and we thank you in
advance for your participation.
Sincerely,
/s/ Michael E. DeDomenico
Michael E. DeDomenico
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
NUCO2 INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 4, 2007
-------------------------
The Annual Meeting of Shareholders (the "Annual Meeting") of NuCO2 Inc.
(the "Company") will be held on Tuesday, December 4, 2007, beginning at 10:00
a.m., local time, at the Hutchinson Island Marriott Beach Resort and Marina, 555
N.E. Ocean Boulevard, Stuart, Florida 34996, for the following purposes:
1. To elect two directors to Class I of the Company's Board of
Directors, to serve for three-year terms expiring in 2010;
2. To ratify the appointment of Ernst & Young LLP as our independent
registered public accounting firm for fiscal 2008; and
3. To transact such other business as may properly come before the
Annual Meeting.
Only holders of record of the Company's common stock at the close of
business on October 19, 2007, the record date, are entitled to notice of, and to
vote at, the Annual Meeting or any adjournment or postponement thereof.
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD OR VOTING INSTRUCTION
FORM AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE OR SUBMIT YOUR PROXY BY
TELEPHONE OR THE INTERNET, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
TO ENSURE YOUR REPRESENTATION. ANY RECORD HOLDER WHO IS PRESENT AT THE ANNUAL
MEETING MAY VOTE IN PERSON INSTEAD OF BY PROXY, THEREBY CANCELING ANY PREVIOUS
PROXY.
By Order of the Board of Directors
/s/ Eric M. Wechsler
Eric M. Wechsler
SECRETARY
October 31, 2007
NUCO2 INC.
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 4, 2007
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GENERAL
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of NuCO2 Inc., a Florida
corporation (the "Company"), for use at the Annual Meeting of Shareholders of
the Company (the "Annual Meeting") to be held on Tuesday, December 4, 2007,
beginning at 10:00 a.m., local time, at the Hutchinson Island Marriott Beach
Resort and Marina, 555 N.E. Ocean Boulevard, Stuart, Florida 34996, and at any
adjournment or postponement thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders.
This Proxy Statement and the accompanying proxy card or voting instruction
form are first being mailed to shareholders of the Company entitled to vote at
the Annual Meeting on or about October 31, 2007.
OUTSTANDING SECURITIES AND VOTING RIGHTS
Only holders of record of the Company's common stock, $.001 par value
("Common Stock"), at the close of business on October 19, 2007, the record date
(the "Record Date"), are entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, 14,767,969 shares of Common Stock were outstanding,
each of which is entitled to one vote on all matters properly submitted at the
Annual Meeting.
A majority of the outstanding shares of Common Stock present in person or
represented by proxy constitutes a quorum for the transaction of business at the
Annual Meeting. Pursuant to Florida law, abstentions and broker "non-votes" are
counted as present for purposes of determining the presence of a quorum.
However, abstentions are treated as present and entitled to vote, but are not
counted as votes cast "for" or "against" any matter. Broker "non-votes" occur
when a person holding shares through a bank or brokerage firm account does not
provide instructions as to how his or her shares should be voted and the broker
does not exercise discretion to vote those shares on a particular matter. A
broker "non-vote" on a matter is considered not entitled to vote on that matter
and thus is not counted in determining whether a matter requiring approval of a
majority of the shares present and entitled to vote has been approved by a
plurality of the shares present and entitled to vote has been voted. Thus,
abstentions and broker "non-votes" have the same affect as votes cast against
proposals requiring a majority or greater percentage of the outstanding shares
entitled to vote but do not have any affect on proposals requiring a majority or
plurality of the shares present and entitled to vote.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the Annual Meeting. Such inspector(s) shall determine
the number of shares of Common Stock represented at the Annual Meeting, the
existence of a quorum and the validity and effect of proxies, and shall receive,
count and tabulate ballots and votes and determine the results thereof.
PROXY VOTING
Shares for which proxy cards or voting instruction forms are properly
executed and returned, or properly voted via the Internet or telephonically,
will be voted at the Annual Meeting in accordance with the directions noted
thereon or, in the absence of directions, will be voted "FOR" the election of
the nominees to the Board of Directors and "FOR" ratification of the appointment
of Ernst & Young LLP as our independent registered public accounting firm for
fiscal 2008. It is not expected that any matters other than those referred to in
this Proxy Statement will be brought before the Annual Meeting. If, however,
other matters are properly presented, the persons named as proxies will vote in
accordance with their discretion with respect to such matters.
The manner in which your shares may be voted by proxy depends on how your
shares are held. If you own shares of record, meaning that your shares of Common
Stock are represented by certificates or book entries in your name so that you
appear as a shareholder on the records of our share transfer agent, Continental
Stock Transfer & Trust Company, a proxy card for voting those shares will be
included with this Proxy Statement.
If you own shares through a bank or brokerage firm account, you may
instead receive a voting instruction form with this Proxy Statement, which you
may use to instruct how your shares should be voted. Just as with a proxy, you
may vote those shares by completing, signing and returning the voting
instruction form in the enclosed envelope. Many banks and brokerage firms have
arranged for Internet or telephonic voting of shares and provide instructions
for using those services on the voting instruction form. If your bank or
brokerage firm uses Broadridge Investor Communication Solutions, you may vote
your shares via the Internet at www.proxyvote.com or by calling the toll-free
number on your voting instruction form.
ATTENDANCE AND VOTING AT THE ANNUAL MEETING
If you own shares of record, you may attend the Annual Meeting and vote in
person, regardless of whether you have previously voted on a proxy card. If you
own shares through a bank or brokerage firm account, you may attend the Annual
Meeting, but in order to vote your shares at the meeting, you must obtain a
"legal proxy" from the bank or brokerage firm that holds your shares. You should
contact your account representative to learn how to obtain a "legal proxy." We
encourage you to vote your shares in advance of the Annual Meeting date by one
of the methods described above, even if you plan on attending the Annual
Meeting. You may change or revoke your proxy at the Annual Meeting as described
below even if you have already voted.
REVOCATION
Any shareholder holding shares of record may revoke a previously granted
proxy at any time before it is voted by delivering to the Secretary of the
Company, at its principal executive offices located at 2800 S.E. Market Place,
Stuart, FL 34997, a written notice of revocation or a duly executed proxy card
bearing a later date or by attending the Annual Meeting and voting in person.
Any shareholder holding shares through a bank or brokerage firm may revoke a
previously granted proxy or change previously given voting instructions by
contacting the bank or brokerage firm, or by obtaining a legal proxy from the
bank or brokerage firm and voting at the Annual Meeting.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Common Stock as of the Record Date, by (i) each director, (ii) each of the
executive officers named in the Summary Compensation Table below, (iii) all
directors and executive officers as a group and (iv) each person known to the
Company to be the beneficial owner of more than five percent of the Common
Stock.
