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SELAS CORPORATION OF AMERICA
1260 RED FOX ROAD
ARDEN HILLS, MINNESOTA 55112
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 2004 Annual Meeting of Shareholders (the "Annual Meeting") of Selas
Corporation of America (the "Corporation") will be held on Tuesday, April
27, 2004 at the offices of the Company's subsidiary Resistance Technology,
Inc., 4400 McMenemy Road, Vadnais Heights, MN 55127, at 1:00 PM, Central
Time, for the following purposes:
(1) to elect directors; and
(2) to transact such other business as may properly come before the
Annual Meeting.
The Board of Directors has fixed the close of business on March 19,
2004, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof. If the Annual Meeting is adjourned for one or more
periods aggregating at least 15 days because of the absence of a quorum,
those shareholders entitled to vote who attend the reconvened Annual
Meeting, if less than a quorum as determined under applicable law, shall
nevertheless constitute a quorum for the purpose of acting upon any matter
set forth in this Notice of Annual Meeting.
All shareholders are cordially invited to attend the meeting, but
whether or not you expect to attend the meeting in person, please mark,
sign and date the enclosed proxy card and return it promptly in the
envelope provided in order that your shares may be voted. If you attend the
meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors
/s/ Michael J. McKenna
Michael J. McKenna
Chairman of the Board
March 26, 2004
Arden Hills, Minnesota
SELAS CORPORATION OF AMERICA
1260 RED FOX ROAD
ARDEN HILLS, MINNESOTA 55112
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of the Selas
Corporation of America (the "Corporation") for use at the 2004 Annual
Meeting of Shareholders (the "Annual Meeting") to be held on Tuesday, April
27, 2004 at the offices of its subsidiary Resistance Technology, Inc., 4400
McMenemy Road, Vadnais Heights, MN 55127, at 1:00 PM, central time, and any
adjournment or postponement thereof. This Proxy Statement and accompanying
proxy card are first being mailed to shareholders on or about March 26,
2004.
The Board of Directors has fixed the close of business on March 19,
2004, as the record date for determination of the shareholders entitled to
notice of and to vote at the Annual Meeting. As of March 19, 2004, there
were 5,129,214 common shares, par value $1.00 per share ("Common Share"),
of the Corporation outstanding, each of which is entitled to one vote on
all matters to be presented at the Meeting.
Proxies in the form enclosed, if properly executed and received in time
for voting, and not revoked, will be voted as directed on the proxies. If
no directions to the contrary are indicated, the persons named in the proxy
will vote all of your Common Shares "for" the election of the nominees for
director. With respect to any other matter that properly comes before the
meeting, the proxy holders will vote the proxies in their discretion in
accordance with their best judgment. Sending in a signed proxy will not
affect a shareholder's right to attend the Annual Meeting and vote in
person since the proxy is revocable. Any shareholder who submits a proxy
may revoke it at any time before the proxy is voted at the Annual Meeting
by delivering a later dated proxy or by giving written notice to the
Secretary of the Corporation or attending the Annual Meeting in person and
so requesting. Attendance at the Annual Meeting will not by itself revoke a
previously granted proxy.
The presence, in person or represented by proxy, of the holders of
a majority of the outstanding Common Shares will constitute a quorum for
the transaction of business at the Annual Meeting. All Common Shares
present in person or represented by proxy (including "broker non-votes")
and entitled to vote at the Annual Meeting, no matter how they are voted or
whether they abstain from voting, will be counted in determining the
presence of a quorum. If the Annual Meeting is adjourned because of the
absence of a quorum, those shareholders entitled to vote who attend the
adjourned Annual Meeting, although constituting less than a quorum as
provided herein, shall nevertheless constitute a quorum for the purpose of
electing directors. If the Annual Meeting is adjourned for one or more
periods aggregating at least 15 days because of the absence of a quorum,
those shareholders entitled to vote who attend the reconvened Annual
Meeting, if less than a quorum as determined under applicable law, shall
nevertheless constitute a quorum for the purpose of acting upon any matter
set forth in the Notice of Annual Meeting.
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Each Common Share is entitled to one vote on each matter that may
be brought before the Annual Meeting. The election of directors will be
determined by a plurality vote and the two nominees receiving the highest
number of "for" votes will be elected. Approval of any other proposal will
require the affirmative vote of a majority of the shares entitled to vote
and present in person or represented by proxy. Under the Pennsylvania
Business Corporation Law, an abstention, withholding of authority to vote
or broker non-vote, will not have the same legal effect as an "against"
vote and will not be counted in determining whether the proposal has
received the required shareholder vote.
The cost of this solicitation will be borne by the Corporation. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or teletype by officers, directors or employees of the
Corporation, without additional compensation. Upon request, the Corporation
will pay the reasonable expenses incurred by record holders of the
Corporation's Common Shares who are brokers, dealers, banks or voting
trustees, or their nominees, for mailing proxy materials and the annual
report to shareholders to the beneficial owners of the shares they hold of
record.
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ELECTION OF DIRECTORS
The Board of Directors currently consists of five members divided into
three classes.
The Board of Directors, based upon the recommendation of the Nominating
Committee, has nominated Michael J. McKenna as Chairman of the Board and
Director and Mark S. Gorder for re-election at the Annual Meeting to serve
until the 2007 annual meeting of shareholders and until their respective
successors have been duly elected and qualified. The nominees are current
directors of the Corporation and have been previously elected as a director
by the Corporation's shareholders. Both Messrs. McKenna and Gorder have
indicated their willingness to continue serving as directors. The Board of
Directors knows of no reason why the nominees would be unable to serve as
directors. If either of the nominees should for any reason be unable to
serve, then the proxies will be voted for the election of such substitute
nominee as the Board of Directors may designate, unless the Board of
Directors reduces the number of directors on the board.
Assuming a quorum is present, the two nominees receiving the highest
number of "for" votes will be elected. For such purposes, an abstention,
the withholding of authority to vote or broker non-vote will not be counted
in determining whether the proposal has received the required shareholder
vote.
The following table sets forth certain information concerning the
nominees and the persons whose terms as directors will continue after the
Annual Meeting, including their ages and principal occupations during the
past five years:
DIRECTOR TERM
NAME, AGE AND OCCUPATION SINCE EXPIRES
------------------------ ----- -------
Frederick L. Bissinger (93) retired Vice Chairman of Allied Chemical 1974 2006
Corporation (now Honeywell Inc.) a chemical and manufacturing company.
Nicholas A. Giordano (61), business consultant and investor since 1997. Mr. 2000 2006
Giordano was Interim President of LaSalle University from July 1998 to June
1999. From 1981 to 1997, Mr. Giordano was President and Chief Executive
Officer of the Philadelphia Stock Exchange. Mr. Giordano serves as a
trustee of W.T. Trust and Kalmar Pooled Investment Trust, mutual funds, and
as a Director of Independence Blue Cross of Philadelphia.
Robert N. Masucci (66), Chairman of the Board of Montgomery Capital Advisors, 2002 2005
Inc., an investment advisory company, since 1990 and, Chief Executive
Officer of Barclay Brand Ferndon, Inc., a distribution company, since
1996. Prior to 1990, Mr. Masucci was Chief Executive Officer of Drexel
Industries, Inc., a forklift manufacturer.
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DIRECTOR TERM
NAME, AGE AND OCCUPATION SINCE EXPIRES
------------------------ ----- -------
Mark S. Gorder (57), President and Chief Executive Officer of the Corporation 1996 2004
since April 2001; President and Chief Operating Officer of the Corporation
from December 2000 to April 2001; and Vice President of the Corporation
from 1996 to December 2000. Mr. Gorder has been President and Chief
Executive Officer of Resistance Technology, Inc., a subsidiary of the
Corporation, since 1983.
