UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Filed by the Registrantþ | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
þ Preliminary Proxy Statement | o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
o Definitive Proxy Statement | ||
o Definitive Additional Materials | ||
o Soliciting Material Pursuant to § 240.14a-12 |
USEC INC.
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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 | John K. Welch | |||
Chairman of the Board | President and Chief Executive Officer |
Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 24, 2008
5701 Marinelli Road, North Bethesda, Maryland, for the purpose of considering and voting upon:
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Equity Compensation Plan Information | 60 | |||
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Appendix B — Proposed Second Amendment to the USEC Inc. 1999 Employee Stock Purchase Plan | B-1 |
Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
for the Shareholder Meeting to Be Held on April 24, 2008
the year ended December 31, 2007 are available atwww.edocumentview.com/USU.
• | 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. |
• | 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. |
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• | 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. |
• | vote “FOR” all nominees; | |
• | “WITHHOLD” votes as to all nominees; or | |
• | “WITHHOLD” votes as to one or more specific nominees. |
• | vote “FOR” the proposed amendment; | |
• | vote “AGAINST” the proposed amendment; or | |
• | “ABSTAIN” from voting on the proposed amendment. |
• | vote “FOR” the proposed amendment; |
• | vote “AGAINST” the proposed amendment; or |
• | “ABSTAIN” from voting on the proposed amendment. |
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• | vote “FOR” the ratification; | |
• | vote “AGAINST” the ratification; or | |
• | “ABSTAIN” from voting on the ratification. |
• | Item 1: “FOR” each director nominee; |
• | Item 2: “FOR” the approval of the proposed amendment to the Company’s certificate of incorporation; |
• | Item 3: “FOR” the approval of the proposed amendment to the USEC Inc. 1999 Employee Stock Purchase Plan; and |
• | Item 4: “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as USEC’s independent auditors for 2008. |
• | 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 77 | |||
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 also serves on the Board of Trustees of the Scripps Research Institute and the Board of Directors of IDT Corporation. | ||||
Michael H. Armacost | Director since 2002 Age 70 | |||
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. and Applied Materials Inc. | ||||
Joyce F. Brown | Director since 1998 Age 61 | |||
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 Linens ’n Things, Inc. | ||||
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Joseph T. Doyle | Director since 2006 Age 60 | |||
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. | ||||
H. William Habermeyer | Director since 2008 Age 65 | |||
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. | ||||
John R. Hall | Director since 1998 Age 75 | |||
Mr. Hall retired in 1997 as Chairman of the Board of Directors of Ashland, Inc., a company engaged in specialty chemicals, lubricants, car-care products, chemical and plastics distribution 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 GrafTech International Ltd. | ||||
William J. Madia | Director since 2008 Age 60 | |||
Dr. Madia is a vice president at Stanford University responsible for oversight of the Stanford Linear Accelerator Center, 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 and prior to assuming that role, 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. | ||||
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W. Henson Moore | Director since 2001 Age 68 | |||
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. | ||||
Joseph F. Paquette, Jr. | Director since 2001 Age 73 | |||
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. | ||||
John K. Welch | Director since 2005 Age 57 | |||
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, the U.S. Naval Academy Foundation and Precision Custom Components Inc. | ||||
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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 | Technology and | |||||||||||||||||
Responsibility | Compensation | Governance | Affairs | Competition | ||||||||||||||||
Director | Committee | Committee | Committee | Committee | Committee | |||||||||||||||
James R. Mellor | X | |||||||||||||||||||
Michael H. Armacost | X | X | * | |||||||||||||||||
Joyce F. Brown | X | X | ||||||||||||||||||
Joseph T. Doyle | X | X | ||||||||||||||||||
H. William Habermeyer | X | X | ||||||||||||||||||
John R. Hall | X | * | X | |||||||||||||||||
William J. Madia | X | X | * | |||||||||||||||||
W. Henson Moore | X | X | * | |||||||||||||||||
Joseph F. Paquette, Jr. | X | * | X | |||||||||||||||||
Number of Meetings in 2007 | 7 | 6 | 5 | 4 | N/A |
* | Chairman |
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Fees Earned or | Stock | Option | ||||||||||||||
Name | Paid in Cash(1) | Awards(2) | Awards(3) | Total | ||||||||||||
James R. Mellor | $ | 41,667 | $ | 325,995 | — | $ | 367,662 | |||||||||
Michael H. Armacost | $ | 99,000 | $ | 99,992 | — | $ | 198,992 | |||||||||
Joyce F. Brown | $ | 90,000 | $ | 66,661 | — | $ | 156,661 | |||||||||
Joseph T. Doyle | — | $ | 162,667 | $ | 6,895 | $ | 169,562 | |||||||||
John R. Hall | — | $ | 232,378 | — | $ | 232,378 | ||||||||||
W. Henson Moore | $ | 99,000 | $ | 99,992 | — | $ | 198,992 | |||||||||
Joseph F. Paquette, Jr. | $ | 111,500 | $ | 99,992 | — | $ | 211,492 | |||||||||
James D. Woods | $ | 9,600 | $ | 13,506 | — | $ | 23,106 |
(1) | The amounts shown in the Fees Earned or Paid in Cash column include the following: |
• | Annual Retainers: Cash paid in 2007 to Mr. Armacost, Dr. Brown, Mr. Moore and Mr. Paquette for $80,000 cash portion of annual retainers for the 2007 — 2008 term. Mr. Mellor, Mr. Doyle, Mr. Hall and Mr. Woods elected to take all fees in restricted stock units in lieu of cash as shown in the Stock Awards column. | |
• | Committee Chairman’s Fees: Cash paid in 2007 to Mr. Moore and Mr. Paquette for annual committee chairman’s fees for the 2007 — 2008 term. | |
• | Meeting Fees: Cash paid to Mr. Armacost, Dr. Brown, Mr. Moore and Mr. Paquette for Board and Committee meeting fees for 2007 through April 26, 2007 (at which time separate meeting fees were no longer paid). |
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(2) | The amounts shown in the Stock Awards column represents the compensation cost recognized by USEC in 2007 related to stock awards to directors, computed in accordance with Statement of Financial Accounting Standards No. 123 — Revised 2004, “Share Based Payment” (SFAS No. 123(R)) and do not reflect whether the director has actually realized a financial benefit from the award. For a discussion of valuation assumptions, see Note 15 to our consolidated financial statements included in our annual report onForm 10-K/A for the year ended December 31, 2007. In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. | |
Mr. Mellor, Mr. Doyle, Mr. Hall and Mr. Woods elected to take all fees in restricted stock units in lieu of cash and so amounts include $180,000 annual retainer for the2007-2008 term, meeting fees through April 26, 2007, chairman fees, and incentive restricted stock units. Amount for Mr. Armacost, Dr. Brown, Mr. Moore and Mr. Paquette includes $100,000 annual retainer payable in restricted stock units. The amounts shown in the Stock Awards column for each of the non-employee directors includes the following grants of restricted stock units, which have the following grant date fair value, calculated using the closing price of USEC’s common stock on the date of grant in accordance with SFAS No. 123(R): | ||
James R. Mellor |
Number of | Grant Date | |||||||
Grant Date | Restricted Stock Units | Fair Value | ||||||
01/10/07 | 162 | $ | 2,001 | |||||
03/05/07 | 9,064 | $ | 120,007 | |||||
03/14/07 | 134 | $ | 1,997 | |||||
04/11/07 | 109 | $ | 2,007 | |||||
05/11/07 | 8,364 | $ | 199,983 | |||||
Total | 17,833 | $ | 325,995 | |||||
Michael H. Armacost, Joyce F. Brown, W. Henson Moore, and Joseph F. Paquette, Jr. |
Number of | Grant Date | |||||||
Grant Date | Restricted Stock Units | Fair Value | ||||||
05/11/07 | 4,182 | $ | 99,992 | |||||
Total | 4,182 | $ | 99,992 | |||||
Joseph T. Doyle |
Number of | Grant Date | |||||||
Grant Date | Restricted Stock Units | Fair Value | ||||||
03/14/07 | 336 | $ | 5,006 | |||||
04/11/07 | 109 | $ | 2,007 | |||||
05/11/07 | 8,331 | $ | 199,194 | |||||
Total | 8,776 | $ | 206,207 | |||||
John R. Hall |
Number of | Grant Date | |||||||
Grant Date | Restricted Stock Units | Fair Value | ||||||
01/10/07 | 405 | $ | 5,002 | |||||
03/14/07 | 336 | $ | 5,006 | |||||
04/11/07 | 190 | $ | 3,498 | |||||
05/11/07 | 9,154 | $ | 218,872 | |||||
Total | 10,085 | $ | 232,378 | |||||
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James D. Woods |
Number of | Grant Date | |||||||
Grant Date | Restricted Stock Units | Fair Value | ||||||
01/10/07 | 405 | $ | 5,002 | |||||
03/14/07 | 336 | $ | 5,006 | |||||
04/11/07 | 190 | $ | 3,498 | |||||
Total | 931 | $ | 13,506 | |||||
The aggregate number of stock awards, including shares of restricted stock and restricted stock units, outstanding at December 31, 2007 for each of the non-employee directors are as follows: |
Number of Shares of | ||||
Restricted Stock or | ||||
Name | Restricted Stock Units | |||
James R. Mellor | 198,548 | |||
Michael H. Armacost | 33,542 | |||
Joyce F. Brown | 52,736 | |||
Joseph T. Doyle | 11,506 | |||
John R. Hall | 119,607 | |||
W. Henson Moore | 40,939 | |||
Joseph F. Paquette, Jr. | 60,712 |
(3) | The amounts shown in the Option Awards column represents the compensation cost recognized by USEC in 2007 related to stock option awards to directors, computed in accordance with SFAS No. 123(R) and do not reflect whether the director has actually realized a financial benefit from the award. For a discussion of valuation assumptions, see Note 15 to our consolidated financial statements included in our annual report onForm 10-K/A for the year ended December 31, 2007. In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. No stock option grants were made to directors in 2007 and other than a grant of 1,227 stock options made to Mr. Doyle on December 18, 2006, all other prior stock option grants to directors had been fully expensed prior to 2007. The following table shows the number of stock options held by each non-employee director as of December 31, 2007, all of which are immediately exercisable: |
