SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Marine Products Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ 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:
-----------------------------------------------------------------------
[LOGO] MARINE PRODUCTS
CORPORATION
MARINE PRODUCTS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
2170 PIEDMONT ROAD, NE, ATLANTA, GEORGIA 30324
TO THE HOLDERS OF THE COMMON STOCK:
PLEASE TAKE NOTICE that the 2004 Annual Meeting of Stockholders of Marine
Products Corporation, a Delaware corporation ("Marine Products" or "the
Company"), will be held at the Company's offices located at 2170 Piedmont Road,
NE, Atlanta, Georgia, on Tuesday, April 27, 2004, at 11:30 A.M., or any
adjournment thereof, for the following purposes:
1. To elect three Class III directors to the Board of Directors;
2. To approve the proposed 2004 Stock Incentive Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof. The Proxy Statement dated March
22, 2004 is attached.
The Board of Directors has fixed the close of business on March 15, 2004 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting.
Stockholders who do not expect to be present at the meeting are urged to
complete, date, sign and return the enclosed proxy. No postage is required if
the enclosed envelope is mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Linda H. Graham, Secretary
Linda H. Graham, Secretary
Atlanta, Georgia
March 22, 2004
PROXY STATEMENT
This Proxy Statement and a form of proxy were first mailed to stockholders
on or about March 26, 2004. The following information concerning the enclosed
proxy and the matters to be acted upon at the Annual Meeting of Stockholders to
be held on April 27, 2004, is submitted by the Company to the stockholders for
their information.
THREE-FOR-TWO STOCK SPLIT -- The Board of Directors, at their meeting on
January 27, 2004, authorized a three-for-two stock split by the issuance on
March 10, 2004 of one additional common share for each two common shares held of
record at February 10, 2004. Accordingly, the par value of additional shares
issued was adjusted between common stock and capital in excess of par value, and
fractional shares resulting from the stock split were settled in cash. All
share, per share and market price data herein have been adjusted for this split.
SOLICITATION OF AND POWER TO REVOKE PROXY
A form of proxy is enclosed. Each proxy submitted will be voted as
directed, but if not otherwise specified, proxies solicited by the Board of
Directors of the Company will be voted in favor of the candidates for election
to the Board of Directors.
A stockholder executing and delivering a proxy has power to revoke the same
and the authority thereby given at any time prior to the exercise of such
authority if he so elects, by contacting either proxyholder at 2170 Piedmont
Road, NE, Atlanta, Georgia, 30324.
CAPITAL STOCK
The outstanding capital stock of the Company on March 15, 2004 consisted of
25,798,085 shares of Common Stock, par value $0.10 per share. Holders of Common
Stock are entitled to one vote (non-cumulative) for each share of such stock
registered in their respective names at the close of business on March 15, 2004,
the record date for determining stockholders entitled to notice of and to vote
at the meeting or any adjournment thereof.
A majority of the outstanding shares will constitute a quorum at the Annual
Meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
In accordance with General Corporation Law of the state of Delaware, the
election of the nominees named herein as Directors will require the affirmative
vote of a plurality of the votes cast by the shares of Company Common Stock
entitled to vote in the election provided that a quorum is present at the Annual
Meeting. In the case of a plurality vote requirement (as in the election of
directors), where no particular percentage vote is required, the outcome is
solely a matter of comparing the number of votes cast for each nominee, and
hence only votes for director nominees (and not abstentions or broker non-votes)
are relevant to the outcome. The affirmative vote of holders of a majority of
the outstanding shares of Common Stock of the Company entitled to vote and
present in person or by proxy at the Annual Meeting is required for approval of
the Company's 2004 Stock Incentive Plan. With respect to the proposal to approve
the Company's Stock Incentive Plan, abstentions will have the effect of a vote
against the proposal and broker non-votes will be disregarded and will have no
effect on the outcome of the vote. There are no rights of appraisal or similar
dissenter's rights with respect to any matter to be acted upon pursuant to this
Proxy Statement. It is expected that shares beneficially held by officers and
directors of the Company, which in the aggregate represent approximately 67
percent of the outstanding shares of Common Stock, will be voted for the
nominees for directors and in favor of the proposal to approve the 2004 Stock
Incentive Plan.
The executives named in the Summary Compensation Table, and the name and
address of each stockholder who owned beneficially five percent (5%) or more of
the shares of Common Stock of the Company on March 15, 2004, together with the
number of shares owned by each such person and the percentage of outstanding
shares that ownership represents, and information as to Common Stock ownership
of the executive officers and directors of the Company as a group (according to
information received by the Company), are set out below:
AMOUNT BENEFICIALLY PERCENT OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) SHARES
------------------------------------ --------- ----------------------
R. Randall Rollins
Chairman of the Board 15,760,614 (2) 59.2
2170 Piedmont Road, NE
Atlanta, Georgia
Gary W. Rollins
President and Chief Executive Officer,
Rollins, Inc. 15,783,471 (3) 59.3
2170 Piedmont Road, NE
Atlanta, Georgia
FMR Corporation
82 Devonshire Street 2,571,210 (4) 9.7
Boston, Massachusetts
Richard A. Hubbell
President and Chief Executive Officer 754,450 (5) 2.8
2170 Piedmont Road, NE
Atlanta, Georgia
James A. Lane, Jr.
Executive Vice President and President, Chaparral Boats, Inc. 170,868 (6) **
2170 Piedmont Road, NE
Atlanta, Georgia
Ben M. Palmer
Vice President, Chief Financial Officer and Treasurer 129,962 (7) **
2170 Piedmont Road, NE
Atlanta, Georgia
All Directors and Executive Officers as a group 17,703,304 (8) 66.5
(9 persons)
-----------------
** Less than one percent
(1) Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and
investment power.
(2) Includes 71,280 shares held as Trustee, Guardian, or Custodian for his children. Also includes 72,864
shares of common stock in two trusts of which he is Co-Trustee and as to which he shares voting and
investment power. Also includes 15,102,854 shares of the Company held by RFPS Management Company III,
L.P. of which RFA Management Company, LLC ("General Partner"), a Georgia limited liability company, is
the general partner. The voting interests of the General Partner are held by two revocable trusts, one of
which each of Gary or Randall Rollins is the grantor and sole trustee. LOR, Inc. is the manager of the
General Partner. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of LOR, Inc. Included
herein are options to purchase 60,000 shares, which are currently exercisable or will become exercisable
within 60 days of the date hereof. This excludes options to purchase 90,000 shares that are not currently
exercisable and will not become exercisable within 60 days of the date hereof. This also excludes 20,998
shares of common stock held by his wife, as to which Mr. Rollins disclaims any beneficial interest.
(3) Includes 72,864 shares of common stock in two trusts of which he is Co-Trustee and as to which he shares
voting and investment power. Also includes 15,102,854 shares of the Company held by RFPS Management
Company III, L.P. of which RFA Management Company, LLC ("General Partner"), a Georgia limited liability
company, is the general partner. The voting interests of the General Partner are held by two revocable
trusts, one of which each of Gary or Randall Rollins is the grantor and sole trustee. LOR, Inc. is the
manager of the General Partner. Mr. R. Randall Rollins and Mr. Gary W. Rollins have voting control of
LOR, Inc. This also excludes 90,004 shares of common stock held by his wife, as to which Mr. Rollins
disclaims any beneficial interest.
(4) Based on Schedule 13G/A filed with the Securities and Exchange Commission on February 17, 2004.
(5) Includes 583,214 shares subject to options that are currently exercisable or that become exercisable
within 60 days of the date hereof, and 91,466 shares of restricted stock awards.
2
(6) Includes 50,151 shares subject to options that are currently exercisable or that become exercisable
within 60 days of the date hereof, and 36,000 shares of restricted stock awards.
(7) Includes 76,212 shares subject to options that are currently exercisable or that become exercisable
within 60 days of the date hereof, and 26,550 shares of restricted stock awards.
(8) Shares held in trusts as to which more than one officer and/or director are Co-Trustees or entities in
which there is common ownership have been included only once. Includes an aggregate of 834,733 shares
that may be purchased by five executive officers upon exercise of options that are currently exercisable
or that become exercisable within 60 days of the date hereof, and 169,878 shares of restricted stock
grants awarded to or earned by them pursuant to the Company's 2001 Employee Stock Incentive Plan.
ELECTION OF DIRECTORS
At the Annual Meeting, Mr. Wilton Looney, Mr. Gary W. Rollins and Mr. James A. Lane, Jr. will be nominated
to serve as Class III directors. The directors in each class serve for a three year term. The director nominees
will serve in their respective class until their successors are elected and qualified. Five other individuals
serve as directors but are not standing for re-election because their terms as directors extend past this Annual
Meeting pursuant to provisions of the Company's Bylaws that provide for the election of directors for staggered
terms, with each director serving a three-year term. Unless authority is withheld, the proxy holders will vote
for the election of each nominee named below. Although management does not contemplate the possibility, in the
event any nominee is not a candidate or is unable to serve as a director at the time of the election, unless
authority is withheld, the proxies will be voted for any nominee who shall be designated by the present Board of
Directors to fill such vacancy.
The name and age of each of the three director nominees, his principal occupation, together with the number
of shares of Common Stock beneficially owned, directly or indirectly, by him or her and the percentage of
outstanding shares that ownership represents, all as of the close of business on March 15, 2004 (according to
information received by the Company), are set out below. Similar information is also provided for those directors
whose terms expire in future years.
PERCENT OF
SERVICE AS SHARES OF OUTSTANDING
NAMES OF DIRECTORS PRINCIPAL OCCUPATION (1) DIRECTOR AGE COMMON STOCK (2) SHARES
--------------------------------------------------------------------------------------------------------------------------------
NAMES OF DIRECTOR NOMINEES
--------------------------
Class III (New Term Expires 2007)
---------------------------------
Wilton Looney.......... Honorary Chairman of the Board, 2001 to 84 1,080 **
Genuine Parts Company date
(automotive parts distributor).
Gary W. Rollins (3).... President and Chief Executive 2001 to 59 15,783,471 (4) 59.3
Officer of Rollins, Inc. (consumer date
services) since 2001; President and
Chief Operating Officer of Rollins,
Inc. prior to 2001.
James A. Lane, Jr...... Executive Vice President of 2001 to 61 170,868 (5) **
the Company since February 2001; date
President of Chaparral Boats, Inc.
3
PERCENT OF
SERVICE AS SHARES OF OUTSTANDING
NAMES OF DIRECTORS PRINCIPAL OCCUPATION (1) DIRECTOR AGE COMMON STOCK (2) SHARES
--------------------------------------------------------------------------------------------------------------------------------
NAMES OF DIRECTORS WHOSE TERMS HAVE NOT EXPIRED
------------------------------------------------
Class I (Term Expires 2005)
---------------------------
R. Randall Rollins (3). Chairman of the Board; Chairman 2001 to 72 15,760,614 (6) 59.2
of the Board of RPC, Inc. (oil and date
gas services) effective April 22,
2003; Chairman of the Board and
Chief Executive Officer of RPC,
Inc. prior to April 22, 2003;
Chairman of the Board of Rollins,
Inc. (consumer services) since
October 1991.
Henry B. Tipple........ Chairman of the Board and Chief 2001 to 77 242,334 (7) **
Executive Officer of Tippie date
Services, Inc. (management
services). Chairman of the Board
of Dover Downs Gaming and
Entertainment, Inc. (operator
of multi-purpose gaming and
entertainment complex) since
January 2002; and Chairman of
the Board of Dover Motorsports,
Inc. (operator of motorsports
tracks) since April 2000 and Vice
Chairman prior to April 2000.
James B. Williams...... Chairman of the Executive 2001 to 70 36,000 **
Committee, SunTrust Banks, Inc. date
(bank holding company) since
1998; and Chairman of the Board
and Chief Executive Officer of
SunTrust Banks, Inc. until 1998.
Class II (Term Expires 2006)
----------------------------
Richard A.Hubbell...... President and Chief Executive 2001 to 59 754,450 (8) 2.8
Officer of the Company; President date
and Chief Executive Officer of
RPC, Inc. (oil and gas services)
effective April 22, 2003; President
and Chief Operating Officer
of RPC, Inc, from 1987 to
April 21, 2003.
Linda H. Graham........ Vice President and Secretary of 2001 to 67 147,269 (9) **
the Company; Vice President and date
Secretary of RPC, Inc. (oil and
gas services) since 1987.
-----------------
** Less than one percent
4
(1) Unless otherwise noted, each of the directors has held the positions of responsibility set out in this column (but not
necessarily his or her present title) for more than five years. In addition to the directorships listed in this column,
the following individuals also serve on the Boards of Directors of the following companies: James B. Williams: The
Coca-Cola Company, Genuine Parts Company and Georgia Pacific Corporation; R. Randall Rollins: SunTrust Banks, Inc.,
SunTrust Banks of Georgia, Dover Downs Gaming and Entertainment, Inc. and Dover Motorsports, Inc.; Henry B. Tippie:
Dover Downs Gaming and Entertainment, Inc. and Dover Motorsports, Inc. All of the directors shown in the above table
are also directors of RPC, Inc. and with the exception of Messrs. Hubbell and Lane and Ms. Graham are also directors of
Rollins, Inc.
(2) Except as otherwise noted, the nature of the beneficial ownership for all shares is sole voting and investment power.
(3) R. Randall Rollins and Gary W. Rollins are brothers.
(4) See information contained in footnote (3) to the table appearing in Capital Stock section.
(5) See information contained in footnote (6) to the table appearing in Capital Stock section.
(6) See information contained in footnote (2) to the table appearing in Capital Stock section.
(7) Includes 17,064 shares held in trusts of which he is a Trustee or Co-Trustee and as to which he shares voting and
investment power. Also includes shares held by a wholly owned corporation that owns 270 shares.
(8) See information contained in footnote (5) to the table appearing in Capital Stock section.
(9) Includes 65,156 shares subject to options that are currently exercisable or that become exercisable within 60 days of
the date hereof, and 15,863 shares of restricted stock awards.
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS COMPENSATION,
COMMITTEES AND MEETINGS
BOARD MEETINGS AND COMPENSATION
During 2003, non-employee Directors received $12,000 from the Company, plus
$1,000 for each meeting of the Board of Directors or committee they attended. In
addition, a non-employee director that served as Chairman of a Committee
received $4,000 for each committee of which he or she was chairman. The Board of
Directors met four times during the fiscal year ended December 31, 2003. No
director attended fewer than 75 percent of the Board meetings and meetings of
committees on which he or she served during 2003. The Board of Directors has
determined that of all the members of the Board, Messrs. Wilton Looney, Henry B.
