SMITH MIDLAND CORP
10-Ks and 10-Qs
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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
⌧
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))
☒
Definitive Proxy
Statement
☐
Definitive Additional
Materials
☐
Soliciting
Material Pursuant to Section 240.14a-12
SMITH-MIDLAND
CORPORATION
(Name of Registrant as
Specified in its Charter)
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(Name of Person(s)
Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee
(Check the appropriate box):
☒
No fee
required
☐
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:
☐
Fee paid previously with preliminary
materials.
☐
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:
SMITH-MIDLAND
CORPORATION
5119 Catlett
Road
Midland, Virginia
22728
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To be held on
Tuesday, August
13, 2019
Dear
Stockholders:
You are cordially
invited to attend the 2019 Annual Meeting of Stockholders of
SMITH-MIDLAND CORPORATION (the “Company”), a Delaware
corporation, to be held at Smith-Midland Corporation located at
5119 Catlett Road, Midland, Virginia 22728 on Tuesday, August 13,
2019 at 5:00 p.m. local time. The annual meeting is being held
for the following purposes:
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1.
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To elect five (5)
members to the Board of Directors;
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2.
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To ratify the
appointment of the accounting firm BDO USA, LLP as the
Company’s Independent Registered Public Accountants for the
current year ending December 31, 2019;
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3.
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To approve an
advisory vote on executive compensation for named executive
officers;
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4
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To approve an
advisory vote on the frequency of advisory votes on executive
compensation for named executive officers in future years;
and
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5.
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To consider and act upon
any matters incidental to the foregoing and any other matters that
may properly come before the meeting or any and all adjournments
thereof.
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The Board of Directors
has fixed the close of business on June 24, 2019 as the record
date for the determination of Stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment or
adjournments thereof. The foregoing items of business are more
fully described in the Proxy Statement accompanying this
notice.
We hope that all
stockholders will be able to attend the Annual Meeting in
person. In order to assure that a quorum is present at the
Annual Meeting, please date, sign and promptly return the enclosed
proxy whether or not you expect to attend the Annual
Meeting. A prepaid postage envelope has been enclosed for your
convenience. If you attend the Annual Meeting, your proxy
will, at your request, be returned to you and you may vote your
shares in person.
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By Order of the Board of
Directors
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Rodney I.
Smith
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Chairman
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Midland,
Virginia
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July 9,
2019
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Important Notice Regarding the
Availability of Proxy Materials for the
2019
Annual Meeting of Stockholders
to be held on
August 13,
2019
.
Pursuant to
Securities and Exchange Commission rules we have elected to utilize
the "full set delivery" option of providing paper copies of all of
our proxy materials, including a proxy card, to our stockholders,
as well as providing access to our proxy materials on a publicly
assessable website. The Company's Notice of Annual Meeting, Proxy
Statement and Annual Report to Stockholders for the fiscal year
ended December 31, 2018 are available on our corporate website
and may be accessed at
www.edocumentview.com/SMID
.
SMITH-MIDLAND
CORPORATION
5119 Catlett
Road
Midland,
Virginia 22728
PROXY
STATEMENT
The enclosed proxy is
solicited by the Board of Directors of SMITH-MIDLAND CORPORATION
(the “Company”) for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Tuesday, August
13, 2019, at 5:00 p.m. local time at Smith-Midland Corporation
located at 5119 Catlett Road, Midland, Virginia 22728 and at any
adjournment or adjournments thereof.
These proxy solicitation
materials are first being mailed to stockholders of record on or
about July 9, 2019, together with the Company’s Annual Report
to Stockholders.
This proxy statement, form of
proxy and the annual report are available at:
http://www.edocumentview.com/SMID
Stockholders of record
at the close of business on June 24, 2019 will be entitled to
vote at the Annual Meeting or any adjournment thereof. On or
about the record date, 5,134,492 shares of the Company’s
common stock, $.01 par value per share (“Common
Stock”), were issued and outstanding. The Company has no
other outstanding voting securities.
Each share of Common
Stock entitles the holder to one vote with respect to all matters
submitted to Stockholders at the Annual Meeting. A quorum for
the Annual Meeting is a majority of the shares
outstanding. Abstentions and broker non-votes are each
included in the determination of the number of shares present and
voting for the purpose of determining whether a quorum is
present. Broker non-votes occur when shares held by a broker
for a beneficial owner are not voted with respect to a particular
proposal because (1) the broker does not receive voting
instructions from the beneficial owner and (2) the broker lacks
discretionary authority to vote the shares. Brokers are prohibited
from exercising discretionary authority on non-routine matters.
Proposals one, three, and four are considered non-routine matters
and, therefore, brokers cannot exercise discretionary authority
regarding these proposals for beneficial owners who have not
returned proxies to the brokers.
Abstentions or broker
non-votes or failures to vote will have no effect in the election
of directors, who will be elected by a plurality of the affirmative
votes cast.
The affirmative vote of
the holders of a majority of the shares present in person or by
proxy and entitled to vote to ratify the appointment of BDO USA,
LLP as the Company’s independent auditors for the year ending
December 31, 2019 will be required for approval. An
abstention will be counted as a vote against this
proposal.
The affirmative
vote of the holders of a majority of the shares present in person
or by proxy and entitled to vote is required to approve the
advisory vote on named executive officer compensation. This vote is
advisory and will not be binding on the Company or its Board of
Directors. However, the Board will review the voting results and
take them into consideration when making future decisions regarding
executive compensation.
The frequency option (one year, two years or three
years) receiving the plurality of the votes cast will be the
frequency that has been "approved" by stockholders. Because the
vote is advisory, it will not be binding on the Company's Board of
Directors. However, the Board will consider the outcome of the vote
when determining the frequency of future advisory votes on
executive compensation. Abstentions and broker non-votes will have
no effect on this vote.
An Annual Report,
containing the Company’s audited financial statements for the
years ended December 31, 2018 and December 31, 2017, is
being mailed to all Stockholders entitled to vote.