Number of Securities | ||||
Underlying | ||||
Name | Unexercised Options | |||
James R. Mellor | 211,876 | |||
Michael H. Armacost | 16,750 | |||
Joyce F. Brown | 17,250 | |||
Joseph T. Doyle | 1,227 | |||
John R. Hall | 47,222 | |||
W. Henson Moore | 10,500 | |||
Joseph F. Paquette, Jr. | 17,250 |
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Common Stock | ||||||||
Beneficially Owned(1) | ||||||||
Name of Beneficial Owner | Shares Owned | Percent of Class | ||||||
FMR LLC(2) 82 Devonshire Street Boston, Massachusetts 02109 | 12,262,520 | 7.7 | % | |||||
Donald Smith & Co., Inc.(3) 152 West 57th Street New York, New York 10019 | 8,649,900 | 7.8 | % | |||||
Dimensional Fund Advisors LP(4) 1299 Ocean Avenue Santa Monica, California 90401 | 7,102,050 | 6.4 | % | |||||
Wellington Management Company, LLP(5) 75 State Street Boston, Massachusetts 02109 | 6,925,790 | 6.3 | % | |||||
Corriente Advisors, LLC(6) 201 Main Street, Suite 1800 Fort Worth, Texas 76102 | 5,577,282 | 5.0 | % | |||||
Directors | ||||||||
Michael H. Armacost | 51,607 | (7) | * | |||||
Joyce F. Brown | 65,600 | (7) | * | |||||
Joseph T. Doyle | 14,285 | (7) | * | |||||
H. William Habermeyer | 10,000 | * | ||||||
John R. Hall | 168,829 | (7) | * | |||||
William J. Madia | — | * | ||||||
James R. Mellor | 411,424 | (7) | * | |||||
W. Henson Moore | 51,439 | (7) | * | |||||
Joseph F. Paquette, Jr. | 96,770 | (7) | * | |||||
Officers | * | |||||||
John K. Welch | 304,966 | (7) | * | |||||
John C. Barpoulis | 68,529 | (7) | * | |||||
Philip G. Sewell | 349,657 | (7) | * | |||||
Robert Van Namen | 219,232 | (7) | * | |||||
W. Lance Wright | 91,343 | (7) | * | |||||
Directors and all executive officers as a group (20 persons) | 2,067,096 | (8) | 1.9 | % |
* | 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 |
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of stock options or conversion of securities), in accordance with Rule 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 LLC and Edward C. Johnson 3d on February 15, 2008, the beneficial owner of 11,084,835 shares of the Company’s common stock is Fidelity Management & Research Company, a wholly owned subsidiary of FMR LLC, and the beneficial owner of the remaining 1,177,685 shares is Pyramis Global Advisors, LLC, a wholly owned subsidiary of FMR LLC. The Schedule 13G/A states that the number of shares of common stock owned by the investment companies includes 2,482,435 shares of common stock resulting from the assumed conversion of $29,680,000 principal amount of the Company’s 3% convertible senior notes due October 1, 2014 (83.64 shares of common stock for each $1,000 principal amount of notes), and so in calculating the percentage of the class owned by FMR LLC we have assumed the conversion of the entire $575,000,000 principal amount of the Company’s 3% convertible senior notes. The predominant owners of Class B shares of common stock of FMR LLC representing 49% of the voting power of FMR LLC are members of the Edward C. Johnson 3d family. The Schedule 13G/A states that FMR LLC has sole voting power with respect to 1,178,485 shares and sole dispositive power with respect to 12,262,520 shares. For additional information on FMR LLC’s beneficial ownership please see the Schedule 13G/A. | |
(3) | The Schedule 13G filed on February 14, 2008 with the SEC by Donald Smith & Co., Inc. states that it has sole power to vote 6,426,062 shares and sole power to dispose of 8,649,900 shares. Donald Smith & Co., Inc. states in its Schedule 13G 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. | |
(4) | The Schedule 13G/A filed on February 6, 2008 with the SEC by Dimensional Fund Advisors LP states that it has sole power to vote and to dispose of 7,102,050 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) | The Schedule 13G filed on February 14, 2008 with the SEC by Wellington Management Company, LLP states that it has sole power to vote 6,513,900 shares and sole power to dispose of 6,863,090 shares. Wellington Management Company, LLP states in its Schedule 13G 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. | |
(6) | According to the Schedule 13G/A filed with the SEC by Corriente Advisors, LLC and Mark L. Hart III on February 13, 2008, they are the beneficial owner of 5,577,282 shares of the Company’s common stock. The Schedule 13G/A states that both Corriente Advisors, LLC and Mark L. Hart III have sole voting and sole dispositive power with respect to 5,577,282 shares. | |
(7) | Includes shares subject to options granted pursuant to the USEC Inc. 1999 Equity Incentive Plan exercisable, as of February 20, 2008, or within 60 days from such date as follows: Mr. Armacost 16,750; Dr. Brown 17,250; Mr. Doyle 1,227; Mr. Hall 47,222; Mr. Mellor 211,876; Mr. Moore 10,500; Mr. Paquette 17,250; Mr. Welch 154,769; Mr. Barpoulis 35,970; Mr. Sewell 270,797; Mr. Van Namen 150,175; and Mr. Wright 50,334. Also includes restricted stock units that can be converted into USEC common stock within 60 days from February 20, 2008 as follows: Mr. Armacost 9,015; Dr. Brown 4,529; Mr. Doyle 3,058; Mr. Hall 20,761; Mr. Mellor 26,771; Mr. Moore 9,015; and Mr. Paquette 6,283. | |
(8) | Includes 1,033,168 shares subject to options granted pursuant to the USEC Inc. 1999 Equity Incentive Plan exercisable as of February 20, 2008, or within 60 days from such date. Includes 79,432 restricted stock units that can be converted into USEC common stock within 60 days from February 20, 2008. |
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• | Compensation should be aligned with shareholders’ interests: The program seeks to align the interests of executives with the long-term interests of our shareholders by providing strong incentives to maximize long-term value for our shareholders. Long-term stock ownership by our executives is emphasized to provide ongoing alignment. | |
• | Compensation should support our business strategy: Our compensation program is designed to reinforce our underlying business strategy and objectives by rewarding successful execution of our business plan, with performance goals tied to our business plan. Our success is heavily dependent on our ability to attract and retain experienced executives who consistently deliver operational and financial results. | |
• | Compensation should reward performance: A substantial portion of the total compensation opportunity is variable and dependent upon the Company’s operating and financial performance. | |
• | Compensation opportunities should be market competitive: To accomplish these guiding principles, it is essential for the compensation and benefits programs to provide competitive compensation relative to the labor markets for our executives while maintaining fiscal responsibility for our shareholders. | |
• | Compensation and benefits programs should encourage long-term retention: Our compensation and benefits programs, including our retirement plans are intended to encourage retention and reward continuity of service, which is particularly important due to the unique skill sets of our executives. |
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2006 | 12/31/07 | |||||||||||||||||||
Ticker | Revenue | Market Cap | ||||||||||||||||||
Company Name | Symbol | ($MM) | ($MM) | SIC Code | SIC Description | |||||||||||||||
Frontier Oil Corp | FTO | 4,760 | 4,297 | 2911 | PETROLEUM REFINING | |||||||||||||||
Western Refining Inc | WNR | 4,199 | 1,632 | 2911 | PETROLEUM REFINING | |||||||||||||||
Holly Corp | HOC | 4,023 | 2,769 | 2911 | PETROLEUM REFINING | |||||||||||||||
Bemis Co Inc | BMS | 3,639 | 2,752 | 2670 | CONVRT PAPR,PAPRBRD,EX BOXES | |||||||||||||||
NSTAR | NST | 3,578 | 3,869 | 4911 | ELECTRIC SERVICES | |||||||||||||||
Cytec Industries Inc | CYT | 3,330 | 2,938 | 2890 | MISC CHEMICAL PRODUCTS | |||||||||||||||
Cabot Corp | CBT | 2,616 | 2,176 | 2890 | MISC CHEMICAL PRODUCTS | |||||||||||||||
Arch Coal Inc | ACI | 2,532 | 6,416 | 1220 | BITUMINOUS COAL, LIGNITE MNG | |||||||||||||||
PNM Resources Inc | PNM | 2,472 | 1,647 | 4931 | ELECTRIC & OTHER SERV COMB | |||||||||||||||
Georgia Gulf Corp | GGC | 2,428 | 228 | 2810 | INDL INORGANIC CHEMICALS | |||||||||||||||
Albemarle Corp | ALB | 2,369 | 3,950 | 2890 | MISC CHEMICAL PRODUCTS | |||||||||||||||
FMC Corp | FMC | 2,347 | 4,125 | 2800 | CHEMICALS & ALLIED PRODUCTS | |||||||||||||||
Hercules Inc | HPC | 2,035 | 2,237 | 2890 | MISC CHEMICAL PRODUCTS | |||||||||||||||
USEC Inc | USU | 1,849 | 994 | 2810 | INDL INORGANIC CHEMICALS | |||||||||||||||
Westar Energy Inc | WR | 1,606 | 2,377 | 4931 | ELECTRIC & OTHER SERV COMB | |||||||||||||||
Arch Chemicals Inc | ARJ | 1,435 | 908 | 2800 | CHEMICALS & ALLIED PRODUCTS | |||||||||||||||
50th Percentile | 2,502 | 2,565 | ||||||||||||||||||
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Base Salary: $830,000
Target Annual Incentive: $830,000 (1X or 100% of base salary)
Target Long-Term Incentive: $1,660,000 (2X or 200% of base salary)
Fixed vs. Variable Pay | Short-Term vs. Long-Term Pay | Cash vs. Equity-Based Pay | ||
Fixed 25% (Base Salary) | Short-Term 50% (Salary + Annual Incentive Value) | Cash 42% (Salary + 65% of Annual Incentive Value) | ||
Variable 75% (Annual + Long-Term Incentive Value) | Long-Term 50% (Long-Term Incentive Value) | Equity-Based 58% (35% of Annual Incentive Value + Long-Term Incentive Value) | ||
Base Salary: $320,000 — $425,000 (Range)
Target Annual Incentive: $224,000 — $297,500 (.7X or 70% of base salary)
Target Long-Term Incentive: $416,000 — $552,500 (1.3X or 130% of base salary)
Fixed vs. Variable Pay | Short-Term vs. Long-Term Pay | Cash vs. Equity-Based Pay | ||
Fixed 33% (Base Salary) | Short-Term 57% (Salary + Annual Incentive Value) | Cash 49% (Salary + 65% of Annual Incentive Value) | ||
Variable 67% (Annual + Long-Term Incentive Value) | Long-Term 43% (Long-Term Incentive Value) | Equity-Based 51% (35% of Annual Incentive Value + Long-Term Incentive Value) | ||
• | The value of long-term incentives is generally about double that of the annual incentive to weight an executive’s compensation toward a focus on long-term rather than short-term goals. | |
