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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ | |
Filed by a Party other than the Registrant o | |
Check the appropriate box: |
o Preliminary Proxy Statement | |
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ Definitive Proxy Statement | |
o Definitive Additional Materials | |
o Soliciting Material Pursuant to §240.14a-12 |
Lennox International Inc.
Payment of Filing Fee (Check the appropriate box):
þ No fee required. | |
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
1) Title of each class of securities to which transaction applies: |
2) Aggregate number of securities to which transaction applies: |
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
4) Proposed maximum aggregate value of transaction: |
5) Total fee paid: |
o Fee paid previously with preliminary materials. |
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) Amount Previously Paid: |
2) Form, Schedule or Registration Statement No.: |
3) Filing Party: |
4) Date Filed: |
• | elect | |
• | approve the issuance of shares of our common stock pursuant to an Agreement and Plan of Reorganization with A.O.C. Corporation; and | |
• | transact any other business that may properly come before the Annual Meeting of Stockholders. |
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• | By Mail: You may complete, date, sign and return your Proxy Card in the enclosed postage-paid envelope. If you sign and return the accompanying Proxy Card and your proxy is not revoked, your shares will be voted in accordance with your voting instructions. If you sign and return your Proxy Card but do not give voting instructions, your shares will be voted as recommended by the Board of Directors. | |
• | By Telephone or Internet: The telephone and Internet voting procedures established by |
• | In Person at the Annual Meeting of Stockholders: You may vote in person at the meeting even if you send in your Proxy Card, vote by telephone or vote by Internet. The ballot you submit at the meeting will supersede any prior vote. If you attend the Annual Meeting of Stockholders in person and want to vote shares you beneficially hold in street name, you must bring a written proxy from your broker, bank or other holder of record that identifies you as the sole representative entitled to vote the shares indicated. |
• | submitting a new written proxy bearing a later date than the Proxy Card you previously submitted prior to or at the Annual Meeting of Stockholders; |
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• | voting again by telephone or Internet before 11:59 p.m., Eastern |
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• | attending the Annual Meeting of Stockholders and voting in person; however, attendance at the meeting will not in and of itself constitute a revocation of your proxy. |
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Janet K. Cooper | ||
C. L. (Jerry) Henry |
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Terry D. Stinson | ||
Richard L. Thompson |
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Thomas W. Booth | ||
James J. Byrne | ||
John W. |
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Paul W. Schmidt |
Linda G. Alvarado, 55, has served as a director of our company since 1987. She has served as President and Chief Executive Officer of Alvarado Construction, Inc., a commercial development and general contracting firm specializing in commercial, government and industrial construction, since 1976. She currently serves on the Boards of Directors of Qwest Communications International Inc., a telecommunications company; Pepsi Bottling Group, Inc., a soft drink and beverage company; 3M Company, a diversified technology company; and Pitney Bowes Inc., an office equipment and services company. Ms. Alvarado is also a partner in the Colorado Rockies Baseball Club. | ||
Steven R. Booth, 47, has served as a director of our company since 2002. He became the President and CEO of Polytech Molding Inc., a plastic injection molding company serving the industrial, health care and automotive markets, in 2001. From 1994 to 2001, Mr. Booth was employed by Process Science Inc., a designer and manufacturer of equipment and products using hydrostatic extrusion technology. |
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John E. Major, 61, has served as a director of our company since 1993. Mr. Major is President of MTSG, a company that provides consulting, management and governance services, which he formed in 2003. From 2003 to 2006, he served as Chief Executive Officer of Apacheta Corporation, a mobile wireless software company whose products are used to manage inventory and deliveries. From 2000 to 2003, he served as Chairman and Chief Executive Officer of Novatel Wireless, Inc., a leading provider of wireless Internet solutions. Prior to joining Novatel Wireless, Mr. Major served as President and CEO of Wireless Knowledge, Inc., a joint venture between Microsoft Corporation and QUALCOMM Inc., from 1998 through 1999. From 1997 to 1998, he served as Executive Vice President of QUALCOMM and President of its Wireless Infrastructure Division. Prior to joining QUALCOMM, Mr. Major served as Senior Vice President and Chief Technology Officer at Motorola, Inc., a manufacturer of telecommunications equipment, and Senior Vice President and General Manager for Motorola’s Worldwide Systems Group of the Land Mobile Products Sector. Mr. Major currently serves on the Board of Directors of Littelfuse, Inc., a manufacturer of fuses; Broadcom Corporation, a semiconductor manufacturing company; and the Rancho Santa Fe Foundation. | ||
Jeffrey D. Storey, M.D.,41, has served as a director of our company since 2006. He is a founding partner and President of Cheyenne Women’s Clinic in Cheyenne, Wyoming, a position he has held since 2004. From 1999 to 2004, Dr. Storey was a physician and partner at Cheyenne Obstetrics and Gynecology. Dr. Storey graduated from Dartmouth Medical School in 1993 and has been a practicing obstetrician/gynecologist since 1997. He is also a Lieutenant Colonel and flight surgeon serving as Chief of Aerospace Medicine for the Wyoming Air National Guard and a veteran of Operation Enduring Freedom. Dr. Storey is a fellow in the American College of Obstetricians and Gynecologists and serves as an Adjunct Clinical Faculty Member for the University of Wyoming, Department of Family Practice. |
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• | John W. Norris, III, Steven R. Booth, Thomas W. Booth and Jeffrey D. Storey, M.D. are great-grandchildren of D.W. |
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• | In September 2005, we announced that our Board of Directors had authorized a stock repurchase program to repurchase up to ten million shares of our common stock. As of December 31, 2006, we had repurchased 6,357,041 shares of our common stock under this program. The disinterested directors believe that the AOC Restructuring represents an additional way to increase stockholder value by further reducing the number of outstanding shares of our common stock at minimal cost to us. | |
• |
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Approximate Dollar | ||||||||||||||
Approximate Number | Value of the Shares | |||||||||||||
of Shares of Lennox | of Our Common Stock | |||||||||||||
Common Stock to be | to be Received | |||||||||||||
Percentage | Received Pursuant | Pursuant to the | ||||||||||||
Name of | Basis on which the | Ownership | to the Reorganization | Reorganization | ||||||||||
the Related Person | Individual is a Related Person | of AOC(1) | Agreement | Agreement(2) | ||||||||||
Steven R. Booth | Director of our company | 1.02 | % | 22,732 | $ | 844,948 | ||||||||
Thomas W. Booth | Director of our company | 1.02 | % | 22,732 | 844,948 | |||||||||
President and director of AOC | ||||||||||||||
Richard W. Booth | Father of Steven R. Booth and Thomas W. Booth | 8.69 | % | 194,589 | 7,232,873 | |||||||||
Treasurer and Director of AOC | ||||||||||||||
Richard W. Booth Trust | Thomas W. Booth has voting control of the trust | 0.60 | % | 13,458 | 500,234 | |||||||||
Nancy E. Roman | Sister of Steven R. Booth and Thomas W. Booth | 1.02 | % | 22,732 | 844,948 | |||||||||
John W. Norris, III | Director of our company | 0.05 | % | 1,091 | 40,552 | |||||||||
John W. Norris, Jr. | Father of John W. Norris, III and former Chairman of the Board of our company | 0.14 | % | 3,092 | 114,930 | |||||||||
Julie Ann Norris | Sister of John W. Norris, III and trustee for the Julie Ann Norris Living Trust | 0.11 | % | 2,364 | 87,870 | |||||||||
Jeffrey C. Norris | Brother of John W. Norris, III | 0.11 | % | 2,364 | 87,870 | |||||||||
Robert W. Norris | Brother of John W. Norris, Jr. | 0.14 | % | 3,092 | 114,930 | |||||||||
Megan E. Norris | Sister of John W. Norris, Jr. | 2.83 | % | 63,287 | 2,352,378 | |||||||||
Jeffrey D. Storey, M.D. | Director of our company | — | — | — | ||||||||||
Lynn B. Storey | Mother of Jeffrey D. Storey, M.D. | 6.69 | % | 149,852 | 5,569,999 | |||||||||
TOTAL | 501,385 | $ | 18,636,480 | |||||||||||
(1) | Based on 12,315 shares of AOC common stock outstanding at December 31, 2006. | |
(2) | ||
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• | integrity, interpersonal skills and effectiveness, accountability and high performance standards; | |
• | high levels of leadership experience in business, substantial knowledge of issues faced by publicly traded companies, experience in positions demonstrating expertise, including on other boards of directors, financial acumen, industry knowledge, diversity of view points, experience in international markets and strategic planning; | |
• | expertise under the rules and regulations of the New York Stock Exchange and the Securities and Exchange Commission; | |
• | ability and willingness to represent the stockholders’ long and short-term interests, awareness of our responsibilities to our customers, employees, suppliers, regulatory bodies and the communities in which we operate and willingness to advance his or her opinions while supporting the majority Board decision assuming questions of ethics or propriety are not involved; | |
• | ability to understand and distinguish between the roles of governance and management; and | |
• | availability and commitment. |
