def14a
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 þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, For Use of the Commission Only (as permitted by Rule 14a- 6(e)(2) )
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
VIRCO MFG. CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ |
|
No fee required. |
|
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11. |
|
(1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
|
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
|
|
(5) |
|
Total fee paid: |
|
|
|
|
|
o |
|
Fee paid previously with preliminary materials: |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing. |
|
(1) |
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Date Filed: |
|
|
|
|
|
|
|
|
|
|
Virco
Mfg. Corporation
2027 Harpers Way
Torrance, California 90501
To Be Held on June 17,
2008
The 2008 Annual Meeting of Stockholders (Annual
Meeting) of Virco Mfg. Corporation, a Delaware corporation
(the Company), will be held on Tuesday, June 17, 2008, at
10:00 a.m. Pacific Time at 2027 Harpers Way, Torrance,
CA 90501, for the following purposes:
1. To elect three directors to serve until the 2011 Annual
Meeting and until their successors are elected and qualified;
2. To ratify the appointment of Ernst & Young as
the Companys independent auditors for fiscal year 2008;
3. To transact such other business as may properly come
before the Annual Meeting.
These items are more fully described in the following pages,
which are made part of this notice.
The Board of Directors has fixed the close of business on
May 5, 2008, as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournments and postponements thereof. To
ensure that your vote is recorded promptly, please vote as soon
as possible, even if you plan to attend the Annual Meeting. Most
stockholders have three options for submitting their vote:
(1) via the Internet, (2) by phone or (3) by
mail, using the paper proxy card. For further details, see your
proxy card. If you have Internet access, we encourage you to
record your vote on the Internet. It is convenient for you,
and it also saves the Company significant postage and processing
costs.
By Order of the Board of Directors
Robert E. Dose
Secretary
Torrance, California
May 19, 2008
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
5
|
|
|
|
|
7
|
|
|
|
|
15
|
|
|
|
|
16
|
|
|
|
|
16
|
|
|
|
|
16
|
|
|
|
|
17
|
|
|
|
|
18
|
|
|
|
|
19
|
|
Virco
Mfg. Corporation
2027 Harpers Way
Torrance, California 90501
PROXY
STATEMENT
ANNUAL MEETING OF STOCKHOLDERS,
June 17, 2008
GENERAL
INFORMATION
This Proxy Statement is being mailed to stockholders of Virco
Mfg. Corporation, a Delaware corporation (the
Company), on or about May 19, 2008, in
connection with the solicitation by the Board of Directors of
proxies to be used at the 2008 Annual Meeting of Stockholders
(the Annual Meeting) of the Company to be held on
Tuesday, June 17, 2008, at 10:00 a.m. Pacific
Time at 2027 Harpers Way, Torrance, CA 90501, and any and all
adjournments and postponements thereof.
The cost of preparing, assembling and mailing the Notice of the
Annual Meeting, Proxy Statement and form of proxy and the
solicitation of proxies will be paid by the Company. Proxies may
be solicited in person or by telephone, telegraph,
e-mail or
other electronic means by personnel of the Company who will not
receive any additional compensation for such solicitation. The
Company will pay brokers or other persons holding stock in their
names or the names of their nominees for the expenses of
forwarding soliciting material to their principals.
RECORD
DATE AND VOTING
The close of business on May 5, 2008, has been fixed as the
record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. On that date there
were 14,428,662 shares of the Companys common stock,
par value $.01 per share (Common Stock),
outstanding. All voting rights are vested exclusively in the
holders of the Companys Common Stock. Each share of Common
Stock is entitled to one vote on any matter that may be
presented for consideration and action by the stockholders,
except that as to the election of directors, stockholders may
cumulate their votes. Because three directors are to be elected,
cumulative voting means that each stockholder may cast a number
of votes equal to three times the number of shares actually
owned. That number of votes may be cast for one nominee, divided
equally among each of the nominees or divided among the nominees
in any other manner.
In all matters other than the election of directors, the
affirmative vote of the majority of shares of Common Stock
present in person or represented by proxy at the Annual Meeting
and entitled to vote on the subject matter will be the act of
the stockholders. Directors will be elected by a plurality of
the votes of the Common Stock present in person or represented
by proxy at the Annual Meeting. Abstentions will be treated as
the equivalent of a negative vote for the purpose of determining
whether a proposal other than the election of directors has been
adopted and will have no effect for the purpose of determining
whether a director has been elected. Broker non-votes are not
counted for the purpose of determining the votes cast on a
proposal.
Each proxy received will be voted for managements nominees
for election as directors and in accordance with the
recommendations of the Board of Directors contained in this
Proxy Statement, unless the stockholder otherwise directs in his
or her proxy. Where the stockholder has appropriately directed
how the proxy is to be voted, it will be voted according to his
or her direction. Stockholders wishing to cumulate their votes
should make an explicit statement of the intent to cumulate
votes by so indicating in writing on the proxy card.
Stockholders holding shares beneficially in street name who wish
to cumulate votes should contact their broker, trustee or
nominee. Cumulative voting applies only to the election of
directors. For all other matters, each share of Common Stock
outstanding as of the close of business on the record date is
entitled to one vote.
Any stockholder has the power to revoke his or her proxy at any
time before it is voted at the Annual Meeting by submitting
written notice of revocation to the Secretary of the Company at
the Companys principal executive offices located at 2027
Harpers Way, Torrance, California 90501 by appearing at the
Annual Meeting and voting in person or by filing a duly executed
proxy bearing a later date, either in person at the Annual
Meeting, via the Internet, by telephone, or by mail. Please
consult the instructions included with your proxy card.
PROPOSAL 1
ELECTION
OF DIRECTORS
The Certificate of Incorporation of the Company provides for the
division of the Board of Directors into three classes as nearly
equal in number as possible. In accordance with the Certificate
of Incorporation, the Board of Directors has nominated Donald S.
Friesz, Glen D. Parish, and James R. Wilburn to serve as
Class II directors on the Board of Directors with a term
expiring at the 2011 Annual Meeting.
It is intended that the proxies solicited by this Proxy
Statement will be voted in favor of the election of
Messrs. Friesz, Parish, and Wilburn, unless authority to do
so is withheld. Should any of such nominees be unable to serve
as a director or should any additional vacancy occur before the
election (which events are not anticipated), proxies may be
voted for a substitute nominee selected by the Board of
Directors or the authorized number of directors may be reduced.
If for any reason the authorized number of directors is reduced,
the proxies will be voted, in the absence of instructions to the
contrary, for the election of the remaining nominees named in
this Proxy Statement. In the event that any person other than
the nominees named below should be nominated for election as a
director, the proxies may be voted cumulatively for less than
all of the nominees.
The following table sets forth certain information with respect
to each of the nominees, as well as each of the six continuing
directors. The Board of Directors recommends that you vote
FOR the election of the Class II nominees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
Name
|
|
Age
|
|
Principal Occupation
|
|
Since
|
|
Nominees for Directors Whose Terms Expire in 2011:
|
|
|
|
|
|
|
|
|
|
|
Donald S. Friesz
|
|
|
78
|
|
|
Vice President Sales and Marketing of the Company from 1982 to
February 1996. Mr. Friesz has been retired since 1996.
|
|
|
1992
|
|
Glen D. Parish
|
|
|
70
|
|
|
Vice President of the Company and General Manager of the Conway
Division from 1999 to 2004; previously Vice President of Conway
Sales and Marketing. Mr. Parish has been retired since
2004.
|
|
|
1999
|
|
James R. Wilburn
|
|
|
75
|
|
|
Dean of the School of Public Policy, Pepperdine University,
since September 1997; previously Dean of the School of Business
and Management, Pepperdine University (1982-1994); Professor of
Business Strategy, Pepperdine University (1994-1996); Board
member of The Olsen Company since 1990, Independence Bank since
2004, and Electronic Sensor Tech since 2005.
|
|
|
1986
|
|
Continuing Directors Whose Terms Expire in 2009:
|
|
|
|
|
|
|
|
|
|
|
Robert A. Virtue
|
|
|
75
|
|
|
Chairman of the Board and Chief Executive Officer of the Company
since 1990; President of the Company since August 1982.
|
|
|
1956
|
|
Robert K. Montgomery
|
|
|
69
|
|
|
Partner of Gibson, Dunn & Crutcher LLP, a law firm in which
Mr. Montgomery has served as Partner from 1971 to date.
|
|
|
2000
|
|
Donald A. Patrick
|
|
|
83
|
|
|
Vice President and founder of Diversified Business Resources,
Inc. (mergers, acquisitions and business consultants) from 1988
to 2004.
|
|
|
1983
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
Name
|
|
Age
|
|
Principal Occupation
|
|
Since
|
|
Continuing Directors Whose Terms Expire in 2010:
|
|
|
|
|
|
|
|
|
|
|
Douglas A. Virtue
|
|
|
49
|
|
|
Executive Vice President of the Company since December 1997;
previously General Manager of the Torrance Division of the
Company.
