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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Filed by the Registrantþ | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o Preliminary Proxy Statement | o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ Definitive Proxy Statement | ||
o Definitive Additional Materials | ||
o Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
USEC INC.
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
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o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
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Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
![]() James R. Mellor Chairman of the Board | ![]() John K. Welch President and Chief Executive Officer |
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Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 25, 2006
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Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
• | held directly in your name with our transfer agent, Computershare Trust Company, N.A., 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, Computershare Trust Company, N.A., or under the USEC 401(k) plan with our plan administrator, Fidelity (each a “USEC stock ownership plan”). |
• | are present and vote in person at the meeting; or | |
• | have properly submitted a proxy card or voting instructions prior to the meeting. |
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• | If you are a shareholder of record, you may vote by the ballot provided at the meeting. | |
• | If you hold your shares in “street name,” you must obtain and bring with you to the Annual Meeting a legal proxy from your bank, broker, nominee or other holder of record in order to vote by ballot 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. |
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• | vote “FOR” all nominees, | |
• | “WITHHOLD” votes as to all nominees, or | |
• | “WITHHOLD” votes as to one or more specific nominees. |
• | vote “FOR” the ratification, | |
• | vote “AGAINST” the ratification, or | |
• | “ABSTAIN” from voting on the ratification. |
• | 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 75 as of March 1, 2006 | ||
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 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 also serves on the Board of Trustees of the Scripps Research Institute. | ||||
![]() | Michael H. Armacost | Director since 2002 Age 68 as of March 1, 2006 | ||
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 serves on the board of directors of AFLAC Inc., Applied Materials Inc., and Cargill, Incorporated. | ||||
![]() | Joyce F. Brown | Director since 1998 Age 59 as of March 1, 2006 | ||
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 and the PAXAR Corporation. | ||||
![]() | John R. Hall | Director since 1998 Age 73 as of March 1, 2006 | ||
Mr. Hall retired in 1997 as Chairman of the Board of Directors of Ashland, Inc., a company engaged in road construction, specialty chemicals, lubricants, car-care products, chemical and plastics distribution and transportation fuels businesses, a position he held since 1981. Mr. Hall also was Chief Executive Officer of Ashland, Inc. from 1981 to 1996. Mr. Hall was Chairman of the board of directors of Arch Coal, Inc. from 1997 to 1998, and a director until 1999. Mr. Hall also serves on the board of directors of Humana Inc. and GrafTech International Ltd. | ||||
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W. Henson Moore | Director since 2001 Age 66 as of March 1, 2006 | |||
![]() | Mr. Moore has been President and Chief Executive Officer of the American Forest and Paper Association, the national trade association of the forest, paper and wood products industry, since 1995. 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. | |||
Joseph F. Paquette, Jr. | Director since 2001 Age 71 as of March 1, 2006 | |||
![]() | Mr. Paquette retired in 1997 as Chairman and Chief Executive Officer of PECO Energy Company, a company engaged in the production, purchase, transmission, distribution, and sale of electricity and the distribution and sale of natural gas, a position he held since 1988. Before that, Mr. Paquette held positions with Consumers Power Company as President, and Senior Vice President and Chief Financial Officer, and with Philadelphia Electric Company as Chief Financial Officer. Mr. Paquette also serves on the board of directors of CMS Energy Corporation and the Mercy Health System. | |||
John K. Welch | Director since 2005 Age 55 as of March 1, 2006 | |||
![]() | 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 Dynamics’ Electric Boat Corporation, including President from 1995-2000. Mr. Welch currently serves on the board of directors of Battelle Memorial Institute, the U.S. Naval Academy Foundation and Precision Custom Components Inc. | |||
James D. Woods | Director since 2001 Age 74 as of March 1, 2006 | |||
![]() | Mr. Woods retired in 1997 as Chairman and Chief Executive Officer of Baker Hughes Inc., a provider of drilling, formation evaluation, completion and production products and services to the worldwide oil and gas industry, a position he held since 1989. Mr. Woods was also President of Baker Hughes Inc. from 1986 to 1997. Mr. Woods also serves on the board of directors of National Oilwell Varco, OMI Corporation, ESCO Technologies, Inc., Foster Wheeler Ltd. and Complete Production Services. | |||
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USEC Inc.
Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
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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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Audit, Finance | Regulatory and | |||||||||||||||
and Corporate | Nominating and | Government | ||||||||||||||
Responsibility | Compensation | Governance | Affairs | |||||||||||||
Director | Committee | Committee | Committee | Committee | ||||||||||||
Michael H. Armacost | X | X | ||||||||||||||
Joyce F. Brown | X | X | ||||||||||||||
John R. Hall | X | * | X | |||||||||||||
W. Henson Moore | X | X | * | |||||||||||||
Joseph F. Paquette, Jr. | X | * | X | |||||||||||||
James D. Woods | X | X | * | |||||||||||||
Number of Meetings in 2005 | 10 | 7 | 4 | 2 |
* | Chairman |
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Common Stock | ||||||||
Beneficially Owned(1) | ||||||||
Name of Beneficial Owner | Shares Owned | Percent of Class | ||||||
FMR Corp.(2) | 10,775,800 | 12.4 | % | |||||
82 Devonshire Street | ||||||||
Boston, MA 02109 | ||||||||
Ziff Asset Management, L.P.(3) | 7,794,157 | 9.0 | % | |||||
283 Greenwich Avenue | ||||||||
Greenwich, CT 06830 | ||||||||
Dimensional Fund Advisors Inc.(4) | 6,232,284 | 7.2 | % | |||||
1299 Ocean Avenue, 11th Floor | ||||||||
Santa Monica, CA 90401 | ||||||||
Directors | ||||||||
Michael H. Armacost | 39,092 | (5) | * | |||||
Joyce F. Brown | 57,571 | (5) | * | |||||
John R. Hall | 143,967 | (5) | * | |||||
James R. Mellor | 379,562 | (5) | * | |||||
W. Henson Moore | 38,924 | (5) | * | |||||
Joseph F. Paquette, Jr. | 86,987 | (5) | * | |||||
James D. Woods | 95,063 | (5) | * | |||||
Officers | ||||||||
John K. Welch | 19,594 | * | ||||||
Philip G. Sewell | 265,460 | (5) | * | |||||
Robert Van Namen | 194,852 | (5) | * | |||||
W. Lance Wright | 47,009 | (5) | * | |||||
Ellen C. Wolf | (6) | |||||||
Lisa E. Gordon-Hagerty | (7) | |||||||
Directors and all executive officers as a group (17 persons) | �� | 1,460,920 | (8)(9) | 1.7 | % |
* | 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, conversions of securities or through various trust arrangements), in accordance withRule 13d-3(d)(1) under the Securities Exchange Act of 1934, as amended. | |
(2) | According to the Schedule 13G/A filed with the SEC by FMR Corp. and Edward C. Johnson 3d on February 14, 2006, the beneficial owner of the Company’s common stock is Fidelity Management & Research Company, a wholly owned subsidiary of FMR Corp. The predominant owners of Class B shares of |
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common stock of FMR Corp. representing 49% of the voting power of FMR Corp. are members of the Edward C. Johnson 3d family. The Schedule 13G/A states that FMR Corp. has sole voting power with respect to 1,377,400 shares and sole dispositive power with respect to 10,775,800 shares. For additional information on FMR Corp.’s beneficial ownership please see the Schedule 13G/A. | ||
(3) | This information is based on the Schedule 13G/A filed on February 13, 2006 with the SEC by Ziff Asset Management, L.P., PBK Holdings, Inc., Philip B. Korsant, and ZBI Equities, L.L.C., each of whom is identified as a beneficial owner of the 7,794,157 shares, and all of whom share voting and dispositive power over the shares. | |
(4) | The Schedule 13G/A filed on February 6, 2006 with the SEC by Dimensional Fund Advisors, Inc. states that it has sole power to vote and to dispose of 6,232,284 shares. Dimensional Fund Advisors states in its Schedule 13G/A that all securities reported therein are owned by its advisory clients, 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. | |
(5) | Includes shares subject to options granted pursuant to the USEC Inc. 1999 Equity Incentive Plan exercisable, as of March 1, 2006, or within 60 days from such date as follows: Mr. Armacost 13,250; Dr. Brown 13,750; Mr. Hall 43,722; Mr. Mellor 207,043; Mr. Moore 7,000; Mr. Paquette 13,750; Mr. Woods 13,750; Mr. Sewell 203,425; Mr. Van Namen 137,489; and Mr. Wright 24,210. | |
(6) | Ms. Wolf resigned from USEC Inc. effective February 24, 2006. As a result, we cannot verify her share ownership as of March 1, 2006. As of the date of her resignation, she beneficially owned 99,877 shares including 93,345 shares subject to exercisable options. | |
