def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§ 240.14a-12
EXIDE TECHNOLOGIES
(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):
þ 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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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
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state how it was determined):
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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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Form, Schedule or Registration Statement No.:
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13000
Deerfield Parkway
Building 200
Milton, Georgia 30004
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 2010
To our Stockholders:
The 2010 annual meeting of stockholders of Exide Technologies
will be held at the Atlanta Marriott Alpharetta, 5750 Windward
Parkway, Alpharetta, Georgia 30005, on Wednesday,
September 15, 2010, beginning at 9:00 a.m. local time.
At the meeting, the record holders of our common stock will act
on the following matters:
(1) The election of nine directors;
(2) The ratification of the appointment of our independent
auditors for fiscal 2011; and
(3) Any other matters that properly come before the meeting.
We are furnishing proxy materials to stockholders primarily by
the Internet. This process expedites stockholders receipt
of the materials, significantly lowers the costs of our annual
meeting, and conserves natural resources. On August 2,
2010, we mailed our stockholders a notice containing
instructions on how to access our proxy statement and annual
report and vote online. The notice also included instructions on
how you can receive a paper copy of the proxy materials.
All holders of record of shares of our common stock at the close
of business on July 19, 2010 are entitled to vote at the
meeting and any postponements or adjournments of the meeting.
You may vote your shares via the Internet or by calling a
toll-free number. If you received a paper copy of the proxy card
or voting instruction form by mail, you may sign, date, and mail
your properly executed proxy card or voting instruction form. We
include instructions about each voting option in the proxy
statement. You may also vote in person at the meeting.
The enclosed proxy statement describes the proposals set forth
above in more detail. We urge you to read the proxy materials
carefully before you decide how to vote.
You are cordially invited to attend the meeting. Please note
that due to space limitations, stockholders may only bring one
guest. Admission to the meeting will be on a first-come,
first-served basis. Registration will begin at 8:00 a.m.,
local time, and seating will begin at 8:30 a.m., local
time. Stockholders may be asked to present valid,
government-issued picture identification, such as a
drivers license or passport. Stockholders holding stock in
brokerage accounts (street name holders) will need
to bring a copy of a brokerage statement reflecting stock
ownership as of the record date. Cameras (including cellular
phones with photographic capabilities), recording devices and
other electronic devices will not be permitted at the
meeting.
By order of the Board of Directors,
Brad S. Kalter
Vice President, Deputy General Counsel and
Corporate Secretary
August 2, 2010
YOUR VOTE IS IMPORTANT
Important Notice Regarding the Availability of Proxy
Materials for the Stockholders Meeting to be held on
September 15, 2010. Our proxy statement and annual report
are available at www.proxyvote.com.
Information on our Web site, other than these materials, is
not part of these proxy soliciting materials.
TABLE OF
CONTENTS
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13000
DEERFIELD PARKWAY
BUILDING 200
MILTON, GEORGIA 30004
PROXY STATEMENT, DATED AUGUST
2, 2010
The Board of Directors of Exide Technologies (the
Board) is soliciting proxies from its stockholders
to be voted at the annual meeting of stockholders to be held on
Wednesday, September 15, 2010, beginning at 9:00 a.m.,
local time, at the Atlanta Marriott Alpharetta, 5750 Windward
Parkway, Alpharetta, Georgia 30005, and at any postponements or
adjournments of the meeting. This proxy statement contains
information related to the annual meeting. Directions to the
Atlanta Marriott Alpharetta are included at the end of this
proxy statement. This proxy statement, a proxy card and our
Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010 are being
distributed to stockholders on or about August 2, 2010. The
fiscal year ended March 31, 2010 is referred to as
fiscal 2010 in this proxy statement. Unless the
context indicates otherwise, the Company,
Exide, we or us refers to
Exide Technologies and its subsidiaries.
QUESTIONS
AND ANSWERS RELATING TO THE ANNUAL MEETING
Why did I
receive these materials?
We are providing these materials in connection with the
Boards solicitation of proxies to be voted at our annual
meeting. Stockholders as of the close of business on
July 19, 2010, (the Record Date) are entitled
to vote at our annual meeting of stockholders, which will be
held on September 15, 2010. As a stockholder, you are
invited to attend the annual meeting and are requested to vote
on the items of business described in this proxy statement. This
proxy statement provides notice of the annual meeting of
stockholders, describes the proposals presented for stockholder
action and includes information required to be disclosed to
stockholders. The proxy card enables stockholders to vote on the
matters without having to attend the annual meeting in person.
How are
these materials being distributed?
We are furnishing proxy materials to our stockholders primarily
via the Internet. On or about August 2, 2010, we mailed to
our stockholders a Notice of Internet Availability containing
instructions on how to access our proxy materials, including our
proxy statement and our annual report. The Notice of Internet
Availability also instructs stockholders on how to access the
proxy card to be able to vote through the Internet or by
telephone. Other stockholders, in accordance with their prior
requests, have received
e-mail
notification of how to access our proxy materials and vote by
the Internet, or have been mailed paper copies of our proxy
materials and a proxy card or voting form.
Internet distribution of our proxy materials is designed to
expedite receipt by stockholders, lower the cost of the annual
meeting, and conserve natural resources. However, if you would
prefer to receive printed proxy materials, please follow the
instructions included in the Notice of Internet Availability.
1
Who is
entitled to vote at the meeting?
Only stockholders of record at the close of business on the
Record Date are entitled to receive notice of, and to
participate in, the annual meeting. If you were a stockholder of
record on the Record Date, you will be entitled to vote all of
the shares that you held on that date at the meeting, or any
postponements or adjournments of the meeting.
How many
votes do I have?
You will be entitled to one vote for each outstanding share of
our common stock you own as of the Record Date. As of the Record
Date, there were 75,856,364 shares of our common stock
outstanding and eligible to vote.
Who can
attend the meeting?
Subject to space availability, all stockholders as of the Record
Date, or their duly appointed proxies, may attend the meeting,
and each may be accompanied by one guest. Since seating is
limited, admission to the meeting will be on a first-come,
first-served basis. Registration will begin at 8:00 a.m.,
local time and seating will begin at 8:30 a.m., local time.
If you attend, please note that you may be asked to present
valid, government-issued picture identification, such as a
drivers license or passport. Cameras (including cell
phones with photographic capabilities), recording devices and
other electronic devices will not be permitted at the meeting.
Please also note that if you hold your shares in street
name (that is, through a broker, bank or other nominee),
you will need to bring a copy of a brokerage statement
reflecting your stock ownership as of the Record Date and check
in at the registration desk at the meeting.
Please let us know if you plan to attend the meeting by marking
the appropriate box on the enclosed proxy card or, if you vote
by telephone or Internet, indicating your plans when prompted.
How many
shares must be present or represented to transact business at
the annual meeting?
The presence or representation at the meeting, in person or by
proxy, of the holders of a majority of the aggregate voting
power of the common stock outstanding on the Record Date will
constitute a quorum, permitting the conduct of business at the
meeting. As of the Record Date, 75,856,364 shares of common
stock, representing the same number of votes, were outstanding.
Accordingly, the presence of the holders of common stock
representing at least 37,928,183 votes will be required to
establish a quorum.
Proxies received by us but marked as abstentions, votes withheld
and broker non-votes will be included in the calculation of the
number of votes considered to be present at the meeting.
How can I
vote my shares in person at the annual meeting?
Shares held in your name as the stockholder of record (that is,
if your shares are registered directly in your name with our
transfer agent) may be voted by you in person at the annual
meeting. Shares held by you beneficially in street
name through a broker, bank or other nominee may be voted
by you in person at the annual meeting only if you obtain a
legal proxy from the broker, bank or other nominee that holds
your shares giving you the right to vote the shares. If you have
voted by telephone, Internet or mail and later decide to attend
and vote at the meeting, you may do so.
Can I
vote by telephone or over the Internet?
If you are a stockholder of record, you may vote by telephone,
or over the Internet, by following the instructions included
with your proxy card. If your shares are held beneficially in
street name, please check your proxy card or contact
your broker, bank or other nominee to determine whether you will
be able to vote by telephone or over the Internet. The deadline
for voting by telephone or over the Internet is 11:59 p.m.,
2
local time, on September 14, 2010. If you received a paper
copy of the proxy card or voting instruction form by mail, you
may sign, date, and mail your properly executed proxy card or
voting instruction form.
Can I
change my vote after I return my proxy card?
Yes. If you are a stockholder of record, you may revoke or
change your vote at any time before the proxy is exercised by
filing with our Corporate Secretary, 13000 Deerfield Parkway,
Building 200, Milton, Georgia 30004, a notice of revocation or a
duly executed proxy bearing a later date or by attending the
annual meeting and voting in person. For shares you hold
beneficially in street name through a broker, bank
or other nominee, you may change your vote by submitting new
voting instructions to your broker, bank or other nominee or, if
you have obtained a legal proxy from your broker, bank or other
nominee giving you the right to vote your shares, by attending
the meeting and voting in person. In either case, the powers of
the proxy holders will be suspended if you attend the meeting in
person and so request, although attendance at the meeting will
not by itself revoke a previously granted proxy.
Who
counts the votes?
Votes will be counted by employees of Broadridge Financial
Solutions, Inc. (Broadridge), and certified by the
Inspectors of Election, who is an employee of a third party firm
that works with Broadridge. If you are a stockholder of record,
your signed proxy card is returned directly to Broadridge for
tabulation. If you hold your shares beneficially in street
name through a broker, bank or other nominee, your broker,
bank or other nominee will return one proxy card to Broadridge
on behalf of its clients.
Will
stockholders be asked to vote on any other matters?
Management does not know of any other matters that will be
presented for action at this annual meeting other than described
in this proxy statement. However, if any other matters properly
come before the meeting, the persons named as proxies for
stockholders will vote in accordance with the recommendation of
the Board or, in absence of such a recommendation, in accordance
with the best judgment of the proxy holders on those matters in
the manner they consider appropriate. See Stockholder
Proposals and Director Nominations for 2010 Annual Meeting.
What vote
is required to approve each item?
Election of Directors. The affirmative vote of
a plurality of the votes cast at the meeting is required for the
election of directors (Proposal 1). A properly executed
proxy marked WITHHOLD AUTHORITY with respect to the
election of one or more directors will not be voted with respect
to the director or directors indicated, although it will be
counted for purposes of determining whether there is a quorum.
Other Items. For the ratification of the
appointment of our independent auditors for fiscal 2011
(Proposal 2), the affirmative vote of the holders of a
majority of the votes cast in person or represented by proxy,
and entitled to vote on the item will be required for approval
or ratification.
A properly executed proxy marked ABSTAIN with
respect to any matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum.
Accordingly, an abstention will have the effect of a negative
vote.
Unless you give other instructions on your proxy card, the
persons named as proxy holders on the proxy card will vote in
accordance with the recommendations of the Board. The
Boards recommendation is set forth together with the
description of each item in this proxy statement. In summary,
the Board recommends a vote FOR each of the director nominees
and FOR ratification of the appointment of our independent
auditors.
How are
votes counted?
In the election of directors, you may vote FOR all
or some of the nominees or your vote may be WITHHOLD
AUTHORITY with respect to one or more of the nominees. You
may not cumulate your votes for the election of directors.
3
For the other items of business, you may vote FOR,
AGAINST or ABSTAIN. If you elect to
ABSTAIN, the abstention has the same effect as a
vote AGAINST. If you provide specific instructions
with regard to certain items, your shares will be voted as you
instruct on such items.
If you hold your shares in street name through a
broker, bank or other nominee rather than directly in your own
name, then your broker, bank or other nominee is considered the
stockholder of record, and you are considered the beneficial
owner of your shares. As the beneficial owner, you have the
right to direct your broker, bank or other nominee on how to
vote your shares at the annual meeting. The broker, bank or
other nominee that is the stockholder of record for your shares
is obligated to provide you with a voting instruction card for
you to use for this purpose.
If you hold your shares in a brokerage account but you fail to
return your voting instruction card to your broker, your shares
may constitute broker non-votes. Broker non-votes
may be voted on routine matters such as the ratification of the
appointment of our independent auditors. Please note, however,
that as a result of a recent change in the rules related to
discretionary voting and broker non-votes, brokers, banks and
other nominees are no longer permitted to vote the uninstructed
shares on a discretionary basis in the election of directors. As
a result, if you hold your shares in street name and you do not
instruct your broker, bank or nominee how to vote your shares in
the election of directors, no votes will be cast on your behalf
in the election of directors. Therefore, it is critical that
you indicate your vote if you want it to be counted in the
election of directors.
If you are a beneficial owner and your broker, bank or other
nominee holds your shares in its name, it is permitted to vote
your shares only on the ratification of the appointment of our
independent auditors (Proposal 2) if the broker, bank
or other nominee does not receive voting instructions from you.
What
should I do if I receive multiple Notices of Internet
Availability or sets of voting materials?
You may receive more than one Notice of Internet Availability
or, if you receive printed materials, you may receive multiple
sets of voting materials, including multiple copies of this
proxy statement and multiple proxy cards or voting instruction
cards. For example, if you hold your shares in more than one
brokerage account, you may receive a separate voting instruction
card for each brokerage account in which you hold shares. If you
are a stockholder of record and your shares are registered in
more than one name, you will receive more than one proxy card.
Please complete, sign, date and return each proxy card and
voting instruction card that you receive.
Where can
I find the voting results of the annual meeting?
We intend to announce the preliminary voting results at the
annual meeting and publish the final results in a Report on
Form 8-K
to be filed within four business days following conclusion of
our Annual Meeting.
4
PROPOSALS SUBMITTED
FOR STOCKHOLDER VOTE
PROPOSAL 1
ELECTION OF DIRECTORS
The Board currently consists of seven directors. The Nominating
and Corporate Governance Committee recommended to the Board, and
the Board approved the nomination of each of the nominees below
for election to serve a one-year term set to expire at the 2011
annual meeting of stockholders and until their successors are
duly elected and qualified. Our Board expects that all of the
nominees will be able and willing to serve as directors. If any
nominee is not available to serve as a director at the time of
the annual meeting, the persons named on the proxy may vote for
another candidate nominated by our Board, or our Board may
reduce the number of directors. Our Board has determined that
each of the director nominees below, except James R. Bolch, is
an independent director as defined in the NASDAQ
Listing Rules, as currently in effect (the NASDAQ
Rules).
With the exception of Messrs. OHiggins and Pileggi,
each of the nominees named below is currently a member of our
Board. Additionally, Messrs. OHiggins, Pileggi and
Bolch were not selected at our 2009 annual meeting. Biographical
information about each director nominee, as of July 1,
2010, appears below.
Director
Nominees
Herbert
F. Aspbury
Director since 2006
Mr. Aspbury, 65, is currently Chairman of the Board
of Trustees of Villanova University and previously served as the
chair of the universitys Audit and Finance Committee for
seven years. He is also an Adjunct Professor of the Fisher
Graduate School of International Business of the Monterey
Institute of International Studies, and has lectured at Cornell
Universitys joint MBA program with Queens University,
Ontario. Mr. Aspbury retired from Chase Manhattan Bank in
2000 where he served in a number of capacities, most recently as
the London-based Regional Executive for Europe, Africa and the
Middle East. Mr. Aspbury was a member of Chases
Management Committee, and also sat on the Management Committees
of Chases predecessor banks, Manufacturers Hanover
Trust Company and Chemical Bank. His overall banking career
has spanned 34 years, and was focused on corporate and
investment banking. Mr. Aspbury is also a past director of
the Royal Oak Foundation, the U.S. arm of Britains
National Trust, and served as its Chairman from 2004 through
2007. He continues to serve as a member of Royal Oaks
Finance Committee. Mr. Aspbury is Chairman of the Audit
Committee and a member of the Finance Committee.
Director
Qualifications: Mr. Aspburys previous
service at Chase and other banking institutions is valuable to
the Boards oversight of the Companys capital
structure and capital financing strategies.
Mr. Aspburys exposure to European and other global
markets, as well as cross-border management experience, is
particularly beneficial to the Company in light of our global
operations.
James R.
Bolch
Director Since 2010
Mr. Bolch, 52, is our President and Chief Executive
Officer. Mr. Bolch was appointed to the position in July
2010. From 2005 until his appointment with us, Mr. Bolch
served as Senior Vice President and President, Industrial
Technologies Sector at Ingersoll Rand Company. From 2004 to
2005, Mr. Bolch served as Executive Vice President, Service
Business for Schindler Elevator Corporation. Mr. Bolch
previously served from 1982 to 2004 in a number of positions at
United Technologies Corporation, most recently as Vice
President, Operations of UTC Power, a division of United
Technologies Corp.
Director Qualifications: Mr. Bolchs
experience serving in senior executive positions with a large
multi-national public company has allowed him to develop
leadership and team-building skills that are important to the
Companys future success.
5
Michael
R. DAppolonia
Director since 2004
Mr. DAppolonia, 61, currently serves as
President and Chief Executive Officer of Kinetic Systems, Inc.,
a global provider of process and mechanical solutions to the
electronics, solar and biopharmaceutical industries. From 2001
through 2005, Mr. DAppolonia was President of
Nightingale & Associates, LLC, a global management
consulting firm providing financial and operational
restructuring services to both publicly and privately held
middle-market companies. In his consulting capacity,
Mr. DAppolonia served as an executive officer of a
number of companies including Cone Mills Corporation, Moll
Industries, Inc., McCulloch Corporation, Ametech, Inc., Halston
Borghese, Inc. and Simmons Upholstered Furniture Inc.
Mr. DAppolonia is a member of the Board of Directors
of Kinetic Systems Inc. and Westmoreland Coal Company.
Mr. DAppolonia previously served as a member of the
Board of Directors of The Washington Group International, Inc.,
prior to that companys sale in November 2007 and
Reorganized Cone Mills Corporation. Mr. DAppolonia is
Chairman of the Compensation Committee and a member of the
Nominating and Corporate Governance Committee.
Director
Qualifications: Mr. DAppolonias
has significant operational expertise as a result of his current
executive position with Kinetic Systems, Inc., as well as
previous executive positions. Mr. DAppolonia also
possesses significant experience serving on boards of directors
for small and medium market private and public companies.
David S.
Ferguson
Director since 2005
Mr. Ferguson, 65, is the principal of DS Ferguson
Enterprises, LLC, a retail consulting business. From September
2000 through July 2003, Mr. Ferguson served as President
and Chief Executive Officer of Wal*Mart Europe. Prior to that,
he was President and Chief Executive Officer of Wal*Mart Canada
from February 1996 to September 2000. Mr. Ferguson was
President and Chief Operating Officer as well as a director of
Stuarts Department Stores from August 1994 through October 1995.
Mr. Ferguson is a member of the Board of Directors of the
Empire Company Limited, the parent company of Sobeys Inc., a
Canadian grocery chain and is a member of the Deans
Advisory Board of the Business School at Morehouse College.
Mr. Ferguson previously served on the Board of Advisors for
Miller Zell, Inc., and Vice-Chairman of the Board of Directors
of NSB Retail Systems Plc. Mr. Ferguson is a member of the
Audit Committee, Compensation Committee and the Nominating and
Corporate Governance Committee.
Director Qualifications: Mr. Ferguson has
significant global operational experience due to his previous
executive positions with Wal*Mart. Mr. Ferguson also
possesses significant understanding of retailing as a result of
his previous executive positions. These areas of expertise
provide value to the Board in understanding global marketing
issues and, in particular, the Companys relationships with
third party retailers.
John
OHiggins
Director Nominee
Mr. OHiggins, 46, is the Chief Executive of
Spectris plc, a UK-headquartered company that provides
analytical measurement and industrial controls for a variety of
industries, and has served in that capacity since 2006.
Mr. OHiggins previously worked at Honeywell
International, Inc. from 1991 to 2005, most recently as
President of Asia Pacific from 2002 to 2005.
Mr. OHiggins began his career as a development
engineer for Daimler Benz.
