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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant To Section 14(a) of
The Securities Exchange Act of 1934 (Amendment No. )
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Bellevue, Washington 98004
To Be Held March 1, 2006
(1) | to elect three directors of the Company; | ||
(2) | to consider and approve a proposal to amend the Company’s 2004 Equity Incentive Plan to, among other things, authorize the issuance of an additional 1,000,000 shares of the Company’s Common Stock, | ||
(3) | to consider and approve a proposal to amend the Company’s Employee Stock Purchase Plan to authorize the issuance of an additional 150,000 shares of the Company’s Common Stock, | ||
(4) | to transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
By order of the Board of Directors | ||
ROBERT D. GEORGE | ||
Vice President, | ||
Chief Financial Officer, | ||
Secretary and Treasurer | ||
January 24, 2006 |
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Chairman, President and Chief Executive Officer, Gardner Denver, Inc.Age 60.
Mr. Centanni has been the Chairman of the Board of Gardner Denver, Inc. (a leading manufacturer of reciprocating, rotary and vane compressors, liquid ring pumps and blowers for various industrial, medical, environmental and transportation applications, pumps used in the petroleum and industrial markets, and other fluid transfer equipment serving chemical, petroleum and food industries) since November 1998, and the President and Chief Executive Officer since November 1993. He is also a director of Denman Services, Inc. and the Petroleum Equipment Suppliers Association and also serves as a member of the Executive Committee of the International Compressed Air and Allied Machinery Committee. He has been a director of the Company since 1999.
Chairman and Chief Executive Officer (Retired), Airborne Freight Corporation.Age 68.
Prior to January 2003, Mr. Cline was the Chairman and Chief Executive Officer of Airborne Freight Corporation (an air express company), having held such positions since 1984. He is also a director of Safeco Corporation. He has been a director of the Company since 1999.
Chairman (Retired), ARINC Incorporated.Age 69.
Prior to March 2004, Mr. Pierce was the Chairman of ARINC Incorporated (a transportation and systems engineering solutions provider), having held such position since 1994. Mr. Pierce was also the Chief Executive Officer of ARINC Incorporated from 1994 until December 2001. He has been a director of the Company since 2003.
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President and Chief Executive Officer (Retired), Dover Industries, Inc.Age 67.
Prior to January 2005, Mr. Burns was a Director/Consultant of Dover Industries, Inc. (a diversified manufacturing company), having held such positions since July 2003. Prior to that time, he was President, Chief Executive Officer and Director of Dover Industries, Inc. since 1985. He has been a director of the Company since 2003 and his current term expires in 2008.
Special Advisor to the Board (Retired), Milliman USA.Age 68.
Prior to January 2003, Mr. Clearman was a Special Advisor to the Board of Milliman USA (an actuarial consulting firm), having held such position since August 2001. From October 1998 through July 2001, he was the Chief Financial Officer of Milliman USA. He is also a director for several other companies including Oberto Sausage, Inc., Washington Federal Savings, Inc., Barclay Dean Interiors, Pacific Northwest Title and WestFarm Foods. He has been a director of the Company since 1989 and his current term expires in 2007.
Chairman, President and Chief Executive Officer, Esterline Technologies Corporation.Age 65.
Mr. Cremin has been Chairman since January 2001. In addition, he has served as Chief Executive Officer and President since January 1999 and September 1997, respectively. He has been a director of the Company since 1998 and his current term expires in 2008.
Director, President and Chief Executive Officer, Stantec Inc.Age 54.
Mr. Franceschini has been the Director, President and Chief Executive Officer of Stantec Inc. (a global design firm) since June 1998. He has been a director of the Company since 2002 and his current term expires in 2008.
Admiral, United States Navy (Retired).Age 69.
Since retiring from the U.S. Navy in 1998, Admiral Larson has consulted on a broad array of defense, international and domestic policy issues to government and industry. Admiral Larson is also a Director of Northrop Grumman Corporation. He has been a director of the Company since 2004 and his current term expires in 2007.
Chairman and Chief Executive Officer, FuelCell Energy, Inc.Age 63.
Mr. Leitman has been the Chairman and Chief Executive Officer of FuelCell Energy, Inc. (a fuel cell company) since September 2005. Prior to that time, he was Chairman, President and Chief Executive Officer of FuelCell Energy, Inc. since June 2002. Previously, he was the President and Chief Executive Officer of FuelCell Energy, Inc. from August 1997. He has been a director of the Company since 1998 and his current term expires in 2007.
