DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
ADAMS GOLF, INC.
(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):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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B.H. (Barney) Adams
Chairman of the Board
Adams Golf, Inc.
2801 E. Plano Parkway
Plano, Texas 75074
April 15, 2009
Dear Adams Golf Stockholder:
I am pleased to invite you to Adams Golfs Annual Meeting of Stockholders. The meeting will
be held at 9:00 a.m. central daylight time on Thursday, May 28, 2009 at Adams Golf, Inc.s offices,
2801 E. Plano Parkway, Plano, Texas, 75074.
At the meeting, you and the other stockholders will be asked to (1) re-elect two directors to
the Adams Golf Board and (2) ratify the appointment of KBA Group LLP as our independent auditors
for the current fiscal year. You will also have the opportunity to ask questions about our
business. You will find other detailed information about Adams Golf and its operations, including
its audited consolidated financial statements, in the enclosed Annual Report.
We hope you can join us on May 28th. Whether or not you can attend, please read
the enclosed Proxy Statement. When you have done so, please mark your votes on the enclosed proxy,
sign and date the proxy, and return it to us in the enclosed envelope. Your vote is important, so
please return your proxy promptly.
Yours truly,
B.H. (Barney) Adams
Adams Golf, Inc.
2801 E. Plano Parkway
Plano, Texas 75074
April 15, 2009
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 28, 2009
Adams Golf will hold its Annual Meeting of Stockholders at our principal executive offices,
which are located at 2801 E. Plano Parkway, Plano, Texas, 75074 on Thursday, May 28, 2009 at 9:00
a.m. central daylight time.
We are holding this meeting:
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to re-elect two Class II directors to serve until the 2012 Annual Meeting of
Stockholders; and |
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to ratify the appointment of KBA Group LLP as our independent auditors for the year
ending December 31, 2009. |
Your Board of Directors has selected March 31, 2009 as the record date for determining
stockholders entitled to vote at the meeting. A list of stockholders on that date will be
available for inspection at Adams Golf, Inc., 2801 East Plano Parkway, Plano, Texas, 75074 for at
least 10 days before the meeting.
This Notice of Annual Meeting, Proxy Statement, Proxy and Adams Golfs 2008 Annual Report to
Stockholders are being distributed on or about April 15, 2009.
By Order of the Board of Directors,
Eric T. Logan
Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. IF YOU DO ATTEND THE ANNUAL
MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. THE PROMPT RETURN OF PROXIES
WILL HELP TO ENSURE A QUORUM AND SAVE ADAMS GOLF THE EXPENSE OF FURTHER SOLICITATION.
ADAMS GOLF, INC.
Proxy Statement
for the
Annual Meeting of Stockholders
to be held
May 28, 2009
This Proxy Statement and Form of Proxy are being distributed on or about April 15, 2009
TABLE OF CONTENTS
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Additional Information |
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Please see the back cover of this Proxy Statement for directions to the Annual Meeting.
PROXY STATEMENT
FOR THE 2009 ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors (the Board) of Adams Golf, Inc. is soliciting proxies for the Annual
Meeting of Stockholders. You are receiving a proxy statement because you own shares of Adams Golf
common stock that entitle you to vote at the meeting. By use of a proxy, you can vote whether or
not you attend the meeting. The proxy statement describes the matters we would like you to vote on
and provides information on those matters so you can make an informed decision.
This proxy statement includes information relating to the proposals to be voted on at the
meeting, the voting process, compensation of our directors and officers, and other required
information.
In this proxy statement, unless otherwise indicated, the words the Company, Adams Golf,
we, our and us refer to Adams Golf, Inc.
Purpose of the Annual Meeting
The purpose of the Annual Meeting is to elect directors, to ratify the Audit Committees
selection of the independent registered public accounting firm, and to transact such other business
as may properly come before the Annual Meeting.
Annual Meeting Admission
You are invited to attend the Annual Meeting in person. The Annual Meeting will be held at
9:00 a.m. central daylight time on Thursday, May 28, 2009 at our offices at 2801 E. Plano Parkway,
Plano, Texas, 75074.
Quorum
A majority of the outstanding shares of our common stock must be represented in person or by
proxy at the meeting to establish a quorum. Both abstentions and broker non-votes are counted as
present for determining the presence of a quorum. Broker non-votes occur when you fail to provide
voting instructions for shares you hold in street name. In that case, your broker may be
authorized to vote your shares on routine items but is prohibited from voting your shares on other
matters. The non-votes on those other matters are known as broker non-votes.
Stockholders Entitled to Vote
Each share of our common stock outstanding as of the close of business on March 31, 2009, the
record date, is entitled to one vote per share at the Annual Meeting on each matter properly
brought before the meeting. As of the record date, there were 6,508,304 shares of common stock
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issued and outstanding. This number does not include treasury shares, which are not entitled to be
voted at the meeting.
Adams Golf stockholders hold their shares in various forms, including through a stockbroker,
bank, trustee, or other nominee and directly in their own name. As summarized below, there are
some distinctions between shares held of record and those owned beneficially:
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Stockholder of Record - If your shares are registered directly in your name with Adams
Golfs transfer agent, BNY Mellon Shareowner Services, you are the record stockholder of
those shares and these proxy materials are being sent directly to you by Adams Golf. As
the stockholder of record, you have the right to grant your voting proxy directly to Adams
Golf or to vote in person at the meeting. |
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Beneficial Owner - If your shares are held in a stock brokerage account, by a bank,
trustee, or other nominee, you are considered to be the beneficial owner of shares held in
street name and these proxy materials are being forwarded to you by your broker, trustee,
or nominee who is considered the record stockholder of those shares. As the beneficial
owner, you have the right to direct your broker, trustee or nominee on how to vote and are
also invited to attend the meeting. However, since you are not the stockholder of record,
you may not vote these shares in person at the meeting. Your broker, trustee, or nominee
is obligated to provide you with a voting instruction card for your use. |
Proposals You are Asked to Vote on and the Boards Voting Recommendations
The following proposals are scheduled to be voted on at the meeting. Our Board recommends
that you vote your shares as indicated below:
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Proposal |
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The Boards Voting Recommendation |
1. The Election of Two Director Nominees
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FOR |
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Each nominee to the Board |
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2. Ratification of Independent
Registered Public Accounting Firm
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FOR
Ratification of the Independent
Registered Public Accounting
Firm |
Other than the proposals described in this proxy statement, the Board is not aware of any
other matters to be presented for a vote at the Annual Meeting. If you grant a proxy, any of the
persons named as proxy holders will have the discretion to vote your shares on any additional
matters properly presented for a vote at the meeting. If any of our nominees is unavailable as a
candidate for director, the proxy holders will vote your proxy for another candidate or candidates
as they may be nominated by the Board.
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Required Vote
The nominees for election as directors at the Annual Meeting will be elected by a plurality of
the votes cast at the meeting. This means that the director nominee with the most votes for a
particular slot is elected for that slot. Votes withheld from one or more director nominees will
have no effect on the election of any director from whom votes are withheld.
The approval of each other proposal requires the affirmative FOR vote of a majority of those
shares present and in person or represented by proxy at the meeting and entitled to vote on the
matter. If you are a beneficial owner and you do not provide the stockholder of record with voting
instructions, your shares may constitute broker non-votes, as described in the section on page 1
entitled Quorum. In tabulating the voting result for any particular proposal, shares that
constitute broker non-votes will have no effect on the outcome of any vote.
Voting Methods
If you are a stockholder of record, you may vote your shares in person at the Meeting, vote
by telephone, or vote by mailing in the enclosed proxy card. Please refer to the specific
instructions set forth on the enclosed proxy card.
If you hold your shares in street name, you must obtain a proxy from your broker, banker,
trustee or nominee giving you the right to vote the shares at the Meeting. Please contact your
broker/banker/trustee/nominee to obtain instructions for voting your shares.
Revoking Your Proxy
You may revoke your proxy by doing one of the following:
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by sending a written notice of revocation to the Secretary of the Company that is
received prior to the Meeting, stating that you revoke your proxy; |
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by signing a later-dated proxy card and submitting it so that it is received prior to
the Meeting in accordance with the instructions included in the proxy card; or |
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by attending the Meeting and voting your shares in person. |
Counting the Vote
In the election of directors, you may vote FOR all of the nominees or your vote may be
WITHHELD from one or more of the nominees. With respect to each other proposal, you may vote
FOR, AGAINST, or ABSTAIN. If you sign your proxy card or broker voting instructions card
with no further instructions, your shares will be voted in accordance with the recommendations of
the Board.
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Results of the Vote
We will announce preliminary voting results at the meeting and publish final results in our
Quarterly Report on Form 10-Q for the quarter ending June 30, 2009.
Delivery of Proxy Materials
Security and Exchange Commission rules allow us to deliver a single copy of an annual report
and proxy statement to any household at which two or more stockholders reside, if we believe the
stockholders are members of the same family. This rule benefits both you and the Company. We
believe it eliminates duplicate mailings that stockholders living at the same address receive and
it reduces our printing and mailing costs. This rule applies to any annual reports, proxy
statements, proxy statements combined with a prospectus, or information statements. Each
stockholder will continue to receive a separate proxy card or voting instruction card.
Your household may have received a single set of proxy materials this year. If you prefer to
receive your own copy now or in future years, please request a duplicate set by contacting Mr. Eric
Logan, Chief Financial Officer, at (972) 673-9000 or by mail at 2801 E. Plano Parkway, Plano, Texas
75074 or by email at InvestorInfo@adamsgolf.com.
If a broker or other nominee holds your shares, you may continue to receive some duplicate
mailings. Certain brokers will eliminate duplicate account mailings by allowing stockholders to
consent to such elimination, or through implied consent if a stockholder does not request
continuation of duplicate mailings. Since not all brokers and nominees may offer stockholders the
opportunity this year to eliminate duplicate mailings, you may need to contact your broker or
nominee directly to discontinue duplicate mailings.
List of Stockholders
The names of stockholders of record entitled to vote at the Annual Meeting will be available
at the Annual Meeting for any purpose germane to the meeting. The list will be available 10 days
prior to the meeting between the hours of 9:00 am and 4:30 p.m. at our principal executive offices
at 2801 East Plano Parkway, Plano, Texas, 75074, by contacting Mr. Eric Logan, Chief Financial
Officer.
Cost of Proxy Solicitation
Adams Golf will pay for the cost of preparing, assembling, printing, mailing and distributing
these proxy materials. In addition to mailing these proxy materials, the solicitation of proxies
or votes may be made in person, by telephone, or by electronic communication by our directors,
officers and employees who do not receive any additional compensation for these solicitation
activities. We will also reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation
materials to beneficial owners of stock.
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Transfer Agent
Our Transfer Agent is BNY Mellon Shareowner Services. All communications concerning
record stockholder accounts, including address changes, name changes, common stock transfer
requirements, and similar issues can be handled by contacting our Transfer Agent at 877-884-3492 or
on the internet at www.bnymellon.com/shareowner/isd.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Board of Directors is divided into three classes. One class of directors is elected at
each Annual Meeting of Stockholders for a three-year term of office.
The directors elected at this meeting will serve until the Annual Meeting of Stockholders held
in 2012. Directors not up for election this year will continue in office for the remainder of
their terms.
The Board of Directors has nominated two directors to serve for a three-year term expiring in
2012.
If a nominee is unavailable for election, proxy holders will vote for another nominee proposed
by the Board or, as an alternative, the Board may reduce the number of directors to be elected at
the meeting.
The Board of Directors unanimously recommends a vote FOR the election of these director
nominees.
Directors Up for Election in 2009 for Terms Expiring in 2012
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Director Class |
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Name and Principal Occupation |
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Director Since |
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Other Directorships |
Oliver G. (Chip) Brewer III |
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Class II
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2000 |
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President and Chief Executive |
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(Exp. 2012) |
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Officer of the Company |
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Russell L. Fleischer |
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Class II
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2005 |
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Chief Executive Officer, |
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(Exp. 2012) |
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Healthvision |
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Oliver G. (Chip) Brewer III - Age 45, a director since October 2000. Mr. Brewer has served as
the President and Chief Executive Officer of Adams Golf since January 2002. He was our President
and Chief Operating Officer from August 2000 to January 2002 and our Senior Vice President of Sales
and Marketing from September 1998 to August 2000.
Russell L. Fleischer - Age 41, a director since February 2005. Mr. Fleischer has been Chief
Executive Officer of Healthvision (formerly Quovadx) since July 2007. From September 2006 until
July 2007, he was an Executive in Residence for Golden Gate Capital. Mr. Fleischer was the Chief
Executive Officer and a director of TriSyn Group, a privately held software company from December
2002 until September 2006. He was Vice President and Chief Financial Officer of Adams Golf from
November 2000 to December 2002.