Michael J. McKenna (69), Chairman of the Board of Directors of the 1998 2004
Corporation since April 2001. In March 2001, Mr. McKenna retired as the
Vice Chairman and a Director of Crown Cork & Seal Company, Inc., a
manufacturing company. From 1995 to 1998, Mr. McKenna was the President
and Chief Operating Officer and, prior to 1995, was the Executive Vice
President and President of the North American Division of Crown Cork & Seal
Company, Inc.
Messrs. Giordano and Masucci are first cousins.
BOARD AND COMMITTEE MATTERS
INDEPENDENCE
The Board of Directors has determined that the following directors,
constituting a majority of the members of the Board, are independent as
defined in the corporate governance rules of the American Stock Exchange:
Messrs. Bissinger, Giordano, Masucci and McKenna.
COMMUNICATION WITH THE BOARD
Shareholders may communicate with the Board of Directors, including any
individual director, by sending a letter to the Selas Corporation of
America Board of Directors, c/o Corporate Secretary, Selas Corporation of
America, 1260 Red Fox Road, Arden Hills, Minnesota 55112. The Corporate
Secretary has the authority to disregard any inappropriate communications
or to take other appropriate actions with respect to any such inappropriate
communications. If deemed an appropriate communication, the Corporate
Secretary will submit your correspondence to the Chairman of the Board or
to any specific director to whom the correspondence is directed.
MEETINGS OF THE BOARD AND COMMITTEES
The Corporation's Board of Directors held five formal meetings and two
telephonic meetings in 2003. During 2003, all directors of the Corporation
attended at least 75% of the total number of meetings of the Board of
Directors of the Corporation and all committees of which they were members.
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ATTENDANCE AT ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors has adopted a policy that all of the directors
should attend the Annual Meeting of Shareholders, absent exceptional cause.
Last year, all of the directors attended the Annual Meeting of
Shareholders.
DIRECTOR COMPENSATION
In 2003, Mr. McKenna received an annual retainer of $133,800 for
services performed as Chairman of the Board. The other directors who were
not officers of the Corporation received an annual retainer of $24,000 plus
$800 per Board or Committee meeting attended on a particular day and $400
for each additional Board or Committee meeting attended on the same day.
Mr. Giordano receives an additional $200 per meeting for his services as
Chairman of the Audit Committee. Total fees earned were $30,400, $29,600,
and $28,800 by Messrs. Bissinger, Giordano and Masucci, respectively. Under
the Corporation's Non-Employee Directors Stock Option Plan, directors who
are not employees of the Corporation or any of its subsidiaries receive an
automatic one-time grant of an option to acquire 5,000 Common Shares of the
Corporation upon their initial election or appointment to the Board of
Directors and are also eligible to receive discretionary grants. In 2003,
there were no options granted under that plan.
COMMITTEES OF THE BOARD
The Board of Directors of the Corporation has established an Audit
Committee, a Compensation Committee and a Nominating and Corporate
Governance Committee.
AUDIT COMMITTEE
The Board of Directors of the Corporation has appointed a standing
Audit Committee consisting of Messrs. Giordano (Chairman), Masucci, and
McKenna. The Board of Directors has determined that each member of the
Audit Committee is independent, as defined in applicable American Stock
Exchange corporate governance rules and SEC regulations. In addition, the
Board of Directors has determined that Mr. Giordano, Audit Committee
Chairman, qualifies as an audit committee financial expert, as defined in
applicable SEC rules. The Audit held four formal meetings in 2003. In
addition, the Audit Committee or its Chairman held informal telephonic
meetings with the Corporation's management and independent auditors to
review and approve the Corporation's quarterly consolidated financial
statements.
The Audit Committee is governed by a written charter approved by the
Board of Directors, a copy of which can be found in Appendix A. The
principal duties of the Audit Committee are to monitor the integrity of the
financial statements of the Corporation, the compliance by the Corporation
with legal and regulatory requirements and the independence and performance
of the Corporation's independent auditors. In addition, the Committee
selects the firm to be engaged as the Corporation's independent public
accountants, and approves the engagement of the independent public
accountants for all non-audit activities permitted under the Sarbanes-Oxley
Act of 2002. The report of the Audit Committee appears on page 16.
COMPENSATION COMMITTEE
The Board of Directors of The Corporation has appointed a standing
Compensation Committee currently consisting of Messrs. McKenna (Chairman),
Giordano, Masucci, and Bissinger. The Board of Directors has
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determined that each member of the Compensation Committee is independent,
as defined in applicable American Stock Exchange corporate governance
rules. The Compensation Committee reviews and makes recommendations to the
Board of Directors concerning officer compensation and officer and employee
bonus programs and administers the Corporation's 2001 Stock Option Plan,
Amended and Restated 1994 Stock Option Plan and Non-Employee Directors
Stock Option Plan. This Committee met two times in 2003. The report of the
Compensation Committee is set forth beginning on page 11.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Board of Directors of the Corporation has appointed a standing
Nominating and Corporate Governance Committee currently consisting of
Messrs. McKenna (Chairman), Giordano, and Masucci. The Board of Directors
has determined that each member of the Compensation Committee is
independent, as defined in applicable American Stock Exchange Corporate
Governance Rules. This Committee was formed in February 2004. In 2003, the
entire Board of Directors acted as a nominating committee.
The Nominating and Corporate Governance Committee is governed by a
written charter approved by the Board of Directors, a copy of which can be
found in Appendix B. The principal duties of the Nominating and Corporate
Governance Committee are to identify individuals qualified to become
members of the Board consistent with the criteria approved by the
Committee, consider nominees made by shareholders in accordance with the
Corporation's bylaws, select, or recommend to the Board, the director
nominees for each annual shareholders meeting, develop and recommend to the
Board corporate governance principles and oversee the evaluations of the
Board and senior management.
CONSIDERATION OF DIRECTOR CANDIDATES RECOMMENDED OR NOMINATED BY
SHAREHOLDERS. The Nominating and Corporate Governance Committee will
consider properly submitted shareholder recommendations for director
candidates. A shareholder who wishes to recommend a prospective director
nominee should send a signed and dated letter to the Chairman of the
Nominating and Corporate Governance Committee, c/o Corporate Secretary,
Selas Corporation of America, 1260 Red Fox Road, Arden Hills, Minnesota
55112. Under the Corporation's bylaws, a shareholder who desires to
nominate directors for election at the Corporation's shareholders meeting
must comply with the procedures summarized below:
o shareholder nominations for directors to be elected, which have
not been previously approved by the Nominating and Corporate
Governance Committee, must be submitted to the Corporate Secretary
not later than the latest date by which shareholder proposals must
be submitted to the Corporation for inclusion in the proxy
statement pursuant to SEC Rule 14a-8;
o shareholder nominations must be in writing and sent either by
personal delivery, nationally recognized express mail or U.S.
mail, postage prepaid;
o each shareholder nomination must set forth the following:
o the name and address of the shareholder making the
nomination and the person(s) nominated;
o a representation that the shareholder is a holder of record,
and/or a beneficial owner, of voting stock of the Corporation
entitled to vote at the meeting and intends to appear in
person or by proxy at the meeting to vote for the person(s)
nominated;
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o a description of all arrangements and understandings between
the shareholder and each nominee and any other person(s),
naming such person(s), pursuant to which the nomination was
submitted by the shareholder;
o such other information regarding the shareholder nominee as
would be required to be included in a proxy statement filed
pursuant to the proxy rules of the SEC had the nominee been
nominated by the Nominating and Corporate Governance
Committee, including the principal occupation of each nominee;
and
o the consent of each nominee to serve as a director if so
elected.