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• | the name and address of the shareholder; | ||
• | a representation that the shareholder is entitled to vote at the meeting at which directors will be elected; | ||
• | the number of shares of the Company that are beneficially owned by the shareholder; | ||
• | a representation that the shareholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; | ||
• | the following information with respect to the person nominated by the shareholder: |
• | name and address; | ||
• | other information regarding such nominee as would be required in a proxy statement filed pursuant to applicable rules promulgated by the SEC, and | ||
• | a description of any arrangements or understandings between the shareholder and the nominee and any other persons (including their names), pursuant to which the nomination is made; and |
• | the consent of each such nominee to serve as a director if elected. |
Mail: | Board of Directors | |||
Attn: Lead Independent Director or Corporate Secretary | ||||
Esterline Technologies Corporation | ||||
500 108th Avenue NE, Suite 1500 | ||||
Bellevue, WA 98004 |
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Amount and Nature | ||||||||
of Beneficial | ||||||||
Name and Address of Beneficial Owner (1) | Ownership (2) | Percent of Class | ||||||
Dimensional Fund Advisors Inc. | 1,624,233 | (3) | 6.4 | % | ||||
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401 | ||||||||
AXA Financial, Inc. | 1,312,829 | (4) | 5.2 | % | ||||
1290 Avenue of the Americas, New York, NY 10104 | ||||||||
M&G Investment Management Limited | 1,280,000 | (5) | 5.0 | % | ||||
Governor’s House, Laurence Pountney Hill, London, England EC4R 0HH | ||||||||
Robert W. Cremin | 327,766 | (6) | 1.3 | % | ||||
Robert D. George | 117,500 | (6) | * | |||||
Stephen R. Larson | 101,500 | (6) | * | |||||
Larry A. Kring | 97,650 | (6) | * | |||||
John F. Clearman | 15,583 | * | ||||||
Richard J. Wood | 11,250 | (6) | * | |||||
Jerry D. Leitman | 7,249 | * | ||||||
Ross J. Centanni | 5,951 | * | ||||||
Robert S. Cline | 5,951 | * | ||||||
James L. Pierce | 4,541 | * | ||||||
Anthony P. Franceschini | 3,169 | * | ||||||
Lewis E. Burns | 1,541 | * | ||||||
Charles R. Larson | 1,379 | * | ||||||
Directors, nominees and executive officers as a group (15 persons) | 771,040 | (6) | 3.0 | % |
* | Less than 1% | |
(1) | Unless otherwise indicated, the business address of each of the shareholders named in this table is Esterline Technologies Corporation, 500 108th Avenue NE, Bellevue, Washington 98004. | |
(2) | Unless otherwise indicated in the footnotes to this table, the person and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. |
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(3) | The information on the number of shares held is based upon a Schedule 13G/A filed on February 9, 2005, on behalf of Dimensional Fund Advisors Inc. (“Dimensional”). Based upon such filing, Dimensional is an investment advisor registered under Section 203 of the Investment Advisors Act of 1940. Dimensional furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other investment vehicles, including commingled group trusts. These investment companies and investment vehicles are the “Funds”. In its role as investment advisor or investment manager, Dimensional possessed sole voting and sole investment power over all of the shares. The Funds own all of the shares, and Dimensional disclaims beneficial ownership of such shares. | |
(4) | The information on the number of shares held is based upon a Schedule 13G/A filed on February 15, 2005 on behalf of AXA Financial, Inc. (“AXF”). Based upon such filing, Alliance Capital Management, L.P. (“Alliance”), a majority owned subsidiary of AXF, manages unaffiliated third-party client accounts that hold the shares. Each of AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Courtage Assurance Mutuelle and AXA have sole voting power with respect to 857,567 shares, shared voting power with respect to 9,050 shares and sole dispositive power with respect to all of the shares. Each of the foregoing entities, which are affiliates of AXF, disclaims beneficial ownership of such shares. AXF has sole voting power with respect to 427,165 shares and shared voting power with respect to 9,050 shares. Alliance is deemed to have sole voting power with respect to 425,815 shares, shared voting power with respect to 9,050 shares, and sole dispositive power with respect to 504,059 shares. AXA Rosenburg Investment management LLC, an affiliate of AXF, is deemed to have sole voting power with respect to 429,600 shares and sole dispositive power with respect to 806,620 shares. AXA Konzern AG, an affiliate of AXF, is deemed to have sole voting power and sole dispositive power with respect to 800 shares. AXA Equitable Life Insurance Company, an affiliate of AXF, is deemed to have sole voting power and sole dispositive power with respect to 1,350 shares. | |
(5) | The information on the number of shares is based upon a Schedule 13G filed on January 10, 2006 by M&G Investment Management Limited (“M&G”). Based upon such filing, M&G has shared voting and shared dispositive power with respect to the shares. | |
(6) | Includes shares subject to options granted under the Company’s Amended and Restated 1987 and 1997 Stock Option Plans and the Company’s 2004 Equity Incentive Plan which are exercisable currently or within 60 days of the date of this proxy statement as follows: Mr. Cremin, 323,750 shares; Mr. George, 116,500 shares; Mr. Larson, 99,500 shares; Mr. Kring, 77,250 shares; Mr. Wood, 11,250 shares; and directors, nominees and executive officers as a group, 695,250 shares. |
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Long-Term Compensation | ||||||||||||||||||||||||||||
Awards | ||||||||||||||||||||||||||||
