Table of Contents
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14. | |||
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. 1)
| 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 |
The Hallwood Group, Incorporated
(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):
| þ No fee required. | |
| o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| 1) Title of each class of securities to which transaction applies: |
| 2) Aggregate number of securities to which transaction applies: |
| 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| 4) Proposed maximum aggregate value of transaction: |
| 5) Total fee paid: |
| o Fee paid previously with preliminary materials. |
| o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| 1) Amount Previously Paid: |
| 2) Form, Schedule or Registration Statement No.: |
| 3) Filing Party: |
| 4) Date Filed: |
TABLE OF CONTENTS
Table of Contents
THE
HALLWOOD GROUP INCORPORATED
NOTICE OF
ANNUAL MEETING
Dear
Hallwood Group Stockholder:
On behalf of the board of directors, you are cordially invited
to attend the Annual Meeting of Stockholders of The Hallwood
Group Incorporated (the “Company”). The annual meeting
will be held on Wednesday, June 20, 2007, at 2:00 p.m.
local time, at the offices of the Company, located at 3710
Rawlins, Suite 1500, Dallas, Texas 75219.
At the annual meeting we will:
1. Elect two directors to hold office for three years
each; and
2. Transact any other business properly presented at the
meeting.
Only stockholders of record at the close of business on Friday,
May 11, 2007, are entitled to notice of and to vote at the
annual meeting.
By order of the Board of Directors
MELVIN J. MELLE
Secretary
May 21, 2007
Your board of directors urges you to vote upon the matters
presented. If you are unable to attend the meeting, please
complete, sign, date and promptly return the enclosed proxy in
the envelope provided. It is important for you to be represented
at the meeting. Executing your proxy will not affect your right
to vote in person if you are present at the annual meeting.
Table of Contents
THE
HALLWOOD GROUP INCORPORATED
3710 Rawlins, Suite 1500
Dallas, Texas 75219
PROXY
STATEMENT
FOR
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 20, 2007
This proxy statement and the accompanying proxy are first being
mailed on or about May 21, 2007. The accompanying proxy is
solicited by the board of directors of the Company.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
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1.
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Q: | Who is entitled to vote? | ||
| A: | Stockholders of record at the close of business on Friday, May 11, 2007, the ‘‘record date,” are entitled to vote at the annual meeting. | |||
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2.
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Q: | What may I vote on? | ||
| A: | You may vote on: | |||
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(1) the election of two
nominees to serve on the board of directors for three years
each; and
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(2) any other business
properly presented at the meeting.
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3.
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Q: | How do I vote? | ||
| A: | Sign and date each proxy card you receive and return it in the prepaid envelope. If you return your signed proxy card but do not mark the boxes showing how you wish to vote, your shares will be voted FOR the election of the nominees for director, and in the proxies’ discretion with respect to any other matter properly presented at the meeting. Abstentions, broker non-votes and proxies directing that the shares are not to be voted will not be counted as a vote in favor of the nominees. | |||
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4.
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Q: | How can I revoke my proxy? | ||
| A: | You have the right to revoke your proxy at any time by: | |||
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(1) notifying our corporate
secretary in writing before the meeting;
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(2) voting in person; or
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(3) returning a later-dated
proxy card before the meeting.
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| Attending the meeting is not sufficient to revoke your proxy unless you also take one of the actions above. | ||||
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5.
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Q: | How does the board of directors recommend I vote on the proposal to elect the nominees for director? | ||
| A: | Your board of directors recommends that you vote FOR both nominees for director. | |||
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6.
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Q: | How many shares can vote at the annual meeting? | ||
| A: | As of the record date, there were 1,516,711 shares of common stock outstanding and entitled to vote at the annual meeting. You are entitled to one vote for each share of common stock you hold. | |||
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7.
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Q: | What is a ‘‘quorum?” | ||
| A: | A ‘‘quorum” is a majority of the outstanding shares. A quorum may be present at the meeting or represented by proxy. There must be a quorum for the meeting to be valid. If you submit a properly executed proxy card, even if you abstain from voting, you will be considered part of the quorum. In addition, broker non-votes will be counted toward determining the presence of a quorum. | |||
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8.
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Q: | What vote is required to elect the directors? | ||
| A: | A plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors is necessary to elect the nominees for director. Abstentions and shares held by brokers that have been designated as not voted will be counted for purposes of determining a quorum, but will not be counted as votes cast in favor of the election of directors. Mr. Gumbiner, our Chairman of the Board, beneficially owns approximately 66.0% of the outstanding shares and, therefore, will determine the outcome of the election. He has indicated that he intends to vote his shares in favor of the two nominees. | |||
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Table of Contents
SOLICITATION
OF PROXIES
The cost of preparing, assembling, printing and mailing this
proxy statement and the enclosed proxy form and the cost of
soliciting proxies related to the annual meeting will be borne
by the Company. The Company will request banks and brokers to
solicit their customers who are beneficial owners of shares of
common stock listed of record in names of nominees, and will
reimburse those banks and brokers for the reasonable
out-of-pocket
expenses of the solicitation. The original solicitation of
proxies by mail may be supplemented by telephone, telegram and
personal solicitation by officers and other regular employees of
the Company and its subsidiaries, but no additional compensation
will be paid to those individuals on account of their
activities. In addition, the Company has retained
Morrow & Co., Inc. to assist in the solicitation of
proxies, for which it will be paid a fee of $2,500 plus
reimbursement of reasonable
out-of-pocket
expenses. We estimate that Morrow & Co.’s total
fees and expenses will be approximately $5,000.
ELECTION
OF DIRECTORS
The Company’s board of directors is divided into three
classes serving staggered three-year terms. At the annual
meeting, you will elect two directors to serve for three years
each.
The individuals named on the enclosed proxy card intend to vote
for the election of the nominees listed below, unless you direct
them to withhold your vote. Each of the nominees has indicated
that he is able and willing to serve as a director. However, if
for some reason either of the nominees is unable to stand for
election or becomes unwilling to serve for good cause, the
individuals named as proxies may vote for a substitute
nominee(s). The nominees for director must be elected by a
plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the
election of directors.
