Exhibit 10.59
L.B. FOSTER COMPANY
EXECUTIVE ANNUAL INCENTIVE COMPENSATION PLAN
1. Purpose of the Plan
The purpose of the L.B. Foster Company Executive Annual Incentive
Compensation Plan (the "Plan") is to advance the interests of the Company and
its shareholders by providing incentives to officers and certain other key
employees with significant responsibility for achieving performance goals
critical to the success and growth of the Company. The Plan is designed to: (i)
promote the attainment of the Company's significant business objectives; (ii)
encourage and reward management teamwork across the entire Company; and (iii)
assist in the attraction and retention of employees vital to the Company's
long-term success.
2. Definitions
For the purpose of the Plan, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended, including
any successor law thereto.
(c) "Committee" means the Compensation Committee of the Board, or such
other committee as is appointed or designated by the Board to administer the
Plan, in each case which shall be comprised solely of two or more "outside
directors" (as defined under Section 162(m) of the Code and the regulations
promulgated thereunder).
(d) "Company" means L.B. Foster Company and any subsidiary entity or
affiliate thereof, including subsidiaries or affiliates which become such after
adoption of the Plan.
(e) "Forfeit," "Forfeiture," "Forfeited" means the loss by a Participant of
any and all rights to an award granted under the Plan, including the loss of any
payment of compensation by the Company under the Plan or any award granted
thereunder.
(f) "Participant" means any person: (1) who satisfies the eligibility
requirements set forth in Paragraph 4; (2) to whom an award has been made by the
Committee; and (3) whose award remains outstanding under the Plan.
(g) "Performance Goal" means, in relation to any Performance Period, the
level of performance that must be achieved with respect to a Performance
Measure.
(h) "Performance Measures" means any one or more of the following
performance criteria, either individually, alternatively or in any combination,
and subject to such modifications or variations as specified by the Committee,
applied to either the Company as a whole or to a business unit or subsidiary
entity thereof, either individually, alternatively or in any combination, and
measured over a period of time including any portion of a year, annually or
cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years' results or to a designated comparison
group, in each case as specified by the Committee: cash flow; cash flow from
operations; earnings (including, but not limited to, earnings before interest,
taxes, depreciation, and amortization or some variation thereof); earnings per
share, diluted or basic; earnings per share from continuing operations; net
asset turnover; inventory turnover; capital expenditures; debt; debt reduction;
working capital; return on investment; return on sales; return on invested
capital; net or gross sales; market share; economic value added; cost of
capital; change in assets; expense reduction levels; productivity; delivery
performance; safety record and/or performance; stock price; return on equity;
total stockholder return; return on capital; return on assets or net assets;
revenue; income or net income; operating income or net operating income;
operating income adjusted for management fees and depreciation, and
amortization; operating profit or net operating profit; gross margin, operating
margin or profit margin; and completion of acquisitions, business expansion,
product diversification, new or expanded market penetration and other
non-financial operating and management performance objectives.
To the extent consistent with Section 162(m) of the Code and the
regulations promulgated thereunder, the Committee may determine that certain
adjustments shall apply, in whole or in part, in such manner as specified by the
Committee, to exclude the effect of any of the following events that occur
during a Performance Period: the impairment of tangible or intangible assets;
litigation or claim judgments or settlements; changes in tax law, accounting
principles or other such laws or provisions affecting reported results; business
combinations, reorganizations and/or restructuring programs, including but not
limited to reductions in force and early retirement incentives; currency
fluctuations; and any extraordinary, unusual, infrequent or non-recurring items,
including, but not limited to, such items described in management's discussion
and analysis of financial condition and results of operations or the financial
statements and/or notes thereto appearing in the Company's annual report for the
applicable period.
(i) "Performance Period" means, in relation to any award, the calendar year
or other fiscal period within the calendar year of less than 12 months for which
a Participant's performance is being calculated, with each such period
constituting a separate Performance Period.
(j) "Section 409A" shall mean Section 409A of the Code and the regulations
and other binding guidance promulgated thereunder.
(k) "Retirement" means retirement of an employee as determined and
authorized by the Committee.
(l) Total and Permanent Disability" means: (1) if the Participant is
insured under a long-term disability insurance policy or plan which is paid for
by the Company, the Participant is totally disabled under the terms of that
policy or plan; or (2) if no such policy or plan exists, the Participant shall
be considered to be totally disabled as determined by the Committee.
3. Administration of the Plan
(a) The management of the Plan shall be vested in the Committee; provided,
however, that all acts and authority of the Committee pursuant to this Plan
shall be subject to the provisions of the Committee's Charter, as amended from
time to time, and such other authority as may be delegated to the Committee by
the Board. The Committee may, with respect to Participants who the Committee
determines are not likely to be subject to Section 162(m) of the Code, delegate
such of its powers and authority under the Plan to the Company's officers as it
deems necessary or appropriate. In the event of such delegation, all references
to the Committee in this Plan shall be deemed references to such officers as it
relates to those aspects of the Plan that have been delegated.
