EXIDE TECHNOLOGIES
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
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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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):
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NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD AUGUST 22, 2007
To our Shareholders:
The 2007 annual meeting of shareholders of Exide Technologies
will be held at the Hilton Garden Inn Atlanta North/Alpharetta
at 4025 Windward Plaza Drive, Alpharetta, Georgia 30005, on
Wednesday, August 22, 2007, beginning at 9:00 a.m.
local time. At the meeting, the holders of our outstanding
common stock will act on the following matters:
(1) The election of nine directors;
(2) A proposal to amend our Certificate of Incorporation to
increase our authorized shares of common stock from 100,000,000
to 200,000,000 and the aggregate number of shares of capital
stock from 101,000,000 to 201,000,000;
(3) A proposal to ratify the appointment of our independent
auditors for fiscal 2008; and
(4) Any other matters that properly come before the meeting.
All holders of record of shares of our common stock (NASDAQ:
XIDE) at the close of business on June 28, 2007 are
entitled to vote at the meeting and any postponements or
adjournments of the meeting.
The enclosed proxy statement describes the proposals set forth
above in more detail. We urge you to read the proxy statement
carefully before you decide how to vote.
You are cordially invited to attend the meeting. Please note
that space limitations make it necessary to limit attendance to
shareholders and one guest. Admission to the meeting will be on
a first-come, first-served basis. Registration will begin at
8:00 a.m., and seating will begin at
8:30 a.m. Each shareholder may be asked to present
valid picture identification, such as a drivers license or
passport. Shareholders 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,
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Gordon A. Ulsh
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Brad S. Kalter
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President and
Chief Executive Officer
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Deputy General Counsel and
Corporate Secretary
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July 16, 2007
YOUR VOTE IS IMPORTANT
If you are unable to attend the meeting in person, you may
vote on the proposals by proxy. To do so, please complete, date,
sign and return the enclosed proxy card. We have enclosed a
prepaid envelope to expedite the return of your proxy card. You
may also vote by telephone or over the Internet as noted in the
proxy card instructions. If you have voted by telephone,
Internet or mail and later decide to attend and vote at the
meeting, you may do so.
TABLE OF
CONTENTS
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13000
DEERFIELD PARKWAY
BUILDING 200
ALPHARETTA, GEORGIA 30004
PROXY STATEMENT, DATED JULY 16,
2007
The Board of Directors of Exide Technologies is soliciting
proxies from its shareholders to be used at the annual meeting
of shareholders to be held on Wednesday, August 22, 2007,
beginning at 9:00 a.m., at the Hilton Garden Inn Atlanta
North/ Alpharetta at 4025 Windward Plaza Drive, Alpharetta,
Georgia 30005, and at any postponements or adjournments thereof.
This proxy statement contains information related to the annual
meeting. This proxy statement, a proxy card and our Annual
Report on
Form 10-K
for the fiscal year ended March 31, 2007 are being mailed
to shareholders on or about July 16, 2007. The fiscal year
ended March 31, 2007 is referred to as fiscal
2007 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?
Shareholders as of the close of business on June 28, 2007,
which is referred to as the Record Date, are
entitled to vote at our annual meeting of shareholders, which
will be held on August 22, 2007. As a shareholder, you are
invited to attend the annual meeting and are requested to vote
on the items of business described in this proxy statement. We
are required by law to distribute these proxy materials to all
shareholders as of the Record Date. This proxy statement
provides notice of the annual meeting of shareholders, describes
the proposals presented for shareholder action and includes
information required to be disclosed to shareholders. The
accompanying proxy card enables shareholders to vote on the
matters without having to attend the annual meeting in person.
Who is
entitled to vote at the meeting?
Only shareholders 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 shareholder 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 61,210,421 shares of our common stock
outstanding and eligible to vote.
Who can
attend the meeting?
Subject to space availability, all shareholders 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
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meeting will be on a first-come, first-served basis.
Registration will begin at 8:00 a.m., and seating will
begin at 8:30 a.m. If you attend, please note that you
may be asked to present valid 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 conduct business at the
annual meeting?
The presence 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, 61,210,421 shares of common stock, representing
the same number of votes, were outstanding. Thus, the presence
of the holders of common stock representing at least 30,605,211
votes will be required to establish a quorum.
Proxies received 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 shareholder of record 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.
How can I
vote my shares without attending the annual meeting?
Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may direct how your
shares are voted without attending the annual meeting. If you
are a shareholder of record (that is, if your shares are
registered directly in your name with our transfer agent), you
must complete and properly sign and date the accompanying proxy
card and return it to us and it will be voted as you direct. A
pre-addressed envelope is included for your use. If you are a
shareholder of record and attend the meeting, you may deliver
your completed proxy card in person. If you hold shares
beneficially in street name, you may vote by
submitting voting instructions to your broker, bank or other
nominee.
Can I
vote by telephone or electronically?
If you are a shareholder of record, you may vote by telephone,
or electronically through the Internet, by following the
instructions included with your proxy card. If your shares are
held 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 electronically. The
deadline for voting by telephone or electronically is
11:59 p.m., Eastern Standard Time, on August 21, 2007.
Can I
change my vote after I return my proxy card?
Yes. If you are a shareholder of record, you may revoke or
change your vote at any time before the proxy is exercised by
filing with our Corporate Secretary 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, 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
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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 and certified by the Inspectors of
Election, who are employees of American Stock
Transfer & Trust Company (AST), our
transfer agent. If you are a shareholder of record, your signed
proxy card is returned directly to AST for tabulation. If you
hold your shares in street name through a broker,
bank or other nominee, your broker, bank or other nominee will
return one proxy card to AST on behalf of its clients.
What are
the Board of Directors recommendations?
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 of Directors.
The Board of Directors recommendation is set forth
together with the description of each item in this proxy
statement. In summary, the Board of Directors recommends a vote
FOR each of the proposals.
Will
shareholders be asked to vote on any other matters?
To our knowledge and the knowledge of management, shareholders
will vote only on the matters described in this proxy statement.
However, if any other matters properly come before the meeting,
the persons named as proxies for shareholders will vote on those
matters in the manner they consider appropriate.
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.
Amendment to Certificate of Incorporation. The
affirmative vote of the holders of outstanding shares
representing at least a majority of the voting power of all of
the shares of our common stock issued and outstanding on the
Record Date is required to amend our Certificate of
Incorporation to increase the number of authorized shares of
common stock (Proposal 2).
Ratification of Appointment of Independent
Auditors. For the ratification of the appointment
of our independent auditors for fiscal 2008 (Proposal 3),
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.
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.
How are
votes counted?
In the election of directors, you may vote FOR all
or some of the nominees or your vote may be WITHHELD
with respect to one or more of the nominees. You may not
cumulate your votes for the election of directors.
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
shareholder of record, and you are considered the beneficial
owner of your shares. We have supplied copies of our proxy
statement of shareholders to the broker, bank or other nominee
holding your shares of record, and they have the
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responsibility to send it to you. 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 shareholder 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. Generally, broker non-votes occur
on a matter when a broker is not permitted to vote on that
matter without instructions from the beneficial owner and
instructions are not given. In tabulating the voting result for
any particular proposal, shares that constitute broker non-votes
are not considered present and entitled to vote on that
proposal. If a quorum is present at the annual meeting, the
persons receiving the greatest number of votes will be elected
to serve as directors. As a result, broker non-votes will not
affect the outcome of the voting on the election of directors
(Proposal 1). The approval of the ratification of the
appointment of our independent auditors
(Proposal 3) requires the affirmative vote of a
majority of the shares of common stock present in person or
represented by proxy at the annual meeting and entitled to vote
on the proposal. A broker non-vote is treated as not being
entitled to vote on the matter and, therefore, is not counted
for purposes of determining whether the proposal has been
approved. However, broker non-votes will have the same effect as
a vote against the proposal to amend our Certificate of
Incorporation to increase the number of authorized shares of
common stock (Proposal 2) because this proposal must be
approved by a majority of the voting power of all of the shares
of our common stock issued and outstanding on the Record Date,
regardless of whether all of such shares are present and
entitled to vote at the meeting. Shares represented by such
broker non-votes will, however, be counted in
determining whether there is a quorum.
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 on the election of directors (Proposal 1), the
amendment to our Certificate of Incorporation (Proposal 2)
and the ratification of the appointment of our independent
auditors (Proposal 3), even if the broker, bank or other
nominee does not receive voting instructions from you.
What
should I do if I receive more than one set of voting
materials?
You may receive more than one set 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 shareholder 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 our quarterly
report on
Form 10-Q
for the quarter ending September 30, 2007.
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PROPOSALS SUBMITTED
FOR SHAREHOLDER VOTE
PROPOSAL 1
ELECTION OF DIRECTORS
Each of the directors below will be a nominee for election to
serve a one-year term set to expire at the annual meeting in
2008 and until their successors are duly elected and qualified.
Our Board of Directors 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 will vote for another
candidate nominated by our Board of Directors, or our Board of
Directors may reduce the number of directors. Our Board of
Directors has determined that each of the director nominees
below, except Gordon A. Ulsh, is an independent
director as defined in the listing standards of the Nasdaq
Global Market, as currently in effect. The Board determined that
Mr. Lashs employment with Tontine Associates, LLC,
did not impair his independence under the NASDAQ Marketplace
Rules.
Each of the nominees named below is currently a member of our
Board of Directors. Biographical information about each director
nominee, as of July 16, 2007, appears below.