Below are the names and ages of the nominees and of the
directors whose terms of office will continue after the annual
meeting, the year in which each director was first elected as a
director of the Company, their principal occupations or
employment for at least the past five years and other
directorships they hold.
Nominees
for Election for a Three-Year Term Ending with the 2010 Annual
Meeting
| J. Thomas Talbot | Mr. Talbot, age 71, has served as a director since 1981. He is the owner of The Talbot Company. He also has been a partner in Pacific Management Group, an asset management firm, since 1986. He was a partner of Shaw & Talbot, a commercial real estate investment and development company, from 1975 until August 2003. He served as a director of Fidelity National Financial, Inc. from 1990 to September 2003. He served as a director of California Coastal Communities, Inc. from August 1993 to July 2004. | |
| A. Peter Landolfo | Mr. Landolfo, age 58, has served as a director since May 2004. Since December 2005, he has been a partner in APL Consulting, Inc., a consulting company to the financial printing industry. Since 1992, he has been President of Dallas Design Concepts, Inc., a specialty gift company. He served in various capacities, most recently as Senior Vice President, with Bowne of Dallas, LLP, a financial printer in Dallas, Texas, from 1974 to December 2005. |
Director
Continuing in Office Until the 2008 Annual Meeting
| Charles A. Crocco, Jr. | Mr. Crocco, age 68, has served as a director since 1981. He is an attorney, who was Counsel to Crocco & De Maio, P.C. through March 2003. He is a Securities Arbitrator in proceedings brought under the auspices of the National Association of Securities Dealers. He also served as a director of First Banks America, Inc., a bank holding company, from 1989 until December 2002. |
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Table of Contents
Directors
Continuing in Office Until the 2009 Annual Meeting
| Anthony J. Gumbiner | Mr. Gumbiner, age 62, has served as a director and Chairman of the Board since 1981, and Chief Executive Officer of the Company since 1984. He also served as President and Chief Operating Officer from December 1999 to March 2005. He also serves as a director and Chairman of the board of directors of Hallwood Energy Management, LLC, the general partner of Hallwood Energy, L.P. (“Hallwood Energy”). He served as a director of Hallwood Realty, LLC, the general partner of Hallwood Realty Partners, L.P. (“HRP”) and its predecessor until HRP was sold in July 2004. Mr. Gumbiner was a director and officer of Hallwood Energy Corporation (“HEC”) until its sale in December 2004 and of Hallwood Energy III, L.P. (“HE III”) until its sale in July 2005. Mr. Gumbiner is also a solicitor of the Supreme Court of Judicature of England. | |
| M. Garrett Smith | Mr. Smith, age 45, has served as a director since November 2004. He has been a general partner in Spinnerhawk Natural Resources Fund, L.P., a long-short energy hedge fund, since February 2005. From December 2000 to February 2005, he was a Principal with BP Capital, LLC, a Dallas, Texas-based investment firm specializing in the oil and gas industry, and as a General Partner and Portfolio Manager of BP Capital Energy Equity Fund, an energy hedge fund. From March to December 2000, Mr. Smith was the Chief Financial Officer of Stonebridge Technologies. From 1989 to 2000, Mr. Smith held a number of financial management positions, including Executive Vice President and Chief Financial Officer, of Pioneer Natural Resources Company, an exploration and production company. |
Except as indicated above, neither the nominees nor the
continuing directors hold a directorship in any company with a
class of securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended, or subject to the
requirements of Section 15(d) of the Securities Exchange
Act or any company registered as an investment company under the
Investment Company Act of 1940, as amended. Each of
Messrs. Crocco, Landolfo, Smith and Talbot are independent
directors under the standards of the American Stock Exchange,
upon which the Company’s Common Stock is listed for
trading. In determining the independence of Messrs. Crocco
and Talbot, the Board considered that each of them have invested
in Hallwood Energy on the same terms as other investors.
No family relationships exist between the nominees, the
directors and the executive officers.
The board of directors unanimously recommends a vote
“FOR” the election of the nominated individuals.
Committees
and Meetings of the Board of Directors
Messrs. Crocco (Chairman), Landolfo and Smith served as
members of the Company’s audit committee during the year
ended December 31, 2006. The audit committee met five times
during 2006 and was charged with the responsibility of reviewing
the annual audit report and the Company’s accounting
practices and procedures, and recommending to the board of
directors the independent registered public accounting firm to
be engaged for the following year.
The board of directors does not have a standing nominating or
compensation committee. Because Mr. Gumbiner owns more than
50% of the Company’s voting power, it is a “controlled
company” under the rules of the American Stock Exchange and
is not required, nor does the Board believe it is necessary, to
have separate nominating and compensation committees.
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Table of Contents
During the year ended December 31, 2006, the board of
directors held five meetings. Each director attended at least
75% of (1) the total number of meetings held by the board
of directors, and (2) the total number of meetings held by
all committees of the board of directors on which he served.
The Company does not have a policy with respect to attendance by
the directors at the annual meetings of stockholders. Last year
all members of the board of directors attended the annual
meeting. Each member of the board of directors has indicated his
intent to attend the 2007 Annual Meeting.
Communication
With Directors
The board of directors does not provide a formal process by
which stockholders may send communications to the board of
directors. The Company is a “controlled company” under
the rules of the American Stock Exchange and 66.0% of its voting
securities are owned by a single stockholder. Consequently, the
board of directors does not believe it is necessary to formalize
such a communication process. However, stockholders may
communicate with the Company or request information at any time
by contacting Mr. Melvin J. Melle, Vice President, Chief
Financial Officer and Secretary at 800.225.0135.
Code of
Business Conduct and Ethics
The board of directors has adopted a Code of Business Conduct
and Ethics that applies to all employees, including those
officers responsible for financial matters. The Code of Business
Conduct and Ethics may be accessed through the Company’s
website at www.hallwood.com. Any amendments to or waivers
of the Code of Business Conduct and Ethics will be promptly
disclosed on the Company’s website. Any stockholder may
request a printed copy of the Code of Business Conduct and
Ethics by contacting Mr. Melvin J. Melle, Vice President,
Chief Financial Officer and Secretary at 800.225.0135.