(b) Subject to the terms of the Plan, the Committee shall, among other
things, have full authority and discretion to determine eligibility for
participation in the Plan, make awards under the Plan, establish the terms and
conditions of such awards (including the Performance Goal(s) and Performance
Measure(s) to be utilized) and determine whether the Performance Goals
applicable to any Performance Measures for any awards have been achieved. The
Committee's determinations under the Plan need not be uniform among all
Participants, or classes or categories of Participants, and may be applied to
such Participants, or classes or categories of Participants, as the Committee,
in its sole and absolute discretion, considers necessary, appropriate or
desirable. The Committee is authorized to interpret the Plan, to adopt
administrative rules, regulations, and guidelines for the Plan, and may correct
any defect, supply any omission or reconcile any inconsistency or conflict in
the Plan or in any award. All determinations by the Committee shall be final,
conclusive and binding on the Company, the Participant and any and all
interested parties.
(c) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to determine the extent to which awards under the Plan
will be structured to conform to the requirements applicable to
performance-based compensation as described in Section 162(m) of the Code, and
to take such action, establish such procedures, and impose such restrictions at
the time such awards are granted as the Committee determines to be necessary or
appropriate to conform to such requirements. Notwithstanding any provision of
the Plan to the contrary, if an award under this Plan is intended to qualify as
performance-based compensation under Section 162(m) of the Code and the
regulations issued thereunder and a provision of this Plan would prevent such
award from so qualifying, such provision shall be administered, interpreted and
construed to carry out such intention (or disregarded to the extent such
provision cannot be so administered, interpreted or construed).
(d) The benefits provided under the Plan are intended to be excepted from
coverage under Section 409A and the regulations promulgated thereunder and shall
be construed accordingly. Notwithstanding any provision of the Plan to the
contrary, if any benefit provided under this Plan is subject to the provisions
of Section 409A and the regulations issued thereunder (and not excepted
therefrom), the provisions of the Plan shall be administered, interpreted and
construed in a manner necessary to comply with Section 409A and the regulations
issued thereunder (or disregarded to the extent such provision cannot be so
administered, interpreted, or construed.)
4. Participation in the Plan
Officers and key employees of the Company, as determined by the Committee,
shall be eligible to participate in the Plan. No employee shall have the right
to participate in the Plan, and participation in the Plan in any one Performance
Period does not entitle an individual to participate in future Performance
Periods.
5. Incentive Compensation Awards
(a) The Committee may, in its discretion, from time to time make awards to
persons eligible for participation in the Plan pursuant to which the Participant
will earn cash compensation. The amount of a Participant's award may be based on
a percentage of such Participant's salary or such other methods as may be
established by the Committee. Each award shall be communicated to the
Participant, and shall specify, among other things, the terms and conditions of
the award and the Performance Goals to be achieved. The maximum amount that may
be awarded and paid under the Plan to a Participant for any calendar year shall
not exceed USD $1,500,000.
(b) With respect to awards that are intended to be performance-based
compensation under Section 162(m) of the Code, each award shall be conditioned
upon the achievement of one or more Performance Goal(s) with respect to the
Performance Measure(s) established by the Committee. No later than ninety (90)
days after the beginning of the applicable Performance Period, the Committee
shall establish in writing the Performance Goals, Performance Measures and the
method(s) for computing the amount of compensation which will be payable under
the Plan to each Participant if the Performance Goals established by the
Committee are attained; provided however, that for a Performance Period of less
than one year, the Committee shall take any such actions prior to the lapse of
25% of the Performance Period. In addition to establishing minimum Performance
Goals below which no compensation shall be payable pursuant to an award, the
Committee, in its discretion, may create a performance schedule under which an
amount less than or more than the target award may be paid so long as the
Performance Goals have been achieved.
(c) The Committee, in its sole discretion, may also establish such
additional restrictions or conditions that must be satisfied as a condition
precedent to the payment of all or a portion of any awards. Such additional
restrictions or conditions need not be performance-based and may include, among
other things, the receipt by a Participant of a specified annual performance
rating, the continued employment by the Participant and/or the achievement of
specified performance goals by the Company, business unit or Participant.
Furthermore and notwithstanding any provision of this Plan to the contrary, the
Committee, in its sole discretion, may reduce the amount of any award to a
Participant if it concludes that such reduction is necessary or appropriate
based upon: (i) an evaluation of such Participant's performance; (ii)
comparisons with compensation received by other similarly situated individuals
working within the Company's industry; (iii) the Company's financial results and
conditions; or (iv) such other factors or conditions that the Committee deems
relevant. Notwithstanding any provision of this Plan to the contrary, the
Committee shall not use its discretionary authority to increase any award that
is intended to be performance-based compensation under Section 162(m) of the
Code.
