def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
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[ ] Preliminary proxy statement |
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Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2)) |
[X] Definitive proxy statement |
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[ ] Definitive additional materials |
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[ ] Soliciting material pursuant to Rule 14a-12 |
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ESCO 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):
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[X] |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title 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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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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Proposed maximum aggregate value of transaction: |
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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 the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing. |
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Amount previously paid: |
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Form, schedule or registration statement no.: |
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NOTICE OF
THE ANNUAL MEETING OF
THE STOCKHOLDERS OF
ESCO TECHNOLOGIES INC.
St. Louis,
Missouri
December 22, 2009
TO THE
STOCKHOLDERS OF
ESCO TECHNOLOGIES INC.:
The Annual Meeting of the Stockholders of ESCO Technologies Inc.
will be held at the Companys headquarters located at 9900A
Clayton Road, St. Louis County, Missouri 63124 on Thursday,
February 4, 2010, commencing at 9:30 A.M. central
time, at which meeting only holders of record of the
Companys common stock at the close of business on
December 4, 2009 will be entitled to vote, for the
following purposes:
1. To elect two directors to serve for a term expiring in
2013;
2. To vote on a proposal to ratify the Companys
appointment of KPMG LLP as the Companys independent
registered public accounting firm for the fiscal year ending
September 30, 2010; and
3. To transact such other and further business, if any, as
lawfully may be brought before the meeting and any adjournment
or postponement thereof.
The Company has mailed to Stockholders a separate notice (dated
December 22, 2009) of internet availability of the
proxy materials containing instructions on how to access the
proxy materials and vote electronically via the internet, or
vote by phone, by mail or in person. A paper or
e-mail copy
of the proxy materials may be requested using one of the methods
described in that separate notice.
ESCO TECHNOLOGIES INC.
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BY
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Chairman, Chief Executive
Officer and President
Secretary
Even though you may plan to attend the meeting in person,
please vote electronically via the internet or by telephone
(toll-free 1-866-265-2401), or, if you requested paper or
e-mail
copies of the proxy materials, please complete, sign, date and
return the proxy card in the return postage-paid envelope.
TABLE OF CONTENTS
ESCO
TECHNOLOGIES INC.
9900A
Clayton Road, St. Louis, Missouri 63124
FOR THE ANNUAL MEETING OF THE STOCKHOLDERS TO BE HELD
FEBRUARY 4, 2010
This proxy statement is furnished to the holders of all of the
issued and outstanding shares of common stock (the Common
Shares) of ESCO Technologies Inc. (the
Company) in connection with the solicitation of
proxies for use in connection with the Annual Meeting of the
Stockholders to be held February 4, 2010, and all
adjournments thereof, for the purposes set forth in the
accompanying Notice of the Annual Meeting of the Stockholders.
Such holders are hereinafter referred to as the
Stockholders. The Company is first providing access
to these proxy materials including the form of proxy to
Stockholders on or about December 22, 2009.
Whether or not you expect to be present in person at the
meeting, please submit your vote in advance using one of the
voting methods described in the separate notice dated
December 22, 2009. In voting, you have several choices:
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You may vote on each proposal, in which case the Common Shares
will be voted in accordance with your choices.
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You may, when appropriate, indicate a preference to abstain on
any proposal, which will have the effect described in
VOTING on page 27.
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You may return a properly executed proxy form without indicating
your preferences, in which case the proxies will vote the Common
Shares as follows: (1) FOR election of the directors
nominated by the Board of Directors, (2) FOR the proposal
to ratify the Companys appointment of KPMG LLP as the
Companys independent registered public accounting firm for
the fiscal year ending September 30, 2010, and (3) in
the proxy holders discretion on such other business as may
properly come before the meeting.
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Any person giving such proxy has the right to revoke it at any
time before it is voted by giving written notice of revocation
to the Secretary of the Company, by duly executing and
delivering a proxy bearing a later date, or by attending the
Annual Meeting and casting a contrary vote in person.
The close of business on December 4, 2009 was fixed as the
record date for the determination of the Stockholders entitled
to vote at the Annual Meeting of the Stockholders. As of the
record date, 26,422,188 Common Shares were outstanding and
entitled to be voted at such meeting. The Stockholders will be
entitled to cast one vote for each Common Share held of record
on the record date.
A copy of the Companys Annual Report to Stockholders for
the fiscal year ended September 30, 2009 is available for
review at www.escotechnologies.com.
The solicitation of this proxy is made by the Board of Directors
of the Company. The solicitation will be by mail and via the
internet, and the expense thereof will be paid by the Company.
Proxies may also be solicited by telephone,
e-mail or
telefax by directors, officers or regular employees of the
Company.
2
I. ELECTION
OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR
election of V.L. Richey, Jr. and J.M. Stolze, the two
nominees for Directors listed below.
Nominees
and Continuing Directors
The Companys Bylaws provide that the number of directors
shall not be less than three nor greater than ten, and shall be
determined from time to time by majority vote of the Board of
Directors. In accordance with the Bylaws, the Board of Directors
has fixed the number of directors at seven. Currently, there is
a total of six directors. Pursuant to the Companys
Articles of Incorporation, a majority of the directors in office
may fill any vacancy on the Board of Directors. As of the date
of mailing of this proxy statement, the Nominating and Corporate
Governance Committee has not determined whether or whom to
propose as a candidate for an additional director. The Board is
divided into three classes, with the terms of office of each
class ending in successive years. Two directors of the Company
are to be elected for terms expiring at the Annual Meeting in
2013, or until their respective successors have been elected and
have qualified. Certain information with respect to the nominees
for election as directors proposed by the Board of Directors and
the other directors whose terms of office as directors will
continue after the Annual Meeting is set forth below. Should any
one or more of the nominees be unable or unwilling to serve
(which is not expected), the proxies (except proxies marked to
the contrary) will be voted for such other person or persons as
the Board of Directors of the Company may recommend. Proxies
cannot be voted for more than two nominees.
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Name, Age, Principal Occupation or
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Served as
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Position, Other Directorships
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Director Since
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NOMINEES FOR TERMS ENDING IN 2013
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V.L. Richey, Jr., 52
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2002
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Chairman, Chief Executive Officer and President of the Company
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J.M. Stolze, 66
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1999
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Retired Vice President and Chief Financial Officer, Stereotaxis,
Inc., manufacturer of medical instruments
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TO CONTINUE IN OFFICE UNTIL 2012
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J.M. McConnell, 68
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1996
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Retired Chief Executive Officer, Instron Corporation,
manufacturer of scientific instruments
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Director of Warren Resources, Inc.
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D.C. Trauscht, 76
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1991
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Chairman, BW Capital Corporation, private investment company
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Director of Bourns Inc.
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TO CONTINUE IN OFFICE UNTIL 2011
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L.W. Solley, 67
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1999
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Retired Executive Vice President, Emerson Electric Co.,
manufacturer of electrical and other products
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J.D. Woods, 78
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2001
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Chairman Emeritus and retired Chief Executive Officer, Baker
Hughes Incorporated, supplier of oilfield equipment and services
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Director of Foster Wheeler Ltd. and Complete Production
Services, Inc.
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Each of the nominees and continuing directors has had the same
position with the same employer as stated in the preceding table
during the past five years, except as follows:
Since April 2003, Mr. Richey has been Chairman and Chief
Executive Officer of the Company. Since September 30, 2006,
he has also been President.
From May 2004 until November 2009, Mr. Stolze was Vice
President and Chief Financial Officer of Stereotaxis, Inc.
3
Board of
Directors and Committees
The Board of Directors has determined that none of the
non-management directors has any relationship with the Company
other than in his capacity as a director and stockholder, and,
as a result, such directors are determined to be independent
under the standards of the New York Stock Exchange. The
non-management directors are J.M. McConnell, L.W. Solley, J.M.
Stolze, D.C. Trauscht and J.D. Woods.
There were four meetings of the Board of Directors during fiscal
2009. All of the incumbent directors attended at least 75% of
the meetings of the Board and committees on which they served.
The Companys policy requires the attendance of all
directors at the Annual Meeting of Stockholders, except for
absences due to causes beyond the reasonable control of the
director. Each of the six directors in office at the time of the
2009 Annual Meeting attended that meeting except
Mr. McConnell, who was absent due to illness.
The many responsibilities and the substantial time commitment of
being a director of a public company require that the Company
provide adequate incentives for the directors continued
performance by paying compensation commensurate with the
directors expertise and duties. The non-management
directors are compensated based upon their respective levels of
Board participation and responsibilities, including service on
Board committees. Directors who are employees of the Company do
not receive any compensation for service as directors.
Compensation paid to non-management directors is as follows:
annual cash retainer $30,000; additional annual cash
retainer for Lead Director $15,000; annual fee for
four Board meetings $4,800; annual cash retainer for
Chairman of Audit and Finance Committee $7,000;
annual cash retainer for Chairmen of Human Resources and
Compensation and Nominating and Corporate Governance
Committees $5,000; annual fee for four meetings of
Audit and Finance Committee and Human Resources and Compensation
Committee $4,800; annual fee for five meetings of
Nominating and Corporate Governance Committee
$6,000. All of the above-mentioned cash retainers and fees are
paid in January of each year. In addition, for attendance at any
Board or Committee meeting in excess of the numbers stated
above, a fee of $1,200 may be paid following such meeting. Also,
each non-management director receives a retainer of 800 Common
Shares per quarter.
Under the Companys Directors Extended Compensation
Plan, a Plan for non-management Directors who began Board
service prior to April 2001, each director currently on the
Board who has served as a non-management director for at least
five years will, after the later of termination of services as a
director or reaching age 65, receive for life an annual
benefit equal to a percentage of the fiscal year 2001 annual
cash retainer for directors of $20,000. Such percentage ranges
from 50% to 100% based upon years of service as a director. In
the event of death of a retired director who is eligible under
this plan, 50% of the benefit will be paid to the surviving
spouse for life. On or after retirement, if the eligible
director so elects, the actuarial equivalent of the benefit may
be received in a single lump sum. Certain of the eligible
directors have elected to receive this lump sum distribution at
the time of retirement, in compliance with section 409(a)
of the Internal Revenue Code.
Directors may elect to defer receipt of all of their cash
compensation
and/or all
of their quarterly stock retainer. If elected, the deferred
amounts are credited to the directors deferred
compensation account in stock equivalents. Deferred amounts will
be distributed in Common Shares or cash at such future dates as
specified by the director unless distribution is accelerated in
certain circumstances, including a change in control of the
Company. The stock portion which has been deferred may only be
distributed in Common Shares.
Directors are subject to stock ownership guidelines. Under these
guidelines, each independent director is expected to accumulate
shares having a total cash value equal to five times the annual
cash retainer. These shares must be accumulated within five
years of guideline adoption or appointment to the Board. All
directors are in compliance with the guidelines.
4
DIRECTOR
COMPENSATION
The following table sets forth the compensation of the
Companys non-management directors for fiscal 2009.
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Change in
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Pension
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Fees
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Value and
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Earned
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Non-Equity
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Nonqualified
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or Paid
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Stock
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Option
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Incentive Plan
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Deferred
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in Cash
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Awards
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Awards
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Compensation
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Compensation
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All Other
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Total
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Name
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($)
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($)(1)
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($)
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($)
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Earnings(2)
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Compensation ($)
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($)
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J.M. McConnell
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$
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45,600
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(3)
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$
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139,976
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$
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25,320
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$
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210,896
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L.W. Solley
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45,600
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(4)
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139,976
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48,026
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233,602
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J.M. Stolze
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46,600
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(5)
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139,976
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51,155
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237,731
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D.C. Trauscht
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70,400
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(6)
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139,976
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14,005
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224,381
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J.D. Woods
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44,600
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(7)
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139,976
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24,757
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209,333
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Dollar amounts based on the market value of the stock on the
date of each quarterly award of 800 shares under the
Compensation Plan for Non-Employee Directors. The amounts
reflect the actual dollar amounts recognized for financial
statement reporting purposes for fiscal 2009. |
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Date of Award
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Shares
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Share Price
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October 1, 2008
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800
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$
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48.22
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January 2, 2009
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800
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42.36
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April 1, 2009
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800
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37.98
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July 1, 2009
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800
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46.41
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Represents the increase in actuarial present value of the
accumulated benefits under the Companys extended
compensation plan for non-management directors from
September 30, 2008 to September 30, 2009.