Director
Qualifications: Mr. OHiggins possesses
significant executive and operational skills as a current
corporate chief executive. Mr. OHiggins global
experience and European background are additional valuable
qualifications due to the global scope of the Companys
operations.
6
Dominic
J. Pileggi
Director Nominee
Mr. Pileggi, 58, is the Chief Executive Officer of
Thomas & Betts Corporation, a leading manufacturer and
marketer of electrical components for worldwide industrial,
construction and utility markets, a position he has held since
January 2004. Prior to being named CEO, Mr. Pileggi served
in various other management positions at Thomas &
Betts, including Chief Operating Officer, President
Electrical Products and President Electronics.
Mr. Pileggi has also held senior executive positions at
Casco Plastic, Inc., Jordan Telecommunications and Viasystems.
He began his career at Procter & Gamble.
Mr. Pileggi is the Chairman of the Board of
Thomas & Betts and serves as a member of the Board of
the Lubrizol Corporation.
Director Qualifications: Mr. Pileggi
possesses significant executive, operational and marketing
expertise and a broad understanding of global industrial and
consumer markets. Mr. Pileggis other board positions,
including serving as his companys chairman, provide
Mr. Pileggi with a unique basis for understanding our
business and governance process.
John P.
Reilly
Director since 2004
Mr. Reilly, 66, is the retired Chairman, President
and Chief Executive Officer of Figgie International.
Mr. Reilly has more than thirty years of experience in the
automotive industry, where he has served as President and CEO of
a number of automotive suppliers, including Stant Corporation
and Tenneco Automotive. He has also held leadership positions at
the former Chrysler Corporation and Navistar, and has served as
President of Brunswick Corporation. Mr. Reilly is currently
on the Board of Directors of Material Sciences Corporation,
Marshfield Door Systems, Inc. and Timken Company.
Mr. Reilly serves as Chairman of the Board of Directors and
a member of the Compensation Committee.
Director Qualifications: Mr. Reilly has
significant experience in the automotive industry, a key
strategic market for the Company. Mr. Reillys also
has significant executive experience with large multi-national
manufacturing enterprises. Mr. Reillys significant
roles in the automotive industry and executive experience, as
well as other public company board service, are important
factors that make him well-qualified to serve as the Chairman of
the Board.
Michael
P. Ressner
Director since 2004
Mr. Ressner, 61, is a retired Nortel Networks
executive who, between 1981 and 2003, served in a number of
senior financial and operational management positions.
Mr. Ressner was an Adjunct Professor of Applied Financial
Management at North Carolina State University between 2002 and
2004. He has been an adviser within the College of Management at
North Carolina State University since 2004. Mr. Ressner
currently serves as a member of the Board of Directors for the
following companies: Magellan Health Services, Inc. and Tekelec,
Inc. Mr. Ressner previously served on the Boards of Arsenal
Digital Solutions, Entrust, Inc., Proxim Corporation and
Riverstone Networks. Mr. Ressner is Chairman of the Finance
Committee and a member of the Audit Committee.
Director Qualifications: Mr. Ressner has
served in a number of senior financial positions for a large
public company and has chaired and served on a number of public
company audit committees. Mr. Ressners significant
experience with financial statements, internal controls, and
audit committee obligations are valuable to the Board and to the
committees on which he serves.
Carroll
R. Wetzel
Director since 2005
Mr. Wetzel, 67, served as non-executive Chairman of
the Board of Directors of Safety Components International, Inc.,
a supplier of automotive airbag fabric and cushions and
technical fabrics from 2000 to 2005. From 1988 to 1996,
Mr. Wetzel served as co-head of the Merger and Acquisition
Group at the Chase Manhattan Bank and previously as the head of
the Mergers and Acquisitions Group at Chemical Bank. Prior
7
to 1988, Mr. Wetzel served as a corporate finance officer
at Dillon Read & Co., Inc. Mr. Wetzel currently
serves on the Board of Directors of PHH Corporation.
Mr. Wetzel previously served as Vice Chairman and lead
director at Arch Wireless and also served on the Boards of
Brinks Company, Brinks Home Security and Laidlaw International,
Inc. Mr. Wetzel is Chairman of the Nominating and Corporate
Governance Committee and a member of the Finance Committee.
Director Qualifications: Mr. Wetzel
possesses significant expertise in capital markets and corporate
financing as a result of his previous employment positions with
Chase Manhattan Bank and Dillon Reed & Co, Inc.
Mr. Wetzels previous and current service on other
public company boards provides a level of governance expertise
in overseeing the Nominating and Corporate Governance Committee.
The Board recommends that the stockholders vote FOR the
election of each of the director nominees named above.
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PROPOSAL 2
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A
PROPOSAL TO RATIFY THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANYS INDEPENDENT
AUDITORS FOR FISCAL 2011
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The Audit Committee selects our independent auditors. This
proposal is put before the stockholders because, though the
stockholder vote is not binding on the Audit Committee, the
Board believes that it is good corporate practice to seek
stockholder ratification of the Audit Committees
appointment of the independent auditors. If the appointment of
PricewaterhouseCoopers LLP (PwC) is not ratified,
the Audit Committee will evaluate the basis for the
stockholders vote when determining whether to continue the
firms engagement, but may ultimately determine to continue
the engagement of the firm or another audit firm without
re-submitting the matter to stockholders. Even if the
appointment of PwC is ratified, the Audit Committee may in its
sole discretion terminate the engagement of the firm and direct
the appointment of another independent auditor at any time
during the year.
We expect that representatives of PwC will attend the 2010
annual meeting and that they will have the opportunity to
respond to appropriate questions from stockholders and to make a
statement if they desire to do so.
There are no relationships between our executives, directors and
PwC.
Fees of
Independent Public Accountants for Fiscal 2010 and
2009
The following table presents fees for professional services
rendered by PwC for the audit of our annual financial statements
and internal control over financial reporting for fiscal 2010
and fiscal 2009, together with any fees for audit-related
services and tax services rendered by PwC for fiscal 2010 and
fiscal 2009.
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Fiscal 2010
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Fiscal 2009
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(1) Audit fees(a)
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$
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4,922,172
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$
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4,997,329
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(2) Audit-related fees
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(3) Tax fees(b)
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271,448
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7,079
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(4) All other fees(c)
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6,732
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1,042
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Total
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$
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5,200,352
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$
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5,005,450
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(a) |
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Fees for professional services performed by PwC for the audit of
our annual financial statements and review of financial
statements included in our
Form 10-Q
filings, and services that are normally provided in connection
with statutory regulatory filings or engagements. Fees for
fiscal 2010 and fiscal 2009 also included an audit of our
internal control over financial reporting. |
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(b) |
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Tax fees in fiscal 2010 related primarily to tax consulting fees
regarding research & development charges as well as
transfer pricing procedures, which were performed in the United
States. The remaining fees for fiscal 2010 and the fees for
fiscal 2009 related to tax returns in Denmark and Norway. |
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(c) |
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Fees in fiscal 2010 related to technical work performed over the
first time preparation of certain statutory accounts in Norway.
Fees in fiscal 2009 pertained to reconciliations performed in
Norway due to country-specific reporting obligations regarding
payroll tax. |
8
Pre-Approval
Policies
All audit, audit-related and tax services for fiscal 2010 were
pre-approved by the Audit Committee, which concluded that the
provision of such services by PwC was compatible with the
maintenance of that firms independence in the conduct of
its auditing functions. The Audit Committees charter
provides that individual engagements must be separately
approved. The policy also requires specific approval by the
Audit Committee if total fees for audit-related and tax services
would exceed total fees for audit services in any fiscal year.
The policy authorizes the Audit Committee to delegate to one or
more of its members pre-approval authority with respect to
permitted services.
Pursuant to the Audit Committee charter, the Audit Committee
must approve all audit engagement fees other significant
compensation to be paid to the independent auditor and the terms
of such engagement. Additionally, the Audit Committee must
pre-approve any non-audit services to be provided by the
independent auditor.
The Board recommends that the stockholders vote FOR the
ratification of the appointment of PricewaterhouseCoopers LLP as
our independent auditors for fiscal 2011.
OTHER
MATTERS
As of the date of this proxy statement, management knows of no
business that will be presented for consideration at the 2010
annual meeting other than the items referred to above. If any
other matter is properly brought before the meeting for action
by stockholders, proxies in the enclosed form returned to us
will be voted in accordance with the recommendation of the Board
or, in the absence of such a recommendation, in accordance with
the best judgment of the proxy holders.
GOVERNANCE
OF THE COMPANY
We are committed to maintaining the highest standards of
business conduct and corporate governance, which we believe are
essential to running our business efficiently, serving our
stockholders well and maintaining our integrity in the
marketplace. We have adopted a Code of Ethics and Business
Conduct for directors, officers (including the principal
executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar
functions) and all of our employees (the Code of
Ethics). We have also adopted Corporate Governance
Guidelines, which, in conjunction with our Certificate of
Incorporation, Bylaws and committee charters, form the framework
for our governance. Our Corporate Governance Guidelines
and Code of Ethics are available on the Investor Relations
page of our website
http://www.exide.com.
We will post on this website any amendments to the Code of
Conduct or waivers of the Code of Conduct for directors and
executive officers and will disclose waivers of the Code in a
Current Report on
Form 8-K.
Stockholders may request free printed copies of the Code of
Ethics from:
Exide Technologies
13000 Deerfield Parkway
Building 200
Milton, Georgia 30004
Attn: Corporate Secretary
9
Board of
Directors Committees and Meetings
The members of the Board on the date of this proxy statement,
and the committees of the Board on which they currently serve,
are identified below.
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Nominating
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and Corporate
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Compensation
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Audit
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Governance
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Director
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Committee
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Committee
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Committee
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Finance Committee
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Herbert F. Aspbury
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Chair
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Member
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James R. Bolch
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Michael R. DAppolonia
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Chair
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Member
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David S. Ferguson
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Member
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Member
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Member
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John P. Reilly, Chairman
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Member
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Michael P. Ressner
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Member
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Chair
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Carroll R. Wetzel
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Chair
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Member
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Joseph V. Lash, who resigned from the Board effective
May 27, 2010, served on the Compensation and Finance
Committees. Mr. Bolch does not serve on any committee of
the Board. The Board met ten times during fiscal 2010. Each
director attended at least 75% of all meetings of the Board and
committees on which he served. Under our Corporate Governance
Guidelines, each director is expected to attend Board
meetings on a regular basis. Board members are encouraged, but
not required, to attend the annual meeting of stockholders. All
Board members attended the 2009 Annual Meeting.
The Board has Audit, Nominating and Corporate Governance,
Compensation and Finance Committees. Each of the committees
operates under a written charter adopted by the Board. All of
the committee charters are available on the Investor Relations
page of our website at
http://ir.exide.com/committees.cfm.
A free printed copy of each of these charters is available to
any stockholder who sends a request to the address listed under
the heading Governance of the Company.
Our Corporate Governance Guidelines require that at least
a majority of Board members qualify as independent under the
applicable listing standards of The NASDAQ Rules and
Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934 (the Exchange
Act). Each year, the Board reviews information provided by
the directors and any other relevant information and, based on
this information, makes an affirmative determination as to each
directors independence. After considering the NASDAQ Rules
and
Rule 10A-3(b)(1)
under the Exchange Act, the Board determined that the following
directors are independent: Messrs. Reilly, Aspbury,
DAppolonia, Ferguson, OHiggins, Pileggi, Ressner and
Wetzel. James R. Bolch, due to his employment with the Company,
is not considered an independent director.
The Company has entered into indemnity agreements with each of
its directors and executive officers that provide for defense
and indemnification against any judgment or costs assessed
against them in the course of their service to us, as well as
for the advancement of expenses and contribution in the event of
joint liability.
In particular, the indemnification agreements provide
contractual indemnification for the indemnitee that is meant to
supplement the indemnification provided by our organizational
documents. The indemnification agreements provide that we will
indemnify and hold harmless each indemnitee, to the fullest
extent permitted by law, against any and all expenses and
losses, and any local or foreign stamp duties or taxes imposed
as a result of the actual or deemed receipt of any payments
under the indemnity agreement, that are paid or incurred by the
indemnitee in connection with such proceeding. We will indemnify
and hold harmless any indemnitee for all expenses paid or
incurred by indemnitee in connection with each successfully
resolved claim, issue or matter on which indemnitee was
successful. The indemnification agreements further provide that
we will not provide indemnification for any proceeding initiated
or brought voluntarily by the indemnitee against us or our
directors, officers or employees, or for any accounting of
profits made from the purchase and sale by the indemnitee of our
securities.
The indemnification agreements also provide that we will
advance, to the fullest extent permitted by law, to the
indemnitee any and all expenses paid or incurred by indemnitee
in connection with any proceeding
10
(whether prior to or after its final disposition), provided that
the indemnitee is otherwise entitled to indemnification under
the indemnification agreement.
The agreements do not permit indemnification for acts or
omissions for which indemnification is not permitted under
Delaware law.
Audit
Committee
The Audit Committee met four times during fiscal 2010. The
purpose of the Audit Committee is to assist the Board in
overseeing the accounting and financial reporting processes and
the audits of our financial statements. The Audit
Committees primary duties and responsibilities are to:
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monitor the integrity of our financial reporting process and
systems of internal controls regarding finance, accounting and
legal compliance;
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appoint, approve and monitor the independence, services,
performance and compensation of our independent auditors and
internal audit services;
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provide an avenue of communication among the independent
auditors, our disclosure committee, management, employees, the
internal audit function and the Board;
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review and submit to the Board for approval, as appropriate,
related person transactions for potential conflict of interest
situations;
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prepare the Audit Committee report that the rules of the
Securities and Exchange Commission (SEC) require to
be included in our annual proxy statement; and
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monitor and approve the scope of our internal audit plan and
work program and coordinate our internal and external audits.
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In September 2009, the Board determined that all of the members
of the Audit Committee are independent within the meaning of SEC
regulations, the NASDAQ Rules and our Corporate Governance
Guidelines. The Board has determined that Mr. Aspbury,
the chair of the Audit Committee, is qualified as an audit
committee financial expert within the meaning of SEC rules, and
that he has financial sophistication within the meaning of the
NASDAQ Rules.
The report of the Audit Committee is included herein under the
heading Report of the Audit Committee. The charter
of the Audit Committee is available on our website listed above.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee met seven
times during fiscal 2010. The primary purpose of the Nominating
and Corporate Governance Committee is to assist the Board in
identifying qualified individuals to serve as directors on the
Board. To that end, the Nominating and Corporate Governance
Committee has the following duties, among others:
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establish criteria for selecting new directors, identify
individuals qualified to become members of the Board based on
these criteria and recommend to the Board for its consideration
such individuals as nominees to the Board;
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oversee evaluations of the Board, individual members of the
Board and the committees of the Board; and
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develop, evaluate and make recommendations to the Board with
respect to our corporate governance policies and procedures and
the Code of Ethics.
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In September 2009, the Board determined that all of the members
of the Nominating and Corporate Governance Committee are
independent within the meaning of SEC rules, the NASDAQ Rules
and our Corporate Governance Guidelines.
11
The Committee has set forth in its charter, qualities it seeks
in individuals to be nominated to the Board. These qualities
include those directors below under Director
Qualifications, Nominations and Diversity, among other
criteria, a high degree of leadership experience in business or
administrative activities, breadth of knowledge about issues
affecting us and the ability and willingness to contribute
special competencies to Board activities. These, and other
individual attributes, including personal integrity and loyalty
to Exide and concern for its success and welfare, are more fully
described in the Committees charter which is available on
the Investor Relations page of our website at
http://www.ir.exide.com/committees.cfm.
The Nominating and Corporate Governance Committee also reviews
annually the process for succession plans for our Chief
Executive Officer (CEO) and the CEOs direct
reports.
Compensation
Committee
The Compensation Committee met thirteen times during fiscal
2010. The purpose of the Compensation Committee is to assist the
Board in fulfilling its oversight responsibilities with respect
to compensation. The Compensation Committees primary
duties and responsibilities include:
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oversee the administration of our compensation plans, in
particular our incentive compensation and equity-based plans;
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develop and recommend to the Board total compensation for our
CEO and determine compensation for all other executive officers,
including oversight of the administration of our executive
benefit plans; and
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review and discuss with management the Compensation Discussion
and Analysis and review and approve the Compensation Committee
report to be included in the annual proxy statement as required
by the rules of the SEC.
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In September 2009, the Board determined that all of the members
of the Compensation Committee are independent within the meaning
of SEC regulations, the NASDAQ Rules and our Corporate
Governance Guidelines.
Finance
Committee
The Finance Committee conducted five meetings during fiscal
2010. The Finance Committees primary duties and
responsibilities include:
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assist the Board in reviewing and making recommendations to the
Board regarding our long-term financial structure, objectives
and policies;
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recommend to the Board authorizations, filings and applications
necessary and appropriate to enable management to execute
proposed financing plans; and
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review financial implications of any significant transactions
requiring Board approval, such as mergers, acquisitions,
reorganizations and divestitures.
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Director
Qualifications, Nomination and Diversity
The Nominating and Corporate Governance Committee of the Board
considers all qualified candidates who may be identified by our
stockholders, current Board members
and/or
professional search firms. Stockholders who wish to propose a
director candidate for consideration by the Nominating and
Corporate Governance Committee may do so by submitting the
candidates name, resume and biographical information and
qualifications to the attention of the Secretary of the Company
at 13000 Deerfield Parkway, Building 200, Milton, Georgia 30004.
All proposals for recommendation or nominations received by the
Secretary will be presented to the Nominating and Corporate
Governance Committee for its consideration and the Committee
will review each candidate using the same criteria. Members of
the Nominating and Corporate Governance Committee will interview
candidates, and the Nominating and Corporate Governance
Committee will recommend to the Board nominees that best meet
the Boards current needs. In order for a recommended
director candidate to be considered by the Nominating and
Corporate Governance Committee for nomination for election at an
upcoming annual meeting of stockholders, the recommendation must
be received by the
12
Secretary not less than 120 days prior to the anniversary
date of the Companys most recent annual meeting of
stockholders.
Although the Board does not maintain a formal policy regarding
diversity, the Nominating and Corporate Governance Committee
considers diversity to include diversity of backgrounds,
cultures, education, experience, geographic profiles, as well as
race, ethnicity, gender, national origin and other categories.
Board
Leadership Structure
Since 2004, the Chairman of the Board has been an independent,
non-employee director. In March 2010, the Board approved
amendments to its bylaws that restricted the Chairman of the
Board from also serving simultaneously as an executive of the
Company. John P. Reilly has served as the Chairman of the Board
since May 2004. As Chairman of the Board, Mr. Reilly
approves meeting schedules and agendas and chairs executive
sessions of the independent directors. The Board believes that
this leadership structure ensures effective independent Board
leadership and oversight of management and the Companys
long-term strategic objectives. Additionally, all of the
Boards standing committees are composed solely of, and
chaired by, independent directors. As a matter of practice, the
Chairman of the Board regularly elicits input from the CEO as to
matters to be covered at the meetings.
Board of
Directors Role in Risk Oversight
The Board provides oversight of the Companys enterprise
risks. Management oversees the daily risk management processes,
and has formalized the development of a risk matrix through
input from each business unit and corporate function. The risk
matrix is refined over the course of the fiscal year and is
reviewed with the Board on a semi-annual basis.
Although the Board has ultimate responsibility for overseeing
risk management, the Board determined that the individual
committees are best suited to provide direct oversight of
certain risks related specifically to their areas of
responsibility, and the committees review those risks with the
Board. The Audit Committee reviews with the Vice
President Internal Audit the audits or assessments
of significant risks conducted by the Companys internal
audit personnel based on its own audit plan. The Audit Committee
also regularly reviews with management the Companys
internal control over financial reporting, including any
significant deficiencies, as well as significant legal,
regulatory, and compliance matters that could have a material
impact on the Companys financial statements or business.
