def14-a.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. _____)
Filed
by the Registrant x
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by a Party other than the Registrant o
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for Use of the Commission Only (as permitted by Rule
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to §240.14a-12
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Interface,
Inc.
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(Name
of Registrant as Specified in Its Charter)
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of Person(s) Filing Proxy Statement, if other than the
Registrant)
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of each class of securities to which transaction
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(set forth the amount on which the filing
fee is calculated and state how it was determined):
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maximum aggregate value of transaction:
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Interface,
Inc.
2859
Paces Ferry Road, Suite 2000
Atlanta,
Georgia 30339
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
The
annual meeting of shareholders of Interface, Inc. (the “Company”) will be held
on Thursday, May 21, 2009, at 3:00 p.m. Eastern Time, at the Vinings Club
located at 2859 Paces Ferry Road, Atlanta, Georgia. The purposes of
the meeting are to consider and vote upon:
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Item
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Recommended
Vote
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1.
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The
election of eleven members of the Board of Directors, five directors to be
elected by the holders of the Company’s Class A Common Stock and six
directors to be elected by the holders of the Company’s Class B
Common Stock.
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FOR
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2.
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A
proposal to approve the Company’s Executive Bonus Plan.
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FOR
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3.
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The
ratification of the appointment of BDO Seidman, LLP as independent
auditors for 2009.
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FOR
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4.
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Such
other matters as may properly come before the meeting and at any
adjournments of the meeting.
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The Board
of Directors set March 13, 2009 as the record date for the
meeting. This means that only shareholders of record at the close of
business on March 13, 2009 will be entitled to receive notice of and to vote at
the meeting or any adjournments of the meeting.
The Board
of Directors is using the attached Proxy Statement to solicit Proxies from
shareholders. Please promptly complete and return a Proxy Card or use
telephone or Internet voting at your earliest convenience. Voting your Proxy in
a timely manner will assure your representation at the annual meeting. You may,
of course, change or withdraw your Proxy at any time prior to the voting at the
meeting.
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By
order of the Board of Directors |
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/s/
RAYMOND S. WILLOCH
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RAYMOND
S. WILLOCH |
|
Secretary |
April 8,
2009
PLEASE
PROMPTLY COMPLETE AND RETURN A PROXY CARD
OR
USE TELEPHONE OR INTERNET VOTING PRIOR TO THE MEETING SO THAT YOUR
VOTE
MAY
BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
Interface,
Inc.
2859
Paces Ferry Road, Suite 2000
Atlanta,
Georgia 30339
_______________
PROXY
STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
_______________
GENERAL
INFORMATION
The Board
of Directors of Interface, Inc. (the “Company”) is furnishing this Proxy
Statement to solicit Proxies for Class A Common Stock and Class B Common Stock
to be voted at the annual meeting of shareholders of the Company. The
meeting will be held at 3:00 p.m. Eastern Time on May 21, 2009. The
Proxies also may be voted at any adjournments of the meeting. It is
anticipated that this Proxy Statement will first be made available to
shareholders on April 8, 2009.
The
record of shareholders entitled to vote at the annual meeting was taken as of
the close of business on March 13, 2009. On that date, the Company
had outstanding and entitled to vote 56,465,832 shares of Class A Common Stock
and 6,735,612 shares of Class B Common Stock. Except for (i) the election
and removal of directors, and (ii) class votes as required by law or the
Company’s Articles of Incorporation, holders of both classes of Common Stock
vote as a single class. In all cases, holders of Common Stock (of either class)
are entitled to cast one vote per share.
Each
Proxy for Class A Common Stock (“Class A Proxy”) or Class B Common Stock (“Class
B Proxy”) that is properly completed (whether executed in writing or submitted
by telephone or Internet) by a shareholder will be voted as specified by the
shareholder in the Proxy. If no specification is made, the Proxy will be voted
(i) for the election of the nominees (Class A or Class B, as the case may be)
listed in this Proxy Statement under the caption “Nomination and Election of
Directors,” (ii) for the proposal to approve the Executive Bonus Plan, and (iii)
for the ratification of the appointment of BDO Seidman, LLP as independent
auditors for 2009. A Proxy given pursuant to this solicitation may be
revoked by a shareholder who attends the meeting and gives notice of his or her
election to vote in person, without compliance with any other formalities. In
addition, a Proxy given pursuant to this solicitation may be revoked prior to
the meeting by delivering to the Secretary of the Company either an instrument
revoking it or a duly executed Proxy for the same shares bearing a later
date.
An
automated system administered by the Company’s transfer agent tabulates the
votes. Abstentions and broker non-votes are included in the determination of the
number of shares present and entitled to vote for the purpose of establishing a
quorum. A broker non-vote occurs when a broker or other nominee who holds shares
for a customer does not have authority to vote on certain non-routine matters
because its customer has not provided any voting instructions on the
matter. Abstentions are the equivalent of a non-vote since (i)
directors are elected by a plurality of the votes cast, and (ii) other proposals
are approved if the affirmative votes cast exceed the negative votes
cast. Broker non-votes are not counted for purposes of determining
whether a proposal has been approved.
If your
shares of Common Stock are held by a broker, bank or other nominee (e.g., in
“street name”), you should receive instructions from your nominee, which you
must follow in order to have your shares voted – the instructions may appear on
a special proxy card provided to you by your nominee (also called a “voting
instruction form”). Your nominee may offer you different methods of voting, such
as by telephone or Internet. If you do hold your shares in “street name” and
plan on attending the annual meeting of shareholders, you should request a proxy
from your broker or other nominee holding your shares in record name on your
behalf in order to attend the annual meeting and vote at that time (your broker
or other nominee may refer to it as a “legal” proxy).
The
expense of this solicitation, including the cost of preparing and mailing this
Proxy Statement, will be paid by the Company. Copies of solicitation material
may be furnished to banks, brokerage houses and other custodians, nominees and
fiduciaries for forwarding to the beneficial owners of shares of the Company’s
Common Stock, and normal handling charges may be paid for the forwarding
service. In addition to solicitations by mail, directors and employees of the
Company may solicit Proxies in person or by telephone, fax or e-mail. The
Company also has retained Georgeson Inc., a proxy solicitation firm, to assist
in soliciting Proxies from record and beneficial owners of shares of the
Company’s Common Stock. The fee paid by the Company for such assistance will be
$7,500 (plus expenses).
NOMINATION
AND ELECTION OF DIRECTORS
(ITEM
1)
The
Bylaws of the Company provide that the Board of Directors shall consist of a
maximum of 15 directors, the exact number of directors being established by
action of the Board taken from time to time. The Board of Directors
has currently set the number of directors at 11. The holders of Class
B Common Stock are entitled to elect a majority (six) of the Board members. The
holders of Class A Common Stock are entitled to elect the remaining (five)
directors. The term of office for each director continues until the next annual
meeting of shareholders and until his or her successor, if there is to be one,
has been elected and has qualified.
In the
event that any nominee for director withdraws or for any reason is not able to
serve as a director, each Proxy that is properly executed and returned will be
voted for such other person as may be designated as a substitute nominee by the
Board of Directors, but in no event will any Class A Proxy be voted for more
than five nominees or Class B Proxy be voted for more than six nominees. Each
nominee is an incumbent director standing for re-election, and has consented to
being named herein and to continue serving as a director if
re-elected.
Certain
information relating to each nominee proposed by the Board is set forth
below. Directors are required to submit an offer of resignation upon
experiencing a job change.
CLASS
A NOMINEES
Name
(Age) |
Information |
|
|
Dianne
Dillon-Ridgley
(57)
|
Ms.
Dillon-Ridgley was elected to the Board in February 1997.
Ms. Dillon-Ridgley has served as the U.N. Headquarters representative
for the World YWCA since 1997 and for the Center for International
Environmental Law since 2005. From 1995 to 1998, she served as senior
policy analyst with the Women’s Environment and Development Organization,
and from 1998 to 1999 she served as Executive Director of that
organization. She was appointed by President Clinton to the President’s
Council on Sustainable Development in 1994 and served as Co-Chair of the
Council’s International and Population/Consumption Task Forces until the
Council’s dissolution in June 1999. Ms. Dillon-Ridgley also serves on the
boards of five nonprofit organizations and on the Dean’s Advisory Board
for Auburn University’s College of Human Sciences.
|
Dr.
June M. Henton
(69)
|
Dr.
Henton was elected as a director in February 1995. Since 1985, Dr. Henton
has served as Dean of the College of Human Sciences at Auburn University,
which includes an Interior Design program. Dr. Henton, who received her
Ph.D. from the University of Minnesota, has provided leadership for a wide
variety of professional, policy and civic organizations. As a charter
member of the Operating Board of the National Textile Center, Dr. Henton
has significant expertise in the integration of academic and research
programs within the textile industry. Dr. Henton also
serves on the board of one nonprofit organization.
|
Christopher
G. Kennedy
(45)
|
Mr.
Kennedy was elected as a director in May 2000. He became an Executive Vice
President of Merchandise Mart Properties, Inc. (a subsidiary of Vornado
Realty Trust based in Chicago, Illinois) in 1994 and President in 2000.
Since 1994, he has served on the Board of Trustees of Ariel Mutual Funds.
From 1997 to 1999, Mr. Kennedy served as the Chairman of the Chicago
Convention and Tourism Bureau. Mr. Kennedy also serves on the boards of
three nonprofit organizations.
|
K.
David Kohler
(42)
|
Mr.
Kohler was elected as a director in October 2006. He serves as
Executive Vice President for Kohler Co., a global leader in the
manufacture of kitchen and bath products, interior furnishings, engines
and power generation systems, and an owner and operator of golf and resort
destinations. Mr. Kohler was previously a chairman of the
National Kitchen and Bath Association’s Board of Governors of
Manufacturing. He is currently a member of the board of Kohler
Co., and has previously served on the board of a privately-held
manufacturer. He is also a director of Internacional de
Cerámica, S.A.B. de C.V., a public company traded on the Mexican Stock
Market.
|
|
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Thomas
R. Oliver
(68)
|
Mr.
Oliver was elected as a director in July 1998. He served as Chairman of
Six Continents Hotels (formerly Bass Hotels and Resorts), the hotel
business of Six Continents, PLC (formerly Bass PLC), from March 1997 until
his retirement in March 2003, and served as Chief Executive Officer of Six
Continents Hotels from March 1997 to October 2002. Mr. Oliver also
currently serves as a director of UDR, Inc. (formerly United Dominion
Realty Trust, Inc.).
|
CLASS
B NOMINEES
Name
(Age) |
Information |
|
|
Ray
C. Anderson
(74)
|
Mr.
Anderson founded Interface in 1973 and served as Chairman and Chief
Executive Officer until his retirement as Chief Executive Officer and
transition from day-to-day management in July 2001, at which time he
became Interface’s non-executive Chairman of the Board. He chairs the
Executive Committee of the Board and remains available for policy level
consultation on substantially a full time basis. Mr. Anderson was
appointed by President Clinton to the President’s Council on Sustainable
Development in 1996 and served as Co-Chair until the Council’s
dissolution. He currently serves on the boards of one private company and
10 nonprofit organizations.
|
Edward
C. Callaway
(54)
|
Mr.
Callaway was elected as a director in October 2003. Since
November 2003, Mr. Callaway has served as Chairman and Chief Executive
Officer of the Ida Cason Callaway Foundation, a nonprofit organization
that owns the Callaway Gardens Resort and has an environmental mission of
conservation, education and land stewardship. Mr. Callaway has
served in various capacities at Crested Butte Mountain Resort and
successor companies, including the capacities of President and Chief
Executive Officer (1987-2003) and Chairman (2003), and currently serves as
a director. Mr. Callaway serves on the boards of two other
nonprofit organizations.
|
Carl
I. Gable
(69)
|
Mr.
Gable was elected as a director in March 1984. He is a private investor
and was an attorney with the Atlanta-based law firm of Troutman Sanders
LLP, from March 1996 until April 1998. Mr. Gable also served as
a director of Fidelity Southern Corporation from July 2000 to November
2002, and currently serves on the board of one nonprofit organization. Mr.
Gable currently serves as the lead independent director of the
Board.
|
Daniel
T. Hendrix
(54)
|
Mr.
Hendrix joined the Company in 1983 after having worked previously for a
national accounting firm. He was promoted to Treasurer of the Company in
1984, Chief Financial Officer in 1985, Vice President-Finance in 1986,
Senior Vice President-Finance in 1995, Executive Vice President in 2000,
and President and Chief Executive Officer in July 2001. He was elected to
the Board in October 1996. Mr. Hendrix served as a director of
Global Imaging Systems, Inc. from 2003 to 2007, and has served as a
director of American Woodmark Corp. since May
2005.
|
James
B. Miller, Jr.
(68)
|
Mr.
Miller was elected as a director in May 2000. Since 1979, Mr. Miller has
served as Chairman and Chief Executive Officer of Fidelity Southern
Corporation, the holding company for Fidelity Bank. He also has
served in various capacities at Fidelity Southern Corporation’s affiliated
companies, including as Chief Executive Officer of Fidelity Bank from 1977
to 1997 and from 2003 to the present, and as Chairman of LionMark
Insurance Company since 2004. Mr. Miller currently serves on
the boards of American Software, Inc., three private companies and six
nonprofit organizations.
|
Harold
M. Paisner
(69)
|
Mr.
Paisner was elected as a director in February 2007. Mr. Paisner
is Senior Partner of the law firm Berwin Leighton Paisner, LLP in London,
England. He currently is a member of the boards of FIBI
Bank (UK) plc and Think London (the official inward investment agency of
London, England), and serves as a Governor of Ben Gurion University of the
Negev and as a Trustee of the Institute of Jewish Policy
Research. Formerly, Mr. Paisner has served
as a director of LINPAC Group Limited and Estates & Agency
Holdings plc.
|
Vote
Required and Recommendation of Board
Under the
Company’s Bylaws, election of each of the five Class A nominees requires a
plurality of the votes cast by the Company’s outstanding Class A Common Stock
entitled to vote and represented (in person or by proxy) at the meeting.
Election of each of the six Class B nominees requires a plurality of the votes
cast by the Company’s outstanding Class B Common Stock entitled to vote and
represented (in person or by proxy) at the meeting. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR
THE ELECTION OF EACH OF THE CLASS A NOMINEES AND CLASS B NOMINEES LISTED ABOVE,
AND PROXIES EXECUTED AND RETURNED OR VOTED BY TELEPHONE OR INTERNET WILL BE
VOTED FOR EACH OF THE NOMINEES (CLASS A OR CLASS B, AS APPLICABLE) UNLESS
CONTRARY INSTRUCTIONS ARE INDICATED.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board
of Directors held five meetings during 2008. All of the directors
attended at least 75% of the total number of meetings of the Board and any
committees of which he or she was a member.
The Board
of Directors has the following standing committees that assist the Board in
carrying out its duties: the Executive Committee, the Audit
Committee, the Compensation Committee, and the Nominating & Governance
Committee. The following table lists the members of each
committee:
Executive Committee
|
|
Audit Committee
|
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Compensation Committee
|
|
Nominating & Governance
Committee
|
|
|
|
|
|
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Ray
C. Anderson (Chair)
|
|
Carl
I. Gable (Chair)
|
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Thomas
R. Oliver (Chair)
|
|
June
M. Henton (Chair)
|
Carl
I. Gable
|
|
Edward
C. Callaway
|
|
K.
David Kohler
|
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Dianne
Dillon-Ridgley
|
Daniel
T. Hendrix
|
|
James
B. Miller, Jr.
|
|
Harold
M. Paisner
|
|
Christopher
G. Kennedy
|
James
B. Miller, Jr.
|
|
|
|
|
|
Thomas
R. Oliver
|
Executive
Committee. The Executive
Committee met once during 2008. With certain limited exceptions, the Executive
Committee may exercise all the power and authority of the Board of Directors in
the management of the business and affairs of the Company.
Audit
Committee. The Audit
Committee met five times and acted by unanimous written consent one time during
2008. The function of the Audit Committee is to (i) serve as an independent and
objective party to review the Company’s financial statements, financial
reporting process and internal control system, (ii) review and evaluate the
performance of the Company’s independent auditors and internal financial
management, and (iii) provide an open avenue of communication among the
Company’s independent auditors, management (including internal financial
management) and the Board. The Board of Directors has determined that
all three members of the Audit Committee are “independent” in accordance with
applicable law, including the rules and regulations of the Securities and
Exchange Commission and the rules of the Nasdaq Stock Market, and that each of
the three members of the Audit Committee is an “audit committee financial
expert” as defined by the rules and regulations of the Securities and Exchange
Commission. The Audit Committee operates pursuant to an Audit
Committee Charter which was adopted by the Board of Directors. The
Audit Committee Charter may be viewed on the Company’s website, www.interfaceglobal.com/Investor-Relations/Corporate-Governance/Audit-Committee-Charter.aspx.
Compensation
Committee. The Compensation
Committee met one time and acted by unanimous written consent five times during
2008. The function of the Compensation Committee is to (i) evaluate
the performance of the Company’s Chief Executive Officer and other senior
executives, (ii) determine compensation arrangements for such executives, (iii)
administer the Company’s stock and other incentive plans for key employees, and
(iv) review the administration of the Company’s employee benefit
plans. The Board of Directors has determined that each member of the
Compensation Committee is “independent” in accordance with the rules and
regulations of the Securities and Exchange Commission and the rules of the
Nasdaq Stock Market. The Compensation Committee operates pursuant to
a Compensation Committee Charter that was adopted by the Board of
Directors. The Compensation Committee Charter may be viewed on the
Company’s website, www.interfaceglobal.com/Investor-Relations/Corporate-Governance/Compensation-Committee-Charter.aspx. The
Compensation Committee’s policies and philosophy are described in more detail
below in this Proxy Statement under the heading “Compensation Discussion and
Analysis.”
Nominating
& Governance Committee. The Nominating & Governance
Committee met twice in 2008. The Nominating & Governance
Committee assists the Board in reviewing and analyzing, and makes
recommendations regarding, corporate governance matters. The
Nominating & Governance Committee also assists the Board in establishing
qualifications for Board membership and in identifying, evaluating and selecting
qualified candidates to be nominated for election to the Board. In
the event of a vacancy on the Board, the Nominating & Governance Committee
develops a pool of potential director candidates for consideration. The
Nominating & Governance Committee seeks candidates for election and
appointment with excellent decision-making ability, valuable and varied business
experience and knowledge, impeccable personal integrity and reputation, and
diversity of background and experience. The Nominating &
Governance Committee considers whether candidates are free of constraints or
conflicts which might interfere with the exercise of independent judgment
regarding the types of matters likely to come before the Board, and have the
time required for preparation, participation and attendance at Board and
committee meetings. Other factors considered by the Nominating &
Governance Committee in identifying and selecting candidates include the needs
of the Company and the range of talent and experience already represented on the
Board. The Nominating & Governance Committee solicits suggestions
from other members of the Board regarding persons to be considered as possible
nominees. Shareholders who wish the Nominating & Governance
Committee to consider their recommendations for director candidates should
submit their recommendations in writing to the Nominating & Governance
Committee, in care of the office of the Chairman of the Board, Interface, Inc.,
2859 Paces Ferry Road, Suite 2000, Atlanta, GA 30339. Recommendations
should include the information which would be required for a “Shareholder
Proposal” as set forth in Article II, Section 9 of the Company’s
Bylaws. Director candidates who are recommended by shareholders in
accordance with these procedures will be evaluated by the Nominating &
Governance Committee in the same manner as director candidates recommended by
the Company’s directors.
The Board
of Directors has determined that each member of the Nominating & Governance
Committee is “independent” in accordance with applicable law, including the
rules and regulations of the Securities and Exchange Commission and the rules of
the Nasdaq Stock Market. The Nominating & Governance Committee
operates pursuant to a Nominating & Governance Committee Charter that was
adopted by the Board of Directors. The Nominating & Governance
Committee Charter may be viewed on the Company’s website,
www.interfaceglobal.com/Investor-Relations/Corporate-Governance/Nominating---Governance-Charter-(1).aspx.
