January
29, 2010
BY
EDGAR
Securities
and Exchange Commission
Division
of Corporation Finance
100 F
Street, NE, Mail Stop 4631
Washington,
DC 20549
Attention:
Ms. Pamela Long, Assistant Director
RE: American
Woodmark Corporation, File No. 000-14798
Form 10-K for the
fiscal year ended April 30, 2009
Definitive Proxy
Statement on Schedule 14A
Form 10-Q for the
quarter ended October 31, 2009
Dear Ms.
Long:
This
letter is in response to the letter from the Staff of the Securities and
Exchange Commission dated January 19, 2010 and received by facsimile on the same
date. American Woodmark Corporation (the Company) understands and
shares the SEC’s goal of adequate and accurate disclosures of pertinent
financial information. Contained below are the comments contained in
your letter, followed by the Company’s responses.
Definitive
Proxy Statement on Schedule 14A filed on June 30, 2009
Compensation
Discussion and Analysis, Page 9
Annual
Cash Bonus, page 11
|
1.
|
Staff Comment: In future
filings, please disclose more detailed information regarding your annual
cash bonus program. Specifically, please disclose the predetermined
threshold level of net income you require before any annual cash bonuses
are paid out. Please further explain, in both quantitative and qualitative
terms, the difference between “superior performance” and targeted
performance levels so that the reader can fully understand the
distinctions you make between past and current performance goals. Also,
please disclose the net income target levels for 2007, 2008 and 2009 as
well as the actual net income achieved during those years. Please show us
what these disclosures will look like. Please refer to Item 402(b)(2)(v)
of Regulation S-K. To the extent you believe that disclosure of the
information would result in competitive harm such that you may omit the
information under Instruction 4 to Item 402(b) of Regulation S-K, please
provide a detailed explanation supporting your conclusion. Please refer
also to Question 118.04 of the Regulation S-K Compliance and Disclosure
Interpretations available on our
website.
|
Company
Response: Per your request, the Company will provide a
disclosure similar to the following in future filings:
On
an annual basis, the Compensation Committee establishes bonus targets based on a
variety of factors including progress towards critical elements of the Company’s
long term strategy, prior year performance, and the external economic
environment. As a result, annual bonus targets vary from fiscal year
to fiscal year. The annual performance goals for each of the years
listed below represented the expected range of Company net income across three
levels of performance:
|
·
|
“threshold”
representing minimal performance in order to qualify for any annual bonus
payout,
|
|
·
|
“target”
representing performance consistent with expectations to qualify for a
payout of 60% of potential, and
|
|
·
|
“maximum”
representing superior performance exceeding
expectations.
|
Annual
bonus goals for threshold, target, and maximum, as well as actual net income
achieved, are listed below. The 2009 actual net income represents the Company’s
reported net loss of $3.2 million, excluding restructuring charges net of income
tax benefit of $6.0 million.
|
Net
Income Goals
|
||||||||||||||||
|
Fiscal
Year
|
Threshold
|
Target
|
Maximum
|
Actual
|
||||||||||||
|
2007
|
$ | 25.7 | $ | 32.7 | $ | 38.7 | $ | 32.6 | ||||||||
|
2008
|
$ | 22.0 | $ | 30.0 | $ | 36.0 | $ | 4.3 | ||||||||
|
2009
|
$ | 0.0 | $ | 10.0 | $ | 20.0 | $ | 2.8 | ||||||||
|
2.
|
Staff Comment: We note
your disclosure in footnote 1 of the Grants of Plan-Based Awards in Fiscal
2009 on page 16. We also note your disclosure in the last paragraph on
page 19. In future filings, please disclose in this section the
performance objectives triggering a target payout and the performance
objectives that trigger a maximum payout under the annual bonus program
for each named executive officer. Please show us how you plan to disclose
this information in the future.
|
Company
Response: As indicated in the response to the previous Staff
Comment, this data will be included in future filings in the description of the
Annual Cash Bonus in the Elements of Compensation section. These
future filings will include a revision of the verbiage in this footnote 1 to
include a cross reference to the new table to be included in the description of
the Annual Cash Bonus section, as follows:
The
amounts displayed in these columns reflect the threshold, target and maximum
payouts under the fiscal year 2009 Annual Cash Bonus program. For
Messrs. Gosa and Guichard, the Company’s attainment of its net income goal was
the only determinant of the amount of bonus paid to these Named Executive
Officers. For Mr. Gosa, the potential bonus payments ranged from 0% to 50% of
his 2009 base salary, with a target of 30%; for Mr. Guichard the range was from
0% to 150% of his 2009 annual base salary, with a target of 90%. For Messrs.
Wolk and Dunston, the Company’s attainment of its net income goal determined 70%
of the amounts potentially payable to these Named Executive Officers, with the
remaining 30% of their potential bonus payments determined by achievement of
their respective individual goals. Messrs. Wolk and Dunston had
potential bonus payments of from 0% to 100% of their respective base salaries,
with a target of 60%. The Company’s specific net income goals and the
individual performance goals of Messrs. Wolk and Dunston for fiscal year 2009
are described in Compensation Discussion and Analysis on page 11, under the
heading Annual Cash Bonus.