The Nominating and Corporate Governance Committee has the sole
authority to select, or to recommend to the Board of Directors, the
nominees to be considered for election as a director. The officer presiding
over the shareholders meeting, in such officer's sole and absolute
discretion, may reject any nomination not made in accordance with the
foregoing procedures.
The deadline for submitting the letter recommending a prospective
director nominee for the 2005 Annual Meeting of Shareholders is November
26, 2004.
The Corporation's bylaws are available, at no cost, at the SEC's
website, www.sec.gov, as Exhibit 3.2 to the Corporation's Annual Report on
Form 10-K filed with the SEC in March 2004 or upon the shareholder's
written request directed to the Corporate Secretary at the address given
above.
DIRECTOR QUALIFICATIONS. Nominees for director must be at least 21
years old. Nominees for director will be selected on the basis of
outstanding achievement in their careers; broad experience; education;
independence under applicable American Stock Exchange and SEC rules;
financial expertise; integrity; financial integrity; ability to make
independent, analytical inquiries; understanding of the business
environment; and willingness to devote adequate time to Board and committee
duties. The proposed nominee should have sufficient time to devote their
energy and attention to the diligent performance of the director's duties,
including attendance at Board and committee meetings and review of the
Corporation's financial statements and reports, SEC filings and other
materials. Finally, the proposed nominee should be free of conflicts of
interest that could prevent such nominee from acting in the best interest
of shareholders.
Additional special criteria apply to directors being considered to
serve on a particular committee of the Board. For example, members of the
Audit Committee must meet additional standards of independence and have the
ability to read and understand the Corporation's financial statements.
IDENTIFYING AND EVALUATING NOMINEES FOR DIRECTOR. The Nominating and
Corporate Governance Committee assesses the appropriate size of the Board
in accordance with the limits fixed by the Corporation's charter and
bylaws, whether any vacancies on the Board are expected and what incumbent
directors will stand for re-election at the next meeting of shareholders.
If vacancies are anticipated, or otherwise arise, the Nominating and
Corporate Governance Committee considers candidates for director suggested
by members of the Nominating and Corporate Governance Committee and other
Board members as well as management, shareholders and other parties. The
Nominating and Corporate Governance Committee also has the sole authority
to retain a search firm to identify and evaluate director candidates.
Except for incumbent directors standing for re-election as described below,
there are
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no differences in the manner in which the Nominating and Corporate
Governance Committee evaluates nominees for director, based on whether the
nominee is recommended by a shareholder or any other party.
In the case of an incumbent director whose term of office expires, the
Nominating and Corporate Governance Committee reviews such director's
service to the Corporation during the past term, including, but not limited
to, the number of Board and committee meetings attended, as applicable,
quality of participation and whether the candidate continues to meet the
general qualifications for a director outlined above, including the
director's independence, as well as any special qualifications required for
membership on any committees on which such director serves. When a member
of the Nominating and Corporate Governance Committee is an incumbent
director eligible to stand for re-election, such director will not
participate in that portion of the Nominating and Corporate Governance
Committee meeting at which such director's potential nomination for
election as a director is discussed by the Nominating and Corporate
Governance Committee.
In the case of a new director candidate, the Nominating and Corporate
Governance Committee will evaluate whether the nominee is independent, as
independence is defined under applicable American Stock Exchange corporate
governance rules, and whether the nominee meets the qualifications for
director outlined above as well as any special qualifications applicable to
membership on any committee on which the nominee may be appointed to serve
if elected. In connection with such evaluation, the Nominating and
Corporate Governance Committee determines whether the committee should
interview the nominee, and if warranted, one or more members of the
Nominating and Corporate Governance Committee interviews the nominee in
person or by telephone.
Upon completing the evaluation, and the interview in case of a new
candidate, the Nominating and Corporate Governance Committee makes a
decision as to whether to nominate the director candidate for election at
the shareholders meeting.
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ADDITIONAL INFORMATION
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND CERTAIN OFFICERS
The following table sets forth certain information as of March 19,
2004, concerning beneficial ownership of the Common Shares by (i) persons
or groups of persons shown by Securities and Exchange Commission records to
own beneficially more than 5% of the Common Shares (ii) directors and
nominees, (iii) the executive officers named in the Summary Compensation
Table included herein and (iv) all directors and executive officers as a
group.
NUMBER OF
SHARES
BENEFICIALLY PERCENT
NAME OWNED(1) OF CLASS
---- -------- --------
The Trust Company of New Jersey (2)................................... 463,700 9.1%
35 Journal Square
Jersey City, NJ 07306
Gabelli Asset Management Inc. (3)..................................... 360,000 7.0%
One Corporate Center
Rye, NY 10580
Estate of Siggi B. Wilzig (4)......................................... 336,575 6.6%
c/o Herrick, Feinstein LLP
2 Penn Plaza
Newark, NJ 07105
Dimensional Fund Advisors, Inc (5)................................... 303,800 5.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
U.S. Bancorp (6)...................................................... 287,850 5.6%
601 2nd Ave. South
Minneapolis, MN 55402-4302
Mark S. Gorder, Director, President and Chief Executive Officer(7).... 357,650 6.9%
Michael J. McKenna, Chairman of the Board of Directors (8)............ 49,200 *
Nicholas A. Giordano, Director (9).................................... 39,200 *
Robert N. Masucci, Director (10) ..................................... 38,200 *
Robert F. Gallagher, Vice President and Chief Financial Officer,...... 33,200 *
Secretary, and Treasurer (11)
Frederick L. Bissinger, Director (12)................................. 29,000 *
Gerald H. Broecker, Vice President and Assistant Secretary(13)........ 19,800 *
All Directors and Executive Officers as a Group (7 persons) (14)...... 566,250 10.7%
---------------------
* Less than 1%
Footnotes to the table are provided on the next page.
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Footnotes for the Table of Beneficial Ownership of Common Shares
(1) Unless otherwise indicated, each person has sole voting and investment
power with respect to all such shares. The securities "beneficially
owned" by a person are determined in accordance with the definition of
"beneficial ownership" set forth in the regulations of the Securities
and Exchange Commission and, accordingly, include securities owned by
or for the spouse, children or certain other relatives of such person
as well as other securities as to which the person has or shares voting
or investment power or has the right to acquire within 60 days after
the March 19, 2004. The same shares may be beneficially owned by more
than one person. Beneficial ownership may be disclaimed as to certain
of the securities.
(2) Based upon a Schedule 13D/A filed with the SEC on February 9, 2004. (3)
Based upon a Schedule 13G/A filed with the SEC on February 11, 2004.
(4) Based upon a Schedule 13D filed with the SEC on October 2, 2003.
(5) Based upon a Schedule 13G/A filed with the SEC on February 6, 2004.
(6) Includes 287,850 Common Shares owned by Mr. Gorder and held in a trust
for which U.S. Bank National Association serves as agent and U.S.
Bancorp Asset Management, Inc. serves as investment advisor. Based upon
a Schedule 13G/A filed with the SEC on January 30, 2004 that also
includes U.S. Bancorp Asset Management, Inc. as the beneficial owner of
the shares shown in the table. According to the Schedule 13G/A, U.S.
Bancorp is a holding company which is the parent company of U.S.
Bancorp Asset Management, Inc., an investment advisor.
(7) Includes 70,000 shares which Mr. Gorder has the right to acquire within
60 days of March 19, 2004 through the exercise of stock options.
Includes 287,850 shares, which are owned by Mr. Gorder and are held in
a trust account at U.S. Bancorp, as previously listed in the table. Mr.
