def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule
14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by
the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Thor Industries, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
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TABLE OF CONTENTS
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THOR INDUSTRIES, INC.
419 West Pike Street Jackson Center, Ohio 45334-0629
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 7, 2010
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Important Notice Regarding the Availability of Proxy Materials for the Thor
Industries, Inc. Annual
Meeting of Stockholders to be Held on December 7, 2010 |
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The Proxy Statement and Annual Report on Form 10-K are available at
www.edocumentview.com/THO2010 |
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The 2010 Annual Meeting of Stockholders (the Meeting) of Thor Industries, Inc. (the Company)
will be held at the Cornell Club, 6 East 44th Street, New York, N.Y., on December 7,
2010, at 1:00 p.m., local time, for the purpose of considering and voting upon the following:
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the election of one director; |
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the adoption of the Thor Industries, Inc. 2010 Equity and Incentive Plan; and |
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such other business as may properly come before the Meeting or any adjournment
of the Meeting. |
Stockholders of record at the close of business on October 15, 2010 will be entitled to receive
notice of the Meeting and to vote at the Meeting. A list of such stockholders will be available
for examination by any stockholder for any purpose germane to the Meeting, during normal business
hours, at the office of the Company for a period of ten days prior to the Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN YOUR PROXY
CARD AS SOON AS POSSIBLE.
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By Order of the Board of Directors,
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Walter L. Bennett |
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Executive Vice President, Chief Administrative
Officer and Secretary |
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November 2, 2010
THOR INDUSTRIES, INC.
419 West Pike Street Jackson Center, Ohio 45334-0629
This proxy statement is furnished in connection with the solicitation of proxies by the Board of
Directors (our Board) of Thor Industries, Inc. (our Company) for use at the 2010 Annual Meeting
of Stockholders to be held at the Cornell Club, 6 East 44th Street, New York, N.Y., on
December 7, 2010, at 1:00 p.m., local time (the Meeting), and any adjournment thereof. The cost
of such solicitation is being borne by our Company. This proxy statement and the accompanying form
of proxy are being sent to stockholders on or about November 2, 2010.
Representatives of Deloitte & Touche LLP, our independent registered public accounting firm, will
be present at the Meeting, will have the opportunity to make a statement if they desire to do so,
and will be available to respond to any stockholder questions that may be asked.
Stockholders may vote their shares by proxy in any of the following three ways:
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By Proxy Card: You may vote by signing and returning the enclosed proxy card. |
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By Internet: You may vote by Internet 24 hours a day through 12:00 p.m., Eastern
Standard Time, on December 7, 2010 by following the instructions that are included on your
enclosed proxy card. If you vote by Internet, you do not need to return your proxy card. |
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By Telephone: You may vote by telephone 24 hours a day through 12:00 p.m. Eastern
Standard Time, on December 7, 2010 by following the instructions that are included on your
enclosed proxy card. If you vote by telephone, you do not need to return your proxy card. |
A proxy submitted by mail that is properly executed, duly returned to our Company and not revoked
prior to the Meeting will be voted in accordance with the instructions contained therein. If no
instructions are given with respect to the proposals to be voted upon, proxies will be voted in
favor of such proposals. Each proxy may be revoked by a stockholder at any time until exercised by
giving written notice to the Secretary of our Company, by voting in person at the Meeting, or by
submitting a later-dated proxy by mail, Internet or telephone.
Our Companys common stock, par value $0.10 per share (our Common Stock), constitutes our only
outstanding security entitled to vote on the matters to be voted upon at the Meeting. Each share
of Common Stock entitles the holder to one vote. Only stockholders of record at the close of
business on October 15, 2010, the record date for the Meeting (the Record Date), are entitled to
notice of and to vote at the Meeting or any adjournment thereof. As of the Record Date, 55,784,510
shares of our Common Stock were outstanding. The presence, in person or by proxy, of the holders
of a majority of all the issued and outstanding Common Stock is necessary to constitute a quorum at
the Meeting. Abstentions and broker non-votes (i.e., shares held by a broker for its customers
that are not voted because the broker does not receive instructions from the customer or because
the broker does not have discretionary voting power with respect to the item under consideration)
will be counted as present for purposes of determining the presence or absence of a quorum for the
transaction of business.
In accordance with our By-laws and the Delaware General Corporation Law, a plurality of the votes
duly cast is required for the election of directors. The affirmative vote of a majority of the
outstanding shares of our Common Stock entitled to vote thereon is required to approve the Thor
Industries, Inc. 2010 Equity and Incentive Plan. Under the Delaware General Corporation Law,
although abstentions and broker non-votes are deemed to be present for the purpose of determining
whether a quorum is present at a meeting, abstentions and broker non-votes are not deemed to be
votes duly cast. As a result, abstentions and broker non-votes will not be included in the
tabulation of voting results with respect to Proposal #1 regarding the election of a director and
therefore will have no impact on the voting on such proposal. With respect to Proposal #2
regarding the Thor Industries, Inc. 2010 Equity and Incentive Plan, however, abstentions and broker
non-votes have the effect of votes in opposition.
1
A copy of our annual report for the fiscal year ended July 31, 2010 (fiscal 2010) is being sent
to each stockholder of record. The annual report is not to be considered a part of this proxy
soliciting material.
Stockholders Sharing an Address
We will deliver only one annual report and proxy statement to multiple stockholders sharing an
address unless we receive contrary instructions from one or more of the stockholders. We will
undertake to deliver promptly, upon written or oral request, a separate copy of the annual report
and/or proxy statement to a stockholder at a shared address to which a single copy of the annual
report and proxy statement are delivered. A stockholder can notify us either in writing or by
phone that the stockholder wishes to receive a separate copy of the annual report and/or proxy
statement, or stockholders sharing an address can request delivery of a single copy of the annual
report and/or proxy statement if they are receiving multiple copies, by contacting us at Thor
Industries, Inc., 419 W. Pike St., Jackson Center, OH 45334, Attention: Corporate Secretary or at
(937) 596-6849.
Proposal #1 Election of Director
Our By-laws provide that our Board may set the number of directors at no less than one (1) and no
more than fifteen (15). Our Board currently consists of seven directors who are divided into three
classes. J. Allen Kosowsky and Jan H. Suwinski currently serve as Class A directors; their terms
expire at the 2011 annual meeting of stockholders. Peter B. Orthwein and William C. Tomson
currently serve as Class B directors; their terms expire on the date of the Meeting. Neil D.
Chrisman, Alan Siegel and Geoffrey A. Thompson currently serve as Class C directors; their terms
expire at the 2012 annual meeting of stockholders. Our Board appointed Mr. Kosowsky as a director
effective as of March 11, 2010 to fill the vacancy created by the death of Wade F. B. Thompson, the
former Chairman of the Board, President and Chief Executive Officer of our Company.
Messrs. Chrisman and Tomson have informed us that they intend to retire from our Board, effective
as of the date of the Meeting. However, Mr. Chrisman has indicated that he will remain on our
Board until a suitable successor is identified. Our Nominating and Corporate Governance Committee,
while actively searching for candidates with the aid of a search consultant, has not yet identified
individuals to fill the vacancies to be created because of these retirements. In accordance with
our By-laws, the Board has set the number of directors at six, effective as of the date of the
Meeting, and accordingly there is no nominee to replace Mr. Tomson, whose term expires on the date
of the Meeting.
In accordance with our Certificate of Incorporation, as amended, Mr. Orthwein has been nominated to
stand for election as a Class B director. Our Nominating and Corporate Governance Committee has
proposed this nomination. If elected, Mr. Orthwein would serve on our Board until the 2013 annual
meeting of stockholders and until his successor is duly elected and qualified.
The persons named in the enclosed proxy intend to vote FOR the election of the nominee listed
below. In the event that the nominee becomes unavailable for election (a situation our management
does not now anticipate), the shares represented by proxies will be voted, unless authority is
withheld, for such other person as may be designated by our Nominating and Corporate Governance
Committee.
The nominee, as set forth below, is now a director of our Company and has continuously served in
such capacity since his first election or appointment to our Board.
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First Year |
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as Director |
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Peter B. Orthwein
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65 |
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Chairman, President
and Chief Executive
Officer of the
Company
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1980 |
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OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ABOVE NOMINEE.
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Directors of the Company
Our Board believes that it is necessary for each of our directors to possess many qualities and
skills. Our Nominating and Corporate Governance Committee does not have a formal process for
identifying director candidates. When searching for new candidates, our Nominating and Corporate
Governance Committee considers the evolving needs of our Board and searches for candidates that
fill any current or anticipated future gap. Our Board also believes that all directors must
possess a considerable amount of business management (such as experience as a chief executive or
chief financial officer) and educational experience. Our Nominating and Corporate Governance
Committee also evaluates candidates on, as applicable, the satisfaction of any independence
requirements imposed by law, regulation, the New York Stock Exchange and our Corporate Governance
Guidelines. Our Nominating and Corporate Governance Committee first considers a candidates
management experience and then considers issues of judgment, background, stature, conflicts of
interest, integrity, ethics and commitment to the goal of maximizing stockholder value when
considering director candidates. Our Nominating and Corporate Governance Committee does not have a
formal policy with respect to diversity; however, our Board and Nominating and Corporate Governance
Committee believe that it is essential that our Board members represent diverse viewpoints. In
considering candidates for our Board, our Nominating and Corporate Governance Committee considers
the entirety of each candidates credentials in the context of these standards. With respect to the
nomination of continuing directors for re-election, the individuals contributions to our Board are
also considered.
Our Board does not usually consider stockholder nominations of director candidates because it
believes that this is not an efficient or effective means of identifying qualified individuals. In
addition, our Board has a long history of being able to attract and maintain a membership with the
variety of skills necessary to properly oversee the affairs of our Company. However, to the extent
that we are conducting a search for a director candidate, our Nominating and Corporate Governance
Committee may choose to consider a stockholder nomination of a candidate provided that such
candidate possesses the requisite business, management and educational experience.
Set forth below is certain information regarding our directors who will continue serving on the
Board after the Meeting, including certain individual qualifications and skills of our directors
that contribute to the effectiveness of our Board. There are no family relationships among any of
our directors or executive officers.
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Peter B. Orthwein, age 65
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Mr. Orthwein, a co-founder of our Company,
currently serves as Chairman of the Board,
President and Chief Executive Officer of our
Company, having been appointed to those
positions on an interim basis on November 10,
2009 and on a permanent basis on November 17,
2010, following the death of Wade F. B.
Thompson, our former Chairman, President and
Chief Executive Officer. Mr. Orthwein has
served as a director of our Company since its
founding in 1980, Vice Chairman of our Company
from 1986 to November 2009 and Treasurer of our
Company from 1980 to November 2009.
Our Nominating and Governance Committee and
Board believe that his extensive experience with
our Company and the industry make him an asset
to our Board. |
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Neil D. Chrisman, age 73
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Mr. Chrisman, who became a Director in July
1999, is a retired Managing Director in
Corporate Finance of J.P. Morgan & Co. Mr.
Chrisman retired from J.P. Morgan in 1993. As a
member of the Banks Credit Policy Committee and
senior credit officer for J.P. Morgan for over
25 years, Mr. Chrisman gained extensive
experience making loans and investments in
medium to large domestic and international
companies. He served as a director of various
private companies in which J.P. Morgan held an
equity interest. He also served as Chairman of
the Board for over 15 years of several major not
for profit arts organizations in the New York
City area. Our Nominating and Governance
Committee and Board believe that his financial
and executive experience make him an asset to
the Board. |
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J. Allen Kosowsky, age 62
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Mr. Kosowsky, who became a Director in March 2010, is a certified
public accountant who since 1985 has conducted business through his own advisory firm. The
firm provides services that include, but are not limited to, business and intellectual
property valuations, forensic accounting and financial analysis and alternative dispute
resolutions. From January 2003 to February 2010, Mr. Kosowsky served as the chairman of the
board of directors and chairman of the audit committee for ON2 Technologies Inc., a U.S. based
video compression software company, which was recently acquired by Google, Inc. Our
Nominating and Corporate Governance Committee and Board believe that his extensive accounting
experience and expertise make him an asset to our Board. |
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Alan Siegel, age 75
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Mr. Siegel, who became a Director in
September 1983, is a retired partner of the
law firm of Akin Gump Strauss Hauer & Feld
LLP and currently serves as an officer and
director of The Thompson Family Foundation,
Inc., a charitable foundation created by Wade
F. B. Thompson, the deceased co-founder of
the Company. Mr. Siegel previously served as
non-executive chairman of the board of
directors of The Wet Seal, Inc., a national
retailer. He has also served on the board of
directors of several other public and private
companies including Ermenegildo Zegna, AXA
RE, and Southern Starr Broadcasting, Inc.
Our Nominating and Governance Committee and
Board believe that his experience with our
Company and his legal and business background
make him an asset to our Board. |
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Jan H. Suwinski, age 69
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Mr. Suwinski, who became a Director in July
1999, has been a Professor of Business
Operations at the Samuel Curtis Johnson
Graduate School of Management, Cornell
University since July 1996. From 1990 to
1996, Mr. Suwinski was Executive Vice
President, Opto Electronics Group at Corning,
Incorporated and Chairman of Siecor, a
Siemens/Corning joint venture. Mr. Suwinski
is a director of Tellabs, Inc. and ACI
Worldwide, Inc. Mr. Suwinski served on the
board of directors of Ohio Casualty Group,
Inc. from 2002 to 2007. Mr. Suwinski spent 32
years in a variety of managerial roles at
Corning, Inc., a global manufacturing
company. Our Nominating and Governance
Committee and Board believe that his
management experience coupled with his 18
years of service on public company boards
make him an asset to our Board. |
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Geoffrey A. Thompson, age 70
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Mr. Thompson, who became a Director in
September 2003, is the retired Chief
Executive Officer of Marine Midland Banks,
Inc., where he served as President from 1985
to 1992 and Chief Executive Officer from 1987
to 1992. After serving with Marine Midland
Banks, Inc., Mr. Thompson worked as an
independent business consultant and served as
a principal at Kohlberg & Company and, from
2004 to 2010, was a partner of Palisades
Advisors, LLC, a private equity firm. Mr.
Thompson served on the board of directors of
Stoneleigh Partners Acquisition Corp. from
2006 to 2009 and HSBC, plc, one of the
worlds five largest banks, from 1984 to
1992. Our Nominating and Governance
Committee and Board believe that Mr.
Thompsons substantial management experience
as a chief executive officer of a public
company, his financial expertise and training
which qualify him as an audit committee
financial expert, and his significant public
company board experience make him an asset to
the Board. |
Executive Officers Who Are Not Directors
The following is a list of the names, ages and certain biographical information of our executive
officers who are not directors. Executive officers serve at the discretion of our Company.
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Walter L. Bennett, age 64
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Mr. Bennett has been
with our Company and its predecessor since July 1977 and currently serves as
Executive Vice President, Chief Administrative Officer and Secretary of the
Company. He became Vice President, Finance, of Airstream, Inc. in September
1980; Vice President, Finance, of our Company in September 1983; Chief
Administrative Officer/Secretary of our Company in November 1985; Senior Vice
President of our Company in February 1989; Chief Financial Officer of our
Company in March 1999 and Executive Vice President of our Company in January
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Christian G. Farman, age 51
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Mr. Farman has been
with our Company since May 2008, serving as Senior Vice President and Chief
Financial Officer. On November 17, 2009, he was elected to the office of
Treasurer of our Company. Prior to joining our Company, Mr. Farman served as
Chief Financial Officer of Deutsch, a leading manufacturer of electrical
connectors, from May 2006 to May 2007. From December 2003 to December 2005,
Mr. Farman served as Chief Financial Officer of Insituform Technologies, Inc.,
a NASDAQ-listed infrastructure company, first as Vice President, from December
2003 to January 2005, and then as Senior Vice President, from January 2005 to
December 2005. From February 2003 to April 2003, Mr. Farman served as Chief
Operating Officer of the National Audubon Society. Prior to that, from 1989 to
2001, Mr. Farman was employed by Vivendi North America (previously Anjou
International), a water treatment and environmental services company, which he
joined as Controller and was ultimately promoted to Executive Vice President
and Chief Financial Officer. Prior to Vivendi North America, he was employed
as a senior audit manager at Price Waterhouse (now known as
PricewaterhouseCoopers LLP), where he worked from 1979 to 1989. Mr. Farman is
a Certified Public Accountant. |
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Ronald Fenech, age 53
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Mr. Fenech has been with
our Company since 2001 and was appointed Senior Group President of our Company
in January 2010, with responsibility for our recreation vehicle segment. From
November 2001 to January 2010, Mr. Fenech served as President of Keystone RV
Company, one of our subsidiaries. |
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Richard E. Riegel, III, age 44
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Mr. Riegel has
been with our Company since May 1998 and was appointed Senior Group President
of our Company in January 2010, with responsibility for investor relations,
developing new business segments related to our existing lines of business and
the oversight of our bus segment. Mr. Riegel served as our Chief Operating
Officer from October 2007 to January 2010 and from August 2005 to September
2007 served as Group President. From April 2002 through August 2005, Mr.
Riegel served as President and Chief Executive Officer of Airstream, Inc. and
from 1998 through April 2002, he served as Vice President, Corporate
Development, of our Company. |
Board of Directors, Committees and Corporate Governance
Our Board has the responsibility for establishing broad corporate policies and for the overall
management of our business. Members of our Board are kept informed of our performance by various
reports sent to them at regular intervals by management, as well as by operating and financial
reports presented by management at Board meetings.
Board Leadership Structure
Peter B. Orthwein, our President and Chief Executive Officer and a co-founder of our Company,
serves as Chairman of the Board. Our Board believes that our Chief Executive Officer is best
situated to serve as
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Chairman because he is the director most familiar with our business and industry and most capable
of effectively identifying strategic priorities and leading the discussion and execution of
strategy. Further, we have consistently combined the positions of Chairman and Chief Executive
Officer since our Company was founded and we believe that combining these positions has served us
well. Independent directors and management have different perspectives and roles in strategy
development. Our independent directors bring experience, oversight and expertise from outside our
Company and industry, while the Chief Executive Officer brings Company-specific experience and
expertise. Our Board believes that the combined role of Chairman and Chief Executive Officer
promotes strategy development and execution, and facilitates information flow between management
and our Board, which are essential to effective governance.
One of the key responsibilities of our Board is to develop and oversee strategic direction and hold
management accountable for the execution of strategy once it is developed. Our Board believes the
combined role of Chairman and Chief Executive Officer, together with an independent Lead Director
having the duties described below, is in the best interest of stockholders because it provides the
appropriate balance between strategy development and independent oversight of management.
Geoffrey A. Thompson, an independent director who serves on our Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee, was selected by our Board to serve as
the Lead Director. The Lead Directors primary responsibility is to ensure that our Board provides
independent oversight of management and that directors and stockholders have an independent
leadership contact. The Lead Director has the responsibility of presiding at all meetings of the
non-management directors held in executive session, consulting with the Chairman and Chief
Executive Officer on board and committee meeting agendas, acting as a liaison between management
and the non-management directors, including maintaining frequent contact with the Chairman and
Chief Executive Officer and advising him on the efficiency of the board meetings, and facilitating
teamwork and communication between the non-management directors and management, as well as
additional responsibilities that are more fully described in the Companys Corporate Governance
Guidelines.
As part of our annual corporate governance and succession planning review, our Nominating and
Governance Committee and our Board evaluates our board leadership structure to ensure that it is
appropriate. Our Board recognizes that there may be circumstances in the future that would lead it
to separate the offices of Chief Executive Officer and Chairman of the Board.
Committees
Our Board has three committees with the principal functions described below. The charters of each
of these committees are posted on our website at www.thorindustries.com and are available
in print to any stockholder who requests them. The charters of our Audit Committee and Nominating
and Corporate Governance Committee, which were revised during fiscal 2010, are attached to this
Proxy Statement as Appendix A and Appendix B, respectively.
Audit Committee
We have a separately-designated standing Audit Committee established in accordance with section
3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The principal
functions of our Audit Committee are to (i) recommend engagement of our independent registered
public accounting firm and (ii) maintain communications among our Board, such independent
registered public accounting firm and our internal accounting staff with respect to accounting and
auditing procedures, the implementation of recommendations by such independent registered public
accounting firm, the adequacy of our internal controls and related matters. During fiscal 2010, our
Audit Committee had quarterly private meetings with our Chief Financial Officer, the Internal Audit
Director and our independent registered public accounting firm. Our Board has determined that
Geoffrey A. Thompson, a member of our Audit Committee, is an audit committee financial expert as
defined in Section 407 of the Sarbanes-Oxley Act of 2002.
Compensation Committee
The principal functions of our Compensation Committee are to establish and review executive
compensation policies and guiding principles; review and approve the compensation of our Chief
Executive
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Officer and evaluate our Chief Executive Officers performance in light of such compensation;
review and approve the compensation of our other executive officers; evaluate the design of
compensation and benefit programs for our executive officers; review all components of compensation
for independent directors; and assist the Board in fulfilling its oversight responsibilities with
respect to the management of risks arising from our compensation policies and programs. Our
Compensation Committee also acts as administrator under several of our compensation and benefits
plans, including our 2006 Equity Incentive Plan (our 2006 Plan) and, if approved by the
stockholders, our Thor Industries, Inc. 2010 Equity and Incentive Plan (our 2010 Plan). In its
capacity as administrator of our 2006 Plan and, if approved by our stockholders, our 2010 Plan, our
Compensation Committee is authorized to issue awards under these Plans, including options and
restricted stock, determine which employees and other individuals performing substantial service
for our Company may be granted options, restricted stock and/or performance incentive awards, and
determine the rights and limitations attendant to options, restricted stock and performance
incentive awards granted under these plans.
Nominating and Corporate Governance Committee
The principal functions of our Nominating and Corporate Governance Committee are to address all
matters of corporate governance; evaluate qualifications and candidates for positions on our Board
using the criteria set forth above under the heading Directors of the Company; review succession
plans, including policies and principles for the selection and performance review of the Chief
Executive Officer; establish criteria for selecting new directors, nominees for Board membership
and the positions of Chairman and Chief Executive Officer; and to determine whether a director
should be invited to stand for re-election. A copy of our Companys Corporate Governance
Guidelines is available on our website at www.thorindustries.com and is available in print
to any stockholder who requests it.
Membership of Committees
The following table summarizes the current membership of our Board and each of its committees.
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and |
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Corporate |
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Audit |
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Compensation |
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Governance |
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Board |
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Committee |
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Committee |
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Committee |
Peter B. Orthwein |
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Chairman |
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Neil D. Chrisman |
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X |
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X |
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J. Allen Kosowsky |
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X |
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Alan Siegel |
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X |
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Chair |
Jan H. Suwinski |
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X |
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Chair |
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Geoffrey A. Thompson |
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Lead Director |
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X |
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X |
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X |
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William C. Tomson |
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X |
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Chair |
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Mr. Tomson has informed us that he intends to retire as a director effective on the date of the
Meeting. In addition, Mr. Chrisman has also informed us that he intends to retire as a director
effective on the date of the Meeting, but has indicated that he will remain on our Board until a
suitable successor is identified. After their respective resignations, our Board will revise the
membership of our Board committees to ensure continued compliance with applicable laws and New York
Stock Exchange rules.
Our Board has affirmatively determined, by resolution of our Board as a whole, that the following
directors have no direct or indirect material relationship with our Company and satisfy the
requirements to be considered independent in accordance with the rules of the New York Stock
Exchange and our Director Independence Standards which are set forth on Appendix C to this
Proxy Statement: Messrs. Neil D. Chrisman, Alan Siegel, Jan H. Suwinski, Geoffrey A. Thompson and
William C. Tomson. As a result, each of our Audit Committee, Compensation Committee and Nominating
and Corporate Governance Committee is comprised entirely of independent directors, as determined by
our Board.
7
Mr. Siegel serves as a co-executor of the Estate of Wade F. B. Thompson (the Estate), our largest
stockholder and holder of the shares of our Common Stock previously owned by the late Mr. Thompson.
Mr. Siegel is also an officer and director of The Thompson Family Foundation, Inc., a charitable
foundation, created by Wade F. B. Thompson. As of September 1, 2010, the Estate owned 16.5% of our
issued and outstanding Common Stock. In Mr. Siegels capacity as co-executor and as trustee under
Wade F. B. Thompsons trust, Mr. Siegel receives fees and expense reimbursement provided in the
documents governing such appointments. On December 17, 2009, we entered into a repurchase
agreement to purchase shares of our Common Stock from the Estate in a private transaction.
Pursuant to the terms of the repurchase agreement, we purchased from the Estate 3,980,000 shares of
our Common Stock at a price of $29 per share, representing an aggregate purchase price of
$115,420,000. The repurchase transaction was evaluated and approved by members of our Board other
than Mr. Siegel. Mr. Siegel did not receive any fees in connection with the repurchase
transaction.
Our Board concluded that Mr. Siegels service as co-executor of the Estate and trustee under Mr.
Thompsons trust, including his service in connection with the Estates sale of shares of our Common Stock to
the Company, does not impair Mr. Siegels ability to exercise independent judgment from management
and is not material to our Company or management.
Board and Committee Meetings
Our Board, as a whole, met in person, by telephone or took action by unanimous written consent 12
times during fiscal 2010. Our Audit Committee met in person or by telephone 11 times during fiscal
2010. Our Compensation Committee met in person or by telephone 9 times during fiscal 2010. Our
Nominating and Corporate Governance Committee met in person or by telephone 3 times in fiscal 2010.
Each of the directors attended at least 75% (and most attended 100%) of all meetings of our Board
and the respective Board committees on which they served during fiscal 2010 (during the respective
periods that each such person was serving as a director or committee member, as applicable).
In addition, regularly scheduled meetings of the non-management directors are held four times each
year. A non-management director is chosen to preside at these meetings.
It is our policy that directors attend all Board meetings and the annual meeting of stockholders,
unless excused by the Chairman. All elected directors were in attendance at the 2009 Annual
Meeting of Stockholders.
Stockholder Communications
Although we have not to date developed formal processes by which stockholders may communicate
directly to directors, we believe that the informal process, pursuant to which any communication
sent to our Board in care of our Company is forwarded to our Board, has served the needs of our
Board and our stockholders. Until any other procedures are developed, any communications to our
Board should be sent to it in care of the Secretary of our Company.
Any communications from interested parties directed toward non-management directors specifically
may be sent to Alan Siegel, one of our non-management directors, who forwards to each of the other
non-management directors any such communications that, in the opinion of Mr. Siegel, deal with the
functions of our Board or the committees thereof or that he otherwise determines require their
attention. Mr. Siegels address for this purpose is c/o Thor Industries, Inc., 419 West Pike St.,
Jackson Center, OH 45334.
Code of Ethics
We have adopted a written code of ethics, the Thor Industries, Inc. Business Ethics Policy, which
is applicable to all of our directors, officers and employees, including our principal executive
officer, principal financial officer, principal accounting officer or controller and other
executive officers identified in this proxy statement who perform similar functions (collectively,
the Selected Officers). Our code of ethics was recently amended and a copy of such code of
ethics has been posted on our website and is available in print to any stockholder who requests it.
We intend to disclose any changes in or waivers from our code of ethics applicable to any Selected
Officer on our website or by filing a Form 8-K with the Securities and Exchange Commission.
8
The Boards Role in Risk Oversight
Management is responsible for the day-to-day management of risks we face, while our Board, as a
whole and through its committees, is responsible for the oversight of risk management. Our Board
takes an active role in risk oversight, using an enterprise-wide approach that is designed to
support the achievement of organizational objectives, including strategic objectives, to improve
long-term organizational performance and enhance shareholder value. A fundamental part of risk
management is not only understanding the risks a company faces and what steps management is taking
to manage those risks, but also understanding what level of risk is appropriate for our Company.