PRINCIPAL
SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP
The
following table sets forth, as of February 1, 2009 (unless otherwise indicated),
beneficial ownership of each class of the Company’s Common Stock by: (i) each
person, including any “group” as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, known by the Company to be the beneficial owner
of more than 5% of any class of the Company’s voting securities, (ii) each
nominee for director, (iii) the Company’s Principal Executive Officer, Principal
Financial Officer, and next three most highly compensated executive officers
(the “Named Executive Officers”), and (iv) all executive officers and directors
of the Company as a group.
Beneficial Owner (and Business Address of 5%
Owners)
|
|
Title
of
Class
|
|
Amount
and
Nature
of
Beneficial
Ownership(1)
|
|
Percent
of
Class(1)
|
|
|
Percent
of
Class
A
if Converted(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ray
C.
Anderson
|
|
Class
A
|
|
|
15,000 |
(3) |
|
|
* |
|
|
|
5.9 |
% |
2859
Paces Ferry Road, Suite 2000
Atlanta,
Georgia 30339
|
|
Class
B
|
|
|
3,507,730 |
(3) |
|
|
51.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ariel
Investments,
LLC
200
E. Randolph Drive, Suite 2900
Chicago,
Illinois 60601
|
|
Class
A
|
|
|
8,993,800 |
(4)(5) |
|
|
15.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barclays
Global Investors,
N.A.
400
Howard Street
San
Francisco, CA 94105
|
|
Class
A
|
|
|
3,463,137 |
(4)(6) |
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RidgeWorth
Capital Management, Inc.
50
Hurt Plaza, Suite 1400
Atlanta,
Georgia 30303
|
|
Class
A
|
|
|
3,558,943 |
(4)(7) |
|
|
6.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheffield
Asset Management,
L.L.C.
900
North Michigan Ave., Suite 1100
Chicago,
Illinois 60611
|
|
Class
A
|
|
|
3,047,818 |
(4)(8) |
|
|
5.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Witmer
Asset Management, and Charles and Meryl
Witmer
One
Dag Hammarskjold Plaza
885
2nd
Ave., 31st
Floor
New
York, New York 10017
|
|
Class
A
|
|
|
3,211,733
|
(4)(9)
|
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward
C.
Callaway
|
|
Class
A
|
|
|
10,000 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
38,000 |
(10) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dianne
Dillon-Ridgley
|
|
Class
A
|
|
|
203 |
(11) |
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
23,000 |
(11) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carl
I.
Gable
|
|
Class
A
|
|
|
2,640 |
(12) |
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
94,244 |
(12) |
|
|
1.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
T.
Hendrix
|
|
Class
A
|
|
|
72,260 |
|
|
|
* |
|
|
|
1.1 |
% |
|
|
Class
B
|
|
|
549,894 |
(13) |
|
|
8.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
M.
Henton
|
|
Class
A
|
|
|
2,000 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
42,600 |
(14) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
G.
Kennedy
|
|
Class
A
|
|
|
30,223 |
(15) |
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
43,000 |
(15) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K.
David
Kohler
|
|
Class
A
|
|
|
0 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
29,000 |
(16) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick
C.
Lynch
|
|
Class
A
|
|
|
65,833 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
98,333 |
(17) |
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
B. Miller,
Jr.
|
|
Class
A
|
|
|
16,525 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
43,000 |
(18) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Owner (and Business Address of 5%
Owners)
|
|
Title
of
Class
|
|
Amount
and
Nature
of
Beneficial
Ownership(1)
|
|
Percent
of
Class(1)
|
|
Percent
of
Class
A
if Converted(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
R.
Oliver
|
|
Class
A
|
|
|
140,000 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
33,000 |
(19) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harold
M.
Paisner
|
|
Class
A
|
|
|
12,000 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
29,000 |
(20) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lindsey
K.
Parnell
|
|
Class
A
|
|
|
90,837 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
110,833 |
(21) |
|
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
R.
Wells
|
|
Class
A
|
|
|
158,576 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
186,292 |
(22) |
|
|
2.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond
S.
Willoch
|
|
Class
A
|
|
|
66,666 |
|
|
|
* |
|
|
|
* |
|
|
|
Class
B
|
|
|
119,711 |
(23) |
|
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
executive officers and
directors
|
|
Class
A
|
|
|
742,480 |
|
|
|
1.3 |
% |
|
|
9.5 |
% |
as
a group (16 persons)
|
|
Class
B
|
|
|
5,101,347 |
(24) |
|
|
73.4 |
% |
|
|
|
|
__________
* Less
than 1%.
|
(1)
|
Shares
of Class B Common Stock are convertible, on a share-for-share basis, into
shares of Class A Common Stock. The number of Class A shares indicated as
beneficially owned by each person or group does not include Class A shares
such person or group could acquire upon conversion of Class B
shares. Percent of Class is calculated assuming that the
beneficial owner has exercised any conversion rights, options or other
rights to subscribe held by such beneficial owner that are exercisable
within 60 days (not including Class A shares that could be acquired upon
conversion of Class B shares), and that no other conversion rights,
options or rights to subscribe have been exercised by anyone
else.
|
|
(2)
|
Represents
the percent of Class A shares the named person or group would beneficially
own if such person or group, and only such person or group, converted all
Class B shares beneficially owned by such person or group into Class A
shares.
|
|
(3)
|
Represents
15,000 Class A shares held by Mr. Anderson’s wife, although Mr. Anderson
disclaims beneficial ownership of such shares. Also includes
19,000 Class B shares that may be acquired by Mr. Anderson pursuant to
exercisable stock options, and 21,452 Class B shares that Mr. Anderson
beneficially owns through the Company’s 401(k)
plan.
|
|
(4)
|
Based
upon information included in statements as of December 31, 2008 provided
to the Company and filed with the Securities and Exchange Commission by
such beneficial owners.
|
|
(5)
|
All
such shares are held by Ariel Investments, LLC (“Ariel”) for the accounts
of investment advisory clients. Ariel, in its capacity as
investment advisor, has sole voting power with respect to 6,964,590 of
such shares and sole dispositive power with respect to 8,982,140 of such
shares.
|
|
(6)
|
According
to a Schedule 13G filed February 5, 2009, the reported shares are held by
Barclays Global Investors, NA, and certain affiliates in trust accounts
for the economic benefit of the beneficiaries of those
accounts.
|
|
(7)
|
Includes
shares beneficially owned by RidgeWorth Capital Management, Inc.
individually and as parent company for Ceredex Value Advisors
LLC. RidgeWorth Capital Management has sole voting power with
respect to 3,538,969 of such shares and sole dispositive power respect to
all of such shares.
|
|
(8)
|
Sheffield
Asset Management, L.L.C. has shared voting and dispositive power with
respect to all of such shares.
|
|
(9)
|
Witmer
Asset Management reports beneficial ownership and shared voting and
dispositive power with respect to 3,006,033 shares, and no sole voting or
dispositive power. Charles Witmer reports beneficial ownership
of 3,211,733 shares, sole voting and dispositive power with respect to
125,000 shares, and shared voting and dispositive power with respect to
3,086,733 shares. Meryl Witmer reports beneficial ownership of
3,108,733 shares, sole voting and dispositive power with respect to 22,000
shares, and shared voting and dispositive power with respect to 3,086,733
shares.
|
|
(10)
|
Includes
6,000 restricted Class B shares, and 20,000 Class B shares that may be
acquired by Mr. Callaway pursuant to exercisable stock
options.
|
|
(11)
|
Includes
103 Class A shares held by Ms. Dillon-Ridgley’s son, although Ms.
Dillon-Ridgley disclaims beneficial ownership of such
shares. Also includes 6,000 restricted Class B shares, and
5,000 Class B shares that may be acquired by Ms. Dillon-Ridgley pursuant
to exercisable stock options.
|
|
(12)
|
Includes
140 Class A shares held by Mr. Gable as custodian for his
son. Includes 6,000 restricted Class B shares, and 15,000 Class
B shares that may be acquired by Mr. Gable pursuant to exercisable stock
options.
|
|
(13)
|
Includes
254,144 restricted Class B shares, and 4,342 Class B shares beneficially
owned by Mr. Hendrix pursuant to the Company’s 401(k)
plan.
|
|
(14)
|
Includes
6,000 restricted Class B shares, and 15,000 Class B shares that may be
acquired by Dr. Henton pursuant to exercisable stock
options.
|
|
(15)
|
Includes
6,000 restricted Class B shares, and 25,000 Class B shares that may be
acquired by Mr. Kennedy pursuant to exercisable stock options. Mr. Kennedy
serves on the Board of Trustees of Ariel Mutual Funds, for which Ariel
Investments, LLC serves as investment advisor and performs services which
include buying and selling securities on behalf of the Ariel Mutual Funds.
Mr. Kennedy disclaims beneficial ownership of all Class A shares held
by Ariel Investments, LLC as investment advisor for Ariel Mutual
Funds.
|
|
(16)
|
Includes
6,000 restricted Class B shares, and 20,000 Class B shares that may be
acquired by Mr. Kohler pursuant to exercisable stock
options.
|
|
(17)
|
Includes
98,333 restricted Class B shares.
|
|
(18)
|
Includes
6,000 restricted Class B shares, and 25,000 Class B shares that may be
acquired by Mr. Miller pursuant to exercisable stock
options.
|
|
(19)
|
Includes
6,000 restricted Class B shares, and 15,000 Class B shares that may be
acquired by Mr. Oliver pursuant to exercisable stock
options.
|
|
(20)
|
Includes
6,000 restricted Class B shares, and 20,000 Class B shares that may be
acquired by Mr. Paisner pursuant to exercisable stock
options.
|
|
(21)
|
Includes
109,333 restricted Class B shares, and 1,500 Class B shares that may be
acquired by Mr. Parnell pursuant to exercisable stock
options.
|
|
(22)
|
Includes
175,918 restricted Class B shares.
|
|
(23)
|
Includes
113,340 restricted Class B shares, and 6,371 Class B shares beneficially
owned by Mr. Willoch pursuant to the Company’s 401(k)
plan.
|
|
(24)
|
Includes
928,878 restricted Class B shares, and 180,500 Class B shares that may be
acquired by all executive officers and directors as a group pursuant to
exercisable stock options. Also includes 32,165 Class B shares
that are beneficially owned through the Company’s 401(k)
plan.
|
COMPENSATION
DISCUSSION AND ANALYSIS
Overall
Philosophy and Objectives
The
Company’s compensation program is designed in a manner intended to both attract
and retain a highly-qualified, motivated and engaged management team whose focus
is on enhancing shareholder value. The Company believes a
straightforward program that is readily understood and endorsed by its
participants best serves these goals, and has constructed a program that
contains (1) multiple financial elements, (2) clear and definitive targets,
(3) challenging but attainable objectives, and (4) specified performance
metrics. More specifically, the objectives of the Company’s
management compensation program include:
·
|
Establishing
strong links between the Company’s performance and total compensation
earned – i.e., “paying for
performance”;
|
·
|
Providing
incentives for executives to achieve specific performance
objectives;
|
·
|
Promoting
and facilitating management stock ownership, and thereby motivating
management to think and act as
owners;
|
·
|
Emphasizing
the Company’s mid and long-term performance, thus enhancing shareholder
value; and
|
·
|
Offering
market competitive total compensation opportunities to attract and retain
talented executives.
|
Program
Design and Administration
The
Compensation Committee of the Board of Directors, which is composed entirely of
independent directors, has developed and administers the Company’s executive pay
program so as to provide compensation commensurate with the level of financial
performance achieved, the responsibilities undertaken by the executives, and the
compensation packages offered by comparable companies. The program
currently consists of four principal components, each of which is designed to
drive a specific behavioral focus, which in turn helps to provide specific
benefits to the Company:
|
Program
Component
___________________________
|
|
Behavioral
Focus
_______________________________
|
|
Ultimate
Benefit to Company
__________________________________
|
|
|
|
|
|
|
|
Competitive
base salary
|
|
Rewards
individual competencies, performance and level of experience
|
|
Assists
with attraction and retention of highly-qualified executives, and promotes
management stability
|
|
|
|
|
|
|
|
Annual
cash bonuses based on achievement of established goals
|
|
Rewards
individual performance and operational results of specific business units
and Company as a whole
|
|
Aligns
individual interests with overall short term (quarterly and annual)
objectives, and reinforces “pay for performance” program
goals
|
|
|
|
|
|
|
|
Long-term
incentives
|
|
Rewards
engagement, longevity, sustained performance and actions designed to
enhance overall shareholder value
|
|
Aligns
individual interests with the long-term investment interests of
shareholders, and assists with retention of highly-qualified
executives
|
|
|
|
|
|
|
|
Other
elements such as special incentives, retirement benefits and elective
deferred compensation
|
|
Rewards
targeted operational results, engagement and longevity, and sustained
performance
|
|
Focuses
enhanced efforts on a particular key objective (e.g., debt reduction),
aligns individual interests with the long-term investment interests of
shareholders, assists with the attraction and retention of
highly-qualified executives, and promotes management
stability
|
The
Company strives to structure various elements of these program components so
that a large portion of executive compensation is directly linked to advancing
the Company’s financial performance and the interests of
shareholders.
The
Committee establishes base salaries for the executive officers, including the
Named Executive Officers listed in the “Summary Compensation Table” included in
this Proxy Statement. The Committee also administers the annual bonus
program, the long-term incentive program, retirement benefits, deferred
compensation arrangements, and, when applicable, special incentive
programs. In fulfilling its responsibilities, the Committee
periodically seeks input from a nationally-recognized, independent compensation
consultant, retained directly by the Committee, and also seeks input from the
Company’s Chief Executive Officer and General Counsel. The Committee
also takes into account publicly available data relating to the compensation
practices and policies of other companies within and outside the Company’s
industry. Furthermore, the policies and programs described below are
subject to change as the Committee deems necessary from time to time to respond
to economic conditions, meet competitive standards and serve the objectives of
the Company and its shareholders.
Discussion
of Principal Elements of Compensation Program
Base
Salaries
The
Committee generally strives to set base salaries at the market median (50th
percentile) of salaries offered by other employers in our industry and other
publicly traded companies with characteristics similar to the Company (size,
growth rate, etc.), based, by and large, on information provided by an
independent compensation consultant and internal equalization policies of the
Company. Some of the companies considered from time to time are
included in the list of companies comprising the “self-determined peer group”
index used to create the stock performance graph included in the Company’s
Annual Report on Form 10-K for the year ended December 28, 2008. The
Company’s current self-determined peer group is comprised of the following
companies: Actuant Corp.; Acuity Brands, Inc.; Albany International Corp.; BE
Aerospace, Inc.; The Dixie Group, Inc.; Herman Miller, Inc.; HNI Corporation;
Kimball International, Inc.; Knoll, Inc.; Mohawk Industries, Inc.; Steelcase,
Inc.; Unifi, Inc.; and USG Corp.
In
addition, the Committee may consider other factors when setting individual
salary levels, which may result in salaries somewhat above or below the targeted
amount. These factors include the executive’s level of
responsibility, achievement of goals and objectives, tenure with the Company,
and specific background or experience, as well as external factors such as the
availability of talent, the recruiting requirements of the particular situation,
and general economic conditions and rates of inflation.
Base
salary adjustments for executive officers generally are made (if at all)
annually and are dependent on the factors described above. Based on
the foregoing considerations, in December 2007, the Committee approved 2008 base
salary increases for the Named Executive Officers in an aggregate amount of
$100,222 for the group of five executives (individual raises ranged from 3.4% to
6%). The Committee determined the raises were warranted based on
increases in the cost of living, each of the executives exceeding performance
expectations in 2007 (which was the Company’s best year ever in operating income
and earnings per share from continuing operations, and the Company’s modular
carpet business had a record year in sales and operating income in each of its
three geographic regions – the Americas, Europe and Asia-Pacific), and, with
respect to Mr. Lynch, the Chief Financial Officer, to bring his base salary more
in line with market levels. The Named Executive Officers have
received no base salary increases since December 2007, and the Committee does
not intend to increase their base salaries during 2009.
Please
see the “Summary Compensation Table” included in this Proxy Statement for the
base salaries of the Named Executive Officers in 2008.
Annual
Bonuses
The
Committee administers the Executive Bonus Plan, which provides quarterly
and annual bonus opportunities for Company executives. The bonus
opportunities provide an incentive for executives to earn compensation based on
the achievement of important corporate or business unit (division or subsidiary)
financial performance and, in some cases, individual performance
goals. In determining the appropriate bonus opportunities, the
Committee seeks to establish potential awards that, when combined with annual
salary, place the total overall cash compensation opportunity for the Company’s
executives in the third quartile (between the market 50th percentile and the
market 75th
percentile) for comparable companies, provided that the performance objectives
are substantially achieved.
Each
executive officer of the Company, including the Chief Executive Officer, is
assigned a bonus potential (typically ranging between 70% and 110% of base
salary), and a personalized set of quarterly and annual financial objectives
and, in the case of certain staff positions, non-financial
objectives. Actual awards can range from 0% to 125% of the bonus
potential, depending on the degree to which the established financial and
non-financial objectives are achieved, and are paid on a quarterly and annual
basis in the following manner:
Achievement of Objectives
|
|
Percentage
of Bonus
Opportunity Payable
|
|
Timing of Payment to Employee
Participant
|
|
|
|
|
|
First
Quarter Objectives Achieved
|
|
15%
|
|
Approximately
45 days following end of first quarter
|
Second
Quarter Objectives Achieved
|
|
15%
|
|
Approximately
45 days following end of second quarter
|
Third
Quarter Objectives Achieved
|
|
15%
|
|
Approximately
45 days following end of third quarter
|
Fourth
Quarter Objectives Achieved
|
|
15%
|
|
Approximately
60 days following end of year
|
Fiscal
Year Objectives Achieved
|
|
40%
|
|
Approximately
60 days following end of year
|
In 2008,
100% of the bonus potential for the Chief Executive Officer, Chief Financial
Officer and each of the other Named Executive Officers was based on measurable
financial objectives, which consisted of growth in operating income, cash flow,
revenue and earnings per share. Relative weights assigned to these
financial objectives were 50%, 20%, 10% and 20%, respectively.
For 2008,
each of the Named Executive Officers (except for Mr. Parnell, who manages the
Company’s Europe floorcoverings business) received a modest bonus (in each case,
the bonus amount was less than 12% of salary), which appears in the “Summary
Compensation Table” included in this Proxy Statement, as their respective
performance objectives were determined to have been achieved, in part, during
the first two quarters of the year (and primarily in the second
quarter). The achievements included:
·
|
Earnings
per share (applicable to all executives) were $0.26 in the second quarter
2008.
|
·
|
On
a consolidated basis (applicable to Messrs. Hendrix, Lynch and Willoch),
second quarter 2008 net sales and operating income increased 11% (to
$295.0 million) and 8% (to $33.4 million), respectively, compared with the
second quarter of the prior year. In addition, the Company
achieved more than 100% of its targeted cash flow in the second
quarter.
|
·
|
Americas
floorcoverings (managed by Mr. Wells) experienced 7% growth in net sales
and 8% growth in operating income in the second quarter 2008, compared
with the prior year period.
|
For
fiscal year 2009, annual incentive awards are again based on the achievement of
important corporate or business unit (division or subsidiary) financial
performance. The annual incentive awards for 2009 are structured in a
manner similar to the annual incentive awards in 2008, except that financial
objectives consist of operating income, cash flow and earnings per share, and
the relative weights assigned to those financial objectives are 60%, 20% and
20%, respectively.