• | The amount of variable or “at-risk” compensation is higher for the Chief Executive Officer than the other named executive officers in light of his greater responsibility and ability to influence the Company’s results. | |
• | Annual incentives are paid 65% in cash and 35% in restricted stock. If an executive has met his or her stock ownership guidelines, the amount of restricted stock received may be less as they may elect to receive a greater proportion of their annual incentive in cash. Alternatively, an executive may elect to receive a greater proportion of his annual incentive in restricted stock in lieu of cash. |
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Name | 2006 Salary | Adjustment | 2007 Salary | |||||||||
John K. Welch | $ | 750,000 | $ | 80,000 | $ | 830,000 | ||||||
John C. Barpoulis | $ | 340,000 | $ | 10,000 | $ | 350,000 | ||||||
Philip G. Sewell | $ | 405,000 | $ | 20,000 | $ | 425,000 | ||||||
Robert Van Namen | $ | 340,000 | $ | 31,000 | $ | 371,000 | ||||||
W. Lance Wright | $ | 300,000 | $ | 20,000 | $ | 320,000 |
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Name | 2007 Salary | Adjustment | 2008 Salary | |||||||||
John K. Welch | $ | 830,000 | $ | 70,000 | $ | 900,000 | ||||||
John C. Barpoulis | $ | 350,000 | $ | 50,000 | $ | 400,000 | ||||||
Philip G. Sewell | $ | 425,000 | $ | 45,000 | $ | 470,000 | ||||||
Robert Van Namen | $ | 371,000 | $ | 39,000 | $ | 410,000 | ||||||
W. Lance Wright | $ | 320,000 | $ | 50,000 | $ | 370,000 |
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Position | Target Level | Rationale | ||||
CEO | 100% | • Provides executives with the motivation and reward to perform at the highest level in achieving critical annual financial and operating objectives. • Goal of targeting the named executive officers’ base salary plus the annual incentive to a competitive level. | ||||
Other named executive officers | 70% |
Performance Measure | Weight | Rationale | ||||||
Corporate Quantitative Goals • Net income per share (60%) • Cash flow from operations per share (40%) | 55% | • | Net income and cash flow from operations are important measures of the Company’s operating results and liquidity, with a slightly greater emphasis on net income due to potential timing variances with cash flow from operations. | |||||
Key Performance Objectives • Individual performance measures weighted between 5% and 35% | 45% | • | Based on the Company’s strategic initiatives and operating plan. The weight of each of the key performance objectives varied by individual based on their areas of responsibility. |
Cash Flow from | ||||
Net Income | Operations | |||
Level | Per Share (60%) | Per Share (40%) | ||
Maximum (150%) | $.80/share | $1.26/share | ||
Target (100%) | $.23/share | $.11/share | ||
Threshold (0%) | $(.11)/share | $(.57)/share | ||
Actual Performance (146%) | $1.04/share (150%)* | $1.17/share (140%) |
* | Performance exceeded the maximum award. |
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Key Performance Objective | Difficulty | |
Strengthening near-term performance of the business through efforts to control costs and increase revenues. | Achievement of initiatives relating to identifying new revenue sources and controlling costs involve substantial effort and initiative, including efforts with respect to contracting, negotiating electric power costs, and improving plant operations. | |
Meeting milestones relating to the Company’s American Centrifuge Plant under a 2002 agreement between the U.S. Department of Energy and the Company, and maintaining separative work unit (SWU) performance levels and plant deployment costs for the American Centrifuge Plant within budgeted levels. | The American Centrifuge project is a unique project and the Company’s deployment schedule and target cost estimate are ambitious; therefore achievement of this objective is subject to a number of uncertainties and involves substantial effort and initiative. | |
Achieving success in contracting with customers for output from the American Centrifuge Plant. | Contracting for output from the American Centrifuge Plant is challenging because of the uncertainties relating to the American Centrifuge Plant; therefore achievement of this objective involves substantial effort and initiative. | |
Maintaining a stable supply of Russian highly enriched uranium and appropriate restrictions on imports of low enriched uranium. | USEC purchases low enriched uranium from dismantled Soviet nuclear weapons under the Megatons to Megawatts nonproliferation program with Russia, which is a unique program. In addition, Russia has the largest nuclear fuel industry in the world and is aggressively seeking to expand its share of the world market, in particular the United States. Therefore, this objective is subject to a number of uncertainties and involves substantial effort and initiative. | |
Providing for the capital requirements of the American Centrifuge project and ensuring that the Company maintains sufficient liquidity for its operations and capital needs. | A significant amount of capital is required to achieve the commercial deployment of the American Centrifuge Plant and there are a number of uncertainties with respect to the Company’s ability to obtain financing; therefore the achievement of this objective involves substantial effort and initiative. | |
Improving organizational efficacy, performance and communication. | USEC is engaged in a complicated, unique and technologically sophisticated business and ensuring that the Company has adequate resources during its transition period involves substantial 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 | 113 | % | 146 | % | 131 | % | ||||||
John C. Barpoulis | 115 | % | 146 | % | 132 | % | ||||||
Philip G. Sewell | 109 | % | 146 | % | 129 | % | ||||||
Robert Van Namen | 113 | % | 146 | % | 131 | % | ||||||
W. Lance Wright | 109 | % | 146 | % | 129 | % |
Annualized Target | Percentage of Annualized Long-Term Incentive Value | |||||||||||||||
Long-Term Incentive Value | Restricted Stock | Stock Option | Executive | |||||||||||||
Position | (as a Multiple of Base Salary) | Awards | Awards | Incentive Plan | ||||||||||||
CEO | 2.0 | X | 25 | % | 25 | % | 50 | % | ||||||||
Other named executive officers | 1.3 | X | 27 | % | 27 | % | 46 | % |
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2007 Target % | 2008 Target % | |||||||
Name | (of base salary) | (of base salary) | ||||||
John K. Welch | 50 | % | 75 | % | ||||
John C. Barpoulis | 35 | % | 60 | % | ||||
Philip G. Sewell | 35 | % | 60 | % | ||||
Robert Van Namen | 35 | % | 60 | % | ||||
W. Lance Wright | 35 | % | 40 | % |
2007 Target % | 2008 Target % | |||||||
Name | (of base salary) | (of base salary) | ||||||
John K. Welch | 50 | % | 75 | % | ||||
John C. Barpoulis | 35 | % | 60 | % | ||||
Philip G. Sewell | 35 | % | 60 | % | ||||
Robert Van Namen | 35 | % | 60 | % | ||||
W. Lance Wright | 35 | % | 40 | % |
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Value of Target Award | ||||||||
(based on a 3-year | ||||||||
Annualized Value | performance period, | |||||||
Name | (as a % of base salary) | as a % of base salary) | ||||||
CEO | 100 | % | 300 | % | ||||
Other named executive officers | 60 | % | 180 | % |
Performance Goal | Weight | Measure/Difficulty | ||||
Gross profit for 2008 as measured against internal targets | 30% | The Compensation Committee believes that these internal gross profit targets are achievable yet require considerable effort and innovation on the part of the executive management team | ||||
USEC’s total shareholder return (TSR) for the period as measured against the S&P 500 total shareholder return (without dividends) | 20% | Threshold: USEC TSR between the 45th and 54th percentile of the S&P 500 Target: USEC TSR between the 55th and 64th percentile of the S&P 500 Maximum: USEC TSR at the 65th percentile or greater of the S&P 500 | ||||
Two business performance targets | 50% | Related to achieving USEC’s internal goals relating to the American Centrifuge program | ||||
• Achieving a specified economic performance of the centrifuge machine (50%) | Threshold: Performance level is within minus 10% of specified performance level Target: Specified performance level* is achieved Maximum: Performance level is 10% or more above specified performance level *The specified performance level is classified for purposes of national security. | |||||
• Completion of a financing plan for the Company’s American Centrifuge plant (50%) | Achievable yet requires considerable effort and innovation on the part of the executive management team |
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Number of | Stock | |||||||||||
Stock Ownership Guideline | Years of | Ownership as | ||||||||||
Name | (number of shares) | Service | of 12/31/07 | |||||||||
John K. Welch | 300,000 | 2 | 150,197 | |||||||||
John C. Barpoulis | 65,000 | 2 | 32,559 | |||||||||
Philip G. Sewell | 65,000 | 6 | 78,860 | |||||||||
Robert Van Namen | 65,000 | 9 | 69,057 | |||||||||
W. Lance Wright | 65,000 | 4 | 41,009 |
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Change in | ||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||
Non-Qualified | ||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||
Name and | Fiscal | Awards | Awards | Compensation | Earnings | Compensation | ||||||||||||||||||||||||||
Principal Position | Year | Salary | (1) | (2) | (3) | (4) | (5) | Total | ||||||||||||||||||||||||
John K. Welch | 2007 | $ | 828,462 | $ | 1,477,617 | $ | 330,055 | $ | 65,025 | $ | 925,499 | $ | 66,295 | $ | 3,692,953 | |||||||||||||||||
President and CEO | 2006 | $ | 750,000 | $ | 931,392 | $ | 182,934 | $ | 0 | $ | 317,658 | $ | 49,650 | $ | 2,231,634 | |||||||||||||||||
John C. Barpoulis | 2007 | $ | 349,808 | $ | 281,543 | $ | 63,375 | $ | 168,232 | $ | 29,725 | $ | 9,000 | $ | 901,683 | |||||||||||||||||
Senior Vice President and Chief Financial Officer | 2006 | $ | 317,538 | $ | 255,836 | $ | 21,991 | $ | 190,326 | $ | 20,856 | $ | 8,800 | $ | 815,347 | |||||||||||||||||
Philip G. Sewell | 2007 | $ | 424,615 | $ | 328,585 | $ | 188,928 | $ | 544,926 | $ | 749,935 | $ | 0 | $ | 2,236,989 | |||||||||||||||||
Senior Vice President, American Centrifuge and Russian HEU | 2006 | $ | 401,423 | $ | 338,343 | $ | 91,437 | $ | 352,592 | $ | 695,653 | $ | 0 | $ | 1,879,448 | |||||||||||||||||
Robert Van Namen | 2007 | $ | 370,404 | $ | 215,500 | $ | 78,386 | $ | 473,866 | $ | 129,257 | $ | 26,466 | $ | 1,293,879 | |||||||||||||||||