(7) | Ms. Gordon-Hagerty’s employment with USEC Inc. was terminated effective September 30, 2005. As a result, we cannot verify her share ownership as of March 1, 2006. As of the date of her resignation, she beneficially owned 161,305 shares including 125,809 shares subject to exercisable options. | |
(8) | Includes 701,503 shares subject to options granted pursuant to the USEC Inc. 1999 Equity Incentive Plan exercisable as of March 1, 2006, or within 60 days from such date. | |
(9) | This does not include shares owned by Ms. Wolf or Ms. Gordon-Hagerty, neither of whom were executive officers as of March 1, 2006. |
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Annual Compensation | Long-Term Compensation | |||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||
Annual | Restricted | Securities | All Other | |||||||||||||||||||||||||||||
Compen- | Stock | Underlying | LTIP | Comp- | ||||||||||||||||||||||||||||
Fiscal | Salary | Bonus(1) | sation(2) | Awards(3) | Options(4) | Payouts(5) | ensation(6) | |||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | (#) | ($) | ($) | ||||||||||||||||||||||||
James R. Mellor(7) | 2005 | $ | 1,191,878 | — | $ | 143,755 | $ | 1,161,771 | 1,333 | — | — | |||||||||||||||||||||
Chairman and former | 2004 | — | — | — | 119,432 | 3,500 | — | $ | 291,667 | |||||||||||||||||||||||
interim President and CEO | 2003 | — | — | — | 101,757 | 3,500 | — | 316,667 | ||||||||||||||||||||||||
John K. Welch(8) | 2005 | 173,077 | — | — | 243,749 | 100,000 | — | 2,835 | ||||||||||||||||||||||||
President and CEO | ||||||||||||||||||||||||||||||||
Philip G. Sewell | 2005 | 360,600 | $ | 342,563 | — | 90,280 | 26,708 | — | — | |||||||||||||||||||||||
Senior Vice President, | 2004 | 304,692 | 164,408 | — | 192,778 | 53,913 | $ | 527,703 | — | |||||||||||||||||||||||
American Centrifuge and | 2003 | 250,000 | 160,968 | — | 86,674 | 50,000 | — | — | ||||||||||||||||||||||||
Russian HEU | ||||||||||||||||||||||||||||||||
Robert Van Namen | 2005 | 302,077 | 204,982 | — | 190,727 | 23,775 | — | 17,606 | ||||||||||||||||||||||||
Senior Vice President, | 2004 | 271,582 | 148,128 | — | 161,258 | 44,571 | 86,576 | 15,188 | ||||||||||||||||||||||||
Uranium Enrichment | 2003 | 226,054 | 108,108 | — | 58,210 | 18,000 | — | 9,999 | ||||||||||||||||||||||||
Ellen C. Wolf(9) | 2005 | 490,000 | 449,330 | 95,123 | 137,194 | 40,592 | — | 20,000 | ||||||||||||||||||||||||
Former Senior Vice President | 2004 | 490,000 | 267,665 | — | 453,549 | 79,130 | — | 19,800 | ||||||||||||||||||||||||
and Chief Financial Officer | 2003 | 32,038 | — | — | — | — | — | — | ||||||||||||||||||||||||
W. Lance Wright | 2005 | 261,044 | 143,603 | — | 209,726 | 20,710 | — | 11,900 | ||||||||||||||||||||||||
Senior Vice President, | 2004 | 210,000 | 73,920 | — | 65,140 | 5,250 | — | 2,423 | ||||||||||||||||||||||||
Human Resources and | 2003 | 76,731 | 23,274 | — | 12,526 | — | — | — | ||||||||||||||||||||||||
Administration | ||||||||||||||||||||||||||||||||
Lisa E. Gordon-Hagerty(10) | 2005 | 386,158 | — | — | 137,194 | 40,592 | — | 1,182,337 | ||||||||||||||||||||||||
Former Executive Vice | 2004 | 490,000 | 214,133 | — | 345,539 | 85,217 | 182,046 | 19,800 | ||||||||||||||||||||||||
President and Chief | 2003 | 18,846 | — | — | — | — | — | — | ||||||||||||||||||||||||
Operating Officer |
(1) | The amounts shown in this column constitute the cash portion of the annual incentive awards made to each of the Named Executive Officers based on the Compensation Committee’s evaluation of each officer’s performance during the period. The amounts shown include cash amounts earned under the Company’s Annual Incentive Program for the period indicated and paid in the following period. | |
(2) | Mr. Mellor retained his residence in California while serving as interim President and Chief Executive Officer, and for 2005, the amount shown for Mr. Mellor includes $77,837 of temporary housing provided pursuant to his employment agreement and $58,744 of related travel expenses for Mr. Mellor and his spouse. For Ms. Wolf, the amount shown for 2005 includes $93,285, representing the reimbursement of closing costs and other relocation expenses incurred by Ms. Wolf. | |
