pre14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
þ Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
Kaiser Aluminum Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its
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Date Filed: |
Kaiser
Aluminum Corporation
27422 Portola Parkway, Suite 350
Foothill Ranch, CA
92610-2831
April
[ ], 2008
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Kaiser Aluminum Corporation to be held at The
Westin, South Coast Plaza, 686 Anton Boulevard, Costa Mesa,
California 92626 on Wednesday, June 4, 2008, at
9:00 a.m., local time.
During the Annual Meeting, stockholders will consider and vote
upon the election of four members to the Board of Directors, the
ratification of the selection of Deloitte & Touche LLP
as our independent registered public accounting firm and the
amendment of our Amended and Restated Certificate of
Incorporation to increase the number of authorized shares of
common stock. The attached Notice of Annual Meeting of
Stockholders and Proxy Statement describe fully the formal
business to be transacted at the Annual Meeting.
Certain directors and officers will be present at the Annual
Meeting and will be available to respond to any questions you
may have. I hope you will be able to attend.
Whether or not you plan to attend the Annual Meeting, we urge
you to review carefully the accompanying material and to vote by
proxy without delay. To do so, please submit your voting
instructions over the Internet or by telephone as indicated on
the enclosed proxy card or by completing, signing and dating the
enclosed proxy card and returning it by mail in the accompanying
envelope. If you attend the Annual Meeting, you may vote in
person even if you have previously submitted your voting
instructions over the Internet, by telephone or by mail.
Sincerely,
Jack A. Hockema
President, Chief Executive Officer and
Chairman of the Board
Kaiser
Aluminum Corporation
27422 Portola Parkway, Suite 350
Foothill Ranch, CA
92610-2831
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON JUNE 4, 2008
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
(the Annual Meeting) of Kaiser Aluminum Corporation
will be held at The Westin, South Coast Plaza, 686 Anton
Boulevard, Costa Mesa, California 92626 on Wednesday,
June 4, 2008, at 9:00 a.m., local time, for the
following purposes:
(1) To elect four members to our board of directors for
three-year terms to expire at our 2011 annual meeting of
stockholders;
(2) To ratify the selection of Deloitte & Touche
LLP as our independent registered public accounting firm for
2008;
(3) To consider the amendment of our Amended and Restated
Certificate of Incorporation to increase the number of
authorized shares of common stock from 45,000,000 to
90,000,000; and
(4) To consider such other business as may properly come
before the Annual Meeting or any adjournments thereof.
Information concerning the matters to be acted upon at the
Annual Meeting is set forth in the accompanying Proxy Statement.
The close of business on April 15, 2008 has been fixed as
the record date for determining the stockholders entitled to
notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
We urge stockholders to vote by proxy by submitting voting
instructions over the Internet or by telephone as indicated on
the enclosed proxy card or by completing, signing and dating the
enclosed proxy card and returning it by mail in the accompanying
envelope, which does not require postage if mailed in the United
States.
By Order of the Board of Directors,
John M. Donnan
Senior Vice President, General Counsel and Secretary
Foothill Ranch, California
April [ ], 2008
Kaiser
Aluminum Corporation
27422 Portola Parkway, Suite 350
Foothill Ranch, CA
92610-2831
PROXY STATEMENT
FOR
ANNUAL MEETING OF
STOCKHOLDERS
To Be Held On June 4,
2008
TABLE OF
CONTENTS
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Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Stockholders to Be Held on
June 4, 2008: The Proxy Statement and our Annual Report to
Stockholders are available at
http://www.[ ].
GENERAL
QUESTIONS AND ANSWERS
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When is the Proxy Statement being sent to stockholders and
what is its purpose? |
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This Proxy Statement is first being sent to our stockholders on
or about May [ ], 2008 at the direction of our
board of directors in order to solicit proxies for our use at
the Annual Meeting. |
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When is the Annual Meeting and where will it be held? |
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The Annual Meeting will be held on Wednesday, June 4, 2008,
at 9:00 a.m., local time, at The Westin, South Coast Plaza,
686 Anton Boulevard, Costa Mesa, California 92626. |
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Who may attend the Annual Meeting? |
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All of our stockholders may attend the Annual Meeting. |
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Who is entitled to vote? |
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Stockholders as of the close of business on April 15, 2008
are entitled to vote at the Annual Meeting. Each share of our
common stock is entitled to one vote. |
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On what am I voting? |
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You will be voting on: |
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The election of four members to our board of
directors to serve until our 2011 annual meeting of stockholders;
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The ratification of the selection of
Deloitte & Touche LLP as our independent registered
public accounting firm for 2008;
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The amendment of the Amended and Restated
Certificate of Incorporation to increase the number of
authorized shares of common stock from 45,000,000 to 90,000,000;
and
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Such other business as may properly come before the
Annual Meeting or any adjournments thereof.
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How does the board of directors recommend that I vote? |
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The board of directors recommends that you vote your shares: |
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FOR the election of each of the persons
identified in Proposal For Election of
Directors as nominees for election as directors;
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FOR the ratification of the selection of
Deloitte & Touche LLP as our independent registered
public accounting firm for 2008; and
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FOR the amendment of the Amended and
Restated Certificate of Incorporation to increase the number of
authorized shares of common stock from 45,000,000 to 90,000,000.
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How can I vote? |
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You can vote in person at the Annual Meeting or you can vote
prior to the Annual Meeting by proxy. Whether or not you plan to
attend the Annual Meeting, we urge you to vote by proxy without
delay. |
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How do I vote by proxy? |
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If you choose to vote your shares by proxy, you have the
following options: |
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Over the Internet: You can vote
over the Internet at the website shown on your proxy card.
Internet voting will be available 24 hours a day, seven
days a week, until 11:59 p.m., Eastern Time, on Tuesday,
June 3, 2008.
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By telephone: You can vote by
telephone by calling the toll-free number shown on your proxy
card. Telephone voting will be available 24 hours a day,
seven days a week, until 11:59 p.m., Eastern Time, on
Tuesday, June 3, 2008.
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By mail: You can vote by mail by
completing, signing and dating your proxy card and returning it
in the enclosed prepaid envelope.
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I want to attend the Annual Meeting and vote in person. How
do I obtain directions to the Annual Meeting? |
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You may obtain directions to the Annual Meeting at the Internet
website of The Westin, South Coast Plaza, at
http://www.starwoodhotels.com/westin/property/area/directions.html?propertyID=1002 or by calling
The Westin, South Coast Plaza, at
(714) 540-2500. |
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What constitutes a quorum? |
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As of April 15, 2008, the record date,
[ ] shares of our common stock were
issued and outstanding. A majority of these shares present or
represented by proxy will constitute a quorum for the
transaction of business at the Annual Meeting. If you properly
vote by proxy by submitting your voting instructions over the
Internet, by telephone or by mail, then your shares will be
counted as part of the quorum. Abstentions or votes that are
withheld on any matter will be counted towards a quorum but will
be excluded from the vote relating to the particular matter
under consideration. Broker non-votes will be counted towards a
quorum but will be excluded from the vote with respect to the
matters for which they are applicable. A broker non-vote occurs
when a broker holding shares for a beneficial owner does not
vote on a particular proposal because the broker does not have
discretionary voting power with respect to that proposal and has
not received instructions with respect to that proposal from the
beneficial owner. |
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What are the voting requirements for the proposals? |
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There are different voting requirements for each proposal. |
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The required vote for election of each director is a
plurality of the votes of the holders of the shares of our
common stock present in person or represented by proxy at the
Annual Meeting. Accordingly, the four nominees receiving the
highest number of votes will be elected. If you withhold
authority to vote for any particular director nominee, your
shares will not be counted in the vote for that nominee and will
have no effect on the outcome of the vote.
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The approval of the holders of a majority of the
total number of outstanding shares of our common stock present
in person or represented by proxy at the Annual Meeting and
actually voted on the proposal is necessary to ratify the
selection of Deloitte & Touche LLP as our independent
registered public accounting firm for 2008. If you abstain from
voting on the proposal to ratify the selection of
Deloitte & Touche LLP, your shares will not be counted
in the vote for the proposal and will have no effect on the
outcome of the vote.
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The affirmative vote of the holders of a majority of
the total number of outstanding shares of our common stock
entitled to vote at the Annual Meeting is required to amend our
Amended and Restated Certificate of Incorporation. If you
abstain from voting on either on the proposed amendment of our
Amended and Restated Certificate of Incorporation, your shares
will effectively be a vote against that proposal.
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If my shares are held in street name by my
broker, will my broker vote my shares for me? |
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To be sure your shares are voted, you should instruct your
broker to vote your shares using the instructions provided by
your broker. |
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What will happen if the selection of Deloitte &
Touche LLP as our independent registered public accounting firm
for 2008 is not ratified by stockholders? |
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Pursuant to the audit committee charter, the audit committee of
our board of directors has sole authority to appoint our
independent registered public accounting firm, and the audit
committee will not be bound by the ratification of, or failure
to ratify, the selection of Deloitte & Touche LLP. The
audit committee will, however, consider any failure to ratify
the selection of Deloitte & Touche LLP in connection
with the appointment of our independent registered public
accounting firm the following year. |
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What will happen if the proposed amendment of the Amended and
Restated Certificate of Incorporation is not approved by
stockholders? |
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If the amendment of our Amended and Restated Certificate of
Incorporation to increase the number of authorized shares of
common stock is not approved by stockholders at the Annual
Meeting, the amendment will |
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not become effective, and the number of shares of common stock
authorized under our Amended and Restated Certificate of
Incorporation will remain 45,000,000. |
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Can I change my vote after I mail my proxy? |
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Yes. If you vote by proxy, you can revoke that proxy at any time
before voting takes place at the Annual Meeting. You may revoke
your proxy by: |
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voting again over the Internet or by telephone no
later than 11:59 p.m., Pacific Standard Time, on Tuesday,
June 3, 2008;
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submitting a properly signed proxy card with a later
date;
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delivering, no later than 5:00 p.m., local
time, on Tuesday, June 3, 2008, written notice of
revocation to our Secretary,
c/o Mellon
Investor Services Proxy Processing, P.O. Box 1680,
Manchester, CT
06045-9986;
or
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attending the Annual Meeting and voting in person.
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Your attendance alone will not revoke your proxy. To change your
vote, you must also vote in person at the Annual Meeting. If you
instruct a broker to vote your shares, you must follow your
brokers directions for changing those instructions. |
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What does it mean if I receive more than one proxy card? |
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If you receive more than one proxy card, it is because your
shares are held in more than one account. You must vote each
proxy card to ensure that all of your shares are voted at the
Annual Meeting. |
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Who will count the votes? |
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Representatives of Mellon Investor Services, our transfer agent,
will tabulate the votes and act as inspectors of election. |
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How much will this proxy solicitation cost? |
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We have hired MacKenzie Partners, Inc. to assist us in the
distribution of proxy materials and solicitation of votes at a
cost not to exceed $15,000, plus out-of-pocket expenses. We will
reimburse brokerage firms and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to the owners of our
common stock. Our officers and regular employees may also
solicit proxies, but they will not be specifically compensated
for these services. In addition to the use of the mail, proxies
may be solicited personally or by telephone by employees of
Kaiser or MacKenzie Partners. |
4
PROPOSALS REQUIRING
YOUR VOTE
Proposal
for Election of Directors
General
Our board of directors currently has ten members, consisting of
our President and Chief Executive Officer and nine independent
directors. Our current directors are:
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Carolyn Bartholomew
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Alfred E. Osborne, Jr., Ph.D.
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Carl B. Frankel
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Georganne C. Proctor
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Jack A. Hockema
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Jack Quinn
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Teresa A. Hopp
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Thomas M. Van Leeuwen
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William F. Murdy
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Brett E. Wilcox
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Mr. Hockema, our President and Chief Executive Officer,
serves as the Chairman of the Board, and Dr. Osborne serves
as the Lead Independent Director.
Our certificate of incorporation and bylaws provide for a
classified board of directors consisting of three classes. The
term of the Class II directors will expire at the 2008
annual meeting of stockholders; the term of the Class III
directors will expire at the 2009 annual meeting of
stockholders; and the term of the Class I directors will
expire at the 2010 annual meeting of stockholders.
The nominating and corporate governance committee of our board
of directors has recommended, and our board of directors has
approved, the nomination of the four nominees listed below. The
nominees have indicated their willingness to serve as members of
the board of directors if elected; however, in case any nominee
becomes unavailable for election to the board of directors for
any reason not presently known or contemplated, the proxy
holders have discretionary authority to vote proxies for a
substitute nominee. Proxies cannot be voted for more than four
nominees.
The board of directors recommends a vote FOR each
of the persons nominated by the board of directors.
Nominees
for Election as Class II Directors
Set forth below is information as to the nominees for election
as Class II Directors at the Annual Meeting, including
their ages, present principal occupations, other business
experiences, present directorships in other public companies and
membership on committees of our board of directors.
Carolyn Bartholomew, 50, has served as a director of
Kaiser since June 2007. Ms. Bartholomew has served as Vice
Chairman of
U.S.-China
Economic and Security Review Commission since January 2008. She
was the Commissioner of
U.S.-China
Economic and Security Review Commission from April 2003 until
she was elected Vice Chairman in January 2006 and served as its
Chairman from January 2007 to December 2007. She has been the
Executive Director of the Basic Education Coalition, a
non-profit organization that works to raise public and private
support for basic education for children in the United States
and abroad, since July 2004. From August 1987 to April 2003,
Ms. Bartholomew served as Legislative Director, District
Director and Chief of Staff to Congresswoman Nancy Pelosi.
Ms. Bartholomew graduated cum laude with a Bachelor of Arts
degree in anthropology from the University of Minnesota. She
also holds a Master of Arts degree in anthropology from Duke
University and a Juris Doctorate from Georgetown University.
Ms. Bartholomew serves on the nominating and corporate
governance committee.
Jack A. Hockema, our President and Chief Executive
Officer, serves as Chairman of the Board and serves on the
executive committee. For information as to Mr. Hockema, see
Executive Officers below.
Georganne C. Proctor, 51, has served as a director of
Kaiser since July 2006. Ms. Proctor is currently the
Executive Vice President and Chief Financial Officer of
TIAA-CREF, a financial services company. Previously,
Ms. Proctor was the Executive Vice President
Finance for Golden West Financial Corp., the second largest
financial thrift in the United States and holding company of
World Savings Bank, from February 2003 to April
5
2005. From July 1997 through September 2002, Ms. Proctor
was Senior Vice President and Chief Financial Officer of Bechtel
Corporation and served as the Vice President and Chief Financial
Officer of Bechtel Enterprises, one of its subsidiaries, from
June 1994 through June 1997. Ms. Proctor was a member of
the board of directors of Bechtel Corporation from April 1999 to
December 2002. She also served in several other financial
positions with the Bechtel Group from
1982-1991.
From 1991 through 1994, Ms. Proctor was Director of Project
and Division Finance of Walt Disney Imagineering and
Director of Finance & Accounting for Buena Vista Home
Video International. Ms. Proctor currently serves on the
board of directors of Redwood Trust, Inc. She holds a
Masters degree in Business Administration from California
State University, Hayward, and a Bachelors degree in
Business Administration from the University of South Dakota.
Ms. Proctor serves on the audit and compensation committees.
Brett E. Wilcox, 54, has served as a director of Kaiser
since July 2006. Mr. Wilcox is currently Chief Executive
Officer of Summit Power Alternative Resources where he manages
the development of wind generation and new energy technologies.
Mr. Wilcox has been an active investor in, on the board of
directors of, or an executive consultant for, a number of metals
and energy companies since 2005. From 1986 to 2005,
Mr. Wilcox served as Chief Executive Officer of Golden
Northwest Aluminum Company and its predecessors. Golden
Northwest Aluminum Company, together with its subsidiaries,
filed a petition for reorganization under the United States
Bankruptcy Code on December 22, 2003. Mr. Wilcox has
also served as Executive Director of Direct Services Industries,
Inc., a trade association of large aluminum and other
energy-intensive companies; an attorney with Preston,
Ellis & Gates in Seattle, Washington; Vice Chairman of
the Oregon Progress Board; Chairman of the Oregon Economic and
Community Development Commission; a member of the Oregon
Governors Comprehensive Review of the Northwest Regional
Power System; a member of the Oregon Governors Task Forces
on structure and efficiency of state government, employee
benefits and compensation, and government performance and
accountability. Mr. Wilcox received a Bachelors
degree from the Woodrow Wilson School of Public and
International Affairs at Princeton University and a Juris
Doctorate from Stanford Law School. Mr. Wilcox serves on
the executive and audit committees.
Continuing
Directors
Set forth below is information as to the continuing directors,
including their ages, present principal occupations, other
business experiences, present directorships in other public
companies and membership on committees of our board of directors.
Class III
Directors
Carl B. Frankel, 73, has served as a director of Kaiser
since July 2006. Mr. Frankel currently serves as a
union-nominated member of LTV Steel Corporations board of
directors and as a member of the board of directors of Us TOO, a
prostate cancer support and advocacy organization. Previously,
Mr. Frankel was General Counsel to the USW from May 1997
until his retirement in September 2000. Prior to May 1997,
Mr. Frankel served as Assistant General Counsel and
Associate General Counsel of the USW for 29 years. From
1987 through 1999, Mr. Frankel served at the staff level of
the Collective Bargaining Forum, a government sponsored
tripartite committee consisting of government, union and
employer representatives designed to improve labor relations in
the United States. Mr. Frankel is also an elected fellow of
the College of Labor and Employment Lawyers and a published
author of several articles. Mr. Frankel has earned the
Sustained Superior Performance Award from the National Labor
Relations Board, or NLRB, and the Outstanding Performance Award
from the NLRB. Mr. Frankel earned a Bachelors degree
and Juris Doctorate from the University of Chicago.
Mr. Frankel serves on the nominating and corporate
governance committee.
Teresa A. Hopp, 48, has served as a director of Kaiser
since July 2006. Prior to Ms. Hopps retirement, she
was the Chief Financial Officer for Western Digital Corporation,
a hard disk drive manufacturer, from January 2000 to October
2001 and its Vice President, Finance from September 1998 to
December 1999. Prior to her employment with Western Digital
Corporation, Ms. Hopp was with Ernst & Young LLP
from 1981 where she served as an audit partner for four years.
During her tenure at Ernst & Young LLP, she managed
audit department resource planning and scheduling and served as
internal education director and information systems audit and
security director. She graduated summa cum laude from the
California State University, Fullerton, with a Bachelors
degree in Business Administration. Ms. Hopp serves on the
executive and audit committees.
6
William F. Murdy, 66, has served as a director of Kaiser
since July 2006. Mr. Murdy has been the Chairman and Chief
Executive Officer of Comfort Systems USA, a commercial heating,
ventilation and air conditioning construction and service
company, since June 2000. Mr. Murdy previously served as
President and Chief Executive Officer of Club Quarters, and
Chairman, President and Chief Executive Officer of Landcare USA,
Inc. Mr. Murdy has also served as President and Chief
Executive Officer of General Investment & Development,
and as President and Managing General Partner with Morgan
Stanley Venture Capital, Inc. He previously served as Senior
Vice President and Chief Operating Officer of Pacific Resources,
Inc. Mr. Murdy currently serves on the board of directors
of Comfort Systems USA and UIL Holdings Corp. He holds a
Bachelor of Science degree in Engineering from the
U.S. Military Academy, West Point, and a Masters
degree in Business Administration from the Harvard Business
School. Mr. Murdy serves on the compensation and nominating
and corporate governance committees.
Class I
Directors
Alfred E. Osborne, Jr., Ph.D., 63, has served
as a director of Kaiser since July 2006. Dr. Osborne has
been the Senior Associate Dean at the UCLA Anderson School of
Management since July 2003 and an Associate Professor of Global
Economics and Management since July 1978. From July 1987 to June
2003, Dr. Osborne served as the Director of the Harold and
Pauline Price Center for Entrepreneurial Studies at the UCLA
Anderson School of Management. Dr. Osborne currently serves
on the board of directors of EMAK Worldwide, Inc., First Pacific
Advisors New Income Fund, Capital Fund and Crescent Fund.
He holds a Doctorate degree in Business Economics, a
Masters degree in Business Administration, a Master of
Arts degree in Economics and a Bachelors degree in
Electrical Engineering from Stanford University.
Dr. Osborne serves on the audit and nominating and
corporate governance committees.
Jack Quinn, 57, has served as a director of Kaiser since
July 2006. Mr. Quinn has recently accepted the position of
president with Erie Community College in Buffalo, New York, and
began his service in April 2008. Mr. Quinn was the
President of Cassidy & Associates, a government
relations firm, from January 2005 to March 2008, which assists
clients to promote policy and appropriations objectives in
Washington, D.C. with a focus on transportation, aviation,
railroad, highway, infrastructure, corporate and industry
clients. From January 1993 to January 2005, Mr. Quinn
served as a United States Congressman for the state of New York.
While in Congress, Mr. Quinn was Chairman of the
Transportation and Infrastructure Subcommittee on Railroads. He
was also a senior member of the Transportation Subcommittees on
Aviation, Highways and Mass Transit. In addition, Mr. Quinn
was Chairman of the Executive Committee in the Congressional
Steel Caucus. Prior to his election to Congress, Mr. Quinn
served as supervisor of the town of Hamburg, New York.
Mr. Quinn currently serves as a trustee of the AFL-CIO
Housing Investment Trust. Mr. Quinn received a
Bachelors degree from Siena College in Loudonville, New
York, and a Masters degree from the State University of
New York, Buffalo. Mr. Quinn received honorary Doctorate of
Law degrees from Medaille College and Siena College.
Mr. Quinn is also a certified school district
superintendent through the New York State Education Department.
Mr. Quinn serves on the compensation and nominating and
corporate governance committees.
Thomas M. Van Leeuwen, 51, has served as a director of
Kaiser since July 2006. Mr. Van Leeuwen served as a
Director Senior Equity Research Analyst for Deutsche
Bank Securities Inc. from March 2001 until his retirement in May
2002. Prior to that, Mr. Van Leeuwen served as a
Director Senior Equity Research Analyst for Credit
Suisse First Boston from May 1993 to November 2000. Prior to
that time, Mr. Van Leeuwen was First Vice President of
Equity Research with Lehman Brothers. Mr. Van Leeuwen held
the position of research analyst with Sanford C.
Bernstein & Co., Inc. and systems analyst with The
Procter & Gamble Company. Mr. Van Leeuwen holds a
Masters degree in Business Administration from the Harvard
Business School and a Bachelor of Science degree in Operations
Research and Industrial Engineering from Cornell University.
Mr. Van Leeuwen serves on the audit, compensation and
nominating and corporate governance committees.
Proposal
for Ratification of the Selection of our Independent Registered
Public Accounting Firm
Pursuant to the audit committee charter, the audit committee has
the sole authority to retain an independent registered public
accounting firm for our company. The board of directors requests
that the stockholders ratify the audit committees
selection of Deloitte & Touche LLP as our independent
registered public accounting firm for 2008.
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The audit committee will not be bound by the ratification of, or
failure to ratify, the selection of Deloitte & Touche
LLP, but the audit committee will consider any failure to ratify
the selection of Deloitte & Touche LLP in connection
with the appointment of our independent registered public
accounting firm for 2009.
The board of directors recommends a vote FOR
ratification of the audit committees selection of
Deloitte & Touche LLP as Kaisers independent
registered public accounting firm for 2008.
Proposal
for the Amendment of our Amended and Restated Certificate of
Incorporation to Increase the Number of Authorized Shares of
Common Stock
Our board of directors has unanimously adopted a resolution
setting forth a proposed amendment to our Amended and Restated
Certificate of Incorporation to increase the number of
authorized shares of common stock from 45,000,000 to 90,000,000,
declaring the advisability of such amendment and directing that
the amendment be considered at the Annual Meeting. If approved
by stockholders at the Annual Meeting, the amendment will become
effective upon the filing of a certificate of amendment with the
Secretary of State of the State of Delaware.
Our Amended and Restated Certificate of Incorporation currently
authorizes us to issue a total of 50,000,000 shares,
consisting of 45,000,000 shares of common stock and
5,000,000 shares of preferred stock. As of April 2,
2008, 20,620,169 shares of our common stock were issued and
outstanding and 1,467,661 shares of common stock were
reserved for issuance in connection with our Amended and
Restated 2006 Equity and Performance Incentive Plan, leaving
22,777,778 shares of common stock available for other uses.
As of the date of this Proxy Statement, no shares of preferred
stock are issued and outstanding. If approved by stockholders at
the Annual Meeting, the amendment to our Amended and Restated
Certificate of Incorporation will result in the increase of the
total number of authorized shares from 50,000,000 to 95,000,000
and the increase of the number of authorized shares of common
stock from 45,000,000 to 90,000,000. No increase in the number
of authorized shares of preferred stock is being proposed at
this time.
The board of directors believes that it is in the best interests
of Kaiser and its stockholders to increase the number of
authorized but unissued shares of common stock in order to have
additional shares available to meet future business needs and
provide us with the flexibility to issue additional shares for,
among other things, stock splits or dividends, compensation
plans and arrangements, offerings to raise additional capital,
corporate acquisitions and other corporate purposes. We have no
current plans for the use of the additional shares of common
stock proposed to be authorized.
The additional shares of common stock for which approval is
sought would be part of the existing class of our common stock
and, if and when issued, would have the same rights and
privileges as the shares of common stock currently outstanding.
Such shares would be available for issuance without any action
or vote by our stockholders, except as otherwise required by the
rules of any national securities exchange or association on
which our securities are then traded.
While the proposed increase will provide additional shares to
meet future business needs and provide flexibility as more fully
described above, the existence of additional authorized but
unissued shares of common stock could render more difficult or
discourage an attempt to obtain control of our company by means
of a proxy contest, tender offer, merger or otherwise. In
addition, any future issuance of such additional shares of
common stock, whether or not in connection with an anti-takeover
measure, could have the effect of diluting the earnings per
share, book value per share and voting power of shares held by
our existing stockholders.
The board of directors recommends a vote FOR the
amendment of the Amended and Restated Certificate of
Incorporation to increase the number of authorized shares of
common stock from 45,000,000 to 90,000,000.
CORPORATE
GOVERNANCE
Our board of directors is responsible for providing effective
governance over the affairs of our company. Kaisers
corporate governance practices are designed to align the
interests of the board of directors and management
8
with those of our stockholders and to promote honesty and
integrity throughout the company. Highlights of our corporate
governance practices are described below.
A copy of the current charter, as approved by our board of
directors, for each of the executive committee, audit committee,
compensation committee and nominating and corporate governance
committee and a copy of our corporate governance guidelines and
code of business conduct and ethics, which applies to all of our
employees, including our executive officers, are available on
our Internet website at www.kaiseraluminum.com under
Investor Relations Corporate Governance.
Copies are also available to stockholders upon request from our
Corporate Communications Department, Kaiser Aluminum
Corporation, 27422 Portola Parkway, Suite 350, Foothill
Ranch, CA
92610-2831.
Furthermore, we will post any amendments to our Code of Business
Conduct and Ethics, or waivers of the Code for our directors or
executive officers, on our Internet website at
www.kaiseraluminum.com under Investor
Relations Corporate Governance.
Stockholder
Communications with the Board of Directors
Stockholders may communicate with our board of directors as a
group or with the chair of the executive committee, audit
committee, compensation committee or nominating and corporate
governance committee by sending an email to
[email protected],
[email protected],
[email protected],
[email protected], or
[email protected], respectively, or by writing
to such group or person at Kaiser Aluminum Corporation, Attn:
Corporate Secretary (Board of Directors), 27422 Portola Parkway,
Suite 350, Foothill Ranch, California
92610-2831.
Communications that are intended specifically for any other
group of directors or for any individual director, such as the
independent directors as a group or the Lead Independent
Director, should be sent to the attention of our corporate
secretary at the address above or via email at
[email protected] and should clearly state the
individual director or group of directors that is the intended
recipient of the communication.
Our corporate secretary will review each communication and,
following such review, determine whether or not the
communication is appropriate for delivery to the director or
group of directors to whom it is addressed. Communications that,
in the judgment of our corporate secretary, are clearly of a
marketing nature, that advocate that Kaiser engage in illegal
activity, that do not reasonably relate to Kaiser or our
business or that are similarly inappropriate will not be
furnished to the intended recipient. If, in the judgment of the
corporate secretary, any communication pertains to an accounting
matter, it will be forwarded to our compliance officer.
Communications that, in the judgment of our corporate secretary,
are appropriate for delivery to the director or group of
directors to whom they are addressed will, unless requiring
immediate attention, be assembled and delivered to the intended
recipients on a periodic basis, generally at or in advance of
each regularly scheduled meeting of our board of directors. Any
communication that, in the judgment of our corporate secretary,
requires immediate attention will be promptly delivered to the
director or group of directors to whom such communication is
addressed. In no case will the corporate secretary provide
anyone but a member of our board of directors with access to any
such communication.
Board and
Committee Meetings and Consents in 2007
During 2007, our board of directors held eight meetings and
acted by unanimous written consent three times. In addition to
meetings of the full board of directors, directors attended
meetings of board of directors committees. Each incumbent
director attended at least 75% of the aggregate number of
meetings of the full board of directors held during the period
he or she was a director in 2007 and each committee on which he
or she served held during the period he or she served on such
committee in 2007.
Annual
Meetings of Stockholders
Members of our board of directors are expected to make
reasonable efforts to attend our annual meetings of
stockholders. All directors then serving attended our 2007
annual meeting of stockholders.
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Director
Independence
Our corporate governance guidelines require that a majority of
the members of our board of directors satisfy the independence
requirements set forth in the Nasdaq Marketplace Rules and other
applicable criteria of the National Association of Securities
Dealers, or NASD. We refer to these requirements as the general
independence criteria. Additionally, the audit committee
charter, compensation committee charter and nominating and
corporate governance committee charter require that all
respective committee members satisfy the general independence
criteria. There are no family relationships among our officers
or directors.