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• | sending an email to the Board at directors@lennoxintl.com; or | |
• | mailing a written communication to 2140 Lake Park Blvd., Richardson, Texas 75080, Attention: Board of Directors, c/o Investor Relations. |
• | refer substantiated allegations of improper accounting, internal controls or auditing matters affecting | |
• | refer substantiated allegations of other improper conduct affecting | |
• | advise the Board at its regularly scheduled meetings of material stockholder communications; and | |
• | refer questions concerning our products, services and human resources issues to the appropriate department for a response. |
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• | maintaining competitive total executive compensation opportunities by keeping each element of executive compensation market-competitive; | |
• | aligning all executive reward programs with the achievement of corporate goals; and | |
• | attracting and retaining top executive talent to support organizational growth and expansion. |
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• | business/product mix; | |
• | international presence/operations; | |
• | revenue; and | |
• | industry. |
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• Emerson Electric Co. | • York International Corporation (now a division of Johnson Controls Inc.) | • Acuity Brands Inc. | ||
• American Standard Companies Inc. | • USG Corp. | • Kennametal Inc. | ||
• ITT Industries | • Armstrong Holdings Inc. | • Briggs & Stratton Corp. | ||
• Owens Corning Sales, Inc. | • The Stanley Works | • Tecumseh Products Company | ||
• Dover Corporation | • Universal Forest Products Inc. | • Jacuzzi Brands Inc. | ||
• Black & Decker Corp. | • Snap-On Inc. | • Genlyte Group Inc. | ||
• Maytag Corporation |
base salary; | ||
• | performance based short-term variable pay programs paid in cash; | |
• | long-term equity incentive programs paid in stock; | |
• | perquisites and other compensation; | |
• | health and welfare programs; and | |
• | retirement programs. |
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Performance | ||||||||
Threshold | Target | Maximum | Above | |||||
Performance | Performance | Performance | Maximum | |||||
Payout Opportunity for Robert E. Schjerven | 50% of Target | 110% of Base Salary | 150% of Target | Up to 225% of Target | ||||
Payout Opportunity for all other named executive officers | 50% of Target | 70% of Base Salary | 150% of Target | Up to 225% of Target |
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In 2006, each of the named executive officers earned a payout of 166% of target, or 3.31% of base salary, under the broad-based short-term incentive program. As a result of | ||
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• | an automobile allowance of $1,500 per month; | |
• | a country club membership; | |
• | tax and financial planning services, reimbursed up to $12,000 per year; | |
• | the installation of company HVAC equipment at the executive’s home so that the executive can promote our equipment to both business and personal guests; | |
• | an executive level relocation program with taxgross-up assistance; and | |
• | an annual comprehensive physical exam. |
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James J. Byrne (Chairperson) | Linda G. Alvarado | |
Terry D. Stinson | John E. Major |
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Long-Term Compensation | |||||||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||||||
Annual Compensation | |||||||||||||||||||||||||||||||||
Restricted | Securities | ||||||||||||||||||||||||||||||||
Other Annual | Stock | Underlying | LTIP | All Other | |||||||||||||||||||||||||||||
Salary | Bonus(1) | Compensation(2) | Awards(3) | Options/SARs | Payouts(4) | Compensation(5) | |||||||||||||||||||||||||||
Named Executive Officer | Year | ($) | ($) | ($) | ($) | Granted(#) | ($) | ($) | |||||||||||||||||||||||||
Robert E. Schjerven | 2005 | $ | 943,000 | $ | 2,381,075 | $ | 57,064 | $ | 1,127,782 | 84,081 | $ | 1,130,120 | $ | 248,877 | |||||||||||||||||||
Chief Executive | 2004 | 850,000 | 998,750 | — | 1,185,445 | 0 | 0 | 221,745 | |||||||||||||||||||||||||
Officer | 2003 | 802,500 | 1,156,043 | — | 889,953 | 123,902 | 205,265 | 232,703 | |||||||||||||||||||||||||
Harry J. Ashenhurst, Ph.D. | 2005 | $ | 468,050 | $ | 760,582 | $ | — | $ | 247,640 | 18,463 | $ | 446,940 | $ | 172,537 | |||||||||||||||||||
Executive Vice | 2004 | 421,287 | 352,827 | — | 322,673 | 0 | 0 | 96,316 | |||||||||||||||||||||||||
President and Chief | 2003 | 399,324 | 470,007 | — | 244,722 | 34,070 | 108,358 | 85,581 | |||||||||||||||||||||||||
Administrative Officer; Interim President and Chief Operating Officer, Worldwide Refrigeration | |||||||||||||||||||||||||||||||||
Robert J. McDonough | 2005 | $ | 444,684 | $ | 693,429 | $ | 98,647 | $ | 247,640 | 18,463 | $ | 446,940 | $ | 306,738 | |||||||||||||||||||
Executive Vice | 2004 | 404,258 | 389,041 | — | 322,673 | 0 | 0 | 766,787 | |||||||||||||||||||||||||
President; President | 2003 | 367,866 | 339,952 | — | 642,522 | 34,070 | 75,599 | 78,574 | |||||||||||||||||||||||||
and Chief Operating Officer, Worldwide Heating & Cooling | |||||||||||||||||||||||||||||||||
Scott J. Boxer | 2005 | $ | 440,121 | $ | 696,133 | $ | — | $ | 247,640 | 18,463 | $ | 446,940 | $ | 83,648 | |||||||||||||||||||
Executive Vice | 2004 | 406,953 | 288,945 | — | 322,673 | 0 | 0 | 110,815 | |||||||||||||||||||||||||
President; President | 2003 | 381,688 | 567,928 | 72,242 | 642,522 | 34,070 | 88,199 | 80,335 | |||||||||||||||||||||||||
and Chief Operating Officer, Service Experts | |||||||||||||||||||||||||||||||||
Susan K. Carter(6) | 2005 | $ | 397,104 | $ | 720,294 | $ | 68,501 | $ | 751,840 | 18,463 | $ | 0 | $ | 28,262 | |||||||||||||||||||
Executive Vice | 2004 | 143,941 | 120,551 | — | 577,673 | 0 | 0 | 130,845 | |||||||||||||||||||||||||
President and Chief | 2003 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||
Financial Officer |
Change in | ||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Deferred | All Other | ||||||||||||||||||||||||||||
Salary | Awards | Awards | Compensation | Compensation | Compensation | Total | ||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($)(1) | ($)(2) | ($)(3) | Earnings(4) | (5) | Compensation | ||||||||||||||||||||||||
Robert E. Schjerven | 2006 | $ | 990,244 | $ | 4,542,708 | $ | 85,767 | $ | 2,483,632 | $ | 1,689,001 | $ | 361,776 | $ | 10,153,128 | |||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||||||||
Susan K. Carter | 2006 | $ | 436,814 | $ | 1,049,316 | $ | 53,853 | $ | 702,441 | $ | 303,777 | $ | 147,745 | $ | 2,693,946 | |||||||||||||||||
Executive Vice President and | ||||||||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||||||
Harry J. Ashenhurst, Ph.D. | 2006 | $ | 491,546 | $ | 1,244,689 | $ | 84,536 | $ | 790,455 | $ | 668,749 | $ | 304,348 | $ | 3,584,323 | |||||||||||||||||
Executive Vice President and | ||||||||||||||||||||||||||||||||
Chief Administrative Officer | ||||||||||||||||||||||||||||||||
Scott J. Boxer | 2006 | $ | 462,127 | $ | 1,221,212 | $ | 77,437 | $ | 546,411 | $ | 431,172 | $ | 147,394 | $ | 2,885,753 | |||||||||||||||||
Executive Vice President and | ||||||||||||||||||||||||||||||||
President and Chief Operating | ||||||||||||||||||||||||||||||||
Officer, Service Experts | ||||||||||||||||||||||||||||||||
Linda A. Goodspeed | 2006 | $ | 365,827 | $ | 1,235,209 | $ | 77,437 | $ | 588,287 | $ | 121,638 | $ | 139,353 | $ | 2,527,751 | |||||||||||||||||
Executive Vice President and | ||||||||||||||||||||||||||||||||
Chief Supply Chain, | ||||||||||||||||||||||||||||||||
Logistics and Technology | ||||||||||||||||||||||||||||||||
Officer | ||||||||||||||||||||||||||||||||
Robert J. McDonough(6) | 2006 | $ | 389,099 | $ | (2,036,296 | ) | $ | (112,190 | ) | $ | 0 | $ | 0 | $ | 4,925,584 | $ | 3,166,196 | |||||||||||||||
Former Executive Vice President and | ||||||||||||||||||||||||||||||||
President and Chief Operating | ||||||||||||||||||||||||||||||||
Officer, Worldwide Heating and Cooling |
(1) | Except as provided below, the amounts shown represent the compensation costs (prior to any assumed forfeitures related to service-based vesting conditions, where applicable) recognized for financial statement reporting purposes for the | |
(2) | Except as provided below, the amounts shown represent the compensation costs (prior to any assumed forfeitures related to service-based vesting conditions, where applicable) recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with SFAS No. 123R in connection with stock appreciation rights granted under the 1998 Plan. Therefore, such amounts may include compensation costs for awards granted in and prior to 2006. Assumptions used in calculating these amounts are included in note 12 to our audited financial statements for the fiscal year ended December 31, 2006, included in our Annual Report onForm 10-K filed with the Securities and Exchange Commission on February 27, 2007. The negative amount shown for Mr. McDonough reflects the actual forfeiture of stock appreciation rights realized in connection with his termination of employment with our company. | |
(3) | The amounts shown represent short-term cash incentive awards earned under our short-term variable pay programs in 2006. Such awards were paid in March 2007. These amounts were reported under the “Bonus” column in previous years. |
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(4) | The amounts shown represent the |
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The amounts shown |
Perquisites | Other Compensation | |||||||||||||||||||||||||||||||||||||||||||
Contri- | ||||||||||||||||||||||||||||||||||||||||||||
butions to | ||||||||||||||||||||||||||||||||||||||||||||
Country | Tax and | Equipment | Matching | Term Life | Tax | Profit | Disability | |||||||||||||||||||||||||||||||||||||
Auto | Club | Financial | and | Relocation | Physical | Charitable | Insurance | Gross- | Sharing | Benefit | ||||||||||||||||||||||||||||||||||
Name | Allowance | Dues | Planning | Installation | Assistance | Exam | Contributions | Premiums | ups | Plans | Restoration | |||||||||||||||||||||||||||||||||
Robert E. Schjerven | $ | 15,840 | $ | 1,303 | $ | 4,075 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 7,236 | $ | 0 | $ | 332,269 | $ | 1,053 | ||||||||||||||||||||||