(3) | The amounts shown in this column represent the dollar value of the restricted stock grant based on the value of USEC common stock on the grant date. All grants of restricted stock were made under the 1999 Equity Incentive Plan. All shares of restricted stock are entitled to dividends on the same basis as any dividends declared and paid on shares of USEC’s unrestricted common stock and holders of restricted stock are entitled to vote. All shares of restricted stock vest as described below, with accelerated vesting in the case of restricted stock granted to employees (other than Mr. Mellor) upon the occurrence of a change of control of the Company, or upon death, disability, retirement, or involuntary termination of employment (other than for cause). | |
The amount for 2005 for Mr. Mellor includes 80,000 shares of restricted stock granted on February 23, 2005 pursuant to his employment agreement. These shares vest upon the earlier of five years from the |
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date of grant or his retirement from the Board. The amount for 2005 for Mr. Mellor also includes a total of 3,524 shares of restricted stock granted in 2005 and 2006 as payment for his services as a director in 2005. Of these shares, 3,305 vest on the later to occur of the first anniversary of the date of grant and termination of his service on the Board, and 219 vest on the later to occur of the third anniversary of the date of grant and termination of his service on the Board. The amount for 2004 for Mr. Mellor includes 16,360 shares of restricted stock granted in 2005 and 2004 as payment for his services as a director in 2004. Of these shares, 15,106 vest on the later to occur of the first anniversary of the date of grant and termination of his service on the Board, and 1,254 vest on the later to occur of the third anniversary of the date of grant and termination of his service on the Board. The amount for 2003 for Mr. Mellor includes 16,017 shares of restricted stock granted in 2004 and 2003 as payment for his services as a director in 2003. Of these shares, 14,683 vest on the later to occur of the first anniversary of the date of grant and termination of his service on the Board, and 1,334 vest on the later to occur of the third anniversary of the date of grant and termination of his service on the Board. Mr. Mellor elected to receive all of his annual retainer and meeting fees in restricted stock in 2005, 2004 and 2003. | ||
The amounts for 2005 include 19,594, 8,872, and 11,232 shares of restricted stock granted on February 28, 2006 to Mr. Welch, Mr. Van Namen and Mr. Wright, respectively, as payment for all or a portion of their annual incentive awards for 2005. These shares will vest on February 28, 2007. The amounts for 2005 also include 5,342, 4,755, 8,118, 4,142 and 8,118 shares of restricted stock granted on March 23, 2005 to Mr. Sewell, Mr. Van Namen, Ms. Wolf, Mr. Wright and Ms. Gordon-Hagerty, respectively, as part of their long-term incentive awards for 2005. These shares will vest ratably over three years from the date of grant, except for the shares granted to Ms. Wolf (whose shares were forfeited on February 24, 2006 in connection with her resignation) and Ms. Gordon-Hagerty (whose shares vested on September 30, 2005 in connection with her termination of employment). | ||
The amounts for 2004 include 5,237, 4,719, 8,527, 2,354 and 12,328 shares of restricted stock granted on March 23, 2005 to Mr. Sewell, Mr. Van Namen, Ms. Wolf, Mr. Wright and Ms. Gordon-Hagerty, respectively, as payment for a portion of their annual incentive awards for 2004. These shares vested on March 23, 2006, except for the shares granted to Ms. Wolf (whose shares were forfeited on February 24, 2006 in connection with her resignation) and Ms. Gordon-Hagerty (whose shares vested on September 30, 2005 in connection with her termination of employment). The amounts for 2004 also include 10,783, 8,914, 15,826, 3,150 and 17,043 shares of restricted stock granted on February 10, 2004 to Mr. Sewell, Mr. Van Namen, Ms. Wolf, Mr. Wright and Ms. Gordon-Hagerty, respectively, as part of their long-term incentive awards for 2004. These shares will vest ratably over three years from the date of grant, except for the shares granted to Ms. Wolf (whose 5,276 unvested shares were forfeited on February 24, 2006 in connection with her resignation) and Ms. Gordon-Hagerty (whose unvested shares vested on September 30, 2005 in connection with her termination of employment). The amounts for 2004 also include 2,471 and 1,379 shares of restricted stock granted on April 28, 2004 to Mr. Sewell and Mr. Van Namen, respectively, as an incentive for having met their ownership guideline for that year. These shares vested on April 28, 2005. | ||