Annual | Securities | |||||||||||||||||||||||||||
Compensation | Other Annual | Underlying | Payouts | All Other | ||||||||||||||||||||||||
Salary | Bonus | Compensation | Options | LTIP Payouts | Compensation | |||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($)(1) | ($)(2) | (#) | ($) | ($) (3) | |||||||||||||||||||||
Robert W. Cremin | 2005 | 685,833 | 2,097,302 | — | 77,000 | — | 6,300 | |||||||||||||||||||||
Chairman, President and | 2004 | 640,000 | 276,750 | — | 55,000 | 216,975 | 6,150 | |||||||||||||||||||||
Chief Executive Officer | 2003 | 540,000 | 302,543 | — | 40,000 | 412,500 | 3,000 | |||||||||||||||||||||
Robert D. George | 2005 | 333,333 | 726,724 | — | 17,500 | — | 6,300 | |||||||||||||||||||||
Vice President, Chief | 2004 | 306,667 | 90,000 | — | 12,000 | 71,010 | 6,150 | |||||||||||||||||||||
Financial Officer, Secretary and Treasurer | 2003 | 280,000 | 104,583 | — | 10,000 | 135,000 | 3,000 | |||||||||||||||||||||
Larry A. Kring | 2005 | 385,000 | 761,626 | — | 27,300 | — | 6,300 | |||||||||||||||||||||
Senior Group Vice President | 2004 | 368,833 | 108,000 | — | 17,000 | 71,010 | 6,150 | |||||||||||||||||||||
2003 | 335,000 | 125,126 | — | 10,000 | 135,000 | 3,000 | ||||||||||||||||||||||
Stephen R. Larson | 2005 | 306,333 | 616,802 | — | 14,600 | — | 6,300 | |||||||||||||||||||||
Vice President, Strategy & | 2004 | 293,000 | 86,400 | — | 12,000 | 71,010 | 6,150 | |||||||||||||||||||||
Technology | 2003 | 273,000 | 101,968 | — | 10,000 | 135,000 | 3,000 | |||||||||||||||||||||
Richard J. Wood (4) | 2005 | 262,263 | 457,761 | 127,711 | 25,000 | — | 50,839 | |||||||||||||||||||||
Group Vice President | 2004 | 234,121 | 86,415 | — | — | — | 58,045 | |||||||||||||||||||||
2003 | 75,947 | — | — | 10,000 | — | 33,282 |
(1) | For fiscal 2005, includes amounts earned under the Company’s 2005 Annual Incentive Compensation Plan and the initial one-year performance period under the Company’s new Long-Term Incentive Plan. | |
(2) | The Company paid for tax planning services provided to Mr. Wood and reimbursed him for relocation expenses that totaled approximately $111,828, a cost of living adjustment, and car expenses. Excludes an allowance paid to each of the named executive officers for the purchase of a vehicle and amounts paid to a financial services provider for investment planning services rendered to Messrs. Cremin, Kring and Larson. | |
(3) | Other amounts listed are those contributed or accrued by the Company for the Named Executive Officers, other than Mr. Wood, under the Company’s 401(k) plan. For Mr. Wood, amounts reflected are those contributed by the Company under the Esterline Group Personal Pension Plan. | |
(4) | Mr. Wood was named Group Vice President in January 2005. Previously, he was President of the Sensors Group, a subsidiary of the Company, from June 2003 to December 2004. All of the amounts set forth in the Summary Compensation Table for Mr. Wood, other than $220,833 of the annual salary and $69,641 of other annual compensation for fiscal year 2005, which were paid in U.S. dollars, represent the U.S. dollar equivalent of payments made to Mr. Wood in U.K. pounds sterling. All amounts reported for Mr. Wood for fiscal years 2003 and 2004 and the pension contributions and $58,070 of other annual compensation reported for Mr. Wood for fiscal 2005 were converted using the following average exchange rates for the 12-month period ended as of the end of fiscal years 2003, 2004 and 2005, respectively: U.S. $1.00 = U.K. £1.62 for 2003; U.S. $1.00 = U.K. £1.81 for 2004; and U.S. $1.00 = U.K. £1.85 for 2005. For fiscal 2005, $41,430 of Mr. Wood’s annual salary was converted using the average exchange rate for the two-month period ended December 31, 2004 of U.S. $1.00 = U.K. £1.91. |
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Individual Grants | ||||||||||||||||||||||||||||
Number of | % of Total | |||||||||||||||||||||||||||
Securities | Options | Potential Realizable Value at | ||||||||||||||||||||||||||
Underlying | Granted to | Assumed Annual Rates of Stock | ||||||||||||||||||||||||||
Options | Employees | Exercise | Price Appreciation | |||||||||||||||||||||||||
Granted | in Fiscal | Price | for Option Term (5) | |||||||||||||||||||||||||
Name | (#) (1) | Year | ($/Share) | Expiration Date | 0% ($) | 5% ($) | 10% ($) | |||||||||||||||||||||
Robert W. Cremin | 45,000 | (2) | 13 | % | 34.30 | December 9, 2014 | 0 | 970,699 | 2,459,941 | |||||||||||||||||||
32,000 | (3) | 9 | % | 38.90 | June 2, 2015 | 0 | 782,848 | 1,983,891 | ||||||||||||||||||||
Robert D. George | 12,000 | (2) | 3 | % | 34.30 | December 9, 2014 | 0 | 258,553 | 655,984 | |||||||||||||||||||
5,500 | (3) | 2 | % | 38.90 | June 2, 2015 | 0 | 134,552 | 340,981 | ||||||||||||||||||||
Larry A. Kring | 15,000 | (2) | 4 | % | 34.30 | December 9, 2014 | 0 | 323,556 | 819,981 | |||||||||||||||||||
12,300 | (3) | 4 | % | 38.90 | June 2, 2015 | 0 | 300,907 | 762,558 | ||||||||||||||||||||
Stephen R. Larson | 12,000 | (2) | 3 | % | 34.30 | December 9, 2014 | 0 | 258,853 | 655,984 | |||||||||||||||||||
2,600 | (3) | 1 | % | 38.90 | June 2, 2015 | 0 | 63,606 | 161,191 | ||||||||||||||||||||
Richard J. Wood | 25,000 | (4) | 7 | % | 31.03 | February 9, 2015 | 0 | 487,865 | 1,236,346 |
(1) | The grants were made pursuant to the Company’s 2004 Equity Incentive Plan. The exercise price of the options is equal to the fair market value of the Common Stock on the date of grant. The options vest at the rate of twenty-five percent per year on each of the first four anniversaries of the date of grant. | |
(2) | These grants were made on December 9, 2004. | |
(3) | These grants were made in June 2, 2005. | |
(4) | This grant was made in February 9, 2005. | |