Susan K. Carter | $ | 15,300 | $ | 4,655 | $ | 10,000 | $ | 6,918 | $ | 0 | $ | 4,292 | $ | 1,000 | $ | 2,412 | $ | 0 | $ | 103,168 | $ | 0 | ||||||||||||||||||||||
Harry J. Ashenhurst, Ph.D. | $ | 11,340 | $ | 11,468 | $ | 9,000 | $ | 28,476 | $ | 0 | $ | 0 | $ | 0 | $ | 3,056 | $ | 0 | $ | 120,183 | $ | 825 | ||||||||||||||||||||||
Scott J. Boxer | $ | 14,760 | $ | 6,170 | $ | 11,658 | $ | 0 | $ | 0 | $ | 1,605 | $ | 0 | $ | 2,412 | $ | 0 | $ | 110,789 | $ | 0 | ||||||||||||||||||||||
Linda A. Goodspeed | $ | 16,020 | $ | 13,572 | $ | 10,000 | $ | 6,455 | $ | 0 | $ | 2,489 | $ | 0 | $ | 2,412 | $ | 0 | $ | 88,405 | $ | 0 | ||||||||||||||||||||||
Robert J. McDonough | $ | 12,000 | $ | 0 | $ | 0 | $ | 3,919 | $ | 19,697 | $ | 0 | $ | 0 | $ | 0 | $ | 4,769 | $ | 0 | $ | 0 |
Auto Allowance — based on the |
Country Club Dues, Tax and Financial Planning, Physical Exam, Relocation Assistance and Matching Charitable Contributions — based on the | ||
Company Equipment and Installation — Company equipment is based on the sales price of the equipment, discounted in accordance with our employee purchase program, and installation of such equipment is based on the incremental cost paid by our company in 2006. | ||
• | Term Life Insurance Premiums — based on the incremental cost paid by us in 2006 on behalf of each named executive officer for | |
• | TaxGross-Ups — based on the incremental cost paid by us in 2006 for certain taxable benefits relating to relocation assistance. | |
• | Contributions to Profit Sharing Plans — based on contributions made on the named executive officer’s behalf under our Profit Sharing Retirement Plan and our Profit Sharing Restoration Plan in 2006. Information regarding our 2006 contributions to the Profit Sharing | |
• | Disability Benefit Restoration — based on the |
• | Dr. Ashenhurst received | |
Mr. McDonough received, or is entitled to receive, severance payments totaling $4,885,199 (see “Potential Payments Upon Termination or Change of Control”). |
(6) | As previously announced on October 12, 2006, Mr. McDonough and |
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Individual Grants | ||||||||||||||||||||||||
Percent of | ||||||||||||||||||||||||
Number of | Total | |||||||||||||||||||||||
Securities | Option/SARs | |||||||||||||||||||||||
Underlying | Granted to | Exercise or | Grant Date | |||||||||||||||||||||
Grant | SARs | Employees in | Base Price | Expiration | Present | |||||||||||||||||||
Name | Date(1) | Granted(#) | Fiscal Year | ($/Sh) | Date | Value(2)($) | ||||||||||||||||||
Robert E. Schjerven | 12/09/05 | 84,081 | 14.67 | % | $ | 29.355 | 12/09/12 | $ | 708,382 | |||||||||||||||
Harry J. Ashenhurst, Ph.D. | 12/09/05 | 18,463 | 3.22 | % | 29.355 | 12/09/12 | 155,551 | |||||||||||||||||
Robert J. McDonough | 12/09/05 | 18,463 | 3.22 | % | 29.355 | 12/09/12 | 155,551 | |||||||||||||||||
Scott J. Boxer | 12/09/05 | 18,463 | 3.22 | % | 29.355 | 12/09/12 | 155,551 | |||||||||||||||||
Susan K. Carter | 12/09/05 | 18,463 | 3.22 | % | 29.355 | 12/09/12 | 155,551 |
All | All | |||||||||||||||||||||||||||||||||||||||||||||||
Other | Other | |||||||||||||||||||||||||||||||||||||||||||||||
Stock | Option | |||||||||||||||||||||||||||||||||||||||||||||||
Awards: | Awards: | Exercise | Grant | |||||||||||||||||||||||||||||||||||||||||||||
Number of | Number of | or Base | Closing | Date Fair | ||||||||||||||||||||||||||||||||||||||||||||
Shares of | Securities | Price of | Market | Value of | ||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under | Estimated Future Payouts Under Equity | Stock or | Underlying | Option | Price on | Stock and | ||||||||||||||||||||||||||||||||||||||||||
Non-Equity Incentive Plan Awards(2) | Incentive Plan Awards(3) | Units | Options | Awards | Date | Option | ||||||||||||||||||||||||||||||||||||||||||
Grant | Threshold | Target | Max. | Threshold | Target | Max. | (#) | (#) | ($/Sh) | of Grant | Awards | |||||||||||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | (#) | (#) | (#) | (4) | (5) | (6) | ($/Sh) | (7) | ||||||||||||||||||||||||||||||||||||
Robert E. Schjerven(1) | 12/08/06 | $ | 544,634 | $ | 1,089,268 | $ | 2,450,854 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
12/08/06 | $ | 9,902 | $ | 19,805 | $ | 49,512 | 0 | 0 | 0 | 0 | 0 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||
Susan K. Carter | 12/08/06 | $ | 159,000 | $ | 318,000 | $ | 715,500 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
12/08/06 | $ | 4,543 | $ | 9,086 | $ | 22,714 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | 7,011 | 14,022 | 28,044 | — | — | — | — | $ | 432,509 | ||||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | — | — | — | 8,413 | — | — | — | $ | 259,499 | ||||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | — | — | — | — | 17,062 | $ | 30.845 | $ | 30.970 | $ | 144,225 | ||||||||||||||||||||||||||||||||||
Harry J. Ashenhurst, Ph.D.(8) | 12/08/06 | $ | 180,643 | $ | 361,286 | $ | 812,894 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
12/08/06 | $ | 5,161 | $ | 10,322 | $ | 25,806 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | 7,011 | 14,022 | 28,044 | — | — | — | — | $ | 432,509 | ||||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | — | — | — | 8,413 | — | — | — | $ | 259,499 | ||||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | — | — | — | — | 17,062 | $ | 30.845 | $ | 30.970 | $ | 144,225 | ||||||||||||||||||||||||||||||||||
10/04/06 | — | — | — | — | — | — | 20,000 | — | — | — | $ | 462,700 | ||||||||||||||||||||||||||||||||||||
Scott J. Boxer | 12/08/06 | $ | 169,832 | $ | 339,663 | $ | 764,243 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
12/08/06 | $ | 4,852 | $ | 9,705 | $ | 24,262 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | 7,011 | 14,022 | 28,044 | — | — | — | — | $ | 432,509 | ||||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | — | — | — | 8,413 | — | — | — | $ | 259,499 | ||||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | — | — | — | — | 17,062 | $ | 30.845 | $ | 30.970 | $ | 144,225 | ||||||||||||||||||||||||||||||||||
Linda A. Goodspeed | 12/08/06 | $ | 134,441 | $ | 268,883 | $ | 604,986 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
12/08/06 | $ | 3,841 | $ | 7,682 | $ | 19,206 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | 7,011 | 14,022 | 28,044 | — | — | — | — | $ | 432,509 | ||||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | — | — | — | 8,413 | — | — | — | $ | 259,499 | ||||||||||||||||||||||||||||||||||||
12/08/06 | — | — | — | — | — | — | — | 17,062 | $ | 30.845 | $ | 30.970 | $ | 144,225 | ||||||||||||||||||||||||||||||||||
Robert J. McDonough | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
(1) | As a result of Mr. Schjerven’s pending retirement, Mr. Schjerven was not awarded any PSP awards, restricted stock awards or stock appreciation rights in 2006. | |
(2) | The amounts shown represent estimated future cash payouts under our management short-term incentive program and our broad-based short-term incentive program, based on a percentage of the named executive | |
(3) | The amounts shown represent the number of shares underlying PSP awards. The threshold amount represents 50% of the target and the maximum amount represents 200% of target. | |
(4) | The amounts shown represent the number of shares underlying restricted stock awards, which, except where otherwise noted, vest on the third anniversary of the date of grant provided that the named executive officer remains employed by our company throughout the three-year vesting period. | |
(5) | The amounts shown represent the number of shares underlying stock appreciation rights, which vest | |
(6) | Reflects the exercise price of stock appreciation rights, based on the average of the high and low sales prices of our common stock on | |
The amounts shown represent the grant date fair market value of PSP awards, restricted stock awards and stock appreciation rights, calculated in accordance with SFAS No. 123R. For PSP and restricted stock awards granted on December 8, 2006, the grant date fair market value is $30.845 per share based on the average of the high and low sales prices of our common stock on the New York Stock Exchange on the date of the grant. For the restricted stock award granted on October 4, 2006, the grant date fair market value is $23.135 per share based on the average of the high and low sales prices of our common stock on |
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the New York Stock Exchange on the date of grant. For stock appreciation rights, the grant date fair market value is determined using the Black-Scholes-Merton valuation model | ||
(8) | The restricted stock award granted to Dr. Ashenhurst on October 4, 2006 will vest on July 20, 2008 if he remains employed with our company throughout the vesting period. |
Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised In-the- | |||||||||||||||||||||||
Options/SARs at | Money Options/SARs at | |||||||||||||||||||||||
Shares | December 31, 2005 (#) | December 31, 2005(1) ($) | ||||||||||||||||||||||
Acquired | Value | |||||||||||||||||||||||
Name | on Exercise(#) | Realized($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Robert E. Schjerven | 0 | $ | 0 | 973,120 | 125,382 | $ | 15,092,377 | $ | 474,548 | |||||||||||||||
Harry J. Ashenhurst, Ph.D. | 103,773 | 1,566,555 | 196,669 | 29,820 | 2,559,326 | 130,492 | ||||||||||||||||||
Robert J. McDonough | 30,000 | 530,425 | 233,215 | 29,820 | 3,382,997 | 130,492 | ||||||||||||||||||
Scott J. Boxer | 0 | 0 | 274,310 | 29,820 | 4,069,741 | 130,492 | ||||||||||||||||||
Susan K. Carter | 0 | 0 | 0 | 18,463 | 0 | 0 |
Option/SAR Awards(1) | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||||||
Equity | Plan | |||||||||||||||||||||||||||||||||||
Incentive | Awards: | |||||||||||||||||||||||||||||||||||
Plan | Market | |||||||||||||||||||||||||||||||||||
Awards: | or Payout | |||||||||||||||||||||||||||||||||||
Market | Number of | Value of | ||||||||||||||||||||||||||||||||||
Number of | Value of | Unearned | Unearned | |||||||||||||||||||||||||||||||||
Shares or | Shares or | Shares, | Shares, | |||||||||||||||||||||||||||||||||
Units of | Units of | Units or | Units or | |||||||||||||||||||||||||||||||||
Number of | Number of | Stock | Stock | Other | Other | |||||||||||||||||||||||||||||||
