def14a
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:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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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):
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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: |
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May 7,
2007
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 6, 2007, at
9:00 a.m., local time.
The attached Notice of Annual Meeting of Stockholders and Proxy
Statement describe fully the formal business to be transacted at
the Annual Meeting. During the Annual Meeting, stockholders will
consider and vote upon the election of three members to the
Board of Directors and the ratification of the selection of
Deloitte & Touche LLP as our independent registered
public accounting firm.
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.
We urge you to review carefully the accompanying material and to
return the enclosed proxy card promptly. Please sign, date and
return the enclosed proxy card without delay. If you attend the
Annual Meeting, you may vote in person even if you have
previously mailed a proxy.
Sincerely,
Jack A. Hockema
President, Chief Executive Officer and
Chairman of the Board
27422
Portola Parkway, Suite 350, Foothill Ranch, CA 92610-2831
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held On June 6,
2007
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 6, 2007, at 9:00 a.m., local time, for the
following purposes:
(1) To elect three members to our Board of Directors for
three-year terms to expire at our 2010 annual meeting of
stockholders;
(2) To ratify the selection of Deloitte & Touche
LLP as our independent registered public accounting firm for
2007; and
(3) 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 12, 2007 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 complete, date, sign and return the
enclosed proxy card 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
Vice President, Secretary and General Counsel
Foothill Ranch, California
May 7, 2007
27422
Portola Parkway, Suite 350, Foothill Ranch, CA 92610-2831
PROXY
STATEMENT
TABLE OF
CONTENTS
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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 6,
2007
GENERAL
QUESTIONS AND ANSWERS
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When is the Proxy Statement being mailed and what is its
purpose? |
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This Proxy Statement is first being mailed to our stockholders
on or about May 7, 2007 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 6, 2007,
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 12, 2007
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 three members to our Board of
Directors to serve until our 2010 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 2007; 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 do I vote? |
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You may vote by either attending the Annual Meeting or signing
and dating each proxy card you receive and returning it in the
enclosed prepaid envelope. We encourage you to complete and send
in your proxy card without delay. |
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All shares represented by valid proxies, unless the stockholder
otherwise specifies, will be voted: |
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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 2007; and
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At the discretion of the proxy holders with regard
to any other matter that may properly come before the Annual
Meeting.
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If you properly specify on your proxy card how your shares are
to be voted, your shares will be voted accordingly. However, as
indicated above, if you sign and send in your proxy card but do
not indicate how you |
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want to vote, your shares will be voted for each of the nominees
for election as directors and for the ratification of the
selection of Deloitte & Touche LLP as our independent
registered public accounting firm for 2007. |
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If I abstain from voting or withhold authority to vote on
either proposal or withhold authority to vote for any particular
director nominee, will my shares be counted in the vote? |
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If you abstain from voting on the Proposal For Election of
Directors, your shares will not be counted in the vote for any
director nominee. If you withhold authority to vote for any
particular director nominee, your shares will not be counted in
the vote for that nominee. If you abstain from voting or
withhold authority to vote on the Proposal For Ratification
of the Selection of our Independent Registered Public Accounting
Firm, your shares will not be counted in the vote for 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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Your broker could vote your shares without your instructions on
each of the proposals but is not required to do so. To be sure
your shares are voted, you should instruct your broker to vote
your shares using the instructions provided by your broker. If
you do not instruct your broker on how to vote your shares, your
shares may not be counted in the vote on the Proposal For
Election of Directors or the Proposal For Ratification of
our Independent Registered Public Accounting Firm. |
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Can I change my vote after I mail my proxy? |
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Yes. You can change your vote before voting takes place at the
Annual Meeting. You may revoke your proxy by: |
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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 June 5, 2007, 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.
Your attendance alone will not revoke your proxy. To change your
vote, you must also vote in person at the Annual Meeting.
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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 in more than one account. You will need to sign and
return all proxy cards to ensure that all of your shares are
voted at the Annual Meeting. |
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Who will count the vote? |
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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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What constitutes a quorum? |
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As of April 12, 2007, the record date,
20,575,423 shares of our common stock were issued and
outstanding. A majority of the issued and outstanding shares
present or represented by proxy will constitute a quorum for the
transaction of business at the Annual Meeting. If you submit a
properly executed proxy card, 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. |
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What is the required vote for election of each director? |
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The required vote for election of each director is a plurality
of the votes of the shares of our common stock having voting
power present or represented by proxy at the Annual Meeting.
Therefore, the three nominees receiving the highest number of
votes will be elected. |
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What is the required vote for ratification of the selection
of Deloitte & Touche LLP as our independent registered
public accounting firm for 2007? |
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The approval of the holders of a majority of the total number of
outstanding shares of our common stock present 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 2007. |
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What will happen if the selection of Deloitte &
Touche LLP as our independent registered public accounting firm
for 2007 is not ratified? |
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Pursuant to the Audit Committee Charter, our audit committee has
sole authority to appoint our independent registered public
accounting firm, and our 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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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 of approximately $7,500, 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. |
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PROPOSALS REQUIRING
YOUR VOTE
Proposal
for Election of Directors
General
Our board of directors currently has nine members, consisting of
our President and Chief Executive Officer and eight independent
directors. There is currently one vacancy on our board of
directors. Our current directors are:
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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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Alfred E.
Osborne, Jr., Ph.D.
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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 initial three Class I directors will expire at
the 2007 annual meeting of the stockholders; the term of the
initial Class II directors will expire at the 2008 annual
meeting of the stockholders; and the term of the Class III
directors will expire at the 2009 annual meeting of the
stockholders. The current vacancy is in Class II.
In order to be elected as a director, a nominee must receive a
plurality of the votes of the shares of our common stock present
or represented by proxy at the Annual Meeting.
Our nominating and corporate governance committee has
recommended, and our board of directors has approved, the
nomination of the three 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 or nominees. Proxies cannot be voted for more than three
nominees.
The board of directors recommends a vote FOR each
of the persons nominated by the board of directors.
Nominees
for Election as Class I Directors
Set forth below is information as to the nominees for election
as Class I 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.
Alfred E. Osborne, Jr., Ph.D., 62, 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 K2, Inc., EMAK Worldwide, Inc. and
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.
Mr. Osborne serves on our audit and nominating and
corporate governance committees.
Jack Quinn, 56, has served as a director of Kaiser since
July 2006. Mr. Quinn has been the President of
Cassidy & Associates, a government relations firm,
since January 2005. Mr. Quinn 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
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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, Congressman 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 our compensation and nominating and
corporate governance committees.
Thomas M. Van Leeuwen, 50, 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 our audit and nominating and
corporate governance 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 II
Directors
Jack A. Hockema, our President and Chief Executive
Officer, serves as Chairman of the Board and serves on our
executive committee. For information as to Mr. Hockema, see
Executive Officers below.
Georganne C. Proctor, 50, 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 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 our 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 also 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
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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 serves as a director of Oregon Steel Mills, Inc.
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 our executive and audit
committees.
There is currently a vacancy in Class II resulting from the
death in February 2007 of George Becker, who was designated to
serve on our board of directors by the United Steelworkers, or
USW, pursuant to our chapter 11 plan of reorganization.
Pursuant to our bylaws, the vacancy resulting from death will be
filled by the remaining directors and the director elected in
such manner to fill the vacancy will hold office for the
remainder of Mr. Beckers full term. Pursuant to the
Director Designation Agreement described below, the USW has the
right to nominate the replacement director. (See Corporate
Governance Director Designation Agreement)
below.
Class III
Directors
Carl B. Frankel, 72, 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 our nominating
and corporate governance committee.
Teresa A. Hopp, 47, has served as a director of Kaiser
since July 2006. Ms. Hopp currently serves as a board
member and audit committee chair for On Assignment, Inc., a
provider of skilled contract professionals to the life sciences
and healthcare industries, where she is responsible for
oversight of compliance with the Sarbanes-Oxley Act of 2002.
Prior to Ms. Hopps retirement, she was the Chief
Financial Officer for Western Digital Corporation, a hard disk
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 our
executive and audit committees.
William F. Murdy, 65, 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 our compensation and nominating
and corporate governance committees.
6
Proposal
for Ratification of the Selection of our Independent Registered
Public Accounting Firm
General
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 2007.
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 2008.
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 2007.
Audit
Committee Report
The audit committee charter requires our 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 below. 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 2007
and on our managements assessment of, 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, 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, and (3) the change in accounting
methodologies with respect to inventory accounting made in
connection with our application of fresh start accounting. 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, 2006. During the year ended
December 31, 2006, there were no disagreements with
Deloitte & Touche LLP on any matter of accounting
principle or practice,
7
financial statement disclosure or auditing 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 audited
financial statements of Kaiser contained in our Annual Report on
Form 10-K
for the year ended December 31, 2006 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, 2006, as filed with the
Securities and Exchange Commission, or 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
Registered Public Accounting Firms Fees
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 2005 and
2006, and fees billed for other services rendered by
Deloitte & Touche LLP.
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2005
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2006
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Audit Fees(1)
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$
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1,971,710
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$
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2,359,289
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Audit-Related Fees(2)
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$
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158,040
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$
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311,358
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Tax Fees(3)
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$
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210,000
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$
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295,186
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All Other Fees
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$
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$
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(1) |
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Audit fees 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 |
8
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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. |
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(2) |
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Audit-related fees consist principally of fees for employee
benefit plans, SOX, Section 404 advisory services and
statutory audits. |
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(3) |
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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) report 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 2006 were
pre-approved by our former 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.
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 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 our 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 our executive committee, audit
committee, compensation committee or nominating and corporate
governance committee by sending an email to
boardofdirectors@kaiseraluminum.com,
execchair@kaiseraluminum.com, auditchair@kaiseraluminum.com,
compchair@kaiseraluminum.com, or
nominatingchair@kaiseraluminum.com, 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
corpsecretary@kaiseraluminum.com 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, it will be forwarded to our Compliance Officer.
9
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
communication.
Board and
Committee Meetings and Consents in 2006
Between our emergence from chapter 11 bankruptcy on
July 6, 2006 and December 31, 2006, our board of
directors held five meetings and acted by unanimous written
consent one time. In addition to meetings of the full board of
directors, directors attended meetings of board of directors
committees. Each incumbent director attended at least 80% of the
aggregate number of meetings of the board of directors and the
committees on which he or she served. Members of our board of
directors are expected to make reasonable efforts to attend our
annual meetings of stockholders.
Prior to our emergence from chapter 11 bankruptcy, between
January 1, 2006 and July 6, 2006, our board of
directors held eight meetings and did not act by unanimous
written consent.
Director
Independence
Our corporate governance guidelines, adopted upon our emergence
from chapter 11 bankruptcy, 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, our audit committee
charter, compensation committee charter and nominating and
corporate governance committee charter, each adopted upon our
emergence from chapter 11 bankruptcy, 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 Messrs. Frankel,
Murdy, Osborne, Quinn, Van Leeuwen and Wilcox and Mmes. Hopp and
Proctor, representing eight of our nine 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, including the fees paid to such
individuals for attending meetings prior to our emergence from
chapter 11 bankruptcy and their formal appointment as
directors upon emergence.
Prior to our emergence from chapter 11 bankruptcy, we were
not listed on a national securities exchange and, consequently,
the members of our board of directors as constituted prior to
our emergence from chapter 11 bankruptcy were not subject
to independence requirements. However, our board of directors as
constituted prior to emergence determined that, of its six
members, Robert J. Cruikshank, Ezra G. Levin and John D. Roach
satisfied the independence requirements set forth in both the
Nasdaq Marketplace Rules and the New York Stock Exchange Listed
Company Manual and that George T. Haymaker, Jr., Jack A.
Hockema and Charles E. Hurwitz did not meet such independence
standards. Prior to our emergence, Messrs. Cruikshank and
Roach were members of our audit committee;
Messrs. Cruikshank, Roach and Levin were members of our
compensation policy committee; Mr. Cruikshank was the sole
member of our Section 162(m) compensation committee; and
Messrs. Haymaker, Hockema and Levin were members of our
executive committee. We did not have a nominating and corporate
governance committee prior to our emergence from chapter 11
bankruptcy.
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
10
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 our 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 our 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 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, our
nominating and corporate governance 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 our 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).
11
Current members of our board of directors that were designated
by the USW pursuant to our chapter 11 plan of
reorganization are Messrs. Frankel, Quinn and Wilcox.
Mr. Quinn has been nominated for re-election at the Annual
Meeting in accordance with the provisions of the Director
Designation Agreement. In addition, under the Director
Designation Agreement, the USW has the right to nominate an
individual to fill the vacancy on our board of directors
resulting from the death in February 2007 of George Becker, who
was designated by the USW to serve on our board of directors
pursuant to our chapter 11 plan of reorganization.
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.
Our 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).
Our executive committee currently consists of
Messrs. Hockema and Wilcox and Ms. Hopp.
Mr. Hockema currently serves as the chair of the executive
committee. Between our emergence from bankruptcy on July 6,
2006 and December 31, 2006, our executive committee did not
meet but did act by unanimous written consent two times. Prior
to our emergence from chapter 11 bankruptcy, our former
executive committee held one meeting and acted by unanimous
written consent one time between January 1, 2006 and
July 6, 2006.
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 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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Our 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
12
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 SEC
rules. 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).
Our 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, or the Exchange Act
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.
Between our emergence from chapter 11 bankruptcy on
July 6, 2006 and December 31, 2006, our audit
committee held four meetings and acted by unanimous written
consent one time. Prior to our emergence from chapter 11
bankruptcy, our former audit committee held five meetings and
did not act by unanimous written consent between January 1,
2006 and July 6, 2006.
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 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
(i) providing competitive market data and related
assessments of executive compensation as background against
which the compensation committee considers executive
compensation, (ii) preparing and reviewing tally sheets for
the named executive officers, (iii) apprising the
compensation committee of trends and best practices associated
with executive and director compensation, (iv) providing
support with respect to legal, regulatory and accounting
considerations impacting compensation and benefit programs, and
(v) 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.
Our 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.
Our compensation committee currently consists of
Messrs. Murdy and Quinn and Ms. Proctor.
Mr. Murdy currently serves as the chair of the compensation
committee. Between our emergence from chapter 11 bankruptcy
13
on July 6, 2006 and December 31, 2006, our
compensation committee held two meetings and acted by unanimous
written consent one time. Prior to our emergence from
chapter 11 bankruptcy, our former compensation policy
committee held three meetings and did not act by unanimous
written consent and our Section 162(m) compensation
committee did not meet or act by unanimous written consent
between January 1, 2006 and July 6, 2006.
Compensation
Committee Interlocks and Insider Participation
From the time of our emergence from bankruptcy on July 6,
2006 through the end of 2006, Messrs. Murdy and Quinn 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.
Prior to our emergence from chapter 11 bankruptcy on
July 6, 2006, Messrs. Cruikshank, Roach and Levin were
members of our compensation policy committee and
Mr. Cruikshank was the sole member of our
Section 162(m) compensation committee. None of the members
of the compensation policy committee or the Section 162(m)
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.
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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14
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.
|
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. Where 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 10th 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, the rules of
the SEC, the Nasdaq Marketplace Rules or other applicable
criteria of the NASD; and
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15
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a written statement that each submitting stockholder and the
director candidate shall make available to the committee all
information reasonably requested in connection with the
committees evaluation of the director candidate.
|
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.
Our nominating and corporate governance committee 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).
Our nominating and corporate governance committee currently
consists of Messrs. Osborne, Frankel, Murdy, Quinn and Van
Leeuwen. Dr. Osborne currently serves as the chair of the
nominating and corporate governance committee. Between our
emergence from bankruptcy on July 6, 2006 and
December 31, 2006, our nominating and corporate governance
committee did not meet and acted by unanimous written consent
one time. We did not have a nominating and corporate governance
committee prior to our emergence from chapter 11 bankruptcy
on July 6, 2006.
EXECUTIVE
OFFICERS
The following table sets forth the names and ages of each of the
current executive officers of our company and the positions they
hold.
|
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|
|
Name
|
|
Age
|
|
Position(s)
|
|
Jack A. Hockema
|
|
|
60
|
|
|
President, Chief Executive Officer
and Chairman of the Board; Director
|
Joseph P. Bellino
|
|
|
56
|
|
|
Executive Vice President and Chief
Financial Officer
|
John Barneson
|
|
|
56
|
|
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Senior Vice President and Chief
Administrative Officer
|
John M. Donnan
|
|
|
46
|
|
|
Vice President, Secretary and
General Counsel
|
Daniel J. Rinkenberger
|
|
|
48
|
|
|
Vice President and Treasurer
|
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
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.
16
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 Ohio State University.
John Barneson has served as our Senior Vice President and
Chief Administrative Officer since August 2001. He previously
served 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 Vice President,
Secretary and General Counsel since January 2005.
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.
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 progressively responsible positions 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.
