SEC Comment Letter for AZZ INC (AZZ) (CIK 0000008947) (AZZ) — Jul 31, 2009
AZZ INC (AZZ) (CIK 0000008947)
Date: July 31, 2009 · CIK: 0000008947 · Accession: 0000000000-09-041091
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-12777
Referenced dates: July 2, 2009, July 17, 2009, July 2, 2009
Letter
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 DIVISION OF CORPORATION FINANCE Mail Stop 3720 July 31, 2009 Mr. David H. Dingus Principal Executive Officer AZZ incorporated One Museum Place, Suite 500 3100 West Seventh Street Fort Worth, TX 76107
RE: AZZ, Inc. Form 10-K for the fiscal year ended February 28, 2009 and Document Incorporated by Reference Filed May 12, 2009 File No. 001-12777
Dear Mr. Dingus: We have reviewed your response letter dated July 17, 2009 and have the following comments. Please respond to our comments within 10 business days or tell us by that time when you will provide us with a response. If the comment requests revised disclosure in future filings, please confir m in writing that you intend to do so. We welcome any questions you may have about our comments or any other aspect of our review. Information Incorporated Into Part III by Reference to Proxy Statement
Executive Compensation, page 13
Compensation Discussion and Analysis, page 13
1. We note your response and proposed disclosu re in regards to comment three in our letter dated July 2, 2009. However, we continue to believe that you should provide a more robust disclosure of how and why the Committee chose to award the amounts reported in the Summary Compen sation Table. For example, in the penultimate paragraph of the section titled “Performance-Based Incentive Compensation” on page A-5 of your proposed disclosure, you state the following:
Mr. David H. Dingus AZZ incorporated July 31, 2009 Page 2 of 4 “The Committee has determined that , based upon the actual fiscal year results for fiscal year 2009 and their respective performances during this year and, in the case of Mr. Dingus, the annual evaluation of Mr. Dingus for fiscal year 2009 conducted by the Committee in consultation with the full board, Messrs. Dingus and Perry have fulfilled their respective maximum performance levels for diluted earnings per share and have met or exceeded their target performance levels for their respective qualitative goals. Accordingly, both officers received 200% of the target cash award attributable to diluted earnings per share and 125% of the target cash award attributable to their respective qualitative goals.”
Revise to disclose how Messrs. Dingus and Perry fulfilled their respective performance levels for diluted earnings per share and “met or exceeded” their respective target performance levels for their respective qualitative goals. Simply stating that these two officers satisfie d the performance levels and qualitative goals does not provide meaningful anal ysis. Also, explain how the Committee arrived at a 200% award, as it is not clear from y our disclosure how this percentage level was calculated. Revise to provide similar analyses with respect to the awards made to your other named executive officers.
By way of further example, in th e “Long-Term Incentive Compensation” subsection on page A-6 of your proposed di sclosure, you provide a list of factors that the Committee considers when dete rmining the size of stock appreciation rights grants. Your revised disclosure should detail how the Committee analyzed these factors when choosing the amounts ac tually awarded to the named executive officers. 2. In your proposed disclosure in response to comment four in our letter dated July 2, 2009, you state that, while the company does not set compensation components to meet specific benchmarks, the Committee does consider market data when determining the overall compensation of th e company’s named executive officers. In this regard, revise to describe the findings from your market data analysis and then what decisions were made a nd what compensation changes were considered/implemented and why. 3. In your proposed disclosure in response to comment four in our letter dated July 2, 2009, you state that compensation is determ ined, in part, by an analysis of internal pay equity. Please revise to describe the fi ndings from your internal pay equity analysis and then what decisions were made and what compensation changes were considered/implemented and why.
Mr. David H. Dingus AZZ incorporated July 31, 2009 Page 3 of 4 Annual Incentive Compensation, page 15
4. We note your response to comment five in our letter dated July 2, 2009. In this regard, you state that disclosing certain quantitative goals would cause you competitive harm because these targets ar e based on the company’s strategic plan, which typically includes contemplated tran sactions (including proposed strategic acquisitions of other companies) that may not have been disclosed to the public by the time that any particular fiscal year has ended. In light of the fact that these performance targets relate to a completed fiscal year and actual segment results have been disclosed, in your response le tter please further explain how disclosing these targets would cause you substantia l competitive harm. Provide specific examples from last year if necessary. Along with any other information you deem appropriate, please discuss th e following in your analysis:
• An explanation of how the performance ta rgets set forth in your strategic plan differ from the target projections that ar e released to the public. For example, we note that an 8-K filed on June 30, 2009 contained annual internal revenue projections for 2010 as well as actu al results for 2008 and 2009 (see slide seven of your presentation filed as exhibit 99.1).
• An explanation of how disclosure of these targets would cause substantial competitive harm in light of the fact that you disclose each segment’s historical annual internal revenue, operating income, and return on assets in footnote 11 “Operating Segments” of your Form 10-K for the year ended February 28, 2009.
• An analysis of how your strategic plan impacts the diluted earnings per share target set by the board, a nd whether your diluted earni ngs per share target is also based, in part, upon the company’s completion of strategic transactions. We may have additional comment upon our review of your response.
* * * *
Please furnish a letter that keys your re sponse to our comment and provides any requested information. Detailed letters greatl y facilitate our review . Please file your letter over EDGAR. Please understand that we may have additional comments after reviewing your response to our comment.