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Table of Contents
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
OWNERS AND MANAGEMENT
The following table sets forth information as to the beneficial
ownership of shares of the Company’s common stock as of the
close of business on the record date (1) for any person or
“group,” as that term is used in Section 13(d)(3)
of the Securities Exchange Act, who, or which the Company knows,
owns beneficially more than 5% of the outstanding shares of the
Company’s common stock; (2) for the continuing
directors and the nominees for director; and (3) for all
directors and executive officers as a group. Unless otherwise
noted, the address of each person listed below is 3710 Rawlins,
Suite 1500, Dallas, Texas 75219.
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Amount and Nature |
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of Beneficial |
Percentage |
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Name and Address of Beneficial Owner
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Ownership(1) | of Class(1) | ||||||
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Anthony J. Gumbiner
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1,001,575 | (2) | 66.0 | % | ||||
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Advisory Research, Inc.
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123,001 | (3) | 8.1 | |||||
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Charles A. Crocco, Jr.
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14,846 | (4) | 1.0 | |||||
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Melvin J. Melle
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12,523 | (5) | 0.8 | |||||
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J. Thomas Talbot
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5,000 | (6) | 0.3 | |||||
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M. Garrett Smith
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— | (7) | — | |||||
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A. Peter Landolfo
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— | (7) | — | |||||
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William L. Guzzetti
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— | (8) | — | |||||
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Amber M. Brookman
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— | (9) | — | |||||
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All directors and executive
officers as a group (8 persons)
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1,033,944 | 67.8 | ||||||
| (1) | Assumes, for each person or group listed, the exercise of all stock options or other rights held by that person or group that are exercisable within 60 days, according to Rule 13d-3(d)(1)(i) of the Securities Exchange Act, but the exercise of none of the derivative securities owned by any other holder of options. Unless otherwise noted, the address of each individual listed above is 3710 Rawlins, Suite 1500, Dallas, Texas 75219. | |
| (2) | Shares held indirectly through Hallwood Family (BVI) L.P., a limited partnership controlled by Mr. Gumbiner and members of his family. 175,000 of these shares are pledged to a bank in connection with a loan agreement. Mr. Gumbiner also holds a 4.26% profits interest in Hallwood Energy. | |
| (3) | This information is derived from a Schedule 13G filed by Advisory Research, Inc. on February 21, 2007. Advisory Research Inc.’s reported address is 180 North Stetson St., Suite 5500, Chicago, Illinois 60601. | |
| (4) | Mr. Crocco is an investor in Hallwood Energy. | |
| (5) | Includes currently exercisable options to purchase 9,000 shares of common stock. Mr. Melle is an investor in Hallwood Energy. | |
| (6) | Mr. Talbot is an investor in Hallwood Energy. | |
| (7) | Messrs. Smith and Landolfo do not own any shares or hold any options to purchase shares of the Company. | |
| (8) | Mr. Guzzetti does not own any shares or hold any options to purchase shares of the Company. He is an investor and holds a 4.26% profits interest in Hallwood Energy. | |
| (9) | Ms. Brookman does not own any shares or hold any options to purchase shares of the Company. She is an investor in Hallwood Energy. |
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EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The Company is a holding company with interests in textile
products and energy. The Company’s compensation program is
intended to pay competitive salaries and to reward specific
accomplishments through a combination of bonuses or other
compensation depending on each officer’s role in the
Company. Mr. Gumbiner, the Company’s Chief Executive
Officer, and Mr. Guzzetti, the President and Chief
Operating Officer are active in the Company’s corporate
activities and energy investments and oversee the activities of
the textile subsidiary. The Company’s Chief Financial
Officer, Mr. Melle, is responsible for the financial
activities of the Company and oversees the financial activities
of the textile subsidiary. Ms. Brookman is the President
and primarily responsible for the activities of Brookwood
Companies Incorporated (“Brookwood”), the
Company’s textile subsidiary.
The Company’s board of directors, acting in its capacity as
the compensation committee, annually determines the compensation
paid by the Company to its executive officers and bases the
amount of compensation on the board of directors’
determination of the reasonable compensation for each officer.
The members of the board of directors, through their business
experience, are generally aware of prevailing compensation
practices and regularly review and remain informed about the
recent financial and operating experience of the Company. Based
on this experience and review, the board of directors
establishes compensation that it believes to be appropriate for
each officer. In general, a substantial portion of the executive
officers’ compensation from the Company has been paid as
salary, although from time to time the Company has awarded
substantial bonuses upon completion of significant transactions
that provide material benefits to the Company. The board does
not routinely utilize formal surveys, benchmarking or
compensation consultants in making its compensation decisions.
The board considers the executive officers’ input in
determining compensation, but the individual officer does not
participate in the meeting when his or her compensation is
determined.
Mr. Gumbiner’s base compensation is provided through a
consulting agreement originally entered into in 1996 between the
Company and Hallwood Investments Limited (HIL), an entity
associated with Mr. Gumbiner. The Company has from time to
time paid bonuses to Mr. Gumbiner or HIL upon the
completion of significant transactions. The Board did not
consider any changes in the consulting fee paid under this
agreement for 2006, no bonus was paid for 2006 and
Mr. Gumbiner did not receive any equity or long-term
compensation for 2006. In addition to the consulting fee, under
this agreement, the Company reimbursed HIL for business expenses
in providing office space and administrative services, for
travel to and from the Company’s United States office, and
related expenses. During 2006, the Company also reimbursed
Mr. Gumbiner for services, meals and other personal
expenses related to the office separately maintained by
Mr. Gumbiner. At Mr. Gumbiner’s recommendation,
the outside members of the Company’s board of directors
determined in 2006 that the reimbursement for personal expenses
would not continue after November 2006. In addition,
Mr. Gumbiner is a director and officer of Hallwood Energy
in which the Company holds an approximate 25% interest (20%
after consideration of profits interests). As compensation for
Mr. Gumbiner’s services on behalf of Hallwood Energy,
Mr. Gumbiner has a consulting agreement with Hallwood
Energy and Mr. Gumbiner holds a profits interest in
Hallwood Energy. The compensation from Hallwood Energy was
approved by the board of directors of Hallwood Energy.