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
17
Compensation
Discussion and Analysis
Introduction
This section provides (1) an overview of the compensation
committee of the board of directors, (2) a discussion of
the background and objectives of our compensation programs for
senior management, and (3) a discussion of all material
elements of the compensation of each of the executive officers
identified in the following table, whom 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 and Chief
Administrative Officer
|
John M. Donnan
|
|
Vice President, Secretary and
General Counsel
|
Daniel D. Maddox
|
|
Vice President and Controller (our
former principal accounting officer)
|
Kerry A. Shiba
|
|
Executive Vice President and Chief
Financial Officer (our former principal financial officer)
|
The year ended December 31, 2006 was a transition year for
us. It was also a transition year for the board of directors and
our compensation programs. On July 6, 2006, we emerged from
chapter 11 bankruptcy, and a new board of directors
selected by our pre-emergence creditors was installed.
In contemplation of our emergence from chapter 11
bankruptcy, the individuals expected to serve on the
compensation committee at emergence began an extensive review of
all aspects of our executive compensation programs in early
2006. Based on their review and discussions with the other
individuals expected to serve on the board of directors at
emergence, a comprehensive compensation structure was approved
for implementation upon our emergence.
Overview
of Compensation Committee
As indicated above, the compensation committee of the board of
directors is comprised entirely of independent directors. The
compensation committees primary duties and
responsibilities are to establish and implement our compensation
policies and programs for senior management. 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 has
engaged Hewitt to advise it on all matters related to
compensation of our chief executive officer and other members of
senior management.
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. Neither our chief executive officer nor any other
member of management votes on items before the compensation
committee; however, the compensation committee and board of
directors solicit the views of the chief executive officer on
compensation matters, including as they relate to the
compensation of the other named executive officers and other
members of senior management reporting to the chief executive
officer. The compensation committee also works with our senior
management to determine the agenda for each meeting, and our
human resources department, with the assistance of our outside
advisors, prepares the meeting materials.
Objectives
of our Compensation Program
The comprehensive compensation structure implemented upon our
emergence from chapter 11 bankruptcy was developed based on
the following objectives:
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|
Create alignment between senior management and stockholders by
rewarding senior management for the achievement of strategic
goals that successfully drive our operations and enhance
stockholder value;
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18
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|
Attract, motivate and retain highly experienced executives vital
to our short-term and long-term success, profitability and
growth;
|
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|
Differentiate senior management rewards based on actual
performance; and
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|
Provide targeted compensation levels consistent with the
50th percentile of our compensation peer group, which is
discussed below, for base salary, the 50th percentile for
annual monetary incentives at target-level performance and
between the 50th and the 65th percentile for
annualized economic equity grant value of long-term incentives.
|
Design of
our Compensation Program
The compensation program for senior management, including the
named executive officers, is intended to reinforce the
importance of performance and accountability at both the
individual and corporate levels. In addition to focusing on
pay for performance, our compensation program is
designed to:
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Balance short-term and long-term goals (approximately 50% of the
chief executive officers target total compensation is
delivered through long-term incentives, while approximately 40%
of the target total compensation for the other named executive
officers is delivered through long-term incentives);
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Deliver a mix of fixed and at-risk compensation (by design,
approximately 70% of the chief executive officers target
total compensation and approximately 60% of the target total
compensation for the other named executive officers is variable,
i.e., at-risk annual and long-term incentive
compensation) that is directly related to stockholder value and
our overall performance;
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Provide guidelines for a compensation program that is
competitive with our compensation peer group; and
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|
Use equity-based awards, stock ownership guidelines and annual
incentives that are linked to stockholder value and achievement
of individual, segment and corporate performance.
|
Each element of compensation is reviewed individually and
considered collectively with the other elements of our
compensation program to ensure that it is consistent with the
goals and objectives of both that particular element of
compensation and our overall compensation program.
In designing the compensation program and in determining senior
management compensation, including the compensation of the named
executive officers, we also considered the following factors:
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The external challenges to our ability to attract and retain
strong senior management;
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|
Each individuals contributions to our overall results;
|
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|
Our operating and financial performance compared with the
targeted goals; and
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|
Our size and complexity compared with companies in our
compensation peer group.
|
We also use 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 include a historical
summary of base salary, annual bonus and long-term equity
awards. They also provide a review of wealth and retirement
accumulation as a result of employment with our company.
In developing the compensation structure that was effective upon
our emergence from chapter 11 bankruptcy, we reviewed the
compensation and benefit practices, as well as levels of pay, of
a compensation peer group of companies. The selection of an
appropriate peer group was an important part of the work
performed by the individuals expected to serve on the
compensation committee at emergence. Working closely with
Hewitt, the companies selected were determined to: (1) be
of a similar size; (2) have positions of similar complexity
and scope of responsibility; and (3) compete with us for
talent. The selected companies include companies in similar
industries, as well as companies in different industries. We
continually review, evaluate and update the compensation peer
group. For the compensation structure developed in 2006 in
anticipation of our emergence from chapter 11 bankruptcy
and the compensation structure developed in 2007, the
compensation peer group consisted of 41 companies. As we
developed the peer group for 2006, we also determined that it
was appropriate to design
19
programs that deliver total compensation between the
50th and 65th percentiles of the compensation peer
group. However, we also recognize that we compete with much
larger companies that aggressively recruit for the best
qualified talent in particularly critical functions and that to
attract and retain that talent, we may determine that it is in
the best interests of our company and stockholders to provide
packages that deviate from the targeted pay objectives.
Background
of our Compensation Programs
Although this section focuses on our post-emergence compensation
programs, it also addresses certain aspects of our key employee
retention program, implemented in 2002 during our
chapter 11 bankruptcy with the support of our creditors and
approval of the bankruptcy court in order to meet the dual goals
of (1) providing the retention incentives necessary to
retain certain key employees who were expected to remain with us
through our emergence from chapter 11 bankruptcy, assume
the additional administrative and operational burdens imposed on
us during chapter 11 bankruptcy and take the actions
necessary to improve our operating performance and strategic
positioning during the chapter 11 bankruptcy and
(2) addressing the financial constraints and obligations to
creditors faced by companies in chapter 11 bankruptcy. We
refer to the key employee retention program as the
Chapter 11 KERP. Among other elements, the Chapter 11
KERP included:
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a two-year retention plan (which we refer to as our
Chapter 11 Retention Plan) that provided semi-annual
retention payments to key employees through March 31, 2004,
with a significant portion of those payments to certain senior
employees, including Messrs. Hockema and Barneson, being
withheld and paid, subject to certain conditions relating to
continued employment, in two installments the first
on the date of emergence and the second one year later;
|
|
|
|
a long-term incentive plan (which we refer to as our
Chapter 11 Long-Term Incentive Plan) designed to provide
incentives for key employees to achieve cost reductions in
excess of $80 million annually, with all awards earned
being withheld and paid, subject to certain conditions relating
to continued employment, in two installments the
first on the date of emergence and the second one year later;
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|
a severance plan (which we refer to as our Severance Plan) and
related agreements designed to provide key employees with job
security in an uncertain environment;
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|
change-in-control
severance agreements (which we refer to as Change in Control
Agreements) intended to retain key employees through any
potential merger or acquisition transaction; and
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|
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|
the continuance for key employees of our then-existing
nonqualified, unfunded supplemental executive retirement plan
(which we refer to as our Old Restoration Plan) intended to
restore benefits that would be payable to participants in the
Kaiser Aluminum Salaried Employees Retirement Plan, a defined
benefit pension plan previously maintained by us for our
salaried employees (which we refer to as our Old Pension Plan),
but for legal limitations on benefit accruals and payments
thereunder.
|
Each of these elements is more fully described below.
As indicated, retention of our senior management was determined
to be important to our successful emergence from chapter 11
bankruptcy, and a discussion of certain elements of the
Chapter 11 KERP is relevant to any discussion of
(1) compensation received by our named executive officers
in 2006, (2) compensation accrued to our named executive
officers during our chapter 11 bankruptcy, but payable in
2007, (3) the rights of our named executive officers upon
termination of employment, and (4) the comprehensive
compensation structure implemented upon our emergence from
chapter 11 bankruptcy. This is particularly true because,
as indicated above, several elements of the Chapter 11 KERP
were designed to enhance retention of key employees by
conditioning payments on continued employment and withholding
payments until at and after our emergence.
Elements
of Compensation
Our compensation program currently consists of base salary,
annual cash incentives, long-term incentives, retirement
benefits and certain perquisites. In addition, we impose stock
ownership requirements on senior management and provide for
general severance and
change-in-control
protections for certain members of senior
20
management, including each of the named executive officers. We
also entered into employment agreements with
Messrs. Hockema, Bellino and Maddox, although
Mr. Maddoxs agreement expired on March 31, 2007.
Base
salary
We annually review base salaries for our chief executive officer
and those members of senior management reporting to the chief
executive officer and determine if a change is appropriate. In
reviewing base salaries, we consider several factors, including
level of responsibility, prior experience, a comparison to base
salaries paid for comparable positions in our compensation peer
group and the relationship among base salaries paid within our
company. Our intent is to fix base salaries at levels that we
believe are consistent with our program design objectives,
including the ability to attract, motivate and retain
individuals in a competitive environment.
During 2006, we did not increase the base salary of
Mr. Hockema or Mr. Donnan. Mr. Hockemas
base salary remained at the same level as 2005 as part of the
negotiation of his new employment agreement based on our
analysis of competitive market practice. Mr. Donnan was
promoted to his current position in 2005 and received a base
salary increase at that time. In April 2006, each of
Messrs. Barneson and Maddox received a base salary increase
so that his salary level would be better aligned with the
compensation structure that was being developed in contemplation
of our emergence from chapter 11 bankruptcy.
Mr. Shiba, who resigned effective January 23, 2006,
did not receive a base salary increase in 2006. The base salary
of Mr. Bellino, who joined us in May 2006, was negotiated
based on our analysis of competitive market practice information
provided by Hewitt. Base salaries for our named executive
officers in 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Amount of Base Salary
|
|
|
|
|
Name
|
|
Increase for 2006
|
|
|
2006 Base Salary
|
|
|
Jack A. Hockema
|
|
$
|
0
|
|
|
$
|
730,000
|
|
Joseph P. Bellino
|
|
|
|
|
|
$
|
350,000
|
|
John Barneson
|
|
$
|
5,000
|
|
|
$
|
280,000
|
|
John M. Donnan
|
|
$
|
0
|
|
|
$
|
260,000
|
|
Daniel D. Maddox
|
|
$
|
25,000
|
|
|
$
|
225,000
|
|
Kerry A. Shiba
|
|
$
|
0
|
|
|
$
|
270,000
|
|
Annual
cash incentives
Our annual cash incentives link the compensation of participants
directly to the accomplishment of specific business goals, as
well as individual performance. Annual cash incentive
compensation is intended to focus and reward individuals based
on measures identified as having a positive impact on our annual
business results. Our 2006 Short-Term Incentive Plan, a
transition program based on historical programs using return on
net assets and core cash flows, was designed to (1) focus
attention on earnings before interest, taxes, depreciation and
amortization, or EBITDA, from our fabricated products segment in
order to continue to tie compensation to returns on net assets
and core cash flows, with modifiers for achievement of plan,
individual performance and safety performance, (2) reward
achievement of aggressive performance goals, (3) provide
incentive opportunities consistent with those provided by
companies in the compensation peer group, and (4) link
performance compensation to individual performance as well as
our ability to pay. When establishing our threshold performance
incentive targets, the compensation committee reviews and
discusses with both senior management and the full board of
directors our business plan and its key underlying assumptions,
expectations under then-existing and anticipated market
conditions and the opportunity to generate stockholder value and
then establishes the performance thresholds and targets for the
year.
21
During 2006, we made nominal adjustments to the annual cash
incentive targets for each of our named executive officers
(other than Mr. Bellino and Mr. Shiba) based on our
analysis of competitive market practice information provided by
Hewitt. The annual cash incentive target of Mr. Bellino,
who joined us in May 2006, was negotiated as part of his
employment agreement and based on competitive market practice at
that time. Mr. Shiba, who resigned effective
January 23, 2006, did not participate in the 2006
Short-Term Incentive Plan. The table below sets forth the
possible payouts, stated as a percentage of base salary, that
could have been earned by our named executive officers (other
than Mr. Shiba), under our 2006 Short-Term Incentive Plan
at each performance level.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Below Threshold
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Jack A. Hockema
|
|
|
0
|
%
|
|
|
34.25
|
%
|
|
|
68.50
|
%
|
|
|
205.50
|
%
|
Joseph P. Bellino
|
|
|
0
|
%
|
|
|
25.00
|
%
|
|
|
50.00
|
%
|
|
|
150.00
|
%
|
John Barneson
|
|
|
0
|
%
|
|
|
22.50
|
%
|
|
|
45.00
|
%
|
|
|
135.00
|
%
|
John M. Donnan
|
|
|
0
|
%
|
|
|
22.50
|
%
|
|
|
45.00
|
%
|
|
|
135.00
|
%
|
Daniel D. Maddox
|
|
|
0
|
%
|
|
|
16.67
|
%
|
|
|
33.33
|
%
|
|
|
100.00
|
%
|
A monetary incentive target for each participant is established
for annual cash incentive compensation based on a percentage of
base salary (generally determined based on the
50th percentile of our compensation peer group, internal
compensation balance and position responsibilities). The
monetary incentive targets are generally set at the beginning of
each annual performance period, and actual annual cash incentive
compensation then determined based on the results for the annual
performance period, subject to any adjustments approved by the
compensation committee. These adjustments may spread
extraordinary items over a period of years based upon the
recommendation of our chief executive officer and the approval
of the compensation committee. The resulting award multiple may
then be adjusted within a range of plus or minus 10 percent
based upon fabricated products safety performance.
Each participants base award is determined by multiplying
his or her monetary incentive target by the award multiple.
Based on the fabricated products results and safety performance,
as well as segment and individual performance, a
participants monetary award can 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 target. A cash pool is established based
upon the award multiple multiplied by the sum of individual
monetary incentive targets for all plan participants. Although
individual monetary awards may be adjusted up or down, the
entire cash pool is paid to participants.
Based on our 2006 results, the 2006 award multiple approved by
the compensation committee for use under the 2006 Short-Term
Incentive Plan was approximately 1.73. Individual monetary
awards actually earned by our named executive officers under the
2006 Short-Term Incentive Plan are set forth in footnote 3
under Summary Compensation Table for
2006 below.
Long-term
incentives
Upon our emergence from chapter 11 bankruptcy in July 2006,
our Chapter 11 Long-Term Incentive Plan adopted in 2002 as
part of the Chapter 11 KERP terminated and
Messrs. Hockema, Bellino, Barneson, Donnan and Maddox each
received an emergence grant of restricted stock
under our 2006 Equity and Performance Incentive Plan (which we
refer to as our Equity Incentive Plan). We determined that the
emergence grants to senior management were appropriate since our
primary concerns upon emergence were to retain senior
management, including the named executive officers (other than
Mr. Shiba), and to immediately align the interests of
senior management with the interests of our stockholders. We
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. We
accomplished our objectives by providing stock ownership of
approximately two percent of our outstanding common stock in the
aggregate to members of senior management.
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 under the Equity Incentive
22
Plan based on an analysis of competitive market practice for a
normal annual grant and the terms of his employment agreement.
Mr. Shiba, who resigned effective January 23, 2006,
did not receive a grant of restricted stock under the Equity
Incentive Plan. The table below summarizes the grants made to
our named executive officers (other than Mr. Shiba) under
the Equity Incentive Plan in July 2006:
|
|
|
|
|
|
|
Number of Shares
|
|
Name
|
|
of Restricted Stock
|
|
|
Jack A. Hockema
|
|
|
185,000
|
|
Joseph P. Bellino
|
|
|
15,000
|
|
John Barneson
|
|
|
48,000
|
|
John M. Donnan
|
|
|
45,000
|
|
Daniel D. Maddox
|
|
|
11,334
|
|
Recognizing that our business is cyclical and that the market
value of our common stock may fluctuate during business cycles,
we 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. Through the
issuance of restricted stock with three-year cliff
vesting to our named executive officers and other members of
senior management, the recipients do not become 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. Finally, while we view the emergence
grants as a one-time event, we will continue to take the
emergence grants into account in the design of future programs
and awards.
As described below, 2007 annual equity grants made to named
executive officers and other senior executives under our Equity
Incentive Plan were made during the week following the filing of
our Annual Report on
Form 10-K
with the SEC. We intend to follow a similar practice in the
future. We also expect future grants of restricted stock made to
our directors pursuant to our director compensation policy to be
made on the date of our annual meeting. The exercise price of
any stock option is based upon the closing price per share of
our common stock, as reported by the Nasdaq Global Market, Inc.,
on the date of the grant, and pursuant to the terms of our
Equity Incentive Plan, the exercise price of any stock option
can never be less than the closing price per share, as reported
by the Nasdaq Global Market, Inc., of our common stock on the
date of grant.