Amount and
Nature of
Beneficial Percent of
Name and Address of Beneficial Owner (1) Ownership (2) Class (3)
---------------------------------------- ------------ ---------
Michael E. DeDomenico......................... 462,354 (4) 3.1
Robert L. Frome............................... 110,929 (5) *
Steven J. Landwehr............................ 17,500 (6) *
Daniel Raynor................................. 68,500 (7) *
J. Robert Vipond.............................. 27,500 (8) *
Christopher White............................. 17,800 (9) *
Robert R. Galvin.............................. 204,818 (10) 1.4
William Scott Wade............................ 236,500 (11) 1.6
2
Eric M. Wechsler.............................. 65,500 (12) *
Avenir Corporation............................ 2,210,448 (13) 15.0
1919 Pennsylvania Avenue
Washington, DC 20006
Federated Investors, Inc...................... 1,721,291 (13) 11.7
1001 Liberty Avenue
Pittsburgh, PA 15222
BAMCO, INC.................................... 1,500,000 (13) 10.2
767 Fifth Avenue, 49th Floor
New York, NY 10153
Shamrock Partners Activist Value Fund, L.L.C.. 1,191,892 (14) 8.1
4444 Lakeside Drive
Burbank, CA 91505
T. Rowe Price Associates, Inc. ............... 1,149,200 (15) 7.8
100 East Pratt Street
Baltimore, MD 21202
TimesSquare Capital Management LLC............ 1,036,500 (13) 7.0
1177 Avenue of the Americas, 39th Floor
New York, NY 10036
Janus Capital Management LLC.................. 999,225 (13) 6.8
151 Detroit Street
Denver, CO 80206
All directors and executive officers as a group
(9 persons)................................... 1,211,401 (16) 7.7
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*Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
the Company, 2800 S.E. Market Place, Stuart, FL 34997.
(2) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended ("Exchange Act") and
unless otherwise indicated, represents shares for which the beneficial
owner has sole voting and investment power and for beneficial ownership
purposes includes any options or other rights to subscribe for Common
Stock which are exercisable within sixty (60) days of the Record Date.
(3) Each beneficial owner's percentage ownership is determined by assuming
that options, warrants and convertible securities that are held by such
person (but not those held by any other person) and that are exercisable
within sixty (60) days of the Record Date have been exercised.
(4) Includes 391,003 shares issuable upon exercise of stock options.
(5) Includes 8,000 shares owned by Frome & Co., a limited partnership of which
Mr. Frome is the general partner, 7,000 shares owned by Mr. Frome's
daughter with respect to which Mr. Frome disclaims beneficial ownership,
3,550 shares owned by Mr. Frome's spouse with respect to which Mr. Frome
disclaims beneficial ownership and 32,167 shares issuable upon exercise of
stock options.
(6) Represents shares issuable upon exercise of stock options.
(7) Includes 63,500 shares issuable upon exercise of stock options.
(8) Represents shares issuable upon exercise of stock options.
(9) Includes 17,500 shares issuable upon exercise of stock options.
(10) Includes 201,786 shares issuable upon exercise of stock options.
(11) Includes 235,000 shares issuable upon exercise of stock options.
(12) Includes 62,500 shares issuable upon exercise of stock options
(13) As reported in Form 13F for the quarter ended June 30, 2007.
(14) As reported in Amendment No. 2 to Schedule 13D dated October 18, 2007.
(15) As reported in Schedule 13G dated February 14, 2007. These securities are
owned by various individual and institutional investors including T. Rowe
Price Small-Cap Stock Fund, Inc. (which owns 900,000 shares, representing
6.1% of the shares outstanding), for which T. Rowe Price Associates, Inc.
("Price Associates") serves as investment advisor with power to direct
investments and/or sole power to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be the beneficial owner of such securities;
however, Price Associates expressly disclaims that it is, in fact, the
beneficial owner of such securities.
3
(16) Includes 1,048,456 shares issuable upon exercise of stock options held by
directors and executive officers.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Under the terms of the Company's Articles of Incorporation, as amended to
date, the Board of Directors is currently comprised of six members divided
equally into three classes of directors. Each year, one class of directors is
elected to serve a three-year term. The current term of the Class I directors
terminates on the date of the Annual Meeting.
The Company has nominated each of Robert L. Frome and Steven J. Landwehr
(the "Nominees") to be elected as a Class I director at the Annual Meeting to
serve for a term of three years. Each of the Nominees now serves as a Class I
director of the Company. The Board of Directors has no reason to believe that
either of the Nominees will refuse or be unable to accept election; however, in
the event that a Nominee is unable to accept election or if any other unforeseen
contingencies should arise, each proxy that does not direct otherwise will be
voted for such other person as may be designated by the Board of Directors.
Unless instructed otherwise, the persons named on the accompanying proxy card
will vote for the election of the Nominees for election to the Board of
Directors, to serve for a term of three years and until his successor is duly
elected and qualified.
The term of each class of directors and the names of the directors in each
class appear in the below table:
Class Term Names of Nominees/directors
----- ---- ---------------------------
Class I Term expires at the 2007 Annual Meeting Robert L. Frome
Steven J. Landwehr
Class II Term expires at the 2008 Annual Meeting Michael E. DeDomenico
Daniel Raynor
Class III Term expires at the 2009 Annual Meeting J. Robert Vipond
Christopher White
The nominees for election to the Board of Directors who receive the
greatest number of votes cast for the election of directors by the shares
present, in person or by proxy, shall be elected directors. Holders of Common
Stock are not allowed to cumulate their votes in the election of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH NOMINEE.
BOARD OF DIRECTORS
MICHAEL E. DEDOMENICO, age 60, has been Chief Executive Officer of the
Company since September 2000 and a director since June 2000. In October 2001,
Mr. DeDomenico was elected Chairman of the Board. From March 1998 to July 2000,
Mr. DeDomenico was president and chief executive officer of Praxair
Distribution, Inc., a North American industrial gases company and a subsidiary
of Praxair Inc. Mr. DeDomenico had been employed by Union Carbide Corp. in
various capacities since 1969 and when Praxair was spun-off by Union Carbide in
1992, he was named president of Praxair Canada. The following year he was
appointed president of Praxair Europe and in March 1998 was named president and
chief executive officer of Praxair Distribution. Mr. DeDomenico is a director of
Interline Brands, Inc., a leading direct marketer and distributor of
maintenance, repair and operations products. Mr. DeDomenico has a B.S. degree in
economics and finance from Hofstra University and an M.B.A. degree from Georgia
State University.
ROBERT L. FROME, age 68, has been a director since December 1995. Mr.
Frome has been engaged in the practice of law for more than the past five years
as a senior partner of the law firm of Olshan Grundman Frome Rosenzweig &
Wolosky LLP. Mr. Frome is a director of Healthcare Services Group, Inc., the
nation's largest provider of housekeeping services to long-term healthcare
facilities. Mr. Frome has a B.S. degree from New York University, an L.L.B.
degree from Harvard University and an L.L.M. degree from New York University.
