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| L. B.415 Holiday Drive, Suite 100
Pittsburgh, Pennsylvania 15220
|
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY
25, 201623, 2024
To Our Shareholders:
L. B.
L.B. Foster Company
(the “Company”) will hold its Annual Meeting of Shareholders
at the DoubleTree Hotel at 500 Mansfield Avenue, Pittsburgh, Pennsylvaniain a virtual-only format on
Wednesday,Thursday, May
25, 2016,23, 2024, at 8:
0030 AM, Eastern Daylight Time (the “Annual Meeting” or the “Meeting”)
,. You will not be able to attend the Meeting in person at a physical location. We believe that hosting a virtual Annual Meeting enables greater shareholder attendance and participation from any location around the world, improves meeting efficiency and our ability to communicate effectively with our shareholders, and reduces the cost and environmental impact of the Meeting. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/FSTR2024 you must enter the control number found on your proxy card, voting instruction form, or Notice of Internet Availability of Proxy Materials (the “Notice”) you previously received. Once admitted to the Meeting, you may vote during the Annual Meeting, submit questions, and view the list of shareholders entitled to vote by following the instructions available on the Meeting website. The Meeting will be held for the purposes of:
1.
| 1. | ElectingElection of a board of eight directors for the ensuing year;one-year terms; |
2.
| 2. | RatifyingRatification of the appointment of Ernst & Young LLP as ourthe Company’s independent registered public accounting firm for 2016;2024; |
| 3.
| Advisory approval of the compensation paid to the Company’s named executive officers in 2015;2023; and |
| 4.
| Approval of the L.B. Foster Company 2022 Equity and Incentive Compensation Plan (as Amended and Restated 2006 Omnibus Incentive Plan; andRestated). |
| 5. | Acting upon any other matters that properly come before the Annual Meeting. |
Shareholders will also be asked to consider and act upon such other business that properly comes before the Annual Meeting.
Shareholders are cordially invited to attend the Annual Meeting. Only holders of record of Company
Common Stockcommon stock at the close of business on March
23, 201621, 2024 will be entitled to vote at the
meetingAnnual Meeting or at any adjournment
or postponement thereof.
U.S. Securities and Exchange Commission rules allow companies to furnish proxy materials to their shareholders over the Internet. This process expedites shareholder receipt of proxy materials and lowers the cost of our Annual Meeting. On or about April
13, 2016,12, 2024, we
mailedreleased to our shareholders a Notice
of Internet Availability containing instructions on how to access our
20162024 Proxy Statement and
20152023 Annual Report and how to cast your vote. The Notice also includes instructions on how to receive a paper copy of the Annual Meeting materials.
Your vote is important. Whether you plan to attend the Annual Meeting or not, we hope you will vote your shares as soon as possible. Please sign, date, and return your proxy card or voting instruction form or vote by telephone or via the Internet; instructions are included on the
Notice, proxy card, and
votervoting instruction form.
If you plan to attend the Annual Meeting in person, please detach the Admission Ticket from your proxy card and bring it to the Meeting. If you are a beneficial owner of shares held in “street name” through a broker, bank, or other intermediary, please contact your broker, bank, or other intermediary to obtain evidence of ownership and a legal proxy, which you must bring with you to the Meeting. | |
| | | Patrick J. Guinee
|
Pittsburgh, Pennsylvania | | | Executive Vice President, General Counsel &
Corporate Secretaryand |
April 12, 2024 | |
Pittsburgh, Pennsylvania
April 13, 2016
| |
TABLE OF CONTENTS TABLE OF CONTENTS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Proxy Statement contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements include any statement that does not directly relate to any historical or current fact. Sentences containing words such as “believe,” “intend,” “strive,” “seek,” “aim,” “plan,” “may,” “expect,” “should,” “could,” “anticipate,” “estimate,” “predict,” “project,” “target,” “goal,” or their negatives, or other similar expressions of a future or forward-looking nature generally should be considered forward-looking statements. Forward-looking statements in this Proxy Statement are based on management’s current expectations and assumptions about future events that involve inherent risks and uncertainties and may concern, among other things, L.B. Foster Company’s (the “Company’s”) expectations relating to our strategy, goals, projections, and plans regarding our financial position, liquidity, capital resources, and results of operations and decisions regarding our strategic growth initiatives, market position, and product development. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: any future global health crises, and the related social, regulatory, and economic impacts and the response thereto by the Company, our employees, our customers, and national, state, or local governments; a continuation or worsening of the adverse economic conditions in the markets we serve, including recession, the continued volatility in the prices for oil and gas, governmental travel restrictions, project delays, and budget shortfalls, or otherwise; volatility in the global capital markets, including interest rate fluctuations, which could adversely affect our ability to access the capital markets on terms that are favorable to us; restrictions on our ability to draw on our credit agreement, including as a result of any future inability to comply with restrictive covenants contained therein; a decrease in freight or transit rail traffic; environmental matters, including any costs associated with any remediation and monitoring of such matters; the risk of doing business in international markets, including compliance with anti-corruption and bribery laws, foreign currency fluctuations and inflation, global shipping disruptions, and trade restrictions or embargoes; our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses or to divest businesses, such as the recent dispositions of the Track Components, Chemtec, and Ties businesses, and acquisitions of the Skratch Enterprises Ltd., Intelligent Video Ltd., VanHooseCo Precast LLC, and Cougar Mountain Precast, LLC businesses and to realize anticipated benefits; costs of and impacts associated with shareholder activism; the timeliness and availability of materials from our major suppliers, as well as the impact on our access to supplies of customer preferences as to the origin of such supplies, such as customers’ concerns about conflict minerals; labor disputes; cybersecurity risks such as data security breaches, malware, ransomware, “hacking,” and identity theft, which could disrupt our business and may result in misuse or misappropriation of confidential or proprietary information, and could result in the disruption or damage to our systems, increased costs and losses, or an adverse effect to our reputation, business or financial condition; the continuing effectiveness of our ongoing implementation of an enterprise resource planning system; changes in current accounting estimates and their ultimate outcomes; the adequacy of internal and external sources of funds to meet financing needs, including our ability to negotiate any additional necessary amendments to our credit agreement or the terms of any new credit agreement, and reforms regarding the use of SOFR as a benchmark for establishing applicable interest rates; the Company’s ability to manage its working capital requirements and indebtedness; domestic and international taxes, including estimates that may impact taxes; domestic and foreign government regulations, including tariffs; economic conditions and regulatory changes caused by the United Kingdom’s exit from the European Union; geopolitical conditions, including the ongoing conflicts between Russia and Ukraine and Israel and Hamas; a lack of state or federal funding for new infrastructure projects; an increase in manufacturing or material costs; the loss of future revenues from current customers; and risks inherent in litigation and the outcome of litigation and product warranty claims. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The forward-looking statements in this Proxy Statement are made as of the date of this Proxy Statement and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by the federal securities laws. TABLE OF CONTENTS L. B.This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of L. B.L.B. Foster Company (the “Company”) to be voted at the May 25, 201623, 2024 Annual Meeting of Shareholders and at any adjournment or postponement thereof (the “Annual Meeting” or the “Meeting”). This Proxy Statement, the Notice of Internet Availability of Proxy Materials, the proxy card, and our 20152023 Annual Report to Shareholders were each made available to shareholders on the Internet, free of charge, at www.proxyvote.comor mailed on or about April 13, 2016.12, 2024. At the close of business on March 23, 2016,21, 2024, the record date for entitlement to vote at the Meeting (“Record(the “Record Date”), there were 10,341,64710,971,832 shares of common stock outstanding. Only holders of record of our common stock at the close of business on the Record Date are entitled to notice of, and to vote at, the Meeting or at any adjournment or postponement thereof. Such shareholders will have one vote for each share held on that date. The presence, in person or by proxy, of the shareholders entitled to cast at least a majority of the votes that all shareholders are entitled to cast on a matter to be acted on at the Annual Meeting will constitute a quorum. Where a shareholder’s proxy or ballot is properly executed and returned but does not provide voting instructions, the shares of such shareholder will nevertheless be counted as being present at the Meeting for the purpose of determining a quorum. Abstentions and “broker non-votes” (as described below) will be counted for purposes of determining a quorum. If your shares are held in “street name” (i.e. , held for your account by a broker or other nominee), you should receive instructions from the holder of record on voting your shares. If a shareholder holds shares beneficially in street name and does not provide the shareholder’s broker with voting instructions, such shares may be treated as “broker non-votes.” Generally, broker non-votes occur when a broker is not permitted to vote on a particular matter without instructions from the beneficial owner and instructions have not been given. Brokers that have not received voting instructions from their clients cannot vote on their clients’ behalf on “non-routine” proposals, such as the election of directors and executive compensation matters (for purposes of this Proxy Statement, Proposals 1, 3, and 4), although they may vote their clients’ shares on “routine” proposals, such as the ratification of the independent registered public accounting firm (for purposes of this Proxy Statement, Proposal 2). In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal. Directors will be elected by a plurality of the votes cast by the holders of the shares voting in person or represented by proxy at the Meeting. Only votes FOR or AGAINST this proposalWITHHELD on the election of each director nominee under Proposal 1 count as votes cast. Abstentions and brokerBroker non-votes are not considered to be votes cast for each director nominee under Proposal 1 and will have no effect on this proposal.the vote. Our common stock does not have cumulative voting rights in the election of directors. The Audit Committee of the Board has appointed Ernst & Young LLP (“Ernst & Young”) as the Company’s independent registered public accounting firm for 2016.2024. The affirmative vote of a majority of the votes cast by the Company’s shareholders entitled to vote shall ratify this appointment. Only votes FOR or AGAINST this proposal count as votes cast. Abstentions and broker non-votes are not considered to be votes cast on this proposal. Brokers have discretion to vote on this item. The advisory vote to approveapproval of the compensation paid to the Company’s named executive officers in 20152023 as reported in this Proxy Statement will be determined by the affirmative vote of a majority of the votes cast by the Company’s shareholders entitled to vote. Only votes FOR or AGAINST this proposal count as votes cast. Abstentions and broker non-votes are not considered to be votes cast on this proposal. The vote to approveapproval of on the L.B. Foster Company 2022 Equity and Incentive Compensation Plan (as Amended and Restated 2006 Omnibus IncentiveRestated) to authorize additional shares for issuance under the Plan will be determined by the affirmative vote of a majority of the votes cast by the Company’s shareholders entitled to vote. Only votes FOR or AGAINST this proposal count as votes cast. Abstentions and broker non-votes are not considered to be votes cast on this proposal.
TABLE OF CONTENTS If theyou are a shareholder of record and your form of proxy is properly executed and returned, it will be voted as directed. If no directions are given, the proxy will be voted FOR the election of each of the eight director nominees named herein as directors;for one-year terms; FOR the ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm for 2016;2024; FOR the advisory approval of the compensation paid to the Company’s named executive officers in 2015 as reported in this Proxy Statement;2023; and FOR the approval of the L.B. Foster Company 2022 Equity and Incentive Compensation Plan (as Amended and Restated 2006 Omnibus Incentive Plan.Restated). The proxy grants discretionary authority to vote on other matters that properly come before the Annual Meeting (including to Lee B. Foster II, Chairmanadjourn the Meeting) to Raymond T. Betler, Chair of the Board of Directors, and Robert P. Bauer,John F. Kasel, President and Chief Executive Officer.Officer (“CEO”) of the Company. The voting instruction form also serves as the voting instructions for the trustees who hold shares of record for participants in the Company’s 401(k) plans. If voting instructions representing shares in the Company’s 401(k) plans are received, but no indication is provided as to how those shares are to be voted, the shares will be counted as being present at the Annual Meeting and will count toward achievement of a quorum. If voting instructions as to the shares in the Company’s 401(k) plans are not received, those shares will be voted in the same proportion as shares in the 401(k) plans for which voting instructions were received. The cost of soliciting proxies will be borne by the Company. Officers or employees of the Company may solicit proxies by mail, telephone, email, or facsimile. The Company has retained Laurel Hill Advisory Group, LLC for the solicitation of proxies and will pay its fee of $5,000$7,000.00 plus reasonable out-of-pocket expenses. If you are a shareholder of record, you may vote your shares of Company Common Stockcommon stock by telephone, or through the Internet.Internet, or by mail in advance of the Annual Meeting. You may also vote your shares by mail or in person.electronically at the Meeting. Please see the Notice of Internet Availability of Proxy Materials for instructions on how to access the proxy materials and how to cast your vote. If you are a beneficial owner of shares held in “street name” through a broker, bank, or other intermediary, you may vote by returning your voting instruction card, or by following the instructions for voting via telephone or the Internet, as provided by the bank, broker, or other intermediary. You may also vote your shares electronically during the Annual Meeting. If you own shares in different accounts or in more than one name, you may receive different voting instructions for each type of ownership. Please vote all of your shares. If you are a participant in the Company’s 401(k) plans, you must vote your shares in advance of the Annual Meeting using one of the methods described above for shareholders of record. Participants in the Company’s 401(k) plans may attend the Annual Meeting but will not be able to vote shares held in such plans electronically online during the Annual Meeting. The Annual Meeting will be held in a virtual-only format. You will not be able to attend the Meeting in person at a physical location. We have designed the virtual Annual Meeting to provide substantially the same opportunities to participate as you would have at an in-person meeting held at a physical location. To be admitted to the Annual Meeting, please log in to www.virtualshareholdermeeting.com/FSTR2024 where you must enter the control number found on your proxy card, voting instruction form, or Notice of Internet Availability you previously received. Once admitted to the Meeting, you may vote during the Annual Meeting, submit questions, and view the list of shareholders entitled to vote by following the instructions available on the Meeting website. If you have already voted by Internet, phone, or mail prior to accessing the Meeting, you do not need to vote again. Voting online during the Annual Meeting will revoke any prior votes. The virtual Annual Meeting platform is fully supported across browsers (Edge, Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Shareholders should confirm that they have a strong internet connection if they intend to attend the Annual Meeting. Attendees should allow plenty of time to log in prior to the start of the Annual Meeting. The virtual Annual Meeting format allows shareholders to communicate with us during the Annual Meeting so they can ask questions of our management and Board, as appropriate. If you wish to submit a question during the Annual Meeting, you may do so by logging into the virtual meeting platform at www.virtualshareholdermeeting.com/FSTR2024, typing your question into the “Ask a Question” field, and clicking “Submit.” TABLE OF CONTENTS Questions pertinent to the Annual Meeting will be answered in the Question and Answer session during the Annual Meeting, subject to time constraints. Any such questions that cannot be answered during the Annual Meeting due to time constraints will be posted and answered on the Company’s investor relations website, lbfostercompany.gcs-web.com under the “Governance” tab, as soon as practicable after the Annual Meeting. Votes submitted via the Internet, by telephone, or by telephonemail must be received by 11:59 PM EDT, on May 24, 2016. Submitting22, 2024. If you are a participant in the Company’s 401(k) plans, you must vote your shares two days in advance of the Annual Meeting using one of the methods described above for shareholders of record. Participants in the Company’s 401(k) plans may attend the Annual Meeting but will not be able to vote shares held in such plans electronically online during the Annual Meeting. Except as otherwise noted herein, submitting your vote via the Internet, by telephone, or by telephonemail will not affect your right to vote in person should you decide to attend the Annual Meeting.Meeting virtually. You may change your vote or revoke your proxy at any time by submitting a valid, subsequent vote by telephone or through the Internet, by submitting another properly signed proxy which bears a later date, or attendingvoting electronically during the Annual Meeting and voting in person.Meeting. Attendance at the Annual Meeting will not by itself revoke a previously granted proxy; you must also vote your shares. If you planencounter any technical difficulties in accessing the virtual Meeting, please call the technical support number that will be posted on attendingthe virtual shareholder meeting login page at www.virtualshareholdermeeting.com/FSTR2024. Technical support will be available beginning approximately 15 minutes prior to the start of the Annual Meeting in person, please detach the Admission Ticket from your proxy card and bring it to the Meeting. If you are a beneficial owner of shares held in “street name” through a broker, bank, or other intermediary, please contact your broker, bank, or other intermediary to obtain evidence of ownership and a legal proxy, which you must bring with you to the Meeting.its conclusion. TABLE OF CONTENTS PROPOSAL NO. 1 -– ELECTION OF DIRECTORS The first proposal item to be voted on is the election of eight directors.directors for one-year terms. The Board of Directors has nominated the following eight people to serve as directors, all of whom are currently serving asdirectors: Messrs. Betler, Kasel, Kunz, Meyer, and Thompson and Mses. Lee and Owen, current directors of the Company.Company, and Mr. Jones who, if elected, will succeed to Mr. Jungé’s position on the Board. Mr. Jungé is not standing for reelection at the Annual Meeting in accordance with the retirement age policy included in the Company’s Corporate Governance Guidelines. Each director who is elected will hold office until the next annual meeting and generally until the director’s successor is elected and qualified. Information concerning the nominees is set forth below with brief descriptions of each nominee’s qualifications to serve on the Company’s Board of Directors: Nominee NomineeRaymond T. Betler
| | | | | | | Robert P. Bauer | | Mr. Bauer,Betler, age 57,68, has been a director of the Company since February 2012, when2020 and Chairman since 2022. From 2014 until his retirement in 2019, he was appointed President and Chief Executive Officer. Since August 2015, Mr. Bauer has served as Officer of Westinghouse Air Brake Technologies d/b/a director of Alamo Group, Inc.Wabtec Corporation (“Wabtec”), which designs, manufactures distributes,locomotives and services equipment for infrastructure maintenance, agriculture, and other applications, including truck and tractor mounted mowing and other vegetation maintenance equipment, street sweepers, snow removal equipment, excavators, vacuum trucks, and other industrial equipment. Mr. Bauer served as President of Emerson Climate Technologies, Refrigeration Division, a business segment of Emerson Electric Co., a diversified global manufacturing and technology company, (“Emerson”) from June 2011 to February 2012. He also served as President of Emerson Network Power, Liebert Division, from January 2002 through May 2011. Mr. Bauer spent a total of 17 years with Emerson in various senior management positions and became a Group Vice President, Emerson in 2004. Prior to Emerson, he held management positions with Rockwell Automation and Westinghouse Electric. We believe that Mr. Bauer is qualified to serve as a director because of his vast experience in global manufacturing, worldwide marketing, and new product development. He also has extensive experience with mergers and acquisitions and strategic planning including investments in new technologies. | | | | Lee B. Foster II | | Mr. Foster, age 69, has been a director of the Company since 1990 and Chairman since 1998. He was the Chief Executive Officer of the Company from May 1990 until he resigned from such office in January 2002, and remained a Company employee until May 2008. Mr. Foster has been a director of Wabtec Corporation since 1999, which manufactures components for locomotives, freight cars, and passenger transit vehicles and provides aftermarket services. At Wabtec, he previously served as President and Chief Operating Officer from 2013 to 2014, as Chief Operating Officer from 2010 to 2013, and as Vice President and Group Executive of the Transit Group from 2008 to 2010. Prior to Wabtec, he worked at Westinghouse Transportation and its predecessors AEG Westinghouse Transportation, ABB Daimler Benz Transportation – Adtranz, Daimler Benz Rail Systems, and Bombardier Transportation, since 1979; Mr. Betler served as President and CEO for 15 years during his 30 year tenure with this global company. Mr. Betler was a Director of CNX Midstream Partners LP from 2017 to 2020, where he served on the audit committee, and he has been a Director of Dollar Bank since 2006, where he serves on the executive, audit, nomination and governance, and compensation committees.
Qualifications.We believe that Mr. FosterBetler is qualified to serve as a director because of his historypublic company CEO experience, valuable understanding of the rail, transportation, and energy industries, and experience in compensation and corporate governance matters. | | | | | Alexander B. Jones
| | | Mr. Jones, age 38, is Vice President and Senior Research Analyst for 22NW, LP (‘‘22NW LP”), a Seattle-based long/short small cap value hedge fund, having joined that firm in 2021. Prior to 22NW, Mr. Jones was founder and principal of Porter Street Research, LLC, a Washington, DC based investment research and advisory firm, from 2017 to 2021; an investment analyst at Legacy Research/Bonner and Partners in Washington, DC, from 2017 to 2019; an Investment Analyst at The Brookings Institution in Washington, DC, from 2015 to 2017; and a Senior Investment Associate at Cambridge Associates in Arlington, Virginia from 2008 to 2015.
Qualifications. We believe that Mr. Jones is qualified to serve as a director because he brings to the Board a valuable understanding of capital allocation and public markets and a shareholder perspective, including relating to enhancing shareholder value. See “Agreements with 22NW Fund, LP et al which describes agreements between the Company and his knowledge ofcertain shareholders regarding Mr. Jones being nominated to the Company’s current businesses,Board and his corporate governance experienceserving as a member of another public company’s board of directors. In addition, Mr. Foster’s experience brings additional insight to a variety of our business issues.Board Observer.” | | | | |
TABLE OF CONTENTS Dirk JungéJohn F. Kasel
| | | Mr. Jungé,Kasel, age 67,59, has been a director of the Company since 2015.2021 when he was appointed President and Chief Executive Officer. He isjoined the Chairman of Pitcairn Company a private Pitcairn family holding company,in 2003 and Pitcairn Trust Company, a Pennsylvania state-chartered trust company, since 1991. Until 2012, he served as Vice President – Operations and Manufacturing until 2005, introducing LEAN manufacturing and other advancements which improved operating efficiency and reliability. Mr. Kasel most recently served as Senior Vice President and Chief ExecutiveOperating Officer from 2019 to 2021; Senior Vice President – Rail & Construction from 2017 to 2019; Senior Vice President – Rail Products & Services from 2012 to 2017; and Senior Vice President – Operations and Manufacturing from 2005 to 2012. Prior to joining the Company, Mr. Kasel served as Vice President of Pitcairn,Operations for Mammoth, Inc., a recognized global leader in the specialized family office marketplace, and has overseen investments in oil and gas and drilling partnerships. SinceNortek company which produces HVAC systems, from 2000 heto 2003. He has served as a director of Paramount Resources, Ltd.,The Allegheny Conference on Community Development, a public Canadian energy company, with assignments onnonprofit, private sector organization committted to improving the corporate governance committeeeconomic future of the Pittsburgh, Pennsylvania region, since 2003 and the environmental, health & safety committee since 2011. In 2013, he joined the Board of Directors of Freeman Company, a privately held company and a leader in face-to-face marketing.March 2023.
Qualifications. We believe that Mr. JungéKasel is |
| | | Nominee | | | | | qualified to serve as a director because of his detailed knowledge of the Company’s operations, markets, and strategy; deep operational experience including LEAN manufacturing both at the Company and other corporations; and familiarity with the Company’s international presence and M&A transactions. | | | | | John E. Kunz
| | | Mr. Kunz, 59, has been a director of the Company since 2022 and was formerly Senior Vice President and Chief Financial Officer of PGT Innovations, Inc., a national leader in premium windows and doors, from 2022 until his retirement in 2023. Prior to that he served as Senior Vice President and Chief Financial Officer of U.S. Concrete, Inc., a concrete and aggregate products producer serving the construction and building materials industries, from 2017 to 2021. From 2015 to 2017, Mr. Kunz served as Vice President and Controller of Tenneco Inc., a global manufacturer of automotive emission control and ride control systems “Tenneco.” In that role he served as the company’s principal accounting officer with responsibility for the company’s corporate accounting and financial reporting globally. Prior to that, Mr. Kunz served as Tenneco’s Vice President, Treasurer and Tax, a position he held from July 2006 to 2015, preceded by his position as Tenneco’s Vice President and Treasurer, which he held from 2004 until 2006. Prior to his employment with Tenneco, Mr. Kunz was the Vice President and Treasurer of Great Lakes Chemical Corporation (“Great Lakes”), a position he held from 2001 until 2004, after holding several finance positions of increasing responsibility at Great Lakes, beginning in 1999. Mr. Kunz was a director of Wabash National Corporation, a leader of engineered solutions for the transportation, logistics, and distribution industries, from 2011 to 2022, where he previously served as chair of its audit committee, a member of the finance committee, and chair of the compensation committee.
Qualifications. We believe that Mr. Kunz is qualified to serve as a director due to his deep experience with concrete and aggregates products manufacturing serving the building products sector, financial and accounting expertise, and 13 years of businesspublic company board experience, including as chair of both an audit committee and a compensation committee. Mr. Kunz is an audit committee financial expert and brings a strong business and financial perspective to the Board to help drive shareholder value. | | | | |
TABLE OF CONTENTS Janet Lee
| | | Ms. Lee, age 60, has been a director of the Company since 2023. She currently serves as Senior Vice President, General Counsel & Secretary of ANSYS, Inc., a software company, a position she has held since 2023; she was Vice President, General Counsel & Secretary of ANSYS from 2017 through 2022. From 2010 to 2017, Ms. Lee was Vice President, Legal and Intellectual Property for HERE Technologies North America, a privately-held location and mapping company then-owned by BMW, Audi, and Daimler. Ms. Lee functioned as the Director of Nokia Research Center, Legal and Intellectual Property for Nokia Corporation from 2007 to 2010; Assistant General Counsel of America Online, Inc. from 1999 to 2007; corporate and M&A attorney for Cooley Godward, LLP from 1996 to 1999; General Counsel of Renaissance Group, a full-service investment bank in the energy sectorRussian Federation, from 1995 to 1996; and attorney at Clifford Chance in Russia from 1993 to 1995 and at Paul Weiss, Rifkind, Wharton & Garrison from 1991 to 1993.
Qualifications. We believe that Ms. Lee is qualified to serve as a director because she brings a wide range of knowledge and skills to the Board, honed through more than three decades of legal experience in both private practice and in global, public companies. In her current role, Ms. Lee has been part of a team that has overseen corporate growth from a smaller public company to a member of the Nasdaq 100; she is responsible for transactions support, product and regulatory compliance, cybersecurity, litigation, intellectual property protection, enterprise risk management, business continuity and crisis management, ethics training and investigations, data privacy, government relations, ESG matters, and employment legal support including European labor union matters. Ms. Lee brings a diverse perspective and insight to the Board. | | | | | David J. Meyer
| | | Mr. Meyer, age 54, has been a director of the Company since January 2024. He has serves as non-executive Chair of A. Stucki Company, a privately-held manufacturer of high quality freight and rail-related parts (“A. Stucki”), since 2023, and served as Executive Chair of A. Stucki from 2022 to November 2023. From 2019 to 2020, Mr. Meyer was the Chief Operating Officer of Stone Canyon Industries Rail, a private company which acquired A. Stucki in 2015 and sold it to Stellex Capital in 2022. From 1999 to 2017, Mr. Meyer served in positions of increasing responsibility at Westinghouse Airbrake Technologies Corporation (“Wabtec”), a publicly traded global provider of equipment, systems, digital solutions, and value-added services for the freight and transit rail sectors, most recently as President of its Industrial Group, and prior as Group Executive of its Transit sector. Over his tenure, he held various positions in its freight car products operations and brake systems businesses. While at Wabtec, Mr. Meyer served as a captain in the United States Army Reserve from 1995 to 2003, bringing Lean manufacturing and management to the Army Depot system while on active duty in 2002; a factory manager at Oxford Automotive Incorporated, a full-service, global tier one supplier of integrated systems based on metal forming and related technologies from 1995 to 1999; and as a manufacturing manager, product line manager, and project engineer for Eaton Corporation, a global manufacturer of highly engineered products that serve automotive, heavy truck, industrial, construction, commercial and semiconductor markets, from 1995 to 1998. Mr. Meyer also founded Northern Bel, LLC, a consulting and acquisition organization, in 2018, and was a Board member of American Track Services from 2019 to 2021. He holds seven (7) patents for various rail-related products.
Qualifications. We believe that Mr. Meyer is qualified to serve as a director of the Company due to his 28 years of manufacturing experience, including 23 years in the rail industry, the focus of the Company’s largest business segment, as a result of which he gained valuable market-specific operations and financial expertise. His engineering, manufacturing, global public and private enterprises, as well as his familiarity with strategic planning, risk management, compensation, finance,company, and governance matters, which enable him to make a valuable contributionUnited States Army skills add depth to the Board’s business and compliance oversight functions.Board in critical areas for the Company. | | | | |
TABLE OF CONTENTS Diane B. Owen
| | | Ms. Owen, age 60, was elected as68, has been a director in Mayof the Company since 2002. Since JuneFrom 2014 to 2019, she has served as an independent Board Membermember and Internal Control Committee Chairinternal control committee chair of Elliott Group Holdings, a subsidiary of Ebara Corporation, an international company that manufactures and services industrial equipment. She was Senior Vice President – Corporate Audit of H.J. Heinz Company, an international food company, from May 2010 to Juneuntil her retirement in 2013 and was Vice President - Corporate Audit of H.J. Heinz Company from April 2000 to May 2010.
Qualifications. We believe that Ms. Owen is qualified to serve as a director of the Company due to her over 30 years of business experience, particularly in accounting and finance. Ms. Owen playshas played a critical role as Chairman of the Audit Committee and as the Board’san audit committee financial expert.expert on the Board and former Chair of our Audit Committee. In addition, Ms. Owen’s extensive internationalglobal business experience enables her to provide valuable insights to the Company in its international business interests. interests and issues. | | | | | Robert S. PurgasonBruce E. Thompson
| | | Mr. Purgason,Thompson, age 60,65, has been a director of the Company since December 2014. He2022 and is President of Hospitality Development Company Group, a hotel development, management, and ownership business with several Marriott franchise hotels in operation, a position he has been Seniorheld since 2021. From 2019 to 2020, Mr. Thompson served as Vice President of The Williams Companiesand Chief Separation Officer at Arconic Inc., an industrial company specializing in lightweight metals engineering and manufacturing (“Williams”Arconic”) since January 2015,, leading the Williams operating area that encompass the assetssplit of Arconic’s rolled aluminum and operations of Access Midstream, including natural gas gathering and processing. Mr. Purgason is currently a director of Williams Partners, andmulti-material engineered products businesses. He previously served as Chief Operating Officer of the general partner of Access MidstreamVice President—Internal Audit at Arconic from 20122016 to 2015.2019. Prior to joining Access Midstream,its separation into two public companies, Arconic and Alcoa Corporation (“Alcoa”), in 2016, Mr. Purgason spent five years at Crosstex Energy Services, L.P. and was promoted to Senior Vice President-Chief Operating Officer in November 2006. Prior to Crosstex, Mr. Purgason spent 19 years with The Williams CompaniesThompson served in various senior business developmentroles at Alcoa., an aluminum industry pioneer and operational rolesglobal leader in lightweight metals technology, engineering, and manufacturing, including as Vice President—Internal Audit from 2015 to 2016, Vice President—Business Analysis and Planning from 2014 to 2015, and Director—Business Analysis and Planning from 2011 to 2014. Before joining Alcoa, Mr. Thompson was Vice President – Finance of increasing responsibility. Mr. Purgason began his career at Perry Gas Companies in Odessa, Texas working in all facets of the natural gas treating business. Mr. Purgason’s extensive experience in,Johnson Controls, Inc., a multinational conglomerate with HVAC, refrigeration, and keen understanding of, the energy industry brings valuable insight to the Board, particularly with regard to the Company’s operations which include pipe threadingsecurity controls and coatingequipment, as well as blending, injection,automotive businesses, from 2006 to 2011. From 2002 to 2005, he was the Chief Financial Officer of VITEC, LLC, a manufacturer and custody transfer metering skids for the oilsupplier of automotive fuel delivery systems. Prior to VITEC, Mr. Thompson held finance and gas industry.cross-functional positions of increasing responsibility at Ford Motor Company and Midwest Stamping Company between 1993 and 2001. He also bringsis a trustee of Howard University and a former board experience which contributes to the corporate governance experiencemember and chair of the Board. | | | | William H. Rackoff | | Mr. Rackoff, age 67, has been a director of the Company since 1996. Since 1994, Mr. Rackoff has been PresidentNational Black MBA Association between 2011 and Chief Executive Officer of ASKO, Inc., a private international company which manufactures custom engineered tooling for the metalworking industry.2020.
Qualifications. We believe that Mr. RackoffThompson is qualified to serve as a director becausedue to his yearsdecades of business experience in the steel industryaudit, accounting and his engineering background enable him to understandfinance, operations, marketing, and develop the factors that drive the Company’s performance, including strategy, operations, and finance. Mr. Rackoff, as Chairman of the Compensation Committee, has led the creation of the Company’s executive incentive programs. | | | | Suzanne B. Rowland | | Ms. Rowland, age 54, was electedcorporate strategy. He plays a critical role as a director in May 2008. Ms. Rowland was Vice PresidentBoard audit committee financial expert and General Manager in the Industrial Fire Products DivisionChair of Tyco International from 2011our Audit Committee. In addition to 2015 and was Vice President Business Excellence for the Tyco Flow Control Division from 2009 to 2010. Prior to Tyco, Ms. Rowland spent over 20 years with Rohm and Haas Company in senior executive positions including Vice President Global Adhesives, Vice President Coatings North America, and Vice President of Procurement & Logistics. We believe that Ms. Rowland is qualified to
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| | | Nominee | | | | | serve as a director because of her 30 years of broadhis vast business leadership experience, in Fortune 500 global companies. Having served as an operating executive for the last 18 years in mechanicalMr. Thompson brings a diverse perspective and electrical products, materials, and chemicals, Ms. Rowland brings valuable insight into strategic and operational issues important to the Company’s success. | | | | Bradley S. Vizi | | Mr. Vizi, age 32, has been a director since February 2016. He is Founder and has been Managing Director of Legion Partners Asset Management since 2012. Prior to founding Legion Partners, Mr. Vizi was an investment professional for Shamrock Capital Advisors, the alternative investment vehicle of the Disney Family from 2007 to 2010. Prior to Shamrock, Mr. Vizi was a member of the private equity group at Kayne Anderson Capital Advisors. Since 2015, Mr. Vizi has served as Chairman of the Board of Directors for RCM Technologies, Inc., a public staffing and solutions company, and has been a member of its Board of Directors since 2013, serving on the compensation and governance committees. Mr. Vizi brings to the Board a valuable understanding of capital allocation and public markets, experience in compensation and corporate governance matters, and ato help drive shareholder perspective regarding enhancing stakeholder value. Mr. Vizi was elected to the Board pursuant to an agreement dated February 12, 2016 (the “Investors Agreement”) by the Company with Legion Partners, L.P. I, Legion Partners, L.P. II, Legion Partners Special Opportunities, L.P. II, Legion Partners Holdings, LLC, Legion Partners Asset Management, LLC, Legion Partners Holdings, LLC, Bradley S. Vizi, Christopher S. Kiper, and Raymond White (collectively, the “Investor Group”). |
Pursuant to the Investors Agreement, effective February 12, 2016, the Board agreed to increase the size of the Board from eight to nine members and appoint Mr. Vizi to the Board for a term expiring at the 2016 Annual Meeting. Additionally, under the terms of the Investors Agreement, the Board agreed, among other matters, to (i) appoint Mr. Vizi to the Compensation and Nomination and Governance Committees of the Board, (ii) nominate Mr. Vizi for election to the Board at the 2016 Annual Meeting and (iii) not increase the size of the Board beyond nine members without the consent of Mr. Vizi for the period commencing on the date of the Agreement and ending ten (10) days prior to the expiration of the advance notice period for the submission by shareholders of director nominations for consideration at the Company’s 2017 Annual Meeting of Shareholders (the “Standstill Period”).
The Board nominated the foregoing nominees based upon the recommendation of the Nomination and Governance Committee and, as to Mr. Vizi, pursuant to the terms of the Investors Agreement.Committee. The nominees have expressed their willingness to serve as directors, if elected. However, should any of the nominees be unavailable for election, the proxies (except for proxies that withhold authority to vote for directors) will be voted for such substitute nominee or nominees as may be chosen by the Board, or the number of directors may be reduced by appropriate action of the Board. The Board of Directors recommends that you vote “FOR” each of the foregoing nominees. TABLE OF CONTENTS PROPOSAL NO. 2 -– RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2024 Ernst & Young has served as the Company’s independent registered public accounting firm since 1990 andLLP has been appointed by the Audit Committee of the Board as the Company’s independent registered public accountantsaccounting firm for the fiscal year ending December 31, 2016.2024. Although action by the shareholders in thisAudit Committee has the sole authority to appoint the Company’s independent registered public accounting firm, as a matter is not required,of good corporate governance, the Board is seeking shareholder ratification of this appointment in light of the important role played by the independent registered public accounting firm.appointment. If the shareholders fail to ratify the selection, the Audit Committee will consider whether to retain Ernst & Young going forward.take this into consideration. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different firm at any time during the year if the committeeAudit Committee determines that such a change would be in the best interests of the Company and its shareholders. Representatives of Ernst & Young are expected to be in attendance at the Annual Meeting and available to respond to appropriate questions from shareholders and will have an opportunity to make a statement if they so desire. The Board of Directors recommends that you vote “FOR” the ratification of Ernst & Young LLP’s appointment as the Company’s independent registered public accounting firm for fiscal year 2016.2024.
TABLE OF CONTENTS PROPOSAL NO. 3 -– ADVISORY VOTE ONAPPROVAL OF THE COMPENSATION PAID TO THECOMPANY’S NAMED EXECUTIVE OFFICERS’ 2015 COMPENSATIONOFFICERS IN 2023 At the 2011Company’s 2023 Annual Meeting, upon recommendation by the Board, of Directors, shareholders voted to hold an advisory vote on executive compensation every year. Accordingly, the Company has determined to submit an advisory vote on our executive compensation program to shareholders at each annual meeting until a new advisory vote on the frequency of such advisory votes on executive compensation is held. Subject to future advisory votes on the frequency of future advisory votes on executive compensation, with the next one occurring in 2029 we anticipate continuing to hold an advisory vote on the compensation paid to the Company’s named executive officers on an annual basis, with the next one occurring in 2025. The following proposal gives our shareholders the opportunity to vote to approve or not approve, on an advisory basis, the compensation paid to our named executive officers in 2015,2023, as described in this Proxy Statement, and is non-binding upon the Company, our Board, or the Compensation Committee of the Board. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our executive officers and our compensation philosophy, policies, and practices, as disclosed under the “Executive Compensation” section of this Proxy Statement. We are providing this vote as required by Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, we are asking our shareholders to vote “FOR” the adoption of the following resolution: ““RESOLVED, that the compensation paid to the named executive officers of L. B.L.B. Foster Company (the “Company”), as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion in the Company’s Proxy Statement for the 20162024 Annual Meeting of Shareholders under the heading entitled ‘Executive Compensation,’ is hereby approved.” The Company’s compensation programs are centered on a pay-for-performance culture and are designed to be strongly aligned with the long-term interests of shareholders. The Company’s goal for its executive compensation program is to reward executives who provide leadership for, and contribute to, the Company’s financial success. While we intend to carefully consider the voting results of this proposal, the final vote is advisory in nature and therefore not binding on the Company, our Board, or the Compensation Committee of the Board. The Board of Directors recommends that you vote “FOR” the advisory approval of the compensation paid to the Company’s named executive officers’ compensationofficers in 2015,2023, as reported in this Proxy Statement. PROPOSAL NO. 4 -– APPROVAL OF THE L.B. FOSTER COMPANY 2022 EQUITY AND INCENTIVE COMPENSATION PLAN (AS AMENDED AND RESTATED 2006 OMNIBUS INCENTIVE PLANProposal No. 4 seeks shareholder approval of the 2006 Omnibus Incentive Plan, as amended and restated.
RESTATED) Background of the 2006 Omnibus2022 Equity and Incentive Compensation Plan The
On March 29, 2024, the Board is requesting thatand the Company’sCompensation Committee (for the purposes of this proposal, the “Committee”), unanimously approved and adopted, subject to the approval of shareholders vote in favor of amending, restating and extending the term of the 2006 Omnibus Incentive Plan (the “Plan”). The Plan was approved by shareholders on May 24, 2006 and again on May 18, 2011, and currently is scheduled to terminate on May 17, 2021. We are submitting the Plan for shareholder approval at thethis Annual Meeting, in order to, among other things: | · | Increase the maximum aggregate number of shares of Company common stock that will be available for issuance under the Plan, from 900,000 shares of common stock to 1,270,000 shares of common stock; |
| · | Preserve the Company’s ability to deduct compensation earned by certain executives as qualified performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) (and approve higher limits applicable to such awards as described below); |
| · | Include additional types of awards that may be granted under the Plan, including incentive stock options and stock appreciation rights (“SARs”); |
| · | Clarify the circumstances under which shares will and will not be added back to the pool of shares available for issuance under the Plan; |
| · | Clarify the authority of the 2022 Equity and Incentive Compensation Committee of the Board (the “Committee”) with respect to the Plan; |
| · | Add one-year minimum vesting schedules, with limited exceptions, applicable to restricted stock, restricted stock units, and performance awards that may be granted under the Plan; |
| · | Expand the list of performance metrics that may be used in connection with the grant of performance awards intended to comply with Section 162(m) of the Code; |
| · | Provide that, if dividend equivalent rights are granted in connection with performance awards, the payment of such rights will be subject to the attainment of the performance goals applicable to the award; |
| · | Add a cap on the dollar amount of any award(s) specifically granted under the Plan to a non-employee director of $300,000 for any fiscal year of the Company; |
| · | Provide for a recoupment provision that makes clear that awards granted under the Plan may be subject to clawback as a result of applicable law, government regulation, stock exchange listing requirements or Company policy; and |
| · | Add administrative provisions which clarify that awards may be granted to employees in foreign jurisdictions and that the Committee may establish deferred compensation arrangements relating to awards granted under the Plan. |
The Plan is administered by the Committee, which has the full and exclusive authority to interpret, construe and administer the Plan, including, among other matters, to: (i) adopt or establish and amend such rules, regulations, agreements, guidelines, procedures, forms, and instruments as may be necessary or advisable for the administration and operation of the Plan; (ii) correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any award in the manner and to the extent it deems desirable; (iii) select the persons to be granted awards under the Plan; (iv) grant and determine the terms, conditions, form and size of awards to be made to each person selected, including clawback or other recoupment provisions applicable to awards granted thereunder; (v) determine the time when awards are to be made and any conditions which must be satisfied before an award is made; (vi) establish objectives, conditions and performance goals for earning awards; (vii) determine the terms of each award agreement and any amendments or modifications thereof; (viii) determine whether the conditions for earning an award have been met and whether an award will be paid at the end of the performance period; (ix) determine if and when an award may be deferred; (x) determine whether the amount or payment of an award should be reduced or eliminated; (xi) determine the guidelines and/or procedures for the payment or exercise of awards; and (xii) determine whether to accelerate vesting provisions applicable to awards. The Committee’s decisions will be final, conclusive and binding with respect to the Plan and any award made under the Plan.
If the Company’s shareholders do not approve the Plan, the Plan will remain as currently in effect; however, the Committee will not be able to grant awards of qualified performance-based compensation that are exempt from the $1 million deduction limitation under Section 162(m) of the Code to certain executives under the Plan, as discussed more fully below under the heading “Approval of the Plan for Purposes of Section 162(m) of the Code.”
Addition of 370,000 Shares to the Plan from Prior Authorized Amount
The Committee’s independent compensation consultant, Pay Governance LLC, provided assistance with preparing the Plan. Based on an analysis of leading proxy advisory firms’ policies on equity-based compensation plans, our historical share usage under the Plan, our anticipated share usage under the Plan taking account of our current stock price, and the importance of long-term incentives in supporting the key objectives of the Company’s equity compensation program, management recommended, and the Board approved, among other changes to the Plan, the proposed increase of 370,000 shares (from the prior authorized amount of 900,000) available for issuance under the Plan, which represented approximately 3.6% of our outstanding common stock as of March 23, 2016. This increase in the number of shares available for issuance under the Plan would have had a value of approximately $5,942,200 based on the closing market price of the Company’s common stock on that date ($16.06 per share).
Description of the(as Amended and Restated, 2006 Omnibus Incentive Plan
The following summary of the major features of the Plan is qualified in its entirety by reference to the complete text of the Plan, which is attached as Appendix A to this proxy statement.
Features of the Plan:
| · | No liberal share counting“Amended Plan”). The Plan prohibits the reuse of shares issuable under the Plan that are (i) delivered in payment of the exercise price of an option or base price of a SAR or other exercise price of an award, (ii) delivered to or withheld by the Company to pay tax withholding obligations, (iii) purchased by the Company using proceeds from option exercises or (iv) not issued or delivered as a result of a net settlement of an outstanding option or SAR. |
| · | No repricing of stock options or SARs. The Plan explicitly prohibits repricing of options and SARs without first obtaining shareholder approval. |
| · | No discounted stock options or SARs. All stock options and SARs must have an exercise or base price equal to or greater than the fair market value of the underlying common stock on the grant date. |
| · | Awards are administered by an independent Committee. The Plan will be administered by the Committee, or another committee designated by the Board, which is or will be comprised entirely of independent directors. See page 23 of this Proxy Statement for more information about the Committee. |
| · | Awards subject to “clawback.” All incentive awards under the Plan are subject to any law, regulation or Company policy that requires recoupment. |
Purpose
The purpose of the Amended Plan is to advance the interests of the Company and its shareholders and promote the Company’s long-term growth and financial success by providing to our non-employee directors, officers and other employees, and certain consultants, equity and other financial incentivescash incentive awards that reward their service and performance. If approved by the shareholders at this Annual Meeting, the Amended Plan will be effective upon such approval. If the shareholder vote on the Amended Plan at this Annual Meeting is postponed, the Amended Plan will be effective on such date on which a shareholders’ meeting to vote on and approve the Amended Plan occurs, and until such time, the 2022 Equity and Incentive Compensation, as currently in effect (the “Current Plan”), will continue in effect in accordance with its terms. The Board recommends that you vote for approval of the Amended Plan. The Board believes it is in the best interests of the Company and our shareholders to approve the Amended Plan in order to continue to motivate performance by our key employees and directorsnon-employee directors. The primary amendment to the Current Plan is to increase the number of shares of common stock authorized for issuance under the Current Plan by 1,070,000 shares of common stock in addition to the number of shares currently remaining available for issuance under the Current Plan, plus any shares relating to outstanding awards under the Current Plan or the L.B. Foster Company 2006 Omnibus Incentive Compensation Plan as Amended and Restated on May 24, 2018 (the “Predecessor Plan”),
TABLE OF CONTENTS that are added (or added back) pursuant to the share counting rules of the Company. plan. As of March 1, 2024, there was an estimated maximum of 81,965 shares of common stock that remain available for issuance under the Current Plan, assuming PSUs are earned at a maximum performance level. The following table provides certain additional information regarding shares of common stock available for issuance under the Current Plan and outstanding awards issued under the Current Plan as of March 1, 2024: Shares of common stock underlying outstanding restricted stock, performance stock units (“PSUs”), and deferred stock units (assumes maximum performance for outstanding unearned PSUs) | | | 913,560 | Estimated total shares remaining available for future issuance under Current Plan | | | 81,965 |
The following is designed to provide flexibility to enable us to attract and retain the services of these individuals, upon whose judgment, interest and special effort the successful conduct of our operations is largely dependent.Eligibility
Any officer, employee, consultant, independent contractor or directora summary of the Amended Plan, which is qualified in its entirety by the complete text of the Amended Plan attached as Appendix A to this Proxy Statement. To the extent the description below differs from the Amended Plan text in Appendix A, the text of the Amended Plan governs the terms and provisions of the Amended Plan. Because Company or any of its subsidiaries isdirectors and executive officers are eligible to receive an awardawards under the Amended Plan, they may be deemed to have a personal interest in the adoption of this proposal.
The Compensation Committee will have full discretion to determine the number and amount of awards to be granted to participants under the Plan, subject to the terms of the Amended Plan. AsThe future benefits or amounts that will be awarded or paid under the Amended Plan currently are not determinable. Awards granted under the Amended Plan are within the Committee’s discretion, and the Committee has not yet determined the value or amount of December 31, 2015, there were approximately 690 salaried, exemptfuture awards or which individuals may receive them. Purposes of the Proposal Our Board and Compensation Committee determined that the adoption of the Amended Plan is necessary to reward the service and performance of our non-employee directors, officers and other employees, and certain consultants. The Board believes that a long-term equity incentive program motivates and rewards our directors, executive officers and other key individuals for their contributions to our Company’s performance and serves to align long-term compensation with the performance of Company stock. Our Board recommends a vote for approval of the Amended Plan because it will allow the Company to continue to use equity-based incentives and promote the goals of our compensation strategy. The Amended Plan will only become effective if it is approved by our shareholders and, if it is not approved, the Current Plan will continue to remain in effect. It is not possible at present to determine the amount or form of any award that will be granted or available for grant to any person in the future under the Amended Plan. Important Features of the Amended Plan | | Plan Term | | | If approved, no grant will be made under the Amended Plan on or after the tenth anniversary of the Amended Plan’s original effective date of June 2, 2022. | | | | Minimum Vesting Provisions | | | Except as otherwise provided in the Amended Plan, equity-based awards granted under the Amended Plan will generally be subject to either a minimum vesting or minimum performance period of at least one year. | | | | Limits on Non-Employee Director Compensation | | | The Amended Plan provides an overall annual cap on the amount of compensation that may be granted to each non-employee director. | | | | No Liberal Share Counting | | | Shares withheld to pay withholding tax obligations, or for the payment of option exercise prices, among other circumstances, will not be added back to the authorized share pool. | | | | No Dividends on Unvested Awards | | | No dividends or dividend equivalents with respect to options rights and appreciation rights and with respect to other awards, no dividends or dividend equivalents will be paid on awards until they | |
TABLE OF CONTENTS | | | | | are earned and/or vested. | | | | No Repricing Without Shareholder Approval | | | Option rights and appreciation rights may not be amended to reduce their exercise or base price, as applicable, and may not be cancelled in exchange for cash, other awards, or option rights and appreciation rights with an exercise or base price, as applicable, that is less than the exercise or base price of the original option rights or appreciation rights without obtaining shareholder approval. | | | | No Discounted Option Rights or Appreciation Rights | | | Option rights and appreciation rights may not be granted with an exercise or base price less than the fair market value of the Company’s common stock on the date of grant. | | | | No “Evergreen” Provisions | | | The Amended Plan authorizes the issuance of a fixed number of shares of common stock (subject to adjustment as provided therein). Shareholder approval will be required before any additional shares can be authorized for issuance under the Amended Plan. | | | | Clawback Protections | | | Pursuant to the terms of the Amended Plan, awards will be subject to recovery or recoupment under circumstances set forth in a clawback policy adopted by the Company as required by SEC and stock exchange rules. | |
Plan Summary The following summary describes the material features of the Amended Plan. The purposes of the Amended Plan are to promote the interests of the Company and its subsidiariesshareholders by: motivating and rewarding long-term strategic management that results in profitable growth and sustained shareholder value creation; aligning employee and director interests with those of shareholders through encouraging stock ownership; reinforcing a strong management team commitment to the Company’s long-term success; providing meaningful long-term incentive award opportunity as part of a competitive total compensation program that enables the Company to attract and retain its key employees; managing costs effectively through program design and administration guidelines in terms of accounting, tax, cash flow and shareholder dilution; and structuring grants to be responsive to changes in the Company’s business environment and compensation objectives. The Amended Plan will generally be administered by our Compensation Committee. Employees (including officers), non-employee directors and certain consultants of the Company and our affiliates are eligible to receive awards under the Amended Plan based on the discretion of the Compensation Committee and its designees. As of February 29, 2024, approximately 1,063 of the Company’s and its subsidiaries’ employees and currently eight of our non-employee directors and none of our consultants were eligible to participate in the Amended Plan in connection with their provision of which 33 were participating, and eight non-employee directorsservices to the Company. In connection with the Board’s consideration of the Company participatingAmended Plan, the Board reviewed leading proxy advisory firms’ policies on equity-based compensation plans, the importance of long-term incentives in supporting the Plan.The selectionkey objectives of participantsthe Company’s equity compensation program, and the natureoverall dilution and sizevalue of the awards is subject toAmended Plan as described above. The Amended Plan provides for the Committee’s discretion.following award types: stock option rights, appreciation rights, restricted stock, restricted stock units (“RSUs”), cash incentives, performance shares, performance units and other awards. The Board recommends that our shareholders approve the Amended Plan Reserve Thewhich authorizes the issuance of 1,070,000 shares of our common stock, plus (i) the number of shares reservedcurrently remaining available for issuance under the Current Plan, will be depleted by one shareplus (ii) the total number of shares of common stock remaining available for each share subject to a stock-settled award. Fractional shares will not be issuedissuance under the Plan.