Additionally, the Finance Committee exercises oversight with
regard to the risk assessment and management processes related
to matters including capital structure and liquidity. The
Nominating and Corporate Governance Committee, through its
succession planning activities, addresses risks related to
identification of executive talent and continuity of senior
management.
The Compensation Committee is responsible for overseeing risks
related to compensation policies and practices. The Compensation
Committee reviews a number of factors, including the mix of
long-term and short-term incentive compensation, the performance
metrics utilized for incentive compensation and the general
designs of the various incentive plans. After a review of the
Companys existing compensation program, the Compensation
Committee determined that the Companys compensation
programs are not likely to have a material adverse effect on the
Company.
Executive
Sessions of Independent Directors
The Board conducts executive sessions comprised exclusively of
independent directors during each regularly scheduled Board
meeting and as otherwise appropriate. The executive sessions are
chaired by the Chairman of the Board.
13
Compensation
Committee Interlocks and Insider Participation
During fiscal 2010, Messrs. DAppolonia, Ferguson,
Jennings, Lash and Reilly each served for a period of time as a
member of the Compensation Committee, none of whom:
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is one of our current or former executive officers;
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is or was a participant in a related person transaction in
fiscal 2010 (for a description of our policy on related person
transactions, see Certain Relationships and Related
Transactions); and
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is an executive officer of another entity of which one of our
executive officers serves on the board of directors.
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There were no interlocking relationships between any of the
Compensation Committees members and the Companys
executive officers during fiscal 2010.
14
REPORT OF
THE AUDIT COMMITTEE
The following Report of the Audit Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
notwithstanding any general statement contained in any such
filing incorporating this proxy statement by reference, except
to the extent we specifically incorporate this Report by
reference therein.
Purpose
The Audit Committee reviews the Companys financial
reporting process on behalf of the Board. The purpose, authority
and responsibilities of the Audit Committee are specified in its
charter, which most recently was revised in fiscal 2011, and is
available on our website at
http://ir.exide.com/committees.cfm.
The composition of the Audit Committee and the function of the
Audit Committee are described in further detail on page 11
of this proxy statement under the caption Audit Committee.
Independent
Public Accountant Communications
The Committee discussed with the independent public accountants,
PricewaterhouseCoopers LLP, matters required to be discussed
pursuant to Statement on Auditing Standards No. 61
(Communication with Audit Committees), as amended, including,
among other things, management judgments and accounting
estimates, as well as whether there were any significant audit
adjustments, any disagreements with management or any
difficulties encountered in performing the audit. The Committee
also discussed with its independent public accountants matters
relating to its independence, which discussion included a review
of the firms audit and non-audit fees, as the fees may be
modified or supplemented from time to time. In connection with
such discussions, the Committee received and reviewed the
written disclosures and letter from its independent public
accountants required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent
accountants communications with the audit committee
concerning independence. The Committee met separately at least
quarterly with its independent public accountants, without
management present.
Internal
Controls
During fiscal 2010, the Committee discussed with management its
assessment of the effectiveness of our internal control over
financial reporting under Section 404 of the Sarbanes-Oxley
Act of 2002 and whether any deficiencies existed. The Committee
also discussed with the Companys independent public
accountants its evaluation of our internal control over
financial reporting.
Review of
Periodic Reports
The Committee reviewed and discussed with management and the
independent public accountants each of our quarterly and annual
reports for fiscal 2010, including our audited financial
statements, which review included a discussion regarding
accounting principles, practices and judgments. The Committee
also reviewed and discussed with management the earnings press
releases accompanying such quarterly and annual reports.
Audited
Financial Statements
As a result of its review of the audited financial statements,
as well as its discussions with management and the independent
public accountants, including those discussions mentioned above
related to independent public accountant communications, the
Committee recommended to the Board and the Board approved the
inclusion of our audited consolidated financial statements in
our Annual Report on
Form 10-K
for fiscal 2010 for filing with the SEC.
Members of the Audit Committee
Herbert F. Aspbury, Chairman
David S. Ferguson
Michael P. Ressner
15
COMPENSATION
DISCUSSION AND ANALYSIS
We refer you to our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010 for additional
information regarding fiscal 2010 results discussed in the
Executive Summary of this report.
Executive
Summary
This Compensation Discussion and Analysis provides an
explanation of how our compensation programs are designed with
respect to our named executive officers. Significant objectives
of our compensation program include the following:
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Recruit, retain, and motivate executive officers;
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Provide total compensation that is significantly weighted toward
the achievement of performance-based objectives; and
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Align performance goals with greater stockholder value.
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The Committee attempts to design total compensation for the
named executive officers that will provide significant
compensation if the Company achieves superior financial
performance. General economic conditions continued to impact the
Companys results in fiscal 2010. However, the Committee
believes that the short-term cash incentive award payments made
based on fiscal 2010 financial performance were appropriate in
light of the Companys efforts to withstand significant
pressures resulting from the global economic slowdown, as well
as the Companys improvements in net income and earnings
per share. Our year-over-year key financial performance
indicators of net income and earnings per share placed us above
the 75th percentile when measured against our peer
companies year-over-year results, while our Adjusted
EBITDA placed us between the 50th and
75th percentiles. Our peer companies are described in more
detail on page 20 of this proxy statement.
The following table includes key financial performance
indicators over the past three fiscal years. The table also
includes adjusted net income and adjusted earnings per share for
each of the past three fiscal years, as such metrics are used
for the Companys fiscal 2010 and fiscal 2011 annual
incentive plan program. The Company also believes that these
measures are useful to investors and management because they
assist investors and management in evaluating and comparing the
Companys performance for different periods by excluding
non-operational items that the Company believes are not
indicative of, or may obscure trends useful in evaluating, the
Companys continuing operations.
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Fiscal 2008
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Fiscal 2009
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Fiscal 2010
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(In millions except for per-share data)
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Adjusted EBITDA(1)
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$
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244.1
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$
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252.7
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$
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198.8
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Net Sales
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$
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3,696.7
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$
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3,322.3
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$
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2,685.8
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Net Income(2)
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$
|
32.1
|
|
|
$
|
(69.5
|
)
|
|
$
|
(11.8
|
)
|
Adjusted Net Income(3)
|
|
$
|
28.7
|
|
|
$
|
47.3
|
|
|
$
|
48.5
|
|
Earnings Per Share (Diluted)
|
|
$
|
0.46
|
|
|
$
|
(0.92
|
)
|
|
$
|
(.16
|
)
|
Adjusted Earnings Per Share(4)
|
|
$
|
0.41
|
|
|
$
|
0.63
|
|
|
$
|
.64
|
|
|
|
|
(1) |
|
Adjusted EBITDA is defined as earnings before interest, taxes,
depreciation, amortization and restructuring charges. Our
Adjusted EBITDA definition also adjusts reported earnings for
the effect of non-cash currency remeasurement gains or losses,
the non-cash gain or loss from revaluation of the Companys
warrants liability, impairment charges, non-cash gains or losses
on asset sales and non-cash stock compensation expense and
minority interest, as well as a specific exclusion for the loss
on early extinguishment of debt recorded in the first quarter of
fiscal 2008. We also refer you to the earnings release filed as
Exhibit 99.1 to our Report on Form
8-K, dated
June 2, 2010, for a reconciliation of Adjusted EBITDA to
the income or loss reported under generally accepted accounting
principles. |
16
|
|
|
(2) |
|
Excludes any net income attributable to minority interests, and
reflects only net income of Exide Technologies as reported in
the Companys audited consolidated financial statements
included in its Annual Report on Form 10-K for the fiscal year
ended March 31, 2010, filed with the SEC on June 2,
2010. |
|
(3) |
|
Adjusted net income is defined as net income plus or minus
after-tax restructuring charges, one-time tax items (including
non-cash valuation allowances), reorganization expenses related
to post-bankruptcy claims administration, after tax currency
re-measurement gains or losses, and non-cash gains or losses
from the revaluation of the Companys warrants liability. |
|
(4) |
|
Adjusted earnings per share is defined as adjusted net income
divided by weighted average shares outstanding. |
The Committee believes that the compensation program and
performance goals identified for fiscal 2011 will provide
appropriate economic incentives in light of current economic
conditions for the named executive officers to continue to drive
improvements in our financial performance and stockholder value.
Compensation
Committee Overview
The Committee is required by its charter to consist of no fewer
than three independent directors, who are annually recommended
by the Nominating and Corporate Governance Committee and
approved by the Board. The Board evaluates the Committee
members independence in accordance with standards
established by The NASDAQ Marketplace Rules. The Committee is
presently comprised of three directors: Michael R.
DAppolonia (Chair), David S. Ferguson and John P. Reilly
(Chairman of the Board). Previously, the Committee was comprised
of four directors including Paul W. Jennings, the former
Committee Chair, who resigned from the Board effective
January 28, 2010 and Joseph V. Lash, who resigned from the
Board effective May 27, 2010. Mr. Ferguson was
appointed to the Committee concurrently with
Mr. Lashs resignation on May 27, 2010.
Generally, the Committee meets at least quarterly. During fiscal
2010, the Committee met a total of thirteen times.
Compensation
Committee Activities
The Committees responsibilities include reviewing and
approving corporate goals and objectives relevant to the
compensation of our Chief Executive Officer (CEO)
and, based on the evaluation of the CEOs performance
against these goals and objectives, recommending the CEOs
compensation to the Board. The Committee is also responsible for
reviewing and approving the compensation for all named executive
officers and certain other key employees, overseeing the
administration of our compensation and benefits plans, including
both our short-term cash incentive and long-term equity
incentive compensation plans, and making recommendations to the
Board regarding director compensation.
The Committees responsibilities are enumerated in full
detail in the Committees charter, which is reviewed
annually. The charter, originally adopted on May 12, 2004,
was most recently amended on March 25, 2010, to document
the Committees oversight of compensation-related risk. A
copy of the charter can be found under the Investor Relations
page of our website:
http://ir.exide.com/committees.cfm.
Role of
Executive Officers in Compensation Decisions
Annually, the CEO, in consultation with the Executive Vice
President Human Resources and Communications
(EVP-HR), makes recommendations to the Committee
regarding any adjustments to base salary for named executive
officers based on the CEOs assessments of each named
executive officer and market data for similarly positioned
executives. Materials supporting the recommendations, including
division and the corporate-level results, market survey data,
any peer group analysis and salary history for named executive
officers are provided to the Committee for its review and
consideration in consultation with the Committees
independent compensation consultant, Towers Watson, formerly
known as Watson Wyatt. The CEO and
EVP-HR
attend the Committees meetings to present their
recommendations regarding base salary adjustments. The Committee
reviews with the CEO and EVP-HR any such recommendations and
approves or alters the proposed base salary adjustments. The
Committee also considers annual short-term cash incentive
17
compensation and long-term equity incentive compensation for
named executive officers based, in part, on recommendations from
the CEO. The CEO is not present when the Committee reviews the
CEOs compensation.
In addition, the Committee delegates to the Benefits
Administration Committee and the Benefits Investment Committee,
each comprised of members of senior management, responsibilities
related to administration, management and oversight of our
various health and welfare plans and pension plans,
respectively, for our global employees. Management provides the
Committee with not less than at least one annual update
regarding the activities of these two senior management
committees. The Committee has also provided authority to the
EVP-HR for administration of our 2004 Stock Incentive Plan
(2004 Plan) and 2009 Stock Incentive Plan (the
2009 Plan and, together with the 2004 Plan, the
Incentive Plans), including responsibilities
relating to preparing foreign sub-plans to comply with foreign
tax laws for
non-U.S. participants,
monitoring the awards outstanding to provide the Committee with
sufficient information regarding remaining shares available
under the Incentive Plans and adopting and issuing award
agreements. The EVP-HR provides periodic updates to the
Committee regarding matters related to administration of the
Incentive Plans.
Independent
Compensation Consultants
When analyzing various components of named executive officer
compensation, the Committee often engages an independent
compensation consultant to provide advice and other services,
including providing data regarding prevailing market conditions.
Since October 2007, the Committee has retained Towers Watson to
serve as its independent compensation consultant. The Committee
believes that Towers Watson provides independent advice
concerning named executive officer compensation. The fees for
Towers Watson are paid directly by the Company pursuant to the
Committees charter. The Committee annually reviews the
retention of its independent compensation consultant.
The Companys management separately engages Mercer
Consulting periodically to provide consulting advice regarding
the design of sales team incentive plans, tools for designing a
global job classification system and market data regarding
executive compensation.
Upon request of the Committee, Towers Watson provides market
data regarding metrics for the Committees review of the
CEOs base salary, annual short-term cash incentive
compensation and long-term equity incentive compensation. Towers
Watson will periodically coordinate with the EVP-HR regarding
compensation packages for proposed new named executive officers
and other senior personnel, as well as providing metrics for
evaluating and scaling long-term equity incentive compensation
for all named executive officers. Towers Watson, through its
international affiliations, also provides the Committee
recommendations concerning market survey data for any
non-U.S. named
executive officers. Towers Watson also provides benchmarking
data described below under the caption
Benchmarking Market Survey Data to
assist the Committee in evaluating and recommending changes to
director compensation. Pursuant to the terms of the consulting
agreement, Towers Watson reports directly to the Committee and
acts at the Committees request. Towers Watson reviews and
makes recommendations to the Committee regarding the companies
included in the Companys peer group.
Philosophy
Regarding Executive Compensation
The Committees primary objective is to design and
implement an executive compensation program that attracts,
motivates and retains a strong leadership team, and that rewards
named executive officers based upon achievement of the
Companys financial objectives and long-term stockholder
value. A core strategy of the executive compensation program is
to link each named executive officers compensation to the
Companys overall performance, the performance of the named
executive officers division, as applicable, and the named
executive officers individual performance. The elements of
named executive officer compensation are based, in part, on the
Companys performance objectives, as well as external
competitive market analyses that use a
18
variety of sources, including the compensation market survey
data compiled by Towers Watson. The Committee utilizes the
following to provide total annual compensation to our named
executive officers:
|
|
|
|
|
base salary;
|
|
|
|
short-term cash incentive compensation; and
|
|
|
|
annual grants of long-term compensation, principally in the form
of time-vested and performance-based restricted stock,
restricted stock unit awards and options.
|
The Committee does not believe perquisites, including executive
retirement plans, should represent a significant portion of
named executive officer compensation.
The Committee believes base salary should represent
approximately one-third of a named executive officers
total compensation. The Committee believes that
performance-based compensation, including both short-term annual
cash incentive compensation and long-term equity incentive
compensation, should represent approximately two-thirds of a
named executive officers total compensation because the
emphasis on performance-based compensation encourages superior
performance that also serves to retain key employees and better
aligns executive compensation with the interests of the
Companys stockholders. While not all of the Companys
equity compensation is tied to stock performance, the Committee
believes that the mix of long-term equity compensation should
emphasize vesting only upon the achievement of specific
performance-based financial targets, with only limited
time-vesting (service-based) awards. In fiscal 2010, the
Committee benchmarked total compensation for the named executive
officers, as well as the individual elements of total
compensation, as set forth below.
|
|
|
|
|
The Committee targeted total compensation for named executive
officers between the 50th and 75th percentiles based
on market survey data.
|
|
|
|
The Committee targeted base salary for the named executive
officers between the 50th and 75th percentile of
current market rates based on market survey data. See
Elements of Compensation Base Salary.
|
|
|
|
The Committee targeted payouts of short-term cash incentive
compensation, which typically includes awards between 50% and
125% of a named executive officers base salary, at the
50th percentile based on market survey data. Payout of
these awards is conditioned on an individual named executive
officers division financial performance, where applicable,
and consolidated corporate financial performance. The Committee
believes that any payout above the 50th percentile should
reflect strong performance compared to the market. See
Elements of Compensation Short-Term Cash
Incentive Compensation.
|
|
|
|
The Committee targeted payouts under long-term equity
compensation awards for named executive officers, other than the
CEO and President and Chief Operating Officer (the
COO), at the 50th percentile based on market
survey data in fiscal 2010, which was a reduction from the
fiscal 2009 target payout range, which was between the
50th and 75th percentiles based on market survey data.
The Committee has continued to target payouts under long-term
equity compensation awards for the CEO and COO between the
50th and 75th percentile based on market survey data.
See Elements of Compensation Long-Term Equity
Incentive Compensation.
|
|
|
|
The Committee may set the total compensation, or any individual
component of any element of total compensation, above or below
the percentile targets based on each named executive
officers annual performance, years of experience, current
compensation, scope of responsibility when compared to positions
contained in market data, the Committees ability to target
appropriate future base salaries, and any other factors that the
Committee deems appropriate.
|
Named executive officers receive benefits aligned with benefits
received by other employees under company-sponsored plans.
Perquisites are selectively utilized to support the named
executive officers business needs and the Committee does
not seek to offer perquisites that are competitive with others
in its peer group.
19
Benchmarking
The Committees independent compensation consultant
provides compensation data for named executive officers using
general market data, as well as peer group data.
Peer
Group Data
The criteria for the selection of the peer group include
industry, size (based on revenue, market capitalization, total
assets and number of employees), and companies with comparable
business models, operations and complexities. During fiscal
2010, the Committee evaluated the Companys peer group and,
based on the recommendation from Towers Watson, the Committee
removed Spectrum Brands from its fiscal 2010 peer group as a
result of bankruptcy proceedings. The Committee also added WABCO
Holdings, Inc., which is appropriately aligned with the Company
and other components of the peer group. The companies comprising
the peer group for fiscal 2010 are listed below:
|
|
|
American Axle & Manufacturing Holdings, Inc. (NYSE:AXL)
|
|
Hubbel Incorporated (NYSE:HUB)
|
AMETEK Inc. (NYSE:AME)
|
|
Modine Manufacturing Company (NYSE:MOD)
|
Amphenol Corporation (NYSE:APH)
|
|
Molex Incorporated (NASDAQ:MOLX)
|
ArvinMeritor, Inc. (NYSE:ARM)
|
|
Rockwell Automation, Inc. (NYSE:ROK)
|
Autoliv, Inc. (NYSE:ALV)
|
|
Tenneco Inc. (NYSE:TEN)
|
Borg Warner Inc. (NYSE:BWA)
|
|
The Timken Company (NYSE:TKR)
|
Brunswick Corporation (NYSE:BC)
|
|
Vishay Intertechnology, Inc. (NYSE:VSH)
|
Energizer Holdings, Inc. (NYSE:ENR)
|
|
WABCO Holdings, Inc. (NYSE:WBC)
|
Enersys (NYSE:ENS)
|
|
|
General Cable Corporation (NYSE:BGC)
|
|
|
The Committee uses peer company data to evaluate the
appropriateness of the components of our compensation program,
including the following: director compensation; the allocation
of various forms of long-term compensation awards; and the type
of financial metrics used for short-term cash incentive awards
and long-term equity compensation awards. The Committee uses
this data so that the components of compensation programs are
competitive with those of our peer group, will encourage
superior performance and attract and retain qualified employees.
Using the criteria discussed above, the Committee periodically
reviews and evaluates, with assistance from its independent
compensation consultant, the appropriateness of the companies
comprising the peer group.
Market
Survey Data
In addition to our peer group data, the EVP-HR used the
following database tool to benchmark base salary and total cash
compensation for our named executive officers: Top Management
Compensation Calculator by Towers Watson Data Services. This
Towers Watson market survey data is comprised of data from more
than 1,500 organizations representing a variety of industries,
sizes of companies and geographic areas. The Company utilizes
survey data for the position or positions that most closely
matches the job description of each NEO or executive officer
position, and for the companies that are most closely aligned
with characteristics of the Company, including comparable
industry, comparable size (revenue and employees), geography and
other measures of comparison as appropriate and available.