As indicated below, each of the named executive officers (other
than Mr. Bellino, who joined us in May 2006) received
payments under our Chapter 11 Long-Term Incentive Plan. The
Chapter 11 Long-Term Incentive Plan, which is described in
more detail below, terminated upon our emergence from
chapter 11 bankruptcy. Under the Chapter 11 Long-Term
Incentive Plan, key management employees, including
Messrs. Hockema, Barneson, Donnan, Maddox and Shiba, were
eligible to receive an annual cash award based on sustained cost
reductions above $80 million annually for the four and
one-half year period from 2002 through emergence. Awards accrued
on an annual basis during this period in a range between
approximately (16%) to 81% of target, with an average accrual of
approximately 55% of target over the four and one-half year
period. Because the Chapter 11 Long-Term Incentive Plan was
based on sustained cost reductions and continuation of
employment through emergence, no amounts were paid or payable to
the named executive officers until emergence. At emergence, each
of Messrs. Hockema, Barneson, Donnan and Maddox received
approximately one-half of his award, with the remaining portion
of the award payable in a lump sum on July 6, 2007 unless
his employment is terminated by us for cause or voluntarily
terminated by him prior to that date. Mr. Shiba, who
resigned effective January 23, 2006, received his total
award in early 2006 pursuant to the terms of a release entered
into between him and us in connection with his resignation. The
total awards accrued for each of our named executive officers
under the Chapter 11 Long-Term Incentive Plan are set forth
in footnote 2 under Summary Compensation
Table for 2006 below.
Stock
ownership guidelines
Stock ownership guidelines were introduced upon our emergence
from chapter 11 bankruptcy in July 2006, as part of our
comprehensive compensation structure, in order to further align
the interests of senior management, including the named
executive officers, with those of our stockholders. Under the
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
Mr. Hockema, and
23
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 reported closing price for our common
stock on the Nasdaq Global Market on April 3, 2007, each
named executive officer currently owns common stock above the
applicable stock ownership requirements under the stock
ownership guidelines.
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 two
principal plans: (1) 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 (2) a
nonqualified, unfunded and unsecured deferred compensation plan
(which we refer to as our New Restoration 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. 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, we believe 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.
In April 2005, we implemented a new defined contribution
retirement program for salaried employees, to be effective as of
May 1, 2005. The program was intended to replace our Old
Pension Plan, which was terminated by the Pension Benefit
Guaranty Corporation, or PBGC, on December 17, 2003, but
with lower costs and risks to us and reduced benefits to the
participants. The new defined contribution retirement program
has three primary components, which are discussed more fully
below: (1) a company match of the employees pre-tax
deferrals under our Savings Plan; (2) a company
contribution to the employees account under our Savings
Plan; and (3) a company contribution to the employees
account under the New Restoration Plan. A decision with respect
to the implementation of the third component was deferred for
consideration by the post-emergence board of directors in the
context of the implementation of our post-emergence
comprehensive compensation structure. Our New Restoration Plan
was adopted upon our emergence from chapter 11 bankruptcy.
The implementation of the New Restoration Plan included the
transfer, rather than distribution (as had been contemplated by
the Chapter 11 KERP), of the lump-sum equivalent of the
accrued benefits for the remaining participants under the Old
Restoration Plan into the New Restoration Plan. The table below
summarizes the balances that were transferred into the New
Restoration Plan from the Old Restoration Plan for
Messrs. Hockema, Barneson, Donnan and Maddox.
Mr. Shiba, who resigned effective January 23, 2006,
and Mr. Bellino, who joined us in May 2006, did not
participate in the New Restoration Plan in 2006.
|
|
|
|
|
|
|
Balance Transferred to
|
|
Name
|
|
the New Restoration Plan
|
|
|
Jack A. Hockema
|
|
$
|
964,718
|
|
John Barneson
|
|
$
|
887,366
|
|
John M. Donnan
|
|
$
|
54,851
|
|
Daniel D. Maddox
|
|
$
|
41,416
|
|
Under the terms of the New Restoration Plan, these balances were
transferred to 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.
Perquisites
During 2006, 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
24
the legal fees and expenses incurred by Mr. Hockema in
connection with the negotiation and consummation of his
employment agreement and the housing and other expenses incurred
by Mr. Bellino in connection with his relocation to
California upon joining us. Our use of perquisites as an element
of compensation is limited and is largely based on 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.
Chapter 11
Retention Plan
As part of the Chapter 11 KERP, we also adopted the
Chapter 11 Retention Plan, a retention plan with certain
key employees, including Messrs. Hockema, Barneson, Donnan
and Maddox, which continued through the first two years of our
restructuring. Although the Chapter 11 Retention Plan was
not extended beyond March 31, 2004, portions of the
payments to Messrs. Hockema and Barneson under the
Chapter 11 Retention Plan through that date were withheld
to further enhance the retention aspects of the Chapter 11
KERP. 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 the withheld amount was paid in a lump sum
in August 2006 following our emergence from chapter 11
bankruptcy. The remaining one-half is expected to be paid in a
lump sum on July 6, 2007, subject to the continued
employment of Messrs. Hockema and Barneson as more fully
discussed below.
Employment
Contracts, Termination of Employment Arrangements and
Change-in-Control
Arrangements
As discussed more fully below, we have entered into employment
agreements with Messrs. Hockema, Bellino and Maddox. Our
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. With
respect to Messrs. Hockema and Bellino, we worked with
Hewitt and determined that employment agreements and the
negotiated terms of those agreements were consistent with market
practice. We also determined that entering into an employment
agreement with Mr. Hockema was important to 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. With respect to Mr. Maddox, who
lives in Houston, Texas where we were formerly headquartered and
who expressed his desire to remain in Houston, we determined
that it was important to provide an incentive for
Mr. Maddox to remain with our company through at least
March 2007 in order to help facilitate and complete the
transition of our accounting function to our current
headquarters in Foothill Ranch, California and the training of
his replacement. In each case, we 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 certain terminations
of employment, including in connection with a change in control,
by us without cause and by the named executive officer with good
reason. These protections for all the named executive officers
(other than Mr. Bellino, who joined us in May 2006 just
prior to our emergence from chapter 11 bankruptcy and,
accordingly, did not participate in the Chapter 11 KERP)
and other members of senior management were supported by our
creditors and approved by the bankruptcy court as part of the
Chapter 11 KERP. 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. Mr. Hockemas
protection is now part of his employment agreement, replacing
the similar protection previously available to him under
Chapter 11 KERP agreements. Similarly,
Mr. Bellinos protection is part of his employment
agreement. We view these severance protection benefits as an
important component of the total compensation package for each
of our named executive officers. In our view, having these
protections helps to maintain the named executive officers
objectivity in decision-making and provides another vehicle to
align the interests of our named executive officer with the
interests of our stockholders.
25
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, we consider the anticipated tax
treatment to our company and our executive officers in the
review and establishment of compensation programs and payments.
While no assurance can be given that compensation will be fully
deductible under Section 162(m), we will continue to
evaluate steps that we can take to increase or otherwise
preserve deductibility. In the interim, we have determined that
we will not seek to limit compensation to that deductible under
Section 162(m), particularly in light of the substantial
net operating loss carry-forwards that we expect to be available
to us to offset taxable income.
Actions
With Respect to 2007 Compensation
Set forth below is a brief discussion of actions taken since
December 31, 2006 with respect to our 2007 compensation
program. Mr. Maddox, who resigned effective April 1,
2007 upon the completion of his employment agreement, did not
and will not participate in our 2007 compensation program.
Base
Salary
We have fixed base salaries for 2007. Base salaries for our
named executive officers in 2007 are 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
|
|
Annual
cash incentives
On March 30, 2007, the Compensation Committee approved a
short-term incentive plan for 2007, our 2007 STI Plan. The 2007
STI Plan is designed to reward participants for economic value
added, or EVA, versus cost of capital 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. Under
the 2007 STI Plan, EVA 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 2007 STI Plan provides for (1) a
threshold performance below which no payout is made, a target
performance level at which the target payout is available and a
maximum 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. Set forth below are the estimated future payouts
that can be earned by each of the named executive officers under
the 2007 STI Plan at the threshold, target and maximum
performance levels.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
Name
|
|
Award Amount
|
|
|
Award Amount
|
|
|
Award Amount
|
|
|
Jack A. Hockema
|
|
$
|
259,615
|
|
|
$
|
519,230
|
|
|
$
|
1,557,690
|
|
Joseph P. Bellino
|
|
$
|
90,750
|
|
|
$
|
181,500
|
|
|
$
|
544,500
|
|
John Barneson,
|
|
$
|
65,475
|
|
|
$
|
130,950
|
|
|
$
|
392,850
|
|
John M. Donnan
|
|
$
|
60,750
|
|
|
$
|
121,500
|
|
|
$
|
364,500
|
|
In addition to being designed to reward participants for EVA,
our 2007 STI Plan recognizes that our business is cyclical. The
EVA target for 2007 is set at a level that we believe is
achievable with the current economic environment if management
performs as expected. Although future awards are difficult to
predict, under the 2007 STI Plan the annual awards over the last
nine years would have averaged approximately 60% of target,
there would have been no awards in six out of nine of those
years and the award multiple in 2006 before applicable modifiers
would have been approximately 1.9.
26
Under the 2007 STI Plan, a pro rata incentive award is earned
based on actual eligibility during the performance period if,
prior to December 31, 2007, 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 prior to
December 31, 2007. Under the 2007 STI Plan, incentive
awards are forfeited for voluntary terminations prior to
December 31, 2007. 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, 2007, unless such
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 March 30, 2007, the Compensation Committee approved the
following 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
(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 sale price per
share of our common stock as reported by the Nasdaq Global
Market, Inc. 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 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 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, 2008,
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 by the Nasdaq Global Market, Inc. on
April 3, 2007. The option rights granted terminate on
April 3, 2017, unless terminated earlier in accordance with
the terms of the underlying grant. |
27
Summary
Compensation Table for 2006
The table below sets forth information regarding 2006
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); (3) each of John Barneson, John M. Donnan and Daniel
D. Maddox (who resigned effective April 1, 2007), our three
other most highly compensated executive officers (based on total
compensation for 2006); and (4) Kerry A. Shiba, our former
Vice President and Chief Financial Officer (who resigned
effective January 23, 2006).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Awards(1)
|
|
|
Compensation(2)(3)
|
|
|
Earnings(4)
|
|
|
Compensation
|
|
|
Total
|
|
|
Jack A. Hockema,
|
|
|
2006
|
|
|
$
|
730,000
|
|
|
$
|
1,301,167
|
|
|
$
|
2,474,930
|
|
|
$
|
8,403
|
|
|
$
|
539,556
|
(5)(6)(7)(8)
|
|
$
|
5,054,056
|
|
President, Chief Executive Officer
and Chairman of the Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph P. Bellino,
|
|
|
2006
|
|
|
$
|
220,018
|
|
|
$
|
105,500
|
|
|
$
|
288,892
|
|
|
|
|
|
|
$
|
39,119
|
(5)(6)(9)
|
|
$
|
653,529
|
|
Executive Vice President and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Barneson,
|
|
|
2006
|
|
|
$
|
278,750
|
|
|
$
|
337,600
|
|
|
$
|
554,941
|
|
|
$
|
5,020
|
|
|
$
|
191,942
|
(5)(6)(7)(10)
|
|
$
|
1,368,253
|
|
Executive Vice President and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Donnan,
|
|
|
2006
|
|
|
$
|
260,000
|
|
|
$
|
316,500
|
|
|
$
|
297,699
|
|
|
|
|
|
|
$
|
41,897
|
(5)(6)(11)
|
|
$
|
916,096
|
|
Vice President, General Counsel and
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel D. Maddox,
|
|
|
2006
|
|
|
$
|
222,917
|
|
|
$
|
318,863
|
|
|
$
|
237,854
|
|
|
|
|
|
|
$
|
36,971
|
(5)(6)(12)
|
|
$
|
816,605
|
|
Vice President and Controller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kerry A. Shiba,
|
|
|
2006
|
|
|
$
|
17,386
|
|
|
|
|
|
|
$
|
253,511
|
|
|
$
|
884
|
|
|
$
|
433,646
|
(5)(13)
|
|
$
|
705,427
|
|
Executive Vice President and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
|
(1) |
|
Reflects the value of restricted stock awards granted to our
named executive officers under our Equity Incentive Plan on
July 6, 2006 in connection with our emergence from
chapter 11 bankruptcy based on the compensation cost of the
award with respect to our 2006 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. The number
of shares of restricted stock received by our named executive
officers pursuant to such awards was as follows:
Mr. Hockema, 185,000; Mr. Bellino, 15,000;
Mr. Barneson, 48,000; Mr. Donnan, 45,000; and
Mr. Maddox, 11,334. The table reflects the expense
recognized for each named executive officer (other than
Messrs. Maddox and Shiba) for the six-month portion of the
three-year vesting period for the restricted stock extending
from our emergence date through December 31, 2006, computed
in accordance with
SFAS No. 123-R,
but excluding any impact of assumed forfeiture rates, based on
(a) a per share value at emergence of $42.20 and
(b) the total number of shares of restricted stock received
by the named executive officer. The table reflects the expense
recognized for Mr. Maddox, who resigned effective
April 1, 2007, computed in accordance with
SFAS No. 123-R,
but excluding any impact of assumed forfeiture rates, based on
(a) a per share value at emergence of $42.20, (b) the
total number of shares of restricted stock received by him,
(c) the assumptions that his employment will terminate and
that his shares of restricted stock will vest on April 1,
2007, and (d) the six- month portion of the assumed
nine-month vesting period for his restricted stock extending
from our emergence date through December 31, 2006.
Mr. Shiba, who resigned effective January 23, 2006,
did not receive a restricted stock award. For additional
information regarding the compensation cost of |
28
|
|
|
|
|
stock awards with respect to our 2006 fiscal year, see
Note 7 of the Notes to Consolidated Financial Statements
included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006. |
|
(2) |
|
Includes payments made in 2006 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 on July 6, 2006,
as follows: Mr. Hockema, $1,649,440; Mr. Barneson,
$346,938; Mr. Donnan, $104,554; Mr. Maddox, $114,043;
and Mr. Shiba, $253,511. For each of Messrs. Hockema,
Barneson, Donnan and Maddox, these amounts represent
approximately one-half of the total amounts accrued under our
Chapter 11 Long-Term Incentive Plan during the four and
one-half year period from 2002 through our emergence from
chapter 11 bankruptcy on July 6, 2006; for
Mr. Shiba, the amount represents the total amount accrued.
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 Maddox were as
follows: Mr. Hockema, $3,298,880; Mr. Barneson,
$693,876; Mr. Donnan, $208,575; and Mr. Maddox,
$227,228. Individual amounts accrued by year for
Messrs. Hockema, Barneson, Donnan and Maddox were as
follows: Mr. Hockema, $2,324,557 in 2002 and 2003, $918,818
in 2004, ($240,819) in 2005 and $296,324 in 2006;
Mr. Barneson, $466,534 in 2002 and 2003, $214,391 in 2004,
($56,191) in 2005 and $69,142 in 2006; Mr. Donnan, $146,045
in 2002 and 2003, $55,129 in 2004, ($32,109) in 2005 and $39,510
in 2006; and Mr. Maddox, $162,274 in 2002 and 2003, $61,255
in 2004, ($16,055) in 2005 and $19,755 in 2006. 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 Maddox, the 2006
payments under our Chapter 11 Long-Term Incentive Plan were made
in August 2006 following our emergence. For each of
Messrs. Hockema, Barneson and Donnan, the remaining portion
of the total amount (subject to adjustment in accordance with
the terms of the Chapter 11 Long-Term Incentive Plan) will
be paid on July 6, 2007 unless he is terminated for cause
or voluntarily terminates his employment prior to that date. For
Mr. Maddox, pursuant to the terms of his employment
agreement, the remaining portion of the total amount will be
paid on July 6, 2007, notwithstanding the termination of
his employment effective April 1, 2007. For Mr. Shiba,
pursuant to the terms of a release entered into between him and
us in connection with his resignation, the total amount was paid
in early 2006. Mr. Bellino, who joined us in May 2006, did
not participate in our Chapter 11 Long-Term Incentive
Plan. |
|
(3) |
|
Includes payments under our 2006 Short-Term Incentive Plan,
pursuant to which key management employees earned cash awards
based on the financial and safety performance of our fabricated
products segment, the performance of the particular segment to
which the employee was assigned and individual performance
objectives. Based on our 2006 results, the award multiple
approved by the compensation committee for use under the 2006
Short-Term Incentive Plan was approximately 1.73. Individual
monetary awards paid to the named executive officers under the
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; Mr. Donnan,
$193,145; and Mr. Maddox, $123,811. Mr. Shiba, who
resigned effective January 23, 2006, did not participate in
our 2006 Short-Term Incentive Plan. |
|
(4) |
|
Reflects the aggregate change in actuarial present value of
the named executive officers accumulated benefit under our
Old Pension Plan during 2006 (except for negative changes of
$(603) for Mr. Donnan and $(256) for Mr. Maddox)
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 annum to determine the actuarial present
value of the accumulated benefit at December 31, 2006.
Effective December 17, 2003, the 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 New 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. |
29
|
|
|
(5) |
|
Includes contributions made by us under our Savings Plan in
2006, as follows: Mr. Hockema, $22,883; Mr. Barneson,
$24,225; Mr. Donnan, $21,133; and Mr. Maddox, $20,240.