Based upon information requested from and provided by each
director concerning their background, employment and
affiliations, including family relationships, our board of
directors has determined that each of Mmes. Bartholomew, Hopp
and Proctor and Messrs. Frankel, Murdy, Osborne, Quinn, Van
Leeuwen and Wilcox, representing nine of our ten directors,
satisfy the general independence criteria and are independent
within the meaning of such term under our corporate governance
guidelines. In making such determination, the board of directors
considered the relationships that each of the directors had with
our company and all other facts and circumstances the board of
directors deemed relevant in determining the independence of
each of the directors in accordance with the general
independence criteria.
Our corporate governance guidelines require our independent
directors to meet at least quarterly in executive sessions at
which only independent directors are present. The guidelines
further provide that the position of Lead Independent Director
will be selected by a majority of the independent directors.
Stockholders may communicate with the independent directors as
provided above. See Stockholder Communications
with the Board of Directors above.
Director
Designation Agreement
On July 6, 2006, we entered into a Director Designation
Agreement with the USW under which the USW has certain rights to
nominate individuals to serve on our board of directors and
committees until December 31, 2012. The USW has the right
to nominate, for submission to our stockholders for election at
each annual meeting, the minimum number of candidates necessary
to ensure that, assuming such candidates are included in the
slate of director candidates recommended by our board of
directors in our proxy statement relating to the annual meeting
and our stockholders elect each candidate so included, at least
40% of the members of our board of directors immediately
following such election are directors who were either designated
by the USW pursuant to our chapter 11 plan of
reorganization or have been nominated by the USW in accordance
with the Director Designation Agreement. The Director
Designation Agreement contains requirements as to the
timeliness, form and substance of the notice the USW must give
to the nominating and corporate governance committee in order to
nominate such candidates. The nominating and corporate
governance committee will determine in good faith whether each
candidate properly submitted by the USW satisfies the
qualifications set forth in the Director Designation Agreement.
If the nominating and corporate governance committee determines
that such candidate satisfies the qualifications, the committee
will, unless otherwise required by its fiduciary duties,
recommend such candidate to our board of directors for inclusion
in the slate of directors to be recommended by the board of
directors in our proxy statement. The board of directors will,
unless otherwise required by its fiduciary duties, accept the
recommendation and include the director candidate in the slate
of directors that the board of directors recommends.
The Director Designation Agreement also provides that the USW
will have the right to nominate an individual to fill a vacancy
on the board of directors resulting from the death, resignation,
disqualification or removal of a director who was either
designated by the USW to serve on the board of directors
pursuant to our chapter 11 plan of reorganization or has
been nominated by the USW in accordance with the Director
Designation Agreement. The Director Designation Agreement
further provides that, in the event of newly created
directorships resulting from an increase in the number of our
directors, the USW will have the right to nominate the minimum
number of individuals to fill such newly created directorships
necessary to ensure that at least 40% of the members of the
board of directors immediately following the filling of the
newly created directorships are directors who were either
designated by the USW pursuant to our plan of reorganization or
have been nominated by the USW in accordance with the Director
Designation Agreement. In each such case, the USW, the
nominating and corporate governance
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committee and the board of directors will be required to follow
the nomination and approval procedures described above.
A candidate nominated by the USW may not be an officer,
employee, director or member of the USW or any of its local or
affiliated organizations as of the date of his or her
designation as a candidate or election as a director. Each
candidate nominated by the USW must satisfy:
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the general independence criteria;
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the qualifications to serve as a director as set forth in any
applicable corporate governance guidelines adopted by the board
of directors and policies adopted by the nominating and
corporate governance committee establishing criteria to be
utilized by it in assessing whether a director candidate has
appropriate skills and experience; and
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any other qualifications to serve as director imposed by
applicable law.
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Finally, the Director Designation Agreement provides that, so
long as our board of directors maintains an audit committee,
executive committee or nominating and corporate governance
committee, each such committee will, unless otherwise required
by the fiduciary duties of the board of directors, include at
least one director who was either designated by the USW to serve
on the board of directors pursuant to our plan of reorganization
or has been nominated by the USW in accordance with the Director
Designation Agreement (provided at least one such director is
qualified to serve on such committee as determined in good faith
by the board of directors).
Current members of our board of directors that have been either
designated by the USW to serve on the board of directors
pursuant to our plan of reorganization or nominated by the USW
in accordance with the provisions of the Director Designation
Agreement are Ms. Bartholomew and Messrs. Frankel,
Quinn and Wilcox. Ms. Bartholomew and Mr. Wilcox have
been nominated for re-election at the Annual Meeting in
accordance with the provisions of the Director Designation
Agreement.
Board
Committees
Currently, we have four standing committees of the board of
directors: an executive committee; an audit committee; a
compensation committee; and a nominating and corporate
governance committee.
Executive
Committee
The executive committee of the board of directors manages our
business and affairs that require attention prior to the next
regular meeting of our board of directors. However, the
executive committee does not have the power to (1) approve
or adopt, or recommend to our stockholders, any action or matter
expressly required by law to be submitted to our stockholders
for approval, (2) adopt, amend or repeal any bylaw of our
company, or (3) take any other action reserved for action
by the board of directors pursuant to a resolution of the board
of directors or otherwise prohibited to be taken by the
executive committee by law or pursuant to our certificate of
incorporation or bylaws.
The executive committee charter requires that a majority of the
members of the executive committee satisfy the general
independence criteria. The members of the executive committee
must include the Chairman of the Board and at least one of the
directors either designated by the USW pursuant to our
chapter 11 plan of reorganization or nominated by the USW
in accordance with the Director Designation Agreement (so long
as at least one such director is qualified to serve thereon).
The executive committee currently consists of
Messrs. Hockema and Wilcox and Ms. Hopp.
Mr. Hockema currently serves as the chair of the executive
committee. During 2007, the executive committee held one meeting
and acted by unanimous written consent five times.
Audit
Committee
The audit committee of the board of directors oversees our
accounting and financial reporting practices and processes and
the audits of our financial statements on behalf of the board of
directors. The audit committee is
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responsible for appointing, compensating, retaining and
overseeing the work of our independent auditors. Other duties
and responsibilities of the audit committee include:
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establishing hiring policies for employees or former employees
of the independent auditors;
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reviewing our systems of internal accounting controls;
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discussing risk management policies;
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approving related-party transactions;
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establishing procedures for complaints regarding financial
statements or accounting policies; and
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performing other duties delegated to the audit committee by the
board of directors from time to time.
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The audit committee charter requires that all members of the
audit committee satisfy the general independence criteria. The
charter also requires that no audit committee member may have
participated in the preparation of our financial statements
during the three years prior to his or her appointment as a
member and that each audit committee member be able to read and
understand fundamental financial statements, including a balance
sheet, an income statement and a cash flow statement.
Additionally, at least one member of the audit committee must
have had past employment experience in finance or accounting,
requisite professional certification in accounting, or any other
comparable experience or background which results in that
individuals financial sophistication, including being or
having been a chief executive officer, chief financial officer
or other senior officer with financial oversight
responsibilities and that member or another member must have
sufficient education or experience to have acquired the
attributes necessary to meet the criteria of an audit
committee financial expert, as that term is defined in the
rules promulgated by the Securities and Exchange Commission, or
SEC. The members of the audit committee must include at least
one of the directors either designated by the USW pursuant to
our chapter 11 plan of reorganization or nominated by the
USW in accordance with the Director Designation Agreement (so
long as at least one such director is appropriately qualified).
The audit committee consists of Mmes. Hopp and Proctor and
Messrs. Osborne, Van Leeuwen and Wilcox. Ms. Hopp
currently serves as the chair of the audit committee. Our board
of directors has determined that all five members of the audit
committee (1) meet the general independence criteria, as
well as the criteria for independence set forth in
Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934, and (2) are able
to read and understand fundamental financial statements. Our
board of directors also determined that no member of the audit
committee participated in the preparation of our financial
statements during the three years prior to their appointment as
members of the committee. Our board of directors has determined
that Mmes. Hopp and Proctor and Mr. Wilcox satisfy the
financial sophistication criteria described above and satisfy
the criteria necessary to serve as the audit committee
financial expert.
During 2007, the audit committee held seven meetings.
Compensation
Committee
General
The compensation committee of the board of directors establishes
and administers our policies, programs and procedures for
compensating our senior management, including determining and
approving the compensation of our executive officers. Other
duties and responsibilities of the compensation committee
include:
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administering plans adopted by the board of directors that
contemplate administration by the compensation committee,
including our Amended and Restated 2006 Equity and Performance
Incentive Plan;
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overseeing regulatory compliance with respect to compensation
matters;
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reviewing director compensation; and
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performing other duties delegated to the compensation committee
by the board of directors from time to time.
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The compensation committee solicits the views of our chief
executive officer on compensation matters, including as they
relate to the compensation of the other members of senior
management reporting to the chief executive officer. The
compensation committee has retained Hewitt Associates, LLC to
advise the compensation committee on all matters related to
compensation of our chief executive officer and other members of
senior management. Hewitts services in this regard include
(1) providing competitive market data and related
assessments of executive compensation as background against
which the compensation committee considers executive
compensation, (2) preparing and reviewing tally sheets for
the named executive officers, (3) apprising the
compensation committee of trends and best practices associated
with executive and director compensation, (4) providing
support with respect to legal, regulatory and accounting
considerations impacting compensation and benefit programs, and
(5) attending meetings of the compensation committee and
board of directors when requested. These services are typically
directed by the compensation committee and coordinated with our
human resources department.
The compensation committee charter requires that all members of
the compensation committee satisfy the general independence
criteria, as well as qualify as a non-employee
director within the meaning of
Rule 16b-3
promulgated under the Exchange Act.
The compensation committee currently consists of
Messrs. Murdy, Quinn and Van Leeuwen and Ms. Proctor.
Mr. Murdy currently serves as the chair of the compensation
committee. During 2007, the compensation committee held five
meetings and acted by unanimous written consent one time.
Compensation
Committee Interlocks and Insider Participation
During 2007, Messrs. Murdy, Quinn and Van Leeuwen and
Ms. Proctor served as members of the compensation
committee. None of the members of the compensation committee
(1) was an officer or employee of our company during the
year, (2) was formerly an officer of our company, or
(3) had any relationships requiring disclosure by us under
the SECs rules with respect to certain relationships and
related-party transactions. Furthermore, none of our executive
officers serves as a member of the board of directors or
compensation committee of any entity that has one or more
executive officers serving on our board of directors or
compensation committee.
Nominating
and Corporate Governance Committee
The nominating and corporate governance committee of the board
of directors identifies individuals qualified to become members
of our board of directors, recommends candidates to fill
vacancies and newly-created positions on our board of directors,
recommends director nominees for the election by stockholders at
the annual meetings of stockholders and develops and recommends
to the board of directors our corporate governance principles.
To ensure flexibility with respect to the director nominee
evaluation process, the nominating and corporate governance
committee has not established specific, minimum qualifications
that an individual must meet in order to become a member of the
board of directors. The nominating and corporate governance
committee evaluates director candidates submitted by
stockholders as described below in the same manner as those
candidates identified by the nominating and corporate governance
committee. The nominating and corporate governance committee
believes that our company is best served when each member of the
board of directors:
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exhibits strong leadership in his or her particular field or
area of expertise;
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possesses the ability to exercise sound business judgment;
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has a strong educational background or equivalent life
experiences;
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has substantial experience both in the business community and
outside the business community;
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contributes positively to the existing collaborative culture
among members of the board of directors;
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represents the best interests of all of our stockholders and not
just one particular constituency;
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has experience as a senior executive of a company of significant
size or prominence or another business or organization
comparable to our company;
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possesses skills and experience which make him or her a
desirable addition to a standing committee of the board of
directors;
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consistently demonstrates integrity and ethics in his or her
professional and personal life; and
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has the time and ability to participate fully in activities of
the board of directors, including attendance at, and active
participation in, meetings of the board of directors and the
committee or committees of which he or she is a member.
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Other duties and responsibilities of the nominating and
corporate governance committee include:
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assisting in succession planning;
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considering possible conflicts of interest of members of the
board of directors and management and making recommendations to
prevent, minimize or eliminate such conflicts of interests;
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making recommendations to the board of directors regarding the
appropriate size of the board of directors; and
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performing other duties delegated to the nominating and
corporate governance committee by the board of directors from
time to time.
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The nominating and corporate governance committee has adopted
policies and procedures by which our stockholders may submit
director candidates to the nominating and corporate governance
committee for consideration. If the nominating and corporate
governance committee receives, by a date not less than 120, nor
more than 150, calendar days before the anniversary of the date
that the proxy statement was mailed to stockholders in
connection with our previous years annual meeting, a
recommendation for a director nominee from a stockholder or
group of stockholders that beneficially owned more than 5% of
our outstanding common stock for at least one year as of the
date of the recommendation, then such director candidate will be
considered and evaluated by the nominating and corporate
governance committee for the annual meeting immediately
succeeding the date that proper written notice was timely
delivered to and received by the nominating and corporate
governance committee. When the date of our annual meeting of
stockholders changes by more than 30 calendar days from the
previous years annual meeting, such written notice of the
recommendation for the director candidate will be considered
timely if, and only if, it is received by the nominating and
corporate governance committee no later than the close of
business on the tenth calendar day following the first day on
which notice of the date of the upcoming annual meeting is
publicly disclosed by us.
Written notice from an eligible stockholder or group of eligible
stockholders to the nominating and corporate governance
committee recommending a director candidate must contain or be
accompanied by:
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proof that the stockholder or group of stockholders submitting
the recommendation for a director candidate has beneficially
owned, for the required one-year holding period, more than 5% of
our outstanding common stock;
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a written statement that the stockholder or group of
stockholders submitting the recommendation for a director
candidate intends to continue to beneficially own more than 5%
of our outstanding common stock through the date of the next
annual meeting of stockholders;
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the name and record address of each stockholder submitting a
recommendation for the director candidate, the written consent
of each such stockholder and the director candidate to be
publicly identified (including, in the case of the director
candidate, to be named in the companys proxy materials)
and the written consent of the director candidate to serve as a
member of our board of directors (and any committee of our board
of directors to which the director candidate is assigned to
serve by our board of directors) if elected;
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a description of all arrangements or understandings between or
among any of the stockholder or group of stockholders submitting
the recommendation for a director candidate, the director
candidate and any other person or persons (naming such person or
persons) pursuant to which the submission of the recommendation
for a director candidate is to be made by such stockholder or
group of stockholders;
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with respect to the director candidate, (1) his or her
name, age, business and residential address and principal
occupation or employment, (2) the number of shares of our
common stock beneficially owned by him or her, (3) a resume
or similar document detailing his or her personal and
professional experiences and accomplishments, and (4) all
other information relating to the director candidate that would
be required to be disclosed in a proxy statement or other filing
made in connection with the solicitation of proxies for the
election of directors pursuant to the Exchange Act of 1934, the
rules of the SEC, the Nasdaq Marketplace Rules or other
applicable criteria of the NASD; and
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a written statement that each submitting stockholder and the
director candidate shall make available to the nominating and
corporate governance committee all information reasonably
requested in connection with the committees evaluation of
the director candidate.
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The notice must be signed by each stockholder submitting the
proposal and the director candidate. The notice must be sent to
the following address by registered or certified mail: Kaiser
Aluminum Corporation, Attn: Corporate Secretary (Nominating and
Corporate Governance Committee), 27422 Portola Parkway,
Suite 350, Foothill Ranch, California
92610-2831.
The nominating and corporate governance committee charter
requires that all members of the nominating and governance
committee satisfy the general independence criteria. The members
of the nominating and corporate governance committee must
include at least one of the directors either designated by the
USW pursuant to our chapter 11 plan of reorganization or
nominated by the USW in accordance with the Director Designation
Agreement (so long as at least one such director is
appropriately qualified).
The nominating and corporate governance committee currently
consists of Ms. Bartholomew and Messrs. Frankel,
Murdy, Osborne, Quinn and Van Leeuwen. Dr. Osborne
currently serves as the chair of the nominating and corporate
governance committee. During 2007, the nominating and corporate
governance committee held two meetings and acted by unanimous
written consent one time.
EXECUTIVE
OFFICERS
The following table sets forth the names and ages of each of the
current executive officers of the company and the positions they
hold.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position(s)
|
|
Jack A. Hockema
|
|
|
61
|
|
|
President, Chief Executive Officer and Chairman of the Board;
Director
|
Joseph P. Bellino
|
|
|
57
|
|
|
Executive Vice President and Chief Financial Officer
|
John Barneson
|
|
|
57
|
|
|
Senior Vice President Corporate Development
|
John M. Donnan
|
|
|
47
|
|
|
Senior Vice President, General Counsel and Secretary
|
James E. McAuliffe, Jr.
|
|
|
62
|
|
|
Senior Vice President Human Resources
|
Daniel J. Rinkenberger
|
|
|
49
|
|
|
Vice President and Treasurer
|
Lynton J. Rowsell
|
|
|
33
|
|
|
Vice President and Chief Accounting Officer
|
Set forth below are brief descriptions of the business
experience of each of our executive officers.
Jack A. Hockema has served as our President and Chief
Executive Officer and a director since October 2001, and as
Chairman of the Board since July 2006. He previously served as
Executive Vice President of Kaiser and President of the Kaiser
Fabricated Products division from January 2000 to October 2001,
and Executive Vice President of Kaiser from May 2000 to October
2001. He served as Vice President of Kaiser from May 1997 to May
2000. Mr. Hockema was President of Kaiser Engineered
Products from March 1997 to January 2000. He served as President
of Kaiser Extruded Products and Engineered Components from
September 1996 to March 1997. Mr. Hockema served as a
consultant to Kaiser and acting President of Kaiser Engineered
Components from September 1995 to September 1996.
Mr. Hockema was an employee of Kaiser from 1977 to 1982,
working at our Trentwood facility, and serving as plant manager
of our former Union City, California can plant and as operations
15
manager for Kaiser Extruded Products. In 1982, Mr. Hockema
left Kaiser to become Vice President and General Manager of Bohn
Extruded Products, a division of Gulf+Western, and later served
as Group Vice President of American Brass Specialty Products
until June 1992. From June 1992 to September 1996,
Mr. Hockema provided consulting and investment advisory
services to individuals and companies in the metals industry. He
holds a Master of Science degree in Industrial Management and a
Bachelor of Science degree in Civil Engineering, both from
Purdue University.
Joseph P. Bellino has served as our Executive Vice
President and Chief Financial Officer since May 2006. Prior to
joining Kaiser, Mr. Bellino was employed by Steel
Technologies Inc., a flat-rolled steel processor, where he
served as chief financial officer and treasurer for nine years
and was a member of the board of directors from 2002 to 2004.
From 1996 to 1997, Mr. Bellino was president of Beacon
Capital Advisors Company, a consulting firm specializing in
mergers and acquisitions, valuations and executive advisory
services. Prior to 1996, Mr. Bellino held senior executive
positions with a privately held holding company with investments
in the manufacturing and distribution industries for
15 years. Mr. Bellino holds a Bachelor of Science
degree in finance and a Master of Business Administration
degree, both from The Ohio State University.
John Barneson has served as our Senior Vice
President Corporate Development since December 2007.
He previously served as our Senior Vice President and Chief
Administrative Officer from August 2001 to December 2007 and as
our Vice President and Chief Administrative Officer from
December 1999 through August 2001. He served as Engineered
Products Vice President of Business Development and Planning
from September 1997 to December 1999. Mr. Barneson served
as Flat-Rolled Products Vice President of Business Development
and Planning from April 1996 to September 1997.
Mr. Barneson has been an employee of Kaiser since September
1975 and has held a number of staff and operation management
positions within the Flat-Rolled and Engineered Products
business units. He holds a Master of Science degree and a
Bachelor of Science degree in Industrial Engineering from Oregon
State University.
John M. Donnan has served as our Senior Vice President,
General Counsel and Secretary since December 2007. He previously
served as our Vice President, Secretary and General Counsel from
January 2005 to December 2007. Mr. Donnan joined the legal
staff of Kaiser in 1993 and was named Deputy General Counsel of
Kaiser in 2000. Prior to joining Kaiser, Mr. Donnan was an
associate in the Houston, Texas office of the law firm of
Chamberlain, Hrdlicka, White, Williams & Martin. He
holds a Juris Doctorate degree from the University of Arkansas
School of Law and Bachelor of Business Administration degrees in
finance and accounting from Texas Tech University. He is a
member of the Texas and California bars.
James E. McAuliffe, Jr. has served as our Senior
Vice President Human Resources since December 2007.
He previously served as our Vice President Human
Resources from January 2002 to December 2007. Mr. McAuliffe
joined Kaiser in 1998 as Vice President Human
Resources for our fabricating business. Prior to joining Kaiser,
Mr. McAuliffe served as Vice President of Human Resources
for Rexam, Inc., a manufacturer of industrial coatings for
graphics, photographic and computer industries and J.P
Industries, a manufacturer of automotive engine and transmission
components. He holds a Bachelor of Arts degree in Labor
Relations and Industrial Psychology from Michigan State
University and attended graduate school at Central Michigan
University.
Daniel J. Rinkenberger has served as our Vice President
and Treasurer since January 2005. He previously served as our
Vice President of Economic Analysis and Planning from February
2002 through January 2005. He served as Vice President, Planning
and Business Development of Kaiser Fabricated Products division
from June 2000 through February 2002. Prior to that, he served
as Vice President, Finance and Business Planning of Kaiser
Flat-Rolled Products division from February 1998 to February
2000, and as our Assistant Treasurer from January 1995 through
February 1998. Before joining Kaiser, he held a series of
positions of increasing responsibility in the Treasury
Department at Pennzoil Corporation. He holds a Master of
Business Administration degree in finance from the University of
Chicago and a Bachelor of Education degree from Illinois State
University. He is a Chartered Financial Analyst.
Lynton J. Rowsell has served as our Vice President and
Chief Accounting Officer since December 2007. He previously
served as our Chief Accounting Officer from April 2007 to
December 2007. Mr. Rowsell joined Kaiser in October 2006 as
Director of External Reporting. Prior to joining Kaiser,
Mr. Rowsell worked as assistant
16
corporate controller of GeoLogistics, an international freight
management and logistics company, from March 2006 to October
2006. Prior to joining GeoLogistics, Mr. Rowsell was with
Ernst & Young as audit senior manager from October
2004 to March 2006, audit manager from October 2001 to September
2004 and supervising senior from October 1999 to September 2001.
Mr. Rowsell holds a Bachelor of Science Honours degree in
Mathematics, Operations Research, Statistics and Economics from
the University of Warwick in the United Kingdom. He is a
Chartered Accountant.
EXECUTIVE
COMPENSATION
Compensation
Committee Report
The compensation committee has reviewed and discussed with
management the compensation discussion and analysis section
included below. Based on its review and discussions with
management, the compensation committee recommended to the board
of directors that such compensation discussion and analysis be
included in this Proxy Statement.
This report is submitted by the members of the compensation
committee of the board of directors:
Compensation Committee
William F. Murdy (Chair)
Georganne C. Proctor
Jack Quinn
Thomas M. Van Leeuwen
Compensation
Discussion and Analysis
Introduction
This section provides (1) an overview of the compensation
committee of our board of directors, (2) a discussion of
the objectives of our post-emergence comprehensive compensation
structure and the design of our overall 2007 compensation
program for senior management, and (3) a discussion of all
material elements of the 2007 compensation for each of the
executive officers identified in the following table, who we
refer to as our named executive officers:
|
|
|
Name
|
|
Title
|
|
Jack A. Hockema
|
|
President and Chief Executive Officer (our principal executive
officer)
|
Joseph P. Bellino
|
|
Executive Vice President and Chief Financial Officer (our
principal financial officer)
|
John Barneson
|
|
Senior Vice President Corporate Development
|
John M. Donnan
|
|
Senior Vice President, General Counsel and Secretary
|
Daniel J. Rinkenberger
|
|
Vice President and Treasurer
|
During 2007, we continued the transition from compensation
programs implemented in 2002 during our chapter 11
bankruptcy as part of our creditor-supported and court-approved
key employee retention program, which we refer to as our
Chapter 11 KERP, to the comprehensive compensation
structure approved by the compensation committee upon our
emergence from chapter 11 bankruptcy following an extensive
review of all aspects of our executive compensation programs. In
addition to base salary, the key components of our overall 2007
compensation program were:
|
|
|
|
|
A cash-based, short-term incentive plan designed to reward
participants for economic value added, or EVA, versus cost of
capital of our core Fabricated Products business; and
|
|
|
|
An equity-based, long-term incentive program designed to align
compensation with the interests of our stockholders and enhance
retention of senior management.
|
17
Since our emergence from chapter 11 bankruptcy, two of our
key objectives have been, and in 2007 continued to be, ensuring
that we align our senior management and stockholders by
rewarding senior management for achieving strategic goals that
successfully drive our operations and enhance stockholder value
and attracting, motivating and retaining executives vital to our
short-term and long-term success, profitability and growth.
Overview
of Compensation Committee
The compensation committee of our board of directors is
comprised entirely of independent directors. By design, members
of the compensation committee also serve on other board
committees, including the audit committee and the nominating and
corporate governance committee. We believe this structure helps
coordinate the efforts of the respective committees. The
compensation committees primary duties and
responsibilities are to establish and implement our compensation
policies and programs for senior management. While the
nominating and corporate governance committee has the
responsibility to evaluate the overall performance of our chief
executive officer, the compensation committee coordinates with
and assists the nominating and corporate governance committee in
connection with that evaluation.
The compensation committee has the authority under its charter
to engage the services of outside advisors, experts and others
to assist it. Pursuant to that authority, the compensation
committee engaged Hewitt Associates LLC in 2006 to advise it on
all matters related to compensation of our chief executive
officer and other members of senior management, including the
other named executive officers, and has continued to engage
Hewitt in 2007 and 2008.
The compensation committee meets formally and informally
throughout the year. Informal meetings frequently occur when our
directors are together for meetings of the full board of
directors and telephonically at the request of one or more
committee members. Our chief executive officer, other members of
our management and outside advisors may be invited to attend all
or a portion of a compensation committee meeting depending on
the nature of the agenda items; however, neither our chief
executive officer nor any other member of management votes on
items before the compensation committee.
The compensation committee works with our senior management and
Hewitt to determine the agenda for its formal meetings and to
prepare meeting materials. The compensation committee and board
of directors also solicit the views of our chief executive
officer on compensation matters, including, among others:
|
|
|
|
|
Objectives for our compensation programs;
|
|
|
|
Structure of our compensation programs;
|
|
|
|
Succession planning; and
|
|
|
|
Compensation of other members of senior management, including
the other named executive officers.
|
Objectives
of our Comprehensive Compensation Structure
Our comprehensive compensation structure was developed in 2006
in connection with our emergence from chapter 11 bankruptcy
to achieve the following objectives, which we believe are
critical for enhancing stockholder value and our long-terms
success:
|
|
|
|
|
Creating alignment between senior management and our
stockholders by rewarding senior management for achieving
strategic goals that successfully drive our operations and
enhance stockholder value;
|
|
|
|
Attracting, motivating and retaining highly experienced
executives vital to our short-term and long-term success,
profitability and growth;
|
|
|
|
Differentiating senior management compensation based on actual
performance; and
|
|
|
|
Providing targeted compensation levels that are benchmarked to
our compensation peer group discussed below as follows:
|
|
|
|
|
|
for base salary, the 50th percentile;
|
18
|
|
|
|
|
for annual cash incentives at target-level performance, the
50th percentile; and
|
|
|
|
for annualized economic equity grant value of long-term
incentives, between the 50th and the 65th percentiles.
|
Design of
our Overall 2007 Compensation Program
Our overall 2007 compensation program for senior management,
including the named executive officers, reinforces performance
and accountability at both the corporate and individual levels.
In addition to focusing on pay for performance, our
overall 2007 compensation program:
|
|
|
|
|
Balanced short-term and long-term goals, with:
|
|
|
|
|
|
approximately 50% of the chief executive officers target
total compensation being delivered through long-term
incentives; and
|
|
|
|
approximately 40% of the target total compensation for the other
named executive officers being delivered through long-term
incentives;
|
|
|
|
|
|
Delivered a mix of fixed and at-risk compensation directly
related to our overall performance and the creation of
stockholder value, with:
|
|
|
|
|
|
approximately 70% of the chief executive officers target
total compensation being at-risk compensation; and
|
|
|
|
approximately 60% of the target total compensation for the other
named executive officers being at-risk compensation;
|
|
|
|
|
|
Provided compensation that is competitive with our compensation
peer group;
|
|
|
|
Used equity-based awards, stock ownership guidelines and annual
incentives linked to stockholder value and achievement of
corporate, segment and individual performance; and
|
|
|
|
Used forfeiture provisions that can result in the loss of
equity-based awards and resulting benefits if we determine a
recipient, including any of the named executive officers, has
engaged in certain activities detrimental to us.
|
Periodically, but not less than annually, each element of
compensation is reviewed and considered by the compensation
committee and our board of directors both individually and
collectively with the other elements of compensation to ensure
that it is consistent with the objectives of both our
post-emergence comprehensive compensation structure and that
particular element of compensation. Any suggestions or concerns
identified in the course of that review and consideration are
shared with senior management and Hewitt and addressed in a
manner that is satisfactory to the compensation committee and
our board of directors. This process occurs over a series of
meetings of the compensation committee, the board of directors
and the independent directors meeting in executive sessions
without members of management present.