Gorder, whose business address is 1260 Red Fox Road, Arden Hills, MN
55112, is also President and Chief Executive Officer of Resistance
Technology, Inc., a wholly owned subsidiary of the corporation.
(8) Includes 20,000 shares which Mr. McKenna has the right to acquire
within 60 days of March 19, 2004 through the exercise of stock options.
(9) Includes 15,000 shares which Mr. Giordano has the right to acquire
within 60 days of March 19, 2004 through the exercise of stock options.
(10)Includes 15,000 shares which Mr. Masucci has the right to acquire
within 60 days of March 19, 2004 through the exercise of stock options.
(11)Includes 10,000 shares which Mr. Gallagher has the right to acquire
within 60 days of March 19, 2004 through the exercise of stock options.
(12)Includes 15,000 shares which Mr. Bissinger has the right to acquire
within 60 days of March 19, 2004 through the exercise of stock options.
(13)Includes 12,600 shares which Mr. Broecker has the right to acquire
within 60 days of March 19, 2004 through the exercise of stock options.
(14)Includes 157,600 shares which directors and executive offices have the
right to acquire within 60 days of March 19, 2004 through the exercise
of stock options.
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COMPENSATION COMMITTEE REPORT
The Corporation's compensation program for officers, which is
administered by the Compensation Committee of the Board of Directors, is
designed to align a significant portion of officer compensation with the
Corporation's business objectives and performance.
The Corporation's officer compensation program consists of base salary,
potential annual cash incentive compensation and long-term incentive
compensation in the form of stock options. Officers are also covered under
medical, life insurance, and 401K savings plans generally available to
employees of the Corporation or the business unit managed by the officer.
Through the use of data on comparable companies and its evaluation of
officers' performance, the Compensation Committee's objective is to
recommend to the Board of Directors the setting of total base salary and
potential incentive compensation for Mr. Mark S. Gorder, the Corporation's
Chief Executive Officer, and other officers at levels designed to achieve
the Corporation's objectives of attracting, retaining, motivating and
rewarding talented executives. The Compensation Committee's philosophy is
that a significant portion of the total potential compensation of the Chief
Executive Officer and other senior executives should be leveraged to be
dependent upon the degree of the Corporation's or a business unit's
financial success in a particular year.
In 2003, the Compensation Committee recommended to the Board of
Directors and the Board of Directors approved an incentive compensation
program for 2003 that applied financial performance measures tailored to
the nature of the particular business unit and the desired contribution to
the overall financial results of the Corporation. In all cases, incentive
compensation was substantially dependent on the achievement of financial
performance targets relating to a particular business unit or to the
Corporation on a consolidated basis. Because of the financial performance
of the Corporation and its business units for 2003, no executive officers
received a bonus for the year. The Chief Executive Officer's base
compensation for 2003 was set at $275,000 as defined within his employment
agreement that took effect January 1, 2001. The "Summary Compensation
Table" shows a lower amount, however, due to the voluntary salary reduction
that the Chief Executive Officer has taken in the last two years.
The Corporation's Amended and Restated 1994 Stock Option Plan and 2001
Stock Option Plan are its long-term incentive plans for officers and key
employees. These plans are designed to further align the interests of the
Corporation's officers and its shareholders by creating a direct link
between long-term executive compensation and long-term shareholder value.
Since all options are granted at fair market value at the time of grant,
there is no built-in profit and thus the value of the option is tied solely
and directly to increases in value of the Common Shares. Stock options are
granted to the Corporation's officers from time to time, as deemed
appropriate by the Compensation Committee, based on various factors,
including the executive's ability to contribute to the Corporation's
long-term growth and profitability.
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In 2003, the Corporation issued an option to purchase 50,000 shares to
Mr. Gorder, the Chief Executive Officer, and an option to purchase 25,000
shares to Mr. Gallagher, the Chief Financial Officer, each of which will
become exercisable upon the earlier of the attainment of certain corporate
goals or seven years after the date of grant. As noted in "Executive
Compensation - Stock Option Tables," the options granted to Mr. Gorder in
2002 were cancelled because the corporate goals upon which such options
would become exercisable were not met.
THE COMPENSATION COMMITTEE
Michael J. McKenna, Chairman
Frederick L. Bissinger
Robert N. Masucci
Nicholas A. Giordano
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning
compensation paid or accrued by the Corporation and its subsidiaries for
the years indicated to the Corporation's Chief Executive Officer and its
four most highly compensated executive officers that made over $100,000 in
annual compensation for fiscal year ended December 31, 2003 (the "Named
Officers").
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------
NAME AND PRINCIPAL ------------------- SECURITIES UNDERLYING ALL OTHER
POSITION(1) YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)(2)
----------------------------- ---- ---------- --------- ----------- -------------------
Mark S. Gorder............. 2003 265,539 - 50,000 10,822
President and Chief Executive 2002 268,127 - 50,000 8,322
Officer of the Corporation 2001 264,640 - 25,000 5,687
Robert F. Gallagher........ 2003 166,266 10,000 25,000 5,497
Chief Financial Officer, Vice 2002 57,550 - 50,000 176
President, Treasurer, and 2001 - - - -
Secretary of the Corporation
Gerald H. Broecker ........ 2003 122,158 - - 4,200
Vice President and Assistant 2002 113,961 - - 3,918
Seretary of the Corporation 2001 117,860 - - 4,227
(1) For fiscal year ended December 31, 2003, the Corporation only had three
executive officers that made over $100,000 in annual compensation. Mr.
Robert F. Gallagher, who serves as the Chief Financial Officer, Vice
President, Secretary and Treasurer, was hired on August 19, 2002. Mr.
Gerald H. Broecker was appointed as Vice President of Administration on
December 17, 2002.
(2) Represents the Corporation's or a subsidiary's contributions to the
Named Officer's account under retirement plans and group term life
insurance. In 2003, the Corporation made contributions of $8,500,
$4,988, $3,665 to the retirement plan accounts and $2,322, $510, $535
to the group term life insurance plans for the benefit of Mssrs.
Gorder, Gallagher, and Broecker, respectively.
13
STOCK OPTION TABLES
The following tables set forth certain information about stock option
grants by the Corporation to the Named Officers in fiscal 2003 and the
number of options exercised in fiscal 2003 and the number, respectively, of
unexercised options and the value of unexercised in-the-money options at
the 2003 fiscal year end held by Named Officers.
OPTIONS GRANTED IN 2003
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM (2)
OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION ----------------------------
NAME GRANTED IN 2003 (1) PER SHARE DATE AT 5% AT 10%
---- ------- ----------- --------- ---- ----- ------
Mark S. Gorder 50,000 66.7% $3.05 12/16/2013 $95,906 $243,046
Robert F. Gallagher 25,000 33.3% $3.05 12/16/2013 47,953 121,523
-------------------------
(1) During 2003 the Corporation granted options under the 2001 Stock Option
Plan covering a total of 75,000 Common Shares.
(2) These amounts represent hypothetical gains that could be achieved for
the respective options if exercised at the end of the option term.
These gains are based on assumed rates of stock appreciation of 5% and
10% compounded annually from the date the respective options were
granted to their expiration date. The rates of appreciation used in
this table are prescribed by regulation of the Securities and Exchange
Commission and are not intended to forecast future appreciation of the
market value of the Common Shares.