ExceptPredecessor Plan (but not reserved for outstanding awards under the Predecessor Plan) as otherwise provided inof June 2, 2022 plus
TABLE OF CONTENTS (iii) any shares relating to outstanding awards under the Current Plan shares may be re-creditedor the Predecessor Plan added (or added back, as applicable) pursuant to the plan reserve if (i) an award lapses, expires, terminates, or is cancelled without the underlying shares being issued (or a portion thereof), (ii) it is determined during or at the conclusionshare counting rules of the termplan as further described herein. As of March 1, 2024, there were an awardestimated maximum of 81,965 shares of common stock that all or someremained available for issuance under the Current Plan (assuming outstanding PSUs are earned at a maximum performance level and including any shares underlyingrelating to the award may not be issued becausePredecessor Plan). Certain Limitations on Awards Under the conditions for such issuance failed to be met, (iii) any award (or a portion thereof) is settled in cash, (iv)Amended Plan, the aggregate number of shares subject to an award are forfeited, or (v) shares are issued pursuant to an award but are subsequently reacquired by the Company (except with respectrelating to incentive stock options).Individual Award Limits
The Plan provides for limits on certain types of awards thatoptions (as defined in the Amended Plan) may be granted undernot exceed 765,000 shares. Notwithstanding anything in the Amended Plan to a participant in any one fiscal year. Under the Plan, for any fiscal year and subject to adjustment in accordance with the terms of the Plan, no participant may be granted (i) an award of stock options or
SARs for more than 300,000 shares, (ii) a performance award (payable in stock) intended to be performance-based compensation under Section 162(m) of the Code of more than 150,000 shares (measured on a target award level on the grant date), or (iii) a performance award (payable in cash) intended to be performance-based compensation under Section 162(m) of the Code of more than $5,000,000 (measured on a target award level on the grant date). Additionally, and subject to adjustment in accordance with the terms of the Plan,contrary, no non-employee director may be granted, in any one fiscalcalendar year, awards specifically granted underaggregate compensation, in the Plan withform of cash and/or equity, for such service having an aggregate maximum value calculated(measured at the grant date, as applicable, and calculating the value of their respectiveany awards based on the grant dates,date fair value for financial reporting purposes), in excess of more than $300,000.
Awards
$500,000. The following typesAmended Plan provides that the aggregate number of shares available for issuance under the Amended Plan will be reduced by one share for each share subject to an award granted under the Amended Plan. Subject to the terms of the Amended Plan, if any award granted under the Amended Plan is cancelled or forfeited, expires, is settled for cash, or is unearned, the common stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, again be available for issuance under the Amended Plan. The Amended Plan further provides that if, after the effective date of the Amended Plan, any common stock subject to awards granted under the Amended Plan or the Predecessor Plan is forfeited, or awards granted under the Amended Plan or the Predecessor Plan (in whole or in part) are cancelled or forfeited, expire, are settled for cash, or are unearned, the common stock subject to such awards, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, will be available for awards under the Amended Plan. Notwithstanding the foregoing, (i) shares of common stock withheld by the Company, tendered or otherwise used in payment of the exercise price of an option right (or the exercise price of an option right granted under the Predecessor Plan) will not be added back to the aggregate number of shares of common stock available under the Amended Plan; (ii) shares of common stock withheld by the Company, tendered or otherwise used to satisfy tax withholding will not be added back to the aggregate number of shares of common stock available under the Amended Plan; (iii) shares of common stock subject to a share-settled appreciation right that are not actually issued in connection with the settlement of such appreciation right on the exercise thereof will not be added back to the aggregate number of shares of common stock available under the Amended Plan; and (iv) shares of common stock reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of option rights will not be added back to the aggregate number of shares of common stock available under the Amended Plan. If a participant has elected to give up the right to receive cash compensation in exchange for shares based on fair market value, such shares will not count against the aggregate share limit of the Amended Plan. Awards may be granted under the Plan:Stock Options. Stock options may be nonqualified stock optionsAmended Plan in substitution for or incentive stock options that complyin conversion of, or in connection with Section 422 of the Code. Only an employee of the Company may receive incentive stock options. The Committee determines all terms and conditionsassumption of, stock options, includingstock appreciation rights, restricted stock, RSUs or other share or share-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any subsidiary. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of the Amended Plan, and may account for common stock substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction. Any common stock that is issued or transferred by, or that is subject to any awards that are granted by, or become obligations of, the Company will not reduce the shares of common stock available for issuance or transfer under the Amended Plan or otherwise count against the share limits contained in the Amended Plan and summarized above. In addition, no shares of common stock subject to an award that is granted by, or becomes an obligation of, the Company under the Amended Plan as described in this paragraph, will be added to the aggregate share limit contained in the Amended Plan.
Awards granted under the Amended Plan may provide for the payment of dividends or dividend equivalents (other than in connection with option rights and appreciation rights), payable in cash, shares, other securities or other property; provided, however, that such dividends or dividend equivalents will only be paid to the applicable vesting period.participant if the underlying award vests and/or is earned. Except as otherwiseto the extent provided in the Amended Plan, no award will be transferable by the participant, except by will or the laws of descent and distribution. TABLE OF CONTENTS Minimum Vesting/Performance Period Except in the case of substitute awards (as defined in the Amended Plan) and cash incentive awards, awards granted under the Amended Plan to participants will either be subject to a minimum vesting or minimum performance period, in the case of performance awards, of one year. Notwithstanding the foregoing or any other provision of the Amended Plan, (i) the Compensation Committee may authorize acceleration of vesting or continued vesting of such awards in the event of the participant’s death, disability, termination of employment or service or the occurrence of a change in control (as defined in the Amended Plan), (ii) the Compensation Committee may exercise its authority under the Amended Plan as provided therein following the grant of an award, agreement or(iii) the Compensation Committee may grant awards without the above-described minimum requirements with respect to awards covering up to 5% of the aggregate number of shares authorized for issuance under the Amended Plan, optionsand (iv) with respect to awards granted to employeesnon-employee directors, the vesting of such awards will be exercisable only after twelve months have elapsed fromdeemed to satisfy the grant date and shallminimum vesting requirement to the extent that the awards vest ratably in one-fourth incrementsbased on the approximate one-year period beginning on each regular annual meeting of the first, second, third,Company’s shareholders and fourth anniversariesending on the date of the next regular annual meeting of the Company’s shareholders (provided, however, that such approximate one-year period with respect to awards granted to non-employee directors may not be less than 50 weeks). Eligible Participants Under the Amended Plan, the Compensation Committee may grant awards to the following persons providing services to the Company: (i) non-employee directors; (ii) officers or other employees of the Company or any subsidiary, including a person who has agreed to commence serving in such capacity within 90 days of the date of grant. Thegrant; or (iii) certain consultants as provided in the Amended Plan. Stock Option Rights Stock option rights granted under the Amended Plan may be either incentive stock options or non-qualified stock options. Incentive stock options may only be granted to employees. Except with respect to substitute awards, incentive stock options and non-qualified stock options must have an exercise price per share that is not less than the fair market value of a share of the Company’s common stock on the date of grant. To the extent permitted by law, any grant may provide for deferred payment of the exercise price from the proceeds of sale through a bank or broker on a date satisfactory to the Company or some or all of the shares of common stock to which such exercise relates. Each stock option will specify the vesting schedule, including any applicable performance objectives, and the option term may not extend for more than ten years after the date of grant. Each grant will specify the form of consideration to be paid in satisfaction of the exercise price, including (i) in cash, by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of common stock owned by the optionee having a value at the time of exercise equal to the total exercise price, (iii) subject to any conditions or limitations established by the Compensation Committee, by the withholding of common stock otherwise issuable upon exercise of an option pursuant to a “net exercise” arrangement, (iv) by a combination of such methods of payment, or (v) by such other methods as may be approved by the Compensation Committee. Option rights may not provide for any dividends or dividend equivalents to be paid thereon. Appreciation Rights The Amended Plan provides for the grant of appreciation rights. Except with respect to substitute awards, the base price of an appreciation right may not be less than the fair market value of a share subject to the optionof common stock on the grant date.Except as otherwise provided in the Plan or in the applicable award agreement, if the employment or other service of a participant, other than a non-employee director, terminates for any reason other than death, disability, or retirement, all stock options held by the participant will expire and may not thereafter be exercised.
Unless the award agreement provides otherwise, if the employment or other service of a participant, other than as a non-employee director, terminates, other than due to a “termination for cause” (as defined in the Plan), the participant may exercise all unexercised and vested stock options within 30 days of such termination; except as so exercised, the stock option will expire at the end of such period. Any options in which such participant is not vested at the time of termination will be forfeited. In no event, however, may any stock option be exercised after the expiration of ten years from the grant date of such stock option.
Except as otherwise provided in the award agreement, a non-employee director whose service is terminated will be entitled to exercise such non-employee director’s stock options, to the extent vested as of the date of such termination, untilgrant. Each appreciation right will specify the expiration ofvesting schedule, including any applicable performance objectives, and the full term of the stock option, unless the non-employee director has been terminated for cause. In the event that a non-employee director is terminated for cause, all stock options held by the director will terminate immediately andan appreciation right may not thereafter be exercised.
Except as otherwise provided in the Plan or an award agreement, during the twelve month period following a participant’s death, any or all of the unexercised and vested stock options that a participant was entitled to exercise immediately prior to death may be exercised by the participant’s personal representative. Any stock options in which a participant is not vested at the time of death will be forfeited. In no event, however, may any such options be exercised after the expiration ofextend more than ten years from the date of grantgrant. An appreciation right may be paid in cash, shares of such options.
Except as otherwise provided in the Plan or an award agreement, if a participant retires, or suffers a disability, at a time when the participant is entitled to exercise aCompany’s common stock option, then at any time or times
within three years after such termination of service because of retirement or disability, the participant may exercise the option as to all or any of the shares that the participant was entitledcombination thereof. Appreciation rights may not provide for any dividends or dividend equivalents to purchasebe paid thereon.
Restricted Stock Restricted stock may also be granted under the option immediately prior to such termination; except as so exercised,Amended Plan. Restricted stock constitutes the stock option will expire at the endimmediate transfer of such period. In no event, however, may any option be exercised after the expiration of ten years from the date of grant of such option.Restricted Stock and Restricted Stock Units (“RSUs”). An award of restricted stock is an awardownership of shares of the Company’s common stock that may not be sold or otherwise disposedto the participant in consideration of duringthe performance of services, entitling such participant to voting, dividend, and other ownership rights, but subject to a restrictedsubstantial risk of forfeiture and restrictions on transfer for a period of time, each as determined by the Committee. An awardCompensation
TABLE OF CONTENTS Committee, or until certain performance objectives specified by the Compensation Committee are achieved. Each grant or sale of RSUsrestricted stock may be made without additional consideration or in consideration of a payment by the participant that is an awardless than the fair market value of shares of the right to receive a share of common stock or cash equal to a share ofCompany’s common stock on the payment date of grant. Dividends and afterother distributions paid on or in respect of any shares of restricted stock may be paid directly to the expirationparticipant, or may be reinvested in additional shares of a restricted periodstock, as determined by the Committee. Restricted stock awards and RSUs granted to employees will have a service period of no less than twelve months (subject to special vesting terms);Compensation Committee in its sole discretion, provided, however, that this limitationin all cases, such dividends and other distributions will not: (i) adversely affect a participant’s rights under another planbe subject to the same restrictions on vesting, payment or agreement or (ii) apply to awards granted in exchangeotherwise as the underlying award. Restricted Stock Units The Amended Plan provides for the surrendergrant of RSUs. RSUs awarded under the Amended Plan constitute an agreement by the Company to deliver shares of the Company’s common stock, cash, or substitutiona combination thereof, to the participant in the future in consideration of another company’s awardsthe performance of services, but subject to its employees and directors. Thethe fulfillment of such conditions (which may include the achievement of performance objectives) during the restriction period as the Compensation Committee may also impose additional restrictions on an awardspecify. Each grant or sale of restricted stock or RSUs, including, but not limited to, attainment of certain performance goals during the restricted period. Restricted stock may have voting and dividend rights, and RSUs may have associated dividend equivalent rights.Performance Grants.Performance grants will consistbe made without additional consideration or in consideration of a rightpayment by the participant that is (i) denominatedless than the fair market value of shares of the Company’s common stock on the date of grant.
During the applicable restriction period, the participant will have no ownership, transfer or voting rights in the shares of the Company’s common stock underlying the RSUs. Rights to dividend equivalents may be extended to and made part of any RSU award at the discretion of and on the terms determined by the Compensation Committee; provided, however, that any dividend equivalents or other distributions on the shares of the Company’s common stock underlying the RSUs will be deferred until and paid contingent upon the vesting of such RSUs. Cash Incentive Awards, Performance Shares and Performance Units Performance shares, performance units and cash stock or any other form of award issuableincentive awards may also be granted to participants under the Plan (or any combination thereof), (ii) valued,Amended Plan. A performance share is a bookkeeping entry that records the equivalent of one share of the Company’s common stock, and a performance unit is a bookkeeping entry that records a unit equivalent to $1.00 or such other value as determined by the Committee,Compensation Committee. Each grant will specify the number or amount of performance shares or performance units, or the cash amount payable with respect to cash incentive awards, being awarded, which number or amount may be subject to adjustment to reflect changes in accordance withcompensation or other factors. These awards become payable to participants upon the achievement of suchspecified performance goals during such performance periods as the Committee will establishobjectives, and (iii) payable at such time and in such form as the Committee will determine. Unless otherwise determined by the Committee, any such performance grant will be evidenced by an award agreement containing the terms of the award, including, but not limited to, the performance criteria andupon such terms and conditions as the Compensation Committee determines at the time of grant. Each grant will specify the performance objectives regarding the earning of the award. Each grant will specify the time and manner of payment of cash incentive awards, performance shares or performance units that have been earned, and any grant may further specify that any such amount may be determined, from timepaid or settled in cash, shares of the Company’s common stock, or any combination thereof. Any grant of performance shares or performance units may provide for the payment of dividend equivalents in cash or in additional shares of the Company’s common stock, provided that such dividend equivalents will be subject to time,deferral and payment on a contingent basis based on the earning and vesting of the performance shares or performance units, as applicable, with respect to which such dividend equivalents are paid. The performance objectives that may apply with respect to awards of performance shares, performance units, or cash incentive awards (or, when so determined by the Compensation Committee, in each caseoption rights, appreciation rights, restricted stock, RSUs, dividend equivalents or other awards pursuant to the Amended Plan) may include (but are not inconsistent with the Plan. In relationlimited to): objectives related to any performance grant, the performance period may not be less than twelve months for which performance is being measured.Section 162(m) of the Code limits the federal income tax deductibility of compensation in excess of $1,000,000 per year paid to certain employees (generally the chief executive officer and next three highest paid executive officers other than the chief financial officer), unless the compensation is “qualified performance-based compensation” within the meaning of Section 162(m). Under the Plan, awards may, but need not, include performance criteria that are intended to satisfy Section 162(m). To the extent that awards are intended to qualify as “qualified performance-based awards” under Section 162(m), the performance criteria will relate to one or more of the following performance criteria (and subject to such modifications as specified by the Committee): cash flow; cash flow from operations; earnings (including, but not limited to, earnings before interest, taxes, depreciation, and amortization or some variation thereof); earnings per share, diluted or basic; earnings per share from continuing operations; net asset turnover; inventory turnover; days sales outstanding on receivables; capital expenditures; debt; debt reduction; working capital (including as a percentage of sales); return on investment; return on sales; return on invested capital; net or gross sales; economic profit; gross profit on sales; material gross profit (gross profit on material portion of sales); performance profit (operating income minus an allocated charge approximating the Company’s cost of capital, before or after tax); purchase variance; delivery variance; quality; customer satisfaction; comparable site sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; productivity; delivery performance; safety record and/or performance; environmental record and/or performance; stock price; return on equity or capital employed; total shareholder return or relative increases to shareholder return; return on capital; return on assets or net assets; revenue; revenue growth; income or net income; operating income or net operating income; operating income adjusted for management fees
TABLE OF CONTENTS and depreciation and amortization; pre-tax income (including (including on an as-adjusted basis); operating profit or net operating profit; non-performing assets; asset sale targets; value of assets; employee retention/attrition rates; investments; regulatory compliance; satisfactory internal or external audits; improvement of financial ratings; value creation; gross margin, operating margin or profit margin; margin growth; completion of acquisitions, business expansion, product diversification, and new or expanded market penetrationpenetration; growth or growth rate; employee recruitment, engagement, retention and other non-financial operatingsatisfaction; diversity; environmental and social measures; human resources management, performance objectives,and any combination of the foregoing, and such other business performance criteria as may, from time to time, be established by the Committee.
To the extent consistent with Section 162(m) of the Code, the Committee may determine, at the time the performance goals are established, that certain adjustments will apply, in whole or in part, in such manner as determined by the Committee, to exclude or include the effect of any of the following events that occur during a performance period: the impairment of tangible or intangible assets; litigation or claim judgments or settlements; the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; business combinations, reorganizations and/or restructuring programs, including, but not limited to, reductions in force and early retirement incentives; currency fluctuations; and any extraordinary, unusual, infrequent or non-recurring items, including, but not limited to, such items described in management’s discussion and analysis of financial condition and results of operations or the financial statements and/or notes thereto appearing in the Company’s annual report to shareholders for the applicable period.
The above-listed performance metrics may be applied individually, alternatively, or in any combination, and subject to such modifications or variations as specified by the Committee, applied to either the Company as a whole or to a business unit or subsidiary entity thereof, either individually, alternatively or in any combination, and any of which may be measured over a period of time, including any portion of a year, annually or cumulatively over a period of years, on aneither in absolute basis orterms, relative to a pre-established target, as compared to any incremental increase, as compared to previous years’ results or as compared to results of a designated comparison group,group.
If the Compensation Committee determines that a change in each case as specified by the Committee.Thebusiness, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the aforementioned performance objectives unsuitable, the Compensation Committee may in its sole discretion modify such performance objectives or the goals or actual levels of achievement regarding the performance objectives, in whole or in part, as the Compensation Committee deems appropriate and equitable.
Other Awards Other awards may also establish such additional restrictions or conditions that must be satisfied as a condition precedent to the payment of all or a portion of any performance grants. Such additional restrictions or conditions need not be performance-based and may include, among other things, the receipt by a participant of a specified annual performance rating, the continued employment by the participant and/or the achievement of specified performance goals by the Company, business unit, or participant. Furthermore, and notwithstanding any provision of this Plan to the contrary, the Committee, in its sole discretion, may retain the discretion to reduce the amount of any performance grant payable to a participant if it concludes that such reduction is necessary or appropriate based upon: (i) an evaluation of such participant’s performance; (ii) comparisons with compensation received by other similarly-situated individuals working within the Company’s industry; (iii) the Company’s financial results and conditions; or (iv) such other factors or conditions that the Committee deems relevant; provided, however, that the Committee will not use its discretionary authority to increase any award that is intended to be performance-based compensation under Section 162(m) of the Code.Stock appreciation rights (SARs). The Committee may grant SARs either separately or in tandem with a stock option granted under the Plan. The grant or base price of a SAR may not be less than the fair market value of a share of our common stock on the grant date. SARs will vest in accordance with the vesting schedule specified by the Committee in the award agreement (and subject to the terms and conditions included therein), and such awards granted to employees will have a vesting period of no less than twelve months (subject to the special vesting terms); provided, however, this limitation will not: (i) adversely affect a participant’s rights under another plan or agreement or (ii) apply to awards granted in exchange for the surrender of, or substitution of, another company’s awards to its employees
and directors. Upon exercise, each SAR entitles a participant to receive an amount equal to the appreciation in fair market value of a share of common stock on the date the SAR is exercised over the fair market value of a share of common stock on the date the SAR is granted. The payment may be settled in cash, shares of common stock, or a combination of both.
Other Awards.The Committee may grant other types of awardsAmended Plan that may be baseddenominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares (including, without limitation, securities convertible into shares), as deemed by the Compensation Committee to be consistent with the purposes of the Amended Plan. Cash awards, as an element of or supplement to any other award granted under the Amended Plan, may also be granted. Subject to the terms of the Amended Plan, the Compensation Committee may authorize the grant of shares of common stock as a bonus, or denominatedmay authorize the grant of other awards in lieu of obligations of the Company or a subsidiary to pay cash or deliver other property under the Amended Plan or under other plans or compensatory arrangements, subject to such terms as will be determined by the Compensation Committee in a manner that complies with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). The Compensation Committee may, at or after the date of grant, authorize the payment of dividends or dividend equivalents on other awards on a deferred and contingent basis, either in cash or in additional shares of common stock; provided, however, that dividend equivalents or other distributions on common stock underlying awards granted will be deferred until and paid contingent upon the earning and vesting of such awards. These awards will provide for vesting and other terms as deemed appropriate by the Compensation Committee and consistent with the terms of the Amended Plan.
Adjustments; Change in Control The Compensation Committee will make or provide for such adjustments in the number of and kind of common stock covered by outstanding awards granted under the Amended Plan, in the exercise price and base price provided in outstanding option rights and appreciation rights, respectively, in cash incentive awards, and in other award terms, as the Compensation Committee, in its sole discretion, determines, in good faith, is equitably required to prevent dilution or enlargement of the rights of participants that otherwise would result from (i) any extraordinary cash dividend, stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (ii) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (iii) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event or in the event of a change in control, the Compensation Committee may provide in substitution for any or all outstanding awards under the Amended Plan such alternative consideration (including cash), if any, as it, in good faith, may determine to be equitable in the circumstances and will require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each option right or appreciation right with an exercise price or base price, respectively, greater than the consideration offered in connection with any such transaction or event or change in control, the Compensation Committee may in its sole discretion elect to cancel such option right or appreciation right without any payment to the person holding such option right or appreciation right. The Compensation Committee will also make or provide for such adjustments in the number of shares of common stock specified in the Amended Plan as the Compensation Committee, in its sole discretion, determines, in good faith, is appropriate to reflect any transaction or event described therein. TABLE OF CONTENTS Amendment and Termination The Board generally may amend the Amended Plan at any time and from time to time in whole or in part. However, if any amendment (i) would materially increase the benefits accruing to participants under the Amended Plan, (ii) would materially increase the number of securities which may be issued under the Amended Plan, (iii) would materially modify the requirements for participation in the Amended Plan, or (iv) must otherwise be approved by the Company’s shareholders in order to comply with applicable law or the Nasdaq listing requirements, then such amendment will be subject to shareholder approval and will not be effective unless and until such approval has been obtained. Subject to the achievementterms of performance goals during a performance period determined by the Committee, or such other terms and conditions asAmended Plan, the Compensation Committee may prescribe,amend the terms of any award, prospectively or retroactively. Except as otherwise provided in the Amended Plan, no such amendment will materially impair the rights of any participant without his or her consent. Further, if permitted by Section 409A of the Code, but subject to limitations under applicable law.
Repricing
Notwithstanding anything in the terms of the Amended Plan, to the extent a participant holds an option right or appreciation right not immediately exercisable in full, or any restricted stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any RSUs as to which the restriction period has not been completed, or any cash incentive awards, performance shares or performance units which have not been fully earned, or any dividend equivalents or other awards made pursuant to the Amended Plan subject to any vesting schedule or transfer restriction, or who holds common stock subject to any transfer restriction imposed under the Amended Plan, the Compensation Committee may, in its sole discretion, provide for continued vesting or accelerate the time at which such option right, appreciation right or other award may vest or be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such restriction period will end or the time at which such cash incentive awards, performance shares or performance units will be deemed to have been earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award.
The Board may, in its discretion, terminate the Amended Plan at any time. Termination of the Amended Plan will not affect the rights of participants or their successors under any awards outstanding and not exercised in full on the date of termination. Notwithstanding the foregoing or any provision of the Amended Plan or an award agreement to the contrary, the Compensation Committee, may at any time (without the consent of participants), modify, amend, or terminate any or all of the provisions of the Amended Plan or an award agreement to the extent necessary to conform the provisions of the Amended Plan and/or the award agreement with Section 409A of the Code or any other provision of the federal income tax laws, regardless of whether such modification, amendment or termination of the Amended Plan and/or award agreement will adversely affect the rights of a participant, and except for adjustments madeto enable the Amended Plan to achieve its stated purposes in accordanceany jurisdiction outside the United States in a tax-efficient manner and in compliance with local rules and regulations. No Repricing Except in connection with a corporate transaction or event described in the Amended Plan or in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, shares of stock, other Company securities or other property), stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of stock or other Company securities, or similar transaction(s)), neither the Committee nor any other person may, without obtaining shareholder approval, (i) amend the terms of outstanding options or SARsawards may not be amended to reduce the exercise price of such outstanding optionsoption rights or SARs; (ii)the base price of outstanding appreciation rights, or cancel outstanding options“underwater” option rights or SARsappreciation rights (including following a participant’s voluntary surrender of “underwater” option rights or appreciation rights) in exchange for optionscash, other awards or SARsoption rights or appreciation rights with an exercise price or base price, as applicable, that is less than the exercise price of the original optionsoption rights or SARs; or (iii) cancel outstanding options or SARs with an exercise price aboveof the current stock price in exchange for cashoriginal appreciation rights, as applicable, without approval by the shareholders. Withholding To the extent that the Company is required to withhold federal, state, local or foreign taxes or other securities. In addition,amounts in connection with any payment made or benefit realized by a participant or other person under the Amended Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes or other amounts required to be withheld, which arrangements (in the discretion of the Compensation Committee) may include relinquishment of a portion of such benefit. If a participant’s benefit is to be received in the form of common stock, and such participant fails to make arrangements for the payment of taxes or other amounts, then, unless otherwise determined by the Compensation TABLE OF CONTENTS Committee, the Company will withhold shares of common stock having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when a participant is required to pay the Company an amount required to be withheld under applicable income, employment, tax, or other laws, the participant may elect, unless otherwise determined by the Compensation Committee, to satisfy the obligation, in whole or in part, by having withheld, from the shares of common stock required to be delivered to the participant, shares of common stock having a value equal to the amount required to be withheld or by delivering to the Company other shares of common stock held by such participant. The Compensation Committee may not make a grantalso provide for automatic and mandatory withholding of shares of common stock from an optionaward by the Company in connection with the participant’s satisfaction of such obligations. The common stock used for tax or SAR with a grant date that is effective priorother withholding will be valued at an amount equal to the fair market value of such common stock on the date the benefit is to be included in a participant’s income. In no event will the fair market value of the common stock to be withheld and delivered exceed the minimum amount required to be withheld, unless (i) an additional amount can be withheld and not result in adverse accounting consequences and (ii) such additional withholding amount is authorized by the Compensation Committee. Clawback Any award agreement may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee takes actionfrom time to approvetime, if a Participant, either (a) during employment or other service with the Company or a Subsidiary, or (b) within a specified period after termination of such award.Clawback
Theemployment or service, engages in any detrimental activity, as described in the applicable award agreement. In addition, notwithstanding anything in the Amended Plan providesto the contrary, any award agreement may also provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any cash or Common Stock issued under and/or any other benefit related to an award, or other provisions intended to have a similar effect, including upon such terms and conditions as may be required by the Committee and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Common Stock may be traded.
Any award agreement (or any part thereof) may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain or earnings related to an award, or include other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee in accordance with (i) any Company clawback or recoupment policy, including the Incentive Recoupment Policy, that is adopted to comply with the requirements of any awards made under the Plan are subject to recovery under any law, government regulation,applicable laws, rules, regulations, stock exchange listing requirementstandards or Company policyotherwise, or (ii) any applicable to them,laws that impose mandatory clawback or recoupment requirements under the circumstances set forth in such laws, including any recoupment and/as required by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or “clawback” that may be required to be made pursuant to such law, government regulation,other applicable laws, rules, regulations, or stock exchange listing requirement, or Company policystandards, as may be in effect from time to time.Effective Datetime, and Termination
Ifwhich may operate to create additional rights for the Company with respect to awards and the recovery of amounts relating thereto. By accepting awards under the Amended Plan, is approved at the Annual Meeting, it will become effective asparticipants consent to be bound by the terms of the date ofClawback Policy, if applicable, and agree and acknowledge that they are obligated to cooperate with, and provide any and all assistance necessary to, the Company in its efforts to recover or recoup any award, any gains or earnings related to any award, or any other amount paid under the Amended Plan or otherwise subject to clawback or recoupment pursuant to such approvallaws, rules, regulations, stock exchange listing standards or Company policy. Such cooperation and will terminate on May 25, 2026, unless earlier terminatedassistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the recovery or recoupment by the Board. The Board may terminateCompany from the Plan at any time, provided that no termination will materially affect the rightsparticipants of any participantsuch amounts, including from the participants’ accounts or from any other compensation, to the extent permissible under any award previously granted in whichSection 409A of the participant has a vested interest, without the written consent of such participant.
Code. U.S. Federal Income Tax Consequences The following is a brief summary of certain of the principal United States federal income tax consequences applicable to the Amended Plan participants and the Company, and is based upon an interpretation of present federal tax laws and regulations whichand may be inapplicable if such laws and regulations are changed. This summary, which is presented for the information of shareholders concerning how to vote on this proposal and not for Amended Plan participants, is not intended to be exhaustivecomplete and does not describe federal taxes other than income taxes (such as Medicare and Social Security taxes), or constitute tax advice, nor does it describe state, local or foreign tax consequences. To the extent any awards Incentive Stock Option Rights. Options granted under the Plan are subject to Section 409A of the Code, the following description assumes that such awards will be designed to conform to the requirements of Section 409A of the Code and the regulations promulgated thereunder (or an exceptionthereto). The Plan is not subject to the protective provisions of the Employee Retirement Income Security Act of 1974 and is not qualified under Section 401(a) of the Code.
Nonqualified stock options. For federal income tax purposes, no income is generally recognized by a participant upon the grant of a nonqualified stock option. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of a share of common stock on the date of exercise over the exercise price, multiplied by the number of shares received pursuant to the exercise of the option. Upon a subsequent sale of the common stock acquired under a nonqualified stock option, the participant will recognize a gain or loss that is measured by the difference between (i) the exercise price, increased by any compensation reported upon the participant’s exercise of the option and (ii) the amount realized on such sale or exchange. Any such gain or loss will be capital in nature if the shares were held as a capital asset, and will be long-term if such shares were held for more than one year. The Company generally is entitled to a tax deduction for compensation paid to a participant at the same time and in the same amount as the participant recognizes compensation upon exercise of the option.
Incentive stock options.Options issued under theAmended Plan and designated as incentive stock options are intended to qualify as such under Section 422 of the Code. No taxable income is recognized byUnder the participant uponprovisions of Section 422 and the grant or exercise ofrelated
TABLE OF CONTENTS regulations, an optionee who has been granted an incentive stock option will not recognize income and the Company will not be entitled to a deduction at the time of the grant or exercise of the option; provided, however, that the difference between the fair market value of the common stock received on the exercise date and the exercise price paid is an item of tax preference for purposes of determining the participant’soptionee’s alternative minimum tax. The taxation of gain or loss upon the sale of the common stock acquired upon exercise of an incentive stock option depends, in part, on whether the holding period of the common stock is at least (i) two years from the date the option was granted and (ii) one year from the date the common stock was transferred to the participant.optionee. If thesethis holding period requirements areis satisfied, any gain or loss realizedrecognized on a subsequent disposition of the common stock will be treated as a long-term capital gain or loss. If thesethis holding period requirements areis not met, then, upon such “disqualifying disposition” of the common stock, the participantoptionee generally will realizerecognize compensation, taxable as ordinary income, in an amount equal to the excess of the fair market value of the common stock at the time of exercise over the option price limited, however, to the gain on such sale. Any further gain (or loss) realizedor loss recognized by the participantoptionee generally will be taxed as short-term or long-term capital gain (or loss),or loss depending on the holding period. If the participantoptionee recognizes ordinary income upon a disqualifying disposition, the Company generally will be entitled to a tax deduction in the same amount. If, however, the participantoptionee meets the applicable holding period, the Company generally will not be entitled to a tax deduction with respect to capital gains recognized by the participant.optionee. If an incentive stock option is exercised at a time when it no longer qualifies as an incentive stock option, the option will be treated as a nonqualified stock option. Nonqualified Stock Option Rights and Appreciation RightsRestricted. An optionee will generally not recognize income at the time a nonqualified stock awardsoption is granted. Rather, the optionee recognizes compensation, taxable as ordinary income, only when the nonqualified stock option is exercised. The amount of income recognized is equal to the excess of the fair market value of the common stock received over the exercise price. Generally, the Company, subject to any Section 162(m) limitation, will be entitled to a tax deduction in an amount equal to the ordinary income recognized by the optionee. Upon a subsequent disposition of the common stock acquired under a nonqualified stock option, the optionee will recognize short-term or long-term capital gain or loss depending on the holding period.
Stock appreciation rights are treated very similar to nonqualified stock options for tax purposes. A participant receiving a stock appreciation right will not normally recognize any taxable income upon the grant of the stock appreciation right. Upon the exercise of the stock appreciation right, the participant will recognize compensation, taxable as ordinary income, equal to either: (i) the cash received upon the exercise or (ii) if common stock is received upon the exercise of the stock appreciation right, the fair market value of the common stock received. Generally, the Company, subject to any Section 162(m) limitation, will be entitled to a tax deduction in an amount equal to the ordinary income recognized by the participant. Unrestricted Stock and performance-basedOther Stock-Based Awards. The tax consequences of receiving common stock awards. A recipient ofpursuant to a stock award under the Amended Plan are similar to receiving cash compensation from the Company, unless the common stock awarded is restricted stock (i.e., subject to a substantial risk of forfeiture). If the shares of common stock are unrestricted (i.e., not subject to a substantial risk of forfeiture), the participant must recognize compensation, taxable as ordinary income, equal to the fair market value of the common stock received less any amount paid for common stock. The federal income tax consequences of other stock-based incentive awards will depend on how the awards are structured. Generally, the Company, subject to any Section 162(m) limitation, will be entitled to a deduction with respect to other incentive awards only to the extent that the recipient recognizes ordinary income in connection with such awards. Restricted Stock. A participant that receives a restricted stock award under the Amended Plan will normally will not be required to recognize income for federal income tax purposes at the time of grant, nor is the Company entitled to any deduction, to the extent that the common stock awarded has not vested.vested (i.e., still subject to a substantial risk of forfeiture). When any portionpart of thea restricted stock award vests, the participant will recognize compensation, taxable as ordinary income, in an amount equal to the fair market value of the vested common stock on the vesting date. A recipientThe participant may, however, make an election, underreferred to as a Section 83(b) of the Codeelection, within 30thirty days of the date offollowing the grant of shares of commonthe restricted stock award, to be taxed at the time of the grant of the award. A participant who makes a Section 83(b) election will recognize ordinary taxable incomeaward based on the grant date equal to the fair market value of the shares as ifcommon stock on the shares were unrestricted. If the shares subject to such election are subsequently forfeited, the recipient will not be entitled to any deduction, refund or loss for tax purposes with respectgrant date (determined without regard to the forfeited shares.restrictions). If a Section 83(b) election has not been made, any dividends received with respect to the restricted stock award prior to the lapse of the restrictions will be treated as additional compensation that is taxable as ordinary income to the participant. TheGenerally, the Company,generally is subject to any Section 162(m) limitation, will be entitled to a deduction for compensation paid to a participantin the same amount and at the same time and in the same amount asthat the participant recognizes ordinary income.
Upon the sale of the vested common stock, the participant will realizerecognize short-term or long-term capital gain or loss depending on the holding period. The holding period generally begins when the restriction period expires. If the recipient timely made a Section 83(b) election, the holding period commences on the date of the grant. TABLE OF CONTENTS Depending on the terms of the award, performance-based stock awards are taxed in a manner similar to restricted stock.
Restricted Stock Units. A participant generallywho receives restricted stock units will not recognize taxable income, upon the grant of a performance stock award. Upon payment of the performance stock award, the participant will recognize ordinary income in an amount equal to the fair market value of the common stock received. The Company generally is entitled to a deduction for compensation paid to a participant at the same time and in the same amount as the participant recognizes ordinary income.Restricted stock units and performance-based units. A recipient of units will not be required to recognize any income for federal income tax purposes, and the Company is not entitled to a deduction, at the time of grant. Rather, upon the settlement of units, the recipient of such units generally will be subject to tax at ordinary income rates on the fair market value of any common stock issued or cash paid in settlement of the award of such units, and the Company generally, subject to any Section 162(m) limitation, will be entitled to a deduction equal to the amount of the ordinary income realizedrecognized by the recipient. If the recipient receives shares of common stock upon settlement then, upon disposition of such shares, appreciation or depreciation after the settlement date is treated as either short-term or long-term capital gain or loss, depending on how long the shares have been held.
Performance AwardsStock appreciation rights. No taxable income is. A participant generally recognized by a participantwill not recognize income upon the grant of a SAR underperformance award. Upon payment of the Plan. Upon the exercise of a SAR,performance award, the participant will recognize compensation, taxable as ordinary income, in an amount equal to either: (i) the fair market value ofcash received or, if the shares of common stock; or (ii) the amount of cash received. Shares ofperformance award is payable in common stock, received upon the exercise of a SAR will, upon subsequent sale, be eligible for capital gain treatment, with the capital gain holding period commencing on the date of exercise of the SAR. The Company is entitled to a tax deduction for compensation paid to a participant at the same time and in the same amount as the participant recognizes ordinary income upon exercise of the SAR.Unrestricted stock awards.The tax consequences of receiving common stock pursuant to any other share-based incentive award under the Plan are similar to receiving cash compensation from the Company, unless the common stock awarded is restricted stock. If the shares of common stock are unrestricted, the participant must recognize ordinary income equal to the fair market value of the common stock received, less any amount paid for common stock. Thereceived. When the participant recognizes ordinary income upon payment of a performance award, the Company generally, issubject to any Section 162(m) limitation, will be entitled to a tax deduction for compensation paid to a participant at the same time and in the same amount as the participant recognizes ordinary income.amount.
Cash awards and other incentive awards.A participant will recognize ordinary income upon receipt of cash pursuant to a cash award. The Company generally will be entitled to a deduction equal to the amount of the ordinary income realized by the participant. The federal income tax consequences of other incentive awards will depend on how the awards are structured. Generally, the Company will be entitled to a deduction with respect to other incentive awards only to the extent that the recipient realizes compensation income in connection with such awards.
Section 409A of the Code.Awards of stock options, stock appreciation rights, restricted stock units, other share-based awards and performance grants under the Plan may, in certain instances, result in
the deferral of compensation that is subject to the requirements of Section 409A of the Code. Generally, to the extent that these awards fail to meet certain requirements under Section 409A, the regulations issued thereunder or an exception thereto, the award recipient will be subject to immediate taxation, interest and tax penalties in the year the award vests. It is our intent that awards under the Plan will be structured and administered in a manner that complies with the requirements of Section 409A of the Code, or an exception thereto.
Approval of Plan for Purposes of Section 162(m) of the Code
Section 162(m) of the Code limits the deductibility of compensation paid to each of the Company’s chief executive officer and the three other highest compensated officers, other than the chief financial officer (collectively, the “covered employees”), in any one year to $1,000,000, unless the compensation is “qualified performance-based compensation.” The Plan has been structured in a manner that enables the Company to grant awards to covered employees that are designed to satisfy the requirements of “qualified performance-based compensation” within the meaning of Section 162(m). Among other requirements, for compensation to be “performance-based” for purposes of Section 162(m), the performance goals must be pre-approved and objective. These awards are referred to as “qualified performance-based awards” and are in addition to stock options and SARs, which also are expressly authorized under the Plan and also may qualify as qualified performance-based compensation for purposes of Section 162(m). Specifically, in order for stock options and SARs to qualify as qualified performance-based compensation, Section 162(m) requires that the shareholders approve a maximum limit on the number of shares underlying such awards that may be granted to a participant over a specified period and that the exercise price of any such award not be less than the fair market value of a share of common stock on the grant date of the award.
One of the requirements of Section 162(m) relates to shareholder approval (and, in certain cases, re-approval) of the plan under which the awards are granted, including approval of the material terms of the performance goals under which qualified performance-based awards may be paid. In this regard, Section 162(m) requires re-approval of those performance goals after five years if the Committee has retained discretion to vary the targets under the performance goals from year to year, as is the case under the Plan.
Shareholders are being asked to approve the Plan and, specifically, the material terms of the performance goals under which an award of qualified performance-based compensation may be granted in the Plan, in order to preserve the Company’s ability to deduct compensation paid to covered employees pursuant to any qualified performance-based award, stock option, or SAR that may be made in the future under the Plan. For purposes of Section 162(m), the material terms include the employees eligible to receive compensation, a description of the business criteria on which the performance goal is based (i.e., performance measures), and the maximum amount of compensation that can be paid to an employee under the performance goal (i.e., individual annual award limits). Shareholder approval of the material terms of the Plan (including, but not limited to, the individual annual award limits) will allow the Committee the opportunity to grant awards intended to qualify as performance-based compensation under Section 162(m). Shareholder approval of the Plan also will constitute re-approval of the material terms of the Plan for purposes of Section 162(m) approval requirements. However, nothing in this proposal precludes the Committee from granting, and the Committee reserves the right to grant, awards that do not qualify as qualified performance-based compensation under Section 162(m). Additionally, there is not any guarantee that awards intended to qualify as qualified performance-based compensation under Section 162(m) ultimately will be deductible by the Company.
Benefits to Named Executive Officers and Others
Plan Benefits
The benefits that will be awarded or paid under the Plan cannot currently be determined. Awards granted under the Plan are within the Committee’s discretion, and the Committee has not yet determined future awards or which individuals may receive them.
Information regarding the shares of common stock and related securities previously authorized for issuance under the Plan is set forth under “Securities Authorized for Issuance under the Equity Compensation Plans” below.
The Board of Directors recommends that you vote “FOR” the approval of the L.B. Foster Company 2022 Equity and Incentive Compensation Plan, As Amended and Restated 2006 Omnibus Incentive Plan. SECURITIES AUTHORIZED FOR ISSUANCE UNDER THE EQUITY COMPENSATION PLANTABLE OF CONTENTS Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information at December 31, 2023 with respect to compensation plans under which equity securities of the Company are authorized for issuance. Equity compensation plans approved by shareholders | 245,265 | | 735,477(1) | $ | | —(2) | 162,042 | | 88,246(3) | Equity compensation plans not approved by shareholders | — | $ — | — | | | — | | | — | Total | 245,265 | | 735,477(1) | $ | | —(2) | 162,042 | | 88,246(3) |
| (1)
| The number ofis comprised of: (i) 503,412 performance share units included in this table reflects an assumed payout at maximum performance achievement. The performance share(“PSUs”); (ii) 19,998 performance-based stock incentive award units were(“PBSAs”); (iii) 193,634 strategic transformation plan award units (“Special PSUs”); and (iv) 18,433 deferred stock units (“DSUs”) all granted under the 2006 Omnibus Incentive Plan,Current and Predecessor Plans, which PSUs, PBSAs, Special PSUs, and DSUs were unvested and unearned as of December 31, 2015. This2023. The 717,044 PSUs, PBSAs and Special PSUs included in this table was revised from the Company’s Annual Report on Form 10-Kreflect an assumed payout at 21.2% attainment for the fiscal2021-2023 PSU awards (actual achievement); 93.9% attainment for the first calendar year endedtranche (actual achievement), 96.3% attainment for the second calendar year tranche (actual achievement) and maximum achievement for the third calendar year tranche of the 2022-2024 PSU awards; 187% attainment for the first calendar year tranche (actual achievement) and maximum achievement for the second and third calendar year tranches of the 2023-2025 PSU awards; and maximum achievement for the 2021-2026 PBSAs and 2022 Special PSUs. |
(2)
| At December 31, 2015 to reflect the outstanding performance share units, including, as a result, reducing the number of shares remaining available for future issuance from 407,307 to 162,042. | | (2) | As of December 31, 2015,2023, there were no outstanding awards with an exercise price. Weighted-average exercise price per share. This column also does not reflect outstanding performance share units.take into account PSUs, PBSAs, Special PSUs, or DSUs because they have no exercise price. |
| (3)
| Does not include the 245,265 performance share units includedPSUs, PBSAs, Special PSUs, or DSUs described in column (a).footnote 1 and 263,970 shares of restricted stock that were unvested as of December 31, 2023. |
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The 162,042 securities remaining available for future issuance disclosed in column (c) of the table above reflects the deduction from the authorized Plan total of both (i) the 245,265 performance share units identified in column (a) of the table and (ii) 93,817 shares of restricted stock that were outstanding and unvested as of December 31, 2015.