Director
Nominees
Herbert F. Aspbury
Director since 2006
Mr. Aspbury, 62, is an investor and advisor at
Private Client Resources LLC, a privately held company founded
in 2001, which provides consolidated financial information for
high wealth investment managers and their clients. Since 2002,
Mr. Aspbury has also served as an Adjunct Professor at the
Fisher Graduate School of International Business of the
Monterrey Institute of International Studies and is a guest
lecturer in Cornell Universitys Joint MBA program with
Queens University of Canada. Mr. Aspbury retired from Chase
Manhattan Bank in 2000 where he served in a number of
capacities, most recently as the London-based Managing Director
and Regional Executive for Europe, Africa and the Middle East.
Mr. Aspbury was a member of Chase Manhattan
Corporations Management Committee. Mr. Aspbury also
served in a number of capacities with Chemical Bank until its
merger with Chase Manhattan. Mr. Aspbury serves as Vice
Chairman of the Board of Trustees of Villanova University and is
the Chair of its Audit & Finance Committee, as well as
Chairman of the Royal Oak Foundation, the U.S. arm of
Britains National Trust. Mr. Aspbury is the Chairman
of the Finance Committee and a member of the Audit Committee.
Michael R. DAppolonia
Director since 2004
Mr. DAppolonia, 58, currently serves as
President and Chief Executive Officer of Kinetic Systems, Inc.,
a global provider of process and mechanical solutions to the
electronics and biopharmaceutical industries and a currently
non-active member and former 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 the President of Reorganized
Cone Mills Corporation and from October 2003 to May 2005 served
as Chief Restructuring Officer of Cone Mills Corporation. From
September 2002 to October 2003, Mr. DAppolonia served
as President and Director of Moll Industries, Inc. Previously
Mr. DAppolonia served as President and Chief
Executive Officer of McCulloch Corporation, Ametech, Inc.,
Halston Borghese, Inc. and Simmons Upholstered Furniture Inc.
Mr. DAppolonia is a member of the Board of Directors
of The Washington Group International, Inc. and Kinetic Systems
Inc. Mr. DAppolonia is Chairman of the Compensation
Committee.
David S. Ferguson
Director since 2005
Mr. Ferguson, 62, 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
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director of Stuarts Department Stores from August 1994 through
October 1995. Mr. Ferguson is the Vice Chairman of N.S.B.,
a U.K. software and services company, and is a member of the
Board of Directors 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 is currently on
the Board of Advisors of Miller Zell, Inc. Mr. Ferguson is
a member of the Compensation and Nominating and Corporate
Governance Committees.
Paul W. Jennings
Director since 2006
Mr. Jennings, 50, is President and Chief
Executive Officer of Innospec Inc., an international specialty
chemicals company headquartered in England. From November 2002
through his appointment as CEO, Mr. Jennings served as
Innospecs Executive Vice President and Chief Financial
Officer. Mr. Jennings previously served as CFO of Griffin
LLC, a joint venture between Griffin Corporation and Dupont, and
from 1986 to 1999 held the positions of CFO and Vice President
of Finance for various divisions and regions of Courtaulds plc,
working in the United States, Europe and Singapore.
Mr. Jennings is a member of the Nominating and Corporate
Governance Committee.
Joseph V. Lash
Director since 2007
Mr. Lash, 44, has been employed by Tontine
Associates, LLC, a Greenwich, Connecticut-based investment firm,
since July 2005. Tontine Associates, LLC is an affiliate of
Jeffrey L. Gendell, the beneficial owner of 28.1% of our common
stock as described in a Form 3 filed by Mr. Gendell on
September 20, 2006. Prior to that, Mr. Lash was a
Senior Managing Director of Conway, Del Genio, Gries &
Co., LLC, a financial advisory firm from April 2002 to July
2005. From June 1998 to April 2001, Mr. Lash was a Managing
Director of JP Morgan Chase & Co., a financial
services firm. Mr. Lash also serves as a director of
Integrated Electrical Services, Inc., an electrical contracting
services provider, and Neenah Foundry Company, a metals casting
manufacturer. Mr. Lash is a member of the Finance Committee.
John P. Reilly
Director since 2004
Mr. Reilly, 63, 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.
Michael P. Ressner
Director since 2004
Mr. Ressner, 58, 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: Arsenal Digital Solutions, Entrust, Inc.,
Magellan Health Services, Inc. and Tekelec, Inc.
Mr. Ressner is Chairman of the Audit Committee and a member
of the Finance Committee.
Gordon A. Ulsh
Director since 2005
Mr. Ulsh, 61, is our President and Chief Executive
Officer. Mr. Ulsh was appointed to his current position in
April 2005. From 2001 until March 2005, Mr. Ulsh was
Chairman, President and Chief Executive Officer of FleetPride
Inc., the nations largest independent aftermarket
distributor of heavy-duty truck parts. Prior to joining
FleetPride in 2001, Mr. Ulsh worked with Ripplewood Equity
Partners, providing analysis of
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automotive industry segments for investment opportunities.
Earlier, he served as President and Chief Operating Officer of
Federal-Mogul Corporation in 1999 and as head of its Worldwide
Aftermarket Division in 1998. Prior to Federal-Mogul, he held a
number of leadership positions with Cooper Industries, Inc.,
including Executive Vice President of its automotive products
segment. Mr. Ulsh joined Coopers Wagner Lighting
business unit in 1984 as Vice President of Operations, following
16 years in manufacturing and engineering management at
Ford Motor Company. Mr. Ulsh currently serves as a member
of the Board of Directors of OM Group, Inc.
Carroll R. Wetzel
Director since 2005
Mr. Wetzel, 64, most recently served as 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 1995,
Mr. Wetzel served as co-head of the Merger and Acquisition
Group at the Chase Manhattan Bank and its predecessor
institutions. Previously he held positions at Dillon
Read & Co., Inc. and Smith Barney, and served as Vice
Chairman and lead director at Arch Wireless from 2001 through
2002. Mr. Wetzel currently serves as a member of the Board
of Directors of Laidlaw International, Inc. Mr. Wetzel is
Chairman of the Nominating and Corporate Governance Committee
and a member of the Audit and Finance Committees.
The Board of Directors recommends that the shareholders 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 AMEND OUR CERTIFICATE OF INCORPORATION TO
INCREASE OUR AUTHORIZED SHARES OF COMMON STOCK FROM
100,000,000 TO 200,000,000 AND THE AGGREGATE NUMBER OF SHARES OF
CAPITAL STOCK FROM 101,000,100 TO 201,000,000
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The Board of Directors has approved and recommended, subject to
shareholder approval, an amendment to our Certificate of
Incorporation that would increase the number of shares of common
stock from 100,000,000 shares to 200,000,000 shares
and to make a corresponding change in the aggregate number of
shares of all classes of stock which we have authority to issue
to 201,000,000. The Board of Directors has directed that this
proposed amendment be submitted for approval to stockholders at
the annual meeting. If approved by our shareholders, the
increase in authorized common stock (and the corresponding
increase in the aggregate number of shares of all classes of
stock) would become effective as soon as reasonably practicable
after the annual meeting by filing a certificate of amendment to
our Certificate of Incorporation with the Secretary of State of
the State of Delaware.
If the amendment is approved, the text of Section 1 of
Article IV of the Certificate of Incorporation would read
in its entirety as follows:
The total number of shares of all
classes of capital stock which the Corporation shall have
authority to issue is 201,000,000 shares, of which
200,000,000 shares shall be Common Stock of the par value
of $0.01 per share (hereinafter called Common
Stock) and 1,000,000 shares shall be Preferred
Stock of the par value of $0.01 per share (hereinafter called
Preferred Stock).
Our current authorized common stock is 100,000,000 shares.
As of the Record Date, there were 61,210,421 shares of
common stock issued and outstanding, 6,621,165 warrants issued
and issuable pursuant to our 2004 plan of reorganization
covering 6,621,165 shares of common stock,
6,057,677 shares of common stock reserved for issuance
under our 2004 Stock Incentive Plan for directors, employees and
consultants and 3,584,229 shares of common stock reserved
for issuance upon the conversion of the convertible notes. Based
on the number of outstanding and reserved shares of common stock
described above, we currently have approximately
22,526,508 shares of common stock remaining available for
issuance. In addition, we are required to issue shares of common
stock under our 2004 plan of reorganization to holders of
disputed prepetition unsecured claims as such claims are
resolved and may be required to issue additional shares to
holders of prepetition secured claims if our reserve for
unsecured claims is exceeded.
7
If approved by our shareholders, the additional shares of common
stock authorized would be available for issuances for any proper
corporate purpose from time to time as determined by our Board
of Directors without further approval of the shareholders,
except as otherwise required by law or the rules of any national
securities exchange in which our shares of common stock are
listed. For example, we may issue shares of common stock in
public or private offerings for cash, for use in our operations,
for use as equity incentives to employees and officers and for
use as consideration in acquiring other companies or assets with
stock. Our Board of Directors also believes the amendment to our
Certificate of Incorporation will enhance our flexibility in
managing our capitalization, raising capital and structuring
appropriate equity compensation. Our Board of Directors
determines whether, when and on what terms to issue shares of
common stock and preferred stock, including the additional
shares proposed to be authorized.
Our Board of Directors is seeking approval for additional
authorized common stock at this time because opportunities
requiring prompt action may arise in the future and our Board of
Directors believes the delay and expense in seeking shareholder
approval for additional authorized common stock could deprive us
and our shareholders of the ability to benefit effectively from
opportunities
and/or cause
the loss of attractive acquisitions or financing arrangements.
