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. )
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
Capital Southwest Corporation
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(Name of Registrant as Specified In Its Charter)
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 21, 2008
To the Shareholders of Capital Southwest Corporation:
NOTICE IS HEREBY GIVEN that our annual meeting of shareholders will be
held on Monday, July 21, 2008, at 10:00 a.m., Dallas time, in Meeting Room #210
of the North Dallas Bank Tower, 12900 Preston Road, Dallas, Texas, for the
following purposes:
1. To elect six directors to serve until the next annual meeting of
shareholders or until their respective successors shall be elected and
qualified.
2. To ratify the appointment by our Audit Committee of Grant Thornton LLP as
our independent registered public accounting firm for the fiscal year
ending March 31, 2009.
Only record holders of our common stock at the close of business on May 27,
2008 will be entitled to notice of, and to vote at, the meeting and any
adjournment thereof.
Your vote is important. Accordingly, you are asked to vote, whether or
not you plan to attend the annual meeting. You may vote by: (i) mail by marking,
signing, dating and returning the accompanying proxy card in the postage-paid
envelope we have provided, (ii) using the Internet at www.voteproxy.com, (iii)
phone by calling 1-800-776-9437, or (iv) attending the annual meeting and voting
in person. If you plan to attend the annual meeting to vote in person and your
shares are registered with our transfer agent, American Stock Transfer & Trust
Company, or in the name of a broker or bank, you must secure a proxy from the
broker or bank assigning voting rights to you for your shares. You may revoke
your proxy by (i) executing and submitting a later dated proxy card, (ii)
subsequently authorizing a proxy card through the Internet or by telephone,
(iii) sending a written revocation of proxy to our Secretary at our principal
executive office, or (iv) attending the annual meeting and voting in person.
By Order of the Board of Directors
JEFFREY G. PETERSON
Secretary
May 27, 2008
Dallas, Texas
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 21, 2008
This proxy statement is furnished in connection with the solicitation
by the board of directors of Capital Southwest Corporation, a Texas corporation,
with principal executive offices at 12900 Preston Road, Suite 700, Dallas, Texas
75230, of proxies to be voted at the annual meeting of shareholders to be held
on July 21, 2008 or any adjournment thereof. The date on which this proxy
statement and the enclosed form of proxy are first being sent or given to our
shareholders is on or about May 27, 2008. Although the annual report is being
mailed to shareholders with this proxy statement, it does not constitute part of
this proxy statement.
Purpose of the Meeting
The annual meeting of shareholders is to be held for the purposes of
(1) electing six persons to serve as our directors until the next annual meeting
of shareholders, or until their respective successors shall be elected and
qualified; and (2) ratifying the appointment by our Audit Committee of Grant
Thornton LLP as our independent registered public accounting firm for the fiscal
year ending March 31, 2009.
Who May Vote
The record date for holders of our common stock entitled to notice of,
and to vote at, the annual meeting of shareholders is the close of business on
May 27, 2008, at which time we had outstanding and entitled to vote at the
meeting 3,889,151 shares of common stock.
Quorum
The presence, in person or by proxy, of the holders of a majority of
the shares of common stock outstanding and entitled to vote at the annual
meeting is necessary to constitute a quorum (1,944,576 shares). Each shareholder
is entitled to one vote, in person or by proxy, for each share of common stock
held in its name at the close of business on the record date. Shareholders who
are present, in person or by proxy, but abstain from voting on any matter will
be counted as present at the meeting for purposes of constituting a quorum, but
not for purposes of determining the final vote on any matter. Similarly,
nominees (such as broker-dealers) who are present, in person or by proxy, but
abstain or refrain from voting on any item, will be counted as present at the
meeting, but not voting on any such item.
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Required To Vote
To be elected a director, each nominee must receive the favorable vote
of the holders of a majority of the shares of common stock represented at the
annual meeting in person or by proxy. In order to ratify the appointment of
Grant Thornton LLP as our independent registered public accounting firm for the
year ending March 31, 2009, the ratification proposal must receive the favorable
vote of a majority of the shares of common stock represented at the annual
meeting in person or by proxy.
Each proxy delivered to us, unless the shareholder otherwise specifies
therein, will be voted FOR the election as directors of the persons nominated as
directors and FOR the ratification of the appointment by the Audit Committee of
our board of directors of Grant Thornton LLP as our independent registered
public accounting firm. In each case where the shareholder has appropriately
specified how the proxy is to be voted, it will be voted in accordance with the
specification. As to any other matter or business which may be properly brought
before the meeting, a vote may be cast pursuant to the accompanying proxy in
accordance with the judgment of the person or persons voting the same, but
neither management nor our board of directors knows of any such other matter or
business.
How You May Vote
You may vote using any of the following methods:
o By Mail: Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided. The named proxies will vote
your shares according to your directions. If you submit a signed proxy
card without indicating your vote, the person voting the proxy will
vote in favor of proposals one and two.
o By Internet: Go to www.voteproxy.com and use the Internet to transmit
your voting instructions and for electronic delivery of information
until 11:59 Eastern Time on July 17, 2008. Have your proxy card in hand
when you access the Web site and then follow the instructions.
o By Phone: Call 1-800-776-9437 and use any touch-tone telephone to
transmit your voting instructions until 11:59 Eastern Time on July 17,
2008. Have your proxy card in hand when you call and then follow the
instructions.
o By Attending the Annual Meeting In Person: You may vote shares held
directly in your name in person at the meeting. If you want to vote
shares that you hold in street name at the meeting, you must request a
legal proxy from your broker, bank or other nominee that holds your
shares.
You may revoke your proxy and change your vote at any time before the
final vote at the meeting. You may do this by signing a new proxy card with a
later date, voting on a later date by proxy, or by attending the meeting and
voting in person. However, your attendance at the meeting will not automatically
revoke your proxy. You must specifically revoke your proxy.
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of May 1, 2008 by (1) each person,
so far as is known to our management, who is the beneficial owner (as that term
is defined in the rules and regulations of the SEC) of more than 5% of our
outstanding common stock, (2) each executive officer named in the Summary
Compensation Table, (3) each current director, and (4) all current directors and
executive officers as a group. The number of shares beneficially owned by each
entity, person, director or executive officer is determined under the rules of
the SEC, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership includes
any shares as to which the individual has the sole or shared voting power or
investment power and also any shares that the individual has a right to acquire
as of June 29, 2008, (60 days after May 1, 2008) through the exercise of any
stock option or other right. Unless otherwise indicated below, each of the
persons named in the table has sole voting and investment power with respect to
the shares indicated to be beneficially owned.