Stock
Ownership Guidelines
In October 2007, the Committee recommended and the Board
approved stock ownership guidelines (Ownership
Guidelines). The Ownership Guidelines were adopted, in
part, to demonstrate the Companys commitment to investors,
employees, customers and vendors, by requiring named executive
officers, certain other selected members of senior management
and non-employee directors to maintain a significant holding of
the Companys common stock. Pursuant to the Ownership
Guidelines, the CEO, other named executive officers, other
selected members of senior management and non-employee Board
members, are required to achieve and maintain certain levels of
beneficial ownership in the Companys common stock based on
a multiple of their annual base salary. The Committee consulted
with its independent compensation consultant in an effort to
design Ownership Guidelines consistent with those of the
Companys peer group. Non-employee
20
directors are also required to maintain stock ownership at
levels based on their annual cash retainer. The Ownership
Guidelines are as follows:
|
|
|
|
|
|
|
Chief Executive Officer
|
|
5 Times Annual Base Salary
|
|
|
Executive Vice Presidents
|
|
|
|
|
Division Presidents
|
|
3 Times Annual Base Salary
|
|
|
Section 16 Officers
|
|
|
|
|
Other Members of Senior Management
|
|
1.5 Times Annual Base Salary
|
|
|
Non-Employee Board Members
|
|
3 Times Annual Cash Retainer
|
The Board set December 31, 2012 as the initial deadline for
achieving the required stock ownership levels, and five years
from the date of any individuals retention or promotion
into one of the aforementioned positions.
Elements
of Compensation
Our executive compensation program consists of:
|
|
|
|
|
base salary;
|
|
|
|
short-term cash incentive compensation;
|
|
|
|
long-term equity incentive compensation; and
|
|
|
|
personal benefits, supplemental retirement plans and limited
select perquisites.
|
A description of each of the compensation program elements
follows.
Base
Salary
The Committee adheres to the principal that base salary should
represent a key component of a named executive officers
total compensation. In order to hire and retain highly qualified
candidates, the Committee generally sets base salaries for named
executive officers at, or above, the prevailing median base
salary of similarly situated executives based on market survey
data, which typically results in base salary between the
50th and 75th percentile based on market survey data.
The Committee establishes, and periodically modifies, if
appropriate, each named executive officers base salary
through an evaluation of several factors, including individual
performance, current market conditions, years of experience,
industry specific experience, national and local salaries for
comparable positions (internally and externally), level of
responsibility and the recommendations of the CEO and EVP-HR.
Each year, the Committee, based, in part, on the review of
information obtained from its independent compensation
consultant and the CEOs and EVP-HRs recommendation,
reviews and modifies, as it deems appropriate, the base salaries
for the Companys named executive officers other than the
CEO. The CEOs base salary for each of fiscal years 2009
and 2010 was set pursuant to the terms of his Amended and
Restated Employment Agreement, as amended. In conjunction with
evaluations submitted by Board members, the Committee reviews
and may recommend additional increases in the CEOs base
salary. Any such recommendations regarding the CEOs base
salary must be approved by the Board.
For fiscal 2010, the Company suspended base salary increases for
all named executive officers, as well as all salaried employees
not subject to collective bargaining agreements. However, upon
his appointment as President Exide Europe,
Mr. Ostermanns base salary was increased from
290,000 to 365,000 effective March 1, 2010 to
compensate him for the additional responsibilities related to
the oversight of both European divisions. On May 26, 2010,
the Committee increased Mr. Damaskas base salary from
$350,000 to $400,000 to more closely align his base salary with
the 50th percentile for chief financial officers based on
market survey data. The Company re-instituted merit increases in
fiscal 2011. On July 21, 2010, the Committee approved a
fiscal 2011 annual merit increase for Mr. Ostermann, increasing
his annual base salary to 386,900. Merit increases for
other named executive officers are currently under consideration.
On August 31, 2009, the Company announced that
Messrs. Ulsh, OLeary, Bregman and Damaska each
offered, and the Company accepted, a voluntary 10% reduction in
base salary for the period beginning
21
September 1, 2009 and ending on February 28, 2010. The
original fiscal 2009 salary levels for these named executive
officers were reinstated effective March 1, 2010.
The Committee and Board determined that Mr. Ulshs
base salary, when compared to the salaries of the Companys
other named executive officers, appropriately reflects his
greater global responsibilities for the Companys
operational and strategic oversight. The Committee also believes
the base salaries for our COO should be higher than the salaries
for the Companys other non-CEO named executive officers
due to the global responsibilities of the position. As noted
above, Mr. Ostermanns salary also exceeds levels for
other named executive officers in light of his responsibility
for oversight of both of the Companys European divisions.
The base salaries for other named executive officers generally
fall within a range discussed above and adequately represent
differences in respective individual and division performance.
Short-Term
Cash Incentive Compensation
The Committee believes that short-term cash incentive
compensation that is based on performance, through the
achievement of division and corporate goals, is an important
component of overall executive cash compensation and aligns
named executive officers goals with those of the
stockholders. Target short-term cash incentive compensation is
established annually as part of the review of total
compensation. For the named executive officers, the Committee
generally establishes annual short-term cash incentive
compensation at 50% of base salary, which typically results in
short-term cash incentive compensation at or near the
50th percentile based on market survey data.
Mr. Ulshs employment agreement provides target
short-term cash incentive compensation at 125% of base salary
and Mr. OLearys target is 65% of base salary.
The Committee believes that the significantly higher targets for
the CEO and COO, when compared to the Companys other named
executive officers, are appropriate in light of their respective
level of responsibility, and to ensure that their annual total
cash compensation is at or near the 50th percentile based
on market survey data.
In addition, the Committee may, from time to time, approve lump
sum payments to new employees upon their retention or to
existing employees, including the named executive officers, upon
assumption of additional responsibilities. The Committee did not
approve any of these lump sum payments for named executive
officers in fiscal 2010.
Fiscal
2010 Short-Term Cash Incentive Plan
In fiscal 2010, short-term cash incentive awards were granted
under our Fiscal Year 2010 Plan (2010 AIP). Annual
cash incentives under the 2010 AIP were based on the following
performance measures for non-divisional named executive
officers: Adjusted Earnings Per Share (Adjusted
EPS), which is defined as net income plus or minus
after-tax restructuring charges, one-time tax items (including
non-cash valuation allowances), reorganization expenses related
to post-bankruptcy claims administration, after tax currency
re-measurement gains or losses, and non-cash gains or losses
from the revaluation of the Companys warrants liability;
and consolidated corporate Adjusted EBITDA (Consolidated
EBITDA). For named executive officers who oversee one of
the Companys divisional operations, in addition to the
corporate goals of Adjusted EPS and Adjusted EBITDA, their
performance measures also included the divisions Adjusted
EBITDA and the divisions return on working capital
(Division ROWC), which is defined as the
divisions Adjusted EBITDA divided by the sum of
inventories and receivables minus the sum of accounts payable
and accrued liabilities.
For any named executive officer serving as a division president,
fiscal 2010 awards under the 2010 AIP were weighted 50% based on
achievement of the divisions Adjusted EBITDA, 25% based on
Division ROWC, 15% based on Adjusted EPS and 10% based on
Consolidated EBITDA. For corporate named executive officers,
fiscal 2010 awards under the 2010 AIP were weighted 70% based on
Adjusted EPS and 30% on Consolidated EBITDA.
The Committee also established threshold Adjusted Net Income of
$22.8 million, which is defined as net income subject to
the same adjustments discussed above regarding Adjusted EPS,
below which no named executive officer was eligible to receive
any fiscal 2010 award otherwise earned under the 2010 AIP.
22
Each named executive officer serving as a division president
achieved an award of 100% of his or her targeted bonus award if
the Companys consolidated corporate results and the named
executive officers respective division results achieved
target levels and the Companys consolidated corporate
results achieved the threshold Adjusted Net Income. Performance
above or below the target resulted in a proportional payment
above or below the target payout. Named executive officers
received 50% of their division
and/or
corporate target award upon achievement of 80% of the
performance target; and up to 200% of their target award upon
achievement of 120% of the performance targets. Awards were
capped at the achievement of 200% of target award.
Payments of fiscal 2010 awards under the 2010 AIP occurred on or
about June 15, 2010, after the audit of the Companys
financial statements is complete. In fiscal 2010, the Company
achieved Adjusted Net Income of $48.5 million, which
exceeded the minimum threshold. On a consolidated basis, the
Companys target Adjusted EBITDA was $239 million and
the Company achieved $198.8 million, or 58% of the target.
Target Adjusted EPS was $0.58, and the Company achieved $0.64,
or 156% of target. A fiscal 2010 year-end adjustment
relating to the elimination of a U.S. income tax provision
provided a significant benefit to fiscal 2010 Adjusted EPS under
the 2010 AIP. Although inclusion of the tax adjustment was
appropriately calculated under the terms of the fiscal 2010 AIP,
the Committee determined that a payout at 156% of target for the
Adjusted EPS metric was inconsistent with the Companys
fiscal 2010 performance. Consequently, the Committee exercised
negative discretion and reduced the Adjusted EPS payout for each
named executive officer to the threshold level. Threshold,
target and actual payouts to the Companys named executive
officers in fiscal 2010 under the 2010 AIP were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold(1)
|
|
Target(2)
|
|
Actual
|
|
Gordon A. Ulsh
|
|
$
|
593,750
|
|
|
$
|
1,187,500
|
|
|
$
|
622,250
|
|
E.J. OLeary
|
|
$
|
178,750
|
|
|
$
|
357,500
|
|
|
$
|
187,330
|
|
Phillip A. Damaska
|
|
$
|
87,500
|
|
|
$
|
175,000
|
|
|
$
|
91,700
|
|
Mitchell S. Bregman(3)
|
|
$
|
83,200
|
|
|
$
|
166,400
|
|
|
$
|
22,131
|
|
Michael Ostermann(4)(5)
|
|
$
|
123,188
|
|
|
$
|
246,275
|
|
|
$
|
433,127
|
|
|
|
|
(1) |
|
Assumes both division and corporate results were 80% of target. |
|
(2) |
|
Assumes both division and corporate results achieved target
results. |
|
(3) |
|
Mr. Bregmans division achieved Adjusted EBITDA of
$25.1 million, which fell below the threshold level. His
division also achieved Division ROWC of 78.3% which was also
below the threshold level. Consequently, Mr. Bregmans
award was limited to the corporate Adjusted EBITDA payout and
the Adjusted EPS payout at the threshold level. |
|
(4) |
|
Mr. Ostermann division achieved Adjusted EBITDA of
$60.9 million, which exceeded 200% of target. His division
also achieved Division ROWC of 69.5%, which exceeded 200%
of target. |
|
(5) |
|
Mr. Ostermanns compensation is paid in Euros and
reflects the Euro/U.S. Dollar exchange rate of 1.35/1.00 at
March 31, 2010. |
Fiscal
2011 Short-Term Cash Incentive Awards
As part of its annual review of the Companys 2010 AIP, on
March 24, 2010, the Committee approved the fiscal 2011
short-term cash incentive plan awards for named executive
officers under the 2010 AIP. Threshold, target and maximum goals
for Adjusted EBITDA, Adjusted EPS, divisional Adjusted EBITDA
and ROWC were established by the Committee based on the fiscal
2011 operating plan goals approved by the Board. In connection
with these fiscal 2011 awards, the Committee amended the
divisional goals of ROWC under the 2010 AIP by adjusting the
definition of working capital to mean the sum of accounts
receivable and inventory minus accounts payable.
23
The threshold, target and maximum payouts to the Companys
named executive officers for fiscal 2011 awards under the 2010
AIP are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold(1)
|
|
Target(2)
|
|
Maximum(3)
|
|
Phillip A. Damaska
|
|
$
|
100,000
|
|
|
$
|
200,000
|
|
|
$
|
400,000
|
|
Mitchell S. Bregman
|
|
$
|
83,200
|
|
|
$
|
166,400
|
|
|
$
|
332,800
|
|
Michael Ostermann(4)
|
|
$
|
130,579
|
|
|
$
|
261,158
|
|
|
$
|
522,315
|
|
|
|
|
(1) |
|
Assumes both division and consolidated corporate results are at
80% of target and the Adjusted Net Income threshold is met. |
|
(2) |
|
Assumes both division and consolidated corporate performance are
at target level. |
|
(3) |
|
Assumes both division and consolidated corporate performance are
at maximum level. |
|
(4) |
|
Mr. Ostermanns compensation is paid in Euros and
reflects the Euro/U.S. Dollar exchange rate of
1.35/1.00 at
March 31, 2010. |
On June 1, 2010, the Board approved a lump sum
discretionary payment of $300,000 to Mr. Ulsh. The payment
is in lieu of Mr. Ulshs target fiscal 2011 short-term
incentive plan amount for the period April 1, 2010 through
June 30, 2010. For fiscal 2011, Mr. Bolchs
threshold payout is $531,250, his target payout is $1,062,500,
and his maximum payout is $2,125,000. The Committee believes the
targets established for the named executive officers for fiscal
2011 awards under the 2010 AIP require significant performance
at the division and corporate level, particularly in light of
the current global economic downturn and uncertainty regarding
the timing of any corresponding economic recovery.
Long-Term
Equity Incentive Compensation
At its 2009 annual stockholders meeting, the Company
sought and received approval from its stockholders for the
adoption of the 2009 Plan. The 2009 Plan authorized the issuance
of up to four million options, restricted stock, restricted
stock units (RSUs) and performance unit awards, the
latter being payable in cash or stock. The Committee oversees
the administration of the 2009 Plan.
The Committee believes that long-term equity incentive
compensation issued under the 2009 Plan should be a significant
element of total compensation for the Companys named
executive officers because it is designed to align
managements performance with long-term stockholder value,
principally through the issuance of options and time vested
restricted stock awards.
Long-term equity incentive compensation is based, in part, on
recommendations from the Companys independent compensation
consultant and comparative market survey data and peer group
data. The Committees determination of the amount and
relative weight of equity awards as part of total compensation
is also based on the philosophy that, in light of the current
number of outstanding shares of common stock, average annual
equity awards to management should approximate 1% of those total
outstanding shares to avoid diluting the holdings of
non-employee stockholders. Consequently, the Committee may vary
the type and amount of long-term equity compensation to preserve
this ratio and avoid equity award rates that would prematurely
exhaust the 2009 Plans reserve of stock and options
available for future awards. Additionally, the Committee, based
upon the recommendation of the CEO, may provide interim awards
of long-term equity to employees in recognition of extraordinary
contributions.
The relative weighting of equity and cash performance units
within the long-term incentive plan is based on various factors,
including the number of remaining shares (options, restricted
stock, performance shares and RSUs) available for grant under
the 2009 Plan and the anticipated vesting rate for previous
grants. The Committee includes a performance unit payable in
cash in the annual long-term incentive compensation grants when,
in light of the prevailing price of the Companys common
stock on The NASDAQ Global Market, issuance solely of equity
would disproportionately reduce the number of remaining options,
restricted stock, performance shares and RSUs available for
grant under the 2009 Plan.
24
Long-term incentive awards have generally been set as a
percentage of base salary for the Companys named executive
officers, subject to annual review by the Committee, and payouts
on these long-term incentive awards, other than awards made to
the CEO and COO, have been targeted to a range between the
50th and 75th percentiles based on market survey data.
As discussed above, the Committee reduced the target range in
fiscal 2010 to target payouts for named executive officers,
other than the CEO and COO, under long-term incentive awards at
the 50th percentile based on market survey data.
In connection with these changes implemented in fiscal 2010, the
Committee examined market survey data and determined that
certain named executive officer long-term equity targets
exceeded the 75th percentile. Consequently, awards set
between 125% and 300% of base salary were reduced or increased
for certain named executive officers in order to more
effectively target long-term incentive award payouts closer the
50th percentile based on market survey data. In particular,
the Committee recommended, and the Board approved, a reduction
in target long-term equity compensation for
Messrs. Ostermann and Bregman from 125% to 100% of base
salary. The Committee also recommended, and the Board approved,
an increase to Mr. Damaskas award from 125% to 145%
of base salary. The Committee believes that additional
adjustments for other named executive officers will be
considered for the fiscal 2012 grants.
For fiscal 2009 and fiscal 2010, Mr. Ulshs long-term
equity incentive compensation award was set at 300% of base
salary, and Mr. OLearys long-term equity
incentive compensation award was set at 150% of base salary. As
compared to the Companys other named executive officers,
the long-term equity incentive awards for the CEO and COO are
set significantly higher as a result of their global
responsibilities and to ensure total compensation near the
75th percentile based on market survey data.
On May 4, 2009, the Board approved for the named executive
officers, fiscal 2010 long-term equity incentive compensation
awards. The Committee considered the reduction in the per-share
price of the Companys common stock since the May 2008
grant, as well as the limited number of restricted shares or RSU
awards remaining under the 2004 Plan, and the Committee, in
consultation with Towers Watson, developed a plan weighted
significantly on performance units payable in cash. For the CEO,
the Board approved an award equal to 300% of base salary
weighted between three types of awards: options, RSUs and a
performance unit cash award. The value of each award type is
equal to 100% of the CEOs fiscal 2010 base salary then in
effect. The performance unit cash award will vest on
June 30, 2010, and the stock option and RSU awards will
vest on the later of June 30, 2010 or the last date of
Mr. Ulshs employment with the Company. For a further
description of Mr. Ulshs awards under the Ulsh
Agreement, see pp. 29-30 of this proxy statement. With regard to
other named executive officers, the Board reviewed the amount of
shares remaining in the 2004 Plan and the Committees
targeted burn rate objective of approximately 1% of outstanding
shares of common stock, and determined that the fiscal 2010
long-term equity incentive compensation awards should provide
for an allocation of 70% performance unit cash awards and 30%
options, the terms of which are described below under the
captions Options and Performance Unit
Awards. No restricted shares or RSUs were delivered to
management.
On March 25, 2010, the Board approved for the named
executive officers, fiscal 2011 long-term equity incentive
compensation awards. The Committee sought to limit equity awards
to approximately 1% of outstanding shares of common stock. The
Committee determined that a grant comprised solely of
performance-based and service-based share awards valued at
$10.00 per share would result in the issuance of approximately
1.1% of outstanding shares. With regard to named executive
officers other than the CEO, the Board determined that the
fiscal 2011 long-term equity incentive compensation awards
should provide for an allocation of two-thirds performance share
awards and one-third service-based restricted share awards, the
terms of which are described below under the captions
Restricted Stock,
Restricted Stock Units and
Performance Share Awards. The Committee
did not provide the CEO with a fiscal 2011 award at this time in
light of Mr. Ulshs pending retirement.
25
Options
The Committee occasionally grants options as an element of the
named executive officers equity-based awards. Under the
2009 Plan, options vest over a three-year period and must be
exercised within ten years of the grant date. An options
value increases or decreases in connection with fluctuations in
the price of the Companys common stock. Consequently, the
Committee believes that the option awards align executives
interests with long-term stockholder return.
The number of options granted is based, in part, on the
theoretical value of the options. The Committee has
traditionally used the Black-Scholes Valuation Model
(BSVM), a common fair value model. The BSVM uses a
complex calculation designed to provide the theoretical value of
an option at the date of grant. The BSVM calculates a
probability distribution of future stock prices at a future
exercise date by using an expected return equal to the risk-free
rate of return. The return varies with the volatility of the
security calculated as of the date of grant.
Probability-weighted future payouts are then discounted back to
present day dollars based on a risk-free rate of return. The
parameters used in valuations include:
|
|
|
|
|
|
|
|
|
|
|
|
Volatility:
|
|
The tendency of the market price of the security underlying the
option to fluctuate either up or down.
|
|
|
|
|
|
|
|
Risk Free Rate:
|
|
The theoretical rate of return attributed to an investment with
zero risk.
|
|
|
|
|
|
|
|
Term:
|
|
The expected life of a stock option held by a Company employee
before exercise or cancellation.
|
|
|
|
|
|
|
|
Grant Price:
|
|
Market value of stock price on day stock option was granted.
|
In light of the Companys current stock price and the
Committees targeted annual burn rate objective of
approximately 1% of the Companys outstanding shares, the
Committee did not issue options for fiscal 2011.
