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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
James R. Mellor | John K. Welch | |||
Chairman of the Board | President and Chief Executive Officer |
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Two Democracy Center
6903 Rockledge Drive
Senior Vice President, General Counsel and Secretary
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Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
for the Shareholder Meeting to Be Held on April 28, 2011
the year ended December 31, 2010 are available athttp://bnymellon.mobular.net/bnymellon/USU.
• | Proposal 1: To elect the eleven director nominees for a term of one year; | |
• | Proposal 2: To hold an advisory vote on executive compensation; | |
• | Proposal 3: To hold an advisory vote on the frequency of holding an advisory vote on executive compensation; | |
• | Proposal 4: To approve an amendment to the USEC Inc. 2009 Equity Incentive Plan; | |
• | Proposal 5: To ratify the appointment of PricewaterhouseCoopers LLP as USEC’s independent auditors for 2011; and | |
• | Such other business as may properly come before the meeting or any adjournments thereof. |
• | FOR the election of the eleven director nominees for a term of one year; | |
• | FOR the approval, on an advisory basis, of the compensation of our named executive officers; | |
• | FOR the approval, on an advisory basis, of a triennial advisory vote on executive compensation; | |
• | FOR the approval of an amendment to the USEC Inc. 2009 Equity Incentive Plan; and | |
• | FOR the ratification of the appointment of PricewaterhouseCoopers LLP as USEC’s independent auditors for 2011. |
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• | held directly in your name with our transfer agent, BNY Mellon Shareowner Services, as a “shareholder of record;” | |
• | held for you in an account with a broker, bank or other nominee (shares held in “street name” for a “beneficial owner”); and | |
• | held for you under a USEC employee stock ownership plan with our plan administrator, BNY Mellon Shareowner Services, or under the USEC 401(k) plan with our plan administrator, Fidelity (each a “USEC stock ownership plan”). |
Broker Discretionary | ||||
Proposal | Vote Required | Voting Allowed | ||
Proposal 1 — Election of the eleven director nominees for a term of one year | Plurality of votes cast | No | ||
Proposal 2 — Advisory vote on executive compensation | Majority of shares entitled to vote and present in person or represented by proxy | No | ||
Proposal 3 — Advisory vote on the frequency of advisory vote on executive compensation | Plurality of votes cast | No | ||
Proposal 4 — Approval of an amendment to the USEC Inc. 2009 Equity Incentive Plan | Majority of shares entitled to vote and present in person or represented by proxy | No | ||
Proposal 5 — Ratification of the appointment of PricewaterhouseCoopers LLP as USEC’s independent auditors for 2011 | Majority of shares entitled to vote and present in person or represented by proxy | Yes |
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• | By Mail. If you are a shareholder of record or hold shares through a USEC stock ownership plan, be sure to complete, sign and date the proxy card accompanying this Proxy Statement and return it in the prepaid envelope. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example as guardian, executor, trustee, custodian, attorney or officer of a corporation), you should indicate your name and title or capacity. If you are a shareholder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named as proxies in the proxy card will vote the shares represented by that proxy as recommended by the Board of Directors. | |
• | By telephone or over the Internet. You can vote by calling the toll-free telephone number on your proxy card and following the voice prompts that you hear during the call. By following the voice prompts, you may vote your shares and confirm that your instructions have been properly recorded. The website for Internet voting ishttp://www.proxyvoting.com/USU. As with telephone voting, you can confirm that your instructions have been properly recorded. Telephone and Internet voting facilities for shareholders of record will be available 24 hours a day. Proxies submitted by telephone or the Internet must be received by 10:00 a.m. Eastern Time on April 28, 2011. If you vote by telephone or on the Internet, you should not separately return your proxy card or voting instruction card. | |
• | In person at the annual meeting. If you choose to vote at the annual meeting, you may vote by the ballot provided at the meeting. Even if you plan to attend the meeting, we encourage you to vote by completing, signing, dating, and returning the enclosed proxy card or by voting using the Internet or telephone so your vote will be counted if you later decide not to attend the meeting. If you decide to change your vote at the meeting, you may do so by voting in person at the meeting. If you hold your shares through a USEC stock ownership plan, you cannot vote in person at the annual meeting. Please vote by signing and dating your proxy card and mailing it in the postage-paid envelope provided or by using the Internet or telephone. |
• | Proposal 1: FOR the election of the eleven director nominees for a term of one year; | |
• | Proposal 2: FOR the approval, on an advisory basis, of the compensation of our named executive officers; | |
• | Proposal 3: FOR the approval, on an advisory basis, of a triennial advisory vote on executive compensation; | |
• | Proposal 4: FOR the approval of an amendment to the USEC Inc. 2009 Equity Incentive Plan; and |
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• | Proposal 5: FOR the ratification of the appointment of PricewaterhouseCoopers LLP as USEC’s independent auditors for 2011. |
• | submitting a properly executed proxy card with a later date, which proxy card is received prior to the date of the annual meeting; | |
• | delivering to the Secretary of USEC, prior to the date of the annual meeting, a written notice of revocation bearing a later date than the proxy; or | |
• | voting in person at the annual meeting. |
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James R. Mellor | Director since 1998 Age 80 | |||
Mr. Mellor retired in 1997 as Chairman and Chief Executive Officer of General Dynamics Corporation, a company engaged in shipbuilding and marine systems, land and amphibious combat systems, information systems, and business aviation businesses, a position he held since 1994. Prior to assuming that position, Mr. Mellor was President and Chief Executive Officer from 1993 to 1994 and was previously President and Chief Operating Officer of General Dynamics. Mr. Mellor served as interim President and Chief Executive Officer of the Company from December 2004 to October 2005. Mr. Mellor previously served on the Board of Directors of AmerisourceBergen Corporation, Computer Sciences Corporation, Net2Phone, Inc. and IDT Corporation. | ||||
In recommending the re-election of Mr. Mellor, the Board considered the following key competencies: USEC leadership as current Chairman and formerly as interim CEO; CEO experience; government contracting experience; and public company board experience. Mr. Mellor has served as USEC’s Chairman since USEC’s privatization in 1998. | ||||
Michael H. Armacost | Director since 2002 Age 73 | |||
Mr. Armacost is a Walter H. Shorenstein distinguished fellow and visiting professor in the Asia/Pacific Research Center at Stanford University. Mr. Armacost served as President and a Trustee of The Brookings Institution from 1995 to 2002. He served as Undersecretary of State for Political Affairs from 1984 to 1989, as U.S. Ambassador to Japan from 1989 to 1993 and to the Philippines from 1982 to 1984. Mr. Armacost also serves on the Board of Directors of AFLAC Inc. Mr. Armacost previously served on the Board of Directors of Applied Materials Inc. and Cargill, Incorporated. | ||||
In recommending the re-election of Mr. Armacost, the Board considered the following key competencies: government and public policy experience; international experience; and public company board experience. | ||||
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Joyce F. Brown | Director since 1998 Age 64 | |||
Dr. Brown is the President of the Fashion Institute of Technology of the State University of New York, a position she has held since 1998. From 1994 to 1997, Dr. Brown was a professor of clinical psychology at the City University of New York, where she previously held several Vice Chancellor positions. From 1993 to 1994, she served as the Deputy Mayor for Public and Community Affairs in the Office of the Mayor of the City of New York. Dr. Brown also serves on the Board of Directors of Polo Ralph Lauren Corporation. Dr. Brown previously served on the Board of Directors of Linens & Things and the PAXAR Corporation. | ||||
In recommending the re-election of Dr. Brown, the Board considered the following key competencies: executive experience; public relations experience; government experience; and public company board experience. Dr. Brown has been a member of USEC’s Board since its privatization in 1998. | ||||
Sigmund L. Cornelius | Director since 2011 Age 56 | |||
Mr. Cornelius retired in January 2011 from ConocoPhillips, an integrated energy company, where he was Senior Vice President, Finance, and Chief Financial Officer from 2008 to 2010. Prior to that, Mr. Cornelius served as Senior Vice President, Planning, Strategy and Corporate Affairs from 2007 to 2008, having previously served as President, Exploration and Production — Lower 48 from 2006 to 2007 and President, Global Gas from 2004 to 2006. Mr. Cornelius joined ConocoPhillips predecessor Conoco Inc. in 1980. Mr. Cornelius also serves on the Board of Directors of Carbo Ceramics Inc. | ||||
Mr. Cornelius was appointed to the Board effective March 2011 following a board search process. In recommending the election of Mr. Cornelius, the Board considered the following key competencies: CFO experience; audit committee financial expert; energy experience; business operations experience; and public company board experience. | ||||
Joseph T. Doyle | Director since 2006 Age 63 | |||
Mr. Doyle is a consultant to and a director of several for profit companies and not for profit organizations. From July 2002 through March 2003, he served as Senior Vice President and Chief Financial Officer of Foster Wheeler, Inc. Prior to joining Foster Wheeler, Mr. Doyle was Executive Vice President and Chief Financial Officer of U.S. Office Products from 1998 through 2001, Chief Financial Officer of Westinghouse Electric Company’s Industrial Group from 1996 through 1998, and Chief Financial Officer of Allison Engine Company (now Rolls Royce Allison) from 1994 through 1996. U.S. Office Products filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in March 2001. | ||||
In recommending the re-election of Mr. Doyle, the Board considered the following key competencies: CFO and 17 years of public accounting experience; audit committee financial expert; internal audit experience; nuclear submarine and nuclear energy and power experience; and engineering and construction experience. | ||||
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H. William Habermeyer | Director since 2008 Age 68 | |||
Mr. Habermeyer retired in 2006 as President and Chief Executive Officer of Progress Energy Florida, a subsidiary of Progress Energy, Inc., a diversified energy company. Mr. Habermeyer joined Progress Energy predecessor, Carolina Power & Light in 1993 and served as Vice President of Nuclear Services and Environmental Support, Vice President of Nuclear Engineering, and Vice President of the Western Region in North Carolina, before assuming the role of President and Chief Executive Officer of Progress Energy Florida in 2000. Prior to that, Mr. Habermeyer had a28-year career in the U.S. Navy, retiring as a Rear Admiral. Mr. Habermeyer also serves on the Board of Directors of Raymond James Financial, Inc. and Southern Company. | ||||
In recommending the re-election of Mr. Habermeyer, the Board considered the following key competencies: CEO experience; business operations experience, including operating and managing nuclear powered submarines and commercial nuclear power plants; nuclear engineering experience; electric utility experience; and public company board experience. | ||||
William J. Madia | Director since 2008 Age 63 | |||