In designing the overall compensation program, as well as the
individual compensation, for senior management, including the
named executive officers, for any particular year, the
compensation committee considers the following factors, among
others:
|
|
|
|
|
The external challenges to our near- and long-term ability to
attract and retain strong senior management;
|
|
|
|
Each individuals contributions to our overall results;
|
|
|
|
Our historical and anticipated operating and financial
performance compared with targeted goals; and
|
|
|
|
Our size and complexity compared with companies in our
compensation peer group.
|
The compensation committee uses tally sheets that
provide a summary of the compensation history of our chief
executive officer and those members of senior management
reporting to the chief executive officer. These tally sheets,
which are prepared by our senior management and Hewitt, include
a historical summary of base salary, annual bonus and equity
awards.
19
The compensation committee also reviews the compensation and
benefit practices, as well as levels of pay, of a compensation
peer group of companies. In 2006, working with Hewitt, our
management selected for inclusion in the compensation peer group
companies that were determined to: (1) be of a similar
size; (2) have positions of similar complexity and scope of
responsibility;
and/or
(3) compete with us for talent. Our management, working
with Hewitt, reviews, evaluates and updates the compensation
peer group, which includes companies in both similar and
different industries, at least annually. For 2007, our
compensation peer group consisted of the following
37 companies:
|
|
|
Ameron International Corporation
|
|
Mittal Steel USA Inc.
|
Ash Grove Cement Company
|
|
Neenah Paper, Inc.
|
Bandag, Incorporated
|
|
Olin Corporation
|
Bemis Manufacturing Company
|
|
OMNOVA Solutions Inc.
|
Brady Corporation
|
|
Pella Corporation
|
Briggs & Stratton Corporation
|
|
Polaris Industries Inc.
|
Cameron International Corporation
|
|
Rayonier Inc.
|
The David J. Joseph Company
|
|
Ryerson, Inc.
|
Donaldson Company, Inc.
|
|
Sauer-Danfoss Inc.
|
EDO Corporation
|
|
Solar Turbines Incorporated
|
ESCO Technologies Inc.
|
|
Spring Global US, Inc.
|
Fellowes, Inc.
|
|
SPS Technologies, Inc.
|
Graco Inc.
|
|
Steelcase Inc.
|
Joy Global Inc.
|
|
Texas Industries, Inc.
|
Kaman Corporation
|
|
The Timken Company
|
Kennametal Inc.
|
|
Valmont Industries, Inc.
|
Lord Corporation
|
|
Vulcan Materials Company
|
Martin Marietta Materials, Inc.
|
|
Walter Industries, Inc.
|
Milacron Inc.
|
|
|
There were no changes to our compensation peer group in 2007 as
compared to 2006 other than changes as a result of mergers,
acquisitions and restructurings involving individual companies
in our compensation peer group. Importantly, the compensation
committee recognizes that we compete for talent with companies
much larger than those included in our compensation peer group.
These larger companies aggressively recruit for the best
qualified talent in particularly critical functions. As a
result, to attract and retain talent, the compensation committee
may from time to time determine that it is in the best interests
of our company and stockholders to provide compensation packages
that deviate from targeted pay levels.
Elements
of Compensation
Elements of compensation for 2007 included base salary, annual
cash incentives, long-term incentives, retirement benefits and
certain perquisites.
Base
salary
The compensation committee annually reviews base salaries for
our chief executive officer and those members of senior
management reporting to the chief executive officer, including
the other named executive officers, and determines if a change
is appropriate. In reviewing base salaries, the compensation
committee considers factors, including, among others:
|
|
|
|
|
Level of responsibility;
|
|
|
|
Prior experience;
|
|
|
|
Base salaries paid for comparable positions by our compensation
peer group; and
|
20
|
|
|
|
|
The relationship among base salaries paid within our company.
|
The intent is to fix base salaries at levels consistent with the
design of the overall compensation program for the particular
year. During 2007, the compensation committee increased the base
salaries of our named executive officers by 3.7% to 4.0%,
principally to align base salaries with targeted levels based on
a review of our compensation peer group. Base salaries for our
named executive officers in 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Amount of Base Salary
|
|
|
|
|
Name
|
|
Increase for 2007
|
|
|
2007 Base Salary
|
|
|
Jack A. Hockema
|
|
$
|
28,000
|
|
|
$
|
758,000
|
|
Joseph P. Bellino
|
|
$
|
13,000
|
|
|
$
|
363,000
|
|
John Barneson
|
|
$
|
11,000
|
|
|
$
|
291,000
|
|
John M. Donnan
|
|
$
|
10,000
|
|
|
$
|
270,000
|
|
Daniel J. Rinkenberger
|
|
$
|
9,000
|
|
|
$
|
234,000
|
|
Annual
cash incentives
In 2007, we completed our transition from the annual incentive
programs implemented during our chapter 11 bankruptcy using
a variety of measures, including earnings before interest,
taxes, depreciation and amortization, or EBITDA, economic value
added, or EVA, and return on net assets, to a short-term
incentive plan using solely an EVA measure.
Our 2007 Short-Term Incentive Plan, which we refer to as our
2007 STI Plan, was designed to reward participants for EVA of
our core Fabricated Products business, including corporate
expenses, with modifiers for safety performance (as measured by
the total case incident rate), segment performance and
individual performance. The 2007 STI Plan was consistent with
the post-emergence comprehensive compensation structure and the
design of the overall 2007 compensation program. Under the 2007
STI Plan, EVA equaled our pre-tax operating income (subject to
certain adjustments) less a capital charge, calculated as a
percentage of our net assets (subject to certain adjustments).
The adjustments to EVA included, among others:
|
|
|
|
|
Removing results of our Primary Aluminum business to reflect the
fact that it is not a core business;
|
|
|
|
Removing discontinued or legacy operations;
|
|
|
|
Eliminating fresh start accounting adjustments, including the
approximately $49 million reduction of our total assets
(and the resulting higher payouts those adjustments might
otherwise create);
|
|
|
|
Eliminating VEBA assets and liabilities;
|
|
|
|
Excluding capital expenditures in progress; and
|
|
|
|
Adding the capitalized value of long-term leases.
|
The 2007 STI Plan provided a threshold performance level below
which no payout would be made, a target performance level at
which the target payout was available and a maximum performance
level at or above which the maximum payout would be available.
Payout opportunities ranged from zero up to three times the
target payout amount. Performance in excess of the threshold
resulted in an increase in the overall incentive pool by 6% of
adjusted operating income in excess of the threshold performance
up to the maximum payout opportunity.
Threshold and maximum payouts required a return on net assets of
approximately 7.5% and 35%, respectively, and would have
resulted in payouts equal to one-half and three times target,
respectively. In addition, the 2007 STI Plan tied pay to
performance, only increased the incentive pool by only 6% of
operating income for returns in excess of threshold performance
(subject to the payout maximum) when performance exceeded
threshold performance and did not dilute the performance
required as we continued to invest in our business.
21
At the beginning of 2007, a monetary incentive target was
established under the 2007 STI Plan for each participant based
on a percentage of base salary, with such percentage generally
determined based on, among other things:
|
|
|
|
|
A targeted level benchmarked to the 50th percentile of our
compensation peer group;
|
|
|
|
Internal compensation balance; and
|
|
|
|
Position responsibilities.
|
When establishing the performance levels for the 2007 STI Plan,
the compensation committee reviewed and discussed with both
senior management and the board of directors:
|
|
|
|
|
Our business plan and its key underlying assumptions;
|
|
|
|
The expectations under then-existing and anticipated market
conditions; and
|
|
|
|
The opportunity to generate stockholder value.
|
In addition to being designed to reward participants for EVA,
the 2007 STI Plan recognized that our business is cyclical. The
EVA target for 2007 was set at a level believed to be achievable
in the then-existing economic environment if management
performed as expected. Applying historical performance to the
2007 STI Plan, the annual cash incentive compensation over the
nine years prior to 2007 would have averaged approximately 60%
of target and there would have been no such compensation in six
out of those nine years.
Our key strategic initiatives for 2007 were established at the
beginning of 2007 through a series of board and committee
meetings. These initiatives were consistent with the business
and strategic plan previously approved by our board and included
specific actions expected to:
|
|
|
|
|
Enhance our position as the supplier of choice for our customers;
|
|
|
|
Facilitate our being a low cost producer by controlling costs
beyond inflation;
|
|
|
|
Achieve profitable sales growth through organic and external
growth;
|
|
|
|
Expand and enhance the deployment of the Kaiser Production
System;
|
|
|
|
Sustain financial strength to provide strategic flexibility in
all phases of the business cycle; and
|
|
|
|
Continue to improve our standing as a valued corporate citizen.
|
Individual performance goals for other members of senior
management, including the other named executive officers, were
established by our chief executive officer and consistent with
the 2007 key strategic initiatives.
Based on the Fabricated Products business results and safety
performance, as well as segment and individual performance, a
participants base award could be modified, in the
aggregate, up to plus or minus 100 percent of the incentive
target or base award, subject to an overall cap on the aggregate
award of three times the incentive target. A cash pool was
established based upon the award multiple multiplied by the sum
of individual monetary incentive targets for all plan
participants. Although individual monetary awards could be
adjusted up or down, the entire cash pool was paid to
participants.
In early 2008, our actual results for 2007, EVA based on those
results and the resulting award multiple were determined. Each
participants base award under the 2007 STI Plan was
determined by multiplying his or her monetary incentive target
by the award multiple. The compensation committee, the
nominating and corporate governance committee and our board of
directors also reviewed the actual performance of both our
company and our chief executive officer for the 2007 performance
period as compared to the 2007 key strategic initiatives and
performance goals.
Based on the 2007 results, the compensation committee determined
the 2007 STI Plan award multiple to be approximately 2.3. The
effective award multiple for our named executive officers, other
than Mr. Rinkenberger was approximately 2.2. The award
multiples for our named executive officers were less than the
approximately 2.3 2007 STI Plan award multiple approved by the
compensation committee, as a result of higher payouts awarded to
other
22
participants in the 2007 STI Plan and the dilutive effect of
those higher payouts on the rest of the pool available for
distribution. Mr. Rinkenbergers multiple was
approximately 2.3 as a result of a positive multiplier based on
individual performance.
The table below sets forth for the 2007 STI Plan the possible
payouts that could have been earned by our named executive
officers at each performance level and the actual amounts earned
by them.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Below Threshold
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
|
Jack A. Hockema
|
|
$
|
0
|
|
|
$
|
259,615
|
|
|
$
|
519,230
|
|
|
$
|
1,557,690
|
|
|
$
|
1,127,200
|
|
Joseph P. Bellino
|
|
$
|
0
|
|
|
$
|
90,750
|
|
|
$
|
181,500
|
|
|
$
|
544,500
|
|
|
$
|
395,300
|
|
John Barneson
|
|
$
|
0
|
|
|
$
|
65,475
|
|
|
$
|
130,950
|
|
|
$
|
392,850
|
|
|
$
|
284,500
|
|
John M. Donnan
|
|
$
|
0
|
|
|
$
|
60,750
|
|
|
$
|
121,500
|
|
|
$
|
364,500
|
|
|
$
|
262,800
|
|
Daniel J. Rinkenberger
|
|
$
|
0
|
|
|
$
|
41,950
|
|
|
$
|
78,000
|
|
|
$
|
245,700
|
|
|
$
|
177,900
|
|
Long-term
incentives
On March 30, 2007, the compensation committee approved
grants of restricted stock and option rights for the named
executive officers, with such grants being effective
April 3, 2007. In making such grants, the compensation
committee established a target monetary value for the equity
grants to be made to each named executive officer and determined
that each named executive officer should receive restricted
stock having an economic value equal to 75% of his target
monetary value and option rights having an economic value equal
to 25% of his target monetary value. The use of restricted stock
and option rights was determined by the compensation committee
to effectively align long-term incentive compensation with the
interests of our stockholders and enhance retention through the
use of three-year cliff vesting on April 3, 2010 for the
restricted stock and ratable vesting over the three-year period
from the grant date through April 3, 2010 for the options
rights.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of
|
|
|
|
|
|
|
|
|
|
Common Stock for
|
|
|
|
Target
|
|
|
Number of Shares of
|
|
|
Which Option Rights
|
|
Name
|
|
Monetary Value(1)
|
|
|
Restricted Stock(2)
|
|
|
are Exercisable(3)
|
|
|
Jack A. Hockema
|
|
$
|
1,250,000
|
|
|
|
13,239
|
|
|
|
8,037
|
|
Joseph P. Bellino
|
|
$
|
476,000
|
|
|
|
5,041
|
|
|
|
3,060
|
|
John Barneson
|
|
$
|
363,000
|
|
|
|
3,844
|
|
|
|
2,334
|
|
John M. Donnan
|
|
$
|
324,000
|
|
|
|
3,431
|
|
|
|
2,083
|
|
Daniel J. Rinkenberger
|
|
$
|
125,000
|
|
|
|
1,323
|
|
|
|
803
|
|
|
|
|
(1) |
|
For purposes of these grants, (a) restricted stock was
determined to have an economic value of $70.81 per share
(calculated using (i) the $80.01 closing price per share of
our common stock as reported on the Nasdaq Global Select Market
on April 3, 2007 and (ii) an 11.5% discount factor to
take into account the applicable restriction period) and
(b) option rights were determined to have an economic value
of $38.88 per share of common stock purchasable upon exercise
thereof (calculated by Hewitt using a modified Black-Scholes
valuation). |
|
(2) |
|
The restrictions on 100% of the shares of restricted stock
granted will lapse on April 3, 2010 or earlier if the named
executive officers employment terminates as a result of
death or disability (or, in the case of Messrs. Hockema and
Bellino, retirement), the named executive officers
employment is terminated by us without cause, the named
executive officers employment is voluntarily terminated by
him for good reason or in the event of a change in control. |
|
(3) |
|
The option rights granted became exercisable as to one-third of
the total number of shares of common stock for which they are
exercisable on April 3, 2008 and will become exercisable as
to one-third of the total number of shares of common stock for
which they are exercisable on each of April 3, 2009 and
April 3, 2010 or earlier if the named executive
officers employment terminates as a result of death or
disability (or, in the case of Messrs. Hockema and Bellino,
retirement), the named executive officers employment is
terminated by us without cause, the named executive
officers employment is voluntarily terminated by him for
good reason or in the event of a change in control. The purchase
price per share payable upon exercise of each option right is
$80.01, the closing price per share of our common stock as
reported on the Nasdaq Global Select Market on |
23
|
|
|
|
|
April 3, 2007. The option rights granted terminate on
April 3, 2017, unless terminated earlier in accordance with
their terms. |
Upon our emergence from chapter 11 bankruptcy in July 2006,
each of our named executive officers (other than
Mr. Bellino, who joined us in May 2006), as well as other
members of senior management, received an emergence
grant of restricted stock. The compensation committee
determined that the emergence grants to senior management were
appropriate to retain senior management, including the named
executive officers, and to immediately align the interests of
senior management with the interests of our stockholders. The
compensation committee also wanted to recognize and reward the
commitment and efforts of members of senior management through
the four and one-half years we were in chapter 11
bankruptcy and their ability during that period to both grow our
Fabricated Products business and complete a restructuring that
allowed us to emerge with a strong balance sheet and platform
for future growth. The compensation committee accomplished these
objectives by providing stock ownership of approximately two
percent of our outstanding common stock in the aggregate to
members of senior management, including our named executive
officers, through the issuance of restricted stock with
three-year cliff vesting precluding the recipients from becoming
unconditionally entitled to receive any of the shares granted at
emergence until July 6, 2009, subject to certain exceptions
related to the termination of employment.
The size of the emergence grants was developed based on
extensive data provided by Hewitt on emergence grant practices
at other companies emerging from chapter 11 bankruptcy.
Mr. Bellino, who joined us in May 2006, did not receive an
emergence grant but did receive a grant of shares of
restricted stock based on an analysis of competitive market
practice for a normal annual grant and the terms of his
employment agreement. The table below summarizes the grants made
to our named executive officers in July 2006:
|
|
|
|
|
|
|
Number of Shares of
|
|
Name
|
|
Restricted Stock
|
|
|
Jack A. Hockema
|
|
|
185,000
|
|
Joseph P. Bellino
|
|
|
15,000
|
|
John Barneson
|
|
|
48,000
|
|
John M. Donnan
|
|
|
45,000
|
|
Daniel J. Rinkenberger
|
|
|
24,000
|
|
Recognizing that our business is cyclical and that the market
value of our common stock may fluctuate during business cycles,
the compensation committee also intended the grants to provide
an incentive for the named executive officers and other members
of senior management to remain with us throughout business
cycles. While the emergence grants are viewed as a one-time
event, the compensation committee took the emergence grants into
account when it made the 2007 equity grants described above and
the 2008 equity grants described below and will continue to take
the emergence grants into account in the design of future
compensation programs and awards.
Retirement
benefits
We no longer maintain a defined benefit pension plan or retiree
medical program that covers members of senior management.
Retirement benefits to our senior management, including the
named executive officers, are currently provided through a
defined contribution retirement program consisting of the
following two principal plans:
|
|
|
|
|
the Kaiser Aluminum Savings and Investment Plan, a tax-qualified
profit-sharing and 401(k) plan (which we refer to as our Savings
Plan); and
|
|
|
|
a nonqualified and unsecured deferred compensation plan intended
to restore benefits that would be payable to participants in the
Savings Plan but for the limitations on benefit accruals and
payments imposed by the Internal Revenue Code (which we refer to
as our Restoration Plan).
|
Each of these plans is discussed more fully below. Although
these plans provide reduced benefits to members of senior
management when compared to the benefits available prior to and
during our chapter 11 bankruptcy, the compensation
committee believes that they support the objectives of our
post-emergence comprehensive compensation structure, including
the ability to attract and retain senior and experienced mid- to
late-career executives for critical positions within our
organization.
24
The defined contribution retirement program has three primary
components, which are discussed more fully below:
|
|
|
|
|
A company match of the employees pre-tax deferrals under
our Savings Plan;
|
|
|
|
A company contribution to the employees account under our
Savings Plan; and
|
|
|
|
A company contribution to the employees account under our
Restoration Plan.
|
Under the terms of our Restoration Plan, cash balances are
maintained in a rabbi trust where they remain
subject to the claims of our creditors and are otherwise
invested in funds designated by each individual from a menu of
possible investments. In addition, the cash balances maintained
in the rabbi trust are forfeited if the individual is terminated
for cause.
Perquisites
During 2007, all of our named executive officers received a
vehicle allowance and Messrs. Hockema, Bellino and Barneson
were reimbursed for admission to, and the dues for, a club
membership. Additionally, we reimbursed the housing and other
expenses incurred by Mr. Bellino in connection with the
completion of his relocation to California. Our use of
perquisites as an element of compensation is limited and is
largely based on business-related entertainment needs and the
historical practices and policies of our company. We do not view
perquisites as a significant element of our comprehensive
compensation structure but do believe that they can be used in
conjunction with base salary to attract, motivate and retain
individuals in a competitive environment.
Stock
Ownership Guidelines
In order to further align the interests of senior management,
including the named executive officers, with those of our
stockholders, we have stock ownership guidelines. Under those
guidelines, members of our senior management are expected to
hold common stock having a value equal to a multiple of their
base salary as determined by their position. The guidelines
contemplate a multiple of five times base salary for our chief
executive officer and three times base salary for the other
named executive officers. Each member of senior management
covered by our stock ownership guidelines is expected to retain
at least 75 percent of the net shares resulting from equity
compensation awards until he or she achieves the applicable
ownership level contemplated by the stock ownership guidelines.
For purposes of these guidelines, stock ownership includes
shares over which the holder has direct or indirect ownership or
control, including restricted stock and restricted stock units,
but does not include unexercised stock options. The ownership
guidelines are expected to be met within five years. Based on
the closing price per share of our common stock as reported on
the Nasdaq Global Select Market on March 3, 2008, each
named executive officer owns common stock above the applicable
stock ownership requirements under the stock ownership
guidelines.
Employment
Contracts, Termination of Employment Arrangements and
Change-in-Control
Arrangements
As discussed more fully below, in 2006 we entered into
employment agreements with Messrs. Hockema and Bellino. The
decisions to enter into employment agreements and the terms of
those agreements were based on the facts and circumstances at
the time and an analysis of competitive market practice. The
compensation committee, working with Hewitt, determined that
employment agreements and the negotiated terms of those
agreements were consistent with market practice. The
compensation committee also determined that entering into an
employment agreement with Mr. Hockema was important to,
among other things:
|
|
|
|
|
Provide an economic incentive for Mr. Hockema to delay his
retirement until at least July 2011;
|
|
|
|
Improve our ability to retain other key members of senior
management; and
|
|
|
|
Provide assurance to our customers and other stakeholders of the
continuity of senior management for an extended period beyond
our emergence from chapter 11 bankruptcy.
|
25
In each case, the compensation committee determined that the
agreements and the terms of those agreements were in the best
interests of our company and stockholders.
Also, as discussed more fully below, we provide all named
executive officers with benefits related to terminations of
employment in specified circumstances, including in connection
with a change in control, by us without cause and by the named
executive officer with good reason. Importantly, these
protections limit our ability to downwardly adjust certain
aspects of compensation, including base salaries and target
incentive compensation, without triggering the ability of the
affected named executive officer to receive termination
benefits. The compensation committee views these termination
protection benefits as an important component of the total
compensation package for each of our named executive officers.
In the view of the compensation committee, these protections
help to maintain the named executive officers objectivity
in decision-making and provide another mechanism to align the
interests of our named executive officer with the interests of
our stockholders.
Tax
Deductibility
Section 162(m) of the Internal Revenue Code limits the
deductibility of compensation in excess of $1 million paid
to our chief executive officer and our four other highest-paid
executive officers unless certain specific and detailed criteria
are satisfied. We believe that it is often desirable and in our
best interests to deduct compensation payable to our executive
officers. In this regard, the compensation committee considers
the anticipated tax treatment to our company and our executive
officers in the review and establishment of compensation
programs and payments. Although the various components of our
compensation program are not fully deductible under
Section 162(m), management and the compensation committee
continue to evaluate steps that can be taken to increase or
otherwise preserve deductibility. In the interim, the
compensation committee has determined that we will not limit
compensation to that deductible under Section 162(m),
particularly in light of the substantial tax attributes,
including net operating loss carry-forwards, available to us to
offset taxable income.
Actions
With Respect to 2008 Compensation
Set forth below is a brief discussion of actions taken since
December 31, 2007 with respect to our 2008 compensation of
our senior management, including the named executive officers.
Base
Salary
We have fixed base salaries for 2008 effective April 1,
2008. Base salaries for our named executive officers were
adjusted as follows:
|
|
|
|
|
|
|
|
|
|
|
Amount of
|
|
|
|
|
Name
|
|
Base Salary Increase
|
|
|
Base Salary
|
|
|
Jack A. Hockema
|
|
$
|
29,000
|
|
|
$
|
787,000
|
|
Joseph P. Bellino
|
|
$
|
14,000
|
|
|
$
|
377,000
|
|
John Barneson
|
|
$
|
11,000
|
|
|
$
|
302,000
|
|
John M. Donnan
|
|
$
|
25,000
|
|
|
$
|
295,000
|
|
Daniel J. Rinkenberger
|
|
$
|
8,000
|
|
|
$
|
242,000
|
|
As indicated by the table above, the compensation committee
increased the base salaries by 3.4% to 3.9% for all of our named
executive officers other than Mr. Donnan, principally to
align base salaries with targeted levels based on a review of
our compensation peer group. Mr. Donnans increase was
9.3% and also reflected his assumption of additional
responsibilities with respect to environmental, health, safety
and product liability matters in late 2007.
Short-Term
Incentive Plan
On February 27, 2008, the compensation committee approved a
short-term incentive plan for 2008, which we refer to as our
2008 STI Plan. Like the 2007 STI Plan, the 2008 STI Plan is
designed to reward participants for EVA of our core Fabricated
Products business with modifiers for safety performance (as
measured by the total case incident rate), business unit
performance and individual performance. Under the 2008 STI Plan,
EVA will equal our
26
pre-tax operating income (subject to certain adjustments) less a
capital charge, calculated as a percentage of our net assets
(subject to certain adjustments). The 2008 STI Plan provides for
(1) a threshold performance level below which no payout is
made, a target performance level at which the target award is
available and a performance level at or above which the maximum
payout is available, and (2) minimum and maximum payout
opportunities ranging from zero up to three times the target
payout amount. The table below sets forth the estimated future
payouts that can be earned by each of the named executive
officers under the 2008 STI Plan below threshold performance
levels and at the threshold, target and maximum performance
levels.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Below
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Threshold
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Jack A. Hockema
|
|
$
|
0
|
|
|
$
|
269,548
|
|
|
$
|
539,095
|
|
|
$
|
1,617,285
|
|
Joseph P. Bellino
|
|
$
|
0
|
|
|
$
|
94,250
|
|
|
$
|
188,500
|
|
|
$
|
565,500
|
|
John Barneson
|
|
$
|
0
|
|
|
$
|
67,950
|
|
|
$
|
135,900
|
|
|
$
|
407,700
|
|
John M. Donnan
|
|
$
|
0
|
|
|
$
|
73,750
|
|
|
$
|
149,860
|
|
|
$
|
442,500
|
|
Daniel J. Rinkenberger
|
|
$
|
0
|
|
|
$
|
42,350
|
|
|
$
|
81,070
|
|
|
$
|
254,100
|
|
Under the 2008 STI Plan, a pro rata incentive award is earned
based on actual eligibility during the performance period if
prior to December 31, 2008 a participant (1) dies,
(2) retires under normal retirement
(age 62) or in connection with full early retirement
(position elimination), (3) is involuntarily terminated due
to position elimination, or (4) becomes disabled. Under the
2008 STI Plan, incentive awards are forfeited for voluntary
terminations without good reason prior to December 31,
2008. A participant will be entitled to the full payment of his
or her award if his or her employment terminates on or after
December 31, 2008, unless the participants employment
is voluntarily terminated by him or her without good reason or
by us for cause, in which case he or she would forfeit the award.
Long-term
incentives
On February 27, 2008, the compensation committee approved a
long-term incentive program for 2008 through 2010, which we
refer to as our 2008 2010 LTI Program. The
2008 2010 LTI Program was designed to enhance and
increase the pay-for-performance and retention
features of our overall 2008 compensation program by rewarding
participants with (1) a fixed number of shares of
restricted stock that vest over time and (2) a fixed number
of performance shares that vest, if at all, based on the average
annual EVA of our core Fabricated Products business for 2008,
2009 and 2010. EVA under the 2008 2010 LTI Program
will equal our pre-tax operating income (subject to certain
adjustments) less a capital charge, calculated as a percentage
of our net assets (subject to certain adjustments). The
2008 2010 LTI Program provides with respect to the
performance shares for (1) a threshold performance level at
which no performance shares will vest, a target performance
level at which the target number of performance shares will vest
and a performance level at or above which the maximum number of
performance shares will vest and (2) minimum and maximum
vesting opportunities ranging from zero up to two times the
target number. Each performance share that becomes vested
entitles the participant to receive one share of our common
stock.
On February 27, 2008, to effectuate the 2008
2010 LTI Program, the compensation committee approved the
following grants of restricted stock and performance shares,
with such grants being effective as of March 3, 2008, for
the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of
|
|
|
Number of Performance
|
|
Name
|
|
Restricted Stock(1)
|
|
|
Shares(2)
|
|
|
Jack A. Hockema
|
|
|
9,805
|
|
|
|
23,416
|
|
Joseph P. Bellino
|
|
|
3,731
|
|
|
|
8,912
|
|
John Barneson
|
|
|
2,847
|
|
|
|
6,801
|
|
John M. Donnan
|
|
|
2,681
|
|
|
|
6,404
|
|
Daniel J. Rinkenberger
|
|
|
982
|
|
|
|
2,345
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
(1) |
|
The restrictions on 100% of the shares of restricted stock
granted will lapse on March 3, 2011 or earlier if the named
executive officers employment terminates as a result of
death or disability (or, in the case of Messrs. Hockema and
Bellino, retirement), the named executive officers
employment is terminated by us without cause, the named
executive officers employment is voluntarily terminated by
him for good reason or in the event of a change in control. |
|
(2) |
|
The table below sets forth the number of performance shares that
will become vested for each of the named executive officers
under the 2008 2010 LTI Program at the threshold,
target and maximum performance levels: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Jack A. Hockema
|
|
|
0
|
|
|
|
11,708
|
|
|
|
23,416
|
|
Joseph P. Bellino
|
|
|
0
|
|
|
|
4,456
|
|
|
|
8,912
|
|
John Barneson
|
|
|
0
|
|
|
|
3,400
|
|
|
|
6,801
|
|
John M. Donnan
|
|
|
0
|
|
|
|
3,202
|
|
|
|
6,404
|
|
Daniel J. Rinkenberger
|
|
|
0
|
|
|
|
1,172
|
|
|
|
2,345
|
|
|
|
|
|
|
The number of performance shares, if any, that vest based on the
level of performance achieved during the three-year performance
period will vest on the later to occur of March 3, 2011 and
the date on which we certify the performance level achieved
during the three-year performance period. If, prior to
December 31, 2010, the named executive officers
employment terminates as a result of death or disability (or, in
the case of Messrs. Hockema and Bellino, retirement), the
named executive officers employment is terminated by us
without cause, the named executive officers employment is
voluntarily terminated by him for good reason or in the event of
a change in control, the target number of performance shares
will vest. After December 31, 2010, the number of
performance shares, if any, that will vest upon any of the
foregoing events will be determined based on the performance
level achieved during the three-year performance period. |
Summary
Compensation Table
The table below sets forth information regarding compensation
for our named executive officers: (1) Jack A. Hockema, our
President, Chief Executive Officer and Chairman of the Board;
(2) Joseph P. Bellino, our Executive Vice President and
Chief Financial Officer (who joined us in May 2006); and
(3) each of John Barneson, John M. Donnan and Daniel J.
