Payment of Filing Fee (Check the appropriate box): 14, 2011 The Proxy Statement includes a description of each proposal. Our board of directors recommends that stockholders vote “FOR” proposals 1, 2, 3 and 4. Please read each proposal carefully, study the recommendations of the board of directors and its committees and vote promptly.¨o Preliminary Proxy Statement ¨o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) xx Definitive Proxy Statement ¨o Definitive Additional Materials ¨o Soliciting Material Pursuant to §240.14a-12 Mueller Water Products, Inc. (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Mueller Water Products, Inc.(Name of Registrant as Specified In Its Charter)(Name of Person(s) Filing Proxy Statement, if other than the Registrant)xx No fee required. ¨o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which the transaction applies: (2) Aggregate number of securities to which the transaction applies: (3) Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of the transaction: (5) Total fee paid: ¨o Fee paid previously with preliminary materials. ¨o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: 15, 201020112012 Annual Meeting of Stockholders of Mueller Water Products, Inc. to be held on Wednesday, January 26, 201125, 2012 at 10:00 A.M. local time at the Grand Hyatt Atlanta inInterContinental Buckhead hotel in Atlanta, Georgia. The meeting will begin with a discussion of, and voting on, the matters described in the attached Notice of Annual Meeting of Stockholders and Proxy Statement, followed by my report on our company’scompany's financial performance and operations.officers, andofficers. It also informs you of steps we are taking to fulfill our responsibilities to you as a stockholder. We alsoIn addition, we use the Proxy Statement to discuss the proposals that require your vote and to solicit your vote, to the extent that you cannotdo not attend the Annual Meeting in person.more important to us than ever. The proposals included in the Proxy Statement are different than those included in prior years, and your. Your broker cannot vote on allcertain of the proposals without your instruction. If you do not plan to attend the Annual Meeting in person, pleasePlease inform us, or your broker, as to how you would like us to vote your shares on the proposals set forth in the Proxy Statement.The Proxy Statement includes a description of each proposal. Our board of directors recommends that stockholders vote “FOR” proposals 1, 2 and 4, and vote“FOR”if you do not plan to attend the annual “Say-When-on-Pay” option on proposal 3. Proposals 2 and 3 are new votes that apply to certain U.S. public companies holding stockholders meetings after January 20, 2011, so our company will be one of the first to solicit votes for these proposals. Please read each proposal carefully, study the recommendations of the board of directors and its committees, and vote promptly.Annual Meeting in person.YOUR VOTE IS MORE IMPORTANT THAN EVER.PLEASE REVIEW THE ATTACHED MATERIALS AND SUBMIT YOUR VOTE PROMPTLY USING THE INTERNET, BY TELEPHONE OR BY MAIL.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
www.proxyvote.com (for beneficial holders) and www.proxyvoting.com/mwa (for registered holders). directors REGORY E. HYLAND 14, 201126, 201125, 2012(“Mueller Water Products” or the(the “Company”), will be held at 10:00 A.M., local time, on Wednesday, January 26, 201125, 2012 at the Grand Hyatt Atlanta inInterContinental Buckhead 3300hotel, 3315 Peachtree Road, N.E., Atlanta, Georgia, 30305,30326, for the following purposes:1. to elect, as members of the board of directors to serve for the ensuing year, the 11 nominees named in the attached Proxy Statement;2. to hold an advisory vote on executive compensation (the “Say-on-Pay” vote);compensation;3. to holdapprove an advisory voteamendment to determine stockholder preferences on whether future Say-on-Pay votes should occur every one, two or three years;the Amended and Restated 2006 Stock Incentive Plan;4. to ratify the appointment of Ernst & Young LLP as the Company’sCompany's independent registered public accounting firm for fiscal 2011;2012; and5. to transact such other business as may properly come before the Annual Meeting and any adjournments thereof. the Company’s common stock at the close of business on November 29, 2010,28, 2011, the record date for voting at the Annual Meeting, are entitled to notice of and to vote at the Annual Meeting or any adjournments thereof.StockholderAnnual Meeting: the Proxy Statement and the annual report are available atwww.proxyvote.com.pleased to taketaking advantage of the Securities and Exchange Commission rulerules allowing companies to furnish proxy materials to stockholders over the Internet. The Company believes that this e-proxy“e-proxy” process expedites stockholders’stockholders' receipt of proxy materials, while also lowering the costs and reducing the environmental impact of the Annual Meeting. We anticipate that a Notice of Internet Availability of Proxy Materials containing instructions on how to access the Proxy Statement and the annual report and how to vote over the Internet or how to request and return a proxy card by mail will first be mailed to our stockholders on or before December 17, 2010.16, 2011. Please refer to the Notice of Internet Availability of Proxy Materials, proxy materials email or proxy card you received for information on how to vote your shares and to ensure that your shares will be represented and voted at the Annual Meeting even if you cannot attend.Orderorder of the Boardboard of DirectorsROBERT BARKERG15, 2010 Page 1 771314 16 171718192020212325262626 26 272729353536404949 50505151565859606060 6366666666666769Page 70 71 7272 72 73 757575 757676 76EXHIBIT A: AMENDED AND RESTATED 2006 STOCK INCENTIVE PLAN Please note that attendance at the Annual Meeting will be limited to stockholders of Mueller Water Products, Inc. as of the record date (or their authorized representatives). You will be required to provide the admission ticket that is detachable from your proxy card or other evidence of ownership. If your shares are held by a bank or broker, please bring to the meeting your bank or broker statement evidencing your beneficial ownership of the Company’s stock as of the record date to gain admission to the meeting. as of the record date (or their authorized representatives). You will be required to provide the admission ticket that is detachable from your proxy card or other evidence of ownership. If your shares are held by a bank or broker, please bring to the meeting your bank or broker statement evidencing your beneficial ownership of the Company’s stock as of the record date to gain admission to the meeting.1200 Abernathy Road, N.E.Suite 1200Atlanta, Georgia 30328
PROXY STATEMENT
The Company(the “Company”) is furnishing this Proxy Statement in connection with the solicitation by the board of directors (the “Board”) of Mueller Water Products, Inc. (“Mueller Water Products” or the “Company”)Company of proxies for its 2012 annual meeting of stockholders and any adjournments of the meeting (the “Annual Meeting”) for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held on Wednesday, January 26, 201125, 2012 at 10:00 A.M. local time, at the Grand Hyatt Atlanta inInterContinental Buckhead 3300hotel, 3315 Peachtree Road, N.E., Atlanta, Georgia 30305.
30326.
Hart.
The election |
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Your proxy will give the members of the 11 director nominees named in the Proxy Committee the authority toStatement (Proposal 1);
Restated 2006 Stock Incentive Plan to increase the number of shares reserved for issuance under the plan by 4,500,000 shares (Proposal 3); and
Approval of this
There will be no approval or adoption of a resolution or proposal relatingAmendment to the Say-When-on-Pay Vote; rather, the Board will consider the results of the voteAmended and other relevant information in establishing the Company’s policy on the frequency of future Say-on-Pay votes.
Proposal 4: Ratification of the Appointment of the Independent Registered Public Accounting Firm
Approval of thisRestated 2006 Stock Incentive Plan
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the prepaid and addressed envelope enclosed therewith; or by attending |
Even if you plan to attend the Annual Meeting weand voting in person.
proxy even if you plan to attend the Annual Meeting.
If you
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are entitled to vote.
shares owned only through an employee stock purchase plan. If you hold shares of common stockCommon Stock through the Mueller Water Products Employee Stock Purchase Plan or the Walter Energy Employee Stock Purchase Plan, then your vote must be received by 11:59 p.m.P.M. Eastern time on January 23, 2011,24, 2012, unless you vote in person at the Annual Meeting.
the solicitation of proxies, including the solicitation of proxies from brokerage firms, banks, nominees, custodians and fiduciaries, for a fee not anticipated to exceed $7,000$6,300 plus expenses. Your cooperation in promptly voting by proxy via the medium of your choice will help to avoid additional expense.
Important Notice Regarding the Availability
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on January 25, 2012: |
The Proxy Statement and the Company’s annual report are available atwww.muellerwaterproducts.comorwww.proxyvote.com (for beneficial holders) or www.proxyvoting.com/mwa (for registered holders). |
Name | Age | Served as Director of the Company From | ||||||
Donald N. Boyce | 72 | 2006 | ||||||
Howard L. Clark, Jr. | 66 | 2006 | ||||||
Shirley C. Franklin | 65 | 2010 | ||||||
Gregory E. Hyland | 59 | 2005 | ||||||
Jerry W. Kolb | 74 | 2006 | ||||||
Joseph B. Leonard | 67 | 2006 | ||||||
Mark J. O’Brien | 67 | 2006 | ||||||
Bernard G. Rethore | 69 | 2006 | ||||||
Neil A. Springer | 72 | 2006 | ||||||
Lydia W. Thomas | 66 | 2008 | ||||||
Michael T. Tokarz | 61 | 2006 |
Name | Age | Served as Director of the Company Since |
Howard L. Clark, Jr. | 67 | 2006 |
Shirley C. Franklin | 66 | 2010 |
Thomas J. Hansen | 62 | 2011 |
Gregory E. Hyland | 60 | 2005 |
Jerry W. Kolb | 75 | 2006 |
Joseph B. Leonard | 68 | 2006 |
Mark J. O’Brien | 68 | 2006 |
Bernard G. Rethore | 70 | 2006 |
Neil A. Springer | 73 | 2006 |
Lydia W. Thomas | 67 | 2008 |
Michael T. Tokarz | 62 | 2006 |
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![]() | Howard L. Clark, Jr. is the Lead Director of the Board and has been a member of the Board since April 2006. He has been a director of Walter Energy, Inc. (“Walter Energy”, formerly Walter Industries, Inc.), a homebuilding, financial services and natural resources company, since March 1995. Mr. Clark Mr. Clark brings general management expertise, financial expertise, M&A experience, strategic planning expertise, corporate governance expertise, marketing expertise, international business experience and government and regulatory affairs experience. In particular, the Board considered his significant current and past experience serving in senior management positions in the investment banking and capital markets industries, and his valuable knowledge of executive management and corporate governance matters provided by his public company directorships and his career with and knowledge regarding major multinational investment banking and financial services corporations. |
![]() | Shirley C. Franklin has been a member of | |
Ms. Franklin brings general management expertise, strategic planning expertise, marketing expertise and governmental and regulatory affairs experience. Ms. Franklin’s record of civic involvement and professional experience has spanned three decades, including her service as mayor of Atlanta, during which time she |
![]() ![]() | Thomas J. Hansen has been a member of the Board since October 2011. Mr. Hansen is Vice Chairman of Illinois Tool Works Inc. (“ITW”), a manufacturer of fasteners and components, consumable systems and a variety of specialty products and equipment. Mr. Hansen joined ITW in 1980 as sales and marketing manager of the Shakeproof Industrial Products businesses. From 1998 until May 2006, he served as Executive Vice President of ITW. Mr. Hansen is a member of the Northern Illinois University Executive Club, a member of the Economics Club of Chicago, Chairman of The ITW Better Government Council, and a former member of the Board of Trustees of MAPI (Manufacturers Alliance). Mr. Hansen is a director of Terex Corporation, a diversified global manufacturer of a variety of machinery products. From 2005 through 2008, he served as director of CDW Corporation. Mr. Hansen brings general management expertise, multiple-part manufacturing and operations experience, M&A experience, strategic planning expertise, corporate governance expertise, marketing expertise and international business experience. He is a senior executive of a large diversified industrial manufacturing company that faces many of the current economic, social and governance issues that the Company faces. | |
![]() | Gregory E. Hyland has served as Chairman of the Board since October 2005 and as President and Chief Executive Officer since January 2006. Mr. Hyland served as Chairman, President and Chief Executive Officer of Walter Energy from September 2005 until December 2006. Prior to that time, Mr. Hyland served as President, U.S. Fleet Management Solutions of Ryder System, Inc., a transportation and logistics company, from June 2005 to September 2005. He served as Executive Vice President, U.S. Fleet Management Solutions of Ryder System from October 2004 to June 2005. Mr. Hyland is a director of Ferro Corporation, a global supplier of technology-based performance materials for manufacturers. Mr. Hyland brings general management expertise, financial expertise, M&A experience, strategic planning expertise, corporate governance expertise, international business experience and government and regulatory affairs experience from his past and current positions in both management and on the boards of directors of each of Walter Energy, Ryder System and Ferro. |
![]() | Jerry W. Kolb has been a member of the Board since April 2006. He has been a director of Walter Energy since June 2003. Mr. Kolb previously served as a Vice Chairman of Deloitte & Touche LLP, a registered public accounting firm, from 1986 to 1998. Mr. Kolb brings general management expertise, financial expertise, M&A experience, strategic planning expertise, corporate governance expertise and international business experience. In particular, the Board considered his broad perspective in accounting and financial reporting matters and his extensive experience in audit, finance, compensation matters and executive management based on his 41-year career with Deloitte & Touche LLP. | ||
![]() | Joseph B. Leonard has been a member of the Board since April 2006. He was a director of Walter Energy from June 2005 to April 2007 and he rejoined that board in February 2009. Mr. Leonard brings general management expertise, financial expertise, multiple-part manufacturing and operations experience, M&A experience, strategic planning expertise, corporate governance expertise, offshore sourcing expertise, marketing expertise, international business experience and government and regulatory affairs experience. In particular, the Board considered his significant experience in executive management, operations, marketing and public affairs based on his career with major corporations. |
![]() | Mark J. Mr. O’Brien brings general management expertise, financial expertise, M&A experience, strategic planning expertise, corporate governance expertise, marketing expertise, international business experience and government and regulatory affairs experience. Mr. O’Brien also brings significant expertise in capital markets, municipal finance and the real estate market. In particular, the Board considered his knowledge of the capital markets and municipal finance and knowledge of the homebuilding and real estate sectors of the economy. |
![]() | Bernard G. Rethore has been a member of the Board since April 2006. He has been a director of Walter Energy since March 2002. He has been Chairman Emeritus of Flowserve Corporation, a manufacturer of pumps, valves, seals and components, since April 2000. From January 2000 to April 2000, he served as Mr. Rethore brings general management expertise, financial expertise, multiple-part manufacturing and operations experience, M&A experience, strategic planning expertise, corporate governance expertise and international business experience. In particular, the Board considered his more than 30 years of experience at senior executive level positions with public manufacturing companies and his service on the boards of other public companies as a member of their audit committees and compensation committees. Mr. Rethore’s extensive management experience makes him a valuable contributor to the Board on matters involving business strategy, capital allocation and M&A opportunities. |
![]() | Neil A. Springer has been a member of the Board since April 2006. He was a director of Walter Energy from August 2000 to April 2006. Mr. Springer has been managing director of Springer & Associates, LCC, a board consulting and executive recruitment company, since 1994. Mr. Springer Mr. Springer brings general management expertise, financial expertise, multiple-part manufacturing and operations experience, strategic planning expertise, corporate governance expertise and marketing expertise. In particular, the Board considered his more than 50 years of commercial experience and his entrepreneurial and business leadership skills. His executive experience, board memberships and his company, Springer & Associates, which focuses on board consulting, have provided Mr. Springer with substantial training in corporate governance and executive compensation and knowledge of financial reporting. | |
![]() | Lydia W. Thomashas been a member of the Board since January 2008. She served as President and Chief Executive Officer of Noblis, Inc., a public interest scientific research, technology and strategy company, from 1996 to September 2007. She was previously with The MITRE Corporation, Center for Environment, Resources and Space, serving as Senior Vice President and General Manager from 1992 to 1996, Vice President from 1989 to 1992 and Technical Director from 1982 to 1989. She Ms. Thomas brings general management expertise, M&A experience, strategic planning expertise, corporate governance expertise and government and regulatory affairs experience. In particular, the Board considered her extensive experience at senior executive level positions and her particular expertise related to information technology and environmental, health and safety matters. |
![]() | Michael T. Tokarz has been a member of the Board since April 2006. He has served as non-executive Chairman |
Mr. Tokarz brings general management expertise, financial expertise, multiple-part manufacturing and operations experience, M&A experience, strategic planning expertise, corporate governance expertise, offshore sourcing expertise, marketing expertise, international business experience and government and regulatory affairs experience. In particular, the Board considered his knowledge and experience in banking and finance, his entrepreneurial and business leadership skills, his more than 20 years of board experience with publicly traded companies and his corporate governance training. |
We believe that thestockholders.
As set forth in the Compensation Discussion and Analysis, the
“
TIMING OF ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-WHEN-ON-PAY”)
WeStock Plan. Determinations of the Compensation Committee are providing our stockholdersfinal, binding and conclusive.
The Board recognized that our Company’s Annual Meetingqualify as “performance-based compensation” under Section 162(m) will be based on one or more of the first annual meetings to consider the Say-When-on-Pay votefollowing criteria: consolidated earnings (before or after taxes); net income; operating income; earnings per share; book value per share; return on stockholders' equity; expense management; return on investment; improvements in capital structure; profitability of an identifiable business unit or product; maintenance or improvement of profit margins; stock price; market share; improvement in revenues or sales; costs and/or cost reductions or savings; cash flow; working capital; return on invested capital or assets; consummation of acquisitions or sales of certain assets, subsidiaries or other businesses; and therefore considered its recommendation over several meetings. On the one hand, the Board recognizes the importance of receiving regular inputfunds from our stockholders on important issues,operations. Any such as our compensation policiesperformance goals must be objective and procedures. The Board also believes that a well-structured compensation program should include plans that drive the creation of stockholder value over the long term and do not simply focus on short-term gains. Because of that, the Board believes that any annual advisory vote will be more limited in value than a vote which reflects the long-term executive compensation philosophy ofapproved by the Compensation Committee andin a manner consistent with Section 162(m). The foregoing criteria may relate to the long-term resultsCompany, one or more of its actions. Moreover, many elementssubsidiaries, or one or more of compensation are structured overits divisions or units, or a multi-year period, disclosure is made to cover several years,combination of the foregoing, and some proxy advisory firms review total shareholder returns over multi-year periods. Also, equity awards to management are granted to compensate management over at least a three-year period.
On the other hand, the Board recognizes that even if the effectiveness of these plans cannotmay be adequately evaluatedapplied on an annualabsolute basis many stockholders may wantor be relative to express a preference in a single year based on a multi-year review. At present, an annual Say-on-Pay vote may represent the most effective means for some of our stockholders to express meaningful input on executive compensation. Until there is greater certainty and precedent relating to the frequency of a Say-on-Pay vote, the Board determined that an annual Say-on-Pay vote would best express its commitment to take steps to align the compensation of its executives with the interests of the Company’s stockholders. The Board’s determination was further based on the premise that this recommendation could be modified in future years if it becomes apparent that an annual Say-on-Pay vote is not meaningful, is burdensomeone or is more frequent than recommended by best corporate governance practices. Based on these factors, our Board determined to recommend that future Say-on-Pay votes occur each year until the next Say-When-on-Pay vote.
