Exhibit 10.55
L. B. FOSTER COMPANY 2006
MANAGEMENT INCENTIVE COMPENSATION PLAN
I. PURPOSE
This Plan is designed to motivate employees to achieve goals, to reward
employees who achieve such goals and to improve corporate performance.
II. CERTAIN DEFINITIONS
The terms below shall be defined as follows for the purposes of this Plan.
The definitions shall be subject to such adjustments as, from time to time, may
be made, by the Committee.
2.1 "Base Compensation" shall mean the total base salary, rounded to the
nearest whole dollar, actually paid to a Participant during the Fiscal
Year, excluding payment of overtime, incentive compensation, commissions,
reimbursement of expenses, severance, car allowances or any other payments
not deemed part of a Participant's base salary; provided, however, that the
Participant's contributions to the Corporation's Voluntary Investment Plan
shall be included in Base Compensation. Base Compensation for Participants
who die, retire or are terminated shall include only such compensation paid
to such during the fiscal year with respect to the period prior to death,
retirement or termination.
2.2 "Committee" shall mean the Compensation Committee of the Board of
Directors and any successors thereto.
2.3 "Corporation" shall mean L. B. Foster Company and those subsidiaries
thereof in which L.B. Foster Company owns 100% of the outstanding common
stock.
2.4 "Department/Individual Goals" are those goals approved by the Chief
Executive Officer and utilized to establish incentive awards pursuant to
Section 4.3
2.5 "Fiscal Year" means the 2006 calendar year.
2.6 "Incentive Award" shall mean the payment made to a Participant under
this Plan, after and/or subject to adjustments under this Plan.
2.7 "Incentive Income" shall mean the pre-tax income (after, inter alia,
deductions for benefits payable under the annual sales incentive and profit
sharing plans) for the Corporation or, as applicable, for an Operating Unit
for the Fiscal Year, but determined in accordance with generally-accepted
accounting principles, excluding (i) benefits payable under this Plan; (ii)
dividends and related interest with respect to Dakota Minnesota & Eastern
Railroad Corporation preferred stock to the extent not included in the
Corporation's Planned Incentive Income; and (iii) any portion of gains or
losses arising from transactions not in the ordinary course of business
which the Committee, in its sole discretion, determines to exclude.
2.8 "Operating Unit" shall mean the following units or divisions which are
reported in the Company's internal financial statements: CXT Rail, CXT
Buildings, Foster Coated Pipe, Threaded Products, Rail Products (excluding
CXT Rail), Piling and Fabricated Products, subject to such adjustments as
may be made by the Chief Executive Officer.
2.9 "Participant" shall mean a salaried employee of the Corporation who
satisfies all of the eligibility requirements set forth in Article III
hereof.
2.10 "Plan" shall mean the L. B. Foster Company Management Incentive
Compensation Plan, which Plan shall be in effect with respect to the Fiscal
Year.
2.11 "Planned Incentive Income" shall mean, as applicable, Incentive Income
for the Corporation and each Operating Unit as approved by the
Corporation's Board of Directors.
2.12 "Target Award" shall mean the product of a Participant's Base
Compensation multiplied by said Participant's Target Percentage.
2.13 "Target Percentage" shall mean those percentages assigned to
Participants pursuant to Section 4.1 hereof.
III. ELIGIBILITY
Unless changed or amended by the Committee, an employee shall be deemed a
Participant in the Plan only if all of the following requirements are satisfied:
3.1 A Participant must be a salaried employee (but excluding an employee
whose sole title is Chairman of the Board) of the Corporation, at a grade
level set forth in Section 4.1 or as otherwise approved both by the
Corporation's Chairman of the Board and Chief Executive Officer, for at
least six (6) months of the entire fiscal year, unless deceased or retired.
3.2 A Participant may not have: (i) been terminated for cause; (ii)
voluntarily have resigned (other than due to retirement with the Company's
consent) prior to the date Individual Incentive Awards are paid; (iii),
unless the Corporation agrees in writing that the employee shall remain a
Participant in this Plan, been terminated for any reason whatsoever and
have received money from the Corporation in connection with said
termination, or (iv) have been primarily employed by Natmaya or Fosmart
during the Fiscal Year.