Rinkenberger, our three other most highly compensated executive
officers (based on total compensation for 2007).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
Name and
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Principal Position
|
|
Year(1)
|
|
|
Salary
|
|
|
Stock Awards(2)
|
|
|
Awards(3)
|
|
|
Compensation(4)(5)
|
|
|
Earnings(6)
|
|
|
Compensation
|
|
|
Total
|
|
|
Jack A. Hockema,
|
|
|
2007
|
|
|
$
|
751,000
|
|
|
$
|
2,867,146
|
|
|
$
|
80,169
|
|
|
$
|
2,721,195
|
|
|
$
|
10,178
|
|
|
$
|
610,827
|
|
|
$
|
7,040,515
|
|
President, Chief Executive Officer and Chairman of the Board
|
|
|
2006
|
|
|
$
|
730,000
|
|
|
$
|
1,301,167
|
|
|
|
|
|
|
$
|
2,474,930
|
|
|
$
|
8,403
|
|
|
$
|
536,461
(7)(8)(9)(10)(15)
|
|
|
$
|
5,050,961
|
|
Joseph P. Bellino,
|
|
|
2007
|
|
|
$
|
359,750
|
|
|
$
|
311,833
|
|
|
$
|
30,524
|
|
|
$
|
395,300
|
|
|
|
|
|
|
$
|
198,484
|
|
|
$
|
1,295,891
|
|
Executive Vice President and Chief Financial Officer
|
|
|
2006
|
|
|
$
|
220,018
|
|
|
$
|
105,500
|
|
|
|
|
|
|
$
|
288,892
|
|
|
|
|
|
|
$
|
40,365
(7)(8)(11)(15)
|
|
|
$
|
654,775
|
|
John Barneson,
|
|
|
2007
|
|
|
$
|
288,250
|
|
|
$
|
752,090
|
|
|
$
|
23,282
|
|
|
$
|
619,776
|
|
|
$
|
6,511
|
|
|
$
|
222,797
|
|
|
$
|
1,912,706
|
|
Senior Vice President Corporate Development
|
|
|
2006
|
|
|
$
|
278,750
|
|
|
$
|
337,600
|
|
|
|
|
|
|
$
|
554,941
|
|
|
$
|
5,020
|
|
|
$
|
195,037
(7)(8)(9)(12)(15)
|
|
|
$
|
1,372,598
|
|
John M. Donnan,
|
|
|
2007
|
|
|
$
|
267,500
|
|
|
$
|
701,629
|
|
|
$
|
20,778
|
|
|
$
|
363,324
|
|
|
$
|
62
|
|
|
$
|
65,390
|
|
|
$
|
1,418,683
|
|
Senior Vice President, General Counsel and Secretary
|
|
|
2006
|
|
|
$
|
260,000
|
|
|
$
|
316,500
|
|
|
|
|
|
|
$
|
297,699
|
|
|
|
|
|
|
$
|
41,897
(7)(8)(13)(15)
|
|
|
$
|
916,096
|
|
Daniel J. Rinkenberger,
|
|
|
2007
|
|
|
$
|
231,750
|
|
|
$
|
304,063
|
|
|
$
|
8,010
|
|
|
$
|
238,437
|
|
|
$
|
880
|
|
|
$
|
50,455
|
|
|
$
|
893,595
|
|
Vice President and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7)(8)(14)(15)
|
|
|
|
|
|
28
|
|
|
(1) |
|
Mr. Rinkenberger was not included as a named executive
officer in the summary compensation table contained in the proxy
statement relating to our 2007 meeting of stockholders.
Accordingly, this table does not set forth information regarding
his 2006 compensation. |
|
(2) |
|
Reflects the value of restricted stock awards granted to our
named executive officers based on the compensation cost of the
awards with respect to the applicable fiscal year, computed in
accordance with Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 123 (revised 2004),
Share-Based Payment, which we refer to as
SFAS No. 123-R,
but excluding any impact of assumed forfeiture rates. For
additional information regarding the compensation cost of stock
awards with respect to our 2007 fiscal year, see Note 11 of
the Notes to Consolidated Financial Statements included in our
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007. |
|
(3) |
|
Reflects the value of option awards granted to our named
executive officers based on the compensation cost of the awards
with respect to the applicable fiscal year, computed in
accordance with
SFAS No. 123-R,
but excluding any impact of assumed forfeiture rights. For
additional information regarding the compensation costs of
option awards with respect to our 2007 fiscal year, see
Note 11 of the Notes to Consolidated Financial Statements
included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007. |
|
(4) |
|
Includes payments made under our Chapter 11 Long-Term
Incentive Plan, pursuant to which key management employees
accrued cash awards based on our attainment of sustained cost
reductions above $80 million annually for the four and
one-half year period from 2002 through our emergence from
chapter 11 bankruptcy in July 2006. The total amounts accrued
under our Chapter 11 Long-Term Incentive Plan during the
four and one-half year period for Messrs. Hockema,
Barneson, Donnan and Rinkenberger were as follows:
Mr. Hockema, $3,298,880; Mr. Barneson, $693,876;
Mr. Donnan, $208,575; and Mr. Rinkenberger, $123,609.
Annual awards during this period were approximately 81% of
target in 2002 and 2003; 61% of target in 2004; (16%) of target
in 2005; and 40% of target in 2006, with an average award of
approximately 55% of target over the four and one-half year
period. For each of Messrs. Hockema, Barneson, Donnan and
Rinkenberger, approximately one-half of the total amounts
accrued under our Chapter 11 Long-Term Incentive Plan was
paid in August 2006 following our emergence, as follows:
Mr. Hockema, $1,649,440; Mr. Barneson, $346,938;
Mr. Donnan, $104,554; and Mr. Rinkenberger, $63,072.
For each of Messrs. Hockema, Barneson, Donnan and
Rinkenberger, the remaining portion of the total amounts accrued
under our Chapter 11 Long-Term Incentive Plan was paid in
July 2007, as follows: Mr. Hockema, $1,593,995;
Mr. Barneson, $335,276; Mr. Donnan, $100,524; and
Mr. Rinkenberger, $60,537. Mr. Bellino who, joined us
in May 2006, did not participate in the Chapter 11
Long-Term Incentive Plan. |
|
(5) |
|
Includes payments under our short-term incentive plans. Pursuant
to such short-term incentive plans, key management employees
earned cash awards based on the financial and safety performance
of our Fabricated Products business, the performance of the
particular segment to which the employee was assigned and
individual performance objectives. For 2007, individual monetary
awards paid to the named executive officers under the 2007 STI
Plan, which were paid in March 2008, were as follows:
Mr. Hockema, $1,127,200; Mr. Bellino, $395,300;
Mr. Barneson, $284,500; Mr. Donnan, $262,800; and
Mr. Rinkenberger, $177,900. For 2006, individual monetary
awards paid to the named executive officers under our 2006
Short-Term Incentive Plan, which were paid in March 2007, were
as follows: Mr. Hockema, $825,490; Mr. Bellino,
$288,892; Mr. Barneson, $208,003; and Mr. Donnan,
$193,145. |
|
(6) |
|
Reflects the aggregate change in actuarial present value of the
named executive officers accumulated benefit under a
defined pension benefit plan previously mentioned by us for our
salaried employees, which we refer to as our Old Pension Plan,
during the applicable fiscal year. For 2007, reflects the
aggregate change in actuarial present value calculated by
(a) assuming mortality according to the RP-2000 Combined
Health mortality table published by the Society of Actuaries and
(b) applying a discount rate of 5.75% per annum to
determine the actuarial present value of the accumulated benefit
at December 31, 2006 and a discount rate of 6.00% per annum
to determine the actuarial present value of the accumulated
benefit at December 31, 2007. For 2006, reflects the
aggregate change in actuarial present value (except for a
negative aggregate change of $(603) for Mr. Donnan)
calculated by (a) assuming mortality according to the
RP-2000 Combined Health mortality table published by the Society
of Actuaries and (b) applying a discount rate of 5.50% per
annum to determine the actuarial present value of the
accumulated benefit at December 31, 2005 and a discount
rate of 5.75% per |
29
|
|
|
|
|
annum to determine the actuarial present value of the
accumulated benefit at December 31, 2006. Effective
December 17, 2003, the Pension Benefit Guaranty
Corporation, or PBGC, terminated and effectively assumed
responsibility for making benefit payments in respect of our Old
Pension Plan, whereupon all benefit accruals under the Old
Pension Plan ceased and benefits available thereunder to certain
salaried employees, including Messrs. Hockema and Barneson,
were significantly reduced due to the limitations on benefits
payable by the PBGC. Above-market or preferential earnings are
not available under our Restoration Plan, which is our only plan
or arrangement pursuant to which compensation may be deferred on
a basis that is not tax-qualified, or any of our other benefit
plans. |
|
(7) |
|
Includes contributions made by us under our Savings Plan. For
2007, includes contributions as follows: Mr. Hockema,
$23,975; Mr. Bellino, $13,400; Mr. Barneson, $29,708;
Mr. Donnan, $22,200; and Mr. Rinkenberger, $20,523.
For 2006, includes contributions as follows: Mr. Hockema,
$22,883; Mr. Barneson, $24,225; and Mr. Donnan,
$21,133. In 2006, we did not make contributions under our
Savings Plan to Mr. Bellino, who joined us in May 2006. |
|
(8) |
|
Includes contributions made by us under our Restoration Plan
(which is intended to restore the benefit of contributions that
we would have otherwise paid to participants under our Savings
Plan but for limitations imposed by the Internal Revenue Code).
For 2007, includes contributions as follows: Mr. Hockema,
$135,916; Mr. Bellino, $0; Mr. Barneson, $31,025;
Mr. Donnan, $14,800; and Mr. Rinkenberger, $10,528. In
2007, contributions to Mr. Bellino under our Savings Plan
were not subject to limitations imposed by the Internal Revenue
Code. For 2006, includes contributions as follows:
Mr. Hockema, $105,037; Mr. Barneson, $27,873; and
Mr. Donnan, $9,809. In 2006, Mr. Bellino, who joined
us in May 2006, did not participate in our Restoration Plan. |
|
(9) |
|
Includes amounts paid to Messrs. Hockema and Barneson under
our Chapter 11 Retention Plan. The total amounts withheld
from Messrs. Hockema and Barneson under our Chapter 11
Retention Plan were as follows: Mr. Hockema, $730,000; and
Mr. Barneson, $250,000. One-half of the total retention
payments withheld from Messrs. Hockema and Barneson under
the Chapter 11 Retention Plan ($365,000 and $125,000,
respectively) was paid to them in August 2006 following our
emergence from chapter 11 bankruptcy, and the remaining
one-half of the total amount withheld from each of
Messrs. Hockema and Barneson ($365,000 and $125,000,
respectively) was paid to them in July 2007. |
|
(10) |
|
Includes the cost to us of perquisites and other personal
benefits for Mr. Hockema. For 2007, includes such costs as
follows: vehicle allowance, $14,570. For 2006, includes such
costs as follows: club membership dues, $3,780; legal fees and
expenses incurred by Mr. Hockema in connection with the
negotiation and consummation of his employment agreement with
us, $25,191; and vehicle allowance, $14,570. |
|
(11) |
|
Includes the cost to us of perquisites and other personal
benefits for Mr. Bellino. For 2007, includes such costs as
follows: club membership dues, $5,319; housing and other
expenses associated with his relocation to California $160,258;
and vehicle allowance, $12,292. For 2006, includes such costs as
follows: club membership dues, $4,286; housing and other
expenses associated with his relocation to California, $27,840;
and vehicle allowance, $8,239. |
|
(12) |
|
Includes the cost to us of perquisites and other personal
benefits for Mr. Barneson. For 2007, includes such costs as
follows: club membership dues, $7,941; and vehicle allowance,
$10,459. For 2006, includes such costs as follows: club
membership dues, $7,480; and vehicle allowance, $10,459. |
|
(13) |
|
Includes the cost to us of perquisites and other personal
benefits for Mr. Donnan. For 2007, includes such costs as
follows: vehicle allowance, $10,955. For 2006, includes such
costs as follows: vehicle allowance, $10,955. |
|
(14) |
|
Includes the cost to us of perquisites and other benefits for
Mr. Rinkenberger. For 2007, includes such costs as follows:
vehicle allowance, $10,288. |
|
(15) |
|
Includes dividend payments made to Messrs. Hockema,
Bellino, Barneson, Donnan and Rinkenberger in 2007 as follows:
Mr. Hockema, $71,366; Mr. Bellino, $7,215;
Mr. Barneson, $18,664; Mr. Donnan, $17,435; and
Mr. Rinkenberger, $9,116. |
As reflected in the table above, the salary received by each of
our named executive officers as a percentage of their respective
total compensation was as follows:
|
|
|
|
|
For 2007, Mr. Hockema, 10.7%; Mr. Bellino, 27.8%;
Mr. Barneson, 15.1%; Mr. Donnan, 18.9%; and
Mr. Rinkenberger, 25.9%; and
|
30
|
|
|
|
|
For 2006, Mr. Hockema, 14.5%; Mr. Bellino (who joined
us in May 2006), 33.6%; Mr. Barneson, 20.4%; and
Mr. Donnan, 28.4%.
|
All Other
Compensation
The table below sets forth information regarding each component
of compensation included in the All Other
Compensation column of the Summary Compensation Table
above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restoration
|
|
|
Amounts Paid
|
|
|
Club
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings Plan
|
|
|
Plan
|
|
|
Under Chapter 11
|
|
|
Membership
|
|
|
Vehicle
|
|
|
Dividend
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Retention Plan
|
|
|
Dues
|
|
|
Allowance
|
|
|
Payments
|
|
|
Other(1)
|
|
|
Total
|
|
|
Jack A. Hockema
|
|
|
2007
|
|
|
$
|
23,975
|
|
|
$
|
135,916
|
|
|
$
|
365,000
|
|
|
|
|
|
|
$
|
14,570
|
|
|
$
|
71,366
|
|
|
|
|
|
|
$
|
610,827
|
|
|
|
|
2006
|
|
|
$
|
22,883
|
|
|
$
|
105,037
|
|
|
$
|
365,000
|
|
|
$
|
3,780
|
|
|
$
|
14,570
|
|
|
|
|
|
|
$
|
25,191
|
|
|
$
|
536,461
|
|
Joseph P. Bellino
|
|
|
2007
|
|
|
$
|
13,400
|
|
|
|
|
|
|
|
|
|
|
$
|
5,319
|
|
|
$
|
12,292
|
|
|
$
|
7,215
|
|
|
$
|
160,258
|
|
|
$
|
198,484
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,286
|
|
|
$
|
8,239
|
|
|
|
|
|
|
$
|
27,840
|
|
|
$
|
40,365
|
|
John Barneson
|
|
|
2007
|
|
|
$
|
29,708
|
|
|
$
|
31,025
|
|
|
$
|
125,000
|
|
|
$
|
7,941
|
|
|
$
|
10,459
|
|
|
$
|
18,664
|
|
|
|
|
|
|
$
|
222,797
|
|
|
|
|
2006
|
|
|
$
|
24,225
|
|
|
$
|
27,873
|
|
|
$
|
125,000
|
|
|
$
|
7,480
|
|
|
$
|
10,459
|
|
|
|
|
|
|
|
|
|
|
$
|
195,037
|
|
John M. Donnan
|
|
|
2007
|
|
|
$
|
22,200
|
|
|
$
|
14,800
|
|
|
|
|
|
|
|
|
|
|
$
|
10,955
|
|
|
$
|
17,435
|
|
|
|
|
|
|
$
|
65,390
|
|
|
|
|
2006
|
|
|
$
|
21,133
|
|
|
$
|
9,809
|
|
|
|
|
|
|
|
|
|
|
$
|
10,955
|
|
|
|
|
|
|
|
|
|
|
$
|
41,897
|
|
Daniel J. Rinkenberger
|
|
|
2007
|
|
|
$
|
20,523
|
|
|
$
|
10,528
|
|
|
|
|
|
|
|
|
|
|
$
|
10,288
|
|
|
$
|
9,116
|
|
|
|
|
|
|
$
|
50,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For Mr. Hockema, represents reimbursement of legal fees and
expenses incurred in connection with the negotiation and
consummation of his employment agreement with us. For
Mr. Bellino, represents reimbursement of housing and other
expenses associated with his relocation to California. |
Grants of
Plan-Based Awards in 2007
The table below sets forth information regarding grants of
plan-based awards made to our named executive officers during
2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
Fair Value of
|
|
|
|
|
|
|
Estimated Possible Payouts Under
|
|
Shares of
|
|
Securities
|
|
Stock and
|
|
|
|
|
Award
|
|
Non-Equity Incentive Plan Awards(2)
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
|
|
|
Approval
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units(3)
|
|
options(4)
|
|
Awards(5)
|
Name
|
|
Grant Date
|
|
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
($)
|
|
Jack A. Hockema
|
|
|
|
|
|
|
|
|
|
$
|
259,615
|
|
|
$
|
519,230
|
|
|
$
|
1,557,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,239
|
|
|
|
|
|
|
$
|
1,059,252
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,037
|
|
|
$
|
320,676
|
|
Joseph P. Bellino
|
|
|
|
|
|
|
|
|
|
$
|
90,750
|
|
|
$
|
181,500
|
|
|
$
|
544,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,041
|
|
|
|
|
|
|
$
|
403,330
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,060
|
|
|
$
|
122,094
|
|
John Barneson
|
|
|
|
|
|
|
|
|
|
$
|
65,475
|
|
|
$
|
130,950
|
|
|
$
|
392,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,844
|
|
|
|
|
|
|
$
|
307,558
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,334
|
|
|
$
|
93,127
|
|
John M. Donnan
|
|
|
|
|
|
|
|
|
|
$
|
60,750
|
|
|
$
|
121,500
|
|
|
$
|
364,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,431
|
|
|
|
|
|
|
$
|
274,514
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,083
|
|
|
$
|
83,112
|
|
Daniel J. Rinkenberger
|
|
|
|
|
|
|
|
|
|
$
|
41,000
|
|
|
$
|
78,000
|
|
|
$
|
245,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,323
|
|
|
|
|
|
|
$
|
105,853
|
|
|
|
|
4/3/07
|
|
|
|
3/30/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
803
|
|
|
$
|
32,040
|
|
|
|
|
(1) |
|
On March 30, 2007, the compensation committee of our board
of directors approved the grants of restricted stock and option
rights reflected in the table, with such grants to be effective
as of the third trading day after the day on which we filed our
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006. We filed |
31
|
|
|
|
|
our Annual Report on Form
10-K for the
fiscal year ended December 31, 2006 on March 29, 2007,
resulting in a grant date for such restricted stock and option
rights of April 3, 2007. |
|
(2) |
|
Reflects the threshold, target and maximum award amounts under
our 2007 STI Plan for our named executive officers. No awards
were available below the threshold performance level. Under our
2007 STI Plan, participants were eligible to receive a cash
incentive award between one-half and three times the
participants target award amount. Individual monetary
awards paid to the named executive officers under the 2007 STI
Plan, which were paid in March 2008, were as follows:
Mr. Hockema, $1,127,200; Mr. Bellino, $395,300;
Mr. Barneson, $284,500; Mr. Donnan, $262,800; and
Mr. Rinkenberger, $177,900. |
|
(3) |
|
Reflects the number of shares of restricted stock received by
our named executive officers pursuant to awards granted
effective April 3, 2007. The restrictions on such shares
will lapse on April 3, 2010 or earlier if the named
executive officers employment terminates as a result of
death or disability (or, in the case of Messrs. Hockema and
Bellino, retirement), the named executive officers
employment is terminated by us without cause, the named
executive officers employment is voluntarily terminated by
him for good reason or if there is a change in control. The
named executive officer will receive all dividends and other
distributions paid with respect to the shares of restricted
stock he or she holds, but if any of such dividends or
distributions are paid in shares of our capital stock, such
shares will be subject to the same restrictions on
transferability as are the shares of restricted stock with
respect to which they were paid. |
|
(4) |
|
Reflects the total number of shares of common stock issuable
upon exercise of option rights granted to our named executive
officers effective April 3, 2007. The option rights became
exercisable as to one-third of the total number of shares of
common stock for which they are exercisable on April 3,
2008 and will become exercisable as to one-third of the total
number of shares of common stock for which they are exercisable
on each of April 3, 2007 and April 3, 2010 or earlier
if the named executive officers employment terminates as a
result of death or disability (or, in the case of
Messrs. Hockema and Bellino, retirement), the named
executive officers employment is terminated by us without
cause, the named executive officers employment is
voluntarily terminated by him for good reason or in the event of
a change of control. The purchase price payable upon exercise of
the option rights is $80.01 per share of common stock, the
closing price per share of our common stock as reported on the
Nasdaq Global Select Market on April 3, 2007. The option
rights expire on April 3, 2017, unless terminated earlier
in accordance with their terms. |
|
(5) |
|
Reflects the grant date fair value of the stock and option
awards reflected in this table, computed in accordance with
SFAS No. 123-R.
For information regarding the compensation cost of the stock and
option awards with respect to our 2007 fiscal year, see
Note 11 to the Notes to Consolidated Financial Statements
included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007. |
Employment-Related
Agreements and Certain Employee Benefit Plans
Employment
Agreement with Jack A. Hockema
On July 6, 2006, in connection with our emergence from
chapter 11 bankruptcy, we entered into an employment
agreement with Jack A. Hockema, pursuant to which
Mr. Hockema continued his duties as our President and Chief
Executive Officer. The terms of Mr. Hockemas
employment agreement provide for an initial base salary of
$730,000, subject to annual increases, if any, agreed by us and
Mr. Hockema and for an annual short-term incentive target
equal to 68.5% of his base salary. The short-term incentive is
to be paid in cash, but is subject to both our meeting the
applicable underlying performance thresholds and an annual cap
of three times the target. If Mr. Hockemas employment
terminates other than on a date which is the last day of a
fiscal year, then his annual short-term incentive target with
respect to the fiscal year in which his employment terminates
will be prorated for the actual number of days of employment
during such fiscal year, and such amount will be paid to
Mr. Hockema or his estate unless his employment was
terminated by us for cause or was voluntarily terminated by him
without good reason. Under the employment agreement,
Mr. Hockema received a grant of 185,000 shares of
restricted stock on July 6, 2006 under our Equity Incentive
Plan; the restrictions on all such shares will lapse on
July 6, 2009 or earlier if his employment is terminated as
a result of his death, disability or retirement, his employment
is terminated by us without cause or his employment is
voluntarily terminated by him with good reason, or if there is a
change in control. The employment agreement provides that
Mr. Hockema is entitled to receive annual equity awards
(such as restricted stock, stock options or performance shares)
with a target economic value of 165% of his base salary; the
32
terms of all equity grants to Mr. Hockema are to be similar
to the terms of equity grants made to other senior executives at
the time they are made, except that the grants must provide for
full vesting at retirement and pro rata vesting upon any other
termination of his employment except termination by us for cause
or voluntary termination by him without good reason. The initial
term of Mr. Hockemas employment agreement is five
years and it will be automatically renewed and extended for
one-year periods unless either party provides notice one year
prior to the end of the initial term or any extension period.
Mr. Hockema also participates in the various benefit plans
for salaried employees.
Under Mr. Hockemas employment agreement, following
any termination of his employment, we must pay or provide to
Mr. Hockema or his estate:
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|
|
base salary earned through the date of such termination;
|
|
|
|
except in the case of a termination by us for cause or by him
other than for good reason, earned but unpaid incentive awards;
|
|
|
|
accrued but unpaid vacation;
|
|
|
|
benefits under our employment benefit plans to the extent vested
and not forfeited on the date of such termination; and
|
|
|
|
benefit continuation and conversion rights to the extent
provided under our employment benefit plans.
|
In addition, if Mr. Hockemas employment is terminated
as a result of his death or disability, all of his outstanding
equity awards will vest in accordance with their terms, subject
to the provisions described above, and all of his vested but
unexercised grants will remain exercisable through the second
anniversary of such termination. If Mr. Hockemas
employment is terminated by us for cause or is voluntarily
terminated by him without good reason, all of his unvested
equity grants will be forfeited and all of his vested but
unexercised equity grants will be forfeited on the date that is
90 days following such termination. If
Mr. Hockemas employment is terminated by us without
cause or is voluntarily terminated by him with good reason, in
addition to the payment of his accrued benefits as described
above, (1) we will make a lump-sum payment to
Mr. Hockema in an amount equal to two times the sum of his
base salary and annual short-term incentive target, (2) his
medical, dental, vision, life insurance and disability benefits,
which we refer to as welfare benefits, will continue for two
years commencing on the date of such termination, and
(3) all of his outstanding equity awards will vest in
accordance with their terms, subject to the provisions described
above, and all of his vested but unexercised grants will remain
exercisable through the second anniversary of such termination.
If there is a change in control of our company, all of
Mr. Hockemas equity awards outstanding as of the date
of such change in control will fully vest. If
Mr. Hockemas employment is terminated by us without
cause or is voluntarily terminated by him with good reason
within two years following a change in control, in addition to
the payments of his accrued benefits as described above,
(1) we will make a lump-sum payment to Mr. Hockema in
an amount equal to three times the sum of his base salary and
annual short-term incentive target, (2) his welfare
benefits will continue for three years commencing on the date of
such termination, and (3) all previously unvested equity
grants will become exercisable and vested but unexercisable
grants will remain exercisable through the second anniversary of
such termination. If any payments to Mr. Hockema would be
subject to federal excise tax by reason of being considered
contingent on a change in control, we must pay to
Mr. Hockema an additional amount such that, after
satisfaction of all tax obligations imposed on such payments,
Mr. Hockema retains an amount equal to such federal excise
tax.
Mr. Hockema will be subject to noncompetition,
nonsolicitation and confidentiality restrictions following his
termination of employment.
For quantitative disclosure regarding estimated payments and
other benefits that would have been received by Mr. Hockema
or his estate if his employment had terminated on
December 31, 2007, the last business day of 2007, under
various circumstances, see Potential Payments
and Benefits upon Termination of Employment below.
33
Employment
Agreement with Joseph P. Bellino
On July 6, 2006, in connection with our emergence from
chapter 11 bankruptcy, we entered into an employment
agreement with Joseph P. Bellino, pursuant to which
Mr. Bellino continued his duties as our Executive Vice
President and Chief Financial Officer. The agreement supersedes
an employment agreement with Mr. Bellino that was entered
into when he joined us in May 2006. The terms of
Mr. Bellinos employment agreement provide for an
initial base salary of $350,000, subject to annual increases, if
any, agreed by us and Mr. Bellino and for an annual
short-term incentive target equal to 50% of his base salary. The
short-term incentive is to be paid in cash, but is subject to
both our meeting the applicable underlying performance
thresholds and an annual cap of three times the target. If
Mr. Bellinos employment terminates other than on a
date which is the last day of a fiscal year, then his annual
short-term incentive target with respect to the fiscal year in
which his employment terminates will be prorated for the actual
number of days of employment during such fiscal year, and such
amount will be paid to Mr. Bellino or his estate unless his
employment was terminated by us for cause or was voluntarily
terminated by him without good reason. Under the employment
agreement, Mr. Bellino received an initial grant of
15,000 shares of restricted stock on July 6, 2006
under our Equity Incentive Plan; the restrictions on all such
shares will lapse on July 6, 2009 or earlier if his
employment is terminated as a result of his death, disability or
retirement, his employment is terminated by us without cause or
his employment is voluntarily terminated by him with good
reason, or if there is a change in control. The employment
agreement provides that Mr. Bellino is entitled to receive
annual equity awards (such as restricted stock, stock options or
performance shares) with a target economic value of $450,000;
the terms of all equity grants are to be similar to the terms of
equity grants made to other senior executives at the time they
are made. Mr. Bellino also participates in the various
benefit plans for salaried employees. The initial term of his
employment agreement is through May 15, 2009 and will be
automatically renewed and extended for one-year periods unless
either party provides notice one year prior to the end of the
initial term or any extension period.
Under Mr. Bellinos employment agreement, following
any termination of his employment, we must pay or provide to
Mr. Bellino or his estate:
|
|
|
|
|
base salary earned through the date of such termination;
|
|
|
|
except in the case of a termination by us for cause or by him
other than for good reason, earned but unpaid incentive awards;
|
|
|
|
accrued but unpaid vacation;
|
|
|
|
benefits under our employment benefit plans to the extent vested
and not forfeited on the date of such termination; and
|
|
|
|
benefit continuation and conversion rights to the extent
provided under our employment benefit plans.
|
In addition, if Mr. Bellinos employment is terminated
as a result of his death or disability, all of his outstanding
equity awards will vest in accordance with their terms, subject
to the provisions described above, and all of his vested but
unexercised grants will remain exercisable through the second
anniversary of such termination. If Mr. Bellinos
employment is terminated by us for cause or is voluntarily
terminated by him without good reason, all of his unvested
equity grants will be forfeited and all of his vested but
unexercised equity grants will be forfeited on the date that is
90 days following such termination. If
Mr. Bellinos employment is terminated by us without
cause or is voluntarily terminated by him with good reason, in
addition to the payment of his accrued benefits as described
above, (1) we will make a lump-sum payment to
Mr. Bellino in an amount equal to two times the sum of his
base salary, (2) his welfare benefits will continue for two
years commencing on the date of such termination, and
(3) all of his outstanding equity awards will vest in
accordance with their terms, subject to the provisions described
above, and all of his vested but unexercised grants will remain
exercisable through the second anniversary of such termination.