Non-management directors are eligible to participate in the plan
after at least five years of Board service. The plan pays
benefits as a percentage of $20,000 at time of retirement based
on completed years of Board service. The percentage is 50% for
five years of Board service and increases by 10% for each
additional year of service to 100% for ten or more years of
Board service. Benefits are paid quarterly commencing the later
of the directors 65th birthday or retirement. In the event
of death, 50% of the annual benefit is payable to the surviving
spouse for the life of the spouse. The change in pension value
shown above includes the effect of changes in actuarial
assumptions from year to year. Pension values increased due to
the effect of changes in actuarial assumptions. The increase in
pension value due to assumption changes for
Messrs. McConnell, Solley, Stolze, Trauscht and Woods was
$29,526, $30,982, $33,287 $19,315 and $13,151, respectively. |
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Represents: annual cash retainer $30,000, board
meeting fees $4,800, committee meeting
fees $10,800. |
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Represents: annual cash retainer $30,000, board
meeting fees $4,800, committee meeting
fees $10,800. |
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Represents: annual cash retainer $30,000, board
meeting fees $4,800, committee meeting
fees $4,800, committee chairman fee
$7,000. |
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Represents: annual cash retainer $30,000, lead
director fee $15,000, board meeting fees
$4,800, committee meeting fees $15,600, committee
chairman fee $5,000. |
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Represents: annual cash retainer $30,000, board
meeting fees $4,800, committee meeting
fees $4,800, committee chairman fee
$5,000. |
CORPORATE
GOVERNANCE
The Board of Directors has adopted corporate governance
guidelines and a code of business conduct and ethics applicable
to all of the Companys directors, officers and employees.
Additionally, the Board of Directors has adopted a code of
ethics for senior financial officers applicable to the
Companys Chief Executive Officer, Chief Financial Officer,
Chief Accounting Officer, Controller and persons performing
similar duties. These documents are posted on the Companys
web site: www.escotechnologies.com. A copy of each of the
corporate governance
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guidelines, the code of business conduct and ethics and the code
of ethics for senior financial officers is also available in
print to any Stockholder who requests it.
Mr. Trauscht, the Companys Lead Director, presides at
meetings of the non-management directors (each of whom is deemed
independent), which normally occur in conjunction with each
Board meeting. Parties desiring to communicate concerns
regarding the Company to the non-management Directors may direct
correspondence to the Lead Director of the Board at the
following address: Mr. D.C. Trauscht, Lead Director, ESCO
Technologies Board of Directors, ESCO Technologies Inc., 9900A
Clayton Road, St. Louis, MO
63124-1186.
Parties who wish to communicate with a particular director may
write to such director at ESCO Technologies Inc., 9900A Clayton
Road, St. Louis, MO
63124-1186,
Attn: Secretary. All such letters will be forwarded promptly to
the relevant director.
Related
Person Transactions and Procedures
The Company reviews relationships and transactions in which the
Company and Related Persons are participants to determine
whether such Related Persons have a direct or indirect material
interest. Related Persons include the Companys directors,
director nominees, executive officers, 5% or more Stockholders
or their immediate family members. The Company has developed and
implemented processes and controls to obtain information from
Related Persons about Related Person Transactions and for the
purpose of determining, based on the facts and circumstances,
whether a Related Person has a direct or indirect material
interest in the transaction. As required under SEC rules,
transactions that are determined to be directly or indirectly
material to a Related Person are disclosed in this proxy
statement.
Pursuant to these processes, all directors and executive
officers annually complete, sign and submit a Directors
and Officers Questionnaire and a Conflict of Interest
Questionnaire that are designed to identify Related Person
Transactions and both actual and potential conflicts of
interest. Additionally, 5% or more Stockholders are requested to
respond to certain questions designed to identify direct or
indirect material interests by such 5% or more Stockholder in
any transactions with the Company. The Companys policy on
Related Person Transactions requires prompt notice to the
General Counsel by a Related Person of any material interest
that such Related Person may have in a proposed transaction with
the Company. If the Chairman of the Corporate Governance and
Nominating Committee determines that a conflict exists, after
notice from the General Counsel, the Committee will review the
material facts of the proposed transaction and determine whether
to approve or disapprove such transaction. The Committee will
consider whether the transaction with the Related Person is on
terms no less favorable than terms generally available to an
unaffiliated third-party under the same or similar
circumstances. If advance Committee approval is not feasible or
is not obtained, review of the transaction will occur after the
fact, and the Committee shall be empowered to approve, ratify,
amend, rescind or terminate the transaction.
COMMITTEES
The members of the Board of Directors are appointed to various
committees. The standing committees of the Board are: the
Executive Committee, the Audit and Finance Committee, the Human
Resources and Compensation Committee and the Nominating and
Corporate Governance Committee. Each of these committees
operates under a written charter adopted by the Board of
Directors.
The Executive Committees function is to exercise the full
authority of the Board of Directors between Board meetings,
except that the Executive Committee may not take certain
specified actions which the Board of Directors has reserved for
action by the whole Board. The Committee held one meeting in
fiscal 2009. Mr. Richey (Chairman) and Mr. Trauscht
are the members of the Committee.
The Audit and Finance Committees functions generally are
to assist oversight by the Board of Directors of the
Companys financial reporting process, the Companys
compliance with legal and regulatory requirements, the
independent registered public accounting firms (the
accounting firm) qualifications and independence,
and the performance of the Companys internal audit
function and the accounting firm. These functions include the
responsibility to appoint, retain and oversee the accounting
firm and its performance of the annual audit; to annually
evaluate the qualifications, independence and prior performance
of the accounting firm; to review the scope of the accounting
firms work and approve its annual audit fees and any
non-audit service fees; to review the Companys internal
controls with the accounting firm and the internal audit
executive; to review with the accounting firm any
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problems it may have encountered during the annual audit; to
discuss 10-K
and 10-Q
reports with management and the accounting firm before filing;
to review and discuss earnings press releases; to discuss with
management major financial risk exposures; to review the annual
plan and associated resource allocation of the internal audit
function; to review the Companys reports to Stockholders
with management and the accounting firm, and to receive certain
assurances from management; to prepare a report as required by
the SEC (the SEC) to be included in the annual proxy
statement; and to review the effectiveness of the Companys
legal, regulatory and corporate governance compliance programs.
Each member of the Committee is an independent director, as
defined in the applicable listing standards of the New York
Stock Exchange. The Board of Directors has determined that
Mr. Stolze, the Chairman of the Audit and Finance
Committee, is an audit committee financial expert within the
meaning of Item 407(d)(5)(ii) of
Regulation S-K
under the Securities Exchange Act of 1934, as amended (the
Exchange Act), and is independent within the meaning
of the applicable listing standards of the New York Stock
Exchange. The Committee met four times in fiscal 2009.
Mr. Stolze (Chairman), Mr. McConnell and
Mr. Trauscht are the members of the Committee. The
Committees charter is posted on the Companys web
site: www.escotechnologies.com under the Corporate
Governance link and is available in print to any Stockholder who
requests it.
The Human Resources and Compensation Committees functions
generally are to review and approve corporate goals and
objectives relevant to compensation of the Chief Executive
Officer; to evaluate the Chief Executive Officers
performance in light of these goals and objectives; to determine
and approve the Chief Executive Officers compensation
level based upon the evaluation; to review and approve the
compensation of officers and other key executives, incentive
compensation plans, equity-based plans and other compensation
plans; to review and approve material changes to benefit
programs, including new programs; to review the performance,
development, and succession planning for the Company management;
to assure that executive officers and other senior executives of
the Company are compensated in a manner consistent with the
strategy of the Company and competitive practice; to review and
discuss with management the Companys Compensation
Discussion and Analysis (CD&A) and recommend
its inclusion in the annual proxy statement and
Form 10-K
for filing with the SEC; and to oversee the Charitable
Contributions Program. Each member of the Committee is an
independent director, as defined in the applicable listing
standards of the New York Stock Exchange. The Committee met four
times in fiscal 2009. Mr. Woods (Chairman), Mr. Solley
and Mr. Trauscht are the members of the Committee. The
Committees charter is posted on the Companys web
site: www.escotechnologies.com under the Corporate
Governance link and is available in print to any Stockholder who
requests it.
The Nominating and Corporate Governance Committees
functions generally are to identify and recommend approval of
individuals qualified to become Board members; to recommend
director nominees for selection to the Board; to review the
composition of the Board committees; to develop and recommend to
the Board effective corporate governance guidelines; to oversee
the Companys ethics programs; to review conflicts of
interest involving related persons, including oversight and
administration of the Related Party Transactions policy; and to
lead the Board in its annual review of the Boards
performance. The Committee will consider candidates for election
as directors recommended by Stockholders and evaluate such
individuals in the same manner as other candidates proposed to
the Committee. All candidates must meet the legal, regulatory
and exchange requirements applicable to members of the Board of
Directors. The Committee has not established other specific
minimum qualifications that must be met by a candidate in order
to be considered for nomination by the Committee, but requires
that candidates have varied business and professional
backgrounds; be persons of the highest integrity; possess sound
business judgment and possess such other skills and experience
as will enable the Board to act in the long-term interests of
the Stockholders. Additionally, the Committee may establish and
utilize such other specific membership criteria as the Committee
deems appropriate from time to time in light of the Boards
need of specific skills and experience. The Committee may
identify new candidates for nomination based on recommendations
from Company management, employees, non-management directors,
third party search firms, Stockholders and other third parties.
Consideration of a new candidate typically involves the
Committees review of information pertaining to such
candidate and a series of internal discussions, and may proceed
to interviews with the candidate. New candidates are evaluated
based on the above-described criteria in light of the specific
needs of the Board and the Company at the time. Incumbent
directors whose terms are set to expire are evaluated based on
the above-described criteria, as well as a review of their
overall past performance on the Board of Directors. The
Committee has the authority to engage third party search firms
to identify candidates, but did not do so in fiscal 2009.
7
Stockholders who wish to recommend director candidates for the
next Annual Meeting of Stockholders should notify the Committee
no later than September 1, 2010. Submissions are to be
addressed to the Nominating and Corporate Governance Committee,
c/o the
Companys Corporate Secretary, Alyson S. Barclay, at ESCO
Technologies Inc., 9900A Clayton Road, St. Louis, MO
63124-1186,
which submissions will then be forwarded to the Committee. The
Committee is not obligated to nominate any such individual for
election. No such Stockholder candidates have been received by
the Company for this Annual Meeting. Each member of the
Committee is an independent director, as defined in the
applicable listing standards of the New York Stock Exchange. The
Committee met five times in fiscal 2009. Mr. Trauscht
(Chairman), Mr. McConnell and Mr. Solley are the
members of the Committee. The Committees charter is posted
on the Companys web site: www.escotechnologies.com
under the Corporate Governance link and is available in print to
any Stockholder who requests it.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2009, the members of the Human Resources and
Compensation Committee were L.W. Solley, D.C. Trauscht and J.D.
Woods. None of the foregoing (i) was during fiscal 2009 an
officer or employee of the Company; (ii) was formerly an
officer of the Company; or (iii) had any relationship
requiring disclosure by the Company under any paragraph of
Item 404 of
Regulation S-K.
Report of
the Audit and Finance Committee
The Audit and Finance Committee (the Committee)
oversees and monitors the Companys financial reporting
process on behalf of the Board of Directors. Management has the
primary responsibility for the financial statements and the
reporting process, including the Companys systems of
internal control. In fulfilling its oversight responsibilities,
the Committee reviewed and discussed with management the audited
financial statements to be included in the Annual Report on
Form 10-K
for the year ended September 30, 2009, including a
discussion of the quality and the acceptability of the
Companys financial reporting practices and the internal
controls over financial reporting.
The Committee reviewed with the independent registered public
accounting firm (the accounting firm), which is
responsible for expressing an opinion on the conformity of those
audited financial statements with accounting principles
generally accepted in the United States of America, its
judgments as to the quality and the acceptability of the
Companys financial reporting and such other matters as are
required to be discussed with the Committee under auditing
standards generally accepted in the United States of America. In
addition, the Committee discussed with the accounting firm its
independence from management and the Company, including the
impact of any non-audit-related services provided to the Company
and the matters in the accounting firms written
disclosures and the letter required by the applicable
requirements of the Public Company Accounting Oversight Board
received by the Company regarding the accounting firms
communications with the Committee concerning independence. The
Committee also discussed with the accounting firm the matters
required to be discussed by the statement on Auditing Standards
No. 61, as amended.
