1. Sponsor “Two Perspectives on Succession” Michael Foley, President & CEO, Reflexite Corporation Paul Silvis, Founder, Former Head Coach, Restek Corporation Moderated by Diane Stoneman, Director of Consulting and Training, Winning Workplaces © 2009 Winning Workplaces. May not be reproduced or distributed without expressed written permission of Winning Workplaces.

2. About Winning Workplaces Founded in 2001 by co-owners of Fel-Pro Committed to small/midsize organizations building healthy, productive work cultures Triple bottom line: Business, People, Community.

3. Top Small Workplaces Recognition The Wall Street Journal Winners profiled Oct. 2008, WSJ.Com/Entrepreneur Report @ WinningWorkplaces.org 2009 competition underway

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5. Our Agenda today The succession tale of two firms Impact on business and workforce Lessons learned Questions from audience

6. Featured Presenters Michael Foley President & CEO Reflexite Corporation Avon, CT Paul Silvis Founder, Former Head Coach Restek Corporation Bellefonte, PA

7. President & CEO Reflexite Corporation Michael Foley

8. Reflexite Overview Core Technologies Optical Engineering Microreplication Polymer Processing Fundamentals Technology Ownership Quality Three Business Units Reflective Products Business Display Optics Optical Solutions Business

9. Reflexite Global Locations May 2008, 515 employees Worldwide Reflexite The Management of Light ®

10. Goals of a Successful Succession Process Continuity of Leadership Business Results Sustained/Improved Preserve Essential Culture and Values Individual Goals are Met – Personal – Career – Financial

11. Risks in a Succession Process The risk of failure……. – Is High. Empirical data suggest that more than 50% of succession scenarios fail in one or more ways versus the ideals. Only 25% of family businesses make it to 2 nd generation. – Can be detrimental to business. Discontinuity of leadership, distraction of management, etc

12. Common Causes of Failure No Succession: CEO dies/incapacitated without implementing succession plan No Process Failed Process: Departing CEO “can’t let go” Incoming CEO does not meet expectations Personality Conflicts Family Issues Financial Complications Opaque process/no objective independent oversight

13. Elements of Reflexite Succession Process Candidate Selection and Development Board Involvement – Succession Committee – Mentor – Full Board Engagement Shared Expectations – Roles and Responsibilities Matrix – Frequent “Calibration Sessions” 3 rd Party Facilitators – Engaged “Coach” – Peer Groups Milestone Based Process ( CEO Readiness Criteria) Use of Symbolic Transitions/Communication of Process Time

14. Characteristics of Reflexite Succession Process Transparency Board Oversight Independence Expert Involvement Buy-in Consideration of needs of individuals involved and their unique personalities

15. Board Involvement 3 Board members who had experience with succession – Peter Russo - CFO who became CEO of Data Instruments – Art LoVetere – Pres. became CEO MacDermid Chemical; transitioned to son of his former CEO – Peter Eio – Pres. of Lego USA, succession in large family company University Professor Peter Russo served as mentor “Executive Sessions” amongst outside Board members

16. Responsibilities Matrix Purpose: – Provides clarity on roles and responsibility – Defines limits of authority Benefit is more in the process of developing rather than day-to-day use Should be reviewed as reponsibilities will evolve during transition

17. Outside Assistance Peer Groups – UPENN ESOP CEO Group – Other Possibilities (YPO,TEC Group) Facilitator – Engaged “coach” with psychology and background in corporate coaching – Assisted in conflict resolution and helped parties understand each other

18. CEO Transition Milestones Performance Mgt Process for Incoming CEO – “CEO Readiness Criteria” – 360 Evaluations – Bd Involvement: Criteria, Measurement, Follow Up Liquidity for Outgoing CEO

19. CEO Readiness Criteria 28 Criteria – derived from from UPENN “Leadership in an Ownership Environment” Confidential 360 Process was used, along with self-evaluation Grouped into “Exceeds Expectations”, “Meets Expectations, but Could Improve”, and “Development Required” Mentor worked with me to develop action plan

20. Results Managed 2nd transaction- no abrupt change – We got it right on the first try…. – Both outgoing/incoming CEO achieved primary goals – No one got fired! Firm prospered before, during, after transition

21. Opportunities for Improvement Need a timetable AND milestones Should have put “liquidity” first on the list rather than an afterthought Patience

22. Paul Silvis Founder, Former Head Coach Restek Corporation

23. My Journey Started Restek at age 30. Started Restek at age 30. No formal business training. No formal business training. No money or “rich uncles”. No money or “rich uncles”. No management skills. No management skills. No fall back position. No fall back position. Would rather fail than not try. Would rather fail than not try. Passionate about employee treatment. Passionate about employee treatment.

