UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported) March 12, 2008 (March 6, 2008)
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L.B. Foster Company
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(Exact name of registrant as specified in its charter)
Pennsylvania 000-10436 25-1324733
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
415 Holiday Drive, Pittsburgh, Pennsylvania 15220
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 412-928-3417
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None
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
The Registrant's named executive officers are Lee B. Foster II (Chairman of the
Board), Stan L. Hasselbusch (President and Chief Executive Officer), David J.
Russo (Sr. Vice President and Chief Financial Officer), John F. Kasel (Sr. Vice
President - Operations & Manufacturing) and Donald L. Foster (Sr. Vice President
- - Construction Products). Since Mr. Lee B. Foster II was not and will not be
eligible to receive awards discussed in this report, his name is not repeated in
the following disclosure.
A. Annual Incentive Plan
On March 6, 2008, Registrant's Compensation Committee ( the "Committee") adopted
and its Board approved, subject to shareholder approval, the L.B. Foster
Executive Annual Incentive Compensation Plan which is attached hereto and
incorporated herein by reference (the "Annual Incentive Plan"). The Committee
has approved goals under which annual incentive awards for 2008 will be based
upon the extent to which Corporate and/or individual operating units approach or
surpass planned "Pre-Tax Income"(1) and, for Corporate only, planned
"ROIC"(2)).
The NEOs were assigned the following Target Percentages:
- ------------------------------------------------------- ------------------------
Target Percentage
- ------------------------------------------------------- ------------------------
Stan L. Hasselbusch - President and Chief Executive
Officer 65%
David J. Russo - Sr. V.P., CFO and Treasurer 45%
John F. Kasel - Sr. V.P. - Operations and Manufacturing 40%
Donald L. Foster - Sr. V.P. - Construction Products 40%
- ------------------------------------------------------- ------------------------
A participant's base salary will be multiplied by his Target Percentage to
obtain a "Target Award". These Target Awards are then allocated as follows:
- ----------- ----------------------- ------------- ----------------- ------------
Metric Chief Sr. V.P. and Sr. V.P.-
Executive CFO; Sr. V.P. Construction
Officer - Operations & Products
Manufacturing
- ----------- ----------------------- ------------- ----------------- ------------
Corporate ROIC 25% 25%
----------------------- ------------- ----------------- ------------
Financial Pre-Tax Income -
Performance Corporate 75% 55% 20%
Awards ----------------------- ------------- ----------------- ------------
Operating Unit Pre-Tax
Income 60%
- ----------- ----------------------- ------------- ----------------- ------------
Individual
Performance Personal Objectives 20% 20%
Awards
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Financial Performance Awards are meant to comply with IRS Section 162(m), while
Individual Performance Awards may not satisfy IRC Section 162(m) requirements.
Financial Performance Awards (but not Individual Performance Awards) shall be
determined by adjusting a participant's Target Award based on the actual
attainment of planned Pre-Tax Income and ROIC as set forth below:
Incentive Income Multiplier (Corporate/Operating Unit)
----------------------------------------- ------------------------------------
% of Planned Pre-Tax Income Achieved Corporate or Operating Unit
Multiplier of Allocated
Target Award
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140% and Over 200.0%
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135% 187.5%
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130% 175.0%
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125% 162.5%
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120% 150.0%
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115% 137.5%
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110% 125.0%
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105% 112.5%
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100% 100.0%
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90% 73.0%
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80% 47.0%
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70% 20.0%
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Less than 70% 0.0%
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ROIC Multiplier
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Target ROIC Achieved Corporate Multiplier of
Allocated Target Award
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21.00% and Over 200.00%
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20.25% 187.50%
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19.50% 175.00%
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18.75% 162.50%
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18.00% 150.00%
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17.25% 137.50%
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16.50% 125.00%
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15.75% 112.50%
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15.00% 100.00%
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13.65% 73.00%
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12.35% 47.00%
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11.00% 20.00%
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Less than 11.00% 0.00%
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B. 2006 Omnibus Plan
The 2006 Omnibus Incentive Plan ("Original Omnibus Plan") provides for the
issuance of up to 500,000 shares of the Company's common stock, which may
include newly-issued or treasury shares, through the exercise of stock options
or the award of shares of common stock.
On March 6, 2008, Registrant's Compensation Committee and its Board of Directors
approved amendments to the Original Omnibus Plan, subject to shareholder
approval (the "Amended Omnibus Plan").
On March 6, 2008, the NEOs were awarded the following "Performance Share Units",
which Performance Share Units, subject to shareholder approval, will be
converted into Registrant's common stock based upon Registrant's average
"ROIC"(3)over the three (3) year performance period 2008 - 2010, inclusive:
Name Number of Performance Share Units
---- ---------------------------------
Stan L. Hasselbusch 8,540
David J. Russo 2,053
Donald L. Foster 2,053
John F. Kasel 2,053
Based upon the Company's average ROIC over the 3 years period (and contingent
upon shareholder approval), each NEO's Performance Share Units shall be
converted into Company common stock. "Average ROIC" for the three (3) year
performance period shall be calculated by adding together the annual ROIC
percentages and dividing by three (3). The Average ROIC target for the 2008 -
2010 performance period shall be 16%. The number of performance shares to be
awarded to a participant shall be determined by multiplying the participant's
Performance Share Units by the "Percentage of Performance Share" that
corresponds to the Company's "Average ROIC" for the three (3) year performance
period, as follows:
ROIC
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Percent of
Performance Share
Level of Performance Average ROIC Units Earned
- ------------------------ ---------------------------- -----------------------
Below Threshold Below 12.0% 0%
Threshold Equal to 12.0% 50%
Target Equal to 16.0% 100%
Outstanding Equal to or Greater than 200%
20.0%
The Committee plans to establish new targets annually for successive 3 year
performance periods. For example, in 2009, the Committee plans again to
establish targets and new financial metrics for the performance period 2009 -
2011, inclusive.
1. " Pre-Tax Income" with respect to the Annual Incentive Plan means the pre-tax
income for the Corporation or, as applicable, for an Operating Unit determined
in accordance with generally accepted accounting principles, but excluding: (i)
the "Milestone Payments" or other amounts, if any, paid to the former
shareholders (and their respective successors and assigns) of the Dakota
Minnesota and Eastern Railroad Corporation ("DM&E") arising from or in
connection with the 2007 merger of the DM&E; (ii) all gains or losses arising
from sales of capital assets when the sale or purchase price for an individual
asset exceeds $50,000; (iii) all expenses, costs, profits, losses or gains
attributable to (a) the sale, other than sales of inventory in the ordinary
course of business, of more than 25% of the assets of an "Operating Unit" or 50%
of the assets of a Component in the Fiscal Year, or (b) the acquisition of a
business in 2008 for a purchase price of more than $1M; (iv) with respect to
Operating Units only, the costs of the Plan; (v) interest, investment gains or
losses arising from cash or marketable securities of $105M; and (vi)interest
expense related to use of funds in excess of $105M, during the Fiscal Year in
connection with the purchase of a business or businesses for more than an
aggregate purchase price(s) of $105M; provided, however, that the loss of
investment income due to the use of funds in excess of $105M shall be added back
to calculate pre-tax income with such funds being deemed to have earned interest
at the effective average interest rate attained by the Corporation for the
Fiscal Year from the date such funds are so utilized. Notwithstanding the
foregoing, in the event more than 25% of the assets of an Operating Unit or 50%
of the assets of a Component are sold, excluding sales of inventory in the
ordinary course of business, during the Fiscal Year, such Component's or
Operating Unit's , as applicable, Planned re-tax Income shall be eliminated from
all calculations, together with the Component's or Operating Unit's, as
applicable, profits , losses and pre-tax income for the Fiscal Year.