AGGREGATED OPTION EXERCISES IN 2003 AND
DECEMBER 31, 2003 OPTION VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED
SHARES COVERED BY UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT DECEMBER 31, 2003 DECEMBER 31, 2003(1)
ON VALUE ---------------------------- ------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------- -------- -------- ----------- ------------- ----------- -------------
Mark S. Gorder - - 65,000 85,000 $18,150 $12,100
Robert F. Gallagher - - 10,000 65,000 14,300 74,200
Gerald H. Broecker - - 12,600 2,400 2,178 1,452
-------------------------
(1)Represents the difference between the option exercise price and the
fair market value of the Common Shares at December 31, 2003.
In-the-money options are those where the fair market value of the
underlying securities exceeds the exercise price of the option. The
closing price of the Common Shares on December 31, 2003, was $3.73 per
share.
14
Mr. Gorder was granted an option to purchase 50,000 shares in December
2002 which became exercisable upon the earlier of certain corporate goals
in 2003 or seven years after the date of grant. Because the Corporation did
not meet the goals established for 2003, the Compensation Committee and Mr.
Gorder agreed to cancel the 2002 options. Under SEC regulations, the
cancellation of the 2002 options and the issuance of options in December
2003 is considered a "repricing" and the disclosure of the following
information is required. Except as set forth below, the Corporation has not
repriced options held by any executive officer during the last ten
completed fiscal years.
Number of Length of
Securities Market Price Exercise Original Option
Underlying of Stock at Price at New Term Remaining
Options Time of Time of Exercise at Date of
Name Date Repriced (#) Repricing Repricing Price Repricing
-------------- -------- ------------ --------- --------- ----- ---------
Mark S. Gorder 12/16/03 50,000 $3.05 $1.55 $3.05 9 years
EMPLOYMENT AGREEMENT
The Corporation entered into an employment agreement with Mr. Gorder,
as President and Chief Executive Officer of the Corporation. The agreement
provides for Mr. Gorder to serve as President and Chief Executive officer
of the Corporation until April 30, 2004. Pursuant to the agreement, Mr.
Gorder was compensated at the annual rate of $250,000 for the period of
January 1, through April 30, 2001 and at the annual rate of $275,000 for
the period of May 1, 2001 through December 31, 2001. Mr. Gorder's annual
compensation after December 31, 2001 was to be established by the Board of
Directors, but is required to be no less than $275,000 thereafter. The
"Summary Compensation Table" shows a lower amount, however, due to the
voluntary salary reduction that Mr. Gorder has taken in the last three
years. If Mr. Gorder's employment is terminated for any reason, other than
for cause, he will be entitled to the continued payment of his salary and
bonus until April 30, 2004, or, at his election, a lump sum payment equal
to the present value of these payments.
CHANGE-OF-CONTROL ARRANGEMENTS
Under an agreement with Mr. Gorder that will expire on April 30, 2004,
the Corporation would be required to pay two years' salary to him upon
involuntary termination (defined to include a reduction in salary, change
of location, or adverse change in responsibilities, or any termination of
employment other than for cause, death, or disability) within two years
following a change in control or sale of substantial assets of the
Corporation or Resistance Technology, Inc. and all of the options held by
him would become exercisable immediately.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 2003 were: Messrs.
McKenna, Chairman, Bissinger, Giordano and Masucci. No person who served as
a member of the Compensation Committee during 2003 was a current or former
officer or employee of the Corporation or any subsidiary or engaged in
certain transactions with Corporation or any subsidiary required to be
disclosed by regulations of the SEC. Additionally, there were no
compensation committee "interlocks" during 2003, which generally means that
no executive officer of the Corporation served as a director or member of
the compensation committee of another entity, which had an executive
officer serving as a director or member of the Compensation Committee of
the Corporation.
15
CERTAIN TRANSACTIONS
TRANSACTIONS WITH MR. GORDER
Mr. Gorder is a general partner (with a one-third interest) of Arden
Partners I, L.L.P., a Minnesota limited liability partnership ("Arden")
that owns and leases to the Corporation's subsidiary, Resistance
Technology, Inc. ("RTI"), property under a lease entered into October,
1991, and amended and restated on November 1, 1996. The leased property is
one of RTI's two manufacturing facilities. In 2002, the lease was renewed
with a term of October 31, 2011. Under the lease, RTI pays Arden a base
monthly rent of approximately $27,500 until October 2003 and a base monthly
rent of approximately $30,667 thereafter. In August 1997, the Corporation
made a personal loan to Mr. Gorder in the amount of $58,000. The loan
accrued interest at the rate of 8.5% per annum. The loan was paid in full
in 2003. Mr. Gorder is the President and Chief Executive Officer of the
Corporation, as well as a director.
AUDIT COMMITTEE REPORT
The Audit Committee has prepared the following report on its activities
with respect to the Corporation's audited consolidated financial statements
for the year ended December 31, 2003, which is referred to herein as the
Corporation's audited consolidated financial statements:
o The Audit Committee has reviewed and discussed the audited
consolidated financial statements with management.
o The Audit Committee has discussed with KPMG LLP, the Corporation's
independent auditors, the matters required to be discussed by
Statements on Auditing Standards No. 61, which include, among other
items, matters related to the conduct of the audit of the
Corporation's consolidated financial statements.
o The Audit Committee has received the written disclosures and the
letter from KPMG LLP required by Independence Standards Board Standard
No. 1, and has discussed with KPMG LLP its independence from the
Corporation.
o Based on the review and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the audited
consolidated financial statements be included in the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2003, for
filing with the Securities and Exchange Commission.
THE AUDIT COMMITTEE
Nicholas A. Giordano, Chairman
Michael J. McKenna
Robert N. Masucci
16
ADDITIONAL INFORMATION REGARDING THE CORPORATION'S AUDITORS
The Corporation's independent auditors for the fiscal year ended
December 31, 2003 was KPMG LLP. The Audit Committee of the Board of
Directors has appointed KPMG LLP as the Corporation's independent auditors
for the fiscal year ending December 31, 2004. Representatives of KPMG LLP
are expected to be present at the Annual Meeting and will have the
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
AUDIT FEES
The aggregate fees billed by KPMG LLP for professional services
rendered for the audit of the Corporation's annual financial statements for
the fiscal years ended December 31, 2003 and December 31, 2002 and the
review of the financial statements included in the Corporation's Forms 10-Q
for fiscal years 2003 and 2002 totaled $266,000 and $410,000, respectively.
AUDIT-RELATED FEES
The aggregate fees billed by KPMG LLP for assurance and related
services that are reasonably related to the performance of the audit or
review of the Corporation's financial statements for the fiscal years ended
December 31, 2003 and December 31, 2002 and that are not disclosed in the
paragraph captioned "Audit Fees" above, were $16,000 and $14,500,
respectively. The services performed by KPMG LLP in connection with these
fees consisted principally of audits of employee benefit plans and other
attest services.
TAX FEES
The aggregate fees billed by KPMG LLP for professional services
rendered for tax compliance, tax advice and tax planning for the fiscal
years ended December 31, 2003 and December 31, 2002 were $23,150 and
$72,000, respectively. The services performed by KPMG LLP in connection
with these fees consisted of tax planning and compliance.
ALL OTHER FEES
The Corporation made no other payments to its independent auditor with
respect to the relevant disclosure period.
PRE-APPROVAL POLICY
The Audit Committee has established pre-approval policies and
procedures pursuant to which the Audit Committee approved the foregoing
audit and permissible non-audit services provided by KPMG LLP in 2003.
AUDITOR INDEPENDENCE
The Audit Committee has considered the nature of the above-listed
services provided by KPMG LLP and determined that the provision of the
services are compatible with maintaining its independence.