Name and Address of Shares Owned Percent of
Beneficial Owner Beneficially Class
---------------- ------------ -----
William R. Thomas..........................675,170 (1)(2) 17.4%
12900 Preston Rd., Suite 700
Dallas, Texas 75230
Ned Sherwood ..............................267,484 (6) 6.9
1133 Avenue of the Americas, Suite 2700
New York, NY 10036
First Manhattan Company ...................239,212 (5) 6.2
437 Madison Avenue
New York, New York 10022
Gary L. Martin ............................181,533 (2)(3) 4.7
12900 Preston Rd., Suite 700
Dallas, Texas 75230
William M. Ashbaugh ....................... 90,515 (2)(3)(4) 2.3
Donald W. Burton .......................... 25,380 (7) *
Graeme W. Henderson ....................... 9,500 *
Jeffrey G. Peterson ....................... 7,029 (3)(4) *
Samuel B. Ligon ........................... 3,000 *
John H. Wilson ............................ 2,000 *
All directors and executive officers
as a group (10 persons)....................817,839 (8) 21.0
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* Less than 1%.
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(1) Mr. Thomas has sole voting and investment power with respect to 587,026
shares, which include 37,974 shares owned by one of his children and
206,525 shares owned by Thomas Heritage Partners, Ltd., in which Mr. Thomas
has a 38.7% limited partnership interest. Mr. Thomas holds a majority
interest in and is president and sole manager of Thomas Heritage Company,
LLC, the sole general partner of Thomas Heritage Partners, Ltd.
(2) Messrs. Thomas, Martin and Ashbaugh direct the trustees in the voting of
88,144 shares owned by a trust pursuant to a pension plan for our employees
and certain of our wholly-owned portfolio companies. Accordingly, Messrs.
Thomas, Martin and Ashbaugh have shared voting and investment power with
respect to the 88,144 shares, representing 2.3% of our outstanding common
stock, owned by the aforementioned trust. Under the rules and regulations
of the SEC, Messrs. Thomas, Martin and Ashbaugh are deemed to be the
beneficial owners of such 88,144 shares, which are included in the shares
beneficially owned by each of Messrs. Thomas, Martin and Ashbaugh.
(3) Includes 871, 5,297 and 629 shares owned by a trust pursuant to an ESOP
which were allocated to Messrs. Ashbaugh, Martin and Peterson,
respectively.
(4) Includes 1,500 and 6,400 shares subject to immediately exercisable stock
options held by Messrs. Ashbaugh and Peterson, respectively.
(5) As reported to us by First Manhattan Co., First Manhattan had sole voting
and dispositive power with respect to 100 shares, and shared voting and
dispositive power with respect to 237,512 and 239,112 shares, respectively,
by reasons of advisory and other relationships with the persons who own the
shares.
(6) As reported to us by Ned Sherwood, Mr. Sherwood had sole voting and
dispositive power with respect to 49,938 and 63,606 shares, respectively,
and shared voting and dispositive power with respect to 203,878 shares by
reasons of advisory and other relationships with the persons who own the
shares.
(7) Mr. Burton has sole voting and investment power with respect to 25,380
shares owned by Burton Partnership, LP, of which Mr. Burton is the general
partner.
(8) Includes (a) the shares owned by the partnership and trusts referred to in
notes (1), (2), (3) and (7), respectively, to the above table, (b) 9,930
shares subject to immediately exercisable stock options (including those
referred to in note (4) to the above table) and (c) 37,974 shares owned by
an immediate family member of Mr. Thomas.
In addition to the beneficially owned shares reported in the above
table, ESOPs for our employees and employees of certain wholly-owned portfolio
companies held an aggregate of 288,111 shares (7.4% of our outstanding common
stock) on May 1, 2008. Voting rights on such shares were passed through to the
ESOP participants, who are entitled to vote the shares in their individual
accounts on July 17, 2008. As trustee of the ESOPs, Mr. Martin has voting power
with respect to shares not voted prior to July 17, 2008.
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Officers:
Term of # of
Office Principal Portfolio Other
Position(s) and Length Occupation(s) Companies Directorships
Name, Address* Held with of During Past 5 Overseen Held by
and Age Company Time Served Years by Officers Officers
---------------------- ------------ ----------- -------------- ---------- ---------------
Interested Persons
------------------
Gary L. Martin See PROPOSAL 1: ELECTION OF DIRECTORS
Age 61
William M. Ashbaugh Senior Vice One year; Senior Vice 5 CMI Holding
Age 53 President Senior Vice President Company, Inc.;
and Vice President since 2005; Dennis Tool,
President since 2005 Vice President Inc.; Palm
since 2001 Harbor Homes;
Via Holdings,
Inc.
Jeffrey G. Peterson Secretary, One year; Secretary and 11 Balco, Inc.;
Age 34 Chief Secretary Chief BOXX
Compliance and Chief Compliance Technologies,
Officer, Compliance Officer since Inc.; Heelys,
Vice Officer 2007; Vice Inc.; Humac
President since 2007; President Company; Media
and Vice since 2005; Recovery, Inc.;
Investment President Investment PalletOne,
Associate since 2005 Associate Inc.; The
since 2001 RectorSeal
Corporation;
Wellogix, Inc.;
The Whitmore
Manufacturing
Company
PROPOSAL 1: ELECTION OF DIRECTORS
Six directors are proposed to be elected at the annual meeting to serve
until the next annual meeting of shareholders or until their respective
successors shall be elected and qualified. Each of the named persons currently
serves as a director and was nominated by the Nominating Committee. The
Nominating Committee did not receive any nominations for trust manager from any
person.
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Nominees for Director:
Term of # of
Office Principal Portfolio Other
Position(s) and Length Occupation(s) Companies Directorships
Name, Address* Held with of During Past 5 Overseen Held by
and Age Company Time Served Years by Officers Officers
---------------------- ------------ ----------- -------------- ---------- ---------------
Interested Persons
------------------
William R. Thomas Chairman of One year; President until -
Age 79 the Board, Chairman 2007; and
President since 1982; currently
and Director director Chairman of the
since 1972 Board
Gary L. Martin President, One year; President of 26 Alamo Group
Age 61 Vice President the Corporation Inc.; All
President since 2007; since 2007; Components,
and Director director President of Inc.; Heelys,
since 1988 The Whitmore Inc.; Humac
Manufacturing Company;
Company and Lifemark
Vice President Group; Media
of the Company Recovery, Inc;
until 2007 The RectorSeal
Corporation;
The Whitmore
Manufacturing
Company
Not Interested Persons
----------------------
Donald W. Burton Director One year Chairman, - Knology, Inc.;
Age 64 President and Cluster A
General Partner Mutual Funds
of various managed by
South Atlantic BlackRock
Venture Fund Advisors
Partnership
entities;
General Partner
of The Burton
Partnerships
Graeme W. Henderson Director One year; Self-employed 1 Lifemark Group
Age 74 director as a private
since investor and
1976 consultant
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Term of # of
Office Principal Portfolio Other
Position(s) and Length Occupation(s) Companies Directorships
Name, Address* Held with of During Past 5 Overseen Held by
and Age Company Time Served Years by Officers Officers
---------------------- ------------ ----------- -------------- ---------- ---------------
Samuel B. Ligon Director One year; Self-employed 1 Heelys, Inc.;
Age 69 director as a private Jokari/US,
since 2003 investor and Inc.; Smith
consultant Abrasives, Inc.