Further, the Committee discussed with the Companys
internal audit executive and the accounting firm the overall
scope and plans for their respective audits. The Committee meets
periodically with the internal audit executive and the
accounting firm, with and without management present, to discuss
the results of the examinations, their evaluations of the
Companys internal controls (including internal controls
over financial reporting), and the overall quality of the
Companys financial reporting.
In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors that the
audited financial statements be included in the Annual Report on
Form 10-K
for the fiscal year ended September 30, 2009 for filing
with the SEC. The Committee also evaluated and reappointed KPMG
LLP as the Companys independent registered public
accounting firm for fiscal 2010.
The Audit and Finance Committee
J.M. Stolze, Chairman
J.M. McConnell
D.C. Trauscht
8
EXECUTIVE
COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
The Human Resources and Compensation Committee (the
Committee) is responsible for determining the
compensation of the Chief Executive Officer, other senior
officers and key executives of the Company.
Compensation
Objectives
The Committees objective is to develop and maintain
compensation packages most likely to attract, retain, motivate,
and reward the Companys executive officers and other
senior officers and key executives. Compensation programs are
designed to be consistent with those of other companies engaged
in similar industries
and/or of
similar size with which the Company is likely to compete for
talent to enable the Company to employ and retain a high-quality
management team. The Committee seeks to use at-risk compensation
to maximize the alignment of executive compensation with the
long-term interests of Stockholders.
Compensation
Summary
The Committee offers its executive officers a compensation
package that includes:
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A competitive base salary;
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An annual at-risk cash bonus opportunity based on key
performance measures;
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Long-term equity incentive compensation (LTI) based
on Company stock performance and retention factors;
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Protection in the form of change of control arrangements through
a Severance Plan and employment agreements; and
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Appropriate and reasonable perquisites.
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The Committee sets compensation levels based on the skills,
experience and achievements of each executive officer, taking
into account market checking described below and the
compensation recommendations by the Chief Executive Officer,
except with respect to his own position. The Committee also
considers tally sheets which provide, for each executive
officer, a recap of each principal element of compensation as
well as benefits, perquisites, outstanding equity awards and
stock ownership or potential ownership. The tally sheets also
reflect the incremental compensation as a result of various
termination scenarios and each element of pay or benefits
impacted. The Committee retains the discretion to adjust all
elements of compensation as it deems appropriate, subject to the
requirements of stockholder approved plans.
Compensation
Consultant and Market Checking
The Committee is authorized by its charter to employ independent
compensation and other consultants. Every other year and for
fiscal 2009, the Committee has engaged Towers Perrin, a
nationally recognized compensation consulting firm
(Compensation Consultant), to assist the Committee
in evaluating executive compensation. An unrelated branch of
Towers Perrin has historically been engaged to perform actuarial
services for the Company. The Compensation Consultant
periodically attends the Committee meetings at the
Committees request and provides information, research and
analysis pertaining to executive compensation as requested by
the Committee, including updates on market trends, survey data
and analysis for market checking. In September 2008, the
Compensation Consultant prepared a report which the Committee
and management used for their fiscal 2009 market checking. The
report included market data from two separate groups of
companies as set forth below:
1. A comparative group of six peer companies selected on
the basis of industry type, and within each industry, closest
comparable size in the utility solutions, test and filtration
industries, identified in the Companys 2008 annual report
to stockholders as the 2007 Peer Group, and
comprised as follows:
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Utility Solutions Group:
Test:
Filtration:
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Itron, Inc.
Tektronix Inc.
Pall Corporation
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Badger Meter, Inc.
Clarcor, Inc.
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Roper Industries Inc.
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2. A combination of two surveys of general manufacturing
companies adjusted to the Companys relative size. This
second group is included to ensure that comparisons are made
with competitors, as well as manufacturing companies of a size
similar to the Company. There were between 144 and
272 companies
9
(depending on the position) that participated in the
Compensation Consultants surveys for the executive officer
positions.
For each of the Companys executive officer positions and
each principal element of compensation (base salary, cash bonus
and LTI), as well as total cash compensation (base salary and
cash bonus), and target total direct compensation (target cash
compensation and LTI), a review is made against an annual median
market rate determined based on the average of these two groups.
For fiscal 2009, the Company utilized the average of the
25th and
50th
percentiles for the peer companies, due to their larger company
size, in determining the average market rates. For FY 2009, the
50th and
75th
percentiles were averaged for the manufacturing group due to the
Companys relative business complexity.
Each principal element of compensation is reviewed independently
against the market rates. Relative Company performance is also
periodically compared to the then current peer group to test the
overall reasonableness of pay for performance for years in which
the Compensation Consultant is engaged.
The September 2008 report included a review of the internal pay
relationships between the CEO and other executive officers and a
comparison of the pay relationship between like officers in
similar sized manufacturing companies. The report reflected that
the CEOs pay is well aligned with the other executive
officers of the Company and is in line with the pay
relationships at the manufacturing companies group. Accordingly,
the Committee determined that no changes to the compensation
practices were required for fiscal 2009.
In the years in which the Compensation Consultant is not
engaged, the Company ages the prior years data from the
manufacturing surveys included in the Consultants report
(by applying a multiplier to the Consultants prior year
survey data consistent with the average market increase for
executives in the prior year), and collects pertinent
information from peer proxy filings, such as base salary.
Principal
Elements of Compensation
The principal elements of compensation (base salary, cash bonus
and LTI) for the executive officers are shown in the Summary
Compensation Table on page 15.
Annual Base Salaries Base salaries are
designed to attract, retain, motivate and reward competent,
qualified, experienced executives to operate the business. The
Company emphasizes performance-based compensation for the
executive officers. Historically, the executive officers
salaries have been targeted to the median of the annual market
rates, as adjusted for the relative value of the jobs within the
Company to those in the comparison companies. At the discretion
of the Committee, with input by the CEO, executive officers with
significant experience and responsibility who consistently
demonstrate exemplary performance may be paid more than the
market rates set for their positions, while less experienced
executive officers may be paid salaries less than the market
rates.
Fiscal 2009 base salaries for the executive officers were set by
the Committee at the beginning of the fiscal year. The salaries
were set based on the Committees review of current salary
levels and target total cash compensation (base salary and cash
bonus) compared to the established annual market rates and took
into account, for the CEO, fiscal 2008 individual and Company
performance, and for the other executive officers, a subjective
evaluation of the executives fiscal 2008 performance with
input of the CEO.
In considering fiscal 2008 Company performance for the
CEOs base salary determination, the Committee took into
account the Companys financial and operating performance,
including: the Company experienced strong operating performance
across all three business segments; the Companys
consolidated sales increased 40%; EBIT increased 113%; EBIT
margin increased 450 basis points; EPS-Continuing
Operations increased 55%; net cash provided by operating
activities increased 71%; entered orders increased 35%; and
progress was made on the execution of the Aclara contracts with
Pacific Gas & Electric. In addition, during fiscal
2008, the Company completed the acquisition of Doble Engineering
Company and the divestiture of Filtertek. Based on these
factors, the Committee increased the CEOs base salary and
bonus compensation, and set the target total cash compensation
for the CEO for fiscal 2009 at the median market rate.
Based on the individual contributions made by the other
executive officers and the market rates, the Committee approved
a 2009 increase in base salary for the Executive VP and CFO and
the Senior VP and General Counsel. Target total cash
compensation (base salary and cash bonus) for 2009 was set at
the market median rate for the Executive VP and CFO and below
the market median rate for the Senior VP and General Counsel.
The
10
manufacturing survey data, however, indicated that total cash
compensation for the Senior VP and General Counsel was at the
market median rate. The Company concluded that due to the small
sample size of the peer survey its data was not reflective of
the market.
Cash Bonus The Committee uses annual
performance-based cash bonuses to compensate the executive
officers. The Committee establishes performance targets for
executive officers, using financial, operational and individual
goals linking compensation to overall Company performance. The
executive officers goals are determined by each officer
and submitted to the CEO for his review, except with respect to
his goals which are evaluated and approved by the Lead Director.
For the executive officers, the Company operated two short-term
cash bonus plans in fiscal 2009: (i) the Incentive
Compensation Plan for Executive Officers (ICP); and
(ii) the Performance Compensation Plan (PCP).
These at-risk plans closely link the executive officers
pay to the Companys financial results and provide for
compensation variability through reduced payments in times of
poor performance and higher compensation in times of strong
performance. The ICP is a Section 162(m) stockholder
approved plan with a fixed target and a range.The PCP also has a
fixed target and a range, but allows for Committee discretion in
determining actual bonus payouts.
The target short-term bonuses are divided equally between the
two plans for the executive officers. The target percentage of
total cash compensation represented by the ICP and PCP is based
on the level of the position, with targets for fiscal 2009 as
follows:
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Cash Bonus Fiscal 2009
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Target ICP
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Target PCP
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Base %
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Bonus %
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% of
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% of
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Base
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Total
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Bonus
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Total
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Total
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Total
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Salary
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Cash
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Target
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Cash
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Cash
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Cash
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($)
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Comp.
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($)
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Comp.
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($)
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Comp.
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($)
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Comp.
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Chairman & CEO
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$
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675,000
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60
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%
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$
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450,000
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40
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%
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$
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225,000
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20
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%
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$
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225,000
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20
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%
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EVP & CFO
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450,000
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65
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%
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245,000
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35
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%
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122,500
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17.5
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%
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122,500
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17.5
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%
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SVP & General Counsel
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253,000
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70
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%
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109,000
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30
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%
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54,500
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15
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%
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54,500
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15
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%
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The higher at-risk target percentage for the CEO as compared to
the other executive officers is based on the Companys
at-risk philosophy, and his role as CEO of the Company. Likewise
the CFOs position has a higher percentage as compared to
the Senior VP and General Counsel, based on his expanded
responsibilities. Typically near the beginning of each fiscal
year, the Committee sets performance targets and evaluation
criteria and approves the minimum and maximum multipliers which
will be applied to the targets to determine payments under both
plans. The Committee approves the performance targets after
reviewing the Companys business plans and determining the
short-term business metrics which the Companys senior
management should focus on most in order to drive results.
Because of the broad responsibilities of the executive officers,
their targets are tied to Company-wide measures.
In determining the fiscal 2009 combined ICP and PCP bonus target
for the CEO, the Committee considered the actual total cash
compensation of the CEO compared to the market rate and the
bonus target percentage for this position, in conjunction with
the increase in base salary. During the first quarter of fiscal
2009, the Committee agreed to measure 50% of the bonus target
(the ICP bonus) against the EPS Target (defined below), and
measure the other 50% of the bonus target (the PCP bonus)
against (i) the achievement of the Cash Flow Target
(defined below) (weighted at 35%); and (ii) the execution
of individual objectives (weighted at 15%), which were
established by the Committee in consultation with the Lead
Director at the beginning of fiscal 2009.
The fiscal 2008 report of the Compensation Consultant reflected
that the Companys short-term bonus target percentages (ICP
and PCP combined targets) were generally in line with the market
median levels for the manufacturing companies group. The peer
companies had a larger portion of total direct compensation
allocated to long term incentives, hence the cash compensation
percentages are lower. For fiscal 2009, the Committee approved
two criteria for the PCP. One was cash flow (weighted at 70%)
with a target of $100 million (the Cash Flow
Target), and the second was individual objectives
(weighted at 30%) measured against strategic management
objectives The individual performance criteria were deemed to be
significantly challenging for the individuals and necessary for
the continuing business success of the Company. The PCP had a
multiplier for cash flow which ranged from .20 to 2.0 times the
target compensation and a multiplier for individual objectives
which ranged from 0 to 1.0 times the target compensation.
11
For fiscal 2009, the target multipliers under the ICP ranged
from .20 to 2.0 times the target cash bonus. For fiscal 2009,
the ICP evaluation criteria approved by the Committee was an
objective EPS target of $2.07 (the EPS Target). This
target was determined at the beginning of the fiscal year on the
basis of subsidiary projections and senior management input. The
Committee recognized the uncertainty of the economy at the time
the target was established.
