o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Under Rule 14a-12 |
þ | No fee required. | |
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o | Fee paid previously with preliminary materials: |
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• | by telephone; | |
• | via the Internet; | |
• | by completing, signing, dating and returning the enclosed proxy form in the envelope provided; or | |
• | in person at the meeting. |
• | delivering a written notice of revocation to the Secretary of the Corporation; | |
• | giving a valid, later dated proxy; or | |
• | attending the meeting and voting in person. |
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Name, Age and Year | Principal Occupation and Directorships of | |
First Elected(1) | Other Publicly Traded Corporations | |
Nominees for Directors of the | ||
Ronald M. DeFeo Age: Director since 2001 | Chairman of the Board of Terex Corporation (a global manufacturer of equipment for the construction and mining industries) since | |
Philip A. Dur(2) Age: 62 Director since 2006 | Retired, having served as Corporate Vice President and President, Ship Systems Sector of Northrop Grumman Corporation (a global defense company) from October 2001 to December 2005; Vice President, Program Operations, Electronic Sensors and Systems Sector from December 1999 to September 2000 Vice President, Domestic and International Program Development from September 2000 to September 2001. |
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Name, Age and Year | Principal Occupation and Directorships of | |
First Elected(1) | Other Publicly Traded Corporations | |
William R. Newlin Age: Director since 1982 | Lead Director of the Board of Directors of the Corporation since July | |
and Calgon Carbon Corporation. | ||
Lawrence W. Stranghoener Age: Director since 2003 | Executive Vice President and Chief Financial Officer of The Mosaic Company (a crop nutrition company) since September 2004. Formerly, Executive Vice President and Chief Financial Officer of Thrivent Financial for Lutherans (a financial services company) and its predecessor organization from January 2001 to September | |
2004. | ||
Directors of the Third Class Whose Terms Will Expire in 2007 | ||
Carlos M. Cardoso Age: 48 Director since 2006 | President and Chief Executive Officer since January 2006; Executive Vice President and Chief Operating Officer from January 2005 to December 2005; Vice President and President, Metalworking Solutions and Services Group, from April 2003 to December 2004. Formerly, President, Pump Division, Flowserve Corporation (a manufacturer/provider of flow management products and services) from August 2001 to March 2003; Vice President and General Manager, Engine Systems and Accessories, of Honeywell International, Inc., (a diversified technology and manufacturing company, formerly Allied Signal, Inc.) from March 1999 to August 2001. | |
A. Peter Held Age: Director since 1995 | Retired, having served as President of Cooper Tools, a division of Cooper Industries, Inc. (a manufacturer and marketer of industrial power tools and systems and services) from 1992 to 2003. | |
Larry D. Yost Age: Director since 1987 | Retired, having served as Chairman and Chief Executive Officer of ArvinMeritor, Inc. (a provider of components for vehicles) from August 2000 to August 2004; Chairman and Chief Executive Officer of Meritor Automotive Inc. from May 1997 to July 2000. Director of Milacron Inc., | |
Directors of the First Class Whose Terms Will Expire in 2008 | ||
Timothy R. McLevish Age: 51 Director since 2004 | Senior Vice President and Chief Financial Officer of Ingersoll-Rand Company Limited (a global provider of industrial and commercial products) since May 2002. Formerly, Executive Vice President of MeadWestvaco Corporation (a diversified manufacturing company) from January 2002 to March 2002; Vice President and Chief Financial Officer of Mead Corporation (a forest products company) from December 1999 to January 2002. | |
Markos I. Tambakeras Age: 56 Director since 1999 | Executive Chairman of the Board of Directors of the Corporation since January 2006; Chairman of the Board of Directors from July 2002 to December 2005; President and Chief Executive Officer from July 1999 to December 2005. Director of ITT Industries, Inc. and Parker Hannifin Corporation. Member, President’s Manufacturing Council. | |
Steven H. Wunning Age: 55 Director since 2005 | Group President and Executive Office member of Caterpillar Inc. (a global manufacturer of construction, mining, and industrial equipment) since January 2004; Corporate Vice President of Caterpillar Inc. from November 1998 to January 2004. |
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(1) | Each current director has served continuously since such director was first elected. | |
(2) | Mr. |
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• | Board nominees are identified, screened and recommended by the Nominating/Corporate Governance Committee and approved by the full Board. Any director candidates nominated by the shareowners will be considered by the Nominating/Corporate Governance Committee for recommendation in accordance with the Corporation’s By-Laws and applicable law. For further information on shareowner nominating procedures, please refer to “Shareowner Proposals and Nominating Procedures” under the “Other Matters” section of this Proxy Statement. | |
• | In fiscal |
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• | Directors are selected on the basis of, among other things, independence, integrity, diversity, experience, sound judgment in areas relevant to the Corporation’s businesses, and willingness to commit sufficient time to the Board. | |
• | Board members are expected to ensure that other existing and planned future commitments do not materially interfere with service as a |
• | A majority of Board members must qualify as independent directors under the listing standards of the New | |
• | Only those directors who the Board affirmatively determines have no material relationship with the Corporation, either directly or indirectly, will be considered independent directors. The Board’s determination is based on the standards for independence under the rules of the NYSE and those of any other applicable regulatory authority, and also on additional qualifications set forth in the Corporate Governance Guidelines regarding: |
• | Indebtedness of the director, or immediate family members or affiliates of the director, to the Corporation; | |
• | Indebtedness of the Corporation to affiliates of the director; and | |
• | A director’s relationships with charitable organizations. |
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• | Upon the recommendation of the Nominating/Corporate Governance Committee, the Board affirmatively determined that Messrs. |
• | Management directors must seek and obtain the approval of the Board before accepting outside board memberships. |
• | No director may be nominated for re-election or re-appointment to the Board if he or she would be age seventy (70) or older at the time of election or appointment. |
• | Directors must avoid any action, position or interest that conflicts with an interest of the Corporation, or gives the appearance of conflict. The Corporation annually solicits information from directors in order to monitor potential conflicts of interest. |
• | Each new director must participate in the Corporation’s orientation program, which should be conducted within two (2) months of the meeting at which the new director is elected. | |