|
|
|
1992
|
|
Thomas J. Schulte
|
|
|
51
|
|
|
Managing Partner of RBZ, a public accounting firm from 1997 to
2007. Currently Partner-In-Charge RBZ Audit Group.
|
|
|
2007
|
|
Albert J. Moyer
|
|
|
64
|
|
|
Board member of LaserCard Corporation, Occam Networks Inc.,
Collectors Universe, Inc. and CALAMP Corporation; Chief
Financial Officer for QAD Inc. (1998-2000); President of the
commercial division of the Profit Recovery Group International,
Inc. (2000); consultant to QAD Inc. (2000-2002); Chief Financial
Officer of Allergan Inc. (1995-1998).
|
|
|
2004
|
|
BOARD
COMMITTEES, MEETINGS & COMPENSATION
Meetings
and Compensation
Each director of the Company serving in fiscal 2007 attended at
least 75% of the fiscal 2007 meetings of the Board of Directors
and each committee on which he served. The Board of Directors
held six meetings in fiscal 2007. The Board of Directors has
determined that the following directors, who constitute a
majority of the Board of Directors, are independent
directors as defined by the NASDAQ Stock Exchange listing
standards: Messrs. Friesz, Moyer, Montgomery, Patrick,
Wilburn, and Schulte. Directors who are also officers of the
Company receive no additional compensation for their services as
directors. The non-employee director compensation program
provides for an annual retainer of $50,000, of which
(i) 75% is paid in cash in equal quarterly installments and
(ii) 25% is paid in the form of restricted stock grants,
granted on the date of the Annual Meeting. In addition, each
non-employee director who serves as a lead director or a chair
or member of a Board Committee also receives an additional
annual retainer for such services. The lead director receives
$20,000 in cash per year. Retainers for committee members are as
follows: Audit Committee chair $7,500, Audit Committee member
$4,500, Corporate Governance/Nominating Committee chair $5,000,
Corporate Governance/Nominating Committee member $3,000,
Compensation Committee chair $5,000, and Compensation Committee
member $3,000. Directors are also reimbursed for travel and
related expenses incurred for attending meetings. The Company
has established a pension plan for non-employee directors who
have served as such for at least 10 years, providing for a
series of quarterly payments (equal to the portion paid to the
non-employee directors annual service fee) for such
directors lifetime following the date on which such
director ceases to be a director for any reason other than
death. Effective December 31, 2003, the Company froze all
future benefit accruals under the pension plan.
Audit
Committee
The Board of Directors has a standing Audit Committee that in
fiscal 2007 was composed of Messrs. Schulte (Chair),
Friesz, Moyer and Patrick. The Audit Committee held three
on-site
meetings and four telephonic meetings in fiscal 2007. The Audit
Committee acts pursuant to a written charter adopted by the
Board of Directors. The functions of the Audit Committee
include: reviewing the financial statements of the Company;
reviewing the scope of the annual audit by the Companys
independent auditors; and reviewing the audit reports rendered
by such independent auditors. Among other things, the Audit
Committee is directly responsible for: the appointment,
compensation, retention and oversight of the independent
auditors; reviewing the independent auditors
qualifications and independence; reviewing the plans and results
of the audit engagement with the independent auditors; approving
professional services provided by the independent auditors and
approving financial reporting principles and policies;
considering the range of audit and non-audit fees; reviewing the
adequacy of the Companys internal accounting controls; and
working to ensure the integrity of financial
3
information supplied to stockholders. The Audit Committee also
has the other responsibilities enumerated in its charter, and
examines and considers additional matters as it deems
appropriate. The Audit Committees charter is available on
the Companys website at www.virco.com. Each of the Audit
Committee members is an independent director as
defined by the listing standards of the NASDAQ Stock Exchange.
The Board of Directors has determined that Mr. Schulte, who
is the chair of the Audit Committee, qualifies as an audit
committee financial expert, as that term is defined in
Item 407(d)(5) of
Regulation S-K
of the Securities Exchange Act of 1934 (the Exchange
Act). The Board reevaluates the composition of the Audit
Committee on an annual basis to ensure that its composition
remains in the best interests of the Company and its
stockholders.
Compensation
Committee
The Board of Directors has a standing Compensation Committee
that in fiscal 2007 was composed of Messrs. Moyer (Chair),
Patrick, Montgomery and Wilburn, all of whom are
independent directors as defined in the listing
standards of the NASDAQ Stock Exchange. The function of this
Committee is, among other things, to make recommendations to the
Board regarding changes in salaries and benefits. The
Compensation Committee held two
on-site
meetings in fiscal 2007. The Compensation Committee acts
pursuant to a written charter adopted by the Board of Directors,
a copy of which is available on the Companys website at
www.virco.com.
Corporate
Governance/Nominating Committee
The Board of Directors has a standing Corporate
Governance/Nominating Committee which is comprised of
Messrs. Montgomery (Chair), Friesz, Schulte, Patrick, Moyer
and Wilburn, all of whom are independent directors
as defined in the listing standards of the NASDAQ Stock
Exchange. During fiscal 2007, the Corporate
Governance/Nominating Committee held two meetings in executive
sessions outside the presence of management and intends to hold
at least two such meetings in fiscal 2008 as well.
The Corporate Governance/Nominating Committees function is
to identify and recommend from time to time candidates for
nomination for election as directors of the Company. Candidates
may come to the attention of the Corporate Governance/Nominating
Committee through members of the Board of Directors,
stockholders or other persons. Consideration of new Board
nominee candidates typically involves a series of internal
discussions, review of information concerning candidates and
interviews with selected candidates. Candidates are evaluated at
regular or special meetings, and may be considered at any point
during the year, depending on the Companys needs. The
Corporate Governance/Nominating Committee acts pursuant to a
written charter adopted by the Board of Directors, a copy of
which is available to stockholders on the Companys
website, at www.virco.com. In evaluating nominations, the
Corporate Governance/Nominating Committee considers a variety of
criteria, including business experience and skills,
independence, judgment, integrity, the ability to commit
sufficient time and attention to Board of Directors activities
and the absence of potential conflicts with the Companys
interests. The Corporate Governance/Nominating Committee has not
established any specific minimum qualification standards for
nominees to the Board of Directors, although from time to time
the Corporate Governance/Nominating Committee may identify
certain skills or attributes ( e.g., financial
experience, business experience) as being particularly desirable
to meet specific Board of Director needs that may arise. To
nominate a prospective nominee for the Corporate
Governance/Nominating Committees consideration, you may
submit, in accordance with the Companys Bylaws, a
candidates name and qualifications to the Companys
Corporate Secretary at 2027 Harpers Way, Torrance, California
90501.
Communications
with the Board of Directors
Any stockholder interested in communicating with individual
members of the Board of Directors, the Board of Directors as a
whole, any of the committees of the Board or the independent
directors as a group may send written communications to the
Board of Directors, any committee of the Board of Directors or
any director or directors of the Company at 2027 Harpers Way,
Torrance, California 90501, Attention: Robert E. Dose,
Secretary. Communications received in writing are forwarded to
the Board of Directors, committee or individual director or
directors to whom the communication is directed, unless, at his
discretion, the Secretary determines that the communication is
of a commercial or frivolous nature, is unduly hostile,
threatening, illegal, does not reasonably relate to the Company
or its business, or is otherwise inappropriate for the Board of
Directors consideration. In such cases, such
4
correspondence may be forwarded elsewhere in the Company for
review and possible response. The Secretary has the authority to
discard or disregard any inappropriate communications or to take
other appropriate actions with respect to any such inappropriate
communications. Directors are expected to attend the Annual
Meeting. Last year all of the directors attended the Annual
Meeting. The independent directors hold two regularly scheduled
executive session meetings each fiscal year outside the presence
of management as well as additional meetings as are necessary.
