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) December 15, 2005
EMCOR Group, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8267 11-2125338
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(Commission File Number) (I.R.S. Employer Identification No.)
301 Merritt Seven, Norwalk, CT 06851
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(Address of Principal Executive Offices) (Zip Code)
(203) 849-7800
(Registrant's Telephone Number, Including Area Code)
N/A
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(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))
Item 1.01. Entry into a Material Definitive Agreement
On December 15, 2005, the Board of Directors of Emcor Group, Inc. (the
"Company") adopted the Emcor Group, Inc. Long-Term Incentive Plan (the "Plan"),
which is intended to foster and promote the long term financial success of the
Company. Each current member of the Executive Management Committee of the
Company (Messrs. Frank T. MacInnis, Anthony J. Guzzi, Sheldon I. Cammaker,
Leicle E. Chesser, R. Kevin Matz, Mark A. Pompa, Michael J. Parry, Geoffrey
Birkbeck, Edward Dabrowski, Eugene Martin, William A. Rodgers, Jr., John Warga,
and Anthony Whale) participates in the Plan, unless the Compensation and
Personnel Committee of the Board of Directors of the Company (the "Compensation
Committee"), which administers the Plan, determines that a particular member
will not participate for a particular plan year. The Compensation Committee may
also designate any other individuals as participants for a particular plan year.
The Plan provides for the grant of restricted stock unit awards ("Stock
Units"). For each plan year, each participant will be awarded a number of Stock
Units equal to a predetermined percentage(as provided in the Plan) of the
participant's base salary divided by the fair market value of a share of Company
common stock ("Company Stock") on the first business day of the applicable plan
year. Stock Units awarded under the Plan will be treated for all purposes as
Other Stock-Based Awards awarded under the Company's 2005 Management Stock
Incentive Plan (the "Stock Plan"), and shares of Company Stock paid to
participants under the Plan will be deemed issued pursuant to the Stock Plan and
subject to the terms and conditions thereof (to the extent not in conflict with
the Plan). The Plan will terminate as to the further award of Stock Units when
no further shares are available for grant under the Stock Plan.
Stock Units will vest, generally, on the third anniversary of the date such
Stock Units were awarded. Stock Units will be forfeited if they have not vested
as of a date a participant's employment is terminated (a) by the Company for
"Cause" (as defined in the Plan) or (b) by the participant by reason of his
choosing to terminate his employment with the Company for other than (i) "Good
Reason" (as defined in the Plan), (ii) his "Disability" (as defined in the Plan)
or (iii) after the plan has been in effect for three years, his "Retirement" (as
defined in the Plan).
If a participant's employment is terminated (a) by the Company or a
subsidiary without Cause, (b) by reason of his Disability or death, (c) by the
participant with Good Reason, or (d) after the Plan has been in effect for three
years, by the participant by Retirement, then, generally, upon such termination
such participant's Stock Units will vest. Upon a "Change of Control" (as defined
in the Plan) each participant's Stock Units will also vest.
The Plan also provides for cash awards based on financial performance over
a multi-year period. Within 90 days following the commencement of each plan
year, commencing with the 2006 plan year, the Compensation Committee, after
receiving the recommendation of the Chief Executive Officer, will establish an
aggregate earnings per share objective ("EPSO") for such plan year and the two
immediately succeeding plan years (the "Applicable Three Year Period"). If the
Company's "Earnings Per Share" (as defined in the Plan) for the Applicable Three
Year Period exceeds 50% of such period's EPSO, each participant will be entitled
to a corresponding percentage of his Performance Based Target Bonus ("PBTB").
The percentage of PBTB earned is 50% if the actual Earnings Per Share is 50% of
the EPSO, 100% if the actual Earnings Per Share is 100% of the EPSO, and 200% if
the actual Earnings Per Share is 120% of the EPSO, with interpolation between
these EPSO attainment percentages. A participant's PBTB for the Applicable Three
Year Period will be a predetermined percentage of his base salary, as provided
in the Plan.
In addition, within 90 days following the commencement of the 2006 plan
year, the Compensation Committee, after receiving the recommendation of the
Chief Executive Officer, will establish an aggregate earnings per share
objective ("Two Year EPSO") for the 2006 and 2007 plan years (the "Applicable
Two Year Period"). If the Company's Earnings Per Share for the Applicable Two
Year Period exceeds 50% of the Two Year EPSO, certain of the participants (as
described in the Plan) will be entitled to corresponding percentages of their
PBTBs. The percentage of PBTB earned is 50% if the actual Earnings Per Share is
50% of the EPSO, 100% if the actual Earnings Per Share is 100% of the EPSO, and
200% if the actual Earnings Per Share is 120% of the EPSO, with interpolation
between these EPSO attainment percentages. A participant's PBTB for the
Applicable Two Year Period will be a predetermined percentage of his base
salary, as provided in the Plan.