• | Directors are encouraged to participate in continuing education programs. |
• | In accordance with the Corporation’s Director and Officer Stock Ownership Guidelines, a meaningful portion of director compensation is required to be in Capital Stock or deferred stock credits of the Corporation to further the direct correlation of directors’ and shareowners’ economic interests. |
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• | Directors on the Audit Committee do not receive any compensation from the Corporation other than director fees (including fees paid for service on Board committees). | |
• | Directors who are employees do not receive additional compensation for their services as directors. |
• | The Board believes that, | |
• | The Lead Director presides over the executive sessions of non-management directors and acts as the liaison between the non-management directors and the Chief Executive Officer as to matters emanating from these executive sessions. |
The Board |
• | Agendas for Board and committee meetings are established in consultation with Board members and management. Board members are also encouraged to raise, at any Board meeting, subjects that are not on the agenda for that meeting. |
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• | A preliminary agenda and presentation materials are distributed to Board and committee members in advance of each meeting, to the extent practicable. |
• | Non-management directors meet privately in regularly scheduled executive sessions without the presence of any management. The Lead Director presides over these executive sessions. | |
• | Any interested parties desiring to communicate with the Lead Director or non-management directors individually or as a group regarding the Corporation may send correspondence in care of the Corporation’s |
• | Board members have complete access to management and the Corporation’s outside advisors. | |
• | The Board is authorized to retain, as it deems necessary and appropriate, independent advisors of its choice with respect to any issue relating to its activities. |
• | The Board’s performance is assessed annually to determine whether the Board and its committees are functioning effectively. The Nominating/Corporate Governance committee oversees this assessment. |
• | The Board has the following standing committees: Audit, Compensation and Nominating/Corporate Governance. | |
• | Only independent directors serve on the Audit, Compensation and Nominating/Corporate Governance Committees. Directors serving on the Audit Committee must also meet the additional independence and financial literacy qualifications, as required under the Securities Exchange Act of 1934, as amended (the |
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“Exchange Act”), the listing standards of the NYSE and the rules and regulations of any other applicable regulatory authority. |
• | Each Board committee’s written charter, which details its duties and responsibilities, is, and all future changes thereto will be, posted on the Corporation’s website at www.kennametal.com, currently available on the “Corporate Governance” page, which is accessible under the “Corporate” | |
• | Each committee is led by a Chair, who is appointed by the Board annually, based upon the recommendation of the Nominating/Corporate Governance Committee. | |
• | Minutes of each committee meeting are provided to each Board member to assure that the Board remains fully apprised of topics discussed and actions taken. The Chair of each committee also regularly reports at Board meetings on committee matters. |
• | The Compensation Committee, in consultation with the Lead Director and the rest of the non-management directors, annually evaluates the overall performance of the Chief Executive Officer. | |
• | The evaluation is based on objective criteria, including performance of the business, accomplishment of long-term strategic objectives and development of management. |
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• | The Chief Executive Officer delivers annually a report on succession planning to the Board, which includes an assessment of senior officers and their potential to succeed the Chief Executive Officer and other senior management positions. |
• | The Nominating/Corporate Governance Committee annually reviews the Corporate Governance Guidelines and the Code of Business Ethics and Conduct and recommends any changes to the Board. |
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Nominating/ | ||||||||||||
Corporate | ||||||||||||
Name | Audit | Compensation | Governance | |||||||||
Peter B. Bartlett(1) | X | |||||||||||
Ronald M. DeFeo | X | X | * | |||||||||
A. Peter Held | X | X | ||||||||||
Timothy R. McLevish(2) | X | X | ||||||||||
William R. Newlin(3) | X | X | ||||||||||
Lawrence W. Stranghoener | X | * | X | |||||||||
Markos I. Tambakeras | ||||||||||||
Steven H. Wunning(4) | X | X | ||||||||||
Larry D. Yost | X | X | * | |||||||||
No. of Meetings fiscal year 2005 | 10 | 7 | 6 |
Nominating/ | ||||||||||||
Corporate | ||||||||||||
Audit | Compensation | Governance | ||||||||||
Carlos M. Cardoso | ||||||||||||
Ronald M. DeFeo | X | X | * | |||||||||
Philip A. Dur(1) | X | X | ||||||||||
A. Peter Held | X | X | ||||||||||
Timothy R. McLevish | X | X | ||||||||||
William R. Newlin(2) | X | X | ||||||||||
Lawrence W. Stranghoener | X | * | X | |||||||||
Markos I. Tambakeras | ||||||||||||
Steven H. Wunning | X | X | ||||||||||
Larry D. Yost | X | X | * | |||||||||
No. of Meetings Fiscal Year 2006 | 11 | 8 | 5 |
* | Chair | |
(1) | Mr. | |
Mr. Newlin serves as the Lead Director. | ||
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Annual Retainer(1) | |||||||
Lead Director(2) | $ | 60,400 | |||||
All Other Non-Employee Directors | $ | 30,000 | |||||
Annual Grant of Restricted Stock or Deferred Stock Credits | |||||||
Lead Director | $ | 10,000 | |||||
All Other Non-Employee Directors | $ | 10,000 | |||||
Annual Committee Chairman Stipend(1) | |||||||
Audit Committee | $ | 16,500 | |||||
Compensation Committee | $ | 11,000 | |||||
Nominating/ Corporate Governance Committee | $ | 11,000 | |||||
Annual Stipend for Committee Service (other than as Chairman)(1) | |||||||
Audit Committee | $ | 9,900 | |||||
Compensation Committee | $ | 6,600 | |||||
Nominating/ Corporate Governance Committee | $ | 6,600 | |||||
Stock Options(3) | One-time grant of 9,000 shares upon election to Board of Directors. Annual grant of 4,500 shares thereafter. |
Annual Retainer(1) | ||||||
Lead Director | $ | 69,500 | ||||
All Other Non-Employee Directors | $ | 34,500 | ||||
Annual Grant of Restricted Stock or Deferred Stock Credits | ||||||
All Non-Employee Directors | $ | 40,000 | ||||
Annual Committee Chairman Stipend(1) | ||||||
Audit Committee | $ | 16,500 | ||||
Compensation Committee | $ | 13,500 | ||||
Nominating/Corporate Governance Committee | $ | 13,500 | ||||
Annual Stipend for Committee Service (other than as Chairman)(1) | ||||||
Audit Committee | $ | 9,900 | ||||
Compensation Committee | $ | 8,000 | ||||
Nominating/Corporate Governance Committee | $ | 8,000 | ||||
Stock Options(2) | One-time grant of 7,000 shares upon election to Board of Directors; annual grant of 3,500 shares thereafter. |
(1) | Directors’ fees are paid quarterly. | |
(2) | ||
The exercise price for each award is the mean between the highest and lowest sales price of the Corporation’s Capital Stock on the NYSE on the last trading day prior to the date of the grant. |
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Amount of | Total Beneficial | |||||||||||
Beneficial | Ownership and | |||||||||||