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Directors Continuing in Office
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Director Class |
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Name and Principal Occupation |
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Director Since |
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Other Directorships |
B.H. (Barney) Adams |
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Class III |
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1987 |
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n/a |
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Chairman of the Board of the |
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(Exp. 2010) |
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Company |
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Joseph R. Gregory |
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Class III |
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2007 |
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President & CEO,
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(Exp. 2010) |
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Gregory Management Co., LLC
Chairman & CEO,
Epic Secure Solutions, Inc. |
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Mark R. Mulvoy |
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Class III |
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1998 |
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Retired Editor of Sports Illustrated |
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(Exp. 2010) |
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John M. Gregory |
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Class I |
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2007 |
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Stellar Pharmaceuticals |
Chief Manager, SJ Strategic |
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(Exp. 2011) |
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UPM Pharmaceuticals |
Investments LLC |
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Robert D. Rogers |
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Class I |
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2004 |
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Texas Industries, Inc. |
Retired President, Chairman of the |
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(Exp. 2011) |
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Con-Way, Inc. |
Board
of Texas Industries, Inc. |
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B.H. Barney Adams - Age 70, a director since 1987. Mr Adams founded Adams Golf in 1987 and
has served as our Chairman of the Board since that time. Mr. Adams served as our Chief Executive
Officer from 1987 until January 2002, and as our President from 1987 until August 2000. Mr. Adams
is the inventor of the Tight Lies® Fairway Wood.
Joseph R. Gregory - Age 54, a director since November 2007. Mr. Gregory was elected to the
Board as a result of the resignation of Paul F. Brown on November 2, 2007. Mr. Gregory is
currently the President and Chief Executive Officer of Gregory Management Co., LLC, a private
investment management company, and is Chairman and Chief Executive Officer of Epic Secure
Solutions, Inc., a privately-held security software company. Previously, he was a co-founder of
King Pharmaceuticals, Inc. (NYSE: KG) where he served as Vice Chairman of the Board of Directors.
He also served as President and Chief Executive Officer of Monarch Pharmaceuticals. He serves on
the boards of numerous community charities, and runs a private family foundation focusing on
childrens issues. Mr. Gregory is a graduate of the University Of Maryland School Of Business,
where he received his Bachelor of Science degree in business administration in 1977.
Mark R. Mulvoy - Age 67, a director since April 1998. Mr. Mulvoy is a retired executive of
Sports Illustrated magazine where he was employed from 1965 to 1996. He was Managing Editor of
Sports Illustrated from 1984 through 1996 and Publisher from 1990 to 1992.
John M. Gregory - Age 56, a director since November 2007. Mr. Gregory is currently Chief
Manager of SJ Strategic Investments LLC, a private, family-owned investment vehicle with a
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portfolio of public and private investments. Previously, he founded King Pharmaceuticals, Inc.
(NYSE:KG) and served as Chairman of the Board and Chief Executive Officer for nine years.
Currently, Mr. Gregory serves on the board of Stellar Pharmaceuticals,
Inc., a Canadian based pharmaceutical company (OTCBB: SLXCF; TSXV: SLX), and serves as Chairman and
Chief Executive Officer of UPM Pharmaceuticals, Inc., a privately-held pharmaceutical company. Mr.
Gregory is a graduate of the University of Maryland School of Pharmacy, where he received a
Bachelor of Science in Pharmacy in 1976.
Robert D. Rogers - Age 72, a director since February 2004. Mr. Rogers has been a Director of
Texas Industries, Inc. since 1970, and was elected as Chairman of the Board in October 2004. He
retired from his position of President and CEO of Texas Industries in May 2004, a position he had
held since 1970. Mr. Rogers is also a director of Con-Way Inc. (NYSE:CNW) and serves on the
companys finance committee. In addition, he is a member of the Executive Board for Southern
Methodist University Cox School of Business.
There is no family relationship between any of the nominees or between any nominee and any
executive officer of Adams Golf, except that Mr. John Gregory and Mr. Joseph Gregory are brothers.
The Board of Directors has determined that each of Messrs. Fleischer, John Gregory, Joseph
Gregory, Rogers and Mulvoy is an independent director pursuant to Rule 4200(a)(15) of the NASDAQ
Marketplace Rules.
CORPORATE GOVERNANCE
Our business, property and affairs are managed under the direction of our Board of Directors.
Members of our Board are kept informed of our business through discussions with our Chairman, our
President and Chief Executive Officer and other officers, by reviewing materials provided to them,
by visiting our offices and production facility, and by participating in meetings of the Board and
its Committees. The Board of Directors is committed to good business practices, transparency of
financial reporting and sound corporate governance.
Executive Sessions of Independent Directors
Independent directors occasionally meet in executive sessions without management and may or
may not select a director to facilitate the meeting. In 2008, our independent directors held two
such meetings.
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Communication with Directors
Stockholders may communicate with the Independent Directors or Chairs of our Audit and
Compensation Committees on board-related issues by writing to the Committee Chairs or to the
outside directors as a group c/o Mr. Eric Logan, Chief Financial Officer, at Adams Golf, 2801 E.
Plano Parkway, Plano, Texas, 75074. The envelope should clearly indicate the person or persons to
whom the communication should be forwarded.
Communications will be distributed to the Board, or to any individual director or directors as
appropriate, depending on the facts and circumstances outlined in the communications. The Board of
Directors has directed that certain items that are unrelated to the duties and responsibilities of
the Board do not need to be forwarded to our Directors, such as:
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spam |
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junk mail and mass mailings |
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product inquiries and suggestions |
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resumes and other forms of job inquiries |
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surveys |
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business solicitation or advertisements |
In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable
will be excluded, with the provision that any communication that is filtered out must be available
to any outside director upon request.
Code of Conduct
Adams Golf has adopted a code of conduct that applies to all of our directors, officers and
employees. To obtain a copy of our Code of Conduct, please contact Mr. Eric Logan, Chief Financial
Officer, c/o Adams Golf, 2801 E. Plano Parkway, Plano, Texas, 75074.
Transactions with Related Persons
We do not have a specific set of policies and procedures with respect to the approval of
related party transactions. Our Code of Conduct, discussed above, which is found in our Employee
Information Guide, governs our decision-making with respect to related party transactions. In
general, related party transactions are infrequent in nature and are always disclosed to the Board.
If a related party transaction affects a specific Board member, that Board member will be recused
from voting with respect to the approval of the related party transaction. In fiscal 2008, there
were no related party transactions that were reviewed for approval.
Ms. Cindy Adams-Herington, the daughter of our Chairman, Barney Adams, owns 40% of Plano Paper
and Supply. Her husband, Mr. Tom Herington owns 60% of Plano Paper and Supply. Our Chairman, Mr.
Barney Adams, is a lender to Plano Paper and Supply. In June 2005, Adams Golf, in an open bid
process, selected Plano Paper and Supply as a supplier of shipping boxes for our products. In
2008, we made total purchases of $359,751 from Plano
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Paper and Supply. This supply arrangement is
subject to change at any time based on then current market conditions and an ongoing competitive
bidding process.
Relationships
Two adult children of our Chairman, Barney Adams are employees of Adams Golf. Mr. Edwin Adams
serves as our General Counsel. In 2008, Edwin Adams received an annual base
salary of $134,000 and a performance bonus of $14,500 related to second half 2007 fiscal year
performance. Ms. Cindy Adams-Herington holds the position of Vice President, Advertising and
Marketing and received an annual base salary in 2008 of $168,826 and a performance bonus of $40,977
related to second half 2007 fiscal year performance. Neither Edwin Adams nor Cindy Herington has
employment contracts or change of control arrangements with us.
10
Director Attendance at Annual Meeting of Stockholders
The Companys policy is that our Directors are expected to attend the Annual Meeting of
Stockholders unless extenuating circumstances prevent them from attending. All of our then serving
Directors attended last years Annual Meeting of Stockholders, with the exception of Mr. John
Gregory.
BOARD STRUCTURE AND COMMITTEE MEMBERSHIP
The Board is divided into three classes serving staggered three-year terms. The Board has
seven Directors and two committees: the Audit Committee and the Compensation Committee. The
membership during fiscal 2008 and the function of each Committee are described below.
During fiscal 2008, the Board of Directors held four meetings. The Audit Committee held four
meetings and the Compensation Committee held four meetings during fiscal 2008. All of our
Directors attended at least 75% of the meetings of the Board and all committees on which he served.
The following chart shows the composition of the committees of the Board of Directors and the
number of meetings held by each committee during fiscal year 2008.
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|
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|
|
Audit |
|
Compensation |
|
Independent |
Director |
|
Committee |
|
Committee |
|
Director 1 |
B.H. (Barney) Adams |
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|
|
|
|
|
|
|
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|
|
|
Oliver G. (Chip) Brewer III |
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|
|
|
|
|
|
|
|
|
|
|
Russell L. Fleischer |
|
|
X |
|
|
|
X |
|
|
|
X |
|
John M. Gregory |
|
|
|
|
|
|
|
|
|
|
X |
|
Joseph R. Gregory |
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|
|
|
|
|
|
|
|
|
X |
|
Mark R. Mulvoy |
|
|
X |
|
|
|
X |
|
|
|
X |
|
Robert D. Rogers |
|
|
X |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2008 Meetings |
|
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4 |
|
|
|
4 |
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|
|
|
|
|
|
(1) |
|
Individuals who are independent directors in accordance with NASDAQs
independence
standards set forth in Rule 4200(a)(15). |
Audit Committee
The Audit Committee assists the Board in its oversight of the integrity of the Companys
financial statements, compliance with legal and regulatory requirements, the qualifications,
independence and performance of the Companys independent auditor, and the performance of the
Companys internal auditing function. In addition, the Audit Committee:
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|
|
Reviews the annual audited and quarterly consolidated financial statements; |
|
|
|
|
Reviews the Companys financial reporting process and disclosure and internal controls |
11
|
|
|
and procedures, including major issues regarding accounting principles and financial
statement presentation, and critical accounting policies to be used in the consolidated
financial statements; |
|
|
|
Appoints, oversees and approves compensation of the independent auditor; |
|
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|
Reviews with the independent auditor the scope of the annual audit, including fees and
staffing, and approves all audit and permitted non-audit services provided by the auditor; |
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|
|
Reviews findings and recommendations of the independent auditor and managements
response to the recommendations of the independent auditor; and |
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|
Discusses policies with respect to risk assessment and risk management, the Companys
major risk exposures, and the steps management has taken to monitor and mitigate such
exposures. |
Russell L. Fleischer, Mark R. Mulvoy and Robert D. Rogers are the members of the Audit
Committee. The Board of Directors has determined that all of our Audit Committee members are
independent and Mr. Fleischer and Mr. Rogers qualify under the NASDAQ listing standards as audit
committee financial experts within the meaning of the rules of the Securities and Exchange
Commission. The charter of the Audit Committee is available at www.adamsgolf.com under Corporate -
Corporate Governance.
Compensation Committee
The primary functions of the Compensation Committee are to review and refine our executive
compensation philosophy and guiding principles to reflect Adams Golfs mission, values and
long-term strategic objectives and to adopt and administer executive compensation programs in a
manner that furthers the interests of our stockholders.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee (i) was an officer or employee of the
Company during the fiscal year 2008, or (ii) had any relationship requiring disclosure by the
Company under the rules of the Securities and Exchange Commission requiring disclosure of certain
relationships and related party transactions. None of our executive officers serves as a member of
the board of directors or compensation committee of any entity that has one or more executive
officers serving on our Board of Directors or Compensation Committee.
Russell L. Fleischer and Mark R. Mulvoy are the members of the Compensation Committee. Mr.
Mulvoy serves as the Compensation Committee Chairman. Both Mr. Fleischer and Mr. Mulvoy qualify as
independent directors under the NASDAQ listing standards. The Compensation Committee does not
currently operate under a Compensation Committee charter.
12
Role of Committee
The fundamental responsibilities of our Compensation Committee are:
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|
|
to adopt, review and refine the Companys executive compensation philosophy and
guiding principles that reflect Adams Golfs mission, values and long-term strategic
objectives; |
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|
|
to administer the Companys executive compensation program in a manner that furthers the
Companys strategic goals and serves the interest of our stockholders; |
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|
to establish compensation-related performance objectives for executive officers that
support our strategic plan; |
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|
to evaluate the job performance of the Chief Executive Officer in light of those goals
and objectives; |
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|
|
to determine the total compensation levels of the senior executive officers and to
allocate total compensation among the various components of executive pay; |
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|
|
to make recommendations to the Board of Directors regarding incentive and equity-based
compensation plans; and |
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|
|
to recommend to the Board the compensation arrangements with non-employee directors. |
Committee Meetings
Our Compensation Committee meets as often as necessary to perform its duties and
responsibilities. The Compensation Committee held four formal meetings during fiscal year 2008 and
multiple informal conference calls regarding employment contract and director compensation issues.
The Compensation Committee frequently receives and reviews materials in advance of each
meeting. These materials are typically compiled by management and include information that
management believes will be helpful to the Committee as well as materials that the Committee has
specifically requested. Depending on the agenda for the particular meeting, these materials may
include:
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|
financial reports on year-to-date performance versus budget and compared to prior year
performance; |
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|
|
calculations and reports on levels of achievement of individual and corporate
performance objectives; |
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|
|
|
information on the executive officers stock ownership and option holdings. |
13
For a further discussion of the Compensation Committees role in executive officer compensation,
please see the Compensation Discussion and Analysis section of this Proxy Statement beginning on
page 17.
