Statement of Policy Regarding Securities Trades by Company Personnel ("Insider Trading Policy")
For a PDF version, click here.
(Effective March 1, 2003)
The Reasons For An Insider Trading Policy
The Federal securities laws prohibit the purchase or sale of securities by persons who are aware of material nonpublic information about a company, as well as the disclosure of material nonpublic information about a company to others who then trade in the company’s securities. These transactions are commonly known as “insider trading.”
Insider trading violations are pursued vigorously by the Securities and Exchange Commission and the U.S. Attorneys and are punished severely. While the regulatory authorities concentrate their efforts on individuals who trade, or who tip inside information to others who trade, the Federal securities laws also impose potential liability on companies and other “controlling persons” if they fail to take reasonable steps to prevent insider trading by company personnel.
The Company’s Board of Directors has adopted this Statement of Policy Regarding Securities Trades by Company Personnel, which is referred to hereafter as the Company’s “Insider Trading Policy,” both to satisfy the Company’s obligation to prevent insider trading and to help Company personnel avoid the severe consequences associated with violations of the insider trading laws. For purposes of this policy, “Company” includes both Spartech Corporation and its subsidiaries.
This Insider Trading Policy also is intended to prevent even the appearance of improper conduct on the part of anyone employed by or associated with the Company, not just so-called “insiders.” We have all worked hard over the years to establish our reputation for integrity and ethical conduct, and we cannot afford to have that reputation damaged.
The Consequences of An Insider Trading Violation
The consequences of an insider trading violation can be severe:
On Traders. Company personnel (or their tippees) who trade on inside information are subject to the following penalties:
• A civil penalty of up to three times the profit gained or loss avoided;
• A criminal fine of up to $1,000,000 (no matter how small the profit); and
• A jail term of up to ten years.
On Tippers. An employee who communicates, or “tips,” inside information to a person who then trades is subject to the same penalties as the tippee, even if the employee did not trade and did not profit from the tippee’s trading.
On Control Persons. The Company and its supervisory personnel, if they fail to take appropriate steps to prevent illegal insider trading, are subject to the following penalties:
• A civil penalty of up to $1,000,000 or, if greater, three times the profit gained or loss avoided as a result of the employee’s violation; and
• A criminal penalty of up to $2,500,000.
Additional Sanctions By The Company. An employee’s failure to comply with the Company’s insider trading policy may subject the employee to Company-imposed sanctions, including termination of employment for cause, whether or not the employee’s failure to comply results in a violation of law. Needless to say, a violation of law, or even an SEC investigation that does not result in prosecution, can tarnish one’s reputation and irreparably damage a career.
Persons Subject to Insider Trading Policy
So long as you are a director, officer or employee of the Company, this Insider Trading Policy applies to:
• Your family members who reside with you, and
• Any family members who do not live in your household but whose transactions in Company securities are directed by you or are subject to your influence or control (such as parents or children who consult with you before they trade in company securities)
As a director, officer or employee, you are responsible for the transactions of these other persons and therefore you should make them aware of the need to confer with you before they trade in the Company’s securities. As used in this Insider Trading Policy, “you” means anyone subject to this Insider Trading Policy.
If you are in possession of material nonpublic information when you cease being a director, officer or employee, this Insider Trading Policy will continue to apply until that information has become public or is no longer material.
No Trading or Acting on Inside Information
If you are aware of material nonpublic information relating to the Company, you may not, either directly or through family members or other persons or entities:
• Buy or sell securities of the Company (other than pursuant to a pre-approved trading plan that complies with SEC Rule 10b5-1), or
• Engage in any other action to take personal advantage of that information, or
• Pass that information on to others outside the Company, including family and friends.
Also, if you learn of material nonpublic information about another company with which the Company does business, including a customer or supplier, you may not trade in the other company’s securities until the information becomes public or is no longer material.
Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are not exempted from the policy. The securities laws do not recognize such mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct.
When Information Becomes Public. Information is not deemed to become “public” until the information has been disclosed broadly to the marketplace (such as by Company press release or an SEC filing) and the investing public has had time to absorb the information fully. To avoid the appearance of impropriety, information will not be considered fully absorbed by the marketplace until the third trading day after the day the information has been publicly disclosed. However, if the information is announced before the New York Stock Exchange opens for that day, the day of the announcement will be deemed the first full trading day.
|If the Information is Announced:||You May Begin Trading:|
|Before the market opens on a Friday||Tuesday|
|After the market opens on a Friday||Wednesday|
|Before the market open on Monday||Wednesday|
|After the market opens on Monday||Thursday|
What Constitutes Material Information. Material information is any information that a reasonable investor would consider important in making a decision to buy, hold, or sell securities. Any information that might reasonably be expected to affect the Company’s stock price, whether it is positive or negative, should be considered material. Some examples of information that would ordinarily be regarded as material are:
• Projections of future earnings or losses, or other earnings guidance;
• Earnings that are inconsistent with the consensus expectations of the investment community;
• A pending or proposed merger, acquisition or tender offer;
• A pending or proposed acquisition or disposition of a significant asset;
• A change in dividend policy, the declaration of a stock split, or an offering of additional securities;
• A change in management;
• Development of a significant new product or process;
• Impending bankruptcy or the existence of severe liquidity problems;
• The gain or loss of a significant customer or supplier.