Name of Beneficial Owner | Ownership(1)(2) | Stock Credits(3) | Stock Credits | |||||||||
Peter B. Bartlett | 8,547 | 24,280 | 32,827 | |||||||||
Ronald M. DeFeo | 22,547 | 4,486 | 27,033 | |||||||||
A. Peter Held | 33,738 | 4,773 | 38,511 | |||||||||
Timothy R. McLevish | 0 | 698 | 698 | |||||||||
William R. Newlin(4) | 184,869 | 44,607 | 229,476 | |||||||||
Lawrence W. Stranghoener | 13,196 | 2,651 | 15,847 | |||||||||
Steven H. Wunning | 0 | 198 | 198 | |||||||||
Larry D. Yost | 34,597 | 10,733 | 45,330 | |||||||||
Markos I. Tambakeras | 628,067 | 0 | 628,067 | |||||||||
James R. Breisinger | 137,053 | 10,103 | 147,156 | |||||||||
Carlos M. Cardoso | 122,286 | 7,999 | 130,285 | |||||||||
Stanley B. Duzy | 90,034 | 24,918 | 114,952 | |||||||||
Michael P. Wessner | 77,543 | 0 | 77,543 | |||||||||
Directors and Executive Officers as a Group (21 persons) | 1,655,946 | 166,320 | 1,822,266 |
Amount of | Total Beneficial | |||||||||||
Beneficial | Stock | Ownership and | ||||||||||
Name of Beneficial Owner | Ownership(1)(2) | Credits(3) | Stock Credits | |||||||||
Ronald M. DeFeo | 27,786 | 5,069 | 32,855 | |||||||||
Philip A. Dur | 1,082 | 0 | 1,082 | |||||||||
A. Peter Held | 37,412 | 5,902 | 43,314 | |||||||||
Timothy R. McLevish | 4,649 | 2,364 | 7,013 | |||||||||
William R. Newlin(4) | 175,160 | 45,990 | 221,150 | |||||||||
Lawrence W. Stranghoener | 21,435 | 3,727 | 25,162 | |||||||||
Steven H. Wunning | 3,000 | 1,806 | 4,806 | |||||||||
Larry D. Yost | 39,097 | 11,624 | 50,721 | |||||||||
Markos I. Tambakeras | 383,141 | 0 | 383,141 | |||||||||
Carlos M. Cardoso | 170,761 | 8,113 | 178,873 | |||||||||
Stanley B. Duzy | 30,672 | 25,271 | 55,943 | |||||||||
David W. Greenfield | 18,507 | 3,309 | 21,816 | |||||||||
Ronald C. Keating | 56,672 | 0 | 56,672 | |||||||||
Catherine R. Smith | 30,290 | 0 | 30,290 | |||||||||
Michael P. Wessner(5) | 40,243 | 0 | 40,243 | |||||||||
Directors and Executive Officers as a Group (21 persons)(6) | 1,239,127 | 136,944 | 1,376,071 |
(1) | No individual beneficially owns in excess of one percent of the total shares | |
(2) | The figures shown in this column include | |
(3) | These amounts represent shares of Capital Stock to which such individuals are entitled pursuant to their election to defer fees or bonuses as stock credits under the Directors Stock Incentive Plan, | |
(4) | The figure shown includes: | |
(5) | Effective as of June 8, 2006, Mr. Wessner ceased being an employee of the Corporation in connection with the closing of the sale of 100% of the stock of J&L America, Inc. to MSC Acquisition Corp. IV, a wholly owned subsidiary of MSC Industrial Direct Co. Inc. The figures set forth in the table above reflect shares that Mr. Wessner beneficially owned as of June 7, 2006 or had the right to acquire within 60 days thereafter pursuant to the Corporation’s stock option plans. | |
(6) | Figures shown for all directors and officers as a group do not include shares or stock credits beneficially owned by Mr. Wessner. |
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Long-Term | |||||||||||||||||||||||||||||
Compensation Awards | |||||||||||||||||||||||||||||
Annual Compensation | |||||||||||||||||||||||||||||
Restricted | Securities | ||||||||||||||||||||||||||||
Other Annual | Stock | Underlying | All Other | ||||||||||||||||||||||||||
Salary | Bonus | Compensation | Awards | Options | Compensation | ||||||||||||||||||||||||
Name and Principal Position | Fiscal Year | ($) | ($)(1) | ($)(2) | ($)(3) | (#)(4) | ($)(5)(6) | ||||||||||||||||||||||
Markos I. Tambakeras, | 2005 | 807,500 | 1,436,940 | 97,312 | 340,093 | 36,100 | 16,291 | ||||||||||||||||||||||
Chairman, President, and | 2004 | 780,000 | 1,231,152 | 14,815 | 577,200 | (7) | 33,000 | 14,085 | |||||||||||||||||||||
Chief Executive Officer | 2003 | 634,500 | 167,700 | 18,140 | — | — | 7,785 | ||||||||||||||||||||||
James R. Breisinger, | 2005 | 298,750 | 360,125 | 6,325 | 77,853 | 8,600 | 8,250 | ||||||||||||||||||||||
Vice President and President, | 2004 | 285,000 | 306,862 | 6,236 | 76,960 | (7) | 7,500 | 7,907 | |||||||||||||||||||||
Advanced Components Group | 2003 | 271,986 | 12,540 | 7,848 | — | 25,000 | 6,118 | ||||||||||||||||||||||
Carlos M. Cardoso, | 2005 | 504,800 | 750,827 | 8,451 | 354,708 | 12,200 | 15,485 | ||||||||||||||||||||||
Executive Vice President and | 2004 | 465,000 | 422,943 | 45,421 | — | — | 46,617 | (9) | |||||||||||||||||||||
Chief Operating Officer | 2003 | 82,784 | 46,500 | 15,788 | 1,185,400 | (8) | 100,000 | (8) | 15,315 | (9) | |||||||||||||||||||
Stanley B. Duzy, | 2005 | 305,500 | 373,250 | 9,992 | 77,853 | 8,600 | 15,205 | ||||||||||||||||||||||
Vice President and | 2004 | 300,000 | 303,806 | 8,501 | 116,130 | (10) | 7,500 | 11,725 | |||||||||||||||||||||
Chief Administrative Officer | 2003 | 270,004 | 50,000 | 7,629 | 169,775 | (11) | 25,000 | 5,725 | |||||||||||||||||||||
Michael P. Wessner, | 2005 | 335,174 | 284,400 | 6,225 | 323,703 | 8,600 | 15,775 | ||||||||||||||||||||||
Vice President and President, | 2004 | 309,174 | 213,403 | 6,225 | 77,420 | (12) | 5,000 | 12,015 | |||||||||||||||||||||
J&L Industrial Supply | 2003 | 294,000 | 10,560 | 8,522 | — | 25,000 | 8,564 |
Long-Term | ||||||||||||||||||||||||||||
Compensation Awards | ||||||||||||||||||||||||||||
Annual Compensation | Restricted | Securities | ||||||||||||||||||||||||||
Other Annual | Stock | Underlying | All Other | |||||||||||||||||||||||||
Salary | Bonus | Compensation | Awards | Options | Compensation | |||||||||||||||||||||||
Name and Principal Position | Fiscal Year | ($) | ($) | ($) | ($) | (#) | ($) (8) | |||||||||||||||||||||
Markos I. Tambakeras(1) | 2006 | 892,500 | 1,216,800 | 64,455 | 617,381 | 39,000 | 19,148 | |||||||||||||||||||||
Executive Chairman | 2005 | 807,500 | 1,436,940 | 97,312 | 340,093 | 36,100 | 16,291 | |||||||||||||||||||||
2004 | 780,000 | 1,231,152 | 14,815 | 577,200 | 33,000 | 14,085 | ||||||||||||||||||||||
Carlos M. Cardoso(2) | 2006 | 627,917 | 753,200 | 6,531 | 427,865 | 30,766 | 18,235 | |||||||||||||||||||||
President and | 2005 | 504,800 | 750,827 | 8,451 | 354,708 | 12,200 | 15,485 | |||||||||||||||||||||
Chief Executive Officer | 2004 | 465,000 | 422,943 | 45,421 | — | — | 46,617 | |||||||||||||||||||||
Stanley B. Duzy(3) | 2006 | 314,433 | 234,383 | 11,051 | 101,210 | 8,700 | 18,301 | |||||||||||||||||||||
Vice President and | 2005 | 305,500 | 373,250 | 9,992 | 77,853 | 8,600 | 15,205 | |||||||||||||||||||||
Chief Administrative Officer | 2004 | 300,000 | 303,806 | 8,501 | 116,130 | 7,500 | 11,725 | |||||||||||||||||||||
David W. Greenfield(4) | 2006 | 290,000 | 256,040 | 5,392 | 71,606 | 6,350 | 20,910 | |||||||||||||||||||||
Vice President, | 2005 | 280,217 | 270,079 | 7,861 | 53,268 | 6,000 | 18,397 | |||||||||||||||||||||
Secretary and General Counsel | 2004 | 261,469 | 207,841 | 7,750 | 106,453 | 5,000 | 14,160 | |||||||||||||||||||||
Ronald C. Keating(5) | 2006 | 302,268 | 289,884 | 14,196 | 51,111 | 5,000 | 174,490 | |||||||||||||||||||||
Vice President and | 2005 | 272,312 | 250,040 | 3,755 | 726,100 | 19,400 | 14,631 | |||||||||||||||||||||
President, Metalworking | 2004 | 233,901 | 187,788 | — | 46,452 | 2,500 | 9,721 | |||||||||||||||||||||
Solutions and Services Group | ||||||||||||||||||||||||||||
Catherine R. Smith(6) | 2006 | 400,000 | 409,480 | 1,125 | 151,815 | 14,000 | 18,307 | |||||||||||||||||||||
Executive Vice President and | 2005 | 90,909 | 330,000 | 7,020 | 1,014,530 | 50,000 | 120,029 | |||||||||||||||||||||
Chief Financial Officer | 2004 | — | — | — | — | — | — | |||||||||||||||||||||
