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SECURITIES AND EXCHANGE COMMISSION
Exchange Act of 1934 (Amendment No. )
Filed by a Party other than the Registranto
o | Preliminary Proxy Statement | |
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QUANEX BUILDING PRODUCTS CORPORATION | January 23, 2009 | |
1900 West Loop South | Dear Fellow Stockholder: | |
Suite 1500 | ||
Houston, Texas 77027 (713) 961-4600 | You are cordially invited to attend the Company’s Annual Meeting of Stockholders to be held at 8:00 a.m., C.S.T., on Thursday, February 26, 2009, at the Company’s principal executive offices at 1900 West Loop South, 15th Floor, Houston, Texas. | |
This year you will be asked to vote in favor of the election of two directors and in favor of the material terms of the performance criteria for annual incentive awards, performance stock awards and performance unit awards under the Quanex Building Products Corporation 2008 Omnibus Incentive Plan (the “Omnibus Plan”). These proposals are more fully explained in the attached proxy statement, which you are encouraged to read. | ||
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH PROPOSAL OUTLINED IN THE ATTACHED PROXY, AND URGES YOU TO VOTE AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. | ||
Thank you for your cooperation. | ||
Sincerely, | ||
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David D. Petratis | ||
Chairman of the Board |
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(1) | To elect two directors to serve until the Annual Meeting of Stockholders in 2012; | ||
(2) | To approve the material terms of the performance criteria for annual incentive awards, performance stock awards and performance unit awards under the Quanex Building Products Corporation 2008 Omnibus Incentive Plan; and | ||
(3) | To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. |
By order of the Board of Directors, | ||
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Kevin P. Delaney | ||
Senior Vice President – General Counsel | ||
and Secretary |
January 23, 2009
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To Be Held February 26, 2009
FOR THE ANNUAL MEETING TO BE HELD ON FEBRUARY 26, 2009:
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Director | ||||||||||
Principal Occupation | Age | Since | ||||||||
Nominees for election for terms expiring at the 2012 Annual Meeting (Class II Directors) | ||||||||||
Donald G. Barger, Jr. | Retired since 2008 from YRC Worldwide Inc. (formerly Yellow Roadway Corporation), a provider of transportation services throughout North America and other international markets (Overland Park, Kansas) | 65 | 2007 | |||||||
David D. Petratis | President and Chief Executive Officer, Quanex Building Products Corporation | 51 | 2008 | |||||||
Directors whose terms expire at the 2011 Annual Meeting(Class I Directors) | ||||||||||
Susan F. Davis | Executive Vice President of Human Resources of Johnson Controls, Inc., a global leader in automotive systems, battery technology and building controls (Milwaukee, Wisconsin) | 55 | 2007 | |||||||
Joseph D. Rupp | Chairman, President and Chief Executive Officer of Olin Corporation, a basic materials company concentrated in chemicals and ammunition (Clayton, Missouri) | 58 | 2007 | |||||||
Directors whose terms expire at the 2010 Annual Meeting (Class III Directors) | ||||||||||
Joseph J. Ross | Retired since 2004 from Federal Signal Corporation, a manufacturer of safety and communications equipment and specialty vehicles (Oak Brook, Illinois) | 63 | 2007 | |||||||
Richard L. Wellek | Retired since 1999 from Varlen Corporation, a manufacturer of engineered products supplying the railroad, light vehicle, and heavy duty truck markets (Naperville, Illinois) | 70 | 2007 |
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• | individually, alternatively, or in any combination; |
• | with respect to the Company, one or more business units, or any combination of the foregoing; |
• | on an absolute basis, or relative to a target, to a designated comparison group, to results in other periods, or to other external measures; and |
• | including or excluding items that could affect the measurement, such as extraordinary or unusual and nonrecurring gains or losses, litigation or claim judgments or settlements, material changes in tax laws, acquisitions, divestitures, the cumulative effect of accounting changes, asset write-downs, restructuring charges, or the results of discontinued operations. |
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Maximum Number of Shares of | ||||
Common Stock That May be Granted to | ||||
Type of Award | a Participant During a Fiscal Year | |||
Option | 350,000 | |||
SAR | 350,000 | |||
Performance/Restricted Stock | 175,000 | |||
Performance Unit Payable in Stock | 175,000 |
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Name and Age | Office and Length of Service | |
David D. Petratis, 51 | Chairman of the Board, President and Chief Executive Officer since 2008 | |
Brent L. Korb, 36 | Senior Vice President — Finance and Chief Financial Officer since 2008 | |
Kevin P. Delaney, 47 | Senior Vice President — General Counsel and Secretary since 2007 | |
Jairaj T. Chetnani, 37 | Vice President — Treasurer since 2008 | |
Paul A. Hammonds, 52 | Vice President — Corporate Development since 2007 | |
Deborah M. Gadin, 39 | Vice President — Corporate Controller since 2008 |
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• | Annual Cash Retainer(1) — $40,000/year paid quarterly |
• | Board Meeting Fees(1) — $1,500/meeting ($1,250/telephonic meeting) |
• | Committee Meeting Fees(1) — $1,250/meeting |
• | Committee Chairman Fees(1) |
• | $15,000/year paid quarterly to the chairman of the Nominating and Corporate Governance Committee (who also serves as the lead director) |
• | $10,000/year paid quarterly to the chairmen of the Audit Committee and Compensation and Management Development Committee |
• | Executive Committee Chair receives no extra pay |
• | Annual Stock Retainer(2) — Equivalent value of $25,000 in restricted stock units and equivalent value of $50,000 in options to purchase shares of the Company’s common stock. Both the restricted stock units and the stock options vest immediately upon issuance on October 31, however the restricted stock units are restricted until the director ceases to serve in such role. |
• | Initial Stock Option Grant(2) — Following the first full year of service as a director, each non-employee director receives an initial stock option grant to purchase 5,000 shares of the Company’s common stock. These options vest immediately. |
• | Initial Transaction-Related Stock Option Grant — Directors who served as directors of Quanex Corporation received an initial stock option grant of 10,000 options on the date the Company was spun off from Quanex Corporation. |
• | Messrs. Barger and Ross received an equivalent value of $40,000 in restricted stock units for serving on the CEO Search Committee. |
• | Expense Reimbursement — Directors are reimbursed for their expenses relating to attendance at meetings. |
1. | Non-employee directors are permitted to defer all or any part of their cash retainers and fees under the Quanex Building Products Corporation Deferred Compensation Plan (the “DC Plan”). These deferrals are placed into notional accounts maintained under the DC Plan and are deemed invested in cash, units denominated in Common Stock, or any of the accounts available under the Company’s qualified 401(k) plan, as the director elects. If a director elects to make a deferral to his or her notional common stock unit account for a period of three full years or more, a matching award equal to 20% of the amount deferred is made by the Company to the director’s notional account. The number of units that is deemed invested in Company common stock units and credited to a director’s notional account is equal to the number of shares of Common Stock that could have been purchased with the dollar amount deferred or matched based on the closing price of the Common Stock on the New York Stock Exchange on the date the amount would have been paid had it not been deferred. If a dividend or other distribution is declared and paid on Common Stock, for each notional common stock unit credited to a director’s account a corresponding credit will be accrued in the director’s notional matching account. Except with respect to matching deferrals (and dividend deferrals, if any), all director deferrals are 100% vested. Matching deferrals (and dividend deferrals, if any) are 100% vested, unless a director receives a distribution from the DC Plan for any reason, other than death, disability or retirement, within three years after a deferral was credited to his or her notional common stock unit account. If a director receives such a distribution from the DC Plan, any matching amount corresponding to the deferral that has been credited for less than three years, plus any dividends or other distributions that correspond to such matching amount, will be forfeited. No payments may be made under the DC Plan until a distribution is permitted in accordance with the terms of the DC Plan. In the event of a “change of control” of the Company, any amount credited to a director’s account is fully vested and is payable in cash within five days after the change of control occurs. A “change in control” is defined generally as (i) an acquisition of securities resulting in an individual or entity or group thereof becoming, directly or indirectly, the beneficial owner of 20% or more of either (a) the Company’s then-outstanding Common Stock or (b) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors, (ii) a change in a majority of the persons who were members of the Board of Directors as of December 12, 2007 (the “Incumbent Board”), (iii) generally, a reorganization, merger or consolidation or sale of the Company or disposition of all or substantially all of the assets of the Company, or (iv) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. For this purpose, an individual will be treated as a member of the Incumbent Board if he becomes a director subsequent to December 12, 2007, and his election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board; unless his initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, entity or group other than the Board. All distributions under the DC Plan will be made in cash. Any deferral or payment permitted under the DC Plan will be administered in a manner that is intended to comply with Section 409A of the Internal Revenue Code of 1986. |
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2. | Restricted stock unit grants and stock option grants are issued from the Quanex Building Products Corporation 2008 Omnibus Incentive Plan. |
Change in | ||||||||||||||||||||||||||||
Pension Value & | ||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||
Fees Earned | Deferred | |||||||||||||||||||||||||||
or Paid in | Stock | Option | Compensation | All Other | ||||||||||||||||||||||||
Cash(2) | Awards(3) | Awards(3) | Earnings(4) | Compensation(5) | Total | |||||||||||||||||||||||
Name | Year(1) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Donald G. Barger, Jr. | 2008 QBP | 34,500 | 45,818 | 85,494 | — | 8,955 | 174,767 | |||||||||||||||||||||
2008 Pred | 38,250 | 17,630 | 958,158 | — | 171,569 | 1,185,607 | ||||||||||||||||||||||
Susan F. Davis | 2008 QBP | 32,000 | 24,998 | 85,494 | — | 6,564 | 149,056 | |||||||||||||||||||||
2008 Pred | 35,000 | 17,630 | 561,703 | — | 98,652 | 712,985 | ||||||||||||||||||||||
Joseph J. Ross | 2008 QBP | 35,750 | 45,818 | 85,494 | — | 7,450 | 174,512 | |||||||||||||||||||||
2008 Pred | 36,250 | 17,630 | 1,270,663 | — | 43,733 | 1,368,276 | ||||||||||||||||||||||
Joseph D. Rupp | 2008 QBP | 25,750 | 24,998 | 85,494 | — | 164 | 136,406 | |||||||||||||||||||||