2. "ROIC" means, with respect to the Annual Incentive Plan, after tax earnings
from continuing operations before interest income and interest expense and
amortization charges (tax affected using the effective corporate tax rate) and
excluding: (i) all "Milestone Payments" or other amounts, if any, paid to the
former shareholders (and their respective successors and assigns) of the DM&E
arising from or in connection with the 2007 merger of the DM&E; (ii) all gains
or losses arising from sales of capital assets when the sale or purchase price
for an individual asset exceeds $50,000; and (iii) all expenses, costs, losses,
gains, attributable to (a) the sale, excluding sales of inventory in the
ordinary course of business, of more than 25% of the assets of an "Operating
Unit" or, more than 50% of the assets of a Component, or (b) the acquisition of
a business for a purchase price exceeding $1,000,000, divided by an average of
month end total assets less the sum of cash, marketable securities and
non-interest bearing current liabilities, determined in accordance with
generally accepted accounting principles.
3. ROIC Percentages mean, with respect to the Amended Omnibus Plan and with
respect to any calendar year; (a) after tax earnings from continuing operations
before interest income and interest expense and amortization charges (tax
affected using the effective corporate tax rate) and excluding all "Milestone
Payments") or other amounts, if any, paid to the former shareholders (and their
respective successors and assigns) of the DM&E arising from or in connection
with the 2007 merger of the DM&E divided by (b) an average of month end total
assets less the sum of cash, marketable securities and non-interest bearing
current liabilities, determined in accordance with generally accepted accounting
principles.
Item 9.01 Exhibits
10.57.1 2006 Omnibus Incentive Plan, As Amended and Restated March 6, 2008.
10.59 Executive Annual Incentive Compensation Plan
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
L.B. FOSTER COMPANY
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(Registrant)
Date: March 12, 2008
/s/ David J. Russo
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David J. Russo
Senior Vice President
Chief Financial Officer and Treasurer
Exhibit Index
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Exhibit Number Description
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10.57.1 2006 Omnibus Incentive Plan, As Amended and Restated
March 6, 2008.
10.59 Executive Annual Incentive Compensation Plan
Exhibit 10.57.1
L. B. FOSTER COMPANY
2006 OMNIBUS INCENTIVE PLAN
As Amended and Restated on March 6, 2008
ARTICLE I
PURPOSE, EFFECTIVE DATE AND AVAILABLE SHARES
1.1 Purpose. The purpose of this Plan is to provide financial incentives for
selected Key Personnel and Directors of L. B. Foster Company (the "Company") and
its subsidiaries, thereby promoting the long-term growth and financial success
of the Company by (i) attracting and retaining personnel and directors of
outstanding ability, (ii) strengthening the Company's capability to develop,
maintain and direct a competent management team, (iii) motivating officers to
achieve long-range performance goals and objectives, and (iv) providing
incentive compensation opportunities competitive with those of other
corporations.
1.2 Effective Date and Expiration of Plan. The Board of Directors of the Company
has originally adopted the Plan with an effective date March 31, 2006, and the
Plan, as amended and restated, shall be effective March 6, 2008 ("Effective
Date"), subject to approval by the stockholders of the Company; provided that,
no award granted after the Effective Date that is intended to be
performance-based within the meaning of Section 162(m) shall be paid prior to
shareholder approval of the material terms of the Plan. Unless terminated by the
Board pursuant to Section 7.3, the Plan shall expire on March 31, 2016. No Award
shall be made pursuant to the Plan after its termination date, but Awards made
prior to the termination date may extend beyond that date.
1.3 Shares Available Under the Plan. L. B. Foster Company stock to be issued
under the Plan may be authorized but unissued common stock or previously issued
shares of common stock which have been reacquired by the Company and are held in
its treasury. Subject to adjustment under Section 7.6, no more than 500,000
shares of common stock shall be issuable under the Plan. No Participant may
receive (i) Options for more than 75,000 shares of Stock in any one fiscal year
of the Company, (ii) Performance Grants (denominated in Stock) for more than
75,000 shares of Stock in any one fiscal year of the Company and (iii)
Performance Grants (denominated in cash) for more than $1,500,000 in any one
fiscal year of the Company. The foregoing limitations shall be subject to
adjustment as provided in Section 7.6, but only to the extent that any such
adjustment will not affect the status of (i) any Award intended to qualify as
performance-based compensation under Section 162(m) of the Code or (ii) any
Award intended to comply with, Section 409A or an exception thereto. If any
shares of Stock covered by an award terminate, lapse, are Forfeited or
cancelled, or such Award is otherwise settled without the delivery of the full
number of shares underlying the Award, including shares withheld to satisfy tax
withholding obligations, then such shares to the extent of any such Forfeiture,
termination, lapse, cancellation, payment, etc., shall again be, or shall become
available for issuance under this Plan.
ARTICLE II
DEFINITIONS
As used in the Plan and except as otherwise specifically provided in an
Award Agreement, the following terms shall have the meanings set forth below:
2.1 "Award" means, individually or collectively, any Option, Restricted Stock
Award or Performance Grant under this Plan.
2.2 "Award Agreement" means, as applicable, the Restricted Stock Agreement, the
Stock Option Agreement, or the Performance Grant Agreement.
2.3 "Board" means the Board of Directors of L. B. Foster Company.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means a committee of the directors of the Company, not to be
less than two, appointed by the Board, each of who is (i) a "non-employee
director" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934, as amended, and (ii) a "outside director" (as defined in Treasury
Regulation ss.1.162-27(e)(3)(i) or any successor regulation),. If the Board has
not appointed a Committee, "Committee" shall mean the Board.
2.6 "Company" means L. B. Foster Company and its successors and assigns.
2.7 "Director" means a director of the Company. In some instances, Plan
provisions are applied differently with respect to non-employee Directors
(within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended) and, where the term Director is so qualified to say "non-employee
Director", such Plan provisions shall be limited to such outside, non-employee
Directors.
2.8 "Disability" means a disability which results in the Participant being
unable to engage in any substantial, gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
months. The determination of whether a Participant has a Disability shall be
made in accordance with Code Section 22(e)(3), including any regulations issued
by the Internal Revenue Service thereunder.
2.9 "Effective Date" means the date on which the Plan is effective as provided
in Section 1.2.
2.10 "Fair Market Value" of the Stock as to a particular time or date shall be
the closing price of the Stock on the trading day that is the date of grant or,
if the date of grant is not a trading day, on the trading day immediately
preceding the date of grant.
2.11 "Forfeit," "Forfeiture," "Forfeited" means the loss by a Participant of any
and all rights to an Award granted under the Plan, including the loss of any
payment of compensation by the Company under the Plan or any Award granted
thereunder.
2.12 "Key Personnel" means officers and employees, consultants and independent
contractors of the Company and its Subsidiaries who occupy responsible
executive, professional, sales or administrative positions and who have the
capacity to contribute to the success of the Company.
2.13 "Officer" means an officer of the Company or of a Subsidiary.
2.14 "Option" means an option to purchase common stock of the Company, where
such option is not a qualified (or statutory) option under Code Section 422.
2.15 "Option Price" means the price at which common stock of the Company may be
purchased under an Option as provided in Section 4.4.
2.16 "Participant" means a person to whom an Award is made under the Plan.
2.17 "Performance Grant" means an award subject, in part, to the terms,
conditions and restrictions described in Article VI, pursuant to which the
recipient may become entitled to receive cash, Stock or other securities, or any
combination thereof.
2.18 "Performance Grant Agreement" means a written agreement entered into
between the Company and a Participant setting forth the terms and conditions of
a Performance Grant awarded pursuant to Article VI.
