SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. 1 )
Filed by
the Registrant [X]
Filed by
a Party other than the Registrant [ ]
Check the
appropriate box:
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Preliminary Proxy Statement
[ ]
Confidential, for Use of the Commission Only
(as permitted by Rule
14a-6(e)(2))
[X] Definitive
Proxy Statement
[ ]
Definitive Additional Materials
[ ]
Soliciting Material Pursuant to Sec. 240.14a-12
Insituform
Technologies, Inc.
(Name of
Registrant as Specified in its Charter)
_________________________________________________________
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[X] No
fee required.
[ ]
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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of each class of securities to which transaction applies:
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange
Act
Rule 0-11 (set forth the amount on which the filing fee
is
calculated and state how it was
determined):
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_______________________________________________________________
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary
materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and
identify
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previously.
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Schedule and the date of its
filing.
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Explanatory Note: This
Amendment No. 1 to Schedule 14A is being filed to correct certain information
contained in Insituform Technologies, Inc.’s (the “Company”) definitive proxy
statement attached to a Schedule 14A (the “Original Filing”), which was filed
with the Securities and Exchange Commission and mailed to the Company’s
stockholders on March 25, 2009. Subsequent to such filing, the
Company noted certain clerical errors with respect to the calculation of (i)
“All Other Compensation” for Mr. Burgess and the 2008 “Total Compensation” for
Mr. Vossman in the “Summary Compensation Table” on page 28 of the Original
Filing, (ii) the “Aggregate Earnings (Losses) in Last FY” in the “Nonqualified
Deferred Compensation” table on page 32 of the Original Filing, and (iii) the
total “Number of Securities to be Issued upon Exercise of Outstanding Options,
Warrants and Rights” under “Equity Compensation Plan Information” on page 39 of
the Original Filing, as well as certain other typographical errors.
Except
for the matters described above, this Amendment No. 1 to Schedule 14A does not
modify or update other disclosures in, or appendices to, the Original
Filing. This amendment does not change any previously reported
results and information, nor does it reflect events occurring after the date of
the Original Filing.
INSITUFORM
TECHNOLOGIES, INC.
__________________________
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
to
be held on April 22, 2009
__________________________
TO THE
OWNERS OF COMMON STOCK
OF
INSITUFORM TECHNOLOGIES, INC.:
You are invited to attend Insituform
Technologies, Inc.’s 2009 Annual Meeting of Stockholders. The meeting
will be held on Wednesday, April 22, 2009, at 8:00 a.m. local time at the Crown
Plaza Hotel Lafayette-Acadian, 1801 West Pinhook Road, Lafayette, Louisiana
70508.
The purposes of this year’s meeting
are:
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(1)
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to
elect six directors,
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(2)
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to
approve the Insituform Technologies, Inc. 2009 Employee Equity Incentive
Plan,
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(3)
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to
ratify the appointment of PricewaterhouseCoopers LLP as our independent
auditors for the year ending December 31, 2009,
and
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(4)
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to
transact any other business that may properly come before the meeting or
any adjournment(s) of the meeting.
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The Board of Directors set February 27,
2009 as the record date for the meeting. This means that if you were
an owner of our common stock at the close of business on that date, you are
entitled to receive this notice of the meeting and vote at the meeting and any
adjournment(s) of the meeting.
Whether or not you expect to attend the
meeting, please vote by following the instructions on the enclosed proxy card to
vote by telephone or Internet, or by marking, signing, dating and returning the
enclosed proxy card in the postage-paid envelope provided.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 22, 2009:
Our
Proxy Statement and 2008 Annual Report are available at
http://www.amstock.com/proxyservices/viewmaterials.asp.
By Order of the Board
of Directors,
David F.
Morris
Secretary
Chesterfield,
Missouri
March 25,
2009
Proxy
Statement
Insituform Technologies, Inc.’s Board
of Directors is mailing this proxy statement and the proxy card to you to
solicit proxies on its behalf to be voted at our 2009 Annual Meeting of
Stockholders, and at any adjournment(s) of the meeting. This proxy
statement and the proxy card were first mailed on March 25, 2009. The
meeting will be held on Wednesday, April 22, 2009 at 8:00 a.m. local time at the
Crown Plaza Hotel Lafayette-Acadian, 1801 West Pinhook Road, Lafayette,
Louisiana 70508, for the purposes listed in the accompanying
notice.
We will bear all costs relating to the
solicitation of proxies. Proxies may be solicited by our officers,
directors and regular employees personally, by mail or by
telephone. We may pay brokers and other persons holding shares of
stock in their names, or the names of their nominees, for reasonable expenses
incurred in sending soliciting material to their principals.
Our executive office is located at
17988 Edison Avenue, Chesterfield, Missouri 63005.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 22, 2009:
Our
Proxy Statement and 2008 Annual Report are available at
http://www.amstock.com/proxyservices/viewmaterials.asp.
Table
of Contents
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QUESTIONS
AND ANSWERS ABOUT THE
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COMPENSATION COMMITTEE REPORT |
27
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| MEETING AND VOTING |
2
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COMPENSATION IN LAST FISCAL YEAR |
28
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| PROPOSAL 1: ELECTION OF DIRECTORS |
5
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Summary Compensation Table |
28
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| Certain Information Concerning Director | Grants of Plan-Based Awards |
29
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| Nominees |
5
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Narrative for Summary Compensation | |
| CORPORATE GOVERNANCE |
8
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Table and Grants of Plan-Based Awards | |
| Independent Directors |
8
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Table |
30
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| Non-Executive Chairman of the Board |
8
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Outstanding Equity Awards at Fiscal Year- | |
| Board Meetings and Committees |
8
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End |
31
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| Corporate Governance Documents |
11
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Option Exercises and Stock Vested |
32
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| REPORT OF THE AUDIT COMMITTEE |
12
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Nonqualified Deferred Compensation |
32
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| DIRECTOR COMPENSATION |
13
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Change of Control, Severance and | ||
| Additional Information About Director | Termination |
33
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| Compensation |
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INFORMATION CONCERNING CERTAIN | ||
| Stock Ownership Policy with Respect | STOCKHOLDERS |
36
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| Non-Employee Directors |
14
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RELATED-PARTY TRANSACTIONS |
38
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| EXECUTIVE COMPENSATION |
15
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SECTION 16(A) BENEFICIAL OWNERSHIP | ||
| COMPENSATION DISCUSSION AND ANALYSIS |
15
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REPORTING COMPLIANCE |
38
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| Overview of Executive Compensation | EQUITY COMPENSATION PLAN INFORMATION |
39
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| Program |
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PROPOSAL 2: APPROVAL OF THE 2009 | ||
| Compensation Philosophy and Objectives |
15
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EMPLOYEE EQUITY INCENTIVE PLAN |
40
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| Executive Compensation Process |
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PROPOSAL 3: RATIFICATION OF THE | ||
| Benchmarking Target Executive | APPOINTMENT OF INDEPENDENT AUDITORS |
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| Compensation |
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Independent Auditors' Fees |
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| Elements and Mix of Compensation |
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Ratification of the Appointment of | ||
| Other Compensation Arrangements |
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Independent Auditors |
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| Section 162(m) Performance-Based | OTHER MATTERS |
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| Compensation |
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HOUSEHOLDING OF MATERIALS |
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| Policy on Recoupment of Incentive | STOCKHOLDER PROPOSALS |
45
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| Compensation |
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STOCKHOLDER COMMUNICATIONS WITH | ||
| Stock Ownership Policy with Respect to | DIRECTORS |
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| Named Officers |
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APPENDIX A: 2009 EMPLOYEE EQUITY | ||
| Other Benefits |
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INCENTIVE PLAN |
A-1
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Questions
And Answers About The Meeting And Voting
Who
may vote?
You
may vote if you owned shares of our common stock at the close of business on
February 27, 2009, the record date for our 2009 Annual Meeting of
Stockholders. You are entitled to one vote for each share you owned
on that date for each director to be elected and on each other matter presented
at the meeting. As of February 27, 2009, we had 38,477,072 shares of
common stock, $.01 par value, outstanding. We have no class or series
of voting stock outstanding other than our common stock.
A
list of stockholders entitled to vote at the meeting will be available for
examination at our executive office located at 17988 Edison Avenue,
Chesterfield, Missouri 63005 for ten days before the Annual Meeting and at the
Annual Meeting.
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What
am I voting on?
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First,
you are voting to elect six directors. Each director, if
elected, will serve a term of one year or until his or her successor has
been elected and qualified.
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Our
Board of Directors recommends a vote “FOR” the election of each of our
nominees for director.
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Second,
you are voting to approve the Insituform Technologies, Inc. 2009 Employee
Equity Incentive Plan.
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Our
Board of Directors recommends a vote “FOR” the approval of the Insituform
Technologies, Inc. 2009 Employee Equity Incentive Plan.
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Third,
you are voting to ratify the appointment of PricewaterhouseCoopers LLP as
our independent auditors for the year ending December 31,
2009.
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Our
Board of Directors recommends a vote “FOR” the ratification of the
appointment of PricewaterhouseCoopers LLP as our independent auditors for
the year ending December 31, 2009.
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In
addition, you may vote on other business, if it properly comes before the
meeting, or any adjournment(s) of the meeting.
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How
do I vote?
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By Telephone or
Internet: You can vote by telephone or Internet by
following the instructions included on the enclosed proxy
card.
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By Written
Proxy: You can vote by written proxy by signing, dating
and returning the enclosed proxy card in the postage-paid envelope
provided. If you sign and return the enclosed proxy card, the
shares represented by the proxy will be voted in accordance with the terms
of the proxy, unless you subsequently revoke your
proxy.
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In Person: If
you are a record stockholder, you can vote in person at the
meeting.
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What
is the difference between a record stockholder and a stockholder who holds
shares in street name?
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If
your shares are registered in your name, you are a record
stockholder.
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If your shares are in the name of your broker
or bank, your shares are held in street name.
How
many votes are required to elect directors?
Directors
are elected by a majority vote. That means that for a director to be
elected, the number of shares voted “for” a director must exceed the aggregate
number of votes withheld from or cast against that director. A
summary of our majority voting standard appears on page 10 of this Proxy
Statement under “Corporate Governance – Board Meetings and Committees –
Corporate Governance and Nominating Committee.”
How many votes
are needed to approve the Insituform
Technologies, Inc. 2009 Employee Equity Incentive Plan?
Approval
of the Insituform Technologies, Inc. 2009 Employee Equity Incentive Plan
requires the affirmative vote of a majority of the shares of our common stock
entitled to vote on the proposal.
How
many votes are required to ratify the appointment of PricewaterhouseCoopers LLP
as our independent auditors for 2009?
Ratification
of the appointment of PricewaterhouseCoopers LLP as our independent auditors for
the fiscal year ending December 31, 2009 requires the affirmative vote of a
majority of the shares of our common stock entitled to vote on the
proposal.
What
if other matters are voted on at the Annual Meeting?
If any
other matters are properly presented at the Annual Meeting for consideration,
the persons named as proxies in the enclosed proxy card will have the discretion
to vote on those matters for you. At the date we filed this Proxy
Statement with the Securities and Exchange Commission, our Board of Directors
did not know of any other matter to be raised at the Annual
Meeting.
What
does it mean if I receive more than one proxy card?
If you
hold your shares in more than one account, you will receive a proxy card for
each account. To ensure that all of your shares are voted, please
vote by telephone or Internet or complete, sign, date and return a proxy card
for each account in the postage-paid envelope provided.
Can
I revoke my proxy?
Yes. You can revoke your
proxy by:
· writing
to the attention of our corporate Secretary at the address of our executive
office prior to the date of the Annual Meeting,
· delivering
a later-dated proxy card prior to or at the Annual Meeting,
or
· voting in
person at the Annual Meeting.
3
What
is the record date and what does it mean?
The
record date for the 2009 Annual Meeting of Stockholders is February 27,
2009. The record date is set by our Board of Directors, as required
by Delaware law. Record stockholders at the close of business on the
record date are entitled to:
· receive notice of
the meeting, and
· vote at
the meeting, or at any adjournment(s) of the meeting.
What
if I do not specify my vote when I return my proxy?
You
should specify your choice for each proposal on the enclosed proxy
card. If no specific instructions are given, proxies that are signed
and returned will be voted “FOR” the election of the director nominees named in
this Proxy Statement, “FOR” the approval of the Insituform Technologies, Inc.
2009 Employee Equity Incentive Plan and “FOR” the ratification of the
appointment of PricewaterhouseCoopers LLP as our independent auditors for the
year ending December 31, 2009.
How
are broker non-votes and abstentions counted?
Broker
“non-votes” will not be counted as present for the purpose of determining the
presence of a quorum unless these shares are voted on another matter presented
at the Annual Meeting. A broker “non-vote” occurs when a broker or
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the broker or nominee:
· has not
received voting instructions on a particular matter from the beneficial owner or
persons entitled to vote, and
· does not
have discretionary voting power on the matter.
If you
are the beneficial owner of shares held in “street name” by a broker, the
broker, as the record holder of the shares, is required to vote those shares in
accordance with your instruction. If you do not give instructions to
the broker, the broker will be entitled to vote the shares with respect to
“discretionary” items but will not be permitted to vote the shares with respect
to “non-discretionary” items (those shares are treated as “broker
non-votes”). Broker non-votes are deemed to be shares entitled to
vote on such matters. Broker non-votes will not be considered as
either a vote cast for or withheld from a director nominee and thus will have no
effect on the vote for director nominees. Because Proposals 2 and 3
require a majority vote of the shares entitled to vote on the proposal, a broker
non-vote will have the effect of a vote against the proposal.
Abstentions
will be counted as present for the purpose of determining the presence of
a quorum for transacting business at the Annual Meeting. The
stockholder has no ability to abstain in the election of
directors. Because Proposals 2 and 3 require a majority vote of the
shares entitled to vote on the proposal, an abstention will have the effect of a
vote against the proposal.
How
many votes must be present to conduct business at the 2009 Annual
Meeting?
Our
Amended and Restated By-Laws require that a quorum must be present to conduct
business at the Annual Meeting. To constitute a quorum, a majority of
the outstanding shares of our common stock must be represented, in person or by
proxy at the Annual Meeting.
4
Proposal
1: Election Of Directors
At our 2009 Annual Meeting,
stockholders will elect six directors, each to serve a term of one year or until
his or her successor is elected and qualified. Our Board of Directors
is not divided into classes of directors, meaning all of our directors are voted
on every year at our annual meeting. Our Board of Directors currently
consists of six directors. Unless otherwise instructed on the proxy
card, each of the persons named on the accompanying proxy card intends to vote
the shares represented thereby in favor of the six nominees listed under
“Certain Information Concerning Director Nominees” below. In no event
may the persons named on the accompanying proxy card vote the shares for a
number of persons greater than the six nominees named herein.
Each director nominee named below is
presently serving as a director of our Company. All nominees have
consented to being named in this Proxy Statement and to serve if
elected. If, however, any nominee should become unable or unwilling
to serve, the persons named on the accompanying proxy card will vote the shares
represented by the proxy for another person duly nominated by our Board, based
on the recommendation of our Corporate Governance & Nominating
Committee, to act in the nominee’s place, or, if no other person is so
nominated, to vote the shares only for the remaining nominees.
Certain
Information Concerning Director Nominees
Certain information concerning the
nominees for election as directors is set forth below. This
information was furnished to us by the nominees. No family
relationship exists between any of our directors or executive
officers.
| J. JOSEPH BURGESS |
Director since
2008
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Age
50
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Mr.
Burgess has been our President and Chief Executive Officer since
April 14, 2008. Mr. Burgess previously served as the President
and Chief Executive Officer of Veolia Water North America (a leading
provider of water and wastewater services to municipal, federal and
industrial customers) from 2005 until joining our Company in 2008. Prior
to that, he was the Chief Operating Officer of Veolia Water North America
from 2003 to 2005 and its Vice President and General Manager for the
Northeast business center from 2002 to 2003. Previously, he was the
Executive Vice President for Water Systems Operations for Ogden Projects
(later renamed Covanta Water; a subsidiary of Ogden Corporation that
specialized in waste-to-energy projects for municipalities) from 1998 to
2003.
Member of
our Strategic Planning Committee.
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STEPHEN
P. CORTINOVIS
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Director
since 1997
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Age
59
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Mr.
Cortinovis has been a co-owner of Lasco Foods, Inc. (a food services
industry manufacturer and distributor) since 2005. He was a partner in
Bridley Capital Partners (a private equity firm) from 2001 until 2007.
Previously, he was President—Europe of Emerson Electric Co. from 1995
until 2001 and held various other executive positions at Emerson Electric
from 1977 to 1995. Mr. Cortinovis also serves on the Boards of Directors
of Plexus Corp. and Lasco Foods, Inc.
Chair of
our Corporate Governance & Nominating Committee and member of our
Strategic Planning
Committee.
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| STEPHANIE A. CUSKLEY |
Director
since 2005
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Age
48
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Ms.
Cuskley was appointed as the Chief Executive Officer of NPower, a
nonprofit information technology services network, on January 19, 2009.
She also serves as the Executive Director of NPower NY, an affiliated
organization of NPower. Previously, she was Managing Director and Group
Head—Mid Cap Investment Banking Coverage of JPMorgan Securities from 2003
until 2005. From 2001 until 2003 she was Managing Director and Project
Manager— LeadershipMorganChase of JPMorgan Chase. Ms. Cuskley also serves
on the Board of Directors of Avantair, Inc.
Chair
of our Audit Committee and member of our Compensation Committee and our
Corporate Governance & Nominating
Committee.
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| JOHN P. DUBINSKY |
Director since
2002
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Age
65
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Mr.
Dubinsky has been the President and Chief Executive Officer of
Westmoreland Associates, LLC (a financial consulting company) since before
2001 and President and Chief Executive Officer of CORTEX (a public purpose
non-profit established to buy property for the development of a
biotechnology corridor in the St. Louis, Missouri area) since 2003. Mr.
Dubinsky also serves as the Vice Chairman of BJC HealthCare, on the Boards
of Directors of Stifel Financial Corp. and Washington University in St.
Louis and as a trustee for Barnes-Jewish Hospital.
Chair
of our Strategic Planning Committee and member of our Compensation
Committee and our Audit
Committee.
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| JUANITA H. HINSHAW |
Director
since 2000
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Age
63
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Ms.
Hinshaw has been the President and Chief Executive Officer of H & H
Advisers (a financial advisory company) since 2005. Previously, she was
the Senior Vice President and Chief Financial Officer of Graybar Electric
Company, Inc. (an electrical and communications distributor). Ms. Hinshaw
also serves on the Boards of Directors of Synergetics USA, Inc. and The
Williams Company, Inc.
Chair
of our Compensation Committee and member of our Audit Committee and our
Corporate Governance & Nominating
Committee.
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| ALFRED L. WOODS |
Director since
1997
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Age
65
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Chairman
of the Board since 2003. Mr. Woods served as our Interim Chief
Executive Officer from August 13, 2007 through April 14, 2008. He has been
the President of Woods Group, LLC (a management consulting company) since
before 2001. Prior thereto, Mr. Woods served in executive positions,
including Chairman and Chief Executive Officer, at a number of public and
private companies. Mr. Woods also serves on the Boards of
Directors of Clutchmobile, Inc. and the Williamsburg Community Foundation,
a not-for-profit organization.
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OUR
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION
OF
THE SIX NOMINEES NAMED HEREIN AS DIRECTORS.
7
Corporate
Governance
Independent
Directors
Based on the findings of our Board’s
Corporate Governance & Nominating Committee, our Board has determined
that the following directors are “independent directors” as defined by the rules
applicable to companies listed on The Nasdaq Global Select Market:
Stephen P.
Cortinovis Juanita
H. Hinshaw
Stephanie A.
Cuskley John
P. Dubinsky
Alfred L.
Woods
From August 13, 2007 through April 14,
2008, Alfred L. Woods, our Chairman of the Board, served as our Interim Chief
Executive Officer. Mr. Woods’ service as our Interim Chief Executive
Officer concluded upon the appointment of J. Joseph Burgess as our President and
Chief Executive Officer on April 14, 2008. Under Nasdaq rules, Mr.
Woods’ service as an interim executive officer of our Company, and the receipt
of compensation for such service, does not disqualify Mr. Woods from his status
as an independent director after his service as interim chief executive officer
ended.