Execution of a proxy
will not in any way affect a Stockholder’s right to attend
the Annual Meeting and vote in person. The proxy may be revoked at
any time before it is exercised by written notice to the Company's
Secretary prior to the Annual Meeting, or by giving to the
Secretary a duly executed proxy bearing a later date than the proxy
being revoked at any time before such proxy is voted, or by
appearing at the Annual Meeting and voting in person. The
shares represented by all properly executed proxies received in
time for the Annual Meeting will be voted as specified
therein. Proxies that are signed and returned but do not
include voting instructions shares will be voted in favor of the
election of Directors of those persons named in this Proxy
Statement, in favor of the proposal to ratify and approve the
selection of BDO USA, LLP as the independent auditors for the
Company for the year ending December 31, 2019, in support of
the compensation of the named executive officers as presented in
this proxy statement, and for a three year frequency on future
say-on-pay advisory votes for compensation of the named executive
officers.
The Board of Directors
knows of no other matter to be presented at the Annual Meeting. If
any other matter should be presented at the Annual Meeting upon
which a vote may be taken, such shares represented by all proxies
received by the Board of Directors will be voted with respect
thereto in accordance with the judgment of the persons named as
attorneys in the proxies. The Board of Directors knows of no
matter to be acted upon at the Annual Meeting that would give rise
to appraisal rights for dissenting stockholders.
1
Proposal
No. 1
ELECTION OF
DIRECTORS
Five Directors,
constituting the entire Board of Directors, are to be elected at
the Annual Meeting. Each Director of the Company is elected at the
Company’s Annual Meeting of Stockholders and serves until his
successor is elected and qualified. Vacancies and newly created
directorships resulting from any increase in the number of
authorized Directors may be filled by a majority vote of Directors
then remaining in office. Officers are elected by and serve at the
discretion of the Board of Directors.
Shares represented by
all proxies received by the Board of Directors and not so marked as
to withhold authority to vote for an individual Director, or for
all Directors, will be voted (unless one or more nominees are
unable or unwilling to serve) for the election of the nominees
named below. The Board of Directors knows of no reason why any
such nominee should be unwilling to serve, but if such should be
the case, proxies will be voted for the election of some other
person or for fixing the number of Directors at a lesser
number.
The Board unanimously
recommends that Stockholders vote
FOR
election of the
five nominees for Director.
The following table
sets forth certain information concerning each nominee for election
as a Director of the Company:
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Name
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Age
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Director
Since
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Position
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Rodney I.
Smith
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80
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1970
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Chairman of the Board of
Directors
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Ashley B.
Smith
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57
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1994
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Chief Executive Officer,
President, and Director
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Wesley A.
Taylor
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71
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1994
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Director
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Richard
Gerhardt
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52
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2016
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Director
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James Russell
Bruner
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63
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2018
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Director
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Background
The following is a brief
summary of the background of each nominee for Director of the
Company:
Rodney I.
Smith.
Chairman of the Board of
Directors.
Rodney I. Smith co-founded the Company in
1960 and became its President and Chief Executive Officer in 1965.
He served as President until 2014 and Chief Executive Officer until
May 2018. Mr. Smith currently remains as a part-time employee of
the Company. He has served on the Board of Directors and has
been its Chairman since 1970. Mr. Smith is the principal
developer and inventor of the Company’s proprietary and
patented products. He is the past President of the National
Precast Concrete Association. Mr. Smith has served on the
Board of Trustees of Bridgewater College in Bridgewater, Virginia
since 1986. The Company believes that Mr. Smith’s
extensive experience in the precast concrete products industry and
his knowledge of the marketplace gives him the qualifications and
skills necessary to serve in the capacity as the Chairman of the
Board of Directors.
Ashley B.
Smith.
Chief Executive Officer,
President, and Director.
Ashley B. Smith has served as
Chief Executive Officer of the Company since May 2018, President
since 2014 and as a Director since 1994. He was Vice President
of the Company from 1990 to 2014. Mr. Smith holds a Bachelor of
Science degree in Business Administration from Bridgewater College.
He is the immediate past President of the National Precast Concrete
Association. Mr. Ashley B. Smith is the son of Mr. Rodney I.
Smith. The Company believes that Mr. Smith’s education,
experience in the precast concrete industry and business experience
give him the qualifications and skills necessary to serve in the
capacity as a director.
Wesley A.
Taylor.
Director
.
Wesley
A. Taylor has served as a Director since 1994, and previously held
the position as Vice President of Administration from 1989 to 2017.
Mr. Taylor holds a Bachelor of Arts degree from Northwestern State
University. The Company believes that Mr. Taylor’s
education, business experience and his extensive experience in the
precast concrete industry gives him the qualifications and skills
necessary to serve in the capacity as a director.
2
Richard Gerhardt.
Director.
Mr.
Gerhardt has served as a Director of the Company since 2016. He is
currently serving his first term as a Fauquier County, Virginia
Supervisor for the Cedar Run Magisterial District. Mr. Gerhardt
served in an escalating succession of positions for three global
shipping and logistic companies: DHL Global Mail, ESI Global
Logistic and MSI Worldwide. His eight years as President, Chief
Operating Officer, and Shareholder of MSI Worldwide culminated in
its acquisition by Belgian Post. Mr. Gerhardt presently serves on
the boards of Path Foundation (formally Fauquier Health
Foundation), Virginia Gold Cup Association and Fauquier Free
Clinic. Mr. Gerhardt holds a Bachelor of Arts in Business
Administration with a minor in Economics from Washington College in
Chestertown, MD. The Company believes that Mr. Gerhardt's
experience in business operations, management, strategic planning
and leadership provides him with the knowledge and skills necessary
to serve in the capacity as a director of the
Company.
James Russell Bruner.
Director.