DIRECTOR NOMINATION PROCESS
We have adopted corporate governance procedures that mandate that a majority of independent
directors must nominate all new directors to the entire Board for a vote. These governance
procedures allow us to comply with NASDAQ nominating committee standards. Subject to the rights of
the holders of preferred stock or any other class of our capital stock (other than common stock),
or any series of the foregoing that has been outstanding, nominations for the election of directors
may be made by our Board of Directors, any committee appointed by our Board, or by any stockholder
entitled to vote for the election of directors. We do not currently have a standing nominating
committee or a charter with respect to the nominating process. Our Board of Directors believes
that it is not necessary to have such a committee because the Boards size and composition allow it
to adequately identify and evaluate qualified candidates for directors. However, our Board of
Directors may consider appointing such a committee at some time in the future.
On November 2, 2007, Stephen R. Patchin and Paul F. Brown, Jr. each resigned as a director of
Adams Golf. On November 5, 2007, the Board of Directors of Adams Golf elected John M. Gregory and
Joseph R. Gregory as directors.
Messrs. Patchin and Brown resigned, and the new directors were selected, in connection with
and pursuant to the sale on November 2, 2007 by Royal Holding Company, Inc. to SJ Strategic
Investments LLC and Joseph R. Gregory of 676,143 and 917,485 shares of Adams Golf Common Stock,
respectively. Mr. Patchin is the Chief Executive Officer of Royal Holding Company, Inc. Mr. Brown
is the Vice President, Finance and Chief Financial Officer of Royal Holding Company, Inc. John M.
Gregory is the Chief Manager of SJ Strategic Investments LLC. John M. Gregory and Joseph R. Gregory
are brothers.
After Messrs. Patchin and Brown indicated to the Adams Golf Board that they would be resigning
in connection with the sale, Messrs. Gregory and Gregory indicated to the Board that they were
interested in being selected as directors in connection with the sale to replace Messrs. Patchin
and Brown. Certain of the independent directors of Adams Golf subsequently agreed to meet with
Messrs. Gregory and Gregory to discuss and consider their potential selection as directors. Messrs.
Gregory and Gregory were elected as directors of Adams Golf at a board meeting held on November 5,
2007. John M. Gregory took the vacated seat of Mr. Patchin, which expired in 2008, but John
Gregory was elected at the Annual Shareholders Meeting in 2008. Joseph R. Gregory took the vacated
seat of Mr. Brown, which expires at the Annual Shareholders Meeting in 2010.
Our Board of Directors evaluates candidates based on financial literacy, knowledge of our
industry or other background relevant to our needs, status as one of our stockholders,
independence for purposes of compliance with the rules of the Securities Exchange Commission and
14
NASDAQ, moral character and willingness, ability and availability for service. Aside from the
qualities stated above, our Board does not have a set of minimum qualifications that must be met by
director nominees.
We have not paid fees to any third party to assist in the process of identifying or evaluating
director candidates. Because we do not have a standing nominating committee, this years nominees
(both of whom are currently serving as directors) were selected for re-election by our
entire Board.
Nominations by Stockholders at the Annual Meeting
Our Board of Directors will consider director candidates recommended by security holders
and evaluates candidates recommended by security holders and the qualifications of such
candidates on the same basis as other candidates. Our By-laws provide that stockholder proposals
and director nominations by stockholders may be made in compliance with certain advance notice,
informational and other applicable requirements. For a detailed description of our Annual Meeting
advance notice requirements and our stockholder nomination procedures, please see page 46 of this
document.
15
EXECUTIVE OFFICERS
Below are the names and ages of our chief executive officer and chief financial officer as of
the end of December 2008 (the named executive officers) and a brief description of their prior
experience and qualifications.
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Name |
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Age |
|
Position |
Oliver G. (Chip) Brewer III
|
|
|
45 |
|
|
President and Chief Executive Officer |
Eric T. Logan
|
|
|
43 |
|
|
Senior Vice President and Chief
Financial Officer |
Oliver G. (Chip) Brewer III - Please see biography of Mr. Brewer on page 6.
Eric T. Logan - Age 43. Mr. Logan has served as Senior Vice President and Chief Financial
Officer of Adams Golf since October 2003. He was Chief Financial Officer of Daisytek International
from May 2003 to October 2003 and U.S. Chief Financial Officer of Daisytek International from
September 2002 to May 2003.
16
COMPENSATION DISCUSSION AND ANALYSIS
Our Compensation Discussion and Analysis addresses the following topics:
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the members and role of our Compensation Committee; |
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our compensation-setting process; |
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our compensation philosophy and policies regarding executive compensation; |
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|
the components of our executive compensation program; and |
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|
our compensation decisions for fiscal year 2008 and the first quarter of fiscal 2009. |
In this Compensation Discussion and Analysis section, the terms we, our, us, and the
Committee refer to the Compensation Committee of Adams Golfs Board of Directors.
Compensation Philosophy and Objectives
Our compensation philosophy and objectives are intended to align the interests of management
with those of our stockholders. The following principles influence and guide our compensation
decisions.
We Focus on Results and Strategic Objectives
Our compensation analysis begins with an examination of Adams Golfs business plan and
strategic objectives. In analyzing Adams Golfs business plan and strategic objectives, the
Compensation Committee may consider any of the following:
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Adams Golf products to be launched in the fiscal year; |
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the competitive environment; |
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targeted revenue growth rates; |
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targeted profitability rates; |
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|
|
investments in the current fiscal year, including, but not limited to, personnel,
marketing, tour pro investment and capital expenditures; |
|
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|
|
customer concentration and channel mix changes; and |
|
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|
|
market share data by product category. |
17
Our compensation decisions for named executive officers are made following a detailed
discussion of the aforementioned business plan and strategic objectives. Our compensation
decisions are intended to reward key management and employees for their participation in advancing
Adams Golfs strategic initiatives and financial performance measures. The most significant
financial performance measures considered in setting compensation are:
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|
|
revenue growth versus business plan for the current fiscal year; |
|
|
|
|
profitability versus business plan for the current fiscal year; and |
|
|
|
|
prudent investments to build the Adams Golf brand and to focus on long-term growth and
the health of the Company. |
At Adams Golf, our most significant profitability measure is EBITDA (earnings before interest,
taxes, depreciation and amortization).
Compensation Decisions Should Promote the Interests of Stockholders
At the core of our compensation philosophy is our guiding belief that pay should be directly
linked to performance. Linking pay to performance, in our opinion, aligns the objectives of our
senior executives with the interests of our stockholders. This philosophy has guided many of our
compensation related decisions, such as:
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|
|
A substantial portion of senior executive compensation is contingent on, and variable
with, achievement of objective corporate and/or individual performance goals. A
substantial majority of the variable or bonus-related component of compensation is
determined by corporate revenue growth and profitability metrics. We believe that linking
the payment of bonuses to our senior executives to the achievement of our most significant
financial performance measures as noted above aligns the objectives of our executive
officers with the interests of our stockholders. |
|
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|
|
We believe that equity ownership by our senior executives aligns their long-term
incentives with those of Adams Golfs stockholders. |
Compensation Should be Reasonable and Responsible
It is essential that Adams Golfs overall compensation levels be sufficiently competitive to
attract talented leaders and motivate those leaders to achieve superior results. At the same time,
we believe that compensation should be set at responsible levels. We believe that our
compensation policies are responsible if our executive compensation programs are consistent with
Adams Golfs constant focus on controlling costs while remaining competitive to allow Adams Golf to
attract highly qualified candidates for management positions.
18
Compensation Disclosures Should be Clear and Complete
We believe that all aspects of executive compensation should be clearly, comprehensibly and
promptly disclosed in plain English to stockholders. We believe that compensation disclosures
should provide all of the information necessary to permit stockholders to understand our
compensation philosophy and objectives, our compensation-setting process and how much our
executives are paid.
The Use of Compensation Consultants
We have in the past engaged compensation consultants to help provide guidance on median pay
and equity ownership levels for executives in similarly-sized companies in comparable industries.
Most recently in July 2007, we engaged Mercer Human Resource Consulting to consult with us
regarding the compensation package of our President and CEO, Chip Brewer for his 2008 2010
employment agreement.
Mercer created a peer list of similarly-sized companies in comparable industries in order to
benchmark executive compensation levels against companies that have executive positions with
responsibilities similar in breadth and scope to ours. Since there are a paucity of publicly
traded, similarly-sized golf equipment and golf component businesses, Mercer included in its peer
group analysis similarly-sized companies in the sporting goods and apparel categories. The
following are several of the companies used in the peer group for Adams Golf: Ashworth, Cutter &
Buck, Radica Games, Cybex International, Fountain Powerboat Industries, Gametech International,
Vermont Teddy Bear and Aldila. The Compensation Committee reviewed a summary of the compensation
data prepared by Mercer to ensure that our named executive officers compensation programs were
competitive.
We do not currently have Mercer or any other compensation consultant under engagement. In our
opinion, our relatively small size and the fact that the compensation package of our CEO is
determined by his employment agreement restricts our need for a continuing engagement with a
consultant. The Compensation Committee may engage a compensation consultant in the future if the
needs of the business so dictate.
Elements of Executive Compensation
Base Salary
Base pay is a critical element of executive compensation because it provides executives with a
base level of monthly income. In determining base salaries, we consider the executives
qualifications and experience, scope of responsibilities and future potential, the goals and
objectives established for the executive, the executives past performance, competitive salary
practices at comparable companies, and internal pay equity and the tax deductibility of base
salary.
For our named executive officers, we establish base salaries at a level so that a significant
portion of the total compensation that such named executive officers can earn is performance-
19
based
pay. Base salary is targeted at median levels for similarly-sized companies in comparable
industries, as defined by Mercer in 2007.
Annual Management Incentive Compensation Plan
Our Annual Management Incentive Compensation Plan (the Plan) was established in 1998. The
Plan provides named executive officers and key employees an opportunity to earn a semi-annual cash
bonus for achieving specified performance-based goals established for each half of the fiscal year.
Performance goals are tied to measures of financial performance rather than appreciation in stock
price. Performance goals are generally based on financial results as defined by our business plan
and bonus evaluations are made in July and January. Our business plan is developed by our named
executive officers in consultation with other members of management of the Company, and is
ultimately presented to and approved by the Board. The named executive officers and other key
employees are evaluated and paid primarily on:
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|
|
revenue growth versus plan for the current fiscal year; |
|
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|
|
profitability versus plan for the current fiscal year; and |
|
|
|
|
prudent investments to build the Adams Golf brand and to focus on long-term growth and
the health of the Company. |
At Adams Golf our most significant profitability measure is EBITDA (earnings before interest,
taxes, depreciation and amortization).
The Compensation Committee has been pleased with the Plan and with the balance inherent in the
measures upon which the named executive officers and other key employees are paid under the Plan.
We are committed to growing revenue and maintaining profitability in the short term, and in the
long-term, making prudent, brand-building investments such as our commitments on the professional
golf tours and our commitment to growing our research and development.
The Compensation Committee sets targeted incentive payout percentages as a percentage of base
salary for each named executive officer. These targets are based on competitive practices for each
comparable position based on survey results from Mercer in 2007. The majority of the weighting of
whether the named executive officer achieves his or her semi-annual bonus is determined by the
financial performance metrics mentioned previously in this section. In addition, each named
executive officer has individual semi-annual goals that must be achieved, in full or in part, in
order to attain the targeted payout of the semi-annual bonus. Performance above or below the
targeted payout can be achieved based on numerous factors including our performance versus
semi-annual financial metrics and the named executive officers individual performance versus his
or her specific semi-annual performance goals.
20
Equity-Based Compensation
We believe that equity compensation is the most effective and most widely-accepted means of
creating a long-term link between the compensation provided to named executive officers and other
key management personnel with gains realized by the stockholders. The Compensation Committees
objective is to provide named executive officers with long-term incentive opportunities that are
consistent with those of comparable companies identified by Mercer in
2007.
The 2002 Equity Incentive Plan governs the granting of all equity-denominated securities to
Adams Golf employees and was approved by the Companys stockholders in May 2002. The 2002 Equity
Incentive Plan allows us to grant Options, Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units, Performance Awards, Dividend Equivalents or Other Stock-Based Awards (all terms
defined in the 2002 Equity Incentive Plan). Through 2007, we had only awarded options to purchase
our common stock under the 2002 Equity Incentive Plan. As discussed in more detail in the section
entitled Employment Contracts and Change in Control Arrangements on page 32 of this proxy
statement, in 2008, we awarded shares of restricted stock to Mr. Brewer, our President and CEO, as
part of his 2008 2010 employment contract. The Compensation Committee regularly discusses and
evaluates the use of alternative types of awards under the 2002 Equity Incentive Plan and may use
such alternative awards in the future.