Dr. Madia is a vice president at Stanford University responsible for oversight of the SLAC National Accelerator Laboratory, a U.S. Department of Energy national science lab. Dr. Madia retired in 2007 as Executive Vice President of Laboratory Operations of the Battelle Memorial Institute, a non-profit independent research and development organization, where he oversaw the management or co-management of six Department of Energy National Laboratories. Dr. Madia served in that position since 1999. In addition, he was President and CEO of UT-Battelle, LLC, he managed Battelle’s global environmental business, served as president of Battelle Technology International, director of Battelle’s Columbus Laboratories, and corporate vice president and general manager of Battelle’s Project Management Division. | ||||
In recommending the re-election of Dr. Madia, the Board considered the following key competencies: science and technology experience; nuclear experience; DOE experience, including the management of six DOE laboratories; and executive and management experience. | ||||
W. Henson Moore | Director since 2001 Age 71 | |||
Mr. Moore was President and Chief Executive Officer of the American Forest and Paper Association, the national trade association of the forest, paper and wood products industry, from 1995 to 2006. He was also President of the International Council of Forest Product Associations from 2002 to 2004. Mr. Moore was previously Deputy Secretary of Energy from 1989 to 1992 and in 1992 became Deputy Chief of Staff for President George Bush. From 1975 to 1987 he represented the Sixth Congressional District of Louisiana in the U.S. House of Representatives. Mr. Moore also serves on the Board of Directors of Domtar Corporation. | ||||
In recommending the re-election of Mr. Moore, the Board considered the following key competencies: DOE experience; political affairs experience; legal experience; CEO experience; international experience; and public company board experience. | ||||
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Walter E. Skowronski | Director since 2011 Age 62 | |||
Mr. Skowronski retired in 2009 as Senior Vice President of The Boeing Company and President, Boeing Capital Corporation, a wholly-owned subsidiary of The Boeing Company, a position he held from 2003 to 2009. Prior to that, Mr. Skowronski was Senior Vice President of Finance and Treasurer of The Boeing Company from 1999 to 2003. Prior to joining Boeing, Mr. Skowronski was Vice President and Treasurer of Lockheed Martin and its predecessor Lockheed Corporation from 1992 to 1999 after joining Lockheed Corporation in 1990. | ||||
Mr. Skowronski was appointed to the Board effective March 2011 following a board search process. In recommending the election of Mr. Skowronski, the Board considered the following key competencies: finance experience, audit committee financial expert; government contracting experience; and business operations experience. | ||||
M. Richard Smith | Director since 2011 Age 63 | |||
Mr. Smith retired in 2007 as Senior Vice President and President of Fossil Power of Bechtel Corporation, a global project execution company. During his 25-year Bechtel career he held other senior positions in engineering, construction and project management including Chief Executive Officer of Intergen and Senior Vice President of USGen, both Bechtel joint ventures, and Executive Vice President of Bechtel Enterprises. Since his retirement Mr. Smith has served as a consultant and director to Sithe Global Power LLC, an international power development company and Skyfuel Inc., a solar technology company. Mr. Smith also currently serves on the Boards of Directors of Instituform Technologies, Inc. and of McGrath RentCorp. He previously served on the Board of Directors of Evergreen Energy Inc. | ||||
Mr. Smith was appointed to the Board effective January 2011 following a board search process. In recommending the election of Mr. Smith, the Board considered the following key competencies: senior executive experience; engineering, construction and project management experience; and public company board experience. | ||||
John K. Welch | Director since 2005 Age 61 | |||
Mr. Welch has been President and Chief Executive Officer since October 2005. Prior to joining USEC, he served as a consultant to several government and corporate entities. He was Executive Vice President and Group Executive, Marine Systems at General Dynamics Corporation from March 2002 to March 2003, and Senior Vice President and Group Executive, Marine Systems from January 2000 to March 2002. Prior to that, Mr. Welch held several executive positions over a ten-year period at General Dynamic’s Electric Boat Corporation, including President from 1995 to 2000. Mr. Welch currently serves on the Board of Directors of Battelle Memorial Institute and Precision Custom Components Inc. | ||||
In recommending the re-election of Mr. Welch, the Board considered the following key competencies: current service as USEC CEO; other executive experience; nuclear and defense experience; professional engineer experience; and manufacturing experience. | ||||
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Hiroshi Sakamoto | Director since 2010 Age 54 | |||
Mr. Sakamoto has served as Senior Vice President and General Manager, Toshiba Nuclear Energy Holdings (US) Inc., a subsidiary of Toshiba Corporation, since April 2007. Since April 2008, Mr. Sakamoto has also served as Senior Vice President and Board Director, Toshiba America Nuclear Energy Corporation, also a subsidiary of Toshiba Corporation. Mr. Sakamoto joined Toshiba Corporation in April 1981 and has held a variety of positions of increasing responsibility over his career, including Vice President for Nuclear Business Development from April 2003 to September 2009 and Senior Manager for Nuclear Energy Engineering from October 2001 to March 2003 at Toshiba International Corporation, a subsidiary of Toshiba Corporation focusing on the energy business. Mr. Sakamoto has a Bachelors Degree and a Masters Degree in Nuclear Engineering from Kyoto University. | ||||
Michael S. Taff | Director since 2010 Age 48 | |||
Mr. Taff has served as Senior Vice President and Chief Financial Officer of The Babcock & Wilcox Company since its spin-off from McDermott International, Inc. in July 2010. From April 2007 until that date, he served as Senior Vice President and Chief Financial Officer of McDermott. Previously, he was Vice President and Chief Accounting Officer of McDermott since June 2005, Vice President and Chief Financial Officer of HMT Inc. (an engineering and construction company) from June 2004 to June 2005, and Vice President and Corporate Controller of Philip Services Corporation (a provider of industrial, environmental, transportation and container services) from September 1994 to May 2004. | ||||
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• | the name of the shareholder and evidence of the person’s ownership of Company stock, including the number of shares owned and the length of time of ownership; and | |
• | the name of the candidate, the candidate’s resume or a listing of his or her qualifications to be a director of the Company and the person’s consent to be named as a director if selected by the Nominating and Governance Committee and nominated by the Board. |
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Regulatory and | ||||||||||||||||||||
Audit and | Nominating and | Government | Technology and | |||||||||||||||||
Finance | Compensation | Governance | Affairs | Competition | ||||||||||||||||
Director | Committee | Committee | Committee | Committee | Committee | |||||||||||||||
James R. Mellor | X | |||||||||||||||||||
Michael H. Armacost | X | * | X | |||||||||||||||||
Joyce F. Brown | X | X | ||||||||||||||||||
Sigmund L. Cornelius | X | |||||||||||||||||||
Joseph T. Doyle | X | * | X | |||||||||||||||||
H. William Habermeyer | X | * | X | |||||||||||||||||
William J. Madia | X | X | * | |||||||||||||||||
W. Henson Moore | X | X | * | |||||||||||||||||
Hiroshi Sakamoto | X | |||||||||||||||||||
Walter E. Skowronski | X | |||||||||||||||||||
M. Richard Smith | X | X | ||||||||||||||||||
Michael S. Taff | X | |||||||||||||||||||
Number of Meetings in 2010 | 6 | 6 | 5 | 5 | 5 |
* | Chairman |
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Fees Earned or | Stock | |||||||||||
Name | Paid in Cash(1) | Awards(2)(3) | Total | |||||||||
James R. Mellor | $ | 180,000 | $ | 120,000 | $ | 300,000 | ||||||
Michael H. Armacost | $ | 87,500 | $ | 120,000 | $ | 207,500 | ||||||
Joyce F. Brown | $ | 80,000 | $ | 120,000 | $ | 200,000 | ||||||
Joseph T. Doyle | $ | 40,000 | $ | 192,000 | $ | 232,000 | ||||||
H. William Habermeyer | $ | 90,000 | $ | 120,000 | $ | 210,000 | ||||||
John R. Hall(4) | — | $ | 216,000 | $ | 216,000 | |||||||
William J. Madia | — | $ | 225,000 | $ | 225,000 | |||||||
W. Henson Moore | $ | 87,500 | $ | 120,000 | $ | 207,500 |
(1) | The amounts shown in the Fees Earned or Paid in Cash column include the following: |
• | Annual Retainers: Cash paid in 2010 for $80,000 cash portion of annual retainers for the 2010–2011 term. Mr. Doyle elected to take one half of the cash portion of his annual retainer and his annual Audit and Finance Committee chairman fee in restricted stock units in lieu of cash as shown in the Stock Awards column. Mr. Hall and Dr. Madia elected to take all fees in restricted stock units in lieu of cash as shown in the Stock Awards column. | |
• | Chairman’s Fees: Cash paid in 2010 to Mr. Armacost ($7,500), Mr. Habermeyer ($10,000), and Mr. Moore ($7,500) for annual committee chairman’s fees for the 2010–2011 term. Also includes cash paid in 2010 to Mr. Mellor for his annual chairman’s fee of $100,000 for the 2010–2011 term. |
(2) | The amounts shown in the Stock Awards column represents the aggregate grant date fair value of stock awards to directors in 2010, computed in accordance with Financial Accounting Standards Board (“FASB”) Auditing Standards Codification (“ASC”) Topic 718 (Compensation–Stock Compensation). For a discussion of valuation assumptions, see Note 13 to our consolidated financial statements included in our annual report onForm 10-K for the year ended December 31, 2010. In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
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Number of | ||||||||||||
Restricted | Grant Date | |||||||||||
Name | Grant Date | Stock Units | Fair Value | |||||||||
James R. Mellor | 05/11/10 | 28,302 | $ | 120,000 | ||||||||
Michael H. Armacost | 05/11/10 | 28,302 | $ | 120,000 | ||||||||
Joyce F. Brown | 05/11/10 | 28,302 | $ | 120,000 | ||||||||
Joseph T. Doyle | 05/11/10 | 45,283 | $ | 192,000 | ||||||||
H. William Habermeyer | 05/11/10 | 28,302 | $ | 120,000 | ||||||||
John R. Hall | 05/11/10 | 50,944 | $ | 216,000 | ||||||||
William J. Madia | 05/11/10 | 53,066 | $ | 225,000 | ||||||||
W. Henson Moore | 05/11/10 | 28,302 | $ | 120,000 |
Number of Shares of | ||||
Restricted Stock or | ||||
Name | Restricted Stock Units | |||
James R. Mellor | 236,681 | |||
Michael H. Armacost | 110,375 | |||
Joyce F. Brown | 129,569 | |||
Joseph T. Doyle | 149,261 | |||
H. William Habermeyer | 79,499 | |||
William J. Madia | 104,263 | |||
W. Henson Moore | 117,772 |
(3) | No stock option grants were made to directors in 2010. The following table shows the number of stock options held by each non-employee director as of December 31, 2010, all of which are immediately exercisable: |
Number of Securities | ||||
Underlying | ||||
Name | Unexercised Options | |||
James R. Mellor | 119,122 | |||
Michael H. Armacost | 16,750 | |||
Joyce F. Brown | 17,250 | |||
Joseph T. Doyle | 1,227 | |||
W. Henson Moore | 10,500 |
(4) | Mr. Hall retired as a director in September 2010. |
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Common Stock | ||||||||
Beneficially Owned(1) | ||||||||
Name of Beneficial Owner | Shares Owned | Percent of Class | ||||||
Dimensional Fund Advisors LP(2) | 9,083,158 | 7.4 | % | |||||
6300 Bee Cave Road | ||||||||
Austin, Texas 78746 | ||||||||
BlackRock, Inc.(3) | 6,592,071 | 5.4 | % | |||||
40 East 52nd Street, | ||||||||
New York, New York 10022 | ||||||||
Noble Group Limited(4) | 5,848,940 | 4.8 | % | |||||
18th Floor, MassMutual Tower | ||||||||
28 Gloucester Road | ||||||||
Hong Kong | ||||||||
Directors | ||||||||
Michael H. Armacost | 100,138 | (5) | * | |||||
Joyce F. Brown | 118,617 | (5) | * | |||||
Sigmund L. Cornelius | — | * | ||||||
Joseph T. Doyle | 131,342 | (5) | * | |||||
H. William Habermeyer | 61,197 | (5) | * | |||||