The involvement of the full Board in setting our business strategy is a key part of its assessment
of managements appetite for risk and also a determination of what constitutes an appropriate level
of risk for our Company. Our full Board participates in an annual enterprise risk management
assessment, which is led by our senior management with the participation of outside advisors. In
addition, senior management regularly attends Board meetings and is available to address any
questions or concerns raised by our Board on risk management-related matters. In this process,
risk is assessed throughout the business, focusing on three primary areas of risk: financial risk,
legal/compliance risk and operational/strategic risk. In its risk oversight role, our Board has
the responsibility to satisfy itself that the risk management processes designed and implemented by
management are adequate and functioning as designed.
While our Board is ultimately responsible for risk oversight, our three Board committees assist our
Board in fulfilling its oversight responsibilities in certain areas of risk. Our Audit Committee
assists our Board in fulfilling its oversight responsibilities with respect to risk management in
the areas of financial reporting, internal controls and compliance with legal and regulatory
requirements, and, in accordance with New York Stock Exchange requirements, discusses policies with
respect to risk assessment and risk management. Risk assessment reports are regularly provided by
management to our Audit Committee. Our Compensation Committee assists our Board in fulfilling its
oversight responsibilities with respect to the management of risks arising from our compensation
policies and programs. Our Nominating and Corporate Governance Committee assists our Board in
fulfilling its oversight responsibilities with respect to the management of risks associated with
Board organization, membership and structure, succession planning for our directors and executive
officers, and corporate governance.
9
Ownership of Common Stock
The following table sets forth information as of September 1, 2010 with respect to the beneficial
ownership, as defined in Rule 13(d) under the Exchange Act, of our Common Stock by (i) each person
known by the Company to beneficially own, as defined in Rule 13d-3 under the Exchange Act, 5% or
more of the outstanding Common Stock; (ii) each director of the Company; (iii) each executive
officer of the Company named in the Summary Compensation Table below; and (iv) all executive
officers and directors of the Company as a group. As of September 1, 2010, there were 51,461,510
shares of Common Stock issued and outstanding.
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Name and Address of Beneficial |
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Owner (1) |
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Beneficial Ownership (2) |
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Number of Shares |
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Percent |
Peter B. Orthwein |
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2,488,150 |
(3) |
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4.8 |
% |
Christian G. Farman |
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66,666 |
(4) |
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* |
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Richard E. Riegel, III |
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612,623 |
(5) |
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1.2 |
% |
Walter L. Bennett |
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16,225 |
(6) |
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* |
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Ronald Fenech |
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101,239 |
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* |
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Neil D. Chrisman |
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31,000 |
(7) |
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* |
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J. Allen Kosowsky |
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2,000 |
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* |
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Alan Siegel |
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2,000 |
(8) |
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* |
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Jan H. Suwinski |
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53,000 |
(9) |
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* |
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Geoffrey A. Thompson |
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17,400 |
(10) |
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* |
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William C. Tomson |
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64,000 |
(11) |
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* |
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Estate of Wade F. B. Thompson
230 Park Avenue, Suite 1541
New York, NY 10169 |
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8,473,470 |
(12) |
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16.5 |
% |
Royce & Associates, LLC
745 Fifth Avenue
New York, NY 10151 |
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5,794,535 |
(13) |
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11.3 |
% |
FMR LLC
82 Devonshire Street
Boston, MA 02109 |
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3,095,200 |
(14) |
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6.0 |
% |
All directors and executive officers as a group (eleven
persons) |
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3,454,303 |
(15) |
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6.7 |
% |
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* |
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less than 1%. |
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(1) |
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Except as otherwise indicated, the address of each beneficial owner
is c/o Thor Industries, Inc., 419 West Pike Street, Jackson Center,
Ohio 45334-0629. |
|
(2) |
|
Except as otherwise indicated, the persons in the table have sole
voting and investment power with respect to all shares of our Common
Stock shown as beneficially owned by them. |
|
(3) |
|
Includes 62,250 shares owned by Mr. Orthweins wife, 124,000 shares
owned of record by a trust for the benefit of Mr. Orthweins
children, of which Mr. Orthwein is a trustee, 30,000 shares owned of
record by a trust for the benefit of Mr. Orthweins half brother, of
which Mr. Orthwein is a trustee, 106,500 shares of record owned by
Mr. Orthweins minor children, for which Mrs. |
10
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Orthwein acts as
custodian, 320,000 shares owned of record by the Orthwein Investment
Group D, L.P., in which Mr. Orthwein has a 0.51% economic interest
but a 51% general partnership interest, 111,500 shares held by a
charitable annuity trust of which Mr. and Mrs. Orthwein are the sole
trustees, and 299,700 shares held in a trust of which Mr. Orthwein is
sole trustee for his three youngest children as beneficiaries. |
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(4) |
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Includes options to acquire 66,666 shares issued under our 2006 Plan
which are currently exercisable. |
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(5) |
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Includes options to acquire 28,000 shares issued under our 1999 Stock
Option Plan (our 1999 Plan) and options to acquire 66,666 shares
issued under our 2006 Plan which are currently exercisable. Also
includes 503,421 shares owned by Mr. Riegels wife, and 6,524 shares
of record owned by Mr. Riegels minor children for whom Mr. Riegel
acts as custodian. |
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(6) |
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Includes options to acquire 15,225 shares issued under our 1999 Plan. |
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(7) |
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Includes options to acquire 25,000 shares issued under our 1999 Plan. |
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(8) |
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Consists of options to acquire 2,000 shares issued under our 1999
Plan. Does not include the 8,473,470 shares owned by the Estate of
which Mr. Siegel is a co-executor. |
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(9) |
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Includes options to acquire 43,000 shares issued under our 1999 Plan. |
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(10) |
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Includes options to acquire 15,000 shares issued under our 1999 Plan. |
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(11) |
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Includes options to acquire 45,000 shares issued under our 1999 Plan. |
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(12) |
|
According to Amendment No. 2 to Schedule 13D filed by the Estate on
April 22, 2010, the Estate and Ms. Angela E. Thompson, a co-executor
of the Estate, may be deemed the beneficial owners of 8,473,470
shares of our Common Stock. Mr. Siegel, another co-executor of the
Estate, may be deemed the beneficial owner of 8,475,470 shares of our
Common Stock, consisting of (i) 8,473,470 shares held by the Estate
and (ii) 2,000 shares issuable upon exercise of stock options held by
Mr. Siegel. |
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(13) |
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The number of shares listed for Royce & Associates, LLC is based on a
Schedule 13G filed on April 6, 2010. |
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(14) |
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The number of shares listed for FMR LLC is based on a Schedule 13G
filed on February 16, 2010. |
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(15) |
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Includes 306,557 shares issuable under stock options which are
currently exercisable or will become exercisable within 60 days from
September 1, 2010. |
11
Compensation Discussion and Analysis
The following Compensation Discussion and Analysis provides information regarding the objectives
and elements of our compensation philosophy, policies and practices with respect to the
compensation of our named executive officers who appear in the Summary Compensation Table below.
Named Executive Officers
For fiscal 2010, our named executive officers and their respective titles are as follows:
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Peter B. Orthwein, Chairman of the Board, President and Chief Executive Officer |
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Christian G. Farman, Senior Vice President, Treasurer and Chief Financial
Officer |
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Ronald Fenech, Senior Group President |
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Richard E. Riegel, III, Senior Group President |
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Walter L. Bennett, Executive Vice President, Chief Administrative Officer and
Secretary |
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Wade F. B. Thompson, former Chairman of the Board, President and Chief
Executive Officer |
Messrs. Orthwein and Farman are included as named executive officers for fiscal 2010 based on their
positions as our Chief Executive Officer and Chief Financial Officer, respectively, and Messrs.
Fenech, Riegel and Bennett are included based on their status as our three most highly compensated
executive officers as of the end of fiscal 2010, other than our Chief Executive Officer and Chief
Financial Officer. Mr. Thompson is included based on his position as our Chief Executive Officer
for a portion of fiscal 2010.
Our Compensation Philosophy and Objectives
Our compensation structure has historically focused on cash compensation tied to current
performance. We have focused on cash compensation because we believe it has been the most
important factor underlying our success in attracting, motivating and retaining executive officers
and other management throughout our 30 year history. In addition, we provide long-term incentive
compensation to our executive officers, including equity awards under our 2006 Plan, to the extent
we believe that it will help us to attract, motivate or retain particular individuals.
Our Company consists of a corporate parent, Thor Industries, Inc., and several operating
subsidiaries. Executive officers of the corporate parent historically have received a majority of
their compensation in the form of discretionary cash bonuses based on the profitability of our
Company. In particular, Messrs. Wade F. B. Thompson and Peter B. Orthwein historically received low
fixed salaries in addition to discretionary cash bonuses relating to the profitability of our
Company, which were reviewed and approved by our Compensation Committee. However, we increased the
base salaries of certain of our named executive officers in fiscal 2010 for the reasons set forth
below.
The management of each of our operating subsidiaries is provided with incentive based cash
compensation through our Management Incentive Plan (our MIP), a program which establishes an
incentive compensation pool equal to a percentage of the operating subsidiarys pre-tax profits if
a threshold established by our Chief Executive Officer is attained. Pre-tax profits of an
operating subsidiary are determined by reference to the income statement of the operating
subsidiary after deducting an interest factor based on the amount of capital, if any, utilized by
the operating subsidiary during the relevant measuring period. We believe that we have been
successful in attracting, motivating and retaining management of our operating subsidiaries in
large part due to our policy of providing cash compensation based upon the profitability of our
operating subsidiaries.
12
Certain executive officers of the corporate parent are also provided with performance-based cash
compensation through our 2006 Plan, our 2008 Plan, our MIP or otherwise. Pre-tax profits has been
chosen as the relevant performance measure under these plans because it is a key metric used by
management to direct and measure our business performance. Moreover, we believe that pre-tax
profits measures are clearly understood by both our employees and stockholders and that incremental
growth in pre-tax profits leads to the creation of long-term stockholder value.
Role of Compensation Consultants
Our Compensation Committee has ultimate responsibility for overseeing all forms of compensation for
our named executive officers. Historically, our Compensation Committee has not utilized the
services of a compensation consultant, relying on its general understanding of compensation
practices of other similarly situated companies and other general marketplace information.
In February 2010, our Compensation Committee engaged Towers Watson, an independent compensation
consultant, to assist our Compensation Committee in structuring some of its executive compensation
programs for fiscal 2011. Towers Watson reviews Compensation Committee materials and attends
committee meetings and executive sessions when requested by the members of our Compensation
Committee. Towers Watson is independent from our Company and reports directly to our Compensation
Committee.
Since February 2010, our Compensation Committee has asked Towers Watson to review and provide input
on:
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the compensation of our named executive officers; |
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structuring incentive compensation to qualify as performance-based compensation for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code); |
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trends in executive compensation; |
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our Compensation Committees charter; |
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meeting materials prepared for and circulated to our Compensation Committee; and |
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proposed executive compensation plans. |
Elements of Compensation for Named Executive Officers
There are four basic elements of our executive compensation program for our named executive
officers, which are: (i) base salary, (ii) cash incentive compensation, (iii) long-term equity
incentive compensation and (iv) other compensation and benefits. Historically, we have not entered
into employment agreements with our named executive officers. However, we entered into an
employment offer letter with Mr. Farman in May 2008 as an inducement to him to join our
Company. We also struck an agreement with Mr. Fenech in April 2010 to induce him to
take on additional responsibilities related to our recreation vehicle segment. In negotiating Mr.
Fenechs compensation, the Compensation Committee was mindful of the highly competitive employment
market for key individuals in the recreation vehicle business, Mr. Fenechs previous compensation
at Keystone RV Company, one of our operating subsidiaries, and Mr. Fenechs substantial capacities
to drive recreation vehicle profitability in the future.
Base Salary
Historically, most of our named executive officers received low base salaries relative to their
bonuses, reflecting our historical philosophy that short-term compensation should be based
primarily on performance. Base salaries of named executive officers are typically not adjusted
except in connection with promotions. Notwithstanding the foregoing, for fiscal 2008, Mr. Bennett,
then our Chief Financial Officer, received a one-time base salary increase, from $100,000 to
$500,000, with the expectation that his annual bonus would be reduced by a similar amount (Mr.
Bennetts actual bonus for fiscal 2008, a combination of a discretionary bonus and a cash incentive
award, was $348,850, a decrease of $551,150 from fiscal 2007). This one-time adjustment reflected
the determination by our Chief Executive Officer and Compensation
13
Committee that a smaller portion of the total compensation of our finance executives should be tied
to profitability going forward to mitigate the potential risks associated with our short-term
incentive compensation program with respect to those individuals. For the same reason, the base
salary of Mr. Farman, our current Chief Financial Officer, was set at $500,000 when he joined our
Company in May 2008.
During fiscal 2010, several individuals within our Company assumed new roles with increased
responsibilities near or after the death of Wade F. B. Thompson, our former Chairman of the Board,
President and Chief Executive Officer, which resulted in the establishment of new base salaries for
these individuals. The base salary of Mr. Orthwein was increased first from $270,000 to $500,000
in November 2009, when Mr. Orthwein served as interim Chairman of the Board, President and Chief
Executive Officer, and, following his promotion to permanent Chairman of the Board, President and
Chief Executive Officer in November 2009, his base salary was increased again to $750,000 in May
2010. In addition, following Mr. Thompsons death, two new senior group presidents were appointed
to oversee the operations of our operating units. Ronald Fenech was appointed Senior Group
President with responsibility for our recreation vehicle segment, our largest operating segment,
and Mr. Riegel was appointed Senior Group President with responsibility for investor relations,
developing new business segments related to our existing lines of business and the oversight of our
bus segment. The base salary of Mr. Fenech was set at $1 million following his appointment as
Senior Group President. Previously, Mr. Fenech served as President of Keystone RV Company, one of
our operating subsidiaries, with a base salary of $200,000 and with the opportunity to earn
additional amounts under our MIP as described below. The Company believes that Mr. Fenechs base
salary is appropriate because of Mr. Fenechs proven ability to drive growth and profitability at
Keystone and as an inducement to Mr. Fenech to assume greater responsibility as the head of our
entire recreation vehicle segment. The base salary of Mr. Riegel was increased from $100,500 to
$200,000, reflecting his increased responsibilities following the death of Mr. Thompson, which
culminated in Mr. Riegel later being appointed as Senior Group President of our Company, with
responsibility for investor relations, developing new business segments related to our existing
lines of business and the oversight of our bus segment.
Recently, our Compensation Committee approved changes to the base salaries of Messrs. Farman and
Riegel for fiscal year 2011. Mr. Farmans base salary was increased from $500,000 to $600,000 and
Mr. Riegels base salary was increased from $200,000 to $300,000. These salary increases were made
in recognition of their valuable contributions to our Company and to motivate and retain these
executives going forward.
Cash Incentive Compensation
Cash incentive compensation consists of discretionary bonuses and performance-based incentive
awards under our 2006 Plan, our 2008 Plan or otherwise. Cash incentive compensation for our named
executive officers generally is determined and paid on either a quarterly or annual basis.
Performance-based incentive awards
On
October 30, 2009, Mr. Riegel became eligible to receive a performance-based incentive award
equal to 0.60% of our annual pre-tax profits for fiscal 2010 and Mr. Farman became eligible to
receive a performance-based incentive award equal to 0.15% of our annual pre-tax profits for fiscal
2010. Each award was payable on a quarterly basis; provided, that, in each case, no amount would
be paid unless the following quarterly thresholds were achieved: $10 million of pre-tax profits for
the first, third and fourth quarters of fiscal 2010 and $5 million of pre-tax profits for the
second quarter of fiscal 2010. In approving the performance-based incentive awards for these named
executive officers, our Compensation Committee considered the named executive officers
responsibilities as well as the estimated impact of these amounts on each named executive officers
total compensation. Mr. Farman was eligible to receive a smaller percentage of our pre-tax profits
than Mr. Riegel because he was also eligible to receive a discretionary bonus for fiscal 2010.
14
In connection with Mr. Fenechs appointment as Senior Group President, with responsibility for our
companys recreation vehicle segment, as discussed under Base Salary above, he was granted a
performance-based incentive award under our MIP, payable on a quarterly basis, equal to 4% of the
pre-tax profit from operations of our recreation vehicle segment (excluding LIFO and impairment
charges) beginning May 1, 2010. Under the terms of the award, Mr. Fenech was required to be
employed by us at the time of payment, losses in any quarter carried forward to future quarters
(but not to the next fiscal year) and the maximum Mr. Fenech was eligible to earn under our MIP for
fiscal 2010 was $10 million. For the portion of fiscal 2010 prior to May 1, 2010, Mr. Fenech
received a performance-based incentive award under our MIP equal to 4.1% of Keystones pre-tax
profits for such period, subject to certain adjustments. The award was paid on a monthly basis for
the period through January 2010, while Mr. Fenech served as President of Keystone, with the final
payment following the end of our quarter ended April 30, 2010.
Messrs. Thompson, Orthwein and Bennett did not receive performance-based incentive awards. Rather,
they were eligible to receive cash incentive compensation for fiscal 2010 only in the form of
discretionary bonuses, at the election of our Compensation Committee.
Discretionary bonuses
Our Compensation Committee elected to pay discretionary bonuses for fiscal 2010 to Messrs.
Orthwein, Farman and Bennett, which were paid on a quarterly basis after the end of each fiscal
quarter. Due to his death in November 2009, Mr. Thompson did not receive a discretionary bonus for
fiscal 2010. In approving the bonus amounts for Messrs. Orthwein, Farman and Bennett, our
Compensation Committee considered our overall performance, including our profitability, our
projected profits for the remainder of fiscal 2010 and the reasonableness of the recommended bonus
amounts in relation to their collective knowledge of the compensation paid to similarly situated
executives in peer and comparably sized companies. In drawing comparisons against peer and other
companies, members of our Compensation Committee individually and informally consulted various
publicly available sources, including publicly available information from the SECs EDGAR database.
They do not, however, have an established peer group against which they draw comparisons nor do
they engage in any formal benchmarking. Mr. Farman received a discretionary bonus in addition to
his performance-based incentive award in recognition of his significant responsibilities, his
diligent work and his overall value to our Company.
Awards for fiscal 2011
On August 20, 2010, our Compensation Committee approved performance-based incentive awards for
Messrs. Orthwein, Fenech and Riegel for fiscal year 2011. These awards continue the recent trend
of providing performance-based incentive compensation awards to our named executive officers as
opposed to purely discretionary bonuses. In addition, as total compensation of our named executive
officers exceeds $1 million, designing these awards so as to comply with Section 162(m) of the Code
is expected to result in less tax paid by our Company (see Tax Deductibility below).
Peter B. Orthwein. Mr. Orthwein was granted a performance-based incentive award under our 2008
Annual Incentive Plan (our 2008 Plan), payable quarterly in accordance with our 2008 Plan, equal
to 0.5% of our pre-tax profits for each fiscal quarter, provided that the pre-tax profits in such
fiscal quarter are at least $15 million. The amount of such award shall not exceed $5 million for
any fiscal quarter in accordance with our 2008 Plan. The receipt of such award is contingent on
Mr. Orthwein being employed with our Company at the time of payment and certification by our
Compensation Committee that the performance goal has been achieved. The amount of such award is
subject to downward adjustment in accordance with the terms of the 2008 Plan.
Ronald Fenech. Mr. Fenech was granted a performance-based incentive award under our 2008 Plan,
payable quarterly in accordance with our 2008 Plan, equal to 3% of our pre-tax profits for each
fiscal quarter, provided that the pre-tax profits in such fiscal quarter are at least $15 million
(the aggregate amount payable for fiscal 2011 pursuant to this award, the Fenech 2008 Plan
Amount). The Fenech 2008 Plan Amount may not exceed $5 million for any fiscal quarter in
accordance with our 2008 Plan.
15
Mr. Fenech was also granted a performance-based incentive award under our 2006 Plan, payable after
the completion of fiscal year 2011 in accordance with our 2006 Plan, equal to (x) 4% of the net
income before taxes from our recreation vehicle business for fiscal 2011 (without taking into
account LIFO or impairment charges) minus (y) the Fenech 2008 Plan Amount (the Fenech 2006 Plan
Amount and, together with the Fenech 2008 Plan Amount, the Fenech Performance Award Amount).
The Fenech Performance Award Amount was bifurcated between the 2008 Plan and the 2006 Plan in order
to maximize deductibility under Section 162(m) of the Code.
Notwithstanding the foregoing, the Fenech Performance Award Amount may not exceed $10 million for
fiscal 2011.
The receipt of the Fenech 2008 Plan Amount and the Fenech 2006 Plan Amount are contingent on Mr.
Fenech being employed with our Company at the time of payment and certification by our Compensation
Committee that the performance goals have been achieved. Such amounts are subject to downward
adjustment in accordance with the terms of our 2008 Plan and 2006 Plan, respectively, and in the
event of losses in any fiscal quarter, it is anticipated that a downward adjustment would be made
to the Fenech 2008 Plan Amount for the next fiscal quarter.
Richard E. Riegel, III. Mr. Riegel was granted a performance-based incentive award under our 2008
Plan, payable quarterly in accordance with our 2008 Plan, equal to 0.3% of our pre-tax profits for
each fiscal quarter, provided that the pre-tax profits in such fiscal quarter are at least $15
million. The amount of such award shall not exceed $5 million for any fiscal quarter in accordance
with our 2008 Plan. The receipt of such award is contingent on Mr. Riegel being employed with our
Company at the time of payment and certification by our Compensation Committee that the performance
goal has been achieved. The amount of such award is subject to downward adjustment in accordance
with the terms of our 2008 Plan. In addition, Mr. Riegel is eligible to receive an additional
discretionary bonus of up to $300,000 for our 2011 fiscal year.
Long-Term Incentive Compensation
We provide long-term incentive compensation, including equity awards, to our named executive
officers to the extent we believe it will help us to attract, motivate or retain particular
individuals or as a supplement to cash compensation. In April 2010, in order to incentivize Mr.
Fenech in his new position as Senior Group President, with responsibility for our recreation
vehicle segment, our largest operating segment, we granted Mr. Fenech options to acquire 750,000
shares our Common Stock, which vest ratably over five years (or earlier upon a change in control),
subject to his continuing employment with us. However, during negotiations we agreed that 50,000
of the options that are eligible to vest each vesting date (250,000 in the aggregate) will not vest
and will instead be forfeited if Mr. Fenechs brother, William Fenech, continues to be employed by
us. In addition, upon a change in control, Mr. Fenech will forfeit a number of options equal to
the number of options owned by his brother that vest upon the change in control. In connection
with, and in consideration of, this option grant, Mr. Fenech agreed to refrain from engaging in
competitive activities and from soliciting our employees and customers during his employment and
for 12 months following his termination of employment. In July 2010, we granted Mr. Farman options
to acquire 100,000 shares of our Common Stock, which vest ratably over five years (or earlier upon
a change in control), subject to his continuing employment with us, based on our belief that the
options would help motivate and retain our Chief Financial Officer. Both of these grants were made
under our 2006 Plan.
Some of our named executive officers, including Mr. Orthwein, already own significant amounts of
our Common Stock, and, as a result, our Compensation Committee believes that the financial
interests of these executives are aligned with those of our stockholders.
Other Benefits
A limited number of additional benefits are also provided to our executive officers, including our
named executive officers, as part of our compensation package because we believe that it is
customary to provide such benefits. In providing such benefits, both our Chief Executive Officer
and our Compensation Committee have determined that these benefits will aid in the attraction and
retention of executive talent.
16
In this regard, we have established the Thor Industries, Inc. Deferred Compensation Plan for
executives who may be impacted by the compensation limits that restrict participation in our
qualified 401(k) plan. This plan allows executives to defer on a pre-tax basis a portion of their
compensation and to have the funds deemed invested in certain mutual fund investments selected by
us and elected by the executives. When the deferred amounts are paid, executives receive the amount they invested plus any gains
or losses based on the performance of the investments.
Severance and Change-in-Control Benefits
We do not typically enter into employment or other agreements with our named executive officers
with provisions regarding severance or change-in-control benefits nor do we maintain a severance
plan or policy for our employees. The absence of these benefits reflects our emphasis on cash
compensation for current performance. Notwithstanding the foregoing, when Mr. Farman joined our
Company in May 2008, pursuant to the terms of an employment offer letter and as an inducement for
him to join our Company, we agreed to pay Mr. Farman severance equal to nine months of Mr. Farmans
base salary in the event Mr. Farman is terminated for reasons other than cause (as defined below).
Mr. Farman is our only named executive officer who is eligible to receive severance benefits.
Certain of our benefit plans include severance and change-in-control protections for plan
participants. For example, our 1999 Plan and 2006 Plan each specify that upon the occurrence of a
change-in-control, all options will automatically become vested and exercisable in full and all
restrictions or conditions, if any, on any restricted awards will automatically lapse. These types
of provisions are designed to ensure that plan participants receive the benefits of prior plan
awards in the event that a change-in-control occurs or they are terminated other than for cause
since these events are largely or entirely out of their control.
The aggregate value of change-in-control and termination benefits for each named executive officer
is summarized below under the subheading, Potential Payments Upon Termination or
Change-in-Control.
Tax Deductibility
Section 162(m) of the Code denies a federal income tax deduction for certain compensation in excess
of $1 million per year paid to the chief executive officer and the three other most highly-paid
executive officers (other than the chief executive officer and chief financial officer) of a
publicly-traded corporation. Certain types of compensation, including compensation based on
performance criteria that are approved in advance by shareholders, are excluded from the deduction
limit. Our Compensation Committees policy is to qualify compensation paid to our executive
officers for deductibility for federal income tax purposes to the extent it believes it is
practical and in our best interests and the best interests of our stockholders. However, to retain
highly skilled executives and remain competitive with other employers, our Compensation Committee
has the right to authorize compensation that would not otherwise be deductible under Section 162(m)
of the Code or otherwise.
Section 409A of the Code
Our compensation plans and programs are designed to comply with Section 409A of the Code, which
places strict restriction on plans that provide for the deferral of compensation.
17
Compensation Committee Report
We, the Compensation Committee of the Board of Directors of Thor Industries, Inc., have reviewed
and discussed the Compensation Discussion and Analysis contained in this proxy statement with
management. Based on such review and discussion, we have recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in this proxy statement and in Thor
Industries, Inc.s Annual Report on Form 10-K for the fiscal year ended July 31, 2010.
The Compensation Committee
William C. Tomson
Geoffrey A. Thompson
Compensation Risk Assessment
At our Compensation Committees direction, management, together with Towers Watson, an outside
compensation consultant, conducted a risk assessment of our compensation programs. Our
Compensation Committee reviewed the findings of the assessment and concluded that our compensation
programs are designed with the appropriate balance of risk and reward in relation to our overall
business strategy and that the balance of compensation elements discourages excessive risk taking.
Our Compensation Committee therefore determined that the risks arising from our compensation
policies and practices for employees are not reasonably likely to have a material adverse effect on
our Company.
The core of our compensation program is the Management Incentive Plan (our MIP), our primary
incentive plan for management of our operating units and certain of our named executive officers,
which is structured as a percent of pre-tax profits. Separate incentive pools are established for
each operating unit and for corporate, and each pool is allocated to the plan participants of the
respective units/corporate staff. Our MIP has been in place for many years and is considered to be
an integral part of our success. Management believes that our MIP encourages participants to think
like owners, which means taking steps necessary to maximize short-term profitability as well as
making investments in product quality and innovation and dealer relationships to ensure that future
profits continue to rise. Moreover, our MIP structure is consistent with competitive practice and,
therefore, very important in retaining key talent. In addition, from time to time our named
executive officers are awarded grants under our 2006 Plan and our 2008 Plan. These grants are also
based on pre-tax profits and are paid either on a quarterly or annual basis.
