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:
|
|
|
o Preliminary
Proxy Statement
|
|
|
þ Definitive
Proxy Statement
|
o Definitive
Additional Materials
|
o Soliciting
Material Pursuant to Rule
14a-11(c) or
Rule 14a-12
|
o Confidential,
for the Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
HUBBELL INCORPORATED
(Name of Registrant as Specified in
Its Charter)
(Name of Person(s) Filing Proxy
Statement)
Payment of Filing Fee (Check the appropriate box):
þ No
fee required.
o Fee
computed on table below per Exchange Act
Rules 14a-6(i)(4)
and 0-11.
|
|
(1) |
Title of each class of securities to which transaction applies:
|
|
|
(2) |
Aggregate number of securities to which transaction applies:
|
|
|
(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(Set forth the amount on which the filing fee is calculated and
state how it was determined):
|
|
|
(4) |
Proposed maximum aggregate value of transaction:
|
|
|
|
Fee paid previously with preliminary materials.
|
|
o
|
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 filing.
|
|
|
(1) |
Amount Previously Paid:
|
|
|
(2) |
Form, Schedule or Registration Statement No.:
|
TABLE OF CONTENTS
HUBBELL
INCORPORATED
584 Derby
Milford Road, Orange, Connecticut 06477
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3,
2010
To the
Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders
of Hubbell Incorporated (the Company) will be held
at The Omni New Haven Hotel, 155 Temple Street, New Haven,
Connecticut 06510 on Monday, May 3, 2010 at 9:00 A.M.
local time for the purpose of considering and acting upon the
following proposals:
1. The election of the following persons to serve as
Directors of the Company for the ensuing year, until the next
Annual Meeting of Shareholders of the Company and until their
respective successors have been duly elected and qualified.
|
|
|
|
|
|
|
|
|
Timothy H. Powers
George W. Edwards, Jr.
Lynn J. Good
|
|
Anthony J. Guzzi
Joel S. Hoffman
Andrew McNally IV
|
|
Carlos A. Rodriguez
G. Jackson Ratcliffe
Richard J. Swift
Daniel S. Van Riper
|
2. The ratification of the selection of independent
registered public accountants to audit the annual financial
statements for the Company for the year 2010.
3. The reapproval of the Companys 2005
Incentive Award Plan, as Amended and Restated.
4. The transaction of such other business as may
properly come before the meeting and any adjournments thereof.
Accompanying this Notice of Annual Meeting is a proxy statement,
proxy card(s), and the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009.
IMPORTANT: It
is important that your shares be represented at this meeting.
Therefore, please fill in, date, and sign the enclosed proxy
card and mail it promptly in the enclosed postage-paid envelope,
vote electronically using the Internet or use the telephone
voting procedures, as described on the enclosed proxy
card.
The Board of Directors has fixed the close of business on
March 5, 2010 as the record date for the determination of
shareholders entitled to notice of and to vote at such meeting
and any adjournments thereof. The transfer books will not be
closed.
By order of the Board of Directors
Richard W. Davies
Vice President,
General Counsel and
Secretary
Dated: March 15, 2010
HUBBELL
INCORPORATED
PROXY
STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
To be held May 3,
2010
The accompanying proxy is solicited by and on behalf of the
Board of Directors of Hubbell Incorporated, a Connecticut
corporation (the Company), to be voted at its Annual
Meeting of Shareholders to be held at The Omni New Haven Hotel,
155 Temple Street, New Haven, Connecticut 06510, on Monday,
May 3, 2010 at 9:00 A.M. local time, and any
adjournments thereof. Commencing on or about March 16,
2010, copies of this Proxy Statement, proxy card(s), and the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2009 are being mailed to
all shareholders.
Any shareholder executing a proxy may revoke it at any time
prior to its use. The Company will treat any duly executed proxy
as not revoked until it receives a duly executed instrument
revoking it, or a duly executed proxy bearing a later date or,
in the case of death or incapacity of the person executing the
same, written notice thereof. If you vote your shares using the
Internet website or the telephone voting procedures, you may
revoke your prior Internet or telephone vote by recording a
different vote on the Internet website or using the telephone
voting procedures, or by signing and returning a duly executed
proxy bearing a later date than your last Internet or telephone
vote. A proxy also may be revoked by voting by ballot at the
Annual Meeting.
Important
Notice Regarding the Availability of Proxy Materials
for the Shareholder Meeting to be Held on May 3, 2010
The
Companys Proxy Statement and Annual Report on
Form 10-K
are available at:
http://www.proxyvoting.com/hub
The following proxy materials are available for you to review at
http://www.proxyvoting.com/hub:
|
|
|
|
|
the Companys 2010 Proxy Statement;
|
|
|
|
the proxy card(s);
|
|
|
|
the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009; and
|
|
|
|
any amendments to the foregoing materials that are required to
be furnished to shareholders.
|
If you would like to access your Proxy Statement and Annual
Report on
Form 10-K
electronically in the future, in lieu of receiving paper copies,
you may do so by signing up for electronic delivery of these
documents online at
http://www.proxyvoting.com/hub
or choosing this option by following the appropriate
instructions when you vote by telephone or by marking the
appropriate box on your proxy card.
At the meeting, shareholders will be asked to consider and act
upon the following proposals:
1. The election of the following persons to serve as
Directors of the Company for the ensuing year, until the next
Annual Meeting of Shareholders of the Company and until their
respective successors have been duly elected and qualified.
|
|
|
|
|
Timothy H. Powers
|
|
Anthony J. Guzzi
|
|
Carlos A. Rodriguez
|
George W. Edwards, Jr.
|
|
Joel S. Hoffman
|
|
G. Jackson Ratcliffe
|
Lynn J. Good
|
|
Andrew McNally IV
|
|
Richard J. Swift
Daniel S. Van Riper
|
2. The ratification of the selection of independent
registered public accountants to audit the annual financial
statements for the Company for the year 2010.
3. The reapproval of the Companys 2005 Incentive
Award Plan, as Amended and Restated.
4. The transaction of such other business as may properly
come before the meeting and any adjournments thereof.
Unless otherwise directed, the persons named in the accompanying
form of proxy intend to vote all proxies received by them in
favor of (1) the election of the nominees to the Board
named herein, (2) the ratification of the selection of
independent registered public accountants, and (3) the
reapproval of the Companys 2005 Incentive Award Plan, as
Amended and Restated. All proxies will be voted as specified by
the Companys shareholders. The Board of Directors
recommends shareholders to vote FOR proposals 1, 2 and 3.
Management does not intend to present any business at the
meeting other than that set forth in the accompanying Notice of
Annual Meeting, and it has no information that others will do
so. If other matters requiring the vote of the shareholders
properly come before the meeting or any adjournments thereof, it
is the intention of the persons named in the accompanying form
of proxy to vote the proxies held by them in accordance with
their judgment on such matters.
Directions to attend the Annual Meeting where you may vote in
person can be found on our website,
www.hubbell.com, in the Investor Relations
section. The content of the Companys website is not
incorporated by reference into, or considered to be a part of,
this Proxy Statement.
2
VOTING
RIGHTS AND SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The record date for the determination of shareholders entitled
to vote at the meeting is the close of business on March 5,
2010. On March 5, 2010, the Company had outstanding
7,167,506 shares of Class A Common Stock, par value
$.01 per share, and 52,746,282 shares of Class B
Common Stock, par value $.01 per share, and no other voting
securities. Each share of Class A Common Stock is entitled
to twenty votes, and each share of Class B Common Stock is
entitled to one vote. The presence at the Annual Meeting, in
person or by proxy, of the holders of Class A Common Stock
and Class B Common Stock holding in the aggregate a
majority of the voting power of the Companys outstanding
shares shall constitute a quorum for the transaction of
business. Once a share of common stock is represented for any
purpose at the Annual Meeting, it will be deemed present for
quorum purposes for the remainder of the meeting and for any
adjournment of the Annual Meeting. Abstentions and broker
non-votes are counted as present for purposes of determining
whether there is a quorum. The vote required for each proposal
to be acted upon at this meeting is set forth in the description
of that proposal.
The following table sets forth as of March 5, 2010, or such
other date as indicated in the table or the notes thereto, each
of the persons known to the Company to own beneficially shares
representing more than 5% of any class of the Companys
outstanding voting securities, with the percent of class stated
therein being based upon the outstanding shares on March 5,
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
|
|
Nature of
|
|
|
|
|
|
|
Name and Address of
|
|
Beneficial
|
|
|
Percent
|
|
Title of Class
|
|
Beneficial Owner
|
|
Ownership
|
|
|
of Class
|
|
|
Class A Common Stock
|
|
Andrew McNally IV, G. J. Ratcliffe, and Richard W. Davies, as
trustees under a Trust Indenture dated September 2, 1957 made by
Louie E. Roche (the Roche Trust),
c/o Hubbell
Incorporated, 584 Derby Milford Road, Orange, Connecticut 06477
|
|
|
2,078,020
|
(1)(2)(4)
|
|
|
28.99
|
%
|
Class A Common Stock
|
|
Andrew McNally IV, G. J. Ratcliffe, and Richard W. Davies, as
trustees under a Trust Indenture dated August 23, 1957 made by
Harvey Hubbell (the Hubbell Trust),
c/o Hubbell
Incorporated, 584 Derby Milford Road, Orange, Connecticut 06477
|
|
|
1,410,440
|
(2)(3)(4)
|
|
|
19.68
|
|
Class A Common Stock
|
|
Adage Capital Partners, L.P.
|
|
|
582,090
|
(5)
|
|
|
8.12
|
|
|
|
Adage Capital Partners GP, L.L.C.
|
|
|
|
|
|
|
|
|
|
|
Adage Capital Advisors, L.L.C.
|
|
|
|
|
|
|
|
|
|
|
Phillip Gross
|
|
|
|
|
|
|
|
|
|
|
Robert Atchinson
200 Clarendon Street
52nd Floor
Boston, Massachusetts 02116
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
|
|
Nature of
|
|
|
|
|
|
|
Name and Address of
|
|
Beneficial
|
|
|
Percent
|
|
Title of Class
|
|
Beneficial Owner
|
|
Ownership
|
|
|
of Class
|
|
|
Class B Common Stock
|
|
BlackRock, Inc.
40 East 52nd Street
New York, New York 10022
|
|
|
4,485,493
|
(6)
|
|
|
8.5
|
|
Class B Common Stock
|
|
Artisan Partners Holdings LP
|
|
|
3,663,951
|
(7)
|
|
|
6.95
|
|
|
|
Artisan Investment Corporation
|
|
|
|
|
|
|
|
|
|
|
Artisan Partners Limited Partnership
|
|
|
|
|
|
|
|
|
|
|
Artisan Investments GP LLC
|
|
|
|
|
|
|
|
|
|
|
ZFIC, Inc.
|
|
|
|
|
|
|
|
|
|
|
Andrew A. Ziegler
|
|
|
|
|
|
|
|
|
|
|
Carlene M. Ziegler
875 East Wisconsin Avenue, Suite 800
Milwaukee, Wisconsin 53202
|
|
|
|
|
|
|
|
|
Class B Common Stock
|
|
Capital World Investors
The Income Fund of America, Inc.
333 South Hope Street
Los Angeles, California 90071
|
|
|
3,272,100
|
(8)
|
|
|
6.2
|
|
Class B Common Stock
|
|
The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
|
|
|
3,009,657
|
(9)
|
|
|
5.71
|
|
(1) The beneficiaries of such trust are the issue of Harvey
Hubbell and their spouses.
(2) The Trust Indenture requires that, so long as no
bank or trust company is acting as a trustee, there shall be
three individuals acting as trustees, each of whom, so long as
any securities of the Company are held by the trust, must be an
officer or Director of the Company. The Trust Indenture
provides that successor trustees are to be appointed by the
trustees then in office. The trustees have shared voting and
investment power with respect to the securities of the Company
held in such trust.
(3) The beneficiaries of such trust are the issue of Harvey
Hubbell.
(4) In addition, Messrs. McNally, Ratcliffe, and
Richard W. Davies, Vice President, General Counsel and
Secretary, beneficially own shares of the Companys Common
Stock as set forth in the table below with respect to
Messrs. McNally and Ratcliffe. The shares of the
Companys Common Stock beneficially owned by
Mr. Davies are included in the total amount of the
Companys Common Stock beneficially owned by All
Directors and executive officers as a group
(19 persons) in the table below.
(5) The Company has received a copy of Schedule 13G,
as amended, as filed with the Securities and Exchange Commission
(SEC) on February 16, 2010 by Adage Capital
Partners, L.P. (ACP), Adage Capital Partners GP,
L.L.C. (ACPGP), as general partner of ACP, Adage
Capital Advisors, L.L.C. (ACA), as managing member
of ACPGP, Phillip Gross, as managing member of ACA, and Robert
Atchinson, as managing member of ACA,
4
collectively, the Reporting Persons, reporting
ownership of these shares as of December 31, 2009.
According to the Schedule 13G, the Reporting Persons have
shared voting and dispositive power as to these shares.
(6) The Company has received a copy of Schedule 13G as
filed with the SEC on January 29, 2010 by BlackRock, Inc.
(BlackRock) reporting ownership of these shares as
of December 31, 2009. According to the Schedule 13G,
on December 1, 2009, BlackRock completed its acquisition of
Barclays Global Investors, NA, which, together with certain
affiliates, had previously filed a Schedule 13G with
respect to the Companys Class B common stock. As
reported in BlackRocks Schedule 13G, BlackRock has
sole voting and dispositive power as to these shares. According
to the Schedule 13G, the shares were acquired by the
following subsidiaries of BlackRock: BlackRock Asset Management
Japan Limited, BlackRock Advisors (UK) Limited, BlackRock
Institutional Trust Company, N.A., BlackRock
Fund Advisors, BlackRock Asset Management Canada Limited,
BlackRock Asset Management Australia Limited, BlackRock
Advisors, LLC, BlackRock Capital Management, Inc., BlackRock
Financial Management, Inc., BlackRock Investment Management, LLC
and BlackRock International Ltd.
(7) The Company has received a copy of Schedule 13G as
filed with the SEC on February 11, 2010 by Artisan Partners
Holdings LP (Artisan Holdings), Artisan Investment
Corporation (Artisan Corp.), the general partner of
Artisan Holdings, Artisan Partners Limited Partnership
(Artisan Partners), Artisan Investments GP LLC
(Artisan Investments), the general partner of
Artisan Partners, ZFIC, Inc. (ZFIC), the sole
stockholder of Artisan Corp., Andrew A. Ziegler and Carlene M.
Ziegler reporting ownership of these shares as of
December 31, 2009. Andrew A. Ziegler and Carlene M. Ziegler
are the principal stockholders of ZFIC. According to the
Schedule 13G, Artisan Holdings, Artisan Corp., ZFIC, Andrew
A. Ziegler and Carlene M. Ziegler have shared voting power with
respect to 3,590,751 of such shares and shared dispositive power
with respect to all such shares; and Artisan Partners and
Artisan Investments have shared voting power with respect to
3,564,551 of such shares and shared dispositive power with
respect to 3,637,751 of such shares. According to the
Schedule 13G, the shares reported were acquired on behalf
of discretionary clients of Artisan Partners and Artisan
Holdings.
(8) The Company has received a copy of Schedule 13G,
as amended, as filed with the SEC on February 11, 2010 by
Capital World Investors (Capital World) and The
Income Fund of America, Inc. (Income Fund) reporting
ownership of these shares as of December 31, 2009. As
reported in said Schedule 13G, Capital Research and
Management Company (CRMC) manages equity assets for
various investment companies through two divisions, including
Capital World. Capital World is deemed to be the beneficial
owner of 3,272,100 shares of Class B Common Stock as a
result of CRMC acting as investment advisor to various companies
registered under Section 8 of the Investment Company Act of
1940. Capital World has sole dispositive power for all such
shares, and Income Fund, which is advised by CRMC, has sole
voting power for all such shares.
(9) The Company has received a copy of Schedule 13G as
filed with the SEC on February 8, 2010 by The Vanguard
Group, Inc. (Vanguard). As reported in said
Schedule 13G, Vanguard has sole voting power with respect
to 36,046 of such shares, sole dispositive power with respect to
2,973,611 of such shares and shared dispositive power with
respect to 36,046 of such shares. According to the
Schedule 13G, Vanguard Fiduciary Trust Company
(VFTC), a wholly owned subsidiary of Vanguard, is
the beneficial owner of 36,046 of such shares as a result of its
serving as investment manager of collective trust accounts. VFTC
directs the voting of these 36,046 shares.
5
The following table sets forth as of March 5, 2010, the
equity securities of the Company beneficially owned by each of
the Directors and the Chief Executive Officer (CEO),
Chief Financial Officer (CFO) and the three other
most highly paid executive officers, referred to as the
named executive officers of the Company, and by all
Directors and executive officers of the Company as a group:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
|
|
|
|
|
Beneficial
|
|
Percent
|
Name
|
|
Title of Class
|
|
Ownership(1)
|
|
of Class
|
|
E. Richard Brooks
|
|
Class A Common
|
|
|
892
|
(2)
|
|
|
*
|
|
|
|
Class B Common
|
|
|
2,658
|
(2)(3)
|
|
|
*
|
|
George W. Edwards, Jr.
|
|
Class A Common
|
|
|
1,000
|
|
|
|
*
|
|
|
|
Class B Common
|
|
|
34,659
|
(3)
|
|
|
*
|
|
Lynn J. Good
|
|
Class B Common
|
|
|
1,000
|
(2)
|
|
|
*
|
|
Anthony J. Guzzi
|
|
Class B Common
|
|
|
3,150
|
(2)(3)
|
|
|
*
|
|
Joel S. Hoffman
|
|
Class A Common
|
|
|
3,821
|
(2)
|
|
|
*
|
|
|
|
Class B Common
|
|
|
23,367
|
(2)(3)
|
|
|
*
|
|
Andrew McNally IV
|
|
Class A Common
|
|
|
3,490,891
|
(5)
|
|
|
48.70
|
|
|
|
Class B Common
|
|
|
62,363
|
(3)
|
|
|
*
|
|
G. Jackson Ratcliffe
|
|
Class A Common
|
|
|
3,571,682
|
(5)
|
|
|
49.83
|
|
|
|
Class B Common
|
|
|
285,770
|
(3)
|
|
|
*
|
|
Carlos A. Rodriguez
|
|
Class B Common
|
|
|
1,000
|
(2)
|
|
|
*
|
|
Richard J. Swift.
|
|
Class B Common
|
|
|
3,550
|
(2)(3)
|
|
|
*
|
|
Daniel S. Van Riper
|
|
Class A Common
|
|
|
1,000
|
(2)
|
|
|
*
|
|
|
|
Class B Common
|
|
|
13,324
|
(2)(3)
|
|
|
*
|
|
Timothy H. Powers
|
|
Class A Common
|
|
|
106,304
|
(6)
|
|
|
1.48
|
|
|
|
Class B Common
|
|
|
1,167,199
|
(4)(7)(8)
|
|
|
2.21
|
|
David G. Nord
|
|
Class A Common
|
|
|
106,304
|
(6)
|
|
|
1.48
|
|
|
|
Class B Common
|
|
|
141,006
|
(4)(7)
|
|
|
*
|
|
Scott H. Muse
|
|
Class B Common
|
|
|
174,125
|
(4)
|
|
|
*
|
|
Gary N. Amato
|
|
Class B Common
|
|
|
117,025
|
(4)
|
|
|
*
|
|
William T. Tolley
|
|
Class B Common
|
|
|
125,034
|
(4)
|
|
|
*
|
|
All Directors and executive officers as a group (19 persons)
|
|
Class A Common
|
|
|
3,928,541
|
(2)(5)(6)(9)
|
|
|
54.81
|
|
|
|
Class B Common
|
|
|
2,770,229
|
(2)(3)(4)(7)(8)(10)
|
|
|
5.25
|
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
The figures in the table and notes thereto represent beneficial
ownership and sole voting and investment power except where
indicated and include the following shares of Class B
Common Stock obtainable within sixty days of March 5, 2010
by the exercise of stock options under the Companys Stock
Option Plan for Key Employees (Option Plan) and
stock appreciation rights (SARs) pursuant to the
Companys 2005 Incentive Award Plan (together with the
Option Plan, the LTI Plans) (see the table captioned
Outstanding Equity Awards at Fiscal Year End on page
38): Mr. Powers 983,197 shares,
Mr. Nord 79,650 shares, |
6
|
|
|
|
|
Mr. Muse 154,425 shares,
Mr. Amato 95,531 shares, and
Mr. Tolley 117,465; and all executive officers
as a group 1,831,078 shares. |
|
(2) |
|
Does not include stock units (each stock unit consisting of one
share each of Class A Common Stock and Class B Common
Stock) credited to and held under the Companys Deferred
Compensation Plan for Directors (Deferred Plan for
Directors) for those Directors who are not employees of
the Company, as discussed below under the section entitled
Compensation of Directors on page 50. As of
March 5, 2010, the following stock units have been credited
under the Deferred Plan for Directors:
Mr. Brooks 10,292 stock units,
Ms. Good 168 stock units;
Mr. Guzzi 4,055 stock units,
Mr. Hoffman 10,699 stock units,
Mr. Rodriguez 168 stock units;
Mr. Swift 3,977 stock units, and Mr. Van
Riper 1,633 stock units. |
|
(3) |
|
Includes 750 shares of Class B Common Stock granted as
restricted stock under the 2005 Incentive Award Plan on
May 4, 2009 which are subject to forfeiture if the
Directors service terminates (other than by reason of
death) prior to the date of the regularly scheduled 2010 Annual
Meeting of Shareholders. |
|
(4) |
|
Includes the following shares of Class B Common Stock
granted as restricted stock under the 2005 Incentive Award Plan
which are subject to vesting and forfeiture in equal annual
installments over a period of three years:
Mr. Powers 26,518, Mr. Nord
7,177, Mr. Muse 5,556,
Mr. Amato 5,154, and
Mr. Tolley 4,305; and all executive officers as
a group 55,590 shares. |
|
(5) |
|
Includes 2,078,020 shares of Class A Common Stock
owned by the Roche Trust of which Messrs. McNally,
Ratcliffe, and Davies are co-trustees and have shared voting and
investment power; and 1,410,440 shares of Class A
Common Stock owned by the Hubbell Trust of which
Messrs. McNally, Ratcliffe, and Davies are co-trustees and
have shared voting and investment power. |
|
(6) |
|
Includes 106,304 shares of Class A Common Stock held
by The Harvey Hubbell Foundation of which Messrs. Powers,
Nord, and one corporate officer are co-trustees and have shared
voting and investment power. |
|
(7) |
|
Includes 29,358 shares of Class B Common Stock held by
The Harvey Hubbell Foundation of which Messrs. Powers,
Nord, and one corporate officer are co-trustees and have shared
voting and investment power. |
|
(8) |
|
Includes 500 shares of Class B Common Stock owned by
Mr. Powers wife. |
|
(9) |
|
Includes 212,264 shares of Class A Common Stock held
by the Companys Pension Trust, the voting and investment
powers over which are controlled by a Retirement Committee of
which James H. Biggart, Vice President and Treasurer, two
corporate officers, and one employee of the Company are
co-members and have shared voting and investment power. |
|
(10) |
|
Includes 130,912 shares of Class B Common Stock held
by the Companys Pension Trust, the voting and investment
powers over which are controlled by a Retirement Committee of
which Mr. Biggart, two corporate officers, and one employee
of the Company are co-members and have shared voting and
investment power. |
7
ITEM 1
ELECTION
OF DIRECTORS
The Companys By-Laws provide that the Board of Directors
shall consist of not less than three nor more than twelve
Directors who shall be elected annually by the shareholders. The
Board has fixed the number of Directors at ten as of the Annual
Meeting of Shareholders, and the following persons are proposed
by the Board, upon recommendation of the Nominating and
Corporate Governance Committee, as Directors of the Company to
hold office until the next Annual Meeting of Shareholders and
until their respective successors have been duly elected and
qualified. In the event that any of the nominees for Directors
should become unavailable, it is intended that the shares
represented by the proxies will be voted for such substitute
nominees as may be nominated by the Board of Directors, unless
the number of Directors constituting a full Board of Directors
is reduced. Each of the nominees below was elected as a Director
by the shareholders of the Company, except for Ms. Good and
Mr. Rodriguez who were appointed to the Board of Directors
in June 2009. Mr. Brooks is retiring as a Director of the
Company in accordance with the Companys Corporate
Governance Guidelines after serving the Companys
shareholders in that capacity since 1993, and therefore is not
standing for re-election. Directors are elected by plurality
vote. Abstentions and broker non-votes will not be counted for
the purposes of the election of Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First
|
|
|
|
|
|
|
Became a
|
Name
|
|
Age(1)
|
|
Principal Occupation
|
|
Director
|
|
Timothy H. Powers
|
|
61
|
|
Chairman of the Board, President, and Chief Executive Officer of
the Company, since 2004; President and Chief Executive Officer,
2001-2004. Director of MeadWestvaco Corporation since 2006.
|
|
2001
|
G. Jackson Ratcliffe
|
|
73
|
|
Chairman of the Board of the Company, 1987-2004; Chairman of the
Board, President and Chief Executive Officer, 1988-2001.
Director of Sunoco, Inc. 1998-2009, Barnes Group 2001-2004, and
Praxair, Inc., 1992-2008.
|
|
1980
|
George W. Edwards, Jr.
|
|
70
|
|
President and Chief Executive Officer of The Kansas City
Southern Railway Company (railroad),
1991-1995.
Director of El Paso Electric Company since 1993.
|
|
1990
|
Lynn J. Good
|
|
50
|
|
Group Executive and Chief Financial Officer of Duke Energy
Corporation (electric power transmission and distribution),
since July 2009. Group Executive and President of Dukes
Commercial Businesses, 2007-2009; Executive Vice President and
CFO, Cinergy Corp., acquired by Duke Energy Corporation,
2005-2007.
|
|
2009
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First
|
|
|
|
|
|
|
Became a
|
Name
|
|
Age(1)
|
|
Principal Occupation
|
|
Director
|
|
Anthony J. Guzzi
|
|
46
|
|
President and Chief Operating Officer of EMCOR Group, Inc.
(mechanical, electrical construction and facilities services),
since 2004. President, North American Distribution and
Aftermarket, Carrier Corporation, a subsidiary of United
Technologies, 2001-2004; President, Commercial Systems and
Services, 2001. Director of EMCOR Group, Inc. since 2009.
|
|
2006
|
Joel S. Hoffman
|
|
71
|
|
Partner of Simpson Thacher & Bartlett LLP, a New York
City law firm, 1971-1999.
|
|
1989
|
Andrew McNally IV
|
|
70
|
|
Senior Advisor, Hammond, Kennedy, Whitney & Company
(merchant banking), since 2007; Partner, 1998-2006. Member,
McNally Investments (merchant banking), since 2005. Chairman and
Chief Executive Officer of Rand McNally & Company
(printing, publishing and map-making), 1993-1997. Director of
Reinhold Industries, Inc., 1999-2006.
|
|
1980
|
Carlos A. Rodriguez
|
|
45
|
|
President, National Account Services & Employer Services
International, Automatic Data Processing, Inc. (payroll and tax
processing, and business services), since March 2010. Division
President for ADPs Small Business Services and the
Professional Employer Organization, 1999-2010.
|
|
2009
|
Richard J. Swift
|
|
65
|
|
Chairman of the Financial Accounting Standards Advisory Council,
2002-2006. Chairman, President and Chief Executive Officer of
Foster Wheeler Ltd. (design, engineering, construction and other
services), 1994-2001. Director of CVS Caremark Corporation since
2006, Ingersoll-Rand Company PLC since 1995, Kaman Corporation,
since 2002, and Public Service Enterprise Group Incorporated,
since 1994.
|
|
2003
|
Daniel S. Van Riper
|
|
69
|
|
Independent Financial Consultant, since 2003. Senior Vice
President and Chief Financial Officer, Sealed Air Corporation
(packaging materials and systems), 1998-2002; Special Advisor,
2002-2005. Director of 3D Systems Corporation since 2006 and DOV
Pharmaceutical, Inc., 2002-2008.
|
|
2003
|
9
During the five years ended December 31, 2009, each of the
Directors, other than Messrs. McNally and Rodriguez, and
Ms. Good, has either been retired or held the principal
occupation set forth above opposite his or her name. The
employment history of Messrs. McNally and Rodriquez, and
Ms. Good during the past five years is reflected in the
table above.
CORPORATE
GOVERNANCE
The Board of Directors has adopted the Companys Corporate
Governance Guidelines (Guidelines) with respect to
significant corporate governance issues. These Guidelines cover
such issues as the composition of the Board and Board
Committees, Board and Board Committee meetings, leadership
development, including succession planning, new Director
orientation, Board responsibilities and compensation, and
Director independence. The Guidelines may be viewed on the
Companys website at www.hubbell.com.
The Board of Directors of the Company met ten times during the
year ended December 31, 2009. During 2009, no Director
attended fewer than 75% of the aggregate number of meetings of
the Board of Directors and meetings of Committees of which the
Director was a member. Board members are expected to attend the
Companys annual meetings of shareholders. All of the
Companys Directors were in attendance at the
Companys May 4, 2009 Annual Meeting of Shareholders,
except for Ms. Good and Mr. Rodriguez who were
appointed to the Board of Directors in June 2009.
Director
Independence
The Companys Guidelines indicate that the Board shall be
comprised of a majority of independent Directors. Each year the
Nominating and Corporate Governance Committee reviews all
relationships between Directors and the Company and its
subsidiaries (either directly or as a partner, shareholder or
officer of an organization that has a relationship with the
Company or any of its subsidiaries) in accordance with the
objective criteria of independence set forth by the New York
Stock Exchange (NYSE) and the SEC and considers
whether any relationship, individually or in the aggregate, is
material and has impaired or may impair a Directors
exercise of independent judgment. The Nominating and Corporate
Governance Committee also reviews a summary of the answers to
annual questionnaires completed by each of the Directors, a
report of transactions with Director-affiliated entities, Code
of Ethics certifications (described below), the status of case
submissions filed with the Companys confidential
communication hotline, and Company donations to charitable
organizations (noting that The Harvey Hubbell Foundation
Educational Matching Gifts Program is available to all
Directors, officers and employees and matches eligible gifts up
to a maximum of $4,000 made by an individual in any single
calendar year). Following review and discussion, the Nominating
and Corporate Governance Committee and the Companys Vice
President, General Counsel and Secretary, provide the results of
this analysis and supporting information to the Board of
Directors.