Senior Vice President, Uranium Enrichment | 2006 | $ | 340,000 | $ | 361,559 | $ | 57,122 | $ | 296,003 | $ | 222,162 | $ | 20,437 | $ | 1,297,283 | |||||||||||||||||
W. Lance Wright | 2007 | $ | 319,615 | $ | 269,211 | $ | 66,935 | $ | 211,389 | $ | 213,867 | $ | 19,890 | $ | 1,100,907 | |||||||||||||||||
Senior Vice President, Human Resources and Administration | 2006 | $ | 300,000 | $ | 333,389 | $ | 28,075 | $ | 166,700 | $ | 67,611 | $ | 17,744 | $ | 913,519 |
(1) | The amounts shown in the Stock Awards column represents the compensation cost recognized by us in the applicable fiscal year related to stock awards to the named executive officers, computed in accordance with SFAS No. 123(R) and do not reflect whether the named executive officer has actually realized a financial benefit from the award. Amounts for 2007 include amounts taken into account in 2007 for awards granted in and prior to 2007 and do not include amounts for restricted stock awards made in March 2008 under the Company’s Annual Incentive Program for year ended December 31, 2007. Amounts for 2006 include amounts taken into account in 2006 for awards granted in and prior to 2006 and do not include amounts for restricted stock awards made in March 2007 under the Company’s Annual Incentive Program for year ended December 31, 2006. For a discussion of valuation assumptions, see Note 15 to our consolidated financial statements included in our annual report onForm 10-K/A for the year ended December 31, 2007 and Note 13 to our consolidated financial statements included in our annual report onForm 10-K for the year ended December 31, 2006. In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
(2) | The amounts shown in the Option Awards column represent the compensation cost recognized by us in the applicable fiscal year related to option awards to the named executive officers, computed in accordance with SFAS No. 123(R). For a discussion of valuation assumptions, see Note 15 to our consolidated financial statements included in our annual report onForm 10-K/A for the year ended December 31, 2007 and Note 13 to our consolidated financial statements included in our annual report onForm 10-K for the year ended December 31, 2006. |
(3) | The amounts shown in the Non-Equity Incentive Plan Compensation 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 year. The amounts shown for 2007 include cash amounts earned under the Company’s Annual Incentive Program for the year ended December 31, 2007 and paid in March 2008. The amounts shown for 2006 include cash amounts earned under the Company’s Annual Incentive Program for the year ended December 31, 2006 and paid in March 2007. Mr. Welch elected to take his entire annual incentive award for 2007 of $1,086,678 and for 2006 of $912,533 in restricted stock in lieu of cash and was eligible to receive an incentive payment of restricted |
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stock on the 65% he could have taken in cash. Messrs. Barpoulis and Wright elected to take an additional 20% of their annual incentive award for 2007 in restricted stock in lieu of cash (for a total of 48% of their annual incentive award in restricted stock and 52% in cash) and were eligible to receive an incentive payment of restricted stock on the 20% they could have taken in cash. Amounts for Messrs. Barpoulis and Wright for 2006 represent 65% of their annual incentive awards for 2006, with the remainder paid in restricted stock. Messrs. Sewell and Van Namen had satisfied their stock ownership guidelines and elected to take their entire annual incentive awards for 2007 and 2006 in cash and so the amount shown for them represents their entire annual incentive award for 2007 and 2006. Restricted stock granted to Messrs. Welch, Barpoulis and Wright for annual incentive awards for the year ended December 31, 2007 was granted in March 2008 and is not shown in the Summary Compensation Table for 2007. Restricted stock granted to Messrs. Welch, Barpoulis and Wright for annual incentive awards for the year ended December 31, 2006 was granted in March 2007 and is not shown in the Summary Compensation Table for 2006. This column also includes payouts made in 2007 to the named executive officers for a terminated performance program as follows: Mr. Welch, $65,025, Mr. Sewell, $160,779, Mr. Van Namen, $132,919 and Mr. Wright, $60,722. This performance program was terminated in March 2006 and awards were approved at that time based on performance achieved with payouts not to be made until originally planned in July 2007. This program was replaced with the Executive Incentive Plan. | ||
(4) | 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 named executive officer’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, 2007, as compared to December 31, 2006; and at December 31, 2006, as compared to December 31, 2005. 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. | |
(5) | The amounts shown in the All Other Compensation column includes Company matching contributions made under the USEC Savings Program and the 401(k) Restoration Plan. For Mr. Welch, the amount shown in the All Other Compensation column also includes $30,403 for perquisites and other personal benefits received by him in 2007 and $19,650 for perquisites and other personal benefits received by him in 2006. These perquisites and other personal benefits (none of which exceeded the greater of $25,000 or 10% of the total amount of these benefits for Mr. Welch) include: (a) financial counseling; (b) golf club membership dues; (c) an annual physical; and (d) spouse travel and related expenses. |
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All Other | All Other | |||||||||||||||||||||||||||||||||||
Stock | Option | |||||||||||||||||||||||||||||||||||
Date of | Estimated Possible | Awards: | Awards: | Exercise or | Grant Date | |||||||||||||||||||||||||||||||
Compensation | Payouts Under | Number of | Number of | Base Price | Fair Value | |||||||||||||||||||||||||||||||
Committee | Non-Equity Incentive | Shares of | Securities | Option | of Stock and | |||||||||||||||||||||||||||||||
Grant | Action | Plan Awards(1) | Stock or | Underlying | Awards | Option | ||||||||||||||||||||||||||||||
Name | Date | (if different) | Threshold | Target | Maximum | Units | Options | ($/Sh) | Awards(2) | |||||||||||||||||||||||||||
John K. Welch | 2/08/07 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 77,882 | (4) | $ | 1,031,158 | ||||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 31,344 | (5) | $ | 414,995 | ||||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 87,068 | (6) | $ | 13.24 | $ | 415,314 | ||||||||||||||||||||||||||||
John C. Barpoulis | 2/08/07 | $ | 0 | $ | 127,400 | $ | 191,100 | |||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 7,739 | (4) | $ | 102,464 | ||||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 9,252 | (5) | $ | 122,496 | ||||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 25,701 | (6) | $ | 13.24 | $ | 122,594 | ||||||||||||||||||||||||||||
Philip G. Sewell | 2/08/07 | $ | 0 | $ | 297,500 | $ | 446,250 | |||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 11,235 | (5) | $ | 148,751 | ||||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 31,208 | (6) | $ | 13.24 | $ | 148,862 | ||||||||||||||||||||||||||||
Robert Van Namen | 2/08/07 | $ | 0 | $ | 259,700 | $ | 389,550 | |||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 9,807 | (4) | $ | 129,845 | ||||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 27,243 | (6) | $ | 13.24 | $ | 129,949 | ||||||||||||||||||||||||||||
W. Lance Wright | 2/08/07 | $ | 0 | $ | 116,480 | $ | 174,720 | |||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 6,779 | (4) | $ | 89,754 | ||||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 8,459 | (5) | $ | 111,997 | ||||||||||||||||||||||||||||||
3/05/07 | 2/07/07 | (3) | 23,498 | (6) | $ | 13.24 | $ | 112,085 |
(1) | Amounts shown are estimated possible cash payouts under the Company’s 2007 Annual Incentive Program under the Company’s 1999 Equity Incentive Plan based on performance against 2007 corporate and individual performance goals at the threshold (0%), target (100%) and maximum (150%) levels. Actual payouts under the 2007 Annual Incentive Program were approved by the Compensation Committee in February 2008 and the cash portion of these payouts are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. The amounts shown in the table above represent only the cash portion of the 2007 annual incentive awards. Under the Annual Incentive Program annual incentives are paid 65% in cash and 35% in restricted stock unless an executive elects to take a greater or lesser portion of their annual incentives in restricted stock. For 2007, Messrs. Sewell and Van Namen elected to take their entire annual incentive awards in cash and Messrs. Barpoulis, Welch and Wright elected to take 52%, 0% and 52%, respectively, of their annual incentive awards in cash, with the remainder in restricted stock. The stock portion of these awards was awarded in March 2008 and will be reflected in the Grants of Plan Based Awards table for 2008. |
(2) | The value of the stock awards is based on the fair value of such award on the grant date, computed in accordance with SFAS No. 123(R). | |
(3) | These annual incentive awards were made 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 named executive officers in 2007 under the Company’s Annual Incentive Program under the Company’s 1999 Equity Incentive Plan based on performance against corporate and individual performance goals in 2006. These shares vest on March 5, 2008. | |
(5) | Includes shares of restricted stock granted to the named executive officers in 2007 under the Company’s Long-Term Incentive Program under the 1999 Equity Incentive Plan. These shares will vest ratably over three years from the date of grant. |
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(6) | Includes non-qualified stock options granted to the named executive officers in 2007 under the Company’s Long-Term Incentive Program under the 1999 Equity Incentive Plan. These options will vest ratably over three years from the date of grant. |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||
Equity | Incentive | |||||||||||||||||||||||||||||||
Incentive | Plan Awards: | |||||||||||||||||||||||||||||||
Plan Awards: | Market or | |||||||||||||||||||||||||||||||