Mr. Guzzetti’s base compensation is provided through a
salary, which was not changed in 2006. The Company has from time
to time paid bonuses to Mr. Guzzetti upon the completion of
significant transactions. No bonus was paid for 2006. In
addition, Mr. Guzzetti is a director and officer of
Hallwood Energy. As compensation for Mr. Guzzetti’s
services on behalf of Hallwood Energy, Mr. Guzzetti
receives a salary from and holds a profits interest in Hallwood
Energy. The compensation from Hallwood Energy was approved by
the board of directors of Hallwood Energy.
The Board recognizes that Messrs. Gumbiner and Guzzetti
both receive compensation from and hold a profits interest in
Hallwood Energy, but consider that those reward their efforts on
behalf of Hallwood Energy rather than the Company and,
therefore, do not factor those amounts into the appropriate
compensation for their efforts on behalf of the Company.
Mr. Melle receives a salary from the Company, which was not
changed in 2006. The Company has from time to time paid bonuses
to Mr. Melle, but no bonus was paid for 2006.
Mr. Melle also holds options to purchase
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9,000 shares of common stock of the Company. The stock
option plan expired by its terms in 2005, but options
outstanding at the expiration date continue for the remainder of
their original term.
Ms. Brookman’s compensation for 2006 was determined in
accordance with a compensation letter entered into with
Ms. Brookman in 1998. The letter agreement provides for
payment of a salary of $300,000 per year plus an annual
bonus in an amount of the greater of 5% of Brookwood’s
earnings before taxes (with certain adjustments) or a minimum of
$100,000. The bonus was intended to provide an incentive to
Ms. Brookman to increase the earnings of Brookwood. In
addition, the letter agreement provides for a car allowance of
$500 per month. For 2006, the Board did not consider any
changes in Ms. Brookman’s salary or bonus. In 2005 and
2006, a special committee of the board consisting of all of the
outside directors engaged representatives of Ernst &
Young Human Capital as consultants and reviewed compensation
paid to the executives of Brookwood, including
Ms. Brookman. After this review, the Company adopted The
Hallwood Group Incorporated 2005 Long-Term Incentive Plan for
Brookwood Companies Incorporated. The plan was adopted to
encourage employees of Brookwood to increase the value of
Brookwood and to continue to be employed by Brookwood. The
Company awarded Ms. Brookman 1,900 units under the
Plan, which constituted 19% of the total units awarded under the
Plan. In addition, the Company agreed that, if certain members
of Brookwood’s senior management do not have, prior to a
change of control transaction, in the aggregate an equity or
debt interest of at least two percent in the entity with whom
the change of control transaction is completed (exclusive of any
such interest any such individual receives with respect to his
or her employment following the change of control transaction),
then the Company will pay Ms. Brookman an additional
$2,600,000. The number of units and additional cash payment
awarded to Ms. Brookman were determined by the special
committee after discussion with Ms. Brookman. On
March 14, 2007, the Board of Directors of the Company
authorized a change in Ms. Brookman’s bonus, providing
that the minimum bonus Ms. Brookman will receive for any
year, beginning with the year 2007, will be $300,000.
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public corporations for
nonqualifying compensation in excess of $1,000,000 paid to a
senior executive officer in any fiscal year. The Company takes
into account this limitation in making compensation decisions,
but may approve compensation that does not qualify for
deductibility when it believes it is in the best interest of the
Company.
The following tables reflect compensation paid to the
Company’s Chief Executive Officer, Chief Financial Officer
and each of the other executive officers of the Company.
SUMMARY
COMPENSATION TABLE FOR 2006
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Change in |
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Pension |
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Value and |
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Non-Equity |
Nonqualified |
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Incentive |
Deferred |
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Stock |
Option |
Plan |
Compensation |
All Other |
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Name and Principal |
Salary |
Bonus |
Awards |
Awards |
Compensation |
Earnings |
Compensation |
Total |
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Position
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Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
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Anthony J. Gumbiner,
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2006 | 996,000 | (1) | $ | 0 | 0 | 0 | 0 | 0 | 291,200 | (2) | 1,287,200 | ||||||||||||||||||||||||
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Chairman, Chairman and
Chief Executive Officer |
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Melvin J. Melle,
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2006 | 208,333 | 9,240 | (3) | 0 | 0 | 0 | 0 | 5,716 | 223,289 | ||||||||||||||||||||||||||
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Vice President,
Chief Financial Officer and Secretary |
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William L. Guzzetti
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2006 | 312,500 | (4) | 9,240 | (3) | 0 | 0 | 0 | 0 | 2,086 | 323,826 | |||||||||||||||||||||||||
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President and Chief
Operating Officer |
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Amber M. Brookman
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2006 | 317,538 | (5) | 260,782 | (6) | 0 | 0 | 0 | 0 | 8,280 | 586,600 | |||||||||||||||||||||||||
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President and Chief
Executive Officer of Brookwood |
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| (1) | Consists of consulting fees paid by the Company to HIL, an entity associated with Mr. Gumbiner. In addition, Mr. Gumbiner received a consulting fee of $200,000 from Hallwood Energy. None of the amounts paid to Mr. Gumbiner were for his service as a director of the Company. | |
| (2) | Consists of $285,132 for reimbursement of services, meals and other personal expenses related to the office separately maintained by Mr. Gumbiner, and $6,200 in life insurance premiums. In addition to the amounts shown in the table, during 2006, the Company reimbursed HIL $178,133 for business expenses in providing office space and administrative services, $267,706 for travel to and from the Company’s United States office, and certain other matters, as described in “Compensation Committee Interlocks and Insider Participation.” | |
| (3) | Consists of $9,240 for payment of a special cash bonus in lieu of a Company-matching contribution under its 401(k) Tax Favored Savings Plan. | |
| (4) | In addition, Mr. Guzzetti received a salary of $208,333 from Hallwood Energy. | |
| (5) | Salary includes a $6,000 car allowance and $11,538 for unused vacation time. | |
| (6) | Consists of annual bonus under compensation letter. |
The following table reflects an award under The Hallwood Group
Incorporated 2005 Long-Term Incentive Plan For Brookwood
Companies Incorporated. Under the plan, upon a change of control
transaction, each participant is entitled to receive a cash
payment equal to the sum calculated by (i) dividing the
number of units held by that participant by the 10,000 total
units authorized under the plan, and (ii) multiplying the
result by 15% of the amount by which (a) the net fair
market value of all consideration received by the Company or its
stockholders as a result of the transaction exceeds (b) the
sum of the liquidation preference plus accrued but unpaid
dividends on the Series A Preferred Stock of Brookwood at
the time of the transaction. At December 31, 2006, the sum
of the liquidation preference plus accrued but unpaid dividends
on the Series A Preferred Stock of Brookwood was
approximately $23,730,000. Ms. Brookman was awarded 1,900
Units under the Plan. However, if the Board determines that
certain specified officers, or other persons performing similar
functions do not have, prior to the change of control
transaction, in the aggregate an equity or debt interest of at
least two percent in the entity with whom the change of control
transaction is completed, then the minimum amount to be awarded
under the Plan shall be $2,000,000. In addition, the Company
agreed that, if members of Brookwood’s senior management do
not have, prior to a change of control transaction, in the
aggregate an equity or debt interest of at least two percent in
the entity with whom the change of control transaction is
completed (exclusive of any such interest any such individual
receives with respect to his or her employment following the
change of control transaction), then the Company will pay
Ms. Brookman an additional $2,600,000. The Plan does not
provide for Threshold, Target or Maximum amounts. However, based
on the description above, the table presents as the Threshold
Amount the $2,600,000 minimum payment Ms. Brookman may
receive under certain conditions and presents as the Target
Amount the $3,000,000 that may be paid to Ms. Brookman
under certain additional conditions.