Securities | Securities | Option/ | That Have | That Have | Rights | Rights | ||||||||||||||||||||||||||||||
Underlying | Underlying | SAR | Not | Not | That Have | That Have | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Exercise | Option/ | Vested (#) | Vested ($) | Not | Not | |||||||||||||||||||||||||||||
Options/ | Options/ | Price | SAR | (Restricted | (Restricted | Vested (#) | Vested ($) | |||||||||||||||||||||||||||||
SARs (#) | SARs (#) | ($/Sh) | Expiration | Stock | Stock | (PSP | (PSP | |||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | (2) | Date | Awards)(3) | Awards)(4) | Awards)(5) | Awards)(6) | ||||||||||||||||||||||||||||
Robert E. Schjerven | 299,965 | 0 | $ | 8.19 | 12/13/07 | 98,701 | $ | 3,021,238 | 457,761 | $ | 14,012,064 | |||||||||||||||||||||||||
49,500 | 0 | $ | 19.03 | 12/10/08 | 209,976 | 0 | $ | 16.21 | 12/13/08 | |||||||||||||||||||||||||||
100,104 | 0 | $ | 11.22 | 12/08/09 | 230,974 | 0 | $ | 13.38 | 12/13/09 | |||||||||||||||||||||||||||
123,902 | 0 | $ | 16.76 | 12/11/10 | 28,027 | 56,054 | $ | 29.36 | 12/09/12 | |||||||||||||||||||||||||||
Susan K. Carter | 6,154 | 12,309 | $ | 29.36 | 12/09/12 | 53,260 | $ | 1,630,289 | 107,126 | $ | 3,279,127 | |||||||||||||||||||||||||
0 | 17,062 | $ | 30.85 | 12/08/13 | ||||||||||||||||||||||||||||||||
Harry J. Ashenhurst, Ph.D. | 36,300 | 0 | $ | 19.03 | 12/10/08 | 53,260 | $ | 1,630,289 | 170,916 | $ | 5,231,738 | 34,070 | 0 | $ | 16.76 | 12/11/10 | ||||||||||||||||||||
6,154 | 12,309 | $ | 29.36 | 12/09/12 | 0 | 17,062 | $ | 30.85 | 12/08/13 | |||||||||||||||||||||||||||
Scott J. Boxer | 60,773 | 0 | $ | 8.19 | 12/13/07 | 63,260 | $ | 1,936,389 | 164,996 | $ | 5,050,540 | |||||||||||||||||||||||||
33,000 | 0 | $ | 15.59 | 07/20/08 | ||||||||||||||||||||||||||||||||
26,400 | 0 | $ | 19.03 | 12/10/08 | ||||||||||||||||||||||||||||||||
42,100 | 0 | $ | 16.21 | 12/13/08 | ||||||||||||||||||||||||||||||||
43,014 | 0 | $ | 11.22 | 12/08/09 | ||||||||||||||||||||||||||||||||
46,310 | 0 | $ | 13.38 | 12/13/09 | ||||||||||||||||||||||||||||||||
34,070 | 0 | $ | 16.76 | 12/11/10 | ||||||||||||||||||||||||||||||||
6,154 | 12,309 | $ | 29.36 | 12/09/12 | ||||||||||||||||||||||||||||||||
0 | 17,062 | $ | 30.85 | 12/08/13 | Linda A. Goodspeed | 42,100 | 0 | $ | 16.21 | 12/13/08 | 53,260 | $ | 1,630,289 | 113,098 | $ | 3,461,930 | ||||||||||||||||||||
46,310 | 0 | $ | 13.38 | 12/13/09 | 34,070 | 0 | $ | 16.76 | 12/11/10 | |||||||||||||||||||||||||||
6,154 | 12,309 | $ | 29.36 | 12/09/12 | 0 | 17,062 | $ | 30.85 | 12/08/13 | |||||||||||||||||||||||||||
Robert J. McDonough | 0 | 0 | $ | 0 | N/A | 0 | $ | 0 | 0 | $ | 0 |
(1) | Outstanding stock appreciation rights and options vest in one-third increments on each anniversary of the date of grant. |
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(2) | Pursuant to the 1998 Plan, the exercise price for all outstanding stock appreciation rights and options is based on the | |
(3) | Except as otherwise noted, outstanding restricted stock awards will vest and be distributed in company stock on the third anniversary of the date of grant, provided that the named executive officer remains employed by our company throughout the three-year vesting period. The restricted stock awards held by Mr. Boxer include an award granted in July 2003, which will vest four years from the date of grant. The restricted stock awards held by Dr. Ashenhurst include an award granted in October 2006, which will vest in July 2008. | |
(4) | The amounts shown are based on the closing price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was | |
(5) | PSP awards are subject to the achievement of performance measures. Except as described below, PSP awards vest at the end of a three-year performance period and, to the extent earned, are distributed in company stock. Outstanding PSP awards granted prior to 2003 vest after ten years. As of December 31, 2006, each of Mr. Schjerven, Dr. Ashenhurst, Mr. Boxer and Ms. Goodspeed held PSP awards granted prior to 2003. For PSP awards granted after 2003, the amounts shown assume the achievement of maximum performance levels (based on the achievement of maximum performance levels for the PSP awards that vested in December 2006). PSP awards granted prior to 2003 will vest at target only and are valued that way in the table. | |
(6) | The amounts shown are based on the closing price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.610. |
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Estimated Future Payouts Under | ||||||||||||||||||||
Number of | Performance or | Non-Stock Price-Based Plans | ||||||||||||||||||
Shares, Units or | Other Period Until | (#) | ||||||||||||||||||
Other Rights | Maturation or | |||||||||||||||||||
Name | (#) | Payout | Threshold | Target | Maximum | |||||||||||||||
Robert E. Schjerven | 63,955 | 3 years | 31,978 | 63,955 | 127,910 | |||||||||||||||
Harry J. Ashenhurst, Ph.D | 14,044 | 3 years | 7,022 | 14,044 | 28,088 | |||||||||||||||
Robert J. McDonough | 14,044 | 3 years | 7,022 | 14,044 | 28,088 | |||||||||||||||
Scott J. Boxer | 14,044 | 3 years | 7,022 | 14,044 | 28,088 | |||||||||||||||
Susan K. Carter | 14,044 | 3 years | 7,022 | 14,044 | 28,088 |
Option/ SAR Awards | Stock Awards | |||||||||||||||||
Number of Shares | Value realized on | Number of Shares | Value Realized on | |||||||||||||||
Acquired on | Exercise | Acquired on | Vesting | |||||||||||||||
Name | Exercise (#) | ($)(1) | Vesting (#) | ($)(2) | ||||||||||||||
Robert E. Schjerven | 0 | $ | 0 | RSA | 52,105 | $ | 1,617,079 | |||||||||||
PSP | 107,902 | $ | 3,318,526 | |||||||||||||||
Susan K. Carter | 0 | $ | 0 | RSA | 15,000 | $ | 343,800 | |||||||||||
Harry J. Ashenhurst, Ph.D. | 137,656 | $ | 2,655,670 | RSA | 14,328 | $ | 444,669 | |||||||||||
PSP | 29,670 | $ | 912,501 | |||||||||||||||
Scott J. Boxer | 0 | $ | 0 | RSA | 14,328 | $ | 444,669 | |||||||||||
PSP | 29,670 | $ | 912,501 | |||||||||||||||
Linda A. Goodspeed | 0 | $ | 0 | RSA | 14,328 | $ | 444,669 | |||||||||||
PSP | 29,670 | $ | 912,501 | |||||||||||||||
Robert J. McDonough | 233,215 | $ | 3,675,900 | RSA | 24,960 | $ | 670,051 |
(1) | The amounts shown are based on the difference between the exercise price of the optionsand/or stock appreciation rights (the average of the high and low sales prices of our common stock on the New York Stock Exchange on the date of the grant) and the market price of our common stock on the date of exercise (the average of the high and low sales prices of our common stock on the New York Stock Exchange on the date of exercise). | |
(2) | The amounts shown, which include restricted stock and PSP awards, are based on the average of the high and low sales prices of our common stock on the New York Stock Exchange on the day of vesting. |
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34
Number of | Present | Payments | ||||||||||||
Years | Value | During | ||||||||||||
Credited | of Accumulated | the Last Fiscal | ||||||||||||
Name | Plan Name | Service (#) | Benefit ($)(2) | Year ($) | ||||||||||
Robert E. Schjerven(1) | Supplemental Retirement Plan | 16.0 | $ | 9,371,877 | $ | 0 | ||||||||
Consolidated Pension Plan | 20.8 | $ | 203,246 | $ | 0 | |||||||||
Susan K. Carter | Supplemental Retirement Plan | 2.5 | $ | 369,557 | $ | 0 | ||||||||
Consolidated Pension Plan | 2.5 | $ | 7,440 | $ | 0 | |||||||||
Harry J. Ashenhurst. Ph.D. | Supplemental Retirement Plan | 18.0 | $ | 3,376,484 | $ | 0 | ||||||||
Consolidated Pension Plan | 18.0 | $ | 10,186 | $ | 0 | |||||||||
Scott J. Boxer | Supplemental Retirement Plan | 8.6 | $ | 1,295,810 | $ | 0 | ||||||||
Consolidated Pension Plan | 8.6 | $ | 47,428 | $ | 0 | |||||||||
Linda A. Goodspeed | Supplemental Retirement Plan | 5.5 | $ | 478,677 | $ | 0 | ||||||||
Consolidated Pension Plan | 5.5 | $ | 3,592 | $ | 0 | |||||||||
Robert J. McDonough(3) | Supplemental Retirement Plan | N/A | N/A | $ | 830,038 | |||||||||
Consolidated Pension Plan | N/A | N/A | $ | 0 |
(1) | The difference in Mr. Schjerven’s number of years of credited service under the Consolidated Pension Plan (20.8 years) versus the Supplemental Retirement Plan (16.0 years) is due to the Consolidated Pension Plan recognizing credited service from March 31, 1986, the date Mr. Schjerven became a participant in the Heatcraft Inc. Salaried Employees’ Pension Plan, which we acquired upon our acquisition of Heatcraft Inc. On January 1, 1991, the Heatcraft Inc. Salaried Employees’ Pension Plan was merged into the Lennox International Inc. Pension Plan for Salaried Employees (now known as the Consolidated Pension Plan). Credited service for Mr. Schjerven commenced under the Supplemental Retirement Plan effective January 1, 1991, the date that this plan was restated to redefine the eligible group. |
(2) | The present value of the lump-sum accumulated benefit payable at December 31, 2006 is equal to the present value factor, multiplied by the monthly benefit, multiplied by twelve, to annualize. The amounts shown are calculated in accordance with Statement of Financial Accounting Standards No. 87,“Employers’ Accounting for Pensions” using a 5.89% interest (discount) rate as of December 31, 2006 and theRP-2000 mortality table for males and females without collar adjustment. The calculations assume payments are deferred until age 65 for all participants under our Consolidated Pension Plan and until the earliest unreduced retirement age for each participant under our Supplemental Retirement Plan. Additional assumptions are included in note 11 to our audited financial statements for the fiscal year ended December 31, 2006 included in our Annual Report onForm 10-K filed with the Securities and Exchange Commission on February 27, 2007. | |
(3) | Mr. McDonough elected a single lump-sum payment of his benefits under the Supplemental Retirement Plan and the Consolidated Pension Plan, to which he was entitled as of October 31, 2006. However, only a portion of the lump sum could be paid at that time due to the six-month holdback requirements for key executives under Section 409A of the Internal Revenue Code. Therefore, he was paid a gross payment of $830,038 on October 31, 2006 and will be eligible for the balance of $296,970, plus any actuarial adjustment for the delay in payment, in June 2007. |
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Name of Fund | Rate of Return | |||