The Say-When-on-Pay vote is expressed through a vote on the following resolution:
“RESOLVED, that a non-binding advisory vote of the stockholders of Mueller Water Products, Inc. (the “Company”) to approve, on an advisory basis, the compensation of the Company’s named executive officers,peer group company or indices, all as disclosed pursuant to the disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, be held at an Annual Meeting of the Stockholders, beginning with the 2011 Annual Meeting of the Stockholders, (1) every one year, (2) every two years or (3) every three years.”
As noted above, the Board recommends a one-year frequency on the Say-When-on-Pay vote. The enclosed proxy card gives you four choices: you can choose whether the Say-on-Pay vote should be conducted every one year, every two years or every three years, or you can abstain.
This vote is an advisory vote and is therefore not binding on the Company or the Board. But the Board and the Compensation Committee shall determine.
be adoptedStock Plan is approved by the Board onstockholders. On September 30, 2011, the frequencyclosing price of future Say-on-Pay votes. The Board may decide that it is inCommon Stock was $2.48.
votes cast.
members.
environment,its end markets, the Board believes that having one leader serve as both Chairman of the Board and Chief Executive Officer provides decisive and effective leadership. The Board also believes that this leadership structure, when combined with the Company’sCompany's other governance policies and procedures, provides appropriate opportunities for oversight, discussion and evaluation of decisions and direction of the Board.
In connection with this process, which included a review of the structure and components of each of our incentive plans and compensation policies and practices at our business units, Company management identified two incentive plans (in which Company senior management does not participate) that did not limit the maximums payable under those plans. Even though those plans have historically resulted in de minimis levels of payments, the Compensation Committee instructed the Company management to ensure that all incentive compensation programs include appropriate maximum levels and Company management has since capped payout levels for these plans.
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using multiple performance measures in annual incentive awards; capping payout levels for annual bonuses; maintaining a performance/payout curve that is linear, with no break-points; using both stock options and restricted stock units as long-term incentive vehicles; using 10-year stock options and requiring equity awards to generally vest over at least a three-year period, except in the case of death, disability or retirement; maintaining change-in-control severance arrangements |
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The Compensation Committee has established policies and practices that it believes will reduce the likelihood that risks arising from our compensation policies would be reasonably likely to have a material adverse effect on the Company as a whole. By adopting the 2010 Management Incentive Plan (the “Management Incentive Plan”) as a uniform plan applicable to all executivessenior executives;
financial factors.
During parts of fiscal 2010,
In October 2011, the Board determined that Mr. Leonard was independent.
management with respect to outside affiliations, the Board has determined that none of the other directors (other than Mr. Hyland) has a material relationship with the Company other than through his or her role as director, and, except as set forth above, each is independent because:
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additional standards for audit committee members of publicly traded companies required by the Sarbanes-Oxley Act of 2002. Members of the Compensation Committee meet the additional standards applicable to “outside directors” under Section 162(m) of the Internal Revenue Code and qualify as “non-employee directors” as defined in Rule 16b-3 under the Exchange Act.
Manual in the 12 months ended December 31, 2008. Mr. Leonard did not serve on any committee while he was not an independent director. In October 2011, the Board determined that Mr. Leonard was independent.
The Board has determined that the Audit Committee, the Compensation Committee, and the Nominating Committee consist entirely of independent directors under the rules established by the New York Stock Exchange and, as applicable, the SEC.
Name | Audit | Compensation | Nominating | EHS | Executive | |||||
Howard L. Clark, Jr. | Chair | X | X | |||||||
Shirley C. Franklin | X | X | ||||||||
Thomas J. Hansen | X | X | ||||||||
Gregory E. Hyland | Chair | |||||||||
Jerry W. Kolb | X | X | ||||||||
Joseph B. Leonard * | Chair | |||||||||
Mark J. O’Brien | X | X | ||||||||
Bernard G. Rethore | X | X | Chair | |||||||
Neil A. Springer | Chair | X | ||||||||
Lydia W. Thomas | X | X | ||||||||
Michael T. Tokarz | X | X | X | |||||||
Number of fiscal 2011 meetings | 12 | 5 | 4 | 4 | — |
Name | Audit | Compensation | Nominating | EHS | Executive | |||||
Donald N. Boyce | Chair | X | X | |||||||
Howard L. Clark, Jr. | Chair | X | Lead Director | |||||||
Gregory E. Hyland | Chair | |||||||||
Jerry W. Kolb | X | X | ||||||||
Joseph B. Leonard | ||||||||||
Mark J. O’Brien | X | |||||||||
Bernard G. Rethore | X | X | Chair | |||||||
Neil A. Springer | Chair | X | ||||||||
Lydia W. Thomas | X | X | ||||||||
Michael T. Tokarz | X | X | X | |||||||
Number of fiscal 2010 meetings | 11 | 6 | 5 | 3 | 0 |
October 2011 after having determined that he was independent.
Board.
SEC.
Environmental,
The Executive Committee has and may exercise, during the intervals between meetings of the Board, all the powers and authority vested in the Board, except the following: (a) the power or authority to amend the Company’s Certificate of Incorporation; (b) the power or authority to amend the Company’s Bylaws; (c) the power or authority to adopt an agreement of merger; (d) the power or authority to exchange, consolidate, sell, lease, pledge or exchange all or substantially all of the Company’s assets; (e) the power or authority to adopt or revoke a plan of dissolution; (f) the power or authority delegated to any other Committee of the Board; and (g) such other powers or authority as are restricted in the Delaware General Corporation Law or the Company’s Bylaws.
Other Committees
The Board established a Finance Committee and a Pricing Committee, each consisting of Messrs. Boyce, Clark and Tokarz. The Finance Committee reviewed and approved documents relating to the Company’s financial restructuring that was completed in August 2010. The Pricing Committee reviewed and approved the terms of the senior unsecured notes that were issued by the Company in August 2010. Members were not paid any fees for serving on either committee.
In order
in October 2011.
of the stockholders. In reviewing a candidate, the Nominating Committee considers the candidate's integrity of the candidate and whether the candidate would be independent,independence, as defined in the Corporate Governance Guidelines and in the Listed Company Manual. The Nominating Committee expects a high level of involvement from its directors and reviews, if applicable, a candidate’scandidate's service on other boards to assess whether the candidate has sufficient time to devote to Board duties.
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Any
Directors” for a description of the procedures a stockholder is required to follow to nominate a director.
Directors are expected to attend annual meetings of the stockholders of the Company. All of the directors except Mr. Tokarz,at that time attended the annual meeting of stockholders held on January 28, 2010.
26, 2011.
The Compensation Committee consists of Messrs. Boyce, Kolb, Rethore and Springer.
Company.
Donald N. Boyce,
Introduction | Rewarding Performance: Compensation Elements | |||
Executive Summary | Base Salary | |||
Overview | Annual Cash Incentive Awards | |||
Our Business in Fiscal 2011 | Long-Term Equity-Based Compensation | |||
Compensation Philosophy | Retirement Benefits | |||
Compensation Elements | Other Benefits | |||
Total Compensation | Departure of Robert G. Leggett | |||
Risk and Incentive Compensation | Income Tax Consequences of Executive Compensation | |||
Role of Management in Compensation Decisions . | Compensation Recovery (“Clawback”) Policy | |||
Role of Compensation Consultant in Compensation Decisions | Anti-Hedging Policy | |||
Factors Considered by the Compensation Committee | Stock Ownership Guidelines | |||
Peer Group Benchmarking | ||||
Tally Sheets | ||||
Wealth Accumulation Review | ||||
2011 Say-on-Pay Vote Results |
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Economic conditions did not fully recover in fiscal 2010 from their rapid deterioration in the prior year period, negatively affecting our results. Our net sales in fiscal 2010 were $1.338 billion, compared to $1.428 billion in the prior year and $1.859 billion in the year ended September 30, 2008.2010 ("fiscal 2010").
economic downturn. Our primary end markets in fiscal 20102011 were the installation, repair and replacement of municipal water distribution and treatment systems, non-residential construction and new water and wastewater infrastructure. The impact of the overall weakness of the U.S. economy on these end markets continued to adversely affect our operations and results in fiscal 2010.
in recent years:
attractive rates. Execution of this program resulted in a significant improvement to our balance sheet during fiscal 2010.reduce costs. The following chart sets forth certainsummary offers additional details concerning these operational and financial achievementsachievements.
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ReducedContents
Position
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Completed Debt Refinancing
In August 2010, the Company sold aggregate principal amount of $225 million of 8 3/4 senior unsecured notes due 2020 and entered into a five-year $275 million asset-based credit agreement. Concurrently with these transactions, the Company terminated its 2007 credit agreement and repaid all amounts outstanding thereunder, which otherwise would have been payable primarily in 2012 and 2014. The Company has no significant required debt principal payments until 2015 and believes that the new capital structure allows for greater operational flexibility at attractive interest rates.
Disposed of Non-Core Assets
Maintaining non-core assets can be an inefficient use of a company’s resources. In November 2009, the Company sold certain of the assets of Anvil’s former electrical fittings business and recognized a pre-tax gain of $1.6 million. In January 2010, the Company sold Anvil’s Canadian wholesale distribution business and recognized a pre-tax gain of $2.8 million. While these divestitures removed non-core assets from the Company, they also reduced the amount of net sales to be recognized at Anvil going forward.
Robert G. Leggett”.
On August 2, 2010, Mr. Raymond Torok agreed, in connection with his upcoming retirement, to serve as Chairman of U.S. Pipe until September 30, 2010 and as acting President of U.S. Pipe until August 9, 2010, when his successor, Paul T. Ciolino, was appointed President of U.S. Pipe. Pursuant to his amended employment agreement, Mr. Torok accepted a position as Senior Executive with Mueller Water Products, Inc. from October 1, 2010 through September 30, 2011.
The NEOs include our CEO, CFO and the three other most highly compensated executive officers who were serving as executive officers at September 30, 2010. Additionally, we include information concerning Mr. Torok who served as an executive officer during fiscal 2010 but ceased to be an executive officer prior to year end, Mr. Torok will continue to work for the Company for fiscal 2011. The NEOs in fiscal 2010 are as follows:
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Company. The Compensation Committee own effort. of 2011. The Company does not believe that the work of the Compensation Consultant has raised any conflict of interest. Company, the lower price of Common Stock and to avoid greater consumption of the share pool associated with the Amended and Restated 2006 Stock Incentive Plan (the “Stock Plan”). revenue size of the Company as a whole and for each separate business unit. Allegheny Technologies Incorporated Ametek, Inc. Armstrong World Industries, Inc. Donaldson Company, Inc. EnPro Industries, Inc. Flowserve Corporation FMC Technologies Graco Inc. IDEX Corporation Lennox International Inc. Mueller Industries, Inc. Otter Tail Corporation Pentair, Inc. Quanex Building Products Corporation Robbins & Myers, Inc Roper Industries, Inc. Watts Water Technologies, Inc. Worthington Industries, Inc. in recent years. management's interests are aligned with the long-term interests of the Company and its stockholders. Committee carefully reviewed these results. The Compensation Committee described below. Mr. Hyland Mr. Hart Mr. Leggett Mr. Rogowski Mr. Fish Mr. Torok Merit-based increases in base salary were made for each NEO in fiscal 2011. participants. remove primarily restructuring charges). Results Required to Achieve Bonus (in millions) 2010 Actual (millions) 2010 Payout (% of Gregory E. Hyland, Evan L. Hart and Robert G. Leggett Adjusted Net Income (Loss) Cash Flow Gregory S. Rogowski Adjusted Income (Loss) from Operations Capital as a Percent of Net Sales Thomas E. Fish from Operations Capital as a Percent of Net Sales Raymond P. Torok Adjusted Income (Loss) from Operations reviewed subjectively. The percent achievement of individual goals is determined by the Gregory E. Hyland Evan L. Hart Robert G. Leggett Gregory E. Rogowski Thomas E. Fish Raymond P. Torok fiscal 2011: Stock Option “In the Money” Value Restricted Stock Unit Change in Price Grant Date November 29, 2006 November 29, 2007 December 2, 2008 December 1, 2009 2011. The table below summarizes information related to our primary annual grant dates. Plan in fiscal 2011. through September 16, 2010, with an amount equal to 10% of Mr. Club membership benefits ceased on December 31, 2010. Table.” Change-in-Control.” possible for stockholders should the Company be acquired in the future, despite the risk of losing employment and potentially not having the opportunity to otherwise vest in equity awards. The agreement. Messrs. Hart, Leggett and Rogowski participated in the ESPP in fiscal 2011. the Company's chief executive officer for a period of six months and receives $150,000 for his consulting services. programs, even though such programs may result in certain non-deductible compensation expenses. The Compensation Committee expects to adopt changes to Position/Title Salary ($) Bonus ($) Stock Awards ($)(1) Option Awards ($)(2) Non-Equity Incentive Plan Compensation ($) Change in ($) All Other Compensation ($) Gregory E. Hyland Chairman, President and Chief Executive Officer Evan L. Hart (3) Senior Vice President and Chief Financial Officer Robert G. Leggett (4) Executive Vice President and Chief Operating Officer Gregory S. Rogowski (5) President, Mueller Co. Thomas E. Fish President, Anvil International Raymond P. Torok President, U.S. PipeCompany’s executives:—Seek to Align Executives’ and Stockholders’ Interests — Executives’ interests are more directly aligned with the interests of our stockholders when compensation programs: (1) aresignificantly impacted by the value of our common stock; (2) require significant ownership of our common stock;interests of our stockholders when compensation programs: (1) are significantly impacted by the value of Common Stock; (2) require significant ownership of Common Stock; and (3) emphasize both short- and long-term financial performance. A significant portion of the compensation for NEOs is comprised of long-term equity awards and the Compensation Committee has adopted stock ownership guidelines to ensure that the executives do not sell their common stock resulting from equity awards until each holds a specified multiple of base salary in Company common stock. In 2010, the stock ownership guidelines were modified to require the Chief Executive Officer to hold six times his base salary in Company common stock.—Seek to Set Executive Compensation at a Level that is Competitive — To attract qualified executives, motivate performance and retain executives with the abilities and skills needed to build long-term stockholder value, total compensation should be competitive and should reflect the value of comparable positions in the market and within the Company. The Compensation Committee also reviews wealth accumulation data for NEOs.—Seek to Motivate Achievement of Financial and Strategic Goals — A significant portion of an executive’s overall compensation depends on the achievement of short- and long-term financial goals and strategic objectives. Additionally, the portion of an executive’s total compensation that varies with performance is a function of the executive’s responsibilities and ability to influence results, and is tied to strategic goals determined at the beginning of each fiscal year.—Seek to Reward Superior Performance — While the total compensation for an executive should be both competitive and tied to achievement of financial goals and strategic objectives, we seek to ensure that performance that exceeds targets is rewarded with above target compensation and that rewards are less than target when performance does not meet targeted expectations.—Administer the Compensation Program Consistently and Fairly — We believe that consistency is important in an approach to executive compensation, and that it is important not to significantly vary the approach over time. We also believe, however, that a consistent approach must be monitored to ensure that market forces or compensation structures do not reward managers for excessive risk taking, do not unduly punish managers for the effect of market forces beyond their control, and do not reward managers for achievements due to factors other than their own effort.In 2009, the Compensation Committee took actionshas adopted stock ownership guidelines that prohibit executives from selling Common Stock acquired through equity awards or open market purchases until specified ownership levels have been met.align compensationSet Executive Compensation at a Level that is Competitive - To attract qualified executives, motivate performance and retain executives with our Peer Groupthe abilities and appropriately adjusted compensation, but alsoskills needed to compensate executives for individual efforts that promotedbuild long-term stockholder value. In fiscal 2010,value, total compensation should be competitive and should reflect the Compensation Committee determined to maintainvalue of comparableconsistency ofmarket and within the structural components of the compensation program to provide management with consistent and directed goals. Also in fiscal 2010, our stockholders approved the Management Incentive Plan, which was designed to provide consistent mechanisms for determining incentive compensation to all executives and employees at our corporate office and business units, and to provide greater clarity around the exact terms and amounts of any incentive grant.has recognizedalso reviews wealth accumulation data for NEOs.resultfunction of the decreaseexecutive's responsibilities and ability to influence results.our marketsan approach to executive compensation. As such, it is important not to significantly vary the approach over time. A consistent approach must be monitored to ensure that market forces or compensation structures do not reward managers for excessive risk taking, do not unduly punish managers for the effect of market forces beyond their control, and stock price in the past few years, NEOs anddo not reward managers for achievements due to factors other employees who receive stock-based compensation have received significantly less in terms of actual compensation and long-term wealth creation from the levels of compensation intended when the grants were made, despitethan their effective performance under difficult market conditions.Compensation Committee reviews and approves the following elements of compensation for executives:percentage data presented below relates to fiscal 2011.Compensation Element Objective Behavioral Focus Base salary —Provides fixed compensation to the executive—Target represents approximately 25.3%31.8% of the total direct compensation for the Chief Executive Officer and approximately 32.4%39.1% of total direct compensation for other NEOs —Most directly comparable component of compensation to measure against Peer Group; rewards experience and individual performance—Not at riskAnnual