2.19 "Permitted Transferee" means (i) any person defined as an employee in the
Instructions to Registration Statement Form S-8 promulgated by the Securities
and Exchange Commission, as such Form may be amended from time to time, which
persons include, as of the date of adoption of this Plan, executors,
administrators or beneficiaries of the estates of deceased Participants,
guardians or members of a committee for incompetent former Participants, or
similar persons duly authorized by law to administer the estate or assets of
former Participants, and (ii) Participants' family members who acquire Awards
from the Participant other than for value, including through a gift or a
domestic relations order. For purposes of this definition, "family member"
includes any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the Participant's household (other
than a tenant or employee), a trust in which these persons have more than fifty
percent of the beneficial interest, a foundation in which these persons (or the
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty percent of the voting
interests. For purposes of this definition, neither (i) a transfer under a
domestic relations order in settlement of marital property rights nor (ii) a
transfer to an entity in which more than fifty percent of the voting or
beneficial interests are owned by family members (or the Participant) in
exchange for an interest in that entity is considered a transfer for "value".
2.20 "Personal Representative" means the person or persons who, upon the death,
Disability or incompetency of a Participant, shall have acquired, by will or by
the laws of descent and distribution or by other legal proceedings, the right to
exercise an Option theretofore granted to such Participant.
2.21 "Plan" means this 2006 Omnibus Incentive Plan, as amended.
2.22 "Restricted Stock Agreement" means a written agreement entered into between
the Company and a Participant setting forth the terms and conditions of a
Restricted Stock Award made pursuant to Article V.
2.23 "Restricted Stock Award" means a grant of Stock to a Participant pursuant
to Article V.
2.24 "Retirement", "Retire" means retirement of an employee or other service
provider as determined and authorized by the Committee.
2.25 "Section 409A" shall mean Section 409A of the Code, the regulations and
other binding guidance promulgated thereunder.
2.26 "Separation from Service" and "Separate from Service" shall mean the
Participant's death, retirement or other termination of employment with the
Company (including all persons treated as a single employer under Section 414(b)
and 414(c) of the Code) that constitutes a "separation from service" (within the
meaning of Section 409A). For purposes hereof, the determination of controlled
group members shall be made pursuant to the provisions of Section 414(b) and
414(c) of the Code; provided that the language "at least 50 percent" shall be
used instead of "at least 80 percent" in each place it appears in Section
1563(a)(1),(2) and (3) of the Code and Treas. Reg. ss. 1.414(c)-2; provided,
further, where legitimate business reasons exist (within the meaning of Treas.
Reg. ss. 1.409A-1(h)(3)), the language "at least 20 percent" shall be used
instead of "at least 80 percent" in each place it appears.
2.27 "Specified Employee" means a key employee (as defined in Section 416(i) of
the Code without regard to paragraph (5) thereof) of the Company as determined
in accordance with Section 409A and the procedures established by the Company.
2.28 "Stock" means common stock of the Company.
2.29 "Stock Option Agreement" means a written agreement entered into between the
Company and a Participant setting forth the terms and conditions of an Option
awarded pursuant to Article IV.
2.30 "Subsidiary" means a corporation or other business entity, domestic or
foreign, the majority of the voting stock or other voting interests in which is
owned directly or indirectly by the Company, including a Subsidiary which become
such after adoption of the Plan.
2.31 "Termination for Cause" or "Terminated for Cause" means (i) termination due
to (a) willful or gross neglect of duties or (b) willful misconduct in the
performance of such duties, so as to cause material harm to the Company or any
Subsidiary, (ii) termination due to the Participant committing fraud,
misappropriation or embezzlement in the performance of his or her duties or
(iii) termination due to the Participant committing any felony of which he or
she is convicted and which, as determined in good faith by the Board,
constitutes a crime involving moral turpitude and results in material harm to
the Company or a Subsidiary. The Committee shall make all determinations of
whether the Participant was Terminated for Cause.
ARTICLE III
ADMINISTRATION
3.1 Committee to Administer.
(a) The Plan shall be administered by the Committee. The Committee shall have
full and exclusive authority and discretion to interpret, construe, and
administer the Plan, to establish and amend rules and regulations for its
administration, and make all other determinations necessary or advisable for the
administration of the Plan. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any Award in the
manner and to the extent it shall deem desirable. The Committee's decisions
shall be final, conclusive and binding with respect to the Plan and any Award
made under the Plan.
(b) A majority of the members of the Committee shall constitute a quorum for the
conduct of business at any meeting. The Committee shall act by majority vote of
the members present at a duly convened meeting, including a telephonic meeting
in accordance with Section 1708 of the Pennsylvania Business Corporation Law
("BCL"). Action may be taken without a meeting if written consent thereto is
given in accordance with Section 1727 of the BCL.
(c) Notwithstanding any provision herein to the contrary, to the extent the
Board is performing any Plan-related functions, including the determination of
whether a Participant has been Terminated for Cause, the Board shall have the
same discretionary power and authority to administer the Plan as the Committee
does under this Article III.
3.2 Powers of Committee.
(a) Subject to the provisions of the Plan, the Committee shall have authority,
in its discretion, to determine those Key Personnel and Directors who shall
receive Awards, the time or times when each such Award shall be made, the type
of Award to be made, and the number of shares to be subject to each Award.
(b) A Director shall not participate in a vote granting himself an Award.
(c) The Committee shall determine the terms, restrictions and provisions of the
agreement relating to each Award. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in the Plan, or in any agreement
relating to an Award, in such manner and to the extent the Committee shall
determine in order to carry out the purposes and intent of the Plan..
(d) Notwithstanding any provision herein to the contrary, to the extent the
Board is performing any Plan-related functions, the Board shall have the same
discretionary power and authority to administer the Plan as the Committee does
under this Article III.
3.3 Awards. Awards under the Plan shall consist of Options, Restricted Stock
Awards, and Performance Grants. All Awards shall be subject to the terms and
conditions of the Plan and to such other terms and conditions consistent with
the Plan as the Committee deems appropriate.
3.4 Eligibility for Awards. Awards may be made to Key Personnel and Directors.
In selecting Participants and in determining the form and amount of the Award,
the Committee may give consideration to his or her functions and
responsibilities, his or her present and potential contributions to the success
of the Company, the value of his or her services to the Company, and other
factors deemed relevant by the Committee.
ARTICLE IV
STOCK OPTIONS
4.1 Award of Stock Options. Subject to the provisions of the Plan, the Committee
may grant Options to Key Personnel and Directors.
4.2 Period of Option.
----------------
(a) Except as otherwise provided in a Stock Option Agreement or the Plan, an
Option shall be exercisable only after twelve (12) months have elapsed from the
date of grant, and after such twelve-month waiting period, the Option may be
exercised in cumulative installments in the following manner:
(i) The Participant may purchase up to one-fourth (1/4) of the total
optioned shares at any time after one year from the date of grant and prior to
the termination of the Option.
(ii) The Participant may purchase an additional one-fourth (1/4) of the
total optioned shares at any time after two years from the date of grant and
prior to the termination of the Option.
(iii) The Participant may purchase an additional one-fourth (1/4) of the
total optioned shares at any time after three years from the date of grant and
prior to the termination of the Option.
(iv) The Participant may purchase an additional one-fourth (1/4) of the
total optioned shares at any time after four years from the date of grant and
prior to the termination of the Option.
The duration of each Option shall not be more than ten (10) years from the date
of grant.
(b) Notwithstanding the foregoing, the Committee may establish, in the
applicable Stock Option Agreement, any other period during which Options may be
exercised.
(c) Except as otherwise provided in the Plan or in the Stock Option Agreement,
an Option may not be exercised by a Participant, other than a non-employee
Director, unless such Participant is then, and continually (except for approved
sick leave, FMLA, authorized military service, or other approved, bona fide
leave of absence) after the grant of the Option has been, employed as an officer
or employee of the Company or a Subsidiary.
(d) An Option granted to a non-employee Director, who is a Director at the time
of such grant, shall be immediately exercisable, except as may be otherwise
provided in the Option Agreement.