On
February 25, 2009, the Board of Directors unanimously approved and adopted,
subject to shareholders’ approval, an amended and restated Executive Bonus Plan,
which will replace the existing Executive Bonus Plan (see Item 2 of this Proxy
Statement).
Long-Term
Incentives
The
Committee administers the shareholder-approved Interface, Inc. Omnibus Stock
Incentive Plan (the “Omnibus Stock Plan”), which is an equity-based plan that
allows for long-term incentive awards such as restricted stock and stock
options. The Omnibus Stock Plan provides for the grant to key
employees and directors of the Company and its subsidiaries of restricted stock,
incentive stock options (which qualify for certain favorable tax treatment),
nonqualified stock options, stock appreciation rights, deferred shares,
performance shares and performance units. The size of the awards made
to individual officers is based on an evaluation of several factors, including
the officer’s level of responsibility, the officer’s base salary and the
Company’s overall compensation objectives. The amount and nature of prior equity
incentive awards also are generally considered in determining new Omnibus Stock
Plan awards for executive officers.
Long-term
incentives are intended to attract and retain outstanding executive talent,
create a direct link between shareholder and executive interests by focusing
executive attention on increasing shareholder value, and motivate executives to
achieve specific performance objectives. For instance, stock options
(when granted) have an exercise price equal to at least 100% of the market price
of the underlying Common Stock on the date of grant. Thus, the stock
options only have value if the market price of the Company’s stock rises after
the grant date. Additionally, restricted stock awards generally vest,
in whole or in part, over a period of multiple years (five years for the 2008
awards), giving the executive an incentive to remain employed with the Company
for a significant time period to vest in an award. Moreover, awards
of restricted stock may vest earlier if specific performance criteria are met,
and these performance criteria are designed to drive shareholder
value. (As discussed below, 50% of the 2008 awards are ineligible for
time/retention vesting and are forfeited altogether if the performance criterion
is not met. In addition, the shares that are eligible for time/
retention vesting are reduced share-for-share by the number of shares that vest
based on achievement of the performance criterion).
Description
of Available Awards
Restricted
Shares
Awards of
restricted shares under the Omnibus Stock Plan generally vest over a period of
multiple years following the date of award, and may vest earlier if specified
performance criteria established by the Committee are
satisfied. Unvested awards are also subject to forfeiture under
certain circumstances. All restricted shares awarded to date have
been made without consideration from the participant (although the Omnibus Stock
Plan authorizes the Committee, in connection with any award, to require payment
by the participant of consideration, which can be less than the fair market
value of the award on the date of grant). Awards of restricted stock
generally will not be transferable by the participant other than by will or
applicable laws of descent and distribution, although the Committee, in its
discretion, may permit limited transfers of awards to family members or for
estate planning purposes.
Stock
Options
Options
granted under the Omnibus Stock Plan may be incentive stock options (as defined
in Section 422 of the Internal Revenue Code of 1986, as amended), nonqualified
stock options or a combination of the foregoing, although only employees are
eligible to receive incentive stock options. All options under the
Omnibus Stock Plan will be granted at an exercise price per share equal to not
less than 100% of the fair market value of the Common Stock on the date the
option is granted. Options may be structured to vest over a period of
multiple years. Options granted under the Omnibus Stock Plan expire
following a pre-determined period of time after the date of grant (which may not
be more than 10 years after the grant date), and generally will terminate on the
date three months following the date that a participant’s employment with the
Company terminates.
The
Company receives no consideration upon the granting of an option. Full payment
of the option exercise price must be made when an option is
exercised. The exercise price may be paid in cash or in such other
form as the Company may approve, including shares of Common Stock valued at
their fair market value on the date of option exercise. Options
generally will not be transferable by the holder thereof other than by will or
applicable laws of descent and distribution, although the Compensation
Committee, in its discretion, may permit limited transfers of options to family
members or for estate planning purposes.
Other Potential
Awards
The
Omnibus Stock Plan also provides for the award of stock appreciation rights,
deferred shares, performance shares and performance units. To date,
the Committee has not granted any of these types of awards.
2008
Omnibus Stock Plan Awards to Named Executive Officers
The
long-term incentive awards made under the Omnibus Stock Plan in January 2008 to
the Company’s executive officers consisted of restricted stock grants with
performance-based vesting and, with respect to a portion of such grants,
tenure-based vesting. The 2008 awards were higher than the typical
restricted stock awards in prior years because they were made pursuant to a
three-year performance program applicable during 2008-2010. (No
restricted stock awards have been granted to executive officers since January
2008, and the Committee currently does not intend to make additional restricted
stock awards to executive officers in the remainder of 2009 or
2010.) The 2008 awards are eligible to performance vest to the extent
that the Company’s earnings per share plus dividends exceeds a specified
baseline threshold and reaches a target amount during the performance period
(provided that a stated minimum level of operating income also is
achieved). At the time of the awards, the Committee believed that a
three-year performance period was appropriate because the Committee desired to
focus this incentive award on longer-term performance. Fifty percent
of each 2008 award is eligible to vest on the fifth anniversary of the grant
date if the executive remains employed by the Company at that time, but the
shares eligible to vest based on tenure of employment are reduced
share-for-share by the number of shares that performance vest (such that if at
least fifty percent of the shares performance vest there will be no shares
eligible to time vest). The remaining fifty percent would be
forfeited altogether if the performance criterion is not met.
The 2008
awards originally provided that additional shares would be issued to the
executives on a pro rata basis to the extent the performance target was exceeded
during the three-year performance period. In January 2009, the
Committee determined that an amendment of the awards was appropriate in response
to the deteriorating market conditions brought on by the current severe
worldwide recession. The amendment extended the performance period
through the year 2012 (to allow some time for economic conditions to stabilize
and begin recovering) and reduced the threshold (to a challenging but
potentially achievable level) at which such restricted shares would begin to
performance vest on a pro rata basis during the extended performance
period. The performance target that must be achieved for vesting in
the entirety of the award remained unchanged, and the executive’s opportunity to
receive additional shares for exceeding that performance target was
removed. No stock options were granted to executive officers in
2008.
Stock
Ownership and Retention Guidelines
To
further tie the financial interests of Company executives to those of
shareholders, the Committee has established stock ownership and retention
guidelines. Under these guidelines, executive officers are expected
to accumulate a number of shares (unrestricted) of the Company’s Common Stock
having a value equaling one and one-half times base salary in the case of the
Chief Executive Officer and one times base salary in the case of the other
executive officers (based on salaries and the stock price at the time the
guidelines were adopted in 2004). The expectation was for executives
to reach this ownership level by January 2009, and all executives have
now met this target. To facilitate accomplishing the ownership
targets, executive officers generally are expected to retain at least one-half
of the net after-tax shares (i.e., the net shares remaining after first selling
sufficient shares to cover the anticipated tax liability and, in the case of
stock options, the exercise price) obtained upon the vesting of restricted stock
and the exercise of stock options.
Directors
also are subject to stock ownership requirements. The directors who
were serving when the requirements were adopted were required to accumulate at
least 2,000 shares (unrestricted) by March 31, 2006, and any new director
elected thereafter is required to accumulate at least 2,000 shares
(unrestricted) by the second anniversary of his or her election. (All
directors have met this stock ownership standard.) As a guideline,
non-employee directors also are expected to retain during their tenure all of
the net after-tax shares obtained upon the vesting of restricted stock and at
least one-half of the net after-tax shares obtained upon the exercise of stock
options.
Other
Elements of Compensation Program
In
addition to the principal compensation program elements described above, the
Company has adopted a number of other elements to further its compensation
program goals, including, on occasion, special incentive programs to strengthen
the alignment of our executive officers’ interests with shareholder long-term
interests. They are as follows:
· 401(k)
Plan
|
· Special
Incentive Programs
|
· Elective
Deferred Compensation Program
|
· Severance
Agreements
|
· Pension/Salary
Continuation Programs
|
· Perquisites
|
401(k)
Plan
The
Company maintains the Interface, Inc. Savings and Investment Plan (the “401(k)
Plan”), a tax-qualified 401(k) plan which provides its U.S.-based employees a
convenient and tax-advantaged opportunity to save for retirement. The
Company’s Named Executive Officers who are based in the United States are
eligible to participate in the 401(k) Plan on the same terms as other executive
and non-executive employees based in the United States, and receive the same
benefits afforded all other participants.
Under the
401(k) Plan, all participating employees are eligible to receive matching
contributions that are subject to vesting over time. The Company
periodically evaluates the level of matching contributions afforded participant
employees to ensure competitiveness in the marketplace. In 2008, the
Company matched 50% of the first 6% of the employee’s eligible compensation
(capped by statutory limitations) that the employee contributed to the 401(k)
Plan. In March 2009, however, in response to deteriorating market
conditions and to help preserve cash, the Company match amount was reduced to
17% of the first 6% of the employee’s eligible compensation (capped by statutory
limits) that the employee contributes to the 401(k) Plan.
Elective
Deferred Compensation Program
The
Company maintains the Interface, Inc. Nonqualified Savings Plan and Interface,
Inc. Nonqualified Savings Plan II (collectively, the “Nonqualified Plan”) for
certain U.S.-based “highly compensated employees” (as such term is defined in
applicable IRS regulations), including the Named Executive Officers who are
based in the United States. As with the Company’s 401(k) Plan, the
Named Executive Officers who are based in the United States are eligible to
participate in the Nonqualified Plan on the same terms as other executive and
non-executive eligible employees based in the United States, and receive the
same benefits afforded all other participants. Under the Nonqualified
Plan, all eligible employees can elect to defer, on a pre-tax basis, a portion
of their salary and/or annual bonus compensation. (Up to 80% of base
salary and 100% of annual bonus compensation can be deferred.) In
2008, the Company matched 50% of the first 6% of the employee’s eligible salary
and bonus that was deferred, less any potential Company matching amounts under
the 401(k) Plan. In March 2009, as with the 401(k) Plan match, the
Company’s Nonqualified Plan match amount was reduced to 17% of the first 6% of
the employee’s eligible salary and bonus that was deferred, less any potential
Company matching amounts under the 401(k) Plan.
The
Nonqualified Plan also contains a “Key Employee Retirement Savings Benefit”
feature to permit discretionary contributions to certain key employees’ accounts
(in a separately tracked sub-account) to enhance retirement savings and to
couple such contributions with vesting structures that will promote the
retention of such key employees. In January 2009, the Compensation
Committee made a Key Employee Retirement Savings Benefit contribution of $50,000
to the Nonqualified Plan account of Mr. Lynch. This contribution will
vest 50% upon his reaching age 50 and 50% upon his reaching age 55, assuming
continuous service with the Company until such ages. A similar
contribution was made to Mr. Lynch’s account in 2007.
Please
see the “Non-Qualified Deferred Compensation” table included in this Proxy
Statement for further details regarding the Nonqualified Plan, as well as the
Company’s Named Executive Officers’ contributions, earnings and account balances
applicable to the Nonqualified Plan for fiscal year 2008.
Pension/Salary
Continuation Programs
Foreign Defined Benefit
Plans
The
Company has trustee-administered defined benefit retirement plans (“Pension
Plans”) which cover certain of its overseas employees. The benefits
are generally based on years of service and the employee’s average monthly
compensation. As determined by their respective trustees, the
investment objectives of the Pension Plans are to maximize the return on the
investments without exceeding the limits of prudent pension fund investment and
to ensure that the assets ultimately will be sufficient to exceed minimum
funding requirements. The goal is to optimize the long-term return on
plan assets at a moderate level of risk, by balancing higher-returning assets,
such as equity securities, with less volatile assets, such as fixed income
securities. The assets are managed by professional investment firms
and performance is evaluated periodically against specific
benchmarks. The Pension Plans’ net assets did not include any shares
of the Company’s own stock at December 28, 2008.
Named
Executive Officer Mr. Parnell, based in Europe, is a participant in a Pension
Plan. Please see the “Pension Benefits” table included in this Proxy
Statement for information about the pension benefits applicable to Mr.
Parnell.
Salary Continuation
Plan
The
Company maintains a nonqualified Salary Continuation Plan designed to induce
selected employees of the Company to remain in the employ of the Company by
providing them with retirement, disability and death benefits in addition to
those which they may receive under the Company’s other benefit programs. The
Salary Continuation Plan entitles participants to (i) retirement benefits upon
normal retirement from the Company at age 65 (or early retirement as early as
age 55) after completing at least 15 years of service with the Company (unless
otherwise provided in the plan), payable for the remainder of their lives (or,
if elected by a participant, a reduced benefit is payable for the remainder of
the participant’s life and any surviving spouse’s life) and in no event for less
than 10 years under the death benefit feature; (ii) disability benefits payable
for the period of any pre-retirement total disability; and (iii) death benefits
payable to the designated beneficiary of the executive for a period of up to 10
years. The annual retirement benefit for retirement at age 65 is 50%
of the executive’s final average earnings (defined as the average of the salary
and bonus paid by the Company for the four individual calendar years of the
executive’s highest compensation during the last eight full calendar years of
the executive’s employment with the Company ending on or prior to the effective
date of the executive’s retirement), which decreases proportionately to 30% of
final average earnings for early retirement at age 55. The annual
disability benefit is structured to essentially equate to 66% of current pay
(salary and bonus) at the time of disability. The annual death
benefit, for the 10-year payment period, is 50% of final average earnings, for a
pre-retirement death, or a continuation of the actual retirement payments for
the balance of the 10-year period (if any) for a post-retirement death (assuming
no election of spousal survival benefits). The Salary Continuation
Plan is administered by the Compensation Committee, which has full discretion in
choosing participants and the benefits applicable to each. The Company’s
obligations under the Salary Continuation Plan are currently unfunded (although
the Company uses insurance instruments to hedge its exposure thereunder);
however, the Company is required to contribute the present value of its
obligations thereunder to an irrevocable grantor trust in the event of a “Change
in Control” (as such term is defined in the Salary Continuation Plan) of the
Company.
Pursuant
to the Salary Continuation Plan, the Company has maintained Salary Continuation
Agreements with each of Named Executive Officers Messrs. Hendrix, Wells and
Willoch since 1986, 1998 and 1997, respectively. (The Company most
recently amended and restated the Salary Continuation Agreements with Messrs.
Hendrix, Wells and Willoch in January 2008, primarily to comply with Section
409A of the Internal Revenue Code of 1986, as amended. The benefits
under their amended and restated agreements are substantially similar to those
under their respective prior agreements.) The individual Salary
Continuation Agreements contain essentially all of the benefit terms and
conditions, and those agreements control in the event of any conflict with the
Salary Continuation Plan document. Please see the “Pension Benefits”
table included in this Proxy Statement for information about the Salary
Continuation Plan benefits applicable to Messrs. Hendrix, Wells and
Willoch.
Special
Incentive Programs
From time
to time, the Committee may implement special incentive programs which provide
executives an opportunity to earn additional compensation if specific
performance objectives are met. The time period for achievement of
the objectives may vary from less than a year to a multiple-year
period. In each case, the performance objectives are designed to
represent challenging but achievable targets that will serve to align the
interests of executives with the interests of shareholders, and encourage
executives to think and act as owners. There were no special
incentive programs adopted or outstanding during 2008.
In
January 2009, the Committee adopted a special incentive program that provides
executive officers of the Company a bonus compensation opportunity based on the
achievement of a key business performance objective. The performance
objective is reduction in Company debt and/or accumulation of cash on the
balance sheet in a specified amount by the end of fiscal year
2009. (The baseline is the fiscal 2008 year-end balance sheet, and a
specified minimum amount of operating income must be achieved as an additional
condition to the bonus opportunity.) This performance objective is
viewed as particularly important by the Committee in light of the Company’s
10.375% Senior Notes which mature in February 2010. The payout to
each executive officer for achievement of the performance objective would be a
cash amount equaling 50% to 100% of the officer’s respective base salary,
depending on the extent (pro rata) to which a specified threshold is exceeded
and the specified target is achieved. The projected aggregate payout
to the executive officers for achieving the objective would range from
approximately $1.4 million (for achieving the threshold amount) to approximately
$2.8 million (for achieving the target amount or more). Any
bonus paid under this program would be excluded from any severance benefits
available to the officer in case of termination (except in case of termination
following a change in control of the Company), and also would be excluded from
the final average earnings formulas of Salary Continuation Agreements and all
other applicable retirement or pension plans.
Severance
Agreements
The
Company has substantially similar Employment and Change in Control Agreements in
effect with each of Messrs. Hendrix, Lynch, Wells and Willoch, and has two
employment agreements in effect with Mr. Parnell covering his activities (i)
within and (ii) outside of the United Kingdom. These agreements
generally provide for certain benefits (salary, bonus, medical benefits, etc.)
in the event of a Named Executive Officer’s termination of employment without
“cause” (as defined in the agreements), as well as certain benefits upon his
resignation, death or disability. These agreements also contain
provisions placing restrictions on a Named Executive Officer’s ability to
compete with the Company, or solicit its customers or employees, for a specified
period of time following termination of employment.
For
Messrs. Hendrix, Lynch, Wells and Willoch, these agreements provide for certain
benefits in the event of a termination of employment in connection with a
“Change in Control” (as defined in the agreements) of the
Company. (Mr. Parnell is not a party to a change in control
agreement.)
Please
see the further discussion below in the “Potential Payments Upon Termination or
Change of Control” section of this Proxy Statement regarding the respective
employment and change in control agreements of the Company’s Named Executive
Officers.
Perquisites
In order
to provide a market competitive total compensation package to certain of the
Company’s executive officers, including the Named Executive Officers, the
Company provides those limited perquisites that it believes enable its Named
Executive Officers to perform their responsibilities efficiently and with
minimal distractions. In 2008, the Company provided the following
perquisites to one or more of the Named Executive Officers:
· Company-provided
automobile/allowance
|
· Company-provided
telephone
|
· Health
club dues
|
· Long-term
care insurance
|
· Tax
return preparation services
|
· Split
dollar insurance agreement (for Mr. Hendrix only)
|
· Brokerage
fees for 10b5-1 trading plan sales
|
|
Please
see the “Summary Compensation Table” included in this Proxy Statement (and the
notes thereto) for a more detailed discussion of these perquisites and their
valuation.
Compensation
Deductibility
An income
tax deduction under federal law will be generally available for annual
compensation in excess of $1 million paid to the chief executive officer and the
named executive officers of a public corporation only if that compensation is
“performance-based” and complies with certain other tax law
requirements. Executive compensation under the Company’s Executive
Bonus Plan, described above, meets these requirements and therefore qualifies
for an income tax deduction under federal law.
Although
the Committee considers deductibility issues when approving executive
compensation elements, the Company and the Committee believe that other
compensation objectives, such as attracting, retaining and providing incentives
to qualified managers, are important and may supersede the goal of maintaining
deductibility. Consequently, the Company and the Committee may make
compensation decisions without regard to deductibility when it is deemed to be
in the best interests of the Company and its shareholders to do so.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee of the Board of Directors has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K
with management. Based on such review and discussions, the
Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this 2009 Proxy Statement
and incorporated by reference into the Company’s Annual Report on Form 10-K for
the year ended December 28, 2008, filed with the Securities and Exchange
Commission.
|
THE
COMPENSATION COMMITTEE |
|
|
|
Thomas R.
Oliver (Chair) |
|
K. David
Kohler |
|
Harold M.
Paisner |
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of
the executive officers of the Company served as either (1) a member of the
Compensation Committee or (2) a director of any entity of which any member of
the Compensation Committee is an executive officer. In addition, none of the
executive officers of the Company served as a member of the compensation
committee of any entity of which any member of the Board of Directors is an
executive officer.
EXECUTIVE
COMPENSATION AND RELATED ITEMS
Summary
Compensation Table
The
following table provides information about the compensation paid by the Company
and its subsidiaries to the Company’s Named Executive Officers for each of the
past three fiscal years.