Michael P. Wessner(7) | 2006 | 340,246 | — | 6,646 | 226,204 | 16,383 | 2,509,102 | |||||||||||||||||||||
Vice President and President, | 2005 | 335,174 | 284,400 | 6,225 | 323,703 | 8,600 | 15,775 | |||||||||||||||||||||
J&L Industrial Supply | 2004 | 309,174 | 213,403 | 6,225 | 77,420 | 5,000 | 12,015 |
(1) | ||
Other Annual Compensation. Figures in this column include taxes paid on behalf of Mr. Tambakeras for | ||
Restricted Stock Awards. Fiscal Year 2006 Awards: The figure reflects the market value on the grant date of the following restricted stock awards granted to Mr. Tambakeras: (a) an award of 8,700 shares on July 25, 2005, which originally was scheduled to vest in four equal installments commencing on the first anniversary of the grant date; and (b) an award of 3,500 shares on July 25, 2005, which fully vested on July 25, 2006. | ||
Fiscal Year 2005 Award: The figure reflects the market value on the grant date of a restricted stock award of 8,300 shares granted to Mr. Tambakeras on July 27, 2004, which vests in three equal installments commencing on the first anniversary of the grant date. |
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Fiscal Year 2004 Award: The figure reflects the market value on the grant date of a restricted stock award of 15,000 shares granted to Mr. Tambakeras on December 11, 2003, which vests on the sixth anniversary of the grant date, but for which vesting may be accelerated if certain corporate performance goals are met. | ||
Dividends are paid on shares subject to these awards. Mr. Tambakeras held an aggregate of 87,233 shares of restricted stock on June 30, 2006 with a market value of $5,430,254. Pursuant to the terms of Mr. Tambakeras’s Amended and Restated Executive Employment Agreement, which is described elsewhere in this Proxy Statement, upon the expiration of the term of such agreement (or earlier in certain circumstances) (the “Termination Date”), and to the extent allowable under the applicable plan, vesting shall be accelerated with respect to all shares of restricted stock held by Mr. Tambakeras that otherwise would have vested subsequent to the Termination Date and on or prior to December 31, 2007; the remainder shall be forfeited. With respect to restricted stock awards granted under the Corporation’s Stock and Incentive Plan of 2002, as amended, for which awards vesting cannot be accelerated, Mr. Tambakeras will forfeit the unvested portion of such awards and receive instead a cash payment equal to the value of the shares that otherwise would have vested subsequent to the Termination Date and on or prior to December 31, 2007. For further explanation of these matters, please refer to the discussion of Mr. Tambakeras’s agreement under the “Employment Agreements and Termination of Employment andChange-in-Control Arrangements” section of this Proxy Statement. | ||
Securities Underlying Options. These figures represent options to purchase shares of the Corporation’s Capital Stock. | ||
All Other Compensation. For Fiscal Year 2006, the figure includes: (a) income imputed to Mr. Tambakeras based upon premiums paid by the Corporation to secure and maintain a $500,000 term life insurance policy for Mr. Tambakeras’s life or until December 31, 2007. The Corporation paid a premium in the amount of $1,785 during fiscal year 2006 on behalf of Mr. Tambakeras; and (b) $17,363 contributed by the Corporation under its Thrift Plus Plan, either as a cash contribution or a matching contribution, on behalf of Mr. Tambakeras. Please refer to Footnote Number 8 below for additional details relating to the Corporation’s contributions under the Thrift Plus Plan. | ||
(2) | General. Mr. Cardoso | |
Bonus. Through fiscal year 2005, these figures include bonuses paid partially or entirely in shares of Capital Stock or in stock credits as elected by | ||
Fiscal Year 2005 Awards: The figure reflects the market value on the grant date of the following restricted stock awards granted to Mr. Cardoso: (a) an award of 2,700 shares on July 27, 2004, which vests in three equal installments commencing on the first anniversary of the grant date; and (b) an award of 5,000 shares on January 6, 2005, which vests in four equal installments commencing on the first anniversary of the grant date. | ||
Dividends are paid on shares subject to these awards. Mr. Cardoso held an aggregate of 24,005 shares of restricted stock on June 30, 2006 with a market value of $1,494,311. | ||
Securities Underlying Options. These figures represent options to purchase shares of the Corporation’s Capital Stock. | ||
All Other Compensation. For Fiscal Year 2006, the figure includes: (a) income imputed to Mr. Cardoso based upon premiums paid by the Corporation to secure and maintain a $500,000 term life insurance policy while |
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Mr. Cardoso remains an active employee of the Corporation. The Corporation paid a premium in the amount of $835 during fiscal year 2006 on behalf of Mr. Cardoso; and (b) $17,400 contributed by the Corporation under its Thrift Plus Plan, either as a cash contribution or a matching contribution, on behalf of Mr. Cardoso. Please refer to Footnote Number 8 below for additional details relating to the Corporation’s contributions under the Thrift Plus Plan. | ||
(3) | Bonus. Through fiscal year 2005, these figures include bonuses paid partially or entirely in shares of Capital Stock or in stock credits as elected by Mr. Duzy under the Corporation’s Performance Bonus Stock Plan. Under the plan, an executive was permitted to elect to receive stock or stock credits in lieu of a all or a portion of a cash bonus. Pursuant to the plan, any portion of a bonus paid in shares of Capital Stock or in stock credits was increased by 25% of that value. The 25% premium feature under the plan was discontinued and was no longer applicable for fiscal year 2006. | |
Other Annual Compensation. Figures in this column include taxes paid on behalf of Mr. Duzy for executive benefit programs for fiscal years 2004, 2005, and 2006. | ||
Restricted Stock Awards. Fiscal Year 2006 Award: The figure reflects the market value on the grant date of a restricted stock award of 2,000 shares granted to Mr. Duzy on July 25, 2005, which vests in four equal installments commencing on the first anniversary of the grant date. | ||
Fiscal Year 2005 Award: The figure reflects the market value on the grant date of a restricted stock award of 1,900 shares granted to Mr. Duzy on July 27, 2004, which vests in three equal installments commencing on the first anniversary of the grant date. | ||
Fiscal Year 2004 Award: The figure reflects the market value on the grant date of a restricted stock award of 3,000 shares granted to Mr. Duzy on July 29, 2003, which vests on the sixth anniversary of the grant date, but for which vesting may be accelerated if certain corporate performance goals are met. | ||
Dividends are paid on shares subject to these awards. Mr. Duzy held an aggregate of 6,765 shares of restricted stock on June 30, 2006 with a market value of $421,121. | ||
Securities Underlying Options. These figures represent options to purchase shares of the Corporation’s Capital Stock. | ||
All Other Compensation. For Fiscal Year 2006, the figure includes: (a) income imputed to Mr. Duzy based upon premiums paid by the Corporation to secure and maintain a $500,000 term life insurance policy while Mr. Duzy remains an active employee of the Corporation. The Corporation paid a premium in the amount of $1,225 during fiscal year 2006 on behalf of Mr. Duzy; and (b) $17,076 contributed by the Corporation under its Thrift Plus Plan, either as a cash contribution or a matching contribution, on behalf of Mr. Duzy. Please refer to Footnote Number 8 below for additional details relating to the Corporation’s contributions under the Thrift Plus Plan. | ||