John H. Wilson Director One year; President of 2 Encore Wire
Age 65 director U.S. Equity Corporation;
since 1988 Corporation, a Palm Harbor
venture capital Homes, Inc.
investment firm
*The business address of each director is 12900 Preston Road, Suite 700, Dallas,
Texas 75230.
Our Nominating Committee has determined that Messrs. Thomas and Martin
are "interested persons" as defined in the Investment Company Act of 1940 and
are not "independent" as defined by the Nasdaq Stock Market Listing Standards.
The committee has determined that Messrs. Burton, Henderson, Ligon and Wilson
are "independent" as defined by the Nasdaq Stock Market Listing Standards and
they are not "interested persons" as defined by the Investment Company Act of
1940.
Vote Required
Nominees who receive the affirmative vote of the holders of a majority
of the shares of common stock represented in person or by proxy at the annual
meeting shall be re-elected as our directors. Abstentions will have no effect on
the election of directors. If you hold your shares through a broker, bank or
other nominee and you do not instruct them how to vote on this proposal, your
broker may have authority to vote your shares. You may give each nominee one
vote for each share you hold. The proxy holders intend to vote the shares
represented by proxies to elect the six nominees to the board set forth in
Proposal 1.
Board Recommendation
The board recommends that you vote "For" each of the nominees to the
board set forth in this Proposal 1.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During our fiscal year ended March 31, 2008, our board of directors
held ten meetings. The board of directors has established an Audit Committee, a
Compensation Committee and a Nominating Committee to assist the board in
carrying out its duties. During the year, our Audit Committee held seven
meetings, our Compensation Committee held four meetings and our Nominating
Committee held one meeting. Mr. Thomas (Chairman) attended less than 75% of the
total number of board and committee meetings on which the directors served. All
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directors who were serving at the time attended our 2007 annual meeting of
shareholders.
Committee Member Independence
All of the members of the Audit Committee, the Compensation Committee
and the Nominating Committee are "independent" as defined by the Nasdaq Stock
Market Listing Standards and the Sarbanes-Oxley Act of 2002 and they are not
"interested persons" as defined by the Investment Company Act of 1940.
Audit Committee
The Audit Committee members are Messrs. Ligon (Chairman), Henderson and
Wilson. The committee assists the board in fulfilling its responsibilities for
general oversight of: (1) our accounting and financial reporting processes and
the integrity of our financial statements; (2) our systems of internal
accounting and financial controls; (3) the independence, qualification and
performance of our independent auditors; and (4) our compliance with ethics
policies and legal and regulatory requirements relating to financial statements
and reporting. The committee has the responsibility for selecting our
independent registered public accounting firm and pre-approving audit and
non-audit services. Among other things, the committee prepares a report for
inclusion in the annual proxy statement; reviews the Audit Committee charter and
the committee's performance; approves the scope of the annual audit; and reviews
our corporate policies with respect to financial reporting and valuation of our
investments. The committee also oversees investigations into complaints
concerning financial matters. The committee has the authority to obtain advice
and assistance from outside legal, accounting or other advisors as the committee
deems necessary to carry out its duties. The committee has determined that
Messrs. Burton, Henderson, Ligon and Wilson are "independent" as defined by the
Nasdaq Stock Market Listing Standards and they are not "interested persons" as
defined by the Investment Company Act of 1940.
The duties and responsibilities of the Audit Committee are set forth in
the Amended and Restated Audit Committee Charter, which the board of directors
adopted on May 27, 2003. A copy of the Amended and Restated Audit Committee
Charter is available on our website at www.capitalsouthwest.com.
Nominating Committee
The Nominating Committee members are Messrs. Wilson (Chairman), Burton,
Henderson and Ligon. The committee has the responsibility to (1) determine and
recommend to the board the slate of director nominees to be proposed to our
shareholders; (2) identify and recommend to the board individuals qualified to
become board members; and (3) insure that the board and its committees are
appropriately constituted. The committee will consider director nominations made
by shareholders, who should send nominations to our corporate secretary, Jeffrey
G. Peterson. Shareholder nominations proposed for consideration by the committee
must include the nominee's name and qualifications for board membership. See
"Shareholder Proposals" on page 23. The committee has determined that Messrs.
Burton, Henderson, Ligon and Wilson are "independent" as defined by the Nasdaq
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Stock Market Listing Standards and they are not "interested persons" as defined
by the Investment Company Act of 1940.
The committee seeks to identify, and the board of directors selects,
director candidates who (1) have significant experience that is relevant and
beneficial to the board of directors and the Company, (2) are willing and able
to make sufficient time commitments to the Company's affairs in order to perform
their duties as directors, including regular attendance of board and committee
meetings, (3) have a record of character and integrity, and (4) represent the
interests of the Company's shareholders. The evaluation process for nominees is
the same regardless of the source of the recommendation. A copy of the
Nominating Committee Charter is available via the Internet at
www.capitalsouthwest.com.
Compensation Committee
The Compensation Committee members are Messrs. Wilson (Chairman),
Burton, Henderson and Ligon. The committee (1) discharges the board's
responsibilities to establish the compensation of our executives, recommending
to the board any proposed changes in the basic elements of the Company's
compensation programs and any proposed stock option grants; (2) makes an annual
report on executive compensation for inclusion in our annual proxy statement;
(3) reviews and discusses with management and recommends to the board the
Company's Compensation Discussion and Analysis for inclusion in each year's
proxy statement; and (4) provides oversight for our compensation structure,
including our equity compensation plans and benefits programs. Other specific
duties and responsibilities of the committee include reviewing and approving
objectives relative to executive officers' compensation; approving and amending
our incentive compensation and stock option programs (subject to shareholder
approval if required); and annually evaluating the committee's performance and
its charter. A copy of the Compensation Committee Charter is available via the
Internet on our website at www.capitalsouthwest.com/investors/governance. The
committee has determined that Messrs. Burton, Henderson, Ligon and Wilson are
"independent" as defined by the Nasdaq Stock Market Listing Standards and they
are not "interested persons" as defined by the Investment Company Act of 1940.