Mr. Moyer currently functions as the lead independent
director. The lead independent director position rotates among
the independent directors periodically as determined by the
independent directors.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Shares
Owned By Directors, Management and Principal
Stockholders
The following table sets forth information as of May 5,
2008 (unless otherwise indicated), relating to the beneficial
ownership of the Companys Common Stock (i) by each
person known by the Company to own beneficially more than 5% of
the outstanding shares of Common Stock of the Company,
(ii) by each director or nominee of the Company,
(iii) by each Named Executive Officer of the Company as
named in the Summary Compensation Table and (iv) by all
executive officers and directors of the Company as a group. The
number of shares beneficially owned is deemed to include shares
of Common Stock in which the persons named have or share either
investment or voting power. Unless otherwise indicated, the
mailing address of each of the persons named is 2027 Harpers
Way, Torrance, California 90501.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
of Beneficial
|
|
|
Percent of
|
|
Name of Beneficial Owner
|
|
Ownership(1)
|
|
|
Class
|
|
|
Wedbush Inc.(2)
|
|
|
1,699,766
|
|
|
|
11.57
|
%
|
Private Capital Management, L.P.(3)
|
|
|
975,826
|
|
|
|
6.76
|
%
|
Nancy Virtue-Cutshall(4)
|
|
|
875,856
|
|
|
|
6.07
|
%
|
Athena Capital Management(5)
|
|
|
763,534
|
|
|
|
5.29
|
%
|
Robert A. Virtue(6)
|
|
|
290,333
|
|
|
|
2.01
|
%
|
Chairman of the Board of Directors, Chief Executive Officer
|
|
|
|
|
|
|
|
|
Douglas A. Virtue(7)
|
|
|
604,814
|
|
|
|
4.19
|
%
|
Director, Executive Vice President
|
|
|
|
|
|
|
|
|
Donald S. Friesz
|
|
|
67,067
|
|
|
|
|
(8)
|
Director
|
|
|
|
|
|
|
|
|
Thomas J. Schulte
|
|
|
1,841
|
|
|
|
|
(8)
|
Director
|
|
|
|
|
|
|
|
|
Albert J. Moyer
|
|
|
8,361
|
|
|
|
|
(8)
|
Director
|
|
|
|
|
|
|
|
|
Robert K. Montgomery
|
|
|
19,312
|
|
|
|
|
(8)
|
Director
|
|
|
|
|
|
|
|
|
Glen D. Parish
|
|
|
30,953
|
|
|
|
|
(8)
|
Director, Former Vice President, General Manager
|
|
|
|
|
|
|
|
|
Donald A. Patrick
|
|
|
52,286
|
|
|
|
|
(8)
|
Director
|
|
|
|
|
|
|
|
|
James R. Wilburn
|
|
|
19,167
|
|
|
|
|
(8)
|
Director
|
|
|
|
|
|
|
|
|
Robert E. Dose
|
|
|
39,366
|
|
|
|
|
(8)
|
Vice President Finance, Secretary, Treasurer
|
|
|
|
|
|
|
|
|
Lori L. Swafford
|
|
|
33,760
|
|
|
|
|
(8)
|
Vice President, Legal Affairs
|
|
|
|
|
|
|
|
|
Larry O. Wonder
|
|
|
38,347
|
|
|
|
|
(8)
|
Vice President, Sales
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group (18 persons)
|
|
|
1,349,813
|
|
|
|
9.25
|
%
|
5
|
|
|
(1) |
|
Except as indicated in the footnotes to this table and pursuant
to applicable community property laws, to the knowledge of the
Company, the persons named in this table have sole voting and
investment power with respect to all shares beneficially owned
by them. For purposes of this table, a person is deemed to be
the beneficial owner of any security if the person
has the right to acquire beneficial ownership of such security
within 60 days of May 5, 2008, including but not
limited to, any right to acquire through the exercise of any
option, warrant or right or through the conversion of a
security. Amounts for Messrs. Robert Virtue, Douglas
Virtue, Friesz, Schulte, Moyer, Montgomery, Parish, Patrick,
Wilburn, Dose, Swafford, Wonder, and all executive officers and
directors as a group, include 5,196, 5,196, 0, 0, 0, 0, 13,930,
0, 0, 22,837, 22,837, 22,837 and 160,479 shares issuable
upon exercise of options or conversion of restricted stock
units, respectively, and 17,322, 16,381, 0, 0, 0, 0, 6,278, 0,
0, 5,080, 765, 11,409 and 55,270 shares held under the
Companys 401(k) Plan as of May 5, 2008, respectively. |
|
(2) |
|
Reflects information as of February 15, 2008, according to
public filings by Wedbush, Inc., Edward W. Wedbush (EWW) and
Wedbush Morgan Securities, Inc. Includes the total number of
shares of Common Stock and shares issuable under currently
exercisable warrants, that are held by each of Wedbush, Inc.,
Edward W. Wedbush and Wedbush Morgan Securities, Inc. Also
includes 309,580 shares of Common Stock, and
61,200 shares of Common Stock issuable under currently
exercisable warrants, that are beneficially owned by customers
of Wedbush Morgan Securities, Inc., over which Wedbush Morgan
Securities, Inc. has dispositive power. The reporting persons
disclaim any beneficial ownership over such shares. Business
addresses of the above filers are as follows: Wedbush
Inc. 1000 Wilshire Blvd., Los Angeles, CA
90017-2457:
EWW P.O. Box 30014, Los Angeles, CA
90030-0014:
Wedbush Morgan Securities P.O. Box 30014,
Los Angeles, CA
90030-0014. |
|
(3) |
|
Reflects information as of February 14, 2008, according to
public filings by Private Capital Management, L.P.
(PCM). The address for PCM is 8889 Pelican Bay
Blvd., Suite 500 Naples, FL 34108. |
|
(4) |
|
Includes 291,023 shares held by a trust of which
Ms. Virtue-Cutshall is the sole trustee. |
|
(5) |
|
Reflects information as of May 2, 2008, according to public
filings by Athena Capital Management. The address for Athena is
50 Monument Road, Suite 201, Bala Cynwyd, PA 19004. |
|
(6) |
|
Excludes 1,696,735 shares owned beneficially by
Mr. Robert Virtues adult children, including
Mr. Douglas Virtue, as to which Mr. Robert Virtue
disclaims beneficial ownership. |
|
(7) |
|
Douglas A. Virtue is Robert A. Virtues son. The total
number of shares beneficially owned by Mr. Robert A.
Virtue, his brothers Raymond W. Virtue and Richard J. Virtue,
his sister, Nancy Virtue-Cutshall, their children and their
mother, Mrs. Julian A. Virtue, aggregate
5,840,206 shares or 40.44% of the total shares of Common
Stock outstanding. Robert A. Virtue, Richard J. Virtue, Raymond
W. Virtue, Nancy Virtue-Cutshall and certain of their respective
spouses and children (collectively, the Virtue
Stockholders) and the Company have entered into an
agreement with respect to certain shares of the Companys
Common Stock received by the Virtue Stockholders as gifts from
the founder, Julian A. Virtue, including shares received in
subsequent stock dividends in respect of such shares. Under the
agreement, each Virtue Stockholder who proposes to sell any of
such shares is required to provide the remaining Virtue
Stockholders notice of the terms of such proposed sale. Each of
the remaining Virtue Stockholders is entitled to purchase any or
all of such shares on the terms set forth in the notice. The
Company may purchase any shares not purchased by such remaining
Virtue Stockholders on such terms. The agreement also provides
for a similar right of first refusal in the event of the death
or bankruptcy of a Virtue Stockholder, except that the purchase
price for the shares is to be based upon the then prevailing
sales price of the Companys Common Stock on the NASDAQ
Stock Exchange. |
|
(8) |
|
Less than 1%. |
6
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Objectives
of the Compensation Program
The objectives of the Companys executive compensation
program are to: 1) attract, motivate and retain highly
qualified executives; 2) link total compensation to
stockholder returns; 3) reflect individual contributions to
the performance of the Company; 4) insure appropriate
balance between long-term value creation and short-term
performance by including equity as part of total compensation;
5) maintain internal fairness and morale by benchmarking
executive compensation, including perquisites and non-cash
benefits, against the aggregated average compensation and
benefits of the Companys top 25 managers.
The Compensation Committee recommends and the Board approves the
base salaries of the Companys Chief Executive Officer (the
CEO), Chief Financial Officer (the CFO),
and the three other most highly compensated executives.
Throughout this Compensation Discussion & Analysis
(CD&A), the CEO, CFO and three other most
highly compensated executives are referred to collectively as
the Named Executive Officers.
What the
Compensation Program is Designed to Reward
The program is designed to support annual and long-term business
goals that create profitable growth and long-term value for
stockholders.
Elements
of Compensation Program
The Companys executive compensation program consists of
three main elements: 1) base salary, which is tied to
individual job duties; 2) annual bonus plan cash
incentives, which are mathematically linked to the
Companys Annual Operating Plan, including pre-tax profit;
and 3) long-term equity incentives, the value of which are
contingent upon successful execution of the Companys
multi-year strategic growth and market development initiatives.
Ancillary benefits such as health insurance, retirement
benefits, and an automobile allowance are also part of the
executive compensation program. As with the three main elements
of the program, these ancillary benefits are benchmarked against
similar benefits provided to the Companys top 25 managers.
The combination of base salary, annual incentive, long-term
incentive, and ancillary benefits is referred to as Total
Compensation. The Company has established a target of
market median for the Total Compensation of Named
Executive Officers as determined by scale-, geography- and
date-adjusted national compensation surveys from Wyatt Total
Reward, Wyatt CQ Survey, Mercer Manufacturing Compensation
Survey, Mercer Manufacturing Industry Market View, National
Assoc. of Manufacturers, and Employers Group Research Services
Survey.