The actual fiscal 2009 combined ICP and PCP bonus payment to the
CEO was based upon the factors identified above. The ICP bonus
was based on the Companys reported EPS of $1.88, which was
90% of the 2009 fiscal year target of $2.07. The bonus was paid
at a .52 multiplier. The PCP bonus was based on the
Committees evaluation of the cash flow from operations
target established for the PCP of +$100 million. The bonus
was paid at a 2.0 multiplier, as the actual cash flow was
$110 million.
In 2009, in accordance with the PCP, the Committee authorized a
one-time discretionary increase adjustment to the PCP payments
for the executive officers other than the CEO. Fiscal year 2009
was a difficult business environment, and the officers
performance was instrumental in ensuring the Companys
success. Lower 2009 LTI awards were made to recognize the
cost-cutting measures made across the Company, and these
discretionary awards were made to ensure the retention of these
key executive officers and are reflective of their efforts and
diligence in the Companys success for 2009.
Long-Term Equity Incentive
Compensation The Committee historically has
granted LTI in the form of performance-accelerated restricted
shares (PARS)
and/or stock
options. Based principally on sensitivity to stockholder
concerns with stock option dilution and as it did in fiscal
2008, in fiscal 2009 the Committee allocated the full LTI
compensation to PARS. PARS are distributed in shares of stock
and typically have a performance period of five years.
Generally, the PARS award may be distributed no earlier than
3.5 years after the award, if the target stock price is
achieved. The Committee believes that the Companys
performance will reflect the contributions of management within
the 3.5 year timeframe. If the target stock price is not
achieved, the PARS award will be paid out at the end of the
performance period, if the employee is still employed. The value
of PARS fluctuates directly with changes in the price of stock,
which ties executives interests directly to those of
Stockholders. For executive officers, these awards also contain
a two-year non-compete period after the expiration of the
earning period of the awards, which provides additional
Stockholder protection.
In line with the Companys at-risk philosophy, the
Committee determined the total amount of LTI to grant to each
executive officer in accordance with the annual market rate and
then made adjustments based on the Committees assessment
of the relative value and performance of each individual or, in
the case of the CEO, the Companys fiscal 2008 financial
performance, the relative Stockholder return and the market rate
value of similar incentive awards to CEOs. In October 2008, the
Committee granted the executive officers equity awards in the
form of PARS with an October 2010 September 2013
performance period. The target LTI for fiscal 2009 was one times
total target cash compensation for the CEO and approximately 75%
of base compensation for the Executive VP and CFO and 60% of
base compensation for the Senior VP and General Counsel. The LTI
targets were established by the Committee utilizing its
assessment of the market data. The peer companies are
significantly larger than the Company, as are their LTI awards,
hence the Committee looked at the manufacturing group and the
peer data with adjustments based on the Companys size. The
award to the CEO was in line with the Committees target of
one times the CEOs annual total cash compensation and fell
below the median market rate.
The 2009 fiscal year awards set the stock price target at $51.75
for the acceleration of the full PARS awards, which was
approximately 38% over the then-current share price of $37.54,
and for acceleration of 50% of the PARS awards the stock price
target was set at $48.40. This increase in the stock price
targets was viewed as meaningful and challenging. No portion of
these awards may be earned prior to fiscal 2011.
Equity Grant Procedures The Company
does not coordinate stock option or PARS grants with the release
of material, non-public information. Company-wide equity grants,
including equity grants to executive officers, are generally
awarded on the date of the October or November Committee meeting
when other compensation decisions are made. During the year,
equity awards are made to new hires, promoted employees or in
other special circumstances, generally on the first trading day
of the month after hire or the date of the next Committee
meeting. Since October 5, 2006, the exercise price of each
of the stock option grants has been the market closing price on
the grant date. Previously, the Company utilized the average of
the high and low prices on the date of grant to determine the
stock option grant price.
12
Other
Compensation Elements
Perquisites The Company also provides
limited perquisites to the executive officers which have
historically included country club membership, annual physical,
financial planning and an auto allowance. The Committee annually
reviews the types and value of the perquisites provided to the
executive officers as part of its overall review of executive
compensation. The Committee has determined the perquisites paid
in fiscal 2009 to be reasonable.
Stock Ownership Guidelines The
Committee has established stock ownership guidelines for the CEO
and the other executive officers. The guidelines currently set
the minimum level of ownership at five times total cash
compensation (base salary and annual cash bonus target) for the
CEO and three times total cash compensation for the other
executive officers. Newly appointed executive officers are
expected to be in compliance with the ownership guidelines
within five years of their appointments. Unexercised stock
options and unvested PARS are not included in determining the
ownership amounts. All executive officers were in compliance at
the end of fiscal 2009.
Retirement Benefits Like other
employees of the Company, executive officers are eligible for
retirement benefits provided through a matched defined
contribution program. The CEO and other executive officers are
also eligible for a frozen benefit under the defined benefit
retirement program, and the CEO and Senior VP and General
Counsel are eligible for a frozen benefit under the supplemental
executive retirement plan (the SERP). These plans
were frozen in December of 2003 for all Company employees. The
Companys decision to end the accrual of benefits under the
defined benefit retirement program is consistent with the
compensation programs lack of emphasis on risk-free or
safety-net
pay.
Severance Plan Severance provisions in
the event of a change of control benefit a company in the event
of a change of control or a potential change of control by
allowing executives who are parties to such arrangements to
focus on continuing business operations and the success of a
potential business combination rather than seeking alternative
employment, thereby providing stability to a corporation during
a potentially uncertain period. Accordingly, the Committee
decided that it was in the Companys best interest to adopt
a Severance Plan, effective in 1995, which prescribes the
compensation and benefits to be provided in the event of a
change of control to certain executives, including the CEO and
the other executive officers. The Companys change of
control arrangements were designed to provide executives with
severance payments and certain other benefits in the event that
their employment is terminated in connection with a change of
control transaction. The Severance Plan provides severance
benefits only if there is both (1) a change of control of
the Company and (2) the employees employment is
terminated by the Company (or any successor) without cause or if
the employee terminates his or her employment for good reason,
in each case within 36 months following a change of control.
If triggered, the executive will be entitled to all accrued, but
unpaid compensation and benefits and a lump sum cash payment,
which is designed to replicate the cash compensation (base
salary and bonus), plus certain benefits, that the executive
would have received had he or she remained employed for two
years. The determination of the appropriate level of payments
and benefits to be provided in the event of a change of control
termination involved consideration of a number of factors. The
compensation levels were determined based on a survey of the
Companys peers at the time the Severance Plan was adopted
by the Company. Additionally, the 2007 Peer Group companies
generally have adopted change of control arrangements which
provide for payments of base salary, bonus and other benefits
for periods ranging from two to three years. The Committee
considered that a high-level executive, who is more likely to
lose his or her job in connection with a change of control than
other employees, may require more time than other employees in
order to secure an appropriate new position, and, unless that
executive was provided with change of control benefits, he or
she may be motivated to start a job search early if a change of
control is possible, to the detriment of the Company. Thus, the
existence of the Severance Plan provides an incentive for the
executive to remain with the Company until a change of control
occurs. In addition, since payments are not provided under the
Severance Plan unless there has been a change of control and a
qualifying termination of employment, an acquirer who may wish
to retain the Companys management team during or after a
transition period will have the opportunity to do so.
In addition, pursuant to the Companys LTI plans, in the
event of a change of control, stock option vesting is
accelerated to the date of the change of control and earned PARS
are distributed at that date. The balance of the PARS are
distributed at the end of the fiscal year in which a change of
control occurs if the executive is still employed by the Company
(or any successor).
13
Employment Agreements for the CEO and Executive
Officers The Company has employment
agreements (the Agreements) with each of the
executive officers. These Agreements exclude separations due to
a change of control or termination for cause, and provide for
the payment of severance under a predetermined separation
agreement, thereby providing for a more amicable separation in
circumstances where a business change is warranted. The
Agreements automatically renew at the end of each one-year term
unless either party gives notice of non-renewal at least
180 days prior to expiration of the then-current term. The
Agreements provide for payment of an annual base salary, subject
to review for increase at the discretion of the Committee,
participation in the Companys PCP and ICP bonus plans, and
eligibility for participation in the Companys LTI plans
and benefit plans and programs applicable to senior executives,
and continuance of certain perquisites. For a specified period
of time after a termination, the Agreements prohibit the
executive officers from soliciting Company employees or
disclosing confidential information. The Agreements also require
that the executive officers provide limited consulting services
on an as-requested basis following termination. The specifics
regarding the cash compensation and benefits provided in the
event of a qualifying separation are outlined in the Employee
Agreement section on page 19.
The Committee periodically assesses the reasonableness of the
Agreements to consider whether any changes are appropriate.
Limit on Deductibility of Certain
Compensation Federal income tax law prohibits
publicly held companies, such as the Company, from deducting
certain compensation paid to an executive officer that exceeds
$1 million during the tax year. To the extent that
compensation is based upon the attainment of performance goals
set by the Committee pursuant to plans approved by the
Stockholders, the compensation is not included in the limit. The
Committee intends, to the extent feasible and where it believes
it is in the best interests of the Company and its Stockholders,
to attempt to qualify executive compensation as tax deductible
where it does not adversely affect the Committees
development and execution of effective compensation plans. For
example, to enable certain bonuses and long-term compensation to
be deductible, the Committee makes these awards under incentive
plans approved by Stockholders as much as possible. While the
Committee is limited in its ability to make discretionary bonus
payments under the ICP, there are no such limitations under the
PCP. Gains on stock option exercises may be deductible if
granted under a Stockholder approved plan since they are tied to
the performance of the Companys stock price. Salaries and
other compensation not tied to Company performance are not
deductible to the extent they exceed the $1 million limit.
Policy on Restitution The
Companys Code of Business Conduct and Ethics reaffirms the
importance of high standards of business ethics. Adherence to
these standards by all employees is the best way to ensure
compliance and secure public confidence and support. All
employees are responsible for their actions and for conducting
themselves with integrity. Any failure on the part of any
employee to meet any of the standards embodied in this Code will
be subject to disciplinary action, including dismissal.
When appropriate, and in accordance with applicable law, the
Company will seek restitution of any bonus, commission, or other
compensation (including equity gains from stock options, PARS or
other awards received by any employee) as a result of the
employees intentional or knowing fraudulent or illegal
conduct, including the making of a material misrepresentation
contained in the Companys financial statements.
Compensation
Committee Report
The Human Resources and Compensation Committee has reviewed and
discussed with management the Companys disclosures under
Compensation Discussion and Analysis beginning on
page 9 of this proxy statement.
Based on such review and discussion, the Committee recommended
to the Board of Directors that the Compensation Discussion and
Analysis be included in this proxy statement and incorporated by
reference in the Companys annual report on
Form 10-K
for the fiscal year ended September 30, 2009 for filing
with the SEC.