In evaluating and determining the independence of the Directors,
the Nominating and Corporate Governance Committee considered
that in the ordinary course of business, transactions may occur
between the Company and its subsidiaries and entities with which
some of the Directors are or have been affiliated. Specifically,
Messrs. Brooks, Edwards, Swift and Van Riper serve as
directors of other companies with which the Company engages in
ordinary course business transactions. Mr. Guzzi,
Ms. Good and Mr. Rodriguez are officers of other
companies with which the Company engages in ordinary course
business transactions. The Nominating and Corporate Governance
Committee considered the dollar amounts of transactions with
each of these entities and any related arrangements between the
Company and any of the applicable customers or suppliers, and
determined that none were required to
10
be disclosed as a related party transaction under the federal
securities laws or otherwise impaired the applicable
Directors independence under NYSE guidelines. In addition,
the Nominating and Corporate Governance Committee considered
Mr. Ratcliffes prior service to the Company as
President and CEO ending in 2001, as Chairman of the Board and
as a consultant each ending in 2004, and the fact that he no
longer had any relationship with the Company except as a
Director, and determined that, in addition to meeting the NYSE
bright line test for independence with respect to
such prior service to the Company, such prior service did not
otherwise impair his independence.
As a result of this review, the Board has determined that the
following Directors are independent in accordance with
applicable law and the NYSE rules: Mr. E. Richard Brooks,
Mr. George W. Edwards, Jr., Ms. Lynn J. Good,
Mr. Anthony J. Guzzi, Mr. Joel S. Hoffman,
Mr. Andrew McNally IV, Mr. G. Jackson Ratcliffe,
Mr. Carlos A. Rodriguez, Mr. Richard J. Swift, and
Mr. Daniel S. Van Riper; and that Mr. Timothy H.
Powers is not independent. Mr. Powers is not considered an
independent outside Director because of his employment as
Chairman of the Board, President and CEO of the Company. In
determining the nominees for election as Directors at the 2010
Annual Meeting of Shareholders, the Nominating and Corporate
Governance Committee noted that the Companys Guidelines
provide that upon reaching age 72 a director shall not
thereafter stand for re-election unless the Board, based upon
the recommendation of the Nominating and Corporate Governance
Committee, makes an exception to this standard as deemed
appropriate in the interests of the Companys shareholders.
Mr. Ratcliffe had reached the age of 72 in March 2008 and
the Committee had determined that a waiver of the guideline was
appropriate in Mr. Ratcliffes case in light of his
extensive managerial experience and deep knowledge of the
Companys businesses. The Committee determined that waiver
of the guideline continued to be appropriate for
Mr. Ratcliffe in connection with the 2010 election of
Directors.
Board
Leadership Structure
The Companys By-Laws require the Board to choose the
Chairman of the Board from among the Directors and provide the
Board with the ability to appoint the President of the Company
as the Chairman of the Board. This approach gives the Board the
necessary flexibility to determine whether these positions
should be held by the same person or by separate persons based
on the leadership needs of the Company at any particular time.
Based on the Companys present circumstances, the Board has
determined that the Company and its shareholders are best served
by having Mr. Powers serve as its Chairman of the Board,
President and CEO. Mr. Powers combined role as
Chairman of the Board, President and CEO promotes unified
leadership and direction for the Company, which allows for a
single, clear focus for management to execute the Companys
strategy and business plans. Mr. Powers has served in this
combined role since 2004. However, from 2001 to 2004, to assist
in the transition of leadership from Mr. Ratcliffe (the
Companys former Chairman, President and CEO) to
Mr. Powers, the Board determined that the Company was best
served by having one person serve as the Chairman of the Board
and another person serve as President and CEO.
The Boards present composition provides independent and
effective oversight of the Companys business and affairs.
The Audit, Compensation, and Nominating and Corporate Governance
Committees are comprised entirely of Directors who meet the
independence requirements of the NYSE. Mr. Powers is the
only member of the executive management who is also a Director.
The Board and Nominating and Corporate Governance Committee have
assembled a Board that consists of strong and effective
Directors who are currently or have been leaders or CFOs of
major companies or institutions or advisors thereto, are
independent analytical thinkers and have a diverse range of
experience and skills.
11
In addition, the Board has established a Lead Director position,
which rotates annually among the chairs of the Board Committees,
as detailed in the Guidelines, immediately following the
Companys annual meeting. The Lead Director coordinates the
activities of the Directors who are not Company officers
(including those who are not independent by virtue of a material
relationship, former status or family membership, or for any
other reason) (collectively, the Non-Management
Directors), coordinates the agenda for and chairs sessions
of the Non-Management Directors, and facilitates communications
between the Non-Management Directors and the other members of
the Board and the management of the Company. At its meeting held
on February 12, 2009, the Board of Directors, upon
recommendation of Nominating and Corporate Governance Committee,
amended the Guidelines to provide that any Director who is due
to serve as Lead Director under the annual rotation procedure
may decline acceptance of such position for any given term if
the Director determines that the circumstances so warrant.
Currently, Mr. Brooks is the Lead Director, and he is
expected to hold this position through the Companys 2010
Annual Meeting of Shareholders.
Given the strong leadership of the Companys Chairman of
the Board, President and CEO, the counterbalancing role of the
Lead Director, and a Board otherwise comprised of effective and
independent directors, the Board believes that, based on the
Companys present circumstances, the Boards current
leadership structure is appropriate.
Board
Oversight of Risk
The Board is responsible for overseeing the Companys risk
management practices and Committees of the Board assist it in
fulfilling this responsibility.
As required by its Charter, the Audit Committee routinely
discusses with management the Companys significant risk
exposures and the actions management has taken to limit, monitor
or control such exposures, including guidelines and policies
with respect to the Companys assessment of risk and risk
management. At least annually, the Audit Committee reviews with
management the Companys Enterprise Risk Management Program
which identifies and quantifies a broad spectrum of
enterprise-wide risks, and related action plans. In 2009, the
Companys full Board participated in this review and
discussion and expects to continue this practice as part of its
role in the oversight of the Companys risk management
practices. In addition, the Companys Internal Audit and
Legal Departments report to the Committee on various matters
related to the Companys risk exposures on an regular basis
or more frequently if appropriate. Such matters may include a
review of metrics related to the Companys confidential
communication hotline, Listen Up; reports of audits conducted by
the Internal Audit Department; and code of ethics or
compliance-related matters. At their discretion, members of the
Board may also directly contact management to review and discuss
any risk-related or other concerns that may arise between
regular meetings.
In 2009, the Company reviewed with the Compensation Committee
its compensation policies and practices applicable to all
employees that could affect the Companys assessment of
risk and risk management. Following such review, the Company
determined that its compensation policies and practices for all
employees do not create risks that are reasonably likely to have
a material adverse effect on the Company. As part of its risk
assessment and management activities going forward, the Company
also determined that it would undertake an annual review of its
compensation policies and practices as they relate to risk, the
results of which will be shared with the Compensation Committee
and, if appropriate, the full Board of Directors.
12
Code of
Ethics
The Company has a Conflicts of Interest Policy, Business Ethics
Policy and Use of Undisclosed Information Statement, which is
the Companys code of ethics within the meaning
of Section 406 of the Sarbanes-Oxley Act of 2002 and the
rules promulgated thereunder (Code of Ethics). The
Code of Ethics can be viewed on the Companys website at
www.hubbell.com. The Company requires all officers
and Directors to certify compliance with the Code of Ethics and
complete a Code of Ethics training course on an annual basis.
Waivers to the Code of Ethics as to officers and Directors may
be made only by the Companys Board of Directors or an
appropriate committee of the Board of Directors, and will be
promptly disclosed to Company shareholders through the
Companys website.
Communications
with Directors
Shareholders and interested parties may communicate with either
the Companys Lead Director or with the Non-Management
Directors as a group by using any of the following methods:
(a) via Listen Up confidential communication:
(i) electronically at
http://www.listenupreports.com;
(ii) fax to 1-312-635-1501; (iii) toll free to
1-888-789-6627; or (iv) by mail to Listen
Uptm/SAI
Global, 101 Morgan Lane #301, Plainsboro, New Jersey 08536;
or (b) by writing to: Board of Directors,
c/o Richard
W. Davies, Vice President, General Counsel and Secretary,
Hubbell Incorporated, 584 Derby Milford Road, Orange,
Connecticut 06477. Such communications will be distributed to
the specific Director(s) requested by the interested party or,
if generally to the Board, to other members of the Board as may
be appropriate depending on the material outlined in the
communication. For example, if a communication relates to
accounting, internal accounting controls, or auditing matters,
the communication will be forwarded to the Chair of the Audit
Committee.
Board
Committees
The Board of Directors has Audit, Compensation, Executive,
Finance, and Nominating and Corporate Governance Committees. The
principal responsibilities of each of these committees is
described generally below, and in detail in their respective
Committee Charters. The Charter for each of the Companys
(i) Audit Committee, (ii) Compensation Committee,
(iii) Finance Committee, and (iv) Nominating and
Corporate Governance Committee are available on the
Companys website at www.hubbell.com. The
Charter for the Executive Committee is incorporated into
Article III, Section 1, of the Companys By-Laws
which are also posted on the Companys website.
Messrs. Brooks, Guzzi, Hoffman, Van Riper, and
Ms. Good serve as members of the Audit Committee, with
Mr. Van Riper as Chairman. The Audit Committee consists of
members who are independent as defined in the
current NYSE listing standards and regulations adopted by the
SEC under the federal securities laws. The Audit Committee
appoints independent registered public accountants to serve as
auditors for the following year, subject to ratification by the
shareholders at the annual meeting; meets periodically with the
independent registered public accountants, internal auditors,
and appropriate personnel responsible for the management of the
Company and subsidiary companies concerning the adequacy of
internal controls and the objectivity of the financial reporting
of the Company; reviews and oversees the independence of the
Companys independent registered public accountants;
reviews and discusses the Companys internal audit function
and its personnel; pre-approves the hiring of the
13
independent registered public accountants for audit and
non-audit services; and reviews and approves the scope of the
audit and fees for the audit and non-audit services performed by
the independent registered public accountants. The independent
registered public accountants and the Companys management
and internal auditors each meet alone with the Audit Committee
several times during the year and have access at any time to the
Audit Committee. The Board of Directors has determined, in its
business judgment, that each member of the Audit Committee is
financially literate, at least one member of the Audit Committee
meets the NYSE standard of having accounting or related
financial management expertise and that Mr. Van Riper and
Ms. Good each meet the SEC criteria of an audit
committee financial expert. The Audit Committee met nine
times in 2009.
Messrs. Edwards, Hoffman, McNally, Powers, and Ratcliffe
serve as members of the Executive Committee, with
Mr. Ratcliffe as Chairman. The Executive Committee meets
during intervals between meetings of the Board of Directors and
may exercise all the powers of the Board of Directors in the
management of the business, and properties and affairs of the
Company, except certain powers set forth in the By-Laws of the
Company. The Executive Committee did not meet in 2009.
Messrs. Edwards, McNally, Rodriguez, Swift, and Van Riper
serve as members of the Compensation Committee, with
Mr. Edwards as Chairman. The Compensation Committee
consists of Directors who are independent as defined
in the current NYSE listing standards and regulations adopted by
the SEC under the federal securities laws. The Compensation
Committee conducts an annual appraisal of the performance of the
CEO and determines the compensation (base salary plus additional
compensation and benefits) of the CEO. After consultation with
the CEO and the Chairman of the Board of Directors, the
Compensation Committee also determines the compensation of other
members of the Companys senior management group. The
Compensation Committee evaluates the performance of the Chairman
of the Board of Directors; determines equity grants under the
Companys 2005 Incentive Award Plan; recommends (for
approval) to the Board of Directors pension changes, and other
significant benefits or perquisites; and reviews the members of
the Companys senior management group and plans for the
development of qualified candidates, and reports to the Board of
Directors annually. The Compensation Committee met five times in
2009.
Messrs. Edwards, McNally, Powers, Ratcliffe, and Rodriguez
serve as members of the Finance Committee, with Mr. McNally
as Chairman. The Finance Committee recommends to the Board of
Directors of the Company proposals concerning long- and
short-term financing, material divestments and acquisitions,
cash and stock dividend policies, programs to repurchase the
Companys stock, stock splits, and other proposed changes
in the Companys capital structure; periodically reviews
the Companys capital expenditure policy and recommends
changes to the Board of Directors, where appropriate, and, when
requested by the Board of Directors, reviews and makes
recommendations to the Board of Directors with respect to
proposals concerning major capital expenditures and leasing
arrangements; monitors the Companys effective tax rate and
related tax matters; reviews annually the Companys
insurance programs and their adequacy to protect against major
losses and liabilities; reviews and monitors the administration
and asset management of the Companys employee benefit
plans, including the
14
selection of investment and other advisors, the allocation of
assets between fixed income and equity, the performance of plan
investment managers and pension plan contributions; and reviews
and monitors the administration of the Companys cash and
investment portfolios, including the Companys investment
guideline policies. The Finance Committee met nine times in 2009.
|
|
|
Nominating
and Corporate Governance Committee
|
Messrs. Brooks, Guzzi, Hoffman, and Swift and Ms. Good
serve as members of the Nominating and Corporate Governance
Committee, with Mr. Brooks as Chairman. The Nominating and
Corporate Governance Committee consists of Directors who are
independent as defined in the current NYSE listing
standards and regulations adopted by the SEC under the federal
securities laws. The Nominating and Corporate Governance
Committee assists the Board of Directors in fulfilling its
responsibilities by identifying individuals qualified to become
Board members; recommending Director nominees to be elected at
the next annual meeting of shareholders or appointed by the
Board of Directors to fill vacancies on the Board; reviewing and
recommending (for approval) to the Board of Directors
compensation for service on the Board of Directors and its
various committees, policies governing retirement from the Board
of Directors, and individuals to serve as the Companys
officers and members of the various committees of the Board of
Directors; reviewing and recommending to the Board (for
approval) changes proposed by the Chairman of the Board and the
CEO pertaining to the structure and appointment of the
Companys officers; and developing and recommending to the
Board of Directors the adoption, or amendment, of the Guidelines
and principles applicable to the Company. The Nominating and
Corporate Governance Committee met six times in 2009.
Director
Nominations
|
|
|
Qualifications
of Director Nominees
|
As set forth in the Guidelines, the Nominating and Corporate
Governance Committee works with the Board on an annual basis to
determine the size of the Board and the appropriate
characteristics, skills and experience for the Board and its
individual members. The Committee recommends to the Board
candidates for Board membership in accordance with the
Guidelines and the selection criteria outlined in its Charter.
In evaluating suitability to the Board, the Committee considers
candidates on the basis of their ability to make independent
analytical inquiries; general understanding of marketing,
finance and other elements relevant to the success of a publicly
traded company in todays business environment; educational
and professional background; experience in corporate governance
(such as an officer or a former officer of a publicly held
corporation); experience in the Companys industry;
experience as a board member of another publicly held
corporation; and academic expertise in an area of the
Companys operations. Candidates are assessed on the basis
of their qualifications, experience, skills and ability to
enhance shareholder value. The Nominating and Corporate
Governance Committee and the Board evaluate each candidate in
the context of the Board as a whole. The Board does not have a
policy with regard to the consideration of diversity in
identifying director nominees, rather the objective is to
assemble a Board with diverse experience in these various areas
that can best perpetuate the success of the business and
represent shareholder interests through the exercise of sound
judgment.
Each Director nominee possesses the appropriate characteristics,
skills and experience specified in the Companys Guidelines
and the Nominating and Corporate Governance Committee Charter
for membership to the Board of Directors. As a result, the Board
is comprised of individuals with strong and unique backgrounds,
giving the Board, as a whole, competence and experience in a
wide variety of areas such as finance and accounting,
15
operations, legal, investing, risk management, mergers and
acquisitions, auditing, corporate governance and public company
board service. Several nominees have served or are currently
serving as CEO or CFO of reputable public companies in
industries, like manufacturing and power, that share common
characteristics with the Companys industry. Set forth
below are summaries of the experience of the nominees considered
by the Nominating and Corporate Governance Committee in
assembling a Board best suited to represent the interests of the
Company and its shareholders:
Mr. Powers brings to the Board many years of CFO,
CEO, management, strategic development, and mergers and
acquisitions experience in manufacturing industries, including:
|
|
|
|
|
Chairman (since 2004), President and CEO (since 2001), and
Senior Vice President and CFO
(1998-2001)
of the Company
|
|
|
|
Previously, 10 years of experience in manufacturing as
Executive Vice President, Finance and Business Development
Americas Region at ABB, Inc. and 3 years of experience as
Vice President and Corporate Controller for BBC Brown Boveri,
Inc.
|
|
|
|
Serves on the boards of MeadWestvaco Corporation, a public
manufacturing corporation, and the National Electric
Manufacturers Corporation (NEMA), and on the Board of Trustees
of Manufacturers Alliance (MAPI)
|
Mr. Ratcliffe brings to the Board extensive legal,
CFO, CEO, management, strategic development, and mergers and
acquisitions experience, public corporation board experience and
numerous years with the Company in a variety of capacities,
including:
|
|
|
|
|
35 years with the Company consisting of 14 years as
President and CEO, and 17 years as Chairman, 7 years
as CFO, and 6 years as Chief Legal Officer
|
|
|
|
Served on the boards of 9 public corporations, including Sunoco,
Inc., Praxair, Inc., Barnes Group, Inc., Olin Corporation, and
Aquarion Company
|
Mr. Edwards brings to the Board many years of CEO
and management experience in the utility and railroad
industries, and public corporation board experience, including:
|
|
|
|
|
Past Chairman, President and CEO experience at The United
Illuminating Company, a public utility
|
|
|
|
Past President and CEO experience at The Kansas City Southern
Railway Company
|
|
|
|
Served on several boards of public corporations, including
Aquarion Company and El Paso Electric Company, where he
also was Chairman of the Board
|
Ms. Good brings to the Board CFO and finance,
auditing, and general management experience in the utility
industry, including:
|
|
|
|
|
Present Group Vice President and CFO of Duke Energy, an electric
power company; past experience in various capacities as Senior
Vice President and Treasurer, and President of Commercial
Business
|
|
|
|
CFO and Controller of a utility holding company prior to its
acquisition by Duke Energy
|
|
|
|
Served as partner of Arthur Anderson LLP for 10 years and
Deloitte & Touche LLP for 1 year
|
16
|
|
|
|
|
Certified Public Accountant (CPA) for approximately
27 years
|
|
|
|
Qualifies as an audit committee financial expert
|
Mr. Guzzi brings to the Board COO, manufacturing,
strategic development, operations and management consultant
experience, including:
|
|
|
|
|
Present President and COO of EMCOR Group, Inc., a public
manufacturing corporation that designs, operates, and maintains
complex mechanical and electrical systems
|
|
|
|
Past experience in manufacturing including President, North
American Distribution and Aftermarket, and President, Commercial
Systems and Services of Carrier Corporation, a subsidiary of
United Technologies
|
|
|
|
Past experience as an engagement manager with
McKinsey & Company, a prominent management consulting
firm
|
Mr. Hoffman brings to the Board many years of
experience as a partner in a New York City law firm specializing
in mergers and acquisitions, securities and governance,
including:
|
|
|
|
|
37 years of experience as a practicing attorney, and for
approximately 25 years was the Companys lead outside
attorney advising the Company on mergers and acquisitions,
securities, governance and other legal issues related to the
business
|
|
|
|
Director of the Company for 20 years
|
Mr. McNally brings to the Board many years of CEO,
management and operations experience in the publishing industry
and public and private corporation boards, mergers and
acquisitions, finance, and risk analysis experience, as well as
service in merchant and investment banking, including:
|
|
|
|
|
Past Chairman and CEO of Rand McNally & Company,
engaged in printing, publishing and map-making
|
|
|
|
Past Director of numerous public and private corporations,
including Reinhold Industries, Inc., Burns International Service
Corp., Borg Warner Security Corp., Zenith Electric Corp., and
Mercury Finance
|
|
|
|
Former partner and current Senior Advisor of Hammond, Kennedy,
Whitney & Company, and a partner in McNally
Investments, both merchant bankers
|
Mr. Rodriguez brings to the Board many years of CFO,
finance, operations, merger and acquisition, and banking and
general management experience, including:
|
|
|
|
|
Division President of the small business services and added
value services of ADP, one of the largest payroll and tax filing
processors
|
|
|
|
Previous CFO and other high level finance experience with a
public company acquired by ADP and was CFO of two privately held
corporations
|
|
|
|
Advisory board member of a private equity fund
|
Mr. Swift possesses CEO and public corporation board
experience, and a strong finance and corporate governance
background, including:
|
|
|
|
|
Past Chairman, President and CEO of Foster Wheeler Ltd.
|
17
|
|
|
|
|
Serves on several boards of public corporations, including
Ingersoll-Rand Company, PLC, Kaman Corporation, and CVS/Caremark
Corporation, and has over 25 years of audit committee
experience
|
|
|
|
Former Chairman of the National Foreign Trade Council and former
Chairman of the Financial Accounting Standards Advisory Counsel,
which advises FASB on accounting standards
|
Mr. Van Riper brings to the Board, CFO, public
accounting, finance, audit, corporate governance, strategic
planning, mergers and acquisitions, risk analysis, and public
board experience, including:
|
|
|
|
|
Past Senior Vice President and CFO of Sealed Air Corporation
|
|
|
|
Serves/served on several boards of public companies, including
New Brunswick Scientific Co., Inc., DOV Pharmaceutical, Inc.,
Millenium Chemicals Inc., 3D Systems Corporation, and Globecomm
Systems Inc.
|
|
|
|
Served as a partner of accounting firm KPMG LLP for
26 years, including as lead partner to Fortune 500 and
other U.S. and multinational corporations in a variety of
areas
|
|
|
|
CPA for approximately 45 years
|
|
|
|
Qualifies as an audit committee financial expert
|
|
|
|
Director
Nomination Process
|
In searching for qualified Director candidates for election to
the Board and to fill vacancies on the Board, the Board solicits
current Directors for the names of potentially qualified
candidates and may ask Directors to pursue their own business
contacts for the names of potentially qualified candidates. The
Nominating and Corporate Governance Committee may also consult
with outside advisors or retain search firms to assist in the
search for qualified candidates and will consider suggestions
from shareholders for nominees for election as Directors and
evaluate such suggested nominees on the same terms as candidates
identified by Directors, outside advisors or search firms
selected by the Nominating and Corporate Governance Committee.
Ms. Good and Mr. Rodriquez were recommended to the Nominating
and Corporate Governance Committee by a third party search firm.
Once potential candidates are identified, the Nominating and
Corporate Governance Committee reviews the backgrounds of those
candidates. Candidate(s) who appear to be suitable based upon
their qualifications and the Boards needs are then
interviewed by the independent Directors and executive
management. Candidates may be asked to submit additional
information to the Company, after which the Nominating and
Corporate Governance Committee makes its recommendation to the
Board. If the Board approves the recommendation, the recommended
candidate is nominated for election by the Companys
shareholders or the candidate is appointed by the Board to fill
a vacancy on the Board.
Any shareholder who intends to propose a candidate to the
Nominating and Corporate Governance Committee for nomination as
a Director should deliver written notice to the Secretary of the
Company with the following information: (a) the
nominees biographical data (including business experience,
service on other boards, and academic credentials), (b) all
transactions and relationships, if any, between the nominating
shareholder or such nominee, on the one hand, and the Company or
its management, on the other hand, as well as any relationships
or arrangements, if any, between the nominating shareholder and
the nominee and any other transactions or relationships of which
the Board of Directors should be aware in order to evaluate such
nominees potential independence as a Director,
(c) details of whether the nominee or the nominating
shareholder is involved in any on-
18
going litigation adverse to the Company or is associated with an
entity which is engaged in such litigation and (d) whether
the nominee or any company for which the nominee serves or has
served as an officer or director is, or has been, the subject of
any bankruptcy, SEC or criminal proceedings or investigations,
any civil proceedings or investigations related to fraud,
accounting or financial misconduct, or any other material civil
proceedings or investigations. The notice must also contain a
written consent confirming the nominees (a) consent
to be nominated and named in the Companys proxy statement
and, if elected, to serve as a Director of the Company and
(b) agreement to be interviewed by the Nominating and
Corporate Governance Committee and submit additional information
if requested to do so. Any such notice should be delivered to
the Company sufficiently in advance of the Companys annual
meeting to permit the Nominating and Corporate Governance
Committee to complete its review in a timely fashion.
|
|
|
Shareholder
Nominations for Director
|
The Companys By-Laws contain time limitations, procedures
and requirements relating to direct nominations of Directors by
shareholders of record. Any such shareholder who intends to
bring before an annual meeting of shareholders any nomination
for Director must deliver written notice to the Secretary of the
Company. This notice must make certain representations, provide
specified consents, and set forth specified information with
respect to the shareholder and the nominee, including, without
limitation, information as would be required under applicable
securities law and SEC regulations in a proxy statement used to
solicit proxies for the nominee. In general, the notice must be
delivered not less than seventy days nor more than ninety days
prior to the first anniversary of the preceding years
annual meeting (or, if the date of the 2011 Annual Meeting of
Shareholders is more than twenty days before or more than
seventy days after May 3, 2011, notice by the shareholder
must be so delivered not earlier than ninety days prior to the
meeting and not later than seventy days prior to the meeting or
the tenth day following the date on which public disclosure of
the date of the meeting is first made by the Company). If,
however, the number of Directors to be elected at the 2011
Annual Meeting of Shareholders is increased and there is no
public announcement by the Company naming all of the nominees
for Director or specifying the size of the increased Board of
Directors at least eighty days prior to May 3, 2011, notice
will also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it
is delivered to the Secretary of the Company not later than the
close of business on the tenth day following the day on which
such public announcement is first made by the Company. The
Companys By-Laws can be viewed on its website at
www.hubbell.com.
19
COMPENSATION
DISCUSSION AND ANALYSIS
Overview/Philosophy
The total direct compensation package for the Companys
executives is made up of three elements:
|
|
|
|
|
base salary,
|
|
|
|
a short-term cash-based incentive program tied to achievements
of designated performance objectives, and
|
|
|
|
a long-term incentive program in the form of equity-based
compensation.
|
Executives also receive indirect compensation through employee
benefit plans, perquisites and severance protection.
Accordingly, the total compensation set forth in the Summary
Compensation Table, consists of both variable (annual short-term
and long-term incentive award grants valued as if paid
currently) as well as non-variable compensation (base salary,
benefit plans, and perquisites).
Variable compensation provides Company executives with
additional compensation based on both Company and individual
performance. The performance goals assigned to variable
compensation opportunities are designed to promote the
Companys strategic interests, thereby aligning
executives financial concerns with those of the
Companys shareholders. Variable and non-variable
compensation provides Company executives with income that is
reflective of competitive benchmarks which enhances the
Companys ability to attract and retain key management. The
Company has adopted an incentive-pay-for-performance philosophy
pursuant to which the greatest portion of an executives
total direct compensation is variable and therefore is linked to
performance on both a short-term and long-term basis.
The Role
of the Compensation Committee and Compensation
Consultant
The Compensation Committee determines the Companys
compensation philosophy and approves each element of the
Companys executive officers compensation. In
determining the amount of total direct compensation for the
named executive officers, the Compensation Committee has sought
the advice of and reviewed data provided by Exequity, LLP
(Exequity), an independent outside compensation
consultant. Exequity advises the Compensation Committee with
respect to named executive officer compensation. Exequity does
not advise the management of the Company, and receives no
compensation from the Company for services other than as
directed by the Compensation Committee and the Nominating and
Corporate Governance Committee (for which Exequity provides
guidance with respect to independent Director compensation).
In 2009, the Compensation Committee discussed its compensation
philosophy with Exequity, but otherwise did not impose any
specific limitations or constraints on, or otherwise direct, the
manner in which Exequity performed its advisory services. As
advisor to the Compensation Committee, Exequity reviewed the
total compensation strategy and pay levels for the
Companys named executive officers, examined all aspects of
the Companys executive compensation programs to ensure
their ongoing support of the Companys business strategy,
informed the Compensation Committee of developing legal and
regulatory considerations affecting executive compensation and
benefit programs, and provided general advice to the
Compensation Committee with respect to
20
all compensation decisions pertaining to the CEO and to all
senior executive compensation recommendations submitted by
management.
The Compensation Committee considers recommendations made by the
CEO with respect to compensation for executives that report
directly to him. However, the Compensation Committee is the sole
determiner of all final executive compensation decisions.
Benchmarking
Exequity supplied the Compensation Committee with compensation
data for each element of the total direct compensation package
(base salary, short-term and long-term incentive awards). The
Compensation Committee benchmarked to the median pay levels for
specific positions at manufacturing companies represented in the
Hewitt Associates Total Compensation
DataBasetm
which equates to a community of over 200 companies in the
U.S. general manufacturing sector. The data relied upon by
the Compensation Committee was a statistical summary of the pay
practices for the manufacturing companies in that database and
was not representative of any individual companies. In fact, the
Compensation Committee does not know the names of the companies
whose pay practices are reflected in the statistical summary,
nor does it receive information with respect to pay practices at
any individual company included in the database. Throughout this
Compensation Discussion and Analysis (CD&A)
references to benchmarking, competitive
data or market refer to this statistical
summarized data.
The Compensation Committees decision to benchmark the
Companys executive compensation levels to the practices of
such general manufacturing companies reflects the fact that the
source and the destination of the Companys senior
executive talent extend beyond the limited community of
electrical manufacturers and includes a wide range of other
organizations in the manufacturing sectors outside the
Companys traditional competitors for products and
services. Benchmarking pay practices to a broad representation
of general industry ensures that the Company sets its pay at
such levels as will position it to attract and retain qualified
senior executives in the face of competing pressures in the
Companys relevant labor markets.