20/20 Hindsight. Remember, anyone scrutinizing your transactions will be doing so after the fact, with the benefit of hindsight. As a practical matter, before engaging in any transaction, you should carefully consider how enforcement authorities and others might view the transaction in hindsight.
No Individual Disclosure Of Information
The Company is required under Regulation FD of the federal securities laws to avoid the selective disclosure of material nonpublic information. The Company has established procedures for releasing material information in a manner that is designed to achieve broad public dissemination of the information immediately upon its release. Therefore:
• You may not disclose information about the Company to anyone outside the Company, including family members and friends, other than in accordance with those procedures, and
• You may not discuss the Company or its business in an internet “chat room” or similar internet-based forum.
Other Prohibited Transactions
The Company considers it improper and inappropriate for any director, officer or other employee of the Company to engage in speculative transactions in the Company’s securities or other transactions which might give the appearance of impropriety. Therefore, this insider Trading Policy also prohibits the following transactions:
Short Sales. Short sales of the Company’s securities evidence an expectation on the part of the seller that the securities will decline in value, and therefore signal to the market that the seller has no confidence in the Company or its short-term prospects. In addition, short sales may reduce the seller’s incentive to improve the Company’s performance.
For these reasons, you may not engage in short sales of the Company’s securities. (In addition, Section 16(c) of the Exchange Act prohibits officers and directors from engaging in short sales.)
Derivative Securities. A transaction in options is, in effect, a bet on the short-term movement of the Company’s stock and therefore creates the appearance that the director or employee is trading based on inside information. Transactions in options also may focus the transacting person’s attention on short-term performance at the expense of the Company’s long-term objectives.
Accordingly, you may not engage in transactions in puts, calls or other derivative securities based on the Company’s securities, on an exchange or in any other organized market.
Hedging Transactions. Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allow a stockholder to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the holder to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, the owner may no longer have the same objectives as the Company’s other shareholders.
Therefore, you may not engage in any such transactions.
Margin Accounts and Pledges. Securities purchased on margin may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities held in an account which may be borrowed against or are otherwise pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. A margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company securities.
Therefore, you may not purchase Company securities on margin, or borrow against any account in which Company securities are held, or pledge Company securities as collateral for a loan.
Note: An exception to the prohibition against pledges may be granted where a person wishes to pledge Company securities as collateral for a loan (not including margin debt) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. Any person who wishes to pledge Company securities as collateral for a loan must submit a request for approval to the Chief Financial Officer or General Counsel at least two weeks prior to the execution of the documents evidencing the proposed pledge.
Transactions Under Company Plans
Stock Option Exercises. This Insider Trading Policy does not apply to your exercise of an employee stock option, or to the exercise of a tax withholding right pursuant to which you elect to have the Company withhold shares subject to an option to satisfy tax withholding requirements.
This Insider Trading Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
401(k) Plan. This Insider Trading Policy does not apply to purchases of Company stock in the Company’s 401(k) Plan resulting from your periodic contribution of money to the plan pursuant to your payroll deduction election.
This Insider Trading Policy does apply, however, to certain elections you may make under the 401(k) Plan, including:
• An election to increase or decrease the percentage of your periodic contributions that will be allocated to the Company stock fund, or
• An election to make an intra-plan transfer of an existing account balance into or out of the Company stock fund.
Although loans from 401(k) Plan accounts are not currently permitted, should they be permitted in the future this Insider Trading Policy would apply to an election to borrow money against your 401(k) Plan account if the loan would result in a liquidation of some or all of your Company stock fund balance, and to the repayment of a plan loan if some or all of the payments would be allocated to the Company stock fund.
Dividend Reinvestment Plan. This Insider Trading Policy does not apply to purchases of Company stock under the Company’s Dividend Reinvestment Plan resulting from your reinvestment of dividends paid on Company stock.
This Insider Trading Policy does apply, however, to your election to participate in the Dividend Reinvestment Plan and to your sale of any Company stock purchased pursuant to the plan.
