EXHIBIT 10(u)
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HARSCO CORPORATION
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
(AS AMENDED AND RESTATED NOVEMBER 19, 2002)
Harsco Corporation (the "Corporation") hereby adopts this Deferred
Compensation Plan for Non-Employee Directors (the "Plan") pursuant to which
eligible members of its Board of Directors may elect to defer receipt of all or
any portion of the compensation payable to them for services rendered to the
Corporation as Directors.
1. ELIGIBLE DIRECTORS. The Directors of the Corporation eligible to
make deferral elections under this Plan shall be those Directors who are not
actively employed officers or employees of the Corporation or of any of its
subsidiaries or affiliates (hereinafter referred to individually as a
"Non-Employee Director" and collectively as the "Non-Employee Directors").
2. DEFERRABLE COMPENSATION. A Non-Employee Director may elect to defer
receipt of all, any part or none of the aggregate compensation payable by the
Corporation for services rendered as a Director, including the annual base
retainer, Committee Chairman annual retainer increment, attendance fees for
board and committee meetings, and other fees for special services (in the
aggregate, the "Director's Fees").
3. ELECTION TO DEFER. A Non-Employee Director who desires to defer
receipt of all or a portion of his Director's Fees in any calendar quarter shall
so notify the Corporation's Pension Committee in writing before the first day of
the calendar quarter, specifying on a form supplied by the Committee (a) the
dollar amount or percentage of the Director's Fees to be deferred, (b) the
deferral period, (c) the form of payment, and (d) the notional investment
direction. Elections to take effect with respect to the initial year of this
Plan may be made by Non-Employee Directors until the first regularly scheduled
Board of Directors meeting in 1995. A newly-appointed Non-Employee Director
shall be eligible to defer payment of future Director's Fees by so notifying the
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Pension Committee on the appropriate form at any time within 30 days of his
appointment to the Board of Directors. The elections made pursuant to this
Paragraph shall be irrevocable with respect to those Director's Fees to which
such elections pertain and shall also apply to Director's Fees payable in
subsequent quarterly periods unless the Non-Employee Director notifies the
Pension Committee in writing, before the first day of the calendar quarter, that
different elections shall apply with respect to Director's Fees payable during
such calendar quarter. Such new elections shall likewise continue in effect and
apply to subsequent calendar quarters until similarly changed.
4. NON-DEFERRED COMPENSATION. Any Director's Fees not deferred under
this Plan shall be paid in accordance with normal Corporation policy.
5. DEFERRED COMPENSATION ACCOUNTS AND NOTIONAL INVESTMENT DIRECTIONS.
(a) Accounts: At the time a Non-Employee Director elects to
defer the receipt of compensation pursuant to Paragraph 3 above, he shall also
direct the amount of the deferral to be notionally invested in an
Interest-Bearing Account and the amount to be notionally invested in a Harsco
Stock Account. Pursuant to such investment direction, the deferral amounts shall
be credited to the appropriate accounts as set forth below:
(i) INTEREST-BEARING ACCOUNT: To the extent that a
Non-Employee Director elects a notional investment in an Interest-Bearing
Account, the Corporation shall credit an Interest-Bearing Account established in
his name with the amount of the deferred Director's Fees to be so invested. This
credit shall occur on a quarterly basis, as of each February 15, May 15, August
15 and November 15 for fees earned during the quarterly period ending on the day
immediately preceding such crediting date.
(ii) HARSCO STOCK ACCOUNT: To the extent that a
Non-Employee Director elects a notional investment in a Harsco Stock Account,
the Corporation shall credit a Harsco Stock Account established in his name with
units (including fractions),
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the number of which shall be obtained by dividing the amount of the deferred
Director's Fees for that period to be so invested, by the Fair Market Value of
the Corporation's common stock on the day immediately preceding the date such
credit is to be made to the Account (i.e. February 14 for the February 15 credit
date). This credit shall occur on a quarterly basis, as of each February 15, May
15, August 15 and November 15, for fees earned during the quarterly period
ending on the day immediately preceding such crediting date. These units, thus
calculated, are hereinafter referred to as "Stock Equivalents." For purposes of
the Plan, Fair Market Value of a share of the Corporation's common stock on any
date shall be equal to the mean between the high and low prices at which such
shares were traded on the New York Stock Exchange ("NYSE") on such date, or, if
no sales were quoted on such date, on the most recent preceding date on which
sales were quoted. In the event of any change in the common stock of the
Corporation by reason of any stock dividend, recapitalization, reorganization,
merger, consolidation, split-up, combination or exchange of shares, or a rights
offering to purchase common stock at a price substantially below Fair Market
Value, or of any similar change affecting the common stock, the value and
attributes of each Stock Equivalent shall be appropriately adjusted consistent
with such change to the same extent as if such Stock Equivalents were issued and
outstanding shares of common stock of the Corporation.