The Compensation Committees review of the data in 2009
showed the Companys total pay structure for its executives
to be competitive with 50th percentile practices in that
external market, the position to which the Committee aims to
manage executive compensation opportunities. The actual base
salary, target total cash (base salary plus short-term incentive
award targets), and total target compensation (total target cash
plus the grant date value of long-term incentive opportunities)
for the named executive officers as a group were positioned
close to the 50th percentile, as shown in the following
table:
|
|
|
|
|
|
|
|
|
Base Salary
|
|
Target Total Cash
|
|
Total Compensation
|
|
Target Position
|
|
50th percentile
|
|
50th percentile
|
|
50th percentile
|
Actual Position
|
|
2.1% above
|
|
2.0% above
|
|
1.7% below
|
To ensure a comprehensive evaluation of total remuneration,
compensation tally sheets totaling 2009 compensation for each
named executive officer were prepared for, and reviewed by, the
Compensation Committee. These tally sheets identified and valued
each component of the named executive officers
compensation, including base salary, short-term and long-term
incentive awards, pension benefits, deferred compensation,
perquisites, and potential change in control and severance
benefits, and provided an aggregate sum for each executive. The
Compensation Committee intends to continue the practice of
reviewing tally sheets on at least an annual basis to aid it in
its administration of the Companys compensation program.
21
Base
Salary
Base salaries are determined by reference to competitive data
and individual levels of responsibility. As noted previously,
the Company defines its market competitive position for base
salaries as the 50th percentile of the market data. This
benchmark represents the Compensation Committees belief
that base compensation, which is not performance-based, should
be competitive in order to attract and retain qualified
individuals. In December 2009, management requested, and the
Committee approved, that the named executive officers receive no
base salary adjustment for 2010 in light of the challenging
economic environment.
Short-Term
Incentive Compensation (Non-Equity)
Like base salaries, annual short-term incentive award
expenditures are targeted at 50th percentile levels for
similarly-sized companies across general industry. Short-term
incentive awards for executives are paid pursuant to the
Companys Incentive Compensation Plan and Senior Executive
Incentive Compensation Plan (Senior Plan).
Individual short-term incentive award target levels for each
executive are determined by reference to competitive data
provided by Exequity, though the actual amount of short-term
incentive awards paid to each executive reflect achievement of
Company financial and strategic plan goals which include factors
such as free cash flow and earnings per diluted share
(EPS). Short-term incentive award target levels
(STI Target) are measured as a percentage of base
salaries as indicated below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI Target
|
|
|
|
|
|
|
|
Name
|
|
Percentage
|
|
|
Base Salary
|
|
|
STI Target
|
|
|
T. H. Powers
|
|
|
100
|
%
|
|
$
|
930,000
|
|
|
$
|
930,000
|
|
D. G. Nord
|
|
|
70
|
%
|
|
$
|
432,600
|
|
|
$
|
302,820
|
|
S. H. Muse
|
|
|
70
|
%
|
|
$
|
420,200
|
|
|
$
|
294,140
|
|
G. N. Amato
|
|
|
70
|
%
|
|
$
|
390,000
|
|
|
$
|
273,000
|
|
W. T. Tolley
|
|
|
70
|
%
|
|
$
|
358,600
|
|
|
$
|
251,020
|
|
Messrs. Muse, Amato and Tolley participated in the
Incentive Compensation Plan in 2009. Messrs. Powers and
Nord participated in the Senior Plan, a program that is
specifically designed so as to protect for the Company the tax
deductibility of short-term incentive awards earned by
Messrs. Powers and Nord.
The following sections provide a general description of how the
Incentive Compensation Plan and Senior Plan work:
|
|
|
Incentive
Compensation Plan Named Executive Officers Other
Than The CEO and CFO
|
The Incentive Compensation Plan is structured to closely
resemble the design of executive short-term incentive award
plans that are common at other companies in the general
manufacturing environment. Maintaining a short-term incentive
award plan that typifies those used elsewhere enhances the
appeal of the Companys compensation program generally and
strengthens the Companys ability to attract and retain
high quality executive talent.
The Incentive Compensation Plan authorizes the creation of an
incentive compensation pool each year equal in amount to 15% of
the excess of the Companys consolidated earnings over 10%
of the beginning year invested capital and long-term debt.
Actual short-term incentive awards are paid from the authorized
pool based on the extent to which the Company achieves
Compensation Committee-approved performance goals with respect
to essential
22
operating measures such as EPS, operating profit, and trade
working capital, as well as other strategic objectives as
determined in the discretion of the Compensation Committee.
Incentive Compensation Plan participants can earn from 50% to
200% of their STI Target each year, based on performance.
However, if performance falls below a pre-established minimally
acceptable threshold, then no short-term incentive award is
payable. For 2009, given the complexity of establishing
performance targets in an increasingly unstable economic
environment and to ensure protection of the interests of the
shareholders, the Compensation Committee expressly stated that
it would utilize the performance measures, weightings and
thresholds discussed below as guidelines in its consideration of
the payment of short-term incentive awards (STI
Guidelines). The Committee would then apply discretion to
determine an incentive payout that was representative of Company
performance and in the interests of the shareholders.
|
|
|
Corporate
Officer Short-Term Incentive Award Guidelines
|
For 2009, the Compensation Committee identified two measures of
performance that it would use as principal considerations in its
assessment of performance for purposes of determining short-term
incentive awards: EPS and free cash flow (cash flow from
operations less capital expenditures). EPS was identified
because it was deemed by the Compensation Committee to affect
shareholder value most directly and to be an important variable
in determining share price. Free cash flow was identified
because it is an important determinant in Company performance.
For Messrs. Powers and Nord, the following table sets forth
the performance results and payout applying the STI Guidelines
and also reflects the actual reduced payout granted by the
Compensation Committee:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relative
|
|
|
|
|
Performance
Result
|
Measures
|
|
|
Weight
|
|
|
Performance Threshold
|
|
Actual
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Minimum:
|
|
|
|
|
$2.20 =
|
|
|
|
|
50
|
%
|
|
|
|
|
|
EPS
|
|
|
|
80
|
%
|
|
|
|
Target:
|
|
|
|
|
$2.75 =
|
|
|
|
|
100
|
%
|
|
173%
|
|
|
138%
|
|
|
|
|
|
|
|
|
|
Maximum:
|
|
|
|
|
³
$3.30 =
|
|
|
|
|
200
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum:
|
|
|
|
|
$164M =
|
|
|
|
|
50
|
%
|
|
|
|
|
|
Free cash flow
|
|
|
|
20
|
%
|
|
|
|
Target:
|
|
|
|
|
$205M =
|
|
|
|
|
100
|
%
|
|
200%
|
|
|
40%
|
|
|
|
|
|
|
|
|
|
Maximum:
|
|
|
|
|
$246M =
|
|
|
|
|
200
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI Guidelines Payout:
|
|
|
178%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Payout:
|
|
|
110%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If the minimum levels of EPS of $2.20 and free cash flow of
$164 million were not obtained, then no short-term
incentive award was to be paid. For EPS and free cash flow
between the minimum and maximum, the amount of short-term
incentive awards were to be interpolated on a straight-line
basis.
For 2009, actual EPS was $3.15 and free cash flow was
$368 million. These results surpassed the performance
thresholds established by the Compensation Committee as STI
Guidelines. However, the Compensation Committee determined to
reduce the actual payout to Messrs. Powers and Nord under
the Senior Plan from the 178% that would have been achieved
under the STI Guidelines, to 110% of target. The Compensation
Committee, in making this determination, considered that the
minimum, target and maximum performance goals for 2009 were
lower than for
23
2008, as they were set at a time when market conditions were
deteriorating. The Compensation Committee also considered the
fact that:
|
|
|
|
|
there had been a material increase in the Companys share
price
year-over-year
(as well as over the last 18 months),
|
|
|
|
in 2009 the Company generated the third highest earnings level
in the Companys history; and
|
|
|
|
in 2009 the Company had its highest level of free cash flow.
|
After balancing these factors, the Compensation Committee
determined that although the Companys general performance
was very strong, it was below the level that warranted an award
calculated strictly in accordance with the STI Guidelines.
Rather, the reduced award would appropriately recognize the
level of the Companys financial achievements, and would
also be fair to management for their excellent results during
difficult operating conditions.
Accordingly, the short-term incentive awards earned by
Messrs. Powers and Nord as shown in the Summary
Compensation Table on page 34 reflect achievement of 110%
of target.
|
|
|
Group
Vice President Short-Term Incentive Award Guidelines
|
In addition to EPS and free cash flow measured in the same
manner as for Messrs. Powers and Nord described above, the
group vice presidents STI Guidelines were comprised of a
composite of (i) operating profit and trade working capital
objectives specific to the group vice presidents business
unit (for Mr. Muse, the lighting business
(Lighting), for Mr. Amato, the electrical
systems business (Electrical Systems), and for
Mr. Tolley, the power systems business
(Power)), and (ii) strategic objectives that
were identified as being important indicia of success for the
group vice presidents respective business unit.
The STI Guidelines for Messrs. Muse, Amato and Tolley were
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Measures
|
|
|
Relative Weight
|
|
|
Performance Threshold
|
|
|
|
|
|
|
Minimum:
|
|
|
< 80% =
|
|
|
0%
|
Operating profit and Trade working capital
|
|
|
70%
|
|
|
Target:
Maximum:
|
|
|
100% =
³ 120%
=
|
|
|
100% 200%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS and Free cash flow
|
|
|
15%
|
|
|
See the Corporate Officer
Short-Term
Incentive Award Guidelines discussion above
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic objectives
|
|
|
15%
|
|
|
Compensation Committee discretion based on achievements related
to strategic objectives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Focusing a significant portion of the group vice
presidents potential short-term incentive award on
operating profit and trade working capital results was deemed by
the Compensation Committee to promote decision making that would
best increase the value of the business unit with respect to
which the officer has direct oversight and control. The
operating profit, trade working capital, EPS and free cash flow
targets were the only targets material to the consideration of
Messrs. Muses, Amatos and Tolleys annual
short-term incentive award. The strategic objectives for
Messrs. Muse, Amato and Tolley were selected by the
Compensation Committee after identifying
24
with management certain objectives that relate to central
elements for the strategic plan of each business. However, no
single strategic objective was a material consideration in the
Committees determination of an annual short-term incentive
award. Some of the strategic objectives were formula driven,
others were not, reflecting instead the Compensation
Committees judgment with respect to achievements in
improving the Companys safety performance and leveraging
the Companys enterprise business system including
advancements in standardized reporting and available
functionality.
Although the Compensation Committee determined that the general
performance for each of the group vice presidents was very
strong, it was below the level that warranted an award
calculated strictly in accordance with the STI Guidelines.
Therefore, the Committee used its discretion to reduce the award
amounts to a level that appropriately recognized the
Companys financial achievements, and was also fair to
management for their excellent results during difficult
operating conditions. The following section discusses the
performance results and payout of each of the group vice
presidents businesses applying the STI Guidelines
discussed above and also reflects the actual reduced award
payout granted by the Compensation Committee:
Mr. Muse. The Lighting business achieved
operating profit performance that was 22% below prior year, but
ahead of plan expectations which translated to a performance
result for Mr. Muse of 144% on the operating profit
measure. The Lighting business achieved trade working capital
performance slightly below plan expectations. This performance
translated to a performance result of 96% on the trade working
capital measure. The Compensation Committee assessed
Mr. Muses performance on the strategic objectives and
determined that such results corresponded to a performance level
of 150%. These results collectively surpassed the performance
thresholds used as guidelines by the Compensation Committee.
However, while the Committee determined Mr. Muses
performance to be strong, the Compensation Committee applied
discretion and determined an award reduced to 109% was more
reflective of Mr. Muses performance. As a result,
Mr. Muses actual short-term incentive award for 2009
is shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Result
|
Measures
|
|
|
Relative Weight
|
|
|
Performance Threshold
|
|
|
Actual
|
|
|
Weighted
|
Operating profit
|
|
|
70%
|
|
|
77% of prior year
|
|
|
144%
|
|
|
|
92
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade working capital
|
|
|
|
|
|
23.5% of net sales
|
|
|
96%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS and Free cash flow
|
|
|
15%
|
|
|
See above
|
|
|
178%
|
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic objectives
|
|
|
15%
|
|
|
Compensation Committee
discretion as described above
|
|
|
150%
|
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI Guidelines Payout:
|
|
|
|
141
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Payout:
|
|
|
|
109
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Amato. The Electrical Systems
business achieved operating profit performance that was 27%
below prior year, but ahead of plan expectations which
translated to a performance result for Mr. Amato of 116% on
the operating profit measure. The Electrical Systems business
achieved trade working capital performance well above plan
expectations. This performance translated to a performance
result of 200% on the trade working capital measure. The
Compensation Committee assessed Mr. Amatos
performance on the strategic objectives and determined that such
results corresponded to a performance level of 175%. These
results collectively far surpassed the performance thresholds
used as guidelines by the Compensation Committee. However, while
the Committee
25
determined Mr. Amatos performance to be very strong,
the Compensation Committee applied discretion and determined an
award reduced to 115% was more reflective of the
Mr. Amatos performance. As a result,
Mr. Amatos actual short-term incentive award for 2009
is indicated in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Result
|
Measures
|
|
|
Relative Weight
|
|
|
Performance Threshold
|
|
|
Actual
|
|
|
Weighted
|
Operating profit
|
|
|
70%
|
|
|
76% of prior year
|
|
|
116%
|
|
|
|
96
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade working capital
|
|
|
|
|
|
21.5% of net sales
|
|
|
200%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS and Free cash flow
|
|
|
15%
|
|
|
See above
|
|
|
178%
|
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic objectives
|
|
|
15%
|
|
|
Compensation Committee
discretion as described above
|
|
|
175%
|
|
|
|
26
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI Guidelines Payout:
|
|
|
|
149
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Payout:
|
|
|
|
115
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Tolley. The Power business achieved
operating profit performance that was 10% above prior year which
translated to a performance result for Mr. Tolley of 162%
on the operating profit measure. The Power business achieved
trade working capital performance in excess of plan
expectations. This performance translated to a performance
result of 139% on the trade working capital measure. The
Compensation Committee assessed Mr. Tolleys
performance on the strategic objectives and determined that such
results corresponded to a performance level of 150%. These
results collectively far surpassed the performance thresholds
used as guidelines by the Compensation Committee. However, while
the Committee determined Mr. Tolleys performance to
be strong, the Compensation Committee applied discretion and
determined an award reduced to 122% was more reflective of the
Mr. Tolleys performance. As a result,
Mr. Tolleys actual short-term incentive award for
2009 is shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Result
|
Measures
|
|
|
Relative Weight
|
|
|
Performance Threshold
|
|
|
Actual
|
|
|
Weighted
|
Operating profit
|
|
|
70%
|
|
|
99% of prior year
|
|
|
162%
|
|
|
|
109
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade working capital
|
|
|
|
|
|
17.4% of net sales
|
|
|
139%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS and Free cash flow
|
|
|
15%
|
|
|
See above
|
|
|
178%
|
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic objectives
|
|
|
15%
|
|
|
Compensation Committee
discretion as described above
|
|
|
150%
|
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI Guidelines Payout:
|
|
|
|
158
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Payout:
|
|
|
|
122
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
Executive Incentive Compensation Plan CEO and
CFO
|
The Senior Plan is the means for paying short-term incentive
awards to the limited number of named executive officers whose
incentive compensation opportunities might not otherwise be tax
deductible due to the application of Section 162(m) of the
Internal Revenue Code of 1986 (the Code). The Senior
Plan is designed to ensure that short-term incentive amounts
paid to its participants are performance-based, thereby ensuring
that such amounts remain tax deductible under
Section 162(m) of the Code. Plans like the Senior Plan are
widely used by companies in the general manufacturing sector as
they ensure the tax deductibility of the compensation paid.
Their prevalence across
26
general industry helps promote interest in the Companys
compensation programs among the community of high quality senior
executives that the Company strives to recruit and retain.
Short-term incentive awards under the Senior Plan also are
earned contingent on the achievement of Compensation
Committee-approved goals. Participants become entitled to a
percentage of the short-term incentive award fund described in
connection with the Incentive Compensation Plan. Under the terms
of the Senior Plan, for example:
Mr. Powers was eligible to earn a maximum amount for 2009
equal to the lesser of:
|
|
|
|
|
15% of the amount of the incentive compensation fund established
under the Incentive Compensation Plan, or
|
|
|
|
$5,000,000.
|
Mr. Nords maximum amount for 2009 was the lesser of:
|
|
|
|
|
10% of the amount of the incentive compensation fund established
under the Incentive Compensation Plan, or
|
|
|
|
$5,000,000.
|
The Compensation Committee then uses its discretion to size
actual short-term incentive award payments in relation to goal
attainment. However, awards approved by the Compensation
Committee under the Senior Plan have mirrored those that would
have been paid to participants had they been awarded under the
Incentive Compensation Plan at a target of 100% of base salary
for Mr. Powers, and a target of 70% of base salary for
Mr. Nord. It follows, therefore, that in 2009
Messrs. Powers and Nord were eligible to earn a maximum
short-term incentive award equal to 200% of their STI Target if
EPS exceeded $3.30 and free cash flow exceeded
$246 million. The Compensation Committee then was permitted
to reduce (but not increase) these short-term incentive award
amounts according to its discretionary assessment of
performance. This formulation is necessary to ensure that
(i) any short-term incentive awards payable are deductible
under Section 162(m) of the Code, and (ii) the amount
payable remains in line with the total compensation targeted
percentiles described on page 21.
In exercising its discretion to reduce the maximum earned
short-term incentive award to the level reported in the Summary
Compensation Table, the Compensation Committee considered the
same EPS and free cash flow performance goals, weightings and
formulation that it applied to the Incentive Compensation Plan
participants. For 2009, since actual EPS was $3.15 and free cash
flow was $368 million, the Compensation Committee approved
for Messrs. Powers and Nord the amounts displayed in the
Summary Compensation Table on page 34 which mirrored the
amounts that they would have received as corporate officers
under the Incentive Compensation Plan.
Long-Term
Incentive Compensation (Equity)
The Company matches compensation practices in the general
manufacturing sector by extending to its executives the
opportunity to earn rewards in the form of Company shares. The
long-term incentive compensation program is the means by which
shares are earned. The objectives of the long-term incentive
compensation program are to:
|
|
|
|
|
Generate growth in the Companys share price by rewarding
activity that enhances enterprise value.
|
27
|
|
|
|
|
Ensure long-term rewards are commensurate with performance.
|
|
|
|
Facilitate the accumulation of shares by executives, thereby
enhancing ownership levels and promoting value-added decision
making.
|
In December 2009, the Compensation Committee approved for the
named executive officers awards of Class B Common Stock in
the form of restricted stock, SARs and performance shares. The
Committee believes granting awards in these formats uses shares
efficiently while increasing executive stock ownership
commensurate with the Companys performance. More
specifically, the Compensation Committee deems the issuance of
these particular award types to satisfy the Companys
compensation objectives in the following manner:
|
|
|
|
|
SARs and performance shares strengthen the performance
orientation of the award program.
|
|
|
|
Restricted stock builds equity ownership which is more closely
aligned to that of other shareholders.
|
|
|
|
SARs, restricted stock and performance shares efficiently use
shares to deliver targeted value to executives.
|
The Compensation Committee also understands from its review of
the benchmark data that delivering long-term incentive award
value in a blend of these formats is emblematic of how other
companies in the manufacturing sector are delivering equity
awards to executives in senior leadership positions.
The value of long-term incentive awards granted to executives
each year (the number of SARs, shares of restricted stock, or
performance shares awarded, subject to the achievement of
performance targets) is based on several factors, including:
|
|
|
|
|
Reviews of external practices as provided by Exequity.
|
|
|
|
The Compensation Committees assessment of the
Companys financial performance in the short- and long-term.
|
|
|
|
The value of awards granted in prior years.
|
The Compensation Committee determined that the best balance of
the Companys interests in motivating, retaining and
rewarding the named executive officers, is by having 50% of each
executives long-term incentive award value in the form of
SARs, 25% in restricted stock, and 25% percent in performance
shares. This particular blend of award formats was viewed by the
Compensation Committee as being representative of the prevailing
mix in the external market. This decision to align the
Companys mix of long-term incentive award grants with the
benchmark norm was deemed to be consistent with the
Companys broader objective of extending market
representative pay opportunities.
28
Performance share awards granted in 2009 are earned based on the
Companys total return to shareholders (TSR)
over a three-year performance period compared to the TSR
generated by the other companies that comprise the S&P
Mid-Cap 400 Index (Index). The number of performance
shares paid will be determined based on the Companys
relative performance per the following schedule which shows the
potential payout as a percent of the target award. The
performance and payouts will be rounded to the nearest
percentage.
|
|
|
|
|
|
|
Performance Measure
|
|
Performance
|
|
Payout
|
Total Return to Shareholders(1)
|
|
³ 80th percentile
of Index
At
50th percentile
of Index
At
35th percentile
of Index
Below
35th percentile
of Index
|
|
|
200%
100%
50%
0%
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For every percentile increase in performance, the payout will
increase 3.33% (interpolated on a straight line basis). |
Importantly, all performance share awards remain subject to a
shareholder protection mechanism such that no shares will be
paid in the event the Companys TSR over the three-year
performance period is below the 35th percentile of the
Index. The performance shares therefore provide pay only in the
event of performance thereby linking the named executive
officers incentives to shareholder interests and returns.
The performance share grant of February 9, 2007, having a
performance period of January 1, 2007 to December 31,
2009, was paid out in 2010 based upon the Companys
achievements with respect to two equally weighted performance
measures: TSR and operating margin improvements. At the end of
the performance period, the Company achieved TSR performance at
the 75th
percentile of the Index resulting in a 183% payout, and
operating margin improvement of 282 basis points resulting
in an 82% payout. When blended to form the composite measure
(50% weight TSR plus 50% weight operating margin improvements),
the resulting payout was 133% thereby earning
Messrs. Powers, Nord, Muse and Amato 16,366, 4,239, 4,239
and 2,291 shares, respectively.
|
|
|
Long-Term
Incentive Grant Practices
|
Long-term incentive grants are usually made once a year, after
the Compensation Committee has assessed the Companys
performance for such year. Historically, stock option and SAR
grants have been made at the Compensation Committees
regularly scheduled meeting held in early December, with limited
exceptions related to newly appointed or promoted executives, or
in connection with an acquisition. In 2009, SAR grants were made
on December 7, 2009 at the regularly scheduled Compensation
Committee meeting. A SAR gives the right to the holder to
receive, once vested, the value in shares of the Companys
Class B Common Stock equal to the positive difference
between the base price and the fair market value of a share of
Class B Common Stock upon exercise.
The base price pursuant to which the value of a SAR is measured
is determined under the 2005 Incentive Award Plan which is the
mean between the high and low trading prices of Class B
Common Stock as reported on the New York Stock Exchange on the
trading day immediately preceding the date of grant (i.e.
December 4, 2009 $46.96). The Company uses
the mean between the high and low trading prices on the date
immediately before the date of grant and not the closing price
of its stock on the date of grant for two reasons. First, using
trading prices from the day before the grant enables the
Compensation Committee to know the exact grant price and
therefore
29
determine the exact value of each grant before it is made.
Second, because of the relatively low volume at which the
Companys stock trades suggests that the mean represents a
more accurate picture of the fair market value of the stock than
does the closing price.
For purposes of determining individual award levels, the value
of each SAR is formulated on the basis of a modified
Black-Scholes calculation that is provided to the Compensation
Committee by an independent consulting organization. This SAR
value is different from the cost ascribed to the SARs for
financial accounting purposes and that is disclosed in the
Summary Compensation Table. The difference in the SAR valuations
reflect the fact that the SAR value formulation for financial
accounting purposes is intended to define the Companys
cost of the award while the formulation for award grant level
determination purposes is expected to identify the value of the
opportunity conveyed. The Compensation Committee understands
that the practice of differentiating award valuations is common
at many leading companies.
|
|
|
Stock
Ownership Guidelines for Executives
|
In 2005, the Company adopted stock ownership guidelines
applicable to the named executive officers as well as other
officers and designated employees. The Companys Policy
Regarding Stock Ownership and Retention by Officers and
Designated Company Personnel requires that officers and certain
designated employees (Senior Employees), consistent
with their responsibilities to the shareholders of the Company,
hold a significant equity interest in the Company. The Board
expects all Senior Employees to make a good faith effort,
depending on the circumstances, to attain a share ownership
equal to their base salary multiplied by a certain multiplier,
and divided by the fair market value of the Companys
Class B Common Stock on January 1, 2005, or $52.30
(Minimum Share Requirement).
The share ownership multiples are set forth in the following
table:
|
|
|
|
|
Multiple of
|
Executive Level
|
|
Base Salary
|
|
Chief Executive Officer
|
|
4x
|
Chief Financial Officer
|
|
3x
|
Group Vice Presidents and other Corporate Officers
|
|
2x
|
Vice Presidents and General Managers
|
|
1x
|
Senior Employees have five years from the earliest date on which
any option to acquire Company securities owned by such Senior
Employee fully vests to meet their minimum share requirements.
Until the Minimum Share Requirement is met, and thereafter
whenever the Minimum Share Requirement is not met, a Senior
Employee must retain fifty percent (50%) of net shares acquired
pursuant to the exercise of a stock option or SAR. Once the
Minimum Share Requirement is satisfied, the Senior Employee must
continue to satisfy such requirement for so long as he or she
remains a Senior Employee. Although the Company has not granted
stock options since 2004, options granted prior to 2004 are
vested and may remain outstanding.
Shares that count toward the Minimum Share Requirement include
shares held outright by the Senior Employee or by his or her
spouse or minor children, shares held in trust for the benefit
of the Senior Employee or his or her spouse or minor children,
and restricted stock held pursuant to the 2005 Incentive Award
Plan, or other long-term incentive compensation plan of the
Company, but do not include shares underlying unexercised
options or SARs (whether or not vested).
30
|
|
|
Compensation
Recovery Policy
|
In 2009, the Company adopted a compensation recovery policy
under which, if an executive is determined to have engaged in
fraud or other gross misconduct which contributed in whole or in
part to a restatement of the Companys financial results,
the Board may take disciplinary action which may include one or
more the following:
|
|
|
|
|
Termination of employment.
|
|
|
|
Recovery of all or any portion of any performance-based cash or
equity paid or vested during the previous three years and that
would otherwise not have been paid or vested based on the
restated financial results.
|
|
|
|
Cancellation or forfeiture of any performance-based cash or
equity awards not yet paid or vested, or offset against
future awards.
|
All actions taken under this policy will be determined by the
Board of Directors in its sole discretion, upon consultation
from the Audit Committee and the Nominating and Corporate
Governance Committee.
Employee
Benefits
Named executive officers also receive employee benefits that are
generally applicable to all employees, as well as certain
retirement benefits, perquisites, severance and change in
control protections. These additional benefits are of the type
and amount available to other senior executives of manufacturing
companies as demonstrated in the benchmarked data. The
Compensation Committee believes that it is necessary to provide
these benefits to executives in order to remain market
competitive in attracting and retaining qualified executives.
In addition to the retirement plans which are made generally
available to employees of the Company, which include a tax
qualified defined benefit plan (Basic Plan) and a
defined contribution plan consisting of a 401(k) plan and a
discretionary profit sharing contribution plan
(Contribution Plan), the named executive officers
and certain other selected executive officers participate in
various supplemental retirement plans and deferred compensation
plans, which allow them to earn additional retirement benefits.
The Basic Plan and Contribution Plan are intended to provide
employees, including named executive officers, with retirement
income. Only the Company contributes to the Basic Plan whereas
both the Company and the employee contribute to the Contribution
Plan. Employees hired after December 31, 2003 are not
eligible to participate in the Basic Plan, but participate only
in the Contribution Plan. The Company determined to no longer
offer the Basic Plan to new employees after 2003, as it was no
longer necessary in order to attract talent in the marketplace.
Instead, the Company emphasized participation in the
Contribution Plan with matching contributions and a
discretionary profit sharing contribution which are more in line
with current competitive retirement compensation practices.
Additional information on the Basic Plan, Contribution Plan and
supplemental retirement plans can be found under the section
entitled Retirement Plans and the accompanying
narrative to the Pension Benefits in Fiscal Year 2009 table on
page 42. Information on deferred compensation plans can be
found under the section entitled Non-Qualified Deferred
Compensation and the accompanying narrative to the
Non-Qualified Deferred Compensation in Fiscal Year
2009 table on page 44.
31
The Company provides certain perquisites to its named executive
officers. These perquisites provide flexibility to the
executives and increase travel efficiencies, thereby allowing
more productive use of executive time; protect the
executives physical and financial health and thus the
Companys investment in their development; and encourage
active involvement in Company marketing efforts. More detail on
the Companys perquisites can be found in the narrative
following the Summary Compensation Table on page 36.
|
|
|
Severance,
Continuity and Change in Control Benefits
|
In addition to retirement benefits, the Company provides for
certain severance benefits in the event a named executive
officers employment is involuntarily or constructively
terminated. Such severance benefits are designed to alleviate
the financial impact of an involuntary termination through base
salary and health benefit continuation, as well as outplacement
services, and with the intent of providing for a stable work
environment. In addition to normal severance, the Company
provides enhanced benefits in the event of a change in control
as a means of reinforcing and encouraging the continued
attention and dedication of senior executives of the Company to
their duties of employment without personal distraction or
conflict of interest in circumstances which could arise from the
occurrence of a change in control.
The Company extends severance, continuity, and change in control
benefits because they are essential to help the Company fulfill
its objectives of attracting and retaining key managerial
talent. The decision to offer these benefits did not influence
the Compensation Committees determinations concerning
other direct compensation or benefit levels. In making the
decision to extend the benefits, the Compensation Committee
relied on the assurances of Exequity that the programs are
representative of market practice, both in terms of design and
cost. For example, the Compensation Committees review of
prevailing practices elsewhere demonstrated that the magnitude
of the lump sum cash benefits payable following certain
change-related terminations (3 times base salary plus short-term
incentive award) reflects general industry standards. Similarly,
the promise to accelerate vesting in all outstanding long-term
incentive awards also is emblematic of external norms. The
Compensation Committee determined that extending these
competitive benefits is necessary to attract and retain top
quality executive talent.