Mr. Bruner has
served as a Director of the Company since December 2018. Mr. Bruner
has served as Chairman of Maersk Line, Limited (“Maersk
Line”) since November 2016 and was President and Chief
Executive Officer of Maersk Line from January 2014 to November
2017. Maersk Line owns and operates a fleet of container and tanker
ships that are under the flag of the United States. These ships
support military, government and humanitarian missions through the
transportation of United States government cargo on an
international basis. Through its subsidiaries, Maersk Line owns
and/or operates ships designed to carry wheeled cargo and a fleet
of tankers and maritime support vessels. Maersk Line operates as a
subsidiary of A.P. Moller-Maersk A/S, an integrated transport and
logistics company headquartered in Copenhagen, Denmark. Mr. Bruner
attended Bridgewater College in Virginia. He is a graduate of the
University of Michigan Executive Program and Harvard Business
School's Advanced Management Program. The Company believes that Mr.
Bruner's current and past business-related experience provides him
with the knowledge and skills necessary to serve in the capacity as
a director of the Company.
GENERAL INFORMATION RELATING
TO THE BOARD OF DIRECTORS AND OFFICERS
Director
Independence
Currently Richard
Gerhardt and James Russell Bruner are the only independent
directors of the Company as determined under the NASDAQ Marketplace
Rules. The other Directors are not considered independent in
view of their positions as current or recent executive officers of
the Company.
Meetings of the Board of
Directors
The Board of Directors
met formally three times during 2018 and met informally on a number
of occasions, voting on corporate actions, in some cases, by
written consent. All of the Company’s current directors
attended all of the meetings of the Board of Directors in person
and the respective committees of which he is a member, except for
Richard Gerhardt who missed one meeting of the Board of Directors
during 2018.
With the exception of
Rodney I. Smith and Ashley B. Smith, who are father and son,
respectively, no Director or executive officer of the Company is
related by blood, marriage, or adoption to any of the
Company’s other Directors or executive officers. There are no
related-party transactions required to be disclosed pursuant to
Item 404 of Regulation S-K.
The Company does not
have a standing Nominating Committee at the current time. The
Company believes that a standing Nominating Committee is not
necessary or cost efficient for a company its size. All
directors participate in the consideration of director
nominees. The Company does not have a formal Nominating
Committee Charter. While the Board of Directors has received a
small number of stockholder recommendations for consideration of
director candidates, it has not received a sufficient amount to
warrant the adoption of a formal policy in that regard, although it
may consider doing so in the future. It is the Board’s intent
to consider any stockholder nominees that may be put
forth. The Board has not identified any specific minimum
qualifications or skills that it believes must be met by a nominee
for director. It is the intent of the Board to review from
time to time the appropriate skills and characteristics of
directors in the context of the current make-up of the Board and
the requirements and needs of the Company at a given
time.
In selecting nominees
for the Board, the Company considers the diversity of each
candidate in regards to the anticipated needs of the Company as a
whole so as to leverage the experience and education of each
director in achieving the goals of the Company.
3
Compensation
Committee
The
Company
created a Compensation
Committee in August 2018. The Compensation Committee operates under
a written charter adopted by the Board of Directors and the charter
is available without charge on our website at
www.smithmidland.com
under the heading “Investor
Relations/Governance/Governance Doc
s”. Hard copies may
also be obtained, without charge, by writing to our
Secretary at Smith-Midland Corporation at 5119
Catlett Road, Midland, Virginia 22728. The Compensation Committee
reviews and assesses the adequacy of its charter annually. The
Compensation Committee held one meeting during the fiscal year
ended December 31, 2018.
As of
the
fiscal year ended
December 31,
2018 and as of the record date, the
members of the Compensation Committee consisted of Richard Gerhardt
and James Russell Bruner. Each member of the Compensation Committee
has been determined by the Board, which will be reviewed on an
annual basis, to meet the standards for independence required of
compensation committee members by NASDAQ Marketplace and applicable
SEC rules.
The
Compensation Committee assists the Board in determining the
compensation of the Company’s executive officers, board
advisers and directors of the Company, including but not limited
to, the grant of restricted stock pursuant to the 2016 Stock
Incentive Plan or other plan that may be established.
The Compensation Committee’s principal
responsibilities, which have been authorized by the Board,
are:
●
approving
the corporate goals and objectives applicable to the compensation
for the Chief Executive Officer, evaluating at least annually the
Chief Executive Officer’s performance in light of those goals
and objects and determining and approving the Chief Executive
Officer’s compensation level based on this
evaluation;
●
reviewing
and approving other executive officers’ annual base salaries
and annual incentive opportunities (after considering the
recommendation of our Chief Executive Officer with respect to the
form and amount of compensation for executive officers other than
the Chief Executive Officer);
●
evaluating
the level and form of compensation for Board of Directors and
committee service by non-employee members of our Board and
recommending changes when appropriate;
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advising the Board on compensation and benefits
matters, including making recommendations and decisions where
authority has been granted regarding our equity-based compensation
plans
and benefit plans
generally, including employee bonus and retirement plans and
programs;
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approving
the amount of and vesting of equity awards;
●
evaluating
the need for, and provisions of, any employment contracts/severance
arrangements for the Chief Executive Officer and other executive
officers; and
●
reviewing
and discussing with management our disclosure relating to executive
compensation proposed by management to be included in our proxy
statement and recommending that such disclosures be included in our
annual report on Form 10-K and proxy statement.
The
Compensation Committee does not delegate any of its
responsibilities to other committees or persons. Participation by
executive officers in the recommendation or determination of
compensation for executive officers or directors is limited to (i)
recommendations by our Chief Executive Officer to our Compensation
Committee regarding the compensation of executive officers other
than with respect to himself and (ii) our Chief Executive
Officer’s participation in Board determinations of
compensation for the non-employee directors.
Neither member of the Compensation Committee is or was at any time
an officer or employee of the Company or has or had at any time any
relationship with the Company that requires disclosure under Item
404 of Regulation S-K.
Audit
Committee
The Company
created an Audit Committee in August
2018. The Audit Committee operates under a written charter adopted
by the Board of Directors and the charter is available without
charge on our website at
www.smithmidland.com
under the heading “Investor
Relations/Governance/Governance Doc
s”. Hard copies may
also be obtained, without charge, by writing to our
Secretary at Smith-Midland Corporation at 5119
Catlett Road, Midland, Virginia 22728.