In 2006, we did not make contributions under our Savings Plan to
Mr. Shiba, who resigned effective January 23, 2006, or
Mr. Bellino, who joined us in May 2006. |
|
(6) |
|
Includes contributions made by us under our New 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) in 2006, as follows: Mr. Hockema, $105,037;
Mr. Barneson, $27,873; Mr. Donnan, $9,809; and
Mr. Maddox, $5,579. Mr. Shiba, who resigned effective
January 23, 2006, and Mr. Bellino, who joined us in
May 2006, did not participate in our New Restoration Plan in
2006. |
|
(7) |
|
Includes amounts paid to Messrs. Hockema and Barneson
under our Chapter 11 Retention Plan in 2006, as follows:
Mr. Hockema, $365,000; and Mr. Barneson, $125,000. For
each of Messrs. Hockema and Barneson, these amounts
represent approximately one-half of the total retention payments
withheld from Messrs. Hockema and Barneson under the
Chapter 11 Retention Plan. The total amounts withheld from
Messrs. Hockema and Barneson were as follows:
Mr. Hockema, $730,000; and Mr. Barneson, $250,000. The
2006 payments under our Chapter 11 Retention Plan were made
in August 2006 following our emergence from chapter 11
bankruptcy, and the remaining portion of the total amount
withheld from each of Messrs. Hockema and Barneson will be
paid on July 6, 2007 unless he is terminated for cause or
voluntarily terminates his employment prior to that date. |
|
(8) |
|
Includes the cost to us of perquisites and other personal
benefits for Mr. Hockema as follows: club membership dues,
$6,875; 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. |
|
(9) |
|
Includes the cost to us of perquisites and other personal
benefits for Mr. Bellino as follows: club membership dues,
$3,040; housing and other expenses associated with his
relocation to California, $27,840; and vehicle allowance,
$8,239. |
|
(10) |
|
Includes the cost to us of perquisites and other personal
benefits for Mr. Barneson as follows: club membership dues,
$4,385; and vehicle allowance, $10,459. |
|
(11) |
|
Includes the cost to us of perquisites and other personal
benefits for Mr. Donnan as follows: vehicle allowance,
$10,955. |
|
(12) |
|
Includes the cost to us of perquisites and other benefits for
Mr. Maddox as follows: vehicle allowance, $11,152. |
|
(13) |
|
Includes $431,777 paid or accrued to Mr. Shiba pursuant
to the release entered into between him and us in connection
with his resignation (exclusive of amounts earned by him under
our Chapter 11 Long-Term Incentive Plan (see Note 2
above) and amounts referred to in the next sentence). Also
includes the cost to us of perquisites and other personal
benefits for Mr. Shiba as follows: club membership dues,
$1,210; and vehicle allowance, $659. |
As reflected in the table above, the salary received by each of
our named executive officers as a percentage of their respective
total compensation during 2006 was as follows: Mr. Hockema,
14.4%; Mr. Bellino (who joined us in May 2006), 33.7%;
Mr. Barneson, 20.4%; Mr. Donnan, 28.4%;
Mr. Maddox, 27.3%; and Mr. Shiba (who resigned
effective January 23, 2006), 2.5%.
30
Grants of
Plan-Based Awards in 2006
The table below sets forth information regarding grants of
plan-based awards made to our named executive officers during
2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts Under
|
|
|
Shares of
|
|
|
Grant Date
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards(1)
|
|
|
Stock or
|
|
|
Fair Value of
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units(2)
|
|
|
Stock Awards(3)
|
|
Name
|
|
Grant Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Jack A. Hockema
|
|
|
|
|
|
$
|
250,025
|
|
|
$
|
500,050
|
|
|
$
|
1,500,150
|
|
|
|
|
|
|
|
|
|
|
|
|
7/6/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
185,000
|
|
|
$
|
7,807,000
|
|
Joseph P. Bellino
|
|
|
|
|
|
$
|
87,500
|
|
|
$
|
175,000
|
|
|
$
|
525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
7/6/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$
|
633,000
|
|
John Barneson
|
|
|
|
|
|
$
|
63,000
|
|
|
$
|
126,000
|
|
|
$
|
378,000
|
|
|
|
|
|
|
|
|
|
|
|
|
7/6/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,000
|
|
|
$
|
2,025,600
|
|
John M. Donnan
|
|
|
|
|
|
$
|
58,500
|
|
|
$
|
117,000
|
|
|
$
|
351,000
|
|
|
|
|
|
|
|
|
|
|
|
|
7/6/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
$
|
1,899,000
|
|
Daniel D. Maddox
|
|
|
|
|
|
$
|
37,500
|
|
|
$
|
75,000
|
|
|
$
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
7/6/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,334
|
|
|
$
|
478,295
|
|
Kerry A. Shiba
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects the threshold, target and maximum award amounts
under our 2006 Short-Term Incentive Plan for our named executive
officers. No awards were available below the threshold
performance level. Mr. Shiba, who resigned effective
January 23, 2006, did not participate in our 2006
Short-Term Incentive Plan. Under our 2006 Short-Term Incentive
Plan, participants were eligible to receive a cash incentive
award between one-half and three times the participants
target award amount. Based on our 2006 results, the award
multiple approved by the compensation committee for use under
the 2006 Short-Term Incentive Plan was approximately 1.73.
Individual monetary awards paid to the named executive officers
under the 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;
Mr. Donnan, $193,145; and Mr. Maddox, $123,811. |
|
(2) |
|
Reflects the number of shares of restricted stock received by
our named executive officers pursuant to awards granted under
our Equity Incentive Plan on July 6, 2006 in connection
with our emergence from chapter 11 bankruptcy. The
restrictions on such shares received by Messrs. Hockema,
Bellino, Barneson and Donnan will lapse on July 6, 2009 or
earlier if the named executive officers employment
terminates as a result of death or disability, 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 restrictions on such shares received by
Mr. Maddox lapsed on April 1, 2007 upon the
conclusion, and pursuant to the terms, of his employment
agreement. Mr. Shiba, who resigned effective
January 23, 2006, did not receive a restricted stock
award. |
|
(3) |
|
The grant date fair value of the restricted stock awards
reflected in this table is computed in accordance with
SFAS No. 123-R,
but excluding any impact of assumed forfeiture rates, based on
(a) a per share value at our emergence from chapter 11
bankruptcy of $42.20 and (b) the total number of shares of
restricted stock awarded. For information regarding the
compensation cost of the restricted stock awards with respect to
our 2006 fiscal year, see Note 7 to the Notes to
Consolidated Financial Statements included in our Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2006. |
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
31
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, starting in 2007, Mr. Hockema will
be entitled to receive annual equity awards (such as restricted
stock, stock options or performance shares) with a target cash
economic value of 165% of his base salary; the terms of all
equity grants to Mr. Hockema will 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. Effective
April 3, 2007, Mr. Hockema received a grant of
13,239 shares of restricted stock and option rights
exercisable for 8,037 shares of common stock. The initial
term of his 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:
|
|
|
|
|
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
32
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 29, 2006, the last business day of 2006, under
various circumstances, see Potential Payments
and Benefits upon Termination of Employment below.
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, starting in 2007, Mr. Bellino will
be entitled to receive annual equity awards (such as restricted
stock, stock options or performance shares) with a target cash
economic value of $450,000; the terms of all equity grants will
be similar to the terms of equity grants made to other senior
executives at the time they are made. Effective April 3,
2007, Mr. Bellino received a grant of 5,041 shares of
restricted stock and option rights exercisable for
3,060 shares of common stock. 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. Mr. Bellino also
participates in the various benefit plans for salaried employees.
Under Mr. Bellinos employment agreement, following
any termination of his employment, we must pay or provide to
Mr. Bellino or his estate:
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base salary earned through the date of such termination;
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except in the case of a termination by us for cause or by him
other than for good reason, earned but unpaid incentive awards;
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accrued but unpaid vacation;
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benefits under our employment benefit plans to the extent vested
and not forfeited on the date of such termination; and
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benefit continuation and conversion rights to the extent
provided under our employment benefit plans.
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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
33
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 and annual short-term incentive target, (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 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 29, 2006, the last business day of 2006, under
various circumstances, see Potential Payments
and Benefits upon Termination of Employment below.
Employment
Agreement with Daniel D. Maddox
On July 6, 2006, in connection with our emergence from
chapter 11 bankruptcy, we entered into an employment
agreement with Daniel D. Maddox, pursuant to which
Mr. Maddox continued his duties as our Vice President and
Controller. The terms of Mr. Maddoxs employment
agreement provided for an initial base salary of $225,000 and an
annual short-term incentive target of $75,000, subject to being
prorated for partial years. The short-term incentive was to be
paid in cash, subject to our meeting the applicable underlying
performance thresholds. Under the employment agreement,
Mr. Maddox received an initial grant of 11,334 shares
of restricted stock on July 6, 2006 under our Equity
Incentive Plan; the terms of the restricted stock grant to
Mr. Maddox are similar to the terms of restricted stock
grants made to other senior executives on July 6, 2006. The
employment agreement continued until April 1, 2007, and
Mr. Maddox resigned effective as of that date. Pursuant to
the terms of the employment agreement, Mr. Maddox has
received or will receive benefits under his Change in Control
Agreement as if both a change in control had occurred prior to
his departure and he terminated his employment for good reason.
In addition, pursuant to Mr. Maddoxs employment
agreement, the restrictions on his 11,334 shares of
restricted stock lapsed effective April 1, 2007 upon his
resignation at the conclusion of that agreement.
For quantitative disclosure regarding payments and other
benefits that would have been received by Mr. Maddox or his
estate if his employment had terminated on December 29,
2006, the last business day of 2006, under various
circumstances, see Potential Payments and
Benefits upon Termination of Employment.
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 our
Severance Plan to provide selected executive officers, including
Messrs. Hockema, Barneson, Donnan, Maddox and Shiba, 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 replaces his participation
in the Severance Plan and supersedes his severance agreement.
Mr. Shibas resignation effective January 23,
2006 did not trigger
34
rights under the Severance Plan or his severance agreement. The
Severance Plan and related severance agreements terminate on
July 6, 2007.
Our Severance Plan provides for payment of a severance benefit
and continuation of welfare benefits upon termination of
employment in certain circumstances. Participants are eligible
for the severance payment and continuation of welfare benefits
in the event the participants employment is terminated
without cause or the participant terminates his or her
employment with good reason. The severance payment and
continuation of welfare benefits are not available if:
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the participant receives severance compensation or welfare
benefit continuation pursuant to a Change in Control Agreement
(described below);
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the participants employment is terminated other than by us
without cause or by the participant for good reason; or
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the participant declines to sign, or subsequently revokes, a
designated form of release.
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In consideration for the severance payment and continuation of
welfare benefits, a participant will be subject to
noncompetition, nonsolicitation and confidentiality restrictions
following the participants termination of employment.
The severance payment payable under the Severance Plan to
Messrs. Barneson and Donnan consists of a lump-sum cash
payment equal to two times (for Mr. Barneson) or one time
(for Mr. Donnan) their base salaries. In addition, welfare
benefits are continued for a period of two years (for
Mr. Barneson) or one year (for Mr. Donnan) following
termination of employment. Prior to his resignation effective as
of April 1, 2007, Mr. Maddox was entitled to a
severance payment and continuation of welfare benefits under the
Severance Plan on the same basis as Mr. Donnan.
For quantitative disclosure regarding estimated payments and
other benefits that would have been received by each of
Messrs. Barneson, Donnan and Maddox or his estate if his
employment had terminated on December 29, 2006, the last
business day of 2006, 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
Messrs. Hockema, Barneson, Donnan, Maddox and Shiba, 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. Shibas resignation effective January 23,
2006 did not trigger rights under his Change in Control
Agreement. 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 Mr. Donnan 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;
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the participants employment is terminated other than by us
without cause or by the participant for good reason; or
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the participant declines to sign, or subsequently revokes, a
designated form of release.
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35
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 and Donnan are entitled to receive the
following:
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three times (for Mr. Barneson) or two times (for
Mr. Donnan) the sum of his base pay and most recent
short-term incentive target;
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a pro-rated portion of his short-term incentive target for the
year of termination; and
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a pro-rated portion of his long-term incentive target in effect
for the year of his termination, provided that such target was
achieved.
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In addition, welfare benefits and perquisites are continued for
a period of three years (for Mr. Barneson) or two years
(for Mr. Donnan) 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.
The Change in Control Agreement with Mr. Maddox, who
resigned effective April 1, 2007, provided for payments and
continuation of benefits on the same basis as
Mr. Donnans Change in Control Agreement. Pursuant to
the terms of his employment agreement, as a result of his
resignation, Mr. Maddox has received or will receive
benefits under his Change in Control Agreement as if both a
change in control had occurred prior to his departure and he
terminated his employment for good reason.
For quantitative disclosure regarding estimated payments and
other benefits that would have been received by each of
Messrs. Barneson, Donnan and Maddox or his estate if his
employment had terminated on December 29, 2006, the last
business day of 2006, under various circumstances, see
Potential Payments and Benefits Upon
Termination of Employment below.
Release
with Kerry A. Shiba
Kerry A. Shiba resigned as our Vice President and Chief
Financial Officer effective January 23, 2006. In connection
with his resignation, we entered into a release with
Mr. Shiba. Pursuant to the terms of the release, in lieu of
all benefits to which Mr. Shiba might otherwise be entitled
and in consideration of his satisfaction of certain
post-termination obligations, Mr. Shiba received payments
of $687,157 in the aggregate, including payments of his earned
awards under our Chapter 11 Long-Term Incentive Plan, his
earned short-term incentive award for 2005 and his accrued
unpaid vacation, payments of COBRA premiums for his medical and
dental coverage and payments in respect of certain perquisites.
The release also provides for a mutual release and subjects
Mr. Shiba to certain noncompetition, nondisclosure and
nonsolicitation obligations.
Equity
Incentive Plan
On July 6, 2006, upon our emergence from chapter 11
bankruptcy and the implementation of our plan of reorganization,
our Equity Incentive Plan became effective. 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, 2006, approximately 40
officers and other key employees had been
36
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, of which 525,660 shares have been
issued to our directors, officers and key employees and were
outstanding as of December 31, 2006.
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.
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.
The compensation committee 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 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.
During 2006, we granted restricted stock awards to various
officers (including our named executive officers), key employees
and directors under our Equity Incentive Plan. Effective
April 3, 2007, we granted additional restricted stock
awards to various officers (including our named executive
officers) and key employees. Under the restricted stock awards,
each participant received shares of our common stock that are
subject to certain transfer restrictions and risk of forfeiture.
Prior to the restrictions thereon lapsing, the participant may
not sell, transfer, pledge, assign or take any similar action
with respect to the shares of restricted stock which the
participant owns. Once the restrictions lapse with respect to
shares of restricted stock, the participant owning such shares
will hold freely-transferable shares, subject only to any
restrictions on transfer contained in our certificate of
incorporation, bylaws and insider trading policies, as well as
any applicable federal or state securities laws. Despite the
restrictions, each participant will have full voting rights and
will receive any dividends or other distributions, if any, with
respect to the shares of restricted stock which the participant
owns.
The restrictions on the restricted stock granted to our named
executive officers and non-employee directors in 2006 will lapse
on July 6, 2009 and August 1, 2007, respectively. The
restrictions on restricted stock granted to our named executive
officers effective April 3, 2007 will lapse on
April 3, 2010. However, the restrictions will lapse
immediately upon a change in control, upon the
participants death or disability if the participant was
still employed by us or serving as one of our directors at such
time or, in the case of Messrs. Hockema and Bellino, upon
his retirement. Further, the restrictions on the restricted
stock granted to our employees will lapse if the
participants employment is terminated by us without cause
or by the participant for good reason. If the participants
employment or service as a director should terminate for any
reason other than those described above, the participant will
forfeit his or her restricted stock award, unless the board of
directors determines all or any portion of the restricted stock
grant held by the participant will vest. Under
Mr. Maddoxs employment agreement, the restrictions on
his restricted stock lapsed effective April 1, 2007 upon
his resignation at the conclusion of that agreement.
Effective April 3, 2007, we granted awards of option rights
exercisable for shares of our common stock to various officers
(including our named executive officers) and key employees. The
option rights granted to each of the officers and key employees
will become exercisable as to one-third the total number of
shares of our common stock for which they are exercisable on
each of April 3, 2008, April 3, 2009 and April 3,
2010. Prior to the option rights vesting, the option rights may
not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than by will or the laws of
descent and distribution or pursuant to a qualified domestic
37
relations order. Once the option rights have been exercised for
shares of our common stock, the participant owning such shares
will hold freely-transferable shares, subject only to any
restrictions on transfer contained in our certificate of
incorporation, bylaws and insider trading policies, as well as
any applicable federal or state securities laws. In the event
that we pay a cash dividend on our common stock, each
participant will receive an amount in cash equal to the product
of (1) the amount of such dividend per share of common
stock and (2) the number of shares of common stock for
which the unexercised portion of the option award was
exercisable on the record date for such cash dividend.
