SECURITIES AND EXCHANGE COMMISSION
of the Securities Exchange Act of 1934
(Amendment No.)
[ ] | Preliminary Proxy Statement | [ ] | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||||||||||
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TO BE HELD
APRIL 15, 2009
Chief Legal Officer, and Secretary
Page # | ||||||
---|---|---|---|---|---|---|
Shareholders Entitled to Vote | 1 | |||||
Proxies and Voting Procedures | 1 | |||||
Vote Required for Quorum and Adoption of Proposals | 2 | |||||
Board Recommendations Regarding Proposals 1 and 2 | 2 | |||||
Policy Regarding Director Elections where a Majority Vote Is Not Received | 2 | |||||
ELECTION OF THREE CLASS 1 DIRECTORS FOR THREE-YEAR TERMS (Proposal No. 1) | 3 | |||||
The Board of Directors recommends a Vote “For” All Nominees | 3 | |||||
Nominees for Election at the 2009 Annual Meeting | 3 | |||||
Continuing Directors | 4 | |||||
Directors Whose Terms Will End at the 2009 Annual Meeting | 5 | |||||
CORPORATE GOVERNANCE | 5 | |||||
Board Independence | 5 | |||||
Section 16(a) Beneficial Ownership Reporting Compliance | 6 | |||||
Code of Business Conduct | 6 | |||||
The Board and Its Committees | 6 | |||||
Communications with the Board | 7 | |||||
Director Education | 7 | |||||
Corporate Governance Committee | 7 | |||||
Director Nominees | 8 | |||||
Audit Committee | 9 | |||||
Personnel & Compensation Committee | 10 | |||||
Compensation Committee Interlocks and Insider Participation | 11 | |||||
Finance Committee | 11 | |||||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 12 | |||||
Stock Ownership of Directors and Executive Officers | 12 | |||||
Securities Authorized for Issuance under Equity Compensation Plans | 13 | |||||
Beneficial Owners of More Than 5% of Common Stock | 13 | |||||
EXECUTIVE COMPENSATION | 14 | |||||
Compensation Discussion and Analysis | 14 | |||||
Introduction | 14 | |||||
Highlights | 14 | |||||
Oversight of the Executive Compensation Program | 14 | |||||
Executive Compensation Philosophy | 15 | |||||
Compensation Policies | 15 | |||||
External Market Practices | 15 | |||||
Market Positioning | 16 | |||||
Allocation of 2008 Compensation Package (Excluding Benefits) | 16 | |||||
Components of the Executive Compensation Program | 16 | |||||
Salaries | 17 | |||||
Annual Cash Incentive Awards | 17 | |||||
Award Opportunities | 17 | |||||
Corporate Named Executive Officers | 18 | |||||
Performance Measures | 18 | |||||
2008 Company Annual Financial Performance | 19 | |||||
2008 Individual Performance | 19 | |||||
Actual 2008 Cash Incentive Award Payments | 19 | |||||
Business Unit Named Executive Officer | 20 | |||||
Performance Measures | 20 | |||||
2008 Actual Financial Performance | 20 | |||||
Actual 2008 Cash Incentive Award Payment | 20 |
Page # | ||||||
---|---|---|---|---|---|---|
Long-Term Incentives | 20 | |||||
Retirement Benefits | 21 | |||||
Other Benefits and Perquisites | 22 | |||||
Employment Agreements and Severance/Change in Control Arrangements | 22 | |||||
Stock Ownership Guidelines for Directors and Executive Officers | 23 | |||||
Material Tax and Accounting Implications of the Program | 24 | |||||
Personnel & Compensation Committee Report | 24 | |||||
SUMMARY COMPENSATION TABLE | 25 | |||||
Employment Agreements | 26 | |||||
Grants of Plan-Based Awards in 2008 Fiscal Year | 28 | |||||
Outstanding Equity Awards at 2008 Fiscal Year-End | 29 | |||||
Option Exercises and Stock Vested in Fiscal Year 2008 | 30 | |||||
Pension Benefits | 31 | |||||
Non-Qualified Deferred Compensation Plan | 32 | |||||
POST TERMINATION PAYMENTS AND BENEFITS | 33 | |||||
Payments Made Upon Termination | 33 | |||||
Payments Made Upon Termination for Cause or Without Good Reason | 33 | |||||
Payments Made Upon Retirement | 34 | |||||
Payments Made Upon Death or Disability | 34 | |||||
Payments Made Upon Involuntary Termination of Employment without Cause or for Good Reason | 35 | |||||
Payments Made Due to Qualifying Employment Termination on or after a Change in Control | 36 | |||||
Coordination Between Employment Agreements and Change in Control Agreements | 37 | |||||
Assumptions Regarding Post Termination Payment Tables | 38 | |||||
General Assumptions | 38 | |||||
Equity-Based Assumptions | 38 | |||||
Incentive Plan Assumptions | 38 | |||||
Retirement Benefit Assumptions | 39 | |||||
Conditional Tax Gross-Up for 20% Excise Tax | 39 | |||||
Coordination with Other Tables | 39 | |||||
Non-Compete Assumption | 39 | |||||
NON-EMPLOYEE DIRECTOR COMPENSATION | 46 | |||||
TRANSACTIONS WITH RELATED PERSONS | 47 | |||||
AUDIT COMMITTEE REPORT | 48 | |||||
RATIFICATION OF APPOINTMENT OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY (Proposal No. 2) | 49 | |||||
The Board of Directors Recommends a Vote “For” this Proposal | 49 | |||||
Principal Accounting Fees and Services | 49 | |||||
SHAREHOLDER PROPOSALS FOR 2010 ANNUAL MEETING | 50 | |||||
GENERAL | 50 | |||||
Exhibit 1 | ||||||
Proxy Card |
APRIL 15, 2009
• | Director’s qualifications in light of the overall composition of the Board; |
• | Director’s past and anticipated future contributions to the Board; |
• | stated reasons, if any, for the “withheld” votes and if the underlying cause can be otherwise addressed; and |
• | potential adverse consequences of accepting the resignation, including failure to comply with any applicable rule or regulation (including Nasdaq rules or federal securities laws) or triggering defaults or other adverse consequences under material contracts or the acceleration of change-in-control provisions and other rights in employment agreements, if applicable. |
E. Reeves Callaway III Mr. Callaway, 61, has been a Director since 1995. He is the Founder and President and Chief Executive Officer of The Callaway Companies, an engineering services firm. | ||||||
Karen M. Garrison Ms. Garrison, 60, has been a Director since 2006. She retired as President–Pitney Bowes Business Services, a major manufacturer of postal equipment/software and service provider, in 2004. She is a director of Standard Parking Corporation and Tenet Healthcare. |
A. William Higgins CIRCOR International, Inc., a global diversified manufacturing company that designs, manufactures, and supplies valves, related products and services to OEMs, processors, manufacturers, the military, and utilities that rely on fluid-control to accomplish their missions. He has served in that role since March, 2008 and prior to that held the offices of President and Chief Operating Officer and Executive Vice President and Chief Operating Officer of CIRCOR since 2005. Prior to joining CIRCOR, Mr. Higgins spent thirteen years in a variety of senior management positions with Honeywell International and AlliedSignal. Mr. Higgins is chairman of CIRCOR’s Board of Directors. |
Neal J. Keating Mr. Keating, 53, was elected President and Chief Operating Officer as well as a Director of the company, effective September 17, 2007. Effective January 1, 2008, he was serving as President and Chief Executive Officer and effective March 1, 2008 he was appointed to the additional position of Chairman. Prior to joining the company, Mr. Keating served as Chief Operating Officer at Hughes Supply, a $5.4 billion wholesale distributor that was acquired by Home Depot in 2006. Prior to that, from August 2002 to June 2004, he served as Managing Director/Chief Executive Officer of GKN Aerospace, a $1 billion aerospace subsidiary of GKN, plc, serving also as Executive Director on the Main Board of GKN plc and as a member of the Board of Directors of Agusta-Westland. From 1978 to July 2002, Mr. Keating served in increasingly senior positions at Rockwell International and as Executive Vice President and Chief Operating Officer of Rockwell Collins, Commercial Systems, a $1.7 billion commercial aerospace business from 2001 through 2002. | ||||||
Eileen S. Kraus Ms. Kraus, 70, has been a Director since 1995 and currently serves as the Board’s Lead Director. She is the retired Chairman of Fleet Bank Connecticut and is a director of The Stanley Works and Rogers Corporation. | ||||||
Richard J. Swift Mr. Swift, 64, has been a Director since 2002. He is former Chairman of the Financial Accounting Standards Advisory Council and retired Chairman, President and Chief Executive Officer of Foster Wheeler Ltd., a provider of design, engineering, construction, and other services. He is a director of Ingersoll-Rand Company, Ltd., Public Service Enterprise Group Incorporated, Hubbell Incorporated and CVS Caremark Corporation. |
Brian E. Barents Mr. Barents, 65, has been a Director since 1996. He is the retired President and Chief Executive Officer of Galaxy Aerospace Corp. Prior to that, he was President and Chief Executive Officer of Learjet, Inc. He is also a director of CAE, Inc. | ||||||
Edwin A. Huston Mr. Huston, 70, has been a Director since 2002. He is the retired Vice Chairman of Ryder System, Incorporated, an international logistics and transportation solutions company and a director of The Hackett Group (formerly Answerthink, Inc.), Tennenbaum Opportunity Fund and Unisys Corporation. | ||||||
Thomas W. Rabaut Mr. Rabaut, 60, was elected a Director effective March 1, 2008. Mr. Rabaut has served as a Senior Advisor to The Carlyle Group, a global private equity firm, since January 2007. From June 2005 to January 2007, he was President of the Land & Armaments Operating Group of BAE Systems, a global leader in the design, development and production of military systems. From January 1994 to June 2005, he served as President and Chief Executive Officer of United Defense Industries, Inc., which was acquired by BAE Systems in 2005. He is a director of Cytec Industries, Inc. |
under the caption “Transactions with Related Persons” that were considered by the Board in determining the independence of any of its members.