As of the fiscal year ended December 31, 2018 and as
of the record date, the members of the Audit Committee consisted of
Richard Gerhardt and James Russell Bruner. Each member of the Audit
Committee has been determined by the Board, which will be reviewed
on an annual basis, to meet the standards for independence required
of audit committee members by NASDAQ Marketplace and applicable SEC
rules. The Board has determined that Mr. Bruner is an “audit
committee financial expert,” within the meaning of applicable
SEC rules based upon his education, which includes a degree from
the University of Michigan Executive Program and Harvard Business
School’s Advanced Management Program, and business-related
experience.
The formal report of the Audit Committee is included
in this proxy statement.
The Audit Committee
oversees all accounting and financial reporting processes and the
audit of the Company’s financial statements. The Audit
Committee is responsible for overseeing the quality and integrity
of the Company’s financial statements and the qualifications,
independence, selection and performance of the Company’s
independent registered public accounting firm.
The Audit Committee has
recommended that the audited financial statements for fiscal year
ended December 31, 2018 be included in the Company’s
Annual Report on Form 10-K for the fiscal year then
ended.
Leadership
Structure
Currently, the
Company separates the roles of Chairman of the Board and Chief
Executive Officer. Rodney I. Smith, is Chairman of the Board, and
currently is employed by the Company. The Company believes that Mr.
Rodney I. Smith's history with the Company, as co-founder and
former executive officer, makes him an appropriate person to
provide Chairman oversight.
4
Risk
Oversight
It is the responsibility
of the Board to oversee the assets of the Company and to ensure
that appropriate controls are in place to minimize risks associated
with such assets. While the Board is tasked with the
responsibility to detect potential high level risks, management is
tasked with managing risk on a daily basis. Where possible,
management, in conjunction with the Board, has defined high level
risk controls to help mitigate the most significant risks to the
Company.
Code of
Ethics
Our Board of Directors
has adopted a Professional Code of Ethics as well as a Finance Code
of Professional Conduct. The Professional Code of Ethics covers all
employees of the Company and describes the policies and procedures
for their ethical conduct. The Finance Code of Professional Conduct
covers conduct in the practice of financial management and
specifically relates to the Chief Executive Officer, the Chief
Financial Officer, Accounting Manager and other associates of the
finance organization.
Communications Between
Stockholders and the Board of Directors
Stockholders and other
interested parties wishing to communicate with members of the Board
of Directors should send a letter to the Secretary of the Company
with instructions as to which director(s) is to receive the
communication. The Secretary will forward the written
communication to each member of the Board of Directors identified
by the stockholder or, if no individual director is identified, to
all members of the Board of Directors.
Director Attendance at Annual
Meeting
The Company has not in
the past required members of the Board of Directors to attend each
annual meeting of the stockholders because the formal meetings have
been attended by very few stockholders, and have generally been
brief and procedural in nature. All of the Company’s
current directors attended the 2018 Annual Meeting of stockholders.
The Board will continue to monitor stockholder interest and
attendance at future meetings and re-evaluate this policy as
appropriate.
Director
Compensation
All Directors, whether
employee or non-employee, receive $1,000 per meeting attended as
compensation for their services as Directors and are reimbursed for
expenses incurred in connection with the performance of their
duties. For the twelve months ended December 31, 2018,
total cash payments made to all Directors were $15,000. The
compensation for all directors who are not named executive officers
is:
5
Director Compensation Table
for
2018
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Name
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Fees
Earned or
Paid in Cash
($)
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Stock
Awards
($)(2)
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Option
Awards
($)
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Non-Equity
Incentive
Plan
Compen-sation
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Non-
Qualified
Deferred
Compen-
sation
Earnings
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All Other
Compen-sation
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Total ($)
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Wesley A.
Taylor
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3,000
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—
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—
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—
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—
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—
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3,000
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G.E. "Nick" Borst
(retired)
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3,000
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—
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—
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—
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—
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—
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3,000
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Richard
Gerhardt
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2,000
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—
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—
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—
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—
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—
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2,000
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James Russell
Bruner
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1,000
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—
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—
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—
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—
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—
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1,000
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Executive
Officers
The executive officers,
including the Chairman of the Board who continues to provide
services to the Company as an employee, of the Company
are:
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Director or
Executive
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Name
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Age
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Officer Since
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Position
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Rodney I.
Smith
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80
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1970
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Chairman of the Board of
Directors
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Ashley B.
Smith
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57
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1994
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Chief Executive Officer,
President, and Director
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Adam J.
Krick
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34
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2018
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Chief Financial Officer,
Secretary, and Treasurer
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Adam J. Krick.
Chief
Financial Officer.
Mr. Krick has served as Chief
Financial Officer of the Company since January 2018. Prior to
becoming the Chief Financial Officer, Mr. Krick served as the
Accounting Manager for the Company since 2014. Prior to joining the
Company, Mr. Krick worked in public accounting focusing on tax and
business consulting. Mr. Krick is a Certified Public Accountant and
holds a Bachelor of Business Administration degree in Accounting
from James Madison University.
For the biographies of
Messrs. Rodney I. Smith and Ashley B. Smith please see
“Proposal No. 1—Election of
Directors”.
6
Proposal
No. 2
PROPOSAL TO RATIFY AND APPROVE
THE SELECTION OF BDO USA, LLP
AS THE INDEPENDENT AUDITORS
FOR THE COMPANY FOR THE YEAR ENDING
December 31,
2019
The Company has
selected BDO USA, LLP to serve as its independent registered public
accounting firm for the year ending December 31,
2019.
The Board unanimously recommends that
Stockholders vote
FOR
the ratification of the
selection of BDO USA, LLP as the independent auditors for the
Company for the year ending
December 31,
2019.