Except for Mr. Woods, none of our
independent directors, other than Mr. Dubinsky, have had any personal, financial
or business relationships with us either currently or during the three-year
period ended December 31, 2008. Mr. Dubinsky is President and Chief
Executive Officer of CORTEX, a public purpose non-profit corporation that
purchased real property from one of our subsidiaries in 2006. Our
Board considered the circumstances of the transaction, including the arm’s
length nature of the negotiations (supported by an independent appraisal we
received on the value of the property), and the fact that Mr. Dubinsky has no
personal financial or ownership interest in CORTEX in determining that the
transaction did not negatively impact Mr. Dubinsky’s independence.
Non-Executive
Chairman of the Board
Our Chairman of the Board position is a
non-executive position. Alfred L. Woods has served as our Chairman
since July 2003.
Our Chairman is responsible for the
smooth functioning of our Board, enhancing its effectiveness. The
Chairman guides the processes of our Board, setting the agenda for, and
presiding at, Board meetings. Our Chairman also presides at
stockholder meetings and ensures that directors receive appropriate information
from our Company to fulfill their responsibilities.
Our Chairman is an ex officio member of
each standing Board committee, providing guidance and, like all directors,
taking an active role in evaluating our executive officers.
Our Chairman acts as a regular liaison
between our Board and our executive management, consulting regularly with our
executives over business matters and providing our executives with immediate
consultation and advice on material business decisions that require prompt
reflection or policy interpretation.
The Chairman has no operating or
independent oversight authority or responsibility. All oversight
authority and responsibility remains with our full Board or its designated
committees, and all executive authority and responsibility remains with our
executive management.
Board
Meetings and Committees
Board of
Directors. During 2008, our
Board of Directors held eighteen meetings and acted five times by unanimous
written consent. No director attended fewer than 75% of the aggregate
number of
8
Board
meetings and Board Committee meetings on which the director served during
2008. Our Board has four standing Committees, an Audit Committee, a
Compensation Committee, a Corporate Governance & Nominating Committee
and a Strategic Planning Committee. The Board may also, from time to
time, establish such other Committees as it may deem necessary.
Audit
Committee. The members of
our Board’s Audit Committee are Stephanie A. Cuskley (Chair), John P. Dubinsky
and Juanita H. Hinshaw. Mmes. Cuskley and Hinshaw and Mr.
Dubinsky are independent directors as defined by the rules applicable to
companies listed on The Nasdaq Global Select Market. During 2008,
Sheldon Weinig served on the Audit Committee until the termination of his
service on our Board following the 2008 Annual Meeting of
Stockholders.
The primary functions of the Audit
Committee are to oversee (a) the integrity of our financial statements,
(b) our compliance with legal and regulatory requirements, (c) our
independent auditors’ qualifications and independence and (d) the
performance of our internal audit function and independent
auditors. The Audit Committee also prepares the Report of the Audit
Committee included in our Proxy Statement. The Audit Committee’s
activities are intended to involve guidance and oversight and not to diminish
the primary responsibility of management for our financial statements and
internal controls. The Audit Committee’s responsibilities
include:
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the
appointment, compensation, retention and termination of our independent
auditors and of our internal
auditors,
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oversight
of the work of independent auditors engaged for the purpose of preparing
or issuing an audit report or performing other audit,
review
or attest services for us,
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|
·
|
oversight
of our internal auditors’ work,
|
|
|
·
|
review
of the scope and results of our internal
controls,
|
|
|
·
|
approval
of the professional services provided by our independent auditors,
and
|
|
|
·
|
review
of the independence of our independent
auditors.
|
Audit Committee Financial Expert. Based on the findings of the Audit Committee, our
Board has determined that the Audit Committee has two “audit committee financial
experts,” as defined in the rules promulgated by the Securities and Exchange
Commission and as required of Nasdaq-listed companies. They are Mmes. Cuskley
and Hinshaw.
During 2008, the Audit Committee held
five meetings. Our Board has adopted a written charter for the Audit
Committee.
Compensation
Committee. The members of
our Board’s Compensation Committee are Juanita H. Hinshaw (Chair), Stephanie A.
Cuskley and John P. Dubinsky. Mmes. Hinshaw and Cuskley and Mr.
Dubinsky are independent directors as defined by the rules applicable to
companies listed on The Nasdaq Global Select Market.
The Compensation Committee
(a) determines the compensation level of our Chief Executive Officer and
other executive officers, as well as certain other highly-compensated key
employees, (b) reviews management’s Compensation Discussion and Analysis
relating to our Company’s executive compensation programs and approves the
inclusion of the same in our Proxy Statement and/or Annual Report on Form 10-K,
(c) issues a report confirming the Compensation Committee’s review and approval
of the Compensation Discussion and Analysis for inclusion in our Proxy Statement
and/or Annual Report on Form 10-K, and (d) administers, and makes
recommendations with respect to, our incentive compensation plans and
stock-based plans.
During 2008, the Compensation Committee
held twelve meetings and acted five times by unanimous written
consent. Our Board has adopted a written charter for the Compensation
Committee.
9
Compensation
Committee Interlocks and Insider Participation. There were no
compensation committee interlocks or insider participation on the part of the
members of our Compensation Committee during 2008. The members of the
Compensation Committee are set forth above under “Compensation
Committee.”
Corporate
Governance & Nominating Committee. The members of
our Board’s Corporate Governance & Nominating Committee are Stephen P.
Cortinovis (Chair), Stephanie A. Cuskley and Juanita H. Hinshaw. Mr.
Cortinovis and Mmes. Cuskley and Hinshaw are independent directors as defined by
the rules applicable to companies listed on The Nasdaq Global Select
Market. During 2008, Sheldon Weinig served as the Chair of the
Corporate Governance & Nominating Committee until the termination of his
service on our Board following the 2008 Annual Meeting of
Stockholders.
The Corporate Governance &
Nominating Committee advises the Board on corporate governance principles,
including developing and recommending to our Board a set of corporate governance
guidelines, and identifies qualified individuals to recommend as potential Board
members to our stockholders.
Stockholders also may make nominations
for directors. Stockholders wishing to propose nominees for
consideration at our 2010 Annual Meeting of Stockholders must comply with the
provisions of our Amended and Restated By-Laws dealing with
nominations. For a discussion of the nominating procedures, see
“Stockholder Proposals” in this Proxy Statement. All director
candidates, including those recommended by stockholders, are evaluated on the
same basis. In its evaluation of director candidates, the Corporate
Governance & Nominating Committee considers a variety of
characteristics including, but not limited to: certain core competencies,
including knowledge of accounting and finance, sound business judgment,
knowledge of management trends, crisis response ability, industry knowledge and
strategy and vision; experience, specifically in the industries in which we
operate; independence; level of commitment; Board and Company needs; and
considerations and personal characteristics. The Corporate
Governance & Nominating Committee may engage a third party to assist it
in identifying potential director nominees.
On January 31, 2009, our Board of
Directors amended our Amended and Restated By-Laws to provide that for a nominee
for director to be elected in an uncontested election, the number of shares
voted “for” such director must exceed the aggregate number of votes withheld
from or cast against that director. In connection with the amendment
of our Amended and Restated By-Laws, our Board also amended our Corporate
Governance Guidelines on that date to provide that director nominees annually
submit a contingent resignation in writing to the Chairman of the Corporate
Governance & Nominating Committee to address majority voting in director
elections. This resignation becomes effective only if the director
nominee fails to receive a sufficient number of votes for re-election at the
Annual Meeting and our Board accepts the resignation. Our Corporate Governance
& Nominating Committee will make a recommendation to the Board on whether to
accept or reject the resignation, or whether other action should be taken. The
Board will act on the Committee’s recommendation and publicly disclose its
decision and the rationale behind it within 90 days from the date of the
certification of the election results. A director who tenders his or
her resignation under this policy will not participate in the Corporate
Governance & Nominating Committee’s consideration of its recommendation, if
a member thereof, or in the Board’s decision, on whether to accept or reject the
resignation or take such other actions.
The Corporate Governance &
Nominating Committee held ten meetings and acted once by unanimous written
consent in 2008. Our Board has adopted a written charter for the
Corporate Governance & Nominating Committee.
Strategic
Planning Committee. The members of
our Board’s Strategic Planning Committee are John P. Dubinsky (Chair), J. Joseph
Burgess and Stephen P. Cortinovis. Messrs. Dubinsky and Cortinovis
are independent directors as defined by the rules applicable to companies listed
on The Nasdaq
10
Global
Select Market. The role of this Committee is to review and to make
recommendations to the Board regarding our strategy and strategic planning
process.
The Strategic Planning Committee held
eleven meetings and acted once by unanimous written consent in
2008. Our Board has adopted a written charter for the Strategic
Planning Committee.
Other
Committees. In 2008, our Board also appointed a Proxy
Committee in light of the proxy contest in connection with our 2008 Annual
Meeting of Stockholders. Messrs. Cortinovis and Dubinsky and Ms.
Cuskley served on the Proxy Committee (each served a rotation as Chair of the
Committee), which met fourteen times. The Search Committee of our
Board that was appointed in 2007 in connection with our search for a new chief
executive officer also served in 2008, until our President and Chief Executive
Officer, J. Joseph Burgess, was identified and appointed on April 14,
2008. The Search Committee was comprised of our former director
Sheldon Weinig (Chair) and Mmes. Cuskley and Hinshaw. The Search
Committee met several times informally and reported to the Board at regular or
special Board meetings.
Corporate
Governance Documents
Corporate
Governance Guidelines. Based on the
recommendation of the Corporate Governance & Nominating Committee, our
Board has adopted a set of corporate governance guidelines. These
corporate governance guidelines, which are subject to annual review by the
Corporate Governance & Nominating Committee, provide a framework within
which our Board and executive officers fulfill their respective responsibilities
and reflect our Board’s commitment to monitor the effectiveness of
decision-making both at the Board and senior executive management
level.
Board Committee
Charters. As described
above, the Board has adopted a charter for each of its standing Committees, the
Audit, Compensation, Corporate Governance & Nominating and Strategic
Planning Committees.
Code of Ethics
for our CEO, CFO and Senior Financial Employees. Our Audit
Committee has adopted a written code of ethics that applies to our Chief
Executive Officer, our Chief Financial Officer and senior financial
employees. The purposes of the code of ethics, among other things,
are to deter wrongdoing, to promote ethical conduct and to ensure that
information that we provide in our public reports, including those filed with
the Securities and Exchange Commission, is full, fair, accurate, timely and
understandable.
Code of
Conduct. In addition,
based on the recommendation of the Corporate Governance & Nominating
Committee, our Board has adopted a code of conduct that applies to all of our
employees, including our officers, and our directors.
Availability of
Corporate Governance Documents. Each of our
corporate governance guidelines, Board committee charters, code of ethics and
code of conduct are available, free of charge, on our website, www.insituform.com,
under “Investors – Corporate Governance.” We also will provide these
documents, free of charge, to any stockholder who requests them by writing to
the following address:
|
Investor
Relations
|
|
c/o Insituform
Technologies, Inc.
|
|
17988
Edison Avenue
|
|
Chesterfield,
Missouri 63005
|
If we
amend our code of ethics or grant a waiver of our code of ethics to any of our
officers or directors, we will disclose the amendment or waiver on our
website.
11
Report
of the Audit Committee
The Board’s Audit Committee operates
under a written charter, which was adopted by our Board of
Directors. A copy of this charter is available, free of charge, on
our website, www.insituform.com. The
Audit Committee consists of three independent directors: Stephanie A. Cuskley
(Chair), Juanita H. Hinshaw and John P. Dubinsky.
The Audit
Committee reviewed and discussed our audited consolidated financial statements
for 2008 with our management. In addition, the Audit Committee
discussed with our independent auditors, PricewaterhouseCoopers LLP, the matters
required to be discussed by Statement on Auditing Standards No. 61, as
amended, as adopted by the Public Company Accounting Oversight board in Rule
3200T, which include the following:
|
|
·
|
PricewaterhouseCoopers
LLP’s responsibility under generally accepted auditing
standards,
|
|
|
·
|
significant
accounting policies,
|
|
|
·
|
management
judgments and accounting estimates,
|
|
|
·
|
audit
adjustments that individually or in the aggregate could have a significant
effect on our financial reporting
process,
|
|
|
·
|
PricewaterhouseCoopers
LLP’s judgments about the quality of our accounting
principles,
|
|
|
·
|
other
information in documents containing audited financial
statements,
|
|
|
·
|
disagreements
with our management, including the application of accounting principles,
scope of audit, disclosures and the wording of
PricewaterhouseCoopers
LLP’s report,
|
|
|
·
|
consultation
with other accountants by
management,
|
|
|
·
|
major
issues discussed with our management by PricewaterhouseCoopers LLP,
and
|
|
|
·
|
difficulties
encountered in performing the
audit.
|
The Audit Committee received the
written disclosures and the letter from PricewaterhouseCoopers LLP required by
the applicable requirements of the Public Company Accounting Oversight Board
regarding PricewaterhouseCoopers LLP’s communications with the Audit Committee
concerning independence, and has discussed with PricewaterhouseCoopers LLP its
independence. Based upon the above reviews and discussions, the Audit
Committee recommended to the Board that our audited consolidated financial
statements for 2008 be included in the Annual Report on Form 10-K for the fiscal
year ended December 31, 2008.
The Board and the Audit Committee
believe that the Audit Committee’s current member composition satisfies the
rules that govern audit committee composition, including the requirement that
all audit committee members are “independent” directors, as that term is defined
in the listing standards of The Nasdaq Stock Market LLC.
Based on the findings of the Audit
Committee, our Board has determined that the Audit Committee has two “audit
committee financial experts,” as defined in the rules promulgated by the
Securities and Exchange Commission, and as required of Nasdaq-listed companies.
They are Stephanie A. Cuskley and Juanita H. Hinshaw.
Stephanie
A. Cuskley, Chair Juanita
H. Hinshaw
John P.
Dubinsky
Notwithstanding anything set forth in
any of our previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, which might incorporate future
filings, including this proxy statement, in whole or in part, the preceding
report shall not be deemed incorporated by reference into any such
filings.
12
Director
Compensation
The following table sets forth
information concerning compensation earned by our non-employee directors in
fiscal year 2008:
|
Name
|
Year
|
Fees
Earned
or Paid in
Cash
($)(1)
|
Stock
Awards
($)(2)
|
Option
Awards
($)(3)
|
Non-Equity
Incentive Plan Compensation
($)
|
Change
in Pension Value and
Nonqualified
Deferred Compensation Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Stephen
P. Cortinovis
|
2008
|
$59,694
|
$78,156
|
—
|
—
|
—
|
—
|
$137,850
|
|
Stephanie
A. Cuskley
|
2008
|
80,194
|
78,156
|
—
|
—
|
—
|
—
|
158,350
|
|
John
P. Dubinsky
|
2008
|
68,416
|
78,156
|
—
|
—
|
—
|
—
|
146,572
|
|
Juanita
H. Hinshaw
|
2008
|
61,000
|
78,156
|
—
|
—
|
—
|
—
|
139,156
|
|
Alfred
L. Woods
|
2008
|
77,814(4)
|
780,601
|
—
|
—
|
—
|
384,100
(5)
|
1,242,515
|
_______________
|
(1)
|
Includes
fees for service on Board Committees, including the Proxy Committee and/or
Search Committee, which are not standing Committees of the
Board.
|
|
(2)
|
Represents
the amount recognized for financial statement reporting purposes during
2008 and the award date fair value, calculated in accordance with FAS
123(R), with respect to deferred stock units awarded on June 11, 2008, in
the following amounts: 4,349 to each of Messrs. Cortinovis and
Dubinsky and Mmes. Cuskley and Hinshaw and 7,732 to Mr.
Woods. Also includes awards to Mr. Woods of 33,291
and 8,745 deferred stock units on August 23, 2007 and March 3, 2008,
respectively, in connection with his service as our Interim Chief
Executive Officer from August 13, 2007 through April 14,
2008. These awards vested on April 14, 2008 upon the
appointment of Mr. Burgess as our President and Chief Executive
Officer. Please refer to Note 7, “Equity-Based Compensation,”
in the Notes to Consolidated Financial Statements contained in our Annual
Report on Form 10-K, filed on March 2, 2009, for a discussion regarding
the valuation of our stock awards. The aggregate number of
stock awards outstanding at December 31, 2008, was as
follows: Mr. Cortinovis, 20,674; Ms. Cuskley, 10,749; Mr.
Dubinsky, 20,674; Ms. Hinshaw, 20,674; and Mr. Woods,
59,047.
|
|
(3)
|
No
stock options were granted in 2008. The aggregate number of
option awards outstanding at December 31, 2008, was as
follows: Mr. Cortinovis, 22,500; Mr. Dubinsky, 15,000; Ms.
Hinshaw, 22,500; and Mr. Woods, 22,500. Ms. Cuskley had not
previously received an option
award.
|
|
(4)
|
Mr.
Woods served as our Interim Chief Executive Officer from August 13, 2007
through April 14, 2008. During such time, Mr. Woods did not
receive fees for his service as a
director.
|
|
(5)
|
In
addition to awards of deferred stock units in connection with his service
as Interim Chief Executive Officer in 2008, Mr. Woods received cash
payments of $256,322 for services rendered as Interim Chief Executive
Officer and $127,778 for services rendered during a transition period with
our new Chief Executive
Officer.
|
13
Additional
Information About Director Compensation
Each non-employee director, other than
our Chairman, is compensated at a rate of $32,000 per year, plus reimbursement
of related business travel expenses. Directors are not paid meeting
fees. Mr. Woods, our Chairman, is compensated at a rate of
$109,000 per year, plus reimbursement of related business travel
expenses. Mr. Woods did not receive payments for director
compensation during his term of service as our Interim Chief Executive Officer
from August 13, 2007 through April 14, 2008.
Non-employee directors other than Mr.
Woods receive additional compensation for serving on Board committees as
follows:
|
Chair
|
Member
|
|
|
Board
Committee
|
Compensation
|
Compensation
|
|
Audit
Committee
|
$19,000
|
$13,000
|
|
Compensation
Committee
|
15,000
|
9,000
|
|
Corporate
Governance & Nominating Committee
|
15,000
|
9,000
|
|
Strategic
Planning Committee
|
15,000
|
9,000
|
During 2008, there were two additional
special committees of the Board, the Search Committee and Proxy
Committee. Members of the Search Committee received a stipend of
$10,000, and the Chair received a stipend of $15,000. Members of the
Proxy Committee received a monthly fee of $5,000, with no additional
compensation for the Chair, as those duties were shared by the
members.
Non-employee directors also are
eligible to receive grants of stock options and/or deferred stock units under
our 2006 Non-Employee Director Equity Incentive Plan from time to
time. During 2008, each of Messrs. Cortinovis and Dubinsky and
Mmes. Cuskley and Hinshaw received a grant of 4,349 deferred stock
units. Mr. Woods received a grant of 7,732 deferred stock units
during 2008 for his service as Chairman of the Board of Directors, which grant
was made following his service as our Interim Chief Executive
Officer. Each deferred stock unit represents our obligation to
transfer one share of our common stock to the director in the future, and is
fully vested at award. Following termination of the director’s
service on our Board or on any other distribution date as the director may
elect, shares of our common stock equal to the number of deferred stock units
reflected in the director’s account will be distributed to the
director. Messrs. Cortinovis, Dubinsky and Woods and
Mmes. Cuskley and Hinshaw did not receive any options to purchase shares of
our common stock in 2008.
Stock
Ownership Policy with Respect to Non-Employee Directors
During 2006, we adopted a policy with
respect to required levels of stock ownership for our non-employee
directors. Under the policy, each current non-employee director is
required to beneficially own (and retain thereafter) at least 10,000 shares of
our common stock by July 25, 2009. Each non-employee director who is
elected or appointed after adoption of the policy will be required to
beneficially own (and retain thereafter) at least 10,000 shares of our common
stock no later than the fourth anniversary of the director’s election or
appointment. As of December 31, 2008, each director was in compliance
with the stock ownership requirements of this policy.