The following table shows the number of shares of common stock beneficially owned on the Record Date by: each person who has reported beneficial ownership of more than 5% of the Company’s common stock; each current director and nominee for director; | • | · | each person who has reported beneficial ownership of more than 5% of the Company’s common stock; |
| · | each current director and nominee for director; |
| · | each Named Executive Officer (“NEO”) included in the Summary Compensation Table on page 49;51; and |
| · | all directors and executive officers as a group. |
all directors and executive officers as a group. Information concerning persons we know to be the beneficial owners of more than 5% of the Company’s outstanding common stock is based upon reports filed with the Securities and Exchange Commission (“SEC”). | Stock Ownership | | Number of Shares Owned(a) | | Percent of
Shares(b) | | | | | | | | | | More Than 5% Shareholders: | | | | | | | | | | | | | | | | Legion Group(c)(d) | | 988,036 | | | 9.6 | % | | BlackRock, Inc.(e) | | 649,018 | | | 6.3 | % | | Snow Capital Management, L.P. (f) | | 632,649 | | | 6.1 | % | | | | | | | | | | Nominees for Director: | | | | | | | | Robert P. Bauer (CEO) | | 77,668 | | | * | | | Lee B. Foster II | | 186,726 | | | 1.8 | % | | Dirk Jungé | | 2,000 | | | * | | | G. Thomas McKane (not standing for re-election) | | 22,501 | | | * | | | Diane B. Owen | | 30,047 | | | * | | | Robert S. Purgason | | 10,136 | | | * | | | William H. Rackoff | | 57,747 | | | * | | | Suzanne B. Rowland | | 16,001 | | | * | | | Bradley S. Vizi | | 988,036 | | | 9.6 | % | | | | | | | | | | Named Executive Officers (other than CEO): | | | | | | | | David J. Russo | | 41,119 | | | * | | | John F. Kasel | | 31,452 | | | * | | | Patrick J. Guinee | | 9,724 | | | * | | | David R. Sauder(g) | | 10,564 | | | * | | | | | | | | | | | All Directors and Executive Officers as a Group (19 persons) | | 1,568,645 | | | 15.2 | % |
More Than 5% Shareholders:
| | | | | | | 22NW, LP(d) | | | 1,314,026 | | | 12.0% | GAMCO Investors, Inc. (as defined below)(e) | | | 1,239,004 | | | 11.3% | Dimensional Fund Advisors LP(f) | | | 681,635 | | | 6.2% | Brandes Investment Partners, L.P.(g) | | | 678,603 | | | 6.2% | The Vanguard Group(h) | | | 572,772 | | | 5.2% | | | | | | | | Current Directors and Nominees for Director:
| | | | | | | Raymond T. Betler (Chair) | | | 23,051 | | | * | Alexander B. Jones | | | 1,275 | | | * | Dirk Jungé | | | 26,597 | | | * | John F. Kasel (CEO) | | | 163,090 | | | 1.5% | John Kunz | | | 11,835 | | | * | Janet Lee | | | 8,542 | | | * | David J. Meyer | | | 2,564 | | | * | Diane B. Owen | | | 68,610 | | | * | Bruce E. Thompson | | | 11,884 | | | * | | | | | | | | Named Executive Officers (other than the current CEO)
| | | | | | | William M. Thalman | | | 49,192 | | | * | Patrick J. Guinee | | | 64,729 | | | * | Brian H. Kelly | | | 70,444 | | | * | William F. Treacy, Jr. | | | 40,030 | | | * | | | | | | | | All Directors and Executive Officers as a Group (18 persons) | | | 675,115 | | | 6.2% |
| *
| Less than 1% of the Company’s outstanding common stock outstanding on March 21, 2024. |
| (a)
| This column shows the number of shares with respect to which the named person or group had direct or indirect sole or shared voting or investment power. Unless otherwise noted in the footnotes, each director and NEO has sole voting and investment power with respect to their shares. The column also includes the shares allocated to accounts in the Company’s 401(k) plan maintained by the Company (4,818 for Mr. Bauer, 1,520 for Mr. Russo, 5,856(11,408 for Mr. Kasel, 0 for Mr. Guinee,Thalman, 0 for Mr. Sauder,Guinee, 531 for Mr. Kelly, 7,000 for Mr. Treacy, and 10,7503,038 for theall directors and other executive officers as a group). Mr. Bauer’sJunge’s holdings include 5,000 shares which are held in trust. Mr. Foster’s holdings include 22,000 shares which are held in an investment plan maintained by a separate company, and 84,000 shares which are held in trust. Mr. McKane’s holdings include 22,50114,713 shares held in trust. Ms. Rowland’sAs of May 2017, all Directors were permitted to elect to receive their quarterly cash fees and annual stock award in deferred stock units that would vest six months after their date of separation from the Board. The shareholdings reflected in this column do not include any deferred stock units, which may not be settled for shares of common stock until six months after termination of service from the Board and confer no voting or other shareholder rights upon the director. The deferred stock unit holdings include 1,000 shares held in an IRA.are as follows: Mr. Jungé’s holdings include 2,000 shares held in trust. Mr. Vizi’s holdings include 987,636 shares held by the Legion Group. 18,433 deferred stock units. |
| (b)
| For Directors and Executive Officers, the percentages in this column are based on the assumption that any shares which the named person has the right to acquire within 60 days after the Record Date have been acquired and are outstanding. Of the number of shares shown in column (3) there were 0 shares with respect to which such persons have the right to acquire beneficial ownership within 60 days after the Record Date. |
| (c)
| Based on 10,971,832 shares of the Company’s common stock outstanding on March 21, 2024. |
(d)
| The information in theis based on Schedule 13D/A filed on February 17, 2016jointly by Legion Partners, L.P. I (“Legion Partners I”22NW Fund, LP, 22NW LP, 22NW Fund GP, LLC, 22NW GP, Inc., Aron R. English, Bryson O. Hirai-Hadley, and Alexander B. Jones (each a “22NW Investor” and collectively, “22NW”), Legion Partners, L.P. II (“Legion Partners II”on January 26, 2024 and |
TABLE OF CONTENTS reporting beneficial ownership as of January 25, 2024. Each of 22NW Fund, LP, 22NW, LP, 22NW Fund GP, LLC and 22NW GP, Inc. reported that it has sole voting power with respect to 1,313,121 shares, sole dispositive power with respect to 1,313,121 shares, shared voting power with respect to 0 shares and shared dispositive power with respect to 0 shares. Aron R. English reported that he has sole voting power with respect to 1,314,026 shares, sole dispositive power with respect to 1,314,026 shares, shared voting power with respect to 0 shares, and shared dispositive power with respect to 0 shares. Bryson O. Hirai-Hadley reported that he has sole voting power with respect to 991 shares, sole dispositive power with respect to 991 shares, shared voting power with respect to 0 shares, and shared dispositive power with respect to 0 shares. Alexander B. Jones reported that he has sole voting power with respect to 1,275 shares, sole dispositive power with respect to 1,275 shares, shared voting power with respect to 0 shares, and shared dispositive power with respect to 0 shares. The address of the principal office of each of the Reporting Persons is 590 1st Ave. S, Unit C1, Seattle, WA, 98104. On January 25, 2024, each of the 22NW Investors entered into the Cooperation Agreement (as defined below) with the Company. Among other matters, the Cooperation Agreement requires each of the 22NW Investors, during the pendency of the Standstill Period (as defined below), to take certain actions, including to vote, or cause to be voted, all shares of common stock beneficially owned by each of the 22NW Investors in favor of (a) each of the directors nominated by the Board and recommended by the Board in the election of directors (and not in favor of any other nominees to serve on the Board), and (b) each of the shareholder proposals listed on the Company’s proxy card or voting instruction form as identified in the Company’s proxy statement in accordance with the Board’s recommendations, including in favor of all other matters recommended for shareholder approval by the Board, subject to certain exceptions contained therein. During the Standstill Period, the 22NW Investors agreed not to, among other matters, (a) acquire, in the aggregate, ownership of more than 15% of the outstanding shares of the Company or (b) engage in any solicitation of proxies or written consents to vote any voting securities of the Company, or conduct any non-binding referendum with respect to any voting securities of the Company, or knowingly encourage, assist or participate in any other way, directly or indirectly, in any solicitation of proxies (or written consents) with respect to any voting securities of the Company, or otherwise become a “participant” in a “solicitation,” as such terms are defined in Instruction 3 of Item 4 of Schedule 14A and Rule 14a-1 of Regulation 14A, respectively, under the Exchange Act, to vote any securities of the Company in opposition to any recommendation or proposal of the Board. Additionally, in connection with the Cooperation Agreement, the Company chose to nominate Mr. Alexander B. Jones as a candidate for election to the Board at the Company’s 2024 annual meeting of shareholders (the “2024 Annual Meeting”), for a term expiring at the Company’s 2025 annual meeting of shareholders (the “2025 Annual Meeting”). Pursuant to the Cooperation Agreement, the Company agreed that, during the Standstill Period, if elected to the Board, Mr. Jones shall be appointed to at least one of the Board’s committees and he shall be considered along with all other Board members for Board committee assignments in connection with the Board’s annual review of committee composition. To the extent Mr. Jones is not elected to the Board at the 2024 Annual Meeting, he shall continue to serve as a Board Observer through the expiration of the Standstill Period. For additional information regarding the Cooperation Agreement, see “Agreements with 22NW Fund, LP et. al” in the “Corporate Governance” section. (e)
| The information is based on a Schedule 13D/A filed jointly by GGCP Inc, Teton Advisors, LLC, Gabelli Funds, LLC, GAMCO Investors, Inc., Legion Partners Special Opportunities, L. P. II (“Legion Special II”)Associated Capital Group, Inc., Legion Partners, LLC (“Legion Partners”), Legion PartnersGAMCO Asset Management Inc., and Mario J. Gabelli (collectively, “GAMCO Investors, Inc.”) with the SEC on August 9, 2023, reporting beneficial ownership as of August 8, 2023. Gabelli Funds, LLC (“Legion Asset Management”), Legion Partners Holdings, LLC (“Legion Holdings”), Bradley S. Vizi, Christopher S. Kiper and Raymond White and Forms 4 filed by Mr. Vizi thereafter. Legion Partners I hasreported sole voting andpower with respect to 181,098 shares, sole dispositive power with respect to 181,098 shares, shared voting power with respect to 0 shares, and shared voting and dispositive power with respect to 559,9190 shares. Legion Partners II hasGAMCO Asset Management Inc., reported sole voting andpower with respect to 874,718 shares, sole dispositive power with respect to 887,718 shares, shared voting power with respect to 0 shares, and shared voting and dispositive power with respect to 108,8560 shares. Legion Special II hasTeton Advisors, LLC, reported sole voting andpower with respect to 169,479 shares, sole dispositive power with respect to 169,479 shares, shared voting power with respect to 0 shares, and shared voting and dispositive power with respect to 318,8610 shares. Legion Partners, Legion Asset Management, Legion Holdings and Messrs. Kiper and White haveAssociated Capital Group, Inc., reported sole voting andpower with respect to 709 shares, sole dispositive power with respect to 709 shares, shared voting power with respect to 0 shares, and shared voting and dispositive power with respect to 987,6360 shares. Mr. Vizi has sole voting and dispositive power with respect to 400 shares and shared voting and dispositive power with respect to |
| | 987,636 shares. As the general partner of Legion Partners I, Legion Partners II and Legion Special II, Legion Partners may be deemed to be the beneficial owner of the shares owned by each. Legion Asset Management, as the investment advisor of each of Legion Partners I, Legion Partners II and Legion Special II, may be deemed the beneficial owner of the shares owned by Legion Partners I, Legion Partners II and Legion Special II. Legion Holdings, as the sole member of Legion Asset Management and managing member of Legion Partners, may be deemed the beneficial owner of the shares owned by Legion Partners I, Legion Partners II and Legion Special II. Mr. Vizi, as a managing director of Legion Asset Management and a managing member of Legion Holdings, may be deemed the beneficial owner of the shares owned by Legion Partners I, Legion Partners II and Legion Special II. Each of Messrs. Kiper and White, as managing directors of Legion Asset Management and a managing member of Legion Holdings, respectively, may be deemed the beneficial owners of the shares owned by Legion Partners I, Legion Partners II and Legion Partners Special II. The address for each reporting person is 9401 Wilshire Blvd, Suite 705, Beverly Hills, CA 90212. |
| (d) | Legion Partners I, Legion Partners II, Legion Special II, Legion Partners, Legion Asset Management, Legion Holdings and Messrs. Vizi, Kiper and White (each, an “Investor” and collectively, the “Investor Group”) currently are parties, with the Company, to theGGCP, Inc., GAMCO Investors, Agreement with regard to the shares of common stock held by each Investor. Among other matters, the Investors Agreement requires the Investor Group, during the pendency of the Standstill Period, to vote, or cause to be voted, all shares of common stock beneficially owned by each Investor and their respective affiliates and associates on the Company’s proxy card or voting instruction form in favor of (a) each of the directors nominated by the Board and recommended by the Board in the election of directors (and not in favor of any other nominees to serve on the Board)Inc., and (b) except in connection with certain matters,Mario J. Gabelli each of the shareholder proposals listed on the Company’s proxy card or voting instruction form as identified in the Company’s proxy statement in accordance with the Board’s recommendations, including in favor of all other matters recommended for shareholder approval by the Board. For additional information on the Investors Agreement, see “Nominating and Corporate Governance Committee.” |
| (e) | Based on information in the Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) on January 26, 2016, BlackRock hasreported sole voting power as to 605,104 shares, shared voting power with respect to 0 shares, sole dispositive power with respect to 649,0180 shares, shared voting power with respect to 0 shares, and shared dispositive power with respect to 0 shares. The address of BlackRockfor the reporting person is 55 East 52nd Street,One Corporate Center, Rye, New York NY 10055.10580-1435. |
(f)
| (f) | BasedThe information is based on information in thea Schedule 13G/A filed by Snow Capital Management, L.P. (“Snow Capital”)Dimensional Fund Advisors LP with the SEC on January 12, 2016, Snow CapitalFebruary 9, 2024, reporting beneficial ownership as of December 29, 2023. Dimensional Fund Advisors LP reported that it has sole voting power andwith respect to 669,076 shares, sole dispositive power with respect to 632,649681,635 shares, and shared voting andor dispositive power with respect to 0 shares. Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Company that are owned by the Funds and may be deemed to be the beneficial owner of the shares of the Company held by the Funds. However, all securities reported in this schedule are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. The address of Snow Capitalfor the reporting person is 2000 Georgetowne Drive, Suite 200, Sewickley, PA 15143.6300 Bee Cave Road, Building One, Austin, TX 78746. |
(g)
| (g) | Mr. Sauder voluntarily resigned from employmentThe information is based on a Schedule 13G filed jointly by Brandes Investment Partners, L.P., CO-GP, LLC, Brandes Worldwide Holdings, L.P., and Glenn Carlson with the companySEC on March 7, 2016,February 13, 2023, reporting beneficial ownership as of December 31, 2022. Brandes Investment Partners, L.P. reported that it has sole voting power with respect to 0 shares, sole dispositive power with respect to 0 shares, shared voting power with respect to 316,879 shares, and forfeited unvested restrictedshared dispositive power with respect to 678,603 shares. CO-GP, LLC reported that it has sole voting power with respect to 0 shares, sole dispositive power with respect to 0 shares, shared voting power with respect to 316,879 shares, and shared dispositive power with respect to 678,603 shares. Brandes Worldwide Holdings, L.P. reported that it has sole voting power with respect to 0 shares, sole dispositive power with respect to 0 shares, shared voting power with respect to 316,879 shares, and shared dispositive power with respect to 678,603 shares. Glenn Carlson has sole voting power with respect to 0 shares, sole dispositive power with respect to 0 shares, shared voting power with respect to 316,879 shares, and shared dispositive power with respect to 678,603 shares. Brandes Investment Partners, L.P. is an investment adviser registered under the Investment Advisors Act of 1940. The address for the reporting person is 4275 Executive Square, 5th Floor, La Jolla, CA 92037. |
(h)
| The information is based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 13, 2024, reporting beneficial ownership as of December 29, 2023. The Vanguard Group reported that is has sole voting power with respect to 0 shares, sole dispositive power with respect to 568,291 shares, shared voting power with respect to 0 shares, and shared dispositive power with respect to 4,481 shares. The address for the reporting person is 100 Vanguard Boulevard, Malvern, PA 19355. |
TABLE OF CONTENTS DIRECTOR COMPENSATION – 20152023 The following table sets forth our non-employee director compensation for 2015.2023. Directors who are also employees of the Company do not receive any consideration for their service on the Board. | Name | | Fees Earned or
Paid in Cash($)1 | | Stock Awards($)2 | | Total($) | | | | | | | | | | | | | | | | Lee B. Foster II | | $ | 112,917 | | | $ | 76,300 | | | $ | 189,217 | | | Dirk Jungé3 | | $ | 32,083 | | | $ | 76,300 | | | $ | 108,383 | | | Peter McIlroy II4 | | $ | 16,667 | | | — | | $ | 16,667 | | | G. Thomas McKane5 | | $ | 58,917 | | | $ | 76,300 | | | $ | 135,217 | | | Diane B. Owen | | $ | 62,917 | | | $ | 76,300 | | | $ | 139,217 | | | Robert S. Purgason | | $ | 50,417 | | | $ | 76,300 | | | $ | 126,717 | | | William H. Rackoff | | $ | 65,417 | | | $ | 76,300 | | | $ | 141,717 | | | Suzanne B. Rowland | | $ | 52,917 | | | $ | 76,300 | | | $ | 129,217 | | | Bradley S. Vizi6 | | — | | — | | — |
Raymond T. Betler | | | 135,041 | | | 80,000 | | | 215,041 | Dirk Jungé | | | 69,777 | | | 80,000 | | | 149,777 | John E. Kunz | | | 78,516 | | | 80,000 | | | 158,516 | Janet Lee | | | 66,016 | | | 103,116 | | | 169,132 | Diane B. Owen | | | 75,927 | | | 80,000 | | | 155,927 | Bruce E. Thompson | | | 77,521 | | | 80,000 | | | 157,521 |
*
| Mr. Meyer is not included in the table because he did not serve on the Board during calendar year 2023. |
1
| On February 14, 2023, the Board approved an annual cash retainer fee of $70,000 for each non-employee director, and the following additional annual director retainer fees: Chairman of the Board, $75,000; Chair of Compensation Committee, $12,500; Chair of Audit Committee, $12,500; Chair of Nomination and Governance Committee, $12,500; and Chair of the Select Ad Hoc Corporate Responsibility Committee, $6,250. |
2
| The Non-Employee Director Deferred Compensation Plan (as amended and restated effective December 1, 2022) (the “Director Deferred Compensation Plan”) permits participants to elect to defer receipt of their cash and/or equity compensation to a date that is six months after separation from the Board. Since February 25, 2016, non-employee directors have been permitted to make discretionary elections to receive annual cash retainer fees in fully-vested shares of common stock on a quarterly basis or in quarterly installments of cash. Under the Director Deferred Compensation Plan, in lieu of receiving cash fees on a quarterly basis, non-employee directors may make an irrevocable election for each Board year (commencing on the date of each Annual Meeting of Shareholders through the following Annual Meeting of Shareholders) to receive, at his or her sole discretion, all of such director’s annual cash retainer fees in the form of either (i) fully-vested common stock, (ii) deferred stock units, or (iii) deferred cash. The cash retainer is divided by four and either (i) with respect to fully-vested common stock, issued on each quarterly payment date, with the number of shares determined by dividing the applicable quarterly cash retainer fee by the closing market price per share of the Company’s common stock; (ii) with respect to deferred stock units, determined by dividing the applicable quarterly cash retainer fee by the closing market price per share of the Company’s common stock and crediting that number of units to the director’s deferred stock account; or (iii) credited to a deferred cash account with interest calculated at the U.S. Prime Rate. Commencing on the date of the May 22, 2013,2017 Annual Meeting of Shareholders, Mr. Jungé elected to receive his cash retainer in deferred stock units and the remaining directors elected to receive their cash retainers in cash. Commencing on the dates of the 2018, 2019, 2020, 2021, 2022, and 2023 Annual Meetings of Shareholders, all directors elected to receive their cash retainers in cash. The amounts of retainer fees paid in cash, fully-vested stock, and deferred stock units in 2023 are as follows: Mr. Betler received $135,041 in cash, $0 in fully-vested stock, and $0 in deferred stock units; Mr. Jungé received $69,777 in cash, $0 in fully-vested stock, and $0 in deferred stock units; Mr. Kunz received $78,516 in cash, $0 in fully-vested stock, and $0 in deferred stock units; Ms. Lee received $66,016 in cash; $0 in fully-vested stock, and $0 in deferred stock units; Ms. Owen received $75,927 in cash, $0 in fully-vested stock, and $0 in deferred stock units; and Mr. Thompson received $77,521 in cash, $0 in fully-vested stock, and $0 in deferred stock units. No director elected to defer cash fees into a deferred cash account. |
3
| Ms. Lee was elected to the Board of Directors approvedeffective January 1, 2023, and as part of her compensation, she was awarded 2,388 shares of restricted stock, or 5/12ths of the following annual5,730 shares granted to each director fees: $110,000re-elected to the Board at the June 2, 2022 Annual Meeting, in accordance with the 2022 Annual Director Equity Award for the Chairman of the Board; $60,0002022-2023 Board Year, prorated for the Chair of the Audit Committee; $62,500 for the Chair of the Compensation Committee; and $56,000 for the Chair of the Nomination and Governance Committee. Each of the remaining non-employee directors received an annual fee of $50,000.her service during that Board Year. On May 29, 2015, the Board of Directors approved the following increased annual director retainer fees: $115,000 for the Chairman of the Board; $67,500 for the Chair of the Compensation Committee; $65,000 for the Chair of the Audit Committee; and $61,000 for the Chair of the Nomination and Governance Committee. As of May 29, 2015, each of the remaining non-employee directors receive an annual fee of $55,000. |
| 2 | On May 29, 2015,25, 2023, each non-employee director serving at that time was awarded 2,000an amount of shares of the Company’s Common Stock. Thecommon stock equal to $80,000 divided by the closing price per share of the Company’s common stock on the Nasdaq Stock Market on that date, with such shares vesting on the one-year anniversary of the grant date. As with the annual cash retainer fees, under the Director Deferred Compensation Plan, non-employee directors may make an irrevocable election for each Board year (commencing on the date of each Annual Meeting of Shareholders through the following Annual Meeting of Shareholders) to receive, at his or her sole discretion, all of such director’s annual stock award in the form of deferred stock units which would not be settled until six months after the respective director’s separation from the Board, subject to the one-year vesting schedule established at grant. In 2023, Mses. Lee and Owen, and Messrs. Betler, Jungé, Kunz, and Thompson received awards were fully vestedof 6,154 shares on the grant date andwhich are only subject to the aggregate grant date fair value of eachone-year vesting period. The stock award to our non-employee directors isawards are reflected in the “Stock Awards” column of the table and computed in accordance with FASBFinancial Accounting Standards Board (“FASB”) ASC Topic 718 (excluding the effect of estimated forfeitures). As of December 31, 2023, non-employee directors had unvested stock awards as follows: Mr. Betler: 6,154 shares; Mr. Jungé: 6,154 shares; Mr. Kunz: 6,154 shares; Ms. Lee: 6,154 shares; Ms. Owen: 6,154 shares; and Mr. Thompson: 6,154 shares. For a discussion of valuation assumptions, see Note 15 of the Company’s 2015 Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.2023. |
TABLE OF CONTENTS | 3 | Mr. Jungé became a member of the Board in May 2015. |
| 4 | Mr. McIlroy did not stand for re-election in May 2015. |
| 5 | Mr. McKane is not standing for re-election in May 2016. |
| 6 | Mr. Vizi became a member of the Board in February 2016. |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES The aggregate fees (including out-of-pocket expenses) for professional services rendered by Ernst & Young LLP (“Ernst & Young”) for 20152022 and 20142023 for each of the following categories of services are set forth below: | | | 2014 | | 2015 | | Audit fees (includes audits, reviews of the Company’s fiscal-year audit, interim reviews, related expenses, and in 2015, increased merger and acquisition activity) | | $ | 923,253 | | | $ | 1,306,345 | | | | | | | | | | | | | Audit-related fees (primarily audits of the Company’s various employee benefit plans) | | $ | 36,000 | | | $ | 4,000 | | | | | | | | | | | | | Tax fees (includes tax return preparation, tax compliance, and tax planning) | | $ | 237,526 | | | $ | 207,719 | | | | | | | | | | | | | All other fees | | | — | | | | — | | | | | | | | | | | | | Total fees | | $ | 1,196,779 | | | $ | 1,518,064 | |
Audit fees (includes fees for the audit of the Company’s annual financial statements and internal control over financial reporting, reviews of financial statements included in the Company’s quarterly reports, and services that are normally provided in connection with statutory and regulatory filings or engagements, including certain attest engagements and consents) | | | $1,392,000 | | | $1,370,000 | Audit-related fees (includes fees for acquisition target-related financial audit) | | | $218,000 | | | — | Tax fees (includes tax compliance, tax planning, and state income tax project work) | | | $56,000 | | | $46,000 | All other fees | | | — | | | — | Total fees | | | $1,666,000 | | | $1,416,000 |
The Audit Committee reviewsreviewed summaries of Ernst & Young’s services and related fees and concluded that Ernst & Young’s provision of audit-related services during 20142022 and 20152023 was compatible with maintaining Ernst & Young’s independence. All Ernst & Young services are pre-approved by the Audit Committee. Policy for Approval of Audit and Permitted Non-Audit Services The Audit Committee’s policy is to review in advance, and grant any appropriate pre-approvals of (i) all audit services to be performed by the independent auditor and (ii) all non-audit services to be provided by the independent registered public accounting firm as permitted by Section 10A of the Exchange Act, and, in connection therewith, to approve all fees and other terms of such engagement, provided that pre-approval of de minimis services shall not be required to the extent provided by, and subject to the requirements of, the Exchange Act. The Audit Committee will consider annually for pre-approval a list of specific services and categories of services, including audit and audit-related services, for the upcoming or current fiscal year. All non-audit services are approved by the Audit Committee in advance in accordance with the policy on a case-by-case basis. Any service that is not included in the approved list of services or that does not fit within the definition of a pre-approved service is required to be presented separately to the Audit Committee for consideration at its next regular meeting or, if earlier consideration is required, by other more expeditious means of communication. If the estimated fees for non-audit services are $50,000 or less, management may obtain approval from the Chairman of the Audit Committee in lieu of full Committee action. In 2015,2023, all Ernst & Young professional fees were pre-approved in accordance with the Company’s pre-approval policies then in place. TABLE OF CONTENTS The Board, Board Meetings, Independence, and Tenure In December 2014, the
The current Board increased its size by one member, and consisted ofis eight directors. In February 2016, the Board again increased its size by one and currently consists of nine members until the 2016 Annual Meeting, when the Board will be reduced to eight members. During 2015, the Board held seven meetings, two of which were telephonic. The Board has determined that alleach of theits current directors and director nominees (Messrs. Betler, Jones, Jungé, Kunz, Meyer, and Thompson, and Mses. Lee and Owen), except for Mr. Robert P. Bauer,Kasel, qualify as “independent” as defined by applicable NASDAQNasdaq Stock Market (“ NASDAQ”Nasdaq”) rules,rules. Mr. Kasel is not considered to be independent because of his positions as our President and CEO. In determining the independence of the directors, the Board also considered the independence criteria set forth in the NASDAQNasdaq rules as to compensation committee members before determining the independence of each of the members of the Compensation Committee, and also determined that all members of the Audit Committee qualify as “independent” for purposes of the rules promulgated under the Exchange Act specifically related to audit committee member independence. In making these determinations, the Board concluded that none of its directors or director nominees (other than Mr. Bauer)Kasel) has a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out a director’s responsibilities. In its independence review, the Board also considered transactions, relationships, and arrangements between each director or director nominee, and their respective immediate family members and the Company or senior management. The Company’s Corporate Governance Guidelines do not establish term limits that could deprive the Company of the insight developed by Board members over time, but rather our director evaluation process provides for periodic reviews of each incumbent’sdirector’s performance. Additionally, except for special circumstances as may be determined by the Board, upon recommendation of the Nomination and Governance Committee, no director may be nominated for reelection to the Board if he or she would be age 7275 or older at the time of election. In accordance with this policy, Mr. Jungé is not standing for reelection at the 2024 Annual Meeting. Board Leadership Structure Under the NASDAQNasdaq rules, Mr. Foster,Betler, Chairman of the Board, qualifies as an “independent” director since his employment with the Company ended on May 27, 2008.director. The Board has evaluated Mr. Foster’sindependence in the same manner as all other directors and strongly believes that he is “independent” and that his economic interests are more closely aligned with those of the Company’s shareholders than with those of management. Although the Board does not necessarily object to combining the roles of Chairman of the Board and Chief Executive Officer (“CEO”), the Board has chosen not to combine thoseChairman of the Board and CEO positions at this time because it believes that Mr. Foster’sBetler’s depth of public company and industry experience, andcombined with his detachment from management make Mr. Fosterhim the best qualified individual to serve as Chairman of the Board. This current structure of separating the roles of Chairman and CEO also allows for better alignment of corporate governance (including the risk oversight responsibilities of the Board) with the interests of shareholders in protecting the Company’s long-term enterprise value. The Board also believes that this structure allows our CEO to focus on operating and actively managing the Company and the Chairman to provide guidance and oversight. With independent members of the Board serving as chairpersons and members of our Board committees, this leadership structure further enables the Board to provide independent oversight of material risks affecting the Company that are within the purview of such committees as further described under “Board’s Role in Risk Oversight.” Since the Chairman of the Board and CEO roles are not currently combined, the Board has determined there is no need for a “lead independent director” position.
The Company’s Corporate Governance Guidelines include an expectation that all members of the directors regularlyBoard then serving attend shareholders’ meetings.the annual meeting of shareholders. In 2015,2023, each director then currently serving attended the 20152023 Annual Meeting of Shareholders. During 2023, the Board held six (6) meetings. All of the incumbent directors attended 100% of the meetings of the Board and the committees on which they served in 20152023 (to the extent such directors were serving on the Board or such committees at the times of those meetings). Board’s Role in Risk Oversight The Board is actively involved in overseeing risk management.management and provides oversight and monitoring of management’s assessment of major risks facing the Company and strategies for risk mitigation, including performing periodic reviews of the Company’s environmental, safety, cyber security, and data privacy programs, practices, and risk exposures. Operational and strategic presentations by management to the Board include consideration of the foregoing challenges and risks to the Company’s business, which are discussed by the Board and management.management at every regularly scheduled Board meeting. The Board also reviews and discusses management reports which specifically address risk topics. The CEO, assisted by senior management, is the chief “risk officer” responsible for managing and mitigating the Company’s risks. TABLE OF CONTENTS In addition, each of our Board committees considers risks that are relevant to the areas within its jurisdiction. For example, the Audit Committee periodically requests thatreviews with management address critical accountingand the independent public accountants and internal auditor significant risks and exposures, and reviews, assesses, and oversees the steps management has taken to assess and manage such risks and exposures, particularly issues related to management policies and then considers the impact these issues may have on the Company’sguidelines, financial positionreporting and risk profile.control information services, business information services, business continuity, and physical asset conservation. The Audit Committee also assesses the adequacy of internal controls.controls and business continuity programs. Additionally, the Audit Committee assesses cybersecurity risk and mitigation strategies which include securing appropriate information security insurance coverage and reviewing the effectiveness of the Company’s information security training and compliance program. This program encompasses ongoing online training to identify and avoid hacking scams such as phishing and includes enhanced authentication procedures, endpoint protection software, and monitoring. The Compensation Committee develops executiveis responsible for reviewing the Company’s incentive compensation programs with a view toward providing incentivesarrangements to determine whether they encourage excessive risk-taking, reviewing and discussing at least annually the relationship between risk management policies and practices and compensation, and evaluating compensation policies and practices that are aligned with key performance results, without encouraging excessivecould mitigate any such risks. On an annual basis, the Nomination and Governance Committee overseesevaluates the allocation of risk oversight duties among the Board and its committees by reviewing the structure, function and functionduties of the Board and its committees. Diversity
Although not The full Board reviews environmental risks, including climate change, as part of its oversight of corporate responsibility initiatives, and in 2022 created a select ad hoc Corporate Responsibility Committee of the Board to assist in these duties.
The Company strives to promote the highest standards of environmental performance, corporate governance, and ethical behavior across our global operations while growing our business in a responsible manner and investing in our people. The Board is responsible for the oversight and monitoring of management’s assessment of major risks and strategy for risk management, including performing periodic review of the Company’s environmental and safety programs and practices, Corporate Governance Guidelines, and Legal and Ethical Conduct Policy. The Board is regularly briefed on such matters and visits Company operations at least annually. As part of its goal of good corporate stewardship, in 2022 the Board established a select ad hoc Corporate Responsibility Committee comprised of a Chair (Janet Lee), Dirk Jungé, David Meyer, and the chairs of the standing Board Committees (Audit, Nomination and Governance, and Compensation) to assist the Board in oversight of the Company’s overall environmental and social policies, strategies, and programs. While management is responsible for development of the approach, implementing initiatives, and driving the overall programs, the new Committee reviews the application of relevant market and regulatory development measures to oversee and determine whether the Company’s initiatives are aligned with its long-term business strategies and the creation of shareholder value. The Committee reviews the Company’s environmental and social-related activities, programs and policies and whether they are addressed, as an oversight matter, through the Corporate Responsibility Committee or the Audit, Compensation, and Nomination & Governance Committees. Environmental and Safety Programs and Practices With a focus on improvement, the Company has adopted safety and environmental policies in support of long term environmental, health, and safety (“EHS”) excellence. We endeavor to meet or exceed our EHS goals. Among our core values are safety, teamwork, and innovation which we rely on to create more advanced solutions around sustainability by endeavoring to minimize pollution from our operations while also considering how our operations may create benefits for the communities in which we operate. We aim to incorporate environmental, financial, and social considerations into our internal risk management analyses. We strive to develop best practices in EHS management based on the internationally recognized standard, ISO 14001:2015. The Company’s environmental, health, safety, and sustainability systems are comprised of policies, procedures, and tools used to manage environmental performance in our facilities, including compliance, environmental footprint reduction, and pollution prevention. The system is a framework for setting and reviewing environmental objectives and targets, and focuses on environmental improvement programs. All facilities globally are required to implement the system, track progress, and perform self-audits. TABLE OF CONTENTS The Company seeks to: Minimize discharges to the air, water, and land; Promote environmentally sound management of chemicals and wastes; Reduce or eliminate waste through prevention, reduction, recycling, and reuse; Improve energy efficiency and reduce our greenhouse gas emissions; Practice water conservation; and Reduce impacts to ecosystems by promoting the sourcing of environmentally preferable materials. The Company strives to improve the impact we have on the environment and promote a safe workplace for our employees. EHS and related initiatives are integrated into short- and long-term strategies across our various businesses, and we have reporting systems in place across the Company to capture data on an ongoing basis. Attracting and Retaining Talent We believe human capital management is key to the Company’s success. The Company is an equal opportunity employer and we seek to retain our employees through competitive compensation, benefits, and challenging work experiences with increasing levels of responsibility. The Compensation Committee is tasked with reviewing matters relating to human capital resources, including any formal policy,human capital measures or objectives that management focuses on to address the attraction, development, and retention of personnel, and provide guidance to the Board and management on these matters as the Compensation Committee deems appropriate. Management reports to the Board on succession planning, allocation of talent, and alignment of compensation. The Company routinely uses both internal and external professional services experts for employee training and talent development. For additional information regarding our programs to promote a positive culture and attract and retain employees at the Company, see Part I, Item 1 of our 2023 Annual Report. Our goal is to maintain a diverse Board, with directors possessing complementary and diverse skills, qualities, perspectives, and experiences whothat together can address the wide array of global, environmental, governance, and social issues which affect ourrelevant to the Company. The Nomination and Governance Committee periodically reviews director skills, diversity, and tenure in order to confirm that the directors’ backgrounds will assist the Company to execute on its business strategies, identify any skill gaps on the Board, and formulate plans to address the same. For example, directors who recently joined the Board bring specific skills to the Board, including Mr. Kunz (concrete and aggregates building products experience), Mr. Thompson (public company and finance experience), Ms. Lee (public company experience, including cybersecurity, intellectual property, legal, and regulatory compliance), and Mr. Meyer (manufacturing and rail industry experience). TABLE OF CONTENTS Below is matrix information regarding each then serving Board member’s self-identified diversity characteristics as of March 31, 2024 and March 31, 2023 in the form prescribed by the Nasdaq rules. | | Total Number of Directors | | | 8 | | | | | | | Female | | | Male | | | Non-Binary | | | Did Not
Disclose
Gender | | | | Part I: Gender Identity | | | | Directors | | | 2 | | | 6 | | | 0 | | | 0 | | | | Part II: Demographic Background | | | | African American or Black | | | 0 | | | 1 | | | 0 | | | 0 | | | | Alaskan Native or Native American | | | 0 | | | 0 | | | 0 | | | 0 | | | | Asian | | | 1 | | | 0 | | | 0 | | | 0 | | | | Hispanic or Latinx | | | 0 | | | 0 | | | 0 | | | 0 | | | | Native Hawaiian or Pacific Islander | | | 0 | | | 0 | | | 0 | | | 0 | | | | White | | | 1 | | | 5 | | | 0 | | | 0 | | | | Two or More Races or Ethnicities | | | 0 | | | 0 | | | 0 | | | 0 | | | | LGBTQ+ | | | 0 | | | | Did Not Disclose Demographic Background | | | 0 | |
| | Total Number of Directors | | | 7 | | | | | | | Female | | | Male | | | Non-Binary | | | Did Not
Disclose Gender | | | | Part I: Gender Identity | | | | Directors | | | 2 | | | 5 | | | 0 | | | 0 | | | | Part II: Demographic Background | | | | African American or Black | | | 0 | | | 1 | | | 0 | | | 0 | | | | Alaskan Native or Native American | | | 0 | | | 0 | | | 0 | | | 0 | | | | Asian | | | 1 | | | 0 | | | 0 | | | 0 | | | | Hispanic or Latinx | | | 0 | | | 0 | | | 0 | | | 0 | | | | Native Hawaiian or Pacific Islander | | | 0 | | | 0 | | | 0 | | | 0 | | | | White | | | 1 | | | 4 | | | 0 | | | 0 | | | | Two or More Races or Ethnicities | | | 0 | | | 0 | | | 0 | | | 0 | | | | LGBTQ+ | | | 0 | | | | Did Not Disclose Demographic Background | | | 0 | |
Communications with Directors Shareholders and other parties interested in communicating directly with the Chairman of the Board or with the non-management directors as a group may do so by writing to L. B.L.B. Foster Company, 415 Holiday Drive, Suite 100, Pittsburgh, PA 15220, Attn: Chairman of the Board or Attn: Independent Directors; such parties may also email the Corporate Secretary at corporatesecretary@lbfoster.com. The Corporate Secretary of the Company will review all such correspondence and shall regularly forward to the Board a summary of all such correspondence and copies of all correspondence that, in the opinion of the Corporate Secretary, deal with the functions of the Board or committees thereof or that otherwise require the Board’s attention. DirectorsThe Corporate Secretary may at any time review a log of all correspondence received by the Companyexclude items that is addressedare not related to members of the Board duties and request copies of anyresponsibilities, such correspondence.as junk mail and mass mailings; product complaints and product inquiries; job inquiries TABLE OF CONTENTS and resumes; advertisements or solicitations; and surveys. Concerns relating to accounting, internal controls, or auditing are referred to the Audit Committee Chair who may direct such matters to the Company’s internal audit department or handle them in accordance with procedures established by the Audit Committee for such matters. Historically, the Board has had three standing committees: the Audit Committee, the Compensation Committee, and the Nomination and Governance Committee, each of which is comprised of independent directors, as defined by applicable SEC NASDAQ, and Internal Revenue CodeNasdaq rules. Each of the committees has a written charter approved by the Board. In December 2022, the Board created a select ad hoc Corporate Responsibility Committee, which includes an independent chair and the chairs of the three standing Board committees, and also approved a written charter for its operation to assist with the coordination and oversight of the Company’s environmental and social-related activities, programs and policies. The current members of the Audit Committee are Mr. Thompson (Chair), Ms. Owen, (Chair), and Messrs. JungéMr. Kunz, and Mr. Rackoff.Meyer. The Board has determined that each Audit Committee member is sufficiently proficient in reading and understanding the Company’s financial statements to serve on the Audit Committee and that each member is independent as defined by applicable Nasdaq and SEC rules. Messrs. Thompson and Kunz and Ms. Owen isare each an “audit committee financial expert” as defined under applicable rules of the SEC. The Audit Committee, which held seveneight meetings during 2015, two of which were telephonic,2023, is responsible for overseeing, with management, the work and findings of the independent registered public accounting firm, as well as the effectiveness ofreviewing: the Company’s audited financial reports and interim financial reports; the Company’s systems of internal auditing departmentcontrols regarding finance, accounting and legal compliance that management and the adequacy of our internal controlsBoard have established; and the Company’s auditing, accounting principles employed inand financial reporting. The Audit Committee also is responsible for the appointment and compensation of our independent registered public accounting firm and for reviewing and, if appropriate, approving transactions with related persons.reporting processes. The Audit Committee’s Charter is posted on the Company’s investor relations website, www.lbfoster.com.lbfostercompany.gcs-web.com under the “Governance” tab. With respect to cybersecurity, the Audit Committee oversees risk strategy including (i) the Company’s processes for assessing, identifying, managing, and mitigating material risks from cybersecurity threats and emerging cybersecurity developments and threats; (ii) whether any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect the Company; (iii) the expertise of members of management with respect to assessing and managing risks from cybersecurity threats; and (iv) the Company’s disclosure controls and procedures with respect to material cybersecurity incidents. The Audit Committee, however, generally will defer to the (i) Compensation Committee
for analysis and review of risks and exposures related to executive compensation and (ii) Nomination and Governance Committee for analysis and review of risks and exposures related to certain environmental, social, and governance issues, with input from any other committees, ad hoc or otherwise, in place from time to time. Compensation Committee The current members of the Compensation Committee are Messrs. RackoffKunz (Chair), Jungé, McKane, and Vizi and Ms. Rowland.Betler. The Compensation Committee, which met onheld five occasionsmeetings in 2015,2023, is responsible for approving executiveand overseeing and, recommending, as deemed appropriate or advisable, to the Board for approval of, the Company’s compensation programs, officer compensation (and submits the CEO’s compensationpolicies and objectives for ratification by the Board), and equity awards to employees.officers. The Compensation Committee has the authority under its charter to delegate its authority, duties, and responsibilities (or functions) to one or more members of the Compensation Committee or the Board, and/or to the Company’s officers, when appropriate, but no such delegation shall be permitted if the authority is required by law, regulation, or listing standard to be exercised by the Compensation Committee as a whole or is otherwise prohibited by law, regulation, or listing standard. TheUpon recommendation of the CEO, the Compensation Committee has delegated authority to the Company’s CEO to grantroutinely approves restricted stock awards under the 2006 Omnibus Incentive Planthat vest ratably over three years to key non-executive employees in an amount not to exceed 15,250 shares.recognition of performance and as a retention tool under the applicable equity plan. The Compensation Committee’s Charter is available at the Company’s investor relations websitewww.lbfoster.com. lbfostercompany.gcs-web.com under the “Governance” tab. The Compensation Committee currently uses a “Comparator Group” of twentysixteen similarly-sized companies for compensation benchmarking purposes based on the recommendation of the Compensation Committee’s executive compensation consultant, identified in the “Compensation Discussion and Analysis” section of this Proxy Statement on page 29,and survey data as a tool to establish competitive compensation for the Company’s executive officers. The Comparator Group for 2015 consisted of the following companies: A.M. Castle & Co., Accuride Corp., Alamo Group, Inc., CIRCOR International, Inc., Columbus McKinnon Corporation, Furmanite Corporation, Gibraltar Industries, Inc., Lydall, Inc., MYR Group, Inc., NN, Inc., Northwest Pipe Co., Olympic Steel, Inc., American Railcar Industries, Inc., Lindsay Corporation, Orion Marine Group, Quanex Building Products Corporation, Insteel Industries, Houston Wire & Cable Co., Raven Industries, Inc., and Sterling Construction Co., Inc.
Pay Governance, LLC (the “Consultant”). The Compensation Committee has authority to engage consultants, legal counsel, and other advisors, and retained Pay Governance, LLC (“Consultant”)the Consultant to provide consulting services on the Company’s executive compensation practices and TABLE OF CONTENTS appropriate levels of, and structures for, executive compensation. The use of a consultant provides additional assurance that our executive compensation programs are reasonable, competitive, and consistent with our objectives. The Consultant is engaged directly by the Compensation Committee, regularly participates, as appropriate, in its meetings, including executive sessions of the Committee that exclude management, and advises the Compensation Committee with respect to compensation trends and best practices, plan design, and the reasonableness of compensation awards. In addition, with respect to the CEO, the Consultant prepares specific compensation analyses for the Compensation Committee’s consideration. The CEO does not participate in the development of these analyses.The Consultant has served as the Committee’s independent compensation consultant since 2007, and the Committee believes that its consultant should be able to advise the Compensation Committee independent of management’s influence.analyses. For the year ended December 31, 2015,2023, the Consultant provided no services to the Company other than executive compensation consulting services to the Compensation Committee.Committee and non-employee director compensation consulting services to the Nomination and Governance Committee as described below. The Compensation Committee assessed the independence of the Consultant pursuant to SEC rules and concluded that the Consultant’s work for it does not raise a conflictthere were no conflicts of interest. At least annually, the Committee reviews the types of advice and services provided by the Consultant and the fees charged for those services. The Consultant reports directly to the Compensation Committee on all executive compensation matters; regularly meets separately with the Compensation Committee outside the presence of management; and speaks separately with the Compensation Committee chair and other Compensation Committee members between meetings, as needed. The Compensation Committee gives significant weight to the CEO’s recommendations regarding other executive officers’ compensation; such other executive officers are not present when their compensation is being determined. The CEO is not present when his compensation is being finally determined.
For information regarding the role of consultant in non-employee director compensation, see “Nomination and Governance Committee.” Consideration of Risk Within Compensation Arrangements
In designing incentive plans, the Company attempts to mitigate risk by avoiding unintended compensation windfalls. Attention is devoted to avoiding incentives to engage in excessively risky business behavior.that may encourage excessive risk-taking. The Compensation Committee has considered whether other elements of the executive compensation program promote risk taking at levels that are unacceptable to the Company. The Compensation Committee considered the following factors related to risk: | · | Compensation philosophy that targets salaries and incentives at the market median; |
| · | The use of a capital-based performance metric, Return on Invested Capital (“ROIC”), which holds executives accountable for the efficient use of Company capital; |
| · | Short-term and long-term performance-based incentive awards that are capped; |
| · | Long-term equity incentives allocated to two separate vehicles with a performance or time vesting period of at least three years in length; |
| · | The use of a mix of performance metrics in our annual and long-term incentive programs, including ROIC, Working Capital as a Percentage of Sales, Adjusted EBITDA and Compound Annual Growth Rate of Earnings from continuing operations (“Earnings CAGR”); |
| · | Anti-hedging and anti-pledging policies; |
| · | Stock Ownership Policy; and |
| · | Incentive compensation recoupment provisions. |
Compensation philosophy that targets salaries and incentives at the market median; The use of capital-based performance metrics designed to hold executives accountable for the efficient use of Company capital; Short-term and long-term performance-based incentive awards that are capped; Long-term equity incentives allocated to two separate vehicles (restricted stock and performance share units) with a performance or time vesting period of at least three years in length; The use of a mix of performance metrics in our annual and long-term incentive programs, including Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), Working Capital as a Percentage of Sales, and Economic Profit Improvement; Anti-hedging and anti-pledging policies; Stock Ownership Policy; and Incentive Compensation Recoupment (“clawback”) Policy, amended and restated in 2023 in compliance with new SEC and Nasdaq rules. The Company believes that the above factors, as well as the overall governance and administration of the executive compensation program, serve to manage risk in a manner that is acceptable to the Company and its shareholders and that such compensation policies and practices do not encourage our executives or other employees to take excessive risks that are reasonably likely to have a material adverse effect on the Company. For more information regarding the Compensation Committee’s processes and procedures for setting executive compensation, see the “Compensation Discussion and Analysis” section of this Proxy Statement. TABLE OF CONTENTS Nomination and Governance Committee
The current members of the Nomination and Governance Committee are Messrs. McKaneMs. Owen (Chair) , Mr. Thompson, and Vizi and Mses. Owen and Rowland.Ms. Lee. The Nomination and Governance Committee, which met onheld four occasionsmeetings in 2015,2023, is responsible for overseeing corporate governance, proposing director nominees to the full Board, recommending which directors should serve on various Board committees, and recommending who should serve as Chairman of the Board and chairman of each of the Board’s committees. The Nomination and Governance Committee also recommends to the full Board appropriate compensation for non-employee directors. The Nomination and Governance Committee endeavors to maintain a diverse Board consisting of individuals who arethat possess the minimum qualifications of being financially literate and whose experiences and backgrounds will enable the Board to provide meaningful counsel to, and oversight of, management.management, including, without limitation, possession of such knowledge, experience, skills, diversity, expertise, integrity, ability to make independent analytical inquiries, understanding of the Company’s global business environment, and willingness to devote adequate time and effort to Board responsibilities so as to enhance the Board’s ability to oversee and direct the affairs and business of the Company. The Nomination and Governance Committee recommends to the full Board nominees who will create and maintain a Board that satisfies applicable legal and regulatory requirements. In support of these goals, the Nomination and Governance Committee oversees the directors’ continuing education, which includes seminars focused on strategic and governance issues and discussions with outside advisors. The Nomination and Governance Committee, with the Chairman of the Board, oversees an annual evaluation of the Board’s performance. The Nomination and Governance Committee’s Charter is available on the Company’s investor relations website, www.lbfoster.com.lbfostercompany.gcs-web.com under the “Governance” tab. Candidates for nomination to the Board may be suggested by current directors, management, shareholders, or a third-party search firm engaged to assist with director recruitment. Mr. Meyer was recruited utilizing the directors’ business connections and network. Mr. Jones was identified by the Company’s largest shareholder, 22NW LP. When a vacancy occurs or is anticipated, the Nomination and Governance Committee may engage a third-party search firm to identify candidates based upon the skills, experience, and qualifications that it seeks in potential candidates. Once candidates have been identified, the Nomination and Governance Committee generally evaluates the diverse and complementary skills, experiences, perspectives, and qualifications, conducts an interview process and third-party background check, and makes recommendations to the Board for election. This evaluation process was followed with respect to Messrs. Meyer and Jones. In addition, Mr. Meyer’s current extensive manufacturing and rail experience and engineering skills, and Mr. Jones’s unique perspective on shareholder concerns and capital allocation were considered among many attributes that the Board and the Nomination and Governance Committee concluded would help foster greater innovation, unique thinking, and stronger governance by the Board as a whole. The Committee routinely reviews director refreshment in the context of anticipated vacancies and changing needs of the Company. Refreshment discussions are led by the Committee Chair. In selecting nominees for election to the Board, the Nomination and Governance Committee will consider submissions from shareholders and will consider and evaluate shareholder-recommended nominees within the same weightmanner as other nominees. A shareholder wishing to recommend a nominee may notify the Corporate Secretary or any member of the Nomination and Governance Committee in writing and provide the information required by Section 2.05 of the Company’s By-laws,Bylaws, including the following: Timely written notice to the Corporate Secretary of the Company. The deadlines for providing notice to the Company of a proposed director nomination at our next Annual Meeting are set forth in the Company’s Bylaws and summarized in “Additional Information.” The notice provided to the Corporate Secretary must include all information relating to a director nominee that would be required to be disclosed in a proxy statement or other filings, including such person’s written consent to being named in proxy materials as a nominee and to serving as a director if elected. The notice provided to the Corporate Secretary must include a reasonably detailed description of all direct and indirect compensation, reimbursement, indemnification, benefits and other agreements, arrangements, and understandings (written or oral and formal or informal and whether monetary or non-monetary) during the past three years, and any other relationships, between or among the shareholder proponent and each proposed nominee.
TABLE OF CONTENTS | · | Timely written notice to the Corporate Secretary of the Company. The deadlines for providing notice to the Company of a proposed director nomination at our next Annual Meeting are set forth in the Company’s By-laws and summarized in “Additional Information.” |
| · | The notice provided to the Corporate Secretary must include all information relating to a director nominee that would be required to be disclosed in a proxy statement or other filings, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected. |
| · | The notice provided to the Corporate Secretary must include 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 the shareholder proponent and the beneficial owner, if any, on whose behalf the nomination is made, and each proposed nominee. |
| · | The notice provided to the Corporate Secretary must include a completed and signed questionnaire, representation and agreement as provided in Section 2.05(c) of the Company’s By-laws. |
| · | Such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as an independent director of the Company or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such nominee. |
The notice provided to the Corporate Secretary must include a completed and signed questionnaire, representation, and agreement as provided in Section 2.05(c) of the Company’s Bylaws. Such other information as may reasonably be required by the Company to determine the eligibility and qualifications of such proposed nominee to serve as an independent director of the Company or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such nominee. If applicable, a statement that such shareholder intends to solicit the holders of shares representing at least 67% of the voting power of the Company’s shares entitled to vote on the election of directors in support of director nominees other than the Company’s nominees. Submissions should be sent to the Company’s principal executive offices, 415 Holiday Drive, Suite 100, Pittsburgh, PA 15220, Attn: Corporate Secretary. Please see “Additional Information” on pages 61-62page 68 for the applicable deadlines for submitting proposals relating to director nominations. The foregoing summary of our shareholder director nomination procedures is not complete and is qualified in its entirety by reference to the full text of the Company’s By-lawsBylaws that has been publicly filed with the SEC and is available at www.sec.gov.