2008 Pred | 30,750 | 7,909 | 81,565 | — | 170 | 120,394 | ||||||||||||||||||||||
Richard L. Wellek | 2008 QBP | 30,750 | 24,998 | 85,494 | — | 6,314 | 147,556 | |||||||||||||||||||||
2008 Pred | 37,000 | 17,630 | 844,042 | — | 7,779 | 906,451 |
(1) | Quanex Building Products Corporation spun off from Quanex Corporation on April 23, 2008. Director compensation for the period from November 1, 2007 to April 22, 2008 relates to Quanex Corporation, the Company’s predecessor, and is denoted as “2008 Pred”. Director compensation for the period from April 23, 2008 to October 31, 2008 relates to Quanex Building Products Corporation and is denoted as “2008 QBP”. Compensation in 2008 from Quanex Corporation also reflects items specifically resulting from the spin-off and merger transactions. | |
(2) | Amounts shown reflect fees earned by the directors from Quanex Building Products Corporation and its predecessor during fiscal year 2008. During fiscal 2008, Ms. Davis and Messrs. Barger, Ross, and Wellek elected to defer cash compensation of $67,000, $72,750, $72,000, and $67,750, respectively, under the DC Plan in the form of notional common stock units, and their accounts were credited with 2,634, 2,848, 2,870, and 2,598 notional common stock units, respectively. | |
(3) | These columns show respectively, the dollar amounts for restricted stock units and stock options recognized for financial statement reporting purposes with respect to fiscal year 2008 in accordance with FAS 123(R). Director grants vest immediately and as such are expensed on the date of grant. The stock-based compensation expense prior to the spin-off on April 23, 2008 was driven by stock awards issued by the Company’s predecessor, Quanex Corporation. All predecessor stock options and stock awards were settled just prior to completion of the spin-off on April 23, 2008, as set forth in the various operative agreements relating thereto. These predecessor awards had been received by the directors during their respective years of service as members of the Quanex Corporation Board of Directors; Ms. Davis and Messrs. Barger, Ross, Rupp and Wellek served 10 years, 13 years, 7 years, 1 year and 5 years, respectively. These predecessor stock options were effectively modified for financial reporting purposes pursuant to FAS 123(R), resulting in incremental fair value and expense. The following incremental compensation expense from this modification is reported in the rows denoted as “2008 Pred” as it relates to the Company’s predecessor: |
Option | ||||
Awards | ||||
Name | ($) | |||
Barger | 958,158 | |||
Davis | 561,703 | |||
Ross | 1,270,663 | |||
Rupp | — | |||
Wellek | 844,042 |
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Restricted Stock Units | Stock Options | |||||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||||
Grant Date | as of October | Grant Date | as of October | |||||||||||||||||
Fair Value | 31, 2008 | Fair Value | 31, 2008 | |||||||||||||||||
Name | Period | ($) | (#) | ($) | (#) | |||||||||||||||
Barger | 2008 QBP | 65,002 | (i) | 5,002 | 85,494 | 20,421 | ||||||||||||||
2008 Pred | — | — | — | — | ||||||||||||||||
Davis | 2008 QBP | 24,998 | 2,729 | 85,494 | 20,421 | |||||||||||||||
2008 Pred | — | — | — | — | ||||||||||||||||
Ross | 2008 QBP | 65,002 | (i) | 5,002 | 85,494 | 20,421 | ||||||||||||||
2008 Pred | — | — | — | — | ||||||||||||||||
Rupp | 2008 QBP | 24,998 | 2,729 | 85,494 | 20,421 | |||||||||||||||
2008 Pred | — | — | 81,565 | (ii) | — | |||||||||||||||
Wellek | 2008 QBP | 24,998 | 2,729 | 85,494 | 20,421 | |||||||||||||||
2008 Pred | — | — | — | — |
(i) | During fiscal 2008, Messrs. Barger and Ross each received an equivalent value of $40,000 in restricted stock units for their service on the CEO Search Committee. | ||
(ii) | Amount reported represents an initial stock option grant for Mr. Rupp’s first full year of service as a director of Quanex Corporation. |
(4) | The Company does not provide a pension plan for non-employee directors. None of the directors received preferential or above-market earnings on deferred compensations. | |
(5) | Amounts shown represent (a) the dollar value of the Company’s matching awards made in the form of notional common stock units, pursuant to the terms of the Company’s Deferred Compensation Plan, (b) dividends on outstanding restricted stock units, (c) premiums paid by Quanex Building Products Corporation on Mr. Barger’s life insurance policy, and (d) payments to Messrs. Barger and Ross and Ms. Davis for settlement of their accounts under Quanex Corporation’s Frozen Non-Employee Director Retirement Plan in connection with the spin-off and merger transactions in April 2008. Messrs. Barger and Ross received $163,540 and $36,104, respectively, and Ms. Davis received $91,274 for their Non-Employee Director Retirement Plan settlement. |
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• | To provide competitive total compensation opportunity to our executives; | ||
• | To attract executives who are qualified to perform the duties of their jobs; | ||
• | To retain executives over the long term; and | ||
• | To provide incentives for executives to focus their attention and efforts on achieving goals related to creating long term shareholder value. |
Name | Principal Position(s) | Term | ||
Current Executives | ||||
David D. Petratis | Chairman, President & CEO President & CEO | December 5, 2008 — Present July 1, 2008 — December 5, 2008 | ||
Brent L. Korb* | SVP — Finance & CFO Vice President — Corporate Controller | August 1, 2008 — Present April 23, 2008 ** — June 13, 2008 | ||
Kevin P. Delaney | SVP — General Counsel & Secretary | April 23, 2008 ** — Present | ||
Paul A. Hammonds | VP — Corporate Development | April 23, 2008 ** — Present | ||
Former Executives | ||||
Raymond A. Jean | Chairman, President & CEO Executive Chairman | April 23, 2008 ** — July 1, 2008 July 1, 2008 — December 5, 2008 | ||
Thomas M. Walker | SVP — Finance & CFO | April 23, 2008 ** — July 31, 2008 | ||
John J. Mannion | VP — Treasurer | April 23, 2008 ** — November 30, 2008 |
* | Mr. Korb resigned from his position as Vice President — Corporate Controller, effective June 13, 2008. He was re-hired effective August 1, 2008 to assume the role of SVP — Finance & CFO. | |
** | The officers of Quanex Building Products Corporation were initially elected as officers on December 12, 2007. They did not become official employees of the Company, however, until completion of the transaction on April 23, 2008. |
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Actuant Corp. | Eagle Materials Inc.* | Louisiana-Pacific Corp.* | ||
Albany International Corp. | Encore Wire Corp. | NCI Building Systems Inc.* | ||
American Woodmark Corp.* | EnPro Industries Inc. | Nordson Corp. | ||
Apogee Enterprises Inc. * | Freightcar America Inc. | Olympic Steel Inc. | ||
Astec Industries Inc. | Gibraltar Industries Inc.* | Simpson Manufacturing Inc.* | ||
Builders Firstsource Inc.* | Griffon Corporation* | Superior Industries International | ||
Building Materials Holding Corporation** | Global Industries Ltd. | Texas Industries Inc. | ||
Castle (A M) & Co. | Graco Inc. | Titan International Inc. | ||
CLARCOR Inc. | Greenbrier Companies Inc. | Trex Company, Inc.* | ||
Compass Minerals International Inc. | H&E Equipment Services Inc. | Wabash National Corp. | ||
Drew Industries Inc.* | Headwaters Inc. | Watts Water Technologies Inc. |
* | The eleven companies in the Reference Group identified by the asterisk are those we consider more traditional peers (i.e., Industry Reference Group). These companies will be used by the Compensation Committee to evaluate Company performance as they tend to best reflect the operational and financial performance of our industry. | |
** | Building Materials Holding Corporation was delisted as of October 29, 2008. It was used in the Company’s executive compensation analysis prior to being delisted. Going forward, it will be eliminated from the peer group. |
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Name and Principal Position | Annual Base Salary ($) | |||
David D. Petratis | 700,000 | |||
Chairman, President and CEO | ||||
Brent L. Korb | 325,000 | |||
Senior Vice President — Finance and CFO | ||||
Kevin P. Delaney | 265,000 | |||
Senior Vice President — General Counsel and Secretary | ||||
Paul A. Hammonds | 195,000 | |||
Vice President — Corporate Development | ||||
John J. Mannion* | 165,000 | |||
Vice President — Treasurer |
* | Mr. Mannion’s employment ended with the Company, effective November 30, 2008. His replacement as Vice President — Treasurer began his employment with the Company on December 1, 2008, and earns an Annual Base Salary of $200,000. |
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Goal | Threshold | Target | Maximum | Actual Results | ||||||||||||
Return on Net Assets | 12.1 | % | 17.8 | % | 23.1 | % | 14.0 | % |
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Expressed as a % of Salary
Participant | Threshold | Target | Maximum | |||||||||
CEO | 25.00 | % | 100.00 | % | 200.00 | % | ||||||
SVPs | 18.75 | % | 75.00 | % | 150.00 | % | ||||||
VPs | 10.00 | % | 40.00 | % | 80.00 | % |
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Target Award Levels
Current Long-Term | ||||
Incentive Target | ||||
Multiple of Base | ||||
Title | Salary | |||
Chairman, President and CEO | 300 | % | ||
Senior Vice President — Finance and CFO | 200 | % | ||
Senior Vice President — General Counsel and Secretary | 200 | % | ||
Vice Presidents | 70 | % |
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Number of Shares of | ||||||||
Number of Securities Underlying | Restricted Stock | |||||||
Name | Options Granted (#) | Awarded (#) | ||||||
Raymond A. Jean * | 290,115 | 102,552 | ||||||
Chairman, President and Chief Executive Officer | ||||||||
Thomas M. Walker ** | 121,931 | 38,991 | ||||||
Senior Vice President — Finance and Chief Financial Officer | ||||||||
Kevin P. Delaney | 104,809 | 29,897 | ||||||
Senior Vice President — General Counsel and Secretary | ||||||||
Paul A. Hammonds | 57,316 | 13,417 | ||||||
Vice President — Corporate Development | ||||||||
Brent L. Korb ** | 58,546 | 14,071 | ||||||
Vice President — Corporate Controller | ||||||||
John J. Mannion ** | 41,271 | 9,862 | ||||||
Vice President — Treasurer |
* | In connection with his retirement in December 2008, Mr. Jean forfeited all of these restricted stock awards, and all but 60,000 of the stock option awards. | |
** | In connection with their respective departures from the Company, Messrs. Walker, Korb and Mannion forfeited these restricted stock and stock option awards in their entirety. |
Relative Total Shareholder | EPS Growth | Performance Unit Value | ||||||||||||||||||||||
Milestones | Return Percentile | 3 yr. cum. | Percent | R-TSR | EPS | Total | ||||||||||||||||||
Maximum | 75 | % | 2.66 | 12 | % | $ | 100.00 | $ | 100.00 | $ | 200.00 | |||||||||||||
Target | 60 | % | 2.52 | 9 | % | $ | 50.00 | $ | 50.00 | $ | 100.00 | |||||||||||||
Threshold | 40 | % | 2.38 | 6 | % | $ | 37.50 | $ | 37.50 | $ | 75.00 |
• | Initial restricted stock grant of 40,000 which cliff vests on the third anniversary of his employment. | ||
• | Initial stock option grant of 100,000, granted at fair market value, which vests in 1/3 increments on the 1st, 2nd and 3rd anniversaries of his employment. |
• | “Make Whole” restricted stock grant of 25,000 shares and cash payment of $750,000 for forfeited equity awards at his previous employer. The restricted shares vest in 1/3 increments on the 1st, 2nd and 3rd anniversaries of his employment. The cash payment was made on the date of his employment. |
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• | Initial restricted stock grant of 30,000 which cliff vests on the third anniversary of his employment. |
• | Initial stock option grant of 100,000, granted at fair market value, which vests in 1/3 increments on the 1st, 2nd and 3rd anniversaries of his employment. |