4
STEVEN J. LANDWEHR, age 59, has been a director since July 2005. For over
30 years, Mr. Landwehr held various senior management positions at the 3M
Company, most recently as executive vice president of its transportation
business from October 2002 until July 2005. Previous positions at the 3M Company
included vice president and general manager of the automotive aftermarket
division from 1997 to 2002 and business director of the Europe/Middle East
commercial graphics division. Mr. Landwehr has both B.S. and M.B.A. degrees from
Minnesota State University.
DANIEL RAYNOR, age 47, has been a director since February 1998. Mr. Raynor
is a managing general partner of The Argentum Group, a private equity firm, a
position he has held since 1987. Mr. Raynor is a director of COMFORCE
Corporation and ReSearch Pharmaceutical Services, Inc., both publicly-traded
companies. In addition, Mr. Raynor is also a director of several privately held
companies. He received a B.S. degree in economics from The Wharton School,
University of Pennsylvania.
J. ROBERT VIPOND, age 61, has been a director since March 2004. Since
March 2005, Mr. Vipond has been vice president - finance and chief financial
officer of Crane Co., a diversified manufacturer of engineered industrial
products. Mr. Vipond had been an independent consultant since 2001. From 2000 to
2001, he was a member of Impala Partners, LLC, a financial advisory firm. From
1994 to 2000, Mr. Vipond was vice president and controller of Praxair, Inc.
Prior to joining Praxair, Mr. Vipond was a financial executive with the General
Electric Company for 21 years. Mr. Vipond has a B.S./B.A. degree and an M.B.A.
degree from the University of Nebraska at Omaha.
CHRISTOPHER WHITE, age 61, has been a director since May 2005. Since May
2007, Mr. White has been president of Mint Condition of Georgia, Inc., a
commercial cleaning and janitorial services company. From November 2005 to April
2007, Mr. White was president of RDM Technologies Inc., a leading manufacturer
of production equipment to the beverage industry. Previously, he was for 13
years an executive of the Suntory Water Group, a beverage company, serving as
president and chief executive officer from 2000 to 2004. Mr. White has also held
executive positions with Coca-Cola Enterprises, Inc. as well as Seagram
Company's wine division, E&J Gallo Winery, the Drackett Company division of
Bristol Myers and Proctor & Gamble Distributing Company. Mr. White serves on the
Board of Advisors of BC Beverage Group, LLC, a start-up sports drink company.
Mr. White has a B.A. degree from Columbia University.
COMPENSATION OF DIRECTORS
The Company pays each non-employee director $5,000 per quarter for
services provided as a member of the Board of Directors of the Company and
reimbursement for reasonable expenses incurred in attending meetings of the
Board of Directors. In addition to each non-employee director's quarterly
payment, the Company also pays the Chairman of the Audit Committee $1,500 per
quarter, the Chairman of the Compensation and Stock Option Committee $1,000 per
quarter, and each non-employee director receives an attendance fee of $1,000 for
each meeting of the Board of Directors attended in person. Each non-employee
director also participates in the 2005 Non-Employee Directors Stock Option Plan.
Pursuant to the 2005 Non-Employee Directors Stock Option Plan, each person first
elected or appointed as a non-employee director is granted automatically, on the
date of such initial election or appointment, an option to purchase 20,000
shares of Common Stock at an exercise price per share equal to the fair market
value of the Common Stock on such date. In addition, on the date of each
successive anniversary of the date on which a person was first elected or
appointed as a non-employee director, such non-employee director is
automatically granted an additional option to purchase 5,000 shares of Common
Stock at an exercise price per share equal to the fair market value of the
Common Stock on such date.
5
The following table sets forth all compensation awarded to, earned by, or
paid to each director of the Company with respect to the fiscal year ended June
30, 2007.
DIRECTOR COMPENSATION
Fees Earned or
Name Paid in Cash Option Awards (1) Total
---- ------------ ----------------- -----
Robert L. Frome $ 24,000 $ 35,224 $ 59,224
Steven J. Landwehr $ 24,000 $100,524 $124,524
Daniel Raynor $ 27,000 $ 44,128 $ 71,128
J. Robert Vipond $ 30,000 $ 63,703 $ 93,703
Christopher White $ 24,000 $107,471 $131,471
----------------------
(1) Represents the grant date fair value of option award recognized for
financial statement reporting purposes under FAS 123R, and not amounts
actually received. See "Note 9(g) Shareholders' Equity - Share-Based
Compensation" to the Company's financial statements set forth in the
Company's Form 10-K for the fiscal year ended June 30, 2007, for assumptions
made in determining FAS 123R values.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
During fiscal 2007, there were five meetings of the Board of Directors.
All directors attended at least 75% of the meetings of the Board of Directors
and the committees of which they were members. In addition, from time to time,
directors acted by unanimous written consent.
The Board of Directors has determined that all of the directors other than
Mr. DeDomenico, the Company's Chairman and Chief Executive Officer, are
"independent" under the listing standards of The Nasdaq Global Market
("Nasdaq"). The Board of Directors has established a Compensation and Stock
Option Committee, an Audit Committee, and a Nominating and Corporate Governance
Committee. Each of the Compensation and Stock Option Committee, Audit Committee
and Nominating and Corporate Governance Committee is composed entirely of
independent directors and is responsible to the full Board of Directors. The
functions performed by these committees are summarized below:
COMPENSATION AND STOCK OPTION COMMITTEE. The Compensation and Stock Option
Committee approves the salaries of the executive officers of the Company and
determines the term and grant of stock options in accordance with the Company's
2005 Executive Management Stock Option Plan and administers such plan. See
"Compensation Discussion and Analysis." During fiscal 2007, there were four
meetings of the Compensation and Stock Option Committee. In addition, from time
to time during fiscal 2007, the Compensation and Stock Option Committee acted by
unanimous written consent. The Compensation and Stock Option Committee does not
have a charter. The members of the Compensation and Stock Option Committee are
Messrs. Frome, Landwehr and Raynor. Mr. Raynor serves as Chairman of the
Compensation and Stock Option Committee.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION. During fiscal 2007, Mr. Frome participated in deliberations of
the Board of Directors concerning executive officer compensation. Mr. Frome is a
member of the law firm of Olshan Grundman Frome Rosenzweig & Wolosky LLP, which
law firm was retained by the Company as outside legal counsel during fiscal
2007. Such firm billed the Company approximately $123,000 for fees and expenses
for fiscal 2007.