If you have a question about this Insider Trading Policy or its application to any proposed transaction you may obtain additional guidance from the Chief Financial Officer or General Counsel, who can be reached by telephone at the Corporate Office, (314) 721-4242. Ultimately, however, the responsibility for adhering to this Insider Trading Policy and avoiding unlawful transactions rests with you.
Supplement to Spartech Corporation Insider Trading Policy for Directors, Executive Officers and Certain Other Employees
(Effective March 1, 2003; Amended June 9, 2005)
This Supplement to the Company’s Insider Trading Policy governs transactions in Company securities by directors, executive officers and non-executive employees who routinely come in to possession of earnings information or other material nonpublic information about the Company. The policies and procedures described in this Supplement are a part of the Company’s Insider Trading Policy and are in addition to the other requirements of the Insider Trading Policy.
Persons Subject to These Procedures
This Supplement applies to all directors and executive officers of the Company who are subject to the requirements of Section 16 of the Securities Exchange act of 1934. In addition, the Company’s Chief Executive Officer, Chief Financial Officer and General Counsel may from time to time designate non-executive employees, either by name or title, as subject to this Supplement, and the Supplement will be effective as to each such employee immediately upon the employee’s receipt of notice of designation and a copy of this Supplement. If you have been provided with a copy of this Supplement by the Company, you are subject to this Supplement.
So long as you are a director or executive officer or other employee who has been designated as subject to these policies and procedures, this Supplement applies to:
- Your family members who reside with you, and
- Any family members who do not live in your household but whose transactions in Company securities are directed by you or are subject to your influence or control (such as parents or children who consult with you before they trade in company securities)
You are responsible for the transactions of these other persons and therefore you should make them aware of these procedures and their need to confer with you before they engage in any transaction subject to these procedures. As used in this Supplement, “you” means anyone subject to the policies and procedures described in this Supplement.
This Supplement will cease to apply to your transactions in Company securities upon the expiration of any “blackout period” (see below) in existence at the time of the termination of your service as a director, executive officer or employee, or if you are designated by the Chief Executive Officer, Chief Financial Officer and General Counsel as no longer subject to this Supplement.
The purpose of the following pre-clearance procedures is to help prevent inadvertent violations of the federal securities laws, and to avoid even the appearance of trading on inside information, by persons subject to this Supplement.
If you are subject to this Supplement, you may not engage in any transaction involving the Company’s securities (including a stock plan transaction such as an option exercise, gift, loan or pledge or hedge, contribution to a trust, or any other transfer) without first obtaining pre-clearance of the transaction from any two (2) of the following persons:
- The Chief Executive Officer
- The General Counsel
- The Chief Financial Officer.
A request for pre-clearance should be submitted to one of these persons at least one week in advance of the proposed transaction. The Chief Executive Officer, General Counsel and Chief Financial Officer are under no obligation to approve a trade submitted for pre-clearance and may determine not to permit the trade, and they will have no liability for any refusal to permit a trade or for any delay in making or communicating a decision.
Rule 10b5-1 Trading Plans
If you wish to implement a trading plan under SEC Rule 10b5-1 you must first pre-clear the plan with the General Counsel and the Chief Financial Officer. As required by Rule 10b5-1, you may enter into a trading plan only when you are not in possession of material nonpublic information. In addition, you may not enter into a trading plan during a blackout period (see below).
Transactions effected pursuant to a pre-cleared Rule 10b5-1 trading plan will not require further pre-clearance at the time of the transaction if the plan specifies the dates, prices and amounts of the contemplated trades, or establishes a formula for determining the dates, prices and amounts. Notwithstanding any pre-clearance of a Rule 10b5-1 trading plan, the Company and its officers assume no liability for the consequences of any transaction made pursuant to such plan.
Quarterly Blackout Periods
The Company’s announcement of its quarterly financial results almost always has the potential to have a material effect on the market for the Company’s securities. Therefore, in order to avoid even the appearance of trading while aware of material nonpublic information, persons who are or may be expected to be aware of the Company’s quarterly financial results generally will not be pre-cleared to trade in the Company’s securities during the following periods:
|Quarterly Blackout Period Begins:||Fourteen (14) days prior to the end of the Company's fiscal quarter.|
|Quarterly Blackout Period Ends:||At the close of trading on the New York Stock Exchange on the second full trading day¹ following the Company's issuance of its earnings release for the quarter.|
From time to time, an event may occur that is material to the Company and is known by only a few individuals inside the Company. If you are one of those individuals, or if it would appear to an outsider that you were likely to have had access to information about the event, then you will not be allowed to trade in the Company’s securities so long as the event remains material and nonpublic.