3.3 A Participant's Target Percentage shall be based on the Participant's
Grade Level on July 1, 2006. Those Participants who have retired or died
prior to July 1, 2006 shall have a Target Percentage based upon their grade
level at death or retirement.
3.4 A Participant may not, unless agreed to in writing by the Chief
Executive Officer, be a participant in any other incentive plan maintained
by the Corporation, other than the Corporation's stock option plans.
3.5 As used herein, "cause" to terminate employment shall exist upon (i)
the failure of an employee to substantially perform his duties with the
Corporation; (ii) the engaging by an employee in any criminal act or in
other conduct injurious to the Corporation; or (iii) the failure of an
employee to follow the reasonable directives of the employee's superior(s).
IV. CALCULATION OF INCENTIVE AWARDS
4.1 Eligibility and Target Percentages. Each Participant shall have a
Target Percentage based upon the grade level of such Participant, as
follows:
2006 MIP ELIGIBILITY AND TARGET PERCENTAGES
- ------------------------- --------------------
MANAGEMENT GRADE LEVEL TARGET PERCENTAGE
- ------------------------- --------------------
GRADE X28 5%
- ------------------------- --------------------
GRADE X29 10%
- ------------------------- --------------------
GRADE X30 15%
- ------------------------- --------------------
GRADE X31 20%
- ------------------------- --------------------
GRADE X32 20%
- ------------------------- --------------------
GRADE X33 20%
- ------------------------- --------------------
GRADE O40 20%
- ------------------------- --------------------
GRADE O41 20%
- ------------------------- --------------------
GRADE O42 30%
- ------------------------- --------------------
GRADE O43 35%
- ------------------------- --------------------
GRADE O50 45%
- ------------------------- --------------------
Other employees selected, in writing, by the Corporation's Chairman of the
Board and Chief Executive Officer may also be made Participants in the Plan on
such terms as may be approved by the Chairman of the Board and Chief Executive
Officer.
4.2 Thresholds. The following table shows how Incentive Awards are
calculated, prior to adjustment and to limitations under this Plan:
- -------------------------------- ------------------------------------
Actual Performance, based on Unadjusted Incentive Award,
Percentage of Planned Incentive as Percentage of Lower of Target
Income Achieved Award or Target Award at Incentive
Planned Income
- -------------------------------- ------------------------------------
Outstanding Corporate Operating Unit
- -------------------------------- ------------------- ----------------
160% and over 200% 200%
- -------------------------------- ------------------- ----------------
155% 190% 190%
- -------------------------------- ------------------- ----------------
150% 180% 180%
- -------------------------------- ------------------- ----------------
145% 170% 170%
- -------------------------------- ------------------- ----------------
140% 160% 160%
- -------------------------------- ------------------- ----------------
135% 150% 150%
- -------------------------------- ------------------- ----------------
130% 140% 140%
- -------------------------------- ------------------- ----------------
125% 130% 130%
- -------------------------------- ------------------- ----------------
Exceeding
- -------------------------------- ------------------- ----------------
120% 120% 120%
- -------------------------------- ------------------- ----------------
115% 115% 115%
- -------------------------------- ------------------- ----------------
110% 110% 110%
- -------------------------------- ------------------- ----------------
105% 105% 105%
- -------------------------------- ------------------- ----------------
Target
- -------------------------------- ------------------- ----------------
100% 100% 100%
- -------------------------------- ------------------- ----------------
Threshold
- -------------------------------- ------------------- ----------------
90% 80% 80%
- -------------------------------- ------------------- ----------------
80% 60% 60%
- -------------------------------- ------------------- ----------------
70% 40%
- -------------------------------- ------------------- ----------------
The calculation of "Unadjusted Incentive Award" in the second and third columns
of the above table shall be adjusted proportionately to reflect "Percentage of
Income Achieved" between the levels in the table. For example, if Corporate
achieved 73% of "Planned Incentive Income", the percentage in the second column
would be deemed to be 46%; if Corporate achieved 137% of "Planned Incentive
Income" the percentage in the second column would be deemed to be 154%.