9
Table of Contents
GRANTS OF
PLAN-BASED AWARDS FOR 2006
|
Non-Equity |
||||||||||||||||||||
|
Incentive |
||||||||||||||||||||
|
Plan Awards: |
||||||||||||||||||||
|
Number of |
Estimated Future Payouts Under |
|||||||||||||||||||
|
Units or |
Non-Equity Incentive Plan Awards | |||||||||||||||||||
|
Other Rights |
Threshold |
Target |
Maximum |
|||||||||||||||||
|
Name
|
Grant Date | (#) | ($) | ($) | ($) | |||||||||||||||
|
Amber M. Brookman
|
1/17/06 | 1,900 | 2,600,000 | 3,000,000 | — | |||||||||||||||
The following table reflects the equity awards outstanding at
December 31, 2006 to the named executive officers. The only
named executive officer who held equity awards at that date was
Mr. Melle.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END FOR 2006
| Option Awards | ||||||||||||||||||||
|
Number |
Equity Incentive |
|||||||||||||||||||
|
of |
Number of |
Plan Awards: |
||||||||||||||||||
|
Securities |
Securities |
Number |
||||||||||||||||||
|
Underlying |
Underlying |
of Securities |
||||||||||||||||||
|
Unexercised |
Unexercised |
Underlying |
||||||||||||||||||
|
Options |
Options |
Unexercised |
Option Exercise |
Option |
||||||||||||||||
|
(#) |
(#) |
Unearned Options |
Price |
Expiration |
||||||||||||||||
|
Name
|
Exercisable | Unexercisable | (#) | ($) | Date | |||||||||||||||
|
Melvin J. Melle,
|
2,250 | 0 | 0 | 15.00 | (1 | ) | ||||||||||||||
|
Vice President, Chief Financial
|
4,500 | 0 | 0 | 17.37 | 9/4/07 | |||||||||||||||
|
Officer and Secretary
|
4,500 | 0 | 0 | 10.31 | 5/19/10 | |||||||||||||||
| (1) | Exercised January 9, 2007. |
No options were exercised by the named executive officers during
2006. None of the named executive officers participate in a
deferred-benefit retirement or pension plan in a non-qualified
deferred compensation plan. Therefore, the tables with respect
to these types of compensation have been omitted. The only
incremental payments to which named executive officers are
entitled upon severance or change in control of the Company are
provided under employment or consulting agreements. The amounts
payable under these arrangements are not quantifiable, but are
described in connection with the Grants of Plan-Based Awards
table above and under “Employment Agreements” and
“Compensation Committee Interlocks and Insider
Participation,” below.
COMPENSATION
COMMITTEE REPORT
The Company’s board of directors, acting as the
compensation committee, has reviewed and discussed the
Compensation Discussion and Analysis appearing in this proxy
statement and, based on that review and discussion has
recommended that the Compensation Discussion and Analysis be
included in this proxy statement.
Members
of the Board of Directors:
Anthony J. Gumbiner (Chairman)
Charles A. Crocco, Jr.
A. Peter Landolfo
M. Garrett Smith
J. Thomas Talbot
Charles A. Crocco, Jr.
A. Peter Landolfo
M. Garrett Smith
J. Thomas Talbot
10
Table of Contents
The following table sets forth the amounts paid to the
Company’s outside directors for their service as directors
of the Company. Information concerning amounts paid to
Mr. Gumbiner, the Company’s Chairman and Chief
Executive Officer, is included in the preceding tables.
DIRECTOR
COMPENSATION FOR 2006
|
Change in |
||||||||||||||||||||||||||||
|
Pension |
||||||||||||||||||||||||||||
|
Value and |
||||||||||||||||||||||||||||
|
Fees Earned or |
Non-Equity |
Nonqualified |
||||||||||||||||||||||||||
|
Paid in |
Stock |
Option |
Incentive Plan |
Deferred |
All Other |
|||||||||||||||||||||||
|
Cash |
Awards |
Awards |
Compensation |
Compensation |
Compensation |
Total |
||||||||||||||||||||||
|
Name
|
($) | ($) | ($) | ($) | Earnings | ($) | ($) | |||||||||||||||||||||
|
Charles A. Crocco, Jr.
|
53,500 | 0 | 0 | 0 | 0 | 0 | 53,500 | |||||||||||||||||||||
|
A. Peter Landolfo
|
53,500 | 0 | 0 | 0 | 0 | 0 | 53,500 | |||||||||||||||||||||
|
M. Garrett Smith
|
53,500 | 0 | 0 | 0 | 0 | 0 | 53,500 | |||||||||||||||||||||
|
J. Thomas Talbot
|
53,500 | 0 | 0 | 0 | 0 | 0 | 53,500 | |||||||||||||||||||||
For the year ended December 31, 2006, each of the outside
directors received director fees of $47,500. Board members are
entitled to receive $500 for each day spent on business of the
Company, other than attendance at board meetings. No amounts
were paid under this per diem arrangement in 2006. As
members of a special committee of independent directors of the
Board, each of the outside directors also received an annual
retainer of $5,000 and a meeting attendance fee of
$1,000 per meeting, totaling $6,000. Each director is also
reimbursed for expenses reasonably incurred in connection with
the performance of his duties.