14
Executive
Compensation
Compensation
Discussion and Analysis
Our Compensation Committee is
responsible for establishing our compensation philosophy and ensuring that the
total compensation paid to our executive officers and certain other high-level
employees is fair, reasonable and competitive. The Committee also
makes recommendations to our Board regarding the adoption, amendment and
rescission of our equity-based incentive compensation plans and administers our
employee equity-incentive plans and the long-term incentive plans for executive
officers.
In making
compensation determinations for our executive officers, the Committee
periodically reviews our business goals and objectives, evaluates the
performance of our executive officers in light of these goals and objectives and
assesses our competitive position for executive talent against an established
peer group of companies and other market data. With the assistance of
an independent executive compensation advisor and the input of our Chief
Executive Officer, the Committee also considers individual factors in setting
executive compensation for each of our executive officers, including the
executive officer’s experience, tenure with our Company, specific job duties and
responsibilities and the achievement of individual performance
goals.
Throughout
this Proxy Statement, each of the individuals who served as our Chief Executive
Officer and Chief Financial Officer during fiscal 2008, as well as the other
individuals included in the Summary Compensation Table on page 28, are referred
to as our “Named Officers.”
Compensation
Philosophy and Objectives
Our Compensation Committee believes
that the most effective compensation program is one that is designed to attract
and retain top talent by providing a competitive and equitable compensation
package, while aligning the interests of our executives with those of our
stockholders. The Committee believes that the best way to achieve
this alignment is by rewarding the achievement of specific annual, long-term and
strategic goals, with the ultimate objective of increasing stockholder
value. Direct compensation levels of our executive officers are
generally established based on competitive benchmarking and performance factors,
as well as executive specific factors, including experience, tenure with our
Company, specific job duties and responsibilities and the achievement of
individual performance goals. Our Committee also believes that our
compensation program should be cost-effective, therefore, it considers the tax
and accounting effects when determining the elements, structure and amounts of
our executive officers’ total compensation packages.
In
establishing individual executive compensation, the Committee strives to ensure
that: (i) our executive compensation remains competitive relative to
the compensation paid to similarly situated executives of our peer group; (ii)
our executives are compensated based on each executive’s level of responsibility
and contribution to our business goals; and (iii) each executive’s compensation
is linked with individual goals and objectives as well as the financial
performance of the entire Company.
Executive
Compensation Process
Role of the Compensation
Committee. The Compensation Committee is responsible for
determining the total compensation of our executive officers, including our
Chief Executive Officer, as well as certain of our other high-level
employees. In making compensation determinations for our executive
officers, the Committee periodically reviews our goals and objectives relative
to executive compensation, evaluates the performance of the executive officers
in light of such goals and objectives and assesses our competitive position for
executive compensation against an established peer group of companies and other
market data. For executive officers other than our Chief Executive
Officer, the
15
Committee
will review and consider recommendations of our Chief Executive
Officer. The Committee also considers other factors, such as an
executive’s experience, tenure with our Company and specific job duties in
determining the appropriate compensation of an executive.
Role of Compensation
Consultants. The Committee periodically engages executive
compensation consultants to aid the Committee in its review of total
compensation paid to individuals in positions similarly situated to those of our
executives, including similar positions at our peer group
companies. The data the Committee reviews may include base salary,
annual bonus or incentive cash payments and long-term incentive components of
pay or certain survey market data where peer data for a like position is not
available.
Role of the Chief Executive Officer
in Compensation Decisions. Our Chief Executive Officer
annually reviews the performance of each other executive officer and makes
recommendations to the Compensation Committee regarding the specific
compensation levels of those executives. Our Chief Executive Officer
and executive management then typically work together to develop performance
target recommendations for presentation to and consideration by the Committee in
connection with incentive compensation determinations. In addition,
executive management also recommends the incentive compensation plans for review
and consideration by the Committee.
Benchmarking
Target Executive Compensation
In making decisions regarding the
target total compensation of our executive officers, our Compensation Committee
reviews information provided by management and/or outside compensation
consultants and considers, among other factors as discussed above, the relative
compensation of similarly-situated employees of our peer group of
companies. Our Compensation Committee selected 15 companies to serve
as the peer group that the Committee believed, based on certain data and
recommendations of a compensation consultant, most appropriately represented our
Company. This peer group, which is periodically reviewed by the
Committee and updated as the Committee deems appropriate, consists of companies
that are in industries similar to ours and against which the Committee believes
we compete for talent. The companies currently comprising our peer
group are:
|
§ American
States Water Co.
|
§ MasTec
Inc.
|
|
§ Chicago
Bridge & Iron Co. NV
|
§ Michael
Baker Corp.
|
|
§ Dycom
Industries Inc.
|
§ Perini
Corp.
|
|
§ ENGlobal
Corp.
|
§ Preformed
Line Products Company
|
|
§ Foster
Wheeler Ltd.
|
§ Quanta
Services Inc.
|
|
§ Granite
Construction Inc.
|
§ Sterling
Construction Co. Inc.
|
|
§ Kennametal
Inc.
|
§ Vectren
Corp.
|
|
§ Layne
Christensen Co.
|
For compensation paid to our executive
officers, the Committee targets base salaries at the 50% range of peer group
salaries for similarly-situated executives and total incentive compensation is
targeted at 75% of the range of total incentive compensation at peer group
companies. The Committee believes that total compensation should be
targeted between the median and 75% levels and that base salaries establish the
minimum compensation upon which an executive can rely. Actual
incentive compensation, and therefore total compensation, can meet or fall short
of the target based on the applicable performance requirements, thereby
appropriately aligning the total compensation of our executives with the
interests of our stockholders and the long-term growth of our
Company.
As previously noted, the target
compensation levels are only one factor in the Committee’s determination of
executive compensation levels. Actual compensation levels for
executive officers may be more or less than the targeted levels based upon other
factors that the Compensation Committee may consider in its discretion,
including the level of responsibility and duties of the executive, individual
performance, tenure and experience.
16
Elements
and Mix of Compensation
The principal elements of compensation
for our Named Officers are:
|
|
§
|
base
salary,
|
|
|
§
|
annual
cash incentive compensation, and
|
|
|
§
|
long-term
incentive compensation.
|
Base
Salary. In determining the base salary of each Named
Officer, other than Alfred L. Woods, our Compensation Committee considered,
among other things, the level of responsibility and duties of the executive,
individual performance, tenure and experience, as well as the applicable market
data, as detailed above.
J. Joseph
Burgess was appointed as our President and Chief Executive Officer on April 14,
2008. In connection with his appointment, we entered into a letter
agreement with Mr. Burgess that provided for an initial annual base salary in
the amount of $500,000.
Mr. Woods
served as our Interim Chief Executive Officer from August 13, 2007 until Mr.
Burgess’ appointment on April 14, 2008. As compensation for his
service as Interim Chief Executive Officer for the six-month period beginning on
August 13, 2007 and ending on February 12, 2008, the Compensation Committee
awarded to Mr. Woods 33,291 deferred stock units in lieu of a base salary,
annual cash incentive compensation and long-term incentive compensation that is
available to other executive officers. The deferred stock units
vested on April 14, 2008, upon the appointment of our new President and Chief
Executive Officer. The award date fair value of the entire award of
such deferred stock units was $500,000, based on the closing price of our common
stock on August 13, 2007. For the remainder of his service during
2008, Mr. Woods received a $25,000 monthly cash fee during the period beginning
on February 13, 2008 and ending on April 14, 2008. In addition, on
March 3, 2008, the Committee awarded Mr. Woods 26,236 deferred stock units under
the 2006 Non-Employee Director Equity Incentive Plan. The award date
fair value of the deferred stock units was $350,000, based on the closing price
of our common stock on March 3, 2008. This award of deferred stock
units was subject to a pro rata adjustment in the event Mr. Woods’ service as
Interim Chief Executive Officer was completed prior to August 12,
2008. Upon Mr. Burgess’ appointment, this award was adjusted downward
to 8,745 deferred stock units to reflect the actual period of Mr. Woods’ service
as Interim Chief Executive Officer in 2008.
The
Committee reviewed peer group and survey market data regarding the
competitiveness of the base salaries provided to our executives in
2008. The Committee determined, based on the recommendation of our
then Interim Chief Executive Officer and in light of our 2007 operating results
and certain cost reduction initiatives, that the base salaries of the executive
officers remain at 2007 levels (other than Alexander J. Buehler, as described
below). Thomas E. Vossman, our then Senior Vice President and Chief
Operating Officer, continued his annual base salary of $370,000. The
annual base salary of David F. Morris, our Senior Vice President, General
Counsel and Chief Administrative Officer, remained at $325,000. The
annual base salary of David A. Martin, our Vice President and Chief Financial
Officer, stayed at $275,000. Mr. Cowan’s annual base salary for 2008
continued at $215,000. Mr. Buehler’s salary was increased by 7% to
$230,000, due to additional duties and responsibilities assigned to Mr. Buehler
for 2008.
Annual Cash
Incentive Compensation. We maintain a Management Annual
Incentive Plan, as reviewed and approved by the Compensation Committee, pursuant
to which our executive officers and other key employees are eligible to receive
annual cash incentive awards. Each participant in the Management
Annual Incentive Plan is assigned an incentive award goal that is expressed as a
percentage of his or her base salary. The Committee believes that
this annual cash incentive plan promotes our
17
compensation
philosophy by rewarding our executives and key employees for the achievement of
short-term initiatives and advances our ultimate objective of improving
stockholder value.
For 2008, the Committee assigned the
following incentive award goals to the Named Officers (excluding Mr. Woods, our
then non-employee Interim Chief Executive Officer):
|
Named Officer
|
Target
% of Base Salary
|
| J. Joseph Burgess |
100%
|
| David A. Martin |
60
|
| David F. Morris |
60
|
| Alexander J. Buehler |
51
|
| Daniel E. Cowan |
51
|
Mr.
Vossman’s target percentage of his annual base salary was 60% for 2008 but his
eligibility to receive an award for the year was terminated upon his resignation
of employment with us on September 5, 2008.
In
determining the incentive award goals for these executives, the Committee
reviewed peer group data and other survey market data and trends and considered
the mix of total compensation of individuals in positions similarly situated to
our executives. Based on its review and analysis, the Committee
determined that a significant portion of the total cash compensation of our
executives should be tied to our Company’s operating results, whereby the
incentive award goals are “mid-point” targets, and the executives’ cash
compensation could be higher or lower than the award goals. For
Messrs. Burgess, Morris and Martin, the Committee determined, in accordance with
our 2006 Executive Performance Plan (which qualifies awards as
“performance-based under Section 162(m) of the Internal Revenue Code – See
“Section 162(m) Performance-Based Compensation” below), that the maximum amount
of annual cash incentive award that could be received was equal to twice each
such executive’s award goal. Messrs. Buehler and Cowan are not
participants under the 2006 Executive Performance Plan. Mr. Vossman’s
participation in our 2006 Executive Performance Plan terminated upon his
resignation.
The
Management Annual Incentive Plan includes not only Company performance
requirements, but also individual participant performance
requirements. For 2008, the plan was funded through two separate
funding pools, with 50% funded based on total Company performance during the
plan year and the remaining 50% funded based on the performance of the
individual business units during the plan year. Any awards to our
Named Officers are funded from the Company performance funding
pool.
The
Company performance pool is funded based on the achievement of a consolidated
Company net income target. If the minimum consolidated Company net
income target is achieved or exceeded, and therefore, the pool is funded, all
participants will be eligible to receive a cash incentive award from this
pool. The business unit performance pool is funded based on the
achievement of an operating income target set for each business
unit. If the minimum operating income is achieved by the applicable
business unit, then a pool is funded for that particular business
unit. To receive a cash incentive award from this pool, however, each
participant must achieve certain individual performance objectives established
for such participant at the beginning of the plan year. For corporate
staff, the business unit performance pool is funded in accordance with the
mechanism for funding the Company performance pool. All
awards under the Management Annual Incentive Plan are at the discretion of our
Board or Compensation Committee, and the plan may be modified, suspended or
terminated at any time.
Threshold
funding amounts are set for the achievement of 100% and 90% of the applicable
performance target for the Company performance and business unit funding pools,
respectively. The plan provides for funding in excess of the
threshold funding amount where our actual net income exceeds the net income
target or actual business unit operating income exceeds the operating income
target for such business unit. For the Company performance funding
pool, the threshold funding amount will be increased by one-third of the amount
by which our actual net income exceeds the target. For the business
unit performance funding pool, where the actual operating income for the
business unit is greater than 90% of the operating income target, this pool will
be increased to an amount equal to the threshold
18
funding
amount multiplied by the percentage determined by dividing the actual operating
income by the operating income target. The plan also provides for
reduced funding of the Company performance funding pool where the target net
income is not achieved, but our actual net income exceeds 75% of the
target. If less than 75% of the net income target is achieved, the
consolidated Company performance-based pool will not be funded; provided,
however, that a minimum amount of $700,000 will be available for discretionary
awards for extraordinary performance by individual participants as may be
determined by our Chief Executive Officer at the end of the plan
year. The funding of each business unit performance-based pool is
conditioned upon the achievement of at least 90% of the applicable business unit
operating income target. A business unit funding pool will not be
funded if actual operating income is less than 90% of the target for such
business unit; provided, however, that for the business unit performance funding
pool that applies to corporate staff, if actual net income is less than the
target net income, such pool will only be funded in an amount equal to 50% of
the threshold amount for such pool.
For
purposes of the Plan, consolidated net income is determined from our audited
financial statements for the year and is adjusted to exclude the
following:
|
|
·
|
losses
associated with the write-down of assets of a discontinued business
operation or a business operation to be
liquidated,
|
|
|
·
|
gains
or losses on the sale of any subsidiary, business unit or division or
their assets or business,
|
| · | gains or losses on the disposition of material capital assets or the refinancing of indebtedness, |
|
|
·
|
losses
associated with the write-down of goodwill or other intangible assets due
to impairment,
|
|
|
·
|
net
gains or losses from material property casualty events or condemnation
awards,
|
|
|
·
|
other
material income or loss, the realization of which is not directly
attributable to current senior
management,
|
|
|
·
|
any
effect from a change in generally accepted accounting principles from
those previously used, and
|
|
|
·
|
income
taxes or benefits of any of the
above.
|
In
determining the net income target for the Management Annual Incentive Plan for
2008, the Committee considered the recommendations of executive management
regarding current industry and market conditions and projections based on
management’s internal market analysis and various market surveys, our 2008
business plan as approved by our Board of Directors in December 2007 and prior
year operating results. For 2008, the net income target for the
Management Annual Incentive Plan was $19,304,000. The Committee
believed that the 2008 targets were reasonably aggressive but reachable and set
at a level that promoted our compensation objectives.
In
accordance with the Management Annual Incentive Plan, the following bonus
payments were made to the Named Officers for the 2008 plan year:
Named
Officer 2008 AIP
Payment
J. Joseph
Burgess
$375,000
David A.
Martin
168,791
David F.
Morris 199,481
Alexander
J.
Buehler 116,148
Daniel E.
Cowan 100,086
In
determining the amount of such bonus payments, the Committee reviewed the
Company’s operating results for 2008 against the net income target, including
any adjustments to net income as described above. In addition, in
determining the bonus amount for Mr. Burgess, the Committee also considered
certain other operating metrics for 2008, including earnings per share, cash
flow generation and return on invested capital. Mr. Burgess’ 2008
bonus was pro-rated based on his April 14, 2008 start date.
19
During
2008, certain extraordinary events and transaction activities occurred at the
Company, including a proxy contest in connection with our 2008 Annual Meeting of
Stockholders, negotiations and due diligence in connection with our acquisitions
of The Bayou Companies, L.L.C. and its related entities and Corrpro Companies,
Inc., preparations in connection with our recently completed equity offering and
negotiations in connection with our new credit facility. In
recognition of the exemplary efforts of Messrs. Burgess, Martin and Morris in
connection with those events and activities, the Committee awarded additional
one-time bonus payments as follows:
Named
Officer 2008 Additional
Bonus
J. Joseph
Burgess $125,000
David A.
Martin 50,000
David F.
Morris 50,000
In
determining the amounts of such additional bonus awards for these executives,
the Committee considered the recommendations of the Chief Executive Officer
(other than for Mr. Burgess himself), the dedication and exceptional performance
of such officers in connection with and in light of these events and tasks and
their continued focus on day-to-day operations concurrently with their
performance of these tasks.
Long-Term
Incentive Compensation. In order to align further the
interests of our executives with those of our stockholders over the long-term,
as opposed to the short-term focus of our Management Annual Incentive Plan, and
to encourage the retention of our executives, the Committee provides certain
long-term equity-based incentives to our executives and other key
employees. In addition, due to their levels of responsibility and
duties, the Committee included a long-term cash-based incentive compensation
component of the total compensation for Messrs. Burgess, Martin, Morris and
Vossman under our 2006 Executive Performance Plan. In determining the
aggregate value of such executive’s long-term incentive compensation, the
Committee targets values that are at 75% of the range of total incentive
compensation for similarly situated executives at our peer group
companies. For Messrs. Burgess, Martin and Morris, more than 50% of
their total compensation is paid in the form of long-term equity-based incentive
compensation.
For 2008, the nominal values of the
long-term incentive compensation for these executives were as
follows:
Nominal
Value of 2008 Total Long-
Named
Officer Term Incentive
Compensation
J. Joseph
Burgess
$1,300,000
David A.
Martin 500,000
David F.
Morris 550,000
Alexander
J. Buehler 250,000
Daniel E.
Cowan 200,000
Thomas E.
Vossman 700,000
The
Committee determined that the mix of the total long-term incentive compensation
for Messrs. Burgess, Martin, Morris and Vossman for 2008 was 50% stock options,
35% restricted stock and 15% long-term incentive cash. The mix of
total long-term incentive compensation for 2008 for Messrs. Buehler and Cowan
was 50% stock options and 50% restricted stock. Mr. Vossman’s 2008
equity awards and his right to receive long-term cash-based incentive
compensation were forfeited in connection with his resignation of employment in
September 2008.
Equity-Based
Incentives. Through equity awards, the Committee provides our
key employees an opportunity to benefit from increases in the market price of
our common stock, encourages key employees to acquire an ownership interest in
our Company and aligns their interests with those of our
stockholders. The Committee generally makes all equity-based
incentive awards during its January meeting and limits mid-year grants to newly
hired or promoted employees.
20
Our 2006
Employee Equity Incentive Plan (the “2006 Plan”) provides for the granting of
stock options, restricted stock, restricted stock units and other equity-based
incentive awards to our key employees whose talents and special efforts are
essential to the success of our Company. In 2008, the Committee
awarded stock options and restricted stock to our key employees, including our
executives, under the 2006 Plan.
Stock Options. The
award of stock options to our executives and certain key employees represents
the high-risk and potential high-return component of our long-term incentive
compensation philosophy, as the potential value of a stock option can fall to
zero if the price of our common stock is lower than the exercise price when the
option expires. As detailed above, the number of stock options
awarded to an executive is based primarily on the target dollar value of the
amount of such executive’s long-term incentive compensation allocated to stock
options. That target dollar value is translated into a number of
shares based on the estimated economic value of the award, as determined using a
binomial valuation. Stock options are granted at a price that is
equal to the fair market value of a share of our common stock on the date of
grant. Stock options granted to our key employees in the United
States are granted as incentive stock options to the extent allowed under
Section 422 of the Internal Revenue Code.
On
January 29, 2008, the Compensation Committee granted stock options to our
executive officers as follows:
Named
Officer Options
Granted
David A.
Martin
58,275
David F.
Morris
64,103
Alexander
J.
Buehler
29,138
Daniel E.
Cowan
23,310
Thomas E.
Vossman
81,585
These
options had an exercise price of $12.97, the closing price of our common stock
on The Nasdaq Global Select Market on the date of grant. The options
were granted pursuant to our 2006 Employee Equity Incentive Plan, which was
approved by our stockholders in April 2006. These options vest in
one-third increments beginning on the first anniversary of the date of
grant. As noted above, Mr. Vossman’s option was forfeited upon his
resignation in September 2008.
On April
14, 2008, in connection with his appointment as President and Chief Executive
Officer, the Committee granted to Mr. Burgess an option to purchase 118,397
shares. This option will vest in three equal installments beginning
on the first anniversary of the date of grant and has an exercise price of
$14.55, the closing price of our common stock on The Nasdaq Global Select Market
on the date of grant. This option was issued as an inducement grant
under the rules of The Nasdaq Global Select Market and, as such, was not issued
pursuant to our 2006 Employee Equity Incentive Plan.