If a participant is not employed by the Company or a subsidiary as of the
end of an Applicable Three Year Period or the Applicable Two Year Period, and if
his employment was terminated for Cause or by the participant without Good
Reason, the participant is not entitled to any payment in respect of his PBTB
for such period.
If a participant's employment is terminated during an Applicable Three Year
Period or the Applicable Two Year Period (a) by the Company or a subsidiary
without Cause, (b) by reason of his Disability or death, (c) by the participant
with Good Reason, or (d) after the Plan has been in effect for three years, by
the participant by Retirement, then such participant is entitled with respect to
such period to a prorated PBTB for such period.
Upon a Change of Control, each participant will be paid promptly his PBTB
in respect of each ongoing Applicable Three Year Period and/or the Applicable
Two Year Period in which he participates in accordance with the terms thereof as
if the Company's Earnings Per Share for such period was 100% of the applicable
EPSO for such period.
The maximum individual cash award which may be paid under the Plan is $3
million.
The cash awards will be paid pursuant to provisions of the Company's 2005
Management Stock Incentive Plan (the "Stock Plan") which are expected to be
adopted regarding the payment of performance-based cash compensation which is
exempt from the deduction limits of Section 162(m) of the Internal Revenue Code.
Such awards may not be paid unless and until (i) the Stock Plan is amended to
allow for such performance-based cash compensation and (ii) the Stock Plan, as
so amended, has been approved by the Company's shareholders in a manner intended
to comply with the shareholder approval requirements of Section 162(m).
A copy of the Plan is filed as Exhibit 10 to this Form 8-K and incorporated
herein by reference.
9.01 Financial Statements and Exhibits
(c) Exhibit Number Description of Exhibits
10 EMCOR Group, Inc, Long Term Incentive Plan
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
EMCOR GROUP, INC.
Date: December 16, 2005 By: /s/ Sheldon I Cammaker
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Name: Sheldon I. Cammaker
Title:Executive Vice President
EXHIBIT 10
EMCOR Group, Inc. Long Term Incentive Plan
SECTION I. PURPOSE.
This Long Term Incentive Plan has been established for certain officers of
EMCOR Group, Inc. and certain of its subsidiaries to foster and promote the long
term financial success of the Company and increase shareholder value by (a)
strengthening the Company's ability to develop, maintain and retain effective
senior management; (b) motivating superior performance by means of a long term
performance related incentives linked to business performance; (c) encouraging
and providing for ownership interests in the Company by its senior management;
(d) attracting and retaining qualified senior management personnel by providing
incentive compensation opportunities competitive with comparable companies; and
(e) enabling senior management to participate in the long term financial growth
and financial success of the Company. The terms, conditions and provisions of
the Plan shall be as follows:
SECTION 2. DEFINITIONS.
As used in the Plan, the following capitalized terms shall have the
following meanings:
"Applicable Three Year Period" and "Applicable Two Year Period" shall have
the meanings ascribed to them in Section 7.1 hereof.
"Base Salary" means a Participant's regular basic annual rate of
compensation prior to any reduction thereof under a salary reduction
agreement pursuant to Section 401(k) or Section 125 of the Code and shall
not include (without limitation) cost of living allowances, fees,
retainers, reimbursements, bonuses, incentive awards, prizes or similar
payments.
"Board" means the Board of Directors of the Company.
"Cause" for termination by the Company or a Subsidiary of a Participant's
employment, means (a) an action by Participant involving willful
malfeasance in connection with his employment which results in material
harm to the Company, (b) Participant being convicted of a felony, or (c)
substantial and repeated failure by a Participant to perform duties as
reasonably directed by the Chief Executive Officer (or with respect to the
Chief Executive Officer, the Board).
"Change of Control" has the meaning ascribed to it in the Stock Plan.
"Chief Executive Officer" means the chief executive officer of the Company.
"Class A Participants" means Messrs. Frank T. MacInnis, Anthony J. Guzzi,
Sheldon I. Cammaker, Leicle E. Chesser, R. Kevin Matz, Mark A. Pompa and
Michael J. Parry.
"Class B Participants" means Messrs. Geoffrey Birkbeck, Edward Dabrowski,
Eugene Martin, William A. Rodgers, Jr., John Warga and Anthony Whale.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation Committee" means the Compensation and Personnel Committee of
the Board.
"Company" means EMCOR Group, Inc., a Delaware corporation, or any successor
corporation.
"Company Stock" means common stock of the Company, par value $.01 per
share.
"Disability" shall be deemed to exist if, as a result of a Participant's
incapacity due to physical or mental illness, the Participant shall have
been absent from his duties with the Company or a Subsidiary for a period
of six (6) consecutive months.
"Designated Beneficiary" means the beneficiary or beneficiaries designated
in accordance with Section 9.5 to receive amounts payable to a Participant
under the Plan upon the Participant's death.