cash incentive awards —Provides at-risk variable pay for annual performance—Target represents approximately 25.3%32.1% of the total direct compensation for the Chief Executive Officer and approximately 26.6%29.4% of total direct compensation for other NEOs—Paid in cash —Rewards individual performance based on operational results for business segment or total Company performance, as well as individual performance—At risk, depending on satisfaction of overall Company, segment and individual goalsLong-term equity awards —Provides at-risk variable pay over a number of years—Target represents approximately 49.4%36.1% of the total direct compensation for the Chief Executive Officer and approximately 41.0%31.5% of total direct compensation for other NEOs—For fiscal 2010, 50%2011, long-term awards were granted equivalent in number to those granted in the prior year, but with significantly lower valuesthe value was provided in nonqualified stock options and 50% of the value was provided in restricted stock unitsCommon Stock —Rewards overall Company performance—Aligns the interests of executives with those of stockholders—At risk, based on stock priceEmployee benefits —Promotes health and well-being of employees, including executives—401(k) retirement benefits encourage saving —Annual indirect compensation—Not at riskPerquisites —Promotes health and provides financial, legal, tax insurance and relocationexecutive long term disability assistance for executives and opportunities for reasonable business entertainment —Annual entitlements—Not at risk20102011 compensation, including the percentage of fiscal 20102011 direct compensation that was at risk. The amounts and percentages are based on the fiscal 20102011 target levels for each element at the time of approval. executive’sexecutive's total compensation may be within, below or above the target range for that position. The Compensation Committee regularly reviewsConsultant used a market regression analysis to size-adjust the total compensationmarket data for the revenue size of the Company as a whole and for each executive and compares it to the total compensation of comparable executives in the Peer Group. The Compensation Committee regularly discusses the comparable total compensation data from its Peer Group with Meridian Compensation Partners, LLC, the Company’s independent compensation consultant, based on data collected by it.separate business unit.Company’sCompany's executive compensation program, we believethe Compensation Committee believes it is important to ensure that such incentives do not result in actions that may conflict with the long-term best interests of the Company or its stockholders. The Company believesWe believe that the base salaries of the NEOs, reviewed against similar salaries at peerPeer Group companies, are a sufficient component of total compensation to discourage excessive risk taking. Annual cash incentive bonuses are capped at 200% of the applicable target.plansplan based uponon budgeted performance levels included in pre-approved operating plans that are pre-approved, reviewed and carefully monitored and approved by the Compensation Committee and the Board. The Compensation Committee approves financial or operational targets that it and management believe can be achieved without the need to take inappropriate risks or make material changes to the Company’s businessour businesses or strategy but that, if achieved, are likely to improve theour financial performance of the Company. performance.the Company’s stockour Common Stock price. ExecutivesCompany policy generally cannot sellprohibits executives from selling shares acquired through equity awards or open market purchases until specified ownership levels have been met.We use, to encourage the efficient usethe Company’sour resources. The Compensation Committee annually considers revisions to the metrics used, and reviews progress against them during the year to ensure thatalign incentive compensation is aligned with stockholder interests.We believe for financial targets, together with carefully determined thresholds and maximums makes it unlikely that the risk to the Companyus will be increased in any material way. The targets used in establishing personal incentive goals are intended to benefit the Company and are not reasonably likely to increase material risk to the Company over a longer period of time. We believeCompany. The Compensation Committee believes that having a significant amount of incentive compensation that vests over an extended period, as well asthree years and “clawback”may also discourage unnecessary or excessive risk taking.thatintended to closely align performance targets of the business units and the Company with the strategic goals of the Company. The Compensation Committee and the Chief Executive Officer also discuss the individual goals and desired initiatives for each executive to determine which goals should be used and the extent to which performance targets for the previous year have been achieved.itsthe Compensation Consultant and uses that information as a reference point for the components of compensation. The Chief Executive Officer provides input on and makes recommendations to the Compensation Committee for executives other than himself with respect to annual salary adjustments, annual incentive adjustments and grants of equity awards under ourthe Company's incentive plans. The Compensation Committee approves or modifies the compensation of these executives taking into consideration the Chief Executive Officer’sOfficer's input and recommendations.Officer’sOfficer's performance and subsequently recommends his compensation level to the Board. The Board discusses and approves the annual salary of the Chief Executive Officer. The Chairman of the Compensation Committee and another Compensation Committee member designated by the Chairman meet with the Chief Executive Officer to discuss the Chief Executive Officer’sOfficer's performance and compensation based on evaluations received from the Board. These discussions are considered by the Compensation Committee in setting all elements of the compensation for the Chief Executive Officer.2010,2011, the Chief Executive Officer was present at all of the Compensation Committee meetings, but was excused from the executive sessions of the Compensation Committee and did not participate in meetings or deliberations when his own compensation was discussed.Under its Charter, thean independent compensation consultant,the Compensation Consultant, including approving the consultant’sauthority to approve fees and retention terms. The consultantCompensation Consultant may not have any other relationship with the Company or management without the prior written approval of the Compensation Committee. For the past four years, theThe Compensation Committee selected Hewitt Associates, LLC (“Hewitt”) as its compensation consultant. In February 2010, in order to ensure the independence of its compensation practice, Hewitt separated its employees engaged in executive compensation practice into a separate, independent entity namedretained Meridian Compensation Partners, LLC (“Meridian”). The as the Compensation Committee retained Meridian as its independent compensation consultant in April 2010Consultant for the remainder of fiscal 2010.2011. Each year, the Compensation Committee reviews the performance of its compensation consultants; it willdetermine its advisors for 2011 after the close of fiscal 2010.Compensation Consultant. The Compensation Committee determined that the Company would not retain Meridian for any new projects without the prior consideration and consent of the Compensation Committee; noMeridian did not perform any new projects were approved or performed for the Company by Hewitt or Meridian in fiscal 2010. Hewitt or Meridian, as the case may be, is referred to as the “Compensation Consultant” for purposes of the following discussion.2010,2011, the Compensation Consultant’sConsultant's responsibilities included, but were not limited to:—providing recommendations regarding the composition of the Peer Group;—preparing and analyzing pay survey data;—reviewing and advising on the performance measures to be used in incentive awards; and—reviewing and advising on all principal aspects of executive and non-employee director compensation, including base salaries, bonuses and equity awards for executives, and cash compensation and equity awards for non-employee directors.2010,2011, the Compensation Consultant attended all of the Compensation Committee’s meetings in person or by telephone.Committee's meetings. In the course of fulfilling its consulting responsibilities, representatives of the Compensation Consultant regularly communicate with the Chairman of the Compensation Committee outside of regular committee meetings.discountedpresent value methodology to value restricted stock units, taking into account the likelihood of forfeiture. During fiscal 2010,These valuations are different than those used by the Company for financial reporting purposes. Historically, the Compensation Consultant has calculated the number of stock options and restricted stock units to be provided to executives and other employees based on the value of the grants approved by the Compensation Committee. Those calculations reflect the valueThebelow asthat appear in this Proxy Statement represent values required for financial reporting purposes dopurposes. The Compensation Committee uses the Compensation Consultant's valuation method, rather than the accounting method, to compare awards with those of Peer Group companies. However, reference was not correspondmade to the values reported by the Compensation Consultant on the dateproprietary model for purposes of grant or at any other point in time.For example, the stock options and restricted stock units granted on December 1, 2009 were valued at $2.86 and $4.71, respectively, per award, byNovember 30, 2010. Instead, the Compensation Consultant.Committee granted long-term awards equivalent in number to those granted in the prior year. These awards were valued at $1.70 and $5.05, respectively, forhad significantly lower values to reflect the financial reporting purposes. The stock option valuations differed primarily to different methodologies for assessing volatility. The restricted stock units differed in value because the Compensation Consultant used a discounted value to derive a present valueperformance of the equity award; for financial reporting purposes, no such discount is used.2010,2011, the Compensation Committee reviewed the prior year peer group. The Compensation Committee and the Compensation Consultant considered companies that were likely to compete with the Company for executive talent, and investors, companies with similar organizational structures and strategic focus and other considerations. For fiscal 2010,2011, the Compensation Committee approved the 24-company Peer Group listed below, which was the same peer group used infor fiscal 2009, except that two members of the peer group, The Stanley Works and The Black & Decker Corporation, were dropped after they merged with each other – the Compensation Committee regarded the combinedcorporation as too large to be easily compared to other members of the Peer Group.2010. The Peer Group companies have a primary manufacturing component to their businesses and are publicly traded or otherwise file financial statements with the SEC. Where a company was smaller or larger than the Company, theThe Compensation Consultant used a market regression analysis to adjustsize-adjust the market data to makefor the data more comparable.20102011 Peer GroupName of Company $ 3.14.0 billion$ 4.45.4 billion$ 2.12.5 billion$ 4.16.3 billion$ 2.8 billion $2.5 billion Badger Meter, Inc. $0.3 billion $0.7 billion Cameron International Corporation $6.1 billion $12.3 billion Crane Co. $2.2 billion $2.4 billion Badger Meter, Inc.Curtiss-Wright Corporation $ 0.3 million1.9 billion $ 0.61.5 billionCameron International Corporation$5.2 billion$10.2 billionCrane Co.$2.2 billion$1.8 billionCurtiss-Wright Corporation$1.8 billion$1.4 billion$ 1.92.3 billion$ 2.94.2 billion$ 0.80.9 billion$ 0.50.9 billion$ 4.44.0 billion$ 5.36.6 billion$ 4.44.1 billion$ 7.110.7 billion$ 0.60.7 billion$ 1.72.4 billion$ 1.31.5 billion$ 2.53.2 billion$ 2.83.1 billion$ 2.22.5 billion$ 1.52.1 billion$ 0.91.2 billion$ 1.01.1 billion$ 0.90.8 billion$ 2.73.0 billion$ 3.23.6 billion$ 0.60.8 billion$ 0.60.7 billion$ 0.6 billion$0.8 billion $2.2 billion $2.4 billion $7.3 billion Sauer-Danfoss Inc. $1.6 billion $1.4 billion Valmont Industries, Inc. $2.0 billion $ 4.92.3 billionSauer-Danfoss Inc.$1.2 billion$0.6 billionValmont Industries, Inc.$1.8 billion$2.1 billion$ 1.21.3 billion$ 0.91.4 billion$ 1.92.4 billion$ 1.21.6 billionour common stockCommon Stock and the aggregate market price of the common stock for each company in the Peer Group through November 15, 2010.in recent years. generally an appropriate group to use for comparison of target levels of compensation and that companies in the Peer Group are likely to seek executives with similar backgrounds and experience to the Company's NEOs and other executives. In fiscal 2011, the actual performance of the Peer Group companies varied significantly from ours because they serve different end markets that have reacted differently during the economic downturn, have different capital structures with generally lower levels of debt and many report results based on different fiscal years. The Peer Group companies also face significantly different competitive landscapes. Some companies sell into energy markets (e.g., Cameron International Corporation), while other companies sell into markets with a broader base than our end markets (e.g., IDEX Corporation). target levels of compensation and that companies in the Peer Group are likely to be seeking executives with similar backgrounds and experience to the Company’s NEOs and other executives. In fiscal 2010, the actual performance of the Peer Group companies varied significantly from that of the Company because they serve different end markets that have reacted differently during the recent economic downturn, have different capital structures and generally lower levels of debt, and may report based on different fiscal years.The Peer Group companies also face significantly different competitive landscapes. For example, some companies sell into energy markets (e.g., Cameron International Corporation and Otter Tail Corporation), while other companies sell into markets with a broader base than the Company’s end markets (e.g., Ametek, Inc., IDEX Corporation and Roper Industries, Inc.).The Company’s exposure to the residential construction market and its concentration in the municipal water infrastructure and commercial credit markets has caused the Companyus to be more severely impacted by the economic downturn – and less helped by the fledgling recovery – than certain other members of the Peer Group. The Compensation Committee noted that a peer group comprised of companies different peer groupsfrom those included in the Peer Group may be more relevant and could be considered. In particular, the Compensation Committee noted that one proxy governance firm uses a peer group based on the “Capital Goods” segment of the Standard & Poor’sPoor's industry group, which includes approximately 585 companies.more than 550 companies - the Committee has noted that this proxy governance firm just recently announced changes to its peer group formulations. The Compensation Committee determined that such a broad-based assortment of companies also did not adequately reflect the challengesrisk profile faced by the Company. MeridianThe Compensation Consultant presented the Compensation Committee with information comparing the market price of the Company’s common stockCommon Stock with the market price of the SPDR S&P Homebuilders ETF and U.S. housing starts data, illustrating a strong correlation between the market price of the Company’s common stockCommon Stock and the performance of the U.S. housing sector. Both of these indices reflect the continuing difficulties faced by the Company and its management in fiscal 2010,2011, given declininglow market demand and overcapacity to serve that demand. See “Overview –- Our Business in Fiscal 2010”2011” for a chart that illustrates the correlation between the market price of our common stockCommon Stock and U.S. housing starts data. The following chart illustrates the correlation between the market price of our common stockCommon Stock and the market price of the SPDR S&P Homebuilders ETF through September 30, 2010.the Company’s common stockCommon Stock more closely paralleled the performance of the SPDR S&P Homebuilders ETF – or evenand housing unit starts (see page 29) – than it did the stock market performance of the Peer Group companies. ThisThese strong correlation illustratescorrelations illustrate the significant link between the Company’sCommon Stock price performance and residential construction, municipal spending and commercial construction. The Compensation Committee, together with the Compensation Consultant, considered the factors discussed above, noting in particular the differences in end markets, capital structure, debt levels and competitive landscape. The Compensation Committee also considered that the Company is still likely to compete with companies such as those in the Peer Group for executive talent and may make allowances when it believes such allowances are necessary or advisable to enable the Company to recruit and retain executive talent. However,Therefore, the Compensation Committee continues to use the Peer Group for the purpose of determining target compensation.tally sheets“tally sheets” for each executive, which are prepared by Company management and reviewed by the Compensation Consultant. The tally sheets contain information concerning prior yearyears' compensation, proposed compensation for the current year and various termination-of-employment scenarios, and also highlight multiple elements of compensation.scenarios. The tally sheets enable the Compensation Committee to view and evaluate allmany facets of executive compensation, understand the magnitude of potential payouts as a result of termination-of-employment scenarios and consider changes to our compensation program, arrangements and plans in light of emerging trends. In certain circumstances, the tally sheets show information that is different than the information that is required to be shown under the heading “Executive Compensation – Potential Payments Upon Termination or Change-in-Control.”calculations; for example,calculations, such as projections of how much an executive is projected to earn or accrue over time through cash and equity compensation or receive through certain benefits. The most variable vehicle for wealth accumulation is equity awards, and the Compensation Committee intends for recipients of equity awards to receive thetheir full benefit with improved Company performance and the resulting improvement in stockCommon Stock price. This review is intended to ensure that management’s In fiscal 2010, this analysis demonstrated that the long-term incentive awards granted by the Compensation Committee are now worth significantly less that the valuations targeted at the time of original grant, primarily for the reasons stated above. Company executives have experienced significant declines in the value of their long-term compensation and net worth as stockholder investmentsstock awards have declined in value.Rewarding Performance:Elementsoverseesconsidered these results, as well as other communications from stockholders relating to our compensation practices, in determining the various formsamount, if any, of compensation to reward performance and encourage the achievement of the Company’s near-term objectives and long-term strategic goals. Base salary provides a stable amount of fixed compensation to the executive, while annual cash incentive awards are used to reward financialfor fiscal 2011 and personal performance to achieve Company objectives. Thesetting bonus targets for executive officers for the year ended September 30, 2012.Committee uses long-term equity-based compensation to reward the executivesElements overall Company performance, and to align a significant portion of the overall compensation with the long-term interests of stockholders. Finally, the Compensation Committee oversees retirement benefits and other benefits to promote the health, well-being and financial security of our executives and their families, and, in some cases, to provide perquisites comparable to those available to similarly-situated executives at other companies.The Compensation Committee has noted the effect of the declines in the Company’s primary end markets on the ability