Tippie and James B. Williams are independent as that term is defined by the
rules of the Securities and Exchange Commission ("SEC") and the American Stock
Exchange ("AMEX"). Board members are encouraged to attend the Company's Annual
Stockholder Meetings and all Board members were in attendance at last year's
meeting.
The Board of Directors has the following Committees: Audit Committee,
Compensation Committee, Executive Committee, Diversity Committee and Nominating
and Governance Committee.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors of the Company consists of
Henry B. Tippie, (Chairman), Wilton Looney and James B. Williams, all of whom
are independent, as discussed above. The Audit Committee held five meetings
during the fiscal year ended December 31, 2003. The Board of Directors at its
meeting on January 27, 2004 has determined that all of the Audit Committee
members are "Audit Committee Financial Expert(s)" as defined in the SEC rules.
The Audit Committee meets with the Company's independent public accountants,
internal auditor, Chief Executive Officer and Chief Financial Officer to review
the scope and results of audits and recommendations made with respect to
internal and external accounting controls and specific accounting and financial
reporting issues. The Audit Committee has the authority to obtain advice and
assistance from, and receive appropriate funding from the Company for, outside
legal, accounting or other advisors as it deems necessary to carry out its
duties. On January 27, 2004, the Audit Committee recommended and the Board of
Directors approved changes to the Audit Committee charter. This charter is
included herein as Appendix A and is also available on the Company's website at
www.marineproductscorp.com, under the Governance section.
5
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of the Company
consists of Henry B. Tippie (Chairman), Wilton Looney, and James B. Williams. It
held one meeting during the fiscal year ended December 31, 2003. The function of
the Compensation Committee is to review the base salary and cash based incentive
compensation for all of the Named Executives, and to recommend to the Board any
changes to insure continued effectiveness, and to administer the compensation of
James A. Lane, Jr. in accordance with the Performance-Based Compensation
Agreement. The Compensation Committee also administers the Marine Products
Corporation Employee Stock Incentive Plan and will administer the 2004 Stock
Incentive Plan if it is approved by the stockholders.
EXECUTIVE COMMITTEE
The Executive Committee of the Board of Directors of the Company consists
of R. Randall Rollins, Gary W. Rollins and Richard A. Hubbell. It held one
meeting during the fiscal year ended December 31, 2003. The function of the
Executive Committee is to take all permitted actions of the Board in its stead
as permitted by the Company's By-laws and Delaware law. The members of the
Executive Committee do not receive any additional compensation for serving on
this committee.
DIVERSITY COMMITTEE
The Diversity Committee of the Board of Directors of the Company consists
of Henry B. Tippie (Chairman), Wilton Looney, and James B. Williams. It held one
meeting during the fiscal year ended December 31, 2003. The function of the
Diversity Committee is to monitor compliance with applicable non-discrimination
laws.
NOMINATING AND GOVERNANCE COMMITTEE
The Nominating and Governance Committee of the Board of Directors of the
Company consists of Henry B. Tippie (Chairman), Wilton Looney, and James B.
Williams, all of whom are independent, as discussed on page 5. The Committee was
formed in 2002 pursuant to a resolution passed by the Board of Directors for the
following purposes:
o to recommend to the Board of Directors nominees for director and to
consider any nominations properly made by a stockholder;
o upon request of the Board of Directors, to review and report to the
Board with regard to matters of corporate governance; and
o to make recommendations to the Board of Directors regarding the agenda
for Annual Stockholders Meetings and with respect to appropriate action
to be taken in response to any stockholder proposals.
The Nominating and Governance Committee held one meeting during the fiscal
year ended December 31, 2003. The Company is not required by law or by AMEX
rules to have a nominating or compensation committee since we are a "controlled
corporation" as defined by Part 8, Sec. 801 (a) of the AMEX Company Guide. The
Company is a "controlled corporation" because a group that includes the
Company's Chairman of the Board and his brother, Gary W. Rollins, who is also a
director, and certain other companies under their control, controls in excess of
fifty percent of the Company's voting power. The Board of Directors of the
Company established the Nominating and Governance Committee to promote
responsible corporate governance practices and currently intends to maintain the
Committee going forward.
DIRECTOR NOMINATIONS
Under Delaware law, there are no statutory criteria or qualifications for
directors. No criteria or qualifications have been prescribed by the Board at
this time. The Nominating and Governance Committee does not have a formal
charter or a formal policy with regard to the consideration of director
candidates, however it acts under the guidance of the corporate governance
guidelines approved by the Board of Directors on January 27, 2004 and posted on
the Company's website at WWW.MARINEPRODUCTSCORP.COM under the Governance
6
section. The Board believes that it should preserve maximum flexibility in order
to select directors with sound judgment and other qualities, which are desirable
in corporate governance. According to the Company's corporate governance
guidelines, the Board of Directors will be responsible for selecting its own
members. The Board delegates the screening process involved to the Nominating
and Governance Committee. This Committee is responsible for determining the
appropriate skills and characteristics required of Board members in the context
of the then current make-up of the Board. This determination should take into
account all factors which the Committee considers appropriate, such as
independence, experience, strength of character, mature judgment, technical
skills, diversity, age and the extent to which the individual would fill a
present need on the Board. The Company's By-laws provide that nominations for
the election of directors may be made by any stockholder entitled to vote for
the election of directors. Nominations must comply with an advance notice
procedure which generally requires that written notice be addressed to:
Secretary, Marine Products Corporation, 2170 Piedmont Road NE, Atlanta, Georgia
30324, not less than ninety days prior to the anniversary of the prior year's
Annual Meeting of Stockholders and set forth the name, age, business address
and, if known, residence address of the nominee proposed in the notice, the
principal occupation or employment of the nominee for the past five years, the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by the person and any other information
relating to the person that would be required to be disclosed in a proxy
statement or other filings. The Committee is responsible for screening the
members that are selected by the Board of Directors for nomination to the Board
and for service on committees of the Board. The Company has not received a
recommendation for a director nominee from a stockholder. All of the nominees
for directors being voted upon at the Annual Meeting to be held on April 27,
2004, are directors standing for re-election.
DIRECTOR COMMUNICATIONS
The Company also has a process for interested parties, including
stockholders, to send communications to our Board of Directors. Communications
to the Board of Directors may be sent in the following manner: by corresponding
with Internal Audit Department, Marine Products Corporation, 2170 Piedmont Road
NE, Atlanta, Georgia 30324. Instructions for communications with the directors
are posted on our website at WWW.MARINEPRODUCTSCORP.COM under the Governance
section. All communications received from interested parties are forwarded to
the Board of Directors. Any communication addressed solely to the non-management
directors will be forwarded to them.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the directors named above who serve on the Company's Compensation
Committee are or have ever been employees of the Company. There are no
Compensation Committee interlocks requiring disclosure.
REPORTS OF THE AUDIT AND COMPENSATION COMMITTEES AND
PERFORMANCE GRAPH
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE OTHER COMPANY FILINGS, INCLUDING
THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT OF THE AUDIT
COMMITTEE, REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION AND
THE PERFORMANCE GRAPH INCLUDED HEREIN SHALL NOT BE INCORPORATED BY REFERENCE
INTO ANY SUCH FILINGS.
REPORT OF THE AUDIT COMMITTEE
Management is responsible for the Company's internal controls and the
financial reporting process. The Company's independent public accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with auditing standards generally accepted in
the United States of America and for issuing a report thereon. The Audit
Committee's responsibility is generally to monitor and oversee these processes,
as described in the Audit Committee charter. It is not the duty of the Audit
Committee to plan or conduct audits or to determine that the Company's financial
statements are complete and accurate and in accordance with generally accepted
accounting principles; that is the responsibility of management.
7
In fulfilling its oversight responsibilities with respect to the year ended
December 31, 2003, the Audit Committee:
o Approved the terms of the engagement of Ernst & Young LLP as
independent public accountants of the Company for the year ended
December 31, 2003;
o Reviewed with management and the independent public accountants the
interim financial information included in the Forms 10-Q prior to
their being filed with the SEC. In addition, the Committee reviewed
all earnings releases with management and independent public
accountants prior to their release;
o Reviewed and discussed with the Company's management and the
independent public accountants the audited consolidated financial
statements of the Company as of December 31, 2003 and 2002 and for the
three years ended December 31, 2003. The discussion included matters
related to the conduct of the audit, such as the selection of and
changes in accounting policies, significant adjustments arising from
the audit and the absence of any disagreements with management over
the application of accounting principles, the basis for management's
accounting estimates and the disclosures in the financial statements;
o Discussed with the independent public accountants the matters required
to be discussed by Statement on Auditing Standards No. 61,
"Communications with Audit Committees;" and
o Received from the independent public accountants the written
disclosures and the letter required by Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," and
has discussed with the public accountants the firm's independence from
the Company.
Based upon the review and discussions referred to above, the Committee
recommended to the Board of Directors that the audited consolidated financial
statements of the Company and subsidiaries as of December 31, 2003 and 2002 and
for the three years ended December 31, 2003, be included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2003 and for filing with the
Securities and Exchange Commission.
In giving its recommendation to the Board of Directors, the Audit Committee
has relied on (i) management's representation that such financial statements
have been prepared with integrity and objectivity and in conformity with
accounting principles generally accepted in the United States of America and
(ii) the report of the Company's independent public accountants with respect to
such financial statements.
Submitted by the Audit Committee of the Board of Directors.
AUDIT COMMITTEE
Henry B. Tippie, Chairman
Wilton Looney
James B. Williams
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW
During the fiscal year 2003, the members of the Compensation Committee of
the Board of Directors held responsibility for determining the compensation and
stock-based incentives for all of the Named Executives. The Compensation
Committee is comprised of outside directors who are not eligible to participate
in the Company's compensation plans.
The Company is engaged in a highly competitive industry. The actions of the
executive officers have a profound impact on the short-term and long-term
profitability of the Company; therefore, designs of the executive officers'
compensation packages are very important. In order to retain key employees, the
Company has an executive compensation package that is driven by an increase in
shareholder value, the overall performance of the Company, and the individual
performance of the executive. The measures of the Company's performance include
long-term growth in net income and stockholder value improvements in addition to
individual performance.
8
Pursuant to the above compensation philosophy, the three main components of
the executive compensation packages are base salary, cash based incentive plans,
and stock based incentive plans.
In connection with the spin-off of the Company in February 2001 from RPC,
Inc., initial compensation packages were established for all of the Named
Executives based on evaluation of the responsibilities of these executive
officers. The Committees considered, among other things, that all of the Named
Executives with the exception of Mr. Lane are employees of both the Company and
RPC, Inc. and are paid compensation directly from the Company and RPC, Inc. The
Compensation Committee determined in connection with the spin-off that no
changes to the compensation package of Mr. Lane were necessary.
BASE SALARY
The factors subjectively used in determining base salary include the recent
profit performance of the Company, the magnitude of responsibilities, the scope
of the position, individual performance, and the salary received by peers in
similar positions in the same geographic area. These factors are not used in any
specific formula or weighting. The salaries of the Named Executives are reviewed
annually. Increases to base salaries for the Named Executives ranged up to 50
percent based on all of the factors discussed above.
CASH BASED INCENTIVE PLANS
The annual cash based incentive compensation packages for the Named
Executives, other than Mr. Lane, are based upon performance objectives for the
ensuing fiscal year. The executive officers participate in a variety of
individualized performance bonus plans designed by the Committee to encourage
achievement of short-term objectives. These plans all have payouts subjectively
based on net income, budget objectives, and other individual specific
performance objectives. The specific performance objectives relate to each
executive improving the contribution of his functional area of responsibility to
further enhance the earnings of the Company. Bonuses were paid in the first
quarter of 2004 for the year ended December 31, 2003 and totaled $280,000 for
all of the Named Executives, with the exception of Mr. Lane.
One of the Named Executives, Mr. Lane, has an employment agreement with the
Company. Under this agreement, Mr. Lane receives an annual cash incentive bonus
of 10 percent of pretax profit, as defined, of Chaparral Boats, Inc. This
incentive payment was approximately 97 percent of the total cash compensation
paid to this executive in 2003. During 2003, Mr. Lane received in excess of $1
million in aggregate compensation (the maximum amount for which an employer may
claim a compensation deduction, pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended, unless certain performance related
compensation exemptions are met, during any one fiscal year). The Company
obtained stockholder approval of this agreement at the April 23, 2002
Stockholders' meeting. The Committee believes that the performance related
exemption for deductibility has been satisfied.
STOCK BASED INCENTIVE PLANS
Awards under the Company's 2001 Employee Stock Incentive Plan are purely
discretionary, and are not based on any specific formula and may or may not be
granted in any given fiscal year. Grants are made under the Plan, and the Plan
is administered by, the Committee, which consists of non-employee directors
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended. When considering the grant of stock awards, the Compensation Committee
gives consideration to the overall performance of the Company and the
performance of individual employees. During the fiscal year 2003, the Named
Executives were granted a total of 240,000 stock options. Future awards may also
be granted pursuant to the 2004 Stock Incentive Plan if it is approved by the
stockholders.
Except for Mr. Lane, the Compensation Committee currently believes that no
other employees' total compensation, including option grants under the Company's
2001 Employee Stock Incentive Plan, will materially exceed the $1 million
deductibility limit of Section 162(m) of the Internal Revenue Code of 1986, as
amended. Therefore, the Committee has determined that the Company will not
change its various compensation plans, or
9
otherwise meet the requirements of such exemption, at this time in order to
exempt other types of compensation under section 162(m).
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's compensation is determined by the
Compensation Committee. For fiscal year 2003, the cash compensation of Richard
A. Hubbell, President and Chief Executive Officer, was $390,000, $300,000 of
which was base salary and $90,000 was cash based incentive compensation. In
addition, Mr. Hubbell was granted 37,500 stock options with an exercise price of
$6.81 per share (adjusted for the three-for-two stock split effective March 10,
2004). The Chief Executive Officer's compensation is based upon the long-term
growth in net income, stockholder value improvements and the Chief Executive
Officer's individual performance. The Chief Executive Officer's base salary was
increased by 50 percent in 2003 to be commensurate with that of his peers in the
industry. The decision of the Committee is subjective and is not based upon any
specific formula or guidelines. No member of the Compensation Committee
participates in any Company incentive program.