The last
paragraph of page 19 describes the annual bonus component of the employment
agreements for the Company’s Named Executive Officers (NEOs). The
wording of this paragraph will be modified in future filings to provide a cross
reference to the table information provided in our response to Comment 1, as
follows:
The
four Named Executive Officers are entitled to participate in the Company’s
annual incentive program with a total cash bonus opportunity of
between:
|
·
|
0
percent and 150 percent of Mr. Guichard’s then current base
salary,
|
|
·
|
0
percent and 50 percent of Mr. Gosa’s then current base salary,
and
|
|
·
|
0
percent and 100 percent of Mr. Wolk’s and Mr. Dunston’s respective then
current base salaries.
|
In
each case, the actual amount of bonus paid is related to achievement of the
performance objectives established by the Compensation Committee at the
beginning of the fiscal year. For Messrs. Guichard and Gosa, these
bonuses are entirely dependent upon the Company’s attainment of its net income
goal in relation to the specific targets established by the Compensation
Committee. The Company’s net income targets for fiscal year 2009 are
described in Compensation Discussion and Analysis on page 11 under the heading
Annual Cash Bonus. For Messrs. Wolk and Dunston, these bonuses depend
upon the Company’s attainment of its net income goal (70% of the total bonus
potential) and upon the attainment of their individual goals described in that
section (30% of the total bonus potential).
|
3.
|
Staff Comment: In future
filings, please disclose in both quantitative and qualitative terms the
respective organizational and individual goals Messrs. Wolk and Dunston
must attain to receive the 30% portion of their annual cash bonus amounts.
Please further disclose how you determine whether the entire 30% is
awarded for each named executive officer, including a discussion of any
particular weighting you assign to each organizational or individual goal.
See Item 402(b)(2)(vii) of Regulation S-K. Please show us how you plan to
disclose this information in the
future.
|
Company
Response: The Company will expand its discussion of the
individual goals for Messrs. Wolk and Dunston in future filings as
follows:
Both
Messrs. Wolk and Dunston are leaders of different functional and operational
areas of the Company’s business. As part of the Company Leadership
Team, they each report directly to Mr. Guichard, who develops objectives that
both individuals are expected to achieve, and against which their performance is
assessed. These objectives and performance assessments are reviewed and approved
by the Compensation Committee each year. The Compensation Committee
makes a determination of the bonus earned, in its discretion, with the
assistance of Mr. Guichard, based on a combination of quantitative and
qualitative measurements developed to assess achievement. No
particular weighting is given to any one individual performance goal. In
assessing each executive’s performance, the Compensation Committee considers the
entirety of the executive’s performance.
As
the leader of the Company’s finance and information technology organizations,
Mr. Wolk shares the same net income and Company performance objectives as
Mr. Guichard. His strategic and operational goals include
objectives relating to operational and business support, controllership, cash
flow management, financial flexibility, and management information
systems.
As
the leader of the Company’s manufacturing and logistics operations, Mr. Dunston
shares the same net income and Company performance objectives as Mr.
Guichard. His strategic and operational goals include objectives
relating to operational performance including safety, quality, delivery and cost
and to the overall effectiveness of the Company’s supply chain.
|
4.
|
Staff
Comment: You refer to both “earnings” and “net income”
to describe the company performance targets used in fiscal years 2006,
2007, 2008 and 2009. Please tell us whether you are using these
terms interchangeably to refer to the same performance
metric. Please revise future filings accordingly as necessary
to provide clarity in this regard.
|
Company
Response: The Company has used the terms “net income” and
“earnings” interchangeably. The Company will use “net income” to
describe this performance measure in future filings.
Shareholder
Value Units, page 12
|
5.
|
Staff Comment: We note your
disclosure in footnote 2 of the Grants of Plan-Based Awards in fiscal 2009
on page 16. In future filings, please disclose in this section
the factors or performance targets triggering threshold, target and
maximum payouts under the shareholder value plan for each named executive
officer. Please show us how you plan to disclose this information in the
future.
|
Company Response: The footnote
presently contains a cross reference to a detailed description of the
Shareholder Value Plan on page 12. In future filings, we will provide
in this footnote an enhanced description of the triggers for performance
attainment for this award category, as follows:
These
columns reflect the potential future payouts for each Named Executive Officer
under the 2009-2011 Shareholder Value Plan if the threshold, target, or maximum
goals are satisfied. As described more fully in the “Shareholder Value Units”
section of Compensation Discussion & Analysis on page 12, this Plan provides
participants the right to receive incentive payments when the total return to
the Company’s shareholders equals or exceeds the total return for a
representative index of peer companies. The potential payouts are
based entirely upon the Company’s performance, and therefore, are completely at
risk. Payments are made at the threshold level only if the Company’s total
shareholder return is at least equal to that of the index. If the Company’s
total shareholder return exceeds that of the index, then payments are made at
increasing levels up to the maximum level, based upon a predetermined
comparative scale. No Shareholder Value Plan award payments were made in fiscal
year 2009 because the threshold target was not achieved.