The risk analysis considered the emphasis on short-term profits under our incentive plans along
with the following factors:
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Oversight of the business and our MIP provided by our Chief Executive Officer (a
co-founder of our Company who owns a substantial number of our shares), our Chief Financial
Officer, and our Board |
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Our entrepreneurial culture which we believe encourages employees to think like owners |
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Rigorous internal audits that are conducted throughout our Company |
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Significant equity holdings by named executive officers, including recent grants of
stock options to Mr. Fenech and Mr. Farman with multi-year vesting, that encourage
long-term value creation, balancing the focus of our MIP on short-term profits |
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The performance criteria of our MIP, which emphasizes overall business results and
stockholder value over individual performance |
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Linear award calculations under our MIP, with no steep payout curves or disproportionate
increases in compensation payout thresholds that might create incentives to take greater
risks for greater rewards |
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The same metrics pre-tax profits used each year; these metrics have not been
switched to take advantage of any benefits associated with short-term circumstances |
18
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Our ability to consider non-financial, compliance, and other qualitative performance
factors in determining actual compensation payouts for executive officers |
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Our ability to use downward discretion and claw back payments under our 2006 Plan and
2008 Plan |
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Finance officers of each of our business units report to our Chief Financial Officer in
addition to the presidents of their respective business units |
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For fiscal 2011, our Chief Financial Officer will not be paid a bonus based upon the
earnings of our Company |
We will continue to evaluate our compensation programs with respect to risk going forward and will
consider changes necessary to prevent incentives to take excessive risk.
19
Summary Compensation Table
The following Summary Compensation Table summarizes the total compensation awarded to our named
executive officers in fiscal 2010, fiscal 2009 and fiscal 2008.
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Name and Principal Position |
|
Year |
|
Salary ($) |
|
Bonus
($)(1) |
|
Share Awards ($) |
|
Option Awards ($)(2) |
|
Non-Equity Incentive Plan Compensa- tion ($) |
|
Change in Pension Value and Nonqualified
Deferred Compensation Earnings ($) |
|
All Other
Compen- sation ($) |
|
Total
($) |
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Peter B. |
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2010 |
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484,471 |
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350,000 |
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834,471 |
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Orthwein, Chief |
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2009 |
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235,991 |
(4) |
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(5) |
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|
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|
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235,991 |
|
Executive |
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2008 |
|
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204,618 |
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|
(5) |
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204,618 |
|
Officer,
Chairman and
President (3) |
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Christian G. |
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2010 |
|
|
|
500,000 |
|
|
|
469,534 |
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|
|
|
|
|
|
1,172,000 |
|
|
|
257,091 |
(7) |
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2,398,625 |
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Farman, Senior |
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2009 |
|
|
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500,000 |
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|
160,000 |
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12,375 |
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672,375 |
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Vice President, |
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2008 |
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115,835 |
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1,044,662 |
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1,160,497 |
|
Treasurer and
Chief Financial
Officer (6) |
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Ronald Fenech, |
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2010 |
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600,000 |
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7,580,000 |
(9) |
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6,719,345 |
(10) |
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14,899,345 |
|
Senior Group |
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2009 |
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NA |
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NA |
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NA |
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NA |
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NA |
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NA |
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NA |
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NA |
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President (8) |
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2008 |
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NA |
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NA |
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NA |
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NA |
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NA |
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NA |
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NA |
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NA |
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Richard E. |
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2010 |
|
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171,298 |
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1,000,000 |
(12) |
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1,171,298 |
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Riegel, III, Senior |
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2009 |
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100,500 |
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575,000 |
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675,500 |
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Group President |
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2008 |
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100,500 |
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360,000 |
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1,063,968 |
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477,040 |
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12,500 |
(13) |
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2,014,008 |
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(11) |
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Walter L. |
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2010 |
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400,000 |
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250,000 |
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650,000 |
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Bennett, |
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2009 |
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419,231 |
(14) |
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50,000 |
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469,231 |
|
Executive Vice |
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2008 |
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|
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500,000 |
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|
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150,000 |
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198,850 |
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15,000 |
(15) |
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863,850 |
|
President, Chief
Administrative
Officer and
Secretary |
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Wade F. B. |
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2010 |
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Thompson, |
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2009 |
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(17) |
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(18) |
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former |
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2008 |
|
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270,000 |
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|
|
(18) |
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270,000 |
|
Chief Executive
Officer,
Chairman and
President (16) |
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(1) |
|
For fiscal 2010, the amounts in this column reflect the payment of discretionary bonuses
to Messrs. Orthwein, Farman and Bennett as more fully described in Compensation Discussion
and Analysis above. |
|
(2) |
|
All stock options were granted under our 2006 Plan. Amounts reflect the grant date fair
value of the awards granted in fiscal 2010, 2009, and 2008, respectively, determined in
accordance with Accounting Standards Codification (ASC) Topic 718, CompensationStock
Compensation, for stock option awards as required by SEC rules effective for 2010. The fair
value of stock options awards is estimated on the date of grant using the Black-Scholes
option-pricing model. Assumptions used in the calculation of the Black-Scholes value are
included in Note J of the Notes to Consolidated Financial Statements in our Companys Annual
Report on Form 10-K for the fiscal year ended July 31, 2010. There is no assurance that the
amounts reflected in the option awards column will be realized by the named executive
officers. Actual gains, if any, on stock option exercises will depend on overall market
conditions and the future performance of our Company and our Common Stock. |
20
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(3) |
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Mr. Orthwein was appointed as our Chairman of the Board, President and Chief Executive
Officer on November 17, 2009 following the death of Wade F. B. Thompson on November 13, 2009.
Mr. Orthweins annual base salary increased from $270,000 to $500,000 effective November 16,
2009 and increased again to $750,000 effective May 1, 2010. Previously, Mr. Orthwein served
as our Vice Chairman and Treasurer. |
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(4) |
|
During the first quarter of fiscal 2009, Mr. Orthwein volunteered to reduce his base salary
by 15% from $270,000 to $229,500 for the remainder of 2009. |
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(5) |
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Mr. Orthwein elected to forego payment of any bonus in fiscal years 2009 and 2008 due to the
decline in our performance due to market conditions. He was not provided with any equity or
non-cash compensation in exchange for his decision to forego his bonus. |
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(6) |
|
Mr. Farman was hired in May 2008. The base salary shown for Mr. Farman for fiscal year 2008
reflects the amount paid to Mr. Farman in base salary from the date Mr. Farman joined our
Company through the end of fiscal 2008. Mr. Farmans annual base salary for fiscal 2008 was
$500,000. |
|
(7) |
|
This amount reflects a performance-based award paid to Mr. Farman for fiscal 2010 equal to
0.15% of our annual pre-tax profits for fiscal 2010. The award was payable on a quarterly
basis; provided, that, in each case, no amount would be paid unless the following quarterly
thresholds were achieved: $10 million of pre-tax profits for the first, third and fourth
quarters of fiscal 2010 and $5 million of pre-tax profits for the second quarter of fiscal
2010. |
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(8) |
|
Mr. Fenech was appointed as Senior Group President on January 7, 2010 and his base salary
increased from $200,000 to $1 million effective February 1, 2010. Previously, Mr. Fenech
served as President of Keystone RV Company, one of our operating subsidiaries. |
|
(9) |
|
On April 28, 2010, we granted 750,000 options to Ronald Fenech and 250,000 options to Ronald
Fenechs brother, William Fenech. 150,000 options issued to Ronald Fenech vest and become
exercisable on each of the first five anniversaries of the date of grant, subject to Ronald
Fenech being employed with us on each such vesting date, provided that, on each such vesting
date, 50,000 of the 150,000 options issued to Ronald Fenech will not vest, and will be
forfeited, if William Fenech continues to be employed with us on such vesting date.
Accordingly, if William Fenech remains employed by us during the full five year vesting period
for the options issued to Ronald Fenech, an aggregate of 250,000 options will be forfeited
under Ronald Fenechs option award and the maximum number of shares issuable under Ronald
Fenechs option award will be 500,000. We expect that William Fenech will be employed by us
for the full five year vesting period under Ronald Fenechs option award, and therefore
consider the probability of Ronald Fenechs vesting in these 250,000 options to be very low.
As a result, we have accounted for 250,000 of the 750,000 options issued to Ronald Fenech as a
liability award pursuant to ASC Topic 718, Compensation-Stock Compensation and assigned a
grant date fair value of zero to these 250,000 options, resulting in zero compensation expense
with respect to these 250,000 options. We have accounted for the 250,000 options issued to
William Fenech as an equity award and will record compensation expense with respect to those
options as they vest pursuant to ASC Topic 718, Compensation-Stock Compensation. If the
probability of Ronald Fenech vesting in his incremental 250,000 options changes over the five
year vesting period, compensation expense will be recorded for these options at the time
vesting becomes probable and, correspondingly, less compensation expense will be recorded for
William Fenechs options. The exercise price of all 750,000 options exceeded their fair
market value as of July 31, 2010. |
|
(10) |
|
This amount includes a performance-based incentive award of $2,416,024 paid to Mr. Fenech
under our MIP, which was payable on a quarterly basis, equal to 4% of the pre-tax profit from
operations of our recreation vehicle segment (excluding LIFO and impairment charges) beginning
May 1, 2010. Under the terms of the award, Mr. Fenech was required to be employed by us at
the time of payment, losses in any quarter carried forward to future quarters (but not to the
next fiscal year) and the maximum Mr. Fenech was eligible to earn under our MIP for fiscal
2010 was $10 million. This amount also includes a performance-based incentive award of
$4,303,321 under our MIP for the portion of fiscal 2010 prior to May 1, 2010 equal to 4.1% of
Keystones pre-tax profits for such period, subject to |
21
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certain adjustments. The award was paid on a monthly basis for the period through January
2010, while Mr. Fenech served as President of Keystone, with the final payment following the
end of our quarter ended April 30, 2010. |
|
(11) |
|
Mr. Riegels base salary increased from $100,500 to $200,000 effective November 16, 2009 and
he was appointed as Senior Group President on January 7, 2010. Previously, Mr. Riegel served
as our Chief Operating Officer. |
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(12) |
|
This amount reflects a performance-based award paid to Mr. Riegel for fiscal 2010 equal to
0.60% of our annual pre-tax profits for fiscal 2010. The award was payable on a quarterly
basis; provided, that, in each case, no amount would be paid unless the following quarterly
thresholds were achieved: $10 million of pre-tax profits for the first, third and fourth
quarters of fiscal 2010 and $5 million of pre-tax profits for the second quarter of fiscal
2010. The actual amount paid to Mr. Riegel pursuant to this award was $1,000,000. |
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(13) |
|
Consists of $12,500 credited to Mr. Riegel under our Select Executive Incentive Plan for
2008. |
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(14) |
|
During the first quarter of fiscal 2009, Mr. Bennett volunteered to reduce his base salary by
20% from $500,000 to $400,000. |
|
(15) |
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Consists of $15,000 credited to Mr. Bennett under our Select Executive Incentive Plan for
2008. |
|
(16) |
|
Mr. Thompson served as our Chairman of the Board, President and Chief Executive Officer until
his death on November 13, 2009. |
|
(17) |
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Mr. Thompson elected to forego payment of base salary in fiscal 2009 due to the decline in
our performance due to market conditions. He was not provided with any equity or non-cash
compensation in exchange for his decision to forego his base salary. |
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(18) |
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Mr. Thompson elected to forego payment of any bonus in fiscal 2009 and 2008 due to the
decline in our performance due to market conditions. He was not provided any equity or
non-cash compensation in exchange for his decision to forego his bonus. |
Grants of Plan-Based Awards for Fiscal 2010
The following table summarizes the grants made to each of our named executive officers during
fiscal 2010 under our 2006 Plan, 2008 Plan or other plans or arrangements.
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All |
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Other |
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Other |
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Option |
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Grant |
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Share |
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Awards: |
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Date |
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Awards: |
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Number |
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Exercise |
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Fair |
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Estimated Future Payouts |
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Estimated Future Payouts |
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Number |
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of |
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or Base |
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Value of |
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Under Non Equity Incentive |
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Under Equity Incentive |
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of |
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Shares |
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Price of |
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Share |
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Plan Awards |
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Plan Awards |
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Shares |
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Underlying |
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Option |
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and |
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Grant |
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Threshold |
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Target |
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Maximum |
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Threshold |
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Target |
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Maximum |
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or Units |
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Options |
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Awards |
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Option |
Name |
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Date |
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($) |
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($) |
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($) |
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(#) |
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(#) |
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(#) |
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(#) |
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(#) (1) |
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($/Sh) (2) |
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Awards (3) |
Peter B.
Orthwein. |
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Christian G. Farman |
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10/30/09 |
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(4) |
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(4) |
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(4) |
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07/20/10 |
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100,000 |
(5) |
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$ |
27.88 |
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$ |
1,172,000 |
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Ronald Fenech |
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04/23/10 |
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(6) |
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(6) |
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(6) |
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04/28/10 |
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750,000 |
(7) |
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$ |
35.18 |
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$ |
7,580,000 |
(7) |
Richard E. Riegel, III |
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10/30/09 |
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(8) |
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(8) |
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(8) |
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Walter L.
Bennett. |
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Wade F. B. Thompson |
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(1) |
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Reflects the number of stock options granted in fiscal 2010. |
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(2) |
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Represents the exercise price of stock options reported in the previous column, which is
equal to the closing price of our Common Stock on the grant date. |
22
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(3) |
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Represents the fair value per share of option awards as of the grant date pursuant to ASC
Topic 718. Assumptions used in the calculation of these amounts are included in Note J to the
Consolidated Financial Statements in our Companys Annual Report on Form 10-K for the fiscal
year ended July 31, 2010. |
(4) |
|
As shown under the column Non-Equity Incentive Plan Compensation in the Summary
Compensation Table and as described in Compensation Discussion and Analysis, Mr. Farman was
granted a non-equity incentive plan award on October 30, 2009 equal to
0.15% of our annual pre-tax profits for fiscal 2010 (the actual amount of this award was
$257,091). Because this award is based on a percentage of our pre-tax profits, it is impossible
to calculate thresholds, targets or maximum amounts for such award. |
(5) |
|
These options vest and become exercisable in equal installments on each of the first five
anniversaries of the date of grant (or earlier upon a change in control) subject to Mr.
Farmans continuing employment with our Company on such date. |
(6) |
|
As shown under the column Non-Equity Incentive Plan Compensation in the Summary
Compensation Table and as described in Compensation Discussion and Analysis, Mr. Fenech was
granted (i) a non-equity incentive plan award on April 23, 2010 equal to 4% of the pre-tax
profits from operations of our recreation vehicle segment (excluding LIFO and impairment
charges) beginning May 1, 2010 and (ii) a non-equity incentive plan award under our MIP for
the portion of fiscal 2010 prior to May 1, 2010 equal to 4.1% of Keystones pre-tax profits
for such period, subject to certain adjustments. The aggregate amount of these awards was
$6,719,345. Because these awards are based on a percentage of the pre-tax profit of our
recreation vehicle segment or Keystone, as applicable, it is impossible to calculate
thresholds, targets or maximum amounts for such awards. |
(7) |
|
On April 28, 2010, we granted 750,000 options to Ronald Fenech and 250,000 options to Ronald
Fenechs brother, William Fenech. 150,000 options issued to Ronald Fenech vest and become
exercisable on each of the first five anniversaries of the date of grant, subject to Ronald
Fenech being employed with us on each such vesting date, provided that, on each such vesting
date, 50,000 of the 150,000 options issued to Ronald Fenech will not vest, and will be
forfeited, if William Fenech continues to be employed with us on such vesting date.
Accordingly, if William Fenech remains employed by us during the full five year vesting period
for the options issued to Ronald Fenech, an aggregate of 250,000 options will be forfeited
under Ronald Fenechs option award and the maximum number of shares issuable under Ronald
Fenechs option award will be 500,000. We expect that William Fenech will be employed by us
for the full five year vesting period under Ronald Fenechs option award, and therefore
consider the probability of Ronald Fenechs vesting in these 250,000 options to be very low.
As a result, we have accounted for 250,000 of the 750,000 options issued to Ronald Fenech as a
liability award pursuant to ASC Topic 718, Compensation-Stock Compensation and assigned a
grant date fair value of zero to these 250,000 options, resulting in zero compensation expense
with respect to these 250,000 options. We have accounted for the 250,000 options issued to
William Fenech as an equity award and will record compensation expense with respect to those
options as they vest pursuant to ASC Topic 718, Compensation-Stock Compensation. If the
probability of Ronald Fenech vesting in his incremental 250,000 options changes over the five
year vesting period, compensation expense will be recorded for these options at the time
vesting becomes probable and correspondingly, less compensation expense will be recorded for
William Fenechs options. The exercise price of all 750,000 options exceeded their fair
market value as of July 31, 2010. |
(8) |
|
As shown under the column Non-Equity Incentive Plan Compensation in the Summary
Compensation Table and as described in Compensation Discussion and Analysis, Mr. Riegel was
granted a non-equity incentive plan award on October 30, 2009 equal to 0.60% of our annual
pre-tax profits for fiscal 2010 (the actual amount of this award was $1,000,000). Because
this award is based on a percentage of our net income before taxes, it is impossible to
calculate thresholds, targets or maximum amounts for such award. |
Executive Employment Agreements
Historically, we did not enter into employment agreements with our named executive officers.
However, in May 2008, in order to incentivize Mr. Farman to join our Company as Chief Financial
Officer, we entered into an employment offer letter with Mr. Farman.
|
|
The material terms of the employment offer letter with Mr. Farman are as follows: |
|
|
|
Mr. Farmans annual base salary was set at $500,000. |
|
|
|
Mr. Farman was eligible for an annual bonus of up to $300,000 for fiscal 2009
based on Mr. Farmans performance and our performance. Mr. Farman received a
bonus of $172,375 for fiscal 2009. |
|
|
|
We agreed to grant Mr. Farman options to purchase 100,000 shares of our common
stock pursuant to our 2006 Plan. The stock options will vest over a three year
period in one-third increments on the first, second and third anniversaries of the
date of grant. The stock options were priced on May 5, 2008, the date Mr. Farman
commenced employment with us. |
|
|
|
We agreed to reimburse Mr. Farman for (i) reasonable temporary living expenses
in the Elkhart, Indiana area for up to six months from the date Mr. Farman
commences employment with us and (ii) reasonable moving expenses. |
|
|
|
We agreed to pay Mr. Farman severance equal to nine months of Mr. Farmans base
salary in the event Mr. Farman is terminated for reasons other than cause. For
purposes of Mr. Farmans offer letter, cause means (i) the commission of or plea
of guilty or no contest to, a felony or a crime involving moral turpitude or the
commission of any other act involving willful malfeasance or material fiduciary
breach with respect to our company or an affiliate, (ii) conduct tending to bring
our company into substantial public disgrace, or disrepute, (iii) |
23
|
|
|
gross negligence or willful misconduct with respect to our Company or an affiliate
or (iv) material violation of state or federal securities laws. |
In addition, in April 2010, in order to incentivize Mr. Fenech in his new position as Senior Group
President, with responsibility for our recreation vehicle segment, our largest operating segment,
we agreed as follows:
|
|
|
Mr. Fenechs base salary is set at $1,000,000 per year effective as of February
1, 2010. |
|
|
|
Mr. Fenech would be granted a performance-based incentive award under our MIP,
payable on a quarterly basis, equal to 4% of the pre-tax profit from operations of
our recreation vehicle segment (excluding LIFO and impairment charges) beginning
May 1, 2010. Under the terms of the award, Mr. Fenech was required to be employed
at the time of payment, losses in any quarter carried forward to future quarters
but not the next fiscal year and the maximum Mr. Fenech was eligible to earn under
our MIP in any year was $10 million. |
|
|
|
Mr. Fenech would be granted options to purchase 750,000 shares of our Common
Stock pursuant to our 2006 Plan. These options vest and become exercisable in
equal installments on each of the first five anniversaries of the date of grant
(or if, earlier upon a change in control) subject to Mr. Fenechs continuing
employment with us on such date. However, 50,000 of the option shares that are
eligible to vest on each of the vesting dates (250,000 in the aggregate) will not
vest and will automatically be forfeited if William Fenech, the brother of Ronald
Fenech, is a continuing employee of our Company on such vesting date. All of the
unvested option shares will vest and become exercisable upon a change in control
of the Company; provided, however, that if William Fenech remains a continuing
employee of our Company immediately following the change in control, Ronald Fenech
will forfeit a number of option shares equal to the number of unvested option
shares owned by William Fenech that vest at the time of the change in control. |
Mr. Farman and Mr. Fenech also participate in the compensation and benefit programs generally
available to our executive officers.
2008 Annual Incentive Plan
Our 2008 Annual Incentive Plan (our 2008 Plan) became effective on October 3, 2008, and was
approved by the stockholders at our 2008 Annual Meeting.
Our 2008 Plan is administered by our Compensation Committee. Under our 2008 Plan, our Compensation
Committee has the power to: (i) designate eligible executives to participate in our 2008 Plan for a
designated Performance Period (as defined below) (our 2008 Participants); (ii) determine the
terms and conditions of any Award; (iii) determine whether, to what extent, and under what
circumstances, Awards may be canceled, forfeited, or suspended; (iv) interpret, administer,
reconcile any inconsistency, correct any defect and/or supply any omission in our 2008 Plan and any
instrument or agreement relating to, or Award granted under, our 2008 Plan; (v) establish, amend,
suspend, or waive any rules and regulations; and (vi) make any other determination and take any
other action that our Compensation Committee deems necessary or desirable for the administration of
our 2008 Plan.
Under our 2008 Plan, our Compensation Committee has the authority to grant Awards which represent
the conditional right of a 2008 Participant to receive a cash award following a Performance Period
based upon performance in respect of a Performance Goal (as defined below). For purposes of our
2008 Plan, a Performance Period is a fiscal quarter during which performance is measured in order
to determine a 2008 Participants entitlement to receive payment of an Award, and Performance
Goal is, with respect to each Performance Period, consolidated pre-tax profits of our Company
(Pre-Tax Profits) of $15,000,000.
Prior to, or reasonably promptly following the inception of, a Performance Period but, to the
extent required by Section 162(m) of the Code, by no later than the day prior to the date on which
twenty-five percent (25%) of the Performance Period has elapsed, our Compensation Committee will
allocate in writing, on behalf of
24
each 2008 Participant, the portion of Pre-Tax Profits (not to exceed 3% on behalf of any 2008
Participant), if any (an Award), to be paid to the 2008 Participant if the Performance Goal is
achieved. With respect to any single 2008 Participant, the maximum Award that can be paid with
respect to any Performance Period is $5,000,000.
Our Compensation Committee is authorized at any time during or after a Performance Period to reduce
or eliminate an Award allocated to any 2008 Participant for any reason, including, without
limitation, changes in the position or duties of any 2008 Participant with our Company during or
after a Performance Period, whether due to any termination of employment (including death,
disability, retirement, voluntary termination, or termination with or without cause) or otherwise.
However, no reduction or elimination will increase the amount otherwise payable to any other 2008
Participant if a reduction or elimination would cause the Awards to fail to qualify as qualified
performance-based compensation under Section 162(m) of the Code, as determined by our Compensation
Committee. In addition, to the extent necessary to preserve the intended economic effects of our
2008 Plan to our Company and our 2008 Participants, our Compensation Committee will adjust the
calculation of Pre-Tax Profits and Awards and the allocation thereof to take into account: (i) a
change in corporate capitalization, (ii) a corporate transaction, such as any merger of our Company
or any subsidiary into another corporation, any consolidation of our Company or any subsidiary into
another corporation, any separation of our Company or any subsidiary (including a spin-off or the
distribution of stock or property of the Company or any subsidiary), any reorganization of our
Company or any subsidiary (whether or not the reorganization comes within the definition of Section
368 of the Code), (iii) any partial or complete liquidation of our Company or any subsidiary or a
large, special and non-recurring dividend paid or distributed by our Company, or (iv) a change in
accounting or other relevant rules or regulations; provided, however, that no
adjustment will be authorized or made if and to the extent that our Compensation Committee
determines that the adjustment would cause the Awards to fail to qualify as qualified
performance-based compensation under Section 162(m) of the Code.
Following the completion of each Performance Period, our Compensation Committee certifies in
writing, in accordance with the requirements of Section 162(m) of the Code, the achievement of the
Performance Goal and the Awards payable to 2008 Participants.
Our Board or our Compensation Committee may, at any time, terminate or, from time to time, amend,
modify or suspend our 2008 Plan and the terms and provisions of any Award granted to any 2008
Participant which has not been paid. No Award may be granted during any suspension of the 2008 Plan
or after its termination.
Summaries of Equity Compensation Plans
Thor Industries, Inc. 2006 Equity Incentive Plan
On December 5, 2006, we adopted the Thor Industries, Inc. 2006 Equity Incentive Plan (our 2006
Plan) which is designed to enable us and our affiliates to obtain and retain the services of the
types of employees, consultants and directors who will contribute to our long range success and to
provide incentives that are linked directly to increases in share value which will inure to the
benefit of our stockholders.
Our 2006 Plan was designed, among other things, to replace our 1999 Plan (as defined below) and our
1997 Plan (as defined below). When our Board approved our 2006 Plan, it also approved the
termination of our 1999 Plan and our 1997 Plan, each effective upon the approval of the 2006 Plan
by our stockholders. As a result, there were no further grants of options, restricted stock or
other equity-based awards pursuant to either our 1999 Plan or 1997 Plan.
The maximum number of shares available for the grant of awards under our 2006 Plan is 1,100,000
subject to adjustment in accordance with the terms of our 2006 Plan, which is approximately the
same number of shares that were available for issuance under our 1999 Plan and our 1997 Plan when
those plans were terminated.
25
Our 2006 Plan is administered by our Compensation Committee, which has the power and authority to
select 2006 Participants (as defined below) in such plan and grant 2006 Awards (as defined below)
to such participants pursuant to the terms of such plan.
2006 Awards may be granted to employees, directors and, in some cases, consultants and those
individuals whom our Compensation Committee determines are reasonably expected to become employees,
directors or consultants following the date of the grant of the Award (the 2006 Participants),
provided that incentive stock options may be granted only to employees. 2006 Awards may be in the
form of options (incentive stock options and nonstatutory stock options), restricted stock,
restricted stock units, performance compensation awards and stock appreciation rights
(collectively, 2006 Awards).
Options
Options may be granted as incentive stock options (stock options intended to meet the requirements
of Section 422 of the Code) or nonstatutory stock options (stock options not intended to meet such
requirements) and will be granted in such form and will contain such terms and conditions as our
Compensation Committee deems appropriate. The term of each option will be fixed by our Compensation
Committee but no incentive stock option may be exercisable after the expiration of ten years from
the grant date; provided, that, in the case of incentive stock options granted to a 10%
stockholder, the term of such option may not exceed five years from the grant date. The exercise
price of each incentive stock option may not be less than 100% of the fair market value of our
Common Stock subject to the option on the date of grant; provided, that, in the case of incentive
stock options granted to a 10% stockholder, the exercise price may not be less than 110% of the
fair market value on the date of grant. The exercise price of each nonstatutory stock option may
not be less than 100% of the fair market value of our Common Stock subject to the option on the
date of grant unless such nonstatutory stock option satisfies the additional conditions applicable
to nonqualified deferred compensation under Section 409A of the Code. Our Compensation Committee
will determine the time or times at which, or other conditions upon which, an option will vest or
become exercisable.
Restricted Stock and Restricted Stock Units
Our Compensation Committee may award actual shares of common stock (Restricted Stock) or
hypothetical common stock units having a value equal to the fair market value of an identical
number of shares of common stock (Restricted Stock Units), which award may, but need not, provide
that such Restricted Stock or Restricted Stock Units may not be sold, assigned, transferred or
otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the
performance of an obligation or for any other purpose for such period as our Compensation Committee
shall determine. Subject to the restrictions set forth in the Award, Participants who are granted
Restricted Stock generally will have the rights and privileges of a stockholder as to such
restricted stock, including the right to receive dividends and vote such restricted stock.