of executives to realize the long-term value of equity awards made to them. Each year, the Compensation Committee grants equity awards to the officers and key employees of the Company under the Company’s Second Amended and Restated 2006 Stock Incentive Plan (the “2006 Stock Plan”). In determining the amount of equity awards to each of the NEOs and other executives of the Company, Meridian establishes a benchmark to illustrate the economic value opportunity for the equityinclude base salary, annual cash incentive awards, for each NEOlong-term equity-based compensation, retirement benefits and compares that value to a range of 15% around the median of equity awards for comparable positions in the Peer Group companies.Over the last two years, long-term equity awards to the Chief Executive Officer as valued on the date of grant were approximately 52% of the totalcertain perquisites. These compensation to the CEO, and the awards to the other NEOs were approximately 35% of the total compensation to other NEOs. The Compensation Committee uses these percentages to align the interests of the participants in the 2006 Stock Plan with the interests of stockholders. The Compensation Committee is of the view that the award of equity under the 2006 Stock Plan further incentivizes the participants to take actions thatelements are in the long-term interests of the Company and its stockholders, rewards the participants in line with long-term wealth accumulation models developed by Meridian, and assists the executives in attaining the long-term ownership interests in the Company required by the Stock Ownership Guidelines.guide; inguide. In some cases the Compensation Committee may set base salaries higher or lower than the 50th percentile. Base Salary was not adjusted in 2009. Base salaries are currently adjusted for the NEOs on February 1 of each year, except that in fiscal 2010 Mr. Fish’syear. At September 30, 2011, annual base salary was adjusted as a result of a renegotiation of his employment agreement in February 2010. At year end 2010, the base salariesrates for the NEOs were increased as set forth below to align the salaries for these executives with the salaries for comparable executives at Peer Group companies:below: $ 825,000 $ 325,000 $ 507,292 $ 378,125 $ 371,600 $ 353,190 Mr. Hyland $ 853,000 Mr. Hart $ 345,200 Mr. Leggett $ 517,500 Mr. Rogowski $ 388,400 Mr. Fish $ 380,200 referred to the 50th percentile but also assessedassesses the responsibilities associated with the position, individual contribution and performance, skill set, experience, and external pressures to attract and retain talent and the compensation paid to other executives in the Peer Group and in the Company. Salaries earned by NEOs in fiscal 20102011 are reflected in the “Salary” column (Column C) of the Summary Compensation Table.20102011 was awarded to certain of ourthe Company's employees under the 2010 Management Incentive Plan which provides employees with the opportunity to earn annual cash incentive awards(the “Management Incentive Plan”) based on the achievement of pre-established measurable financial/operational and individual goals.nextthen current fiscal year, using the 50th percentile of the Peer Group data as a guide. The Compensation Committee’sCommittee's goal is to use appropriate opportunities to bring allmaintain compensation for the NEOs and other executives in line with the Company’sCompany's compensation philosophies outlined above. The Compensation Committee usesabove, using the financial/operational goals discussed below for each NEO.annualthe 2011 financial/operational and individual goals for executives covered by the Management Incentive Plan in the first quarter of fiscal 2010.2011. The potential annual cash incentive opportunity for each executive was weighted 70%80% on the achievement of two financial/operational goals described below and 30%20% on an additional financial goal,individual goals, which additional opportunity was subject to the negative discretion of the Compensation Committee based on the achievement of individual goals that are structured to add value to the Company and its stockholders. The amount payable based on attainment of thosethe financial/operations and individual goals is capped at 200% of the target.target opportunity. Under the Management Incentive Plan, the Compensation Committee may decrease, (using negative discretion)but not increase, the amounts payable to participants, but may not increase the amounts payable.Financial/Operational Performance Goalsbased on the relative or absolute attainment of specified levels of one or any combination of the financial/operational performance measures selected for a particular employee. These performance measures may include, but are not limited to, sales, earnings, cash flow and working capital.Financial/operational goals have a weight(as adjusted)(defined as consolidated net income (loss) adjusted to eliminate primarily restructuring charges and amortization of deferred losses on interest rate swap contracts). For operatingsegment executives, the financial metrics selected by the Compensation Committee were average working capital (defined as the segment's average of adjusted current assets less adjusted current liabilities over the course of fiscal 2011, which such measures exclude cash and cash equivalents, deferred income taxes, debt, items reported as assets held for sale that would ordinarily be classified as noncurrent assets or noncurrent liabilities and all balances related to Echologics) as a percent of the segment's net sales and the segment's adjusted operating income. The Compensation Committee further agreedincome (defined as income (loss) from operations adjusted to adjust the financial metrics to exclude the effect of (i) extraordinary, unusual or non-recurring items, (ii) gains or losses on dispositions, (iii) changes in laws affecting reported results, and (iv) charges for reorganization and restructuring. Working capital as a percent of net sales is determined by the average of the month end working capital balances for each of the operating subsidiaries divided by the fiscal year net sales.20102011 financial/operational performance targets for each NEO along with the attained results.Financial/Operational Performance Actual Financial/Operational
Metric Weight Threshold Target
(100%) Maximum
(200%)
Results
Factor
Target
Bonus) Consolidated 50% $(44.5) $(22.7) $18.8 $(28.5) 73.4% Consolidated
Adjusted Free 20% $18.7 $35.6 $68.1 $61.9 180.9% Mueller Co. 50% $48.8 $69.7 $90.6 $81.1 154.5% Average Working 20% 34.3% 32.7% 30.4% 28.8% 200% Anvil Adjusted Income 50% $14.3 $20.4 $43.3 $18.2 63.9% Average Working 20% 34.5% 32.8% 30.2% 32.2% 123.1% U.S. Pipe 50% ($23.6) ($18.2) $0 $(53.2) 0% Average Working
Capital as a Percent
of Net Sales 20% 25.9% 24.8% 23.1% 24.7% 105.9% Financial/Operational Performance Actual Name Weight Threshold 50% $(21.3) $(9.0) $47.0 $(27.7) —% 30% $49.4 $65.5 $99.5 $16.7 —% Gregory S. Rogowski 50% $71.1 $101.6 $132.1 $56.6 —% 30% 27.0% 25.9% 22.5% 28.7% —% Thomas E. Fish 50% $16.1 $23.0 $32.0 $33.1 200.0% 30% 27.7% 26.4% 24.5% 26.3% 105.3% for senior executives, may establish individual performance goals for thosesenior executives. All individual performance goals are set with target, minimum (or threshold), target and maximum objectives for each individual performance goal. Messrs. Hyland, Leggett, Fish and Torok were only eligible for consideration for incentive compensation based on individual performance if the Company generated positive cash flow.2010,2011, individual goals had a total weight of 30%20% of the total cash incentive target, and executives could earn between 0% and 200% of the target amount depending on the level of achievement of individual goals. Individual goals are quantifiable to the extent practicable and are alsoexecutive’sexecutive's direct supervisor and agreed to or modified by the Chief Executive Officer and the Compensation Committee.2010,2011, the Compensation Committee used the financial goal of adjusted free cash flow to determine the availability of a pool from which to pay incentives based on the individual performance of the NEOs.NEOs other than Mr. Rogowski. Because the free cash flow goal was not met, eachnone of thethese NEOs was credited with having met the minimum requirement for being eligible to receive an award of up to 200% ofbased on his individual target, but that would not exceed the amount that would be paid upon the meeting of certain objective individual performance based goals established by the Compensation Committee. Based on a review of the goals described below,target. However, the Compensation Committee exercised its negative discretion for each of the NEOs and determined to award paymentsMr. Fish an additional amount based on the achievements of the Company's Anvil segment and his personal performance. The following cash incentive awards were paid with respect to the NEOsindividual performance goals for individual goals under the Management Incentive Plan: $ 247,500 $ 101,120 $ 130,633 $ 99,691 $ 102,422 $ 78,531 Gregory E. Hyland $ — Evan L. Hart $ — Robert G. Leggett $ — Gregory E. Rogowski $ 70,739 Thomas E. Fish $ 49,525 20102011 are reflected in the “Non-Equity Incentive Plan Compensation”“Bonus” column (Column G)D) of the Summary Compensation Table.With respect to Mr. Hyland’s individual goals, the Compensation Committee considered his contributions in the development and introduction of new product lines across all business units, and his accelerated expansion of certain opportunities in the Company’s meter businesses. The Compensation Committee also considered the development of a long-term information technology strategy for the Company and the use of that strategy to realize operating savings in fiscal 2010. Finally, the Compensation Committee determined to reward Mr. Hyland above his target level for his efforts in fiscal 2010 to reestablish cost-effective corporate development activities to identify and properly prioritize international strategic opportunities. Based on the foregoing considerations, the Compensation Committee determined to award Mr. Hyland an amount representing 100% of his individual goal component.With respect to Mr. Hart’s individual goals, the Compensation Committee considered his contributions to the improvement of additional efficiencies and effectiveness of the internal audit function, his efforts to realize certain tax benefits, and his efforts to reduce the number of days sales outstanding through enhanced collection efforts. Based on the foregoing considerations, the Compensation Committee determined to award Mr. Hart an amount representing 154.5% of his individual goal component.With respect to Mr. Leggett’s individual goals, the Compensation Committee considered his efforts in reducing working capital, safety factors, such as reductions in total reportable injury rates (“TRIR”) and days away from work rates (“DAFW”), compliance with environmental and workplace safety laws, accelerated expansion of the meter businesses, and focus on new products. Based on the foregoing considerations, the Compensation Committee determined to award Mr. Leggett an amount representing 115% of his individual goal component.With respect to Mr. Rogowski’s individual goals, the Compensation Committee considered reductions in the TRIR and DAFW rates, compliance with environmental and workplace safety laws, reductions in the working capital used by Mueller Co., the expansion of a new product development process for thecommercialization of new products, and improvements in productivity, on-time delivery and quality. Based on the foregoing considerations, the Compensation Committee determined to award Mr. Rogowski an amount representing 117.5% of his individual goal component.With respect to Mr. Fish’s individual goals, the Compensation Committee considered reductions in working capital and improvements in inventory turns, cost savings for Anvil’s manufacturing plants, reductions in the TRIR and DAFW rates, completion of divestitures of non-core businesses, and the development of a new product development process. Based on the foregoing considerations, the Compensation Committee determined to award Mr. Rogowski an amount representing 122.5% of his individual goal component.With respect to Mr. Torok’s individual goals, the Compensation Committee considered reductions in the TRIR and DAFW rates, reductions in working capital, increases in operational efficiencies, purchasing initiatives and cost savings, and the introduction of new products into the markets. Based on the foregoing considerations, the Compensation Committee determined to award Mr. Torok an amount representing 100% of his individual goal component.The Compensation Committee awards long-term equity-based incentive compensation to executives and certain key employees under the Company’s 2006 Stock Plan. theour stockholders. In addition, equity awards are intended to help retain executives during the vesting period since, in most circumstances, the awards will be forfeited if the executive leaves the employ of the Company before the awards vest or the applicable restrictions lapse.20102011 Equity AwardsTheWhile the Compensation Committee usedconsidered the 50th percentile relative to the Peer Group as a guide in setting the dollar amounts of the annual equity awards during fiscal 2010, but made adjustments as advised by Meridian based on the level of each executive’s respective responsibilities with the Company and that executive’s potential ability2011, it decided to help the Company attain its strategic and operational goals. The Compensation Committee uses a dollar valuegrant long-term awards equivalent in number to award the long-term equity-based compensation to the NEOs and other executives and its Compensation Consultant determines a specified number of stock options and restricted stock units that equals that value.In determining the actual number of stock options and restricted stock units to be granted, the Compensation Committee relied on calculations provided by Meridian. The economic value calculated for each award is based on a proprietary modified Black-Scholes methodology for options and discounted value methodology for restricted stock units. The economic value depends, in part, on the features of the grant, the historical volatility of the Company’s common stock prices and includes assumptions relating to term, vesting schedule, and the impact of certain employment terminations, among others. The Compensation Committee annually reviews the assumptions used by Meridian in determining the values of those awards and the values used for financial reporting purposes. The economic values derived using the Meridian calculations do not match the grant date fair values derived for financial reporting purposes. See “Executive Compensation – Summary Compensation Table – Stock Awards” and “– Option Awards” below. Before determining final awards, the Compensation Committee also considered the evaluation of each executive by the Chief Executive Officer, the “burn rate” – that is, the rate at which equity awards are granted in the fiscal year relativeprior year. This resulted in significantly lower values compared to the total numberprior year, reflecting the performance of the Company, the lower price of Common Stock and the consumption of shares outstanding – andthat would otherwise have occurred in the availability of shares undershare pool associated with the 2006 Stock Plan.Company’sCompany's stock price has decreased significantly asand the Company’sCompany's businesses have faced a severe economic downturn. This has resulted in a significant decline in the value of stock options and restricted stock units that were granted to executives over the past several years. This decline in value based on a closing stock price of $3.02$2.48 per share on September 30, 2010, as summarized in the table below,2011 was reviewed and considered by the Compensation Committee in making executive compensation decisions for fiscal 2010.
Market
Since
Issuance Grant Date
Market
Price Date of
Grant As of
9/30/2010 $ 15.09 $ 0.00 ($ 12.07 ) -79.9% $ 10.66 $ 0.00 ($ 7.64 ) -71.7% $ 5.49 $ 0.00 ($ 2.47 ) -44.9% $ 5.05 $ 0.00 ($ 2.03 ) -40.2% 9/30/11 Market Price Absolute Decline Percentage Decline November 29, 2006 $ 15.09 $ 2.48 $ (12.61 ) (83.6 )% November 29, 2007 $ 10.66 $ 2.48 $ (8.18 ) (76.7 )% December 2, 2008 $ 5.49 $ 2.48 $ (3.01 ) (54.8 )% December 1, 2009 $ 5.05 $ 2.48 $ (2.57 ) (50.9 )% November 30, 2010 $ 3.52 $ 2.48 $ (1.04 ) (29.5 )% annual awards at its November/December meeting each year, except for awards related to promotions and new hires. Grants approved during scheduled meetings become effective and are priced as of the date of approval or a pre-determined future date. Grants approved by unanimous written consent become effective and are priced as of a pre-determined future date. All stock options have a per shareper-share exercise price equal to the closing stock price on the New York Stock Exchange on the effective date of the grant. See “Executive Compensation –- Summary Compensation Table –- Stock Awards and –- Option Awards” below for a listing of all awards made to the NEOs since November 2006.Torok and Rogowski participateparticipated in the Savings Plan.Hyland’sHyland's employment agreement with Walter Industries, Inc. (now Walter Energy), dated September 9, 2005, the Company adopted a limited retirement savings plan effective from April 1, 2007 (the “Retirement Plan”) for Mr. Hyland.. That employment agreement was assigned to and assumed by the Company on December 14, 2006 and has been subsequently amended and restated without changing the amount of the benefit to which heMr. Hyland is entitled. The Retirement Plan is intended to constitute an unfunded plan of deferred compensation for Mr. Hyland.compensation. Under the Retirement Plan, the Company creditscredited a bookkeeping account for Mr. Hyland. CommencingHyland, commencing April 16, 2007 and as of the 16th day of each calendar month thereafterHyland’sHyland's then current monthly base salary has been credited to such account by the Company.salary. The amounts credited to the Retirement Plan bear interest at 120% of the long-term Applicable Federal Rate (as defined in the Internal Revenue Code) until payment. At September 30, 2010, $528,0882011, $549,009 has been accrued and credited to Mr. Hyland’sHyland's deferral account, and no further accruals will occur to the account, except for interest.Hyland’sHyland's employment at the Company, other than for cause, all deferred compensation under the Retirement Plan will be paid as a lump sum to Mr. Hyland, subject to the terms of the Retirement Plan. Upon a termination of employment for cause, the entire Retirement Plan account will be forfeited. The Company’sCompany's fiscal 20102011 accruals to the Retirement Plan for Mr. Hyland were $104,276.$20,920. See the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column (Column H) of the Summary Compensation Table.Deferred Compensation Plan for All Executives. The Mueller Water Products, Inc. Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) provides executive officers the opportunity to defer up to 70% of base salary and 100% of amounts earned under the Management Incentive Plan. Taxes on deferred amounts are deferred until the amounts are withdrawn so that savings accumulate on a pre-tax basis. At the time the executive commences participation in the Deferred Compensation Plan, the executive may elect to receive payments upon termination of employment, death, disability or retirement in a lump sum or in equal installments. None of our NEOs participate in the Deferred Compensation Plan, and no credits have been made to any NEOs under that plan.2010,2011, the Compensation Committee offered its NEOs limited perquisites, including a car allowance, life insurance, supplemental long-term disability insurance, reimbursement for certain financial planning, legal, relocation and physical examination expenses. In limited cases, the Company has in the past provided for club memberships for NEOs. The two NEOs provided with club memberships in fiscal 2010 used those clubs for business purposes, although they may use them for personal use as well. The Compensation Committee has stated that club memberships will not be offered to future hires and existing reimbursements will cease effective January 1, 2011.20102011 are set forth in the “All Other Compensation Table”.