William J. Madia | 51,197 | (5) | * | |||||
James R. Mellor | 529,557 | (5) | * | |||||
W. Henson Moore | 99,970 | (5) | * | |||||
Hiroshi Sakamoto | — | * | ||||||
Walter E. Skowronski | — | * | ||||||
M. Richard Smith | — | * | ||||||
Michael S. Taff | — | * | ||||||
Officers | ||||||||
John K. Welch | 2,047,973 | (5) | 1.7 | % | ||||
John C. Barpoulis | 627,024 | (5) | * | |||||
Peter B. Saba | 297,722 | (5) | * | |||||
Philip G. Sewell | 815,492 | (5) | * | |||||
Robert Van Namen | 698,061 | (5) | * | |||||
Directors and all executive officers as a group (24 persons) | 6,883,342 | (6) | 5.5 | % |
* | Less than 1% | |
(1) | For purposes of computing the percentage of outstanding shares beneficially owned by each person, the number of shares owned by that person and the number of shares outstanding includes shares as to which such person has a right to acquire beneficial ownership within 60 days (for example, through the exercise of stock options or conversion of securities), in accordance withRule 13d-3(d)(1) under the Securities Exchange Act of 1934, as amended. |
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(2) | The Schedule 13G/A filed on February 11, 2011 with the SEC by Dimensional Fund Advisors LP states that it has sole power to vote 8,854,466 shares and sole power to dispose of 9,083,158 shares. Dimensional Fund Advisors states in its Schedule 13G/A that all securities reported therein are owned by its funds, no one of which, to its knowledge, owns more than 5% of the class of securities. In its Schedule 13G/A, Dimensional Fund Advisors disclaims beneficial ownership of all such securities. | |
(3) | The Schedule 13G filed on February 9, 2011 with the SEC by BlackRock, Inc. states that it has the sole power to vote 6,592,071 shares and the sole power to dispose of 6,592,071 shares. | |
(4) | The Schedule 13D filed on June 7, 2010 with the SEC by Noble Group Limited states that they have the sole power to vote and to dispose of 5,848,940 shares. | |
(5) | Includes shares subject to options granted pursuant to the USEC Inc. 2009 Equity Incentive Plan (or its predecessor plan, the USEC Inc. 1999 Equity Incentive Plan) exercisable, as of March 4, 2011, or within 60 days from such date as follows: Mr. Armacost 16,750; Dr. Brown 17,250; Mr. Doyle 1,227; Mr. Mellor 119,122; Mr. Moore 10,500; Mr. Welch 807,070; Mr. Barpoulis 280,306; Mr. Saba 84,678; Mr. Sewell 485,925; and Mr. Van Namen 340,749. Also includes restricted stock units that can be converted into USEC common stock within 60 days from March 4, 2011 as follows: Mr. Armacost 57,546; Dr. Brown 57,546; Mr. Doyle 100,115; Mr. Habermeyer 51,197; Dr. Madia 51,197; Mr. Mellor 144,904; and Mr. Moore 57,546. | |
(6) | Includes 2,574,010 shares subject to options granted pursuant to the USEC Inc. 2009 Equity Incentive Plan (or its predecessor plan, the USEC Inc. 1999 Equity Incentive Plan) exercisable as of March 4, 2011, or within 60 days from such date. Includes 550,051 restricted stock units that can be converted into USEC common stock within 60 days from March 4, 2011. |
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• | President and Chief Executive Officer (CEO), John K. Welch; | |
• | Senior Vice President and Chief Financial Officer (CFO), John C. Barpoulis; | |
• | Senior Vice President and General Counsel, Peter B. Saba; | |
• | Senior Vice President, American Centrifuge and Russian HEU, Philip G. Sewell; and | |
• | Senior Vice President, Uranium Enrichment, Robert Van Namen. |
• | As of December 31, 2010, we have invested approximately $1.95 billion in the American Centrifuge project, an enormous long-term investment for a company of our size, and are in discussions with the DOE regarding the terms for a conditional commitment for a $2 billion loan guarantee for the ACP. | |
• | During 2010 we also executed an agreement with Toshiba Corporation and Babcock & Wilcox Investment Company (“B&W”) for a $200 million strategic investment in the company and closed on the first phase of funding in September 2010 totaling $75 million. | |
• | With Toshiba’s support we are also in discussions with Japanese export credit agencies regarding financing up to $1 billion of the cost to complete the ACP. | |
• | We also saw significant technical achievements with the project in 2010 as a result of efforts to demonstrate the commercial readiness of our technology — we operated our lead cascade of production-ready AC100 machines in a commercial plant cascade configuration and accumulated significant runtime and we continue to build machines. | |
• | We also saw a significant increase in our stock price in 2010 of 56%, outperforming 91% of the S&P 500 in total shareholder return, indicating that our shareholders think we are on the right track and share our belief in the American Centrifuge technology. |
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• | We had solid financial results in 2010 in spite of the challenges facing our business and exceeded our objectives for gross profit margin and cash flow from operations. Gross profit margin for 2010 was 7.8%, which although down from 10% in 2009, was substantially better than the projected 5% to 6% at the beginning of the year. Adjusted cash flow for 2010 was $35 million above our target. | |
• | As expected, despite higher share prices, our 2010 financial results were down from 2009. Because of the impact of high power prices (approximately 70% of our production costs) on our costs of production, we will continue to have reduced margins until we are able to transition our business through the deployment of the substantially more efficient ACP (which uses 95% less electricity to produce LEU). |
• | Strong oversight by our Compensation Committee of all elements of executive compensation; | |
• | Base salary represents less than 30% of each NEO’s total direct compensation opportunity (22% for the CEO), with the remainder of compensation being variable or “at risk;” | |
• | The Committee’s use of an independent compensation consultant — Towers Watson; | |
• | Based on a comprehensivepay-for-performance analysis conducted by Towers Watson during 2010, realizable pay was aligned with Company three-year performance and the Company’s Peer Group, as described below under“Pay-for-Performance Assessment;” | |
• | Significant stock ownership guidelines that are exceeded by each of our NEOs and directors, as described below under “Stock Ownership Guidelines;” | |
• | A “no hedging” policy in our insider trading policy that prohibits employees and directors from hedging the economic interest in the USEC shares they hold, as described below under “Hedging Prohibition;” | |
• | Our equity incentive plan includes a compensation recovery or “claw back” provision that applies to all equity plan participants, as described below under “Recovery of Incentive Compensation;” | |
• | Provide only very limited perquisites — those provided relate to areas that we believe benefit the Company, including financial planning and executive physicals; | |
• | No employment agreements with NEOs; severance is limited to one times base salary and annual bonus; | |
• | Change in control agreements are limited to one to two and a half times base salary and annual bonus and are “double-trigger” requiring a separation from service to receive benefits; although these agreements provide for automatic renewal to protect employees, we retain the ability to terminate the agreements with sufficient notice; | |
• | Existing change in control agreements contain a limited excise taxgross-up that has been in the Company’s form of agreement since the Company’s change in control arrangements were put in place in 1999; however, the Compensation Committee has determined that beginning in 2011, new or materially amended agreements will not provide for any excise taxgross-up; and | |
• | A strong risk management program with specific responsibilities assigned to the Board and the Board’s committees, and consideration of avoiding excessive risk in compensation decisions. See discussion of |
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the compensation risk assessment performed during 2010 under “Risk Assessment of Compensation Programs.” |
• | Replaced the annual stock option grant to executives under our long-term incentive program with performance-based restricted stock; | |
• | Added a relative total shareholder return measure to our long-term incentive awards to further align the compensation of our executives with our performance relative to companies we compete with for executive talent; and | |
• | Replaced a portion of the time-vested grant of restricted stock with a new three year performance-based cash incentive program to further link pay with performance. |
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Objective | How We Implement Our Objectives | ||
Compensation should be aligned with shareholders’ interests. | • Strong incentives to maximize long-term value for our shareholders. • Long-term stock ownership by executives and stock-based performance incentives provide ongoing alignment. | ||
Compensation should support our business strategy and objectives. | • Reward successful execution of our business plan by tying performance goals to our business plan. • Stretch performance goals encourage innovation by executives while not encouraging excessive risk-taking. | ||
Compensation should be structured to pay for performance. | • A substantial portion of the total compensation opportunity is variable and dependent upon the Company’s operating and financial performance. • An employee’s realized compensation may be above or below his target compensation depending on performance. • 2009 compensation was paid out significantly below target opportunity compensation (2009 annual incentives for the NEOs were paid out at between 61% and 70% of target); 2010 compensation is above target based on Company performance (2010 annual incentives for the NEOs were paid out at between 127% and 129% of target). | ||
Compensation opportunities should be market competitive. | • Compensation and benefits programs are designed to provide competitive compensation relative to the labor markets for our executives while maintaining fiscal responsibility for our shareholders. • We use peer group proxy and published survey data to review market compensation. • In light of the Company’s critical transition period, base salaries and target total direct opportunity compensation are positioned at approximately between the 50th and 75th percentile of the market using this data and moving toward the 50th percentile in the long term. • Current significant challenges facing the Company and talent retention objectives warrant targeting higher levels of compensation for some individuals. | ||
Compensation and benefits programs should encourage short-term and long-term retention. | • Our compensation and benefits programs are intended to encourage retention and reward continuity of service, which is particularly important due to the unique skill sets of our executives. • Short-term retention is also important due to the challenges currently facing our business. | ||
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• | CEO and other NEO pay are set by the Compensation Committee (other than base salaries, which are set by the Board upon recommendation by the Compensation Committee). | |
• | CEO and the Senior Vice President of Human Resources and Administration provide support to the Compensation Committee and attend all Compensation Committee meetings but are not present for executive sessions or discussions of their individual compensation. | |
• | CEO provides performance assessments and compensation recommendations for each of the other NEOs, including a self-assessment of his own performance. | |
• | CFO attends Compensation Committee meetings as needed to report on financial items. | |
• | Compensation Committee meetings often include an executive session without members of management present. |
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• | Albemarle Corp. | • | Cytec Industries Inc. | • | Orbital Sciences Corp. | |||||
• | Alliant Techsystems Inc. | • | Esterline Technologies Corp. | • | Rockwell Collins Inc. | |||||
• | Arch Chemicals Inc. | • | FMC Corp. | • | Rockwood Holdings Inc. | |||||
• | Arch Coal Inc. | • | Goodrich Corp. | • | Shaw Group Inc. | |||||
• | Cameco Corp. | • | Hexcel Corp. | • | Teledyne Technologies | |||||
• | CONSOL Energy Inc. | • | McDermott International, Inc. | |||||||
• | Curtiss-Wright Corp. | • | OM Group |