Number of | Payout | |||||||||||||||||||||||||||||||
Number of | Number of | Market | Unearned | Value of | ||||||||||||||||||||||||||||
Securities | Securities | Number of | Value of | Shares, | Unearned | |||||||||||||||||||||||||||
Underlying | Underlying | Shares or | Shares or | Units or | Shares, Units or | |||||||||||||||||||||||||||
Unexercised | Unexercised | Option | Option | Units of Stock | Units of Stock | Other Rights | Other Rights | |||||||||||||||||||||||||
Options | Options | Exercise | Expiration | That Have | That Have | That Have | That Have | |||||||||||||||||||||||||
Name | Exercisable | Unexercisable | Price | Date | Not Vested | Not Vested | Not Vested | Not Vested | ||||||||||||||||||||||||
John K. Welch | 66,667 | 33,333 | (1) | $ | 11.00 | 10/03/10 | 129,904 | (2) | $ | 1,169,136 | 142,801 | (3) | $ | 1,285,209 | ||||||||||||||||||
29,540 | 59,081 | (4) | $ | 12.09 | 3/28/11 | |||||||||||||||||||||||||||
87,068 | (5) | $ | 13.24 | 3/05/12 | ||||||||||||||||||||||||||||
John C. Barpoulis | 8,655 | $ | 13.98 | 5/04/10 | 25,284 | (6) | $ | 227,556 | 38,842 | (3) | $ | 349,578 | ||||||||||||||||||||
9,374 | 18,748 | (4) | $ | 12.09 | 3/28/11 | |||||||||||||||||||||||||||
25,701 | (5) | $ | 13.24 | 3/05/12 | ||||||||||||||||||||||||||||
Philip G. Sewell | 59,300 | $ | 8.50 | 7/31/11 | 20,833 | (7) | $ | 187,497 | 46,267 | (3) | $ | 416,403 | ||||||||||||||||||||
48,142 | $ | 7.02 | 8/07/12 | |||||||||||||||||||||||||||||
50,000 | $ | 7.00 | 8/06/13 | |||||||||||||||||||||||||||||
53,913 | $ | 8.05 | 2/10/09 | |||||||||||||||||||||||||||||
26,708 | $ | 16.90 | 3/23/10 | |||||||||||||||||||||||||||||
11,166 | 22,333 | (4) | $ | 12.09 | 3/28/11 | |||||||||||||||||||||||||||
31,208 | (5) | $ | 13.24 | 3/05/12 | ||||||||||||||||||||||||||||
Robert Van Namen | 36,000 | $ | 8.50 | 7/31/11 | 17,954 | (8) | $ | 161,586 | 38,842 | (3) | $ | 349,578 | ||||||||||||||||||||
18,000 | $ | 7.00 | 8/06/13 | |||||||||||||||||||||||||||||
44,571 | $ | 8.05 | 2/10/09 | |||||||||||||||||||||||||||||
23,775 | $ | 16.90 | 3/23/10 | |||||||||||||||||||||||||||||
9,374 | 18,748 | (4) | $ | 12.09 | 3/28/11 | |||||||||||||||||||||||||||
27,243 | (5) | $ | 13.24 | 3/05/12 | ||||||||||||||||||||||||||||
W. Lance Wright | 5,250 | $ | 8.05 | 2/10/09 | 22,409 | (9) | $ | 201,681 | 34,272 | (3) | $ | 308,448 | ||||||||||||||||||||
20,710 | $ | 16.90 | 3/23/10 | |||||||||||||||||||||||||||||
8,271 | 16,543 | (4) | $ | 12.09 | 3/28/11 | |||||||||||||||||||||||||||
23,498 | (5) | $ | 13.24 | 3/05/12 |
(1) | These stock options will vest on October 3, 2008. | |
(2) | Shares of restricted stock vest as follows: 88,330 shares with a vesting date of March 5, 2008; 10,339 shares with a vesting date of March 28, 2008; 10,448 shares with a vesting date of March 5, 2009; 10,339 shares with a vesting date of March 28, 2009; and 10,448 shares with a vesting date of March 5, 2010. | |
(3) | Represents the number of shares to be earned based on achieving threshold performance goals under the Company’s Executive Incentive Plan with respect to the performance period March 1, 2006 to December 31, 2008. No awards will be made or shares will be earned until the end of the performance period and the actual number of shares earned will be based upon performance against the performance goals. |
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Please see the Compensation Discussion and Analysis for more information regarding the Executive Incentive Plan. | ||
(4) | Stock options vest at the rate of 331/3% per year, with vesting dates of March 28, 2007, March 28, 2008 and March 28, 2009. | |
(5) | Stock options vest at the rate of 331/3% per year, with vesting dates of March 5, 2008, March 5, 2009, and March 5, 2010. | |
(6) | Shares of restricted stock vest as follows: 10,823 shares with a vesting date of March 5, 2008; 3,281 shares with a vesting date of March 28, 2008; 1,731 shares with a vesting date of May 4, 2008; 3,084 shares with a vesting date of March 5, 2009; 3,281 shares with a vesting date of March 28, 2009; and 3,084 shares with a vesting date of March 5, 2010. | |
(7) | Shares of restricted stock vest as follows: 3,745 shares with a vesting date of March 5, 2008; 1,781 shares with a vesting date of March 23, 2008; 3,908 shares with a vesting date of March 28, 2008; 3,745 shares with a vesting date of March 5, 2009; 3,909 shares with a vesting date of March 28, 2009; and 3,745 shares with a vesting date of March 5, 2010. | |
(8) | Shares of restricted stock vest as follows: 3,269 shares with a vesting date of March 5, 2008; 1,585 shares with a vesting date of March 23, 2008; 3,281 shares with a vesting date of March 28, 2008; 3,269 shares with a vesting date of March 5, 2009; 3,281 shares with a vesting date of March 28, 2009; and 3,269 shares with a vesting date of March 5, 2010. | |
(9) | Shares of restricted stock vest as follows: 9,599 shares with a vesting date of March 5, 2008; 1,381 shares with a vesting date of March 23, 2008; 2,895 shares with a vesting date of March 28, 2008; 2,820 shares with a vesting date of March 5, 2009; 2,895 shares with a vesting date of March 28, 2009; and 2,819 shares with a vesting date of March 5, 2010. |
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 | — | — | 29,933 | $ | 442,843 | |||||||||||
John C. Barpoulis | — | — | 8,534 | $ | 137,450 | |||||||||||
Philip G. Sewell | — | — | 10,108 | $ | 161,524 | |||||||||||
Robert Van Namen | — | — | 17,170 | $ | 257,529 | |||||||||||
W. Lance Wright | — | — | 16,558 | $ | 243,573 |
(1) | Amounts reflect the market value 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 | 2 yr. 3 mos. | $ | 73,586 | $ | 0 | ||||||
Pension Restoration Plan | 2 yr. 3 mos. | $ | 313,729 | $ | 0 | |||||||
2006 SERP | 2 yr. 3 mos. | $ | 969,266 | $ | 0 | |||||||
John C. Barpoulis | Retirement Plan | 2 yr. 9 mos. | $ | 39,743 | $ | 0 | ||||||
Pension Restoration Plan | 2 yr. 9 mos. | $ | 34,137 | $ | 0 | |||||||
2006 SERP | 2 yr. 9 mos. | $ | 0 | $ | 0 | |||||||
Philip G. Sewell | Retirement Plan | 6 yrs. 7 mos. | $ | 249,398 | $ | 0 | ||||||
Pension Restoration Plan | 6 yrs. 7 mos. | $ | 550,244 | $ | 0 | |||||||
1999 SERP | 6 yrs. 7 mos. | $ | 3,677,085 | $ | 0 | |||||||
Robert Van Namen | Retirement Plan | 9 yrs. | $ | 125,019 | $ | 0 | ||||||
Pension Restoration Plan | 9 yrs. | $ | 251,721 | $ | 0 | |||||||
2006 SERP | 9 yrs. | $ | 193,081 | $ | 0 | |||||||
W. Lance Wright | Retirement Plan | 4 yrs. 4 mos. | $ | 119,990 | $ | 0 | ||||||
Pension Restoration Plan | 4 yrs. 4 mos. | $ | 140,801 | $ | 0 | |||||||
2006 SERP | 4 yrs. 4 mos. | $ | 123,511 | $ | 0 |
(1) | In determining the present value of each participant’s pension benefit, a 6.21% discount rate is assumed. An interest rate of 6.55% is used in converting 2006 SERP annuities into lump sums, which is consistent with plan provisions, reflecting the un-annualized Moody’s Aa index bond yield of 5.8% plus 75 basis points. |
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• | 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 33? 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% 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 | $ | 34,081 | $ | 26,892 | $ | 3,745 | $ | 0 | $ | 109,500 | ||||||||||
John C. Barpoulis | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Philip G. Sewell | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Robert Van Namen | $ | 15,866 | $ | 17,466 | $ | 21,026 | $ | 0 | $ | 144,875 | ||||||||||
W. Lance Wright | $ | 9,222 | $ | 10,890 | $ | 4,297 | $ | 0 | $ | 48,191 |
(1) | Amount represents executive’s contributions to the USEC Inc. 401(k) Restoration Plan. These amounts are also included in the Summary Compensation Table in the Salary column. | |
(2) | Amount represents the Company’s contributions to the USEC Inc. 401(k) Restoration Plan. These amounts are also included in the Summary Compensation Table in the All Other Compensation column. | |
(3) | Amount represents earnings on the USEC Inc. 401(k) Restoration Plan during 2007. | |
(4) | Amount represents the aggregate balance for the named executive officers as of December 31, 2007 under the USEC Inc. 401(k) Restoration Plan. Amount includes the executive’s contributions to the USEC Inc. 401(k) Restoration Plan in 2006, as previously reported as compensation in the Summary Compensation Table in the Salary column as follows: Mr. Welch $22,500; Mr. Van Namen $9,524; and Mr. Wright $7,290. Amount includes the Company’s contributions to the USEC Inc. 401(k) Restoration Plan in 2006, as previously reported as compensation in the Summary Compensation Table in the All Other Compensation column as follows: Mr. Welch $21,200; Mr. Van Namen $11,637; and Mr. Wright $8,944. |
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• | his current base salary and a pro-rated share of his current annual incentive (at target) up to the date of termination; | |
• | a cash severance payment equal to one year’s base salary at his current rate and an amount equal to the average of his last three year’s annual incentive awards (both cash and restricted stock); 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). |
• | 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 annual base salary as in effect on the date of termination and the average of the three most recent annual incentive bonuses paid to the executive prior to the date of termination (whether paid in the form of cash or in grants of restricted stock). Any annual incentive bonus paid to an executive during the prior three years that was pro-rated or otherwise adjusted because the executive was not employed by the Company during the entire period to which the bonus related is annualized for purposes of the calculation of the executive’s average bonus. If the executive has experienced a change in position that has affected the executive’s annual bonus opportunity, any annual bonus paid to the executive with respect to a period prior to the change in position is not included in the calculation of the executive’s average bonus. If the executive has not been paid at least three annual bonuses prior to the date of termination that are includable in the calculation of the executive’s average bonus, the executive’s average bonus is an amount equal to the average of such lesser number of annual bonuses. If the executive has not been paid at least one annual bonus prior to the date of termination that is includable in the calculation of the executive’s average bonus, the executive’s average bonus is an amount equal to the executive’s annual target bonus as in effect on the date of termination. | |
