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):
December 19, 2005
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SPARTECH CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
1-5911 43-0761773
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(Commission File Number) (IRS Employer Identification No.)
120 South Central Avenue, Suite 1700, Clayton, Missouri 63105
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(Address of principal executive offices) (Zip Code)
(314) 721-4242
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(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instructions A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR230.425)
[ ] 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))
SPARTECH CORPORATION
FORM 8-K
Item 1.01. Entry into a Material Definitive Agreement.
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(a) Adoption of the Spartech Corporation 2006 Executive Bonus Plan.
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On December 19, 2005, the Compensation Committee of the Company's Board of
Directors adopted the Spartech Corporation 2006 Executive Bonus Plan, and
the full Board of Directors approved the submission of the Plan to the
Company's shareholders for approval at the March 2006 Annual Meeting of
Shareholders. A copy of the 2006 Executive Bonus Plan as adopted is attached
to this Form 8-K as Exhibit 1.01(a).
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The Plan is a performance-based compensation plan for the Company's
executive officers which is intended to comply with the requirements for
qualified performance-based compensation under Section 162(m) of the
Internal Revenue Code. Except for the provisions relating to qualification
under Section 162(m), the Plan is similar to a performance-based bonus plan
recently adopted by the Company for its non-executive managers.
Pursuant to the Plan:
(i) The Compensation Committee will establish one or more
performance periods over which eligibility for
performance-based compensation will be determined. Each
performance period will be established in writing prior to
the expiration of any prescribed time period for the
pre-establishment of performance goals under Section 162(m)
of the Internal Revenue Code.
(ii) For each performance period, the Committee will designate the
participants in the Plan, establish one or more objective
performance goals for each participant or class of
participants, and adopt objective formulas or standards for
computing the amount of bonuses payable to the Participants
based on actual results compared to the performance goals.
All performance goals shall be based upon one or more
objective performance criteria, such as (but not necessarily
limited to) sales, operating earnings, pretax income,
earnings per share, return on equity, working capital or
specific elements thereof, return on capital employed, cash
flow, market share, stock price, total shareholder return,
costs, productivity and economic value added. Performance
goals may be Company-wide or may be specific to a business
unit. The performance goals and target bonuses may be
different, or may be weighted differently, for different
participants or classes of participants.
(iii) After the close of each performance period, the Committee
shall certify in writing the achievement of the applicable
performance goals and the amount of any bonuses payable to
the participants for the performance period under the
applicable formulas or standards.
(iv) Notwithstanding the degree to which the applicable
performance goals are satisfied the Committee has the
discretion to reduce the amount of any participant's bonus
below the standard or formula amount to reflect individual
performance and/or unanticipated factors. The Committee may
not increase the amount of a participant's bonus above the
formula amount, but may award compensation outside the Plan.
(v) Generally, in order to be eligible for a bonus for a
performance period a participant must remain employed by the
Company or a subsidiary through the last day of the
performance period, and must not voluntarily resign his or
her employment after the end of the performance period and
prior to the time of payment. Unless otherwise provided in a
written contract between the company and the participant, a
participant whose employment terminates for any reason prior
to the end of a performance period, or who voluntarily
resigns after the end of the performance period and prior to
the time of payment, will have no right to any portion of a
bonus for that performance period. However, in the event of a
Change in Control of the Company, as defined in the Plan, the
current performance period will end and the performance
criteria will be appropriately adjusted, and all bonuses for
the performance period will become immediately payable.
(vi) The Plan will be effective for the Company's 2006 fiscal year
and thereafter until terminated by the Committee. The Plan
may also be amended by the Committee, subject to any
shareholder approval required to continue to qualify the
bonuses payable under the Plan as qualified performance-based
compensation under the Internal Revenue Code.
On December 19, 2005 the Committee established the Company's 2006 fiscal
year as the first performance period and designated all seven executive
officers of the Company as participants in the Plan. The Committee also
established performance goals consisting of specific targets for operating
earnings, sales volume, and inventory and accounts receivable as a
percentage of sales. If the targets are met, the Company's executive
officers will receive bonuses of 40% to 64% of their base salary (depending
on the position), which is an amount consistent with the level of annual
bonuses paid by the Company for these positions in prior years. If the
targets are exceeded, the participants will receive a higher bonus payout,
but if the targets are not met, the bonus payouts will be lower and may be
zero if minimum performance levels are not met.
(b) Amendments to the Spartech Corporation Non-Qualified Deferred
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Compensation Plan.
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On December 19, 2005, the Board of Directors of the Company approved
amendments to the Company's Non-Qualified Deferred Compensation Plan, which
was originally adopted in 1994. A copy of the Non-Qualified Deferred
Compensation Plan as amended is attached to this Form 8-K as Exhibit 1.01(b).
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The principal amendments are as follows:
(i) Company contributions to the Plan have previously been and
are expected to continue to be invested in life insurance
contract investments; however, the amendments give the Plan
more flexibility to invest in a wider range of insurance
vehicles and do not require that each participant be insured
under a separate individual policy.
(ii) The amendments delay the annual contribution by the Company
on behalf of participants from December 31 to February 15 of
the following year, providing a small cash flow advantage to
the Company while accelerating the first contribution for new
participants by a year.
(iii) The amendments accelerate the time required for the full
vesting of participants' accounts from ten years of service
to seven years of service, and simplify the calculation of
years of service, which as amended provides one year of
service credit for each calendar year in which the
participant is a participant for at least three calendar
months.
(iv) The amendments add a further provision that contributions to
a participant's account which are made after the calendar
year in which the participant has accrued seven years of
service credit and before the participant has reached age 65
are also subject to vesting. Each such contribution will
become 25% vested on December 31 of the calendar year in
which the contribution is made and will become an additional
25% vested on December 31 of each of the three years
thereafter. However, earnings on such contributions are fully
vested. All unvested contributions will vest when the
Participant reaches age 65. Unvested contributions are to be
withheld if the participant's employment terminates other
than by reason of death or disability before age 65.
(v) To comply with Internal Revenue Code Section 409A, except in
cases of disability distributions to participants who are
"specified employees" under Section 409A may not be made
before the earlier of (A) six months after the participant's
termination or (B) the death of the participant.
Item 9.01. Financial Statements and Exhibits.
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(c) Exhibits
Exhibit
Number Description
1.01(a) Spartech Corporation 2006 Executive Compensation Plan, as adopted
December 19, 2005.
1.01(b) Second Amendment And Restatement of the Spartech Corporation
Non-Qualified Deferred Compensation Plan, as adopted December
19, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPARTECH CORPORATION
Date December 21, 2005 By /s/ JEFFREY D. FISHER
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Jeffrey D. Fisher
Senior Vice President, General
Counsel and Secretary