Earnings Per Share for the Two Year Applicable Period or for a Three Year
Applicable Period shall mean the aggregate of the diluted earnings per
share of the Company's Common Stock for each of such two or three years, as
the case may be, as reported in the Company's "Consolidated Statements of
Operations" for such years in accordance with generally accepted accounting
principles; provided, however, that the Compensation Committee may, within
the first 90 days of the Two Year Applicable Period or the first 90 days of
a Three Year Applicable Period, adjust any such period's Earnings Per
Share, to the extent permitted under Section 162(m) of the Code, to omit
the impact on such Earnings Per Share of extraordinary items, gains or
losses on the acquisition or disposal of a business, unusual or
infrequently occurring events and transactions, and/or cumulative effects
of changes in accounting principles.
"Effective Date" means January 1, 2006 subject, in the case of Section 7
hereof to the amendment of the Stock Plan and shareholder approval thereof
as described in Section 7.6 hereof.
"EPSO" shall have the meaning ascribed to it in Section 7.1 hereof.
"Fair Market Value" means, as of a specified date, the closing price at
which a share of Company Stock is traded on the stock exchange, if any, on
which such shares are primarily traded or, if the shares are not then
traded on a stock exchange, the closing price of a share as reported on the
NASDAQ National Market System or, if the shares are not then traded on the
NASDAQ National Market System, the average of the closing bid and ask
prices at which a share is traded on the over-the-counter market, but if no
shares were traded on such date, then on the last previous date on which a
share was so traded, or, if none of the above are applicable, the value of
a share of Company Stock as determined by an unaffiliated investment
banking firm selected by the Board.
"Good Reason" for termination by a Participant of his employment means the
occurrence (without the Participant's express written consent) of any one
of the following acts, or failure to act, unless such act or failure to act
is corrected prior to the date of termination specified in a notice of
termination by Participant given in respect thereof at least 30 days prior
to the effective date of his termination: (1) a reduction by the Company or
by a Subsidiary employer in Participant's Base Salary as in effect on the
Effective Date or as the same may be increased from time to time except in
connection with a similar (as a percentage of Base Salary) reduction in
salary that is applicable to all senior executives of the Company or (2)
the failure by the Company or such Subsidiary to pay to Participant any
portion of Participant's current compensation that is already earned and
due. In addition, a Participant employed by a Subsidiary will be deemed to
have resigned for Good Reason if, in connection with the Company's direct
or indirect disposition of its equity interest in such Subsidiary, the
Participant is not offered a position with the Company or another
Subsidiary.
"Management Committee" means the EMCOR Group, Inc. Executive Management
Committee.
"Participant" means each person who participates in the Plan pursuant to
Section 3 hereof.
"Performance Based Target Bonus" shall have the meaning ascribed to it in
Section 7.2 hereof.
"Plan" means this Long Term Incentive Plan.
"Plan Year" means the accounting fiscal year of the Company.
"Retirement" means a Participant's voluntary termination of employment on
or after attaining age 65.
"Scheduled Vesting Date" shall have the meaning ascribed to it in Section
6.1 hereof.
"Specified Employee" has the meaning set forth in Section 409A(a)(2)(B)(i)
of the Code.
"Stock Plan" means the Company's 2005 Management Stock Incentive Plan, as
in effect from time to time.
"Subsidiary" means each direct or indirect controlled subsidiary of the
Company.
"Two Year EPSO" shall have the meaning ascribed to it in Section 7.1
hereof.
"Unforeseeable Emergency" means severe financial hardship to a Participant,
as determined by the Compensation Committee in accordance with Section
409A(a)(2)(B)(ii) of the Code, and any proposed or final Treasury
Regulations promulgated thereunder.
SECTION 3. ELIGIBILITY AND PARTICIPATION.
The following shall be Participants in the Plan: each individual (a) who as
of the commencement of each Plan Year is a member of the Management Committee
unless the Compensation Committee within 60 days after the commencement of a
Plan Year determines that with respect to such Plan Year such individual shall
not be a Participant or (b) who is designated by the Compensation Committee as a
Participant with respect to a Plan Year no more than 60 days after the
commencement of such Plan Year. A person designated as a Participant for a Plan
Year which is the first Plan Year for an Applicable Three Year Period or the
Applicable Two Year Period shall remain a Participant for such Applicable Three
or Two Year Period. As of the date hereof the members of the Management
Committee are the Class A and Class B Participants.
Except as provided in the next to last sentence of the immediately
preceding paragraph, no person has or at any time will have any right to be
selected for current or future participation in the Plan.
SECTION 4. ADMINISTRATION.
4.1 Authority of the Compensation Committee. The Compensation Committee has
and will have all the authority that may be necessary or helpful to enable it to
discharge its responsibilities with respect to the Plan. Without limiting the
generality of the foregoing, and in addition to any authority or responsibility
specifically granted to the Compensation Committee elsewhere in the Plan, the
Compensation Committee has the exclusive right to (a) interpret the Plan, (b)
construe any ambiguous provision of the Plan, (c) supply any omission, (d)
reconcile any inconsistency, (e) issue administrative guidelines as an aid to
administer the Plan, (f) make rules, if any, for carrying out the Plan and to
make changes in such rules as they from time to time deem proper, and (g) decide
any and all questions arising in the administration, interpretation and
application of the Plan.