The additional shares of common stock to be authorized will have
rights identical to the currently outstanding common stock. The
proposed amendment will not affect the par value of the common
stock, which will remain at $0.01 per share. Under our
Certificate of Incorporation, our shareholders do not have
preemptive rights to subscribe to additional securities which
may be issued by us. This means that current shareholders do not
have a prior right to purchase any new issue of our capital
stock in order to maintain their proportionate ownership of
common stock. Under Delaware law, shareholders will not have any
dissenters or approval rights in connection with the
proposed amendment.
If we issue additional shares of common stock or other
securities convertible into common stock in the future, it could
dilute the voting rights of existing holders of common stock and
could also dilute earnings per share and book value per share.
In addition, such issuances could trigger the anti-dilution
provisions under our convertible notes or existing warrants.
This proposal to increase the authorized number of shares of
common stock has been prompted by business and financial
considerations. We are not currently aware of any attempt to
acquire or take-over the Company and this proposal is not being
presented with the intent that it be used as a type of
anti-takeover device or to secure managements positions
within the Company. However, we could use the additional shares
of common stock to oppose a hostile takeover attempt or delay or
prevent changes in control or management.
Required
Vote
The affirmative vote of the holders of outstanding shares
representing at least a majority of the voting power of all of
the shares of our common stock issued and outstanding on the
Record Date will be required to approve Proposal 2.
The Board of Directors recommends a vote FOR the proposal to
amend our Certificate of Incorporation.
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PROPOSAL 3
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A
PROPOSAL TO RATIFY THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANYS INDEPENDENT
AUDITORS FOR FISCAL 2008
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The Audit Committee selects our independent auditors. This
proposal is put before the shareholders because, though the
shareholder vote is not binding on the Audit Committee, the
Board of Directors believes that it is good corporate practice
to seek shareholder 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
shareholders 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 shareholders. Even if the
appointment of PwC is ratified, the Audit
8
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.
Representatives of PwC are expected to attend the 2007 annual
meeting and to respond to appropriate questions from
shareholders present at the meeting and will have an opportunity
to make a statement if they desire to do so.
Fees of
Independent Public Accountants for Fiscal 2007 and
2006
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 2006
and fiscal 2007, together with any fees for audit-related
services and tax services rendered by PwC for fiscal 2007 and
fiscal 2006.
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Fiscal 2007
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Fiscal 2006
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(1) Audit fees(a)
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$
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8,975,193
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$
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7,946,183
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(2) Audit-related fees(b)
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24,200
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362,128
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(3) Tax fees(c)
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109,130
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(4) All other fees(d)
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34,600
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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 2007 and fiscal 2006 also included $1,995,313 and
$2,964,459 for the audit of our internal control over financial
reporting, respectively. Note that $1,218,571 of fees reflected
in the fiscal 2007 amount above relate to fees for fiscal 2006,
primarily due to supplemental billings and the audit of Exide
Global Holdings Netherlands CV and Subsidiaries. |
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Fees for assurance and related services performed by PwC that
are reasonably related to the performance of the audit or review
of our financial statements, including employee benefit plan or
subsidiary pension audits. |
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Fees for professional services performed by PwC with respect to
compliance and tax consulting. |
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Fees in fiscal 2007 related to an attestation engagement for
environmental statutory requirements and assistance with
conversion to the International Financial Reporting Standards
for two of our
non-U.S.
subsidiaries. |
All audit, audit-related and tax services 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 and 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 to our company
by the independent auditor. Based on the fees disclosed above,
approximately 25.1% of PwCs fees approved by the Audit
Committee related to audit of our internal control over
financial reporting for the fiscal year ended March 31,
2007.
The Board of Directors recommends a vote FOR the ratification
of the appointment of PricewaterhouseCoopers LLP as our
independent auditors for fiscal 2008.
9
OTHER
MATTERS
As of the date of this proxy statement, we know of no business
that will be presented for consideration at the 2007 annual
meeting other than the items referred to above. If any other
matter is properly brought before the meeting for action by
shareholders, proxies in the enclosed form returned to us will
be voted in accordance with the recommendation of the Board of
Directors 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 is
essential to running our business efficiently, serving our
shareholders 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. 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 and
Business Conduct 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 or
waivers of the Code for directors and executive officers and
will disclose waivers of the Code in a Current Report on
Form 8-K.
Shareholders may request free printed copies of the Code of
Ethics and Business Conduct from:
Exide
Technologies
13000 Deerfield Parkway
Building 200
Alpharetta, Georgia 30004
Attn: Corporate Secretary
10
Board of
Directors Committees and Meetings
The members of the Board of Directors on the date of this proxy
statement, and the committees of the Board of Directors 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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Finance
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Director
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Committee
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Committee
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Committee
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Committee
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Herbert F. Aspbury
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Member
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Chair
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Michael R. DAppolonia
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Chair
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David S. Ferguson
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Member
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Member
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Paul W. Jennings
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Member
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Joseph V. Lash
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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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Chair
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Member
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Gordon A. Ulsh
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Carroll R. Wetzel
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Member
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Chair
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Member
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The Board of Directors met 11 times during fiscal 2007. Each
director attended at least 75% of all meetings of the Board of
Directors and committees on which he served. Under our
Corporate Governance Guidelines, each director is
expected to attend Board of Directors meetings on a regular
basis. Board members are encouraged, but not required, to attend
the annual meeting of shareholders. All Board members attended
the 2006 Annual Meeting
The Board of Directors has Audit, Nominating and Corporate
Governance, Compensation and Finance Committees. Each of the
committees operates under a written charter adopted by the Board
of Directors. All of the committee charters are
available on the Investor Relations page of our website at
http://ir.exide.com/committee.cfm.
A free printed copy of each of these charters are available to
any shareholder who requests it from the address listed under
the heading Governance of the Company.
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 (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.
11
Audit
Committee
The Audit Committee met 10 times during fiscal 2007. The purpose
of the Audit Committee is to assist the Board of Directors 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 of Directors;
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review and approve, as appropriate, related party 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 August 2006, the Board of Directors determined that all of
the members of the Audit Committee are independent within the
meaning of SEC regulations, the listing standards of The Nasdaq
Global Market and our Corporate Governance Guidelines.
The Board of Directors has determined that Mr. Ressner,
the chair of the Audit Committee, is qualified as an audit
committee financial expert within the meaning of Commission
rules, and that he has financial sophistication within the
meaning of the listing standards of The Nasdaq Global Market.
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 7 times
during fiscal 2007. The primary purpose of the Nominating and
Corporate Governance Committee is to assist the Board of
Directors in identifying qualified individuals to serve as
directors on the Board of Directors. 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 of
Directors members based on these criteria and recommend to the
Board of Directors for its consideration such individuals as
nominees to the Board of Directors;
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oversee evaluations of the Board of Directors, individual
members of the Board of Directors and the committees of the
Board of Directors; and
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develop, evaluate and make recommendations to the Board of
Directors with respect to our corporate governance policies and
procedures and Code of Ethics and Business Conduct.
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In August 2006, the Board of Directors determined that all of
the members of the Nominating and Corporate Governance Committee
are independent within the meaning of SEC rules, the listing
standards of The Nasdaq Global Market and our Corporate
Governance Guidelines.
The Committee has set forth in its charter, qualities it seeks
in individuals to be nominated to the Board. These qualities
include 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/committee.cfm.
12
Compensation
Committee
The Compensation Committee met 11 times during fiscal 2007. The
purpose of the Compensation Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities with
respect to compensation. The Compensation Committees
primary duties and responsibilities are to:
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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 of Directors total
compensation for our Chief Executive Officer and determine
compensation for all other executive officers, including
oversight of the administration of our executive benefit
plans; and
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prepare the Compensation Discussion and Analysis and
Compensation Committee report to be included in the annual proxy
statement as required by the rules of the SEC.
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In August 2006, the Board of Directors determined that all of
the members of the Compensation Committee are independent within
the meaning of SEC regulations, the listing standards of The
Nasdaq Global Market and our Corporate Governance
Guidelines.
Finance
Committee
The Finance Committee did not conduct any meetings during fiscal
2007. The purpose of the Finance Committee is to assist the
Board in reviewing and making recommendations to the Board
regarding our senior debt financing facility and alternatives
thereto, and regarding any other appropriate matters at the
request of the Board on an ad-hoc basis.
Compensation
Committee Interlocks and Insider Participation
During fiscal 2007, the Compensation Committee was comprised of
Messrs. DAppolonia, Ferguson and Reilly, none of whom
is one of our current or former executive officers. There were
no interlocking relationships between any of the Compensation
Committees members and the Companys executive
officers during fiscal 2007.
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 purpose, authority and responsibilities of the Audit
Committee are specified in its charter, which 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 12 of
this proxy statement under the caption Audit Committee.
Independent
Auditor Communications
The Committee discussed with the independent auditors matters
required to be discussed pursuant to Statement on Auditing
Standards No. 61 (Communication with Audit Committees),
including 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 PwC
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
13
such discussions, the Committee received and reviewed the
written disclosures and letter from PwC required by Independence
Standards Board Standard No. 1 (Independence Discussions
with Audit Committees).
Internal
Controls
During fiscal 2007, the Committee discussed with management the
scope and progress of managements evaluation of our
internal controls over financial reporting under
Section 404 of the Sarbanes-Oxley Act of 2002. The
Committee also discussed with the independent auditors the
status of its testing of internal controls over financial
reporting and whether any deficiencies existed.