The option rights will vest immediately upon a change in
control, upon the participants death or disability if the
participant was still employed by us or serving as one of our
directors at such time or, in the case of Messrs. Hockema
and Bellino, upon his retirement. Further, the vesting of the
option rights will accelerate if the participants
employment is terminated by us without cause or by the
participant for good reason. If the participants
employment should terminate for any reason other than those
described above, the participant will forfeit his or her option
rights award, unless the board of directors determines all or
any portion of the option rights held by the participant will
vest.
Under the Equity Incentive Plan, each non-employee director has
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. In August 2006, we issued an aggregate of
4,273 shares to members of our board of directors in lieu
of cash payments.
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, Maddox and
Shiba, 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 will be paid to participants on July 6, 2007, unless
the participants employment is terminated by us for cause
or is voluntarily terminated by such participant (other than at
normal retirement) prior to that date. The July 6, 2007
payments are subject to adjustment up or down to the extent that
there are fewer participants at such time or there is a change
in the size of the cost reduction pool prior to such time.
Pursuant to Mr. Maddoxs employment agreement, the
remaining portion of his award will be paid to him on
July 6, 2007, notwithstanding the termination of his
employment effective April 1, 2007. Pursuant to the terms
of the release entered into between Mr. Shiba and us in
connection with his resignation, all amounts earned by
Mr. Shiba under the Chapter 11 Long-Term Incentive
Plan were paid to him in early 2006.
2006
Short-Term Incentive Plan
On July 6, 2006, upon our emergence from chapter 11
bankruptcy, our compensation committee approved our 2006
Short-Term Incentive Plan for key managers. Incentive awards
under the 2006 Short-Term Incentive Plan were based upon:
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the fabricated products segments EBITDA;
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the fabricated products segments safety performance as
measured by total case incident rate;
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performance of the particular business to which a participant is
assigned; and
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individual performance objectives.
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Under the 2006 Short-Term Incentive Plan, a participant was
eligible to receive an incentive award between zero to three
times the individuals target amount.
Under the 2006 Short-Term Incentive Plan, in general, any
participant who voluntarily terminated his or her employment
(other than for good reason) or who was terminated by us for
cause prior to December 31, 2006 forfeited his or her
award. A participant was entitled to a pro-rated award under the
2006 Short-Term Incentive Plan if his or her employment
terminated during 2006 but prior to December 31, 2006 and
his or her employment was terminated as a result of death,
disability, normal retirement or full early retirement (position
elimination), was involuntarily terminated by us other than for
cause or was terminated by the participant for good reason. A
participant was entitled to the full payment of his or her award
if his or her employment terminated on or after
December 31, 2006, unless such termination was by us for
cause, in which case he or she would forfeit the award.
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 2007 (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.
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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 five 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.
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, Maddox and Shiba. 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 and no
further payments are payable under the Chapter 11 Retention
Plan.
For Messrs. Hockema and Barneson, $730,000 and $250,000,
respectively, of accrued awards payable under the
Chapter 11 Retention Plan were withheld for subsequent
payment. One-half of such withheld amount was paid in a lump sum
in August 2006 upon our emergence from chapter 11
bankruptcy and one-half is payable in a lump sum on July 6,
2007 unless the named executive officers employment is
terminated by us for cause or is voluntarily terminated by such
named executive officer prior to that date.
39
Outstanding
Equity Awards at December 31, 2006
The table below sets forth the information regarding restricted
stock awards held by our named executive officers as of
December 31, 2006.
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Stock Awards
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Number of Shares or Units of
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Market Value of Shares or Units of
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Stock That Have Not Vested(1)
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Stock That Have Not Vested(2)
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Name
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(#)
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($)
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Jack A. Hockema
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185,000
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$
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10,356,300
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Joseph P. Bellino
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15,000
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$
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839,700
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John Barneson
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48,000
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$
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2,687,040
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John M. Donnan
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45,000
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$
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2,519,100
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Daniel D. Maddox
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11,334
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$
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634,477
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Kerry A. Shiba
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(1) |
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Reflects the number of shares of restricted stock received by
our named executive officers pursuant to awards granted under
our Equity Incentive Plan 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. Pursuant to Mr. Maddoxs employment
agreement, the restrictions on his 11,334 shares of
restricted stock lapsed effective April 1, 2007 upon his
resignation at the conclusion of his employment agreement.
Mr. Shiba, who resigned effective January 23, 2006,
did not receive a restricted stock award. |
|
(2) |
|
Reflects the aggregate market value of the shares of
restricted stock determined based on a per share price of
$55.98, the reported closing price for our common stock on the
Nasdaq Global Market on December 29, 2006, which was the
last trading day of 2006. |
Pension
Benefits as of December 31, 2006
The table below sets forth information regarding the present
value as of December 31, 2006 of the accumulated benefits
of our named executive officers (other than Mr. Bellino)
under our Old Pension Plan. As discussed further below, our Old
Pension Plan was terminated on December 17, 2003, at which
time the number of years of credited service for participants
was frozen. Mr. Bellino joined us in May 2006 and did not
participate in the Old Pension Plan prior to its termination.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
|
|
|
Number of Years
|
|
|
Accumulated
|
|
|
|
|
|
Credited Service
|
|
|
Benefit(1)
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
|
($)
|
|
|
Jack A. Hockema
|
|
Kaiser Aluminum Salaried Employees
Retirement Plan
|
|
|
11.92
|
|
|
$
|
293,262
|
|
John Barneson
|
|
Kaiser Aluminum Salaried Employees
Retirement Plan
|
|
|
28.83
|
|
|
$
|
269,372
|
|
John M. Donnan
|
|
Kaiser Aluminum Salaried Employees
Retirement Plan
|
|
|
10.25
|
|
|
$
|
129,390
|
|
Daniel D. Maddox
|
|
Kaiser Aluminum Salaried Employees
Retirement Plan
|
|
|
7.58
|
|
|
$
|
94,867
|
|
Kerry A. Shiba
|
|
Kaiser Aluminum Salaried Employees
Retirement Plan
|
|
|
5.58
|
|
|
$
|
91,016
|
|
|
|
|
(1) |
|
Reflects the actuarial present value of the named executive
officers accumulated benefit under our Old Pension Plan at
December 31, 2006 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. |
40
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 2006
The table below sets forth, for each of our named executive
officers, information regarding his participation in our New
Restoration Plan during 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Earnings in
|
|
|
Balance at
|
|
Name
|
|
in Last FY(1)
|
|
|
Last FY(2)
|
|
|
Last FYE(3)
|
|
|
Jack A. Hockema
|
|
$
|
105,037
|
|
|
$
|
26,051
|
|
|
$
|
1,095,806
|
|
Joseph P. Bellino
|
|
|
|
|
|
|
|
|
|
|
|
|
John Barneson
|
|
$
|
27,873
|
|
|
$
|
19,102
|
|
|
$
|
934,341
|
|
John M. Donnan
|
|
$
|
9,809
|
|
|
$
|
7,359
|
|
|
$
|
72,018
|
|
Daniel D. Maddox
|
|
$
|
5,579
|
|
|
$
|
1,144
|
|
|
$
|
48,140
|
|
Kerry A. Shiba
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In each case, 100% of such amount is included in the
All Other Compensation column of the summary
compensation table above. See Summary
Compensation Table for 2006 above. |
|
(2) |
|
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.
See Summary Compensation Table for 2006
above. |
|
(3) |
|
Includes amounts accrued under the Old Restoration Plan and
transferred to accounts under the New Restoration Plan upon its
adoption in connection with our emergence from chapter 11
bankruptcy, as follows: Mr. Hockema, $964,718;
Mr. Barneson, $887,366; Mr. Donnan, $54,851; and
Mr. Maddox, $41,416. Mr. Shiba, who resigned effective
January 23, 2006, did not participate in the New
Restoration Plan and, accordingly, the amount of benefits
accrued to him under the Old Restoration Plan was not
transferred to the New Restoration Plan. Mr. Bellino, who
joined us in May 2006, did not participate in the New
Restoration Plan in 2006. |
The New Restoration Plan is a plan we sponsor in which a select
group of our management and highly compensated employees may
participate. Eligibility to participate in our New Restoration
Plan is determined by the compensation committee, which
currently administers the New Restoration Plan. The purpose of
our New 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 New Restoration Plan and contributions to a
participants New Restoration Plan account to restore
benefits under the Savings Plan are made generally in the manner
described below:
|
|
|
|
|
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 New
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
|
41
|
|
|
|
|
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.
|
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 New
Restoration Plan for that year. However, matching contributions
under the New 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 New Restoration Plan.
|
|
|
|
|
Annual fixed-rate contributions to the participants
account under the New 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 New Restoration Plan.
Participants are vested 100% in our fixed-rate contributions to
our New Restoration Plan after five 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 New Restoration Plan.
The Restoration Plan was deemed effective as of May 1,
2005, the date on which the accrual of benefits under the Old
Restoration Plan was terminated. The lump-sum actuarial
equivalent amount of the benefit accrued to a participant under
the Old Restoration Plan has been transferred to such
participants account under the New Restoration Plan.
We may amend or terminate these matching and fixed-rate
contributions at any time by an appropriate amendment to our New
Restoration Plan. The value of each participants account
under our New Restoration Plan changes based upon the
performance of the funds designated by the participant from a
menu of various money market and investment funds.
Potential
Payments and Benefits Upon Termination of Employment
The tables below set forth for each named executive officer
(other than Mr. Shiba) 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 29, 2006, the last
business day of 2006, under the following circumstances:
|
|
|
|
|
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.
|
42
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 29, 2006. Mr. Shiba, who resigned effective
January 23, 2006, was not serving as one of our executive
officers at the end of 2006 and, in lieu of all benefits to
which Mr. Shiba might otherwise have been entitled and in
consideration of his satisfaction of certain post-termination
obligations, Mr. Shiba received payments in accordance with
the terms of the release entered into by him and us in
connection with his resignation. See
Employment-Related Agreements and Certain
Employee Benefit Plans Release with Kerry A.
Shiba above for a more detailed discussion of such
payments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JACK A. HOCKEMA
|
|
|
|
Circumstances of Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Us
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
the Named
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Us
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
Officer with
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
Cause or by
|
|
|
Good
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
the Named
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
by Named
|
|
|
Termination
|
|
|
Executive
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
Payments and
|
|
Executive
|
|
|
by Us for
|
|
|
Officer with
|
|
|
Change in
|
|
|
Normal
|
|
|
|
|
|
|
|
Benefits
|
|
Officer
|
|
|
Cause
|
|
|
Good Reason
|
|
|
Control
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
|
Payment of earned but unpaid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive(2)
|
|
|
|
|
|
|
|
|
|
$
|
1,649,440
|
|
|
$
|
1,649,440
|
|
|
$
|
1,649,440
|
|
|
$
|
1,649,440
|
|
|
$
|
1,649,440
|
|
Short-term incentive(3)
|
|
|
|
|
|
|
|
|
|
$
|
497,310
|
|
|
$
|
497,310
|
|
|
$
|
497,310
|
|
|
$
|
497,310
|
|
|
$
|
497,310
|
|
Retention payment(4)
|
|
|
|
|
|
|
|
|
|
$
|
365,000
|
|
|
$
|
365,000
|
|
|
$
|
365,000
|
|
|
$
|
365,000
|
|
|
$
|
365,000
|
|
Vacation(5)
|
|
$
|
56,154
|
|
|
$
|
56,154
|
|
|
$
|
56,154
|
|
|
$
|
56,154
|
|
|
$
|
56,154
|
|
|
$
|
56,154
|
|
|
$
|
56,154
|
|
Other Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum payment
|
|
|
|
|
|
|
|
|
|
$
|
2,460,100
|
(6)
|
|
$
|
3,690,150
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare benefits
|
|
|
|
|
|
|
|
|
|
$
|
29,880
|
(8)
|
|
$
|
45,474
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability benefits
|
|
|
|
|
|
|
|
|
|
$
|
13,450
|
(9)
|
|
$
|
18,212
|
(9)
|
|
|
|
|
|
$
|
710,856
|
(10)
|
|
|
|
|
Life insurance
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
Perquisites and other personal
benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
gross-up(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,393,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Stock Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value of stock vesting on
termination (14)
|
|
|
|
|
|
|
|
|
|
$
|
10,356,300
|
|
|
$
|
10,356,300
|
|
|
$
|
10,356,300
|
|
|
$
|
10,356,300
|
|
|
$
|
10,356,300
|
|
Distribution of New Restoration
Plan Balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Distribution (15)
|
|
$
|
1,095,806
|
|
|
|
|
|
|
$
|
1,095,806
|
|
|
$
|
1,095,806
|
|
|
$
|
1,095,806
|
|
|
$
|
1,095,806
|
|
|
$
|
1,095,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,151,960
|
|
|
$
|
56,154
|
|
|
$
|
16,523,440
|
|
|
$
|
22,167,272
|
|
|
$
|
14,020,010
|
|
|
$
|
14,730,866
|
|
|
$
|
14,020,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumes that there is no earned but unpaid base salary at the
time of termination. |
|
(2) |
|
Under our Chapter 11 Long-Term Incentive Plan, we must
pay Mr. Hockema or his estate the remaining portion of the
total amount accrued by Mr. Hockema thereunder on
July 6, 2007 unless he is terminated by us for cause or he
voluntarily terminates his employment (other than at normal
retirement) prior to that date. The $1,649,440 amount reflected
in the table is based on computations made in connection with
the 2006 payments under the Chapter 11 Long-Term Incentive
Plan and assumes no decrease in the number of plan participants
or adjustment to the cost reduction pool prior to July 6,
2007. |
|
(3) |
|
Under our 2006 Short-Term Incentive Plan,
Mr. Hockemas target award for 2006 was $500,050, but
his award could have ranged from a threshold of $250,000 to a
maximum of $1,500,150, or could have been zero if the threshold
performance was not achieved. 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 2006 but prior to
December 31, 2006 Mr. Hockemas |
43
|
|
|
|
|
target award for 2006 under our 2006 Short-Term Incentive
Plan would have been prorated for the actual number of days of
Mr. Hockemas employment in 2006 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; accordingly, assuming his employment had terminated on
December 29, 2006, the last business day of 2006, we would
have been obligated to pay Mr. Hockema $497,310 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, 2006, the last day of our
2006 fiscal year, Mr. Hockema would have been entitled to
full payment of his award ($825,490) under the 2006 Short-Term
Incentive Plan unless his employment had been terminated by us
for cause or had been voluntarily terminated by him other than
for good reason. |
|
(4) |
|
Under our Chapter 11 Retention Plan, we must pay
Mr. Hockema or his estate $365,000 on July 6, 2007
unless his employment is terminated by us for cause or is
voluntarily terminated by him (other than at normal retirement)
prior to that date. |
|
(5) |
|
Assumes that Mr. Hockema used all of his 2006 vacation
and that he has four weeks of accrued vacation for 2007. |
|
(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 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. |
|
(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 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. |
|
(8) |
|
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 29, 2006 determined
(a) assuming family coverage in a point of service medical
plan and a basic dental plan, (b) based on current COBRA
coverage rates for 2007 and assuming a 9% increase in the cost
of medical coverage for 2008 as compared to 2007, an 8.5%
increase in the cost of medical coverage for 2009 as compared to
2008 and a 6% increase in the cost of dental coverage for 2008
as compared to 2007 and for 2009 as compared to 2008,
(c) assuming Mr. Hockema pays premiums for such
coverage throughout the applicable benefit continuation period
in the same manner as if he were an active employee, and
(d) applying a discount rate of 5.75% per annum. |
|
(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 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 29, 2006 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 5.75% per annum. |
|
(10) |
|
Reflects the actuarial present value of
Mr. Hockemas disability benefits at December 29,
2006 determined (a) assuming full disability at
December 29, 2006, (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
5.75% per annum. |
|
(11) |
|
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 |
44
|
|
|
|
|
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. |
|
(12) |
|
No life insurance benefit would have been payable assuming
Mr. Hockemas death occurred on December 29, 2006
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. |
|
(13) |
|
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 29, 2006 by us without cause or by him with good
reason following a change in control on such date. |
|
(14) |
|
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 $55.98, the reported closing price for our
common stock on the Nasdaq Global Market on December 29,
2006, which was the last trading day of 2006. The restrictions
on all shares of restricted stock that were held by
Mr. Hockema on December 29, 2006 will lapse on
July 6, 2009 or earlier 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. |
|
(15) |
|
Under our New 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. |
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JOSEPH P. BELLINO
|
|
|
|
Circumstances of Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Us
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Cause or by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Us
|
|
|
the Named
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or by
|
|
|
Officer with
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
the Named
|
|
|
Good
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Executive
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
by Named
|
|
|
Termination
|
|
|
Officer with
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
Payments and
|
|
Executive
|
|
|
by Us for
|
|
|
Good
|
|
|
Change in
|
|
|
Normal
|
|
|
|
|
|
|
|
Benefits
|
|
Officer
|
|
|
Cause
|
|
|
Reason
|
|
|
Control
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
|
Payment of earned but unpaid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive(3)
|
|
|
|
|
|
|
|
|
|
$
|
174,041
|
|
|
$
|
174,041
|
|
|
$
|
174,041
|
|
|
$
|
174,041
|
|
|
$
|
174,041
|
|
Retention payment(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation(5)
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
Other Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum payment
|
|
|
|
|
|
|
|
|
|
$
|
1,050,000
|
(6)
|
|
$
|
1,575,000
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare benefits
|
|
|
|
|
|
|
|
|
|
$
|
29,880
|
(8)
|
|
$
|
45,474
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability benefits
|
|
|
|
|
|
|
|
|
|
$
|
14,996
|
(9)
|
|
$
|
21,951
|
(9)
|
|
|
|
|
|
$
|
1,057,633
|
(10)
|
|
|
|
|
Life insurance
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
Perquisites and other personal
benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
gross-up(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,024,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Stock Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value of stock vesting on
termination (14)
|
|
|
|
|
|
|
|
|
|
$
|
839,700
|
|
|
$
|
839,700
|
|
|
$
|
839,700
|
|
|
$
|
839,700
|
|
|
$
|
839,700
|
|
Distribution of New Restoration
Plan Balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Distribution(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
2,135,540
|
|
|
$
|
3,707,492
|
|
|
$
|
1,040,664
|
|
|
$
|
2,098,297
|
|
|
$
|
1,040,664
|
|
|
|
|
(1) |
|
Assumes that there is no earned but unpaid base salary at the
time of termination. |
|
(2) |
|
Mr. Bellino, who joined us in May 2006, did not
participate in our Chapter 11 Long-Term Incentive Plan. |
|
(3) |
|
Under our 2006 Short-Term Incentive Plan,
Mr. Bellinos target award for 2006 was $175,000, but
his award could have ranged from a threshold of $87,500 to a
maximum of $525,000, or could have been zero if the threshold
performance was not achieved. 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 2006 but prior to
December 31, 2006, Mr. Bellinos target award for
2006 under our 2006 Short-Term Incentive 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; accordingly, assuming his employment had terminated on
December 29, 2006, the last business day of 2006, we would
have been obligated to pay Mr. Bellino $174,041 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, 2006, the last day of our
2006 fiscal year, Mr. Bellino would have been entitled to
full payment of his award under the 2006 Short-Term Incentive
Plan ($288,892) unless his employment had been terminated by us
for cause or was voluntarily terminated by him other than for
good reason. |
|
(4) |
|
Mr. Bellino, who joined us in May 2006, did not
participate in our Chapter 11 Retention Plan. |
|
(5) |
|
Assumes that Mr. Bellino used all of his 2006 vacation
and that he has four weeks of accrued vacation for 2007. |
46
|
|
|
(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 make a lump-sum payment to Mr. Bellino 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. |
|
(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 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. |
|
(8) |
|
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 29, 2006 determined
(a) assuming family coverage in a point of service medical
plan and a basic dental plan, (b) based on current COBRA
coverage rates for 2007 and assuming a 9% increase in the cost
of medical coverage for 2008 as compared to 2007, an 8.5%
increase in the cost of medical coverage for 2009 as compared to
2008 and a 6% increase in the cost of dental coverage for 2008
as compared to 2007 and for 2009 as compared to 2008,
(c) assuming Mr. Bellino pays premiums for such
coverage throughout the applicable benefit continuation period
in the same manner as if he were an active employee, and
(d) applying a discount rate of 5.75% per annum. |
|
(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 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 29, 2006 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 5.75% per annum. |
|
(10) |
|
Reflects the present value of Mr. Bellinos
disability benefits at December 29, 2006 determined
(a) assuming full disability at December 29, 2006,
(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 5.75% per
annum. |
|
(11) |
|
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. |
|
(12) |
|
No life insurance benefit would have been payable assuming
Mr. Bellinos death occurred on December 29, 2006
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. |
|
(13) |
|
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 29, 2006 by us without cause or by him with good
reason following a change in control on such date. |
|
(14) |
|
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 $55.98, the reported closing price for our
common stock on the Nasdaq Global Market on December 29,
2006, which was the last trading day of 2006. The restrictions
on all shares of restricted stock that were held by
Mr. Bellino on December 29, 2006 will lapse on
July 6, 2009 or earlier if his employment terminates as a
result of his death, disability or |
47
|
|
|
|
|
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. |
|
|
|
(15) |
|
Mr. Bellino, who joined us in May 2006, did not have a
balance in the New Restoration Plan on December 29, 2006.