(b) EARNINGS: The Corporation shall credit earnings to each account as
follows:
(i) INTEREST-BEARING ACCOUNT: As of each February 15, May 15,
August 15 and November 15, the Corporation shall credit as earnings to each
Interest-Bearing Account established on behalf of a Non-Employee Director an
amount equal to the Five Year U.S. Treasury Note Percentage Rate multiplied by
the average daily balance in such Interest-Bearing Account during such quarter.
Such Five Year U.S. Treasury Note Percentage Rate shall be equal to one twelfth
(1/12) of the yield on U.S. Treasury Notes having a maturity date five (5) years
hence as listed in The Wall Street Journal or any successor publication, as of
market closing on the business day immediately preceding the day such credits
are to be made (i.e., February 14 for the interest credit on February 15).
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(ii) HARSCO STOCK ACCOUNT: As of each quarterly dividend
payment date, the Corporation shall credit as earnings to each Harsco Stock
Account an amount equal to the cash dividends payable on such date with respect
to that number of shares (including fractional shares) of its common stock equal
to the number of Stock Equivalents credited to the Harsco Stock Account on the
relevant dividend record date. The amount so credited shall then be converted
into additional Stock Equivalents in the manner described earlier using the
dividend payment date as the valuation date.
(c) ACCOUNT TRANSFERS: A Non-Employee Director may transfer all or part
of the amount in one account to the other account by irrevocable written notice
to the Corporation's Pension Committee. Any such transfer will be effective upon
the date that the Corporation receives the written notice, and the value of the
Harsco Stock Account for purposes of the transfer shall be calculated using the
Fair Market Value on the date of the transfer. No Non-Employee Director, may
make a transfer between accounts within six months of any previous transfer by
such Director or within six months of any other transaction in Company stock
that could cause liability under Section 16(b) of the Securities and Exchange
Act of 1934, and any notice of transfer in contravention of this provision will
be void.
6. DEFERRAL PERIOD. At the time a Non-Employee Director elects to defer
the receipt of compensation pursuant to Paragraph 3 above, he shall indicate the
deferral period applicable to such deferred compensation by specifying the year
(the "Payment Year") in which the deferred amounts are to be paid in a lump sum
or in which installment payments shall commence; provided, however, that in no
event shall the Payment Year be later than the year following the year in which
the Non-Employee Director will attain age 72.
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7. FORM OF PAYMENT OF DEFERRED COMPENSATION. Initial payments made
under the Plan shall be based upon the aggregate balance in a Non-Employee
Director's account(s) determined on the first business day of the Payment Year.
The balance in the Non-Employee Director's Interest-Bearing Account shall be the
dollar amount credited to such account as of the first business day of the
Payment Year. The balance in the Non-Employee Director's Stock Account shall be
the dollar amount determined by multiplying the Stock Equivalents credited to
such account on the first business day of the Payment Year by the Fair Market
Value of a share of common stock of the Corporation on such date. The aggregate
balance as thus determined shall be paid to him in cash either in a lump sum
within 30 days following the first business day of the Payment Year or in up to
ten (10) annual installments commencing with the Payment Year as specified in
the election to defer made pursuant to Paragraph 3 above. If an election to
receive installment payments is made, the Non-Employee Director shall receive
the first installment within 30 days following the first business day of the
Payment Year in an amount equal to the aggregate balance in his account(s)
divided by the number of years in the installment payment period. Subsequent
installments shall be computed and paid in similar fashion; provided, however,
that pending distributions in the second through final years of the installment
payment period, the aggregate balance in the Non-Employee Director's account(s)
shall be deemed to be invested in an Interest-Bearing Account and in a Harsco
Stock Account, as applicable, in the same proportion as deferred amounts under
the Plan were notionally invested on the first business day of the Payment Year,
and increased by earnings accordingly. Exhibit A attached hereto presents an
example illustrating how such a calculation is made.