All of these surveys are given equal weighting. The Company
intentionally uses a broad comparison group for executive
compensation because the competition for executive talent
extends beyond the Companys direct competitors and
industry. The Company believes that this breadth of executive
compensation data, conservatively adjusted for firm size,
geographic location and cost of living, and the age of the data,
provides for the fairest and most equitable market
median. The same method of establishing a market median
total compensation target is used for the Companys top 25
managers.
In determining the final Total Compensation for Named Executive
Officers, the Compensation Committee of the Board of Directors
attempts to balance external equity as defined by
market median, with internal equity as
defined by the aggregated average Total Compensation for the
Companys top 25 managers. It is the Companys belief
that this approach to establishing Total Compensation for Named
Executive Officers results in better teamwork and morale among
the entire management team, thus linking executive and
management compensation with short- and long-term value creation
for stockholders.
Base
Salary
Base salary is intended to reward Named Executive Officers and
other employees for their roles within the Company and their
performance in those roles. The Company determines the base
salary range for a particular
7
position by evaluating 1) the duties, complexities and
responsibilities of the position; 2) the level of
experience required; and 3) the compensation for positions
having similar scope and accountability within and outside the
Company (through survey data as described above).
Annual
Incentives
The Named Executive Officers are eligible for annual cash
incentives under the Companys Annual Bonus Plan, which is
approved by the Board of Directors at the beginning of the
Companys fiscal year as part of its Annual Operating Plan.
To reward Named Executive Officers and other salaried managers
for achieving the financial performance set forth in the Annual
Operating Plan, the Board of Directors establishes a minimum
level of financial performance and return to stockholders above
which a cash bonus will be paid. For achieving the minimum
threshold, the Named Executive Officers receive a cash bonus
equal to 15% of their base salary. For achieving the
target pre-tax earnings, Named Executive Officers
receive a 35% cash bonus. The maximum possible cash bonus for
Named Executive Officers is capped at 50% of base salary. The
threshold, target and maximum bonus levels for each Named
Executive Officer were determined by reference to the survey
data and other factors described above.
For fiscal 2007, the threshold for receiving a minimum bonus was
$9,000,000 in pre-tax earnings, after accruing an earned bonus
provision of approximately $206,000 for the Named Executive
Officers. The actual bonus payout for the Named Executive
Officers for 2007, achieved by reaching $12,192,000 in pre-tax
earnings, was $494,863. This cash bonus payout was equal to
approximately 37% of each Named Executive Officers base
salary for fiscal 2007.
Long-Term
Incentives
The Company believes that the most powerful incentive to focus
Named Executive Officers on long-term value creation is
long-term ownership of Company stock. Under the Companys
current long-term incentive program, Named Executive Officers
and top managers receive periodic grants of Restricted Stock
Units (RSUs). The Company uses RSUs rather than
options because it has been the Companys experience that
RSUs are more likely to result in a growing ownership position
of Company stock and thereby align the interests of executives
and stockholders. On the date of the 2007 Annual Meeting and
Board of Directors meeting on June 19, 2007, each Named
Executive Officer was granted 15,000 RSUs, vesting ratably over
a five year period. The number of RSUs granted to each Named
Executive Officer in 2007 was determined by reference to
historical grant levels provided to Company executives, as well
as the factors described above. Each Named Executive Officer
received the same number of RSUs in order to foster internal pay
equity and the Companys one-team management
approach.
Grants of RSUs are typically approved at the Board of Directors
meeting immediately following the Annual Meeting. The meeting
dates are set well in advance and occur approximately two weeks
following the release of the First Quarter results. Scheduling
decisions are made without regard to anticipated earnings or
other major announcements by the Company.
Other
Compensation Elements
Perquisites The Company provides Named
Executive Officers with a Company automobile or cash allowance
of $22,800 per year. The Company does not provide Named
Executive Officers with any other perquisites such as country
club memberships and the Company does not own or lease an
aircraft. Company-provided travel for executives is for business
purposes only.
Other Benefits Executives participate in the
same health, disability and life insurance programs as are
provided to other Company employees. In addition, the Named
Executive Officers participate in the Companys
tax-qualified defined benefit pension plan (the Virco Mfg.
Corporation Employee Retirement Plan) and nonqualified
supplement retirement plan (the VIP Retirement Plan). As more
fully disclosed in the MD&A and Footnote 4 to the financial
statements in the Companys Annual Report on
Form 10-K
for the fiscal year ended January 31, 2008
(Form 10K), these retirement plans were frozen
effective December 31, 2003, and additional benefit
accruals for all Named Executive Officers ceased on that date.
8
Post-Employment
and Other Events
The Company does not have employment agreements with any of the
Named Executive Officers, and is not obligated to provide
termination pay or other severance benefits to any of its Named
Executive Officers. In general, the benefits provided or
available to Named Executive Officers upon retirement, death,
disability or other termination of employment or upon the
occurrence of a
change-in-control
event are the same as those provided or made available to
salaried employees generally.
Pursuant to the 1997 and 2007 Stock Incentive Plans, vesting of
all outstanding stock and option awards is accelerated upon a
change-in-control.
In addition, under the VIP Pension Plan, vesting of retirement
benefits is accelerated upon the occurrence of a
change-in-control
or the death of the participant. These benefits are provided to
salaried employees generally and are intended to ensure that
management remains focused on stockholder value when evaluating
strategic alternatives.
Tax
Deductibility of Executive Compensation
The Company seeks to structure its compensation arrangements to
maximize the tax deductibility of all components of executive
compensation unless the benefit of such deductibility is
outweighed by the need for flexibility or the attainment of
other corporate objectives. The Compensation Committee will
continue to monitor issues concerning the deductibility of
executive compensation and will take appropriate action if and
when it is warranted. Since corporate objectives may not always
be consistent with the requirements for full deductibility, the
Compensation Committee is prepared, if it deems appropriate, to
enter into compensation arrangements under which payments may
not be fully deductible. Thus, deductibility will not be the
sole factor used by the Compensation Committee in ascertaining
appropriate levels or modes of compensation. In fiscal 2007, all
compensation paid to executives was fully deductible; no
executive officer exceeded the $1 million limit under
Section 162(m) of the Internal Revenue Code with regard to
non-performance-based compensation.
Impact of
Prior Compensation in Setting Elements of Compensation
Prior compensation of the Named Executive Officers does not
impact how the Company sets elements of current compensation.
The Compensation Committee believes the competitive environment
that the Company operates in mandates that current total
compensation be set at levels sufficient to attract, motivate
and retain top management, which requires the Company to set
compensation amounts based on current Company and business
conditions.
Executive
Stock Ownership Guideline
The Company has not adopted any executive stock ownership
guidelines. While there are no guidelines, two of the Named
Executive Officers, Robert A. Virtue and Douglas A. Virtue, own
2.2% and 4.1%, respectively, of the outstanding shares of the
Companys Common Stock. Messrs. Virtue and Virtue are
members of the Virtue Family and subject to the terms of the
Virtue Family Agreement discussed in the Security
Ownership section of this Proxy Statement. The Virtue
Family owns approximately 40% of the Companys outstanding
Common Stock.
Impact of
Restatements that Retroactively Impact Financial Goals
The Company has not restated or retroactively adjusted financial
information that has impacted the financial statements or goals
related to previous bonus or long-term award payouts. If
financial results are significantly restated due to fraud or
intentional misconduct, the Board will review any
performance-based compensation paid to Named Executive Officers
who are found to be personally responsible for the fraud or
intentional misconduct that led to the restatement and may, to
the extent permitted by applicable law, seek to recover amounts
paid in excess of the amounts that would have been paid based on
the restated financial results.
The Role
of the Executives in Determining Compensation
While the Compensation Committee is primarily responsible for
reviewing and making determinations with respect to executive
compensation, the CEO and Executive Vice President provide input
and views with respect to
9
compensation for the other Named Executive Officers. The
Compensation Committee believes that the CEOs and
Executive Vice Presidents views are critical in
determining the compensation of other Named Executive Officers
because the CEO and Executive Vice President have day-to-day
involvement with these Named Executive Officers and are in the
best position to assess their performance, abilities, and
contribution to the success of the Company.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis for the year ended
January 31, 2008, as required by Item 402(b) of
Regulation S-K
under the Exchange Act with management, and based on such review
and discussions, the Compensation Committee recommended to the
Board of Directors that the Compensation Discussion &
Analysis be included in this Proxy Statement.
COMPENSATION COMMITTEE
Albert J. Moyer, Chair
Donald A. Patrick
Robert K. Montgomery
Dr. James R. Wilburn
The above report of the Compensation Committee will not be
deemed to be incorporated by reference into any filing by the
Company under the Securities Act or the Exchange Act, except to
the extent that the Company specifically incorporates it by
reference.
Compensation
Committee Interlocks and Insider Participation
During fiscal 2007, the Compensation Committee was comprised of
Messrs. Moyer, Patrick, Montgomery, and Wilburn, none of
whom is a current or former officer of the Company.