(5) | The potential realizable value is based on the assumption that the stock price for the Common Stock appreciates at the annual rate shown (compounded annually) from the date of grant until the end of the ten-year option term, as specified by the SEC. These assumed rates of annual stock price appreciation are specified by the rules of the SEC and are not intended to forecast possible future appreciation, if any, of the Company’s stock price. Actual realizable value, if any, on stock option exercises depends on the future performance of the Common Stock as well as the option holder’s continued employment with the Company. |
Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised, | |||||||||||||||||||||||
Shares | Value | Options at | In-the-Money Options at | |||||||||||||||||||||
Acquired on | Realized | Fiscal Year End (#) (2) | Fiscal Year End ($) (3) | |||||||||||||||||||||
Name | Exercise (#) | ($) (1) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Robert W. Cremin | 100,000 | 2,686,154 | 276,250 | 150,750 | 4,960,663 | 1,302,375 | ||||||||||||||||||
Robert D. George | 8,000 | 140,559 | 104,250 | 32,250 | 2,183,140 | 323,593 | ||||||||||||||||||
Larry A. Kring | 50,000 | 995,176 | 61,750 | 50,050 | 1,276,678 | 406,920 | ||||||||||||||||||
Stephen R. Larson | 20,000 | 542,594 | 87,250 | 32,350 | 1,790,268 | 323,593 | ||||||||||||||||||
Richard J. Wood | — | — | 5,000 | 30,000 | 86,400 | 233,900 |
(1) | The value realized is the difference between the fair market value of the underlying Common Stock at the time of exercise and the aggregate exercise price of the options. | |
(2) | Exercisable/unexercisable amounts are as of October 28, 2005. | |
(3) | Based on the closing price of the Common Stock on October 28, 2005, as reported by the NYSE ($36.93), less the exercise price, multiplied by the number of in-the-money options held. There is no guarantee that, if and when these options are exercised, they will have this value. |
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Performance or | ||||||||||||||||
Number of Shares, | Other Period | Estimated Future Annual Payouts under | ||||||||||||||
Units | Until Maturation | Non-Stock Price-Based Plans($) (1) | ||||||||||||||
Name | or Other Rights | or Payout | Target | Maximum | ||||||||||||
Robert W. Cremin | — | 2005-2007 | 460,000 | 1,840,000 | ||||||||||||
— | 2005-2006 | 460,000 | 1,840,000 | |||||||||||||
Robert D. George | — | 2005-2007 | 165,000 | 660,000 | ||||||||||||
— | 2005-2006 | 165,000 | 660,000 | |||||||||||||
Larry A. Kring | — | 2005-2007 | 165,000 | 660,000 | ||||||||||||
— | 2005-2006 | 165,000 | 660,000 | |||||||||||||
Stephen R. Larson | — | 2005-2007 | 135,000 | 540,000 | ||||||||||||
— | 2005-2006 | 135,000 | 540,000 | |||||||||||||
Richard J. Wood | — | 2005-2007 | 95,000 | 380,000 | ||||||||||||
— | 2005-2006 | 95,000 | 380,000 |
(1) | The above awards are targets which could be earned pursuant to the Company’s long-term incentive compensation plan which was instituted on March 1, 2005. Awards under the new plan are based on performance with respect to two goals: growth in earnings per share and return on invested capital. See “Compensation Committee Report—Long Term Incentive Plan.” |
Years of Credited Service at Retirement | ||||||||||||||||||||
Average Compensation | 10 | 15 | 20 | 25 | 30 | |||||||||||||||
$ 100,000 | $ | 12,400 | $ | 18,600 | $ | 24,800 | $ | 31,000 | $ | 37,200 | ||||||||||
250,000 | 36,400 | 54,600 | 72,800 | 91,000 | 109,200 | |||||||||||||||
400,000 | 60,400 | 90,600 | 120,800 | 151,000 | 181,200 | |||||||||||||||
550,000 | 84,400 | 126,600 | 168,800 | 211,000 | 253,200 | |||||||||||||||
700,000 | 108,400 | 162,600 | 216,800 | 271,000 | 325,200 | |||||||||||||||
850,000 | 132,400 | 198,600 | 264,800 | 331,000 | 397,200 | |||||||||||||||
1,000,000 | 156,400 | 234,600 | 312,800 | 391,000 | 469,200 | |||||||||||||||
1,150,000 | 180,400 | 270,600 | 360,800 | 451,000 | 541,200 |
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JOHN F. CLEARMAN
ANTHONY P. FRANCESCHINI
CHARLES R. LARSON
JAMES L. PIERCE
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Fees | ||||||||
2005 | 2004 | |||||||
Audit fees(1) | $ | 2,641,783 | $ | 1,600,986 | ||||
Audit-related fees(2) | — | — | ||||||
Tax fees(3) | 247,856 | 111,253 | ||||||
All other fees | — | — |
(1) | Includes professional services for the audit of the Company’s annual financial statements, reviews of the financial statements included in the Company’s Form 10-Q filings, services that are normally provided by the Company’s independent registered public accounting firm in connection with statutory and regulatory filings or engagements and services that generally only the independent registered public accounting firm can reasonably provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC. | |
(2) | Includes fees associated with assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements, including, if applicable, fees related to assistance in financial due diligence related to mergers and acquisitions and consultation regarding generally accepted accounting principles. | |
(3) | Includes fees associated with tax compliance, tax advice, and domestic and international tax planning. This category includes fees relating to tax planning on mergers and acquisitions, restructurings and other services related to tax disclosure and filing requirements. |
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ON EXECUTIVE COMPENSATION FOR FISCAL YEAR 2005
§ | Support a performance-oriented environment that rewards both the Company’s annual financial results and its longer-term achievements as compared to market benchmarks. | |
§ | Reward executives for long-term strategic management and the enhancement of shareholder value. | |
§ | Attract and retain key executives critical to the success of the Company. |
§ | Base Salary; | ||