Name
and Principal Position
(a)
|
Year
(b)
|
|
Salary
($)
(c)
|
|
|
Bonus
($)
(d)(1)
|
|
|
Stock
Awards
($)
(e)(2)
|
|
|
Option
Awards
($)
(f)(3)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(g)(4)
|
|
|
Change
in Pension Value and Nonqualified Deferred
Compensation
Earnings
($)
(h)(5)
|
|
|
All
Other Compensation
($)
(i)(6)
|
|
|
Total
($)
(j)(7)
|
|
_________________
|
____
|
|
_____
|
|
|
_____
|
|
|
_____
|
|
|
_____
|
|
|
________
|
|
|
________
|
|
|
________
|
|
|
________
|
|
Daniel
T. Hendrix,
|
2008
|
|
|
780,000 |
|
|
|
--
|
|
|
|
1,113,752 |
|
|
|
-- |
|
|
|
92,664 |
|
|
|
258,315 |
|
|
|
204,282 |
|
|
|
2,449,013 |
|
President
and Chief
|
2007
|
|
|
750,000 |
|
|
|
--
|
|
|
|
1,017,165 |
|
|
|
31 |
|
|
|
1,470,000 |
|
|
|
609,727 |
|
|
|
148,642 |
|
|
|
3,995,565 |
|
Executive
Officer
|
2006
|
|
|
725,000 |
|
|
|
--
|
|
|
|
676,641 |
|
|
|
28,460 |
|
|
|
954,535 |
|
|
|
698,239 |
|
|
|
99,030 |
|
|
|
3,181,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick
C. Lynch,
|
2008
|
|
|
344,500 |
|
|
|
--
|
|
|
|
459,718 |
|
|
|
-- |
|
|
|
33,485 |
|
|
|
-- |
|
|
|
45,844 |
|
|
|
883,547 |
|
Senior
Vice President
|
2007
|
|
|
325,000 |
|
|
|
--
|
|
|
|
282,655 |
|
|
|
-- |
|
|
|
574,275 |
|
|
|
-- |
|
|
|
90,582 |
|
|
|
1,272,512 |
|
and
Chief Financial
|
2006
|
|
|
300,000 |
|
|
|
--
|
|
|
|
194,639 |
|
|
|
17,460 |
|
|
|
349,695 |
|
|
|
-- |
|
|
|
28,325 |
|
|
|
890,119 |
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
R. Wells,
|
2008
|
|
|
525,000 |
|
|
|
--
|
|
|
|
579,611 |
|
|
|
-- |
|
|
|
38,557 |
|
|
|
104,606 |
|
|
|
98,552 |
|
|
|
1,346,326 |
|
Senior
Vice President
|
2007
|
|
|
507,500 |
|
|
|
--
|
|
|
|
580,377 |
|
|
|
13 |
|
|
|
836,069 |
|
|
|
125,900 |
|
|
|
54,240 |
|
|
|
2,104,099 |
|
(Division
President)
|
2006
|
|
|
490,000 |
|
|
|
--
|
|
|
|
374,175 |
|
|
|
11,384 |
|
|
|
676,288 |
|
|
|
274,091 |
|
|
|
38,966 |
|
|
|
1,864,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lindsey
K. Parnell,
|
2008
|
|
|
282,596 |
|
|
|
--
|
|
|
|
626,996 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
59,108 |
|
|
|
968,700 |
|
Senior
Vice President
|
2007
|
|
|
360,906 |
|
|
|
--
|
|
|
|
323,802 |
|
|
|
-- |
|
|
|
654,141 |
|
|
|
27,278 |
|
|
|
60,418 |
|
|
|
1,426,545 |
|
(Division
President)(*)
|
2006
|
|
|
342,363 |
|
|
|
--
|
|
|
|
201,561 |
|
|
|
3,240 |
|
|
|
488,732 |
|
|
|
96,752 |
|
|
|
63,206 |
|
|
|
1,195,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond
S. Willoch,
|
2008
|
|
|
372,250 |
|
|
|
--
|
|
|
|
515,157 |
|
|
|
-- |
|
|
|
36,183 |
|
|
|
89,770 |
|
|
|
67,671 |
|
|
|
1,081,031 |
|
Senior
Vice President
|
2007
|
|
|
360,000 |
|
|
|
--
|
|
|
|
407,440 |
|
|
|
-- |
|
|
|
636,120 |
|
|
|
149,849 |
|
|
|
48,635 |
|
|
|
1,602,044 |
|
and
General Counsel
|
2006
|
|
|
347,500 |
|
|
|
--
|
|
|
|
264,898 |
|
|
|
8,639 |
|
|
|
405,063 |
|
|
|
211,941 |
|
|
|
33,265 |
|
|
|
1,271,306 |
|
|
*
|
Mr.
Parnell, as a Europe-based employee, is paid in British pounds
sterling. In calculating the U.S. dollar equivalent for
disclosure purposes, the Company has converted each payment in pounds into
dollars based on the exchange rate in effect as of the end of each fiscal
year (£1 to $1.47 for 2008, £1 to $1.99 for 2007, and £1 to $1.96 for
2006).
|
|
(1)
|
The
Company paid no discretionary bonuses, or bonuses based on performance
metrics that were not pre-established and communicated to the Named
Executive Officers, for 2006-2008. All cash bonus awards for
2006-2008 were performance-based. These payments, which were
made under the Company’s Executive Bonus Plan, are reported in the
“Non-Equity Incentive Plan Compensation” column
(column (g)).
|
|
(2)
|
The
amounts reported in the “Stock Awards” column include the compensation
cost related to restricted stock awards granted in current and prior
years, computed in accordance with Statement of Financial Accounting
Standard No. 123 (Revised 2004), “Share-Based Payment” (“SFAS
123(R)”). See the Note entitled “Shareholder’s Equity” to the
Consolidated Financial Statements in the Company’s Annual Report on Form
10-K for the year ended December 28, 2008, regarding assumptions
underlying valuation of equity awards. See the “Grants of
Plan-Based Awards” table included in this Proxy Statement for information
about equity awards granted in 2008, and the “Outstanding Equity Awards at
Fiscal Year-End” table included in this Proxy Statement for information
with respect to awards outstanding at year-end 2008. The
ultimate payout value with respect to the “Stock Awards” included in
column (e) may be significantly more or less than the amounts shown, and
possibly zero, depending on the Company’s financial performance or the
price of the Company’s stock at the end of the performance or restricted
period and the recipient’s tenure of employment. For a
description of the performance criteria, please see the discussion
contained in the Compensation Discussion and Analysis
herein.
|
|
(3)
|
The
amounts reported in the “Option Awards” column include the compensation
cost related to stock option awards granted in years prior to 2006 (no
options were granted to the Named Executive Officers during 2006-2008),
computed in accordance with SFAS 123(R). See the Note entitled
“Shareholder’s Equity” to the Consolidated Financial Statements in the
Company’s Annual Report on Form 10-K for the year ended December 28, 2008,
regarding assumptions underlying valuation of equity
awards. See the “Outstanding Equity Awards at Fiscal Year-End”
table included in this Proxy Statement for information with respect to
awards outstanding at year-end 2008. The ultimate payout value
of option awards may be significantly more or less than the amounts shown,
and possibly zero, depending on the price of the Company’s stock during
the term of the option award.
|
|
(4)
|
The
amounts reported in the “Non-Equity Incentive Plan Compensation Earnings”
column for 2008 reflect the amounts earned by and paid to each named
Executive Officer under the Company’s Executive Bonus Plan. The amounts
reported in the “Non-Equity Incentive Plan Compensation” column for 2007
reflect the amounts earned by and paid to each Named Executive Officer
under the Company’s Executive Bonus Plan ($907,500, $330,525, $455,444,
$383,463 and $366,120 for Messrs. Hendrix, Lynch, Wells, Parnell and
Willoch, respectively), as well as under the 2007 Special Incentive
Program adopted by the Compensation Committee ($562,500, $243,750,
$380,625, $270,678 and $270,000 for Messrs. Hendrix, Lynch, Wells, Parnell
and Willoch, respectively). The amounts reported for 2006
reflect the amounts earned by and paid to each Named Executive Officer
under the Company’s Executive Bonus Plan ($682,660, $237,195, $492,538,
$362,305 and $274,750 for Messrs. Hendrix, Lynch, Wells, Parnell and
Willoch, respectively), as well as the 2005-2006 Special Incentive Program
adopted by the Compensation Committee ($271,875, $112,500, $183,750,
$126,927 and $130,313 for Messrs. Hendrix, Lynch, Wells, Parnell and
Willoch, respectively). The material provisions of the
Executive Bonus Plan are more fully described in the Compensation
Discussion and Analysis included
herein.
|
|
(5)
|
The
amounts reported in the “Change in Pension Value and Nonqualified Deferred
Compensation Earnings” column represent aggregate changes in the actuarial
present value of the Named Executive Officers’ accumulated benefit under
our Pension Plans (for Mr. Parnell) and the Company’s Salary Continuation
Plan (for Messrs. Hendrix, Wells and Willoch). In 2008, the
actuarial present value of Mr. Parnell’s accumulated benefit under the
Pension Plans declined by $28,077. Mr. Lynch does not
participate in a Pension Plan or the Salary Continuation
Plan. The Company does not pay any above-market interest (or
any guaranteed interest rate) on its Nonqualified Plan. See the
“Pension Benefits” table of this Proxy Statement for information about
these benefits afforded each of the Company’s Named Executive
Officers.
|
|
(6)
|
The
amounts reported in the “All Other Compensation” column reflect, for each
Named Executive Officer, the sum of (i) the incremental cost to the
Company of all perquisites and other personal benefits (including the
dollar value of life and long-term care insurance premiums paid by the
Company), and (ii) amounts contributed by the Company to the 401(k) Plan,
the Nonqualified Plan, and the Interface Europe Pension Scheme
(collectively, the “Company Retirement Plans”). Amounts
contributed to the Company Retirement Plans are calculated on the same
basis for all participants in the relevant plan, including the Named
Executive Officers. The material provisions of the Company Retirement
Plans are contained in the Compensation Discussion and Analysis
herein.
|
The
following table outlines those perquisites and all other compensation required
by SEC rules to be separately quantified that were provided to the Company’s
Named Executive Officers during 2008.
Name
__________________
|
|
Automobile
($)
_________
|
|
|
Telephone
($)
________
|
|
|
Long-Term
Care
Insurance Premiums
($)
________
|
|
|
Split
Dollar Insurance Premiums
($)
________
|
|
|
Other
($)
____
|
|
|
Dividends
on
Restricted Stock
($)
________
|
|
|
Company
Contributions to Retirement Plans
($)
________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
T. Hendrix
|
|
|
14,606 |
|
|
|
3,364 |
|
|
|
5,469 |
|
|
|
72,032 |
|
|
|
4,423 |
|
|
|
33,097 |
|
|
|
71,291 |
|
Patrick
C. Lynch
|
|
|
14,463 |
|
|
|
3,266 |
|
|
|
4,481 |
|
|
|
-- |
|
|
|
3,934 |
|
|
|
12,800 |
|
|
|
6,900 |
|
John
R. Wells
|
|
|
14,804 |
|
|
|
2,533 |
|
|
|
5,421 |
|
|
|
-- |
|
|
|
4,474 |
|
|
|
22,510 |
|
|
|
48,810 |
|
Lindsey
K. Parnell
|
|
|
21,812 |
|
|
|
4,841 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
13,120 |
|
|
|
19,335 |
|
Raymond
S. Willoch
|
|
|
15,178 |
|
|
|
1,116 |
|
|
|
5,019 |
|
|
|
-- |
|
|
|
5,263 |
|
|
|
15,001 |
|
|
|
26,094 |
|
Telephone. The
Company paid certain fees associated with the Named Executive Officers’ use of
company-provided cellular telephones. In addition, certain fees
associated with landline telephone and facsimile services were paid on Mr.
Parnell’s behalf.
Long-Term Care
Insurance. The Company paid certain premiums associated with
long-term care insurance policies covering Messrs. Hendrix, Lynch, Wells and
Willoch. As a Europe-based employee, Mr. Parnell was not eligible for
coverage under these long-term care policies.
Split Dollar Insurance Agreement
with Daniel T. Hendrix. The Company is a party to a
split-dollar insurance agreement (the “Hendrix Split Dollar Agreement”) with Mr.
Hendrix. Pursuant to the Hendrix Split Dollar Agreement, Mr. Hendrix
has obtained an insurance policy on his life, and the Company pays the premiums
on such policy as an additional employment benefit for Mr.
Hendrix. The annual premium is $72,032. Mr. Hendrix is the
owner of the policy, and has assigned to the Company a portion of the death
benefit that is equal to the greater of (i) the total amount of the unreimbursed
premiums paid by the Company with respect to the policy, or (ii) the death
benefit under the policy in excess of $2,000,000, which amount totaled $992,045
as of December 28, 2008. The balance of the death benefits will be
payable to the beneficiaries of the policy designated by Mr.
Hendrix.
Dividends on Restricted
Stock. In 2008, the Company paid on all outstanding Common
Stock of the Company (including restricted stock) a dividend of $0.03 per share
on a quarterly basis. The amounts in the “Dividends on Restricted
Stock” column reflect dividends on the restricted shares of each Named Executive
Officer in 2008.
Contributions to Retirement
Plans. The Company makes matching contributions, on the same
terms and using the same formulas as for other participating employees, to each
U.S.-based Named Executive Officer’s account under the 401(k) Plan and the
Nonqualified Plan, as applicable.
The
amounts reflected below represent the contributions by the Company during
2006-2008:
|
Name
___________________
|
Year
______
|
|
Company
Contribution
To
401(k) Plan
($)
__________
|
|
|
Company
Contribution
To
Nonqualified Plan
($)
_____________
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
T. Hendrix
|
2008
|
|
|
6,900 |
|
|
|
64,391 |
|
|
|
2007
|
|
|
6,750 |
|
|
|
25,775 |
|
|
|
2006
|
|
|
4,400 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick
C. Lynch
|
2008
|
|
|
6,900 |
|
|
|
-- |
|
|
|
2007
|
|
|
6,750 |
|
|
|
57,454 |
|
|
|
2006
|
|
|
4,400 |
|
|
|
6,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
John
R. Wells
|
2008
|
|
|
6,900 |
|
|
|
41,910 |
|
|
|
2007
|
|
|
6,750 |
|
|
|
13,775 |
|
|
|
2006
|
|
|
4,400 |
|
|
|
13,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond
S. Willoch
|
2008
|
|
|
6,900 |
|
|
|
19,194 |
|
|
|
2007
|
|
|
6,750 |
|
|
|
9,382 |
|
|
|
2006
|
|
|
4,400 |
|
|
|
8,150 |
|
The
Company’s 2007 contribution to the Nonqualified Plan of Mr. Lynch included
a $50,000 discretionary contribution under the Key Employee Retirement Savings
Benefit and is subject to vesting criteria as described in the Compensation
Discussion and Analysis included herein. As a Europe-based employee,
Mr. Parnell is ineligible to participate in the 401(k) Plan and the Nonqualified
Plan. Mr. Parnell is eligible to participate in the Interface Europe
Pension Scheme (the “Europe Pension Scheme”). Under the terms of the
Europe Pension Scheme, the Company contribution amount is based on a percentage
of pensionable earnings, with the rate applied depending on the category of
membership. Mr. Parnell’s specific category of membership entitled
him to a Company contribution rate of 11.3% (subject to a maximum yearly
contribution) through May of 2007 and a Company contribution rate of 12.9%
(subject to a maximum yearly contribution) for the remaining part of 2007 and
2008. The Company’s contribution to Mr. Parnell’s accrual of benefits
under the Europe Pension Scheme was $19,335 in 2008, $27,060 in 2007 and $23,341
in 2006.
|
(7)
|
In
2008, salary as a percentage of total compensation for each of Messrs.
Hendrix, Lynch, Wells, Parnell and Willoch was 31.8%, 39.0%, 39.0%, 29.2%
and 34.4%, respectively. In 2007, salary as a percentage of
total compensation for each of Messrs. Hendrix, Lynch, Wells, Parnell and
Willoch was 18.8%, 25.5%, 24.1%, 27.1% and 22.5%,
respectively. In 2006, salary as a percentage of total
compensation for each of Messrs. Hendrix, Lynch, Wells, Parnell and
Willoch was 22.7%, 33.7%, 26.3%, 28.6% and 27.3%,
respectively. As reflected in column (d), the Company paid no
discretionary bonuses during
2006-2008.
|
Grants
of Plan-Based Awards
The
following table provides information about awards granted to the Company’s Named
Executive Officers in 2008, as well as potential future payments associated
therewith. None of the following amounts were earned or paid during
2008.
|
|
|
|
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards
|
|
|
Estimated
Future Payouts
Under
Equity Incentive
Plan
Awards
|
|
|
|
|
|
|
|
|
|
___________________________________
|
|
|
___________________________________
|
|
|
|
|
Name
(a)
|
|
Grant
Date
(b)
|
|
|
Threshold
($)
(c)
|
|
|
Target
($)
(d)
|
|
|
Maximum
($)
(e)
|
|
|
Threshold
(#)
(f)
|
|
|
Target
(#)
(g)(1)
|
|
|
Maximum
(#)
(h)(2)
|
|
|
Grant
Date Fair Value of Stock and Option Awards
($)
(l)(3)
|
|
Daniel
T. Hendrix
|
|
|
01-10-08 |
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
0
|
|
|
|
167,000 |
|
|
|
167,000 |
|
|
|
2,359,710 |
|
Patrick
C. Lynch
|
|
|
01-10-08 |
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
0 |
|
|
|
80,000 |
|
|
|
80,000 |
|
|
|
1,130,400 |
|
John
R. Wells
|
|
|
01-10-08 |
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
0 |
|
|
|
112,500 |
|
|
|
112,500 |
|
|
|
1,589,625 |
|
Lindsey
K. Parnell
|
|
|
01-10-08 |
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
0 |
|
|
|
85,000 |
|
|
|
85,000 |
|
|
|
1,201,050 |
|
Raymond
S. Willoch
|
|
|
01-10-08 |
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
0 |
|
|
|
80,000 |
|
|
|
80,000 |
|
|
|
1,130,400 |
|
(1)
|
The
awards reflected in column (g) represent the number of shares of
restricted stock granted to the executive on January 10, 2008 under the
Omnibus Stock Plan. The 2008 awards were higher than the
typical restricted stock awards in prior years because they were made
pursuant to a three-year performance program. See the
Compensation Discussion and Analysis herein for additional information on
these awards. The performance objective under the 2008 awards
is improvement in the Company’s earnings per share plus
dividends. Fifty percent of each 2008 award is eligible to vest
on the fifth anniversary of the grant date if the executive remains
employed by the Company at that time, but the shares eligible to vest
based on tenure of employment are reduced share-for-share by the number of
shares that performance vest. The amounts recognized for
financial reporting purposes under SFAS 123(R) for these shares of
restricted stock are included in the “Stock Awards” column (column (e)) of
the Summary Compensation Table.
|
(2)
|
Under
the 2008 awards, there originally was no stated maximum number of shares
that would be issued to the extent the target amount for the three-year
performance period was exceeded. However, the concept of
issuing additional shares for exceeding the target subsequently was
removed in January 2009.
|
(3)
|
The
amounts reflected in column (l) represent the dollar value of restricted
stock granted on January 10, 2008 to the executives calculated by
multiplying the number of shares awarded by $14.13, the closing price of
the Company’s Class A Common Stock as reported by the Nasdaq Stock Market
on the trading date immediately preceding the date of grant. No
options were awarded to any of the Named Executive Officers in
2008.
|
|
Outstanding
Equity Awards at Fiscal Year-End
|
The
following table provides information about the number of shares covered by
exercisable and unexercisable options and vested and unvested restricted stock
awards granted to the Company’s Named Executive Officers as of December 28,
2008.