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
|
|
|
|
Circumstances of Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Us
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Cause or by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Us
|
|
|
the Named
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or by
|
|
|
Officer with
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
the Named
|
|
|
Good
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Executive
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
by Named
|
|
|
Termination
|
|
|
Officer with
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
Payments and
|
|
Executive
|
|
|
by Us for
|
|
|
Good
|
|
|
Change in
|
|
|
Normal
|
|
|
|
|
|
|
|
Benefits
|
|
Officer
|
|
|
Cause
|
|
|
Reason
|
|
|
Control
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
|
Payment of earned but unpaid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive(2)
|
|
|
|
|
|
|
|
|
|
$
|
346,938
|
|
|
$
|
346,938
|
|
|
$
|
346,938
|
|
|
$
|
346,938
|
|
|
$
|
346,938
|
|
Short-term incentive(3)
|
|
|
|
|
|
|
|
|
|
$
|
206,864
|
|
|
$
|
125,310
|
|
|
$
|
206,864
|
|
|
$
|
206,864
|
|
|
$
|
206,864
|
|
Retention payment(4)
|
|
|
|
|
|
|
|
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
Vacation(5)
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
|
$
|
26,923
|
|
Other Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum payment
|
|
|
|
|
|
|
|
|
|
$
|
560,000
|
(6)
|
|
$
|
1,218,000
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare benefits
|
|
|
|
|
|
|
|
|
|
$
|
29,880
|
(8)
|
|
$
|
45,474
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability benefits
|
|
|
|
|
|
|
|
|
|
$
|
11,997
|
(9)
|
|
$
|
17,561
|
(9)
|
|
|
|
|
|
$
|
846,107
|
(10)
|
|
|
|
|
Life insurance
|
|
|
|
|
|
|
|
|
|
$
|
5,029
|
(11)
|
|
$
|
7,756
|
(11)
|
|
|
|
|
|
|
|
|
|
$
|
600,000
|
(12)
|
Perquisites and other personal
benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
44,532
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
gross-up(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,285,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Stock Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value of stock vesting on
termination (15)
|
|
|
|
|
|
|
|
|
|
$
|
2,687,040
|
|
|
$
|
2,687,040
|
|
|
$
|
2,687,040
|
|
|
$
|
2,687,040
|
|
|
$
|
2,687,040
|
|
Distribution of New Restoration
Plan Balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Distribution (16)
|
|
$
|
934,341
|
|
|
|
|
|
|
$
|
934,341
|
|
|
$
|
934,341
|
|
|
$
|
934,341
|
|
|
$
|
934,341
|
|
|
$
|
934,341
|
|
Total
|
|
$
|
961,264
|
|
|
$
|
26,923
|
|
|
$
|
4,934,012
|
|
|
$
|
6,864,047
|
|
|
$
|
4,327,106
|
|
|
$
|
5,173,213
|
|
|
$
|
4,927,106
|
|
|
|
|
(1) |
|
Assumes that there is no earned but unpaid base salary at the
time of termination. |
|
(2) |
|
Under our Chapter 11 Long-Term Incentive Plan, we must
pay Mr. Barneson or his estate the remaining portion of the
total amount accrued by Mr. Barneson thereunder on
July 6, 2007 unless he is terminated by us for cause or he
voluntarily terminates his employment (other than at normal
retirement) prior to that date. The $346,938 amount reflected in
the table is based on computations made in connection with the
2006 payments under the Chapter 11 Long-Term Incentive Plan
and assumes no decrease in the number of plan participants or
adjustments to the cost reduction pool prior to July 6,
2007. |
|
(3) |
|
Under our 2006 Short-Term Incentive Plan,
Mr. Barnesons target award for 2006 was $126,000, but
his award could have ranged from a threshold of $63,000 to a
maximum of $378,000, or could have been zero if the threshold
performance is not achieved. Mr. Barnesons award
under our 2006 Short-Term Incentive Plan was determined in March
2007 to be $208,003. Under the 2006 Short-Term Incentive Plan,
in general, Mr. Barneson would have forfeited his award if
he had voluntarily terminated his employment other than for good
reason prior to December 31, 2006 or if he had been
terminated by us for cause. However, Mr. Barneson would
have been entitled to a pro rata award under the 2006 Short-Term
Incentive Plan if his employment had terminated during 2006 but
prior to December 31, 2006 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. Accordingly, if
|
48
|
|
|
|
|
Mr. Barnesons employment had terminated on
December 29, 2006, the last business day of 2006, 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,
we would have been obligated to pay Mr. Barneson $206,864.
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 2006 other than
on December 31, 2006, Mr. Barnesons target award
for 2006 under our 2006 Short-Term Incentive Plan would have
been prorated for the actual number of days of
Mr. Barnesons employment in 2006 and
Mr. Barneson would have been entitled to payment of such
amount; accordingly, assuming his employment had been so
terminated on December 29, 2006, we would have been
obligated to pay Mr. Barneson $125,310. If
Mr. Barnesons employment had been terminated (other
than by us for cause) on December 31, 2006, the last day of
our 2006 fiscal year, Mr. Barneson would have been entitled
to full payment of his award ($208,003) under the 2006
Short-Term Incentive Plan. |
|
(4) |
|
Under our Chapter 11 Retention Plan, we must pay
Mr. Barneson or his estate $125,000 on July 6, 2007
unless his employment is terminated by us for cause or is
voluntarily terminated by him (other than at normal retirement)
prior to that date. |
|
(5) |
|
Assumes that Mr. Barneson used all of his 2006 vacation
and that he has five weeks of accrued vacation for 2007. |
|
(6) |
|
Under Mr. Barnesons Severance Agreement, if
Mr. Barnesons 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. Barneson in an amount
equal to two times his base salary. |
|
(7) |
|
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. |
|
(8) |
|
If Mr. Barnesons 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 under his Severance Agreement, or, 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, for three years under his Change in Control Agreement,
commencing on the date of such termination. The table reflects
the present value of such medical and dental benefits at
December 29, 2006 determined (a) assuming family
coverage in a point of service medical plan and a basic dental
plan, (b) based on current COBRA coverage rates for 2007
and assuming a 9% increase in the cost of medical coverage for
2008 as compared to 2007, an 8.5% increase in the cost of
medical coverage for 2009 as compared to 2008 and a 6% increase
in the cost of dental coverage for 2008 as compared to 2007 and
for 2009 as compared to 2008, (c) assuming
Mr. Barneson pays premiums for such coverage throughout the
applicable benefit continuation period in the same manner as if
he were an active employee, and (d) applying a discount
rate of 5.75% per annum. |
|
(9) |
|
If Mr. Barnesons 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
under his Severance Agreement, or, 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, for
three years under his Change in Control Agreement, commencing on
the date of such termination. The table reflects the present
value of such disability benefits at December 29, 2006
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 5.75% per
annum. |
|
(10) |
|
Reflects the present value of Mr. Barnesons
disability benefits at December 29, 2006 determined
(a) assuming full disability at December 29, 2006,
(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 5.75% per
annum. |
49
|
|
|
(11) |
|
If Mr. Barnesons 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 under his Severance Agreement, or, 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, for three years under his Change in Control Agreement,
commencing on the date of such termination. The table reflects
the present value of such life insurance benefits at
December 29, 2006 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
5.75% per annum. |
|
(12) |
|
Reflects the life insurance benefit payable assuming
Mr. Barnesons death occurred on December 29,
2006 other than while traveling on company-related business. 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. |
|
(13) |
|
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, $13,155; and vehicle allowance, $31,377. Such
amounts have been estimated by multiplying the cost of
Mr. Barnesons perquisites for 2006 by three. |
|
(14) |
|
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 29, 2006 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. Barnesons termination, determined based on
a per share price of $55.98, the reported closing price for our
common stock on the Nasdaq Global Market on December 29,
2006, which was the last trading day of 2006. The restrictions
on all shares of restricted stock that were held by
Mr. Barneson on December 29, 2006 will lapse on
July 6, 2009 or earlier 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) |
|
Under our New 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
|
|
|
|
Circumstances of Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Us
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
the Named
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Us
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
Officer with
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
Cause or by
|
|
|
Good
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
the Named
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
by Named
|
|
|
Termination
|
|
|
Executive
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
Payments and
|
|
Executive
|
|
|
by Us for
|
|
|
Officer with
|
|
|
Change in
|
|
|
Normal
|
|
|
|
|
|
|
|
Benefits
|
|
Officer
|
|
|
Cause
|
|
|
Good Reason
|
|
|
Control
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
Payment of earned but unpaid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive(2)
|
|
|
|
|
|
|
|
|
|
$
|
104,554
|
|
|
$
|
104,554
|
|
|
$
|
104,554
|
|
|
$
|
104,554
|
|
|
$
|
104,554
|
|
Short-term incentive(3)
|
|
|
|
|
|
|
|
|
|
$
|
192,087
|
|
|
$
|
116,359
|
|
|
$
|
192,087
|
|
|
$
|
192,087
|
|
|
$
|
192,087
|
|
Retention payment(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation(5)
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Other Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum payment
|
|
|
|
|
|
|
|
|
|
$
|
260,000
|
(6)
|
|
$
|
754,000
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare benefits
|
|
|
|
|
|
|
|
|
|
$
|
14,727
|
(8)
|
|
$
|
29,880
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability benefits
|
|
|
|
|
|
|
|
|
|
$
|
2,521
|
(9)
|
|
$
|
5,222
|
(9)
|
|
|
|
|
|
$
|
1,461,148
|
(10)
|
|
|
|
|
Life insurance
|
|
|
|
|
|
|
|
|
|
$
|
943
|
(11)
|
|
$
|
1,898
|
(11)
|
|
|
|
|
|
|
|
|
|
$
|
600,000
|
(12)
|
Perquisites and other personal
benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
21,910
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
gross-up(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
969,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Stock Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value of stock vesting on
termination(15)
|
|
|
|
|
|
|
|
|
|
$
|
2,519,100
|
|
|
$
|
2,519,100
|
|
|
$
|
2,519,100
|
|
|
$
|
2,519,100
|
|
|
$
|
2,519,100
|
|
Distribution of New Restoration
Plan Balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Distribution(16)
|
|
$
|
72,018
|
|
|
|
|
|
|
$
|
72,018
|
|
|
$
|
72,018
|
|
|
$
|
72,018
|
|
|
$
|
72,018
|
|
|
$
|
72,018
|
|
Total
|
|
$
|
92,018
|
|
|
$
|
20,000
|
|
|
$
|
3,185,950
|
|
|
$
|
4,614,673
|
|
|
$
|
2,907,759
|
|
|
$
|
4,368,907
|
|
|
$
|
3,507,759
|
|
|
|
|
(1) |
|
Assumes that there is no earned but unpaid base salary at the
time of termination. |
|
(2) |
|
Under our Chapter 11 Long-Term Incentive Plan, we must
pay Mr. Donnan or his estate the remaining portion of the
total amount accrued by Mr. Donnan thereunder on
July 6, 2007 unless he is terminated by us for cause or he
voluntarily terminates his employment (other than at normal
retirement) prior to that date. The $104,554 amount reflected in
the table is based on computations made in connection with the
2006 payments under the Chapter 11 Long-Term Incentive Plan and
assumes no decrease in the number of plan participants or
adjustments to the cost reduction pool prior to July 6,
2007. |
|
(3) |
|
Under our 2006 Short-Term Incentive Plan,
Mr. Donnans target award for 2006 was $117,000, but
his award could have ranged from a threshold of $58,500 to a
maximum of $351,000, or could have been zero if the threshold
performance was not achieved. Mr. Donnans award under
our 2006 Short-Term Incentive Plan was determined in March 2007
to be $193,145. Under the 2006 Short-Term Incentive Plan, in
general, Mr. Donnan would have forfeited his award if he
had voluntarily terminated his employment other than for good
reason prior to December 31, 2006 or if he had been
terminated by us for cause. However, Mr. Donnan would have
been entitled to a pro rata award under the 2006 Short-Term
Incentive Plan if his employment had terminated during 2006 but
prior to December 31, 2006 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. Accordingly, if
Mr. Donnans employment had terminated on
December 29, 2006, the last business day of 2006, 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,
we would have been obligated to pay Mr. Donnan $192,087.