Eileen S. Kraus, Chair and Lead Director Karen M. Garrison (Chair of the Finance Committee) Edwin A. Huston (Chair of the Audit Committee) Richard J. Swift (Chair of the Personnel & Compensation Committee) |
governance policies and principles for the company; ongoing development and evaluation of the policies, practices, and functioning of the Board and its fulfillment of legal responsibilities in a manner that effectively serves the interests of the company’s shareholders; monitoring director compliance with stock ownership guidelines; consideration and recommendation of shareholder proposals; establishment of selection criteria for, and review and recommendation of, new Board members; administration of the Company’s policy regarding director elections as described at page 2 of this proxy statement; assuring that each standing Committee annually evaluates its own performance; recommendation of guidelines and procedures to be used by Directors and the Committee in evaluating Board performance and managing the annual performance evaluation process; recommendation of director compensation; recommendation of candidates for successor to the Chief Executive Officer; and assuring that management has established and maintains a process for filling senior executive positions other than the Chief Executive Officer.
proxies for election of directors pursuant to Section 14 of the Exchange Act and its rules and regulations. The written notice must be accompanied by a written consent of each proposed nominee to being named or referred to as a nominee and to serve as a director if elected. The Board may require any proposed nominee to furnish such other information (which may include meetings to discuss the furnished information) as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director.
Edwin A. Huston, Chair Robert Alvine Brian E. Barents Eileen S. Kraus |
accounting, internal accounting controls, auditing, or other matters; as well as the confidential, anonymous submission by the company’s employees of concerns regarding questionable accounting, auditing, or other matters. The Committee meets regularly in executive session with the internal audit director and the independent auditor without management present.
Richard J. Swift, Chair Brian E. Barents E. Reeves Callaway III Thomas W. Rabaut |
Karen M. Garrison, Chair Robert Alvine E. Reeves Callaway III Thomas W. Rabaut |
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Name | Number of Shares Beneficially Owned as of February 1, 2009 | Percentage | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Robert Alvine | 12,000 | * | ||||||||
Brian E. Barents | 11,500 | * | ||||||||
T. Jack Cahill | 41,581 | (1) | * | |||||||
E. Reeves Callaway III | 11,500 | * | ||||||||
Candace A. Clark | 63,777 | (2) | * | |||||||
William C. Denninger | 2,500 | * | ||||||||
Ronald M. Galla | 50,806 | (3) | ||||||||
Robert M. Garneau | 68,053 | (4) | * | |||||||
Karen M. Garrison | 6,000 | * | ||||||||
A. William Higgins | 0 | * | ||||||||
Edwin A. Huston | 9,500 | * | ||||||||
Neal J. Keating | 68,682 | (5) | * | |||||||
Eileen S. Kraus | 13,651 | * | ||||||||
Thomas W. Rabaut | 2,000 | * | ||||||||
Richard J. Swift | 7,000 | * | ||||||||
All Directors and Executive Officers as a group | 448,221 | (6) | 1.76 | % |
* | Less than one percent. |
(1) | Includes 8,800 shares subject to stock options exercisable or which will become exercisable within 60 days. Includes 1,225 shares held jointly with spouse. |
(2) | Includes 34,000 shares subject to stock options exercisable or which will become exercisable within 60 days. |
(3) | Includes 40,027 shares held jointly with spouse. Includes 10,779 shares subject to stock options exercisable or which will become exercisable within 60 days |
(4) | Includes 6,000 shares subject to stock options exercisable or which will become exercisable within 60 days. |
(5) | Includes 14,000 shares held in a trust of which Mr. Keating and his spouse are trustees. |
(6) | Includes 105,692 shares subject to stock options exercisable or which will become exercisable within 60 days. |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted- average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders: | ||||||||||||||
2003 Stock Incentive Plan* | 743,679 | $ | 18.81 | 1,148,099 | ||||||||||
Employees Stock Purchase Plan | — | — | 369,613 | |||||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||||
Total | 743,679 | $ | 18.81 | 1,517,712 |
* | Includes securities to be issued upon exercise of outstanding options granted under a predecessor plan. |
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Common Stock | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Gabelli Funds, LLC(1) One Corporate Center Rye, NY 10580 | 2,868,284 | 11.3 | ||||||||
Barclays Global Investors, N.A.(2) 45 Fremont Street San Francisco, CA 94105 | 1,774,652 | 7.0 | ||||||||
Snyder Capital Management, Inc.(3) One Market Plaza Steuart Tower, Suite 1200 San Francisco, CA 94105 | 1,301,687 | 5.1 |
(1) | As reported on Amendment No. 11 to Schedule 13D filed with the SEC on June 15, 2007 and includes shares held by GAMCO Investors, Inc., MJG Associates, Inc., Gabelli Advisors, Inc., GGCP, Inc., and Gabelli Securities, Inc. |
(2) | As reported on a Schedule 13G filed with the SEC February 5, 2009 and includes shares held by Barclays Global Fund Advisors and Barclays Global Investors, Ltd. |
(3) | As reported on a Schedule 13G filed with the SEC February 13, 2009 and includes shares held by Snyder Capital Management L.P. |
under the heading “Personnel & Compensation Committee” on page 10. During each of the last five years, the Committee has directly engaged Geoffrey A. Wiegman, founder and president of Wiegman Associates LLC, an independent compensation consulting firm to assist the Committee in fulfilling its responsibilities (Mr. Wiegman is referred to in this proxy statement as the “independent consultant”). This independent consultant regularly attends Committee meetings. He may also conduct studies at the request of the Company’s management, but did not do so during the fiscal year covered by this proxy statement. Mr. Wiegman is retained directly by the Committee and submits his invoices to the Committee chairman for approval and payment by the company. The Committee determines Mr. Wiegman’s assignments and provides the instructions for completing those assignments. During 2008, the Committee also utilized the services of outside legal counsel with respect to IRC Section 409A amendments to the Company’s executive employment agreements and Mr. Garneau’s Retirement and Consulting Agreement, discussed below.
national compensation surveys when adjusting for company size. Using the results of this review, the Committee has made determinations with respect to base salary, annual cash incentive targets and long-term incentives that it believes are appropriate and reasonable. The independent consultant presented his last report to the Committee in 2007. In order to confirm the continued reasonableness of the 2007 data in setting CEO compensation in 2008, the independent consultant reviewed the above referenced sample of Russell 2000 companies. Based on the results of this review as summarized below, Mr. Keating’s base salary and target cash incentive award opportunity appear to be slightly more conservative than the median for chief executive officers of similar sized Russell 2000 companies.
Base Salary | Target Annual Cash Incentive Award % | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Russell 2000 sample median | $ | 750,000 | 100 | % | ||||||
Kaman | $ | 675,000 | 80 | % |
Fixed | Performance-Based | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Salary (% of Total) | Annual Financial Performance (% of Total) | Long-Term Financial Performance (% of Total) | Total Performance Related (% of Total) | |||||||||||||||
Neal J. Keating | 29 | % | 24 | % | 47 | % | 71 | % | |||||||||||
Robert M. Garneau | 37 | % | 22 | % | 41 | % | 63 | % | |||||||||||
William C. Denninger† | 67 | % | 33 | % | 0 | % | 33 | % | |||||||||||
T. Jack Cahill | 41 | % | 20 | % | 39 | % | 59 | % | |||||||||||
Candace A. Clark | 41 | % | 20 | % | 39 | % | 59 | % | |||||||||||
Ronald M. Galla | 43 | % | 19 | % | 38 | % | 57 | % |
† | Mr. Denninger joined the company in November 2008 and his first long-term performance award grant was made effective January 1, 2009. |
• | Base Salaries; |
• | Annual Cash Incentive Awards; |
• | Long-Term Incentives; |
• | Retirement Benefits; and |
• | Certain Other Benefits. |
approved by the Committee and the annual cash incentive award should only exceed median levels when performance exceeds the company’s targeted objectives.
Named Executive Officer | Award Opportunity Expressed as % of Base Salary | |||||
---|---|---|---|---|---|---|
Neal J. Keating | 80 | % | ||||
Robert M. Garneau | 60 | % | ||||
William C. Denninger | 50 | % | ||||
T. Jack Cahill | 50 | % | ||||
Candace A. Clark | 50 | % | ||||
Ronald M. Galla | 45 | % |
2008 Actual Results | Median Return For Prior 5-Year Period — Russell 2000 | Percentage Of Factor Earned | Weighting Factor | % Of Target Award* | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Return on Investment | 9.5 | % | 6.5 | % | 156.6 | % | 33.3 | % | 51.7 | % | ||||||||||||||||
Growth In Earning per share — continuing operations | –5.5 | % | 10.4 | % | — | 33.3 | % | — | ||||||||||||||||||
Actual versus projected performance | 81.7 | % | N/A | 63.4 | % | 33.4 | % | 20.9 | % | |||||||||||||||||
Overall Corporate Performance Factor | 72.6 | % |
* | This column represents the product of the Percentage of Factor Earned figures multiplied by the Weighting Factor figure. |
Incentive Compensation” column in the Summary Compensation Table. Expressed as a percentage of base salary at calendar year end, the payments were as follows: Mr. Keating: 66%; Mr. Garneau: 48%; Mr. Denninger: 40%; Mr. Galla: 37%; and Ms. Clark: 41%. Mr. Garneau’s cash incentive award was prorated to reflect the number of days from January 1, 2008 to his retirement on November 30 divided by 365. Mr. Denninger’s cash incentive award was also pro rated to reflect his period of employment from November 17 to December 31, 2008. These awards reflect corporate achievement at 72.6% of the Company’s target performance plus the percentages indicated above for individual performance.
Compensation Table at page 25 and the full value of these benefits at normal retirement age is shown in the Pension Benefits Table at page 31.
board of directors about the potential transaction in the best interests of shareowners, without being unduly influenced by personal considerations.
• | modify the change in control definition to exclude the sale of a subsidiary with respect to a parent company executive; |
• | restrict when an executive would be entitled to a Section 280G tax gross-up payment; |
• | require a signed release in exchange for severance benefits in all events; and |
• | revise certain other provisions so that the payments under the agreements are exempt from, or comply with, the requirements of Internal Revenue Code Section 409A. |
President and Chief Executive Officer | 3 times salary | |||||
Participants in the Long-Term Incentive Award Program under the 2003 Stock Incentive Plan (generally, less than 10 individuals) | 2 times salary | |||||
All Other Corporate Officers (generally, about 10 individuals) | 1 times salary |
executive’s progress in meeting ownership requirements. With the exception of Messrs. Keating and Denninger, no equity-based awards were granted in 2008.