The Human Resources and
Compensation Committee
J.D. Woods, Chairman
L.W. Solley
D.C. Trauscht
14
Summary
Compensation Table
The following table contains information concerning compensation
for fiscal 2009 for all services rendered in all capacities to
the Company and its subsidiaries of the executive officers
serving at September 30, 2009. Effective November 12,
2008, the position of A.S. Barclay changed from Vice President,
Secretary and General Counsel to Senior Vice President,
Secretary and General Counsel.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non equity
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Deferred
|
|
All
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
Compensation
|
|
Other
|
|
|
Name and
|
|
Fiscal
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)(6)
|
|
($)
|
|
V.L. Richey, Jr.
|
|
|
2009
|
|
|
$
|
675,000
|
|
|
$
|
369,000
|
|
|
$
|
840,448
|
|
|
$
|
80,711
|
|
|
$
|
117,000
|
|
|
$
|
116,905
|
|
|
$
|
78,417
|
|
|
$
|
2,277,481
|
|
Chairman, Chief
|
|
|
2008
|
|
|
|
615,000
|
|
|
|
267,300
|
|
|
|
553,043
|
|
|
|
133,308
|
|
|
|
283,500
|
|
|
|
0
|
|
|
|
74,268
|
|
|
|
1,926,419
|
|
Executive Officer &
|
|
|
2007
|
|
|
|
595,000
|
|
|
|
285,190
|
|
|
|
558,430
|
|
|
|
161,246
|
|
|
|
39,500
|
|
|
|
0
|
|
|
|
66,670
|
|
|
|
1,706,036
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G.E. Muenster
|
|
|
2009
|
|
|
|
450,000
|
|
|
|
268,250
|
|
|
|
322,950
|
|
|
|
10,896
|
|
|
|
63,700
|
|
|
|
57,164
|
|
|
|
52,916
|
|
|
|
1,225,876
|
|
Executive Vice
|
|
|
2008
|
|
|
|
398,524
|
|
|
|
138,000
|
|
|
|
208,194
|
|
|
|
33,815
|
|
|
|
140,000
|
|
|
|
0
|
|
|
|
40,179
|
|
|
|
958,712
|
|
President & Chief
|
|
|
2007
|
|
|
|
310,000
|
|
|
|
95,290
|
|
|
|
195,700
|
|
|
|
59,464
|
|
|
|
13,000
|
|
|
|
0
|
|
|
|
35,357
|
|
|
|
708,811
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.S. Barclay
|
|
|
2009
|
|
|
|
253,000
|
|
|
|
132,650
|
|
|
|
167,711
|
|
|
|
9,842
|
|
|
|
28,340
|
|
|
|
75,251
|
|
|
|
51,213
|
|
|
|
718,007
|
|
Senior Vice President,
|
|
|
2008
|
|
|
|
235,000
|
|
|
|
69,000
|
|
|
|
120,673
|
|
|
|
22,467
|
|
|
|
70,000
|
|
|
|
0
|
|
|
|
48,815
|
|
|
|
565,955
|
|
Secretary & General
|
|
|
2007
|
|
|
|
225,000
|
|
|
|
69,635
|
|
|
|
140,985
|
|
|
|
41,800
|
|
|
|
9,500
|
|
|
|
0
|
|
|
|
54,963
|
|
|
|
541,883
|
|
Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the cash awards earned under the Companys
Performance Compensation Plan discussed under the caption
Short Term Bonus in the Compensation Discussion and
Analysis. |
|
(2) |
|
Reflects the expenses recognized for financial statement
reporting purposes for the fiscal years ended September 30,
2009, 2008 and 2007, as adjusted, excluding forfeitures, in
accordance with Statement of Financial Accounting Standards
No. 123(R) (FAS 123(R)), for
performance-accelerated restricted stock awards granted under
the Companys 2001 Stock Incentive Plan and 2004 Incentive
Compensation Plan, and does not correspond to the actual value
that will be realized by the executive officers. See
Note 11 of the Companys fiscal year 2009 financial
statements in the Companys Annual Report on
Form 10-K
for a discussion of the valuation of these amounts. |
|
(3) |
|
Reflects the expenses recognized for financial statement
reporting purposes for the fiscal years ended September 30,
2009, 2008, and 2007, excluding forfeitures, in accordance with
Statement of Financial Accounting Standards No. 123(R)
(FAS 123(R)), for stock option awards granted
under the Companys 2001 Stock Incentive Plan and 2004
Incentive Compensation Plan, and does not correspond to the
actual value that will be realized by the executive officers.
See Note 11 of the Companys Annual Report on
Form 10-K
for a discussion of the valuation of these amounts. |
|
(4) |
|
Reflects the cash awards earned under the Companys
Incentive Compensation Plan for Executive Officers discussed
under the caption Short Term Bonus in the
Compensation Discussion and Analysis. |
|
(5) |
|
Represents the change in actuarial present value of the
accumulated benefits under the Companys Retirement Plan
and the Supplemental Executive Reitrement Plan (SERP) from
September 30, 2008 to September 30, 2009. The
aggregate increase in present value for Messrs. Richey,
Muenster and Ms. Barclay was $116,905, $57,164 and $75,251,
respectively. The change in pension value includes the effect of
changes in actuarial assumptions from year to year. In fiscal
2009, pension values increased due to the effect of changes in
actuarial assumptions. The increase in pension value due to
assumption changes for Messrs. Richey, Muenster and
Ms. Barclay was $100,517, $49,976 and $65,604, respectively. |
15
|
|
|
(6) |
|
Comprised of the amounts provided in the table below: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
Employee
|
|
|
|
|
|
|
|
|
|
|
Contribution
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
Savings Plan
|
|
Purchase Plan
|
|
|
|
|
|
|
|
|
Tax
|
|
Company
|
|
Company
|
|
|
Name and Principal Position
|
|
|
|
Perquisites(a)
|
|
Grossups(b)
|
|
Contributions
|
|
Contributions
|
|
Total
|
|
V.L. Richey, Jr.
|
|
|
FY 2009
|
|
|
$
|
35,191
|
|
|
$
|
8,942
|
|
|
$
|
9,800
|
|
|
$
|
24,484
|
|
|
$
|
78,417
|
|
Chairman, Chief Executive
|
|
|
FY 2008
|
|
|
|
37,001
|
|
|
|
9,281
|
|
|
|
9,200
|
|
|
|
18,786
|
|
|
|
74,268
|
|
Officer & President
|
|
|
FY 2007
|
|
|
|
33,161
|
|
|
|
6,661
|
|
|
|
9,000
|
|
|
|
17,848
|
|
|
|
66,670
|
|
G.E. Muenster
|
|
|
FY 2009
|
|
|
$
|
27,202
|
|
|
$
|
21,219
|
|
|
$
|
0
|
|
|
$
|
4,495
|
|
|
$
|
52,916
|
|
Executive Vice President &
|
|
|
FY 2008
|
|
|
|
30,555
|
|
|
|
5,666
|
|
|
|
0
|
|
|
|
3,958
|
|
|
|
40,179
|
|
Chief Financial Officer
|
|
|
FY 2007
|
|
|
|
26,898
|
|
|
|
5,366
|
|
|
|
0
|
|
|
|
3,093
|
|
|
|
35,357
|
|
A.S. Barclay
|
|
|
FY 2009
|
|
|
$
|
32,785
|
|
|
$
|
7,097
|
|
|
$
|
9,726
|
|
|
$
|
1,605
|
|
|
$
|
51,213
|
|
Senior Vice President,
|
|
|
FY 2008
|
|
|
|
32,489
|
|
|
|
6,095
|
|
|
|
9,292
|
|
|
|
939
|
|
|
|
48,815
|
|
Secretary & General Counsel
|
|
|
FY 2007
|
|
|
|
31,816
|
|
|
|
8,345
|
|
|
|
9,238
|
|
|
|
5,564
|
|
|
|
54,963
|
|
|
|
|
(a) |
|
Comprised of car allowance, financial planning, and Company cost
related to the personal use of clubs. |
GRANTS OF
PLAN-BASED AWARDS
The following table provides information for fiscal 2009 for the
executive officers regarding grants under the Incentive
Compensation Plan for Executive Officers, the 2001 Stock
Incentive Plan and the 2004 Incentive Compensation Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
Options
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Awards:
|
|
Exercise
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Number of
|
|
or Base
|
|
Fair Value
|
|
|
|
|
Estimated Future Payouts Under
|
|
Number of
|
|
Securities
|
|
Price
|
|
of Stock
|
|
|
|
|
Non-Equity Incentive Plan Awards(1)
|
|
Shares of
|
|
Underlying
|
|
of Option
|
|
and Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock
|
|
Options
|
|
Awards
|
|
Awards
|
Named Executive Officer
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)(2)
|
|
(#)
|
|
($/Sh)
|
|
($)(3)
|
|
V.L. Richey, Jr.
|
|
|
10/01/08
|
|
|
$
|
45,000
|
|
|
$
|
225,000
|
|
|
$
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/08/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,968
|
|
|
|
|
|
|
|
|
|
|
$
|
1,124,999
|
|
G.E. Muenster
|
|
|
10/01/08
|
|
|
$
|
24,500
|
|
|
$
|
122,500
|
|
|
$
|
245,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/08/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,850
|
|
|
|
|
|
|
|
|
|
|
$
|
519,929
|
|
A.S. Barclay
|
|
|
10/01/08
|
|
|
$
|
10,900
|
|
|
$
|
54,500
|
|
|
$
|
109,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/08/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,780
|
|
|
|
|
|
|
|
|
|
|
$
|
216,981
|
|
|
|
|
(1) |
|
Represent fiscal 2009 threshold, target and maximum
opportunities under the Companys annual Incentive
Compensation Plan (ICP) for Executive Officers. See
Compensation Discussion and Analysis. |
|
(2) |
|
Represent performance-accelerated restricted shares
(PARS) that will vest if the executive officer
continues in the employment of the Company through the
employment service period ending on September 30, 2013.
However, 50% and 100% of these shares may be earned earlier,
between October 1, 2010 and September 30, 2013, if
stock price targets of $48.40 and $51.75, respectively, are met,
and will vest on March 3 following the end of the fiscal year in
which the target is achieved if the executive officer is still
in the employ of the Company. Achievement of target levels is
determined based on the average stock price over a period of
thirty consecutive trading days. All awards provide for
acceleration of vesting in the event of a change in control of
the Company. Dividends, if any, will not be paid prior to the
vesting and distribution of the shares. See Compensation
Discusssion and Analysis. |
|
(3) |
|
Estimated fair values of PARS were based upon the fair market
value of $37.54 per share at the time of the awards in
accordance with FAS 123(R). |
16
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information as of the end of fiscal
2009 for the executive officers regarding outstanding awards of
unexercised stock options and unvested performance-accelerated
restricted stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards(1)
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Shares
|
|
Shares or
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
or Units of
|
|
Units of
|
|
|
|
|
Options:
|
|
Options:
|
|
Exercise
|
|
Option
|
|
Stock That
|
|
Stock
|
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Expiration
|
|
Have Not
|
|
That Have
|
Named Executive Officer
|
|
Grant Date
|
|
(#)
|
|
(#)
|
|
($)
|
|
Date
|
|
Vested (#)
|
|
Not Vested ($)
|
|
V.L. Richey, Jr.(2)
|
|
|
10/16/00
|
|
|
|
12,000
|
|
|
|
|
|
|
$
|
8.610
|
|
|
|
10/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
10/17/01
|
|
|
|
28,000
|
|
|
|
|
|
|
$
|
12.640
|
|
|
|
10/17/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
08/05/02
|
|
|
|
60,000
|
|
|
|
|
|
|
$
|
14.520
|
|
|
|
08/05/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
11/09/05
|
|
|
|
15,050
|
|
|
|
|
|
|
$
|
42.985
|
|
|
|
11/09/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
10/05/06
|
|
|
|
12,133
|
|
|
|
6,067
|
|
|
$
|
45.810
|
|
|
|
10/05/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
11/09/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,050
|
(3)
|
|
$
|
592,970
|
|
|
|
|
10/05/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,200
|
(4)
|
|
|
717,080
|
|
|
|
|
11/09/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,450
|
(5)
|
|
|
1,081,530
|
|
|
|
|
10/08/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,968
|
(6)
|
|
|
1,180,739
|
|
G.E. Muenster(2)
|
|
|
10/16/00
|
|
|
|
12,000
|
|
|
|
|
|
|
$
|
8.610
|
|
|
|
10/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
10/17/01
|
|
|
|
9,576
|
|
|
|
|
|
|
$
|
12.640
|
|
|
|
10/17/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
08/05/02
|
|
|
|
9,946
|
|
|
|
|
|
|
$
|
14.520
|
|
|
|
08/05/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
10/04/04
|
|
|
|
6,400
|
|
|
|
|
|
|
$
|
35.180
|
|
|
|
10/04/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
11/09/05
|
|
|
|
4,500
|
|
|
|
|
|
|
$
|
42.985
|
|
|
|
11/09/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
10/05/06
|
|
|
|
3,366
|
|
|
|
1,684
|
|
|
$
|
45.810
|
|
|
|
10/05/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
11/09/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
(3)
|
|
$
|
177,300
|
|
|
|
|
10/05/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,050
|
(4)
|
|
|
198,970
|
|
|
|
|
11/09/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,075
|
(5)
|
|
|
318,155
|
|
|
|
|
02/06/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,350
|
(7)
|
|
|
210,790
|
|
|
|
|
10/08/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,850
|
(6)
|
|
|
545,690
|
|
A.S. Barclay(2)
|
|
|
10/16/00
|
|
|
|
9,216
|
|
|
|
|
|
|
$
|
8.610
|
|
|
|
10/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
10/17/01
|
|
|
|
16,000
|
|
|
|
|
|
|
$
|
12.640
|
|
|
|
10/17/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
08/05/02
|
|
|
|
13,000
|
|
|
|
|
|
|
$
|
14.520
|
|
|
|
08/05/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
11/09/05
|
|
|
|
3,400
|
|
|
|
|
|
|
$
|
42.985
|
|
|
|
11/09/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
10/05/06
|
|
|
|
2,300
|
|
|
|
1,150
|
|
|
$
|
45.810
|
|
|
|
10/05/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
11/09/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,400
|
(3)
|
|
$
|
133,960
|
|
|
|
|
10/05/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,450
|
(4)
|
|
|
135,930
|
|
|
|
|
11/09/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,385
|
(5)
|
|
|
212,169
|
|
|
|
|
10/08/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,780
|
(6)
|
|
|
227,732
|
|
|
|
|
(1) |
|
Achievement of target levels is determined based on the average
stock price over a period of thirty consecutive trading days.