Additional information on the Companys severance,
continuity, and change in control benefits can be found under
the section entitled Potential Post-Employment and Change
in Control Payments and the accompanying tables and
narrative on page 45.
|
|
|
Tax
Deductibility of Compensation
|
Section 162(m) of the Code establishes an annual
$1 million limit on the amount that the Company can deduct
for compensation paid to any of its top five executives (as
indicated in the Summary Compensation Table for that year),
unless the compensation in excess of $1 million is
performance-based. Payments under the Senior Plan, stock options
and SARs granted under the Companys LTI Plans with an
exercise price of at least fair market value, and performance
shares granted under the 2005 Incentive Award Plan are intended
to qualify as performance-based compensation exempt from the
limitations of Section 162(m) of the Code.
The Committee believes that it is in the Companys best
interests to maintain flexibility in the administration of the
compensation program. In order to retain the flexibility to
compensate the Companys management in the manner best
promoting the Compensation Committees policy objectives,
the Compensation Committee does not
32
require that all compensation be deductible. Accordingly,
payments under the Incentive Compensation Plan and grants of
restricted stock are not intended to qualify as
performance-based compensation and may be subject to the
$1 million deductibility limitation of Section 162(m)
of the Code.
Compensation
Committee Report
The Committee has reviewed the Compensation Discussion and
Analysis and discussed its contents with members of the
Companys management. Based on this review and discussion,
the Committee has recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the
Companys Annual Report on
Form 10-K
and in this Proxy Statement.
Compensation Committee
George W. Edwards, Jr., Chairman
Andrew McNally IV
Richard J. Swift
Daniel S. Van Riper
33
Cash and
Other Forms of Compensation
The following table sets forth the total cash and other
compensation paid or accrued by the Company for services
rendered to the Company and its subsidiaries by the
Companys named executive officers for the year ended
December 31, 2009.
Summary
Compensation Table for Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Plan
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)(4)
|
|
|
($)(5)(6)(7)
|
|
|
($)
|
|
|
T. H. Powers
|
|
|
2009
|
|
|
$
|
930,000
|
|
|
|
1,340,128
|
|
|
|
774,280
|
|
|
|
1,023,000
|
|
|
|
3,315,433
|
|
|
|
78,848
|
|
|
|
7,461,689
|
|
Chairman of the Board,
|
|
|
2008
|
|
|
|
930,000
|
|
|
|
1,224,008
|
|
|
|
1,023,126
|
|
|
|
1,255,500
|
|
|
|
3,867,894
|
|
|
|
84,636
|
|
|
|
8,385,164
|
|
President and Chief Executive Officer
|
|
|
2007
|
|
|
|
900,000
|
|
|
|
1,251,666
|
|
|
|
969,958
|
|
|
|
1,611,000
|
|
|
|
1,865,479
|
|
|
|
57,523
|
|
|
|
6,655,626
|
|
D. G. Nord
|
|
|
2009
|
|
|
|
432,600
|
|
|
|
373,188
|
|
|
|
215,601
|
|
|
|
333,102
|
|
|
|
569,263
|
|
|
|
59,496
|
|
|
|
1,983,250
|
|
Senior Vice President
|
|
|
2008
|
|
|
|
416,000
|
|
|
|
324,119
|
|
|
|
270,927
|
|
|
|
393,120
|
|
|
|
385,871
|
|
|
|
59,309
|
|
|
|
1,849,346
|
|
and Chief Financial Officer
|
|
|
2007
|
|
|
|
391,250
|
|
|
|
332,793
|
|
|
|
257,868
|
|
|
|
501,200
|
|
|
|
231,270
|
|
|
|
73,414
|
|
|
|
1,787,795
|
|
S. H. Muse
|
|
|
2009
|
|
|
|
420,200
|
|
|
|
265,445
|
|
|
|
153,358
|
|
|
|
320,613
|
|
|
|
635,689
|
|
|
|
39,569
|
|
|
|
1,834,874
|
|
Group Vice President
|
|
|
2008
|
|
|
|
408,000
|
|
|
|
265,673
|
|
|
|
222,071
|
|
|
|
228,480
|
|
|
|
385,694
|
|
|
|
36,495
|
|
|
|
1,546,413
|
|
|
|
|
2007
|
|
|
|
393,521
|
|
|
|
274,716
|
|
|
|
212,918
|
|
|
|
268,800
|
|
|
|
210,715
|
|
|
|
33,787
|
|
|
|
1,394,457
|
|
G. N. Amato
|
|
|
2009
|
|
|
|
390,000
|
|
|
|
291,332
|
|
|
|
168,319
|
|
|
|
313,950
|
|
|
|
631,162
|
|
|
|
29,125
|
|
|
|
1,823,888
|
|
Group Vice President
|
|
|
2008
|
|
|
|
324,000
|
|
|
|
220,535
|
|
|
|
184,319
|
|
|
|
328,536
|
|
|
|
391,131
|
|
|
|
25,763
|
|
|
|
1,474,284
|
|
W. T. Tolley
|
|
|
2009
|
|
|
|
358,600
|
|
|
|
242,756
|
|
|
|
140,264
|
|
|
|
306,244
|
|
|
|
154,673
|
|
|
|
53,010
|
|
|
|
1,255,547
|
|
Group Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts shown represent the grant date fair value of restricted
stock, performance shares (with market conditions), and SARs
granted in the year indicated as computed in accordance with
FASB ASC Topic 718. For a discussion of the assumptions made in
the valuation reflected in these columns, see Note 18 to
the Consolidated Financial Statements for 2009 contained in the
Form 10-K
filed with the SEC on February 19, 2010. The actual value,
if any, that an executive may realize from an award is
contingent upon the satisfaction of the conditions to vesting in
that award, and with respect to SARs, upon the positive
difference between the base price and the fair market value of a
share of Class B Common Stock on the date of exercise.
Thus, there is no assurance that the value, if any, eventually
realized by the executive will correspond to the amount shown. |
|
(2) |
|
Reflects short-term incentive awards earned during the fiscal
years 2007, 2008 and 2009 under the Companys Incentive
Compensation Plan and Senior Plan. |
|
(3) |
|
Reflects the aggregate of the increase in actuarial value under
the Basic Plan, Top Hat Restoration Plan (Restoration
Plan), and Supplemental Executive Retirement Plan
(Executive Plan) or Supplemental Management
Retirement Plan (Management Plan) (as applicable)
for Messrs. Powers, Muse, Amato and Tolley (discussed below
in the section entitled Retirement Plans beginning
on page 42). For Mr. Nord, |
34
|
|
|
|
|
reflects the aggregate of the increase in actuarial value under
the Executive Plan only, as he is not eligible to participate in
the Basic Plan. The present value of these accrued benefits at
December 31, 2008 and December 31, 2009 is based on
the RP-2000 Mortality Tables projected with Scale AA, as
published by the Internal Revenue Service on February 26,
2007, and the Pension Protection Act of 2006 (PPA)
2009 and 2010 Optional Combined Tables (gender distinct),
respectively using a discount rate of 6.50% and 6.0%,
respectively. Participants are assumed to retire at age 62. |
|
(4) |
|
The value of pension benefits under the Basic Plan, Restoration
Plan, Executive Plan and Management Plan are based, in part, on
the highest three year average of compensation earned over the
prior ten-year period, including annual short-term incentive
compensation. |
|
(5) |
|
The following table identifies the total amount and type of
perquisites
(ü)
each named executive officer received in 2009 and the
incremental cost of any individual perquisite that exceeds the
greater of $25,000 or 10% of the total amount of perquisites for
a named executive officer. The incremental cost of perquisites
are included in the All Other Compensation column: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Aircraft
|
|
Automobile
|
|
Country
|
|
Executive
|
|
Financial
|
|
Tax
|
Name
|
|
($)
|
|
Usage
|
|
Usage
|
|
Club
|
|
Medical
|
|
Planning
|
|
Preparation
|
|
T. H. Powers
|
|
$
|
67,418
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
ü
|
|
D. G. Nord
|
|
|
41,198
|
|
|
|
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
|
|
|
|
ü
|
|
|
|
ü
|
|
S. H. Muse
|
|
|
31,093
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
|
|
|
|
ü
|
|
|
|
ü
|
|
G. N. Amato
|
|
|
20,025
|
|
|
|
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. T. Tolley
|
|
|
44,802
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
|
ü
|
|
|
|
|
|
|
The Companys methodology for calculating costs associated
with perquisites has been the incremental cost to the Company,
which for personal use of the Companys aircraft includes
fuel, landing fees, hangar fees, maintenance, catering,
additional expenses relating to the crew and other expenses
which would not have otherwise been incurred by the Company if
the aircraft had not been used for personal travel, including
such costs associated with any deadhead flights
(i.e. flights without passengers). For personal use of
the Company automobile, the incremental cost includes the sum of
lease payments, fuel, taxes, maintenance, insurance and
registration less monthly payments made by the named executive
multiplied by the percentage attributable to personal use of the
automobile. Country club membership, financial planning, tax
preparation services and executive medical coverage are
calculated using the actual cost to the Company for the benefit
provided to the executive. |
|
(6) |
|
Includes the Companys payment of the actual life insurance
premium in the following amounts: Mr. Powers
$4,080, Mr. Nord $1,148,
Mr. Muse $1,126, Mr. Amato
$1,750, and Mr. Tolley $858. |
|
(7) |
|
Includes Company 401(k) matching contributions to the
Contribution Plan in the amount of $7,350 for each named
executive officer, and a discretionary profit sharing
contribution of $9,800 for Mr. Nord. |
35
Grants of
Plan-Based Awards in Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Exercise
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
or Base
|
|
|
of Stock
|
|
|
Closing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Price of
|
|
|
and
|
|
|
Price on
|
|
|
|
|
|
|
Est. Future Payouts Under Non- Equity
|
|
|
Est. Future Payouts Under Equity
|
|
|
Shares of
|
|
|
Securities
|
|
|
Option
|
|
|
Option
|
|
|
Grant
|
|
|
|
Grant
|
|
|
Incentive Plan Awards
|
|
|
Incentive Plan Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Awards
|
|
|
Awards
|
|
|
Date
|
|
Name
|
|
Date
|
|
|
Threshold ($)
|
|
|
Target ($)
|
|
|
Max ($)
|
|
|
Threshold (#)
|
|
|
Target (#)
|
|
|
Max (#)
|
|
|
Units
|
|
|
Options
|
|
|
($/Sh)(1)
|
|
|
(2)(3)(4)
|
|
|
($/Sh)
|
|
|
T. H. Powers
|
|
|
12/07/09
|
|
|
$
|
465,000
|
|
|
$
|
930,000
|
|
|
$
|
1,860,000
|
|
|
|
6,654
|
|
|
|
13,309
|
|
|
|
26,618
|
|
|
|
11,020
|
|
|
|
78,767
|
|
|
$
|
46.96
|
|
|
$
|
2,114,408
|
|
|
$
|
47.32
|
|
D. G. Nord
|
|
|
12/07/09
|
|
|
|
151,410
|
|
|
|
302,820
|
|
|
|
605,640
|
|
|
|
1,853
|
|
|
|
3,706
|
|
|
|
7,412
|
|
|
|
3,069
|
|
|
|
21,933
|
|
|
|
46.96
|
|
|
|
588,789
|
|
|
|
47.32
|
|
S. H. Muse
|
|
|
12/07/09
|
|
|
|
147,070
|
|
|
|
294,140
|
|
|
|
588,280
|
|
|
|
1,318
|
|
|
|
2,636
|
|
|
|
5,272
|
|
|
|
2,183
|
|
|
|
15,601
|
|
|
|
46.96
|
|
|
|
418,803
|
|
|
|
47.32
|
|
G.N. Amato
|
|
|
12/07/09
|
|
|
|
136,500
|
|
|
|
273,000
|
|
|
|
546,000
|
|
|
|
1,446
|
|
|
|
2,893
|
|
|
|
5,786
|
|
|
|
2,396
|
|
|
|
17,123
|
|
|
|
46.96
|
|
|
|
459,652
|
|
|
|
47.32
|
|
W. T. Tolley
|
|
|
12/07/09
|
|
|
|
125,510
|
|
|
|
251,020
|
|
|
|
502,040
|
|
|
|
1,205
|
|
|
|
2,411
|
|
|
|
4,822
|
|
|
|
1,996
|
|
|
|
14,269
|
|
|
|
46.96
|
|
|
|
383,020
|
|
|
|
47.32
|
|
|
|
|
(1) |
|
Mean between the high and low trading prices of the
Companys Class B Common Stock on the trading day
immediately preceding the date of grant, which is the fair
market value of the Class B Common Stock determined under
the terms of the 2005 Incentive Award Plan. |
|
(2) |
|
Includes the fair value of restricted stock awards on the grant
date, December 7, 2009, based upon the fair value of such
shares as determined under FASB ASC Topic 718. The determination
of fair values for these awards is disclosed in the Stock-Based
Compensation note within the Notes to the Consolidated Financial
Statements in the Companys
Form 10-K
filed with the SEC on February 19, 2010.
Mr. Powers $517,499, Mr. Nord
$144,120, Mr. Muse $102,514,
Mr. Amato $112,516, and
Mr. Tolley $93,732. |
|
(3) |
|
Includes the fair value of performance shares on the grant date,
December 7, 2009, computed in accordance with FASB ASC
Topic 718 for performance shares with market conditions, based
upon the assumptions set forth in Note 18 to the
Consolidated Financial Statements for 2009 contained in the
Companys
Form 10-K
filed with the SEC on February 19, 2010.
Mr. Powers $822,629, Mr. Nord
$229,068, Mr. Muse $162,931,
Mr. Amato $178,816, and
Mr. Tolley $149,024. |
|
(4) |
|
Includes the fair value of stock appreciation rights on the
grant date, December 7, 2009, based upon the fair value of
such stock appreciation rights as determined under FASB ASC
Topic 718. The determination of fair values for these awards is
disclosed in the Stock-Based Compensation note within the Notes
to the Consolidated Financial Statements in the Companys
Form 10-K
filed with the SEC on February 19, 2010.
Mr. Powers $774,280, Mr. Nord
$215,601, Mr. Muse $153,358,
Mr. Amato $168,319, and
Mr. Tolley $140,264. |
Narrative
Disclosure to Summary Compensation Table and Grants of
Plan-Based Awards Table
See the CD&A above for a complete description of the
compensation plans pursuant to which the amounts listed under
the Summary Compensation Table and Grants of Plan-Based Awards
Table were paid or awarded and the criteria for such payment.
Salary. The values set forth in the table
reflect salary paid in 2009.
Short-Term Incentive Compensation
(Non-Equity). The calculation of short-term
incentive amounts in the Summary Compensation Table and the
target, minimum and maximum amounts set forth in the Grants of
Plan-Based Awards Table are based upon the salary of the named
executive officers at December 31, 2009.
36
Long-Term Incentive Compensation
(Equity). SARs and restricted stock vest in three
equal annual installments on the anniversary of the grant date
based on continued service, and fully vest upon death,
disability or a change in control. SARs generally have a term of
and will expire on the tenth anniversary of their grant date.
However, SARs will expire 90 days following termination of
employment for reasons other than death or retirement. Upon
death, vested SARs remain exercisable for one year. Upon
disability, vested SARs are exercisable until the earlier of one
year following termination of employment if death occurs within
90 days of termination of employment, or the tenth
anniversary of the grant date.
Performance shares are payable at target level if the
participant dies, becomes disabled or there is a change in
control prior to the expiration of the three-year performance
period. The following table summarizes the vesting and exercise
periods of each unvested equity award in the event of
termination due to death or disability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting and Exercise Period for Unvested Equity Awards Upon:
|
Award Type
|
|
|
Death
|
|
|
Disability
|
Performance
|
|
|
Vesting
|
|
|
Unvested shares fully vest
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Exercise Period
|
|
|
Not Applicable
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
Vesting
|
|
|
Unvested shares fully vest
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Exercise Period
|
|
|
Not Applicable
|
|
|
|
|
|
|
|
|
|
|
SARs and
|
|
|
Vesting
|
|
|
Unvested shares fully vest
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise Period
|
|
|
Earlier of (i) 1 year following termination by reason of
death, or (ii) the 10th anniversary of the grant date
|
|
|
Earlier of (i) 1 year following termination if death occurs
within 90 days of thereof, or (ii) the 10th anniversary of
grant date following termination
|
|
|
|
|
|
|
|
|
|
|
The vesting and exercise periods for all restricted stock, SARs,
stock options, and performance share awards upon retirement or a
change in control, as applicable, are discussed under the
section entitled LTI Plans on page 49.
Perquisites
In addition to participation in other employee benefit plans
that are generally applicable to all employees, named executive
officers are eligible for the following perquisites:
|
|
|
|
|
Personal travel on the Company aircraft
|
|
|
|
Use of a Company automobile
|
|
|
|
Financial planning and tax preparation services
|
|
|
|
Country club memberships
|
|
|
|
Participation in the Key Man Supplemental Medical Plan which
provides medical, dental and vision coverage to the participant
while employed by the Company up to $150,000, and upon
retirement up to $150,000. This is a closed plan that no longer
accepts new participants. Currently, Mr. Powers is the only
named executive officer who participates in this plan.
|
37
Outstanding
Equity Awards at Fiscal Year End
The following table provides information on all restricted
stock, SAR, stock option, and performance share awards held by
the named executive officers of the Company and the value of
such holdings measured as of December 31, 2009. All
outstanding equity awards are in shares of the Companys
Class B Common Stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of
|
|
|
Market
|
|
|
No. of Unearned
|
|
|
Unearned
|
|
|
|
No. of
|
|
|
No. of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Value of
|
|
|
Shares, Units,
|
|
|
Shares, Units
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Shares or
|
|
|
or other
|
|
|
or other
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Stock that
|
|
|
Units that
|
|
|
Rights that
|
|
|
Rights that
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
have not
|
|
|
have not
|
|
|
have not
|
|
|
have not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)(1)
|
|
|
Date
|
|
|
(#)(2)
|
|
|
($)(3)
|
|
|
(#)(4)
|
|
|
($)(5)
|
|
|
T. H. Powers
|
|
|
100,000
|
|
|
|
0
|
|
|
|
30.74
|
|
|
|
06/06/11
|
|
|
|
26,518
|
|
|
$
|
1,254,301
|
|
|
|
44,613
|
|
|
$
|
2,110,195
|
|
|
|
|
200,000
|
|
|
|
0
|
|
|
|
36.20
|
|
|
|
12/01/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,000
|
|
|
|
0
|
|
|
|
44.31
|
|
|
|
11/30/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,000
|
|
|
|
0
|
|
|
|
47.95
|
|
|
|
12/05/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,319
|
|
|
|
0
|
|
|
|
49.755
|
|
|
|
12/05/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,763
|
|
|
|
0
|
|
|
|
52.85
|
|
|
|
12/04/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,723
|
|
|
|
28,361
|
|
|
|
54.56
|
|
|
|
12/03/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,392
|
|
|
|
108,786
|
|
|
|
29.275
|
|
|
|
12/01/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
78,767
|
|
|
|
46.96
|
|
|
|
12/07/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. G. Nord
|
|
|
26,400
|
|
|
|
0
|
|
|
|
49.755
|
|
|
|
12/05/15
|
|
|
|
7,177
|
|
|
|
339,473
|
|
|
|
12,008
|
|
|
|
567,979
|
|
|
|
|
23,767
|
|
|
|
0
|
|
|
|
52.85
|
|
|
|
12/04/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,080
|
|
|
|
7,540
|
|
|
|
54.56
|
|
|
|
12/03/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,403
|
|
|
|
28,807
|
|
|
|
29.275
|
|
|
|
12/01/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
21,933
|
|
|
|
46.96
|
|
|
|
12/07/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S. H. Muse
|
|
|
35,000
|
|
|
|
0
|
|
|
|
44.31
|
|
|
|
11/30/13
|
|
|
|
5,556
|
|
|
|
262,799
|
|
|
|
9,458
|
|
|
|
447,363
|
|
|
|
|
45,000
|
|
|
|
0
|
|
|
|
47.95
|
|
|
|
12/05/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,400
|
|
|
|
0
|
|
|
|
49.755
|
|
|
|
12/05/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,767
|
|
|
|
0
|
|
|
|
52.85
|
|
|
|
12/04/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,452
|
|
|
|
6,225
|
|
|
|
54.56
|
|
|
|
12/03/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,806
|
|
|
|
23,612
|
|
|
|
29.275
|
|
|
|
12/01/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
15,601
|
|
|
|
46.96
|
|
|
|
12/07/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. N. Amato
|
|
|
25,000
|
|
|
|
0
|
|
|
|
44.31
|
|
|
|
11/30/13
|
|
|
|
5,154
|
|
|
|
243,784
|
|
|
|
8,427
|
|
|
|
398,597
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
47.95
|
|
|
|
12/05/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,200
|
|
|
|
0
|
|
|
|
49.755
|
|
|
|
12/05/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,847
|
|
|
|
0
|
|
|
|
52.85
|
|
|
|
12/04/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,685
|
|
|
|
4,842
|
|
|
|
54.56
|
|
|
|
12/03/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,799
|
|
|
|
19,598
|
|
|
|
29.275
|
|
|
|
12/01/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
17,123
|
|
|
|
46.96
|
|
|
|
12/07/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. T. Tolley
|
|
|
40,000
|
|
|
|
0
|
|
|
|
36.200
|
|
|
|
12/01/12
|
|
|
|
4,305
|
|
|
|
203,626
|
|
|
|
7,060
|
|
|
|
333,938
|
|
|
|
|
45,000
|
|
|
|
0
|
|
|
|
44.310
|
|
|
|
11/30/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,448
|
|
|
|
0
|
|
|
|
49.755
|
|
|
|
12/05/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,570
|
|
|
|
0
|
|
|
|
52.850
|
|
|
|
12/04/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,301
|
|
|
|
4,150
|
|
|
|
54.560
|
|
|
|
12/03/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,146
|
|
|
|
16,293
|
|
|
|
29.275
|
|
|
|
12/01/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
14,269
|
|
|
|
46.960
|
|
|
|
12/07/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Options to acquire shares of Class B Common Stock of the
Company were granted at the fair market value of the
Class B Common Stock on the date of grant as set forth
under the Companys Option Plan. Options vest in one-third
increments on each anniversary of the date of grant or
immediately in the event of a change in control, as defined in
the Option Plan. Options were granted on June 7, 2001,
December 4, 2001, December 2, 2002, |
38
|
|
|
|
|
December 1, 2003 and December 6, 2004. SARs were
granted on and after December 5, 2005 under the
Companys 2005 Incentive Award Plan and entitle the
recipient to receive once vested the value in shares of the
Companys Class B Common Stock equal to the positive
difference between the base price and the fair market value of a
share of Class B Common Stock upon exercise. One-third of
the SARs vest and become exercisable each year on the
anniversary of the date of grant. SARs fully vest upon a change
in control, or termination of employment by reason of death or
disability. SARs were granted on December 5, 2005,
December 4, 2006, December 3, 2007, December 1,
2008 and December 7, 2009. |
|
(2) |
|
Represents restricted stock granted on the following dates, each
of which vests in three equal installments on the anniversary of
the grant date, with full vesting on a change in control, death
or disability. Unvested shares are forfeited upon termination of
employment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares or
|
|
|
|
|
Units of Stock That
|
Name
|
|
Award Grant Date
|
|
Have Not Vested (#)
|
|
T. H. Powers
|
|
|
12/07/09
|
|
|
|
11,020
|
|
|
|
|
12/01/08
|
|
|
|
11,804
|
|
|
|
|
12/03/07
|
|
|
|
3,694
|
|
D. G. Nord
|
|
|
12/07/09
|
|
|
|
3,069
|
|
|
|
|
12/01/08
|
|
|
|
3,126
|
|
|
|
|
12/03/07
|
|
|
|
982
|
|
S. H. Muse
|
|
|
12/07/09
|
|
|
|
2,183
|
|
|
|
|
12/01/08
|
|
|
|
2,562
|
|
|
|
|
12/03/07
|
|
|
|
811
|
|
G. N. Amato
|
|
|
12/07/09
|
|
|
|
2,396
|
|
|
|
|
12/01/08
|
|
|
|
2,127
|
|
|
|
|
12/03/07
|
|
|
|
630
|
|
W. T. Tolley
|
|
|
12/07/09
|
|
|
|
1,996
|
|
|
|
|
12/01/08
|
|
|
|
1,768
|
|
|
|
|
12/03/07
|
|
|
|
541
|
|
|
|
|
(3) |
|
The restricted share market value was determined based on the
closing market price of the Companys Class B Common
Stock on December 31, 2009, of $47.30. |
39
|
|
|
(4) |
|
Represents performance shares granted on the following dates,
for the stated performance periods, the actual payout of which
is based upon the satisfaction of performance criteria including
the Companys (i) relative performance against two
performance measures: total return to shareholders and operating
profit improvements (12/03/07 grant), and (ii) total return
to shareholders as compared to the total return to shareholders
for companies who comprise the Standard & Poors
Mid-Cap 400 Index (12/01/08 and 12/07/09 grants), more
specifically described under the section entitled
Long-Term Incentive Compensation (Equity) beginning
on page 27. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares or
|
|
|
|
|
|
|
Units of Stock That
|
Name
|
|
Award Grant Date
|
|
Performance Period
|
|
Have Not Vested (#)
|
|
T. H. Powers
|
|
|
12/07/09
|
|
|
|
01/01/10 - 12/31/12
|
|
|
|
13,309
|
|
|
|
|
12/01/08
|
|
|
|
01/01/09 - 12/31/11
|
|
|
|
20,014
|
|
|
|
|
12/03/07
|
|
|
|
01/01/08 - 12/31/10
|
|
|
|
11,290
|
|
D. G. Nord
|
|
|
12/07/09
|
|
|
|
01/01/10 - 12/31/12
|
|
|
|
3,706
|
|
|
|
|
12/01/08
|
|
|
|
01/01/09 - 12/31/11
|
|
|
|
5,300
|
|
|
|
|
12/03/07
|
|
|
|
01/01/08 - 12/31/10
|
|
|
|
3,002
|
|
S. H. Muse
|
|
|
12/07/09
|
|
|
|
01/01/10 - 12/31/12
|
|
|
|
2,636
|
|
|
|
|
12/01/08
|
|
|
|
01/01/09 - 12/31/11
|
|
|
|
4,344
|
|
|
|
|
12/03/07
|
|
|
|
01/01/08 - 12/31/10
|
|
|
|
2,478
|
|
G. N. Amato
|
|
|
12/07/09
|
|
|
|
01/01/10 - 12/31/12
|
|
|
|
2,893
|
|
|
|
|
12/01/08
|
|
|
|
01/01/09 - 12/31/11
|
|
|
|
3,606
|
|
|
|
|
12/03/07
|
|
|
|
01/01/08 - 12/31/10
|
|
|
|
1,928
|
|
W. T. Tolley
|
|
|
12/07/09
|
|
|
|
01/01/10 - 12/31/12
|
|
|
|
2,411
|
|
|
|
|
12/01/08
|
|
|
|
01/01/09 - 12/31/11
|
|
|
|
2,997
|
|
|
|
|
12/03/07
|
|
|
|
01/01/08 - 12/31/10
|
|
|
|
1,652
|
|
|
|
|
(5) |
|
The market value of the unearned shares is based upon the
closing market price of the Companys Class B Common
Stock on December 31, 2009, of $47.30. |
40
Option
Exercises and Stock Vested During Fiscal Year 2009
The following table provides information on the number of shares
acquired and the value realized by the named executive officers
during fiscal year 2009 on the exercise of SARs and stock
options, and on the vesting of restricted stock and performance
shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
No. of
|
|
|
|
|
|
No. of
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
|
on Exercise
|
|
|
Upon Exercise
|
|
|
on Vesting
|
|
|
Upon Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
T. H. Powers
|
|
|
|
|
|
|
|
|
|
|
13,017
|
|
|
$
|
606,626(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
16,366
|
|
|
|
734,719(2
|
)
|
D. G. Nord
|
|
|
|
|
|
|
|
|
|
|
3,430
|
|
|
|
159,839(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
4,239
|
|
|
|
190,162(2
|
)
|
S. H. Muse
|
|
|
|
|
|
|
|
|
|
|
2,978
|
|
|
|
138,839(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
4,239
|
|
|
|
190,162(2
|
)
|
G. N. Amato
|
|
|
|
|
|
|
|
|
|
|
2,172
|
|
|
|
101,167(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
2,291
|
|
|
|
102,774(2
|
)
|
W. T. Tolley
|
|
|
|
|
|
|
|
|
|
|
1,990
|
|
|
|
92,760(1
|
)
|
|
|
|
(1) |
|
The value realized upon the vesting of restricted stock is
calculated based on the closing market price of the
Companys Class B Common Stock on the following
vesting dates: December 4, 2009 $47.00,
December 3, 2009 $46.59, and December 1,
2009 $46.38. |
|
(2) |
|
The value realized upon the vesting of performance shares is
calculated based on the closing market price of the
Companys Class B Common Stock on February 11,
2010 of $44.86, the date the performance shares were delivered,
based on satisfaction of the performance goals, for the
performance period ending December 31, 2009. |
41
Retirement
Plans
The following table provides information related to the
potential benefits payable to each named executive officer under
the Companys Basic Plan (tax qualified retirement plan)
and the Restoration Plan, Management Plan and Executive Plan
(each of its supplemental non-qualified retirement plans,
collectively, the Supplemental Plans), which are
unfunded.