Brian E. Barents
E. Reeves Callaway III
Thomas W. Rabaut
Name and Principal Position | Year | Salary ($) | Stock Awards(1) ($) | Option Awards(2) | Non-Equity Incentive Plan Compensation(3) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) ($) | All Other Compensation(5) ($) | Total ($) | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
NEAL J. KEATING | 2008 | $ | 675,000 | $ | 179,632 | $ | — | $ | 446,040 | $ | 97,766 | $ | 434,015 | $ | 1,832,453 | |||||||||||||||||||
Chairman, President and Chief | 2007 | $ | 186,668 | $ | — | $ | — | $ | 298,666 | $ | 6,500 | $ | 22,200 | $ | 514,034 | |||||||||||||||||||
Executive Officer(6) | 2006 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
ROBERT M. GARNEAU | 2008 | $ | 542,667 | $ | 163,404 | $ | (60,432 | ) | $ | 261,041 | $ | 1,328,172 | $ | 603,628 | $ | 2,838,480 | ||||||||||||||||||
Executive Vice President and | 2007 | $ | 575,000 | $ | 212,304 | $ | 227,994 | $ | 1,451,714 | $ | 1,587,200 | $ | 59,001 | $ | 4,113,213 | |||||||||||||||||||
Chief Financial Officer(7) | 2006 | $ | 550,000 | $ | 68,468 | $ | 227,568 | $ | 1,169,600 | $ | 1,302,800 | $ | 24,805 | $ | 3,343,241 | |||||||||||||||||||
WILLIAM C. DENNINGER | 2008 | $ | 54,098 | $ | 1,893 | $ | 3,038 | $ | 21,801 | $ | — | $ | 1,575 | $ | 82,405 | |||||||||||||||||||
Senior Vice President | 2007 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
And Chief Financial Officer(8) | 2006 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
T. JACK CAHILL | 2008 | $ | 365,000 | $ | 1,366 | $ | (202,634 | ) | $ | 126,655 | $ | 96,746 | $ | 50,566 | $ | 437,699 | ||||||||||||||||||
President, Kaman Industrial | 2007 | $ | 350,000 | $ | 20,510 | $ | 282,391 | $ | 558,124 | $ | 666,900 | $ | 31,946 | $ | 1,909,871 | |||||||||||||||||||
Technologies Corporation | 2006 | $ | 336,000 | $ | 40,085 | $ | 122,014 | $ | 619,309 | $ | 406,900 | $ | 20,712 | $ | 1,545,020 | |||||||||||||||||||
CANDACE A. CLARK | 2008 | $ | 339,000 | $ | 1,290 | $ | (75,765 | ) | $ | 140,007 | $ | 269,550 | $ | 42,415 | $ | 716,497 | ||||||||||||||||||
Senior Vice President | 2007 | $ | 326,000 | $ | 25,815 | $ | 122,567 | $ | 679,653 | $ | 593,100 | $ | 24,368 | $ | 1,771,503 | |||||||||||||||||||
and Chief Legal Officer | 2006 | $ | 315,000 | $ | 53,546 | $ | 108,451 | $ | 552,089 | $ | 304,000 | $ | 21,485 | $ | 1,354,571 | |||||||||||||||||||
RONALD M. GALLA | 2008 | $ | 293,000 | $ | 1,093 | $ | (64,510 | ) | $ | 108,908 | $ | 268,435 | $ | 51,197 | $ | 658,123 | ||||||||||||||||||
Senior Vice President and | 2007 | $ | 282,000 | $ | 21,628 | $ | 103,629 | $ | 536,722 | $ | 508,300 | $ | 23,065 | $ | 1,475,344 | |||||||||||||||||||
Chief Information Officer | 2006 | $ | 268,000 | $ | 44,466 | $ | 93,062 | $ | 403,159 | $ | 177,300 | $ | 29,235 | $ | 1,015,222 |
(1) | Represents restricted stock awards granted in prior years for which compensation cost was recognized during the year without regard to estimated forfeitures, valued in accordance with FAS 123 (R). Please refer to Footnote 20 contained in the company’s audited consolidated financial statements for the year ended December 31, 2008 in its Annual Report to the SEC on Form 10-K. |
(2) | Represents the fair value of stock options and stock appreciation rights granted in prior periods for which compensation cost was recognized during the year without regard to estimated forfeitures valued in accordance with FAS 123 (R). The negative amount reflects the reversal of stock appreciation rights expense under SFAS 123R because of the decline in the company’s stock price during the year. Only the previously expensed portion of the awards that were previously reported in the Summary Compensation Table were reversed. Please refer to Footnote 20 contained in the company’s audited consolidated financial statements for the year ended December 31, 2008 in its Annual Report to the SEC on Form 10-K. |
(3) | Represents cash awards earned by Named Executive Officers during the applicable fiscal year under our Cash Bonus Plan, which plan is discussed under “Compensation Discussion and Analysis” beginning on page 17. Doesnot reflect payments that cannot yet be determined but which may become due under the LTIP for the January 1, 2006—December 31, 2008 performance period. The 2007 figure reflects the LTIP payment made in June 2008 under the LTIP feature of the 2003 Stock Incentive Plan for the January 1, 2005 — December 31, 2007 performance period. Our LTIP is discussed in further detail on page 20, of the Compensation Discussion and Analysis. |
(4) | Represents the total change in the present value of accrued benefits under our pension plan and SERP from year to year. For 2007 and 2008, these changes for the pension plan have been calculated by assuming all executives are employed until retirement and benefits commence at the earlier of normal retirement age (generally age 65) and the earliest age at which an unreduced pension could be received (e.g., age 63 with 30 years of service). The pension plan change for 2006 was calculated in the same manner as in 2007 and 2008 except for disregarding the possibility of commencing unreduced benefits at the earliest possible date. With respect to the SERP, these changes for all years were calculated using the Pension Protection Act interest rate methodology and eliminating pre-retirement mortality assumptions (as all benefits are paid in a single lump sum). Mr. Garneau’s 2008 change in pension value reflects his years of service, compensation level and early retirement factors due to his retirement on November 30, 2008 (his “normal” retirement date at age 65 would have occurred in March 2009). Mr. Cahill’s increase is lower than it would otherwise be due to his having reached the maximum years of service under that are considered for benefit calculation purposes (30 years). |
(5) | Represents the aggregate amounts attributable to all other compensation for each Named Executive Officer not reported in the previous columns, consisting of participation in our life insurance program for senior executives, employer matching contributions under our Thrift and Retirement Plan (401(k)), supplemental employer contributions under our Deferred Compensation Plan (if any), payments under the Medical Expense Reimbursement program (“MERP”) and perquisites. The company’s perquisite program for executive officers provides (1) a leased automobile, reimbursement for maintenance costs and the ability to acquire the vehicle: (2) tax/estate planning reimbursement up to $10,000 per individual per calendar year: (3) for Mr. Keating, fees for personal use of a country club membership; and (4) costs totaling approximately $402,000 associated with Mr. Keating’s relocation to Connecticut, including principally, brokers’ commission of $252,000 and other closing costs of $44,565 associated with the sale of Mr. Keating’s residence and payment of $85,646 for moving expenses made on his behalf through a relocation management agreement between Cartus Corporation and the company. Amounts in this column also represent certain elements of the payments made, or to be made, to Mr. Garneau in connection with his Retirement and Consulting Agreement (which is described under the caption Employment Agreements on page 26,) including the present value of life insurance premiums totaling $419,219 and the value of the company vehicle that was transferred to him of $48,100 (the Kelley Blue Book trade-in value). Detail concerning all payments made, or to be made, to Mr. Garneau under the Retirement and Consulting Agreement are located under the caption Employment Agreements at page 26. Ms. Clark, the company’s chief legal officer, was authorized to use the corporate aircraft on one occasion in March 2008 to meet a personal commitment after being held unexpectedly at company headquarters to finalize negotiations for the Australia SH-2G program termination agreement. The amount reflected in this column represents incremental variable operating costs which include fuel, calculated on the basis of aircraft-specific flight per hour average consumption rate, and hourly maintenance contract charges. Because the corporate aircraft is primarily used for business purposes, capital and other fixed expenditures are not treated as variable operating cost for this purpose. |
(6) | Mr. Keating served as President and Chief Operating Officer from September 17, 2007 to January 1, 2008. Effective January 1, 2008, he became President and Chief Executive Officer and effective March 1, 2008, assumed the additional position of Chairman. |
(7) | Mr. Garneau retired from the Company effective November 30, 2008. He entered into a Retirement and Consulting Letter Agreement with the company in conjunction with his retirement and that arrangement is described under the caption Employment Agreements below. 2007 compensation figures shown in the Stock Awards column reflects an additional $176,461 of restricted stock award expense under FAS 123(R) allocable to 2007 to correct an administrative error in not disclosing this amount in the company’s proxy statement filed on March 5, 2008 with respect to Mr. Garneau. |
(8) | Mr. Denninger joined the Company on November 17, 2008 as Senior Vice President — Finance and was appointed Senior Vice President and Chief Financial Officer upon Mr. Garneau’s retirement. |
Incentive Plan, effective on the Effective Date. The options will vest and the restrictions will lapse at the rate of twenty percent per year, beginning one year after the grant date. Vesting or lapse of restrictions may be accelerated upon death, disability, retirement or upon termination of employment following a change in control event or in other termination of employment circumstances in accordance with the Employment Agreement and Change in Control Agreement. The Employment Agreement also provides for his participation in our employee benefit programs generally applicable to senior executives, including the SERP and LTIP feature of the Stock Incentive Plan. In addition, under the Employment Agreement, the company will provide him with up to three weeks vacation, premium payments towards a $1.0 million life insurance policy owned by him, reasonable tax accounting and tax/estate planning services in accordance with company policy, and a company car. The Change in Control Agreement provides Mr. Denninger with enhanced severance protection after a “change in control” of the company (as defined in the agreement and consistent with the agreements of other Named Executive Officers). The term of this agreement is four years, subject to annual renewal thereafter at the discretion of the Board. Severance benefits under both the Employment Agreement and the Change in Control Agreement are described in detail under the caption Post Termination Payments and Benefits section of this proxy statement at page 33.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards* | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards Number of Shares of Stock or Units (#) | All Other Option Awards Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($/Sh) | |||||||||||||||||||||||||||||||||||
Neal J. Keating | 1/1/2008 | (1) | $ | 0 | $ | 540,000 | $ | 1,080,000 | ||||||||||||||||||||||||||||||||||||||
1/1/2008 | (2) | 1,080,000 | 2,160,000 | |||||||||||||||||||||||||||||||||||||||||||
9/23/2008 | (3) | 30,000 | 30.36 | |||||||||||||||||||||||||||||||||||||||||||