The amount for 2004 for Ms. Wolf includes an award of 19,825 restricted stock units made on July 1, 2004 (valued at $8.77 per unit plus accrued dividends of $8,178). The restrictions on these restricted stock units lapsed on February 24, 2006 in connection with Ms. Wolf’s resignation, and she became entitled to payment in cash at the current share value including accumulated dividends. These units are included in the number of aggregate restricted stock holdings shown in the table below (valued at $11.95 per unit plus accrued dividends of $24,534). | ||
The amounts for 2003 include 10,767, 7,231 and 1,556 shares of restricted stock granted on February 10, 2004 to Mr. Sewell, Mr. Van Namen, and Mr. Wright as payment for a portion of their annual incentive awards for 2003. These shares vested on February 10, 2005. |
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The number and value of aggregate restricted stock holdings of USEC common stock at December 31, 2005 for each Named Executive Officer are as follows: |
Number of Restricted | ||||||||
Name | Common Stock Holdings | Value | ||||||
James R. Mellor | 171,282 | $ | 2,046,820 | |||||
John K. Welch | — | — | ||||||
Philip G. Sewell | 19,416 | 232,021 | ||||||
Robert Van Namen | 16,337 | 195,227 | ||||||
Ellen C. Wolf | 47,021 | 586,435 | ||||||
W. Lance Wright | 8,596 | 102,722 | ||||||
Lisa E. Gordon-Hagerty | — | — |
(4) | Option awards for Mr. Mellor represent his annual option award for service as a director. His award for the Board term ending at the 2006 annual meeting was pro-rated from December 3, 2005. | |
(5) | Represents amounts earned in 2004 from payouts of performance-based awards of restricted stock units. | |
(6) | For Mr. Mellor, the amounts for 2004 and 2003 include payments made to Mr. Mellor under an agreement (and a predecessor agreement) pursuant to which Mr. Mellor provided consulting services to the Company. For Mr. Welch, Mr. Van Namen, Ms. Wolf, Mr. Wright and Ms. Gordon-Hagerty, the amounts include Company contributions made under the Company’s 401(k) plan, along with costs of supplemental 401(k) restoration benefits paid by the Company. In addition, for Ms. Gordon-Hagerty, the amount for 2005 includes $1,158,336 paid to her upon termination of her employment agreement, representing one year’s base salary and bonus and the pro-rated amount of Ms. Gordon-Hagerty’s targeted 2005 bonus, and $5,934 paid to her pursuant to her severance agreement as reimbursement for her expenses in attending a conference. | |
(7) | Mr. Mellor’s employment with the Company terminated in December 2005 following completion of Mr. Mellor’s transition from his role as interim President and Chief Executive Officer. His salary amount for 2005 includes payout of all accrued vacation. | |
(8) | Mr. Welch joined the Company in October 2005. | |
(9) | Ms. Wolf joined the Company in December 2003. Ms. Wolf resigned in February 2006. The restricted stock granted in 2005 and a portion of the restricted and options granted in 2004 to Ms. Wolf were not vested at the time of her resignation and accordingly were forfeited at that time. | |
(10) | Ms. Gordon-Hagerty joined the Company in December 2003. Ms. Gordon-Hagerty’s employment with the Company terminated effective September 30, 2005. Her salary amount for 2005 includes payout of all accrued vacation. |
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Potential Realizable | ||||||||||||||||||||||||
Value at Assumed | ||||||||||||||||||||||||
Individual Grants | Annual Rates of | |||||||||||||||||||||||
Number of | Percent of Total | Stock Price | ||||||||||||||||||||||
Securities | Options Granted | Exercise | Appreciation for | |||||||||||||||||||||
Underlying | to Employees in | Price | Expiration | Option Term | ||||||||||||||||||||
Name | Options Granted(#) | Fiscal Year | ($/Sh)(1) | Date | 5% | 10% | ||||||||||||||||||
James R. Mellor | 1,333 | (2) | 0.41 | % | $ | 11.33 | 12/03/10 | $ | 4,173 | $ | 9,220 | |||||||||||||