Pension
Benefits in Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
|
|
|
No. of
|
|
|
Present Value
|
|
|
During
|
|
|
|
|
|
Years Credited
|
|
|
of Accumulated
|
|
|
the Last
|
|
|
|
|
|
Service
|
|
|
Benefit
|
|
|
Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
|
($)(1)
|
|
|
($)
|
|
|
T. H. Powers
|
|
Basic Plan
|
|
|
11.25
|
|
|
$
|
319,568
|
|
|
$
|
|
|
|
|
Restoration Plan
|
|
|
11.25
|
|
|
|
3,001,485
|
|
|
|
|
|
|
|
Executive Plan
|
|
|
11.25
|
|
|
|
14,190,819
|
|
|
|
|
|
D. G. Nord
|
|
Executive Plan
|
|
|
4.25
|
|
|
|
1,390,675
|
|
|
|
|
|
S. H. Muse
|
|
Basic Plan
|
|
|
16.25
|
|
|
|
237,428
|
|
|
|
|
|
|
|
Restoration Plan
|
|
|
16.25
|
|
|
|
459,512
|
|
|
|
|
|
|
|
Executive Plan
|
|
|
7
|
|
|
|
1,390,332
|
|
|
|
|
|
G. N. Amato
|
|
Basic Plan
|
|
|
21.67
|
|
|
|
600,529
|
|
|
|
|
|
|
|
Restoration Plan
|
|
|
21.67
|
|
|
|
932,566
|
|
|
|
|
|
|
|
Management Plan
|
|
|
2.25
|
|
|
|
372,508
|
|
|
|
|
|
W. T. Tolley
|
|
Basic Plan
|
|
|
7.83
|
|
|
|
118,847
|
|
|
|
|
|
|
|
Restoration Plan
|
|
|
7.83
|
|
|
|
101,326
|
|
|
|
|
|
|
|
Management Plan
|
|
|
2.25
|
|
|
|
218,943
|
|
|
|
|
|
|
|
|
(1) |
|
For the Basic Plan and Supplemental Plans, the present value of
accrued benefits at December 31, 2009 are determined based
on a 6.00% discount rate and PPA 2009 and 2010 Optional Combined
tables (gender distinct). Participants are assumed to retire at
age 62. |
Narrative
Disclosure to Pension Benefits Table
Messrs. Powers and Muse are eligible to earn pension
benefits under the Basic Plan, Executive Plan and Restoration
Plan. Mr. Nord is eligible to earn pension benefits under
the Contribution Plan and the Executive Plan.
Messrs. Tolley and Amato are eligible to earn pension
benefits under the Basic Plan, Management Plan and Restoration
Plan.
The Basic Plan provides for participation by all regular
full-time salaried employees who were employed by covered
Company units on December 31, 2003. The annual benefits
under the Basic Plan are calculated under two formulas: one in
effect prior to January 1, 2004, and the other in effect on
and after January 1, 2004. Benefits earned prior to 2004
are calculated as 1.50% of final compensation per year of
Company service through December 31, 2003, which includes
both basic compensation and short-term incentive awards, reduced
by 1.50% of primary social security benefit per year of service
through December 31, 2003. For service after 2003, benefits
are calculated as .85% of final average compensation which
includes both basic compensation and short-term incentive
awards,
42
plus .65% of final average compensation in excess of an average
social security wage base for each year of service earned after
2003, up to 35 years, plus 1.10% of final average
compensation in excess of 35 years. However, participants
in the Basic Plan who were age 50 and had 10 or more years
of service as of December 31, 2003 will have benefits
earned after 2003 calculated under the formula as in effect
before 2003 or after 2004, depending on which produces a higher
benefit. Early retirement benefits are available to participants
who have reached age 55 and accrued at least 10 years
of service; early retirement benefits are calculated under the
same formula as normal retirement benefits, but reduced by 0.6%
for each month by which the participants early retirement
is after age 60, but before age 65 and 0.3% for each
month by which the participants early retirement precedes
age 60. Lump sum payments cannot be elected under the Basic
Plan. Benefits under the Restoration Plan are calculated in the
same manner as benefits under the Basic Plan, but without regard
to any limits on compensation or benefit accruals that may apply
under the Basic Plan as required by the tax-qualified plan rules.
The Executive Plan provides senior management executives the
opportunity to earn pension benefits supplementing those earned
under the Basic Plan. Executive Plan benefits are calculated as
6% of final total compensation (basic compensation and
short-term incentive awards as reflected in the Salary and
Non-Equity Incentive Plan Compensation columns under the Summary
Compensation Table on pages 34 and 35 hereof) per year of
service under the Executive Plan up to a maximum of 60%, offset
by benefits payable under the Basic Plan and Restoration Plan,
or in the case of Mr. Nord the actuarial equivalent value
of his account balance under the Contribution Plan attributable
to a discretionary profit sharing contribution. Early retirement
benefits are available to participants who elect to retire on or
after age 55; early retirement benefits are calculated
under the same formula as normal retirement benefits except that
the early retirement benefit is based upon the
participants years of service up to the participants
actual early retirement date reduced by 0.3% for each month by
which the participants early retirement precedes
age 62 and by an additional 0.2% for each month by which
the participants early retirement precedes age 60.
Except as otherwise provided, for certain Executive Plan
participants who have entered into Continuity Agreements with
the Company (discussed below, in the Potential
Post-Employment and Change in Control Payments section on
page 45), no benefit is payable under the Executive Plan if
a participant terminates employment prior to age 55 with
less than 10 years of service under the Executive Plan (but
such participant may be entitled to a benefit under the
Restoration Plan). Executive Plan benefits are payable based on
a 50% joint and survivor form of annuity distribution, except
that benefits are paid out as a lump sum upon a change in
control event, as defined in the Executive Plan, or in the
case of a benefit valued under $10,000. Participation in the
Executive Plan is at the sole discretion of the Compensation
Committee which closed the Plan to new participants in 2007.
Benefits under the Management Plan are calculated as 3% of the
difference between the participants average highest three
years of compensation in the ten years prior to retirement (or
if less the total number of years) over the participants
Social Security benefit, times the participants years of
service under the Management Plan, plus the amount of benefit
accrued under the Basic Plan and Restoration Plan through the
date participation in the Management Plan began (subject to a
maximum of 60% of average highest three years compensation),
less benefits under Basic Plan and Restoration Plan for all
years of service or if applicable the actuarial equivalent value
of his account balance under the Contribution Plan attributable
to a discretionary profit sharing contributions. Early
retirement benefits are available to participants who elect to
retire on or after age 55; early retirement benefits are
calculated under the same formula as normal retirement benefits
except that the early retirement benefit is based upon the
participants years of service up to the participants
actual early retirement date reduced by 0.3% for each month by
which the participants early retirement precedes
age 65 and by an additional 0.2% for each month by which
the participants early retirement precedes age 60.
Except as otherwise provided, for certain Management
43
Plan participants who have entered into Continuity Agreements
with the Company (discussed below, in the Potential
Post-Employment and Change in Control Payments section on
page 45), no benefit is payable under the Management Plan
if a participant terminates employment prior to age 55 with
less than 5 years of service under the Management Plan (but
such a participant may be entitled to a benefit under the
Restoration Plan). Management Plan benefits are payable based on
a life annuity distribution except for benefits are paid out as
a lump sum upon a change in control event, as
defined in the Management Plan. Married participants also will
have a death benefit equal to 50% of their annuity payable to
their spouse for the spouses life, in the event that the
participant dies. Participation in the Management Plan is at the
sole discretion of the Compensation Committee.
Non-Qualified
Deferred Compensation
The following table provides information related to the benefits
payable to each named executive officer under the Companys
Executive Deferred Compensation Plan (EDCP)
discussed below.
Non-Qualified
Deferred Compensation in Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings in
|
|
|
Withdrawals/
|
|
|
Balance at
|
|
Name
|
|
in 2009 ($)(1)
|
|
|
in 2009 ($)(2)
|
|
|
Last FY ($)
|
|
|
Distributions ($)
|
|
|
12/31/09 ($)
|
|
|
T. H. Powers
|
|
$
|
306,900
|
|
|
|
|
|
|
$
|
85,669
|
|
|
|
|
|
|
$
|
1,020,319
|
|
D. G. Nord
|
|
|
166,551
|
|
|
|
|
|
|
|
94,290
|
|
|
|
|
|
|
|
457,401
|
|
S. H. Muse
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. N. Amato
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. T. Tolley
|
|
|
|
|
|
|
|
|
|
|
27,554
|
|
|
|
|
|
|
|
107,663
|
|
|
|
|
(1) |
|
Messrs. Powers and Nord elected to defer their 2010
short-term incentive awards into the EDCP. Mr. Powers
elected to defer 30% and Mr. Nord elected to defer 50% of
the amount that is shown in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table on page
34. These amounts were earned and deferred for services in 2009,
but contributed to the EDCP in February 2010. |
|
(2) |
|
Although the EDCP allows for a discretionary contribution by the
Company, no such contribution was made for 2009. |
Narrative
Disclosure to the Non-Qualified Deferred Compensation
Table
In 2007, the Company adopted the EDCP as a means of allowing
selected individuals to defer up to 50% of their annual
short-term incentive compensation. Individuals are selected to
participate in the EDCP by the Compensation Committee each year.
Elections to defer into the EDCP must be made by December 31 of
the year prior to the year in which the short-term incentive
compensation is earned. As a result, elections to defer 2009
short-term incentive compensation were made by December 31,
2008. The Company, in its discretion, may also contribute to the
EDCP for participants. Participants are 100% vested in all
deferrals which they contribute to the EDCP. If the Company
contributes to the EDCP, it may require such contributions to be
subject to vesting, or other restrictions as it may determine at
that time. Amounts deferred into the EDCP are invested at the
discretion of the participant in such mutual funds as the
Compensation Committee may select as being available under the
EDCP. At the time of deferral, the participant also elects the
date on which distribution of deferrals (any Company
44
contributions) for that year and earnings thereon are to be
distributed. Distributions can be made at anytime while the
participant remains an employee (but no sooner than two years
after the year for which the deferral is made), upon separation
from service or upon a change in control. Distributions upon
separation from service may be made in lump sum or installments
over 5, 10 or 15 years, as elected by the participant at
the time of deferral. In service distributions and distributions
made upon a change in control are made in a lump sum.
Participants may also access their accounts under the EDCP in
the event of an unforeseen emergency.
Potential
Post-Employment and Change in Control Payments
The table below is intended to reflect only estimated
incremental post-termination payments payable to a named
executive officer in the event of termination of employment due
to death, disability, involuntary termination without cause, or
a change in control. No incremental amounts are payable upon
voluntary termination of employment or termination for cause,
accordingly these scenarios are not contained in the table. The
benefits payable to the named executive officers under the four
termination scenarios are provided in accordance with the terms
of the plans and agreements described in the narrative following
this table. Accordingly, the amounts in the table DO NOT include:
|
|
|
|
|
Any value that would be realized upon the exercise of vested
SARs or stock options.
|
|
|
|
The estimated value of vested and accrued pension benefits that
would be received upon any termination of employment under the
Companys pension plans except to the extent of additional
service or compensation to which the individual may be entitled
as a result of the arrangements described under Continuity
Agreements in the narrative following this table (the
estimated value of vested and accrued pension benefits are
provided above in the section entitled Retirement
Plans and in the table Pension Benefits in Fiscal
Year 2009 on page 42).
|
The amounts presented in the following table are estimates only
and do not necessarily reflect the actual value of the payments
and other benefits that would be received by the named executive
officers, which would be known only at the time employment
actually terminates and if a change in control were actually to
occur. The amounts set forth below reflect what each named
executive officer would receive under the termination scenarios
set forth above using the following assumptions:
|
|
|
|
|
Termination of employment or change in control, as applicable,
occurred on December 31, 2009.
|
|
|
|
Exercised all unvested SARs and received all restricted stock
and performance shares that became vested upon death,
disability, or a change in control, the value of which was
calculated using the closing market price of the Companys
Class B Common Stock on December 31, 2009, of $47.30.
|
|
|
|
Declared by the Compensation Committee to have incurred a Total
Disability (as defined under the Executive Plan or Management
Plan, as applicable) for purposes of calculating amounts due to
the executive for termination based on disability.
|
|
|
|
There was no discretionary allowance for outplacement services
under the Companys severance policy.
|
45
Post-Employment
and Change in Control Payment Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Awards
|
|
|
Retirement
|
|
|
Tax Gross
|
|
|
|
|
|
|
|
|
|
with
|
|
|
Plan Benefits
|
|
|
Up and
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
(Qualified and
|
|
|
Welfare
|
|
|
|
|
|
|
Severance
|
|
|
Vesting
|
|
|
Non-Qualified)
|
|
|
Benefits
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)
|
|
|
($)
|
|
|
T. H. Powers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
5,352,145
|
|
|
|
|
|
|
|
|
|
|
|
5,352,145
|
|
Disability
|
|
|
|
|
|
|
5,352,145
|
|
|
|
1,555,034
|
|
|
|
|
|
|
|
6,907,179
|
|
Involuntary Termination
|
|
|
796,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
796,925
|
|
Change in Control
|
|
|
7,756,075
|
|
|
|
5,352,145
|
|
|
|
4,194,143
|
|
|
|
6,523,809
|
|
|
|
23,826,172
|
|
D. G. Nord
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
1,434,155
|
|
|
|
|
|
|
|
|
|
|
|
1,434,155
|
|
Disability
|
|
|
|
|
|
|
1,434,155
|
|
|
|
6,310,590
|
|
|
|
|
|
|
|
7,744,745
|
|
Involuntary Termination
|
|
|
111,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,122
|
|
Change in Control
|
|
|
2,993,098
|
|
|
|
1,434,155
|
|
|
|
3,402,330
|
|
|
|
3,323,061
|
|
|
|
11,152,644
|
|
S. H. Muse
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
1,141,073
|
|
|
|
|
|
|
|
|
|
|
|
1,141,073
|
|
Disability
|
|
|
|
|
|
|
1,141,073
|
|
|
|
4,328,181
|
|
|
|
|
|
|
|
5,469,254
|
|
Involuntary Termination
|
|
|
531,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
531,873
|
|
Change in Control
|
|
|
1,829,267
|
|
|
|
1,141,073
|
|
|
|
4,753,284
|
|
|
|
3,825,625
|
|
|
|
11,549,249
|
|
G. N. Amato
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
1,001,457
|
|
|
|
|
|
|
|
|
|
|
|
1,001,457
|
|
Disability
|
|
|
|
|
|
|
1,001,457
|
|
|
|
965,562
|
|
|
|
|
|
|
|
1,967,019
|
|
Involuntary Termination
|
|
|
599,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
599,037
|
|
Change in Control
|
|
|
1,849,863
|
|
|
|
1,001,457
|
|
|
|
2,551,215
|
|
|
|
2,666,682
|
|
|
|
8,069,217
|
|
W. T. Tolley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
836,097
|
|
|
|
|
|
|
|
|
|
|
|
836,097
|
|
Disability
|
|
|
|
|
|
|
836,097
|
|
|
|
1,248,600
|
|
|
|
|
|
|
|
2,084,697
|
|
Involuntary Termination
|
|
|
226,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
226,104
|
|
Change in Control
|
|
|
1,545,510
|
|
|
|
836,097
|
|
|
|
1,244,711
|
|
|
|
1,530,397
|
|
|
|
5,156,715
|
|
|
|
|
(1) |
|
Severance amounts for (a) involuntary termination were
calculated in accordance with the terms of the Companys
severance policy, and (b) change in control were calculated
in accordance with the terms of the named executive
officers Continuity Agreement, both of which are discussed
below. |
|
(2) |
|
Calculated in accordance with the terms of the named executive
officers long-term incentive award grants discussed below
on page 49. |
|
(3) |
|
Calculated as of December 31, 2009 based on a 6.00%
discount rate and using the disability mortality table published
in Internal Revenue Ruling
96-7. This
table assumes a different life expectancy than the PPA 2009
Optional Combined tables used to calculate the present value of
accumulated benefits under the Companys retirement plans.
In the event of disability, the incremental retirement plan
benefit was calculated by subtracting from the disability
benefit the vested accrued benefit under the qualified and
non-qualified plans as of December 31, 2009. |
46
Narrative
to Post-Employment and Change in Control Payment Table
Severance
Policy
The Company has a severance policy which covers the named
executive officers, as well as other officers and individuals
(Eligible Individual(s)). The severance policy
provides that if an Eligible Individuals employment is
terminated (other than for cause and not in connection with a
change in control), the Eligible Individual is entitled to
receive salary continuation equal to 4 weeks of base salary
for each full year of service, subject to a minimum of
13 weeks and a maximum of 78 weeks. In addition, upon
such termination of employment, the Eligible Individual is
entitled to continued group life, medical and dental benefits
for the salary continuation period and a discretionary allowance
for outplacement services.
The severance policy also provides benefits to Eligible
Individuals in the event of a change in control, or if the
Eligible Individual terminates employment for good reason within
three years of a change of control. In such scenario, the
Eligible Individual would be entitled to receive the present
value (discounted at 120% of the short term federal rate) of the
severance amounts provided under the policy. The formula in the
case of corporate officers is based upon 4 weeks of base
salary continuation for each full year of service, subject to a
minimum of 13 weeks and a maximum of 104 weeks, with
the formula amount reduced by 67% and 33%, respectively, if
termination occurs in the second and third year following the
change of control event. In addition, upon such termination of
employment, the Eligible Individual would be entitled to
(a) a short-term incentive award of no less than the
individuals STI Target for the year in which the change of
control occurs, pro rated for the number of months to such
termination, and (b) for the period the base salary would
have been continued even though paid as a lump sum
(i) various medical and health plans, and (ii) death
benefits. The reasons for which the Eligible Individual may
terminate employment include: diminution in authority, reduction
in compensation level, relocation, or adverse modification of
benefits under short-term incentive compensation, benefit or
similar plans.
However, if a named executive officer is entitled to receive
change in control benefits under a Continuity Agreement
(discussed below), such executive is not also eligible to
receive severance benefits under the Companys severance
policy. On the other hand, if the termination of a named
executive officer is not in connection with a change in control,
the named executive officer is entitled to receive the benefits
under the Companys severance policy.
Continuity
Agreements
The Company is a party to agreements with the named executive
officers which provide severance benefits in the event of a
termination of employment following certain change in
control events (the Continuity Agreements). A
change in control is generally defined as a change
in the majority of the Companys Board of Directors during
any 12 month period, the acquisition by a party directly or
indirectly of 30% or more of the voting power of the Company, a
sale of substantially all of the Companys assets, the
acquisition by a party of more than 50% of either the voting
power of the Company or the fair market value of the
Company). The granting of a Continuity Agreement and the
terms contained therein requires the approval of the Board of
Directors, upon recommendation of the Compensation Committee. In
the event a change in control occurs, under the provisions of
the Continuity Agreements, the terminated executive would
receive the following benefits:
|
|
|
|
|
A lump sum amount equal to three times the sum of the
executives annual base salary and annual short-term
incentive award (as calculated under the Continuity Agreements).
|
47
|
|
|
|
|
A pro-rated portion of the executives annual STI Target
for the year in which termination occurs.
|
|
|
|
Enhanced Supplemental Plan Benefits. In particular, an executive
who receives benefits under a Continuity Agreement will become
entitled to Supplemental Plan benefits regardless of age and
years of service. For the named executive officers other than
Messrs. Amato and Tolley, their Supplemental Plan benefits
will also be calculated based on the executives full years
of service, but if the executives service is less than
five years, the executive will be credited with at least five
years of service. Messrs. Amatos and Tolleys
Supplemental Plan benefits will be calculated based on
81/3 years
and 5 years of service, respectively. Additionally, none of the
executives Supplemental Plan benefits will be reduced
actuarially for early payment.
|
|
|
|
Outplacement services at a cost to the Company not exceeding 15%
of the executives annual base salary.
|
|
|
|
Medical, dental, vision and life insurance coverage under the
Companys benefit plans for up to 36 months after
termination.
|
|
|
|
All other accrued or vested benefits which the executive is
entitled to under benefit plans in which the executive
participates (offset by any corresponding benefits under the
Continuity Agreements).
|
|
|
|
A gross-up
payment from the Company to cover any excise taxes (and any
income taxes on the
gross-up
amount) imposed on these severance payments and benefits as a
result of their being paid in connection with a change in
control. The Company will not provide a
gross-up
payment to cover any excise taxes if the total value of the
gross-up
payments and benefits is less than $50,000 higher than the
greatest amount which could be paid without being subject to
excise taxes (in which event such payments and benefits will be
reduced by the amount of the excess).
|
No benefits are payable under the Continuity Agreements if a
named executive officer is terminated for cause
which includes (a) continued and willful failure to perform
the executives duties after receipt of a written demand to
perform, (b) gross misconduct materially and demonstrably
injurious to the Company and (c) conviction of, or plea of
nolo contendere to, a felony, or if the named executive
officer terminates employment other than for good
reason which includes (a) material and adverse
diminution in the executives duties and responsibilities,
(b) reduction in cash compensation or failure to annually
increase base salary, (c) relocation of the
executives workplace to a location that is more than
35 miles from the executives workplace as of the date
immediately prior to the change in control, and (d) in the
case of Mr. Powers, any election to terminate employment
during a
thirty-day
period following the first anniversary of the change in control
or following his
65th
birthday.
Mr. Powers is allowed to terminate his employment
voluntarily during any thirty day period following the first
anniversary of a change in control. This provision was designed
to require the Companys highest level executive to stay on
for at least a year (or, if earlier to
age 65) following a change in control. At the time
Mr. Powers originally entered into his Continuity
Agreements in 1999, the Company believed that a change in
control would likely result in an immediate adverse diminution
of his duties or status, thus he would immediately have a
constructive termination and would be able to receive severance
benefits at such time. However, upon further review in 2005, the
Company thought that the continued services of management might
be desirous following a change in control in order to provide
for a better transition. Accordingly, in 2005 his agreement was
modified to provide that no diminution of duties would be deemed
to have occurred solely due to the Company ceasing to be a
public company or becoming a wholly owned subsidiary of another
company, thereby eliminating an automatic constructive
termination just by reason of a change in control. In addition,
Mr. Powers was allowed the right to terminate his
48
employment for any reason during the thirty day period following
the first anniversary of a change in control, which preserved
his walk away rights and still provided any acquirer with a
possible transition of services. Mr. Powers also has the
right to terminate at sixty-five if earlier, as that was a
provision his predecessor had under his Continuity Agreement and
the Board wanted to ensure that Mr. Powers agreement
was substantially similar to his predecessors.
The Company has established a grantor trust to secure the
benefits to be provided under the Continuity Agreements, the
Executive Plan, Management Plan and Restoration Plan, and other
plans maintained by the Company for the benefit of members of
the Companys senior management. The trust was unfunded at
December 31, 2009.
LTI
Plans
The Companys LTI Plans provide for the accelerated vesting
of all restricted stock, SARs, stock options (other than
incentive stock options granted on or after January 1,
1987) and performance share awards in the event of a
change of control as defined in the LTI Plans.
In the event of retirement, a named executive officer who is
minimum age 55 plus years of service equals 70 is entitled
to an extended vesting and exercise period for their unvested
performance shares and SARs. In the case of stock options, a
named executive officer who is deemed to have retired with the
consent of the Company is also eligible for an extended vesting
and exercise period. The following table sets forth the exercise
periods for performance shares, SARs and stock options upon the
termination of a named executive officer with and without
extended vesting and exercisability:
|
|
|
|
|
|
|
Exercise Period
|
|
Exercise Period
|
Award Type
|
|
(Without Extended Vesting)
|
|
(With Retirement Extended Vesting)
|
|
Performance Shares(1)
|
|
Unvested performance shares forfeited.
|
|
Entitled to receive pro-rata portion of shares named executive
officer would have received had he or she not retired.
|
SARs
|
|
Exercisable until the earlier of: (i) 90 days following
date of termination of employment, or (ii) the tenth anniversary
of the grant date.
|
|
Exercisable until the tenth anniversary of the grant date.
|
Stock Options
|
|
Exercisable until the earlier of: (i) the date of expiration
stated in the grant, or (ii) the close of business 3 months
after the date of termination of employment.
|
|
Grants made prior to 2004, exercisable until later of: (i)
3 years after date of retirement, or (ii) 12 months
after death if death occurs within 3 years after the date
of retirement. However, not later than exercise period stated in
grant. Grants made in 2004 exercisable until the tenth
anniversary of the grant date.
|
|
|
|
(1) |
|
Assumes satisfaction of performance criteria. |
49
Supplemental
Benefit Plans
Certain provisions of the Executive Plan and Management Plan do
not take effect until the occurrence of certain change of
control events. Among others, provisions in the Executive Plan
and Management Plan providing for the (i) suspension,
reduction or termination of benefits in cases of gross
misconduct by a participant (as determined in the sole
discretion of the Compensation Committee); (ii) forfeiture
of benefits if a retired participant engages in certain
proscribed competitive activities; (iii) reduction in
benefits upon the early retirement of a participant; and
(iv) offset of amounts which a participant may then owe the
Company against amounts then owing the participant under the
Executive Plan and Management Plan are automatically deleted
upon the occurrence of a change of control event. In addition,
neither a participants years of service with the Company
(as calculated for the purpose of determining eligibility for
Supplemental Plan benefits ), nor Supplemental Plan benefits
accrued prior to the change of control event, may be reduced
after the occurrence of a change of control event. If a
participants employment is terminated after a change of
control, their Supplemental Plan benefits will be paid in a lump
sum (utilizing actuarial assumptions established in the
Executive Plan and Management Plan) on the 10th day of the
seventh month following their termination.
Compensation
of Directors
The Nominating and Corporate Governance Committee annually
reviews the status of the Companys Non-Management Director
compensation in relation to other U.S. companies of
comparable size and the Companys competitors. Such review
considers all forms of compensation for the Companys
Non-Management Directors. The Nominating and Corporate
Governance Committee is supported in this review by Exequity,
who provides compensation consultation and competitive
benchmarking. Following the review, the Nominating and Corporate
Governance Committee recommends any changes in Non-Management
Director compensation to the Chairman of the Board, who places
such proposal on the agenda for the Boards next meeting.
After a full discussion, the Board approves or disapproves the
Nominating and Corporate Governance Committees
recommendation.
50
The following table provides information concerning the
aggregate cash and other compensation paid to or accrued by the
Company for Non-Management Directors for service rendered on the
Companys Board of Directors during fiscal year 2009.
Mr. Powers receives no compensation beyond that described
above for his service as a Director.
Director
Compensation Table for Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)(4)(5)
|
|
|
($)
|
|
|
E. Richard Brooks
|
|
|
116,000
|
|
|
$
|
25,106
|
|
|
$
|
318
|
|
|
$
|
141,424
|
|
George W. Edwards, Jr.
|
|
|
120,000
|
|
|
|
25,106
|
|
|
|
1,093,712
|
|
|
|
1,238,818
|
|
Lynn J. Good
|
|
|
52,616
|
|
|
|
|
|
|
|
159
|
|
|
|
52,775
|
|
Anthony J. Guzzi
|
|
|
106,000
|
|
|
|
25,106
|
|
|
|
4,318
|
|
|
|
135,424
|
|
Joel S. Hoffman
|
|
|
110,000
|
|
|
|
25,106
|
|
|
|
1,086,546
|
|
|
|
1,217,652
|
|
Andrew McNally IV
|
|
|
120,000
|
|
|
|
25,106
|
|
|
|
2,631,018
|
|
|
|
2,776,124
|
|
G. Jackson Ratcliffe
|
|
|
110,000
|
|
|
|
25,106
|
|
|
|
3,518
|
|
|
|
138,624
|
|
Carlos A. Rodriguez
|
|
|
58,616
|
|
|
|
|
|
|
|
159
|
|
|
|
58,775
|
|
Richard J. Swift
|
|
|
98,000
|
|
|
|
25,106
|
|
|
|
4,318
|
|
|
|
127,424
|
|
Daniel S. Van Riper
|
|
|
115,500
|
|
|
|
25,106
|
|
|
|
369,006
|
|
|
|
509,612
|
|
|
|
|
(1) |
|
Includes the following amounts deferred and held under the
Companys Deferred Plan for Directors:
Mr. Brooks $58,000, Mr. Guzzi
$106,000, Mr. Hoffman $22,000,
Mr. Swift $60,000, and Mr. Van
Riper $115,500. |
|
(2) |
|
Amounts shown represent the grant date fair value of
750 shares of restricted stock granted to each Director
(except for Ms. Good and Mr. Rodriguez who were
appointed to the Board in June 2009) at the Companys
May 4, 2009 Annual Meeting of Shareholders as computed in
accordance with FASB ASC Topic 718. For a discussion of the
assumptions made in the valuation reflected in these columns,
see Note 18 to the Consolidated Financial Statements for
2009 contained in the Companys
Form 10-K
filed with the SEC on February 19, 2010. Such shares are
forfeitable if the Directors service terminates for
reasons other than death prior to the regularly scheduled Annual
Meeting of Shareholders to be held on May 3, 2010. Such
shares also vest and become nonforfeitable in full upon a
Directors death or a change in control (as defined in the
2005 Incentive Award Plan). Except for stock units under the
Companys Deferred Plan for Directors, none of the
Non-Management Directors hold any other form of equity
compensation. |
51
The following represents stock units (each stock unit consisting
of one share each of Class A Common Stock and Class B
Common Stock) held by each Non-Management Director under the
Companys Deferred Plan for Directors:
|
|
|
|
|
|
|
Aggregate No. of
|
|
|
Stock Units Held
|
|
|
at Year End
|
|
|
(#)
|
|
E. Richard Brooks
|
|
|
10,292
|
|
George W. Edwards, Jr.
|
|
|
|
|
Lynn J. Good
|
|
|
|
|
Anthony J. Guzzi
|
|
|
4,055
|
|
Joel S. Hoffman
|
|
|
10,699
|
|
Andrew McNally IV
|
|
|
|
|
G. Jackson Ratcliffe
|
|
|
|
|
Carlos A. Rodriguez
|
|
|
|
|
Richard J. Swift
|
|
|
3,977
|
|
Daniel S. Van Riper
|
|
|
1,633
|
|
|
|
|
(3) |
|
Includes the Companys payment of $318 for life and
business travel accident insurance premiums for each Director,
except for Ms. Good and Mr. Rodriguez whose payments
were prorated to $159 to reflect six months of insurance
coverage following their appointment to the Board in June 2009. |
|
(4) |
|
Includes a Company matching contribution to an eligible
educational institution under The Harvey Hubbell Foundation
Educational Matching Gifts Program in the following amounts:
Mr. Edwards $4,000, Mr. Guzzi
$4,000, Mr. Hoffman $4,000,
Mr. McNally $4,000,
Mr. Ratcliffe $3,200, and
Mr. Swift $4,000. |
|
(5) |
|
Includes the following lump sum distribution under the Deferred
Plan for Directors which consisted of stock (valued using the
closing price of Class B Common Stock on the date of
distribution) and/or cash: : Mr. Edwards
$1,093,394, Mr. Hoffman $1,082,228,
Mr. McNally $2,630,700 and Mr. Van
Riper $368,688. |
Narrative
to Director Compensation Table
Annual
Compensation
Annual compensation for each Non-Management Director for 2009
consisted of the following:
|
|
|
|
|
A retainer of $60,000
|
|
|
|
An additional retainer of $10,000 for each Committee Chair
|
|
|
|
Board and Board Committee meeting fees of $2,000
|
|
|
|
A restricted share grant of 750 shares of Class B
Common Stock after each annual meeting of shareholders which
will vest at the next years annual meeting of shareholders
provided that the director is still serving as a director at the
time of the meeting. The 2009 share grant was made on
May 4, 2009, the date of the annual meeting of
shareholders, to each Non-Management Director who was re-elected
or first elected to the Board, subject to forfeiture if the
Directors service terminates other than by reason of death
prior to the date of the next regularly scheduled annual meeting
of shareholders.
|
52
On February 12, 2010, the compensation payable to
Non-Management Directors for their services was changed to
increase the restricted share grant of 750 shares to
1,750 shares of Class B Common Stock of the Company
each year. Commencing in 2010, each Non-Management Director who
is re-elected, or first elected to the Board will receive a
grant of 1,750 shares of Class B Common Stock each
year on the date of the annual meeting of shareholders, which
shares will be subject to forfeiture if the Directors
service terminates other than by reason of death prior to the
date of the next regularly schedule annual meeting of
shareholders to be held in the following calendar year.