–- Potential Payments Upon Termination or Change-in-Control”.Company’sCompany's change-in-control agreements for our executives are “double trigger,” meaning that acceleration of vesting and severance payments does not occur upon a change in control unless the executive’sexecutive's employment is involuntarily terminated (other than for cause or for termination for good reason) within 24 months following a change-in-control transaction. The Compensation Committee believes this structure strikes an appropriate balance of incentivizingincenting executives without providing benefits to executives who continue to enjoy employment with an acquiring company in the event of a change-in-control transaction.company. The Compensation Committee also believes this structure is more attractive to potential acquiring companies, who may place significant value on retaining members of our executive team and who may perceive this goalobjective to be undermined if executives receive significant acceleration payments in connection with such a transaction and are no longer required to continue employment to earn the remainder of their equity awards. (now Walter Energy) (the “Spin-off”). The Compensation Committee approved change-in-control agreements for executives who were hired or promoted by the Company subsequent to the Spin-off. Key terms, such as triggering events, multiples of pay that would be paid upon the occurrence of those events and the acceleration of equity awards, were based on the agreements previously adopted by Walter Industries.Company’sCompany's NEOs to confirm the existing agreements. The revised agreements generally restated the existing agreements, and included certain technical amendments to bring them into compliance with Section 409A of the Internal Revenue Code and the regulations thereunder. The Compensation Committee approved an agreement in similar form for Mr. Fish in February 2010 in connection with his agreement to accept certain modifications to his employment agreement, including a salary adjustment to reflect a new salary at the 50th percentile of similar executives at Peer Group companies, and a reduction of his target incentive compensation from 119% to 75%, to ensure that Mr. Fish’s compensation was consistent with the Company’s overall compensation philosophy.In August 2010, the Compensation Committee approved a new change-in-control agreement between the Company and Mr. Paul Ciolino, the recently appointed president of the Company’s U.S. Pipe subsidiary. That agreement provides that the amounts payable to Mr. Ciolino on a change-in-control will not exceed 299% of Mr. Ciolino’s “base amount” for the “base period,” as those terms are defined under the applicable regulations of the Internal Revenue Service under Section 280G of the Internal Revenue Code (“Section 280G”). Under Section 280G, an executive who receives a payment of more than that amount upon a change-in-control is subject to an excise tax under another Section of the Internal Revenue Code. Older change-in-control agreements with the Company’s executives provide for the payment to the executive of a “gross-up” amount to put the executive in the same after-tax position as if he had not been subject to the excise tax.“gross-up”excise tax "gross-up" payments under those agreements were generally not payable except to executives who were recently hired or promoted within the past three years, and that only Messrs. Hart, Leggett and Rogowski would be likely to receive an excise tax gross-up.years. After review and discussion with the Compensation Consultant, the Compensation Committee determined not to approve new agreements that permit “gross-up”"gross-up" payments on a change-in-control and not to make any material modifications to any agreements that permit such payments. The Compensation Committee determined to leave in place change-in-control agreements that had been executed prior to August 2010. See “Executive Compensation –- Employment, Severance and Change-in-Control Arrangements” for a description of the change-in-control agreements.Company’sCompany's Employee Stock Purchase Plan (“ESPP”) is a nonqualified stock purchase plan that provides all Company employees an opportunity to purchase our common stockCommon Stock through regular payroll deductions. Participation requires a minimum monthly deduction, andbut monthly deductions cannot exceed 10% of monthly base salary. Further, no more than 1,000 shares can be purchased for any three-month offering period and no more than $25,000 of common stockCommon Stock may be purchased by a participant in any calendar year. The ESPP is implemented through a series of offering periods. The purchase price is equal to 85% of the lesser of the closing price of the common stockCommon Stock on the first trading day of the offering period and the closing price of the common stockCommon Stock on the last trading day of the offering period.2010. Company employees, except as otherwise required by collective bargaining agreements. Every employee is provided life insurance up to one times his or her base salary at no charge, other than income taxes, to the employee, other than tax consequences.employee. For an additional charge, the employee may obtain coverage of up to four times his or her base salary. Competitivewelfareother benefits are offeredincluded in the “All Other Compensation” column of the Summary Compensation Table. Under the terms of the Consulting Agreement, Mr. Leggett is responsible for providing consulting services to non-U.S. employees.the principal executive officer and the next three highest paid executive officers (excludingNEOs (other than the chief financial officer) to $1 million in any year. However, performance-basedPerformance-based compensation that has been approved by stockholders ismay be excluded from the $1 million limitthis limitation if among other requirements, the compensation is payable only upon attainment of pre-established, objective performance goals. Performance-based compensation, such as stock option awards, meets these requirements, and as such is deductible by the Company. Time-based restricted stock unitscertain conditions are not viewed as performance-based under Section 162(m).met. The Compensation Committee intends to maximize the extent of taxCode, exceptCode. The Compensation Committee believes, however, that stockholder interests are best served by not restricting its discretion and flexibility in extraordinary cases when doing so would not be compatible with the Company’sstructuring compensation philosophy.Company’sCompany's employment agreements contain a provision that requires the employee, to the extent required by law, to reimburse the Company following the publication of a restatement of the Company’sCompany's financial statements due to material noncompliance with any financial reporting requirement under the securities laws as a result of misconduct for (a) incentive-based or equity-based compensation received and (b) any profits realized from the sale of securities, in each case during the 12 months prior to discovery of the noncompliance. The Compensation Committee has exclusive authority to interpret and enforce this provision.itsthe Clawback Policy once the SEC issues final rules implementing the provisions of the Dodd-Frank Act related to compensation recovery.Company’sCompany's securities, as well as hedging or monetization transactions and purchases of Company equity securities on margin.Company’sCompany's other stockholders. The Compensation Committee has adopted “Stock Ownership Guidelines” to ensurepromote a high level of stock retention among such executives and non-employee directors. The Stock Ownership Guidelines require that the total stock value of the participant’sparticipant's holdings of shares of common stock of the Company (including direct ownership, ownership by immediate family members and shares owned in retirement, savings and profit sharing plans)Common Stock must equal or exceed the specified target value, as follows: Target Ownership Chief Executive Officer and President 6 x base salary Group Presidents and Executive Vice Presidents 3 x base salary Senior Vice Presidents 2 x base salary Non-Employee Directors 4 x annual retainer vestedlapsed restricted stock units and (B) the higher of (1) the market value of shares held by the participant or (2) the tax basis of shares purchasedheld by the participant or otherwise acquired by vesting.participant. Each individual has until the later of July 30, 2012, or five years from his or her start of service, to achieve his or her respective ownership targets. If a participant is promoted, he or she will have at least three years to increase his or her holdings to meet the new higher ownership requirement. Outstanding stock options and restricted stock units for which the restrictions have not lapsed do not count toward the achievement of target ownership levels. The Chief Executive Officer and the Compensation Committee review the ownership of each executive and non-employee director annually. Prior to attaining the target ownership, a participant may not sell shares of stock obtained as an equity award from the Company. A participant may sell shares that he or she has purchased in the open market if the participant holds (and after such sale will continue to hold) shares representing at least 60% of the participant’s target ownership and obtains the prior approval of the Chairman of the Compensation Committee (or the Compensation Committee, in the case of a participant who was an NEO in the most recent proxy statement). Tendering shares to pay taxes, selling shares pursuant to a previously executed agreement to cover the payment of taxes and tendering shares to pay the exercise price upon stock option exercises are permitted under the Stock Ownership Guidelines.2009 and 2008fiscal 2009 for the Company’sCompany's NEOs as required by the compensation disclosure rules of the SEC. In addition, the Company provides supplemental tables as additional information for our stockholders. The Company provides those tables to demonstrate the value of equity awards granted on the date of grant, reflecting the modified Black-Scholes value on the date of grant, as determined by the Compensation Consultant. Because the actual value of equity awards realized by the NEOs may vary significantly from the reported value in the these supplemental tables may provide greater information concerning the actual compensation for Company executives.Name and Principal Position Fiscal
Year
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings Total ($) (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) 2010 $ 813,333 $ 0 $ 863,969 $ 478,972 $ 848,760 $ 104,276 (6) $ 51,473 $ 3,160,783 2009 $ 750,500 $ 474,000 $ 1,005,010 $ 693,173 $ 0 $ 94,937 $ 57,037 $ 3,074,657 2008 $ 785,000 $ 0 $ 1,102,383 $ 873,014 $ 158,000 $ 90,933 $ 78,357 $ 3,087,687 2010 $ 311,667 $ 0 $ 259,469 $ 143,846 $ 260,120 $ 0 $ 29,756 $ 1,004,858 2009 $ 270,750 $ 0 $ 194,873 $ 134,409 $ 102,600 $ 0 $ 22,223 $ 724,855 2008 $ 215,542 $ 0 $ 161,013 $ 123,434 $ 34,200 $ 0 $ 10,540 $ 544,729 2010 $ 504,861 $ 100,000 $ 398,314 $ 220,822 $ 406,590 $ 0 $ 47,401 $ 1,677,988 2009 $ 475,000 $ 0 $ 139,193 $ 96,007 $ 225,000 $ 0 $ 165,015 $ 1,100,215 2008 $ 41,667 $ 200,000 $ 1,554,116 $ 346,488 $ 0 $ 0 $ 5,631 $ 2,147,902 2010 $ 377,083 $ 0 $ 263,221 $ 145,926 $ 431,289 $ 0 $ 73,949 $ 1,291,468 2009 $ 145,833 $ 56,011 $ 180,407 $ 101,813 $ 0 $ 0 $ 9,667 $ 493,731 2010 $ 345,672 $ 0 $ 246,309 $ 138,373 $ 260,083 $ 0 $ 40,446 $ 1,030,883 2009 $ 306,363 $ 632,003 $ 275,609 $ 190,094 $ 0 $ 0 $ 45,369 $ 1,449,438 2008 $ 304,399 $ 2,818 $ 259,763 $ 205,717 $ 526,114 $ 0 $ 54,847 $ 1,353,658 2010 $ 349,026 $ 0 $ 239,633 $ 132,848 $ 133,974 $ 0 $ 42,156 $ 897,637 2009 $ 323,663 $ 92,694 $ 264,475 $ 182,414 $ 0 $ 0 $ 38,180 $ 901,426 2008 $ 338,531 $ 0 $ 255,520 $ 202,356 $ 111,357 $ 0 $ 35,696 $ 943,460 Name and Principal Position Total ($) (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) Gregory E. Hyland 2011 $ 843,667 $ — $ 602,212 $ 355,002 $ — $ 20,920 $ 47,436 $ 1,869,237 Chairman, President and Chief Executive Officer 2010 $ 813,333 $ — $ 863,969 $ 478,972 $ 848,760 $ 104,276 $ 51,473 $ 3,160,783 2009 $ 750,500 $ 474,000 $ 1,005,010 $ 693,173 $ — $ 94,937 $ 57,037 $ 3,074,657 Evan L. Hart 2011 $ 338,467 $ — $ 180,858 $ 106,615 $ — $ — $ 30,398 $ 656,338 Senior Vice President and Chief Financial Officer 2010 $ 311,667 $ — $ 259,469 $ 143,846 $ 260,120 $ — $ 29,756 $ 1,004,858 2009 $ 270,750 $ — $ 194,873 $ 134,409 $ 102,600 $ — $ 22,223 $ 724,855 Robert G. Leggett (1) 2011 $ 514,097 $ — $ 277,636 $ 163,668 $ — $ — $ 117,129 $ 1,072,530 Former Executive Vice President and 2010 $ 504,861 $ 100,000 $ 398,314 $ 220,822 $ 406,590 $ — $ 47,401 $ 1,677,988 2009 $ 475,000 $ — $ 139,193 $ 96,007 $ 225,000 $ — $ 165,015 $ 1,100,215 Gregory S. Rogowski (2) 2011 $ 384,975 $ 70,739 $ 183,473 $ 108,157 $ — $ — $ 18,680 $ 766,024 President, Mueller Co. 2010 $ 377,083 $ — $ 263,221 $ 145,926 $ 431,289 $ — $ 73,949 $ 1,291,468 2009 $ 145,833 $ 56,011 $ 180,407 $ 101,813 $ — $ — $ 9,667 $ 493,731 Thomas E. Fish 2011 $ 377,333 $ 49,525 $ 176,908 $ 104,131 $ 372,400 $ — $ 41,759 $ 1,122,056 President, Anvil International 2010 $ 345,672 $ — $ 246,309 $ 138,373 $ 260,083 $ — $ 40,446 $ 1,030,883 2009 $ 306,363 $ 632,003 $ 275,609 $ 190,094 $ — $ — $ 45,369 $ 1,449,438 (1)These amounts represent restricted stock units granted in each of fiscal years 2010, 2009 and 2008 and are the aggregate grant date fair value of the awards granted to each named executive officer to be recognized for financial reporting purposes. The amounts represent the aggregate grant date fair value of the awards granted to each NEO computed in accordance with stock-based accounting rules (Financial Accounting Standards Board (“FASB”) ASC Topic 718). Assumptions used in determining these amounts are included in Note 12. (Stock-based Compensation Plans) to our fiscal 2010 consolidated financial statements, which are included in our Annual Report on Form 10-K filed with the SEC on November 24, 2010. These restricted stock units generally vest in thirds on each of the three anniversary dates subsequent to the grant date.
|
Mr. Leggett | Analysis - Rewarding Performance: Compensation Elements - Departure of Robert G. Leggett”. |
(2) | Mr. Rogowski was hired as President of Mueller Co. on May 12, 2009. |
Gregory E. Hyland Evan L. Hart Robert G. Leggett Gregory S. Rogowski Thomas E. Fish Raymond P. Torok (4)20102011 reflects approximately four months compensation at the salary level established in February 2008,2010, and eight months compensation at the salary level established in February 2010.2011. Salary rates were generally frozen throughout 2009, exclusive of temporary reductions. See “Compensation Discussion and Analysis –- Rewarding Performance: Compensation Elements –- Base Salary”.Leggett’sLeggett's employment agreement negotiated in advance of being hired provided for a $200,000 signing bonus in September 2008 and an additional $100,000 bonus in September 2010.reporteddetermined in our 2010 annual report.accordance with generally accepted accounting principles. The ultimate value of the award to the employee will depend on the price of our common stockCommon Stock on the date that the restrictions lapse, and may differ from the value of the awards included in the Summary Compensation Table. Details about fiscal 20102011 awards are included under the heading “Grants of Plan-Based Awards Table”.Grant Date Fair Value vs. Market ValueStock Awards.Ifstock options. The dollar amounts for the stock awards granted beginning November 2006 were valued atrepresent the marketfull grant date fair value as determined in accordance with generally accepted accounting principles. The ultimate value of the Company’s commonaward to the employee will depend on the stock at September 30, 2010 rather thanprice on the date of exercise, and may differ from the grant date fair value their valuations would differ significantly. These differences are reflectedof the awards included in the supplemental table below.Intrinsic Valueabove. Details about fiscal 2011 awards are included under the heading “Grants of Restricted Stock UnitPlan-Based Awards Versus Value for Financial Reporting Purposes (supplemental table)Table”. Grant
Date Share
Price
at
Grant
Date Total
Restricted
Stock
Units
Granted
on Grant
Date Grant Date Fair Value
per Restricted Stock Unit Total Value on Grant Date Intrinsic
Value of
Grant at
09/30/10 (3) Name Compensation
Consultant (1) Financial
Reporting (2) Compensation
Consultant Financial
Reporting 11/29/06 $ 15.09 103,964 $11.96 $ 15.09 $ 1,243,409 $ 1,568,817 $ 313,971 11/29/07 $ 10.66 103,413 $9.21 $ 10.66 $ 952,434 $ 1,102,383 $ 312,307 12/02/08 $ 5.49 183,062 $4.93 $ 5.49 $ 902,496 $ 1,005,010 $ 552,847 12/01/09 $ 5.05 171,083 $4.71 $ 5.05 $ 805,801 $ 863,969 $ 516,671 11/29/06 $ 15.09 2,807 $11.96 $ 15.09 $ 33,572 $ 42,358 $ 8,477 11/29/07 $ 10.66 4,770 $9.21 $ 10.66 $ 43,932 $ 50,848 $ 14,405 07/31/08 $ 9.10 12,106 $8.26 $ 9.10 $ 99,996 $ 110,165 $ 36,560 12/02/08 $ 5.49 35,496 $4.93 $ 5.49 $ 174,995 $ 194,873 $ 107,198 12/01/09 $ 5.05 51,380 $4.71 $ 5.05 $ 242,000 $ 259,469 $ 155,168 09/02/08 $ 10.83 96,567 $9.32 $ 10.83 $ 900,004 $ 1,045,821 $ 291,632 09/02/08 $ 10.83 46,934 $7.99 $ 10.83 $ 375,003 $ 508,295 $ 141,741 12/02/08 $ 5.49 25,354 $4.93 $ 5.49 $ 124,995 $ 139,193 $ 76,569 12/01/09 $ 5.05 78,874 $4.71 $ 5.05 $ 371,497 $ 398,314 $ 238,199 05/12/09 $ 4.07 44,326 Not available $ 4.07 Not available $ 180,407 $ 133,865 12/01/09 $ 5.05 52,123 $4.71 $ 5.05 $ 245,499 $ 263,221 $ 157,411 11/29/06 $ 15.09 17,576 $11.96 $ 15.09 $ 210,209 $ 265,222 $ 53,080 11/29/07 $ 10.66 24,368 $9.21 $ 10.66 $ 224,429 $ 259,763 $ 73,591 12/02/08 $ 5.49 50,202 $4.93 $ 5.49 $ 247,496 $ 275,609 $ 151,610 12/01/09 $ 5.05 24,416 $4.71 $ 5.05 $ 114,999 $ 123,301 $ 73,736 02/22/10 $ 4.76 25,842 $4.45 $ 4.76 $ 114,997 $ 123,008 $ 78,043 11/29/06 $ 15.09 22,742 $11.96 $ 15.09 $ 271,994 $ 343,177 $ 68,681 11/29/07 $ 10.66 23,970 $9.21 $ 10.66 $ 220,764 $ 255,520 $ 72,389 12/02/08 $ 5.49 48,174 $4.93 $ 5.49 $ 237,498 $ 264,475 $ 145,485 12/01/09 $ 5.05 47,452 $4.71 $ 5.05 $ 223,499 $ 239,633 $ 143,305 Name Grant Date Share Price at Grant Date Total Options Granted on Grant Date Grant Date Fair Value (1) Gregory E. Hyland 11/29/06 $ 15.09 88,300 $ 5.90 $ 520,970 $ — 11/29/07 $ 10.66 226,757 $ 3.85 $ 873,014 $ — 12/02/08 $ 5.49 343,155 $ 2.02 $ 693,173 $ — 12/01/09 $ 5.05 281,748 $ 1.70 $ 478,972 $ — 11/30/10 $ 3.52 281,748 $ 1.26 $ 355,002 $ — 11/29/06 $ 15.09 2,384 $ 5.90 $ 14,066 $ — 11/29/07 $ 10.66 10,459 $ 3.85 $ 40,267 $ — 07/31/08 $ 9.10 24,752 $ 3.36 $ 83,167 $ — 12/02/08 $ 5.49 66,539 $ 2.02 $ 134,409 $ — 12/01/09 $ 5.05 84,615 $ 1.70 $ 143,846 $ — 11/30/10 $ 3.52 84,615 $ 1.26 $ 106,615 $ — Robert G. Leggett (3) 09/02/08 $ 10.83 86,406 $ 4.01 $ 346,488 $ — 12/02/08 $ 5.49 47,528 $ 2.02 $ 96,007 $ — 12/01/09 $ 5.05 129,895 $ 1.70 $ 220,822 $ — 11/30/10 $ 3.52 129,895 $ 1.26 $ 163,668 $ — Gregory S. Rogowski 05/12/09 $ 4.07 69,735 $ 1.46 $ 101,813 $ — 12/01/09 $ 5.05 85,839 $ 1.70 $ 145,926 $ — 11/30/10 $ 3.52 85,839 $ 1.26 $ 108,157 $ — 11/29/06 $ 15.09 14,928 $ 5.90 $ 88,075 $ — 11/29/07 $ 10.66 53,433 $ 3.85 $ 205,717 $ — 12/02/08 $ 5.49 94,106 $ 2.02 $ 190,094 $ — 12/01/09 $ 5.05 40,209 $ 1.70 $ 68,355 $ — 02/22/10 $ 4.76 42,435 $ 1.65 $ 70,018 $ — 11/30/10 $ 3.52 82,644 $ 1.26 $ 104,131 $ — (1) Value is based on a modified Black-Scholes option pricing model. The principal difference betweenweighted averages of the valuation models used by the Compensation Consultant and for financial reporting is discounting by the Compensation Consultant.(2)Value is based on a modified Black-Scholes option pricing model. The weighted average assumptions used for all options we have granted by us during each of the past three fiscal years are included in the consolidated financial statements contained in our annual report.(3)(2) Our common stockCommon Stock had a closing price of $3.02$2.48 per share on September 30, 20102011 on the New York Stock Exchange. Our common stock had a closing price of $4.01 per share on December 13, 2010.(4)(3) Mr. Torok became retirement-eligible for vesting purposes on August 18, 2010.Option Awards (Column F)These amounts reflect grants of stock options. The dollar amounts for the awards represent the full grant date fair value as reported in our 2010 annual report. The ultimate value of the award to the employee will depend on the stock price
on the date of exercise or lapse, and may differ from the grant date fair value of the awards included in the table above. Details about fiscal 2010 awards are included under the heading “Grants of Plan-Based Awards Table”.
Grant Date Fair Value vs. Market Value of Option Awards.If the stock option awards were valued at the September 30, 2010 intrinsic value of the award (defined as the difference between the closing market price of our common stock on September 30, 2010 of $3.02 and the option exercise price), they would have no value as all of the outstanding options are not “in the money”. These amounts are reflected in the supplemental table below.