COMPENSATION COMMITTEE
Henry B. Tippie, Chairman
Wilton Looney
James B. Williams
10
COMMON STOCK PERFORMANCE
As part of the executive compensation information presented in this Proxy
Statement, the Securities and Exchange Commission requires a 5-year comparison
of the cumulative total stockholder return based on the performance of the stock
of the Company, assuming dividend reinvestment, as compared with both a broad
equity market index and an industry or peer group index. However, if the
Company's stock has traded for a shorter period of time, the period covered by
the comparison may correspond to that time period. The indices included in the
following graph are the S & P Small Cap Index, the Russell 2000 Index ("Russell
2000") and a peer group which includes companies that are considered peers of
the Company ("Peer Group"). The companies included in the peer group have been
weighted according to each respective issuer's stock market capitalization at
the beginning of each year. The companies are Brunswick Corporation, MarineMax,
Inc., and Travis Boats and Motors, Inc. The Company has voluntarily chosen to
provide both an industry and a peer group index.
The S & P Small Cap Index is used because it was used in the 2003 Proxy
Statement, and was chosen because the Company was a component of the S & P Small
Cap Index in 2003. The Company is no longer a component of the S & P Small Cap
Index, so this index will not be used in the future unless either the Company
again becomes a component of the Index or believes that it is an appropriate
index for comparison. The Russell 2000 is used because the Company became a
component of the Russell 2000 in 2003, and because the Russell 2000 is a stock
index representing small capitalization U.S. stocks. During 2003 the components
of the Russell 2000 had an average market capitalization of $900 million.
The graph below assumes the value of $100.00 invested on February 28, 2001,
the date of the Company's spin-off from RPC, Inc.
COMPARISON OF CUMULATIVE TOTAL RETURN *
[PERFORMANCE GRAPH]
Marine
Values: Products S&P Peers Russell 2000
------- -------- ----- ----- ------------
2/28/01 100.00 100.00 100.00 100.00
12/31/01 98.10 108.11 103.63 102.98
12/31/02 219.09 91.55 100.53 80.76
12/31/03 423.83 125.91 165.00 117.40
* Assumes reinvestment of dividends.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Effective February 28, 2001, RPC began providing certain administrative
services to the Company. The service agreements between RPC and the Company
provide for the provision of services on a cost reimbursement
11
basis and are terminable on six month's notice. The services covered by these
agreements include administration of certain employee benefit programs and other
administrative services. Charges from RPC (or from corporations that are
subsidiaries of RPC) for such services aggregated approximately $496,000 in
2003. During 2003, a subsidiary of the Company paid $171,000 to a division of
RPC for the purchase, installation and service of overhead cranes. The Company
believes the charges paid by its subsidiary are at least as favorable as the
charges that would have been incurred for similar services from unaffiliated
third parties.
The Company participates in a multiple employer plan sponsored by RPC.
Following the spin-off of the Company in 2001, RPC has charged the Company for,
and the Company has been obligated to pay, its allocable share of pension costs
and the associated funding obligation related to the prior service liabilities
of Chaparral employees. Effective December 2003, the related prior service
liabilities totaling $3,314,000 and pension assets totaling $2,517,000 were
transferred within the multiple employer plan by RPC to the Company.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long-term compensation
for services in all capacities to the Company for the calendar years ended
December 31, 2003, 2002 and 2001 of those persons who were at December 31, 2003
(i) the Chief Executive Officer and (ii) the most highly compensated executive
officers of the Company whose total annual compensation exceeded $100,000 (the
"Named Executives").
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS
---------------------------------------------
ANNUAL
COMPENSATION
--------------------
RESTRICTED
STOCK SECURITIES
AWARDS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION (1) YEAR SALARY BONUS ($) (2) OPTIONS(#)(2) COMPENSATION(3)
--------------------------------------- ---- -------- --------- ------------ ------------- ---------------
R. Randall Rollins .................... 2003 $250,000 $ 125,000 $0 150,000 $ 0
Chairman of the Board 2002 150,000 100,000 0 0 0
2001 125,000 0 0 0 0
Richard A. Hubbell .................... 2003 300,000 90,000 0 37,500 0
President and Chief Executive Officer 2002 200,000 100,000 0 150,000 0
2001 158,333 0 0 45,000 0
James A. Lane, Jr. .................... 2003 67,841 3,401,372 0 37,500 24,048
Executive Vice President, and 2002 67,841 2,678,914 0 150,000 22,982
President, Chaparral Boats, Inc. 2001 67,841 2,048,715 0 0 2,040
Ben M. Palmer ......................... 2003 100,000 65,000 0 15,000 0
Vice President, Chief Financial 2002 75,000 25,000 0 30,000 0
Officer and Treasurer 2001 59,444 0 0 15,000 0
-----------------
(1) Mr. Rollins, Mr. Hubbell, Mr. Lane and Mr. Palmer became executive officers
of the Company on February 28, 2001. The amounts reflected in 2001 for Mr.
Lane include compensation paid to him as an employee of Chaparral Boats,
Inc. prior to the spin-off from RPC, Inc.
(2) Time-Lapse Restricted Stock vests ten years from the date of grant. These
shares are forfeited if the employment of the Named Executive terminates
prior to vesting for reasons other than death, retirement or permanent
disability. During these ten years, grantees receive all dividends declared
and retain voting rights for the granted shares. Performance Restricted
Stock is granted, but not earned and issued, until certain five year tiered
performance criteria are met. The performance criteria are predetermined
market prices of the Company's common stock. On the date the common stock
appreciates to each level (determination date), 20 percent of performance
shares are earned. Once earned, the shares vest five years from the
determination date. After the determination date, the grantee will receive
all dividends declared and also voting rights to the shares. As of December
31, 2003, Mr. Hubbell held 72,900 shares of time lapse restricted stock and
18,566 shares of performance restricted stock, Mr. Lane held 36,000 shares
of time lapse restricted stock, and Mr. Palmer held 11,700 shares of time
lapse restricted stock and 14,850 shares of performance restricted stock.
The total number of shares held and their values on December 31, 2003 were
as follows: Mr. Hubbell, 91,466 shares valued at
12
$1,146,000, Mr. Lane, 36,000 shares valued at $451,000 and Mr. Palmer
26,550 shares valued at $332,700. The December 31, 2003 values are based on
the closing market stock price of $12.53 and do not take into account any
diminution of value attributable to vesting provisions on these shares.
(3) Effective with the spin-off from RPC in February 2001, the Company adopted
the RPC 401(k) Plan ("401(k) Plan"), a qualified retirement plan designed
to meet the requirements of Section 401(k) of the Internal Revenue Code
(the "Code"). The 401(k) Plan provides for a matching contribution of fifty
cents ($0.50) for each dollar ($1.00) of a participant's contribution to
the 401(k) Plan that does not exceed six percent of his or her annual
compensation (which includes commissions, overtime and bonuses). A
participant's voluntary pretax salary deferrals made under the 401(k) Plan
are in lieu of payment of compensation to the participant. The Company also
adopted the RPC, Inc. Retirement Income Plan ("Retirement Income Plan"), a
trusteed defined benefit pension plan that provides monthly benefits upon
retirement at age 65 to eligible employees. In the first quarter of 2002,
the Company's Board of Directors approved a resolution to cease all future
benefit accruals under the Retirement Income Plan, effective March 31,
2002. In lieu thereof, beginning in 2002, the Company began providing
enhanced benefits in the form of cash contributions on behalf of certain
long-service employees who were 40 years of age or older on or before
December 31, 2002. These enhanced benefit contributions are discretionary
and may be made annually, subject to a participant's continued employment,
for a maximum of seven years. The contributions are made either to the
non-qualified Supplemental Executive Retirement Plan ("SERP") or to the
401(k) Plan for each employee who is entitled to the enhanced benefits. The
amounts shown in this column represent the Company match under the 401(k)
Plan and, in the case of Mr. Lane it includes $21,350 in 2003 and 2002
towards enhanced benefits. Beginning late in 2002, the Company began
permitting selected highly compensated employees to defer a portion of
their compensation into the SERP.
OPTION/SAR GRANTS IN FISCAL YEAR 2003
The following table sets forth stock options granted in the fiscal year
ending December 31, 2003 to each of the Company's Named Executives. Employees of
the Company and its subsidiaries are eligible for stock option grants based on
individual performance. The table sets forth the hypothetical gains that would
exist for the options at the end of their ten-year term, assuming compound rates
of stock appreciation of five percent and ten percent. The actual future value
of the option will depend on the market value of the Company's Common Stock. All
option exercise prices are based on the market price on the grant date.
INDIVIDUAL GRANTS (1)
------------------------------------------------
PERCENT POTENTIAL REALIZABLE
OF TOTAL VALUE AT ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM (2)
OPTIONS IN FISCAL OR EXPIRATION ---------------------------
NAME GRANTED YEAR BASE PRICE DATE 5% 10%
---- ---------- ---------- ---------- ---------- ------------ -----------
R. Randall Rollins 73,380(3) 14.5 $ 7.49 1/28/2008 $ 295,752 $ 826,048
R. Randall Rollins 76,620(4) 15.1 6.81 1/28/2008 328,146 831,586
Richard A. Hubbell 37,500(5) 7.4 6.81 1/28/2013 160,604 407,002
James A. Lane, Jr. 37,500(5) 7.4 6.81 1/28/2013 160,604 407,002
Ben M. Palmer 15,000(5) 3.0 6.81 1/28/2013 64,242 162,801
-----------------
(1) No Stock Appreciation Rights were granted to the Named Executives during
2003.
(2) These amounts, based on assumed appreciation rates of five percent and ten
percent as prescribed by the Securities and Exchange Commission rules, are
not intended to forecast possible future appreciation, if any, of the
Company's stock price. These numbers do not take into account certain
provisions of options providing for termination of the option following
termination of employment, non-transferability or phased-in vesting. The
Company did not use an alternative formula for a grant date valuation as it
is not aware of any formula that will determine with reasonable accuracy a
present value based on future unknown or volatile factors. Future
compensation resulting from option grants is based solely on the
performance of the Company's stock price.
(3) These Incentive Stock Options were granted on January 28, 2003 at an
exercise price of $7.49 per share, which was 110% of market price, on the
date of grant. The market price on the date of the grant was $6.81. Twenty
percent of these
13
options immediately vest and become exercisable on the date of the grant
and the remaining options vest and become exercisable ratably each year
thereafter over the next four years and expire after five years.
(4) These Non-Qualified Incentive Stock Options were granted on January 28,
2003 at an exercise price of $6.81 per share, the market price on the date
of grant. Twenty percent of these options immediately vest and become
exercisable on the date of the grant and the remaining options vest and
become exercisable ratably each year thereafter over the next four years
and expire after five years.
(5) These Incentive Stock Options were granted on January 28, 2003 at an
exercise price of $6.81 per share, the market price on the date of grant.
These options vest and become exercisable 20 percent each year over five
years and expire after 10 years.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 2003 AND YEAR-END
OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED VALUE AT FY-END (#) AT FY-END ($) (1)
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
R. Randall Rollins .......... 0 $0 60,000/90,000 $323,211/484,817
Richard A. Hubbell .......... 0 0 574,214/164,499 6,439,541/1,335,411
James A. Lane, Jr. .......... 0 0 50,151/137,349 427,287/1,065,213
Ben M. Palmer ............... 0 0 95,522/48,000 1,059,887/379,920
-----------------
(1) Based on the closing price of Company Common Stock on the American Stock Exchange on December 31, 2003 of $12.53
per share.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information regarding equity compensation plans as of December 31, 2003.
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
NUMBER OF SECURITIES TO WEIGHTED AVERAGE EQUITY COMPENSATION
BE ISSUED UNDER EXERCISE EXERCISE PRICE OF PLANS (EXCLUDING
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN (A))
PLAN CATEGORY (A) (B) (C)
------------- ------------------------ -------------------- ------------------------
Equity compensation plans approved
by securityholders ....................... 2,045,001 $3.51 170,039
Equity compensation plans not approved
by securityholders ....................... -- -- --
--------- ----- -------
Total ...................................... 2,045,001 $3.51 170,039
========= ===== =======
BENEFIT PLANS
Effective February 28, 2001, the Company became an adopting employer of the
RPC, Inc. Retirement Income Plan, a trusteed defined benefit pension plan, that
provides monthly benefits upon retirement at age 65 to eligible employees. In
the first quarter of 2002, the Boards of Directors of the Company and RPC joined
in approving resolutions to cease all future benefit accruals under the
Retirement Income Plan, effective March 31, 2002. Retirement Income Plan
benefits are based on the average of the employee's compensation from the
Company and RPC for the five consecutive complete calendar years of highest
compensation during the last ten consecutive complete calendar years ("final
average compensation") immediately preceding March 31, 2002. Accordingly the
pension plan table has not been presented under this section. Mr. Lane has one
year of credited service under the Plan following the spin-off of the Company
from RPC, and 13 years of credited service prior to the spin-off. The estimated
annual benefit payable at the later of retirement or age 65 for Mr. Lane is
$48,400.
14
The Plan also provides reduced early retirement benefits under certain
conditions. In accordance with the Code, the maximum annual benefit payable to a
Retirement Income Plan beneficiary in 2003 was $160,000. In accordance with the
Code (as amended by the Economic Growth and Tax Relief Reconciliation Act of
2001), the maximum compensation recognized by the Retirement Income Plan was
$200,000 in 2002. Retirement benefits accrued at the end of any calendar year or
as of March 31, 2002 will not be reduced or increased by any subsequent changes
in the maximum compensation limit.
Beginning in 2002, the Company provided additional benefits on behalf of
certain longer serviced employees in the form of discretionary cash
contributions made either to the Company's 401(k) Plan (which is described
below) or the SERP. Amounts contributed to the accounts of the Named Executives
are reported in the "All Other Compensation" column of the Summary Compensation
Table on page 12.