Annually, the committee (1) reviews the objectives and structure of the
Company's plans for executive compensation, incentive compensation, equity-based
compensation and its general compensation plans and employee benefit plans
(including retirement plans); (2) evaluates the performance of the chief
executive officer in light of the objectives of the Company's executive
compensation plans, and determines his compensation level based on this
evaluation; and (3) in conjunction with the Company's chief executive officer,
reviews and determines the compensation of all other executive and key
employees, in light of the goals and objectives of the Company's executive
compensation plans. Periodically, as the committee deems necessary or desirable,
and pursuant to the applicable equity-based compensation plan, the committee
will recommend that the board grant stock options (usually at five year
intervals) to officers or employees of the Company for such number of shares of
common stock as the committee shall deem to be in the best interest of the
Company.
9
Compensation Committee Interlocks and Insider Participation
None of our executive officers served as a member of the Compensation
Committee of the board of directors or as a director of any other entity, one of
whose executive officers served as a member of our Compensation Committee.
Certain Relationships and Related Party Transactions
The president is responsible for reviewing and approving all material
transactions with any related party. Related parties include any of our
directors or executive officers, certain of our stockholders and their immediate
family members.
To identify related party transactions, each year, in addition to the
ongoing reporting obligations our our related parties, we submit and require our
directors and officers to complete Director and Officer Questionnaires
identifying any transactions with us in which the officer or director or their
family members have an interest. We review related party transactions due to the
potential for a conflict of interest. A conflict of interest occurs when an
individual's private interest interferes with the interests of the Company as a
whole. Our Code of Business Conduct and Ethics, which is signed by all employees
and directors on an annual basis, requires all directors, officers and employees
who have a conflict of interest to immediately notify the president or
secretary. If there were any actions or relationships that might give rise to a
conflict of interest, such actions or relationships would be reviewed and
pre-approved by the Board of Directors.
We expect our directors, officers and employees to act and make
decisions that are in our best interests and encourage them to avoid situations
which present a conflict between our interests and their own personal interests.
Our directors, officers and employees are prohibited from taking any action that
may make it difficult for them to perform their duties, responsibilities and
services to the Company in an objective and fair manner. A copy of our Code of
Business Conduct and Ethics will be mailed to shareholders without charge upon
request to Jeffrey G. Peterson at 12900 Preston Road, Suite 700, Dallas, TX
75230. Additionally, a copy is available via the Internet at our website
(www.capitalsouthwest.com).
There were no related party transactions for the fiscal year ended
March 31, 2008.
COMPENSATION DISCUSSION AND ANALYSIS
The objectives of our compensation programs are to attract, retain and
motivate competent executive officers who have the experience and ability to
contribute to the success of the Company's investment management activities. The
individual judgments made by the Compensation Committee are subjective and are
based largely on the recommendations of the chief executive officer and the
committee's perception of each executive's contribution to both the Company's
past performance and its long-term growth potential. The committee attempts to
insure that the total compensation paid to each executive officer is fair,
reasonable, competitive and motivational. Periodically, the committee reviews
survey data on similar positions with similar companies.
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This report provides information regarding the compensation programs in
place for the Company's principal executive officer, principal financial officer
and four other highly compensated executive officers (Named Executive Officers
or "NEOs") for the year ended March 31, 2008. It includes information regarding,
among other things, the objectives of the Company's compensation programs and
each element of compensation that we provide. The principal elements of
compensation for executive officers are base salary, discretionary bonus awards,
stock options granted under the stock option plan, contributions to the Employee
Stock Ownership Plan ("ESOP") and funding of a defined benefit retirement plan.
Role of Executive Officers in Compensation Decisions
The committee reviews the performance of our chief executive officer
and determines the amount of his base salary and annual bonus.
Gary L. Martin, our chief executive officer, annually reviews the
performance of all officers and key employees with the committee, together with
recommendations of base salaries, bonuses and stock option grants based on these
reviews. The committee then exercises its discretion in modifying any
recommended salaries, bonuses or stock options. The committee approves for
submission to the board recommendations regarding stock option grants for all of
our officers and employees.
Base Salaries
Base salaries were determined by the Compensation Committee in July
2007 for each of the executive officers on an individual basis, taking into
consideration individual contributions to overall company performance, length of
tenure, compensation levels for comparable positions and internal equities among
positions. Because we place more emphasis on those compensation elements which
are linked to long-term results, our base salaries are generally lower than
those paid by other companies of our size and type. In July 2007, the committee
set the base salary of our chief executive officer, Gary L. Martin, at $250,000
per annum. Salaries of other NEOs are shown in the Summary Compensation Table.
The base salaries of our other NEOs are deemed appropriate in relation to the
salary levels for comparable positions shown in the VCComp 2007 Compensation
Survey.
Bonus Awards
In addition to base salaries, certain executive officers received bonus
awards in March 2008, the amounts of which were determined by the committee on a
discretionary basis. The amounts of bonuses to NEOs are influenced by a number
of factors, including the extent and duration of the Company's growth, the
individual's contribution to achieving overall company growth over both
long-term and short-term time horizons and the individual's creativity and
effectiveness. March 2008 year-end bonuses totaled $330,000. The bonuses of our
other NEOs are deemed appropriate in relation to their performance and the data
on comparable positions shown in the VCComp 2007 Compensation Survey.
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Stock Options
Our Stock Option Plan enables the Company to provide the following to
its executives: (1) incentive compensation commensurate with the creation of
stockholder value; (2) opportunities for increased stock ownership by
executives; and (3) competitive levels of total compensation over a long time
horizon.
Options are granted at the Nasdaq Stock Market's closing price of the
Company's stock on the date of grant and thus will have no ultimate value unless
the value of the Company's stock appreciates. The Company has never granted
options with an exercise price that is less than the closing price of the
Company's common stock on the grant date, nor has it granted options which are
priced on a date other than the grant date. The committee believes stock options
provide a significant incentive for the option holders to enhance the value of
the Company's common stock by continually improving the Company's performance
and its investment results.
Options granted are generally exercisable on or after the first
anniversary of the date of grant in five to ten annual installments and have a
term of ten years. Upon termination or retirement, option holders have 30 days
to exercise options to purchase vested shares except in the case of death or
disability (subject to a 6-month limitation). Prior to the exercise of options,
holders have no rights as stockholders with respect to the shares subject to
such option, including voting rights and the right to receive dividends or
dividend equivalents. The board does retain the right to make option holders
whole in certain situations, e.g. liquidating dividend or distribution.
From time to time, the committee has recommended and the board of
directors has granted qualified and non-qualified stock options to executive
officers and investment associates. Stock option award levels vary among
participants based on their positions within the Company. On July 16, 2007,
options to purchase 25,000 shares at $152.98 per share were granted to Gary L.