Robert M. Garneau* | 1/1/2008 | (1) | $ | 0 | $ | 325,600 | $ | 651,200 | ||||||||||||||||||||||||||||||||||||||
1/1/2008 | (2) | 198,978 | 198,978 | |||||||||||||||||||||||||||||||||||||||||||
William C. Denninger | 11/17/2008 | (1) | $ | 0 | $ | 27,049 | $ | 54,098 | ||||||||||||||||||||||||||||||||||||||
11/17/2008 | (3) | — | — | 2,500 | 21.27 | |||||||||||||||||||||||||||||||||||||||||
11/17/2008 | (4) | 10,000 | 21.27 | |||||||||||||||||||||||||||||||||||||||||||
T. Jack Cahill | 1/1/2008 | (1) | $ | 0 | $ | 182,500 | $ | 365,000 | ||||||||||||||||||||||||||||||||||||||
1/1/2008 | (2) | 346,750 | 693,500 | |||||||||||||||||||||||||||||||||||||||||||
Candace A. Clark | 1/1/2008 | (1) | $ | 0 | $ | 169,500 | $ | 339,000 | ||||||||||||||||||||||||||||||||||||||
1/1/2008 | (2) | 322,050 | 644,100 | |||||||||||||||||||||||||||||||||||||||||||
Ronald M. Galla | 1/1/2008 | (1) | $ | 0 | $ | 131,850 | $ | 263,700 | ||||||||||||||||||||||||||||||||||||||
1/1/2008 | (2) | 263,700 | 527,400 |
* | Under Mr. Garneau’s Retirement and Consulting Letter Agreement, this LTIP grant was paid pro rata based upon target performance. |
(1) | Represents annual Cash Bonus Plan participation for the 2008 fiscal year. Actual determination of the award amount, and its payment, was made in February 2009. Please see the Annual Cash Incentive Awards section of the Compensation Discussion and Analysis at page 17. |
(2) | Represents a long term incentive grant under the LTIP feature of the 2003 Stock Incentive Plan for the three-year performance period 1/1/08 – 12/31/10. Payments, if any are earned, will not be made until approximately June of 2010. Please see the Long Term Incentive Compensation section of the Compensation, Discussion and Analysis at page 20. Figures in this column represent estimated payments accrued by the company as of December 31, 2008. |
(3) | Represents restricted stock award grant under the 2003 Stock Incentive Plan. |
(4) | Represents stock option grant under the 2003 Stock Incentive Plan. |
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexer- cised Options (#) Exer- cisable | Number of Securities Underlying Unexer- cised Options (#) Unexer- cisable(1) | Equity Incentive Plan Awards Number of Securities Underlying Unexer- cised Unearned Options (#) | Option Exercise Price ($) | Option Grant Date | Option Expiration Date | Stock Awards Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Number of Shares or Units of Stock That Have Not Vested ($)(2)(3) | Equity Incentive Plan Awards Number of Unearned Shares, Units or other Rights That Have Not Vested (#) | Equity Incentive Plan Awards Market or Payout Value of Unearned Shares, Units or other Rights That Have Not Vested ($) | ||||||||||||||||||||||||||||||||||||
Neal J. Keating | 9/17/2007 | 16,000 | $ | 290,080 | |||||||||||||||||||||||||||||||||||||||||||
9/23/2008 | 30,000 | $ | 543,900 | ||||||||||||||||||||||||||||||||||||||||||||
Robert M. Garneau | 12,000 | $ | 11.4950 | 2/22/2005 | 11/30/2013 | ||||||||||||||||||||||||||||||||||||||||||
William C. Denninger | 10,000 | $ | 21.2700 | 11/17/2008 | 11/17/2018 | 11/17/2008 | 2,500 | $ | 45,325 | ||||||||||||||||||||||||||||||||||||||
T. Jack Cahill | 368 | $ | 16.3125 | 2/13/2001 | 2/13/2011 | ||||||||||||||||||||||||||||||||||||||||||
T. Jack Cahill | 1,432 | $ | 16.3125 | 2/13/2001 | 2/13/2011 | ||||||||||||||||||||||||||||||||||||||||||
T. Jack Cahill | 3,600 | * | $ | 14.5000 | 2/12/2002 | 2/12/2012 | |||||||||||||||||||||||||||||||||||||||||
T. Jack Cahill | 7,000 | $ | 14.5000 | 2/12/2002 | 2/12/2012 | ||||||||||||||||||||||||||||||||||||||||||
T. Jack Cahill | 11,680 | * | $ | 9.9000 | 2/25/2003 | 2/25/2013 | |||||||||||||||||||||||||||||||||||||||||
Candace A. Clark | 6,000 | $ | 14.5000 | 2/9/1999 | 2/9/2009 | ||||||||||||||||||||||||||||||||||||||||||
Candace A. Clark | 7,500 | $ | 10.3125 | 2/15/2000 | 2/15/2010 | ||||||||||||||||||||||||||||||||||||||||||
Candace A. Clark | 10,500 | $ | 16.3125 | 2/13/2001 | 2/13/2011 | ||||||||||||||||||||||||||||||||||||||||||
Candace A. Clark | 5,470 | $ | 14.5000 | 2/12/2002 | 2/12/2012 | ||||||||||||||||||||||||||||||||||||||||||
Candace A. Clark | 10,530 | $ | 14.5000 | 2/12/2002 | 2/12/2012 | ||||||||||||||||||||||||||||||||||||||||||
Ronald M. Galla | 2,000 | $ | 16.3125 | 2/13/2001 | 2/13/2011 | ||||||||||||||||||||||||||||||||||||||||||
Ronald M. Galla | 2,814 | $ | 14.5000 | 2/12/2002 | 2/12/2012 | ||||||||||||||||||||||||||||||||||||||||||
Ronald M. Galla | 5,965 | $ | 14.5000 | 2/12/2002 | 2/12/2012 |
* | Represents stock appreciation rights. |
(1) | Unless otherwise stated, options and stock appreciation rights vest at the value of twenty percent per year, beginning one year after the grant date and have a term of 10 years. Vesting of these awards may be accelerated upon death, disability, retirement or upon termination of employment following a change in control event, or in other termination of employment circumstances in accordance with the employment agreements and change in control agreements for each Named Executive Officer and otherwise as provided in the 2003 Stock Incentive Plan. Please see the Post Termination Payments and Benefits section at page 33. |
(2) | Market value is calculated based on the closing price of the company’s Common Stock on December 31, 2008 (the last business day of the year), which was $18.13. |
(3) | Unless otherwise stated, restrictions lapse with respect to restricted stock awards at the rate of twenty percent per year, beginning one year after the grant date. Lapsing of restrictions may be accelerated upon death, disability, retirement or upon termination of employment following a change in control event, or in other termination of employment circumstances in accordance with the employment agreements and change in control agreements for each Named Executive Officer and otherwise as provided in the 2003 Stock Incentive Plan. Please see the Post Termination Payments and Benefits section at page 33. |
Option Awards | Stock Award | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Exercise Date | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | Vesting Date | |||||||||||||||||||||
Neal J. Keating | 0 | $ | — | 4,000 | $ | 125,000 | 9/17/08 | ||||||||||||||||||||
Robert M. Garneau | 6,000 | $ | 101,550 | 4/22/08 | |||||||||||||||||||||||
Robert M. Garneau | 1,570 | $ | 39,878 | 2/25/08 | |||||||||||||||||||||||
Robert M. Garneau | 15,000 | $ | 468,750 | 9/17/08 | |||||||||||||||||||||||
Robert M. Garneau | 10,200 | * | $ | 188,904 | 4/22/08 | ||||||||||||||||||||||
T. Jack Cahill | 900 | $ | 22,860 | 2/25/08 | |||||||||||||||||||||||
Candace A. Clark | 850 | $ | 21,590 | 2/25/08 | |||||||||||||||||||||||
Candace A. Clark | 5,520 | * | $ | 114,706 | 8/12/08 | ||||||||||||||||||||||
Ronald M. Galla | 4,700 | * | $ | 102,084 | 9/8/08 | 720 | $ | 18,288 | 2/25/08 |
* | Represents stock appreciation rights. |
(1) | These amounts differ from those shown in the Summary Compensation Table. The amounts shown in the Summary Compensation Table for stock option and stock appreciation rights only represent compensation expense that was recognized during 2008 and represent fair value in accordance with FAS 123 (R) of outstanding awards made in several prior years. The amounts identified above represent the actual value for all options and stock appreciation rights (including previously vested but unexercised options and stock appreciation rights) exercised in 2008 measured as the difference between the fair market value of a share of our Common Stock on the day the option or stock appreciation right was exercised and the exercise price of the option. Stock appreciation rights have been paid in cash only. |
(2) | The value of restricted stock awards included in the Summary Compensation Table represents compensation expenses recorded in 2008 for 2008 and prior awards and valued in accordance with FAS 123 (R). The amount shown above for restricted stock awards represents the actual value of the restricted stock awards on the date restrictions lapsed, determined based on the fair market value of a share of our Common Stock on that date. |
Name | Plan Name | Number of Years of Service (#) | Present Value of Accumulated Benefit(1) ($) | Payments During Last Fiscal Year ($) | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Neal J. Keating | Kaman Corporation Employees’ Pension Plan | 1.38 | 31,769 | $ | — | |||||||||||||
SERP | 1.38 | 72,116 | $ | — | ||||||||||||||
Robert M. Garneau | Kaman Corporation Employees’ Pension Plan | 27.48 | 1,341,252 | $ | — | |||||||||||||
SERP | 27.48 | 4,758,306 | $ | 4,045,596 | (2) | |||||||||||||
William C. Denninger | Kaman Corporation Employees’ Pension Plan | — | — | $ | — | |||||||||||||
SERP | — | — | $ | — | ||||||||||||||
T. Jack Cahill | Kaman Corporation Employees’ Pension Plan | 33.7 | 916,366 | $ | — | |||||||||||||
SERP | 33.7 | 4,048,989 | $ | — | ||||||||||||||
Candace A. Clark | Kaman Corporation Employees’ Pension Plan | 24 | 734,554 | $ | — | |||||||||||||
SERP | 24 | 1,520,161 | $ | — | ||||||||||||||
Ronald M. Galla | Kaman Corporation Employees’ Pension Plan | 24.7 | 820,225 | $ | — | |||||||||||||
SERP | 24.7 | 1,233,749 | $ | — |
* | The material assumptions used for this calculation are as described in Footnote 16 to the company’s audited consolidated financial statements for the year ended December 31, 2008. Please see the Retirement Benefits section of the Compensation Discussion and Analysis at page 21. |
(1) | Represents the present value of accrued benefits under our pension plan and SERP based upon the following assumptions: a) for the pension plan, that all executives are employed until retirement and benefits commence at the earlier of normal retirement age (generally, age 65) and the earliest age at which an unreduced pension could be received (i.e., age 63 with 30 years of service) and b) for the SERP, the change to interest rate methodology required under the Pension Protection Act of 2006 and elimination of pre-retirement mortality assumptions because SERP benefits are payable as a lump sum. |
(2) | Mr. Garneau retired on November 30, 2008 and received his first SERP payment prior to December 31, 2008. The amount shown represents SERP amounts grandfathered from the provisions of Internal Revenue Code Section 409A pursuant to the Seventh Amendment to the SERP. A second payment will be made after six months and one business day following his retirement date in accordance with the Post-2004 SERP. |
2005 and prior years, pension eligible compensation also included taxable income attributable to restricted stock awards and cash settled stock appreciation rights. Benefits under the SERP will be based on the highest five years of pensionable earnings over the last ten years whether or not consecutive. This change allowed long service executives to avoid an immediate decrease in their pensionable earnings level as of January 1, 2006. In February 2007, the Board provided that payments that were not made to a Named Executive Officer as a lump sum SERP retirement benefit during his or her lifetime would be paid as a death benefit to the Named Executive Officer’s surviving spouse (or, in the case of Mr. Garneau, his named beneficiary), or the executive’s estate (in the case of an executive who dies without a surviving spouse or, in the case of Mr. Garneau, a named beneficiary).