Restricted
Stock
The Committee occasionally grants shares of restricted stock as
a component of annual long-term equity awards. The Committee
believes that the issuances of restricted stock that are not
based on performance criteria should represent a small
percentage of an overall equity award. For fiscal 2011, the
Committee issued long-term equity awards comprised of one-third
restricted stock and two-thirds performance share awards
described below. The Committee believes restricted stock is a
useful tool for employee retention and established the vesting
schedule described below for such awards. As a result of the
current economic environment, the Committee used a per-share
value of $10.00 in determining the number of shares awarded to
named executive officers. Although the closing stock price on
March 25, 2010, the date the restricted stock and
restricted was granted was $5.76, the $10.00 value resulted in
an annual burn rate of approximately 1.1% of outstanding shares.
The restricted stock vests ratably over three years, but the
Committee will continue to evaluate the appropriateness of cliff
vesting or other vesting schedules used by the Companys
peer group and market survey data.
Restricted
Stock Units
The Incentive Plans permit the Board to award RSUs. The RSUs
allow participants to defer the recognition of ordinary income
associated with long-term equity incentive compensation awards
until all RSUs have fully vested. Prior to fiscal 2011. RSUs
vested ratably over a five-year period, but shares of common
stock will not be delivered to the employees until the end of
the full vesting period. If the recipients employment with
the Company terminates prior to the end of the five-year period,
the employee will receive stock certificates for any vested RSUs
at the date of termination. As noted above, RSUs were granted to
the CEO as fiscal 2010 long-term incentive compensation. For
fiscal 2011, the Committee also granted RSUs to
Mr. Ostermann, a
non-U.S. stock
plan participant, as long-term incentive compensation in lieu of
restricted stock. As with awards of restricted stock to
U.S. participants, the Committee established a $10.00 per
share
26
value in determining the number of RSUs to award as fiscal 2011
long-term incentive compensation. The RSUs will also vest
ratably over three years.
Performance
Cash Awards
Performance cash awards provide named executives officers with
the opportunity to receive cash compensation upon the
satisfaction of specific financial objectives established by the
Committee for a specified performance period, generally three
years.
The Committee believes that, where possible, long-term incentive
compensation awards should be weighted toward the issuance of
equity awards rather than cash awards to align performance goals
with stockholder value. For fiscal 2010, the Board approved
performance cash awards representing 70% of each named executive
officers long-term equity incentive compensation value,
except the CEO. The performance cash award is based on total
stockholder return during the three-year period commencing
April 1, 2010. The initial price for determining total
stockholder return was the closing price of the Companys
common stock on the grant date or the average closing price of
the Companys common stock for the ten (10) trading
days prior to the grant date, whichever was greater.
Consequently, the base measurement price was set at $6.29, the
closing price of the Companys common stock on May 4,
2009. For each $0.01 increase in the Companys common stock
price from $6.29, each named executive officer will receive
$0.01 of his target performance unit cash award. The performance
unit cash award is capped at the achievement of 200% of the
target, or $18.87 per share. The Company must meet a three-year
cumulative Consolidated Corporate Adjusted EBITDA threshold
before any payment can be earned.
The Board approved a performance cash award for the CEO that
requires specific consolidated corporate performance goals based
on Adjusted EBITDA and Adjusted EPS (as defined on
page 22). Payment of the performance unit cash award will
be contingent on the achievement of these targets for these two
metrics for the period ended March 31, 2010. Payment of the
performance unit cash award will only be made after conclusion
of the performance period as follows: (1) 80% of the
performance unit award upon achievement of 75% of the targets,
(2) 100% of the performance unit award upon achievement of
100% of the targets and (3) up to 200% of the performance
unit award upon achievement of 130% of the targets. In setting
the threshold and target consolidated corporate Adjusted EBITDA
and Adjusted EPS levels, the Board believes the targets require
significant operational and financial performance in light of
the current global economy.
The target and maximum fiscal 2010 performance unit cash awards
to the Companys named executive officers are as follows:
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Target(1)(3)
|
|
Maximum(2)(3)(4)
|
|
Gordon A. Ulsh
|
|
$
|
950,000
|
|
|
$
|
1,900,000
|
|
E.J. OLeary
|
|
$
|
577,500
|
|
|
$
|
1,155,000
|
|
Phillip A. Damaska
|
|
$
|
306,250
|
|
|
$
|
612,500
|
|
Mitchell S. Bregman
|
|
$
|
291,200
|
|
|
$
|
582,400
|
|
Michael Ostermann(4)
|
|
$
|
342,563
|
|
|
$
|
685,125
|
|
|
|
|
(1) |
|
Assumes achievement of target for both metrics for the CEO and
100% increase in stock price for other NEOs. While there is no
specified Threshold for other NEOs, Mr. Ulsh receives a
Threshold Award of $760,000 if the Company achieves 75% of
Target for both metrics. |
|
(2) |
|
Assumes 200% of Target for both metrics for the CEO and 200%
increase in stock price for other NEOs. |
|
(3) |
|
Mr. Ulshs award requires achievement of the target as
of March 31, 2010, consistent with the expiration of his
employment agreement. Performance for the other NEOS relates to
share price appreciation through March 31, 2012. |
|
(4) |
|
Mr. Ostermanns compensation is paid in Euros and
reflects the Euro/U.S. Dollar exchange rate of
1.35/1.00 at
March 31, 2010. |
|
(5) |
|
Upon his retirement, Mr. Ulsh will be entitled to a payout
under the 2010 AIP. On the recommendation of the Committee, the
Board exercised negative discretion in setting
Mr. Ulshs payout under his fiscal 2010 |
27
|
|
|
|
|
performance cash award at $806,498. Consequently, the portion of
Mr. Ulshs award subject to the Adjusted EPS metric
was reduced to the threshold level. |
Performance cash awards were not granted for fiscal 2011 awards.
Performance
Share Awards
On March 25, 2010, the Board approved fiscal 2011
performance share awards representing two-thirds of each named
executive officers long-term equity incentive compensation
value. The performance share award will be based on two metrics:
total stockholder return relative to the Russell
2000®
index, comprising two-thirds of the performance share award, and
cumulative consolidated earnings before interest and taxes
(EBIT), comprising one-third of the performance
share award. The initial price for determining total stockholder
return will be $6.02, representing the
20-day
opening price of the Companys common stock for the period
beginning on April 1, 2010. The final price will be based
on the average closing price for the twenty trading days prior
to, and including, March 29, 2013. Named executive officers
will receive 16.67% of their target performance share awards if
the Company performs at the 25th percentile relative to the
Russell
2000®
component companies. Each named executive officers will receive
66.67% of their total target performance share award if the
Company meets or exceeds the 75th percentile of performance of
the Russell
2000®
component companies. For each five percent improvement in the
Companys performance relative to the Russell
2000®
component companies between the 25th percentile and 75th
percentile, named executive officers will receive approximately
an additional 5% of their target performance share award. No
awards above target will be provided to named executive officers
for performance above the 75th percentile and no award will be
provided to named executive officers if the Companys
performance over the three year period ending March 29,
2013 is below the 25th percentile relative to the Russell 2000
component companies.
The Board established a three-year cumulative consolidated EBIT
performance target based on the fiscal 2011 operating plan as a
base year and assumptions for improvements in the fiscal 2012
and 2013 operating plans. Named executive officers will receive
16.67% of their target performance share awards if the Company
achieves 80% of the target cumulative EBIT target and will
receive 33.33% of their total target performance share award if
the Company meets 100% of its target cumulative EBIT goal. No
awards above target will be provided to named executive officers
for performance above target cumulative EBIT. Performance
between 80% and 100% of the target cumulative EBIT goal will
result in a proportional payment.
The Company must also meet a three-year cumulative consolidated
corporate EBIT threshold before any shares can be earned under
the fiscal 2011 performance share awards.
Personal
Benefits and Perquisites
The Companys named executive officers are provided with
disability insurance, as well as term life insurance equal to
150% of base salary, consistent with the Company sponsored
program provided to other covered employees. These insurance
benefits are also provided to all of the Companys other
U.S. salaried employees.
Named executive officers are also provided with health
insurance, the cost of which is substantially assumed by the
Company, consistent with the Company sponsored program provided
to other covered employees and their families. Employee
contributions for individual and family coverage are set
annually by the Benefits Administration Committee. Medical
evacuation insurance is provided for the Companys named
executive officers, as well as to certain other senior level
employees with significant international travel. This benefit is
extended to the spouse of a named executive officer if the
executive is on a long-term assignment living outside his or her
home country.
Named executive officers receive a monthly automobile allowance
between $750 and $1,000.
Effective June 30, 2010, the Company forfeited its
membership at a country club near the Companys
headquarters in Georgia. Previously, Messrs. Ulsh and
OLeary had exclusive use of this membership.
28
Post-Termination
Compensation
401(k)
Plan
The Company maintains an employee funded 401(k) plan under which
the Company matches up to 50% of the employees
contributions to the 401(k) plan up to the first 6% of such
employees base salary, subject to the maximum contribution
levels established by the IRS. The Companys matching
contributions vest ratably over five-years. Effective
January 1, 2008, the Company amended its 401(k) plan to
create a safe harbor plan for all salaried U.S. workers, as
well as hourly workers not subject to collective bargaining
agreements, to provide for Company contributions equal to 3% of
the employees annual base salary, regardless of whether
the employee contributes to the 401(k) plan. As a result of the
limited participation of those employees eligible to participate
in the 401(k) plan, the safe harbor plan was adopted so that
individuals defined as highly compensated employees
under applicable IRS and the United States Department of Labor
standards, could make the maximum individual contributions to
their 401(k) accounts. The Company contributions to the safe
harbor plan, which are made at the time of each bi-weekly pay
period and are allocated pursuant to the employees
existing investment elections, are 100% vested at the time of
the contribution. Effective September 1, 2009, the Company
temporarily suspended the Company match of participant
contributions to the 401(k) plan. Effective April 1, 2010,
the Company resumed matches.
Cash
Balance and Pension Plans
The Company also maintains a Cash Balance Plan, under which the
Company contributed to the Plan 5% of each
U.S. employees annual base salary. Contributions to
an employees Cash Balance Plan vest equally over five
years. Based on changes to ERISA regulations, effective
January 1, 2008, the Company reduced the vesting period for
the Companys match to three years with 20% vested after
the first year, 40% vested after two years and 100% vested after
three years. The Companys contributions to the Cash
Balance Plan were frozen as of May 15, 2006. The Committee
will continue to evaluate the Cash Balance Plan based on future
competitive market conditions for employee compensation.
GNB Industrial, which the Company acquired in 2000, operated a
pension plan. Mr. Bregman and Ms. Hatcher participated
in the plan while employees of GNB. This plan is managed by the
Company but additional contributions to the plan were frozen as
of December 31, 2000.
Employment
Agreements and Severance Arrangements
The Committee recommends to the Board any retention and
severance agreement for the Companys CEO and approves such
agreements for other named executive officers. The Company
currently has formal employment agreements only with
Mr. Ulsh, Mr. Bolch, and Mr. Ostermann. These
employment agreements establish certain compensation terms as
well as the terms of any severance arrangements. The Committee
has not authorized employment agreements with any other named
executive officers, but may authorize severance agreements with
other executives upon their departure from the Company. While
the Company seeks to obtain non-competition and non-solicitation
agreements when negotiating these severance agreements, such
matters are left to the discretion of management in negotiating
the individual terms of a separation agreement.
Gordon
A. Ulsh Employment Agreement
The terms of Mr. Ulshs employment are governed by his
employment agreement (as amended or restated from time to time,
the Ulsh Agreement). In connection with amendments
agreed to on January 31, 2008, the Ulsh Agreement
establishes a twenty-seven month employment period from
April 1, 2008 through June 30, 2010. The Ulsh
agreement could have been extended for an additional twelve
months by mutual agreement of the parties prior to
December 31, 2009. On May 31, 2010, Mr. Ulsh
agreed to continue to serve as CEO for a period not to extend
beyond July 31, 2010. Mr. Ulshs employment with
us terminated on July 26, 2010, and he also resigned from
the Board effective July 26, 2010.
The Ulsh Agreement provided for a base salary of $950,000 for
the period April 1, 2008 through March 31, 2009 and no
less than $1,000,000 for the period April 1, 2009 through
June 30, 2010. However, at
29
the request of Mr. Ulsh, on January 28, 2009, the
Board of Directors agreed to amend the Ulsh Agreement to delay
Mr. Ulshs base salary increase until such time as
Mr. Ulsh notified the Board of Directors.
Mr. Ulshs target under our short-term cash incentive
plan was also increased to 125% of base salary as part of these
amendments. On August 31, 2009, an additional amendment to
the Ulsh Agreement reduced his base salary to $855,000 for the
period September 1, 2009 though February 28, 2010, and
Mr. Ulsh subsequently agreed to a base salary of $950,000
for the period from February 29, 2010 until June 30,
2010. On November 3, 2009, Mr. Ulsh agreed to an
amendment to the Ulsh agreement ceding his title as President to
Mr. OLeary in conjunction with
Mr. OLearys appointment as President.
The Ulsh agreement provides compensation upon various
termination events in exchange for a general release of claims.
Upon resignation for good reason or termination by the Company
without cause, Mr. Ulsh would receive the following:
(1) earned but unpaid salary and unused vacation,
(2) earned but unpaid short-term cash incentive awards from
the fiscal year prior to the fiscal year in which termination
occurs, (3) a pro-rated portion of the current fiscal
years short-term cash incentive award (based on the number
of days employed during such fiscal year) at the time the
short-term cash incentive award is customarily paid, (4) a
lump sum payment equal to 200% of the sum of annual base salary
and target cash incentive award, (5) reimbursement of
reasonable business expenses incurred up to the date of
termination, and (6) COBRA premiums until the earlier of
18 months following termination and the time at which
Mr. Ulsh is no longer eligible for such COBRA benefits.
Reduction in base salary, short-term cash incentive award or
benefits that qualify as good reason would not be used to
calculate the compensation due to Mr. Ulsh.
In the event Mr. Ulshs employment is terminated for
cause or he resigns without good reason, Mr. Ulshs
severance is limited to earned but unpaid salary and unused
vacation, earned but unpaid short-term cash incentive award from
the fiscal year prior to the fiscal year in which termination
occurs and unreimbursed reasonable business expenses measured up
to the date of termination. If Mr. Ulshs termination
is the result of permanent disability or death, he or his estate
would receive all of the foregoing payments, as well as any
short-term cash incentive awards earned pro rata through the
date of termination.
Pursuant to Mr. Ulshs employment agreement,
good reason is defined as: (1) a material
adverse change in the executives title, role, or
responsibilities, which shall include his failure to be elected
as a member of the Board, (2) a reduction in base salary or
other fixed compensation or failure to pay or provide such
compensation within 30 days when due, (3) a
requirement that the executive report to anyone other than the
Board, or (4) a material adverse change in any pension,
medical, health, savings, life insurance, or accident or
disability plan, except for changes affecting all senior
executives.
The Ulsh Agreement also includes a confidentiality agreement, as
well as provisions governing non-competition and
non-solicitation of employees, clients and customers for two
years following the date of termination.
The Ulsh Agreement accelerates the dates on which certain
incentive awards previously granted under the 2004 Plan vest and
become non-forfeitable. Previously awarded shares of restricted
stock that have not yet vested will vest and become
non-forfeitable on June 30, 2010, and previously awarded
RSUs that have not yet vested will vest and become
non-forfeitable on the last day of Mr. Ulshs
employment. Future awards of options, restricted stock and RSUs
will vest and become nonforfeitable on the last day of
Mr. Ulshs employment. In each case, subject to a
limited exception in the event of Mr. Ulshs death or
disability, any unrestricted share certificates will be issued
six months after any restricted stock or RSU awards become
non-forfeitable. All outstanding options will be exercisable for
a period of three years following the last day of
Mr. Ulshs employment.
On July 21, 2010, the Company entered into a side letter
(Side Letter) to the Ulsh Agreement to address
certain potential adverse tax consequences resulting from
Mr. Ulshs agreement to extend his employment to
July 26, 2010. Under the Side Letter, certain shares
underlying awards held by Mr. Ulsh are to be delivered six
months after the conclusion of his employment with the Company.
In light of Mr. Ulshs agreement to extend his service
as Chief Executive Officer through July 26, 2010 rather
than the previously expected June 30, 2010, the
certificated shares will no longer be delivered on
December 31, 2010, but instead will be delivered on
January 26, 2011. In light of possible higher tax rates
that may become effective
30
January 1, 2011, Mr. Ulshs marginal tax rate may
rise, resulting in higher taxable income for the shares of
common stock that will be delivered on January 26, 2011
than if they had been delivered on December 31, 2010.
Consequently, the Board approved the the Side Letter to address
any potential higher tax obligations relating to his extended
service.
Under the terms of the Side Letter, Mr. Ulsh will receive
an additional payment calculated based on the income recognized
as a result of the delivery of the 278,421 shares of common
stock multiplied by the difference between Mr. Ulshs
2010 and 2011 marginal tax rate. The additional payment
calculation will be limited to the closing price of the
Companys common stock at December 31, 2010 in the
event the price of the Companys common stock increases
between such date and January 26, 2011. Additionally, if
Mr. Ulshs marginal tax rate for 2011 does not
increase from 2010 levels, no additional payment will be
provided. For example, under the terms of the Side Letter,
Mr. Ulsh would be entitled to an additional payment of
$182,439, assuming: (1) a closing price as of $5.62 per
share for the Companys common stock on the applicable
valuation date which has been assumed as the closing price on
July 19, 2010, the Record Date, and (2) an increase in
Mr. Ulshs 2011 marginal tax rate of 4.6%. Any
additional payment actually made by the Company to Mr. Ulsh
under the terms of the Side Letter will depend on the actual
closing price of the Companys common stock on the
applicable valuation date and any actual increase in
Mr. Ulshs 2011 marginal tax rates.
James
R. Bolch Employment Agreement
Mr. Bolch serves as our President and Chief Executive
Officer pursuant to an employment agreement dated June, 10,
2010. The agreement provides for Mr. Bolchs
employment for a two-year period which will commence on
July 26, 2010 (subject to earlier termination under certain
circumstances as described below)(the Bolch Commencement
Date). At the end of the two-year period and each
anniversary thereafter, the agreement provides that the term
will be automatically extended for one additional year unless
either party provides ninety day advance written notice of
non-renewal.
Mr. Bolchs employment agreement provides for base
salary of $850,000 for the first year and $900,000 for the
second year. Mr. Bolch will receive target annual
short-term incentive compensation of 125% of base salary and an
annual long-term incentive grant of 300% of base salary grants
of restricted stock under the Companys 2009 Plan.
Mr. Bolchs employment agreement includes a cash
inducement of $4,213,200 for joining the Company, $1,500,000
paid on the Bolch Commencement Date, $1,000,000 to be paid on
July 26, 2011 and $1,713,200 to be paid on
December 31, 2012, subject to Mr. Bolchs
continued employment through such date (collectively, the
Inducement Bonus). Mr. Bolch will be required
to re-pay a pro-rata portion of any of the Inducement Bonus
already received if he does not remain employed past
July 26, 2012.
On the Bolch Commencement Date, Mr. Bolch will be granted
an inducement equity award of 750,000 shares of restricted
stock, which will vest on the third anniversary of the Bolch
Commencement Date. Mr. Bolch will also receive a fiscal
2011 LTIP award that includes 84,915 shares of restricted
stock under the Companys 2009 Stock Incentive Plan that
vest ratably over three years and 170,085 performance shares
under the Exide Technologies 2009 Stock Incentive Plan.