Fidelity Institutional Short-Intermediate Government Fund | 3.65 | % | ||
Fidelity Investment Grade Bond Fund | 4.82 | % | ||
Fidelity Dividend Growth Fund | 14.67 | % | ||
Fidelity Small Cap Stock Fund | 12.37 | % | ||
Fidelity Diversified International Fund | 22.52 | % |
Executive | Company | Aggregate | Aggregate | |||||||||||||||||
Contributions in | Contributions | Earnings | Aggregate | Balance | ||||||||||||||||
Last Fiscal | in Last Fiscal | in Last | Withdrawals/ | at Last Fiscal | ||||||||||||||||
Name | Year ($) | Year ($) | Fiscal Year ($) | Distributions ($) | Year-End ($) | |||||||||||||||
Robert E. Schjerven | $ | 0 | $ | 314,849 | $ | 149,755 | $ | 0 | $ | 1,824,881 | ||||||||||
Susan K. Carter | $ | 0 | $ | 85,748 | $ | 0 | $ | 0 | $ | 85,748 | ||||||||||
Harry J. Ashenhurst, Ph.D. | $ | 0 | $ | 102,763 | $ | 60,472 | $ | 0 | $ | 712,518 | ||||||||||
Scott J. Boxer | $ | 0 | $ | 93,369 | $ | 35,253 | $ | 0 | $ | 448,832 | ||||||||||
Linda A. Goodspeed | $ | 0 | $ | 70,984 | $ | 16,553 | $ | 0 | $ | 237,892 | ||||||||||
Robert J. McDonough(2) | $ | 0 | $ | 0 | $ | 35,396 | $ | 255,155 | $ | 150,651 |
(1) | Our contributions to the Profit Sharing Restoration Plan are also included in the Summary Compensation Table in the “All Other Compensation” column (see footnote 5 to the Summary Compensation Table). Aggregate earnings for each named executive officer under the Profit Sharing Restoration Plan were not reported in the Summary Compensation Table for 2006 or previous years because such earnings are at the market rate. Our contributions to the Profit Sharing Restoration Plan in prior years, which are included in the “Aggregate Balance at Last Fiscal Year-End” column above, were reported in previous years as “All Other Compensation” in the Summary Compensation Table. |
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22
Years of Service | ||||||||||||||||||||||||
2005 Final Average Earnings(1) | 5 | 10 | 15 | 20 | 25 | 30 | ||||||||||||||||||
$ 250,000 | $ | 34,600 | $ | 69,200 | $ | 103,800 | $ | 103,800 | $ | 103,800 | $ | 103,800 | ||||||||||||
425,000 | 62,600 | 125,200 | 187,800 | 187,800 | 187,800 | 187,800 | ||||||||||||||||||
600,000 | 90,600 | 181,200 | 271,800 | 271,800 | 271,800 | 271,800 | ||||||||||||||||||
775,000 | 118,600 | 237,200 | 355,800 | 355,800 | 355,800 | 355,800 | ||||||||||||||||||
950,000 | 146,600 | 293,200 | 439,800 | 439,800 | 439,800 | 439,800 | ||||||||||||||||||
1,125,000 | 174,600 | 349,200 | 523,800 | 523,800 | 523,800 | 523,800 | ||||||||||||||||||
1,300,000 | 202,600 | 405,200 | 607,800 | 607,800 | 607,800 | 607,800 | ||||||||||||||||||
1,475,000 | 230,600 | 461,200 | 691,800 | 691,800 | 691,800 | 691,800 | ||||||||||||||||||
1,650,000 | 258,600 | 517,200 | 775,800 | 775,800 | 775,800 | 775,800 | ||||||||||||||||||
1,825,000 | 286,600 | 573,200 | 859,800 | 859,800 | 859,800 | 859,800 | ||||||||||||||||||
2,000,000 | 314,600 | 629,200 | 943,800 | 943,800 | 943,800 | 943,800 |
Mr. McDonough elected a single lump-sum payment of his benefits under the |
23
37
• | all outstanding, vested stock options and stock appreciation rights will continue to be exercisable for 90 days following the executive’s last day of employment, provided, however, to the extent such award is not vested on the executive’s last day of employment, the remaining unexercisable portion of the award will terminate as of such date; and | |
• | restricted stock awards and PSP awards will generally terminate on the executive’s last day of employment. |
38
Component | Less Than Three Years of Service | Three or More Years of Service | ||
Base Salary: | One year of base salary | Two years of base salary | ||
Short-Term Variable Pay: | Lump-sum payment equal to all payments under our short-term variable pay programs received in the previous 12 months | Lump-sum payment equal to all payments under our short-term variable pay programs received in the previous 24 months | ||
Payment in Lieu of Outplacement Services: | Lump-sum payment equal to 10% of current base salary | Same | ||
Payment in Lieu of Perquisites: | Lump-sum payment equal to 10% of current base salary | Same | ||
Post-Employment Health Care Coverage: | Payment of COBRA premiums for up to 18 months while executive is unemployed and not eligible for other group health coverage and payment of the equivalent of such premium for up to an additional six months, on amonth-to-month basis, should executive remain unemployed | Same | ||
Death Benefit: | If the named executive officer dies during the severance period, a lump-sum death benefit equal to six months of the named executive officer’s base salary will be paid to the executive’s beneficiary | Same | ||
Accrued Vacation: | A lump-sum payment equal to unused, accrued vacation days | Same |
39
24
40
• | a lump-sum cash payment equal to the sum of his or her then unpaid current salary, the | |
• | a lump-sum cash payment equal to the sum of three times the | |
• | a lump-sum cash payment equal to the sum of three times the officer’s annual base salary and three times the highest annual bonus paid or awarded during the preceding three fiscal years, to reflect the long-term equity incentive component of the | |
• | a lump-sum cash payment equal to the sum of 15% of the | |
• | for purposes of our Supplemental Retirement Plan and Profit Sharing Restoration Plan, three additional years added to each of the service and age criteria; | |
• | continued coverage under our employee welfare benefits plans for up to | |
• | if payments made in conjunction with the change of control employment agreement result in the executive being subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, an additional“gross-up payment” equal to the excise tax imposed. |
25
41
Involuntary-Not for | ||||||||||||||||||||||||||||||||
Cause Termination | ||||||||||||||||||||||||||||||||
Voluntary | Normal | Enhanced | For Cause | Change of | ||||||||||||||||||||||||||||
Component | Termination | Retirement | Severance | Severance | Death | Disability | Termination | Control | ||||||||||||||||||||||||
Base Salary | $ | 0 | $ | 0 | $ | 247,561 | $ | 1,980,488 | $ | 247,561 | $ | 1,980,488 | $ | 0 | $ | 2,381,074 | ||||||||||||||||
Short-Term Variable Pay | 0 | 0 | 0 | 3,379,825 | 0 | 3,379,825 | 0 | 10,113,955 | ||||||||||||||||||||||||
Payment in Lieu of Long-Term Equity Incentives | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 10,113,955 | ||||||||||||||||||||||||
Payment in Lieu of Outplacement | 0 | 0 | 0 | 99,024 | 0 | 99,024 | 0 | 148,537 | ||||||||||||||||||||||||
Payment in Lieu of Perquisites | 0 | 0 | 0 | 99,024 | 0 | 99,024 | 0 | 445,610 | ||||||||||||||||||||||||
Post-Employment Health Care Coverage | 0 | 0 | 0 | 14,203 | 0 | 0 | 0 | 25,050 | ||||||||||||||||||||||||
Long-Term Equity Accelerated Vesting(1) | 0 | 12,741,230 | 0 | 0 | 6,867,691 | 6,867,691 | 0 | 17,192,215 | ||||||||||||||||||||||||
Incremental Payment Under Supplemental Retirement Plan and Consolidated Pension Plan | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
280G TaxGross-up | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 10,313,291 | ||||||||||||||||||||||||
Accrued Vacation(2) | 190,432 | 190,432 | 190,432 | 190,432 | 190,432 | 190,432 | 190,432 | 190,432 | ||||||||||||||||||||||||
TOTAL | $ | 190,432 | $ | 12,931,662 | $ | 437,993 | $ | 5,762,996 | $ | 7,305,684 | $ | 12,616,484 | $ | 190,432 | $ | 50,924,119 | ||||||||||||||||
(1) | The amounts shown reflect unvested long-term equity incentive awards. For retirement, death, and disability, such amounts are based on the closing price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.610. For change of control, the amounts shown are based on the highest sales price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.755. | |
(2) | On December 31 of each year, employees accrue vacation for the following year. The amounts shown represent a lump-sum payment for five weeks of vacation in 2006 (assuming the executive did not take any vacation days in 2006) and five weeks of accrued vacation for 2007. Actual payouts may vary depending on the specific circumstances. |
42
Involuntary-Not for | ||||||||||||||||||||||||||||||||
Cause Termination | ||||||||||||||||||||||||||||||||
Voluntary | Normal | Enhanced | For Cause | Change of | ||||||||||||||||||||||||||||
Component | Termination | Retirement | Severance | Severance | Death | Disability | Termination | Control | ||||||||||||||||||||||||
Base Salary | $ | 0 | $ | 0 | $ | 109,204 | $ | 436,814 | $ | 109,204 | $ | 436,814 | $ | 0 | $ | 645,294 | ||||||||||||||||
Short-Term Variable Pay | 0 | 0 | 0 | 645,294 | 0 | 645,294 | 0 | 3,246,325 | ||||||||||||||||||||||||
Payment in Lieu of Long-Term Equity Incentives | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,246,325 | ||||||||||||||||||||||||
Payment in Lieu of Outplacement | 0 | 0 | 0 | 43,681 | 0 | 43,681 | 0 | 65,522 | ||||||||||||||||||||||||
Payment in Lieu of Perquisites | 0 | 0 | 0 | 43,681 | 0 | 43,681 | 0 | 196,566 | ||||||||||||||||||||||||
Post-Employment Health Care Coverage | 0 | 0 | 0 | 19,887 | 0 | 0 | 0 | 38,163 | ||||||||||||||||||||||||
Long-Term Equity Accelerated Vesting(1) | 0 | 4,924,802 | 0 | 0 | 2,044,462 | 2,044,462 | 0 | 4,949,842 | ||||||||||||||||||||||||
Incremental Payment Under Supplemental Retirement Plan and Consolidated Pension Plan | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 572,897 | ||||||||||||||||||||||||
280G TaxGross-up | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,006,768 | ||||||||||||||||||||||||
Accrued Vacation(2) | 84,002 | 84,002 | 84,002 | 84,002 | 84,002 | 84,002 | 84,002 | 84,002 | ||||||||||||||||||||||||
TOTAL | $ | 84,002 | $ | 5,008,804 | $ | 193,206 | $ | 1,273,359 | $ | 2,237,668 | $ | 3,297,934 | $ | 84,002 | $ | 16,051,704 | ||||||||||||||||
(1) | The amounts shown reflect unvested long-term equity incentive awards. For retirement, death, and disability, such amounts are based on the closing price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.610. For change of control, the amounts shown are based on the highest sales price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.755. | |
(2) | On December 31 of each year, employees accrue vacation for the following year. The amounts shown represent a lump-sum payment for five weeks of vacation in 2006 (assuming the executive did not take any vacation days in 2006) and five weeks of accrued vacation for 2007. Actual payouts may vary depending on the specific circumstances. |