Performance Compensation Awards
Our 2006 Plan provides our Compensation Committee with the authority to designate certain 2006
Awards as performance compensation awards in order to qualify such 2006 Awards as
performance-based compensation under Section 162(m) of the Code. In addition, our 2006 Plan
provides our Compensation Committee with the authority to make a 2006 Award of a cash bonus to any
Participant and designate such 2006 Award as a performance compensation award in order to qualify
such 2006 Award as performance-based compensation under Section 162(m) of the Code.
The maximum performance compensation award payable to any one Participant under our 2006 Plan for a
Performance Period is 1,100,000 shares of common stock or, in the event such performance
compensation award is paid in cash, the equivalent cash value thereof, as determined by our
Compensation Committee. The maximum amount that can be paid in any calendar year to any Participant
pursuant to a Performance Compensation Award in the form of a cash bonus is $10,000,000.
Stock Appreciation Rights
26
Stock appreciation rights may be granted either alone (Free Standing Rights) or, provided the
requirements of our 2006 Plan are satisfied, in tandem with all or part of any option granted under
the 2006 Plan (Related Rights). Upon exercise thereof, the holder of a stock appreciation right
would be entitled to receive from us an amount equal to the product of (i) the excess of the fair
market value of our Common Stock on the date of exercise over the exercise price per share
specified in such stock appreciation right or its related option, multiplied by (ii) the number of
shares for which such stock appreciation right is exercised. The exercise price of a Free Standing
Right shall be determined by our Compensation Committee, but shall not be less than 100% of the
fair market value of our Common Stock on the date of grant of such Free Standing Right. A Related
Right granted simultaneously with or subsequent to the grant of an option shall have the same
exercise price as the related option, shall be transferable only upon the same terms and conditions
as the related option, and shall be exercisable only to the same extent as the related option. A
stock appreciation right may be settled, at the sole discretion of our Compensation Committee, in
cash, shares of our Common Stock or a combination thereof.
Change in Control
In the event of a change in control, unless otherwise provided in a 2006 Award agreement, all
options and stock appreciation rights will become immediately exercisable with respect to 100
percent of the shares subject to such option or stock appreciation rights, and the restrictions
will expire immediately with respect to 100 percent of such shares of Restricted Stock or
Restricted Stock Units subject to such 2006 Award (including a waiver of any applicable Performance
Goals). In addition, unless otherwise provided in a 2006 Award agreement, all incomplete
Performance Periods in respect of a performance compensation award will end upon a change in
control, and our Compensation Committee will (a) determine the extent to which performance goals
with respect to each such Performance Period have been met, and (b) cause to be paid to the
applicable Participant partial or full performance compensation awards with respect to performance
goals for each such Performance Period based upon our Compensation Committees determination of the
degree of attainment of performance goals. Further, in the event of a change in control, our
Compensation Committee may in its discretion and upon advance notice to the affected persons,
cancel any outstanding 2006 Awards and pay to the holders thereof, in cash or stock, or any
combination thereof, the value of such 2006 Awards based upon the price per share of our Common
Stock received or to be received by other shareholders in the event.
Amendment and Termination
Our Board at any time, and from time to time, may amend or terminate our 2006 Plan. However, except
as provided otherwise in our 2006 Plan, no amendment shall be effective unless approved by our
stockholders to the extent stockholder approval is necessary to satisfy any applicable law or
securities exchange listing requirements. Our Compensation Committee at any time, and from time to
time, may amend the terms of any one or more 2006 Awards; provided, however, that our Compensation
Committee may not make any amendment which would otherwise constitute an impairment of the rights
under any 2006 Award unless we request the consent of the 2006 Participant and the 2006 Participant
consents in writing.
1999 Stock Option Plan
The Thor Industries, Inc. 1999 Stock Option Plan (our 1999 Plan) was adopted by our Board in July
1999 and by our stockholders in September 1999 and provided for the grant of incentive stock
options and nonstatutory options to our employees and directors. Our 1999 Plan was frozen effective
as of December 5, 2006.
Upon the occurrence of a change in control, all options granted pursuant to our 1999 Plan will
automatically become vested and exercisable in full.
Under certain circumstances, in the event option holders engage in certain prohibited behavior,
options can be forfeited at the discretion of our Compensation Committee. In addition, any gains
realized by option holders may have to be repaid under certain circumstances.
27
Restricted Stock Plan
We adopted the Thor Industries, Inc. Restricted Stock Plan (our 1997 Plan) effective September
29, 1997. Our 1997 Plan was frozen as of December 5, 2006.
No shares granted under our 1997 Plan may be transferred by the recipient thereof until such shares
have vested. Any nonvested shares will automatically vest upon the earliest of (x) termination
other than for cause and (y) the recipients death, disability or retirement. Our 1997 Plan
contains non-competition and non-solicitation provisions which restrict recipients from competing
with us. Non-compliance with such provisions will result in the forfeiture of non-vested shares.
Outstanding Equity Awards at 2010 Fiscal Year-End
The following table sets forth information concerning option awards and share awards held by our
named executive officers as of July 31, 2010. All share amounts and exercise prices have been
adjusted to reflect the 2 for 1 split in our stock effective January 26, 2004.
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Name |
|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
of Shares |
|
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
or Units |
|
Market Value of |
|
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
|
|
That |
|
Shares or Units |
|
|
Options |
|
Options |
|
Exercise |
|
Option |
|
Have Not |
|
That Have Not |
|
|
Exercisable |
|
Unexercisable |
|
Price |
|
Expiration |
|
Vested |
|
Vested |
|
|
(#) |
|
(#) |
|
($) |
|
Date |
|
(#) |
|
($) |
Peter B. Orthwein |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
Christian G. |
|
|
66,666 |
|
|
|
33,334 |
(1) |
|
$ |
26.30 |
|
|
|
05/05/18 |
|
|
|
|
|
|
|
|
|
Farman |
|
|
|
|
|
|
100,000 |
(2) |
|
$ |
27.88 |
|
|
|
07/20/20 |
|
|
|
|
|
|
|
|
|
Ronald Fenech |
|
|
|
|
|
|
750,000 |
(3) |
|
$ |
35.18 |
|
|
|
04/28/20 |
|
|
|
|
|
|
|
|
|
Richard E. Riegel, III |
|
|
14,000 |
|
|
|
|
|
|
$ |
26.91 |
|
|
|
12/08/13 |
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|
|
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|
|
|
|
|
|
|
|
14,000 |
|
|
|
|
|
|
$ |
12.86 |
|
|
|
07/23/12 |
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|
|
|
|
|
|
|
|
|
|
|
66,666 |
|
|
|
33,334 |
(4) |
|
$ |
26.79 |
|
|
|
05/23/18 |
|
|
|
|
|
|
|
|
|
Walter L. Bennett |
|
|
15,225 |
|
|
|
|
|
|
$ |
26.91 |
|
|
|
12/08/13 |
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|
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|
|
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|
|
|
Wade F. B. Thompson |
|
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|
|
|
|
|
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Farman received an option award for 100,000 shares on May 5, 2008. 33,333 options
vested on May 5, 2009, 33,333 options vested on May 5, 2010 and 33,334 options will vest on
May 5, 2011. |
|
(2) |
|
Mr. Farman received an option award for 100,000 shares on July 20, 2010. These options vest
and become exercisable in equal installments on each of the first five anniversaries of the
date of grant. |
|
(3) |
|
Mr. Fenech received an option award for 750,000 shares on April 28, 2010. These options vest
and become exercisable in equal installments on each of the first five anniversaries of the
date of grant (or if, earlier upon a change in control) subject to Mr. Fenechs continuing
employment with us on such date. However, 50,000 of the option shares that are eligible to
vest on each of the vesting dates (250,000 in the aggregate) will not vest and will
automatically be forfeited if William Fenech, the brother of Ronald Fenech, is a continuing
employee of the Company on such vesting date. All of the unvested option shares will vest and
become exercisable upon a change in control of the Company; provided, however, that if William
Fenech remains a continuing employee of the Company immediately following the change in
control, Ronald Fenech will forfeit a number of option shares equal to the number of unvested
option shares held by William Fenech that vest at the time of the change in control. |
|
(4) |
|
Mr. Riegel received an option award for 100,000 shares on May 23, 2008. 33,333 options vested
on May 23, 2009, 33,333 options vested on May 23, 2010 and 33,334 options will vest on May 23,
2011. |
28
Option Exercises and Shares Vested in Fiscal 2010
The following table summarizes information regarding the vesting of share awards for each named
executive officer in fiscal 2010. None of our named executive officers exercised any stock options
in fiscal 2010.
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Name |
|
Share Awards(1) |
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|
Number of |
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|
|
|
Shares |
|
|
|
|
Acquired on |
|
Value Realized |
|
|
Vesting |
|
on Vesting |
|
|
(#) |
|
($) (2) |
Peter B. Orthwein |
|
|
|
|
|
|
|
|
Christian G. Farman |
|
|
|
|
|
|
|
|
Ronald Fenech |
|
|
|
|
|
|
|
|
Richard E. Riegel, III |
|
|
600 |
|
|
|
16,962 |
|
Walter L. Bennett |
|
|
1,000 |
|
|
|
28,270 |
|
Wade F. B. Thompson |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents restricted stock awards granted under our Restricted Stock Plan. |
|
(2) |
|
Represents the amount realized based on the market price of our Common Stock on the vesting
date. |
Non-Qualified Deferred Compensation for Fiscal 2010
The following table shows the contributions, earnings and account balances for the named executive
officers participating in our Select Executive Incentive Plan and our Deferred Compensation Plan.
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|
|
|
|
|
|
Executive |
|
Registrant |
|
Aggregate |
|
Aggregate |
|
Aggregate |
|
|
Contributions |
|
Contributions |
|
Earnings in |
|
Withdrawals/ |
|
Balance at |
Name |
|
in fiscal 2010 |
|
in fiscal 2010 |
|
fiscal 2010 |
|
Distributions |
|
7/31/10 |
|
|
($) |
|
($) |
|
($) |
|
($)(1) |
|
($) |
Peter B. Orthwein |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian G. Farman |
|
|
27,500 |
(2) |
|
|
|
|
|
|
4,048 |
(3) |
|
|
|
|
|
|
65,922 |
(4) |
Ronald Fenech |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,295 |
(5) |
Richard E. Riegel, III |
|
|
31,701 |
(6) |
|
|
|
|
|
|
36,177 |
(7) |
|
|
40,179 |
|
|
|
294,309 |
(8) |
Walter L. Bennett |
|
|
27,500 |
(9) |
|
|
|
|
|
|
57,276 |
(10) |
|
|
192,157 |
|
|
|
235,326 |
(11) |
Wade F. B. Thompson |
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|
|
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|
|
|
|
|
|
|
(1) |
|
Amounts represent distributions to participants in our Select Executive Incentive Plan
in fiscal 2010 following the termination of such plan effective February 27, 2009. There were
no withdrawals by, or distributions to, any of our named executive officers in fiscal 2010
under our Deferred Compensation Plan. |
|
(2) |
|
Consists of contributions by Mr. Farman to our Deferred Compensation Plan. This amount is
also included in the amount shown as 2010 salary of Mr. Farman, as
reported in the salary column of the
Summary Compensation Table above. |
|
(3) |
|
Consists of aggregate earnings under our Deferred Compensation Plan. |
|
(4) |
|
Consists of Mr. Farmans aggregate balance (all of which is vested) under our Deferred
Compensation Plan. |
29
|
|
|
(5) |
|
Consists of aggregate earnings under our Deferred Compensation Plan. |
|
(6) |
|
Consists of contributions by Mr. Riegel to our Deferred Compensation Plan. Of this amount,
$12,663 and $19,038 are also included in the amounts shown as 2010
salary and 2010 non-equity incentive plan
compensation, respectively, of Mr. Riegel, as reported in the salary
column and the non-equity incentive plan compensation column,
respectively, of the Summary Compensation Table above. |
|
(7) |
|
Consists of $5,808 earned under our Select Executive Incentive Plan and $30,369 earned under
our Deferred Compensation Plan. |
|
(8) |
|
Consists of an aggregate balance of $294,309 under our Deferred Compensation Plan (all of
which is vested). |
|
(9) |
|
Consists of contributions by Mr. Bennett to our Deferred Compensation Plan. This amount is
also included in the amount shown as 2010 bonus of Mr. Bennett, as
reported in the bonus column of the Summary Compensation Table above. |
|
(10) |
|
Consists of $32,042 earned under our Select Executive Incentive Plan and $25,234 earned under
our Deferred Compensation Plan. |
|
(11) |
|
Consists of an aggregate balance $235,326 under our Deferred Compensation Plan (all of which
is vested). |
Our Deferred Compensation Plan is described below. We terminated our Select Executive Incentive
Plan effective February 27, 2009. Amounts under our Select Executive Incentive Plan vested as of
such date for all participants in our Select Executive Incentive Plan and were paid out in April
2010.
Summary of Deferred Compensation Plan
On December 9, 2008, our Board approved and adopted the amended and restated Thor Industries, Inc.
Deferred Compensation Plan (our Deferred Compensation Plan), which was amended and restated
primarily to comply with Section 409A of the Code. The general purpose of our Deferred Compensation
Plan is to provide our key selected employees with the benefits of an unfunded, non-qualified
deferred compensation program.
Under our Deferred Compensation Plan, participants may elect to defer portions of their salary and
bonus amounts. The amounts are credited to the participants individual account, which is credited
with earnings and losses based on the performance of certain investment funds selected by us and
elected by the participant.
Participants are 100% vested in their elective deferrals at all times. Vested benefits become
payable under our Deferred Compensation Plan (i) upon the participants separation from service,
(ii) upon the occurrence of a change in control, (iii) upon the participants death or disability
or (iv) in connection with a severe financial hardship due to an unforeseen emergency (but in this
case amounts payable are limited to the amount necessary to satisfy the emergency plus anticipated
taxes). In each case, payment will be made within ninety (90) days following the event triggering
the payment unless the participant is determined by our Board to be a specified employee under
Section 409A of the Code and the payment trigger is the participants separation from service, in
which case the payment will be delayed for a period of six (6) months.
Prior to a participants attainment of age fifty-five (55), all benefits are paid in lump sum.
Benefits paid following the participants attainment of age fifty-five (55) may be paid in lump sum
or in equal installments not to exceed five years, as elected by the participant in his or her
initial election. Payments of amounts under our Deferred Compensation Plan are paid in cash from
our general funds and any right to receive payments from us under our Deferred Compensation Plan
will be no greater than the right of one of our unsecured creditors.
Our Compensation Committee administers our Deferred Compensation Plan. Our Compensation Committee
has the ability to modify or terminate the plan, provided that any modification or termination does
not adversely affect the rights of any participant or beneficiary as to amounts under the plan. Our
Compensation Committee also has the ability to terminate our Deferred Compensation Plan and
accelerate
30
the payments of all vested accounts in connection with certain corporate dissolutions or
changes of control, provided that the acceleration is permissible under Section 409A of the Code.
Our Deferred Compensation Plan is intended to comply with Section 409A of the Code.
Summary of Select Executive Incentive Plan
We adopted the Thor Industries, Inc. Select Executive Incentive Plan (our Select Executive
Incentive Plan) effective September 29, 1997. Our Select Executive Incentive Plan was administered
by the Compensation Committee. The purpose of our Select Executive Incentive Plan was to provide
eligible executives with supplemental deferred compensation in addition to the current compensation
earned under our MIP. Our Select Executive Incentive Plan was intended to be an unfunded deferred
compensation arrangement for the benefit of a select group of management or highly compensated
employees.
For each year of participation, eligible executives were credited with the amount(s), if any,
determined by our Compensation Committee in its sole discretion. The amount(s) were credited to an
account maintained for each eligible executive, which was also credited with earnings and losses as
if the amounts were invested in specific investment funds selected by our Compensation Committee
(or by the eligible executive if our Compensation Committee established a procedure permitting the
eligible executive to select from amongst the index funds selected by our Compensation Committee).
The amount(s) credited to the account of an eligible executive remained unvested until the
conclusion of the executives sixth year of participation in our Select Executive Incentive Plan,
at which time the amount(s) became 100% vested. However, the amounts immediately became 100% vested
upon the eligible executives death or attainment of age 65. Our Select Executive Incentive Plan
contained non-competition and non-solicitation provisions which prohibited eligible executives from
competing with us within the United States or Canada during the term of such eligible executives
participation and for a period of eighteen months after termination of employment with us for any
reason. Non-compliance with these provisions resulted in a total forfeiture of vested benefits.
Amounts became payable upon an eligible executives separation from service or, if earlier, upon
the eligible executives death or disability or the occurrence of an unforeseen emergency. Payments
made upon an eligible executives death or disability or an unforeseen emergency were made in a
lump sum. Payments made in connection with an eligible executives separation from service
commenced eighteen months following the eligible executives separation from service and payment
was made in equal annual installments over five years or ten years or in another actuarially
equivalent form of payment, as elected by the executive at the commencement of participation in the
plan.
We terminated our Select Executive Incentive Plan effective February 27, 2009. Amounts under our
Select Executive Incentive Plan vested as of such date for all participants in our Select Executive
Incentive Plan and were paid out in April 2010.
Potential Payments Upon Termination or Change-in-Control
The narrative and tables that follow describe potential payments and benefits to our named
executive officers or their beneficiaries under existing plans or arrangements, whether written or
unwritten, for various scenarios including change-in-control and termination of employment. The
amounts shown assume a termination or change-in-control, as applicable, effective as of July 31,
2010, as well as a closing price of our Common Stock on July 30, 2010, the last business day of our
fiscal year, of $27.84 per share, and thus include amounts earned through such time and are
estimates of amounts that would be paid out to our named executive officers upon a
change-in-control or their separation or termination. Note that these amounts are estimates only,
as the actual obligation can only be determined at the time of a change-in-control or the named
executive officers separation from us.
Except for a May 2008 employment offer letter with Mr. Farman, we have not entered into any
employment or similar agreements with any named executive officer with provisions regarding
severance or change-in-control benefits. Pursuant to Mr. Farmans employment offer letter, if his
employment were terminated by the Company other than for cause on July 31, 2010, he would have
received a lump sum severance payment equal to nine months of his base salary of $500,000 (i.e.
$375,000). Except as
31
otherwise provided below, none of our named executive officers is entitled to any payments or
benefits from us upon a termination of employment for any reason, including because of death,
disability or retirement.
Our Deferred Compensation Plan provides for payment of the vested deferred amounts upon termination
of employment and following a change in control. Under our Deferred Compensation Plan,
if a named executive officers employment terminated on July 31, 2010, or if the named executive
officer died or became disabled, he would receive his entire vested account balance (reported in
the Aggregate Balance at 7/31/10 column of the Non-Qualified Deferred Compensation table above).
A change in control would also trigger payment to the named executive officer.
Note that Wade F. B. Thompson, our former Chairman of the Board, President and Chief Executive
Officer, died on November 13, 2009 and no benefit or payments were payable upon his death.
Benefits and Payments Upon Change-in-Control
The table below reflects the benefits payable to our named executive officers had a change in
control occurred as of July 31, 2010:
|
|
|
|
|
|
|
Value of Stock Acceleration |
|
Name |
|
($)(1) |
|
Peter B. Orthwein |
|
|
|
|
Christian G. Farman |
|
|
51,334 |
|
Ronald Fenech |
|
|
|
|
Richard E. Riegel, III |
|
|
35,001 |
|
Walter L. Bennett |
|
|
|
|
(1) |
|
The amounts reported in this column represent the spread value (i.e., the difference
between the stock price on July 30, 2010 and the exercise price) of each named executive
officers stock options that were in the money as of July 31, 2010. |
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of July 31, 2010 about our Common Stock that may be
issued upon the exercise of options, warrants and rights granted to employees or members of our
Board under all of our existing equity compensation plans, including our 2006 Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of securities |
|
|
|
securities to be |
|
|
|
|
|
|
remaining available for |
|
|
|
issued upon |
|
|
Weighted-average |
|
|
future issuance under |
|
|
|
exercise of |
|
|
exercise price of |
|
|
equity compensation |
|
|
|
outstanding |
|
|
outstanding |
|
|
plans (excluding |
|
|
|
options, warrants |
|
|
options, warrants |
|
|
securities reflected in |
|
|
|
and rights |
|
|
and rights |
|
|
column (a)) |
|
Plan category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
Equity compensation plans approved by security holders |
|
|
1,381,725 (1) |
|
|
$ |
30.20 |
|
|
|
30,000 (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,381,725 |
|
|
$ |
30.20 |
|
|
|
30,000 |
|
(1) |
|
Represents shares underlying stock options granted pursuant to our 1999 Plan and our 2006
Plan. Our 1999 Plan was frozen in 2006 upon the adoption of our 2006 Plan. As a result, no
further grants may be made under our 1999 Plan. |
32
(2) |
|
Represents shares authorized for issuance pursuant to our 2006 Plan. |
Each of our non-employee directors receives an annual cash retainer of $170,000, payable quarterly,
plus expenses. Our lead director and the chair of our Audit Committee each receive an additional
annual cash retainer of $20,000, payable quarterly. In addition, on July 20, 2010, we awarded our
lead director, Geoffrey A. Thompson, an option to purchase 20,000 shares of our Common Stock under
our 2006 Plan with a per share exercise price of $27.88. The options will vest in equal
installments on each of the first three anniversaries of the date of grant (or earlier upon a
change in control) subject to Mr. Thompsons continuing service with us on such date. The options
will fully vest and become exercisable upon a change in control of our Company.
For the first quarter of fiscal 2010, each of our non-employee directors volunteered to forgo 15%
of his fees due to the decline in our profits in fiscal 2009 resulting from market conditions.
The following table summarizes the compensation paid to our non-employee directors in fiscal 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
Earned
or
Paid in |
|
|
Option |
|
|
|
|
|
|
Cash |
|
|
Awards |
|
|
Total |
|
Name |
|
($)(1) |
|
|
($)(2) |
|
|
($) |
|
Neil D. Chrisman |
|
|
163,625 |
|
|
|
|
|
|
|
163,625 |
|
J. Allen Kosowsky |
|
|
42,500 |
|
|
|
|
|
|
|
42,500 |
|
Alan Siegel |
|
|
163,625 |
|
|
|
|
|
|
|
163,625 |
|
Jan H. Suwinski |
|
|
182,875 |
|
|
|
|
|
|
|
182,875 |
|
Geoffrey A. Thompson |
|
|
182,875 |
|
|
|
234,400 |
|
|
|
417,275 |
|
William C. Tomson |
|
|
163,625 |
|
|
|
|
|
|
|
163,625 |
|
(1) |
|
Fees consist of an annual cash retainer for board and committee service and an
additional annual cash retainer paid to the lead director and the chair of our Audit
Committee. For Mr. Kosowsky, who was appointed to our Board on March 11, 2010, the amount was
pro-rated based on the portion of the year Mr. Kosowsky served on our Board. |
|
(2) |
|
Amounts reflected for Mr. Thompson reflects the grant date fair value of the award during
fiscal 2010 determined in accordance with ASC Topic 718, CompensationStock Compensation,
for stock option awards as required by the SEC rules effective for 2010. Assumptions used in
the calculation of these amounts are included in Note J of the Notes to Consolidated Financial
Statements in our Annual Report on Form 10-K for the fiscal year ended July 31, 2010. The
aggregate number of outstanding stock options held by each of our non-employee directors on
July 31, 2010 was as follows: Mr. Chrisman 25,000, Mr. Kosowsky 0, Mr. Siegel 2,000,
Mr. Suwinski 43,000, Mr. Thompson 35,000 and Mr. Tomson 45,000. All of the foregoing
stock options are exercisable except for the 20,000 stock options issued to Mr. Thompson on
July 20, 2010. |
Proposal #2 Thor Industries, Inc. 2010 Equity and Incentive Plan
Our Board has approved and recommends that stockholders approve the adoption of the Thor
Industries, Inc. 2010 Equity and Incentive Plan (our 2010 Plan). Our 2010 Plan is designed to
enable us to obtain and retain the services of the types of employees and directors who will
contribute to our long range success and to provide incentives that are linked directly to
increases in share value which will inure to the benefit of our stockholders. Our Board approved
our 2010 Plan on October 25, 2010. The maximum number of shares issuable under our 2010 Plan is
2,000,000 (subject to adjustment) of which a maximum of 1,000,000 shares can be awarded as
restricted stock or restricted stock units.
33
A copy of our 2010 Plan is attached to this Proxy Statement as Appendix D. The description
of our 2010 Plan that follows is qualified in its entirety by reference to our 2010 Plan that is
attached.
Our 2010 Plan will be administered by our Board or a committee designated by our Board (our
Committee). While we are a publicly traded company, our Committee may consist solely of two or
more members of our Board who qualify as outside directors within the meaning of Section 162(m)
of the Code, and as non-employee directors under Rule 16b-3 as promulgated under Section 16 of
the Exchange Act. Our Committee will have the power and authority to select Participants (as
defined below) in our 2010 Plan and grant Awards (as defined below) to such Participants pursuant
to the terms of our 2010 Plan. In addition, our Committee will have the authority to (a) construe
and interpret our 2010 Plan and apply its provisions, (b) promulgate, amend and rescind the rules
and regulations relating to the administration of our 2010 Plan, (c) delegate its authority to one
or more officers of our Company with respect to Awards that do not involve certain executive
officers of our Company, (d) determine when Awards are to be granted under our 2010 Plan and the
applicable date of grant, (e) select those Participants to whom Awards shall be granted, (f)
determine the number of shares of our Common Stock to be made subject to each Award, (g) determine
whether each option is or is not intended to qualify as an incentive stock option, (h) prescribe
the terms and conditions of each Award, (i) amend any outstanding Awards subject to certain
limitations, (j) make decisions with respect to outstanding Awards that may become necessary upon a
change in corporate control or an event that triggers anti-dilution adjustments, and (k) exercise
discretion to make any and all other determinations which it determines to be necessary or
advisable for the administration of our 2010 Plan. All decisions made by our Committee pursuant to
the provisions of our 2010 Plan shall be final and binding on our Company and the Participants.
Subject to adjustment, the total number of shares of our Common Stock that will be available for
the grant of Awards under our 2010 Plan may not exceed 2,000,000 shares; provided, that, for
purposes of this limitation, any stock subject to an Award that is canceled, forfeited or expires
prior to exercise or realization will again become available for issuance under our 2010 Plan.
Subject to adjustment, no Participant will be granted, during any one year period, options to
purchase common stock or stock appreciation rights with respect to more than 2,000,000 shares of
our Common Stock and no Participant will be granted, during any one year period, Restricted Stock
or Restricted Stock Units with respect to more than 1,000,000 shares of common stock. Stock
available for distribution under our 2010 Plan will be authorized and unissued shares, treasury
shares or shares reacquired by our Company in any manner.
Eligibility
Awards may be granted to our employees and directors and those individuals whom our Committee
determines are reasonably expected to become employees or directors following the date of the grant
of the Award (Participants), provided that incentive stock options may be granted only to
employees. Awards may be in the form of options (incentive stock options and nonstatutory stock
options), restricted stock, restricted stock units, performance compensation awards and stock
appreciation rights (collectively, Awards).