Intrinsic Value of Option Awards Versus Value for Financial Reporting Purposes
(supplemental table)
Name | Grant Date | Share Price at Grant Date | Total Options Granted on Grant Date | Grant Date Fair Value per Share | Total Value on Grant Date | Intrinsic Value of Grant at 09/30/10 (3) | ||||||||||||||||||||||
Compensation Consultant (1) | Financial Reporting (2) | Compensation Consultant | Financial Reporting | |||||||||||||||||||||||||
Gregory E. Hyland | 11/29/06 | $ | 15.09 | 88,300 | $6.04 | $ | 5.90 | $ 533,332 | $ | 520,970 | $ | 0 | ||||||||||||||||
11/29/07 | $ | 10.66 | 226,757 | $4.44 | $ | 3.85 | $1,006,801 | $ | 873,014 | $ | 0 | |||||||||||||||||
12/02/08 | $ | 5.49 | 343,155 | $2.63 | $ | 2.02 | $ 902,498 | $ | 693,173 | $ | 0 | |||||||||||||||||
12/01/09 | $ | 5.05 | 281,748 | $2.86 | $ | 1.70 | $ 805,799 | $ | 478,972 | $ | 0 | |||||||||||||||||
Evan L. Hart | 11/29/06 | $ | 15.09 | 2,384 | $6.04 | $ | 5.90 | $ 14,399 | $ | 14,066 | $ | 0 | ||||||||||||||||
11/29/07 | $ | 10.66 | 10,459 | $4.44 | $ | 3.85 | $ 46,438 | $ | 40,267 | $ | 0 | |||||||||||||||||
07/31/08 | $ | 9.10 | 24,752 | $4.04 | $ | 3.36 | $ 99,998 | $ | 83,167 | $ | 0 | |||||||||||||||||
12/02/08 | $ | 5.49 | 66,539 | $2.63 | $ | 2.02 | $ 174,998 | $ | 134,409 | $ | 0 | |||||||||||||||||
12/01/09 | $ | 5.05 | 84,615 | $2.86 | $ | 1.70 | $ 241,999 | $ | 143,846 | $ | 0 | |||||||||||||||||
Robert G. Leggett | 09/02/08 | $ | 10.83 | 86,406 | $4.34 | $ | 4.01 | $ 375,002 | $ | 346,488 | $ | 0 | ||||||||||||||||
12/02/08 | $ | 5.49 | 47,528 | $2.63 | $ | 2.02 | $ 124,999 | $ | 96,007 | $ | 0 | |||||||||||||||||
12/01/09 | $ | 5.05 | 129,895 | $2.86 | $ | 1.70 | $ 371,500 | $ | 220,822 | $ | 0 | |||||||||||||||||
Gregory S. Rogowski | 05/12/09 | $ | 4.07 | 69,735 | Not available | $ | 1.46 | Not available | $ | 101,813 | $ | 0 | ||||||||||||||||
12/01/09 | $ | 5.05 | 85,839 | $2.86 | $ | 1.70 | $ 245,500 | $ | 145,926 | $ | 0 | |||||||||||||||||
Thomas E. Fish | 11/29/06 | $ | 15.09 | 14,928 | $6.04 | $ | 5.90 | $ 90,165 | $ | 88,075 | $ | 0 | ||||||||||||||||
11/29/07 | $ | 10.66 | 53,433 | $4.44 | $ | 3.85 | $ 237,243 | $ | 205,717 | $ | 0 | |||||||||||||||||
12/02/08 | $ | 5.49 | 94,106 | $2.63 | $ | 2.02 | $ 247,499 | $ | 190,094 | $ | 0 | |||||||||||||||||
12/01/09 | $ | 5.05 | 40,209 | $2.86 | $ | 1.70 | $ 114,998 | $ | 68,355 | $ | 0 | |||||||||||||||||
02/22/10 | $ | 4.76 | 42,435 | $2.71 | $ | 1.65 | $ 114,999 | $ | 70,018 | $ | 0 | |||||||||||||||||
Raymond P. | 11/29/06 | $ | 15.09 | 19,316 | $6.04 | $ | 5.90 | $ 116,669 | $ | 113,964 | $ | 0 | ||||||||||||||||
11/29/07 | $ | 10.66 | 52,560 | $4.44 | $ | 3.85 | $ 233,366 | $ | 202,356 | $ | 0 | |||||||||||||||||
12/02/08 | $ | 5.49 | 90,304 | $2.63 | $ | 2.02 | $ 237,500 | $ | 182,414 | $ | 0 | |||||||||||||||||
12/01/09 | $ | 5.05 | 78,146 | $2.86 | $ | 1.70 | $ 223,498 | $ | 132,848 | $ | 0 |
2011. Gregory E. Hyland Evan L. Hart Robert G. Leggett Gregory S. Rogowski Thomas E. Fish Raymond P. Torokour the2010,2011, and under our Top Executive Bonus Plan or the Management Incentive Program for fiscal 20092010 and 2008.fiscal 2009. The earned amounts for fiscal 20102011 were paid in December 2010.–- Deferred Compensation Plans –- Agreement with Mr. Hyland.”NEO’sNEO's perquisites and compensation that is not otherwise reflected in the Summary Compensation Table. Amounts for fiscal 20102011 consist of the following additional compensation attributed to our NEOs:20102011 All Other CompensationName Vehicle
Allowance
or Use of a
Leased
Vehicle Financial
Planning (1) Company
Contributions
to 401(k)
Plans (2) Life and
Long-Term
Disability
Insurance Other Total $ 24,000 $ 1,000 $ 9,800 $ 10,168 $ 6,505 (3) $ 51,473 $ 18,000 $ 0 $ 9,617 $ 2,139 $ 0 $ 29,756 $ 18,000 $ 7,500 $ 9,800 $ 5,541 $ 6,560 (4) $ 47,401 $ 18,000 $ 7,500 $ 9,800 $ 4,405 $ 34,244 (5) $ 73,949 $ 18,000 $ 7,500 $ 9,800 $ 4,696 $ 450 (6) $ 40,446 $ 18,000 $ 0 $ 9,800 $ 8,647 $ 5,709 (7) $ 42,156 Name Vehicle Allowance Total Gregory E. Hyland $ 24,000 $ — $ 9,800 $ 11,980 $ 1,656 (2 ) $ 47,436 Evan L. Hart $ 18,000 $ — $ 9,647 $ 2,751 $ — $ 30,398 Robert G. Leggett (3) $ 18,000 $ 7,500 $ 9,800 $ 5,516 $ 76,313 (4 ) $ 117,129 Gregory S. Rogowski $ 18,000 $ — $ 9,800 $ 4,427 $ (13,547 ) (5 ) $ 18,680 Thomas E. Fish $ 18,000 $ 7,500 $ 9,800 $ 6,101 $ 358 $ (6 ) $ 41,759 (1) Each NEO is entitled to reimbursement of up to $10,000 for their first year ($15,000 for the Chief Executive Officer) of financial planning services. Following their first year, each NEO isNEOs are entitled to reimbursement of up to $7,500 of annual financial planning services ($10,000 for the Chief Executive Officer).(2) The Company suspended matching contributions to its 401(k) plan on behalf of salaried employees from April 1, 2009 through December 31, 2009.(3)Represents $6,505This represents $1,656 for country club dues.dues, a benefit that was eliminated on December 31, 2010.(3) Mr. Leggett is no longer employed by the Company. See “Compensation Discussion and Analysis - Rewarding Performance: Compensation Elements - Departure of Robert G. Leggett”. (4) Represents $3,560 forThis represents relocation benefits of $52,428 and $3,000 for an executive physical examination.vacation benefits of $23,885 pursuant to Mr. Leggett's departure from the Company.
(5) |
(6) | This represents a $358 benefit related to Mr. Fish's wife |
Number of (#) Value Realized on ($) Number of (#) Value Realized ($) (1) Gregory E. Hyland Evan L. Hart Robert G. Leggett Gregory S. Rogowski Thomas E. Fish Raymond P. Torok 2011 Greg Hyland 2011. Evan L. Hart. Mr. Robert G. Leggett. Mr. Gregory S. Rogowski. Mr. Thomas E. Fish. Mr. monthly. In connection with her election to the Board, Ms. Franklin received an equity grant on November 1, 2010 with an economic value of $80,000 split equally between stock options and restricted stock units. Name Boyce, Clark, Kolb, Leonard, O’Brien, Rethore and Springer (d) Thomas Tokarz20102011 on a grant-by-grant basis.20102011 and reported in the Grants of Plan-Based Awards Table was granted under, and is subject to the terms of, the 2006 Stock Plan. The 2006 Stock Plan is administered under the direction of the Compensation Committee. The Compensation Committee has authority to interpret the 2006 Stock Plan and make all required determinations under the 2006 Stock Plan. Awards granted under the 2006 Stock Plan may be transferred to trusts established solely for the benefit of the grantee’sgrantee's family members or to a beneficiary of an NEO upon his death.Fiscal 2010 Grants Fiscal 2011 Grants of Plan-Based Awards Table Estimated Future Payouts Under Non-Equity Incentive Plan Awards All Other Stock Awards: Number of Securities Underlying Options (#) All Other Option Awards: Number of Securities Underlying Options (#) Name Grant Date Threshold Target Maximum (A) (B) (C) (D) (E) (F) (G) (H) (I) Gregory E. Hyland $ — $ 853,000 $ 1,706,000 11/30/10 171,083 $ 602,212 11/30/10 281,748 $ 3.52 $ 355,002 Evan L. Hart $ — $ 253,850 $ 507,700 11/30/10 51,380 $ 180,858 11/30/10 84,615 $ 3.52 $ 106,615 Robert G. Leggett $ — $ 385,573 $ 771,146 11/30/10 78,874 $ 277,636 11/30/10 129,895 $ 3.52 $ 163,668 Gregory S. Rogowski $ — $ 288,731 $ 577,462 11/30/10 52,123 $ 183,473 11/30/10 85,839 $ 3.52 $ 108,157 Thomas E. Fish $ — $ 283,000 $ 566,000 11/30/10 50,258 $ 176,908 11/30/10 82,644 $ 3.52 $ 104,131 Represent2010.2011. Each restricted stock unit entitles the grantee to receive one share of our common stockCommon Stock when the restrictions lapse. The restrictions on all such restricted stock units generally lapse in equal installments on the first, second and third anniversary of the date of grant. Further, the restrictions on these restricted stock units lapse automatically upon the death, disability or retirement of the grantee. Holders of restricted stock units do not have the right to vote or dispose of their restricted stock units and do not have dividend rights with respect to their restricted stock units until the restrictions on those stock units lapse and the shares are issued.All Other our common stockCommon Stock at a specified exercise price. These stock options generally vest in equal installments on the first, second and third anniversary of the date of grant. Once vested, options will generally remain exercisable until their normal expiration dates, which are 10 years from the grant date. Grantees generally have three months to exercise any vested options upon termination of employment. This period is extended to two years in the event termination results from death, disability or retirement. All outstanding options will immediately terminate if the grantee is terminated for cause.2010 was granted with2011 has a per-share exercise price equal to the closing price of the underlying common stockCommon Stock on the New York Stock Exchange on the grant date.accounting principles.in the United States. This is the amount we will record as compensation expense in our financial statements over the vesting period of the award.The equity awards reflected in the table below were outstanding2010.Outstanding Equity Awards as2011Name Option Awards Stock Awards Exercisable Unexercisable (2) Gregory E. Hyland 9/16/2005 12/15/06 113,358 — $ 14.55 09/16/15 56,680 $ 140,566 2/22/2006 12/15/06 69,611 — $ 20.56 02/22/16 74,784 $ 185,464 11/29/06 88,300 — $ 15.09 11/29/16 103,964 $ 257,831 11/29/07 226,757 — $ 10.66 11/29/17 — $ — 12/02/08 228,770 114,385 $ 5.49 12/02/18 61,021 $ 151,332 12/01/09 93,916 187,832 $ 5.05 12/01/19 114,055 $ 282,856 11/30/10 — 281,748 $ 3.52 11/30/20 171,083 $ 424,286 11/29/06 2,384 — $ 15.09 11/29/16 2,807 $ 6,961 11/29/07 10,459 — $ 10.66 11/29/17 — $ — 07/31/08 24,752 — $ 9.10 07/31/18 — $ — 12/02/08 44,359 22,180 $ 5.49 12/02/18 11,832 $ 29,343 12/01/09 28,205 56,410 $ 5.05 12/01/19 34,253 $ 84,947 11/30/10 — 84,615 $ 3.52 11/30/20 51,380 $ 127,422 Robert G. Leggett (5) 09/02/08 86,406 — $ 10.83 12/31/11 — $ — 12/02/08 31,685 — $ 5.49 12/31/11 — $ — 12/01/09 43,299 — $ 5.05 12/31/11 — $ — Gregory S. Rogowski 05/12/09 — 69,735 $ 4.07 05/12/19 44,326 $ 109,928 12/01/09 28,613 57,226 $ 5.05 12/01/19 34,748 $ 86,175 11/30/10 — 85,839 $ 3.52 11/30/20 52,123 $ 129,265 08/22/06 10,502 — $ 16.95 08/22/16 14,016 $ 34,760 11/29/06 14,928 — $ 15.09 11/29/16 17,576 $ 43,588 11/29/07 53,433 — $ 10.66 11/29/17 — $ — 12/02/08 62,737 31,369 $ 5.49 12/02/18 16,734 $ 41,500 12/01/09 13,403 26,806 $ 5.05 12/01/19 16,277 $ 40,367 02/22/10 14,145 28,290 $ 4.76 02/22/20 17,228 $ 42,725 11/30/10 — 82,644 $ 3.52 11/30/20 50,258 $ 124,640 (1) OurThe Company was separated from Walter Energy (formerly Walter Industries)Industries in December 2006. Some equityEquity awards granted prior to NovemberAugust 2006 were made by Walter Industries and were converted into restricted stock units or options to acquire our common stockCommon Stock in connection with our separation from Walter Industries. The exercise price of our reissued stock options reflected a conversion ratio of 3.239.3.239:1. The vesting or lapsing dates and option expiration dates for the reissued awards were identical to the replaced Walter Industries awards.(2) Unexercisable options granted on 11/29/0712/02/08 vest on 11/29/10.12/02/11.Unexercisable options granted on 07/31/08 vest on 07/31/11.Unexercisable options granted on 09/02/08 vest on 09/02/11.Unexercisable options granted on 12/02/08 vest 50% each on 12/02/10 and 12/02/11.in thirds50% on each of 12/01/10, 12/01/11 and 12/01/12.02/22/11/30/11, 02/22/11/30/12 and 02/22/11/30/13.(3) Restrictions on restricted stock units granted by Walter Energy on 09/16/05 lapse on 09/16/12 unless lapsing accelerates as a result of stock price performance. by Walter Energy on 02/22/06 lapse on 02/22/13 unless lapsing accelerates as a result of stock price performance.Restrictions on outstanding restricted stock units granted on 11/29/07 lapse on 11/29/10.Restrictions on outstanding restricted stock units granted on 07/31/08 lapse on 07/31/11.Restrictions on outstanding restricted stock units granted on 09/02/08 lapse on 09/02/11.50% each on 12/02/10 and 12/02/11.in thirds50% on each of 12/01/10, 12/01/11 and 12/01/12.02/22/11/30/11, 02/22/11/30/12 and 02/22/11/30/13.the Company’s common stockCommon Stock maintains a closing market price in excess of a 10% compound annual growth rate (13% for restricted stock units granted on 11/29/06) for 60 consecutive calendar days. When such an event occurs, 25% of the original grant vests on the next anniversary date of the grant.(4) The “market value”"market value" is calculated by multiplying the number of restricted stock units that have not vested by the closing price of our common stockCommon Stock on the New York Stock Exchange on September 30, 20102011 of $3.02 per share. At December 13, 2010, the closing price of our common stock was $4.01$2.48 per share.(5) Mr. Torok became retirement-eligible for purposesLeggett is no longer employed by the Company. See “Compensation Discussion and Analysis - Rewarding Performance: Compensation Elements - Departure of the 2006 Stock PlanRobert G. Leggett”. Mr. Leggett may exercise any exercisable options on August 18, 2010. As a result, 17,520 stockor before December 31, 2011. Unexercisable options granted November 29, 2007, 60,202 stock options granted December 2, 2008 and 78,146 stock options granted December 1, 2009 were vested at September 30, 2010 that would not otherwise have been vested at that date. Similarly, 7,990unlapsed restricted stock units granted November 29, 2007, 32,116 restricted units granted December 2, 2008 and 47,452 restricted stock units granted December 1, 2009 are deemed to be vested atwere forfeited by Mr. Leggett on September 30, 2010 that otherwise would not be vested at that date.2011.20102011 and restricted stock units held by our NEOs for which restrictions lapsed during fiscal 2010.2011. The dollar values shown in this table are not the grant date fair values disclosed elsewhere in this Proxy Statement.20102011 Option Exercises and Stock Vested Table Option Awards Stock Awards Name
Shares
Acquired on
Exercise
Exercise
Shares
Acquired on
Lapse
on Lapse 0 $ 0 95,492 $ 492,925 0 $ 0 17,457 $ 84,779 0 $ 0 40,641 $ 129,726 0 $ 0 0 $ 0 0 $ 0 24,856 $ 128,348 21,593 $ 20,975 24,048 $ 124,169 Option Awards Stock Awards Name Gregory E. Hyland — $ — 152,519 $ 551,087 Evan L. Hart — $ — 34,584 $ 123,657 Robert G. Leggett (2) — $ — 113,866 $ 293,212 Gregory S. Rogowski — $ — 17,375 $ 61,508 Thomas E. Fish — $ — 41,610 $ 153,934 (1) EqualsThe "value realized" is calculated as the closing price of our common stockCommon Stock on the lapse date multiplied by the number of restricted stock units for which restrictions lapsed.(2) Mr. Leggett is no longer employed by the Company. See “Compensation Discussion and Analysis - Rewarding Performance: Compensation Elements - Departure of Robert G. Leggett”. 2010named executive officers.NEOs. Mr. Hyland participates in a deferred compensation plan pursuant to the terms of his employment agreement. None of our NEOs participate in our Executive Deferred Compensation Plan.Name Executive
Contributions in
2010 Fiscal Year Registrant
Contributions in
2010 Fiscal Year Aggregate
Earnings in
2010 Fiscal Year Aggregate
Withdrawals/
Distributions Aggregate
Balance at
2010 Fiscal Year $ 0 $ 81,333 $ 22,943 $ 0 $ 528,088 Name Gregory E. Hyland $ — $ (3,438 ) $ 24,358 $ — $ 549,009 (1) The Company erroneously recorded a contribution in September 2010 subsequent to the mid-September discontinuation of such contributions. This contribution was corrected in October 2010. 2010. For the first three months of fiscal 2010, the Company did not make matching contributions under the 401(k) plan due to economic considerations.2010,2011, the Company had employment agreements with each of the NEOs.Hyland’sHyland's employment agreement with the Company effective as of September 15, 2008 replaces the agreement with Walter Energy dated September 16, 2006 that was assigned to the Company upon the Spin-off. The employment agreement(and subsequently amended on each of December 1, 2009 and December 1, 2010) provides for the following:—An initial annual base salary of $790,000, reviewed annually;—An opportunity to earn an annual target bonus of 100% of a target amount based on annual base salary, with a payout range from zero to up to twice the amount of the target (based on the satisfaction of predetermined goals);—An annual equity opportunity subject to the discretion of the Compensation Committee (if predetermined goals are met);—A car allowance of $2,000 per month;—Four weeks vacation each year;—Reimbursement of financial planning and club membership expenses (in December 2010, Mr. Hyland agreed to forego his right to club memberships under his agreement);—Entitlement to participate in an unfunded deferred compensation plan; and—Severance benefits, including (a) a lump sum payment of unpaid salary and other benefits, and (b) a total amount equal to 300% of Mr. Hyland’s current salary, paid in monthly installments over 24 months.Hart’sHart's employment agreement with the Company, dated July 16, 2008 (and subsequently amended on December 1, 2009), provides for the following:—A starting base salary of $285,000 per year, which will be reviewed annually;—An opportunity to earn an annual target bonus of 60% of annual base salary (increased to 70% for the fiscal 2010 year), with a payout range from zero to up to twice the amount of the target (based on the satisfaction of predetermined goals);—An annual equity opportunity commensurate with an executive-level position at the Company;—A car allowance of $1,500 per month;—Four weeks vacation each year; and—Severance benefits, including (a) a lump sum payment of unpaid salary and other benefits, and (b) a total amount equal to 255% of Mr. Hart’s current salary, paid in monthly installments over 18 months.Leggett’sLeggett's employment agreement with the Company, dated September 15, 2008 provides(and subsequently amended on February 6, 2009 and December 1, 2009) was terminated effective as of November 2, 2011, except for certain post-termination obligations included in the following:employment agreement. See “Compensation Discussion and Analysis - Rewarding Performance: Compensation Elements - Departure of Robert G. Leggett”).