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 |
51
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control and such termination occurred during 2006 other than
on December 31, 2006, Mr. Donnans target award
for 2006 under our 2006 Short-Term Incentive Plan would have
been prorated for the actual number of days of
Mr. Donnans employment in 2006 and Mr. Donnan
would have been entitled to payment of such amount; accordingly,
assuming his employment had been so terminated on
December 29, 2006, we would have been obligated to pay
Mr. Donnan $116,359. If Mr. Donnans employment
had been terminated (other than by us for cause) on
December 31, 2006, the last day of our 2006 fiscal year,
Mr. Donnan would have been entitled to full payment of his
award ($193,145) under the 2006 Short-Term Incentive Plan. |
|
(4) |
|
Mr. Donnan is not entitled to any further payments under
our Chapter 11 Retention Plan. |
|
(5) |
|
Assumes that Mr. Donnan used all of his 2006 vacation
and that he has four weeks of accrued vacation for 2007. |
|
(6) |
|
Under Mr. Donnans Severance Agreement, if
Mr. Donnans 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. Donnan in an amount
equal to his base salary. |
|
(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 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. |
|
(8) |
|
If Mr. Donnans 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 one
year under his Severance Agreement, or, 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, for two years under his Change in Control Agreement,
commencing on the date of such termination. The table reflects
the present value of such medical and dental benefits at
December 29, 2006 determined (a) assuming family
coverage in a point of service medical plan and a basic dental
plan, (b) based on current COBRA coverage rates for 2007
and assuming a 9% increase in the cost of medical coverage for
2008 as compared to 2007 and a 6% increase in the cost of dental
coverage for 2008 as compared to 2007, (c) assuming
Mr. Donnan pays premiums for such coverage throughout the
applicable benefit continuation period in the same manner as if
he were an active employee, and (d) applying a discount
rate of 5.75% per annum. |
|
(9) |
|
If Mr. Donnans employment is terminated by us
without cause or is voluntarily terminated by him for good
reason, we must continue his disability benefits for one year
under his Severance Agreement, or, 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, for
two years under his Change in Control Agreement, commencing on
the date of such termination. The table reflects the present
value of such disability benefits at December 29, 2006
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 5.75% per
annum. |
|
(10) |
|
Reflects the actuarial present value of
Mr. Donnans disability benefits at December 29,
2006 determined (a) assuming full disability at
December 29, 2006, (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
5.75% per annum. |
|
(11) |
|
If Mr. Donnans employment is terminated by us
without cause or is voluntarily terminated by him for good
reason, we must continue his life insurance benefits for one
year under his Severance Agreement, or, 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, for two years under his Change in Control Agreement,
commencing on the date of such termination. The table reflects
the present value of such life insurance benefits at
December 29, 2006 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 |
52
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|
|
Health mortality table published by the Society of Actuaries,
and (e) applying a discount rate of 5.75% per
annum. |
|
(12) |
|
Reflects the life insurance benefit payable assuming
Mr. Donnans death occurred on December 29, 2006
other than while traveling on company-related business. 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. |
|
(13) |
|
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 2006 by two. |
|
(14) |
|
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 29, 2006 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. Donnans termination, determined based on a
per share price of $55.98, the reported closing price for our
common stock on the Nasdaq Global Market on December 29,
2006, which was the last trading day of 2006. The restrictions
on all shares of restricted stock that were held by
Mr. Donnan on December 29, 2006 will lapse on
July 6, 2009 or earlier 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) |
|
Under our New 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. |
53
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|
DANIEL D. MADDOX
|
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Circumstances of Termination
|
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Termination
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by Us
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Without
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Termination
|
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Cause or by
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by Us
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the Named
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Without
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Executive
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Cause or by
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Officer with
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Voluntary
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the Named
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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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Payments and
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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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Benefits
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Officer
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Cause
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Reason
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Control(1)
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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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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Base salary(2)
|
|
|
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
Long-term incentive(3)
|
|
|
|
|
|
|
|
|
|
$
|
114,043
|
|
|
$
|
114,043
|
|
|
$
|
114,043
|
|
|
$
|
114,043
|
|
|
$
|
114,043
|
|
Short-term incentive(4)
|
|
|
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|
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$
|
123,133
|
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$
|
74,589
|
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|
$
|
123,133
|
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$
|
123,133
|
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$
|
123,133
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|
Retention payment(5)
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|
|
|
|
|
|
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|
|
|
|
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Vacation(6)
|
|
$
|
17,308
|
|
|
$
|
17,308
|
|
|
$
|
17,308
|
|
|
$
|
17,308
|
|
|
$
|
17,308
|
|
|
$
|
17,308
|
|
|
$
|
17,308
|
|
Other Benefits:
|
|
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|
|
|
|
|
|
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|
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|
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|
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Lump sum payment
|
|
|
|
|
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|
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$
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225,000
|
(7)
|
|
$
|
600,000
|
(8)
|
|
|
|
|
|
|
|
|
|
|
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Healthcare benefits
|
|
|
|
|
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|
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$
|
14,727
|
(9)
|
|
$
|
29,880
|
(9)
|
|
|
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|
|
|
|
|
|
|
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Disability benefits
|
|
|
|
|
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|
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$
|
2,471
|
(10)
|
|
$
|
5,167
|
(10)
|
|
|
|
|
|
$
|
1,228,734
|
(11)
|
|
|
|
|
Life insurance
|
|
|
|
|
|
|
|
|
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$
|
1,012
|
(12)
|
|
$
|
2,036
|
(12)
|
|
|
|
|
|
|
|
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|
$
|
600,000
|
(13)
|
Perquisites and other personal
benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
22,304
|
(14)
|
|
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|
|
|
|
|
|
|
|
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|
Tax
gross-up(15)
|
|
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$
|
(48,924
|
)
|
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Acceleration of Stock Awards:
|
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Market value of stock vesting on
termination(16)
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$
|
634,477
|
|
|
$
|
634,477
|
|
|
$
|
634,477
|
|
|
$
|
634,477
|
|
|
$
|
634,477
|
|
Distribution of New Restoration
Plan Balance:
|
|
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|
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|
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|
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|
Amount of Distribution(17)
|
|
$
|
48,140
|
|
|
|
|
|
|
$
|
48,140
|
|
|
$
|
48,140
|
|
|
$
|
48,140
|
|
|
$
|
48,140
|
|
|
$
|
48,140
|
|
Total
|
|
$
|
65,448
|
|
|
$
|
17,308
|
|
|
$
|
1,180,311
|
|
|
$
|
1,499,020
|
|
|
$
|
937,101
|
|
|
$
|
2,165,835
|
|
|
$
|
1,537,101
|
|
|
|
|
(1) |
|
Mr. Maddoxs employment agreement, which was to
continue until the earlier of a mutually agreed upon termination
date and March 31, 2007, provided that, if his employment
was terminated (other than by death or disability or by us for
cause) upon the conclusion thereof, he would receive benefits
under his Change in Control Agreement as if both a change in
control had occurred prior to his departure and he was
terminating his employment for good reason. In addition,
pursuant to Mr. Maddoxs employment agreement, if his
employment was terminated (other than by us for cause) upon the
conclusion of his employment agreement, the restrictions on his
shares of restricted stock would lapse. Mr. Maddoxs
employment agreement concluded on April 1, 2007, at which
date Mr. Maddox resigned. |
|
(2) |
|
Assumes that there is no earned but unpaid base salary at the
time of termination. |
|
(3) |
|
Under our Chapter 11 Long-Term Incentive Plan, we were
obligated to pay Mr. Maddox or his estate the remaining
portion of the total amount accrued by Mr. Maddox
thereunder on July 6, 2007 unless he was terminated by us
for cause or he voluntarily terminated his employment (other
than at the conclusion of his employment agreement) prior to
that date. The $114,043 amount reflected in the table is based
on computations made in connection with the 2006 Chapter 11
Long-Term Incentive Plan and assumes no decrease in the number
of plan participants or adjustments to the cost reduction pool
prior to July 6, 2007. |
|
(4) |
|
Under our 2006 Short-Term Incentive Plan,
Mr. Maddoxs target award for 2006 was $75,000, but
his award could have ranged from a threshold of $37,500 to a
maximum of $225,000, or could have been zero if the threshold
performance was not achieved. Mr. Maddoxs award under
our 2006 Short-Term Incentive Plan was determined in March 2007
to be $123,811. Under the 2006 Short-Term Incentive Plan, in
general, Mr. Maddox would have forfeited his award if he
had voluntarily terminated his employment other than for good
reason prior to December 31, 2006 or if he had been
terminated by us for cause. However, Mr. Maddox would have
been entitled to a pro rata award under the 2006 Short-term
Incentive Plan if his employment had been |
54
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|
|
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. Accordingly, if
Mr. Maddoxs employment had terminated on
December 29, 2006, the last business day of 2006, 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 with good
reason, we would have been obligated to pay Mr. Maddox
$123,133. Under Mr. Maddoxs 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 2006 other than on December 31, 2006,
Mr. Maddoxs target award for 2006 under our 2006
Short-Term Incentive Plan would have been prorated for the
actual number of days of Mr. Maddoxs employment in
2006 and Mr. Maddox would have been entitled to payment of
such amount; accordingly, assuming his employment had been so
terminated on December 29, 2006, we would have been
obligated to pay Mr. Maddox $74,589. If
Mr. Maddoxs employment had been terminated (other
than by us for cause) on December 31, 2006, the last day of
our 2006 fiscal year, Mr. Maddox would have been entitled
to full payment of his award ($123,811) under the 2006
Short-Term Incentive Plan. |
|
(5) |
|
Mr. Maddox is not entitled to any further payments under
our Chapter 11 Retention Plan. |
|
(6) |
|
Assumes that Mr. Maddox used all of his 2006 vacation
and that he has four weeks of accrued vacation for 2007. |
|
(7) |
|
Under Mr. Maddoxs Severance Agreement, if
Mr. Maddoxs employment had been terminated by us
without cause or had been voluntarily terminated by him for good
reason, we would have been obligated to make a lump-sum payment
to Mr. Maddox in an amount equal to his base salary. |
|
(8) |
|
Under Mr. Maddoxs Change in Control Agreement, if
Mr. Maddoxs employment had been terminated by us
without cause or had been 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. Maddox would have been entitled to a lump-sum
payment equal to two times the sum of his base salary and most
recent short-term incentive target. |
|
(9) |
|
If Mr. Maddoxs employment had been terminated by
us without cause or had been voluntarily terminated by him for
good reason, we would have been obligated to continue his
medical and dental benefits for one year under his Severance
Agreement, or, if such termination had occurred within the
period commencing 90 days prior to a change in control and
ending two years following a change in control, for two years
under his Change in Control Agreement, commencing on the date of
such termination. The table reflects the present value of such
medical and dental benefits at December 29, 2006 determined
(a) assuming family coverage in a point of service medical
plan and a basic dental plan, (b) based on current COBRA
coverage rates for 2007 and assuming a 9% increase in the cost
of medical coverage for 2008 as compared to 2007 and a 6%
increase in the cost of dental coverage for 2008 as compared to
2007, (c) assuming Mr. Maddox pays premiums for such
coverage throughout the applicable benefit continuation period
in the same manner as if he were an active employee, and
(d) applying a discount rate of 5.75% per annum. |
|
(10) |
|
If Mr. Maddoxs employment had been terminated by
us without cause or had been voluntarily terminated by him for
good reason, we would have been obligated to continue his
disability benefits for one year under his Severance Agreement,
or, if such termination had occurred within the period
commencing 90 days prior to a change in control and ending
two years following a change in control, for two years under his
Change in Control Agreement, commencing on the date of such
termination. The table reflects the present value of such
disability benefits at December 29, 2006 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 5.75% per annum. |
|
(11) |
|
Reflects the present value of Mr. Maddoxs
disability benefits at December 29, 2006 determined
(a) assuming full disability at December 29, 2006,
(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 5.75% per
annum. |
55
|
|
|
(12) |
|
If Mr. Maddoxs employment had been terminated by
us without cause or had been voluntarily terminated by him for
good reason, we would have been obligated to continue his life
insurance benefits for one year under his Severance Agreement,
or, if such termination occurred within the period commencing
90 days prior to a change in control and ending two years
following a change in control, for two years under his Change in
Control Agreement, commencing on the date of such termination.
The table reflects the present value of such life insurance
benefits at December 29, 2006 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 5.75% per annum. |
|
(13) |
|
Reflects the life insurance benefit payable assuming
Mr. Maddoxs death occurred on December 29, 2006
other than while traveling on company-related business. We
maintain a travel and accidental death policy for certain
employees, including Mr. Maddox, that would provide an
additional $1,000,000 death benefit payable to
Mr. Maddoxs estate if his death had occurred during
company-related travel. |
|
(14) |
|
Under Mr. Maddoxs Change in Control Agreement, if
Mr. Maddoxs employment had been terminated by us
without cause or had been 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 would have been obligated to continue his
perquisites for two years commencing on the date of such
termination. The table reflects the estimated cost to us of
continuing Mr. Maddoxs perquisites for such two-year
period as follows: vehicle allowance, $22,304. Such amount has
been estimated by multiplying the cost of Mr. Maddoxs
vehicle allowance for 2006 by two. |
|
(15) |
|
Under Mr. Maddoxs Change in Control Agreement, in
general, if any payments to Mr. Maddox would have been
subject to federal excise tax or any similar state or local tax
by reason of being considered contingent on a change in control,
we would have been obligated to pay to Mr. Maddox an
additional amount such that, after satisfaction of all tax
obligations imposed on such payments, Mr. Maddox retained
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 have applied if
the aggregate payments to Mr. Maddox had been reduced by
5%, then the aggregate payments to Mr. Maddox would have
been reduced by the amount necessary to avoid application of
such federal excise tax or similar state or local tax. The table
reflects an estimate of the amount by which aggregate payments
to Mr. Maddox would have been reduced in accordance with
the terms of his Change in Control Agreement if his employment
had been terminated on December 29, 2006 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. Maddoxs termination, determined based on a
per share price of $55.98, the reported closing price for our
common stock on the Nasdaq Global Market on December 29,
2006, which was the last trading day of 2006. The restrictions
on all shares of restricted stock that were held by
Mr. Maddox on December 29, 2006 lapsed effective
April 1, 2007 upon his resignation at the conclusion of his
employment agreement. |
|
(17) |
|
Under our New Restoration Plan, Mr. Maddox 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. Maddox is
eligible to receive a distribution of his vested balance under
the plan. Such balance is not reflected in this table. |
56
DIRECTOR
COMPENSATION
2006
Post-Emergence Director Compensation
The table below sets forth certain information concerning
compensation of our non-employee directors who served in 2006
following our emergence from chapter 11 bankruptcy on
July 6, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
All Other
|
|
|
|
|
Name
|
|
Paid in Cash
|
|
|
Stock Awards(1)
|
|
|
Compensation(2)
|
|
|
Total
|
|
|
George Becker(3)
|
|
$
|
33,000
|
(4)
|
|
$
|
12,198
|
|
|
$
|
750
|
(5)
|
|
$
|
45,948
|
|
Carl B. Frankel
|
|
$
|
35,250
|
(4)
|
|
$
|
12,198
|
|
|
$
|
6,750
|
(5)
|
|
$
|
54,198
|
|
Teresa A. Hopp
|
|
$
|
48,250
|
(4)
|
|
$
|
12,198
|
|
|
$
|
9,000
|
(5)
|
|
$
|
69,448
|
|
William F. Murdy
|
|
$
|
42,500
|
(4)
|
|
$
|
12,198
|
|
|
$
|
13,500
|
(5)
|
|
$
|
68,198
|
|
Alfred E. Osborne, Jr.
|
|
$
|
53,250
|
|
|
$
|
12,198
|
|
|
$
|
6,750
|
(5)
|
|
$
|
72,198
|
|
Georganne C. Proctor
|
|
$
|
39,750
|
(4)
|
|
$
|
12,198
|
|
|
$
|
12,750
|
(5)
|
|
$
|
64,698
|
|
Jack Quinn
|
|
$
|
38,250
|
(4)
|
|
$
|
12,198
|
|
|
$
|
12,000
|
(5)
|
|
$
|
62,448
|
|
Thomas M. Van Leeuwen
|
|
$
|
38,250
|
(4)
|
|
$
|
12,198
|
|
|
$
|
8,250
|
(5)
|
|
$
|
58,698
|
|
Brett E. Wilcox
|
|
$
|
38,250
|
(4)
|
|
$
|
12,198
|
|
|
$
|
9,000
|
(5)
|
|
$
|
59,448
|
|
|
|
|
(1) |
|
Reflects the value of restricted stock awards granted to
non-employee directors under our Equity Incentive Plan in
connection with our emergence from chapter 11 bankruptcy
based on the compensation cost of the award with respect to our
2006 fiscal year computed in accordance with
SFAS No. 123-R. Each non-employee director received
693 shares of restricted stock pursuant to such grants on
August 1, 2006 and all such shares were outstanding at
December 31, 2006. The restrictions on all such shares
lapse on August 1, 2007 or earlier if the individual ceases
to be a non-employee director as a result of death or disability
or if there is a change in control, except that the restrictions
on Mr. Beckers shares lapsed as a result of his death
in February 2007. The table reflects the expense recognized for
each non-employee director for the five-month portion of the
one-year vesting period extending from August 1, 2006
through December 31, 2006 computed in accordance with
SFAS No. 123-R,
but excluding any impact of assumed forfeiture rates, based on
(a) a per share value at emergence of $42.20 and
(b) the total number of shares of restricted stock received
by him or her. For additional information regarding the
compensation cost of stock awards with respect to our 2006
fiscal year, see Note 7 of the Notes to Consolidated
Financial Statements included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006. |
|
(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) |
|
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 2006: Mr. Becker elected to receive
346 shares of common stock in lieu of approximately $14,968
of his annual retainer; Mr. Frankel elected to receive
520 shares of common stock in lieu of approximately $22,495
of his annual retainer; Ms. Hopp elected to receive
231 shares of common stock in lieu of approximately $9,993
of her annual retainer; Mr. Murdy elected to receive
404 shares of common stock in lieu of approximately $17,477
of his annual retainer; and each of Messrs. Quinn, Van
Leeuwen and Wilcox and Ms. Proctor elected to receive
693 shares of common stock in lieu of approximately $29,979
of his or her annual retainer. In each case, the number of
shares received was determined based on a per share price of
$43.26, the average of the closing price per share for our
common stock reported by the Nasdaq Global Market on each of the
10 consecutive trading days immediately preceding August 1,
2006, the payment date of the annual retainers. |
|
(5) |
|
Reflects fees paid by us for attendance at meetings of the
prospective directors and of the prospective members of the
various board committees held prior to our emergence from
chapter 11 bankruptcy on July 6, 2006. |
57
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 developed in 2005 and
adopted on July 6, 2006 in connection with our emergence
from chapter 11 bankruptcy, each non-employee director
receives the following compensation:
|
|
|
|
|
an annual retainer of $30,000 per year;
|
|
|
|
an annual grant of restricted stock having a value equal to
$30,000;
|
|
|
|
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 our audit committee, currently
Ms. Hopp, receives an additional annual retainer of
$10,000, the chair of our compensation committee, currently
Mr. Murdy, receives an additional annual retainer of $5,000
and the chair of our 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. 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.