• | Retirement benefits.Our executives participate in the Company’s defined benefit pension plan, 401(k) defined contribution retirement plan, and supplemental executive retirement plans. Executives also receive company contributions under our 401(k) plan, a 20% match under our deferred compensation plan, a 15% match under our employee stock purchase program and dividends on unvested restricted stock. | ||
• | Life insurance benefits.Our executives participate in Company provided life insurance, the amount of which is based on a multiplier of their age and/or income. Our executives also have the opportunity to purchase supplemental life insurance. | ||
• | Perquisites. We provide our executives with certain perquisites which help us compete for executive talent, and in some cases, allow our executives to devote more attention to the business of the Company. These perquisites include financial and tax planning, company provided automobiles, club memberships and gross up payments equal to taxes payable on certain perquisites. |
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Level | Typical Executive Position | Stock Ownership Goal | ||
1 | CEO | 4x Base Salary | ||
2 | SVP | 2x Base Salary | ||
3 | VP | 1x Base Salary |
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• | Annual base salary and compensation for earned but unused vacation time accrued through the date of termination of employment; | ||
• | Pro rated amount equal to the greater of the executive officer’s (i) target performance bonus for the year of the termination of employment and (ii) performance bonus for the year immediately preceding the year of the termination of employment; | ||
• | Lump sum severance equal to 18 (Senior Vice Presidents) or 12 (Vice President) months’ of the executive’s base salary for the fiscal year in which the termination occurs; | ||
• | Continued participation in health and welfare plans and payment of benefit premiums for 18 (Senior Vice Presidents) or 12 (Vice Presidents) months; and | ||
• | All other perquisites to which the executive is entitled pursuant to the terms of the agreements providing for such perquisites. |
• | Base salary continuation for two years (at the rate in effect immediately preceding the date of termination), paid semi-monthly for 24 months; | ||
• | Pro-rated AIA bonus for the year of termination, as determined by the Board of Directors; and | ||
• | Continued participation in health and welfare plans and payment of benefit premiums (i.e., medical, dental, vision, life, disability and any other welfare plans he currently participates in) for 18 months. |
• | Any person or entity acquiring or becoming beneficial owner as defined in SEC regulations of 20% or more of (i) the then outstanding shares of common stock of the Company or (ii) the combined voting power of the then outstanding voting securities of the Company; | ||
• | Generally, our current directors ceasing to constitute a majority of our directors; | ||
• | Consummation of a merger, consolidation, or recapitalization (unless the directors continue to represent a majority of the directors on the board, more than 80% of the pre-spin-off ownership survives, and, in the event of a recapitalization, no person owns 20% or more of (i) the then outstanding shares of our common stock or (ii) the combined voting power of our then outstanding voting securities); | ||
• | The stockholders approve a complete liquidation or dissolution of the Company; or | ||
• | The sale, lease or disposal of substantially all of our assets. |
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• | the executive is assigned any duties inconsistent with his position; there is a change in his position, authority, duties or responsibilities; he is removed from, or not re-elected or reappointed to, any duties or position he previously held or was assigned or there is a material diminution in such position, authority, duties or responsibilities; | ||
• | the executive’s annual base salary is reduced; | ||
• | the executive’s annual bonus is reduced below a certain amount; | ||
• | the executive’s principal office is relocated outside of the portion of the metropolitan area of the City of Houston, Texas that is located within the highway known as “Beltway 8”; | ||
• | the executive’s benefits are reduced or terminated; | ||
• | any other non-contractual benefits that were provided to the executive or any material fringe benefit is reduced; | ||
• | the executive’s number of paid vacation days is reduced; | ||
• | the executive’s office space, related facilities and support personnel (including, but not limited to, administrative and secretarial assistance) are reduced or moved; | ||
• | the executive is required to perform a majority of his duties outside our principal executive offices for a period of more than 21 consecutive days or for more than 90 days in any calendar year; or | ||
• | any provision of any employment agreement with the executive is breached. |
• | Annual base salary and compensation for earned but unused vacation time accrued through the date of termination of employment; | ||
• | Pro rated amount equal to the greater of the executive officer’s (i) target performance bonus for the year of the termination of employment and (ii) performance bonus for the year immediately preceding the year of the termination of employment; | ||
• | Lump sum severance equal to three times (for the Chief Executive Officer and Senior Vice Presidents) or two times (for Vice Presidents) the sum of (i) base salary for the year of termination and (ii) the greater of the executive officer’s (x) target performance bonus for the year of the termination of employment and (y) performance bonus for the year immediately preceding the year of the termination of employment; | ||
• | Continued health and welfare benefits for the shorter of (i) three years from the date of termination or (ii) such time as the executive becomes fully employed; and | ||
• | All other perquisites to which the executive is entitled pursuant to the terms of the agreements providing for such perquisites. |
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• | all options to acquire common stock and all stock appreciation rights pertaining to common stock held by the executive immediately prior to a change in control would become fully exercisable; and | ||
• | all restrictions on any restricted common stock granted to the executive prior to the change in control would be removed and the stock would be freely transferable. |
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NQ | ||||||||||||||||||||||||||||||||||||
Pro- | Restricted | Deferred | Retirement | |||||||||||||||||||||||||||||||||
Severance | rated | Options | Stock | Health | Comp. | (SERP & | Tax | Total | ||||||||||||||||||||||||||||
Payment | Bonus | (Unvested) | (Unvested)(1) | Benefits(2) | (Unvested) | Restoration)(3) | Gross-Up | Benefit | ||||||||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
David D. Petratis(4) Enhanced Retirement(5) | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||
Death/Disability | n/a | 500,000 | — | 66,337 | n/a | — | n/a | n/a | 566,337 | |||||||||||||||||||||||||||
Involuntary w/o Cause | 1,400,000 | 500,000 | n/a | n/a | 18,604 | n/a | n/a | n/a | 1,918,604 | |||||||||||||||||||||||||||
Termination after Change in Control(6) | 4,200,000 | 500,000 | — | 595,400 | 79,891 | — | 192,525 | 1,678,364 | 7,246,180 | |||||||||||||||||||||||||||
Brent L. Korb Enhanced Retirement(5) | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||
Death/Disability | n/a | 41,941 | — | 22,837 | n/a | — | 582,382 | (7) | n/a | 647,160 | ||||||||||||||||||||||||||
Involuntary w/o Cause | 487,500 | 82,265 | n/a | n/a | 14,171 | n/a | n/a | n/a | 583,936 | |||||||||||||||||||||||||||
Termination after Change in Control(6) | 1,706,250 | 82,265 | — | 274,800 | 33,863 | — | 402,511 | 998,705 | 3,498,394 | |||||||||||||||||||||||||||
Kevin P. Delaney Enhanced Retirement(5) | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||
Death/Disability | n/a | 52,939 | — | 47,769 | n/a | — | 991,063 | (7) | n/a | 1,091,771 | ||||||||||||||||||||||||||
Involuntary w/o Cause | 397,500 | 103,835 | n/a | n/a | 17,328 | n/a | n/a | n/a | 518,663 | |||||||||||||||||||||||||||
Termination after Change in Control(6) | 1,391,250 | 103,835 | — | 273,857 | 91,190 | — | 869,672 | 783,401 | 3,513,205 | |||||||||||||||||||||||||||
Paul A. Hammonds Enhanced Retirement(5) | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||
Death/Disability | n/a | 20,778 | — | 21,437 | n/a | — | — | n/a | 42,215 | |||||||||||||||||||||||||||
Involuntary w/o Cause | 195,000 | 40,754 | n/a | n/a | 13,670 | n/a | n/a | n/a | 249,424 | |||||||||||||||||||||||||||
Termination after Change in Control(6) | 546,000 | 40,754 | — | 122,900 | 40,388 | — | — | — | 750,042 |
(1) | Unvested restricted shares granted under the Quanex Building Products 2008 Omnibus Incentive Plan are forfeited except upon Death, Disability or termination after a Change in Control. | |
(2) | Health Benefits paid upon involuntary termination without cause include company paid COBRA premiums. Health Benefits paid upon termination after Change in Control includes continuation of all welfare benefits. | |
(3) | See Narrative to “Pension Benefit Table” for further description of SERP and Restoration Plan. |
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(4) | Mr. Petratis is guaranteed an annual bonus of $500,000 for the 2008 fiscal year pursuant to his Offer Letter. | |
(5) | Messrs. Petratis, Korb, Delaney and Hammonds have not reached the minimum retirement requirement of 55 years of age and five years of service with the Company as of October 31, 2008. | |
(6) | These benefits would be provided upon termination by the Company without Cause as well as the Executives’ resignation for Good Reason in connection with a Change in Control. | |
(7) | These amounts represent the present value of the Retirement Benefit as of October 31, 2008. Retirement Benefit amounts for Messrs. Korb and Delaney under the SERP are in the event of Disability only. |
Retirement | Tax | |||||||||||||||||||||||||||||||||||
Severance | Pro-rated | Restricted | Health | NQ Deferred | (SERP & | Gross- | Total | |||||||||||||||||||||||||||||
Payment | Bonus(1) | Options | Stock(2) | Benefits | Compensation | Restoration)(3) | Up | Benefit | ||||||||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
Raymond A. Jean | ||||||||||||||||||||||||||||||||||||
Retirement — December 2008 | — | — | — | — | — | n/a | 4,067,339 | (4) | n/a | 4,067,339 | ||||||||||||||||||||||||||
Thomas M. Walker | ||||||||||||||||||||||||||||||||||||
Separation from Service — July 2008 | — | — | — | — | — | 243,022 | (4) | n/a | n/a | 243,022 | ||||||||||||||||||||||||||
John J. Mannion | ||||||||||||||||||||||||||||||||||||
Separation from Service — November 2008 | 165,000 | 5,425 | — | — | 14,636 | 161,362 | (4) | n/a | n/a | 346,423 |
�� | ||
(1) | The pro-rated bonus relates only to fiscal year 2009. No amounts were included for fiscal year 2008 because Messrs. Jean and Mannion were still employed on October 31, 2008 and Mr. Walker did not receive a 2008 bonus due to his departure prior to the year end. | |
(2) | Unvested restricted shares granted under the Quanex Building Products 2008 Omnibus Incentive Plan are forfeited except upon Death, Disability or termination after a Change in Control. | |
(3) | The SERP value provided for Mr. Jean is the total benefit amount payable on July 1, 2009. See Narrative to “Pension Benefit Table” for further description of the SERP and Restoration Plan. | |
(4) | Amounts to be paid under the Non-Qualified Deferred Compensation Plan or SERP were 100% vested upon the departure date. |