AUDIT COMMITTEE
REPORT
The Company created an Audit Committee in August 2018. The
following is the report of the Audit Committee of the Board of
Directors of the Company.
The Audit
Committee, is responsible for overseeing the integrity of the
Company’s financial statements, the qualifications,
independence, selection and compensation of the Company’s
registered independent public accounting firm, and the internal
control functions as they relate to the the preparation of the
financial statements.
Among other things, the Audit Committee reviews and
discusses with management and with the Company’s independent
registered public accounting firm the results of the
Company’s year-end audit, including the audit report and
audited financial statements. The members of the Audit Committee of
the Board are presenting this report for the fiscal year ended
December 31, 2018.
The Audit Committee acts pursuant to a written
charter. The Audit Committee reviews and assesses the adequacy of
its charter annually. The Audit Committee held two meetings during
the fiscal year ended December 31, 2018.
All members of the Audit Committee are independent
directors, qualified to serve on the Audit Committee pursuant to
the applicable NASDAQ
Marketplace
Rules.
The Audit Committee provides advice,
counsel, and direction to management and the independent registered
public accounting firm, based on the information it receives from
them.
Management is
responsible for the preparation, presentation and correctness of
the Company’s financial statements, internal controls over
financial reporting and procedures designed to assure compliance
with generally accepted accounting procedures. The Company’s
independent registered public accounting firm, BDO USA, LLP, is
responsible for performing an independent audit of the
Company’s consolidated financial statements in accordance
with generally accepted auditing standards in the United States of
America and issuing a report thereon.
Management has
represented to the Audit Committee that the Company’s
consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Audit Committee
has reviewed and discussed with management and BDO USA, LLP, the
Company’s audited financial statements as of and for the year
ended December 31, 2018. The Audit Committee also discussed
with BDO USA, LLP the applicable requirements of the Public Company
Accounting Oversight Board (PCAOB) and the Securities and Exchange
Commission. The Audit Committee has received the written
disclosures and the letter from BDO USA, LLP required by applicable
requirements of the PCAOB regarding BDO USA, LLP’s
communications with the Audit Committee concerning independence,
and the Audit Committee has discussed with BDO USA, LLP its
independence. The Audit Committee has also discussed the
compatibility of the provision of non-audit services with the
independent auditor’s independence.
Management has also represented to the Audit
Committee that it has completed an assessment of the effectiveness
of the Company’s internal control over financial reporting,
and the Audit Committee has reviewed and discussed with management
and BDO USA, LLP the scope and results of their respective
assessments of the Company’s internal control over financial
reporting.
The
Audit Committee met at least once each quarter since its creation
with BDO USA, LLP and management to review the Company’s
interim financial results before the publication of the
Company’s quarterly earnings press releases. The Audit
Committee also intends to meet separately with BDO USA, LLP without
the members of management present on at least an annual
basis.
Based on the review and
discussions described in this report, the Audit Committee
recommended that the audited financial statements referred to above
be included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2018, for filing with the
Securities and Exchange Commission.
The Audit
Committee:
Richard
Gerhardt
James Russell
Bruner
7
AUDIT AND RELATED
FEES
The aggregate fees
billed for each of the two most recent fiscal years for
professional services rendered by BDO USA, LLP, the principal
accountant for the audit of the Company, for assurance and related
services related to the audit; for tax compliance, tax advice, and
tax planning; and for all other audited-related fees are shown in
the table below.
Audit Fees. Fees charged
as audit fees are for the audit of the Company’s annual
financial statements and review of financial statements included in
the Company’s Forms 10-Q or services that are normally
provided by the accountant in connection with statutory and
regulatory filings or engagements.
Tax Fees. Tax fees are
for professional services rendered by BDO USA, LLP for tax
compliance, tax advice, and tax planning.
Audit-Related Fees.
Fees paid to BDO USA, LLP for the audit of the Company's 401(k)
benefit plan.
The Company has a
separate standing Audit Committee. All members of the Audit
Committee are considered to be independent when using the
definition of the NASDAQ Marketplace Rules.
In accordance with
applicable laws and regulations, the Audit Committee reviews and
pre-approves any non-audit services to be performed by BDO USA, LLP
to ensure that the work does not compromise their independence in
performing their audit services. The Audit Committee generally also
reviews and pre-approves all audits, audit related, tax and all
other fees, as applicable. In some cases, pre-approval may be
provided for up to a year and relates to a particular category or
group of services and is subject to a specific budget and SEC
rules.
|
|
2018
|
2017
|
|
Audit Fees
|
$
168
|
$
186
|
|
Tax Fees
|
54
|
52
|
|
Audit-Related
Fees
|
10
|
10
|
|
Total Fees
|
$
232
|
$
248
|
8
Proposal No. 3
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
As
required by Section 14A of the Securities Exchange Act of 1934, the
Board of Directors is providing the stockholders of the Company
with an advisory vote to approve the officer compensation of its
named executive officers. This advisory vote is commonly known as
stockholder "say-on-pay". The Company and its Board of Directors
hopes that each stockholder will take advantage of this opportunity
to make their opinion known.
Please
review the compensation of our named executive officers as
disclosed in this proxy statement in accordance with the SEC rules.
We believe the salaries and other compensation of the named
executive officers are reasonable and necessary to attract and
maintain competent personnel to manage the Company in a responsible
and profitable manner.
We
are asking our stockholders to indicate their support for the
compensation of the named executive officers as described in this
proxy statement with a vote "
For
" the following
resolution:
"Resolved,
that the stockholders approve, on an advisory
basis, the compensation of the named executive officers, as
disclosed in our proxy statement for the 2019 Annual Meeting of
Stockholders pursuant to the compensation disclosure rules of the
SEC."
While
this vote is non-binding, our Board of Directors and the
Compensation Committee, which is comprised of independent
directors, will give the results of this vote careful consideration
when setting policy and making decisions regarding the salaries and
other compensation arrangements for the named executive officers of
the Company.