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
|
________________________________________________________________
|
|
|
_______________________________________________
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
(b)
|
|
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
(c)
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
(d)
|
|
|
Option
Exercise Price
($)
(e)
|
|
|
Option
Expiration Date
(f)
|
|
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
(g)(1)
|
|
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)
(h)(2)
|
|
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
(#)
(i)
|
|
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or Other Rights That Have Not Vested
($)
(j)
|
|
________________
|
|
_________
|
|
|
__________
|
|
|
_________
|
|
|
_______
|
|
|
________
|
|
|
_______
|
|
|
________
|
|
|
_________
|
|
|
__________
|
|
Daniel
T. Hendrix
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
275,810
|
|
|
|
1,398,357
|
|
|
|
--
|
|
|
|
--
|
|
Patrick
C. Lynch
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
106,667
|
|
|
|
540,802
|
|
|
|
--
|
|
|
|
--
|
|
John
R. Wells
|
|
|
-- |
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
-- |
|
|
|
187,584 |
|
|
|
951,051 |
|
|
|
--
|
|
|
|
--
|
|
Lindsey
K. Parnell
|
|
|
1,500 |
|
|
|
--
|
|
|
|
--
|
|
|
|
4.75
|
|
|
|
11-26-11
|
|
|
|
109,333
|
|
|
|
554,318
|
|
|
|
--
|
|
|
|
--
|
|
Raymond
S. Willoch
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
125,006
|
|
|
|
633,780
|
|
|
|
--
|
|
|
|
--
|
|
(1)
|
Restricted
stock awards that have not yet vested are subject to forfeiture by the
Named Executive Officers under certain circumstances. For a description of
the related performance criteria, please see the discussion contained in
the Compensation Discussion and Analysis herein. The restricted
stock vesting dates for each Named Executive Officer range from
2009-2013.
|
|
(2)
|
The
market value referenced above is based on the closing price of $5.07 per
share of the Company’s Class A Common Stock on December 26, 2008 (the
last trading day of the Company’s 2008 fiscal year), as reported by the
Nasdaq Stock Market.
|
|
Option
Exercises and Stock Vested
|
The
following table provides information about the number and corresponding value
realized during 2008 with respect to (i) the exercise of stock options, and (ii)
the vesting of restricted stock for each of the Company’s Named Executive
Officers.
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Number
of Shares
Acquired
on Exercise
(#)
(b)
|
|
|
Value
Realized
on
Exercise
($)
(c)(1)
|
|
|
Number
of Shares Acquired on Vesting
(#)
(d)
|
|
|
Value
Realized
on
Vesting
($)
(e)(2)
|
|
Daniel
T. Hendrix
|
|
|
-- |
|
|
|
-- |
|
|
|
107,385 |
|
|
|
1,721,930 |
|
Patrick
C. Lynch
|
|
|
-- |
|
|
|
-- |
|
|
|
24,300 |
|
|
|
399,006 |
|
John
R. Wells
|
|
|
64,682 |
|
|
|
513,490 |
|
|
|
50,684 |
|
|
|
808,529 |
|
Lindsey
K. Parnell
|
|
|
-- |
|
|
|
-- |
|
|
|
47,397 |
|
|
|
778,259 |
|
Raymond
S. Willoch
|
|
|
-- |
|
|
|
-- |
|
|
|
40,810 |
|
|
|
659,120 |
|
|
(1)
|
This
amount represents the difference at date of exercise between the
respective exercise prices of the stock options and the proceeds from the
sales on that same date. The stock options exercised by Mr.
Wells had exercise prices ranging from $4.25 to $9.00 per share, and
included options granted between 1999 and
2002.
|
|
(2)
|
These
amounts represent the product of the number of shares vested and the
closing price of the Company’s Class A Common Stock on the Nasdaq Stock
Market on the vesting date.
|
The
following table provides information about the pension benefits for each of the
Company’s Named Executive Officers.
Name
(a)
|
|
Plan
Name
(b)(1)
|
|
|
Number
of Years Credited Service
(#)
(c)
|
|
|
Present
Value of Accumulated Benefit
($)
(d)
|
|
|
Payments
During
Last
Fiscal Year
($)
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
T. Hendrix
|
|
Salary
Continuation Plan
|
|
|
|
15 |
|
|
|
4,550,418 |
|
|
|
--
|
|
|
Patrick
C. Lynch
|
|
-- |
|
|
|
|
-- |
|
|
|
-- |
|
|
|
--
|
|
|
John
R. Wells
|
|
Salary
Continuation Plan
|
|
|
|
15 |
|
|
|
1,842,708 |
|
|
|
--
|
|
|
Lindsey
K. Parnell
|
|
Europe
Pension Scheme
|
|
|
|
12 |
|
|
|
344,862 |
|
|
|
--
|
|
|
Raymond
S. Willoch
|
|
Salary
Continuation Plan
|
|
|
|
15 |
|
|
|
1,581,373 |
|
|
|
--
|
|
|
|
(1)
|
The
benefits under the Salary Continuation Plan vest upon 15 years of service
and attainment of the age of 55, with maximum benefit accruing at age
65. None of the Named Executive Officers participating in the
Salary Continuation Plan have reached age 55. The above values
assume commencement of payment of the maximum benefit at age
65. All other assumptions are the same as are used for
financial reporting purposes under generally accepted accounting
principles.
|
|
Non-Qualified
Deferred Compensation
|
The
following table provides information about the contributions, earnings and
account balances of the Company’s applicable deferred compensation plans for
each of the Company’s Named Executive Officers.
Name
(a)(1)
|
|
Executive
Contributions
in
Last FY
($)
(b)
|
|
|
Company
Contributions
in
Last FY
($)
(c)(2)
|
|
|
Aggregate
Earnings
in
Last FY
($)
(d)
|
|
|
Aggregate
Withdrawals/ Distributions
($)
(e)
|
|
|
Aggregate
Balance
at
Last FYE
($)
(f)(3)
|
|
_______________
|
|
____________
|
|
|
__________
|
|
|
________
|
|
|
___________
|
|
|
________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
T. Hendrix
|
|
|
84,831 |
|
|
|
64,391 |
|
|
|
4,247 |
|
|
|
264,840 |
|
|
|
70,231 |
|
Patrick
C. Lynch
|
|
|
22,679 |
|
|
|
-- |
|
|
|
(60,647 |
) |
|
|
-- |
|
|
|
278,636 |
|
John
R. Wells
|
|
|
127,853 |
|
|
|
41,910 |
|
|
|
(206,304 |
) |
|
|
-- |
|
|
|
1,427,719 |
|
Lindsey
K. Parnell
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Raymond
S. Willoch
|
|
|
22,334 |
|
|
|
19,194 |
|
|
|
945 |
|
|
|
66,889 |
|
|
|
22,801 |
|
|
(1)
|
The
Company maintains the Interface, Inc. Nonqualified Savings Plan and
Interface, Inc. Nonqualified Savings Plan II (collectively, the
“Nonqualified Plan”) for certain U.S.-based “highly compensated employees”
(as such term is defined in applicable IRS regulations), including the
Named Executive Officers who are based in the United States (Messrs.
Hendrix, Lynch, Wells and Willoch). As with the Company’s
401(k) Plan, Messrs. Hendrix, Lynch, Wells and Willoch are eligible to
participate in the Nonqualified Plan on the same terms as other eligible
executive and non-executive employees based in the United States, and
receive the same benefits afforded all other
participants.
|
Under the
Nonqualified Plan, all eligible employees can elect to defer, on a pre-tax
basis, a portion of their salary and/or annual bonus
compensation. (Up to 80% of base salary and 100% of annual bonus
compensation can be deferred.) Each participant elects when the
deferred amounts will be paid out, which can be during or after employment,
subject to the provisions of Section 409A of the Internal Revenue
Code. The employee earns a deferred return based on deemed
investments in mutual funds selected by the employee from a list provided by the
Company. The investment risk is borne entirely by the employee
participant. Gains and losses are credited based on the participant’s
election of a variety of deemed investment choices. Participants’
accounts may or may not appreciate, and may even depreciate, depending on the
performance of their deemed investment choices. None of the deemed
investment choices provide interest at above-market rates (or any guaranteed
interest rate). The Company has established a Rabbi Trust to hold,
invest and reinvest deferrals and contributions under the Nonqualified Plan, and
all deferrals are paid out in cash upon distribution.
|
(2)
|
The
amounts reported in column (c) reflect, for each Named Executive Officer
(as applicable), the actual amounts contributed by the Company to the
Nonqualified Plan during fiscal year 2008 (including contributions in 2008
with respect to compensation deferrals in
2007).
|
|
(3)
|
The
amounts reported in column (d) were not reported as compensation to the
Named Executive Officers in the Company’s Summary Compensation
Table. However, the Company’s matching contributions reported
in column (c) are included in the “All Other Compensation” column of the
Company’s Summary Compensation
Table.
|
Director
Compensation
The
following table provides information about the compensation paid to the
Company’s directors in 2008 (excluding Company President and Chief Executive
Officer Daniel T. Hendrix, a Named Executive Officer, whose 2008 compensation is
presented in the Summary Compensation Table included herein).
Name
(a)
|
|
Fees
Earned
or
Paid
in
Cash
($)
(b)
|
|
|
Stock
Awards
($)
(c)(1)
|
|
|
Option
Awards
($)
(d)(2)
|
|
|
Non-Equity
Incentive Plan Compensation
($)
(e)
|
|
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
($)
(f)
|
|
|
All
Other Compensation
($)
(g)
|
|
|
Total
($)
(h)
|
|
__________________
|
|
________
|
|
|
______
|
|
|
______
|
|
|
__________
|
|
|
____________
|
|
|
___________
|
|
|
_______
|
|
Ray
C. Anderson (3)
|
|
|
350,000 |
|
|
|
-- |
|
|
|
-- |
|
|
|
308,000 |
|
|
|
282,935 |
|
|
|
345,231 |
|
|
|
1,286,166 |
|
Edward
C. Callaway (4)
|
|
|
50,000 |
|
|
|
48,320 |
|
|
|
10,023 |
|
|
|
-- |
|
|
|
-- |
|
|
|
540 |
|
|
|
108,883 |
|
Dianne
Dillon-Ridgley (4)
|
|
|
51,000 |
|
|
|
48,320 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
540 |
|
|
|
99,860 |
|
Carl
I. Gable (4)
|
|
|
65,000 |
|
|
|
48,320 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
540 |
|
|
|
113,860 |
|
June
M. Henton (4)
|
|
|
56,000 |
|
|
|
48,320 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
540 |
|
|
|
104,860 |
|
Christopher
G. Kennedy (4)
|
|
|
51,000 |
|
|
|
48,320 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
540 |
|
|
|
99,860 |
|
K.
David Kohler (4)
|
|
|
50,000 |
|
|
|
43,716 |
|
|
|
52,673 |
|
|
|
-- |
|
|
|
-- |
|
|
|
540 |
|
|
|
146,929 |
|
James
B. Miller, Jr. (4)
|
|
|
50,000 |
|
|
|
48,320 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
540 |
|
|
|
98,860 |
|
Thomas
R. Oliver (4)
|
|
|
61,000 |
|
|
|
43,716 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
540 |
|
|
|
105,256 |
|
Harold
M. Paisner (4)
|
|
|
50,000 |
|
|
|
43,716 |
|
|
|
73,200 |
|
|
|
-- |
|
|
|
-- |
|
|
|
540 |
|
|
|
167,456 |
|
|
(1)
|
The
amounts reported in the “Stock Awards” column include the compensation
cost for 2008 related to restricted stock awards granted in current and
prior years, computed in accordance with SFAS 123(R). See the
Note entitled “Shareholder’s Equity” to the Consolidated Financial
Statements in the Company’s Annual Report on Form 10-K for the year ended
December 28, 2008, regarding assumptions underlying valuation of equity
awards. The ultimate payout value may be significantly more or
less than the amounts shown, and possibly zero, depending on the Company’s
financial performance and the recipient’s tenure as a
director. In 2008, each of the directors listed in the table
(except Mr. Anderson) received an award of 3,000 shares of restricted
stock having a grant date fair value of $14.13 per share. As of
December 28, 2008, each of those same directors held an aggregate of 4,500
shares of restricted stock that had not
vested.
|
|
(2)
|
The
amounts reported in the “Option Awards” column include the compensation
cost for 2008 related to option awards granted in prior years, computed in
accordance with SFAS 123(R). See the Note entitled “Shareholder’s Equity”
to Consolidated Financial Statements in the Company’s Annual Report on
Form 10-K for the year ended December 28, 2008, regarding assumptions
underlying valuation of equity awards. The ultimate payout
value may be significantly more or less than the amounts shown, and
possibly zero, depending on the price of the Company’s stock during the
term of the option award. No options were granted to directors
in 2008. As of December 28, 2008, each of Messrs. Anderson,
Gable and Oliver and Ms. Henton held 15,000 outstanding options, each of
Messrs. Callaway, Kohler and Paisner held 20,000 outstanding options, each
of Messrs. Kohler and Miller held 25,000 outstanding options, and Ms.
Dillon-Ridgley held 5,000 outstanding
options.
|
|
(3)
|
Ray
C. Anderson, who serves as Chairman of the Board and Chairman of the
Executive Committee of the Board, remains an employee of the
Company. Mr. Anderson is the Company’s primary spokesperson in
support of its environmental sustainability initiative, giving over 150
speeches, webcasts and interviews during 2008, reaching a total estimated
audience in the millions. In his capacity as an employee, Mr.
Anderson was compensated during 2008 in the amounts reflected in the table
above.
|
The
amount reported in the “Non-Equity Incentive Plan Compensation” column reflects
the amount earned by and paid to Mr. Anderson for 2008 under the Company’s
Executive Bonus Plan. The material provisions of the Executive Bonus
Plan are more fully described in the Compensation Discussion and Analysis
included herein. In addition, as an employee of the Company, Mr.
Anderson also was covered by certain of the Company’s benefits programs, such as
medical and dental insurance plans. Mr. Anderson entered into an
amended and restated Employment Agreement and Change in Control Agreement with
the Company in July 2008 that is substantially similar to those described below
for Messrs. Hendrix, Lynch, Wells and Willoch (except that Mr. Anderson’s
agreement expires upon his reaching age 76).
The
Company maintains a Salary Continuation Agreement with Mr. Anderson pursuant to
the Salary Continuation Plan described in the Compensation Discussion and
Analysis herein. The amount reported in the “Change in Pension Value
and Nonqualified Deferred Compensation Earnings” column relates to Mr.
Anderson’s accumulated benefit thereunder. In 2007, Mr. Anderson’s
salary was reduced to $350,000 and he began drawing payments under his Salary
Continuation Agreement totaling $449,605 per year. The amount in
column (f) reflects the reduction in the actuarial present value of his salary
continuation benefits, plus the salary continuation payments of $449,605, for a
net change of $282,935.
All Other
Compensation. The amount reported in column (g) for Mr.
Anderson reflects the sum of (i) the incremental cost to the Company of all
perquisites and other personal benefits (including the dollar value of split
dollar life insurance premiums paid by the Company), and (ii) the amount
contributed by the Company to The Georgia Institute of Technology to endow the
Anderson Interface Associate Professor Chair (the Company has no commitment to
make future contributions).
The
following table outlines those perquisites and all other compensation required
by SEC rules to be separately quantified that were provided to Mr. Anderson
during 2008.
|
Name
|
Automobile
($)
|
Health
Club Dues
($)
|
Financial,
Legal and Tax Planning
($)
|
Telephone
($)
|
Split
Dollar Insurance Premiums
($)
|
Charitable
Contribution
($)
|
|
______________
|
__________
|
__________
|
____________
|
_________
|
__________
|
__________
|
|
Ray
C. Anderson
|
9,081
|
1,969
|
37,483
|
2,814
|
173,000
|
120,884
|
Automobile/Automobile
Allowance. Mr. Anderson was provided with use of a
company-provided automobile, plus fuel and maintenance.
Health Club
Dues. Certain health club membership dues were paid on behalf
of Mr. Anderson. The Company does not provide any tax reimbursement
in connection with the personal use of the club.
Financial, Legal and Tax
Planning. The Company paid certain fees associated with Mr.
Anderson’s use of certain financial, legal and tax planning services, which
included tax preparation and estate planning services.
Telephone. The
Company paid certain fees associated with Mr. Anderson’s use of a
company-provided cellular telephone.
Split Dollar Insurance Agreement
with Ray C. Anderson and Mary Anne Lanier. The Company is a
party to a split-dollar insurance agreement (the “Anderson Split Dollar
Agreement”) with Mr. Anderson and Mary Anne Anderson Lanier, as Trustee of the
Ray Christie Anderson Family Trust (the “Trust”). Pursuant to the
Anderson Split Dollar Agreement, the Company has obtained an insurance policy on
the lives of Mr. Anderson and his spouse, and it pays the premiums on such
policy as an additional employment benefit for Mr. Anderson. The
annual premium is $173,000. The Company is the owner of the policy,
and has endorsed to the Trust the right to name a beneficiary of a portion of
the death benefit that is approximately equal to the full death benefit minus
the greater of (1) the total amount of the unreimbursed premiums paid by the
Company with respect to the policy, and (2) the cash value of the
policy. Upon the death of the last to die of Mr. Anderson and
his spouse, the Company will receive a portion of the death benefit in an amount
that is approximately equal to the greater of (i) the total amount of the
unreimbursed premiums paid by the Company with respect to the policy, or (ii)
the cash value of the policy, which amount totaled $1,219,000 as of December 28,
2008.
|
(4)
|
For
fiscal year 2008, the Company’s non-employee directors (“outside
directors”) were paid an annual director’s fee of
$45,000. Outside directors who serve on the Audit Committee,
the Compensation Committee and the Nominating & Governance Committee
were paid an additional $5,000 per year, except that the respective
Chairpersons of the Audit Committee, Compensation Committee and Nominating
& Governance Committee were paid an additional $10,000 per year
(rather than $5,000). In addition, the lead independent
director of the Board was paid an incremental $10,000 per
year. Directors also were reimbursed for expenses in connection
with attending Board and Committee
meetings.
|
In 2008,
each outside director was awarded 3,000 restricted shares of Company
stock. The awards of restricted stock vest in two increments
(one-half each) on the first and second anniversaries, respectively, of the
grant date of the award if the individual continues to serve as a director on
those dates. Also in 2008, the Company paid a dividend of $0.03 per
share on Common Stock (including restricted stock) on a quarterly
basis. The amounts in the “All Other Compensation” column reflect
dividends on the restricted shares of each director in 2008.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Board
of Directors of the Company recognizes that transactions with related persons
can present a heightened risk of conflict of interests and/or improper valuation
(or the perception thereof). Accordingly, as a general matter, it is
the Company’s preference to avoid transactions with related
persons. Nevertheless, there are circumstances where the Company may
obtain products or services (i) of a nature, quantity or quality that are
not readily available from alternative sources, (ii) on terms comparable to
those provided by other, unrelated parties, or (iii) when the Company provides
products or services on an arm’s length basis on terms comparable to those
provided to unrelated third parties or on terms provided to employees
generally.
Policy
Regarding Review, Approval or Ratification of Transactions Involving Related
Persons
The
Company has adopted a written policy (the “Related Transactions Policy”) with
respect to the review, approval or ratification of transactions with related
persons involving the Company (or its subsidiaries or controlled
affiliates). In evaluating potential transactions with related
persons, the Related Transactions Policy incorporates and applies the contents
of Item 404(a) of Regulation S-K (including but not limited to the definitions
of “related persons” and “transaction”, as well as the threshold for “direct or
indirect material interest” contained therein).