• | How our performance compared with the Peer Group using operational and shareholder performance metrics — specifically earnings per share growth, sales growth, operating cash flow growth, return on equity, return on assets, and total shareholder return; | |
• | How the potential compensation opportunity for our executives compared with our Peer Group; and | |
• | How the amount of cash compensation our executives earned plus the value of equity compensation as of a specified date as a percentage of (1) their potential (realizable) compensation and (2) our reported net income and average market capitalization compared with our Peer Group. |
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Compensation | Objectives | Key Features | ||||
Element | ||||||
Base Salary | • Provides a stable annual income at a level consistent with individual contributions. | • Adjustments are considered annually based on individual performance, level of pay relative to the market, internal pay equity, and retention issues. | ||||
Annual Incentive Awards | • Rewards the achievement of critical annual financial and operational performance goals. • Aligns NEOs interests with those of our shareholders by promoting improved financial results through improvements to gross margin and cash flow and reductions in controllable expenses, as well as rewarding total shareholder return performance. • Retains NEOs by providing market-competitive compensation. | • Annual incentives can vary from 0% to 150% of the target amount. • Annual performance goals are predetermined and include a combination of company performance measures, weighted 55%, and individual performance measures, weighted 45%. | ||||
Long-Term Incentive Awards (Restricted Stock and Stock Options) | • Aligns NEO’s interests with long-term shareholder interests by linking part of each NEO’s compensation to long-term corporate stock performance. • Provides opportunities for wealth creation and ownership, which promotes retention and enables us to attract and motivate our NEOs. • Retains NEOs through multi-year vesting of equity grants and by providing market-competitive compensation. • Ensures that the executive decision-making process maintains a balanced focus on both immediate measures of success and on the effective growth and development of the business three to five years in the future. | • Utilizes different equity types, including restricted stock and stock options, to balance the multiple objectives. • Long-term equity awards generally vest in increments over a three year period. • Additional performance components added for 2011 to further emphasize pay-for-performance. | ||||
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Short-Term vs. Long-Term Incentive Pay Opportunity as a Percentage of Total Pay | ||||||
Short-Term Incentive Pay Target Annual Incentive | Long-Term Incentive Pay Target Long-Term Incentive | |||||
CEO | 29% | 71% | ||||
Other NEOs (Average) | 29% | 71% | ||||
Cash vs. Equity-Based Pay Opportunity as a Percentage of Total Pay | ||||||
Cash Base Salary + Target Annual Incentive | Equity-Based Target Long-Term Incentives | |||||
CEO | 44% | 56% | ||||
Other NEOs (Average) | 50% | 50% | ||||
Fixed vs. Variable Pay Opportunity as a Percentage of Total Pay | ||||||
Fixed Base Salary | Variable Performance-Related Pay Target Annual Incentive + Target Long-Term Incentive | |||||
CEO | 22% | 78% | ||||
Other NEOs (Average) | 29% | 71% | ||||
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Name | 2009 Salary | 2010 Salary | ||||||
John K. Welch | $ | 900,000 | $ | 900,000 | ||||
John C. Barpoulis | $ | 400,000 | $ | 428,000 | ||||
Philip G. Sewell | $ | 470,000 | $ | 470,000 | ||||
Robert Van Namen | $ | 410,000 | $ | 428,000 | ||||
Peter B. Saba | $ | 370,000 | $ | 390,000 |
2010 Target % | ||||
Name | (of base salary) | |||
John K. Welch | 100 | % | ||
John C. Barpoulis | 70 | % | ||
Peter B. Saba | 70 | % | ||
Philip G. Sewell | 70 | % | ||
Robert Van Namen | 70 | % |
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Corporate Quantitative Goal | Weight | Rationale | ||||||
Gross profit margin percentage. | 25 | % | Gross profit margin percentage is an important measure of our operational profitability. | |||||
Cash flow from operations before American Centrifuge expense, interest and taxes (“Adjusted cash flow from operations”). | 30 | % | Adjusted cash flow from operations is a non-GAAP measure of cash created by existing operations with the heaviest weighting due to the importance to us of cash and liquidity. American Centrifuge expense is excluded because it is variable and difficult to forecast given the demobilization of the American Centrifuge project. Interest and taxes are excluded because most members of management cannot influence these factors. | |||||
U.S. government contract services receivables (measure of the cash received from the resolution of outstanding incurred cost submissions and the approval of revised billing rates in the contract services segment). | 10 | % | This is a measure of management’s efforts to resolve outstanding billing issues with DOE. At the beginning of 2010, USEC had $38 million of U.S. government contract unbilled receivables that had not been billed due to delays in DOE approving updates to our billing rates. In addition, USEC had finalized and submitted to DOE incurred cost submissions for contract work for periods from 2002 through 2008 that had not yet been audited and for which additional amounts were potentially billable. During 2010, $21.6 million of U.S. government contract unbilled receivables were collected. | |||||
Selling, general and administrative (SG&A) expense, not including other compensation and stock based compensation (“Adjusted SG&A expense”). | 10 | % | Adjusted SG&A expense is a non-GAAP measure of controllable overhead expenses. Other compensation and stock based compensation are excluded because they can be influenced by stock price volatility and other subjective variables. | |||||
USEC total shareholder return, as measured by USEC’s total shareholder return compared to the S&P 500. | 25 | % | This is a measure of return to shareholders in the form of stock price appreciation, with a heavy weighting due to the importance to shareholders. | |||||
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Gross Profit | Adjusted Cash | U.S. Government | ||||||||
Margin | Flow from | Contract Services | Adjusted SG&A | Total Shareholder | ||||||
Level | Percentage (25%) | Operations (30%) | Receivables (10%) | Expense (10%) | Return (25%) | |||||
Maximum (150)% | 8.0% | $110 million | $40 million | $40 million | 75th percentile | |||||
Target (100)% | 6.0% | $50 million | $30 million | $44 million | 55th percentile | |||||
Threshold (0)% | 4.0% | $0 million | $0 million | $50 million | 25th percentile | |||||
Actual Performance | 7.8% (145%) | $85 million (130%) | $21.6 million (72%) | $41.5 million (131%) | 91stpercentile (150%) |
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Key Performance Objective | Difficulty | ||
Strengthen near-term performance of the business primarily through actions to control costs and increase revenues, without compromising safety and security. | Achievement of initiatives relating to improving gross margin and cash flow compared to budget, managing selling, general and administrative costs and electric power costs compared to budget, incorporating risk mitigation mechanisms in new customer contracts, and other efforts with respect to contracting involve substantial effort and initiative. | ||
Maintain the future value for ACP by addressing DOE’s technical and financing concerns, preserving the manufacturing infrastructure, and retaining a sufficient supplier base to support timely remobilization. Demonstrate technology and commercial readiness of the ACP by operating AC100 machines in the Lead Cascade. | This includes achievement of objectives relating to American Centrifuge project Lead Cascade operations, continued development efforts to further improve reliability, efforts to reduce perceived project risk, and other steps to improve the project’s financial structure, in support of submission of a revised loan guarantee application to DOE. Achievement in these areas requires significant effort and initiative. | ||
Ensure that we maintain sufficient liquidity to meet our needs and attract capital necessary to execute our long-term strategic objectives. | This includes achievement of objectives relating to our short-term and long-term capital needs in 2010, including efforts to renew our credit facility that was scheduled to expire in August 2010, efforts to obtain government funding for continuing development of the American Centrifuge technology, efforts to pursue strategic alternatives to enhance shareholder value, and efforts to obtain a DOE loan guarantee. Achievement of all of these objectives involves substantial effort and initiative. | ||
Execute steps needed to transition production sources and government services activities. | This includes efforts with respect to transitioning our supply sources pending resolution of the status of the American Centrifuge project, efforts with respect to securing sales commitments to meet revenue and gross margin objectives and align pricing structure with major risk elements in our supply, and efforts to resolve outstanding labor and contract issues in our government services business. Due to the number of risks and uncertainties facing us, implementation of a smooth transition plan involves a great deal of strategic planning and substantial effort and initiative. | ||
Develop a corporate communications plan that positions us and enhances our reputation with government, customers, and employees. Engage key contacts at critical government departments in a structured dialogue to determine a baseline assessment of the working relationship with USEC and the plan of action to improve the relationship and increase the likelihood of positive outcomes. | This includes evaluating strengths and weaknesses of current relationships and identifying steps for improvement, communicating our role in supporting policy objectives and leveraging third party relationships. These efforts require significant coordination, effort and initiative. | ||
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Key Performance | Corporate | Annual Incentive | ||||||||||
Objective | Quantitative Goals | Award (as a | ||||||||||
Achievement Level | Achievement Level | percentage of | ||||||||||
Name | (45%) | (55%) | target) | |||||||||
John K. Welch | 125 | % | 133 | % | 129 | % | ||||||
John C. Barpoulis | 120 | % | 133 | % | 127 | % | ||||||
Peter B. Saba | 125 | % | 133 | % | 129 | % | ||||||
Philip G. Sewell | 120 | % | 133 | % | 127 | % | ||||||
Robert Van Namen | 120 | % | 133 | % | 127 | % |
2010 Annualized Target | 2010 Percentage of Annualized Long-Term Incentive Value | |||||
Long-Term Incentive Value | Restricted Stock | Stock Option | ||||
Position | (as a Multiple of Base Salary) | Awards | Awards | |||
CEO | 2.5X | 70% | 30% | |||
Other NEOs | 1.4X to 1.8X | 57% to 67% | 33% to 43% |
2010 Target % | 2011 Target % | |||||||
Name | (of base salary) | (of base salary) | ||||||
John K. Welch | 175 | % | 75 | % | ||||
John C. Barpoulis | 120 | % | 60 | % | ||||
Peter B. Saba | 80 | % | 50 | % | ||||
Philip G. Sewell | 120 | % | 60 | % | ||||
Robert Van Namen | 120 | % | 60 | % |
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2010 Target % | ||||
Name | (of base salary) | |||
John K. Welch | 75 | % | ||
John C. Barpoulis | 60 | % | ||
Peter B. Saba | 40 | % | ||
Philip G. Sewell | 60 | % | ||
Robert Van Namen | 60 | % |
2011 Target % | ||||
Name | (of base salary) | |||
John K. Welch | 75 | % | ||
John C. Barpoulis | 60 | % | ||
Peter B. Saba | 50 | % | ||
Philip G. Sewell | 60 | % | ||
Robert Van Namen | 60 | % |
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Number of | Stock | |||||||||||
Stock Ownership Guideline | Years of | Ownership as | ||||||||||
Name | (number of shares) | Service | of 12/31/10 | |||||||||
John K. Welch | 300,000 | 5 | 1,162,704 | |||||||||
John C. Barpoulis | 65,000 | 5 | 315,628 | |||||||||
Peter B. Saba | 65,000 | 2 | 184,901 | |||||||||
Philip G. Sewell | 65,000 | 9 | 294,036 | |||||||||
Robert Van Namen | 65,000 | 12 | 326,741 |
2010 Consulting Fees Related to Executive or Director Compensation | $ | 189,071 | ||
All Other Fees | $ | 1,106,151 | ||
Total | $ | 1,295,222 |
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Change in | ||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||