43
Involuntary-Not for | ||||||||||||||||||||||||||||||||
Cause Termination | ||||||||||||||||||||||||||||||||
Voluntary | Normal | Enhanced | For Cause | Change of | ||||||||||||||||||||||||||||
Component | Termination | Retirement | Severance | Severance | Death | Disability | Termination | Control | ||||||||||||||||||||||||
Base Salary | $ | 0 | $ | 0 | $ | 122,887 | $ | 983,092 | $ | 122,887 | $ | 983,092 | $ | 0 | $ | 760,581 | ||||||||||||||||
Short-Term Variable Pay | 0 | 0 | 0 | 1,113,409 | 0 | 1,113,409 | 0 | 3,756,380 | ||||||||||||||||||||||||
Payment in Lieu of Long-Term Equity Incentives | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,756,380 | ||||||||||||||||||||||||
Payment in Lieu of Outplacement | 0 | 0 | 0 | 49,155 | 0 | 49,155 | 0 | 73,732 | ||||||||||||||||||||||||
Payment in Lieu of Perquisites | 0 | 0 | 0 | 49,155 | 0 | 49,155 | 0 | 221,196 | ||||||||||||||||||||||||
Post-Employment Health Care Coverage | 0 | 0 | 0 | 7,762 | 0 | 0 | 0 | 24,426 | ||||||||||||||||||||||||
Long-Term Equity Accelerated Vesting(1) | 0 | 4,924,802 | 0 | 0 | 1,854,373 | 1,854,373 | 0 | 6,911,734 | ||||||||||||||||||||||||
Incremental Payment Under Supplemental Retirement Plan and Consolidated Pension Plan | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
280G TaxGross-up | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,714,317 | ||||||||||||||||||||||||
Accrued Vacation(2) | 94,528 | 94,528 | 94,528 | 94,528 | 94,528 | 94,528 | 94,528 | 94,528 | ||||||||||||||||||||||||
TOTAL | $ | 94,528 | $ | 5,019,330 | $ | 217,415 | $ | 2,297,101 | $ | 2,071,788 | $ | 4,143,712 | $ | 94,528 | $ | 19,313,274 | ||||||||||||||||
(1) | The amounts shown reflect unvested long-term equity incentive awards. For retirement, death, and disability, such amounts are based on the closing price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.610. For change of control, the amounts shown are based on the highest sales price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.755. | |
(2) | On December 31 of each year, employees accrue vacation for the following year. The amounts shown represent a lump-sum payment for five weeks of vacation in 2006 (assuming the executive did not take any vacation days in 2006) and five weeks of accrued vacation for 2007. Actual payouts may vary depending on the specific circumstances. |
44
Involuntary-Not for | ||||||||||||||||||||||||||||||||
Cause Termination | ||||||||||||||||||||||||||||||||
Voluntary | Normal | Enhanced | For Cause | Change of | ||||||||||||||||||||||||||||
Component | Termination | Retirement | Severance | Severance | Death | Disability | Termination | Control | ||||||||||||||||||||||||
Base Salary | $ | 0 | $ | 0 | $ | 115,532 | $ | 924,254 | $ | 115,532 | $ | 924,254 | $ | 0 | $ | 696,133 | ||||||||||||||||
Short-Term Variable Pay | 0 | 0 | 0 | 866,138 | 0 | 866,138 | 0 | 3,474,786 | ||||||||||||||||||||||||
Payment in Lieu of Long-Term Equity Incentives | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,474,786 | ||||||||||||||||||||||||
Payment in Lieu of Outplacement | 0 | 0 | 0 | 46,213 | 0 | 46,213 | 0 | 69,319 | ||||||||||||||||||||||||
Payment in Lieu of Perquisites | 0 | 0 | 0 | 46,213 | 0 | 46,213 | 0 | 207,957 | ||||||||||||||||||||||||
Post-Employment Health Care Coverage | 0 | 0 | 0 | 31,176 | 0 | 0 | 0 | 55,678 | ||||||||||||||||||||||||
Long-Term Equity Accelerated Vesting(1) | 0 | 5,106,992 | 794,391 | 794,391 | 2,574,964 | 2,574,964 | 0 | 7,037,184 | ||||||||||||||||||||||||
Incremental Payment Under Supplemental Retirement Plan and Consolidated Pension Plan | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 618,735 | ||||||||||||||||||||||||
280G TaxGross-up | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,533,708 | ||||||||||||||||||||||||
Accrued Vacation(2) | 88,871 | 88,871 | 88,871 | 88,871 | 88,871 | 88,871 | 88,871 | 88,871 | ||||||||||||||||||||||||
TOTAL | $ | 88,871 | $ | 5,195,863 | $ | 998,794 | $ | 2,797,256 | $ | 2,779,367 | $ | 4,546,653 | $ | 88,871 | $ | 19,257,157 | ||||||||||||||||
(1) | The amounts shown reflect unvested long-term equity incentive awards. For retirement, death, and disability, such amounts are based on the closing price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.610. For change of control, the amounts shown are based on the highest sales price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.755. |
(2) | On December 31 of each year, employees accrue vacation for the following year. The amounts shown represent a lump-sum payment for five weeks of vacation in 2006 (assuming the executive did not take any vacation days in 2006) and five weeks of accrued vacation for 2007. Actual payouts may vary depending on the specific circumstances. |
45
Involuntary-Not for | ||||||||||||||||||||||||||||||||
Cause Termination | ||||||||||||||||||||||||||||||||
Voluntary | Normal | Enhanced | For Cause | Change of | ||||||||||||||||||||||||||||
Component | Termination | Retirement | Severance | Severance | Death | Disability | Termination | Control | ||||||||||||||||||||||||
Base Salary | $ | 0 | $ | 0 | $ | 91,457 | $ | 731,655 | $ | 91,457 | $ | 731,655 | $ | 0 | $ | 568,761 | ||||||||||||||||
Short-Term Variable Pay | 0 | 0 | 0 | 833,391 | 0 | 833,391 | 0 | 2,803,764 | ||||||||||||||||||||||||
Payment in Lieu of Long-Term Equity Incentives | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,803,764 | ||||||||||||||||||||||||
Payment in Lieu of Outplacement | 0 | 0 | 0 | 36,583 | 0 | 36,583 | 0 | 54,874 | ||||||||||||||||||||||||
Payment in Lieu of Perquisites | 0 | 0 | 0 | 36,583 | 0 | 36,583 | 0 | 164,622 | ||||||||||||||||||||||||
Post-Employment Health Care Coverage | 0 | 0 | 0 | 30,442 | 0 | 0 | 0 | 54,576 | ||||||||||||||||||||||||
Long-Term Equity Accelerated Vesting(1) | 0 | 4,924,802 | 0 | 0 | 2,044,462 | 2,044,462 | 0 | 5,133,511 | ||||||||||||||||||||||||
Incremental Payment Under Supplemental Retirement Plan and Consolidated Pension Plan | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 389,760 | ||||||||||||||||||||||||
280G TaxGross-up | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,660,965 | ||||||||||||||||||||||||
Accrued Vacation(2) | 70,351 | 70,351 | 70,351 | 70,351 | 70,351 | 70,351 | 70,351 | 70,351 | ||||||||||||||||||||||||
TOTAL | $ | 70,351 | $ | 4,995,153 | $ | 161,808 | $ | 1,739,005 | $ | 2,206,270 | $ | 3,753,025 | $ | 70,351 | $ | 14,704,948 | ||||||||||||||||
(1) | The amounts shown reflect unvested long-term equity incentive awards. For retirement, death, and disability, such amounts are based on the closing price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.610. For change of control, the amounts shown are based on the highest sales price of our common stock on the New York Stock Exchange on the last trading day of 2006 (December 29, 2006), which was $30.755. | |
(2) | On December 31 of each year, employees accrue vacation for the following year. The amounts shown represent a lump-sum payment for five weeks of vacation in 2006 (assuming the executive did not take any vacation days in 2006) and five weeks of accrued vacation for 2007. Actual payouts may vary depending on the specific circumstances. |
46
Component | Payment(1) | |||
Severance (Base Salary)(2) | $ | 933,840 | ||
Severance (Short-Term Variable Pay) | 1,082,470 | |||
Perquisites | 46,692 | |||
Post-Employment Health Care Coverage(3) | 30,855 | |||
Payment in Lieu of Outplacement Services | 46,692 | |||
Transition Payment(4) | 500,000 | |||
Supplemental Retirement Plan and Consolidated Pension Plan Payout(5) | 1,127,008 | |||
Profit Sharing Restoration Plan and Profit Sharing Retirement Plan Payout(6) | 402,694 | |||
Shares Vested(7) | 670,051 | |||
Accrued Vacation | 44,897 | |||
TOTAL: | $ | 4,885,199 | ||
(1) | Payments are based on the “involuntary — not for cause termination” category described above. | |
(2) | The amount shown will be paid in 24 monthly installments, which commenced October 31, 2006. | |
(3) | The amount shown will be paid in 24 monthly installments, which commenced October 31, 2006. If Mr. McDonough becomes eligible for health care coverage under another employer plan, these payments will terminate. | |
(4) | Payment to be paid on or before April 30, 2007 in recognition of Mr. McDonough’s efforts to provide for a smooth and successful transition of our Heating and Cooling business to our new organizational structure. | |
(5) | Mr. McDonough elected a single lump-sum payment of his benefits under the Supplemental Retirement Plan and the Consolidated Pension Plan, to which he was entitled as of October 31, 2006. However, only a portion of the lump sum could be paid at that time due to the six-month holdback requirements for key executives under Section 409A of the Internal Revenue Code. Therefore, he was paid a gross payment of $830,038 on October 31, 2006 and will be eligible for the balance of $296,970, plus any actuarial adjustment for the delay in payment, in June 2007. | |
(6) | Mr. McDonough elected a single lump-sump payment of his benefits under the Profit Sharing Restoration Plan, to which he was entitled as of October 31, 2006. However, only a portion of the lump sum could be paid at that time due to the six-month holdback requirements for key executives under Section 409A of the Internal Revenue Code. Therefore, he was paid a gross payment of $255,155 on October 31, 2006 and will be eligible for the balance of $150,651, plus any appropriate earnings allocation for the holdback time period, in June 2007. | |
(7) | The amount shown represents a restricted stock award, which provided for a pro-rata payment based on the portion of the vesting period Mr. McDonough served as an employee. |
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• | ||
• | ||
• | ||
• |
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Change in | ||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||
Fees Earned | Option/SAR | Deferred | ||||||||||||||||||||||
Paid in | Stock | Awards | Compensation | All Other | ||||||||||||||||||||
Name | Cash ($)(6) | Awards ($)(7) | ($)(7) | Earnings(8) | Compensation ($)(9) | Total | ||||||||||||||||||
Richard L. Thompson | $ | 119,215 | $ | 95,434 | $ | 128,459 | $ | 194,207 | $ | 65,006 | $ | 602,321 | ||||||||||||