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Change in | ||||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | All Other | ||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | Compen- | ||||||||||||||||||||||||||||||
Salary | Bonus (2) | Awards (3) | Awards (3) | Compensation (4) | Earnings (5) | sation (6) | Total | |||||||||||||||||||||||||||
Name and Principal Position | Year (1) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||
David D. Petratis | 2008 QBP | 233,333 | 750,000 | 113,344 | 61,785 | 500,000 | 47,114 | 225,093 | 1,930,669 | |||||||||||||||||||||||||
Chairman of the Board, President | 2008 Pred | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
and Chief Executive Officer | 2007 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Brent L. Korb | 2008 QBP | 109,686 | — | 38,576 | 45,327 | 41,941 | 22,832 | 28,604 | 286,966 | |||||||||||||||||||||||||
Senior Vice President - | 2008 Pred | 82,568 | — | 153,566 | 324,839 | 116,509 | — | 5,438 | 682,920 | |||||||||||||||||||||||||
Finance & Chief Financial Officer | 2007 | 171,333 | — | 46,632 | 62,204 | 61,662 | 4,000 | 22,662 | 368,493 | |||||||||||||||||||||||||
Kevin P. Delaney | 2008 QBP | 138,447 | — | 78,660 | 96,107 | 52,939 | — | 24,186 | 390,339 | |||||||||||||||||||||||||
Senior Vice President - | 2008 Pred | 116,932 | — | 228,283 | 1,404,394 | 359,937 | — | 8,809 | 2,118,355 | |||||||||||||||||||||||||
General Counsel & Secretary | 2007 | 243,333 | — | 115,790 | 167,839 | 340,302 | 22,000 | 33,175 | 922,439 | |||||||||||||||||||||||||
Paul A. Hammonds | 2008 QBP | 101,886 | — | 35,312 | 52,555 | 20,778 | — | 20,228 | 230,759 | |||||||||||||||||||||||||
Vice President - | 2008 Pred | 87,341 | — | 59,539 | 598,024 | 120,354 | — | 5,604 | 870,862 | |||||||||||||||||||||||||
Corporate Development | 2007 | 182,333 | — | 20,541 | 63,103 | 65,621 | 16,000 | 20,674 | 368,272 | |||||||||||||||||||||||||
Raymond A. Jean | 2008 QBP | 386,818 | — | — | 314,640 | 197,212 | 220,681 | 99,145 | 1,218,496 | |||||||||||||||||||||||||
Former Chairman of the Board, | 2008 Pred | 353,182 | — | 91,983 | 9,890,164 | 1,621,222 | 202,195 | 9,424 | 12,168,170 | |||||||||||||||||||||||||
President & Chief Executive Officer | 2007 | 735,417 | — | 1,056,193 | 1,264,651 | 1,503,050 | 578,000 | 125,866 | 5,263,177 | |||||||||||||||||||||||||
Thomas M. Walker | 2008 QBP | 91,657 | — | — | — | — | — | 23,869 | 115,526 | |||||||||||||||||||||||||
Former Senior Vice President - | 2008 Pred | 159,886 | — | 338,445 | 524,472 | 361,479 | — | 3,119 | 1,387,401 | |||||||||||||||||||||||||
Finance & Chief Financial Officer | 2007 | 333,750 | — | 96,611 | 149,894 | 225,216 | 116,000 | 50,390 | 971,861 | |||||||||||||||||||||||||
John J. Mannion | 2008 QBP | 86,231 | — | — | — | 17,585 | — | 11,458 | 115,274 | |||||||||||||||||||||||||
Former Vice President - Treasurer | 2008 Pred | 76,364 | — | 55,262 | 542,491 | 111,511 | — | 4,464 | 790,092 | |||||||||||||||||||||||||
2007 | 159,583 | — | 19,396 | 78,428 | 57,433 | 6,000 | 14,916 | 335,756 |
(1) | Quanex Building Products Corporation spun off from Quanex Corporation on April 23, 2008. Compensation for the named executive officers for the period from November 1, 2007 to April 22, 2008 relates to Quanex Corporation, the Company’s predecessor, and is denoted as “2008 Pred”. Compensation for the named executive officers for the period from April 23, 2008 to October 31, 2008 relates to Quanex Building Products Corporation and is denoted as “2008 QBP”. Compensation in 2008 from Quanex Corporation reflects items specifically resulting from the spin-off transaction. Compensation for 2007 relates to Quanex Corporation. | |
(2) | As an inducement to join the Company, Mr. Petratis was provided with certain sign-on incentives, as discussed previously in the section titled “Special New-Hire Sign-On Awards”, located on page 28. One of said items was a “Make Whole” cash compensation of $750,000 for forfeited equity awards at his previous employer. |
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(3) | These columns show respectively, the expense dollar amounts for restricted stock and stock options recognized for financial statement reporting purposes with respect to fiscal years 2008 and 2007 in accordance with FAS 123(R). The stock-based compensation expense prior to the spin-off on April 23, 2008 was driven by stock awards issued by the Company’s predecessor, Quanex Corporation, and includes amounts for restricted stock and stock option grants in and prior to fiscal 2007. All predecessor unvested stock options and restricted shares vested as set forth in the various agreements that effected the spin-off and merger transactions that closed on April 23, 2008. Accordingly, these predecessor stock awards were effectively modified for financial reporting purposes pursuant to FAS 123(R) resulting in incremental fair value and expense. The following incremental compensation expense from this modification is reported in the rows denoted as “2008 Pred” as it relates to the Company’s predecessor: |
Stock | Option | |||||||
Awards | Awards | |||||||
Name | ($) | ($) | ||||||
Petratis | — | — | ||||||
Korb | 129,795 | 307,675 | ||||||
Delaney | 186,067 | 1,345,209 | ||||||
Hammonds | 49,277 | 581,769 | ||||||
Jean | — | 9,890,164 | ||||||
Walker | 289,651 | 444,952 | ||||||
Mannion | 45,597 | 527,891 |
As all predecessor restricted stock and option awards vested or were settled, respectively, prior to the spin-off, compensation expense for the period beginning April 23, 2008 (2008 QBP) reflects expense solely from awards issued by Quanex Building Products Corporation in 2008. A discussion of the assumptions used in calculating these values may be found in Note 14 to Quanex Building Products Corporation’s audited financial statements on Form 10-K for the year ended October 31, 2008. Expense is recognized over the course of the requisite service period unless the individual is eligible to retire prior to the end of the vesting period and the terms of the award allows vesting upon retirement. During fiscal 2007, stock options for Mr. Jean, who became eligible to retire in fiscal 2006, were expensed on the date of grant as a result of his retirement eligibility and as those awards did not require additional service to vest upon retirement. Of the awards granted to Mr. Jean by Quanex Building Products in 2008, 60,000 stock options were retirement eligible. Accordingly, Mr. Jean’s stock and option compensation expense for 2008 QBP represents only those 60,000 stock option awards, as all other awards granted by the Company were forfeited upon Mr. Jean’s retirement in December 2008. Additionally, there is zero stock and option compensation expense reported in 2008 QBP for Mr. Walker and Mr. Mannion, as all awards granted to them by the Company were forfeited upon their respective departures from the Company. | ||
These amounts also reflect the Company’s accounting expense for these awards and do not necessarily correspond to the actual value that may be recognized by named executive officers. For information regarding the restricted stock and option awards granted in fiscal 2008, please see the “Grants of Plan-Based Awards” table located on page 40. | ||
(4) | “2008 QBP” amounts represent payments made in December 2008 for performance from April 23, 2008 to October 31, 2008 for Annual Incentive Awards (AIA). “2008 Pred” amounts consist of (a) AIA payments made in April 2008 for goals from November 1, 2008 to April 23, 2008, and (b) amounts paid out in April 2008 with respect to Performance Units granted in December 2005 and December 2006. These Performance Units were paid out in cash at target level pursuant to the Quanex Corporation / Quanex Building Products separation related agreements. Fiscal year 2007 amounts consist of (a) AIA payments for fiscal 2007 performance made in December 2007, and (b) amounts paid out in December 2007 with respect to Performance Units granted in December 2004. These Performance Units were paid out in cash based on Quanex Corporation’s performance over the three-year period ended October 31, 2007. | |
The AIA and Performance Unit payouts also include the dollar value of the portion of the amounts deferred under the Quanex Corporation or Quanex Building Products Corporation Deferred Compensation (DC) Plan, as applicable. Under the terms of each DC Plan, participants may elect to defer a portion of their incentive bonus to a mix of cash, or notional common stock units or investment accounts. |
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The amounts paid for the AIA and Performance Units, along with the respective deferred amounts are as follows: |
Annual Incentive Awards | Performance Unit Payout | |||||||||||||||||
Total | Deferred | Total | Deferred | |||||||||||||||
Name | Year | ($) | ($) | ($) | ($) | |||||||||||||
Petratis | 2008 QBP | 500,000 | 500,000 | — | — | |||||||||||||
2008 Pred | — | — | — | — | ||||||||||||||
2007 | — | — | — | — | ||||||||||||||
Korb | 2008 QBP | 41,941 | — | — | — | |||||||||||||
2008 Pred | 66,509 | — | 50,000 | — | ||||||||||||||
2007 | 61,662 | 15,416 | — | — | ||||||||||||||
Delaney | 2008 QBP | 52,939 | — | — | — | |||||||||||||
2008 Pred | 176,604 | — | 183,333 | — | ||||||||||||||
2007 | 164,202 | — | 176,100 | — | ||||||||||||||
Hammonds | 2008 QBP | 20,778 | 10,389 | — | — | |||||||||||||
2008 Pred | 70,354 | — | 50,000 | — | ||||||||||||||
2007 | 65,621 | 19,686 | — | — | ||||||||||||||
Jean | 2008 QBP | 197,212 | — | — | — | |||||||||||||
2008 Pred | 711,222 | — | 910,000 | — | ||||||||||||||
2007 | 661,683 | — | 841,367 | — | ||||||||||||||
Walker | 2008 QBP | — | — | — | — | |||||||||||||
2008 Pred | 241,479 | — | 120,000 | — | ||||||||||||||
2007 | 225,216 | 112,608 | — | — | ||||||||||||||
Mannion | 2008 QBP | 17,585 | 1,759 | — | — | |||||||||||||
2008 Pred | 61,511 | — | 50,000 | — | ||||||||||||||
2007 | 57,433 | 5,743 | — | — |
Amounts reflected above as “2008 Pred” or “2007” were deferred under the Quanex Corporation DC Plan, while the amounts reflected as “2008 QBP” were deferred under the Quanex Building Products Corporation DC Plan. Please see the “Compensation Discussion and Analysis” for a detailed discussion of the performance measures and related outcomes for payments of the awards. | ||
(5) | The amounts in this column represent the change in actuarial present value of each individual’s accumulated benefit under all defined benefit pension plans. The change in pension value reflects the difference in the present value of accumulated benefits determined as of the end of the current reporting period compared to the end of the previous reporting period. For instance the change for fiscal 2007 would represent the difference between the value at October 31, 2007 and October 31, 2006. The key assumptions used to calculate the change in value are shown with the “Pension Benefits Table”. Negative changes in pension value for a fiscal year can not be included in the Summary Compensation Table. Changes in pension value for certain individuals were negative for fiscal 2008; these negative amounts are follows: |
Change in Pension Value | ||||||||
and Nonqualified Deferred | ||||||||
Compensation Earnings | ||||||||
Name | Year | ($) | ||||||
Delaney | 2008 QBP | (2,714 | ) | |||||
2008 Pred | (2,487 | ) | ||||||
Hammonds | 2008 QBP | (2,454 | ) | |||||
2008 Pred | (2,249 | ) | ||||||
Walker | 2008 QBP | (136,000 | ) | |||||
2008 Pred | — | |||||||
Mannion | 2008 QBP | (1,912 | ) | |||||
2008 Pred | (1,752 | ) |
No named executive officer received preferential or above-market earnings on deferred compensation. |