SECTION 5. RESTRICTED STOCK UNIT AWARDS.
5.1 Establishment of Restricted Stock Unit Award.
(a) For the 2006 Plan Year, each Class A Participant shall be awarded
as of the first business day of such Plan Year a number of Stock Units
(rounded down to the nearest whole Stock Unit) equal to a percentage of his
Base Salary in effect as of December 31, 2005 divided by the Fair Market
Value of a share of Company Stock as of the first business day of the 2006
Plan Year, which percentage of Base Salary shall be that set forth under
"Percentage Multiplier" opposite his respective name on Schedule A annexed
hereto unless the Compensation Committee determines prior to the
commencement of the 2006 Plan Year that a different percentage of Base
Salary shall apply; and each Class B Participant shall be awarded as of the
first business day of such Plan Year a number of Stock Units (rounded down
to the nearest whole Stock Unit) equal to 25% of his Base Salary in effect
as of December 31, 2005 divided by the Fair Market Value of a share of
Company Stock as of the first business day of the 2006 Plan Year unless the
Compensation Committee determines prior to the commencement of the 2006
Plan Year that a different percentage of Base Salary shall apply as to any
Class B Participant.
(b) For the 2007 Plan Year, each Class A Participant shall be awarded
as of the first business day of such Plan Year a number of Stock Units
(rounded down to the nearest whole Stock Unit) equal to three quarters of a
percentage of his Base Salary in effect as of December 31, 2006 divided by
the Fair Market Value of a share of Company Stock as of the first business
day of the 2007 Plan Year, which percentage of Base Salary shall be that
set forth under "Percentage Multiplier" opposite his respective name on
Schedule A annexed hereto unless the Compensation Committee determines
prior to the commencement of the 2007 Plan Year that a different percentage
of Base Salary shall apply; and each Class B Participant shall be awarded
as of the first business day of such Plan Year a number of Stock Units
(rounded down to the nearest whole Stock Unit) equal to 25% of his Base
Salary in effect as of December 31, 2006 divided by the Fair Market Value
of a share of Company Stock as of the first business day of the 2007 Plan
Year unless the Compensation Committee determines prior to the commencement
of the 2007 Plan Year that a different percentage of Base Salary shall
apply as to any Class B Participant.
(c) For the 2008 Plan Year and each succeeding Plan Year, each
Participant listed on Schedule A shall be awarded as of the first business
day of such Plan Year a number of Stock Units (rounded down to the nearest
whole Stock Unit) equal to one-half of a percentage of his Base Salary in
effect as of the December 31 immediately preceding the first day of such
Plan Year divided by the Fair Market Value of a share of Company Stock as
of the first business day of such Plan Year, which percentage of Base
Salary shall be that set forth under "Percentage Multiplier" opposite his
respective name on Schedule A annexed hereto unless the Compensation
Committee determines prior to the commencement of the Plan Year that a
different percentage of Base Salary shall apply.
(d) For individuals becoming Participants after the Effective Date,
the percentage multiplier referred to in the immediately preceding
paragraphs (b) and (c) shall be that set by the Compensation Committee at
the time such individual is designated as a Participant, subject to the
Compensation Committee's determination prior to the commencement of a Plan
Year that a different percentage multiplier shall apply with respect to
such Plan Year.
5.2 Stock Unit Account. Each Stock Unit shall represent one share of
Company Stock and each Participant's award of Stock Units with respect to each
Plan Year shall be credited to a separate account. In the event of any merger,
reorganization, recapitalization, consolidation, sale or other distribution of
all or substantially all of the assets of the Company, any stock or
extraordinary cash dividend, stock split, spin-off, split-up, split-off,
distribution of securities or other property of the Company, or other change in
the Company's capital structure affecting shares of Company Stock, the number of
Stock Units credited to a Participant's account shall be appropriately adjusted
as determined by the Compensation Committee in its sole discretion in a manner
intended to prevent dilution or enlargement of the individual benefits of the
Participant under the Plan.
5.3 Dividend Equivalents. If Stock Units exist in a Participant's account
on a dividend record date for the Company Stock, each such account shall be
credited on the dividend payment date with an additional whole number of Stock
Units (rounded down to the nearest whole Stock Unit) equal to (i) the cash value
of the dividend paid on one share of Company Stock multiplied by the number of
Stock Units in such account on the dividend record date, divided by (ii) the
Fair Market Value of a share of Company Stock on the trading day immediately
preceding the dividend payment date.
5.4 Stock Unit Certificates. Each award of Stock Units under the Plan shall
be represented by a certificate substantially in the form of Exhibit I hereto.