§ | Annual Incentive Compensation Plan; | ||
§ | Long-term Incentive Plan; | ||
§ | Stock Options; and | ||
§ | Benefits. |
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§ | Focus executives on increasing total shareholder returns over the long term by concentrating on key drivers of share price; | |
§ | Encourage executives to take reasonable long-term investment risks by measuring performance over multiple years; and | |
§ | Encourage profitable growth and effective use of assets in achieving growth goals. |
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LEWIS E. BURNS
ROSS J. CENTANNI
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• | All outstanding awards become fully and immediately exercisable immediately prior to the Company transaction, unless such awards are converted, assumed, or replaced by the successor company. The Company can elect to cash-out awards. | ||
• | Performance awards earned and outstanding become payable in full and deferrals or other restrictions shall remain in effect. |
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• | Any options and stock appreciation rights shall become fully exercisable and vested to the full extent of the original grant. | ||
• | Any restrictions and deferral limitations applicable to any restricted stock or stock units shall lapse. | ||
• | All performance awards shall be considered to be earned and payable in full, and any deferral or other restriction shall lapse and such performance stock and performance units shall be immediately settled or distributed. | ||
• | Any restrictions and deferral limitations and other conditions applicable to any other awards shall lapse, and such other awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable to the full extent of the original grant. | ||
• | The committee can provide a cash-out right for awards in connection with a change in control. |
• | a merger or consolidation of the Company with or into any other company or other entity; | ||
• | a sale in one transaction or a series of transactions undertaken with a common purpose of at least 50% of the Company’s outstanding voting securities; or | ||
• | a sale, lease, exchange or other transfer in one transaction or a series of related transactions undertaken with a common purpose of at least 50% of the Company’s assets. |
• | the beneficial ownership of the Company or the resulting company remains the same with respect to at least 70% of the voting power of the outstanding voting securities in substantially the same proportions as immediately prior to such Company transaction; | ||
• | no entity (other than the Company or an affiliate) will beneficially own 30% or more of the outstanding shares of common stock of the resulting company or the voting power of the outstanding voting securities; and | ||
• | the Company’s incumbent board will, after the Company transaction, constitute at least a majority of the board of the Company resulting from such Company transaction. |
• | an acquisition of beneficial ownership of 30% or more of either (a) the then outstanding shares of common stock of the Company or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (excluding any acquisition directly from the Company, any acquisition by the Company, any acquisition by any employee benefit plan of the Company, or a related party transaction. |
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• | a change in the composition of the Company’s Board of Directors during any two-year period such that the incumbent board members cease to constitute at least a majority (not including directors whose election was approved by at least two-thirds of the incumbent board). |
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Equity Compensation Plan Information | ||||||||||||
Number of securities | ||||||||||||
remaining available for | ||||||||||||
Number of securities | future issuance under | |||||||||||
to be issued upon | Weighted-average | equity compensation plans | ||||||||||
exercise | exercise price of | (excluding securities | ||||||||||
of outstanding options, | outstanding options, | reflected in the first | ||||||||||
Plan Category | warrants and rights | warrants and rights | column) | |||||||||
Equity compensation plans approved by security holders | 1,401,100 | $ | 23.56 | 451,086 | (1)(2) | |||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 1,401,100 | $ | 23.56 | 451,086 |
(1) | Of these shares, 276,350 shares are available for issuance under the 2004 Equity Incentive Plan, 122,978 shares are available for purchase under the 2002 Employee Stock Purchase Plan, 51,758 are available for grant under the Non-Employee Directors’ Stock Compensation Plan, as of the end of the Company’s last completed fiscal year. If the amendments to the 2004 Equity Incentive Plan proposed in this proxy statement are approved by the Company’s Stockholders at the 2006 annual meeting, an additional 1,000,000 shares will be available for issuance under that plan. If the amendment to the 2002 Employee Stock Purchase Plan proposed in this proxy statement is approved by the Company’s Stockholders at the 2006 annual meeting, an additional 150,000 shares will be available for issuance under that plan. | |
(2) | Pursuant to the Non-Employee Directors’ Stock Compensation Plan, each of the Company’s non-employee directors will receive an automatic grant of shares of Common Stock not subject to any restriction within 45 days of each annual shareholders meeting with an aggregate market value of $45,000 based on the closing price of the Common Stock on that date. |
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By order of the Board of Directors | ||
ROBERT D. GEORGE | ||
Vice President, | ||
Chief Financial Officer, Secretary and Treasurer | ||
January 24, 2006 |