Prior to
entering into a transaction with a related person, the related person is
required to advise a Company-designated “Compliance Officer” (currently the
Company’s General Counsel), who shall determine whether the proposed transaction
is a transaction with a related person under this policy. If the
Compliance Officer determines that the proposed transaction is a transaction
with a related person, the transaction is required to be submitted to the Audit
Committee of the Board of Directors for consideration at its next meeting or, in
those instances in which it is not practicable or desirable for the Company to
wait until the next Audit Committee meeting, to the Chair of the Audit Committee
(who possesses delegated authority to act between committee
meetings). The Audit Committee (or where submitted to the Chair, the
Chair) shall consider all of the available relevant facts and circumstances,
including (if applicable) but not limited to: (i) the benefits to the
Company; (ii) the impact on a director’s independence in the event the related
person is a director, an immediate family member of a director, or an entity in
which the director is a partner, equity holder or executive officer; (iii) the
availability of other sources for comparable products or services; (iv) the
terms of the transaction; and (v) the terms available to or from unrelated
third parties or employees generally, as the case may be. After
review, the Audit Committee or Chair either approves or disapproves the proposed
transaction and advises the Compliance Officer, who in turn conveys the decision
to the appropriate persons within the Company. No member of the Audit
Committee is permitted to participate in any review, consideration, or approval
of any potential transaction with a related person with respect to which such
member or any of his or her immediate family members is a related
person.
The
Related Transactions Policy also provides for the review of (i) transactions
involving related persons entered into by the Company not previously approved or
ratified under this policy, as well as (ii) any previously approved or ratified
transactions with related persons that remain ongoing and have a remaining term
of more than six months or remaining amounts payable to or receivable from the
Company of more than $120,000. The policy also explicitly requires
disclosure of all transactions that are required to be disclosed under the
Securities Act of 1933, the Securities Exchange Act of 1934 and related rules
and regulations.
Transactions
Involving Related Persons
A
wholly-owned subsidiary of the Company employs James A. Lanier, Jr., son-in-law
of Company non-executive Chairman Ray C. Anderson, as its Vice President of
Sales, Higher Education. In 2008, Mr. Lanier earned salary and bonus
of $231,388, an automobile allowance of $7,800, and participated in certain of
the Company’s benefit programs generally available to employees in the
U.S.
DIRECTOR
INDEPENDENCE
For each
director, the Board makes a determination of whether the director is
“independent” under the criteria established by the Nasdaq Stock Market and
other governing laws and regulations. In its review of director
independence, the Board considers all commercial, banking, consulting, legal,
accounting, charitable or other business relationships any director may have
with the Company. The current directors are Ray C. Anderson, Edward
C. Callaway, Dianne Dillon-Ridgley, Carl I. Gable, Daniel T. Hendrix, June M.
Henton, Christopher G. Kennedy, K. David Kohler, James B. Miller, Jr., Thomas R.
Oliver and Harold M. Paisner. As a result of its review, the Board
has determined that all of the current directors, with the exception of Ray C.
Anderson and Daniel T. Hendrix (who are employees), are
independent.
The
independent directors meet in regularly scheduled executive sessions without
Messrs. Anderson and Hendrix or other members of management
present. In 2008, the independent directors met four times in
executive session.
EQUITY
COMPENSATION PLAN INFORMATION
The
following table sets forth information concerning the Company’s equity
compensation plans as of December 28, 2008.
Plan
Category
|
|
Number
of Securities to be Issued upon Exercise of Outstanding Options, Warrants
and Rights
|
|
|
Weighted-Average
Exercise Price of Outstanding Options, Warrants and Rights
|
|
|
Number
of Securities Remaining Available for Future Issuance under Equity
Compensation Plans (Excluding Securities Reflected in Column
(a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
______________________________________
|
|
________________
|
|
|
_________________
|
|
|
_________________
|
|
Equity
Compensation Plan Approved by Security Holders:
|
|
|
|
|
|
|
|
|
|
Omnibus
Stock Plan
|
|
|
662,970 |
|
|
$ |
7.95 |
|
|
|
1,185,948 |
(1) |
Equity
Compensation Plan Not Approved by Security Holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual
Compensation Arrangements(2)
|
|
|
16,000 |
|
|
$ |
7.00 |
|
|
|
0 |
|
|
(1)
|
Each
share issued under the Omnibus Stock Plan pursuant to an award other than
a stock option will reduce the number of remaining shares available by two
shares.
|
|
(2)
|
As
of December 28, 2008, the Company maintained stock option agreements
outside the Omnibus Stock Plan with one independent (non-employee) service
provider with respect to a total of 16,000 shares at $7.00 per
share. The agreements provide for a five-year vesting period
(all options under the agreements have now vested) and a ten-year
term.
|
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The
Company is generally obligated to provide its Named Executive Officers with
certain payments or other forms of compensation when their employment with the
Company is terminated. The actual amount of compensation due each of
the Named Executive Officers, as well as the duration of any periodic payments,
depends on both the circumstances surrounding the termination, as well as the
particulars of any employment-related agreements to which the Company and the
Named Executive Officer are party. As of December 28, 2008, the
Company had Employment and Change in Control Agreements with Messrs. Hendrix,
Lynch, Wells and Willoch, which generally describe the benefits payable at,
following, or in connection with various termination scenarios. The
Company also had employment agreements with Mr. Parnell as of December 28,
2008. These are summarized as follows:
Employment
and Change in Control Agreements
The
Company has maintained Employment and Change in Control Agreements with each of
Messrs. Hendrix, Wells and Willoch since the mid-1990s, and with Mr. Lynch since
2005. (The Company most recently amended and restated these
Employment and Change in Control Agreements in January 2008, primarily to
conform such agreements to the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended). Each Employment and Change in
Control Agreement is for a rolling two-year term, such that the remaining term
is always two years (until a specified retirement age). The Company
may terminate any of such agreements at any time, with or without cause, and
each executive may voluntarily terminate his respective employment upon 90 days
notice. The agreements provide for certain benefits in the event of
various termination scenarios, including termination without cause, termination
with cause, voluntary retirement or resignation, termination due to death or
disability, and termination in connection with a “change in control” (as defined
in the agreements) of the Company. The agreements also entitle the
executives to receive a tax “gross up” payment to cover the amount of any excise
taxes imposed on the benefits payable in the event of a termination in
connection with a “change in control.” Each agreement also contains
provisions placing restrictions on the executive’s ability to compete with the
Company for a period of two years following the termination of his
employment.
In March
of 2007, the Company entered into two separate employment agreements with Named
Executive Officer Mr. Parnell (one agreement applies to Mr. Parnell’s activities
performed on the Company’s behalf within the United Kingdom; the other applies
to his activities outside of the U.K.). Both agreements contain
substantially similar terms, except that the specified compensation in each
agreement correlates to the estimated amount of time Mr. Parnell anticipates
spending within and outside of the U.K. The agreements remain in
effect until such time as the Company provides Mr. Parnell with twelve months’
notice (or pay in lieu of notice) of its intention to terminate Mr. Parnell’s
employment relationship. The employment agreements also contain
provisions placing restrictions on Mr. Parnell’s ability to compete with the
Company for a six month period following the termination of employment, as well
as solicit its customers or employees for a twelve month period following the
termination of employment.
Payments
to Named Executive Officers Upon Termination or Change in Control
In the
event that any of the Named Executive Officers (i) retired or voluntarily
resigned, (ii) died or suffered a disability, (iii) was terminated by the
Company (x) with “cause” (“summary dismissal” in the case of Mr. Parnell), (y)
without “cause” or (z) experienced certain terminations (without cause) in
connection with a “change in control” (as applicable, and as such terms are
defined in the respective agreements) on December 26, 2008, they would have been
entitled to receive the following types of payments and benefits, and would have
been subject to the various restrictive covenants, described below.
Upon Retirement or Voluntary
Resignation:
Payment,
Benefit or Restrictive Covenant
|
|
Entitled
to Receive
|
Base
Salary
|
|
Executive
would be entitled to receive his base salary (then-current amount) through
the effective date of retirement or resignation.
|
Bonus
|
|
Executive
would be entitled to receive a prorated portion of his annual bonus
opportunity calculated based on the date of retirement or resignation
(e.g., a June 30 retirement or resignation would entitle executive to 50%
of the bonus otherwise payable).
|
Stock
Options
|
|
Executive
would forfeit any unvested stock options; all previously-vested options
would terminate over the period of time specified in the applicable stock
option agreements (typically 12 to 24 months).
|
Restricted
Stock
|
|
Executive
would forfeit any unvested restricted stock awards, except that upon
retirement at age 65 or thereafter Executive would immediately vest in a
percentage of all unvested restricted stock awards as specified in the
applicable restricted stock agreement(s).
|
Salary
Continuation Plan/Europe Pension Plan
|
|
Salary
Continuation Plan participant would receive full benefits upon retirement
at age 65 after completing at least 15 years of service, payable for the
remainder of his life (or, if elected, a reduced benefit for the remainder
of his life and any surviving spouse’s life). A reduced benefit
is available to participant beginning at age 55. Upon
retirement or voluntary resignation prior to age 55, Salary Continuation
Plan participants would receive no benefit. Participant is
prohibited from competing with the Company while receiving
benefits. Europe Pension Plan participant Mr. Parnell would
receive full pension benefits per the terms of the Pension Plan documents
assuming retirement at age 65, or a reduced benefit upon retirement before
age 65.
|
Other
Employee Retirement Plans
|
|
No
additional benefit beyond those to which the executive normally would be
entitled under the Company’s 401(k) Plan and Nonqualified Plan following
termination of employment.
|
Health,
Life and Other Insurance Coverages
|
|
Upon
attaining age 50 with 15 years of service, or age 55 with 10 years of
service, all U.S. based employees are eligible to participate in the
Company’s Retiree Medical Plan provided that the employee pays the
associated premium (which is designed to cover the full cost of the
plan). No additional benefits are received beyond those to
which the executive normally would be entitled under the terms of the
respective medical and/or insurance plans. Mr. Hendrix has
a Split Dollar Insurance Policy as described in footnote 6 to the 2008
Summary Compensation Table.
|
Restrictive
Covenants
|
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following retirement or
resignation. Mr. Parnell would be prohibited from competing
with the Company for a six month period following termination of
employment or from soliciting its customers or employees for a 12 month
period following termination of employment.
|
Upon
Death/Disability:
Payment,
Benefit or Restrictive Covenant
|
|
Entitled
to Receive
|
Base
Salary
|
|
Executive
would be entitled to receive his base salary (then-current amount) through
the date of termination due to death/disability.
|
Bonus
|
|
Executive
would be entitled to receive a prorated portion of his annual bonus
opportunity calculated based on the date of termination due to
death/disability (e.g., a June 30 termination due to death/disability
would entitle executive to 50% of the bonus otherwise
payable).
|
Stock
Options
|
|
Executive
would forfeit any unvested stock options; all previously-vested options
would terminate over the period of time specified in the applicable stock
option agreements (typically 12 to 24 months following termination due to
disability and 24 months following termination due to death).
|
Restricted
Stock
|
|
Executive
would immediately vest in a percentage of all unvested restricted stock
awards, as specified in the applicable restricted stock
agreement(s).
|
Salary
Continuation Plan/Europe Pension Plan
|
|
Upon
Salary Continuation Plan participant’s death, he would receive a 10 year
certain payout of an annual benefit level as if he were eligible for full
benefits (e.g., age 65). Upon a participant’s disability, he
would receive a payout at an annual benefit level that when combined with
all other Company-sponsored disability security and salary continuation
payments being paid, equals 66 2/3% of average salary and bonus during the
preceding 1-3 years. The annual benefit level would continue
for as long as the participant remains disabled, up to age 65, at which
point the benefit would be reduced to the annual salary continuation
benefit he would have received upon early retirement at age
55. Participant is prohibited from competing with the Company
while receiving benefits. In the event of termination for
disability, Europe Pension Plan participant Mr. Parnell would receive full
pension benefits per the terms of the plan as if Mr. Parnell remained
employed until the “normal retirement date” at age 65. In the
event of his death, Mr. Parnell’s wife would receive a lump sum payment in
the amount of three times pensionable earnings plus annual payments (for
the rest of her life) in an amount equal to 50% of the benefits that Mr.
Parnell would have received if he had continued working and retired at age
65.
|
Other
Employee Retirement Plans
|
|
No
additional benefit beyond those to which the executive would be normally
entitled under the Company’s 401(k) Plan and Nonqualified Plan following
termination of employment.
|
Health,
Life and Other Insurance Coverages
|
|
Upon
attaining age 50 with 15 years of service, or age 55 with 10 years of
service, all U.S. based employees are eligible to participate in the
Company’s Retiree Medical Plan provided that the employee pays the
associated premium (which is designed to cover the full cost of the
plan). No additional benefits are received beyond those to
which the executive would be normally entitled under the terms of the
respective medical and/or insurance plans. Mr. Hendrix has a
Split Dollar Insurance Policy as described in footnote 6 to the 2008
Summary Compensation Table.
|
Restrictive
Covenants
|
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following any termination
due to disability. Mr. Parnell would be prohibited from competing with the
Company for a six month period following termination of employment or from
soliciting its customers or employees for a 12 month period following
termination of employment.
|
Upon Termination With
“Cause”/”Summary Dismissal”:
Payment,
Benefit or Restrictive Covenant
|
|
Entitled
to Receive
|
Base
Salary
|
|
Executive
would be entitled to receive his base salary (then-current amount) through
the effective date of termination.
|
Bonus
|
|
No
benefit.
|
Stock
Options
|
|
Executive
would forfeit any unvested stock options; all previously-vested options
would terminate three months following termination.
|
Restricted
Stock
|
|
Executive
would forfeit any unvested restricted stock awards.
|
Salary
Continuation Plan/Europe Pension Plan
|
|
Salary
Continuation Plan participants would receive no benefit. Europe
Pension Plan participant Mr. Parnell would be entitled to receive
“deferred benefits”, a reduced pension amount as compared to the benefits
which he would have received if Mr. Parnell remained employed until the
“normal retirement date” (as defined in the Pension Plan
documents).
|
Other
Employee Retirement Plans
|
|
No
additional benefit beyond those to which the executive would be normally
entitled under the Company’s 401(k) Plan and Nonqualified Plan following
termination of employment.
|
Health,
Life and Other Insurance Coverages
|
|
Upon
attaining age 50 with 15 years of service, or age 55 with 10 years of
service, all U.S. based employees are eligible to participate in the
Company’s Retiree Medical Plan provided that the employee pays the
associated premium (which is designed to cover the full cost of the
plan). No additional benefits are received beyond those to
which the executive would be normally entitled under the terms of the
respective medical and/or insurance plans. Mr. Hendrix has a
Split Dollar Insurance Policy as described in footnote 6 to the 2008
Summary Compensation Table.
|
Restrictive
Covenants
|
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following
termination. Mr. Parnell would be prohibited from competing
with the Company for a six month period following termination of
employment or from soliciting its customers or employees for a 12 month
period following termination of employment.
|
Upon Termination Without
“Cause”:
Payment,
Benefit or Restrictive Covenant
|
|
Entitled
to Receive
|
Base
Salary
|
|
Executive
would be entitled to receive his base salary in its then-current amount
for two years, or, in the case of Mr. Parnell, 12 months.
|
Bonus
|
|
Executive
would be entitled to receive bonus payments for two years as well as a
prorated bonus for the year in which employment terminates, each
calculated based on the average bonus (excluding special incentive plan
bonuses) received by the executive during the two years prior to the
effective termination date. Mr. Parnell would be entitled to
receive bonus payments equal to the amount of bonus he would have received
had he remained employed for the remaining term.
|
Stock
Options
|
|
Executive
would immediately vest in all unvested options. The options
could be subsequently exercised over the period of time specified in the
applicable stock option agreements (typically 12 to 24
months).
|
Restricted
Stock
|
|
Executive
would immediately vest in a percentage of all unvested restricted stock
awards, as specified in the applicable restricted stock
agreement(s).
|
Salary
Continuation Plan/Europe Pension Plan
|
|
Salary
Continuation Plan participant would remain eligible for participation in
the plan as if he were to remain employed, and thus would receive full
benefits at age 65 after completing at least 15 years of service, payable
for the remainder of his life, or a reduced benefit beginning as early as
age 55 (or, if elected, a reduced benefit for the remainder of his and any
surviving spouse’s life). Participant is prohibited from
competing with the Company while receiving benefits. Europe
Pension Plan participant Mr. Parnell would be entitled to receive full
pension benefits per the terms of the Pension Plan documents as if Mr.
Parnell had remained employed until the “normal retirement date” of age
65.
|
Other
Employee Retirement Plans
|
|
Executive
would be entitled to an amount equal to the matching contribution he would
have received under the Company’s 401(k) Plan for the two-year period
following termination. Mr. Parnell would be entitled to
continue to participate for 12 months.
|
Health,
Life and Other Insurance Coverages
|
|
Executive
would be entitled to continue coverages for two years, or, in the case of
Mr. Parnell, 12 months, with the Company paying the associated
premium. Thereafter, upon attaining age 50 with 15 years of
service, or age 55 with 10 years of service, a U.S. based executives (like
all other U.S based employees) would be eligible to participate in the
Company’s Retiree Medical Plan provided that the executive pays the
associated premium (which is designed to cover the full cost of the
plan).
|
Restrictive
Covenants
|
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following
termination. Mr. Parnell would be prohibited from competing
with the Company for a six month period following termination of
employment or from soliciting its customers or employees for a 12 month
period following termination of employment.
|
Upon Termination Following
“Change in Control”(1):
Payment,
Benefit or Restrictive Covenant
|
|
Entitled
to Receive
|
Base
Salary
|
|
Executive
would be entitled to receive his base salary in its then-current amount
for two years. Such amount would be paid in a lump sum within
30 days after separation from service.
|
Bonus
|
|
Executive
would receive bonus payments for two years as well as a prorated bonus for
the year in which employment terminates, each calculated based on the
average bonus (including any special incentive plan bonuses) received by
the executive during the two years prior to the effective termination
date. Such amount would be paid in a lump sum within 30 days
after separation from service.
|
Stock
Options
|
|
Executive
would immediately vest in all unvested options. The options
could be subsequently exercised over the period of time specified in the
applicable stock option agreements (typically 12 to 24
months).
|
Restricted
Stock
|
|
Executive
would immediately vest in all unvested restricted stock
awards.
|
Salary
Continuation Plan/Europe Pension Plan
|
|
Salary
Continuation Plan participant would remain eligible for participation in
the plan as if he were to remain employed, and thus would receive full
benefits at age 65 after completing at least 15 years of service, payable
for the remainder of his life, or a reduced benefit beginning as early as
age 55 (or, if elected, a reduced benefit for the remainder of his and any
surviving spouse’s life). Participant would also receive the
benefit of a cost of living adjustment calculated with reference to a
specified consumer price index on each participant’s annual benefit amount
(such adjustment accruing from the date of termination until such date
that the participant begins to receive benefits, and not
thereafter). Participant is prohibited from competing with the
Company while receiving benefits.
|
Other
Employee Retirement Plans
|
|
Executive
would be entitled to an amount equal to the matching contribution he would
have received under the Company’s 401(k) Plan for the two-year period
following termination. Mr. Parnell would be entitled to
continue to participate for 12 months.
|
Health,
Life and Other Insurance Coverages
|
|
Executive
will be entitled to continue coverages for two years with the Company
paying the associated premium. Thereafter, upon attaining age
50 with 15 years of service, or age 55 with 10 years of service, a U.S.
based executives (like all other U.S. based employees) would be eligible
to participate in the Company’s Retiree Medical Plan provided that the
executive pays the associated premium (which is designed to cover the full
cost of the plan).
|
Restrictive
Covenants
|
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following
termination. Mr. Parnell would be prohibited from competing
with the Company for a six month period following termination of
employment or from soliciting its customers or employees for a 12 month
period following termination of employment.
|
|
(1)
|
Mr.