Review of
Periodic Reports
The Committee reviewed and discussed with management and the
independent auditors each of our quarterly and annual reports
for fiscal 2007, 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
auditors, the Committee recommended to the Board of Directors
that our audited consolidated financial statements be included
in our Annual Report on
Form 10-K
for fiscal 2007 for filing with the SEC.
Members of the Audit Committee
Michael P. Ressner, Chairman
Herbert F. Aspbury
Carroll R. Wetzel
14
COMPENSATION
DISCUSSION AND ANALYSIS
Compensation
Committee Overview
The Compensation Committee of the Board of Directors (the
Committee) is required by its charter to consist of
no fewer than three independent directors, which are annually
recommended by the Nominating and Corporate Governance Committee
and approved by the Board of Directors (the Board).
The Board evaluates the Committee members independence in
accordance with standards established by The NASDAQ Global
Market. The Committee is presently comprised of three directors:
Michael R. DAppolonia (Chair), David S. Ferguson and John
P. Reilly (Chairman of the Board). Generally, the Committee
meets at least quarterly. During fiscal 2007, the Committee met
a total of 11 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 this evaluation, recommending the CEOs
compensation to the Board. The Committee is also responsible for
approving the compensation for all other executive officers and
certain other key employees, overseeing the administration of
our compensation and benefits plans, including our short-term
cash incentive and long-term equity incentive compensation
plans, and making recommendations to the Board regarding
compensation for Board members.
The Committee delegates to the Benefits Administration Committee
and the Benefits Investment Committee comprised of members of
senior management, responsibilities related to administration
and management of our various health and welfare plans for our
U.S. employees. Additionally, the Committee delegates its
responsibility to the Executive Vice President Human
Resources and Communications
(EVP-HR)
for administration of our 2004 Stock Incentive Plan, including
responsibilities relating to creating foreign sub-plans to
comply with foreign tax laws for
non-U.S. participants,
monitoring the un-issued options and restricted stock in the
2004 Plan and issuing award agreements.
The Committees responsibilities are enumerated in full
detail in the Committees charter. The charter, originally
adopted on May 12, 2004, was amended and approved by the
Board on November 2, 2005. The charter was further amended
on March 22, 2007, principally to address additional
responsibilities related to completion of the Compensation
Discussion and Analysis for each years proxy statement. A
copy of the charter can be found under the Investor Relations
page of our website: http://ir.exide.com/committee.cfm.
Role of
Executive Officers in Compensation Decisions
Annually, the Companys CEO, in consultation with the
EVP-HR, makes recommendations to the Committee regarding
adjustments to base salary for executive officers based on the
CEOs assessments of each executive officer and market data
for similarly positioned executives. Materials supporting the
recommendations, including market survey data, peer group
analysis and salary history for the executive are provided to
the Committee for its review and consideration in consultation
with the Committees independent outside consultant. The
CEO and EVP-HR attend the Committees meetings to present
their recommendations regarding base salary adjustments. The
Committee reviews with the CEO such recommendations and approves
or alters the proposed base salary adjustments. The Committee
also considers proposed annual short-term cash incentive and
long-term equity incentive compensation based, in part, on
recommendations from the Companys CEO. The CEO is not
present when the Committee reviews the CEOs compensation.
Compensation
Consultants
When analyzing various components of executive compensation, the
Committee has elected to rely on an independent outside
consultants expertise and advice regarding prevailing
market conditions. On March 27, 2006, the Committee entered
into a retention agreement with AON Consulting (AON)
to serve as the Committees compensation consultant. AON
also assisted the Committee in 2005. The Committee annually
reviews the retention of its independent outside consultant.
15
Upon request of the Committee, AON provides data regarding
metrics for the Committees review of the CEOs base
salary, short-term cash incentive compensation and long-term
equity incentive compensation. AON frequently coordinates with
the Companys EVP-HR regarding compensation packages for
proposed new executive officers, as well as providing metrics
for evaluating and scaling long-term incentive compensation.
AON, through its international affiliations, also provides the
Company recommendations concerning market data for the
Companys European executive officers. Pursuant to the
terms of the consulting agreement, AON reports directly to the
Committee and acts at the Committees request.
The fees for the Compensation Committees consultant are
paid directly by the Company pursuant to the Committees
charter.
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
executives based upon achievement of the Companys
financial objectives and long-term shareholder value. A core
strategy of the executive compensation program is to link
compensation to the Companys overall performance, the
performance of its various divisions and the performance of
individual executives.
The elements of executive officer compensation described below,
are based, in part, on an external competitive market analysis
that uses a variety of sources, including AON, Watson Wyatt, and
Mercer compensation data, as well as Company objectives. The
Committee also considers the executive officers scope of
responsibility and relative position in the corporate structure.
AON provides annual compensation benchmarking for executives
using general market data, as well as peer group data. The
criteria for the selection of the peer group include industry,
size (based on top line revenue and number of employees), and
financial performance metrics. The peer group participants for
fiscal 2007 are listed below:
Autoliv Inc. (NYSE:ALV)
Borg Warner Inc. (NYSE:BWA)
C&D Technologies Inc. (NYSE:CHP)
Dana Corporation (OTC:DCNAQ.PK)
Dura Automotive Systems (OTC:DRRAQ.PK)
Energizer Holdings Inc. (NYSE:ENR)
Enersys (NYSE:ENS)
Gentek Inc. (NASDAQ:GETI)
Hayes Lemmerz International Inc. (NASDAQ:HAYZ)
LKQ Corporation (NASDAQ:LKQX)
Modine Manufacturing Company (NYSE:MOD)
Spectrum Brands Inc. (NYSE:SPC)
Standard Motor Products (NYSE:SMP)
Superior Industries International, Inc. (NYSE:SUP)
Tenneco Automotive Inc. (NYSE:TEN)
Transport Technologies Industries Inc.
TRW Automotive Holdings Corporation (NYSE:TRW)
United Industrial Corporation (NYSE:UIC)
The Committee periodically reviews and evaluates, with its
consultant, the appropriateness of the companies comprising the
peer group.
Compensation
Policies
The Committee does not currently endorse a policy regarding
stock ownership or stock retention for executive officers.
However, the Committee designs total compensation to include
equity-based awards that promote employee retention and align
the compensation of executive officers with long-term
shareholder value through the accumulation of stock. The
Committee will continue to evaluate the appropriateness of stock
ownership guidelines for its executive officers as well as for
the Board.
The Committees determination of the amount and relative
weight of equity awards as part of total compensation is based,
in part, on the philosophy that equity awards available for
management should not exceed 10% to 15% of total shares
outstanding. Consequently, the Committee may vary the type and
amount of long-term compensation to preserve this ratio and
avoid equity award rates that would prematurely exhaust the 2004
Plans reserve of stock and options available for future
awards.
16
Elements
of Compensation
Base
Salary
The Committee adheres to the principal that base salary should
represent a key component of an executive officers total
compensation. In order to hire and retain highly qualified
candidates, the Committee generally sets base salaries for its
executive officers above the prevailing median of similarly
situated executives. Consequently, base salaries for executive
officers are generally established between the 50th and 75th
percentile of current market rates.
The Committee establishes, and subsequently modifies, each
executive officers base salary based on several factors,
including individual performance, current market conditions,
years of experience, industry specific experience, national and
local salaries for comparable positions (internally and
externally) and level of responsibility. Each year, the
Committee, based, in part, on review with its independent
outside consultant and the CEOs recommendation, reviews
the base salaries for the Companys executive officers
other than the CEO. In conjunction with evaluations submitted by
Board members, the Committee reviews the base salary for the
CEO, and makes recommendations to the Board regarding any
proposed change to the CEOs salary.
During fiscal 2007, as a result of the Companys
operational performance and constrained liquidity, only a
limited number of the named executive officers received annual
increases in their base salary. These increases were generally
due to a change in position or responsibility or a material
misalignment with competitive market data. An individual
adjustment was made for Mitchell S. Bregman,
PresidentIndustrial Energy North America, whose base
salary was increased from $288,000 to $320,000, effective
April 1, 2006.
On March 22, 2007, the Committee reviewed
Mr. Ulshs base salary. Based on a review of market
data and peer group analysis, as well as the Boards
assessment of Mr. Ulshs performance, the Committee
recommended to the Board, and the Board approved, an increase in
Mr. Ulshs base salary from $800,000 to $900,000. The
Committee also reviewed and increased the base salary for Edward
J. OLeary, PresidentTransportation Americas, from
$325,000 to $375,000. Both salary increases took effect
May 1, 2007. Additionally, the base salary for Francis M.
Corby, Jr., the Companys Executive Vice President and
Chief Financial Officer, was increased from $400,000 to
$450,000, effective March 1, 2007, pursuant to the terms of
his employment agreement.
Short-Term
Cash Incentive Compensation
The Committee believes that cash incentive payments based on the
achievement of division and corporate goals are an important
component of overall executive cash compensation. For the
executive officers, the Committee generally establishes annual
target cash incentive awards at 50% of base salary. For the CEO,
Mr. Ulshs employment agreement establishes a target
cash incentive award at 100% of base salary.
Mr. Corbys target cash incentive award was increased
from 50% to 100% of base salary for fiscal 2008 pursuant to the
terms of his employment agreement. The targets are established
annually as part of the review of total cash compensation.
Additionally, the Committee may, from time to time, approve lump
sum payments to new employees upon their retention or to
existing employees upon assumption of additional
responsibilities.
On June 28, 2006, the Committee recommended and the Board
approved a fiscal 2007 short-term incentive plan (the 2007
EP Plan or EP Plan). The 2007 EP Plan provides
cash awards that are based on economic profit (EP).