24. Restek Beginning Elementary School Incubator on October 15, 1985 Founding Principle: “Employees enjoy coming to work as much as going home.”

25. 275 employees 275 employees Germany, France, Ireland, U.K., Japan offices. Germany, France, Ireland, U.K., Japan offices. Distributors in 80 countries Distributors in 80 countries 145,000 square feet, >4 mil/month 145,000 square feet, >4 mil/month Inc 500, Entrepreneur of Year, Best Places, etc. Inc 500, Entrepreneur of Year, Best Places, etc. Owner “grew” as business grew Owner “grew” as business grew Restek Grows Double Digits!

26. Restek’s Business Manufacturer of consumables for Analytical Instruments Gas Chromatography Columns HPLC Columns Packed Columns Instrument Accessories Reference Standards Air Monitoring Canisters SPE

27. Restek’s Business Technology driven division: CVD Coating service CVD Coating service Passivation, Corrosion, Anticoking, UHV, Decorative Passivation, Corrosion, Anticoking, UHV, Decorative

28. Lifetime of a CEO Lifetime of a CEO Packed schedule for 20 years. Things became more predictable. Less engaged in business; more engaged in community. Every leader should replace themselves. CEOs friends sold out for the highest buck. Developed 7yr vision to transfer leadership and ownership Developed a plan to realize the vision Communicated vision to as many people and as frequently as possible

29. Identifying a Successor Executive Coaching (Bartell) Looked for individual with different skills. Wanted an individual confident enough to challenge me. Sought individual who believed in Core Values Next Head Coach had to be well rounded and know the market. Obtained feedback privately & publicly. Wanted to promote from within. Named a successor on the 18 th year.

30. Chose Director of Sales and Marketing Challenged Don to replace himself. Almost pulled the plug in 6 months! Spent time communicating “relay race” vision and clarifying responsibilities to Management and Employees. Developed “it will work” mental vision. Maintaining trust was key to success. OK to disagree. Identifying a Successor (continued)

31. Communicate Transition Process Stepped down as HC in October 2005. Created symbols of power transition Moved out of office Celebration Changed my behavior – less vocal Established two confidants. Weekly mentoring HC has less power! Continued executive training. Weekly mentoring sessions.

32. Keeping a Founder Busy Chair Board. Lead growth and acquisitions. Back to “creating & inventing” roots. Accountable for facility & buildings. Back to school for Smeal executive MBA as husband & wife team. Was busier than ever! Felt challenged & alive! Biggest question was “What will Paul do?”

33. Reaching 100% ESOP Next transition: Company of Owners. Real-estate model to negotiate sale to employees. Stock valuation concern. 23% to 100% ESOP on 12/31 / 08. Spun off RPC division. Established a 15-year HC term. Wrote governance document. Defined roles and structure. Created an anti-solicitation policy.

34. 100% ESOP Proud of employees during economic downturn: Level I, II, III cuts Employees and Managers making ownership decisions. Don continues to learn rapidly. I am less visible. Rarely attend Management Team meetings. Rarely walk the halls. Conscientious to not create leadership confusion. Act as a coach to help individuals through business challenges. Am busier than I have ever been with SilcoTek, other business ventures, and volunteer organizations! My Life Vision: Never retire – just change jobs! A Company of Owners

35. Questions? www.Reflexite.com www.Restek.com

36. Upcoming Webinar June 17 Radio Flyer: The Story of Transforming an American Icon Robert F. Pasin, President & CEO

37. Thank You! www.winningworkplaces.org Sponsor