8. EARLY WITHDRAWAL.
(a) In the event of an "Early Withdrawal", all or part of the
amounts credited to the account(s) of a Non-Employee Director under the Plan,
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net of the forfeited amount described in (c) below, shall be payable to the
Non-Employee Director in a single lump sum notwithstanding the deferral period
and form of payment specified pursuant to Paragraph 3 above.
(b) For purposes of the Plan, an "Early Withdrawal" shall have
occurred if:
(i) WRITTEN NOTICE: A Non-Employee Director notifies the
Corporation's Pension committee in writing at least 30 days in advance of the
proposed withdrawal date that he wishes to make an Early Withdrawal.
(ii) DESIGNATION OF AMOUNTS: The notice described in (a)
above shall be made on a form supplied by the Pension Committee which shall
require, at minimum, that the Non-Employee Director specify the amount of the
withdrawal (subject to the limitations in (iii) below) and whether the full
amount of the withdrawal is to be taken from the Non-Employee Director's
Interest-Bearing Account or Harsco Stock Account or apportioned between them.
(iii) MINIMUM AMOUNT: The amount to be withdrawn shall
equal at least fifty-percent (50%) of the aggregate balance of the Non-Employee
Director's account(s) determined as of the first business day of the calendar
month immediately preceding the calendar month of the withdrawal date. Such
minimum amount shall be determined without regard to the forfeited amount
described in (c) below.
(c) In the event of an Early Withdrawal, the Non-Employee Director
shall forfeit from the amount withdrawn an amount equal to ten-percent (10%) of
the amount withdrawn. The Non-Employee Director and the Non-Employee Director's
designated beneficiary shall not have any right or claim to the forfeited
amount, and the Corporation shall have no obligation whatsoever to the
Non-Employee Director, the Non-Employee Director's designated beneficiary or any
other person with regard to the forfeited amount.
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(d) If a Non-Employee Director seeks to make an Early Withdrawal at a
time when the Non-Employee Director is subject to Section 16 of the Securities
Exchange Act ("Exchange Act"), the Non-Employee Director shall be responsible
for determining whether such Early Withdrawal may be considered a nonexempt sale
under Section 16 of the Exchange Act and shall be subject to any liability which
may result therefrom.
9. CHANGE IN CONTROL.
(a) In the event of a "Change in Control" of the Corporation
followed by a Non-Employee Director's cessation of service to the Corporation as
a Director, all amounts credited to the account(s) of the Non-Employee Director
under the Plan shall be immediately due and payable to the Non-Employee Director
in a single lump sum notwithstanding the deferral period and form of payment
specified pursuant to Paragraph 3 above.
(b) For purposes of this Plan, a "Change in Control" shall
have occurred if:
(i) STOCK ACQUISITION. Any "person" (as such term is
used in Section 13(d) and 14(d) (2) of the Exchange Act), other than the
Corporation or a corporation a majority of whose outstanding stock entitled to
vote is owned, directly or indirectly, by the Corporation, is or becomes, other
than by purchase from the Corporation or such a corporation, the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding voting securities.
Such a Change in Control shall be deemed to have occurred on the first to occur
of the business day immediately preceding the date securities are first
purchased by a tender or exchange offer, or the date on which the Corporation
first learns of the acquisition of 20% of such securities, or the earlier of the
business day immediately preceding the effective date of an agreement for the
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merger, consolidation or other reorganization of the Corporation or the date of
approval thereof by the stockholder of the Corporation, as the case may be.
(ii) CHANGE IN BOARD. During any period of two
consecutive years, individuals who at the beginning of such period were members
of the Board of Directors, and any new director whose election by the Board or
nomination for election by the Corporation's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute at
least a majority of the Board of Directors. Such a Change in Control shall be
deemed to have occurred on the date upon which the requisite majority of
directors fails to be elected by the stockholders of the Corporation.