4.3 Stock Option Agreement. Each Option shall be evidenced by a Stock Option
Agreement in such form and containing such terms and conditions as the Committee
from time to time shall approve, except that the terms and conditions in the
Stock Option Agreement shall be consistent with those set forth herein.
4.4 Option Price and Exercise.
(a) The Option Price of Stock under each Option shall be determined by the
Committee, except that, in no event, may the Option Price be less than the Fair
Market Value of the Stock on the date on which the Option is granted. Once an
Option is granted, repricing of the Option Price for an outstanding Option,
whether exercisable or not exercisable, shall not be permitted.
(b) Options may be exercised from time to time by giving written notice of
exercise to the Company specifying the number of shares to be purchased. The
notice of exercise shall be accompanied by (i) payment in full of the Option
Price in cash, certified check, or other medium accepted by the Company, in its
sole discretion, or (ii) a copy of irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds sufficient
to cover the Option Price. An Option shall be deemed exercised on the date the
Company receives the notice of exercise and all the requirements of this Section
4.4(b) have been fulfilled.
4.5 Termination of Service.
(a) Except as otherwise provided in this Plan or in the applicable Stock Option
Agreement, if the service of a Participant, other than as a non-employee
Director, terminates for any reason other than death, Disability or Retirement,
all Options held by the Participant shall expire and may not thereafter be
exercised. For purposes of this section, the employment or other service in
respect to Options held by such a Participant shall be treated as continuing
intact while the Participant is on authorized military leave, FMLA, approved
sick leave, or other approved, bona fide leave of absence (such as temporary
employment with the government) if the period of such leave does not exceed 90
days, or, if longer, so long as the Participant's right to reestablish his
service with the Company is guaranteed either by statute or by contract. Where
the period of leave exceeds 90 days and where such Participant's right to
reestablish his service is not guaranteed by statute or by contract, his
service, in the Committee's sole discretion, shall be deemed to have terminated
on the ninety-first day of such leave.
Notwithstanding anything herein to the contrary, and unless the Stock Option
Agreement provides otherwise, if the service of a Participant, other than as a
non-employee Director, terminates, other than due to a Termination for Cause,
the Participant may exercise all unexercised and vested Options within 30 days
of such termination. Any Options in which such Participant is not vested at the
time of his termination shall be Forfeited. Except as so exercised, such Option
shall expire at the end of such period. In no event, however, may any Option be
exercised after the expiration of ten (10) years from the date of grant of such
Option.
(b) Except as otherwise provided in the Stock Option Agreement, a non-employee
Director whose service is terminated shall be entitled to exercise his Option
until the expiration of the full term of the Option, unless the non-employee
Director has been Terminated for Cause. In the event that a non-employee
Director is Terminated for Cause, all Options held by such Director shall
terminate immediately and may not thereafter be exercised.
4.6 Death. Except as otherwise provided in the Plan or a Stock Option Agreement,
during the twelve (12) month period following the Participant's death, any or
all of the unexercised and vested Options that the Participant was entitled to
exercise immediately prior to his death may be exercised by such Participant's
executor, administrator, or the person(s) to whom the Options are transferred by
will or the applicable laws of descent and distribution. Any Options in which
such Participant is not vested at the time of his death shall be Forfeited. In
no event, however, may any such Option be exercised after the expiration of ten
(10) years from the date of grant of such Option.
4.7 Retirement or Disability. Except as otherwise provided in the Plan or a
Stock Option Agreement, if a Participant Retires, or suffers a Disability, at a
time when he is entitled to exercise an Option, then at any time or times within
three years after his termination of service because of such Retirement or
Disability the Participant may exercise such Option as to all or any of the
shares which he was entitled to purchase under the Option immediately prior to
such termination. Except as so exercised, such Option shall expire at the end of
such period. In no event, however, may any Option be exercised after the
expiration of 10 years from the date of grant of such Option.
4.8 Committee Discretion. The Committee shall have authority to determine
whether or not a Participant (including a non-employee Director) has Retired,
resigned or has suffered a Disability, and its determination shall be binding on
all concerned. In the sole discretion of the Committee, a transfer of service to
an affiliate of the Company other than a Subsidiary (the latter type of transfer
not constituting a termination of service for purposes of the Plan) may be
deemed to be a Retirement so as to entitle the Participant to exercise the
Option within 90 days after such transfer.
4.9 Stockholder Rights and Privileges. A Participant shall have no rights as a
shareholder with respect to any Stock covered by an Option until the issuance of
a stock certificate to the Participant representing such Stock.
ARTICLE V
RESTRICTED STOCK AWARDS
5.1 Grant of Restricted Stock Awards. Subject to the provisions of the Plan, the
Committee may elect to grant a Restricted Stock Award to any Key Personnel
and/or Director, including but not limited to grants derived from participation
in another plan, program or arrangement established or maintained by the Company
or its Subsidiaries. Notwithstanding anything in this Plan to the contrary, the
Committee, in its discretion, may determine that a Restricted Stock Award may be
subject to such terms, conditions and restrictions (including but not limited to
restrictions on the sale of stock), as set forth in the Award Agreement.
5.2 Vesting Requirements. The restrictions imposed on a Restricted Stock Award
shall lapse in accordance with the vesting requirements specified by the
Committee in the Restricted Stock Agreement, provided that the Committee may
accelerate the vesting of a Restricted Stock Award at any time. Such vesting
requirements may be based on the continued service of the Participant with the
Company or its affiliates for a specified time period (or periods), on the
attainment of specified performance goals established by the Committee in its
discretion, or such other terms and conditions established by the Committee. If
the vesting requirements of a Restricted Stock Award are not satisfied, the
Award shall be Forfeited and the Stock subject to the Award shall be returned to
the Company.
5.3 Restrictions. A Restricted Stock Award may not be transferred, assigned or
subject to any encumbrance, pledge or charge until all applicable restrictions
are removed or have expired, unless otherwise permitted by the Committee.
Failure to satisfy any applicable restrictions shall result in the Award being
Forfeited and the Stock subject to the Award shall returned to the Company. The
Committee may require in a Restricted Stock Agreement that certificates
representing the Restricted Stock Award bear a legend making appropriate
reference to the restrictions imposed, and that certificates representing the
Restricted Stock Award will remain in the physical custody of an escrow holder
until all restrictions are removed or have expired.
5.4 Rights as a Shareholder. Subject to the foregoing provisions of this Article
V and the applicable Restricted Stock Agreement, the Participant shall have all
rights of a shareholder with respect to the Stock granted to the Participant
under a Restricted Stock Award, including the right to vote the Stock and
receive all dividends and other distributions paid or made with respect thereto.
The Committee may provide in a Restricted Stock Agreement for the payment of
dividends and distributions to the Participant at such times as paid to
shareholders generally or at the times of vesting or other payment of the
Restricted Stock Award to the extent not inconsistent with Section 409A and
Section 7.7.
5.5 Restricted Stock Awards to Outside Directors. In addition to discretionary
Restricted Stock Awards under Section 5.1, and subject to adjustment in
accordance with Section 7.6, each non-employee Director elected at an annual
meeting of the Company's shareholders shall be awarded, as of each date he is
elected (or re-elected), the lesser of: (i) 3,500 shares of Stock or (ii) such
number of shares of Stock as is determined by the Committee.
5.6 Section 83(b) Election. If a Participant makes an election pursuant to Code
Section 83(b) with respect to a Restricted Stock Award, the Participant shall
file, within 30 days following the date of grant, a copy of such election with
the Company and with the Internal Revenue Service in accordance with the
regulations under Code Section 83. The Committee may provide in a Restricted
Stock Agreement that the Restricted Stock Award is conditioned upon the
Participant's making or refraining from making an election with respect to the
Award under Code Section 83(b).
ARTICLE VI
PERFORMANCE GRANTS
6.1 Participation. Subject to the provisions of the Plan, the Committee s may
make Performance grants to Key Personnel and Directors in accordance with the
provisions of this Article VI.