In
addition, in future filings the Company will add a new fourth paragraph to the
Shareholder Value Units section of Compensation, Discussion & Analysis on
page 12, as follows:
During
fiscal year 2009, Mr. Guichard was awarded 165 units, Mr. Wolk was awarded 56
units, and Mr. Dunston was awarded 59 units. The determination as to what if any
amount will be paid with respect to these awards will be made based upon a
comparison of the total shareholder return of the Company’s stock against the
net change in the Russell 2000 Index over the performance period from May 2008
to April 2011. If the total shareholder return of the Company’s stock is less
than that of the Russell 2000 Index over this period, then there will be no
payments made with respect to these awards. If during this performance period
the total shareholder return from the Company’s stock equals that of the Russell
2000 Index, then the Plan participants will be paid at a value of $500 per unit,
and for example, Mr. Guichard would realize a payment of $82,500. If the total
shareholder return of the Company’s stock exceeds that of the Russell 2000 Index
by at least 20 percentage points, then participants will receive the maximum
value of $3,000 per unit. If the Company’s total shareholder return exceeds the
Russell 2000 Index performance during this performance period by less than 20
percentage points, then participants will receive a value of from $500 to $3,000
per unit, based upon a predetermined scale.
Employment
Agreements and Post-Employment Compensation Agreements, page 19
|
6.
|
Staff Comment: We note your
disclosure in the first paragraph on page 20. In future filings, please
explain why you determined to provide a longer severance pay period and a
greater bonus payment percentage with respect to Mr. Guichard. See Item
402(j)(3) of Regulation S-K.
|
Company Response: The Company
will provide disclosure in future filings that addresses the Staff’s comment.
The employment agreements granted to our NEOs were approved by the Company’s
Compensation Committee to enhance the Company’s ability to attract and retain
these individuals and provide the Company with continuity in the event of a
change in control. In developing the parameters of these agreements, the
Compensation Committee utilized an independent compensation consultant and an
analysis of peer companies. The Committee established these
agreements with a goal of providing terms that are representative of the
competitive market for like positions. Mr. Guichard’s employment
agreement includes a longer severance period and a greater bonus payment
percentage due to the greater span of control, accountability and ability to
impact the Company’s performance inherent in Mr. Guichard’s role as Chief
Executive Officer.
Certain
Transactions, page 27
|
7.
|
Staff Comment: In future filings,
please disclose whether your policies and procedures for the review and
approval of related party transactions are in
writing.
|
Company Response: The Company
will provide disclosure in future filings that addresses the Staff’s comment.
The Company supplementally confirms that it has written policies concerning
related party transactions and potential conflicts of interests. These policies
describe the types of transactions and relationships that may be in conflict
with these policies. All officers and directors, as well as employees
who exercise substantial discretionary authority in the performance of their
duties are required to complete an annual questionnaire describing any potential
conflicts of interest and certify their compliance with the Company’s policies.
These responses are reviewed by the Company’s Audit Committee. As required by
their respective charters, both the Company’s Audit Committee and its Nominating
and Governance Committee each have responsibility to review all related party
transactions.
Form
10-Q for the quarter ended October 31, 2009
Liquidity
and Capital Resources, page 16
|
8.
|
Staff Comment: We note your
disclosure in the second paragraph that you recently terminated the
Amended and Restated Credit Agreement with Bank of America, N.A. and
entered into a revolving credit agreement with Wells Fargo Bank, N.A. in
December 2009. In future filings, please disclose whether you are in
compliance with the material financial covenants in the new credit
agreement as well as any other material financial covenants contained in
other loan agreements. For any material financial covenants, please
disclose the required ratios/amounts as well as the actual ratios/amounts
as of each reporting date. This disclosure will allow readers to
understand how much cushion there is between the required ratios/amounts
and the actual ratios/amounts.
|
Company
Response: The Company will provide disclosure in future
filings that addresses the Staff’s comment.
With
respect to the Staff’s letter and the Company’s filings referenced therein,
American Woodmark Corporation acknowledges that:
|
·
|
The
Company is responsible for the adequacy and accuracy of the disclosures in
the filings;
|
|
·
|
Staff
comments or changes to disclosure in response to Staff comments do not
foreclose the Commission from taking any action with respect to the
filing; and
|
|
·
|
The
Company may not assert Staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
|
If you
have any questions regarding our responses, please do not hesitate to call me at
(540) 665-9100.
Sincerely,
/s/ Jonathan H.
Wolk
Jonathan
H. Wolk
Vice
President and Chief Financial
Officer