Deferred
Plan for Directors
The Company and all current Directors (other than
Messrs. Powers and Ratcliffe) have entered into an
agreement to defer receipt of all or a portion of such fees
pursuant to a deferred compensation agreement providing for
payment of the fees in stock units (each stock unit consisting
of one share each of the Companys Class A Common
Stock and Class B Common Stock) or credited with interest
at the prime rate as in effect at the Companys principal
commercial bank on the date immediately following the quarterly
directors meeting, subject to certain terms and conditions
of the Companys Deferred Plan for Directors under which
the fees are deferred. Messrs. Edwards and McNally no
longer defer such fees, having exceeded the Companys stock
ownership guidelines described below. In 2008, Directors were
given a one-time election to receive all or part of their
accounts under the Deferred Plan for Directors in 2009.
Otherwise a Directors accounts are paid only after
termination of his service with the Company. Dividend
equivalents are paid on the stock units and are converted into
additional stock units. Distributions are made in either a lump
sum or in installment payments, at the Directors election.
Certain provisions of the Companys Deferred Plan for
Directors do not take effect until the occurrence of certain
change of control events, as defined in the plan.
After the occurrence of a change of control event, the plan may
not be amended without the prior written consent of an affected
participant and no termination of the plan shall have the effect
of reducing any benefits accrued under the plan prior to such
termination. Further, in the event of a change of control, all
amounts credited to a Directors account shall be paid in a
lump sum, with amounts credited as stock units immediately
converted into a right to receive cash. If the Board anticipates
a change in control occurring, then the Companys Deferred
Plan for Directors requires the Company to fund a grantor trust
for the purpose of holding assets in respect of the
Companys obligations to make payments, after a change of
control. The Company has established a grantor trust to secure
the benefits to be provided under the Companys Deferred
Plan for Directors, but has yet to fund any such benefits into
the trust.
Stock
Ownership Guidelines for Directors
The Company has adopted stock ownership guidelines for
Directors. Under these guidelines, all Directors shall make a
good faith effort to own, or acquire within five (5) years
of first becoming subject to the stock ownership guidelines,
shares of common stock of the Company (including share units
under the Companys Deferred Plan for Directors, or any
successor plan) having a market value, based upon the aggregate
purchase price, of at least three (3) times the average
base annual retainer paid to such Director in the following five
(5) years. In addition, Directors who are first standing
for election are encouraged to own 1,000 shares of any
class, or a combination of classes of the Companys common
stock prior to the filing of the proxy statement for the meeting
at which the Director is scheduled to be elected. The stock
ownership guidelines for Directors are more fully described in
the Companys Guidelines which can be found on its website
at www.hubbell.com.
53
ITEM 2
RATIFICATION
OF THE SELECTION OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
General
The selection of independent registered public accountants to
audit the financial statements of the Company made available or
transmitted to shareholders and filed with the SEC for the year
2010 is to be submitted to the meeting for ratification or
rejection as a matter of good governance. PricewaterhouseCoopers
LLP, 300 Atlantic Street, Stamford, Connecticut, has been
selected by the Audit Committee of the Board of Directors of the
Company to audit such financial statements.
PricewaterhouseCoopers LLP have been independent registered
public accountants of the Company for many years. The Company
has been advised that a representative of PricewaterhouseCoopers
LLP will attend the Annual Meeting of Shareholders to respond to
appropriate questions and will be afforded the opportunity to
make a statement if the representative so desires.
The aggregate fees for professional services provided by
PricewaterhouseCoopers LLP to the Company and its subsidiaries
for the years ended December 31, 2009 and 2008, were as
follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit Fees
|
|
$
|
2,212,300
|
|
|
$
|
2,175,600
|
|
Audit-Related Fees
|
|
|
520,000
|
|
|
|
311,800
|
|
Tax Fees
|
|
|
273,000
|
|
|
|
239,400
|
|
All Other Fees
|
|
|
50,000
|
|
|
|
104,500
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
3,055,300
|
|
|
$
|
2,831,300
|
|
|
|
|
|
|
|
|
|
|
Audit Fees consist of fees for professional services rendered
for the audits of (i) the Companys consolidated
annual financial statements; and (ii) the effectiveness of
internal control over financial reporting. Audit Fees also
include review of the interim consolidated financial statements
included in quarterly reports and services that are normally
provided by PricewaterhouseCoopers LLP in connection with
statutory and regulatory filings or engagements.
Audit-Related Fees consist of fees for assurance and related
services that are reasonably related to the performance of the
audit or review of the Companys consolidated financial
statements and are not reported under Audit Fees. This category
includes fees principally related to financial due diligence and
audits of employee benefit plans in 2009 and 2008.
Tax Fees include domestic and international income tax planning
assistance and foreign entity compliance services.
All Other Fees consist of fees for products and services other
than the services reported above. These services include fees
related to the Companys share offering and technical
publications purchased from the independent registered public
accountants.
54
The Audit Committee considered whether the rendering of
non-audit services by PricewaterhouseCoopers LLP to the Company
is compatible with maintaining their independence and concluded
that the non-audit services rendered would not compromise their
independence.
The Companys Audit and Non-Audit Services Pre-Approval
Policy (Services Policy) sets forth the policies and
procedures by which the Audit Committee reviews and approves all
services to be provided by PricewaterhouseCoopers LLP prior to
retaining the firm. In developing these policies and procedures,
the Audit Committee took into consideration the need to ensure
the independence of PricewaterhouseCoopers LLP while recognizing
that PricewaterhouseCoopers LLP may possess the expertise on
certain matters that best positions it to provide the most
effective and efficient services on certain matters unrelated to
accounting and auditing. On balance, the Audit Committee will
only pre-approve the services that it believes enhance the
Companys ability to manage or control risk. The Audit
Committee was also mindful of the relationship between fees for
audit and non-audit services in deciding whether to pre-approve
any such services and may determine, for each fiscal year, the
appropriate ratio between the total amount of fees for audit,
audit-related and tax services, and the total amount of fees for
permissible non-audit services (excluding tax services). The
Services Policy provides for the pre-approval by the Audit
Committee of described services to be performed, such as audit,
audit-related, tax and other permissible non-audit services. The
term of any pre-approval is twelve months from the date of
pre-approval, unless the Audit Committee considers a different
period and states otherwise. Any proposed services exceeding
pre-approval or budgeted amounts also requires pre-approval by
the Audit Committee. In the interim periods during which the
Audit Committee is not scheduled to meet, the Chairman of the
Audit Committee can authorize spending which exceeds
pre-approved cost levels or budgeted amounts. As part of the
process, the Audit Committee shall consider whether such
services are consistent with SEC rules and regulations on
auditor independence.
If the proposal to ratify the selection of
PricewaterhouseCoopers LLP is not approved by the shareholders,
or if prior to the 2011 Annual Meeting of Shareholders,
PricewaterhouseCoopers LLP declines to act or otherwise becomes
incapable of acting, or if its services are discontinued by the
Audit Committee of the Board of Directors, then the Audit
Committee of the Board of Directors will appoint other
independent registered public accountants whose services for any
period subsequent to the 2011 Annual Meeting of Shareholders
will be subject to ratification by the shareholders at that
meeting.
Audit
Committee Report
The Audit Committee of the Board of Directors is comprised of
independent Directors functioning in accordance with a written
charter (the Charter) adopted and approved by the
Board of Directors in May, 2000, which Charter is reviewed
annually by the Audit Committee, and was last amended by the
Board of Directors, effective February 12, 2010. As
provided in the Charter, the Audit Committee assists the
Companys Directors in fulfilling their responsibilities
relating to corporate accounting, the quality and integrity of
the Companys financial reports, and the Companys
reporting practices. The functions of the Audit Committee are
further described elsewhere in this Proxy Statement (see
page 13).
In connection with the discharge of its responsibilities, the
Audit Committee has taken a number of actions, including, but
not limited to, the following:
|
|
|
|
|
the Audit Committee reviewed and discussed with management and
the independent registered public accountants the Companys
audited financial statements;
|
55
|
|
|
|
|
the Audit Committee discussed with the independent registered
public accountants the matters required to be discussed by the
Statement on Auditing Standards Nos. 61, as amended (AICPA,
Professional Standards, Vol. 1, AU Section 380), as
adopted by the Public Company Accounting Oversight Board in
Rule 3200T; and
|
|
|
|
the Audit Committee received from the independent registered
public accountants the written disclosures and letter required
by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent registered public
accountants communications with the Audit Committee
concerning independence, discussed their independence with them
and satisfied itself as to the independence of the independent
registered public accountants.
|
Based on the foregoing reviews and discussions, the Audit
Committee recommended to the Companys Board of Directors
that the audited financial statements be included in the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2009 for filing with the
SEC.
Audit Committee
Daniel S. Van Riper, Chairman
E. Richard Brooks
Lynn J. Good
Anthony J. Guzzi
Joel S. Hoffman
The affirmative vote of a majority of the votes cast by the
holders of the outstanding shares of the Class A Common
Stock and Class B Common Stock, all voting as a single
class (provided that holders of shares representing a majority
of the votes entitled to be cast actually cast votes) is
required to ratify the selection of PricewaterhouseCoopers LLP
as independent registered public accountants of the Company.
Abstentions and broker non-votes will not affect the voting
results although they will have the practical effect of reducing
the likelihood that shares representing a majority of the votes
entitled to be cast will in fact be cast.
The Board of Directors Unanimously Recommends that the
Shareholders Vote FOR the Ratification of the
Selection of PricewaterhouseCoopers LLP.
56
ITEM 3
APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF THE COMPANYS
2005 INCENTIVE AWARD PLAN
The Company previously adopted and shareholders previously
approved the Hubbell Incorporated 2005 Incentive Award Plan (the
2005 Plan) in order to promote the success and
enhance the value of the Company by linking the personal
interest of participants to those of Company shareholders and by
providing participants with an incentive for outstanding
performance. The Board of Directors has approved the amendment
and restatement of the 2005 Plan (which is referred to herein as
the Restated Plan), subject to shareholder approval
which:
|
|
|
|
|
Increases the number of shares of Class B Common Stock
available under the 2005 Plan by 1,000,000 shares, of which
500,000 will be limited to grant in the form of full value
awards;
|
|
|
|
Adds restricted stock unit awards, dividend equivalents, and
stock payment awards;
|
|
|
|
Allows performance-based awards to be paid in cash or shares of
Class B Common Stock;
|
|
|
|
Limits the grants to any one individual in any year to 500,000
options and stock appreciation rights, and 250,000 shares
of restricted stock, restricted stock units, stock payments and
performance-based awards; and
|
|
|
|
Extends the term of the plan until 2020.
|
In addition, certain other immaterial administrative changes
have been included in the Restated Plan.
By seeking shareholder approval of the Restated Plan, the
Company is seeking approval of the material terms of performance
goals under the Restated Plan for purposes of
Section 162(m) of the Internal Revenue Code. Shareholder
approval of such terms would preserve the Companys ability
to deduct compensation associated with future performance-based
awards made under the Restated Plan under Section 162(m).
Section 162(m) limits the deductions a publicly-held
company can claim for compensation in excess of $1 million
paid in a given year to its chief executive officer and its
three other most highly-compensated executive officers (other
than its chief financial officer) (these officers are generally
referred to as the Covered Employees).
Performance-based compensation that meets certain
requirements is not counted against the $1 million
deductibility cap. Stock options and stock appreciation rights
qualify as performance-based compensation if they are granted at
an exercise price equal to the fair market value of our
Class B Common Stock on the date of grant. Other awards
that the Company may grant under the Restated Plan may qualify
as performance-based compensation if the payment, retention or
vesting of the award is subject to the achievement during a
performance period of performance goals selected by the
Compensation Committee (the Committee).
Performance shares which the Company currently uses under the
2005 Plan are intended to qualify as
performance-based
compensation exempt from Section 162(m). The Committee
retains the discretion to set the level of performance for a
given performance measure under a performance-based award. For
such awards to qualify as performance-based compensation, the
shareholders must approve the material terms of the performance
goals every five years.
For a discussion of the performance criteria for which approval
is being sought, please see the discussion under
Performance-Based Awards below.
57
If the Restated Plan is not approved, its provisions will not
become effective. In that case, the 2005 Plan as in existence
prior to its amendment and restatement will continue in effect,
but performance-based shares granted to Covered Employees in
2010 and thereafter will not be deductible as performance-based
compensation under Section 162(m).
Description
of Proposed Restated Plan
The following summary of the terms of the Restated Plan is
qualified in its entirety by reference to the text of the
Restated Plan and the various award agreements used thereunder.
The proposed Restated Plan is attached as Exhibit A to this
proxy statement.
The Restated Plan provides for the grant of stock options, both
incentive stock options and nonqualified stock options,
restricted stock, restricted stock units, stock appreciation
rights (SARs), dividend equivalents, stock payments, and
performance-based awards (collectively Awards) to
eligible individuals.
Administration
The Restated Plan is administered by the Committee, which
consists of at least two or more members of the Board of
Directors who are each non-employee directors within
the meaning of
Rule 16b-3
under the Securities Exchange Act of 1934 (the Act)
and who are also outside directors as defined in
Section 162(m). Subject to the express provisions of the
Restated Plan, the Committee has the authority to interpret the
Restated Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and
provisions of the respective award agreements and to make all
other determinations necessary or advisable for the
administration of the Restated Plan. Subject to the terms and
conditions of the Restated Plan, the Committee has the authority
to select the employees to whom Awards are to be made, to
determine the number of shares to be subject thereto and the
terms and conditions thereof, and to make all other
determinations and to take all other actions necessary or
advisable for the administration of the Restated Plan, including
the power to determine the types and sizes of awards, the price
and timing of awards and the acceleration or waiver of any
vesting restriction, provided that the Committee will not have
the authority to accelerate vesting or waive the forfeiture
provisions applicable to any performance-based awards. The
Committee is also authorized to adopt, amend and rescind rules
relating to the administration of the Restated Plan.
Eligibility
Persons eligible to participate in the Restated Plan include:
(1) employees of the Company and its subsidiaries, and (2)
non-employee directors of the Company, as selected by the
Committee. However, options which are intended to qualify as
ISOs (as defined below) may only be granted to employees.
Limitation
on Awards and Shares Available
The aggregate number of shares of Class B Common Stock
subject to awards under the 2005 Plan is currently 5,875,000. If
the Restated Plan is approved that number will increase to
6,875,000. That number may be adjusted for changes in the
Companys capitalization and certain corporate
transactions, as described below under the heading Changes
in Capital Structure and Change in Control. Currently, no
more than 2,937,500 shares of Class B Common Stock may be
granted under the Plan in the form of full value
awards which are Awards pursuant to
58
which the participant is not required to pay the full fair
market value of such Awards determined on the date of grant. As
of December 31, 2009, 2,092,592 shares remained
available for grant as full value awards. If the Restated Plan
is approved no more than 1,800,000 will be available for future
grant in the form of full value awards.
As of December 31, 2009, awards covering an aggregate of
3,185,316 shares were outstanding under the 2005 Plan, and
2,689,684 shares (plus any shares that might in the future
be returned to the 2005 Plan as a result of cancellations,
forfeitures, repurchases or expiration of awards) remained
available for future grants. As noted above, the Restated Plan
would increase the number of shares authorized for issuance
under the Plan by 1,000,000 shares for a total of
6,875,500 shares.
The payment of dividend equivalents in cash in conjunction with
outstanding awards will not be counted against the shares
available for issuance under the Restated Plan. To the extent
permitted by applicable law or any exchange rule, shares issued
in assumption of, or in substitution for, any outstanding awards
of any entity acquired in any form of combination by the Company
or any of its affiliates will not be counted against the shares
available for issuance under the Restated Plan. Shares tendered
or withheld to satisfy the grant or exercise price or tax
withholding obligation pursuant to any Award will not be added
back to the total number of shares available for grants under
the Restated Plan.
In addition, each share subject to a SAR which is exercised
shall be counted as one share issued under the Restated Plan for
purposes of counting the number of shares available for grant
under the Restated Plan.
The maximum number of shares that may be granted pursuant to an
option to a participant during any calendar year is
500,000 shares. The maximum number of shares that may be
granted pursuant to a SAR to a participant during any calendar
year is 500,000 shares. The maximum number of shares that
may be granted in the form of restricted stock, restricted stock
units, stock payments or performance-based awards to a
participant pursuant to the Restated Plan during any calendar
year is 250,000 shares and the maximum dollar value of any
Award intended to be exempt from Section 162(m) as
performance-based which is payable in cash may not exceed
$2,000,000.
Awards
The Restated Plan provides for the grant of incentive stock
options, nonqualified stock options, restricted stock, stock
appreciation rights, dividend equivalents, stock payments,
restricted stock units, and performance-based awards. Each grant
will be set forth in a separate agreement with the person
receiving the grant and will indicate the type, terms and
conditions of the grant. No determination has been made as to
the types or amounts of awards that will be granted to specific
individuals pursuant to the Restated Plan.
The following briefly describes the characteristics of each type
of grant that may be made under the Plan:
Options. Stock options, including incentive
stock options, as defined under Section 422 of the Internal
Revenue Code, and nonqualified stock options may be granted
pursuant to the Restated Plan. The option exercise price of all
stock options granted pursuant to the Restated Plan will not be
less than 100% of the fair market value of the Companys
Class B Common Stock on the date of grant. Stock options
may be exercised as determined by the Committee, but in no event
more than ten years and one day after their date of grant. The
aggregate fair market value of the shares with respect to which
options intended to be incentive stock options are exercisable
for the first time by an employee in any calendar year may not
exceed $100,000, or such other amount as the Internal Revenue
Code provides.
59
Restricted Stock. Restricted stock may be
granted pursuant to the Restated Plan. A restricted stock award
is the grant of shares of the Companys Class B Common
Stock at a price determined by the Committee (which may be
zero), that is nontransferable and may be subject to substantial
risk of forfeiture until specific conditions are met. Conditions
may be based on continuing employment or achieving performance
goals. During the period of restriction, participants holding
shares of restricted stock may have full voting and dividend
rights with respect to such shares. The restrictions will lapse
in accordance with a schedule or other conditions determined by
the Committee.
Stock Appreciation Rights/SARs. Stock
appreciation rights or SARs may be granted pursuant to the
Restated Plan, either alone or in tandem with other awards. A
SAR is the right to receive payment of an amount equal to the
excess of the fair market value of a share of the Companys
Class B Common Stock on the date of exercise of the SAR
over the fair market value of a share of Class B Common
Stock on the date of grant of the SAR. The Committee may elect
to pay SARs in cash, or in stock, or in any combination of the
two, as determined by the Committee.
Restricted Stock Units. Restricted stock units
represent the right to receive shares of Class B Common
Stock at a specified date in the future, subject to forfeiture
of such right. If the restricted stock unit has not been
forfeited, then on the date specified in the restricted stock
unit award agreement, the Company shall deliver to the holder of
the restricted stock unit, unrestricted shares of Class B
Common Stock which will be freely transferable. The Committee
will specify the purchase price, if any, to be paid by the
grantee for the shares.
Dividend Equivalents. Dividend equivalents
represent the value of the dividends per share of Class B
Common Stock paid by the Company, calculated with reference to
the number of shares covered by an Award (other than a dividend
equivalent award, option or SAR) held by the participant.
Dividend Equivalents will not be granted on options or SARs. In
addition, no dividend equivalent with respect to an Award with
performance-based vesting will be paid unless and until the
Award on which the dividend equivalent is granted vests.
Stock Payments. Payments to participants of
short-term incentive awards or other compensation may be made
under the Restated Plan in the form of Class B Common
Stock. The number of shares will be determined by the Committee,
and may be based upon performance criteria.
Performance-Based Award. Performance-based
awards are payable in cash, shares of Class B Common Stock
or units of value including the dollar value of the shares of
Class B Common Stock, as determined by the Committee, and
are linked to satisfaction of performance criteria; provided,
that no performance award which is intended to be exempt from
the limits of Section 162(m) may be payable in cash in
excess of $2,000,000 for any calendar year.
Payment
for Awards
Upon the exercise of a stock option or with respect to other
Awards which the Committee requires a purchase price, the
purchase price must be paid in full in either cash or its
equivalent or by tendering previously acquired shares with a
fair market value at the time of exercise equal to the purchase
price (provided such shares have been held for such period of
time as may be required by the Committee in order to avoid
adverse accounting consequences and have a fair market value on
the date of delivery equal to the aggregate purchase price of
the exercised portion of the Award) or other property acceptable
to the Committee (including through the delivery of a notice
that the participant has placed a market sell order with a
broker with respect to shares then issuable upon exercise of the
Award, and that the broker has been directed to pay a sufficient
portion of the net proceeds of the sale
60
to the Company in satisfaction of the purchase price, provided
that payment of such proceeds is then made to the Company upon
settlement of such sale).
Performance-Based
Awards
The Restated Plan has been designed to permit the Committee to
grant equity and cash awards that will qualify as
performance-based compensation within the meaning of
Section 162(m). The Committee may grant performance-based
compensation awards to Covered Employees whose compensation for
a given fiscal year may be subject to the limit on deductible
compensation imposed by Section 162(m), to preserve the
deductibility of these awards for federal income tax purposes
(see additional discussion of deductibility requirements under
Federal Income Tax Consequences below).
Performance-based compensation awards vest or become exercisable
upon the attainment of specific performance targets that are
pre-established by the Committee and are related to one or more
of the performance goals (described below) set forth in the
Restated Plan. Participants are only entitled to receive payment
for a performance-based compensation award for any given
performance period to the extent that such pre-established
performance goals for the period are satisfied.
The pre-established performance goals must be based on one or
more of the following performance criteria:
|
|
|
|
|
net earnings (either before or after interest, taxes,
depreciation and amortization);
|
|
|
|
economic value-added (as determined by the Committee);
|
|
|
|
sales or revenue;
|
|
|
|
net income (either before or after taxes);
|
|
|
|
operating earnings;
|
|
|
|
cash flow (including, but not limited to, operating cash flow
and free cash flow);
|
|
|
|
return on capital;
|
|
|
|
return on invested capital;
|
|
|
|
return on shareholders equity;
|
|
|
|
return on assets;
|
|
|
|
shareholder return;
|
|
|
|
return on sales;
|
|
|
|
gross or net profit margin;
|
|
|
|
productivity;
|
|
|
|
expense;
|
|
|
|
operating margin;
|
|
|
|
operating efficiency;
|
|
|
|
customer satisfaction;
|
61
|
|
|
|
|
working capital efficiency;
|
|
|
|
earnings per share;
|
|
|
|
price per share of stock; or
|
|
|
|
market share.
|
The foregoing criteria may relate to the Company, one or more of
its divisions, business units, platforms or an individual, or
any combination of the foregoing, and may be applied on an
absolute basis or as compared to any incremental increases or as
compared to results of one or more peer group companies or
market performance indicators or indices, or any combination
thereof, all as the Committee shall determine.
The Committee may provide that one or more objectively
determinable adjustments will be made to one or more of the
performance goals established for any performance period. Such
adjustments may include one or more of the following:
|
|
|
|
|
items related to a change in accounting principle;
|
|
|
|
items relating to financing activities;
|
|
|
|
expenses for restructuring or productivity initiatives;
|
|
|
|
other non-operating items;
|
|
|
|
items related to acquisitions;
|
|
|
|
items attributable to the business operations of any entity
acquired by the Company during the performance period;
|
|
|
|
items related to the disposal of a business or segment of a
business;
|
|
|
|
items related to discontinued operations that do not qualify as
a segment of a business under applicable accounting standards;
|
|
|
|
items attributable to any stock dividend, stock split,
combination or exchange of shares occurring during the
performance period;
|
|
|
|
any other items of significant income or expense which are
determined to be appropriate adjustments;
|
|
|
|
items relating to unusual or extraordinary corporate
transactions, events or developments;
|
|
|
|
items related to amortization of acquired intangible assets;
|
|
|
|
items that are outside the scope of the Companys core,
on-going business activities; or
|
|
|
|
items relating to any other unusual or nonrecurring events or
changes in applicable laws, accounting standards or business
conditions.
|
In determining the actual size of an individual
performance-based award for a performance period, the Committee
may reduce or eliminate (but not increase) the award. Generally,
a participant will have to be employed on the date the
performance-based award is paid to be eligible for a
performance-based award for any period.
62
Changes
in Capital Structure and Change in Control
In the event of a stock dividend, stock split, combination or
exchange of shares, merger, consolidation, spin-off,
recapitalization, distribution of assets or any other corporate
event affecting the Class B Common Stock or the share price
of the Class B Common Stock in a manner that causes
dilution or enlargement of benefits or potential benefits under
the Restated Plan, the Committee shall make proportionate and
equitable adjustments, in its discretion, to: (i) the
aggregate number and types of shares of stock that may be issued
under the Restated Plan; (ii) the terms and conditions of
any outstanding awards (including any applicable performance
targets); and (iii) the grant or exercise price for any
outstanding awards.
In addition, in such a case or in the event of any unusual or
nonrecurring transactions or events affecting the Company or the
financial statements of the Company, or of changes in applicable
laws, the Committee may, in its discretion, subject to the terms
of the Restated Plan, take any of the following actions if it
determines that such action is appropriate in order to prevent
the dilution or enlargement of benefits or potential benefits
intended to be made available under the Restated Plan or with
respect to any award: (i) provide for either the payment
and termination of the award or the replacement of the award; or
(ii) provide that the awards shall be assumed by the
successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar awards covering
the stock of the successor or survivor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices.
In the event of a change in control (as defined in
the Restated Plan), Awards will be fully exercisable and all
forfeiture restrictions on such Awards shall lapse. In
connection with a change in control, the Committee, in its sole
discretion, may (i) provide for the termination of any
Award, by surrender of such Award for an amount of cash
and/or other
property, if any, equal to the amount by which the fair market
value of the Class B Common Stock which the Award
represents exceeds the Award exercise price for all or part of
the shares which are related to such Award; or
(ii) determine that the Awards may by assumed by a
successor or survivor.
Amendment
and Termination
The Committee, subject to approval of the Board, may terminate,
amend, or modify the Restated Plan at any time; provided,
however, that shareholder approval will be obtained for any
amendment:
|
|
|
|
|
to the extent necessary or desirable to comply with any
applicable law, regulation or stock exchange rule;
|
|
|
|
to increase the number of shares available under the Restated
Plan;
|
|
|
|
to permit the Committee to grant options or SARs with an
exercise or base price below fair market value on the date of
grant;
|
|
|
|
to extend the exercise period for an option or SAR beyond ten
years from the date of grant;
|
|
|
|
to materially increase benefits or change eligibility
requirements under the Restated Plan;
|
|
|
|
to cancel or surrender an option or SAR in exchange for an
option or SAR having a lower per share exercise price; or
|
|
|
|
to reprice an outstanding option or SAR below the per share
exercise or base price as of the grant date.
|
63
In no event may an Award be granted pursuant to the Restated
Plan on or after May 3, 2020, the tenth anniversary of the
date shareholders approve the Restated Plan.
Federal
Income Tax Consequences
With respect to nonqualified stock options, the Company is
generally entitled to deduct and the optionee recognizes taxable
income in an amount equal to the difference between the option
exercise price and the fair market value of the shares at the
time of exercise. A participant receiving incentive stock
options will not recognize taxable income upon grant.
Additionally, if applicable holding period requirements are met,
the participant will not recognize taxable income at the time of
exercise. However, the excess of the fair market value of the
Class B Common Stock received over the option price is an
item of tax preference income potentially subject to the
alternative minimum tax. If stock acquired upon exercise of an
incentive stock option is held for a minimum of two years from
the date of grant and one year from the date of exercise, the
gain or loss (in an amount equal to the difference between the
fair market value on the date of sale and the exercise price)
upon disposition of the stock will be treated as a long-term
capital gain or loss, and the Company will not be entitled to
any deduction. If the holding period requirements are not met,
the incentive stock option will be treated as one which does not
meet the requirements of the Internal Revenue Code for incentive
stock options and the tax consequences described for
nonqualified stock options will apply.