6. Payment of Individual Incentive Awards
(a) After the end of the Performance Period, the Committee shall certify in
writing the extent to which the applicable Performance Goals and any other
material terms have been achieved. Subject to the provisions of the Plan, earned
Awards shall be paid in the first calendar year immediately following the end of
the Performance Period on or before March 15th of such calendar year ("Payment
Date"). For purposes of this provision, and for so long as the Code permits, the
approved minutes of the Committee meeting in which the certification is made may
be treated as written certification.
(b) Unless otherwise determined by the Committee, Participants who have
terminated employment with the Company prior to the actual payment of an award
for any reason (including but not limited to death, Retirement or Total and
Permanent Disability), shall Forfeit any and all rights to payment under any
awards then outstanding under the terms of the Plan and shall not be entitled to
any cash payment for such period. If a Participant's employment with the Company
should terminate during a Performance Period by reason of death, Retirement or
Total and Permanent Disability and the Committee determines that the award is
not Forfeited, the Participant's award shall be prorated to reflect the period
of service during the Performance Period prior to his/her death, Retirement or
Total and Permanent Disability, and shall be paid either to the Participant or,
as appropriate, the Participant's estate, subject to the Committee's
certification that the applicable Performance Goals and other material terms
have been met.
(c) The Committee shall determine whether, to what extent, and under what
additional circumstances amounts payable with respect to an award under the Plan
shall be deferred either automatically, at the election of the Participant, or
by the Committee. All deferrals shall be made in accordance with the terms and
procedures of the deferred compensation plan under which any such amounts are
deferred.
7. Amendment or Termination of the Plan
While the Company intends that the Plan shall continue in force from year
to year, the Company reserves the right to amend, modify or terminate the Plan
at any time; provided, however, that no such modification, amendment or
termination shall without the consent of the Participant, materially adversely
affect the rights of such Participant to any payment that has been determined by
the Committee to be due and owing to the Participant under the Plan but not yet
paid. Any and all actions permitted under this Paragraph 7 may be authorized and
performed by the Committee in its sole and absolute discretion.
Notwithstanding the foregoing or any provision of the Plan to the contrary,
the Committee may at any time (without the consent of the Participant) modify,
amend or terminate any or all of the provisions of this Plan to the extent
necessary to conform the provisions of the Plan with Section 409A or Section
162(m) of the Code, the regulations promulgated thereunder or an exception
thereto regardless of whether such modification, amendment, or termination of
the Plan shall adversely affect the rights of a Participant under the Plan.
Notwithstanding any provision of the Plan to the contrary, in no event shall the
Committee or Board (or any member thereof), or the Company (or its employees,
officers, directors or affiliates) have any liability to any Participant (or any
other person) due to the failure of the Plan to satisfy the requirements of
Section 409A or any other applicable law.
8. Rights Not Transferable
A Participant's rights under the Plan may not be assigned, pledged, or
otherwise transferred except, in the event of a Participant's death, to the
Participant's designated beneficiary, or in the absence of such a designation,
by will or by the laws of descent and distribution.
9. Funding/Payment
The Plan is not funded and all awards payable hereunder shall be paid from
the general assets of the Company. No provision contained in this Plan and no
action taken pursuant to the provisions of this Plan shall create a trust of any
kind or require the Company to maintain or set aside any specific funds to pay
benefits hereunder. To the extent a Participant acquires a right to receive
payments from the Company under the Plan, such right shall be no greater than
the right of any unsecured general creditor of the Company. If any earned Award
is not paid by the Payment Date due to administrative impracticality, such
earned Award will be paid, without earnings, as soon as administratively
practicable thereafter.
10. Withholdings
The Company shall have the right to withhold from any awards payable under
the Plan or other wages payable to a Participant such amounts sufficient to
satisfy federal, state and local tax withholding obligations arising from or in
connection with the Participant's participation in the Plan and such other
deductions as may be authorized by the Participant or as required by applicable
law.
11. No Employment or Service Rights
Nothing contained in the Plan shall confer upon any Participant any right
with respect to continued employment with the Company (or any of its affiliates)
nor shall the Plan interfere in any way with the right of the Company (or any of
its affiliates) to at any time reassign the Participant to a different job,
change the compensation of the Participant or terminate the Participant's
employment for any reason.
12. Other Compensation Plans
Nothing contained in this Plan shall prevent the Corporation from adopting
other or additional compensation arrangements for employees of the Corporation,
including arrangements that are not intended to comply with Section 162(m) of
the Code.
13. Governing Law
The Plan shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania, without giving effect to its conflict of law
provisions.
14. Effective Date
The Plan shall become effective immediately upon the approval and adoption
thereof by the Board; provided, however, that no award intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the Code
shall be payable prior to approval of the Plan's material terms by the Company's
stockholders.