Agreements with 22NW Fund, LP et. al On January 25, 2024, (the “Effective Date”), the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) with Shareholders22NW Fund, LP, 22NW LP, 22NW Fund GP, LLC, 22NW GP, Inc., Aron R. English, Bryson O. Hirai-Hadley, and Alexander B. Jones (each, an “Investor” and collectively the “Investors” or the “Investor Group”). Pursuant to the InvestorsCooperation Agreement, the Board agreedchose to increase the size of the Board from eight to nine members and appoint Mr. Vizi to the Board for a term expiring at the 2016 Annual Meeting, as well as to (i) appoint Mr. Vizi to the Compensation and Nomination and Governance Committees of the Board, (ii) nominate Mr. ViziJones for election to the Board at the 2016 Annual Meeting and (iii) not increaseagreed, among other matters, to (i) subject to Mr. Jones’ election by the sizeshareholders at the Annual Meeting, appoint Mr. Jones to at least one Committee of the Board beyond nine members withoutand (ii) extend the consentterm of Mr. ViziJones’s service as Board Observer under the terms of that certain Cooperation Agreement dated April 6, 2023 (the “Prior Agreement”) until his election to the Board, and that in the event Mr. Jones is not so elected, for him to continue to serve as a non-voting Board Observer through the expiration of the standstill period (the period commencing on January 25, 2024 and expiring upon the earlier of (a) 30 calendar days prior to the expiration of the advance notice period for the durationsubmission by shareholders of director nominations for consideration at the 2025 Annual Meeting and (b) 120 days prior to the first anniversary of the Standstill Period. Annual Meeting (such earlier date, the “Termination Date”); provided, however, that the Termination Date will be extended to 30 calendar days prior to the expiration of the advance notice period for the submission by shareholders of director nominations for consideration at the Company’s 2026 Annual Meeting if (1) the Company notifies the Investor representative and Mr. Jones in writing at least 15 calendar days prior to such date that the Board irrevocably offers to re-nominate Mr. Jones for election at the 2025 Annual Meeting of Shareholders for a term expiring at the Company’s 2026 Annual Meeting of Shareholders and until his successor is duly elected and qualified and (2) both the Investor representative and Mr. Jones agree to such re-nomination prior to the fifteenth calendar day following receipt of such notice (the “Standstill Period”)). The InvestorsCooperation Agreement also requires the Investor Group, at the Annual Meeting and during the pendency of the Standstill Period, to take certain actions, including to vote, or cause to be voted, all shares of common stock beneficially owned by each member of the Investor Group in favor of (a)(i) each of the directors nominated by the Board and recommended by the Board in the election of directors (and not in favor of any other nominees to serve on the Board), and (b) except in connection with any “Opposition Matter” (as described below) or any ISS or Glass Lewis voting recommendation,(ii) each of the shareholder proposals listed on the Company’s proxy card or voting instruction form as identified in the Company’s proxy statement in accordance with the Board’s recommendations, including in favor of all other matters recommended for shareholder approval by the Board, and not execute any proxy card or voting instruction form in respect of such shareholders’ meeting other than the proxy card and related voting instruction form being solicited by or on behalf of the Board. Under the terms of the Investors Agreement,Board; provided, however, that in the event that Institutional ShareholdersShareholder Services Inc. (“ ISS”ISS”) or Glass Lewis & Co., LLC (“Glass Lewis”) has recommendations other than those presented by the Boardrecommends otherwise with respect to any proposalproposals (other than the election or removal of directors), each member of the Investor Group isInvestors shall be permitted to vote in accordance with the ISS or Glass Lewis voting recommendation but, notwithstanding such recommendation, only on the proxy card and related voting instruction form being solicited by or onbehalf of the Board even if ISS or Glass Lewis recommendedrecommendation; provided, further, that the Investors vote on another proxy card or voting instruction form. For purposeseach of the Investors Agreement, “Opposition Matter” meansshall be permitted to vote in their sole discretion with respect to any of the following transactions or events,publicly announced proposals relating to the extent submitted by the Board to the Company’s shareholders for approval: the sale or transfera merger, acquisition, disposition of all or substantially all of the Company’s assets in one or a series of transactions; the sale or transfer of a majority of the outstanding shares of common stock (through a merger, stock purchase, or otherwise); any merger, consolidation, acquisition of controlCompany, or other business combination;combination involving the Company requiring a vote of shareholders of the Company. See “Stock Ownership” for more information regarding the Cooperation Agreement and the Investors’ obligations during the Standstill Period.
Under the Cooperation Agreement, the Company agreed that Mr. Jones will receive (i) the same benefits of director and officer insurance, and any tender or exchange offer; any dissolution, liquidation, or reorganization; any changesindemnity and exculpation arrangements available generally to the directors on the Board, (ii) the same compensation for his service as a director as the compensation received by other TABLE OF CONTENTS non-management directors on the Board with similar Board assignments, and (iii) such other benefits on the same basis as all other non-management directors on the Board. In the Cooperation Agreement, the Company and the Investors have also agreed to customary standstill, confidentiality, non-disparagement, and other provisions and have made customary representations and warranties. Pursuant to the Prior Agreement, the Board had appointed Mr. Jones to serve as a non-voting observer to the Board (the “Board Observer”). The term of the Prior Agreement expired on January 26, 2024, but Mr. Jones’ service as Board Observer was extended through the Standstill Period under the Cooperation Agreement in the event that Mr. Jones is not elected to the Board at the 2024 Annual Meeting. As Board Observer, Mr. Jones is entitled to attend, participate in discussions, and provide input at any portion of Board meetings and meetings of any Board committee at which certain enumerated topics (including business operations, financial results, capital allocation, investor communications, shareholder value enhancement initiatives, strategic transactions, acquisitions, dispositions and/or any other material corporate transactions) are discussed in a non-voting capacity. The Board Observer is also entitled to receive copies of the applicable portion of any notices, minutes, consents, and other materials and information relating to any of the aforementioned topics that the Company provides to the directors on the applicable committees and/or the Board at the same time and in the same manner as provided to such directors. The Company’s capital structure (includingobligations in relation to the issuanceBoard Observer will terminate on the earliest of more than 20%(i) Mr. Jones’ election to the Board, (ii) the expiration of the Standstill Period, (iii) the date at which the Investor Group no longer owns at least the lesser of (a) six and one-half percent (6.5%) of the Company’s then outstanding Common Stock and (b) 719,950 shares of common stock); change in control transactions;Common Stock (subject to adjustment for stock splits, reclassifications, combinations, and similar adjustments), or financings requiring approval by NASDAQ’s shareholder approval rules; in each case, that has been approved by(iv) the date at which the Investor Group provides written notice to the Company of its voluntary termination of its right to appoint a Board but voted against by Mr. Vizi.Observer. Non-Employee Director Compensation The Nomination and Governance Committee determines appropriate levels of compensation for our non-employee directors by reviewing surveys and data from other publicly-traded companies and conferring with other directors, and outside advisors as necessary, to obtain information on competitive compensation practicespractices. The Nomination and Governance Committee uses this information as a tool to determine appropriate levels of non-employee director compensation. The Nomination and Governance Committee then makes recommendations regarding non-employee director compensation to the Board for approval.approval, which recommendations have included reduction in compensation, maintenance of current levels, and increases consistent with industry and peer practice. The Committee commissioned director compensation assessments by Pay Governance, the Compensation Committee’s independent consultant, in February of 2018, 2020, 2022, and 2023. Pay Governance compared the Company’s directors’ compensation levels and program practices to those of the Company’s comparator group and a broader set of over 150 general industry companies of similar size to L.B. Foster. Pay Governance also informed the Nomination and Governance Committee of current trends and practices in directors’ compensation, which includes shareholder approval of equity award limits applicable to director grants. While a compensation increase was approved in February 2020, due to the uncertainty regarding the potential impact of the COVID-19 pandemic on the Company, the Board voted to rescind the increase and maintain the prior year’s compensation levels. The compensation remained unchanged at 2018 levels throughout 2022. In 2023, upon the recommendation of Pay Governance, the non-employee director compensation was adjusted consistent with industry norms effective as of the date of the 2023 Annual Meeting of Shareholders. That compensation level has remained unchanged. Select Ad Hoc Corporate Responsibility Committee The select ad hoc Corporate Responsibility Committee, which met two times in 2023, was formed in December 2022 and is comprised of Chair (Ms. Lee), Mr. Jungé, and the chairs of the other standing Board Committees (Mr. Thompson - Audit, Ms. Owen - Nomination & Governance, and Mr. Kunz - Compensation), and Mr. Meyer. The purpose of the Committee is to assist the Board in oversight of the Company’s overall environmental and social policies, strategies, and programs. While management is responsible for development of the approach, implementing initiatives, and driving the overall programs, this new Committee reviews the application of relevant market and regulatory measures to oversee and determine whether the Company’s initiatives are aligned with its long-term business strategies and the creation of shareholder value. The Committee reviews the Company’s environmental and social-related activities, programs and policies and whether they are addressed, as an oversight matter, through the Corporate Responsibility Committee or the Audit, Compensation, and Nomination & Governance Committees. TABLE OF CONTENTS Additional Corporate Governance Matters
The Company is committed to providing to directors with opportunities and resources for continuing education for corporate governance and business relatedbusiness-related issues as may be appropriate, including Company-paid membership in national director associations which provide educational opportunities, and routinely has third parties provide presentations on current legal, governance, compensation, and accounting matters during Board meetings. The Nomination and Governance Committee organizes one annual training for all Board members, disseminates continuing education materials collected by directors, and provides time for directors to discuss issues and best practices addressed in seminars or programs with the other directors on a regular basis. The Board assesses the effectiveness of the Board and its committees on an annual basis.basis through an evaluation process that involves engagement with individual directors, each committee, and the Board as a whole. The assessment addresses topics such as structure and effectiveness of meetings, membership, materials and communications, and director duties and responsibilities. In addition, each director evaluates the performance characteristics of every director and the Chair, who then engages in candid discussions with each member regarding the feedback. Code of Conduct and Ethics The Company adopted a policy on the code of conduct and ethics that applies to all the Company’s directors, officers, and employees, including its CEO, chief financial officer and chief accounting officer. We have posted a current copy of the policy,code, entitled “Legal and Ethical Conduct Policy,” on our investor relations website, www.lbfoster.com.lbfostercompany.gcs-web.com under the “Governance” tab. Stock Ownership Guidelines for Non-Employee Directors
Within five years of first being elected to the Board, the Company’s non-employee directors are expected to own Company common stock valued at least threeequal to four times their respective annual cash compensation for services as a director. All non-employee directors serving in 20152023 were compliant with these Guidelines. Rights Agreement
In 2012, the Board solicited the advice of certain advisors and together the Board and these advisors reviewed the existing corporate governance policies and practices of the Company. As a result of that review, the Board amended its existing Rights Agreement to remove all references to the requirement that the “Continuing Directors” approve certain actions by the Board, including the redemption of the Rights and the approval of certain acquisitions of our shares by a potential acquirer. The Board believed that this change better aligns the corporate governance practices of the Company with the interests of its shareholders.
Transactions With Related Parties The Company is not aware of any transaction since the beginning of 2015,2023, or any currently proposed transaction, in which the Company was, or is to be, a participant and the amount involved exceeds $120,000 and in which any of the Company’s directors, executive officers, greater than five percent shareholders, or certain family members of any of the foregoing persons or business entities with which such persons are affiliated had or will have a material interest, directly or indirectly. The Company’s written Legal and Ethical Conduct Policy generally addresses the topic of conflicts of interest, which includes transactions qualifying as “related party transactions.” In addition, on an annual basis, the Company requires each director, executive officer, and salaried employee to disclose in writing any situations which may give rise to a conflict of interest. The Company’s Internal Audit Department reviews and summarizes any such disclosures. The Audit Committee Charter provides that the Audit Committee is responsible for reviewing and, if appropriate, approving related party transactions as defined under Item 404 of SEC Regulation S-K. A review of potential related party transactions is undertaken by the Company’s Internal Audit Department and the General Counsel based on annual disclosures made by management and directors, supplemented from time to time based upon changing circumstances, and the Audit Committee is updated at every regular meeting with respect to any such transactions that require consideration. Compensation Committee Interlocks and Insider Participation All members of the Compensation Committee are independent directors, and none are present or past employees or officers of the Company or any of its subsidiaries. No member of the Compensation Committee has had any relationship with the Company requiring disclosure under Item 404 of SEC Regulation S-K. The Company’s executive officers have not served on the Board or Compensation Committee (or other committee serving an equivalent function) of any other entity, whose executive officers have served on the Company’s Board or Compensation Committee. TABLE OF CONTENTS Section 16(a) Beneficial Ownership Reporting ComplianceCompliance; Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires the Company’s officers and directors and personsperson who own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership of such securities with the SEC. The SEC has established specific due dates for these reports and NASDAQ. Officers, directors and beneficial owners of more than 10% of the Company’s shareswe are required by applicable regulations to furnish the Company with copies of all Section 16(a) forms theydisclose in this proxy statement any known late filings or failures to file. Based solely upon aon our review of Section 16 reports filed electronically with the copies of the forms furnished to the Company, orSEC and written representations from certain reporting persons, that no Forms 5 were required, we believe that all Section 16(a) filing requirements applicable to ourthe Company’s officers, directors and more than 10% shareholders were satisfied. Anti-Hedging and Anti-Pledging Policy The Company’s Insider Trading Policy recognizes that hedging or monetization transactions can be accomplished through a number of possible mechanisms that are designed to hedge or offset any decrease in the market value of a company’s equity securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars, and exchange funds. Such hedging transactions may permit a director, officer, or employee to continue to own Company securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership. When that occurs, the director, officer, or employee may no longer have the same objectives as the Company’s other shareholders. Therefore, directors, officers, and employees are prohibited from engaging in any such transactions. This Policy similarly prohibits directors, officers, and 10% beneficial owners were met through December 31, 2015.other employees from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan. TABLE OF CONTENTS Compensation Discussion and Analysis
In this Compensation Discussion and Analysis (“CD&A”), we summarize the compensation awarded to our executive officers listed in the Summary Compensation Table on page 49.51. We refer to these executive officers as our “named executive officers” or “NEOs.” For 2015,2023, the NEOs were: Robert P. Bauer | John F. Kasel
| | | President and CEOChief Executive Officer | | David J. Russo | SeniorWilliam M. Thalman
| | | Executive Vice President and Chief Financial Officer and Treasurer | | John F. Kasel | Senior Vice President, Rail Business | Patrick J. Guinee
| | | Executive Vice President, General Counsel, and Corporate Secretary | | David R. Sauder(1) | Brian H. Kelly
| | | Executive Vice President, Global Business DevelopmentHuman Resources and Administration | | | | William F. Treacy, Jr.
| | | Executive Vice President and Chief Growth Officer | |
| (1) | Mr. Sauder voluntarily resigned from the Company in March 2016. |
Our Compensation Principles and Objectives
The Company’s Compensation Committee (“Committee”(referred to in this CD&A as the “Committee”) maintains a compensation philosophy that: | · | Facilitates the attraction and retention of talented and qualified executives; and |
| · | Seeks to align executive compensation with Company performance by rewarding initiative and positive financial and operating results, while being mindful of the current business climate. |
Facilitates the attraction and retention of talented and qualified executives; and Seeks to align executive compensation with Company performance by rewarding initiative and positive financial and operating results, while being mindful of the current business climate. For each financial measure, we include a footnote that provides an explanation or reconciliation of how the measure is calculated. Such information is included in Appendix B of this proxy statement. To this end, the Company’s executive compensation program is designed to be balanced and reasonable and allow the Company to attract and retain the bestskilled talent available.to execute on our strategic plans. Compensation opportunities are determined with reference to the fiftieth50th percentile or median of the market for positions of similar responsibility. In designing our plans, we do not use highly leveragedhighly-leveraged incentives that we believe could drive risky short-term behavior.
Our Compensation Practices
The Committee has implemented the following practices with respect to the Company’s executive compensation program: ☑
| þ | Committee Independence.The Committee consists of independent directors and reserves time at each meeting to meet in executive session without management present. |
☑
| þ | Independent Compensation Consultant.The Committee has engaged its own independent compensation consultant (Pay Governance) and annually assesses the consultant’s performance, fees, and independence, including whether any type of conflict of interest exists. |
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| þ | Goal Setting and Performance Evaluation for CEO.CEO and Other NEOs. The Committee, with the input of the full Board, engages in formal goal setting and performance evaluation processes withfor both the CEO and other NEOs. The CEO participates in this process with respect to other NEOs. |
☑
| þ | Peer Group.TheGroup. After considering the input of the compensation consultant, the Committee has established formal selection criteria for its comparator peer group companies listed on page 2440 (the “Comparator Group”) and annually evaluates the composition of the Comparator Group to ensure the appropriateness of its component companies. |
TABLE OF CONTENTS ☑
| þ | Pay for Performance.Our metrics are reviewed and selected by the Committee from a list of possible metrics authorized by our shareholder-approved equity plan and the shareholder-approved 2006 OmnibusExecutive Annual Incentive Plan.Compensation Plan (the “Annual Plan”). |
☑
| þ | Tally Sheets.TheIn order to make well informed compensation decisions, the Committee reviews tally sheets that include an executive’s current and historical compensation amounts, stock ownership, and retirement amounts, as well as amounts owed by the Company upon various employment termination scenarios in order to make well informed compensation decisions.scenarios. |
☑
| þ | Double Trigger Change-In-Control.We provide double trigger change-in-control protection to our executive officers, which means they may be entitled to severance of up tobetween one orand two and one-half times base salary and bonus only in the event of both a change-in-control of the Company and a qualifying employment termination.termination (“double trigger”). Restricted stock awards granted after 2013 also provide for double trigger change-in-control vesting, and in 2023 we amended our outstanding performance share unit (“PSU”) awards to provide for double-trigger change-in-control vesting. |
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| þ | Share Ownership Guidelines.We maintain rigorous share ownership guidelines, which are applicable to all executives and non-employee directors, as appropriate.directors. |
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| þ | Clawback Policy.We have aan executive recoupment provisionpolicy that appliesempowers the Company to ourrecover certain incentive arrangementscompensation erroneously awarded in the event that our financial statements are restatedthe Company is required to prepare an accounting restatement due to the material non-compliancenoncompliance of the Company with any financial reporting requirements andrequirement under the Committee determines that an incentive award recipient is culpable for such restatement.securities laws. |
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| þ | Risk Mitigation.We mitigate undue risks associated with compensation through the use of caps on potential incentive payments; maintaining clawback provisions, anti-hedging, anti-pledging, and stock ownership policies and guidelines; retentionprovisionsretention provisions in equity grants; and multiple performance metrics that focus on profitability and capital efficiency. |
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| þ | Annual Say on Pay Vote.Our NEO compensation program is presented to shareholders for an advisory vote on an annual basis. |
☒
| ☒ | Executive Employment Agreements.We do not, as a standard practice, provide executives with employment agreements and currently do not currently have any in place.place with any officer. |
☒
| ☒ | Dividend Equivalents on Unearned Performance Share Unit and Restricted Stock Awards.We do not providepay dividends or dividend equivalents on unearned performance share unit (“PSU”) awards.PSU and restricted stock awards unless and until such awards are deemed earned and/or vested. |
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| ☒ | Tax Gross-Ups on Perquisites or Severance.We do not provide any tax gross-up payments to cover personal income taxes on perquisites or severance benefits related to a change-in-control. |
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| ☒ | Hedging and Pledging.We do not permit hedging or pledging transactions in the Company’s stock, pursuant to our Insider Trading Policy. |
Executive officers’ compensation includes base salary, annual cash incentive awards, and equity-based long-term incentive awards. The Committee aligns a significant portion of executive officer compensation with the Company’s performance relative to pre-established performance goals based on stated Company financial objectives, which are designed to drive the creation of long-term value for our shareholders. The Committee administers both short-term and long-term incentive compensation plans within its executive compensation structure, and the main features of the executive compensation program are as follows:
Base salaries, which represent competitive fixed compensation and reflect the executive’s experience, responsibilities, and expertise. TABLE OF CONTENTS Short-term cash incentive awards, issued pursuant to the Annual Plan in which payment is contingent on meeting annual financial performance goals that align with an executive’s responsibilities. The Committee authorized the 2023 Annual Plan (the “2023 Annual Plan”). The performance criteria used for the 2023 Annual Plan were: | ○ | · | Base salaries, which represent competitive fixed compensation and reflect the executive’s experience, responsibilities and expertise. |
| · | A short-term cash incentive award, issued pursuant to the Executive Annual Incentive Compensation Plan (the “2015 Annual Plan”) in which payment is contingent on meeting annual financial performance goals that align with an executive’s responsibilities. The performance criteria used for the 2015 Annual Plan were: |
| ○
| 2015 Corporate Return on Invested Capital (“ROIC”)1; |
| ○
| 2015 Corporate and Operating Unit2023 Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)(“Adjusted EBITDA”)2(1); and |
| ○ | ○
| 2015 Corporate and Operating Unit2023 Average Working Capital as a Percentage of Sales3(2). |
(Please note
Certain incentive-based compensation is subject to our executive recoupment policy which was amended and restated in 2023 in compliance with new SEC and Nasdaq rules. Long-term incentive awards are heavily weighted toward performance, with 60% of the target long-term incentive opportunity granted in the form of PSUs that are paid, if earned, based on the textachievement of all footnotes is located atpre-determined corporate level performance goals over a three-year period, and 40% of the endtarget long-term incentive opportunity granted in the form of this section.)time-vested restricted stock, which vests ratably in one-third installments over a three-year period from grant. From time to time, the Company may approve additional retention or incentive awards. | • | · | Long-term incentive awards heavily weighted toward performance, with 75% of the target long-term incentive opportunity granted in the form of PSUs that are paid, if earned, based on the achievement of pre-determined corporate level performance goals over a three year period, and 25% of the target long-term incentive opportunity granted in the form of time-vested restricted stock, which vests ratably in one-third installments over a three-year period from grant. All equity awards are made under the Company’s shareholder-approved 2006 Omnibus Incentive Plan. |
| · | The performance goals used for the 20152023 PSU awards were two equally-weighted metrics of 2015-2017 Average ROIC2023-2025 Economic Profit Improvement4(3) and Compound Annual Growth Rate2023-2025 Adjusted EBITDA(1). Each year is measured annually with targets set at the beginning of Earnings from Continuing Operations (“Earnings CAGR”)5, each measured over a three year period. |
| · | Both the 2015 Annual Plan and the 2015 PSUs provide the Committee with the discretion to recoup previously paid awards from individuals whose actions were deemed to have resultedthree-year period in a restatement or adjustment tomanner that requires growth in Company profitability and returns over the Company’s financial results.three-year period. |
| · | The Company maintains a Key Employee Separation Plan (the “Separation Plan”) that provides officers with severance in the event of both a change-in-control and qualifying employment termination. The Separation Plan does not contain any single trigger payments or tax gross-ups, and severance is capped at one or two times base salary and bonus, depending on the executive. |
The Company maintains a Key Employee Separation Plan (the “Separation Plan”) that provides officers with severance in the event of both a change-in-control and qualifying employment termination. The Separation Plan does not contain any single trigger payments or tax gross-ups, and severance is capped at between one and two and one-half times base salary and bonus, depending on the executive. Annual and long-term performance goals are approved by the Committee at the beginning of each yearplan after consideration of the Company’s prior year performance, budgeted performance for the performance period, and anticipated market and economic conditions for the performance period. Realizable Pay-for-Performance Alignment
In 2015, the Committee’s independent compensation consultant, Pay Governance, LLC, prepared an assessment to determine the alignment of the aggregate compensation awarded to our CEO for the prior three and five years based on the performance of the Company relative to the Company’s Comparator Group (described below) over such periods. Pay Governance determined that the CEO’s realizable compensation ranked within the third quartile (58th percentile) of the Comparator Group over a three-year period and within the second quartile (44th percentile) over a five-year period, while composite performance, defined as the relative ranking of EBITDA Margin6, ROIC and Total
Shareholder Return (“TSR”) (measured as stock price appreciation, plus dividends), ranked within the third quartile (50thand 54th percentiles, respectively) of this group over the same three- and five-year periods. The Committee evaluated this information and concluded that the Company’s relative performance was aligned appropriately with the relative realizable value of the CEO’s compensation over the periods examined.
Measurement Period | Company Composite
Performance Ranking | CEO Realizable Pay
Percentile Ranking | Difference | Three Years 2012 – 2014 | 59th percentile | 58th percentile | 1% | Five Years 2010 – 2014 | 54th percentile | 44th percentile | 10% |
Results of 20152023 Shareholder Vote on Named Executive Officer Compensation
In May 2015,2023, we held a shareholder advisory vote on the compensation paid to our NEOs, which resulted in the significant approval by shareholdersa significant margin of 2014the 2022 compensation paid to our NEOs, with approximately 86%87% of votes cast in favor of our say-on-pay proposal. Based on this feedback, and as the Company evaluated its compensation policies and practices throughout the remainder of 2015, we contacted several key shareholders to discuss our compensation practices and obtain their views on our policies and programs. The results of these conversations were relayed to2023, our Board of Directors andchose to make no significant changes to our programs were deemedexisting executive incentive programs. In keeping with compensation market practices, in 2023 the Company amended its outstanding PSU awards to be necessary asinclude double trigger vesting in the event of a result of the 2015 say-on-pay vote result and such conversations.change-in-control. In connection with the Committee’s determination of 20162023 executive compensation, the Company was mindful of the strong support our shareholders expressed for our pay-for-performance philosophy, which is designed to link the compensation paid to our executive officers, including NEOs, to the Company’s financial and share price performance in order to ensure that we are delivering value to our shareholders and not merely performing well against our peers. The remainder of this Compensation Discussion and AnalysisCD&A is divided into three parts: | 1.
| Summary of 20152023 Compensation Arrangements, which provides 2015 business performance highlights and a brief summary of how the Company’sCompany determines executive compensation program;for the NEOs; |
| 2.
| Overview of Compensation Framework, which reviews in greater detail overall considerations in determining executive pay, as well as the key elements of 20152023 executive compensation at the Company; and |
| 3.
| Other Compensation Practices, which apply to our NEOs’ other compensatory arrangements. |
TABLE OF CONTENTS Summary of 20152023 Compensation ArrangementsIn 2015, the Company achieved the following positive results:
| · | Record revenue of $624.5 million |
| · | Revenues for the year increased by $17.3 million or 2.9% |
| · | Cash flow from operating activities was $56.2 million |
Determining the Chief Executive Officer’s Compensation
The compensation of our CEO, Robert Bauer,John F. Kasel, consists of three major components: base salary, an annual cash incentive,incentives, and a long-term incentiveincentives in the form of equity awards. In 2015, Mr. Bauer’sKasel was paid a base salary at an annual rate of $577,500 until March 1, 2023 at which time his annual salary rate was not increased to $675,000, which was much more closely aligned with the market base compensation for Mr. Kasel’s role and remainedresponsibilities. Mr. Kasel’s 2023 annual cash incentive awards were calculated relative to performance goals established at $613,000.Mr. Bauer’s 2015 Annual Plan cash award was calculatedthe beginning of the performance period and as described inunder the 20152023 Annual Plan on pages 37-40.page 42. Mr. Kasel’s target annual cash incentive award remained at 100% of his base salary. As a result of the Company’s performance in 2015,2023, as further described below, Mr. BauerKasel earned an annual cash incentive payout under the 2023 Annual Plan of $334,453,$987,188 in a year during which represented 68.2% of his target award opportunity, and is included in the Summary Compensation Table on page 49.
stock price more than doubled. Mr. Bauer’sKasel’s long-term incentive equity award target for 20152023 was targeted at $915,000,$1,100,000. This award was made consistent with shares awarded in accordance withmarket data and increased the percentage of performance-based at-risk compensation, establishing a strong link between Mr. Kasel’s pay and the Company’s Long-Term Incentive Plan (“LTIP”)performance. Mr. Kasel’s compensatory arrangements were established following guidance of the Company’s executive compensation advisor and further described on pages 40-42. The target represented an increase from 2014 based on Pay Governance’s report that Mr. Bauer’s long-term compensation was belowafter consideration of the market median.and the Comparator Group’s pay practices as more fully described under “Overview of Compensation Framework.” Determining Compensation for Other Named Executive Officers
Each of our other NEOs, other than Mr. Kasel, is a leader of an individual business or function of the Company, who reportsand all report directly to the CEO. The CEO develops the objectives that each individual member of the executive management team is expected to achieve, and against which the executive officer’sNEO’s performance is assessed. These objectives are reviewed with the Committee at the beginning of each year and are derived largely from the Company’s annual financial and strategic planning sessions in which the other NEOs participate and the Board reviews. The CEO leads the assessment of each other NEO’s individual performance against these objectives, as well as the Company’s overall performance and the performance of each NEO’s business or function. The CEO then makes a compensation recommendation to the Committee for each NEO in consultation with the Company’s VP,EVP, Human Resources and Administration. The NEOs, including the CEO, do not participate in the final determination of their own compensation. Using
As discussed above, the Company’s general process involves using proxy statement data from the Comparator Group companies, a compensation surveyssurvey, and at times, the input of the independent compensation consultant, the Committee determinesto determine competitive compensation levels for the NEOs and the other executive officers of the Company. As with the CEO, the NEOs’ compensation consists of three major components: base salary, an annual cash incentiveincentives, and a long-term incentiveincentives in the form of equity awards. Determination of base salaries for the non-CEO NEOs is described further on page 37. As with the CEO, the 2015 annual42. Annual cash incentive awards for these NEOs were determined in accordance with the 20152023 Annual Plan, as described on pages 37-40,page 42 and their long-term incentive equity awards were granted in accordance with the LTIP,long-term incentive program (the “LTIP”), as described on pages 40-42.page 44. Overview of Compensation Framework The Company seeks to attract and retain talented and qualified executives through the use of compensation programs that are balanced and competitive. The Committee pursues this goal through its approval of executive officer compensation and, in the case of the CEO, recommending that the Board ratify his compensatory arrangements. The Committee’s executive compensation philosophy is to align compensation with Company performance by rewarding initiative and positive financial and operating results, while being mindful of the current business climate. The Committee generally aligns executive officer compensation with the Company’s performance in order to drive short-term achievement and create long-term shareholder value. Our compensation program reflects the goals of consistent behavior and balancing short-short and long-term interests. Due to the Company’s product mix and distinct manufacturing and distribution businesses, our Company does not have “true” peerstrue “peers” among publicly-traded TABLE OF CONTENTS companies and, for this reason, the Committee believes that Company-specific performance measures, as opposed to performance goals measured relative to peer company performance, isare most appropriate to incentivize management to achieve the business goals of the Company. Further, annual and long-term performance measures include a mix of factors to avoid over-emphasis on any single measure. Such measures include goals for both profitability and efficient use of capital. A significant portion of the executive officers’ potential compensation is variable and earned under incentive plans that are based on the Company’s performance and the value delivered to the Company’s shareholders. Realizable Pay-for-Performance Evaluation
In order to test the alignment of executive officer compensation and Company performance, in 2015 the Committee, with the assistance of its compensation consultant, examined the relationship of the CEO’s compensation and Company performance against the Comparator Group. Performance was defined as the relative ranking of the following three performance metrics:
The Committee evaluated each performance metric independently relative to the Comparator Group for the three-year period of 2012 to 2014 and the five-year period of 2010 to 2014 (2014 being the most current available data). The relative ranking of each performance metric was averaged to form a performance composite ranking. Similarly, the Committee reviewed the CEO’s realizable compensation over the same three- and five-year periods. Realizable compensation includes:
| · | Actual annual cash incentive awards paid; |
| · | Time-vested restricted stock awards granted during the applicable period and valued at the year-end 2014 stock price; and |
| · | PSUs granted during the applicable period that were earned or expected to be earned and valued at the year-end 2014 stock price. |
The Company’s relative performance composite ranking and the CEO’s realizable compensation was aligned with the Comparator Group companies as follows:
The Committee evaluated this information and concluded that the Company’s relative performance was consistent with the relative realizable value of compensation paid to the CEO.
The Use of Market Compensation Data The Committee’s objective is to pay executives fairly and competitively. Executive pay is measured against athe Comparator Group as well asand other market data (described below) , to confirm that compensation is within the range of competitive practices. Each year, to assist in its compensation decisions to determine market rates for overall compensation and each pay component, the Committee reviews market data drawn from the following sources: (i) survey from Towers Watson and (ii) the compensation practices of the Comparator Group. Group and (ii) survey data compiled and published by independent third-party providers. As stated above, the Committee does not believe the Company has true “peers” among publicly-traded organizations. Accordingly, the Committee reviews the compensation of certain publicly-traded companies that it believes are in many respects,most comparable to the Company. The Comparator Group was selected based on the following criteria: | · | Revenues ranging from approximately one-half to double that of the Company; |
| · | Assets ranging from approximately one-half to double that of the Company; |
| · | Market capitalization of less than $1.5 billion at the time of review by the Committee; |
| · | Less than 4,000 employees; |
| · | Gross margin less than 40% and asset turnover of greater than .90, indicating less asset intensive businesses and likely a distribution business element; and |
| · | Industry sector generally composed of materials and industrial companies. |
Revenues and assets ranging from approximately one-half to double those of the Company; Market capitalization of less than $1.5 billion at the time of review by the Committee; Generally less than 4,000 employees; Lower gross margins and higher asset turnovers, likely indicating a distribution business element; and Industry sector generally composed of materials and industrial companies. The Committee approvedreviews the Comparator Group each year, and used the following 2017 Comparator Group companies for 20152023 executive compensation purposes: A.M. Castle & Co., Accuride Corp., Alamo Group, Inc., CIRCOR International, Inc., Columbus McKinnon Corporation, Furmanite Corporation, Gibraltar Industries, Inc., Lydall, Inc., MYR Group, Inc., NN, Inc., Northwest Pipe Co., Olympic Steel, Inc., American Railcar Industries, Inc., Lindsay Corporation, Orion Marine Group, Quanex Building Products Corporation, Insteel Industries, Houston Wire & Cable Co., Raven Industries, Inc., and Sterling Construction Co., Inc. This Comparator Group is the same as the peer group used for the 2014 executive compensation program.
| | Tredegar Corporation | | | Hawkins, Inc | | | Orion Group Holdings, Inc. | | | | Ampco-Pittsburgh Corporation | | | LSI Industries, Inc. | | | Quanex Building Products Corporation | | | | Twin Disc, Incorporated | | | Manitex International, Inc. | | | Insteel Industries, Inc. | | | | Columbus McKinnon Corporation | | | NN, Inc. | | | Ascent Industries | | | | Newpark Resources, Inc | | | Haynes International, Inc. | | | CIRCOR International, Inc. | | | | The Gorman-Rupp Company | | | Northwest Pipe Company | | | | |
Role of the Compensation Committee in Establishing Objectives The Company’s overall executive compensation program is intended to create long-term value by retaining and rewarding outstanding leaders and motivating them to perform at the highest level. Incentives are designed to reward financial and operating performance. After considering the pay practices of other organizations through our review of the compensation practices of the Comparator Group and the Towers Watson compensation survey data from independent third-party providers, the Committee exercises its judgment in making decisions on individual executive compensation components, including the amount and allocation of compensation. The Committee annually reviews and, if appropriate, adjusts these compensation components based on market and business conditions. The Committee believes that a significant portion of an executive’s compensation should be delivered through performance-based incentive compensation. Each year, the Committee identifies a variety of financial metrics and establishes rigorous annual and three yearthree-year performance goals as the basis for motivating and rewarding executives and aligning compensation with the performance of the Company. Management and the Compensation Committee believe that Adjusted EBITDA is an important metric to drive both short and long-term performance of the Company. The LTIP performance targets are set at the beginning of each three-year period and reflect increasing levels of achievement required each year, with a heavier weighting assigned to the last year in each performance period to provide a greater incentive for longer-term achievement. The Annual Plan and LTIP program include both profitability and capital-efficiency based targets. TABLE OF CONTENTS If the Company’s performance exceeds our goals and expectations, the incentive plans pay above the targeted level. If the Company’s performance falls below our goals and expectations, the incentive plans pay either below the targeted level, or nothing if threshold performance is not met. Both the 2015The 2023 Annual Plan and the PSU awardscomponent of the LTIP include payout limits to prevent excessive payments and discourage executives from engaging in inappropriately risky behaviortaking excessive risk with the business that may be contrary to the best interests of the Company and its shareholders. In 2015,2023, potential compensation for current NEOs was allocated among each compensation element as follows: 
Notes:
Fixed cash base salary includes base salary earned in 2015 as disclosed infollows (shown for the Summary Compensation TableCEO and the other NEOs on an average basis).
Notes: *
| Fixed cash base salary earned in 2023 as disclosed in the Summary Compensation Table on page 49.Annual and long-term incentive percentages calculated based on salary disclosed in the Summary Compensation Table onpage 49, with the annual and long-term incentives being reflected at target.
51. |
*
| Annual and long-term incentive percentages are calculated based on salary disclosed in the Summary Compensation Table on page 51, with the annual and long-term incentives reflected at target. |
Compensation of our NEOs includes base salary, annual cash incentive awards, and long-term equity awards.Base Salary
In 2015,awards paid under the LTIP. Mr. Kasel’s base salary amountsand other incentive compensation were determined by the Compensation Committee after conferring with its independent compensation consultant, taking into consideration Mr. Kasel’s
TABLE OF CONTENTS experience, Comparator Group companies’ practices, the Company’s compensation practices as described above, and the Company’s overall budgeted and forecasted compensation spending plan. The salary and incentive compensation of the other NEOs is determined by following the same process. Base Salary and 2023 Salary Increases Base salaries are reviewed annually and any increases are effective on March 1 for all NEOs. In 2023, base salary increases for each NEO were establishedmade according to historic practice after considering each NEO’s performance, retention, alignment with the corporate strategy, execution of strategic initiatives to drive shareholder value, and reviewing compensation data from the Comparator Group and other similarly-sized organizations included in the Towers Watson compensation survey.survey data from independent third-party providers. With respect to the Comparator Group and the survey, we targetedcompensation adjustments are made with reference to the fiftieth percentiles derived from this data. Additionally, base salaries are reviewed annually for merit-based increases. For 2015, our NEOs, other than the CEO, who were serving at the beginning of the fiscal year received merit increases of 3.0% to 4.0%.2015 Executive50th percentile.
| | John F. Kasel
| | | $577,500 | | | $675,000 | | | | William M. Thalman
| | | $357,000 | | | $385,560 | | | | Patrick J. Guinee
| | | $348,767 | | | $376,920 | | | | Brian H. Kelly
| | | $333,342 | | | $362,970 | | | | William F. Treacy, Jr.
| | | $327,456 | | | $353,160 | |
2023 Annual Incentive Compensation Plan (2015 The 2023 Annual Plan)The Committee establishes the performance criteria, which for 2015Plan was designed to provide performance-based cash compensation for the performance period of January 1, 20152023 through December 31, 20152023 and align NEOs’NEO compensation with the achievement of performance goals that support the Company’s business strategy. The Committee determined that the 2015 Annual Plan would be funded by 7% of 2015 Adjusted EBITDA7. The Committee then approved the following 20152023 performance measures and goals for the awards under the 2015 Annual Plan:
· 2015 Corporate ROIC
· 2015 Corporate and Operating Unit Adjusted EBITDA
· 2015 Corporate and Operating Unit Working Capital as a Percentage of Sales
| • | 2023 Average Working Capital as a Percentage of Sales(2) |
To determine a NEO’s annual incentive opportunity, a participant’s base salary is multiplied by a target percentagetopercentage to obtain a target award. Target percentages for each participant’sNEO’s position approximate the market median. For the 20152023 Annual Plan, each NEO was assigned the following target opportunity expressed as a percentpercentage of base salary: Robert P. Bauer | 80% | David J. Russo | 60% | John F. Kasel
| 50% | | 100% | | | | William M. Thalman
| | | 65% | | | | Patrick J. Guinee
| 45% | | 55% | | David R. Sauder | 40%Brian H. Kelly
| | | 55% | | | | William F. Treacy, Jr.
| | | 50% | |
The table below illustrates the 20152023 performance measures and weighting applicable to the 2023 Annual Plan, as assigned to each participating NEO: | Performance Metric | Robert P.
Bauer | David J.
Russo | John F.
Kasel | Patrick J.
Guinee | David R.
Sauder | | Corporate ROIC | 15% | 15% | — | 15% | 15% | | Corporate Adjusted EBITDA | 70% | 70% | 30% | 70% | 70% | | Operating Unit Adjusted EBITDA | — | — | 50% | — | — | | Corporate Working Capital as a Percentage of Sales | 15% | 15% | — | 15% | 15% | | Operating Unit Working Capital as a Percentage of Sales | — | — | 20% | — | — |
In February 2016, the Committee determined that the 2015 Annual Plan was funded at approximately $4 million, and
| | Adjusted EBITDA(1)
| | | 75% | | | 75% | | | 75% | | | 75% | | | 75% | | | | Average Working Capital as a Percentage of Sales(2)
| | | 25% | | | 25% | | | 25% | | | 25% | | | 25% | |
The actual individual payments wereto NEOs are calculated based on individual NEO target award opportunity multiplied by the actual level of attainment of each performance metric relative to performance goals established at the stated targets. beginning of the performance period. TABLE OF CONTENTS The 20152023 performance goals and payout percentage for each metric are summarized below: Corporate ROIC
Adjusted EBITDA(1) Performance and Payout Ranges (Messrs. Bauer, Russo, Guinee, and Sauder)
| 2015 ROIC | 2015 Payout Range | | 127.5% and Over | 200% | | 100% | 100% | | 80% | 20% | | Less than 80% | 0% | | | | | 2015 Actual Performance | 2015 Payout as % of Target | | 90.2% | 58% |
Corporate & Operating Unit Adjusted EBITDA
| | 121.1% and over
| | | 200% | | | | 100%
| | | 100% | | | | 80.0%
| | | 50% | | | | Less than 80.0%
| | | 0% | | | | 2023 Actual Attainment
| | | 2023 Payout as
% of Target | | | | 122.1%
| | | 200% | |
Average Working Capital as a Percentage of Sales(2) Performance and Payout Ranges (Messrs. Bauer, Russo, Kasel, Guinee, and Sauder)
| 2015 Adjusted EBITDA | 2015 Payout Range | | 170% and over | 200% | | 100% | 100% | | 50% | 20% | | Less than 50% | 0% | | | | | 2015 Actual Performance | 2015 Payout as % of Target | | Corporate | | 90.6% | 85% | | Rail Products | | 102.2% | 103% |
Corporate and Operating Unit Working Capital as a % of Sales Performance and Payout Ranges
(Messrs. Bauer, Russo, Kasel, Guinee, and Sauder)
| 2015 Working Capital as a % of Sales Goals | 2015 Payout Range | | 86% and under | 200% | | 100% | 100% | | 110% | 40% | | Greater than 110% | 0% | | 2015 Actual Performance | 2015 Payout as % of Target | | Corporate | | 118.4% | 0% | | Rail Products | | 126.0% | 0% |
Corporate ROIC and Actual Performance and 2015 Payout
| | 2015 Target
Performance Goal | 2015 Actual
Performance | 2015 Payout as a
% of Target | | Mr. Bauer | 9.79% | 8.84% | 58% | | Mr. Russo | 9.79% | 8.84% | 58% | | Mr. Guinee | 9.79% | 8.84% | 58% | | Mr. Sauder | 9.79% | 8.84% | 58% |
Corporate
| | 97.2% and below
| | | 200% | | | | 100%
| | | 100% | | | | 102.3%
| | | 50% | | | | Above 102.3%
| | | 0% | | | | 2023 Actual Attainment
| | | 2023 Payout as
% of Target | | | | 104.0%
| | | 0% | |
Adjusted EBITDA (1) Target and Actual Performance and 20152023 Payout | 2015 Target
Performance Goal | 2015 Actual
Performance | 2015 Payout as a
% of Target | Mr. Bauer | $63.1M | $57.1M | 85% | Mr. Russo | $63.1M | $57.1M | 85% | Mr. Kasel | $63.1M | $57.1M | 85% | Mr. Guinee | $63.1M | $57.1M | 85% | Mr. Sauder | $63.1M | $57.1M | 85% |
Operating Unit Adjusted EBITDA Income Target and Actual Performance and 2015 Payout
| 2015 Target
Performance Goal | 2015 Actual
Performance | 2015 Payout as a
% of Target | Mr. Kasel | $51.2M | $52.3M | 103% |
Corporate
| | John F. Kasel
| | | $26.0 | | | $31.8 | | | 200% | | | | William M. Thalman
| | | $26.0 | | | $31.8 | | | 200% | | | | Patrick J. Guinee
| | | $26.0 | | | $31.8 | | | 200% | | | | Brian H. Kelly
| | | $26.0 | | | $31.8 | | | 200% | | | | William F. Treacy, Jr.
| | | $26.0 | | | $31.8 | | | 200% | |
Average Working Capital as a %Percentage of Sales(2) Target and
Actual Performance and 20152023 Payout | | John F. Kasel
| | | 21.3% | | | 22.2% | | | 0% | | | | William M. Thalman
| | | 21.3% | | | 22.2% | | | 0% | | | | Patrick J. Guinee
| | | 21.3% | | | 22.2% | | | 0% | | | | Brian H. Kelly
| | | 21.3% | | | 22.2% | | | 0% | | | | William F. Treacy, Jr.
| | | 21.3% | | | 22.2% | | | 0% | |
Discretionary Reduction to the Incentives of the NEOs The above described 2023 Annual Plan structure resulted in a calculated achievement payout of 150%; however, the annual incentive payments to the NEOs were reduced for 2023 at the request of the CEO to the Board of Directors due to safety performance. The Company sets high safety goals and objectives, and in 2023 several business groups did not perform to these expectations. Accordingly, a discretionary reduction of 2.5% was applied to the payouts of all NEOs, resulting in a final payout achievement of 146.25%. TABLE OF CONTENTS | | 2015 Target
Performance Goal | 2015 Actual
Performance | 2015 Payout as a
% of Target | | Mr. Bauer | 17.7% | 21.0% | 0% | | Mr. Russo | 17.7% | 21.0% | 0% | | Mr. Guinee | 17.7% | 21.0% | 0% | | Mr. Sauder | 17.7% | 21.0% | 0% |
Operating Unit Working Capital
The 2023 Annual Plan results were calculated as a % of Sales Targetset forth below for Messrs. Kasel, Thalman, Guinee, Kelly, and Actual Performance and 2015 Payout| | 2015 Target
Performance Goal | 2015 Actual
Performance | 2015 Payout as a
% of Target | | Mr. Kasel | 17.4% | 21.9% | 0% |
Treacy: Adjusted EBITDA(1) | | | 200% | | | 75% | | | 150% | Average Working Capital as a % of Sales(2) | | | 0% | | | 25% | | | 0% | 2023 Payout as a % of Target | | | | | | | | | 150% | Payout Modifier (2.5% discretionary reduction for safety performance) | | | — | | | — | | | 97.5% | Total 2023 Payout | | | | | | | | | 146.25% |
Actual cash incentive awards earned and paid to the NEOs under the 2023 Annual Plan are included in the Summary Compensation Table on page 49 under the column headingNon-Equity Incentive Plan Compensation.51. Long-Term Incentive Plan 2015
2023 Long-Term Incentive Awards In 2015, the Committee approved annual grants of equity to each NEO. This program consists of two components: time-vested restricted stock and PSUs.
