Exhibit 10.17
As amended on July 5, 2006
LAIDLAW INTERNATIONAL, INC.
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
ARTICLE I
INTRODUCTION
1.1. PURPOSE. The purpose of this Laidlaw International, Inc. Non-Employee
Director Compensation Policy (the "Policy") is to set forth the policy of
Laidlaw International, Inc. with respect to the compensation of its non-employee
directors, subject, in the case of Equity Awards, to the terms of the Amended
and Restated Laidlaw International, Inc. 2003 Equity and Performance Incentive
Plan (the "Plan").
1.2. EFFECTIVE DATE OF POLICY. The Policy shall be effective as of November
19, 2003 (the "Effective Date").
1.3. DEFINITIONS. The following terms, when used in this Policy, shall have
the meanings set forth below. Capitalized terms used herein but not otherwise
defined shall have the meaning set forth in the Plan.
ANNUAL GRANT DATE shall have the meaning set forth in Section 4.1 of this
Policy.
BENEFICIARY means the individual(s) or entity or combination thereof
designated by the Non-Employee Director to receive the balance of the
Non-Employee Director's Deferral Account in the event of the Non-Employee
Director's death. To be effective, any Beneficiary designation shall be filed in
writing with the Committee or the Committee's designee. A Non-Employee Director
may revoke an existing Beneficiary designation by filing another written
Beneficiary designation with the Committee. The latest Beneficiary designation
received by the Committee shall be controlling. If no Beneficiary is named by a
Non-Employee Director or if he or she survives all of the named Beneficiaries,
the Deferral Account shall be paid in the following order of precedence: (i) to
the Non-Employee Director's spouse, if living at the time of the Non-Employee
Director's death; (ii) per stirpes to the Non-Employee Director's descendants
(including adopted children) living at the time of the Non-Employee Director's
death; or (iii) to the Non-Employee Director's estate.
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COMMITTEE means the Human Resources and Compensation Committee of the
Board.
DEFERRAL means the amount of Retainer or Meeting Fees deferred under
Section 5.1 or the number of Restricted Shares deferred into Deferral Shares
pursuant to Section 5.2 made in any particular Deferral Election.
DEFERRAL ACCOUNT means a bookkeeping account in the name of a Non-Employee
Director who makes a Deferral Election under Article V of this Policy.
DEFERRAL ELECTION means an election to defer pursuant to Article V, at such
time and in such manner as the Committee may prescribe.
DEFERRAL SHARES means the number of Common Shares credited to a Deferral
Account as a result of the election to surrender Restricted Shares as provided
in Section 5.2.
DISTRIBUTION DATE means the date on which a Non-Employee Director will
receive a distribution of his Deferral Account.
DISABLED means a Non-Employee Director's inability to perform his or her
duties as a Board member, determined in the sole discretion of the Board.
DIVIDEND EQUIVALENT means an amount equal to the dividend paid on one
Common Share, as declared by the Corporation from time to time.
EFFECTIVE DATE shall have the meaning set forth in Section 1.2 of this
Policy.
ELECTION DATE means the date a Non-Employee Director elects to defer
payment of Restricted Shares pursuant to Section 5.2.
EQUITY AWARD means an award granted to a Non-Employee Director under
Article IV of the Policy in the form of Stock Options or Restricted Shares,
which shall at all times be subject to the terms of the Plan.
MEETING FEES shall mean fees payable to a Non-Employee Director in
connection with Board or committee meetings.
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POLICY means this Laidlaw International, Inc. Non-Employee Director
Compensation Policy.
REDEFERRAL ELECTION means an election made pursuant to Section 5.4 to
extend a Distribution Date.
RETAINER means the annual cash retainer fee payable by the Corporation to a
Non-Employee Director for services as a director of the Corporation.
STOCK OPTION means an option granted pursuant to the Plan.
ARTICLE II
ELIGIBILITY
This Policy shall apply to each Non-Employee Director. A Non-Employee
Director's eligibility to participate in and receive awards pursuant to this
Policy is subject to the terms of the Policy and does not guarantee that
individual the right to continue participating in the Policy throughout the term
of the Policy.
ARTICLE III
CASH COMPENSATION
3.1. RETAINER. A Retainer shall be payable in advance on the first business day
of each calendar quarter to each Non-Employee Director who serves on the
Board on such date. Payments shall be made in cash, unless deferred
pursuant to Article V. The Retainer payable to each Non-Employee Director
for services rendered as a member of the Board shall be at an annual rate
of $47,500 (or in the case of the Chair, $150,000) plus the sum of the
following, as applicable:
(a) For services rendered as the Chair of the Board's Audit
Committee, $20,000;
(b) For services rendered as the Chair of the Board's Compensation
Committee, $8,000;
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(c) For services rendered as the Chair of other Board committees,
$5,000 per committee.