(4) | Bonus. Through fiscal year 2005, these figures include bonuses paid partially or entirely in shares of Capital Stock or in stock credits as elected by Mr. Greenfield under the Corporation’s Performance Bonus Stock Plan. Under the plan, an executive was permitted to elect to receive stock or stock credits in lieu of a all or a portion of a cash bonus. Pursuant to the plan, any portion of a bonus paid in shares of Capital Stock or in stock credits was increased by 25% of that value. The 25% premium feature under the plan was discontinued and was no longer applicable for fiscal year 2006. | |
Other Annual Compensation. Figures in this column include taxes paid on behalf of Mr. Greenfield for executive benefit programs for fiscal years 2004, 2005, and 2006. | ||
Restricted Stock Awards. Fiscal Year 2006 Award: The figure reflects the market value on the grant date of a restricted stock award of 1,415 shares granted to Mr. Greenfield on July 25, 2005, which vests in four equal installments commencing on the first anniversary of the grant date. | ||
Fiscal Year 2005 Award: The figure reflects the market value on the grant date of a restricted stock award of 1,300 shares granted to Mr. Greenfield on July 27, 2004, which vests in three equal installments commencing on the first anniversary of the grant date. | ||
Fiscal Year 2004 Award: The figure reflects the market value on the grant date of a restricted stock award of 2,750 shares granted to Mr. Greenfield on July 29, 2003, which vests on the sixth anniversary of the grant date, but for which vesting may be accelerated if certain corporate performance goals are met. |
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Dividends are paid on shares subject to these awards. Mr. Greenfield held an aggregate of 4,047 shares of restricted stock on June 30, 2006 with a market value of $251,926. | ||
Securities Underlying Options. These figures represent options to purchase shares of the Corporation’s Capital Stock. | ||
All Other Compensation. For Fiscal Year 2006, the figure includes: (a) income imputed to Mr. Greenfield based upon premiums paid by the Corporation to secure and maintain a $500,000 term life insurance policy while Mr. Greenfield remains an active employee of the Corporation. The Corporation paid a premium in the amount of $4,035 during fiscal year 2006 on behalf of Mr. Greenfield; and (b) $16,875 contributed by the Corporation under its Thrift Plus Plan, either as a cash contribution or a matching contribution, on behalf of Mr. Greenfield. Please refer to Footnote Number 8 below for additional details relating to the Corporation’s contributions under the Thrift Plus Plan. | ||
(5) | Bonus. Through fiscal year 2005, these figures include bonuses paid partially or entirely in shares of Capital Stock or in stock credits as elected by Mr. Keating under the Corporation’s Performance Bonus Stock Plan. Under the plan, an executive was permitted to elect to receive stock or stock credits in lieu of a all or a portion of a cash bonus. Pursuant to the plan, any portion of a bonus paid in shares of Capital Stock or in stock credits was increased by 25% of that value. The 25% premium feature under the plan was discontinued and was no longer applicable for fiscal year 2006. | |
Other Annual Compensation. Figures in this column include taxes paid on behalf of Mr. Keating for executive benefit programs for fiscal years 2005 and 2006. | ||
Restricted Stock Awards. Fiscal Year 2006 Award: The figure reflects the market value on the grant date of a restricted stock award of 1,010 shares granted to Mr. Keating on July 25, 2005, which vests in four equal installments commencing on the first anniversary of the grant date. | ||
Fiscal Year 2005 Awards: The figure reflects the market value on the grant date of the following restricted stock awards granted to Mr. Keating: (a) an award of 15,000 shares on July 1, 2004 in connection with Mr. Keating’s election as corporate officer, with a vesting schedule of one fourth on July 1, 2005, one fourth on July 1, 2006, and one half on July 1, 2007; and (b) an award of 1,000 shares on July 27, 2004, which vests in three equal installments commencing on the first anniversary of the grant date. | ||
Fiscal Year 2004 Award: The figure reflects the market value on the grant date of a restricted stock award of 1,200 shares granted to Mr. Keating on July 29, 2003, which vests on the sixth anniversary of the grant date, but for which vesting may be accelerated if certain corporate performance goals are met. | ||
Dividends are paid on shares subject to these awards. Mr. Keating held an aggregate of 13,326 shares of restricted stock on June 30, 2006 with a market value of $829,544. | ||
Securities Underlying Options. These figures represent options to purchase shares of the Corporation’s Capital Stock. | ||
All Other Compensation. For Fiscal Year 2006, the figure includes: (a) income imputed to Mr. Keating based upon premiums paid by the Corporation to secure and maintain a $500,000 term life insurance policy while Mr. Keating remains an active employee of the Corporation. The Corporation paid a premium in the amount of $705 during fiscal year 2006 on behalf of Mr. Keating; (b) $18,196 contributed by the Corporation under its Thrift Plus Plan, either as a cash contribution or a matching contribution, on behalf of Mr. Keating; and (c) moving allowance and related expenses in the aggregate amount of $155,590. Please refer to Footnote Number 8 below for additional details relating to the Corporation’s contributions under the Thrift Plus Plan. | ||
(6) | General. Ms. Smith joined the Corporation as its Executive Vice President and Chief Financial Officer in April 2005. | |
Other Annual Compensation. Figures in this column include taxes paid on behalf of Ms. Smith for executive benefit programs for fiscal years 2005 and 2006. | ||
Restricted Stock Awards. Fiscal Year 2006 Award: The figure reflects the market value on the grant date of a restricted stock award of 3,000 shares granted to Ms. Smith on July 25, 2005, which vests in four equal installments commencing on the first anniversary of the grant date. |
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Fiscal Year 2005 Award: The figure reflects the market value on the grant date of a restricted stock award of 22,000 shares granted to Ms. Smith on April 11, 2005 in connection with her employment agreement, with a vesting schedule of one half on April 11, 2007 and one half April 11, 2009. | ||
Dividends are paid on shares subject to these awards. Ms. Smith held an aggregate of 25,000 shares of restricted stock on June 30, 2006 with a market value of $1,556,250. | ||
Securities Underlying Options. These figures represent options to purchase shares of the Corporation’s Capital Stock. | ||
All Other Compensation. For Fiscal Year 2006, the figure includes: (a) income imputed to Ms. Smith based upon premiums paid by the Corporation to secure and maintain a $500,000 term life insurance policy while Ms. Smith remains an active employee of the Corporation. The Corporation paid a premium in the amount of $2,130 during fiscal year 2006 on behalf of Ms. Smith; and (b) $16,177 contributed by the Corporation under its Thrift Plus Plan, either as a cash contribution or a matching contribution, on behalf of Ms. Smith. Please refer to Footnote Number 8 below for additional details relating to the Corporation’s contributions under the Thrift Plus Plan. | ||