• | Payment to Named Executive Officers who are at least age 55 upon separating from service with the company (other than due to death) after December 31, 2007 will be made six months and a day after such separation; the SERP previously provided for payments to be made only when a Named Executive Officer commenced retirement benefits under the pension plan. |
• | Payment to participants who have not attained at least age 55 upon separating from service with the company (other than due to death) after December 31, 2007 will be made upon the earlier of a participant’s attaining 55 years of age and the date that is six months and a day following the date of a participant’s separation from service; previously, Named Executive Officers were allowed to defer SERP payments until commencing pension benefits. |
• | If a participant dies before commencing benefits under the SERP, the death benefit will either be paid upon the Named Executive Officer’s death or on the date that he or she would have attained age 55 if he or she had been living, depending on whether or not the Named Executive Officer was eligible to receive a benefit under the SERP on the date of his or her death. |
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Neal J. Keating | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Robert M. Garneau | $ | — | $ | — | $ | 758 | $ | — | $ | 13,658 | ||||||||||||||||
William C. Denninger | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
T. Jack Cahill | $ | 54,000 | $ | 7,500 | $ | 41,667 | $ | — | $ | 773,355 | ||||||||||||||||
Candace A. Clark | $ | — | $ | — | $ | 20,396 | $ | — | $ | 367,358 | ||||||||||||||||
Ronald M. Galla | $ | — | $ | — | $ | 44,939 | $ | — | $ | 809,433 |
(1) | Included in Summary Compensation Table under salary. |
(2) | Interest is credited at 120% of Applicable Federal Long-term Rate. |
may elect distribution in the form of a lump sum payment or installments if he or she separates from service with the company after attaining early retirement age under the pension plan, with payment to commence shortly after retirement or until the second day of January in the following year. In the event that separation from service occurs prior to attaining early retirement age or if benefits do not exceed $25,000 in the aggregate, benefits are paid in a lump sum. Participants may also elect to receive payments while employed after a stated number of years as part of their initial deferral election or any time by having their account balance reduced by 10%. Distributions are also available due to financial hardship.
• | requiring that distributions on account of separation from service (other than death or disability) be delayed in all events for six months and a day; |
• | removing a Named Executive Officer’s right to elect in-service distribution at any time subject to a 10% penalty and right to change the timing of payments upon a sale or merger; |
• | eliminating the Committee’s discretion to accelerate or otherwise change the time for payment of benefits; |
• | modifying change in control, disability, unforeseeable emergency and retirement definitions to comply with Section 409A; |
• | eliminating the ability to transfer balances from the SERP to the Deferred Compensation Plan; |
• | limiting rights to make additional elections to further defer amounts as required under Section 409A; and |
• | clarifying when a Named Executive Officer must make an election to defer compensation under the Deferred Compensation Plan. |
• | unpaid base salary through the date of termination; |
• | any unpaid annual cash incentive award or LTIP award with respect to a completed performance period; and |
• | all accrued and vested benefits under the company’s compensation and benefit programs, including the pension plan and the SERP. |
• | conviction of, or a plea of guilty to, a felony or any crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety; or |
• | a determination by a majority of the Board in good faith that the Named Executive Officer has either |
• | willfully and continuously failed to substantially perform his or her duties, |
• | engaged in illegal conduct, an act of dishonesty or gross misconduct, in each case which is in the course of the Named Executive Officer’s employment and materially injurious to the company, |
• | willfully violated a material requirement of the company’s Code of Conduct or the Named Executive Officer’s fiduciary duty to the company, or |
• | in the case of the Chief Executive Officer, violated his covenant to the company that he is not bound to any agreement that would, among other things, limit his performance with the company. |
• | full vesting of all outstanding equity awards; |
• | a pro-rata portion of the Named Executive Officer’s annual cash incentive award for the performance year in which the termination occurs; payable at the same time that such awards are paid to other senior executives (provided that if such awards are not paid by March 15th of the calendar year after the calendar year in which such awards are earned, the pro-rata award will not be paid until the date that is six months and a day after the executive’s termination of employment and will be credited with interest calculated under Internal Revenue Code Section 1274 from March 15 until the date that it is paid); |
• | for performance periods beginning on January 1, 2009 or earlier, immediate pro-rata payment in cash of each outstanding LTIP award for which the performance period has not yet been completed, based on 100% of the target value irrespective of actual performance and based upon actual financial performance for performance periods beginning after January 1, 2009; |
• | for Messrs. Keating, Garneau, and Cahill, continued premium payments for their lifetime under our Senior Executive Life Insurance Program under certain circumstances; and |
• | title to the executive’s company automobile on an “as is” basis, with the automobile’s fair market value being taxable to the executive. |
• | full vesting of all outstanding equity awards; |
• | for performance periods beginning on January 1, 2009 or earlier, immediate pro-rata payment in cash of each outstanding LTIP award for which the performance period has not yet been completed, based on 100% of the target value irrespective of actual performance and based upon actual financial performance for performance periods beginning after January 1, 2009; |
• | benefits under the company’s disability plan or payments under the company’s life insurance plan, as appropriate; and |
• | a pro-rata portion of the Named Executive Officer’s annual cash incentive award for the performance year in which the termination occurs based upon target performance, payable at the time that annual cash incentive awards are paid to other executives. |
• | an immediate lump-sum payment equal to two times the executive’s base salary (three times in the case of Mr. Keating) and most recent annual cash incentive award paid or earned, subject to a reduction as set forth in the employment agreement if termination of employment occurs within two years of the executive’s “eligibility date” for retirement (as defined above under “Payments Made Upon Retirement”); |
• | a pro-rata portion of the Named Executive Officer’s annual cash incentive award for the performance year in which the termination occurs, payable on the same terms and conditions as if the executive had retired; |
• | full vesting of all outstanding equity awards; |
• | for performance periods beginning on January 1, 2009 or earlier, pro-rata payment in cash of each outstanding LTIP award for which the performance period has not yet been completed, based on 100% of the target value irrespective of actual performance and based upon actual financial performance for performance periods beginning after January 1, 2009; |
• | immediate title to the executive’s company automobile on an “as is” basis, with the automobile’s fair market value being taxable to the executive; |
• | continued participation in all medical, dental and vision plans which cover the executive and the executive’s eligible dependents for up to 24 months with the executive continuing to make his/her share of premium payments, subject to offset due to future employment; and |
• | continued payment of life insurance premiums until the earlier of 24 months following employment termination or attainment of age 65 and for Messrs. Keating, Cahill and Garneau, continued payment of life insurance premiums for the remainder of their lives under certain circumstances. |
• | removal of the Named Executive Officer from his or her position with the company (other than for Cause); |
• | reduced base salary or annual target cash incentive award opportunity; |
• | a failure to pay promised compensation or benefits under the terms of the employment agreement; |
• | relocation by more than 50 miles; |
• | the assignment of duties that are materially inconsistent with the Named Executive Officer’s position; or |
• | no longer being a direct report to the Chief Executive Officer of the company (for Named Executive Officers other than the Chief Executive Officer) |
• | a lump-sum cash payment equal to the three times the executive’s base salary, in the case of Mr. Keating, and two times, in the case of the other Named Executive Officers, plus three times, in the case of Mr. Keating, and two times, in the case of the other Named Executive Officers, the last annual cash incentive award paid or awarded to the executive in the three years preceding the date of termination, which shall be payable, with interest, on the date that is six months and one business day after the executive’s termination of employment; |
• | a pro-rata portion of the Named Executive Officer’s annual cash incentive award for the performance year in which the termination occurs (based on actual company performance through the date of termination) payable on the later of the date that such awards are generally paid to other senior executives and the date that is six months and a day after the executive’s termination of employment (if such award payment is not paid until the date that is six months and a day after the executive’s employment termination, the amount shall be credited with interest from March 15th until the date that it is paid); |
• | continued participation at the company’s expense for 24 months in all medical, dental and accidental death and disability plans which cover the executive and the executive’s eligible dependents, subject to offset due to future employment; |
• | full vesting of outstanding equity awards; |
• | for performance periods beginning on January 1, 2009 or earlier, immediate pro-rata payment in cash of each outstanding LTIP award for which the performance period has not yet been completed, based on 100% of the target value irrespective of actual performance and based upon actual financial performance for performance periods beginning after January 1, 2009; |
• | an additional three years, in the case of Mr. Keating, and two years, in the case of the other Named Executive Officers, of credited and continuous service under the SERP, provided, however, that the enhancement to Mr. Cahill’s SERP under this agreement, shall be equal to one and one-fifteenth (1 and 1/15) of his then current SERP benefit; |
• | benefits under any post-retirement health care plans if the executive would have otherwise become eligible for those benefits by remaining employed through the second anniversary of the employment termination date, commencing on the later of the date that such coverage would have become first available and the date on which the executive’s post-employment participation in our benefit plans, as described above, terminates; |
• | prepayment of premiums under any life insurance policy insuring the life of the executive in the case of Messrs. Keating and Cahill, which shall be payable, with interest, on the date that is six months and one business day after the executive’s termination of employment and, in the case of Mr. Denninger, Mr. Galla and Ms. Clark, continued payment of remaining life insurance premium payments for which the company shall establish an irrevocable grantor trust holding assets sufficient to pay such premiums; |
• | reimbursement for up to $30,000 (in the aggregate) for outplacement services and relocation costs until the earlier of the first anniversary of the date of termination or the first day of the executive’s employment with a new employer; |
• | continued use of executive’s company automobile for six months following employment termination; and |
• | title to the executive’s company automobile, with the automobile’s book value being taxable to the executive, which shall be delivered to the executive on the date that is six months and a day after the executive’s termination of employment. |
• | a person unaffiliated with the company acquires control of more than thirty-five percent of our voting securities; |
• | there is a change in more than fifty percent of our directors over two consecutive years which is not Board-approved; |
• | a merger with an unrelated entity that results in our shareholders owning fifty percent or less of the voting securities of the merged entity (or its parent company) occurs; or |
• | there is a sale of substantially all of the company’s assets to an unrelated third party or shareholder approval of a plan of complete liquidation or dissolution of the company. |
• | the willful and continued failure to substantially perform his or her duties with the company after notice from the company; |
• | willful engaging by the Named Executive Officer in conduct which is demonstrably and materially injurious to the company or its subsidiaries, monetarily or otherwise; |
• | in the case of the Chief Executive Officer, violating his covenant to the company that he is not bound to any agreement that would, among other things, limit his performance with the company. |
• | to pay to the Named Executive Officer any portion of his or her current or deferred compensation, within 30 days of the date such compensation is due; |
• | to continue in effect any compensation plan in which the Named Executive Officer participates immediately prior to the change in control which is material to his or her total compensation without an equitable substitute; |
• | to provide life insurance, health and accident, or disability plans that are substantially similar to those in which the Named Executive Officer was participating immediately prior to the change in control; |
• | to provide the Named Executive Officer with the number of paid vacation days to which he or she was entitled to prior to the change in control; |
• | to comply with the employment termination procedures for cause set forth in the change in control agreement. |
• | a diminution of the business of the company or any of its subsidiaries or a reduction in the Named Executive Officer’s business unit’s head count or budget; |
• | a suspension of the Named Executive Officer’s position, job functions, authorities, duties and responsibilities while on paid administrative leave. |
subsidiaries and does not solicit our employees during the 2-year period following termination of employment. A tax gross-up for excise taxes under Section 4999 of the Internal Revenue Code (and income taxes on the gross-up) that become payable by an executive will be paid only if payments (including vesting of outstanding equity compensation awards) contingent on a change in ownership or control of the company exceed the maximum amount (as determined under applicable tax rules) that the executive could receive without having any such payments become subject to such tax by at least $100,000.