All restricted stock awards incorporate the following features:
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The term of the grant does not exceed 10 years; |
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|
The vesting period of current restricted stock awards varies between four months and
three years; |
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Grants do not include reload provisions. |
All stock option awards incorporate the following features:
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|
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The term of the grant does not exceed 10 years; |
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The grant prices of future option grants will not be less than the market price on the
date of grant; |
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Grants do not include reload provisions; and |
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Options generally vest 25% per year over four years beginning with the first anniversary
of the date of grant. In some instances we have used six-month and one-year option vesting
periods. |
We currently use restricted stock awards as a long-term incentive vehicle because:
21
|
|
|
Restricted stock grants align the interests of executives with those of the
stockholders, support a pay-for-performance culture, foster employee stock ownership, and
focus the management team on increasing value for the stockholders. |
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|
Restricted stock grants help to provide a balance to the overall compensation program;
our annual bonus incentive program focuses on the achievement of annual performance
targets; the long-term vesting period for restricted stock awards creates incentives for
increases in stockholder value over a longer term. |
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|
The vesting period encourages executive retention and the preservation of stockholder
value. |
We may continue to use stock options as a long-term incentive vehicle because:
|
|
|
Stock options align the interests of executives with those of the stockholders, support
a pay-for-performance culture, foster employee stock ownership, and focus the management
team on increasing value for the stockholders. |
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|
|
All of the value received by the recipient from a stock option is based on the growth of
the stock price above the exercise price. |
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|
|
Stock options help to provide a balance to the overall compensation program; our annual
bonus incentive program focuses on the achievement of annual performance targets; the
four-year vesting period for stock option awards creates incentives for increases in
stockholder value over a longer term. |
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|
The vesting period encourages executive retention and the preservation of stockholder
value. |
In determining the number of options and/or restricted shares to be granted to named executive
officers and other key employees, we take into account the individuals position, scope of
responsibility, ability to affect revenue growth, profitability and stockholder value, as well as
the individuals historic and recent performance and the equity value of the grant in relation to
other elements of total compensation.
Option grants for our President and CEO, Chip Brewer, have been made concurrent with his
employment agreements of 2002 and 2005. A restricted stock grant, with vesting provisions, was
made concurrent with his employment agreement of 2008. These grants were approved by the
Compensation Committee and the entire Board. There have been two option grants for our CFO, Eric
Loganone made concurrent with the beginning of his employment in October 2003, and the other made
in a key employee grant in November 2004. The grants were approved by the Compensation Committee
and the entire Board. The date of Board approval is generally the date at which any option
agreement or restricted stock grant becomes effective.
22
In the past, we have granted stock options with an exercise price less than the market price
of the stock at the date of grant. The grants were meant to incentivize key employees to help to
turn around the Company. The grants were made at a time when there was minimal Black Scholes value
in options granted with an exercise price equal to market price on the date of grant. We believe
the grants have achieved their purpose, as we have been profitable for five of the previous six
fiscal years and the executive team and key employees have remained largely intact.
The expenses from these options have been accounted for from the inception of the option
grants. Given current IRS tax rulings in Section 409A, we do not expect to grant stock options in
the future with exercise prices less than the market price of the stock at the date of grant. We
may grant other types of incentive awards under the 2002 Equity Incentive Plan in the future to the
extent such awards are consistent with and further our compensation objectives.
The application of Section 409A of the Internal Revenue Service tax code resulted in many
option holders designating option exercise dates in advance for some options that were granted with
an exercise price less than the market price of the stock at the date of grant. For more
information about the scheduled timing of these exercises for our employees, please consult our
Annual Report for the year ended December 31, 2008, a copy of which is included with this proxy
statement. In particular, please see Note 11 of the financial statements to the Annual Report
regarding Stockholders Equity.
Additional Benefits
Executive officers participate in other employee benefit plans generally available to all
employees on the same terms as similarly situated employees. We offer a variety of health and
welfare and retirement savings programs to all eligible employees. The named executive officers
generally are eligible for the same benefit programs on the same basis as the rest of the Companys
employees. The health and welfare programs are intended to protect employees against catastrophic
loss and to encourage a healthy lifestyle. Our health and welfare programs include medical,
wellness, pharmacy, dental, vision, life insurance and accidental death and disability. All
employees are eligible for our 401(k) program.
In addition, certain officers receive other additional perquisites that are described in this
Proxy Statement under the heading Executive Compensation. These perquisites include:
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|
|
Life Insurance & Accidental Death & Dismemberment Coverage: We pay 100% of the premium
for both term life insurance and accidental death and dismemberment coverage, equal to two
times the named executive officers base salary. This benefit is available to all
employees. |
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|
|
Supplemental Life Insurance: Supplemental life insurance benefits are provided to the
named executive officers and to all other employees. The named executive officers and
employees must pay for any supplemental insurance coverage they decide to buy. |
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|
Short-term and Long-term Disability: We pay 100% of the premium cost for these |
23
|
|
|
benefit programs for named executive officers and all other employees. The short-term
disability program provides income replacement at 67% of base pay level for up to 13 weeks
of recovery. Upon expiration of the 13 week short-term disability period, the long-term
disability program provides income replacement at 60% of base pay level, up to a maximum of
$6,000 per month, until age 65 or recovery per the terms and conditions of the program. |
We requested that the Company disclose all perquisites provided to the named executive
officers shown in the Summary Compensation Table even if the perquisites fall below the disclosure
thresholds required under Securities and Exchange Commission rules.
Our Compensation Decisions
This section describes the compensation decisions that we made with respect to the named
executive officers for fiscal year 2008.
Executive Summary
In 2008 and the first quarter of 2009, we continued to apply the compensation principles
previously described in determining the compensation of our named executive officers. These
compensation decisions were made in the context of Adams Golfs recent financial performance.
In summary, the compensation decisions made in 2008 and the first quarter of 2009 for the
named executive officers were as follows:
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|
|
For fiscal year 2009, the base salary level for our President and CEO, Chip Brewer is
governed by his employment agreement, which called for an increase in base salary for 2009
to $450,000 from $425,000. However, Mr. Brewer has chosen to forego his 2009 increase and
reduce his annualized base salary to $360,000 for fiscal year 2009, beginning April 1,
2009. Our CFO, Eric Logan, has chosen to reduce his annualized base salary level for
fiscal year 2009 to $200,000 from $215,000 beginning April 1, 2009. |
|
|
|
|
In 2008, the President and CEO, Chip Brewer and the CFO, Eric Logan were paid
semi-annual incentive bonuses of $200,000 and $50,000, respectively, for the Companys
performance in the last six months of 2007. Because Adams Golf did not achieve its 2008
Annual Plan revenue or EBITDA targets, neither Mr. Brewer nor Mr. Logan were paid incentive
bonuses relating to performance in fiscal year 2008. |
We believe that these decisions are consistent with our core compensation principles and
objectives:
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|
|
We believe in a pay-for-performance culture; |
|
|
|
|
Compensation decisions should promote the interests of long-term stockholders; and |
24
|
|
|
Compensation should be reasonable and responsible. |
Base Salary Decisions
We adjust base salaries on a calendar year basis. For fiscal year 2009, the base salary level
for our President and CEO, Chip Brewer is governed by his employment agreement, which called for an
increase in base salary for 2009 to $450,000 from $425,000. However, Mr. Brewer has chosen to
forego his 2009 increase and reduce his annualized base salary to $360,000 for fiscal year 2009,
beginning April 1, 2009. Our CFO, Eric Logan, has chosen to reduce his annualized base salary
level for fiscal year 2009 to $200,000 from $215,000 beginning April 1, 2009.
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Title |
|
2009 Base Salary |
|
2008 Base Salary |
Oliver G. (Chip)
Brewer III |
|
President and CEO |
|
$ |
360,000 |
(1) |
|
$ |
425,000 |
|
|
Eric T. Logan |
|
Senior Vice President and CFO |
|
|
200,000 |
(2) |
|
|
215,000 |
|
|
|
|
(1) |
|
Mr. Brewers annualized base salary was $425,000 from 1/1/09 to 3/31/09 and $360,000 from
4/1/09 to the present. |
|
(2) |
|
Mr. Logans annualized base salary was $215,000 from 1/1/09 to 3/31/09 and $200,000 from 4/1/09
to the present. |
In setting these base salaries, we considered:
|
|
|
our compensation philosophy and guiding principles described above; |
|
|
|
|
the experience and industry knowledge of the named executive officers and the quality
and effectiveness of their leadership at the Company; |
|
|
|
|
all of the components of executive compensation, including base salary, incentive
compensation, stock options, and benefits and perquisites; |
|
|
|
|
the mix of performance pay to total compensation; and |
|
|
|
|
internal pay equity among Adams Golfs senior executives. |
For a more detailed description of Mr. Brewers current employment agreement, please see
Employment Contracts and Change in Control Arrangements on page 32.
Annual Management Incentive Compensation Plan Decisions
Our Annual Management Incentive Compensation Plan provides our named executive officers and
key employees an opportunity to earn a semi-annual cash bonus for achieving
25
specified performance-based goals established for the fiscal year. In recent years (including 2008
and 2009), the Compensation Committee has established performance objectives for the named
executive officers based on targeted levels of revenue growth and EBITDA (earnings before interest,
taxes, depreciation and amortization). We believe that focusing on revenue growth is important
because there are distinct advantages to revenue and profitability scale in the golf equipment
business, such as the ability to advertise on network-televised golf events, to sponsor
professional tour pros, and the ability to compete for strong R&D talent. We believe that focusing
on EBITDA is important because it is the most widely-accepted metric for the cash flow generated by
a business. The performance objectives allow the named executive officers to earn a cash bonus up
to a specified percentage of their base salary if Adams Golf achieves at least a specified
threshold of the above metrics.
The targeted bonus levels as a percentage of salary for 2008 for the named executive officers
are specified below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus as Percentage (%) of Salary (1) |
Name |
|
Title |
|
Threshold |
|
Target |
|
Stretch |
Oliver G. (Chip) Brewer III |
|
President and CEO |
|
|
0 |
% |
|
|
100 |
% |
|
|
200 |
% |
|
Eric T. Logan |
|
Senior Vice President and CFO |
|
|
0 |
% |
|
|
50 |
% |
|
|
|
|
|
|
|
(1) |
|
The named executive officers are eligible to receive a bonus equal to up to the specified percentage of
their base salary if Adams Golf achieves the specified level of revenue growth and EBITDA as defined in the
Companys business plan. |
Per the terms of Mr. Brewers employment contract, Mr. Brewer is entitled to a targeted bonus
percentage of 100% with a stretch bonus percentage of 200%.
Stock Option and Restricted Stock Grant Decisions
In March 2008 per Mr. Brewers employment agreement, we granted Mr. Brewer 150,000 shares of
our restricted common stock, which will vest in six equal installments on the last trading days of
June and December 2008, 2009 and 2010.
As of the record date for the 2009 Annual Stockholders Meeting, the named executive officers
hold the following unvested restricted stock grants and stock options that would become vested upon
a change in control.
26
|
|
|
|
|
|
|
|
|
|
|
No. of Shares |
|
Unrealized |
|
|
Underlying |
|
Value of |
|
|
Unvested |
|
Unvested |
Name |
|
Awards (#) |
|
Awards ($) |
Oliver G. (Chip) Brewer III |
|
|
100,000 |
|
|
$ |
222,000 |
|
|
Eric T. Logan |
|
|
|
|
|
|
|
|
Note: The unrealized value of Mr. Brewers restricted stock award was calculated by
multiplying the number of unvested shares remaining in the restricted stock grant by the closing
price of our common stock as of 3/13/2009 ($2.22 per share).
Reasonableness of Compensation
After considering all components of the compensation paid to the named executive officers, the
Compensation Committee has determined that the compensation is reasonable and is not excessive. In
making this determination, we considered many factors, including the following:
|
|
|
Management has consistently led Adams Golf to increasing levels of profitability and
revenue growth in recent years. |
|
|
|
|
Managements compensation as compared to the compensation of executives at peer list
companies studied in the past. |
|
|
|
|
The stockholder return performance of Adams Golf for the majority of the past six years
has outpaced the performance of companies in Adams Golfs peer group. |
|
|
|
|
The compensation program for named executive officers and other key employees has
generally achieved the goals of retaining and attracting talented management members who
can and have helped us return the Company to profitability. |
Managements Role in the Compensation-Setting Process
Management plays a significant role in the compensation-setting process. The most significant
aspects of managements role are:
|
|
|
evaluating employee performance; |
|
|
|
|
establishing business performance targets and objectives; |
|
|
|
|
recommending salary levels and option awards; and |
|
|
|
|
preparing meeting information for each Compensation Committee meeting. |
27
Upon request, the Chief Executive Officer may also participate in Compensation Committee
meetings to provide:
|
|
|
background information regarding Adams Golfs strategic objectives; |
|
|
|
|
his evaluation of the performance of the senior executive officers; and |
|
|
|
|
compensation recommendations as to senior executive officers other than himself. |
Compensation Policies
The Tax Deductibility of Compensation Should be Maximized Where Appropriate
The Company generally seeks to maximize the deductibility for tax purposes of all elements of
compensation. For example, the Company has always issued nonqualified stock options that result in
a tax deduction to Adams Golf upon exercise. Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public corporations for non-qualifying compensation in excess of $1.0
million paid in any taxable year to an individual who, on the last day of the taxable year, is
either the Companys principal executive officer or an individual who is among the three highest
compensated officers for the taxable year (other than the principal executive officer or the
principal financial officer) to any such persons in any fiscal year. We review compensation plans
in light of applicable tax provisions, including Section 162(m), and may revise compensation plans
from time to time to maximize deductibility. However, we may approve compensation that does not
qualify for deductibility when we deem it to be in the best interest of Adams Golf.