If there is a change in control of our company, all of
Mr. Bellinos equity awards outstanding as of the date
of such change in control will fully vest. If
Mr. Bellinos employment is terminated by us without
cause or is voluntarily terminated by him with good reason
within two years following a change in control, in addition to
the payments of his accrued benefits as described above,
(1) we will make a lump-sum payment to Mr. Bellino in
an
34
amount equal to three times the sum of his base salary and
annual short-term incentive target, (2) his welfare
benefits will continue for three years commencing on the date of
such termination, and (3) all previously unvested equity
grants will become exercisable and vested but unexercisable
grants will remain exercisable through the second anniversary of
such termination. If any payments to Mr. Bellino would be
subject to federal excise tax by reason of being considered
contingent on a change in control, we must pay to
Mr. Bellino an additional amount such that, after
satisfaction of all tax obligations imposed on such payments,
Mr. Bellino retains an amount equal to such federal excise
tax.
Mr. Bellino will be subject to noncompetition,
nonsolicitation and confidentiality restrictions following his
termination of employment.
For quantitative disclosure regarding estimated payments and
other benefits that would have been received by Mr. Bellino
or his estate if his employment had terminated on
December 31, 2007, the last business day of 2007, under
various circumstances, see Potential Payments
and Benefits upon Termination of Employment below.
Salaried
Severance Plan
Effective September 3, 2002, in connection with the
commencement of our chapter 11 bankruptcy and the
implementation of the Chapter 11 KERP, we adopted a
severance plan to provide selected executive officers, including
Messrs. Hockema, Barneson, Donnan and Rinkenberger, and
other key employees with appropriate protection in the event of
certain terminations of employment and entered into severance
agreements with plan participants. Mr. Hockemas
employment agreement discussed above replaced his participation
in the severance plan and superseded his severance agreement.
The severance plan and related severance agreements, including
those with Messrs. Barneson, Donnan and Rinkenberger,
terminated on July 6, 2007. Mr. Bellino, who joined us
in May 2006, was not covered by the Chapter 11 KERP or
related severance plan, but his employment agreement discussed
above, like Mr. Hockemas, contains protections in the
event of certain terminations of employment.
Messrs. Barneson, Donnan and Rinkenberger are now subject
to our severance plan for salaried employees, which we refer to
as our Salaried Severance Plan. Our Salaried Severance Plan
provides for payment of a termination allowance and continuation
of welfare benefits upon an involuntary separation of employment
that is intended to be permanent and that is due to our
convenience. The termination allowance and continuation of
welfare benefits are not available under our Salaried Severance
Plan if:
|
|
|
|
|
the employee received severance compensation or welfare benefit
continuation pursuant to a Change in Control Agreement
(described below) or any other agreement;
|
|
|
|
the employees employment is terminated other than by us
without cause; or
|
|
|
|
the employee declined to sign, or subsequently revokes, a
designated form of release.
|
The termination allowance payable to covered employees under our
Salaried Severance Plan consists of a lump-sum cash payment
equal to the covered employees weekly base salary
multiplied by a number of weeks (not to exceed 26), which we
refer to as the continuation period, determined based on the
covered employees number of years of full employment.
Under our Salaried Severance Plan, welfare benefits are
continued following the termination of employment for the
shorter of the continuation period and the period commencing on
the termination of employment and ending on the date that the
covered employee is no longer eligible for coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, or
COBRA. As of December 31, 2007, the continuation periods
for Messrs. Barneson, Donnan and Rinkenberger were 26, 12
and 12 weeks, respectively
For quantitative disclosure regarding estimated payments and
other benefits that would have been received by each of
Messrs. Barneson, Donnan and Rinkenberger or his estate if
his employment had terminated on December 31, 2007, the
last business day of 2007, under various circumstances, see
Potential Payments and Benefits upon
Termination of Employment below.
Change in
Control Agreements
In 2002, in connection with the commencement of our
chapter 11 bankruptcy and the implementation of the
Chapter 11 KERP, we also entered into Change in Control
Agreements with certain key executives, including
35
Messrs. Hockema, Barneson, Donnan and Rinkenberger, in
order to provide them with appropriate protection in the event
of a termination of employment in connection with a change in
control or, except as otherwise provided, a significant
restructuring. Mr. Hockemas employment agreement
discussed above supersedes his Change in Control Agreement.
Mr. Bellino, who joined us in May 2006, was not covered by
the Chapter 11 KERP and did not receive a Change in Control
Agreement thereunder, but his employment agreement discussed
above, like Mr. Hockemas, contains
change-in-control
severance arrangements. The Change in Control Agreements
terminate on the second anniversary of a change in control.
The Change in Control Agreements provide for severance payments
and continuation of welfare benefits upon termination of
employment in certain circumstances. The participants are
eligible for severance benefits if their employment is
terminated by us without cause or by the participant with good
reason during a period that commences 90 days prior to the
change in control and ends on the second anniversary of the
change in control. Participants (including Messrs. Donnan
and Rinkenberger but excluding Mr. Barneson) also are
eligible for severance benefits if their employment is
terminated by us due to a significant restructuring even when
there has been no change in control. These benefits are not
available if:
|
|
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|
|
the participant receives severance compensation or welfare
benefit continuation pursuant to the Severance Plan or any other
prior agreement;
|
|
|
|
the participants employment is terminated other than by us
without cause or by the participant for good reason; or
|
|
|
|
the participant declines to sign, or subsequently revokes, a
designated form of release.
|
In consideration for the severance payment and continuation of
benefits, a participant will be subject to noncompetition,
nonsolicitation and confidentiality restrictions following his
or her termination of employment with us.
Upon a qualifying termination of employment, each of
Messrs. Barneson, Donnan and Rinkenberger are entitled to
receive the following:
|
|
|
|
|
three times (for Mr. Barneson) or two times (for
Messrs. Donnan and Rinkenberger) the sum of his base pay
and most recent short-term incentive target;
|
|
|
|
a pro-rated portion of his short-term incentive target for the
year of termination; and
|
|
|
|
a pro-rated portion of his long-term incentive target in effect
for the year of his termination, provided that such target was
achieved.
|
In addition, welfare benefits and perquisites are continued for
a period of three years (for Mr. Barneson) or two years
(for Messrs. Donnan and Rinkenberger) after termination of
employment with us.
In general, if any payments would be subject to federal excise
tax or any similar state or local tax by reason of being
considered contingent on a change in control, the participant
will be entitled to receive an additional amount such that,
after satisfaction of all tax obligations imposed on such
payments, the participant retains an amount equal to the federal
excise tax or similar state or local tax imposed on such
payments. However, if no such federal excise tax or similar
state or local tax would apply if the aggregate payments were
reduced by 5%, then the aggregate payments to the participant
will be reduced by the amount necessary to avoid application of
such federal excise tax or similar state or local tax.
For quantitative disclosure regarding estimated payments and
other benefits that would have been received by each of
Messrs. Barneson, Donnan and Rinkenberger or his estate if
his employment had terminated on December 31, 2007, the
last business day of 2007, under various circumstances, see
Potential Payments and Benefits Upon
Termination of Employment below.
Equity
Incentive Plan
On July 6, 2006, upon our emergence from chapter 11
bankruptcy and the implementation of our plan of reorganization,
our 2006 Equity and Performance Incentive Plan became effective.
Our 2006 Equity and
36
Performance Incentive Plan was amended and restated on
February 6, 2008. We refer to such plan, both before and
after its amendment and restatement, as our Equity Incentive
Plan.
The Equity Incentive Plan is an omnibus plan that facilitates
the issuance of future long-term incentive awards as part of our
comprehensive compensation structure and is administered by a
committee of non-employee directors of our board of directors,
currently the compensation committee.
Our officers and other key employees, as selected by the
compensation committee are eligible to participate in the Equity
Incentive Plan. As of December 31, 2007, approximately 40
officers and other key employees had been selected by the
compensation committee to receive awards under the Equity
Incentive Plan. Our non-employee directors also participate in
the Equity Incentive Plan.
Subject to certain adjustments that may be required from time to
time to prevent dilution or enlargement of the rights of
participants under the Equity Incentive Plan, a maximum of
2,222,222 shares of common stock may be issued under the
Equity Incentive Plan. As of December 31, 2007, there were
1,604,197 shares of common stock available for issuance in
respect of future awards under the Equity Incentive Plan.
Our Equity Incentive Plan permits the granting of awards in the
form of options to purchase our common stock, stock appreciation
rights, shares of restricted stock, restricted stock units,
performance shares, performance units and other awards. The
Equity Incentive Plan will expire on July 6, 2016. No
grants will be made under the Equity Incentive Plan after that
date, but all grants made on or prior to such date will continue
in effect thereafter subject to the terms thereof and of the
Equity Incentive Plan.
Under our Equity Incentive Plan, any award agreement may provide
that, if the compensation committee of our board of directors
determines that a participant has engaged in any detrimental
activity, either during employment by us, or within a specified
period after termination of employment, the participant is
required to, among other things:
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|
|
forfeit any award under the Equity Incentive Plan held by the
participant,
|
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|
|
return to us (in exchange for our payment to the participant of
any cash amount that the participant paid to us for such an
award) all shares of our common stock acquired under the Equity
Incentive Plan that the participant has not disposed of, and
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|
with respect to any shares acquired under the Equity Incentive
Plan that the participant has disposed of, pay to us the
difference between the market value of those shares on the date
they were acquired and any amount that the participant paid for
such shares.
|
Under the Equity Incentive Plan, detrimental
activity is generally defined to include (1) conduct
resulting in an accounting restatement due to material
noncompliance with any financial reporting requirements under
U.S. federal securities laws, (2) competing with us,
(3) soliciting any of our employees to terminate his or her
employment with us, (4) disclosing our confidential
business information, (5) failing or refusing to promptly
disclose and assign to us rights in certain intellectual
property that the participant conceived during his or her
employment with us, and (6) activity that results in the
termination of the participants employment by us for
cause, which we typically define to include violation of our
code of business conduct and ethics. To date, each award
agreement under the Equity Incentive Plan, other than award
agreements with non-employee directors, contains such provisions
that are applicable if the compensation committee determines the
participant has engaged in detrimental activity, either during
employment by us or within one year after termination of
employment.
The Equity Incentive Plan also permits non-employee directors to
elect to receive shares of our common stock in lieu of any or
all of his or her annual cash retainer, including retainers for
serving as a committee chair or lead outside director.
Our board of directors may, in its discretion, terminate the
Equity Incentive Plan at any time. The termination of the Equity
Incentive Plan would not affect the rights of participants or
their successors under any awards outstanding and not exercised
in full on the date of termination.
Our board of directors may at any time and from time to time
amend the Equity Incentive Plan in whole or in part. Any
amendment which must be approved by our stockholders in order to
comply with applicable law or the
37
rules of the principal securities exchange, association or
quotation system on which our common stock is then traded or
quoted will not be effective unless and until such approval has
been obtained. The compensation committee will not, without the
further approval of the stockholders, authorize the amendment of
any outstanding option or appreciation right to reduce the
exercise price or base price. Furthermore, no option will be
cancelled and replaced with awards having a lower exercise price
without further approval of the stockholders.
Savings
Plan
We sponsor a tax-qualified profit sharing and 401(k) plan, our
Savings Plan, in which eligible salaried employees may
participate. Pursuant to the Savings Plan, employees may elect
to reduce their current annual compensation up to the lesser of
75% or the statutorily prescribed limit of $15,500 in calendar
year 2008 (plus up to an additional $5,000 in the form of
catch-up
contributions for participants near retirement age), and have
the amount of any reduction contributed to the Savings Plan. Our
Savings Plan is intended to qualify under sections 401(a)
and 401(k) of the Internal Revenue Code, so that contributions
by us or our employees to the Savings Plan and income earned on
contributions are not taxable to employees until withdrawn from
the Savings Plan and so that contributions will be deductible by
us when made. We match 100% of the amount an employee
contributes to the Savings Plan, subject to a 4% maximum based
on the employees compensation as defined in the Savings
Plan.
Employees are immediately vested 100% in our matching
contributions to our Savings Plan. We also make annual
fixed-rate contributions on behalf of our employees in the
following amounts:
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|
|
|
|
For our employees who were employed with us on or before
January 1, 2004, we contribute in a range from 2% to 10% of
the employees compensation, based upon the sum of the
employees age and years of continuous service as of
January 1, 2004; and
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|
|
|
For our employees who were first employed with us after
January 1, 2004, we contribute 2% of the employees
compensation.
|
An employee is required to be employed on the last day of the
year in order to receive the fixed-rate contribution. Employees
are vested 100% in our fixed-rate contributions to the Savings
Plan after three years of service. The total amount of elective,
matching and fixed-rate contributions in any year cannot exceed
the lesser of 100% of an employees compensation or $45,000
in 2007 (adjusted annually). We may amend or terminate these
matching and fixed-rate contributions at any time by an
appropriate amendment to our Savings Plan. Upon termination of
employment, employees are eligible to receive a distribution of
their vested plan balances under our Savings Plan. The
independent trustee of the Savings Plan invests the assets of
the Savings Plan as directed by participants.
Restoration
Plan
We sponsor a nonqualified, deferred compensation plan which we
refer to as our Restoration Plan in which a select group of our
management and highly compensated employees may participate.
Eligibility to participate in our Restoration Plan is determined
by the compensation committee. The purpose of our Restoration
Plan is to restore the benefit of matching and fixed-rate
contributions that we would have otherwise paid to participants
under our Savings Plan but for the limitations on benefit
accruals and payments imposed by the Internal Revenue Code. We
maintain an account on behalf of each participant in the
Restoration Plan and contributions to a participants
Restoration Plan account to restore benefits under the Savings
Plan are made generally in the manner described below:
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|
|
If our matching contributions to a participant under the Savings
Plan are limited in any year, we will make an annual
contribution to that participants account under the
Restoration Plan equal to the difference between:
|
|
|
|
|
|
the matching contributions that we could have made to that
participants account under the Savings Plan if the
Internal Revenue Code did not impose any limitations; and
|
|
|
|
the maximum contribution we could in fact make to that
participants account under the Savings Plan in light of
the limitations imposed by the Internal Revenue Code.
|
38
A participant is required to be making elective contributions
under our Savings Plan on the first day of the year in order to
receive a matching contribution from us under our Restoration
Plan for that year. However, matching contributions under the
Restoration Plan are calculated as though the participant
elected to make the maximum permissible elective contributions
under the Savings Plan sufficient to receive the maximum
matching contribution from us under the Savings Plan, without
regard for the participants actual elective contributions.
Participants are immediately vested 100% in our matching
contributions to the Restoration Plan.
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Annual fixed-rate contributions to the participants
account under the Restoration Plan are made in an amount equal
to between 2% and 10% of the participants excess
compensation, as defined in Section 401(a)(17) of the
Internal Revenue Code. The actual fixed-rate contribution
percentage is determined based upon the sum of the
participants age and years of continuous service as of
January 1, 2004. If a participant is first employed with us
after January 1, 2004, the fixed-rate contribution
percentage is 2%. A participant is required to be employed on
the last day of the year in order to receive the fixed-rate
contribution. Further, to the extent that fixed-rate
contributions to a participant under our Savings Plan on
compensation that is not excess compensation, as defined in
Internal Revenue Code Section 401(a)(17), cannot be made under
the Savings Plan due to Internal Revenue Code limitations, such
fixed-rate contributions will be made to such participants
account under our Restoration Plan. Participants are vested 100%
in our fixed-rate contributions to our Restoration Plan after
three years of service or upon retirement, death, disability or
a change of control.
|
A participant is entitled to distributions six months following
his or her termination of service, except that any participant
who is terminated for cause will forfeit the entire amount of
matching and fixed-rate contributions made by us to that
participants account under the Restoration Plan.
We may amend or terminate these matching and fixed-rate
contributions at any time by an appropriate amendment to our
Restoration Plan. The value of each participants account
under our Restoration Plan changes based upon the performance of
the funds designated by the participant from a menu of various
money market and investment funds.
Chapter 11
Long-Term Incentive Plan
During 2002, in connection with the commencement of our
chapter 11 bankruptcy and the implementation of the
Chapter 11 KERP, we adopted our Chapter 11 Long-Term
Incentive Plan, pursuant to which key management employees,
including Messrs. Hockema, Barneson, Donnan and
Rinkenberger, became eligible to receive an annual cash award
based on our attainment of sustained cost reductions above
$80 million annually for the period 2002 through our
emergence from chapter 11 bankruptcy on July 6, 2006.
Under the Chapter 11 Long-Term Incentive Plan, 15% of cost
reductions above the stipulated threshold were placed in a pool
to be shared by participants based on the percentage their
individual targets comprised of the aggregate target for all
participants. Annual awards during this period ranged between
approximately (16%) to 81% of target, with an average award of
approximately 55% of target over the four and one-half year
period. In general, approximately one-half of the award payable
under the Chapter 11 Long-Term Incentive Plan was paid to
participants in August 2006 and the remaining portion of the
award was paid to participants in July 2007. No further amounts
are payable under the Chapter 11 Long-Term Incentive Plan.
Chapter 11
Retention Plan
Effective September 3, 2002, in connection with the
commencement of our chapter 11 bankruptcy and the
implementation of the Chapter 11 KERP, we adopted the
Chapter 11 Retention Plan and entered into retention
agreements with selected key employees, including
Messrs. Hockema, Barneson, Donnan and Rinkenberger. In
general, awards payable under the Chapter 11 Retention Plan
vested, as applicable, on September 30, 2002,
March 31, 2003, September 30, 2003 and March 31,
2004. The Chapter 11 Retention Plan was not extended beyond
March 2004. Except with respect to payments of the withheld
amounts (as described below) to Messrs. Hockema and
Barneson, no payments were made after March 31, 2004.
39
For Messrs. Hockema and Barneson, $730,000 and $250,000,
respectively, of accrued awards payable under the
Chapter 11 Retention Plan were withheld for subsequent
payment. One-half of such withheld amount was paid in a lump sum
in August 2006 upon our emergence from chapter 11
bankruptcy, and one-half was paid in a lump sum in July 2007. No
further amounts are payable under the Chapter 11 Retention
Plan.
Outstanding
Equity Awards at December 31, 2007
The table below sets forth the information regarding equity
awards held by our named executive officers as of
December 31, 2007.
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|
|
|
|
|
|
Option Awards(1)
|
|
|
Stock Awards
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
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|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested(2)
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Jack A. Hockema
|
|
|
|
|
|
|
8,037
|
|
|
$
|
80.01
|
|
|
|
4/3/17
|
|
|
|
185,000
|
(3)
|
|
$
|
14,703,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,239
|
(4)
|
|
$
|
1,052,236
|
|
Joseph P. Bellino
|
|
|
|
|
|
|
3,060
|
|
|
$
|
80.01
|
|
|
|
4/3/17
|
|
|
|
15,000
|
(3)
|
|
$
|
1,192,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,041
|
(4)
|
|
$
|
400,659
|
|
John Barneson
|
|
|
|
|
|
|
2,334
|
|
|
$
|
80.01
|
|
|
|
4/3/17
|
|
|
|
48,000
|
(3)
|
|
$
|
3,815,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,844
|
(4)
|
|
$
|
305,521
|
|
John M. Donnan
|
|
|
|
|
|
|
2,083
|
|
|
$
|
80.01
|
|
|
|
4/3/17
|
|
|
|
45,000
|
(3)
|
|
$
|
3,576,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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3,431
|
(4)
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|
$
|
272,696
|
|
Daniel J. Rinkenberger
|
|
|
|
|
|
|
803
|
|
|
$
|
80.01
|
|
|
|
4/3/17
|
|
|
|
24,000
|
(3)
|
|
$
|
1,907,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,323
|
(4)
|
|
$
|
105,152
|
|
|
|
|
(1) |
|
Reflects option rights granted to our named executive officers
effective April 3, 2007. The option rights became
exercisable as to one-third of the total number of shares of
common stock for which they are exercisable on April 3,
2008 and will become exercisable as to one-third of the total
number of shares of common stock for which they are exercisable
on each of April 3, 2007 and April 3, 2010 or earlier
if the named executive officers employment terminates as a
result of death or disability (or, in the case of
Messrs. Hockema and Bellino, retirement), the named
executive officers employment is terminated by us without
cause, the named executive officers employment is
voluntarily terminated by him for good reason or in the event of
a change of control. The option rights expire on April 3,
2017, unless terminated earlier in accordance with their terms. |
|
(2) |
|
Reflects the aggregate market value of the shares of restricted
stock determined based on a per share price of $79.48, the
closing price per share of our common stock as reported on the
Nasdaq Global Select Market on December 31, 2007, which was
the last trading day of 2007. |
|
(3) |
|
Reflects the number of shares of restricted stock received by
our named executive officers pursuant to awards granted on
July 6, 2006 in connection with our emergence from
chapter 11 bankruptcy. The restrictions on all such shares
will lapse on July 6, 2009 or earlier if the named
executive officers employment terminates as a result of
death or disability (or, in the case of Messrs. Hockema and
Bellino, retirement), the named executive officers
employment is terminated by us without cause, the named
executive officers employment is voluntarily terminated by
him for good reason or if there is a change in control. |
|
(4) |
|
Reflects the number of shares of restricted stock received by
our named executive officers pursuant to awards granted
effective April 3, 2007. The restrictions on all such
shares will lapse on April 3, 2010 or earlier if the named
executive officers employment terminates as a result of
death or disability (or, in the case of Messrs. Hockema or
Bellino, retirement), the named executive officers
employment is terminated by us without cause, the named
executive officers employment is voluntarily terminated by
him for good reason or if there is a change in control. |
40
Pension
Benefits as of December 31, 2007
The table below sets forth information regarding the present
value as of December 31, 2007 of the accumulated benefits
of our named executive officers (other than Mr. Bellino)
under our Old Pension Plan. As discussed further below, our Old
Pension Plan was terminated on December 17, 2003, at which
time the number of years of credited service for participants
was frozen. Mr. Bellino joined us in May 2006 and did not
participate in the Old Pension Plan prior to its termination.
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Present Value of
|
|
|
|
|
|
Number of Years
|
|
|
Accumulated
|
|
|
|
|
|
Credited Service
|
|
|
Benefit(1)
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
|
($)
|
|
|
Jack A. Hockema
|
|
Kaiser Aluminum Salaried
Employees Retirement Plan
|
|
|
11.92
|
|
|
$
|
303,439
|
|
John Barneson
|
|
Kaiser Aluminum Salaried
Employees Retirement Plan
|
|
|
28.83
|
|
|
$
|
275,883
|
|
John M. Donnan
|
|
Kaiser Aluminum Salaried
Employees Retirement Plan
|
|
|
10.25
|
|
|
$
|
129,452
|
|
Daniel J. Rinkenberger
|
|
Kaiser Aluminum Salaried
Employees Retirement Plan
|
|
|
7.58
|
|
|
$
|
169,757
|
|
|
|
|
(1) |
|
Reflects the actuarial present value of the named executive
officers accumulated benefit under our Old Pension Plan at
December 31, 2007 determined [(a) assuming mortality
according to the RP-2000 Combined Health mortality table
published by the Society of Actuaries and (b) applying a
discount rate of 5.75% per annum.] |
The Old Pension Plan previously maintained by us was a
qualified, defined-benefit retirement plan for our salaried
employees who met certain eligibility requirements. Effective
December 17, 2003, the PBGC terminated and effectively
assumed responsibility for making benefit payments in respect of
the Old Pension Plan. As a result of the termination, all
benefit accruals under the Old Pension Plan were terminated and
benefits available to certain executive officers, including
Messrs. Hockema and Barneson, were significantly reduced
due to the limitation on benefits payable by the PBGC. Benefits
payable to participants will be reduced to a maximum of $34,742
annually for retirement at age 62, a lower amount for
retirement prior to age 62, and a higher amount for
retirements after age 62, up to $43,977 at age 65, and
participants will not accrue additional benefits. In addition,
the PBGC will not make lump-sum payments to participants.
Nonqualified
Deferred Compensation for 2007
The table below sets forth, for each of our named executive
officers, information regarding his participation in our
Restoration Plan during 2007.
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|
|
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|
|
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|
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|
|
Registrant
|
|
|
|
|
|
|
|
|
|
Contributions in
|
|
|
Aggregate Earnings
|
|
|
Aggregate Balance
|
|
Name
|
|
Last FY(1)(a)
|
|
|
in Last FY(2)(3)(b)
|
|
|
at Last FYE(c)
|
|
|
Jack A. Hockema
|
|
$
|
135,916
|
|
|
$
|
70,178
|
|
|
$
|
1,370,871
|
|
Joseph P. Bellino
|
|
|
|
|
|
|
|
|
|
|
|
|
John Barneson
|
|
$
|
31,025
|
|
|
$
|
59,072
|
|
|
$
|
1,026,464
|
|
John M. Donnan
|
|
$
|
14,800
|
|
|
$
|
8,664
|
|
|
$
|
96,257
|
|
Daniel J. Rinkenberger
|
|
$
|
10,528
|
|
|
$
|
627
|
|
|
$
|
16,702
|
|
|
|
|
(1) |
|
In each case, 100% of such amount is included in the amounts for
2007 reflected in the All Other Compensation column
of the Summary Compensation Table above. |
|
(2) |
|
Amounts included in this column do not include amounts reflected
in column (a). |
|
(3) |
|
Amounts included in this column do not include above-market or
preferential earnings (of which there were none) and,
accordingly, such amount is not included in the Change in
Pension Value and Nonqualified Deferred Compensation
Earnings column of the Summary Compensation Table above. |
41
Potential
Payments and Benefits Upon Termination of Employment
The tables below set forth for each named executive officer
quantitative disclosure regarding estimated payments and other
benefits that would have been received by the named executive
officer or his estate if his employment had terminated on
December 31, 2007, the last business day of 2007, under the
following circumstances:
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|
|
voluntary termination by the named executive officer;
|
|
|
|
termination by us for cause;
|
|
|
|
termination by us without cause or by the named executive
officer with good reason;
|
|
|
|
termination by us without cause or by the named executive
officer with good reason following a change in control;
|
|
|
|
termination at normal retirement;
|
|
|
|
termination as a result of disability; or
|
|
|
|
termination as a result of death.
|
Information regarding estimated payments and other benefits upon
termination of employment at normal retirement is provided for
illustrative purposes notwithstanding the fact that none of the
named executive officers had reached retirement age as of
December 31, 2007.
JACK A.
HOCKEMA
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Circumstances of Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by us without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Cause or by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by us without
|
|
|
the Named
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or by
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
the Named
|
|
|
Officer with
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Executive
|
|
|
Good Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
by Named
|
|
|
Termination
|
|
|
Officer with
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
by us
|
|
|
Good
|
|
|
Change in
|
|
|
Normal
|
|
|
|
|
|
|
|
Payments and Benefits
|
|
Officer
|
|
|
for Cause
|
|
|
Reason
|
|
|
Control
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
|
Payment of earned but unpaid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive(2)
|
|
|
|
|
|
|
|
|
|
$
|
1,127,200
|
|
|
$
|
1,127,200
|
|
|
$
|
1,127,200
|
|
|
$
|
1,127,200
|
|
|
$
|
1,127,200
|
|
Vacation(3)
|
|
$
|
58,308
|
|
|
$
|
58,308
|
|
|
|
58,308
|
|
|
|
58,308
|
|
|
|
58,308
|
|
|
|
58,308
|
|
|
|
58,308
|
|
Other Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum payment
|
|
|
|
|
|
|
|
|
|
|
2,554,460
|
(4)
|
|
|
3,831,690
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare benefits
|
|
|
|
|
|
|
|
|
|
|
37,498
|
(6)
|
|
|
59,104
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability benefits
|
|
|
|
|
|
|
|
|
|
|
11,413
|
(7)
|
|
|
14,576
|
(7)
|
|
|
|
|
|
|
528,814
|
(8)
|
|
|
|
|
Life insurance
|
|
|
|
|
|
|
|
|
|
|
|
(9)
|
|
|
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
(10)
|
Perquisites and other personal benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
gross-up(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,616,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Equity Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value of stock vesting on termination(12)
|
|
|
|
|
|
|
|
|
|
|
15,756,036
|
|
|
|
15,756,036
|
|
|
|
15,756,036
|
|
|
|
15,756,036
|
|
|
|
15,756,036
|
|
Spread for options vesting on termination(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution of Restoration Plan Balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Distribution(14)
|
|
|
1,370,871
|
|
|
|
|
|
|
|
1,370,871
|
|
|
|
1,370,871
|
|
|
|
1,370,871
|
|
|
|
1,370,871
|
|
|
|
1,370,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,429,179
|
|
|
$
|
58,308
|
|
|
$
|
20,915,785
|
|
|
$
|
25,834,347
|
|
|
$
|
18,312,414
|
|
|
$
|
18,841,228
|
|
|
$
|
18,312,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
|
|
|
(1) |
|
Assumes that there is no earned but unpaid base salary at the
time of termination. |
|
(2) |
|
Under our 2007 STI Plan, Mr. Hockemas target award
for 2007 was $519,230, but his award could have ranged from a
threshold of $259,615 to a maximum of $1,557,690, or could have
been zero if the threshold performance was not achieved.