Martin, who joined the Company as President and CEO.
Giving effect to the option grants described above, the options
exercised during the year and the cancellation of Susan K. Hodgson's 4,000
options upon her resignation, outstanding options at March 31, 2008 totaled
70,400 shares, equivalent to a 1.8% fully-diluted equity interest.
Employee Stock Ownership Plan
We maintain an Employee Stock Ownership Plan ("ESOP") for our employees
as part of the ESOP of one of our wholly-owned portfolio companies in which our
NEOs participate. Employees who have completed one year of credited service, as
defined in the plan, are eligible to participate in the ESOP. Contributions to
the ESOP are discretionary, within limits established by the Internal Revenue
Code. Funds contributed to the trust established under the ESOP are applied by
the trustees to the purchase, in the open market at prevailing market prices, of
our common stock. A participant's interest in contributions to the ESOP fully
vests after five years (three years effective April 1, 2008) of credited
service, and such vested interest is distributed to a participant at retirement,
12
death or total disability, or after a one year break in service resulting from
termination of employment for any other reason. Thus, the ESOP rewards long-term
employees, aligning their interests with those of the Company's long-term
shareholders. See note (3) to the table under "Stock Ownership of Certain
Beneficial Owners."
A significant equity incentive is provided by the ESOP, to which the
Compensation Committee authorized a contribution equivalent to 10% of each
participating employee's covered compensation for the fiscal year ended March
31, 2008, subject to limits imposed by the Internal Revenue Service ("IRS").
Based on the Internal Revenue Code Section 410(b) coverage testing requirements,
10.0% of each participating employee's covered compensation was contributed to
the ESOP. The sum of such contributions was $94,210.
Retirement Plans
We maintain a qualified defined benefit, non-contributory retirement
plan for our employees ("Participants") and employees of certain of our
wholly-owned portfolio companies. Certain NEOs, including Messrs. Ashbaugh,
Peterson and Martin now participate in this retirement plan. We also maintain a
Restoration Plan that provides benefits to the Participants in the qualified
plan as are necessary to fulfill the intent of our retirement plan without
regard to the limitations imposed by the Internal Revenue Code of 1986. The
Restoration Plan is unfunded and non-qualified.
The retirement benefits payable to our NEOs depend on the Participant's
years of service under our plan and their final average monthly compensation
determined by averaging the five consecutive years of highest compensation prior
to retirement. For pension calculation purposes, earnings include salaries and
bonuses (excluding all other compensation) reported in the Summary Compensation
Table. For a more detailed explanation of our pension plans, and the present
value of the accumulated benefits of our named executive officers, see
"Executive Compensation - Pension Benefits Table" on page 17.
We and the Compensation Committee believe that the retirement plans
described above are important parts of our compensation program. These plans
assist us in retaining our executive officers because their retirement benefits
increase for each year of employment.
Severance Pay Agreements
Severance Pay Agreements have been established with certain executive
officers of the Company. The Agreements provide severance benefits for an
officer whose employment is involuntarily terminated without cause or who
resigns following a salary reduction or a significant reduction in job
responsibilities subsequent to a "change in control" of the Company. A change in
control is deemed to occur if (i) the Company becomes a subsidiary of another
corporation or is merged or consolidated with or into another corporation, or
substantially all of its assets are sold to or acquired by another person,
corporation or group of associated persons acting in concert; (ii) the Company
becomes a subsidiary of another corporation or is merged or consolidated with or
into another corporation, or substantially all of the assets or more than 50% of
the outstanding voting stock of the Company are sold to or acquired by another
13
person, corporation or group of associated persons acting in concert; (iii) a
person who has not owned 10% or more of the common stock for ten years acquires
25% or more of the outstanding common stock; or (iv) there is a change of a
majority of the directors of the Company and such new directors have not been
approved by the incumbent directors.
The Severance Pay Agreements provide, subject to the limitations set
forth below, that an officer would be entitled to an amount equal to the sum of
his annual base salary plus, if such officer has completed more than five years
of service, an additional amount equal to his monthly base salary for each year
of completed service in excess of five years. Although it is not now possible to
determine with certainty the amounts which the officers named in the Summary
Compensation Table might receive under the Agreements, such officers could
receive a lump-sum payment in an amount not exceeding the lesser of (i) two
times his annual compensation, or (ii) 24 times his monthly base salary at the
date of termination.
Accounting for Stock-Based Compensation
Beginning on April 1, 2003, the Company began accounting for
stock-based payments relating to its Stock Option Program in accordance with the
requirements of FASB Statement 123(R).
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company's board of directors has
reviewed and discussed with management the above Compensation Discussion and
Analysis required by Item 402(b) of Regulation S-K. Based on such review and
discussions, the Compensation Committee recommended to the board of directors
that the Compensation Discussion and Analysis be included in the Company's proxy
statement on Schedule 14A and, by reference, its annual report on Form 10-K.
The foregoing report is provided by the following directors who
constitute the Committee.
Compensation Committee
John H. Wilson, Chairman
Donald W. Burton
Graeme W. Henderson
Samuel B. Ligon
The following tables provide information about compensation for our senior
executive team which includes the required disclosures about our named executive
officers.
14
Summary Compensation Table
Change in
Pension
Value and
Nonqualified
Deferred All Other
Fiscal Option Compensation Compensation
Name Year Salary Bonus Awards (1) Earnings (2) (3) Total
---- ---- ------ ----- ---------- ------------ --- -----
Gary L. Martin 2008 $256,261 $160,417 452,960 (4) $264,934 $22,500 $1,157,072
President and Chief 2007 210,673 79,135 - 128,230 24,217 442,255
Executive Officer 2006 196,154 63,846 - 141,959 18,928 420,887
William M. Ashbaugh 2008 227,500 89,583 78,254 34,690 22,500 452,527
Senior Vice President 2007 217,500 59,167 72,389 22,391 22,000 393,447
2006 207,500 58,750 - 21,671 21,000 308,921
Jeffrey G. Peterson 2008 161,250 66,875 31,276 7,323 22,500 289,224
Secretary, Chief 2007 143,750 36,250 36,410 3,752 18,000 238,162
Compliance Officer and 2006 120,000 35,208 - 3,448 15,521 174,177
Vice President
-------------
(1) The amounts represent the portion of the grant which was expensed in that
year pursuant to SFAS No. 123R. The grant date value, determined in
accordance with SFAS No. 123R, for the 2007 grant is reflected in the
Grants of Plan-Based Awards table below. See Note 6 of the consolidated
financial statements in the Company's Annual Report for the year ended
March 31, 2008 regarding assumptions underlying valuation of equity awards.