AUDIT COMMITTEE. The Audit Committee makes recommendations to the Board of
Directors regarding the selection and retention of independent auditors, reviews
the scope and results of the audit and reports the results to the Board of
Directors. In addition, the Audit Committee reviews the adequacy of internal
accounting, financial and operating controls and reviews the Company's financial
reporting compliance procedures. The Audit Committee Charter is available on the
Company's website at www.nuco2.com. See "Report of the Audit Committee." The
6
Audit Committee met ten times during fiscal 2007. The members of the Audit
Committee are Messrs. Raynor, Vipond and White. Mr. Vipond serves as Chairman of
the Audit Committee.
After reviewing the qualifications of the current members of the Audit
Committee, and any relationships they may have with us that might affect their
independence from the Company, the Board of Directors has determined that (1)
all current Audit Committee members are "independent" as that concept is defined
in Section 10A of the Exchange Act, (2) all current Audit Committee members are
"independent" as defined in the applicable listing standards of Nasdaq, (3) all
current Audit Committee members are financially literate, and (4) J. Robert
Vipond qualifies as an "audit committee financial expert" under the applicable
rules promulgated under the Exchange Act. In making the determination as to Mr.
Vipond's status as an audit committee financial expert, the Board of Directors
determined that he has accounting and related financial management expertise
within the meaning of the aforementioned rules as well as the listing standards
of Nasdaq.
As required by the rules of the Securities and Exchange Commission, the
Audit Committee has established procedures for the receipt, retention and
treatment of complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, as well as the confidential and
anonymous submission of information, written or oral, by Company employees
regarding questionable accounting or auditing matters.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and
Corporate Governance Committee's primary responsibilities include:
o Assisting the Board of Directors by identifying the individuals qualified
to become Board members and to recommend to the Board the director
nominees for the next annual meeting of shareholders;
o Recommending to the Board of Directors candidates for membership on Board
committees;
o Recommending to the Board of Directors the Corporate Governance
Guidelines applicable to the Company; and
o Taking a leadership role in shaping the corporate governance of the
Company.
The Company's Board of Directors believes strongly that good corporate
governance accompanies and greatly aids the Company's long-term business
success. This success has been the direct result of the Company's key business
strategies and the highest business standards. The Board strongly supports these
key strategies, advising on design and implementation, and seeing that they
guide the Company's operations. To accomplish its strategic goals, the Company
has developed and follows a program of corporate governance. The Board has
adopted a set of Corporate Governance Guidelines and its Nominating and
Corporate Governance Committee is responsible for reviewing and reassessing the
Guidelines on an annual basis and making recommendations to the Board concerning
changes to the Guidelines. The Guidelines, as well as the Nominating and
Corporate Governance Committee Charter, are available on the Company's website
at www.nuco2.com.
The members of the Nominating and Corporate Governance Committee, which
was established by the Board of Directors in December 2005, are Messrs.
Landwehr, Raynor and White. During fiscal 2007, there was one meeting of the
Nominating and Corporate Governance Committee. Mr. Landwehr serves as Chairman
of the Nominating and Corporate Governance Committee.
While there are no formal procedures for shareholders to recommend
nominations beyond those set forth on page 16 of this Proxy Statement, the Board
of Directors will consider shareholder recommendations. Such recommendations
should be addressed to the Chairman of the Company's Nominating and Corporate
Governance Committee.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board of Directors accepts communications sent to the Board of
Directors (or to specified individual directors) by shareholders of the Company.
Shareholders may communicate with the Board of Directors (or with specified
individual directors) by writing to the Company at NuCO2 Inc., Attention:
Secretary, 2800 S.E. Market Place, Stuart, Florida 34997. All written
communications received in such manner from shareholders of the Company shall be
forwarded promptly to the members of the Board of Directors to whom the
communication is directed or, if the communication is not directed to any
particular member(s) of the Board of Directors, the communication will be
forwarded promptly to all members of the Board of Directors.
7
CODE OF ETHICS
The Board of Directors has adopted a Code of Ethics that is applicable to
all of our directors, officers and employees, including our Chief Executive
Officer, Chief Financial Officer and principal accounting officer. Our Code of
Ethics is available through our website at www.nuco2.com, or in print to any
shareholder who requests it from: Investor Relations, NuCO2 Inc., 2800 S.E.
Market Place, Stuart, FL 34997.
DIRECTOR ATTENDANCE AT ANNUAL MEETINGS OF SHAREHOLDERS
Absent extenuating circumstances, each director is expected to attend
annual meetings of shareholders. Five of the Company's six directors attended
the 2006 Annual Meeting of Shareholders.
REPORT OF THE AUDIT COMMITTEE
In accordance with a written charter adopted by the Audit Committee of the
Company's Board of Directors, the Audit Committee assists the Board of Directors
in fulfilling its responsibility for oversight of the quality and integrity of
the Company's financial reporting processes. The Audit Committee Charter is
available on the Company's website at www.nuco2.com. Management has the primary
responsibility for the financial statements and the reporting process, including
the system of internal controls. The independent auditors are responsible for
performing an independent audit of the Company's financial statements in
accordance with generally accepted auditing standards and for issuing a report
thereon. The independent auditors are also responsible for expressing opinions
on management's assessment of the effectiveness of the Company's internal
control over financial reporting and on the effectiveness of the Company's
internal control over financial reporting.
In this context, the Audit Committee has met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's financial statements were prepared in accordance
with generally accepted accounting principles, and the Audit Committee has
reviewed and discussed the financial statements with management and the
independent auditors. The Audit Committee discussed with the independent
auditors matters required to be discussed by Statement of Auditing Standards No.
61 (Communications with Audit Committees), as amended.
In addition, the Audit Committee has discussed with the independent
auditors the auditors' independence from the Company and its management,
including the matters in the written disclosures and the letter required by the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and also considered whether the provision of the non-audit related
services described below under "Independent Public Accountants" is compatible
with maintaining their independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their respective audits. The Audit Committee meets
with the independent auditors, with and without management present, to discuss
the results of their examinations, the evaluations of the Company's internal
controls and the overall quality of the Company's accounting principles.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board of Directors
approved, that the audited financial statements of the Company for the three
years ended June 30, 2007 be included in the Company's Annual Report on Form
10-K for the period ended June 30, 2007 for filing with the Securities and
Exchange Commission.
Members of the Audit
Committee
Daniel Raynor
J. Robert Vipond (Chairman)
Christopher White
8
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2008
The Audit Committee of the Board of Directors has appointed Ernst & Young
LLP as our independent registered public accounting firm for fiscal 2008,
subject to ratification by our shareholders. Although not required by law, the
Board of Directors is seeking shareholder ratification of its selection. If
ratification is not obtained, the Audit Committee intends to continue the
employment of Ernst & Young LLP at least through fiscal 2008. A representative
of Ernst & Young LLP is expected to be present at the Annual Meeting, will have
the opportunity to make a statement if they desire to do so, and are expected to
be available to respond to appropriate questions.