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(6) | The named executives receive various perquisites provided by or paid for by the Company. These perquisites can include life insurance, financial planning, personal use of automobiles, memberships in social and professional clubs, relocation reimbursement and gross up payments equal to taxes payable on certain perquisites. Also included are the Company’s contributions under its 401(k) plan, a 20% match under its DC plan, a 15% match under its Employee Stock Purchase Program (ESPP), and dividends on unvested restricted stock. The amounts reported in Other Annual Compensation for the named executives are: |
Life | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
> $50,000 | Relo- | Settle- | Deferred | Unvested | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual | & | cation | ment of | Compen- | ESPP | Re- | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Life | Club | Financial | Tax | Unused | sation | 15% | stricted | |||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance | Financial | Auto- | Member- | Planning | Relo- | Gross | Vaca- | 401K | Plan | Stock | Stock | |||||||||||||||||||||||||||||||||||||||||||||||
> $50,000 | Planning | mobile | ship | Gross Up | cation | Up | tion | Match | Match | Match | Interest | Dividends | Total | |||||||||||||||||||||||||||||||||||||||||||||
Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||||||||||||||||
Petratis | 2008 QBP | 5,727 | 650 | — | 1,800 | 3,658 | 69,230 | 41,538 | — | — | 100,000 | 540 | — | 1,950 | 225,093 | |||||||||||||||||||||||||||||||||||||||||||
2008 Pred | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
2007 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Korb | 2008 QBP | 1,547 | 600 | 9,755 | 1,132 | 1,231 | — | — | 11,877 | 1,494 | — | 68 | — | 900 | 28,604 | |||||||||||||||||||||||||||||||||||||||||||
2008 Pred | — | — | — | — | — | — | — | — | 4,256 | — | 90 | — | 1,092 | 5,438 | ||||||||||||||||||||||||||||||||||||||||||||
2007 | 507 | — | 10,601 | — | 266 | — | — | — | 5,481 | 3,083 | 540 | — | 2,184 | 22,662 | ||||||||||||||||||||||||||||||||||||||||||||
Delaney | 2008 QBP | 3,218 | 1,699 | 11,357 | 3,298 | 2,820 | — | — | — | — | — | — | — | 1,794 | 24,186 | |||||||||||||||||||||||||||||||||||||||||||
2008 Pred | — | — | — | 1,295 | — | — | — | — | 5,750 | — | — | — | 1,764 | 8,809 | ||||||||||||||||||||||||||||||||||||||||||||
2007 | 3,218 | 357 | 12,205 | 3,924 | 2,050 | — | — | — | 5,625 | — | — | — | 5,796 | 33,175 | ||||||||||||||||||||||||||||||||||||||||||||
Hammonds | 2008 QBP | 2,801 | 2,777 | 7,814 | — | 2,183 | — | — | — | 1,320 | 2,078 | 450 | — | 805 | 20,228 | |||||||||||||||||||||||||||||||||||||||||||
2008 Pred | 712 | — | — | — | — | — | — | — | 4,430 | — | — | — | 462 | 5,604 | ||||||||||||||||||||||||||||||||||||||||||||
2007 | 2,749 | 870 | 8,178 | — | 1,181 | — | — | — | 5,625 | 787 | 360 | — | 924 | 20,674 | ||||||||||||||||||||||||||||||||||||||||||||
Jean | 2008 QBP | 30,315 | 10,000 | 12,412 | 8,486 | 23,123 | — | — | — | — | — | — | 8,656 | 6,153 | 99,145 | |||||||||||||||||||||||||||||||||||||||||||
2008 Pred | — | — | — | 3,674 | — | — | — | — | 5,750 | — | — | — | — | 9,424 | ||||||||||||||||||||||||||||||||||||||||||||
2007 | 33,071 | 10,000 | 11,824 | 12,320 | 24,704 | — | — | — | 5,625 | — | — | — | 28,322 | 125,866 | ||||||||||||||||||||||||||||||||||||||||||||
Walker | 2008 QBP | 4,412 | 280 | 7,422 | 596 | 2,691 | — | — | 7,298 | — | — | — | — | 1,170 | 23,869 | |||||||||||||||||||||||||||||||||||||||||||
2008 Pred | — | — | — | 795 | — | — | — | — | — | — | — | — | 2,324 | 3,119 | ||||||||||||||||||||||||||||||||||||||||||||
2007 | 11,543 | 1,750 | 11,134 | 2,429 | 7,625 | — | — | — | — | 11,261 | — | — | 4,648 | 50,390 | ||||||||||||||||||||||||||||||||||||||||||||
Mannion | 2008 QBP | 473 | — | 8,072 | — | 249 | — | — | — | 1,720 | 352 | — | — | 592 | 11,458 | |||||||||||||||||||||||||||||||||||||||||||
2008 Pred | — | — | — | — | — | — | — | — | 4,030 | — | — | — | 434 | 4,464 | ||||||||||||||||||||||||||||||||||||||||||||
2007 | 516 | — | 6,640 | — | 271 | — | — | — | 5,292 | 1,149 | 180 | — | 868 | 14,916 |
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All Other Stock | All Other Option | |||||||||||||||||||||||||||||||||
Awards: | Awards: Number | Exercise or | Grant Date | |||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non- | Number of | of Securities | Base Price | Grant Date Fair | Fair Value of | |||||||||||||||||||||||||||||
Equity Incentive Plan Awards(1) | Shares of Stock | Underlying | of Option | Value of Stock | Option | |||||||||||||||||||||||||||||
Threshold | Target | Maximum | or Units(2) | Options(2) | Awards | Awards(3) | Awards(3) | |||||||||||||||||||||||||||
Name | Grant Date | ($) | ($) | ($) | (#) | (#) | ($/Sh) | ($) | ($) | |||||||||||||||||||||||||
Petratis | 2008 QBP | 58,333 | 233,333 | 466,666 | — | — | — | — | ||||||||||||||||||||||||||
7/1/2008 | — | — | — | 65,000 | 100,000 | $ | 15.55 | 1,010,750 | 551,550 | |||||||||||||||||||||||||
Korb | 2008 QBP | 20,566 | 82,265 | 164,529 | — | — | — | — | — | |||||||||||||||||||||||||
2008 Pred | 8,314 | 33,254 | 66,509 | — | — | — | — | — | ||||||||||||||||||||||||||
8/1/2008 | — | — | — | 30,000 | 100,000 | $ | 15.32 | 459,600 | 540,960 | |||||||||||||||||||||||||
4/23/2008 | — | — | — | 14,071 | (4) | 58,546 | (4) | $ | 15.02 | 211,346 | 307,015 | |||||||||||||||||||||||
Delaney | 2008 QBP | 25,959 | 103,835 | 207,671 | — | — | — | — | — | |||||||||||||||||||||||||
2008 Pred | 22,076 | 88,302 | 176,604 | — | — | — | — | — | ||||||||||||||||||||||||||
4/23/2008 | 29,897 | 104,809 | $ | 15.02 | 449,053 | 549,618 | ||||||||||||||||||||||||||||
Hammonds | 2008 QBP | 10,189 | 40,754 | 81,509 | — | — | — | — | — | |||||||||||||||||||||||||
2008 Pred | 8,794 | 35,177 | 70,354 | — | — | — | — | — | ||||||||||||||||||||||||||
4/23/2008 | — | — | — | 13,417 | 57,316 | $ | 15.02 | 201,523 | 300,565 | |||||||||||||||||||||||||
Jean | 2008 QBP | 96,705 | 386,818 | 773,636 | — | — | — | — | — | |||||||||||||||||||||||||
2008 Pred | 88,903 | 355,611 | 711,222 | — | — | — | — | — | ||||||||||||||||||||||||||
4/23/2008 | — | — | — | 102,552 | (5) | 290,115 | (5) | $ | 15.02 | 1,540,331 | 1,521,363 | (5) | ||||||||||||||||||||||
Walker | 2008 QBP | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
2008 Pred | 30,185 | 120,740 | 241,479 | — | — | — | — | — | ||||||||||||||||||||||||||
4/23/2008 | 38,991 | (6) | 121,931 | (6) | $ | 15.02 | 585,645 | 639,406 | (6) | |||||||||||||||||||||||||
Mannion | 2008 QBP | 8,623 | 34,492 | 68,985 | — | — | — | — | — | |||||||||||||||||||||||||
2008 Pred | 7,689 | 30,756 | 61,511 | — | — | — | — | — | ||||||||||||||||||||||||||
4/23/2008 | — | — | — | 9,862 | (6) | 41,271 | (6) | $ | 15.02 | 148,127 | 216,425 |
(1) | The amounts shown reflect possible Annual Incentive Award (AIA) payments under the Quanex Building Products Corporation 2008 Omnibus Incentive Plan for fiscal year 2008, under which the named executive officers were eligible to receive a cash bonus based on a target percentage of base salary. Additionally, Mr. Petratis is guaranteed an AIA of $500,000 for the 2008 fiscal year, pursuant to his initial employment offer letter. The amounts actually paid to the named executive officers for 2008 pursuant to this program are reflected in the “Summary Compensation Table” herein. The following table shows the range of RONA goals set for determining AIA to our executives for the period from April 23, 2008 to October 31, 2008. We set the target performance level for RONA at a level that represents a reasonable opportunity of achievement. The target performance level was driven from our business budgeting process, which uses a number of assumptions about the state of our markets and material commodity prices to determine our expected financial performance (including expected sales, expected expenses and other factors). We recognized the volatility in the market through establishing a range of outcomes around the target. |
Return on Net Assets | ||||||||||||||
Award for Period | Period Award Calculated On | Threshold | Target | Maximum | ||||||||||
April 23, 2008 to October 31, 2008 | November 1, 2007 to October 31, 2008 | 12.1 | % | 17.8 | % | 23.1 | % |
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For fiscal year 2008, we achieved 14.0% return on net assets, resulting in a payout of 51% of target. Please see the “Compensation Discussion and Analysis” for more information regarding this program and the related performance measures. | ||
For the period from November 1, 2007 to April 22, 2008, AIA was based on completion of the spin-off and merger transactions and achieving eleven predetermined milestones directly related thereto. The milestones were established by the Compensation Committee and actual performance was measured against the predetermined milestone dates. Target payout would have been achieved upon successful completion of the transactions. In order to receive maximum payout, the Company would have had to complete seven or more of the milestones on or before the predetermined dates. The Company completed ten of the eleven milestones in advance of the predetermined dates, which when combined with the successful completion of the transactions, resulted in a payout of 100% of maximum. | ||
(2) | The amounts shown reflect grants of restricted stock awards and stock options made under the Quanex Building Products Corporation 2008 Omnibus Incentive Plan. The stock options are granted at fair market value based on the closing share price as of the grant date. Former Quanex Corporation Executive Officers did not receive their regular long-term incentive grants in December 2007 due to the impending spin-off of the Building Products business. On the distribution date of April 23, 2008, these officers received a long-term incentive grant of stock options and restricted stock intended to replace the grant not made in December 2007 by Quanex Corporation. Executives also received a stock option and restricted grant in connection with the spin-off on the distribution date. The purpose of the second grant was to further align the interests of the executives with shareholders of Quanex Building Products and foster retention in a time of transition and uncertainty. For more information on the April 23, 2008 grant, please see the “Stock Option Grant and Restricted Stock Award” table located on page 28. | |
(3) | The fair value shown in this column was calculated in accordance with FAS 123(R). A discussion of the assumptions used in calculating these values may be found in Note 14 to Quanex Building Products Corporation’s audited financial statements on Form 10-K for the year ended October 31, 2008. In addition to these awards granted in fiscal 2008, restricted stock and option awards granted in previous years by the Company’s predecessor and unvested or outstanding as of April 23, 2008 were deemed to be modified pursuant to FAS 123(R) during fiscal 2008. As a result of this modification for financial reporting purposes, additional compensation expense was recorded in April 2008 representing the incremental fair value of the modified awards. For additional information and quantification of incremental compensation expense for the named executives, please see footnote (3) to the Summary Compensation Table located on page 36. | |
(4) | Mr. Korb forfeited these restricted stock awards and stock option awards in connection with his departure from the Company on June 13, 2008. | |
(5) | All of Mr. Jean’s restricted stock awards, and all but 60,000 of Mr. Jean’s stock options were forfeited in connection with Mr. Jean’s retirement from the Company in December 2008. The remaining 60,000 stock options will vest on April 23, 2009. | |
(6) | Messrs. Walker and Mannion forfeited these restricted stock awards and stock option awards in connection with their respective departures from the Company. |
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Option Awards | Stock Awards | |||||||||||||||||||||||
Number of | Number of | |||||||||||||||||||||||
Securities | Securities | Market Value | ||||||||||||||||||||||