The programLTIP provides (i) NEOs with an incentive to remain with the Company, (ii) a means for NEOs to build ownership in the Company, and (iii) alignment with the value of NEOs’ awards and the Company’s long-term financial performance. In 2023, the Committee approved annual grants of equity to each NEO, consisting of two components: time-vested restricted stock and PSUs. For each NEO, 25%40% of the target long-term incentive value was granted in the form of time-vested restricted stock, which vests ratably in one-third installments over a three-year period from grant. The average closing price per share of the Company’s common stock during the firstlast 15 calendar days of February 2015January 2023 was used to determine the number of shares granted to each executive.NEO. The Committee believes that restricted stock awards recognize the cyclicality of the Company’s markets, promote executive retention and build ownership in the Company. Restricted stock also aligns our NEOs’ compensation and Company performance by conditioning a portion of the incentive opportunity upon appreciation of share value. The remaining 75%60% of aeach NEO’s target long-term incentive award for 2023 was distributedgranted in the form of PSUs, with the number of units determined in the same manner as the portion granted in restricted stock. stock for each NEO, including the CEO. The PSUs granted in 2023 have a performance period of January 1, 20152023 through December 31, 2017,2025, and will be converted into Companypaid in shares of the Company’s common stock, if earned, based uponon the Company’s achievement of two equally-weighted performance goals of Average ROIC(i) Economic Profit Improvement(3), calculated with reference to the Economic Profit earned for each calendar year in the performance period; and Earnings CAGR,(ii) Adjusted EBITDA(1) measured overeach year of the three-year performance period. Economic Profit Improvement(3) and Adjusted EBITDA(1) targets were established at the beginning of the three-year period at a cumulative threelevel that requires growth in Company profitability and economic returns. Actual results are measured each year against the annual targets and shares earned are banked (30%, 30% and 40% for each of Year 1, Year 2 and Year 3, respectively) until the end of the three-year performance period.period and are not settled until the end of the three-year period, generally subject to continued employment. The PSUs are designed to align compensation and Company performance by making our NEOs’ long-term incentive compensation over a three-year performance period contingent upon the Company’s 2015-2017 Average ROICEconomic Profit Improvement(3) and Earnings CAGR.Adjusted EBITDA(1) achievement between 2023 and 2025. In 2015,2023, the Committee approved the following target long-term incentive values for each NEO, to be allocated between restricted stock awards and PSUs: Robert P. Bauer | $915,000 | David J. Russo | $300,000 | John F. Kasel
| | | $260,0001,100,000 | | | | William M. Thalman
| | | $350,000 | | | | Patrick J. Guinee
| | | $150,000300,000 | | David R. Sauder(1) | Brian H. Kelly
| | | $165,000300,000 | | | | William F. Treacy, Jr.
| | | $250,000 | |
TABLE OF CONTENTS | (1) | In connection with Mr. Sauder’s voluntary resignation fromBased on these target values, the Company, he forfeited, in total, the 2015 restricted stock and PSU awards granted to him. |
The NEOs were awarded the following restricted shares and PSUs:
| Name | Restricted
Shares | 2015-2017 PSUs (at Target) | | Robert P. Bauer | 4,602 | 13,806 | | David J. Russo | 1,509 | 4,526 | | John F. Kasel | 1,308 | 3,922 | | Patrick J. Guinee | 754 | 2,264 | | David R. Sauder | 830 | 2,490 |
PSUs: | | John F. Kasel
| | | 37,131 | | | 55,696 | | | | William M. Thalman
| | | 11,814 | | | 17,722 | | | | Patrick J. Guinee
| | | 10,126 | | | 15,190 | | | | Brian H. Kelly
| | | 10,126 | | | 15,190 | | | | William F. Treacy, Jr.
| | | 8,439 | | | 12,658 | |
The number of PSUs towhich may be earned at the end of each annual period in the 2023-2025 three-year performance plan will be determined in accordance with the following formula, with performance evaluated at the end of each annual period and awardedshares earned at a rate of 30% in the first year, 30% in the second year, and 40% in the third year, with any shares earned in such period to a participant in common stock is determined by multiplying each participant’s PSUs byvest and settle at the Average ROIC “Percentend of PSUs Earned” and “Earnings CAGR Award Multiplier” below, which corresponds to the Company’s 2015-2017 Average ROIC and Earnings CAGR performance, respectively, compared to target for the three-year performance period, generally subject to continued employment: (PSUs awarded (at target) x Economic Profit Improvement % of Target Payout Earned x 0.50) +
(PSUs awarded (at target) x Adjusted EBITDA % of Target Payout Earned x 0.50) = Total Earned PSUs
Economic Profit Improvement(3)* | | All NEOs
| | | $10.6 | | | 200.0% | | | 50% | | | 100% | |
| | 200%
| | | $6.6 | | | | 100%
| | | $5.1 | | | | 50%
| | | $2.5 | |
*
| With respect to the two remaining (2024 and 2025) annual tranches, the Economic Profit Improvement(3) targets are confidential and will be disclosed after the end of each applicable annual performance period. |
Adjusted EBITDA(1)* | | All NEOs
| | | $31.8 | | | 174.0% | | | 50% | | | 87% | |
| | 200%
| | | $33.8 | | | | 100%
| | | $26.0 | | | | 50%
| | | $18.2 | |
*
| With respect to the two remaining (2024 and 2025) annual tranches, the Adjusted EBITDA(1) targets are confidential and will be disclosed after the end of each applicable annual performance period. |
| | John F. Kasel
| | | | | | 31,245 | | | | William M. Thalman
| | | 100% Economic Profit Improvement(3) + 87% Adjusted EBITDA(1) = | | | 9,942 | | | | Patrick J. Guinee
| | | 187% Achievement x 30% Year 1 Weighting = 56.1% of PSUs | | | 8,522 | | | | Brian H. Kelly
| | | Awarded (to be settled at the end of the three-year performance period) | | | 8,522 | | | | William F. Treacy, Jr.
| | | | | | 7,101 | |
TABLE OF CONTENTS 2021-2023 and is2022-2024 Performance Share Unit Awards 2022-2024 PSU Awards The performance goals applicable to the PSU awards granted to our NEOs in the 2022 – 2024 Plan were equally weighted 50% foras Corporate ROIC performance(4) and Adjusted EBITDA(1) with annual targets established and weighted 20%, 30% and 50% forover a performance period of January 1, 2022 through December 31, 2024. The formulas applicable to each of the Earnings CAGR performance:annual Corporate ROIC(4) and annual Adjusted EBITDA(1) metrics are described on page 37 of our proxy statement filed on April 14, 2023. Corporate ROIC(4)* | | All NEOs
| | | 8.8% | | | 75% | | | 50% | | | 37.5% | |
| | 200%
| | | 12.7% | | | | 100%
| | | 9.8% | | | | 25%
| | | 6.8% | |
*
| With respect to the remaining 2024 annual tranche, the Corporate ROIC(4) is confidential and will be disclosed after the end of the applicable annual performance period. |
| | All NEOs
| | | $31.8 | | | 117.5% | | | 50% | | | 58.8% | |
| | 200%
| | | $39.2 | | | | 100%
| | | $30.2 | | | | 50%
| | | $21.1 | |
*
| With respect to the remaining 2024 annual tranche, the Adjusted EBITDA(1) target is confidential and will be disclosed after the end of the applicable annual performance period. |
2015-2017Average ROIC | John F. Kasel
| | | | | | 7,748 | | Level of Performance | AverageWilliam M. Thalman
| | | 37.5% Corporate ROIC(4) + 58.8% Adjusted EBITDA(1) = 96.3% | Percent of PSUs
Earned | | 3,874 | | Below Threshold | Below 10.5%Patrick J. Guinee
| 0% | | Achievement x 30% Year 2 Weighting = 28.9% of PSUs Awarded | | | 3,551 | | Threshold | Equal Brian H. Kelly
| | | (to 10.5%be settled at the end of the three-year performance period) | 50% | | 3,229 | | Target | Equal to 14.0%William F. Treacy, Jr.
| 100% | | | | | 2,195 | |
2021-2023 PSU Awards The performance goals applicable to the PSU awards granted to our NEOs in 2021 were equally weighted as Average Corporate ROIC(5) and Cumulative Adjusted EBITDA(6) and were measured over a performance period of January 1, 2021 through December 31, 2023. The goals applicable to each of the Average Corporate ROIC(5) and Cumulative Adjusted EBITDA(6) metrics are described on page 47 of our proxy statement filed on April 21, 2022. TABLE OF CONTENTS Average Corporate ROIC(5) | | All NEOs
| | | 7.3% | | | 0% | | | 50% | | | 0% | |
| | 200%
| | | 14.0% | | | | 100%
| | | 12.0% | | | | 25%
| | | 9.0% | |
Cumulative Adjusted EBITDA(6) | | All NEOs
| | | $74.9 | | | 42.3% | | | 50% | | | 21.2% | |
| | 200%
| | | $132.6 | | | | 100%
| | | $102.0 | | | | 35%
| | | $71.4 | |
Outstanding | Equal to or Greater than 17.5%John F. Kasel
| 200% | | | | | 3,803 | | | | William M. Thalman
| | | 0% Average Corporate ROIC(5) + 21.2% Cumulative Adjusted | | | 2,377 | | | | Patrick J. Guinee
| | | EBITDA(6) = 21.2% Achievement of PSUs Awarded | | | 2,377 | | | | Brian H. Kelly
| | | | | | 1,988 | | | | William F. Treacy, Jr.
| | | | | | 1,469 | |
| Earnings CAGR | | | Earnings
Growth Rate | Earnings
CAGR Award
Multiplier | | Earnings
Growth Rate | Earnings
CAGR Award
Multiplier | | <2% | 0 | | 9% | 1.80 | | 2% | .20 | | 10% | 2.00 | | 3% | .60 | | 11% | 2.20 | | 4% | .80 | | 12% | 2.40 | | 5% | 1.00 | | 13% | 2.60 | | 6% | 1.20 | | 14% | 2.80 | | 7% | 1.40 | | 15% | 3.00 | | 8% | 1.60 | | 15%+ | 3.00 |
Average Corporate ROIC(5) was calculated as the three-year average of Corporate ROIC determined in each year of the performance period. Adjusted EBITDA(1) was also calculated each year of the three-year plan period. The sum of the three years Adjusted EBITDA is the Cumulative Adjusted EBITDA(6) result that was measured against the target goal. The Average Corporate ROIC(5) and Cumulative Adjusted EBITDA(6) targets were derived using a growth rate that results in increasing profitability and capital returns necessary year over year to attain the goal. For more information regarding the 2015 PSU and restricted stock awards granted to our NEOs, please see the Summary Compensation Table and Grants of Plan BasedPlan-Based Awards in 2015.2013-2015 Performance Share Unit Awards
The performance goals applicable2023. Straight line interpolation is used to calculate results that fall between levels in the 2013 PSU awards were Corporate ROIC (50%) and Earnings CAGR (50%) and were measured over a performance period of January 1, 2013 through December 31, 2015. The formulas applicable to each of the Corporate ROIC and Earnings CAGR metrics are described on pages 23-25 of our proxy statement filed on April 11, 2014.
Actual ROIC achievement for the three-year performance period was derived by averaging the actual ROIC in fiscal years 2013, 2014 and 2015. The results were 13.40%, 11.16%, and 6.80% in those years, respectively, leading to an average ROIC of 10.45%, which resulted in no pay-out as to this metric. The Earning CAGR achievement for the three-year period was (17.8%), which resulted in
no pay-out as to this metric. As a result, our NEOs who were granted these awards in 2013 did not earn their respective 2013 PSU awards and the awards were cancelled in their entirety.
tables above. Other Compensation Practices
The NEOs participate in the Company’s 401(k) and Profit Sharing Plan (“401(k) Plan”), a defined contribution retirement plan, qualifying under Section 401(k) of the Code, which is available to a broad segment of the Company’s employees. The Company’s contributions for 20152023 to the 401(k) Plan with respect to our NEOs are included in the Summary Compensation Table (see page 49)51). There were no discretionary profit-sharing contributions made under the 401(k) Plan for 2023. The Company also maintains a Supplemental Executive Retirement Plan (the “SERP”) under which executive officers may accrue benefits unavailable under the 401(k) Plan because of Internal Revenue Code (the “Code”) limitations. These benefits are also included in the Summary Compensation Table and 20152023 Non-Qualified Deferred Compensation table (see pages 4951 and 53,55, respectively). TABLE OF CONTENTS The Company maintains these retirement plans for retention purposes and to provide a competitive opportunity for the Company’s employees to obtain a secure retirement.
Anti-Hedging and Anti-Pledging Policy The Company’s Anti-Hedging and Anti-Pledging Policy is explained on page 35 above. No Employment Agreements Separation Plan, and Change-In-Control Arrangements The Company does not currently provide its NEOs with formal employment agreements. Separation Plan and Change-In-Control Arrangements The Separation Plan provides severance in the event of both a change-in-control of the Company andcombined with a qualifying termination of aeach currently-employed NEO’s employment, and includes Mr. Bauer as a participant.employment. The Committee believes that providing severance in these situations is beneficial to shareholders so that executives may remain indifferentunbiased when evaluating a transaction that may be beneficial to shareholders, yet could negatively impact their continued employment with the Company. In the event a participant experiences a qualifying employment termination in connection with a change-in-control of the Company, such participant is entitled to receive the participant’s base salary plus the average of the participant’stheir target annual cash bonuses paid or due and payable over the prior three calendar yearsbonus multiplied by a “Benefit Factor” (subject to execution (and non-revocation) of a release of claims and compliance with confidentiality and one-year non-compete and customer and employee non-solicit obligations). The participants’ Benefit Factors are as follows: | | Benefit FactorCEO
| | | 2.5 | | CEO and | Executive/Senior Vice Presidents
| | | 2 | | | | Vice Presidents and Controller
| | | 1 | |
Subject to compliance with the obligations in the release, a participant also will be paid $15,000 for outplacement services, and provided medical, dental, and vision insurance for up to 18 months post-employment. A participant will not be entitled to these payments and benefits under the Separation Plan, unless both: (i) a change-in-control has occurred; and (ii) the participant’s employment has been terminated (involuntarily without “cause” or for “good reason”). Our PSUs and restricted stock award agreements also include double trigger change-in-control provisions. In the eventcase of the 2021-2023 PSU, Performance-Based Stock Program, and Strategic Transformation Plan awards, if the awards were assumed by an acquiror in connection with a CIC, the awards at the time of the change-in-control would be deemed earned at target and converted into time-based awards of the Committee may, in its discretion, determine that PSU awards areacquiror which generally would be subject to vesting based on continued employment through the end of the remaining vesting term. If, however, there is a qualifying termination after the change-in-control but before the end of the vesting term, the vesting will be accelerated and deemed earned at a target award level on a pro-rated basis (generally based onlevel. For PSUs awarded in 2022 and thereafter, if the number of monthselapsed duringawards are assumed by the applicable performance period prior to the change-in-control). For restricted stock awards granted to executives prior to 2014, such awards will vestacquiror in connection with a change-in-control, the PSUs for completed periods will be deemed earned at actual and the PSUs for executive restricted stockincomplete and future periods will be deemed earned at target with earned PSUs converted into time-based awards granted in 2014 and thereafter, such awardsof the acquiror which generally will only vest if an executive experiencesbe subject to vesting based on continued employment through the end of the remaining vesting term. If however there is a qualifying termination after the CIC but before the end of employment in connection withthe vesting term, the vesting will be accelerated. If the PSUs are not assumed by the acquiror, single trigger vesting occurs and the PSUs for completed periods will be earned at actual, and PSUs for incomplete and future periods will be deemed earned at a change-in-control (double trigger).
target award level. Any payment to a participant that would constitute an “excess parachute payment” within the meaning of Section 280G of the Code will cause the payment to be reduced to an amount, which maximizes the aggregate present value of the payment, without causing any payment to be subject to the limitation of deduction under Section 280G. See pages 55-5959-61 for estimates on the benefits thecertain NEOs would have received if a participantsuch person was terminated on December 31, 2015,2023, in connection with a change-in-control. TABLE OF CONTENTS The Company’s Stock Ownership Policy requires our CEO to own stock valued at least 5 times his salary. Executive/Senior Vice Presidents are required to own stock valued at least 2.5 times their respective salaries, and Vice Presidents and the Controller are required to own stock valued at least 1.5 times their respective salaries. The Stock Ownership Policy requires executives to retain 100% of the shares that are earned or that vest (net of tax) at any time while the value of current holdings is below the target requirement. Shares that count toward the requirement include unvested restricted shares, shares acquired through employee benefit plans, and shares held outright by the executive. In cases of hardship, the CEO may recommend to the Committee, and the Committee may grant the executive, permission to sell shares even if the Policy requirement has not been met. The Committee believes that such ownership requirements will discourage executives from taking any excessive long-term risks. Tax Considerations
The Committee has considered the impact
Right of the applicable tax lawsRecovery (Clawback) In accordance with respect to compensation paid under the Company’s plans, arrangementsSEC rules and agreements. In certain instances, applicable tax laws impose potential penalties on such compensation and/or result in a loss of deduction to the Company for such compensation.Section 409A. Participation in, and compensation paid under, the Company’s plans, arrangements and agreements may, in certain instances, result in the deferral of compensation that is subject to the requirements of Section 409A of the Code. Generally,Nasdaq listing rules, in 2023, the Compensation Committee adopted an amended and restated executive Incentive Recoupment Policy (the “Clawback Policy”) that empowers the Company to the extent that the Company’s plans, arrangements and agreements failrecover certain incentive compensation erroneously awarded to meet certain requirements under Section 409A of the Code, compensation earned thereunder may be subject to immediate taxation and tax penalties. It is the intenta current or former “Section 16 officer” of the Company, that its plans, arrangements and agreements will be structured and administeredas defined in a manner that complies withRule 16a-1(f) under the requirementsSecurities Exchange Act of Section 409A of the Code (or an exception thereto).
Section 162(m). With certain exceptions, Section 162(m) of the Code limits the Company’s deduction for compensation in excess of $1 million paid to certain covered employees. Compensation paid to covered employees is not subject to the deduction limitation if it is considered “qualified performance-based compensation” within the meaning of Section 162(m) of the Code. While the Committee considers the tax impact of any compensation arrangement, the Committee evaluates such impact in light of our overall compensation objectives. The Committee reserves the right to approve non-deductible compensation if it believes it is1934, as amended (“Exchange Act”) (a “Covered Officer”), in the best interestsevent of an accounting restatement. In the Company and/or its shareholders.
Right of Recovery (Clawback)
The Company has adopted policies regarding the Committee’s authorityevent we are required to adjust or recover annual incentive or PSU payments or awards if the Committee finds certain recipients of such awards culpable in connection withprepare an accounting restatement due to material non-compliance with financial reporting requirements.
as provided in our Clawback Policy, unless an exception applies, the Company will recover reasonably promptly from each Covered Officer the covered compensation received by such Covered Officer. Other Corporate Plans At various times in the past, the Company has adopted certain employee benefit plans in which NEOs have been permitted to participate.
The Company also provides certain executive officers with life and long-term disability and health insurance programs. The incremental cost to the Company of our NEOs’ benefits provided under these programs is included in the Summary Compensation Table (see page 49). Benefits under these plans are not directly or indirectly tied to Company performance.51) for each applicable NEO. The Company also provides limited perquisites to the NEOs, which may include car allowances or use of a leased car, financial planning services, and membership in athletic or social clubs. The Company’s incremental costs for these perquisites are included in the Summary Compensation Table.
Footnote Definitions for Section: Executive CompensationTABLE OF CONTENTS | 1 | “2015 Corporate ROIC” means, with respect to the Company for the 2015 fiscal year: (a) after tax earnings from continuing operations before interest income and interest expense and amortization charges (all tax affected using the effective corporate tax rate), divided by (b) an average of month end total assets less the sum of cash, marketable securities and non-interest bearing current liabilities, determined in accordance with generally accepted accounting principles. ROIC was expressed as a percentage and determined without regard to: (i) the effect of changes in accounting principles, (ii) any on-going and/or one-time costs and/or expenses attributable to an acquisition, including but not limited to, those related to the negotiation, completion and/or integration of an acquisition, incurred during the fiscal year, (iii) any costs related to purchase accounting step up in the basis of tangible or intangible assets not classified as amortization, (iv) the elimination of the impact of all assets and liabilities purchased or incurred as a result of an acquisition, (v) any on-going and/or one-time costs and/or expenses (exclusive of employee travel) related to the unsuccessfully attempted acquisition of a business during the 2015 fiscal year, (vi) any on-going and/or one-time costs and/or expenses associated with the successful or unsuccessful sale of a business (exclusive of employee travel), (vii) any significant or non-recurring items which are disclosed in management’s discussion and analysis of financial condition and results of operations in the Company’s Annual Report on Form 10-K for such period and which would have an adverse effect on the pay-out amount of a participant’s award, and (viii) the reported results of an acquisition completed in the fiscal year, including the results of operations and financial position. Notwithstanding the foregoing, in the event that a business was sold during the fiscal year, such business’ target and adjusted actual results were eliminated from all calculations. |
| 2 | “2015 Corporate and Operating Unit Adjusted EBITDA” (Earnings before interest, taxes, depreciation, and amortization) means, with respect to the Company or an operating unit, for the fiscal year 2015, determined in accordance with generally accepted accounting principles, including the applicable LIFO charge or credit: (a) income from continuing operations; (b) plus income tax expense; (c) plus interest expense; (d) minus interest income; (e) plus depreciation expense; and (f) plus amortization expense. Adjusted EBITDA was calculated without regard to: (i) the effect of changes in accounting principles, (ii) any on-going and/or one-time costs and/or expenses attributable to an acquisition, including but not limited to, those related to the negotiation, completion |
and/or integration of an acquisition, incurred during the fiscal year 2015, (iii) any costs related to the purchase accounting step up in the basis of tangible or intangible assets not classified as depreciation or amortization, (iv) any on-going and/or one-time costs and/or expenses related to the unsuccessfully attempted acquisition of a business during the fiscal year 2015 (exclusive of employee travel), (v) any on-going and/or one-time costs and/or expenses (exclusive of employee travel) associated with the sale or attempted sale of a business in the fiscal year 2015, (vi) any significant or non-recurring items which are disclosed in management’s discussion and analysis of financial condition and results of operations in the Company’s Annual Report on Form 10-K for such period and which would have an adverse effect on the pay-out amount of a participant’s award, (vii) the costs of the plan for domestic operating units, (viii) the impact on any operating unit attributable to any administrative intercompany charges related to transfer pricing compliance where the consolidated impact is zero, and (ix) the reported results of an acquisition completed in fiscal year 2015. Notwithstanding the foregoing, in the event that a business is sold during the fiscal year, such business’ target and adjusted actual results were eliminated from all calculations.
| 3 | “2015 Corporate and Operating Unit Working Capital as a Percentage of Sales” means, with respect to the Company or, as applicable, for an operating unit, for fiscal year 2015, the average monthly balances of inventory and accounts receivable less the average monthly balances of accounts payable and deferred revenue divided by annual net sales, provided however that all the above items, were determined without regard to: (i) any on-going and/or one-time costs and/or expenses relating to acquisitions transacted during fiscal year 2015, (ii) businesses reclassified as “Discontinued Operations,” (iii) the impact on any operating unit attributable to any administrative intercompany charges related to transfer pricing compliance where the consolidated impact is zero, and (iv) the reported results of an acquisition completed in fiscal year 2015, including the results of operations and financial position. Notwithstanding the foregoing, in the event that a business is sold during fiscal year 2015, such business’ target and adjusted actual results were eliminated from all calculations. |
| 4 | “2015-2017 ROIC” means, with respect to any calendar year: (A) after tax earnings from continuing operations before interest income and interest expense and amortization charges (all tax affected using the effective corporate tax rate), divided by (B) an average of month end total assets less the sum of cash, marketable securities and non-interest bearing current liabilities, determined in accordance with generally accepted accounting principles. |
ROIC will be expressed as a percentage (%) and calculated annually for the Company for each calendar year in the performance period;provided, however, that ROIC will be determined without regard to: (i) the effect of changes in accounting principles; (ii) any on-going and/or one-time costs and/or expenses attributable to an acquisition, including but not limited to, those related to the negotiation, completion and/or integration of an acquisition, incurred during the year of acquisition in the performance period; (iii) any costs related to purchase accounting step up in the basis of tangible or intangible assets not classified as depreciation and amortization; (iv) the impact of all assets and liabilities purchased or incurred as a result of an acquisition; (v) any on-going and/or one-time costs and/or expenses related to the unsuccessfully attempted acquisition of a business during the performance period (exclusive of employee travel); (vi) any on-going and/or one-time costs and/or expenses associated with the successful or unsuccessful sale of a business (exclusive of employee travel); (vii) any significant or non-recurring items which are disclosed in management’s discussion and analysis of financial condition and results of operations in the Company’s Annual Report on Form 10-K for such period and which would have an adverse effect on the number of PSUs earned; (viii) any charges, losses or expenses and the resulting impact to assets and liabilities relating to warranty claims (the “Warranty Matters”); and (ix) the reported results of an acquisition in the calendar year of such acquisition in the performance period, including the results of operations
and financial position. Notwithstanding the foregoing, (i) in the event that a business is sold during a calendar year in the performance period, the impact of such business’ results will be excluded from the ROIC calculation for such year and (ii) the Committee expressly reserves the right not to exclude the effect of any of the above adjustments if such adjustments would result in an increase in award pay-out. The “Average ROIC” for the performance period will be calculated by aggregating the ROIC percentages and dividing by three (3).
| 5 | 2015-2017 Compound Annual Growth Rate of Earnings from Continuing Operations (Earnings CAGR) means the growth rate of income from continuing operations as measured on a cumulative annual rate of growth over the specified three year period. The growth rate is calculated as follows: (1/3) -1, where “Year 3 Income” is the income from continuing operations in the final year of the program and “Base Year Income” represents the income from continuing operations for the year immediately preceding the commencement of the performance period;provided, however,that Earnings CAGR will be determined without regard to: (i) the effect of changes in accounting principles; (ii) any costs related to purchase accounting step up in the basis of tangible or intangible assets; (iii) any on-going and/or one-time costs and/or expenses attributable to an acquisition, including but not limited to, those related to the negotiation, completion and/or integration of an acquisition, incurred during the year of acquisition in the performance period; (iv) any on-going and/or one-time costs and/or expenses related to the unsuccessfully attempted acquisition of a business during the performance period; (v) any on-going and/or one-time costs and/or expenses associated with the successful or unsuccessful sale of a business (exclusive of employee travel); (vi) any significant or non-recurring items which are disclosed in management’s discussion and analysis of financial condition and results of operations in the Company’s Annual Report on Form 10-K for such period and which would have an adverse effect on the number of PSUs earned; (vii) any charges, losses or expenses and the resulting impact to assets and liabilities relating to Warranty Matters; and (viii) the reported results of an acquisition in the calendar year of such acquisition in the performance period, including the results of operations and financial position. For the 2015 – 2017 PSU program, the Base Year Income (January 1, 2014 through December 31, 2014) was the final audited income from continuing operations for such year. Notwithstanding the foregoing, the Committee expressly reserved the right not to exclude the effect of any of the above adjustments if such adjustments would result in an increase in award pay-out. |
| 6 | “EBITDA Margin” means earnings before interest, taxes, depreciation and amortization divided by total revenue. |
| 7 | “2015 Adjusted EBITDA” (Earnings before interest, taxes, depreciation, and amortization) means with respect to the Company and operating unit for the 2015 performance period, determined in accordance with generally accepted accounting principles, including the applicable LIFO charge or credit (a) income from continuing operations; (b) plus income tax expense; (c) plus interest expense; (d) minus interest income; (e) plus depreciation expense; and (f) plus amortization expense. Adjusted EBITDA was calculated without regard to: (i) the effect of changes in accounting principles, (ii) any on-going and/or one-time costs and/or expenses attributable to an acquisition, including but not limited to, those related to the negotiation, completion and/or integration of an acquisition, incurred during the 2015 performance period, (iii) any costs related to the purchase accounting step up in the basis of tangible or intangible assets not classified as depreciation or amortization, (iv) any on-going and/or one-time costs and/or expenses related to the unsuccessfully attempted acquisition of a business during the 2015 performance period (exclusive of employee travel), (v) any on-going and/or one-time costs and/or expenses (exclusive of employee travel) associated with the sale or attempted sale of a business in the 2015 performance period, (vi) any significant or non-recurring items which are disclosed in management’s discussion and analysis of financial condition and |
results of operations in the Company’s Annual Report on Form 10-K for such period and which would have an adverse effect on the pay-out amount of an award, (vii) the costs of the annual incentive plan for domestic operating units unless included in the fiscal year 2015 budget, (viii) unbudgeted litigation or claim judgments and associated fees, civil penalties or settlements, and (ix) the impact on any operating unit attributable to any administrative intercompany charges related to transfer pricing compliance where the consolidated impact is zero. Notwithstanding the foregoing, in the event that a business is sold during the 2015 Performance Period, such business’ target and adjusted actual results shall be eliminated from all calculations.
Included in this Compensation Discussion and Analysis are certain non-GAAP financial measures that management and the Board of Directors use to measure the Company’s performance for incentive compensation purposes. Management and the Board of Directors believe that these measures, considered along with the corresponding GAAP measures, provide management and investors with useful information in understanding our operating results and related incentive compensation programs, as well as in measuring our operating results against the operating results of other companies.
COMPENSATION COMMITTEE REPORT Notwithstanding anything to the contrary set forth in any of the Company’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that incorporate other Company filings, including this Proxy Statement, the following Report of the Compensation Committee does not constitute soliciting material and shall not be incorporated by reference into any such filings. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on this review and discussion, it has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. | Compensation Committee | | COMPENSATION COMMITTEE | | William H. Rackoff, Chairman | | John E. Kunz, Chair | | G. Thomas McKane | | Dirk Jungé | | Dirk Jungé | | | Suzanne B. Rowland | | | Bradley S. ViziRaymond T. Betler |
TABLE OF CONTENTS SUMMARY COMPENSATION TABLE - 2013, 2014, and 2015– 2023, 2022 AND 2021 The following table sets forth information regarding compensation of the Company’s NEOs for the years 2013, 2014,2023, 2022, and 2015| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-Equity
Incentive Plan Compensation ($)(2) | All Other
Compensation ($) | Total ($) | Robert P. Bauer President and CEO | 2015 | $613,000 | — | $941,912 | $334,453 | $107,028(3) | $1,996,393 | | 2014 | $609,250 | — | $524,058 | $433,406 | $100,524 | $1,667,238 | | 2013 | $592,250 | — | $463,804 | $342,913 | $108,427 | $1,507,394 | David J. Russo Sr VP, CFO and Treasurer | 2015 | $308,357 | — | $308,800 | $126,180 | $ 52,556(4) | $ 795,893 | | 2014 | $297,408 | — | $139,719 | $155,151 | $ 47,364 | $ 639,642 | | 2013 | $288,837 | — | $148,417 | $122,640 | $ 49,694 | $ 609,588 | John F. Kasel Sr VP, Rail Business | 2015 | $293,171 | — | $267,607 | $112,870 | $ 54,605(5) | $ 728,253 | | 2014 | $284,767 | — | $139,719 | $129,569 | $ 44,575 | $ 598,630 | | 2013 | $276,683 | — | $148,417 | $ 78,301 | $ 50,898 | $ 554,299 | Patrick J. Guinee VP, General Counsel and Secretary | 2015 | $256,563 | — | $154,431 | $ 78,739 | $ 44,229(6) | $ 533,962 | | 2014 | $213,141 | — | $305,674 | $ 80,865 | $ 8,201 | $ 607,881 | David R. Sauder VP, Global Business Development | 2015 | $248,187 | — | $ 169,880 | $ 67,705 | $ 43,571(7) | $ 529,343 | | 2014 | $241,419 | — | $ 87,324 | $ 91,594 | $ 38,367 | $ 458,704 | | 2013 | $235,771 | — | $ 92,801 | $ 72,806 | $ 37,927 | $ 439,305 |
| | John F. Kasel
President and CEO | | | 2023 | | | $658,750 | | | — | | | $1,078,650 | | | $987,188 | | | $133,065(3) | | | $2,857,653 | | | | 2022 | | | $572,917 | | | — | | | $1,484,515 | | | $589,050 | | | $88,539 | | | $2,735,021 | | | | 2021 | | | $489,956 | | | — | | | $667,892 | | | $314,386 | | | $87,755 | | | $1,559,989 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | William M. Thalman
EVP and Chief
Financial Officer | | | 2023 | | | $380,800 | | | | | | $343,209 | | | $366,524 | | | $69,012(4) | | | $1,159,545 | | | | 2022 | | | $354,167 | | | — | | | $570,145 | | | $200,277 | | | $35,300 | | | $1,159,889 | | | | 2021 | | | $283,333 | | | | | | $591,962 | | | $149,600 | | | $26,617 | | | $1,051,513 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Patrick J. Guinee
EVP, General
Counsel and
Corporate Secretary | | | 2023 | | | $372,228 | | | | | | $294,172 | | | $303,186 | | | $71,239(5) | | | $1,040,825 | | | | 2022 | | | $344,461 | | | — | | | $522,620 | | | $177,871 | | | $48,242 | | | $1,093,194 | | | | 2021 | | | $322,932 | | | — | | | $333,874 | | | $129,172 | | | $45,827 | | | $831,805 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Brian H. Kelly,
EVP, HR and Administration | | | 2023 | | | $358,047 | | | | | | $294,172 | | | $291,966 | | | $80,802(6) | | | $1,024,987 | | | | 2022 | | | $327,478 | | | — | | | $475,113 | | | $170,050 | | | $50,972 | | | $1,023,613 | | | | 2021 | | | $297,707 | | | — | | | $287,770 | | | $119,083 | | | $64,502 | | | $769,062 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | William F. Treacy, Jr.
EVP and Chief
Growth Officer(8) | | | 2023 | | | $348,876 | | | | | | $245,147 | | | $258,248 | | | $48,443(7) | | | $900,714 | |
| (1)
| For 2015,2023, the amounts represent the aggregate grant date fair value of the 2015-20172023-2024 LTIP awards; this grant consists of a combination of restricted stock and PSUsawards computed in accordance with FASB ASC Topic 718 (ASC 718) (excluding the effect of estimated forfeitures). These grants consist of a combination of restricted stock and PSUs. For a discussion of valuation assumptions, see Note 15 of the Company’s 20152023 Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.2023. The 20152023 amounts listed in this table use the closing price of Company stock on March 13, 2015 ($44.64)February 14, 2023 of $11.62 per share and for the PSUs, the amounts are based on an expected performance attainment of 0% for ROIC and 239% for the Earnings CAGR.target performance. Maximum opportunity for PSUs is $1,540,750 for Mr. Bauer; $505,102 for Mr. Russo; $437,695$1,294,375 for Mr. Kasel; $252,662$411,859 for Mr. Thalman; $353,016 for Mr. Guinee; and $277,884$353,016 for Mr. Sauder. In the case ofKelly; and $294,172 for Mr. Sauder, he forfeited his 2015 restricted stock and PSU awards in connection with his voluntary resignation from the Company effective March 7, 2016.Treacy. |
(2)
| (2) | Amounts represent cash awards paid under the 2015 Executive2023 Annual Incentive Compensation Plan. For further information, please see pages 37-40.42-44. |
| (3)
| For Mr. Bauer,Kasel, the 20152023 amount includes: a SERP contribution of $45,911; a discretionary 401(k) profit sharing contribution; a 401(k) Company match of $10,600;$19,800; a SERP contribution of $55,068; an auto allowance of $11,700; executive medical reimbursement; Company paid$13,750; Company-paid life insurance premium; Company paidCompany-paid long-term disability premium; a club membership of $18,734;$25,283; and $11,042for$15,610 for financial planning services. |
| (4)
| For Mr. Russo,Thalman, the 20152023 amount includes: a SERP contribution of $11,663; a discretionary 401(k) profit sharing contribution; a 401(k) Company match of $10,600;$19,800; a SERP contribution of $15,065; an auto allowance of $11,700; Company paid$13,750; Company-paid life insurance premium; Company-paid long-term disability; and club membership of $16,339. |
(5)
| For Mr. Guinee, the 2023 amount includes: a 401(k) Company paidmatch of $19,355; a SERP contribution of $13,206; an auto allowance of $13,750; Company-paid life insurance premium; Company-paid long-term disability premium; professional and club membership;memberships; and $10,329$15,610 for financial planning services. |
| (5)(6)
| For Mr. Kasel,Kelly, the 20152023 amount includes: a SERP contribution of $9,268; a discretionary 401(k) profit sharing contribution; a 401(k) Company match of $10,600;$15,278; a SERP contribution of $11,886; an auto allowance of $11,700; Company paid$13,750; Company-paid life insurance premium; Company-paid long-term disability premium; a club membership of $6,866;$19,206 and $9,358 for financial planning services.services of $15,610. |
| (6)(7)
| For Mr. Guinee,Treacy, the 20152023 amount includes: a SERP contribution of $4,255; a 401(k) Company match of $10,600;$19,800; a discretionary 401(k) profit sharingSERP contribution of $4,970;$11,153; an auto allowance of $11,700; Company paid$13,750; Company-paid life insurance premium; Company paidpremium and Company-paid long-term disability premium; professional licensing fee; and $11,113 for financial planning services.premium. |
(8)
| (7) | For Mr. Sauder, the 2015 amount includes:Treacy was not a SERP contribution of $4,394; a discretionary 401(k) profit sharing contribution of $4,970; a 401(k) Company match of $10,600; an auto allowance of $11,700;named executive medical reimbursement; Company paid life insurance premium; Company paid long-term disability premium; professional membership dues; and $9,138 for financial planning services.officer in 2022 or 2021. |
TABLE OF CONTENTS
GRANTS OF PLAN-BASED AWARDS IN 20152023 The following table provides information on 20152023 Non-Equity and Equity Incentive Plan Awards: | NEO | Grant
Date | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under
Equity Incentive Plan Awards(2) | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)(3) | Grant Date
Fair Value of
Stock
Awards ($)(4) | Threshold
($) | Target ($) | Maximum
($) | Threshold
(#) | Target
(#) | Maximum
(#) | | | | | | | | | | | | | Robert P. Bauer | — | 112,792 | 490,400 | 980,800 | — | — | — | — | — | | 3/13/15 | — | — | — | 4,832 | 13,806 | 34,515 | — | 616,300 | | 3/13/15 | — | — | — | | | | 4,602 | 205,433 | | | | | | | | | | | | | David J. Russo | — | 42,553 | 185,014 | 370,028 | — | — | — | — | — | | 3/13/15 | — | — | — | 1,584 | 4,526 | 11,315 | — | 202,041 | | 3/13/15 | — | — | — | | | | 1,509 | 67,362 | | | | | | | | | | | | | John F. Kasel | — | 35,181 | 146,586 | 293,171 | — | — | — | — | — | | 3/13/15 | — | — | — | 1,373 | 3,922 | 9,805 | — | 175,078 | | 3/13/15 | — | — | — | | | | 1,308 | 58,389 | | | | | | | | | | | | | Patrick J. Guinee | — | 26,554 | 115,453 | 230,907 | — | — | — | — | — | | 3/13/15 | — | — | — | 792 | 2,264 | 5,660 | — | 101,065 | | 3/13/15 | — | — | — | | | | 754 | 33,659 | | | | | | | | | | | | | David R. Sauder | — | 22,833 | 99,275 | 198,550 | — | — | — | — | — | | 3/13/15 | — | — | — | 872 | 2,490 | 6,225 | — | 111,154 | | 3/13/15 | — | — | — | | | | 830 | 37,051 | | | | | | | | | | | |
��
| | John F. Kasel
| | | | | | 337,500 | | | 675,000 | | | 1,350,000 | | | — | | | — | | | — | | | — | | | — | | | | 2/14/2023 | | | — | | | — | | | — | | | 27,848 | | | 55,696 | | | 111,392 | | | — | | | 647,188 | | | | 2/14/2023 | | | — | | | — | | | — | | | — | | | — | | | — | | | 37,131 | | | 431,462 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William M. Thalman
| | | — | | | 125,307 | | | 250,614 | | | 501,228 | | | — | | | — | | | — | | | — | | | — | | | | 2/14/2023 | | | — | | | — | | | — | | | 8,861 | | | 17,722 | | | 35,444 | | | — | | | 205,930 | | | | 2/14/2023 | | | — | | | — | | | — | | | — | | | — | | | — | | | 11,814 | | | 137,279 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Patrick J. Guinee
| | | — | | | 103,653 | | | 207,306 | | | 414,612 | | | — | | | — | | | — | | | — | | | — | | | | 2/14/2023 | | | — | | | — | | | — | | | 7,595 | | | 15,190 | | | 30,380 | | | — | | | 176,508 | | | | 2/14/2023 | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,126 | | | 117,664 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Brian H. Kelly
| | | — | | | 99,817 | | | 199,634 | | | 399,268 | | | — | | | — | | | — | | | — | | | — | | | | 2/14/2023 | | | — | | | — | | | — | | | 7,595 | | | 15,190 | | | 30,380 | | | — | | | 176,508 | | | | 2/14/2023 | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,126 | | | 117,664 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William F. Treacy, Jr.
| | | — | | | 88,290 | | | 176,580 | | | 353,160 | | | — | | | — | | | — | | | — | | | — | | | | 2/14/2023 | | | — | | | — | | | — | | | 6,329 | | | 12,658 | | | 25,316 | | | — | | | 147,086 | | | | 2/14/2023 | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,439 | | | 98,061 | |
(1)
| (1) | These grants reflect awards issued under the Executive Annual Incentive Compensation Plan in 20152023 as discussed on pages 37-40.42-44. Amounts actually paid under this plan to NEOs for 20152023 are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
(2)
| (2) | These grants reflect LTIP awards of PSUs issuedgranted under the LTIP and the Company’s 2006 Omnibus2022 Equity and Incentive Compensation Plan as amended and restated, for 20152023 as discussed on pages 40-41.In the case of Mr. Sauder, the PSU award was forfeited in connection with his voluntary resignation from the Company in March 2016.44-47. |
(3)
| (3) | This column includes restricted stock awards under the LTIP and the Company’s 2006 Omnibus2022 Equity and Incentive Compensation Plan as amended and restated, for 20152023 as discussed on pages 40-41. In44-47. The fair market value for these shares on the casegrant date of Mr. Sauder,February 14, 2023 was $11.62, the restricted stock award was forfeited in connection with his voluntary resignation from the Company in March 2016.closing price per share on that day. |
| (4)
| Reflects grant date fair value of PSU and restricted stock awards determined in accordance with ASC 718. For a discussion of the valuation assumptions, see Note 15 of the Company’s Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.2023. |
Please see the “Compensation Discussion and Analysis” section of this Proxy Statement for a description of our plans and other compensatory arrangements with our NEOs that are reported in the Summary Compensation Table – 2023, 2022, and 2021 and Grants of Plan-Based Awards table.in 2023. TABLE OF CONTENTS
OUTSTANDING EQUITY AWARDS AT 20152023 FISCAL YEAR-END Our NEOs held no outstanding stock options at fiscal year-end. The following table sets forth information regarding outstanding stock options and unvested stock awards awarded toheld by the NEOs as of December 31, 2015:| | Option Awards | Stock Awards | | Name | Number of Securities
Underlying
Unexercised Options
(#) Exercisable | Option
Exercise
Price ($) | Option
Expiration
Date | Number of
Shares or
Units of Stock
That Have Not
Vested (#)(1) | Market Value of
Shares or Units
of Stock That
Have Not
Vested ($)(3) | Equity Incentive Plan
Awards: Number of
Unearned Shares, Units
or Other Rights That
Have Not Vested (#)(2) | Equity Incentive Plan
Awards: Market or Payout
Value of Unearned Shares,
Units or Other Rights That
Have Not Vested ($)(3) | | Robert P. Bauer | — | — | — | 31,503 | $430,331 | 24,608 | $336,145 | | David J. Russo | — | — | — | 5,645 | $ 77,111 | 7,406 | $101,166 | | John F. Kasel | — | — | — | 5,444 | $ 74,365 | 6,802 | $ 92,915 | | Patrick J. Guinee | — | — | — | 6,354 | $ 86,796 | 4,064 | $ 55,514 | | David R. Sauder | — | — | — | 2,790 | $ 38,111 | 4,290 | $ 58,601 |
| | John F. Kasel
| | | 98,263 | | | $2,160,803 | | | 162,419 | | | $3,571,594 | | | | William M. Thalman
| | | 42,054 | | | $924,767 | | | 55,158 | | | $1,212,924 | | | | Patrick J. Guinee
| | | 33,029 | | | $726,308 | | | 49,362 | | | $1,085,470 | | | | Brian H. Kelly
| | | 31,410 | | | $690,706 | | | 47,111 | | | $1,035,971 | | | | William F. Treacy, Jr.
| | | 24,429 | | | $537,194 | | | 36,362 | | | $799,600 | |
| (1)
| This column includes unvested restricted stock awards granted under the LTIP in 2012, 2013, 2014,2021, 2022, and 2015.2023, a new hire grant for Mr. Thalman in 2021, and a promotional grant for Mr. Kasel in 2021. The vesting schedule of thesethe restricted stock awards is described below: |
| | | | 20122021 Restricted Stock Awards:
| | | Robert P. Bauer | 02/01/12 | 4 year ratable vesting; vests 25% (16,500 shares) per year over 4 year period | 16,500 | Robert P. Bauer | 03/06/12 | 4 year cliff vesting; grant vests 03/06/16 | 3,931 | David J. Russo | 03/06/12 | 4 year cliff vesting; grant vests 03/06/16 | 1,000 | David J. Russo | 03/06/12 | 4 year cliff vesting; grant vests 03/06/16 | 1,258 | John F. Kasel
| 03/06/12 | 4 year cliff vesting; grant vests 03/06/16 | 1,000 | John F. Kasel2/26/2021 | 03/06/12 | 4 year cliff vesting; grant vests 03/06/16 | 1,258 | David R. Sauder | 03/06/12 | 4 year cliff vesting; grant vests 03/06/16 | 786 | 2013 Restricted Stock Awards: | | Robert P. Bauer | 02/27/13 | 4 year cliff vesting; grant vests 02/27/17 | 2,869 | David J. Russo | 02/27/13 | 4 year cliff vesting; grant vests 02/27/17 | 918 | John F. Kasel | 02/27/13 | 4 year cliff vesting; grant vests 02/27/17 | 918 | David R. Sauder | 02/27/13 | 4 year cliff vesting; grant vests 02/27/17 | 574 | 2014 Restricted Stock Awards: | | Robert P. Bauer | 02/26/14 | 4 year cliff vesting; grant vests 02/26/18 | 3,601 | David J. Russo | 02/26/14 | 4 year cliff vesting; grant vests 02/26/18 | 960 | John F. Kasel | 02/26/14 | 4 year cliff vesting; grant vests 02/26/18 | 960 | Patrick J. Guinee | 02/25/14 | 4 year cliff vesting; grant vests 02/25/18 | 5,000 | Patrick J. Guinee | 02/26/14 | 4 year cliff vesting; grant vests 02/26/18 | 600 | David R. Sauder | 02/16/14 | 4 year cliff vesting; grant vests 02/26/18 | 600 | 2015 Restricted Stock Awards: | Robert P. Bauer | 03/13/15 | 3 year ratable3-year graded vesting; vests 33 1/3% per year over 3 year3-year period | 4,602 | | 3,080 | | David J. Russo | 03/13/15John F. Kasel
| 3 year ratable | | 7/21/2021 | | | 3-year graded vesting; vests 33 1/3% per year over 3 year3-year period | 1,509 | | 1,013 | | John F. Kasel | 03/13/15William M. Thalman
| 3 year ratable | | 3/01/2021 | | | 3-year graded vesting; vests 33 1/3% per year over 3 year3-year period | 1,308 | | 1,925 | | Patrick J. Guinee | 03/13/15William M. Thalman
| 3 year ratable | | 3/01/2021 | | | 3-year graded vesting; vests 33 1/3% per year over 3 year3-year period | 754 | | 5,000 | | David R. Sauder | 03/13/15Patrick J. Guinee
| 3 year ratable | | 2/26/2021 | | | 3-year graded vesting; vests 33 1/3% per year over 33-year period | | | 1,925 | | | | Brian H. Kelly
| | | 2/26/2021 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | 830 | | 1,610 | | | | William F. Treacy, Jr.
| | | 2/26/2021 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 1,190 | | | | 2022 Restricted Stock Awards:
| | | | John F. Kasel
| | | 2/17/2022 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 9,208 | | | | William M. Thalman
| | | 2/17/2022 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 4,604 | | | | Patrick J. Guinee
| | | 2/17/2022 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 4,220 | | | | Brian H. Kelly
| | | 2/17/2022 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 3,837 | | | | William F. Treacy, Jr.
| | | 2/17/2022 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 2,609 | | | | 2023 Restricted Stock Awards:
| | | | John F. Kasel
| | | 2/14/2023 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 37,131 | | | | William M. Thalman
| | | 2/14/2023 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 11,814 | | | | Patrick J. Guinee
| | | 2/14/2023 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 10,126 | | | | Brian H. Kelly
| | | 2/14/2023 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 10,126 | | | | William F. Treacy, Jr.
| | | 2/14/2023 | | | 3-year graded vesting; vests 33 1/3% per year over 3-year period | | | 8,439 | |
This column also includes: The 2021-2023 PSU awards granted under the LTIP. These awards were subject to forfeiture after the performance period ended (December 31, 2023) and prior to the distribution date (February 13, 2024) when the underlying performance achievement was certified. The performance attainment for the Average Corporate ROIC metric was 0% and the attainment of the Cumulative Adjusted EBITDA metric was 73.4%, resulting in an overall payout of 21.2%. The first tranche of the 2022 PSUs earned for the first annual period (January 1, 2022 through December 31, 2022) of the 2022-2024 performance period upon certification of the performance results for such period on February 14, 2023. The performance attainment for the Corporate ROIC metric was 114.3% and the attainment for the Adjusted EBITDA metric was 73.5%, resulting in participants earning 93.9% of target for the first annual period. The earned PSUs remain subject to service conditions and will vest and settle in the first quarter of 2025 upon final certification of results at the end of the full three-year performance period. The second tranche of the 2022 PSUs earned for the second annual period (January 1, 2023 through December 31, 2023) of the 2022-2024 performance period upon certification of the performance results for such period on February 13, 2024. The performance attainment for the Average ROIC metric was 89.8% and the attainment for the Adjusted EBITDA metric was 105.3%, resulting in participants earning 96.3% of target for the second annual period. The earned PSUs remain subject to service conditions and will vest and settle in the first quarter of 2025 upon final certification of results at the end of the full three-year performance period. TABLE OF CONTENTS The first tranche of the 2023 PSUs earned for the first annual period (January 1, 2023 through December 31, 2023) of the 2023-2025 performance period upon certification of the performance results for such period on February 13, 2024. The performance attainment for the Economic Profit metric was 210.39% and the attainment for the Adjusted EBITDA metric was 122.10%, resulting in participants earning 187% of target for the first annual period. The earned PSUs remain subject to service conditions and will vest and settle in the first quarter of 2026 upon final certification of results at the end of the full three-year performance period. | | 2021-2023 Performance Share Unit Awards:
| | | | John F. Kasel
| | | 2/26/2021 | | | 3-year performance period ended 12/31/23; achievement certified and shares distributed 02/13/2024 | | | 3,803 | | | | William M. Thalman
| | | 2/26/2021 | | | 3-year performance period ended 12/31/23; achievement certified and shares distributed 02/13/2024 | | | 2,377 | | | | Patrick J. Guinee
| | | 2/26/2021 | | | 3-year performance period ended 12/31/23; achievement certified and shares distributed 02/13/2024 | | | 2,377 | | | | Brian H. Kelly
| | | 2/26/2021 | | | 3-year performance period ended 12/31/23; achievement certified and shares distributed 02/13/2024 | | | 1,988 | | | | William F. Treacy, Jr.
| | | 2/26/2021 | | | 3-year performance period ended 12/31/23; achievement certified and shares distributed 02/13/2024 | | | 1,469 | | | | 2022-2024 Performance Share Unit Awards (2022 and 2023 Tranches):
| | | | John F. Kasel
| | | 2/17/2022 | | | PSUs vest in February 2025 upon final certification of results. | | | 12,783 | | | | William M. Thalman
| | | 2/17/2022 | | | PSUs vest in February 2025 upon final certification of results. | | | 6,392 | | | | Patrick J. Guinee
| | | 2/17/2022 | | | PSUs vest in February 2025 upon final certification of results. | | | 5,859 | | | | Brian H. Kelly
| | | 2/17/2022 | | | PSUs vest in February 2025 upon final certification of results. | | | 5,327 | | | | William F. Treacy, Jr.
| | | 2/17/2022 | | | PSUs vest in February 2025 upon final certification of results. | | | 3,621 | | | | 2023-2025 Performance Share Unit Awards (2023 Tranche):
| | | | John F. Kasel
| | | 2/14/2023 | | | PSUs vest in February 2026 upon final certification of results | | | 31,245 | | | | William M. Thalman
| | | 2/14/2023 | | | PSUs vest in February 2026 upon final certification of results | | | 9,942 | | | | Patrick J. Guinee
| | | 2/14/2023 | | | PSUs vest in February 2026 upon final certification of results | | | 8,522 | | | | Brian H. Kelly
| | | 2/14/2023 | | | PSUs vest in February 2026 upon final certification of results | | | 8,522 | | | | William F. Treacy, Jr.