Mr. Hockemas award under our 2007 STI Plan was
determined in March 2008 to be $1,127,200. Pursuant to
Mr. Hockemas employment agreement, we must pay
Mr. Hockema or his estate any earned but unpaid short-term
incentive unless he is terminated by us for cause or he
voluntarily terminates his employment other than for good
reason. Under Mr. Hockemas employment agreement, if
his employment had terminated during 2007 but prior to
December 31, 2007, Mr. Hockemas target award for
2007 under our 2007 STI Plan would have been prorated for the
actual number of days of Mr. Hockemas employment in
2007 and Mr. Hockema would have been entitled to payment of
such amount, without any increase or reduction that would
normally be considered with his award, unless his employment had
been terminated by us for cause or had been voluntarily
terminated by him other than for good reason. Under
Mr. Hockemas employment agreement, if his employment
had terminated on December 31, 2007, the last day of our
2007 fiscal year, Mr. Hockema would have been entitled to
full payment of his award ($1,127,200) under the 2007 STI Plan
unless his employment had been terminated by us for cause or had
been voluntarily terminated by him other than for good reason. |
|
(3) |
|
Assumes that Mr. Hockema used all of his 2007 vacation and
that he has four weeks of accrued vacation for 2008. |
|
(4) |
|
Under Mr. Hockemas employment agreement, if
Mr. Hockemas employment is terminated by us without
cause or is voluntarily terminated by him for good reason, we
must make a lump-sum payment to Mr. Hockema in an amount
equal to two times the sum of his base salary and target annual
bonus opportunity for the fiscal year in which such termination
occurs. |
|
(5) |
|
Under Mr. Hockemas employment agreement, if
Mr. Hockemas employment is terminated by us without
cause or is voluntarily terminated by him for good reason within
two years following a change in control, we must make a lump-sum
payment to Mr. Hockema in an amount equal to three times
the sum of his base salary and target annual bonus. |
|
(6) |
|
Under Mr. Hockemas employment agreement, if
Mr. Hockemas employment is terminated by us without
cause or is voluntarily terminated by him for good reason, we
must continue his medical and dental benefits for two years, or,
if such termination occurs within two years following a change
in control, three years, commencing on the date of such
termination. The table reflects the present value of such
medical and dental benefits at December 31, 2007 determined
(a) assuming family coverage in a point of service medical
plan and a premium dental plan and (b) based on current
COBRA coverage rates for 2008 and assuming a 10% increase in the
cost of medical and dental coverage for 2009 as compared to 2008
and a 10% increase in the cost of medical and dental coverage
for 2010 as compared to 2009. |
|
(7) |
|
Under Mr. Hockemas employment agreement, if
Mr. Hockemas employment is terminated by us without
cause or is voluntarily terminated by him for good reason, we
must continue his disability benefits for two years, or, if such
termination occurs within two years following a change in
control, three years, commencing on the date of such
termination. The table reflects the present value of such
disability benefits at December 31, 2007 determined
(a) based on our current costs of providing such benefits
and assuming such costs do not increase during the applicable
benefit continuation period, (b) assuming we pay such costs
throughout the applicable benefit continuation period in the
same manner as we currently pay such costs, (c) assuming
mortality according to the RP-2000 Combined Health mortality
table published by the Society of Actuaries, and
(d) applying a discount rate of 6.00% per annum. |
|
(8) |
|
Reflects the actuarial present value of Mr. Hockemas
disability benefits at December 31, 2007 determined
(a) assuming full disability at December 31, 2007,
(b) assuming mortality according to the RP-2000 Disabled
Retiree mortality table published by the Society of Actuaries,
and (c) applying a discount rate of 6.00% per annum. Such
disability benefits would be paid by a third-party insurer and
not by us. |
|
(9) |
|
Under Mr. Hockemas employment agreement, if
Mr. Hockemas employment is terminated by us without
cause or is voluntarily terminated by him for good reason, we
must continue his life insurance benefits for two years, or, if
such termination occurs within two years following a change in
control, three years, commencing |
43
|
|
|
|
|
on the date of such termination. Mr. Hockema has declined
life insurance coverage. Accordingly, we would not be obligated
to provide Mr. Hockema with life insurance benefits for the
applicable benefit continuation period. |
|
(10) |
|
No life insurance benefit would have been payable assuming
Mr. Hockemas death occurred on December 31, 2007
other than while traveling on company-related business. However,
we maintain a travel and accidental death policy for certain
employees, including Mr. Hockema, that would provide a
$1,000,000 death benefit payable to Mr. Hockemas
estate if his death had occurred during company-related travel.
Such death benefit would be paid by a third-party insurer and
not by us. |
|
(11) |
|
Under Mr. Hockemas employment agreement, if any
payments to Mr. Hockema would be subject to federal excise
tax by reason of being considered contingent on a change in
control, we must pay to Mr. Hockema an additional amount
such that, after satisfaction of all tax obligations imposed on
such payments, Mr. Hockema retains an amount equal to such
federal excise tax. The table reflects an estimate of the
additional amount that we would have been obligated to pay
Mr. Hockema if his employment had been terminated on
December 31, 2007 by us without cause or by him with good
reason following a change in control on such date. |
|
(12) |
|
Reflects the aggregate market value of the shares of restricted
stock for which restrictions would have lapsed early due to
Mr. Hockemas termination, determined based on a per
share price of $79.48, the closing price per share of our common
stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007.
The restrictions on all shares of restricted stock that were
held by Mr. Hockema on December 31, 2007 would have
lapsed early if his employment terminated as a result of his
death, disability or retirement, his employment is terminated by
us without cause or his employment was voluntarily terminated by
him for good reason, or if there was a change in control. |
|
(13) |
|
Reflects the spread, if any, of (a) the aggregate market
value of the shares of common stock purchasable upon exercise of
the option rights which would have vested early due to
Mr. Hockemas termination, determined based on a per
share price of $79.48, the closing price per share of common
stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007,
over (b) the aggregate exercise price required to purchase
such shares upon exercise of such option rights. All option
rights that were held by Mr. Hockema on December 31,
2007 would have vested early if his employment terminated as a
result of his death, disability or retirement, his employment
was terminated by us without cause or his employment was
voluntarily terminated by him for good reason, or if there was a
change in control. No spread is reported in the table because
the $80.01 per share exercise price of such option rights
exceeded the $79.48 closing price per share of our common stock
as reported on the Nasdaq Global Select Market on
December 31, 2007. |
|
(14) |
|
Under our Restoration Plan, Mr. Hockema is entitled to a
distribution of his account balance six months following his
termination, except that he will forfeit the entire amount of
matching and fixed rate contributions made by us to his account
if he is terminated for cause. In addition, under our Savings
Plan, upon termination of employment, Mr. Hockema is
eligible to receive a distribution of his vested balance under
the plan. Such balance is not reflected in this table. |
44
JOSEPH P.
BELLINO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Circumstances of Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by us without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
the Named
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by us without
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or by
|
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
the Named
|
|
|
with Good
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Executive
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
by Named
|
|
|
Termination
|
|
|
Officer with
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
by us for
|
|
|
Good
|
|
|
Change in
|
|
|
Normal
|
|
|
|
|
|
|
|
Payments and Benefits
|
|
Officer
|
|
|
Cause
|
|
|
Reason
|
|
|
Control
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
|
Payment of earned but unpaid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive(2)
|
|
|
|
|
|
|
|
|
|
$
|
395,300
|
|
|
$
|
395,300
|
|
|
$
|
395,300
|
|
|
$
|
395,300
|
|
|
$
|
395,300
|
|
Vacation(3)
|
|
$
|
27,923
|
|
|
$
|
27,923
|
|
|
|
27,923
|
|
|
|
27,923
|
|
|
|
27,923
|
|
|
|
27,923
|
|
|
|
27,923
|
|
Other Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum payment
|
|
|
|
|
|
|
|
|
|
|
726,000
|
(4)
|
|
|
1,633,500
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare benefits
|
|
|
|
|
|
|
|
|
|
|
37,498
|
(6)
|
|
|
59,104
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability benefits
|
|
|
|
|
|
|
|
|
|
|
15,369
|
(7)
|
|
|
22,136
|
(7)
|
|
|
|
|
|
|
951,823
|
(8)
|
|
|
|
|
Life insurance
|
|
|
|
|
|
|
|
|
|
|
|
(9)
|
|
|
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
(10)
|
Perquisites and other personal benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
gross-up(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,046,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Equity Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value of stock vesting on termination(12)
|
|
|
|
|
|
|
|
|
|
|
1,592,859
|
|
|
|
1,592,859
|
|
|
|
1,592,859
|
|
|
|
1,592,859
|
|
|
|
1,592,859
|
|
Spread for options vesting on termination(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution of New Restoration Plan Balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Distribution(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
27,923
|
|
|
$
|
27,923
|
|
|
$
|
2,794,949
|
|
|
$
|
4,777,572
|
|
|
$
|
2,016,082
|
|
|
$
|
2,967,905
|
|
|
$
|
2,016,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumes that there is no earned but unpaid base salary at the
time of termination. |
|
(2) |
|
Under our 2007 STI Plan, Mr. Bellinos target award
for 2007 was $181,500, but his award could have ranged from a
threshold of $90,750 to a maximum of $544,500, or could have
been zero if the threshold performance was not achieved.
Mr. Bellinos award under our 2007 STI Plan was
determined in March 2008 to be $395,300. Pursuant to
Mr. Bellinos employment agreement, we must pay
Mr. Bellino or his estate any earned but unpaid short-term
incentive unless he is terminated by us for cause or he
voluntarily terminates his employment other than for good
reason. Under Mr. Bellinos employment agreement, if
his employment had terminated during 2007 but prior to
December 31, 2007, Mr. Bellinos target award for
2007 under our 2007 STI Plan would have been prorated for the
actual number of days of Mr. Bellinos employment in
2006 and Mr. Bellino would have been entitled to payment of
such amount, without any increase or reduction that would
normally be considered with his award, unless his employment had
been terminated by us for cause or had been voluntarily
terminated by him other than for good reason. Under
Mr. Bellinos employment agreement, if his employment
had terminated on December 31, 2007, the last day of our
2007 fiscal year, Mr. Bellino would have been entitled to
full payment of his award under the 2007 STI Plan ($395,300)
unless his employment had been terminated by us for cause or was
voluntarily terminated by him other than for good reason. |
|
(3) |
|
Assumes that Mr. Bellino used all of his 2007 vacation and
that he has four weeks of accrued vacation for 2008. |
45
|
|
|
(4) |
|
Under Mr. Bellinos employment agreement, if
Mr. Bellinos employment is terminated by us without
cause or is voluntarily terminated by him for good reason, we
must make a lump-sum payment to Mr. Bellino in an amount
equal to two times his base salary for the fiscal year in which
such termination occurs. |
|
(5) |
|
Under Mr. Bellinos employment agreement, if
Mr. Bellinos employment is terminated by us without
cause or is voluntarily terminated by him for good reason within
two years following a change in control, we must make a lump-sum
payment to Mr. Bellino in an amount equal to three times
the sum of his base salary and target annual bonus. |
|
(6) |
|
Under Mr. Bellinos employment agreement, if
Mr. Bellinos employment is terminated by us without
cause or is voluntarily terminated by him for good reason, we
must continue his medical and dental benefits for two years, or,
if such termination occurs within two years following a change
in control, three years, commencing on the date of such
termination. The table reflects the present value of such
medical and dental benefits at December 31, 2007 determined
(a) assuming family coverage in a point of service medical
plan and a premium dental plan and (b) based on current
COBRA coverage rates for 2008 and assuming a 10% increase in the
cost of medical and dental coverage for 2009 as compared to 2008
and a 10% increase in the cost of medical and dental coverage
for 2010 as compared to 2009. |
|
(7) |
|
Under Mr. Bellinos employment agreement, if
Mr. Bellinos employment is terminated by us without
cause or is voluntarily terminated by him for good reason, we
must continue his disability benefits for two years, or, if such
termination occurs within two years following a change in
control, three years, commencing on the date of such
termination. The table reflects the present value of such
disability benefits at December 31, 2007 determined
(a) based on our current costs of providing such benefits
and assuming such costs do not increase during the applicable
benefit continuation period, (b) assuming we pay such costs
throughout the applicable benefit continuation period in the
same manner as we currently pay such costs, (c) assuming
mortality according to the RP-2000 Combined Health mortality
table published by the Society of Actuaries, and
(d) applying a discount rate of 6.00% per annum. |
|
(8) |
|
Reflects the present value of Mr. Bellinos disability
benefits at December 31, 2007 determined (a) assuming full
disability at December 31, 2007, (b) assuming
mortality according to the RP-2000 Disabled Retiree mortality
table published by the Society of Actuaries, and
(c) applying a discount rate of 6.00% per annum. Such
disability benefits would be paid by a third-party insurer and
not by us. |
|
(9) |
|
Under Mr. Bellinos employment agreement, if
Mr. Bellinos employment is terminated by us without
cause or is voluntarily terminated by him for good reason, we
must continue his life insurance benefits for two years, or, if
such termination occurs within two years following a change in
control, three years, commencing on the date of such
termination. Mr. Bellino has declined life insurance
coverage. Accordingly, we would not be obligated to provide
Mr. Bellino with life insurance benefits for the applicable
benefit continuation period. |
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(10) |
|
No life insurance benefit would have been payable assuming
Mr. Bellinos death occurred on December 31, 2007
other than while traveling on company-related business. However,
we maintain a travel and accidental death policy for certain
employees, including Mr. Bellino, that would provide a
$1,000,000 death benefit payable to Mr. Bellinos
estate if his death had occurred during company-related travel.
Such death benefit would be paid by a third-party insurer and
not by us. |
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(11) |
|
Under Mr. Bellinos employment agreement, if any
payments to Mr. Bellino would be subject to federal excise
tax by reason of being considered contingent on a change in
control, we must pay to Mr. Bellino an additional amount
such that, after satisfaction of all tax obligations imposed on
such payments, Mr. Bellino retains an amount equal to such
federal excise tax. The table reflects an estimate of the
additional amount that we would have been obligated to pay
Mr. Bellino if his employment had been terminated on
December 31, 2007 by us without cause or by him with good
reason following a change in control on such date. |
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(12) |
|
Reflects the aggregate market value of the shares of restricted
stock for which restrictions would have lapsed early due to
Mr. Bellinos termination, determined based on a per
share price of $79.48, the closing price per share of our common
stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007.
The restrictions on all shares of restricted stock that were
held by Mr. Bellino on December 31, 2007 would have
lapsed early if his employment terminates as a result of his
death, disability or retirement, his employment is terminated by
us without cause or his employment is voluntarily terminated by
him for good reason, or if there is a change in control. |
46
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(13) |
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Reflects the spread, if any, of (a) the aggregate market
value of the shares of common stock purchasable upon exercise of
the option rights which would have vested early due to
Mr. Bellinos termination, determined based on a per
share price of $79.48, the closing price per share of our common
stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007,
over (b) the aggregate exercise price required to purchase
such shares upon exercise of such option rights. All option
rights that were held by Mr. Bellino on December 31,
2007 would have vested early if his employment terminated as a
result of his death, disability or retirement, his employment
was terminated by us without cause or his employment was
voluntarily terminated by him for good reason, or if there was a
change in control. No spread is reported in the table because
the $80.01 per share exercise price of such option rights
exceeded the $79.48 closing price per share of our common
stock as reported on the Nasdaq Global Select Market on
December 31, 2007. |
|
(14) |
|
Under our Restoration Plan, Mr. Bellino is entitled to a
distribution of his account balance six months following his
termination, except that he will forfeit the entire amount of
matching and fixed rate contributions made by us to his account
if he is terminated for cause. As of December 31, 2007, no
contributions had been made to Mr. Bellino under the
Restoration Plan. Under our Savings Plan, upon termination of
employment, Mr. Bellino is eligible to receive a
distribution of his vested balance under the plan. Such balance
is not reflected in this table. |
JOHN
BARNESON
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Circumstances of Termination
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Termination
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by us without
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Cause or by
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Termination
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the Named
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by us without
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Executive
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Cause or by
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Officer
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Voluntary
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the Named
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with Good
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Termination
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Executive
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Reason
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by Named
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Termination
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Officer with
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Following a
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Executive
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by us for
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Good
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Change in
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Normal
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Payments and Benefits
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Officer
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Cause
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Reason
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Control
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Retirement
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Disability
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Death
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Payment of earned but unpaid:
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Base salary(1)
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Short-term incentive(2)
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$
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284,500
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$
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284,500
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$
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284,500
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$
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284,500
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$
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284,500
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Vacation(3)
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$
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27,981
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$
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27,981
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27,981
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27,981
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27,981
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27,981
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27,981
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Other Benefits:
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Lump sum payment
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145,500
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(4)
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1,265,850
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(5)
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Healthcare benefits
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8,928
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(6)
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59,104
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(7)
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Disability benefits
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3,079
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(8)
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17,736
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(9)
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762,649
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(10)
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Life insurance
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2,810
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(11)
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4,968
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(12)
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600,000
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Perquisites and other personal benefits
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31,377
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(14)
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Tax
gross-up(15)
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1,090,518
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Acceleration of Equity Awards:
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Market value of stock vesting on termination(16)
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4,120,561
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4,120,561
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4,120,561
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4,120,561
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4,120,561
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Spread for options vesting on termination(17)
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Distribution of New Restoration Plan Balance:
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Amount of Distribution(18)
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1,026,464
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1,026,464
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1,026,464
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1,026,464
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1,026,464
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1,026,464
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Total
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$
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1,054,445
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$
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27,981
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$
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5,619,823
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$
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7,956,587
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$
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5,459,506
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$
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6,222,155
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$
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6,059,506
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(1) |
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Assumes that there is no earned but unpaid base salary at the
time of termination. |
47
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(2) |
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Under our 2007 STI Plan, Mr. Barnesons target award
for 2007 was $130,950, but his award could have ranged from a
threshold of $65,475 to a maximum of $392,850, or could have
been zero if the threshold performance is not achieved.
Mr. Barnesons award under our 2007 STI Plan was
determined in March 2008 to be $284,500. Under the 2007 STI
Plan, Mr. Barneson would have been entitled to a pro rata
award under the 2007 STI Plan if his employment had terminated
during 2007 but prior to December 31, 2007 and his
employment had been terminated as a result of death, disability,
normal retirement or full early retirement (position
elimination), had been involuntarily terminated by us without
cause or had been voluntarily terminated by him for good reason.
Under Mr. Barnesons Change in Control Agreement, if
his employment had been terminated by us without cause or by him
for good reason within the period commencing 90 days prior
to a change in control and ending two years following a change
in control and such termination occurred during 2007 other than
on December 31, 2007, Mr. Barnesons target award
for 2007 under our 2007 STI Plan would have been prorated for
the actual number of days of Mr. Barnesons employment
in 2007 and Mr. Barneson would have been entitled to
payment of such amount. If Mr. Barnesons employment
had been terminated on December 31, 2007, the last day of
our 2007 fiscal year, Mr. Barneson would have been entitled
to full payment of his award ($284,500) under the 2007 STI Plan
unless his employment had been terminated by us for cause or was
voluntarily terminated by him other than for good reason. |
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(3) |
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Assumes that Mr. Barneson used all of his 2007 vacation and
that he has five weeks of accrued vacation for 2008. |
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(4) |
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Under our Salaried Severance Plan, if Mr. Barnesons
employment is terminated by us without cause, Mr. Barneson
is entitled to a lump-sum payment equal to his weekly base
salary multiplied by a number of weeks (not to exceed 26), which
we refer to as the continuation period, determined based on his
number of years of full employment. As of December 31,
2007, Mr. Barnesons continuation period was
26 weeks. |
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(5) |
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Under Mr. Barnesons Change in Control Agreement, if
Mr. Barnesons employment is terminated by us without
cause or is voluntarily terminated by him for good reason within
the period beginning 90 days prior to a change in control
and ending two years following a change in control,
Mr. Barneson is entitled to a lump-sum payment equal to
three times the sum of his base salary and most recent
short-term incentive target. |
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(6) |
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Under our Salaried Severance Plan, if Mr. Barnesons
employment is terminated by us without cause, Mr. Barneson
is entitled to continuation of his medical and dental benefits
following the termination of employment for a period not to
exceed the shorter of his continuation period (see note
(4) above) and the period commencing on the termination of
employment and ending on the date he is no longer eligible for
coverage under COBRA. The table reflects the present value of
such medical and dental benefits at December 31, 2007
determined (a) assuming family coverage in a point of
service medical plan and a premium dental plan and
(b) based on current COBRA coverage rates for 2008 and
assuming a 10% increase in the cost of medical and dental
coverage for 2009 as compared to 2008 and a 10% increase in the
cost of medical and dental coverage for 2010 as compared to 2009. |
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(7) |
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Under Mr. Barnesons Change in Control Agreement, if
Mr. Barnesons employment is terminated by us without
cause or is voluntarily terminated by him for good reason and if
such termination occurs within the period commencing
90 days prior to a change in control and ending two years
following a change in control, we must continue his medical and
dental benefits for three years commencing on the date of such
termination. The table reflects the present value of such
medical and dental benefits at December 31, 2007 determined
(a) assuming family coverage in a point of service medical
plan and a premium dental plan and (b) based on current
COBRA coverage rates for 2008 and assuming a 10% increase in the
cost of medical and dental coverage for 2009 as compared to 2008
and a 10% increase in the cost of medical and dental coverage
for 2010 as compared to 2009. |
|
(8) |
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Under our Salaried Severance Plan, if Mr. Barnesons
employment is terminated by us without cause, Mr. Barneson
is entitled to continuation of his disability benefits following
the termination of employment for a period not to exceed the
shorter of his continuation period (see note (4) above) and
the period commencing on the termination of employment and
ending on the date he is no longer eligible for coverage under
COBRA. The table reflects the present value of such disability
benefits at December 31, 2007 determined (a) assuming
coverage throughout Mr. Barnesons continuation
period, (b) based on our current costs of providing such
benefits and assuming such costs do not increase during
Mr. Barnesons continuation period, (c) assuming
we |
48
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pay such costs throughout Mr. Barnesons continuation
period in the same manner as we currently pay such costs,
(d) assuming mortality according to the RP-2000 Combined
Health mortality table published by the Society of Actuaries,
and (e) applying a discount rate of 6.00% per annum. |
|
(9) |
|
Under Mr. Barnesons Change in Control Agreement, if
Mr. Barnesons employment is terminated by us without
cause or is voluntarily terminated by him for good reason if
within the period commencing 90 days prior to a change in
control and ending two years following a change in control, we
must continue his disability benefits for three years commencing
on the date of such termination. The table reflects the present
value of such disability benefits at December 31, 2007
determined (a) based on our current costs of providing such
benefits and assuming such costs do not increase during the
applicable benefit continuation period, (b) assuming we pay
such costs throughout the applicable benefit continuation period
in the same manner as we currently pay such costs,
(c) assuming mortality according to the RP-2000 Combined
Health mortality table published by the Society of Actuaries,
and (d) applying a discount rate of 6.00% per annum. |
|
(10) |
|
Reflects the present value of Mr. Barnesons
disability benefits at December 31, 2007 determined (a)
assuming full disability at December 31, 2007,
(b) assuming mortality according to the RP-2000 Disabled
Retiree mortality table published by the Society of Actuaries,
and (c) applying a discount rate of 6.00% per annum. Such
disability benefits would be paid by a third-party insurer and
not by us. |
|
(11) |
|
Under our Salaried Severance Plan, if Mr. Barnesons
employment is terminated by us without cause, Mr. Barneson
is entitled to continuation of his life insurance benefits
following the termination of employment for a period not to
exceed the shorter of his continuation period (see note
(4) above) and the period commencing on the termination of
employment and ending on the date he is no longer eligible for
coverage under COBRA. The table reflects the present value of
such life insurance benefits at December 31, 2007
determined (a) assuming coverage throughout
Mr. Barnesons continuation period at his current
election of the maximum available coverage, (b) based on
our current cost of providing such benefits and assuming such
costs do not increase during Mr. Barnesons
continuation period, (c) assuming we pay such costs
throughout Mr. Barnesons continuation period in the
same manner as we currently pay such costs, (d) assuming
mortality according to the RP-2000 Combined Health mortality
table published by the Society of Actuaries, and
(e) applying a discount rate of 6.00% per annum. |
|
(12) |
|
Under Mr. Barnesons Change in Control Agreement, if
Mr. Barnesons employment is terminated by us without
cause or is voluntarily terminated by him for good reason if
within the period commencing 90 days prior to a change in
control and ending two years following a change in control, we
must continue his life insurance benefits for three years
commencing on the date of such termination. The table reflects
the present value of such life insurance benefits at
December 31, 2007 determined (a) assuming his current
election of the maximum available coverage, (b) based on
our current cost of providing such benefits and assuming such
costs do not increase during the applicable benefit continuation
period, (c) assuming we pay such costs throughout the
applicable benefit continuation period in the same manner as we
currently pay such costs, (d) assuming mortality according
to the RP-2000 Combined Health mortality table published by the
Society of Actuaries, and (e) applying a discount rate of
6.00% per annum. |
|
(13) |
|
Reflects the life insurance benefit payable assuming
Mr. Barnesons death occurred on December 31,
2007 other than while traveling on company-related business.
Such life insurance benefit would be paid by
a third-party
insurer and not by us. We maintain a travel and accidental death
policy for certain employees, including Mr. Barneson, that
would provide an additional $1,000,000 death benefit payable to
Mr. Barnesons estate if his death had occurred during
company-related travel. Such death benefit would be paid by a
third-party insurer and not by us. |
|
(14) |
|
Under Mr. Barnesons Change in Control Agreement, if
Mr. Barnesons employment is terminated by us without
cause or is voluntarily terminated by him for good reason within
the period commencing 90 days prior to a change in control
and ending two years following a change in control, we must
continue his perquisites for three years commencing on the date
of such termination. The table reflects the estimated cost to us
of continuing Mr. Barnesons perquisites for such
three-year period as follows: club membership dues, $7,941; and
vehicle allowance, $10,459. Such amounts have been estimated by
multiplying the cost of Mr. Barnesons perquisites for
2006 by three. |
49
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(15) |
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Under Mr. Barnesons Change in Control Agreement, in
general, if any payments to Mr. Barneson would be subject
to federal excise tax or any similar state or local tax by
reason of being considered contingent on a change in control, we
must pay to Mr. Barneson an additional amount such that,
after satisfaction of all tax obligations imposed on such
payments, Mr. Barneson retains an amount equal to the
federal excise tax or similar state or local tax imposed on such
payments. The table reflects an estimate of such additional
amount that we would have been obligated to pay
Mr. Barneson if his employment had been terminated on
December 31, 2007 by us without cause or by him for good
reason following a change in control on such date. |
|
(16) |
|
Reflects the aggregate market value of the shares of restricted
stock for which restrictions would have lapsed early due to
Mr. Barnesons termination, determined based on a per
share price of $79.48, the closing price per share of our common
stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007.
The restrictions on all shares of restricted stock that were
held by Mr. Barneson on December 31, 2007 would have
lapsed early if his employment terminates as a result of his
death or disability, his employment is terminated by us without
cause or his employment is voluntarily terminated by him for
good reason, or if there is a change in control. |
|
(17) |
|
Reflects the spread, if any, of (a) the aggregate market
value of the shares of common stock purchasable upon exercise of
the option rights which would have vested early due to
Mr. Barnesons termination, determined based on a per
share price of $79.48, the closing price per share of our common
stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007,
over (b) the aggregate exercise price required to purchase
such shares upon exercise of such option rights. All option
rights that were held by Mr. Barneson on December 31,
2007 would have vested early if his employment terminated as a
result of his death, disability or retirement, his employment
was terminated by us without cause or his employment was
voluntarily terminated by him for good reason, or if there was a
change in control No spread is reflected in the table because
the $80.01 per share exercise price of such option rights
exceeded the $79.48 closing price per share of our common stock
as reported on the Nasdaq Global Select Market on
December 31, 2007. |
|
(18) |
|
Under our Restoration Plan, Mr. Barneson is entitled to a
distribution of his account balance six months following his
termination, except that he will forfeit the entire amount of
matching and fixed rate contributions made by us to his account
if he is terminated for cause. In addition, under our Savings
Plan, upon termination of employment, Mr. Barneson is
eligible to receive a distribution of his vested balance under
the plan. Such balance is not reflected in this table. |
50
JOHN M.
DONNAN
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Circumstances of Termination
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Termination
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by us without
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Cause or by
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Termination
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the Named
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by us without
|
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Executive
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Cause or by
|
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Officer
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Voluntary
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|
|
|
|
|
the Named
|
|
|
with Good
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Executive
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
by Named
|
|
|
Termination
|
|
|
Officer with
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
by us for
|
|
|
Good
|
|
|
Change in
|
|
|
Normal
|
|
|
|
|
|
|
|
Payments and Benefits
|
|
Officer
|
|
|
Cause
|
|
|
Reason
|
|
|
Control
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
|
Payment of earned but unpaid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive(2)
|
|
|
|
|
|
|
|
|
|
$
|
262,800
|
|
|
$
|
262,800
|
|
|
$
|
262,800
|
|
|
$
|
262,800
|
|
|
$
|
262,800
|
|
Vacation(3)
|
|
$
|
20,769
|
|
|
$
|
20,769
|
|
|
|
20,769
|
|
|
|
20,769
|
|
|
|
20,769
|
|
|
|
20,769
|
|
|
|
20,769
|
|
Other Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum payment
|
|
|
|
|
|
|
|
|
|
|
62,308
|
(4)
|
|
|
783,000
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare benefits
|
|
|
|
|
|
|
|
|
|
|
4,121
|
(6)
|
|
|
37,498
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability benefits
|
|
|
|
|
|
|
|
|
|
|
667
|
(8)
|
|
|
6,031
|
(9)
|
|
|
|
|
|
|
1,417,144
|
(10)
|
|
|
|
|
Life insurance
|
|
|
|
|
|
|
|
|
|
|
233
|
(11)
|
|
|
2,031
|
(12)
|
|
|
|
|
|
|
|
|
|
|
600,000
|
(13)
|
Perquisites and other personal benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,910
|
(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
gross-up(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
834,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Equity Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value of stock vesting on termination(16)
|
|
|
|
|
|
|
|
|
|
|
3,849,296
|
|
|
|
3,849,296
|
|
|
|
3,849,296
|
|
|
|
3,849,296
|
|
|
|
3,849,296
|
|
Spread for options vesting on termination(17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution of New Restoration Plan Balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Distribution(18)
|
|
|
96,257
|
|
|
|
|
|
|
|
96,257
|
|
|
|
96,257
|
|
|
|
96,257
|
|
|
|
96,257
|
|
|
|
96,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
117,026
|
|
|
$
|
20,769
|
|
|
$
|
4,296,451
|
|
|
$
|
5,914,072
|
|
|
$
|
4,229,122
|
|
|
$
|
5,646,266
|
|
|
$
|
4,829,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumes that there is no earned but unpaid base salary at the
time of termination. |
|
(2) |
|
Under our 2007 STI Plan, Mr. Donnans target award for
2007 was $121,500, but his award could have ranged from a
threshold of $60,750 to a maximum of $364,500, or could have
been zero if the threshold performance is not achieved.