Non-Qualified | ||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||
Name and | Fiscal | Salary | Awards | Awards | Compensation | Earnings | Compensation | |||||||||||||||||||||||||
Principal Position | Year | (1) | (2) | (3) | (4) | (5) | (6) | Total | ||||||||||||||||||||||||
John K. Welch | 2010 | $ | 900,000 | $ | 1,575,000 | $ | 675,001 | $ | 1,164,600 | $ | 775,545 | $ | 84,510 | $ | 5,174,656 | |||||||||||||||||
President and CEO | 2009 | $ | 934,615 | $ | 2,125,767 | $ | 675,000 | $ | 544,500 | $ | 1,799,094 | $ | 60,953 | $ | 6,139,929 | |||||||||||||||||
2008 | $ | 900,000 | $ | 1,720,430 | $ | 675,001 | $ | 371,853 | $ | 1,298,226 | $ | 61,512 | $ | 5,027,022 | ||||||||||||||||||
John C. Barpoulis | 2010 | $ | 440,654 | $ | 513,602 | $ | 256,800 | $ | 380,941 | $ | 193,221 | $ | 22,405 | $ | 1,807,623 | |||||||||||||||||
Senior Vice President and | 2009 | $ | 421,598 | $ | 507,355 | $ | 240,001 | $ | 197,120 | $ | 130,050 | $ | 20,321 | $ | 1,516,445 | |||||||||||||||||
Chief Financial Officer | 2008 | $ | 400,000 | $ | 405,646 | $ | 239,999 | $ | 239,182 | $ | 92,036 | $ | 9,200 | $ | 1,386,063 | |||||||||||||||||
Peter B. Saba | 2010 | $ | 384,615 | $ | 390,002 | $ | 156,000 | $ | 353,262 | $ | 57,313 | $ | 9,800 | $ | 1,350,992 | |||||||||||||||||
Senior Vice President, | 2009 | $ | 381,154 | $ | 395,304 | $ | 148,000 | $ | 185,833 | $ | 33,335 | $ | 9,800 | $ | 1,153,426 | |||||||||||||||||
General Counsel and | 2008 | $ | 250,385 | $ | 198,921 | $ | 39,007 | $ | 70,989 | $ | 44,328 | $ | 9,200 | $ | 612,830 | |||||||||||||||||
Secretary | ||||||||||||||||||||||||||||||||
Philip G. Sewell | 2010 | $ | 487,851 | $ | 563,998 | $ | 282,000 | $ | 418,324 | $ | 0 | $ | 0 | $ | 1,752,173 | |||||||||||||||||
Senior Vice President, | 2009 | $ | 505,928 | $ | 596,139 | $ | 282,000 | $ | 228,655 | $ | 67,889 | $ | 0 | $ | 1,680,611 | |||||||||||||||||
American Centrifuge and | 2008 | $ | 473,269 | $ | 476,635 | $ | 281,999 | $ | 282,677 | $ | 396,197 | $ | 0 | $ | 1,910,777 | |||||||||||||||||
Russian HEU | ||||||||||||||||||||||||||||||||
Robert Van Namen | 2010 | $ | 423,154 | $ | 513,602 | $ | 256,800 | $ | 380,941 | $ | 227,133 | $ | 17,882 | $ | 1,819,512 | |||||||||||||||||
Senior Vice President, | 2009 | $ | 425,769 | $ | 520,037 | $ | 246,001 | $ | 202,048 | $ | 189,922 | $ | 22,236 | $ | 1,606,013 | |||||||||||||||||
Uranium Enrichment | 2008 | $ | 410,000 | $ | 413,463 | $ | 246,000 | $ | 240,696 | $ | 214,180 | $ | 30,038 | $ | 1,554,377 |
(1) | The Company had 27 pay periods in 2009; however, annual salaries are calculated based on 26 pay periods. This additional pay period is included in the amounts in the Salary column for 2009. The amounts shown in the Salary column also include amounts paid in a year for unused accrued vacation time. | |
(2) | The amounts shown in the Stock Awards column represents the aggregate grant date fair value in the fiscal year related to stock awards earned by the NEOs, computed in accordance with FASB ASC Topic 718. The amounts shown in the Stock Awards column for a fiscal year include (a) awards made to the NEOs under the Company’s long-term incentive program during March of that year and (b) the restricted stock portion of any annual incentives earned by the NEOs for that year based on the Compensation Committee’s evaluation of each officer’s performance during the year, which awards are paid in March of the following year. For 2010, all annual incentive awards to the NEOs were paid 100% in cash and are included in the Non-Equity Incentive Plan Compensation column. For a discussion of valuation assumptions, see Note 13 to our consolidated financial statements included in our annual report onForm 10-K for the year ended December 31, 2010, and Note 11 to our consolidated financial statements included in our annual report onForm 10-K for the years ended December 31, 2009 and December 31, 2008. | |
(3) | The amounts shown in the Option Awards column represent the aggregate grant date fair value in the fiscal year related to option awards to the NEOs under the Company’s long-term incentive program, computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 13 to our consolidated financial statements included in our annual report onForm 10-K for the year ended December 31, 2010, and Note 11 to our consolidated financial statements included in our annual report onForm 10-K for the years ended December 31, 2009 and December 31, 2008. | |
(4) | The amounts shown in the Non-Equity Incentive Plan Compensation column include the cash portion of the annual incentive awards made to each of the NEOs based on the Compensation Committee’s evaluation of each officer’s performance during the year. The amounts shown for a fiscal year include cash annual incentives earned for that year and paid in March of the following year. For 2010, all annual incentive awards were paid 100% in cash. | |
For 2009, all of the NEOs had met their stock ownership guidelines and elected to receive their 2009 annual incentive awards 100% in cash. |
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For 2008, all of the NEOs had met their stock ownership guidelines and were eligible to receive their entire 2008 annual incentive award in cash. NEOs are eligible to receive 20% incentive payments of restricted stock for taking amounts they are entitled to receive in cash in restricted stock in lieu of cash. Amounts shown represent only the portion of the annual incentive awards that was paid in cash as follows: Welch 0%, Barpoulis 50%, Saba 50%, Sewell 50%, Van Namen 50%. Mr. Welch took his entire annual incentive award of $871,190 in restricted stock and therefore received an incentive payment of $174,238 in restricted stock. Messrs. Barpoulis, Saba, Sewell and Van Namen took 50% of their annual incentive awards of $276,077, $129,000, $324,394 and $279,104, respectively, in restricted stock and therefore received incentive payments of $27,608, $12,900, $32,439 and $27,910, respectively, in restricted stock. Restricted stock granted to Messrs. Welch, Barpoulis, Saba, Sewell and Van Namen for 2008 annual incentive awards was granted in March 2009 and is shown in the Summary Compensation Table under Stock Awards for 2008. Amounts for 2008 also include cash payouts made in March 2009 under a three-year performance plan for the performance period March 1, 2006 through December 31, 2008 as follows: Mr. Welch, $371,853; Mr. Barpoulis, $101,144; Mr. Saba, $6,489; Mr. Sewell, $120,480; and Mr. Van Namen, $101,144. | ||
(5) | The amounts shown in the Change in Pension Value and Non-Qualified Deferred Compensation earnings column represent the change in the actuarial present value of the NEO’s accumulated benefits under the Employees’ Retirement Plan of USEC Inc., the USEC Inc. Pension Restoration Plan and the USEC Inc. 2006 Supplemental Executive Retirement Plan (or, in the case of Mr. Sewell, the 1999 Supplemental Executive Retirement Plan) at December 31, 2010, as compared to December 31, 2009; at December 31, 2009, as compared to December 31, 2008; and at December 31, 2008, as compared to December 31, 2007. The actuarial present value of Mr. Sewell’s accumulated benefits under these plans as of December 31, 2010 decreased by $337,954 as compared to December 31, 2009. None of our plans provide for above-market earnings on deferred compensation amounts, and as a result, the amounts reported here do not reflect any such earnings. | |
(6) | The amounts shown in the All Other Compensation column for 2010 for Mr. Welch, Mr. Barpoulis, Mr. Saba and Mr. Van Namen include Company matching contributions of $9,800 made under the USEC Savings Program. The amounts for Mr. Welch and Mr. Van Namen for 2010 also include Company matching contributions of $47,980 and $8,082, respectively, made under the USEC Inc. Executive Deferred Compensation Plan, as included in the Nonqualified Deferred Compensation in Fiscal Year 2010 table. For Mr. Welch and Mr. Barpoulis, the amount shown for 2010 also includes $26,730 and $12,605, respectively, for perquisites and other personal benefits received in 2010. Perquisites and other personal benefits for Mr. Welch for 2010 included: financial counseling, club membership dues, an annual physical, and spouse travel and related expenses. Perquisites and other personal benefits for Mr. Barpoulis for 2010 included financial counseling. No one perquisite for Mr. Welch or Mr. Barpoulis exceeded the greater of $25,000 or 10% of the total amount of these benefits for such executive. |
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All | All | |||||||||||||||||||||||||||||||||||
Other | Other | |||||||||||||||||||||||||||||||||||
Stock | Option | Exercise | Grant Date | |||||||||||||||||||||||||||||||||
Date of | Estimated Possible | Awards: | Awards: | or Base | Fair | |||||||||||||||||||||||||||||||
Compensation | Payouts Under | Number | Number of | Price | Value of | |||||||||||||||||||||||||||||||
Committee | Non-Equity Incentive | of Shares | Securities | Option | Stock and | |||||||||||||||||||||||||||||||
Grant | Action | Awards(1) | of Stock | Underlying | Awards | Option | ||||||||||||||||||||||||||||||
Name | Date | (if different) | Threshold | Target | Maximum | or Units | Options | ($/Sh) | Awards(2) | |||||||||||||||||||||||||||
John K. Welch | 2/10/10 | $ | 0 | $ | 900,000 | $ | 1,350,000 | |||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 304,054 | (4) | $ | 1,575,000 | ||||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 240,214 | (5) | $ | 5.18 | $ | 675,001 | ||||||||||||||||||||||||||||
John C. Barpoulis | 2/10/10 | $ | 0 | $ | 299,600 | $ | 449,400 | |||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 99,151 | (4) | $ | 513,602 | ||||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 91,388 | (5) | $ | 5.18 | $ | 256,800 | ||||||||||||||||||||||||||||
Peter B. Saba | 2/10/10 | $ | 0 | $ | 273,000 | $ | 409,500 | |||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 75,290 | (4) | $ | 390,002 | ||||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 55,516 | (5) | $ | 5.18 | $ | 156,000 | ||||||||||||||||||||||||||||
Philip G. Sewell | 2/10/10 | $ | 0 | $ | 329,000 | $ | 493,500 | |||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 108,880 | (4) | $ | 563,998 | ||||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 100,356 | (5) | $ | 5.18 | $ | 282,000 | ||||||||||||||||||||||||||||
Robert Van Namen | 2/10/10 | $ | 0 | $ | 299,600 | $ | 449,400 | |||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 99,151 | (4) | $ | 513,602 | ||||||||||||||||||||||||||||||
3/08/10 | 2/10/10 | (3) | 91,388 | (5) | $ | 5.18 | $ | 256,800 |
(1) | Amounts shown are estimated possible cash payouts for 2010 annual incentives based on performance against 2010 corporate and individual performance goals at the threshold (0%), target (100%) and maximum (150%) levels. Actual payouts of 2010 annual incentives were approved by the Compensation Committee in February 2011 and were 127% to 129% of target for each of the NEOs. These payouts are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. | |
(2) | The value of the stock awards is based on the fair value of such award on the grant date, computed in accordance with FASB ASC Topic 718. | |
(3) | These long-term incentive awards were granted by the Compensation Committee, effective as of a later date following the release of the Company’s audited financial results. | |
(4) | Includes shares of restricted stock granted to the NEOs in 2010 under the Company’s long-term incentive program. These shares will vest ratably over three years from the date of grant. | |
(5) | Includes non-qualified stock options granted to the NEOs in 2010 under the Company’s long-term incentive program. These options will vest ratably over three years from the date of grant. |
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Option Awards | Stock Awards | |||||||||||||||||||||||
Market | ||||||||||||||||||||||||
Number of | Number of | Number of | Value of | |||||||||||||||||||||
Securities | Securities | Shares or | Shares or | |||||||||||||||||||||
Underlying | Underlying | Units of | Units of | |||||||||||||||||||||
Unexercised | Unexercised | Option | Option | Stock That | Stock That | |||||||||||||||||||
Options | Options | Exercise | Expiration | Have Not | Have Not | |||||||||||||||||||
Name | Exercisable | Unexercisable | Price | Date | Vested | Vested | ||||||||||||||||||
John K. Welch | 88,621 | $ | 12.09 | 3/28/11 | 592,450 | (1) | $ | 3,566,549 | ||||||||||||||||