(2) Amounts shown reflect the aggregate change during the year in actuarial
present value of accumulated benefit under all pension plans (including
restoration plan). See Note 7 of the consolidated financial statements in
the Company's Annual Report for the year ended March 31, 2008 regarding
assumptions used in determining the amounts.
(3) Includes amounts accrued for each executive officer in lieu of a
contribution to his account in an ESOP and amounts contributed to the ESOP
accounts of each executive officer.
(4) The amount includes Gary Martin's $305,000 vested interest in The Whitmore
Manufacturing Company's Phantom Stock Option Plan accrued in that year
pursuant to Internal Revenue Code Section 409A.
15
Grants of Plan-Based Awards
All Other Exercise
Option Awards: Estimated Future Payouts or Base
Number of Under Equity Incentive Plan Price of Grant Date
Securities Awards Option Fair Value
Grant Underlying ------------------------------- Awards of
Name Date Options (#) Threshold Target Maximum ($/Sh) Option (1)
---- ---- ----------- --------- ------ ------- ------ ----------
Gary L. Martin 7/16/07 25,000 - - - $152.98 $1,044,425
----------
(1) Grant date fair value is determined in accordance with SFAS No. 123R. This
grant date fair value is expensed over the vesting period of the award
under SFAS No. 123R, and is reflected in the Summary Compensation Table in
the year it is expensed. See Note 6 of the Consolidated Financial
Statements in the Company's annual report for the year ended March 31, 2008
regarding assumptions underlying valuation of equity awards.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information with respect to the
value of all unexercised options previously awarded to the NEOs as of March 31,
2008.
Option Awards
----------------------------------
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised
Options Options Option Option
Name (#) Exercisable (#) Unexercisable Exercise Price Expiration Date
---- --------------- ----------------- -------------- ---------------
Gary L. Martin - 25,000 $152.98 7/16/2017
William M. Ashbaugh - 7,500 65.70 8/27/2011
1,500 13,500 93.49 5/15/2016
Jeffrey G. Peterson 5,400 - 65.00 7/16/2011
1,000 9,000 93.49 5/15/2016
Option Exercises and Stock Vested
The following table sets forth certain information with respect to the
options exercised by the NEOs during the fiscal year ended March 31, 2008.
Option Awards
-------------------------------------------
Value Realized
Number of Shares On
Name Acquired on Exercise (#) Exercise ($) (1)
---- ------------------------ ----------------
William M. Ashbaugh 2,000 $204,968
Jeffrey G. Peterson 100 10,700
16
-----------------
(1) The value realized on exercise was the number of shares exercised times the
difference between our closing stock price on the exercise date and the
exercise price of the options.
Pension Benefits
The following table sets forth information with respect to retirement
benefits of the NEOs.
Number of Present Value Payments
Years Credited of Accumulated During Last
Name Plan Name Service (#) Benefit ($) Fiscal Year ($)
---- --------- ----------- ----------- ---------------
William R. Thomas Retirement Plan 45.917 $1,868,002 $304,574
Restoration Plan 45.917 851,442 135,768
William M. Ashbaugh Retirement Plan 6.583 107,995 -
Restoration Plan 6.583 20,319 -
Gary L. Martin Retirement Plan 35.333 1,007,607 -
Restoration Plan 35.333 309,210 -
Jeffrey G. Peterson Retirement Plan 6.667 21,894 -
Our chairman of the board, William R. Thomas, is entitled to a
substantially increased annual retirement benefit as a result of his service
beyond the normal retirement age and to an additional annual retirement benefit
as a result of his credited service prior to April 1972 under a retirement
benefit formula of our retirement plan which was modified for credited service
subsequent to April 1972. Section 401(a)(9) of the Internal Revenue Code
required that Mr. Thomas begin receiving monthly retirement benefit payments on
April 1, 2000 because of his age and ownership of more than 5% of our common
stock. Retirement benefits payable (for life only) to Mr. Thomas under the
retirement plan and retirement restoration plan total $440,342 per annum.
The Retirement Plan for Employees of Capital Southwest Corporation and
Its Affiliates is a non-contributory defined benefit pension plan providing
annual retirement benefits to eligible employees. It is assumed that retirement
occurs at age 65 and that benefits are payable only during the employee's
lifetime. The amount of the monthly retirement benefit payable beginning at age
65 is equal to (i) 1.2% of final average monthly compensation in the five
successive calendar years out of the last ten completed calendar years that
gives the highest average multiplied by years of credited service (not in excess
of 35 years) plus (ii) 0.65% of that portion of the final average monthly
compensation which exceeds social security benefits in effect on the date of
retirement times credited service (not in excess of 35 years).
Benefits provided under the Retirement Plan are based on compensation
up to a maximum limit under the Internal Revenue Code (which was $225,000 in
2007). In addition, benefits provided under the Retirement Plan may not exceed a
benefit limit under the Internal Revenue Code (which was $180,000 payable as a
single life annuity beginning at normal retirement age in 2007). Benefits under
17
the Restoration Plan provide the difference when the benefit is computed without
plan limitations.
The assumptions used to develop the actuarial present value of the
accumulated benefit obligation to each NEO was determined in accordance with
SFAS No. 158, "Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans," as of the pension plan measurement date utilized in our
audited financial statements for the year ended March 31, 2008.
Director Compensation for the Fiscal Year Ended March 31, 2008
Fees Earned or
Name Paid in Cash Total
----- ------------ -----
Donald W. Burton $36,000 $36,000
Graeme W. Henderson 36,000 36,000
Samuel B. Ligon 36,000 36,000
William R. Thomas 67,000 67,000
John H. Wilson 35,000 35,000
In addition to reimbursement of travel expenses for attendance at board
meetings, a director who is not our employee receives an annual fee of $32,000
for service as a director. In addition, non-employee directors receive $1,000
for each directors' meeting attended (excluding telephone meetings), limited to
a total of $4,000 per year, and receive no fees for attending committee
meetings. The chairman of the board receives an extra annual fee of $60,000. We
pay no fees for telephone meetings of the board or its committees. For fiscal
years ending after March 31, 2008, this compensation structure places a maximum
of $36,000 on fees payable to each non-employee director and a maximum of
$96,000 on fees paid to the chairman.
Additional Compensation Information
The following table sets forth additional compensation information for
the fiscal year ended March 31, 2008 for each of the three highest-paid
executive officers whose compensation exceeded $60,000 and for all other
directors (Donald W. Burton, Graeme W. Henderson, Samuel B. Ligon and John H.
Wilson), who are not our employees.
