Exhibit 10.56
L. B. FOSTER COMPANY 2005
THREE YEAR INCENTIVE PLAN
AS AMENDED AND RESTATED MAY 24, 2006
I. PURPOSE
This Plan is designed to further motivate selected corporate officers 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 "Committee" shall mean the Compensation Committee of the Board of
Directors and any successors thereto.
2.2 "Corporation" shall mean L. B. Foster Company and those subsidiar-
ies thereof in which L. B. Foster Company owns 100% of the
outstanding common stock.
2.3 "Fiscal Period" means the 2005, 2006 and 2007 calendar years.
2.4 "Incentive Award" shall mean the payment made to a Participant
under this Plan, after and/or subject to adjustments under
this Plan.
2.5 "Incentive Income" shall mean the Corporation's aggregate
pre-tax income for the Fiscal Period determined in accordance
with generally accepted accounting principles, but excluding
income with respect to the Corporation's investments in the
Dakota, Minnesota & Eastern Railroad, or
other gains, losses, charges or income which the Committee, in
its sole discretion, determines to be extraordinary.
2.6 "Participant" shall mean an officer of the Corporation who is
specifically selected by the Committee and who satisfies all
of the eligibility requirements set forth in Article III hereof.
2.7 "Plan" shall mean the L. B. Foster Company 2005 Three Year
Incentive Plan, which Plan shall be in effect with respect to
the Fiscal Period.
2
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 an elected officer of the Company who has
been selected to participate in the Plan by the Committee.
3.2 A Participant may not have: (i) been terminated for cause;
(ii) have resigned (other than due to retirement with the
Committee's consent) prior to the date Individual Incentive
Awards are paid; (iii), been terminated for any reason
whatsoever and have received money from the Corporation in
connection with said termination; unless the Corporation
agrees in writing that the employee shall remain a Participant
in this Plan or (iv) have been primarily employed by Natmaya
or Fosmart during the Fiscal Period; provided, however, that
the amount of any Incentive Award for a Participant who ceases
to be an employee during the Fiscal Period for any reason
shall be only in an amount determined in the Committee's
discretion and shall be paid to the Participant within the
first 75 days of the calendar year following the Participant's
termination of employment.
3.3 As used herein, "cause" to terminate employment shall exist
upon (i) the failure of an employee capably to 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
any of the reasonable directives of the employee's
superior(s). The Committee, in its sole judgment, shall
determine whether "cause" to terminate employment exists for
the purposes of this Plan.
IV. CALCULATION OF INCENTIVE AWARDS
4.1 Calculation of Total Amount Available for Incentive Awards
The total amount available for Incentive Awards shall be
calculated by first determining the applicable percentage in
the left hand column of the table below (the "Performance
PercentagThe Performance Percentage shall be calculated by
dividing Incentive Income minus $13,168,000 by $10,341,000.
The total amount available for Incentive Awards shall then be
calculated by multiplying the percentage in the right hand
column (the "Payout Percentage") of the table below,
corresponding to the Performance Percentage, by $1,825.000,
and then deducting any prior payments made to Participants
under Section 3.2.
3
------------------------------ ----------------------------
Performance Payout (as % of $1,825,000)
Percentage
------------------------------ ----------------------------
------------------------------ ----------------------------
Less than 70% -0-
------------------------------ ----------------------------
70% 10.0%
------------------------------ ----------------------------
80% 30.0%
------------------------------ ----------------------------
90% 62.5%
------------------------------ ----------------------------
100% 100.0%
------------------------------ ----------------------------
110% 112.5%
------------------------------ ----------------------------
120% 130.0%
------------------------------ ----------------------------
130% 150.0%
------------------------------ ----------------------------
150% 200.0%
------------------------------ ----------------------------
The calculation of the Payout Percentage shall be adjusted
proportionately between the levels in the table to reflect the
Performance Percentage actually achieved. For example, if the
Performance Percentage was 75%, the corresponding Payout
Percentage would be 20%.
4.2 Calculation of Individual Incentive Awards
Each initial Participant shall be assigned points based upon
the Participant's position, as follows:
President/CEO 4 Points
Sr. Vice Presidents 2 Points
Vice Presidents, Controller 1 Point
Subsequent Participants, if any, designated by the Committee
shall have points assigned to them by the Committee, based,
among such other factors as the Committee may deem
appropriate, upon the subsequent Participant's position and
the time during the Fiscal Period that the Participant held
the position. If an initial Participant or a subsequent
Participant ceases to be an employee of the Corporation at any
time during the Fiscal Period and still meets the eligibility
equirements of III, the points assigned to such Participant
shall be adjusted downward as the Committee, in its
discretion, determines to be appropriate.
A Participant's Individual Incentive Award shall be calculated
by multiplying the total amount available for Incentive Awards
under Section 4.1 by a fraction, the numerator of which shall
be the Participant's points and the denominator of which shall
be the sum of all Participants' points, but subject to the
limitations in V.
4
Example:
The Corporation earns Incentive Income of 24,000,000.
Participant Smith is assigned two points and the sum of all
Participants' points is 17. Participant Smith's Incentive
Award would be calculated as follows:
a. Calculate Total Amount Available for Incentive Award
($24,000,000 - $13,168,000) / $10,341,000 = 105% (Performance
Percentage)
b. 106.25 (Payment Percentage) X $1,825,000 = $1,939,062
c. 2/17 X $1,939,062 = $228,034 (Individual Incentive Award)
V. LIMITATIONS
Notwithstanding any provision herein to the contrary, an
Incentive Award payable to any Participant may not exceed twice the
Incentive Award that would have been payable to such Participant if the
Corporation had achieved a Performance Percentage of 100%, all of the
initial Participants had remained Participants for the full Fiscal
Period and there were no subsequent Participants. In addition, if the
sum of all points assigned to Participants is fewer than 19, the
Incentive Awards payable under this Plan shall be adjusted downward in
amounts determined by the Committee. Any amounts not paid shall remain
the Corporation's property.
VI. STOCK IN LIEU OF CASH
Notwithstanding any other provision of this Plan, the
Committee (subject to having received any necessary authorization from
the Corporation's shareholders) may substitute shares of the
Corporation's Common Stock ("Stock") subject to such restrictions on
transferability as the Corporation's legal counsel may deem necessary
or appropriate (such restrictions shall provide for no less than a
two-year restriction on the voluntary transfer of such stock), in lieu
of cash in an amount up to 50% of the Individual Incentive Awards that
would otherwise be payable to such Participants under the Plan. The
amount of stock to be granted to Participant shall be calculated by the
Committee determining the fair market value of such restricted stock
(which may include a discount to the stock's then current trading
price) and substituting such stock for up to 50% of the cash that
otherwise would have been payable to a Participant as an Incentive
Award. Cash which would have been payable to Participant, but for this
Article V, shall not be distributed and shall remain the property of
the Corporation.
5
VI. PAYMENT OF AWARDS
Payment of Individual Incentive Awards will be made on or
before March 15, 2008.
VII. ADMINISTRATION AND INTERPRETATION OF THE PLAN
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 Corporation's Internal Audit Department will review and
verify the calculation of Incentive Awards.