Financial Restatement
It is the Boards policy that the Board will, to the extent permitted by governing law, have
the sole and absolute authority to make retroactive adjustments to any cash or equity-based
incentive compensation paid to named executive officers and certain other key management where the
payment was predicated on the achievement of certain financial results that were subsequently the
subject of restatement. Where applicable, the Company will seek to recover any amount determined
to have been inappropriately received by the individual involved. We have not had to pursue
recovery from any individual as a result of a restatement.
Stock Ownership Guidelines
We have not adopted formal stock ownership guidelines for our named executive officers
however, we do believe that named executive officers owning stock helps align their interest with
those of long-term stockholders.
28
Timing of Stock Option Grants
Adams Golf has adopted a policy on stock option grants that includes the following provisions
relating to the timing of option grants:
|
|
|
The grant date of stock options is always the date of approval of the grants (or a
specified later date if for any reason the grant is approved during a time when Adams Golf
is in possession of material, non-public information). |
|
|
|
|
For stock options that may be granted in the future, the exercise price will be the
closing price of the underlying common stock on the grant date. |
COMPENSATION COMMITTEE REPORT
We have reviewed and discussed the foregoing Compensation Discussion and Analysis with
management. Based on our review and discussion with management, we have recommended to the Board
of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by:
Russell L. Fleischer
Mark R. Mulvoy
29
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation of our named executive
officers who served in such capacities during the fiscal year ended December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Restricted |
|
All Other |
|
|
Name and |
|
|
|
|
|
|
|
|
|
|
|
|
|
Option |
|
Stock |
|
Compen- |
|
Total |
Principal Position |
|
Year |
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
sation |
|
Fiscal Year |
Oliver G. (Chip) |
|
|
2008 |
|
|
$ |
425,000 |
|
|
$ |
1,544,000 |
(1) |
|
|
|
|
|
$ |
425,000 |
(2) |
|
$ |
77,930 |
(3) |
|
$ |
2,471,930 |
|
Brewer III |
|
|
2007 |
|
|
|
400,000 |
|
|
|
400,000 |
|
|
|
|
|
|
|
|
|
|
|
79,194 |
(4) |
|
|
879,194 |
|
President and Chief |
|
|
2006 |
|
|
|
400,000 |
|
|
|
325,000 |
|
|
|
|
|
|
|
|
|
|
|
61,172 |
(5) |
|
|
786,172 |
|
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric T. Logan |
|
|
2008 |
|
|
|
215,000 |
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
34,846 |
(6) |
|
|
299,846 |
|
Senior Vice |
|
|
2007 |
|
|
|
200,000 |
|
|
|
220,000 |
|
|
|
|
|
|
|
|
|
|
|
32,515 |
(7) |
|
|
452,515 |
|
President and Chief |
|
|
2006 |
|
|
|
200,000 |
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
15,994 |
(8) |
|
|
315,994 |
|
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes a $1,344,000 long-term incentive payment pursuant to Mr. Brewers 2005 2007 employment agreement and a semi-annual bonus award
of $200,000 related to the Companys financial performance in the second half of fiscal year 2007. |
|
(2) |
|
The value of the restricted stock award was based on a share price of $8.50 per share, which was the closing price of our common stock on
March 13, 2008, the date of the restricted stock award. |
|
(3) |
|
Includes $24,586 of automobile expenses; $1,436 for Group Term Life insurance premiums; $21,833 for health and welfare benefits; $2,430
of non-reimbursed business expenses; $18,446 for country club memberships and $9,200 of 401k matching contributions. |
|
(4) |
|
Includes $26,977 of automobile expenses; $900 for Group Term Life insurance premiums; $25,487 for health and welfare benefits; $3,415 of
non-reimbursed business expenses; $15,666 for country club memberships and $6,750 of 401k matching contributions. |
|
(5) |
|
Includes $24,686 of automobile expenses; $900 for Group Term Life insurance premiums; $9,683 for health and welfare benefits; $3,307 of
non-reimbursed business expenses; $16,952 for country club memberships and $5,643 of 401k matching contributions. |
|
(6) |
|
Includes $455 for Group Term Life insurance premiums; $24,013 for health and welfare benefits; and $10,379 of 401k matching contributions. |
|
(7) |
|
Includes $420 for Group Term Life insurance premiums; $25,345 for health and welfare benefits; and $6,750 of 401k matching contributions. |
|
(8) |
|
Includes $420 for Group Term Life insurance premiums; $9,455 for health and welfare benefits; and $6,119 of 401k matching contributions. |
Narrative Discussion of Summary Compensation Table
The salary and stock option awards for Mr. Brewer are determined by his employment agreement
with the Company. For a more detailed description of the Employment Agreement, please see
Employment Contracts and Change in Control Arrangements beginning on page 32. Bonuses for Mr.
Brewer and Mr. Logan are paid semi-annually under the terms of the Companys Annual Management
Incentive Compensation Plan. The Summary Compensation Table presents the total amount of bonuses
paid to the Companys named executive officers in fiscal years 2006, 2007 and 2008. While Mr.
Brewer and Mr. Logan were each paid semi-annual incentive bonuses of $200,000 and $50,000,
respectively, in 2008, such bonuses related to the Companys performance in the last six months of
2007. Because Adams Golf did not achieve its 2008 Annual Plan revenue or EBITDA targets, neither
Mr. Brewer nor Mr. Logan were paid incentive bonuses relating to performance in fiscal year 2008.
For a more detailed description of the Companys Annual Management Incentive Compensation Plan,
please see Annual Management Incentive Compensation Plan on page 25.
30
Grants of Plan-Based Awards
Set forth in the following table is information with respect to plan-based awards made to our
named executive officers in 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other |
|
|
|
|
|
|
|
|
All other |
|
option awards: |
|
|
|
|
|
|
|
|
stock awards: |
|
Number of |
|
Grant date |
|
|
|
|
|
|
Number of |
|
securities |
|
fair value |
|
|
|
|
|
|
shares of |
|
underlying |
|
of stock and |
Name |
|
Grant Date |
|
stock or units |
|
options |
|
option awards |
Oliver G. (Chip) Brewer III |
|
March 13, 2008 |
|
|
150,000 |
|
|
|
|
|
|
$ |
1,275,000 |
(1) |
|
Eric T. Logan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The value of the restricted stock award was based on a share price of
$8.50 per share, which was the closing price of our common stock on
March 13, 2008, the date of the restricted stock award. |
There were no equity grants given to Mr. Logan during the fiscal year ended December 31, 2008.
Pursuant to Mr. Brewers employment agreement, he received 150,000 shares of restricted stock in
2008. 25,000 shares vest on each of the last trading days of June and December in each of the
fiscal years 2008 through 2010. The restricted stock grants and stock option awards for Mr. Brewer
are determined by his employment agreement with the Company. For a more detailed description of
the Employment Agreement, please see Employment Contracts and Change in Control Arrangements
beginning on page 32.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning restricted stock awards and stock
options held by the named executive officers at December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
Underlying |
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
|
|
|
|
Underlying |
|
Unexercised |
|
|
|
|
|
|
|
|
|
Number of |
|
Value of |
|
|
|
|
|
|
Unexercised |
|
Options (#) |
|
Option |
|
Option |
|
Restricted |
|
Restricted |
Name and |
|
|
|
|
|
Options (#) |
|
Unexercis- |
|
Exercise |
|
Expiration |
|
Securities |
|
Securities |
Principal Position |
|
Grant Date |
|
Exercisable |
|
able |
|
Price ($) |
|
Date |
|
Unvested |
|
Unvested |
Oliver G. (Chip) |
|
|
1/16/2002 |
|
|
|
243,750 |
|
|
|
|
|
|
$ |
0.04 |
|
|
|
1/16/2012 |
|
|
|
|
|
|
|
|
|
Brewer III (1) |
|
|
2/14/2003 |
|
|
|
97,475 |
|
|
|
|
|
|
|
0.04 |
|
|
|
2/14/2013 |
|
|
|
|
|
|
|
|
|
President and Chief |
|
|
7/31/2003 |
|
|
|
119,778 |
|
|
|
|
|
|
|
0.04 |
|
|
|
7/31/2013 |
|
|
|
|
|
|
|
|
|
Executive Officer |
|
|
1/15/2004 |
|
|
|
66,694 |
|
|
|
|
|
|
|
0.04 |
|
|
|
1/15/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
3/10/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
$ |
300,000 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric T. Logan (2) |
|
|
10/24/2003 |
|
|
|
6,250 |
|
|
|
|
|
|
|
0.04 |
|
|
|
10/24/2013 |
|
|
|
|
|
|
|
|
|
Senior Vice |
|
|
11/8/2004 |
|
|
|
15,625 |
|
|
|
|
|
|
|
0.04 |
|
|
|
11/8/2014 |
|
|
|
|
|
|
|
|
|
President and |
|
|
1/1/2005 |
|
|
|
|
|
|
|
6,250 |
|
|
|
0.04 |
|
|
|
1/1/2015 |
|
|
|
|
|
|
|
|
|
Chief Financial
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All information in this table relates to nonqualified stock options. The Company has not granted any incentive stock options
or stock appreciation rights (SARs). |
31
|
|
|
(1) |
|
Mr. Brewers restricted stock vests in 6 equal installments on the last trading day of June and December for
the term of his contract (2008 2010). Mr. Brewers options vested as follows: Options granted 1/16/2002
vested on 7/16/2002; options granted 2/14/2003 vested on 8/14/2003; options granted 7/31/2003 vested on
1/31/2004; and options granted 1/15/2004 vested on 7/15/2004. |
|
(2) |
|
In each case, Mr. Logans option grants vested in four equal installments on the anniversary date of the grant. |
|
(3) |
|
The value of Mr. Brewers unvested shares of restricted stock is based upon the share price of $3.00 per
share, which was the closing price of our common stock on December 31, 2008. |
Employment Contracts and Change in Control Arrangements
Oliver G. (Chip) Brewer III Employment Agreement effective 2008 through 2010
On December 31, 2007, we entered into an employment contract with Chip Brewer, our President
and Chief Executive Officer. On January 3, 2008, we filed a Form 8-K with the Securities and
Exchange Commission describing the terms of this agreement. The form of the agreement was filed
with our Form 10-K on March 11, 2008.
The term of Mr. Brewers employment agreement runs from January 1, 2008 through December 31,
2010, unless earlier terminated. Mr. Brewer received an annual base salary of $425,000 in 2008
and, by the terms of the agreement, was eligible to receive an annual base salary of $450,000 in
2009 and $475,000 in 2010. However, Mr. Brewer has chosen to forego his 2009 increase and reduce
his annualized base salary to $360,000 for fiscal year 2009, beginning April 1, 2009. Mr. Brewer
is eligible for semi-annual performance bonuses not to exceed 100% of Mr. Brewers annual base
salary then in effect.
The employment agreement also provides for retention awards of restricted stock, with vesting
provisions, and subject to proper authorization from our Board of Directors as well as compliance
with all applicable laws and regulations. On March 10, 2008, Mr. Brewer was granted 150,000
restricted shares of our common stock. The restricted stock vests in six equal installments on the
last trading days of June and December 2008, 2009 and 2010. If we sell or transfer a majority of
our capital stock or substantially all of our assets to an unaffiliated entity, all of Mr. Brewers
potential restricted stock awards under the employment agreement will vest no later than the
calendar day immediately preceding the sale or closing date of the transaction.
The agreement provides that Mr. Brewer is eligible for a one-time long term incentive payment
at the conclusion of the agreement. The amount of the payment is contingent upon achievement of a
minimum performance goal and may be increased if certain additional performance criteria are met or
exceeded.
The agreement may be terminated without cause either by us (a termination without cause)
upon delivery of 60 days written notice, or by Mr. Brewer (a termination without good reason)
upon delivery of 30 days written notice, or by the mutual agreement of Mr. Brewer and us. We can
terminate Mr. Brewer for cause if Mr. Brewer (a) deliberately and intentionally breaches any
material provision of the agreement without curing such a breach within 30 days of written notice
of the breach; (b) deliberately and intentionally engages in gross misconduct that is materially
harmful to our best interests; or (c) is convicted of a felony or crime involving moral turpitude,
fraud or deceit. Mr. Brewer can terminate his agreement for good reason upon delivery of 30 days
written notice to the Company no later than 90 days after Mr. Brewer
32
reasonably becomes aware of the circumstances giving rise to such good reason. Good reason
refers to any of the following conduct of the Company: If we (a) materially breach any material
provision of the agreement without curing such breach within 30 days of written notice of the
breach; (b) assign Mr. Brewer any duties inconsistent in any material respect with his position or
diminish Mr. Brewers status and reporting requirements, his authority, duties, powers or
responsibilities, other than an isolated incident which is remedied within 30 days notice from Mr.