9
Proposal No. 4
FREQUENCY OF ADVISORY VOTE REGARDING EXECUTIVE
COMPENSATION
The
Board of Directors, pursuant to the requirements of Section 14A of
the Securities Exchange Act of 1934, is providing the stockholders
of the Company an advisory vote on the frequency of say-on-pay
votes for the named executive officers of the Company. This
advisory vote allows the stockholders to decide how often they
would prefer to vote on the say-on-pay provisions as described
above. The choice of votes for this proposal will be one, two,
three years or abstention from voting.
The
Board of Directors has closely reviewed the voting options
available and has come to the conclusion that the advisory vote on
this proposal would best be held every third year. As this vote is
advisory in nature, the Board of Directors will carefully weigh the
outcome of the vote when making its final decision as to how often
to establish the voting policy.
We are asking our stockholders to vote
For
a "Three Year" frequency on future
say-on-pay advisory votes for compensation of the named executive
officers of the Company.
10
BENEFICIAL OWNERSHIP OF COMMON
STOCK
The following table sets
forth, as of June 24, 2019, certain information concerning
ownership of the Company’s Common Stock by (i) each person
known by the Company, based solely on filings with the Securities
and Exchange Commission, to own of record or be the beneficial
owner of more than five percent (5%) of the Company’s Common
Stock, (ii) named executive officers and Directors, and (iii) all
Directors, and executive officers as a group. Except as otherwise
indicated, the stockholders listed in the table have sole voting
and investment powers with respect to the shares
indicated.
|
Name and Address of Beneficial Owner
(1)
|
Number of Shares
Beneficially Owned
(2)
|
Percentage of
Class
|
|
Rodney I. Smith
(1)(3)(4)(5)
|
684,798
|
13.3
%
|
|
|
|
|
|
Ashley B. Smith
(1)(3)(4)(6)
|
173,042
|
3.4
%
|
|
|
|
|
|
Wesley A. Taylor
(1)(7)
|
28,667
|
*
|
|
|
|
|
|
Richard Gerhardt
(8)(9)
|
2,000
|
*
|
|
|
|
|
|
James Russell
Bruner
|
—
|
—
|
|
|
|
|
|
Adam J. Krick
(1)(10)
|
3,390
|
*
|
|
|
|
|
|
ARS Investment Partners
LLC (11)
|
391,206
|
7.6
%
|
|
|
|
|
|
Thompson Davis &
Co., Inc. (12)
|
525,033
|
10.2
%
|
|
|
|
|
|
Wax Asset
Management, LLC (13)
|
538,490
|
10.5
%
|
|
|
|
|
|
All directors and
executive officers as a group (6 persons)(14)
|
891,897
|
17.4
%
|
(1) The address for
each of Messrs. Rodney I. Smith, Ashley B. Smith, Wesley A. Taylor,
and Adam J. Krick is c/o Smith-Midland Corporation, 5119 Catlett
Road, Midland, Virginia 22728.
(2) Pursuant to the
rules and regulations of the Securities and Exchange Commission,
shares of Common Stock that an individual or group has a right to
acquire within 60 days pursuant to the exercise of options or
warrants are deemed to be outstanding for the purposes of computing
the percentage ownership of such individual or group, but are not
deemed to be outstanding for the purpose of computing the
percentage ownership of any other person shown in the
table.
(3) Ashley B. Smith
is the son of Rodney I. Smith. Each of Rodney I. Smith and
Ashley B. Smith disclaims beneficial ownership of the other’s
shares of Common Stock.
(4) Does not
include aggregate of 80,513 shares of Common Stock held by Matthew
Smith and Roderick Smith. Matthew Smith and Roderick Smith are
sons of Rodney I. Smith, and brothers of Ashley B.
Smith. Also, does not include shares held by Merry Robin
Bachetti, sister of Rodney I. Smith and aunt of Ashley B. Smith,
for which each of Rodney I. Smith and Ashley B. Smith disclaims
beneficial ownership.
(5) Does not
include 2,500 shares of Common Stock held by Hazel Bohling, former
wife of Rodney I. Smith, and mother of Mr. Smith’s children.
Mr. Smith disclaims beneficial ownership of the shares held by
Hazel Bohling. Includes 14,000 unvested restricted shares
granted pursuant to the Company's 2016 Equity Incentive
Plan.
11
(6) Includes 10,667
unvested restricted shares granted pursuant to the Company's 2016
Equity Incentive Plan.
(7) Includes 5,667
unvested restricted shares granted pursuant to the Company's 2016
Equity Incentive Plan.
(8) Includes 667
unvested restricted shares granted pursuant to the Company's 2016
Equity Incentive Plan.
(9) Address of holder is
8305 Old Dumfries Road, Catlett, VA 20119.
(10) Includes 167
unvested restricted shares granted pursuant to the Company's 2016
Equity Incentive Plan.
(11) Address of
holder is 500 Fifth Avenue, Ste 1440, New York, NY
10110.
(12) Address of holder
is 15 S. 5th Street, Richmond, VA 23219.
(13) Address of holder
is 44 Cherry Lane, Madison, CT 06443.
(14) Includes 31,168
unvested restricted shares for all directors and executive officers
as a group.
EQUITY COMPENSATION PLAN
INFORMATION
The following table sets
forth information as of December 31, 2018 regarding the
Company's equity compensation plans:
|
Plan Category
|
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants and
rights
|
Weighted
average exercise
price of
outstanding
options, warrants and
rights
|
Number of
securities remaining
available for future
issuance under
equity compensation
plans
|
|
Equity compensation
plans approved by security holders (1)
|
—
|
—
|
—
|
|
Equity compensation
plans not approved by security holders
|
—
|
—
|
226,500
|
|
Total
|
—
|
—
|
226,500
|
(1) The Equity Incentive
Plan has a balance of 226,500 shares of stock unissued and
available for award at December 31, 2018.