87,068 | $ | 13.24 | 3/05/12 | |||||||||||||||||||||
201,794 | 100,897 | (2) | $ | 5.86 | 3/03/13 | |||||||||||||||||||
124,309 | 248,619 | (3) | $ | 3.72 | 3/04/14 | |||||||||||||||||||
240,214 | (4) | $ | 5.18 | 3/08/15 | ||||||||||||||||||||
John C. Barpoulis | 190,223 | (5) | $ | 1,145,142 | ||||||||||||||||||||
28,122 | $ | 12.09 | 3/28/11 | |||||||||||||||||||||
25,701 | $ | 13.24 | 3/05/12 | |||||||||||||||||||||
71,749 | 35,874 | (2) | $ | 5.86 | 3/03/13 | |||||||||||||||||||
44,199 | 88,398 | (3) | $ | 3.72 | 3/04/14 | |||||||||||||||||||
91,388 | (4) | $ | 5.18 | 3/08/15 | ||||||||||||||||||||
Peter B. Saba | 11,661 | 5,831 | (6) | $ | 5.23 | 5/06/13 | 141,929 | (7) | $ | 854,413 | ||||||||||||||
27,256 | 54,512 | (3) | $ | 3.72 | 3/04/14 | |||||||||||||||||||
55,516 | (4) | $ | 5.18 | 3/08/15 | ||||||||||||||||||||
Philip G. Sewell | 59,300 | $ | 8.50 | 7/31/11 | 42,931 | (8) | $ | 258,445 | ||||||||||||||||
48,142 | $ | 7.02 | 8/07/12 | |||||||||||||||||||||
50,000 | $ | 7.00 | 8/06/13 | |||||||||||||||||||||
33,499 | $ | 12.09 | 3/28/11 | |||||||||||||||||||||
31,208 | $ | 13.24 | 3/05/12 | |||||||||||||||||||||
84,305 | 42,152 | (2) | $ | 5.86 | 3/03/13 | |||||||||||||||||||
51,934 | 103,867 | (3) | $ | 3.72 | 3/04/14 | |||||||||||||||||||
100,356 | (4) | $ | 5.18 | 3/08/15 | ||||||||||||||||||||
Robert Van Namen | 36,000 | $ | 8.50 | 7/31/11 | 192,500 | (9) | $ | 1,158,850 | ||||||||||||||||
18,000 | $ | 7.00 | 8/06/13 | |||||||||||||||||||||
28,122 | $ | 12.09 | 3/28/11 | |||||||||||||||||||||
27,243 | $ | 13.24 | 3/05/12 | |||||||||||||||||||||
73,543 | 36,771 | (2) | $ | 5.86 | 3/03/13 | |||||||||||||||||||
45,304 | 90,608 | (3) | $ | 3.72 | 3/04/14 | |||||||||||||||||||
91,388 | (4) | $ | 5.18 | 3/08/15 |
(1) | Shares of restricted stock vest as follows: 38,396 shares with a vesting date of March 3, 2011; 125,000 shares with a vesting date of March 4, 2011; 101,351 shares with a vesting date of March 8, 2011; 101,351 shares with a vesting date of March 8, 2012; 125,000 shares with a vesting date of March 4, 2012; and 101,352 shares with a vesting date of March 8, 2013. | |
(2) | Stock options vest at the rate of 331/3% per year, with vesting dates of March 3, 2009, March 3, 2010, and March 3, 2011. | |
(3) | Stock options vest at the rate of 331/3% per year, with vesting dates of March 4, 2010, March 4, 2011, and March 4, 2012. | |
(4) | Stock options vest at the rate of 331/3% per year, with vesting dates of March 8, 2011, March 8, 2012, and March 8, 2013. | |
(5) | Shares of restricted stock vest as follows: 13,652 shares with a vesting date of March 3, 2011; 38,709 shares with a vesting date of March 4, 2011; 33,050 shares with a vesting date of March 8, 2011; 38,710 shares with a vesting date of March 4, 2012; 33,050 shares with a vesting date of March 8, 2012; and 33,051 shares with a vesting date of March 8, 2013. | |
(6) | Stock options vest at the rate of 331/3% per year, with vesting dates of May 6, 2009, May 6, 2010, and May 6, 2011. |
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(7) | Shares of restricted stock vest as follows: 29,176 shares with a vesting date of March 4, 2011; 8,287 shares with a vesting date of May 6, 2011; 25,096 shares with a vesting date of March 8, 2011; 29,176 shares with a vesting date of March 4, 2012; 25,097 shares with a vesting date of March 8, 2012; and 25,097 shares with a vesting date of March 8, 2013 | |
(8) | Shares of restricted stock vest as follows: 10,435 shares with a vesting date of March 3, 2011; 16,248 shares with a vesting date of March 4, 2011; and 16,248 shares with a vesting date of March 4, 2012. | |
(9) | Shares of restricted stock vest as follows: 13,994 shares with a vesting date of March 3, 2011; 39,677 shares with a vesting date of March 4, 2011; 33,050 shares with a vesting date of March 8, 2011; 39,678 shares with a vesting date of March 4, 2012; 33,050 shares with a vesting date of March 8, 2012; and 33,051 shares with a vesting date of March 8, 2013. |
Option Awards | Stock Awards | |||||||||||||||
Number of Shares | Value Realized on | Number of Shares | Value Realized on | |||||||||||||
Name | Acquired on Exercise | Exercise | Acquired on Vesting | Vesting(1) | ||||||||||||
John K. Welch | — | — | 454,873 | $ | 2,378,164 | |||||||||||
John C. Barpoulis | — | — | 99,973 | $ | 522,337 | |||||||||||
Peter B. Saba | — | — | 55,983 | $ | 285,435 | |||||||||||
Philip G. Sewell | — | — | 232,285 | $ | 1,206,623 | |||||||||||
Robert Van Namen | — | — | 101,955 | $ | 532,677 |
(1) | Amounts reflect the closing market price of the stock on the day the stock vested. |
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Present Value of | ||||||||||||
Number of Years of | Accumulated | Payments During | ||||||||||
Name | Plan Name | Credited Service | Benefit(1) | Last Fiscal Year | ||||||||
John K. Welch | Retirement Plan | 5 yrs., 2 mos. | $ | 166,818 | $ | 0 | ||||||
Pension Restoration Plan | 5 yrs., 2 mos. | $ | 895,452 | $ | 0 | |||||||
2006 SERP | 5 yrs., 2 mos. | $ | 4,167,176 | $ | 0 | |||||||
Total | $ | 5,229,446 | $ | 0 | ||||||||
John C. Barpoulis | Retirement Plan | 5 yrs., 9 mos. | $ | 97,205 | $ | 0 | ||||||
Pension Restoration Plan | 5 yrs., 9 mos. | $ | 236,529 | $ | 0 | |||||||
2006 SERP | 5 yrs., 9 mos. | $ | 155,453 | $ | 0 | |||||||
Total | $ | 489,187 | $ | 0 | ||||||||
Peter B. Saba | Retirement Plan | 2 yrs., 8 mos. | $ | 68,848 | $ | 0 | ||||||
Pension Restoration Plan | 2 yrs., 8 mos. | $ | 66,128 | $ | 0 | |||||||
2006 SERP | 2 yrs., 8 mos. | $ | 0 | $ | 0 | |||||||
Total | $ | 134,976 | $ | 0 | ||||||||
Philip G. Sewell | Retirement Plan | 9 yrs., 8 mos. | $ | 354,495 | $ | 0 | ||||||
Pension Restoration Plan | 9 yrs., 8 mos. | $ | 1,010,625 | $ | 0 | |||||||
1999 SERP | 9 yrs., 8 mos. | $ | 3,237,739 | $ | 0 | |||||||
Total | $ | 4,602,859 | $ | 0 | ||||||||
Robert Van Namen | Retirement Plan | 12 yrs. | $ | 241,997 | $ | 0 | ||||||
Pension Restoration Plan | 12 yrs. | $ | 599,464 | $ | 0 | |||||||
2006 SERP | 12 yrs. | $ | 359,595 | $ | 0 | |||||||
Total | $ | 1,201,056 | $ | 0 |
(1) | In determining the present value of each participant’s pension benefit, a 5.77% discount rate is assumed. An assumed interest rate of 5.90% is used in converting Pension Restoration Plan, 2006 SERP and 1999 SERP annuities into lump sums. The lump sum interest rate is determined at the time of benefit commencement and reflects the un-annualized Moody’s Aa index bond yield plus 75 basis points. For purposes |
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of this table, the calculation assumes retirement at the earliest age at which unreduced benefits could be paid, including projected future service for eligibility purposes only. |
• | Regular Formula: The monthly benefit under the “Regular Formula” is calculated as 1.2% of final average monthly compensation (base salary plus annual bonus) times years and months of credited service plus $110. There are no offsets to this benefit. | |
• | Alternate Formula: The monthly benefit under the “Alternate Formula” is calculated as 1.5% of final average monthly compensation (base salary plus annual bonus) times years and months of credited service minus 1.5% times actual or projected monthly primary Social Security benefit times years and months of credited service up to 331/3 years (up to a maximum of 50% of the actual or projected monthly Social Security benefit). | |
• | Minimum Formula: The monthly benefit under the “Minimum Formula” is calculated as $5 multiplied by the first ten years and months of credited service, plus $7 multiplied by the next ten years and months of credited service, plus $9 times the years and months of credited service in excess of 20 years, plus 10% (less 1% per year of credited service less than 8) of the final average monthly compensation as calculated under the Regular Formula plus $110. There are no offsets to this benefit. |
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Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||
Contributions | Contributions | Earnings | Withdrawals/ | Balance | ||||||||||||||||
Name | in Last FY(1) | in Last FY(2) | in Last FY(3) | Distributions | at Last FYE(4) | |||||||||||||||
John K. Welch | $ | 144,450 | $ | 47,980 | $ | 60,962 | — | $ | 635,384 | |||||||||||
John C. Barpoulis | — | — | — | — | — | |||||||||||||||
Peter B. Saba | — | — | — | — | — | |||||||||||||||
Philip G. Sewell | — | — | — | — | — | |||||||||||||||
Robert Van Namen | $ | 10,102 | $ | 8,082 | $ | 34,677 | — | $ | 277,638 |
(1) | Amount represents executive’s contributions to the Deferred Compensation Plan. These amounts are also included in the Summary Compensation Table in the Salary column. | |
(2) | Amount represents the Company’s contributions to the Deferred Compensation Plan. These amounts are also included in the Summary Compensation Table in the All Other Compensation column. |
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(3) | Amount represents earnings on the Deferred Compensation Plan during 2010. | |
(4) | Amount represents the aggregate balance for the NEOs as of December 31, 2010 under the Deferred Compensation Plan. Includes the executive’s contributions to the Deferred Compensation Plan and a predecessor plan previously reported as compensation to the NEOs in the Summary Compensation Table in the Salary column in previous years, including as follows: Mr. Welch $93,462 in 2009 and $90,000 in 2008; and Mr. Van Namen $28,266 in 2009 and $37,547 in 2008. Amount includes the Company’s contributions to the Deferred Compensation Plan and a predecessor plan previously reported as compensation in the Summary Compensation Table in the All Other Compensation column in previous years, including as follows: Mr. Welch $27,208 in 2009 and $26,800 in 2008; and Mr. Van Namen $12,436 in 2009 and $20,838 in 2008. |
• | his current base salary and a prorated share of his current annual incentive (payable at the end of the performance period based on actual performance) up to the date of termination; | |
• | a lump sum cash severance equal to one year’s base salary at his current rate and an amount equal to his final average bonus (generally the average of the three most recent annual incentive bonuses paid to the executive prior to the date of termination); and | |
• | continuation of medical and dental coverage as well as life insurance paid for by the Company for one year after termination (or until he receives similar coverage from a subsequent employer, whichever occurs first) and outplacement assistance services. |
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• | a cash lump sum payment of his unpaid base salary through the date of termination, plus all other amounts to which he was entitled under any of the Company’s compensation or benefit plans under the terms of such plans; | |
• | a cash lump sum payment equal to 2.5 times the sum of the executive’s final annual base salary and his final average bonus. The executive’s final average bonus is generally the average of the three most recent annual incentive bonuses paid to the executive prior to the date of termination; | |
• | continuation of life, accident and health insurance benefits for 2.5 years following the change in control, or, if sooner, until he is covered by comparable programs of a subsequent employer; | |
• | two and one-half additional years of service for purposes of vesting, eligibility and benefit accrual under the Company’s SERPs; and | |
• | if the executive receives payments that would subject him to any federal excise tax due under Section 4999 of the Internal Revenue Code, either his severance payments would be reduced so as not to trigger the excise tax or, if it would produce a larger net benefit, he would receive a cash payment equal to the amount of such excise tax. The calculation of the 280Ggross-up amount in the tables below is based upon a 280G excise tax rate of 20%. |
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Involuntary | ||||||||||||||||||||||||
or Good | ||||||||||||||||||||||||
Reason | ||||||||||||||||||||||||
Executive Benefits | Involuntary | Involuntary | Termination | |||||||||||||||||||||
and Payments | Voluntary | Retirement | Not for Cause | For Cause | (Change | Death or | ||||||||||||||||||
Upon Termination | Termination | (1) | Termination | Termination | in Control) | Disability | ||||||||||||||||||
John K. Welch | ||||||||||||||||||||||||
Severance Payments(2) | $ | 0 | N/A | $ | 1,734,126 | $ | 0 | $ | 4,335,315 | $ | 0 | |||||||||||||