The current federal income tax consequences of other awards
authorized under the Restated Plan generally follow certain
basic patterns: SARs are taxed and deductible in substantially
the same manner as nonqualified stock options; nontransferable
restricted stock subject to a substantial risk of forfeiture
results in income recognition equal to the excess of the fair
market value over the price paid, if any, only at the time the
restrictions lapse (unless the recipient elects to accelerate
recognition as of the date of grant); stock-based performance
awards, dividend equivalents and other types of awards are
generally subject to tax at the time of payment. Compensation
otherwise effectively deferred is taxed when paid. In each of
the foregoing cases, the Company will generally have a
corresponding deduction at the time the participant recognizes
income.
Certain Awards under the Plan, depending in part on particular
Award terms and conditions, may be considered non qualified
deferred compensation subject to the requirements of Internal
Revenue Code Section 409A. If the terms of such Awards do
not meet the requirements of Section 409A, then the
violation may result in an additional 20% tax obligation, plus
penalties and interest for such participant.
As of March 11, 2010, the closing market price of a share
of Class B Common Stock authorized for issuance under the
Restated Plan was $49.40 and the approximate number of employees
and
non-employee
directors eligible to participate in the Restated Plan was 500.
64
New Plan
Benefits
The number of Awards that an employee or director may receive
under the Restated Plan is in the discretion of the Committee
and can not be determined at this time. However, for the sake of
illustration, the following sets forth the grants that such
individuals received under the 2005 Plan in 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Stock
|
|
|
Number of
|
|
|
Number of
|
|
Name and Position
|
|
Appreciation Rights
|
|
|
Restricted Shares
|
|
|
Performance Shares
|
|
|
Timothy H. Powers
|
|
|
78,767
|
|
|
|
11,020
|
|
|
|
13,309
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
David G. Nord
|
|
|
21,933
|
|
|
|
3,069
|
|
|
|
3,706
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott H. Muse
|
|
|
15,601
|
|
|
|
2,183
|
|
|
|
2,636
|
|
Group Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary N. Amato
|
|
|
17,123
|
|
|
|
2,396
|
|
|
|
2,893
|
|
Group Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
William T. Tolley
|
|
|
14,269
|
|
|
|
1,996
|
|
|
|
2,411
|
|
Group Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Group
|
|
|
193,831
|
|
|
|
23,382
|
|
|
|
28,237
|
|
Non-Executive Director Group
|
|
|
0
|
|
|
|
6,000
|
|
|
|
0
|
|
Non-Executive Officer Employee Group
|
|
|
175,121
|
|
|
|
81,517
|
|
|
|
6,357
|
|
Equity
Compensation Plans
The following table provides certain information as of
December 31, 2009 about Class B Common Stock that may
be issued under the Companys existing equity compensation
plans (in thousands, except per share amounts):
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities Remaining
|
|
|
|
Number of Securities to be
|
|
|
Weighted-Average
|
|
|
Available for Future Issuance
|
|
|
|
Issued upon Exercise of
|
|
|
Exercise Price of
|
|
|
Under Equity Compensation
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Plans (Excluding Securities
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants, and Rights
|
|
|
Reflected in Column A)
|
|
|
|
(A)
|
|
|
(B)
|
|
|
(C)
|
|
|
Equity compensation plans approved by shareholders(a)
|
|
|
5,045
|
(c)(d)
|
|
$
|
42.28
|
(e)
|
|
|
2,690
|
(c)
|
Equity compensation plans not requiring shareholder approval(b)
|
|
|
|
|
|
|
|
|
|
|
140
|
(c)
|
Total
|
|
|
5,045
|
|
|
$
|
42.28
|
|
|
|
2,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The Companys Stock Option Plan for Key Employees and 2005
Incentive Award Plan. |
|
(b) |
|
The Companys Deferred Compensation Plan for Directors. |
|
(c) |
|
Class B Common Stock. |
65
|
|
|
(d) |
|
Includes 223 performance share awards assuming a maximum payout
target. The Company does not anticipate that the maximum payout
target will be achieved for these awards. |
|
(e) |
|
Weighted average exercise price excludes performance share
awards included in column A. |
Vote
Required
Under NYSE rules, the affirmative vote of a majority of the
votes cast by the holders of the Class A Common Stock and
Class B Common Stock, all voting as a single class, is
required to approve the Restated Plan, provided that the total
votes cast on this proposal represent more than 50% of the
outstanding shares entitled to vote on this proposal. In other
words, the sum of votes for and against
plus abstentions must exceed 50% of the number of outstanding
shares of Class A Common Stock and Class B Common
Stock. Abstentions will count as votes cast and will have the
same effect as votes cast against the proposal. Broker non-votes
will not count as votes cast because brokers do not have the
authority to vote shares on this proposal without direction from
the beneficial owner. Thus, failure to direct your vote will
make it less likely that the total votes cast on this proposal
will represent more than 50% of the outstanding shares of
Class A Common Stock and Class B Common Stock, which
could impair the approval of the Restated Plan.
The Board of Directors Unanimously Recommends that the
Shareholders Vote For the Approval of the Hubbell
Incorporated 2005 Incentive Award Plan, as Amended and
Restated.
GENERAL
The expense of this solicitation is to be borne by the Company.
The Company may also reimburse persons holding shares in their
names or in the names of their nominees for their expenses in
sending proxies and proxy material to their principals. Original
solicitation of proxies may be supplemented by telephone,
facsimile, electronic mail or personal solicitation by the
Companys directors, officers or employees. No additional
compensation will be paid to the Companys directors,
officers or employees for such services. The Company has
retained D. F. King & Co., Inc. to assist in the
solicitation of proxies, at an estimated cost of $10,000, plus
reasonable expenses.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys officers, Directors and
persons owning more than ten percent of a registered class of
the Companys equity securities to file reports of
ownership and changes in ownership of all equity and derivative
securities of the Company with the SEC and the NYSE. SEC
regulations also require that a copy of all Section 16(a)
forms filed be furnished to the Company by its officers,
Directors and greater than ten-percent shareholders.
Based solely on a review of the copies of such forms and related
amendments received by the Company and, where applicable,
written representations from the Companys officers and
Directors that no Form 5s were required to be filed, the
Company believes that during and with respect to fiscal year
2009 all Section 16(a) filing requirements applicable to
its officers, Directors and beneficial owners of more than ten
percent of any class of its equity securities were met.
Information
Regarding Executive Officers
In 2005, Mr. Tolley entered into an agreement with the SEC
to settle charges that he had allegedly violated certain
provisions of the federal securities laws at his prior employer,
which resulted in material misstatements of certain of such
66
employers quarterly earnings in 2000. Pursuant to the
agreement, Mr. Tolley, without admitting or denying the
allegations of the SECs complaint, consented to the entry
of a final judgment permanently enjoining him from further
violations of the federal securities laws, and to pay a civil
penalty in the amount of $50,000. The charges were not related
to the Company or to Mr. Tolleys service with the
Company. The Board considered this matter in connection with
Mr. Tolleys return to the Company on May 2,
2005, following a period of paid administrative leave.
Review
and Approval of Related Person Transactions
The Company reviews all relationships and transactions in which
the Company and its Directors and executive officers or their
immediate family members participate to determine whether such
persons have a direct or indirect material interest. The
Companys legal staff is primarily responsible for the
development and implementation of processes and controls to
obtain information from the Directors and executive officers
with respect to related person transactions and for then
determining, based on the facts and circumstances, whether the
Company or a related person has a direct or indirect material
interest in the transaction. As required under SEC rules,
transactions that are determined to be directly or indirectly
material to the Company or a related person are disclosed in the
Companys proxy statement. In addition, the Nominating and
Corporate Governance Committee reviews and approves or ratifies
any related person transaction that is required to be disclosed.
See also the discussion under Director Independence
above on page 10.
67
SHAREHOLDER
PROPOSALS FOR THE
2011 ANNUAL MEETING
Shareholder Proposals to be Considered for Inclusion in the
Companys Proxy Materials. Shareholder
proposals to be considered for inclusion in the Companys
proxy materials related to the 2011 Annual Meeting of
Shareholders pursuant to
Rule 14a-8
(Rule 14a-8)
under the Securities Exchange Act of 1934, as amended (the
Exchange Act), must be received by the Company no
later than November 16, 2010.
Shareholder Proposals Not Intended to be Included in the
Proxy Materials Related to the 2011 Annual
Meeting. The Companys By-Laws contain time
limitations, procedures and requirements relating to director
nominations or other shareholder proposals not intended to be
included in the Companys proxy materials related to the
2011 Annual Meeting of Shareholders pursuant to
Rule 14a-8.
Such nominations or proposals (assuming the 2011 Annual Meeting
of Shareholders is not held more than twenty days before or more
than seventy days after May 3, 2011) must be received
by the Company no earlier than February 2, 2011 and no
later than February 22, 2011 or else managements
proxies will retain the power to vote proxies received for the
2011 Annual Meeting of Shareholders in their discretion with
respect to such proposals received later than February 22,
2011, assuming such a meeting date, and proposals where the
proponent does not comply with Exchange Act
Rule 14a-4(c)(2).
For additional information on the time limitations and
requirements relating to director nominations or other
shareholder proposals, see the sections entitled Director
Nominations and Shareholder Nominations for
Director beginning on page 15 of this Proxy Statement
or the Companys By-Laws. The Companys By-Laws can be
viewed on its website at www.hubbell.com.
By Order of the Board of Directors
Hubbell
Incorporated
Orange, Connecticut
March 15, 2010
68
Exhibit A
HUBBELL
INCORPORATED
2005 INCENTIVE AWARD PLAN
(As
Amended and Restated)
ARTICLE 1
Purpose
The purpose of the Hubbell Incorporated 2005 Incentive Award
Plan (As Amended and Restated) (the Plan) is
to promote the success and enhance the value of Hubbell
Incorporated (the Company) by linking the
personal interests of the members of the Board and Employees to
those of Company shareholders and by providing such individuals
with an incentive for outstanding performance to generate
superior returns to Company shareholders. The Plan is further
intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of members of the
Board and Employees upon whose judgment, interest, and special
effort the successful conduct of the Companys operation is
largely dependent.
ARTICLE 2
Definitions
and Construction
Wherever the following terms are used in the Plan they shall
have the meanings specified below, unless the context clearly
indicates otherwise. The singular pronoun shall include the
plural where the context so indicates.
2.1 Applicable Accounting
Standards means Generally Accepted Accounting
Principles in the United States, International Financial
Reporting Standards or such other accounting principles or
standards as may apply to the Companys financial
statements under United States federal securities laws from time
to time.
2.2 Award means an Option, a
Restricted Stock award, a Restricted Stock Unit Award, a Stock
Appreciation Right award, Dividend Equivalent award, Stock
Payment award, or a Performance-Based Award granted to a
Participant pursuant to the Plan.
2.3 Award Agreement means any
written agreement, contract, or other instrument or document
evidencing an Award.
2.4 Board means the Board of
Directors of the Company.
2.5 Change in Control means and
includes any of the following:
(a) Continuing Directors no longer constitute at least 2/3
of the Directors;
(b) any person or group of persons (as defined in
Rule 13d-5
under the Securities Exchange Act of 1934), together with its
affiliates, becomes the beneficial owner, directly or
indirectly, of 20% or more of the voting power of the then
outstanding securities of the Company entitled to vote for the
election of the Companys Directors; provided that this
Section 2.5(b) shall not apply with respect to any
holding of securities by (i) the trust under a
Trust Indenture dated September 2, 1957 made by Louie
E. Roche, (ii) the trust under a Trust Indenture dated
A-1
August 23, 1957 made by Harvey Hubbell, and (iii) any
employee benefit plan (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as
amended) maintained by the Company or any affiliate of the
Company; or
(c) the consummation of a merger or consolidation of the
Company with any other corporation, the sale of substantially
all of the assets of the Company or the liquidation or
dissolution of the Company, unless, in the case of a merger or
consolidation, the incumbent Directors in office immediately
prior to such merger or consolidation will constitute at least
2/3 of the Directors of the surviving corporation of such merger
or consolidation and any parent (as such term is defined in
Rule 12b-2
under the Securities Exchange Act of 1934) of such
corporation.
2.6 Code means the Internal
Revenue Code of 1986, as amended.
2.7 Committee means the committee
of the Board described in Article 11.
2.8 Continuing Director means any
individual who is a member of the Companys Board of
Directors on December 9, 1986 or was designated (before
such persons initial election as a Director) as a
Continuing Director by 2/3 of the then Continuing Directors.
2.9 Covered Employee means an
Employee who is, or could be, a covered employee
within the meaning of Section 162(m) of the Code.
2.10 Director means an individual
who is a member of the Companys Board of Directors on the
relevant date.
2.11 Disability means that the
Participant qualifies to receive long-term disability payments
under the Companys long-term disability insurance program,
as it may be amended from time to time.
2.12 Dividend Equivalent means a
right to receive the equivalent value (in cash or Stock) of
dividends paid on Stock, awarded under Section 8.2.
2.13 Eligible Individual means
any person who is a Director or an Employee, as determined by
the Committee.
2.14 Employee means any officer
or other employee (as defined in accordance with
Section 3401(c) of the Code) of the Company or any
Subsidiary.
2.15 Exchange Act means the
Securities Exchange Act of 1934, as amended.
2.16 Fair Market Value means, as
of any given date, the fair market value of a share of Stock on
the immediately preceding date determined by such methods or
procedures as may be established from time to time by the
Committee. Unless otherwise determined by the Committee, the
Fair Market Value of a share of Stock as of any date shall be
the mean between the high and low trading price for a share of
Stock as reported on the New York Stock Exchange (or on any
national securities exchange on which the Stock is then listed)
on such date or, if no such prices are reported for that date,
the mean between the high and low trading prices on the next
preceding date for which such prices were reported.
2.17 Full Value Award means an
Award other than an Option or SAR, which is settled by the
issuance of Stock.
A-2
2.18 Incentive Stock Option means
an Option that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.
2.19 Independent Director means a
Director who is not an Employee of the Company.
2.20 Non-Employee Director means
a Director who qualifies as a Non-Employee Director
as defined in
Rule 16b-3(b)(3)
of the Exchange Act, or any successor definition adopted by the
Board.
2.21 Non-Qualified Stock Option
means an Option that is not intended to be an Incentive Stock
Option.
2.22 Officer means each of the
officers specified in Section 1 of Article IV of the
By-Laws of the Company except for any such officer whose title
begins with the word Assistant.
2.23 Option means a right granted
to a Participant pursuant to Article 5 of the Plan to
purchase a specified number of shares of Stock at a specified
price during specified time periods. An Option may be either an
Incentive Stock Option or a Non-Qualified Stock Option.
2.24 Participant means any
Eligible Individual who, as a Director or Employee, has been
granted an Award pursuant to the Plan.
2.25 Performance-Based Award
means a right granted to a Participant to receive cash or Stock
pursuant to Article 8, and which is subject to the terms
and conditions set forth in Article 8.
2.26 Performance Criteria means
the criteria (and adjustments) that the Committee selects for
purposes of establishing the Performance Goal or Performance
Goals for a Participant for a Performance Period determined as
follows:
(a) The Performance Criteria that will be used to establish
Performance Goals are limited to the following: net earnings
(either before or after interest, taxes, depreciation and
amortization), economic value-added (as determined by the
Committee), sales or revenue, net income (either before or after
taxes), operating earnings, cash flow (including, but not
limited to, operating cash flow and free cash flow), return on
capital, return on invested capital, return on
shareholders equity, return on assets, shareholder return,
return on sales, gross or net profit margin, productivity,
expense, operating margin, operating efficiency, customer
satisfaction, working capital efficiency, earnings per share,
price per share of Stock, and market share, any of which may be
measured either in absolute terms or as compared to any
incremental increase or as compared to results of a peer group
or to market performance indicators or indices. To the extent a
Performance-Based Award is intended to be Qualified
Performance-Based Compensation, the Committee shall, within the
time prescribed by Section 162(m) of the Code, define in an
objective fashion the manner of calculating the Performance
Criteria it selects to use for such Performance Period for such
Participant.
(b) The Committee may, in its sole discretion, provide that
one or more objectively determinable adjustments shall be made
to one or more of the Performance Goals. Such adjustments may
include one or more of the following: (i) items related to
a change in accounting principle; (ii) items relating to
financing activities; (iii) expenses for restructuring or
productivity initiatives; (iv) other non-operating items;
(v) items related to acquisitions; (vi) items
attributable to the business operations of any entity acquired
by the Company during the Performance Period; (vii) items
related to the disposal of a business or segment of a business;
(viii) items related to discontinued operations that do not
qualify as a segment of a business under Applicable Accounting
Standards; (ix) items attributable to any stock dividend,
stock split, combination or exchange of stock occurring during
the Performance
A-3
Period; or (x) any other items of significant income or
expense which are determined to be appropriate adjustments;
(xi) items relating to unusual or extraordinary corporate
transactions, events or developments, (xii) items related
to amortization of acquired intangible assets; (xiii) items
that are outside the scope of the Companys core, on-going
business activities; or (xiv) items relating to any other
unusual or nonrecurring events or changes in applicable laws,
accounting principles or business conditions. For all Awards
intended to qualify as Performance-Based Compensation, such
determinations shall be made within the time prescribed by, and
otherwise in compliance with, Section 162(m) of the Code.
2.27 Performance Goals means, for
a Performance Period, the goals established in writing by the
Committee for the Performance Period based upon the Performance
Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the
performance of a division, business unit, platform or an
individual. The achievement of each Performance Goal shall be
determined in accordance with Applicable Accounting Standards.
2.28 Performance Period means the
one or more periods of time, which may be of varying and
overlapping durations, as the Committee may select, over which
the attainment of one or more Performance Goals will be measured
for the purpose of determining a Participants right to,
and the payment of, a Performance-Based Award.
2.29 Plan means this Hubbell
Incorporated 2005 Incentive Award Plan (As Amended and
Restated), as it may be amended from time to time.
2.30 Qualified Performance-Based
Compensation means any compensation that is
intended to qualify as qualified performance-based
compensation as described in Section 162(m)(4)(C) of
the Code.
2.31 Restricted Stock means Stock
awarded to a Participant pursuant to Article 6 that is
subject to certain restrictions and may be subject to risk of
forfeiture.
2.32 Restricted Stock Units shall
mean the right to receive Stock awarded under Section 8.4.
2.33 Securities Act shall mean
the Securities Act of 1933, as amended.
2.34 Stock means the Class B
Common Stock of the Company, par value $0.01 per share, and such
other securities of the Company that may be substituted for
Stock pursuant to Article 10.
2.35 Stock Appreciation Right or
SAR means a right granted pursuant to
Article 7 to receive a payment equal to the excess of the
Fair Market Value of a specified number of shares of Stock on
the date the SAR is exercised over the Fair Market Value on the
date the SAR was granted as set forth in the applicable Award
Agreement.
2.36 Stock Payment shall mean
(a) a payment in the form of Stock, or (b) an option
or other right to purchase Stock, as part of a short-term
incentive award, deferred compensation or other arrangement,
awarded under Section 8.3.
2.37 Subsidiary means any
subsidiary corporation as defined in
Section 424(f) of the Code and any applicable regulations
promulgated thereunder or any other entity of which a majority
of the outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Company.
A-4
ARTICLE 3
Shares Subject
to the Plan
3.1 Number of Shares.
(a) Subject to Article 10 and Section 3.1(b), the
aggregate number of shares of Stock which may be granted as
Awards under the Plan shall be 6,875,000 shares. The
maximum number of shares of Stock that may be delivered upon
exercise of Incentive Stock Options shall be
5,875,000 shares.
(b) Of the shares of Stock reserved for grant under
Section 3.1(a) of this Plan no more than
2,644,961 shares of Stock may be granted in the form of
Full Value Awards.
(c) To the extent that an Award terminates, expires, or
lapses for any reason, or an Award is settled in cash
without the delivery of shares to the Participant, then any
shares of Stock subject to the Award shall again be available
for the grant of an Award pursuant to the Plan. Any Shares
tendered or withheld to satisfy the grant or exercise price or
tax withholding obligation pursuant to any Award shall be
counted against the number of Shares available under the Plan
and shall not be available for future grants of Awards. For
purposes of number of Shares available under
Section 3.1(a), Shares subject to Stock Appreciation Rights
shall be counted as one share delivered for each Stock
Appreciation Right awarded, regardless of the number of Shares
actually delivered upon exercise of the Stock Appreciation
Right. To the extent permitted by applicable law or any exchange
rule, shares of Stock issued in assumption of, or in
substitution for, any outstanding awards of any entity acquired
in any form of combination by the Company or any Subsidiary
shall not be counted against shares of Stock available for grant
pursuant to the Plan. The payment of Dividend Equivalents in
cash in conjunction with any outstanding Awards shall not be
counted against the shares available for issuance under the
Plan. Notwithstanding the provisions of this
Section 3.1(c), no shares of Stock may again be optioned,
granted or awarded if such action would cause an Incentive Stock
Option to fail to qualify as an incentive stock option under
Section 422 of the Code.
3.2 Stock Distributed. Any Stock
distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Stock, including Stock
repurchased by the Company, or Stock purchased on the open
market.
3.3 Limitation on Number of Shares Subject to
Awards. Notwithstanding any provision in the
Plan to the contrary, and subject to Article 10, Awards
granted any Employee shall be subject to the following
limitations all applied on an individual and not an aggregate
basis by type of Award:
(a) The maximum number of shares of Stock that may be
granted pursuant to an Option to any one Participant in any
fiscal year of the Company shall not exceed 500,000 shares
of Stock;
(b) The maximum number of shares of Stock that may be
granted subject to a Stock Appreciation Right to any one
Participant in any fiscal year of the Company shall not exceed
500,000 shares of Stock;
(c) The maximum number of shares of Stock that may be
granted in the form of Restricted Stock, Restricted Stock Units,
Stock Payments, or Performance-Based Awards in any fiscal year
of the Company shall not exceed 250,000 shares of Stock
(with such limit applying to each such form of Award on an
individual and not an aggregate basis); and
A-5
(d) No Award granted in any fiscal year of the Company that
provides for payment in cash shall exceed $2,000,000.
ARTICLE 4
Eligibility
and Participation
4.1 Eligibility. Each Eligible
Individual shall be eligible to be granted one or more Awards
pursuant to the Plan.
4.2 Participation. Subject to the
provisions of the Plan, the Committee may, from time to time,
select from among all Eligible Individuals, those to whom Awards
shall be granted and shall determine the nature and amount of
each Award. No Eligible Individual shall have any right to be
granted an Award pursuant to this Plan.
4.3 Foreign Participants. In order
to assure the viability of Awards granted to Participants
employed in countries other than the United States, the
Committee may provide for such special terms as it may consider
necessary or appropriate to accommodate differences in local
law, tax policy, or custom. Moreover, the Committee may approve
such supplements to, or amendments, restatements, or alternative
versions of, the Plan as it may consider necessary or
appropriate for such purposes without thereby affecting the
terms of the Plan as in effect for any other purpose;
provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the share
limitations contained in Sections 3.1, 3.2 and 3.3 of the
Plan.
ARTICLE 5
Stock
Options
5.1 General. The Committee is
authorized to grant Options to Participants on the following
terms and conditions:
(a) Exercise Price. The exercise
price per share of Stock subject to an Option shall be
determined by the Committee and set forth in the Award
Agreement; provided that the exercise price for any
Option shall not be less than 100% of the Fair Market Value of a
share of Stock, on the date of grant.
(b) Time and Conditions of
Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in
part; provided that the term of any Option granted under
the Plan shall not exceed ten years. The Committee shall also
determine the performance or other conditions, if any, that must
be satisfied before all or part of an Option may be exercised.
(c) Payment. The Committee shall
determine the methods by which the exercise price of an Option
may be paid, the form of payment, including, without limitation
any one or a combination of the following: (i) cash,
(including check, bank draft or money order) (ii) shares of
either class of the Companys common stock held for such
period of time as may be required by the Committee in order to
avoid adverse accounting consequences and having a Fair Market
Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof, or
(iii) by delivery of irrevocable instructions to a broker
to sell the Stock otherwise deliverable upon exercise of the
Option and to deliver to the Company an amount equal to the
aggregate exercise price. The
A-6
Committee shall also determine the methods by which shares of
Stock shall be delivered or deemed to be delivered to
Participants.
(d) Evidence of Grant. All Options
shall be evidenced by a written Award Agreement between the
Company and the Participant. The Award Agreement shall include
such additional provisions as may be specified by the Committee.
5.2 Incentive Stock Options. The
terms of any Incentive Stock Options granted pursuant to the
Plan must comply with the conditions and limitations contained
in Section 12.2 and this Section 5.2.
(a) Eligibility. Incentive Stock
Options may be granted only to Employees of the Company or any
subsidiary corporation thereof (within the meaning
of Section 424(f) of the Code and the applicable
regulations promulgated thereunder).
(b) Exercise Price. The exercise
price per share of Stock shall be set by the Committee;
provided that subject to Section 5.2(d) the exercise
price for any Incentive Stock Option shall not be less than 100%
of the Fair Market Value on the date of grant.
(c) Individual Dollar
Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all shares
of Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed
$100,000 or such other limitation as imposed by
Section 422(d) of the Code, or any successor provision. To
the extent that Incentive Stock Options are first exercisable by
a Participant in excess of such limitation, the excess shall be
considered Non-Qualified Stock Options.
(d) Ten Percent Owners. An
Incentive Stock Option shall be granted to any individual who,
at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of
stock of the Company only if such Option is granted at a price
that is not less than 110% of Fair Market Value on the date of
grant and the Option is exercisable for no more than five years
from the date of grant.
(e) Notice of Disposition. The
Participant shall give the Company prompt notice of any
disposition of shares of Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date
of grant of such Incentive Stock Option or (ii) one year
after the transfer of such shares of Stock to the Participant.
(f) Right to Exercise. During a
Participants lifetime, an Incentive Stock Option may be
exercised only by the Participant.
5.3 Substitution of Stock Appreciation
Rights. The Committee may provide in the
Award Agreement evidencing the grant of an Option that the
Committee, in its sole discretion, shall have to right to
substitute a Stock Appreciation Right for such Option at any
time prior to or upon exercise of such Option, subject to the
provisions of Section 7.2 hereof; provided that such Stock
Appreciation Right shall be exercisable with respect to the same
number of shares of Stock for which such substituted Option
would have been exercisable.
5.4 Paperless Exercise. In the
event that the Company establishes, for itself or using the
services of a third party, an automated system for the exercise
of Options, such as a system using an internet website or
interactive voice response, then the paperless exercise of
Options by a Participant may be permitted through the use of
such an automated system.
A-7
ARTICLE 6
Restricted
Stock Awards
6.1 Grant of Restricted Stock. The
Committee is authorized to make Awards of Restricted Stock to
any Participant selected by the Committee in such amounts and
subject to such terms and conditions as determined by the
Committee. All Awards of Restricted Stock shall be evidenced by
a written Restricted Stock Award Agreement.
6.2 Issuance and
Restrictions. Restricted Stock shall be
subject to such restrictions on transferability and other
restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or
the right to receive dividends on the Restricted Stock). These
restrictions may lapse separately or in combination at such
times, pursuant to such circumstances, in such installments, or
otherwise, as the Committee determines at the time of the grant
of the Award or thereafter.
6.3 Forfeiture. Except as
otherwise determined by the Committee at the time of the grant
of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted
Stock that is at that time subject to restrictions shall be
forfeited; provided, however, that, the Committee may
(a) provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of
terminations resulting from specified causes, and (b) in
other cases waive in whole or in part restrictions or forfeiture
conditions relating to Restricted Stock.
6.4 Certificates for Restricted
Stock. Restricted Stock granted pursuant to
the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing shares of Restricted
Stock are registered in the name of the Participant,
certificates must bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain
physical possession of the certificate until such time as all
applicable restrictions lapse.
ARTICLE 7
Stock
Appreciation Rights
7.1 Grant of Stock Appreciation Rights.
(a) A Stock Appreciation Right may be granted to any
Participant selected by the Committee. A Stock Appreciation
Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose and
shall be evidenced by an Award Agreement.
(b) A Stock Appreciation Right shall entitle the
Participant (or other person entitled to exercise the Stock
Appreciation Right pursuant to the Plan) to exercise all or a
specified portion of the Stock Appreciation Right (to the extent
then exercisable pursuant to its terms) and to receive from the
Company an amount determined by multiplying the difference
obtained by subtracting the exercise price per share of the
Stock Appreciation Right from the Fair Market Value of a share
of Stock on the date of exercise of the Stock Appreciation Right
by the number of shares of Stock with respect to which the Stock
Appreciation Right shall have been exercised, subject to any
limitations the Committee may impose.
A-8
7.2 Payment and Limitations on Exercise.
(a) Payment of the amounts determined under
Section 7.1(b) above shall be in cash, in Stock (based on
its Fair Market Value as of the date the Stock Appreciation
Right is exercised) or a combination of both, as determined by
the Committee in the Award Agreement. To the extent payment for
a Stock Appreciation Right is to be made in cash, the Award
Agreement shall specify the date of payment which may be
different than the date of exercise of the Stock Appreciation
Right, to the extent necessary to comply with the requirements
to Section 409A of the Code, as applicable. If the date of
payment for a Stock Appreciation Right is later than the date of
exercise, the Award Agreement may specify that the Participant
be entitled to earnings on such amount until paid.
(b) To the extent any payment under Section 7.1(b) is
effected in Stock it shall be made subject to satisfaction of
all provisions of Article 5 above pertaining to Options.
ARTICLE 8
Performance-Based
Awards, Dividend Equivalents, Stock Payments, Restricted Stock
Units
8.1 Performance-Based Awards
(a) Any Participant selected by the Committee may be
granted one or more Performance-Based Awards which shall be
denominated either in Stock units of value including the dollar
value of shares of Stock or cash and which may be linked to any
one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in
each case on a specified date or dates or over any period or
periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of
Award) the contributions, responsibilities and other
compensation of the particular Participant.
(b) Applicability to Covered
Employees. The designation of a Covered
Employee as a Participant for a Performance Period shall not in
any manner entitle the Participant to receive an Award for the
period. Moreover, designation of a Covered Employee as a
Participant for a particular Performance Period shall not
require designation of such Covered Employee as a Participant in
any subsequent Performance Period and designation of one Covered
Employee as a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in
any other period.