• | continuation of medical and similar benefits for 2.5 years following the change in control, or, if sooner, until he is covered by comparable programs of a subsequent employer (and reduced to the extent he receives comparable benefits). | |
• | two and one-half additional years of service for purposes of vesting, eligibility and benefit accrual under the Company’s retirement plans. | |
• | in the event the executive receives payments that would subject him to any federal excise tax due under section 4999 of the Internal Revenue Code, he would also 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% and a 35% income tax rate. |
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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 | $ | 1,701,267 | $ | 0 | $ | 4,434,416 | $ | 0 | |||||||||||||
Stock options | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Restricted Stock | $ | 0 | N/A | $ | 1,169,136 | $ | 0 | $ | 1,169,136 | $ | 1,169,136 | |||||||||||||
Executive Incentive Plan(3) | $ | 0 | N/A | $ | 1,039,506 | $ | 0 | $ | 1,606,509 | $ | 1,039,506 | |||||||||||||
Retirement Plan(4) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Pension Restoration Plan(4) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
401(k) Restoration Plan(5) | $ | 0 | N/A | $ | 24,046 | $ | 0 | $ | 24,046 | $ | 24,046 | |||||||||||||
2006 SERP(6) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 3,031,449 | $ | 3,031,449 | |||||||||||||
280G TaxGross-up | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 2,135,193 | $ | 0 | |||||||||||||
Continuing Benefits(7) | $ | 0 | N/A | $ | 13,277 | $ | 0 | $ | 35,560 | $ | 0 | |||||||||||||
Total | $ | 0 | $ | 3,947,232 | $ | 0 | $ | 12,436,309 | $ | 5,264,137 | ||||||||||||||
John C. Barpoulis | ||||||||||||||||||||||||
Severance Payments(2) | $ | 0 | N/A | $ | 618,895 | $ | 0 | $ | 1,606,975 | $ | 0 | |||||||||||||
Stock options | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Restricted Stock | $ | 0 | N/A | $ | 227,556 | $ | 0 | $ | 227,556 | $ | 227,556 | |||||||||||||
Executive Incentive Plan(3) | $ | 0 | N/A | $ | 282,744 | $ | 0 | $ | 436,968 | $ | 282,744 | |||||||||||||
Retirement Plan(4) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Pension Restoration Plan(4) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 100,924 | $ | 0 | |||||||||||||
2006 SERP(6) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 135,620 | $ | 211,786 | |||||||||||||
280G TaxGross-up | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 458,338 | $ | 0 | |||||||||||||
Continuing Benefits(7) | $ | 0 | N/A | $ | 15,906 | $ | 0 | $ | 42,133 | $ | 0 | |||||||||||||
Total | $ | 0 | $ | 1,145,101 | $ | 0 | $ | 3,008,514 | $ | 722,086 | ||||||||||||||
Philip G. Sewell | ||||||||||||||||||||||||
Severance Payments(2) | N/A | $ | 0 | $ | 755,885 | $ | 0 | $ | 1,852,558 | $ | 0 | |||||||||||||
Stock options | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Restricted Stock | N/A | $ | 0 | $ | 187,497 | $ | 0 | $ | 187,497 | $ | 187,497 | |||||||||||||
Executive Incentive Plan(3) | N/A | $ | 0 | $ | 336,798 | $ | 0 | $ | 520,506 | $ | 336,798 | |||||||||||||
Retirement Plan(4) | N/A | $ | 252,188 | $ | 256,472 | $ | 252,188 | $ | 256,472 | $ | 130,365 | (9) | ||||||||||||
Pension Restoration Plan(4) | N/A | $ | 556,401 | $ | 565,851 | $ | 556,401 | $ | 874,220 | (10) | $ | 287,623 | (9) | |||||||||||
1999 SERP(8) | N/A | $ | 3,829,994 | $ | 3,816,261 | $ | 0 | $ | 3,507,892 | $ | 1,979,855 | |||||||||||||
280G TaxGross-up | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Continuing Benefits(7) | N/A | $ | 0 | $ | 1,785 | $ | 0 | $ | 6,830 | $ | 0 | |||||||||||||
Total | $ | 4,638,583 | $ | 5,920,549 | $ | 808,589 | $ | 7,205,975 | $ | 2,922,138 | ||||||||||||||
Robert Van Namen | ||||||||||||||||||||||||
Severance Payments(2) | $ | 0 | N/A | $ | 661,351 | $ | 0 | $ | 1,626,860 | $ | 0 | |||||||||||||
Stock options | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Restricted Stock | $ | 0 | N/A | $ | 161,586 | $ | 0 | $ | 161,586 | $ | 161,586 | |||||||||||||
Executive Incentive Plan(3) | $ | 0 | N/A | $ | 282,744 | $ | 0 | $ | 436,968 | $ | 282,744 | |||||||||||||
Retirement Plan(4) | $ | 98,986 | N/A | $ | 98,986 | $ | 98,986 | $ | 98,986 | $ | 47,403 | (9) | ||||||||||||
Pension Restoration Plan(4) | $ | 200,518 | N/A | $ | 200,518 | $ | 200,518 | $ | 283,714 | (10) | $ | 96,025 | (9) | |||||||||||
2006 SERP(6) | $ | 282,138 | N/A | $ | 282,138 | $ | 0 | $ | 378,066 | $ | 270,330 | |||||||||||||
280G TaxGross-up | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 443,704 | $ | 0 | |||||||||||||
Continuing Benefits(7) | $ | 0 | N/A | $ | 15,994 | $ | 0 | $ | 42,353 | $ | 0 | |||||||||||||
Total | $ | 581,642 | $ | 1,703,317 | $ | 299,504 | $ | 3,472,237 | $ | 858,088 |
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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 | ||||||||||||||||||
W. Lance Wright | ||||||||||||||||||||||||
Severance Payments(2) | $ | 0 | N/A | $ | 572,201 | $ | 0 | $ | 1,465,755 | $ | 0 | |||||||||||||
Stock options | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Restricted Stock | $ | 0 | N/A | $ | 201,681 | $ | 0 | $ | 201,681 | $ | 201,681 | |||||||||||||
Executive Incentive Plan(3) | $ | 0 | N/A | $ | 249,480 | $ | 0 | $ | 385,560 | $ | 249,480 | |||||||||||||
Retirement Plan(4) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Pension Restoration Plan(4) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 420,497 | $ | 0 | |||||||||||||
2006 SERP(6) | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 336,628 | $ | 409,044 | |||||||||||||
280G TaxGross-up | $ | 0 | N/A | $ | 0 | $ | 0 | $ | 463,776 | $ | 0 | |||||||||||||
Continuing Benefits(7) | $ | 0 | N/A | $ | 15,780 | $ | 0 | $ | 41,818 | $ | 0 | |||||||||||||
Total | $ | 0 | $ | 1,039,142 | $ | 0 | $ | 3,315,715 | $ | 860,205 |
(1) | No named executive officer is eligible for normal retirement under any of the Company’s retirement programs as of December 31, 2007 and only Mr. Sewell is eligible for early retirement as of December 31, 2007. Mr. Sewell would have been eligible to commence an immediate reduced retirement benefit if he had retired as of December 31, 2007. In the case of involuntary not for cause termination, his retirement benefit is unreduced due to relaxed eligibility requirements for involuntary termination. | |
(2) | In calculating the Severance Payment payable upon involuntary not for cause termination under the Company’s severance policy for executive officers, the calculation of the final average bonuses for the named executive officers included each executive’s 2007 target annual incentive bonus because annual incentive bonuses for 2007 had not been determined as of December 31, 2007. In addition, for Messrs. Welch and Barpoulis, bonuses prior to 2006 were not included in the calculation because the executive either received only a partial bonus or experienced a change in position that altered his bonus opportunity. | |
In calculating the Severance Payment under the executives’ change in control agreements, the final average bonuses for the named executive officers were calculated using the average of any bonuses paid in 2006, 2005 and 2004. Pro-rated bonuses were annualized for purposes of this calculation and any bonus received prior to a change in position was excluded. | ||
(3) | Under the terms of the Executive Incentive Plan, if an executive is terminated by the Company other than for cause, he will receive a pro-rated award based on the period of time in which he was in the plan. Accordingly, amounts in the column Involuntary Not For Cause Termination reflect target awards under the Executive Incentive Plan pro-rated to reflect participation during 22 months of the 34 month performance period. Amounts in the column Involuntary or Good Reason Termination (Change in Control) reflect a target award with no pro-ration. | |
(4) | Only Messrs. Sewell and Van Namen are vested under the Retirement Plan and the Pension Restoration Plan. However, Mr. Van Namen is not eligible to commence payment under either plan and so the amount for Mr. Van Namen represents the present value of his benefit with an age 65 commencement. Amounts shown are the actuarial present value of life annuity payments. The present value of accumulated benefits is shown at the unreduced retirement age, using the assumptions under SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, as shown in Note 14 to our consolidated financial statements included in our annual report onForm 10-K/A for the year ended December 31, 2007. | |
(5) | Represents unvested Company match contributions under the 401(k) Restoration Plan. Mr. Welch was 50% vested in Company match contributions to the 401(k) Restoration Plan as of December 31, 2007. All other named executive officers who participate in the 401(k) Restoration Plan were fully vested under the 401(k) Restoration Plan as of December 31, 2007 and their aggregate balance as of December 31, 2007 is reported in the Nonqualified Deferred Compensation in Fiscal Year 2007 table. Vested contributions are payable in cash upon termination of employment. Vesting is accelerated upon an involuntary not for cause termination, a change in control or termination for death or disability. |
49
(6) | Mr. Van Namen is the only named executive officer vested under the 2006 SERP; however, he is ineligible to commence payment so his amount represents the present value of his accrued benefits with an age 55 lump sum payment. Messrs. Welch, Barpoulis and Wright are only vested under the 2006 SERP in the case of a change in control or death or disability. Accrued SERP benefits are forfeited upon a termination for cause. 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. Death benefits reflect an actuarial reduction from age 55 to current age. Amounts for all executives represent accrued benefits payable in lump sum form, with an assumed discount rate of 6.55% as provided under the terms of the 2006 SERP. The present value of accumulated benefits is shown at the unreduced retirement age, using the assumptions under SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, as shown in Note 14 to our consolidated financial statements included in our annual report onForm 10-K/A for the year ended December 31, 2007. | |