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• | The director was an employee of the Company. | ||
• | The director was affiliated with or employed by an independent public accounting firm for the Company (or of an affiliate). | ||
• | The director was part of an interlocking directorate in which an executive officer of the Company serves on the compensation committee (or the board if no compensation committee) of another company that concurrently employed the director. | ||
• | The director has an immediate family member falling in any of the foregoing categories. |
• | A director cannot receive, directly or indirectly, any consulting or advisory fees or any other compensation other than director’s fees from the Company; | ||
• | A director cannot be an “affiliated person” of the Company or any of its subsidiaries (as such term is defined under applicable federal securities laws and regulations), except as specifically permitted under such laws and regulations or official interpretations thereof. |
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Date of | ||||||
Date of | Shareholder | |||||
Board Action | Action | Section/Effect of Amendment | Approval | |||
December 4, 2003 | Initial Plan Adoption | March 3, 2004 | ||||
December 8, 2005 | Plan Amendments | Section 2/update definitions; Section 3.1/update administrative authority language; | March ___, 2006 | |||
Section 3.2/prohibit repricing without shareholder approval (moved from Section 17.1); | ||||||
Section 4.1/increase authorized shares by adding 1 million shares; | ||||||
Section 4.3/move limitations to Section 12; | ||||||
Section 6/provide for treatment of dividends; | ||||||
Section 7/clarify mechanics for option exercise and termination of service; | ||||||
Section 8/update ISO terms; | ||||||
Section 9/update SAR terms; | ||||||
Section 10/clarify treatment of stock awards; | ||||||
Section 11/update performance award provisions; | ||||||
Section 12/clarify application of 162(m) limits and update performance criteria; | ||||||
Section 13/clarify authority to grant other types of awards; | ||||||
Section 16/update company transaction and change in control provisions, add cash-out feature and provide for Section 409A compliance; | ||||||
Section 17.1/move repricing prohibition to Section 4.2; | ||||||
Section 18.4/clarify application to all Awards other than Stock Awards; | ||||||
Section 18.6/update authority to grant outside US; | ||||||
Section 18.11/add new section clarifying Plan limited by applicable law. |
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(a) | consummation of a merger or consolidation of the Company or any direct or indirect Subsidiary Corporation of the Company with or into any other company, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate, at least 70% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing 30% or more of the combined voting power of the Company’s then outstanding securities; or | ||
(b) | consummation of an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the |
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Company’s assets to an entity, at least 70% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. |
(a) | the employee does not, immediately after the Option is granted, own stock (as defined by the Code) possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or of a Parent Corporation or Subsidiary Corporation; | ||
(b) | the employee’s customary employment is for 20 hours or more per week or any lesser number of hours established by the Plan Administrator for a future Offering; | ||
(c) | the employee has been employed for a minimum of one year as of an Offering Date or any lesser or greater minimum employment period not to exceed two years that is established by the Plan Administrator for a future Offering; and | ||
(d) | if established by the Plan Administrator for a future Offering, the employee customarily works a certain minimum number of months per year, such number of months not to exceed five months per year. |
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(a) | Except as otherwise set forth below, the Plan shall be implemented by a series of Offerings that each last six months (each, an “Offering”), such Offerings to commence on June 16 and December 16 of each year and to end on the next December 15 and June 15, respectively. The first Offering shall begin on September 3, 2002 and shall end on December 15, 2002. | ||
(b) | Notwithstanding the foregoing, the Plan Administrator may establish (i) a different term for the initial Offering or for one or more future Offerings and (ii) different commencing and ending dates for such Offerings; provided, however, that an Offering may not exceed five years; and provided, further, that if the Purchase Price may be less than 85% of the Fair Market Value of the Common Stock on the Purchase Date, the Offering may not exceed 27 months. | ||
(c) | In the event the first or the last day of an Offering is not a regular business day, then the first day of the Offering shall be deemed to be the next regular business day and the last day of the Offering shall be deemed to be the last preceding regular business day. |
(a) | Each Offering shall consist of one or more consecutive purchase periods (each, a “Purchase Period”). The last day of each Purchase Period shall be the Purchase Date for such Purchase Period. A Purchase Period shall commence on June 16 and December 16 of each year and shall end on the next December 15 and June 15, respectively. The first Purchase Period shall begin on September 3, 2002 and shall end on December 15, 2002. | ||
(b) | Notwithstanding the foregoing, the Plan Administrator may establish (i) a different term for the initial Purchase Period or for one or more future Purchase Periods and (ii) different commencing and ending dates for any such Purchase Period. | ||