17
PERFORMANCE GRAPH
The following graph shows the cumulative total return for the last five
years, calculated as of December 31 of each such year, for the Common
Shares, the Standard & Poor's 500 Index and the American Stock Exchange
Market Value Index. The graph assumes that the value of the investment in
each of the three was $100 at December 31, 1998 and that all dividends were
reinvested.
[LINE GRAPH]
1998 1999 2000 2001 2002 2003
Base
Year
SELAS 100 81 42 25 18 45
S&P 500 100 120 107 93 72 90
AMEX 100 127 130 123 120 170
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers and directors and persons who own more
than ten percent of a registered class of the Corporation's equity
securities (collectively, the "reporting persons") to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Corporation with copies of these reports.
Based on the Corporation's review of the copies of these reports
received by it and written representations, if any, received from reporting
persons with respect to the filing of reports of Forms 3, 4 and 5, the
Corporation believes that all filings required to be made by the reporting
persons for fiscal 2003 were made on a timely basis, with the exception
that Mr. Gorder was late in filing a report with respect to options granted
in December 2002 and 2003 and Mr. Gallagher was late in filing a report
with respect to options granted in 2002 and 2003.
18
SHAREHOLDER PROPOSALS
Under the Corporation's bylaws, shareholder proposals with respect to
the 2005 Annual Meeting of Shareholders, including nominations for
directors, which have not been previously approved by the Board of
Directors, must be submitted to the Secretary of the Corporation no later
than November 26, 2004. Any such proposals must be in writing and sent
either by personal delivery, nationally recognized express mail or United
States mail, postage prepaid to Corporate Secretary, Selas Corporation of
America, 1260 Red Fox Road, Arden Hills, Minnesota 55112. Each nomination
or proposal must include the information required by the bylaws. All late
or nonconforming nominations and proposals may be rejected by the officer
presiding at the meeting. Please refer to "Nominating and Corporate
Governance Committee" beginning on page 6 for additional information with
respect to the procedures with respect to the nomination of directors.
Shareholder proposals for the 2005 Annual Meeting of Shareholders must
be submitted to the Corporation by November 26, 2004 to receive
consideration for inclusion in the Corporation's Proxy Statement relating
to the 2005 annual meeting of shareholders. Any such proposal must also
comply with SEC proxy rules, including SEC Rule 14a-8, and any applicable
requirements set forth in the bylaws.
In addition, shareholders are notified that the deadline for providing
the Corporation timely notice of any shareholder proposal to be submitted
outside of the Rule 14a-8 process for consideration at the Corporation's
2005 Annual Meeting of Shareholders is November 26, 2004. As to all such
matters which the Corporation does not have notice on or prior to November
26, 2004, discretionary authority shall be granted to the persons
designated in the Corporation's Proxy related to the 2005 annual meeting of
shareholders to vote on such proposal.
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
A copy of the annual report to shareholders of the Corporation,
including consolidated financial statements, for 2003 is being delivered
with the proxy materials and is not to be regarded as proxy solicitation
material.
EACH SHAREHOLDER CAN OBTAIN A COPY OF THE CORPORATION'S ANNUAL REPORT
ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL SCHEDULES FOR
THE YEAR ENDED DECEMBER 31, 2003 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WITHOUT CHARGE EXCEPT FOR EXHIBITS TO THE REPORT, BY SENDING A
WRITTEN REQUEST TO: SELAS CORPORATION OF AMERICA, 1260 RED FOX ROAD, ARDEN
HILLS, MINNESOTA 55112, ATTN: MR. ROBERT F. GALLAGHER.
19
OTHER MATTERS
The Corporation is not presently aware of any matters (other than
procedural matters) that will be brought before the Meeting which are not
reflected in the attached Notice of the Meeting. The enclosed proxy confers
discretionary authority to vote with respect to any and all of the
following matters that may come before the Meeting: (i) matters which the
Corporation did not receive notice by March 4, 2004 were to be presented at
the Meeting; (ii) approval of the minutes of a prior meeting of
shareholders, if such approval does not amount to ratification of the
action taken at the meeting; (iii) the election of any person to any office
for which a bona fide nominee named in this Proxy Statement is unable to
serve or for good cause will not serve; (iv) any proposal omitted from this
Proxy Statement and the form of proxy pursuant to Rules 14a-8 or 14a-9
under the Securities Exchange Act of 1934; and (v) matters incident to the
conduct of the Meeting. In connection with such matters, the persons named
in the enclosed proxy will vote in accordance with their best judgment.
Robert F. Gallagher
Secretary, Treasurer,
and Chief Financial Officer
20
APPENDIX A
SELAS CORPORATION OF AMERICA
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee ("Committee") is appointed by and generally acts on
behalf of the Board of Directors (the "Board"). The Committee's purposes
shall be: (a) to assist the Board in its oversight of (i) the quality and
integrity of the Company's financial statements, financial reporting and
disclosure controls and procedures, including internal controls; and (ii)
the Company's compliance with legal and regulatory requirements; (b) to
interact directly with and evaluate the performance of the independent
auditors, including to determine whether to engage or dismiss the
independent auditors and to monitor the independent auditors'
qualifications and independence; and (c) to prepare annually the report
required by the rules of the Securities and Exchange Commission ("SEC") for
inclusion in the proxy statement for the Company's annual meeting of
stockholders.
The Committee's responsibilities are principally of an oversight nature.
Although the Committee has the responsibilities set forth in this Charter,
it is not the responsibility of the Committee to plan or conduct audits or
to determine that the Company's financial statements and disclosures are
accurate, complete and stated in accordance with generally accepted
accounting principles ("GAAP") and other applicable rules and regulations.
Management is responsible for the preparation, presentation, and integrity
of the Company's financial statements, including ensuring that the
financial statements are accurate, complete and stated in accordance with
GAAP and, together with the other financial information included in the
Company's public disclosures, fairly present the financial condition,
results of operations and cash flows of the Company. Management is also
responsible for the Company's financial reporting process, accounting
policies, internal accounting controls and disclosure controls and
procedures. The independent auditors are responsible for planning and
conducting an audit of the Company's annual financial statements,
expressing an opinion as to the conformity of such annual financial
statements with GAAP and reviewing the Company's quarterly financial
statements.
COMPOSITION
The Committee shall consist of three or more independent directors of the
Company designated by the Committee on Directors and Corporate Governance
and approved by a majority of the whole Board of Directors by resolution or
resolutions. Any director who is a present or former employee of the
Company may not serve on the Audit Committee. The members of the Committee
shall meet the independence requirements of the American Stock Exchange and
SEC rules.
In addition, the Chairman of the Committee must be financially
sophisticated and all members of the Committee shall be financially
literate at the time of appointment. Members of the Committee are not
required to be engaged in the accounting or auditing profession and,
consequently, some members may not be expert in financial matters or in
matters involving accounting or auditing. However, to the extent possible,
at least one member of the Committee shall, in the judgment of the Board,
be an "audit committee financial expert" in accordance with the rules and
regulations of the SEC.
A-1
The members of the Committee shall serve one-year terms. The Board shall
designate one member of the Committee to serve as Chairperson. The members
of the Committee shall serve until their resignation, retirement, or
removal by the Board and until their successors shall be appointed. No
member of the Committee shall be removed except by majority vote of the
independent directors of the full Board then in office.
The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain
independent legal counsel, accounting or other consultants or experts to
advise the Committee. The Committee may also utilize the services of the
Company's regular legal counsel and other advisors to the Company.
MEETINGS
The Committee shall meet at quarterly, or more frequently as circumstances
dictate. The Committee will meet separately, periodically, with management,
and with the independent auditors to discuss any matters that the Committee
or each of these groups believes should be discussed privately. The
Committee may also request any officer or employee of the Company or the
Company's outside counsel or independent auditors to attend a meeting of
the Committee or to meet with any members of, or consultants to the
Committee.