Brewer; (c) fail to obtain a written agreement to assume the obligations of this agreement five
days before a merger, consolidation or sale of all or substantially all of our assets; (d) reduce
Mr. Brewers total compensation, other than as the result of Mr. Brewers failure to meet certain
performance based goals established for purposes of determining incentive based compensation; (e)
relocate our principal offices to a location more than 75 miles from Plano, Texas; or (f) if the
Company fails to set internal financial goals or adopt an equity incentive plan. The agreement
will terminate by its terms upon Mr. Brewers disability, if he is unable to perform his duties on
a full time basis for a period of 60 days, or upon his death.
In the event that either we terminate the employment agreement without cause or Mr. Brewer
terminates for good reason, then Mr. Brewer will be entitled to receive (a) his annual base salary
for a period of one year after the later of the date of termination or the expiration of the notice
period; (b) all retention based restricted stock that Mr. Brewer was potentially eligible to
receive during the 12-month period following the date on which Mr. Brewer was terminated; (c) a
payment equal to both semi-annual bonuses for which Mr. Brewer was potentially eligible in the
calendar year of termination, paid as if we achieved our internal financial goals for that period;
and (d) the long-term incentive payment for which Mr. Brewer was potentially eligible, paid as if
certain performance criteria for that period had been achieved.
In the event that (i) Mr. Brewer becomes disabled or upon his death; (ii) the agreement is
terminated by mutual agreement; (iii) we terminate Mr. Brewers employment with cause; or (iv) Mr.
Brewer terminates his employment without good reason, Mr. Brewer will be entitled to receive his
accrued salary and benefits through the date of termination, reimbursements for expenses actually
incurred and benefits under any benefit and indemnification plans for Mr. Brewer or his dependants
through the date of termination, and any continuing coverage as required by law.
The following table shows the potential payments upon termination or a change in control of
the Company for Mr. Brewer, based on his 2008 2010 employment agreement:
33
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Involuntary |
|
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|
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|
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|
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For Good |
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Resig- |
|
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Reason |
|
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|
|
|
|
|
|
nation |
|
Without |
|
Termi- |
|
|
|
|
|
|
For Cause |
|
Without |
|
Cause |
|
nation |
|
|
|
|
Executive |
|
Termi- |
|
Good |
|
Termi- |
|
(Change-in- |
|
|
|
|
Benefits |
|
nation |
|
Reason |
|
nation |
|
Control) |
|
Disability |
|
Death |
and Payments |
|
on |
|
on |
|
on |
|
on |
|
on |
|
on |
Upon Separation |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary |
|
|
|
|
|
|
|
|
|
$ |
450,000 |
(1) |
|
$ |
450,000 |
(1) |
|
$ |
450,000 |
(2) |
|
$ |
450,000 |
(1) |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
|
|
(3) |
|
|
|
|
|
|
|
(3) |
Restricted
Stock Award |
|
|
|
|
|
|
|
|
|
$ |
111,000 |
(4) |
|
$ |
111,000 |
(4) |
|
|
|
|
|
|
|
|
Performance
Bonus |
|
|
|
|
|
|
|
|
|
$ |
450,000 |
(5) |
|
$ |
450,000 |
(5) |
|
$ |
450,000 |
(5) |
|
|
|
|
Long Term
Incentive
Plan |
|
|
|
|
|
|
|
|
|
|
1,500,000 |
(6) |
|
|
1,500,000 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits &
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and
Welfare
Plans |
|
|
|
|
|
|
|
|
|
|
40,279 |
(8) |
|
|
40,279 |
(8) |
|
|
|
|
|
|
|
|
Life
Insurance
Benefits |
|
|
|
|
|
|
|
|
|
|
1,436 |
(9) |
|
|
1,436 |
(9) |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
An additional sum equal to accrued but unpaid base salary would also be payable to Mr. Brewer |
|
(2) |
|
Reflects the total amount to be paid to Mr. Brewer including any Social Security proceeds and
disability payments. |
|
(3) |
|
An additional sum equal to accrued but unpaid business expenses would also be payable to Mr.
Brewer. |
|
(4) |
|
Represents value of otherwise unvested shares that would vest, subject to the 2002 Equity
Incentive Plan, employment agreement, and applicable award.. The share price assumed was
$2.22 per share, which was the price on 3/13/09. |
|
(5) |
|
Mr. Brewer would receive the equivalent of two semi-annual bonuses, irrespective of whether
the Company was on track to achieve its internal financial goals tied to the payment of the
bonuses. |
|
(6) |
|
If EBITDA achieved by the Company is greater than a targeted level at the time of Mr.
Brewers separation, Mr. Brewer would receive an additional payment equal to $0.05 for each
dollar over the EBITDA target. |
|
(7) |
|
An additional sum equal to accrued but unpaid health and welfare plan and life insurance plan
benefits. |
|
(8) |
|
Reflects the estimated lump-sum present value of all future costs which will be paid on
behalf of Mr. Brewer under the Companys health and welfare and employee benefit plans. |
|
(9) |
|
Reflects the estimated lump-sum present value of the cost of coverage for life insurance
policies provided by the Company to Mr. Brewer. |
Eric T. Logan
On May 15, 2007, we entered into a Change of Control Agreement with Mr. Eric Logan, Senior
Vice President and Chief Financial Officer of Adams Golf. On May 21, 2007, we filed a Form 8-K
with the Securities and Exchange Commission describing the terms of this agreement. The Change of
Control Agreement runs for three years from the date of the Agreement and provides that Mr. Logan
will be entitled to certain compensation and benefits upon a qualifying event. Generally,
qualifying events include termination of employment upon our sale, change of control (as defined),
or upon certain restructuring events. The compensation and benefits include (i) payment of earned
and unpaid compensation, (ii) payment of base salary for a period of 12 months after the
qualifying event, (iii) continued substantially equal medical benefits for 12 months after the
qualifying event, and (iv) the immediate vesting of any stock options granted and 120 days after
such vesting to exercise those options. Termination for cause is not a qualifying event, and for
purposes of the Change of Control Agreement, cause is defined to mean (i) the admission or
conviction of a felony, (ii) the commission of an act of dishonesty in the course of duties, (iii)
repeated disregard of policy directives, (iv) failure to satisfactorily
34
perform assigned duties, or (v) breach of fiduciary responsibilities or fiduciary duties as an
employee.
The following table shows the potential payments upon termination or a change in control of
the Company for Mr. Logan:
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Good |
|
|
|
|
|
|
|
|
|
|
Resignation |
|
|
|
|
|
Reason |
|
|
|
|
|
|
|
|
|
|
Without |
|
Without |
|
Termination |
|
|
|
|
|
|
For Cause |
|
Good |
|
Cause |
|
(Change-in- |
|
|
|
|
Executive Benefits |
|
Termination |
|
Reason |
|
Termination |
|
Control) |
|
Disability |
|
Death |
and Payments |
|
on |
|
on |
|
on |
|
on |
|
on |
|
on |
Upon Separation |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary |
|
|
n/a |
|
|
|
n/a |
|
|
$ |
215,000 |
(1) |
|
$ |
215,000 |
(1) |
|
|
n/a |
|
|
|
n/a |
|
Stock Options |
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits &
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and
Welfare
Plans (2) |
|
|
n/a |
|
|
|
n/a |
|
|
|
24,013 |
|
|
|
24,013 |
|
|
|
n/a |
|
|
|
n/a |
|
Life
Insurance
Benefits (3) |
|
|
n/a |
|
|
|
n/a |
|
|
|
455 |
|
|
|
455 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
|
(1) |
|
An additional sum equal to accrued but unpaid base salary would also be payable to Mr. Logan. |
|
(2) |
|
Reflects the estimated lump-sum present value of all future costs which will be paid on behalf of Mr. Logan under the Companys
health and welfare benefit plans. |
|
(3) |
|
Reflects the estimated lump-sum present value of the cost of coverage for life insurance policies provided by the Company to Mr. Logan. |
Option Exercises and Stock Vested
During fiscal 2008, the named executive officers exercised stock options and had restricted
stock vest as shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
Number |
|
|
|
|
|
|
|
|
of Shares |
|
Value |
|
Number of |
|
Value |
|
|
Acquired |
|
Realized |
|
Shares |
|
Realized |
|
|
or |
|
on |
|
Acquired |
|
on |
Name |
|
Exercised |
|
Exercise |
|
on Vesting |
|
Vesting |
Oliver G. (Chip)
Brewer III |
|
|
75,029 |
|
|
$ |
502,319 |
|
|
|
50,000 |
(1) |
|
$ |
209,750 |
|
|
Eric T. Logan |
|
|
28,125 |
|
|
|
188,406 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes 25,000 shares vested on June 30, 2008, valued at $5.49 per share, and
25,000 shares vested on December 31, 2008, valued at $2.90 per share. |
Pension Benefits
Neither of the named executive officers has received any pension benefits from Adams Golf.
35
Nonqualified Deferred Compensation
Neither of the named executive officers received any nonqualified deferred compensation during
fiscal 2008.
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities Remaining |
|
|
Number of Securities to |
|
Weighted-Average |
|
Available for Future Issuance |
|
|
Be Issued Upon Exercise |
|
Exercise Price of |
|
Under Equity Compensation Plans |
|
|
of Outstanding Options, |
|
Outstanding Options, |
|
(Excluding Securities Reflected in |
Plan Category |
|
Warrants and Rights |
|
Warrants and Rights |
|
Column (a)) |
|
|
(a) |
|
(b) |
|
(c) |
Equity Compensation
Plans Approved by
Security Holders |
|
|
892,982 |
|
|
$ |
0.19 |
|
|
|
891,160 |
|
|
Equity Compensation
Plans Not Approved
by Security Holders |
|
|
|
|
|
|
n/a |
|
|
|
|
|
|
Total |
|
|
892,982 |
|
|
$ |
0.19 |
|
|
|
891,160 |
|
36
DIRECTOR COMPENSATION
Compensation Arrangements for Fiscal 2008
The following table describes the compensation arrangements with our non-employee directors
for the 2008 fiscal year.
|
|
|
|
|
|
|
2008 |
Annual Cash Retainer (1) |
|
$ |
40,000 |
|
Annual Restricted Stock Grant (2) |
|
$ |
20,000 |
|
Attendance Fee per Meeting (3) |
|
|
1,000 |
|
Committee Stipends (4): |
|
|
|
|
Audit Committee Chair |
|
|
5,000 |
|
Compensation Committee Chair |
|
|
5,000 |
|
Non-Chair Committee Membership |
|
|
2,500 |
|
Adams Golf Annual Product Allowance (5) |
|
|
1,000 |
|
|
|
|
(1) |
|
Each non-employee director who serves as a member of the Board of
Directors for at least one month of each quarter receives a quarterly
director fee of $10,000. |
|
(2) |
|
Each non-employee director who serves as a member of the Board of
Directors for at least one month of each quarter receives a restricted
stock grant in the value of $20,000. The shares vest over four years.
The price of shares will be determined at the date of the grant,
which will occur on the date of the Annual Shareholders Meeting each
year. |
|
(3) |
|
Each non-employee director who serves as a member of the Board of
Directors for at least one month of each quarter receives $1,000 per
meeting attended in person or by telephone. We reimburse our
directors for travel and lodging expenses that they incur in
connection with their attendance of directors meetings and meetings
of stockholders of the Company. |
|
(3) |
|
Each non-employee director serving as chairperson of any committee of
the Board receives an additional $1,250 per quarter provided such
person serves in such capacity for at least one month during that
quarter. Each non-employee director serving as a member of any
committee receives an additional $625 per quarter provided such person
serves in such capacity for at least one month during that quarter. |
|
(5) |
|
Our non-employee directors are also entitled to receive, at no charge,
up to $1,000 of Adams Golf products annually for promotional purposes. |
Compensation Arrangements for Fiscal 2009
The Board of Directors have agreed to reduce their Annual Cash Retainer from $40,000 to
$20,000, effective February 26, 2009. All other components of non-employee Director Compensation
described above for 2008 remain the same for 2009.
37
Actual Fiscal 2008 Director Compensation
The following table shows the compensation paid to our non-employee directors for the 2008
fiscal year. Neither Mr. Adams nor Mr. Brewer receives fees for serving as directors of the
Company. For a description of each type of compensation shown below, please see the footnotes
above for the table entitled Compensation Arrangements for 2008.