EP is defined as earnings before interest, taxes, depreciation
and annual amortization (Adjusted EBITDA) less cash
taxes and a capital charge of 2% per month on capital employed
(defined as the sum of trade accounts receivable, inventory and
fixed assets less trade accounts payable to generate such
Adjusted EBITDA). The budgeted EP for fiscal 2007 includes
target and stretch goals for Adjusted EBITDA and working capital
reductions.
For fiscal 2007, executive officers began accruing award credit
once a certain threshold level above the fiscal 2006 EP was
reached and would receive 50% of their target award upon
achievement of this threshold. Executives could earn an award of
100% of the individual executives targeted cash incentive
award if the Company achieved an EP level at the midpoint
between actual fiscal 2006 EP and stretch fiscal 2007 EP
17
(Target EP) and an award of 200% of his or her
target cash incentive award level if the Company achieved the
stretch fiscal 2007 EP. Payments above target were uncapped.
For each of the executive officers serving as division
presidents, EP awards were weighted 75% based on their
divisions EP performance and 25% for consolidated
corporate EP performance. For the other executive officers,
awards were weighted 100% on consolidated EP results.
Payments under the Companys fiscal 2007 EP plan did not
occur until June 22, 2007, after the audit of the
Companys financial statements was complete. Payouts to the
Companys named executive officers, as well as target and
stretch 2007 EP levels, are as follows:
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Named Executive Officer
|
|
Threshold(1)
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|
|
Target(1)
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|
Stretch(1)
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|
|
Actual(1)
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|
Gordon A. Ulsh
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|
50%
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|
100%
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|
200%
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158.8%
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Francis M. Corby, Jr.
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25%
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|
50%
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|
100%
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79.4%
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Mitchell S. Bregman
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25%
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50%
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|
100%
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|
100.1%
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E.J. OLeary
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|
25%
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|
50%
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|
100%
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|
100.1%
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Phillip A. Damaska
|
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|
15%
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30%
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|
60%
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47.6%
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|
(1) |
Percentage of individual named executive officers base
salary
|
As the Company opted to forego merit increases for fiscal 2007
for its executive officers and U.S. salaried employees, the
Companys 2007 EP Plan provided an additional award equal
to 3% of a participants base salary upon the achievement
of EP at the midpoint between the actual fiscal 2006 EP and the
stretch fiscal 2007 EP, as described above. This award increased
up to 6% of each individuals base salary if the stretch
fiscal 2007 EP was achieved. Payment was received on or about
June 22, 2007, after completion of the audit of the
Companys financial statements. The Companys named
executive officers all opted to forego this additional payment,
principally in light of the payment that could be earned by the
divisions performance under the EP Plan.
On March 21, 2007, the Committee approved the award formula
for the fiscal 2008 EP Plan, and on March 22, 2007, the
Board adopted the same formula for the CEO. Eligible division
employees will begin earning award credit once his or her
division reaches the threshold of 80% of actual fiscal 2007 EP.
For fiscal 2008, eligible employees can earn an award of 100% of
an individuals targeted cash incentive award level if the
division and the Company achieve an EP level at a specified
level above the average of the actual and target fiscal 2007 EP
levels. If any divisions results fall below the minimum
threshold of 80% of the divisions actual fiscal 2007 EP,
any payment to such divisions employees will be limited to
the corporate portion of the EP Plan, assuming the consolidated
corporate results reach 80% of actual fiscal 2007 EP. Any
payments above target are uncapped. Payments earned under the EP
Plan will be made only after the completion of the fiscal 2008
audit report.
Due to the sensitive nature of the Companys Adjusted
EBITDA results to its shareholders and various lender groups,
the Company believes that disclosure of the specific targets for
fiscal 2008 would cause undue harm to the Company. Payments at
target and threshold levels under the fiscal 2008 EP Plan are as
follows:
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Named Executive Officer
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Threshold (1)(2)
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Target (2)
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Gordon A. Ulsh
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80%
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100%
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Francis M. Corby, Jr.
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80%
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100%
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Mitchell S. Bregman
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40%
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50%
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E.J. OLeary
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40%
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|
50%
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Phillip A. Damaska
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24%
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30%
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|
(1) Assumes both division and consolidated corporate
results are at 80% of actual fiscal 2007 EP.
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(2) |
Percentage of individual named executive officers base
salary.
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18
Long-Term
Equity Incentive Compensation
Upon emergence from Chapter 11 bankruptcy protection in
2004, the Company sought and received approval from its
shareholders for the creation of the 2004 Stock Incentive Plan
(the 2004 Plan or the Plan). As
originally designed, the 2004 Plan permits the award of options,
restricted stock and performance unit awards, the latter being
payable in cash or stock. In December 2006, the Board amended
the 2004 Plan to provide for the award of restricted stock
units. The 2004 Plan is administered by the Committee.
Individuals eligible for the 2004 Plan include directors,
certain consultants and employees.
The Committee believes that long-term incentive compensation
issued under the 2004 Plan should be a significant element of
total compensation for the Companys executive officers and
other members of senior management. Long-term incentive
compensation is designed to align managements performance
with long-term shareholder value, principally through the
issuance of equity securities. Long-term incentive awards have
generally been established at 125% of base salary for the
Companys executive officers and 250% of base salary for
the Chief Executive Officer, subject to annual review by the
Committee. For fiscal 2008, Mr. Ulshs long-term
incentive compensation award was set at 300% of base salary. The
equity compensation levels are based, in part, on
recommendations from the Companys independent outside
consultant and comparative market data and conditions.
The relative weighting of equity and cash within the long-term
incentive plan is based on several factors, including the number
of remaining shares (options, restricted stock and restricted
stock units) available for grant under the 2004 Plan and the
anticipated vesting rate for previous grants. The Committee has
included a cash component 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 and restricted
stock units available for grant under the 2004 Plan.
Initial awards under the 2004 Plan were issued in October 2004,
contingent upon shareholder approval of the 2004 Plan, which
occurred at the Companys 2005 Annual Meeting. The awards
provided an allocation of 75% options and 25% restricted stock.
The allocation was recommended by the Committees
independent outside consultant in consultation with the EVP-HR,
after reviewing anticipated award vesting rates and the
Committees desire to weight various forms of equity
compensation to best accomplish the goals of employee retention
and alignment of senior managements objectives with
long-term shareholder return.
For fiscal 2006, the Committee, after review with its
independent outside consultant, determined that an allocation of
25% options, 15% restricted shares and 60% performance unit cash
awards would appropriately balance the goals of maximizing
long-term shareholder value, compensating executive officers and
preserving sufficient shares in the 2004 Plan for future grants
without the need for shareholder approval. As with the prior
awards, the fiscal 2006 awards were approved by the Committee
and Board during the Companys third fiscal quarter.
In fiscal 2007, in connection with the Companys request
that shareholders approve an equity rights offering and private
placement of approximately 35 million shares of the
Companys common stock, shareholders approved an amendment
to the 2004 Plan that provided an additional four million shares
of restricted stock and stock options. Despite the impact of the
common stocks price on the size of stock option and
restricted stock awards necessary to provide award recipients
with appropriate long-term compensation value, the larger pool
of shares available for awards permitted the Committee to
increase options awarded to all plan participants to 50% of
total awards, with restricted stock and performance unit cash
awards at 25% each.
While the Committees first three awards under the 2004
Plan were issued between September and November, the Committee
believes that issuing awards near the April 1st start of
the Companys fiscal year will allow the Committee to
concurrently assess annual base compensation adjustments, cash
incentive targets and annual equity awards. Consequently, the
Committee approved grants under the 2004 Plan for fiscal 2008 to
executive officers and other plan participants on March 21,
2007.
19
For the fiscal 2008 grants, the Committee reviewed the amount of
shares remaining in the 2004 Plan and determined that
performance unit cash awards were not required. Accordingly,
awards were equally weighted between stock options and
restricted stock units. The Committee determined that restricted
stock units would be issued in lieu of restricted stock in order
to provide participants with the deferral of any ordinary income
tax until full vesting of all such units. The restricted stock
units will vest ratably over a five-year period, but stock
certificates will not be issued until the end of the full
vesting period.
Options
The Committee views the granting of stock options as an integral
element of any equity-based award. Under the Companys 2004
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 the fluctuations
in price of the Companys common stock. Consequently, the
Committee views such awards as aligning executives
interests with long-term shareholder return.
The number of options granted is based, in part, on the
theoretical value of the options. The Committee uses the
Black-Scholes Valuation Model (BSVM), a common form
of fair value model. The BSVM is 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 underlying options market price to
fluctuate either up or down.
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Risk Free Rate: The theoretical rate of return
attributed to an investment with zero risk.
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Term:
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The expected life of a stock option held by a Company employee
before exercise or cancellation.
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Grant
Price: Market value of stock
price on day stock option was granted.
The Committee does not set the exercise price of stock options
as of the date the award is granted. Rather, as a result of the
Companys obligation to comply with the terms of its
Warrant Agreement, dated May 5, 2004, the Committee
determined that the award of options for the first
3,125,000 shares under the 2004 Plan must be issued with an
exercise price based on the ten-day trailing average closing
price of the Companys common stock prior to the date of
grant. The actual exercise price for options can therefore be
greater than, equal to or less than the stock price on the date
of grant. For each of the Companys October 13, 2004
and November 29, 2005 grants, the exercise price was
greater than the closing price of the Companys stock on
the date of grant. The exercise price for options granted on
September 21, 2006 and March 22, 2007 was lower than
the closing price on the grant date.