2006
Pre-Emergence Director Compensation
The table below sets forth certain information concerning the
compensation earned in 2006 by our non-employee directors who
served in 2006 prior to our emergence from chapter 11
bankruptcy on July 6, 2006. Each of these directors
resigned effective immediately prior to our emergence from
chapter 11 bankruptcy on July 6, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
All Other
|
|
|
|
|
Name
|
|
Cash
|
|
|
Compensation(1)
|
|
|
Total
|
|
|
Robert J. Cruikshank
|
|
$
|
44,500
|
|
|
$
|
0
|
|
|
$
|
44,500
|
|
George T. Haymaker Jr.
|
|
$
|
25,000
|
|
|
$
|
36,500
|
(2)
|
|
$
|
61,500
|
|
Charles E. Hurwitz
|
|
$
|
35,500
|
|
|
$
|
0
|
|
|
$
|
35,500
|
|
Ezra G. Levin
|
|
$
|
49,000
|
|
|
$
|
0
|
|
|
$
|
49,000
|
|
John D. Roach
|
|
$
|
46,500
|
|
|
$
|
0
|
|
|
$
|
46,500
|
|
|
|
|
(1) |
|
Excludes perquisites and other personal benefits where the
aggregate amount of such compensation to the director is less
than $10,000. |
|
(2) |
|
Reflects the amount received by Mr. Haymaker for
services of non-executive chairman of the board pursuant to an
agreement among Mr. Haymaker, us and Kaiser
Aluminum & Chemical Corporation. |
Prior to our emergence from chapter 11 bankruptcy, each
non-employee director received an annual base fee for services
as a director. The base fee for 2006 was $50,000.
The chair of each board committee (other than the audit
committee) was paid a fee of $3,000 per year for services
as chair. The fee paid to the chair of the audit committee was
$10,000 per year. All non-employee directors also generally
received a fee of $1,500 per day for board meetings
attended in person or by phone and $1,500 per day for
committee meetings held in person or by phone on a date a board
meeting was not also held. Non-employee directors who served as
members of the executive committee (other than
Mr. Haymaker, who had a separate agreement discussed below)
were paid a fee of $6,000 per year for such services.
58
Non-employee directors were reimbursed for travel and other
disbursements relating to board and committee meetings, and
non-employee directors were provided accident insurance in
respect of company-related business travel. Subject to the
approval of the chairman of the board, directors also generally
could be paid ad hoc fees in the amount of $750 per
one-half day or $1,500 per day for company-related services
other than attending board and committee meetings that required
travel in excess of 100 miles.
Mr. Haymaker agreed to continue to serve as a director and
non-executive chairman of the boards of our company and Kaiser
Aluminum & Chemical Corporation throughout our
chapter 11 bankruptcy pursuant to an agreement among him,
us and Kaiser Aluminum & Chemical Corporation entered
into in 2004 and subsequently extended. Mr. Haymakers
annual base compensation under the agreement was $50,000 for
services as a director and $73,000 for services as non-executive
chairman of the boards of our company and Kaiser
Aluminum & Chemical Corporation, inclusive of any board
and committee fees otherwise payable.
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information as of December 31,
2006 with respect to shares of our common stock that may be
issued under equity compensation plans. Our Equity Incentive
Plan is our only equity compensation plan. A complete copy of
the Equity Incentive Plan is included as Exhibit 99.1 to
the Registration Statement on
Form S-8
that we filed with the SEC on July 6, 2006. The Equity
Incentive Plan was supported by our former creditors, authorized
pursuant to our plan of reorganization and adopted by our board
of directors upon our emergence from chapter 11 bankruptcy.
It has not been approved by a vote of our stockholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of
|
|
|
|
Number of Shares
|
|
|
|
|
|
Common Stock Remaining
|
|
|
|
of Common Stock to
|
|
|
|
|
|
Available for Future
|
|
|
|
be Issued Upon
|
|
|
Weighted-Average
|
|
|
Issuance Under Equity
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
(Excluding Shares of
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Common Stock Reflected
|
|
Plan Category
|
|
and Rights (a)
|
|
|
and Rights
|
|
|
in Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(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
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
1,692,863
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
1,692,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
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. Under the Equity Incentive Plan, as of
December 31, 2006 we had granted 515,150 shares of
restricted stock restricted stock units covering
3,699 shares of common stock that continued to be
outstanding at that date. Under the Equity Incentive Plan, on
August 1, 2006, we also issued 4,273 shares of common
stock to non-employee directors who elected to receive shares of
common stock in lieu of all or part of the annual cash retainer
and 6,237 shares of restricted stock to non-employee
directors as part of their annual compensation for service on
our board of directors. All such shares issued to nonemployee
directors continued to be outstanding at December 31,
2006. |
PRINCIPAL
STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table presents information regarding the number of
shares of Kaiser common stock beneficially owned as of April 4,
2007 (unless otherwise indicated) by:
|
|
|
|
|
each named executive officer, as well as Mr. Rinkenberger;
|
|
|
|
each of our current directors;
|
59
|
|
|
|
|
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 20,575,423 shares of our common stock
outstanding as of April 4, 2007.
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
|
|
|
|
|
Beneficial
|
|
|
Percent
|
|
Name of Beneficial Owner
|
|
Ownership
|
|
|
of Class
|
|
|
Directors and Executive
Officers(1)(2)
|
|
|
|
|
|
|
|
|
Jack A. Hockema
|
|
|
198,239
|
|
|
|
*
|
|
John Barneson
|
|
|
51,844
|
|
|
|
*
|
|
Joseph P. Bellino
|
|
|
20,041
|
|
|
|
*
|
|
John M. Donnan
|
|
|
48,431
|
|
|
|
*
|
|
Daniel D. Maddox
|
|
|
7,472
|
|
|
|
*
|
|
Daniel J. Rinkenberger
|
|
|
25,323
|
|
|
|
*
|
|
Kerry A. Shiba
|
|
|
|
|
|
|
*
|
|
Carl B. Frankel
|
|
|
1,213
|
|
|
|
*
|
|
Teresa A. Hopp
|
|
|
924
|
|
|
|
*
|
|
William F. Murdy
|
|
|
1,097
|
|
|
|
*
|
|
Alfred E. Osborne, Jr.,
PhD.
|
|
|
1,193
|
|
|
|
*
|
|
Georganne C. Proctor
|
|
|
1,386
|
|
|
|
*
|
|
Jack Quinn
|
|
|
1,386
|
|
|
|
*
|
|
Thomas M. Van Leeuwen
|
|
|
1,386
|
|
|
|
*
|
|
Brett E. Wilcox
|
|
|
1,386
|
|
|
|
*
|
|
All current directors and
executive officers as a group (14 persons)
|
|
|
361,321
|
|
|
|
1.8
|
%
|
5% Stockholders
|
|
|
|
|
|
|
|
|
Union VEBA Trust(3)
|
|
|
5,472,665
|
|
|
|
26.6
|
%
|
Jeffrey A. Altman(4)
|
|
|
1,580,430
|
|
|
|
7.68
|
%
|
One Post Office Square
|
|
|
|
|
|
|
|
|
Witmer Asset Management(5)
|
|
|
1,070,216
|
|
|
|
5.2
|
%
|
Boston, Massachusetts 02109
|
|
|
|
|
|
|
|
|
Charles H. Witmer(5)
|
|
|
1,099,216
|
|
|
|
5.34
|
%
|
Meryl B. Witmer(5)
|
|
|
1,089,216
|
|
|
|
5.29
|
%
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
The shares held by our executive officers were received under
our Equity Incentive Plan. Pursuant to the Equity Incentive
Plan, these shares are restricted and are subject to forfeiture
until three years following their grant (subject to certain
exceptions related to termination of employment) and,
consequently, may not be traded in the public market until such
date. Of Mr. Hockemas shares, 185,000 are subject to
forfeiture until July 6, 2009 and 13,239 are subject to
forfeiture until April 3, 2010; of Mr. Barnesons
shares, 48,000 are subject to forfeiture until July 6, 2009
and 3,844 are subject to forfeiture until April 3, 2010; of
Mr. Bellinos shares, 15,000 are subject to forfeiture
until July 6, 2009 and 5,041 are subject to forfeiture
until April 3, 2010; of Mr. Donnans shares,
45,000 are subject to forfeiture until July 6, 2009 and
3,431 are subject to forfeiture until April 3, 2010; and of
Mr. Rinkenbergers shares, 24,000 are subject to
forfeiture until July 6, 2009 and 1,323 are subject to
forfeiture until April 3, 2010. |
60
|
|
|
(2) |
|
Each of our independent directors received 693 shares of
our common stock on August 1, 2006 under our Equity and
Performance Incentive Plan. Pursuant to the plan, these shares
are restricted and are subject to forfeiture until
August 1, 2007 and, consequently, may not be traded in the
public market until such date. In addition, certain of our
directors elected to receive shares of our common stock in lieu
of all or a portion of their annual cash retainer, including
Messrs. Frankel (520 shares), Murdy (404 shares),
Quinn (693 shares), Van Leeuwen (693 shares) and
Wilcox (693 shares) and Mmes. Hopp (231 shares) and
Proctor (693 shares). |
|
(3) |
|
Shares beneficially owned by the Union VEBA Trust are as
reported on the Amendment No. 1 to Form 13G filed by
the Union VEBA Trust on February 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
5,472,665 shares owned by the Union VEBA Trust. The
principal address of the Union VEBA Trust is c/o National
City Bank, as Trustee for Kaiser VEBA Trust, 20 Stanwix Street,
Locator
46-25162,
Pittsburgh, PA 15222. |
|
(4) |
|
Shares beneficially owned by Jeffrey Altman are as reported
on the Amendment No. 1 to Form 13G filed by Owl
Creek I, L.P. on February 14, 2007. Of these shares,
Owl Creek I, L.P. has shared investment and voting power
with respect to 61,896 shares directly owned by it; Owl
Creek II, L.P. has shared investment and voting power with
respect to 527,860 shares directly owned by it; Owl Creek
Advisors, LLC has shared investment and voting power with
respect to 589,756 shares directly owned by Owl
Creek I, L.P. and Owl Creek II, L.P.; Owl Creek Asset
Management, L.P. has shared investment and voting power with
respect to 990,674 shares directly owned by Owl Creek
Overseas Fund, Ltd., Owl Creek Overseas Fund II, Ltd. and
Owl Creek Socially Responsible Investment Fund, Ltd.; and
Jeffrey Altman has shared investment and voting power with
respect to 1,580,430 shares directly owned by Owl
Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas
Fund, Ltd., Owl Creek Overseas Fund II, Ltd. and Owl Creek
Socially Responsible Investment Fund, Ltd. Jeffrey Altman is the
managing member of Owl Creek Advisors, LLC and the managing
member of the general partner of Owl Creek Asset Management,
L.P. and in that capacity directs their operations. The
principal address of Jeffrey Altman is 640 Fifth Avenue,
20th Floor, New York, NY 10019. |
|
(5) |
|
Shares beneficially owned by Witmer Asset Management, Charles
Witmer and Meryl Witmer are as reported on the Amendment
No. 1 to Form 13G filed by Witmer Asset Management on
February 14, 2007. Witmer Asset Management has shared
investment and voting power with respect to
1,070,216 shares. Charles Witmer has sole investment and
voting power with respect to 10,000 shares and has shared
investment and voting power with respect to
1,099,216 shares. Meryl Witmer has shared investment and
voting power with respect to 1,089,216 shares. The
principal addresses of Witmer Asset Management, Charles Witmer
and Meryl Witmer are One Dag Hammarskjold Plaza, 885
2nd Avenue, 31st Floor, New York, NY 10017. |
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 the 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
61
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.
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
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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.
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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 Agreement absent 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.
As indicated above, the Union VEBA Trust transferred a greater
number of shares in the underwritten offering than the Union
VEBA Trust could have transferred under the general restriction
on transfer described above. For purposes of determining whether
any future transfer of shares of common stock by the Union VEBA
Trust is permissible under the general restriction, the Union
VEBA Trust will be deemed to have effected the transfer of the
excess shares at the earliest possible date or dates the Union
VEBA Trust would have been permitted to effect such transfer
under the general restriction absent these exceptions. As a
result of the underwritten offering, the Union VEBA Trust is
currently prohibited from selling additional shares of our
common stock until after July 6, 2009, 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 agree or it is determined
in a ruling by the Internal Revenue Service that any such sale
does 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 will 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 has
been filed with the Internal Revenue Service.
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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 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 as registrable
securities).
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
Commencing April 1, 2007, 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, the
Stock Transfer Restriction Agreement prohibits the Union VEBA
Trust from selling any additional shares of our common stock
until after July 6, 2009 or, if the Internal Revenue
Service grants the requested ruling described above,
July 6, 2008.
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.
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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
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
promulgated by the SEC must be approved by our 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 adopted upon emergence,
were not applicable. The approval of the sale in the
underwritten offering 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 was 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 was not separately reviewed and approved by the
audit committee.
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 2006, 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.
FORM 10-K
Copies of our Annual Report on
Form 10-K
(excluding exhibits) filed with the SEC are available, without
charge, upon written request to Kaiser Aluminum Corporation,
27422 Portola Parkway, Suite 350, Foothill Ranch,
California
92610-2831,
Attention: Investor Relations Department. Exhibits to the
Form 10-K
will be furnished upon payment of a fee of $0.25 per page
to cover our expenses in furnishing the exhibits.
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STOCKHOLDER
PROPOSALS
To be considered for inclusion in our proxy statement for our
2008 annual meeting of stockholders, proposals of stockholders
must be in writing and received by us no later than
January 7, 2008. To be presented at the 2008 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 8, 2008 and no earlier
than February 6, 2008, 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
Vice President, Secretary and General Counsel
Foothill Ranch, California
May 7, 2007
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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 6,
2007. |
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 6, 2007 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
AND FOR THE RATIFICATION OF DELOITTE & TOUCHE LLP AS
KAISERS INDEPENDENT
REGISTERED ACCOUNTING FIRM AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON
VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE
ANNUAL MEETING.
(Continued, and to be marked, dated and signed, on the other
side)
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Address Change/Comments (Mark the
corresponding box on the reverse side) |
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Mark Here for Address Change or Comments |
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PLEASE SEE REVERSE SIDE |
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PROPOSAL 1: ELECTION OF DIRECTORS |
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FOR all nominees (except as marked to the
contrary) o |
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WITHHOLD AUTHORITY o |
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Nominees: |
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01
Alfred E. Osborne, Jr., Ph.D. |
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PROPOSAL 2: |
RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS
KAISERS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING
DECEMBER 31, 2007 |
FOR o |
AGAINST o |
ABSTAIN o |
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02
Jack Quinn |
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03
Thomas M. Van Leeuwen |
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All shares will be voted as
directed herein and, unless otherwise directed, will be voted
For
proposal 1 and For proposal 2 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 by (i) submitting a properly signed proxy card
with a later date, (ii) delivering, no later than 5:00 p.m., local time,
on June 5, 2007, written notice of revocation to the Secretary of Kaiser
Aluminum Corporation c/o Mellon Investor Services, Proxy Processing, P.O.
Box 1680, Manchester, CT 06045-9986 or (iii) attending the Annual Meeting
and voting in person. Your attendance at the Annual Meeting alone will not
revoke your proxy. To change your vote, you must also vote in person at
the Annual Meeting. |
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INSTRUCTION: To withhold authority to vote for any
individual nominee, place an X in the box beside
the nominees name
above. |
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WILL ATTEND o |
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Please check the following box if you plan to attend the
annual meeting in person. |
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Signature |
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Signature |
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Date |
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NOTE: 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. |