• | Base amount calculations for Section 280G tax gross-ups are based on each of our Named Executive Officer’s taxable wages (Form W-2, Box 1) for the years 2003 through 2007. |
• | All Named Executive Officers were assumed to be subject to the maximum federal and Connecticut income and other payroll taxes, aggregating to a net combined effective tax of 60.07% when calculating the excise tax gross-up. |
• | Unvested stock options and stock appreciation rights vested on December 31, 2008 with respect to a change in control, termination of employment without cause by us or by the Named Executive Officer for good reason, retirement, death or disability. |
• | Unvested stock options and stock appreciation rights that become vested due to a change in control are valued based on their “spread” (i.e., the difference between the stock’s fair market value and the exercise price). |
• | It is possible that IRS rules would require these items to be valued using a valuation method such as the Black-Scholes model if they continued in existence after a change in control. Using a Black-Scholes value in lieu of the “spread” would result in higher value for excise taxes and the related tax gross-up payment. |
• | The entire value of long-term incentive plan awards with a performance period that has not ended as of a change in control are fully taken into account without any discount for amounts that may earned as of the assumed change in control date for purposes of the excise tax gross-up payment. |
• | All amounts under our annual cash incentive award plan were earned for 2008 in full based on actual performance and are not treated as subject to the excise tax upon a change in control. |
• | The present value of the additional service credit for retirement benefits due to a qualifying employment termination after a change in control consists of 2 years of additional credit, except in the case of Mr. Keating whose additional service credit is 3 years. |
• | All benefits are payable in a single lump sum at the participant’s earliest retirement-eligible date. |
• | December 31, 2008 present values for the qualified pension plan assume that all executives are employed until retirement and benefits commence at the earlier of normal retirement age (generally, age 65) and the earliest age at which an unreduced pension could be received (i.e., age 63 with 30 years of service). December 31, 2008 present values for the SERP reflect the change to interest rate methodology required under the Pension Protection Act of 2006 and eliminate pre-retirement mortality assumptions because SERP benefits are payable as a lump sum. |
• | Stock options, stock appreciation rights and restricted stock that vested prior to termination of employment–vested equity awards are reflected in the Outstanding Equity Awards at 2008 Fiscal Year-End table; |
• | Pension and SERP benefits, which are reflected in the 2008 Pension Benefits Table; |
• | Nonqualified deferred compensation vested under the Deferred Compensation Plan, which is reflected in the 2008 Non-Qualified Deferred Compensation Plan Table; and |
• | Unreimbursed business expenses. |
• | Solely for purposes of illustrating the potential payment amounts, we have not taken into account that some payments payable after a change in control that are attributable to a non-compete agreement may be exempt from excise taxes as reasonable compensation. |
Termination by Us for Cause or Voluntary Termination by Named Executive Officer Without Good Reason | Termination by Us without Cause or by Named Executive Officer with Good Reason on Account of a Change in Control | Termination by Us without Cause or by Named Executive Officer with Good Reason | Retirement | Death | Disability | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash Severance(1) | 0 | 2,920,998 | 1,947,332 | 446,040 | 446,040 | 446,040 | ||||||||||||||||||||
Acceleration of Long Term Incentive Grants at Target(2) | 0 | 1,080,000 | 360,000 | 360,000 | 360,000 | 360,000 | ||||||||||||||||||||
Value of Accelerated Unvested Equity(3) | 0 | 833,980 | 833,980 | 833,980 | 833,980 | 833,980 | ||||||||||||||||||||
Benefits Continuation(4) | 0 | 44,635 | 44,635 | 0 | 0 | 0 | ||||||||||||||||||||
Life Insurance(5) | 0 | 362,871 | 7,506 | 7,506 | 0 | 7,506 | ||||||||||||||||||||
Company Automobile(6) | 0 | 43,700 | 43,700 | 43,700 | 0 | 0 | ||||||||||||||||||||
Outplacement Services | 0 | 30,000 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Present Value of Additional Service Credit for Retirement Benefits(7) | 0 | 239,179 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Excise Tax and Gross-Up(8) | 0 | 2,154,383 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Accrued Benefits | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Total | 0 | 7,709,746 | 3,237,153 | 1,691,226 | 1,640,020 | 1,647,526 |
(1) | Reflects two times (or three times in the event of a change in control) Mr. Keating’s 2008 base salary ($675,000) and last paid annual cash incentive award ($298,666). If retirement, death or disability, reflects pro-rata annual cash incentive award at target, to be paid when normally paid to other executives. |
(2) | Mr. Keating became a participant in the long-term incentive award program on January 1, 2008. |
(3) | Reflects the value of unvested restricted stock and the value of unvested stock options that become fully vested and remain exercisable, which is calculated by the difference between the exercise price and the closing market price of $18.13 as of December 31, 2008. |
(4) | Reflects the value of the company’s share of premium payments to be made for medical, dental, MERP and vision for 24 months, based on 2009 premiums for active employees with one dependent. |
(5) | Reflects the value of regular annual premium based on 2008 rate, which may fluctuate from time to time. The premium payment obligation accelerates upon a Change in Control; the estimated pre-payment for life insurance premium payments as of 12/31/08 is illustrated in this chart assuming net rate of return for annual premium at 6.404%, mortality based on blended RP2000 (as required by the Pension Protection Act of 2006), interest at 6.15%. |
(6) | Reflects the value of the automobile at the Kelley Blue Book trade in value. |
(7) | This amount does not include amounts that the Named Executive Officer accrued under the Company’s pension plan and SERP as of December 31, 2008, which are disclosed in the Pension Benefits table at page 31. Mr. Keating is not yet vested in the Company’s pension plan. |
(8) | This item represents reimbursement to Mr. Keating of excise tax amounts (not personal income tax), which would be determined based upon a comparison of estimated severance compensation to the average of the executive’s gross wages (W-2 earnings) for the prior five-year period or, if less, the period of actual employment. |
Termination by Us for Cause or Voluntary Termination by Named Executive Officer Without Good Reason | Termination by Us without Cause or by Named Executive Officer with Good Reason on Account of a Change in Control | Termination by Us without Cause or by Named Executive Officer with Good Reason | Retirement | Death | Disability | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash Severance(1) | 0 | 880,000 | 880,000 | 21,801 | 21,801 | 21,801 | ||||||||||||||||||||
Acceleration of Long Term Incentive Grants at Target | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Value of Accelerated Unvested Equity(2) | 0 | 173,450 | 173,450 | 173,450 | 173,450 | 173,450 | ||||||||||||||||||||
Benefits Continuation(3) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Life Insurance(4) | 0 | 253,058 | 9,231 | 0 | 0 | 0 | ||||||||||||||||||||
Company Automobile(5) | 0 | 9,450 | 9,450 | 9,450 | 0 | 0 | ||||||||||||||||||||
Outplacement Services | 0 | 30,000 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Present Value of Additional Service Credit for Retirement Benefits(6) | 0 | 11,845 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Excise Tax and Gross-Up | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Accrued Benefits(7) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Total | 0 | 1,357,803 | 1,072,131 | 204,701 | 195,251 | 195,251 |
* | Mr. Denninger joined the company on November 17, 2008. |
(1) | Reflects two times Mr. Denninger’s 2008 base salary ($440,000) and last paid annual cash incentive award ($ 0). If retirement, death or disability, reflects pro-rata annual cash incentive award at target, to be paid when normally paid to other executives. Mr. Denninger became a participant in the long-term incentive award program on January 1, 2009. |
(2) | Reflects the value of unvested stock options and restricted stock that become vested, which is calculated by the difference between the exercise price and the closing market price of $18.13 as of December 31, 2008. |
(3) | Mr. Denninger has elected not to participate in the company’s group medical program in either 2008 or 2009. |
(4) | Reflects the value of regular annual premium based on 2007 rate, which may fluctuate from time to time. The premium payment obligation accelerates upon a Change in Control; the estimated pre-payment for life insurance premium payments as of 12/31/08 is illustrated in this chart assuming net rate of return for annual premium at 6.694%, mortality based on blended RP2000 (as required by the Pension Protection Act of 2006), interest at 5.90%. |
(5) | Mr. Denninger has elected to retain his personal vehicle and thus receives an allowance of $1,575 per month for use and maintenance. This amount reflects 6 months of the vehicle allowance. |
(6) | This amount does not include amounts that the Named Executive Officer accrued under the Company’s pension plan and SERP as of December 31, 2008, if any, which are disclosed in the Pension Benefits table at page 31. |
(7) | Reflects Thrift Plan (401k) plan) matching contributions in which Mr. Denninger is not yet vested. |
Termination by Us for Cause or Voluntary Termination by Named Executive Officer Without Good Reason | Termination by Us without Cause or by Named Executive Officer with Good Reason on Account of a Change in Control | Termination by Us without Cause or by Named Executive Officer with Good Reason | Retirement | Death | Disability | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash Severance(1) | 0 | 1,080,000 | 1,080,000 | 126,655 | 126,655 | 126,655 | ||||||||||||||||||||
Acceleration of Long Term Incentive Grants at Target(2) | 0 | 897,650 | 555,650 | 555,650 | 555,650 | 555,650 | ||||||||||||||||||||
Value of Accelerated Unvested Equity(3) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Benefits Continuation(4) | 0 | 32,069 | 32,069 | 0 | 0 | 0 | ||||||||||||||||||||