Effective February 28, 2001, the Company began participating in a defined
contribution 401(k) Plan sponsored by RPC, which is available to substantially
all employees with more than six months of service. The Company makes matching
contributions of fifty cents ($0.50) for each dollar ($1.00) of a participant's
contribution to the 401(k) Plan, that does not exceed six percent of his or her
annual compensation. The only form of benefit payment under the 401(k) Plan is a
single lump-sum payment equal to the vested balance in the participant's account
on the date the distribution is processed. Under the 401(k) Plan, the full
amount of a participant's vested accrued benefit is payable upon his termination
of employment, retirement, total and permanent disability, or death. Also under
the 401(k) Plan, a participant may withdraw his or her pre-tax contributions to
the extent of certain specified instances of financial hardship and may withdraw
any amount from his or her pre-tax contribution account for any reason after
attaining age 59 1&sol:2. In addition, a participant may withdraw any amount
from his or her rollover account for any reason. Amounts contributed by the
Company to the accounts of the Named Executives for 2003 under this plan are
reported in the "All Other Compensation" column of the Summary Compensation
Table on page 12.
PROPOSAL TO APPROVE THE MARINE PRODUCTS CORPORATION
2004 STOCK INCENTIVE PLAN
The Marine Products Corporation 2004 Stock Incentive Plan (the "2004 Plan")
is intended to supplement the Company's 2001 Employee Stock Incentive Plan (the
"2001 Plan"; collectively with the 2004 Plan, the "Plans"). Under the 2004 Plan,
the Company can tailor incentive awards to support its corporate objectives and
to keep pace with competitive business practices. Generally, the 2004 Plan is
intended to strengthen the mutuality of interests between award recipients and
the Company's stockholders.
The Board of Directors adopted the "2004 Plan," subject to approval by the
Company's stockholders, on January 27, 2004. The 2004 Plan provides for the
delivery of up to 1,500,000 shares of the Company's common stock ("Shares"). As
of March 15, 2004, there were approximately 170,000 shares remaining available
for new grants under the 2001 Plan.
SUMMARY DESCRIPTION OF THE 2004 PLAN
THE FOLLOWING SUMMARIZES THE MAJOR PROVISIONS OF THE 2004 PLAN AND IS
QUALIFIED IN ITS ENTIRETY BY THE TEXT OF THE 2004 PLAN, WHICH IS ATTACHED AS
APPENDIX B TO THIS PROXY STATEMENT.
Generally, the 2004 Plan authorizes the Compensation Committee (or, if so
designated by the Board of Directors, the full Board of Directors or some other
committee of non-employee directors) to grant to directors, officers and other
key employees ("Participants") stock options and other equity compensation more
fully described below.
ELIGIBILITY. Directors, officers and other key employees of the Company or
its subsidiaries and affiliates who are responsible for or contribute to the
growth and/or profitability of the business of the Company are eligible to be
granted awards under the 2004 Plan. Notwithstanding the foregoing, Incentive
Stock Options ("ISOs" as defined in the 2004 Plan) may only be granted to
employees of the Company and any of its subsidiaries or affiliates that are a
"subsidiary corporation" (within the meaning of Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code")). Furthermore, no director who is
not also an employee of the Company shall be eligible to receive Incentive Stock
Options.
15
AWARDS THAT MAY BE ISSUED UNDER THE 2004 PLAN. The 2004 Plan authorizes the
grant of stock options, stock appreciation rights ("SARs"), and any other type
of award valued by reference to (or otherwise based on) Shares, including
restricted stock. If the Shares covered by an award are not delivered because
the award is forfeited or canceled, or because the award is settled in cash or
used to satisfy an applicable tax withholding obligation, such shares will not
be deemed delivered for purposes of determining the number of Shares remaining
available for delivery. The maximum number of Shares available for delivery
under the 2004 Plan will be unaffected by the availability of Shares under any
plan assumed in connection with the acquisition of another company or business.
The Compensation Committee shall have full authority to grant, pursuant to
the terms of the 2004 Plan (i) stock options, including, without limitation,
ISOs, non-qualified options ("NQOs") and premium stock options, (ii) SARs and/or
(iii) other stock-based awards, including, without limitation, restricted stock,
stock units ("stock units" are grants of a right to receive shares of stock in
the future), performance-accelerated restricted stock, performance stock and
performance units (as defined in the 2004 Plan).
ADDITIONAL PLAN LIMITATIONS. The 2004 Plan imposes additional limitations.
Under the 2004 Plan, no more than 1,500,000 Shares may be issued pursuant to
Incentive Stock Options ("ISOs"). In addition, no one individual may be granted
options or SARs representing over 200,000 Shares during any fiscal year or other
stock-based awards, including restricted stock, representing over 200,000 Shares
during any fiscal year. There is no maximum number of persons eligible to
receive awards under the 2004 Plan. The Company estimates that approximately 200
persons are currently eligible.
PLAN ADMINISTRATION. The 2004 Plan may be administered by the Board of
Directors, or any committee of at least two "Non-Employee Directors" (as that
term is defined by Rule 16b-3 under the Exchange Act) who are also "outside
directors" as defined by regulations promulgated under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Company expects the
2004 Plan to be administered by the Compensation Committee (the "Compensation
Committee"), which will have exclusive discretion to select participants and
determine the timing, type, size and terms of each award, and to make all other
determinations necessary or desirable in the interpretation and administration
of the 2004 Plan. The Committee may also determine whether awards may be settled
in cash and whether amounts payable with respect to an award will be deferred
(either automatically or at the election of the Participant).
RE-PRICING AND AMENDMENT OF AWARDS. If the exercise or base prices of any
options or SARs exceed the current fair market value (as defined in the 2004
Plan) of the Shares, the Committee may, without stockholder approval, re-price
such options or SARs to a price no lower than the then-current Fair Market
Value. The Committee may also, without stockholder approval, amend any award to
provide its holder with additional rights or benefits of the type otherwise
permitted by the 2004 Plan, including extending its term. However, the term of
any Option or SAR may not exceed ten years.
TERMINATION OF THE PLAN. The 2004 Plan will terminate ten years from the
date of stockholder approval.
TRANSFERABILITY. Except as may be provided by the Committee, awards will
not be transferable except by will or by the laws of descent and distribution.
TERMINATION OF EMPLOYMENT. Generally, awards are forfeited if the
recipient's employment or performance of services terminates before the award is
exercised or vests. However, the Committee may provide otherwise, and there are
limited exceptions where employment terminates because of death, disability or
retirement. Generally, if an option or SAR holder's employment terminates due
to:
o death, options or SARs exercisable at termination (or whose vesting was
accelerated by the Committee) remain exercisable for six months or for
the remaining term of the option, if shorter;
o disability, options or SARs exercisable at termination (or whose vesting
was accelerated by the Committee) remain exercisable for one year, or
for the remaining term of the option, if shorter; and
16
o retirement, options or SARs exercisable at termination remain
exercisable for a period of three months, less one day, or for the
remaining term of the option, if shorter.
The Committee has discretion to alter the extension periods. The holders of
other stock-based awards, including restricted stock, performance-accelerated
restricted stock, performance stock, performance units and stock awards, are
subject to different termination provisions that involve pro rata distribution
or forfeiture, depending on the reason for termination of employment and length
of service with the Company (see Section 7.b. of the 2004 Plan attached hereto
as Appendix B to this Proxy Statement).
OPTION PRICING. The Committee has the authority to fix the exercise price
of option awards. Generally, the exercise price of incentive stock options must
be at least 100 percent of the fair market value of the Shares at the time of
grant. However, if the grantee is a person with over 10 percent of the voting
power of the Company (or any subsidiary or parent of the Company), then the
exercise price must be at least 110 percent of such fair market value. The
exercise price of nonqualified stock options must be at least 90 percent of such
fair market value. On March 15, 2004, the closing price of the Shares on the
American Stock Exchange was $13.33 per share.
OPTION TERM. The term of each stock option shall be fixed by the Committee,
but no stock option shall be exercised more than ten years (or, in the case of
an Incentive Stock Option granted to an employee who owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or any of its subsidiary or parent corporations, more than five
years) after the date the option is granted. Options will become exercisable at
such times and in such installments as the Committee shall determine. Payment of
the option price must be made in full at the time of exercise in such form
(including, but not limited to, cash, unrestricted common stock held for at
least six months, or any combination thereof) as the Committee may determine.
CERTAIN ISO RESTRICTIONS. In order to comply with certain federal tax
restrictions, no employee may be granted an incentive stock option if taking
into account such option the aggregate fair market value of the stock with
respect to which incentive stock options are exercisable for the first time by
such employee during any given calendar year, under this and all other incentive
stock option plans of the Company, would exceed $100,000.
CASHLESS EXERCISES. If permitted by the Committee, a Participant may elect
to pay the exercise price upon the exercise of an option by irrevocably
authorizing a third party to sell shares of stock (or a sufficient portion of
the shares) acquired upon exercise of the option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire exercise price and any
tax withholding resulting from such exercise.
SARS. An SAR may be granted alone, or a holder of an option or other award
may be granted a related SAR either at the time of grant or by amendment of the
option or award thereafter. Upon exercise of an SAR, the holder must surrender
the SAR and surrender, unexercised, any related option or other award, and the
holder will receive in exchange, at the election of the Committee, cash or
common stock, or any combination thereof, equal in value to the difference
between the exercise price or option price per share and the fair market value
per share on the last business day preceding the date of exercise, times the
number of shares subject to the SAR, or portion thereof, which is exercised.
RESTRICTED STOCK AWARDS. Arestricted stock award is an award of a given
number of shares of common stock which are subject to a restriction against
transfer and to a risk of forfeiture during a period set by the Committee.
During the restriction period, the Participant generally has the right to vote
and receive dividends on the shares.
PERFORMANCE-BASED COMPENSATION. The Committee may determine whether an
award is "performance-based compensation" as defined by Section 162(m) of the
Code. Any awards designated as "performance-based compensation" must be
conditioned on achievement of one or more performance measures, as selected by
the Committee: increase in stock price, return on capital or increase in pretax
earnings of the Company and/or one or more divisions and/or subsidiaries, return
on stockholders' equity of the Company, increase in earnings per share of the
Company, sales of the Company and/or one or more divisions and/or subsidiaries,
pretax earnings of the Company and/or one or more divisions and/or subsidiaries,
net earnings of the Company and/or one or more divisions and/or subsidiaries,
control of operating and/or non-operating expenses of the Company and/or one or
more divisions and/or subsidiaries, margins of the Company and/or one or more
divisions and/or subsidiaries, market price of the Company's securities and
solely for an award not intended to constitute "performance-based
17
compensation" under Section 162(m) of the Code, other factors directly tied to
the performance of the Company and/or one or more divisions and/or subsidiaries
or other performance criteria. Any award so designated must also meet any
additional requirements of Section 162(m) of the Code and the regulations there
under.
AMENDMENT AND TERMINATION. The 2004 Plan is subject to amendment or
termination by the Board of Directors without stockholder approval as deemed in
the best interests of the Company. However, no such amendment may (i) increase
the number of shares that may be issued under the 2004 Plan (except by certain
adjustments provided for under the 2004 Plan); (ii) change the class of persons
eligible to receive ISOs under the 2004 Plan; (iii) change the requirements
regarding the exercise price; or (iv) amend the 2004 Plan in a manner that would
require approval of RPC's stockholders under applicable law, regulation or rule.
Options may not be granted under the 2004 Plan after the date of termination of
the 2004 Plan, but options granted prior to that date shall continue to be
exercisable according to their terms.
RIGHTS UPON CHANGE IN CORPORATE STRUCTURE. In general, if the Company is
merged into or consolidated with another corporation (and is not the surviving
corporation), or is liquidated, or sells substantially all its assets
(collectively hereinafter referred to as a "Non-Acquiring Transaction") while
unexercised options are outstanding, thereafter, each holder of an outstanding
option shall be entitled, upon exercise of such option, to receive such stock or
other securities as the holders of the same class of stock as those shares
subject to the option shall be entitled to receive in such Non-Acquiring
Transaction based upon the agreed upon conversion ratio or per share
distribution. However, in the discretion of the Board of Directors, any
limitations on exercisability of options may be waived so that all options, from
and after a date prior to the effective date of such Non-Acquiring Transaction
shall be exercisable in full. Furthermore, in the discretion of the Board of
Directors, the right to exercise may be given to each holder of an option during
a 30-day period preceding the effective date of such Non-Acquiring Transaction.
Any outstanding options not exercised within such 30-day period may be cancelled
by the Board. Any such adjustments relating to Company securities shall be made
by the Board and be final, binding and conclusive. The Committee need not treat
all optionees and/or options in the same manner.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividends, stock split or other changes in corporate
structure affecting the stock, and subject to the 2004 Plan, shares reserved for
issuance under this 2004 Plan shall be adjusted or substituted, as may be
determined to be appropriate by the Committee, provided that the number of
shares subject to any award shall always be a whole number. Such adjusted option
price shall be used to determine the amount payable by the Company upon the
exercise of any SAR associated with any stock option.
2003 AWARDS. The following table sets forth all awards granted under the
2001 Plan during 2003 to each of the individuals and groups named therein. All
such grants were in the form of stock options, restricted stock or some
combination of the two. Although it is anticipated that grants under the 2004
Plan will be made in 2004, the nature and amounts of such grants are not
determinable at this time.
NEW PLAN BENEFITS*
DOLLAR VALUE ($) OF
AWARDS NUMBER OF UNITS
NAME AND POSITION GRANTED IN 2003 GRANTED IN 2003
----------------- ------------------- ----------------
R. Randall Rollins $ 0 150,000
Richard A. Hubbell 0 37,500
James A. Lane, Jr. 0 37,500
Ben M. Palmer 0 15,000
Executive Group 0 247,500
Non-Executive Director Group 0 0
Non-Executive Officer Employee Group 0 259,500
-----------------
* Grants shown were made pursuant to the 2001 Plan.
18
FEDERAL INCOME TAX CONSEQUENCES
The following discussion addresses certain anticipated federal income tax
consequences to recipients of awards made under the 2004 Plan and to the
Company. It is based on the Code and interpretations thereof as in effect on the
date of this proxy statement. It is not intended as tax advice to any
individual.
SUMMARY OF CURRENT FEDERAL INCOME TAX RATES FOR INDIVIDUALS
As a result of changes made by the Job and Growth Tax Relief Reconciliation
Act of 2003 (the "2003 Tax Act"), for tax years 2003 through 2010, ordinary
income of individuals, such as compensation income, will be taxed at a top
marginal rate of 35 percent. In addition, for capital assets sold on or after
May 6, 2003 and before 2009, the maximum long-term capital gains rate for
individuals will be 15 percent. The 2003 Tax Act also reduces to 15 percent the
maximum federal income tax rate for qualified dividends received by individuals
for tax years 2003 through 2008.