Mr. Montgomery is a partner of the law firm Gibson,
Dunn & Crutcher LLP, which has provided legal services
to the Company. The Company expects that such law firm will
continue to render legal services to the Company in the future.
There are no interlocking board memberships between officers of
the Company and any member of the Compensation Committee.
Summary
Compensation Table for Fiscal 2007
The table below sets forth the compensation awarded to, earned
by, or paid to, each of the Named Executive Officers for Fiscal
2007 and 2006. The Company has no employment agreements with any
of its executives. While employed, executives are entitled to
base salary, participation in the executive compensation
programs identified in the tables below and discussed in the
CD&A and other benefits common to all employees. The
performance-based conditions associated with the Bonus Plan as
well as salary and bonus in proportion to total compensation are
discussed in detail throughout the CD&A.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Incentive Plan
|
|
Change in
|
|
All Other
|
|
|
Name and Position
|
|
Year
|
|
Salary
|
|
Awards
|
|
(Bonus Plan)
|
|
Pension
|
|
Compensation
|
|
Total
|
|
Robert A. Virtue
|
|
|
2007
|
|
|
$
|
408,768
|
|
|
$
|
11.865
|
|
|
$
|
153,972
|
|
|
$
|
115,239
|
|
|
$
|
15,142
|
|
|
$
|
704,986
|
|
President & CEO
|
|
|
2006
|
|
|
|
427,058
|
|
|
|
|
|
|
|
159,257
|
|
|
|
93,191
|
|
|
|
23,246
|
|
|
|
702,752
|
|
Douglas A. Virtue
|
|
|
2007
|
|
|
|
258,715
|
|
|
|
11.865
|
|
|
|
98,982
|
|
|
|
|
|
|
|
8,372
|
|
|
|
377,934
|
|
Executive Vice President
|
|
|
2006
|
|
|
|
228,371
|
|
|
|
|
|
|
|
100,404
|
|
|
|
118,663
|
|
|
|
18,498
|
|
|
|
465,936
|
|
Robert E, Dose
|
|
|
2007
|
|
|
|
248,080
|
|
|
|
32,595
|
|
|
|
93,483
|
|
|
|
2,228
|
|
|
|
26,200
|
|
|
|
402,586
|
|
Vice President Finance
|
|
|
2006
|
|
|
|
225,000
|
|
|
|
20,730
|
|
|
|
96,131
|
|
|
|
108,112
|
|
|
|
34,780
|
|
|
|
484,753
|
|
Lori L. Swafford
|
|
|
2007
|
|
|
|
224,330
|
|
|
|
32,595
|
|
|
|
84,318
|
|
|
|
|
|
|
|
29,244
|
|
|
|
370,487
|
|
Vice President & Corporate Counsel
|
|
|
2006
|
|
|
|
205,000
|
|
|
|
20,730
|
|
|
|
87,586
|
|
|
|
73,317
|
|
|
|
38,372
|
|
|
|
425,005
|
|
Larry O. Wonder
|
|
|
2007
|
|
|
|
197,068
|
|
|
|
32,595
|
|
|
|
73,320
|
|
|
|
8,229
|
|
|
|
16,277
|
|
|
|
327,489
|
|
Vice President Sales
|
|
|
2006
|
|
|
|
189,630
|
|
|
|
20,730
|
|
|
|
77,161
|
|
|
|
116,740
|
|
|
|
24,155
|
|
|
|
428,416
|
|
10
|
|
|
(1) |
|
Reflects the vesting of 3,000 RSUs granted in June 2004 and the
grant of RSUs in June 2007. The value on vesting of RSUs is
calculated by multiplying the number of shares vested by the
difference between the closing market price per share on the
date of vesting less the $0.01 par value of the share of
Common Stock that is paid by the Named Executive Officer. |
|
(2) |
|
The amounts shown in this column are based on the same
assumptions used in the preparation of the Companys 2007
financial statements, which are described in the MD&A and
Footnote 4 to the financial statements contained in the
Companys
Form 10-K.
The Pension Plans that Named Executive Officers participate in
were frozen in 2003. The Named Executive Officers did not accrue
any additional benefits during fiscal 2007. The change in
pension amount includes the effect of a change in discount rate
from 5.75% in fiscal 2006 to 6.00% in fiscal 2007, utilization
of an updated table for receiving an undiscounted benefit, and
the decrease in the discount period. For Robert A. Virtue,
change in pension reflects adjustments to current and prior year
balances to reflect retirement age greater than age 65. Due
to the change in discount rates, the change in pension value for
Doug Virtue decreased by $154 and the change in pension value
for Lori Swafford decreased by $4,372. |
|
(3) |
|
The amounts shown in this column include automobile allowances,
the value of personal use of a Company-provided vehicle,
payments under a mortgage assistance plan that was terminated in
May 2007, and medical insurance for domestic partners. |
Grants of
Plan-Based Awards for Fiscal 2007
The table below sets forth the grants of plan-based awards to
the Named Executive Officers during fiscal 2007 under the Bonus
Plan. Such awards include monetary compensation under the Bonus
Plan and grants of RSUs in June 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise or
|
|
|
Estimated Future Payouts Under
|
|
Estimated Future Payouts Under Equity
|
|
Number
|
|
|
|
Base Price
|
|
|
Non-Equity Incentive Plan Awards
|
|
Incentive Plan Awards
|
|
of Share
|
|
Number of
|
|
of Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Securities
|
|
Awards
|
Name and Position
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
Robert A. Virtue
|
|
|
N/A
|
|
|
|
63,000
|
|
|
|
147,000
|
|
|
|
210,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
15,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
President & CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas A. Virtue
|
|
|
N/A
|
|
|
|
40,500
|
|
|
|
94,500
|
|
|
|
135,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
15,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Dose
|
|
|
N/A
|
|
|
|
38,250
|
|
|
|
89,250
|
|
|
|
127,500
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
15,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Vice President Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lori L. Swafford
|
|
|
N/A
|
|
|
|
34,500
|
|
|
|
80,500
|
|
|
|
115,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
15,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Vice President & Corporate Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry O. Wonder
|
|
|
N/A
|
|
|
|
30,000
|
|
|
|
70,000
|
|
|
|
100,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
15,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Vice President Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Cash amounts in this table pertain to the Bonus Plan described
under Annual Incentives in the CD&A. Shares or
units in this table pertain to RSUs described under Long
Term Incentives in the CD&A. |
11
Outstanding
Equity Awards at Fiscal Year-end 2007
The following table sets forth the Named Executive
Officers outstanding equity awards as of the end of fiscal
2007. All outstanding stock option awards reported in this table
vest in five years and expire 10 years from the date of
grant. All outstanding grants of RSUs vest over a five year
period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
Option Awards
|
|
|
|
|
|
Incentive
|
|
Plan
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Awards
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Awards
|
|
Market
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Value
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
Value of
|
|
Unearned
|
|
Unearned
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Shares or
|
|
Shares,
|
|
Shares,
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
Units, or
|
|
Units, or
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
Units of
|
|
Stock
|
|
Other
|
|
Other
|
|
|
Options
|
|
Options
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Stock That
|
|
That Have
|
|
Rights
|
|
Rights That
|
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned
|
|
Price
|
|
Expiration
|
|
Have Not
|
|
Not
|
|
That Have
|
|
Have Not
|
Name and Title
|
|
(#)
|
|
(#)
|
|
Options (#)
|
|
($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
Vested (#)
|
|
Vested ($)
|
|
Robert A. Virtue
|
|
|
2,196
|
|
|
|
|
|
|
|
|
|
|
|
11.06
|
|
|
|
07/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President & CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
95,400
|
|
|
|
|
|
|
|
|
|
Douglas A. Virtue
|
|
|
2,196
|
|
|
|
|
|
|
|
|
|
|
|
11.06
|
|
|
|
07/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
95,400
|
|
|
|
|
|
|
|
|
|
Robert E. Dose
|
|
|
14,641
|
|
|
|
|
|
|
|
|
|
|
|
12.64
|
|
|
|
10/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President
|
|
|
2,196
|
|
|
|
|
|
|
|
|
|
|
|
11.06
|
|
|
|
07/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
38,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
95,400
|
|
|
|
|
|
|
|
|
|
Lori L. Swafford
|
|
|
14,641
|
|
|
|
|
|
|
|
|
|
|
|
12.64
|
|
|
|
10/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President &
|
|
|
2,196
|
|
|
|
|
|
|
|
|
|
|
|
11.06
|
|
|
|
07/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
38,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
95,400
|
|
|
|
|
|
|
|
|
|
Larry O. Wonder
|
|
|
14,641
|
|
|
|
|
|
|
|
|
|
|
|
12.64
|
|
|
|
10/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President Sales
|
|
|
2,196
|
|
|
|
|
|
|
|
|
|
|
|
11.06
|
|
|
|
07/23/2009
|
|
|
|
6,000
|
|
|
|
38,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
95,400
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
All stock options and RSUs vest at 20% per year for five years
from the grant date. All outstanding options are fully vested.