Mr. David H. Dingus AZZ incorporated July 31, 2009 Page 4 of 4 Please contact Jay Knight, Staff Attorney, at (202) 551-3370 or me at (202) 551- 3257 with any questions. S i n c e r e l y , /s/ Celeste M. Murphy Celeste M. Murphy L e g a l B r a n c h C h i e f cc: By facsimile to (817) 878-9709
F. Richard Bernasek (Kelly Hart & Hallman LLP)
Show Raw Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE
Mail Stop 3720
July 31, 2009
Mr. David H. Dingus Principal Executive Officer AZZ incorporated One Museum Place, Suite 500 3100 West Seventh Street
Fort Worth, TX 76107
RE: AZZ, Inc.
Form 10-K for the fiscal year ended February 28, 2009
and Document Incorporated by Reference Filed May 12, 2009 File No. 001-12777
Dear Mr. Dingus:
We have reviewed your response letter dated July 17, 2009 and have the
following comments. Please respond to our comments within 10 business days or tell us by that time when you will provide us with a response. If the comment requests revised disclosure in future filings, please confir m in writing that you intend to do so. We
welcome any questions you may have about our comments or any other aspect of our review.
Information Incorporated Into Part III by Reference to Proxy Statement
Executive Compensation, page 13
Compensation Discussion and Analysis, page 13
1. We note your response and proposed disclosu re in regards to comment three in
our letter dated July 2, 2009. However, we continue to believe that you should
provide a more robust disclosure of how and why the Committee chose to award
the amounts reported in the Summary Compen sation Table. For example, in the
penultimate paragraph of the section titled “Performance-Based Incentive
Compensation” on page A-5 of your proposed disclosure, you state the following:
Mr. David H. Dingus
AZZ incorporated
July 31, 2009 Page 2 of 4
“The Committee has determined that , based upon the actual fiscal
year results for fiscal year 2009 and their respective performances
during this year and, in the case of Mr. Dingus, the annual evaluation of Mr. Dingus for fiscal year 2009 conducted by the Committee in consultation with the full board, Messrs. Dingus and Perry have fulfilled their respective maximum performance levels for diluted earnings per share and have met or exceeded their target performance levels for their respective qualitative goals.
Accordingly, both officers received 200% of the target cash award
attributable to diluted earnings per share and 125% of the target
cash award attributable to their respective qualitative goals.”
Revise to disclose how
Messrs. Dingus and Perry fulfilled their respective
performance levels for diluted earnings per share and “met or exceeded” their
respective target performance levels for their respective qualitative goals. Simply stating that these two officers satisfie d the performance levels and qualitative
goals does not provide meaningful anal ysis. Also, explain how the Committee
arrived at a 200% award, as it is not clear from y our disclosure how this
percentage level was calculated. Revise to provide similar analyses with respect to the awards made to your other named executive officers.
By way of further example, in th e “Long-Term Incentive Compensation”
subsection on page A-6 of your proposed di sclosure, you provide a list of factors
that the Committee considers when dete rmining the size of stock appreciation
rights grants. Your revised disclosure should detail how the Committee analyzed
these factors when choosing the amounts ac tually awarded to the named executive
officers.
2. In your proposed disclosure in response to comment four in our letter dated July
2, 2009, you state that, while the company does not set compensation components
to meet specific benchmarks, the Committee does consider market data when determining the overall compensation of th e company’s named executive officers.
In this regard, revise to describe the findings from your market data analysis and
then what decisions were made a nd what compensation changes were
considered/implemented and why.
3. In your proposed disclosure in response to comment four in our letter dated July
2, 2009, you state that compensation is determ ined, in part, by an analysis of
internal pay equity. Please revise to describe the fi ndings from your internal pay
equity analysis and then what decisions were made and what compensation changes were considered/implemented and why.
Mr. David H. Dingus
AZZ incorporated
July 31, 2009 Page 3 of 4 Annual Incentive Compensation, page 15
4. We note your response to comment five in our letter dated July 2, 2009. In this
regard, you state that disclosing certain quantitative goals would cause you
competitive harm because these targets ar e based on the company’s strategic plan,
which typically includes contemplated tran sactions (including proposed strategic
acquisitions of other companies) that may not have been disclosed to the public
by the time that any particular fiscal year has ended. In light of the fact that these
performance targets relate to a completed fiscal year and actual segment results
have been disclosed, in your response le tter please further explain how disclosing
these targets would cause you substantia l competitive harm. Provide specific
examples from last year if necessary. Along with any other information you deem
appropriate, please discuss th e following in your analysis:
• An explanation of how the performance ta rgets set forth in your strategic plan
differ from the target projections that ar e released to the public. For example,
we note that an 8-K filed on June 30, 2009 contained annual internal revenue
projections for 2010 as well as actu al results for 2008 and 2009 (see slide
seven of your presentation filed as exhibit 99.1).
• An explanation of how disclosure of these targets would cause substantial
competitive harm in light of the fact that you disclose each segment’s historical annual internal revenue, operating income, and return on assets in
footnote 11 “Operating Segments” of your Form 10-K for the year ended February 28, 2009.
• An analysis of how your strategic plan impacts the diluted earnings per share
target set by the board, a nd whether your diluted earni ngs per share target is
also based, in part, upon the company’s completion of strategic transactions.
We may have additional comment upon our review of your response.
* * * *
Please furnish a letter that keys your re sponse to our comment and provides any
requested information. Detailed letters greatl y facilitate our review . Please file your
letter over EDGAR. Please understand that we may have additional comments after
reviewing your response to our comment.
Mr. David H. Dingus
AZZ incorporated July 31, 2009 Page 4 of 4
Please contact Jay Knight, Staff Attorney, at (202) 551-3370 or me at (202) 551-
3257 with any questions. S i n c e r e l y , /s/ Celeste M. Murphy Celeste M. Murphy L e g a l B r a n c h C h i e f cc: By facsimile to (817) 878-9709
F. Richard Bernasek (Kelly Hart & Hallman LLP)