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TABLE OF CONTENTS
NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS			1
PROXY STATEMENT
GENERAL EXPLANATION OF MATERIALS INCLUDED			2
	Specific Items of Business		2
QUESTIONS AND REQUESTS FOR ADDITIONAL INFORMATION			2
	Request for Multiple Copies of Proxy Materials		3
	Request for Single Copy of Proxy Materials		3
VOTING			3
	Voting Securities, Record Date		3
	Stockholder of Record		3
	Beneficial Owner		4
	Voting in Person at the Annual Meeting		4
	Voting by Submitting a Proxy or Voting Instructions		4
	Proxies and Voting Instructions Are Revocable		4
	Voting Electronically		5
	Voting Procedures		5
	Election of Directors		5
	Voting on Other Business		5
	How Shares will be Voted by Proxy of Voting Instructions		5
	Broker Non-Votes		5
	Additional Business Proposals Presented at Meeting		6
	Quorum Requirement		6
STOCKHOLDER PROPOSALS			6
	Stockholder Proposals Intended to be Included in Proxy Statement		6
	Stockholder Proposals Not Intended to be Included in Proxy Statement		6
	Stockholder Proposals for Director Candidates		6
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS			7
	Directors and Executive Officers		7
	Board Leadership Structure		11
	Board Policy Regarding Voting for Directors		11
	Board Independence		11
	Meetings of the Board and Its Committees		12
	The Company’s Director Independence Standards		12
	Board Structure and Committee Composition		13
	Audit Committee		13
	Compensation Committee		14
	Nominating/Governance Committee		15
	Stockholder Recommendations		15
	Director Qualifications		16
	Identifying and Evaluating Candidates for Directors		16
	Executive Sessions		17
	Communications with the Board		17
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			17
BENEFICIAL OWNERSHIP TABLE			18

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE			18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			18
	Review, Approval or Ratification of Transactions with Management and Others		19
PROPOSAL NO. 1 – ELECTION/RE-ELECTION OF DIRECTORS			19
	Vote Required		20
NON-EMPLOYEE DIRECTOR COMPENSATION			21
	2013 Non-Employee Director Compensation Table		21
	2013 Outstanding Equity Awards Table		22
	General		23
	Board Compensation		23
	Committee Compensation		23
	Equity Compensation		23
	Per Diem Compensation		23
	Potential Payments upon Termination or Change in Control		23
	Compensation  Committee Interlocks and Insider Participation		24
PROPOSAL NO. 2 – VOTE ON PROPOSED CORPORATE NAME CHANGE			24
PROPOSAL NO. 3 – RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			25
	Audit Committee Report		25
PRINCIPAL ACCOUNTING FEES AND SERVICES			26
	Audit Fees		26
	Tax Fees		26
	All Other Fees		26
PROPOSAL NO. 4 – ADVISORY VOTE ON EXECUTIVE COMPENSATION			27
EXECUTIVE COMPENSATION			27
	Executive Compensation Program Design		28
	Base Salary		28
	Annual Cash Incentive Plan		28
	Profit Sharing Program		30
	Long-Term Incentive – Stock Options		31
	Perquisites		31
	Special AMAK Cash Bonus		32
	Governance of Pay Setting Process		32
	Role of Compensation Committee in Establishing Pay Levels		33
	Role of Management in Establishing Pay Levels		33
	Role of the Compensation Consultant in Establishing Pay Levels		33
	Regulatory Considerations		34
	Employment Arrangements		34
	Benchmarking Against Our Peer Group		34
	Determination of Performance Targets		36
	Company Goal (Operating Income)		37
	Report of the Compensation Committee		37
	Compensation Committee Interlocks and Insider Participation		38
	Compensation and Risk		38
	Executive Compensation Program for 2013 and 2012		38
2013 SUMMARY COMPENSATION TABLE			41
2013 ALL OTHER COMPENSATION TABLE			42