For the 6,000 RSUs remaining from the June 30, 2004, RSU
award included in this table there are two remaining vesting
dates: June 30, 2008, and June 30, 2009. For the grant
of 15,000 RSUs on June 17, 2007 to all Named Executive
Officers, there are five remaining vesting dates: June 19,
2008, June 19, 2009, June 19, 2010, June 19,
2011, and June 19, 2012. |
|
(2) |
|
The amounts reported in this column were computed based on the
fiscal year-end closing price of $6.37 per share of common stock
less the $0.01 par value of the share of Common Stock that
is paid by the Named Executive Officer. |
12
Option
Exercises and Stock Vested for Fiscal 2007
The following table sets forth information concerning the Named
Executive Officers exercise of stock options and vesting
of RSUs during fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares Acquired
|
|
Value Realized
|
|
Shares Acquired
|
|
Value Realized
|
Name and Position
|
|
on Exercise (#)
|
|
on Exercise ($)
|
|
on Vesting (#)
|
|
on Vesting ($)
|
|
Robert A. Virtue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President & CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas A. Virtue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Dose
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
19,710
|
|
Vice President Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lori L. Swafford
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
19,710
|
|
Vice President & Corporate Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry O. Wonder
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
19,710
|
|
Vice President Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The value realized on vesting of RSUs is calculated by
multiplying the number of shares vested by the difference
between the closing market price of $6.58 per share on the date
of vesting less the $0.01 par value of the share of Common
Stock that is paid by the Named Executive Officer. |
Pension
Benefits for Fiscal 2007
The following table sets forth information concerning the
payments available under the Companys VIP Pension Plan and
the Virco Mfg. Corporation Employee Retirement Plan, both of
whose benefit accruals were frozen in 2003.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Present
|
|
|
Payments
|
|
|
|
|
|
Years of
|
|
|
Value of
|
|
|
During Last
|
|
|
|
|
|
Credited
|
|
|
Accumulated
|
|
|
Fiscal Year
|
|
Name and Position
|
|
Plan Name
|
|
Service (#)
|
|
|
Benefit ($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert A. Virtue
President & CEO
|
|
Virco Important
Performers (VIP) Plan
|
|
|
21
|
|
|
|
1,794,776
|
|
|
|
117,564
|
|
|
|
Virco Mfg. Corporation Employees Retirement Plan
|
|
|
50
|
|
|
|
2,173,548
|
|
|
|
73,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas A. Virtue
Executive Vice President
|
|
Virco Important
Performers (VIP) Plan
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
Virco Mfg. Corporation Employees Retirement Plan
|
|
|
21
|
|
|
|
415,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Dose
Vice President Finance
|
|
Virco Important
Performers (VIP) Plan
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
Virco Mfg. Corporation Employees Retirement Plan
|
|
|
16
|
|
|
|
403,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lori L. Swafford
Vice President & Corporate
|
|
Virco Important
Performers (VIP) Plan
|
|
|
11
|
|
|
|
|
|
|
|
|
|
Counsel
|
|
Virco Mfg. Corporation Employees Retirement Plan
|
|
|
11
|
|
|
|
254,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry O. Wonder
Vice President Sales
|
|
Virco Important
Performers (VIP) Plan
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
Virco Mfg. Corporation Employees Retirement Plan
|
|
|
28
|
|
|
|
501,308
|
|
|
|
|
|
13
|
|
|
(1) |
|
The amounts shown in this column are based on the same
assumptions used in the preparation of the Companys fiscal
2007 financial statements, which are described in the MD&A
and Footnote 4 to the financial statements of the Companys
Form 10-K. |
|
(2) |
|
The Pension Plans that Executive Officers participate in were
frozen in 2003. The Executive Officers did not accrue any
additional benefits during 2007. The Change in Pension amount
includes the effect of a change in discount rate from 5.75% in
2006 to 6.00% in 2007, utilization of an updated table for
receiving an undiscounted benefit, and the decrease in the
discount period. The first date at which a Named Executive
Officer can receive an undiscounted benefit is at age 65.
Robert Virtue deferred collection of pension benefits from
age 65 to age 74
1/2.
Mr. Virtue began receiving pension benefits in July 2007. |
Nonqualified
Deferred Compensation for Fiscal 2007
The Company does not have a deferred compensation plan.
Potential
Payments upon Termination or Change-in-Control
As discussed in the CD&A above, the Company does not have
employment agreements with any of the Named Executive Officers.
Retirement, death, disability and
change-in-control
events do not trigger the payment of compensation to the Named
Executive Officers that is not available to all salaried
employees (including the amounts included in the Pension
Benefits for Fiscal 2007 table). Named Executive Officers
do not have a contractual right to receive severance benefits.
As noted in Post-Employment and Other Events,
pursuant to the 1997 and 2007 Stock Incentive Plans, the vesting
of all outstanding stock and options awards is accelerated upon
a
change-in-control.
In addition, under the VIP Pension Plan, the vesting of
retirement benefits is accelerated upon the occurrence of a
change-in-control
or the death of the participant.
Change-in-control
is defined by a party other than the members of the Virtue
family accumulating 20% or more of the Companys Common
Stock. The following table quantifies compensation that would be
payable to the Named Executive Officers upon a
change-in-control. The tables assume that the event occurred on
the last business day of fiscal 2007.
Value in
Event of Change-in-Control with or without Employment
Termination
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
|
Shares Vesting
|
|
Value
|
|
|
on Change-
|
|
Realized
|
Name and Position
|
|
in-Control (#)
|
|
on Vesting ($)
|
|
Robert A. Virtue
|
|
|
15,000
|
|
|
|
95,400
|
|
President & CEO
|
|
|
|
|
|
|
|
|
Douglas A. Virtue
|
|
|
15,000
|
|
|
|
95,400
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
Robert E. Dose
|
|
|
21,000
|
|
|
|
133,560
|
|
Vice President Finance
|
|
|
|
|
|
|
|
|
Lori L. Swafford
|
|
|
21,000
|
|
|
|
133,560
|
|
Vice President & Corporate Counsel
|
|
|
|
|
|
|
|
|
Larry O. Wonder
|
|
|
21,000
|
|
|
|
133,560
|
|
Vice President Sales
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the value of accelerating the vesting of RSUs not
otherwise vested. The Value Realized on Vesting of RSUs is
calculated by multiplying the number of shares vested by the
difference between the closing market price on January 31,
2008, of $6.37 less the $0.01 par value of the share of
Common Stock that is paid by the Named Executive Officer. |
14
DIRECTOR
COMPENSATION
The Companys non-employee directors receive an annual
retainer of $50,000 composed of 75% in the form of quarterly
cash payments and 25% in the form of a restricted stock grant on
the date of the Annual Meeting. Each non-employee director who
serves as a lead director or as the Chair or member of a Board
committee also receives an additional annual retainer for his or
her services. The lead director receives $20,000 per year. The
Audit Committee Chair receives $7,500 per year, and Audit
Committee members receive $4,500 per year. Chairs of the
Compensation Committee and the Governance Committee each receive
an additional $5,000 and the members of these committees each
receive $3,000 per year. Directors are also reimbursed for
travel and related expenses incurred to attend meetings. The
Company has also established a pension plan for non-employee
directors who have served as such for at least 10 years,
providing for a series of quarterly payments (equal to the
portion paid to the non-employee directors annual service
fee) for such directors lifetime following the date on
which such director ceases to be a director for any reason other
than death. Effective December 31, 2003, the Company froze
all future benefit accruals under the pension plan.
The Companys Guidelines with regard to Common Stock
ownership by directors is for each director to own Common Stock
with a market value of three times or more the annual cash
retainer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Paid
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Change in
|
|
|
All Other
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Pension
|
|
|
Compensation
|
|
|
|
|
Name and Position
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Value ($)
|
|
|
($)
|
|
|
Total ($)
|
|
|
Donald S. Friesz
|
|
|
45,000
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,720
|
|
|
|
100,220
|
|
Thomas J. Schulte
|
|
|
24,000
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,500
|
|
Robert K. Montgomery
|
|
|
45,500
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
5,549
|
|
|
|
|
|
|
|
63,549
|
|
Albert J. Moyer
|
|
|
67,500
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
Glen D. Parish
|
|
|
37,500
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,491
|
|
|
|
103,904
|
|
Donald A. Patrick
|
|
|
49,000
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,500
|
|
Dr. James R. Wilburn
|
|
|
43,500
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,000
|
|
|
|
|
(1) |
|
Cash fees include the cash portion of the annual retainer plus
fees for serving as a lead director, committee chair, or
committee member. |
|
(2) |
|
A grant of restricted stock representing 25% of the annual
retainer is awarded on the day of the Annual Meeting. The fair
market value of the stock grant for each director was $12,500 at
the date of grant. The non-employee directors have no
outstanding equity awards other than this grant. |
|
(3) |
|
The Pension Plan that directors participate in was frozen in
2003. The Directors did not accrue any additional benefits
during fiscal 2007. The Change in Pension value includes the
effect of a change in discount rate from 5.75% in 2006 to 6.00%
in fiscal 2007, and the decrease in the discount period. Due to
the change in discount rates, the change in pension value for
Donald S. Friesz decreased by $6,827, the change in pension
value for Donald A. Patrick decreased by $5,661, and the change
in pension value for James R. Wilburn decreased by $7,219. |
|
(4) |
|
Messrs. Friesz and Parish are former officers of the Company.