Restricted
Stock
The Committee includes shares of restricted stock as a component
of annual long-term equity awards. The Committee has
traditionally determined that the issuance of restricted stock
should represent a smaller percentage of the overall equity
award than options. The Committee believes restricted stock is a
useful tool for employee retention and established a five-year
vesting schedule for such awards. The Committee has
traditionally used a ten-day trailing average closing price of
the Companys common stock in establishing the number of
shares of restricted stock awarded to participants.
Restricted
Stock Units
In December 2006, the Companys Board approved amendments
to the 2004 Plan, permitting it to award restricted stock units
(RSUs). The RSUs allow participants to defer the recognition of
ordinary income associated with long-term equity incentive
awards until all RSUs have fully vested. For fiscal 2008, the
Committee awarded RSUs to plan participants. The awards vest
ratably over a five-year period, but shares of
20
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.
Performance
Unit Awards
Performance unit awards provide 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.
The Committee believes long-term incentive compensation awards,
when possible, should be limited to the issuance of equity.
However, in fiscal 2006, the Committee evaluated the number of
shares remaining in the Companys 2004 Plan, and concluded
that a sufficient number of shares would likely not be available
for future equity awards unless cash awards were a significant
component of that years long-term incentive compensation
grants. Accordingly, the Committee determined that a performance
award payable in cash would be necessary, and that such award
would comprise 60% of the fiscal 2006 long-term incentive
compensation award.
For the fiscal 2006 grants, the Committee established specific
performance goals based on Adjusted EBITDA and return on assets
(ROA) associated with the performance unit awards.
Payment of the awards is contingent on the achievement of
targets for the three-year period ending March 31, 2008.
None of the performance unit cash awards will vest until
completion of the fiscal year ended March 31, 2008. The
Committee established a target award and performance level, a
threshold performance level for which 40% of the target award
would be paid, a stretch performance level for which 150% of the
award would be paid and a maximum performance level for which
200% of the target award level would be paid.
The Committees independent outside consultant evaluated
the required Adjusted EBITDA and ROA targets and advised the
Committee on the expected relationship of EBITDA growth during
the performance period to anticipated appreciation in market
capitalization and resulting increase in shareholder value.
Additionally, the Committees independent outside
consultant evaluated the proposed performance target and award
payouts against the 22 peer companies listed below, and provided
advice to the Committee with respect to both the recommended
awards and targeted goals.
Autoliv Inc. (NYSE:ALV)
Borg Warner Inc. (NYSE:BWA)
C&D Technologies Inc. (NYSE:CHP)
Dana Corporation (OTC:DCNAQ.PK)
Dura Automotive Systems (OTC:DRRAQ.PK)
Energizer Holdings Inc. (NYSE:ENR)
Energy Conversion Devices, Inc. (NYSE:ENER)
Enersys (NYSE:ENS)
Gentek Inc. (NASDAQ:GETI)
Gentex Corporation (NASDAQ:GNTX)
Hayes Lemmerz International Inc. (NASDAQ:HAYZ)
LKQ Corporation (NASDAQ:LKQX)
Metaldyne Corporation
Modine Manufacturing Company (NYSE:MOD)
Spectrum Brands Inc. (NYSE:SPC)
Standard Motor Products (NYSE:SMP)
Superior Industries International, Inc. (NYSE:SUP)
Tenneco Automotive Inc. (NYSE:TEN)
Transport Technologies Industries Inc.
TRW Automotive Holdings Corporation (NYSE:TRW)
United Components Inc.
United Industrial Corporation (NYSE:UIC)
The Companys 2004 Plan limits any performance unit award
to $2,000,000. Consequently, Mr. Ulshs award, if
earned, will be capped at $2,000,000, even though achievement of
the maximum level of Adjusted
21
EBITDA and ROA targets would otherwise result in Mr. Ulsh
receiving a payment of $2,400,000. The threshold target and
maximum payouts for the fiscal 2007 awards are as follows:
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|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold(1)
|
|
|
Target(1)
|
|
|
Maximum(1)
|
|
|
Gordon A. Ulsh
|
|
|
60%
|
|
|
|
150%
|
|
|
|
250%
|
|
Francis M. Corby, Jr.(2)
|
|
|
|
|
|
|
|
|
|
|
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|
Mitchell S. Bregman
|
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|
30%
|
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|
67%
|
|
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|
133%
|
|
Edward J. OLeary
|
|
|
30%
|
|
|
|
67%
|
|
|
|
133%
|
|
Phillip A. Damaska
|
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|
18%
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|
45%
|
|
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|
90%
|
|
|
|
(1)
|
Percentage of individual named executive officers base
salary
|
|
(2)
|
Mr. Corby generally does not participate in the
Companys long-term equity compensation plan.
Mr. Corby received equity compensation under the terms of
his two-year employment agreement, but is eligible for
additional awards in the Boards discretion.
|
In fiscal 2007, the Committee reduced the cash component to 25%
of the total long-term incentive award. The Committee
established Adjusted EBITDA and ROA targets for the three-year
period ending on March 31, 2009, which, if met, are
expected to generate significant shareholder returns in relation
to the performance unit cash payments. The targets were
established by an extrapolation of the fiscal 2006 targets, as
recommended by management. The threshold, target and maximum
payouts for the fiscal 2007 awards are as follows:
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|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold(1)
|
|
|
Target(1)
|
|
|
Maximum(1)
|
|
|
Gordon A. Ulsh
|
|
|
25%
|
|
|
|
62.5%
|
|
|
|
125%
|
|
Francis M. Corby, Jr.(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell S. Bregman
|
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|
12.5%
|
|
|
|
31%
|
|
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|
62.5%
|
|
Edward J. OLeary
|
|
|
12.5%
|
|
|
|
31%
|
|
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|
62.5%
|
|
Phillip A. Damaska
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|
7.5%
|
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|
18.75%
|
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|
37.5%
|
|
|
|
(1)
|
Percentage of individual named executive officers base
salary
|
|
(2)
|
Mr. Corby generally does not participate in the
Companys long-term equity compensation plan.
Mr. Corby received equity compensation under the terms of
his two-year employment agreement, but is eligible for
additional awards in the Boards discretion.
|
Due to the sensitive nature of the Companys Adjusted
EBITDA results to its shareholders and various lender groups,
the Company believes that disclosure of the specific Adjusted
EBITDA and ROA targets would cause undue harm to the Company.
In light of the number of remaining restricted stock and stock
options available for distribution under the 2004 Plan, the
Committee did not include performance unit cash awards as a
component of its fiscal 2008 long-term incentive grant.
Personal
Benefits and Perquisites
The Companys named executive officers are provided with
disability insurance and life insurance equal to a certain
percentage of base salary consistent with the Company sponsored
program provided to other covered employees. Effective
January 1, 2007, the amount of life insurance was raised
from 100% of an employees base salary to 150% of an
employees base salary.
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 executive officers, as well as
to other senior level employees with significant international
travel. This benefit is extended to the
22
spouse of an executive officer if the executive is on a
long-term assignment living outside his or her home country.
Executive officers receive a monthly automobile allowance
between $750 and $1,000.
Pursuant to his employment agreement, Mr. Ulsh is
reimbursed for the initiation fee and monthly dues for
membership in a country club that enables Mr. Ulsh to
entertain clients and conduct business development activities.
Mr. OLeary also receives reimbursement for his
monthly country club dues.
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 up to the first 6% of such employees base
salary, subject to maximum contribution levels established by
the Internal Revenue Service.
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. An employees Cash Balance Plan vests
equally over five 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.
Additionally, 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.
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 the
Companys CEO and Chief Financial Officer (CFO)
that establish, among other compensation, the terms of any
severance arrangements. The Committee has not authorized
employment agreements with any other of the named executive
officers, but may authorize severance agreements with other
executives upon their departure from the Company. While the
Company seeks to obtain non-compete 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
Mr. Ulshs employment agreement provided for grants of
stock options and restricted stock under the Companys 2004
Plan. Currently, all unvested options and restricted stock would
be forfeited upon termination of employment. At the time of the
commencement of Mr. Ulshs employment with the
Company, he received replacement equity awards consisting of
80,000 options and 100,000 shares of restricted stock,
which vest equally over three years. Upon termination due to
death, disability, termination by the Company without cause or
termination by Mr. Ulsh with good reason, as defined below,
all unvested replacement awards vest immediately.
Mr. Ulshs 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. Ulsh would
receive earned but unpaid salary and unused vacation, as well as
any earned but unpaid short-term cash incentive award from the
fiscal year prior to the fiscal year in which termination
occurs, 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 cash incentive
award is customarily paid, a lump sum payment equal to 200% of
the sum of annual base salary and target cash incentive award,
reimbursement of reasonable business expenses incurred up to the
date of termination, COBRA premiums until the earlier of
23
18 months following termination or the time at which
Mr. Ulsh is no longer eligible for such COBRA benefits.
Additionally, any reduction in base salary, short-term cash
incentive award or benefits that qualify as good reason is not
used in calculating 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. If
Mr. Ulshs termination is the result of permanent
disability or death, he or his estate receives all of the
foregoing payments, as well as any short-term cash incentive
award earned pro rata through the date of termination.
Mr. Ulshs 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. Ulshs employment agreement,
good reason is defined as: (i) 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, (ii) a reduction in base salary
or other fixed compensation or failure to pay or provide such
compensation within 30 days when due, (iii) a
requirement that the executive report to anyone other than the
Board, or (iv) a material adverse change in any pension,
medical, health, savings, life insurance, or accident or
disability plan, except for changes affecting all senior
executives.