Options
Options may be granted as incentive stock options (stock options intended to meet the requirements
of Section 422 of the Code) or nonstatutory stock options (stock options not intended to meet such
requirements) and will be granted in such form and will contain such terms and conditions as our
Committee deems appropriate. The term of each option will be fixed by our Committee but no
incentive stock option may be exercisable after the expiration of ten years from the grant date;
provided, that, in the case of incentive stock options granted to a 10% stockholder, the term of
such option may not exceed five years from the grant date. The exercise price of each incentive
stock option may not be less than 100% of the fair market value of the common stock subject to the
option on the date of grant; provided, that, in the case of incentive stock options granted to a
10% stockholder, the exercise price may not be less than 110% of the fair market value on the date
of grant. The exercise price of each nonstatutory stock option may not be less than 100% of the
fair market value of the common stock subject to the option on the date of grant. Our Committee
will determine the time or times at which, or other conditions upon which, an option will vest or
34
become exercisable. Payment in respect of the exercise of an option may be made in cash or by
certified or bank check, or our Committee may, in its discretion and to the extent permitted by
law, allow such payment to be made by surrender of unrestricted shares of common stock (with a fair
market value equal to the exercise price) that have been held by the Participant for any period
deemed necessary by our accountants to avoid an additional compensation charge, or by means of
attestation whereby the Participant identifies for delivery specific shares of common stock that
have a fair market value equal to the exercise price, or through a broker-assisted cashless
exercise program, a net exercise method, or in any other form of legal consideration that may be
acceptable to our Committee.
Restricted Stock and Restricted Stock Units
Our Committee may award actual shares of our Common Stock (Restricted Stock) or hypothetical
common stock units having a value equal to the fair market value of an identical number of shares
of our Common Stock (Restricted Stock Units), which award may, but need not, provide that such
Restricted Stock or Restricted Stock Units may not be sold, assigned, transferred or otherwise
disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of
an obligation or for any other purpose for such period (the Restricted Period) as our Committee
shall determine. Subject to the restrictions set forth in the Award, Participants who are granted
Restricted Stock generally will have the rights and privileges of a stockholder as to such
restricted stock, including the right to vote such restricted stock. Cash dividends and stock
dividends with respect to Restricted Stock shall be withheld by our Company for the Participants
account, and interest may be credited on the amount of the cash dividends withheld at a rate and
subject to such terms as determined by our Committee. The cash dividends or stock dividends so
withheld by our Committee and attributable to any particular share of Restricted Stock will be
distributed to the Participant in cash or, at the discretion of our Committee, in shares of common
stock having a fair market value equal to the amount of such dividends, if applicable, upon the
release of restrictions on such shares. The Restricted Period shall commence on the date of the
grant and end at the time or times set forth on a schedule established by our Committee in the
applicable Award agreement. At the discretion of our Committee cash dividends and stock dividends
(Dividend Equivalents) also may be paid with respect to Restricted Stock Units which, if
credited, shall be withheld for the Participants account and distributed upon the settlement of
the Restricted Stock Unit. If the Restricted Stock or the Restricted Stock Units, as applicable,
are forfeited, the Participant shall have no right to such dividends and/or Dividend Equivalents.
Performance Compensation Awards
Our 2010 Plan provides our Committee with the authority, at the time of grant of any Award
(other than options and stock appreciation rights granted with an exercise price or grant price
equal to or greater than the fair market value per share of stock on the date of the grant), to
designate such Award as a performance compensation award in order to qualify such Award as
performance-based compensation under Section 162(m) of the Code. In addition, our 2010 Plan
provides our Committee with the authority to make an Award of a cash bonus to any Participant and
designate such Award as a performance compensation award in order to qualify such Award as
performance-based compensation under Section 162(m) of the Code.
During the first 90 days of a performance period (or, if longer or shorter, within the maximum
period allowed under Section 162(m) of the Code), which period may not be less than one fiscal
quarter (the Performance Period), our Committee may, in its sole discretion, select which
Participants will be eligible to receive performance compensation awards in respect of such
Performance Period. Our 2010 Plan provides that, with regard to a particular performance
compensation award, our Committee has full discretion to select the length of the Performance
Period, the performance criteria that will be used to establish the performance goal, the kind(s)
and/or level(s) of the performance goal(s) that is (are) to apply to our Company and the
performance formula to be applied against the relevant performance goal to determine, with regard
to the performance compensation award of a particular Participant, whether all, some portion or
none of the performance compensation award has been earned for the Performance Period.
The maximum performance compensation award payable to any one Participant under our 2010 Plan for a
Performance Period is 2,000,000 shares of our Common Stock or, in the event such performance
35
compensation award is paid in cash, the equivalent cash value thereof, as determined by our
Committee. If the performance compensation award is in the form of Restricted Stock or Restricted
Stock Units, then the maximum performance compensation award payable to any one Participant for a
Performance Period is 1,000,000 shares of our Common Stock. The maximum amount that can be paid in
any calendar year to any Participant pursuant to a performance compensation award in the form of a
cash bonus is $10,000,000.
Performance compensation awards shall be based on the attainment of specific levels of performance
of our Company (or affiliate, division or operational unit of our Company) and shall be limited to
the following:
|
(a) |
|
net earnings or net income (before or after taxes); |
|
|
(b) |
|
basic or diluted earnings per share (before or after taxes); |
|
|
(c) |
|
net revenue or net revenue growth; |
|
|
(d) |
|
gross revenue; |
|
|
(e) |
|
gross profit or gross profit growth; |
|
|
(f) |
|
net operating profit (before or after taxes); |
|
|
(g) |
|
pre-tax profits (before or after LIFO adjustments); |
|
|
(h) |
|
return measures (including, but not limited to, return on assets, capital,
invested capital, equity, or sales); |
|
|
(i) |
|
cash flow (including, but not limited to, operating cash flow, free cash
flow, and cash flow return on capital); |
|
|
(j) |
|
earnings before or after taxes, interest, depreciation and/or amortization; |
|
|
(k) |
|
gross or operating margins; |
|
|
(l) |
|
productivity ratios; |
|
|
(m) |
|
share price (including, but not limited to, growth measures and total stockholders
return); |
|
|
(n) |
|
expense targets; |
|
|
(o) |
|
margins; |
|
|
(p) |
|
operating efficiency; |
|
|
(q) |
|
objective measures of customer satisfaction; |
|
|
(r) |
|
working capital targets; |
|
|
(s) |
|
measures of economic value added; |
|
|
(t) |
|
inventory control; and |
|
|
(u) |
|
enterprise value. |
Stock Appreciation Rights
Stock appreciation rights may be granted either alone (Free Standing Rights) or, provided the
requirements of our 2010 Plan are satisfied, in tandem with all or part of any option granted under
our 2010 Plan (Related Rights). Upon exercise thereof, the holder of a stock appreciation right
would be entitled to receive from our Company an amount equal to the product of (i) the excess of
the fair market value of our Common Stock on the date of exercise over the exercise price per share
specified in such stock appreciation right or its related option, multiplied by (ii) the number of
shares for which such stock appreciation right is exercised. The exercise price of a Free Standing
Right shall be determined by our Committee, but shall not be less than 100% of the fair market
value of our Common Stock on the date of grant of such Free Standing Right. A Related Right granted
simultaneously with or subsequent to the grant of an option shall have the same exercise price as
the related option, shall be transferable only upon the
36
same terms and conditions as the related option, and shall be exercisable only to the same extent
as the related option. A stock appreciation right may be settled, at the sole discretion of our
Committee, in cash, shares of our Common Stock or a combination thereof.
Change in Control
In the event of a Change in Control (as defined in our 2010 Plan) of our Company, and either in or
not in combination with another event such as a termination of the applicable Participants service
by our Company without cause, unless otherwise provided in an Award agreement, all options and
stock appreciation rights will become immediately exercisable with respect to 100 percent of the
shares subject to such option or stock appreciation rights, and the restrictions will expire
immediately with respect to 100 percent of such shares of Restricted Stock or Restricted Stock
Units subject to such Award (including a waiver of any applicable Performance Goals). In addition,
unless otherwise provided in an Award agreement, all incomplete Performance Periods in respect of a
performance compensation award will end upon a Change in Control, and our Committee will (a)
determine the extent to which performance goals with respect to each such Performance Period have
been met, and (b) cause to be paid to the applicable Participant partial or full performance
compensation awards with respect to performance goals for each such Performance Period based upon
our Committees determination of the degree of attainment of performance goals or assuming that
applicable target levels of performance have been attained or on such other basis as determined by
our Committee. Further, in the event of a Change in Control, our Committee may in its discretion
and upon advance notice to the affected persons, cancel any outstanding Awards and pay to the
holders thereof, in cash or stock, or any combination thereof, the value of such Awards based upon
the price per share of our Common Stock received or to be received by other shareholders of our
Company in the event.
Amendment and Termination
Our Board at any time, and from time to time, may amend or terminate our 2010 Plan. However, except
as provided otherwise in our 2010 Plan, no amendment shall be effective unless approved by the
stockholders of our Company to the extent stockholder approval is necessary to satisfy any
applicable law or securities exchange listing requirements. Our Committee at any time, and from
time to time, may amend the terms of any one or more Awards; provided, however, that our Committee
may not make any amendment which would otherwise constitute an impairment of the rights under any
Award unless our Company requests the consent of the Participant and the Participant consents in
writing.
Adjustments
The maximum number of shares of our Common Stock which may be awarded under our 2010 Plan, and the
number of shares and price per share applicable to any outstanding Award, are subject to adjustment
in the event of stock splits, reverse stock splits, stock or extraordinary cash dividends,
recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization.
Market Value of Underlying Securities
Our common stock underlies all of the options and other equity based awards to be awarded under our
2010 Plan. The market value of our common stock at the close of trading on October 15, 2010, as
reported by the New York Stock Exchange, was $31.90 per share.
Term
Our 2010 Plan will expire on October 23, 2020. Any awards previously granted under our 2010 Plan
and outstanding subsequent to October 23, 2020 will continue to be governed by the provisions of
our 2010 Plan.
37
Plan Benefits to be Received
Benefits and amounts to be awarded under our 2010 Plan are not currently determinable.
U.S. Federal Income Tax Consequences
The following is a summary of certain material U.S. federal income tax consequences relating to
Awards under our 2010 Plan, based on federal income tax laws currently in effect. This summary is
not intended to and does not describe all of the possible tax consequences that could result from
the acquisition, holding, exercise or disposition of an option right or shares of common stock
purchased or granted pursuant to, or any other Award granted under, our 2010 Plan and does not
describe any state, local or foreign tax consequences. Moreover, the federal income tax
consequences to any particular individual may differ from those described herein by reason of,
among other things, the particular circumstances of such individual. This summary is for general
information only and does not constitute tax advice.
Nonstatutory Stock Options. An individual receiving nonstatutory stock options generally should not
recognize taxable income at the time of grant. An individual should generally recognize ordinary
compensation income in an amount equal to the excess, if any, of the fair market value of the
option shares on exercise of the nonstatutory stock options over the exercise price thereof. In
general, subject to the limitations set forth in Sections 162(m) and 280G, discussed below, our
Company is entitled to deduct from its taxable income the amount that the individual is required to
include in ordinary income at the time of such inclusion. Additional special rules apply if an
individual exercises a nonstatutory stock option by paying the exercise price, in whole or in part,
by the transfer of shares of common stock to our Company.
Incentive Stock Options. An individual granted an incentive stock option generally should not
recognize taxable income at the time of grant or, subject to certain conditions, at the time of
exercise, although he or she may be subject to alternative minimum tax. If the individual holds the
shares acquired upon exercise of an incentive stock option for at least two years after the date of
grant and for at least one year after the date of exercise, upon disposition of the shares by the
individual, the difference, if any, between the sales price of the shares and the exercise price of
the option will be treated as long-term capital gain or loss. In general, if a disqualifying
disposition should occur (i.e., the shares acquired upon exercise of the option are disposed of
within the later of two years from the date of grant or one year from the date of exercise), an
individual will generally recognize ordinary compensation income in the year of disposition in an
amount equal to the excess, if any, of the fair market value of the option shares at the time of
exercise over the exercise price thereof (or, if less, the amount realized on the subsequent
disposition of the shares). Our Company is not entitled to any deduction on account of the grant of
incentive stock options or the individuals exercise of the option to acquire common stock.
However, in the event of a subsequent disqualifying disposition of such shares of common stock
acquired pursuant to the exercise of an incentive stock option under circumstances resulting in
taxable compensation to the individual, subject to the limitations set forth in Sections 162(m) and
280G, discussed below, in general, our Company should be entitled to a tax deduction equal to the
amount treated as taxable compensation to the individual. Additional special rules apply if an
individual exercises an incentive stock option by paying the exercise price, in whole or in part,
by the transfer of shares of common stock to our Company.
Stock Appreciation Rights. An individual receiving a stock appreciation right (SAR) generally
should not recognize taxable income at the time of grant. Upon exercise of an SAR, an individual
generally should recognize ordinary compensation income in an amount equal to the fair market value
of the payment received in respect of the SAR. In general, our Company should be able to deduct
this same amount for U.S. federal income tax purposes, but such deduction may be limited under
Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in
those sections.
Restricted Stock. An individual generally should not recognize ordinary income upon receipt of
restricted stock. The individual generally should recognize ordinary income when the restricted
stock is transferable by the individual or no longer subject to a substantial risk of forfeiture,
whichever occurs first. At such time, the individual should recognize ordinary income in an amount
equal to the current fair market value of the shares. An individual may, however, elect to
recognize ordinary income when the restricted stock is granted
38
in an amount equal to the fair market value of the shares at that time, determined without regard
to the restrictions. (Special rules apply to the receipt and disposition of restricted stock
received by officers and directors who are subject to Section 16(b) of the Exchange Act). In
general, our Company should be able to deduct, at the same time as it is recognized by the
individual, the amount of taxable compensation to the individual for U.S. federal income tax
purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for
compensation paid to certain executives designated in those sections.
Restricted Stock Units. An individual receiving a restricted stock unit award generally should not
recognize taxable income at the time of grant. Rather, upon delivery of shares and/or cash, as
applicable, pursuant to a restricted stock unit award, the individual generally should have taxable
compensation equal to the fair market value of the number of shares (and/or the amount of cash) the
individual actually receives with respect to the award. In general, our Company should be able to
deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited
under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated
in those sections.
Section 162(m) Limitation. In general, Section 162(m) of the Code denies a publicly held
corporation a deduction for U.S. federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and the three other most highly-paid
executive officers (other than the chief executive officer and chief financial officer), subject to
certain exceptions. Our 2010 Plan is intended to satisfy an exception with respect to grants of
options to covered employees. In addition, our 2010 Plan is designed to permit certain awards of
restricted stock, restricted stock units, cash bonus awards and other awards to be awarded as
performance compensation awards intended to qualify under the performance-based compensation
exception to Section 162(m) of the Code.
Section 280G of the Code. Under certain circumstances, the accelerated vesting or settlement of
awards in connection with a Change in Control (as defined in our 2010 Plan) may be deemed an
excess parachute payment for purposes of the golden parachute tax provisions of Section 280G of
the Code. To the extent it is so considered, the grantee may be subject to a 20% excise tax and our
Company may be denied a federal income tax deduction.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF OUR 2010 PLAN.
Certain Relationships and Transactions with Management
The Estate (as defined above) and Mr. Orthwein own Cash Flow Management, Inc. (Cash Flow
Management). For fiscal 2010, we paid Cash Flow Management a fee of $192,000, which was used to
defray expenses, including the rent of offices used by Messrs. Orthwein, Riegel and Thompson and we
also reimbursed Cash Flow Management for an immaterial amount of related expenses. Prior to his
death, Mr. Thompson owned the stock of Cash Flow Management now held by the Estate.
On December 17, 2009, we entered into a repurchase agreement to purchase shares of our Common Stock
from the Estate in a private transaction. Pursuant to the terms of the repurchase agreement, we
purchased from the Estate 3,980,000 shares of our Common Stock at a price of $29 per share,
representing an aggregate purchase price of $115,420,000. Alan Siegel, a member of our Board is a
co-executor of the Estate and trustee of Wade F. B. Thompsons trust. Mr. Siegel is also an
officer and director of The Thompson Family Foundation, Inc., a charitable foundation, created by
Wade F. B. Thompson. The repurchase transaction was evaluated and approved by members of our Board
other than Mr. Siegel. Mr. Siegel did not receive any fees in connection with the repurchase
transaction. We used available cash to purchase the shares of our Common Stock. The amount of
shares we repurchased represented 7.2% of our issued and outstanding Common Stock at the time of
the transaction.
J. Allen Kosowsky provided accounting-related advice to our Company during fiscal 2010 prior to his
appointment to our Board. The aggregate amount paid by us to Mr. Kosowsky for these services for
fiscal 2010 was $119,357.
39
Our Audit Committee is required to review and approve all related party transactions that are
required to be disclosed under Item 404 of Regulation S-K promulgated by the SEC. All such related
party transactions must also be approved by the disinterested members of our Board if required by
Delaware General Corporation Law.
Report of the Audit Committee
The Audit Committee serves as the representative of the Companys Board of Directors for general
oversight of the Companys financial accounting and reporting, systems of internal control and
audit process, and monitoring compliance with laws and regulations and standards of business
conduct. The Audit Committee operates under a written charter, a copy of which is available on our
Companys website at www.thorindustries.com.
Management of the Company has the primary responsibility for the financial reporting process,
including the system of internal control. Deloitte & Touche LLP (Deloitte), an independent
registered public accounting firm acting as the Companys independent auditor, is responsible for
performing an independent audit of the Companys consolidated financial statements in accordance
with the standards of the United States Public Company Accounting Oversight Board and issuing a
report thereon and as to its assessment of the effectiveness of internal control over financial
reporting.
In carrying out its duties, the Audit Committee has reviewed and discussed the Companys audited
consolidated financial statements for the fiscal year ended July 31, 2010 with the Companys
management and Deloitte. The Audit Committee has also discussed with Deloitte the matters required
to be discussed by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees
Concerning Independence, as amended (AICPA Professional Standards, vol. 1 AU section 380), as
adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the Audit
Committee has received the written disclosures and the letter from Deloitte required by applicable
requirements of the Public Company Accounting Oversight Board regarding Deloittes communications
with the Audit Committee concerning independence and has discussed with Deloitte its independence
from the Company and its management. Based on the foregoing reports and discussions and subject to
the limitations on the role and responsibilities of the Audit Committee referred to above and in
the Charter of the Audit Committee, the Audit Committee recommended to the Board of Directors, and
the Board of Directors has approved, that the audited consolidated financial statements be included
in the Companys Annual Report on Form 10-K for the fiscal year ended July 31, 2010.
The Board of Directors has affirmatively determined that each of the members of the Audit Committee
is independent as defined under the rules of the New York Stock Exchange.
|
|
|
|
|
The Audit Committee |
|
|
Neil D. Chrisman |
|
|
Jan H. Suwinski |
|
|
Geoffrey A. Thompson |
The foregoing report of our Audit Committee shall not be deemed to be incorporated by reference in
any previous or future documents filed by our Company with the Securities and Exchange Commission
under the Securities Act or the Exchange Act, except to the extent that we incorporate the report
by reference in any such document.
40
Independent Registered Public Accounting Firm Fees
The following table represents the aggregate fees billed to us for fiscal 2010 and 2009 by Deloitte
and Touche, LLP, our principal independent registered public accounting firm (Deloitte).
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2010 |
|
|
Fiscal 2009 |
|
Audit Fees |
|
$ |
1,522,320 |
|
|
$ |
2,088,490 |
|
|
Audit-Related Fees |
|
|
93,820 |
|
|
|
35,102 |
|
|
Subtotal |
|
|
1,616,140 |
|
|
|
2,123,592 |
|
|
Tax Fees |
|
|
644,969 |
|
|
|
1,225,710 |
|
|
All Other Fees |
|
|
|
|
|
|
|
|
|
Total Fees |
|
$ |
2,261,109 |
|
|
$ |
3,349,302 |
|
Audit Fees. Represents fees for professional services provided for the audit of our annual
financial statements and review of our quarterly financial statements, and audit services provided
in connection with other statutory or regulatory filings.
Audit-Related Fees. Represents fees for assurance services related to the audit of our financial
statements. The amount shown for fiscal 2010 consists of fees for audit work primarily associated
with our recent acquisitions. The amount shown for fiscal 2009 consists of fees for benefit plan
audits.
Tax Fees. Represents fees for professional services related to taxes including the preparation of
domestic and international returns, tax examinations assistance and tax planning.
All Other Fees. Represents fees for products and services provided to us not otherwise included in
the categories above.
Our Audit Committee has considered whether performance of services other than audit services is
compatible with maintaining the independence of Deloitte.
Our Audit Committee has adopted a formal policy concerning the approval of audit and non-audit
services to be provided by the independent registered public accounting firm to us. The policy
requires that all services Deloitte, our independent registered public accounting firm, may provide
to us, including audit services and permitted audit-related and non-audit services, be pre-approved
by our Audit Committee. Our Audit Committee pre-approved all audit and non-audit services provided
by Deloitte during fiscal 2010.
Additional Corporate Governance Matters
Section 16(a) Beneficial Ownership Reporting Compliance
The federal securities laws require the filing of certain reports by officers, directors and
beneficial owners of more than ten percent (10%) of our securities with the Securities and Exchange
Commission and the New York Stock Exchange. Specific due dates have been established and we are
required to disclose in this Proxy Statement any failure to file by these dates. Based solely on a
review of copies of the filings furnished to us, or written representations that no such filings
were required, the Company believes that all filing requirements were satisfied by each of our
officers, directors and ten percent (10%) stockholders for fiscal 2010, except that the following
filings were not made on a timely basis: (i) Mr. Fenech, an executive officer, did not timely file
a Form 4 to report two transactions; (ii) Mr. Kosowsky, a director, did not timely file a Form 3
upon becoming a director of the Company; (iii) Mr. Farman, an executive officer, did not timely
file a Form 4 to report one transaction; (iv) Mr. Geoffrey A. Thompson, a director, did not timely
file a Form 4 to report
one transaction; and (v) Mr. Riegel, an executive officer, did not timely file a Form 4 to report
each of four transactions.
41
Stockholder Proposals
Proposals by stockholders that are intended to be presented at the 2011 annual meeting must be
received by the Company on or before July 1, 2011 to be included in the proxy statement and form of
proxy for the 2011 annual meeting.
Notice of a shareholder proposal for the 2011 annual meeting submitted outside the processes of
Rule 14a-8 of the Exchange Act which is not received on or before September 14, 2011 will be
considered untimely. The Company reserves the right to reject, rule out of order or take other
appropriate action with respect to any proposal that does not comply with applicable requirements.
Other Matters
Management knows of no other matters that will be presented for consideration at the Meeting.
However, if any other matters are properly brought before the Meeting, it is the intention of the
persons named in the proxy to vote the proxy in accordance with their best judgment.
|
|
|
|
|
|
By Order of the Board of Directors,
|
|
|
|
|
|
WALTER L. BENNETT |
|
|
Executive Vice President, Chief
Administrative Officer and Secretary |
|
|
November 2, 2010
42
APPENDIX A
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF THOR INDUSTRIES, INC. CHARTER
As reviewed and approved by the Board of Directors, October 1, 2009
The Audit Committee (the Audit Committee or the Committee) of the Board of
Directors (the Board of Directors or the Board) of Thor Industries, Inc. (the
Company) is established by and among the Board of Directors for the primary purpose of
assisting the Board in:
|
|
|
Overseeing the integrity of the Companys financial statements, |
|
|
|
|
Overseeing the Companys compliance with legal and regulatory requirements, |
|
|
|
|
Overseeing the independent auditors qualifications, independence and performance, |
|
|
|
|
Overseeing the performance of the Companys independent auditor and internal audit
function, |
|
|
|
|
Overseeing the Companys system of disclosure controls and procedures, internal controls
over financial reporting, and compliance with ethical standards adopted by the Company. |
Consistent with this function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Companys policies, procedures, and practices at all levels. The
Audit Committee should also provide for open communication among the independent auditor, financial
and senior management, the internal auditing function, and the Board of Directors. The Audit
Committee has the authority to obtain advice and assistance from outside legal, accounting, or
other advisors as deemed appropriate to perform its duties and responsibilities.
The Company will provide appropriate funding, as determined by the Audit Committee, for
compensation to the independent auditor, to any advisors that the Audit Committee chooses to
engage, and for payment of ordinary administrative expenses of the Audit Committee that are
necessary or appropriate in carrying out its duties.
The independent auditor is ultimately accountable to the Committee, which has the sole authority to
appoint, oversee and, where appropriate, replace the independent auditor. The Committee has direct
responsibility for the compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor regarding financial
reporting) in connection with preparing or issuing an audit report or performing other audit,
review or attest services for the Company. The independent auditor shall report directly to the
Committee.
The Audit Committee will primarily fulfill its responsibilities by carrying out the activities
enumerated in Section III of this Charter. The Audit Committee will report regularly to the Board
of Directors regarding the execution of its duties and responsibilities.
While the Committee has the responsibilities and authority set forth in this Charter, it is not the
duty of the Committee to plan or conduct audits or to determine that the Companys financial
statements are complete and accurate and are in accordance with generally accepted accounting
principles. It is the responsibility of management and the responsibility of the independent
auditor to audit managements conclusions. Nothing contained in this Charter is intended to expand
applicable standards of liability under statutory or regulatory requirements for the directors of
the Company or members of the Committee.
A-1
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II. |
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COMPOSITION AND MEETINGS |
The Audit Committee will comprise three or more directors as determined by the Board of Directors.
Each Audit Committee member will have no material relationship with the Company (either directly or
as a partner, shareholder, or officer of an organization that has a relationship with the Company
other than as a Board member), as affirmatively determined by the Board of Directors. All committee
members must meet the independence requirements of the New York Stock Exchange and Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934, as amended (the Exchange Act).
All members of the Committee must comply with all financial literacy requirements of the New York
Stock Exchange. At least one member of the Committee shall be an audit committee financial expert
in compliance with the criteria established by the SEC. The existence of such a member, including
his or her name and whether or not he or she is independent, will be disclosed in periodic filings
as required by the SEC. Committee members are encouraged to enhance their familiarity with finance
and accounting by participating in educational programs, including those conducted by the Company
or outside consultants.
The members of the Committee will be elected by the Board at the annual organizational meeting of
the Board of Directors to serve until their successors are elected. Unless a Chairperson is elected
by the full Board, the members of the Committee may designate a Chairperson by majority vote. A
Committee member may be removed at any time (with or without cause) by the Board.
If any director serving on the Committee is also serving on the audit committee of three or more
other public companies, the Board of Directors must make a determination, as promptly as
practicable following the time when the Company first becomes aware of such circumstances and
thereafter on a periodic basis but no less frequently than annually, that such simultaneous service
does not impair the ability of such director to effectively serve on the Committee, and such
determination must be disclosed in the Companys proxy statement issued in connection with the
Companys annual meeting of stockholders.
If a member of the Committee ceases to be independent for reasons outside the members reasonable
control, his or her membership on the Committee may, if so permitted under then applicable New York
Stock Exchange rules, continue until the earlier of the Companys next annual meeting of
shareholders or one year from the occurrence of the event that caused the failure to qualify as
independent.
The Committee will meet four times annually, or more frequently as it deems necessary to fulfill
its responsibilities. Each regularly scheduled meeting will include an executive session of the
Committee absent members of management. As part of its responsibility to foster open communication,
the Committee will meet periodically with management, the director of the internal auditing
function, and the independent auditor in separate executive sessions. In addition, the Committee
will meet with the independent auditor and management to discuss the annual audited financial
statements and quarterly financial statements, including the Companys disclosure under
Managements Discussion and Analysis of Financial Condition and Results of Operations.
The Committee may meet by telephone conference call or by any other means permitted by law or the
Companys Bylaws. A majority of the members of the Committee shall constitute a quorum. The
Committee shall act on the affirmative vote of a majority of members present at a meeting at which
a quorum is present. Subject to the Companys Bylaws, the Committee may act by unanimous written
consent of all members in lieu of a meeting. The Committee shall determine its own rules and
procedures, including designation of a chairperson pro tempore in the absence of the Chairperson,
and designation of a secretary. The secretary need not be a member of the Committee and shall
attend Committee meetings and prepare minutes. The Committee shall keep written minutes of its
meetings, which shall be recorded or filed with the books and records of the Company. Any member
of the Board of Directors shall be provided with copies of such Committee minutes if requested.
The Committee may ask members of management, employees, outside counsel, the independent auditors,
internal auditors or others whose advice and counsel are relevant to the issues then being
considered by the Committee, to attend any meetings and to provide such pertinent information as
the Committee may
A-2
request.
The Chairperson of the Committee shall be responsible for leadership of the Committee, including
preparing the agenda, presiding over Committee meetings, making Committee assignments and regularly
reporting the Committees actions to the Board of Directors.
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III. |
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RESPONSIBILITIES AND DUTIES |
To fulfill its responsibilities and duties, the Audit Committees policies and procedures should
remain flexible to enable the Committee to react to changes in circumstances and conditions so that
it can fulfill its oversight responsibilities. In addition to such other duties as the Board of
Directors may assign from time to time, the Committee will:
Documents/Reports/Accounting Information Review
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1. |
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Review this Charter periodically, at least annually, and recommend to the Board
of Directors any necessary amendments. |
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2. |
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Review and discuss with management and the independent auditor the Companys
annual financial statements, quarterly financial statements (prior to the Companys
10-Q filings or release of earnings), and all internal controls reports (or summaries
thereof). Review other relevant reports or financial information submitted by the
Company to any governmental body or the public, including management certifications as
required by the Sarbanes-Oxley Act of 2002 and relevant reports rendered by the
independent auditors (or summaries thereof). |
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3. |
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Prepare the audit committee report for inclusion in the Companys annual proxy
statement as required by the applicable rules and regulations of the Securities and
Exchange Commission. |
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4. |
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Recommend to the Board of Directors whether the financial statements should be
included in the Companys Annual Report on Form 10-K. |
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5. |
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Discuss with management and the independent auditor significant financial
reporting issues and judgments made in connection with the preparation of the Companys
financial statements, including any significant changes in the Companys selection or
application of accounting principles, and the judgments of each of management and the
independent auditor as to the quality and appropriateness of the Companys accounting
principles as applied in its financial reporting. |
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6. |
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Review and discuss with management and the independent auditor Managements
Report on Internal Control Over Financial Reporting to be included in the Companys
Form 10-K. |
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7. |
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Discuss earnings press releases, including the type and presentation of
information, paying particular attention to any pro forma or adjusted non-GAAP
information. Such discussions may be in general terms (i.e., discussion of the types of
information to be disclosed and the type of presentations to be made). |
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8. |
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Discuss financial information and earnings guidance provided to analysts and
ratings agencies. Such discussions may be in general terms (i.e., discussion of the
types of information to be disclosed and the type of presentations to be made). |
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9. |
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Review the regular internal reports to management (or summaries thereof)
prepared by the internal auditing function, as well as managements response. |
A-3
Independent Auditors
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10. |
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Appoint (and recommend that the Board of Directors submit for shareholder
ratification, if applicable), compensate, retain (and, where appropriate, replace) and
oversee the work performed by the independent auditor for the purpose of preparing or
issuing an audit report or related work. Review the performance of the independent
auditors and remove the independent auditors if circumstances warrant. The independent
auditor will report directly to the Audit Committee, which has the sole authority to
oversee the resolution of disagreements between management and the independent auditors
if they arise. Discuss with the independent auditor the matters required to be
discussed under Statement on Auditing Standards (SAS) No. 61, as amended by SAS No. 84
and SAS No. 90. |
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In evaluating the independent auditors qualifications, performance and
independence, the Committee should discuss with the independent auditor the
independent auditors independence, take into account the opinions of management
and the internal auditors and consider whether the independent auditors quality
controls are sufficient and whether the provision of permitted non-audit services
is compatible with maintaining the auditors independence. The Committee shall
present its conclusions with respect to the independent auditor to the Board. |
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11. |
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Review with the independent auditor any problems or difficulties and
managements response; review the independent auditors attestation and report on
managements internal control report prior to the filing of the Companys Form 10-K;
and hold timely discussions with the independent auditors regarding the following: |
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All critical accounting policies and practices; |
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All alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management, ramifications of
the use of such alternative disclosures and treatments, and the treatment
preferred by the independent auditor; and |
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Other material written communications between the independent auditor and
management, including, but not limited to, the management letter and schedule of
unadjusted differences. |
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12. |
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At least annually, obtain and review a report by the independent auditor
describing: |
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The firms internal quality-control procedures; |
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Any material issues raised by the most recent internal quality-control review
or peer review, or by any inquiry or investigation conducted by governmental or
professional authorities during the preceding five years with respect to
independent audits carried out by the firm, and any steps taken to deal with any
such issues; and |
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All relationships between the independent auditor and the Company, addressing
the matters set forth in Independence Standards Board Standard No. 1. |
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This report should be used to evaluate the independent auditors qualifications,
performance, and independence. Further, the Committee will review the experience and
qualifications of the lead partner and other senior members of the independent audit
team each year and determine that all partner rotation requirements, as promulgated by
applicable rules and regulations, are executed. The Committee will also consider
whether there should be rotation of the firm itself. |
A-4
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13. |
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Actively engage in dialogue with the independent auditor with respect to any
disclosed relationships or services that may affect the independence and objectivity of
the auditor and take, or recommend that the full Board of Directors take, appropriate
actions to oversee the independence of the outside auditor. |
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14. |
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Ensure the rotation of the lead audit partner having primary responsibility
for the Companys audit and the audit partner responsible for reviewing the audit as
required by law. |
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15. |
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Consider whether there should be regular rotation of the Companys independent
auditor. |
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16. |
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Review and pre-approve (which may be pursuant to pre-approval policies and
procedures) both audit and nonaudit services to be provided by the independent auditor.
The authority to grant pre-approvals may be delegated to one or more designated members
of the Audit Committee whose decisions will be presented to the full Audit Committee at
its next regularly scheduled meeting. Approval of nonaudit services will be disclosed
to investors in periodic reports required by Section 13(a) of the Exchange Act. |
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17. |
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Set clear hiring policies, compliant with governing laws and regulations, for
employees or former employees of the independent auditor. |
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18. |
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Discuss with the independent auditor material issues on which the national
office of the independent auditor was consulted by the Companys audit team. |
Financial Reporting Processes, Accounting Policies, and Internal Control Structure
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19. |
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In consultation with the independent auditor and the internal auditor, review
the integrity of the Companys financial reporting processes (both internal and
external), and the internal control structure (including disclosure controls and
procedures and internal control over financial reporting). |
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20. |
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Receive and review any disclosure from the Companys CEO or CFO made in
connection with the certification of the Companys quarterly and annual reports filed
with the SEC of: a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting; and b) any fraud, whether or
not material, that involves management or other employees who have a significant role
in the Companys internal controls. |
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21. |
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Review major issues regarding accounting principles and financial statement
presentations, including any significant changes in the Companys selection or
application of accounting principles; major issues as to the adequacy of the Companys
internal control over financial reporting; any special audit steps adopted in light of
material control deficiencies; and the adequacy of disclosures about changes in
internal control over financial reporting. |
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22. |
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Review analyses prepared by management (and the independent auditor as noted
in item 12 above) setting forth significant financial reporting issues and judgments
made in connection with the preparation of the financial statements, including analyses
of the effects of alternative GAAP methods on the financial statements. |
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23. |
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Review the effect of regulatory and accounting initiatives, as well as
off-balance-sheet structures, on the financial statements of the Company. |
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24. |
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Review and approve all related-party transactions, defined as those
transactions required to be disclosed under item 404 of Regulation S-K. |
A-5
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25. |
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Establish procedures for the receipt, retention, and treatment of complaints
regarding accounting, internal accounting controls, or auditing matters. |
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26. |
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Establish procedures for the confidential, anonymous submission by Company
employees regarding questionable accounting or auditing matters. |
Internal Audit
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27. |
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Review and advise on the selection and removal of the internal audit director. |
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28. |
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Review activities, organizational structure, and qualifications of the
internal audit function. |
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29. |
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Annually, review and recommend changes (if any) to the internal audit charter. |
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30. |
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Periodically review, with the internal audit director any significant
difficulties, disagreements with management, or scope restrictions encountered in the
course of the functions work. |
Ethical Compliance, Legal Compliance, and Risk Management
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31. |
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Establish, review and update periodically a code of business conduct and
ethics and determine whether management has established a system to enforce this code.
Determine whether the code is in compliance with all applicable rules and regulations. |
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32. |
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Review managements monitoring of the Companys compliance with its code of
business conduct and ethics, and determine whether management has the proper review
system in place such that the Companys financial statements, reports, and other
financial information disseminated to governmental organizations, and the public,
satisfy legal requirements. |
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33. |
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Review, with the Companys counsel, legal compliance matters, including
corporate securities trading policies. |
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34. |
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Review, with the Companys counsel, any legal matter that could have a
significant impact on the Companys financial statements. |
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35. |
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Discuss policies with respect to risk assessment and risk management,
including appropriate guidelines and policies to govern the process, as well as the
Companys major financial risk exposures and the steps management has undertaken to
control them. |
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36. |
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Obtain from the independent auditor assurance that Section 10A(b) of the
Securities Exchange Act of 1934 has not been implicated. |
Other Responsibilities
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37. |
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Review with the independent auditor, the internal auditing function, and
management the extent to which changes or improvements in financial or accounting
practices have been implemented. |
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38. |
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Conduct an annual performance assessment relative to the Committees purpose,
duties, and responsibilities outlined herein. |
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39. |
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Perform any other activities consistent with this Charter, the Companys
by-laws, and governing law, as the Board of Directors deems necessary or appropriate. |
A-6
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In discharging its responsibilities, the Committee shall have the authority to engage and
determine funding for independent legal, accounting or other advisors (without seeking Board
approval) as the Committee determines necessary or appropriate to carry out its duties. The
Committee may conduct or authorize investigations into or studies of matters within the
Committees scope of responsibilities as described herein. The Company shall provide
appropriate funding, as determined by the Committee, for the payment of (i) compensation to
the independent auditor, and legal, accounting or other advisors engaged by the Committee
and (ii) ordinary administrative expenses of the Committee that are necessary or appropriate
in carrying out its duties. |
A-7
APPENDIX B
Amended and Restated Charter of the Nominating and Corporate Governance
Committee of the Board of Directors of Thor Industries, Inc.
As adopted by the Board of Directors on June 16, 2010
I. Purpose of the Committee
The purposes of the Nominating and Corporate Governance Committee (the Committee) of the Board of
Directors (the Board) of Thor Industries, Inc. (the Company) shall be to recommend to the Board
individuals qualified to serve as directors of the Company and on committees of the Board; to
advise the Board with respect to the Board composition, compensation, procedures and committees; to
develop and recommend to the Board a set of corporate governance principles applicable to the
Company; and to oversee the evaluation of the Board. The Committee shall report to the Board on a
regular basis and not less than once per year.
II. Composition of the Committee
The Committee shall be comprised of two or more directors each of whom has been determined, in the
business judgment of the Board, to qualify as an independent director (Independent Directors)
under (a) the rules of the New York Stock Exchange (the NYSE Rules) and (b) the Companys
Corporate Governance Guidelines.
The Board will select members of the Committee who will be approved by a majority vote of the
Board. Committee members will serve during their respective term as a director, subject to earlier
removal by a majority vote of the Board. Unless a chair is elected by the full Board, the members
of the Committee may designate a chair by majority vote of the Committee membership.
III. Meetings and Procedures of the Committee
The Committee may fix its own rules of procedure, which shall be consistent with the Bylaws of the
Company and this Charter. The Committee shall meet at least two times annually or more frequently
as circumstances or such rules of procedure as it may adopt require. The Board may designate one
member of the Committee as its Chairperson.
The Committee may request that any directors, officers or employees of the Company, or other
persons whose advice and counsel are sought by the Committee, attend any meeting of the Committee
to provide such pertinent information as the Committee requests.
Following each of its meetings, the Committee shall deliver a report on the meeting to the Board,
including a summary description of actions taken by the Committee at the meeting. The Committee
shall keep written minutes of its meetings, which minutes shall be maintained with the books and
records of the Company.
IV. Committee Responsibilities
A. Board Candidates and Nominees
The Committee shall have the following goals and responsibilities with respect to Board candidates
and nominees:
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(a) |
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To recommend to the Board the director nominees for election by the
stockholders or appointment by the Board, as the case may be, pursuant to the Bylaws of
the Company, which recommendations shall be consistent with the Boards criteria for
selecting new |
B-1
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directors. Such criteria shall include the possession of such knowledge,
experience, skills, expertise and diversity as may enhance the Boards ability to
manage and direct the affairs and business of the Company, including, when
applicable, as may enhance the ability of committees of the Board to fulfill their
duties. The Committee shall also take into account, as applicable, the satisfaction
of any independence requirements imposed by law, regulation, the NYSE Rules, and the
Companys Corporate Governance Guidelines. Any new candidate proposed by the
Committee for election to the Board shall be discussed with and receive concurrence
from the whole Board prior to the Chairman of the Board extending a formal
invitation to the candidate to join the Board. |
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(b) |
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To establish procedures for evaluating the suitability of potential director
nominees proposed by the directors, management or shareholders. |
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(c) |
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To review the suitability for continued service as a director of each Board
member when his or her term expires and when he or she has a significant change in
status, including but not limited to an employment change, and to recommend whether or
not the director should be re-nominated. |
B. Board Composition and Compensation
The Committee shall have the following goals and responsibilities with respect to the composition
and procedures of the Board as a whole:
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(a) |
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To review annually with the Board the size and composition of the Board as a
whole and to recommend, if necessary, measures to be taken so that the Board (i)
reflects the appropriate balance of knowledge, experience, skills, expertise and
diversity required for the Board as a whole and (ii) contains at least the minimum
number of Independent Directors required by the NYSE Rules or such greater number or
percentage of Independent Directors as the Committee may, from time to time, recommend
to the Board. |
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(b) |
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To make recommendations on the frequency and structure of Board meetings. |
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(c) |
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To review, on an annual basis the level and form of non-employee Director
compensation and recommend to the Chairman of the Board any changes the Committee
considers appropriate. |
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(d) |
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To make recommendations concerning any other aspect of the procedures of the
Board that the Committee considers warranted, including but not limited to procedures
with respect to the waiver by the Board of any Company rule, guideline, procedure or
corporate governance principle. |
C. Board Committees
The following shall be the goals and responsibilities of the Committee with respect to the
committee structure of the Board:
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(a) |
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To make recommendations to the Board, in consultation with the Chairman of the
Board, regarding the size, composition and chair, if any, of each standing committee of
the Board of Directors, including the identification of individuals qualified to serve
as members of a standing committee, including the Committee, and to recommend to the
Board individual directors to fill any vacancy that might occur on a committee,
including the Committee. |
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(b) |
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To monitor the functioning of the standing committees of the Board and to make
recommendations for any changes, including the creation and elimination of any standing
or special committees. |
B-2
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(c) |
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To review annually standing committee assignments and the policy with respect
to the rotation of standing committee memberships and/or chairpersonships, and to
report any recommendations to the Board. |
D. Corporate Governance
The following shall be the goals and responsibilities of the Committee with respect to corporate
governance:
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(a) |
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To develop and recommend to the Board a set of corporate governance principles
for the Company, which shall be consistent with any applicable laws, regulations and
listing standards. At a minimum, the corporate governance principles developed and
recommended by the Committee shall address the following: |
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(i) Director qualification standards. The Committee shall establish director
qualification standards; and such standards must reflect at a minimum the
independence requirements of the NYSE Rules. The Committee shall also develop
policies regarding director tenure, retirement and succession, and may consider
whether it is in the best interest of the Company to limit the number of corporate
boards on which a director may serve. |
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(ii) Director responsibilities. |
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(iii) Director access to management and, as necessary and appropriate, independent
advisors. |
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(iv) Director compensation, including principles for determining the form and amount
of director compensation, and for reviewing those principles at least annually. |
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(v) Director orientation and continuing education. |
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(vi) Management succession, including policies and principles for the selection and
performance review of the Chief Executive Officer, as well as policies regarding
succession of the Chief Executive Officer in the event of his or her death or
retirement. |
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(b) |
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To review periodically, and at least annually, the corporate governance
principles adopted by the Board to assure that they are appropriate for the Company,
and to recommend any desirable changes therein to the Board. In formulating its
recommendations pursuant to this Charter, the Committee shall work closely with the
Chairman of the Board of the Company. |
E. Evaluation of the Board
The Committee shall be responsible for overseeing the annual evaluation of the Board as a whole.
The Committee shall establish procedures to allow it to exercise this oversight function.
V. Evaluation of the Committee
The Committee shall on an annual basis evaluate its performance, which evaluation should among
other things: (i) compare its performance with the requirements of this charter, (ii) evaluate its
performance against its goals and objectives for the previous year, and (iii) set forth its goals
and objectives for the upcoming year. The evaluation should include a review and assessment of the
adequacy of the Committees charter. The Committee shall address all matters that it considers
relevant to its performance, including at least the following: the adequacy, appropriateness and
quality of the information and recommendations presented by the Committee to the Board, the manner
in which they were discussed or debated, and whether the number and length of meetings of the
Committee were adequate for it to complete its work in a thorough and thoughtful manner.
B-3
The Committee shall report the results of its evaluation to the Board, including any recommended
amendments to this Charter and any recommended changes to the Companys or the Boards policies or
procedures.
VI. Investigations and Studies; Outside Advisors
The Committee may conduct or authorize investigations into or studies of matters within the
Committees scope of responsibilities, and may retain, at the Companys expense, such independent
counsel or other advisors as it deems necessary. The Committee shall have the sole authority to
retain or terminate any search firm to be used to identify director candidates, including sole
authority to approve the search firms fees and other retention terms, such fees to be borne by the
Company.
B-4
APPENDIX C
Director Independence Standards
As adopted by the Board of Directors of Thor Industries, Inc.
A director will not be considered independent if, within the preceding three years:
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The director is an employee, or whose immediate family member is an executive officer, of the
Company. |
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The director receives, or whose immediate family member receives, more than $100,000 per year
in direct compensation from the Company, other than director and committee fees and pension
or other forms of deferred compensation for prior service (provided such compensation is not
contingent in any way on continued service). |
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The director is affiliated with or employed by, or whose
immediate family member is affiliated with or employed in a professional capacity by, a present or former internal or external
auditor of the Company. |
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The director is employed, or whose immediate family member is employed, as an executive
officer of another company where any of the Companys present executives serve on that
companys compensation committee. |
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The director is an executive officer or an employee, or whose immediate family member is an
executive officer, of another company that makes payments to, or receives payments from, the
Company for property or services in an amount which, in any single fiscal year, exceeds the
greater of $1 million or 2% of such other companys consolidated gross revenues. |
For relationships not covered by the guidelines above, or for relationships that are covered,
but as to which the Board believes a director may nonetheless be independent, the determination of
independence shall be made by the Board. However, any determination of independence for a director
who does not meet these standards must be specifically explained in the Companys proxy statement
for a meeting of shareholders at which directors are to be elected.
C-1
APPENDIX D
THOR INDUSTRIES, INC.
2010 EQUITY AND INCENTIVE PLAN
1.1 General Purpose. The name of this plan is the Thor Industries, Inc.
2010 Equity
and Incentive Plan (the Plan). The purpose of the Plan is to enable Thor Industries, Inc., a
Delaware corporation (the Company), and any Affiliate to obtain and retain the services of the
types of Employees and Directors who will contribute to the Companys long range success and to
provide incentives that are linked directly to increases in share value which will inure to the
benefit of all stockholders of the Company.
1.2 Eligible Award Recipients. The persons eligible to receive Awards
are the
Employees and Directors of the Company and its Affiliates and any such parties who are reasonably
expected to become Employees and Directors after the receipt of Awards.
1.3 Available Awards. Awards that may be granted under the Plan
include:
(a) Incentive Stock Options, (b) Nonstatutory Stock Options, (c) Restricted Awards, (d) Performance
Compensation Awards and (e) Stock Appreciation Rights.
2.1 Administrator means the Board or
the Committee appointed by the Board in accordance with
Section 3.5.
2.2 Affiliate means any parent
corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of
the Code.
2.3 Award means any right granted
under the Plan, including an Incentive Stock Option, a
Nonstatutory Stock Option, a Restricted Award, a Performance Compensation Award and a Stock
Appreciation Right.
2.4 Award Agreement means a written
agreement between the Company and a holder of an Award
evidencing the terms and conditions of an individual Award grant. Each Award Agreement shall be
subject to the terms and conditions of the Plan.
2.5 Beneficial Owner has the meaning
assigned to such term in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that in calculating the beneficial ownership of any particular
person (as that term is used in Section 13(d)(3) of the Exchange Act), such person shall be
deemed to have beneficial ownership of all securities that such person has the right to acquire
by conversion or exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms Beneficially Owns and Beneficially Owned
have a corresponding meaning.
2.6 Board means the Board of Directors
of the Company.
D - 1
2.7 Cause means (a) with respect to any
Participant who is a party to an employment or
service agreement or employment policy manual with the Company or its Affiliates and such agreement
or policy manual provides for a definition of Cause, as defined therein and (b) with respect to all
other Participants (i) the commission of, or plea of guilty or no contest to, a felony or a crime
involving moral turpitude or the commission of any other act involving willful malfeasance or
material fiduciary breach with respect to the Company or an Affiliate, (ii) conduct that results in
or is reasonably likely to result in harm to the reputation or business of the Company or any of
its Affiliates; (iii) gross negligence or willful misconduct with respect to the Company or an
Affiliate or (iv) material violation of state or federal securities laws. The Administrator, in
its absolute discretion, shall determine the effect of all matters and questions relating to
whether a Participant has been discharged for Cause.
2.8 Change in Control shall mean:
(a)
The direct or indirect sale, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all or substantially
all of the properties or assets of the Company and its subsidiaries, taken as a whole, to any
person (as that term is used in Section 13(d)(3) of the Exchange Act (a Person)) that is not a
subsidiary of the Company;
(b)
The Incumbent Directors cease for any reason to constitute at least a majority of the
Board; or
(c)
The date which is 10 business days prior to the consummation of a complete liquidation or
dissolution of the Company; or
(d)
The acquisition by any Person of Beneficial Ownership of 50% or more (on a fully diluted
basis) of either (A) the then outstanding shares of Common Stock of the Company, taking into
account as outstanding for this purpose such Common Stock issuable upon the exercise of options or
warrants, the conversion of convertible stock or debt, and the exercise of any similar right to
acquire such Common Stock (the Outstanding Company Common Stock) or (B) the combined voting power
of the then outstanding voting securities of the Company entitled to vote generally in the election
of directors (the Outstanding Company Voting Securities); provided, however, that for purposes of
this Plan, the following acquisitions shall not constitute a Change in Control: (i) any
acquisition by the Company or any subsidiary, (ii) any acquisition by any employee benefit plan
sponsored or maintained by the Company or any subsidiary, (iii) any acquisition which complies with
clauses, (i), (ii) and (iii) of subsection (e) of this Section 2.8 or (iv) in respect of an
Award held by a particular Participant, any acquisition by the Participant or any group of persons
including the Participant (or any entity controlled by the Participant or any group of persons
including the Participant); or
(e)
The consummation of a reorganization, merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company that requires the approval of the
Companys stockholders, whether for such transaction or the issuance of securities in the
transaction (a Business Combination), unless immediately following such Business Combination:
(i) more than 50% of the total voting power of (x) the entity resulting from such Business
Combination (the Surviving Company), or (y) if
D - 2
applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of
sufficient voting securities eligible to elect a majority of the members of the board of directors
(or the analogous governing body) of the Surviving Company (the Parent Company), is represented
by the Outstanding Company Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which the Outstanding
Company Voting Securities were converted pursuant to such Business Combination), and such voting
power among the holders thereof is in substantially the same proportion as the voting power of the
Outstanding Company Voting Securities among the holders thereof immediately prior to the Business
Combination, (ii) no Person (other than any employee benefit plan sponsored or maintained by the
Surviving Company or the Parent Company) is or becomes the beneficial owner, directly or
indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible
to elect members of the board of directors of the Parent Company (or the analogous governing body)
(or, if there is no Parent Company, the Surviving Company) and (iii) at least a majority of the
members of the board of directors (or the analogous governing body) of the Parent Company (or, if
there is no Parent Company, the Surviving Company) following the consummation of the Business
Combination were Board members at the time of the Boards approval of the execution of the initial
agreement providing for such Business Combination.
2.9 Code means the
Internal Revenue
Code of 1986, as it may be amended from time to time.
2.10 Committee means a committee of
one or more members of the Board appointed by the Board
to administer the Plan in accordance with Section 3.5.
2.11 Common Stock means the common
stock, $0.10 par value per share, of the Company.
2.12 Company means Thor Industries,
Inc. a Delaware corporation.
2.13 Continuous Service means that the
Participants service with the Company or an
Affiliate, whether as an Employee or Director, is not interrupted or terminated. The Participants
Continuous Service shall not be deemed to have terminated merely because of a change in the
capacity in which the Participant renders service to the Company or an Affiliate as an Employee or
Director or a change in the entity for which the Participant renders such service, provided that
there is no interruption or termination of the Participants Continuous Service. For example, a
change in status from an Employee of the Company to a Director of an Affiliate will not constitute
an interruption of Continuous Service. The Administrator or its delegate, in its sole discretion,
may determine whether Continuous Service shall be considered interrupted in the case of any leave
of absence approved by that party, including sick leave, military leave or any other personal or
family leave of absence.
2.14 Covered Employee has the same
meaning as set forth in Section 162(m)(3) of the Code.
2.15 Date of Grant means the date on
which the Administrator adopts a resolution, or takes
other appropriate action, expressly granting an Award to a Participant that
D - 3
specifies the key terms and conditions of the Award or, if a later date is set forth in such
resolution, then such date as is set forth in such resolution.
2.16 Detrimental Activity means:
(a) violation of the terms of any agreement with the
Company or any of its Affiliates concerning non-disclosure, confidentiality, intellectual property,
privacy or exclusivity; (b) disclosure of the Companys or its Affiliates confidential information
to anyone outside the Company or its Affiliates, without prior written authorization from the
Company or its Affiliates, or in conflict with the interests of the Company or its Affiliates,
whether the confidential information was acquired or disclosed by the Participant during or after
employment by the Company or its Affiliates; (c) failure or refusal to disclose promptly or assign
to the Company or its Affiliates all right, title and interest in any invention, work product or
idea, patentable or not, made or conceived by the Participant during employment by the Company or
its Affiliates, relating in any manner to the interests of the Company or its Affiliates or the
failure or refusal to do anything reasonably necessary to enable the Company or its Affiliates to
secure a patent where appropriate in the United States and in other countries; (d) activity that is
discovered to be grounds for or results in termination of the Participants employment for Cause;
(e) any breach of a restrictive covenant contained in any employment agreement, Award Agreement or
other agreement between the Participant and the Company or its Affiliates, during any period for
which a restrictive covenant prohibiting Detrimental Activity, or other similar conduct or act, is
applicable to the Participant during or after employment by the Company or its Affiliates; (f) any
attempt directly or indirectly to induce any Employee of the Company or its Affiliates to be
employed or perform services or act in conflict with the interests of the Company or its
Affiliates; (g) any attempt, in conflict with the interests of the Company or its Affiliates,
directly or indirectly, to solicit the trade or business of any current or prospective customer,
client, supplier or partner of the Company or its Affiliates; (h) the conviction of, or guilty plea
entered by, the Participant for any felony or a crime involving moral turpitude whether or not
connected with the Company; or (i) the commission of any other act involving willful malfeasance or
material fiduciary breach with respect to the Company or its Affiliates.