6.2 Grant. The Committee shall have sole and complete authority to determine the
Key Personnel and Directors who shall receive a Performance Grant, which shall
consist of a right that is (i) denominated in cash, Stock or any other form of
Award issuable under the Plan (or any combination thereof), (ii) valued, as
determined by the Committee, in accordance with the achievement of such
performance goals during such performance periods as the Committee shall
establish and (iii) payable at such time and in such form as the Committee shall
determine. Unless otherwise determined by the Committee, any such Performance
Grant shall be evidenced by a Performance Grant Agreement containing the terms
of the Award, including, but not limited to, the performance criteria and such
terms and conditions as may be determined, from time to time, by the Committee,
in each case not inconsistent with this Plan.
6.3 Terms and Conditions. For Awards intended to be performance-based
compensation under Section 162(m) of the Code, Performance Grants shall be
conditioned upon the achievement of pre-established goals relating to one or
more of the following performance measures, as determined in writing by the
Committee and subject to such modifications as specified by the Committee: cash
flow; cash flow from operations; earnings (including earnings before interest,
taxes, depreciation and amortization or some variation thereof); earnings per
share, diluted or basic; earnings per share from continuing operations; net
asset turnover; inventory turnover; capital expenditures; debt; debt reduction;
working capital; return on investment; return on sales; net or gross sales;
market share; economic value added; cost of capital; change in assets; expense
reduction levels; productivity; delivery performance; stock price; return on
equity; total or relative increases to stockholder return; return on invested
capital; return on assets or net assets; revenue; income or net income;
operating income or net operating income; operating profit or net operating
profit; gross margin, operating margin or profit margin; and completion of
acquisitions, business expansion, product diversification and other
non-financial operating and management performance objectives. To the extent
consistent with Code Section 162(m), the Committee may determine, at the time
the performance goals are established, that certain adjustments shall apply, in
whole or in part, in such manner as determined by the Committee, to exclude the
effect of any of the following events that occur during a performance period:
the impairment of tangible or intangible assets; litigation or claim judgments
or settlements; the effect of changes in tax law, accounting principles or other
such laws or provisions affecting reported results; business combinations,
reorganizations and/or restructuring programs, including, but not limited to,
reductions in force and early retirement incentives; currency fluctuations; and
any extraordinary, unusual, infrequent or non-recurring items, including, but
not limited to, such items described in management's discussion and analysis of
financial condition and results of operations or the financial statements and/or
notes thereto appearing in the Company's annual report to shareholders for the
applicable fiscal year. Performance measures may be determined either
individually, alternatively or in any combination, applied to either the Company
as a whole or to a business unit or subsidiary entity thereof, either
individually, alternatively or in any combination, and measured cumulatively
over a period of years, on an absolute basis or relative to a pre-established
target, to previous fiscal years' results or to a designated comparison group,
in each case as specified by the Committee.
6.4 Preestablished Performance Goals. For Awards intended to be
performance-based compensation under Code Section 162(m), performance goals
relating to the performance measures set forth above shall be preestablished in
writing by the Committee, and achievement thereof certified in writing prior to
payment of the Award, as required by Code Section 162(m) and Treasury
Regulations promulgated thereunder. All such performance goals shall be
established in writing no later than ninety (90) days after the beginning of the
applicable performance period, or within such other timeframe as required by
Code Section 162(m) and Treasury Regulations promulgated thereunder. In addition
to establishing minimum performance goals below which no compensation shall be
payable pursuant to a Performance Grant, the Committee, in its sole discretion,
may create a performance schedule under which an amount less than or more than
the target award may be paid so long as the performance goals have been
achieved.
6.5 Additional Restrictions/Negative Discretion. The Committee, in its sole
discretion, may also establish such additional restrictions or conditions that
must be satisfied as a condition precedent to the payment of all or a portion of
any Performance Grants. Such additional restrictions or conditions need not be
performance-based and may include, among other things, the receipt by a
Participant of a specified annual performance rating, the continued employment
by the Participant and/or the achievement of specified performance goals by the
Company, business unit or Participant. Furthermore, and notwithstanding any
provision of this Plan to the contrary, the Committee, in its sole discretion,
may retain the discretion to reduce the amount of any Performance Grant payable
in cash to a Participant if it concludes that such reduction is necessary or
appropriate based upon: (i) an evaluation of such Participant's performance;
(ii) comparisons with compensation received by other similarly-situated
individuals working within the Company's industry; (iii) the Company's financial
results and conditions; or (iv) such other factors or conditions that the
Committee deems relevant; provided, however, that the Committee shall not use
its discretionary authority to increase any Award that is intended to be
performance-based compensation under Code Section 162(m).
6.6 Payment of Performance Awards. Performance Grants may be paid in a lump sum
or in installments following the close of each performance period as provided
the Committee in the Performance Grant Agreement.
6.7 Rights with Respect to Stock and Other Securities. Unless otherwise
determined by the Committee in its discretion, a Participant to whom an Award is
made under this Article (and any Person succeeding to such a Participant's
rights pursuant to this Article) shall have no rights as a shareholder with
respect to any Stock or as a holder with respect to other securities, if any,
issuable pursuant to any such Award until the date a stock certificate
evidencing such Stock or other evidence of ownership is issued to such
Participant or until the Participant's ownership of such Stock shall have been
entered into the books of the registrar in the case of uncertificated shares.
6.8 Termination of a Participant. For all purposes under this Article, and
unless otherwise determined by the Committee in a Performance Grant Agreement,
Participants who have terminated their employment with the Company prior to the
actual payment of an Award for any reason (including but not limited to death,
Retirement or Disability) shall Forfeit any and all rights to payment under any
Awards then outstanding under the terms of this Article and shall not be
entitled to any payment for the performance period.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 Nontransferability. No Award under the Plan shall be transferable by the
Participant other than by will or the laws of descent and distribution;
provided, however, that, if so determined by the Committee, a Participant may,
in the manner established by the Committee, designate a beneficiary or
beneficiaries to exercise the rights of the Participant, and to receive any
property distributable, with respect to any Award upon the death of the
Participant and the Committee may, in its sole discretion, permit the transfer
or an Award to a Permitted Transferee subject to all the terms and conditions of
the Award. Except as provided in Section 4.7, all Options shall be exercisable
during the Participant's lifetime only by such Participant or his or her
Personal Representative. Any transfer contrary to this Section 7.1 will nullify
the Award.
7.2 Amendments. The Committee may at any time discontinue granting Awards under
the Plan. The Board may at any time amend the Plan or amend any outstanding
Award Agreement for the purpose of satisfying the requirements of any changes in
applicable laws or regulations or for any other purpose which may at the time be
permitted by law; provided that no such amendment shall be permissible if it
would result in Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, becoming inapplicable to any Award. Notwithstanding the foregoing or
any provision of an Award to the contrary, the Committee may at any time
(without the consent of any Participant) modify, amend or terminate any or all
of the provisions of an Award to the extent necessary to conform the provisions
of the Award with Section 162(m), Section 409A or any other provision of the
Code or other applicable law, the regulations issued thereunder or an exception
thereto, regardless of whether such modification, amendment or termination of
the Award shall adversely affect the rights of a Participant.
7.3 Termination. The Board may terminate the Plan at any time prior to its
scheduled expiration date, but no such termination shall adversely affect the
rights of any Participant under any Award theretofore granted in which he or she
has a vested interest without his or her written consent.
7.4 Nonuniform Determinations. The Committee's determinations under the Plan,
including without limitation (i) the determination of the Key Personnel and
Directors to receive Awards, (ii) the form, amount and timing of such Awards,
(iii) the terms and provisions of such Awards and (iv) the Agreements evidencing
the same, need not be uniform and may be made by it selectively among Key
Personnel and Directors who receive, or who are eligible to receive, Awards
under the Plan, whether or not such Key Personnel or Directors are similarly
situated.