Francis
M. Corby, Jr. Employment Agreement
Pursuant to Mr. Corbys employment agreement, any
options immediately vest and all restrictions on share grants
would lapse if Mr. Corby is terminated without cause or if
he resigns for good reason. Alternatively, Mr. Corby would
forfeit all options and restricted shares if he is terminated
for cause or resigns for any reason other than good reason.
Mr. Corbys employment agreement also provides various
levels of compensation upon different termination events in
exchange for a general release of claims. If he resigns for good
reason or if he is terminated by the Company without cause,
Mr. Corby would receive earned but unpaid salary and unused
vacation, any earned but unpaid short-term cash incentive award
from the fiscal year prior to the fiscal year in which
termination occurs, a short-term cash incentive award at the
target level for the fiscal year in which he is terminated, a
lump sum payment of the remaining salary through the end of the
employment period (March 31, 2008), reimbursement of
reasonable business expenses incurred up to the date of
termination and COBRA premiums until March 31, 2008.
Additionally, any reduction in base salary, short-term cash
incentive award or benefits that qualifies as good
reason is not used in calculating the compensation due to
Mr. Corby.
In the event Mr. Corbys employment is terminated for
cause or he resigns without good reason, Mr. Corbys
severance is limited to earned but unpaid salary and unused
vacation, as well as any 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. Corbys termination is the result of
permanent disability or death, he or his estate would receive
the foregoing payments and any short-term cash incentive award
earned pro rata through the date of termination, respectively.
Pursuant to Mr. Corbys employment agreement,
good reason is defined as: (i) a material
adverse change in the executives title, role, or
responsibilities, (ii) a reduction in the then applicable
base salary or other fixed compensation or failure to pay or
provide compensation, bonus or benefits provided in this
agreement within 30 days of when due, (iii) a
requirement that the executive report to anyone other than the
CEO, or (iv) a material adverse change in any pension,
medical, health, savings, life insurance, or accident or
disability plan, except for changes affecting all senior
executives.
Neil
Bright Severance Agreement
In October 2006, the Company entered into a severance agreement
with Neil Bright, the Companys former
President Industrial Energy Europe and Rest of
World. Pursuant to the terms of the agreement,
24
Mr. Bright received a lump sum payment of twelve
months base salary and automobile allowance, accrued but
unpaid vacation for the year, a prorated portion of the annual
short-term cash incentive award and an additional lump sum
payment. Subject to the approval of the United Kingdom pension
trustees, the Company agreed to make an additional payment to
Mr. Brights U.K. pension in an amount equivalent to
the Companys contributions from October 2006 through
October 2007, continuation of private health and life insurance
for a period of 12 months, reimbursement of certain legal
services incurred in connection with the negotiation of the
agreement and reimbursement of certain outplacement services.
Other
Severance Arrangement
Additionally, the Companys other named executive officers
are provided severance in an amount equal to twelve months
salary paid over a twelve month period and, with respect to
Mr. Damaska, severance equal to six months salary over a
six-month period with the ability to provide an additional six
months salary that would be mitigated if Mr. Damaska
obtains employment during that six-month period.
Incentive
Plans
The Companys executive officers, as well as all other
employees who receive grants of options and restricted stock
under the Companys 2004 Stock Incentive Plan are provided
with protections in the event of a change in control of the
Company. 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 executive officers
are 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 executive worked.
Pursuant to the Companys 2004 Stock Incentive Plan, a
change in control is defined as follows:
(I) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Companys then
outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in
paragraph (III)(B) below;
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and
any new director (other than directors whose initial assumption
of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election
by the Companys shareholders was approved or recommended
by the affirmative vote of a majority of the directors then
still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was
previously so approved or recommended (Continuing
Directors);
(III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with
any other corporation, other than a merger or consolidation in
which (A) the Companys shareholders receive or retain
voting common stock in the Company or the surviving or resulting
corporation in such transaction on the same pro rata basis as
their relative percentage ownership of Company common stock
immediately preceding such transaction and a majority of the
entire Board of the Company are or continue to be Continuing
Directors following such transaction, or (B) the
Companys shareholders receive voting common stock in the
corporation which becomes the public parent of the Company or
its successor in such transaction on the same pro rata basis as
their relative percentage ownership of Company common stock
immediately preceding such transaction and a majority of the
entire Board of such parent corporation are Continuing Directors
immediately following such transaction;
25
(IV) the sale of any one or more Company subsidiaries,
businesses or assets not in the ordinary course of business and
pursuant to a shareholder approved plan for the complete
liquidation or dissolution of the Company; or
(V) there is consummated any sale of assets, businesses or
subsidiaries of the Company which, at the time of the
consummation of the sale, (x) together represent 50% or
more of the total book value of the Companys assets on a
consolidated basis or (y) generated 50% or more of the
Companys pre-tax income on a consolidated basis in either
of the two fully completed fiscal years of the Company
immediately preceding the year in which the Change in Control
occurs; provided, however, that, in either case, any such sale
shall not constitute a Change in Control if such sale
constitutes a Rule
13e-3
transaction and at least 60% of the combined voting power of the
voting securities of the purchasing entity are owned by
shareholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior
to such sale.
Notwithstanding the foregoing, a Change in Control
shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated
transactions immediately following which the record holders of
the common stock of the Company immediately prior to such
transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
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 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 shareholder 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
of Directors that the Compensation Discussion and Analysis be
included in these proxy materials.
Members of the Compensation Committee
Michael R. DAppolonia (Chair)
David S. Ferguson
John P. Reilly
26
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Change in
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Pension
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Value and
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Nonqualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
|
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Compensation
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All Other
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Fiscal
|
|
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Salary
|
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Bonus
|
|
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Awards
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Awards
|
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Compensation
|
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Earnings
|
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Compensation
|
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Total
|
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Name and Principal Position
|
|
Year
|
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($)(1)
|
|
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($)(2)
|
|
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($)(3)
|
|
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($)(4)
|
|
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($)(5)
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($)(6)
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($)(7)
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($)
|
|
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Gordon A. Ulsh,
|
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2007
|
|
|
$
|
800,000
|
|
|
$
|
375,000
|
|
|
$
|
310,337
|
|
|
$
|
492,105
|
|
|
$
|
1,270,400
|
|
|
$
|
11,479
|
|
|
$
|
25,525
|
|
|
$
|
3,284,846
|
|
President and Chief Executive
Officer
|
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|
|
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|
|
|
|
|
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|
|
|
|
|
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|
|
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Francis M. Corby, Jr.,
|
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2007
|
|
|
$
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404,167
|
|
|
$
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16,667
|
|
|
$
|
82,947
|
|
|
$
|
90,969
|
|
|
$
|
357,300
|
|
|
$
|
11,167
|
|
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$
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67,105
|
|
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$
|
1,030,321
|
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Executive Vice President and Chief
Financial Officer
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|
|
|
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Mitchell S. Bregman,
|
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2007
|
|
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$
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320,000
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|
|
|
|
|
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$
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22,995
|
|
|
$
|
69,835
|
|
|
$
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324,320
|
|
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$
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8,987
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|
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$
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20,200
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|
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$
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766,337
|
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President Industrial
Energy Americas
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Edward J. OLeary,
|
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2007
|
|
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$
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325,000
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$
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35,564
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|
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$
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60,234
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$
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328,088
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$
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6,993
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|
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$
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471,178
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$
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1,227,057
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President
Transportation Americas
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Phillip A. Damaska,
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2007
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$
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280,000
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$
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75,000
|
|
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$
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13,943
|
|
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$
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38,375
|
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$
|
133,392
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|
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$
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5,016
|
|
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$
|
309,107
|
|
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$
|
854,833
|
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Senior Vice President and Corporate
Controller
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Neil S. Bright,
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2007
|
|
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$
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219,671
|
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|
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$
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1,318
|
|
|
$
|
4,184
|
|
|
|
|
|
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$
|
11,217
|
|
|
$
|
684,185
|
|
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$
|
920,575
|
|
Former President
Industrial Energy Europe and ROW
|
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(1) |
|
Effective March 1, 2007, Mr. Corbys base salary
was increased to $450,000. Effective May 1, 2007,
Mr. Ulshs base salary was increased to $900,000,
Mr. OLearys base salary was increased to
$375,000 and Mr. Damaskas base salary was increased
to $291,000. Mr. Brights base salary, which was paid
in Pounds Sterling has been converted at the exchange rate in
effect at March 31, 2007 of 1.9679 U.S. dollars to 1 Pound
Sterling. |
|
(2) |
|
Pursuant to their employment agreements, Mr. Ulsh received
a payment of $375,000 and Mr. Corby received a payment of
$16,667 for fiscal 2006 that was paid in fiscal 2007.
Additionally, Mr. Damaska received a lump sum payment of
$75,000 in connection with his promotion to the position of
Senior Vice President. |
|
(3) |
|
The amounts in this column reflect the compensation expense
recognized in accordance with FAS 123R for fiscal 2007
financial statement reporting purposes related to stock awards.
For our stock awards, compensation expense is based on fair
value, which is calculated using the closing price of our common
stock on the date of grant. For additional information, refer to
Note 11 of the Companys financial statements in our
Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007. |
|
(4) |
|
The amounts in this column reflect the compensation expense
recognized in accordance with FAS 123R for fiscal 2007
financial statement reporting purposes related to stock option
awards. For our stock options compensation, expense is based on
fair value, which is calculated using a BSVM. For additional
information, refer to Note 11 of the Companys
financial statements in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007. |
|
(5) |
|
The amounts in this column reflect payments under our EP Plan
for fiscal 2007, which were not paid until June 22, 2007,
after the completion of the audit of the Companys
financial statements for the year ended March 31, 2007.