Stock Options | $ | 0 | N/A | $ | 789,747 | $ | 0 | $ | 789,747 | $ | 789,747 | |||||||||||||
Restricted Stock | $ | 0 | N/A | $ | 3,566,549 | $ | 0 | $ | 3,566,549 | $ | 3,566,549 | |||||||||||||
Retirement Plan(3) | $ | 151,711 | N/A | $ | 151,711 | $ | 151,711 | $ | 151,711 | $ | 71,745 | |||||||||||||
Pension Restoration Plan(3) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
2006 SERP(4) | $ | 5,226,482 | N/A | $ | 5,226,482 | $ | 0 | $ | 7,088,044 | (8) | $ | 5,226,482 | ||||||||||||
280G TaxGross-up | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 1,654,202 | $ | 0 | |||||||||||||
Continuing Benefits(5) | $ | 0 | N/A | $ | 40,172 | $ | 0 | $ | 100,430 | $ | 0 | |||||||||||||
Total | $ | 5,378,193 | $ | 11,508,787 | $ | 151,711 | $ | 17,685,998 | $ | 9,654,523 | ||||||||||||||
John C. Barpoulis | ||||||||||||||||||||||||
Severance Payments(2) | $ | 0 | N/A | $ | 693,574 | $ | 0 | $ | 1,733,936 | $ | 0 | |||||||||||||
Stock Options | $ | 0 | N/A | $ | 285,821 | $ | 0 | $ | 285,821 | $ | 285,821 | |||||||||||||
Restricted Stock | $ | 0 | N/A | $ | 341,111 | $ | 0 | $ | 341,111 | $ | 341,111 | |||||||||||||
Retirement Plan(3) | $ | 44,159 | N/A | $ | 44,159 | $ | 44,159 | $ | 44,159 | $ | 20,494 | |||||||||||||
Pension Restoration Plan(3) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
2006 SERP(4) | $ | 406,872 | N/A | $ | 406,872 | $ | 0 | $ | 645,472 | (8) | $ | 502,268 | ||||||||||||
280G TaxGross-up | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 502,287 | $ | 0 | |||||||||||||
Continuing Benefits(5) | $ | 0 | N/A | $ | 31,840 | $ | 0 | $ | 79,601 | $ | 0 | |||||||||||||
Total | $ | 451,031 | $ | 1,803,377 | $ | 44,159 | $ | 3,632,387 | $ | 1,149,694 | ||||||||||||||
Peter B. Saba | ||||||||||||||||||||||||
Severance Payments(2) | $ | 0 | N/A | $ | 575,833 | $ | 0 | $ | 1,439,583 | $ | 0 | |||||||||||||
Stock Options | $ | 0 | N/A | $ | 176,618 | $ | 0 | $ | 176,618 | $ | 176,618 | |||||||||||||
Restricted Stock | $ | 0 | N/A | $ | 854,413 | $ | 0 | $ | 854,413 | $ | 854,413 | |||||||||||||
Retirement Plan(3) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Pension Restoration Plan(3) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
2006 SERP(4) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 420,496 | (8) | $ | 412,648 | ||||||||||||
280G TaxGross-up | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 469,248 | $ | 0 | |||||||||||||
Continuing Benefits(5) | $ | 0 | N/A | $ | 6,816 | $ | 0 | $ | 17,039 | $ | 0 | |||||||||||||
Total | $ | 0 | $ | 1,613,680 | $ | 0 | $ | 3,377,397 | $ | 1,443,679 | ||||||||||||||
Philip G. Sewell | ||||||||||||||||||||||||
Severance Payments(2) | $ | 0 | $ | 0 | $ | 782,399 | $ | 0 | $ | 1,955,997 | $ | 0 | ||||||||||||
Stock Options | $ | 329,937 | $ | 329,937 | $ | 329,937 | $ | 329,937 | $ | 329,937 | $ | 329,937 | ||||||||||||
Restricted Stock | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Retirement Plan(3) | $ | 354,495 | $ | 354,495 | $ | 354,495 | $ | 354,495 | $ | 354,495 | $ | 184,222 | (7) | |||||||||||
Pension Restoration Plan(3) | $ | 1,010,625 | $ | 1,010,625 | $ | 1,010,625 | $ | 1,010,625 | $ | 1,010,625 | $ | 932,822 | (7) | |||||||||||
1999 SERP(6) | $ | 3,237,739 | $ | 3,237,739 | $ | 3,237,739 | $ | 0 | $ | 3,237,739 | (8) | $ | 1,682,569 | |||||||||||
280G TaxGross-up | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Continuing Benefits(5) | $ | 0 | $ | 0 | $ | 23,654 | $ | 0 | $ | 59,135 | $ | 0 | ||||||||||||
Total | $ | 4,932,796 | $ | 4,932,796 | $ | 5,738,849 | $ | 1,695,057 | $ | 6,947,928 | $ | 3,129,550 |
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Involuntary | ||||||||||||||||||||||||
or Good | ||||||||||||||||||||||||
Reason | ||||||||||||||||||||||||
Executive Benefits | Involuntary | Involuntary | Termination | |||||||||||||||||||||
and Payments | Voluntary | Retirement | Not for Cause | For Cause | (Change | Death or | ||||||||||||||||||
Upon Termination | Termination | (1) | Termination | Termination | in Control) | Disability | ||||||||||||||||||
Robert Van Namen | ||||||||||||||||||||||||
Severance Payments(2) | $ | 0 | N/A | $ | 702,034 | $ | 0 | $ | 1,458,302 | $ | 0 | |||||||||||||
Stock Options | $ | 0 | N/A | $ | 291,048 | $ | 0 | $ | 291,048 | $ | 291,048 | |||||||||||||
Restricted Stock | $ | 0 | N/A | $ | 1,158,850 | $ | 0 | $ | 1,158,850 | $ | 1,158,850 | |||||||||||||
Retirement Plan(3) | $ | 131,563 | N/A | $ | 236,712 | $ | 131,563 | $ | 131,563 | $ | 146,656 | (7) | ||||||||||||
Pension Restoration Plan(3) | $ | 55,767 | N/A | $ | 99,086 | $ | 55,767 | $ | 55,767 | $ | 62,265 | (7) | ||||||||||||
2006 SERP(4) | $ | 918,556 | N/A | $ | 842,728 | $ | 0 | $ | 1,179,744 | (8) | $ | 901,929 | ||||||||||||
280G TaxGross-up | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Continuing Benefits(5) | $ | 0 | N/A | $ | 33,846 | $ | 0 | $ | 84,614 | $ | 0 | |||||||||||||
Total | $ | 1,105,886 | $ | 3,364,304 | $ | 187,330 | $ | 4,359,888 | $ | 2,560,748 |
(1) | As of December 31, 2010, Mr. Sewell is eligible for normal retirement in the 1999 SERP and early retirement in the Retirement Plan and the Pension Restoration Plan. Because of his years of services, Mr. Sewell would have been eligible to commence an immediate unreduced retirement benefit if he had retired as of December 31, 2010. No other NEO is eligible for an early or normal retirement under any of the Company’s retirement programs as of December 31, 2010. | |
(2) | In calculating the Severance Payment, the final average bonuses for the NEOs do not include each executive’s 2010 annual incentive bonus because annual incentive bonuses for 2010 had not been determined or paid as of December 31, 2010. The final average bonuses for the NEOs were based on the average of any bonuses paid for 2009, 2008 and 2007. In the case of Mr. Saba, his bonuses for periods prior to 2009 were not included in the calculation because he experienced a change in position that altered his bonus opportunity. | |
(3) | Only Mr. Sewell and Mr. Van Namen are vested under the Retirement Plan and the Pension Restoration Plan as of December 31, 2010. Mr. Sewell (age 64 as of December 31, 2010) is eligible for early retirement and would commence an immediate unreduced benefit upon termination. Mr. Van Namen (age 49 as of December 31, 2010) is not yet eligible for retirement but is eligible for immediate commencement of benefits accrued prior to 2001, payable as a lump sum. Mr. Van Namen will be eligible to commence a reduced pension for benefits accrued after 2000 at age 50. Amounts shown are the actuarial present value of annuity payments and lump sums, as applicable. The present value of accumulated benefits is calculated using the assumptions under FASB ASC Topic715-30 as shown in Note 12 to our consolidated financial statements included in our annual report onForm 10-K for the year ended December 31, 2010. In the case of disability, each of the executives would continue to accrue service during periods of disability rather than commence a retirement benefit. | |
(4) | Mr. Welch, Mr. Barpoulis and Mr. Van Namen are the only NEOs vested under the 2006 SERP. Accrued SERP benefits are forfeited upon a termination for cause. Mr. Welch is eligible for immediate lump sum benefits. Mr. Barpoulis and Mr. Van Namen are ineligible to commence payment so their amounts represent the present value of an age 55 lump sum payment. Lump sum death benefits are payable immediately. The 2006 SERP provides for a minimum benefit objective of 10% of final average pay (20% in the case of Mr. Welch) in the case of a change in control or death or disability. Amounts for all executives represent the present value of accrued benefits payable in lump sum form. The present value of accumulated benefits is calculated using the assumptions under FASB ASC Topic715-30 as shown in Note 12 to our consolidated financial statements included in our annual report onForm 10-K for the year ended December 31, 2010. | |
(5) | Includes (a) the cost of continuation of medical, dental and life insurance benefits for a period of one year following termination of employment in the case of an involuntary not for cause termination; and (b) the cost of continuation of medical, dental, life insurance and disability benefits for a period of 2.5 years following termination of employment in the case of a change in control. Amounts vary by executive based on their specific benefit elections. |
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(6) | Mr. Sewell is the only NEO with benefits under the 1999 SERP. Mr. Sewell is eligible to commence an immediate, unreduced benefit upon termination. Benefits accrued prior to 2005 are payable in the form of an annuity and post-2004 benefits are payable as the lump sum equivalent of such annuity. Accrued 1999 SERP benefits are forfeited upon a termination for cause. The amount shown is the actuarial present value of life annuity and lump sum payments. Death benefits are 50% of Mr. Sewell’s pre-2005 accrued benefit and 100% of his post-2004 accrued benefit, with survivor benefits payable as an annuity. The present value of accumulated benefits is calculated using the assumptions under FASB ASC Topic715-30 as shown in Note 12 to our consolidated financial statements included in our annual report onForm 10-K for the year ended December 31, 2010. | |
(7) | In the case of death, Mr. Welch’s, Mr. Barpoulis’, Mr. Sewell’s and Mr. Van Namen’s beneficiaries would be entitled to survivor annuity benefits under the Retirement Plan and the Pension Restoration Plan and would be eligible to commence survivor benefits immediately. Mr. Welch’s and Mr. Barpoulis’ survivor’s benefit is the 50% survivor portion of a joint and survivor annuity and is reduced for early commencement. Mr. Sewell’s survivor benefit is 50% of the amount Mr. Sewell would receive in the form of a single life annuity. Mr. Van Namen’s survivor’s benefit is 50% of the amount Mr. Van Namen would receive in the form of a single life annuity and is reduced for early commencement, subject to a minimum survivor benefit of 25%. Benefits accrued and vested after December 31, 2004 in the Pension Restoration Plan are payable as a lump sum. In the case of disability, each of the executives would continue to accrue service during periods of disability rather than commence a retirement benefit. | |
(8) | Change in control agreements provide for an additional 2.5 years of service for vesting, eligibility and benefit accrual for the executive’s retirement benefits. This is provided through the executive’s SERP benefit and accordingly, amount reflects gross benefit with 2.5 year service enhancement, less vested accrued benefits under the Retirement Plan and the Pension Restoration Plan. |
Number of | ||||||||||||
Number of | Securities | |||||||||||
Securities | Remaining | |||||||||||
to be Issued Upon | Weighted-Average | Available | ||||||||||
Exercise of | Exercise Price of | for Future Issuance | ||||||||||
Outstanding | Outstanding | Under Equity | ||||||||||
Options, Warrants | Options, Warrants | Compensation | ||||||||||
Plan Category | and Rights | and Rights | Plans | |||||||||
Equity compensation plans approved by security holders | 3,552,378 | $ | 6.20 | 2,686,786 | (1) | |||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 3,552,378 | 2,686,786 | ||||||||||
(1) | Includes approximately 1,745,576 shares with respect to which awards are available for issuance under the USEC Inc. 2009 Equity Incentive Plan (net of awards which terminate or are cancelled without being exercised or that are settled for cash) and approximately 941,210 shares (rounded) available for issuance under the USEC Inc. 2009 Employee Stock Purchase Plan. |
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• | Strong oversight by our Compensation Committee of all elements of executive compensation; | |
• | Base salary represents less than 30% of each NEO’s total direct compensation opportunity (22% for the CEO), with the remainder of compensation being variable or “at risk;” | |
• | The Compensation Committee’s use of an independent compensation consultant; | |
• | Based on a comprehensivepay-for-performance analysis conducted by the compensation consultant during 2010, realizable pay was aligned with Company three-year performance and the Company’s Peer Group; | |
• | Significant stock ownership guidelines that are exceeded by each of our NEOs and directors; | |
• | A “no hedging” policy in our insider trading policy that prohibits employees and directors from hedging the economic interest in the USEC shares they hold; | |