EMPLOYMENT
AGREEMENTS
During the year ended December 31, 2006, the Company had an
employment agreement with Mr. Melle. The employment
agreement provided for payment of a minimum salary of
$200,000 per year plus an annual bonus in an amount as may
be determined by the board of directors. In addition, the
employment agreement provided that the Company will maintain
$500,000 of life insurance benefits and, for the year ended
December 31, 2006, the Company paid a life insurance
premium in the amount of $5,716. Mr. Melle’s
employment agreement continued under the same terms and
conditions until December 31, 2006 at which time it was
automatically extended for one year, and is automatically
extended annually unless terminated by either party. The board
of directors may terminate the agreement at any time for cause
(defined as persistent incompetence or insubordination, willful
misconduct, dishonesty or conviction of a felony), in which
event the agreement and all rights to compensation will
terminate immediately. If the Company terminates the agreement
for any other reason, then it must continue to pay the aggregate
base salary in effect at the time for the remainder of the term
of the agreement.
During the year ended December 31, 2006, Brookwood had a
compensation letter (the “Letter”) with
Ms. Brookman. The Letter provided for payment of a salary
of $300,000 per year plus an annual bonus in an amount of
the greater of 5% of Brookwood’s earnings before taxes
(with certain adjustments) or a minimum of $100,000. In
addition, the Letter provided for a car allowance of
$500 per month. The Letter does not provide for severance
or termination benefits. On March 14, 2007, the Board of
Directors of the Company authorized a change in
Ms. Brookman’s bonus, providing that the minimum bonus
Ms. Brookman will receive for any year, beginning with the
year 2007, will be $300,000.
In addition, please see the discussion in the next section of
the consulting agreement with HIL, which is associated with
Mr. Gumbiner.
COMPENSATION
COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
AND INSIDER PARTICIPATION
The board of directors as a whole performs the functions of the
compensation committee. References to the Company’s
compensation committee in this proxy statement refer to the
board of directors, acting in its capacity as the compensation
committee. Mr. Gumbiner was an officer of the Company
during 2006.
11
Table of Contents
During 2006, Messrs. Gumbiner and Guzzetti served on the
board of directors of the general partner of Hallwood Energy and
are its chief executive officer and chief operating officer,
respectively.
During 2006, the Company invested approximately $9,427,000 in
Hallwood Energy on the same terms as other affiliated and
nonaffiliated investors. In addition, Messrs. Gumbiner and
Guzzetti received compensation from Hallwood Energy, as
described in this proxy statement. Messrs. Crocco and
Talbot are also investors in Hallwood Energy on the same terms
as other investors. In addition, in 2007 prior to the date of
the proxy statement, the Company advanced a total of $7,000,000
to Hallwood Energy as interim funding under a demand note
bearing interest at 6% above prime rate. In April 2007, Hallwood
Energy requested an additional capital contribution in the
amount of $25,000,000 from its partners. The Company and
Hallwood Energy have agreed that Hallwood Energy will apply the
amounts previously advanced as the Company’s portion of
this capital call and will repay to the Company any excess of
the amounts advanced over the Company’s share of the
capital contribution.
Since December 31, 1996, the Company has been a party to an
agreement with HIL under which HIL provides international
consulting and advisory services to the Company and its
affiliates. The agreement currently provides for an annual fee
of $996,000. According to this agreement, the Company reimburses
HIL for reasonable and necessary expenses in providing office
space and administrative services used by Mr. Gumbiner. For
the year ended December 31, 2006, the Company reimbursed
HIL $178,133 for these expenses. and $267,706 for travel to and
from the Company’s United States office and other purposes.
In addition, during 2006 the Company reimbursed HIL $285,132 for
services, meals and other personal expenses related to the
office separately maintained by Mr. Gumbiner At
Mr. Gumbiner’s recommendation, the Company will not
reimburse Mr. Gumbiner for the personal expenses related to
his office incurred after November 2006. This agreement provides
that it is automatically extended each year for an additional
year, unless terminated by either party at least 30 days
prior to the expiration of the term. If the agreement is
terminated for certain acts of dishonesty, fraud, willful
misconduct, willful breach or repeated, habitual neglect, the
agreement will terminate immediately. If the agreement is
terminated by the Company for any other reason, then it must
continue to pay the consulting fee in effect at the time for the
remainder of the term of the agreement. The agreement does not
provide for any other severance or termination benefits.
The Company does not have a written policy specifically
addressing the review, approval or ratification of any
transaction required to be disclosed as a related party
transaction. The Company’s Code of Business Conduct and
Ethics generally prohibits all employee conflicts of interest,
as determined by the Board. It has been the policy of the Board
to require approval by those members of the Board who are not
involved in the particular transaction of all transactions with
related persons. In considering particular transactions, the
Board considers the benefits and costs to the Company and the
related party.
Report of
the Audit Committee
The audit committee is composed of three directors and operates
under an Amended and Restated Audit Committee Charter, adopted
by the board of directors according to the rules and regulations
of the American Stock Exchange. The board of directors has
determined that each of the members is independent, as defined
by the American Stock Exchange’s Listed Company Guide. The
board of directors has determined that Mr. Smith is an
“audit committee financial expert,” as defined by the
Securities and Exchange Commission (“SEC”).
Management is responsible for the Company’s internal
controls and the financial reporting process.
Deloitte & Touche LLP (“D&T”), the
Company’s independent registered public accounting firm, is
responsible for performing an independent audit of the
Company’s consolidated financial statements in accordance
with the standards of the Public Company Accounting Oversight
Board generally accepted in the United States of America. The
audit committee’s responsibility is to monitor and oversee
these processes. The audit committee also recommends to the
board of directors the selection of the Company’s
independent registered public accounting firm.