(c) | In the event the first or last day of a Purchase Period is not a regular business day, then the first day of the Purchase Period shall be deemed to be the next regular business day and the last day of the Purchase Period shall be deemed to be the last preceding regular business day. |
(a) | The purchase price (the “Purchase Price”) at which Common Stock may be acquired in an Offering pursuant to the exercise of all or any portion of an Option shall be 85% of the lesser of (i) the Fair Market Value of the Common Stock on the Offering Date of such Offering and (ii) the Fair Market Value of the |
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Common Stock on a Purchase Date during the Offering, unless the Plan Administrator establishes a higher percentage for a future Offering. |
(b) | Notwithstanding the foregoing, if an increase in the number of shares authorized for issuance under the Plan (other than an annual increase pursuant to Section 4) is approved and all or a portion of such additional shares are to be issued during one or more Offerings that are underway at the time of stockholder approval of such increase (the “Additional Shares”), then, if as of the date of such stockholder approval, the Fair Market Value of a share of Common Stock is higher than the Fair Market Value on the Offering Date for any such Offering, the Purchase Price for the Additional Shares shall be 85% of the lesser of (i) the Common Stock’s Fair Market Value on the date of such stockholder approval and (ii) the Fair Market Value of the Common Stock on the Purchase Date. |
(a) | indicating the Eligible Employee’s election to participate in the Plan; | ||
(b) | authorizing payroll deductions and stating the amount to be deducted regularly from the Participant’s Eligible Compensation; and | ||
(c) | authorizing the purchase of Common Stock for the Participant in each Purchase Period. |
(a) | No Participant shall be entitled to purchase Common Stock under the Plan (or any other employee stock purchase plan that is intended to meet the requirements of Code Section 423 sponsored by the Company, a Parent Corporation or a Subsidiary Corporation) with a Fair Market Value exceeding $25,000 (such value determined as of the Offering Date for each Offering or such other limit as may be imposed by the Code) in any calendar year in which a Participant participates in the Plan (or any other employee stock purchase plan described in this Section 8.1). |
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(b) | No Participant shall be entitled to purchase more than 2,000 shares of Common Stock (or such other number as the Board or the Committee shall specify for a future Offering) under the Plan in any Offering or, if a future Offering has more than one Purchase Period, in any single Purchase Period of that Offering. |
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VOLUNTARY WITHDRAWAL
(a) | Unless the Plan Administrator establishes otherwise for a future Offering, during a Purchase Period, a Participant may elect to reduce payroll contributions to 0% by completing and filing with the Human Resources Department an amended Subscription authorizing cessation of payroll deductions. The change in rate shall be effective as of the first pay date that falls at least ten business days after the Participant files the amended Subscription (the “Change Notice Date”), unless the Plan Administrator determines otherwise for a future Offering. All payroll deductions accrued by a Participant as of a Change Notice Date shall continue to be applied toward the purchase of Common Stock on the Purchase Date, unless a Participant withdraws from the Plan, pursuant to Section 11.2 below. An amended Subscription shall remain in effect until the Participant changes such Subscription in accordance with the terms of the Plan. | ||
(b) | Unless the Plan Administrator determines otherwise for a future Offering, a Participant may elect to increase or decrease the amount to be withheld from his or her compensation for future Purchase Periods by filing with the Human Resources Department an amended Subscription; provided, however, that notice of such election must be delivered to the Human Resources Department prior to or during an open enrollment period for the next Purchase Period (or by any other time period established by the Plan Administrator for a future Offering) in such form and in accordance with such terms as the Plan Administrator may establish for an Offering. An amended Subscription shall remain in effect until the Participant changes such Subscription in accordance with the terms of the Plan. | ||
(c) | Notwithstanding the foregoing, to the extent necessary to comply with Code Section 423 and Section 8.1, a Participant’s payroll deductions shall be decreased to 0% during any Purchase Period if the aggregate of all payroll deductions accumulated with respect to one or more Purchase Periods ending within the same calendar year exceeds $25,000 of Fair Market Value of the Common Stock determined as of the first day of an Offering ($21,250 to the extent the Purchase Price may be 85% of the Fair Market Value of the Common Stock on the Offering Date of the Offering). Payroll deductions shall re-commence at the rate provided in such Participant’s Subscription at the beginning of the first Purchase Period that is scheduled to end in the following calendar year, unless the Participant terminates participation in the Plan as provided in Section 11.2 or indicates otherwise in an amended Subscription. Also, notwithstanding the foregoing, a Participant’s payroll deductions shall be decreased to 0% at such time that the aggregate of all payroll deductions accumulated with respect to an Offering exceeds the amount necessary to purchase 2,000 shares of Common Stock in such Offering (or such other number as the Board or Committee shall specify for a future Offering). Payroll deductions shall re-commence at the rate provided in such Participant’s Subscription at the beginning of the next Purchase Period, provided the Participant continues to participate in the Plan and such participation complies with Section 8.1. |