Mr. Bolchs employment agreement also provides
compensation upon various termination events in exchange for a
general release of claims. Upon resignation for good reason or
termination by the Company without cause, Mr. Bolch will
receive a lump sum cash payment equal to 225% of base salary for
the remaining portion of his term of employment (but not less
than twelve months of base salary), a pro-rata share of the
annual bonus that would have been paid had he remained employed
through the end of the fiscal year in which such termination
occurs, any unpaid portion of the Inducement Bonus, immediate
vesting of the inducement equity award, any earned, but unpaid
vacation pay, reimbursement of reasonable business expenses
incurred up to the date of termination, and premiums above those
paid by active employees under the Companys medical,
vision and dental plans until the earlier of 18 months
following termination or the time at which Mr. Bolch
becomes eligible for such benefits from another employer.
31
In the event Mr. Bolchs employment is terminated for
cause or he resigns without good reason, Mr. Bolchs
severance is limited to earned but unpaid salary and unused
vacation, earned but unpaid short-term cash incentive award from
the fiscal year prior to the fiscal year in which termination
occurs and unreimbursed reasonable business expenses. If
Mr. Bolchs termination is the result of permanent
disability or death, he or his estate receives all of the
foregoing payments, as well as any unpaid portion of the
Inducement Bonus or unvested inducement equity award.
Mr. Bolchs agreement also includes a confidentiality
agreement, as well as provisions governing non-compete and
non-solicitation of employees, clients and customers for two
years following the date of termination.
Pursuant to Mr. Bolchs employment agreement,
good reason is defined as: (1) a material
adverse change in the executives title, role, or
responsibilities, (2) a reduction in base salary,
(3) a requirement that the executive report to anyone other
than the Board, or (4) relocation of Mr. Bolchs
place of employment more than fifty (50) miles from the
executive offices in Milton, Georgia.
Michael
Ostermann Employment Agreement
Mr. Ostermann entered into an employment agreement (the
Ostermann Agreement), with Exide Technologies GmbH
on January 1, 2009, when he commenced employment as the
Companys President Transportation Europe. The
Ostermann agreement sets forth Mr. Ostermanns initial
base salary of 290,000, which is subject to adjustment
annually. Mr. Ostermanns base salary for fiscal 2010
increased to 365,000 effective March 1, 2010 upon his
promotion to President of Europe which included Transportation
and Industrial Divisions . The Ostermann Agreement includes
terms related to the provision of sick pay, a company car,
accident and death insurance policies, and annual pension plan
payments. The Company also agreed to permit Mr. Ostermann
to participate in the Companys long term incentive plan
and other incentive plans. The Ostermann Agreement is terminable
(1) upon six months advance written notice from Exide
Technologies GmbH, (2) upon the resolution of Exide
Technologies GmbHs shareholders, (3) upon the
attainment of age 65 by Mr. Ostermann, (4) upon
Mr. Ostermanns resignation, or (5) immediately,
for cause or behavior-related grounds if Mr. Ostermann is
subject to the provisions of the German Termination Protection
Act. Upon termination of Mr. Ostermanns employment by
the Company without cause, Mr. Ostermann is entitled to the
payment of one full year base salary. The Ostermann Agreement
includes confidentiality, non-competition and non-solicitation
provisions.
Other
Severance Arrangement
The Companys other named executive officers are generally
provided severance in an amount equal to twelve months salary
paid over a twelve-month period following the date of
termination of employment for any reason other than a for
cause termination.
Incentive
Plans
The Companys named executive officers, as well as all
other employees who receive grants of options and restricted
stock under the Companys Incentive Plans, are provided
with protections in the event of a change in control of the
Company, as defined in the Incentive Plans. Pursuant to the
various award agreements provided to employees, all unvested
options and restricted shares will fully vest if, in connection
with or within twelve months following the consummation of a
change in control, an employee is involuntarily terminated by
the successor company or business. Additionally, regardless of
whether a named executive officer is terminated upon a change in
control, any performance cash award will be paid at the
achievement level at the time of the change in control prorated
by the portion of the performance period in which the named
executive officer worked.
Tax and
Accounting Considerations
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public corporations for
compensation over $1,000,000 paid for any fiscal year to the
corporations chief executive officer and the
32
four other most highly compensated executive officers as of the
end of any fiscal year. However, the statute exempts qualifying
performance-based compensation from the deduction limit if
certain requirements are met.
The Committee generally designs components of executive
compensation to ensure full deductibility. The Committee
believes, however, that stockholder interests are best served by
not restricting the Committees discretion and flexibility
in crafting compensation programs, even though such programs may
result in certain non-deductible compensation expenses.
Accordingly, the Committee has, from time to time, approved
elements of compensation for certain officers that are not fully
deductible, and may do so in the future in appropriate
circumstances.
Beginning on April 1, 2006, the Company began accounting
for stock-based compensation, including awards made under the
2004 Plan, in accordance with Statement of Financial Accounting
Standards No. 123R Share Based Payment
(FAS 123R).
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the above
Compensation Discussion and Analysis with the Companys
management. Based on the review and discussions, the
Compensation Committee recommended to the Companys Board
that the Compensation Discussion and Analysis be included in the
proxy statement.
Members of the Compensation
Committee1
Michael R. DAppolonia (Chair)
David S. Ferguson
John P. Reilly
1 Mr. Lash
served on the Compensation Committee until his resignation from
the Board effective May 27, 2010.
33
FISCAL
2010 SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary ($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)(6)
|
|
|
($)(7)
|
|
|
($)(8)
|
|
|
($)
|
|
|
|
|
|
Gordon A. Ulsh,
|
|
|
2010
|
|
|
$
|
902,500
|
|
|
$
|
949,998
|
|
|
$
|
705,352
|
|
|
$
|
1,512,821
|
|
|
$
|
2,093
|
|
|
$
|
26,197
|
|
|
$
|
4,098,961
|
|
|
|
|
|
Chief Executive Officer
|
|
|
2009
|
|
|
$
|
950,000
|
|
|
$
|
950,000
|
|
|
$
|
880,202
|
|
|
$
|
1,464,807
|
|
|
$
|
795
|
|
|
$
|
38,944
|
|
|
$
|
4,284,748
|
|
|
|
|
|
|
|
|
2008
|
|
|
$
|
891,667
|
|
|
|
|
|
|
|
|
|
|
$
|
1,738,140
|
|
|
$
|
875
|
|
|
$
|
34,650
|
|
|
$
|
2,665,332
|
|
|
|
|
|
Phillip A. Damaska,
|
|
|
2010
|
|
|
$
|
332,500
|
|
|
$
|
222,988
|
|
|
$
|
97,449
|
|
|
$
|
99,104
|
|
|
$
|
3,734
|
|
|
$
|
23,300
|
|
|
$
|
779,074
|
|
|
|
|
|
Executive Vice President and
|
|
|
2009
|
|
|
$
|
350,000
|
|
|
$
|
109,369
|
|
|
$
|
304,020
|
|
|
$
|
196,772
|
|
|
$
|
(793
|
)
|
|
$
|
26,085
|
|
|
$
|
985,453
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
$
|
290,083
|
|
|
$
|
32,550
|
|
|
|
|
|
|
$
|
167,711
|
|
|
$
|
(110
|
)
|
|
$
|
15,765
|
|
|
$
|
505,999
|
|
|
|
|
|
Edward J. OLeary,
|
|
|
2010
|
|
|
$
|
522,500
|
|
|
$
|
362,491
|
|
|
$
|
183,763
|
|
|
$
|
201,653
|
|
|
$
|
3,695
|
|
|
$
|
28,777
|
|
|
$
|
1,302,879
|
|
|
|
|
|
President and Chief
|
|
|
2009
|
|
|
$
|
521,708
|
|
|
$
|
181,875
|
|
|
$
|
505,532
|
|
|
$
|
404,320
|
|
|
$
|
(629
|
)
|
|
$
|
37,768
|
|
|
$
|
1,650,574
|
|
|
|
|
|
Operating Officer(1)
|
|
|
2008
|
|
|
$
|
437,892
|
|
|
|
|
|
|
|
|
|
|
$
|
469,901
|
|
|
$
|
(182
|
)
|
|
$
|
33,662
|
|
|
$
|
941,273
|
|
|
|
|
|
Mitchell S. Bregman,
|
|
|
2010
|
|
|
$
|
316,160
|
|
|
$
|
146,226
|
|
|
$
|
92,663
|
|
|
$
|
36,233
|
|
|
$
|
105,772
|
|
|
$
|
23,437
|
|
|
$
|
720,491
|
|
|
|
|
|
President Industrial
|
|
|
2009
|
|
|
$
|
330,133
|
|
|
$
|
100,001
|
|
|
$
|
277,958
|
|
|
$
|
226,719
|
|
|
$
|
(28,554
|
)
|
|
$
|
25,392
|
|
|
$
|
931,649
|
|
|
|
|
|
Energy Americas
|
|
|
2008
|
|
|
$
|
320,000
|
|
|
|
|
|
|
|
|
|
|
$
|
422,159
|
|
|
$
|
(8,775
|
)
|
|
$
|
20,550
|
|
|
$
|
753,934
|
|
|
|
|
|
Michael Ostermann,
|
|
|
2010
|
|
|
$
|
267,937
|
|
|
$
|
241,696
|
|
|
$
|
107,111
|
|
|
$
|
402,331
|
|
|
|
|
|
|
$
|
203,949
|
|
|
$
|
1,223,023
|
|
|
|
|
|
President Exide Europe(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Ulsh retired effective July 26, 2010.
Mr. OLeary retired from the Company effective
June 16, 2010. |
|
(2) |
|
Mr. Ostermanns compensation is paid in Euros and
reflects the Euro/U.S. Dollar exchange rate of
1.35/1.00 at
March 31, 2010. |
|
(3) |
|
Messrs. Ulsh, OLeary, Bregman and Damaska each agreed
to a voluntary 10% reduction in base salary for the period
beginning September 1, 2009 and ending on February 28,
2010. Effective March 1, 2010, Mr. Ostermanns
base salary was increased to 365,000. Effective
June 1, 2010, Mr. Damaskas salary was increased
to $400,000. See Compensation Discussion and
Analysis Elements of Compensation Base
Salary. |
|
(4) |
|
In accordance with recent changes in the SECs disclosure
rules, the amounts reported in the Stock Awards
column of the table above represent the grant date fair value of
the stock awards granted for each year in accordance with
ASC 718. The SECs disclosure rules previously
required that we based on the amount recognized during the
corresponding year for financial statement reporting purposes
with respect to these awards. The recent changes in the
SECs disclosure rules require that we present the stock
award amounts in the applicable column of the table using the
grant date fair value of the awards granted during the
corresponding year (regardless of the period over which the
awards are scheduled to vest) and, therefore the amounts
reported in the table above for stock awards in 2009 and 2008
differ from the amounts previously reported in our Summary
Compensation Table for these years. Amounts for performance
share awards included in the Stock Awards column
above reflect the most probable outcome award value at the date
of grant in accordance with ASC 718. If the performance
share awards were computed at the highest performance levels,
the following mounts would be included in the table for each
named executive officer with respect to such performance share
awards. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share
|
|
|
|
|
Awards at the Highest
|
Name
|
|
Year
|
|
Performance Level ($)
|
|
E.J. OLeary
|
|
|
2010
|
|
|
$
|
309,650
|
|
Phillip A. Damaska
|
|
|
2010
|
|
|
$
|
190,480
|
|
Mitchell S. Bregman
|
|
|
2010
|
|
|
$
|
124,913
|
|
Michael Ostermann
|
|
|
2010
|
|
|
$
|
206,463
|
|
|
|
|
|
|
Assumptions used in calculation of these amounts are included in
Note 9 of the Companys financial statements in our
Annual Report on
Form 10-K
for the fiscal years ended March 31, 2010, March 31,
2009 and March 31, 2008. |
|
(5) |
|
In accordance with recent changes in the SECs disclosure
rules, the amounts reported in the Option Awards
column above represent the grant date fair value of the option
awards granted in each year in accordance with ASC 718. The
SECs disclosure rules previously required that we based on
the amount |
34
|
|
|
|
|
recognized during the corresponding year for financial statement
reporting purposes with respect to these awards. The recent
changes in the SECs disclosure rules require that we
present the option award amounts in the applicable column of the
table using the grant date fair value of the awards granted
during the corresponding year (regardless of the period over
which the awards are scheduled to vest) and, therefore the
amounts reported in the table above for option awards in 2009
and 2008 differ from the amounts previously reported in our
Summary Compensation Table for these years. Assumptions used in
calculating these amounts are included in Note 9 of the
Companys financial statements in our Annual Report on
Form 10-K
for the fiscal years ended March 31, 2010. |
|
(6) |
|
Payments made in fiscal 2010 in this column represent awards
granted under the fiscal 2010 AIP, which were paid on
June 14, 2010, and performance cash award paid to
Mr. Ulsh on June 14, 2010. Payments made in fiscal
2009 in this column represent awards granted under the fiscal
2009 EP Plan, which was paid on June 12, 2009 and
performance unit cash awards granted on September 21, 2006
and paid on June 23, 2009. Fiscal 2008 payments include
awards under our fiscal 2008 EP Plan which was paid on
June 12, 2008 and performance unit cash awards granted on
November 29, 2005 that were paid on June 17, 2008. For
additional information regarding the 2010 AIP and performance
unit cash awards, see pp.
22-23 and
27-28, respectively, of the CD&A above. This column also
includes payments approved in February 2008 and paid in fiscal
2009 to the named executive officers resulting from the decision
to increase various stock option exercise prices to address
Internal Revenue Code Section 409A. |
|
(7) |
|
For fiscal 2008 the Companys change in pension values are
valued at December 31, 2008. Consistent with the
Companys adoption of FAS 158, the fiscal 2010 and
2009 calculation is measured at March 31, 2010 and
March 31, 2009, respectively, the end of the fiscal year. |
|
(8) |
|
The following table describes each component of the All
Other Compensation column in the Summary Compensation
Table for fiscal 2010. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions to
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
Tax
|
|
Retirement and
|
|
Expatriate
|
|
|
|
|
|
|
|
|
Club Dues
|
|
Reimbursement
|
|
Reimbursements
|
|
401(k) Plans
|
|
Payments
|
|
|
|
|
Name
|
|
Fiscal Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)(a)
|
|
($)(b)
|
|
Total ($)
|
|
|
|
Gordon A. Ulsh
|
|
|
2010
|
|
|
$
|
7,547
|
|
|
$
|
12,000
|
|
|
|
|
|
|
$
|
6,650
|
|
|
|
|
|
|
$
|
26,197
|
|
|
|
|
|
Phillip A. Damaska
|
|
|
2010
|
|
|
|
|
|
|
$
|
11,400
|
|
|
|
|
|
|
$
|
11,900
|
|
|
|
|
|
|
$
|
23,300
|
|
|
|
|
|
Edward J. OLeary
|
|
|
2010
|
|
|
$
|
7,077
|
|
|
$
|
11,400
|
|
|
|
|
|
|
$
|
10,300
|
|
|
|
|
|
|
$
|
28,777
|
|
|
|
|
|
Mitchell S. Bregman
|
|
|
2010
|
|
|
|
|
|
|
$
|
11,400
|
|
|
|
|
|
|
$
|
12,037
|
|
|
|
|
|
|
$
|
23,437
|
|
|
|
|
|
Michael Ostermann(c)
|
|
|
2010
|
|
|
|
|
|
|
$
|
23,830
|
|
|
|
|
|
|
$
|
64,260
|
|
|
$
|
115,858
|
|
|
$
|
203,949
|
|
|
|
|
|
|
|
|
(a) |
|
Mr. Ostermanns benefits in this column include
$30,510 contributions to social insurance plan provided under
common law and a payment of $33,750 to his private pension plan
established pursuant to his employment agreement. |
|
(b) |
|
Expatriate payments made to Mr. Ostermann for his time
spent in Gennevielles, France include the following for fiscal
2010: $33,144 housing allowance for reimbursement of housing
expenses; and goods and services allowance of $82,714. |
|
(c) |
|
The payments are paid in Euros and reflect the Euro/U.S. Dollar
exchange rate of 1.35/1.00 at March 31, 2010. |
35
FISCAL
2010 GRANTS OF PLAN-BASED AWARDS TABLE
The following table provides information regarding equity and
non-equity awards granted to the named executive officers in
fiscal 2010.
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All Other
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All Other
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Option
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Exercise
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Stock Awards:
|
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Awards:
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or
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Number of
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Number of
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Base
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Grant Date
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Estimated Future Payouts Under
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Estimated Future Payouts Under
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Shares of
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Securities
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Price
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Fair
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Non-Equity Incentive Plan Awards(1)
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Equity Incentive Plan Awards(2)
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Stock or
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Underlying
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of Option
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Value of Stock
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Grant
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Grant
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Threshold
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Target
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Maximum
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Threshold
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Target
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Maximum
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Units
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Options
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Awards
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and Option
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Name
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Date
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Type
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($)
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($)
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($)
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(#)
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(#)
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(#)
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(#)(3)
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(#)
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($ / Sh)
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Awards ($)(4)
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Gordon A. Ulsh
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05/04/2009
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Performance Cash
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$
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760,000
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$
|
950,000
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$
|
1,900,000
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Stock Options
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158,863
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$
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6.29
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$
|
705,352
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RSU
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151,033
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$
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949,998
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Phillip A. Damaska
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05/04/2009
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Performance Cash
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$
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306,250
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$
|
612,500
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|
|
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03/25/2010
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Stock Options
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|
|
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21,948
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$
|
6.29
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|
|
$
|
97,450
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AIP
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$
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100,000
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$
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200,000
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$
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400,000
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Performance Shares
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|
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11,266
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|
33,833
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$
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127,745
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Restricted Stock
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|
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|
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|
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16,917
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|
|
|
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$
|
95,243
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|
Edward J. OLeary
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|
05/04/2009
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Performance Cash
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|
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$
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577,500
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|
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$
|
1,155,000
|
|
|
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|
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|
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|
|
03/25/2010
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Stock Options
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|
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|
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41,388
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|
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$
|
6.29
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|
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$
|
183,763
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|
|
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AIP
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$
|
178,750
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|
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$
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357,500
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$
|
715,000
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|
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|
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|
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Performance Shares
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|
|
|
|
|
|
|
|
|
|
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|
|
18,315
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|
55,000
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|
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|
|
|
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|
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|
|
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$
|
207,666
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|
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Restricted Stock
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|
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27,500
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|
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$
|
154,825
|
|
Mitchell S. Bregman
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|
05/04/2009
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|
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Performance Cash
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$
|
291,200
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|
|
$
|
582,400
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|
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|
|
|
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|
|
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|
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|
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|
|
|
|
|
|
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|
|
03/25/2010
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,870
|
|
|
$
|
6.29
|
|
|
$
|
92,663
|
|
|
|
|
|
|
|
AIP
|
|
$
|
83,200
|
|
|
$
|
166,400
|
|
|
$
|
332,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,388
|
|
|
|
22.187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
83,772
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,093
|
|
|
|
|
|
|
|
|
|
|
$
|
62,454
|
|
Michael Ostermann
|
|
|
05/04/2009
|
|
|
Performance Cash
|
|
|
|
|
|
$
|
338,072
|
|
|
$
|
676,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/25/2010
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,124
|
|
|
$
|
6.29
|
|
|
$
|
107,111
|
|
|
|
|
|
|
|
AIP
|
|
$
|
130,579
|
|
|
$
|
261,158
|
|
|
$
|
522,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,211
|
|
|
|
36,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
138,464
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,336
|
|
|
|
|
|
|
|
|
|
|
$
|
103,232
|
|
|
|
|
(1) |
|
The amounts shown illustrate award opportunities under the 2011
and 2010 AIP and the performance unit cash awards issued in
fiscal 2010. For additional information regarding the 2011 and
2010 AIP and the performance unit cash awards, refer to
pages 22-24 of the proxy statement above. |
|
(2) |
|
The amounts shown represent the number of performance share
awards, which, to the extent earned, will vest and be
distributed in shares of our common stock. For additional
information regarding the performance share awards, refer to
page 28 of the proxy statement above. |
|
(3) |
|
This column shows the number of restricted shares units granted
to the named executive officers and, with respect to
Mr. Ulsh, the number of RSUs granted in fiscal 2010. The
RSUs, which became non-forfeitable on July 26, 2010, will
be delivered on January 26, 2011. |
|
(4) |
|
The amounts in this column reflect the grant date fair value
computed in accordance with ASC 718 for fiscal 2010
financial statement reporting purposes related to stock awards.