On October 12, 2006, the Audit Committee of the Board of Directors
dismissed Margolin, Winer & Evens LLP ("MWE") as our independent registered
public accounting firm and appointed Ernst & Young LLP as our new independent
registered public accounting firm. MWE's accountant's reports on the financial
statements of the Company for the fiscal years ended June 30, 2006 and 2005 did
not contain an adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope, or accounting principles. There were no
other reportable events or disagreements with MWE to report in response to Item
304(a) of Regulation S-K.
The affirmative vote of the holders of a majority of the shares present in
person or by proxy and entitled to vote thereon is required to ratify Ernst &
Young LLP's appointment as the Company's independent registered public
accounting firm.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG LLP'S APPOINTMENT AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR FISCAL 2008.
EXECUTIVE OFFICERS
The Company's current executive officers, and certain information
regarding them (other than Mr. DeDomenico, whose information is included under
"Board of Directors") are listed below.
ROBERT R. GALVIN, age 46, has been Chief Financial Officer and Executive
Vice President of the Company since November 2002. From 1998 to October 2002,
Mr. Galvin was senior vice president and chief financial officer of Independent
Propane Company, a retail propane distribution company, and from 1993 to 1998,
Mr. Galvin was director of finance of TA Instruments, Inc. From 1983 to 1993,
Mr. Galvin was with KPMG Peat Marwick, including two years as senior manager in
the executive office - department of professional practice. Mr. Galvin is a
Certified Public Accountant and has a B.S. degree in accounting from Villanova
University.
WILLIAM SCOTT WADE, age 50, has been Chief Operating Officer and Executive
Vice President of the Company since June 2003. From May 2002 until May 2003, Mr.
Wade was Executive Vice President - Operations of the Company. From 2000 to
2001, Mr. Wade was vice president of operations, quality and regulatory affairs
of Medsource Technologies, a provider of manufacturing and supply chain
solutions for the medical devices industry and from 1998 to 2000, Mr. Wade was
vice president, operations at Medtronic AVE. Prior thereto, Mr. Wade was
director of U.S./Pacific operations at Ohmeda, Inc., a division of The BOC
Group, Inc., in Singapore from 1994 to 1998 and operations manager at Texas
Instruments from 1979 to 1994. Mr. Wade has a B.S. degree in mechanical
engineering from Virginia Polytechnic Institute.
ERIC M. WECHSLER, age 48, has been General Counsel and Secretary of the
Company since January 1998. Prior to joining the Company, Mr. Wechsler, since
1990, was a corporate associate at the law firm of Olshan Grundman Frome
Rosenzweig & Wolosky LLP, the Company's legal counsel. Mr. Wechsler has a J.D.
degree from Fordham University, an M.B.A. degree from New York University and a
B.A. degree from Northwestern University.
9
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Company's principal executive officer, principal financial officer,
and the other most highly compensated executive officers of the Company whose
salary and bonus exceeded $100,000 with respect to the fiscal year ended June
30, 2007 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Non-Equity
Option Incentive Plan All Other
Name and Principal Position Salary Bonus Awards Compensation (1) Compensation Total
--------------------------- ------ ----- ------ ---------------- ------------ -----
Michael E. DeDomenico $432,600 $ 58,000 -- $184,115 $ 43,753 (2) $718,468
Chairman,
Chief Executive Officer
Robert R. Galvin $297,413 $ 40,000 -- $ 90,413 $ 61,664 (3) $489,490
Chief Financial Officer,
Treasurer
William Scott Wade $297,413 $ 40,000 -- $ 90,413 $ 14,899 (4) $442,725
Chief Operating Officer
Eric M. Wechsler $205,485 $ 12,000 -- $ 43,727 $ 2,171 (5) $263,383
General Counsel, Secretary
----------------------
(1) Represents amounts paid under the Company's fiscal 2007 Management
Incentive Plan ("MIP"). The MIP is discussed in further detail on page 13
under "Cash Bonuses."
(2) Consists of disability insurance premiums and car allowance in the amount
of $25,000, tax reimbursements in the amount of $15,572 thereon, and
401(k) matching contributions in the amount of $3,181.
(3) Consists of commuting expenses in the amount of $36,000, tax
reimbursements in the amount of $22,158 thereon, and 401(k) matching
contributions in the amount of $3,506.
(4) Consists of car allowance in the amount of $7,800, tax reimbursements in
the amount of $3,730 thereon, and 401(k) matching contributions in the
amount of $3,369.
(5) Consists of 401(k) matching contributions.
GRANTS OF PLAN-BASED AWARDS
The following table sets forth information concerning plan-based awards
granted to the Named Executive Officers during the fiscal year ended June 30,
2007 under the MIP. The amounts actually earned by the Named Executive Officers
appear in the Summary Compensation Table under the "Non-Equity Incentive Plan
Compensation" column.
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)
----------------------------------------
Name Threshold Target Maximum
---- --------- ------ -------
Michael E. DeDomenico $ 32,913 $302,820 $618,755
Robert R. Galvin $ 16,163 $148,707 $303,855
William Scott Wade $ 16,163 $148,707 $303,855
Eric M. Wechsler $ 7,813 $ 71,920 $146,875
----------------------
10
(1) The amounts shown in the columns are threshold, target and stretch goal
(maximum) potential amounts that were payable under the MIP. The MIP is
discussed in further detail on page 13 under "Cash Bonuses."
The following table sets forth the outstanding option awards held by the
Named Executive Officers at June 30, 2007.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards
-----------------------------------------------------------------------------------
Equity Incentive
Plan Awards:
Number of Number of Number of
Securities Securities Securities
Underlying Underlying Underlying
Unexercised Unexercised Unexercised
Options Options Unearned Option Exercise Option
Name Exercisable Unexercisable Options Price ($/Share) Expiration Date
---- ----------- ------------- ------- --------------- ---------------
Michael E. DeDomenico 131,250 93,750 (2) $24.00 10/19/2015
45,000 15,000 (1) $25.67 6/29/2015
40,000 $19.27 6/27/2014
20,000 $14.68 1/20/2014
100,000 $12.05 9/12/2011
54,753 $6.75 6/30/2010
Robert R. Galvin 87,500 62,500 (2) $24.00 10/19/2015
37,500 12,500 (1) $25.67 6/29/2015
27,000 $19.27 6/27/2014
13,000 $14.68 1/20/2014
25,000 $8.77 8/13/2013
31,786 $8.69 10/20/2012
William Scott Wade 87,500 62,500 (2) $24.00 10/19/2015
37,500 12,500 (1) $25.67 6/29/2015
27,000 $19.27 6/27/2014
13,000 $14.68 1/20/2014
70,000 $12.27 5/12/2012
Eric M. Wechsler 26,250 18,750 (2) $24.00 10/19/2015
11,250 3,750 (1) $25.67 6/29/2015
6,700 $19.27 6/27/2014
3,300 $14.68 1/20/2014
10,000 $8.77 8/13/2013
5,000 $8.00 9/22/2012
--------------------------
(1) Vests on June 30, 2008.