5.5 Company Stock Paid Pursuant to the Stock Plan. Stock Units awarded
under the Plan shall be treated for all purposes as "Other Stock-Based Awards"
awarded under the Stock Plan, and shares of Company Stock paid to Participants
under the Plan shall be deemed issued pursuant to the Stock Plan, and subject to
the terms and conditions thereof (to the extent not in conflict with the Plan).
SECTION 6. DISTRIBUTIONS.
6.1 Vesting and Distribution. Except as otherwise provided herein, all
Stock Units in a Participant's account shall vest on the third anniversary of
the date such Stock Units were awarded (the "Scheduled Vesting Date"). On the
first business day following the day on which the Company releases to the public
generally its results for the fourth quarter of the calendar year immediately
preceding the Scheduled Vesting Date (but not later than March 15 of the year
following the Scheduled Vesting Date), the Company shall issue in respect of
such Stock Units an equal number of shares of Company Stock registered in the
name of the Participant, his estate, beneficiary or person referred to in
Section 9.7 hereof, as the case may be. If a Participant's employment is
terminated prior to the Scheduled Vesting Date (a) by the Company for Cause or
(b) by the Participant by reason of his choosing to terminate his employment
with the Company for other than (i) Good Reason, (ii) his Disability or (iii) if
the Plan shall have been in effect for at least three years, his Retirement, all
unvested Stock Units in the Participant's account shall be forfeited, and such
Participant shall not be entitled to such Stock Units or shares of Company Stock
issuable in respect thereof. For purposes of this Plan, the transfer of a
Participant's employment from the Company (or from a Subsidiary) to a Subsidiary
(or to the Company) shall not be considered a termination of employment.
6.2 Early Vesting and Early Distribution. If there shall be a Change of
Control (provided that the Compensation Committee does not reasonably determine
that the Change of Control is not an event described in Section 409A(a)(2)(A)(v)
of the Code), or if a Participant's employment (a) shall be terminated by the
Company without Cause or (b) shall be terminated by a Participant for Good
Reason or by reason of his Retirement (provided, in the case of Retirement, the
Plan shall have been in effect for at least three years) or (c) shall be
terminated by the Company or the Participant by reason of his Disability, or if
the Participant shall die while employed by the Company or a Subsidiary, then in
such case as of such date of Change of Control or termination of employment, as
the case may be, all Stock Units in a Participant's Account(s) shall vest and an
equal number of shares of Company Stock shall be promptly issued in respect
thereof; provided that such distribution shall be delayed for six months
following his termination of employment if necessary to avoid tax penalties
under Section 409A of the Code.
6.3 Unforeseeable Emergency. Notwithstanding anything contained herein to
the contrary, the Compensation Committee may permit delivery of shares of
Company Stock in respect of Stock Units earlier than otherwise provided herein
if it determines, in its sole discretion, following written request therefor by
the Participant, that the Participant is experiencing an Unforeseeable
Emergency; provided that such distribution may not be in an amount greater than
that determined by the Compensation Committee as necessary to alleviate the
Unforeseeable Emergency and otherwise meets the requirements of Section
409A(a)(2)(B)(ii) of the Code.
6.4 Distribution for Taxes. Notwithstanding anything contained herein to
the contrary, the Compensation Committee shall immediately deliver shares of
Company Stock in respect of Stock Units credited to a Participant's Stock Unit
Account which have been determined by the Internal Revenue Service or a taxing
authority of another jurisdiction, in a manner which cannot be appealed or as to
which the time to appeal has expired, to be (or to have been) taxable to the
Participant in a calendar year prior to the calendar year that shares of Company
Stock were scheduled to be paid in respect of such Stock Units pursuant to the
terms of the Plan.
SECTION 7. CASH AWARDS BASED ON LONG TERM FINANCIAL PERFORMANCE.
7.1 Establishment of Aggregate Earnings Per Share Objective and Earning of
Performance Based Target Bonus.
(a) Within 90 days following the commencement of each Plan Year,
commencing with the 2006 Plan Year, the Compensation Committee, after
receiving the recommendation of the Chief Executive Officer, shall
establish an aggregate Earnings Per Share objective ("EPSO") for such Plan
Year and the two immediately succeeding Plan Years (the "Applicable Three
Year Period").
(b) If the Company's Earnings Per Share for the Applicable Three Year
Period is less than 100% (but not less than 50%) of such period's EPSO,
each Participant shall be entitled to 50% (adjusted, as applicable, in
accordance with Section 7.1(d)) of his Performance Based Target Bonus (as
the term is hereafter defined) in respect of such Applicable Three Year
Period; if the Company's Earnings Per Share for the Applicable Three Year
Period is at least 100% but less than 120% of such period's EPSO, each
Participant shall be entitled to 100% (adjusted, as applicable, in
accordance with Section 7.1(d)) of his Performance Based Target Bonus in
respect of such Applicable Three Year Period; and if the Company's Earnings
Per Share for the Applicable Three Year Period is 120% or more of such
period's EPSO, each Participant shall be entitled to 200% of his
Performance Based Target Bonus. No Performance Based Target Bonus for an
Applicable Three Year Period shall be payable if the Company's Earnings Per
Share for such period is less than 50% of such period's EPSO.