In this context, the audit committee reviewed and discussed the
audited consolidated financial statements with both management
and D&T. Specifically, the audit committee has discussed
with D&T matters required to be discussed by Statement on
Auditing Standards No. 61.
12
Table of Contents
The audit committee received from D&T the written
disclosures and the letter required by Independence Standards
Board Standard No. 1 (Independence — Discussions
with Audit Committee), and has discussed with D&T the issue
of its independence from the Company.
It is not the audit committee’s duty or responsibility to
conduct auditing or accounting reviews or procedures. Therefore,
the audit committee has relied, without independent
verification, on management’s representation that the
financial statements have been prepared with integrity and
objectivity and in accordance with the standards of the Public
Company Accounting Oversight Board generally accepted in the
United States of America, and on the representations of the
independent registered public accounting firm included in its
report on the Company’s consolidated financial statements.
The audit committee’s oversight does not provide it with an
independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or
policies, or appropriate internal controls and procedures
designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the audit
committee’s considerations and discussions with management
and the independent registered public accounting firm do not
assure that the Company’s financial statements are
presented in accordance with generally accepted accounting
principles, that the audit of the Company’s financial
statements has been carried out in accordance with generally
accepted auditing standards or that the Company’s
independent registered public accounting firm is in fact
“independent.”
Based on the audit committee’s review of the audited
financial statements and its discussions with management and
D&T noted above and the report of the independent
registered public accounting firm to the audit committee, the
audit committee recommended to the board of directors that the
audited consolidated financial statements be included in the
Company’s Annual Report on
Form 10-K
for the year ended December 31, 2006.
2006
Members of the Audit Committee of the Board of Directors of the
Company
Charles A. Crocco, Jr. (Chairman)
A. Peter Landolfo
M. Garrett Smith
A. Peter Landolfo
M. Garrett Smith
13
Table of Contents
PROCEDURES
FOR DIRECTOR NOMINATIONS
As discussed above, as a “controlled company” under
the rules of the American Stock Exchange, the Company is not
required to have a standing nominating committee or a written
charter governing the nomination process. As a result, the full
board of directors, of which each of the members other than
Mr. Gumbiner are independent, serves that function.
The Company’s bylaws provide that a stockholder may
nominate a person for election as a director at an annual
meeting if written notice of the stockholder’s intent to
make the nomination has been given to the Secretary of the
Company at least 90 days in advance of the meeting or, if
later, the tenth day following the first public announcement of
the date of the meeting. Such notices must comply with the
provisions of the bylaws.
In the event that a stockholder meeting the requirements and
following the procedures of the bylaws was to propose a nominee,
or if a vacancy occurs as a result of an increase in the number
of directors, the board of directors will identify candidates
with superior qualifications and personally interview them and,
if appropriate, arrange to have members of management interview
such candidates. Preferred candidates would display the highest
personal and professional character and integrity and have
outstanding records of accomplishment in diverse fields of
endeavor. Candidates should have demonstrated exceptional
ability and judgment and have substantial expertise in their
particular fields. Candidates with experience relevant to the
Company’s business would be preferred. The board of
directors, upon evaluation and review of the candidates, would
determine who to recommend to the stockholders for approval or
to fill any vacancy. The board of directors would use the same
criteria for evaluating nominees recommended by stockholders as
for those referred by management or any director. The Company
does not pay and does not anticipate paying any fees to third
parties for identifying or evaluating candidates for director.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
During 2006, Ms. Brookman’s daughter, Amber
Brookman, Jr., and
son-in-law,
Steven Lerman, were employees of Brookwood and received total
compensation of $128,000 and $195,000, respectively.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
D&T served as the Company’s independent registered
public accounting firm for the years ended December 31,
2006, 2005 and 2004 and has been selected to serve in that
capacity again for the year ending December 31, 2007. A
representative of D&T will be available at the annual
meeting to respond to appropriate questions and will be given an
opportunity to make a statement if desired.
AUDIT
FEES
All services rendered by D&T are pre-approved by the audit
committee. D&T has or is expected to provide services to
the Company in the following categories and amounts:
| Calendar Years Ended | ||||||||
| 2006 | 2005 | |||||||
|
Audit fees(1)
|
$ | 493,859 | $ | 419,550 | ||||
|
Audit-related fees(2)
|
$ | 53,500 | $ | 48,403 | ||||
|
Tax fees(3)
|
$ | 184,547 | $ | 335,593 | ||||
|
All other fees(4)
|
$ | 1,599 | $ | 1,599 | ||||
| (1) | Audit fees — These are fees for professional services performed by D&T for the audit of the Company’s annual consolidated financial statements and review of interim financial statements included in the Company’s Form 10-Q filings, and services that are normally provided in connection with statutory regulatory filings or engagements. | |
| (2) | Audit-related fees — These are fees for assurance and related services performed by D&T that are reasonably related to the performance of the audit or review of the Company’s financial statements. This includes: |
14
Table of Contents
| employee benefit and compensation plan audits; attestations by D&T that are not required by statute and consulting on financial accounting/reporting standards. | ||
| (3) | Tax fees — These are fees for professional services performed by D&T with respect to tax compliance, tax advice and tax planning. This includes preparation or review of original and amended tax returns for the Company and its consolidated subsidiaries; refund claims; payment planning; tax audit assistance; and tax work stemming from “Audit-Related” items. | |
| (4) | All other fees — These are fees for other permissible work performed by D&T that does not meet the above category descriptions. |
Pre-Approval
Policy
The audit committee’s pre-approval guidelines with respect
to pre-approval of audit and non-audit services are summarized
below.
General
The audit committee is required to pre-approve the audit and
non-audit services performed by the independent registered
public accounting firm in order to assure that the provision of
such services does not impair the registered public accounting
firm’s independence. Unless a type of service to be
provided by the independent registered public accounting firm
has received general pre-approval, it will require specific
pre-approval by the audit committee. Any proposed services
exceeding pre-approved cost levels requires specific
pre-approval by the audit committee.
