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EX-99.1 - EXHIBIT 99.1 - WSI INDUSTRIES, INC. | c23678exv99w1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 20, 2011
WSI Industries, Inc.
(Exact name of registrant as specified in its charter)
Minnesota | 000-00619 | 41-0691607 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
213 Chelsea Road Monticello, MN |
55362 |
|
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (763) 295-9202
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Items under Sections 1, 3, 4, 6, and 7 are not applicable and therefore omitted.
Item 2.02 | Results of Operations and Financial Condition. |
WSI Industries, Inc. (the Company) issued a press release on October 20, 2011 disclosing material
non-public information regarding its results of operations for the fourth quarter and fiscal year
ended August 28, 2011. The Company hereby furnishes the press release, which is attached hereto as
Exhibit 99.1.
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Appointment of Director and CEO Transition
On October 20, 2011, the Companys Board of Directors elected Benjamin Rashleger, currently the
Companys President and Chief Operating Officer, as a director.
Further, Michael J. Pudil will retire as the Companys Chief Executive Officer effective December
31, 2011 and Mr. Rashleger will be promoted to Chief Executive Officer effective January 1, 2012.
Adjustments to Base Salaries for 2012 and Rashleger Agreement
On October 20, 2011, the Companys Compensation Committee set the annual base salaries for the
Companys executive officers effective October 24, 2011. Mr. Rashlegers annual base salary will be
increased to $216,000, reflecting his responsibilities effective January 1, 2012 as the Companys
Chief Executive Officer. Mr. Sheelys base salary will be increased to $140,910. Mr. Pudils
annual base salary was not adjusted and will continue as set by his employment agreement dated
October 7, 2009 until his retirement on December 31, 2011.
When Mr. Rashleger was hired, the Company entered into two agreements with him: an Employment
(Change In Control) Agreement dated October 12, 2009 and a Restrictive Covenant Agreement. On
October 20, 2011, the Compensation Committee recommended and the Board of Directors approved the
entry by the Company into a severance letter agreement with Mr. Rashleger. The severance letter
agreement entered into by Mr. Rashleger on October 20, 2011 is the same as the severance letter
agreement between the Company and Paul D. Sheely attached as Exhibit 10.5 to the Current Report on
Form 8-K dated October 7, 2009 except that the salary continuation benefit and the Companys
payment of COBRA premiums each will continue for a period of eighteen months.
Adoption of 2012 Executive Bonus Program
On October 20, 2011, the Compensation Committee of Board of Directors of the Company recommended,
and the Board of Directors approved, the 2012 Executive Bonus Program (the Program) for certain
executive officers and other members of management. The Compensation Committee also approved the
bonus that may be earned by executive officers under the Program, as a percentage of the executive
officers salary, at the threshold, target and maximum levels. The Companys executive officers
are: Michael J. Pudil, Chief Executive Officer; Benjamin Rashleger, President and Chief Operating
Officer; and Paul D. Sheely, Chief Financial Officer. Under his employment agreement dated October
7, 2009 with the Company, Mr. Pudil no longer participates in the executive bonus programs of the
Company, including the Program.
Under the Program, Messrs. Rashleger and Sheely are eligible for a bonus depending upon the
Companys fiscal year 2012 performance against goals established by the Compensation Committee
relating to return on assets. Return on assets is defined as pretax income before incentive
compensation divided by average tangible assets. The Compensation Committee set threshold, target
and maximum goals for fiscal year 2012 relating to return on assets. If the threshold level is not
met, the executive officers will not earn any bonus under the Program. Under the Program, Mr.
Rashleger is eligible for a bonus of 10%, 60% and 80% of his base salary at the threshold, target
and maximum levels of return on assets, respectively. Under the Program, Mr. Sheely is eligible for
a bonus of 10%, 50% and 70% of his base salary at the threshold, target and maximum levels of
return on assets, respectively. If the Company achieves a level of return on assets that falls
between the levels established by the Compensation Committee, the executive officers bonus will be
prorated. All bonuses at the threshold and target levels and between the threshold and target
levels will be paid out in cash. If the Company achieves a return on assets in excess of the target
level and up to the maximum level, the executive officers bonus will be paid out in cash up to the
target level amount and for the bonus in excess of the target level amount, the bonus will be paid
by lapse of restrictions on shares of restricted stock granted by the Compensation Committee on
October 20, 2011.
In connection with the Program, the Compensation Committee approved grants effective October 24,
2011 of performance based restricted stock to Messrs. Rashleger and Sheely and the other
participants in the Program, with the number of shares granted to each participant representing the
maximum number of shares that could be earned under the Program. Messrs. Rashleger and Sheely were
granted 7,448 and 4,858 shares of performance based restricted stock, respectively. The shares of
performance based restricted stock may not be transferred unless and until the restrictions lapse
upon achievement of a return on assets in excess of the target level and up to the maximum level.
Following achievement of the return on assets objective, restrictions on one-third of the shares
would lapse on the payout date of bonuses under the Program, as approved by the Compensation
Committee, and restrictions on one-third of the shares would lapse on each of the 12 month and 24
month anniversary of the first lapse date. The holder of the performance based restricted stock is
entitled to vote and receive dividends and exercise all other rights with respect to the shares.
Any shares of performance based restricted stock as to which restrictions do not lapse will be
forfeited.
Payouts under 2011 Executive Bonus Program
On October 20, 2011, the Companys Compensation Committee determined the achievement and payout to
executive officers under the Companys 2011 Executive Bonus Program that was adopted on October 19,
2010. Under the 2011 Executive Bonus Program, the bonuses to participants were determined based on
achievement relating to return on assets for fiscal year 2011. Of the Companys current executive
officers, only Messrs. Rashleger and Sheely were eligible to participate in the 2011 Executive
Bonus Program. Depending on the Companys achievement under the 2011 Executive Bonus Program,
bonuses may be paid to Messrs. Rashleger and Sheely in cash and in lapse of restrictions on
performance based restricted stock granted on October 19, 2010. The Companys return on assets for
fiscal year 2011 exceeded the threshold amount, but was less than the target amount. Accordingly,
under the Companys 2011 Executive Bonus Program, the Company will pay Mr. Rashleger and Mr. Sheely
a cash bonus of $62,437 and $48,346, respectively, or approximately 35.6% of the respective annual
base salaries earned during fiscal 2011. Because the return on assets did not meet or exceed the
target level amount, all shares of performance based restricted stock granted in connection with
the 2011 Executive Bonus Program were forfeited as of October 20, 2011. Accordingly, Messrs.
Rashleger and Sheely forfeited 5,438 and 4,133 shares of performance based restricted stock,
respectively, which represents shares of performance based restricted stock originally granted on
October 22, 2010 including dividends paid in additional shares.
Item 8.01 | Other Events. |
On October 20, 2011, the Companys Board of Directors declared a dividend of $.04 per share payable
November 17, 2011 to holders of record on November 3, 2011.
Item 9.01 | Financial Statements And Exhibits. |
Exhibit No. | Description | |||
99.1 | Press Release issued on October 20, 2011. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WSI INDUSTRIES, INC. |
||||
By: | /s/ Michael J. Pudil | |||
Michael J. Pudil | ||||
Chief Executive Officer |
Date: October 26, 2011