(c) Within 90 days following the commencement of the 2006 Plan Year,
the Compensation Committee, after receiving the recommendations of the
Chief Executive Officer, shall establish an aggregate Earnings Per Share
objective ("Two Year EPSO") for the 2006 Plan Year and the 2007 Plan Year
(the "Applicable Two Year Period"). (No aggregate Earnings Per Share
objective shall be established with reference only to the 2006 Plan Year).
If the Company's Earnings Per Share for the Applicable Two Year Period is
less than 100% (but not less than 50%) of the Two Year EPSO, each Class A
Participant shall be entitled to 50% (adjusted, as applicable, in
accordance with Section 7.1(d)) of his Performance Based Target Bonus in
respect of the Applicable Two Year Period; if the Company's Earnings Per
Share for the applicable Two Year Period is at least 100% but less than
120% of the Two Year EPSO, each Class A Participant shall be entitled to
100% (adjusted, as applicable, in accordance with Section 7.1(d)) of his
Performance Based Target Bonus in respect of the Applicable Two Year
Period; and if the Company's Earnings Per Share for the Applicable Two Year
Period is 120% or more of the Two Year EPSO, each Participant shall be
entitled to 200% of his Performance Based Target Bonus in respect of the
Applicable Two Year Period. No Performance Based Target Bonus for the
Applicable Two Year Period shall be payable if the Company's Earnings Per
Share for such period is less than 50% of the Two Year EPSO. No Class B
Participant shall be eligible for a Performance Based Target Bonus in
respect of the Applicable Two Year Period.
(d) If the Company's Earnings Per Share for an Applicable Three Year
Period or the Applicable Two Year Period is greater than 50% of such
period's EPSO or Two Year EPSO, as the case may be, but is less than 100%
of such period's EPSO or Two Year EPSO, as the case may be, then for each
whole percentage point in excess of 50%, the percentage of the applicable
Performance Based Target Bonus referred to in the immediately preceding
paragraphs (b) and (c) to which the applicable Participants are entitled
shall be increased above 50% by one percentage point. If the Company's
Earnings Per Share for an Applicable Three Year Period or the Applicable
Two Year Period is greater than 100% of such period's EPSO or Two Year
EPSO, as the case may be, but is less than 120% of such period's EPSO or
Two Year EPSO, as the case maybe, then for each whole percentage point in
excess of 100%, the percentage of the applicable Performance Based Target
Bonus referred to in the immediately preceding paragraphs (b) and (c) to
which the applicable Participants are entitled shall be increased above
100% by 5.0 percentage points (up to, but not in excess of, 200%).
7.2 Performance Based Target Bonus. Except as provided in the immediately
succeeding paragraph, unless the Compensation Committee fixes a different
Performance Based Target Bonus in respect of an Applicable Three Year Period for
a Class A or Class B Participant within three months following the commencement
of the first Plan Year of such period, a Participant's Performance Based Target
Bonus for the Applicable Three Year Period shall be one-half of the product of
(i) his Base Salary as of December 31 of the year immediately preceding the
first Plan Year of such Applicable Three Year Period and (b) the Percentage
Multiplier set forth opposite his respective name on Schedule A annexed hereto.
A Class A Participant's Performance Based Target Bonus for the Applicable
Two Year Period shall be one-quarter of the product of (a) his annual salary
rate as of December 31, 2005 and (b) the Percentage Multiplier set forth
opposite his respective name on Schedule A annexed hereto. A Class A and Class B
Participant's Performance Based Target Bonus for the Applicable Three Year
Period commencing January 1, 2006 shall be one-half of the product of (a) his
Base Salary as of December 31, 2005 and (b) the Percentage Multiplier set forth
opposite his respective name on Schedule A annexed hereto.
For individuals who become Participants in the Plan after the Effective
Date, the Performance Based Target Bonus for an Applicable Three Year Period for
such individual shall be determined by the Compensation Committee within 90 days
following the commencement of the first Plan Year included in the Applicable
Three Year Period.
7.3 Payment in Respect of Performance Based Target Bonus. An amount to
which a Participant is entitled in respect of an Applicable Three Year Period or
the Applicable Two Year Period, as the case may be, shall be paid in cash to
such Participant on the March 15 following the end of such Applicable Three Year
Period or Applicable Two Year Period, as the case may be, whether or not the
Participant is then an employee of the Company or a Subsidiary; provided that
(i) such payment may be made after such March 15, so long as it is made within
the calendar year in which falls such March 15 and (ii) the Compensation
Committee has certified in writing that such amount has been earned in
accordance with this Section 7.
7.4 Early Termination of Employment. If a Participant shall not be in the
employ of the Company or a Subsidiary as of the end of an Applicable Three Year
Period or the Applicable Two Year Period, as the case may be, and if his
employment shall have been terminated by the Company or a Subsidiary for Cause
or by the Participant without Good Reason, the Participant shall not be entitled
to any payment in respect of his Performance Based Target Bonus for such period.