Parnell is not party to a change in control agreement, and thus does not
receive any materially different benefits and/or payments upon a “Change
in Control” as compared to the Termination Without
“Cause” scenario described
above.
|
The
following tables summarize the benefits payable to each of Named Executive
Officers under his employment and (as applicable) change in control agreement in
effect at December 26, 2008 (the last business day of the Company’s 2008 fiscal
year). The tables do not include amounts payable under employee
benefit plans in which Company associates are eligible to participate on a
non-discriminatory basis. The amounts shown in the tables below
assume that a Named Executive Officer’s employment terminated as of December 26,
2008, and that the fair market value of the Company’s common stock was $5.07 per
share.
Daniel
T. Hendrix
|
|
Retirement
or Resignation
|
|
|
Death/
Disability
|
|
|
Termination
with Just Cause
|
|
|
Termination
without Just Cause
|
|
|
Termination
Following Change in Control(1)
|
|
|
|
__________
|
|
|
_______
|
|
|
_________
|
|
|
________
|
|
|
__________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation:
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Base
salary
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,560,000 |
|
|
|
1,560,000 |
|
Bonus
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
2,283,863 |
|
|
|
3,530,854 |
|
Stock
options
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
-- |
|
Restricted
stock(2)
|
|
|
--
|
|
|
|
586,214
|
|
|
|
--
|
|
|
|
501,545 |
|
|
|
1,398,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
continuation(3)
|
|
|
--
|
|
|
|
751,825
/1,028,785 |
|
|
--
|
|
|
|
-- |
(6) |
|
|
-- |
(6) |
Retirement
plans(4)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
13,800 |
|
|
|
13,800 |
|
Health, life and other insurance(5)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
36,946 |
|
|
|
36,946 |
|
Excise
tax gross-up
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
4,994,021 |
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick
C. Lynch
|
|
Retirement
or Resignation
|
|
|
Death/
Disability
|
|
|
Termination
with Just Cause
|
|
|
Termination
without Just Cause
|
|
|
Termination
Following Change in Control(1)
|
|
|
|
__________
|
|
|
_______
|
|
|
_________
|
|
|
________
|
|
|
___________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation:
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Base
salary
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
689,000 |
|
|
|
689,000 |
|
Bonus
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
814,984 |
|
|
|
1,347,407 |
|
Stock
options
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
-- |
|
Restricted
stock(2)
|
|
|
--
|
|
|
|
169,728
|
|
|
|
--
|
|
|
|
129,168 |
|
|
|
540,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
continuation
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
-- |
|
Retirement
plans(4)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
13,800 |
|
|
|
13,800 |
|
Health, life and other insurance(5)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
30,974 |
|
|
|
30,974 |
|
Excise
tax gross-up
|
|
|
-- |
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
852,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
R. Wells
|
|
Retirement
or Resignation
|
|
|
Death/Disability
|
|
|
Termination
with Just Cause
|
|
|
Termination
without Just Cause
|
|
|
Termination
Following Change in Control(1)
|
|
|
|
__________
|
|
|
___________
|
|
|
____________
|
|
|
___________
|
|
|
___________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation:
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Base
salary
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,050,000 |
|
|
|
1,050,000 |
|
Bonus
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,378,222 |
|
|
|
2,221,692 |
|
Stock
options
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
-- |
|
Restricted
stock(2)
|
|
|
--
|
|
|
|
345,551
|
|
|
|
--
|
|
|
|
288,513 |
|
|
|
951,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
continuation(3)
|
|
|
--
|
|
|
|
446,806/
705,084
|
|
|
--
|
|
|
|
-- |
(6) |
|
|
-- |
(6) |
Retirement
plans(4)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
13,800 |
|
|
|
13,800 |
|
Health, life and other insurance(5)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
36,732 |
|
|
|
36,372 |
|
Excise
tax gross-up
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
2,985,669 |
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lindsey
K. Parnell
|
|
Retirement
or Resignation
|
|
|
Death
|
|
|
Disability
|
|
|
Termination
with Just
Cause
|
|
|
Termination
without Just Cause or Following Change in Control(8)
|
|
|
|
__________
|
|
|
___________
|
|
|
__________
|
|
|
_________
|
|
|
_________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation:
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Base
salary
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
282,596 |
|
Bonus
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
Stock
options
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
Restricted
stock(2)
|
|
|
--
|
|
|
|
138,629
|
|
|
|
138,629
|
|
|
|
--
|
|
|
|
95,534 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
continuation
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
Retirement
plans(4)
|
|
|
17,446
|
|
|
|
518,616/36,735
|
|
|
34,574
|
|
|
|
17,446
|
|
|
|
34,574 |
|
Health, life and other insurance(5)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
10,904 |
|
Excise
tax gross-up
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond
S. Willoch
|
|
Retirement
or
Resignation
|
|
|
Death/Disability
|
|
|
Termination
with Just Cause
|
|
|
Termination
without Just Cause
|
|
|
Termination
Following Change in Control(1)
|
|
|
|
__________
|
|
|
___________
|
|
|
____________
|
|
|
___________
|
|
|
___________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation:
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Base
salary
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
744,500 |
|
|
|
744,500 |
|
Bonus
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
921,611 |
|
|
|
1,519,888 |
|
Stock
options
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
-- |
|
Restricted
stock(2)
|
|
|
--
|
|
|
|
250,818
|
|
|
|
--
|
|
|
|
210,258 |
|
|
|
633,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
continuation(3)
|
|
|
--
|
|
|
|
321,943
/ 445,553
|
|
|
--
|
|
|
|
-- |
(6) |
|
|
-- |
(6) |
Retirement
plans(4)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
13,800 |
|
|
|
13,800 |
|
Health, life and other insurance(5)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
32,048 |
|
|
|
32,048 |
|
Excise
tax gross-up
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
-- |
|
|
|
2,223,264 |
(7) |
|
(1)
|
Unlike
a number of publicly-traded companies, the Company does not utilize a
“single trigger” concept for severance payments in its Employment and
Change in Control Agreements. The “Change in Control” (as
defined in the applicable agreements) does not, by itself, provide the
Named Executive Officer with any right to resign and receive a severance
benefit. Instead, for severance benefits to be payable, there
must be a “second trigger” of either (i) an “Involuntary Separation from
Service” or (ii) a “Separation from Service for Good Reason” (essentially,
resignation in the face of negative changes in executive’s employment
relationship with the Company) that occurs within 24 months after the date
of a Change in Control. The amounts included in this column
thus assume that both a “Change in Control” and a subsequent termination
(as described immediately above) occurred as of December 26,
2008. If a related termination did not in fact occur, no
severance payments would be payable. The amounts in this column
for Base Salary and Bonus would be paid in a lump sum within 30
days.
|
|
(2)
|
These
amounts assume each Named Executive Officer sold all newly vested shares
of restricted stock immediately upon termination of
employment.
|
|
(3)
|
The
amounts included in the “Death/Disability” column represent the annual payments to
which Messrs. Hendrix, Wells and Willoch would be entitled under the
Salary Continuation Plan following their death or disability as of
December 26, 2008. The annual benefit amount following a
participant’s death would be paid for 10 years, after which time it would
permanently cease. In the event of a participant’s disability,
the annual benefit amount would continue for as long as the participant
continued to suffer the qualifying disability, up to age 65, at which
point a reduced annual benefit would be payable ($902,190, $536,167 and
$386,320 for Messrs. Hendrix, Wells and Willoch, respectively, assuming no
election of the extended spousal life benefit described
above).
|
|
(4)
|
The
amounts noted for Messrs. Hendrix, Lynch, Wells and Willoch represent
contributions required to be made by the Company on behalf of each
executive following termination, and assume each executive maintained the
maximum level of contribution to the 401(k) Plan. The amounts
contained in Mr. Parnell’s table above reflect the annual payments to
which he would be entitled under the terms of the Europe Pension Plan,
except in the case of death where his spouse would receive a lump sum
payment of $518,616 plus annual payments of $36,735 for the remainder of
her life. The amounts shown for Mr. Parnell’s retirement,
resignation and termination with cause assume that Mr. Parnell elects to
begin receiving benefits immediately upon termination in those respective
events.
|
|
(5)
|
These
amounts represent premiums paid by the Company on behalf of each Named
Executive Officer following termination, and assume each Named Executive
Officer chose to maintain his current coverages under the various medical
and/or insurance plans in which he was a
participant.
|
|
(6)
|
If
a Salary Continuation Plan participant was terminated on December 26, 2008
without cause or following a “Change in Control”, he would not be entitled
to any
accelerated vesting and/or immediate payment of Plan
benefits. Instead, the participant would remain eligible for
participation in the plan as if he remained employed, and thus would
receive full benefits at age 65 after completing at least 15 years of
service, or a reduced benefit beginning as early as age 55. The
benefits are payable for the remainder of his life, or, if elected, a
reduced benefit is payable for the remainder of his and any surviving
spouse’s life. However, the excise tax calculations performed
pursuant to Sections 4999 and 280G of the Internal Revenue Code require,
for purposes of the presentation for a termination following a Change in
Control and the resulting excise tax “gross-up” set forth herein for each
executive, that the full lifetime benefit amount
ultimately payable to each Plan participant (reduced to a net present
value) be included. The aggregate actuarial lifetime benefit
amounts payable, reduced to a present value and assuming Plan benefits are
paid beginning at age 62, are $6,982,222, $3,520,050 and $2,733,803 for
Messrs. Hendrix, Wells and Willoch, respectively.
|
|
|
|
|
|
Each
Plan participant would, however, in the case of a termination following a
Change in Control, receive the benefit of a cost of living adjustment
calculated with reference to a specified consumer price index on each
participant’s annual Plan benefit amount (such adjustment accruing from
the date of termination until such date that the participant actually
begins to receive benefits, and not thereafter). The aggregate
actuarial lifetime value of the
cost of living adjustment, reduced to a present value and assuming Plan
benefits are paid beginning at age 55, are $157,401, $594,795 and $288,357
for Messrs. Hendrix, Wells and Willoch,
respectively.
|
|
(7)
|
As
discussed in Footnote 6, these amounts are calculated assuming (as
applicable) the inclusion of the full lifetime benefit amount
ultimately payable to each Salary Continuation Plan participant (reduced
to a net present value) in connection with a termination following a
Change in Control. To the extent that the cost of living
adjustment amounts referenced in Footnote 6, rather than the full lifetime
benefit amounts, were instead included in the 280G excise
tax calculations, no excise tax “gross-up” benefits would be payable
to Messrs. Hendrix, Wells or Willoch in connection with a termination
following a Change in Control. The excise tax “gross-up”
amounts presented further assume that none of the payments in the event of
a termination following a Change in Control would be categorized as
“reasonable compensation” (such as, for example, payments associated with
non-compete and other restrictive covenants) for purposes of the Section
280G excise tax calculation. The Company believes that a
substantial amount of the payments could be deemed “reasonable
compensation” for purposes of Section 280G, which could substantially
reduce the excise tax “gross-up” payable
hereunder.
|
|
(8)
|
Mr.
Parnell is not party to a Change in Control Agreement, and thus does not
receive any materially different benefits and/or payments upon a
termination in connection with a “Change in Control” as compared to those
in a termination without cause scenario.
|
APPROVAL
OF THE EXECUTIVE BONUS PLAN
(ITEM
2)
On
February 25, 2009, the Board of Directors unanimously approved and adopted,
subject to shareholders’ approval, an amended and restated Executive Bonus Plan
(the “Plan”). The purposes of the Plan are to support the Company’s
ongoing efforts to attract, retain and develop exceptional executive talent and
to enable the Company to provide incentives directly linked to the Company’s
objectives. The amended and restated Plan is substantially similar to
the existing Executive Bonus Plan which was approved by the shareholders in
2004. (The new Plan will replace the existing Executive Bonus
Plan.) The Company’s shareholders are being asked to approve the Plan
solely for the purpose of ensuring that bonuses paid to the Company’s chief
executive officer and its four other most highly compensated executive officers
(potential “Section 162(m) Officers”) are fully deductible for tax purposes by
the Company without regard to the limitations of Section 162(m) of the Internal
Revenue Code. The full text of the Plan is set forth in Appendix A to
this Proxy Statement.
The Plan
will be administered by the Compensation Committee of the Board of Directors,
which has full discretionary authority in all matters relating to the discharge
of its responsibilities and the exercise of its authority under the
Plan. All decisions of the Compensation Committee and its actions
with respect to the Plan will be final, binding and conclusive.
The Plan
applies to executive officers of the Company. As of April 8, 2009,
the Company had six executive officers. The Compensation Committee
will determine which of the Company’s executive officers will participate in the
Plan for each performance period. The Compensation Committee
specifically identifies any participants who it determines are Section 162(m)
Officers with respect to each performance period. For fiscal year
2009, Messrs. Hendrix, Lynch, Wells and Willoch have been designated as Section
162(m) Officers.
The
Compensation Committee will establish the commencement date and end date for
each “performance period” during which corresponding performance objectives must
be met. The Compensation Committee will grant awards under the Plan
for each performance period at such time as it deems appropriate; provided,
that, awards to Section 162(m) Officers are made no later than 90 days after the
first day of each performance period. Potential bonuses payable under
the Plan will be tied to the attainment of specified performance objectives, are
not related to past performance, and are stated as a percentage of each
participant’s base salary. Performance objectives may relate to
attainment by the Company or a subsidiary or business unit of specified levels
or increases in any or all of the following: operating income, cash
flow, reduction of off-quality and waste, return on equity, earnings per share,
total earnings, return on capital, return on assets, earnings before interest
and taxes, gross margin, economic value added, sales, the fair market value of
the Company’s common stock, improvement in fixed charge coverage ratio, debt
reduction and/or cash accumulation, or measurable financial criteria associated
with credit facility, bond indenture or other covenants. In addition,
as to participants who are not Section 162(m) Officers, the Committee may
establish other performance objectives, including goals relating to individual
performance and non-financial objectives.
The
Compensation Committee will determine the extent to which the performance
objectives for the corresponding performance period have been attained and
determine the actual bonus amount payable to each participant in accordance with
the awards established for the performance period. The Compensation
Committee may not increase the amount of a Section 162(m) Officer’s bonus for
any reason. Subject to the foregoing, the Compensation Committee will
have the authority, in its sole discretion, to adjust the bonus payable to any
participant based on individual or Company performance factors during the
performance period that the Compensation Committee deems
relevant. The maximum potential bonus amount payable under the Plan
to any participant with respect to any fiscal year will be
$1,850,000.
The Board
of Directors has approved the Plan, and has recommended that it be submitted to
the shareholders at the annual meeting for their approval. The Board
of Directors may terminate the Plan at any time and may, from time to time,
amend the terms of the Plan; provided, however, that no such amendment shall
adversely affect any right of a participant with respect to any award previously
made, and provided further that no amendment that requires shareholder approval
for the Plan to continue to comply with Section 162(m) shall be effective absent
shareholder approval. To the extent required under Section 162(m) of
the Internal Revenue Code, the Plan will again be submitted to shareholders for
approval after five years. The Board of Directors believes that the
approval of the Plan is in the Company’s and shareholders’ best
interests.
Because
benefits under the Plan will depend on the discretion of the Compensation
Committee, it is not possible to determine the total benefits that will be
received if the Plan is approved by shareholders. For reference,
bonus compensation for fiscal years 2006-2008 received by or allocated to the
Company’s Chief Executive Officer and the four other most highly compensated
executive officers of the Company under the existing 2004 plan is included in
the “Non-Equity Incentive Plan Compensation” column in the “Summary Compensation
Table” in this Proxy Statement.
Vote
Required and Recommendation of Board
Under the
Company’s Bylaws, adoption of the Plan is approved if the affirmative votes cast
by the Company’s outstanding shares entitled to vote and represented (in person
or by proxy) at the meeting exceed the negative votes. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL, AND THE
PROXY SUBMITTED BY TELEPHONE OR INTERNET OR PROXY CARD WILL BE VOTED IN THAT
MANNER UNLESS THE SHAREHOLDER SUBMITTING THE PROXY SPECIFICALLY VOTES TO THE
CONTRARY (OR ABSTANS).
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM
3)
Information
Concerning the Company’s Accountants
BDO
Seidman, LLP (“BDO Seidman”) acted as the Company’s independent auditor during
the past fiscal year. The Audit Committee has again appointed BDO
Seidman to act as the independent auditor of the Company for fiscal year
2009. The Board of Directors will present to the annual meeting a
proposal that such appointment be ratified. Should the shareholders
fail to ratify the appointment, the Audit Committee will reconsider its
selection, but may continue the engagement. Even if the appointment
is ratified, the Audit Committee, in its discretion, may change the appointment
at any time. BDO Seidman has no financial interest, direct or
indirect, in the Company or any subsidiary.
A
representative of BDO Seidman is expected to be present at the annual meeting to
make a statement if he or she desires to do so and to respond to appropriate
questions.
Audit
and Non-Audit Fees
The
following table shows the fees for professional audit and other services
provided by BDO Seidman to the Company for fiscal years 2008 and
2007.
|
|
|
2008
|
|
|
2007
|
|
|
Audit
Fees(1)
|
|
$ |
1,798,000 |
|
|
$ |
1,764,000 |
|
|
Audit-Related
Fees(2)
|
|
|
22,000 |
|
|
|
18,000 |
|
|
Tax
Fees(3)
|
|
|
232,000 |
|
|
|
222,000 |
|
|
All
Other Fees(4)
|
|
|
-- |
|
|
|
-- |
|
|
Total
|
|
$ |
2,052,000 |
|
|
$ |
2,004,000 |
|
_________________
|
(1)
|
“Audit
Fees” consist of fees billed or accrued for professional services rendered
for the audit of the Company’s annual financial statements, audit of the
Company’s internal control over financial reporting, review of the interim
financial statements included in quarterly reports, and services that are
normally provided by BDO Seidman in connection with statutory and
regulatory filings.
|
|
(2)
|
“Audit-Related
Fees” consist of fees billed or accrued primarily for employee benefit
plan audits and other attestation
services.
|
|
(3)
|
“Tax
Fees” consist of fees billed or accrued for professional services rendered
for tax compliance, tax advice and tax planning, both domestic and
international.
|
|
(4)
|
“All
Other Fees” consist of fees billed or accrued for those services not
captured in the audit, audit-related and tax categories. The
Company generally does not request such services from the independent
auditors.
|
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent
Auditors
|
Consistent
with the Securities and Exchange Commission policies regarding auditor
independence, the Audit Committee has responsibility for appointing, setting
compensation and overseeing the work of the Company’s independent
auditors. In recognition of this responsibility, the Audit Committee
has established a policy to pre-approve all audit and non-audit services
provided by the independent auditors.
These
services may include audit services, audit-related services, tax services and
other services. Pre-approval is generally provided for and detailed
as to the particular services or category of services and is generally subject
to a specific budget. None of the services rendered by the
independent auditors under the categories “Audit-Related Fees”, “Tax Fees” and
“All Other Fees” described above were approved by the Audit Committee after
services were rendered pursuant to the de minimis exception established by the
Commission.
Vote
Required and Recommendation of the Board
Under the
Company’s Bylaws, the proposal to ratify the appointment of BDO Seidman to act
as the Company’s independent auditors for fiscal year 2009 is approved if the
affirmative votes cast by the Company’s outstanding shares of Common Stock
entitled to vote and represented (in person or by proxy) at the meeting exceed
the negative votes. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL, AND THE
PROXY SUBMITTED BY TELEPHONE OR INTERNET OR PROXY CARD WILL BE VOTED IN THIS
MANNER UNLESS THE SHAREHOLDER SUBMITTING THE PROXY SPECIFICALLY VOTES TO THE
CONTRARY (OR ABSTAINS).