(2) This option is performance based and vests in accordance with the terms of the Company's 2005 Executive
Management Stock Option Plan.
11
The following table provides information regarding the pre-tax value
realized from the exercise of stock options by the Named Executive Officers
during the fiscal year ended June 30, 2007.
Option Awards
--------------------------------------
Number of Shares
Acquired on Value Realized on
Name Exercise Exercise (1)
---- -------- ------------
Michael E. DeDomenico 85,366 $1,664,389
Robert R. Galvin 60,000 $ 978,875
William Scott Wade 50,000 $ 687,212
Eric M. Wechsler 5,000 $ 84,681
--------------
(1) Represents the difference between the option exercise price and the
market value on the date of exercise, times the number of shares
acquired, without deducting any taxes paid by the employee.
COMPENSATION DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis discusses the material
elements of compensation for the Named Executive Officers. The Compensation and
Stock Option Committee of the Board of Directors of the Company (for purposes of
this section, the "Compensation Committee"), which is composed entirely of
independent directors, reviews and approves the compensation of the Named
Executive Officers.
COMPENSATION OBJECTIVES
The Company's primary objectives are to retain the best qualified people
and ensure that they are properly motivated to contribute to the Company's
success over the long term. Accordingly, the Compensation Committee, in
establishing the components and levels of compensation for the Company's
officers, including the Named Executive Officers, seeks to provide financial
incentives in the form of base salary, and cash bonuses and equity compensation
in order to align the interests of the officers more closely with those of the
shareholders of the Company and to motivate such executives to increase
shareholder value by improving corporate performance and profitability.
COMPONENTS OF EXECUTIVE COMPENSATION FOR FISCAL 2007
For the fiscal year ended June 30, 2007, the components of compensation
for the Named Executive Officers were:
o Base salary;
o Cash bonuses;
o Equity compensation; and o Perquisites and other personal benefits.
BASE SALARY
The Company provides each of the Named Executive Officers with a base
salary to compensate him for services rendered during the fiscal year. For Named
Executive Officers with an employment agreement during fiscal 2007, base salary
is the amount specified in the employment agreement. At the beginning of fiscal
2007, each of the Company's officers, including the Named Executive Officers was
awarded a five percent (5%) increase in base salary. The base salaries paid for
fiscal 2007 appear in the Summary Compensation Table under the "Salary" column.
12
CASH BONUSES
The Company offers each of the Company's officers, including the Named
Executive Officers, an opportunity to earn additional cash compensation in the
form of bonuses that are awarded if the Company attains targeted performance
goals established by the Compensation Committee. The Company believes that
making a significant portion of officer compensation subject to the Company
attaining performance goals motivates the officers to increase their efforts on
behalf of the Company. The Company also believes that it is appropriate that the
Company's officers receive lower or no bonuses when the Company does not attain
its targeted performance goals and higher compensation when the Company exceeds
such goals.
Annually, the Compensation Committee creates a Management Incentive Plan
("MIP") for the Company's officers, including the Named Executive Officers, that
establishes a range of financial targets based on the Company's budget, which is
approved by the Company's Board of Directors. For all participants in the MIP,
including the Named Executive Officers, the Compensation Committee established
EBITDA (earnings before interest, taxes, depreciation and amortization) and
return on capital as the fiscal 2007 performance measures. Each Named Executive
Officer has a MIP target cash bonus amount which is a percentage of the
executive's base salary. For Named Executive Officers with an employment
agreement during fiscal 2007, the MIP target cash bonus is the amount specified
in the employment agreement. For fiscal 2007, Mr. DeDomenico's MIP target cash
bonus award was set at 70% of his base salary, Mr. Galvin's MIP target cash
bonus was set at 50% of his base salary, Mr. Wade's MIP target cash bonus was
set at 50% of his base salary and Mr. Wechsler's MIP target cash bonus was set
at 35% of his base salary. Bonus payouts for the year are determined by the
Company's financial results for the year relative to the pre-determined
performance measures. At the end of the fiscal year, the Compensation Committee
has discretion to adjust an award payout and for the fiscal year ended June 30,
2007, adjusted the award payouts for the Company's officers, including the Named
Executive Officers. The cash incentive bonuses paid for fiscal 2007 appear in
the Summary Compensation Table under the "Non-Equity Incentive Plan
Compensation" column. MIP target cash incentive bonus levels were not achieved
by any of the Named Executive Officers.
In addition, the Compensation Committee may, from time to time, award
special cash bonuses to the Named Executive Officers. In January 2007, the
Compensation Committee awarded special cash bonuses to each of the Named
Executive Officers. These bonuses appear in the Summary Compensation Table under
the "Bonus" column.
EQUITY COMPENSATION
The Compensation Committee has the ability to grant equity compensation to
officers of the Company, including the Named Executive Officers, under the
Company's 2005 Executive Management Stock Option Plan (the "2005 Plan"). The
2005 Plan permits the issuance of incentive stock options and non-qualified
stock options. The purpose of the 2005 Plan is to strengthen the Company's
ability to attract and retain persons of training, experience and ability and to
provide an incentive to such persons who will be responsible for the Company's
development and financial success. Stock options align employee incentives with
shareholders because options have value only if the stock price increases over
time. The Company's 10-year options, granted at the fair market value on the
date of grant, encourage employees to focus on long-term growth. In addition,
options are intended to help retain key employees because they are expected to
vest over three to five years in accordance with earnings per share targets
established annually by the Board of Directors. The three to five year vesting
also helps keep employees focused on long-term performance.
During fiscal 2007, no stock options were granted to the Named Executive
Officers. Pursuant to the 2005 Plan, on October 20, 2005 (during fiscal 2006),
each of the Named Executive Officers was granted a stock option. In accordance
with the terms of the 2005 Plan, none of the Named Executive Officers is
eligible for an additional grant until 2008. As a result of the Company's
earnings per share performance and in accordance with the terms of the 2005
plan, in fiscal 2007, 33% of the stock option vested and became exercisable and
in fiscal 2006, 25% of the stock option vested and became exercisable. Pursuant
to the terms of the 2005 Plan, the Compensation Committee adjusted the original
earnings per share target established for fiscal 2007 to reflect the Company's
new strategic growth plan adopted in January 2007.
POLICY ON GRANTING STOCK OPTIONS. In fiscal 2007, the Company established
a written policy on granting stock options under the 2005 Plan and the Company's
2005 Employee Stock Option Plan. The policy provides who has authority for
granting stock options, the procedure for granting awards and how the date of
grant and exercise prices are determined.
13
PERQUISITES AND OTHER PERSONAL BENEFITS
The Company provides limited perquisites and personal benefits to its
Named Executive Officers that the Compensation Committee believes are reasonable
and consistent with its overall compensation program to better enable the
Company to attract and retain superior employees for key positions. The
Compensation Committee periodically reviews the levels of perquisites and other
personal benefits provided to the Named Executive Officers. Perquisites and
other personal benefits for fiscal 2007 appear in the Summary Compensation Table
under "All Other Compensation."