Pension or
Retirement Benefits Estimated Annual
Name and Aggregate Accrued Corporation's
Principal Position Compensation as Part of Expenses Retirement
------------------- ------------ ------------------- ----------
Gary L. Martin $1,157,072 (1) (3) (4)
President and CEO
William M. Ashbaugh 459,727 (1) (3) (4)
Senior Vice President
18
Pension or
Retirement Benefits Estimated Annua
Name and Aggregate Accrued Corporation's
Principal Position Compensation as Part of Expenses Retirement
------------------- ------------ ------------------- ----------
Jeffrey G. Peterson 296,424 (1) (3) (4)
Vice President
Donald W. Burton 36,000 (2) None None
Director
Graeme W. Henderson 36,000 (2) None None
Director
Samuel B. Ligon 36,000 (2) None None
Director
William R. Thomas 355,285 (2) (3) (4)
Chairman of the Board
John H. Wilson 35,000 (2) None None
Director
----------------
(1) See "Outstanding Equity Awards at Fiscal Year-End" and "Option Exercises
and Stock Vested" for information regarding stock options exercised during
or held at the end of the fiscal year ended March 31, 2008. See "Retirement
Plans" for information on our Retirement Plan and Retirement Restoration
Plan. See "Employee Stock Ownership Plan" for a description of our ESOP and
"Summary Compensation Table" for amounts accrued and contributed to each
officer's ESOP account.
(2) Directors who are not our employees are compensated as described under
"Director Compensation for the Fiscal Year Ended March 31, 2008" and are
not participants in our retirement plan or ESOP.
(3) As described in note 8 to our Consolidated Financial Statements, the
Retirement Plan was overfunded and therefore generated a benefit for the
year ended March 31, 2008. After deducting the expense of the unfunded
Retirement Restoration Plan, our net benefit attributable to both plans was
$327,345 for the year ended March 31, 2008. Our net benefit is not
allocated to individual plan participants.
(4) Individual retirement benefits are based on formulas relating benefits to
average final compensation and years of credited service. See "Pension
Benefits" which includes a description of the retirement benefits.
AUDIT COMMITTEE REPORT
The Audit Committee consists of three members of the Company's board of
directors. Each member is an independent director as required by Sarbanes-Oxley
and Nasdaq. In addition, the board of directors has determined that Samuel B.
Ligon is an Audit Committee Financial Expert as defined by SEC rules.
The committee oversees the Company's financial reporting process on
behalf of the board of directors. Management is responsible for the financial
statements and the reporting process, including the Company's system of internal
19
control. In fulfilling our oversight responsibilities, the committee reviewed
the audited consolidated financial statements in the Annual Report with
management, including a discussion of the quality, not just the acceptability,
of the accounting principles; the reasonableness of the valuation of restricted
securities and other significant judgments; and the clarity of disclosures in
the financial statements. The committee is not, however, professionally engaged
in the practice of accounting or auditing, and does not provide any expert or
other special assurance as to such financial statements concerning compliance
with the laws, regulations or accounting principles generally accepted in the
United States ("GAAP"). The committee relies, without independent verification,
on the information provided to them and on the representations made by
management and the independent registered public accounting firm.
The committee reviewed with Grant Thornton LLP, who is responsible for
expressing an opinion on the conformity of those audited financial statements
with GAAP, its judgment as to the quality, not just the acceptability, of the
Company's accounting principles and such other matters as are required to be
discussed with the Audit Committee under generally accepted auditing standards.
The committee discussed with Grant Thornton LLP the matters required to be
discussed by Statement on Auditing Standards (SAS) No. 141 "The Auditor's
Communication with those Charged with Governance," SAS 99 "Consideration of
Fraud in Financial Statement Audits," and SEC Rules discussed in Final Release
Nos. 33-8183 and 33-8183a. In addition, the committee discussed with Grant
Thornton LLP their independence from management and the Company, including the
matters in the written disclosures and letter we received from them as required
by the Independence Standards Board Standard No. 1, and considered the
compatibility of non-audit services with their independence.
The committee discussed with Grant Thornton LLP the overall scope and
plans for their audit and also met with them, with and without management
present, to discuss the results of their audit, their evaluation of the
Company's internal controls and the overall quality of the Company's financial
reporting.
The committee reviewed and discussed the audited consolidated financial
statements for the fiscal year ended March 31, 2008 with management and Grant
Thornton LLP and also discussed with management and Grant Thornton the process
used to support certifications by our chief executive officer and chief
financial officer that are required by the SEC and the Sarbanes-Oxley Act of
2002 to accompany our periodic filings with the SEC. In addition, the committee
reviewed and discussed the Company's progress on complying with Section 404 of
the Sarbanes-Oxley Act of 2002, including the Public Company Accounting
Oversight Board's (PCAOB) Auditing Standard No. 5 regarding the audit of
internal control over financial reporting.
Based on the reviews and discussions referred to above and subject to
the limitations on the committee's role and responsibilities referred to above
and in the Audit Committee Charter, the Audit Committee recommended to the board
of directors (and the board has approved) that the audited consolidated
financial statements be included in the Annual Report on Form 10-K for the
fiscal year ended March 31, 2008 for filing with the SEC. The committee has
selected Grant Thornton LLP as our independent registered public accounting firm
20
for the fiscal year ending March 31, 2009, and has presented the selection to
the shareholders for ratification.
Audit Committee
Samuel B. Ligon, Chairman
Graeme W. Henderson
John H. Wilson
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
ACCOUNTING FIRM
The Audit Committee, in accordance with its charter, has appointed the
firm of Grant Thornton LLP as independent registered accounting firm to audit
our financial statements for the fiscal year ending March 31, 2009. We are
asking the shareholders to ratify the appointment of Grant Thornton LLP as our
independent registered accounting firm for the fiscal year ending March 31,
2009. In order to ratify the appointment of Grant Thornton LLP as our
independent registered accounting firm for the year ending March 31, 2009, the
proposal must receive the favorable vote of a majority of the shares represented
in person or by proxy at the annual meeting. If shareholders fail to ratify the
appointment, the Audit Committee may reconsider the appointment.
A representative of Grant Thornton LLP will be present at the annual
meeting to make a statement regarding our financial statements for the fiscal
year ended March 31, 2008 and to respond to appropriate questions you may have.
The board recommends that you vote "For" the ratification of the
appointment of Grant Thornton LLP as our independent registered accounting firm.
Audit and Other Fees
The following table sets forth fees for services rendered by Grant
Thornton LLP for the fiscal years ended March 31, 2008 and March 31, 2007.
2008 2007
---- ----
Audit Fees(1) $119,500 $108,550
Audit-Related Fees 4,134 12,500
Tax Fees((2)) 7,382 6,000
All Other Fees(3) 324,650 -0-
-------- --------
Total Fees $455,666 $127,050
======== ========
-------------------
(1) Represents fees paid for professional services provided in connection with
the audit of our annual financial statements, internal controls and review
of our quarterly financial statements, advice on accounting matters that
arose during the audit and audit services provided in connection with our
statutory and regulatory filings.