Grant date fair value of performance-based stock awards is
evaluated using a BSVM based on the most probable outcome award
payout level. For additional information, refer to Note 9
of our financial statements in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010. |
36
FISCAL
2010 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
TABLE
This table provides information on the current holding of stock
options, restricted stock and restricted stock units for the
named executive officers.
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
Units of
|
|
Units of
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
|
|
Stock That
|
|
Stock That
|
|
|
Option
|
|
Options
|
|
Options
|
|
Exercise
|
|
Option
|
|
Stock
|
|
Have Not
|
|
Have Not
|
|
|
Grant
|
|
(#)(1)
|
|
(#)(2)
|
|
Price
|
|
Expiration
|
|
Grant
|
|
Vested
|
|
Vested
|
Name
|
|
Date
|
|
Exercisable
|
|
Unexercisable
|
|
($)(1)
|
|
Date
|
|
Date(2)
|
|
(#)(3)
|
|
($)(4)
|
|
Gordon A. Ulsh(5)
|
|
|
4/2/2005
|
|
|
|
230,000
|
|
|
|
0
|
|
|
$
|
13.22
|
|
|
|
08/29/15
|
|
|
|
04/2/2005
|
|
|
|
6,000
|
|
|
$
|
34,560
|
|
|
|
|
11/29/2005
|
|
|
|
198,925
|
|
|
|
0
|
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
|
11/29/2005
|
|
|
|
20,093
|
|
|
$
|
115,736
|
|
|
|
|
09/21/2006
|
|
|
|
332,200
|
|
|
|
0
|
|
|
$
|
3.66
|
|
|
|
09/21/16
|
|
|
|
09/21/2006
|
|
|
|
54,960
|
|
|
$
|
316,570
|
|
|
|
|
3/22/2007
|
|
|
|
191.939
|
|
|
|
0
|
|
|
$
|
8.84
|
|
|
|
03/22/17
|
|
|
|
03/22/2007
|
|
|
|
63,500
|
|
|
$
|
365,762
|
|
|
|
|
5/15/2008
|
|
|
|
0
|
|
|
|
90,649
|
|
|
$
|
14.87
|
|
|
|
05/15/18
|
|
|
|
05/15/2008
|
|
|
|
63,887
|
|
|
$
|
367,989
|
|
|
|
|
5/04/2009
|
|
|
|
0
|
|
|
|
158,863
|
|
|
$
|
6.29
|
|
|
|
05/04/19
|
|
|
|
5/04/2009
|
|
|
|
151,033
|
|
|
$
|
869,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phillip A. Damaska
|
|
|
1/31/2005
|
|
|
|
12,000
|
|
|
|
0
|
|
|
$
|
13.41
|
|
|
|
08/29/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/29/2005
|
|
|
|
16,000
|
|
|
|
0
|
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
|
11/29/2005
|
|
|
|
1,286
|
|
|
$
|
7,410
|
|
|
|
|
9/21/2006
|
|
|
|
34,900
|
|
|
|
0
|
|
|
$
|
3.66
|
|
|
|
09/21/16
|
|
|
|
09/21/2006
|
|
|
|
5,760
|
|
|
$
|
33,178
|
|
|
|
|
3/22/2007
|
|
|
|
16,795
|
|
|
|
0
|
|
|
$
|
8.84
|
|
|
|
03/22/17
|
|
|
|
03/22/2007
|
|
|
|
5,556
|
|
|
$
|
32,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/29/2007
|
|
|
|
2,100
|
|
|
$
|
12,096
|
|
|
|
|
5/15/2008
|
|
|
|
10,458
|
|
|
|
20,852
|
|
|
$
|
14.87
|
|
|
|
05/15/18
|
|
|
|
05/15/2008
|
|
|
|
5,884
|
|
|
$
|
33,892
|
|
|
|
|
5/04/2009
|
|
|
|
|
|
|
|
21,948
|
|
|
$
|
6.29
|
|
|
|
05/04/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2010
|
|
|
|
16,917
|
|
|
$
|
97,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward J. OLeary
|
|
|
6/6/2005
|
|
|
|
30,000
|
|
|
|
0
|
|
|
$
|
5.09
|
|
|
|
06/06/15
|
|
|
|
06/6/2005
|
|
|
|
1,000
|
|
|
$
|
5,760
|
|
|
|
|
11/29/2005
|
|
|
|
1,785
|
|
|
|
0
|
|
|
$
|
4.46
|
|
|
|
11/29/15
|
|
|
|
11/29/2005
|
|
|
|
1,643
|
|
|
$
|
9,465
|
|
|
|
|
9/21/2006
|
|
|
|
67,500
|
|
|
|
0
|
|
|
$
|
3.66
|
|
|
|
09/21/16
|
|
|
|
09/21/2006
|
|
|
|
11,160
|
|
|
$
|
64,282
|
|
|
|
|
03/22/2007
|
|
|
|
32,490
|
|
|
|
0
|
|
|
$
|
8.84
|
|
|
|
03/22/17
|
|
|
|
03/22/2007
|
|
|
|
10,750
|
|
|
$
|
61,919
|
|
|
|
|
5/15/2008
|
|
|
|
17,389
|
|
|
|
34,674
|
|
|
$
|
14.87
|
|
|
|
05/15/18
|
|
|
|
05/15/2008
|
|
|
|
9,785
|
|
|
$
|
56,360
|
|
|
|
|
5/04/2009
|
|
|
|
0
|
|
|
|
41,388
|
|
|
$
|
6.29
|
|
|
|
05/04/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2010
|
|
|
|
27,500
|
|
|
$
|
158,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell S. Bregman
|
|
|
10/13/2004
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
15.82
|
|
|
|
08/29/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/29/2005
|
|
|
|
30,118
|
|
|
|
0
|
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
|
11/29/2005
|
|
|
|
2,423
|
|
|
$
|
13,954
|
|
|
|
|
9/21/2006
|
|
|
|
66,400
|
|
|
|
0
|
|
|
$
|
3.66
|
|
|
|
09/21/16
|
|
|
|
09/21/2006
|
|
|
|
11,000
|
|
|
$
|
63,360
|
|
|
|
|
3/22/2007
|
|
|
|
31,990
|
|
|
|
0
|
|
|
$
|
8.84
|
|
|
|
03/22/17
|
|
|
|
03/22/2007
|
|
|
|
10,585
|
|
|
$
|
60,967
|
|
|
|
|
5/15/2008
|
|
|
|
9,532
|
|
|
|
19,094
|
|
|
$
|
14.87
|
|
|
|
05/15/18
|
|
|
|
05/15/2008
|
|
|
|
5,380
|
|
|
$
|
30,989
|
|
|
|
|
5/04/2009
|
|
|
|
0
|
|
|
|
20,870
|
|
|
$
|
6.29
|
|
|
|
05/04/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/25/2010
|
|
|
|
11,093
|
|
|
$
|
63,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Ostermann
|
|
|
5/04/2009
|
|
|
|
0
|
|
|
|
24,124
|
|
|
$
|
6.29
|
|
|
|
05/04/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/25/2010
|
|
|
|
18,336
|
|
|
$
|
105,615
|
|
|
|
|
(1) |
|
The 2004 Plan was amended effective August 22, 2007 to
provide that the exercise price would be equal to the closing
price of the Companys common stock on the grant date or
the average closing price of our common stock for the ten days
preceding the grant date, whichever is higher. On
February 18, 2008, the executive officers and directors
executed amendments to the option awards approved by the Board
and granted to non-employee directors and executive officers
where the exercise price was lower than closing price of the
Companys common stock on the grant date. |
|
(2) |
|
All stock grants listed in this column represent restricted
stock, with the exception of the March 22, 2007 grant of
restricted stock units for all the named executive officers and
Mr. Ulshs May 15, 2008 and May 4, 2009
awards. |
37
|
|
|
(3) |
|
Mr. Ulsh received two grants of restricted stock in
connection with the commencement of his employment on
April 2, 2005. The grant of 100,000 shares vests
equally over three years. Mr. OLeary received two
grants of restricted shares in connection with the commencement
of his employment on June 6, 2005. The grant of
12,000 shares vests equally over three years. The
March 25, 2010 awards of restricted stock vest ratably over
three years from the date of grant. All other grants of
restricted stock vest 20% each year for five years from the date
of grant. All grants of stock options vest equally each year for
three years from the date of grant. |
|
(4) |
|
The market value of unvested restricted stock is based on the
$5.76 closing price of our stock on The NASDAQ Global Market on
March 31, 2010. |
|
(5) |
|
All of Mr. Ulshs unvested stock options and
restricted stock awards vested at June 30, 2010. All
restricted stock unit awards became non-forfeitable on
July 26, 2010 and will be delivered in certificated form on
January 26, 2011. |
FISCAL
2010 OPTION EXERCISES AND STOCK VESTED TABLE
The following table provides information for the named executive
officers, on (1) stock option exercises during fiscal 2010,
including the number of shares acquired upon exercise and the
value realized and (2) the number of shares acquired upon
the vesting of stock awards and the value realized.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized
|
|
Number of Shares
|
|
Value Realized
|
|
|
Acquired on Exercise
|
|
on Exercise
|
|
Acquired on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)
|
|
(#)(4)
|
|
($)(5)
|
|
Gordon A. Ulsh(1)
|
|
|
|
|
|
|
|
|
|
|
85,323
|
|
|
$
|
596,870
|
|
Phillip A. Damaska(2)
|
|
|
|
|
|
|
|
|
|
|
9,716
|
|
|
$
|
64,814
|
|
Edward J. OLeary
|
|
|
|
|
|
|
|
|
|
|
16,043
|
|
|
$
|
108,570
|
|
Mitchell S. Bregman(3)
|
|
|
|
|
|
|
|
|
|
|
15,158
|
|
|
$
|
106,240
|
|
Michael Ostermann
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Ulsh forfeited 11,666 of the shares listed above to pay
withholding tax obligations related to the vested shares. |
|
(2) |
|
Mr. Damaska forfeited 935 of the shares listed above to pay
withholding tax obligations related to the vested shares. |
|
(3) |
|
Mr. Bregman forfeited 2,908 of the shares listed above to
pay withholding tax obligations related to the vested shares. |
|
(4) |
|
All vested stock listed in this column represents restricted
stock and vested, non-forfeitable restricted stock units
(whether shares have been delivered or not delivered). |
|
(5) |
|
Values based on the closing price of our common stock on the
respective exercise or vesting dates. Where the vesting date
occurred on a Saturday or Sunday, which is based on the closing
price on the last market date prior to the vesting date. |
38
FISCAL
2010 PENSION BENEFITS TABLE
The table below sets forth information on the pension benefits
for the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Present
|
|
|
|
|
|
|
|
|
of Years
|
|
Value of
|
|
Actual
|
|
Payments
|
|
|
|
|
Credited
|
|
Accumulated
|
|
Cash Balance
|
|
During Last
|
|
|
|
|
Service
|
|
Benefit
|
|
Account
|
|
Fiscal Year
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
Gordon A. Ulsh
|
|
Cash Balance
|
|
|
5.00
|
|
|
$
|
25,945
|
|
|
$
|
26,167
|
|
|
|
|
|
Phillip A. Damaska
|
|
Cash Balance
|
|
|
5.00
|
|
|
$
|
17,234
|
|
|
$
|
18,769
|
|
|
|
|
|
Edward J. OLeary
|
|
Cash Balance
|
|
|
5.00
|
|
|
$
|
17,055
|
|
|
$
|
18,574
|
|
|
|
|
|
Mitchell S. Bregman(2)
|
|
GNB
|
|
|
21.67
|
|
|
$
|
299,498
|
|
|
|
|
|
|
|
|
|
|
|
Cash Balance
|
|
|
9.00
|
|
|
$
|
68,960
|
|
|
$
|
73,829
|
|
|
|
|
|
Michael Ostermann
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consistent with the Companys adoption of ASC 715,
benefits are valued based on years of service as of
March 31, 2010. |
|
(2) |
|
Mr. Bregman participated in a pension plan with GNB
Industrial, which merged with the Company in 2000. This plan is
managed by the Company but was frozen as of December 31,
2000. |
FISCAL
2010 DIRECTOR COMPENSATION TABLE
Directors who are employees receive no additional compensation
or retirement benefits for serving on the Board or its
committees. In fiscal 2010, we provided the following annual
compensation to our non-employee directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
|
|
|
Paid in Cash
|
|
Stock Awards
|
|
Option Awards
|
|
Total
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
John P. Reilly, Chairman
|
|
$
|
161,000
|
|
|
$
|
70,000
|
|
|
|
|
|
|
$
|
231,000
|
|
Herbert F. Aspbury
|
|
$
|
87,250
|
|
|
$
|
70,000
|
|
|
|
|
|
|
$
|
157,250
|
|
Michael R. DAppolonia
|
|
$
|
87,000
|
|
|
$
|
70,000
|
|
|
|
|
|
|
$
|
157,000
|
|
David S. Ferguson
|
|
$
|
77,500
|
|
|
$
|
70,000
|
|
|
|
|
|
|
$
|
147,500
|
|
Paul W. Jennings
|
|
$
|
79,250
|
|
|
$
|
70,000
|
|
|
|
|
|
|
$
|
149,250
|
|
Joseph V. Lash
|
|
$
|
83,000
|
|
|
$
|
70,000
|
|
|
|
|
|
|
$
|
153,000
|
|
Michael R. Ressner
|
|
$
|
82,500
|
|
|
$
|
70,000
|
|
|
|
|
|
|
$
|
152,500
|
|
Carroll R. Wetzel
|
|
$
|
87,500
|
|
|
$
|
70,000
|
|
|
|
|
|
|
$
|
157,500
|
|
|
|
|
(1) |
|
This column represents the amount of cash compensation earned by
the non-employee directors for meeting fees, annual retainer,
Chairman retainer and Committee Chair retainers. |
|
(2) |
|
In accordance with recent changes in the SECs disclosure
rules, the amounts reported in this column reflect the fair
value on the grant date of the option awards granted to our
non-employee directors during fiscal 2010. These values have
been determined under the principles used to calculate the value
of equity awards for purposes of our financial statements.
Assumptions used in the calculation of these amounts are
included in Note 9 of the Companys financial
statements in our Annual Report on
Form 10-K
for the fiscal years ended March 31, 2010, 2009 and 2008. |
Each non-employee director receives an annual cash retainer of
$50,000 payable prospectively in quarterly cash installments.
Additionally, the Chairman of the Board receives an annual
retainer of $90,000 payable prospectively in quarterly
installments. The Chairman of the Audit Committee and
Compensation Committee receive an additional annual cash
retainer of $15,000. The Chairman of each of the Finance
Committee and the Nominating and Corporate Governance Committee
receives an additional annual cash retainer of $10,000. Each
member of the Board also receives $1,500 for each Board or
committee meeting
39
attended in person and $1,000 for each Board or committee
meeting attended telephonically. On September 16, 2009,
each of the Board members offered, and the Company accepted, a
voluntary reduction in quarterly Board retainers for the period
October 1, 2009 through March 31, 2010. On
September 16, 2009, the Board also approved the annual
non-employee director equity compensation of $70,000 comprised
entirely of 8,000 restricted stock units. On May 27, 2010,
the Board approved an increase in this amount of the annual
non-employee director equity compensation from $70,000 to
$80,000 beginning with the equity grant following the 2009
annual meeting of shareholders. The restricted stock units
become non-forfeitable at the conclusion of the directors
annual service, but stock certificates will not be issued until
each directors retirement from the Board.
On May 27, 2010, the Board also approved inducement awards
for new directors. Each new director will receive restricted
stock units valued at $50,000 that will vest ratably over two
years beginning with the first annual meeting following one year
of service Such awards will accelerate if the director is
nominated but not re-elected at a shareholder meeting.
FISCAL
2010 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
TABLE
The tables and narratives below describe the potential payments
to each named executive officer upon termination. In accordance
with SEC rules, all information described in this section is
presented as if a triggering event occurred on March 31,
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination w/o
|
|
|
|
|
|
|
|
|
Termination
|
|
Termination
|
|
Cause within
|
|
|
|
|
|
|
|
|
w/o Cause or by
|
|
w/ Cause or
|
|
12 months after a
|
|
|
|
|
|
|
|
|
employee for
|
|
by employee w/o
|
|
Change in
|
|
|
|
|
Name
|
|
Benefit
|
|
Good Reason
|
|
Good Reason
|
|
Control
|
|
Death
|
|
Disability
|
|
Gordon A. Ulsh
|
|
Base salary(1)
|
|
$
|
1,900,000
|
|
|
|
|
|
|
$
|
1,900,000
|
|
|
|
|
|
|
|
|
|
|
|
Bonus/EP(2)
|
|
$
|
622,250
|
|
|
$
|
622,250
|
|
|
$
|
622,250
|
|
|
$
|
622,250
|
|
|
$
|
622,250
|
|
|
|
Stock Options(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted shares/RSU(4)
|
|
$
|
2,036,010
|
|
|
|
|
|
|
|
|
|
|
$
|
1,237,939
|
|
|
$
|
1,237,939
|
|
|
|
Performance Unit Cash Award(5)
|
|
|
|
|
|
|
|
|
|
$
|
806,398
|
|
|
$
|
806,398
|
|
|
$
|
806,398
|
|
|
|
COBRA(6)
|
|
$
|
14,317
|
|
|
|
|
|
|
$
|
14,317
|
|
|
|
|
|
|
|
|
|
|
|
Tax Gross-Up(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Tax Payment(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Values based on Mr. Ulshs base salary in effect as of
March 31, 2010. Also assumes there would be no change in
the terms of Mr. Ulshs employment agreement after a
change in control. In addition to the amount listed above,
Mr. Ulsh would also receive earned but unpaid salary and
earned but unpaid vacation through the date of termination under
any circumstance, including death or disability. |
|
(2) |
|
Mr. Ulsh is entitled to receive any earned but unpaid bonus
for the prior fiscal year regardless of the nature of the
termination, including death or disability. For purposes of this
table, the actual fiscal 2010 AIP payout was used. As a result
of his retirement effective July 26, 2010, Mr. Ulsh
did not participate in the 2011 AIP. |
|
(3) |
|
Values shown were determined by multiplying the number of
in the money options that would vest upon
termination by the difference between the exercise price and the
$5.76 closing price of our common stock on March 31, 2010.