—A starting base salary of $500,000 per year, which will be reviewed annually;—An opportunity to earn an annual target bonus of 75% of annual base salary, with a payout range from zero to up to twice the amount of the target (based on the satisfaction of predetermined goals);—An annual equity opportunity commensurate with an executive-level position at the Company;—A car allowance of $1,500 per month;—Four weeks vacation each year;—A sign-on bonus of $200,000 payable in September 2008 and an additional bonus of $100,000 payable on September 2, 2010; and—Severance benefits, including (a) a lump sum payment of unpaid salary and other benefits, and (b) a total amount equal to 262.5% of Mr. Leggett’s current salary, paid in monthly installments over 18 months.Rogowski’sRogowski's employment agreement with the Company, dated May 12, 2009 (and subsequently amended on December 1, 2009), provides for the following:—A base salary of $375,000 per year, which will be reviewed annually;—An opportunity to earn an annual target bonus of 75% of annual base salary, with a payout range from zero to up to twice the amount of the target (based on the satisfaction of predetermined goals);—An annual equity opportunity commensurate with an executive-level position at the Company;—A car allowance of $1,500 per month;—Four weeks vacation each year; and—Severance benefits, including (a) a lump sum payment of unpaid salary and other benefits, and (b) a total amount equal to 262.5% of Mr. Rogowski’s current salary, paid in monthly installments over 18 months.Fish’sFish's employment agreement with the Company, dated February 22, 2010, was negotiated by management to replace a prior employment agreement and provides for the following:— base salary of $371,600 per year, which will be reviewed annually;—An opportunity to earn an annual target bonus of 75% of annual base salary, with a payout range from zero to up to twice the amount of the target (based on the satisfaction of predetermined goals);—An annual equity opportunity commensurate with an executive-level position at the Company;—A car allowance of $1,500 per month;—Five weeks vacation each year; and—Severance benefits, including (a) a lump sum payment of unpaid salary and other benefits, and (b) a total amount equal to 262.5% of Mr. Fish’s current salary, paid in monthly installments over 18 months.Raymond P. Torok.Mr. Torok’s employment agreement with the Company, effective September 15, 2008 through August 2010, provided for the following:—An annual base salary initially at $340,698;—An opportunity to earn an annual target bonus of 75% of annual base salary, with a payout range from zero to up to twice the amount of the target (based on the satisfaction of predetermined goals);—An annual equity opportunity;—A car allowance of $1,500 per month;—Four weeks vacation each year; and—Severance benefits, including (a) a lump sum payment of unpaid salary and other benefits, and (b) a total amount equal to 262.5% of Mr. Torok’s current salary, paid in monthly installments over 18 months.In August 2010, Mr. Torok entered into a new employment agreement that reduced his base salary of $371,600 per year, which will be reviewed annually;$180,000 beginning October 1, 2010 and provided that he would be eligible to receive hisearn an annual target bonus for fiscal 2010. All incentive compensation after the bonus paid for fiscal 2010 would be discretionary. Mr. Torok’s severance was limited to hisof 75% of base salary, through September 30, 2011with a payout range from zero to up to twice the amount of the target (based on the satisfaction of predetermined goals);continuationlump sum payment of healthcare coverage forunpaid salary and other benefits and (b) a total amount equal to 262.5% of Mr. Fish's current salary, paid in monthly installments over 18 months.2010,2011, the Company had a change-in-control agreement with each of Messrs. Hyland, Hart, Leggett, Rogowski and Fish.Company.Company for federal or state income tax purposes. The agreements provide that no executive is entitled to receive duplicative severance benefits under any other Company-related plans or programs if benefits are triggered.NEO’sNEO's employment had terminated on September 30, 2010,2011, including (other than for Mr. Fish) a gross-up for certain taxes in the event that any payments made in connection with a change in control were subject to the excise tax imposed by Section 4999 of the Internal Revenue Code. The definitions that apply follow the table below.–- Severance arrangement for termination without cause or for good reason–- Termination without cause after a change-in-control or, if applicable, sale of segment–- Death, disability or retirementPotential Payments Upon Termination or Change-in-Control Potential Payments Upon Termination or Change-in-Control Table(1) Name Health, Welfare and Other Benefits Continuation Total Gregory E. Hyland A $ 3,173,625 (6) $ — $ — $ 32,656 (11) $ 25,000 $ — $ 3,231,281 B $ 3,202,465 (7) $ — $ 1,442,336 $ 32,656 (11) $ 298,550 $ — $ 4,976,007 C $ 549,009 (8) $ — $ 858,474 $ — $ — $ — $ 1,407,483 Evan L. Hart A $ 932,704 (6) $ — $ — $ 11,566 (10) $ 25,000 $ — $ 969,260 B $ 958,767 (7) $ — $ 248,675 $ 15,408 (11) $ 120,820 $ 597,919 $ 1,941,589 C $ — $ — $ 241,713 $ — $ — $ — $ 241,713 Gregory S. Rogowski A $ 1,049,427 (6) $ — $ — $ 7,313 (10) $ 25,000 $ — $ 1,081,740 B $ 1,178,703 (7) $ 70,739 $ 325,369 $ 9,750 (11) $ 135,940 $ — $ 1,720,501 C $ — $ — $ 325,369 $ — $ — $ — $ 325,369 Thomas E. Fish A $ 1,034,583 (6) $ — $ — $ 26,537 (10) $ 25,000 $ — $ 1,086,120 B $ 1,173,356 (9) $ 421,925 $ 327,581 $ 35,383 (11) $ 133,070 $ — $ 2,091,314 C $ — $ — $ 249,233 $ — $ — $ — $ 249,233 (1) Information related to Mr. Leggett is not included in the table because he is no longer employed by the Company. See “Compensation Discussion and Analysis - Rewarding Performance: Compensation Elements - Departure of Robert G. Leggett”). Pursuant to the terms of the Release and his employment agreement, Mr. Leggett received or is entitled to receive (a) cash severance of $1,382,322, (b) health, welfare and other benefits continuation of $20,389 and outplacement of $25,000 for a total of $1,427,711. (2) All NEOs are entitled to a pro rata share of the current fiscal year bonus in the event of termination without cause or after a change-in-control. Amounts in this table assume a termination date of September 30, 20102011 and represent the actual bonus paid for fiscal 20102011 since this amount would not have otherwise been paid at that date.(2)(3) The value of stock options is calculated as the difference between the closing price of our common stockCommon Stock per share on September 30, 20102011 and the option exercise prices per share multiplied by the number of options. The value of restricted stock units is the closing price of our common stockCommon Stock per share on September 30, 20102011 multiplied by the number of restricted stock units. The closing price of our common stock on September 30, 20102011 on the New York Stock Exchange was $3.02$2.48 per share. Upon termination due to death, disability or retirement, only the equity awards granted beginning November 2006 vest automatically in accordance with their terms. Mr. Leggett would be entitled to a payment for the value of unvested restricted stock units from his initial grant that would have vested within 18 months of the termination date. Mr. Torok was retirement-eligible at September 30, 2010 for purposes of the 2006 Stock Plan.(3)(4) Outplacement services will be provided for up to two years, but will not exceed 35% of the named executive officer’sNEO's base salary at the time of termination.(4)(5) The gross-up for purposes of Section 280G is calculated by determining if the total amount payable to the executive contingent upon a change-in-control exceeds 2.99 times the average of the annual eligible compensation payable to the executive during the preceedingpreceding five years. If the total amount payable exceeds the average annual compensation amount, a “gross-up”"gross-up" amount is added to the amounts paid to the executive in order to put the executive in the same after-tax position as if he had not been subject to the excise tax.(5)(6) Cash severance is equal to 300% (Mr. Hyland) of current annual base salary plus payout under the retirement plan,Retirement Plan plus accrued but untaken vacation. The percentage applicable to Mr.Messrs. Hart, is 255%. The percentage applicable to Messrs. Leggett, Rogowski and Fish is 262.5%. Cash severance to Mr. Hyland also includes payout under the retirement plan.Retirement Plan. Accrued vacation assumes that no vacation has been taken.(6)(7) Cash severance is equal to 2 times annual base salary plus 2 times the average bonus over the last three years, plus accrued but untaken vacation. Cash severance to Mr. Hyland’s severanceHyland also includes payout under the retirement plan.Retirement Plan. Accrued but untaken vacation assumes that no vacation has been taken as of September 30, 2010.taken.(7)(8) Cash severance isto Mr. Hyland also includes payout under the retirement plan.Retirement Plan.(8)(9) Cash severance is equal to the remainderlesser of 2 times annual base salary through September 30, 2011 and includes a payment forplus 2 times the average bonus over the last three years or 2.99 times annual base salary, plus accrued but unpaiduntaken vacation.(9)(10) Welfare benefits are continued for up to 18 months from the separation date based on the current elections and plan premiums. (10)(11) Welfare benefits are continued for up to 24 months from the separation date based on the current elections and plan premiums. —The Company hasCauseto terminate the executive officer:—Under the employment agreements upon (A) conviction or guilty plea of a felony or any crime involving fraud or dishonesty; (B) theft or embezzlement of property from the Company; (C) refusal to perform his employment duties; (D) fraudulent preparation of financial information of the Company; willful conduct that is demonstrably and materially injurious to the Company; or (E) willful violation of material Company policies or procedures.—Under the change-in-control agreements upon (A) conviction or guilty plea of a felony or any crime involving fraud or dishonesty; (B) refusal to perform his employment duties; (C) fraudulent preparation of financial information of the Company; or (D) willful conduct that is demonstrably and materially injurious to the Company.—The executive officer hasGood Reason to terminate his employment:—Under the employment agreements if the Company (A) assigns the executive officer duties that are materially inconsistent with his position or materially reduce or alter the executive officer’s position; (B) requires that the executive officer be based at a location different from the location of his principal job location or office; or (C) materially reduces the executive officer’s base salary.—Under the change-in-control agreements if the Company (A) assigns the executive officer duties that are materially inconsistent with his position or materially reduce or alter the executive officer’s position; (B) requires that the executive officer be based at a location in excess of 50 miles from the location of his principal job location or office; (C) reduces the executive officer’s base salary; (D) fails to continue in effect any of the Company’s benefit plans in which the executive officer participates unless such failure to continue the benefits pertains to all plan participants generally; (E) fails to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Company’s obligations under the agreement; or (F) materially breaches any of the provisions of the agreement.—Achange-in-control of the Company exists if:—Any person acquires more than 30% of the combined voting power of the Company’s outstanding securities;—A majority of the Board is replaced;—A merger or consolidation of the Company is completed, with more than a 33 1/3% beneficial ownership change; or—The Company’s stockholders approve a plan or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets. which consists solely of independent directors, is responsible for reviewing and considering any revisions to director compensation. The Board reviews the Compensation Committee’sCommittee's recommendations and determines the amount of director compensation. The Board determined that compensation for non-employee directors should be a mix of cash and equity-based compensation. The interests of directors are aligned with the interests of stockholders by linking a portion of their compensation to stockCommon Stock performance. Under our stock ownership guidelines, directors are expected to keep all of the shares, net of shares used to pay the exercise price, or withholding taxes, thatwhich they receive as compensation or acquire by other means until they own shares equal in market value to at least four times their annual retainer.Company’s Peer Group. Any changes are reviewed with the Compensation Consultant.$46,500.$45,000. We pay annual retainers in quarterly installments.2010,2011, the Chair of the Audit Committee and the Compensation Committee each received $12,000$15,000 for serving as Chair, andwhile the Chair of the Compensation Committee received $8,750 for serving as Chair. The Chair of each of the Nominating Committee and EHS Committee each received $7,500 for serving as Chair.Committeecommittee meeting that they attend. Meeting fees are paid promptly after attendance is confirmed at a Board or Committee meeting.2010,2011, the Compensation Committee determined that the annual equity grant for continuing non-employee directors would have an economic value of $80,000$71,051 split equally between stock options and restricted stock units. The number of units equivalent to the economic value of those awards is determined by Meridianthe Compensation Consultant using the same methodologies used in determining the value of similar equity awards to management.28, 2010,26, 2011, each non-employee director (other than Ms. Franklin, who had not served as a director for six months at the time of the award, and Mr. Hansen, who had not yet joined the Board) was awarded (a) options to purchase 15,094 shares of common stockCommon Stock with an exercise price equal to $4.67$4.21 per share, the closing price of the common stockCommon Stock on the New York Stock Exchange on the grant date, and (b) 9,174 restricted stock units.20102011 compensation for our non-employee directors. None of our non-employee directors received any non-equity incentive plan compensation or participated in our pension or nonqualified deferred compensation plans. Mr. Hyland, our Chairman, President and Chief Executive Officer, does not receive any compensation in connection with his service as a director.Fiscal 2010 Director Compensation Fiscal 2011 Director Compensation Table Name Fees Earned or Paid in Cash ($) Total ($) Total Donald N. Boyce $ 60,000 $ 25,500 $ 85,500 $ 38,623 $ 23,547 $ — $ 147,670 Howard L. Clark Jr. $ 52,500 $ 22,500 $ 75,000 $ 38,623 $ 23,547 $ — $ 137,170 Shirley C. Franklin $ 45,000 $ 24,000 $ 69,000 $ 42,013 $ 26,580 $ — $ 137,593 Jerry W. Kolb $ 45,000 $ 37,500 $ 82,500 $ 38,623 $ 23,547 $ — $ 144,670 Joseph B. Leonard $ 45,000 $ 10,500 $ 55,500 $ 38,623 $ 23,547 $ — $ 117,670 Mark J. O’Brien $ 45,000 $ 21,000 $ 66,000 $ 38,623 $ 23,547 $ — $ 128,170 Bernard G. Rethore $ 52,500 $ 43,500 $ 96,000 $ 38,623 $ 23,547 $ — $ 158,170 Neil A. Springer $ 60,000 $ 37,500 $ 97,500 $ 38,623 $ 23,547 $ — $ 159,670 Lydia W. Thomas $ 45,000 $ 24,000 $ 69,000 $ 38,623 $ 23,547 $ — $ 131,170 Michael T. Tokarz (3) $ 45,000 $ 22,500 $ 67,500 $ 38,623 $ 23,547 $ 3,738 $ 133,408 (1) Includes fees earned as chair of a committee of the board of directors.Board.(2) ValuesThe amounts reflect the amounts attributed toexpenses arising from restricted stock units and nonqualified stock options granted during fiscal 20102011 that is expectedmanagement expects to be recognizedrecognize for financial reporting purposes. The amounts representExpense is recognized over the aggregate grant date fair valueshorter of the awards granted to each director computed in accordance with stock-based accounting rules (FASB ASC Topic 718). Assumptions used in determining these amounts are included in Note 12 (Stock-based Compensation Plans) to our fiscal 2010 consolidated financial statements, which are included in our Annual Report on Form 10-K filed with the SEC on November 24, 2010. These awards generally vest in thirds on each of the three anniversary dates subsequent to the grant date. Oncegrants' three-year terms or until a director becomes retirement-eligible pursuant to the terms of the 2006 Stock Plan, all unvested awards vest at that date.Plan. Messers. Boyce, Clark, Kolb, Leonard, O’Brien,O'Brien, Rethore and Springer were retirement eligible at September 30, 2010. Option Awards Stock Awards Number of Securities
Underlying Unexercised
Options (#) Grant Date Exercisable
(a) Unexercisable Option
Exercise
Price ($) Option
Expiration
Date Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#) (b) Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($) (c) 05/25/06 10,700 — $ 16.00 05/25/16 03/22/07 12,600 — $ 14.19 03/22/17 01/30/08 9,701 — $ 7.95 01/30/18 — $ — 01/28/09 9,546 — $ 7.76 01/28/19 — $ — 01/28/10 15,094 — $ 4.67 01/28/20 — $ — 57,641 — — $ — 01/30/08 2,908 $ 8,782 01/28/09 3,182 6,364 $ 7.76 01/28/19 3,662 $ 11,059 01/28/10 — 15,094 $ 4.67 01/28/20 9,174 $ 27,705 3,182 21,458 15,744 $ 47,547 05/25/06 10,700 — $ 16.00 05/25/16 03/22/07 12,600 — $ 14.19 03/22/17 01/30/08 6,467 3,234 $ 7.95 01/30/18 1,454 $ 4,391 01/28/09 3,182 6,364 $ 7.76 01/28/19 3,662 $ 11,059 01/28/10 — 15,094 $ 4.67 01/28/20 9,174 $ 27,705 32,949 24,692 14,290 $ 43,156 (a)Except as otherwise indicated, all outstanding stock options vest in equal installments on the first, second and third anniversary of the grant date. Messrs. Boyce, Clark, Kolb, Leonard, O’Brien, Rethore and SpringerDr. Thomas were each retirement-eligible at September 30, 2010 pursuant to2011. Mr. Boyce resigned from the terms of the 2006 Stock Plan.Board in November 2011. Ms. ThomasFranklin becomes retirement-eligible on June 8,February 4, 2013 and Mr. Tokarz becomes retirement-eligible on January 29, 2013.(3) Mr. Tokarz deferred the receipt of all of the director compensation earned in fiscal 2011 into 18,320.73 phantom shares of Common Stock. "All Other Compensation" represents amounts accrued on identical terms to dividends paid on Common Stock related to the accumulated phantom share balance. Option Awards Stock Awards Number of Securities Underlying Unexercised Options (#) Name Grant Date Exercisable Unexercisable Boyce, Clark, Kolb, Leonard, O'Brien, Rethore, Springer and Thomas (2) 5/25/2006 10,700 — $ 16.00 5/25/2016 3/22/2007 12,600 — $ 14.19 3/22/2017 1/30/2008 9,701 — $ 7.95 1/30/2018 — $ — 1/28/2009 9,546 — $ 7.76 1/28/2019 — $ — 1/28/2010 15,094 — $ 4.67 1/28/2020 — $ — 1/26/2011 15,094 — $ 4.21 1/26/2021 — $ — 72,735 — — $ — Franklin (3) 11/1/2010 0 25,806 2.92 11/1/2010 14,388 35,682 Tokarz (4) 5/25/2006 10,700 — $ 16.00 5/25/2016 3/22/2007 12,600 — $ 14.19 3/22/2017 1/30/2008 9,701 — $ 7.95 1/30/2018 1/28/2009 6,364 3,182 $ 7.76 1/28/2019 1,831 $ 4,541 1/28/2010 5,032 10,062 $ 4.67 1/28/2020 6,116 $ 15,168 1/26/2011 — 15,094 $ 4.21 1/26/2021 9,174 $ 22,752 44,397 28,338 17,121 $ 42,460 (1) The "market value" is calculated by multiplying the number of restricted stock units that have not vested by the closing price of Common Stock on the New York Stock Exchange on September 30, 2011 of $2.48 per share. (2) Each of these directors is retirement-eligible at September 30, 2011 pursuant to the terms of the 2006 Stock Plan. Therefore, their outstanding stock options are deemed vested and restrictions on their restricted stock units are deemed lapsed. Mr. TokarzBoyce resigned from the Board in November 2011.(3) Ms. Franklin becomes retirement-eligible on January 17,February 4, 2013 pursuant to the terms of the 2006 Stock Plan.(b)All Therefore, all of her outstanding stock options will be deemed vested and restrictions on her restricted stock units will be deemed lapsed on that date. Otherwise, outstanding stock options vest and restrictions on restricted stock units lapse in equal installments on the first, second and third anniversaryanniversaries of the grant date. Messrs. Boyce, Clark, Kolb, Leonard, O’Brien, Rethore and Springer were each retirement-eligible at September 30, 2010. Ms. Thomas becomes retirement-eligible on June 8, 2011 pursuant to the terms of the 2006 Stock Plan. dates.(4) Mr. Tokarz becomes retirement-eligible on January 17,29, 2013 pursuant to the terms of the 2006 Stock Plan.(c)Represents the number of restricted stock units for which the restrictions have not yet lapsed at September 30, 2010 multiplied by $3.02, the closing price per share of our common stock on September 30, 2010. The closing price of our common stock was $4.01 per share on December 13, 2010.(d)Each of these directors is retirement-eligible at September 30, 2010 pursuant to the terms of the 2006 Stock Plan. Therefore, all of theirhis outstanding stock options will be deemed vested and restrictions on his restricted stock units arewill be deemed vested atlapsed on that date.