7.5 No Right to Employment. Neither the action of the Board in establishing the
Plan nor any action taken by the Committee under the Plan, nor any provision of
the Plan, shall be construed as giving to any person the right to be retained in
the employ, or as an Officer or Director, of the Company or any Subsidiary.
7.6 Changes in Stock. In the event of a stock dividend, split-up, or a
combination of shares, recapitalization or merger in which the Company is the
surviving corporation or other similar capital change, the number and kind of
shares of stock or securities of the Company to be subject to the Plan and to
Options or Stock then outstanding or to be awarded thereunder, the maximum
number of shares of Stock or securities which may be issued on the exercise of
Options granted under the Plan, the Option Price and other relevant provisions
shall be appropriately adjusted by the Board, whose determination shall be
binding on all persons; provided, however, with respect to any Award subject to
Section 162(m) or Section 409A, any such adjustment shall be authorized only to
the extent that such adjustment would not cause the Award to fail to comply with
Section 162(m) or Section 409A. In the event of a consolidation or a merger in
which the Company is not the surviving corporation, or any other merger in which
the shareholders of the Company exchange their shares of stock in the Company
for stock of another corporation, or in the event of complete liquidation of the
Company, or in the case of a tender offer accepted by the Board of Directors,
all outstanding Options shall thereupon terminate, provided that the Board may,
prior to the effective date of any such consolidation or merger, either (i) make
all outstanding Options immediately exercisable or (ii) arrange to have the
surviving corporation grant to the Participants replacement Options on terms
which the Board shall determine to be fair and reasonable.
7.7 Compliance with Code Section 409A. Notwithstanding any provision of the Plan
or an Award Agreement to the contrary, if any Award or benefit provided under
this Plan is subject to the provisions of Section 409A, the provisions of the
Plan and any applicable Award Agreement shall be administered, interpreted and
construed in a manner necessary to comply with Section 409A or an exception
thereto (or disregarded to the extent such provision cannot be so administered,
interpreted or construed). The following provisions shall apply, as applicable:
(i) If a Participant is a Specified Employee and a payment subject to
Section 409A (and not excepted therefrom) to the Participant is due upon
Separation from Service, such payment shall be delayed for a period of six (6)
months after the date the Participant Separates from Service (or, if earlier,
the death of the Participant). Any payment that would otherwise have been due or
owing during such six-month period will be paid immediately following the end of
the six-month period in the month following the month containing the 6-month
anniversary of the date of termination unless another compliant date is
specified in the applicable Award Agreement.
(ii) For purposes of Section 409A, and to the extent applicable to any
Award or benefit under the Plan, it is intended that distribution events qualify
as permissible distribution events for purposes of Section 409A and shall be
interpreted and construed accordingly. With respect to payments subject to
Section 409A, the Company reserves the right to accelerate and/or defer any
payment to the extent permitted and consistent with Section 409A. Whether a
Participant has Separated from Service or employment will be determined based on
all of the facts and circumstances and, to the extent applicable to any Award or
benefit, in accordance with the guidance issued under Section 409A. For this
purpose, a Participant will be presumed to have experienced a Separation from
Service when the level of bona fide services performed permanently decreases to
a level less than twenty percent (20%) of the average level of bona fide
services performed during the immediately preceding thirty-six (36) month period
or such other applicable period as provided by Section 409A.
(iii) The Committee, in its discretion, may specify the conditions under
which the payment of all or any portion of any Award may be deferred until a
later date. Deferrals shall be for such periods or until the occurrence of such
events, and upon such terms and conditions, as the Board shall determine in its
discretion, in accordance with the provisions of Section 409A, the regulations
and other binding guidance promulgated thereunder; provided, however, that no
deferral shall be permitted with respect to Options and other stock rights
subject to Section 409A. An election shall be made by filing an election with
the Company (on a form provided by the Company) on or prior to December 31st of
the calendar year immediately preceding the beginning of the calendar year (or
other applicable service period) to which such election relates (or at such
other date as may be specified by the Board to the extent consistent with
Section 409A) and shall be irrevocable for such applicable calendar year (or
other applicable service period).
(iv) The grant of Options and other stock rights subject to Section 409A
shall be granted under terms and conditions consistent with Treas. Reg. ss.
1.409A-1(b)(5) such that any such Award does not constitute a deferral of
compensation under Section 409A. Accordingly, any such Award may be granted to
employees and other service providers of the Company and its Subsidiaries and
affiliates in which the Company has a controlling interest. In determining
whether the Company has a controlling interest, the rules of Treas. Reg. ss.
1.414(c)-2(b)(2)(i) shall apply; provided that the language "at least 50
percent" shall be used instead of "at least 80 percent" in each place it
appears; provided, further, where legitimate business reasons exist (within the
meaning of Treas. Reg. ss. 1.409A-1(b)(5)(iii)(E)(i)), the language "at least 20
percent" shall be used instead of "at least 80 percent" in each place it
appears. The rules of Treas. Reg. ss.ss. 1.414(c)-3 and 1.414(c)-4 shall apply
for purposes of determining ownership interests.
(v) In no event shall any member of the Board, the Committee or the Company
(or its employees, officers or directors) have any liability to any Participant
(or any other Person) due to the failure of an Award to satisfy the requirements
of Section 409A.
7.8 Tax Withholding. Whenever Stock is to be delivered to a Participant upon
exercise of an Option or the award of a Restricted Stock Award or otherwise, the
Company may (i) require such Participant to remit to the Company an amount in
cash sufficient to satisfy all federal, state and local tax withholding
requirements related thereto, (ii) withhold such required withholding from
compensation otherwise due to such Participant, (iii) do any combination of the
foregoing, or (iv) employ any other acceptable method approved by the Company to
facilitate the required withholding, provided such approach is permissible under
applicable securities and other laws. Notwithstanding anything in this Plan to
the contrary, the Committee may, in its discretion, permit a Participant (or any
beneficiary or person entitled to act) to elect to pay a portion or all of the
amount requested by the Company for such taxes with respect to such Award, at
such time and in such manner as the Committee shall deem to be appropriate
(including, but not limited to, by authorizing the Company to withhold, or
agreeing to surrender to the Company on or about the date such tax liability is
determinable, Stock, or property, other securities or property, or other forms
of payment, or any combination thereof, owned by such person or a portion of
such forms of payment that would otherwise be distributed, or have been
distributed, as the case may be, pursuant to such Award to such person, having a
market value equal to the amount of such taxes); provided, however, any
broker-assisted cashless exercise shall comply with the requirements for equity
classification of Paragraph 35 of FASB Statement No. 123(R) and any withholding
satisfied through a net-settlement shall be limited to the minimum statutory
withholding requirements.
7.9 Delivery of Shares. The Company shall not be obligated to deliver any Stock
upon the grant, exercise or payment of an Award unless and until, in the opinion
of the Company's counsel, all applicable federal, state and other laws and
regulations have been complied with. In the event the outstanding Stock is at
the time listed on any stock exchange, no delivery shall be made unless and
until the shares to be delivered have been listed or authorized to be added to
the list upon official notice of issuance on such exchange. No delivery shall be
made until all other legal matters in connection with the issuance and delivery
of Stock have been approved by the Company's counsel. Without limiting the
generality of the foregoing, the Company may require from the Participant or
other person purchasing shares of Stock under the Plan such investment
representation or such agreement, if any, as counsel for the Company may
consider necessary in order to comply with the Securities Act of 1933, as
amended, and the regulations thereunder. Certificates evidencing the shares may
be required to bear a restrictive legend. A stop transfer order may be required
to be placed with the transfer agent, and the Company may require that the
Participant or such other person agree that any sale of the shares will be made
only on one or more specified stock exchanges or in such other manner as
permitted by the Committee.
7.10 Status. A Participant's status as Key Personnel or a Director shall be made
exclusively by the Committee and determined for each Award as of the date the
Award is granted to the Participant.