OPTIONS
GRANT OF OPTIONS. There will be no federal income tax consequences to the
grantee of an Option or the Company upon the grant of either an ISO or a NQO
under the 2004 Plan. An "NQO" is an Option that is not intended to be an
"incentive stock option" as that term is described in section 422(b) of the
Code.
EXERCISE OF NQOS. Upon the exercise of an NQO, the grantee generally will
recognize ordinary compensation income, subject to withholding and employment
taxes, in an amount equal to: (a) the fair market value, on the date of
exercise, of the acquired shares of common stock, less (b) the exercise price
paid for those shares. Subject to Sections 162(m) and 280G of the Code (as
discussed below) and the Company satisfying applicable reporting requirements,
the Company will be entitled to a tax deduction in the same amount. Gains or
losses recognized by the grantee upon a subsequent disposition of the shares
will be treated as long-term capital gain or loss if the shares are held for
more than a year from the date of exercise. Such gains or losses will be
short-term gains or losses if the shares are held for one year or less. For
purposes of computing gain or loss, the grantee's basis in the shares received
will be the exercise price paid for the shares plus the amount of income, if
any, recognized upon exercise of the option.
EXERCISE OF ISOS. Upon the exercise of an ISO, the grantee will recognize
no immediate taxable income for regular income tax purposes, provided the
grantee was continuously employed by the Company or a subsidiary from the date
of grant through the date which is three months prior to the date of exercise
(or through the date which is one year prior to the exercise date in the case of
total disability).
The exercise of an ISO will, however, result in an adjustment for
alternative minimum tax purposes in an amount equal to the excess of the fair
market value of the shares at exercise over the exercise price. That adjustment
may result in alternative minimum tax liability to the grantee upon the exercise
of the ISO. Subject to certain limitations, alternative minimum tax paid in one
year may be carried forward and credited against regular federal income tax
liability for subsequent years. If the grantee retains the shares acquired upon
the exercise of the ISO for more than two years from the date of grant and one
year from the date of exercise, any gain on a later sale of the shares will be
treated as long-term capital gain, and the Company will not be entitled to any
tax deduction with respect to the ISO.
If the grantee disposes of the shares of common stock received upon the
exercise of an ISO before the expiration of the two-year and one-year holding
periods discussed above, a "Disqualifying Disposition" occurs, and the grantee
will have ordinary compensation income, and the Company will have a
corresponding deduction, at the time of such disposition. The amount of ordinary
income and deduction generally will be equal to the lesser of: (a) the fair
market value of the shares of common stock on the date of exercise minus the
exercise price; or (b) the amount realized upon disposition of the common stock
minus the exercise price. If the amount realized on disposition exceeds the
value of the shares on the date of exercise, that additional amount will be
taxable as capital gain. To be entitled to a deduction as a result of a
Disqualifying Disposition, the Company must satisfy applicable reporting
requirements. In addition, for Disqualifying Dispositions by certain executive
officers, the
19
Company's deduction is subject to the limits of Sections 162(m) and 280G of the
Code.
STOCK APPRECIATION RIGHTS
There will be no federal income tax consequences to either the grantee or
the Company upon the grant of an SAR. However, the grantee generally will
recognize ordinary compensation income upon the exercise of an SAR in an amount
equal to the aggregate amount of cash and the fair market value of any shares of
common stock received upon exercise. Subject to Sections 162(m) and 280G of the
Code and the Company satisfying applicable reporting requirements, the Company
will be entitled to a deduction equal to the amount included in the grantee's
taxable income as a result of the exercise of the SAR. Any shares of common
stock received by the grantee upon exercise of an SAR will have a tax basis
equal to their fair market value on the date of exercise. Upon a subsequent sale
of those shares, any gain or loss realized will be capital gain or loss,
long-term or short-term, depending upon whether the shares were held for more
than one year from the date of exercise.
RESTRICTED SHARES
Unless a grantee who receives an award of restricted stock makes an
election under Section 83(b) of the Code as described below, there will be no
federal income tax consequences to either the grantee or the Company upon the
grant of the restricted shares until expiration of the restricted period and the
satisfaction of any performance goals or other conditions applicable to the
restricted shares. At that time, the grantee generally will recognize ordinary
income equal to the then fair market value of the shares of common stock and,
subject to Sections 162(m) and 280G of the Code and the Company satisfying
applicable reporting requirements, the Company will be entitled to a
corresponding deduction. In general, any dividends paid to the grantee while the
restrictions or other conditions applicable to the restricted shares apply will
be taxable compensation income to the grantee, and the Company will be entitled
to a corresponding deduction with respect to such dividends, subject to Sections
162(m) and 280G of the Code.
If the grantee makes an election under Section 83(b) of the Code with
respect to the restricted shares (a "Section 83(b) Election"), the grantee will
recognize ordinary income equal to the fair market value of the restricted
shares as of the date of grant and the Company generally will be entitled to a
corresponding deduction subject to Sections 162(m) and 280G of the Code. In
addition, dividends paid to the grantee would generally be eligible for the
current maximum tax rate of 15 percent applicable to qualified dividends. The
Company would not be entitled to a deduction with respect to any dividends paid
to the grantee if a Section 83(b) Election is made with respect to the
restricted shares.
Upon a subsequent sale of restricted shares, any gain or loss realized by
the grantee will be capital gain or loss, long-term or short-term, depending
upon whether the restricted shares were held for more than one year from the
date of grant if a Section 83(b) Election is made or, if no Section 83(b)
Election is made, more than one year from the date of vesting. The basis of the
restricted shares sold for purposes of calculating gain or loss will be the fair
market value of those shares at the time of grant if a Section 83(b) Election is
made or at the time of vesting if a Section 83(b) Election is not made.
STOCK UNITS
There will be no federal income tax consequences to the grantee or the
Company upon the grant of stock units. Grantees generally will recognize
ordinary income, taxable as compensation, at the time payment for the stock
units is received in an amount equal to the aggregate amount of cash and the
fair market value of any shares of common stock received. Subject to Sections
162(m) and 280G of the Code and the Company satisfying applicable reporting
requirements, the Company will be entitled to a deduction equal to the amount
included in the grantee's income at that time.
SECTION 162(m) LIMITATION
In general, Section 162(m) of the Code limits to $1 million the federal
income tax deductions that may be claimed in any tax year of the Company with
respect to compensation payable to any employee who is chief
20
executive officer or one of the other four highest paid executive officers of
the Company on the last day of that tax year. This limit does not apply to
certain performance-based compensation paid under a plan that meets the
requirements of Section 162(m) the Code and the regulations promulgated
thereunder. The Company believes that the options and SARs to be granted under
the 2004 Plan by the Compensation Committee which have an exercise price that is
at least equal to 100 percent of the fair market value of the shares at the time
of grant will qualify for the performance-based compensation exception to the
Section 162(m) limitations. Deductions attributable to restricted stock and
stock units may also qualify for this exception provided the compensation is
contingent on attaining one or more performance goals. However, the Committee
has the ability to grant NQOs, SARS, restricted stock and stock units that do
not qualify for this exception.
GOLDEN PARACHUTE TAX AND SECTION 280G OF THE CODE
If an award is accelerated as a result of a change in control, all or a
portion of the value of the award at that time may be a "parachute payment"
under Section 280G of the Code for certain employees and other individuals who
perform services for the Company. Section 280G generally provides that if
parachute payments equal or exceed three times an Award holder's average W-2
compensation for the five tax years preceding the year of the change in control,
the Company will not be permitted to claim its deduction with respect to any
"excess parachute payments" made to the individual. An "excess parachute
payment" generally is the portion of a parachute payment that exceeds such
individual's historical average compensation. Section 280G of the Code generally
applies to employees or other individuals who perform services for the Company
if, within the 12-month period preceding the change in control, the individual
is an officer of the Company, a shareholder owning more than 1 percent of the
stock of the Company, or amember of the group consisting of the lesser of the
highest paid 1 percent of the employees of the Company or the highest paid 250
employees of the Company. A recipient of an excess parachute payment is subject
to a 20 percent excise tax on such excess parachute payment under Section 4999
of the Code.
The discussion set forth above is intended only as a summary and does not
purport to be a complete enumeration or analysis of all potential tax effects
relevant to recipients of awards under the 2004 Plan. We have not undertaken to
discuss the tax treatment of awards under the 2004 Plan in connection with a
merger, consolidation or similar transaction. Such treatment will depend on the
terms of the transaction and the method of dealing with the awards in connection
therewith.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE PROPOSAL TO APPROVE THE MARINE PRODUCTS CORPORATION 2004 STOCK
INCENTIVE PLAN. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
21
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP ("Ernst & Young") served as the Company's independent
public accountants for the year ended December 31, 2003. Representatives of
Ernst & Young are expected to be present at the Annual Meeting and will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions. For the year ended December 31, 2002, the
independent public accounting firm of Arthur Andersen LLP ("Andersen") was
initially engaged as the auditors but was terminated on July 23, 2002 by the
Board of Directors, pursuant to the recommendation by the Audit Committee.
The aggregate fees billed by independent public accountants are set forth
below:
ERNST & YOUNG ANDERSEN
--------------------------------------------------------------------------------
2003 2002 2002
---- ---- ----
Audit fees and quarterly reviews $ 110,000 $92,000 $ 4,000
Audit related fees -- -- --
Tax fees (1) 44,000 7,000 25,000
All other fees -- -- --
-----------------
(1) Tax fees related to tax compliance, planning and advice, tax consultation
and research.
All of the services described above were approved by the Company's Audit
Committee. The Audit Committee has determined that the payments made to its
independent public accountants for these services are compatible with
maintaining such auditors' independence. All of the hours expended on the
principal accountant's engagement to audit the financial statements of the
Company for the year 2003 and 2002 were attributable to work performed by
full-time, permanent employees of the principal accountant. There are no
pre-approved services or amounts currently set by the Audit Committee.
The Audit Committee is directly responsible for the appointment and
termination (subject, if applicable, to shareholder ratification), compensation,
and oversight of the work of the independent public accountants, including
resolution of disagreements between management and the independent public
accountants regarding financial reporting. The Audit Committee is responsible
for pre-approving all audit and non-audit services provided by the independent
public accountants and ensuring that they are not engaged to perform the
specific non-audit services proscribed by law or regulation. The Audit Committee
has delegated pre-approval authority to its Chairman with the stipulation that
his decision is to be presented to the full Committee at its next scheduled
meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company has completed a review of Forms 3, 4 and 5 and amendments
thereto furnished to the Company by all Directors and Officers subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, as amended. In
addition, the Company has a written representation from all Directors, Officers
and greater than 10 percent stockholders from whom no Form 5 was received,
indicating that no Form 5 filing was required. Based solely on this review, the
Company believes that filing requirements of such persons under Section 16 for
the fiscal year ended December 31, 2003 have been satisfied on a timely basis.
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intended to be presented at the
Company's 2005 Annual Meeting of the Stockholders, pursuant to Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as amended, must be
received by the Company by November 22, 2004 for inclusion in its proxy
statement and form of proxy relating to that meeting. With respect to the
Company's Annual Meeting of the Stockholders to be held in 2005, all stockholder
proposals submitted outside the stockholder proposal rules contained in Rule
14a-8 promulgated under the Securities Exchange Act of 1934, as amended, which
pertains to the inclusion of stockholder proposals in a Company's proxy
materials, must be received by the Company by February 5, 2005, in order to be
considered timely. With regard to such stockholder proposals, if the date of the
next Annual Meeting of Stockholders is advanced or delayed more than 30 calendar
days from April 27, 2005, the Company will, in a timely manner, inform its
stockholders of the change and of the date by which such proposals must be
received.
22
With respect to stockholder nomination of directors, the Company's By-laws
provide that nominations for the election of directors may be made by any
stockholder entitled to vote for the election of directors. Nominations must
comply with an advance notice procedure which generally requires with respect to
nominations for directors for election at an annual meeting, that written notice
be addressed to: Secretary, Marine Products Corporation, 2170 Piedmont Road NE,
Atlanta, Georgia 30324, not less than ninety days prior to the anniversary of
the prior year's Annual Meeting and set forth the name, age, business address
and, if known, residence address of the nominee proposed in the notice, the
principal occupation or employment of the nominee for the past five years, the
nominee's qualifications, the class or series and number of shares of capital
stock of the Company which are owned beneficially or of record by the person and
any other information relating to the person that would be required to be
disclosed in a proxy statement or other filings. Such nominations must be
submitted by January 27, 2005, with respect to directors to be elected at the
2005 Annual Meeting of Stockholders.
EXPENSES OF SOLICITATION
Marine Products will bear the cost of soliciting proxies. Upon request, we
will reimburse brokers, dealers and banks, or their nominees, for reasonable
expenses incurred in forwarding copies of the proxy material to their beneficial
shareholders of record. Solicitation of proxies will be made principally by
mail. Proxies also may be solicited in person or by telephone, facsimile or
other means by our directors, officers and regular employees. These individuals
will receive no additional compensation for these services. The Company has
retained Georgeson Shareholder Communications, Inc. to conduct a broker search
and to send proxies by mail for an estimated fee of $4,500 plus shipping
expenses.
MISCELLANEOUS
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2003 is being mailed to stockholders with this proxy statement.
Management knows of no business other than the matters set forth herein
that will be presented at the Annual Meeting. In as much as matters not known at
this time may come before the Annual Meeting, the enclosed proxy confers
discretionary authority with respect to such matters as may properly come before
the Annual Meeting and it is the intention of the persons named in the proxy to
vote in accordance with their best judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Linda H. Graham, Secretary
Linda H. Graham, Secretary
Atlanta, Georgia
March 22, 2004
23
APPENDIX A
AUDIT COMMITTEE CHARTER
MARINE PRODUCTS CORPORATION
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
PURPOSE
The Audit Committee (the "Committee") is appointed by the Board of
Directors (the "Board") to assist the Board in fulfilling its oversight
responsibilities. The Committee's primary purpose is to monitor the integrity of
the Company's financial reporting process, including (by overseeing the
financial reports and other financial information provided by the Company to any
governmental or regulatory body, the public or other users thereof) the
Company's systems of internal accounting and financial controls, the performance
of the Company's internal audit function, the independent auditor's
qualifications and independence, the Company's compliance with ethics policies
and legal and regulatory requirements statements, and the annual independent
audit of theCompany's financial statements. The Committee will monitor the
independence, performance, and qualifications of the Company's independent
auditors.