On October 13, 2016 the
Company's Board of Directors adopted the 2016 Equity Incentive Plan
(the "Equity Incentive Plan"). Employees, directors and consultants
of the Company are eligible to participate in the Equity Incentive
Plan. The Equity Incentive Plan is administered by the Compensation
Committee of the Board of Directors or the full Board during such
times as no committee is appointed by the Board or during such
times as the Board is acting in lieu of the committee (the
"Committee"). The Equity Incentive Plan provides for the grant of
equity-based compensation in the form of restricted stock,
restricted stock units, performance shares, performance cash and
other share-based awards. The Committee has the authority to
determine the type of award, as well as the amount, terms and
conditions of each award, under the Equity Incentive Plan subject
to the limitations and other provisions of the Equity Incentive
Plan. An aggregate of 400,000 shares of Common Stock, par value
$.01 per share, were authorized for issuance under the Equity
Incentive Plan, subject to adjustment for stock splits, dividends,
distributions, recapitalizations and other similar transactions or
events, of which amount 226,500 remains available for issuance. If
any shares subject to an award are forfeited, expire, or otherwise
terminate without issuance of such shares, such shares shall, to
the extent of such forfeiture, expiration, or termination, again be
available for issuance under the Equity Incentive
Plan.
12
Compensation of Executive
Officers
The following table sets
forth the compensation paid by the Company for services rendered
for 2018 and 2017 to the principal executive officer and the
Company’s two most highly compensated executive officers
other than the principal executive officer (the “named
executive officers”) as of the end of 2018:
Summary Compensation
Table
|
Name and Principal
Position
|
|
Year
|
Salary ($)(1)
|
Bonus ($)(2)
|
|
All Other Compensation ($)
|
Total ($)
|
|
Rodney I. Smith
|
|
2018
|
123,247
|
60,350
|
—
|
102,000
|
285,597
|
|
Chief Executive Officer
and Chairman of the Board (3)(4)
|
|
2017
|
116,774
|
64,230
|
228,900
|
102,000
|
511,904
|
|
|
|
|
|
|
|||
|
Ashley B.
Smith
|
|
2018
|
188,823
|
119,006
|
—
|
3,000
|
310,829
|
|
President and Chief
Executive Officer (4)(5)
|
|
2017
|
201,994
|
59,808
|
—
|
3,000
|
264,802
|
|
|
|
|
|
|
|||
|
Adam J.
Krick
|
|
2018
|
134,437
|
20,350
|
17,225
|
3,000
|
175,012
|
|
Chief Financial Officer
(6)
|
|
|
|
|
|
|
|
(1) Represents
salaries paid in 2018 and 2017 for services provided by each named
executive officer serving in the capacity listed.
(2) Represents
amounts paid for annual performance-based bonus related to
operations for the prior year.
(3) Mr. Rodney I.
Smith was paid $99,000 in each of 2018 and 2017, which is included
in the column titled “All Other Compensation”, for
royalty payments due under his employment contract with the
Company, which is more fully described in the following section
titled “Employment Contracts and Termination of Employment
and Change in Control Arrangements”. In addition, Mr.
Rodney I. Smith received director’s compensation in the
amount of $3,000 for the years 2018 and 2017. Includes, under Stock
Awards, 42,000 restricted shares granted to Mr. Smith in January
2017, vesting ratably, on an annual basis, over a three year
vesting period. The value of the common stock shares at the grant
date was $228,900.
(4) Mr. Ashley B. Smith
replaced Rodney I. Smith as Chief Executive Officer in May
2018.
(5) Mr. Ashley B.
Smith received director’s compensation in the amount of
$3,000 for each of the years 2018 and 2017.
(6) Includes 2,500
restricted shares granted in January 2018 pursuant to the Company's
2016 Equity Incentive Plan, which shares vested in full immediately
on the grant date. The value of the common stock shares at the
grant date was $17,225. Mr. Krick received advisory director's
compensation in the amount of $3,000 for the year 2018, as shown in
"All Other Compensation".
13
Outstanding Equity Awards at
Fiscal Year-End
|
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option
Exercise
Price
($/Sh)
|
Option
Expiration Date
|
Number of Shares or Units of
Stock that have not Vested (#)(1)
|
Market Value of Shares or Units
of Stock that have not Vested ($)
|
Equity Incentive Plan Awards:
Number of Unearned Shares, Units or Other Rights that have not
Vested (#)
|
Equity Incentive Plan Awards:
Market or Payout Value of Unearned Shares, Units or Other Rights
that have not Vested ($)
|
|
Rodney I.
Smith
|
—
|
—
|
—
|
—
|
28,000
|
152,600
|
—
|
—
|
|
Ashley B.
Smith
|
—
|
—
|
—
|
—
|
10,667
|
52,800
|
—
|
—
|
|
Adam J.
Krick
|
—
|
—
|
—
|
—
|
167
|
825
|
—
|
—
|
|
TOTAL
|
—
|
—
|
|
|
38,834
|
206,225
|
—
|
—
|
(1) Restricted shares
granted vest, ratably, on an annual basis, over three years from
the date of grant.
Employment Contracts and
Termination of Employment and Change in Control
Arrangements.
The Company entered into
an Employment Agreement with Rodney I. Smith, its current Chairman
of the Board, effective as of September 30, 2002. The agreement
provides for an annual base salary of $99,000 (“Base
Salary”), which will be reviewed at least annually and
adjusted from time to time at the determination of the Board of
Directors. It also provides for an annual royalty fee of $99,000
payable as consideration for Mr. Smith’s assignment to the
Company of all of his rights, title and interest in and to the
Patents (as defined in the agreement). Payment of the royalty
continues only for as long as the Company is using the inventions
underlying the Patents. Mr. Smith is also entitled to a
performance-based bonus as determined by the Board each calendar
year.