All awards provide for acceleration of vesting in the event of a
change in control of the Company. Dividends, if any, will not be
paid prior to the vesting and distribution of the shares. |
|
(2) |
|
The options that were granted on October 5, 2006 and
remained unexercisable as of September 30, 2009 fully
vested on October 5, 2009. |
|
(3) |
|
Shares of performance-accelerated restricted stock granted
November 9, 2005 will vest if the executive officer
continues in the employment of the Company through
September 30, 2010. Earlier vesting of 50% and 100% of the
stock awards may be achieved if stock price targets of $50 and
$55, respectively, are achieved between October 1, 2008 and
September 30, 2010. These shares will vest and be
distributed on March 31 of the year following the end of the
fiscal year in which the target is achieved. |
|
(4) |
|
Shares of performance-accelerated restricted stock granted
October 5, 2006 will vest if the executive officer
continues in the employment of the Company through
September 30, 2011. Earlier vesting of 50% and 100% of the
stock awards may be achieved if stock price targets of $59 and
$63, respectively, are achieved between October 1, 2008 and
September 30, 2011. These shares will vest and be
distributed on March 31 of the year following the end of the
fiscal year in which the target is achieved. |
17
|
|
|
(5) |
|
Shares of performance-accelerated restricted stock granted
November 9, 2007 will vest if the executive officer
continues in the employment of the Company through
September 30, 2012. Earlier vesting of 50% and 100% of the
stock awards may be achieved if stock price targets of $45 and
$48, respectively, are achieved between October 1, 2009 and
September 30, 2012. These shares will vest and be
distributed on March 31 of the year following the end of the
fiscal year in which the target is achieved. |
|
(6) |
|
Shares of performance-accelerated restricted stock granted
October 8, 2008 will vest if the executive officer
continues in the employment of the Company through
September 30, 2013. Earlier vesting of 50% and 100% of the
stock awards may be achieved if stock price targets of $48.40
and $51.75, respectively, are achieved between October 1,
2010 and September 30, 2013. These shares will vest and be
distributed on March 31 of the year following the end of the
fiscal year in which the target is achieved. |
|
(7) |
|
Shares of performance-accelerated restricted stock granted
February 6, 2008 will vest if the executive officer
continues in the employment of the Company through
September 30, 2012. Earlier vesting of 50% and 100% of the
stock awards may be achieved if stock price targets of $45 and
$48, respectively, are achieved between October 1, 2009 and
September 30, 2012. These shares will vest and be
distributed on March 31 of the year following the end of the
fiscal year in which the target is achieved. |
OPTION
EXERCISES AND STOCK VESTED
The following table sets forth information for the executive
officers regarding, in the aggregate, stock options exercised
and performance-accelerated restricted stock vesting during
fiscal 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Value
|
|
|
Number of
|
|
|
Value
|
|
|
|
Shares
|
|
|
Realized
|
|
|
Shares
|
|
|
Realized
|
|
|
|
Acquired on
|
|
|
Upon
|
|
|
Acquired on
|
|
|
on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Named Executive Officer
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)
|
|
|
V.L. Richey, Jr.
|
|
|
46,884
|
|
|
$
|
814,073
|
|
|
|
n/a
|
|
|
|
n/a
|
|
G.E. Muenster
|
|
|
40,800
|
|
|
|
1,155,200
|
|
|
|
n/a
|
|
|
|
n/a
|
|
A.S. Barclay
|
|
|
47,800
|
|
|
|
1,273,711
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
(1) |
|
Represents the difference between the exercise price and the
fair market value of Company common stock on the date of
exercise. |
PENSION
BENEFITS
At the time of the 1990 spin-off of the Company by Emerson
Electric Co. (Emerson), the Company established a
Retirement Plan (the Retirement Plan) in which the
Companys executive officers as well as other covered
employees participate. Prior to the 1990 spin-off, the executive
officers (other than Mr. Muenster, who was not then an
employee) participated in one of the pension plans of Emerson or
its subsidiaries. The Retirement Plan is substantially identical
to the Emerson Retirement Plan at the time of the 1990 spin-off
(the Emerson Retirement Plan). Under the Retirement
Plan, a participant will be credited with his service under the
Emerson Retirement Plan, but his benefit accrued under the
Retirement Plan will be offset by his benefit accrued under the
Emerson Retirement Plan as of September 30, 1990. Benefits
under the Retirement Plan may be reduced under certain maximum
provisions of the Internal Revenue Code. In 1993, the Company
adopted a Supplemental Executive Retirement Plan (the
SERP) which provides that where any such reductions
occur, the Company will pay a retirement supplement to certain
executives including the executive officers (other than
Mr. Muenster). The SERP was designed to maintain total
retirement benefits at the formula level of the Retirement Plan.
Effective December 31, 2003, both the Retirement Plan and
the SERP were frozen with no increase in benefits accruing to
participants.
These plans provide for fixed retirement benefits based on the
participants credited years of service, five-year average
compensation (the highest average annual cash compensation
during any five consecutive years through 2003), and applicable
Social Security covered compensation calculated as of
December 31, 2003, the effective date
18
of the freezing of the plans. Under the current law, the
benefits amounts will not be subject to any reduction for Social
Security or other offset amounts.
Effective January 1, 2004, the Company modified its
existing Employee Savings Investment Plan (an employee benefit
plan under section 401(k) of the Internal Revenue Code
which is available to substantially all United States employees
including the executive officers), through the addition of a
Company cash match at a rate of 100% of employee contributions
up to 3% of the employees eligible compensation, and 50%
of employee contributions which are in excess of such 3%, up to
5% of the employees eligible compensation, subject to
Internal Revenue Code limits. The amounts contributed in fiscal
years 2007, 2008 and 2009 by the Company to the executive
officers are listed in footnote (6) of the Summary
Compensation Table under the heading Defined Contribution
Savings Plan Company Contributions.
The amounts reported in the table below represent the present
value of the accumulated benefit at September 30, 2009 for
the executive officers under each plan based upon the
assumptions described in footnote (1).
PENSION
BENEFITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present Value of
|
|
|
|
|
|
|
Years
|
|
Accumulated
|
|
Payments
|
|
|
|
|
Credited
|
|
Benefit
|
|
During Last
|
Name
|
|
Plan Name
|
|
Service (#)
|
|
($)(1)
|
|
Fiscal Year ($)
|
|
V.L. Richey, Jr.
|
|
Retirement Plan
|
|
|
18
|
|
|
$
|
242,877
|
|
|
$
|
0
|
|
|
|
SERP
|
|
|
18
|
|
|
|
100,071
|
|
|
|
0
|
|
G.E. Muenster
|
|
Retirement Plan
|
|
|
13
|
|
|
|
156,313
|
|
|
|
0
|
|
|
|
SERP
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
A.S. Barclay
|
|
Retirement Plan
|
|
|
16
|
|
|
|
197,297
|
|
|
|
0
|
|
|
|
SERP
|
|
|
16
|
|
|
|
11,015
|
|
|
|
0
|
|
|
|
|
(1) |
|
The accumulated benefit was frozen as of December 31, 2003.
The present value has been calculated assuming that the
executive officers will remain in service until age 65, the
age at which retirement may occur without any reduction in
benefits, and that the benefit is payable on the basis of a
single life annuity with 60 months certain payment option.
Except for the assumption that the executives remain in service
and retire at age 65, the present value is based on the
assumptions as described in Note 12 to the financial
statements in the Companys Annual Report for the fiscal
year ended September 30, 2009. Specifically, the interest
assumption is 5.5% and the post-retirement mortality assumption
is based on the 2009 IRS Static Post Retirement mortality table
reflecting projections to 2016 using Scale AA. |
EMPLOYMENT
AGREEMENTS
The Company entered into employment agreements effective on or
about November 1, 1999 with Messrs. Richey and
Muenster and Ms. Barclay. These employment agreements were
amended to extend until November 2, 2004, and were further
amended on May 5, 2004 to provide for automatic renewal
after November 2, 2004 for subsequent one year periods
unless a six month notice of non-renewal is given by the Company
or the executive. In addition, the employment agreements were
again amended effective October 3, 2007 to change
(i) the compensation and benefits the executive would
receive in the event of a termination by the Company other than
for cause, as described below, and (ii) the definition of
Good Reason in the context of the compensation and
benefits the executive would receive if the Company terminated
him or her for Good Reason, as described below.
The employment agreements provide for a base salary of not less
than the executives fiscal year 1999 base salaries, as
increased in accordance with the Companys compensation
policy, and an annual bonus in accordance with the Performance
Compensation Plan and the Incentive Compensation Plan. These
executives are also entitled to participate in any stock
options, restricted stock or performance shares awards and other
compensation as the Companys Human Resources and
Compensation Committee shall determine. They are also entitled
to participate in all employee benefit programs of the Company
applicable to senior executives, and the Company will continue
to provide certain perquisites, including financial planning, an
automobile allowance and club membership.
The Company has the right to terminate the employment of the
executive officers at any time upon thirty days notice for cause
or without cause, and these executives have the right to resign
at any time upon thirty days notice.
19
Cause is defined in the agreements as an executives
willful failure to perform his or her duties, disability or
incapacity extending for nine consecutive months, willful
misconduct, conviction of a felony, breach of any material
provision of the employment agreement, or a determination by the
Board that the executive committed fraud, embezzlement, theft or
misappropriation against the Company. If an executives
employment is terminated by the Company other than for cause, or
if an executive terminates his employment following certain
actions by the Company (i.e. for Good Reason), such
as materially failing to comply with the agreement, materially
reducing the executives responsibilities or requiring the
executive to relocate, the executive will be entitled to receive
certain compensation and benefits. In the case of such a
termination, Mr. Richey and Mr. Muenster will receive
for two years, and Ms. Barclay will receive for one year:
(i) at their election, their base salary and bonus
(calculated to be no less than the annual percentage of base
salary under the bonus plans for the last fiscal year prior to
termination) in either a lump sum on the regularly scheduled
payroll date coinciding with or immediately preceding March 15
of the calendar year following the calendar year of termination,
or in equal biweekly installments up until the regularly
scheduled payroll date coinciding with or immediately preceding
March 15 of the year following termination, at which time any
balance will be paid in a lump sum, (ii) immediate vesting
of outstanding stock options and immediate vesting and payout of
earned performance-accelerated restricted shares, and
(iii) continuation of certain employee benefits and
perquisites. If an executives employment is terminated in
connection with a Change in Control (as defined), the executive
will not receive the foregoing benefits, and will receive
instead the benefits payable under the Companys Severance
Plan.
The employment agreements prohibit the executives from
disclosing confidential information or trade secrets concerning
the Company, and for a specific period from soliciting employees
of the Company and from soliciting customers or distributors of
the Company.
SEVERANCE
PLAN
The Company has established a Severance Plan (the
Plan) covering the executive officers. Under the
Plan, following an occurrence of a Change in Control, each of
the executive officers will be entitled to be employed by the
Company for a three year employment period during which he or
she will: (i) be paid a minimum base salary equal to his or
her base salary prior to the Change in Control, and a minimum
annual bonus based on the average of his or her bonuses during
the last five preceding fiscal years, disregarding the highest
and lowest such years, and (ii) continue to receive the
employee benefits to which he or she was entitled prior to the
Change in Control. During this employment period, if the
executive officers employment is terminated by the Company
other than for cause, death or disability, or the executive
officer terminates his or her employment for good reason
following certain actions by the Company, such as materially
failing to comply with the provisions of the Plan, a material
diminution in his or her authority, duties or responsibilities
or base salary, or requiring him or her to relocate, he or she
will be entitled to receive, among other things, a cash lump sum
equal to the aggregate of: (i) any unpaid current base
salary; (ii) any unpaid deferred compensation; (iii) a
bonus calculated by multiplying the average of the past five
years bonus percentages (ratio of annual bonus to annual base
salary), disregarding the highest and lowest percentages, times
the base salary earned from the start of the fiscal year in
which the termination occurred to the date of the termination;
and (iv) an amount calculated by multiplying two times the
sum of (x) the current annual base salary and (y) such
annual base salary multiplied by the average of the past five
years bonus percentages (ratio of annual bonus to annual
base salary), disregarding the highest and lowest percentages.