Director Compensation for Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees |
|
|
|
|
|
|
|
|
|
|
Paid |
|
Option |
|
|
|
|
|
Total |
Name |
|
In Cash |
|
Awards |
|
Other |
|
Compensation |
B.H. (Barney) Adams |
|
|
|
|
|
|
|
|
|
$ |
308,974 |
(1) |
|
$ |
308,974 |
|
Russell L. Fleischer |
|
$ |
47,750 |
|
|
|
|
|
|
|
|
|
|
|
47,750 |
|
John M. Gregory |
|
|
40,087 |
|
|
|
|
|
|
|
|
|
|
|
40,087 |
|
Joseph R. Gregory |
|
|
40,087 |
|
|
|
|
|
|
|
|
|
|
|
40,087 |
|
Mark R. Mulvoy |
|
|
53,201 |
|
|
|
|
|
|
|
4,235 |
(2) |
|
|
57,436 |
|
Robert D. Rogers |
|
|
45,875 |
|
|
|
|
|
|
|
|
|
|
|
45,875 |
|
|
|
|
(1) |
|
Includes $254,400 in salary, $21,630 in automobile expenses, $6,995 in group term life insurance premiums,
$18,167 for health and welfare benefits, $426 of non-reimbursed business expenses and $7,356 of 401k
company matching contributions. |
|
(2) |
|
Represents reimbursement of travel expenses related to meeting attendance. |
Narrative to Director Compensation Table
Although Mr. Adams is not an executive officer of Adams Golf, he is compensated for services
he provides both as Chairman of the Board and as an employee of Adams Golf. In fiscal 2008 Mr.
Adams was paid pursuant to an employment agreement entered into on February 16, 2006. Mr. Adams is
the founder of Adams Golf and its former Chief Executive Officer. Mr. Adams has been Chairman of
the Board of Adams Golf since its inception. Accordingly, the Compensation Committee and the Board
of Directors, excluding Mr. Adams, agreed that Mr. Adams should be compensated in a different
manner from that of the other non-executive directors of the Company.
Barney Adams Employment Agreement effective 2006 through 2008
The term of Mr. Adams employment agreement began on January 1, 2006 and continued until
December 31, 2008. Mr. Adams received an annual base salary of $254,400 during the term of the
agreement. Mr. Adams served as our non-executive Chairman of the Board of Directors pursuant to
the agreement and performed such duties as would be reasonably expected of a non-executive Chairman
of the Board of Directors of a similarly-sized corporation.
Barney Adams Employment Agreement effective 2009 through 2011
The term of Mr. Adams current employment agreement began on January 1, 2009 and continues
until December 31, 2011, unless earlier terminated. Mr. Adams receives an annual base salary of
$120,000 during the term of the agreement. Mr. Adams serves as our non-
38
executive Chairman of the Board of Directors pursuant to the agreement and performs such duties as
would be reasonably expected of a non-executive Chairman of the Board of Directors of a
similarly-sized corporation.
The agreement may be terminated without cause by us (a termination without cause) at
anytime, by Mr. Adams (a termination without good reason) upon delivery of 60 days written
notice, or by the mutual agreement of Mr. Adams and us. We can terminate Mr. Adams for cause if
Mr. Adams (a) deliberately and intentionally breaches any material provision of the agreement
without curing such a breach within 30 days of written notice of the breach; (b) deliberately and
intentionally engages in gross misconduct that is materially harmful to our best interests; or (c)
is convicted of a felony or crime involving moral turpitude, fraud or deceit. Mr. Adams can
terminate his agreement for good reason upon delivery of 30 days written notice if we (a)
materially breach any provision or fail to perform any covenant of the agreement without curing
such breach or failure to perform within 30 days of written notice of the breach or failure to
perform; (b) substantially reduce Mr. Adams title, position, reporting requirements,
responsibilities or duties, which is not be remedied within 30 days notice from Mr. Adams; (c)
reduce Mr. Adams base compensation; (d) fail to obtain a written agreement from any successor to
assume the obligations of this agreement five days before a merger, consolidation or sale of all or
substantially all of our assets; or (e) deliver to Mr. Adams written notice of our approval for Mr.
Adams to tender his resignation with good reason.
In the event that either we terminate the employment agreement without cause or Mr. Adams
terminates for good reason, then Mr. Adams will be entitled to receive his annual base salary for a
period of one year after such termination plus any accrued but unpaid base salary as of the date of
such termination.
The Compensation Committee determined that Mr. Adams compensation was not only consistent
with the compensation philosophy and objectives of Adams Golf but comparable to companies with
similar revenues in similar industries. Adams Golf updated the data from a study done by Mercer in
2007 to analyze the compensation practices for similar non-executive chairpersons and presented
such analysis to the Compensation Committee prior to finalizing the terms of Mr. Adams
compensation. Although Mr. Adams compensation is subject to the terms of his agreement, the
Compensation Committee may periodically review the terms of his compensation arrangements to
confirm that it continues to be consistent with Adams Golfs compensation philosophy and
objectives, and comparable to current compensation for non-executive chairpersons within Adams
Golfs industry.
39
The following table shows the potential payments upon termination or a change in control of the
Company for Mr. Adams:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Good |
|
|
|
|
|
|
|
|
|
|
Resig- |
|
|
|
|
|
Reason |
|
|
|
|
|
|
|
|
|
|
nation |
|
Without |
|
Termi- |
|
|
|
|
|
|
For Cause |
|
Without |
|
Cause |
|
nation |
|
|
|
|
Executive |
|
Termi- |
|
Good |
|
Termi- |
|
(Change-in- |
|
|
|
|
Benefits |
|
nation |
|
Reason |
|
nation |
|
Control) |
|
Disability |
|
Death |
and Payments |
|
on |
|
on |
|
on |
|
on |
|
on |
|
on |
Upon Separation |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
|
3/13/09 |
Compensation: |
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|
|
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|
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|
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Base Salary |
|
|
|
|
|
|
|
|
|
|
120,000 |
(1) |
|
$ |
120,000 |
(1) |
|
$ |
120,000 |
(2) |
|
$ |
120,000 |
(1) |
Expenses |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
Performance
Bonus |
|
|
|
|
|
|
|
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|
|
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Benefits &
Perquisites: |
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Health and
Welfare
Plans |
|
|
|
|
|
|
|
|
|
|
18,167 |
(3) |
|
|
18,167 |
(3) |
|
|
|
|
|
|
|
|
Life
Insurance
Benefits |
|
|
|
|
|
|
|
|
|
|
6,995 |
(4) |
|
|
6,995 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
An additional sum equal to accrued but unpaid base salary would also be payable to Mr.
Adams |
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(2) |
|
Reflects the total amount to be paid to Mr. Adams including disability payments. |
|
(3) |
|
Reflects the estimated lump-sum present value of all future costs which will be paid on
behalf of Mr. Adams under the Companys health
and welfare benefit plans. |
|
(4) |
|
Reflects the estimated lump-sum present value of the cost of coverage for life insurance
policies provided by the Company to Mr. Adams. |
40
STOCK OWNERSHIP
Beneficial Ownership of Certain Stockholders, Directors and Executive Officers
This table shows, as of March 31, 2009, the beneficial ownership of Adams Golf common stock by
(1) each person known to us to be the beneficial owner of more than 5% of our common stock; (2)
each director and nominee for director; (3) each named executive officer set forth in the Summary
Compensation Table on page 30; and (4) all directors and executive officers as a group. The
address of each executive officer and director is c/o Adams Golf, Inc., 2801 E. Plano Parkway,
Plano, Texas 75074.
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Amount and Nature of Common Stock Beneficially Owned (1) |
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Shares Subject to |
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|
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|
Options or |
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|
|
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|
|
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Restricted Shares |
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|
|
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|
|
|
Which Are or |
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|
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|
|
Will Become |
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Shares Owned |
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Exercisable |
|
Total |
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|
|
|
as of |
|
Prior to May 31, |
|
Beneficial |
|
Percent of |
Name of Beneficial Owners |
|
March 31, 2009 |
|
2009 (2) |
|
Ownership |
|
Class (3) |
Certain Persons |
|
|
|
|
|
|
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|
|
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|
|
|
|
SJ Strategic Investments LLC (5) |
|
|
2,236,596 |
|
|
|
1,136 |
|
|
|
2,237,732 |
|
|
|
34.4 |
% |
Roland E. Casati (7) |
|
|
459,650 |
|
|
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0 |
|
|
|
459,650 |
|
|
|
7.1 |
% |
Directors and Named
Executive Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
B.H. (Barney) Adams (8) |
|
|
502,978 |
|
|
|
0 |
|
|
|
502,978 |
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|
|
7.8 |
% |
Russell L. Fleischer |
|
|
0 |
|
|
|
9,943 |
|
|
|
9,943 |
|
|
|
|
* |
John M. Gregory (6) |
|
|
2,236,596 |
|
|
|
1,136 |
|
|
|
2,237,732 |
|
|
|
34.4 |
% |
Joseph R. Gregory (4) |
|
|
2,236,596 |
|
|
|
1,136 |
|
|
|
2,237,732 |
|
|
|
34.4 |
% |
Mark R. Mulvoy |
|
|
250 |
|
|
|
13,068 |
|
|
|
13,318 |
|
|
|
|
* |
Robert D. Rogers (9) |
|
|
1,250 |
|
|
|
13,068 |
|
|
|
14,318 |
|
|
|
|
* |
Oliver G. (Chip) Brewer III |
|
|
245,219 |
|
|
|
527,696 |
|
|
|
772,915 |
|
|
|
11.0 |
% |
Eric T. Logan |
|
|
45,080 |
|
|
|
21,875 |
|
|
|
66,955 |
|
|
|
1.1 |
% |
All Directors and Named Executive Officers
as a Group (8 persons) |
|
|
3,031,373 |
|
|
|
586,786 |
|
|
|
3,618,159 |
|
|
|
51.0 |
% |
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. |
|
(2) |
|
Shares of common stock subject to options that are presently exercisable or exercisable within 60 days of March 31, 2009 are deemed
to be beneficially owned by the person holding such options for the purpose of computing the beneficial ownership of such person, but
are not treated as outstanding for the purpose of computing the beneficial ownership of any other person. |
|
(3) |
|
Applicable percentage of ownership is based on 6,508,304 voting shares of common stock outstanding on March 31, 2009. |
|
(4) |
|
Includes 1,116,923 shares owned by SJ Strategic Investments LLC. Mr. Joseph Gregorys brother, John Gregory, is the managing member
of SJ Strategic Investments LLC. Mr. Joseph Gregory has disclaimed beneficial ownership of the shares owned by SJ Strategic
Investments |
|
(5) |
|
Includes 1,119,673 shares owned by Mr. Joseph R. Gregory. Mr. John Gregory is the brother of Joseph Gregory. Mr. John Gregory has
disclaimed beneficial ownership of the shares owned by Joseph R. Gregory. The address for SJ Strategic Investments LLC is 340
Edgemont Avenue, Suite 200, Bristol, TN 37620 |
|
(6) |
|
Includes 1,116,923 shares owned by SJ Strategic Investments LLC and 1,119,673 shares owned by Mr. Joseph R. Gregory. Mr. John Gray
is the managing member of SJ Strategic Investments LLC. Mr. Joseph Gregory is the brother of Mr. John Gregory. Mr. John Gregory has
disclaimed beneficial ownership of the shares owned by Mr. Joseph Gregory |
|
(7) |
|
The address for Mr. Casati is Continental Offices, Ltd., 2700 River Road, Suite 211, Des Plaines, IL 60018. |
|
(8) |
|
Includes 502,978 shares Mr. Adams holds jointly with Jackie Adams, his spouse. |
|
(9) |
|
Represents shares of common stock held by a trust for which Mr. Rogers has sole voting and dispositive power over the shares held by
the trust. |
41
Section 16(a) Beneficial Ownership Reporting Compliance
Under the U.S. securities laws, directors, certain executive officers and persons holding more
than 10% of Adams Golfs common stock must report their initial ownership of the common stock, and
any changes in that ownership, to the Securities and Exchange Commission. The Securities and
Exchange Commission has designated specific due dates for these reports. Based solely on our
review of copies of the reports filed with the Securities and Exchange Commission and written
representations of our directors and executive officers, we believe all persons subject to
reporting filed the required reports on time in 2008.
42
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected KBA Group LLP as the Companys independent registered public
accounting firm to examine the consolidated financial statements of the Company for fiscal year
2009. The Board of Directors seeks an indication from stockholders of their approval or
disapproval of the Audit Committees appointment of KBA Group as independent registered public
accounting firm (auditors) for fiscal year 2009.
KBA Group has been our independent auditors since 2005, and no relationship exists, other than
the usual relationship between auditor and client. Representatives of KBA Group will be available
to respond to questions at the Annual Meeting of Stockholders and will have the opportunity to make
a statement at the Annual Meeting of Stockholders if they desire to do so.