All
outstanding stock options vest immediately upon a “change in control” of our
Company, as defined in the applicable stock option agreements.
Generally,
our stock options terminate seven years after the date of grant. To
the extent an option remains unexercised at the end of such seven-year period,
the employee’s right to purchase shares pursuant to the option
terminates. In addition, an option will terminate upon the occurrence
of certain other events. Upon retirement, stock options
terminate five years after the date of retirement, subject to the earlier
expiration of the option in accordance with its seven-year term. If
an employee is terminated without cause, terminates his employment voluntarily
or if employment is terminated as a result of disability, options terminate the
earlier of 90 days after the date of termination of employment or the expiration
of the option term. In the event of the
21
death of
an employee (or if an employee dies during a period in which an option remains
exercisable following a termination as described above), options remain
exercisable for a period of one year following the employee’s death, subject to
the earlier expiration of the option term. If employment is
terminated for any other reason, options terminate immediately.
We do not
back-date stock options or grant stock options or other equity awards
retroactively. All options are granted with an exercise price equal
to the closing price of our common stock on The Nasdaq Global Select Market on
the date of grant. The Compensation Committee generally makes all
equity-based incentive awards during its regularly scheduled January meeting and
limits mid-year grants to newly-hired or promoted employees. Due to
certain pending corporate transactions and the timing of our release of our 2008
earnings, however, the Committee determined that it was appropriate to delay the
annual equity grants for 2009 until after the public announcement of such
transactions and the release of our 2008 earnings. The annual equity
awards for 2009 were made by the Committee on March 2, 2009 after the public
announcements of the transactions and our 2008 earnings.
Restricted Stock and Restricted
Stock Units. The granting of restricted stock or restricted
stock units is specifically targeted toward the retention of our executives and
key employees. Our long-term equity-based incentives have enabled us
to attract and retain key employees by encouraging their ownership in our common
stock. The award of restricted stock or restricted stock units is
also designed to assist executives in satisfying our Company’s ownership
guidelines with respect to our common stock.
In
general, restricted stock awarded to our executive officers and all key
employees contains both a performance restriction and a service
restriction. The performance restriction requires the achievement of
a consolidated net income target during a defined performance period, adjusted
in accordance with the Management Annual Incentive Plan as discussed
above. If 100% of the restricted stock performance target is
not achieved, a lesser amount of restricted stock will be awarded based on a
straight-line sliding scale, so long as we achieve at least 75% of the
performance goal. The sliding scale is set such that the achievement
of 75% of the performance goal will equal a reduction of the award by 50% and
the failure to achieve 75% of performance goal will result in a forfeiture of
the entire award.
The
service restrictions on restricted stock and restricted stock unit awards lapse
on the third anniversary of the date of award, unless the recipient is not an
employee of our Company or any subsidiary on such date, and the awards remain
subject to forfeiture until such time. The service restrictions will,
however, lapse prior to such date and the restricted stock or unit will vest
immediately upon the occurrence of the recipient’s death, attainment of age 65,
termination of employment as a result of disability or upon a change in control
of our Company. In addition, if we terminate a recipient’s employment
without cause, the restriction will lapse and the restricted stock or unit will
vest as to a percentage of the award determined by dividing the number of whole
months of the recipient’s employment beginning on the date that is 18 months
after the date of grant by 36. If a recipient is terminated for cause
or voluntarily terminates his employment prior to the third anniversary of the
date of award, the award is forfeited.
On
January 29, 2008, the Compensation Committee awarded restricted stock to our
Named Officers (other than Messrs. Woods and Burgess) as follows:
Named
Officer Restricted Stock
Awarded
David A.
Martin
23,179
David F.
Morris
25,497
Alexander
J.
Buehler
16,556
Daniel E.
Cowan
13,245
Thomas E.
Vossman
32,450
22
The
performance period applicable to such awards was from January 1, 2008 through
December 31, 2008, and the applicable net income target was
$19,304,000. This net income target was achieved, and the performance
restriction was therefore removed from these awards. No restricted
stock units were awarded in 2008. As noted above, Mr. Vossman’s
restricted stock award was forfeited upon his resignation in September
2008.
In
connection with his appointment as President and Chief Executive Officer in
April 2008, Mr. Burgess was awarded a long-term incentive restricted stock award
of 52,784 shares and a one-time restricted stock award of 103,092
shares. The long-term incentive restricted stock award had a nominal
value of $455,000 on the date of award (35% of the total value of his long-term
incentive compensation for 2008) and is subject to three-year cliff
vesting. This award was also subject to our achievement of the 2008
net income target. The net income target was met, and the performance
restriction was therefore satisfied. The one-time restricted stock
award is subject to a five-year cliff vesting, but is not subject to any
performance restrictions. This one-time award had a nominal value of
$1,500,000 on the date of award. These restricted stock awards were
issued as inducement grants under the rules of The Nasdaq Global Select Market
and, as such, were not issued pursuant to our 2006 Employee Equity Incentive
Plan.
Each
award of restricted stock or restricted stock units is intended to qualify as
“qualified performance-based compensation” within the meaning of Section 162(m)
of the Internal Revenue Code by virtue of the Compensation Committee setting
performance criteria for these restricted awards under our 2006 Executive
Performance Plan. See “Section 162(m) Performance-Based Compensation”
below.
Cash-Based
Incentives. Long-term cash-based incentives are provided to
certain of our executive officers under our 2006 Executive Performance Plan
based on the level of achievement of financial and other pre-established
performance criteria over a three-year performance period. The
Committee determines the participants in the 2006 Executive Performance Plan
based on an executive’s level of responsibility and duties. For these
executive officers, the Committee establishes a three-year performance period
and determines certain performance targets for threshold, target and maximum
incentive cash payments. For each three-year period, the target cash
incentive award is set at 15% of the total dollar value of the long-term
incentive compensation established for each participating executive
officer. One hundred percent of the target cash award for each
executive officer is paid when we meet 100% of our three-year performance
target. A threshold payment equal to one-half of the target cash
award for each executive officer is paid when we meet at least 75% of our
three-year performance target, and a maximum award of two times the target award
is paid when we are at least 25% over our three-year performance
target. The payment of a long-term cash incentive award may be
reduced by the Compensation Committee in its sole discretion, and the granting
of such awards is subject to the discretion of the Compensation
Committee.
The Committee believes these awards
focus the interests of our key executives on one or more of the key measures of
our financial success as determined by the Compensation Committee over the
longer term than the annual cash incentive payments. Those key
measures may include stock price, sales, return on equity, book value, expense
management, earnings per share, free cash flow, net income, individual
performance and business unit performance, as set forth in our 2006 Executive
Performance Plan.
For the
three-year performance period beginning in 2008 and ending in 2010, our
Compensation Committee designated Messrs. Burgess, Martin and Morris as
participants in the 2006 Executive Performance Plan. The Committee
set a performance target for this period of our achievement of total
stockholders’ equity at December 31, 2010 of $437,112,000, subject to certain
adjustments, including (i) any cash or other property dividend or distribution
(including any spin-off), effective as of the time of such event and equal in
amount to the fair market value of such dividend or distribution, (ii) any stock
issuances by us, including the exercise of employee and director stock options,
(iii) any acquisition or
23
disposition
of any business by us, whether as a stock acquisition or asset transaction, and
(iv) the inclusion or exclusion of other items set forth in our Management
Annual Incentive Plan or as otherwise determined by the Committee, in its sole
discretion, to be extraordinary and/or non-recurring.
The
Committee set a target cash incentive payout of $195,000 for Mr. Burgess,
$104,167 for Mr. Martin and $114,583 for Mr. Morris for this
period. Messrs. Buehler and Cowan were not designated as participants
in the 2006 Executive Performance Plan for the 2008 – 2010
period. Mr. Vossman was previously designated as a participant in the
2006 Executive Performance Plan for the 2008 to 2010 performance period;
however, due to Mr. Vossman’s termination of employment in September 2008, he is
not entitled to any compensation for the 2008 – 2010 performance
period.
For the
three-year performance period that ended in 2008, the performance target was our
achievement of total stockholders’ equity at December 31, 2008 of $416,647,382,
which target was subject to adjustment for certain extraordinary and/or
nonrecurring items. Total stockholders’ equity at December 31, 2008
was $367,977,000, which was at least 75% of the required increase in total
stockholders’ equity. In light of such results and considering
certain adjustments for extraordinary and/or non-recurring items, the Committee
determined that Mr. Morris be awarded the threshold amount of
$20,000. Mr. Vossman was previously designated as a participant in
the 2006 Executive Performance Plan for the 2006 to 2008 performance period;
however, due to Mr. Vossman’s termination of employment in September 2008, he
was not entitled to any compensation for the 2006 – 2008 performance
period.
Other
Compensation Arrangements
As
discussed above, Mr. Woods served as our Interim Chief Executive Officer until
Mr. Burgess’ appointment on April 14, 2008. Following Mr. Burgess’
appointment, the Committee determined that Mr. Woods be compensated for certain
transition services performed during the period from April 14, 2008 through May
31, 2008. For such services Mr. Woods received a monthly amount of
$83,333.33.
On May
18, 2008, the Committee awarded to Mr. Woods a cash bonus in the amount of
$205,000 in consideration of his commitment, dedication and service to the
Company during his term of service as Interim Chief Executive Officer and during
the transitional period.
Mr.
Vossman resigned from the Company effective September 5, 2008. In
connection with his resignation, we entered into a Consulting Agreement with Mr.
Vossman, effective as of the date of his resignation through December 31,
2008. Pursuant to the Consulting Agreement, we paid Mr. Vossman a
monthly fee of $30,000 for his services during the consulting
period.
Section
162(m) Performance-Based Compensation
Section 162(m)
of the Internal Revenue Code of 1986, as amended, generally limits federal
income tax deductions for compensation to $1 million per year for our Chief
Executive Officer and our four other most highly compensated officers, but it
contains an exception for performance-based compensation that satisfies certain
conditions. Our 2006 Executive Performance Plan is intended to allow
us to pay performance-based compensation as defined in
Section 162(m). Under our 2006 Executive Performance Plan, our
Compensation Committee designates participants in various incentive programs for
each fiscal year or other period set by the Committee. Each incentive
program can have its own specific performance goals or targets and performance
period. Our Compensation Committee establishes objective performance
goals based upon one or more key financial measures as discussed
above. Performance goals may be determined based on any of the key
measures, individually or in combination, adjusted in the manner our
Compensation Committee determines in its sole discretion.
24
The payment of any incentive program
award under our 2006 Executive Performance Plan may be reduced by our
Compensation Committee in its sole discretion, and the granting of awards is
subject to the discretion of our Compensation Committee. In addition,
our Board may modify or terminate this plan at any time in its
discretion.
Policy
on Recoupment of Incentive Compensation
On October 24, 2007, our Board of
Directors adopted our Policy on Recoupment of Incentive
Compensation. This policy provides that if during any fiscal year
there occurs a material misstatement or omission of financial information in our
financial statements, our Board of Directors or our Compensation Committee may,
in its discretion, recoup or cancel all or part of the incentive compensation
provided to any executive officer or key employee. For the purposes
of the policy, incentive compensation includes any bonus, incentive payment,
equity award or other compensation, including the amount of any annual salary
increase or any gains realized on the exercise of stock options or sale of
shares of our common stock. In addition to the recoupment of
incentive compensation, our Board or Compensation Committee may take such other
actions as it deems necessary or appropriate to address the events that gave
rise to the material misstatement or omission and to prevent its
recurrence. Such actions may include, to the extent permitted by
applicable law:
|
|
·
|
adjusting
the future compensation of the executive officer or key
employee,
|
|
|
·
|
terminating
the employment of the executive officer or key employee,
and
|
|
|
·
|
pursuing
other legal remedies against the executive officer or key
employee.
|
Each
executive officer or key employee that receives incentive compensation pursuant
to any of our incentive compensation plans is required to acknowledge in writing
such executive officer’s or key employee’s agreement with the policy and
understanding that any incentive compensation made to such executive officer or
key employee is conditioned upon and subject to the policy.
Stock
Ownership Policy with Respect to Named Officers
We have a policy with respect to the
required stock ownership levels of certain highly-compensated key employees,
including our Named Officers, that was adopted by our Board of Directors on July
25, 2006 and amended and restated on January 23, 2008. Pursuant to
the policy, each of our Named Officers (other than Messrs. Woods and Vossman,
who are not currently executive officers) is required to beneficially own, by no
later than the third anniversary of the date he became subject to the policy, at
least the number of shares of our common stock that is equal to his base salary
on the date he became subject to the policy divided by the average of the
closing price of our common stock for the 10 trading days prior to such
date. The required share ownership of each of our Named Officers is
as follows:
|
Named
Executive Officer
|
Date
Subject to
Policy
|
Subject
Salary
|
10-Day
Average
Closing
Price
|
Required
Share
Ownership
|
|
J.
Joseph Burgess
|
April
14, 2008
|
$500,000
|
$14.99
|
33,355
|
|
David
A. Martin
|
August
13, 2007
|
275,000
|
16.66
|
16,506
|
|
David
F. Morris
|
July
25, 2006
|
240,000
|
22.52
|
10,657
|
|
Alexander
J. Buehler
|
July
25, 2006
|
195,000
|
22.52
|
8,658
|
|
Daniel
E. Cowan
|
October
24, 2007
|
215,000
|
15.90
|
13,522
|
Mr. Woods is subject to our policy
requiring levels of stock ownership for our non-employee
directors. Pursuant to such policy, Mr. Woods is required to own
10,000 shares of our common stock no later than July 25, 2009. To
date Mr. Woods and each of the other Named Officers are in compliance with the
stock ownership requirements of these policies.
25
Other
Benefits
Standard Benefit
Package. We provide
standard Company-sponsored benefit plans to all of our employees, including the
Named Officers. Such benefits include Company-sponsored insurance,
retirement (defined contribution), severance benefits, 401(k) matching
contributions, short-term disability insurance in the amount of 100% of each
employee’s base salary at the time of disability for disabilities lasting for up
to 90 days and long-term disability insurance in the amount of 60% of each
employee’s base salary at the time of disability for disabilities lasting longer
than 90 days from the time of the disability until the age of 65. The
long-term disability benefits are capped at $12,500 per month. We
also provide life insurance benefits in the amount of two times salary, up to
$500,000, for all of our employees (except our Chief Executive Officer who has
$1.0 million in life insurance benefits). In addition, in order to
provide a competitively attractive package to secure and retain executive
officers, we supplement the standard benefit packages offered to all employees
with appropriate executive benefits, as listed below. The executive
officers’ benefits package are designed to assist the executive officers in
providing for their own financial security in a manner that recognizes
individual needs and preferences.
Supplemental Benefits for Certain
Executives.
Deferred Compensation
Plan. Executive officers may choose to defer up to specified
maximum amounts of compensation by contributing those amounts to our
nonqualified deferred compensation plan for key employees. This plan
allows for base salary deferral of up to 15% of base salary, and bonus deferral
of up to 50% of bonus amounts. Under the plan, we will match
contributions equal to the first 3% of compensation at a 100% rate, and
contributions equal to the next 2% of compensation at a 50% rate, when
aggregated with any matching contributions made under our 401(k) Profit Sharing
Plan (Company-matching contributions were limited to a maximum aggregate of
$9,000 per employee for 2008). Contributions in the nonqualified
deferred compensation plan are adjusted to match the performance of
participant-selected indices, which mirror fund choices available under our
401(k) Profit Sharing Plan.
Account
balances will accrue for each participant based on the amount of the
participant’s deferrals into the account and the investment performance of his
or her selected indices. Participants are at all times 100% vested in
their deferrals, Company-matching contributions and investment
earnings. Participants generally will be paid their account balances
after termination of their employment with our Company or on such other
distribution date as they may elect. For a key employee participant,
however, no payments may be made from his or her account balance until the date
that is six months following the date of termination of such key employee’s
employment.
During
2008, Messrs. Martin and Cowan deferred $11,000 and $21,500 of their
compensation, respectively, under our nonqualified deferred compensation
plan. These amounts do not include $1,285 and $5,160 in
Company-matching contributions that we contributed to Mr. Martin’s and Mr.
Cowan’s accounts, respectively, under the plan during 2008.
Other
Benefits. We provide to each of our executive officers a
cellular phone with e-mail capabilities.
26
Compensation
Committee Report
The
responsibilities of the Compensation Committee are provided in its charter,
which has been approved by our Board of Directors.
In
fulfilling its oversight responsibilities with respect to the Compensation
Discussion and Analysis included in this Report, the Compensation Committee,
among other things, has:
|
|
·
|
reviewed
and discussed the Compensation Discussion and Analysis with management,
and
|
|
|
·
|
in
reliance on such review and discussions, approved the inclusion of such
Compensation Discussion and Analysis in this Proxy
Statement.
|
SUBMITTED
BY THE COMPENSATION COMMITTEE
Juanita
H. Hinshaw, Chair Stephanie A.
Cuskley
John
P. Dubinsky
Notwithstanding
anything set forth in any of our previous filings under the Securities Act of
1933 or the
Securities
Exchange Act of 1934 that might incorporate future filings, including this Proxy
Statement, in
whole
or in part, the preceding report shall not be deemed incorporated by reference
in any such filings.
* * *
27
Compensation
in Last Fiscal Year
Summary Compensation
Table
The following table sets forth
information concerning compensation earned for the fiscal years ended December
31, 2008, 2007 and 2006, if applicable, for all persons who served as our
principal executive officer or principal financial officer during 2008, the
three other most highly compensated executive officers of our Company and a
former executive officer who otherwise would have been named as one of our three
most highly-paid executive officers, except for his resignation prior to the end
of the year (collectively, the “Named Officers”):
|
Name
and Principal
Position
|
Year
|
Salary
($)(1)
|
Stock
Awards
($)(2)
|
Option
Awards
($)(3)
|
Non-Equity
Incentive
Plan
Compensation
($)(4)
|
All
Other
Compensation
($)(5)
|
Total
($)
|
|
J.
Joseph Burgess (6)
Chief Executive
Officer and President
|
2008
|
$358,013
|
$
398,984
|
$265,909
|
$500,000
|
$ 46,139
|
$1,569,045
|
|
Alfred
L. Woods
Chairman of the Board
and Former Interim
Chief Executive Officer
|
2008
2007
|
–
–
|
780,601(7)
138,944
|
–
–
|
–
–
|
461,914
(8)
46,000
|
1,242,515
184,944
|
|
David
A. Martin
Vice President and
Chief Financial Officer
|
2008
2007
2006
|
275,000
267,025
178,075
|
149,457
28,123
–
|
278,552
237,764
42,305
|
218,791
–
65,000
|
10,160
18,695
19,817
|
931,960
551,607
305,197
|
|
David
F. Morris
Senior Vice President,
General Counsel and Chief
Administrative Officer
|
2008
2007
2006
|
325,000
306,597
240,000
|
189,095
82,970
30,960
|
226,579
201,866
141,671
|
269,481
–
72,000
|
10,160
20,691
22,679
|
1,020,315
612,124
507,310
|
|
Alexander
J. Buehler (9)
Vice President –
Marketing and
Technology
|
2008
2007
2006
|
228,750
214,846
195,000
|
132,870
78,076
47,797
|
89,521
45,338
68,673
|
116,148
–
34,000
|
9,156
15,704
11,439
|
576,445
353,964
356,909
|
|
Daniel
E. Cowan (10)
Vice President –
Strategic Business
Initiatives
|
2008
2007
2006
|
215,000
180,208
37,500
|
83,788
5,893
–
|
93,156
43,368
12,624
|
100,086
–
5,000
|
9,139
34,575
25,964
|
501,169
264,044
81,088
|
|
Thomas
E. Vossman (11)
Former Senior Vice
President and Chief
Operating Officer
|
2008
2007
2006
|
253,782
370,001
310,000
|
132,511
131,875
48,981
|
5,417
251,031
247,648
|
–
–
70,000
|
262,396
20,475
20,620
|
654,106
773,382
697,249
|
_______________
|
(1)
|
Includes
amounts earned but deferred at the election of the executive officer under
our nonqualified deferred compensation
plan.
|
|
(2)
|
Represents
the dollar amount recognized for financial statement reporting purposes in
accordance with FAS 123(R) with respect to deferred stock units, in the
case of Mr. Woods, and restricted stock and restricted stock units for the
other Named Officers. Please refer to Note 7, “Equity-Based
Compensation,” in the Notes to Consolidated Financial Statements contained
in our Annual Report on Form 10-K, filed on March 2, 2009, for a
discussion regarding the valuation of our stock
awards.
|
|
(3)
|
Represents
the dollar amount recognized for financial statement reporting purposes in
accordance with FAS 123(R) with respect to options to purchase shares of
our common stock, net of forfeitures, awarded to Named Officers (other
than Mr. Woods). Please refer to Note 7, “Equity-Based
Compensation,” in the Notes to Consolidated Financial Statements contained
in our Annual Report on Form 10-K, filed on March 2, 2009, for a
discussion regarding the valuation of our option
awards.
|
|
(4)
|
Represents
bonuses awarded under our Management Annual Incentive
Plan. With respect to Mr. Morris, 2008 also includes a $20,000
cash payment under our 2006 Executive Performance Plan in connection with
his long-term incentive cash award for the performance period of January
1, 2006 through December 31,
2008.
|
28
|
(5)
|
Represents
the following amounts paid or accrued in 2008: Mr. Burgess,
$960 in term life insurance premiums and $45,179 in relocation expenses;
Mr. Martin, $9,200 in employer-matching contributions under our 401(k)
Profit Sharing Plan and nonqualified deferred compensation plan and $960
in term life insurance premiums; Mr. Morris, $9,200 in
employer-matching contributions under our 401(k) Profit Sharing Plan and
$960 in term life insurance premiums; Mr. Buehler, $8,278 in
employee-matching contributions under our 401(k) Profit Sharing Plan
and $878 in term life insurance premiums; Mr. Cowan, $8,313 in
employer-matching contributions under our 401(k) Profit Sharing Plan and
nonqualified compensation plan and $826 in term life insurance premiums;
and Mr. Vossman, $800 in term life insurance premiums, $9,200 in
employer-matching contributions under our 401(k) Profit Sharing Plan,
$192,396 in severance payments and $60,000 in consulting
fees.
|
|
(6)
|
Mr.