In addition, he or she will receive the continuation of his or
her employee benefits for two years. Change in Control is
defined to include (1) an acquisition of beneficial
ownership of at least 20% of the common stock or voting power of
the Company, (2) a change in the majority of Board members
except as a result of the election of directors approved by the
Board of Directors, or (3) a merger, reorganization or
similar type of transaction after which there is a greater than
50% change in beneficial ownership of the common stock of the
Company. The Company may amend the Plan, but no amendment
adverse to the rights of the executive officers will be
effective unless notice thereof has been given by the Company to
the affected executive officer(s) at least one year prior to the
occurrence of a Change in Control.
20
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The information and tables below reflect the compensation and
benefits to be provided to the executive officers of the Company
in the event of a termination of employment at, following, or in
connection with a change in control or other termination of
employment. The tables reflect the additional compensation and
benefits to be provided to the executive officer because of such
termination of employment. The amounts shown assume that such
termination was effective as of the close of business on
September 30, 2009, the end of the Companys last
fiscal year. The actual amounts to be paid would be determinable
only at the time of the actual termination of employment.
PAYMENTS/BENEFITS
FOLLOWING A CHANGE IN CONTROL
Under the Severance Plan described above, assuming that
subsequent to a Change in Control, the termination of the
employment of the executive officer by the Company other than
for cause, death or disability or by the executive officer for
good reason occurred on September 30, 2009, during the
three-year employment period, the executive officer would be
entitled to a lump sum payment as defined in the Severance Plan
section above. The executive officer also would be entitled to
the continuation for two years of all medical, disability,
dental, life insurance, club membership and automobile benefits
as favorable as those to which he or she was entitled on the
date of termination, or reimbursement for the cost thereof. In
addition, the executive officers stock options would vest
and become exercisable and his or her earned and unearned shares
of performance-accelerated restricted stock would vest and be
distributed, as provided in the award agreements.
PAYMENTS/BENEFITS
UPON DEATH OR DISABILITY
The Company has employment agreements with each of the executive
officers which are described above. Assuming the executive
officers employment was terminated because of death or
disability, under the employment agreement he or she would
receive benefits under the Companys disability plan or the
Companys life insurance plans, as applicable. In addition,
the executive officers vested stock options would remain
exercisable for three months in the case of death and for one
year in the case of disability.
PAYMENTS/BENEFITS
UPON TERMINATION BY THE EMPLOYEE WITH GOOD REASON OR BY THE
COMPANY WITH NO REASON
Assuming the executive officer terminated his or her employment
for good reason following certain actions by the Company or the
Company terminated his or her employment for reasons other than
cause, death or disability, under the employment agreement the
Company would continue to pay his or her base salary and bonus
for two years following termination for Mr. Richey and
Mr. Muenster and for one year for Ms. Barclay;
however, each executive officer could elect to receive these
payments in lump sums on or about March 15 of the calendar year
following the calendar year in which the termination occurs.
Further, certain benefits would continue after such termination.
In addition, the executive officers outstanding stock
options would vest and become exercisable and his or her earned
but unvested shares of performance-accelerated restricted stock
would vest and be distributed. These payments and benefits would
be conditioned upon the executive officer not soliciting
employees, customers or distributors of the Company for a
specified period. In addition, the executive officer would be
required to execute the Companys standard severance
agreement and release.
PAYMENTS
UPON TERMINATION BY THE EMPLOYEE WITHOUT GOOD REASON
Assuming the executive officer terminated his or her employment
without good reason, he or she would not be entitled to payment
of continued compensation or benefits. The Human Resources and
Compensation Committee of the Board of Directors could agree, in
its discretion, to permit the executive officer to exercise his
or her vested stock options for three months after such
termination.
PAYMENTS
UPON TERMINATION BY THE COMPANY WITH CAUSE
Assuming the executive officers employment was terminated
by the Company with cause, under the employment agreement the
executive officer would not be entitled to payment of continued
compensation or benefits. The Human Resources and Compensation
Committee of the Board of Directors could agree, in its
21
discretion, to permit the executive officer to exercise his or
her vested stock options for three months after such termination.
Incremental
Compensation in the Event of Termination as a Result of the
Following Events:
Victor
L. Richey, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee w/ Good
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason or by
|
|
|
Employee
|
|
|
Termination
|
|
|
|
Change of
|
|
|
|
|
|
|
|
|
Employer w/ No
|
|
|
Without
|
|
|
by Employer
|
|
Pay Element
|
|
Control(1)
|
|
|
Death
|
|
|
Disability
|
|
|
Reason
|
|
|
Good Reason
|
|
|
With Cause
|
|
|
Cash Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,350,000
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
Bonus
|
|
$
|
486,675
|
(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
900,000
|
(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
Severance Payment
|
|
$
|
2,323,350
|
(5)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Compensation
|
|
$
|
2,810,025
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,250,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Stock and Option Award Opportunities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Perf Accelerated Restricted Stock(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Earned
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
- Unearned (accelerated)
|
|
$
|
3,572,319
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Awards
|
|
$
|
3,572,319
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Total Direct Compensation
|
|
$
|
6,382,344
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,250,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broad-Based Benefits
|
|
$
|
26,891
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,108
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Retirement Benefits
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Other Executive Benefits / Perquisites
|
|
$
|
91,084
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
99,021
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefits
|
|
$
|
117,975
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
101,129
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Total Incremental Pay
|
|
$
|
6,500,319
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,351,129
|
|
|
$
|
0
|
|
|
$
|
0
|
|
22
G. E.
Muenster
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee w/ Good
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason or by
|
|
|
Employee
|
|
|
Termination
|
|
|
|
Change of
|
|
|
|
|
|
|
|
|
Employer w/ No
|
|
|
Without
|
|
|
by Employer
|
|
Pay Element
|
|
Control(1)
|
|
|
Death
|
|
|
Disability
|
|
|
Reason
|
|
|
Good Reason
|
|
|
With Cause
|
|
|
Cash Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
900,000
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
Bonus
|
|
$
|
249,750
|
(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
490,000
|
(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
Severance Payment
|
|
$
|
1,399,500
|
(5)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Compensation
|
|
$
|
1,649,250
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,390,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Stock and Option Award Opportunities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Perf Accelerated Restricted Stock(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Earned
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
- Unearned (accelerated)
|
|
$
|
1,450,905
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Awards
|
|
$
|
1,450,905
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Total Direct Compensation
|
|
$
|
3,100,155
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,390,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broad-Based Benefits
|
|
$
|
32,579
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,621
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Retirement Benefits
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Other Executive
Benefits/Perquisites
|
|
$
|
72,934
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
81,569
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefits
|
|
$
|
105,513
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
85,190
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Total Incremental Pay
|
|
$
|
3,205,668
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,475,190
|
|
|
$
|
0
|
|
|
$
|
0
|
|
23
Alyson
S. Barclay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee w/ Good
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason or by
|
|
|
Employee
|
|
|
Termination
|
|
|
|
Change of
|
|
|
|
|
|
|
|
|
Employer w/ No
|
|
|
Without
|
|
|
by Employer
|
|
Pay Element
|
|
Control(1)
|
|
|
Death
|
|
|
Disability
|
|
|
Reason
|
|
|
Good Reason
|
|
|
With Cause
|
|
|
Cash Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
253,000
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
Bonus
|
|
$
|
133,331
|
(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
109,000
|
(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
Severance Payment
|
|
$
|
772,662
|
(5)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Compensation
|
|
$
|
905,993
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
362,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Stock and Option Award Opportunities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Perf Accelerated Restricted Stock(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Earned
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
- Unearned (accelerated)
|
|
$
|
709,791
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Awards
|
|
$
|
709,791
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Total Direct Compensation
|
|
$
|
1,615,784
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
362,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broad-Based Benefits
|
|
$
|
36,008
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
5,284
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Retirement Benefits
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Other Executive
Benefits/Perquisites
|
|
$
|
74,194
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
52,131
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefits
|
|
$
|
110,202
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
57,415
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Total Incremental Pay
|
|
$
|
1,725,986
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
419,415
|
|
|
$
|
0
|
|
|
$
|
0
|
|
FOOTNOTES TO ABOVE THREE TABLES
|
|
|
(1) |
|
Upon a Change of Control, the executive officer would be subject
to a reduction in compensation if the reduction would create a
more favorable net-after-tax benefit under the Internal Revenue
Code section 4999 golden parachute excise tax.
Based on the calculations under section 4999 as applied to
the amounts shown in the table, the executive officer would not
be subject to this excise tax and no reduction in benefits would
be necessary. For purposes of these calculations, it was assumed
that all vesting stocks and options would be cashed out by the
acquiring entity. |
|
(2) |
|
As calculated under the terms of the executive officers
employment agreement. The amount shown represents the annual
base salary in effect at September 30, 2009 multiplied by
two for Mr. Richey and Mr. Muenster, and by one for
Ms. Barclay. |
|
(3) |
|
As calculated under the terms of the Severance Plan
(page 28, clause (iii) hereof). The amount shown is in
lieu of any annual bonus for fiscal 2009 which would have
otherwise been paid except for the termination. |
|
(4) |
|
As calculated under the terms of the executive officers
employment agreement. The amount shown represents the annual
cash bonus target percentage of total cash compensation for
fiscal 2009 multiplied by two for Mr. Richey and
Mr. Muenster and by one for Ms. Barclay. |
|
(5) |
|
As calculated under the terms of the Severance Plan
(page 28, clause (iv) hereof). |
|
(6) |
|
No unvested stock options would become vested. |
|
(7) |
|
Represents earned and unearned shares that would be accelerated
and distributed, based on the closing market price of $39.40 of
the Companys common stock on September 30, 2009. |
24
|
|
|
(8) |
|
The amounts shown represent the projected benefit cost to
continue benefits in accordance with the executive
officers employment agreement and the provisions of the
Severance Plan. Included in the Total Benefits are auto, club,
financial planning, broad-based benefits (health insurance and
disability premiums) and club tax gross up. In addition, an
estimated outplacement fee of $15,000 is included. |
Security
Ownership Of Directors and Executive Officers
The following table sets forth certain information with respect
to the number of Common Shares beneficially owned by the
directors and executive officers of the Company as of
December 4, 2009. Except as otherwise noted, each person
has sole voting and investment power as to his or her shares.