3.2. MEETING FEES. Meeting Fees shall be payable quarterly to each Non-Employee
Director. Payments shall be in arrears on the first business day of each
calendar quarter to Non-Employee Directors who participated in Board or
committee meetings in the preceding calendar quarter. Payments shall be
made in cash, unless deferred pursuant to Article V. Meeting Fees payable
to each Non-Employee Director shall equal $1,500 per Board meeting (whether
in person or telephonic) and $1,000 per committee meeting (whether in
person or telephonic), except for Audit Committee meetings which shall be
$1,500 per meeting (whether in person or telephonic). Meeting Fees shall be
payable only for meetings held in accordance with the Corporation's By-Laws
and, in the case of Committee meetings, to Committee members only. Whether
any such meeting is telephonic or in person shall be determined by
reference to the notice pursuant to which such meeting is called.
ARTICLE IV
EQUITY COMPENSATION
4.1. EQUITY AWARDS. Equity Awards will be granted under the Plan annually
beginning with the fiscal year of the Corporation ended August 31, 2003.
Such Equity Awards shall be effective as of the date approved by the Board
("Annual Grant Date"), which approval shall occur within 90 days after the
end of the fiscal year of the Corporation for which the grant is made. Each
annual Equity Award shall be in the amounts set forth in paragraphs (a) and
(b) below, as such paragraphs may be amended from time to time in
accordance with Article IX.
(a) Stock Options. For services rendered as a member of the Board, a grant of
6,750 Stock Options; provided, however, that for services rendered as the
Chair of the Board, a grant of 10,125 Stock Options;
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(b) Restricted Shares. For services rendered as a member of the Board, a grant
of 3,375 Restricted Shares; provided, however, that for services rendered
as the Chair of the Board, a grant of 5,063 Restricted Shares.
A Non-Employee Director who begins to serve as a Non-Employee Director
between Annual Grant Dates shall be granted Equity Awards under the Plan
equal to 13,500 Stock Options and 6,750 Restricted Shares, multiplied by a
fraction, the numerator of which is the number of whole or partial months
between the date on which the Non-Employee Director became a director
through the end of the Corporation's fiscal year in which the Non-Employee
Director became a director, and the denominator of which is 12. Only whole
Stock Options or Restricted Shares shall be granted; any fraction of a
Stock Option or Restricted Share shall be rounded to the nearest whole
number.
4.2. TERMS OF EQUITY AWARDS. The terms and conditions of each Equity Award shall
be set forth in an Evidence of Award and consistent with the terms of the
Plan.
ARTICLE V
DEFERRAL PROGRAM
5.1. DEFERRAL OF CASH COMPENSATION. A Non-Employee Director may make an
irrevocable Deferral Election to defer receipt of all or any whole
percentage of any Retainer or Meeting Fees payable under Article III to a
Deferral Account on such forms as the Committee may prescribe. Such
Deferral Election must be made before the beginning of the calendar year in
which such Retainer is earned or meetings giving rise to Meeting Fees
occur. Notwithstanding the foregoing: (i) in the calendar year including
the Effective Date, a Deferral Election may be made within 30 days of the
Effective Date to defer cash compensation attributable to director services
performed or meetings occurring after such Deferral Election, as determined
by the Committee; and (ii) in the first year a Non-Employee Director
becomes eligible to participate in the Policy, he or she may make a
Deferral Election within 30 days of becoming eligible to participate in the
Policy to defer cash compensation attributable to director services or
meetings occurring after such Deferral Election, as determined by the
Committee.
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5.2. DEFERRAL OF RESTRICTED SHARE DISTRIBUTION. A Non-Employee Director may make
an irrevocable Deferral Election no later than 12 months before the date
Restricted Shares vest under Article IV to defer receipt of all or any
whole percentage of such Restricted Shares at such time and on such forms
as the Committee may prescribe. If a Non-Employee Director elects to defer
payment with respect to the Restricted Shares, he or she will be deemed, as
of the date of such election (the "Election Date"), to have surrendered the
Restricted Shares and to have his or her Deferral Account (as described in
Section 5.5) credited with an equal number of Common Shares (hereinafter,
the "Deferral Shares"). As of the Election Date, the Non-Employee Director
shall no longer have voting and dividend rights with respect to the
Restricted Shares surrendered.