Jerry W. Kolb Mark J. O'Brien Neil A. SpringerDirectors’Directors' Deferred Fee Plan, as amended, under which non-employee directors may elect to defer all or a portion of their directors’directors' fees. The Company credits the deferred fees, at each electing director’sdirector's option, to either an income account or a stock equivalent account, or divides the fees between the two accounts. If a director elects the income account, the Company credits the director’sdirector's fees otherwise payable as a dollar amount to the director’sdirector's income account on the date such fees would otherwise have been paid. The Company credits the income account quarterly with interest at an annual rate equal to the yield of a 10-year U.S. Treasury Note at the beginning of such calendar quarter plus 1.00%. If a director elects the stockdirector’sdirector's fees otherwise payable during a calendar quarter to stock equivalent shares equal in number to the maximum number of shares of common stock,Common Stock, or fraction thereof (to the nearest one hundredth (1/100) of one share), which could be purchased with the dollar amount of such fees at the closing market price of the common stockCommon Stock on the first trading day of the following calendar quarter. The Company also credits the stock equivalent account with stock equivalent shares equal in number to the maximum number of shares of common stock,Common Stock, or fraction thereof (to the nearest one hundredth (1/100) of one share), which could have been purchased with the cash dividend, if any, which would have been payable had the participant been the actual owner of thea number of shares of commonCommon Stock equal to the number of stock equivalent shares credited to his account at the payment date for such dividend.participant’sparticipant's termination of his or her services as a director, with the payment made in cash in one, five, ten or fifteen annual installments as determined by the participating director in his or her election form. During fiscal 2010,2011, Mr. Tokarz was the only non-employee director thatwho participated in this plan. Mr. Tokarz’sTokarz's deferred payments are maintained in a stock equivalent account. of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for fiscal 2010 and the Company’s 2011Company's 2012 Proxy Statement.Compensation and Human Resources Committee Donald N. Boyce,ChairBernard G. Rethore
2011: Audit Committee Thomas J. Hansen Bernard G. Rethorereportsreported as follows with respect to the audit of the Company’sCompany's consolidated financial statements for the year ended September 30, 2010:Committee’sCommittee's responsibility is to monitor and oversee the Company’sCompany's financial reporting, internal controls over financial reporting and audit functions. The Audit Committee has reviewed and discussed the consolidated financial statements with management and Ernst & Young LLP, the Company’sCompany's independent registered public accounting firm for fiscal 2010.2011. Management is responsible for the preparation, presentation and integrity of the Company’sCompany's financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.Company’sCompany's internal control over financial reporting.Company’s Annual ReportCompany's annual report on Form 10-K for the year ended September 30, 20102011 filed with the SEC, as well as Ernst & Young LLP’sLLP's Reports of Independent Registered Public Accounting Firm included in the Company’s Annual ReportCompany's annual report on Form 10-K related to its audits of the consolidated financial statements and the internal control over financial reporting.accountant’saccountant's communications with the Audit Committee concerning independence and the Audit Committee has discussed with Ernst & Young LLP their firm’sfirm's independence.Committee’sCommittee's review of the representations of management, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual ReportCompany's annual report on Form 10-K for the year ended September 30, 2010 for filing with the SEC.2011.Audit CommitteeNeil A. Springer, Chair ChairmanShirley C. Franklin Jerry W. Kolb
2011. Audit fees (1) Audit-related fees (2) Tax fees All other fees Total fees Name of Beneficial Owner Donald N. Boyce, Director Howard L. Clark, Jr., Director Shirley C. Franklin Director Gregory E. Hyland, Chairman, President and Chief Executive Officer Jerry W. Kolb, Director Joseph B. Leonard, Director Mark J. O’Brien, Director Bernard G. Rethore, Director Neil A. Springer, Director Lydia W. Thomas, Director Michael T. Tokarz, Director Evan L. Hart, Senior Vice President and Chief Financial Officer Robert G. Leggett, Executive Vice President and Chief Operating Officer Gregory S. Rogowski, President, Mueller Co. Thomas E. Fish, President, Anvil Raymond P. Torok, Chairman, U.S. Pipe All directors and executive officers as a group (22 individuals) Title of Class Name and Address of Beneficial Owner Common stock, par value $0.01 Blackrock, Inc. (A) 40 East 52nd Street New York, NY 10022 Blackrock, Inc. reported beneficial ownership, sole voting power and sole dispositive power of 8,717,462 shares. late and related to a vesting that occurred on October 8, 2010 and Form 5 filings that reported broker-initiated dividend reinvestment purchases by Mr. Fish and Mr. Dunn. proposal of such business by such stockholder. If the notice does not contain all of the information specified in Section 2.03(A)(3) of the 14, 2011 (“Ernst & Young”) as the independent registered public accounting firm to audit the Company’sCompany's consolidated financial statements and internal control over financial reporting for the year ended September 30, 2010.forduring the fiscal years ended September 30, 20102011 and 20092010 (in millions). Fiscal 2010 Fiscal 2009 $ 2.8 $ 2.8 0.2 0.3 – – 0.7 – $ 3.7 $ 3.1 Fiscal 2011 Fiscal 2010 Audit fees (1) $ 2.6 $ 2.8 Audit-related fees (2) — 0.2 Tax fees — — All other fees — 0.7 Total fees $ 2.6 $ 3.7 (1) These amounts reflect fees for professional services performed by Ernst & Young LLP for the annual auditaudits (including out-of-pocket expenses) and quarterly limited reviews of the Company’sCompany's consolidated financial statements.(2) These amounts reflect fees for professional services performed by Ernst & Young LLP for assurance and related services that are reasonably related to the performance of the audit or review of the Company’sCompany's financial statements and are not reported under the “Audit Fees” above (principally for work done by Ernst & Young LLP related to the Company’s Registration Statement filed on Form S-8, the Company’s Shelf Registration Statement filed on Form S-3, the September 2009 public offering of common stock and the August 2010 issuance of senior unsecured notes).Company’sCompany's independent registered public accounting firm. Specifically, non-audit fees to be incurred by the Company’sCompany's independent registered public accounting firm for services permitted by the Sarbanes-Oxley Act to be performed by such firm must be approved in advance by the Audit Committee Chair (for individual projects in amounts up to $100,000) or the Audit Committee.November 20, 2010,December 5, 2011, as to: (A) shares of common stockCommon Stock beneficially owned by each current director each nominee for director and each NEO of the Company;NEO; and (B) shares of common stockCommon Stock beneficially owned by all current directors and executive officers of the Company as a group. Except as indicated below, to the knowledge of the Company management, each person indicated in the following table has sole voting and investment power as to the shares shown.November 20, 2010,December 5, 2011, there were 154,893,560156,545,457 shares of common stockCommon Stock outstanding. Information related to Mr. Boyce is not included in the table. Mr. Boyce resigned from the Board in November 2011. Number of
Shares of
Common
Stock
Beneficially
Owned Percent of
Outstanding
Common
Stock 89,975 (A) * 79,671 (A) * 0 * 1,459,989 (B) * 96,823 (A) * 86,671 (A) * 86,671 (A) * 102,975 (A) * 85,497 (A) * 10,830 (A) * 294,441 (A) * 163,502 (C) * 287,952 (D) * 50,700 (E) * 283,312 (F) * 360,300 * 4,290,752 (G) 2.8 % Name of Beneficial Owner (1) Howard L. Clark, Jr., Director 75,600 * Shirley C. Franklin Director 22,990 * Thomas J. Hansen, Director 14,492 * Gregory E. Hyland, Chairman, President and Chief Executive Officer 3,054,109 1.9% Jerry W. Kolb, Director 92,752 * Joseph B. Leonard, Director 82,600 * Mark J. O’Brien, Director 82,600 * Bernard G. Rethore, Director 98,904 * Neil A. Springer, Director 81,426 * Lydia W. Thomas, Director 43,962 * Michael T. Tokarz, Director 282,600 * Evan L. Hart, Senior Vice President and Chief Financial Officer 538,541 * Robert G. Leggett, Former Executive Vice President and Chief Operating Officer 460,186 * Gregory S. Rogowski, President, Mueller Co. 379,138 * Thomas E. Fish, President, Anvil 659,644 * Paul Ciolino, President, U.S. Pipe 243,465 * All directors and executive officers as a group (20 individuals) 7,104,075 4.5% * Less than 1% of outstanding common stock. (A)Includes options to purchase 57,641 shares(1) The address of common stock, for alleach of our directors other than Ms. Franklin, Mr. Hyland, Dr. Thomas and Mr. Tokarz. Additional information with respect to Mr. Hyland’s beneficial ownership of common stockexecutive officers is provided in footnote (B). Dr. Thomas’ share total includes options to purchase 3,182 shares of common stock. Mr. Tokarz’s share total includes options to purchase 32,949 shares of common stock.c/o Mueller Water Products, Inc., 1200 Abernathy Road, N.E., Suite 1200, Atlanta, Georgia 30328.(B)Includes options to purchase 283,887 shares of common stock and 152,519 restricted stock units that vest within 60 days of November 20, 2010.(C)Includes options to purchase 53,870 shares of common stock and 30,549 restricted stock units that vest within 60 days of November 20, 2010.(D)Includes options to purchase 59,141 shares of common stock and 34,743 restricted stock units that vest within 60 days of November 20, 2010.(E)Includes options to purchase 28,613 shares of common stock and 17,375 restricted stock units that vest within 60 days of November 20, 2010.(F)Includes options to purchase 62,582 shares of common stock and 32,996 restricted stock units that vest within 60 days of November 20, 2010.(G)Includes (1) options to purchase 628,672 shares of common stock (all of which were out-of-the-money as of November 20, 2010) and (2) 345,326 restricted stock units that vest within 60 days of November 20, 2010.the Company’s common stock.Common Stock. The information in the table is based on information furnished by the specified persons pursuant to Schedules 13D and 13G filed by each of them with the SEC and on the number of shares of the CompanyCommon Stock issued and outstanding at November 20,December 5, 2011.Title of Class Amount and Nature of Beneficial Ownership Percent of Class Common Stock, par value $0.01 11,616,486 7.46% 8,717,462 5.6% 8,668,826 5.56% 8,250,000 5.3% (154,893,560). Amount and
Nature of
Beneficial
Ownership Percent of
Class 11,405,431 7.4 % (A)Based on a Schedule 13G filed on January 29, 2010, as of December 31, 2009 Blackrock, Inc. reported beneficial ownership of 11,405,431 shares, sole voting power as to 11,405,431 shares and sole dispositive power as to 11,405,431 of those shares. On December 1, 2009, Blackrock completed its acquisition of Barclays Global Investors from Barclays Bank PLC. As a result, substantially all of the Barclays Global Investors entities are included as subsidiaries of Blackrock for purpose of Schedule 13G filings.the Company’sa company's common stock (the “Reporting Persons”) to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than 10% beneficial owners are required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.the fiscal year ended September 30, 20102011, except for Form 4s for Mr. Rogowski and Mr. Fish that were inadvertently filed one day and two days late, respectively, a Form 4 for Mr. FishRobert D. Dunn, the Company's Senior Vice President, Human Resources, that was inadvertently filed approximately four weeks late.whichthat other persons intend to present at the Annual Meeting. Should any other matter or business requiring a vote of stockholders arise, the persons named in the enclosed proxy intend to exercise the authority conferred by the proxy and vote the shares represented thereby in respect of any such other matter or business in accordance with their best judgment in the interest of the Company.Annual Reportannual report on Form 10-K for the fiscal year ended September 30, 20102011 filed with the SEC, Station Place, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and the New York Stock Exchange. A copy of the Form 10-K (excluding exhibits) will be furnished, without charge, by writing to the Corporate Secretary, Mueller Water Products, Inc., 1200 Abernathy Road, N.E., Suite 1200, Atlanta, Georgia 30328. The Form 10-K is also available on the Company’sCompany's website atwww.muellerwaterproducts.com.20122013 Proxy StatementCompany’sCompany's proxy materials for the 2012 Annual Meeting2013 annual meeting of Stockholders,stockholders, such proposal must be received by the Company not later than the close of business at 5:00 p.m.P.M. (Eastern time) on August 19, 201117, 2012 for inclusion, pursuant to Rule 14a-8 under the Exchange Act, in the Company’sCompany's proxy statement for such meeting. Such proposal also will need to comply with SEC regulations regarding the inclusion of stockholder proposals in Company-sponsored proxy materials. In order to allow the Company to identify the proposal as being subject to Rule 14a-8 and to respond in a timely manner, stockholder proposals are required tomust be submitted to the Office of the Corporate Secretary as follows:20122013 Annual Meeting of StockholdersCompany’sCompany's Bylaws provide a formal procedure for bringing business before the annual meeting of stockholders. A stockholder proposing to present a matter or nominate a director for consideration at the 2012 Annual Meeting2013 annual meeting of Stockholdersstockholders is required to deliver a written notice to the Corporate Secretary of the Company, no earlier than the close of business at 5:00 p.m.P.M. (Eastern time) on August 19, 20112012 and not later than September 19, 2011.18, 2012. In the event that the date of the 20122013 Annual Meeting of Stockholders is more than 30 days before or more than 60 days after the anniversary date of the Annual Meeting, the notice must be delivered to the Corporate Secretary of the Company not earlier than the 120th day prior to such 2012 Annual Meeting2013 annual meeting of Stockholdersstockholders and not later than the later of the 90th day prior to such 2012 Annual Meeting2013 annual meeting of Stockholdersstockholders or, if the number of directors to be elected to the Board at an annual meeting is increased and the first public announcement naming all the nominees for director or specifying the size of the increased Board is less than 100 days prior to the anniversary of the mailing date of proxy materials for the prior year’syear's annual meeting, the 10th day following the day on which such public announcement is first made by the Company.Company’sCompany's Bylaws, including the name and address of the stockholder and the beneficial owner on whose behalf the proposal is made, the class and number of shares of the Company’s stockCompany's Common Stock owned beneficially by such stockholder and such beneficial owner, any derivative instrument directly or indirectly owned beneficially by such stockholder. The notice must also set forth a brief description of the business desired to be brought, the text of the proposal and the reasons for conducting such business at the annual meeting, and a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons in connection with theCompany’sCompany's Bylaws, the proposed business will not be transacted at the annual meeting. Such Bylaw provisions are not intended to affect any rights of stockholders to request inclusion of proposals in the Company’sCompany's proxy statement pursuant to Rule 14a-8 under the Exchange Act.3, 20112, 2012 of an intent to present a proposal at the Company’s 2012 Annual MeetingCompany's 2013 annual meeting of Stockholdersstockholders (and for any reason the proposal is voted upon at that annual meeting), the Company’sCompany's proxy holders will have the right to exercise discretionary voting authority with respect to the proposal, if presented at the annual meeting, without including information regarding the proposal in its proxy materials.stockholder’sstockholder's proposal has been included in a proxy statement that has been prepared by the Company to solicit proxies for such annual meeting. The Company may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Company.Company’sCompany's Bylaws provide the formal procedure for nominations by stockholders of director candidates. A stockholder intending to make such a nomination is required to deliver to the Corporate Secretary of the Company, a notice that contains all of the information specified in Section 2.03(A)(3) of the Company’sCompany's Bylaws, including the name and address of the stockholder and the beneficial owner on whose behalf the proposal is made, the class and number of shares of the Company’sCompany's stock owned beneficially by such stockholder and such beneficial owner, any derivative instrument directly or indirectly owned beneficially by such stockholder. As to each person, if any, whom the stockholder proposes to nominate for election or reelection to the Board, the notice must set forth all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, including such person’sperson's written consent to being named in the proxy statement as a nominee and to serving as a director if elected, and a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships between or among such stockholder and beneficial owner, if any, and each proposed nominee. If the notice does not contain all of the information specified in Section 2.03(A)(3) of the Company’sCompany's Bylaws, the proposed business will not be transacted at the annual meeting. Such BylawBylaws provisions are not intended to affect any rights of stockholders to request inclusion of proposals in the Company’sCompany's proxy statement pursuant to Rule 14a-8 under the Exchange Act.On August 25, 2010, the SEC adopted new rules relating to the ability of certain stockholders to nominate directors for election, often referred to as proxy access. These rules will not be applicable to our 2011 Annual Meeting but may provide stockholders with additional procedures for nominating directors commencing with our 2012 Annual Meeting.ROBERT BARKER15, 201020112012 Annual Meeting of Stockholders26,25, 2011 at 10:00 A.M., local timeGrand Hyatt Atlanta in3300 Hotel3030530326