• | Our equity incentive plan includes a compensation recovery or “claw back” provision that applies to all equity plan participants; | |
• | Provide only very limited perquisites — those provided relate to areas that we believe benefit the Company, including financial planning and executive physicals; | |
• | No employment agreements with NEOs; severance is limited to one times base salary and annual bonus; | |
• | Change in control agreements are limited to one to two and a half times base salary and annual bonus and are “double-trigger” requiring a separation from service to receive benefits; | |
• | Existing change in control agreements contain a limited excise taxgross-up that has been in the Company’s form of agreement since the Company’s change in control arrangements were put in place in 1999; however, the Compensation Committee has determined that beginning in 2011, new or materially amended agreements will not provide for any excise taxgross-up; and | |
• | A strong risk management program with specific responsibilities assigned to the Board and the Board’s committees, and consideration of avoiding excessive risk in compensation decisions. |
• | Replaced the annual stock option grant to executives under our long-term incentive program with performance-based restricted stock; | |
• | Added a relative total shareholder return measure to our long-term incentive awards to further align the compensation of our executives with our performance relative to companies we compete with for executive talent; and | |
• | Replaced a portion of the time-vested grant of restricted stock with a new three year performance-based cash incentive program to further link pay with performance. |
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ADVISORY VOTE ON EXECUTIVE COMPENSATION
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• | Increase by 3,000,000 (from 4,500,000 to 7,500,000) the number of shares with respect to which awards may be granted under the Plan; | |
• | Modify the existing “clawback” provision of the Plan to also provide that any awards under the Plan will be subject to any compensation recovery or “clawback” policy that may be adopted by the Board from time to time, including retroactively, in order to implement final rulemaking under Section 954 of the Dodd-Frank Act or any future changes in law or regulation; | |
• | Make more explicit that with respect toall awards whose vesting is contingent on performance, no dividends or dividend equivalents shall be paid unless and until the award vests. Previously this restriction on the payment of dividends on unvested performance awards was contained only in the section of the Plan dealing with performance awards and was not repeated in the sections of the Plan dealing more generally with restricted stock and restricted stock unit awards. This made the Plan subject to potential misinterpretation and is being corrected in the amendment; and | |
• | Extend the expiration date of the Plan from February 25, 2019 to February 17, 2021 (the tenth anniversary of the Board’s adoption of the First Amendment). |
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• | An independent committee of the Board administers the Plan; | |
• | Awards may not be granted later than February 17, 2021 (10 years from the effective date of the First Amendment); | |
• | Awards may be stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and cash-based and other stock-based awards; | |
• | Stock options and stock appreciation rights may not be repriced under the Plan; | |
• | Stock options and stock appreciation rights may not be granted below fair market value; | |
• | Stock options and stock appreciation rights cannot be exercised more than 10 years from the date of grant; | |
• | Awards are subject to the following vesting limits: (1) awards other than non-employee director awards and performance awards will vest no faster than proportionally over a minimum period of three years; (2) performance awards shall not be vested over a period of less than one year; and (3) up to 210,000 awards may be granted without minimum vesting; | |
• | Dividends or dividend equivalents, if any, may not be paid on any awards whose vesting is contingent upon performance unless and until the award vests; |
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• | Awards granted by the Committee under the Plan will provide for acceleration of exercisability, vestingand/or settlement in connection with a change in control only where there is also an involuntary separation from service other than for cause (or by the employee for good reason) (e.g., “double trigger”); | |
• | Includes a “clawback” provision that requires repayment of all payments in settlement of any awards earned or accrued during the12-month period following the first public issuance or filing with the SEC of a financial document that is subsequently restated as a result of misconduct; in addition, any awards under the Plan shall be subject to any compensation recovery or “clawback” policy that may be adopted by the Board from time to time, including retroactively, in order to implement final rulemaking under Section 954 of the Dodd-Frank Act or any future changes in law or regulations; and | |
• | The Board may not make material amendments to the Plan without shareholder approval, including an amendment that would (1) materially increase the benefits accrued to participants under the Plan, (2) materially increase the number of shares available under the Plan (except for anti-dilution adjustments in the case of certain corporate transactions or events), (3) change the type of awards that may be granted under the Plan, (4) materially modify the requirements for participation in the Plan, or (5) require approval of the Company’s shareholders under applicable law, including the rules of any stock exchange upon which the Company’s shares are listed. |
• | For options or SARs, the annual grant limit per Covered Employee is 1,000,000 shares; | |
• | For restricted stock or restricted stock units, the annual grant limit per Covered Employee is 1,000,000 shares; | |
• | For performance awards settled in shares, the annual grant limit per Covered Employee is 1,000,000 shares; and |
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• | For cash-based awards or performance awards settled in cash, the annual grant limit per Covered Employee is $2,000,000. |
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• | revenue; | |
• | sales; | |
• | expenses; | |
• | operating income; | |
• | gross profit; | |
• | gross margin; | |
• | operating margin; | |
• | earnings before any one or more or a combination of: stock-based compensation expense, interest, taxes, depreciation and amortization; | |
• | pre-tax profit; | |
• | operating income or profit; | |
• | net operating income; | |
• | net income; | |
• | after tax operating income; | |
• | economic value added; | |
• | cash flow(s); | |
• | free cash flow; | |
• | operating cash flow; | |
• | balance of cash, cash equivalents and marketable securities; | |
• | stock price; | |
• | earnings or book value per share; |
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• | earnings per share; | |
• | diluted earnings per share; | |
• | return on shareholder equity; | |
• | return on capital; | |
• | return on assets; | |
• | return on equity; | |
• | return on capital, capital employed or investment; | |
• | return on investment; | |
• | employee satisfaction; | |
• | employee retention, customer satisfaction, safety or diversity, market share product development; | |
• | research and development expenses; | |
• | completion or attainment of objectively determinable targets with respect to an identified special project; | |
• | total sales or revenues or sales or revenues per employee; | |
• | production (separative work units or SWUs); | |
• | stock price or total shareholder return; | |
• | dividends; and | |
• | strategic business objectives, consisting of one or more objectives based on meeting specified cost targets, business expansion goals, and goals relating to acquisitions or divestiture. |
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Number of Shares of | ||||||||||||
Number of | Restricted Stock or | |||||||||||
Name | Dollar Value ($) | Stock Options | Restricted Stock Units | |||||||||
Named Executive Officers: | ||||||||||||
John K. Welch | $ | 3,252,579 | 240,214 | 497,602 | ||||||||
President and CEO | ||||||||||||
John C. Barpoulis | $ | 1,037,758 | 91,388 | 150,764 | ||||||||
Senior Vice President and CFO | ||||||||||||
Peter B. Saba | $ | 793,306 | 55,516 | 123,032 | ||||||||
Senior Vice President, General Counsel and Secretary | ||||||||||||
Philip G. Sewell | $ | 1,160,140 | 100,356 | 169,525 | ||||||||
Senior Vice President, American Centrifuge and Russian HEU | ||||||||||||
Robert Van Namen | $ | 1,044,440 | 91,388 | 152,054 | ||||||||
Senior Vice President, Uranium Enrichment | ||||||||||||
Total for All Executive Officers (12 persons) | $ | 9,789,183 | 752,705 | 1,481,483 | ||||||||
Non-Executive Director Group (10 persons) | $ | 1,233,005 | 0 | 290,803 | ||||||||
All employees who are not executive officers, as a group | $ | 2,030,867 | 20,313 | 381,040 | ||||||||
Total | $ | 13,053,054 | 773,018 | 2,153,326 |
(1) | The amounts in the Dollar Value column represent the aggregate grant date fair value of the stock option, restricted stock and restricted stock unit awards made during 2010, computed in accordance with FASB ASC Topic 718. |
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Amount Billed | Amount Billed | |||||||
For Year Ended | For Year Ended | |||||||
Type of Fee | December 31, 2010 | December 31, 2009 | ||||||
(In thousands) | (In thousands) | |||||||
Audit Fees(1) | $ | 1,037 | $ | 1,081 | ||||
Audit-Related Fees(2) | $ | 105 | $ | 15 | ||||
Tax Fees(3) | $ | 88 | $ | 70 | ||||
All Other Fees(4) | $ | 3 | $ | 3 | ||||
Total | $ | 1,233 | $ | 1,169 | ||||
(1) | Primarily audits of the financial statements for both periods including internal control testing over financial reporting and reviews of quarterly financial statements for both periods and accounting for the investment by Toshiba Corporation and Babcock & Wilcox Investment Company in 2010. | |
(2) | Compliance report for revolving credit facility in both periods and fraud risk assessment in 2010. | |
(3) | Primarily services related to selected tax projects and IRS audit assistance for both periods. | |
(4) | Service fee for access to electronic publication. |
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USEC INC. 2009 EQUITY INCENTIVE PLAN
1. | The second sentence of Section 1.1 of the Plan is amended and restated as follows: |
2. | The first sentence of Section 4.1 of the Plan is amended and restated as follows: |
3. | The following sentence is added at the end of each of Section 8.5 and Section 9.4 of the Plan: |
4. | The following sentence is added at the end of Section 19.1 of the Plan: |
By: | /s/ Peter B. Saba |
Title: | Senior Vice President, |
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Both are available 24 hours a day, 7 days a week.
http://www.proxyvoting.com/usu
1-866-540-5760
The Board of Directors recommends a vote FOR each of the listed nominees, FOR Proposals 2, 4 and 5, and EVERY THREE YEARS on Proposal 3. | Please mark your votes as indicated in this example | x |
For | Withhold | For | Withhold | |||||||||
1. Election of Directors: | ||||||||||||
01 James R. Mellor | o | o | 07 William J. Madia | o | o | |||||||
02 Michael H. Armacost | o | o | 08 W. Henson Moore | o | o | |||||||
03 Joyce F. Brown | o | o | 09 Walter E. Skowronski | o | o | |||||||
04 Sigmund L. Cornelius | o | o | 10 M. Richard Smith | o | o | |||||||
05 Joseph T. Doyle | o | o | 11 John K. Welch | o | o | |||||||
06 H. William Habermeyer | o | o |
FOR | AGAINST | ABSTAIN | ||||||||
2. | To approve on an advisory basis the compensation of our named executive officers. | o | o | o | ||||||
3 YEARS | 2 YEARS | 1 YEAR | ABSTAIN | |||||||
3. | Frequency of advisory vote on executive compensation. | o | o | o | o | |||||
FOR | AGAINST | ABSTAIN | ||||||||
4. | To approve an amendment to the USEC Inc. 2009 Equity Incentive Plan. | o | o | o | ||||||
FOR | AGAINST | ABSTAIN | ||||||||
5. | To ratify the appointment of PricewaterhouseCoopers LLP as USEC’s independent auditors for 2011. | o | o | o |
Mark Here for Address Change or Comments SEE REVERSE | o |
Signature | Signature | Date |
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