(iii) OTHER EVENTS. There occurs a change in control of
the Corporation of a nature that would be required to be reported as such in
response to Item 1(a) of the Current Report on Form 8-K pursuant to Section 13
of 15(d) of the Exchange Act, or any successor provision to such Item relating
to a "change in control," or in any other filings under the Exchange Act.
10. DESIGNATION OF BENEFICIARY. If a Non-Employee Director dies prior
to receiving the entire balance of his account(s) under the Plan, any balance
remaining in his account(s) shall be paid in a lump sum as soon as practicable
to the Non-Employee Director's designated beneficiary or, if the Non-Employee
Director has not designated a beneficiary or the designated beneficiary is dead,
then to his estate. Any designation of a beneficiary may be revoked or modified
at any time by the Non-Employee Director, except that no designation shall be
recognized as valid unless properly filed with the Pension Committee during the
lifetime of the Non-Employee Director while he is legally competent.
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11. WITHHOLDING OF TAXES. The rights of a Non-Employee Director to
payments or credits under this Plan shall be subject to the Corporation's
obligations, if any, to withhold income or other taxes from such payments.
12. STATUS OF PLAN. This Plan is a nonqualified deferred compensation
plan covering no employees of the Corporation. As such, the Plan is exempt from
the requirements of the Employee Retirement Income Security Act of 1974, as
amended. The Corporation intends that the Plan shall at all times be maintained
on an unfunded basis for federal income tax purposes. Hence, all payments from
this Plan shall be made from the general assets of the Corporation. This Plan
shall not require the Corporation to set aside, segregate, earmark, pay into a
trust or special account or otherwise restrict the use of its assets in the
operation of its business. A Non-Employee Director (or, if applicable, his
designated beneficiary) shall have no greater right or status than as an
unsecured general creditor of the Corporation with respect to any amounts owed
hereunder.
13. RIGHTS NONASSIGNABLE. All payments to persons entitled to benefits
hereunder shall be made to such persons and shall not be grantable, transferable
or otherwise assignable in anticipation of payment thereof, in whole or in part,
by the voluntary or involuntary acts of any such persons or by operation of law
subject to garnishment, execution, attachment or any other similar legal process
of creditors of such persons.
14. ADMINISTRATION. Full power and authority to construe, interpret and
administer this Plan shall be vested in the Corporation's Pension Committee. The
Pension Committee shall have full power and authority to make each determination
provided for in this Plan. All determinations made by the Pension Committee
shall be conclusive and binding upon the Company and any other party claiming
rights hereunder.
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15. TERMINATION. The Board of Directors may, in its discretion,
terminate this Plan at any time. Upon termination of the Plan, benefits shall be
paid in accordance with the deferral elections made by the Non-Employee
Director; provided, however, that the Pension Committee shall have the right to
determine the total amount payable to each Non-Employee Director (or, if
applicable, his beneficiary) and to cause the amount so determined to be paid in
lump sum, thereby discharging the Corporation from any further liability or
obligation under this Plan.
16. AMENDMENT. The Board of Directors may, in its discretion, amend
this Plan from time to time. In addition, the Pension Committee may from time to
time amend this Plan to make such administrative changes as it may deem
necessary or desirable. No such amendment shall divest any Non-Employee Director
(or person claiming through him) of any rights to amounts previously credited to
his accounts hereunder.
17. INCOMPETENCY. If a person to receive payment hereunder is deemed by
the Pension Committee or is adjusted to be legally incompetent, the payments
shall be made to the duly appointed guardian of such incompetent, or they may be
made to such person or persons who the Pension Committee believes are caring for
or supporting such incompetent; and the receipt thereof by such person or
persons shall constitute complete satisfaction of the Company's obligations
under this Plan.
18. EXPENSES. The expenses of administering this Plan shall be borne by
the Corporation.
19. GENDER. The masculine pronoun shall be deemed to include the
feminine, and the singular to include the plural, unless a different meaning is
plainly required by context.
20. GOVERNING LAW. This Plan shall be construed, administered and
enforced according to the laws of the Commonwealth of Pennsylvania.