Mr. Donnans award under our 2007 STI Plan was
determined in March 2008 to be $262,800. Under the 2007 STI
Plan, Mr. Donnan would have been entitled to a pro rata
award under the 2007 STI Plan if his employment had terminated
during 2007 but prior to December 31, 2007 and his
employment had been terminated as a result of death, disability,
normal retirement or full early retirement (position
elimination), had been involuntarily terminated by us without
cause or had been voluntarily terminated by him for good reason.
Under Mr. Donnans Change in Control Agreement, if his
employment had been terminated by us without cause or by him for
good reason within the period commencing 90 days prior to a
change in control and ending two years following a change in
control and such termination occurred during 2007 other than on
December 31, 2007, Mr. Donnans target award for
2007 under our 2007 STI Plan would have been prorated for the
actual number of days of Mr. Donnans employment in
2007 and Mr. Donnan would have been entitled to payment of
such amount. If Mr. Donnans employment had been
terminated on December 31, 2007, the last day of our 2007
fiscal year, Mr. Donnan would have been entitled to full
payment of his award ($262,800) under the 2007 STI Plan unless
his employment had been terminated by us for cause or was
voluntarily terminated by him other than for good reason. |
|
(3) |
|
Assumes that Mr. Donnan used all of his 2007 vacation and
that he has four weeks of accrued vacation for 2008. |
51
|
|
|
(4) |
|
Under our severance policy, if Mr. Donnans employment
is terminated by us without cause, Mr. Donnan is entitled
to a lump-sum payment equal to his weekly base salary multiplied
by a number of weeks (not to exceed 26), which we refer to as
the continuation period, determined based on his number of years
of full employment. As of December 31, 2007,
Mr. Donnans continuation period was 12 weeks. |
|
(5) |
|
Under Mr. Donnans Change in Control Agreement, if
Mr. Donnans employment is terminated by us without
cause or is voluntarily terminated by him for good reason within
the period beginning 90 days prior to a change in control
and ending two years following a change in control,
Mr. Donnan is entitled to a lump-sum payment equal to two
times the sum of his base salary and most recent short-term
incentive target. |
|
(6) |
|
Under our Salaried Severance Plan, if Mr. Donnans
employment is terminated by us without cause, Mr. Donnan is
entitled to continuation of his medical and dental benefits
following the termination of employment for a period not to
exceed the shorter of his continuation period (see note
(4) above) and the period commencing on the termination of
employment and ending on the date he is no longer eligible for
coverage under COBRA. The table reflects the present value of
such medical and dental benefits at December 31, 2007
determined (a) assuming family coverage in a point of
service medical plan and a premium dental plan and
(b) based on current COBRA coverage rates for 2008 and
assuming a 10% increase in the cost of medical and dental
coverage for 2009 as compared to 2008 and a 10% increase in the
cost of medical and dental coverage for 2010 as compared to 2009. |
|
(7) |
|
Under Mr. Donnans Change in Control Agreement, if
Mr. Donnans employment is terminated by us without
cause or is voluntarily terminated by him for good reason within
the period commencing 90 days prior to a change in control
and ending two years following a change in control, we must
continue his medical and dental benefits for two years
commencing on the date of such termination. The table reflects
the present value of such medical and dental benefits at
December 31, 2007 determined (a) assuming family
coverage in a point of service medical plan and a premium dental
plan and (b) based on current COBRA coverage rates for 2008
and assuming a 10% increase in the cost of medical and dental
coverage for 2009 as compared to 2008. |
|
(8) |
|
Under our Salaried Severance Plan, if Mr. Donnans
employment is terminated by us without cause, Mr. Donnan is
entitled to continuation of his disability benefits following
the termination of employment for a period not to exceed the
shorter of his continuation period (see note (4) above) and
the period commencing on the termination of employment and
ending on the date he is no longer eligible for coverage under
COBRA. The table reflects the present value of such disability
benefits at December 31, 2007 determined (a)assuming
coverage throughout Mr. Donnans continuation period,
(b) based on our current costs of providing such benefits
and assuming such costs do not increase during
Mr. Donnans continuation period, (c) assuming we
pay such costs throughout Mr. Donnans continuation
period in the same manner as we currently pay such costs,
(d) assuming mortality according to the RP-2000 Combined
Health mortality table published by the Society of Actuaries,
and (e) applying a discount rate of 6.00% per annum. |
|
(9) |
|
Under Mr. Donnans Change in Control Agreement, if
Mr. Donnans employment is terminated by us without
cause or is voluntarily terminated by him for good reason within
the period commencing 90 days prior to a change in control
and ending two years following a change in control, we must
continue his disability benefits for two years commencing on the
date of such termination. The table reflects the present value
of such disability benefits at December 31, 2007 determined
(a) based on our current costs of providing such benefits
and assuming such costs do not increase during the applicable
benefit continuation period, (b) assuming we pay such costs
throughout the applicable benefit continuation period in the
same manner as we currently pay such costs, (c) assuming
mortality according to the RP-2000 Combined Health mortality
table published by the Society of Actuaries, and
(d) applying a discount rate of 6.00% per annum. |
|
(10) |
|
Reflects the actuarial present value of Mr. Donnans
disability benefits at December 31, 2007 determined (a)
assuming full disability at December 31, 2007,
(b) assuming mortality according to the RP-2000 Disabled
Retiree mortality table published by the Society of Actuaries,
and (c) applying a discount rate of 6.00% per annum.
Such disability benefits would be paid by a third-party insurer
and not by us. |
|
(11) |
|
Under our Salaried Severance Plan, if Mr. Donnans
employment is terminated by us without cause, Mr. Donnan is
entitled to continuation of his life insurance benefits
following the termination of employment for a period not to
exceed the shorter of his continuation period (see note
(4) above) and the period commencing on the termination of
employment and ending on the date he is no longer eligible for
coverage |
52
|
|
|
|
|
under COBRA. The table reflects the present value of such life
insurance benefits at December 31, 2007 determined
(a) assuming coverage throughout Mr. Donnans
continuation period at his current election of the maximum
available coverage, (b) based on our current cost of
providing such benefits and assuming such costs do not increase
during Mr. Donnans continuation period,
(c) assuming we pay such costs throughout
Mr. Donnans continuation period in the same manner as
we currently pay such costs, (d) assuming mortality
according to the RP-2000 Combined Health mortality table
published by the Society of Actuaries, and (e) applying a
discount rate of 6.00% per annum. |
|
(12) |
|
Under Mr. Donnans Change in Control Agreement, if
Mr. Donnans employment is terminated by us without
cause or is voluntarily terminated by him for good reason within
the period commencing 90 days prior to a change in control
and ending two years following a change in control, we must
continue his life insurance benefits for two years commencing on
the date of such termination. The table reflects the present
value of such life insurance benefits at December 31, 2007
determined (a) assuming his current election of the maximum
available coverage, (b) based on our current costs of
providing such benefits and assuming such costs do not increase
during the applicable benefit continuation period,
(c) assuming we pay such costs throughout the applicable
benefit continuation period in the same manner as we currently
pay such costs, (d) assuming mortality according to the
RP-2000 Combined Health mortality table published by the Society
of Actuaries, and (e) applying a discount rate of 6.00% per
annum. |
|
(13) |
|
Reflects the life insurance benefit payable assuming
Mr. Donnans death occurred on December 31, 2007
other than while traveling on company-related business. Such
life insurance benefit would be paid by a
third-party
insurer and not by us. We maintain a travel and accidental death
policy for certain employees, including Mr. Donnan, that
would provide an additional $1,000,000 death benefit payable to
Mr. Donnans estate if his death had occurred during
company-related travel. Such death benefit would be paid by a
third-party
insurer and not by us. |
|
(14) |
|
Under Mr. Donnans Change in Control Agreement, if
Mr. Donnans employment is terminated by us without
cause or is voluntarily terminated by him for good reason within
the period commencing 90 days prior to a change in control
and ending two years following a change in control, we must
continue his perquisites for two years commencing on the date of
such termination. The table reflects the estimated cost to us of
continuing Mr. Donnans perquisites for such two-year
period as follows: vehicle allowance, $21,910. Such amount has
been estimated by multiplying the cost of Mr. Donnans
vehicle allowance for 2007 by two. |
|
(15) |
|
Under Mr. Donnans Change in Control Agreement, in
general, if any payments to Mr. Donnan would be subject to
federal excise tax or any similar state or local tax by reason
of being considered contingent on a change in control, we must
pay to Mr. Donnan an additional amount such that, after
satisfaction of all tax obligations imposed on such payments,
Mr. Donnan retains an amount equal to the federal excise
tax or similar state or local tax imposed on such payments. The
table reflects an estimate of such additional amount that we
would have been obligated to pay Mr. Donnan if his
employment had been terminated on December 31, 2007 by us
without cause or by him for good reason following a change in
control on such date. |
|
(16) |
|
Reflects the aggregate market value of the shares of restricted
stock for which restrictions would have lapsed early due to
Mr. Donnans termination, determined based on a per
share price of $79.48, the closing price per share of our
common stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007.
The restrictions on all shares of restricted stock that were
held by Mr. Donnan on December 31, 2007 would have
lapsed early if his employment terminates as a result of his
death or disability, his employment is terminated by us without
cause or his employment is voluntarily terminated by him for
good reason, or if there is a change in control. |
|
(17) |
|
Reflects the spread between the aggregate market value of the
shares of common stock purchasable upon exercise of the option
rights which would have vested early due to
Mr. Donnans termination, determined based on a per
share price of $79.48, the closing price per share of our common
stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007,
and the aggregate exercise price required to purchase such
shares upon exercise of such option rights. All option rights
that were held by Mr. Donnan on December 31, 2007
would have vested early if his employment terminated as a result
of his death, disability or retirement, his employment was
terminated by us without cause or his employment was voluntarily
terminated by him for good reason, or if there was a change in
control. No spread |
53
|
|
|
|
|
is reflected in the table because the $80.01 per share exercise
price of such option rights exceeded the $79.48 closing price
per share of our common stock as reported on the Nasdaq Global
Select Market on December 31, 2007. |
|
|
|
(18) |
|
Under our Restoration Plan, Mr. Donnan is entitled to a
distribution of his account balance six months following his
termination, except that he will forfeit the entire amount of
matching and fixed rate contributions made by us to his account
if he is terminated for cause. In addition, under our Savings
Plan, upon termination of employment, Mr. Donnan is
eligible to receive a distribution of his vested balance under
the plan. Such balance is not reflected in this table. |
DANIEL J.
RINKENBERGER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Circumstances of Termination
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by us without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or by
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
the Named
|
|
|
|
|
|
|
|
|
|
|
|
|
by us without
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or by
|
|
Officer
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
the Named
|
|
with Good
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
Executive
|
|
Reason
|
|
|
|
|
|
|
|
|
by Named
|
|
Termination
|
|
Officer
|
|
Following a
|
|
|
|
|
|
|
|
|
Executive
|
|
by us for
|
|
with Good
|
|
Change in
|
|
Normal
|
|
|
|
|
Payments and Benefits
|
|
Officer
|
|
Cause
|
|
Reason
|
|
Control
|
|
Retirement
|
|
Disability
|
|
Death
|
|
Payment of earned but unpaid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive(2)
|
|
|
|
|
|
|
|
|
|
$
|
177,900
|
|
|
$
|
177,900
|
|
|
$
|
177,900
|
|
|
$
|
177,900
|
|
|
$
|
177,900
|
|
Vacation(3)
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
|
|
18,000
|
|
|
|
18,000
|
|
|
|
18,000
|
|
|
|
18,000
|
|
|
|
18,000
|
|
Other Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum payment
|
|
|
|
|
|
|
|
|
|
|
45,000
|
(4)
|
|
|
624,000
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare benefits
|
|
|
|
|
|
|
|
|
|
|
4,121
|
(6)
|
|
|
37,498
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability benefits
|
|
|
|
|
|
|
|
|
|
|
722
|
(8)
|
|
|
6,475
|
(9)
|
|
|
|
|
|
|
1,150,813
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
600,000
|
(12)
|
Perquisites and other personal benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,576
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
gross-up(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
509,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Equity Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value of stock vesting on termination (15)
|
|
|
|
|
|
|
|
|
|
|
2,012,672
|
|
|
|
2,012,672
|
|
|
|
2,012,672
|
|
|
|
2,012,672
|
|
|
|
2,012,672
|
|
Spread for options vesting on termination (16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution of New Restoration Plan Balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Distribution(17)
|
|
|
16,702
|
|
|
|
|
|
|
|
16,702
|
|
|
|
16,702
|
|
|
|
16,702
|
|
|
|
16,702
|
|
|
|
16,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
34,702
|
|
|
$
|
18,000
|
|
|
$
|
2,275,117
|
|
|
$
|
3,423,569
|
|
|
$
|
2,225,274
|
|
|
$
|
3,376,087
|
|
|
$
|
2,825,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumes that there is no earned but unpaid base salary at the
time of termination. |
|
(2) |
|
Under our 2007 STI Plan, Mr. Rinkenbergers target
award for 2007 was $78,000, but his award could have ranged from
a threshold of $41,950 to a maximum of $245,000, or could have
been zero if the threshold performance is not achieved.
Mr. Rinkenbergers award under our 2007 STI Plan was
determined in March 2008 to be $177,900. Under the 2007 STI
Plan, Mr. Rinkenberger would have been entitled to a pro
rata award under the 2007 STI Plan if his employment had
terminated during 2007 but prior to December 31, 2007 and
his employment had been terminated as a result of death,
disability, normal retirement or full early retirement (position
elimination), had been involuntarily terminated by us without
cause or had been voluntarily terminated by him for good reason.
Under Mr. Rinkenbergers Change in Control Agreement,
if his |
54
|
|
|
|
|
employment had been terminated by us without cause or by him for
good reason within the period commencing 90 days prior to a
change in control and ending two years following a change in
control and such termination occurred during 2007 other than on
December 31, 2007, Mr. Rinkenbergers target
award for 2007 under our 2007 STI Plan would have been prorated
for the actual number of days of Mr. Rinkenbergers
employment in 2007 and Mr. Rinkenberger would have been
entitled to payment of such amount. If
Mr. Rinkenbergers employment had been terminated on
December 31, 2007, the last day of our 2007 fiscal year,
Mr. Rinkenberger would have been entitled to full payment
of his award ($177,900) under the 2007 STI Plan unless his
employment had been terminated by us for cause or was
voluntarily terminated by him other than for good reason. |
|
(3) |
|
Assumes that Mr. Rinkenberger used all of his 2007 vacation
and that he has four weeks of accrued vacation for 2008. |
|
(4) |
|
Under our severance policy, if Mr. Rinkenbergers
employment is terminated by us without cause,
Mr. Rinkenberger is entitled to a lump-sum payment equal to
his weekly base salary multiplied by a number of weeks (not to
exceed 26), which we refer to as the continuation period,
determined based on his number of years of full employment. As
of December 31, 2007, Mr. Rinkenbergers
continuation period was 12 weeks. |
|
(5) |
|
Under Mr. Rinkenbergers Change in Control Agreement,
if Mr. Rinkenbergers employment is terminated by us
without cause or is voluntarily terminated by him for good
reason within the period beginning 90 days prior to a
change in control and ending two years following a change in
control, Mr. Rinkenberger is entitled to a lump-sum payment
equal to two times the sum of his base salary and most recent
short-term incentive target. |
|
(6) |
|
Under our Salaried Severance Plan, if
Mr. Rinkenbergers employment is terminated by us
without cause, Mr. Rinkenberger is entitled to continuation
of his medical and dental benefits following the termination of
employment for a period not to exceed the shorter of his
continuation period (see note (4) above) and the period
commencing on the termination of employment and ending on the
date he is no longer eligible for coverage under COBRA. The
table reflects the present value of such medical and dental
benefits at December 31, 2007 determined (a) assuming
family coverage in a point of service medical plan and a premium
dental plan and (b) based on current COBRA coverage rates
for 2008 and assuming a 10% increase in the cost of medical and
dental coverage for 2009 as compared to 2008 and a 10% increase
in the cost of medical and dental coverage for 2010 as compared
to 2009. |
|
(7) |
|
Under Mr. Rinkenbergers Change in Control Agreement,
if Mr. Rinkenbergers employment is terminated by us
without cause or is voluntarily terminated by him for good
reason within the period commencing 90 days prior to a
change in control and ending two years following a change in
control, we must continue his medical and dental benefits for
two years commencing on the date of such termination. The table
reflects the present value of such medical and dental benefits
at December 31, 2007 determined (a) assuming family
coverage in a point of service medical plan and a premium dental
plan and (b) based on current COBRA coverage rates for 2008
and assuming a 10% increase in the cost of medical and dental
coverage for 2009 as compared to 2008. |
|
(8) |
|
Under our Salaried Severance Plan, if
Mr. Rinkenbergers employment is terminated by us
without cause, Mr. Rinkenberger is entitled to continuation
of his disability benefits following the termination of
employment for a period not to exceed the shorter of his
continuation period (see note (4) above) and the period
commencing on the termination of employment and ending on the
date he is no longer eligible for coverage under COBRA. The
table reflects the present value of such disability benefits at
December 31, 2007 determined (a) assuming coverage
throughout Mr. Rinkenbergers continuation period,
(b) based on our current costs of providing such benefits
and assuming such costs do not increase during
Mr. Rinkenbergers continuation period,
(c) assuming we pay such costs throughout
Mr. Rinkenbergers continuation period in the same
manner as we currently pay such costs, (d) assuming
mortality according to the RP-2000 Combined Health mortality
table published by the Society of Actuaries, and
(e) applying a discount rate of 6.00% per annum. |
|
(9) |
|
Under Mr. Rinkenbergers Change in Control Agreement,
if Mr. Rinkenbergers employment is terminated by us
without cause or is voluntarily terminated by him for good
reason within the period commencing 90 days prior to a
change in control and ending two years following a change in
control, we must continue his disability benefits for two years
commencing on the date of such termination. The table reflects
the present value of such disability benefits at
December 31, 2007 determined (a) based on our current
costs of providing such benefits |
55
|
|
|
|
|
and assuming such costs do not increase during the applicable
benefit continuation period, (b) assuming we pay such costs
throughout the applicable benefit continuation period in the
same manner as we currently pay such costs, (c) assuming
mortality according to the RP-2000 Combined Health mortality
table published by the Society of Actuaries, and
(d) applying a discount rate of 6.00% per annum. |
|
(10) |
|
Reflects the actuarial present value of
Mr. Rinkenbergers disability benefits at
December 31, 2007 determined (a) assuming full disability
at December 31, 2007, (b) assuming mortality according
to the RP-2000 Disabled Retiree mortality table published by the
Society of Actuaries, and (c) applying a discount rate of
6.00% per annum. Such disability benefits would be paid by a
third-party insurer and not by us. |
|
(11) |
|
No life insurance benefit would have been payable assuming
Mr. Rinkenbergers death occurred on December 31,
2007 other than while traveling on company-related business.
However, we maintain a travel and accidental death policy for
certain employees, including Mr. Rinkenberger, that would
provide a $1,000,000 death benefit payable to
Mr. Rinkenbergers estate if his death had occurred
during company-related travel. Such death benefit would be paid
by a third-party insurer and not by us. |
|
(12) |
|
Reflects the life insurance benefit payable assuming
Mr. Rinkenbergers death occurred on December 31,
2007 other than while traveling on company-related business.
Such life insurance benefit would be paid by a third-party
insurer and not by us. We maintain a travel and accidental death
policy for certain employees, including Mr. Rinkenberger,
that would provide an additional $1,000,000 death benefit
payable to Mr. Rinkenbergers estate if his death had
occurred during company-related travel. Such death benefit would
be paid by a third-party insurer and not by us. |
|
(13) |
|
Under Mr. Rinkenbergers Change in Control Agreement,
if Mr. Rinkenbergers employment is terminated by us
without cause or is voluntarily terminated by him for good
reason within the period commencing 90 days prior to a
change in control and ending two years following a change in
control, we must continue his perquisites for two years
commencing on the date of such termination. The table reflects
the estimated cost to us of continuing
Mr. Rinkenbergers perquisites for such two-year
period as follows: vehicle allowance, $20,576. Such amount has
been estimated by multiplying the cost of
Mr. Rinkenbergers vehicle allowance for 2007 by two. |
|
(14) |
|
Under Mr. Rinkenbergers Change in Control Agreement,
in general, if any payments to Mr. Rinkenberger would be
subject to federal excise tax or any similar state or local tax
by reason of being considered contingent on a change in control,
we must pay to Mr. Rinkenberger an additional amount such
that, after satisfaction of all tax obligations imposed on such
payments, Mr. Rinkenberger retains an amount equal to the
federal excise tax or similar state or local tax imposed on such
payments. The table reflects an estimate of such additional
amount that we would have been obligated to pay
Mr. Rinkenberger if his employment had been terminated on
December 31, 2007 by us without cause or by him for good
reason following a change in control on such date. |
|
(15) |
|
Reflects the aggregate market value of the shares of restricted
stock for which restrictions would have lapsed early due to
Mr. Rinkenbergers termination, determined based on a
per share price of $79.48, the closing price per share of our
common stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007.
The restrictions on all shares of restricted stock that were
held by Mr. Rinkenberger on December 31, 2007 would
have lapsed early if his employment terminates as a result of
his death or disability, his employment is terminated by us
without cause or his employment is voluntarily terminated by him
for good reason, or if there is a change in control. |
|
(16) |
|
Reflects the spread between the aggregate market value of the
shares of common stock purchasable upon exercise of the option
rights which would have vested early due to
Mr. Rinkenbergers termination, determined based on a
per share price of $79.48, the closing price per share of our
common stock as reported on the Nasdaq Global Select Market on
December 31, 2007, which was the last trading day of 2007,
and the aggregate exercise price required to purchase such
shares upon exercise of such option rights. All option rights
that were held by Mr. Rinkenberger on December 31,
2007 would have vested early if his employment terminated as a
result of his death, disability or retirement, his employment
was terminated by us without cause or his employment was
voluntarily terminated by him for good reason, or if there was a
change in control. No spread is reflected in the table because
the $80.01 per share exercise price of such option rights
exceeded the $79.48 closing price per share of our common stock
as reported on the Nasdaq Global Select Market on
December 31, 2007. |
56
|
|
|
(17) |
|
Under our New Restoration Plan, Mr. Rinkenberger is
entitled to a distribution of his account balance six months
following his termination, except that he will forfeit the
entire amount of matching and fixed rate contributions made by
us to his account if he is terminated for cause. In addition,
under our Savings Plan, upon termination of employment,
Mr. Rinkenberger is eligible to receive a distribution of
his vested balance under the plan. Such balance is not reflected
in this table. |
DIRECTOR
COMPENSATION
The table below sets forth certain information concerning
compensation of our non-employee directors who served in 2007.
Director
Compensation for 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Stock
|
|
|
|
|
Name
|
|
Paid in Cash
|
|
|
Awards(1)
|
|
|
Total(2)
|
|
|
George Becker(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Bartholomew(4)
|
|
$
|
47,500
|
(5)
|
|
$
|
60,000
|
|
|
$
|
107,500
|
|
Carl B. Frankel
|
|
$
|
52,750
|
(5)
|
|
$
|
60,000
|
|
|
$
|
112,750
|
|
Teresa A. Hopp
|
|
$
|
65,750
|
(5)
|
|
$
|
60,000
|
|
|
$
|
125,750
|
|
William F. Murdy
|
|
$
|
60,750
|
(5)
|
|
$
|
60,000
|
|
|
$
|
120,750
|
|
Alfred E. Osborne, Jr, PhD
|
|
$
|
74,500
|
(5)
|
|
$
|
60,000
|
|
|
$
|
134,500
|
|
Georganne C. Proctor
|
|
$
|
58,000
|
(5)
|
|
$
|
60,000
|
|
|
$
|
118,000
|
|
Jack Quinn
|
|
$
|
55,750
|
(5)
|
|
$
|
60,000
|
|
|
$
|
115,750
|
|
Thomas M. Van Leeuwen
|
|
$
|
59,500
|
(5)
|
|
$
|
60,000
|
|
|
$
|
119,500
|
|
Brett E. Wilcox
|
|
$
|
55,000
|
(5)
|
|
$
|
60,000
|
|
|
$
|
115,000
|
|
|
|
|
(1) |
|
Reflects the value of restricted stock awards granted to
non-employee directors under our Equity Incentive Plan based on
the compensation cost of the awards with respect to our 2007
fiscal year, computed in accordance with
SFAS No. 123-R,
but excluding any impact of assumed forfeiture rates. For
additional information regarding the compensation cost of stock
awards with respect to our 2007 fiscal year, see Note 11 of
the Notes to Consolidated Financial Statements included in our
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007. The
non-employee director will receive all dividends and other
distributions paid with respect to the shares of restricted
stock he or she holds, but if any of such dividends or
distributions are paid in shares of our capital stock, such
shares will be subject to the same restrictions on
transferability as are the shares of restricted stock with
respect to which they were paid. |
|
(2) |
|
Excludes perquisites and other personal benefits where the
aggregate amount of such compensation to the director is less
than $10,000. |
|
(3) |
|
Mr. Becker served as a director from July 2006 until his
death in February 2007. |
|
(4) |
|
Ms. Bartholomew has served as a director since June 2007. |
|
(5) |
|
Reflects (a) annual retainer of $40,000, (b) any
additional annual retainer for serving as Lead Independent
Director or chair of a committee of the board of directors, and
(c) fees for attendance of board or board committee
meetings. Each non-employee director had the right to elect to
receive shares of our common stock in lieu of any or all of his
or her annual cash retainer, including retainers for serving as
a committee chair or lead outside director, which is included in
this column. In 2007: Mr. Bartholomew elected to receive
202 shares of common stock in lieu of approximately $14,970
of her annual retainer; Mr. Frankel elected to receive
404 shares of common stock in lieu of approximately $29,940
of his annual retainer; Ms. Hopp elected to receive
168 shares of common stock in lieu of approximately $12,450
of her annual retainer; Mr. Murdy elected to receive
607 shares of common stock in lieu of approximately $44,984
of his annual retainer; Dr. Osborne elected to receive
742 shares of common stock in lieu of approximately $54,989
of his annual retainer; Mr. Van Leeuwen elected to receive
137 shares of common stock in lieu of approximately $10,153
of his annual retainer; and each of Messrs. Quinn and
Wilcox and Ms. Proctor elected to receive 539 shares
of common stock in lieu of |
57
|
|
|
|
|
approximately $39,945 of his or her annual retainer. In each
case, the number of shares received was determined based on a
per share price of $74.11, the closing price per share of our
common stock as reported by the Nasdaq Global Select Market on
June 6, 2007, the payment date of the annual retainers. |
Director
Compensation Arrangements
We periodically review director compensation in relation to
other comparable companies and in light of other factors that
the compensation committee deems appropriate and discuss
director compensation with the full board of directors. Pursuant
to the director compensation policy adopted effective
June 6, 2007, each non-employee director receives the
following compensation:
|
|
|
|
|
an annual retainer of $40,000 per year;
|
|
|
|
an annual grant of restricted stock having a value equal to
$60,000;
|
|
|
|
a fee of $1,500 per day for each meeting of the board of
directors attended in person and $750 per day for each such
meeting attended by phone; and
|
|
|
|
a fee of $1,500 per day for each committee meeting of the board
of directors attended in person on a date other than a date on
which a meeting of the board of directors is held and $750 per
day for each such meeting attended by phone.
|
In addition, our Lead Independent Director, currently
Dr. Osborne, receives an additional annual retainer of
$10,000, the chair of the audit committee, currently
Ms. Hopp, receives an additional annual retainer of
$10,000, the chair of the compensation committee, currently
Mr. Murdy, receives an additional annual retainer of $5,000
and the chair of the nominating and corporate governance
committee, currently Dr. Osborne, receives an additional
annual retainer of $5,000, with all such amounts payable at the
same time as the annual retainer. Each non-employee director may
elect to receive shares of common stock in lieu of any or all of
his or her annual retainer, including any additional annual
retainer for service as the Lead Independent Director or the
chair of a committee of the board of directors.
The payment of annual retainers, including any additional annual
retainer for service as Lead Independent Director or the chair
of a committee of the board of directors, and the annual grant
of restricted stock is made each year on the date on which we
hold our annual meeting of stockholders, unless the board of
directors determines such payment and grant should occur on
another date. The number of shares of common stock to be
received in the grant of restricted stock, as well as the number
of shares of common stock to be received by any non-employee
director electing to receive common stock in lieu of any or all
of his or her payment of annual retainer, including any
additional annual retainer, will be based on the closing price
per share of common stock on the date such grant and payments
are made.
We reimburse all directors for reasonable and customary travel
and other disbursements relating to meetings of the board of
directors and committees thereof, and non-employee directors are
provided accident insurance with respect to company-related
business travel.