Audit and Non-Audit Fees
|
|
|
|
|
|
|
|
|
Service Provided |
|
Fiscal 2008 |
|
|
Fiscal 2007 |
|
Audit Fees (1) |
|
|
|
|
|
|
|
|
Annual Audit |
|
$ |
128,100 |
|
|
$ |
93,135 |
|
|
|
|
|
|
|
|
|
|
Audit Related Fees |
|
|
|
|
|
|
|
|
401(k) Audit |
|
|
9,450 |
|
|
|
9,450 |
|
|
|
|
|
|
|
|
|
Total Fees |
|
$ |
137,550 |
|
|
$ |
102,585 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees consisted of audit work performed in the preparation of the
financial statements and in the assessment of internal controls over
financial reporting as required by Section 404 of the Sarbanes-Oxley
Act, as well as work that generally only the independent auditor can
reasonably be expected to provide, such as statutory audits. |
Pre-Approval Policies
As required by the Sarbanes-Oxley Act, all audit and non-audit services performed by
independent registered public accounting firms must be pre-approved by Adams Golfs Audit Committee
unless the pre-approval provision is waived in applicable securities rules and regulations of the
Securities Exchange Commission. The Audit Committee may delegate to one or more members of the
Committee the authority to grant pre-approval of non-audit services. The decision of any member to
whom such authority is delegated to pre-approve non-audit services will be presented to the full
Audit Committee for its approval at its next scheduled meeting.
During fiscal year 2008, the Audit Committee approved 100% of the total fees that were paid to
KBA Group LLP.
43
Board of Directors Recommendation
Stockholder ratification of the selection of KBA Group LLP as our independent registered
public accounting firm for the year ending December 31, 2009 is not required by our bylaws or
otherwise. We are submitting the selection of KBA Group to the stockholders for ratification as a
matter of good corporate practice. In the event that the stockholders fail to ratify the selection,
the Audit Committee will reconsider whether or not to continue to retain that firm. Even if the
selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a
different independent registered public accounting firm at any time during the year if the Audit
Committee determines that such a change could be in the best interest of our stockholders.
The Companys Board of Directors recommends that you vote FOR Proposal No. 2.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Companys financial reporting process on behalf of the Board
of Directors. Management has the primary responsibility for the financial statements and the
reporting process, including the system of internal controls.
In this context, the Committee has met and held discussions with management and the
independent registered public accounting firm regarding the fair and complete presentation of the
Companys results and the assessment of the Companys internal control over financial reporting.
The Audit Committee has discussed significant accounting policies applied to the Company in its
financial statements, as well as alternative treatments. Management represented to the Audit
Committee that the Companys consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, and the Audit Committee
has reviewed and discussed the consolidated financial statements with management and the
independent registered public accounting firm. The Audit Committee discussed with the independent
registered public accounting firm matters required to be discussed by Statement on Auditing
Standards No. 61, as amended (Communications with Audit Committees).
In addition, the Audit Committee has discussed with the independent registered public
accounting firm the auditors independence from the Company and its management, including the
matters in the written disclosures required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). The Audit Committee has received the written
disclosures and the letter from independent registered public accounting firm required by
applicable requirements of the Public Company Accounting Oversight Board regarding the independent
accountants communications with the audit committee concerning independence. The Audit Committee
also had considered whether the independent registered public accounting firms provision of
non-audit services to the Company is compatible with the auditors independence. The Audit
Committee has concluded that the independent registered public accounting firm is independent from
the Company and its management.
44
The Audit Committee reviewed and discussed Company policies with respect to risk assessment
and risk management.
The Audit Committee discussed with the Companys internal auditor and independent registered
public accounting firm the overall scope and plans for their respective audits. The Audit
Committee met with the internal auditor and the independent registered public accounting firm, with
and without management present, to discuss the result of their examinations, the evaluations of the
Companys internal controls, and the overall quality of the Companys financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended
to the Board of Directors, and the Board has approved, that the audited financial statements be
included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008, for
filing with the Securities and Exchange Commission. The Committee has selected KBA Group LLP as
the Companys independent registered public accounting firm for fiscal 2009.
Submitted by:
Russell L. Fleischer
Mark R. Mulvoy
Robert D. Rogers
Members of the Audit Committee
45
ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS
Our By-laws provide that stockholder proposals and director nominations by stockholders
may be made in compliance with certain advance notice, informational and other applicable
requirements. With respect to stockholder proposals (concerning matters other than the nomination
of directors), the individual submitting the proposal must file a written notice with the secretary
of Adams Golf c/o Adams Golf, Inc. at 2801 E. Plano Parkway, Plano, Texas 75074 setting forth
certain information about the stockholder and all persons acting in concert with him or her,
including the following information:
|
|
|
a brief description of the business desired to be brought before the meeting and the
reasons for conducting such business at the Annual Meeting; |
|
|
|
|
the names and addresses of the supporting stockholders; |
|
|
|
|
the class and number of shares of our stock that are beneficially owned by such persons;
and |
|
|
|
|
any material interest of such persons in the matter presented. |
The notice must be delivered to the secretary (1) at least 90 days before any scheduled
meeting or (2) if less than 100 days notice or prior public disclosure of the meeting is given, by
the close of business on the 10th day following the giving of notice or the date public
disclosure was made, whichever is earlier.
Stockholder Nomination Procedures
A stockholder may recommend a nominee to become a director of Adams Golf by giving the
secretary (at the address set forth above) a written notice setting forth certain information,
including:
|
|
|
the name, age, business and residence address of the person intended to be nominated; |
|
|
|
|
a representation that the nominating stockholder is in fact a holder of record of Adams
Golf common stock entitled to vote at the meeting and that he or she intends to be present
at the meeting to nominate the person specified; |
|
|
|
|
a description of all arrangements between the nominating stockholder, the nominee and
other persons concerning the nomination; |
|
|
|
|
any other information about the nominee that must be disclosed in the proxy
solicitations under Rule 14(a) of the Securities Exchange Act of 1934, as amended; and |
|
|
|
|
the nominees written consent to serve, if elected. |
46
Such nominations must be made pursuant to the same advance notice requirements for
stockholder proposals set forth in the preceding paragraph.
We currently plan to hold our annual meetings on the third Wednesday in May of each
year. Accordingly, our 2010 Annual Meeting of Stockholders is currently scheduled for May 19,
2010, but we reserve the right to change the date in the future. Unless a change to this scheduled
meeting date occurs, in order to be properly brought before the 2010 Annual Meeting, a
stockholders notice of a matter the stockholder wishes to present, or the person or persons the
stockholder wishes to nominate as a director, must be must be received at Adams Golfs principal
executive offices no later than the close of business on February 18, 2010.
The requirements described above do not supersede the requirements or conditions established
by the Securities and Exchange Commission for stockholder proposals to be included in Adams Golfs
proxy materials for a meeting of stockholders. Stockholders who, in accordance with SEC Rule
14a-8, wish to present proposals for inclusion in the proxy materials to be distributed in
connection with our 2010 Annual Meeting Proxy Statement must submit their proposals so that they
are received at Adams Golfs principal executive offices no later than the close of business on
December 16, 2009.
Copies of our By-laws are available upon written request made to the secretary of Adams Golf
at the above address. The Chairman of the meeting may refuse to bring before a meeting any
business not brought in compliance with applicable law and our By-laws.
Communications with Directors
Our stockholders may communicate directly with members of our Board of Directors. For direct
communication with any member of Adams Golfs Board, please send your communication in a sealed
envelope addressed to the applicable director inside of another envelope addressed to Mr. Eric
Logan, Chief Financial Officer, c/o Adams Golf, 2801 E. Plano Parkway, Plano, Texas, 75074. Mr.
Logan will forward such communication to the indicated director.
47
2801 E. Plano Parkway
Plano, Texas 75074
(972) 673-9000
Directions to Adams Golfs Annual Meeting of Stockholders
From DFW Airport: Proceed to North exit from terminal. After the tollbooth, stay left to
enter Hwy. 121 North. Stay right on Hwy. 121 for a short distance to Hwy. 635 East exit. Follow
Hwy. 635 east to Hwy. I-75 North. Follow I-75 north approximately six miles to the Plano Parkway
exit. Turn right on Plano Parkway and follow approximately two miles through the Jupiter Road
intersection. Adams Golf is located on the left (north) side of E. Plano Parkway.
From Love Field: Exit Love Field and turn left on Mockingbird Lane. Proceed to North Dallas
Tollway, go left (north) to the Hwy. 635 exit. Follow Hwy. 635 east to Hwy. I-75 North. Follow
I-75 north approximately six miles to the Plano Parkway exit. Turn right on Plano Parkway and
follow approximately two miles through the Jupiter Road intersection. Our offices are located on
the left (north) side of E. Plano Parkway.
Annual Report
The 2008 Annual Report accompanies this Proxy Statement. We will provide without charge upon
written request, to any person receiving a copy of this proxy statement, a copy of Adams Golfs
2008 Form 10-K annual report, including the audited consolidated financial statements and the
financial statement schedules thereto. These requests should be addressed to Mr. Eric Logan, Chief
Financial Officer, c/o Adams Golf, Inc., 2801 E. Plano Parkway, Plano, Texas 75074 (972-673-9000).
We are delivering one copy of this Proxy Statement and the accompanying Annual Report to
households even when multiple stockholders share the same address unless we have received
instructions to the contrary from one of these stockholders. Upon a written or verbal request
from a stockholder at a shared address, we will deliver a separate copy of this proxy statement
and Annual Report, including the audited consolidated financial statements and the financial
statement schedules thereto, and will deliver separate copies of any future Proxy Statement or
Annual Report if desired. Such a request may be made by contacting Mr. Eric Logan, Chief
Financial Officer, c/o Adams Golf, Inc., 2801 E. Plano Parkway, Plano, TX 75074 (972-673-9000).
The Board of Directors e r co mmends a vote FOR It ems 1 and 2 and n i the discretion of t h e
proxies upon such other matters as may properly come before t h e meeting or any adjournment h t
ereof. Please mark your votes as indic ate d n i X this example FOR WI THH OLD * E XCEPTIONS ALL
FOR ALL FOR AGA INST ABS TAIN 1. Election of Directors 2. DirectorsB Proposal Ratify t he
appointment of KBA Group Nominees: LLP as t h e CompanyBs Independent Auditors o f r 2009. 01
Oliver G. C ( hip) Brewer I I and 02 Russell L. Fleischer C ( lass I directors o t serve until t h
e 2012 Annual Meeting) I n h t eir discretion, t h e proxies are authorized o t vote upon such
other matters as may (IN STRUCTIONS: To withhold authority t o vote for any individual properly
come before t h e meeting or any adjournment h t ereof. nominee, mark the Exceptions box above
and write that nominees name n i the space provided below.) *Exceptions Mark Here o f r Addre ss
Will Atte nd Meeting Change or Comments YES SEE REVERSE Signature Signature Date NOTE: Please sign
as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full tit le as such. FOLD AND DETACH HERE ADAMS
GOLF, N I C. Im portant notic e regarding the n I ternet availability of proxy materials for the
Annual Meetin g of shareholders The Proxy Statement and the 2008 Annual Report o t Stockholders are
available at: http:/ bnymellon.mobular.net/bnymellon/adgf 48237 |
ADAMS GOLF, INC. PROXY/VOTING INSTRUCTION CARD This Proxy is solic ited on behalf of the Board of
Directors of Adams Golf, Inc. for the Annual Meeting of Stockhold ers on May 28, 2009 The
undersigned appoin ts Oliver G. Brewer II and Eric T. Logan, and each of them, with full power of
substitu t i on n i each, h t e proxies of t h e undersigned, t o represent h t e undersigned and
vote all shares of Adams Golf, I n c. Common Stock which the undersigned may be entit le d to vote
at the Annual Meetin g of Stockhold ers to be held on May 28, 2009, and at any adjournment or
postponement t h ereof, as n i dicated on the reverse side. This proxy, when properly executed,
will be vote d in t h e manner directed herein by t h e undersigned stockholder. If no direction is
given, t h is proxy will be voted FOR proposals 1 and 2 and n i the discreti on of t h e proxies
upon such other matters as may properly come before t h e meeting or any adjournment thereof. If
you have writ ten in h t e belo w space, please mark the comments notification box on h t e reverse
side. BNY ME LLON SHAREOWNER SERVICES Address Change/Comments P.O . BOX 3550 SOUTH HACKENSACK, NJ
07606-9250 (Mark the corresponding box on the reverse sid e) (Conti nued and to be marked, dated
and signed, on the other side) FOLD AND DETACH HERE You can now access your ADAMS GOLF, INC.
account online. Access your ADAMS GOLF, INC. stockholder account online via n I vestor
ServiceDirect® (ISD). The r t ansfer agent for ADAMS GOLF, N I C. now makes t i easy and convenient
to get current n i formation on your stockholder account. View account statu s View payment
history o f r dividends View certific ate his tory Make address changes View book-entry n i o
f rmati on Obtain a duplic ate 1099 tax form Establis h/change your PIN Vis it us on the web at
http://w ww.bnymellon.com/shareowner/isd For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time www.bnymellon.com/shareowner/is d In vestor ServiceDirect¤ Avail
able 24 hours per day, 7 days per week TOLL FREE NUMBER: 1-800-370-1163 Choose MLinkSM o f r fast,
easy and secure 24/7 online access to your f u u t re proxy materials, investment plan statements,
t a x documents and more. Simply lo g on o t Investor ServiceDirect® at www.bnymel
on.com/shareowner/isd where step-b y-step n i structions wil prompt you through enrollment. 48237 |