Mr. Smith’s
employment agreement provides further that if Mr. Smith (i)
voluntarily leaves the employ of the Company within six months of
his becoming aware of a Change of Control (as defined in the
agreement) of the Company, then he shall be entitled to receive a
lump sum amount equal to three times the five-year average of his
combined total annual compensation, which includes the Base Salary
and bonus, less one dollar ($1.00), and certain other unpaid
accrued amounts as of the date of his termination, or (ii) is
terminated by the Company without Cause (as defined in the
agreement) or leaves the Company with Good Reason (as defined in
the agreement), Mr. Smith shall be entitled to a lump sum payment
equal to three times the combined Base Salary and bonus paid during
the immediately preceding calendar year, and such other unpaid
accrued amounts. In any of such cases, the Company will provide Mr.
Smith with certain Company fringe benefits for two years, subject
to certain conditions as provided for in the agreement, and all of
Mr. Smith’s unvested options to purchase Company stock shall
become fully vested and exercisable on the date of termination. Mr.
Smith will be entitled to exercise all such options for three years
from the date of termination. The Company will have no further
obligations to Mr. Smith, other than with respect to the payment of
royalties.
In the event Mr.
Smith’s employment by the Company is terminated as a result
of Mr. Smith’s (i) death, his estate shall be entitled to a
lump sum payment of one times the combined Base Salary and bonus,
and certain other accrued and unpaid amounts, or (ii) disability,
Mr. Smith shall be entitled to Base Salary and bonus for a period
of one year commencing with the date of termination, and all other
unpaid accrued amounts.
The employment agreement
also contains non-competition and non-solicitation covenants for
one year following Mr. Smith’s termination of employment for
any reason.
Mr. Smith is currently
being compensated in accordance with the employment
agreement.
14
Section 16(a)
(“Section 16(a)”) of the Securities Exchange Act of
1934, as amended, requires executive officers and Directors and
persons who beneficially own more than ten percent (10%) of the
Company’s Common Stock to file initial reports of ownership
on Form 3 and reports of changes in ownership on Form 4 with the
Securities and Exchange Commission and any national securities
exchange on which the Company’s securities are
registered.
Based solely on a review of the copies of such
forms furnished to the Company, the Company believes that all
reports required by Section 16(a) were filed on time during 2018,
except
that James Russell Bruner filed
his Form 3 Initial Statement of Beneficial Onwership of Securities
one day after it was due.
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
BDO USA, LLP acted as
our independent registered public accounting firm for the fiscal
year ended December 31, 2018. A representative of BDO
USA, LLP plans to be present at the Annual Meeting with the
opportunity to make a statement if he desires to do so, and will be
available to respond to appropriate questions.
VOTING AT
MEETING
The Board of Directors
has fixed June 24, 2019 as the record date for the
determination of Stockholders entitled to vote at this Annual
Meeting. On or about that date, 5,134,492 shares of Common Stock
were outstanding and entitled to vote.
SOLICITATION OF
PROXIES
The cost of solicitation
of proxies will be borne by the Company. In addition to the
solicitation of proxies by mail, officers and employees of the
Company may solicit in person or by telephone. The Company may
reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation
materials to beneficial owners.
REVOCATION OF
PROXY
Subject to the terms and
conditions set forth herein, all proxies received by the Company
will be effective, notwithstanding any transfer of the shares to
which such proxies relate, unless prior to the Annual Meeting, the
Company receives a written notice of revocation signed by the
person who, as of the record date, was the registered holder of
such shares. The Notice of Revocation must indicate the certificate
number or numbers of the shares to which such revocation relates
and the aggregate number of shares represented by such
certificate(s).
DEADLINE
FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2020 ANNUAL
MEETING
Pursuant to SEC Rule
14a-8, in order to be included in proxy material for next
year’s annual meeting, Stockholders’ proposed
resolutions must be received by the Company no later than March 11,
2020. In addition, the by-laws of the Company require that we be
given advance notice of stockholder nominations for election to the
Board of Directors and of other matters which stockholders wish to
present for action at an annual meeting of stockholders. The
required notice must be delivered to the Secretary of the Company
at our principal offices not less than 60 days and not more than 90
days prior to the anniversary date of the immediately preceding
annual meeting of stockholders. These requirements are separate
from and in addition to the SEC requirements that a stockholder
must meet in order to have a stockholder proposal included in the
Company’s proxy statement.
Pursuant to our
by-laws, if notice of any stockholder proposal is received earlier
than May 16, 2020 or after June 16, 2020, then the notice
will be considered untimely and we are not required to present such
proposal at the Annual Meeting to be held in 2020. If the
Board of Directors chooses to present a proposal submitted after
June 15, 2020 at next year’s Annual Meeting, then the
persons named in proxies solicited by the Board of Directors for
such Annual Meeting may exercise discretionary voting power with
respect to such proposal.
15
HOUSEHOLDING OF PROXY
MATERIAL
Some banks, brokers and
other nominee record holders may have been sent to multiple
stockholders in your household. If you would like to obtain another
copy of the proxy statement, proxy card or annual report to
stockholders, please contact by mail Secretary, Smith-Midland
Corporation, 5119 Catlett Road, Midland, Virginia 22728. If you
want to receive separate copies of our proxy statements, proxy card
and annual reports in the future, or if you are receiving multiple
copies and would like to receive only one copy for your household,
you should contact your bank, broker, or other nominee record
holder.
ANNUAL REPORT ON FORM
10-K
An Annual Report on Form
10-K as filed with the SEC for the year ended December 31,
2018, containing financial and other information about the Company,
is being mailed to all stockholders of record as of the Record
Date, at the Company's cost.
MISCELLANEOUS
The management does not
know of any other matter that may come before the Annual Meeting.
However, if any other matters are properly presented to the Annual
Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with
their judgment on such matters.
|
|
|
|
|
|
|
|
By Order of the Board
of Directors:
|
|
|
|
|
|
/s/ Rodney I.
Smith
|
|
|
|
|
|
Rodney I.
Smith
|
|
|
Chairman of the Board
of Directors
|
|
|
Midland,
Virginia
|
|
|
|
|
|
July 9,
2019
|
THE MANAGEMENT HOPES
THAT STOCKHOLDERS WILL ATTEND THE ANNUAL MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN, AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT
RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND
YOUR COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE
MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT
IN THEIR PROXIES.
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