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Percent of
|
|
|
Common Shares
|
|
Outstanding
|
Name of Beneficial Owner
|
|
Beneficially Owned(1)
|
|
Common Shares
|
|
A.S. Barclay
|
|
|
123,782
|
|
|
|
(2
|
)
|
J.M. McConnell
|
|
|
20,140
|
(3)
|
|
|
(2
|
)
|
G.E. Muenster
|
|
|
171,983
|
|
|
|
(2
|
)
|
V.L. Richey, Jr.
|
|
|
359,561
|
|
|
|
1.4
|
%
|
L.W. Solley
|
|
|
17,350
|
|
|
|
(2
|
)
|
J.M. Stolze
|
|
|
29,400
|
(4)
|
|
|
(2
|
)
|
D.C. Trauscht
|
|
|
20,400
|
|
|
|
(2
|
)
|
J.D. Woods
|
|
|
16,625
|
|
|
|
(2
|
)
|
All directors and executive officers as a group (8 persons)
|
|
|
759,241
|
|
|
|
2.8
|
%
|
|
|
|
(1) |
|
Includes the following Common Shares covered by employee stock
options which the individual has the right to acquire within
60 days after December 4, 2009: Ms. Barclay
45,066, Mr. Muenster 41,072, Mr. Richey 133,250 and
all directors and executive officers as a group 219,388. |
|
(2) |
|
The percentage of total outstanding Common Shares beneficially
owned by this individual does not exceed 1%. |
|
(3) |
|
Includes 4,120 stock equivalents credited to
Mr. McConnells deferred compensation account under
the Compensation Plan for Non-Management Directors. |
|
(4) |
|
Includes 17,400 stock equivalents credited to
Mr. Stolzes deferred compensation account under the
Compensation Plan for Non-Management Directors. |
Security
Ownership of Certain Beneficial Owners
The following table sets forth certain information with respect
to each person known by the Company to beneficially own more
than five percent of the outstanding Common Shares as of
December 4, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Percent
|
|
|
Name and Address of
|
|
Common Shares
|
|
of Outstanding
|
|
|
Beneficial Owner
|
|
Beneficially Owned
|
|
Common Shares
|
|
Columbia Wanger Asset Management, L.P.
|
|
|
3,457,450
|
(1)
|
|
|
13.1
|
%
|
227 West Monroe, Suite 3000
Chicago, IL 60606
|
|
|
|
|
|
|
|
|
Waddell & Reed Financial, Inc., et al
|
|
|
2,869,996
|
(2)
|
|
|
10.9
|
%
|
6300 Lamar Ave.
Overland Park, KS 66202
|
|
|
|
|
|
|
|
|
The Bank of New York Mellon Corporation
|
|
|
2,679,008
|
(3)
|
|
|
10.1
|
%
|
One Wall Street,
31st
Floor
New York, NY 10286
|
|
|
|
|
|
|
|
|
BlackRock, Inc.
|
|
|
1,875,300
|
(4)
|
|
|
7.1
|
%
|
40 East 52nd
New York, NY 10022
|
|
|
|
|
|
|
|
|
Barclays Global Investors N.A.
|
|
|
1,825,000
|
(4)
|
|
|
6.9
|
%
|
400 Howard Street
San Francisco, CA 94105
|
|
|
|
|
|
|
|
|
25
|
|
|
(1) |
|
Based on information provided by Columbia Wanger Asset
Management, L.P. (CWAM), the investment advisor to
the following registered owners: Columbia Acorn Fund,
2,200,000 shares; Columbia Acorn USA, 587,000 shares
(Columbia Acorn Trust owns 2,787,000 shares); Wanger USA,
452,300 shares; Wanger US Smaller Companies, a portfolio of
Wanger Investment Company PLC, 39,000 shares; Fairfax
County Employees Retirement, 25,000 shares; Fleet
Bank Pension, 19,500 shares; New America Small Caps,
3,450 shares; Oregon State Treasury, 120,000 shares;
Optimum Small Cap Growth, 11,200 shares. CWAM and its
general partner, WAM Acquisition G.P., hold shared voting power
and investment power with the registered owners as to the
3,457,450 shares. |
|
(2) |
|
Based on information provided by Waddell & Reed
Financial, Inc., which holds sole voting and disposition powers
for the 2,869,996 shares. |
|
(3) |
|
Based on information contained in Schedule 13G dated
April 30, 2009 filed with the SEC by The Bank of New York
Mellon Corporation, which holds sole voting power for
2,452,243 shares, shared voting power for
150,480 shares, sole dispositive power for
2,678,861 shares and shared dispositive power for
147 shares. |
|
(4) |
|
Based on information as of November 30, 2009 provided by
the Companys shareholder analyst consultant. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys directors and executive officers and
persons who own beneficially more than ten percent of any class
of equity security of the Company to file with the SEC initial
reports of such ownership and reports of changes in such
ownership. Officers, directors and such beneficial owners are
required by SEC regulation to furnish the Company with copies of
all Section 16(a) forms they file. To the Companys
knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no
other reports were required, during the fiscal year ended
September 30, 2009, all Section 16(a) reports
applicable to its officers, directors and greater than ten
percent beneficial owners were timely filed.
II. PROPOSAL TO
RATIFY COMPANYS APPOINTMENT OF KPMG LLP
AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR
2010
The Board of Directors unanimously recommends a vote FOR the
appointment of KPMG LLP as independent registered public
accounting firm for the fiscal year ending September 30,
2010.
The Audit and Finance Committee has appointed KPMG LLP, an
independent registered public accounting firm, as independent
public accountants of the Company for the fiscal year ending
September 30, 2010.
KPMG LLP or its predecessor firms have served as the independent
public accountants of the Company since its incorporation in
1990. A representative of KPMG LLP is expected to be present at
the 2010 Annual Meeting with the opportunity to make a statement
and respond to appropriate questions from Stockholders.
Although this appointment is not required to be submitted to a
vote of Stockholders, the Board of Directors believes it is
appropriate to request that the Stockholders ratify the
appointment of KPMG LLP as the independent registered public
accounting firm of the Company for the fiscal year ending
September 30, 2010. If the Stockholders do not ratify this
appointment, the Audit and Finance Committee will investigate
the reasons for Stockholder rejection and will reconsider the
appointment.
III. INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
SERVICES AND FEES
The Audit and Finance Committee (the Committee) has
adopted pre-approval policies and procedures requiring that the
Committee pre-approve all audit and non-audit services to be
provided by the Companys independent registered public
accounting firm. In accordance with this policy, the Committee
has pre-approved and has set specific quarterly limitations on
fees for the following categories of services: general
accounting and SEC consultation, compliance with pertinent
legislation, general taxation matters and tax returns. Services
which have
26
not received specific pre-approval by the Committee must receive
such approval prior to the rendering of the services.
The following fees were paid to KPMG LLP for services rendered
for each of the last two fiscal years:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit Fees
|
|
$
|
985,000
|
|
|
$
|
1,176,000
|
|
Audit-Related Fees
|
|
|
|
|
|
|
|
|
Tax Fees
|
|
|
2,000
|
|
|
|
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
Total KPMG LLP Fees Paid
|
|
$
|
987,000
|
|
|
$
|
1,176,000
|
|
Audit Fees primarily represent amounts paid for the audit of the
Companys annual financial statements, reviews of SEC
Forms 10-Q
and 10-K, or
services that are normally provided in connection with statutory
and regulatory filings or engagements for those fiscal years,
including expressing an opinion on the Companys internal
control over financial reporting.
Audit-Related Fees represent amounts paid for services for
acquisition due diligence and other assurance and related
services that are reasonably related to the performance of the
audit or review of financial statements, but which are not
included under Audit Fees above.
Tax Fees represent amounts paid for tax compliance, tax advice
and tax planning services.
In the process of the appointment of KPMG LLP as the
Companys independent registered public accounting firm for
the fiscal year ending September 30, 2010, the Committee
has determined that the non-audit services provided by KPMG LLP
are compatible with maintaining the independence of KPMG LLP.
IV. VOTING
The affirmative vote of the holders of a majority of the Common
Shares entitled to vote which are present in person or
represented by proxy at the 2010 Annual Meeting is required to
elect directors, to ratify the Companys appointment of the
independent registered public accounting firm for fiscal 2010,
and to act on any other matters properly brought before the
meeting. Common Shares represented by proxies which are marked
withhold authority with respect to the election of
any one or more nominees for election as directors, proxies
which are marked Abstain on the proposal to ratify
the selection of independent public accountants, and proxies
which are marked to deny discretionary authority on other
matters will be counted for the purpose of determining the
number of shares represented by proxy at the meeting. Such
proxies will thus have the same effect as if the Common Shares
represented thereby were voted against nominee or nominees,
against such proposal to ratify the appointment of the
independent registered public accounting firm, and against such
other matters, respectively. Common Shares not voted on one or
more but less than all such matters on proxies returned by
brokers will be treated as not represented at the meeting as to
such matter or matters.
The Company knows of no other matters to come before the
meeting. If any other matters properly come before the meeting,
the proxies solicited hereby will be voted on such matters in
accordance with the judgment of the persons voting such proxies.
V. STOCKHOLDER
PROPOSALS
Proposals of Stockholders intended to be presented at the 2011
Annual Meeting must be received by the Company by
August 20, 2010 for inclusion in the Companys proxy
statement and form of proxy relating to that meeting. Upon
receipt of any such proposal, the Company will determine whether
or not to include such proposal in the proxy statement and form
of proxy in accordance with regulations governing the
solicitation of proxies.
In order for a Stockholder to nominate a candidate for director,
under the Companys Articles of Incorporation, timely
notice of the nomination must be given to the Company in advance
of the meeting. Ordinarily, such notice must be given not less
than 60 nor more than 90 days before the meeting (but if
the Company gives less than 50 days
27
notice or prior public disclosure of the date of the meeting,
then the Stockholder must give such notice within ten days after
notice of the meeting is mailed or other public disclosure of
the meeting is made, whichever occurs first). The Stockholder
filing the notice of nomination must describe various matters
regarding the nominee, including such information as name,
address, occupation and shares held.
In order for a Stockholder to bring other business before a
Stockholder meeting, timely notice must be given to the Company
within the time limits described above. Such notice must include
a description of the proposed business, the reasons therefor and
other specified matters. The Board may reject any such proposals
that are not made in accordance with these procedures or that
are not a proper subject for Stockholder action in accordance
with the provisions of applicable law. These requirements are
separate from and in addition to the requirements a Stockholder
must meet to have a proposal included in the Companys
proxy statement. The foregoing time limits also apply in
determining whether notice is timely for purposes of rules
adopted by the SEC relating to the exercise of discretionary
voting authority.
In each case, the notice must be given to the Secretary of the
Company, whose address is 9900A Clayton Road, St. Louis, MO
63124-1186.
Any Stockholder desiring a copy of the Companys Articles
of Incorporation or Bylaws will be furnished one without charge
upon written request to the Secretary.
28
|
|
|
|
|
|
|
x
|
|
PLEASE MARK VOTES
AS IN THIS EXAMPLE
|
|
REVOCABLE PROXY
ESCO TECHNOLOGIES INC.
|
|
|
|
The undersigned, as holder of record of the common stock
of ESCO TECHNOLOGIES INC. (the Company), does hereby appoint
G.E. Muenster and A.S. Barclay, or either of them, the true and
lawful attorneys in fact, agents and proxies of the undersigned
to represent the undersigned at the Annual Meeting of
Stockholders of the Company, to be held on February 4, 2010,
commencing at 9:30 A.M., St. Louis time, at the Companys
headquarters located at 9900A Clayton Road, St. Louis County,
Missouri 63124 and at any and all adjournments of such meeting,
and to vote all the shares of common stock of the Company
standing on the register of the Companys stock transfer agent
in the name of the undersigned as follows, and in their
discretion on such other business as may properly come before
the meeting:
|
|
|
|
|
|
|
|
|
Please be sure to date and sign
this proxy card in the box below. |
|
Date |
|
|
|
|
Sign above |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With- |
|
For All |
|
|
|
|
|
|
For |
|
hold |
|
Except |
1. |
|
Election of Directors of all nominees listed
(except as marked to the contrary below): |
|
o |
|
o |
|
o |
|
|
V.L. RICHEY, JR.
|
|
J.M. STOLZE |
|
|
|
|
|
|
|
|
INSTRUCTION: To withhold authority to vote for any individual nominee, mark For
All Except and write that nominees name in the
space provided below. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. |
|
Ratification of Companys Appointment of
KPMG LLP as Independent Registered
Public Accounting Firm for Fiscal Year
Ending September 30, 2010. |
|
For
o |
|
Against
o |
|
Abstain
o |
MANAGEMENT RECOMMENDS A VOTE FOR THE
ABOVE PROPOSALS.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby acknowledges access to the
Notice of the Annual Meeting and accompanying Proxy
Statement dated December 22, 2009, and 2009 Annual Report
to Stockholders.
The proxies will vote your common stock in the manner
directed herein by the undersigned Stockholder.
If no direction is made, this proxy will be voted FOR each
of these Proposals.
Please sign exactly as your name appears on this
form. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title
as such. If signing on behalf of a corporation, please
sign in full corporate name by President or other
authorized officer. If signing on behalf of a partnership,
please sign in partnership name by authorized person.
Detach above card, sign,
date and mail in postage paid envelope provided.
ESCO TECHNOLOGIES INC.
PLEASE ACT PROMPTLY
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
December 22, 2009
Dear Stockholder:
The Annual Meeting of Stockholders of ESCO Technologies Inc. will be held at the Companys
headquarters located at 9900A Clayton Road, St. Louis County, Missouri 63124 at 9:30 A.M., St.
Louis time, on Thursday, February 4, 2010.
It is important that your shares are represented at this meeting. Whether or not you plan to
attend the meeting, please review the enclosed proxy materials, complete the attached proxy form
above, and return it promptly in the envelope provided.
Thank you.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS
PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
5157/5158/5159