| | | 2/14/2023 | | | PSUs vest in February 2026 upon final certification of results | | | 7,101 | |
(2)
| For Restricted Stock, PSUs, Performance-Based Stock Awards, (“PBSAs”), and Special PSUs, values are based on the Company’s December 29, 2023 closing price of $21.99 per share. |
(3)
| This column reflects the number of unvested tranches of the 2022 and 2023 PSU awards, granted under the LTIP (for2021 PBSAs, and 2022 Special PSUs for which the performance conditions havehad not been satisfied)satisfied as of December 31, 2015 and includes awards granted in 2014 and 2015 as described below. The 2013-2015 PSUs were not earned and, as a result, were forfeited and canceled.2023. |
(3a)
| (2a) | The 2014-2016the 2022-2024 LTIP PSU awards were granted on 02/26/14.February 17, 2022. These PSUs may be earned based on annual achievement of the underlying performance metrics during each of the three years of the performance period, but such earned PSUs remain subject to service conditions and will vest and settle in the first quarter of 2025 upon final certification of results at the end of the full three-year performance period. PSUs earned for the first and second annal periods are included in footnote (1) above. The number of shares included for these awards assumes target performance for the 2024 tranche and includes the following: Mr. Kasel 13,407 shares; Mr. Thalman 6,703 shares; Mr. Guinee 6,144 shares, Mr. Kelly 5,586 shares; and Mr. Treacy 3,798 shares. The expected performance attainment for the Corporate ROIC portion of this grant as of December 31, 2023 is 89.8%, and the expected attainment of the Adjusted EBITDA portion of this grant is 105.3%. |
(3b)
| the 2023-2025 LTIP PSU awards were granted on February 14, 2023. These PSUs may be earned based on annual achievement of the underlying performance metrics during each of the three years of the performance period, but such earned PSUs remain subject to service conditions and will vest and settle in the first quarter of 2026 upon final certification of results at the end of the full three-year performance period. PSUs earned for the first annual period (2023) are included in footnote (1) above. The number of shares included for these awards assumes maximum performance for 2024 and 2025 tranches and includes the following: Mr. Kasel 77,974 shares; Mr. Thalman 24,811 shares; Mr. Guinee 21,266 shares, Mr. Kelly 21,266 shares; and Mr. Treacy 17,721 shares. The expected performance attainment for the Economic Profit Improvement portion of this grant as of December 31, 2023 is 210.39%, and the expected attainment of the Cumulative Adjusted EBITDA portion of this grant is 122.1%. |
(3c)
| the 2021 PBSAs were granted on March 1, 2021. Assuming the achievement of the underlying performance conditions, PSU awards will be settled and be paid in shares of the Company’s common stock inon the calendar year immediately following the endfifth anniversary of the performance period on a date determined in the Compensation Committee’s discretion, but in no event later than March 15, 2016.award. The number of shares included for these awards assumes target performance and includes as follows: Mr. Bauer 10,802 shares;the following: 3,333 shares each for Messrs. RussoKasel, Thalman, Guinee, Kelly, and Kasel 2,880 shares; and Messrs. Guinee and Sauder 1,800 shares.Treacy. The expected performance attainment for the ROIC portion of this grant as of December 31, 2015 is 0%, the expected attainment of the Earnings CAGR portion of this grant is 0% and, as of December 31, 2014, the Company had disclosed in its 2015 proxy statement that expected performance attainment for the ROIC portion of this grant was 63.2% and the expected attainment of the Earnings CAGR portion of this grant was 87.7%.80.8% |
(3d)
| (2b) | The 2015-2017 PSU awardsthe 2022-2025 Special PSUs were granted on 03/13/15. Assuming the achievement of the underlying performance conditions, PSU awards will be settled and paid in shares of the Company’s common stock in the calendar year immediately following the end of the performance period on a date determined in the Compensation Committee’s discretion, but in no event later than March 15, 2017.June 2, 2022. The number of shares included for these awards assumes target performance and includes as follows:the following: Mr. Bauer 13,806Kasel 67,705 shares; Mr. Russo 4,526 shares; Mr. Kasel 3,922Thalman 20,311 shares; Mr. Guinee 2,26418,619 shares; Mr. Kelly 16,926 shares; and Mr. Sauder 2,490Treacy 11,510 shares. The expected performance attainment for the ROICEBITDA Margin portion of this grant as of December 31, 2015 is 0%100%, and the expected attainment of the Earnings CAGRstock price portion of this grant is 175%47.5%. |
| (3) | Based on the Company’s December 31, 2015 closing share price of $13.66 per share. |
TABLE OF CONTENTS
20152023 OPTION EXERCISES AND STOCK VESTED There were no stock options exercised by our NEOs during 2023. The following table discloses the number of stock options that were exercised in 2015 by our NEOs and the number of stock awards held by our NEOs that vested during 2015:| | Option Awards | Stock Awards | | Name | Number of Shares
Acquired on Exercise
(#) | Value Realized
on Exercise ($) | Number of Shares
Acquired on Vesting
(#) | Value Realized
on Vesting ($)(1) | | Robert P. Bauer | — | — | 24,185 | 1,187,766 | | David J. Russo | — | — | 4,181 | 174,045 | | John F. Kasel | — | — | 4,181 | 174,045 | | Patrick J. Guinee | — | — | — | — | | David R. Sauder | — | — | 3,013 | 125,864 |
| | John F. Kasel
| | | 11,208 | | | $143,534 | | | | William M. Thalman
| | | 9,227 | | | $116,429 | | | | Patrick J. Guinee
| | | 5,479 | | | $70,167 | | | | Brian H. Kelly
| | | 4,972 | | | $63,675 | | | | William F. Treacy, Jr.
| | | 3,499 | | | $44,810 | |
| (1)
| With respect to restricted stock, Mr. BauerKasel received distributions of 4,604 shares on February 17, 2023 at $12.81 (closing price on that day) per share, 2,512 shares on February 20, 2023 at $12.81 (closing price on February 17, 2023, the last preceding business day) per share, 4,092 shares on February 26, 2023 at $12.80 (closing price on February 24, 2023, the last preceding business day) per share; Mr. Thalman received distributions of 2,302 shares on February 17, 2023 at $12.81 (closing price on that day) per share, 1,925 shares on February 26, 2023 at $12.80 (closing price on February 24, 2023, the last preceding business day) per share, 5,000 shares on March 1, 2023 at $12.46 (closing price on that day) per share; Mr. Guinee received a distribution of 16,5002,110 shares on February 1, 201517, 2023 at $49.01 (closing price on the next trading day of February 2, 2015) per share; Mr. Russo received distributions of 994 shares on March 15, 2015 at $44.90 (closing price on the next trading day of March 16, 2015) per share, and 727 shares on December 11, 2015 at $11.09$12.81 (closing price on that date)day) per share, 1,444 shares on February 20, 2023 at $12.81 (closing price on February 17, 2023, the last preceding business day) per share, 1,925 shares on February 26, 2023 at $12.80 (closing price on February 24, 2023, the last preceding business day) per share; Mr. KaselKelly received distributions of 9941,918 shares on March 15, 2015February 17, 2023 at $44.90 (closing price on the next trading day of March 16, 2015) per share, and 727 shares on December 11, 2015 at $11.09$12.81 (closing price on that date)day) per share; Mr. Sauder received distributions of 621 and 375share, 1,444 shares on March 15, 2015February 20, 2023 at $44.90$12.81 (closing price on February 17, 2023, the next trading day of March 16, 2015)last preceding business day) per share, and 4801,610 shares on December 11, 2015February 26, 2023 at $11.09$12.80 (closing price on February 24, 2023, the last preceding business day) per share; and Mr. Treacy received a distribution of 1,304 shares on February 17, 2023 at $12.81 (closing price on that date)day) per share. With respect to PSUs earned and distributed, Mr. Bauer received 7,685share, 1,005 shares on February 22, 201520, 2023 at $49.33$12.81 (closing price on February 17, 2023, the next trading day of February 23, 2015)last preceding business day) per share; each of Messrs. Russo and Kasel received 2,460share, 1,190 shares on February 22, 201526, 2023 at $49.33$12.80 (closing price on February 24, 2023, the next trading day of February 23, 2015) per share; and Mr. Sauder received 1,537 shares on February 22, 2015 at $49.33 (closing price on the next trading day of February 23, 2015)last preceding business day) per share. Please see the Outstanding Equity Awards at 2023 Fiscal Year End table for a discussion of the 2021-2023 PSU awards; those underlying performance conditions were certified by the Compensation Committee of the Board of Directors as having been achieved and the shares distributed in 2024. |
20152023 NON-QUALIFIED DEFERRED COMPENSATION
The following table discloses the contribution, earnings and balances under the Company’s defined contribution plan that provides for the deferred compensation on a non-qualified tax basis: | Name | Registrant Contributions
in 2015(1) | Aggregate Earnings
in 2015(2) | Aggregate Balance at
December 31, 2015(3) | | Robert P. Bauer | $45,911 | $1,906 | $166,193 | | David J. Russo | $11,663 | $1,453 | $126,670 | | John F. Kasel | $ 9,268 | $ 908 | $ 79,206 | | Patrick J. Guinee | $ 4,255 | $ 49 | $ 4,304 | | David R. Sauder | $ 4,394 | $ 319 | $ 27,851 |
| | John F. Kasel
| | | $55,068 | | | $10,808 | | | $248,337 | | | | William M. Thalman
| | | $15,065 | | | $1,064 | | | $24,438 | | | | Patrick J. Guinee
| | | $13,206 | | | $2,877 | | | $66,104 | | | | Brian H. Kelly
| | | $11,886 | | | $3,168 | | | $72,796 | | | | William F. Treacy, Jr.
| | | $11,153 | | | $1,130 | | | $25,956 | |
(1)
| (1) | Amounts represent 20152023 Company contributions to the SERP, which are included in the “All Other Compensation” column of the Summary Compensation table as described on page 49.51. |
| (2)
| Amounts represent interest earned in 2015.2023. In accordance with the SERP, the Company applies interest to the benefit amount using the calendar year’s rate of return of Fidelity’s Managed Income Portfolio as of December 31, 201529, 2023, or a one yearone-year annualized Treasury Bill interest rate as of the last Friday of the year, whichever is higher. For 2015,2023, these rates were 1.16%1.77% and .61%,4.55% respectively. The interest rate applied to the benefit in 20152023 was 1.16%4.55%. TheThese interest amounts are not included in the Summary Compensation Table – 2023, 2022 and 2021 as they are not considered to be “above market” or preferential. |
| (3)
| Amounts represent total SERP balance as of December 31, 2015. Company contributions made to the SERP in 2015 are disclosed in the Summary Compensation Table in the “All Other Compensation” column and related footnotes.2023. Amounts also include Company contributions to the SERP which were reported in the Summary Compensation Table for the prior fiscal years in which the executive was a NEO: $48,710 (2014), $56,411 (2013)$23,292 (2022) and $15,161 (2021) for Mr. Bauer; $11,087 (2014), $15,001 (2013)Kasel; $7,951 (2022) for Mr. Russo; $0 (2014)Thalman; $6,745 (2022) and $5,247 (2021) for Mr. Guinee; $7,058 (2014), $11,127 (2013)and $5,662 (2022) and $3,931 (2021)) for Mr. Kasel; and $3,604 (2014), $6,137 (2013) forKelly. Mr. Sauder.Treacy was not an NEO in 2022 or 2021. |
TABLE OF CONTENTS Description of Supplemental Executive Retirement Plan (“SERP”) The SERP is designed primarily for the purpose of providing benefits for a select group of management or highly compensated employees of the Company and its affiliates and is intended to qualify as a “top hat” plan under the Employee Retirement Income Security Act of 1974, as amended. The SERP is an unfunded, unsecured obligation of the Company, the benefits of which will be paid from its general assets. We established the SERP in order to attract and retain persons that we consider to be important to our success by providing benefits that are not restricted by the statutory limitations imposed on tax-qualified retirement plans by the federal income tax laws. Executives and other eligible individuals are participants in the SERP. The Compensation Committee has reserved the right to terminate a participant’s participation in the SERP at any time. Additionally, if a participant’s employment with the Company or its affiliates is terminated, or if the Compensation Committee, in its sole discretion, determines that a participant will no longer be a participant, the participant’s participation in the SERP (and such person’s right to accrue any benefits thereunder) will terminate. The benefit provided under the SERP equals the supplemental retirement contributions credited to the participant’s account under the SERP, if any, as adjusted for interest credits. For each year or portion of a year in which a participant participates in the SERP, the participant may be credited with a matching contribution and/or a profit sharing contribution. The matching contribution is the difference, if any, between (a) the matching contribution that would have been made under the 401(k) Plan if the participant had made elective contributions to such plan sufficient to generate the maximum rate of matching contribution available under such plan, without imposition of any statutory limits imposed on
tax-qualified retirement plans by the federal income tax laws and (b) the same amount with the imposition of such limits. The profit sharing contribution is the difference, if any, between (a) the profit sharing contribution that would have resulted if the applicable percentage rate had been applied on the participant’s compensation without regard to any statutory limits imposed on tax-qualified retirement plans by the federal income tax laws and (b) the actual profit sharing contribution allocated to the participant under the 401(k) Plan. The interest credit is applied by the Company each December 31 to the amounts credited to each participant’s bookkeeping account at the greater of (a) a one-year annualized treasury bill interest rate as reported for the last Friday of each year, or (b) calendar year’s rate of return of Fidelity’s Managed Income Portfolio as of December 31 of such year. The balance in a participant’s bookkeeping account generally becomes distributable, in the form of a lump sum, following the six-month anniversary of a participant’s separation from service due to involuntary termination by the Company (other than for cause) or retirement upon attainment of age 65 (or 55 with the Compensation Committee’s approval). Distributions may commence sooner for participants who are not considered “key employees” under the federal income tax laws and/or in the event of a participant’s death or separation from service due to disability, as defined in the SERP. No benefits are payable under the SERP if a participant terminates employment for any reason other than those specified above. If a participant is discharged by the Company for cause (i.e., conduct that is injurious to the Company, conduct which intentionally violates either the Company’s written policies or the reasonable directives of the Company’s CEO, or the commission of a felony), such participant’s rights to any benefits under the SERP will be forfeited. If the Compensation Committee determines that a participant is engaged in conduct detrimental to the interests of the Company or has used or is using trade secrets or other confidential information gained while employed with the Company, the Compensation Committee may, upon written notice to the participant, suspend or forfeit the participant’s right to any benefit under the SERP.
TABLE OF CONTENTS
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL As discussed on page 3138 and pages 42-43,page 47, the Company has established the Separation Plan in order to retain and motivate its executives to focus on the Company’s successful operation, regardless of any real or perceived threat from a change-in-control. In certain circumstances, thisthe Separation Plan provides for severance payments to our NEOs only upon a qualifying termination of employment in connection with a change-in-control. Certain of our stock and incentive plans and programs, and certain of our retirement plans also include change-in-control provisions or additional benefits upon termination. The following discussion explains the effects of termination, both within and outside of the context of a change-in-control, under the Separation Plan, our stock and incentive plans and programs, and our applicable retirement plans.The payments and benefits detailed below are in addition to (i) any payments and benefits under our plans or arrangements which are offered or provided generally to all salaried employees on a non-discriminatory basis, and (ii) any accumulated vested benefits for each NEO, including those set forth in the 20152023 Non-Qualified Deferred Compensation Table.
Termination of Employment - Outside of a Change-in-Control
Termination Provisions Under Our Equity and Annual Compensation Plans and Programs We provide equity-based and cash-based long-term incentive awards for executives. Please see the Compensation Discussion and Analysis for further details of these programs. Under the terms of the PSU Awards,in the event an awardee’s employment is terminated during a performance period by reason of death, disability, or retirement on or after the one-year anniversary of the commencement of the applicable performance period, the awardee will be entitled to receive a pro-rated payment for any PSU, if earned, based on the number of complete months served by the awardee during sucheach calendar year period of the three-year performance period.period (or the number of remaining months in the performance period, if the awardee commenced employment after the start of the applicable performance period). The Executive Annual Incentive Compensation PlanprovidesPlan provides that, in the event an awardee’sawardee terminates employment is terminated during a performance periodprior to the actual payment of an award, such awardee generally will not be entitled to any payment except in the event of termination by reason of death, disability, or retirement (as such terms are defined in the Executive Annual Incentive Compensation Plan), in which case the awardee will be entitled to receive a pro-rated bonus payment, if earned, based onaward reflecting the awardee’s service during the applicable performance period, served bysubject to the awardee during suchCommittee’s certification of the achievement of applicable performance period.goals, among other matters. Termination Provisions Under Our Supplemental Executive Retirement Plan (“SERP”)SERP We maintain various retirement programs, including the SERP. There are no additional benefits provided to our NEOs in the event of a termination of employment prior to a change-in-control. Additionally, an executive is not entitled to benefits under SERP if that executive is terminated for “cause” or if the executive terminates employment with the Company, other than pursuant to a retirement (including an early retirement approved by the Company), death, or disability.
Change-In-Control and/or Related Termination of Employment
Change-In-Control Provisions Under the Executive Annual Incentive Compensation Plan In the event of a change-in-control (as defined in the Annual Plan), an awardee will generally be entitled to receive a lump sum cash payment equal to athe pro-rated target bonus for the year in which the change-in-control occurs, which will be based on the portion of the year that the awardee was employed by the Company prior to the change-in-control (thechange-in-control. The Compensation Committee retainsmay, in its sole discretion, to determine if a participantthat an awardee is not entitled to such payment).payment.TABLE OF CONTENTS Change-In-Control Provisions Under the Key Employee Separation Plan
Cash severance pay.pay. If a NEO’s employment is terminated during the 90 day90-day period prior to, on, or within two years of a change-in-control, either by the executive for good reason or by the Company other than for cause, death, or disability, the executive will receive, in cash as severance pay (in addition to amounts earned by such NEO through the termination date), an amount equal to the product of: the NEO’s benefit factor (as noted on page 4248 of this Proxy Statement) times the sum of (x) and (y) below: | (x)
| the NEO’s base salary at the annual rate in effect on the termination date, plus |
| (y)
| his target annual bonus opportunity under the Executive Annual Incentive Compensation Plan for the year in which the termination date occurs, multiplied by the average percentage of target achievement of the past three incentives paid under the Executive Annual Incentive Compensation Plan or, if greater, the three full calendar years ended before the change-in-control.occurs. |
Continuation of medical and welfare benefits.benefits. The NEO will receive the same or equivalent medical, dental, and vision benefits (through the payment of the NEO’s COBRA premiums) received at the date of termination until the earlier to occur of: (i) the NEO reaching the age of 65, (ii) the date the NEO is provided similar benefits by another employer, or (iii) the period to which the NEO is entitled to coverage under COBRA (generally, 18 months).
Outplacement Services.Services. The Company will provide a payment of $15,000 to the NEO to cover outplacement assistant services.
Limitations :. To the extent that payments would constitute “excess parachute payments” within the meaning of Section 280G of the Code, such payments will be limited to the maximum amount permitted to be paid without causing any payments to be subject to the limitation of deductions under Section 280G of the Code.Under the Separation Plan, “Change-In-Control” and “Good Reason” are defined as follows:follows (which definition of “Change-in-Control” is substantially similar as such definition in the Predecessor Plan and the Executive Annual Incentive Compensation Plan): Change-In-Control - shall mean the first to occur, after the effective date of the Separation Plan, of any of the following: | (i)
| any merger, consolidation, or business combination in which the stockholdersshareholders of the L. B. Foster Company immediately prior to the merger, consolidation or business combination do not own at least a majority of the outstanding equity interests of the surviving parent entity; |
| (ii)
| the sale of all or substantially all of the L. B. Foster Company’s assets in a single transaction or a series of related transactions; |
| (iii)
| the acquisition of beneficial ownership or control (including, without limitation, power to vote) of a majority of the outstanding common stock of the L. B. Foster Company by any person or entity (including a “group” as defined by or under Section 13(d)(3) of the Securities Exchange Act, but excluding the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and any corporation owned, directly or indirectly, by the stockholdersshareholders of the Company in substantially the same proportions as their ownership of shares); or |
| (iv)
| a contested election of directors, as a result of which or in connection with which the persons who were directors of the L. B. Foster Company before such election or their nominees cease to constitute a majority of L. B. Foster’sthe Board. |
Upon the occurrence of a change-in-controlChange-in-Control as provided above, no subsequent event or condition shall constitute a change-in-controlChange-in-Control for purposes of the Separation Plan, with the result that there can be no more than one change-in-controlChange-in-Control under the Key Employee Separation Plan.
Good Reason - shall mean the Participant’s separation from service by the Participant as a result of the occurrence, without the Participant’s written consent, of one of the following events: | (i)
| A material reduction in the Participant’s annual base payBase Pay (as defined in the Separation Plan) (unless such reduction relates to an across-the-board reduction similarly affecting Participant and all or substantially all other executives of the Company and its Affiliates)affiliates); |
| (ii)
| The Company makes or causes to be made a material adverse change in the Participant’sparticipant’s position, authority, duties, or responsibilities which results in a significant diminution in the Participant’sparticipant’s position, authority, duties, or responsibilities, excluding any change made in connection with (A) a reassignment to a new job position, or (B) a termination of Participant’sparticipant’s employment with the Company for disability, cause, death, or temporarily as a result of Participant’sparticipant’s incapacity or other absence for an extended period; |
TABLE OF CONTENTS | (iii)
| A relocation of the Company’s principal place of business, or of Participant’sparticipant’s own office as assigned to Participantparticipant by the Company to a location that increases Participant’sparticipant’s normal work commute by more than 50 miles; or |
| (iv)
| Any other action by the Company that constitutes a material breach of the employment agreement, if any, under which Participant’sparticipant’s services are to be performed. |
In order for Participantparticipant to terminate for Good Reason, (A) the Company must be notified by Participantparticipant in writing within 90 days of the event constituting Good Reason, (B) the event must remain uncorrected by the Company for 30 days following such notice (the “Notice Period”), and (C) such termination must occur within 60 days after the expiration of the Notice Period. Change-In-Control and Termination Provisions Under Our Equity Compensation Programs
Restricted Stock Grants - Restricted Stock awards grantedgenerally will accelerate and vest only if both a Change-in-Control occurs prior to 2014the end of the full vesting period and (i) participant experiences an involuntary separation from service by the Company other than due to (A) cause, (B) death, or (C) disability, or the participant terminates for Good Reason within the 90-day period immediately preceding a Change-in-Control, or (ii) the acquiring entity in a Change-in-Control does not assume awards into a substantially comparable award. PSU Awards – PSU award agreements also include double trigger Change-in-Control provisions that were implemented in 2023 consistent with industry practice. In the event of a Change-in-Control with the respect to the 2021-2023 PSU awards, if the awards are assumed by the acquiror, the PSUs are deemed earned at target level and will become vested uponvest and be issued at the occurrence of a change-in-control, regardlesssecond trigger which is a qualifying termination of whether a participant hasemployment occurring before the end of the performance period. If the awards are not assumed by the acquiror, single trigger vesting occurs at the time of the Change-in-Control the PSUs are deemed earned at target and will be issued at the occurrence of the change-in-control. The awards have since been terminatedpaid out according to metric achievement as described in the Compensation Discussion & Analysis above and awards thereafter, will only vestare no longer outstanding. For PSUs awarded in 2022 and after, in the event of a change-in-control and an involuntary terminationChange-in-Control, if the awards are assumed by the Company without cause oracquiror, the PSUs for good reason bycompleted periods are earned at actual achievement, and PSUs for incomplete and future periods are deemed earned at target; all PSUs are issued at the participant.PSU Awards – In the event of a change-in-control, the Compensation Committee may, in its sole discretion, deem that awardees have earned their respective PSU awards at a target award level; provided that the awardee will only be entitled to a pro-rated award based on the ratioend of the numberperformance period. If awards are not assumed by acquiror, single trigger vesting occurs and the PSUs for completed periods are earned at actual, and PSUs for incomplete and future periods are deemed earned at target; all PSUs are issued at the end of complete months an awardeethe performance period unless otherwise permitted by IRC Section 409A. This construct is employed or serves duringalso applicable to the applicable performance period.
one-time special 2021 Performance Based Stock Awards and 2022 Strategic Transformation Awards. The following tables detail the incremental payments and benefits (above those already disclosed in this Proxy Statement) to which the NEOs would have been entitled under each termination of employment and change-in-control scenario, assuming the triggering event occurred on December 31, 2015:2023: | | Lump Sum Severance(1)(2)
| | | — | | | $987,188 | | | $987,188 | | | $987,188 | | | $3,375,000 | | | — | | | | Benefits Continuation(3)
| | | — | | | — | | | — | | | — | | | $27,526 | | | — | | | | Equity Awards (Unvested)
| | | — | | | $1,597,740(5) | | | $982,479(5) | | | $1,597,740(5) | | | $4,691,945(6) | | | — | | | | Outplacement Services
| | | — | | | — | | | — | | | — | | | $15,000 | | | — | | | | SERP(4)
| | | $248,337 | | | $248,337 | | | $248,337 | | | $248,337 | | | $248,337 | | | — | | | | Totals
| | | $248,337 | | | $2,833,265 | | | $2,218,004 | | | $2,833,265 | | | $8,357,808 | | | $0 | |
| Robert P. Bauer | | Non-Change-in-Control | | Change-in-Control | | NEO - Payments and Benefits | | By Company without Cause
or by
Executive for
Good
Reason(1) | Death | Disability | Retirement | | By Company
without Cause
or by
Executive for
Good Reason | Without
Termination of
Employment or
Termination for
any other Reason | | | | | | | | | | | | Lump Sum Severance(1)(2) | | | $334,453 | $334,453 | $334,453 | | $1,920,929 | | | Benefits Continuation(3) | | | | | | | $ 35,167 | | | Equity Awards (Unvested) | | | $ 45,838(5) | $ 45,838(5) | $ 45,838(5) | | $ 605,242(6) | $318,278(6) | | Outplacement Services | | | | | | | $ 15,000 | | | SERP(4) | | $166,193 | $166,193 | $166,193 | $166,193 | | $ 166,193 | | | | | | | | | | | | | Totals | | $166,193 | $546,484 | $546,484 | $546,484 | | $2,742,531 | $318,278 |
| David J. Russo | | Non-Change-in-Control | | Change-in-Control | | NEO - Payments and Benefits | | By Company
without Cause
or by
Executive for
Good Reason | Death | Disability | Retirement | | By Company
without Cause
or by
Executive for
Good Reason | Without
Termination of
Employment or
Termination for
any other Reason | | | | | | | | | | | | Lump Sum Severance(1)(2) | | | $126,180 | $126,180 | $126,180 | | $884,879 | | | Benefits Continuation(3) | | | | | | | $ 35,167 | | | Equity Awards (Unvested) | | | $ 15,027(5) | $ 15,027(5) | $ 15,027(5) | | $131,441(6) | $43,384(6) | | Outplacement Services | �� | | | | | | $ 15,000 | | | SERP(4) | | $126,670 | $126,670 | $126,670 | $126,670 | | $126,670 | | | | | | | | | | | | | Totals | | $126,670 | $267,877 | $267,877 | $267,877 | | $1,193,157 | $43,384 |
| John F. Kasel | | Non-Change-in-Control | | Change-in-Control | | NEO - Payments and Benefits | | By Company
without Cause
or by
Executive for
Good Reason | Death | Disability | Retirement | | By Company
without Cause
or by
Executive for
Good Reason | Without
Termination of
Employment or
Termination for
any other Reason | | | | | | | | | | | | Lump Sum Severance(1)(2) | | | $112,870 | $112,870 | $112,870 | | $774,469 | | | Benefits Continuation(3) | | | | | | | $ 36,084 | | | Equity Awards (Unvested) | | | $13,022(5) | $ 13,022(5) | $ 13,022(5) | | $123,195(6) | $43,384(6) | | Outplacement Services | | | | | | | $ 15,000 | | | SERP(4) | | $79,206 | $ 79,206 | $ 79,206 | $ 79,206 | | $ 79,206 | | | | | | | | | | | | | Totals | | $79,206 | $205,098 | $205,098 | $205,098 | | $1,027,954 | $43,384 |
| Patrick J. Guinee | | Non-Change-in-Control | | Change-in-Control | | NEO - Payments and Benefits | | By Company
without Cause
or by
Executive for
Good Reason | Death | Disability | Retirement | | By Company
without Cause
or by
Executive for
Good Reason | Without
Termination of
Employment or
Termination for
any other Reason | | | | | | | | | | | | Lump Sum Severance(1)(2) | | | $ 78,739 | $78,739 | $78,739 | | $343,410 | | | Benefits Continuation(3) | | | | | | | $ 36,338 | | | Equity Awards (Unvested) | | | $ 7,517(5) | $ 7,517(5) | $ 7,517(5) | | $115,609(6) | $0(6) | | Outplacement Services | | | | | | | $ 15,000 | | | SERP(4) | | $4,304 | $ 4,304 | $ 4,304 | $ 4,304 | | $ 4,304 | | | | | | | | | | | | | Totals | | $4,304 | $90,560 | $90,560 | $90,560 | | $514,661 | $0 |
| David R. Sauder(7) | | Non-Change-in-Control | | Change-in-Control | | NEO - Payments and Benefits | | By Company
without Cause
or by
Executive for
Good Reason | Death | Disability | Retirement | | By Company
without Cause
or by
Executive for
Good Reason | Without
Termination of
Employment or
Termination for
any other Reason | | | | | | | | | | | | Lump Sum Severance(1)(2) | | | $67,705 | $67,705 | $ 67,705 | | $320,347 | | | Benefits Continuation(3) | | | | | | | $ 36,338 | | | Equity Awards (Unvested) | | | $ 8,267(5) | $ 8,267(5) | $ 8,267(5) | | $ 68,983(6) | $18,578(6) | | Outplacement Services | | | | | | | $ 15,000 | | | SERP(4) | | $27,851 | $27,851 | $27,851 | $ 27,851 | | $ 27,851 | | | | | | | | | | | | | Totals | | $27,851 | $103,823 | $103,823 | $103,823 | | $468,519 | $18,578 |
TABLE OF CONTENTS | | Lump Sum Severance(1)(2)
| | | — | | | $366,524 | | | $366,524 | | | $366,524 | | | $1,272,348 | | | — | | | | Benefits Continuation(3)
| | | — | | | — | | | — | | | — | | | $35,505 | | | — | | | | Equity Awards (Unvested)
| | | — | | | $574,051(5) | | | $375,667(5) | | | $574,051(5) | | | $1,765,542(6) | | | — | | | | Outplacement Services
| | | — | | | — | | | — | | | — | | | $15,000 | | | — | | | | SERP(4)
| | | $24,438 | | | $24,438 | | | $24,438 | | | $24,438 | | | $24,438 | | | — | | | | Totals
| | | $24,438 | | | $965,013 | | | $766,629 | | | $965,013 | | | $3,112,833 | | | $0 | |
| | Lump Sum Severance(1)(2)
| | | — | | | $303,186 | | | $303,186 | | | $303,186 | | | $1,168,452 | | | — | | | | Benefits Continuation(3)
| | | — | | | — | | | — | | | — | | | $39,212 | | | — | | | | Equity Awards (Unvested)
| | | — | | | $515,808(5) | | | $332,308(5) | | | $515,508(5) | | | $1,479,003(6) | | | — | | | | Outplacement Services
| | | — | | | — | | | — | | | — | | | $15,000 | | | — | | | | SERP(4)
| | | $66,104 | | | $66,104 | | | $66,104 | | | $66,104 | | | $66,104 | | | — | | | | Totals
| | | $66,104 | | | $885,098 | | | $701,598 | | | $884,798 | | | $2,767,771 | | | $0 | |
| | Lump Sum Severance(1)(2)
| | | — | | | $291,966 | | | $291,966 | | | $291,966 | | | $1,125,208 | | | — | | | | Benefits Continuation(3)
| | | — | | | — | | | — | | | — | | | $39,212 | | | — | | | | Equity Awards (Unvested)
| | | — | | | $486,469(5) | | | $317,860(5) | | | $486,469(5) | | | $1,417,354(6) | | | — | | | | Outplacement Services
| | | — | | | — | | | — | | | — | | | $15,000 | | | — | | | | SERP(4)
| | | $72,796 | | | $72,796 | | | $72,796 | | | $72,796 | | | $72,796 | | | — | | | | Totals
| | | $72,796 | | | $851,231 | | | $682,622 | | | $851,231 | | | $2,669,570 | | | $0 | |
| | Lump Sum Severance(1)(2)
| | | — | | | $258,248 | | | $258,248 | | | $258,248 | | | $1,059,480 | | | — | | | | Benefits Continuation(3)
| | | — | | | — | | | — | | | — | | | $27,526 | | | — | | | | Equity Awards (Unvested)
| | | — | | | $363,691(5) | | | $242,721(5) | | | $363,691(5) | | | $1,080,800(6) | | | — | | | | Outplacement Services
| | | — | | | — | | | — | | | — | | | $15,000 | | | — | | | | SERP(4)
| | | $25,956 | | | $25,956 | | | $25,956 | | | $25,956 | | | $25,956 | | | — | | | | Totals
| | | $25,956 | | | $647,895 | | | $526,925 | | | $647,895 | | | $2,208,762 | | | $0 | |
| (1)
| Under the Separation Plan, the “Lump Sum Severance” forLump Severance value in the case of a qualifying change-in-control related termination of employment is generally the awardee’s benefit factor multiplied by the sumCompany without Cause or by the executive for Good Reason following a Change-in-Control, value is equal to the applicable Benefit Factor multiplied by: (i) Participant’s Base Pay in effect as of (i) base salarythe Date of Termination; plus (ii) the awardee’sParticipant’s target annual bonus opportunity under the L.B. Foster Company Executive Annual Incentive Compensation Plan for the year ofthat the termination multiplied by the average percentage of target achievement of the past three incentives paid under such Separation Plan. The Separation Plan provides that certain severance payments will be cut back to amounts that do not exceed each named executive officer’s respective safe harbor limit, as defined under the golden parachute rules of Internal Revenue Code Section 280G, however, the amounts reflected in the table show full payout value and assume no cut back.occurs |
TABLE OF CONTENTS | | The “Lump Sum Severance” amounts under the categories of death, disability and retirement are the payouts related to the Executive Annual Incentive Compensation Plan (reflecting actual 2015 performance).Plan. |
| (3)
| Under the Separation Plan, these benefits consist of continued medical, dental and vision benefits as described above. Benefits continuation is the cost of COBRA for the Company based on NEO’sthe NEO's benefit elections as of December 31, 2015.2023. |
| (4)
| Payout of the SERP other than for retirement assumes the following: the NEO was terminated due to involuntary termination by the Company (other than for cause), death or disability. A SERP payout would not be made to a NEO that terminated voluntarily for any reason other than a qualified retirement per definition in the Separation Plan. |
| (5)
| This includes PSU award values that would be calculated in the “Non-Change-in-Control” situations of death, disability, and retirement. These values represent the pro rata portion of the anticipated award earned at the end of the performance period assumingcompared to target performance, based on the number of complete months served by the awardee during the entire performance period. |
(6)
| (6) | Assumes full accelerated vestingThis disclosure assumes that, in the event of all unvesteda change in control, the acquiror will assume and replace outstanding equity awards. In the case of a double-trigger event (change in control and qualifying termination), the PSUs for the PBSAs and Special PSUs that were awarded in both 2021 (2021-2026 Performance Based Stock Retention Program) and 2022 (2022-2025 Strategic Transformation Plan) would be earned and vest at target values; the 2022-2024 PSUs would be earned based on actual performance for the 2022 and 2023 tranches and target for the 2024 tranche; and the 2023-2025 PSUs would be earned based on actual performance for the 2023 tranche and at target for the 2024 and 2025 tranches. Outstanding restricted stock usingawards would also vest. All values use the closing stock price per shareof $21.99 for L.B. Foster Company on December 31, 201529, 2023. |
TABLE OF CONTENTS RATIO OF ANNUAL COMPENSATION FOR THE CEO TO OUR MEDIAN EMPLOYEE We are required to disclose the ratio of compensation of our principal executive officer (CEO Mr. Kasel), to our median employee’s annual total compensation. The values are as follows for 2023: Mr. Kasel’s Total Annual Compensation: | | | $2,857,653 | Median Employee’s Total Annual Compensation: | | | $75,244 | Ratio of $13.66; assumes PSUs vesting at targetMedian Employee’s Compensation to Mr. Kasel’s Compensation: | | | 38:1 |
In accordance with the SEC rules, the Company undertook the process of identifying a median employee for the purposes of our 2023 pay ratio disclosure by using our employee population as of December 31, 2023 of 867 employees that reflected a full fiscal and calendar year of compensation, and analyzing 2023 earnings using tax forms W2 (U.S.), T4 (Canada), and P60 (U.K.) for all employees, excluding our CEO. Once we identified our median employee for purposes of this pay ratio disclosure, that employee’s total compensation was calculated using the same methodology required for disclosure of compensation to the CEO in 2023, under the requirements established by the SEC, for the Summary Compensation Table. The exchange rates used to convert both Canadian Dollars and British Pounds Sterling to U.S. Dollars were 0.75 and 1.27, respectively. The pay ratio reported above is calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. In determining our median employee, we did not use any of the exemptions permitted under SEC rules. Similarly, except as described above, we did not rely on any material assumptions, adjustments (e.g., cost-of-living adjustments), or estimates (e.g., statistical sampling) to identify our median employee or to determine annual total compensation or any elements of annual total compensation for our median employee or the CEO. TABLE OF CONTENTS PAY VERSUS PERFORMANCE (PVP) The following table and related disclosures provide information about the relationship between compensation actually paid to our Named Executive Officers (“NEOs”) and certain financial performance metrics of the Company pursuant to an SEC-prescribed methodology, which is different from the SEC-prescribed methodology required for the Summary Compensation Table and related disclosures. | | 2023 | | | — | | | $2,857,653 | | | — | | | $5,154,361 | | | $1,030,187 | | | $1,694,018 | | | $146.11 | | | $1,299 | | | | 2022 | | | — | | | $2,735,021 | | | — | | | $1,761,087 | | | $1,056,867 | | | $696,180 | | | $64.32 | | | ($45,677) | | | | 2021 | | | $2,961,796(4) | | | $1,559,989(4) | | | $1,654,005 | | | $1,075,030 | | | $749,589(4) | | | $527,394 | | | $91.36 | | | $3,471 | |
Note: Totals may not foot due to rounding. (1)
| Robert P. Bauer served as our principal executive officer (“PEO”) from January 1, 2021 to July 21, 2021 (“Former PEO”) and pro-rated for months elapsedJohn F. Kasel served as ofour PEO from July 21, 2021 to December 31, 20152021 and for the thirty-six month performance period, usingfull years of 2022 and 2023. The Non-PEO NEOs (the “Non-PEO NEOs”) reflected in columns (d) and (e) include the closing price per share on December 31, 2015 of $13.66.following individuals: James Kempton (2021), Patrick J. Guinee (2021, 2022 and 2023), Brian H. Kelly (2021, 2022 and 2023), Gregory W. Lippard (2021 and 2022), William M. Thalman (2021, 2022 and 2023), and William F. Treacy, Jr. (2023). |
(2)
| (7)Certain values in the table above and footnotes below differ as compared to our 2023 proxy statement due to minor miscalculations in our disclosure last year. |
(3)
| Mr. Sauder voluntarily terminated employmentThe following amounts were deducted from / added to Summary Compensation Table (“SCT”) total compensation in March 2016,accordance with the SEC-mandated adjustments to calculate compensation actually paid (“CAP”) to our PEO and Former PEO, and average CAP to our Non-PEO NEOs for 2021, 2022, and 2023. |
PEO SCT Total to CAP Reconciliation | | SCT Total | | | $1,559,989 | | | $2,735,021 | | | $2,857,653 | | | | - SCT “Stock Awards” column value | | | ($667,892) | | | ($1,484,515) | | | ($1,078,650) | | | | - SCT “Option Awards” column value | | | $0 | | | $0 | | | $0 | | | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Equity Awards Granted in Fiscal Year | | | $480,235 | | | $837,653 | | | $2,041,266 | | | | +/- Change in Fair Value of Equity Awards Granted in Prior Fiscal Years That Are Outstanding and Unvested as of the Covered Year-End | | | ($319,119) | | | ($341,262) | | | $1,297,912 | | | | + Fair Value at Vesting of Equity Awards Granted in Fiscal Year That Vested During Fiscal Year | | | $0 | | | $0 | | | $0 | | | | +/- Change in Fair Value as of Vesting Date of Equity Awards Granted in Prior Fiscal Years That Vested During Fiscal Year | | | $21,818 | | | $14,190 | | | $36,181 | | | | - Fair Value as of Prior Fiscal Year-End of Equity Awards Granted in Prior Fiscal Years That Failed to Vest During Fiscal Year | | | $0 | | | $0 | | | $0 | | | | + Dollar Value of Dividends/Earnings Paid Prior to the Vesting Date on Equity Awards in the Covered Year | | | $0 | | | $0 | | | $0 | | | | + Excess Fair Value for Equity Award Modifications | | | $0 | | | $0 | | | $0 | | | | Compensation Actually Paid | | | $1,075,030 | | | $1,761,087 | | | $5,154,361 | |
TABLE OF CONTENTS Former PEO SCT Total to CAP Reconciliation | | SCT Total | | | $2,961,796 | | | — | | | — | | | | - SCT “Stock Awards” column value | | | ($929,250) | | | — | | | — | | | | - SCT “Option Awards” column value | | | $0 | | | — | | | — | | | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Equity Awards Granted in Fiscal Year | | | $144,801 | | | — | | | — | | | | +/- Change in Fair Value of Equity Awards Granted in Prior Fiscal Years That Are Outstanding and Unvested as of the Covered Year-End | | | ($621,877) | | | — | | | — | | | | + Fair Value at Vesting of Equity Awards Granted in Fiscal Year That Vested During Fiscal Year | | | $259,311 | | | — | | | — | | | | +/- Change in Fair Value as of Vesting Date of Equity Awards Granted in Prior Fiscal Years That Vested During Fiscal Year | | | $22,663 | | | — | | | — | | | | - Fair Value as of Prior Fiscal Year-End of Equity Awards Granted in Prior Fiscal Years That Failed to Vest During Fiscal Year | | | ($183,439) | | | — | | | — | | | | + Dollar Value of Dividends/Earnings Paid Prior to the Vesting Date on Equity Awards in the Covered Year | | | $0 | | | — | | | — | | | | + Excess Fair Value for Equity Award Modifications | | | $0 | | | — | | | — | | | | Compensation Actually Paid | | | $1,654,005 | | | — | | | — | |
Non-PEO NEO Average SCT Total to Average CAP Reconciliation | | SCT Total | | | $749,589 | | | $1,056,867 | | | $1,030,187 | | | | - SCT “Stock Awards” column value | | | ($323,929) | | | ($486,997) | | | ($294,175) | | | | - SCT “Option Awards” column value | | | $0 | | | $0 | | | $0 | | | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Equity Awards Granted in Fiscal Year | | | $215,558 | | | $281,294 | | | $556,704 | | | | +/- Change in Fair Value of Equity Awards Granted in Prior Fiscal Years That Are Outstanding and Unvested as of the Covered Year-End | | | ($110,241) | | | ($162,533) | | | $386,518 | | | | + Fair Value at Vesting of Equity Awards Granted in Fiscal Year That Vested During Fiscal Year | | | $0 | | | $0 | | | $0 | | | | +/- Change in Fair Value as of Vesting Date of Equity Awards Granted in Prior Fiscal Years That Vested During Fiscal Year | | | $8,983 | | | $7,549 | | | $14,784 | | | | - Fair Value as of Prior Fiscal Year-End of Equity Awards Granted in Prior Fiscal Years That Failed to Vest During Fiscal Year | | | ($12,567) | | | $0 | | | $0 | | | | + Dollar Value of Dividends/Earnings Paid Prior to the Vesting Date on Equity Awards in the Covered Year | | | $0 | | | $0 | | | $0 | | | | + Excess Fair Value for Equity Award Modifications | | | $0 | | | $0 | | | $0 | | | | Compensation Actually Paid | | | $527,394 | | | $696,180 | | | $1,694,018 | |
(4)
| Summary Compensation Table totals differ as compared to the values included in our 2022 Proxy Statement, as the reported 2021 Stock Award amounts have been adjusted to reflect a result allcorrected valuation of the amounts reflected2021-2026 Performance Based Stock Award Retention Program. The value for each of the Former PEO, the PEO and each Non-PEO was overstated in this table are hypothetical.our 2022 Proxy Statement by $10,916. |
TABLE OF CONTENTS Pay Versus Performance Relationship Descriptions CHARTS OF CAP VERSUS PERFORMANCE METRICS The chart below illustrates the relationship between the PEO, Former PEO and Non-PEO NEOs’ CAP amounts and the Company’s TSR during the period 2021-2023.
The chart below illustrates the relationship between the PEO, Former PEO and Non-PEO NEO’s CAP amounts and the Company’s Net Income during the period 2021-2023. TABLE OF CONTENTS Supplemental Disclosure The charts below illustrate the relationship between the current PEO and other NEOs’ SCT Total Compensation, total shareholder return, and CAP amounts during the period 2021-2023. This relationship reflects the impact of changes in the Company’s stock price performance on the amount of Compensation Actually Paid in each year in relation to the amount reported in the Summary Compensation Table for the current PEO and other NEOs. TABLE OF CONTENTS The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this Report by reference therein. The Audit Committee of the Board of Directors is composed of independent directors and oversees the Company’s financial reporting process on behalf of the Board. The Audit Committee is responsible for the appointment, compensation, and retention of the Corporation’s independent registered public accountants. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements of the Company for the year ended December 31, 2015.2023. The Audit Committee’s Charter is available on the Company’s website (www.lbfoster.com) (www.lbfoster.com). The Audit Committee held seven (two of which were telephonic)eight meetings during the 20152023 fiscal year. Management is responsible for the Company’s internal controls and for the financial reporting process. With respect to 2015,2023, management advised the Audit Committee that all annual and quarterly financial statements reviewed by the Audit Committee had been prepared in accordance with generally accepted accounting principles. The Audit Committee met and held discussions with Ernst & Young LLP (“Ernst & Young”) who are responsible for performing an independent audit of the Company’s financial statements in accordance with generally accepted auditing standards and for issuing a report thereon, regarding the audited financial statements, including a discussion of the quality, not just the acceptability, of the Company’s accounting principles and Ernst & Young’s judgment regarding these matters. The Audit Committee has discussed with the independent registered public accountants the matters required to be discussed relating toby the conductapplicable requirements of the audit under the Auditing Standard No. 16, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board (“PCAOB”) . and the SEC. The Audit Committee has received the written disclosures and the letter from Ernst & Young required by applicable requirements of the PCAOB regarding the independent registered public accountant’s communications with the Audit Committee concerning independence and has discussed with Ernst & Young its independence. The Audit Committee concluded that Ernst & Young’s independence had not been impaired. The Audit Committee discussed with the Company’s internal auditor and independent registered public accountants the overall scope and plans for their respective audits. The Audit Committee meets with the independent registered public accountants, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee discussed the results of Ernst & Young’s quarterly review procedures with the Company’s CEO, CFO, and Controller and with Ernst & Young prior to the Company’s release of quarterly financial information. Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2015,2023, for filing with the SEC. | | | AUDIT COMMITTEE | | | | Bruce E. Thompson, Chair | | | | Diane B. Owen Chair | | Dirk Jungé | | John E. Kunz | | William H. Rackoff | | David J. Meyer |
TABLE OF CONTENTS Management is not aware, at this time, of any other matters to be presented at the meeting.Annual Meeting. If, however, any other matters should come before the meeting or any postponement or adjournment thereof, the proxies will be voted at the discretion of the proxy holders. Representatives of Ernst & Young are expected to be in attendance at the meeting to respond to appropriate questions from shareholders and will have an opportunity to make a statement if they so desire.
If you wish to present a proposal for possible inclusion in our Proxy Statement for the 20172025 Annual Meeting of Shareholders pursuant to the SEC’s rules, you must send the proposal to: Patrick J. Guinee, Senior Vice President, General Counsel, &and Corporate Secretary, L. B.L.B. Foster Company, 415 Holiday Drive, Suite 100, Pittsburgh, PA 15220. ShareholderUnder SEC rules, shareholder proposals submitted for inclusion in our Proxy Statement for the Annual Meeting of Shareholders to be held in 20172025 pursuant to Rule 14a-8 of the Exchange Act must conform to the requirements of Rule 14a-8 of the Exchange Act and be received by the Corporate Secretary of the Company on or before December 14, 2016.13, 2024 Shareholders who wish to bring business before or nominate a person for election as a director at the Company’s 20162025 Annual Meeting of Shareholders (other than through a shareholder proposal pursuant to Rule 14a-8 of the SEC’s rules)Exchange Act) must notify the Corporate Secretary of the Company in writing and provide the information required by the provision of our By-LawsBylaws dealing with advanced notice director nominations and shareholder proposals. See the “Corporate Governance—Board Committees—Nomination and Governance Committee” section of this Proxy Statement for additional details. The notice must be delivered to or mailed and received by the Corporate Secretary noat the principal executive offices of the Company not later than the close of business on the 90 th day prior to (February 24, 2017)22, 2025) nor earlier than the close of business on the 120 th day (January 23, 2025) prior to (January 25, 2017) the date of the first anniversary of the Annual Meeting;preceding year’s annual meeting; provided, however, that in the event that the date of the 20172025 Annual Shareholders’ Meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder, to be timely, must be delivered not earlier than the close of business on the 120 th day prior to the 20172025 Annual Shareholder Meeting and not later than the close of business on the later of (i) the 90 th day prior to the 20172025 Annual Shareholder Meeting or (ii) the 7 th day following the day on which public announcement of the date of such meeting is first made. A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 20152023 is available to shareholders. A shareholder may obtain a copy of such Annual Report, including the financial statements and the financial statement schedules, free of charge on our website atwww.lbfoster.com or by writing to the Investor RelationsDepartment, L. B.L.B. Foster Company, 415 Holiday Drive, Suite 100, Pittsburgh, PA 15220 (a copy of any exhibits thereto will be provided upon payment of a reasonable charge limited to our cost of providing suchexhibits).The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address with the same last name by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” is intended to provide extra convenience for shareholders and cost savings for companies. SomeThe Company and some brokers household proxy materials, delivering a single proxy statement to multiple shareholders sharing an address unless contrary instructions have been received from the affectedsuch shareholders. Once shareholders have received notice from their broker that materials will be sent in the householding manner to the shareholder’s address, householding will continue until otherwise notified or until the shareholder revokes such consent. If, at any time, shareholders wish to begin, or no longer wish to participate in householding, and would prefer to receive a separate Proxy Statement, they should notify their broker if shares are held in a brokerage account. UponShareholders of record may request to begin or discontinue householding in the future by contacting our transfer agent, Broadridge, at 1-866-540-7095, by mail to Broadridge; ATTN: Householding Department; 51 Mercedes Way, Edgewood, NY 11717. Promptly upon written or oral request, a separate copy of the Annual Report, or Proxy Statement, or Notice of Internet Availability of Proxy Materials, as applicable, will be sent to a shareholder at a shared address to which a single copy of the documents was delivered. Any such request should be addressed to: Investor Relations Dept., L. B.L.B. Foster Company, 415 Holiday Drive, Suite 100, Pittsburgh, PA 15220, or may be made by calling the Company at (412) 928-3417. April 13, 201612, 2024 TABLE OF CONTENTS APPENDIX A L. B. FOSTER COMPANY
2006 OMNIBUS INCENTIVE PLAN
2022 Equity and Incentive Compensation Plan
As Amended and Restated on May 25, 2016
TABLE OF CONTENTS ARTICLE I
PURPOSE, EFFECTIVE DATE
L.B. FOSTER COMPANY
2022 EQUITY AND AVAILABLE SHARES1.1INCENTIVE COMPENSATION PLAN
AS AMENDED AND RESTATED MAY 23, 2024 1. Purpose. Purpose. The purpose of this Plan is intended to advance the interests of L. B. Foster Companypermit award grants to non-employee Directors, officers and its shareholders by providing equity and financial incentives for Key Personnel and Directorsother employees of the Company and any Subsidiary, thereby promoting the Company’s long-term growthits Subsidiaries, and financial success by (i) attracting and retaining personnel and Directors of outstanding ability, (ii) strengthening the Company’s capabilitycertain Consultants to develop, maintain and direct a competent management team, (iii) motivating Officers to achieve long-range performance goals and objectives, (iv) providing incentive compensation opportunities competitive with those of other companies, and (v) providing incentives that align with the interests of the shareholders of the Company.1.2 Effective Date and Expiration of Plan. The Board originally adopted the 2006 Omnibus Incentive Plan effective as of March 31, 2006 (“Effective Date”), and the Plan was amended and restated upon approval by the shareholders of the Company on May 18, 2011 and May 25, 2016. Unless terminated by the Board pursuant to Section 10.3, the Plan shall terminate on May 25, 2026. No Award shall be made pursuant to the Plan after its termination date, but Awards made prior to the termination date may extend beyond that date.