21
(2) Represents fees for services provided in connection with tax compliance,
tax advice and tax planning.
(3) Represents fees paid for professional services provided in connection with
the restatement of our Form 10-K for the year ended March 31, 2007 and
Form 10-Q for the quarter ended June 30, 2007.
The Audit Committee has determined that the provision of non-audit
services by Grant Thornton LLP is compatible with maintaining Grant Thornton's
independence. At its regularly scheduled and special meetings, the audit
committee considers and pre-approves any audit and non-audit services to be
performed by our independent accountants, Grant Thornton LLP. In accordance with
its charter, the Audit Committee approves in advance all audit and tax services
to be provided by Grant Thornton LLP. In other cases, the chairman of the Audit
Committee, an independent member of our board, has the delegated authority from
the committee to pre-approve certain additional services, and such pre-approvals
are communicated to the full committee at its next meeting. During the fiscal
year 2008, all services were pre-approved by the Audit Committee in accordance
with this policy.
COMMUNICATION WITH DIRECTORS
Shareholders who wish to send communications to independent members of
the board should address such communications to John H. Wilson, independent
director, at 1000 Three Lincoln Centre, 5430 LBJ Freeway, Dallas, TX 75240.
Any complaint regarding accounting, internal accounting controls or
auditing matters should be mailed to John H. Wilson, independent director and
Audit Committee member, at 1000 Three Lincoln Centre, 5430 LBJ Freeway, Dallas,
TX 75240. Written complaints may be submitted anonymously.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our officers and directors and persons who beneficially own more than
10% of our common stock to file reports of securities ownership and changes in
such ownership with the SEC. Officers, directors and greater than 10% beneficial
owners also are required by rules promulgated by the SEC to furnish us with
copies of all Section 16(a) forms they file with the SEC. Based solely upon a
review of the copies of such forms furnished to us, we believe that each of our
officers, directors and greater than 10% beneficial owners complied with all
Section 16(a) filing requirements applicable to them during the fiscal year
ended March 31, 2008.
OTHER MATTERS
As of the mailing date of this proxy statement, the board of directors
knows of no other matters to be presented at the meeting. Should any of the
matters requiring a vote of the shareholders arise at the meeting, the persons
named in the proxy will vote the proxies in accordance with their best judgment.
22
SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETING
Any shareholder who intends to present a proposal at the annual meeting
in the year 2009, and who wishes to have the proposal included in our proxy
statement for that meeting, must deliver the proposal to our corporate
secretary, Jeffrey G. Peterson, at 12900 Preston Road, Suite 700, Dallas, Texas
75230, no later than February 2, 2009. All proposals must meet the requirements
set forth in the rules and regulations of the SEC in order to be eligible for
inclusion in the proxy statement for that meeting.
Any shareholder who intends to bring business to the annual meeting in
the year 2009, but not include the proposal in our proxy statement, or to
nominate a person to the board of directors, must also give written notice to
our corporate secretary, Jeffrey G. Peterson at the address set forth in the
preceding paragraph, by February 2, 2009.
EXPENSES OF SOLICITATION OF PROXIES
In addition to the use of the mails, proxies may be solicited by
personal interview and telephone by our directors, officers and employees, who
will not receive additional compensation for such services. We will request
brokerage houses, nominees, custodians and fiduciaries to forward soliciting
materials to the beneficial owners of stock held of record by them and will
reimburse such persons for forwarding materials. The cost of soliciting proxies
will be borne by us.
ANNUAL REPORT
The Annual Report to Shareholders covering the fiscal year ended March
31, 2008 accompanies this proxy statement, but is not deemed a part of the proxy
soliciting material.
A copy of the fiscal 2008 Annual Report on Form 10-K, as filed with the
SEC, will be mailed to shareholders without charge upon request to Jeffrey G.
Peterson, Secretary, Capital Southwest Corporation, 12900 Preston Road, Suite
700, Dallas, Texas 75230.
A copy of the Form 10-K is available via the Internet at our website
(www.capitalsouthwest.com) and the EDGAR version of such report is available at
the SEC's website (www.sec.gov).
23
Capital Southwest Corporation
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- JULY 21, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE CORPORATION.
The undersigned (1) acknowledges receipt of the Notice of Annual Meeting of
Shareholders of Capital Southwest Corporation, a Texas corporation, (the
"Corporation") to be held on Monday, July 21, 2008, at 10:00 a.m., Dallas time,
in Meeting Room #210 of the North Dallas Bank Tower, 12900 Preston Road, Dallas,
Texas, and the Proxy Statement in connection therewith; and (2) appoints Samuel
B. Ligon, William R. Thomas and John H. Wilson, and each of them, his proxies
with full power of substitution, for and in the name, place and stead of the
undersigned, to vote upon and act with respect to all of the shares of Common
Stock of the Corporation standing in the name of the undersigned, or with
respect to which the undersigned is entitled to vote and act at the meeting and
at any adjournment thereof, and the undersigned directs that this proxy be
voted:
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF SHAREHOLDERS OF
CAPITAL SOUTHWEST CORPORATION
July 21, 2008
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
--------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE __
--------------------------------------------------------------------------------
1. Election of Directors:
NOMINEES:
___ FOR ALL NOMINEES ( ) Donald W. Burton
( ) Graeme W. Henderson
___ WITHOLD AUTHORITY ( ) Samuel B. Ligon
FOR ALL NOMINEES ( ) Gary L. Martin
( ) William R. Thomas
___ FOR ALL EXCEPT ( ) John H. Wilson
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: ( )
2. Proposal to ratify the appointment by our Audit Committee of Grant Thornton
LLP as our independent registered public accounting firm for the fiscal
year ending March 31, 2009.
FOR AGAINST ABSTAIN
_____ _____ _____
This proxy when properly executed will be voted in the manner directed.
Unless otherwise marked, this proxy will be voted for the election of the
persons named at the left hereof and for the proposal described in (2) above.
If more than one of the proxies named herein shall be present in person or by
substitute at the meeting or at any adjournment thereof, the majority of the
proxies so present and voting, either in person or by substitute, shall exercise
all of the powers hereby given.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
the proxies, their substitutes, or any of them, may lawfully do by virtue
hereof.
__________________________________________________________
To change the address on your account, please check
the box at right and indicate your new address in _____
the address space above. Please note that changes to
the registered name(s) on the account may not be
submitted via this method.
Signature of
Shareholder: ____________________________________ Date: _____________
Signature of
Shareholder: ____________________________________ Date: _____________
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is
a partnership, please sign in partnership name by authorized person.