(7) | General. Effective as of June 8, 2006, Mr. Wessner ceased being an employee of the Corporation in connection with the closing of the sale of 100% of the stock of J&L America, Inc. to MSC Acquisition Corp. IV, a wholly owned subsidiary of MSC Industrial Direct Co. Inc. | |
Bonus. Through fiscal year 2005, these figures include bonuses paid partially or entirely in shares of Capital Stock or in stock credits as elected by Mr. Wessner under the Corporation’s Performance Bonus Stock Plan. Under the plan, an executive was permitted to elect to receive stock or stock credits in lieu of a all or a portion of a cash bonus. Pursuant to the plan, any portion of a bonus paid in shares of Capital Stock or in stock credits was increased by 25% of that value. The 25% premium feature under the plan was discontinued and was no longer applicable for fiscal year 2006. | ||
Other Annual Compensation. Figures in this column include taxes paid on behalf of Mr. Wessner for executive benefit programs for fiscal years 2004, 2005, and 2006. | ||
Restricted Stock Awards. Fiscal Year 2006 Awards: The figure reflects the market value on the grant date of restricted stock awards of 2,000 shares and 2,470 shares, respectively, granted | ||
Fiscal Year 2005 Awards: The figure reflects the market value on the grant date of the following restricted stock awards granted to Mr. Wessner: (a) an award of 1,900 shares granted to Mr. Wessner on July 27, 2004, | ||
Fiscal Year 2004 Award: The figure reflects the market value on the grant date of a restricted stock award of 2,000 shares granted to Mr. Wessner on July 29, 2003, which shares originally were scheduled to vest on the sixth anniversary of the grant date, but for which vesting could be accelerated if certain corporate performance goals were met. Under the terms of Mr. Wessner’s Success Agreement, the unvested shares under this award were forfeited effective June 8, 2006 in connection with the closing of the sale of J&L America, Inc. | ||
Dividends are paid on shares subject to these awards. |
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(8) | Beginning January 1, 2004, for each employee whose benefit accrual under the Corporation’s defined benefit pension plan was discontinued as of December 31, 2003, the Corporation: (a) makes a cash contribution to each eligible employee’s plan account in an amount equal to 3% of the employee’s eligible compensation (salary and, if applicable, bonus); and (b) may make an annual discretionary cash contribution of up to 3% of eligible compensation based on the overall performance of the Company for the fiscal year. These contributions are not made to employees whose benefit accruals under the defined benefit plan were continued, based upon specified age and service criteria, as further described in the “Retirement Benefits” section of this Proxy Statement. | |
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Number of | ||||||||||||||||||||
Securities | % of Total | |||||||||||||||||||
Underlying | Options | Exercise or | Grant Date | |||||||||||||||||
Options | Granted in | Base Price | Expiration | Present | ||||||||||||||||
Name | Granted(#)(1) | Fiscal Year | ($/share) | Date | Value($)(2) | |||||||||||||||
Markos I. Tambakeras | 36,100 | 3.7550 | 40.975 | 7/26/14 | 394,266 | |||||||||||||||
James R. Breisinger | 8,600 | .8946 | 40.975 | 7/26/14 | 93,925 | |||||||||||||||
Carlos M. Cardoso | 12,200 | 1.2690 | 40.975 | 7/26/14 | 133,242 | |||||||||||||||
Stanley B. Duzy | 8,600 | .8946 | 40.975 | 7/26/14 | 93,925 | |||||||||||||||
Michael P. Wessner | 8,600 | .8946 | 40.975 | 7/26/14 | 93,925 |
Number of | ||||||||||||||||||||
Securities | % of Total | |||||||||||||||||||
Underlying | Options | Exercise or | Grant Date | |||||||||||||||||
Options | Granted in | Base Price | Expiration | Present | ||||||||||||||||
Name | Granted (#) (1) | Fiscal Year | ($)/Share | Date | Value ($) (2) | |||||||||||||||
Markos I. Tambakeras | 39,000 | 7.8310 | $ | 50.60500 | 7/25/15 | $ | 487,500 | |||||||||||||
Carlos M. Cardoso | 30,766 | 6.1776 | 50.60500 | 7/25/15 | 384,575 | |||||||||||||||
Stanley B. Duzy, Jr. | 8,700 | 1.7469 | 50.60500 | 7/25/15 | 108,750 | |||||||||||||||
David W. Greenfield | 6,350 | 1.2750 | 50.60500 | 7/25/15 | 79,360 | |||||||||||||||
Ronald C. Keating | 5,000 | 1.0040 | 50.60500 | 7/25/15 | 62,500 | |||||||||||||||
Catherine R. Smith | 14,000 | 2.8111 | 50.60500 | 7/25/15 | 175,000 | |||||||||||||||
Michael P. Wessner(3) | 16,383 | 3.2896 | 50.60500 | 12/31/06 | 204,788 |
(1) | Options with respect to the Corporation’s Capital Stock were granted with an exercise price equal to the fair market value of the Capital Stock on the date of grant. These options vest in | |
(2) | Based on the Black-Scholes Option Valuation model, adjusted for dividends to determine grant date present value of the options. The Corporation does not advocate or necessarily agree that the | |
(3) | In connection with Mr. Wessner’s Success Agreement, these options fully vested on June 8, 2006, which was the date of the closing of the sale of J&L. In accordance with the terms of the Success Agreement, the period during which Mr. Wessner may exercise these options will expire on December 31, 2006. |
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Number of | ||||||||||||||||
Securities | Value of | |||||||||||||||
Underlying | Unexercised | |||||||||||||||
Unexercised | In-the-Money | |||||||||||||||
Options at Fiscal | Options at Fiscal | |||||||||||||||
Year End(#) | Year End($) | |||||||||||||||
Shares Acquired | Value | Exercisable/ | Exercisable/ | |||||||||||||
Name | on Exercise(#) | Realized($) | Unexercisable | Unexercisable | ||||||||||||
Markos I. Tambakeras | — | — | 357,667/ 81,433 | 5,337,027/ 564,458 | ||||||||||||
James R. Breisinger | 16,628 | 357,289 | 92,272/ 13,600 | 1,190,896/ 78,775 | ||||||||||||
Carlos M. Cardoso | — | — | 66,667/ 45,533 | 1,081,005/ 599,970 | ||||||||||||
Stanley B. Duzy | — | — | 67,500/ 13,600 | 991,556/ 78,755 | ||||||||||||
Michael P. Wessner | 5,000 | 106,319 | 53,667/ 11,993 | 723,461/ 66,489 |
Number of | ||||||||||||||||
Securities | Value of | |||||||||||||||
Underlying | Unexercised | |||||||||||||||
Unexercised | In-the-Money | |||||||||||||||
Options at Fiscal | Options at Fiscal | |||||||||||||||
Year End (#) | Year End ($ ) | |||||||||||||||
Shares Acquired | Value | Exercisable/ | Exercisable/ | |||||||||||||
Name | On Exercise (#) | Realized ($) | Unexercisable | Unexercisable | ||||||||||||
Markos I. Tambakeras | 275,198 | $ | 8,646,829 | 128,836/74,066 | $ | 3,052,015/1,227,629 | ||||||||||
Carlos M. Cardoso | 0 | 0 | 104,067/38,899 | 3,348,025/531,300 | ||||||||||||
Stanley B. Duzy | 69,961 | 2,082,826 | 2,906/16,933 | 71,223/282,706 | ||||||||||||
David W. Greenfield | 28,224 | 788,481 | 0/12,016 | 0/198,647 | ||||||||||||
Ronald C. Keating | 4,000 | 86,580 | 23,717/19,183 | 536,417/307,093 | ||||||||||||
Catherine R. Smith | 0 | 0 | 0/64,000 | 0/969,780 | ||||||||||||
Michael P. Wessner | 81,983 | 1,814,735 | 0 | 0 |
Estimated Future Payouts Under Non- | ||||||||||||||||
Stock Price-Based Plans(1) | ||||||||||||||||
Performance or Other | ||||||||||||||||
Period Until | Threshold | Target | Maximum | |||||||||||||
Name | Maturation or Payout | ($)(2) | ($) | ($)(2) | ||||||||||||
Markos I. Tambakeras | FY2005 — FY2007 | 425,000 | 850,000 | 1,700,000 | ||||||||||||
James R. Breisinger | FY2005 — FY2007 | 102,604 | 205,207 | 410,414 | ||||||||||||