1.3 Shares Available Under the Plan.
(a) Stock to be issued under the Plan may be authorized but unissued shares of Stock or previously-issued shares of Stock which have been reacquired by the Company and are held in its treasury.
(b) SubjectSubsidiaries, and to adjustment under Section 10.6, no more than 1,270,000 shares of Stock shall be issuable under the Plan. The aggregate number of shares of Stock that may be issued under the Plan through Incentive Stock Options shall be 1,270,000 shares of Stock (subjectprovide to adjustment pursuant to Section 10.6).
(c) Subject to adjustment under Section 10.6, no Participant may be granted under this Plan (i) Options such persons incentives and rewards for service and/or Stock Appreciation Rights for more than 300,000 shares of Stock in any one fiscal year of the Company, (ii) Performance Grants (payable in Stock) and intended to be performance-based compensation under Section 162(m) of the Code for more than 150,000 shares of Stock (measured on a target award level on the grant date) in any one fiscal year of the Company and (iii) Performance Grants (payable in cash) and intended to be performance-based compensation under Section 162(m) of the Code for more than $5,000,000 (measured on a target award level on the grant date) in any one fiscal year of the Company. The foregoing limitations shall be subject to adjustmentperformance.
2. Definitions. Except as otherwise provided in Section 10.6, but only to the extent that any such adjustment will not affect the status of (i) any Award intended to qualify as performance-basedcompensation under Section 162(m) or (ii) any Award intended to comply with Section 409A or an exception thereto.
(d) Stock covered by an Award granted under this Plan shall not be counted as used unless and until it is actually issued and delivered to a Participant. If (i) an Award lapses, expires, terminates, or is cancelled without the shares of Stock underlying the Award being issued (or any portion thereof), (ii) it is determined during or at the conclusion of the term of an Award that all or some portion of the shares of Stock underlying the Award may not be issued on the basis that the conditions for such issuance were or will not be satisfied, (iii) any Award (or portion thereof) is settled for cash, (iv) shares of Stock to be issued pursuant to an Award are Forfeited, or (v) shares of Stock are issued pursuant to any Award and the Company subsequently reacquires such shares pursuant to rights reserved upon the issuance of such shares, then, in all such cases, such shares of Stock shall be re-credited to the Plan’s reserve (in the same amount as such shares depleted the reserve); provided, however, that shares of Stock re-credited pursuant to the Plan pursuant to clause (v) may not increase the number of shares which may be issued pursuant to Incentive Stock Options.
(e) Notwithstanding the foregoing, in no event shallherein, the following shares of Stock be re-credited toare the Plan’s reserve: shares of Stock (i) delivered in payment of the exercise price of an Option, base price of a SAR or other exercise price of an Award; (ii) delivered to or withheld by the Company to satisfy Federal, state or local tax withholding obligations; (iii) purchased by the Company using proceeds from Option exercises; and (iv) not issued or delivered as a result of a net settlement of an outstanding Option or SAR.
(f) If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for shares of Stock based on Fair Market Value, such shares of Stock shall not count against the aggregate plan limit described in Section 1.3(b).
ARTICLE II
DEFINITIONS
Asdefinitions used in this Plan and exceptPlan:
(a) “Affiliate” means a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified. (b) “Appreciation Right” means a right granted pursuant to Section 5 of this Plan. (c) “Base Price” means the price to be used as otherwise specifically provided in an Award Agreement, the following terms shall havebasis for determining the meanings set forth below:2.1 “10% Shareholder” means an Employee who, as ofSpread upon the date on which an Incentive Stock Option is granted to such Employee, owns more than ten percent (10%) of the total combined voting power of all classes of Stock then issued by the Company or a Subsidiary.
2.2 “Award” means, individually or collectively, a grantexercise of an Option, Stock Appreciation Right, Performance Grant, Dividend or Dividend Equivalent Rights, Stock Award, Restricted Stock or Restricted Stock Unit Award, Cash Award, or Other Award that is valued in whole or in part by reference to, or otherwise based on, the Stock,
performance goals or other factors, on a standalone, combination or tandem basis, as described in or granted under this Plan.
2.3 “Award Agreement” means the agreement or other writing (which may be framed as a plan, program or notification, and which may be in electronic format) that sets forth the terms and conditions of each Award under the Plan, including any amendment or modification thereof.
2.4 “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the Exchange Act.
2.5 “Board”Right.
(d) “Board” means the Board of Directors of the Company. (e) “Cash Incentive Award” means a cash award granted pursuant to Section 82.6 “Cash Award” of this Plan.
(f) “Change in Control” has the meaning specifiedset forth in Section 8.1.122.7 “Change in Control” shall mean:
(a) of this Plan.
(g) “Clawback Policy” means the consummation of any merger, consolidation or business combination in which the shareholders of theL.B. Foster Company immediately priorAmended and Restated Executive Recoupment Policy (as may be amended and restated from time to the merger, consolidation or business combination do not own at least a majority of the outstanding equity interests of the surviving parent entity;(b) the sale of all or substantially all of the Company’s assets in a single transaction or a series of related transactions;
(c) the acquisition of beneficial ownership or control, directly or indirectly, through one transaction or a series of transactions (including, without limitation, power to vote) of a majority of the outstanding Stock of the Company by any “person” as such term is defined under sections 13(d) and 14(d) of the Exchange Act (but excluding the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of Stock); or
(d) a contested election of Directors, including with respect to Directors elected under any proxy access procedures included in the Company’s organizational documents, as a result of which or in connection with which the persons who were Directors of the Company before such election or nominees approved by the Board for election to the Board cease to constitute a majority of the Board.
2.8 “Code”time).
(h) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.2.9 “Committee”thereunder, as such law and regulations may be amended from time to time.
(i) “Committee” means the Compensation Committee of the Company,Board (or its successor(s)), or suchany other committee of the Board designated by the Board to administer this Plan pursuant to Section 10 of this Plan. TheEach member of the Committee shall be appointed byqualify as (i) an “independent” director under the Board and shall consist of two or more membersapplicable definition of the Board, each of whom shall be (i)Nasdaq Stock Market or other securities exchange upon which the Common Stock is listed and (ii) a “non-employee director” within the meaning of Rule 16b-3 underof the Exchange Act and (ii) an “outside director” as defined under §1.162-27(e)(3)(i)Act. (j) “Common Stock” means the common stock, par value $0.01 per share, of the Code Company or any successor regulation. Ifsecurity into which such common stock may be changed by reason of any transaction or event of the Board has not appointed a Committee, “Committee” shall mean the Board.
2.10type referred to in “Company”Section 11 of this Plan.
(k) “Company” means L. B.L.B. Foster Company, a Pennsylvania companycorporation, and its successors and assigns.2.11 “Director”successors.
(l) “Consultant” means a director onnatural person that provides bona fide services to the BoardCompany and/or its Affiliates; provided, however, that a Consultant shall not include a person whose services are in connection with the offer or sale of the Company.Company’s securities in a capital-raising transaction including, directly or indirectly, the promotion or maintenance of a market for the Company’s securities. (m) “Date of Grant” means the date provided for by the Committee on which a grant of Option Rights, Appreciation Rights, Performance Shares, Performance Units, Cash Incentive Awards, or other awards contemplated by Section 92.12 of this Plan, or a grant or sale of Restricted Stock, Restricted Stock Units, or other awards contemplated by “Disability”Section 9 of this Plan, will become effective (which date will not be earlier than the date on which the Committee takes action with respect thereto).
(n) “Director” means a member of the Board. (o) “Disability” means permanently and totally disabled as defined in Section 22(e)(3) of the Code (or any successor section); provided, however, if an Awardaward is subject to Section 409A of the Code (and not excepted therefrom) and a Disability is a distribution event under Section 409A for purposes of the Award,award, the foregoing definition of Disability shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event qualifies as a Disability within the meaning of Treas. Reg. § 1.409A-3(i)Treasury Regulation §1.409A-3(i)(4)(i). 2.13 “Dividend” or “Dividend Equivalent Rights”
(p) “Effective Date” means June 2, 2022, the right to receive a payment, in cash or property, equal todate this Plan was originally approved by the cash dividendsShareholders. TABLE OF CONTENTS (q) “Evidence of Award” means an agreement, certificate, resolution or other distributions paid with respecttype or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of an award granted under this Plan. An Evidence of Award may be in an electronic medium, may be limited to notation on the Stock.2.14 “Effective Date” meansbooks and records of the date on whichCompany and, unless otherwise determined by the Plan is effective as provided in Section 1.2.
2.15 “Employee” means an employeeCommittee, need not be signed by a representative of the Company or any Subsidiary, including an employee who is an Officer or a Director, but excluding any person who is classified by the Company or a Subsidiary as a “contractor” or “consultant.” Directors who are not otherwise employed by the Company or any Subsidiary shall not be considered Employees under the Plan.
2.16 “ExchangeParticipant.
(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder, as amended.2.17 “Fair Market Value”such law, rules and regulations may be amended from time to time.
(s) “Incentive Stock Option” means (i) with respectan Option Right that is intended to qualify as an “incentive stock option” under Section 422 of the Stock,Code or any successor provision. (t) “Market Value per Share” means, as of any particular date, (a)the closing price of a share of Common Stock as reported for that date on the Nasdaq Stock Market or, if the Common Stock is not then listed on the Nasdaq Stock Market, on any other national securities exchange on which the Common Stock is listed, on any established stock exchange, system or market that reports the closing sale price of the Stock, the closing sale price of the Stock as quoted on such exchange, system or market on such date or if the Stock is not tradedthere are no sales on such date, on the closest preceding date ontrading day before which the Stock was traded or (b) if the closinga sale priceoccurred. If there is not quoted on such exchange, system or market, the average of the closing bid and ask prices of the Stock on such date, or (c) in the absence of an establishedno regular public trading market for the Common Stock, then the Market Value per Share shall be the fair market value as determined in good faith by the Committee. The Committee or (ii)is authorized to adopt another fair market value pricing method provided such method is stated in the applicable Evidence of Award and is in compliance with respectthe fair market value pricing rules set forth in Section 409A of the Code. (u) “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right. (v) “Option Price” means the purchase price payable on exercise of an Option Right. (w) “Option Right” means the right to property other than thepurchase Common Stock the valueupon exercise of such property as determinedan award granted pursuant to Section 4 of this Plan. (x) “Participant” means a person who is selected by the Committee in its sole discretion.2.18 “Forfeit,” “Forfeiture,”to receive benefits under this Plan and who is at the time (i) a non-employee Director, (ii) an officer or “Forfeited” means the loss by a Participant of any and all rights to an Award granted under the Plan (or any portion thereof), including the loss of any payment of compensation by the Company under the Plan or any Award granted thereunder.
2.19 “Key Personnel” means Officers, Employees, consultants and independent contractorsother employee of the Company or any Subsidiary, who occupy responsible executive, professional, sales or administrative positions or who otherwise have the capacity to contribute to the success of the Company, but does not include Non-Employee Directors. Key Personnel also may include individuals who have accepted an offer of employment with the Company or any Subsidiary.
2.20 “Incentive Stock Option” or “ISO” means an option to purchase Stock, which is intended to meet the requirements of an incentive stock option under Section 422 of the Code (or any successor Section).
2.21 “Non-Employee Director” means a Director on the Board who is not an Employee.
2.22 “Nonqualified Stock Option”or “NQSO” means an Option to purchase Stock which is not intended to meet the requirements of an Incentive Stock Option under Section 422 of the Code (or any successor Section).
2.23 “Officer” means an officer of the Company or of a Subsidiary.
2.24 “Option” means an Incentive Stock Option or a Nonqualified Stock Option.
2.25 “Option Price” means the price at which the Stock may be purchased under an Option as provided in Section 4.4.
2.26 “Participant” meansincluding a person who has agreed to whom an Award is made under the Plan.
2.27 “Performance Grant” means an Award subject, in part, to the terms, conditions and restrictions described in Article VI, pursuant to which the recipient may become entitled to receive cash, Stock or other securities, or any combination thereof.
2.28 “Performance Grant Agreement” means a written agreement entered into between the Company and a Participant setting forth the terms and conditions of a Performance Grant awarded pursuant to Article VI.
2.29 “Permitted Transferee” means (i) any person defined as an employee in the Instructions to the Registration Statement on Form S-8 promulgated by the Securities and Exchange Commission, as such Form may be amended from time to time, or any successor form, which persons include, as of the date of adoption of this Plan by the Board, executors, administrators or beneficiaries of the estates of deceased Participants, guardians or members of a committee for incompetent former Participants, or similar persons duly authorized by law to administer the estate or assets of former Participants, and (ii) Participants’ family members who acquire Awards from the Participant other than for value, including through a gift or a domestic relations order. For purposes of this definition, “family member” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial
interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests. For purposes of this definition, unless otherwise determined by the rules and regulations of the Securities and Exchange Commission, neither (i) a transfer under a domestic relations order in settlement of marital property rights nor (ii) a transfer to an entity in which more than fifty percent of the voting or beneficial interests are owned by family members (or the Participant) in exchange for an interest in that entity is considered a transfer for “value.”
2.30 “Personal Representative” means the person or persons who, upon the death, Disability or incompetency of a Participant, shall have acquired, by will or by the laws of descent and distribution or by other legal proceedings, the right to exercise an Option or to take other action on behalf of the Participant with respect to any Award theretofore granted to such Participant.
2.31 “Plan” means this 2006 Omnibus Incentive Plan, as amended and restated.
2.32 “Restriction Period” means the length of time established relative to an Award during which time the Participant cannot sell, assign, transfer, pledge, or otherwise encumber the Stock or Stock Units subject to such Award, and at the end of which the Participant obtains an unrestricted right to such Stock or Stock Units.
2.33 “Restricted Stock Agreement” means a written agreement entered into between the Company and a Participant setting forth the terms and conditions of a Restricted Stock Award or Restricted Stock Unit Award made pursuant to Article V.
2.34 “Restricted Stock Award” means a grant of Stock to a Participant pursuant to Article V.
2.35 “Restricted Stock Unit Award” means an Award of the right to receive either (as the Committee determines) Stock or cash or other property, including an Award, equal to the Fair Market Value of a share of Stock on the date of settlement of the Award subject, in part, to the terms, conditions and restrictions described in Article V hereof and as set forth in any Restricted Stock Agreement.
2.36 “Retirement” or “Retire” means retirement of an Employee or other service provider as determined and authorized by the Committee.
2.37 “Section 162(m)” shall mean Section 162(m) of the Code, the regulations and other binding guidance promulgated thereunder.
2.38 “Section 409A” shall mean Section 409A of the Code, the regulations and other binding guidance promulgated thereunder.
2.39 “Separation from Service” and “Separate from Service” shall mean the Participant’s death, retirement or other termination of employment or service with the Company (including all persons treated as a single employer under Section 414(b) and 414(c) of the Code) that constitutes a “separation from service” within the meaning of
Section 409A. For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Section 414(b) and 414(c) of the Code; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Section 1563(a)(1),(2) and (3) of the Code and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. Whether a Participant has Separated from Service will be determined based on all of the facts and circumstances and, to the extent applicable to any Award or benefit, in accordance with the guidance issued under Section 409A. A Participant will be presumed to have experienced a Separation from Service when the level of bona fide services performed permanently decreases to a level less than twenty percent (20%) of the average level of bona fide services performed during the immediately preceding thirty-six (36) month period or such other applicable period as provided by Section 409A.
2.40 “Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of the Company as determined in accordance with Section 409A and the procedures established by the Company.
2.41 “Stock” means the common stock, par value $.01, of the Company, or any other security into which the Stock shall have been converted in accordance with Section 10.6 of this Plan.
2.42 “Stock Appreciation Right” or “SAR” means an Award pursuant to which the Participant will receive a payment in cash or Stock, or any combination thereof, equal to the appreciation of the Fair Market Value of a share of Stock from the date of grant to the date of exercise.
2.43 “Stock Award” has the meaning specified in Section 8.1.
2.44 “Stock Option Agreement” means a written agreement entered into between the Company and a Participant setting forth the terms and conditions of an Option awarded pursuant to Article IV.
2.45 “Stock Unit” means a right to receive a payment (in cash, shares of Stock, or a combination of both, as contemplated in the Award Agreement) valued in relation to a designated dollar value or the Fair Market Value of one or more shares of Stock.
2.46 “Subsidiary” means a corporation or other business entity, domestic or foreign, the majority of the voting stock or other voting interests in which is owned directly or indirectly by the Company, including a Subsidiary which becomes such after adoption of this Plan.
2.47 “Termination for Cause” or “Cause” means: (i) willful neglect of or failure to properly perform the duties and responsibilities assigned to the Participant or the failure of the Participant to comply with proper directives of such Participant’s supervisor(s) or the Board, as applicable; (ii) an act of dishonesty or disloyalty relating to the business and affairs of the Company and/or its Subsidiaries or their relationship with their respective Employees, suppliers, customers or others having a business relationship with the
Company and/or its Subsidiaries; (iii) conviction of a crime involving fraud, theft, intentional dishonesty, moral turpitude or similar conduct; (iv) misappropriation of any funds or property of the Company and/or its Subsidiaries or actions which are inconsistent with the Participant’s fiduciary obligations to the Company and/or its Subsidiaries; (v) failure to abide by any of the Company’s and/or its Subsidiaries’ policies; or (vi) any other action or course of conduct by the Participant which has or reasonably can be expected to have an adverse effect on the Company and its Subsidiaries, and their respective businesses or affairs. The Committee shall make all determinations of whether a Participant was Terminated for Cause and any such determination shall be final and conclusive.
ARTICLE III
ADMINISTRATION
3.1 Committee to Administer.
(a) The Plan shall be administered by the Committee. The Committee shall have full and exclusive authority and discretion to interpret, construe and administer the Plan, including, but not limited to, the authority to:
(i) Adopt or establish and amend such rules, regulations, agreements, guidelines, procedures, forms and instruments as may be necessary or advisable for the administration and operation of the Plan;
(ii) Correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent it shall deem desirable;
(iii) Select the persons to be granted Awards under the Plan;
(iv) Grant and determine the terms, conditions, form and size of Awards to be made to each person selected, including clawback or other recoupment provisions applicable Awards granted hereunder;
(v) Determine the time when Awards are to be made and any conditions which must be satisfied before an Award is made;
(vi) Establish objectives, conditions and performance goals for earning Awards;
(vii) Determine the terms of each Award Agreement and any amendments or modifications thereof;
(viii) Determine whether the conditions for earning an Award have been met and whether an Award will be paid at the end of the performance period;
(ix) Determine if and when an Award may be deferred;
(x) Determine whether the amount or payment of an Award should be reduced or eliminated;
(xi) Determine the guidelines and/or procedures for the payment or exercise of Awards; and
(xii) Determine whether to accelerate vesting provisions applicable to Awards.
The Committee’s decisions shall be final, conclusive and binding with respect to the Plan and any Award made under the Plan.
(b) Except as otherwise may be provided in the charter or similar governing document applicable to the Committee and this Plan, (i) a majority of the members of the Committee shall constitute a quorum for the conduct of business at any meeting, (ii) the Committee shall act by majority vote of the members present at a duly convened meeting, including a telephonic meeting in accordance with the Pennsylvania Business Corporation Law (“BCL”), and (iii) action may be taken without a meeting if written consent thereto is given in accordance with the BCL.
(c) Notwithstanding any provision herein to the contrary, to the extent the Board is performing any Plan-related functions, including the determination of whether a Participant has been Terminated for Cause, the Board shall have the same discretionary power and authority to administer the Plan as the Committee does under this Article III.
(d) No member of the Board or Committee and no Officer shall be liable for anything done or omitted to be done by such member or Officer, by any other member of the Board or Committee or by any other Officer in connection with the performance of duties under this Plan, except for such member’s or Officer’s own willful misconduct or as expressly provided by statute.For avoidance of doubt, nothing in this section is intended to limit the indemnification provisions applicable to Directors and Officers of the Company as they are entitled under Pennsylvania law.
(e) The Board and/or Committee may delegate authority to an Officer and/or Director to administer certain of their respective authority under this Plan, including granting and administering certain Awards under this Plan, subject to the right of the Board and/or the Committee to revoke its delegation at any time and to make such delegation on such terms and conditions as the Board and/or Committee determine in their respective discretion to be appropriate in accordance with, and as permitted by, applicable law or regulation. In each case where the Board and/or Committee has delegated authority under this Plan, such Officer and/or Director delegatee shall be deemed the “Committee” or “Board,” where applicable, in connection with fulfilling the functions delegated to such person under the Plan.
(f) Notwithstanding any other provision of the Plan, the Board or the Committee may impose such conditions on any Award (including, without limitation, the right of the Board or the Committee to limit the time of exercise to specified periods) as may be
required to satisfy the requirements of Rule 16b-3 (or any successor rule) under the Exchange Act (“Rule 16b-3”) and/or Section 422 (or any successor provision) of the Code.
3.2 Powers of Committee.
(a) Subject to the provisions of the Plan, the Committee shall have authority, in its discretion, to determine those Key Personnel and Directors who shall receive Awards, the time or times when each such Award shall be made, the type of Award to be made, the number of shares to be subject to each Award and/or any other terms and conditions of the Award.
(b) The Committee shall determine the terms, restrictions and provisions of the agreement relating to each Award. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan, or in any Award Agreement,commence serving in such manner and to the extent the Committee shall determine in order to carry out the purposes and intent of the Plan.
(c) Notwithstanding any provision herein to the contrary, to the extent the Board is performing any Plan-related functions, the Board shall have the same discretionary power and authority to administer the Plan as the Committee does under this Article III.
3.3 Awards.
(a) Subject to the terms of this Plan, the Committee may grant any type of Award to any Participant it selects, but only an Employee may receive grants of Incentive Stock Options. Awards may be granted alone or in addition to, in tandem with, or (subject to the prohibition on repricing set forth below) in substitution for any other Award (or any other award granted under another plan of the Company or any Subsidiary). All Awards shall be subject to the terms and conditions of the Plan and to such other terms and conditions consistent with the Plan as the Committee deems appropriate.
(b) Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Section 10.6 or in connection with a corporate transaction involving the Company (including, without limitation, any stock Dividend, distribution (whether in the form of cash, shares of Stock, other Company securities or other property), stock split, extraordinary cash Dividend, recapitalization, Change in Control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Stock or other Company securities, or similar transaction(s)), neither the Committee nor any other person may, without obtaining shareholder approval, (i) amend the terms of outstanding Options or SARs to reduce the exercise price of such outstanding Options or SARs; (ii) cancel outstanding Options or SARs in exchange for Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs; or (iii) cancel outstanding Options or SARs with an exercise price above the current Stock price in exchange for cash or other securities. In addition, the Committee may not make a grant of an Option or SAR with a grant date that is effective prior to the date the Committee takes action to approve such Award.
3.4 Eligibility for Awards. In selecting Participants and in determining the form and amount of the Award, the Committee may give consideration to such Participant’s functions and responsibilities, his or her present and potential contributions to the success of the Company, the value of his or her services to the Company, and other factors deemed relevant by the Committee, subject to the provisions of the Plan.
ARTICLE IV
STOCK OPTIONS
4.1 Award of Options. Subject to the provisions of the Plan, the Committee may grant Options to Key Personnel and Directors; provided, however, that only an Employee may receive grants of Incentive Stock Options.
4.2 Period of Option.
(a) Except as otherwise provided in a Stock Option Agreement or the Plan, an Option granted to Key Personnel shall be exercisable only after twelve (12) months have elapsed from the date of grant, and after such twelve-month waiting period, the Option may be exercised in cumulative installments in the following manner:
(i) The Participant may purchase up to one-fourth (1/4) of the total optioned shares at any time after one year from the date of grant and prior to the termination of the Option.
(ii) The Participant may purchase an additional one-fourth (1/4) of the total optioned shares at any time after two years from the date of grant and prior to the termination of the Option.
(iii) The Participant may purchase an additional one-fourth (1/4) of the total optioned shares at any time after three years from the date of grant and prior to the termination of the Option.
(iv) The Participant may purchase an additional one-fourth (1/4) of the total optioned shares at any time after four years from the date of grant and prior to the termination of the Option.
(b) The Committee may also establish, in the applicable Stock Option Agreement, any other period during which Options may be exercised, provided that the duration of an Option shall not be more than ten (10) years from the date of grant and, provided further, that the duration of an Option granted to a 10% Shareholder shall not be more than five (5) years from the date of grant in the case of ISOs.
(c) A Nonqualified Stock Option granted to a Non-Employee Director, who is a Director at the time of such grant, shall be immediately exercisable, except as may be otherwise provided in the Stock Option Agreement.
4.3 Stock Option Agreement. Each Option shall be evidenced by a Stock Option Agreement in such form and containing such terms and conditions as the Committee from time to time shall approve, except that the terms and conditions in the Stock Option Agreement shall be consistent with those set forth herein. The terms and conditions of Stock Option Agreements need not be identical.
4.4 Option Price and Exercise.
(a) The Option Price of Stock under each Option shall be determined by the Committee, provided that the Option Price may not be less than the Fair Market Value of the Stock on the date on which the Option is granted, and provided further that the Option Price of an Incentive Stock Option granted to a 10% Shareholder may not be less than 110% of the Fair Market Value of the Stock on the date on which the Option is granted.
(b) Options may be exercised from time to time by giving written notice of exercise to the Company specifying the number of shares to be purchased. The notice of exercise shall be accompanied by (i) payment in full of the Option Price in cash, certified check, or other medium accepted by the Company, in its sole discretion, or (ii) a copy of irrevocable instructions to a broker to promptly deliver to the Company the amount of sale proceeds sufficient to cover the Option Price. An Option shall be deemed exercised on the date the Company receives the notice of exercise and all the requirements of this Section 4.4(b) have been fulfilled. An Option may provide that it shall be deemed to have been exercised at the close of business on the business day preceding the expiration date of the Option, or such other date as specified by the Committee, if at such time such Option has a positive value. Such deemed exercise shall be settled or paid in the same manner as a regular exercise thereof.
(c) If the aggregate Fair Market Value of the Stock subject to all Incentive Stock Options granted to a Participant (as determined on the date of grant of each such Option) that become exercisable during a calendar year exceeds the dollar limitation set forth in Section 422(d) of the Code, then such Incentive Stock Options shall be treated as Nonqualified Stock Options to the extent such limitation is exceeded.
4.5 Treatment of Incentive Stock Options. In all other respects, the terms of any Incentive Stock Option should comply with the provisions of Section 422 of the Code, except to the extent the Committee determines otherwise. If an Option that is intended to be an Incentive Stock Option fails to meet the requirements thereof, the Option shall automatically be treated as a Nonqualified Stock Option to the extent of such failure. The aggregate Fair Market Value (determined as of the time the Option is granted) of the shares of Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all option plans of the Company and of any “parent corporation” or subsidiary corporation (as such terms are defined in Sections 424(e) and (f) of the Code)) shall not exceed one hundred thousand dollars ($100,000), provided, however, that if such one hundred thousand dollars ($100,000) limit is exceeded, the excess ISOs shall be treated as NQSOs. For purposes of the preceding sentence, Incentive Stock Options will be taken into account in the order in which they are granted.
4.6 Termination of Service.
(a) Except as otherwise provided in this Plan or in the applicable Stock Option Agreement or any severance or employment agreement, if the employment or other service of a Participant, other than as a Non-Employee Director, terminates for any reason other than death, Disability, Retirement, or due to a Termination for Cause, the Participant may exercise all unexercised and vested Options within 30 days of such termination, and such portion of the Option will expire at the end of such period. Any Options in which such Participant is not vested at the time of such Participant’s termination shall be immediately Forfeited. In no event, however, may any Option be exercised after the expiration of ten (10) years from the date of grant of such Option. In the event that such Participant is Terminated for Cause, all Options held by such Participant shall terminate immediately and may not thereafter be exercised. For purposes of this section, the employment or other service in respect to Options held by such a Participant shall be treated as continuing intact while the Participant is on authorized military leave, on leave pursuant to the Family Medical Leave Act, approved sick leave or other approved, bona fide leave of absence (such as temporary employment with the government) if the period of such leave does not exceed 90 days or, if longer, so long as the Participant’s right to reestablish such Participant’s service with the Company is guaranteed either by statute or by contract. Where the period of leave exceeds 90 days and where such Participant’s right to reestablish such Participant’s service is not guaranteed by statute or by contract, such Participant’s service, in the Committee’s sole discretion, shall be deemed to have terminated on the ninety-first day of such leave.
(b) Except as otherwise provided in the Stock Option Agreement, a Non-Employee Director whose service is terminated shall be entitled to exercise such Non-Employee Director’s Options, to the extent vested as of the date of such termination, until the expiration of the full term of the Option, unless the Non-Employee Director has been Terminated for Cause. In the event that a Non-Employee Director is Terminated for Cause, all Options held by such Director shall terminate immediately and may not thereafter be exercised.
4.7 Death. Except as otherwise provided in the Plan or a Stock Option Agreement, during the twelve (12) month period following the Participant’s death, any or all of the unexercised and vested Options that the Participant was entitled to exercise immediately prior to such Participant’s death may be exercised by such Participant’s Personal Representative. Any Options in which such Participant is not vested at the time of such Participant’s death shall be immediately Forfeited. In no event, however, may any such Option be exercised after the expiration of ten (10) years from the date of grant of such Option.
4.8 Retirement or Disability. Except as otherwise provided in the Plan or a Stock Option Agreement or in any severance or employment agreement, if a Participant Retires, or suffers a Disability, at a time when such Participant is entitled to exercise an Option, then the Participant may exercise the Option, to the extent vested, at any time or times within three (3) years after such Participant’s termination of service because of such Retirement or Disability, and such vested portion of the Option will expire at the end of
such period. Any Options in which such Participant is not vested at the time of the Participant’s Retirement or Disability, as the case may be, shall be immediately Forfeited. In no event, however, may any Option be exercised after the expiration of ten (10) years from the date of grant of such Option.
4.9 Committee Discretion. For avoidance of doubt and not in limitation of the discretionary authority of the Committee under this Plan, the Committee shall have authority to determine whether or not a Participant (including a Non-Employee Director) has Retired, resigned or suffered a Disability, or has been Terminated for Cause, or is on an authorized leave of absence, and its determination shall be binding on all concerned. In the sole discretion of the Committee, a transfer of service to an affiliate of the Company other than a Subsidiary (the latter type of transfer not constituting a termination of service for purposes of the Plan) may be deemed to be a Retirement so as to entitle the Participant to exercise the Optioncapacity within 90 days after such transfer.
4.10 Shareholder Rights and Privileges. A Participant shall have no rights as a shareholder with respect to any Stock covered by an Option until the issuance of a stock certificate, or other evidence of ownership is issued, representing such Stock.
ARTICLE V
RESTRICTED STOCK AWARDS
AND
RESTRICTED STOCK UNIT AWARDS
5.1 Grant of Restricted Stock Awards or Restricted Stock Unit Awards. Subject to the provisions of the Plan, the Committee may elect to grant Restricted Stock AwardsDate of Grant, or Restricted Stock Unit Awards to any Key Personnel and/or Director, including, but not limited to, grants derived from participation in another plan, program or arrangement established or maintained by the Company or any Subsidiary. Notwithstanding anything in this Plan to the contrary, the Committee, in its discretion, may determine that(iii) a Restricted Stock Award or Restricted Stock Unit Award may be subject to such terms, conditions and restrictions (including but not limited to restrictions on the sale of Stock), as set forth in the applicable Restricted Stock Agreement, and shall determine whether a Restricted Stock Unit Award is to be settled at vesting by the issuance of Stock or the payment of cash or other consideration.
5.2 Vesting Requirements. The restrictions imposed on a Restricted Stock Award shall lapse, and a Restricted Stock Unit Award shall vest, in accordance with the vesting schedule specified by the Committee in the Restricted Stock Agreement, and such Awards granted to Key Personnel will have a service period of no less than twelve (12) months (subject to special vesting terms set forth in the Restricted Stock Agreement); provided however, this limitation shall not: (i) adversely affect a Participant’s rights under another plan or agreement or (ii) apply to Awards granted in exchange for the surrender of, or substitution of, another company’s awards to its employees and directors. Such vesting requirements may be based on the continued service of the Participant with the Company or its affiliates (including any Subsidiary) for a specified time period (or periods),
on the attainment of specified performance goals established by the Committee in its discretion, or such other terms and conditions established by the Committee. Except as otherwise provided in this Plan or the Restricted Stock Agreement, if the vesting requirements of a Restricted Stock Award or Restricted Stock Unit Award are not satisfied, the Award shall be Forfeited and the Stock subject to the Award shall be returned to the Company and eligible for reissuance under the Plan.
5.3 Restrictions. A Restricted Stock Award and a Restricted Stock Unit Award may not be transferred, assigned or subject to any encumbrance, pledge or charge until all applicable restrictions are removed or have expired, unless otherwise permitted by the Committee. Failure to satisfy any applicable restrictions shall result in the Award being Forfeited and the Stock subject to the Award shall be returned to the Company and eligible for reissuance under the Plan. The Committee may require in a Restricted Stock Agreement that certificates representing the Restricted Stock Award bear a legend making appropriate reference to the restrictions imposed, and that certificates representing the Stock subject to such Restricted Stock Award will remain in the physical custody of the Company or an escrow holder (including the transfer agent for the Stock) until all restrictions are removed or have expired.
5.4 Rights as a Shareholder.
(a) Subject to the foregoing provisions of this Article V and the applicable Restricted Stock Agreement, the holder of a Restricted Stock Award shall have all rights of a shareholder with respect to the Stock granted to the Participant under a Restricted Stock Award, including the right to vote the Stock and receive all Dividends (to the extent issued by the Company) and other distributions paid or made with respect thereto, except that (i) the Participant shall not be entitled to possession of the stock certificate (in the event paper certificates are issued) until the Restriction Period shall have expired, (ii) the Company shall retain custody of the Stock during the Restriction Period, (iii) the Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Stock during the Restriction Period, and (iv) a breach of the terms and conditions established by the Committee pursuant to the Restricted Stock Agreement shall cause a Forfeiture of the applicable Award.
(b) The Committee may provide in a Restricted Stock Agreement for a Restricted Stock Unit Award for the payment of Dividends or Dividend Equivalent Rights and distributions to the Participant at such times as paid to shareholders generally or at the times of vesting or other payment of the Award to the extent not inconsistent with Section 409A and Section 10.7.
5.5 Section 83(b) Election. If a Participant makes an election pursuant to Code Section 83(b) with respect to a Restricted Stock Award, the Participant shall file, within 30 days following the date of grant, a copy of such election with the Company and with the Internal Revenue Service in accordance with the regulations under Code Section 83. The Committee may provide in a Restricted Stock Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or refraining from making an election with respect to the Award under Code Section 83(b).
ARTICLE VI
PERFORMANCE GRANTS
6.1 Participation. Subject to the provisions of the Plan, the Committee may make Performance Grants to Key Personnel and Directors in accordance with the provisions of this Article VI.
6.2 Grant. The Committee shall have sole and complete authority to determine the Key Personnel and Directors who shall receive a Performance Grant, which shall consist of a right that is (i) denominated in cash, Stock or any other form of Award issuable under the Plan (or any combination thereof), (ii) valued, as determined by the Committee, in accordance with the achievement of such performance goals during such performance periods as the Committee shall establish and (iii) payable at such time and in such form as the Committee shall determine. Unless otherwise determined by the Committee, any such Performance Grant shall be evidenced by a Performance Grant Agreement containing the terms of the Award, including, but not limited to, the performance criteria and such terms and conditions as may be determined, from time to time, by the Committee, in each case not inconsistent with this Plan. In relation to any Performance Grant, the performance period may not be less than 12 months for which performance is being measured.
6.3 Terms and Conditions.
(a) For Awards intended to be performance-based compensation under Section 162(m) of the Code, Performance Grants shall be conditioned upon the achievement of pre-established goals relating toConsultant.
(y) “Performance Objectives” means one or more of the followingfinancial and/or operational performance measures, asgoals or objectives established pursuant to this Plan for Participants who have received grants of Performance Shares, Performance Units or Cash Incentive Awards or, when so determined in writing by the Committee, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, dividend equivalents or other awards pursuant to this Plan and subjectinclude, but are not limited to, such modifications as specified by the Committee:objectives related to cash flow; cash flow from operations; free cash flow; earnings (including, but not limited to, earnings before interest, taxes, depreciation, and amortization or some variation thereof); earnings per share, diluted or basic; earnings per share from continuing operations; net asset turnover; inventory turnover; days sales outstanding on receivables; capital expenditures; debt; debt reduction; working capital (including as a percentage of sales); return on investment; return on sales; return on invested capital; net or gross sales; economic profit; economic profit improvement; gross profit on sales; material gross profit (gross profit on material portion of sales); performance profit (operating income minus an allocated charge approximating the Company’s cost of capital, before or after tax); purchase variance; delivery variance; quality; customer satisfaction; comparable site sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; productivity; delivery performance; safety record and/or performance; environmental record and/or performance; stock price; return on equity or capital employed; total shareholder return or relative increases to shareholder return; return on capital; return on assets or net assets; revenue; revenue growth; income or net income; operating income or net operating income; operating income adjusted for management fees and depreciation and amortization; pre-tax income (including on an as-adjusted basis); operating profit or net operating profit; non-performing assets; asset sale targets; value of assets; employee retention/attrition rates; investments; regulatory compliance; satisfactory internal or external audits; improvement of financial ratings;value creation; gross margin, operating margin or profit margin; margin growth; completion of acquisitions, business expansion, product diversification, and new or expanded market penetrationpenetration; growth or growth rate; employee recruitment, engagement, retention and other non-financial operatingsatisfaction; diversity; environmental and social measures; human resources management, performance objectives,and any combination of the foregoing, and such other business performance criteria as may, from time to time, be established by the Committee in the applicable Award Agreement. (b) To the extent consistent with Section 162(m), the Committee may determine, at the time the performance goals are established, that certain adjustments shall apply, in whole or in part, in such manner as determined by the Committee, to exclude or include the effect of any of the following events that occur during a performance period: the impairment of tangible or intangible assets; litigation or claim judgments or settlements; the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; business combinations, reorganizations and/or restructuring programs, including, but not limited to, reductions in force and early retirement incentives; currency fluctuations; and any extraordinary, unusual, infrequent or non-recurring items, including, but not limited to, such items described in management’s discussion and analysis of financial condition and results of operations or the financial statements and/or notes thereto appearing in the Company’s annual report to shareholders for the applicable period.
(c) Performance measures may be determined either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary entity thereof, either individually, alternatively or in any combination, and any of which may be measured cumulatively overeither in absolute terms, relative to a
TABLE OF CONTENTS pre-established target, as compared to any incremental increase, as compared to previous years’ results or as compared to results of a designated comparison group. If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Performance Objectives unsuitable, the Committee may in its discretion modify such Performance Objectives or the goals or actual levels of achievement regarding the Performance Objectives, in whole or in part, as the Committee deems appropriate and equitable. (z) “Performance Period” means, in respect of a Cash Incentive Award, Performance Share or Performance Unit, a period of years, on an absolute basistime established pursuant to Section 8 of this Plan within which the Performance Objectives relating to such Cash Incentive Award, Performance Share or relative to a pre-established target, to previous fiscal years’ results or to a designated comparison group, in each case as specified by the Committee.6.4 Preestablished Performance Goals. For Awards intendedUnit are to be performance-based compensation under achieved.
(aa) “Performance Share” means a bookkeeping entry that records the equivalent of one share of Common Stock awarded pursuant to Section 162(m), performance goals relating8 of this Plan, and may be payable in cash, Common Stock or a combination thereof. (bb) “Performance Unit” means a bookkeeping entry award granted pursuant to the performance measures set forth above shall be preestablished in writingSection 8 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Committee, and achievement thereof certifiedmay be payable in writing priorcash, Common Stock or a combination thereof. (cc) “Plan” means this L.B. Foster Company 2022 Equity and Incentive Compensation Plan, as may be amended or amended and restated from time to paymenttime. (dd) “Predecessor Plan” means the L.B. Foster Company 2006 Omnibus Incentive Plan As Amended and Restated on May 24, 2018. (ee) “Restricted Stock” means Common Stock granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfer has expired. (ff) “Restricted Stock Units” means an award made pursuant to Section 7 of this Plan of the Award, as required by Section 162(m) and treasury regulations promulgated thereunder. All such performance goals shall be established in writing byright to receive Common Stock, cash or a combination thereof at the Committee no later than the earlier of (i) ninety (90) days after the beginningend of the applicable performanceRestriction Period. (gg) “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 7 of this Plan. (hh) “Retirement” or “Retire” means retirement of a Participant as determined and authorized by the Committee. (ii) “Separation from Service” and “Separate from Service” shall mean a Participant’s death, Retirement or other termination of employment or service with the Company (including all persons treated as a single employer under Sections 414(b) and 414(c) of the Code) that constitutes a “separation from service” within the meaning of Section 409A of the Code. For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Sections 414(b) and 414(c) of the Code; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Sections 1563(a)(1),(2) and (3) of the Code and Treasury Regulation §1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treasury Regulation §1.409A-1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. Whether a Participant has Separated from Service will be determined based on all of the facts and circumstances and, to the extent applicable to any award or benefit, in accordance with the guidance issued under Section 409A of the Code. A Participant will be presumed to have experienced a Separation from Service when the level of bona fide services performed permanently decreases to a level less than twenty percent (20%) of the average level of bona fide services performed during the immediately preceding thirty-six (36) month period or (ii)such other applicable period as provided by Section 409A of the Code. (jj) “Shareholder” means an individual or entity that owns one or more shares of Common Stock. (kk) “Spread” means the excess of the Market Value per Share on the date onwhen an Appreciation Right is exercised over the Base Price provided for with respect to the Appreciation Right. (ll) “Subsidiary” means a corporation, company or other entity (i) of which 25%more than 50% of the performance period has been completed,outstanding shares or withinsecurities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture, limited liability company, unincorporated association or other similar entity), but more than 50% TABLE OF CONTENTS of whose ownership interest representing the right generally to make decisions for such other timeframe asentity is, now or hereafter, owned or controlled, directly or indirectly, by the Company; provided, however, that for purposes of determining whether any person may be requireda Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which the Company at the time owns or permittedcontrols, directly or indirectly, more than 50% of the total combined Voting Power represented by all classes of stock issued by such corporation. (mm) “Substitute Award” means awards made in substitution for or in conversion of, or in connection with the assumption of, awards held by awardees of an entity engaging in a corporate acquisition or merger with the Company or any Subsidiary, as provided in Section 162(m)22 of this Plan. (nn) “Termination for Cause” or “Cause” means: (i) willful neglect of or material failure to properly perform the duties and treasury regulations promulgated thereunder. In addition to establishing minimum performance goals below which no compensation shall be payable pursuantresponsibilities assigned to a Performance Grant,Participant or the Committee, in its sole discretion, may creatematerial failure of a performance schedule under whichParticipant to comply with proper directives of such Participant’s supervisor(s) or the Board, as applicable; (ii) an amount less thanact of dishonesty or more than the target award may be paid so long as the performance goals have been achieved.6.5 Additional Restrictions/Negative Discretion. The Committee, in its sole discretion, may also establish such additional restrictions or conditions that must be satisfied as a condition precedentdisloyalty relating to the paymentbusiness and affairs of all the Company and/or its Subsidiaries or their relationship with their respective employees, suppliers, customers or others having a portionbusiness relationship with the Company and/or its Subsidiaries; (iii) conviction of a crime involving fraud, theft, intentional dishonesty, moral turpitude or similar conduct; (iv) misappropriation of any Performance Grants. Such additional restrictionsfunds or conditions need not be performance-based and may include, amongproperty of the Company and/or its Subsidiaries or actions which are inconsistent with a Participant’s fiduciary obligations to the Company and/or its Subsidiaries; (v) material failure to abide by any of the Company’s and/or its Subsidiaries’ policies; or (vi) any other things, the receiptaction or course of conduct by a Participant which has or reasonably can be expected to have a material adverse effect on the Company and its Subsidiaries, and their respective businesses or affairs. The Committee shall make all determinations of whether a specified annual performance rating,
Participant was Terminated for Cause and any such determination shall be final and conclusive. (oo) “Voting Power” means, at any time, the continued employment bycombined voting power of the Participant and/then-outstanding securities entitled to vote generally in the election of Directors in the case of the Company or members of the achievementboard of specified performance goalsdirectors or similar body in the case of another entity. 3. Shares Available Under this Plan. (a) Maximum Shares Available Under this Plan. (i)
| Subject to adjustment as provided in Section 11 of this Plan and the share counting rules set forth in Section 3(b) of this Plan, the number of shares of Common Stock available under this Plan for awards of (A) Option Rights or Appreciation Rights, (B) Restricted Stock, (C) Restricted Stock Units, (D) Performance Shares or Performance Units, (E) awards contemplated by Section 9 of this Plan, or (F) dividend equivalents paid with respect to awards made under this Plan will not exceed, in the aggregate, (x) 1,070,000 shares of Common Stock, plus (x) the number of shares remaining available for issuance under this Plan immediately prior to May 23, 2024, plus (y) the total number of shares of Common Stock remaining available for awards under the Predecessor Plan (but not reserved for outstanding awards under the Predecessor Plan) as of the Effective Date plus (z) the shares of Common Stock that are subject to awards granted under this Plan or the Predecessor Plan that are added (or added back, as applicable) to the aggregate number of shares of Common Stock available under this Section 3(a)(i) pursuant to the share counting rules of this Plan. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing. |
(ii)
| Subject to the share counting rules set forth in Section 3(b) of this Plan, the aggregate number of shares of Common Stock available under Section 3(a)(i) of this Plan will be reduced by one share of Common Stock for every one share of Common Stock subject to an award granted under this Plan. |
(b) Share Counting Rules. (i)
| Except as provided in Section 22 of this Plan or in this Section 3(b), if any award granted under this Plan (in whole or in part) is cancelled or forfeited, expires, is settled for cash, or is unearned, the Common Stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, again be available under Section 3(a)(i) above. |
(ii)
| If, after the Effective Date, any Common Stock subject to an award granted under the Predecessor Plan is forfeited, or an award granted under the Predecessor Plan (in whole or in part) is cancelled |
TABLE OF CONTENTS or forfeited, expires, is settled for cash, or is unearned, the Common Stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, be available for awards under this Plan. (iii)
| Notwithstanding anything to the contrary contained in this Plan: (A) shares of Common Stock withheld by the Company, tendered or otherwise used in payment of the Option Price of an Option Right (or the option price of an option granted under the Predecessor Plan) will not be added (or added back, as applicable) to the aggregate number of shares of Common Stock available under Section 3(a)(i) of this Plan; (B) shares of Common Stock withheld by the Company, tendered or otherwise used to satisfy tax withholding will not be added (or added back, as applicable) to the aggregate number of shares of Common Stock available under Section 3(a)(i) of this Plan; (C) shares of Common Stock subject to a share-settled Appreciation Right that are not actually issued in connection with the settlement of such Appreciation Right on the exercise thereof will not be added back to the aggregate number of shares of Common Stock available under Section 3(a)(i) of this Plan; and (D) shares of Common Stock reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Option Rights will not be added (or added back, as applicable) to the aggregate number of shares of Common Stock available under Section 3(a)(i) of this Plan. |
(iv)
| If, under this Plan, a Participant has elected to give up the right to receive cash compensation in exchange for Common Stock based on fair market value, such Common Stock will not count against the aggregate limit under Section 3(a)(i) of this Plan. |
(c) Limit on Incentive Stock Options. Notwithstanding anything to the contrary contained in this Plan, and subject to adjustment as provided in Section 11 of this Plan, the aggregate number of shares of Common Stock actually issued or transferred by the Company business unit upon the exercise of Incentive Stock Options will not exceed 765,000 shares of Common Stock. (d) Non-Employee Director Compensation Limit. Notwithstanding anything to the contrary contained in this Plan, in no event will any non-employee Director in any one calendar year be granted aggregate compensation, in the form of cash and/or Participant. Furthermore,equity, for such service having an aggregate maximum value (measured at the Date of Grant as applicable, and notwithstandingcalculating the value of any awards based on the grant date fair value for financial reporting purposes) in excess of $500,000. (e) Minimum Vesting Requirement. Except in the case of Substitute Awards and Cash Incentive Awards, awards granted under this Plan to Participants shall either be subject to a minimum vesting or minimum performance period, in the case of Performance Shares and Performance Units, of one year. Notwithstanding the foregoing or any other provision of this Plan, (i) the Committee may authorize acceleration of vesting or continued vesting of such awards in the event of the Participant’s death, disability, termination of employment or service or the occurrence of a Change in Control, (ii) the Committee may exercise its authority under Section 18(c) at any time following the grant of an award, (iii) the Committee may grant awards without the above-described minimum requirements with respect to awards covering up to 5% of the aggregate number of shares authorized for issuance under this Plan, and (iv) with respect to awards granted to non-employee Directors, the vesting of such awards will be deemed to satisfy the minimum vesting requirement to the contrary,extent that the awards vest based on the approximate one-year period beginning on each regular annual meeting of the Company’s shareholders and ending on the date of the next regular annual meeting of the Company’s shareholders (provided, however, that such approximate one-year period with respect to awards granted to non-employee Directors may not be less than 50 weeks). 4. Option Rights. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of Option Rights. Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions: (a) Each grant will specify the number of shares of Common Stock to which it pertains subject to the limitations set forth in Section 3 of this Plan. (b) Each grant will specify an Option Price per share of Common Stock, which Option Price (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant. TABLE OF CONTENTS (c) Each grant will specify whether the Option Price will be payable (i) in cash, by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Stock owned by the Optionee having a value at the time of exercise equal to the total Option Price, (iii) subject to any conditions or limitations established by the Committee, in its sole discretion, may retainby the discretion to reduce the amountwithholding of any Performance Grant payableCommon Stock otherwise issuable upon exercise of an Option Right pursuant to a Participant“net exercise” arrangement, (iv) by a combination of such methods of payment, or (v) by such other methods as may be approved by the Committee. (d) To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company or some or all of the shares of Common Stock to which such exercise relates. (e) Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary, if it concludesany, that such reduction is necessary before any Option Rights or appropriate based upon: (i) an evaluationinstallments thereof will vest. Subject to Section 3(e), any grant may provide for continued vesting or the earlier vesting of such Participant’s performance;Option Rights, and any other terms consistent with the terms of this Plan. (f) Any grant of Option Rights may specify Performance Objectives regarding the vesting of such rights. (g) Option Rights granted under this Plan may be (i) options, including Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) comparisonsoptions that are not intended to so qualify, or (iii) combinations of the foregoing. Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code. (h) No Option Right will be exercisable more than 10 years from the Date of Grant. The Committee may provide in any Evidence of Award for the automatic exercise of an Option Right upon such terms and conditions as established by the Committee. (i) Option Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon. (j) Each grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with compensation receivedthis Plan, as the Committee may approve. 5. Appreciation Rights. (a) The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to any Participant of Appreciation Rights. An Appreciation Right will be the right of the Participant to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100%) at the time of exercise. (b) Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions: (i)
| Each grant may specify that the amount payable on exercise of an Appreciation Right will be paid by the Company in cash, Common Stock or any combination thereof. |
(ii)
| Each grant will specify the period or periods of continuous service by the Participant with the Company or any Subsidiary, if any, that is necessary before the Appreciation Rights or installments thereof will vest. Subject to Section 3(e), any grant may provide for continued vesting or the earlier vesting of such Appreciation Rights, and any other terms consistent with the terms of this Plan. |
(iii)
| Any grant of Appreciation Rights may specify Performance Objectives regarding the vesting of such Appreciation Rights. |
(iv)
| Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon. |
(v)
| Each grant of Appreciation Rights will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve. |
TABLE OF CONTENTS (c) Also, regarding Appreciation Rights: (i)
| Each grant will specify in respect of each Appreciation Right a Base Price, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant; and |
(ii)
| No Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant. The Committee may provide in any Evidence of Award for the automatic exercise of an Appreciation Right upon such terms and conditions as established by the Committee. |
6. Restricted Stock. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the grant or sale of Restricted Stock to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions: (a) Each such grant or sale will constitute an immediate transfer of the ownership of shares of Common Stock to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other similarly-situated individuals workingownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter described (including Section 6(g) of this Plan). (b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share on the Date of Grant. (c) Each such grant or sale will provide that the Restricted Stock covered by such grant or sale will be subject to a “substantial risk of forfeiture” within the Company’s industry; (iii)meaning of Section 83 of the Code for a period to be determined by the Committee on the Date of Grant or until achievement of Performance Objectives referred to in Section 6(e) of this Plan. (d) Each such grant or sale will provide that during or after the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Committee on the Date of Grant (which restrictions may include rights of repurchase or first refusal of the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture while held by any transferee). (e) Any grant of Restricted Stock may specify Performance Objectives regarding the vesting of such Restricted Stock. (f) Subject to Section 3(e), Restricted Stock may provide for continued vesting or the earlier vesting of such Restricted Stock, and any other terms consistent with the terms of this Plan. (g) Any such grant or sale of Restricted Stock may require that any and all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and/or reinvested in additional Restricted Stock, which will be subject to the same restrictions as the underlying award. For the avoidance of doubt, any such dividends or other distributions on Restricted Stock shall be deferred until, and paid contingent upon, the vesting of such Restricted Stock. (h) Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve. Unless otherwise directed by the Committee, (i) all certificates representing Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such shares or (ii) all Restricted Stock will be held at the Company’s financial results and conditions; or (iv)transfer agent in book entry form with appropriate restrictions relating to the transfer of such other factors or conditions that the Committee deems relevant; provided, however, that the Committee shall not use its discretionary authority to increase any Award that is intended to be performance-based compensation under Section 162(m).6.6Restricted Stock.