John K. Welch | 100,000 | 30.86 | % | $ | 11.00 | 10/03/10 | $ | 303,910 | $ | 671,561 | ||||||||||||||
Philip G. Sewell | 26,708 | (3) | 8.24 | % | $ | 16.90 | 3/23/10 | $ | 124,704 | $ | 275,563 | |||||||||||||
Robert Van Namen | 23,775 | (3) | 7.34 | % | $ | 16.90 | 3/23/10 | $ | 111,009 | $ | 245,301 | |||||||||||||
Ellen C. Wolf | 40,592 | (3) | 12.53 | % | $ | 16.90 | 3/23/10 | $ | 189,530 | $ | 418,813 | |||||||||||||
W. Lance Wright | 20,710 | (3) | 6.39 | % | $ | 16.90 | 3/23/10 | $ | 96,698 | $ | 213,678 | |||||||||||||
Lisa E. Gordon-Hagerty | 40,592 | (4) | 12.53 | % | $ | 16.90 | 3/23/10 | $ | 189,530 | $ | 418,813 |
(1) | The exercise price of the options granted to the individuals shown above was the fair market value of the Company’s common stock on the date of grant. Except as otherwise noted, the options granted vest in three equal annual installments beginning on the first anniversary of the grant date. | |
(2) | Mr. Mellor’s options were granted to him in respect of his service as a director and therefore vest one year from the date of grant. | |
(3) | On December 12, 2005, USEC accelerated the vesting of all outstanding and unvested stock options with an exercise price greater than the closing price on December 12, 2005 of $12.41 per share. Options to purchase 131,509 shares having an exercise price of either $13.98 or $16.90 per share, including the options granted to Mr. Sewell, Mr. Van Namen, Ms. Wolf and Mr. Wright on March 23, 2005 shown in the table above, became exercisable immediately as a result of the vesting acceleration. The primary purpose of the acceleration was to eliminate the future compensation expense USEC would otherwise recognize in our consolidated statements of income with respect to these options once SFAS No. 123(R), Share Based Payment, became effective for us in 2006. In addition, because these options had exercise prices in excess of current market values, and were not fully achieving their original objectives of incentive compensation and retention, the Board of Directors believed the acceleration may have a positive effect on morale, retention, and perceptions of option value. | |
(4) | Under the terms of Ms. Gordon-Hagerty’s severance agreement, all of her unvested options vested at the time of her termination of employment in 2005. |
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Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised | |||||||||||||||||||||||
Shares | Options at | in-the-Money Options at | ||||||||||||||||||||||
Acquired on | Value | Fiscal Year-End | Fiscal Year-End | |||||||||||||||||||||
Name | Exercise | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
James R. Mellor | — | — | 207,043 | 1,333 | $ | 1,204,954 | $ | 826 | ||||||||||||||||
John K. Welch | — | — | — | 100,000 | — | $ | 95,000 | |||||||||||||||||
Philip G. Sewell | 20,000 | $ | 241,090 | 255,454 | 52,609 | $ | 1,087,420 | $ | 222,675 | |||||||||||||||
Robert Van Namen | — | — | 122,632 | 35,714 | $ | 419,022 | $ | 145,585 | ||||||||||||||||
Ellen C. Wolf | — | — | 66,969 | 52,753 | $ | 102,870 | $ | 205,737 | ||||||||||||||||
W. Lance Wright | — | — | 22,460 | 3,500 | $ | 6,825 | $ | 13,650 | ||||||||||||||||
Lisa E. Gordon-Hagerty | — | — | 125,809 | — | $ | 332,346 | — |
Performance or | Estimated Future Payouts Under | |||||||||||||||||||
Number of | Other Period Until | Nonstock Price-Based Plans | ||||||||||||||||||
Shares, Units or | Maturation or | Threshold | Target | Maximum | ||||||||||||||||
Name | Other Rights(1) | Payout | (#) | (#) | (#) | |||||||||||||||
James R. Mellor | — | — | — | — | — | |||||||||||||||
John K. Welch | 59,268 | 10/2005 - 6/2007 | 29,634 | 59,268 | 88,902 | |||||||||||||||
Philip G. Sewell | — | — | — | — | — | |||||||||||||||
Robert Van Namen | — | — | — | — | — | |||||||||||||||
Ellen C. Wolf | — | — | — | — | — | |||||||||||||||
W. Lance Wright | 19,900 | 2/2005 - 6/2007 | 9,950 | 19,900 | 29,850 | |||||||||||||||
Lisa E. Gordon-Hagerty | — | — | — | — | — |