Carlos M. Cardoso | FY2005 — FY2007 | 143,770 | 287,539 | 575,078 | ||||||||||||
Stanley B. Duzy | FY2005 — FY2007 | 102,604 | 205,207 | 410,414 | ||||||||||||
Michael P. Wessner | FY2005 — FY2007 | 102,604 | 205,207 | 410,414 |
Estimated Future Payouts Under | ||||||||||||||||
Performance or Other | Non-Stock Price-Based Plans(1) | |||||||||||||||
Period Until | Threshold | Target | Maximum | |||||||||||||
Name | Maturation or Payout | ($) (2) | ($) | ($) (2) | ||||||||||||
Markos I. Tambakeras | FY2006 — FY2008 | 500,000 | 1,000,000 | 2,000,000 | ||||||||||||
Carlos M. Cardoso | FY2006 — FY2008 | 202,000 | 404,000 | 808,000 | ||||||||||||
Stanley B. Duzy | FY2006 — FY2008 | 112,000 | 224,000 | 448,000 | ||||||||||||
David W. Greenfield | FY2006 — FY2008 | 81,250 | 162,500 | 325,000 | ||||||||||||
Ronald C. Keating | FY2006 — FY2008 | 58,250 | 116,500 | 233,000 | ||||||||||||
Catherine R. Smith | FY2006 — FY2008 | 175,000 | 350,000 | 700,000 | ||||||||||||
Michael P. Wessner(3) | FY2006 — FY2008 | 112,000 | 224,000 | 448,000 |
(1) | Payment of these awards is subject to, and contingent upon, achievement of certain performance criteria over a | |
(2) | The long-term incentive bonus threshold and maximum amounts range from 50% of the specified target award to 200% of the specified target award for the Named Executive Officers based on | |
(3) | Effective as of June 8, 2006, Mr. Wessner ceased being an employee of the Corporation in connection with the closing of the sale J&L. Due to the cessation of his employment, Mr. Wessner no longer participates in the Corporation’s LTIP Plan. Mr. Wessner has not received any amounts under the plan to date and will not receive any amounts under the plan in the future. |
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Annualized | Estimated Annual Benefit Upon Retirement With Years of Credited Service Indicated | |||||||||||||||||||||||||
Covered | ||||||||||||||||||||||||||
Compensation | 5 | 10 | 15 | 20 | 25 | 30 | ||||||||||||||||||||
$ | 100,000 | $ | 35,000 | $ | 40,000 | $ | 45,000 | $ | 50,000 | $ | 55,000 | $ | 60,000 | |||||||||||||
200,000 | 70,000 | 80,000 | 90,000 | 100,000 | 110,000 | 120,000 | ||||||||||||||||||||
400,000 | 140,000 | 160,000 | 180,000 | 200,000 | 220,000 | 240,000 | ||||||||||||||||||||
600,000 | 210,000 | 240,000 | 270,000 | 300,000 | 330,000 | 360,000 | ||||||||||||||||||||
800,000 | 280,000 | 320,000 | 360,000 | 400,000 | 440,000 | 480,000 | ||||||||||||||||||||
1,000,000 | 350,000 | 400,000 | 450,000 | 500,000 | 550,000 | 600,000 | ||||||||||||||||||||
1,200,000 | 420,000 | 480,000 | 540,000 | 600,000 | 660,000 | 720,000 | ||||||||||||||||||||
1,400,000 | 490,000 | 560,000 | 630,000 | 700,000 | 770,000 | 840,000 | ||||||||||||||||||||
1,600,000 | 560,000 | 640,000 | 720,000 | 800,000 | 880,000 | 960,000 | ||||||||||||||||||||
1,800,000 | 630,000 | 720,000 | 810,000 | 900,000 | 990,000 | 1,080,000 |
Annualized | ||||||||||||||||||||||||||||||
Covered | ||||||||||||||||||||||||||||||
Compensation | Estimated Annual Benefit Upon Retirement With Years of Credited Service Indicated | |||||||||||||||||||||||||||||
5 | 10 | 15 | 20 | 25 | 30 | 35 | ||||||||||||||||||||||||
$ | 100,000 | $ | 35,000 | $ | 40,000 | $ | 45,000 | $ | 50,000 | $ | 55,000 | $ | 60,000 | $ | 65,000 | |||||||||||||||
200,000 | 70,000 | 80,000 | 90,000 | 100,000 | 110,000 | 120,000 | 130,000 | |||||||||||||||||||||||
400,000 | 140,000 | 160,000 | 180,000 | 200,000 | 220,000 | 240,000 | 260,000 | |||||||||||||||||||||||
600,000 | 210,000 | 240,000 | 270,000 | 300,000 | 330,000 | 360,000 | 390,000 | |||||||||||||||||||||||
800,000 | 280,000 | 320,000 | 360,000 | 400,000 | 440,000 | 480,000 | 520,000 | |||||||||||||||||||||||
1,000,000 | 350,000 | 400,000 | 450,000 | 500,000 | 550,000 | 600,000 | 650,000 | |||||||||||||||||||||||
1,200,000 | 420,000 | 480,000 | 540,000 | 600,000 | 660,000 | 720,000 | 780,000 | |||||||||||||||||||||||
1,400,000 | 490,000 | 560,000 | 630,000 | 700,000 | 770,000 | 840,000 | 910,000 | |||||||||||||||||||||||
1,600,000 | 560,000 | 640,000 | 720,000 | 800,000 | 880,000 | 960,000 | 1,040,000 | |||||||||||||||||||||||
1,800,000 | 630,000 | 720,000 | 810,000 | 900,000 | 990,000 | 1,080,000 | 1,170,000 |
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Number of Securities | ||||||||||||
Number of | Remaining Available | |||||||||||
Securities to be | for Future Issuance | |||||||||||
Issued Upon | Weighted Average | Under Equity | ||||||||||
Exercise of | Exercise Price of | Compensation Plans | ||||||||||
Outstanding Options, | Outstanding Options, | (Excluding Securities | ||||||||||
Plan Category | Warrants and Rights | Warrants and Rights | Reflected in Column A) | |||||||||
A (1) | B (2) | C (3) | ||||||||||
Equity compensation plans approved by shareowners(4) | 3,301,725 | $ | 37.46 | 2,815,002 | (5) | |||||||
Equity compensation plans not approved by shareowners(6) | 353,198 | $ | 27.52 | 94,736 | (7) | |||||||
TOTAL | 3,654,923 | $ | 36.70 | 2,909,738 |
Number of Securities | ||||||||||||
Number of | Remaining Available | |||||||||||
Securities to be | for Future Issuance | |||||||||||
Issued Upon | Weighted Average | Under Equity | ||||||||||
Exercise of | Exercise Price of | Compensation Plans | ||||||||||
Outstanding Options, | Outstanding Options, | (Excluding Securities | ||||||||||
Plan Category | Warrants and Rights | Warrants and Rights | Reflected in Column A) | |||||||||
A (1) | B (2) | C (3) | ||||||||||
Equity compensation plans approved by shareowners(4) | 2,225,168 | $ | 42.06 | 2,003,162 | (5) | |||||||
Equity compensation plans not approved by shareowners(6) | 206,487 | $ | 29.51 | 89,082 | (7) | |||||||
TOTAL | 2,431,655 | $ | 41.42 | 2,092,244 |
(1) | This column also includes stock credits issued under the Bonus Stock Plan and Directors Stock Incentive Plan. Not included in this column are awards under the LTIP Plan, which are dollar-denominated awards, but may be paid either in cash or stock, or any combination of cash and stock, at the election of the Compensation Committee. | |
(2) | The calculations of the weighted average exercise prices shown in this column do not include stock credits issued under the Bonus Stock Plan or the Directors Stock Incentive Plan. | |
(3) | No further grants may be made from: (i) the 1988 Plan; (ii) the 1992 Plan; (iii) the 1996 Plan; (iv) the 1999 Plan; and (v) the 1999 Stock Plan. | |
(4) | These plans consist of: (i) the 1988 Plan; (ii) the 1992 Plan; (iii) the 1996 Plan; (iv) the 1999 Plan; (v) the 2002 Plan; and (vi) the Bonus Stock Plan. | |
(5) | The number of securities available for future issuance under the 2002 Plan, other than upon the exercise of options, warrants or rights, is | |
(6) | The 1999 Stock Plan and Directors Stock Incentive Plan are non-shareowner approved plans. | |
(7) | The number of securities available for future issuance under the Directors Stock Incentive Plan, other than upon the exercise of options, warrants or rights, is |
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• | To link the interests of executives and managers to the interests of the shareowners and other potential investors. | |
• | To provide incentives for working toward increasing the market value of the Corporation’s stock and to increase shareowner value through achieving financial and business objectives. | |
• | To provide incentives for strategic vision and decision-making that will promote and enhance the longer-term health and viability of the Corporation. | |
• | To provide incentives for innovation, quality management, responsiveness to customer needs, development of value-added products and services, and an action-oriented approach to opportunities in the marketplace. | |