The audit committee may delegate pre-approval authority to one
or more of its members. The member or members to whom such
authority is delegated must report any pre-approval decisions to
the audit committee at its next scheduled meeting. The audit
committee may delegate its responsibilities to pre-approve
services performed by the independent registered public
accounting firm to management.
Audit
Services
The annual audit services engagement terms and fees are subject
to the specific pre-approval of the audit committee. The audit
committee approves, if necessary, any changes in terms,
conditions and fees resulting from changes in audit scope,
company structure or other matters. In addition to the annual
audit services engagement specifically approved by the audit
committee, the audit committee may grant general pre-approval
for other audit services, which are those services that only the
independent registered public accounting firm reasonably can
provide.
Audit-related
Services
Audit-related services are assurance and related services that
are reasonably related to the performance of the audit or review
of the Company’s financial statements and that are
traditionally performed by the independent registered public
accounting firm. The audit committee believes that the provision
of audit-related services does not impair the independence of
the registered public accounting firm.
Tax
Services
The audit committee believes that the independent registered
public accounting firm can provide tax services to the Company,
such as tax compliance, tax planning and tax advice without
impairing the registered public accounting firm’s
independence. However, the audit committee will not permit the
retention of the independent registered public accounting firm
in connection with a transaction initially recommended by the
independent registered public accounting firm, the purpose of
which may be tax avoidance and the tax treatment of which may
not be supported in the Internal Revenue Code and related
regulations.
15
Table of Contents
All Other
Services
The audit committee may grant pre-approval to those permissible
non-audit services classified as “all other services”
that it believes are routine and recurring services, and would
not impair the independence of the registered public accounting
firm.
Pre-Approval
Fee Levels
Pre-approval fee levels for all services to be provided by the
independent registered public accounting firm are established
periodically by the audit committee. Any proposed services
exceeding these levels requires specific pre-approval by the
audit committee.
STOCKHOLDER
PROPOSALS
If a stockholder intends to present a proposal for action at the
2008 annual meeting and wishes to have the proposal considered
for inclusion in the Company’s proxy materials in reliance
on
Rule 14a-8
under the Securities Exchange Act, the proposal must be
submitted in writing to the Secretary of The Hallwood Group
Incorporated, at 3710 Rawlins, Suite 1500, Dallas, Texas
75219 by January 15, 2008. Such proposals must also meet
the other requirements of the rules of the SEC relating to
stockholder proposals.
The Company’s bylaws establish an advance notice procedure
with regard to certain matters, including stockholder proposals
and nominations of individuals for election to the board of
directors. In general, notice of a stockholder proposal or a
director nomination for an annual meeting must be received by
the Company 90 days or more before the date of the annual
meeting and must contain specified information and conform to
certain requirements, as set forth in the bylaws.
If you wish to submit a proposal at the annual meeting, other
than through inclusion in the proxy statement, you must notify
the Company no later than March 22, 2008. If you do not
notify the Company of your proposal by that date, the Company
will exercise its discretionary voting power on that proposal.
In addition, if you submit a proposal outside of
Rule 14a-8
of the Securities Exchange Act for the 2008 annual meeting, and
the proposal fails to comply with the advance notice procedure
prescribed by the bylaws, then the Company’s proxy or
proxies may confer discretionary authority on the persons being
appointed as proxies on behalf of management to vote on the
proposal.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires the
Company’s officers and directors, and persons who own more
than 10% of a registered class of the Company’s securities,
to file reports of ownership and changes of ownership with the
SEC and the American Stock Exchange. Officers, directors and 10%
stockholders of the Company are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms
filed by them.
Based solely on review of copies of the forms received, the
Company believes that, during the last fiscal year, all filings
under Section 16(a) applicable to its officers, directors
and 10% stockholders were timely.
16
Table of Contents
OTHER
BUSINESS
The Company is not aware of any other business to be presented
at the annual meeting. All shares represented by proxies will be
voted in favor of the nominees for director set forth in this
proxy statement, unless otherwise indicated on the form of
proxy. If any other matters properly come before the meeting,
the Company’s proxy holders will vote on those matters
according to their best judgment.
Please note, however, that if your shares of common stock are
voted against the nominees for director, the proxy holders will
not use their discretion to vote your shares in favor of any
adjournment or postponement of the annual meeting.
By order of the Board of Directors
MELVIN J. MELLE
Secretary
May 21, 2007
17
Table of Contents
SKU HWG PS-07
Table of Contents
 |
||||
 |
||||
Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. |
X |
|||||||||||
Annual Meeting Proxy Card
|
||||||||
6 PLEASE FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
| A | Election of Directors — The Board of Directors recommends a vote FOR the nominees listed. | |||||||||||||||||||||||||||
| 1. Nominees: | For | Withhold | For | Withhold | + | |||||||||||||||||||||||
| 01 - J. Thomas Talbot | o | o | 02 - A. Peter Landolfo | o | o | |||||||||||||||||||||||
| 2. | In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the annual meeting. | For o |
Against o |
Abstain o |
||||||||||||||||||||
| B | Non-Voting Items | |||||||||||||||||||||||
| Change of Address — Please print new address below. | ||||||||||||||||||||||||
| D Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | ||||||||||
| Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. | ||||||||||
| Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||||||
/
|
/ | |||||||||
Table of Contents
6 PLEASE FOLD ALONG THE PERFORATION, DETACH
AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.6
Proxy — THE HALLWOOD GROUP INCORPORATED
3710 RAWLINS, SUITE 1500
DALLAS, TEXAS 75219
DALLAS, TEXAS 75219
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Charles A. Crocco, Jr. and M. Garrett Smith, and each of them,
as Proxies, each with the power to appoint their substitutes, and hereby authorizes them to
represent and vote, as designated below, all of the shares of the common stock of The Hallwood
Group Incorporated (the “Company”), held of record by the undersigned on May 11, 2007, at the
Annual Meeting of Stockholders to be held on June 20, 2007, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein by the undersigned
stockholder. If no direction is given, this proxy will be voted FOR the election of the nominees
listed, and at the discretion of the Proxies with respect to any other matter that is properly
brought before the meeting.
COMPLETE, SIGN and DATE the proxy card and return promptly using the enclosed envelope.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE
REVERSE SIDE