(7) | 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 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. | |
(8) | Mr. Sewell is the only named executive officer with benefits under the USEC Inc. 1999 SERP. Mr. Sewell is eligible to commence an immediate, reduced benefit upon termination. Accrued 1999 SERP benefits are forfeited upon a termination for cause. The amount shown is the actuarial present value of life annuity payments. The present value of accumulated benefits is shown at the unreduced retirement age, using the assumptions under SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, as shown in Note 14 to our consolidated financial statements included in our annual report onForm 10-K/A for the year ended December 31, 2007. | |
(9) | In the case of death, Messrs. Sewell’s and Van Namen’s beneficiaries would be entitled to survivor annuity benefits. Mr. Sewell’s spouse would be eligible to commence survivor benefits immediately. Mr. Sewell’s survivor benefit is the 50% survivor portion of a joint and survivor annuity. Mr. Van Namen’s survivor is ineligible to commence immediate benefit because Mr. Van Namen has less than ten years of service. An age 65 survivor benefit is included for Mr. Van Namen, which is the 50% survivor portion of a joint and survivor annuity, reflecting a contingent annuitant adjustment. Amounts shown are the actuarial present value of these survivor annuity benefits. In the case of disability, each of the executives would continue to accrue service during periods of disability rather than commence a retirement benefit. | |
(10) | Change in control agreements provide for an additional 2.5 years of service for vesting, eligibility and benefit accrual for the Pension Restoration Plan. Accordingly, amount reflects gross benefit with 2.5 year service enhancement, less accrued benefit under the Retirement Plan. For Mr. Sewell, in the case of involuntary termination within three years following a change in control, his amount is unreduced because under the Retirement Plan and the Pension Restoration Plan, if an employee is terminated by the Company other than for cause, the employee receives an additional two years of age and service credit for early retirement eligibility purposes, which for Mr. Sewell would make him eligible for an unreduced retirement benefit. |
50
INCORPORATION RELATING TO THE COMPANY’S RIGHTS WITH RESPECT TO
COMMON STOCK HELD BY FOREIGN PERSONS
• | prohibit the NRC from issuing any license or certificate to us if it determines that (1) we are owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government; or (2) the issuance of such a license or certificate of compliance would be inimical to the common defense and security of the United States or the maintenance of a reliable and economical domestic source of enrichment services; and | |
• | prevent us from gaining access to classified information if we are under foreign ownership, control or influence. |
• | “Foreign Persons,” which include (1) an individual who is not a citizen of the United States; (2) a partnership in which any general partner is a Foreign Person or the partner or partners having a majority interest in partnership profits are Foreign Persons; (3) a foreign government or representative thereof; (4) a corporation, partnership, trust, company, association or other entity organized or incorporated under the laws of a jurisdiction outside of the United States; and (5) a corporation, partnership, trust, company, association or other entity that is controlled directly or indirectly by any one or more of the foregoing; | |
• | a “Contravening Person,” which is (1) a person having a significant commercial relationship with respect to uranium or uranium products with any person incorporated, organized or having its principal place of business outside of the United States that is in the business of enriching uranium for use by nuclear reactors or any person incorporated, organized or having its principal place of business outside of the United States that is in the business of creating a fissile product capable of use as a fuel source for nuclear reactors in lieu of enriched uranium; or (2) any person incorporated, organized or having its principal place of business outside of the United States that is in the business of enriching uranium for use by nuclear reactors or any person incorporated, organized or having its principal place of business outside of the United States that is in the business of creating a fissile product capable of use as a fuel source for nuclear reactors in lieu of enriched uranium or any person affiliated with such a person in such a manner as to warrant application of the foreign ownership restrictions to such person. |
51
• | Information Request. If we have reason to believe that the ownership or proposed ownership of, or exercise of rights with respect to, our securities by any person, including record holders, beneficial owners and any person presenting our securities for transfer into its name may be inconsistent with, or in violation of the Foreign Ownership Restrictions, we may request of such person, and require such person to promptly furnish to us, such information as we reasonably request to determine whether such ownership is in compliance with the Foreign Ownership Restrictions. Further, we may request any person that has filed a Schedule 13D, Schedule 13G or a Schedule TO with the Securities and Exchange Commission, or SEC, with respect to our securities to provide us such information as the Board of Directors may require to confirm that such person’s plans or proposals as disclosed in such filing will not result in a violation of the Foreign Ownership Restrictions. | |
• | Suspension of Voting Rights; Refusal to Transfer. If any person, including a proposed transferee, from whom information is requested should fail to respond to us or if we conclude that the ownership of, or the exercise of any rights of ownership with respect to, our securities by any person could result in any inconsistency with, or violation of, the Foreign Ownership Restrictions, we may, for so long as we determine necessary, (1) refuse to permit the transfer of our securities to such proposed transfereeand/or (2) suspend or limit voting rights associated with stock ownership by such person, or proposed transferee, if our Board of Directors in good faith believes that the exercise of such voting rights would result in any inconsistency with, or violation of, the Foreign Ownership Restrictions. | |
• | Redemption/Exchange. In addition, any shares of common stock held or beneficially owned by a Foreign Person or a Contravening Person are subject to redemption or exchange by us by action of the Board of Directors, pursuant to Section 151 of the DGCL, or any other applicable provision of law, to the extent necessary in the judgment of the Board of Directors to comply with the Foreign Ownership Restrictions. The terms and conditions of such redemption will be as follows: |
• | the redemption price of the shares of common stock to be redeemed will be equal to the fair market value of the shares of common stock to be redeemed, as determined by the Board of Directors in good faith unless the Board of Directors determines that the holder of such shares of common stock knew or should have known its ownership or beneficial ownership would constitute a violation of the Foreign Ownership Restrictions, in which case the redemption price will be equal to the lower of (1) the fair market value of the shares of common stock to be redeemed and (2) such Foreign Person’s or Contravening Person’s purchase price for such shares of common stock; | |
• | the redemption price of such shares of common stock may be paid in cash, securities or any combination thereof and the value of any securities constituting all, or any part of, the redemption price will be determined by the Board of Directors in good faith; | |
• | if less than all the shares of common stock held or beneficially owned by Foreign Persons are to be redeemed, the shares of common stock to be redeemed will be selected in any manner determined by the Board of Directors to be fair and equitable; |
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• | at least 30 days’ written notice of the redemption date will be given to the record holders of the shares of common stock selected to be redeemed (unless waived in writing by any such holder), provided that the redemption date may be the date on which written notice will be given to record holders if the cash or redemption securities necessary to effect the redemption has been deposited in trust for the benefit of such record holders and subject to immediate withdrawal by them upon surrender of the stock certificates for their shares of common stock to be redeemed, duly endorsed in blank or accompanied by duly executed proper instruments of transfer; | |
• | from and after the redemption date, the shares of common stock to be redeemed will cease to be regarded as outstanding and any and all rights attaching to such shares of common stock will cease and terminate, and the holders will be entitled only to receive the cash or securities payable upon redemption; and | |
• | the redemption will be subject to such other terms and conditions as the Board of Directors may determine. |
• | We are authorized to take any other action we may deem necessary or appropriate to ensure compliance with the Foreign Ownership Restrictions, including suspending or limiting any and all rights of stock ownership which may violate or be inconsistent with the Foreign Ownership Restrictions. Further, we may exercise any and all appropriate remedies, at law or in equity in any court of competent jurisdiction, against any holder of our securities or rights with respect thereto or any proposed transferee, with a view towards obtaining information or preventing or curing any situation which would cause any inconsistency with, or violation of, the Foreign Ownership Restrictions. | |
• | Additional Provisions. We may note on the certificates of our securities that the shares of common stock represented by such certificates are subject to the Foreign Ownership Restrictions. Our Board of Directors has the exclusive right to interpret all issues relating to the Foreign Ownership Restrictions and the determinations of the Board of Directors are final and binding. The Board of Directors may, at any time and from time to time, adopt such other or additional reasonable procedures as the Board of Directors may deem desirable or necessary to comply with the Foreign Ownership Restrictions. Any amendment to the Foreign Ownership Restrictions requires the affirmative vote of the majority of the members of the Board of Directors then in office as well as the affirmative vote of two-thirds of the outstanding voting stock. |