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Mr. DeDomenico is employed as Chairman and Chief Executive Officer of the
Company under an amended and restated employment agreement expiring on June 30,
2009 at a base salary of $530,000 per annum effective July 9, 2007. The
employment agreement also provides that Mr. DeDomenico will be a director of the
Company. If Mr. DeDomenico dies or becomes permanently incapacitated, he (or his
beneficiaries) is entitled to receive 100% of his annual base salary and target
cash bonus in twelve equal monthly installments and immediate vesting of all
granted but unvested options. In the event that Mr. DeDomenico's employment is
terminated by the Company in its discretion, he is entitled, in consideration of
a two year non-compete, to two years' annual base salary in six equal quarterly
installments and immediate vesting of all granted but unvested options. In
connection with Mr. DeDomenico's death, permanent disability or termination at
the Company's discretion, he and/or his dependents and beneficiaries will
continue to participate in all medical insurance and related benefits provided
by the Company on the same basis as prior to the date of his termination for the
period of time that he is receiving cash compensation following termination.
Also, in the event that Mr. DeDomenico voluntarily terminates his employment for
"Good Reason" after a "Change in Control" of the Company occurs, Mr. DeDomenico
is entitled to receive a payment equal to two times his then current annual base
salary and target cash bonus payable within sixty days after termination in
consideration of a two year non-compete, continuation of all benefits for one
and one-half years following termination and immediate vesting of all granted
but unvested options.
Mr. Galvin is employed as Executive Vice President and Chief Financial
Officer of the Company under an employment agreement expiring on October 31,
2008 at a base salary of $309,310 per annum effective July 9, 2007. If Mr.
Galvin dies, his beneficiaries are entitled to receive 100% of the compensation
payable to him during the twelve month period preceding his death, payable in
twelve equal monthly payments. If Mr. Galvin becomes permanently incapacitated,
he is entitled to receive 100% of his annual base salary in twelve equal monthly
installments. In the event that Mr. Galvin's employment is terminated by the
Company in its discretion, he is entitled, in consideration of a two year
non-compete, to one year's annual base salary in equal quarterly installments.
In connection with Mr. Galvin's death, permanent disability or termination at
the Company's discretion, he and/or his dependents and beneficiaries will
continue to participate in all medical insurance and related benefits provided
by the Company on the same basis as prior to the date of his termination for one
year following termination. Also, in the event that Mr. Galvin voluntarily
terminates his employment for "Good Reason" after a "Change in Control" of the
Company occurs, Mr. Galvin is entitled to receive a payment equal to 1 1/2 times
his then current annual base salary and target cash bonus payable within sixty
days after termination in consideration of a two year non-compete, continuation
of all benefits for one and one-half years following termination and immediate
vesting of all granted but unvested options.
Mr. Wade is employed as Executive Vice President and Chief Operating
Officer of the Company under an employment agreement expiring on May 31, 2009 at
a base salary of $309,310 per annum effective July 9, 2007. If Mr. Wade dies,
his beneficiaries are entitled to receive 100% of the compensation payable to
him during the twelve month period preceding his death, payable in twelve equal
monthly payments. If Mr. Wade becomes permanently incapacitated, he is entitled
to receive 100% of his annual base salary in twelve equal monthly installments.
In the event that Mr. Wade's employment is terminated by the Company in its
discretion, he is entitled, in consideration of a two year non-compete, to one
year's annual base salary in equal quarterly installments. In connection with
Mr. Wade's death, permanent disability or termination at the Company's
discretion, he and/or his dependents and beneficiaries will continue to
participate in all medical insurance and related benefits provided by the
Company on the same basis as prior to the date of his termination for one year
following termination. Also, in the event that Mr. Wade voluntarily terminates
his employment for "Good Reason" after a "Change in Control" of the Company
occurs, Mr. Wade is entitled to receive a payment equal to 1 1/2 times his then
current annual base salary and target cash bonus payable within sixty days after
termination in consideration of a two year non-compete, continuation of
14
all benefits for one and one-half years following termination and immediate
vesting of all granted but unvested options.
Mr. Wechsler is employed as General Counsel and Secretary of the Company
under an employment agreement expiring on July 30, 2009 at a base salary of
$258,000 per annum effective July 9, 2007. If Mr. Wechsler dies, his
beneficiaries are entitled to receive 100% of the compensation payable to him
during the twelve month period preceding his death, payable in twelve equal
monthly payments. If Mr. Wechsler becomes permanently incapacitated, he is
entitled to receive 100% of his annual base salary in twelve equal monthly
installments. In the event that Mr. Wechsler's employment is terminated by the
Company in its discretion, he is entitled, in consideration of a two year
non-compete, to one year's annual base salary in equal quarterly installments.
In connection with Mr. Wechsler's death, permanent disability or termination at
the Company's discretion, he and/or his dependents and beneficiaries will
continue to participate in all medical insurance and related benefits provided
by the Company on the same basis as prior to the date of his termination for one
year following termination. Also, in the event that Mr. Wechsler voluntarily
terminates his employment for "Good Reason" after a "Change in Control" of the
Company occurs, Mr. Wechsler is entitled to receive a payment equal to his then
current annual base salary and target cash bonus payable within sixty days after
termination in consideration of a two year non-compete, continuation of all
benefits for one year following termination and immediate vesting of all granted
but unvested options.
COMPENSATION COMMITTEE REPORT
The Compensation Committee evaluates and establishes compensation for the
Named Executive Officers and oversees the Company's equity incentive plans, MIP
and benefit and perquisite programs. Management has the primary responsibility
for the Company's financial statements and reporting process, including
disclosure of executive compensation. With this in mind, we have reviewed and
discussed with management the above Compensation Discussion and Analysis. The
Compensation Committee is satisfied that the Compensation Discussion and
Analysis fairly and completely represents the philosophy, intent and actions of
the Compensation Committee with regard to executive compensation. We recommended
to the Board of Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement for filing with the Securities and Exchange
Commission.
The Compensation and Stock Option Committee
Daniel Raynor (Chairman)
Robert L. Frome
Steven Landwehr
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Executive officers, directors and greater than ten percent shareholders are
required by the regulations of the Securities and Exchange Commission to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, the Company believes that during the fiscal year ended
June 30, 2007, its executive officers, directors and greater than ten percent
shareholders complied with all Section 16(a) filing requirements, with the
exception of one sale by Robert L. Frome on November 14, 2006 of 1,013 shares of
Common Stock that was reported on November 17, 2006.
INDEPENDENT PUBLIC ACCOUNTANTS
A representative of Ernst & Young LLP, the Company's independent public
accountants for the fiscal year ended June 30, 2007, is expected to be present
at the Annual Meeting and will be available to answer any appropriate
shareholder questions and will have the opportunity to make a statement if he or
she desires to do so.