Burgess joined our Company on April 14,
2008.
|
|
(7)
|
Includes
the awards of 33,291 and 8,745 deferred stock units awarded to Mr. Woods
in connection with his service as our Interim Chief Executive Officer on
August 13, 2007 and March 3, 2008, respectively, each of which award
vested on April 14, 2008 upon the appointment of Mr. Burgess as our
President and Chief Executive Officer, and 7,732 deferred stock units
awarded on June 11, 2008 in connection with Mr. Woods’ service as the
Chairman of our Board of
Directors.
|
|
(8)
|
Mr.
Woods served as our Interim Chief Executive Officer from August 13, 2007
through April 14, 2008. Mr. Woods did not receive a salary for
his service as Interim Chief Executive Officer in 2007; rather he received
compensation in the form of deferred stock units. During 2008,
Mr. Woods received $256,322 for services rendered as Interim Chief
Executive Officer and $127,778 for services rendered during the transition
period while assisting the new Chief Executive
Officer. Additionally, he received $77,814 in director’s fees
after resuming his duties as Chairman of the
Board.
|
|
(9)
|
Mr.
Buehler served as an executive officer in the position of Vice President –
Marketing and Technology through December 31, 2008. As of
January 1, 2009, Mr. Buehler serves as our Vice President – Europe, a
non-executive position.
|
|
(10)
|
Mr.
Cowan joined our Company on September 28, 2006. Mr. Cowan
served as an executive officer in the position of Vice President –
Strategic Business Initiatives through December 31, 2008. As of
January 1, 2009, Mr. Cowan serves as our Vice President – Asia/Pacific, a
non-executive position.
|
|
(11)
|
Mr.
Vossman resigned on September 5,
2008.
|
Grants
of Plan-Based Awards
The
following table sets forth information concerning grants of plan-based awards
earned for the fiscal year ended December 31, 2008 for the Named Officers (other
than Mr. Vossman):
|
Name
(1)
|
Grant
Date
|
Estimated
Future Payouts Under Non-
Equity
Incentive Plan Awards(2)
|
Estimated
Future Payouts Under
Equity
Incentive Plan Awards
|
All
Other
Stock
Awards: Number
of
Shares
of
Stock
or
Units
(#)
|
All
Other
Option
Awards: Number of Securities Underlying Options
(#)
|
Exercise
or
Base Price of Option Awards ($/Sh)
|
Grant
Date
Fair Value of
Stock
and
Option
Awards
($)(4)
|
||||
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)(3)
|
Maximum
(#)
|
||||||
|
J.
Joseph Burgess
|
4/14/08
|
—
|
—
|
—
|
—
|
155,876
(5)
|
—
|
—
|
—
|
—
|
$2,267,996
|
|
4/14/08
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
118,397(6)
|
$14.55
|
650,000
|
|
|
4/14/08
|
$135,417
|
$270,833
|
$541,666
|
||||||||
|
Alfred
L. Woods
|
3/03/08
|
—
|
—
|
—
|
—
|
—
|
—
|
8,745
(6)
|
—
|
—
|
116,658
|
|
6/11/08
|
—
|
—
|
—
|
—
|
—
|
—
|
7,732
(7)
|
—
|
—
|
138,944
|
|
|
David
A. Martin
|
1/29/08
|
—
|
—
|
—
|
—
|
23,179
|
—
|
—
|
—
|
—
|
300,632
|
|
1/29/08
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
58,275
|
12.97
|
305,361
|
|
|
1/29/08
|
52,083
|
104,167
|
208,333
|
||||||||
|
David
F. Morris
|
1/29/08
|
—
|
—
|
—
|
—
|
25,497
|
—
|
—
|
—
|
—
|
330,696
|
|
1/29/08
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
64,103
|
12.97
|
335,900
|
|
|
1/29/08
|
57,292
|
114,583
|
229,167
|
||||||||
|
Alexander
J. Buehler
|
1/29/08
|
—
|
—
|
—
|
—
|
16,556
|
—
|
—
|
—
|
—
|
214,731
|
|
1/29/08
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
29,138
|
12.97
|
152,683
|
|
|
Daniel
E. Cowan
|
1/29/08
|
—
|
—
|
—
|
—
|
13,245
|
—
|
—
|
—
|
—
|
171,788
|
|
1/29/08
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
23,310
|
12.97
|
122,144
|
|
_______________
|
(1)
|
All
awards to Mr. Vossman in 2008 were forfeited upon his resignation on
September 5, 2008.
|
|
(2)
|
Represents
estimated future payouts under our Long-Term Incentive Plan for the 2008 –
2010 performance period. The target amount is earned if
performance targets are achieved. Any awards earned under our
Long-Term Incentive Plan for the 2008 – 2010 performance period would be
paid in 2011.
|
29
|
(3)
|
Represents
the number of shares of restricted stock awarded in 2008. These
shares of restricted stock, other than the 103,092 shares of restricted
stock awarded to Mr. Burgess on April 14, 2008, will fully vest on January
29, 2011, provided that employment continues through such
date.
|
|
(4)
|
Represents
the grant date fair value of (i) $12.97 per share for the restricted stock
awards and $5.24 per share for the stock option grants to the Named
Officers (other than Mr. Burgess) on January 29, 2008; (ii) $14.55 per
share for the restricted stock awards and $5.49 per share for the stock
option grants on to Mr. Burgess on April 14, 2008; and (iii) $13.34 per
share for the deferred stock units awarded to Mr. Woods on March 3, 2008
and $17.97 for the deferred stock units awarded to Mr. Woods on June 11,
2008, each computed in accordance with FAS 123(R). Please refer
to Note 7, “Equity-Based Compensation,” in the Notes to Consolidated
Financial Statements contained in our Annual Report on Form 10-K, filed on
March 2, 2009, for a discussion regarding the valuation of our stock and
option awards.
|
|
(5)
|
These
awards were issued as “inducement” grants” under the rules of the Nasdaq
Global Select Market and, as such, were not issued pursuant to the
Company’s 2006 Employee Equity Incentive Plan. Represents
awards of 52,784 and 103,092 shares of restricted stock on April 14, 2008
that will fully vest on April 14, 2011 and April 14, 2013, respectively,
provided Mr. Burgess’ employment continues through such
dates.
|
|
(6)
|
Mr.
Woods was awarded 26,236 deferred stock units on March 3, 2008 in
connection with his service as Interim Chief Executive
Officer. This award of deferred stock units was subject to a
pro rata adjustment in the event Mr. Woods’ service as Interim Chief
Executive Officer was completed prior to August 12, 2008. Upon
the appointment of Mr. Burgess as our new President and Chief Executive
Officer on April 14, 2008, this award was adjusted downward to 8,745
deferred stock units to reflect the actual period of Mr. Woods’ service as
Interim Chief Executive Officer in
2008.
|
|
(7)
|
Mr.
Woods was awarded 7,732 deferred stock units in June 2008 as director
compensation.
|
Narrative for Summary Compensation Table and Grants of Plan-Based Awards Table
The dollar amounts of “Stock Awards”
shown in the Summary Compensation Table represent the amounts recognized by our
Company for financial statement reporting purposes in 2008 as
follows: (i) deferred stock units awarded to Mr. Woods in connection
with his service as our Interim Chief Executive Officer on August 23, 2007 and
March 3, 2008 in the amounts of 33,291 ($524,999) and 8,745 ($116,658),
respectively, which awards vested on April 14, 2008, and in connection with his
service on our Board of Directors in the amount of 7,732 deferred stock units on
June 11, 2008 ($138,944); and (ii) shares of restricted stock or restricted
stock units awarded to the other Named Officers as follows: Mr.
Burgess, 52,784 shares of restricted stock on April 14, 2008 ($183,761) and
103,092 shares of restricted stock on April 14, 2008 ($215,223); Mr. Martin,
23,179 shares of restricted stock on January 29, 2008 ($92,713), 8,340
restricted stock units on August 23, 2007 ($43,921) and 1,500 restricted stock
units on January 11, 2007 ($12,823); Mr. Morris, 25,497 shares of restricted
stock on January 29, 2008 ($101,985), 2,661 restricted stock units on August 23,
2007 ($14,013), 5,430 restricted stock units on January 11, 2007 ($46,421),
3,600 shares of restricted stock on January 5, 2006 ($23,334) and 2,000 shares
of restricted stock on May 5, 2005 ($3,342); Mr. Buehler, 16,556 shares of
restricted stock on January 29, 2008 ($66,222), 3,622 restricted stock units on
January 11, 2007 ($30,964), 4,500 restricted stock units on January 5, 2006
($29,168) and 3,900 restricted stock units on May 5, 2005 ($6,516); Mr. Cowan,
13,245 shares of restricted stock on January 29, 2008 ($52,978) and 6,416
restricted stock units on October 23, 2007 ($30,810); and Mr. Vossman, 9,510
restricted stock units on January 11, 2007 ($100,128), 5,200 shares of
restricted stock on January 5, 2006 ($25,699) and 4,000 shares of restricted
stock on May 5, 2005 ($6,684).
The dollar amounts of “Option Awards”
shown in the Summary Compensation Table represent the amounts recognized by our
Company for financial statement reporting purposes in 2008 as
follows: Mr. Burgess, 118,397 options on April 14, 2008
($265,909); Mr. Martin, 58,275 options on January 29, 2008
($163,415), 53,106 options on August 23, 2007 ($111,507), 4,000 options on
January 5, 2006 ($2,759) and 4,500 options on May 5, 2005 ($871); Mr.
Morris, 64,103 options on January 29, 2008 ($179,760), 14,451 options on August
23, 2007 ($30,342), 20,100 options on January 5, 2006 ($13,863) and 13,500
options on May 5, 2005 ($2,614); Mr. Buehler, 29,138 options on
January 29, 2008 ($81,708), 9,700 options on January 5, 2006 ($6,690) and 5,800
options on May 5, 2005 ($1,123); Mr. Cowan, 23,310 options on January 29, 2008
($65,364), 7,592 options on October 23, 2007 ($19,335) and 4,000 options on
November 28, 2006 ($8,457); and Mr. Vossman, 34,300 options on January 5, 2006
($382) and 26,000 options on May 5, 2005 ($5,035).
The
Summary Compensation Table reflects certain bonuses paid to Named Officers under
our 2008 Management Annual Incentive Plan, additional bonuses for certain
extraordinary events and long-
30
term
incentive cash compensation under our 2006 Executive Performance
Plan. The amounts paid to the Named Officers (other than Mr. Woods
and Mr. Vossman) were as follows: Mr. Burgess, $375,000 under the
Management Annual Incentive Plan and $125,000 in additional bonus compensation;
Mr. Martin, $168,791 under the Management Annual Incentive Plan and $50,000 in
additional bonus compensation; Mr. Morris, $199,481 under the Management Annual
Incentive Plan, $50,000 in additional bonus compensation and $20,000 in
long-term incentive cash compensation under the 2006 Executive Performance Plan;
Mr. Buehler, $116,148 under the Management Annual Incentive Plan; and Mr. Cowan,
$100,086 under the Management Annual Incentive Plan. Mr. Vossman
received no bonus compensation in 2008 due to his resignation on September 5,
2008.
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth information concerning outstanding equity awards, as
of the fiscal year ended December 31, 2008, held by the Named Officers (other
than Mr. Vossman):
|
Option
Awards
|
Stock
Awards
|
||||||||
|
Name
(1)
|
Number
of Securities Underlying Unexercised
Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of Securities Underlying Unexercised Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares or
Units
of
Stock
that Have Not Vested
(#)(2)
|
Market
Value
of
Shares
or
Units
of
Stock
that
Have
Not
Vested
($)(3)
|
Equity
Incentive
Plan
Awards:
Number
of Unearned
Shares,
Units,
or
Other
Rights
that
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value
of Unearned Shares,
Units,
or
Other
Rights
that
Have
Not
Vested
($)
|
|
J.
Joseph Burgess
|
—
|
118,397
|
—
|
$14.55
|
4/14/15
|
—
|
—
|
—
|
—
|
|
—
|
—
|
—
|
—
|
—
|
155,876
|
$3,069,198
|
—
|
—
|
|
|
Alfred
L. Woods
|
7,500
|
—
|
—
|
28.94
|
2/17/10
|
—
|
—
|
—
|
—
|
|
7,500
|
—
|
—
|
29.06
|
3/19/11
|
—
|
—
|
—
|
—
|
|
|
7,500
|
—
|
—
|
23.85
|
6/03/12
|
—
|
—
|
—
|
—
|
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
David
A. Martin
|
2,750
|
—
|
—
|
29.06
|
3/19/11
|
—
|
—
|
—
|
—
|
|
4,353
|
—
|
—
|
23.92
|
2/25/12
|
—
|
—
|
—
|
—
|
|
|
2,750
|
—
|
—
|
12.50
|
3/7/10
|
—
|
—
|
—
|
—
|
|
|
3,750
|
—
|
—
|
16.26(4)
|
5/25/11
|
—
|
—
|
—
|
—
|
|
|
1,250
|
—
|
—
|
15.50
|
5/25/11
|
—
|
—
|
—
|
—
|
|
|
4,500
|
—
|
—
|
14.65
|
5/5/12
|
—
|
—
|
—
|
—
|
|
|
4,000
|
—
|
—
|
19.41
|
1/5/13
|
—
|
—
|
—
|
—
|
|
|
39,828
|
13,278
|
__
|
15.77
|
1/11/14
|
—
|
—
|
—
|
—
|
|
|
19,424
|
38,851
|
__
|
12.97
|
1/29/15
|
—
|
—
|
—
|
—
|
|
|
—
|
—
|
—
|
—
|
—
|
33,019
|
650,144
|
—
|
—
|
|
|
David
F. Morris
|
13,500
|
—
|
—
|
14.65
|
5/5/12
|
—
|
—
|
—
|
—
|
|
20,100
|
—
|
—
|
19.41
|
1/5/13
|
—
|
—
|
—
|
—
|
|
|
10,839
|
3,612
|
—
|
15.77
|
1/11/14
|
—
|
—
|
—
|
—
|
|
|
21,367
|
42,736
|
—
|
12.97
|
1/29/15
|
—
|
—
|
—
|
—
|
|
|
—
|
—
|
—
|
—
|
—
|
37,188
|
732,232
|
—
|
—
|
|
|
Alexander
J. Buehler
|
1,500
|
—
|
__
|
16.11
|
7/29/11
|
—
|
—
|
—
|
—
|
|
5,800
|
—
|
—
|
14.65
|
5/5/12
|
—
|
—
|
—
|
—
|
|
|
9,700
|
—
|
—
|
19.41
|
1/5/13
|
—
|
—
|
—
|
—
|
|
|
9,712
|
19,426
|
—
|
12.97
|
1/29/15
|
—
|
—
|
—
|
—
|
|
|
—
|
—
|
—
|
—
|
—
|
24,678
|
485,910
|
—
|
—
|
|
|
Daniel
E. Cowan
|
3,796
|
3,796
|
—
|
14.38
|
10/23/14
|
—
|
—
|
—
|
—
|
|
7,769
|
15,541
|
—
|
12.97
|
1/29/15
|
—
|
—
|
—
|
—
|
|
|
19,661
|
387,125
|
||||||||
_______________
31
|
(1)
|
Mr.
Vossman resigned his employment on September 5, 2008. In
connection with his resignation, all unvested awards were
forfeited. Certain awards of restricted stock vested by their
terms and his vested but unexercised options have expired by their
terms.
|
|
(2)
|
Represents
the number of shares of restricted stock or restricted stock units awarded
as follows: Mr. Burgess, 103,092 and 52,784 shares of
restricted stock on April 14, 2008; Mr. Martin, 23,179 shares of
restricted stock on January 29, 2008, 8,340 restricted stock units on
August 23, 2007 and 1,500 restricted stock units on January 11,
2007; Mr. Morris, 25,497 shares of restricted stock on January
29, 2008, 2,661 restricted stock units on August 23, 2007, 5,430
restricted stock units on January 11, 2007 and 3,600 shares of restricted
stock on January 1, 2006; Mr. Buehler, 16,556 shares of restricted stock
on January 29, 2008, 3,622 restricted stock units on January 11, 2007 and
4,500 shares of restricted stock on January 1, 2006; and Mr. Cowan 13,245
shares of restricted stock on January 29, 2008 and 6,416 restricted stock
units on October 23, 2007. The awards of restricted stock or
restricted stock units will fully vest on the third anniversary of the
date of award, except that the awards of restricted stock units to Mr.
Morris and Mr. Martin on August 23, 2007 shall vest on January 11, 2010;
provided, however, that in each case employment continues through such
date.
|
|
(3)
|
Represents
the value of shares of restricted stock and restricted stock units
calculated on the basis of the closing price of our common stock on The
Nasdaq Global Select Market on December 31, 2008 ($19.69 per
share).
|
|
(4)
|
Effective
December 29, 2006, the exercise price with respect to 3,750 options
granted to Mr. Martin on May 25, 2004 was increased from $15.50 to $16.26
in order to avoid a 20% excise tax at exercise of the options under
Section 409A of the Internal Revenue Code of 1986, as
amended.
|
Option
Exercises and Stock Vested
The
following table sets forth information regarding options exercised by the Named
Officers and the vesting of stock awards previously granted to the Named
Officers during the fiscal year ended December 31, 2008:
|
Option
Awards
|
Stock
Awards
|
|||
|
Name
|
Number
of Shares
Acquired
on Exercise
(#)
|
Value
Realized on
Exercise
($)
|
Number
of Shares
Acquired
on Vesting
(#)
|
Value
Realized on
Vesting
($)
|
|
J.
Joseph Burgess
|
—
|
—
|
—
|
—
|
|
Alfred
L. Woods
|
15,000
|
$70,350
|
19,846
|
$297,690
|
|
David
A. Martin
|
—
|
—
|
—
|
—
|
|
David
F. Morris
|
—
|
—
|
2,000
|
35,140
|
|
Alexander
J. Buehler
|
—
|
—
|
3,900
|
68,523
|
|
Daniel
E. Cowan
|
—
|
—
|
—
|
—
|
|
Thomas
E. Vossman
|
—
|
—
|
13,497
|
237,237
|
Nonqualified
Deferred Compensation
The
following table sets forth information concerning contributions, earnings and
balances under our nonqualified deferred contribution plan for the Named
Officers:
|
Name
|
Executive
Contribution
in
Last
FY
($)(1)
|
Registrant
Contributions
in
Last
FY
($)(1)
|
Aggregate
Earnings
(Losses)
in Last FY
($)(2)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance
at
Last FYE
($)
|
|
David
A. Martin
|
$11,000
|
$1,285
|
$(8,450)
|
—
|
$19,224
|
|
David
F. Morris
|
—
|
—
|
(12,572)
|
—
|
18,605
|
|
Daniel
E. Cowan
|
21,500
|
5,160
|
(5,773)
|
—
|
20,887
|
____________
|
(1)
|
Named
Officer and registrant contributions also are reported in the “Salary” and
“Other Compensation” columns, respectively, of the Summary Compensation
Table.
|
|
(2)
|
Amounts
credited do not constitute above-market
earnings.
|
32
Executive officers may choose to
defer up to specified maximum amounts of compensation by contributing those
amounts to our nonqualified deferred compensation plan for key
employees. This plan allows for base salary deferral of up to 15% of
base salary, and bonus deferral of up to 50% of bonus amounts. Under
the plan, we will match contributions equal to the first 3% of compensation at a
100% rate, and contributions equal to the next 2% of compensation at a 50% rate,
when aggregated with any matching contributions made under our 401(k) Profit
Sharing Plan (Company-matching contributions were limited to a maximum aggregate
of $9,200 per employee for 2008). Contributions in the nonqualified
deferred compensation plan are adjusted to match the performance of
participant-selected indices, which mirror fund choices available under our
401(k) Profit Sharing Plan.
Account
balances will accrue for each participant based on the amount of the
participant’s deferrals into the account and the investment performance of his
or her selected indices. Participants are at all times 100% vested in
their deferrals, Company-matching contributions and investment
earnings. Participants generally will be paid their account balances
after termination of their employment with our Company or on such other
distribution date as they may elect. For a key employee participant,
however, no payments may be made from his or her account balance until the date
that is six months following the date of termination of such key employee’s
employment. The nonqualified deferred compensation plan is intended
to comply with Section 409A of the Internal Revenue Code and the Treasury
Regulations issued thereunder.
During
2008, Messrs. Martin and Cowan deferred $11,000 and $21,500 of their
compensation, respectively, under our nonqualified deferred compensation
plan. These amounts do not include $1,285 and $5,160 in
Company-matching contributions that we contributed to Mr. Martin’s and Mr.
Cowan’s accounts, respectively, under the plan during 2008. Mr.
Morris deferred no compensation and no Company-matching contributions were made
to Mr. Morris’ account under the nonqualified deferred compensation plan during
2008.
Change
of Control, Severance and Termination
In connection with his resignation, we
entered into an Executive Separation and Release Agreement with Mr. Vossman,
effective as of September 5, 2008 (the “Separation
Agreement”). Pursuant to the Separation Agreement, Mr. Vossman is
entitled to receive an aggregate severance payment in the amount of $265,000
(the “Severance Payment”) in exchange for certain representations and covenants,
including covenants of confidentiality, non-solicitation and non-competition, as
well as a full release of us from all claims.
Under the Separation Agreement, the
Severance Payment is being paid as follows: (i) a lump-sum payment of
$162,500 was made on September 12, 2008, and (ii) additional payments in the
aggregate amount of $102,500 payable in equal semi-monthly installments over
twelve months that began in September 2008 and will end in August
2009. During 2008, Mr. Vossman received payments in connection with
the Severance Payment equal to $192,396.
The Separation Agreement supersedes and
terminates all other prior agreements regarding severance between us and Mr.
Vossman. Other than as set forth in the Separation Agreement, we owe
no other payments for severance or termination benefits to Mr.
Vossman.
Effective March 1, 2008, we adopted a
Severance Policy that would provide for severance payments to Named Officers at
the rate of twelve weeks of base salary, plus two additional weeks of base
salary for each full year of continuous service time with our Company; provided,
however, that the Named Officers would not receive less than twelve nor more
than 42 weeks of base salary. This Severance Policy would apply where
a Named Officer in good standing with our Company is involuntarily terminated
without cause, the Named Officer completed a minimum of six months continuous
service time and the termination was not due to a violation of our Code of
Conduct.
33
The
award agreements in connection with our stock option, restricted stock and
restricted stock unit awards granted to our key employees provide that upon a
change in control of our Company, all outstanding unvested equity awards will
immediately vest.
If such a change in control event would
have occurred as of December 31, 2008, the amount of compensation that would
have been recognized by our Company for unvested awards of our Named Officers as
of such date would have been:
|
Named
Officer
|
Amount
Recognized
for
Stock
Option
Awards
($)
|
Amount
Recognized
for
Restricted
Stock
or
Restricted
Stock
Unit
Awards
($)
|
|
J.
Joseph Burgess
|
$323,488
|
$1,869,012
|
|
David
A. Martin
|
158,914
|
292,938
|
|
David
F. Morris
|
140,996
|
299,463
|
|
Alexander
J. Buehler
|
59,045
|
180,554
|
|
Daniel
E. Cowan
|
62,008
|
174,369
|
|
TOTAL
|
$744,451
|
$2,816,336
|
The
employment letter between our Company and J. Joseph Burgess dated April 4, 2008
provides for certain severance benefits in connection with certain termination
events. If during the first 24 months of his employment Mr. Burgess
(i) is terminated by us for reasons other than “Cause” (as defined in the
employment letter), or (ii) following a “Change in Control” (as defined in the
employment letter), terminates his employment with us for “Good Reason” (as
defined in the employment letter), he shall receive a severance payment equal to
24 months of his current base salary and 24 months of the monthly cost of
medical and dental insurance that was provided by us at such
time. Any such severance payments owed after the first 12 months of
employment but prior to the end of the initial 24 month period shall be reduced
by any amount that Mr. Burgess receives as compensation from a successor
employer. If Mr. Burgess’ employment is terminated by us for reasons
other than “Cause” after the initial 24-month period, the severance payment
would be reduced to 12 months of his current base salary and 12 months of the
monthly cost of medical and dental insurance that was provided by us at such
time. A severance payment would be made in either 24 or 12 equal
monthly installments, depending on the period in which the termination
occurs.
Any
severance payments made pursuant to Mr. Burgess’ employment letter are
conditioned upon certain representations, warranties, covenants and agreements
to be made by Mr. Burgess, including, but not limited to, a release of all
claims and covenants of confidentiality, non-solicitation and
non-competition.
The
following table illustrates the potential cash payments to be received by Mr.
Burgess under the above-referenced termination events:
34
|
Involutary Termination
without Cause Following
Change in Control
|
Volutary Termination
for Good Reason
Following Change in
Control
|
||||||
|
Type
of Payment
|
First
24
Months(1)
|
After
24
Months
|
First
24
Months(1)
|
After
24
Months
|
|||
|
Base
Salary(2)
|
$1,000,000
|
$500,000
|
$1,000,000
|
N/A
|
|||
|
Medical
Insurance Cost(3)
|
13,015
|
6,508
|
13,015
|
N/A
|
|||
|
Dental
Insurance Cost(4)
|
1,338
|
669
|
1,338
|
N/A
|
|||
|
Long-Term
Performance Cash(5)
|
155,278
|
155,278
|
155,278
|
N/A
|
|||
|
TOTAL
|
$1,169,631
|
$662,455
|
$1,169,631
|
N/A
|
|||
____________________
|
|
(1)
|
Does
not include any amount by which the severance payment would be reduced for
compensation received from a successor employer, for any severance payment
owed due to a termination event occurring after the first 12 months of
employment and prior to the end of the initial 24-month
period.
|
|
|
(2)
|
Assumes
Mr. Burgess’ base salary on December 31, 2008 of
$500,000.
|
|
|
(3)
|
Based
on a current monthly medical insurance cost to us of $542.31 as of
December 31, 2008.
|
|
|
(4)
|
Based
on a current monthly dental insurance cost to us of $55.77 as of December
31, 2008.
|
|
|
(5)
|
Assumes
a termination at the end of the twelfth full month of employment, where
the amount owed would be equal to one-third of each of the target
long-term performance cash awards for the 2008 – 2010 and 2009 – 2011
performance periods.
|
35
Information
Concerning Certain Stockholders
The table below sets forth certain
information as of February 27, 2009 with respect to the number of shares of our
common stock owned by:
|
|
·
|
each
of our executive officers named in the Summary Compensation Table under
“Executive Compensation” (other than Mr.
Vossman),
|
|
|
·
|
each
of our directors and director
nominees,
|
|
|
·
|
each
person known by us to own beneficially more than 5% of the outstanding
shares of our common stock, and
|
|
|
·
|
all
of our directors and executive officers as a
group.
|
|
Name
and Address of Beneficial Owner
|
Amount and Nature of
Beneficial Ownership(1)
|
Percent
of
Class
|
|
T.
Rowe Price Associates, Inc.
100
East Pratt Street
Baltimore,
Maryland 21202 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
|
3,485,159(2)
|
9.06%
|
|
Invesco,
Ltd.
1360
Peachtree Street, NE
Atlanta,
Georgia 30309 . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .
.
|
2,338,459(3)
|
6.08
|
|
Pictet
Asset Management SA
60
Route Des Acacias
Geneva
73, Switzerland CH-12 11 . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
|
1,965,000(4)
|
5.11
|
|
Barclays
Global Investors, NA
400
Howard Street
San
Francisco, CA 94105 . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
|
1,951,587(5)
|
5.07
|
|
Alexander
J. Buehler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
|
53,971(6)
|
—
(7)
|
|
J.
Joseph Burgess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .
.
|
195,342(8)
|
—
(7)
|
|
Stephen
P. Cortinovis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
|
61,174(9)
|
—
(7)
|
|
Daniel
E. Cowan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
|
34,527(10)
|
—
(7)
|
|
Stephanie
A. Cuskley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
21,908(11)
|
—
(7)
|
|
John
P. Dubinsky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
|
45,826(12)
|
—
(7)
|
|
Juanita
H. Hinshaw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
|
45,174(13)
|
—
(7)
|
|
David
A. Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
|
117,219(14)
|
—
(7)
|
|
David
F. Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
123,085(15)
|
—
(7)
|
|
Alfred
L. Woods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
|
105,789(16)
|
—
(7)
|
|
Directors
and executive officers as a group (9 persons)(18) . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
|
815,620(17)
|
2.12%
|
__________
|
(1)
|
Except
as otherwise indicated, as of February 27, 2009, all shares are owned with
sole voting and investment power. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission. For the listed officers and directors, the number
of shares beneficially owned includes shares of common stock that the
individual had the right to acquire on or within 60 days after February
27, 2009, including through the exercise of stock options and in
connection with deferred stock units. References to stock
options in the footnotes to this table include only those options that are
or will become exercisable within 60 days after February 27,
2009. A director would only receive shares of common stock in
connection with deferred stock units within 60 days after February 27,
2009 if the director’s service on the board terminated during that time
period. Also included are shares of restricted stock, over
which the individual has voting power, but no investment
power.
|
|
(2)
|
The
information provided herein is based on a Schedule 13G filed jointly by T.
Rowe Price Associates, Inc. and T. Rowe Price Small-Cap Value Fund, Inc.
with the Securities and Exchange Commission on February 13,
2009. T. Rowe Price Associates, Inc. has sole voting power with
respect to 1,104,609 shares of our common stock and sole dispositive power
with respect to 3,485,159 shares of our common stock. These
securities are owned by various individual and institutional investors,
including the fund (which owns 1,655,000 shares, representing 4.3% of the
shares outstanding, over which the fund has sole voting power), which T.
Rowe Price Associates, Inc. serves as investment adviser with power to
direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, T. Rowe Price Associates, Inc. is deemed
to be a beneficial owner of these securities; however, T. Rowe Price
Associates, Inc. expressly disclaims that it is, in fact, the beneficial
owner of these securities.
|
36
|
(3)
|
The
information provided herein is based on a Schedule 13G filed by Invesco,
Ltd. with the Securities and Exchange Commission on February 9, 2009, on
behalf of the following subsidiaries: PowerShares Capital
Management LLC, Invesco Asset Management Limited, Invesco Asset Management
Ireland Limited and Invesco National Trust Company (collectively, the
“Subsidiaries”). The information in the Schedule 13G indicates
that the Subsidiaries have sole voting and dispositive power with respect
to 2,338,459 shares.
|
|
(4)
|
The
information provided herein is based on a Schedule 13G/A filed by Pictet
Asset Management SA with the Securities and Exchange Commission on
February 9, 2009. The information in the Schedule 13G/A
indicates that Pictet Asset Management SA, has sole voting and dispositive
power with respect to all of these shares. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Pictet
Asset Management SA is deemed to be a beneficial owner of these
securities; however, Pictet Asset Management SA expressly disclaims that
it is, in fact, the beneficial owner of these
securities.
|
|
(5)
|
The
information provided herein is based on a Schedule 13G filed by Barclays
Global Investors NA with the Securities and Exchange Commission on
February 6, 2009. The information in the Schedule 13G indicates
that Barclays Global Advisors, an investment adviser, is the beneficial
owner of 1,951,587 shares and has sole voting power with respect to
1,491,181 of these shares and sole dispositive power with respect to all
1,951,587 of these shares. The shares reported are held by
Barclays Global Investors, NA in trust accounts for the economic benefit
of the beneficiaries of those accounts.
|
|
(6)
|
Represents
7,081 shares of common stock; options to purchase 26,712 shares of stock,
16,556 shares of restricted stock and 3,622 restricted stock
units.
|
|
(7)
|
Less
than one percent.
|
|
(8)
|
Represents
options to purchase 39,466 shares of stock and 155,876 shares of
restricted stock.
|
|
(9)
|
Represents
18,000 shares of common stock, options to purchase 22,500 shares of stock
and 20,674 deferred stock
units.
|
|
(10)
|
Represents
301 shares of common stock, options to purchase 14,565 shares of stock,
13,245 shares of restricted stock and 6,416 restricted stock
units.
|
|
(11)
|
Represents
11,159 shares of common stock and 10,749 deferred stock
units.
|
|
(12)
|
Represents
11,952 shares of common stock, options to purchase 15,000 shares of stock
and 18,874 deferred stock
units.
|
|
(13)
|
Represents
2,000 shares of common stock, options to purchase 22,500 shares of stock
and 20,674 deferred stock
units.
|
|
(14)
|
Represents
1,595 shares of common stock, options to purchase 82,605 shares of stock,
23,179 shares of restricted stock and 9,840 restricted stock
units.
|
|
(15)
|
Represents
15,600 shares of common stock, options to purchase 65,806 shares of stock,
33,588 shares of restricted stock and 8,091 restricted stock
units.
|
|
(16)
|
Represents
24,242 shares of common stock, options to purchase 22,500 shares of stock
and 59,047 deferred stock
units.
|
|
(17)
|
Includes
options to purchase 314,546 shares of stock, 247,080 shares of restricted
stock, 27,969 restricted stock units and 130,018 deferred stock
units.
|
|
(18)
|
Does
not include ownership of Thomas E. Vossman, as Mr. Vossman is no longer an
employee of our Company.
|
37
Related-Party
Transactions
Pursuant to its charter, our Audit
Committee is responsible for reviewing and approving all transactions of our
Company in which a related person has a direct or indirect material interest and
the amount involved exceeds $120,000. It is our policy that executive
management notify the Audit Committee of any transaction that may be deemed a
related-party transaction. Upon such a notification, the Audit
Committee will meet to review the terms of such a transaction and make any
necessary determinations.
We
maintain various policies and procedures relating to the review, approval or
ratification of transactions in which we, or any of our directors, officers or
employees, may have a direct or indirect material interest. Our Code
of Conduct, which may be found on our website at www.insituform.com
under Investors/Corporate Governance, prohibits our directors, officers and
employees from engaging in specified activities without prior approval of
management or our Board or Audit Committee, as
appropriate. Activities that may constitute a conflict of interest
with our Company and require prior approval include: (i) investing in or being
an officer or employee of one of our customers, suppliers, subcontractors or
competitors; (ii) having a substantial business interest in a company competing
with or doing business with our Company; (iii) receiving any benefit, either
direct or indirect, from the investment in or association with a company that
our Company may have otherwise received; and (iv) engaging in a transaction with
our Company personally or through an affiliate.
Additionally,
we require each of our directors and officers to complete a comprehensive
questionnaire each year that, among other things, identifies any transactions or
potential transactions with us in which the director or officer, or a family
member or associated entity, has any interest, financial or
otherwise. Our directors and officers are also required to update
their information if there are changes throughout the year.
We
believe that these policies and procedures ensure that all related-party
transactions are appropriately reviewed and, if required, disclosed pursuant to
the rules of the Securities and Exchange Commission.
For 2008, we had no related-party
transactions.
Section 16(A)
Beneficial Ownership Reporting Compliance
To our knowledge, based solely upon a
review of copies of reports received by us pursuant to Section 16(a) of the
Securities Exchange Act of 1934 and written representations that no other
reports were required to be filed, we believe that during 2008 all filing
requirements applicable to our directors, officers and 10% stockholders under
Section 16(a) were satisfied. With the exception of one late
filing of a Form 4 by Mr. Burgess, all such reports were timely
filed. Mr. Burgess was required to report on or before April 16, 2008
his awards of a stock option and restricted stock made on April 14,
2008. Due to a delay in the receipt of an Edgar filer code for Mr.
Burgess, the required filing was made on April 17, 2008.
38
Equity
Compensation Plan Information
The following table provides
information as of December 31, 2008 with respect to the shares of common
stock that may be issued under our existing equity compensation
plans:
|
Number
of
Securities
to be
Issued
upon
Exercise
of
Outstanding
Options,
Warrants
and
Rights
(a)
|
Weighted-
Average
Exercise
Price
of
Outstanding
Options,
Warrants
and
Rights
(b)
|
Number
of
Securities
Remaining
Available
for
Future
Issuance
under
Equity
Compensation
Plans
(excluding
securities
reflected
in
column (a))
(c)
|
|
|
Equity
compensation plans approved by security holders (1)(2)
|
1,364,305
|
$18.32
|
1,483,176
|
|
Equity
compensation plans not approved by security holders (3)
|
274,273
|
14.55
|
—
|
|
Total
|
1,638,578
|
$17.69
|
1,483,176
|
|
(1)
|
The
number of securities to be issued upon exercise of granted/awarded
options, warrants and rights includes 914,376 stock options, 319,911 stock
awards and 130,018 deferred and restricted stock units outstanding at
December 31, 2008.
|
|
(2)
|
On
March 2, 2009, our annual equity grants to officers and key employees and
a special equity grant to a new employee were made, which included an
aggregate of 322,034 stock options and 383,621 restricted stock
awards. Taking into account such grants and as of such date,
the number of securities to be issued upon exercise of granted/awarded
options, warrants and rights is 2,069,960 with a weighted-average exercise
price of $16.45, leaving 777,521 securities available for issuance under
our equity compensation
plans.
|
|
(3)
|
On
April 14, 2008, the Company granted J. Joseph Burgess a non-qualified
stock option to purchase 118,397 shares of the Company’s common stock, a
performance-based award of 52,784 shares of restricted stock and a
one-time award of 103,092 shares of restricted stock in connection with
his appointment as the Company’s President and Chief Executive Officer.
These awards were issued as “inducement grants” under the rules of the
Nasdaq Global Select Market and, as such, were not issued pursuant to our
2006 Employee Equity Incentive
Plan.
|
39
PROPOSAL 2: APPROVAL OF THE 2009 EMPLOYEE EQUITY INCENTIVE PLAN
Our Board of Directors has adopted, subject to stockholder approval, the 2009
Employee Equity Incentive Plan (the “2009 Plan”). If the 2009 Plan is
approved by stockholders, our Board of Directors intends to terminate the 2006
Employee Equity Incentive Plan (the “2006 Plan”), which would otherwise expire
on April 25, 2016, and cancel the authority to grant new awards under the 2006
Plan. There are currently approximately 631,767 shares which are authorized for
issuance, and not otherwise subject to an outstanding award, under the 2006 Plan
which will no longer be available for future awards upon the approval of the
2009 Plan. The cancellation of the 2006 Plan will not terminate or
otherwise affect the outstanding awards under the 2006 Plan.
The 2009
Plan provides for the granting of stock options and other stock-based awards to
our key employees. Our Board of Directors believes that it is in our
best interest to have sufficient shares available under the plan for awards to
key employees, whose talents and special efforts are essential to our continued
progress. In addition, our Board of Directors believes that the plan
advances the interests of our company and stockholders by encouraging key
employees to acquire an ownership interest in our company, thus aligning their
interests in our financial performance more directly to those of our
stockholders and providing them an incentive to remain employees over the long
term.
The maximum number of shares of our
common stock which is being authorized for issuance under the 2009 Plan is
2,500,000, subject to adjustment in the event of any subsequent change in the
number of issued shares of our common stock without the payment of new
consideration, such as in a stock dividend, stock split or similar
issuance.
The
complete text of the 2009 Plan is attached as Appendix
A. The following summary of the plan is subject to the
provisions contained in the complete text of the plan.
Description
of the 2009 Plan
Administration. The
2009 Plan will be administered by our Board of Directors or our Compensation
Committee (the “Administrator”). The Administrator will have
exclusive authority to interpret and administer the plan, to establish
appropriate rules relating to the plan, to delegate some or all of its authority
under the plan and to take all such steps and make all such determinations in
connection with the plan and the benefits granted pursuant to the plan as it may
deem necessary or advisable.
Eligibility. Officers and key
employees of our company and subsidiaries will be eligible to
participate. The Administrator has the sole discretion to designate
which employees among the eligible participants will receive awards under the
plan.
Shares Subject to
the Plan. An aggregate of
2,500,000 shares of our common stock are being authorized for issuance under the
2009 Plan, subject to adjustment in the event of any subsequent change in the
number of issued shares of our common stock without the payment of new
consideration, such as in a stock dividend, stock split or similar
issuance. Only shares underlying awards that expire, are cancelled or
are forfeited will be added back into the share pool for future awards under the
plan. Shares subject to awards under the plan that are withheld, or
otherwise remitted, in payment of the purchase price of an option or stock
appreciation right or in satisfaction of a tax withholding obligation with
respect to an award shall not be added back into the share pool for future
awards under the plan.
40
Shares underlying awards where the
benefit is not limited to the increase of value of the shares subject to the
award over the fair value of the shares at the grant date of the award (such as
options and stock appreciation rights) will count against the number of shares
available for issuance under the plan at the rate of 1.44 shares for each share
subject to these type of awards.
Types of Awards;
Annual Limits on Awards. Stock appreciation rights, restricted
stock, performance awards, stock options and stock units may be granted. The
maximum number of shares subject to stock options or stock appreciation
rights that may be awarded in any calendar year to any individual may not exceed
500,000 shares, subject to the adjustment provisions under the
plan.
Stock Appreciation
Rights. Stock appreciation rights entitle the holder to
receive a payment equal to the difference between the fair market value of our
common stock at the time of exercise of the stock appreciation right and
the base price of the stock appreciation right established by the Administrator
at the time of grant. The base price established by the Administrator
may not be less than the fair market value of a share of our common stock on the
grant date of the award. At the time of grant, the Administrator may
establish a maximum amount per share which will be payable upon exercise of a
stock appreciation right, and may determine whether a stock appreciation right
may be exercised (i) in lieu of the exercise of an option; (ii) in conjunction
with the exercise of a stock option; (iii) upon lapse of a stock option; and/or
(iv) independent of the exercise of a stock option. In the
Administrator’s discretion, the value of a stock appreciation right may be paid
in cash or common stock, or a combination thereof. The Administrator
will establish the term of any stock appreciation rights provided that stock
appreciation rights may not be exercised more than ten years from the date of
grant. Dividend equivalents will not be awarded in conjunction with a
stock appreciation right.
Restricted
Stock. Restricted stock are shares of our common stock that
are subject to the restrictions
or conditions specified by the Administrator at the time of
grant. The Administrator may issue shares of restricted stock either
as a stock bonus or at a purchase price below the fair market value of our stock
on the date of award. During the period that the stock is restricted,
holders will be entitled to receive all dividends and other distributions made
in respect of the restricted stock and to vote the restricted stock without
limitation.
Performance
Awards. In the discretion of the Administrator, performance
awards entitle the holder to receive shares of our common stock or cash, or
both, upon the achievement of certain pre-established performance criteria (such
as return on average total capital employed, earnings per share or increases in
share price) during a performance period that may not exceed five years. The
holder has no right to receive dividends or dividend equivalents on or to vote
shares subject to performance awards until the shares are actually earned and
issued.
Stock
Options. Stock options entitle the holder to purchase common
stock at a purchase price
established by the Administrator on the date of grant. The purchase
price of any stock option may not be less than the fair market value of our
common stock on the date of grant. The Administrator will determine
the terms and conditions of such stock options, including whether the options
will be incentive stock options under Section 422 of the federal tax code or
nonqualified stock options, and the times at which such stock options will be
exercisable. No incentive stock option that first become exercisable
in a particular calendar year may be granted to an individual if the aggregate
fair market value of common stock underlying all incentive stock options held by
the individual that are exercisable for the first time in that calendar year
exceeds $100,000.
41
Effective Date,
Amendments and Duration. The 2009 Plan will be
effective upon approval of our stockholders at the 2009 annual
meeting.
Amendment or
Modification of 2009 Plan; No Unilateral Action on Outstanding
Awards. Our Board of Directors may amend or modify the 2009
Plan at any time except an amendment or modification (i) increasing the
number of shares of common stock that may be issued under the plan; (ii)
increasing the amount or type of benefits that may be granted under the plan; or
(iii) modifying the eligibility requirements for benefits under the plan, each
of which requires the prior approval of our stockholders. The
Administrator may not reduce the amount, or change the terms and conditions, of
any outstanding award without the holder’s prior consent.
Prohibition on
Repricing of Awards. Without the prior approval of our
stockholders, the Administrator may not effect a repricing of any stock options
or other benefits granted under the 2009 Plan. A repricing will be
deemed to mean any of the following or any action that has a similar effect: (i)
the lowering of the purchase price of an option or other award after it is
granted; (ii) the canceling of an option or other award in exchange for another
option or award at the time that the purchase price of the cancelled option or
award exceeds the fair market value of the underlying stock, unless the
cancellation or exchange occurs in the context of a merger, acquisition or other
similar transaction; (iii) the purchase of an option or other award for cash or
other consideration at a time when the purchase price of the purchased option or
award exceeds the fair market value of the underlying stock, unless the purchase
or exchange occurs in the context of a merger, acquisition or other similar
transaction; or (iv) an action that is treated as a repricing under United
States generally accepted accounting principles.
Effective Date
and Term of 2009 Plan. The 2009 Plan will be effective for a
period of ten years from the effective date unless our Board of Directors
terminates the plan earlier.
Federal
Tax Consequences
Generally. A
participating employee will not realize income on the grant of stock options or
stock appreciation rights or the award of restricted stock or stock units, and
we will not be entitled to a deduction at such time.
Incentive Stock
Options. If a holder exercises an incentive stock option and
does not dispose of the shares acquired within two years from the date of the
grant, or within one year from the date of exercise of the stock option, no
ordinary income will be realized by the holder at the time of exercise, and we
will not be entitled to a deduction by reason of the exercise. The holder will
realize capital gain or loss upon the sale of the acquired shares equal to the
difference between the sale price and the purchase price for the
shares. If a holder disposes of the shares acquired pursuant to an
incentive stock option within two years from the date of grant of the stock
option or within one year from the date of exercise of the stock option, the
holder will realize ordinary income at the time of disposition equal to the
excess, if any, of the lesser of (a) the amount realized on the disposition or
(b) the fair market value of the shares on the date of exercise, over the
holder’s basis in the shares. We generally will be entitled to a
deduction in an amount equal to such income in the year of the disqualifying
disposition, except to the extent, if any, that such deduction may be limited
under Section 162(m) or Section 280G of the federal tax code. In
addition, the holder will realize capital gain or loss on any excess of the sale
price over the fair market value on the exercise date.
42
Nonqualified Stock Options; Stock Appreciation
Rights. Upon the exercise of a nonqualified stock
option or the surrender of a stock appreciation right, the excess, if any, of
the fair market value of the stock on the date of exercise over the purchase
price or base price, as the case may be, is ordinary income to the holder as of
the date of exercise. We generally will be entitled to a deduction
equal to such excess amount in the year of exercise, except to the extent, if
any, that such deduction may be limited under Section 162(m) or Section 280G of
the federal tax code.
Restricted Stock; Section
83(b) Election. Subject to a
voluntary election by the holder under Section 83(b) of the federal tax code, a
holder of restricted shares of common stock will realize income as a result of
the award of such shares at the time the restrictions expire on such
shares. An election pursuant to Section 83(b) of the federal tax code
would cause the holder to realize income in the year in which such award was
granted. The amount of income realized will be the difference between
the fair market value of the shares on the date such restrictions expire (or on
the date of issuance of the shares, in the event of a Section 83(b) election)
over the purchase price, if any, of such shares. We generally will be
entitled to a deduction equal to the income realized in the year in which the
holder is required to report such income, except to the extent, if any, that
such deduction may be limited under Section 162(m) or Section 280G of the
federal tax code.
Performance
Awards. A holder will realize income as a result of a
performance award at the time the award is paid or made available. The amount of
income realized by the holder will be equal to the fair market value of the
shares on the date of issuance, in the case of a stock award, and to the amount
of the cash paid, in the event of a cash award. We will be entitled to a
corresponding deduction equal to the income realized in the year of such
issuance or payment, except to the extent, if any, that such deduction may be
limited under Section 162(m) or Section 280G of the federal tax code
..
Stock
Units. A holder will realize income as a result of an award of
stock units at the time shares of common stock are issued in an amount equal to
the fair market value of such shares at that time. We will be
entitled to a corresponding deduction equal to the income realized in the year
of such issuance, except to the extent, if any, that such deduction may be
limited under Section 162(m) or Section 280G of the federal tax
code.
Section
409A Compliance. The tax consequences to the holder of an
award described above assume that, to the extent any award under the plan is
subject to the requirements of Section 409A of the federal tax code, such award
will comply with that section. In the event any such award that is
subject to Section 409A was determined not to be in compliance with the section,
the holder could be subject to earlier taxation, a penalty tax of 20% of the
amount includible in gross income, and interest on federal income taxes that
would have been payable if the amount were taxable when first
vested.
New
Plan Benefits
Currently, approximately 97 employees
will be eligible to participate in the 2009 Plan. The Administrator
will determine annually the award recipients and the actual awards granted under
the plan. As these awards are discretionary, the amount of awards to be granted
under the plan is not determinable as of the date of this proxy
statement.
The fair market value per share of our
common stock for all purposes under the plan will be the closing selling price
per share on The Nasdaq Stock Market on the determination date. On
March 17, 2009, the fair market value per share of our common stock was
$14.97.
Required
Vote for Approval
The
required vote for approval of the 2009 Plan is a majority of the shares of our
common stock entitled to vote on this proposal at the annual
meeting.
OUR
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL
OF
THE 2009 PLAN.
43
Proposal
3: Ratification of the appointment of
independent auditors
Our Board
of Directors, upon the recommendation of the Audit Committee of the Board, has
appointed PricewaterhouseCoopers LLP as our independent auditors for the year
ending December 31, 2009. A resolution will be presented at the
meeting to ratify the appointment of PricewaterhouseCoopers LLP.
PricewaterhouseCoopers LLP served as our
independent auditors for the year ended December 31,
2008. Representatives of PricewaterhouseCoopers LLP are expected to be
present at our Annual Meeting to respond to appropriate questions from our
stockholders and to make statements if they so desire.
Independent
Auditors’ Fees
Consistent with its charter adopted by
our Board of Directors, the Audit Committee pre-approves all auditing services
and all non-audit services (to the extent such non-audit services are
permissible) to be provided by our independent auditors. Proposed
audit and non-audit services are presented to our Audit Committee periodically
for pre-approval, based on a budget that includes a description of, and a
budgeted amount for, particular categories of audit services, non-audit
services, tax services and other services. The Audit Committee’s
approval is required to exceed the budgeted amount. In addition, as
permitted by law, the Chair of our Audit Committee may pre-approve services or
changes to estimated, approved fees. If the Audit Committee Chair
pre-approves services on behalf of the Audit Committee, the services are
presented to our Audit Committee for ratification at its next regularly
scheduled meeting.
In our two most recent fiscal years, we
paid the following amounts to our independent auditors:
|
2008
|
2007
|
|
|
Audit
Fees . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
|
$1,051,390
|
$857,745
|
|
Audit-Related
Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . .
|
1,045,000
|
12,000
|
|
Tax
Fees . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
|
—
|
—
|
|
All
Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
|
—
|
—
|
|
Total
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
|
$2,096,390
|
$869,745
|
|
|
(1)
|
Does
not include $35,000 and $15,953 in administrative and out-of-pocket fees
paid for the years ended December 31, 2008 and 2007,
respectively.
|
Audit
Fees. We paid an aggregate of $1,051,390 to
PricewaterhouseCoopers LLP for (i) the 2008 fiscal year audit, (ii) the review
of the financial statements included in our 2008 quarterly reports on Form 10-Q,
(iii) statutory and subsidiary audits and (iv) services related to certain SEC
filings and a common stock offering. In 2007, we paid an aggregate of
$857,745 to PricewaterhouseCoopers LLP for these services.
Audit-Related
Fees. In 2008, we paid PricewaterhouseCoopers LLP $1,045,000
for due diligence services. Specifically, these fees were for
services performed in connection with our acquisitions of The Bayou Companies,
L.L.C. and Corrpro Companies, Inc. All of these services were
pre-approved by our Audit Committee. In 2007, we paid an aggregate of
$12,000 to PricewaterhouseCoopers LLP for audit-related services.
Tax
Fees. We did not engage PricewaterhouseCoopers LLP to provide
these services in 2008 or 2007.
All Other
Fees. In 2008 and 2007, PricewaterhouseCoopers LLP did not
perform any services for us other than those described above.
44
We intend to use our independent
auditors to provide only audit, audit-related and tax services in the
future.
Ratification
of the Appointment of Independent Auditors
Ratification of the appointment of
PricewaterhouseCoopers LLP as our independent auditors for the year ending
December 31, 2009 will require the affirmative vote of a majority of the votes
entitled to vote on this proposal at the Annual Meeting.
OUR
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE
APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT AUDITORS
FOR
THE YEAR ENDING DECEMBER 31, 2009.
Other
Matters
The Board
does not know of any other matters that may be brought before the annual
meeting. However, if any other matters are properly presented for
action, it is the intention of the persons named on the accompanying proxy card
to vote the shares represented thereby in accordance with their judgment on such
matters.
Householding
of materials
In some instances, only one copy of
this Proxy Statement or our 2008 Annual Report is being delivered to multiple
stockholders sharing an address, unless we have received instructions from one
or more of the stockholders to continue to deliver multiple
copies. We will deliver promptly upon oral or written request a
separate copy of the Proxy Statement or 2008 Annual Report, as applicable, to
any stockholder at your address. If you wish to receive a separate
copy of the Proxy Statement or 2008 Annual Report, you may call us at (636)
530-8000 or send a written request to Insituform Technologies, Inc., 17988
Edison Avenue, Chesterfield, Missouri 63005, Attention:
Secretary. Alternatively, stockholders sharing an address who now
receive multiple copies of the Proxy Statement or Annual Report may request
delivery of a single copy also by calling us at the number or writing to us at
the address listed above.
Stockholder
Proposals
Our
Amended and Restated By-Laws provide that, in order for a stockholder to
nominate a candidate for director or to bring other business before a meeting of
stockholders, the stockholder must have given timely notice thereof in writing
to our Secretary at our principal executive office.
For the
nomination of candidates for and the election of directors to be timely brought
before a meeting by a stockholder, a stockholder’s notice shall be delivered
(a) with respect to an election to be held at an annual meeting of
stockholders, not less than 90 days nor more than 120 days prior to the first
anniversary of the preceding year’s annual meeting (which for the 2010 Annual
Meeting of Stockholders would be January 22, 2010 and December 23, 2009,
respectively) and (b) with respect to an election to be held at a special
meeting of stockholders (i) not earlier than the 120th day prior to such special
meeting and (ii) not later than the close of business on the later of the 90th
day prior to such special meeting or the 10th day following the day on which
public announcement is first made of the date of the special meeting and of the
nominees to be elected at such meeting.
45
In the
event that the number of directors to be elected to the Board at an annual
meeting is increased and there is no public announcement naming all of the
nominees for directors or specifying the size of the increased Board made by us
at least 60 days prior to the first anniversary of the preceding year’s annual
meeting, a stockholder’s notice shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it is
delivered not later than the close of business on the 10th day following the day
on which such public announcement of the date of such meeting is first
made.
For business other than nominations of
candidates for and the election of directors to be timely brought before a
meeting by a stockholder, a stockholder’s notice shall be delivered to or mailed
to and received by our Secretary not less than 90 days nor more than 120 days
prior to the first anniversary of the preceding year’s annual meeting (which for
the 2010 Annual Meeting of Stockholders would be January 22, 2010 and December
23, 2009, respectively).
However,
in the event that the date of the annual meeting is advanced by more than 30
days or delayed by more than 60 days from such anniversary date, for a notice by
the stockholder for these purposes to be timely, it must be so delivered (a) not
earlier than the 120th day prior to such annual meeting and (b) not later than
the close of business on the later of the 90th day prior to such annual meeting
or the 10th day following the day on which public announcement (as defined in
our Amended and Restated By-Laws) of the date of such meeting is first
made.
Any
written notice of a stockholder proposal, including a proposal for the
nomination of candidates for election as director, must include the information
and representations required by our Amended and Restated By-Laws and, in the
case of a notice of nomination of directors, all information relating to each
person whom the stockholder proposes to nominate for election or reelection as a
director, that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act, as amended (including such person’s
written consent to being named in the Proxy Statement as a nominee and to
serving as a director if elected).
The chairman of any meeting of
stockholders for the election of directors or other business and the Board may
refuse to acknowledge the nomination of any person or permit any business to be
brought without compliance with the procedures set forth in our Amended and
Restated By-Laws or if the stockholder solicits proxies in support of such
stockholder’s nominee(s) or proposal for other business without such stockholder
having made the representations required by our Amended and Restated
By-Laws. If a stockholder does not appear or send a qualified
representative (as defined in our Amended and Restated By-Laws) to present the
nomination or proposal at such meeting, we need not present such nomination or
proposal for a vote at such meeting, notwithstanding that proxies in respect of
such nomination or proposal may have been received by us. The
foregoing requirements are separate from and in addition to the requirements of
the Securities and Exchange Commission that a stockholder must meet to have a
proposal included in our Proxy Statement.
Under the proxy rules of the Securities
and Exchange Commission, a stockholder wishing to include a stockholder proposal
in our Proxy Statement must submit the proposal to us not later than 120
calendar days before the first release date of the prior year’s annual meeting
Proxy Statement. For the 2010 Annual Meeting of Stockholders, this
date would be November 26, 2009. This rule is independent of the
procedures mandated in our Amended and Restated By-Laws with respect to the
ability of a stockholder to present stockholder proposals at the Annual Meeting
as stated above.
46
Stockholder
Communications With Directors
Our Board has an informal process in
place for our stockholders to communicate with directors. Any
stockholder wishing to contact our Board or one of our directors can write
to:
Board of
Directors
c/o Insituform Technologies,
Inc.
17988 Edison Avenue
Chesterfield, Missouri
63005
All correspondence received by us and
addressed as indicated above will be reviewed by appropriate Insituform
personnel and promptly forwarded to our Chairman of the Board and/or to the
appropriate director. Communications that relate to our accounting,
internal accounting controls or auditing matters will also be referred to the
Chair of our Board’s Audit Committee.
Although our Board does not have an
express policy regarding director attendance at the Annual Meeting of
Stockholders, we anticipate that all directors will attend this year’s Annual
Meeting. Six directors attended the 2008 Annual Meeting of
Stockholders.
David F.
Morris
Secretary
Chesterfield,
Missouri
March 25,
2009
47
Appendix
A
INSITUFORM
TECHNOLOGIES, INC.
2009
Employee Equity Incentive Plan
1. Purpose and Nature of
Plan. The purpose of this 2009 Employee Equity Incentive Plan
(the “Plan”) of Insituform Technologies, Inc. (the “Company”) is to encourage
key employees of the Company and such subsidiaries of the Company as the
Administrator may designate, to acquire shares of Class A $0.01 par value common
stock of the Company (“Common Stock”) or to receive monetary payments based on
the value of such stock or based upon achieving certain goals on a basis
mutually advantageous to such employees and the Company and thus provide an
incentive for employees to contribute to the success of the Company and align
the interests of key employees with the interests of the shareholders of the
Company.
2. Administration. The
Plan shall be administered by the Board of Directors of the Company or the
Compensation Committee of the Board of Directors (the
“Administrator”).
The authority to select persons
eligible to participate in the Plan, to grant benefits in accordance with the
Plan, and to establish the timing, pricing, amount and other terms and
conditions of such grants (which need not be uniform with respect to the various
participants or with respect to different grants to the same participant), may
be exercised by the Administrator in its sole discretion.
Subject to the provisions of the Plan,
the Administrator shall have exclusive authority to interpret and administer the
Plan, to establish appropriate rules relating to the Plan, to delegate some or
all of its authority under the Plan and to take all such steps and make all such
determinations in connection with the Plan and the benefits granted pursuant to
the Plan as it may deem necessary or advisable. The validity, construction, and
effect of the Plan shall be determined in accordance with the laws of the State
of Missouri.
The Board of Directors in its
discretion may delegate and assign specified duties and authority of the
Administrator to any other committee and retain the other duties and authority
of the Administrator to itself. Also, the Board of Directors in its
discretion may appoint a separate committee of outside directors to make awards
that satisfy the requirements of Section 162(m) of the Internal Revenue
Code.
3. Shares Reserved Under the
Plan. Subject to the provisions of Section 12 (relating to
adjustment for changes in capital stock) an aggregate of two million five
hundred thousand (2,500,000) shares of Common Stock of the Company shall be
available for issuance under the Plan (the “Plan Maximum”). The
shares of Common Stock issued under the Plan may be made available from
authorized but unissued shares or shares re-acquired by the Company, including
shares purchased in the open market or in private transactions.
Stock underlying outstanding options,
stock appreciation rights, stock units or performance awards will reduce the
Plan Maximum while such options, stock appreciation rights, stock units or
performance awards are outstanding. Shares underlying expired,
canceled or forfeited options, stock appreciation rights, stock units or
performance awards shall be added back to the Plan Maximum. If the
exercise price of stock options is paid by delivery of shares of Common Stock of
the Company, or if shares of Common Stock of the Company are withheld from a
distribution in payment of the exercise price, the Plan Maximum shall be reduced
by the gross number of shares subject to the exercised stock option, rather than
the net number of shares issued pursuant to such exercise. Restricted
stock issued pursuant to the Plan will reduce the Plan Maximum while outstanding
even while subject to restrictions. Shares of restricted stock shall
be added back to the Plan Maximum if such restricted stock is forfeited or is
returned to the Company as part of a restructuring of benefits granted pursuant
to this Plan. Shares of Common Stock reserved for issuance upon
grants of stock appreciation rights (to the extent the number of reserved shares
exceeds the number of shares actually issued upon exercise of the stock
appreciation
A-1
rights),
and shares of Common Stock withheld by, or otherwise remitted to, the Company to
satisfy an Employee’s tax withholding obligations with respect to awards under
the Plan shall not be added back to the Plan Maximum.
Awards
other than options, stock appreciation rights and any other award where the
benefit is not limited to the increase in value of the shares of Common Stock
subject to the award over fair market value of such shares at the time of the
award, shall be counted against the Plan Maximum in a 1.44-to-1
ratio.
Notwithstanding the
above, the maximum number of shares subject to stock options or to SARs that may
be awarded in any calendar year to any individual shall not exceed 500,000
shares (as adjusted in accordance with Section 12).
After adoption of this Plan, all shares
of Common Stock of the Company otherwise available for awards under the 2006
Employee Equity Incentive Plan of Insituform Technologies, Inc. (but not subject
to outstanding awards thereunder) at such time shall be unavailable for
issuance.
4. Participants. Participants
will consist of such officers and key employees of the Company or any designated
subsidiary as the Administrator in its sole discretion shall
determine. Designation of a participant in any year shall not require
the Administrator to designate such person to receive a benefit in any other
year or to receive the same type or amount of benefit as granted to the
participant in any other year or as granted to any other participant in any
year. The Administrator shall consider such factors as it deems
pertinent in selecting participants and in determining the type and amount of
their respective benefits.
5. Types of
Benefits. The following benefits may be granted under the
Plan: (a) stock appreciation rights (“SARs”); (b) restricted stock
(“Restricted Stock”); (c) performance awards (“Performance Awards”); (d)
incentive stock options (“ISOs”); (e) nonqualified stock options (“NQSOs”); and
(f) Stock Units, all as described below.
6. Stock Appreciation
Rights. A SAR is the right to receive all or a portion of the
difference between the fair market value of a share of Common Stock at the time
of exercise of the SAR and the exercise price of the SAR established by the
Administrator, subject to such terms and conditions set forth in a SAR agreement
as may be established by the Administrator in its sole
discretion. The exercise price of a SAR may not be less than the fair
market value of a share of Common Stock at the time of the award. At
the sole discretion of the Administrator, SARs may be exercised (a) in lieu of
exercise of an option; (b) in conjunction with the exercise of an option; (c)
upon lapse of an option; (d) independent of an option; or (e) each of the above
in connection with a previously awarded option under the Plan. If the
option referred to in (a), (b) or (c) above qualified as an ISO pursuant to
Section 422 of the Internal Revenue Code of 1986 (“Code”), the related SAR shall
comply with the applicable provisions of the Code and the regulations issued
thereunder. At the time of grant, the Administrator may establish, in
its sole discretion, a maximum amount per share which will be payable upon
exercise of a SAR, and may impose conditions on exercise of a SAR. At
the discretion of the Administrator, payment for SARs may be made in cash or
shares of Common Stock of the Company, or in a combination
thereof. SARs will be exercisable not later than ten years after the
date they are granted and will expire in accordance with the terms established
by the Administrator. Dividend equivalents shall not be awarded in
conjunction with a SAR.
7. Restricted
Stock. Restricted Stock is Common Stock of the Company issued
or transferred under the Plan (other than upon exercise of stock options or as
Performance Awards) at any purchase price less than the fair market value
thereof on the date of issuance or transfer, or as a bonus, subject to such
terms and conditions set forth in a Restricted Stock agreement as may be
established by the Administrator in its sole discretion. In the case
of any Restricted Stock:
A-2
(a) The
purchase price, if any, will be determined by the Administrator;
(b) The period of restriction shall be established by the Administrator for any grants of Restricted Stock;
(c)
Restricted Stock may be subject to (i) restrictions on the sale or
other disposition thereof; (ii) rights of the Company to reacquire such
Restricted Stock at the purchase price, if any, originally paid therefor upon
termination of the employee’s employment within specified periods;
(iii) representation by the employee that he or she intends to acquire
Restricted Stock for investment and not for resale; and (iv) such other
restrictions, conditions and terms as the Administrator deems
appropriate;
(d)
The
participant shall be entitled to all dividends paid with respect to Restricted
Stock during the period of restriction and shall not be required to return any
such dividends to the Company in the event of the forfeiture of the Restricted
Stock;
(e)
The
participant shall be entitled to vote the Restricted Stock during the period of
restriction;
(f)
The
Administrator shall determine whether Restricted Stock is to be delivered to the
participant with an appropriate legend imprinted on the certificate or if the
shares are to be issued in the name of a nominee or deposited in escrow pending
removal of the
restrictions.
8. Performance
Awards. Performance Awards are Common Stock of the Company,
monetary units or some combination thereof, to be issued without any payment
therefor, in the event that certain performance goals established by the
Administrator are achieved over a period of time designated by the
Administrator, but not in any event more than five years. The goals
established by the Administrator may include return on average total capital
employed, earnings per share, increases in share price or such other goals as
may be established by the Administrator. In the event the minimum
corporate goal is not achieved at the conclusion of the period, no payment shall
be made to the participant. Actual payment of the award earned shall
be in cash or in Common Stock of the Company or in a combination of both, as the
Administrator in its sole discretion determines. If Common Stock of
the Company is used, the participant shall not have the right to vote and
receive dividends until the goals are achieved and the actual shares are
issued.
9. Incentive Stock
Options. ISOs are stock options to purchase shares of Common
Stock at not less than 100% of the fair market value of the shares on the date
the option is granted, subject to such terms and conditions set forth in an
option agreement as may be established by the Administrator in its sole
discretion that conform to the requirements of Section 422 of the
Code. Such purchase price may be paid (a) by check; or (b) in the
sole discretion of the Administrator, by the delivery of shares of Common Stock
owned by the participant for at least six months; or (c) in the sole discretion
of the Administrator, by a combination of any of the foregoing, in the manner
provided in the option agreement. The aggregate fair market value
(determined as of the time an option is granted) of the stock with respect to
which ISOs are exercisable for the first time by an optionee during any calendar
year (under all option plans of the Company and its subsidiaries) shall not
exceed $100,000. Dividend equivalents shall not be awarded in
conjunction with an ISO. The term of an ISO shall not exceed ten
years.
10. Nonqualified Stock
Options. NQSOs are nonqualified stock options to purchase
shares of Common Stock at purchase prices established by the Administrator on
the date the options are granted, subject to such terms and conditions set forth
in an option agreement as may be established by the Administrator in its sole
discretion. The exercise price of a NQSO may not be less than the
fair market value of a share of Common Stock at the time of the
award. The term of a NQSO shall not exceed ten
years. Subject to the option agreement, the purchase price may be
paid by check or shares of Common Stock. Alternatively, in the sole
discretion of the Administrator, the option exercise may be settled
by
A-3
transferring
the net number of shares with a value equal to the excess of the fair market
value at the time of the exercise of the shares of Common Stock subject to the
exercise over the exercise price of such shares. Subject to the
option agreement, shares of Common Stock also may be withheld by, or otherwise
remitted to, the Company to satisfy an Employee’s tax withholding obligations
with respect to exercise of a stock option. Dividend equivalents
shall not be awarded in conjunction with a stock option.
11. Stock Units. A
Stock Unit represents the right to receive a share of Common Stock from the
Company at a designated time in the future, subject to such terms and conditions
set forth in a Stock Unit agreement as may be established by the Administrator
in its sole discretion. The participant does not have the rights of a
shareholder until receipt of the Common Stock.
12. Adjustment
Provisions.
(a) If the Company shall at
any time change the number of issued shares of Common Stock without new
consideration to the Company (such as by stock dividends or stock splits), the
total number of shares reserved for issuance under this Plan and the number of
shares covered by each outstanding benefit shall be adjusted so that the
aggregate consideration payable to the Company, if any, and the value of each
such benefit shall not be changed. Benefits may also contain
provisions for their continuation or for other equitable adjustments after
changes in the Common Stock resulting from reorganization, sale, merger,
consolidation, issuance of stock rights or warrants, or similar
occurrence.
(b) Notwithstanding any other
provision of this Plan, and without affecting the number of shares reserved or
available hereunder, the Board of Directors may authorize the issuance or
assumption of benefits in connection with any merger, consolidation, acquisition
of property or stock, or reorganization upon such terms and conditions as it may
deem appropriate.
13. Nontransferability. Each
benefit granted under the Plan to an employee shall not be transferable
otherwise than by will or the laws of descent and distribution; provided,
however, NQSOs granted under the Plan may be transferred, without consideration,
to a Permitted Transferee (as defined below). Benefits granted under
the Plan shall be exercisable, during the participant’s lifetime, only by the
participant or a Permitted Transferee. Benefits granted under the
Plan may not be transferred to a third party for value, without shareholder
approval. In the event of the death of a participant, exercise or
payment shall be made only:
(a) By or to the Permitted
Transferee, executor or administrator of the estate of the deceased participant
or the person or persons to whom the deceased participant’s rights under the
benefit shall pass by will or the laws of descent and distribution;
and
(b) To the extent that the
deceased participant or the Permitted Transferee, as the case may be, was
entitled thereto at the date of his death.
For
purposes of this Section, “Permitted Transferee” shall include (i) one or
more members of the participant’s family, (ii) one or more trusts for the
benefit of the participant and/or one or more members of the participant’s
family, or (iii) one or more partnerships (general or limited),
corporations, limited liability companies or other entities in which the
aggregate interests of the participant and members of the participant’s family
exceed 80% of all interests. For this purpose, the participant’s
family shall include only the participant’s spouse, children and
grandchildren.
14. Taxes. The
Company shall be entitled to withhold the amount of any tax attributable to any
amounts payable or shares deliverable under the Plan after giving the person
entitled to receive such payment or delivery notice as far in advance as
practicable, and the Company may defer making payment or delivery as to any
benefit if any such tax is payable until indemnified to its
satisfaction. In the sole discretion of the Administrator, the person
entitled to any such delivery may, by notice to the Company
at
A-4
the time
the requirement for such delivery is first established, elect to have such
withholding satisfied by a reduction of the number of shares otherwise so
deliverable, such reduction to be calculated based on a closing market price on
the date of such notice.
15. Tenure. A
participant’s right, if any, to continue to serve the Company and its
subsidiaries as an officer, employee, or otherwise, shall not be enlarged or
otherwise affected by his or her designation as a participant under the
Plan.
16. Duration, Interpretation, Amendment
and Termination. No benefit shall be granted more than ten
years after the date of adoption of this Plan; provided, however, that the terms
and conditions applicable to any benefit granted within such period may
thereafter be amended or modified by mutual agreement between the Company and
the participant or such other person as may then have an interest
therein. Without the prior approval of the Company’s stockholders,
the Company will not effect a “repricing” (as defined below) of any stock
options or other benefits granted under the terms of this Plan. For
purposes of the immediately preceding sentence, a “repricing” shall be deemed to
mean any of the following actions or any other action having the same
effect: (a) the lowering of the purchase price of an option or other
benefit after it is granted; (b) the canceling of an option or other benefit in
exchange for another option or benefit at a time when the purchase price of the
cancelled option or benefit exceeds the fair market value of the underlying
stock (unless the cancellation and exchange occurs in connection with a merger,
acquisition, spin-off or other similar corporate transaction); (c) the purchase
of an option or other benefit for cash or other consideration at a time when the
purchase price of the purchased option or benefit exceeds the fair market value
of the underlying stock (unless the purchase occurs in connection with a merger,
acquisition, spin-off or other similar corporate transaction) or (d) an action
that is treated as a repricing under generally accepted accounting
principles. To the extent that any stock options or other benefits
which may be granted within the terms of the Plan would qualify under present or
future laws for tax treatment that is beneficial to a recipient, then any such
beneficial treatment shall be considered within the intent, purpose and
operational purview of the Plan and the sole discretion of the Administrator,
and to the extent that any such stock options or other benefits would so qualify
within the terms of the Plan, the Administrator shall have full and complete
authority to grant stock options or other benefits that so qualify (including
the authority to grant, simultaneously or otherwise, stock options or other
benefits which do not so qualify) and to prescribe the terms and conditions
(which need not be identical as among recipients) in respect to the grant or
exercise of any such stock option or other benefits under the Plan.
The Board of Directors may amend the
Plan from time to time or terminate the Plan at any time. However, no
action authorized by this paragraph shall reduce the amount of any existing
benefit or change the terms and conditions thereof without the participant’s
consent. No amendment of the Plan shall, without approval of the
stockholders of the Company, (a) increase the total number of shares which may
be issued under the Plan or increase the amount or type of benefits that may be
granted under the Plan; or (b) modify the requirements as to eligibility for
benefits under the Plan.
17. Rules of Construction; Compliance
with 409A. The terms of this Plan, and any agreement
containing the terms and conditions of an award made pursuant to this Plan,
shall be interpreted: first, in a manner that causes the award to comply with
Section 409A of the Internal Revenue Code of 1986, as amended; and secondly, in
accordance with the laws of the State of Missouri.
18. Effective
Date. This Insituform Technologies, Inc. 2009 Employee Equity
Incentive Plan shall become effective as of the date it is adopted by the Board
of Directors of the Company subject only to approval by the holders of a
majority of the outstanding voting stock of the Company within twelve months
before or after the adoption of the Plan by the Board of Directors.
A-5
INSITUFORM
TECHNOLOGIES, INC.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
As
an alternative to completing this form, you may enter your vote instruction by
telephone at 1-800-PROXIES, or via the Internet at WWW.VOTEPROXY.COM and follow
the simple instructions. Use the Company Number and Account Number shown on your
proxy card.
The
undersigned having received the notice of the 2009 Annual Meeting of
Stockholders of Insituform Technologies, Inc. (the “Company”) and the proxy
statement, appoints J. Joseph Burgess and David F. Morris, and each of them
acting individually, the undersigned’s proxies with full power of substitution,
for and in the name, place and stead of the undersigned, to vote and act with
respect to all of the shares of the Company’s Class A common stock, $.01 par
value, standing in the name of the undersigned or with respect to which the
undersigned is entitled to vote and act, at the meeting and at any adjournment
or adjournments thereof, and the undersigned directs that this proxy be voted as
specified on the reverse side.
If
no direction is made, the proxy will be voted: (a) “FOR” all of the Company’s
director nominees in Proposal 1, (b) “FOR” Proposal 2 and (c) “FOR” Proposal
3. The undersigned hereby revokes any proxy or proxies heretofore
given to vote upon or act with respect to such stock and hereby ratifies and
confirms all that the proxies so present and voting, their substitutes or any of
them, may lawfully do by virtue hereof.
YOUR
VOTE IS VERY IMPORTANT – PLEASE VOTE TODAY.
(Continued
and to be signed on the reverse side.)
ANNUAL
MEETING OF STOCKHOLDERS OF
INSITUFORM
TECHNOLOGIES, INC.
April
22, 2009
PROXY
VOTING INSTRUCTIONS
|
INTERNET - Access “www.voteproxy.com” and
follow the
on-screen
instructions. Have your proxy card available when you
access
the web page, and use the Company Number and Account
Number
shown on your proxy card.
|
||
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TELEPHONE - Call toll-free 1-800-PROXIES
(1-800-776-9437) in the
United
States or 1-718-921-8500
from foreign countries from any
touch-tone
telephone and follow the instructions. Have your proxy card
available
when you call and use the Company Number and Account
Number
shown on your proxy card.
|
COMPANY NUMBER | |
|
Vote
online/phone until 11:59 PM EST the day before the meeting.
MAIL - Sign, date and mail
your proxy card in the envelope provided
as
soon as possible.
|
ACCOUNT NUMBER | |
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IN
PERSON -
You may vote your shares in person by attending the
Annual
Meeting.
|
NOTICE OF INTERNET
AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, proxy statement and proxy card
are available at
http://www.amstock.com/proxyservices/viewmaterials.asp
â
Please detach along perforated line and mail in the envelope provided IF you are
not voting via telephone or the Internet. â
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL THE
NOMINEES LISTED AND "FOR" PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE x
|
1. Election
of Directors:
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|||||
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FOR
|
AGAINST
|
ABSTAIN
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|||
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J.
Joseph Burgess
|
£
|
£
|
£
|
||
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Stephen
P. Cortinovis
|
£
|
£
|
£
|
||
|
Stephanie A.
Cuskley
|
£
|
£
|
£
|
||
|
John P.
Dubinsky
|
£
|
£
|
£
|
||
|
Juanita
H. Hinshaw
|
£
|
£
|
£
|
||
|
Alfred
L. Woods
|
£
|
£
|
£
|
||
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2. To
approve the Insituform
Technologies,
Inc.
2009 Employee
Equity Incentive Plan
|
£
|
£
|
£
|
||
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3. To
ratify the appointment of
PricewaterhouseCoopers
LLP as independent
auditors for the
year
ending December 31, 2009
|
£
|
£
|
£
|
|
This
proxy also may be voted, in the discretion of the proxies, on any matter
that may properly come before the meeting or any adjournment or
adjournments thereof. Should a nominee be unable to serve, this
proxy may be voted for a substitute selected by the Board of
Directors.
|
|
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To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. o
|
Signature
of
Stockholder __________________________________Date: __________ Signature
of Stockholder______________________________ Date:
_______________
|
Note:
|
Please
sign exactly as your name or names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
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