2.17 Director means a member of the
Board.
2.18 Disability means that the
Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment; provided, however,
for purposes of determining the term of an Incentive Stock Option pursuant to Section 6.10
hereof, the term Disability shall have the meaning ascribed to it under Code Section 22(e)(3). The
determination of whether an individual has a Disability shall be determined under procedures
established by the Administrator. Except in situations where the Administrator is determining
Disability for purposes of the term of an Incentive Stock Option pursuant to Section 6.10
hereof within the meaning of Code Section 22(e)(3), the Administrator may rely on any determination
that a Participant is disabled for purposes of benefits under any long-term disability plan
maintained by the Company or any Affiliate in which a Participant participates.
2.19 Effective Date shall mean the date
as of which this Plan is adopted by the Board.
D - 4
2.20 Employee means any person employed
by the Company or an Affiliate. Mere service as a
Director or payment of a directors fee by the Company or an Affiliate shall not be sufficient to
constitute employment by the Company or an Affiliate.
2.21 Exchange Act means the Securities
Exchange Act of 1934, as amended.
2.22 Fair Market Value means, as of any
date, the value of the Common Stock as determined
below. The Fair Market Value on any date on which the Companys shares of Common Stock are
registered under Section 12 of the Exchange Act and listed on the New York Stock Exchange shall be
the closing price of a share of Common Stock on the New York Stock Exchange on such date, and
thereafter (a) if the Common Stock is admitted to quotation on the over the counter market or any
interdealer quotation system, the Fair Market Value on any given date shall not be less than the
average of the highest bid and lowest asked prices of the Common Stock reported for such date or,
if no bid and asked prices were reported for such date, for the last day preceding such date for
which such prices were reported, or (b) in the absence of an established market for the Common
Stock, the Fair Market Value determined in good faith by the Administrator and such determination
shall be conclusive and binding on all persons.
2.23
[reserved]
2.24 Free Standing Rights has the
meaning set forth in Section 7.3(a).
2.25 Incentive Stock Option means an
Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
2.26 Incumbent Directors means
individuals who, on the Effective Date, constitute the Board,
provided that any individual becoming a Director subsequent to the Effective Date whose election or
nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for Director without objection to such
nomination) shall be an Incumbent Director. No individual initially elected or nominated as a
director of the Company as a result of an actual or threatened election contest with respect to
Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf
of any person other than the Board shall be an Incumbent Director.
2.27 Negative Discretion means the discretion
authorized by the Plan to be applied by the
Administrator to eliminate or reduce the size of a Performance Compensation Award in accordance
with Section 7.2(d)(iv) of the Plan; provided, that, the exercise of such discretion would
not cause the Performance Compensation Award to fail to qualify as performance-based compensation
under Section 162(m) of the Code.
2.28 Non-Employee Director means a
Director who is a non-employee director within the
meaning of Rule 16b-3.
2.29 Nonstatutory Stock Option means an
Option not intended to qualify as an Incentive Stock
Option.
D - 5
2.30 Officer means a person who is an
officer of the Company within the meaning of Section
16 of the Exchange Act and the rules and regulations promulgated thereunder.
2.31 Option means an Incentive Stock
Option or a Nonstatutory Stock Option granted pursuant
to the Plan.
2.32 Option Agreement means a written
agreement between the Company and an Optionholder
evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan and need not be identical.
2.33 Optionholder means a person to
whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.
2.34 Option Exercise Price means the price at which a
share of Common Stock may be purchased
upon the exercise of an Option.
2.35 Outside Director means a Director
who is an outside director within the meaning of
Section 162(m) of the Code and Treasury Regulations Section 1.162-27(e)(3) or any successor to such
statute and regulation.
2.36 Participant means an eligible
person to whom an Award is granted pursuant to the Plan
or, if applicable, such other person who holds an outstanding Award.
2.37 Performance Compensation Award means any
Award designated by the Administrator as a
Performance Compensation Award pursuant to Section 7.2 of the Plan.
2.38 Performance Criteria means the criterion or
criteria that the Administrator shall
select for purposes of establishing the Performance Goal(s) for a Performance Period with respect
to any Performance Compensation Award under the Plan. The Performance Criteria that will be used
to establish the Performance Goal(s) shall be based on the attainment of specific levels of
performance of the Company (or Affiliate, division, business unit or operational unit of the
Company) and shall be limited to the following:
(a)
net earnings or net income (before or after taxes);
(b)
basic or diluted earnings per share (before or after taxes);
(c)
net revenue or net revenue growth;
(d)
gross revenue;
(e)
gross profit or gross profit growth;
(f)
net operating profit (before or after taxes);
(g)
pre-tax profits (before or after LIFO adjustments)
D - 6
(h)
return measures (including, but not limited to, return
on assets, capital, invested
capital, equity, or sales);
(i)
cash flow (including, but not limited to,
operating
cash flow, free cash flow, and cash
flow return on capital);
(j)
earnings before or after taxes, interest,
depreciation
and/or amortization;
(k)
gross or operating margins;
(l)
productivity ratios;
(m) share
price (including, but not limited to, growth
measures and total stockholders
return);
(n)
expense targets;
(o)
margins;
(p)
operating efficiency;
(q)
objective measures of customer satisfaction;
(r)
working capital targets;
(s)
measures of economic value added;
(t)
inventory control; and
(u)
enterprise value.
Any one or more of the Performance Criteria may be used on an absolute or relative basis to measure
the performance of the Company and/or an Affiliate as a whole or any division, business unit or
operational unit of the Company and/or an Affiliate or any combination thereof, as the
Administrator may deem appropriate, or any of the above Performance Criteria as compared to the
performance of a group of comparable companies, or published or special index that the
Administrator, in its sole discretion, deems appropriate, or the Company may select Performance
Criterion (m) above as compared to various stock market indices. The Administrator also has the
authority to provide for accelerated vesting of any Award based on the achievement of Performance
Goals pursuant to the Performance Criteria specified in this paragraph. To the extent required
under Section 162(m) of the Code, the Administrator shall, within the first 90 days of a
Performance Period (or, if longer or shorter, within the maximum period allowed under 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. In the event that applicable tax and/or
securities laws change to permit the Administrator discretion to alter the governing Performance
Criteria without obtaining stockholder approval of such changes, the Administrator shall have sole
discretion to make such changes without obtaining stockholder approval.
D - 7
2.39
Performance Formula means, for a Performance Period, the one or more objective formulas
applied against the relevant Performance Goal to determine, with regard to the Performance
Compensation Award of a particular Participant, whether all, some portion but less than all, or
none of the Performance Compensation Award has been earned for the Performance Period.
2.40 Performance Goals means, for a
Performance Period, the one or more goals established by
the Administrator for the Performance Period based upon the Performance Criteria. The
Administrator is authorized at any time during the first 90 days of a Performance Period (or, if
longer or shorter, within the maximum period allowed under Section 162(m) of the Code), or at any
time thereafter (but only to the extent the exercise of such authority after such period would not
cause the Performance Compensation Awards granted to any Participant for the Performance Period to
fail to qualify as performance-based compensation under Section 162(m) of the Code), in its sole
and absolute discretion, to adjust or modify the calculation of a Performance Goal for such
Performance Period to the extent permitted under Section 162(m) of the Code in order to prevent the
dilution or enlargement of the rights of Participants based on the following events:
(a)
asset write-downs;
(b)
litigation or claim judgments or settlements;
(c)
the effect of changes in tax laws, accounting principles, or other laws or regulatory
rules affecting reported results;
(d)
any reorganization and restructuring programs;
(e)
extraordinary nonrecurring items as described in Accounting Principles Board Opinion No.
30 (or any successor or pronouncement thereto) and/or in managements discussion and analysis of
financial condition and results of operations appearing in the Companys annual report to
stockholders for the applicable year;
(f)
acquisitions or divestitures;
(g)
any other specific unusual or nonrecurring events, or objectively determinable category
thereof;
(h)
foreign exchange gains and losses; and
(i)
a change in the Companys fiscal year.
2.41 Performance Period means the one or more
periods of time not less than one fiscal
quarter in duration, as the Administrator 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 Compensation Award.
2.42 Plan means this Thor Industries,
Inc. 2010 Equity and Incentive Plan.
D - 8
2.43
Related Rights
has the meaning set forth in Section 7.3(a).
2.44
Restricted Award
means any Award granted pursuant to Section 7.1(a).
2.45
Restricted Period
has the meaning set forth in Section 7.1(a).
2.46 Rule 16b-3 means
Rule 16b-3 promulgated under the Exchange Act or any successor to Rule
16b-3, as in effect from time to time.
2.47 SAR exercise price has the meaning
set forth in Section 7.3(b).
2.48 Securities Act means the
Securities Act of 1933, as amended.
2.49 Stock Appreciation Right means the
right pursuant to an award granted under Section
7.3 to receive an amount equal to the excess, if any, of (A) the Fair Market Value, as of the
date such Stock Appreciation Right or portion thereof is surrendered, of the shares of stock
covered by such right or such portion thereof, over (B) the aggregate SAR exercise price of such
right or such portion thereof.
2.50 Stock for Stock Exchange has the meaning
set forth in Section 6.4.
2.51 Ten Percent Stockholder means a
person who owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of any of its Affiliates.
3.1 Administration by Board. The Plan shall be administered
by the Board unless and
until the Board delegates administration to a Committee, as provided in Section 3.5.
3.2 Powers of Administrator. The Administrator shall have
the power and authority to
select and grant to Participants Awards pursuant to the terms of the Plan.
3.3 Specific Powers. In particular, the Administrator shall
have the authority: (a)
to construe and interpret the Plan and apply its provisions; (b) to promulgate, amend, and rescind
rules and regulations relating to the administration of the Plan; (c) to authorize any person to
execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;
(d) to delegate its authority to one or more Officers of the Company with respect to awards that do
not involve Covered Employees or insiders within the meaning of Section 16 of the Exchange Act;
(e) to determine when Awards are to be granted under the Plan and the applicable Date of Grant; (f)
from time to time to select, subject to the limitations set forth in this Plan, those Participants
to whom Awards shall be granted; (g) to determine the number of shares of Common Stock to be made
subject to each Award; (h) to determine whether each Option is to be an Incentive Stock Option or a
Nonstatutory Stock Option; (i) to prescribe the terms and conditions of each Award, including,
without limitation, the exercise price and medium of payment and vesting provisions, and to specify
the provisions of the Award Agreement relating to such grant or sale; (j) to designate an Award
(including a cash bonus) as a Performance Compensation Award and to select the Performance Criteria
that will be used to establish the Performance Goals; (k) to
D - 9
amend any outstanding Awards, including for the purpose of modifying the time or manner of
vesting, or the term of any outstanding Award; provided, however, that if any such amendment
impairs a Participants rights or increases a Participants obligations under his or her Award or
creates or increases a Participants federal income tax liability with respect to an Award, such
amendment shall also be subject to the Participants consent; (l) to determine the duration and
purpose of leaves of absences which may be granted to a Participant without constituting
termination of their employment for purposes of the Plan, which periods shall be no shorter than
the periods generally applicable to Employees under the Companys employment policies; (m) to make
decisions with respect to outstanding Awards that may become necessary upon a change in corporate
control or an event that triggers anti-dilution adjustments; (n) to interpret, administer,
reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and
any instrument or agreement relating to, or Award granted under, the Plan; and (o) to exercise
discretion to make any and all other determinations which it determines to be necessary or
advisable for the administration of the Plan. The Administrator also may modify the purchase price
or the exercise price of any outstanding Award, provided that if the modification effects a
repricing, stockholder approval shall be required before the repricing is effective.
3.4 Decisions Final. All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final and binding on the Company and the Participants, unless such
decisions are determined by a court having jurisdiction to be arbitrary and capricious.
3.5 The Committee.
(a)
General. The Board may delegate administration of the Plan to a Committee or
Committees of one or more members of the Board, and the term Committee shall apply to any person
or persons to whom such authority has been delegated. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in this Plan to the
Board or the Administrator shall thereafter be to the Committee or subcommittee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. The members of the Committee shall be appointed by and serve at the
pleasure of the Board. From time to time, the Board may increase or decrease the size of the
Committee, add additional members to, remove members (with or without cause) from, appoint new
members in substitution therefor, and fill vacancies, however caused, in the Committee. The
Committee shall act pursuant to a vote of the majority of its members or, in the case of a
committee comprised of only two members, the unanimous consent of its members, whether present or
not, or by the written consent of the majority of its members and minutes shall be kept of all of
its meetings and copies thereof shall be provided to the Board. Subject to the limitations
prescribed by the Plan and the Board, the Committee may establish and follow such rules and
regulations for the conduct of its business as it may determine to be advisable.
(b)
Committee Composition when Common Stock is Registered. At such time as the Common
Stock is required to be registered under Section 12 of the Exchange Act, in the discretion of the
Board, a Committee may consist solely of two or more Non-
D - 10
Employee Directors who are also Outside Directors. The Board shall have discretion to
determine whether or not it intends to comply with the exemption requirements of Rule 16b-3 and/or
Section 162(m) of the Code. However, if the Board intends to satisfy such exemption requirements,
with respect to Awards to any Covered Employee and with respect to any insider subject to Section
16 of the Exchange Act, the Committee shall be a compensation committee of the Board that at all
times consists solely of two or more Non-Employee Directors who are also Outside Directors. Within
the scope of such authority, the Board or the Committee may (i) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant Awards to eligible
persons who are either (A) not then Covered Employees and are not expected to be Covered Employees
at the time of recognition of income resulting from such Award or (B) not persons with respect to
whom the Company wishes to comply with Section 162(m) of the Code or (ii) delegate to a committee
of one or more members of the Board who are not Non-Employee Directors the authority to grant
Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. Nothing
herein shall create an inference that an Award is not validly granted under the Plan in the event
Awards are granted under the Plan by a compensation committee of the Board that does not at all
times consist solely of two or more Non-Employee Directors who are also Outside Directors.
3.6 Indemnification. In
addition to such other rights of indemnification as they may
have as Directors or members of the Committee, and to the extent allowed by applicable law, the
Administrator shall be indemnified by the Company against the reasonable expenses, including
attorneys fees, actually incurred in connection with any action, suit or proceeding or in
connection with any appeal therein, to which the Administrator may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Award granted under the Plan,
and against all amounts paid by the Administrator in settlement thereof (provided, however, that
the settlement has been approved by the Company, which approval shall not be unreasonably withheld)
or paid by the Administrator in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action, suit or proceeding
that such Administrator did not act in good faith and in a manner which such person reasonably
believed to be in the best interests of the Company, and in the case of a criminal proceeding, had
no reason to believe that the conduct complained of was unlawful; provided, however, that within 60
days after institution of any such action, suit or proceeding, such Administrator shall, in
writing, offer the Company the opportunity at its own expense to handle and defend such action,
suit or proceeding.
|
4. |
|
Shares Subject to the Plan. |
Subject to adjustment in accordance with Section 12, the total number of shares of
Common Stock that shall be available for the grant of Awards under the Plan shall not exceed
2,000,000 of which a maximum of 1,000,000 shares can be awarded as Restricted Awards; provided,
that, for purposes of this limitation, any Common Stock subject to an Option or Award that is
canceled, forfeited or expires prior to exercise or realization, shall again become available for
issuance under the Plan. Subject to adjustment in accordance with Section 12, no
Participant shall be granted, during any one (1) year period, Options to purchase Common Stock or
Stock Appreciation Rights with respect to more than 2,000,000 shares of Common Stock or any other
Awards with respect to more than 1,000,000 shares of Common Stock. Stock available for
distribution under the Plan shall be authorized and unissued shares, treasury shares or shares
D-11
reacquired by the Company in any manner. Notwithstanding anything to the contrary contained
herein: (i) shares tendered in payment of an Option shall not be added to the aggregate plan limit
described above; (ii) shares withheld by the Company to satisfy any tax withholding obligation
shall not be added to the aggregate plan limit described above; and (iii) all shares covered by a
Stock Appreciation Right or other Awards, whether or not shares of Common Stock are actually issued
to the Participant upon exercise or settlement of the Award, shall be considered issued or
transferred pursuant to the Plan. All shares reserved for issuance under the Plan may be used for
Incentive Stock Options. No fractional shares of Common Stock may be issued.
5.1 Eligibility for Specific Awards. Incentive Stock Options may be
granted only to
Employees. Awards other than Incentive Stock Options may be granted to Employees and Directors and
those individuals whom the Administrator determines are reasonably expected to become Employees and
Directors following the Date of Grant.
5.2 Ten Percent Stockholders. A Ten Percent Stockholder shall not be
granted an
Incentive Stock Option unless the Option Exercise Price is at least 110% of the Fair Market Value
of the Common Stock at the Date of Grant and the Option is not exercisable after the expiration of
five years from the Date of Grant.
5.3 Directors. Each Director of the Company shall be eligible to receive
discretionary grants of Awards under the Plan.
Each Option shall be in such form and shall contain such terms and conditions as the
Administrator shall deem appropriate. All Options shall be separately designated Incentive Stock
Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a
separate certificate or certificates will be issued for shares of Common Stock purchased on
exercise of each type of Option. Notwithstanding the foregoing, the Company shall have no
liability to any Participant or any other person if an Option designated as an Incentive Stock
Option fails to qualify as such at any time or if an Option is determined to constitute
nonqualified deferred compensation within the meaning of Section 409A of the Code and the terms
of such Option do not satisfy the requirements of Section 409A of the Code. The provisions of
separate Options need not be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each of the following
provisions:
6.1 Term. Subject to the provisions of Section 5.2 regarding
Ten Percent
Stockholders, no Incentive Stock Option shall be exercisable after the expiration of 10 years from
the date it was granted.
6.2 Exercise Price of an Incentive Stock Option. Subject to the
provisions of
Section 5.2 regarding Ten Percent Stockholders, the Option Exercise Price of each
Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock
subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an
Incentive Stock Option may be granted with an Option Exercise Price lower than that set forth in
the preceding
D - 12
sentence if such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.
6.3 Exercise Price of a Nonstatutory Stock Option. The Option Exercise
Price of each
Nonstatutory Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock
subject to the Option on the date the Option is granted. Notwithstanding the foregoing, a
Nonstatutory Stock Option may be granted with an Option Exercise Price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the Code.
6.4 Consideration. The Option Exercise Price of Common Stock acquired
pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and regulations, either (a) in
cash or by certified or bank check at the time the Option is exercised or (b) in the discretion of
the Administrator, upon such terms as the Administrator shall approve, the Option Exercise Price
may be paid: (i) by delivery to the Company of other Common Stock, duly endorsed for transfer to
the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise Price
(or portion thereof) due for the number of shares being acquired, or by means of attestation
whereby the Participant identifies for delivery specific shares of Common Stock that have a Fair
Market Value on the date of attestation equal to the Option Exercise Price (or portion thereof) and
receives a number of shares of Common Stock equal to the difference between the number of shares
thereby purchased and the number of identified attestation shares of Common Stock (a Stock for
Stock Exchange); (ii) a cashless exercise program established with a broker; (iii) by
reduction in the number of shares of Common Stock otherwise deliverable upon exercise of such
Option with a Fair Market Value equal to the aggregate Option Exercise Price at the time of
exercise, or (iv) in any other form of legal consideration that may be acceptable to the
Administrator. Unless otherwise specifically provided in the Option, the purchase price of
Common Stock acquired pursuant to an Option that is paid by delivery (or attestation) to the
Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only
by shares of the Common Stock of the Company that have been held for more than six months (or such
longer or shorter period of time required to avoid a charge to earnings for financial accounting
purposes). Notwithstanding the foregoing, during any period for which the Common Stock is publicly
traded (i.e., the Common Stock is listed on any established stock exchange or a national market
system) an exercise by a Director or executive officer that involves or may involve a direct or
indirect extension of credit or arrangement of an extension of credit by the Company, directly or
indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act (codified as Section 13(k) of
the Exchange Act) shall be prohibited with respect to any Award under this Plan.
6.5 Transferability of an Incentive Stock Option. An Incentive Stock
Option shall not
be transferable except by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing,
the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.
6.6 Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock
Option may,
in the sole discretion of the Administrator, be transferable to a permitted transferee,
D - 13
as hereinafter defined, upon written approval by the Administrator to the extent provided in
the Option Agreement. A permitted transferee means: (a) a transfer by gift or domestic relations
order to a member of the Optionholders immediate family (child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships), any person sharing the Optionholders household (other than a tenant or employee),
a trust in which these persons have more than 50% of the beneficial interest, a foundation in which
these persons (or the Optionholder) control the management of assets, and any other entity in which
these persons (or the Optionholder) own more than 50% of the voting interests; (b) third parties
designated by the Administrator in connection with a program established and approved by the
Administrator pursuant to which Participants may receive a cash payment or other consideration in
consideration for the transfer of such Nonstatutory Stock Option; and (c) such other transferees as
may be permitted by the Administrator in its sole discretion. If the Nonstatutory Stock Option
does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.
6.7 Vesting Generally. The Option may, but need not, vest and therefore
become
exercisable in periodic installments that may, but need not, be equal. The Option may be subject
to such other terms and conditions on the time or times when it may be exercised (which may be
based on performance or other criteria) as the Administrator may deem appropriate. The vesting
provisions of individual Options may vary. No Option may be exercised for a fraction of a share of
Common Stock. The Administrator may, but shall not be required to, provide for an acceleration of
vesting and exercisability in the terms of any Option Agreement upon the occurrence of a specified
event.
6.8 Termination of Continuous Service. Unless otherwise provided in an
Option
Agreement or in an employment agreement the terms of which have been approved by the Administrator,
in the event an Optionholders Continuous Service terminates (other than upon the Optionholders
death or Disability), the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination) but only within
such period of time ending on the earlier of (a) the date three months following the termination of
the Optionholders Continuous Service, or (b) the expiration of the term of the Option as set forth
in the Option Agreement; provided, that, if the termination of Continuous Service is by the Company
for Cause, all outstanding Options (whether or not vested) shall immediately terminate and cease to
be exercisable. If, after termination, the Optionholder does not exercise his or her Option within
the time specified in the Option Agreement, the Option shall terminate.
6.9 Extension of Termination Date. An Optionholders Option
Agreement may also
provide that if the exercise of the Option following the termination of the Optionholders
Continuous Service for any reason would be prohibited at any time because the issuance of shares of
Common Stock would violate the registration requirements under the Securities Act or any other
state or federal securities law or the rules of any securities exchange or interdealer quotation
D - 14
system, then the Option shall terminate on the earlier of (a) the expiration of the term of
the Option in accordance with Section 6.1 or (b) the expiration of a period after
termination of the Participants Continuous Service that is three months after the end of the
period during which the exercise of the Option would be in violation of such registration or other
securities law requirements.
6.10 Disability of Optionholder. Unless otherwise provided in an Option
Agreement, in
the event that an Optionholders Continuous Service terminates as a result of the Optionholders
Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only within such period of
time ending on the earlier of (a) the date 12 months following such termination or (b) the
expiration of the term of the Option as set forth in the Option Agreement. If, after termination,
the Optionholder does not exercise his or her Option within the time specified herein, the Option
shall terminate.
6.11 Death of Optionholder. Unless otherwise provided in an Option
Agreement, in the
event an Optionholders Continuous Service terminates as a result of the Optionholders death, then
the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as
of the date of death) by the Optionholders estate, by a person who acquired the right to exercise
the Option by bequest or inheritance or by a person designated to exercise the Option upon the
Optionholders death, but only within the period ending on the earlier of (a) the date 12 months
following the date of death or (b) the expiration of the term of such Option as set forth in the
Option Agreement. If, after death, the Option is not exercised within the time specified herein,
the Option shall terminate.
6.12 Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate
Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any Optionholder during any calendar year
(under all plans of the Company and its Affiliates) exceeds $100,000, the Options or portions
thereof which exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options.
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7. |
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Provisions of Awards Other Than Options. |
7.1 Restricted Awards
(a) General.
A Restricted Award is an Award of actual shares
of Common Stock (Restricted Stock) or
hypothetical Common Stock units (Restricted Stock Units) having a value equal to the Fair Market
Value of an identical number of shares of Common Stock, which may, but need not, provide that such
Restricted Award may not be sold, assigned, transferred or otherwise disposed of, pledged or
hypothecated as collateral for a loan or as security for the performance of any obligation or for
any other purpose for such period (the Restricted Period) as the Administrator shall determine.
D - 15
(b)
Restricted Stock and Restricted Stock Units.
(i)
Each Participant granted Restricted Stock shall execute and deliver to the Company an
Award Agreement with respect to the Restricted Stock setting forth the restrictions and other terms
and conditions applicable to such Restricted Stock. If the Administrator determines that the
Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant
pending the release of the applicable restrictions, the Administrator may require the Participant
to additionally execute and deliver to the Company (a) an escrow agreement satisfactory to the
Administrator, if applicable and (b) the appropriate blank stock power with respect to the
Restricted Stock covered by such agreement. If a Participant shall fail to execute an agreement
evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock power,
the Award shall be null and void. Subject to the restrictions set forth in the Award, the
Participant generally shall have the rights and privileges of a stockholder as to such Restricted
Stock, including the right to vote such Restricted Stock and the right to receive dividends;
provided, that, any cash dividends and stock dividends with respect to the Restricted Stock shall
be withheld by the Company for the Participants account, and interest may be credited on the
amount of the cash dividends withheld at a rate and subject to such terms as determined by the
Administrator. The cash dividends or stock dividends so withheld by the Administrator and
attributable to any particular share of Restricted Stock (and earnings thereon, if applicable)
shall be distributed to the Participant in cash or, at the discretion of the Administrator, in
shares of Common Stock having a Fair Market Value equal to the amount of such dividends, if
applicable, upon the release of restrictions on such share and, if such share is forfeited, the
Participant shall have no right to such dividends.
(ii)
The terms and conditions of a grant of Restricted Stock Units shall be reflected in a
written Award Agreement. No shares of Common Stock shall be issued at the time a Restricted Stock
Unit is granted, and the Company will not be required to set aside a fund for the payment of any
such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units
granted hereunder. At the discretion of the Administrator, each Restricted Stock Unit
(representing one share of Common Stock) may be credited with cash and stock dividends paid by the
Company in respect of one share of Common Stock (Dividend Equivalents). Dividend Equivalents
shall be withheld by the Company for the Participants account, and interest may be credited on the
amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by
the Administrator. Dividend Equivalents credited to a Participants account and attributable to
any particular Restricted Stock Unit (and earnings thereon, if applicable) shall be distributed in
cash or, at the discretion of the Administrator, in shares of Common Stock having a Fair Market
Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the
Participant upon settlement of such Restricted Stock Unit and, if such Restricted Stock Unit is
forfeited, the Participant shall have no right to such Dividends Equivalents.
(c) Restrictions.
(i)
Restricted Stock awarded to a Participant shall be subject to the following restrictions
until the expiration of the Restricted Period, and to such other terms and conditions as may be set
forth in the applicable Award Agreement: (A) if an escrow arrangement is used, the Participant
shall not be entitled to delivery of the stock certificate;
D-16
(B) the shares shall be subject to the restrictions on transferability set forth in the Award
Agreement; (C) the shares shall be subject to forfeiture to the extent provided in the applicable
Award Agreement; and (D) to the extent such shares are forfeited, the stock certificates shall be
returned to the Company, and all rights of the Participant to such shares and as a shareholder with
respect to such shares shall terminate without further obligation on the part of the Company.
(ii) Restricted Stock
Units
awarded to
any Participant shall be subject to (A) forfeiture
until the expiration of the Restricted Period, and satisfaction of any applicable Performance Goals
during such period, to the extent provided in the applicable Award Agreement, and to the extent
such Restricted Stock Units are forfeited, all rights of the Participant to such Restricted Stock
Units shall terminate without further obligation on the part of the Company and (B) such other
terms and conditions as may be set forth in the applicable Award Agreement.