In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company. The Committee is authorized to
retain outside counsel, auditors or other experts and professionals for this
purpose. The Board and the Committee are in place to represent the Company's
shareholders; accordingly, the outside auditor is ultimately accountable to the
Board and the Committee.
The Company shall provide appropriate funding, as determined by the
Committee, for payment of compensation to any registered public accounting firm
engaged for the purpose of rendering or issuing an audit report or related work
or performing other audit, review or attest services for the company and to any
advisors employed by the Company as well as ordinary administrative expenses of
the Committee that are necessary or appropriate in carrying out its duties.
MEMBERSHIP
The Committee shall be comprised of not less than three members of the
Board, and the Committee's composition shall meet all requirements of the Audit
Committee policy of the American Stock Exchange.
Accordingly, all of the members must be directors:
o Who are independent of management and the Company. Members of the
Committee shall be considered independent as long as they do not
accept any consulting, advisory, or compensatory fee from the Company
and are not an affiliated person of the Company or its subsidiaries,
and meet the independence requirements of the American Stock Exchange.
Under Rule 10A-3 to Securities Exchange Act of 1934, disallowed
payments to an Audit Committee member includes payments made directly
or indirectly, and for these purposes "indirect" acceptance shall
include (a) payments to spouses, minor children or stepchildren or
children or stepchildren sharing a home with the member and (b)
payments accepted by an entity in which such member is a partner,
member, officer such as a managing director occupying a comparable
position or executive officer, or occupies a similar position (except
limited partners, non-managing members and those occupying similar
positions who, in each case, have no active role in providing services
to the entity) and which provides accounting, consulting, legal,
investment banking or financial advisory to the Company or any
subsidiary.
o Who are financially literate or who become financially literate within
a reasonable period of time after appointment to the Committee. In
addition, at least one member of the Committee must be an Audit
Committee "financial expert" as defined by SEC regulations.
KEY RESPONSIBILITIES
The Committee's primary responsibility is to oversee the Company's
financial reporting process on behalf of the Board and report results of their
activities to the Board on a regular basis. While the Committee has
A-1
the responsibilities and powers set forth in this Charter, it is not the duty of
the Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. Management is responsible for the
preparation, presentation, and integrity of the Company's financial statements
and for the appropriateness of the accounting principles and reporting policies
that are used by the Company as well as the Company's internal controls. The
independent auditors are responsible for performing an independent audit of the
Company's financial statements in accordance with auditing standards generally
accepted in the United States and for issuing a report hereon.
The Committee, in carrying out its responsibilities, believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and circumstances. The Committee should take appropriate actions to
set the overall corporate "tone" for quality financial reporting, sound business
risk practices, and ethical behavior. The following shall be the principal
duties and responsibilities of the Committee. These functions are set forth as a
guide with the understanding that the Committee may diverge from this guide as
appropriate under the circumstances.
The Committee shall be directly responsible for the appointment and
termination (subject, if applicable, to shareholder ratification), compensation,
and oversight of the work of the independent auditors, including resolution of
disagreements between management and the auditor regarding financial reporting.
The Committee shall pre-approve all audit and non-audit services provided by the
independent auditors and shall not engage the independent auditors to perform
the specific non-audit services proscribed by law or regulation. The Committee
may delegate pre-approval authority to a member of the Committee. The decisions
of any Committee member to whom pre-approval authority is delegated must be
presented to the full Committee at its next scheduled meeting.
At least annually, the Committee shall obtain and review a report by the
independent auditors describing:
o The firm's internal quality control procedures.
o 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, within the
preceding five years, respecting one or more independent audits
carried out by the firm, and any steps taken to deal with any such
issues.
o All relationships between the independent auditor and the Company (to
assess the auditor's independence).
In addition, the Committee shall set clear hiring policies for employees or
former employees of the independent auditors that meet the SEC regulations and
the American Stock Exchange listing standards.
The Committee shall discuss with the internal auditors and the independent
auditors the overall scope and plans for their respective audits, including the
adequacy of staffing and compensation. Also, the Committee shall discuss with
management, the internal auditors, and the independent auditors the adequacy and
effectiveness of the accounting and financial controls, including the Company's
policies and procedures to assess, monitor, and manage business risk, and legal
and ethical compliance programs (e.g., Company's Code of Conduct).
The Committee shall meet separately periodically with management, the
internal auditors, and the independent auditors to discuss issues and concerns
warranting Committee attention. The Committee shall provide sufficient
opportunity for the internal auditors and the independent auditors to meet
privately with the members of the committee. The Committee shall review with the
independent auditor any audit problems or difficulties and management's
response.
The Committee shall receive regular reports from the independent auditor on
the critical policies and practices of the Company, and all alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management.
The Committee shall review management's assertion on its assessment of the
effectiveness of internal controls as of the end of the most recent fiscal year
and the independent auditors' report on management's assertion.
A-2
APPENDIX B
2004 STOCK INCENTIVE PLAN
MARINE PRODUCTS CORPORATION 2004 STOCK INCENTIVE PLAN
SECTION 1. PURPOSES; DEFINITIONS.
The purpose of the Marine Products Corporation 2004 Stock Incentive Plan
(the "Plan") is to enable Marine Products Corporation (the "Company" or "Marine
Products") to attract, retain and reward directors and key employees of the
Company and its Subsidiaries and Affiliates, and strengthen the mutuality of
interests between such persons and the Company's shareholders, by offering such
persons performance-based stock incentives and/or other equity interests or
equity-based incentives in the Company, as well as performance-based incentives
payable in cash.
For purposes of this Plan, the following terms shall be defined as set
forth below:
1. "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating
employer under this Plan, provided that the Company directly or
indirectly owns at least 20% of the combined voting power of all
classes of stock of such entity or at least 50% of the ownership
interests in such entity.
2. "Award" shall mean any Award or benefit granted under the Plan,
including, without limitation, the grant of Options, SARs, Stock
Unit Awards, Restricted Stock Awards, Performance Stock Awards and
Performance Unit Awards.
3. "Board" means the Board of Directors of the Company.
4. "Book Value" means, at any given date, (i) the consolidated
stockholders' equity in the Company and its Subsidiaries, as shown
on the Company's consolidated balance sheet as of the end of the
immediately preceding fiscal year, subject to such adjustments as
the Committee shall in good faith specify at or after grant, divided
by (ii) the number of shares of Outstanding Stock as of such
year-end date (as adjusted by the Committee for subsequent events).
5. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
6. "Committee" means the Committee referred to in Section 2 of this
Plan. If at any time no Committee shall be in office, then the
functions of the Committee specified in this Plan may be exercised
by the Board or the Compensation Committee of the Board, as set
forth in Section 2 hereof.
7. "Company" means Marine Products Corporation, a corporation organized
under the laws of the State of Delaware, or any successor
corporation.
8. "Disability" means disability as determined under procedures
established by the Committee for purposes of this Plan and shall in
all events be consistent with the definition of "disabled" provided
in Sections 422(c)(6) and 22(e)(8) of the Code.
9. "Early Retirement" means retirement with the express written consent
of the Committee (given for purposes of this Plan only at or before
the time of such retirement) from active employment with the Company
and/or any Subsidiary or Affiliate or pursuant to the early
retirement provisions of the applicable pension plan of such entity.
10. "Fair Market Value" means, as of any given date, unless otherwise
determined by the Committee in good faith:
(i) if the Stock is listed on an established stock exchange or
exchanges, or traded on the NASDAQ National Market System
("NASDAQ/NMS") the highest closing price of the Stock as listed
thereon on the applicable day, or if no sale of Stock has been
made on any exchange or on NASDAQ/NMS on that date, on the next
preceding day on which there was a sale of Stock;
(ii) if the Stock is not listed on an established stock exchange or
NASDAQ/NMS but is instead traded over-the-counter, the mean of
the dealer "bid" and "ask" prices of the Stock in the
over-the-counter
B-1
market on the applicable day, as reported by the National
Association of Securities Dealers, Inc.; and
(iii) if the Stock is not listed on any exchange or traded
over-the-counter, the value determined in good faith by the
Committee.
11. "Incentive Stock Option" means any Stock Option designated as an
"Incentive Stock Option" within the meaning of Section 422 of the
Code.
12. "Non-Employee Director" shall have the meaning set forth in Rule
16b-3 promulgated pursuant to the Securities Exchange Act of 1934,
as amended.
13. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
14. "Normal Retirement" means retirement from active employment with the
Company and/or any Subsidiary or Affiliate on or after age 65.
15. "Other Stock-Based Award" means an Award under Section 7 below that
is valued in whole or in part by reference to or is otherwise based
on, Stock, including, without limitation, Restricted Stock,
Performance-Accelerated Restricted Stock, Performance Stock,
Performance Units and Stock Awards or Options valued by reference to
book value or Subsidiary performance.
16. "Outstanding Stock" shall include all outstanding shares of Common
Stock, $.10 par value, of the Company as well as the number of
shares of Common Stock into which then outstanding shares of capital
stock of the Company, of whatever class, are convertible as of the
year-end immediately preceding the date of calculation thereof (as
adjusted by the Committee for certain events).
17. "Participants" shall include those persons who are granted one or
more Awards under the Plan, subject to the terms and conditions of
the Plan as the Committee shall determine and designate, from time
to time, from among those eligible for Award grants hereunder.
18. "Performance-Accelerated Restricted Stock" means Restricted Stock
which is subject to restrictions for a stated period of time based
on continued employment, with the opportunity for the restriction
period to be shortened based on the achievement of predetermined
performance goals.
19. "Performance Stock" means Stock awarded under Section 7 below at the
end of a specified performance period, the amount of which is
determined by multiplying a performance factor times either (i) the
Fair Market Value of the Stock on the last day of the performance
period, or (ii) the difference between the Fair Market Value of the
Stock on the first and last days of the performance period,
provided, however, that at the discretion of the Committee,
Participants may receive the value of Performance Stock in cash, as
determined by reference to the Fair Market Value on the date the
amount of the award is determined.
20. "Performance Unit" means an Award pursuant to Section 7 with a
starting value and an associated performance period, such. that at
the end of the performance period Participants receive an amount,
payable in either cash or Stock, at the discretion of the Committee,
equal to (i) the number of units earned based on a predetermined
performance schedule times the starting unit value, or (ii) the
number of units granted times the ending unit value based on a
predetermined performance schedule.
21. "Plan" means this Marine Products Corporation 2004 Stock Incentive
Plan, as hereafter amended from time to time.
22. "Premium Stock Option" means any Stock Option with an exercise price
in excess of the Fair Market Value, as computed on the date of grant
of the Stock Option.
23. "Retirement" means Normal or Early Retirement.
24. "Restricted Stock" means Stock awarded under Section 7 below which
is (i) subject to restrictions for a stated period of time based on
continued employment, (ii) subject to restrictions which will only
lapse upon the achievement of predetermined performance goals, or
(iii) subject to a combination of the restrictions described in (i)
and (ii) above.
B-2
25. "Stock" means the Common Stock, $.10 par value per share, of the
Company.
26. "Stock Appreciation Right" or "SAR" means the right pursuant to an
award granted under Section 6 below to receive an amount in either
cash or stock, equal to the difference between the Fair Market Value
of the Stock on the date of exercise and the Fair Market Value of
the Stock on the date of grant of the right.
27. "Stock Option" or "Option" means any option to purchase shares of
Stock granted pursuant to Section 5 below.
28. "Subsidiary" means any present or future subsidiary corporation of
the Company within the meaning of Section 424(f) of the Code, and
any present or future business venture designated by the Committee
in which the Company has a significant interest, as determined in
the discretion of the Committee.
SECTION 2. ADMINISTRATION.
This Plan shall be administered by the Board of Directors or by a
Committee of not less than two Non-Employee Directors, who shall be members of
the Board and who shall serve at the pleasure of the Board, such Committee to be
designated by the Board. Each member of the Committee shall also be an "outside
director" as defined in the regulations promulgated pursuant to Section 162(m)
of the Internal Revenue Code of 1986, as amended. Except as otherwise directed
by the Board, the functions of the Committee specified in this Plan shall be
exercised by the Compensation Committee of the Board.
The Committee shall have full authority to grant, pursuant to the terms
of this Plan, to Participants under Section 4: (i) Stock Options, including,
without limitation, Incentive Stock Options, Non-Qualified Stock Options and
Premium Stock Options, (ii) Stock Appreciation Rights and/or (iii) Other
Stock-Based Awards, including, without limitation, Restricted Stock, Stock
Units, Performance-Accelerated Restricted Stock, Performance Stock and
Performance Units.
In particular, the Committee shall have the authority:
(i) subject to Section 4 hereof, to select the Participants to whom
Stock Options, Stock Appreciation Rights and/or Other
Stock-Based Awards may from time to time be granted hereunder;
(ii) to determine whether and to what extent Stock Options, Stock
Appreciation Rights and/or Other Stock-Based Awards, or any
combination thereof, are to be granted hereunder to one or more
Participants;
(iii) to determine the number of shares of Stock to be covered by each
such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Award granted hereunder (including,
but not limited to, the share price and any restriction or
limitation, or any vesting, acceleration or waiver of forfeiture
restrictions regarding any Stock Option or other Award and/or
the shares of Stock relating thereto, based in each case on such
factors as the Committee shall determine, in its sole
discretion);
(v) to determine whether and under what circumstances Stock Options,
Stock Appreciation Rights, Performance Stock and Performance
Units may be settled in cash;
(vi) to determine whether, to what extent and under what
circumstances Stock Option grants and/or other Awards under this
Plan and/or other cash Awards made by the Company are to be
made, and operate, on a tandem basis vis-a-vis other Awards
under this Plan and/or cash Awards made outside of this Plan, or
on an additive basis; and
(vii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an
Award under this Plan shall be deferred either automatically or
at the election of the Participant (including providing for and
determining the amount (if any) of any deemed earnings on any
deferred amount during any deferral period).