Robert E. Schjerven(1) | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
Linda G. Alvarado | $ | 60,640 | $ | 15,820 | $ | 52,736 | $ | 129,873 | $ | 20,010 | $ | 279,079 | ||||||||||||
Steven R. Booth | $ | 64,390 | $ | 15,820 | $ | 52,736 | $ | 0 | $ | 20,010 | $ | 152,956 | ||||||||||||
Thomas W. Booth(2) | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
James J. Byrne | $ | 67,511 | $ | 47,717 | $ | 81,221 | $ | 73,165 | $ | 37,813 | $ | 307,427 | ||||||||||||
Janet K. Cooper | $ | 70,539 | $ | 15,820 | $ | 52,736 | $ | 0 | $ | 28,844 | $ | 167,939 | ||||||||||||
C.L. (Jerry) Henry | $ | 34,810 | $ | 15,820 | $ | 52,736 | $ | 0 | $ | 84,270 | $ | 187,636 | ||||||||||||
John E. Major | $ | 39,137 | $ | 47,717 | $ | 81,221 | $ | 100,889 | $ | 70,963 | $ | 339,927 | ||||||||||||
John W. Norris, III | $ | 62,811 | $ | 15,820 | $ | 52,736 | $ | 0 | $ | 20,010 | $ | 151,377 | ||||||||||||
Paul W. Schmidt | $ | 30,139 | $ | 15,820 | $ | 18,763 | $ | 0 | $ | 65,961 | $ | 130,683 | ||||||||||||
Terry D. Stinson | $ | 29,535 | $ | 15,820 | $ | 52,736 | $ | 0 | $ | 81,758 | $ | 179,849 | ||||||||||||
Jeffrey D. Storey, M.D. | $ | 18,572 | $ | 663 | $ | 656 | $ | 0 | $ | 32,485 | $ | 52,376 | ||||||||||||
John W. Norris, Jr.(3) | $ | 67,811 | $ | 0 | $ | 254,861 | $ | (34,632 | ) | $ | 142,406 | $ | 430,446 | |||||||||||
David V. Brown(4) | $ | 16,882 | $ | 46,253 | $ | 256,152 | $ | 106,036 | $ | 8,769 | $ | 434,092 | ||||||||||||
Walden O’Dell(5) | $ | 0 | $ | 49,491 | $ | 33,562 | $ | 0 | $ | 0 | $ | 83,053 |
(1) | Mr. Schjerven’s compensation for 2006 is disclosed in the Summary Compensation Table. He did not receive any compensation for service on our Board of Directors. | |
(2) | Mr. Booth serves as Vice President of Operations Services of Service Experts Inc., one of our subsidiaries. He does not receive any compensation for service on our Board of Directors. | |
(3) | Mr. Norris retired from the Board effective July 21, 2006. | |
(4) | Mr. Brown retired from the Board effective April 20, 2006. | |
(5) | Mr. O’Dell resigned from the Board effective January 27, 2006. | |
(6) | The amounts shown reflect cash payments only. Fees paid in stock are reported in the “All Other Compensation” column. | |
(7) | Except as provided below, the amounts shown represent the compensation costs (prior to any assumed forfeitures related to service-based vesting conditions, where applicable) recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with SFAS No. 123R in connection with restricted stock awards (see “Stock Awards” column) and stock appreciation rights (see “Option/SAR Awards” column) granted under the 1998 Plan. Therefore, such amounts may include compensation costs for awards granted in and prior to 2006. Assumptions used in calculating these amounts are included in note 12 to our audited financial statements for the fiscal year ended December 31, 2006, included in our Annual Report onForm 10-K filed with the Securities and Exchange Commission on February 27, 2007. The amount shown for Mr. O’Dell reflects the actual forfeiture of $33,973 realized in connection with his resignation from the Board. |
50
Aggregate | Aggregate | |||||||
Restricted Stock | Options/SARs | |||||||
Awards Outstanding as of | Outstanding as of | |||||||
Name | December 31, 2006 (#) | December 31, 2006 (#) | ||||||
Richard L. Thompson | 5,418 | 121,114 | ||||||
Linda G. Alvarado | 3,096 | 113,863 | ||||||
Steven R. Booth | 3,096 | 59,175 | ||||||
James J. Byrne | 3,096 | 85,575 | ||||||
Janet K. Cooper | 3,096 | 59,175 | ||||||
C.L. (Jerry) Henry | 3,096 | 74,306 | ||||||
John E. Major | 3,096 | 56,592 | ||||||
John W. Norris, III | 3,096 | 42,492 | ||||||
Paul W. Schmidt | 3,096 | 9,798 | ||||||
Terry D. Stinson | 3,096 | 87,463 | ||||||
Jeffrey D. Storey, M.D. | 1,547 | 4,706 | ||||||
John W. Norris, Jr. | 0 | 647,621 | ||||||
David V. Brown | 0 | 109,157 | ||||||
Walden O’Dell | 0 | 30,638 |
Grant Date Fair Market | Grant Date Fair | |||||||
Value of Restricted | Market Value of Stock | |||||||
Stock Awards | Appreciation Rights | |||||||
Granted in 2006 | Granted in 2006 | |||||||
Chairman of the Board | $ | 95,434 | $ | 94,486 | ||||
All Other Non-Employee Directors | $ | 47,717 | $ | 47,248 |
(8) | The amounts shown represent the change in the present value of accumulated benefits that accrued during 2006 under our Director’s Retirement Plan as a result of the participants aging an additional year and increases in their director fees. The amount shown for Ms. Alvarado also includes $9,566 in interest earned on her outstanding deferred compensation balance of $211,684 under the Non-Employee Directors’ Compensation and Deferral Plan. |
51
(9) | The amounts shown include perquisites and other compensation, based on the incremental cost to our company. The following table identifies the separate amounts attributable to each category of perquisites and other compensation in 2006 for each individual who served as a non-employee director during 2006. |
Portion of Annual | ||||||||||||||||
Tax and Financial | Physical | Matching Charitable | Retainer Paid | |||||||||||||
Name | Planning Services | Exam | Contributions | in Stock | ||||||||||||
Richard L. Thompson | $ | 2,575 | $ | 0 | $ | 0 | $ | 62,431 | ||||||||
Linda G. Alvarado | $ | 0 | $ | 0 | $ | 0 | $ | 20,010 | ||||||||
Steven R. Booth | $ | 0 | $ | 0 | $ | 0 | $ | 20,010 | ||||||||
James J. Byrne | $ | 1,316 | $ | 1,758 | $ | 0 | $ | 34,739 | ||||||||
Janet K. Cooper | $ | 5,000 | $ | 3,883 | $ | 0 | $ | 19,961 | ||||||||
C.L. (Jerry) Henry | $ | 3,330 | $ | 0 | $ | 1,000 | $ | 79,940 | ||||||||
John E. Major | $ | 0 | $ | 0 | $ | 0 | $ | 70,963 | ||||||||
John W. Norris, III | $ | 0 | $ | 0 | $ | 0 | $ | 20,010 | ||||||||
Paul W. Schmidt | $ | 0 | $ | 0 | $ | 1,000 | $ | 64,961 | ||||||||
Terry D. Stinson | $ | 2,528 | $ | 4,265 | $ | 0 | $ | 74,965 | ||||||||
Jeffrey D. Storey, M.D. | $ | 0 | $ | 0 | $ | 0 | $ | 32,485 | ||||||||
John W. Norris, Jr. | $ | 0 | $ | 2,699 | $ | 100,000 | (a) | $ | 39,707 | |||||||
David V. Brown | $ | 0 | $ | 0 | $ | 0 | $ | 8,769 | ||||||||
Walden O’Dell | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
(a) | Upon the event of his retirement, we made a contribution of $100,000 in Mr. Norris’ name to a charity. |
• | all non-employee directors, other than the Chairman, will receive a fee of $1,500 for each formal director education presentation attended by such director; and | |
• | the Chairman will be compensated $50,000 annually for attendance, in person or by telephone, at Board committee meetings. |
52
Number of Securities | Weighted-Average | Number of Securities | |||||||||||
to be Issued upon | Exercise Price of | Remaining Available | |||||||||||
Exercise of | Outstanding | for Future Issuance | |||||||||||
Outstanding Options, | Options, Warrants | Under Equity | |||||||||||
Plan Category | Warrants and Rights | and Rights | Compensation Plans | ||||||||||
Equity compensation plans approved by security holders | 9,453,121 | (1) | $ | 15.59 | (2) | 8,265,755 | (3) | ||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||||||
Total | 9,453,121 | $ | 15.59 | 8,265,755 |
Number of Securities | ||||||||||||
to be Issued upon | Weighted-Average | Number of Securities | ||||||||||
Exercise of | Exercise Price of | Remaining Available | ||||||||||
Outstanding | Outstanding | for Future Issuance | ||||||||||
Options, Warrants | Options, Warrants | Under Equity | ||||||||||
Plan Category | and Rights | and Rights | Compensation Plans | |||||||||
Equity compensation plans approved by security holders | 8,276,015 | (1) | $ | 17.66 | (2) | 7,126,027 | (3) | |||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
TOTAL: | 8,276,015 | $ | 17.66 | 7,126,027 | ||||||||
(1) | Includes the following: | ||
• | |||
• | Stock appreciation rights based on | ||
• | |||
• |
Excludes approximately |
(2) | Excludes PSP awards and restricted stock awards because such awards have no exercise price. | |
(3) | Includes |
27
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28
• | each person known by us to own more than 5% of the outstanding shares of our common stock; | |
• | each of our directors and nominees for director; | |
• | each of our named executive officers; and | |
• | all of our executive officers, directors and nominees for director, as a group. |
Options/SARs | ||||||||||||||||
Shares Beneficially | Exercisable Within | Percent | ||||||||||||||
Name of Beneficial Owner | Owned(1) | 60 Days | Total | of Class | ||||||||||||
John W. Norris, Jr.(2) | 3,913,196 | 723,821 | 4,637,017 | 6.43 | % | |||||||||||
Robert E. Schjerven | 835,855 | 973,120 | 1,808,975 | 2.50 | % | |||||||||||
Linda G. Alvarado(3) | 12,165 | 107,672 | 119,837 | * | ||||||||||||
Harry J. Ashenhurst, Ph.D. | 282,572 | 147,423 | 429,995 | * | ||||||||||||
Steven R. Booth(4) | 2,807,240 | 36,484 | 2,843,724 | 3.98 | % | |||||||||||
Thomas W. Booth(5) | 2,852,493 | 34,977 | 2,887,470 | 4.04 | % | |||||||||||
Scott J. Boxer | 322,356 | 274,310 | 596,666 | * | ||||||||||||
David V. Brown | 1,742,287 | 107,672 | 1,849,959 | 2.59 | % | |||||||||||
James J. Byrne | 73,252 | 62,884 | 136,136 | * | ||||||||||||
Susan K. Carter | 99,388 | 0 | 99,388 | * | ||||||||||||
Janet K. Cooper | 19,324 | 36,484 | 55,808 | * | ||||||||||||
C. L. (Jerry) Henry | 15,275 | 51,615 | 66,890 | * | ||||||||||||
John E. Major | 32,763 | 46,384 | 79,147 | * | ||||||||||||
Robert J. McDonough | 208,428 | 233,215 | 441,643 | * | ||||||||||||
John W. Norris, III(6) | 318,149 | 28,162 | 346,311 | * | ||||||||||||
Paul W. Schmidt | 5,400 | 0 | 5,400 | * | ||||||||||||
Terry D. Stinson | 23,628 | 64,772 | 88,400 | * | ||||||||||||
Jeffrey D. Storey(7) | 231,869 | 0 | 231,869 | * | ||||||||||||
Richard L. Thompson | 79,343 | 107,672 | 187,015 | * | ||||||||||||
All executive officers, directors and nominees for director as a group (22 persons) | 12,140,634 | 3,220,684 | 15,361,498 | 20.59 | % | |||||||||||
Barclays Global Investors, NA(8) | 4,045,549 | 0 | 4,045,549 | 5.67 | % |
Options/SARs | ||||||||||||||||
Shares Beneficially | Exercisable Within | Percent | ||||||||||||||
Name of Beneficial Owner | Owned(1) | 60 Days | Total | of Class | ||||||||||||
Robert E. Schjerven | 845,515 | 1,042,448 | 1,887,963 | 2.77 | % | |||||||||||
Todd M. Bluedorn | — | — | — | * | ||||||||||||
Linda G. Alvarado(2) | 30,952 | 101,385 | 132,337 | * | ||||||||||||