(iii) The Administrator
shall
have the
authority to remove any or all of the restrictions on
the Restricted Stock and Restricted Stock Units whenever it may determine that, by reason of
changes in applicable laws or other changes in circumstances arising after the date the Restricted
Stock or Restricted Stock Units are granted, such action is appropriate.
(d) Restricted Period. With
respect to Restricted Stock and Restricted Stock Units,
the Restricted Period shall commence on the Date of Grant and end at the time or times set forth on
a schedule established by the Administrator in the applicable Award Agreement.
(e) Delivery of Restricted Stock
and Settlement of Restricted Stock Units. Upon the
expiration of the Restricted Period with respect to any shares of Restricted Stock, the
restrictions set forth in Section 7.1(c) and the applicable Award Agreement shall be of no
further force or effect with respect to such shares, except as set forth in the applicable Award
Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to
the Participant, or his beneficiary, without charge, the stock certificate evidencing the shares of
Restricted Stock which have not then been forfeited and with respect to which the Restricted Period
has expired (to the nearest full share) and any cash dividends or stock dividends credited to the
Participants account with respect to such Restricted Stock and the interest thereon, if any. Upon
the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the
Company shall deliver to the Participant, or his beneficiary, without charge, one share of Common
Stock for each such outstanding Restricted Stock Unit (Vested Unit) and cash equal to any
Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section
7.1(b)(ii) hereof and the interest thereon or, at the discretion of the Administrator, in
shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents and the
interest thereon, if any; provided, however, that, if explicitly provided in the applicable Award
Agreement, the Administrator may, in its sole discretion, elect to pay cash or part cash and part
Common Stock in lieu of delivering only shares of Common Stock for Vested Units. If a cash payment
is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to
the Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed with
respect to such Vested Unit.
D - 17
(f) Stock Restrictions. Each
certificate representing Restricted Stock awarded under
the Plan shall bear a legend in such form as the Company deems appropriate.
7.2 Performance Compensation Awards.
(a) General. The Administrator
shall have the authority, at the time of grant of any
Award described in this Plan (other than Options and Stock Appreciation Rights granted with an
exercise price or grant price, as the case may be, equal to or greater than the Fair Market Value
per share of Stock on the date of grant), to designate such Award as a Performance Compensation
Award in order to qualify such Award as performance-based compensation under Section 162(m) of
the Code. In addition, the Administrator shall have the authority to make an award of a cash bonus
to any Participant and designate such Award as a Performance Compensation Award in order to qualify
such Award as performance-based compensation under Section 162(m).
(b) Eligibility. The
Administrator will, in its sole discretion, designate within the
first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed
under Section 162(m) of the Code) which Participants will be eligible to receive Performance
Compensation Awards in respect of such Performance Period. However, designation of a Participant
eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the
Participant to receive payment in respect of any Performance Compensation Award for such
Performance Period. The determination as to whether or not such Participant becomes entitled to
payment in respect of any Performance Compensation Award shall be decided solely in accordance with
the provisions of this Section 7.2. Moreover, designation of a Participant eligible to
receive an Award hereunder for a particular Performance Period shall not require designation of
such Participant eligible to receive an Award hereunder in any subsequent Performance Period and
designation of one person as a Participant eligible to receive an Award hereunder shall not require
designation of any other person as a Participant eligible to receive an Award hereunder in such
period or in any other period.
(c) Discretion of Administrator
with Respect to Performance Compensation Awards. With
regard to a particular Performance Period, the Administrator shall have full discretion to select
the length of such Performance Period (provided any such Performance Period shall be not less than
one fiscal quarter in duration), the type(s) of Performance Compensation Awards to be issued, the
Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or
level(s) of the Performance Goals(s) that is (are) to apply to the Company and the Performance
Formula. Within the first 90 days of a Performance Period (or, if longer or shorter, within the
maximum period allowed under Section 162(m) of the Code), the Administrator shall, with regard to
the Performance Compensation Awards to be issued for such Performance Period, exercise its
discretion with respect to each of the matters enumerated in the immediately preceding sentence of
this Section 7.2(c) and record the same in writing.
(d) Payment of Performance
Compensation Awards.
(i) Condition
to
Receipt of
Payment. Unless otherwise provided in the applicable
Award Agreement, a Participant must be employed by the Company on the last
D - 18
day of a Performance Period to be eligible for payment in respect of a Performance
Compensation Award for such Performance Period.
(ii) Limitation. A Participant
shall be
eligible to
receive payment in respect of a
Performance Compensation Award only to the extent that: (A) the Performance Goals for such period
are achieved; and (B) the Performance Formula as applied against such Performance Goals determines
that all or some portion of such Participants Performance Compensation Award has been earned for
the Performance Period.
(iii) Certification. Following the
completion of a
Performance Period, the
Administrator shall review and certify in writing whether, and to what extent, the Performance
Goals for the Performance Period have been achieved and, if so, calculate and certify in writing
that amount of the Performance Compensation Awards earned for the period based upon the Performance
Formula. The Administrator shall then determine the actual size of each Participants Performance
Compensation Award for the Performance Period and, in so doing, may apply Negative Discretion in
accordance with Section 7.2(d)(iv) hereof, if and when it deems appropriate.
(iv) Use of Discretion. In
determining
the actual
size of an individual Performance
Compensation Award for a Performance Period, the Administrator may reduce or eliminate the amount
of the Performance Compensation Award earned under the Performance Formula in the Performance
Period through the use of Negative Discretion if, in its sole judgment, such reduction or
elimination is appropriate. The Administrator shall not have the discretion to (a) grant or
provide payment in respect of Performance Compensation Awards for a Performance Period if the
Performance Goals for such Performance Period have not been attained; or (b) increase a Performance
Compensation Award above the maximum amount payable under Section 7.2(d)(vi) of the Plan.
(v)
Timing of Award Payments.
Performance
Compensation Awards granted for a
Performance Period shall be paid to Participants as soon as administratively practicable following
completion of the certifications required by this Section 7.2.
(vi) Maximum Award Payable.
Notwithstanding any
provision contained in this Plan to
the contrary, the maximum Performance Compensation Award payable to any one Participant under the
Plan for a Performance Period is 2,000,000 shares of Common Stock or, in the event such Performance
Compensation Award is paid in cash, the equivalent cash value thereof on the first or last day of
the Performance Period to which such Award relates, as determined by the Administrator. The
maximum amount that can be paid in any calendar year to any Participant pursuant to a cash bonus
Award described in the last sentence of Section 7.2(a) shall be $10,000,000. Furthermore,
any Performance Compensation Award that has been deferred shall not (between the date as of which
the Award is deferred and the payment date) increase (A) with respect to a Performance Compensation
Award that is payable in cash, by a measuring factor for each fiscal year greater than a reasonable
rate of interest set by the Administrator or (B) with respect to a Performance Compensation Award
that is payable in shares of Common Stock, by an amount greater than the appreciation of a share of
Common Stock from the date such Award is deferred to the payment date.
D - 19
7.3 Stock Appreciation Rights.
(a) General.
Stock Appreciation Rights may be granted either alone (Free Standing
Rights) or, provided the requirements of Section 7.3 (b) are satisfied, in tandem with
all or part of any Option granted under the Plan (Related Rights). In the case of a Nonstatutory
Stock Option, Related Rights may be granted either at or after the time of the grant of such
Option. In the case of an Incentive Stock Option, Related Rights may be granted only at the time
of the grant of the Incentive Stock Option.
(b) Grant
Requirements. A Stock Appreciation Right may only be granted if the Stock
Appreciation Right does not provide for the deferral of compensation within the meaning of Section
409A of the Code. A Stock Appreciation Right does not provide for a deferral of compensation if:
(A) the value of the Common Stock the excess over which the right provides for payment upon
exercise (the SAR exercise price) may never be less than the Fair Market Value of the underlying
Common Stock on the date the right is granted, (B) the compensation payable under the Stock
Appreciation Right can never be greater than the difference between the SAR exercise price and the
Fair Market Value of the Common Stock on the date the Stock Appreciation Right is exercised, (C)
the number of shares of Common Stock subject to the Stock Appreciation Right must be fixed on the
date of grant of the Stock Appreciation Right, and (D) the right does not include any feature for
the deferral of compensation other than the deferral of recognition of income until the exercise of
the right.
(c) Exercise and
Payment. Upon exercise thereof, the holder of a Stock Appreciation
Right shall be entitled to receive from the Company, an amount equal to the product of (i) the
excess of the Fair Market Value, on the date of such written request, of one share of Common Stock
over the SAR exercise price per share specified in such Stock Appreciation Right or its related
Option, multiplied by (ii) the number of shares for which such Stock Appreciation Right shall be
exercised. Payment with respect to the exercise of a Stock Appreciation Right that satisfies the
requirements of Section 7.3 (b) shall be paid on the date of exercise and made in shares
of Common Stock (with or without restrictions as to substantial risk of forfeiture and
transferability, as determined by the Administrator in its sole discretion), valued at Fair Market
Value on the date of exercise. Payment may be made in the form of shares of Common Stock (with or
without restrictions as to substantial risk of forfeiture and transferability, as determined by the
Administrator in its sole discretion), cash or a combination thereof, as determined by the
Administrator.
(d) Exercise
Price. The exercise price of a Free Standing Stock Appreciation Right
shall be determined by the Administrator, but shall not be less than 100% of the Fair Market Value
of one share of Common Stock on the Date of Grant of such Stock Appreciation Right. A Related
Right granted simultaneously with or subsequent to the grant of an Option and in conjunction
therewith or in the alternative thereto shall have the same exercise price as the related Option,
shall be transferable only upon the same terms and conditions as the related Option, and shall be
exercisable only to the same extent as the related Option; provided, however, that a Stock
Appreciation Right, by its terms, shall be exercisable only when the Fair Market Value per share of
Common Stock subject to the Stock Appreciation Right and related Option exceeds the exercise price
per share thereof and no Stock Appreciation Rights may be
D - 20
granted in tandem with an Option unless the Administrator determines that the requirements of
Section 7.3 (b) are satisfied.
(e) Reduction in the Underlying
Option Shares. Upon any exercise of a Stock
Appreciation Right, the number of shares of Common Stock for which any related Option shall be
exercisable shall be reduced by the number of shares for which the Stock Appreciation Right shall
have been exercised. The number of shares of Common Stock for which a Stock Appreciation Right
shall be exercisable shall be reduced upon any exercise of any related Option by the number of
shares of Common Stock for which such Option shall have been exercised.
(f) Written Request. Unless
otherwise determined by the Administrator in its sole
discretion and only if permitted in the Stock Appreciation Rights Award Agreement, any exercise of
a Stock Appreciation Right for cash, may be made only by a written request filed with the Corporate
Secretary of the Company. Within 30 days of the receipt by the Company of a written request to
receive cash in full or partial settlement of a Stock Appreciation Right or to exercise such Stock
Appreciation Right for cash, the Administrator shall, in its sole discretion, either consent to or
disapprove, in whole or in part, such written request. A written request to receive cash in full
or partial settlement of a Stock Appreciation Right or to exercise a Stock Appreciation Right for
cash may provide that, in the event the Administrator shall disapprove such written request, such
written request shall be deemed to be an exercise of such Stock Appreciation Right for shares of
Common Stock.
(g) Disapproval by
Administrator. If the Administrator disapproves in whole or in
part any election by a Participant to receive cash in full or partial settlement of a Stock
Appreciation Right or to exercise such Stock Appreciation Right for cash, such disapproval shall
not affect such Participants right to exercise such Stock Appreciation Right at a later date, to
the extent that such Stock Appreciation Right shall be otherwise exercisable, or to elect the form
of payment at a later date, provided that an election to receive cash upon such later exercise
shall be subject to the approval of the Administrator. Additionally, such disapproval shall not
affect such Participants right to exercise any related Option.
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8. |
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Covenants of the Company. |
8.1 Availability of Shares. During the terms of the Awards, the Company shall keep
available at all times the number of shares of Common Stock required to satisfy such Awards.
8.2 Securities Law Compliance. Each Option Agreement and Award Agreement shall
provide that no shares of Common Stock shall be purchased or sold thereunder unless and until
(a) any then applicable requirements of state or federal laws and regulatory agencies shall have
been fully complied with to the satisfaction of the Company and its counsel and (b) if required to
do so by the Company, the Participant shall have executed and delivered to the Company a letter of
investment intent in such form and containing such provisions as the Administrator may require.
The Company shall use reasonable efforts to seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to grant Awards and to
issue and sell shares of Common Stock upon exercise of the
D - 21
Awards; provided, however, that this undertaking shall not require the Company to register
under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any
such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary for the lawful
issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability
for failure to issue and sell Common Stock upon exercise of such Awards unless and until such
authority is obtained.
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9. |
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Use of Proceeds from Stock. |
Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof, shall
constitute general funds of the Company.
10.1 Acceleration of Exercisability and Vesting. The Administrator shall
have the
power to accelerate the time at which an Award may first be exercised or the time during which an
Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in
the Award stating the time at which it may first be exercised or the time during which it will
vest.
10.2 Stockholder Rights. Except as provided in the Plan or an Award
Agreement, no
Participant shall be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Award unless and until such Participant has
satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or
distributions of other rights for which the record date is prior to the date such Common Stock
certificate is issued, except as provided in Section 11 hereof.
10.3 No Employment or Other Service Rights. Nothing in the Plan or any
instrument
executed or Award granted pursuant thereto shall confer upon any Participant any right to continue
to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or
shall affect the right of the Company or an Affiliate to terminate (a) the employment of an
Employee with or without notice and with or without Cause or (b) the service of a Director pursuant
to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may be.
10.4 Transfer, Approved Leave of Absence. For purposes of the Plan, no
termination of
employment by an Employee shall be deemed to result from either (a) a transfer to the employment of
the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to
another; or (b) an approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the Employees right to re-employment is guaranteed either by a
statute or by contract or under the policy pursuant to which the leave of absence was granted or if
the Administrator otherwise so provides in writing.
10.5 Investment Assurances. The Company may require a Participant, as a
condition of
exercising or acquiring Common Stock under any Award (a) to give written
D - 22
assurances satisfactory to the Company as to the Participants knowledge and experience in
financial and business matters and/or to employ a purchaser representative reasonably satisfactory
to the Company who is knowledgeable and experienced in financial and business matters and that he
or she is capable of evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the Award; and (b) to give written assurances satisfactory to the Company
stating that the Participant is acquiring Common Stock subject to the Award for the Participants
own account and not with any present intention of selling or otherwise distributing the Common
Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall
be inoperative if (i) the issuance of the shares of Common Stock upon the exercise or acquisition
of Common Stock under the Award has been registered under a then currently effective registration
statement under the Securities Act or (ii) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the circumstances under
the then applicable securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate
in order to comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.
10.6 Withholding Obligations. To the extent provided by the terms of an
Award
Agreement and subject to the discretion of the Administrator, the Participant may satisfy any
federal, state or local tax withholding obligation relating to the exercise or acquisition of
Common Stock under an Award by any of the following means (in addition to the Companys right to
withhold from any compensation paid to the Participant by the Company) or by a combination of such
means: (a) tendering a cash payment; (b) authorizing the Company to withhold shares of Common
Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the
exercise or acquisition of Common Stock under the Award, provided, however, that no shares of
Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld
by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock
of the Company.
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Adjustments Upon Changes in Stock. |
Awards granted under the Plan and any agreements evidencing such Awards, the maximum number of
shares of Common Stock subject to all Awards stated in Section 4 and the maximum number of
shares of Common Stock with respect to which any one person may be granted Awards during any period
stated in Section 4 and Section 7.2(d)(vi) will be equitably adjusted or
substituted, as to the number, price or kind of a share of Common Stock or other consideration
subject to such Awards to the extent necessary to preserve the economic intent of such Award in the
event of changes in the outstanding Common Stock or in the capital structure of the Company by
reason of stock or extraordinary cash dividends, stock splits, reverse stock splits,
recapitalization, reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the Date of Grant of any such Award. Any
adjustment in Incentive Stock Options under this Section 11 shall be made only to the extent not
constituting a modification within the meaning of Section 424(h)(3) of the Code, and any
adjustments under this Section 11 shall be made in a manner which does not adversely affect the
exemption provided pursuant to Rule 16b-3 under the Exchange Act or otherwise result in a violation
of Section 409A of the Code. Further, with respect to Awards intended to qualify as
performance-based compensation under Section 162(m) of the Code, such adjustments or
D - 23
substitutions shall be made only to the extent that the Administrator determines that such
adjustments or substitutions may be made without causing the Company to be denied a tax deduction
on account of Section 162(m) of the Code. The Company shall give each Participant notice of an
adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all
purposes. Notwithstanding the above, in the event of any of the following: (i) the Company is
merged or consolidated with another corporation or entity and, in connection therewith,
consideration is received by shareholders of the Company in a form other than stock or other equity
interests of the surviving entity or outstanding Awards are not to be assumed upon consummation of
the proposed transaction; (ii) all or substantially all of the assets of the Company are acquired
by another person; (iii) the reorganization or liquidation of the Company; or (iv) the Company
shall enter into a written agreement to undergo an event described in clause (i), (ii) or (iii)
above, then the Administrator may, in its discretion and upon at least 10 days advance notice to
the affected persons, cancel any outstanding Awards and cause the holders thereof to be paid, in
cash or stock, or any combination thereof, the value of such Awards based upon the price per share
of Common Stock received or to be received by other shareholders of the Company in the event. The
terms of this Section 11 may be varied by the Administrator in any particular Award Agreement.
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Effect of Change in Control |
12.1 Unless otherwise provided in an Award Agreement:
(a) In
the
event of a Change in Control, notwithstanding any provision of the Plan or any
applicable Award Agreement to the contrary, and either in or not in combination with another event
such as a termination of the applicable Participants Continuous Service by the Company without
Cause, all Options and Stock Appreciation Rights subject to such Award shall become immediately
exercisable with respect to 100 percent of the shares subject to such Option or Stock Appreciation
Rights, and/or the Restricted Period shall expire immediately with respect to 100 percent of such
shares of Restricted Stock or Restricted Stock Units subject to such Award (including a waiver of
any applicable Performance Goals) and, to the extent practicable, such acceleration of
exercisability and expiration of the Restricted Period (as applicable) shall occur in a manner and
at a time which allows affected Participants the ability to participate in the Change in Control
transaction with respect to the Common Stock subject to their Awards.
(b) In
the event of a Change in Control, all incomplete
Performance Periods in respect of such
Award in effect on the date the Change in Control occurs shall end on the date of such change and
the Administrator shall (A) determine the extent to which Performance Goals with respect to each
such Performance Period have been met based upon such audited or unaudited financial information
then available as it deems relevant, (B) cause to be paid to the applicable Participant partial or
full Awards with respect to Performance Goals for each such Performance Period based upon the
Administrators determination of the degree of attainment of Performance Goals or assuming that the
applicable target levels of performance have been attained or on such other basis determined by
the Administrator, and (C) cause the Award, if previously deferred, to be settled in full as soon
as possible.
D - 24
12.2 In addition, in the event of a Change in Control, the Administrator may in its
discretion
and upon at least 10 days advance notice to the affected persons, cancel any outstanding Awards
and pay to the holders thereof, in cash or stock, or any combination thereof, the value of such
Awards based upon the price per share of Common Stock received or to be received by other
shareholders of the Company in the event.
12.3 The obligations of the Company under the Plan shall be binding upon any successor
corporation or organization resulting from the merger, consolidation or other reorganization of the
Company, or upon any successor corporation or organization succeeding to all or substantially all
of the assets and business of the Company and its Affiliates, taken as a whole.
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Amendment of the Plan and Awards. |
13.1 Amendment of Plan. The Board at any time, and from time to time, may amend or
terminate the Plan. However, except as provided in Section 11 relating to adjustments upon
changes in Common Stock and Section 13.3, no amendment shall be effective unless approved
by the stockholders of the Company to the extent stockholder approval is necessary to satisfy any
applicable law or securities exchange listing requirements. At the time of such amendment, the
Board shall determine, upon advice from counsel, whether such amendment will be contingent on
stockholder approval.
13.2 Stockholder Approval. The Board may, in its sole discretion, submit any other
amendment to the Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations
thereunder regarding the exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
13.3 Contemplated Amendments. It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with
the maximum benefits provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified
deferred compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards
granted under it into compliance therewith.
13.4 No Impairment of Rights. Rights under any Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (a) the Company requests the consent
of the Participant and (b) the Participant consents in writing.
13.5 Amendment of Awards. The Administrator at any time, and from time to time, may
amend the terms of any one or more Awards; provided, however, that the Administrator may not affect
any amendment which would otherwise constitute an impairment of the rights under any Award unless
(a) the Company requests the consent of the Participant and (b) the Participant consents in
writing.
D - 25
14.1 Other Compensation Arrangements. Nothing contained in this Plan
shall
prevent
the Board from adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either generally applicable or
applicable only in specific cases. The Plan is intended to constitute an unfunded plan for
incentive compensation and nothing contained in the Plan shall give any Participant any rights that
are greater than those of a general unsecured creditor of the Company.
14.2 Recapitalizations. Each Option Agreement and Award Agreement shall
contain
provisions required to reflect the provisions of Section 11.
14.3 Delivery. Upon exercise of a right granted under this Plan, the
Company shall
issue Common Stock or pay any amounts due within a reasonable period of time thereafter. Subject
to any statutory or regulatory obligations the Company may otherwise have, for purposes of this
Plan, 30 days shall be considered a reasonable period of time.
14.4 Other Provisions. The Option Agreements and Award Agreements
authorized under
the Plan may contain such other provisions not inconsistent with this Plan, including, without
limitation, restrictions upon the exercise of the Awards, as the Administrator may deem advisable.
14.5 Cancellation and Rescission of Awards for Detrimental Activity.
(a)
Upon
exercise, payment or delivery pursuant to an Award, the Participant shall certify in
a manner acceptable to the Company that the Participant has not engaged in any Detrimental Activity
described in Section 2.16.
(b)
Unless
the Award Agreement specifies otherwise, the Administrator may cancel, rescind,
suspend, withhold or otherwise limit or restrict any unexpired, unpaid or deferred Awards at any
time if the Participant engages in any Detrimental Activity described in Section 2.16.
(c) In
the
event a Participant engages in Detrimental Activity described in Section
2.16 after any exercise, payment or delivery pursuant to an Award, during any period for which
any restrictive covenant prohibiting such activity is applicable to the Participant, such exercise,
payment or delivery may be rescinded within one year after such exercise, payment or delivery. In
the event of any such rescission, the Participant shall pay to the Company the amount of any gain
realized or payment received as a result of the exercise, payment or delivery, in such manner and
on such terms and conditions as may be required by the Company. The Company shall be entitled to
set-off against the amount of any such gain any amount owed to the Participant by the Company.
14.6 Disqualifying Dispositions. Any Participant who shall make a
disposition (as
defined in Section 424 of the Code) of all or any portion of shares of Common Stock acquired upon
exercise of an Incentive Stock Option within two years from the Date of Grant of such Incentive
Stock Option or within one year after the issuance of the shares of Common Stock acquired upon
exercise of such Incentive Stock Option shall be required to
D - 26
immediately advise the Company in writing as to the occurrence of the sale and the price
realized upon the sale of such shares of Common Stock.
14.7 Section 16. It is the intent of the Company that the Plan
satisfy, and be
interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 as promulgated
under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of
Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be
subject to short-swing liability under Section 16 of the Exchange Act. Accordingly, if the
operation of any provision of the Plan would conflict with the intent expressed in this
Section 14.7, such provision to the extent possible shall be interpreted and/or deemed
amended so as to avoid such conflict.
14.8 Section 162(m). To the extent the Administrator issues any
Award
that is
intended to be exempt from the application of Section 162(m) of the Code, the Administrator may,
without shareholder or grantee approval, amend the Plan or the relevant Award Agreement
retroactively or prospectively to the extent it determines necessary in order to comply with any
subsequent clarification of Section 162(m) of the Code required to preserve the Companys Federal
income tax deduction for compensation paid pursuant to any such Award.
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15. |
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Effective Date of Plan. |
The Plan shall become effective as of the Effective Date, but no Award shall be exercised (or,
in the case of a stock Award, shall be granted) unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
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16. |
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Termination or Suspension of the Plan. |
The Plan shall terminate automatically on October 23, 2020. No Award shall be granted
pursuant to the Plan after such date, but Awards theretofore granted may extend beyond that date.
The Board may suspend or terminate the Plan at any earlier date pursuant to Section 13.1
hereof. No Awards may be granted under the Plan while the Plan is suspended or after it is
terminated. Unless the Company determines to submit Section 7.2 of the Plan and the definition of
Performance Goal and Performance Criteria to the Companys stockholders at the first
stockholder meeting that occurs in the fifth year following the year in which the Plan was last
approved by stockholders (or any earlier meeting designated by the Board), in accordance with the
requirements of Section 162(m) of the Code, and such stockholder approval is obtained, then no
further Performance Compensation Awards shall be made to Covered Employees under Section
7.2 after the date of such annual meeting, but the Plan may continue in effect for Awards to
Participants not in accordance with Section 162(m) of the Code.
The law of the State of Delaware shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such states conflict of law rules.
D - 27
As adopted by the Board of Directors of Thor Industries, Inc. on October 25, 2010.
As approved by the Stockholders of Thor Industries, Inc. on __________________.
D - 28
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IMPORTANT ANNUAL MEETING INFORMATION |
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MR A SAMPLE
DESIGNATION (IF ANY)
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Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a
week!
Instead of mailing your proxy, you may choose one of the two voting
methods outlined below to vote your proxy.
VALIDATION
DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
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Proxies submitted by the Internet or telephone must be received by
12:00 p.m., ET, on December 7, 2010. |
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Vote by
Internet Log
on to the Internet and go to www.envisionreports.com/THO2010
Follow the steps
outlined on the secured website. |
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Vote by
telephone Call toll free 1-800-652-VOTE (8683) within the USA,
US territories & Canada any time on a touch tone
telephone. There is NO CHARGE to you for the call. |
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Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas.
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Follow the instructions provided by the recorded message. |
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Annual Meeting Proxy Card |
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE,
FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
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A
Proposals The Board of Directors recommends a vote FOR
the nominee listed and FOR Proposal 2.
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1. |
Election of Director: |
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Withhold |
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01 - Peter B. Orthwein
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For |
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2. |
To approve the Thor Industries, Inc. 2010 Equity and Incentive Plan. |
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Change of Address Please print your new address below.
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Comments Please print your comments below.
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Meeting Attendance
Mark the box to the right
if you plan to attend the
Annual Meeting. |
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Authorized
Signatures
This section must be completed for your vote to be counted.
Date and Sign Below
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Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or
custodian, please give full title.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box. |
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C 1234567890 1 1 D V |
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MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE
AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND |
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▼IF
YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.▼
Proxy Thor Industries, Inc.
ANNUAL MEETING OF STOCKHOLDERS, DECEMBER 7, 2010
The undersigned stockholder of Thor Industries, Inc. hereby appoints Peter B. Orthwein and Walter L. Bennett or each of them, with power of substitution
and revocation to each, as proxies to appear and vote all shares of the Company which the undersigned would be entitled to vote if personally present at
the Annual Meeting of Stockholders to be held at The Cornell Club, 6 East 44th Street, New York, N.Y., on December 7, 2010, at 1:00 p.m., local time, and
any adjournments or postponements thereof, hereby revoking any proxy heretofore given, notice of which meeting and related proxy statement have been
received by the undersigned.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND SHALL BE VOTED AS SPECIFIED HEREIN. IF NO SPECIFICATION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS #1 and #2.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)