Other compensation consists of pension benefits earned as an
employee of the Company and paid in retirement, and, in the case
of Mr. Friesz, consulting fees in the amount of $3,000. |
15
EMPLOYMENT
CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
None of the Companys Named Executive Officers have
employment or severance arrangements.
Securities
Authorized for Issuance Under Equity Compensation
Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
|
|
|
remaining available for
|
|
|
|
|
|
|
|
|
|
future issuance under
|
|
|
|
Number of securities to
|
|
|
Weighted-average
|
|
|
equity compensation
|
|
|
|
be issued upon exercise
|
|
|
exercise price of
|
|
|
plans - excluding
|
|
|
|
of outstanding options,
|
|
|
outstanding options
|
|
|
securities reflected in
|
|
|
|
warrants and rights
|
|
|
warrants and rights
|
|
|
column (a)
|
|
Plan category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
161,000
|
|
|
$
|
11.46
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
161,000
|
|
|
$
|
11.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On January 31, 2008, there were 724,613 shares
available for grant under the 2007 Employee Incentive Plan and
on January 31, 2007, there were 109,000 shares
available for grant under the 1997 Employee Incentive Plan.
CODE OF
ETHICS
The Company has adopted a Code of Ethics, which is
applicable to its chief executive officer and senior financial
officers, including the principal accounting officer. The
Code of Ethics is available on the Companys
website at www.virco.com. The Company intends to post amendments
to or waivers under the Code of Ethics at this location on its
website. Upon written request, the Company will provide a copy
of the Code of Ethics free of charge. Requests should be
directed to Virco Mfg. Corporation, 2027 Harpers Way, Torrance,
California 90501, Attention: Robert E. Dose, Secretary.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Audit Committee, among its other duties and
responsibilities, reviews and monitors all related party
transactions and adopted the Companys Related Party
Transaction Policies and Procedures (the
Policy). The Board of Directors has delegated to the
Chair of the Audit Committee the authority to pre-approve or
ratify (as applicable) any transaction with a related party in
which the aggregate amount involved is expected to be less than
$250,000. A summary of each new transaction pre-approved by the
Chair of the Audit Committee pursuant to this policy shall be
provided to the Board of Directors for review at its next
regularly scheduled meeting. Under the Policy, the Audit
Committee is responsible for reviewing and approving
transactions with a related party in which the aggregate amount
is expected to exceed $250,000, and both the Audit Committee and
the Board of Directors are responsible for reviewing and
approving transactions with a related party in which the
aggregate amount is expected to equal or exceed $500,000. If
advance Audit Committee
and/or Board
of Directors approval is not feasible, then the transaction with
the related party will be considered and, if the Audit Committee
and/or Board
of Directors determines it to be appropriate, ratified at the
next regularly scheduled meeting. In determining whether to
approve the entry into a transaction with a related party, the
Audit Committee
and/or Board
of Directors as applicable will assess, among other factors it
deems appropriate, whether the transaction is on terms no more
favorable than terms generally available to an unaffiliated
third-party under the same or similar circumstances and the
extent of the related partys interest in the transaction.
If a transaction with a related party will be ongoing, the Audit
Committee
and/or Board
of Directors may establish guidelines for the Companys
management to follow in its dealings with such related party.
Thereafter, the Audit Committee
and/or Board
of Directors as applicable, on at least an annual basis, will
review and asses the relationship with the related party to
determine whether the relationship is in compliance with the
Policy and remains appropriate. No director shall participate in
any discussion or approval of a
16
transaction for which he or she is a related party, except that
this director shall provide all material information concerning
the transaction to the Audit Committee
and/or Board
of Directors as applicable.
Robert K. Montgomery served in fiscal 2007 as a member of the
Board of Directors of the Company. Mr. Montgomery is a
partner of the law firm Gibson, Dunn & Crutcher LLP,
which has provided legal services to the Company. The Company
expects that such law firm will continue to render legal
services to the Company.
In fiscal 2007, the Company paid approximately $735,000 to
Hedgehog Design, LLC, which provides product design and related
services to the Company. Robert Mills, the sole member of
Hedgehog Design, LLC, resides with Lori L. Swafford, Vice
President of Legal Affairs for the Company.
In keeping with the Companys policy on Related Party
Transactions, the Board and the Audit Committee have reviewed
and ratified the terms and circumstances of the transactions
with Mr. Mills and found them to be properly approved when
initiated in 2002; in the best interests of the Company at the
time, at present, and going forward; and no more favorable than
terms offered and sums paid to similarly situated companies and
individuals offering comparable services. As part of the review
and ratification process, the product lines designed by
Mr. Mills were evaluated for financial and market
performance. It was determined that these product lines had and
will likely continue to have a favorable impact on the
Companys results.
REPORT OF
THE AUDIT COMMITTEE
The Board of Directors has adopted a written charter for the
Audit Committee, which is available on the Companys
website at www.virco.com. The Audit Committee reviews the
Companys financial reporting process on behalf of the
Board of Directors. Management has the primary responsibility
for the financial statements and the reporting process. The
Companys independent auditors are responsible for
expressing an opinion on the conformity of the Companys
audited financial statements with accounting principles
generally accepted in the United States.
In this context, the Audit Committee has reviewed and discussed
the audited financial statements included in the Companys
Annual Report on
Form 10-K
for the fiscal year ended January 31, 2008, with management
and the independent auditors, including their judgment of the
quality and appropriateness of accounting principles, the
reasonableness of significant judgments and the clarity of the
disclosures in the financial statements. In addition, the Audit
Committee has discussed with the independent auditors the
matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees), SEC
rules, and other applicable standards. In addition, the Audit
Committee has received from the independent auditors the written
disclosures, pursuant to the Independence Standards Board
Standard No. 1 (Independence Discussions with Audit
Committees) and discussed with them their independence from the
Company and its management. The Audit Committee has also
considered whether the independent auditors provision of
non-audit services to the Company is compatible with the
auditors independence. The Audit Committee also reviewed
and discussed with management its report on internal control
over financial reporting and the related audit performed by the
independent auditors which confirmed the effectiveness of the
Companys internal control over financial reporting.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board of Directors, and
the Board has approved, that the audited financial statements be
incorporated by reference in the Companys Annual Report on
Form 10-K
for the fiscal year ended January 31, 2008, for filing with
the Securities and Exchange Commission.
THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Thomas J. Schulte, Chair
Donald S. Friesz
Albert J. Moyer
Donald A. Patrick
17
The report of the Audit Committee of the Board of Directors
shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933 or under the
Securities Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
RELATIONSHIP
WITH INDEPENDENT AUDITORS
Ernst & Young LLP was selected by the Audit Committee
of the Board of Directors to audit the Companys financial
statements for fiscal 2007. The Audit Committee is directly
responsible for the engagement of the outside auditor. In making
its determination, the Audit Committee reviewed both the audit
scope and estimated audit fees for the coming year. Each
professional service performed by Ernst & Young LLP
during fiscal 2007 was reviewed, and the possible effect of such
service on the independence of the firm was considered, by the
Audit Committee. Representatives of Ernst & Young LLP
will be present at the Annual Meeting and will have an
opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions.
The Audit Committee has adopted policies and procedures for
pre-approving all audit services, audit-related services, tax
services and non-audit services performed by Ernst &
Young LLP. Specifically, the Audit Committee has pre-approved
the use of Ernst & Young LLP for detailed, specific
types of services within the following categories: annual
audits, quarterly reviews and statutory audits, preparation of
certain corporate tax returns, regulatory implementation and
compliance and risk assessment guidance. In each case, the Audit
Committee has also set specific annual ranges or limits on the
amount of each category of services which the Company would
obtain from Ernst & Young LLP, which limits and
amounts are established periodically by the Audit Committee. Any
proposed services exceeding these levels or amounts require
specific pre-approval by the Audit Committee. The Audit
Committee monitors the performance of all services provided by
the independent auditor, to determine whether such services are
in compliance with the Companys pre-approval policies and
procedures.