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(a) | The Company may, from time to time, impose a requirement that any notice of withdrawal be on file with the Human Resources Department for a reasonable period prior to the effectiveness of the Participant’s withdrawal. | ||
(b) | If a Participant withdraws from the Plan after the Purchase Date for a Purchase Period, the withdrawal shall not affect Common Stock acquired by the Participant in any earlier Purchase Periods. | ||
(c) | In the event a Participant voluntarily elects to withdraw from the Plan, the Participant may participate in any subsequent Offering under the Plan by again satisfying the definition of Eligible Employee and re-enrolling in the Plan in accordance with Section 7. |
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(a) | The Board may amend the Plan in such respects as it shall deem advisable; provided, however, that, to the extent required for compliance with Code Section 423 or any applicable law or regulation, stockholder approval will be required for any amendment that will (i) increase the total number of shares as to which Options may be granted under the Plan, (ii) modify the class of employees eligible to receive Options, or (iii) otherwise require stockholder approval under any applicable law or regulation; and provided further, that except as provided in this Section 17, no amendment to the Plan shall make any change in any Option previously granted which adversely affects the rights of any Participant. | ||
(b) | The Plan shall continue in effect for ten years after the date of its adoption by the Board. Notwithstanding the foregoing, the Board may at any time and for any reason suspend or terminate the Plan. During any period of suspension or upon termination of the Plan, no Options shall be granted. | ||
(c) | Except as provided in Section 20, no such termination of the Plan may affect Options previously granted, provided that the Plan or an Offering may be terminated by the Board on a Purchase Date or by the Board setting a new Purchase Date with respect to an Offering and a Purchase Period then in progress if the Board determines that termination of the Plan and/or the Offering is in the best interests of the Company and the stockholders or if continuation of the Plan and/or the Offering would cause the Company to incur adverse accounting charges as a result of a change after the effective date of the Plan in the generally accepted accounting rules applicable to the Plan. |
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SUMMARY PAGE
Date of Shareholder | ||||||
Date of Board Action | Action | Section/Effect of Amendment | Approval | |||
September 17, 2001 | Initial Plan Adoption | March 3, 2004 | ||||
September 12, 2002 | Plan Amendment | Section 2/update definition of Eligible Compensation and Eligible Employee; Section 5/change Offering and Purchase Period Dates; Section 6/permit higher Purchase Price for future offerings; Section 11/change administrative procedures for withholding elections, payroll deductions and withdrawal from the plan; | Not required | |||
September 8, 2004 | Plan Amendment | Section 22/renumbered as Section 23; Section 22/authorize subplans for employees in other countries; | Not required | |||
December 8, 2005 | Plan Amendment | Section 4/amended to increase shares available for issuance from | March ,2006 | |||
300,000 shares to 450,000 shares |
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Please Mark Here for Address Change or Comments | o | |||
SEE REVERSE SIDE |
1. | Election of the following Director Nominees: | |||||
FOR all nominees listed below (except as marked to the contrary) | WITHHOLD AUTHORITY to vote for all nominees listed below | |||||
o | o | |||||
To serve a term that expires in 2009: | ||||||
01 Ross J. Centanni, | ||||||
02 Robert S. Cline, and | ||||||
03 James L. Pierce | ||||||
INSTRUCTION: To withhold authority for any individual nominee, print that nominee’s name in the following space: | ||||||
FOR | AGAINST | ABSTAIN | ||||||
2. | To consider and approve a proposal to amend the Company’s 2004 Equity Incentive Plan to, among other things, authorize the issuance of an additional 1,000,000 shares of the Company’s Common Stock, | o | o | o | ||||
FOR | AGAINST | ABSTAIN | ||||||
3. | To consider and approve a proposal to amend the Company’s Employee Stock Purchase Plan to authorize the issuance of an additional 150,000 shares of the Company’s Common Stock, | o | o | o | ||||
4. | In their discretion, the holders of this proxy are authorized to vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof. | |||||||
This proxy, when properly executed, will be voted in the manner directed on this proxy card. Management recommends a vote FOR all nominees designated on this proxy card and FOR proposals 2, 3 and 4. If no specification is made, a vote FOR all nominees and FOR proposals 2, 3 and 4 will be entered. | ||||||||
The undersigned hereby revokes any proxy or proxies heretofore given for such shares and ratifies all that said proxies or their substitutes may lawfully do by virtue hereof. |
Signature | Signature | Date | ||||||||
NOTE: Please sign as name appears on this proxy. If stock is held jointly, each owner should sign. Persons signing in a representative capacity should give their title. PLEASE PROMPTLY DATE, SIGN AND RETURN THIS PROXY CARD. |
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