Underlying | Underlying | Number of | of Shares or | |||||||||||||||||||||
Unexercised | Unexercised | Option | Shares or Units | Units of Stock | ||||||||||||||||||||
Options | Options | Exercise | Option | of Stock That | That Have | |||||||||||||||||||
(#) | (#) | Price | Expiration | Have Not Vested | Not Vested (10) | |||||||||||||||||||
Name | Exercisable | Unexercisable | ($) | Date | (#) | ($) | ||||||||||||||||||
Petratis | — | 100,000 | (1) | 15.5500 | 7/1/2018 | 65,000 | (6) | 595,400 | ||||||||||||||||
Korb | — | 100,000 | (2) | 15.3200 | 8/1/2018 | 30,000 | (7) | 274,800 | ||||||||||||||||
Delaney | — | 104,809 | (3) | 15.0200 | 4/23/2018 | 29,897 | (8) | 273,857 | ||||||||||||||||
Hammonds | — | 57,316 | (3) | 15.0200 | 4/23/2018 | 13,417 | (8) | 122,900 | ||||||||||||||||
Jean | — | 290,115 | (4) | 15.0200 | 4/23/2012 | 102,552 | (9) | 939,376 | ||||||||||||||||
Mannion | — | 41,271 | (5) | 15.0200 | (5) | 9,862 | (5) | 90,336 |
(1) | Mr. Petratis’ stock options vest annually in equal installments over a three-year period. One-third of stock options will vest on July 1, 2009 with the remaining two-thirds vesting in equal installments on July 1, 2010 and July 1, 2011. | |
(2) | Mr. Korb’s stock options vest annually in equal installments over a three-year period. One-third of stock options will vest on August 1, 2009 with the remaining two-thirds vesting in equal installments on August 1, 2010 and August 1, 2011. | |
(3) | Messrs. Delaney and Hammonds’ stock options vest annually in equal installments over a three-year period. One-third of stock options will vest on April 23, 2009 with the remaining two-thirds vesting in equal installments on April 23, 2010 and April 23, 2011. | |
(4) | All but 60,000 of Mr. Jean’s stock options were subsequently forfeited in connection with Mr. Jean’s retirement from the Company in December 2008. The remaining 60,000 in stock options will vest on April 23, 2009. | |
(5) | All of Mr. Mannion’s stock options and restricted stock awards were subsequently forfeited in connection with his departure from the Company in November 2008. | |
(6) | 40,000 of these restricted stock awards vest in full three years from the date of grant on July 1, 2011. The remaining 25,000 restricted stock awards vest annually in equal installments over a three year period, and accordingly will vest in one-third increments on July 1, 2009, July 1, 2010 and July 1, 2011. | |
(7) | Mr. Korb’s restricted stock awards vest in full three years from the date of grant on August 1, 2011. | |
(8) | Messrs. Delaney and Hammonds’ restricted stock awards vest in full three years from the date of grant on April 23, 2011. | |
(9) | All of Mr. Jean’s restricted stock awards were subsequently forfeited in connection with Mr. Jean’s retirement from the Company in December 2008. | |
(10) | This column shows the total market value of the unvested stock awards as of October 31, 2008, based on the closing price per share of Quanex Building Products Corporation’s stock of $9.16 on October 31, 2008. |
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Option Awards | Stock Awards | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares | Shares | |||||||||||||||
Acquired on | Value Realized | Acquired on | Value Realized | |||||||||||||
Exercise | on Exercise | Vesting (1) | on Vesting (1) | |||||||||||||
Name | (#) | ($) | (#) | ($) | ||||||||||||
Petratis | — | — | — | — | ||||||||||||
Korb | — | — | 3,900 | 213,018 | ||||||||||||
Delaney | — | — | 10,350 | 546,768 | ||||||||||||
Hammonds | — | — | 1,650 | 90,123 | ||||||||||||
Jean | — | — | 50,575 | 2,564,723 | ||||||||||||
Walker | — | — | 8,300 | 453,346 | ||||||||||||
Mannion | — | — | 1,550 | 84,661 |
(1) | These shares vested prior to the spin-off of the Company from Quanex Corporation. No shares of restricted stock have vested since the spin-off. The value realized upon vesting represents the number of shares of stock vesting times closing market price of a share of Quanex Corporation stock on the vesting date. |
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• | 2.75% of the highest consecutive 36-month average of salary and bonus compensation from the last 60 months of employment, | ||
• | multiplied by the named executive officer’s years of service (but not in excess of 20 years), and | ||
• | reduced by (i) any benefits payable under the Pension Plan and (ii) 50% of the named executive officer’s Social Security benefits adjusted pro rata for years of service not in excess of 20 years. |
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• | the benefit payable to the named executive officer under the Pension Plan if the compensation taken into account under that plan were not capped at the amount required under Section 401(a)(17) of the Internal Revenue Code, | ||
• | reduced by the benefit payable to the named executive officer under the Pension Plan taking into account only the amount of compensation allowed under Section 401(a)(17) of the Internal Revenue Code. |
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Number of | Present Value of | Payments | ||||||||||||
Years Credited | Accumulated | During Last | ||||||||||||
Service | Benefit | Fiscal Year | ||||||||||||
Name | Plan Name | (#) | ($) | ($) | ||||||||||
David D. Petratis | SERP (1) | 0.33 | 45,157 | — | ||||||||||
Pension Plan (2) | 0.33 | 1,957 | — | |||||||||||
Brent L. Korb | SERP (1) | 4.94 | 27,194 | — | ||||||||||
Pension Plan (2) | 4.94 | 12,173 | — | |||||||||||
Kevin P. Delaney | SERP (1) | 5.28 | 144,468 | — | ||||||||||
Pension Plan (2) | 5.28 | 32,442 | — | |||||||||||
Paul A. Hammonds | Restoration Plan (3) | 5.65 | 8,004 | — | ||||||||||
Pension Plan (2) | 5.65 | 52,575 | — | |||||||||||
Raymond A. Jean | SERP (1) | 7.69 | 3,994,993 | — | ||||||||||
Pension Plan (2) | 7.69 | 222,312 | — | |||||||||||
Thomas M. Walker | SERP (1) | 2.14 | 237,431 | — | ||||||||||
Pension Plan (2) | 2.14 | 44,124 | — | |||||||||||
John J. Mannion | Restoration Plan (3) | 4.17 | 689 | — | ||||||||||
Pension Plan (2) | 4.17 | 16,482 | — |
(1) | The SERP provides retirement benefits for certain designated management employees in addition to those provided under the Pension Plan. The purpose of the SERP is to supplement those retirement benefits that a Participant may be entitled to receive as a salaried employee of the Company. The SERP pays a retirement benefit to eligible employees following retirement or termination of employment. As noted above, the benefit formula under the SERP equals: 2.75 percent of Final Average Earnings (defined as the highest 36 months of compensation during the last 60 months preceding retirement or termination) multiplied by Years of Service (not in excess of 20 years), less the sum of (1) the Participant’s Pension Plan Benefit, and (2) one-half of the Participant’s Social Security Benefit multiplied by a fraction (which shall not exceed one) the numerator of which is the Participant’s number of years of Service and the denominator of which is 20. The definition of “compensation” under the SERP includes W-2 wages modified by excluding reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation, welfare benefits, BeneFlex dollars under the Company’s Medical Reimbursement Plan, and restricted stock awards and stock options; and modified further by including elective contributions under a cafeteria plan maintained by the Company that is governed by section 125 of the Code and elective contributions to any plan maintained by the Company that contains a qualified cash or deferred arrangement under section 401(k) of the Code. | |
Vesting in the SERP is based on 5 Years of Service. Early Retirement under the SERP requires a Participant to attain age 55 with 5 Years of Service. If the Participant retires prior to age 55, the accrued benefit is reduced 5% for each year (and fractional year) that the Participant’s benefit commencement precedes age 65. | ||
Benefits under the SERP are paid under the following options: |
• | Single Life Annuity | ||
• | 50%, 75%, or 100% Joint & Survivor Annuity | ||
• | 10 Year Certain and Life | ||
• | Single Lump Sum |
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The SERP also pays a death benefit to the designated beneficiary if the Participant has retired or terminated employment, but has not commenced payment. In addition, the SERP pays a Disability Benefit. Should a Participant with six months of service terminate due to disability prior to early retirement, the SERP will pay a Disability Benefit until age 65 equal to 50 percent of the sum of his monthly Earnings in effect at the date of his Disability and the monthly equivalent of the average of his Incentive Awards for the prior three Plan Years, less the sum of (1) the Participant’s Qualified Plan Benefit; (2) the Participant’s Social Security Benefit; (3) the Participant’s benefit under the Company’s group long-term disability insurance plan; (4) the Participant’s benefit under an individual disability policy provided by the Company, and; (5) the Participant’s benefit under the Company’s wage continuation policy plan. Benefits payable from the Plan are equal to the actuarial equivalent of the accrued benefit at date of distribution employing the Actuarial Equivalent definition from the Pension Plan. The Company has no policy for granting additional service under this plan. | ||
(2) | The Pension Plan was established to provide retirement income to the Company’s non-union employees. It is an ERISA qualified pension plan. The Pension Plan pays a retirement benefit to eligible Participants equal to 1.5% of the Traditional Member’s Average Monthly Compensation (high 5 consecutive years of Earnings out of the 10 years preceding termination or retirement) times years and fractional years of Benefit Service earned prior to November 1, 1985 plus the sum of 1% of Average Monthly Compensation up to Social Security Covered Compensation and 1.5% of the Traditional Member’s Average Monthly Compensation in excess of Social Security Covered Compensation, the total of which is multiplied by years and fractional years of Benefit Service from, on and after November 1, 1985. Compensation is defined as earned income excluding deferred compensation. Compensation is limited by the compensation limits imposed under the Internal Revenue Code. For Cash Balance Participants, the Pension Plan pays the Account Balance with interest at date of termination. The contribution equals a certain percentage based on location, credited with interest. The Pension Plan pays a Death Benefit prior to retirement to the spouse, or to the estate, if no spouse. The Pension Plan does not provide for a Disability Retirement. The Pension Plan requires 5 Years of Vesting Service for Traditional Plan Participants and 3 Years of Service for Cash Balance Participants. Early Retirement under the Plan requires a Participant to have attained age 55 with 5 Years of Service. None of the named executive officers is currently eligible for an early retirement benefit under this plan. Benefits commencing prior to age 65 are reduced 5/9ths of 1% for each of the first 60 months, and an additional 5/18ths of 1% for each month in excess of 60 that benefits commence prior to age 65. The Company has no policy for granting additional service under this plan. | |