Also, the Company may on occasion issue interim earnings guidance or other potentially material information by means of a press release, SEC filing on Form 8-K or other means designed to achieve widespread dissemination of the information. You should anticipate that trades are unlikely to be pre-cleared while the Company is in the process of assembling the information to be released and until the information has been released and fully absorbed by the market.
The existence of an event-specific blackout will not be announced. If you request pre-clearance of a transaction in the Company’s securities during an event-specific blackout, you will be informed of the existence of a blackout period, but you may not be advised of the reason for the blackout.
If you are made aware of the existence of an event-specific blackout you should not disclose the existence of the blackout to any other person. Whether or not you are designated as being subject to an event-specific blackout you still have the obligation not to trade while aware of material nonpublic information.
If you are subject to a quarterly earnings blackout period and have an unexpected and urgent need to sell Company stock in order to generate cash you may, in appropriate circumstances, be permitted to sell Company stock even during the blackout period. Hardship exceptions may be granted only by the Chief Executive Officer and the General Counsel and the Chief Financial Officer and must be requested at least two business days in advance of the proposed trade. Such officers are under no obligation to approve a hardship exception, and neither the Company nor such officers will have any liability for any refusal to grant a hardship exception or for any delay in making or communicating a decision. In any event, a hardship exception may be granted only if all three of such officers conclude that the extent of the requesting person’s knowledge of the Company’s earnings information for the applicable quarter does not constitute material nonpublic information. Under no circumstance will a hardship exception be granted during an event-specific blackout period.
All directors, officers and other employees subject to this Supplement must certify their understanding of, and intent to comply with, not only this Supplement but also the other provisions of the Company’s Insider Trading Policy. Please sign, date and return the attached Certification within five days after your receipt of this Supplement.
I hereby certify that:
- I have read and understand the Company’s Statement of Policy regarding Securities Trades by Company Personnel, and the Supplement thereto for Directors, Executive Officers and Certain Other Employees, covering pre-clearance and broker interface procedures and blackout periods (together, the “Insider Trading Policy”);
- I understand that the General Counsel and Chief Financial Officer are available to answer any questions I may have regarding the Insider Trading Policy;
- Since I have been a director or employee of the Company or otherwise designated as subject to the Insider Trading Policy Supplement, I have complied with the Insider Trading Policy; and
- I will continue to comply with the Insider Trading Policy for as long as I am subject to the Policy.
Additional Documentation Requirements for Directors and Executive Officers
The following additional documentation requirements are a part of the Company’s Insider Trading Policy and are designed to facilitate compliance by the directors and executive officers of the Company with the requirements of Section 16 of the Securities Exchange Act of 1934.
Power of Attorney
In order to assist the Company in preparing and filing your Forms 4 on a timely basis, it is imperative that you sign, date and return immediately the attached Power of Attorney.
Broker Interface Procedures
The timely reporting of transactions by our directors and officers required by Section 16 of the Securities Exchange Act requires prompt communication with the Company by the brokers handling transactions for them. A knowledgeable, alert broker can also serve as a gatekeeper, helping to ensure compliance with our pre-clearance procedures and helping prevent inadvertent violations.
You should advise the broker handling your transactions in company stock of the following requirements under this Policy:
• No order (except for orders under pre-approved Rule 10b5-1 plans) should be entered without first verifying that your transaction was pre-cleared, and
• The Company should be immediately advised by telephone and in writing (via e-mail or fax) of the details of every transaction involving company stock, including gifts, transfers, pledges, and all 10b5-1 transactions.
However, you are ultimately responsible for any non-compliance with this Insider Trading Policy or with applicable securities transaction reporting requirements.
Power of Attorney
Know all by these presents, that the undersigned hereby constitutes and appoints each of the following officers and employees of Spartech Corporation, a Delaware corporation, (the “Company”): General Counsel, Corporate Counsel, Director of Treasury and the Senior Manager of External Reporting, signing singly, the true and lawful attorney-in-fact of the undersigned:
- To execute for and on behalf of the undersigned, in the undersigned’s capacity as a director and/or officer of Spartech Corporation, a Delaware corporation (the “Company”), Forms 3, 4, and 5 in accordance with Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder;
- To do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute any such Form 3, 4, or 5, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority; and
- To take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact’s discretion.
The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact’s substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming, nor is the Company assuming, any of the undersigned’s responsibilities to comply with Section 16 of the Securities Exchange Act of 1934.
This Power of Attorney shall remain in full force and effect until the undersigned is no longer required to file Forms 3, 4, and 5 with respect to the undersigned’s holdings of and transactions in securities issued by the Company, unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney
to be executed as of this ____ day of ____________________, 20___.
¹If the earnings release is issued before the New York Stock Exchange opens for that day, that day will be deemed the first full trading day. If the release or conference call occurs after the market opens, that day will not be counted.