58
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information as of December 31,
2007 with respect to shares of our common stock that may be
issued under equity compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
of Common Stock
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
Number of Shares
|
|
|
|
|
|
for Future Issuance
|
|
|
|
of Common Stock
|
|
|
Weighted-Average
|
|
|
under Equity
|
|
|
|
to be Issued Upon
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Exercise of
|
|
|
Outstanding
|
|
|
(Excluding Shares of
|
|
|
|
Outstanding Options,
|
|
|
Options, Warrants
|
|
|
Common Stock Reflected
|
|
Plan Category
|
|
Warrants and Rights(a)
|
|
|
and Rights(b)
|
|
|
in Column(a)(c)
|
|
|
Equity compensation plans approved by stockholders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Equity and Performance Incentive Plan(1)
|
|
|
28,864
|
(2)
|
|
$
|
80.01
|
(3)
|
|
|
1,604,197
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
28,864
|
(2)
|
|
$
|
80.01
|
(3)
|
|
|
1,604,197
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Our 2006 Equity and Performance Incentive Plan was amended and
restated on February 6, 2008. The amendments were not
material and did not affect the number of shares available for
issuance thereunder. We refer to the 2006 Equity and Performance
Plan, both before and after its amendment and restatement, as
our Equity Incentive Plan. The Equity Incentive Plan is our only
equity compensation plan. A copy of the Amended and Restated
2006 Equity and Performance Incentive Plan is included as
Exhibit 10.13 to our Annual Report on
Form 10-K
for the year ended December 31, 2007. |
|
(2) |
|
Reflects options to purchase 25,137 shares of common stock
and restricted stock units covering 3,727 shares of common
stock, in each case outstanding as of December 31, 2007. |
|
(3) |
|
Reflects the exercise price per share of common stock
purchasable upon exercise of options outstanding as of
December 31, 2007. The exercise price is the same for all
such options. No exercise price is payable in connection with
the issuance of shares covered by the restricted stock units
outstanding as of December 31, 2007. |
|
(4) |
|
Subject to certain adjustments that may be required from time to
time to prevent dilution or enlargement of the rights of
participants under the Equity Incentive Plan, a maximum of
2,222,222 shares of common stock may be issued under the
Equity Incentive Plan. As of December 31, 2007,
580,815 shares of common stock had been issued thereunder
and remained outstanding. Of such shares, 549,071 were shares of
restricted stock that remained subject to forfeiture as of such
date. In the event of forfeiture, such shares would again become
available for issuance under the Equity Incentive Plan. |
59
PRINCIPAL
STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table presents information regarding the number of
shares of Kaiser common stock beneficially owned as of
April 2, 2008 by:
|
|
|
|
|
each named executive officer;
|
|
|
|
each of our current directors;
|
|
|
|
all our current directors and executive officers as a
group; and
|
|
|
|
each person or entity known to us to beneficially own 5% or more
of our common stock.
|
Unless otherwise indicated by footnote, the beneficial owner
exercises sole voting and investment power over the shares noted
below. The percentage of beneficial ownership for our directors
and executive officers, both individually and as a group, is
calculated based on 20,620,169 shares of our common stock
outstanding as of April 2, 2008.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
of Beneficial
|
|
|
Percent
|
|
Name of Beneficial Owner
|
|
Ownership
|
|
|
of Class
|
|
|
Directors and Executive Officers
|
|
|
|
|
|
|
|
|
Jack A. Hockema
|
|
|
210,723
|
(1)(2)
|
|
|
1.0
|
%
|
Joseph P. Bellino
|
|
|
24,792
|
(1)(2)
|
|
|
*
|
|
John Barneson
|
|
|
55,469
|
(1)(2)
|
|
|
*
|
|
John M. Donnan
|
|
|
51,806
|
(1)(2)
|
|
|
*
|
|
Daniel J. Rinkenberger
|
|
|
26,572
|
(1)(2)
|
|
|
*
|
|
Carolyn Bartholomew
|
|
|
1,011
|
(2)
|
|
|
*
|
|
Carl B. Frankel
|
|
|
4,426
|
(2)
|
|
|
*
|
|
Teresa A. Hopp
|
|
|
1,901
|
(2)
|
|
|
*
|
|
William F. Murdy
|
|
|
2,513
|
(2)
|
|
|
*
|
|
Alfred E. Osborne, Jr., PhD
|
|
|
3,944
|
(2)(3)
|
|
|
*
|
|
Georganne C. Proctor
|
|
|
2,734
|
(2)
|
|
|
*
|
|
Jack Quinn
|
|
|
3,809
|
(2)
|
|
|
*
|
|
Thomas M. Van Leeuwen
|
|
|
2,332
|
(2)
|
|
|
*
|
|
Brett E. Wilcox
|
|
|
2,737
|
(2)
|
|
|
*
|
|
All current directors and executive officers as a group
(16 persons)
|
|
|
423,595
|
(1)(2)(3)
|
|
|
2.1
|
%
|
|
|
|
|
|
|
|
|
|
5% Stockholder
|
|
|
|
|
|
|
|
|
Union VEBA Trust
|
|
|
4,845,465
|
(4)
|
|
|
23.5
|
%
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
Includes shares of our common stock issuable upon exercise of
options within 60 days after April 2, 2008, as
follows: Hockema (2,679 shares); Bellino
(1,020 shares); Barneson (778 shares); Donnan
(694 shares); Rinkenberger (267 shares); and all
current directors and executive officers as a group
(5,793 shares). |
|
(2) |
|
Includes shares of restricted stock that remained subject to
forfeiture as of April 2, 2008, as follows: Hockema
(208,044 shares); Bellino (23,772 shares); Barneson
(54,691 shares); Donnan (51,112 shares); Rinkenberger
(26,305 shares); Bartholomew (809 shares); Frankel
(809 shares); Hopp (809 shares); Murdy
(809 shares); Osborne (809 shares); Proctor
(809 shares); Quinn (809 shares); Van Leeuwen
(809 shares); Wilcox (809 shares); and all current
directors and executive officers as a group
(399,679 shares). |
|
(3) |
|
Includes 1,000 shares of our common stock held by a Keough
plan of which Dr. Osborne is the beneficiary,
200 shares of our common stock held by
Dr. Osbornes wife as UTMA custodian for son and
500 shares held by the Rahnasto/Osborne Revocable
Trust U/A DTD 11/07/1999 of which Dr. Osborne is a
co-beneficiary and a co-trustee. |
60
|
|
|
(4) |
|
Shares beneficially owned by the Union VEBA Trust are as
reported on the Amendment No. 1 to Schedule 13G filed
by the Union VEBA Trust on February 12, 2007 and the
Form 4 filed by the Union VEBA Trust on December 12,
2007. Independent Fiduciary Services, Inc. in its capacity as
independent fiduciary for the Union VEBA Trust has sole
discretionary investment and voting power with respect to the
4,845,465 shares owned by the Union VEBA Trust. The
principal address of the Union VEBA Trust is
c/o Mellon
Bank, N.A., as Trustee for Kaiser VEBA Trust, P.O. Box
3196, Pittsburg, PA
15230-3196. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Director
Designation Agreement
For a description of the Director Designation Agreement with the
USW, see Corporate Governance Director
Designation Agreement.
Stock
Transfer Restriction Agreement
On July 6, 2006, in connection with our emergence from
chapter 11 bankruptcy, we entered into a Stock Transfer
Restriction Agreement with the trustee of the Union VEBA Trust,
which is our largest stockholder.
The Stock Transfer Restriction Agreement provides, in general,
that, until the earliest of (1) July 6, 2016,
(2) the repeal, amendment or modification of
Section 382 of the Internal Revenue Code in such a way as
to render us no longer subject to the restrictions imposed by
Section 382, (3) the beginning of a taxable year in
which none of the income tax benefits in existence on
July 6, 2006 are currently available or will be available,
(4) the determination by our board of directors that the
restrictions will no longer apply, (5) a determination by
the board of directors or the Internal Revenue Service that we
are ineligible to use Section 382(l)(5) of the Internal
Revenue Code permitting full use of the income tax benefits
existing on July 6, 2006, and (6) an election by us
for Section 382(l)(5) of the Internal Revenue Code not to
apply, except as described below the trustee of the Union VEBA
Trust will be prohibited from transferring or otherwise
disposing of more than 15% of the total number of shares of
common stock issued pursuant to our chapter 11 plan of
reorganization to the Union VEBA Trust in any
12-month
period without the prior written approval of the board of
directors in accordance with our certificate of incorporation.
Pursuant to the Stock Transfer Restriction Agreement, the
trustee of the Union VEBA Trust also expressly acknowledged and
agreed to comply with the restrictions on the transfer of our
securities contained in our certificate of incorporation.
Simultaneously with the execution and delivery of the Stock
Transfer Restriction Agreement, we entered into a Registration
Rights Agreement with the trustee of the Union VEBA Trust and
transferees of the Union VEBA Trust pursuant to the
pre-effective date sales protocol discussed below. Under the
Stock Transfer Restriction Agreement, notwithstanding the
general restriction on transfer described above, the Union VEBA
Trust was permitted to transfer a larger percentage of its
holdings through an underwritten offering as described in the
next following paragraph.
Prior to March 31, 2007, the Union VEBA Trust was entitled
to request in writing that we file a registration statement
covering the resale of shares of our common stock equal to a
maximum of 30% of the total number of shares of common stock
received by the Union VEBA Trust pursuant to the plan of
reorganization in an underwritten offering, as contemplated by
the Registration Rights Agreement, so long as:
|
|
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|
|
the number of shares of common stock to be sold would not
constitute more than 45% of the total number of shares of common
stock received by the Union VEBA Trust pursuant to the plan of
reorganization, less the number of shares included in all other
transfers previously effected by the Union VEBA Trust during the
preceding 36 months or since July 6, 2006, if
shorter; and
|
|
|
|
the shares of common stock to be sold would have a market value
of not less than $60.0 million on the date the request was
made.
|
The Union VEBA Trust made such a request in July 2006 and we
completed an offering of shares by the Union VEBA Trust and
certain other selling stockholders on January 31, 2007. The
Union VEBA Trust offered and sold 2,517,955 shares of our
common stock pursuant to the underwritten offering, constituting
the maximum number of shares of our common stock it could
include in the underwritten offering under the Stock Transfer
Restriction
61
Agreement absent approval of our board of directors. With the
approval of our board of directors, the Union VEBA Trust also
offered and sold 819,280 additional shares of our common stock
pursuant to a
30-day
option granted to the underwriters to cover over-allotments, if
any, in connection with the underwritten offering.
During the fourth quarter of 2007, with the approval of our
board of directors, the Union VEBA Trust sold an additional
627,200 shares of our common stock that it would have been
unable to sell under the Stock Transfer Restriction Agreement
absent such approval.
For purposes of determining whether any future transfer of
shares of common stock by the Union VEBA Trust is permissible
under the general restriction on transfer described above, the
Union VEBA Trust will be deemed to have effected the transfer of
the shares sold by it in excess of the shares that it was
permitted to transfer under the general restriction at the
earliest possible date or dates the Union VEBA Trust would have
been permitted to effect such transfer under the general
restriction absent board approval. As a result, the Union VEBA
Trust is currently prohibited from selling additional shares of
our common stock until after January 31, 2010, without the
prior written approval of our board of directors in accordance
with our certificate of incorporation.
As background, the chapter 11 plan of reorganization stated
that on its effective date, 11,439,900 shares of our common
stock would be contributed to the Union VEBA Trust. Prior to the
effective date of the plan of reorganization, in accordance with
a sales protocol established by order of the bankruptcy court,
the Union VEBA Trust sold interests entitling the purchasers
thereof to receive 2,630,000 shares of common stock that
otherwise would have been issuable to the Union VEBA Trust on
the effective date of the plan of reorganization. Accordingly,
on the effective date, 8,809,900 shares of common stock
were issued to the Union VEBA Trust. Pursuant to the terms of
the sale protocol, unless we otherwise agreed or it was
determined in a ruling by the Internal Revenue Service that any
such sale would not constitute a sale of shares on or following
the effective date of the plan of reorganization for purposes of
the applicable limitations of Section 382 of the Internal
Revenue Code, the shares attributable to a sale of all or part
of the interest of the Union VEBA Trust were to be deemed to
have been received by the Union VEBA Trust on the effective date
and sold on or after the effective date out of the permitted
sale allocation under the Stock Transfer Restriction Agreement
as if sold at the earliest possible date or dates such sales
would have been permitted thereunder for purposes of determining
the permissibility of future sales of shares under the Stock
Transfer Restriction Agreement. A request for such a ruling was
filed with the Internal Revenue Service, and on May 2,
2007, we received such a ruling from the Internal Revenue
Service. As a result of the ruling, 8,809,900 rather than
11,439,900 shares of our common stock are treated as having
been received by the Union VEBA Trust on the effective date of
the plan of reorganization and the number of shares of our
common stock that generally may be sold by the Union VEBA Trust
under the Stock Transfer Restriction Agreement during any
12-month
period was reduced from 1,715,985 to 1,321,485.
Registration
Rights Agreement
General
On July 6, 2006, we entered into the Registration Rights
Agreement with the trustee of the Union VEBA Trust and certain
parties, whom we refer to below as the other parties, that, in
accordance with the pre-effective date sales protocol, purchased
from the Union VEBA Trust interests entitling them to receive
shares that otherwise would have been issuable to the Union VEBA
Trust.
The Registration Rights Agreement provides the Union VEBA Trust
with certain rights to require that we register the resale of
the shares of common stock issued to the Union VEBA Trust
pursuant to our plan of reorganization unless such securities
(1) are disposed of pursuant to an effective registration
statement under the Securities Act of 1933, or the Securities
Act, (2) are distributed to the public pursuant to
Rule 144 under the Securities Act, (3) may be freely
sold publicly without either registration under the Securities
Act or compliance with any restrictions under Rule 144
under the Securities Act, (4) have been transferred to any
person, or (5) have ceased to be outstanding (prior to the
occurrence of any such event, such securities (together with any
shares of common stock issued as a dividend or other
distribution with respect to, or in exchange for or in
replacement of, such securities are referred to below as
registrable securities).
62
Demand
Registration
Pursuant to Section 2.1 of the Registration Rights
Agreement, during the period commencing on July 6, 2006 and
ending March 31, 2007, the Union VEBA Trust had the right
to demand that we prepare and file with the SEC a registration
statement covering the resale of its registrable securities in
an underwritten offering, which the Union VEBA Trust did in July
2006. Pursuant to the Registration Rights Agreement, each of the
other parties was provided the opportunity to include the
securities it purchased pursuant to the pre-effective date sales
protocol in the underwritten offering. As indicated above, the
underwritten offering was completed on January 31, 2007. We
will not be required to effect another registration for the
Union VEBA Trust pursuant to Section 2.1 of the
Registration Rights Agreement and the other parties have no
further rights under the Registration Rights Agreement.
Shelf
Registration
Pursuant to Section 3.1 of the Registration Rights
Agreement, the Union VEBA Trust may (and, if so directed by its
independent fiduciary, will) demand that we prepare and file
with the SEC a shelf registration statement covering
the resale of all registrable securities held by the Union VEBA
Trust on a continuous basis under and in accordance with
Rule 415 under the Securities Act. The Registration Rights
Agreement provides that, following receipt of such a request, we
will prepare and file the shelf registration covering all
registrable securities held by the Union VEBA Trust and will use
commercially reasonable efforts to cause the shelf registration
to be declared effective under the Securities Act as soon as
practicable after such filing. However, we will not be required
to take such action if, at the time of a shelf
registration request, the Stock Transfer Restriction Agreement
would prohibit the Union VEBA Trust from immediately selling a
number of shares of common stock greater than the number of
shares of common stock it would then be permitted to sell in
compliance with the restrictions of Rule 144 under the
Securities Act. As indicated above, as of the date of this Proxy
Statement, the Stock Transfer Restriction Agreement prohibits
the Union VEBA Trust from selling any additional shares of our
common stock without the prior written approval of our board of
directors until after January 31, 2010.
Piggyback
Registration
If we register equity securities for our own account or the
account of any other person (other than a registration statement
in connection with a merger or reorganization or relating to an
employee benefit plan or in connection with an offering made
solely to our then-existing stockholders or employees), the
Union VEBA Trust will be offered the opportunity, subject to the
terms of the Stock Transfer Restriction Agreement, to include
its registrable securities in such registration. Customary
priority provisions will apply in the context of an underwritten
offering.
Expenses
Subject to provisions for reimbursement in limited
circumstances, we bear all of our
out-of-pocket
expenses in connection with any registration under the
Registration Rights Agreement. All underwriting fees, discounts,
selling commissions and stock transfer taxes applicable to the
sale of registrable securities are borne by the applicable
selling holder. We incurred expenses of approximately $1,740,000
in connection with the underwritten offering described above.
Rule 144
The Registration Rights Agreement provides that we will file all
required SEC reports, and cooperate with the Union VEBA Trust,
to the extent required to permit the Union VEBA Trust to sell,
subject to the terms of the Stock Transfer Restriction
Agreement, its registrable securities without registration under
Rule 144.
Review,
Approval of or Ratification of Transactions with Related
Persons
Our corporate governance guidelines, which were adopted by our
board of directors on July 6, 2006 in connection with our
emergence from chapter 11 bankruptcy, require that our
board of directors conduct an appropriate review of all
related-party transactions. The charter for the audit committee
of our board of directors, which was adopted by the board of
directors on the same day that our corporate governance
guidelines were adopted, requires that any related-party
transaction required to be disclosed under Item 404 of
Regulation S-K
63
promulgated by the SEC must be approved by the audit committee.
Neither the board of directors nor the audit committee has
adopted specific policies or procedures for review or approval
of related-party transactions.
The Director Designation Agreement, the Stock Transfer
Restriction Agreement and the Registration Rights Agreement were
authorized, executed and delivered in accordance with our plan
of reorganization upon our emergence from chapter 11
bankruptcy and, accordingly, our corporate governance guidelines
and audit committee charter, which were also adopted upon
emergence, were not applicable. The approvals of the 2007 sales
of shares of our common stock by the Union VEBA Trust beyond
that number of shares otherwise permitted under the Stock
Transfer Restriction Agreement and our certificate of
incorporation were granted by our full board of directors in
accordance with the express procedures set forth in our
certificate of incorporation after extensive review and
analysis, and were not separately reviewed and approved by the
audit committee.
AUDIT
COMMITTEE REPORT
The audit committee charter requires the audit committee to
undertake a variety of activities designed to assist our board
of directors in fulfilling its oversight role regarding our
independent registered public accounting firms
independence, our financial reporting process, our systems of
internal controls and our compliance with applicable laws, rules
and regulations. These requirements are briefly summarized under
Corporate Governance Board
Committees Audit Committee above. The audit
committee charter also makes it clear that the independent
registered public accounting firm is ultimately accountable to
the board of directors and the audit committee, not management.
Our internal accountants prepare our consolidated financial
statements and our independent registered public accounting firm
is responsible for auditing those financial statements. The
audit committee oversees the financial reporting processes
implemented by management but does not conduct any auditing or
accounting reviews. The members of the audit committee are not
company employees. Instead, the audit committee relies, without
independent verification, on managements representation
that the financial statements have been prepared in conformity
with accounting principles generally accepted in the United
States of America and on the representations of our independent
registered public accounting firm included in its report on our
financial statements. The audit committees oversight does
not provide them with an independent basis for determining
whether management has maintained appropriate accounting and
financial reporting principles or policies or appropriate
internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations.
Furthermore, the audit committees discussions with
management and its accountants do not ensure that the financial
statements are presented in accordance with accounting
principles generally accepted in the United States of America or
that the audit of the financial statements has been carried out
in accordance with auditing standards of the Public Company
Accounting Oversight Board (United States) or that our
independent registered public accounting firm is in fact
independent.
We have engaged Deloitte & Touche LLP as our
independent registered public accounting firm to audit and
report to our stockholders on our financial statements for 2008
and the effectiveness of our internal controls over financial
reporting. The audit committee has discussed with management and
Deloitte & Touche LLP significant accounting policies
applied by us in our financial statements as well as alternative
treatments and significant judgments, including (1) the
treatment of an annual variable contribution obligation to the
voluntary employees beneficiary association trust that
provides benefits for certain eligible retirees represented by
certain unions and their spouses and eligible dependents, or the
Union VEBA Trust, and to another voluntary employees
beneficiary association trust that provides benefits for certain
other eligible retirees and their surviving spouses and eligible
dependents, (2) the application of fresh start accounting
upon our emergence from chapter 11 bankruptcy on
July 6, 2006, (3) change in accounting methodologies
with respect to inventory accounting made in connection with our
application of fresh start accounting, and (4) the
recognition of a portion of our deferred tax assets as of
December 31, 2007. For a more detailed discussion of these
accounting items, see Item 7. Managements
Discussion and Analysis of Financial Condition and Results of
Operations in our Annual Report on
Form 10-K
for the year ended December 31, 2007. During the year ended
December 31, 2007, there were no disagreements with
Deloitte & Touche LLP on any matter of accounting
principle or practice, financial statement disclosure or
auditing
64
scope or procedure, which, if not resolved to the satisfaction
of Deloitte & Touche LLP, would have caused them to
make a reference to the subject matter of the disagreement in
connection with its reports.
The audit committee has reviewed and discussed the
companys audited financial statements contained in our
Annual Report on
Form 10-K
for the year ended December 31, 2007 with our management.
The audit committee has also discussed with our independent
registered public accounting firm the matters required to be
discussed pursuant to SAS No. 61 (Codification of
Statements on Auditing Standards, Communication with Audit
Committees).
The audit committee has also received and reviewed the written
disclosures and the letter from Deloitte & Touche LLP
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and has
discussed with Deloitte & Touche LLP its independence.
The audit committee discussed with our internal accountants and
Deloitte & Touche LLP the overall scope and plans for
their respective audits. The audit committee meets with
management, our internal auditors and our independent auditors
periodically in separate private sessions to discuss any matter
that the committee, management, the independent auditors or such
other persons believe should be discussed privately.
Based on the review and discussions referred to above, the audit
committee recommended to the board of directors that the audited
financial statements be included in our Annual Report on
Form 10-K
for the year ended December 31, 2007, as filed with the SEC.
The audit committee considered whether, and concluded that, the
provision by Deloitte & Touche LLP of the services for
which we paid the amounts set forth under Tax Fees
and All Other Fees below is compatible with
maintaining the independence of Deloitte & Touche LLP.
This report is submitted by the members of the audit committee
of the board of directors:
Audit Committee
Teresa A. Hopp (Chair)
Alfred E. Osborne, Jr., Ph.D.
Georganne C. Proctor
Thomas M. Van Leeuwen
Brett E. Wilcox
This Audit Committee Report does not constitute soliciting
material and shall not be deemed filed or incorporated by
reference into any other filing made by us under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to
the extent that we specifically incorporate this Audit Committee
Report by reference therein.
INDEPENDENT
PUBLIC ACCOUNTANTS
The following table presents fees for professional audit
services rendered by Deloitte & Touche LLP for the
audit of our annual financial statements for each of 2006 and
2007, and fees billed for other services rendered by
Deloitte & Touche LLP.
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2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees(1)
|
|
$
|
2,359,289
|
|
|
$
|
3,369,568
|
|
Audit-Related Fees(2)
|
|
$
|
311,358
|
|
|
$
|
262,083
|
|
Tax Fees(3)
|
|
$
|
295,186
|
|
|
$
|
275,755
|
|
All Other Fees
|
|
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|
|
|
|
|
|
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(1) |
|
Audit fees for 2007 consist principally of fees for the audit of
our annual financial statements and review of our financial
statements included in our Quarterly Reports on
Form 10-Q
for those years, audit services provided in connection with
compliance with the requirements of the Sarbanes-Oxley Act of
2002, or SOX, and fees incurred in connection with the filing of
registration statements with the SEC. Audit fees for 2006 did
not |
65
|
|
|
|
|
include any services provided in connection with SOX as 2007 was
the first year that the Company was required to comply. |
|
(2) |
|
Audit-related fees for 2006 consist principally of fees for
employee benefit plans, SOX, Section 404 advisory services
and statutory audits. Audit related fees for 2007 consist
principally of fees from employee benefit plans and statutory
audits. |
|
(3) |
|
Tax fees consist principally of tax compliance and preparation
fees. |
The audit committee charter requires that the audit committee
pre-approve all audit and non-audit engagements, fees, terms and
services in a manner consistent with the Sarbanes-Oxley Act of
2002 and all rules and applicable listing standards promulgated
by the SEC and the Nasdaq Marketplace Rules and other applicable
criteria of the NASD. The audit committee may delegate the
authority to grant any pre-approvals of non-audit engagements to
one or more members of the audit committee, provided that such
member (or members) reports any pre-approvals to the audit
committee at its next scheduled meeting. The audit committee has
delegated pre-approval authority to its chair. All of the
audit-related fees, tax fees and other fees for 2007 were
pre-approved by the audit committee.
Representatives of Deloitte & Touche LLP are expected
to be present at the Annual Meeting and will have the
opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our officers and directors and persons who own more
than 10% of a registered class of our equity securities to file
initial reports of ownership and reports of changes in ownership
with the SEC. Such persons are required by regulation of the SEC
to furnish us with copies of all Section 16(a) forms they
file. Based solely on our review of the copies of such forms or
written representations from certain reporting persons received
by us with respect to 2007, we believe that our officers and
directors and persons who own more than 10% of a registered
class of our equity securities have complied with all applicable
filing requirements.
OTHER
MATTERS
We do not know of any other matters to be presented or acted
upon at the Annual Meeting. If any other matter is presented at
the Annual Meeting on which a vote may properly be taken, the
shares represented by proxies will be voted in accordance with
the judgment of the proxy holders.
STOCKHOLDER
PROPOSALS
To be considered for inclusion in our proxy statement for our
2009 annual meeting of stockholders, proposals of stockholders
must be in writing and received by us no later than January
[ ], 2009. To be presented at the 2009 annual
meeting of stockholders without inclusion in our proxy statement
for such meeting, proposals of stockholders must be in writing
and received by us no later than March [ ],
2009 and no earlier than February [ ],
2009, in accordance with procedures set forth in our bylaws.
Such proposals should be mailed to Kaiser Aluminum Corporation,
27422 Portola Parkway, Suite 350, Foothill Ranch,
California
92610-2831
and directed to the corporate secretary.
By Order of the Board of Directors,
John M. Donnan
Senior Vice President, General Counsel
and Secretary
Foothill Ranch, California
April [ ], 2008
66
PROXY
KAISER ALUMINUM CORPORATION
27422 Portola Parkway, Suite 350
Foothill Ranch, California 92610
This proxy is solicited by the Board of Directors of Kaiser Aluminum Corporation for the
annual meeting of stockholders to be held on June 4, 2008.
The undersigned hereby appoints Jack A. Hockema, Joseph P. Bellino and John M. Donnan and each
of them as proxies, each with the power to appoint his substitute, and hereby authorizes each of
them to vote all shares of Kaiser Aluminum Corporation common stock which the undersigned may be
entitled to vote at the annual meeting of stockholders to be held at 9:00 a.m. Pacific Time on
Wednesday, June 4, 2008 at The Westin South Coast Plaza, 686 Anton Boulevard, Costa Mesa,
California 92626, or at any adjournment or postponement thereof, upon the matters set forth on the
reverse side and described in the accompanying proxy statement and upon such other business as may
properly come before the annual meeting.
This proxy, when properly executed, will be voted in the manner directed herein by the
undersigned. If no direction is given, this proxy will be voted For the nominees listed herein,
For the ratification of Deloitte & Touche LLP as Kaisers independent registered accounting firm,
For the amendment of Kaisers Amended and Restated Certificate of Incorporation to increase the
number of authorized shares of common stock from 45,000,000 to 90,000,000 and in accordance with
the discretion of the person voting the proxy with respect to any other business properly brought
before the annual meeting.
Please mark your votes as indicated in this example: ý
PROPOSAL 1: ELECTION OF DIRECTORS
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FOR all nominees |
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WITHHOLD AUTHORITY |
Nominees: |
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(except as marked to the contrary) |
|
to vote for all nominees |
01 Carolyn Bartholomew
02 Jack A. Hockema
03 Georganne C. Proctor
04 Brett E. Wilcox
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o
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o |
INSTRUCTION: To withhold authority to vote for any individual nominee, strike through the
nominees name above.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS KAISERS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2008
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o FOR
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o AGAINST
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o ABSTAIN |
PROPOSAL 3: APPROVAL OF AMENDMENT OF KAISERS AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
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o FOR
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o AGAINST
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o ABSTAIN |
Please check the following box if you plan to attend the annual meeting in person. o
All shares will be voted as directed herein and, unless otherwise directed, will be voted
For proposal 1, For proposal 2 and For proposal 3 and in accordance with the discretion of
the person voting the proxy with respect to any other business properly brought before the annual
meeting. You may revoke this proxy prior to the time this proxy is voted.
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Dated:
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, 2008 |
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Signature |
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Signature |
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Please sign exactly as your name or names appear hereon. When signing as attorney-in-fact,
executor, administrator, trustee or guardian, please give full title as such. Joint owners should
each sign. In the case of a corporation, partnership or other entity, the full name of the
organization should be used and the signature should be that of a duly authorized officer or
person.
To vote by mail, please complete, sign, date and promptly return this proxy card in the
enclosed pre-addressed, postage-paid envelope. If you are voting by internet or telephone, please
do not mail your proxy card.
ÙFOLD AND DETACH HEREÙ
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH OF WHICH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting will be available through 11:59 PM Eastern Time
the day prior to the day on which annual meeting is held.
Your internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you completed,
signed and returned your proxy card.
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INTERNET
[http://www. ]
Use the internet to vote your proxy.
Have your proxy card in hand when
you access the website.
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OR
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TELEPHONE
[1-800- ]
Use any touch-tone telephone to vote
your proxy. Have your proxy card in
hand when you call. |
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