If the Participant's employment shall be terminated during an Applicable Three
Year Period or the Applicable Two Year Period, as the case may be, (i) by the
Company or a Subsidiary without Cause, (ii) by reason of his Disability or
death, (iii) by the Participant with Good Reason or (iv) after this Plan shall
have been in effect for three years, by the Participant by Retirement, then such
Participant shall be entitled with respect to such period to a payment in cash
based on the product of (A) a fraction, the number of which is the number of
full and partial months which have elapsed in the applicable period prior to his
termination of employment and the denominator of which is the total number of
months in the applicable period and (B) his Performance Based Target Bonus for
such period. Such payment in respect of such period shall be made at the time
such payment would have been made had there been no termination of employment;
provided that such payment shall be delayed for six months following his
termination of employment if necessary to avoid tax penalties under Section 409A
of the Code. If there shall be Change of Control, promptly thereafter each
Participant shall be paid his Performance Based Target Bonus in respect of each
ongoing Applicable Three Year Period and/or the Applicable Two Year Period in
which he participates in accordance with the terms thereof as if the Company's
Earnings Per Share for such period was 100% of the applicable EPSO for such
period.
7.5 Certain Adjustments in EPSO. In the event that during any year in the
Two Year Applicable Period or a Three Year Applicable Period there shall be any
merger, reorganization, recapitalization, consolidation, sale or other
distribution of all or substantially all of the assets of the Company, any stock
or extraordinary cash divided, stock split, spin-off, split-up, split-off,
distribution of securities or other property of the Company or other change in
the Company's capital structure affecting shares of Common Stock, the EPSO for
the Two Year Applicable Period or a Three Year Applicable Period shall be
appropriately adjusted as determined by the Compensation Committee in its sole
discretion in a manner intended to prevent diminution or enlargement of the
payment to a Participant in respect of his Performance Based Target Bonus.
7.6 Effect of Stock Plan Amendment and Approval. Awards under this Section
7 are granted and paid pursuant to authority which shall be provided under the
Stock Plan to grant cash-based performance awards which are intended to be
exempt from the application of Section 162(m) of the Code, and such awards shall
be deemed granted pursuant to the Stock Plan for that purpose. Notwithstanding
anything in this Section 7 to the contrary, no awards shall be paid pursuant to
this Section 7 unless and until (i) the Stock Plan has been amended to provide
for the payment of cash-based performance awards intended to be exempt from the
application of Section 162(m) of the Code and (ii) the Stock Plan, as so
amended, has been approved by the Company's shareholders in a manner intended to
comply with the shareholder approval rules of Section 162(m) of the Code.
7.7 Maximum Award Amount. Notwithstanding anything in this Section 7 to the
contrary, no single Award paid pursuant to this Section 7 shall exceed $3
million.
SECTION 8. TERMINATION OR AMENDMENT OF THE PLAN.
8.1 Amendment or Termination. The Board may amend, modify, suspend or
terminate the Plan at any time or extend the term of the Plan. The termination
or any modification, suspension, or amendment of the Plan shall not, without the
consent of a Participant, (A) adversely affect the Participant's rights with
respect to Stock Units and/or Company Stock previously awarded to the
Participant or credited to his or her Stock Unit Accounts or (B) result in a
distribution of amounts credited to his or her Stock Unit Accounts earlier than
otherwise provided herein (and in no event may any such distribution be made
without the explicit consent of the Participant if it would result in the
application of tax penalties pursuant to Section 409A of the Code) or (C)
adversely affect any payment the Participant may be entitled to with respect to
the Applicable Two Year Period or with respect to an Applicable Three Year
Period which period has commenced prior to such amendment, modification or
suspension, or termination. The Plan shall terminate as to the further award of
Stock Units when no further shares are available for grant under the Stock Plan.
SECTION 9. MISCELLANEOUS.
9.1 Reorganization or Discontinuance. The obligations of the Company under
the Plan shall be binding upon any successor corporation or organization
resulting from merger, consolidation or other reorganization of the Company, or
upon any successor corporation or organization succeeding to substantially all
of the assets and business of the Company. The Company will make appropriate
provision for the preservation of Participants' rights under the Plan in any
agreement or plan which it may enter into or adopt to effect any such merger,
consolidation, reorganization or transfer of assets.
9.2 Non-Alienation of Benefits. A Participant may not assign, sell,
encumber, transfer or otherwise dispose of any rights or interests under the
Plan except by will or by the laws of descent and distribution. Any attempted
disposition in contravention of the preceding sentence shall be null and void.
9.3 No Claim or Right to Plan Participation. Except as otherwise
specifically provided in the Plan, no employee or other person shall have any
claim or right to be selected as a Participant under the Plan. Neither the Plan
nor any action taken pursuant to the Plan shall be construed as giving any
employee any right to be retained in the employ of the Company or any
Subsidiary.