• | To attract, develop, retain and motivate individuals with the leadership and technical skills required to carry the Corporation forward into the future, given the belief that the Corporation’s human resources can provide a competitive advantage in the marketplace. | |
• | To tie compensation to achievement of strong results. |
• | Salaryfor executives, including the Chief Executive Officer, is intended to be competitive with Market Data and is designed to attract and retain | |
• | Annual performance incentive |
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intended to maintain management compensation at a competitive level, as indicated by Market Data and as recommended by independent compensation consultants. |
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• | Long-term incentive | |
• | Stock Ownership Guidelinesare designed to tie the interests of executives and managers to the interests of the shareowners. The Corporation has adopted Stock Ownership Guidelines for executives, key managers, and for members of the Board of Directors. The belief is that stock should be acquired and held in such quantities to provide an ongoing incentive to make decisions and take actions that will enhance the performance of the Corporation and increase its value. These guidelines were first adopted in 1995 and, periodically, the level of ownership (i.e., multiple of base salary for executives, multiple of retainer for directors) and number of individuals subject to the guidelines has been modified. The current guidelines are: |
Multiple | ||||||
Chief Executive Officer | 5X | |||||
Executive Vice Presidents and Group Presidents | 3X | |||||
Executive Management Council, Corporate Officers, and certain Business Unit Managers | 2X | |||||
Other Key Managers | 1X | |||||
Non-Employee Directors | 5X | |||||
• | Executive Perquisites and Benefits. Executives are entitled to what the Committee believes are reasonable perquisites and benefits |
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• | Base salaries for certain executive officers of the Corporation were adjusted in fiscal year | |
• | Individual executive officer annual performance incentive rewards for fiscal year | |
• | Stock options, restricted stockand/or LTIP were awarded to certain executive officers, during the course of fiscal year |
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2000 | 2001 | 2002 | 2003 | 2004 | 2005 | |||||||||||||||||||
Kennametal Inc. | $ | 100 | 176.10 | 177.70 | 167.69 | 230.76 | 234.45 | |||||||||||||||||
S&P Mid-Cap 400 | $ | 100 | 108.87 | 103.74 | 103.00 | 131.82 | 150.31 | |||||||||||||||||
Current Peer Group | $ | 100 | 117.63 | 131.17 | 123.74 | 190.77 | 192.13 | |||||||||||||||||
Prior Peer Group | $ | 100 | 117.06 | 130.30 | 128.78 | 201.75 | 211.62 |
2001 | 2002 | 2003 | 2004 | 2005 | 2006 | |||||||||||||||||||
Kennametal Inc. | $ | 100.00 | $ | 100.96 | $ | 95.39 | $ | 131.31 | $ | 133.41 | $ | 183.67 | ||||||||||||
Prior Peer Group Index | 100.00 | 111.52 | 105.30 | 162.47 | 162.62 | 218.51 | ||||||||||||||||||
S&P Mid-Cap 400 | 100.00 | 95.28 | 94.60 | 121.07 | 138.06 | 155.98 | ||||||||||||||||||
Current Peer Group Index | 100.00 | 111.65 | 104.88 | 161.48 | 160.93 | 217.64 | ||||||||||||||||||
S&P Composite | 100.00 | 82.01 | 82.22 | 97.93 | 104.12 | 113.11 |
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Percent of | ||||||||
Number of | Outstanding | |||||||
Name and Address | Shares | Capital Stock(1) | ||||||
Barclays Global Investors, NA | 3,853,843 | 10.04 | % | |||||
45 Fremont Street | ||||||||
San Francisco, CA 94105 | ||||||||
Fidelity Management & Research Co. | 2,125,012 | 5.53 | % | |||||
82 Devonshire Street | ||||||||
Boston, MA 02109 | ||||||||
Franklin Advisors, Inc. | 2,098,803 | 5.47 | % | |||||
1 Franklin Parkway | ||||||||
San Mateo, CA 94403-1906 |
Percent of | ||||||||
Number of | Outstanding | |||||||
Name and Address | Shares(1) | Capital Stock(1) | ||||||
Barclays Global Investors, NA | 2,231,207 | 5.64 | % | |||||
45 Fremont Street | ||||||||
San Francisco, CA 94105 | ||||||||
Franklin Resources, Inc. | 2,583,581 | 6.53 | % | |||||
1 Franklin Parkway | ||||||||
San Mateo, CA94403-1906 | ||||||||
Transamerica Investment Management LLC | 2,601,608 | 6.57 | % |
(1) | As reported by the |
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Fiscal 2005 | Fiscal 2004 | |||||||
Audit Fees(1) | $ | 4.2 | $ | 1.9 | ||||
Audit-Related Fees(2) | $ | 0.1 | $ | 0.2 | ||||
Tax Fees(3) | $ | 0.5 | $ | 0.6 | ||||
All Other Fees | $ | — | $ | — | ||||
TOTAL | $ | 4.8 | $ | 2.7 |
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Fiscal 2006 | Fiscal 2005 | |||||||
Audit Fees(1) | $ | 4.8 | $ | 4.7 | ||||
Audit-Related Fees(2) | 0.2 | 0.1 | ||||||
Tax Fees(3) | 0.4 | 0.5 | ||||||
All Other Fees | — | — | ||||||
TOTAL | $ | 5.4 | $ | 5.3 | ||||
(1) | These fees relate to services provided for the audit of the consolidated financial statements, subsidiary and statutory audits, the issuance of consents and assistance with the review of documents filed with the SEC. | |
(2) | These fees primarily relate to services provided in connection with financial due diligence services in connection with acquisitions. | |
(3) | These fees relate primarily to tax compliance services, tax planning advice, tax preparation services for employees on international assignments and tax audit assistance. |
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By Phone: | 1-866-211-6288 | |||||||||||
By Mail: | Mellon Investor Services LLC P.O. Box 3315 South Hackensack, NJ 07606 | or | Mellon Investor Services LLC 85 Challenger Road Ridgefield Park, NJ 07660 | |||||||||
By Internet: | http://www.melloninvestor.com/isd |
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A-1
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A-5
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Please Mark Here for Address | o |
SEE REVERSE SIDE |
VOTEFORall | ||
nominees listed | ||
(except as marked | ||
to the contrary). | WITHHOLD AUTHORITY to vote FOR ALL NOMINEES listed | |
o | o |
II. | THE APPROVAL OF THE AMENDMENT TO KENNAMETAL’S AMENDED AND RESTATED ARTICLES OF INCORPORATION; | FOR o | AGAINST o | ABSTAIN o | ||||
III. | RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 30, | FOR o | AGAINST o | ABSTAIN o |
This Proxy, when properly executed, will be voted in the manner directed herein.If no direction is made, this Proxy will be voted FOR the election of the nominees in Item I above, FOR the approval of the Amendment to Kennametal’s Amended and Restated Articles of Incorporation and FOR the ratification of the selection of the independent registered public accounting firm.The proxies are authorized to vote, in accordance with their judgment, upon such other matters as may properly come before the meeting and any adjournments thereof. | ChooseMlinkSM for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on toInvestor ServiceDirect® atwww.melloninvestor.com/isd where step-by-step instructions will prompt you through enrollment. |
Signature(s) | Signature(s) | Date | , | 2006 | ||||||||||||
Internet | ||||||||
http:// | 1-866-540-5760 | |||||||
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. | OR | Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. | OR | Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. |
PROXY | KENNAMETAL INC. | PROXY |
• | View account status | • | ||||||
• | ||||||||
View | • | Obtain a duplicate 1099 tax form | ||||||
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