7. Payment of Performance Awards. Payment of a Performance Grant (i) may be in cash, Stock (which may include Restricted Stock Units. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting or sale of Restricted Stock Units)Units to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions: (a) Each such grant or sale will constitute the agreement by the Company to deliver Common Stock or cash, or a combination thereof, to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include achievement regarding Performance Objectives) during the Restriction Period as the Committee may specify. TABLE OF CONTENTS (b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share on the Date of Grant. (c) Subject to Section 3(e), Restricted Stock Units may provide for continued vesting or the earlier lapse or other modification of the Restriction Period, and any other terms consistent with the terms of this Plan. (d) During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Common Stock deliverable upon payment of the Restricted Stock Units and will have no right to vote them, but the Committee may, at or after the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on a deferred and contingent basis, either in cash or in additional shares of Common Stock; provided, however, that dividend equivalents or other distributions on Common Stock underlying Restricted Stock Units shall be deferred until and paid contingent upon the vesting of such Restricted Stock Units. (e) Each grant or sale of Restricted Stock Units will specify the time and manner of payment of the Restricted Stock Units that have been earned. Each grant or sale will specify that the amount payable with respect thereto will be paid by the Company in Common Stock or cash, or a combination thereof. (f) Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve. 8. Cash Incentive Awards, Performance Shares and Performance Units. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting of Cash Incentive Awards, Performance Shares and Performance Units. Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions: (a) Each grant will specify the number or amount of Performance Shares or Performance Units, or cash amount payable with respect to a Cash Incentive Award, to which it pertains, which number or amount may be subject to adjustment to reflect changes in compensation or other factors. (b) The Performance Period with respect to each grant of a Cash Incentive Award, Performance Shares or Performance Units will be such period of time as will be determined by the Committee, in its sole discretion, (ii)which, subject to Section 3(e), may be made insubject to continued vesting or earlier lapse or other modification, and such grants may provide for any other terms consistent with the terms of this Plan. (c) Each grant of a lump sumCash Incentive Award, Performance Shares or in installments followingPerformance Units will specify Performance Objectives regarding the closeearning of each performance period as provided by the award. (d) Each grant will specify the time and manner of payment of a Cash Incentive Award, Performance Shares or Performance Units that have been earned. (e) The Committee in the Performance Grant Agreement, and (iii) to the extent applicable, shall be basedmay, on the Fair Market ValueDate of the Stock.6.7 Rights with Respect to Stock and Other Securities. Unless otherwise determined by the Committee in its discretion in aGrant of Performance Grant Agreement, a Participant to whom an Award is made under this Article (and any Person succeeding to such Participant’s rights pursuant to this Article) shall have no rights as a shareholder with respect to any StockShares or as a holder with respect to other securities, if any, issuable pursuant to any such Award until the date a stock certificate evidencing such Stock or until the Participant’s ownership of such Stock shall have been entered into the books of the registrar in the case of uncertificated shares. Notwithstanding the foregoing, the Committee mayPerformance Units, provide for the payment of Dividend Equivalent Rightsdividend equivalents to the holder thereof either in cash or in additional shares of Common Stock, which dividend equivalents shall be subject to deferral and payment on a contingent basis based on the Participant’s earning and vesting of the Performance Shares or Performance Units, as applicable, with respect to which such dividend equivalents are paid.
(f) Each grant of a Cash Incentive Award, Performance Grants, payable either in StockShares or cash, on a deferred basisPerformance Units will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and contingent uponwill contain such terms and provisions, consistent with this Plan, as the achievement ofCommittee may approve. 9. Other Awards. (a) Subject to applicable law and the applicable performance goals.limits set forth in Section 36.8 Termination of a Participant. For all purposes under this Article VI, and unless otherwise determined by the Committee in a Performance Grant Agreement or an employment or severance agreement, Participants who have terminated their employment with the Company prior to the actual payment of an Award for any reason (including but not limited to death, Retirement or Disability) shall Forfeit any and all rights to payment under any Awards then outstanding under the terms of this Article and shall not be entitled to any payment for the performance period.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights. Subject to the terms of the Plan, the Committee may grant SARs to Key Personnel or Directors, either separately or in tandem with an Option. The Committee shall determine all terms and conditions of each SAR, including but not limited to:
(a) Whether the SAR is granted independently of an Option or in tandem with an Option;
(b) The number of Shares to which the SAR relates;
(c) The date of grant, which may not be prior to the date of the Committee’s approval of the grant;
(d) The grant price, provided thatauthorize the grant price shall not be less than the Fair Market Valueto any Participant of a share ofCommon Stock as of the grant date of the SAR;
(e) SARs shall vest in accordance with the vesting schedule specified by the Committee in the Award Agreement (and subject to the terms and conditions included therein), and such Awards granted to Key Personnel will have a vesting period of no less than twelve (12) months (subject to the special vesting terms set forth in the Award Agreement); provided however, this limitation shall not: (i) adversely affect a Participant’s rights under another plan or agreement or (ii) apply to Awards granted in exchange for the surrender of, or substitution of, another company’s awards to its employees and directors;
(f) The term, provided that no SAR shall be exercisable later than the tenth (10th) anniversary of the date of its grant; and
(g) Whether the SAR will be settled in cash, Shares, or a combination thereof.
7.2 Exercise of SARs. SARs may be exercised in accordance with such terms and conditions as the Committee, in its sole discretion, may specify. The Committee may (i) grant SARs that are subject to the achievement of one or more vesting conditions and (ii) accelerate the exercisability of outstanding SARs consistent with the provisions of the Plan. Tandem SARs shall be exercisable only while the Option to which the tandem SAR relates is exercisable. A SAR may provide that it shall be deemed to have been exercised at the close of business on the business day preceding the expiration date of the SAR, or such other date as specified by the Committee, if at such time such SAR has a positive value. Such deemed exercise shall be settled or paid in the same manner as a regular exercise thereof.
7.3 Tandem SARs. Unless otherwise determined by the Committee, if a SAR is granted in relation to an Option, the SAR shall be exercisable or shall mature at the same time or times, on the same conditions and to the extent and in the proportion, that the related Option is exercisable and may be exercised or mature for all or part of the shares of Stock subject to the related Option. Upon exercise of any number of SARs, the number of shares of Stock subject to the related Option shall be reduced accordingly and such Option may not be exercised with respect to that number of shares of Stock. The exercise of any number of shares of Stock underlying an Option Award that relate to a SAR shall likewise result in an equivalent reduction in the number of shares of Stock covered by the related SAR.
7.4 Payment of SARs. Upon exercise of the SAR, the holder shall be entitled to receive payment of an amount determined by multiplying: (i) the difference between the Fair Market Value of a share of Stock on the date of exercise over the base amount of the SAR as set by the Committee at the date of grant by (ii) the number of shares of Stock with respect to which the SAR is exercised.
ARTICLE VIII
OTHER AWARDS
8.1 Other Awards. The Committee may, subject to limitations under applicable law, grant to Key Personnel and Directors such other Awardsawards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of Common Stock (including Dividends and Dividend Equivalent Rights) or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into shares of Common Stock, purchase rights for shares of Common Stock, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, affiliatesAffiliates or other business units thereof or any other factors designated by the Board,Committee, and Awardsawards valued by reference to the book value of the shares of Common Stock or the value
TABLE OF CONTENTS of securities of, or the performance of specified Subsidiaries or affiliatesAffiliates or other business units of the Company. The Board shallCommittee will determine the terms and conditions of such Awards, which may include, but are not limited to:(a) awards. Common Stock Award. An unrestricted transferdelivered pursuant to an award in the nature of ownership of Stock.
(b) Awards under Deferred Compensation or Similar Plans. Thea purchase right to receive Stock or a fixed or variable share denominated unit granted under this Plan or any deferred compensation or similar plan established from time toSection 9 will be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, Common Stock, other awards, cash, notes or other property, as the Company.
(c) Committee determines.
(b) Cash Award. An Award denominated in cash,awards, as separate from, an element of or supplement to any other Awardaward granted under this Plan, that may also be granted pursuant to this Section 9. (c) The Committee may authorize the grant of shares of Common Stock as a bonus, or may authorize the grant of other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to the achievement of performance goals during a performance periodsuch terms as will be determined by the Committee in a manner that complies with Section 409A of the Code. (d) The Committee may, at or after the Date of Grant, authorize the payment of dividends or dividend equivalents on awards granted under this Section 9 on a deferred and contingent basis, either in cash or in additional shares of Common Stock; provided, however, that dividend equivalents or other distributions on Common Stock underlying awards granted under this Section 9 shall be deferred until and paid contingent upon the earning and vesting of such awards. (e) Each grant of an award under this Section 9 will be evidenced by an Evidence of Award. Each such Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve, and will specify the time and terms of delivery of the applicable award. (f) Subject to Section 3(e), awards under this Section 9 may provide for the earning or vesting of, or earlier elimination of restrictions applicable to, such award, and any other terms consistent with the terms of this Plan. 10. Administration of this Plan. (a) This Plan will be administered by the Committee; provided, that, at the discretion of the Board, the Plan may be earnedadministered by the Board, including with respect to the administration of any responsibilities and duties so delegated to the Committee. The Committee may from time to time delegate all or any part of its authority under this Plan to a Company or Subsidiary bonus or incentive plan or program.ARTICLE IX
NON-EMPLOYEE DIRECTOR AWARDS
9.1 Limitation on Awards to Non-Employee Directors. Notwithstanding anythingsubcommittee thereof. To the extent of any such delegation, references in this Plan to the contraryCommittee will be deemed to be references to such subcommittee.
(b) The interpretation and subject to adjustmentconstruction by the Committee of any provision of this Plan or of any Evidence of Award (or related documents) and any determination by the Committee pursuant to Section 10.6 hereof,any provision of this Plan or of any such agreement, notification or document will be final and conclusive. No member of the Committee shall be liable for any such action or determination made in good faith. In addition, the Committee is authorized to take any action it determines in its sole discretion to be appropriate subject only to the express limitations contained in this Plan, and no Non-Employee Directorauthorization in any Plan section or other provision of this Plan is intended or may be granted, in anydeemed to constitute a limitation on the authority of the Committee. (c) To the extent permitted by law, the Committee may delegate to one fiscal yearor more of its members, to one or more officers of the Company, Awards specifically granted under this Plan with an aggregate maximum value, calculatedor to one or more agents or advisors, such duties or powers as of their respective grant dates, of more than $300,000.ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Nontransferability. No Award under the Plan shall be transferable by the Participant other than by will or the laws of descentit may deem advisable, and distribution; provided, however, that, if so determined by the Committee, a Participantthe subcommittee, or any person to whom duties or powers have been delegated as aforesaid, may in the manner established by the Committee, designate a beneficiaryemploy one or beneficiariesmore persons to exercise the rights of the Participant, and to receive any property distributable,render advice with respect to any Award uponresponsibility the deathCommittee, the subcommittee or such person may have under this Plan. The Committee may, by resolution, authorize one or more officers of the ParticipantCompany to do one or both of the following on the same basis as the Committee: (i) designate employees to be recipients of awards under this Plan and (ii) determine the size of any such awards; provided, however, that the Committee may,will not delegate such responsibilities to any such officer for awards granted to an employee who is an officer (for purposes of Section 16 of the Exchange Act) or a Director.
11. Adjustments. The Committee shall make or provide for such adjustments in the number of and kind of Common Stock covered by outstanding Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units granted hereunder and, if applicable, in the number of and kind of Common Stock covered by other awards granted pursuant to Section 9 of this Plan, in the Option Price and Base Price provided in outstanding Option Rights and Appreciation Rights, respectively, in Cash Incentive Awards, and in other award terms, as the Committee, in its sole discretion, permit the transfer or an Award to a Permitted Transferee subject to all the terms and conditions of the Award. Except as provideddetermines, in Section 4.7, Options shall be exercisable during the Participant’s lifetime only by such Participant or such Participant’s Personal Representative. Any transfer contrary to this Section 10.1 will nullify the Award.10.2 Amendments. The Committee may at any time discontinue granting Awards under the Plan. The Committee may at any time amend the Plan or amend any outstanding Award Agreement (including, but not limited to, acceleration of the date of exercise or vesting of any Award and/or payments under any Award) in accordance with the terms of the Plan and for the purpose of satisfying the requirements of any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law; provided that no such amendment shall be permissible if it would result in Rule 16b-3 under the Exchange Act becoming inapplicable to any Award or first require shareholder approval. Notwithstanding the foregoing or any provision of an Award to the contrary, the Committee may at any time (without the consent of any Participant) modify, amend or terminate any or all of the provisions of an Award to the extent necessary to conform the provisions of the Award with Section 162(m), Section 409A or any other provision of the Code or other applicable law, the regulations issued thereunder or an exception thereto, regardless of whether such modification, amendment or termination of the Award shall adversely affect the rights of a Participant.
10.3 Termination. The Board may terminate the Plan at any time prior to its scheduled expiration date, but no such termination shall materially adversely affect the rights of any Participant under any Award theretofore granted in which such Participant has a vested interest without such Participant’s written consent.
10.4 Nonuniform Determinations. The Committee’s determinations under the Plan, including without limitation (i) the determination of the Key Personnel and Directors to receive Awards, (ii) the form, amount and timing of such Awards, (iii) the terms and provisions of such Awards and (iv) the Award Agreements evidencing the same, need not be uniform and may be made by it selectively among Key Personnel and Directors who receive, or who are eligible to receive, Awards under the Plan, whether or not such Key Personnel or Directors are similarly situated.
10.5 No Right to Employment/Service. Neither the action of the Board in establishing the Plan nor any action taken by the Committee, a Director or an Officer under the Plan, nor any provision of the Plan, shall be construed as giving to any person the right to be
retained in the employ, or as an Officer or Director, of, or as an independent contractor or consultant to, the Company or any Subsidiary.
10.6 Changes in Stock. In the event of any Dividend (other than a regular cash Dividend) or other distribution (whether in the form of cash, Stock, other Company securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Stock or other Company securities, issuance of warrants or other rights to purchase Stock or other Company securities or other similar corporate transaction in which the Companygood faith, is the surviving corporation or other event that affects the Stock such that an adjustment is necessary in orderequitably required to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, the number and kindrights of Participants that otherwise would result from (a) any extraordinary cash
TABLE OF CONTENTS dividend, stock dividend, stock split, combination of shares, of Stockrecapitalization or securitiesother change in the capital structure of the Company, to be subject to the Plan and to Awards then outstanding(b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or to be awarded thereunder, the maximum number of shares of Stockcomplete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, which may be issued on the exercise of Options or SARs granted under the Plan, the Option Price, base price of SARs and(c) any other relevant provisions shall be appropriately adjusted by the Committee, whose determination shall be binding on all persons; provided, however, with respectcorporate transaction or event having an effect similar to any Award subject to Section 162(m) or Section 409A, any such adjustment shall be authorized only toof the extent that such adjustment would not cause the Award to fail to comply with Section 162(m) or Section 409A. Inforegoing. Moreover, in the event of aany such transaction in which the Company is not the surviving entity, or any other transaction in which the shareholders of the Company exchange their shares of Stock in the Company for stock or equity securities of another company,event or in the event of complete liquidation or dissolution of the Company, ora Change in the case of a tender offer accepted by the Board, all outstanding Awards shall thereupon terminate, provided thatControl, the Committee may prior to the effective date ofprovide in substitution for any such transaction, either (i) makeor all outstanding Awards immediately exercisable or vested or (ii) arrange to have the surviving entity grant to the Participants replacement awards under this Plan such alternative consideration (including cash) on terms which the Board shall, if any, as it, in good faith, may determine to be fairequitable in the circumstances and reasonable. The Committee,shall require in its sole discretion and toconnection therewith the extent not inconsistentsurrender of all awards so replaced in a manner that complies with Section 10.7 hereof, may determine that, in409A of the event of a transaction in which the Company is not the surviving entity, each outstanding Award shall terminate within a specified number of days after notice to the Participant, and such Participant shall receive, with respect to each such Award, cash or other property, including securities of any entity acquiring the Company, in an amount equal to the Fair Market Value of such Award (if any) as determined by the Committee in its sole discretion.Code. In addition, for each Option Right or SARAppreciation Right with an Option Price or base price, as the case may be,Base Price, respectively, greater than the consideration offered in connection with any such transaction or event or Change in Control, the Committee may in its sole discretion elect to cancel such Option Right or SARAppreciation Right without any payment to the person holding such Option Right or SAR.10.7Appreciation Right. The Committee shall also make or provide for such adjustments in the number of shares of Common Stock specified in Compliance with Code Section 409A3 of this Plan as the Committee in its sole discretion, determines, in good faith, is appropriate to reflect any transaction or event described in this Section 11.
12. Change in Control. Notwithstanding any provisionFor purposes of this Plan, except as may be otherwise prescribed by the Plan orCommittee in an Evidence of Award Agreement to the contrary, if any Award or benefit providedmade under this Plan is subject to the provisions of Section 409A, the provisions of the Plan and anyor as otherwise provided in another plan or agreement applicable Award Agreement shall be administered, interpreted and construed in a manner necessary to comply with Section 409A or an exception thereto (or disregarded to theextent such provision cannot be so administered, interpreted or construed). The following provisions shall apply, as applicable:
(i) If a Participant is a Specified Employee and a payment subject to Section 409A (and not excepted therefrom) to the Participant, a “Change in Control” will be deemed to have occurred upon the occurrence (after the Effective Date) of any of the following events:
(a) the consummation of any merger, consolidation or business combination in which the shareholders of the Company immediately prior to the merger, consolidation or business combination do not own at least a majority of the outstanding equity interests of the surviving parent entity; (b) the sale of all or substantially all of the Company’s and its Subsidiaries’ assets in a single transaction or a series of related transactions; (c) the acquisition of beneficial ownership or control, directly or indirectly, through one transaction or a series of transactions (including, without limitation, power to vote) of a majority of the outstanding shares of Common Stock of the Company by any “person” as such term is duedefined under Sections 13(d) and 14(d) of the Exchange Act (but excluding the Company, any Subsidiary, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and any corporation or other entity owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of Stock); or (d) a contested election of Directors, including with respect to Directors elected under any proxy access procedures included in the Company’s organizational documents, as a result of which or in connection with which the Participant’s Separation from Service, such payment shall be delayed for a period of six (6) months after the date the Participant Separates from Service (or, if earlier, the deathpersons who were Directors of the Participant). Any payment that would otherwise have been dueCompany before such election or owing during such six-month period will be paid immediately followingnominees approved by the endBoard for election to the Board cease to constitute a majority of the six-month period inBoard. 13. Detrimental Activity and Recapture/Recoupment Provisions. (a) Any Evidence of Award may provide for the month followingcancellation or forfeiture of an award or the month containing the 6-month anniversary of the date of termination unless another compliant date is specified in the applicable Award Agreement.(ii) For purposes of Section 409A,forfeiture and repayment to the extent applicable to any Award or benefit under the Plan, it is intended that distribution events qualify as permissible distribution events for purposes of Section 409A and shall be interpreted and construed accordingly. With respect to payments subject to Section 409A, the Company reserves the right to accelerate and/or defer any payment to the extent permitted and consistent with Section 409A.Whether a Participant has Separated from Service or employment will be determined based on all of the facts and circumstances and, to the extent applicable to any Award or benefit, in accordance with the guidance issued under Section 409A.
(iii) The Committee, in its discretion, may specify the conditions under which the payment of all or any portion of any Award may be deferred untilgain related to an award, or other provisions intended to have a later date. Deferrals shall be for such periods or until the occurrence of such events, andsimilar effect, upon such terms and conditions as may be determined by the Board shall determine in its discretion, in accordance with the provisions of Section 409A, the regulations andCommittee from time to time, if a Participant, either (a) during employment or other binding guidance promulgated thereunder; provided, however, that no deferral shall be permitted with respect to Options and other stock rights subject to Section 409A. An election shall be made by filing an electionservice with the Company (onor a form provided bySubsidiary, or (b) within a specified period after termination of such employment or service, engages in any detrimental activity, as described in the Company) on or prior to December 31stapplicable Evidence of the calendar year immediately preceding the beginning of the calendar year (or other applicable service period) to which such election relates (or at such other date as may be specified by the Board to the extent consistent with Section 409A) and shall be irrevocable for such applicable calendar year (or other applicable service period).
(iv) The grant of Options and other Stock rights subject to Section 409A shall be granted under terms and conditions consistent with Treas. Reg. § 1.409A-1(b)(5) such that any such Award does not constitute a deferral of compensation under Section 409A. Accordingly, any such Award may be granted to Employees and other service providers of the Company or any Subsidiary and affiliates in which the Company has a controlling interest.Award. In determining whether the Company has a controlling interest, the rules of Treas. Reg. § 1.414(c)-2(b)(2)(i) shall apply; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-
1(b)(5)(iii)(E)(i)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. The rules of Treas. Reg. §§ 1.414(c)-3 and 1.414(c)-4 shall apply for purposes of determining ownership interests.
(v) In no event shall any member of the Board, the Committee or the Company or any Subsidiary (or their Employees, officers or directors) have any liability to any Participant (or any other Person) due to the failure of an Award to satisfy the requirements of Section 409A.
10.8 Tax Withholding. Whenever Stock is to be delivered to a Participant pursuant to an Award granted hereunder, the Company may (i) require such Participant to remit to the Company an amount in cash sufficient to satisfy all federal, state and local tax withholding requirements related thereto, (ii) withhold such required withholding from compensation otherwise due to such Participant, (iii) do any combination of the foregoing, or (iv) employ any other acceptable method approved by the Company to facilitate the required withholding, provided such approach is permissible under applicable securities and other laws. Notwithstandingaddition, notwithstanding anything in this Plan to the contrary, any Evidence of Award may also provide for the Committee may, in its discretion, permit a Participant (or any beneficiarycancellation or person entitled to act) to elect to pay a portionforfeiture of an award or all of the amount requested by the Company for such taxes with respect to such Award, at such timeforfeiture and in such manner as the Committee shall deem to be appropriate (including, but not limited to, by authorizing the Company to withhold, or agreeing to surrenderrepayment to the Company onof any cash or about the date such tax liability is determinable,Common Stock issued under and/or property,any other securities or property,benefit related to an award, or other forms of payment,provisions intended to have a similar effect, including upon such terms and conditions as may be required by the Committee and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any combination thereof, owned by such personnational securities exchange or a portion of such forms of payment that would otherwise be distributed, or have been distributed, asnational securities association on which the caseCommon Stock may be pursuant to suchtraded.
(b) Any Evidence of Award to such person, having a market value equal(or any part thereof) may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the amountCompany of any gain or earnings related to an award, or include other provisions intended to have a similar effect, upon such taxes); provided, however,terms and conditions as may be determined by the Committee in accordance with (i) any broker-assisted cashless exercise shallCompany clawback or recoupment policy, including the Clawback Policy, TABLE OF CONTENTS that is adopted to comply with the requirements of Financial Accounting Standards Board, Accounting Standards Codification, Topic 718 (or any successor provision) andapplicable laws, rules, regulations, stock exchange listing standards or otherwise, or (ii) any withholding satisfied through a net-settlement shall be limited toapplicable laws that impose mandatory clawback or recoupment requirements under the minimum statutory withholding requirements orcircumstances set forth in such laws, including as otherwise determined inrequired by the discretion of the Committee. No such arrangement shall be permitted that is an impermissible loan to executive officers or directors under Section 402 of Sarbanes-Oxley Act of 2002.10.9 Delivery of Shares. The Company shall not be obligated to deliver any Stock upon2002, the grant, exerciseDodd-Frank Wall Street Reform and Consumer Protection Act, or payment of an Award unless and until, in the opinion of the Company’s counsel, allother applicable Federal, state and other laws, andrules, regulations, have been complied with. In the event the outstanding Stock is at the time listed on anyor stock exchange no delivery shalllisting standards, as may be made unlessin effect from time to time, and until the shareswhich may operate to be delivered have been listed or authorized to be added to the list upon official notice of issuance on such exchange. No delivery shall be made until all other legal matters in connection with the issuance and delivery of Stock have been approved by the Company’s counsel. Without limiting the generality of the foregoing, the Company may require from the Participant or other person purchasing shares of Stock under the Plan such investment representation or such agreement, if any, as counselcreate additional rights for the Company may consider necessary in orderwith respect to comply with the Securities Act of 1933, as amended,awards and the regulations thereunder,recovery of amounts relating thereto. By accepting awards under this Plan, the Participants consent to be bound by the terms of the Clawback Policy, if applicable, and agree and acknowledge that they are obligated to cooperate with, and provide any and all assistance necessary to, the Company in its efforts to recover or recoup any award, any gains or earnings related to any award, or any other applicable law. Certificates evidencing the shares may be required to bear
a restrictive legend. A stop transfer order may be required to be placed with the transfer agent, and the Company may require that the Participant or such other person agree that any sale of the shares will be made only on one or more specified stock exchanges or in such other manner as permitted by the Committee.
10.10 Status. A Participant’s status as Key Personnel or a Director shall be made exclusively by the Committee, for purposes of, and as evidenced by, participation in the Plan, and determined for each Award as of the date the Award is granted to the Participant, and such determination shall be final and conclusive absent manifest error.
10.11 Unfunded. This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Awardamount paid under this Plan or otherwise subject to clawback or recoupment pursuant to such laws, rules, regulations, stock exchange listing standards or Company policy. Such cooperation and rightsassistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the payment of Awards shall be no greater than the rights of the Company’s general creditors.
10.12 Deferral of Awards. The Committee may establish onerecovery or more programs under the Plan to require or permit Participants the opportunity to elect to defer receipt of consideration upon the exercise of an Award, satisfaction of performance goals, or other event that absent the requirement or election would entitle the Participant to payment or receipt of shares of Stock or other consideration under an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee deems advisable for the administration of any deferral program.
10.13 Acceptance of Actions/Determinations. By accepting any Award or other benefit under this Plan, each Participant (and each person claiming under or through such Participant) shall be conclusively deemed to have indicated such Participant’s acceptance and ratification of, and consent to, any action taken or determinations made under this Planrecoupment by the Company from the BoardParticipants of any such amounts, including from the Participants’ accounts or from any other compensation, to the Committee, and their respective delegatees.
10.14 Governing Law. The validity, construction, interpretation, administration and effect of this Plan, and of its rules and regulations, and rights relating to this Plan and to Awards grantedextent permissible under this Plan, shall be governed by the substantive lawsSection 409A of the Commonwealth of Pennsylvania without regard to its choice or conflicts of laws principles. If any provision of this Plan or any Award is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of this Plan or any Award, but such provision shall be fully severable, and this Plan or Award, as applicable, shall be construed and enforced as if the illegal or invalid provision had never been included in this Plan or Award, as applicable.Code.
14. Non-U.S. Participants.10.15 Non U.S. Participants. In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America or who provide services to the Company or any Subsidiary under an agreement with a foreign nation or agency, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or
custom. Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including without limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretarysecretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the shareholdersShareholders. 15. Transferability. (a) Except as otherwise determined by the Committee, and subject to compliance with Section 17(b) of this Plan and Section 409A of the Company.10.16Code, no Option Right, Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, Cash Incentive Award, award contemplated by ShareholderSection 9 of this Plan or dividend equivalents paid with respect to awards made under this Plan will be transferable by the Participant except by will or the laws of descent and distribution. In no event will any such award granted under this Plan be transferred for value. Where transfer is permitted, references to “Participant” shall be construed, as the Committee deems appropriate, to include any permitted transferee to whom such award is transferred. Except as otherwise determined by the Committee, Option Rights and Privileges. AAppreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law or court supervision.
(b) The Committee may specify on the Date of Grant that part or all of the shares of Common Stock that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions on transfer, including minimum holding periods. 16. Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by a Participant or Personal Representative shallother person under this Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes or other amounts required to be withheld, which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such benefit. If a Participant’s benefit is to be received in the form of Common Stock, and such Participant fails to make arrangements for the payment of taxes or other amounts, then, unless otherwise determined by the Committee, the TABLE OF CONTENTS Company will withhold shares of Common Stock having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when the Participant is required to pay the Company an amount required to be withheld under applicable income, employment, tax or other laws, the Participant may elect, unless otherwise determined by the Committee, to satisfy the obligation, in whole or in part, by having withheld, from the shares of Common Stock required to be delivered to the Participant, shares of Common Stock having a value equal to the amount required to be withheld or by delivering to the Company other shares of Common Stock held by such Participant. The Committee may also provide for automatic and mandatory withholding of shares of Common Stock from an award by the Company in connection with the Participant’s satisfaction of such obligations. The Common Stock used for tax or other withholding will be valued at an amount equal to the fair market value of such Common Stock on the date the benefit is to be included in Participant’s income. In no event will the fair market value of the Common Stock to be withheld and delivered pursuant to this Section 16 exceed the minimum amount required to be withheld, unless (i) an additional amount can be withheld and not result in adverse accounting consequences and (ii) such additional withholding amount is authorized by the Committee. Participants will also make such arrangements as the Company may require for the payment of any withholding tax or other obligation that may arise in connection with the disposition of Common Stock acquired upon the exercise of Option Rights. 17. Compliance with Section 409A of the Code. (a) To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants. This Plan and any grants made hereunder will be administered in a manner consistent with this intent. Any reference in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service. (b) Neither a Participant nor any of a Participant’s creditors or beneficiaries will have no rightsthe right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a shareholderParticipant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owed by a Participant to the Company or any of its Subsidiaries. (c) If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant will be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest, on the tenth business day of the seventh month after such separation from service. (d) Solely with respect to any award that constitutes nonqualified deferred compensation subject to Section 409A of the Code and that is payable on account of a Change in Control (including any installments or stream of payments that are accelerated on account of a Change in Control), a Change in Control shall occur only if such event also constitutes a “change in the ownership,” “change in effective control,” and/or a “change in the ownership of a substantial portion of assets” of the Company as those terms are defined under Treasury Regulation §1.409A-3(i)(5), but only to the extent necessary to establish a time and form of payment that complies with Section 409A of the Code, without altering the definition of Change in Control for any purpose in respect of such award. (e) Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code. In any case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for TABLE OF CONTENTS a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties. 18. Amendments. (a) The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to this Plan, for purposes of applicable stock exchange rules and except as permitted under Section 11 of this Plan, (i) would materially increase the benefits accruing to Participants under this Plan, (ii) would materially increase the number of securities which may be issued under this Plan, (iii) would materially modify the requirements for participation in this Plan, or (iv) must otherwise be approved by the Shareholders in order to comply with applicable law or the rules of the Nasdaq Stock coveredMarket or, if the Common Stock is not traded on the Nasdaq Stock Market, the principal national securities exchange upon which the Common Stock is traded or quoted, all as determined by an Awardthe Board, then, such amendment will be subject to approval by the Shareholders and will not be effective unless and until sharessuch approval has been obtained. (b) Except in connection with a corporate transaction or event described in Section 11 of such Stock are issued (as evidencedthis Plan or in connection with a Change in Control, the terms of outstanding awards may not be amended to reduce the Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation Rights, or cancel outstanding “underwater” Option Rights or Appreciation Rights (including following a Participant’s voluntary surrender of “underwater” Option Rights or Appreciation Rights) in exchange for cash, other awards or Option Rights or Appreciation Rights with an Option Price or Base Price, as applicable, that is less than the Option Price of the original Option Rights or Base Price of the original Appreciation Rights, as applicable, without approval by the appropriate entryShareholders. This Section 18(b) is intended to prohibit the repricing of “underwater” Option Rights and Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 11 of this Plan. Notwithstanding any provision of this Plan to the contrary, this Section 18(b) may not be amended without approval by the Shareholders. (c) If permitted by Section 409A of the Code, but subject to the paragraph that follows, including in the case of termination of employment or service, or in the case of unforeseeable emergency or other circumstances or in the event of a Change in Control, to the extent a Participant holds an Option Right or Appreciation Right not immediately exercisable in full, or any Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Cash Incentive Awards, Performance Shares or Performance Units which have not been fully earned, or any dividend equivalents or other awards made pursuant to Section 9 of this Plan subject to any vesting schedule or transfer restriction, or who holds Common Stock subject to any transfer restriction imposed pursuant to Section 15(b) of this Plan, the Committee may, in its sole discretion, provide for continued vesting or accelerate the time at which such Option Right, Appreciation Right or other award may vest or be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Cash Incentive Awards, Performance Shares or Performance Units will be deemed to have been earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award. (d) Subject to Section 18(b) of this Plan, the Committee may amend the terms of any award theretofore granted under this Plan prospectively or retroactively. Except for adjustments made pursuant to Section 11 of this Plan, no such amendment will materially impair the rights of any Participant without his or her consent. The Board may, in its discretion, terminate this Plan at any time. Termination of this Plan will not affect the rights of Participants or their successors under any awards outstanding hereunder and not exercised in full on the booksdate of termination. 19. Governing Law. This Plan and all grants and awards and actions taken hereunder will be governed by and construed in accordance with the internal substantive laws of the Company orCommonwealth of a duly authorized transfer agentPennsylvania. 20. Effective Date/Termination. This Plan will be effective as of the Company).Effective Date. No grants will be made after the Effective Date under the Predecessor Plan provided that outstanding awards granted under the Predecessor Plan will continue unaffected following the Effective Date. No grant will be made under this Plan on or after the tenth anniversary of the Effective Date, but all grants made prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan. For clarification purposes, the terms and conditions of this Plan shall not apply to or otherwise impact previously granted and outstanding awards under the Predecessor Plan, as applicable. TABLE OF CONTENTS 21. Miscellaneous Provisions.10.17 Fractional Shares.
(a) The Company will not be required to issue any fractional shares of Common Stock pursuant to this Plan. The Committee may provide for the elimination of fractions or for the settlement of fractions in cash. (b) This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time. (c) Except with respect to Section 21(e)10.18 Enforceability. of this Plan, to the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right. Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan.
(d) No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or shares thereunder, would be, in the opinion of counsel selected by the Company, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan. (e) Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries will not be considered interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder. (f) No Participant will have any rights as a Shareholder with respect to any Common Stock subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such Common Stock upon the share records of the Company. (g) The Committee may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant. (h) Except with respect to Option Rights and Appreciation Rights, the Committee may permit Participants to elect to defer the issuance of Common Stock under this Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan and which are intended to comply with the requirements of Section 409A of the Code. The Committee also may provide that deferred issuances and settlements include the crediting of dividend equivalents or interest on the deferral amounts. (i) If any provision of this Plan is or becomes invalid illegal or unenforceable in any jurisdiction, or would disqualify this Plan or any Awardaward under any law deemed applicable by the Committee, such provision shallwill be construed or deemed amended or limited in scope to confirmconform to applicable laws or, in the discretion of the Committee, it shallwill be stricken and the remainder of this Plan shallwill remain in full force and effect. 10.19 Recoupment. Notwithstanding any other provisionanything in this Plan or an Evidence of Award to the contrary, nothing in this Plan or in an Evidence of Award prevents a Participant from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations, and for purpose of clarity a Participant is not prohibited from providing information voluntarily to the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act.
22. Share-Based Awards madein Substitution for Awards Granted by Another Company. Notwithstanding anything in this Plan to the contrary: (a) Awards may be granted under this Plan shallin substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units or other share or share-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary. Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for Common Stock substituted for the securities covered by the original awards and the number of shares subject to recovery underthe original awards, as well as any law, governmental regulation, stock exchange listing requirementexercise or Company policypurchase prices applicable to them, including any related deductions, recoupment and/the original awards, adjusted to account for differences in stock prices in connection with the transaction. TABLE OF CONTENTS Any Common Stock that is issued or claw-back as may be required to be made pursuant to such law, government regulation, stock exchange listing requirement,transferred by, or Company policy, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to Awards and recovery of amounts relating thereto. By accepting Awards under the Plan, Participants agree and acknowledge that they are obligated to cooperate with, and provide any and all assistance necessary to, the Company to recover or recoup any Award or amounts paid under the Planis subject to clawback pursuant to such law, government regulation, stock exchange listing requirementany awards that are granted by, or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover or recoup any Award or amounts paid under the Plan from a Participant’s accounts, or pending or future compensation or Awards.10.20 Successors. Allbecome obligations of, the Company under Section 22(a) of this Plan will not reduce the shares of Common Stock available for issuance or transfer under this Plan with respector otherwise count against the limits contained in Section 3 of this Plan. In addition, no shares of Common Stock subject to Awardsan award that is granted hereunder, shallby, or becomes an obligation of, the Company under Section 22(a) of this Plan, will be binding on any successoradded to the Company, whetheraggregate limit contained in Section 3(a)(i) of this Plan pursuant to the existenceshare recycling provisions set forth in Section 3(b) of such successor isthis Plan.
TABLE OF CONTENTS
Financial Metric Definitions and Reconciliations (1)
| Annual Plan and PSU Annual Tranches: Adjusted EBITDA |
2023 Adjusted EBITDA Reconciliation*
| | | | Net (loss) income, as reported | | | $1,299 | Interest expense - net | | | 5,528 | Income tax (benefit) | | | (355) | Depreciation expense | | | 9,949 | Amortization expense | | | 5,314 | Total EBITDA | | | $21,735 | Loss on divestitures | | | 3,074 | VanHooseCo contingent consideration | | | (26) | Bridge grid deck exit impact | | | 4,454 | Bad debt provision | | | 1,862 | Restructuring costs | | | 676 | Total Adjusted EBITDA | | | $31,775 |
∗
| Adjusted EBITDA targets for the 2023 Annual Plan were adjusted for divestitures completed in 2023, as permitted by the plan document. |
Definition for PSU Annual Tranches: Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA); shall mean (a) income from continuing operations; (b) plus income tax expense; (c) plus interest expense; (d) minus interest income; (e) plus depreciation expense; (f) plus amortization expense; (g) plus or minus adjustments allowable as determined by the result of a direct or indirect purchase, merger,consolidation or otherwise, of all or substantially allCompensation Committee.
Note: Adjusted EBITDA for the 2023 tranche of the business and/or assets of2023 and 2022 PSU Awards was determined on a basis consistent with the Company.10.21 Effective Date. This amendment2023 Annual Plan. Such basis will be consistently applied to determine the Adjusted EBITDA in 2024 and restatement of2025 for the L. B. Foster Company 2006 Omnibus Incentive Plan is effective2022 and 2023 PSU Awards, respectively. Adjusted EBITDA targets for the 2023 PSU Awards were adjusted for divestitures completed in 2023, as ofpermitted by the Effective Date.
plan document. (2)
 L.B. FOSTER COMPANY
415 HOLIDAY DRIVE
PITTSBURGH, PA 15220-2729
ATTN: INVESTOR RELATIONS
| VOTE BY INTERNETAnnual Plan: 2023 Average Working Capital as a Percentage of Sales
|
Average Working Capital as a Percentage of Sales (determined on a 13-point average basis)
| | | | Accounts receivable - www.proxyvote.comnet | | | $65,872 | Contract assets | | | 32,395 | Inventories - net | | | 80,797 | Accounts payable | | | (42,610) | Deferred revenue | | | (15,569) | 13-point average working capital | | | $120,885 | Total net sales | | | $543,744 | Average working capital percentage of sales | | | 22.2% |
(3)
Use
| 2023-2025 PSUs: Economic Profit Improvement shall mean (a) Economic Profit (Loss) for the Internet to transmit your voting instructionsannual period, less (b) Economic Loss for 2022 (the Baseline Economic Loss). Economic Profit (Loss), including the Baseline Economic Loss, is calculated as (i) Net Operating Profit After Tax (NOPAT), less the applicable Capital Charge for the performance period, including the impact from any approved adjustments. The Capital Charge is calculated as the average invested capital deployed during the performance period multiplied by the weighted average cost of capital (WACC). Economic Profit Improvement will be calculated with regard to: (a) effects of changes in accounting or tax law, (b) divestitures of properties, businesses, investments, equity in affiliates or held for sale discontinued operations and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurredassociated with these actions, (c) costs of any acquisition or potential acquisition, purchase accounting and other non-operating results of an acquisition completed during the period, and (d) any significant or non-recurring item(s). The calculation of NOPAT, Capital Charge and Economic Profit (Loss) for each performance period shall utilize consistent methodologies used to calculate the Baseline Economic Loss including but not limited to a fixed income tax rate of 12% and a fixed WACC of 10%. Economic Profit Improvement for the 2023 PSU Awards will be calculated in 2024 and 2025 by our companydetermining Economic Profit in mailing proxy materials, you can consentsuch performance periods, calculated on a basis consistent with that used to receiving all future proxy statements, proxy cardscalculate the Baseline Economic Loss, and annual reports electronically via e-mailcomparing the result to the Baseline Economic Loss.
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TABLE OF CONTENTS (4)
| 2022-2024 PSUs: Corporate ROIC (for the 2023 Tranche of 2022 PSU Awards) shall mean with respect to any calendar year: (A) pre-tax earnings from continuing operations before interest income and interest expense and amortization charges, divided by (B) an average of month-end total assets less the sum of cash, marketable securities and non-interest-bearing current liabilities, determined in accordance with generally accepted accounting principles. Corporate ROIC will be calculated with regard to: (a) effects of changes in accounting or tax law, (b) divestitures of properties, businesses, investments, equity in affiliates or held for sale discontinued operations and the Internet. To sign upcosts associated with these actions, (c) costs of any acquisition or potential acquisition, purchase accounting and other non-operating results of an acquisition completed during the period, and (d) any significant or non-recurring item(s). Corporate ROIC shall be expressed as a percentage (%) and calculated annually for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return itCompany for each calendar year in the postage-paid envelope we have providedperformance period, including the impact from any approved adjustments.
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(5)
| 2021-2023 PSUs: 2021-2023 Average ROIC: means, with respect to any calendar year: (i) pre-tax earnings from continuing operations before interest income and interest expense and amortization charges, divided by (ii) an average of month end total assets less the sum of cash, marketable securities, and non-interest bearing current liabilities, determined in accordance with generally accepted accounting principles. Corporate ROIC will be calculated with regard to: (a) effects of changes in accounting or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | | | | | | | | | | | | | | | | | | |
| | | TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | | | | | | KEEP THIS PORTION FOR YOUR RECORDS | | DETACH AND RETURN THIS PORTION ONLY | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | |
| | | | | | | | | | | | | | | | | | | | | | | For | Withhold | For All | | To withhold authority to votetax law, (b) divestitures of properties, businesses, investments, equity in affiliates or held for sale discontinued operations and the costs associated with these actions, (c) costs of any individual nominee(s)acquisition or potential acquisition, purchase accounting and other non-operating results of an acquisition completed during the period, and (d) any significant or non-recurring item(s). Corporate ROIC will be expressed as a percentage (%) and calculated annually for the Company for each calendar year in the three-year performance period. The Average Corporate ROIC for the three-year performance period is calculated by aggregating Corporate ROIC percentages as calculated for each year and dividing by three (3), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | | | All | All | Except | | | | | | | | | | The Board of Directors recommends you vote FOR
the following: | | | | | | | | | | | | | 1. | Election of Directors | | | | ☐ | ☐ | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nominees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 01 Robert P. Bauer 02 Lee B. Foster II 03 Dirk Jungé 04 Diane B. Owen 05 Robert S. Purgason | | | | 06 William H. Rackoff 07 Suzanne B. Rowland 08 Bradley S. Vizi | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR proposals 2, 3 and 4. | | | | For | Against | Abstain | | | | | | | | | | | | | | | | | | | | | | | 2 | Ratify appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2016. | | ☐ | ☐ | ☐ | | | | | | | | | | | | | | | | | 3 | Advisory approval of the compensation paidrounded to the Company’s named executive officersnearest tenth of a percentage. |
(6)
| 2021-2023 PSUs: 2021-2023 Cumulative Adjusted EBITDA* |
Cumulative Adjusted EBITDA Reconciliation
| | | | | | | | | | | | | Net (loss) income, as reported | | | $3,471 | | | $(45,677) | | | $1,299 | | | $(40,907) | Interest expense - net | | | 2,956 | | | 3,340 | | | 5,528 | | | 11,824 | Income tax (benefit) expense | | | 1,119 | | | 36,681 | | | (355) | | | 37,445 | Depreciation expense | | | 8,051 | | | 8,635 | | | 9,949 | | | 26,635 | Amortization expense | | | 5,836 | | | 6,144 | | | 5,314 | | | 17,294 | Total EBITDA | | | $21,433 | | | $9,123 | | | $21,735 | | | $52,291 | Loss (gain) on divestitures | | | (2,741) | | | (22) | | | 3,074 | | | 311 | Acquisition and divestiture costs | | | — | | | 2,235 | | | — | | | 2,235 | Commercial contract settlement | | | — | | | 3,956 | | | — | | | 3,956 | Insurance proceeds | | | — | | | (790) | | | — | | | (790) | VanHooseCo inventory adjustment to fair value | | | — | | | 1,135 | | | — | | | 1,135 | VanHooseCo contingent consideration | | | — | | | 526 | | | (26) | | | 500 | Impairment expense | | | — | | | 8,016 | | | — | | | 8,016 | Bridge grid deck exit impact | | | — | | | — | | | 4,454 | | | 4,454 | Bad debt provision | | | — | | | — | | | 1,862 | | | 1,862 | Restructuring costs | | | — | | | — | | | 676 | | | 676 | Other approved adjustments | | | 395 | | | (185) | | | — | | | 210 | Total Cumulative Adjusted EBITDA | | | $19,087 | | | $23,994 | | | $31,775 | | | $74,856 |
∗
| Cumulative Adjusted EBITDA targets for the 2021 PSU Awards were adjusted for divestitures completed in 2015. | | ☐ | ☐ | ☐ | | | | | | | | | | | | | | | 4 | Approval of2021, 2022 and 2023, as permitted by the Amended and Restated 2006 Omnibus Incentive Plan. | | ☐ | ☐ | ☐ | | | | | | | | | | | | | | | | | | | | | | | | For | Against | Abstain | | | | | | | | | | | | | | | | | 5 | Acting upon any other matters that properly come before the Annual Meeting. | | ☐ | ☐ | ☐ | | | | | | | | | | | | | | | | | | | | Yes | No | | | | | | | | | | | | | | | | | | | | | | | | | | | Please indicate if you plan to attend this meeting | | ☐ | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | | | Signature (Joint Owners) | Date | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
0000284791_1 R1.0.1.25
Bring this admission ticket with you to the meeting on May 25, 2016. Do not mail.
This admission ticket admits you to the meeting. You will not be let into the meeting without an admission ticket or
other proof of stock ownership as of March23, 2016, the record date.
ADMISSION TICKET
L.B. FOSTER COMPANY
2016 Annual Meeting of Shareholders
May25, 2016
8:00 A.M. Eastern Daylight Time
DOUBLETREE HOTEL
500 Mansfield Avenue
Pittsburgh, PA15205
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be
Held on May 25, 2016:
The proxy statement and 2015 Annual Report to Shareholders are available atwww.proxyvote.com
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement, 2015 Annual Report is/are available atwww.proxyvote.com
| | | | | | | | | ANNUAL MEETING OF SHAREHOLDERS
May 25, 2016
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS
| | | | | | | | | | The shareholder(s) hereby appoint Lee B. Foster II and Robert P. Bauer, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of L. B. Foster Company that the shareholder(s) are entitled to vote at the Annual Meeting of Shareholders to be held at 8:00 AM, Eastern Daylight Time on May 25, 2016, at the DoubleTree Hotel, 500 Mansfield Avenue, Pittsburgh, PA 15205, and any adjournment or postponement thereof.
| | | | | | | | | | THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF ALL NOMINEES LISTED ON THE REVERSE SIDE TO THE BOARD OF DIRECTORS AND “FOR” PROPOSALS 2, 3, and 4. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PLEASE MARK, SIGN, DATE AND RETURN THIS CARD USING THE ENCLOSED REPLY ENVELOPE | | | | | | | | |
0000284791_2 R1.0.1.25
TABLE OF CONTENTS | 