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers, and persons who own more than 10% of a registered class
of the Company’s equity securities, to file with the Securities and Exchange
Commission and the Nasdaq Stock Market reports of ownership and changes in
ownership of Common Stock and other equity securities of the Company. Directors,
executive officers and greater than 10% shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based
solely upon a review of the copies of such reports furnished to the Company or
written representations that no other reports were required, the Company
believes that during fiscal 2008 all filing requirements applicable to its
directors, executive officers and greater than 10% beneficial owners were met
except that (1) Ray C. Anderson, Chairman of the Company, filed a Form 4 one
business day late with respect to the exercise of 13,000 stock options; (2)
Thomas R. Oliver, a Director of the Company, filed a late Form 4 with respect to
the amendment of, and exercise of, 40,000 stock options; (3) Dianne
Dillon-Ridgley, a Director of the Company, filed a late Form 4 with respect to
the purchase of 103 shares by her son who resides in her household; (4) Robert
A. Coombs, a Senior Vice President of the Company, filed a late Form 5 with
respect to entering into a zero-cost collar arrangement for 15,000 shares on
November 10, 2007; (5) James B. Miller, Jr., a Director of the Company, filed a
late Form 5 with respect to a gift of 2,475 shares to his grandson who resided
in his household; and (6) Daniel T. Hendrix, the President and Chief Executive
Officer and a Director of the Company, filed a late Form 5 with respect to the
conversion of 47,708 shares from Class A Common Stock to Class B Common
Stock.
AUDIT
COMMITTEE REPORT
The Audit
Committee operates pursuant to an Audit Committee Charter that was adopted by
the Board of Directors. (A copy of the Audit Committee Charter may be
viewed on the Company’s website, www.interfaceglobal.com/Investor-Relations/Corporate-Governance/Audit-Committee-Charter.aspx.) The
Company’s management is responsible for its internal accounting controls and the
financial reporting process. The Company’s independent accountants, BDO Seidman,
are responsible for performing an audit of the Company’s consolidated financial
statements in accordance with auditing standards generally accepted in the
United States. The independent accountants also are responsible for
expressing opinions on the conformity of the Company’s audited financial
statements with generally accepted accounting principles, on management’s
assessment of the Company’s internal control over financial reporting, and on
the effectiveness of the Company’s internal control over financial reporting.
The Audit Committee’s responsibility is to monitor and oversee these
processes.
In
keeping with that responsibility, the Audit Committee has reviewed and discussed
the Company’s audited consolidated financial statements with management and BDO
Seidman. In addition, the Audit Committee has discussed with BDO Seidman the
matters required to be discussed by Statement on Auditing Standards No. 61,
“Communications with Audit Committee,” as currently in effect. In addition, the
Audit Committee has received the written disclosures from BDO Seidman required
by Public Company Accounting Oversight Board Rule 3526, “Communication with
Audit Committees Concerning Independence,” and has discussed with the
independent accountants their independence. The Audit Committee has also
considered whether the provision of any services discussed above in Item 3 under
the caption “Ratification of Appointment of Independent Auditors – Audit and
Non-Audit Fees” by BDO Seidman is compatible with maintaining BDO Seidman’s
independence.
The Board
of Directors, in its business judgment, has determined that all three members of
the Audit Committee are “independent,” as required by applicable listing
standards of the Nasdaq Stock Market as currently in effect. Although the
members of the Audit Committee are not professionally engaged in the practice of
auditing or accounting and are not experts in the fields of auditing or
accounting (including in respect of auditor independence), the Board of
Directors determined that each member does qualify as an “audit committee
financial expert” as defined by Item 407(d)(5) of Regulation
S-K. Members of the Audit Committee rely, without independent
verification, on the information provided to them and on the representations
made by management and BDO Seidman. Accordingly, the Audit Committee’s oversight
does not provide an independent basis to determine that management has followed
appropriate accounting and financial reporting principles or maintained
appropriate internal controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. Furthermore, the Audit
Committee’s considerations and discussions referred to above do not assure that
the audit of the Company’s financial statements has been carried out in
accordance with generally accepted auditing standards, that the financial
statements are presented in accordance with generally accepted accounting
principles or that the Company’s auditors are “independent.”
Based on
the reports and discussions described in this report, and subject to the
limitations on the role and responsibilities of the Audit Committee referred to
above and in the Audit Committee Charter, the Audit Committee recommended to the
Board of Directors that the audited consolidated financial statements of the
Company be included in the Company’s Annual Report on Form 10-K for the year
ended December 28, 2008 for filing with the Securities and Exchange
Commission.
|
THE AUDIT
COMMITTEE |
|
|
|
Carl I. Gable
(Chair) |
|
Edward C.
Callaway |
|
James B.
Miller, Jr. |
SHAREHOLDER
PROPOSALS
Proposals
of shareholders intended to be presented at the Company’s 2010 annual meeting
must be received by the Company no later than December 9, 2009, in order to be
eligible for inclusion in the Company’s Proxy Statement and form of Proxy for
that meeting. In addition, in accordance with Article II, Section 9,
of the Bylaws of the Company, proposals of shareholders intended to be presented
at the Company’s 2010 annual meeting must be presented to the Board of Directors
by no later than 90 days prior to that annual meeting, with such deadline for
presentation of proposals estimated to be February 19, 2010.
COMMUNICATING
WITH THE BOARD
Shareholders
wishing to communicate with the Board of Directors may send communications via
U.S. mail to the following address:
Chairman
of the Board
Interface,
Inc.
2859
Paces Ferry Road
Suite
2000
Atlanta,
GA 30339
From time
to time, the Board may change the process by which shareholders may communicate
with the Board or its members. The Company’s website, www.interfaceglobal.com,
will reflect any changes to the process.
Attendance
of Board members at annual meetings is left to the discretion of each individual
Board member. Three Board members attended the 2008 annual meeting
(either in person or by telephone).
“HOUSEHOLDING”
OF PROXY MATERIALS
The
Securities and Exchange Commission has adopted rules that permit companies and
intermediaries such as brokers to satisfy delivery requirements for proxy
statements with respect to two or more shareholders sharing the same address by
delivering a single proxy statement addressed to those
shareholders. This process, which is commonly referred to as
“householding,” potentially provides extra convenience for shareholders and cost
savings for companies. The Company and some brokers household proxy
materials, delivering a single proxy statement to multiple shareholders sharing
an address unless contrary instructions have been received from the affected
shareholders. Once you have received notice from your broker or us that they or
we will be householding materials to your address, householding will continue
until you are notified otherwise or until you revoke your
consent. If, at any time, you no longer wish to participate in
householding and would prefer to receive a separate proxy statement, please
notify your broker if your shares are held in a brokerage account or us if you
hold shares as the registered holder. You can notify us by sending a
written request to Interface, Inc., Attn: Secretary, 2859 Paces Ferry
Road, Suite 2000, Atlanta, Georgia 30339.
OTHER
MATTERS THAT MAY COME BEFORE THE MEETING
The
Company knows of no matters other than those stated above that are to be brought
before the meeting. However, if any other matter should be properly presented
for consideration and voting, it is the intention of the persons named as
proxies in the enclosed Proxy to vote the Proxy in accordance with their
judgment of what is in the best interest of the Company.
|
By
order of the Board of Directors
|
|
|
|
/s/ RAYMOND S.
WILLOCH
|
|
RAYMOND
S. WILLOCH
|
|
Secretary
|
April
8, 2009
|
|
INTERFACE,
INC.
EXECUTIVE BONUS
PLAN
1.
PURPOSE.
The
purpose of the Interface, Inc. Executive Bonus Plan is to provide bonus
compensation opportunities which support the Company’s on-going efforts to
attract, retain and develop exceptional executive talent and which provide
incentives directly linked to the Company’s business objectives. The Plan is
intended to meet the requirements for "qualified performance-based compensation"
under Section 162(m) of the Internal Revenue Code of 1986, as
amended.
2.
DEFINITIONS.
The following capitalized terms, as
used herein, shall have the following meanings:
(a) "Annual Base Salary" shall mean:
(i) with respect to any Participant other than a Section 162(m) Officer, the
base salary paid to such Participant during any Performance Period (up to a
maximum of one year’s base salary paid); and (ii) with respect to any Section
162(m) Officer, the annual rate of base salary of such Section 162(m) Officer in
effect on the first day of any Performance Period.
(b) "Award" shall mean an incentive
compensation award, granted pursuant to the Plan, which is contingent upon the
attainment of Performance Goals with respect to a Performance
Period.
(c) "Board" shall mean the Board of
Directors of Interface.
(d) "Change in Control" shall mean
the occurrence of an event described in Section 5(d) hereof.
(e) "Code" shall mean the Internal
Revenue Code of 1986, as amended.
(f) "Committee" shall mean a
committee of the Board as described in Section 3 hereof.
(g) "Company" shall mean,
collectively, Interface and its direct and indirect subsidiaries.
(h) "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
(i) "Interface" shall mean Interface,
Inc., a Georgia corporation.
(j) "Participant" shall mean an
executive officer of the Company who is, pursuant to Section 4 of the Plan,
selected to participate in the Plan.
(k) "Performance Goal" shall mean the
criteria and objectives, determined by the Committee, which must be met during
the applicable Performance Period as a condition of the Participant's receipt of
payment with respect to an Award. Performance Goals may relate to
attainment by the Company or a subsidiary or business unit of specified levels
or increases in any or all of the following: (i) operating income;
(ii) cash flow, (iii) reduction of off-quality and waste;
(iv) return on equity; (v) earnings per share; (vi) total
earnings; (viii) return on capital; (ix) return on assets;
(x) earnings before interest and taxes; (xi) gross margin;
(xii) economic value added; (xiii) sales; (xiv) the fair market value
of Interface’s common stock; (xv) improvement in fixed charge coverage
ratio; (xvi) debt reduction and/or cash accumulation; or
(xvii) measurable financial criteria associated with credit facility, bond
indenture or other covenants. In addition, with respect to
Participants who are not Section 162(m) Officers, the Committee may establish
other Performance Goals, including goals relating to individual performances and
non-financial objectives.
(l)
"Performance Period" shall mean the Company's fiscal year or such other time
period determined by the Committee during which Performance Goals are to be
met.
(m) "Plan" shall mean the Interface,
Inc. Executive Bonus Plan.
(n) "Section 162(m) Officer" shall
mean an officer of the Company who, in the Committee's determination made at the
time of any Award, is or may become a "covered employee" as defined in Section
162(m) of the Code and the regulations thereunder.
3.
ADMINISTRATION.
(a) GENERAL. The Plan shall be
administered by the Committee. The Committee shall have the authority in its
sole discretion, subject to the express provisions of the Plan, to administer
the Plan and to exercise all the powers and authority either specifically
granted to it under the Plan or necessary or advisable in the administration of
the Plan, including, without limitation: the authority to grant Awards; to
determine the persons to whom, and the time or times at which, Awards shall be
granted; to determine the terms, conditions, restrictions and performance
criteria, including Performance Goals, relating to any Award; to determine the
commencement date and end date for each Performance Period; to determine
whether, to what extent, and under what circumstances an Award may be settled,
canceled, forfeited, or surrendered; to construe and interpret the Plan and any
Award; to prescribe, amend and rescind rules, regulations and procedures
relating to the Plan; to determine the terms and provisions of Awards; and to
make all other determinations deemed necessary or advisable for the
administration of the Plan. All decisions, determinations and interpretations of
the Committee shall be final and binding on all persons, including the Company,
the Participant (or any person claiming any rights under the Plan from or
through any Participant) and any shareholder.
(b) MEMBERS. The Committee shall
consist of two or more members of the Board, each of whom shall be an "outside
director" within the meaning of Section 162(m) of the Code. All determinations
of the Committee shall be made by a majority of its members either present in
person or participating by conference telephone at a meeting or by written
consent. The Committee may delegate to one or more of its members or to one or
more agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under the Plan.
(c) LIABILITY. No member of the Board
or the Committee shall be liable for any action taken or determination made in
good faith with respect to the Plan or any Award granted hereunder.
4.
ELIGIBILITY.
The Committee shall select which
executive officers of the Company are to participate in the Plan for a
Performance Period. In selecting the officers of the Company who are eligible to
participate in the Plan and in establishing the terms of Awards granted to such
Participants, the Committee may accept such recommendations of the senior
management of the Company as it deems appropriate. The Committee
shall specifically identify any Participants who it determines are Section
162(m) Officers with respect to each fiscal year.
5. TERMS
OF AWARDS.
(a) IN GENERAL. The Committee shall
grant awards under the Plan for each Performance Period at such time or times as
it deems appropriate; provided, Awards to Section 162(m) Officers shall be made
not later than 90 days after the first day of each Performance Period. Awards
shall be expressed as a percentage of a Participant's Annual Base Salary. The
Committee shall specify the Performance Goals applicable to each Award, as well
as the percentage of the Award assigned to each Performance Goal. The terms of
an Award may contain a range of target levels so that a Participant who fails to
achieve the maximum target level for a Performance Goal may still earn a portion
of the potential bonus related to such Performance Goal. The terms of an Award
to a Section 162(m) Officer must state an objective formula or standard for
determining the amount of compensation payable to the Participant. The maximum
amount of compensation that may be paid to any Participant with respect to any
fiscal year under any and all Awards is $1,850,000. Unless otherwise
provided by the Committee in connection with the termination of employment of a
Participant due to death or disability prior to the last day of a Performance
Period, or except as set forth in Section 5(d) hereof, payment in respect of
Awards to a Section 162(m) Officer shall be made only if and to the extent the
Performance Goals with respect to such Performance Period are attained and the
Participant is employed by the Company on the last day of the Performance
Period. Awards granted pursuant to the Plan shall be evidenced in the minutes of
the Committee or in such other written form as the Committee shall determine
appropriate.
(b) CERTIFICATION OF PERFORMANCE
CRITERIA. After the end of each Performance Period, the Committee shall
determine the extent to which the Performance Criteria have been achieved for
that Performance Period and shall approve the compensation to be paid to each
Participant. The Committee in its sole discretion (but subject to any
contractual rights of the executive) may reduce, but not increase, the amount of
compensation that otherwise would be payable under the Plan to a Section 162(m)
Officer if the Committee determines such reduction to be appropriate based on
personal, corporate or other factors that the Committee deems appropriate. With
respect to Participants other than Section 162(m) Officers, the Committee may
take into account such factors (including, without limitation, individual job
performance, the effect of unanticipated events on the Company's financial
performance or other subjective criteria) as it deems appropriate in determining
the degree to which the Performance Criteria have been satisfied (or were
reasonable under the circumstances) and in determining the amount of
compensation payable to any such Participant.
(c) TIME AND FORM OF PAYMENT. Unless
otherwise determined by the Committee, all payments in respect of Awards granted
under this Plan shall be made in cash within a reasonable period after the end
of the Performance Period, subject to deferral as provided by the Committee or
under any applicable deferred compensation plan of the Company.
(d) CHANGE IN CONTROL.
Notwithstanding any other provision of the Plan to the contrary, if, while any
Awards remain outstanding under the Plan, a "Change in Control" of Interface
shall occur, the Performance Period(s) outstanding at the time of such Change in
Control shall be deemed to have been completed, the maximum level of performance
set forth under the respective Performance Goals shall be deemed to have been
attained and a pro rata portion (based on the number of full and partial months
that have elapsed with respect to such Performance Period) of each outstanding
Award granted to each Participant for the outstanding Performance Period shall
become immediately payable in cash to each Participant. For purposes
of this Section 5(d), a Change in Control of Interface shall occur upon the
happening of the earliest to occur of the following:
(i) During such period as the holders
of Interface's Class B common stock are entitled to elect a majority of
Interface's Board, the Permitted Holders (as defined below) shall at any time
fail to be the "beneficial owners" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act) of the majority of the issued and outstanding shares of the
Class B common stock;
(ii) At any time during which the
holders of Interface's Class B common stock have ceased to be entitled to elect
a majority of Interface's Board, the acquisition by any "person," entity, or
"group" of "beneficial ownership" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act, and rules promulgated thereunder) of more than 30
percent of the outstanding capital stock entitled to vote for the election of
directors ("Voting Stock") of (A) Interface, or (B) any corporation which
is the surviving or resulting corporation, or the transferee corporation, in a
transaction described in clause (iii)(A) or (iii)(B) immediately
below;
(iii) The effective time of (A) a
merger, consolidation or other business combination of Interface with one or
more corporations as a result of which the holders of the outstanding Voting
Stock of Interface immediately prior to such merger or consolidation hold less
than 51 percent of the Voting Stock of the surviving or resulting corporation,
or (B) a transfer of all or substantially all of the property or assets of the
Company other than to an entity of which Interface owns at least 51 percent of
the Voting Stock, or (C) a plan of complete liquidation of Interface;
and
(iv) The election to the Board,
without the recommendation or approval of Ray C. Anderson if he is then serving
on the Board, or, if he is not then serving, of the incumbent Board, of the
lesser of (A) four directors, or (B) directors constituting a majority of the
number of directors of Interface then in office.
As used herein, "PERMITTED HOLDERS"
shall mean any of (1) Ray C. Anderson, Daniel T. Hendrix, John R. Wells, Raymond
S. Willoch, Robert A. Coombs, Patrick C. Lynch, Carl I. Gable, Lindsey K.
Parnell and J. Smith Lanier, II, provided that, for purposes of this definition,
the reference to each such individual shall be deemed to include the members of
such individual's immediate family, such individual's estate, and any trusts
created by such individual for the benefit of members of such individual's
immediate family.
6.
GENERAL PROVISIONS.
(a) NONTRANSFERABILITY. Awards shall
not be transferable by a Participant except by will or the laws of descent and
distribution.
(b) NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing in the Plan or in any Award or other agreement entered into pursuant
hereto shall confer upon any Participant the right to continue in the employ of
the Company or to be entitled to any remuneration or benefits not set forth in
the Plan or such other agreement or to interfere with or limit in any way the
right of the Company to terminate such Participant's employment.
(c) WITHHOLDING TAXES. The Company
shall have the right to withhold the amount of any taxes that the Company may be
required to withhold before delivery of payment of an Award to the Participant
or other person entitled to such payment, or to make such other arrangements for
the withholding of taxes that the Company deems satisfactory.
(d) AMENDMENT, TERMINATION AND
DURATION OF THE PLAN. The Board or the Committee may at any time and from time
to time alter, amend, suspend, or terminate the Plan in whole or in part;
provided that, no amendment that requires shareholder approval in order for the
Plan to continue to comply with Code Section 162(m) shall be effective unless
the same shall be approved by the requisite vote of the shareholders of the
Company. Notwithstanding the foregoing, no amendment shall affect adversely any
of the rights of any Participant, without such Participant's consent, under any
Award theretofore granted under the Plan. To the extent then required under
Section 162(m) of the Code, the Plan shall again be submitted to the
shareholders of the Company for approval no later than the first shareholder
meeting that occurs in the fifth year following the year in which the
shareholders first approve the Plan.
(e) PARTICIPANT RIGHTS. No
Participant shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment for
Participants.
(f) GOVERNING LAW. The Plan and all
determinations made and actions taken pursuant hereto shall be governed by the
laws of the State of Georgia without giving effect to the conflict of laws
principles thereof.
(g) EFFECTIVE DATE. The Plan shall
take effect upon its adoption by the Board; provided, however, that the Plan
shall be subject to the requisite approval of the shareholders of the Company to
the extent required under Section 162(m) of the Code.
(h) BENEFICIARY. A Participant may
file with the Committee a written designation of a beneficiary on such form as
may be prescribed by the Committee and may, from time to time, amend or revoke
such designation. If no designated beneficiary survives the Participant, the
Participant's estate shall be deemed to be the Participant's
beneficiary.
(i) INTERPRETATION. The Plan is
designed and intended to comply, to the extent applicable, with the requirements
for qualified performance-based compensation under Section 162(m) of the Code,
and all applicable provisions hereof shall be construed in a manner to so
comply. The Plan is also intended to comply, to the extent applicable, with the
requirements of Section 409A of the Code, and all applicable provisions hereof
shall be construed in a manner to so comply.