B-3
(viii) to the extent that Options or SARs have exercise or base prices
that exceed the current Fair Market Value of the Stock, the
Committee has the discretion, without obtaining shareholder
approval, to reprice such Options or SARs and lower their
exercise or base prices to prices not lower than the then
current Fair Market Value of the Stock. The Committee may also,
without obtaining shareholder approval, amend any outstanding
Award to provide the holder thereof with additional rights or
benefits of the type otherwise permitted by the Plan, including
without limitation, extending the term thereof; provided,
however, that in no event may the term of any Option or SAR
exceed ten (10) years; and
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing this Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of this Plan and any
Award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan.
Except to the extent prohibited by applicable law or the applicable
rules of a stock exchange, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers hereunder, including without
limitation, the power to designate Participants hereunder and determine the
amount, timing and terms of Awards hereunder, to any person or persons selected
by it, including without limitation, any executive officer of the Company. Any
such allocation or delegation may be revoked by the Committee at any time.
Except as otherwise provided by the Committee, Awards under the Plan are
not transferable except as designated by the Participant by will or by the laws
of descent and distribution.
Except as otherwise specifically provided herein, all decisions made by
the Committee pursuant to the provisions of this Plan shall be made in the
Committee's sole discretion and shall be final and binding on all persons,
including the Company and all Plan Participants.
SECTION 3. STOCK SUBJECT TO PLAN.
(a) Subject to the following provisions of this Section 3, the
maximum number of shares of Stock that may be delivered to
Participants and their beneficiaries under the Plan shall be
1,500,000 shares of Stock.
(b) To the extent any shares of Stock covered by an Award are not
delivered to a Participant or beneficiary because the Award is
forfeited or canceled, or the shares of Stock are not delivered
because the Award is settled in cash or used to satisfy the
applicable tax withholding obligation, such shares shall not be
deemed to have been delivered for purposes of determining the
maximum number of shares of Stock available for delivery under
the Plan. The maximum number of shares of Stock available for
delivery under the Plan shall not be reduced for shares subject
to plans assumed by the Company in an acquisition of an interest
in another company.
(c) Subject to the aggregate maximum set forth in (a) above and to
adjustment in accordance with paragraphs (d) and (f) of this
Section 3, the following additional maximums are imposed under
the Plan:
(i) The maximum number of shares of Stock that may be issued
PURSUANT TO Options intended to be ISOs shall be
1,500,000 shares;
(ii) The maximum number of shares of Stock that may be
covered by Awards granted to any one individual pursuant
to Sections 5 and 6 (relating to Options and SARs) shall
be 200,000 during any fiscal year; and
(iii) The maximum number of shares of Stock that may be
covered by Awards granted to any one individual pursuant
to Section 7 (relating to Other Stock-Based Awards)
shall be 200,000 during any fiscal year.
(d) In general, if the Company is merged into or consolidated with
another corporation under circumstances in which the Company is
not the surviving corporation, or if the Company is liquidated,
or sells or otherwise disposes of substantially all of its
assets to another corporation (any such merger,
B-4
consolidation, etc. being hereinafter referred to as a
"Non-Acquiring Transaction") while unexercised Options are
outstanding under this Plan, after the effective date of a
Non-Acquiring Transaction each holder of an outstanding Option
shall be entitled, upon exercise of such Option, to receive such
stock or other securities as the holders of the same class of
stock as those shares subject to the Option shall be entitled to
receive in such Non-Acquiring Transaction based upon the agreed
upon conversion ratio or per share distribution. However, in the
discretion of the Board of Directors, after giving due
consideration to the impact on the optionee, if any, pursuant to
Rule 16b-3, any limitations on exercisability of Options may be
waived so that all Options, from and after a date prior to the
effective date of such Non-Acquiring Transaction shall be
exercisable in full. Furthermore, in the discretion of the Board
of Directors, the right to exercise may be given to each holder
of an Option during a 30-day period preceding the effective date
of such Non-Acquiring Transaction. Any outstanding Options not
exercised within such 30-day period may be cancelled by the
Board of Directors as of the effective date of any such
Non-Acquiring Transaction. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Board of Directors, whose
determination in that respect shall be final, binding and
conclusive. The Committee need not treat all optionees and/or
Options in the same manner.
(e) Except as set forth in this Plan, Award holders shall have no
rights by reason of any subdivision or consolidation of shares
of stock of any class or the payment of any stock dividend or
any other increase or decrease in the number of shares of stock
of any class or by reason of any dissolution, liquidation,
merger, or consolidation or spinoff of stock of another
corporation, and no issue by the Company of shares of stock of
any class shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares
subject to the Award. The grant of any Award pursuant to this
Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or to transfer
all or any part of its business or assets.
(f) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividends, stock split or other changes
in corporate structure affecting the Stock, and subject to
Section 5(j), such substitution or adjustment shall be made in
the aggregate number of shares reserved for issuance under this
Plan, in the number and option price of shares subject to
outstanding Options granted under this Plan and in the number of
shares subject to other outstanding Awards granted under this
Plan as may be determined to be appropriate by the Committee, in
its sole discretion, provided that the number of shares subject
to any Award shall always be a whole number. Such adjusted
option price shall be used to determine the amount payable by
the Company upon the exercise of any Stock Appreciation Right
associated with any Stock Option.
SECTION 4. ELIGIBILITY.
Directors, officers and other key employees of the Company or its
Subsidiaries and Affiliates who are responsible for or contribute to the growth
and/or profitability of the business of the Company and/or its Subsidiaries and
Affiliates are eligible to be granted Awards under this Plan. Notwithstanding
the foregoing, Incentive Stock Options may only be granted to employees of the
Company and any of its Subsidiaries or Affiliates that are a "subsidiary
corporation" (within the meaning of Section 424(f) of the Code). Furthermore, no
director who is not also an employee of the Company shall be eligible to receive
Incentive Stock Options.
B-5
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to or in tandem with
other Awards granted under this Plan and/or cash Awards made outside of this
Plan. Any Stock Option granted under this Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under this Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. Incentive Stock Options and
Non-Qualified Stock Options may be issued as Premium Stock Options at the
discretion of the Board.
Subject to the restrictions contained in Section 4 hereof concerning the
grant of Incentive Stock Options, the Committee shall have the authority to
grant to any optionee Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options (in each case with or without Stock Appreciation
Rights). To the extent that the Fair Market Value of the shares with respect to
which Incentive Stock Options first become exercisable by an optionee during any
calendar year (under the Plan and any other plans granting Incentive Stock
Options which are established by the Company or its Subsidiaries) exceeds
$100,000, such Options shall be treated as Non-Qualified Stock Options.
Options granted under this Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the
time of grant but shall be (i) not less than 100% (or, in the
case of an employee who owns stock possessing more than 10% of
the total combined voting power of all classes of capital stock
of the Company or of any of its subsidiary or parent
corporations, not less than 110%) of the Fair Market Value of
the Stock at grant, in the case of Incentive Stock Options, and
(ii) not less than 90% of the Fair Market Value of the Stock at
grant, in the case of Non-Qualified Stock Options.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercised more than ten
years (or, in the case of an Incentive Stock Option granted to
an employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or
any of its subsidiary or parent corporations, more than five
years) after the date the Option is granted.
(c) EXERCISABILITY. Stock Options shall be exercised at such time or
times and subject to such terms and conditions as shall be
determined by the Committee at or after grant. If the Committee
provides, in its sole discretion, that any Stock Option is
exercisable only in installments, the Committee may waive such
installment exercise provisions at any time at or after grant in
whole or in part, based on such factors as the Committee shall
determine, in its sole discretion.
(d) METHOD OF EXERCISE. Subject to whatever installment exercise
provisions or other restrictions apply under Section 5(c), Stock
Options may be exercised in whole or in part at any time during
the option period, by giving written notice of exercise to the
Company specifying the number of shares to be purchased;
provided, however, that if exercised in part, a Stock Option may
not be exercised for fewer than 100 shares, unless the remaining
balance of the Stock Option is less than 100 shares, in which
case the Stock Option may be exercised for the remaining
balance.
Such notice shall be accompanied by payment in full of the
purchase price, either by cash or such instrument as the
Committee may accept. Payment in full or in part may also be
made in the form of unrestricted Stock already owned by the
optionee for a period of at least six months, based, in each
case, on the Fair Market Value of the Stock on the date the
option is exercised, unless it shall be determined by the
Committee, at or after grant, in its sole discretion, that
unrestricted Stock is not a permissible form of payment with
respect to any Stock Option or Options.
If permitted by the Committee, a Plan Participant may elect to
pay the Exercise Price upon the exercise of an Option by
irrevocably authorizing a third party to sell shares of Stock
(or a sufficient portion of the
B-6
shares) acquired upon exercise of the Option and remit to the
Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from
such exercise.
Subject to the immediately preceding paragraph, no shares of
Stock shall be issued until full payment therefor has been made.
An optionee shall generally have the rights to dividends or
other rights of a shareholder with respect to shares subject to
the Stock Option when the optionee has given written notice of
exercise, has paid in full for such shares, and, if requested,
has given the representation described in Section 10(a).
(e) TERMINATION BY DEATH. Subject to Section 5(k), if an optionee's
employment by the Company and/or any Subsidiary or Affiliate
terminates by reason of death, any Stock Option held by such
optionee may thereafter be exercised to the extent such option
was exercisable at the time of death or on such accelerated
basis as the Committee may determine at or after grant (or as
may be determined in accordance with procedures established by
the Committee), by the legal representative of the estate or by
the legatee of the optionee under the will of the optionee, for
a period of six months (or such other period as the Committee
may specify at or after grant) from the date of such death or
until the expiration of the stated term of such Stock Option,
whichever period is the shorter.
(f) TERMINATION BY REASON OF DISABILITY. Subject to Section 3(d), if
an optionee's employment by the Company and/or any Subsidiary or
Affiliate terminates by reason of Disability, any Stock Option
held by such optionee may thereafter be exercised by the
optionee or his/her guardian, to the extent it was exercisable
at the time of termination or on such accelerated basis as the
Committee may determine at or after grant (or as may be
determined in accordance with procedures established by the
Committee), for a period of one year (or such other period as
the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is the shorter;
provided, however, that, if the optionee dies within such
one-year period (or such other period as the Committee may
specify at or after grant), any unexercised Stock Option held by
such optionee shall thereafter be exercisable only pursuant to
Section 5(e).
(g) TERMINATION BY REASON OF RETIREMENT. Subject to Section 3(d), an
optionee's employment by the Company and/or any Subsidiary or
Affiliate terminates by reason of Normal or Early Retirement,
any Stock Option held by such optionee may be exercised by the
optionee, to the extent it was exercisable at the time of such
Retirement, for a period of three months, less one day, (or such
other period as the Committee may specify at or after grant)
from the date of such termination, or the expiration of the
stated term of such Stock Option, whichever period is the
shorter; provided, however, that if the optionee dies within
such three-month, less one day; period (or such other period as
the Committee may specify at grant), any unexercised Stock
Option held by such optionee shall thereafter be exercisable
only pursuant to Section 5(e).
(h) OTHER TERMINATION. Unless otherwise determined by the Committee
(or pursuant to procedures established by the Committee) at or
after grant, if an optionee's employment by the Company and/or
any Subsidiary or Affiliate terminates for any reason other than
death, Disability or Normal or Early Retirement, as in the case
of voluntary resignation of employment by the optionee, the
Stock Option shall thereupon terminate and shall be immediately
forfeited, regardless of its vesting status.
(i) BUYOUT PROVISIONS. The Committee may at any time offer to buy
out for a payment in cash or Stock a Stock Option previously
granted, based on such terms and conditions as the Committee
shall establish and communicate to the optionee at the time that
such offer is made.
(j) FRACTIONAL SHARE. If any adjustment referred to herein shall
result in a fractional share for any optionee under any Stock
Option hereunder, such fraction shall be completely disregarded
and the optionee shall only be entitled to the whole number of
shares resulting from such adjustment.
(k) COMPLIANCE WITH SECTION 422. To the extent that any Option which
is designated as an Incentive Stock Option hereunder fails for
any reason to comply with the provisions of Section 422 it shall
be treated as a Non-Qualified Stock Option.
B-7
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted
alone, in addition to or in tandem with all or part of any other
Award granted under this Plan. In the case of a Non-Qualified
Stock Option, such tandem rights may be granted either at or
after the time of the grant of such Stock Option. In the case of
an Incentive Stock Option, such tandem rights may be granted
only at the time of the grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted
in tandem with a given Stock Option shall terminate and no
longer be exercisable upon the termination or exercise of the
related Stock Option, subject to such provisions as the
Committee may specify at grant where a Stock Appreciation Right
is granted with respect to less than the full number of shares
covered by a related Stock Option.
A Stock Appreciation Right may be exercised by an optionee,
subject to Section 6(b), in accordance with the procedures
established by the Committee for such purpose. Upon such
exercise, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b). Stock
Options which were issued in tandem with exercised Stock
Appreciation Rights shall no longer be exercisable to the extent
that the related Stock Appreciation Rights have been exercised.
(b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject
to such terms and conditions, not inconsistent with the
provisions of this Plan, as shall be determined from time to
time by the Committee, including the following:
(i) Except as set forth below, the term of each Stock
Appreciation Right shall be fixed by the Committee, but
no such Stock Appreciation Right shall be exercised more
than ten years after the date it is granted. Stock
Appreciation Rights granted in tandem with Stock Options
shall be exercisable only at such time or times and to
the extent that the Stock Options to which they relate
shall be exercisable in accordance with the provisions
of Section 5 and this Section 6 whenever the Fair Market
Value of the Stock exceeds the option price per share
specified in the related Stock Option.
(ii) Stock Appreciation Rights shall be exercised at such
time or times and subject to such terms and conditions
as shall be determined by the Committee at or after
grant. If the Committee provides, in its sole
discretion, that any Stock Appreciation Right is
exercisable only in installments, the Committee may
waive such installment exercise provisions at any time
at or after grant in whole or in part, based on such
factors as the Committee shall determine in its sole
discretion. Upon the exercise of a Stock Appreciation
Right, a Participant shall be entitled to receive an
amount in cash and/or shares of Stock equal in value to
the excess of Fair Market Value Of the Stock on the date
of exercise over the Fair Market Value of the Stock on
the date of grant multiplied by the number of Stock
Appreciation Rights exercised, with the Committee having
the right to determine the form of payment. Subject to
whatever installment exercise provisions or other
restrictions apply hereunder, Stock Appreciation Rights
may be exercised in whole or in part at any time during
the term thereof by giving written notice of exercise to
the Company specifying the number of rights to be
exercised.