2013 REALIZED COMPENSATION TABLE			42
RECONCILIATION OF  REALIZED COMPENSATION TABLE			43
2013 GRANTS OF PLAN-BASED AWARDS			43
2013 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END			44
2013 OUTSTANDING EQUITY AWARDS VESTING SCHEDULE			44
2013 PENSION BENEFITS			45
OTHER BUSINESS			45

ARABIAN AMERICAN DEVELOPMENT COMPANY

Time and Date:		10:00 a.m. – 12:00 noon CDT, May 14, 2014
Place:		Sweetwater Country Club
		4400 Palm Royale Blvd.
		Sugar Land, TX  77479
Items of Business:	(1)	Election/re-election of members to the Board of Directors
	(2)	Vote on proposed corporate name change
	(3)	Ratification of the selection of BKM Sowan Horan, LLP as the Company’s independent registered public accounting firm for 2014
	(4)	Advisory vote on executive compensation
	(5)	Consider and act upon such other business as may properly come before the meeting.
Adjournments and Postponements:		Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.
Record Date:		You are entitled to vote only if you were an Arabian American Development Company stockholder of record as of the close of business on March 25, 2014.  Your vote is important. We encourage you to vote by proxy, even if you plan to attend the meeting.  You may vote your proxy by telephone, Internet or mail.  A toll-free telephone number and website address are included on your proxy card.
Meeting Admission:		You are entitled to attend the annual meeting only if you were an Arabian American stockholder of record as of the close of business on March 25, 2014, or hold a valid proxy for the annual meeting.  You should be prepared to present photo identification for admittance.  If you are not a stockholder of record but hold shares through a broker, trustee or nominee, you should provide proof of beneficial ownership as of the record date, such as your most recent account statement prior to March 25, 2014, a copy of the voting instruction card provided by your broker, trustee or nominee, or similar evidence of ownership.  If you do not provide photo identification and comply with the other procedures outlined above, you will not be admitted to the annual meeting.

(1)	The election/re-election of directors,

(2)	The vote on corporate name change,

(3)	The ratification of selection of independent registered public accounting firm, and

(4)	The advisory vote on executive compensation.

 

 

Name; Current Positions Held	Age	Director since	Term expires at Annual meeting in
Nicholas N. Carter President, Chief Executive Officer of the Company since July 2009, President of the Petrochemical Company since 1987, Member of AMAK and PEVM Boards	66	2004	2014
John R. Townsend Chairman of the Audit Committee; Member of Compensation and Nominating/Governance Committees	59	2011	2015
Ghazi Sultan                                                                            Member of  AMAK Board	77	1993	2016

Allen P. McKee                                                                            Chairman of Compensation Committee; Member of Audit and Nominating/Governance Committees and AMAK Board	72	2009	2015
Joseph P. Palm                                                                            Chairman of Nominating/Governance Committee; Member of  Audit and Compensation Committees	69	2011	2014
Gary K. Adams.                                                                            Member of Audit, Compensation and Nominating/Governance Committees	63	2012	2016

 

Name	Positions	Age	Appointed
Nicholas N. Carter	President, Chief Executive Officer and Director/President – TOCCO/ AMAK Board Member	66	2009/1987
Simon Upfill-Brown	Executive Vice President, President SHR/ AMAK Board Member	60	2012
Mark Williamson	Vice President of Marketing - TOCCO	58	1996
Connie Cook	Chief Financial Officer, Secretary, Treasurer and Secretary, Treasurer - TOCCO	50	2011/2008/2004
Ronald Franklin	Vice President of Manufacturing – TOCCO	55	2010

(1)

The director is, or has been in the past three years, an employee of the Company or an employee of any parent or subsidiary of the Company;

(2)

The director has accepted, or has a family member who has accepted during any twelve-month period within the last three years, more than $120,000 in compensation from the Company, other than compensation for Board or Board Committee service, compensation received by the director’s immediate family member for service as a non-executive employee of the Company, and benefits under a tax-qualified retirement plan, or non-discretionary compensation;

(3)

The director is a family member of an individual who is, or at any time during the past three years was, employed by the Company as an executive officer;

(4)

The director is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than (i) payments arising solely from investments in the company’s securities; or (ii) payments under non-discretionary charitable contribution matching programs;

(5)

The director is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the Company serve on the compensation committee of such other entity; or

(6)

The director is, or has a family member who is, a current partner of the Company’s outside auditor, or was a partner or employee of the Company’s outside auditor who worked on the Company’s audit at any time during any of the past three years.

Name of Director	Audit	Compensation	Nominating/Governance
Non-Employee Directors:
Ghazi Sultan1
Allen P. McKee2	Member	Chair	Member
John R. Townsend3	Chair	Member	Member
Joseph P. Palm4	Member	Member	Chair
Gary K. Adams5	Member	Member	Member
Employee Directors:
Nicholas N. Carter
Number of Meetings in Fiscal 2013	6	7	2

1	Mr. Sultan was elected to the Board in September 1993.

2	Mr. McKee was elected to the Board on April 28, 2009.  He joined the Nominating/Governance, Audit and Compensation Committees on April 28, 2009.  He became Chair of the Compensation Committee in February 2010.

3

Mr. Townsend was appointed to the Board in February 2011 and subsequently elected on June 8, 2011.  He joined the Audit and Compensation Committees upon his appointment.  He became Chair of the Audit Committee on April 7, 2011.  He was appointed to the Nominating/Governance Committee on June 9, 2011.

4	Mr. Palm was appointed to the Board in May 2011 and subsequently elected on June 6, 2012.  He joined the Audit, Compensation, and Nominating/Governance Committees on June 9, 2011.  He became Chair of the Nominating/Governance Committee on June 9, 2011.

5	Mr. Adams was appointed to the Board in November 2012 and subsequently elected on June 5, 2013.  He joined the Audit, Compensation, and Nominating/Governance Committees upon appointment.

 

 

(1)

Company directors and nominees, each of the named executive officers, and all individuals owning more than 5% of the Company’s outstanding Common Stock, and

(2)

Current directors and Company executive officers as a group.

Name of Beneficial Owner		Amount and Nature of Beneficial Ownership1				Percent of Class
Current Directors and Nominees:
Ghazi Sultan			190,000	(2)(3)			0.8	%
Allen P. McKee			111,667	(2)(3)			0.5	%
John R. Townsend			22,575				0.1	%
Joseph P. Palm			39,333	(2)			0.2	%
Gary K. Adams			20,000	(2)			0.1	%
Current Director, Nominee or Named Executive Officer:
Nicholas N. Carter			591,509	(2)(3)			2.5	%
Simon Upfill-Brown			16,302				0.1	%
Connie J. Cook			81,836	(2)(3)			0.3	%
Mark D. Williamson			68,121	(2)(3)			0.3	%
Ronald R. Franklin			66,270	(2)(3)			0.3	%
All current directors and executive officers as a group (10 persons)			1,207,613	(2)(3)			5.0	%
Individuals with beneficial ownership of more than 5% of outstanding Common Stock
Fahad Mohammed Saleh Al Athel			4,545,557				18.8	%
Wellington Management Company LLP			2,736,610				11.3	%

 

 

 

 

 