9.4 Taxes. The Company shall have the power to withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy Federal,
state and local withholding tax requirements on any distribution of cash or
Company Stock pursuant to the Plan. The Company may (but shall not be required)
permit a Participant to satisfy a tax withholding requirement by directing the
Company to apply shares of Company Stock to which the Participant is entitled
under the Plan to satisfy such requirement. In such case, the shares shall be
valued at their Fair Market Value as of the date such shares are issued to the
Participant.
9.5 Designation and Change of Beneficiary. Each Participant may indicate at
any time after being notified that he is a Participant the designation of one or
more persons as his beneficiary (the "Designated Beneficiary") who shall be
entitled to receive the amount, if any, payable under the Plan upon the death of
the Participant. Such designation shall be in writing to the Compensation
Committee or an officer of the Company designated by the Compensation Committee.
A Participant may, from time to time, revoke or change his Designated
Beneficiary without the consent of any prior Designated Beneficiary by filing a
written designation with the Compensation Committee or such designated officer.
The last such designation received by the Compensation Committee or such officer
shall be controlling; provided, however, that no designation, or change or
revocation thereof, shall be effective unless received by the Compensation
Committee or such officer prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. In the absence of any
designation of a Designated Beneficiary, the benefits hereunder unpaid at the
Participant's death shall be paid to his estate.
9.6 Delegation. The Compensation Committee may from time to time delegate
any administrative duties hereunder to an officer of the Company designated by
it; provided such delegation is not inconsistent with the provisions of law,
rules of the New York Stock Exchange or provisions of the Charter of the
Compensation Committee.
9.7 Payments to Persons Other Than the Participant. If the Compensation
Committee shall find that any person to whom any amount is payable under the
Plan is unable to care for his affairs because of illness or accident, then any
payment due to such person or his estate (unless a prior claim therefor has been
made by a duly appointed legal representative) may, if the Compensation
Committee so directs, be paid to his spouse, a child, a relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Compensation Committee, in its sole discretion, to be a proper recipient on
behalf of such person otherwise entitled to payment. Any such payment shall be a
complete discharge of the liability of the Company therefor.
9.8 No Liability of Compensation Committee Members or Officers. No member
of the Compensation Committee or any director or officer of the Company or any
Subsidiary shall be personally liable by reason of any act taken hereunder or
any failure to act hereunder or on his behalf in his capacity as a member of the
Compensation Committee or director or an officer, and the Company shall
indemnify and hold harmless each member of the Compensation Committee and any
officer or director of the Company or any Subsidiary to whom any duty or power
relating to the administration or interpretation of the Plan may be delegated,
against any cost or expense (including legal fees, disbursements and other
related charges) or liability (including any sum paid in settlement of a claim
with the approval of the Board) arising out of any act or omission to act in
connection with the Plan, unless arising out of such person's own fraud or
willful misconduct.
9.9 Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the Company and any
Participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan.
The Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended.
9.10 Rights as a Stockholder. No Participant shall have any rights as a
stockholder of the Company with respect to Stock Units credited to his Stock
Unit Accounts.
9.11 Governing Law. This Plan shall be governed by and construed in
accordance with laws of the State of Delaware applicable to agreements made and
to be performed entirely within such state (without regard to any conflict of
law provisions that might indicate the applicability of any other laws).
9.12 Participation in Other Plans. Participation in the Plan shall not
preclude a Participant from participation in any other plans or benefits of the
Company.
9.13 Effective Date. This Plan shall be effective commencing with the 2006
Plan Year.
SCHEDULE A
Class A Participants Percentage Multiplier
-------------------- ---------------------
Frank T. MacInnis 175%
Anthony J. Guzzi 150%
Sheldon I. Cammaker 125%
Leicle E. Chesser 125%
R. Kevin Matz 125%
Mark A. Pompa 125%
Michael J. Parry 100%
Class B Participants Percentage Multiplier
-------------------- ---------------------
Geoffrey Birkbeck 50%
Edward Dabrowski 50%
Eugene Martin 50%
William A. Rodgers, Jr. 50%
John Warga 50%
Anthony Whale 50%
EXHIBIT I
STOCK UNIT CERTIFICATE
This Stock Unit Certificate represents the grant of ____ Stock Units to the
person identified below (the "Participant") pursuant to, and subject to the
terms and conditions of, the EMCOR Group, Inc. Long-Term Incentive Plan (the
"Plan"). The Participant understands and agrees that the grant of the Stock
Units represented hereby will be effective as of the first business day of the
20__ "Plan Year" (as defined in the Plan), subject to the Participant executing
this Stock Unit Certificate where indicated below and returning it to the
Secretary of EMCOR Group, Inc.
EMCOR Group, Inc.
By:________________________
Title:_______________________
AGREED AND ACCEPTED:
[NAME OF PARTICIPANT]
_____________________________