MEMBER COMPENSATION
No Committee member shall accept, directly or indirectly, any consulting,
advisory or other compensatory fees from the Company, except for the
member's fees for services as a director and member of the Committee and
any other committees of the Board.
RESPONSIBILITIES AND DUTIES
The Committee shall:
1. have the sole authority and responsibility for the
appointment and termination of the Company's independent
auditors. The Committee also shall be responsible for
setting the compensation and retention terms for, and
overseeing and evaluating the performance of, the
independent auditors with respect to audit, review or
attestation services. The independent auditors shall report
directly to the Committee.
2. have sole authority and responsibility to approve in
advance the retention of the independent auditors for the
performance of all audit and lawfully permitted non-audit
services and the fees for such services. Pre-approval of
non-audit services will be required
3. ensure that the Committee receives from the independent
auditors the written disclosures and letter required by
Independence Standards Board Standard 1 delineating all
relationships between the independent auditors and the
Company; the Committee shall discuss with the independent
auditors their independence, including any disclosed
relationships or services that may impact the auditors'
objectivity and independence. If deemed appropriate by the
Committee, the Committee may recommend that the Board of
Directors take appropriate action in response to the
independent auditors' report to satisfy itself of their
independence. The Committee shall also confirm with the
independent auditors that the independent auditors are in
compliance with the partner rotation
A-2
requirements established by the SEC.
4. ensure that the Committee annually receives and reviews a
report from the independent auditors describing the
auditing firm's internal quality-control procedures, any
material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by
any inquiry or investigation by governmental or
professional authorities or a private sector regulatory
board, within the preceding five years, relating to
independent audits carried out by the firm, and any steps
taken to deal with any such issues.
5. review with the independent auditors and with management
the proposed scope of the annual audit, past audit
experience, and other matters bearing upon the scope of the
audit. The discussion will include a review of any audit
problems or difficulties, including any restrictions on the
scope of the independent auditors' activities or on access
to requested information, any significant disagreements
with management and management's responses to such matters.
The Committee shall be responsible for resolution of any
disagreements between the independent auditors and
management regarding financial reporting.
6. review and discuss with management and the independent
auditors the annual audited financial statements to be
included in the Company's annual report on Form 10-K
including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results
of Operations." This discussion should include (i) matters
required to be discussed by Statement on Auditing Standards
No. 61, "Communications with Audit Committees," as then in
effect; and (ii) major issues regarding accounting
principles and financial statement presentations, including
critical accounting estimates and judgments, significant
changes in the Company's selection or application of
accounting principles, and major issues as to the adequacy
of the Company's internal controls and special audit steps
adopted in light of any material control deficiencies.
7. recommend to the Board based on the review described in
paragraphs 3 and 6 whether the audited financial statements
should be included in the Company's annual report on Form
10-K.
8. review and discuss with management and the independent
auditors quarterly financial statements to be included in
the Company's 10-Qs and the Company's disclosures under
"Management's Discussion and Analysis of Financial
Condition and Results of Operations."
9. after reviewing the reports from the independent auditors
and the independent auditors' work throughout the audit
period, conduct an annual evaluation of the independent
auditors' qualifications, performance and independence.
This evaluation shall include review and evaluation of the
lead audit partner. In making its evaluation, the Committee
shall take into account the opinions of management. The
Committee shall present its conclusions with respect to the
independent auditors to the full Board.
10. discuss with management and with the independent auditors
the Company's earnings press releases, as well as financial
information and earnings guidance provided to analysts and
ratings agencies. The Committee's discussion in this regard
may be general in nature (such as the type of information
to be disclosed and the type of presentation to be made).
The Committee need not discuss in advance each earnings
release or each instance in which the Company may provide
earnings guidance.
11. discuss periodically with management the Company's policies
and guidelines regarding risk assessment and risk
management, as well as the Company's major financial risk
exposures and steps management has taken to monitor and
control such exposures.
A-3
12. establish and maintain procedures for (i) the receipt,
retention, and treatment of complaints received by the
Company regarding accounting, internal accounting controls,
or auditing matters, and (ii) the confidential, anonymous
submission by Company employees of concerns regarding
questionable accounting or auditing matters.
13. discuss periodically with management and the independent
auditors the adequacy of the Company's disclosure controls
and procedures, including applicable internal controls and
procedures for financial reporting and changes in internal
controls designed to address any significant deficiencies
in the design or operation of internal controls or material
weaknesses therein and any fraud involving management or
other employees that are reported to the Committee. In
addition, the Committee shall review and discuss with
management and the independent auditors (i) the annual
report of management affirming management's responsibility
for establishing and maintaining internal controls over
financial reporting and assessing the effectiveness of the
internal control structure over financial reporting and
(ii) the independent auditors' report on, and attestation
of, management's report when those reports are required by
SEC rules.
14. confirm with management on at least a biennial basis that
the Company's Standards of BUSINESS CONDUCT AND ETHICS have
been communicated by the Company to all key employees of
the Company and its subsidiaries throughout the world with
a direction that all such key employees certify that they
have read, understand and are not aware of any violations
of the Standards of BUSINESS CONDUCT AND ETHICS. The
Committee shall have the sole responsibility to grant
waivers of the Standards of Business Conduct and Ethics to
the Company's directors, executive officers and senior
financial officers.
15. establish policies for the hiring by the Company of
employees or former employees of the independent auditors.
16. establish procedures for approval of all related party
transactions between the Company and any executive officer
or director.
17. through the Committee's Chair, regularly report to the full
Board on the Committee's activities and actions.
18. provide the Company and the Board with the report of the
Committee with respect to the audited financial statements
for inclusion in the Company's annual proxy statement as
required by SEC rules.
19.
annually evaluate the Committee's own performance and
deliver a report to the Board setting forth the results of
the evaluation.
20. review and reassess the adequacy of the Committee charter
on an annual basis and submit any recommended changes to
the Board for consideration.
21. perform any other activities consistent with this Charter,
the Company's bylaws and governing law, as the Committee or
the Board deems necessary or appropriate.
A-4
APPENDIX B
SELAS CORPORATION OF AMERICA
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
This Nominating and Corporate Governance Committee Charter (the
"Charter") has been adopted by the Board of Directors (the "Board") of
SELAS CORPORATION OF AMERICA (the "Company").
PURPOSE
The Board of Directors has established the Nominating and Corporate
Governance Committee (the "Committee") of the Board to (1) identify
individuals qualified to become members of the Board, consistent with the
criteria approved by the Committee, (2) consider nominees made by
shareholders in accordance with the Company's bylaws, (3) select, or
recommend to the Board, the director nominees for each annual shareholders
meeting, (4) develop and recommend to the Board a set of corporate
governance principles applicable to the Company and (5) oversee the
evaluations of the Board and senior management (in conjunction with the
Compensation Committee).
COMPOSITION
The Committee shall be comprised of two or more members, all of whom
must qualify as independent directors ("Independent Directors") under the
listing standards of the American Stock Exchange ("AMEX"), subject to any
exceptions contained in such standards.
The Committee members shall be appointed by the Board. The Board shall
appoint one member of the Committee as chairperson. If the Board fails to
elect a chairperson, the Committee members shall elect a chairperson from
their members. The chairperson shall be responsible for leadership of the
Committee, including overseeing the agenda, presiding over the meetings and
reporting to the Board. If the Committee chairperson is not present at a
meeting, the remaining members of the Committee may designate an acting
chairperson.
The members shall serve for a term of one year or until their
successors shall be appointed and qualified. No member of the Committee
shall be removed except by majority vote of the full Board. The Board shall
have the authority to fill vacancies or add additional members to the
Committee.