5.3. ELECTION OF DISTRIBUTION DATE. As part of any Deferral Election, the
Non-Employee Director shall specify a Distribution Date. The Distribution
Date selected by the Non-Employee Director shall not be earlier than the
January 1 immediately following the first anniversary of the date on which
the Deferral Election is made. The Distribution Dates specified in a
Non-Employee Director's Deferral Elections may, but need not necessarily,
be the same for all Deferrals made under this Policy. A Distribution Date
selected by a Non-Employee Director is irrevocable, except as provided in
Section 5.4.
5.4. REDEFERRAL ELECTION. A Non-Employee Director may make an irrevocable
Redeferral Election to extend a Distribution Date at such time and on such
forms as the Committee may prescribe; provided, however, that (i) such
Redeferral Election must be made before July 1 of the calendar year
preceding the calendar year in which the Distribution Date is to occur; and
(ii) the new Distribution Date must be no earlier than the January 1
immediately following the first anniversary of the date the Redeferral
Election is made.
5.5. DEFERRAL ACCOUNTS. All amounts deferred pursuant to this Article V shall be
allocated to a Deferral Account that includes separate subaccounts for each
Deferral. Deferrals of cash compensation pursuant to Section 5.1 shall be
credited to the Deferral Account as of the date coinciding with or next
following the date on which the Non-Employee Director would have received
the Deferral absent a Deferral Election. Deferral Shares shall be credited
to the Deferral Account as of the Election Date, and shall be subject to a
risk of forfeiture as set forth in Section 5.7 below. The Corporation, in
the discretion
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of the Committee, may maintain one or more grantor trusts to hold assets to
be used for payment of Deferral Accounts; provided, however, that the
assets of any such trust shall remain the assets of the Corporation subject
to the claims of its general creditors. Any such trust shall be designed to
comply with the material requirements of Revenue Procedure 92-64, or such
other interpretive guidance issued under the Internal Revenue Code of 1986,
as amended.
5.6. INVESTMENT OF DEFERRAL ACCOUNTS. Deferral Accounts holding deferred cash
compensation pursuant to Section 5.1 shall be deemed to be invested in
hypothetical Common Shares equal to a number of Common Shares determined by
dividing the amount of cash compensation deferred under Section 5.1 by the
Market Value per Share on the date such cash compensation otherwise would
have been paid, with fractional Common Shares computed to two decimal
places. Dividend Equivalents on each Deferral Share and each hypothetical
Share shall be credited to the Non-Employee Director's Deferral Account and
appropriate subaccount as of the crediting date coincident with or next
following the dividend payment date, and in additional Common Share
equivalents as though such dividend credits were a Deferral.
5.7. VESTING OF DEFERRAL ACCOUNTS. A Non-Employee Director shall be fully vested
at all times in the balance of his or her Deferral Account that relates to
cash compensation that is deferred pursuant to Section 5.1. Deferral Shares
shall be subject to a risk of forfeiture to the same extent, under the same
circumstances, and for the remainder of time that the underlying Restricted
Shares would have been subject to a risk of forfeiture.
5.8. DISTRIBUTION OF DEFERRAL ACCOUNT. A Non-Employee Director's Deferral
Account will be distributed to the Non-Employee Director or applicable
Beneficiary within 30 days after the Distribution Date or, if earlier, the
date on which the Non-Employee Director dies or becomes Disabled or there
occurs a Change in Control. To the extent vested as provided in Section
5.7, distributions of Deferral Accounts holding Deferral Shares shall be
made in a lump sum payment of Common Shares equal to the number of Deferral
Shares accumulated in the Deferral Account on the Distribution Date and
distributions of Deferral Accounts holding deferred cash compensation
pursuant to Section 5.1 shall be
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made in a lump sum payment in cash. Dividend Equivalents held in the
Deferral Accounts shall in all cases be paid on the Distribution Date in a
lump sum in cash.
ARTICLE VI
ADJUSTMENT PROVISIONS
The adjustment provisions of the Plan shall apply to amounts held in the
Deferral Accounts. In the circumstances described in such adjustment provisions.
ARTICLE VII
STOCK OWNERSHIP GUIDELINES
Because the Corporation wishes to align the interests of Non-Employee
Directors and other shareholders of the Corporation, Non-Employee Directors will
be expected to maintain a substantial proprietary interest in the Corporation. A
proprietary interest (which shall include Common Shares in the name of such
Non-Employee Director or his or her Beneficiary held outside the Plan or
received pursuant to the Plan and those Common Share equivalents and Deferral
Shares held in his or her Deferral Account) will be considered substantial if,
on the fifth anniversary of the Effective Date, such proprietary interest has a
Market Value per Share equal to the annual rate of the Non-Employee Director
Retainer of $47,500 multiplied by five (5). The Corporation will consider a
Non-Employee Director's compliance with these stock ownership guidelines in its
annual evaluation of Board member performance.
