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    thirdresponsef10k2009.htm

August 27, 2009

United States Securities and Exchange Commission

100 F Street, NE

Washington, D.C.   20549-6010

Attn:  Robert Bartelmes, Senior Financial Analyst

RE:          AZZ incorporated

File No. 001-2777

Form 10-K for the Year Ended February 28, 2009

AZZ incorporated (the “Company” or “AZZ”) provides the following response to the comment letter dated August 21, 2009, of the Staff of the Securities and Exchange Commission (the “Letter”) concerning the Company’s Form 10-K for the year ended February 28, 2009 (the “Form 10-K”).

AZZ has the following responses to the Letter.

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 disclosure in regards to comment one in our letter dated July 31, 2009. In your response, you refer to Question 118.04 of Regulation S-K’s Compliance and Disclosure Interpretations. Please note that the provision you cite relates to the understanding that there is no requirement that a company provide quantitative targets for
what are inherently subjective or qualitative assessments. Companies are still expected to provide analysis on the substance of their compensation decisions and to disclose how they analyzed individual performance when such performance is material to their compensation decisions. Refer to the section titled “Compensation Discussion and Analysis” of the Staff Observations in the Review of Executive Compensation Disclosure, available on our website at www.sec.gov/divisions/corpfin/guidance/execcompdisclosure.htm.

Therefore, please further revise your CD&A to provide disclosure related to:

•

how the Committee analyzed the base salary factors in its decision to increase Mr. Pendley’s base salary by 10.5% (which appears to be a material increase). For example, how did the Committee’s evaluation of the factors result in Mr. Pendley’s base salary increasing at a higher percentage than your other named executive officers?

•

how the Committee analyzed the Long-Term Incentive Compensation factors when choosing the amounts actually awarded to the named executive officers. For example, how did the Committee’s evaluation of the factors result in Mr. Dingus being awarded

AZZ_  SEC Third Comment Letter Response (2009) (5).DOC

three times the amount of stock appreciation rights as your other named executive officers?

RESPONSE:  AZZ has duly noted the Staff’s comments.  In response to the Staff’s comments, AZZ will file a Form 10-K/A for the fiscal year ended February 28, 2009, which will include the disclosure set forth in Exhibit A attached
hereto.  See the following paragraphs and tables of Exhibit A:  the fourth full paragraph on page 3, the fifth full paragraph on page 3 and the second full paragraph on page 8.  Two additional copies of Exhibit A, one marked to show changes made in response to the Letter and one marked to show cumulative changes, have been included to assist the Staff
in reviewing AZZ’s proposed changes.

AZZ acknowledges that the Company is responsible for the adequacy and accuracy of the disclosure in its filing. AZZ acknowledges that the Staff’s comments or changes to disclosure in response to the Staff’s comments do not foreclose the Commission from taking any action with respect to the filing. AZZ also acknowledges that the
Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Very truly yours,

/s/ Dana L. Perry

Dana L. Perry

Senior Vice President, Finance

And Chief Financial Officer

AZZ_  SEC Third Comment Letter Response (2009) (5).DOC

Exhibit A

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Compensation Program Overview

The Compensation Committee (the “Committee”) of the Board has responsibility for establishing, implementing and continually monitoring adherence to the Company’s compensation philosophy. The Committee ensures that the total compensation paid to the Company’s management team is fair, reasonable and competitive.
Generally, the types of compensation and benefits provided to members of the management team, including the named executive officers, are similar to those provided to other executive officers.

The individuals who served as the Company’s Chief Executive Officer and Chief Financial Officer during fiscal 2009, as well as the other individuals included in the Summary Compensation Table on page 18 of the Company’s proxy statement for its 2009 Annual Meeting (the “Proxy Statement”), are referred to as the “named
executive officers” throughout this Form 10-K/A.

Compensation Philosophy and Objectives

The Committee believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by the Company and which aligns executives’ interests with those of the shareholders by rewarding performance to achieve goals set by the Company, with the
ultimate objective of improving shareholder value. The Committee evaluates both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of publicly traded companies with similar characteristics. To that end, the Committee believes executive compensation packages provided by the Company to its executives,
including the named executive officers, should include both cash and equity-based compensation that reward performance as measured against established goals.

Role of Executive Officers in Compensation Decisions

The Committee makes all compensation decisions including equity awards for the management team (which includes the named executive officers).

The Chief Executive Officer annually reviews the performance of each member of the management team (other than his own, which is reviewed by the Committee). The conclusions reached and recommendations based on these reviews, including with respect to salary adjustments and annual award amounts, are presented to the Committee. The Committee
can exercise its discretion in modifying any recommended adjustments or awards to executives made by the Chief Executive Officer.

Setting Executive Compensation

Based on the foregoing objectives, the Committee has structured the Company’s annual and long-term incentive-based cash and non-cash executive compensation to motivate executives to achieve the business goals set by the Company and reward the executives for achieving such goals. In furtherance of this, the Committee has the authority
under its charter to periodically engage an outside human resources consulting firm to conduct a review of its total compensation program for the Chief Executive Officer as well as for other key executives. The human resources consulting firm provides the Committee with relevant market data and alternatives to consider when making compensation decisions for the Chief Executive Officer and on the recommendations being made by the Company’s Chief Executive Officer for executives other than
the Chief Executive Officer.  In fiscal 2009, the Committee engaged Hewitt Associates to perform an executive compensation review for purposes of advising the Committee with respect to executive compensation for fiscal 2010.

In making compensation decisions, the Committee compares each element of total compensation against a group of publicly-traded manufacturing companies. This group of companies, which is periodically reviewed and

AZZ_  SEC Third Comment Letter Response (2009) (5).DOC

EX A - 1

updated by the Committee, consists of companies against which the Committee believes the Company competes for talent and for shareholder investment.  In fiscal 2009, this group of companies included Universal Stainless & Alloy Products, Friedman Industries Inc., Morton Industrial Group Inc., Preformed Line Products Co., Catalina Lighting Inc., Webco Industries Inc., Global Power Equipment Group, Juno Lighting Inc.,
LSI Industries Inc., NN Inc., Haynes International Inc., WHX Corp., Northwest Pipe Company, Keystone Consolidated Industries Inc., Niagara Corp., Lamson & Sessions Co., Neenah Foundry Co. and Roanoke Electric Steel Corp.  Though the Committee considers this market data on the compensation practices of these companies in determining the overall compensation of the Company’s named executive officers (including in determining base salary ranges, as described below), it does not set compensation
components to meet specific benchmarks (e.g., targeting salaries “above the median” or equity compensation “at the 75th percentile”). Based on this market data analysis, the Committee concluded that the compensation levels for the Company’s named executive officers fell within the range of the observed market compensation levels.

Compensation is determined based upon market data on the compensation of similarly situated executives of such companies, internal pay equity (including the executive’s accountability and impact on Company operations) and the individual’s experience level and performance. In considering internal pay equity, the Committee has
no formula or established ratios for setting one executive’s total compensation versus the compensation of another executive officer. Rather, the Committee subjectively evaluates the relative importance of each named executive officer’s role to the Company as a whole, which results in certain executives receiving more total compensation than others (e.g., the Company’s Chief Executive Officer is paid more than its Chief Financial Officer).

Factors that may result in a deviation from the market data are an individual’s experience level, the job responsibilities of the position and the relative responsibility of the position compared to that of others within the Company. The Committee may also consider how the Company has performed relative to the group of companies
listed above.

The Committee strives to develop compensation packages for our executives made up of a balanced combination of base salary, annual incentive awards, and long term compensation. The overall compensation of our executive officers, including the employment agreements with our Chief Executive Officer and Chief Financial Officer, utilizes a
combination of these forms of compensation. In setting executives’ compensation, our Committee reviews the total remuneration that each respective officer potentially could receive over the next several years under scenarios contemplating the executive’s continued employment or retirement during the period.

While the Committee uses a variety of factors in making compensation decisions for the Company’s named executive officers, the Committee does not use any particular weighting or formula to determine executive compensation. Rather, the Committee subjectively evaluates all of the factors noted in the discussion above in determining
executive compensation.

Fiscal year 2009 Executive Compensation Components

For the fiscal year ended February 28, 2009, the principal components of compensation for named executive officers were:

•

base salary, to compensate the executive officers for day-to-day services rendered to the Company;

•

performance-based incentive compensation, paid in cash to incentivize the achievement of specific operating results and to encourage short-term performance;

•

long-term incentive compensation, tying a portion of the executive officers compensation to equity ownership of the Company; and

•

perquisites and other personal benefits, which may include 401(k) matching contributions, profit sharing contributions, and health, life, and long term disability insurance benefits, which are also generally available to all employees.

AZZ_  SEC Third Comment Letter Response (2009) (5).DOC

EX A - 2

Base Salary

The Company provides named executive officers and other employees with base salary to compensate them for services rendered during the fiscal year. Base salary ranges for named executive officers are determined for each executive based on his or her position and responsibility by using market data. Base salary ranges are designed so that
salary opportunities for a given position will be between 75% and 125% of the midpoint of the base salary established for each range.

During its review of base salaries for executives, the Committee primarily considers:

•

market data periodically provided by our outside consultants;

•

internal data regarding the executive’s compensation, both individually and relative to other executive officers; and

•

individual performance of the executive.

Salary levels are typically considered annually as part of the Company’s performance review process as well as upon a promotion or other change in job responsibility.

In determining salary increases, and also in determining awards under the Senior Management Bonus Plan and long-term incentive compensation awards, for the named officers for fiscal 2009, the Committee utilized qualitative factors to evaluate their performances and recognize their contributions and leadership during fiscal 2008.  In
particular, the Committee considered each officer’s contributions to achieving (i) the review, analysis and evaluation of companies acquired by the Company during the year, (ii) the development and implementation of integration plans for acquired businesses, (iii) the Company’s overall financial performance in light of challenging economic conditions, (iv) the Company’s ability to manage costs, (v) the performance of the Company’s stock price, as compared to its competitors and (vi) the
Company’s business development results, as measured by new and increased business from customers during the year.  The Committee also considered issues of relative amounts paid and awarded as a matter of internal equity.

The amount of each officer’s salary and incentive awards was based on the Committee’s subjective evaluation of each officer’s performance, the relative responsibilities of the officers and the Committee’s sense of fair and equitable relative distributions of salaries and awards.  The Committee also took
into account the compensation plans embodied in employment agreements with the Company’s Chief Executive Officer and Chief Financial Officer, salaries and awards paid in prior years and market compensation data from the industry comparison group described above.  In making its evaluation and the resulting salary and award decisions, the Committee took into account and acknowledged:

•

Mr. Dingus’s ability to focus the entire management team on the successful evaluation and implementation of several business acquisitions that were materially beneficial to AZZ, his ability to motivate management to maintain sales and margins across both operating segments in a challenging economic environment and his contribution
to the performance of our stock price over the past several years;

•

Mr. Pendley’s significant role in the evaluation, implementation and integration of significant galvanizing businesses acquired during fiscal 2008, his leadership and management of the galvanizing business during difficult market conditions, the increase
in revenues from our galvanizing segment through strategic acquisitions and the increase in Mr. Pendley’s responsibilities accompanying this increase in revenues; and

•

The relative value to AZZ of the contributions made by each officer.

Based on the Committee’s subjective evaluation of these factors, base salaries for the Company’s named executive officers were increased in fiscal 2009 by 3.5 percent, in the case of Messrs. Dingus, Perry and Petro, by 3.6 percent, in the case of Mr. Watson, and by 10.5 per