7.11 Unfunded. This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under this Plan, and rights to the
payment of Awards shall be no greater than the rights of the Company's general
creditors.
7.12 Acceptance of Actions/Determinations. By accepting any Award or other
benefit under this Plan, each Participant (and each person claiming under or
through him or her) shall be conclusively deemed to have indicated his or her
acceptance and ratification of, and consent to, any action taken or
determinations made under this Plan by the Company, the Board or the Committee.
7.13 Governing Law. The validity, construction, interpretation, administration
and effect of this Plan, and of its rules and regulations, and rights relating
to this Plan and to Awards granted under this Plan, shall be governed by the
substantive laws of the Commonwealth of Pennsylvania without regard to its
choice or conflicts of laws principles.. If any provision of this Plan or any
Award is held to be illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining provisions of this Plan or any Award,
but such provision shall be fully severable, and this Plan or Award, as
applicable, shall be construed and enforced as if the illegal or invalid
provision had never been included in this Plan or Award, as applicable.
This amendment and restatement of The L.B. Foster Company 2006 Omnibus Incentive
Plan has been duly executed by the undersigned and is effective this 6th day of
March 2008.
L. B. Foster Company
By: William H. Rackoff
Title: Chairman of Compensation Committee
of the Board of Directors
Exhibit 10.59
L.B. FOSTER COMPANY
EXECUTIVE ANNUAL INCENTIVE COMPENSATION PLAN
1. Purpose of the Plan
The purpose of the L.B. Foster Company Executive Annual Incentive
Compensation Plan (the "Plan") is to advance the interests of the Company and
its shareholders by providing incentives to officers and certain other key
employees with significant responsibility for achieving performance goals
critical to the success and growth of the Company. The Plan is designed to: (i)
promote the attainment of the Company's significant business objectives; (ii)
encourage and reward management teamwork across the entire Company; and (iii)
assist in the attraction and retention of employees vital to the Company's
long-term success.
2. Definitions
For the purpose of the Plan, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended, including
any successor law thereto.
(c) "Committee" means the Compensation Committee of the Board, or such
other committee as is appointed or designated by the Board to administer the
Plan, in each case which shall be comprised solely of two or more "outside
directors" (as defined under Section 162(m) of the Code and the regulations
promulgated thereunder).
(d) "Company" means L.B. Foster Company and any subsidiary entity or
affiliate thereof, including subsidiaries or affiliates which become such after
adoption of the Plan.
(e) "Forfeit," "Forfeiture," "Forfeited" means the loss by a Participant of
any and all rights to an award granted under the Plan, including the loss of any
payment of compensation by the Company under the Plan or any award granted
thereunder.
(f) "Participant" means any person: (1) who satisfies the eligibility
requirements set forth in Paragraph 4; (2) to whom an award has been made by the
Committee; and (3) whose award remains outstanding under the Plan.
(g) "Performance Goal" means, in relation to any Performance Period, the
level of performance that must be achieved with respect to a Performance
Measure.
(h) "Performance Measures" means any one or more of the following
performance criteria, either individually, alternatively or in any combination,
and subject to such modifications or variations as specified by the Committee,
applied to either the Company as a whole or to a business unit or subsidiary
entity thereof, either individually, alternatively or in any combination, and
measured over a period of time including any portion of a year, annually or
cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years' results or to a designated comparison
group, in each case as specified by the Committee: cash flow; cash flow from
operations; earnings (including, but not limited to, earnings before interest,
taxes, depreciation, and amortization or some variation thereof); earnings per
share, diluted or basic; earnings per share from continuing operations; net
asset turnover; inventory turnover; capital expenditures; debt; debt reduction;
working capital; return on investment; return on sales; return on invested
capital; net or gross sales; market share; economic value added; cost of
capital; change in assets; expense reduction levels; productivity; delivery
performance; safety record and/or performance; stock price; return on equity;
total stockholder return; return on capital; return on assets or net assets;
revenue; income or net income; operating income or net operating income;
operating income adjusted for management fees and depreciation, and
amortization; operating profit or net operating profit; gross margin, operating
margin or profit margin; and completion of acquisitions, business expansion,
product diversification, new or expanded market penetration and other
non-financial operating and management performance objectives.
To the extent consistent with Section 162(m) of the Code and the
regulations promulgated thereunder, the Committee may determine that certain
adjustments shall apply, in whole or in part, in such manner as specified by the
Committee, to exclude the effect of any of the following events that occur
during a Performance Period: the impairment of tangible or intangible assets;
litigation or claim judgments or settlements; changes in tax law, accounting
principles or other such laws or provisions affecting reported results; business
combinations, reorganizations and/or restructuring programs, including but not
limited to reductions in force and early retirement incentives; currency
fluctuations; and any extraordinary, unusual, infrequent or non-recurring items,
including, but not limited to, such items described in management's discussion
and analysis of financial condition and results of operations or the financial
statements and/or notes thereto appearing in the Company's annual report for the
applicable period.
(i) "Performance Period" means, in relation to any award, the calendar year
or other fiscal period within the calendar year of less than 12 months for which
a Participant's performance is being calculated, with each such period
constituting a separate Performance Period.
(j) "Section 409A" shall mean Section 409A of the Code and the regulations
and other binding guidance promulgated thereunder.
(k) "Retirement" means retirement of an employee as determined and
authorized by the Committee.
(l) Total and Permanent Disability" means: (1) if the Participant is
insured under a long-term disability insurance policy or plan which is paid for
by the Company, the Participant is totally disabled under the terms of that
policy or plan; or (2) if no such policy or plan exists, the Participant shall
be considered to be totally disabled as determined by the Committee.
3. Administration of the Plan
(a) The management of the Plan shall be vested in the Committee; provided,
however, that all acts and authority of the Committee pursuant to this Plan
shall be subject to the provisions of the Committee's Charter, as amended from
time to time, and such other authority as may be delegated to the Committee by
the Board. The Committee may, with respect to Participants who the Committee
determines are not likely to be subject to Section 162(m) of the Code, delegate
such of its powers and authority under the Plan to the Company's officers as it
deems necessary or appropriate. In the event of such delegation, all references
to the Committee in this Plan shall be deemed references to such officers as it
relates to those aspects of the Plan that have been delegated.
(b) Subject to the terms of the Plan, the Committee shall, among other
things, have full authority and discretion to determine eligibility for
participation in the Plan, make awards under the Plan, establish the terms and
conditions of such awards (including the Performance Goal(s) and Performance
Measure(s) to be utilized) and determine whether the Performance Goals
applicable to any Performance Measures for any awards have been achieved. The
Committee's determinations under the Plan need not be uniform among all
Participants, or classes or categories of Participants, and may be applied to
such Participants, or classes or categories of Participants, as the Committee,
in its sole and absolute discretion, considers necessary, appropriate or
desirable. The Committee is authorized to interpret the Plan, to adopt
administrative rules, regulations, and guidelines for the Plan, and may correct
any defect, supply any omission or reconcile any inconsistency or conflict in
the Plan or in any award. All determinations by the Committee shall be final,
conclusive and binding on the Company, the Participant and any and all
interested parties.
(c) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to determine the extent to which awards under the Plan
will be structured to conform to the requirements applicable to
performance-based compensation as described in Section 162(m) of the Code, and
to take such action, establish such procedures, and impose such restrictions at
the time such awards are granted as the Committee determines to be necessary or
appropriate to conform to such requirements. Notwithstanding any provision of
the Plan to the contrary, if an award under this Plan is intended to qualify as
performance-based compensation under Section 162(m) of the Code and the
regulations issued thereunder and a provision of this Plan would prevent such
award from so qualifying, such provision shall be administered, interpreted and
construed to carry out such intention (or disregarded to the extent such
provision cannot be so administered, interpreted or construed).