ARTICLE VIII
ADMINISTRATION
8.1. ADMINISTRATION. This Policy shall be administered by the Committee.
8.2. COMMITTEE'S RIGHTS, DUTIES AND POWERS. The Committee shall have all the
powers, authorities and resources available to it under its charter and the
By-Laws of the Corporation.
8.3. EFFECT OF COMMITTEE DETERMINATIONS. The interpretation and construction of
this Policy by the Committee, and any action taken hereunder, shall be
binding and conclusive upon all parties; provided, however, that nothing
herein shall prevent any Non-Employee Director or Beneficiary from
enforcing his or her rights as a general
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unsecured creditor hereunder.
8.4. INTERESTED COMMITTEE MEMBER. If a member of the Committee receives benefits
pursuant to this Policy, the Committee member may not decide or determine
any matter or question concerning distributions of any kind to be made to
him or her or the nature or mode of settlement of his or her distribution,
unless such decision or determination could be made by the Committee member
under this Policy if the Committee member were not serving as a member of
the Committee.
8.5. EXPENSES. All costs, charges and expenses reasonably incurred in the
administration of this Policy will be paid by the Corporation.
8.6. REPORTS. Each Non-Employee Director shall receive at least annually a
statement reflecting the amount of his or her Deferral Account.
ARTICLE IX
AMENDMENT AND TERMINATION
The Board may amend this Policy from time to time or terminate this Policy
at any time. If the Plan is terminated, no further Equity Awards may be awarded
to Non-Employee Directors under this Policy. Notwithstanding the foregoing, no
action authorized by this Article shall adversely change the terms and
conditions of an outstanding Equity Award or a Non-Employee Director's Deferral
Account without the Non-Employee Director's consent.
ARTICLE X
MISCELLANEOUS
10.1. NON-ASSIGNABILITY OF BENEFITS. No Non-Employee Director nor any
Beneficiary under this Policy shall have any power or right to transfer,
assign, anticipate, hypothecate or otherwise encumber any part or all of
the amounts payable hereunder, except by will or the laws of descent and
distribution. Such amounts shall not be subject to seizure by any creditor
of a Non-Employee Director or any Beneficiary hereunder, by a proceeding at
law or in equity, nor transferable by operation of law in the event of the
bankruptcy or insolvency of any Non-Employee Director or Beneficiary
hereunder. Any such attempted assignment or transfer shall be void.
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10.2. SHAREHOLDER RIGHTS. Amounts held in a Deferral Account shall not confer
upon the holder thereof any rights as a shareholder of the Corporation.
10.3. UNSECURED GENERAL CREDITORS. Non-Employee Directors and their
Beneficiaries shall have no legal or equitable rights, interest or claims
in any property or assets of the Corporation. The obligation under this
Policy to a Non-Employee Director or Beneficiary shall be merely an
unfunded and unsecured promise by the Corporation to pay money to the
Non-Employee Director or Beneficiary in the future. This Policy is intended
to be unfunded for tax purposes or for purposes of any applicable provision
of the Employee Retirement Income Security Act of 1974, as amended.
10.4. EFFECT ON OTHER BENEFITS. Except as otherwise required by applicable law,
this Policy and the benefits described herein are in addition to all other
benefits which may be provided by the Corporation to the Non-Employee
Director from time to time, and shall not reduce, replace or otherwise
cause any reduction, in any manner, with regard to any of such other
benefits.
10.5. NOTICES. Any notice, consent or demand required or permitted to be given
under the provisions of this Policy by the Corporation or any Non-Employee
Director or Beneficiary shall be in writing, and shall be signed by the
person or entity giving or making the same. If such notice, consent or
demand is mailed, it shall be sent by United States certified mail, postage
prepaid, addressed to the principal office of the Corporation, or if to a
Non-Employee Director or Beneficiary to such individual or entity's last
known address as shown on the records of the Corporation. The date of such
mailing shall be deemed the date of notice, consent or demand.
10.6. GOVERNING LAW. This Policy shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
10.7. COMPLIANCE WITH SECURITIES LAW. It is the Corporation's intent that this
Policy comply with the provisions of Section 16 of the Securities Exchange
Act of 1934, as amended, and the rules promulgated thereunder. To the
extent that any provision of this Policy is found not to comply with
Section 16 or such rules, such provision shall be null and void.
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