A member shall promptly notify the Committee and the Board if the
member is no longer an Independent Director and such member shall be
removed from the Committee unless the Board determines that an exception to
the Independent Director requirement is available under the AMEX rules with
respect to such member's continued membership on the Committee.
MEETINGS AND PROCEDURES
Consistent with the Company's articles of incorporation, bylaws and
applicable state law, the following shall apply:
o The Committee shall fix its own rules of procedure, which shall be
consistent with the Bylaws of the Company and this Charter.
o The Committee shall meet at least annually and more frequently as
circumstances require. Members may participate by telephone.
B-1
o The chairperson of the Committee or a majority of the members of
the Committee may call special meetings of the Committee.
o The chairperson, in consultation with other members of the
Committee, shall set the length of each meeting and the agenda of
items to be addressed at each meeting and shall circulate the
agenda to each member of the Committee in advance of each meeting.
o A majority of the members of the Committee shall constitute a
quorum.
o The Committee may request that any directors, officers or
employees of the Company, or other persons whose advice and
counsel are sought by the Committee, attend any meeting of the
Committee and/or provide such pertinent information as the
Committee requests, except that no director of the Company shall
participate in discussions or attend any portion of a meeting of
the Committee at which that director's nomination or committee
selection is being discussed.
o Following each of its meetings, the Committee shall deliver a
report on the meeting to the Board, including a description of all
actions taken by the Committee at the meeting.
o The Committee shall keep written minutes of its meetings, which
minutes shall be maintained by the Company with the books and
records of the Company. The chairperson may designate an officer
or employee of the Company to serve as secretary to the Committee.
RESPONSIBILITIES AND DUTIES OF THE COMMITTEE
The Committee shall have the following duties and responsibilities:
Selection of Director Nominees and Committee Membership
-------------------------------------------------------
o Establish the criteria for selecting new members of the Board,
which criteria shall include, among other factors that the
Committee may deem appropriate, the person's experience as a
director, current and past employment, and knowledge of the
Company's business and industry.
o Interview prospective candidates, and recommend to the Board, the
director nominees for each annual shareholder meeting and nominees
for any vacancies arising between annual shareholder meetings
(subject to any contractual or other rights granted by the Company
to third parties to nominate directors).
o Recommend to the Board whether to increase the number of
directors, or, in the event of the death disability, resignation,
refusal to stand for reelection or removal of a director, whether
to decrease the number of directors.
o Review the composition of the Board and the Committee at least
annually to ensure that the Board and the Committee complies with
all applicable laws, regulations, and listing requirements.
o Recommend to the Board the directors to be appointed to each
committee of the Board.
B-2
o Review the skills, characteristics, and qualifications of the
members of the board and all committees at least annually.
o Determine director and committee member/chair compensation for
those directors who are not also salaried officers of the Company.
o Establish policies regarding the consideration of director
candidates recommended by shareholders.
o Establish procedures to be followed by shareholders in submitting
recommendations for director candidates.
o Recommend to the Board a process for shareholders to communicate
with the Board.
o Recommend to the Board a policy with respect to Board member
attendance at annual meetings.
Develop and Implement Policies Regarding Corporate Governance Matters
---------------------------------------------------------------------
o Recommend to the Board policies to enhance the Board's
effectiveness, including with respect to the distribution of
information to Board members, the size and composition of the
Board, and the frequency and structure of Board meetings.
o Develop and review periodically, and at least annually, the
corporate governance policies of the Company to ensure that they
are appropriate for the Company and that policies of the Company
comply with applicable laws, regulations and listing standards,
and recommend any changes to the Board.
o Periodically (and at least once annually) review and make
recommendations with respect to the Company's code of ethics.
o Consider any other corporate governance issues that arise from
time to time, and recommend appropriate actions to the Board.
Evaluation of the Board and Management
--------------------------------------
o Oversee performance evaluations for the Board as a whole, the
directors and senior management (in conjunction with the
Compensation Committee).
o Maintain an orientation program for new directors and continuing
education programs for directors.
Succession Planning and Other Matters
-------------------------------------
o Review and advise the Board of Directors on executive officer
succession plans.
o Make recommendations to the Board with respect to potential
successors for key management positions.
o Review and evaluate the Committee's performance annually.
B-3
o Review and reassess the adequacy of this Charter on an annual
basis and recommend to the Board any appropriate changes.
o Perform such other duties and responsibilities as may be assigned
to the Committee, from time to time, by the Board.
SUBCOMMITTEES
The Committee may, by resolution passed by a majority of the Committee,
designate one or more subcommittees, each subcommittee to consist of one or
more of the members of the Committee. The Committee may delegate such
authority to a subcommittee as the Committee deems appropriate, consistent
with applicable law and AMEX listing standards.
INVESTIGATIONS AND STUDIES; OUTSIDE ADVISORS
The Committee may conduct or authorize investigations into or studies
of matters within the scope of the Committee's duties and responsibilities,
and may retain, at the Company's expense, such experts and other
professionals as it deems necessary. The Committee shall have the sole
authority to retain or terminate any search firm to be used to identify
director candidates, including sole authority to approve the search firm's
fees and other retention terms, such fees to be borne by the Company.
B-4
APPENDIX C
PROXY CARD
PROXY CARD - SIDE 1
SELAS CORPORATION OF AMERICA
ARDEN HILLS, MINNESOTA 55112
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints MARK S. GORDER and
ROBERT F. GALLAGHER, and either of them, will full power of substitution, as
proxies and hereby authorizes them to represent and to vote all the Common
Shares of Selas Corporation of America held of record by the undersigned on
March 19, 2004, at the annual meeting of shareholders to be held on April 27,
2004, or any postponement or adjournment thereof.
Both proxy agents present and acting in person or by their substitutes (or, if
only one is present and acting, then that one) may exercise all of the powers
conferred by this proxy. DISCRETIONARY AUTHORITY IS CONFERRED BY THIS PROXY WITH
RESPECT TO CERTAIN MATTERS, AS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
PLEASE MARK, SIGN, AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
(CONTINUED ON REVERSE SIDE)
PROXY CARD - SIDE 2
|X| Please mark your votes as in this example.
1. ELECTION OF DIRECTORS. The nominees for election are Michael J. McKenna and
Mark S. Gorder.
Michael J. McKenna [_] FOR NOMINEE [_] WITHHOLD AUTHORITY
Mark S. Gorder [_] FOR NOMINEE [_] WITHHOLD AUTHORITY
2. In their, discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE SHARES RERESENTED BY THIS PROXY, DULY
EXECUTED, WILL BE VOTED AS INSTRUCTED ABOVE. IF
INSTRUCTIONS ARE NOT GIVEN, THEY WILL BE VOTED FOR
THE ELECTION OF DIRECTORS AS SET FORTH IN THE
CORPORATION'S PROXY STATEMENT.
BY SIGNING THIS PROXY, YOU HEREBY ACKNOWLEDGE
RECEIPT OF THE COMPANY'S 2003 ANNUAL REPORT TO
SHAREHOLDERS, NOTICE OF THE COMPANY'S 2004 ANNUAL
MEETING OF SHAREHOLDERS AND THE COMPANY'S PROXY
STATEMENT DATED MARCH 26, 2004.
____________________________ Date ________ , 2004
Signature
____________________________ Date ________ , 2004
Signature (if held jointly)
NOTE: Your signature should appear exactly as your
name appears in the space to the left. For joint
accounts, any co-owner may sign. When signing as
attorney, executor, administrator, or fiduciary,
please give your full title as such.