Excludes valuation of shares otherwise exerciseable at
March 31, 2010. |
|
(4) |
|
Values based on the number of shares that would vest upon
termination multiplied by the $5.76 closing price of our common
stock on March 31, 2010. |
|
(5) |
|
Value is based on a termination at March 31, 2010. For
purposes of this table, actual payment made for the fiscal 2010
performance cash award was used. No payment was earned for
fiscal 2009. |
|
(6) |
|
Based on rates in effect as of March 31, 2010 and assumes
full 18 months of COBRA eligibility. |
|
(7) |
|
Calculations based on the assumed excise tax under
Section 280G of the Internal Revenue Code for the change in
control payment at March 31, 2010. This calculation does
not incorporate any requirements of Internal Revenue Service
Code Section 409A. |
40
|
|
|
(8) |
|
Calculation under the Side Letter based on Mr. Ulshs
marginal tax rates at March 31, 2010. |
|
|
|
|
|
|
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Termination w/o
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Cause within
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Termination
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Voluntary
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12 months after a
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Name
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Benefit
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w/o Cause(1)
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Termination(2)
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Death
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Disability
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Change in Control
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Phillip A. Damaska
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Base salary(1)
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$
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350,000
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$
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350,000
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Stock Options(2)
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Restricted Shares/RSU(3)
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$
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118,581
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Performance Unit Cash Award(4)
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$
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306,250
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$
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306,250
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$
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306,250
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Edward J. OLeary
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Base salary(1)
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$
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550,000
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$
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550,000
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Stock Options(2)
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Restricted Share/RSU(3)
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$
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197,764
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Performance Unit Cash Award(4)
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$
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577,500
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$
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577,500
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$
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577,500
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Mitchell S. Bregman
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Base salary(1)
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$
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332,800
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$
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332,800
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Stock Options(2)
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Restricted Shares/RSU(3)
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$
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169,257
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Performance Unit Cash Award(4)
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$
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291,200
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$
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291,200
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$
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291,200
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Michael Ostermann
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Base salary(1)
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$
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492,750
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$
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332,800
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Stock Options(2)
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Restricted Shares/RSU(3)
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Performance Unit Cash Award(4)
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$
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342,563
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$
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342,563
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$
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342,563
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(1) |
|
Upon termination by the Company, Messrs. Bregman, Damaska,
OLeary and Ostermann would receive one year of severance,
regardless of whether they obtain employment elsewhere during
such year. Assumes there would be no change in severance policy
after a change in control. Mr. Ostermanns
compensation is paid in Euros and reflects the Euro/U.S. Dollar
exchange rate of 1.35/1.00 at March 31, 2010. |
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(2) |
|
Values shown were determined by multiplying the number of
in the money options that would vest upon
termination by the difference between the exercise price and the
closing price of our stock on March 31, 2010. Excludes
valuation of shares otherwise exerciseable at March 31,
2010. |
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(3) |
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Values based on the number of shares not vested at
March 31, 2010 multiplied by the closing price of our
common stock on March 31, 2010. Excludes valuation of
shares otherwise vested or non-forfeitable at March 31,
2010. |
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(4) |
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Value assumes that target level reached for all outstanding
performance cash awards. |
41
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of July 10,
2010, concerning:
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each person whom we know beneficially owns more than five
percent of our common stock;
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each of our directors and nominees for the Board;
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each of our named executive officers; and
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all of our directors and executive officers as a group.
|
Unless otherwise noted below, the address of each beneficial
owner is
c/o Exide
Technologies, 13000 Deerfield Parkway, Building 200, Milton, GA
30004.
We determine beneficial ownership in accordance with the rules
of the SEC. Except as indicated by the footnotes below, we
believe, based on information furnished to our company, that the
persons and entities named in the table below have sole voting
and investment power with respect to all shares of common stock
that they beneficially own, subject to applicable community
property laws.
Applicable percentage ownership is based on
75,856,364 shares of common stock outstanding at
June 30, 2010. In computing the number of shares of common
stock beneficially owned by a person and the percentage
ownership of that person, we included outstanding shares of
common stock subject to options or warrants held by that person
that are currently exercisable or exercisable within
60 days of July 10, 2010. We did not deem these shares
outstanding, however, for purposes of computing the percentage
ownership of any other person.
The information provided in the table below is based on our
records, information filed with the SEC and information provided
to us, except where otherwise noted.
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Number of Shares
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Percent
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Name of Beneficial Owner
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Beneficially Owned
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of Class
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5% Stockholders
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Jeffrey L. Gendell(1)
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15,004,486
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19.8
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%
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C/o Tontine Capital Management, L.L.C.
55 Railroad Avenue, 1st Floor
Greenwich, CT 06830
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FMR LLC(2)
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3,872,126
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5.1
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%
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82 Devonshire Street
Boston, MA 02109
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|
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|
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Directors and Executive Officers(3)
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|
|
|
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Herbert F. Aspbury
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|
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37,237
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|
|
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*
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James R. Bolch(4)
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|
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0
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|
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*
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Michael R. DAppolonia
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|
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57,070
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|
|
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*
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David S. Ferguson
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|
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52,390
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|
|
|
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*
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John P. Reilly
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|
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63,071
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|
|
|
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*
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Michael P. Ressner
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|
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51,307
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|
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|
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*
|
Gordon A. Ulsh(5)
|
|
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2,182,366
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|
|
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2.9
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%
|
Carroll R. Wetzel
|
|
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72,293
|
|
|
|
|
*
|
Edward J. OLeary(6)
|
|
|
284,409
|
|
|
|
|
*
|
Mitchell S. Bregman
|
|
|
245,014
|
|
|
|
|
*
|
Phillip A. Damaska
|
|
|
192,545
|
|
|
|
|
*
|
Michael Ostermann
|
|
|
26,377
|
|
|
|
|
*
|
All Directors and executive officers as a group (15 persons)
|
|
|
3,756,478
|
|
|
|
4.9
|
%
|
|
|
|
* |
|
Represents less than 1% of the outstanding common stock. |
42
|
|
|
(1) |
|
The information reflects the Schedule 13D/A filed with the
SEC on May 17, 2010, all filed jointly by Jeffrey L.
Gendell, or Mr. Gendell, and the entities described
therein. Mr. Gendell is the managing member of Tontine
Capital Overseas GP, L.L.C., a Delaware limited liability
company, or TCO, the general partner of Tontine Capital Overseas
Master Fund, L.P., a Cayman Islands limited partnership, or TMF.
Mr. Gendell is the managing member of Tontine Capital
Management, L.L.C., a Delaware limited liability company, or
TCM, the general partner of Tontine Capital Partners, L.P., a
Delaware limited partnership, or TCP, and Tontine 25 Overseas
Master Fund, L.P., a Cayman Islands limited partnership, or T25.
Mr. Gendell is the managing member of Tontine Management,
L.L.C., a Delaware limited liability company, or TM, the general
partner of Tontine Partners, L.P., a Delaware limited
partnership, or TP, and Tontine Power Partners, L.P., a Delaware
limited partnership, or TPP. Mr. Gendell is also the
managing member of Tontine Overseas Associates, L.L.C., a
Delaware limited liability company, or TOA, the investment
adviser to Tontine Overseas Fund, Ltd., a Cayman Islands
corporation, or TOF, and certain separately managed accounts.
Mr. Gendell is also the managing member of Tontine
Associates, L.L.C., or TA, a Delaware limited liability company,
the general partner of Tontine Capital Overseas Master
Fund II, L.P., a Cayman Islands limited partnership, or TCP
2. TMF beneficially owns 439,464 shares of Common Stock. TP
beneficially owns 1,682,042 shares of common stock. TCM
beneficially owns 2,776,366 shares of common stock. TCO
beneficially owns 444,759 shares of common stock. TCP
beneficially owns 2,321,428 shares of Common Stock. TP
beneficially owns 1,682,042 shares of common stock. TM
beneficially owns 2,077,457 shares of common stock. T25
beneficially owns 246,492 shares of common stock. TOA
beneficially owns 1,175,207 shares of common stock. TCP 2
beneficially owns 8,219,334 shares of common stock. TAA
beneficially owns 8,219,334 shares of common stock. TPP
beneficially owns 22,106 shares of common stock. TA
beneficially owns 311,362 shares of common stock. All of
the foregoing shares of common stock may be deemed to be
beneficially owned by Mr. Gendell. Mr. Gendell
disclaims beneficial ownership of the Issuers securities
reported herein for purposes of Section 16(a) under the
Exchange Act, or otherwise, except as to securities directly
owned by Mr. Gendell or representing Mr. Gendell or
representing Mr. Gendells pro rata interest in, and
interest in the profits of, TCO, TMF, TCM, TCP, TP, TM, TOA,
TOF, T25, and TPP. |
|
(2) |
|
Based on the Schedule 13G filed with the SEC on February 16,
2010 by FMR LLC and its affiliates, Fidelity Management &
Research Company, a wholly-owned subsidiary of FMR LLC and an
investment advisor is the beneficial owner of the above listed
shares as a result of acting as investment advisor to various
investment companies registered under Section 8 of the
Investment Company Act of 1940. |
|
(3) |
|
Includes shares of our common stock that may be acquired by
exercise of stock options or in connection with vesting of
restricted stock units within 60 days of July 10, 2010
for directors and executive officers as follows:
Mr. Aspbury, 30,443 shares;
Messrs. DAppolonia, Reilly and Ressner,
38,228 shares each; Messrs. Ferguson and Wetzel,
36,116 shares each; Mr. Ulsh, 1,576,247 shares;
Mr. Bregman, 190,424 shares; Mr. Damaska,
116,220 shares; Mr. OLeary, 212,528 shares;
Mr. Ostermann 8,041 shares; and all directors and
executive officers as a group, 2,655,853 shares. |
|
(4) |
|
Does not include 834,915 shares that were granted to
Mr. Bolch on July 26, 2010, the date his employment
with the Company commenced. |
|
(5) |
|
Includes 452,870 shares held in the Gordon A. Ulsh and
Laurie J. Ulsh, J/R/L/T/A, dated June 21, 1996, as amended,
of which Mr. Ulsh and his spouse are trustees.
Mr. Ulsh continues to report beneficial ownership of shares
of the issuer held for the account of the trust but disclaims
beneficial ownership (except to the extent of the pecuniary
interest of Mr. Ulsh and his spouse) in the trust. |
|
(6) |
|
Mr. OLeary resigned effective June 16, 2010, and
the shares beneficially owned have been adjusted to exclude
shares forfeited upon his resignation. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,
executive officers and persons who own more than 10% of our
common stock to file with the SEC reports regarding their
ownership and changes in ownership. Based upon a review of
filings with the SEC and written representations that no other
reports were required, we believe that all of our directors,
executive officers and 10% stockholders complied during fiscal
2009 with the reporting requirements of Section 16(a).
43
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to our Corporate Governance Guidelines, as well
as the written Related Party Transaction Policy adopted by the
Board on March 22, 2007, the Audit Committee is responsible
for the review of related person transactions
between the Company and related persons, including directors,
executive officers, director nominees, 5% stockholders of the
Company, as well as the immediate family members of each of the
foregoing individuals. These related person transactions apply
to any transaction or series of transactions in which we or one
of our subsidiaries is a participant, the amount involved
exceeds $120,000 and a related person has a direct or indirect
material interest.
We annually solicit information from our directors and executive
officers in order to monitor potential conflicts of interest.
Director nominees are also requested to provide us the foregoing
information. The Audit Committee considers whether any proposed
related person transaction is on terms and conditions that are
reasonable under the circumstances and in the best interest of
stockholders. No related person transactions were reported in
fiscal 2010.
STOCKHOLDER
PROPOSALS AND DIRECTOR NOMINATIONS FOR 2011 ANNUAL
MEETING
You may submit proposals, including director nominations, for
consideration at future stockholder meetings.
Stockholder Proposals. For a
stockholder proposal to be considered for inclusion in our proxy
statement for the annual meeting next year, our Corporate
Secretary must receive the written proposal at our principal
executive offices no later than April 4, 2011. Such
proposals must also comply with Section 2.03 of our Bylaws
and SEC regulations under
Rule 14a-8
of the Exchange Act regarding the inclusion of stockholder
proposals in company-sponsored proxy materials. Proposals should
be addressed to:
Exide Technologies
13000 Deerfield Parkway
Building 200
Milton, Georgia 30004
Attn: Corporate Secretary
Fax:
(678) 566-9229
For a stockholder proposal that is not intended to be included
in our proxy statement under
Rule 14a-8
of the Exchange Act, the stockholder must be made in accordance
with the provisions of our bylaws, which require the stockholder
to, among other things: (1) comply with all applicable
requirements of the Exchange Act, (2) provide the
information required by Section 2.03 of our Bylaws and
(3) give timely notice to our Corporate Secretary. In
general, this notice must be received by our Corporate Secretary:
|
|
|
|
|
not earlier than the close of business on the one hundred
twentieth day prior to the first anniversary of the 2010 annual
meeting of stockholders, or May 18, 2011; and
|
|
|
|
not later than the close of business on the ninetieth day prior
to the first anniversary of the 2010 annual meeting of
stockholders, or June 17, 2011.
|
However, if the 2011 annual meeting of stockholders is moved
more than 30 days before or more than 70 days after
September 15, 2011, then notice must be delivered by the
stockholder not earlier than the close of business on the one
hundred twentieth day prior to such annual meeting and not later
than the close of business on the later of the ninetieth day
prior to such annual meeting or the tenth day following the day
on which public announcement of the date of such meeting is
first made by our company.
Nomination of Director
Candidates. You may propose director
candidates for consideration by the Boards Nominating and
Corporate Governance Committee. Any such recommendation should
include the nominees name and qualification for Board
membership and should be directed to our Corporate Secretary at
the address of our companys principal executive offices
set forth above.
44
In addition, our Bylaws permit stockholders to nominate
directors for election at an annual meeting of stockholders. To
nominate a director, the stockholder must comply with the
provisions of our Bylaws described briefly above. In addition,
the stockholder must give timely notice to our Corporate
Secretary in accordance with our Bylaws, which, in general,
require that the notice be received by our Corporate Secretary
within the time period described above for stockholder proposals
that are not intended to be included in our proxy statement.
Copy of Bylaws
Provisions. You may contact our Corporate
Secretary at our principal executive offices for a copy of the
relevant provisions of our Bylaws regarding the requirements for
making stockholder proposals and nominating director candidates.
The Board does not provide a process for stockholders to send
other communications to the Board because it believes that the
process available under applicable federal securities laws for
stockholders to submit proposals for consideration at the annual
meeting is adequate.
AVAILABILITY
OF ANNUAL REPORT
You may obtain, without charge, a copy of our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010, including the
financial statements and the financial statement schedules filed
with the SEC pursuant to
Rule 13a-1
of the Exchange Act. You may also obtain copies of exhibits to
the
Form 10-K,
but we will charge a reasonable fee to stockholders requesting
such exhibits. You should direct your request in writing to us
at our address set forth on the first page of this Proxy
Statement, attention: Brad S. Kalter, Corporate Secretary at
13000 Deerfield Parkway, Building 200, Milton, Georgia 30004 or
by calling Investor Relations at
(678) 566-9000.
ADDITIONAL
INFORMATION
Householding of Proxy
Materials. The SEC has adopted rules that permit
companies and intermediaries such as brokers to satisfy delivery
requirements for proxy statements with respect to two or more
stockholders sharing the same address by delivering a single
Notice of Internet Availability or proxy statement addressed to
those stockholders. This process, which is commonly referred to
as householding, potentially provides extra
convenience for stockholders and cost savings for companies. Our
company and some brokers household proxy materials, delivering a
single Notice of Internet Availability or proxy statement to
multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.
Once you have received notice from your broker or our company
that they or our company will be householding materials to your
address, householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in householding and would prefer
to receive a separate Notice of Internet Availability or proxy
statement, or if you are receiving multiple copies of the Notice
of Internet Availability or proxy statement and wish to receive
only one, please notify your broker if your shares are held in a
brokerage account or us if you hold registered shares. You can
notify us by sending a written request to Exide Technologies,
13000 Deerfield Parkway, Building 200, Milton, Georgia 30004 or
by calling Investor Relations at
(678) 566-9000.
Proxy Solicitation Costs. We are making this solicitation and
will pay the entire cost of preparing, assembling, printing,
mailing and distributing these proxy materials and soliciting
votes. If you choose to access the proxy materials and/or vote
over the Internet, you are responsible for Internet access
charges you may incur. If you choose to vote by telephone, you
are responsible for telephone charges you may incur. Our
officers and regular employees may, but without compensation
other than their regular compensation, solicit proxies by
further mailing or personal conversations, or by telephone,
telex, facsimile or other electronic means. We will, upon
request, reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to the
beneficial owners of stock.
45
DIRECTIONS
TO THE ANNUAL MEETING OF STOCKHOLDERS
Directions To:
Atlanta Mariott Alpharetta
5750 Windward Parkway
Alpharetta, Georgia 30005
Tel.
770-754-9600
From
Atlanta-Hartsfield-Jackson International Airport
Take Highway I-85 North to GA 400N (toll road)
Take GA 400N approximately 16 miles to Exit 11
Windward Parkway
Turn Right at the exit ramp. The hotel is immediately on left at
traffic light.
From I-85
South
Take I-285 West to Exit 27/Atlanta/Cumming/Dahlonega/GA
400-N.
Take GA 400 N approximately 14 miles to Exit 11/Windward
Parkway.
Turn Right at exit ramp. Hotel is immediately on left at traffic
light.
From I-75
South
Take Exit #259/Birmingham/Tampa/Greenville/Augusta onto I-285
East toward Greenville/Augusta. Go 7.1 miles.
Take Exit 27/Atlanta/Cummings toward Dahlonega/GA-400N/Cummings.
Go 14 mi.
Take Exit 11/Windward Parkway.
Turn Right at exit ramp. Hotel is immediately on left at traffic
light.
ANNUAL MEETING OF STOCKHOLDERS OF EXIDE TECHNOLOGIES SEPTEMBER 15, 2010 EXIDE TECHNOLOGIES
PROXY VOTING INSTRUCTIONS 13000 DEERFIELD PARKWAY BLDG 200 VOTE BY INTERNET www.proxyvote.com
MILTON, GA 30004 Use the Internet to transmit your voting instructions and for electronic delivery
of information up until 11:59 P.M. Eastern Time on September 14, 2010. Have your proxy card in hand
when you access the web site and follow the instructions to obtain your records and to create an
electronic voting instruction form. VOTE BY PHONE 1-800-690-6903 Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Time on September 14, 2010. Have your
proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date
your proxy card and return it in the postage-paid envelope we have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE
OR BLACK INK AS FOLLOWS: M26486-P00324 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY EXIDE TECHNOLOGIES For Withhold For
All To withhold authority to vote for any individual All All Except nominee(s), mark For All
Except and write the number(s) of the nominee(s) on the line below. 1. The election of the
following nine persons as directors of the Company. 0 0 0 Nominees: 01) Herbert F. Aspbury 06)
Dominic J. Pileggi 02) James R. Bolch 07) John P. Reilly 03) Michael R. DAppolonia 08) Michael P.
Ressner 04) David S. Ferguson 09) Carroll R. Wetzel 05) John OHiggins For Against Abstain 2.
Ratify the appointment of the Companys Independent auditors for fiscal 2011. 0 0 0 The Board of
Directors Recommends a vote For All for Item 1 and For Item 2. In their discretion, the proxies
are authorized to vote upon such other business as may properly come before the annual meeting or
any adjournment or postponement thereof. NOTE: This Proxy Card should be dated and signed by the
stockholder exactly as the stockholders name appears hereon and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. Please sign exactly as
name(s) appear(s) hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. Signature [PLEASE SIGN WITHIN
BOX] Date Signature (Joint Owners) Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice
and Proxy Statement and Annual Report to Stockholders are available at www.proxyvote.com.
M26487-P00324 EXIDE TECHNOLOGIES PROXY ANNUAL MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 15, 2010
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Brad S.
Kalter and Barbara A. Hatcher, and each or any of them, proxies of the undersigned, with full power
of substitution, to vote all of the shares of Exide Technologies, a Delaware corporation (the
Company), which the undersigned may be entitled to vote at the annual meeting of Stockholders of
the Company to be held at the Atlanta Marriott Alpharetta, 5750 Windward Parkway, Alpharetta,
Georgia 30005, on Wednesday, September 15, 2010, beginning at 9:00 a.m. (local time) or at any
adjournment or postponement thereof, as shown on the voting side of this card. This proxy will be
voted as specified. If a choice is not specified, this proxy will be voted FOR the director
nominees and FOR proposal 2 and in the discretion of the proxy holders on any other matter that
properly comes before the meeting in accordance with the recommendations of the Board of Directors.
(Continued and to be signed on the reverse side.) |