(c) Procedures with Respect to Performance-Based
Awards. To the extent necessary to comply
with the Qualified Performance-Based Compensation requirements
of Section 162(m)(4)(C) of the Code, with respect to any
Award granted under this Article 8 which may be granted to
one or more Covered Employees, no later than ninety
(90) days following the commencement of any fiscal year in
question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by
Section 162(m) of the Code), the Committee shall, in
writing, (i) designate one or more Covered Employees,
(ii) select the Performance Criteria applicable to the
Performance Period, (iii) establish the Performance Goals,
and amounts of such Awards, as applicable, which may be earned
for such Performance Period, and (iv) specify the
relationship between Performance Criteria and the Performance
Goals and the amounts of such Awards, as applicable, to be
earned by each Covered Employee for such Performance Period.
Following the completion of each Performance Period, the
Committee shall certify in writing whether the applicable
Performance Goals have been achieved for such Performance
Period. In determining the amount earned by a Covered Employee,
the Committee shall have the right
A-9
to reduce or eliminate (but not to increase) the amount payable
at a given level of performance to take into account additional
factors that the Committee may deem relevant to the assessment
of individual or corporate performance for the Performance
Period.
(d) Payment of Performance-Based
Awards. Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by
the Company or a Subsidiary on the day a Performance-Based Award
for such Performance Period is paid to the Participant.
Furthermore, a Participant shall be eligible to receive payment
pursuant to a Performance-Based Award for a Performance Period
only if the Performance Goals for such period are achieved.
(e) Additional
Limitations. Notwithstanding any other
provision of the Plan, any Award which is granted to a Covered
Employee and is intended to constitute Qualified
Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the
Code (including any amendment to Section 162(m) of the
Code) or any regulations or rulings issued thereunder that are
requirements for qualification as qualified performance-based
compensation as described in Section 162(m)(4)(C) of the
Code, and the Plan shall be deemed amended to the extent
necessary to conform to such requirements.
8.2 Dividend Equivalents. Dividend
Equivalents may be granted by the Committee based on dividends
declared on the Stock, to be credited as of dividend payment
dates during the period between the date an Award is granted to
a Participant and the date such Award vests, is exercised, is
distributed or expires, as determined by the Committee. Such
Dividend Equivalents shall be converted to cash or additional
shares of Stock by such formula and at such time and subject to
such limitations as may be determined by the Committee. In
addition, Dividend Equivalents with respect to an Award with
performance-based vesting that are based on dividends paid prior
to the vesting of such Award shall only be paid out to the
Participant to the extent that the performance-based vesting
conditions are subsequently satisfied and the Award vests.
Notwithstanding the foregoing, no Dividend Equivalents shall be
payable with respect to Options or Stock Appreciation Rights.
8.3 Stock Payments. The Committee
is authorized to make Stock Payments to any Eligible Individual.
The number or value of shares of any Stock Payment shall be
determined by the Committee and may be based upon one or more
Performance Criteria or any other specific criteria, including
service to the Company or any Subsidiary, determined by the
Committee. Shares of Stock underlying a Stock Payment which is
subject to a vesting schedule or other conditions or criteria
set by the Committee will not be issued until those conditions
have been satisfied. Unless otherwise provided by the Committee,
a Participant granted a Stock Payment shall have no rights as a
Company shareholder with respect to such Stock Payment until
such time as the Stock Payment has vested and the Stock
underlying the Award have been issued to the Participant. Stock
Payments may, but are not required to be made in lieu of base
salary, short-term incentive awards, fees or other cash
compensation otherwise payable to such Eligible Individual.
8.4 Restricted Stock Units. The
Committee is authorized to grant Restricted Stock Units to any
Eligible Individual. The number and terms and conditions of
Restricted Stock Units shall be determined by the Committee. The
Committee shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and
nonforfeitable, and may specify such conditions to vesting as it
deems appropriate, including conditions based on one or more
Performance Criteria or other specific criteria, including
service to the Company or any Subsidiary, in each case on a
specified date or dates or over any period or periods, as
determined by the Committee. The Committee shall specify, or
permit the Participant to elect, the conditions and dates upon
which the Stock
A-10
underlying the Restricted Stock Units shall be issued, which
dates shall not be earlier than the date as of which the
Restricted Stock Units vest and become nonforfeitable and which
conditions and dates shall be subject to compliance with
Section 409A of the Code. Restricted Stock Units may be
paid in cash, Stock, or both, as determined by the Committee. On
the distribution dates, the Company shall issue to the
Participant one unrestricted, fully transferable share of Stock
(or the Fair Market Value of one such share in cash) for each
vested and nonforfeitable Restricted Stock Unit.
8.5 Term. The term of a
Performance Award, Dividend Equivalent award, Stock Payment
award and/or
Restricted Stock Unit award shall be set by the Committee in its
sole discretion.
8.6 Exercise or Purchase
Price. The Committee may establish the
exercise or purchase price of a Performance Award, shares
distributed as a Stock Payment award or shares distributed
pursuant to a Restricted Stock Unit award; provided, however,
that value of the consideration shall not be less than the par
value of a share of Stock, unless otherwise permitted by
applicable law.
ARTICLE 9
Provisions
Applicable to Awards
9.1 Stand-Alone and Tandem
Awards. Awards granted pursuant to the Plan
may, in the discretion of the Committee, be granted either
alone, in addition to, or in tandem with, any other Award
granted pursuant to the Plan. Awards granted in addition to or
in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other
Awards.
9.2 Award Agreement. Awards under
the Plan shall be evidenced by Award Agreements that set forth
the terms, conditions and limitations for each Award which may
include the term of an Award, the provisions applicable in the
event the Participants employment or service terminates,
and the Companys authority to unilaterally or bilaterally
amend, modify, suspend, cancel or rescind an Award.
9.3 Limits on Transfer. No right
or interest of a Participant in any Award may be pledged,
encumbered, or hypothecated to or in favor of any party other
than the Company or a Subsidiary, or shall be subject to any
lien, obligation, or liability of such Participant to any other
party other than the Company or a Subsidiary. Except as
otherwise provided by the Committee, no Award shall be assigned,
transferred, or otherwise disposed of by a Participant other
than by will or the laws of descent and distribution. The
Committee by express provision in the Award or an amendment
thereto may permit an Award (other than an Incentive Stock
Option) to be transferred to, exercised by and paid to certain
persons or entities related to the Participant, including but
not limited to members of the Participants family,
charitable institutions, or trusts or other entities whose
beneficiaries or beneficial owners are members of the
Participants family
and/or
charitable institutions, or to such other persons or entities as
may be expressly approved by the Committee, pursuant to such
conditions and procedures as the Committee may establish subject
to the following terms and conditions: (i) an Award
transferred to a transferee shall not be assignable or
transferable by the permitted transferee other than by will or
the laws of descent and distribution; (ii) an Award
transferred to a permitted transferee shall continue to be
subject to all the terms and conditions of the Award as
applicable to the original Participant (other than the ability
to further transfer the Award); and (iii) the Participant
and the permitted transferee shall execute any and all documents
requested by the Committee, including, without limitation
documents to (A) confirm the status of the transferee as a
permitted transferee, (B) satisfy any
A-11
requirements for an exemption for the transfer under applicable
federal, state and foreign securities laws and (C) evidence
the transfer.
9.4 Beneficiaries. Notwithstanding
Section 9.3, a Participant may, in the manner determined by
the Committee, designate a beneficiary to exercise the rights of
the Participant and to receive any distribution with respect to
any Award upon the Participants death. A beneficiary,
legal guardian, legal representative, or other person claiming
any rights pursuant to the Plan is subject to all terms and
conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed
necessary or appropriate by the Committee. If the Participant is
married and resides in a community property state, a designation
of a person other than the Participants spouse as his or
her beneficiary with respect to more than 50% of the
Participants interest in the Award shall not be effective
without the prior written consent of the Participants
spouse. If no beneficiary has been designated or survives the
Participant, payment shall be made to the person entitled
thereto pursuant to the Participants will or the laws of
descent and distribution. Subject to the foregoing, a
beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is
filed with the Committee.
9.5 Stock Certificates; Book Entry Procedures.
(a) Notwithstanding anything herein to the contrary, the
Company shall not be required to issue or deliver any
certificates evidencing shares of Stock pursuant to the exercise
of any Award, unless and until the Board has determined, with
advice of counsel, that the issuance and delivery of such
certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the
requirements of any exchange on which the shares of Stock are
listed or traded. All Stock certificates delivered pursuant to
the Plan are subject to any stop-transfer orders and other
restrictions as the Committee deems necessary or advisable to
comply with federal, state, or foreign jurisdiction, securities
or other laws, rules and regulations and the rules of any
national securities exchange or automated quotation system on
which the Stock is listed, quoted, or traded. The Committee may
place legends on any Stock certificate to reference restrictions
applicable to the Stock. In addition to the terms and conditions
provided herein, the Board may require that a Participant make
such reasonable covenants, agreements, and representations as
the Board, in its discretion, deems advisable in order to comply
with any such laws, regulations, or requirements. The Committee
shall have the right to require any Participant to comply with
any timing or other restrictions with respect to the settlement
or exercise of any Award, including a window-period limitation,
as may be imposed in the discretion of the Committee.
(b) Notwithstanding any other provision of the Plan, unless
otherwise determined by the Committee or required by any
applicable law, rule or regulation, the Company shall not
deliver to any Participant certificates evidencing shares of
Stock issued in connection with any Award and instead such
shares of Stock shall be recorded in the books of the Company
(or, as applicable, its transfer agent or stock plan
administrator).
ARTICLE 10
Changes
in Capital Structure
10.1 Adjustments.
(a) In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation,
spin-off, recapitalization, distribution of Company assets to
shareholders (other than normal cash dividends), or any
A-12
other corporate event affecting the Stock or the share price of
the Stock, the Committee shall make such proportionate and
equitable adjustments to reflect such changes with respect to
(i) the aggregate number and type of shares that may be
issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3);
(ii) the terms and conditions of any outstanding Awards
(including, without limitation, any applicable performance
targets or criteria with respect thereto); and (iii) the
grant or exercise price per share for any outstanding Awards
under the Plan. Any adjustment affecting an Award intended as
Qualified Performance-Based Compensation shall be made
consistent with the requirements of Section 162(m) of the
Code.
(b) In the event of any transaction or event described in
Section 10.1(a) or any unusual or nonrecurring transactions
or events affecting the Company, any affiliate of the Company,
or the financial statements of the Company or any affiliate
(including without limitation any Change in Control), or of
changes in applicable laws, regulations or accounting
principles, and whenever the Committee determines that action is
appropriate in order to prevent the dilution or enlargement of
the benefits or potential benefits intended to be made available
under the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such
changes in laws, regulations or principles, the Committee, in
its sole discretion and on such terms and conditions as it deems
appropriate, either by amendment of the terms of any outstanding
Awards or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the
Participants request, is hereby authorized to take any one
or more of the following actions:
(i) To provide for either:
(A) the termination, by the surrender of any such Award in
exchange for an amount of cash
and/or other
property, if any, equal to the amount by which the fair market
value of the Stock which the Award represents exceeds the Award
exercise price for all or part of the shares of Stock which are
related to such Award and that would have been attained upon the
exercise of such Award or realization of the Participants
rights (and, for the avoidance of doubt, if as of such date the
Committee determines in good faith that no amount would have
been attained upon the exercise of such Award or realization of
the Participants rights, then such Award may be terminated
by the Company without payment); or
(B) The replacement of such Award with other rights or
property selected by the Committee in its sole
discretion; and
(ii) To provide that such Award be assumed by the successor
or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices.
10.2 Acceleration Upon a Change in Control.
(a) Notwithstanding the provisions of Section 10.1,
Awards shall become fully exercisable and all forfeiture
restrictions on such Awards shall lapse upon a Change in
Control. Upon, or in anticipation of, a Change in Control, the
Committee may give each Participant the right to exercise such
Awards during a period of time as the Committee, in its sole and
absolute discretion, shall determine.
Additionally, each Participant who is an Officer, or any other
Participant in the discretion of the Committee may surrender any
Award during the
30-day
period following a Change in Control and receive in cash in lieu
of
A-13
exercising any Award the amount by which the fair market value
of the Stock exceeds the exercise price for all or part of the
shares of Stock subject to such Award. For this purpose, the
fair market value of the Stock shall be deemed to be the closing
price of one share of the Companys Stock on the New York
Stock Exchange on that day, or within the 60 days preceding
the date on which the Change in Control occurs, on which such
closing price was the highest. In the event that the shares are
not listed or admitted to trading on such exchange, the fair
market value shall be deemed to be the closing price of one
share of the Companys Stock on the principal national
securities exchange on which the shares are listed or admitted
to trading, or, if the shares are not listed or admitted to
trading on any national securities exchange, the average of the
highest reported bid and lowest reported asked prices as
reported on the Nasdaq or similar organization if the Nasdaq is
no longer reporting such information. If on any such date the
shares are not quoted by any such organization, the fair market
value of the shares on such date, as determined in good faith by
the Board of Directors of the Company, shall be used.
10.3 No Other Rights. Except as
expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares
of stock of any class, the payment of any dividend, any increase
or decrease in the number of shares of stock of any class or any
dissolution, liquidation, merger, or consolidation of the
Company or any other corporation. Except as expressly provided
in the Plan or pursuant to action of the Committee under the
Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares of Stock subject
to an Award or the grant or exercise price of any Award.
ARTICLE 11
Administration
11.1 Committee. The Plan shall be
administered by the Compensation Committee (the
Committee) consisting solely of at least two or more
members of the Board who are each Non-Employee Directors and
outside directors, within the meaning of
Section 162(m) of the Code.
11.2 Action by the Committee. A
majority of the Committee shall constitute a quorum. The acts of
a majority of the members present at any meeting at which a
quorum is present, and acts approved in writing by a majority of
the Committee in lieu of a meeting, shall be deemed the acts of
the Committee. Each member of the Committee is entitled to, in
good faith, rely or act upon any report or other information
furnished to that member by any Officer or other Employee of the
Company or any Subsidiary, the Companys independent
registered public accountants, or any executive compensation
consultant or other professional retained by the Company to
assist in the administration of the Plan. The Committee shall
select one of its members as a Chairman, who shall preside at
meetings and who shall have authority to execute and deliver
documents on behalf of the Committee. Meetings of the Committee
shall be held at such times and places as the members thereof
may determine.
11.3 Authority of
Committee. Subject to any specific
designation in the Plan, the Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to
each Participant;
A-14
(c) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted
pursuant to the Plan, including, but not limited to, the
exercise price, grant price, or purchase price, any restrictions
or limitations on the Award, any schedule for lapse of
forfeiture restrictions or restrictions on the exercisability of
an Award, and accelerations or waivers thereof, any provisions
related to non-competition and recapture of an Award, based in
each case on such considerations as the Committee in its sole
discretion determines; provided, however, that the
Committee shall not have the authority to accelerate the vesting
or waive the forfeiture of any Performance-Based Awards;
(e) Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price
of an Award may be paid in, cash, Stock, other Awards, or other
property, or an Award may be canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need
not be identical for each Participant;
(g) Decide all other matters that must be determined in
connection with an Award;
(h) Establish, adopt, or revise any rules and regulations
as it may deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant
to, the Plan or any Award Agreement; and
(j) Make all other decisions and determinations that may be
required pursuant to the Plan or as the Committee deems
necessary or advisable to administer the Plan.
11.4 Decisions Binding. The
Committees interpretation of the Plan, any Awards granted
pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are
final, binding, and conclusive on all parties.
ARTICLE 12
Effective
and Expiration Date
12.1 Effective Date. The Plan was
originally effective on May 2, 2005, the date the Plan was
initially approved by the Companys shareholders (the
Original Effective Date). This amendment and
restatement of the Plan shall be effective on the date it is
approved by the Companys shareholders, (the
Restatement Effective Date). The Plan will be deemed
to be approved by the shareholders if it receives the
affirmative vote of a majority of the votes cast at a meeting
duly held in accordance with the applicable provisions of the
Companys By-laws.
12.2 Expiration Date. The Plan
will expire on, and no Incentive Stock Option or other Award may
be granted pursuant to the Plan after, the tenth anniversary of
the Restatement Effective Date. Any Awards that are outstanding
on the tenth anniversary of the Restatement Effective Date shall
remain in force according to the terms of the Plan and the
applicable Award Agreement.
A-15
ARTICLE 13
Amendment,
Modification, and Termination
13.1 Amendment, Modification, and
Termination. With the approval of the Board,
at any time and from time to time, the Committee may terminate,
amend or modify the Plan; provided, however, that (a) to
the extent necessary and desirable to comply with any applicable
law, regulation, or stock exchange rule, the Company shall
obtain shareholder approval of any Plan amendment in such a
manner and to such a degree as required, and
(b) shareholder approval is required for any amendment to
the Plan that (i) increases the number of shares available
under the Plan (other than any adjustment as provided by
Article 10), (ii) permits the Committee to grant
Options or Stock Appreciation Rights with an exercise or base
price that is below Fair Market Value on the date of grant,
(iii) permits the Committee to extend the exercise period
for an Option or Stock Appreciation Right beyond ten years from
the date of grant, or (iv) results in a material increase
in benefits or a change in eligibility requirements.
Notwithstanding any provision in this Plan to the contrary,
absent approval of the shareholder of the Company, no Option or
Stock Appreciation Right may be amended to reduce the per share
exercise or base price of the shares subject to such Option or
Stock Appreciation Right below the per share exercise or base
price as of the date the Option or Stock Appreciation Right is
granted and, except as permitted by Article 10, no Option
or Stock Appreciation Right may be granted in exchange for, or
in connection with, the cancellation or surrender of an Option
or Stock Appreciation Right having a higher per share exercise
or base price.
13.2 Awards Previously Granted. No
termination, amendment, or modification of the Plan shall
adversely affect in any material way any Award previously
granted pursuant to the Plan without the prior written consent
of the Participant.
ARTICLE 14
General
Provisions
14.1 Absence from Work. A
Participant who is absent from work with the Company or a
Subsidiary because of illness or temporary disability, or who is
on leave of absence for such purpose or reason as the Committee
may approve, shall not be deemed during the period of such
absence, by reason of such absence, to have ceased to be an
Employee of the Company or a Subsidiary. Where a cessation of
employment is to be considered a retirement with the consent of
the Company or by reason of Disability for the purpose of this
Plan shall be determined by the Committee, which determination
shall be final and conclusive.
14.2 No Rights to Awards. No
Eligible Individual or other person shall have any claim to be
granted any Award pursuant to the Plan, and neither the Company
nor the Committee is obligated to treat Eligible Individuals,
Participants or any other persons uniformly.
14.3 No Shareholder Rights. Except
as otherwise provided herein, a Participant shall have none of
the rights of a shareholder with respect to shares of Stock
covered by any Award until the Participant becomes the record
owner of such shares of Stock.
14.4 Withholding. The Company or
any Subsidiary shall have the authority and the right to deduct
or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy federal, state, local and
foreign taxes (including the Participants FICA obligation)
required by law to be withheld with respect to any
A-16
taxable event concerning a Participant arising as a result of
this Plan. The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to
elect to have the Company withhold shares of Stock otherwise
issuable under an Award (or allow the return of shares of Stock)
having a Fair Market Value equal to the sums required to be
withheld. Notwithstanding any other provision of the Plan, the
number of shares of Stock which may be withheld with respect to
the issuance, vesting, exercise or payment of any Award (or
which may be repurchased from the Participant of such Award
within six months (or such other period as may be determined by
the Committee) after such shares of Stock were acquired by the
Participant from the Company) in order to satisfy the
Participants federal, state, local and foreign income and
payroll tax liabilities with respect to the issuance, vesting,
exercise or payment of the Award shall be limited to the number
of shares which have a Fair Market Value on the date of
withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for
federal, state, local and foreign income tax and payroll tax
purposes that are applicable to such supplemental taxable income.
14.5 No Right to Employment or
Services. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of
the Company or any Subsidiary to terminate any
Participants employment or services at any time, nor
confer upon any Participant any right to continue in the employ
or service of the Company or any Subsidiary.
14.6 Unfunded Status of
Awards. The Plan is intended to be an
unfunded plan for incentive compensation. With
respect to any payments not yet made to a Participant pursuant
to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater
than those of a general creditor of the Company or any
Subsidiary.
14.7 Indemnification. To the
extent allowable pursuant to applicable law, each member of the
Committee or of the Board shall be indemnified and held harmless
by the Company from any loss, cost, liability, or expense that
may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action or failure to act
pursuant to the Plan and against and from any and all amounts
paid by him or her in satisfaction of judgment in such action,
suit, or proceeding against him or her; provided he or
she gives the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled pursuant
to the Companys Certificate of Incorporation or By-Laws,
as a matter of law, or otherwise, or any power that the Company
may have to indemnify them or hold them harmless.
14.8 Relationship to other
Benefits. No payment pursuant to the Plan
shall be taken into account in determining any benefits pursuant
to any pension, retirement, savings, profit sharing, group
insurance, welfare or other benefit plan of the Company or any
Subsidiary except to the extent otherwise expressly provided in
writing in such other plan or an agreement thereunder.
14.9 Expenses. The expenses of
administering the Plan shall be borne by the Company and its
Subsidiaries.
14.10 Titles and Headings. The
titles and headings of the Sections in the Plan are for
convenience of reference only and, in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall
control.
A-17
14.11 Fractional Shares. No
fractional shares of Stock shall be issued and the Committee
shall determine, in its discretion, whether cash shall be given
in lieu of fractional shares or whether such fractional shares
shall be eliminated by rounding up or down as appropriate.
14.12 Limitations Applicable to
Section 16 Persons. Notwithstanding
any other provision of the Plan, the Plan, and any Award granted
or awarded to any Participant who is then subject to
Section 16 of the Exchange Act, shall be subject to any
additional limitations set forth in any applicable exemptive
rule under Section 16 of the Exchange Act (including any
amendment to
Rule 16b-3
of the Exchange Act) that are requirements for the application
of such exemptive rule. To the extent permitted by applicable
law, the Plan and Awards granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such
applicable exemptive rule.
14.13 Government and Other
Regulations. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to
all applicable laws, rules, and regulations, and to such
approvals by government agencies as may be required. The Company
shall be under no obligation to register pursuant to the
Securities Act, any of the shares of Stock paid pursuant to the
Plan. If the shares paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the
Securities Act, the Company may restrict the transfer of such
shares in such manner as it deems advisable to ensure the
availability of any such exemption.
14.14 Governing Law. The Plan and
all Award Agreements shall be construed in accordance with and
governed by the laws of the State of Connecticut.
A-18
PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
HUBBELL INCORPORATED
For Annual Meeting of Shareholders, May 3, 2010
(For Shares of Class A Common Stock)
The undersigned hereby appoints each of TIMOTHY H. POWERS and MEGAN C. PRENETA as proxies of the
undersigned, with full power of substitution, to vote the shares of the undersigned in Hubbell
Incorporated at the annual meeting of its shareholders and at any adjournment thereof upon the
matters set forth in the notice of meeting and proxy statement for the 2010 annual meeting of
shareholders and upon all other matters properly coming before said meeting or any adjournment
thereof. This proxy will be voted FOR the election of the directors and FOR Proposals 2 and 3, unless a
contrary specification is made, in which case it will be voted in accordance with such
specification.
(Continued and to be signed on the other side.)
|
|
|
|
Address Change/Comments
(Mark the corresponding box on the reverse side) |
|
|
|
|
|
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
5 FOLD AND DETACH HERE5
YOUR VOTE IS IMPORTANT!
|
|
You can vote in one of three ways: |
|
1. |
|
Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
or
|
2. |
|
Call TOLL FREE 1-866-540-5760 on a Touch Tone telephone and follow the instructions on
the reverse side. There is NO CHARGE to you for this call. |
or
|
3. |
|
Vote by Internet at our Internet Address: http://www.proxyvoting.com/hub |
PLEASE VOTE TODAY
|
|
You can access, view and download this years Annual Report and Proxy Statement at
http://bnymellon.mobular.net/bnymellon/HUB. |
PX43376
FOR SHARES OF CLASS A COMMON STOCK
|
|
|
Please mark your
votes as indicated
in this example
|
|
x |
The Board of Directors recommends that you vote FOR the election of all the nominees in Proposal 1
and FOR Proposals 2 and 3.
|
|
|
|
|
|
|
|
|
|
|
FOR all nominees |
|
WITHHOLD
|
|
|
|
|
listed below (except
|
|
AUTHORITY |
PROPOSAL 1. |
|
as marked to the |
|
to vote for all |
ELECTION OF DIRECTORS: |
|
contrary below). |
|
nominees listed below. |
|
|
|
|
|
|
|
1. T. POWERS
2. G. RATCLIFFE
3. G. EDWARDS
4. L. GOOD
5. A. GUZZI
|
|
6. J. HOFFMAN
7. A. MCNALLY IV
8. C. RODRIGUEZ
9. R. SWIFT
10. D. VAN RIPER
|
|
o
|
|
o |
|
|
|
|
|
|
|
(INSTRUCTIONS: To withhold authority to vote for any
individual nominee, write that nominees name in the
space provided below.) |
|
|
|
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN |
Proposal 2.Ratification of the selection of
PricewaterhouseCoopers LLP as independent
registered public accountants for the year 2010.
|
|
o
|
|
o
|
|
o
|
|
Proposal
3.Reapproval of the Companys 2005 Incentive Award
Plan, as Amended and Restated.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
Choose MLinkSM for fast, easy and secure
24/7 online access to your future proxy materials,
investment plan statements, tax documents and more.
Simply log on to Investor ServiceDirect® at
www.bnymellon.com/shareowner/isd where step-by-step
instructions will prompt you through enrollment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Here for Address Change or Comments SEE REVERSE
|
|
o |
NOTE: Please sign exactly as your name or names appear hereon. Persons signing in a representative capacity should indicate their capacity.
5 FOLD AND DETACH HERE5
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the
same manner as if you marked, signed and returned your proxy card.
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
MAY 3, 2010.
The Proxy Statement and Annual Report on Form 10-K are available
at: http://bnymellon.mobular.net/bnymellon/hub
BY INTERNET
http://www.proxyvoting.com/hub
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
BY TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
OR
BY MAIL
Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
PX43376
PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
HUBBELL INCORPORATED
For Annual
Meeting of Shareholders, May 3, 2010
(For Shares of Class B Common Stock)
The undersigned hereby appoints
each of TIMOTHY H. POWERS and MEGAN C. PRENETA as proxies of the undersigned, with full power of substitution, to vote
the shares of the undersigned in Hubbell Incorporated at the annual meeting of its shareholders and at any adjournment thereof upon
the matters set forth in the notice of meeting and proxy statement
for the 2010 annual meeting of shareholders and upon all other
matters properly coming before said meeting or any adjournment thereof. This proxy will be voted FOR the election of
the directors and FOR Proposals 2 and 3, unless a contrary specification is made, in which case it will be voted in accordance with such specification.
(Continued and to be signed on the other side.)
|
|
|
|
|
|
|
|
|
|
|
BNY MELLON SHAREOWNER SERVICES |
|
|
Address Change/Comments
|
|
|
P.O. BOX 3550 |
|
|
(Mark the corresponding box on the reverse side)
|
|
|
SOUTH HACKENSACK, NJ 07606-9250 |
|
|
|
|
|
|
|
|
|
5 FOLD AND DETACH HERE 5
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
|
1. |
|
Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
or
|
2. |
|
Call TOLL FREE 1-866-540-5760 on a Touch Tone telephone and follow the instructions on
the reverse side. There is NO CHARGE to you for this call. |
or
|
3. |
|
Vote by Internet at our Internet Address: http://www.proxyvoting.com/hub |
PLEASE VOTE TODAY
You can access, view and download this years Annual Report and Proxy Statement at
http://bnymellon.mobular.net/bnymellon/HUB.
43671-bl
|
|
|
FOR SHARES OF CLASS B COMMON STOCK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please mark |
|
x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
your votes as |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
indicated in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
this example |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends
that you vote FOR the election of all the nominees in Proposal 1 and
FOR Proposals 2 and 3. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR all nominees
|
|
WITHHOLD
AUTHORITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
listed below (except
|
|
to vote
for all
nominees listed below. |
|
|
|
|
|
|
|
|
|
|
|
|
PROPOSAL 1. |
|
|
as marked to the
contrary below). |
|
|
|
|
|
|
|
|
|
|
|
|
|
ELECTION OF DIRECTORS:
|
|
|
|
|
|
|
|
|
|
FOR |
|
AGAINST
|
|
ABSTAIN |
|
|
|
|
|
|
|
Proposal 2. |
Ratification of the selection of
PricewaterhouseCoopers LLP as
independent registered public accountants for the year
2010.
|
|
o |
|
o |
|
o |
1. T. POWERS 2. G.
RATCLIFFE
3. G. EDWARDS 4. L. GOOD
5. A. GUZZI |
6.
J. HOFFMAN 7. A. MCNALLY IV 8. C. RODRIGUEZ 9. R.
SWIFT 10. D. VAN RIPER |
|
o |
|
o |
|
|
Proposal 3. |
Reapproval of the Companys 2005
Incentive Award Plan
as Amended and Restated.
|
|
o |
|
o |
|
o |
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominees name in the space provided below.)
|
|
|
Choose
MLinkSMfor fast, easy and secure 24/7 online access to
your future proxy materials, investment plan statements, tax documents and more.
Simply log on to Investor ServiceDirect® at
www.bnymellon.com/shareowner/isd where step-by-step instructions will prompt
you through enrollment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Here
for Address Change or Comments
SEE REVERSE |
o |
|
|
|
|
NOTE: Please sign exactly as your name or names appear hereon. Persons signing in a
representative capacity should indicate their capacity.
5
FOLD AND DETACH HERE5
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR
TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and
telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the
same manner as if you marked, signed and returned your proxy card.
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY
OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON MAY 3, 2010. The Proxy Statement and
Annual Report on Form 10-K are available at: http://bnymellon.mobular.net/bnymellon/hub
BY INTERNET
http://www.proxyvoting.com/hub
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
BY TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
OR
BY MAIL
Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.