Life Insurance(5) | 0 | 297,285 | 297,285 | 297,285 | 0 | 297,285 | ||||||||||||||||||||
Company Automobile(6) | 0 | 64,084 | 67,814 | 67,814 | 0 | 0 | ||||||||||||||||||||
Outplacement Services | 0 | 30,000 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Present Value of Additional Service Credit for Retirement Benefits(7) | 0 | 429,532 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Excise Tax and Gross-Up(8) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Accrued Benefits(9) | 76,363 | 76,363 | 76,363 | 76,363 | 76,363 | 76,363 | ||||||||||||||||||||
Total | 76,363 | 2,906,983 | 2,109,181 | 1,123,767 | 758,668 | 1,055,953 |
(1) | Reflects two times the sum of Mr. Cahill’s 2008 base salary ($365,000) and last paid annual cash incentive award ($175,000). If retirement, death or disability reflects pro-rata annual cash incentive award at target to be paid when normally paid to other executives. |
(2) | For a change in control, payment reflects target for each outstanding long-term incentive award made for the 2006 – 2008, 2007 – 2009 and 2008 – 2010 performance periods. For termination with good reason or retirement, the amount reflects a pro-rata payment of the same 3-year long-term incentive grants. |
(3) | Reflects the value of the unvested stock options and restricted stock that become vested, which is calculated as difference between the exercise price and the closing market price of $18.13 as of December 31, 2008 (intrinsic value) of the stock options and the unvested restricted stock. Mr. Cahill also has vested but unexercised options and stock appreciation rights with an intrinsic value of $137,876 at December 31, 2008. |
(4) | Reflects the value of the company’s share of the premium payments to be made for medical, dental, MERP and vision for 24 months, based on 2009 premiums for active employees plus spouse. |
(5) | Reflects the value of regular annual premium based on 2008 rate, which may fluctuate from time to time. The premium payment obligation accelerates upon a Change in Control; the estimated pre-payment for life insurance premium payments as of 12/31/08 is illustrated in this chart assuming net rate of return for annual premium at 6.404%, mortality based on 2009 blended RP2000 (as required by the Pension Protection Act of 2006), interest at 6.15%. |
(6) | Reflects the value of the automobile at the Wheels, Inc. book value (as Kelley Blue Book does not list this vehicle). |
(7) | This amount does not include amounts that the Named Executive Officer accrued under the Company’s pension plan and SERP as of December 31, 2008, which are disclosed in the Pension Benefits table at page 31. |
(8) | Represents the amount that Mr. Cahill’s benefits would be reduced based on the estimates noted above under the change in control agreement to avoid triggering excise taxes and a tax gross-up. A tax gross-up payment would be required if the actual value of the payments contingent upon a change in control exceeded the amount that would trigger excise taxes by more than $100,000. |
(9) | Reflects Thrift plan (401(k) plan) company matching contributions. Mr. Cahill is also entitled to receive his contributions to this plan. The definition of accrued benefits does not include amounts already reported in the Pension Benefits table on page 31, and un-reimbursed business expenses that may be due. |
Termination by Us for Cause or Voluntary Termination by Named Executive Officer Without Good Reason | Termination by Us without Cause or by Named Executive Officer with Good Reason on Account of a Change in Control | Termination by Us without Cause or by Named Executive Officer with Good Reason | Retirement | Death | Disability | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash Severance(1) | 0 | 1,330,000 | 1,330,000 | 140,007 | 140,007 | 140,007 | ||||||||||||||||||||
Acceleration of Long Term Incentive Grants at Target(2) | 0 | 836,500 | 518,547 | 518,547 | 518,547 | 518,547 | ||||||||||||||||||||
Value of Accelerated Unvested Equity(3) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Benefits Continuation(4) | 0 | 32,069 | 32,069 | 0 | 0 | 0 | ||||||||||||||||||||
Life Insurance(5) | 0 | 300,945 | 6,920 | 0 | 0 | 0 | ||||||||||||||||||||
Company Automobile(6) | 0 | 34,825 | 34,825 | 34,825 | 0 | 0 | ||||||||||||||||||||
Outplacement Services | 0 | 30,000 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Present Value of Additional Service Credit for Retirement Benefits(7) | 0 | 186,234 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Excise Tax and Gross-Up | 0 | 998,815 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Accrued Benefits(8) | 76,249 | 76,249 | 76,249 | 76,249 | 76,249 | 76,249 | ||||||||||||||||||||
Total | 76,249 | 3,825,637 | 1,998,610 | 769,628 | 734,803 | 734,803 |
(1) | Reflects two times the sum of Ms. Clark’s 2008 base salary ($339,000) and last paid annual cash incentive award ($326,000). If retirement, death or disability, reflects pro-rata annual cash incentive award at target, to be paid when normally paid to other executives. |
(2) | For a change in control, payment reflects target for each outstanding long-term incentive award made for the 2006 – 2008, 2007 – 2009, and 2008-2010 performance periods. For termination with good reason or retirement, the amount reflects a pro-rata payment of the same 3-year long-term incentive grants. |
(3) | Reflects the value of the unvested stock options and restricted stock that become vested, which is calculated as difference between the exercise price and the closing market price of $18.13 as of December 31, 2008 (intrinsic value) of the stock options and the unvested restricted stock. Ms. Clark also has vested but unexercised options and stock appreciation rights with an intrinsic value of $157,575 at December 31, 2008. |
(4) | Reflects the value of the company’s share of the premium payments to be made for medical, dental, MERP and vision for 24 months, based on 2009 premiums for active employees with one dependent. |
(5) | Reflects the value of regular annual premium based on 2008 rate, which may fluctuate from time to time. The premium payment obligation accelerates upon a Change in Control; the estimated pre-payment for life insurance premium payments as of 12/31/08 is illustrated in this chart assuming net rate of return for annual premium at 6.404%, mortality based on 2009 blended RP2000 (as required by the Pension Protection Act of 2006), interest at 6.15%. |
(6) | Reflects the value of the automobile at the Kelley Blue Book trade in value. |
(7) | This amount does not include amounts that the Named Executive Officer accrued under the Company’s pension plan and SERP as of December 31, 2008, which are disclosed in the Pension Benefits table at page 31. |
(8) | Reflects Thrift plan (401(k) plan) company matching contributions. Ms. Clark is also entitled to receive her contributions to this plan. The definition of accrued benefits does not include amounts already reported in the Pension Benefits table on page 31, and un-reimbursed business expenses that may be due. |
Termination by Us for Cause or Voluntary Termination by Named Executive Officer Without Good Reason | Termination by Us without Cause or by Named Executive Officer with Good Reason on Account of a Change in Control | Termination by Us without Cause or by Named Executive Officer with Good Reason | Retirement | Death | Disability | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash Severance(1) | 0 | 1,093,600 | 1,093,600 | 108,908 | 108,908 | 108,908 | ||||||||||||||||||||
Acceleration of Long Term Incentive Grants at Target(2) | 0 | 678,300 | 417,900 | 417,900 | 417,900 | 417,900 | ||||||||||||||||||||
Value of Accelerated Unvested Equity(3) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Benefits Continuation(4) | 0 | 44,635 | 44,635 | 0 | 0 | 0 | ||||||||||||||||||||
Life Insurance(5) | 0 | 301,321 | 9,043 | 0 | 0 | 0 | ||||||||||||||||||||
Company Automobile(6) | 0 | 36,375 | 36,375 | 36,375 | 0 | 0 | ||||||||||||||||||||
Outplacement Services | 0 | 30,000 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Present Value of Additional Service Credit for Retirement Benefits(7) | 0 | 187,040 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Excise Tax and Gross-Up | 0 | 866,238 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Accrued Benefits(8) | 77,751 | 77,751 | 77,751 | 77,751 | 77,751 | 77,751 | ||||||||||||||||||||
Total | 77,751 | 3,315,260 | 1,679,304 | 640,934 | 604,559 | 604,559 |
(1) | Reflects two times the sum of Mr. Galla’s 2008 base salary ($293,000) and last paid annual cash incentive award ($253,800). If retirement, death or disability, reflects pro-rata annual cash incentive award at target, to be paid when normally paid to other executives. |
(2) | For a change in control, payment reflects target for each outstanding long-term incentive award made for the 2006 – 2008, 2007 – 2009, and 2008 – 2010 performance periods. For termination with good reason or retirement, the amount reflects a pro-rata payment of the same 3-year long-term incentive grants. |
(3) | Reflects the value of the unvested stock options and restricted stock that become vested, which is calculated as difference between the exercise price and the closing market price of $18.13 as of December 31, 2008 (intrinsic value) of the stock options and the unvested restricted stock. Mr. Galla also has vested but unexercised options and stock appreciation rights with an intrinsic value of $35,503 at December 31, 2008. |
(4) | Reflects the value of the company’s share of the premium payments to be made for medical, dental, MERP and vision for 24 months, based on 2009 premiums for active employees with one dependent. |
(5) | Reflects the value of regular annual premium based on 2008 rate, which may fluctuate from time to time. The premium payment obligation accelerates upon a Change in Control; the estimated pre-payment for life insurance premium payments as of 12/31/08 is illustrated in this chart assuming net rate of return for annual premium at 6.404%, mortality based on 2009 blended RP2000 (as required by the Pension Protection Act of 2006), interest at 6.15%. |
(6) | Reflects the value of the automobile at the Kelley Blue Book trade in value. |
(7) | This amount does not include amounts that the Named Executive Officer accrued under the Company’s pension plan and SERP as of December 31, 2008, which are disclosed in the Pension Benefits table at page 31. |