(1) | The current three-year performance period is from July 1, 2004 to June 30, 2007 and target awards for that period were set in 2004 for Mr. Sewell, Mr. Van Namen, Ms. Wolf and Ms. Gordon-Hagerty. Messrs. Wright and Welch were added as participants on February 1, 2005 and October 3, 2005, respectively, and their target awards were pro-rated to reflect their period of participation. Grants consisted of restricted stock units pursuant to which grantees are entitled to receive the cash equivalent value of shares of USEC common stock in the event that USEC total shareholder return and performance against a predetermined set of business goals are achieved. The final cash value of each restricted stock unit will be based |
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on the closing price of USEC common stock on the NYSE on June 30, 2007. There are no minimum amounts payable under the three-year performance plan. Grantees can earn from 0% to 150% of the target number of restricted stock units in the grant for the three-year performance period, where no restricted stock units will be earned if the threshold goals are not achieved, where 50% of the target number of restricted stock units will be earned if threshold goals (50%) are achieved, the target number of restricted stock units will be earned if 100% of the goals are achieved and the maximum number of restricted stock units (150% of the target number of restricted stock units) will be earned if 150% of the goals are achieved. The final award will also include dividend equivalents based on actual dividends paid during the three-year performance period. |
Annual Pension | ||||||||||||||||||||
Years of Credited Service | ||||||||||||||||||||
Final Average Compensation | 5 | 10 | 20 | 30 | 40 | |||||||||||||||
$ 100,000 | $ | 7,320 | $ | 13,320 | $ | 25,320 | $ | 37,320 | $ | 49,320 | ||||||||||
$ 200,000 | 13,320 | 25,320 | 49,320 | 73,320 | 97,320 | |||||||||||||||
$ 400,000 | 25,320 | 49,320 | 97,320 | 145,320 | 193,320 | |||||||||||||||
$ 600,000 | 37,320 | 73,320 | 145,320 | 217,320 | 289,320 | |||||||||||||||
$ 800,000 | 49,320 | 97,320 | 193,320 | 289,320 | 385,320 | |||||||||||||||
$1,000,000 | 61,320 | 121,320 | 241,320 | 361,320 | 481,320 | |||||||||||||||
$1,200,000 | 73,320 | 145,320 | 289,320 | 433,320 | 577,320 | |||||||||||||||
$1,400,000 | 85,320 | 169,320 | 337,320 | 505,320 | 673,320 | |||||||||||||||
$1,600,000 | 97,320 | 193,320 | 385,320 | 577,320 | 769,320 | |||||||||||||||
$1,800,000 | 109,320 | 217,320 | 433,320 | 649,320 | 865,320 |
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• | Annually reviewing and approving corporate goals and objectives relevant to the CEO’s compensation, evaluating the CEO’s performance in light of those goals and objectives, and setting the CEO’s compensation level based on this evaluation; | |
• | Annually reviewing and approving all other equity-based awards to employees; | |
• | Assessing the effectiveness of the Company’s executive compensation program in light of our compensation policies; and | |
• | Annually reviewing senior executive performance. |
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• | Enhancing the Company’s ability to attract, retain, motivate and develop management talent critical to the long-term success of the Company; | |
• | Assuring the compensation levels are consistent with companies of similar size and nature to USEC; | |
• | Emphasizing variable, at-risk pay, which aligns executive compensation with the Company’s overall performance and shareholder interests; and | |
• | Reinforcing management’s commitment to maximize shareholder value by encouraging equity ownership. |
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• | reduction of the maximum payout under the three-year performance component from 200% of target to 150% of target; | |
• | using fixed payout levels of 50% (threshold), 80%, 100% (target), 125% and 150% (maximum); and | |
• | an increase in the weighting of the American Centrifuge goals in the Strategic Incentive Program from 50% of the total to 75% of the total. |
Annualized Target Long | ||||||||||||||||
Term Incentive Value (as | Restricted | Restricted | ||||||||||||||
Position | a Multiple of Base Salary) | Stock | Stock Options | Stock Units | ||||||||||||
CEO | 1.5X | 331/3 | % | 331/3 | % | 331/3 | % | |||||||||
Senior Executive Officers | 1.05X | 331/3 | % | 331/3 | % | 331/3 | % | |||||||||
Other Officers | 0.55X | 75 | % | 25 | % | N/A |
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Joyce F. Brown
Joseph F. Paquette, Jr.