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21. EFFECTIVE DATE. The effective date of this Plan is January 1, 1995
and shall apply with respect to the Director's Fees payable by the Corporation
in respect of services performed on or after such date.
22. SECTION 16 COMPLIANCE. It is the Corporation's intent that this
Plan and any credits or payments made hereunder comply with Section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act") and any related regulations
promulgated there under, including any reporting requirements. To that end, the
Corporation may, in its sole discretion, (i) substitute a payment in cash for
any fees that were otherwise to be deferred under this Plan, if it deems it so
appropriate or (ii) delay any payment otherwise required under the terms of the
Plan until compliance with the requirements of the Exchange Act can be assured.
This amended and restated plan document is effective November 19, 2002 and
executed this 25th day of November, 2002.
ATTEST: HARSCO CORPORATION
/s/ Paul C. Coppock /s/ Derek C. Hathaway
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Paul C. Coppock Derek C. Hathaway
Senior Vice President, Chief Chairman, President and
Administrative Officer, General Chief Executive Officer
Counsel and Secretary
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"Exhibit A"
Deferred Compensation Plan
for Non-Employee Directors
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Example
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This example, prepared for illustrative purposes only,
describes the operation of the installment payout option set forth in Paragraph
7 of the Plan.
Director Green, age 62, elects to defer all of his Director
Fees until the year following the year he attains age 72. During his service as
a Director, Green directs 60% of his Fees to be invested in the Harsco Stock
Account (HSA) and 40% to be invested in the Interest-Bearing Account (IBA).
Pursuant to Green's prior direction, his accounts are to be paid out in three
annual installments. If Green attains age 72 in 2004 his installment should be
calculated and paid as follows:
1st Installment
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o WHEN PAID - Within 30 days of the first business day
(assume January 2) in 2005.
o HOW MUCH - First installment equals one-third of the
aggregate dollar value of Green's accounts as of January 2, 2005. Assume Green's
HSA on January 2, 2005 is credited with 1,000 Stock Equivalents and the FMV of a
share of Harsco common stock on such date is $60, thus giving his HSA a value of
$60,000. Assume further, that as of January 2, 2005, Green's IBA is credited
with $30,000 (representing his prior deferrals plus interest). Accordingly,
Green's first installment should equal $30,000 ($90,000 aggregate account
balance value divided by 3).
o BALANCE IN ACCOUNT AFTER 1ST INSTALLMENT - In order to
continue the 60/40 proportionality going forward, the $60,000 in remaining value
under the Plan should result in the HSA holding 60% of that value and the IBA
holding the remaining 40%. Thus, as of January 2, 2005, the HSA is debited
333.33 shares leaving 666.66 shares (which at $60 FMV equal $40,000) and the IBA
is debited $10,000, thus leaving $20,000.
2nd Installment
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o When paid - Within 30 days of January 2, 2006.
o How much - Second installment equals one-half of the
aggregate dollar value of Green's accounts as of January 2, 2006. Assume that as
of this date, Green's HSA was credited with 700 Stock Equivalents (666.66 from
prior year plus 33.34 new units attributable to dividends in the interim) and
that the FMV of a share of Harsco stock on that date was $62. Thus, Green's HSA
would be worth $43,400 at
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January 2, 2006. Assume further that Green's IBA was worth $21,000 ($20,000 from
prior year plus interim interest of $1,000). Green's second installment would
thus equal $32,200 (($43,400 + $21,000)/ 2).
o Balance is Accounts after 2nd Installment - The same
methodology would be used again to retain the 60/40 proportionality. As of
January 2, 2006, the combined value of HSA and the IBA was worth $64,400, and
after the payout of half this amount, the combined value was $32,200. This means
that the HSA would have 60% of the total value (or $19,320) and the IBA should
have 40% (or $12,880). Thus, the HSA should be debited 38.39 shares
(representing $24,080 or 3888.39 x $62 FMV/share) leaving 311.61 shares (or
$19,320 in value). The IBA should be debited $8,120, leaving $12,880.
3rd and Last Installment
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o WHEN PAID - Within 30 days of January 2, 2007.
o HOW MUCH - Calculate value of both HSA and IBA as of January
2, 2007 (as described above) and pay out total.
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