Audit Fees. The aggregate fees billed by Ernst & Young LLP for professional
services rendered for the audit of the Company's annual financial statements for
15
the fiscal year ended June 30, 2007, including the audit of the effectiveness of
internal control over financial reporting, and for the reviews of the financial
statements included in the Company's quarterly reports on Form 10-Q for that
fiscal year were approximately $497,000 as compared to approximately $446,000
billed by Margolin, Winer & Evens LLP ("MWE") for the fiscal year ended June 30,
2006.
Audit-Related Fees. There were no audit related fees billed by Ernst & Young LLP
for the fiscal year ended June 30, 2007. MWE billed the Company $22,595 in
connection with accounting consultations related to the audit for the fiscal
year ended June 30, 2006.
Tax Fees. The aggregate fees billed by Ernst & Young LLP for professional
services rendered in connection with the preparation of state and local tax
returns for the fiscal year ended June 30, 2007 were $61,500, as compared to
$61,000 billed by MWE for the fiscal year ended June 30, 2006.
All Other Fees. There were no other fees billed by Ernst & Young LLP for the
fiscal year ended June 30, 2007. For the fiscal year ended June 30, 2006, the
Company paid MWE approximately $21,000 related to the Company's acquisition of
the bulk CO2 beverage carbonation business of Bay Area Equipment Co., Inc. in
September 2005 and the audit of the Company's 401(k) savings and retirement
plan.
The Audit Committee of the Company has considered whether the provision of
the above-described services is compatible with maintaining Ernst & Young LLP's
independence and believes the provision of such services is not incompatible
with maintaining such independence.
The Audit Committee does not currently have, and did not have in
connection with Ernst & Young LLP's engagement in fiscal 2007 or MWE's
engagement in fiscal 2006, any formal pre-approval policies and procedures in
effect. Instead, the Audit Committee specifically pre-approved each of the
services to be rendered by Ernst & Young LLP and MWE in advance of the
performance of any services, including the fees and terms thereof.
SHAREHOLDER PROPOSALS FOR
NEXT ANNUAL MEETING
SHAREHOLDER PROPOSALS FOR INCLUSION IN NEXT YEAR'S PROXY STATEMENT
Proposals which shareholders wish to be considered for inclusion in the
Company's proxy statement and form of proxy for next year's annual meeting of
shareholders must be received by the Secretary of the Company by July 3, 2008
and must comply with the requirements of Rule 14a-8 under the Exchange Act.
OTHER SHAREHOLDER PROPOSALS FOR PRESENTATION AT NEXT YEAR'S ANNUAL MEETING
For any proposal, including a nomination for election to the Board of
Directors, that is not submitted for inclusion in next year's Proxy Statement,
but is instead sought to be presented directly from the floor at the 2008 Annual
Meeting, the Company's Bylaws require, and the Securities and Exchange
Commission rules permit, that the proposal be received by the Secretary of the
Company at the Company's principal executive offices not later than later July
3, 2008. However, if the date of the 2008 Annual Meeting is changed to be more
than 30 days before December 4, 2008, the notice must be received not later than
the 10th day following the date on which notice of the date of the 2008 Annual
Meeting is given to shareholders, or made public, whichever first occurs. The
Bylaws also provide that the notice must contain certain information regarding
the proposal and/or the nomination.
EXPENSES OF SOLICITATION
The accompanying proxy is solicited by, and on behalf of, the Board of
Directors, and the entire cost of such solicitation will be borne by the
Company. It is expected that solicitations will be made primarily by mail, but
officers, directors and employees or representatives of the Company may also
solicit proxies by telephone, telegram or in person, without additional
compensation. The Company will, upon request, reimburse brokerage houses and
persons holding shares in the names of their nominees for their reasonable
expenses in sending solicitation material to their principals.
16
OTHER MATTERS
So far as it is known, there is no business other than that described
above to be represented for action by the shareholders at the forthcoming Annual
Meeting, but it is intended that proxies will be voted upon any other matters
and proposals that may legally come before the Annual Meeting, or any
adjournments thereof, in accordance with the discretion of the persons named
therein.
FORM 10-K
The Company will furnish without charge, a copy of its Annual Report on
Form 10-K (without exhibits) for the fiscal year ended June 30, 2007 as filed
with the Securities and Exchange Commission to shareholders of record as of the
Record Date who make written request to Secretary, NuCO2 Inc., 2800 S.E. Market
Place, Stuart, Florida 34997.
17
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
NUCO2 INC.
PROXY - ANNUAL MEETING OF SHAREHOLDERS, DECEMBER 4, 2007
The undersigned shareholder of NuCO2 Inc., a Florida corporation (the
"Company"), does hereby constitute and appoint Michael E. DeDomenico and Robert
R. Galvin, and each of them, the true and lawful attorneys and proxies with full
power of substitution, for and in the name, place and stead of the undersigned,
to vote all of the shares of Common Stock of the Company that the undersigned
would be entitled to vote if personally present at the 2007 Annual Meeting of
Shareholders of the Company to be held at the Hutchinson Island Marriott Beach
Resort and Marina, 555 N.E. Ocean Boulevard, Stuart, Florida 34996 on Tuesday,
December 4, 2007 at 10:00 a.m., local time, or at any adjournment or
adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes as set
forth below.
1. ELECTION OF CLASS I DIRECTORS:
Nominees: Robert L. Frome and Steven J. Landwehr.
|_| FOR |_| TO WITHOLD AUTHORITY to vote for all nominees.
TO WITHHOLD AUTHORITY to vote for any individual nominee, strike
a line through the name above.
2. Ratification of the appointment of Ernst & Young LLP as the
Company's independent registered public accounting firm for fiscal
2008:
|_| FOR |_| AGAINST |_| ABSTAIN
3. DISCRETIONARY AUTHORITY.
(Continued and to be signed and dated on the reverse side)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2
AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES OR PROXY WITH RESPECT TO
ANY OTHER BUSINESS TRANSACTED AT THE 2007 ANNUAL MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given and
acknowledges receipt of a copy of the Notice of Annual Meeting and Proxy
Statement, both dated October 31, 2007, and a copy of the Company's Annual
Report for the fiscal year ended June 30, 2007.
Please mark, date, sign and mail this proxy in the envelope provided for
this purpose. No postage is required if mailed in the United States.
__________________________________________, 2007
__________________________________________ (L.S.)
__________________________________________ (L.S.)
Signature(s)
Note: Please sign exactly as your name or names appear hereon. When
signing as attorney, executor, administrator, trustee or guardian, please
indicate the capacity in which signing. When signing as joint tenants, all
parties in the joint tenancy must sign. When a proxy is given by a corporation,
it should be signed with full corporate name by a duly authorized officer.
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