ELECTION/RE-ELECTION OF DIRECTORS

Nicholas N. Carter Director since 2004 Current Age 67

Mr. Nicholas N. Carter, a U.S. citizen and the President and Chief Executive Officer of the Company since July 2009, is a 1975 graduate of Lamar University with a Bachelor of Business Administration Degree in Accounting.  He worked at the Sabine River Authority of Texas as a Project Accountant from 1973 to 1975. From 1975 to 1977 he was a Staff Accountant with Wathen, DeShong and Company, CPA's. In 1977 he joined South Hampton as Controller. His job titles with the Company include 1979, Facility Manager at TOCCO, 1982, Treasurer of TOCCO, 1987, President of South Hampton. In 2007 he added the title of Executive Vice President of Arabian American Development Co. in addition to the petrochemical duties. He was named to his current position in 2009. From 1977 until the present Mr. Carter has been employed by the Company in a succession of positions with increasing and broader operating responsibilities, as follows; 1977-1979, Controller of South Hampton; 1979 to 1982, Facility Manager at a ship dock and terminal facility owned by TOCCO; 1982 to 1987, Treasurer of TOCCO; 1987 to 2010, President of South Hampton; and 2007 to 2009, Executive Vice President of Arabian American Development Co. This succession of positions with the Company gives Mr. Carter broad experience and knowledge in both the operations and finances of the Company, and in 2009 he was named to his current position, and also retains the petrochemical duties. Mr. Carter also serves as a Director and President of PEVM Ely Valley Mines, Inc. of which the Company owns 55% of the outstanding stock. Mr. Carter was appointed to the Board of AMAK in February 2009.

Joseph P. Palm Director since 2011 Current Age 69

Mr. Joseph P. Palm, a U.S. citizen, has a Masters of Business Administration Degree from Xavier University with over 40 years of experience in the chemical industry.  From 1967-1995 Mr. Palm served Rohm and Haas Company in varying positions including Market Manager, Business Development Manager, Product Safety Manager, and Market Development Analyst.  From 1997-2010 he served INEOS Oligomers as Business Development Manager and Marketing Manager.  We believe that his knowledge and experience provide valuable resources to our board of directors.

Simon Upfill-Brown Director since 2014 Current Age 61

Mr. Simon Upfill-Brown, a U.S. citizen, received undergraduate degrees in chemistry and mathematical statistics from Stellenbosch University, South Africa and an MBA from Stanford Graduate School of Business.  He has over 20 years’ senior level experience in international management of coatings, chemicals and renewable resources.  From 1993 he was President and CEO of Haltermann Inc. Haltermann was a subsidiary of Ascot plc until its acquisition by The Dow Chemical Company in June 2001. He was General Manager of Dow Haltermann from 2001 until 2008.  Mr. Upfill-Brown was also CEO of his own consulting firm, as well as CEO of a venture-backed algae-to-fuels company spun out of MIT in 2001, and a technology start-up focused on converting organic waste to hydrocarbon fuels. He began his career in the paint and protective coatings industry. Mr. Upfill-Brown joined the Company in 2012 as Executive Vice President and in 2013 was appointed to President of South Hampton Resources, Inc. Mr. Upfill-Brown was appointed to the Board of AMAK in December 2012.  We believe that his knowledge and experience provide valuable resources to our board of directors.

 

Name		Fees Earned or Paid in Cash ($)(1)				Stock Awards ($)				Option Awards ($)(2)(3)				Total ($)
Ghazi Sultan			25,000				--				56,392				81,392
Allen P. McKee			72,000				--				56,392				128,392
John R. Townsend			50,000				--				80,400				130,400
Joseph P. Palm			47,000				--				64,648				111,648
Gary K. Adams			45,000				--				119,604				164,604

 

 

 

(1)	Includes committee fees for 2013 in the amount of $120,000, Company board fees in the amount of $75,000, subsidiary board fees in the amount of $10,000, Al Masane Al Kobra Mining Co. board representation in the amount of $20,000 and per diem amounts in the amount of $14,000.

(2)

Represents 20,000 shares of stock options granted to Mr. Sultan and Mr. McKee for 2012 Board service at an exercise price of $2.82 per share based upon the closing price of the Company’s common stock on the grant date of February 23, 2010, 20,000 shares of stock options granted to Mr. Townsend for 2012 Board service at an exercise price of $4.09 per share based upon the closing price of the Company’s common stock on the grant date of May 2, 2011, 20,000 shares of stock options granted to Mr. Palm for 2012 Board service at an exercise price of $3.52 per share based upon the closing price of the Company’s common stock on the grant date of September 25, 2011, and 20,000 shares of stock options granted to Mr. Adams for 2012 Board service at an exercise price of $7.14 per share based upon the closing price of the Company’s common stock on the grant date of November 15, 2012.

(3)

This column represents the dollar amounts for the years shown of the aggregate grant date fair value of stock options granted in those years in accordance with SEC rules.  These amounts reflect the Company’s fiscal year accounting expense and do not correspond to the actual value that will be realized by the Non-Employee Directors.  For information on the valuation assumptions, see “Note 2 – Summary of Significant Accounting Policies – Share-Based Compensation” and “Note 14 – Share-Based Compensation” in the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

		Option awards																Stock awards
Name		Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options  (#) Unexercisable				Equity incentive plan awards: number of securities underlying unexercised unearned options (#)				Option exercise price ($)			Option Expiration date	Number of Shares or units of stock that have not vested (#)	Market value of shares or unites of stock that have not vested (#)	Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)	Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)
Ghazi Sultan			7,000				--				--			$	1.39		01/01/19
			7,000				--				--			$	2.21		01/27/20
			60,000				20,000				20,000			$	2.82		02/22/20
Allen P. McKee			4,667				--				--			$	2.21		01/27/20
			60,000				20,000				20,000			$	2.82		02/22/20
John R. Townsend			--				--				60,000			$	4.09		05/01/21
Joseph P. Palm			17,833				--				--			$	3.90		05/19/21
			--				--				80,000			$	3.52		09/24/21
Gary K. Adams			20,000				--				80,000			$	7.14		11/14/22

 

VOTE ON PROPOSED CORPORATE NAME CHANGE

 

PROPOSAL NO. 3

RATIFICATION OF SELECTION OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

 

 

		2013				2012
Audit Fees		$	368,384			$	236,717
Audit-Related Fees			-				-
Tax Fees			25,300				21,300
All Other Fees			52,100				35,772

 

 

ADVISORY VOTE ON EXECUTIVE COMPENSATION

•

Annual incentive awards consist of cash bonuses generated under our annual incentive program and our legacy profit sharing.  Cash awards under our annual incentive plan are tied to financial results (Operating Income). Our profit sharing program is available to all petrochemical segment employees (including our NEOs) and is based on cash flow from the petrochemical segment of the business. Our NEOs have historically participated in the profit sharing program with all of our petrochemical employees.  We have seen a connection between our executives and our other employees when everyone gathers for a quarterly meeting to discuss Company performance.  The checks that are handed out to each participant in attendance reflect the operating results of the previous quarter.  Everyone from

 

 

our lowest hourly rate petrochemical employee to our CEO feel the excitement or disappointment with the size of their respective profit sharing checks.  We believe that it is important to continue this practice and do not want to disrupt this employee-wide participation and personal connection and identification with our petrochemical facility's quarterly results.  We implemented a new annual incentive program for our NEOs in 2010 which could have eliminated the need for NEO participation in our profit sharing program.  However, rather than eliminate NEO participation from the profit sharing plan we simply net out any quarterly payment made throughout the year from the bonus generated under the new annual incentive program.  By doing this we maintain the connection between our executives and other employees.  Both bonuses and profit sharing awards are paid in cash and provide a strong link between pay and performance as they are directly determined by Operating Income and profitability. In addition, due to the President/CEO’s singular efforts on behalf of AMAK, the Committee determined that he should receive a special award equal to 1% of AMAK’s contribution to the Company for 2013 as reported on the line item “Equity in earnings (loss) of AMAK” (which reports AMAK’s operating results) in the Consolidated Statement of Income in the Company’s 2013 Form 10-K as an additional cash bonus.  This is discussed in greater detail on page 32.

•

We issued equity to our executives in the form of stock options under the 2008 long-term incentive program.  All remaining stock options authorized for issuance by our shareholders under the 2008 long-term incentive program were granted to our executives in 2011. In February 2014 we issued additional equity to our executives in the form of stock options under the 2012 Arabian American Development Company Stock and Incentive Plan.  The equity-based reward to our executives is highly correlated to the investment success of our shareholders as options hold value only as our stock price increases above the strike price.

Participant Title	Target Bonus (as % of Base Salary)	Max	Maximum Bonus (as % of Base Salary)
President and CEO	80%	2X	160%
Executive Vice President	70%	2X	140%
Chief Financial Officer	45%	2X	90%
Vice President of Marketing	45%	2X	90%
Vice President of Manufacturing	50%	2X	100%

For example, if 100% (“Target” Performance) of the Operating Income goal is met, then a 1.00X multiple is applied to the participant’s target bonus.  Threshold payouts will occur when 80% of the Operating Income goal is met (“Threshold” Performance).  In this case a 0.50X multiple is applied to the participant’s Target bonus.  Performance below Threshold (80% Target of Operating Income) results in a zero dollar payout.  The Maximum payout occurs when actual Operating Income is greater than or equal to 140% of the Operating Income goal (“Maximum” Performance).  When Maximum Performance is achieved, a 2.00X multiple is applied to the participant’s Target bonus.  Payouts are scaled linearly between Threshold and Maximum for

Base Salary:		$	378,560
Target Bonus as % of Base Salary: 80%		$	302,848
Maximum Bonus as % of Base Salary: 160%		$	605,696

Payout level	Corporate Performance Bonus Multiple	Performance Achievement
Maximum	2.00X	140% of Operating Income goal
Target	1.00X	100% of Operating Income goal
Threshold	0.50X	80% of Operating Income goal

•	An exercise price equal to closing price of Arabian American Development Company stock on the grant date,

•	Annual vesting in approximately equal installments over a specified period, and

•	Expiration seven to ten years after the grant date.

•	We benchmark our NEOs to comparable positions within the market in terms of specific duties, responsibilities, and job scope.

•	Each position has an established target annual incentive award opportunity, executive benefits and perquisites.  These incentive levels and benefits are reviewed by the Committee on an annual basis to determine their relative level of competitiveness with the market.

•	We generally target all elements of pay and total direct compensation to be positioned between the 25th to 50th percentiles of our peer group.

•	Individual executive pay positioning will vary based on the requirements of the job (competencies and skills), the executive’s experience and performance, and the organizational structure (internal alignment and pay relationships).

•	We also consider internal pay equity when establishing compensation levels.  Currently, we believe that our compensation level for each of our NEOs reflects his or her job responsibility and scope appropriately and scale down from the CEO in a reasonable manner.

•	Exceptions to normal practice may be made based on critical business and people needs.

 

•

The Compensation Committee (comprised of only independent directors) establishes, reviews and approves all elements of the executive compensation program.  A copy of the Compensation Committee Charter is available on our website.  During 2013 the Committee engaged Pearl Meyer & Partners (“PM&P”) to serve as its independent outside executive compensation consultant.  PM&P’s primary role is to provide advice and perspective regarding market compensation trends that may impact decisions we make about our executive compensation program and practices.  PM&P was instrumental in assisting the Committee in a complete overhaul of our executive compensation program in the latter half of 2010.  The Company incurred expenses during 2013 and 2012 payable to PM&P in the amount of $370 and $16,443, respectively.  Management has the responsibility for effectively implementing the executive compensation program.  Additional responsibilities of the Committee, management and the consultant include:

•

The Committee reviews and approves business goals and objectives relevant to executive compensation, evaluates the performance of the President/CEO in light of these goals and objectives, and determines and establishes the President/CEO’s compensation level.

•

Based on review of market data, individual performance and internal pay comparisons, the Committee independently sets the pay for our President/CEO and reviews and approves all NEO and other executive pay arrangements.

 

•	The President/CEO makes recommendations on program design and pay levels, where appropriate, and oversees the implementation of such programs and directives approved by the Committee.

•	The President/CEO develops pay recommendations for his direct reports and other key executives.  This includes all of our NEOs (with the exception of our CEO himself).

•	Our Chief Financial Officer provides the financial information used by the Committee to make decisions with respect to incentive compensation goals and related payouts.

 

•	The compensation consultant is responsible for gathering, analyzing and presenting peer group pay practices and relevant data to the Committee.  They do not have the authority to determine pay.

•	The consultant provides periodic updates to the Committee regarding various tax, accounting and regulatory issues that could have an impact on executive compensation design, administration and/or disclosure.

 

Executive		2013 Base Salary				Annual Incentive Plan Target (Profit Sharing and Cash Bonus)				Long-Term Incentive Compensation(1)				Total Direct Compensation Target
Nicholas N. Carter President & CEO      Compensation Amount		$	378,560			$	302,848			$	156,771			$	838,179
Simon Upfill-Brown Executive Vice President      Compensation Amount		$	325,000			$	227,500			$	83,745			$	636,245
Connie J. Cook Chief Financial Officer      Compensation Amount		$	176,800			$	79,560			$	71,260			$	327,620
Mark D. Williamson Vice President of Marketing      Compensation Amount		$	273,312			$	122,990			$	61,758			$	458,060
Ron Franklin Vice President of Manufacturing      Compensation Amount		$	242,112			$	121,056			$	71,260			$	434,428

(1)

The compensation amount for each NEO shown reflects the value of options granted to the NEOs by the Compensation Committee in the first quarter of 2011 which vest over the next four (4) years in equal increments.  For Mr. Upfill-Brown this amount represents the value of options granted in the second quarter of 2013 which vest over the next (4) years in equal increments.

 

 

 

Beginning of the Performance Period	During the Performance Period	End of the Performance Period
Operating Income goals are developed by the Committee and management and ultimately approved by the Committee	Operating Income performance is monitored relative to goals   Operating Income goals cannot be changed during the performance period	Management presents actual Operating Income results relative to goals and the Committee reviews actual performance to determine any payouts   The Committee may exclude or adjust certain items that are outside the normal course of business, unusual and/or infrequent, and not reflective of our core operating performance for that period

•	limits on annual incentive and long-term performance awards, thereby defining and capping potential payouts;

•	application of an annual incentive metric that aligns employees with the common goal of increasing Operating Income;

•	use of a long-term incentive vehicle—stock option—that vests over a number of years, thereby providing strong incentives for sustained operational and financial performance;

•	Committee discretion to adjust payouts under the annual incentive plan to reflect the core operating performance of the company but prohibits discretion for payouts above stated maximum awards;

•	annual bonuses to executives are awarded after the Company’s pre-bonus Operating Income for the fiscal year is determined which means that the annual bonus is delayed and at risk to the executives based on the actual net operating performance of the Company; and

•

no awards of annual bonuses and stock option grants for a given year are based on matrices such as revenue or operating results of particular transactions or units, which would create the potential that personnel might take actions that benefit that matrix in the short-term while exposing the Company to inappropriate risk.

 

 

•

2013 Target Pre-bonus Operating Income of $21.5 million; therefore, Threshold level of $17.2 million; As noted previously, our 2013 actual Pre-bonus Operating Income was $20.8 million which was 3% below the Target level of $21.5 million; therefore, our executives qualified for a bonus under the annual incentive program of approximately $780,000.

•	2013 Adjusted EBITDA of $23.8 million

•

2012 Target Pre-bonus Operating Income of $18 million; therefore, Threshold level of $14.4 million; As noted previously, our 2012 actual Pre-bonus Operating Income was $18.1 million which was 1% above the Target level of $18 million; therefore, our executives qualified for a bonus under the annual incentive program of approximately $666,000.

•	2012 Adjusted EBITDA of $20.9 million

Position		Base Salary 2013				Base Salary 2014				Increase
President and CEO		$	378,560			$	386,131			$	7,571
Executive Vice President			325,000				331,500				6,500
Chief Financial Officer			176,800				195,336				18,536
Vice President of Marketing			273,312				278,778				5,466
Vice President of Manufacturing			242,112				246,954				4,842

 

Employee Name	Title		Total Options Granted				Vesting Period #1 1/12/11- 1/11/12				Vesting Period #2 1/12/12- 1/11/13				Vesting Period #3 1/12/13- 1/11/14				Vesting Period #4 1/12/14- 1/11/15
Nicholas Carter	President /CEO			129,030				32,257				32,258				32,257				32,258
Ronald Franklin	VP Mfg.			58,650				14,662				14,663				14,662				14,663
Connie Cook	Sec/Treas/CFO			58,650				14,662				14,663				14,662				14,663
Mark Williamson	VP Marketing			50,830				12,707				12,708				12,707				12,708
Turner Evans	Mgr. of Log.			31,280				7,820				7,820				7,820				7,820
Merf Kaufman	Plant Mgr.			31,280				7,820				7,820				7,820				7,820
Darren Smith	IT Mgr.			31,280				7,820				7,820				7,820				7,820
Total				391,000

Employee Name	Title		Total Options Granted				Vesting Period #1 2/21/14- 2/20/15				Vesting Period #2 2/21/15- 2/20/16				Vesting Period #3 2/21/16- 2/20/17				Vesting Period #4 2/21/17- 2/20/18
Nicholas Carter	President /CEO			150,000				37,500				37,500				37,500				37,500
Simon Upfill-Brown	Executive VP			120,000				30,000				30,000				30,000				30,000
Ronald Franklin	VP Manufacturing			58,000				14,500				14,500				14,500				14,500
Connie Cook	Sec/Treas/CFO			47,000				11,750				11,750				11,750				11,750
Mark Williamson	VP Marketing			65,000				16,250				16,250				16,250				16,250
John Cook	Mgr. of Prod. Eng.			10,000				2,500				2,500				2,500				2,500
Turner Evans	Mgr. of Operations			10,000				2,500				2,500				2,500				2,500
Marvin Kaufman	Mgr. of Tech. Svc.			10,000				2,500				2,500				2,500				2,500
Darren Smith	IT Manager			10,000				2,500				2,500				2,500				2,500
Ada Hartman	Controller			10,000				2,500				2,500				2,500				2,500
Luke Worry	Maintenance Mgr.			10,000				2,500				2,500				2,500				2,500
Total				500,000

Name and Principal Position	Year		Salary ($) (1)				Bonus ($)				Stock Award(s) ($)(2)				Option Award(s) ($)(2)				Non-Equity Incentive Plan Compensation ($)				Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)				All Other Compensation ($)(3)				Total ($)
Nicholas N. Carter President and Chief Executive Officer	2013		$	376,880			$	311,380				--			$	156,771				--				--			$	23,867			$	868,898
	2012		$	362,923			$	297,220				--			$	159,534				--				--			$	23,900			$	843,577
	2011		$	350,000			$	356,058				--			$	189,920				--				--			$	23,485			$	919,463
Simon Upfill-Brown Executive Vice President since Sep 2012	2013		$	316,923			$	206,788				--			$	83,745				--				--			$	18,400			$	625,856
	2012		$	71,481			$	52,809			$	72,600			$	--				--				--			$	25,550			$	222,440
Connie J. Cook Chief Financial Officer since Jan 2011; previously Chief Accounting Officer	2013		$	176,015			$	73,829				--			$	71,260				--				--			$	27,810			$	348,914
	2012		$	169,231			$	78,722				--			$	72,641				--				--			$	25,088			$	345,682
	2011		$	159,997			$	101,556				--			$	87,834				--				--			$	21,802			$	371,189
Mark D. Williamson Vice President of Marketing, Petrochemical Company	2013		$	272,099			$	113,506				--			$	61,758				--				--			$	18,417			$	465,780
	2012		$	262,200			$	121,221				--			$	63,600				--				--			$	17,980			$	465,001
	2011		$	274,343			$	145,921				--			$	83,857				--				--			$	18,054			$	522,175
Ron Franklin Vice President of Manufacturing, Petrochemical Company	2013		$	241,038			$	111,738				--			$	71,260				--				--			$	19,941			$	443,977
	2012		$	232,200			$	119,328				--			$	77,435				--				--			$	19,224			$	448,187
	2011		$	225,000			$	143,058				--			$	83,609				--				--			$	16,072			$	467,739