(8) | Reflects Thrift plan (401(k) plan) company matching contributions. Mr. Galla is also entitled to receive her contributions to this plan. The definition of accrued benefits does not include amounts already reported in the Pension Benefits table on page 31, and un-reimbursed business expenses that may be due. |
Benefit*: | Amount | |||||
---|---|---|---|---|---|---|
Pro-rata Annual Cash Incentive Award(1) | $ | 261,041 | ||||
Pro-rata Long Term Incentive(2) | $ | 1,030,853 | ||||
Life Insurance(3) | $ | 419,219 | ||||
Company Car(4) | $ | 48,100 | ||||
Accrued Benefits(5) | $ | 94,366 | ||||
Total | $ | 1,853,579 |
* | Mr. Garneau retired from the company on November 30, 2008 so the amounts indicated represent actual payments. |
(1) | Reflects pro-rata portion of the annual cash incentive award for the 2008 performance year, determined by multiplying the amount Mr. Garneau would have received based upon actual financial performance had his employment continued through end of 2008 by 91.1803%; payable on 3/15/09 or, if sooner, the date in 2009 that annual cash incentive awards are paid to other executives. |
(2) | Reflects a pro-rata payment of the 3-year long term incentive award grants made for the 2006 – 2008 and 2007 – 2009 and 2008 – 2010 performance periods at target. |
(3) | Life insurance represents value of regular annual premium based on 2008 rate, which will be paid but fluctuate throughout the life of the executive; amount shown is PV as of 12/31/08 assuming net rate of return for annual premium at 6.404%, mortality based on 2009 blended RP2000 (as required by the Pension Protection Act of 2006), interest at 6.15%. |
(4) | Title to company automobile transferred to Mr. Garneau; amount reflects the value of the automobile at Kelley Blue Book trade in value. |
(5) | Reflects Thrift plan (401(k) plan) company matching contributions. Mr. Garneau is also entitled to receive his contributions to this plan. The definition of accrued benefits does not include amounts already reported in the Pension Benefits table on page 31, and unreimbursed business expenses that may have been due. |
• | annual cash retainers (payable quarterly in arrears) of $45,000 to each Board member, $30,000 to the Lead Director, $15,000 to the Audit Committee Chair, $7,500 to the Personnel & Compensation Committee chair; and $6,000 to each of the Corporate Governance and Finance Committee chairs; |
• | per meeting fees of $1,500 for each board meeting and $1,500 for each committee meeting with each committee chair receiving $1,800; and |
• | a fully vested restricted stock award of 2,000 shares pursuant to the 2003 Stock Incentive Plan to be made at the Annual Board meeting. |
Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Total ($) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Robert Alvine | $ | 76,500 | $ | 56,830 | $ | 133,330 | ||||||||
Brian E. Barents | $ | 73,500 | $ | 56,830 | $ | 130,330 | ||||||||
E. Reeves Callaway III | $ | 69,000 | $ | 56,830 | $ | 125,830 | ||||||||
John A. DiBiaggio(2) | $ | 23,932 | $ | 0 | $ | 23,932 | ||||||||
Karen M. Garrison | $ | 80,736 | $ | 56,830 | $ | 137,566 | ||||||||
Edwin A. Huston | $ | 93,600 | $ | 56,830 | $ | 150,430 | ||||||||
Eileen S. Kraus | $ | 114,300 | $ | 56,830 | $ | 171,130 | ||||||||
Thomas W. Rabaut | $ | 58,582 | $ | 56,830 | $ | 115,412 | ||||||||
Richard J. Swift | $ | 80,700 | $ | 56,830 | $ | 137,530 |
(1) | Please refer to Footnote 20 contained in the company’s audited consolidated financial statements for the year ended December 31, 2008 in its Annual Report to the SEC on Form 10-K. Each stock award consists of 2,000 shares of our Common Stock at a price of $28.415 per share on April 16, 2008. |
(2) | Dr. DiBiaggio retired from the Board effective April 16, 2008. |
Robert Alvine
Brian E. Barents
Eileen S. Kraus
Fee Category | 2008 Fees | 2007 Fees | |||||||||
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(In Thousands) | |||||||||||
Audit Fees | $ | 1,198.7 | $ | 960.9 | |||||||
Audit-Related Fees | 298.5 | 317.0 | |||||||||
Tax Fees | 435.1 | 359.1 | |||||||||
Total Fees | $ | 1,932.3 | $ | 1,637.0 |
Independent Compensation Consultant
For 2007 Market Report
Compensation Element | |||||||||||||||||||||||
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Surveys | Base Salary | Annual Cash Incentive Award Target | Long-term Compensation Target | Number of Participants | |||||||||||||||||||
Hewitt Associates—Executive Compensation Survey | X | X | Limited | 591 | Fortune 1000 companies | ||||||||||||||||||
Towers Perrin—Executive Compensation Database | X | X | X | 472 | Fortune 1000 companies | ||||||||||||||||||
Hewitt Associates Total Compensation Center | — | — | X | Not determinable |
Used to Evaluate Reasonableness of
CEO Base Salary and Target Cash Incentive Award
Company | 2007 Revenues (millions) | ||||||
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Albany International | $ | 1,092,977 | |||||
Barnes Group | $ | 1,439,502 | |||||
Callaway Golf | $ | 1,124,600 | |||||
Carpenter Technology | $ | 1,953,500 | |||||
Champion Enterprises | $ | 1,273,465 | |||||
Enpro Industries | $ | 1,030,000 | |||||
H B Fuller | $ | 1,400,258 | |||||
Hexcel Corp | $ | 1,171,000 | |||||
Intermec Inc. | $ | 849,220 | |||||
Moog Inc | $ | 1,903,000 | |||||
Nordson Corp | $ | 1,124,829 | |||||
Plexus Corp | $ | 1,841,622 | |||||
Schulman (A) Co | $ | 1,984,011 | |||||
Spartec Corp | $ | 1,451,983 | |||||
Stepan Co | $ | 1,329,901 | |||||
Superior Industries Int’l | $ | 956,892 | |||||
Technitrol Inc | $ | 1,026,555 | |||||
Teledyne Technologies | $ | 1,622,300 | |||||
Tupperware Brands | $ | 1,981,400 | |||||
Valmont Industries | $ | 1,499,800 | |||||
Varian Inc | $ | 1,012,500 | |||||
Wellman, Inc | $ | 1,069,400 | |||||
Median | $ | 1,301,683 | |||||
Average | $ | 1,369,942 | |||||
Note: | |||||||
Data taken from most recent 10K and proxy statements as of January 2009. |
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| FOR ALL (except as | AUTHORITY | *EXCEPTIONS |
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PROPOSAL 1 | o | o | o | |||
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Election of three (3) Class 1 Directors |
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| 01 E. Reeves Callaway III |
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| 02 Karen M. Garrison |
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| 03 A. William Higgins |
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(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the “Exceptions” box and write that nominee’s name in the space provided below.) | ||||||
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*Exceptions ____________________________________________________ |
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| Please mark | x |
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| FOR | AGAINST | ABSTAIN |
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| PROPOSAL 2 | Ratification of appointment of KPMG LLP as independent registered public accounting firm for the Company. |
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| To act in their discretion upon any other business which may properly come before the meeting or any adjournment thereof. |
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| Mark Here for Address | o |
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| Signature ____________________ Signature _____________________ Title(s) ______________ Date _______, 2009 |
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| NOTE: Please sign exactly as name(s) appear hereon. If more than one owner, each must sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. |
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WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
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| Kaman Corporation |
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| You can view the Annual Report and Proxy Statement on the internet at: |
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| http://bnymellon.mobular.net/bnymellon/kamn |
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INTERNET |
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Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. |
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OR |
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TELEPHONE |
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Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. |
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If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. |
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To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. |
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Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. |
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PX42076
KAMAN CORPORATION
PROXY FOR COMMON STOCK IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Kaman Corporation Common Stock hereby appoints Neal J. Keating and William C. Denninger, or either of them with full power of substitution, as attorneys and proxies for and in the name of the undersigned to vote all the shares of the Common Stock of Kaman Corporation which the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held on Wednesday, April 15, 2009, beginning at 11:00 a.m., local time, at the company, 1332 Blue Hills Avenue, Bloomfield, Connecticut, and at any adjournments or postponements thereof, as directed on this card on the matters set forth on the reverse side hereof, all as described in the accompanying Proxy Statement and in their discretion, on all other matters that may properly come before such Annual Meeting.
This proxy card, when properly executed, will be voted in the manner directed herein. If the proxy is signed and returned but no directions are given, then the proxy will be voted “FOR” approval of each of Proposals 1 and 2 and in the discretion of the proxies on any other matters as may properly come before the Annual Meeting.
The Kaman Corporation Board of Directors recommends a vote “FOR” Proposals 1 and 2.
(Continued, and to be marked, dated and signed, on the other side)
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| BNY MELLON SHAREOWNER SERVICES |
Address Change/Comments |
| P.O. BOX 3550 |
(Mark the corresponding box on the reverse side) |
| SOUTH HACKENSACK, NJ 07606-9250 |
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▲ | FOLD AND DETACH HERE | ▲ |
PLEASE VOTE TODAY!
SEE REVERSE SIDE FOR THREE EASY WAYS TO VOTE.
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ChooseMLinkSM for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on toInvestor ServiceDirect® atwww.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you through enrollment. |
PX42076