CHANGE IN CONTROL AGREEMENTS
• | Salary: $100,000 per month; | |
• | Restricted Stock: a grant of 80,000 shares of restricted stock, which shares vest upon the earlier to occur of five years from the date of grant (February 23, 2010) or Mr. Mellor’s retirement from the Board; and | |
• | Employee Benefits and Housing: standard employee benefits and temporary housing during the term of his employment. |
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![Performance Graph](https://capedge.com/proxy/DEF 14A/0000950133-06-001450/w18246w1824622.gif)
December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | |||||||||||||
USEC Inc. | $100.00 | $178.54 | $162.01 | $245.42 | $301.58 | $388.85 | ||||||||||||
S&P 500 Index | $100.00 | $88.11 | $68.64 | $88.32 | $97.93 | $102.74 | ||||||||||||
Peer Group Index1 | $100.00 | $97.25 | $82.24 | $106.31 | $121.50 | $135.12 | ||||||||||||
(1) | The Peer Group consists of: Air Products and Chemicals, Inc., Albemarle Corporation, Alcoa Inc., Commonwealth Industries, Inc., Constellation Energy Group, Inc., Dominion Resources, Inc., Duke Energy Corporation, Eastman Chemical Company, Exelon Corporation, Georgia Gulf Corporation, NL Industries, Inc., PPL Corporation, Praxair, Inc., Progress Energy, Inc., The Southern Company, and XCEL Energy Inc. In accordance with SEC requirements, the return for each issuer has been weighted according to the respective issuer’s stock market capitalization at the beginning of each year for which a return is indicated. In prior years, the Peer Group also included Commonwealth Industries, Inc., which was acquired by Aleris International Inc. on December 9, 2004. They have been removed from the Peer Group and are no longer included in results for any of the years shown in the performance graph. |
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Amount Billed for Year | Amount Billed for Year | |||||||
Type of Fee | Ended December 31, 2005 | Ended December 31, 2004 | ||||||
(In thousands) | (In thousands) | |||||||
Audit Fees(a) | $ | 1,250.0 | $ | 1,328.3 | ||||
Audit-Related Fees(b) | $ | 33.0 | $ | 121.3 | ||||
Tax Fees(c) | $ | 11.0 | $ | 36.0 | ||||
All Other Fees(d) | $ | 1.5 | $ | 1.0 | ||||
Total | $ | 1,295.5 | $ | 1,486.6 | ||||
(a) | Primarily audits of the financial statements for both periods and internal control over financial reporting; reviews of quarterly financial statements for both periods; consultation and research related to auditing matters in 2004; and restatement of financial statements in 2005 for 2004 and prior years. | |
(b) | Primarily compliance report for utility uranium pricing in 2005; SEC comment letter in 2004; and services related to SEC compliance report for bank credit facility in 2004. | |
(c) | Primarily services related to selected tax projects for both periods and IRS audit assistance for both periods. | |
(d) | Service fee for access to electronic publication. |
Michael H. Armacost
James D. Woods
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![-s- TIMOTHY HANSEN](https://capedge.com/proxy/DEF 14A/0000950133-06-001450/w18246w1824602.gif)
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o | Mark this box with an X if you have made changes to your name or address details above. |
Annual Meeting Proxy Card | ![]() | C0123456789 | ![]() | |||
A | Election of Directors | PLEASE REFER TO THE REVERSE SIDE FOR TELEPHONE AND INTERNET VOTING INSTRUCTIONS. |
1. The Board of Directors recommends a voteFOReach of the listed nominees. | ||||||||||
For | Withhold | For | Withhold | |||||||
01 — James R. Mellor | o | o | 05 — W. Henson Moore | o | o | |||||
02 — Michael H. Armacost | o | o | 06 — Joseph F. Paquette, Jr. | o | o | |||||
03 — Joyce F. Brown | o | o | 07 — John K. Welch | o | o | |||||
04 — John R. Hall | o | o | 08 — James D. Woods | o | o |
B | Proposal |
The Board of Directors recommends a voteFORthe following proposal. | ||||||||
For | Against | Abstain | ||||||
2. | To ratify the appointment of PricewaterhouseCoopers LLP as USEC’s independent auditors for 2006. | o | o | o |
C | Authorized Signatures — Sign Here — This section must be completed for your instructions to be executed. |
Signature 1 — Please keep signature within the box | Signature 2 — Please keep signature within the box | Date (mm/dd/yyyy) | ||
/ / | ||||
1 U P X | 0 0 8 1 8 7 |
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FOR THE 2006 ANNUAL MEETING OF USEC SHAREHOLDERS
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• | Call toll free 1-800-652-VOTE (8683) in the United States or Canada any time on a touch tone telephone. There isNO CHARGEto you for the call. | ||
• | Follow the simple instructions provided by the recorded message. |
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• | Go to the following web site: WWW.COMPUTERSHARE.COM/EXPRESSVOTE | ||
• | Enter the information requested on your computer screen and follow the simple instructions. |
Proxies submitted by telephone or the Internet must be received by 1:00 a.m. Eastern Standard Time, April 25, 2006.
THANK YOU FOR VOTING