(3) | The Restoration Plan was established to provide a retirement pay supplement for a select group of management or highly compensated employees so as to retain their loyalty and to offer a further incentive to them to maintain and increase their standard of performance. The Restoration Plan pays a retirement benefit in the form of a lump sum to eligible employees following retirement or termination of employment. If a Participant terminates employment, an Actuarial Equivalent lump sum of the Participant’s Pension Plan Benefit that would be payable if the applicable limitation under section 401(a)(17) of the Code for each fiscal year of the Pension Plan commencing on or after November 1, 1994, was not limited (indexed for increases in the cost of living), less the Participant’s Pension Plan Benefit. Early Retirement under the Restoration Plan requires a Participant to have attained age 55 with 5 Years of Service. None of the named executive officers is currently eligible for an early retirement benefit under this plan. The Restoration Plan requires 5 Years of Service for vesting purposes for Traditional Plan Participants, and three years of Service requirement for Cash Balance Participants. In addition, the Plan also pays a death benefit to the designated beneficiary if the Participant has retired or terminated employment, but has not commenced payment. The Restoration Plan does not provide a Disability Benefit. The Company has no policy for granting additional service under this plan. |
Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||
Contributions | Contributions | Earnings in | Withdrawals/ | Balance at | ||||||||||||||||
FY 2008 (1) | in FY 2008 (1) | FY 2008 (2) | Distributions (3) | 10/31/2008 (4) | ||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
David D. Petratis | — | — | — | — | — | |||||||||||||||
Brent L. Korb | 15,416 | 3,083 | 22,836 | (127,814 | ) | 69,437 | ||||||||||||||
Kevin P. Delaney | — | — | 177,178 | (724,918 | ) | — | ||||||||||||||
Paul A. Hammonds | 19,686 | 787 | (20,794 | ) | — | 146,490 | ||||||||||||||
Raymond A. Jean | — | — | 483,063 | (1,990,545 | ) | — | ||||||||||||||
Thomas M. Walker | 112,608 | 11,261 | 16,272 | — | 242,543 | |||||||||||||||
John J. Mannion | 5,743 | 1,149 | 21,743 | — | 161,706 |
(1) | Executive contributions are incentive compensation earned for fiscal 2007 performance and deferred in December 2007, when they would have otherwise been paid, during fiscal 2008. The registrant contributions are the associated match of Quanex Corporation for these executive contributions. The full amount shown in the executive contributions and registrant contributions columns for each executive was reported in the Summary Compensation Table. | |
(2) | Aggregate earnings are not included as compensation in the current Summary Compensation Table, and were not included in the Information Statement attached as Exhibit 99.1 to the Company’s Registration Statement on Form 10, filed April 4, 2008 and effective April 9, 2008, and Quanex Corporation’s proxy statements for fiscal 2007 and previous years. |
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(3) | Distributions reported were made in connection with the spin-off of Quanex Building Products Corporation from Quanex Corporation. | |
(4) | The aggregate balance is as of 10/31/2008, and includes current and previous years’ executive and registrant contributions and the earnings on those contributions, less any withdrawals. The amounts reported in the aggregate balance at October 31, 2008 are reported in the Summary Compensation Table or were previously reported as compensation to the named executive officer in the Summary Compensation Table contained in the Information Statement attached as Exhibit 99.1 to the Company’s Registration Statement on Form 10, filed April 4, 2008 and effective April 9, 2008 and Quanex Corporation’s proxy statements for fiscal 2007 and previous years, with the exception of Mr. Mannion for all previous years and Mr. Korb for 2007 and earlier as they were not included as an named executive officers in the respective previous years. |
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• | such employee’s payroll deductions; | ||
• | such employee’s 15% Company contribution; | ||
• | cash dividends received from us on all shares in such employee’s Stock Purchase Plan account at the time a dividend is paid; and | ||
• | cash resulting from the sale of any (i) rights to purchase additional shares of our stock, convertibles debentures or other securities of ours or (ii) securities of any other issuer. |
• | all or part of such participant’s Plan Shares at any time, if the participant is employed by us or in connection with a division or subsidiary of ours immediately before we sell or otherwise dispose of that division or subsidiary and after such sale or other disposition the participant is no longer employed by us or our subsidiary; and | ||
• | all or any part of such participant’s Plan Shares at any time after they have been held in the participant’s account for at least one year. |
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Common Stock | ||||||||||||||||||||||||
Restricted | Common Stock | Underlying | ||||||||||||||||||||||
Common Stock | Stock | Credited Under | Exercisable | |||||||||||||||||||||
Owned of Record | Units | DC Plan | Options(1) | Total | Percent | |||||||||||||||||||
David D. Petratis | 120,183 | — | 81,783 | — | 201,966 | * | ||||||||||||||||||
Brent L. Korb | 58,822 | — | — | — | 58,822 | * | ||||||||||||||||||
Kevin P. Delaney | 59,403 | — | — | — | 59,403 | * | ||||||||||||||||||
Paul A. Hammonds | 19,971 | — | 1,699 | — | 21,670 | * | ||||||||||||||||||
Donald G. Barger | 4,189 | 5,002 | 44,371 | 20,421 | 73,983 | * | ||||||||||||||||||
Susan F. Davis | 25,182 | 2,729 | 5,254 | 20,421 | 53,586 | * | ||||||||||||||||||
Joseph J. Ross | 36,273 | 5,002 | 60,482 | 20,421 | 122,178 | * | ||||||||||||||||||
Joseph D. Rupp | — | 2,729 | — | 20,421 | 23,150 | * | ||||||||||||||||||
Richard L. Wellek | 4,898 | 2,729 | 4,756 | 20,421 | 32,804 | * | ||||||||||||||||||
Raymond A. Jean (2) | 291,440 | — | — | — | 291,440 | * | ||||||||||||||||||
Thomas M. Walker (3) | 44,265 | — | — | — | 44,265 | * | ||||||||||||||||||
John J. Mannion (4) | 12,496 | — | — | — | 12,496 | * | ||||||||||||||||||
All Officers and Directors as a group (5) | 696,460 | 18,191 | 201,428 | 102,105 | 1,018,184 | 2.70 |
* | Less than 1.0%. | |
(1) | Includes options exercisable within 60 days. | |
(2) | Mr. Jean retired from the Company, effective December 4, 2008. | |
(3) | Mr. Walker’s employment ended with the Company, effective July 31, 2008. | |
(4) | Mr. Mannion’s employment ended with the Company, effective November 30, 2008. | |
(5) | Includes owned or credited shares totaling 8,390 shares for Jairaj T. Chetnani and 14,146 shares for Deborah M. Gadin. |
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1. | The business of Quanex Building Products Corporation (the “Company”) shall be managed by a Board of Directors (the “Board”) who shall exercise all the powers of the Company not reserved to the shareholders by statute, the Certification of Incorporation or the By-Laws of the Company. | ||
2. | The Chief Executive Officer shall be a member of the Board. | ||
3. | The size of the Board, the classification of directors, the term of office, and the process for filling vacancies shall be in accordance with the Company’s Certificate of Incorporation and By-Laws. |
4. | The Board shall at all times maintain an Audit Committee, a Nominating & Corporate Governance Committee, and a Compensation & Management Development Committee, which shall operate in accordance with applicable laws, their respective Charters as adopted and amended from time to time by the Board, and the applicable rules of the Securities and Exchange Commission and the New York Stock Exchange. | ||
5. | The membership of the Audit Committee, the Compensation & Management Development Committee, or the Nominating & Corporate Governance Committee shall meet the independence requirements of applicable laws, the New York Stock Exchange, and if deemed appropriate from time to time, meet the definition of “non-employee director” under Rule 16b-3 under the Securities Exchange Act of 1934, and “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986. | ||
6. | The Board may establish such other committees as it deems appropriate and delegate to such committees such authority permitted by applicable law and the Company’s By-Laws as the Board sees fit. |
7. | At each regular meeting of the Board, the Board shall meet in executive session, where non-management directors meet without management participation. | ||
8. | The Board, in executive session, shall conduct an annual review of the performance of the Chief Executive Officer, taking into account the views and recommendations of the Chairman of the Compensation & Management Development Committee as set forth in the Committee’s Charter. | ||
9. | The Board shall review policies and procedures developed by the Company and reviewed and approved by the Compensation & Management Development Committee, regarding succession to the position of Chief Executive Officer and positions of other corporate officers and key executives in the event of emergency or retirement. | ||
10. | The Board shall conduct an annual Self-Assessment to determine whether it and its committees are functioning effectively. The full Board shall discuss the evaluation to determine what, if any, action could improve Board and Board committee performance. |
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11. | The Board shall establish methods by which interested parties may communicate directly with the Chairpersons of each Committee or with non-employee directors of the Board as a group and cause such methods to be published. | ||
12. | The Company shall provide each director with complete access to the management of the Company, subject to reasonable notice to the Company and reasonable efforts to avoid disruption to the Company’s management, business and operations. | ||
13. | The Board and Board committees, to the extent set forth in the applicable committee Charter, have the right to consult and retain independent legal and other advisors at the expense of the Company. | ||
14. | The Board or the Company shall establish, or identify and provide access to, appropriate orientation programs, sessions or materials for newly-appointed directors of the Company for their benefit either prior to or within a reasonable period of time after their nomination or election as a director. | ||
15. | The Board or the Company shall encourage directors to periodically pursue or obtain appropriate programs, sessions or materials as to the responsibilities of directors of publicly-traded companies. |
16. | A majority of the members of the Board must qualify as independent directors in accordance with the applicable rules of the New York Stock Exchange. | ||
17. | A director shall not stand for re-election after reaching 70 years of age. | ||
18. | Directors shall promptly report changes in their business or professional affiliations or responsibilities, including retirement, to the Chairman of the Board and the Chairman of the Nominating & Corporate Governance Committee. | ||
19. | A director shall offer to resign from the Board if the Nominating & Corporate Governance Committee concludes that the director (a) no longer meets the Company’s requirements for service on the Board, or (b) has experienced a substantial reduction in responsibilities in full time employment for reasons other than retirement. | ||
20. | No director shall serve as a director, officer or employee of a competitor of the Company. | ||
21. | Non-employee directors shall not serve in a paid consulting role for the Company. | ||
22. | Directors shall advise the Chairman of the Board and the Chairman of the Nominating & Corporate Governance Committee promptly upon accepting any other public company directorship or any assignment to the Audit Committee or Compensation Committee of the board of directors of any public company of which such director is a member. | ||
23. | Non-employee directors shall serve on the board of no more than three other public companies. | ||
24. | A director who is also an officer of the Company shall not continue serving on the Board upon separation of employment with the Company, except in special instances to facilitate a transition of management. | ||