4.3 Allocated Target Awards. For purposes of calculating Incentive Awards,
a Participant's Target Award shall be allocated as follows, which
allocations shall be approved by the Chief Executive Officer.
- -------------------- --------------- ---------------- -------------------------
Corporate Operating Unit Department/Individual
Goals
- -------------------- --------------- ---------------- -------------------------
CEO 100%
- -------------------- --------------- ---------------- -------------------------
Operating Unit
Heads 20% 60% 20%
- -------------------- --------------- ---------------- -------------------------
Corporate 80% 20%
- -------------------- --------------- ---------------- -------------------------
General Managers &
other Participants
with a grade level
X30 & above 20% 60% 20%
- -------------------- --------------- ---------------- -------------------------
Other Participants 80% 20%
- -------------------- --------------- ---------------- -------------------------
4.4 Limitations and Adjustments to Awards. The portion of a Participant`s
Target Award allocated to "Department/Individual Goals" shall be adjusted
to the same extent that the Participant's Target Award(s) allocated to
Corporate or Operating Units are adjusted under Sections 4.2 and 4.4 based
upon the primary allocation of the Participant's Target Award between
Corporate and Operating Units(s).
All Incentive Awards attributable to an Operating Unit or to Corporate
(including Incentive Awards attributable to Department/Individual Goals)
may not exceed 16% of the applicable Operating Unit's or Corporate's actual
Incentive Income when Corporate or the Operating Unit, as applicable,
attains 100% or less of its Planned Incentive Income. Such Incentive Awards
allocated to an Operating Unit or to Corporate, if necessary, shall be
proportionately adjusted downward so that the sum of such resulting
Incentive Awards does not exceed 16% of the applicable Corporate's or
Operating Unit's actual Incentive Income.
If Incentive Income exceeds 100% of Planned Incentive Income, the Incentive
Award shall be adjusted by (i) proportionately adjusting downward, if
necessary, the Incentive Awards allocated to the Operating Unit or
Corporate so that the sum of the resulting Incentive Awards allocated to
the Operating Unit or Corporate does not exceed 16% of the applicable
Corporate or Operating Unit's Planned Incentive Income; and then (ii) by
multiplying the Incentive Award that would have been paid at Planned
Incentive Income by the applicable percentage in the right hand column of
the table in Section 4.2.
Incentive awards attributable to an Operating Unit are not adjusted under
this Section 4.4 based upon overall Corporate Incentive Income, but instead
are adjusted based on such Operating Unit's Incentive Income.
The Chief Executive Officer may, in his discretion, reduce any Incentive
Awards payable under this Plan by up to 25% and the total amount of such
reduction(s) shall be added to the amount available for discretionary
awards under Article V.
4.5 Department/Individual Goals. Determinations on the achieve- ment of
Department/Individual Goals shall be approved by the Chief Ex-ecutive
Officer.
Example 1:
General Manager Smith works for CXT Buildings and has a Target Award of
$18,000 (i.e. Base Compensation of $90,000 and a 20% Target Percentage). In
2006, the Corporation earns $7,000,000 of Incentive Income, which is 100% of its
Planned Incentive Income and CXT Buildings earns $2,000,000 of Incentive Income
which is 125% of its Planned Incentive Income ($1, 600,000). The CEO determines
that Mr. Smith has achieved 1/2 of his Department/Individual goals. Mr. Smith's
Incentive Award (ignoring the 16% limits and the CEO's ability to adjust upward
or downward), would be calculated as follows:
a. $ 3,600 of Mr. Smith's Target Award (20% X $18,000) would be allocated
to Corporate. Assuming that Corporate total awards do not exceed 16% of the
Corporation's Incentive Income and since Corporate achieved 100% of its
Planned Incentive Income, Mr. Smith would receive $ 3,600 from the
Corporate allocation. See Sec. 4.2.
b. $ 10,800 of the Target Award (or 60% of $18,000) would be allocated to
the Operating Unit. Since CXT Buildings earned 125% of Planned Income, Mr.