(iii) Upon the exercise of a tandem Stock Appreciation Right,
the Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have
been exercised for the purpose of the limitation set
forth in Section 3 of this Plan on the number of shares
of Stock to be issued under this Plan, but only to the
extent of the number of shares issued under the Stock
Appreciation Right at the time of exercise based on the
value of the Stock Appreciation Right at such time.
(iv) Stock Appreciation Rights issued in tandem with
Incentive Stock Options shall contain such terms and
conditions as the Committee may determine to be
necessary for the qualification of the Incentive Stock
Options.
B-8
(v) Sections 5(e)-(j) hereof shall apply equally to all
Stock Appreciation Rights granted pursuant to this Plan,
as if each reference therein to a "Stock Option" was
instead a reference to a "Stock Appreciation Right."
SECTION 7. OTHER STOCK-BASED AWARDS.
(a) ADMINISTRATION. Other Awards of Stock and other Awards that are
valued in whole or in part by reference to, or are otherwise
based on, Stock ("Other Stock-Based Awards"), including, without
limitation, Restricted Stock, Performance-Accelerated Restricted
Stock, Performance Stock, Performance Units and Stock Awards or
options valued by reference to Book Value or Subsidiary
performance, may be granted either alone or in addition to or in
tandem with Stock Options or Stock Appreciation Rights granted
under this Plan and/or cash Awards made outside of this Plan.
Subject to the provisions of this Plan, the Committee shall have
authority to determine the persons to whom and the time or times
at which such Awards shall be made, the number of shares of
Stock to be awarded pursuant to such Awards, and all other
conditions of the Awards. The Committee may also provide for the
grant of Stock upon the completion of a specified performance
period or event.
The Committee may designate whether any such Awards being
granted to any Participant are intended to be "performance-based
compensation" as that term is used in Section 162(m) of the
Code. Any such Awards designated as intended to be
"performance-based compensation" shall be conditioned on the
achievement of one or more performance measures. The performance
measures that may be used by the Committee for such Awards shall
be based on any one or more of the following, as selected by the
Committee: increase in stock price, return on capital or
increase in pretax earnings of the Company and/or one or more
divisions and/or subsidiaries, return on stockholders' equity of
the Company, increase in earnings per share of the Company,
sales of the Company and/or one or more divisions and/or
subsidiaries, pretax earnings of the Company and/or one or more
divisions and/or subsidiaries, net earnings of the Company
and/or one or more divisions and/or subsidiaries, control of
operating and/or non-operating expenses of the Company and/or
one or more divisions and/or subsidiaries, margins of the
Company and/or one or more divisions and/or subsidiaries, market
price of the Company's securities, and solely for an Award not
intended to constitute "performance-based compensation" under
Section 162(m) of the Code, other factors directly tied to the
performance of the Company and/or one or more divisions and/or
subsidiaries or other performance criteria. For Awards intended
to be "performance-based compensation," the grant of the Awards
and the establishment of the performance measures shall be made
during the period required under Code Section 162(m).
The provisions of Other Stock-Based Awards need not be the same
with respect to each recipient.
(b) TERMS AND CONDITIONS. Other Stock-Based Awards made pursuant to
this Section 7 shall be subject to the following terms and
conditions:
(i) Subject to the provisions of this Plan and the Award
agreement referred to in Section 7(b)(v) below, Other
Stock-Based Awards and shares subject to such Awards
made under this Section 7 may not be sold, assigned,
transferred, pledged or otherwise encumbered, in the
case of shares of Stock, prior to the date on which the
shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period
lapses, and in all other cases, not at all.
(ii) Subject to the provisions of this Plan and the Award
agreement and unless otherwise determined by the
Committee at grant, the recipient of an Award under this
Section 7 shall be entitled to receive, currently or on
a deferred basis, as determined by the Committee,
interest or dividends or interest or dividend
equivalents with respect to the number of shares covered
by the Award, as determined at the time of the Award by
the Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be deemed
to have been reinvested in additional Stock or otherwise
reinvested.
B-9
(iii) Any Award under this Section 7 and any Stock covered by
any such Award shall vest or be forfeited to the extent
so provided in the Award agreement, as determined by the
Committee, in its sole discretion, at or after grant.
(iv) In the event of the Participant's Retirement, Disability
or death, and in other instances, the Committee may, in
its sole discretion, waive in whole or in part any or
all of the remaining limitations, performance
requirements or restrictions imposed (if any) with
respect to any or all of an Award under this Section 7
and/or accelerate the payment of cash or Stock pursuant
to any such Award.
(v) Each Award under this Section 7 shall be confirmed by,
and subject to the terms of, an agreement or other
instrument executed by the Company and by the
Participant.
(vi) Stock (including securities convertible into Stock)
issued on a bonus basis under this Section 7 may be
issued for no cash consideration.
(vii) Unless otherwise determined by the Committee at or after
grant, if a Participant's employment by the Company
and/or any Subsidiary or Affiliate terminates by reason
of death or Disability, a pro rata portion of the
restrictions pertaining to continued employment on any
Restricted Stock will lapse, based on the number of full
months the Participant was employed during the
restriction period divided by the total number of months
in the restriction period. All such pro rata Awards will
be determined and distributed at such time as Awards are
paid to other Plan Participants.
(viii) Unless otherwise determined by the Committee at or after
grant, if a Participant's employment by the Company
and/or any Subsidiary or Affiliate terminates by reason
of Normal Retirement, all of the restrictions pertaining
to continued employment on any Restricted Stock will
lapse. Any such award will be determined and distributed
at such time as awards are paid to other Plan
Participants.
(ix) Unless otherwise determined by the Committee at or after
grant, if a Participant's employment by the Company
and/or any Subsidiary or Affiliate terminates by reason
of death or Disability, the estate of the Participant or
the Participant, as applicable, will receive a pro rata
portion of the payment or Stock the Participant would
have received for Performance Stock or Performance
Units, based on the number of full months in the
performance period prior to the Participant's death or
Disability, divided by the total number of months in the
performance period. All such pro rata payments will be
determined and distributed at such time as Awards are
paid to other Plan Participants.
(x) Unless otherwise determined by the Committee at or after
grant, if a Participant's employment by the Company
and/or any Subsidiary or Affiliate terminates by reason
of Early Retirement and if such Early Retirement occurs
before age 65 and before completion of 10 years of
service with the Company and/or a Subsidiary or
Affiliate subsequent to the date of grant of Restricted
Stock or Performance-Accelerated Restricted Stock, all
such Restricted Stock and Performance-Accelerated
Restricted Stock will be forfeited by the Participant.
In addition, in the event of Normal or Early Retirement
before the end of the performance period for Performance
Stock or Performance Units, no Awards will be paid
unless specifically approved by the Committee on a
case-by-case basis.
(xi) Unless otherwise determined by the Committee (or
pursuant to procedures established by the Committee) at
or after grant, if a Participant's employment by the
Company and/or any Subsidiary or Affiliate terminates
for any reason other than death, Disability or Normal or
Early Retirement,, as in the case of voluntary
resignation of employment by the Participant, all Other
Stock-Based Awards shall be immediately forfeited.
B-10
(xii) The Committee may at any time offer to buy out for a
payment in cash or Stock an Other Stock-Based Award
previously granted, based on such terms and conditions
as the Committee shall establish and communicate to the
Participant at the time that such offer is made.
(xiii) Except as set forth in this Plan, Participants shall
have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the
payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class
or by reason of any dissolution, liquidation, merger, or
consolidation or spin-off of stock of another
corporation, and no issue by the Company of shares of
stock of any class shall affect, and no adjustment by
reason thereof shall be made with respect to, the number
or price of shares subject to any Other Stock-Based
Award. The grant of any Other Stock-Based Award pursuant
to this Plan shall not affect in any way the right or
power of the Company to make adjustments,
reclassifications, reorganizations or changes of its
capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell, or to
transfer all or any part of its business or assets.
SECTION 8. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue this Plan, but, except as
otherwise provided herein, no amendment, alteration, or discontinuation shall be
made which would impair the rights of a Participant under a Stock Option, Stock
Appreciation Right or Other Stock-Based Award theretofore granted, without the
PARTICIPANT'S consent, or which, without the approval of the Company's
stockholders, would:
(i) increase the number of shares that may be issued under
the Plan (except by certain adjustments provided for
under the Plan);
(ii) change the class of persons eligible to receive ISOs
under the Plan;
(iii) change the requirements of Section 5 hereof regarding
the Exercise Price;
(iv) amend the Plan in a manner that would require approval
of the Company's shareholders under applicable law,
regulation or rule.
Notwithstanding any of the foregoing, adjustments pursuant to Section 3,
paragraphs (d) or (f) shall not be subject to the foregoing limitations of this
Section 8.
Options may not be granted under the Plan after the date of termination
of the Plan, but Options granted prior to that date shall continue to be
exercisable according to their terms.
Subject to the above provisions, the Board shall have broad authority to
amend this Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
SECTION 9. UNFUNDED STATUS OF PLAN.
This Plan is intended to constitute an "unfunded" plan. With respect to
any payments not yet made to a Participant by the Company, nothing contained
herein shall give any such Participant any rights that are greater than those of
a general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under this Plan to deliver Stock or payments in lieu of or with respect
to Awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected Participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of this
Plan.
SECTION 10. GENERAL PROVISIONS.
(a) The Company shall not be obligated to sell or issue any shares
pursuant to any Option unless the shares with respect to which
the Option is being exercised are at the time effectively
registered or exempt from registration under the Securities Act
of 1933, as amended (the "1933 Act"). The Company shall have no
obligation to register pursuant to the 1933 Act any shares of
Stock issued pursuant to this Plan. The
B-11
Committee may require each person purchasing shares pursuant to
a Stock Option or other award under this Plan to represent to
and agree with the Company in writing that the optionee or
Participant is acquiring the shares for investment and without a
view to distribution thereof. The certificates for such shares
may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer. All certificates for
shares of Stock or other securities delivered under this Plan
shall be subject to such conditions, stop-transfer orders and
other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable federal or state securities law,
and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such
restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject
to stockholder approval if much approval is required, and such
arrangements may be either generally applicable or applicable
only in specific cases.
(c) The adoption of this Plan shall not confer upon any employee of
the Company or of any Subsidiary or Affiliate any right to
continued employment with the Company or a Subsidiary or
Affiliate, as the case may be, nor shall it interfere in any way
with the right of the Company or a Subsidiary or Affiliate to
terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes
includable in the gross income of the Participant for federal
income tax purposes with respect to the exercise of any Option
or Stock Appreciation Right or any award under this Plan, the
Participant shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any
federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. The obligations of the
Company under this Plan shall be conditional on such payment or
arrangements, and the Company and its Subsidiaries or Affiliates
shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the
Participant.
(e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional types of Plan Awards at the time of
any dividend payment shall only be permissible if sufficient
shares of Stock are available under Section 3 for such
reinvestment, taking into account other Plan Awards then
outstanding.
(f) This Plan and all Awards made and actions taken hereunder shall
be governed by and construed in accordance with the Delaware
General Corporation Law, to the extent applicable, and in
accordance with the laws of the State of Georgia in all other
respects.
(g) The value of Awards made pursuant to this Plan shall not be
included as part ofthe definition of "cash compensation" in
connection with any other benefit offered by the Company.
(h) An Award under the Plan shall be subject to such terms and
conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and
conditions of any Award to any Participant shall be reflected in
such form of written document as is determined by the Committee.
A copy of such document shall be provided to the Participant,
and the Committee may, but need not, require that the
Participant shall sign a copy of such document. Such document is
referred to in the Plan as an "Award Agreement" regardless of
whether any Participant signature is required.
SECTION 11. EFFECTIVE DATE OF PLAN.
This Plan shall be effective as the date of its approval by the
stockholders of the Company (the "Effective Date").
SECTION 12. TERM OF PLAN.
No Stock Option, Stock Appreciation Right or Other Stock-Based Award
shall be granted pursuant to this Plan on or after the tenth anniversary of the
Effective Date of this Plan, but Awards granted prior to such tenth anniversary
may extend beyond that date.
B-12
MARINE PRODUCTS CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF MARINE PRODUCTS CORPORATION
FOR ANNUAL MEETING OF STOCKHOLDERS ON TUESDAY, APRIL 27, 2004, 11:30 A.M.
The undersigned hereby constitutes and appoints GARY W. ROLLINS and R. RANDALL ROLLINS,
and each of them, jointly and severally, proxies, with full power of substitution, to vote all
shares of Common Stock which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held on April 27, 2004, at 11:30 A.M. at 2170 Piedmont Road, NE, Atlanta,
Georgia, or any adjournment thereof.
The undersigned acknowledges receipt of Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated March 22, 2004, grants authority to said proxies, or either of them,
or their substitutes, to act in the absence of others, with all the powers which the undersigned
would possess if personally present at such meeting and hereby ratifies and confirms all that
said proxies or their substitutes may lawfully do in the undersigned's name, place and stead.
The undersigned instructs said proxies, or either of them, to vote as follows:
1. [ ] FOR WILTON LOONEY, GARY W. ROLLINS [ ] ABSTAIN FROM VOTING FOR THE
AND JAMES A. LANE, JR., AS CLASS III DIRECTORS ELECTION OF ALL CLASS III
NOMINEES
EXCEPT AS INDICATED BELOW
INSTRUCTIONS: TO REFRAIN FROM VOTING FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME
IN THE SPACE PROVIDED BELOW:
----------------------------------------------------------------------------------------------
2. TO APPROVE THE PROPOSED 2004 STOCK INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. ON ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
MARINE PRODUCTS CORPORATION
ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH
YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE WILL BE VOTED "FOR" THE ABOVE-NAMED
NOMINEES FOR DIRECTOR AND FOR APPROVAL OF THE STOCK INCENTIVE PLAN. THIS PROXY
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
PROXY
Please sign below, date and return promptly.
____________________________________________
____________________________________________
Signature(s)
Dated:________________________________, 2004
(Signature should conform to name and title
stenciled hereon. Executors, administrators,
trustees, guardians and attorneys should add
their title upon signing.)
NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES.