UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): [March 6, 2007]
UNITED INDUSTRIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-4252 95-2081809
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
124 INDUSTRY LANE, HUNT VALLEY, MD 21030
(Address of principal executive offices) (Zip Code)
(410) 628-3500
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b)under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
ADOPTION OF 2007 MANAGEMENT INCENTIVE PLAN
On March 6, 2007, the Board of Directors adopted the 2007 Management Incentive
Plan ("MIP") of the Company for the year ending December 31, 2007. The following
description of the MIP is not complete and is qualified in its entirety by the
full text of the MIP, a copy of which is attached as Exhibit 10.1 hereto and
incorporated herein by reference. The MIP is a variable cash-based incentive
plan designed to focus management's attention on performance factors important
to the continued success of each business unit and the Company overall. The MIP
is administered by the Compensation and Stock Option Committee (the
"Compensation Committee"). Under the MIP, the Compensation Committee establishes
a compensation "pool" based upon the extent to which the business unit meets or
exceeds performance against annual performance measures set for each respective
unit. The financial measures generally include, but are not limited to, orders,
profit and cash flow.
Participants in the MIP are executive officers, including the President and
Chief Executive Officer, and other selected senior managers in a position to
significantly affect the performance of their business unit. The senior managers
are generally managers with responsibility across an entire business unit (i.e.,
headquarter executives, product line and other general program managers, and
selected functional managers). The Compensation Committee approves the initial
participants in the plan and any additions of executive officers during the plan
year. The President and Chief Executive Officer has been delegated the authority
by the Compensation Committee, during the plan year, to add participants based
on new hires and promotions to, and to remove participants from, the MIP, other
than executive officers.
Annual incentive awards may range from zero to 200% of the target incentive
compensation. Target incentive compensation is a percent of base salary. The
target incentive percent varies from 10% to 50% of the participant's base
salary, depending on the participant's salary grade, among other factors, and is
determined using competitive data for short-term incentive compensation and in
relation to the executive's total compensation package. Targets for the
executive officers range between 20-45% and, in the case of the President and
Chief Executive Officer, 50%. Awards for participants generally are based on a
combination of business unit performance and personal performance objectives.
The weighting of these factors can vary from one business unit to another,
reflecting the relative importance of business performance to personal
performance for that business unit during any year. If a certain threshold is
not realized, the incentive is not paid.
The business performance is based upon financial performance measures that are
important to the business unit. Budgets, as well as past and expected future
performance results, are criteria used in setting business performance targets.
The Compensation Committee approves the business performance targets for all
executive officers. The business performance targets for all other participants
are reviewed and approved by the Company's chief executive officer, subject to
approval by the Compensation Committee as it deems appropriate. The Compensation
Committee has the discretion to adjust business performance measures in
determining actual business performance to take into account events and
circumstances not contemplated when the business performance measures were
approved.
The personal performance objectives are important personal objectives directly
related to the participant's major responsibilities. For example, those
objectives could include such areas as market and/or customer share improvement;
cost improvements; product development; pricing; inventory levels; introduction
or improvement of products, processes or systems; health, safety and
environmental performance; or management development. The personal performance
objectives of the President and Chief Executive Officer are approved by the
Compensation Committee. The personal performance objectives of the other named
executive officers are approved by the President and Chief Executive Officer,
subject to approval by the Compensation Committee as it deems appropriate. The
personal performance objectives for all other participants are mutually agreed
to by the participant and his or her manager, subject to approval by the
President and Chief Executive Officer as he deems appropriate.
Personal performance objectives are reviewed and revised during the plan year to
take into account significant achievements not contemplated at the time the
personal performance objectives were initially approved. Revisions to the
personal performance objectives of the President and Chief Executive Officer and
other executive officers are approved by the Compensation Committee. The
Compensation Committee has delegated the authority to the President and Chief
Executive Officer the right to make changes to the personal performance
objectives of participants other than executive officers. Revisions to the
personal performance objectives for all other participants are approved by the
participant's manager, subject to approval by the President and Chief Executive
Officer as he deems appropriate.
To determine an employee's incentive award, both performance the business
performance and personal performance objectives factors are rated and weighted
according to the predetermined split. The two results are totaled and multiplied
by the participant's base salary to determine the incentive compensation. If the
requisite performance objectives are not realized, no incentive compensation is
paid to the participant. The predetermined split for the President and Chief
Executive Officer is approved by the Compensation Committee. The predetermined
split for the other executive officers is approved by the President and Chief
Executive Officer, subject to approval by the Compensation Committee as it deems
appropriate. The predetermined split for all other participants is approved by
the President and Chief Executive Officer. Commencing in 2007, the Compensation
Committee has determined that the predetermined split for all corporate and
business unit participants, including all executive officers, shall be 75% for
business performance and 25% for personal performance objectives.
Because of the discretionary nature of the MIP targets and objectives, the MIP
is not intended to satisfy Internal Revenue Code ("Code") Section 162(m).
Payment of awards earned under the MIP will generally be made by March 15, 2008,
subject to a participant's continued employment with the Company at the time of
payment. However, if a participant dies, retires, is laid off, or becomes
disabled after the close of 2007, but before payment is made, payment of the
award will be made by March 15, 2008. If death, retirement, layoff or disability
occurs during 2007, the award will be prorated based on the portion of the year
in which the participant was employed and payment will be made by March 15,
2008.
2006 MANAGEMENT INCENTIVE PLAN AWARDS
On March 6, 2007, the Board of Directors approved the following payments under
the Company's 2006 MIP to the Company's executive officers for services provided
during the fiscal year ended December 31, 2006.
Frederick M. Strader President and Chief Executive $500,000
Officer of the Company
James H. Perry Vice President, Chief Financial $206,736
Officer and Controller of the Company
Jonathan A. Greenberg Vice President, General Counsel and $174,103
Secretary of the Company
Stuart F. Gray Treasurer of the Company $ 41,597
In January 2007, the Company determined that John F. Michitsch and Michael A.
Boden were executive officers of the Company for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended. On March 6, 2007, the Board of
Directors also approved the following payments under the Company's 2006 MIP to
John F. Michitsch and Michael A. Boden for services provided during the fiscal
year ended December 31, 2006.
John F. Michitsch Executive Vice President $151,742
of AAI Corporation
Michael A. Boden Executive Vice President, $185,279
Operations of AAI Corporation
The business performance and personal performance objectives under the 2006 MIP
for each of the Company's executives were met or exceeded. Under the 2006 MIP
calculations, the award to Mr. Strader was $492,436. Because of Mr. Strader's
substantial efforts during 2006, the Compensation Committee determined to
increase the award to $500,000.
EMPLOYEE STOCK OPTION GRANT AGREEMENT
A copy of the form of Company's form of employee stock option grant agreement is
attached as Exhibit 10.2.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
EXHIBIT DESCRIPTION
10.1 2007 Management Incentive Agreement
10.2 Form of Employee Stock Option Grant Agreement Under
2006 Long Term Incentive Plan
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
United Industrial Corporation
By: /s/ James H. Perry
-----------------------------------------------------
James H. Perry
Chief Financial Officer and
Vice President
Date: March 12, 2007
EXHIBIT INDEX
EXHIBIT DESCRIPTION
10.1 2007 Management Incentive Agreement
10.2 Form of Employee Stock Option Grant Agreement Under
2006 Long Term Incentive Plan