25. | The Nominating & Corporate Governance Committee shall be responsible for establishing additional qualifications for directors, taking into account the composition and skills of the entire Board. |
26. | Directors should exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company in a manner consistent with their fiduciary duties. | ||
27. | Directors are expected to attend all Board meetings and meetings of committees to which they are assigned, and at a minimum, 75 percent of such meetings each year. | ||
28. | Directors are expected to prepare for all meetings of the Board or committees to which they are assigned by reviewing the materials that are sent to all directors in advance of meetings. | ||
29. | Non-employee directors are expected to own, beneficially or otherwise, common shares or common share equivalents of the Company’s Common Stock valued at no less than $100,000, which shares or share equivalents may be accumulated over the first three years of service. |
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30. | The Nominating & Corporate Governance Committee shall review and recommend for Board approval the form and amount of non-employee director compensation, including cash, equity-based awards and other director compensation. | ||
31. | In determining non-employee director compensation, the Nominating & Corporate Governance Committee, may consult with appropriate advisers to determine levels of director compensation similar to the compensation of directors of similar companies. | ||
32. | Non-employee directors shall be paid in equity and cash for their services, with a deferral option for fees paid in cash. | ||
33. | Unless and until a recommendation is made by the Nominating & Corporate Governance Committee and approval of the Board, the amount of cash compensation for non-employee directors is as follows: Retainer — $40,000/year paid quarterly; Board meeting fee — $1,250/meeting for telephonic meetings and $1,500/meeting for in-person meetings; Committee meeting fee — $1,250/meeting; Committee chair fees — $10,000/year for Audit and Compensation Committees, and $15,000/year for Governance Committee; and reimbursement for all travel and living expenses associated with meeting attendance. | ||
34. | Unless and until a recommendation is made by the Nominating & Corporate Governance Committee and approval of the Board, new non-employee directors shall receive a one-time non-incentive stock option grant of 5,000 shares on his or her first anniversary of service on the Board. | ||
35. | Unless and until a recommendation is made by the Nominating & Corporate Governance Committee and approval of the Board, on the last business day of each fiscal year, non-employee directors shall receive an annual non-incentive stock option grant of $50,000 in equivalent value. | ||
36. | Unless and until a recommendation is made by the Nominating & Corporate Governance Committee and approval of the Board, on the last business day of each fiscal year, non-employee directors shall receive an annual restricted stock unit award of $25,000 in equivalent value. | ||
37. | Unless and until a recommendation is made by the Nominating & Corporate Governance Committee and approval of the Board, non-employee directors shall not receive any remuneration from the Company other than as set forth in this Director Compensation section of the Corporate Governance Guidelines. |
38. | The Chairman of the Nominating & Corporate Governance Committee shall serve as the Lead Director and shall preside at each executive session. | ||
39. | The Lead Director shall be a member of the Executive Committee and shall have the following responsibilities: |
a. | Chairing the Board in the absence of the Chairman; | ||
b. | Acting as liaison between the Board and the Chairman, as requested by the Board; | ||
c. | In concert with the Chairman, setting the agenda for board meetings, based on input from directors and the annual meeting plans; | ||
d. | Ensuring that independent directors have adequate opportunity to meet in executive session without management present, and setting the agenda for, and moderating, all such sessions; | ||
e. | Communicating to the Chief Executive Officer, as appropriate, the results of executive sessions among independent directors; | ||
f. | Ensuring that the Board has adequate resources, including full, timely and relevant information, to support its decision making requirements; | ||
g. | Organizing the Board’s evaluation of the Chairman and providing the Chairman with feedback related thereto; | ||
h. | Working with the Chairman to ensure proper committee structure and membership, including the assignment of members and committee chairs, and appropriate succession planning related to members and committee chairs; |
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i. | Notifying the Chairman of the retention of outside advisors and consultants who report directly to the Board; | ||
j. | Participating in one-on-one discussions with individual directors, as requested by the Nominating & Corporate Governance Committee; | ||
k. | Leading the Board self-assessment process, in conjunction with the Nominating & Corporate Governance Committee; | ||
l. | Working with the Chairman to form Special Committees of the Board, as necessary; | ||
m. | Carrying out other duties as requested by the Board or the Nominating & Corporate Governance Committee. |
40. | The Chief Executive Officer shall serve on the board of no more than one other public company. | ||
41. | Other executive officers shall serve on the board of no more than one other public company. | ||
42. | The Chief Executive Officer is expected to own, beneficially or otherwise, common shares or common share equivalents of the Company’s Common Stock of at least 400% of the value of his/her base salary within three years of serving in said role. Senior officers are expected to own, beneficially or otherwise, common shares or common share equivalents of the Company’s Common Stock of at least 200% of their base salary and officers 100% of their base salary under the same terms. |
43. | The Quanex Corporate Governance Guidelines may be amended, modified, or waived by the Board and waivers of these Guidelines may also be granted by the Nominating & Corporate Governance Committee, subject to the disclosure and other provisions of the Securities Exchange Act of 1934, the rules promulgated thereunder and the applicable rules of the New York Stock Exchange. |
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1) | By Letter |
1900 West Loop South, Suite 1500
Houston, Texas 77027
2) | By Telephone |
Toll Free Telephone (800) 231-8176
Toll Free HOTLINE (888) 704-8222
3) | By Electronic Mail HOTLINE |
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Joseph J. Ross
Richard L. Wellek
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FY 2008 | FY 2007 | |||||||
Audit Fees(1) | $ | 1,892,000 | $ | 2,014,000 | ||||
Audit Related Fees(2) | 209,000 | 122,000 | ||||||
Tax Fees(3) | 43,000 | 56,000 | ||||||
Transaction Related Fees(4) | 800,000 | 1,346,000 | ||||||
All Other Fees | — | — | ||||||
Total | $ | 2,944,000 | $ | 3,538,000 | ||||
(1) | Audit Fees consist of professional services and related expenses rendered by Deloitte & Touche LLP for the audit of our annual financial statements, audit of internal controls and review of financial statements included in Forms 10-Q and Form 10-K. | |
(2) | Audit Related Fees include employee benefit audits as well as assurance and related services by Deloitte & Touche LLP that are reasonably related to the performance of the audit or review of our financial statements and are not included in Audit Fees. | |
(3) | Tax Fees include professional services rendered by Deloitte & Touche LLP for tax return reviews and miscellaneous consulting. | |
(4) | Transaction Related Fees include fees related to the Company’s Registration Statement on Form 10, transaction stock basis analysis, and transaction-related due diligence services provided by Deloitte & Touche LLP, as a result of the spin-off and merger that occurred in April 2008. |
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Donald G. Barger, Jr.
Richard L. Wellek
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Joseph D. Rupp
Richard L. Wellek
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Amount and | ||||||||
Nature of | ||||||||
Beneficial | Percent | |||||||
Name and Address | Ownership | (%) | ||||||
Lord Abbett & Co. LLC, 90 Hudson Street, Jersey City, NJ 07302 | 5,044,872 | (1) | 13.40 | |||||
Artisan Partners Limited Partnership, 875 East Wisconsin Avenue, Suite 80, Milwaukee, WI 53202 | 3,276,608 | (2) | 8.70 | |||||
Barclays Global Investors, 45 Fremont Street, San Francisco, CA 94105 | 2,405,853 | (3) | 6.39 | |||||
Keeley Asset Management Corp., 401 South LaSalle Street, Suite 1201, Chicago, IL 60605 | 1,990,000 | (4) | 5.28 |
(1) | Lord, Abbett & Co. LLC possesses sole investment discretion and sole voting authority on 4,581,342 shares. | |
(2) | Artisan Partners Limited Partnership possesses shared investment discretion with respect to all shares and shared voting authority on 2,970,208 shares. | |
(3) | Barclays Global Investors, a subsidiary of Barclays PLC, a United Kingdom financial services company possesses shared investment discretion with respect to all shares and sole voting authority with respect to 2,339,423 shares. | |
(4) | Keeley Asset Management Corp. possesses sole investment discretion and sole voting authority on 1,990,000 shares. |
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January 23, 2009
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/s/Kevin P. Delaney | ||||
Kevin P. Delaney | ||||
Senior Vice President — General Counsel and Secretary | ||||
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Kevin P. Delaney | ||||
Senior Vice President — General Counsel and Secretary | ||||
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Quanex Building Products Corporation, a Delaware corporation (the “Company”), will be held at the principal executive offices of the Company, 1900 West Loop South, Suite 1500, Houston, Texas, on February 26, 2009, at 8:00 a.m., C.S.T. | ||
Notice of Internet Availability of Proxy Materials:You can access and review the Annual Report and Proxy Statement on the Internet by going to the following Quanex Building Products Corporation website: http://www.quanex.com/ir_annual_reports.html |
![]() | Quanex Building Products Corporation 1900 West Loop South, Suite 1500 Houston, TX 77027 | proxy |
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• | Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CST) on February 25, 2009. |
• | Please have your proxy card and the last four digits of your Social Security Number or Tax Identification Number available. Follow the simple instructions the voice provides you. |
• | Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CST) on February 25, 2009. |
• | Please have your proxy card and the last four digits of your Social Security Number or Tax Identification Number available. Follow the simple instructions to obtain your records and create an electronic ballot. |
1. | To elect two directors to serve until the Annual Meeting of Stockholders in 2012: | 01 Donald G. Barger, Jr. | |
02 David D. Petratis | |||
o | Vote FOR all nominees (except as marked) | o | Vote WITHHELD from all nominees |
(Instructions: To withhold authority to vote for any indicated nominee, write the number(s) of the nominee(s) in the box provided to the right.) | |
2. | To approve the material terms of the performance criteria for annual incentive awards, performance stock awards and performance unit awards under the Quanex Building Products Corporation 2008 Omnibus Incentive Plan; and | o | For | o | Against | o | Abstain | |||||||
3. | To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. |
Date |