Fees Paid
to Ernst & Young LLP
The following table shows the fees that the Company paid or
accrued for the audit and other services provided by
Ernst & Young LLP for fiscal years 2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees
|
|
$
|
555,000
|
|
|
$
|
578,650
|
|
Audit-Related Fees
|
|
|
47,000
|
|
|
|
39,000
|
|
Tax Fees
|
|
|
43,745
|
|
|
|
41,500
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
645,745
|
|
|
$
|
659,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees. Audit fees are the aggregate fees
for services of the outside auditor for audits of the
Companys annual financial statements, the audit of
internal control over financial reporting, including testing and
compliance with Section 404 of the Sarbanes-Oxley Act, and
review of the Companys quarterly financial statements
included in the Companys
Forms 10-Q,
and services that are normally provided by the independent
registered public accounting firm in connection with statutory
and regulatory filings or engagements for those fiscal years.
Audit-Related Fees. Audit-related fees are
those fees for services provided by the outside auditor that are
reasonably related to the performance of the audit or review of
the Companys financial statements and not included as
audit fees. The services for the fees disclosed under this
category include the audit of the Companys 401(k) and
Qualified Pension Plans.
Tax Fees. Tax fees are those fees for services
provided by the outside auditor, primarily in connection with
the Companys tax compliance activities, including
technical tax advice related to the preparation of tax returns.
18
PROPOSAL 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
The Companys Audit Committee has selected
Ernst & Young LLP, independent auditors, to audit its
financial statements for the fiscal year ending January 31,
2009, and recommends that the stockholders vote for ratification
of that appointment. The Companys Audit Committee has
reviewed the professional services provided by Ernst &
Young LLP, as described above, has considered the possible
effect of such services on the independence of the firm, and has
determined that such services have not affected
Ernst & Young LLPs independence. Notwithstanding
this selection, the Audit Committee, at its discretion, may
direct the appointment of new auditors at any time during the
fiscal year if the Audit Committee determines that such a change
would be in the best interests of the Company and its
stockholders. If there is a negative vote on ratification, the
Audit Committee will reconsider its selection.
The affirmative vote of a majority of the votes cast is required
to ratify the Audit Committees selection. In addition, the
affirmative votes must represent at least a majority of the
required quorum. If the stockholders reject the selection, the
Board of Directors will reconsider its selection. The Board
of Directors unanimously recommends a vote FOR the
ratification of the appointment of Ernst & Young
LLP.
Other
Matters
Section 16 (a) Beneficial Ownership Reporting
Compliance. Section 16(a) of the Securities
Exchange Act requires the Companys officers, directors and
persons who beneficially own more than 10% of any equity
security of the Company to file reports of beneficial ownership
and changes in beneficial ownership with the Securities and
Exchange Commission and to furnish copies of these reports to
the Company. Based solely on a review of the copies of the forms
that the Company received, and other information available to
it, to the best of the Companys knowledge all such reports
were timely filed.
2009 Stockholder Proposal. If a stockholder
wishes to submit a proposal for consideration at the 2009 Annual
Meeting and wants that proposal to appear in the Companys
proxy statement and form of proxy for that meeting, the proposal
must be submitted to the Companys Corporate Secretary at
2027 Harpers Way, Torrance, California 90501, no later than
January 19, 2009. If a stockholder wishes to submit a
proposal for consideration at the 2009 Annual Meeting without
including that proposal in the Companys Proxy Statement
and form of proxy, the Companys bylaws require the
stockholder to provide the Company with written notice of such
proposal no less than 120 days in advance of such meeting,
provided that, if the meeting is advanced or delayed more than
40 days, such proposal must be submitted no later than the
tenth day following the first public announcement of the date of
such meeting. Such notice should be sent to the Companys
Corporate Secretary at 2027 Harpers Way, Torrance, California
90501.
Additional Matters Considered at the Annual
Meeting. The Board of Directors does not know of
any matters to be presented at the Annual Meeting other than as
stated herein. If other matters do properly come before the
Annual Meeting, the persons named on the accompanying proxy card
will vote the proxies in accordance with their judgment in such
matters.
Availability of Annual Report. The Annual
Report to Stockholders of the Company for the fiscal year ended
January 31, 2008, is being mailed to stockholders
concurrently herewith and is also available online at
www.virco.com. The Company will deliver only one Proxy Statement
and accompanying Annual Report to multiple stockholders sharing
an address unless the Company has received contrary instructions
from one or more of the stockholders. The Company will undertake
to deliver promptly, upon written or oral request, a separate
copy of the Proxy Statement and accompanying Annual Report to a
stockholder at a shared address to which a single copy of such
documents are delivered. A stockholder can notify the Company
that the stockholder wishes to receive a separate copy of the
Proxy Statement
and/or
Annual Report by contacting the Companys Corporate
Secretary at 2027 Harpers Way, Torrance, California 90501 or at
(310) 553-0474.
Similarly, stockholders sharing an address who are receiving
multiple copies of the Proxy Statement and accompanying Annual
Report may request delivery of a single copy of the Proxy
Statement
and/or
Annual Report by contacting the Company at the address set forth
above or at
(310) 533-0474.
19
The Company will also provide without charge a copy of its
Annual Report on
Form 10-K,
including financial statements and related schedules, filed with
the Securities and Exchange Commission, upon written or oral
request from any person who was holder of record, or who
represents in good faith that
he/she was a
beneficial owner, of Common Stock of the Company on May 5,
2008. Any such request shall be addressed to the Company at 2027
Harpers Way, Torrance, California 90501, Attention: Corporate
Secretary or by calling
(310) 533-0474.
By Order of the Board of Directors
Robert E. Dose
Secretary
Torrance, California
May 19, 2008
20
PROXYTHIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OFVIRCO MFG. CORPORATIONAnnual
Meeting of Stockholders June 17, 2008The undersigned hereby appoints each of ROBERT A. VIRTUE,
DOUGLAS A. VIRTUE and ROBERT E. DOSE, or either of them, with power to act without the other and
with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to
represent and vote, as provided on the other side, all the shares of Common Stock of Virco Mfg.
Corporation (the Company) which the undersigned is entitled to vote, and, in their discretion, to
vote upon such other business as may properly come before the 2008 Annual Meeting of Stockholders
of the Company to be held June 17, 2008 or any adjournment or postponement thereof, with all powers
which the undersigned would possess if present at the Annual Meeting.(Continued, and to be marked,
dated and signed, on the other side)Address Change/Comments (Mark the corresponding box on the
reverse side)sFOLD AND DETACH HERE. sYou can now access your VIRCO MFG. CORPORATION stockholder
account online.Access your Virco Mfg. Corporation stockholder account online via Investor
ServiceDirect® (ISD).Mellon Investor Services LLC, agent for Virco Mfg. Corporation, now
makes it easy and convenient to get current information on your stockholder account. After a simple
and secure process of establishing a Personal Identification Number (PIN), you are ready to log
in and access your account to: View account status View payment history for dividends View
certificate history Make address changes View book-entry information Obtain a duplicate
1099 tax form Establish/change your PIN Visit us on the web at
http://www.bnymellon.com/shareowner/isd and follow the instructions shown on this page.For
Technical Assistance Call 1-877-978-7778 between 9AM-7PM (EST) Monday-FridayInvestor
ServiceDirect® is a registered trademark of Mellon Investor Services LLC |
Mark Here for Address Change or CommentsSEE REVERSE SIDEThe Board of Directors recommends a vote
FOR item 1. The Board of Directors recommends a vote FOR item 2.
WITHHELDFORFOR ALLFORAGAINST ABSTAINTHIS PROXY
WILL BE VOTED AS DIRECTED, 1.Election of Directors2. Ratification of Appointment of OR IF NO
DIRECTION IS INDICATED, WILL Nominees:Independent AuditorsBE VOTED FOR THE PROPOSALS AND ON
01-Donald S. FrieszANY OTHER BUSINESS THAT MAY PROPRLY 02-Glen D. ParishCOME BEFORE THE ANNUAL
MEETING IN 03-James R. WilburnTHE DISCRETION OF THE HOLDERS OF Withheld for the nominees you list
below: THIS PROXY. (Write that nominees name in the space provided below.)Signature Signature
Date NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.sDetach here
from proxy voting card sVote by Internet or Telephone or Mail24 Hours a Day, 7 Days a WeekInternet
and Telephone voting is available through 11:59 PM EST the day prior to Annual Meeting day.Your
telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as
if you marked, signed and returned your proxy card.InternetTelephoneMail
http://www.proxyvoting.com/virc1-866-540-5760Mark, sign and date your proxy Use the Internet to
vote your proxy. Use any touch-tone telephone to vote card and return it in the enclosed Have your
proxy card in hand when your proxy. Have your proxy card in postage-paid envelope. you access the
web site.OR hand when you call.ORIf you vote your proxy by Internet or by telephone, you do NOT
need to mail back your proxy card.You can view the Annual Report and Proxy Statement on the
internet at: http://www.virco.com |