Smith would receive $14,040 ($10,800 X 130%) from the Operating Unit
allocation.
c. $3,600 (or 20% of $18,000) was allocated to individual/departmental
Goals. Since Mr. Smith's Target Award was primarily allocated to an
Operating Unit, Mr. Smith would have been eligible to receive a maximum of
$4,680 ($3,600 X 130%) from the achievement of individual/departmental
goals. Since Mr. Smith achieved 50% of his goals, he would receive $2,340
from the individual/departmental goals allocation.
d. Mr. Smith's total Incentive Award would be $19,980.
Example 2:
Same facts as Example 1, except that: (i) the total of all unadjusted
Incentive Awards (without reference to 16% limitations and with CXT Buildings
Incentive Income being 125% of its Planned Income of $1,600,000) based on Target
Awards allocated to CXT Buildings would have been $450,000; and (ii) the total
Incentive Awards payable from Corporate, without adjustment, would have been
$600,000. Mr. Smith's Incentive Award would be calculated as follows:
a. Mr. Smith's Corporate allocation would be unaffected by the 16% caps
since the maximum Corporate allocation would be 16% X $7,000,000, or
$1,120,000, which exceeds the $600,000 of Incentive Awards payable from
Corporate;. Mr. Smith would receive $3,600 from his Corporate allocation.
b. If CXT Buildings had achieved its Planned Incentive Income of $1,600,000
its maximum aggregate Incentive Awards could not have exceeded $256,000
($1,600,000 X 16%). Since CXT Buildings achieved 125% of its Planned
Incentive Income, the total Incentive Awards would be limited to $256,000 X
130%, see Sec. 4.2, or $332,800. Accordingly, Mr. Smith would receive 74%
($332,800 / $450,000) of the unadjusted $16,380 ($14,040 + $2,340, see (b)
and (c) of Example 1), or $12,121 from the Operating Unit allocation.
c. Mr. Smith's total Incentive Award would be $15,721.
Example 3:
Same facts as Example 2, except that General Manager Smith works for Fabricated
Products which has a planned loss for 2006:
a. Mr. Smith's Corporate allocation would be unaffected and he would
receive $3,600 from the Corporate allocation.
b. Fabricated Product's maximum aggregate Incentive Awards at Planned
Incentive Income are negative and the only award Mr. Smith would be
eligible to receive, other than Mr. Smith's corporate allocation, would be
a discretionary award under Article V below.
c. Mr. Smith's total Incentive Award would be $3,600; plus any
discretionary award under Article V.
The examples are for illustrative purposes only and do not contain the Company's
or any Operating Unit's actual Planned Incentive Income.
V. DISCRETIONARY AWARDS
An amount shall be available for discretionary awards equal to the sum of
(i) $100,000; (ii) the amount which would have been paid except that an
individual was not a Participant due to such individual's failure to satisfy the
requirements of Sections 3.2(i) or 3.2(ii); (iii) the amount of any reduction in
Incentive Awards made by the Chief Executive Officer under Section 4.4; and (iv)
any amount, otherwise available for payment, that was not paid due to a failure
to achieve Department/Individual goals pursuant to Sections 4.3 and 4.4.
Discretionary awards shall be determined by the Chief Executive Officer, except
that any discretionary awards to officers, elected by the Board of Directors,
must be approved by the Committee. Amounts available under this Article V, but
not paid, shall remain the Corporation's property.
VI. PAYMENT OF AWARDS
Payment of Individual Incentive Awards will be made on or before the later
of March 15, 2007 or the completion of the audit for the Corporation's Fiscal
Year.
VII. ADMINISTRATION AND INTERPRETATION OF THE PLAN
The Chief Executive Officer, if there is a dispute, shall determine the
Operating Unit(s) that will receive credit for any sale and/or how credit for
any sale is to be allocated among any Operating Units. The Chief Executive
Officer's decisions are subject to final review by the Committee if the
Committee requests such review.
A determination by the Committee in carrying out, administering or
interpreting this Plan shall be final and binding for all purposes and upon all
interested persons and their heirs, successors and personal representatives.
The Committee may, from time to time, amend the Plan;.
The Chief Executive Officer may delegate any of his duties herein.
The Corporation's Internal Audit Department will review and verify the
calculation of Incentive Awards.