(d) The benefits provided under the Plan are intended to be excepted from
coverage under Section 409A and the regulations promulgated thereunder and shall
be construed accordingly. Notwithstanding any provision of the Plan to the
contrary, if any benefit provided under this Plan is subject to the provisions
of Section 409A and the regulations issued thereunder (and not excepted
therefrom), the provisions of the Plan shall be administered, interpreted and
construed in a manner necessary to comply with Section 409A and the regulations
issued thereunder (or disregarded to the extent such provision cannot be so
administered, interpreted, or construed.)
4. Participation in the Plan
Officers and key employees of the Company, as determined by the Committee,
shall be eligible to participate in the Plan. No employee shall have the right
to participate in the Plan, and participation in the Plan in any one Performance
Period does not entitle an individual to participate in future Performance
Periods.
5. Incentive Compensation Awards
(a) The Committee may, in its discretion, from time to time make awards to
persons eligible for participation in the Plan pursuant to which the Participant
will earn cash compensation. The amount of a Participant's award may be based on
a percentage of such Participant's salary or such other methods as may be
established by the Committee. Each award shall be communicated to the
Participant, and shall specify, among other things, the terms and conditions of
the award and the Performance Goals to be achieved. The maximum amount that may
be awarded and paid under the Plan to a Participant for any calendar year shall
not exceed USD $1,500,000.
(b) With respect to awards that are intended to be performance-based
compensation under Section 162(m) of the Code, each award shall be conditioned
upon the achievement of one or more Performance Goal(s) with respect to the
Performance Measure(s) established by the Committee. No later than ninety (90)
days after the beginning of the applicable Performance Period, the Committee
shall establish in writing the Performance Goals, Performance Measures and the
method(s) for computing the amount of compensation which will be payable under
the Plan to each Participant if the Performance Goals established by the
Committee are attained; provided however, that for a Performance Period of less
than one year, the Committee shall take any such actions prior to the lapse of
25% of the Performance Period. In addition to establishing minimum Performance
Goals below which no compensation shall be payable pursuant to an award, the
Committee, in its discretion, may create a performance schedule under which an
amount less than or more than the target award may be paid so long as the
Performance Goals have been achieved.
(c) The Committee, in its sole discretion, may also establish such
additional restrictions or conditions that must be satisfied as a condition
precedent to the payment of all or a portion of any awards. Such additional
restrictions or conditions need not be performance-based and may include, among
other things, the receipt by a Participant of a specified annual performance
rating, the continued employment by the Participant and/or the achievement of
specified performance goals by the Company, business unit or Participant.
Furthermore and notwithstanding any provision of this Plan to the contrary, the
Committee, in its sole discretion, may reduce the amount of any award to a
Participant if it concludes that such reduction is necessary or appropriate
based upon: (i) an evaluation of such Participant's performance; (ii)
comparisons with compensation received by other similarly situated individuals
working within the Company's industry; (iii) the Company's financial results and
conditions; or (iv) such other factors or conditions that the Committee deems
relevant. Notwithstanding any provision of this Plan to the contrary, the
Committee shall not use its discretionary authority to increase any award that
is intended to be performance-based compensation under Section 162(m) of the
Code.
6. Payment of Individual Incentive Awards
(a) After the end of the Performance Period, the Committee shall certify in
writing the extent to which the applicable Performance Goals and any other
material terms have been achieved. Subject to the provisions of the Plan, earned
Awards shall be paid in the first calendar year immediately following the end of
the Performance Period on or before March 15th of such calendar year ("Payment
Date"). For purposes of this provision, and for so long as the Code permits, the
approved minutes of the Committee meeting in which the certification is made may
be treated as written certification.
(b) Unless otherwise determined by the Committee, Participants who have
terminated employment with the Company prior to the actual payment of an award
for any reason (including but not limited to death, Retirement or Total and
Permanent Disability), shall Forfeit any and all rights to payment under any
awards then outstanding under the terms of the Plan and shall not be entitled to
any cash payment for such period. If a Participant's employment with the Company
should terminate during a Performance Period by reason of death, Retirement or
Total and Permanent Disability and the Committee determines that the award is
not Forfeited, the Participant's award shall be prorated to reflect the period
of service during the Performance Period prior to his/her death, Retirement or
Total and Permanent Disability, and shall be paid either to the Participant or,
as appropriate, the Participant's estate, subject to the Committee's
certification that the applicable Performance Goals and other material terms
have been met.
(c) The Committee shall determine whether, to what extent, and under what
additional circumstances amounts payable with respect to an award under the Plan
shall be deferred either automatically, at the election of the Participant, or
by the Committee. All deferrals shall be made in accordance with the terms and
procedures of the deferred compensation plan under which any such amounts are
deferred.
7. Amendment or Termination of the Plan
While the Company intends that the Plan shall continue in force from year
to year, the Company reserves the right to amend, modify or terminate the Plan
at any time; provided, however, that no such modification, amendment or
termination shall without the consent of the Participant, materially adversely
affect the rights of such Participant to any payment that has been determined by
the Committee to be due and owing to the Participant under the Plan but not yet
paid. Any and all actions permitted under this Paragraph 7 may be authorized and
performed by the Committee in its sole and absolute discretion.
Notwithstanding the foregoing or any provision of the Plan to the contrary,
the Committee may at any time (without the consent of the Participant) modify,
amend or terminate any or all of the provisions of this Plan to the extent
necessary to conform the provisions of the Plan with Section 409A or Section
162(m) of the Code, the regulations promulgated thereunder or an exception
thereto regardless of whether such modification, amendment, or termination of
the Plan shall adversely affect the rights of a Participant under the Plan.
Notwithstanding any provision of the Plan to the contrary, in no event shall the
Committee or Board (or any member thereof), or the Company (or its employees,
officers, directors or affiliates) have any liability to any Participant (or any
other person) due to the failure of the Plan to satisfy the requirements of
Section 409A or any other applicable law.
8. Rights Not Transferable
A Participant's rights under the Plan may not be assigned, pledged, or
otherwise transferred except, in the event of a Participant's death, to the
Participant's designated beneficiary, or in the absence of such a designation,
by will or by the laws of descent and distribution.
9. Funding/Payment
The Plan is not funded and all awards payable hereunder shall be paid from
the general assets of the Company. No provision contained in this Plan and no
action taken pursuant to the provisions of this Plan shall create a trust of any
kind or require the Company to maintain or set aside any specific funds to pay
benefits hereunder. To the extent a Participant acquires a right to receive
payments from the Company under the Plan, such right shall be no greater than
the right of any unsecured general creditor of the Company. If any earned Award
is not paid by the Payment Date due to administrative impracticality, such
earned Award will be paid, without earnings, as soon as administratively
practicable thereafter.
10. Withholdings
The Company shall have the right to withhold from any awards payable under
the Plan or other wages payable to a Participant such amounts sufficient to
satisfy federal, state and local tax withholding obligations arising from or in
connection with the Participant's participation in the Plan and such other
deductions as may be authorized by the Participant or as required by applicable
law.
11. No Employment or Service Rights
Nothing contained in the Plan shall confer upon any Participant any right
with respect to continued employment with the Company (or any of its affiliates)
nor shall the Plan interfere in any way with the right of the Company (or any of
its affiliates) to at any time reassign the Participant to a different job,
change the compensation of the Participant or terminate the Participant's
employment for any reason.
12. Other Compensation Plans
Nothing contained in this Plan shall prevent the Corporation from adopting
other or additional compensation arrangements for employees of the Corporation,
including arrangements that are not intended to comply with Section 162(m) of
the Code.
13. Governing Law
The Plan shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania, without giving effect to its conflict of law
provisions.
14. Effective Date
The Plan shall become effective immediately upon the approval and adoption
thereof by the Board; provided, however, that no award intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the Code
shall be payable prior to approval of the Plan's material terms by the Company's
stockholders.