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• | extend the term Foreign Ownership Review Event to apply to beneficial ownership of any class of our equity securities, rather than only our common stock; | |
• | modify the term Foreign Ownership Review Event to include beneficial ownership of our equity securities by any one Foreign Person rather than beneficial ownership by all Foreign Persons in the aggregate and establish the beneficial ownership threshold for any Foreign Person that constitutes a Foreign Ownership Review Event as 5% of the issued and outstanding shares of any class of our equity securities, 5% in voting power of the issued and outstanding shares of all classes of our equity securities, or less than 5% if such Foreign Person can control the appointment and tenure of any of our management positions or directors; and | |
• | eliminate as a Foreign Ownership Review Event the acquisition of control in a transaction in which the financing of such acquisition will involve the receipt of money from a Foreign Person that is more than 10% of the purchase price of our securities that are purchased by such Foreign Persons. |
• | the securities held by any record or beneficial owner of securities held by a person may not be transferred to a proposed transferee; and | |
• | a person shall not be entitled to vote or direct the vote of securities held of record or beneficially owed by such person on any or specified matters. |
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• | Statutory Acquisition Restriction: The proposed amendment removes from the certificate of incorporation the provision restricting the acquisition of beneficial ownership by a person or group of securities representing more than 10% of the total votes of all of our outstanding securities from the date of our initial public offering until the third anniversary of such date (which date was July 2001). This restriction was removed due to the fact that it has expired by its terms. | |
• | Contravening Person: The proposed amendment modifies the definition of Contravening Person by changing the phrase “having a significant commercial relationship with” to “acting as an agent for.” This change narrows the definition, which we believe is currently over-inclusive and captures relationships that are not prohibited by the regulations applicable to us. This modification clarifies the intent of the regulatory restrictions to focus on persons who are acting for and on behalf of a foreign enrichment provider rather than including persons or entities that are simply doing business with a foreign enrichment provider. | |
• | Applicability to all classes of equity securities: The proposed amendment makes the ownership thresholds applicable to all classes of our equity securities rather than limiting them to our common stock. We believe this change is needed to give us the flexibility necessary to comply with the regulations applicable to us, including with respect to types of securities that were not contemplated at the time Article Eleventh was originally drafted. | |
• | Other conforming amendments: In addition, the proposed amendment includes other changes necessary to conform and clarify the remaining provisions of Article Eleventh, aligning them with the changes described above. |
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1. | Unless the Board determines that the exercise of rights under our certificate of incorporation is necessary to maintain our regulatory compliance (whether as a result of a request or order of a regulatory authority or otherwise), the Board will first seek to maintain our regulatory compliance by limiting the voting rights of any such Foreign Person. | |
2. | To the extent that the Board determines that the exercise of our right of redemption or exchange is necessary to maintain our regulatory compliance (whether as a result of a request or order of a regulatory authority or otherwise), such redemption or exchange shall be taken only to the extent necessary, in the judgment of the Board, to maintain such regulatory compliance or comply with such request or order, shall be settled only in cash and in no event will we avail ourselves of the Trust Redemption Right (unless otherwise required by law or to maintain our regulatory compliance). | |
3. | In no event will we exercise our right of redemption or exchange if the Board determines that such redemption or exchange is required to be made at the lesser of fair market value and the Foreign Person’s purchase price for the shares redeemed or exchanged. |
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ITEM 3. | APPROVAL OF PROPOSED AMENDMENT TO THE USEC INC. 1999 EMPLOYEE STOCK PURCHASE PLAN |
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Aggregate Number of | Aggregate Number of | |||||||
Shares Purchased | Shares Purchased | |||||||
under the Stock | under the Stock | |||||||
Purchase Plan in | Purchase Plan in | |||||||
the Fiscal Year | All Completed | |||||||
Name | Ended December 31, 2007 | Offering Periods | ||||||
Named Executive Officers: | ||||||||
John K. Welch | 0 | 0 | ||||||
President and CEO | ||||||||
John C. Barpoulis | 0 | 0 | ||||||
Senior Vice President and CFO | ||||||||
Philip G. Sewell | 0 | 0 | ||||||
Senior Vice President, American Centrifuge and Russian HEU | ||||||||
Robert Van Namen | 342 | 4,500 | ||||||
Senior Vice President, Uranium Enrichment | ||||||||
W. Lance Wright | 0 | 2,850 | ||||||
Senior Vice President, Human Resources and Administration | ||||||||
Total for All Executive Officers (10 persons) | 561 | 17,555 | ||||||
Non-Executive Director Group (9 persons) | N/A | N/A | ||||||
All employees who are not executive officers, as a group | 52,988 | 2,389,157 | ||||||
Total | 53,549 | 2,406,712 |
Number of | ||||||||||||
Securities to be | ||||||||||||
Issued Upon | Weighted-Average | Number of Securities | ||||||||||
Exercise of | Exercise Price of | Remaining Available | ||||||||||
Outstanding | Outstanding | for Future Issuance | ||||||||||
Options, Warrants | Options, Warrants | Under Equity | ||||||||||
Plan category | and Rights | and Rights | Compensation Plans | |||||||||
Equity compensation plans approved by security holders | 1,318,000 | $ | 10.23 | 7,191,000 | (1) | |||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 1,318,000 | 7,191,000 | ||||||||||
(1) | Includes 7,098,000 shares available for issuance under the USEC Inc. 1999 Equity Incentive Plan (net of awards which terminate or are cancelled without being exercised or that are settled for cash) and 93,000 shares (rounded) available for issuance under the Stock Purchase Plan. |
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Amount Billed | Amount Billed | |||||||
for Year Ended | for Year Ended | |||||||
Type of Fee | December 31, 2007 | December 31, 2006 | ||||||
(In thousands) | (In thousands) | |||||||
Audit Fees(1) | $ | 1,048 | $ | 1,213 | ||||
Audit-Related Fees(2) | $ | 300 | $ | 13 | ||||
Tax Fees(3) | $ | 99 | $ | 108 | ||||
All Other Fees(4) | $ | 2 | $ | 3 | ||||
Total | $ | 1,449 | $ | 1,337 | ||||
(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. | |
(2) | Securities issuance efforts in 2007; SEC comment letter in 2007; and compliance report for utility uranium pricing in 2006. | |
(3) | Primarily services related to selected tax projects for both periods and IRS audit assistance for both periods. | |
(4) | Service fee for access to electronic publication. |
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TO THE
CERTIFICATE OF INCORPORATION
OF
USEC INC.
A-1
A-2
A-3
A-4
By: |
A-5
TO THE
USEC INC. 1999 EMPLOYEE STOCK PURCHASE PLAN
By: |
Title: |
B-1
000004 | 000000000.000000 ext 000000000.000000 ext | |||||||||||
000000000.000000 ext 000000000.000000 ext | ||||||||||||
000000000.000000 ext 000000000.000000 ext | ||||||||||||
MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 | Electronic Voting Instructions You can vote by Internet or telephone! Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 10:00 a.m., Eastern Daylight Time, on April 24, 2008. | |||||||||||
Vote by Internet • Log on to the Internet and go to www.envisionreports.com/USU | ||||||||||||
• Follow the steps outlined on the secured website. | ||||||||||||
Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the United States, Canada & Puerto Rico any time on a touch tone telephone. There is NO CHARGE to you for the call. | ||||||||||||
• Follow the instructions provided by the recorded message. | ||||||||||||
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. | x |
Annual Meeting Proxy Card | C0123456789 | 12345 | ||||||
A | Proposals — The Board of Directors recommends a vote FOR each of the listed nominees and FOR Proposal 2, 3, and 4. | |||||||||||||||||
1. Election of Directors: | For | Withhold | For | Withhold | For | Withhold | + | |||||||||||
01 - James R. Mellor | o | o | 02 - Michael H. Armacost | o | o | 03 - Joyce F. Brown | o | o | ||||||||||
04 - Joseph T. Doyle | o | o | 05 - H. William Habermeyer | o | o | 06 - John R. Hall | o | o | ||||||||||
07 - William J. Madia | o | o | 08 - W. Henson Moore | o | o | 09 - Joseph F. Paquette, Jr. | o | o | ||||||||||
10 - John K. Welch | o | o |
For | Against | Abstain | For | Against | Abstain | |||||||||||||
2. | The approval of a proposed amendment to the Company’s Certificate of Incorporation relating to the Company’s rights with respect to common stock held by foreign persons. | o | o | o | 3. | The approval of a proposed amendment to the USEC Inc. 1999 Employee Stock Purchase Plan. | o | o | o | |||||||||
4. | To ratify the appointment of PricewaterhouseCoopers LLP as USEC’s independent auditors for 2008. | o | o | o | ||||||||||||||
B | Non-Voting Items | |||
Change of Address — Please print new address below. | ||||
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C | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below |
n | C 1234567890 1 U P X | J N T 0 1 6 8 4 5 1 | MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND | + |
<STOCK#> 00UL4C
FOR THE 2008 ANNUAL MEETING OF USEC SHAREHOLDERS