Harry J. Ashenhurst, Ph.D. | 245,183 | 76,524 | 321,707 | * | ||||||||||||
Steven R. Booth(3) | 2,779,859 | 46,697 | 2,826,556 | 4.20 | % | |||||||||||
Thomas W. Booth(4) | 2,797,575 | 37,108 | 2,834,683 | 4.22 | % | |||||||||||
Scott J. Boxer | 346,043 | 291,821 | 637,864 | * | ||||||||||||
James J. Byrne | 52,584 | 73,097 | 125,681 | * | ||||||||||||
Susan K. Carter | 117,855 | 6,154 | 124,009 | * | ||||||||||||
Janet K. Cooper | 21,577 | 46,697 | 68,274 | * | ||||||||||||
Linda A. Goodspeed | 198,253 | 128,634 | 326,887 | * | ||||||||||||
C. L. (Jerry) Henry | 19,779 | 61,828 | 81,607 | * | ||||||||||||
John E. Major | 36,935 | 44,114 | 81,049 | * | ||||||||||||
Robert J. McDonough | — | — | — | * | ||||||||||||
John W. Norris, III(5) | 320,436 | 30,014 | 350,450 | * | ||||||||||||
Paul W. Schmidt | 9,350 | 1,697 | 11,047 | * | ||||||||||||
Terry D. Stinson | 27,948 | 74,985 | 102,933 | * | ||||||||||||
Jeffrey D. Storey, M.D.(6) | 228,101 | — | 228,101 | * | ||||||||||||
Richard L. Thompson | 101,248 | 102,234 | 203,482 | * | ||||||||||||
All named executive officers, other executive officers, directors and nominees for director as a group (24 persons) | 6,565,079 | 2,356,698 | 8,921,777 | 12.83 | % | |||||||||||
John W. Norris, Jr.(7) | 3,839,634 | 647,621 | 4,487,255 | 6.61 | % |
* | Less than 1% |
(1) | Includes the following unvested restricted stock awards: Mr. Schjerven— |
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Mr. Henry— |
Also includes the following unvested PSP awards: Mr. Schjerven— |
Includes 8,174 shares held by Cimarron Holdings, LLC, of which Ms. Alvarado is a member. | ||
Includes (a) | ||
Includes (a) | ||
Includes (a) 4,987 shares held by the W.H. Norris Trust, 4,987 shares held by the B.W. Norris Trust, and 4,063 shares held by the L.C. Norris Trust, for each of which Mr. Norris | ||
Includes (a) | ||
Includes (a) 321,750 shares held by |
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• | Robert J. McDonough inadvertently filed one Form 4, reporting three transactions involving open market sales, three days late; | |
• | Each of Robert E. Schjerven, Harry A. Ashenhurst, Ph.D., Thomas W. Booth, Scott J. Boxer, Linda A. Goodspeed, David Inman, and Robert J. McDonough inadvertently failed to report one transaction involving the surrender of common stock to satisfy his or her tax withholding obligation in connection with the vesting of a PSP award. Upon discovery of the oversight, each of the foregoing individuals promptly filed an amended Form 4 reporting the transaction; | |
• | Each of Harry J. Bizios, David W. Moon and Douglas L. Young inadvertently failed to account for the surrender of common stock to satisfy his tax withholding obligation in connection with the vesting of a PSP award when reporting the amount of securities beneficially owned on Form 3. Upon discovery of the oversight, each of the foregoing individuals promptly filed an amended Form 3 reporting the correct amount of securities beneficially owned; and | |
• | Jeffrey D. Storey, M.D. inadvertently failed to account for certain shares when reporting the amount of securities beneficially owned on Form 3. Upon discovery of the oversight, Dr. Storey promptly filed an amended Form 3 reporting the correct amount of securities beneficially owned. |
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Paul W. Schmidt (Chairperson) | Janet K. Cooper | |
C. L. (Jerry) Henry | John E. Major |
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2005 | 2004 | |||||||
Audit Fees(1) | $ | 4,367 | $ | 5,244 | ||||
Audit-Related Fees(2) | 143 | 114 | ||||||
Tax Fees(3) | 578 | 768 | ||||||
All Other Fees(4) | 0 | 0 |
2006 | 2005(1) | |||||||
Audit Fees(2) | $ | 5,740 | $ | 5,208 | ||||
Audit-Related Fees(3) | 400 | 143 | ||||||
Tax Fees(4) | 373 | 595 | ||||||
All Other Fees(5) | 0 | 0 | ||||||
TOTAL | $ | 6,513 | $ | 5,946 | ||||
(1) | The amounts shown for 2005 may differ from the amounts shown in last year’s Proxy Statement due to the finalization of billings for services rendered in 2005. | |
(2) | Represents fees billed by KPMG for the audit of our annual financial statements included in our Annual Reports onForm 10-K and review of financial statements included in our Quarterly Reports onForm 10-Q; the audit of our internal control over financial reporting; and for services that are normally provided by KPMG in connection with statutory and regulatory filings or engagements. | |
Represents fees billed by KPMG for assurance and related services reasonably related to the performance of the audit or review of our financial statements and internal control over financial reporting. Such services consisted primarily of audits of our employee benefit plans. | ||
Represents fees billed by KPMG for tax compliance, including review of tax returns, tax advice and tax planning. | ||
We generally do not engage KPMG for “other” services. |
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A-1
A-2
A-3
A-4
A-5
ARTICLE I DEFINED TERMS | A-5 | |||||||
1.1 Certain Defined Terms | ||||||||
ARTICLE II PLAN OF REORGANIZATION | A-7 | |||||||
2.1 Sale of Assets; Consideration; No Liability | A-7 | |||||||
2.2 AOC Liquidating Distribution; Dissolution | A-7 | |||||||
2.3 Reorganization | A-7 | |||||||
2.4 Dissenter’s Rights | A-7 | |||||||
2.5 Stock Transfer Books | A-8 | |||||||
2.6 Fractional Shares | A-8 | |||||||
ARTICLE III THE CLOSING | A-8 | |||||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AOC | A-9 | |||||||
4.1 Organization and Existence | A-9 | |||||||
4.2 Capitalization | A-9 | |||||||
4.3 Power and Authority | A-9 | |||||||
4.4 Financial Statements | A-9 | |||||||
4.5 Absence of Certain Changes | A-9 | |||||||
4.6 No Violation; Consents and Approvals | A-9 | |||||||
4.7 Litigation | A-10 | |||||||
4.8 Title to Assets | A-10 | |||||||
4.9 Governmental Approvals | A-10 | |||||||
4.10 Tax Matters | A-10 | |||||||
4.11 No Brokers | A-10 | |||||||
4.12 No Employees; No Employee Benefit Plans | A-10 | |||||||
4.13 No Reliance | A-10 | |||||||
ARTICLE V REPRESENTATIONS AND WARRANTIES OF LII | A-10 | |||||||
5.1 Organization and Existence | A-10 | |||||||
5.2 Capitalization | A-10 | |||||||
5.3 Power and Authority | A-10 | |||||||
5.4 No Violations; Consents and Approvals | A-11 | |||||||
5.5 No Litigation | A-11 | |||||||
5.6 Listing | A-11 | |||||||
5.7 No Brokers | A-11 | |||||||
5.8 No Reliance | A-11 | |||||||
A-2
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ARTICLE VI ADDITIONAL AGREEMENTS; COVENANTS OF PARTIES | A-11 | |||
6.1 Operation in the Ordinary Course of Business | A-11 | |||
6.2 Press Releases | A-11 | |||
6.3 Listing | A-11 | |||
6.4 Fees and Expenses | A-11 | |||
6.5 LII Annual Meeting; Proxy Statement | A-12 | |||
6.6 AOC Special Meeting | A-12 | |||
6.7 Private Placement | A-12 | |||
6.8 Cooperation and Information | A-13 | |||
6.9 Tax-Free Reorganization | A-13 | |||
ARTICLE VII CONDITIONS TO OBLIGATIONS OF AOC | A-13 | |||
7.1 Representations and Warranties True | A-13 | |||
7.2 Covenants and Agreements Performed by LII | A-13 | |||
7.3 Compliance Certificate | A-13 | |||
7.4 Tax Ruling | A-13 | |||
7.5 Shareholder Approval | A-14 | |||
7.6 Regulatory Approvals | A-14 | |||
7.7 Stock Exchange Listing | A-14 | |||
7.8 Legal Proceedings | A-14 | |||
7.9 Stock Certificates; Cash in Lieu of Fractional Shares | A-14 | |||
7.10 Registration Rights Agreement | A-14 | |||
7.11 Dissenters | A-14 | |||
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF LII | A-14 | |||
8.1 Representations and Warranties True | A-14 | |||
8.2 Covenants and Agreements Performed by AOC | A-14 | |||
8.3 Compliance Certificate | A-14 | |||
8.4 Tax Ruling | A-15 | |||
8.5 Shareholder Approval | A-15 | |||
8.6 Regulatory Approvals | A-15 | |||
8.7 Legal Proceedings | A-15 | |||
8.8 LII Certificate | A-15 | |||
8.9 Consideration Certificate | A-15 | |||
8.10 Dissenters | A-15 | |||
8.11 Registration Rights Agreement | A-15 | |||
8.12 Non-Accredited Investors | A-15 | |||
8.13 Investment Certificate | A-15 | |||
ARTICLE IX TERMINATION | A-16 | |||
9.1 Termination Prior to Closing | A-16 | |||
9.2 Effect of Termination | A-16 | |||
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ARTICLE X MISCELLANEOUS | A-16 | |||
10.1 Survival of Representations and Warranties | A-16 | |||
10.2 Notices | A-16 | |||
10.3 Entire Agreement; Incorporation By Reference | A-17 | |||
10.4 Amendment | A-17 | |||
10.5 Binding Effect; Assignment; No Third Party Benefit | A-17 | |||
10.6 Severability | A-17 | |||
10.7 Governing Law | A-18 | |||
10.8 Headings | A-18 | |||
10.9 Counterparts | A-18 |
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A-8
A-9
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A-11
A-12
A-13
A-14
A-15
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A-17
A-18
By: | /s/ Tom Booth |
Title: | President, AOC |
By: | /s/ William F. Stoll, Jr. |
Title: | ||||||||
A-19
Address Change/Comments (Mark the corresponding box on the reverse side) | ||||||
• | View account status | ||
• | View certificate history | ||
• | View book-entry information |
• | View payment history for dividends | ||
• | |||
• | |||
• | Establish/change your PIN |
TOLL FREE NUMBER: | 1-800-370-1163 |
THIS PROXY WILL BE VOTED AS DIRECTED BELOW, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” ALL NOMINEES LISTED IN PROPOSAL 1 AND “FOR” PROPOSAL 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 1 AND “FOR” PROPOSAL 2. | Please Mark Here for Address Change or Comments | o | ||
SEE REVERSE SIDE |
1. | Election of the following nominees as Class III directors for a term expiring in 2010. | |||||||
WITHHOLD | ||||||||
AUTHORITY | ||||||||
01 | Todd M. Bluedorn | FOR | to vote for | |||||
02 | Janet K. Cooper | all nominees | all nominees | |||||
03 | C.L. (Jerry) Henry | listed | listed | EXCEPTIONS | ||||
04 | Terry D. Stinson | o | o | o | ||||
05 | Richard L. Thompson | |||||||
FOR | AGAINST | ABSTAIN | ||||||
2. | Approval of the issuance of shares of our common stock pursuant to an Agreement and Plan of Reorganization with A.O.C. Corporation. | o | o | o | ||||
3. | At the discretion of the named Proxies on any other matter that may properly come before the meeting or any adjournment thereof. |
I (We) plan to attend the Annual Meeting of Stockholders on May 17, 2007. | o |
Dated | , 2007 | |||
Signature | ||||
Signature |