Performance unit cash awards granted under the 2004 Plan on
November 29, 2005 and September 21, 2006 will only be
paid upon achievement of performance targets at March 31,
2008 and 2009, respectively, and are not reflected in this
column. |
|
(6) |
|
The Companys pension plans are valued at December 31 of
each year. Consequently, the change in pension value in this
column is calculated as of December 31, 2006. |
|
(7) |
|
See the All Other Compensation table herein for
additional information. |
27
The following table describes each component of the All Other
Compensation column in the Summary Compensation Table.
|
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Company
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions to
|
|
|
Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
|
|
|
Insurance
|
|
|
Retirement and
|
|
|
Payments /
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
Executive
|
|
|
Reimbursements
|
|
|
Premiums
|
|
|
401(k) Plans
|
|
|
Accruals
|
|
|
|
|
Name
|
|
Club Dues
|
|
|
Reimbursement
|
|
|
Relocation
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
Total ($)
|
|
|
Gordon A. Ulsh
|
|
$
|
6,525
|
|
|
$
|
12,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,000
|
|
|
|
|
|
|
$
|
25,525
|
|
Francis M. Corby, Jr.
|
|
|
|
|
|
$
|
11,400
|
|
|
$
|
33,938
|
|
|
$
|
13,808
|
|
|
|
|
|
|
$
|
7,958
|
|
|
|
|
|
|
$
|
67,105
|
|
Mitchell S. Bregman
|
|
|
|
|
|
$
|
11,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,800
|
|
|
|
|
|
|
$
|
20,200
|
|
Edward J. OLeary
|
|
$
|
8,296
|
|
|
$
|
11,400
|
|
|
$
|
27,083
|
|
|
$
|
415,767
|
|
|
|
|
|
|
$
|
8,631
|
|
|
|
|
|
|
$
|
471,178
|
|
Phillip A. Damaska
|
|
|
|
|
|
$
|
9,000
|
|
|
$
|
47,540
|
|
|
$
|
241,780
|
|
|
|
|
|
|
$
|
10,788
|
|
|
|
|
|
|
$
|
309,107
|
|
Neil S. Bright
|
|
|
|
|
|
$
|
13,323
|
|
|
|
|
|
|
|
|
|
|
$
|
1,712
|
|
|
$
|
26,360
|
|
|
$
|
642,791
|
|
|
$
|
684,185
|
|
|
|
|
(1) |
|
Includes gross up and reimbursement for relocation tax. |
|
(2) |
|
Includes Company matching contributions to the 401(k) Plan, as
well as contributions to our Cash Balance Plan. Future
contributions to the Cash Balance Plan were frozen as of
May 15, 2006. |
|
(3) |
|
Severance payments include $382,144 in lieu of
12 months salary and car allowance, $15,243 for
accrued but unused vacation, $59,698 for a pro rata portion of
the payment that would have been paid under the fiscal 2007 EP
Plan, a lump sum additional payment of $156,803, $6,358 for
attorneys fees incurred in negotiation of the severance
agreement and $22,544 for outplacement services. |
28
FISCAL
2007 GRANTS OF PLAN-BASED AWARDS TABLE
The following table provides information regarding equity and
non-equity awards granted to the named executive officers in
fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Closing
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price
|
|
|
Price on
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock or
|
|
|
Underlying
|
|
|
of Option
|
|
|
Grant
|
|
|
Value of Stock
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Estimated Future Payouts Under
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Date
|
|
|
and Option
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards(3)
|
|
|
Equity Incentive Plan Awards
|
|
|
(#) (4)
|
|
|
(#) (5)
|
|
|
($ / Sh) (6)
|
|
|
($ / Sh)
|
|
|
Awards ($) (7)(8)
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gordon A. Ulsh
|
|
|
06/28/2006
|
(1)
|
|
$
|
400,000
|
|
|
$
|
800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/21/2006
|
(2)
|
|
$
|
200,000
|
|
|
$
|
500,000
|
|
|
$
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137,400
|
|
|
|
332,200
|
|
|
$
|
3.64
|
|
|
$
|
3.66
|
|
|
$
|
1,377,494
|
|
|
|
|
03/22/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158,751
|
|
|
|
191,939
|
|
|
$
|
7.559
|
|
|
$
|
8.84
|
|
|
$
|
2,545,935
|
|
Francis M. Corby, Jr.
|
|
|
06/28/2006
|
|
|
$
|
112,500
|
|
|
$
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell S. Bregman
|
|
|
06/28/2006
|
(1)
|
|
$
|
80,000
|
|
|
$
|
160,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/21/2006
|
(2)
|
|
$
|
40,000
|
|
|
$
|
100,000
|
|
|
$
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,500
|
|
|
|
66,400
|
|
|
$
|
3.64
|
|
|
$
|
3.66
|
|
|
$
|
275,467
|
|
|
|
|
03/22/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,459
|
|
|
|
31,990
|
|
|
$
|
7.559
|
|
|
$
|
8.84
|
|
|
$
|
424,327
|
|
Edward J. OLeary
|
|
|
06/28/2006
|
(1)
|
|
$
|
81,250
|
|
|
$
|
162,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/21/2006
|
(2)
|
|
$
|
40,625
|
|
|
$
|
101,563
|
|
|
$
|
203,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,900
|
|
|
|
67,500
|
|
|
$
|
3.64
|
|
|
$
|
3.66
|
|
|
$
|
279,827
|
|
|
|
|
03/22/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,872
|
|
|
|
32,490
|
|
|
$
|
7.559
|
|
|
$
|
8.84
|
|
|
$
|
430,952
|
|
Phillip A. Damaska
|
|
|
06/28/2006
|
(1)
|
|
$
|
42,000
|
|
|
$
|
84,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/21/2006
|
(2)
|
|
$
|
21,000
|
|
|
$
|
52,500
|
|
|
$
|
105,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,400
|
|
|
|
34,900
|
|
|
$
|
3.64
|
|
|
$
|
3.66
|
|
|
$
|
144,588
|
|
|
|
|
03/22/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,891
|
|
|
|
16,795
|
|
|
$
|
7.559
|
|
|
$
|
8.84
|
|
|
$
|
222,771
|
|
Neil S. Bright
|
|
|
06/28/2006
|
(1)
|
|
$
|
87,326
|
|
|
$
|
174,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/21/2006
|
(2)
|
|
$
|
43,663
|
|
|
$
|
109,157
|
|
|
$
|
218,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
72,500
|
|
|
$
|
3.64
|
|
|
$
|
3.66
|
|
|
$
|
300,677
|
|
|
|
|
(1) |
|
Awards granted under the 2007 EP Plan. |
|
(2) |
|
Performance unit cash awards under the 2004 Plan payable after
March 31, 2009. |
|
(3) |
|
The columns illustrate the potential value of payments under the
fiscal 2007 EP Plan approved by the Board on June 28, 2006,
as well as the value of potential payments under the performance
unit cash awards issued on September 21, 2006. Payments for
the EP Plan are calculated based on the assumption that
threshold and target goals are satisfied, but no maximum payment
is provided, as awards are uncapped. Additionally, awards are
based upon consolidated corporate results and, with regard to
Messrs. Bregman and OLeary, their respective
divisions performance. Performance unit cash awards are
calculated based on the assumption that threshold, target or
maximum goals are satisfied for the metrics established at the
time of grant. Additionally, payments are based on performance
for the three-year period ending March 31, 2009. For
additional information regarding the performance unit cash
awards and the EP Plan, refer to pp.17-18 and 21-22,
respectively, of the Companys CD&A above. |
|
(4) |
|
This column shows the number of restricted shares and restricted
stock units granted in fiscal 2007 to the named executive
officers. The restricted shares and restricted stock units vest
equally over a five-year period beginning September 21,
2007 and March 22, 2t008, respectively. |
29
|
|
|
(5) |
|
This column shows the number of options granted in fiscal 2007
to the named executive officers. The stock options vest equally
over a three-year period beginning September 21, 2007 and
March 22, 2008, respectively. |
|
(6) |
|
As noted on p. 20 of the CD&A, the Committee does not
set the exercise price of stock options as of the date the award
is granted. This column represents the exercise price based on
the average closing price of our common stock for the ten
trading days preceding the September 21, 2006 and
March 22, 2007 grant dates, respectively. |
|
(7) |
|
This column shows the full grant date fair value of restricted
stock, restricted stock units and stock options under
FAS 123R granted to each of the named executive officers in
fiscal year 2007. For restricted stock and restricted stock
units, fair value is based on the closing price of our common
stock on September 21, 2006 and March 22, 2007,
respectively. For stock options, fair value is calculated using
a BSVM on the grant date of September 21, 2006 and
March 22, 2007. For additional valuation assumptions, see
p. 20 of the CD&A and Note 11 of our financial
statements in the Companys Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007. These amounts
reflect only our compensation expense calculated in accordance
with FAS 123R, and do not necessarily correspond to the
actual values that will be recognized by the named executive
officers. Mr. Bright resigned effective October 20,
2006 and the shares and options granted on September 21,
2006 were forfeited thereafter. |
|
(8) |
|
For the March 22, 2007 grants, the BSVM included the
following parameters: |
|
|
|
|
|
weekly volatility of 77.3%, |
|
|
|
a risk-free rate of return of 4.63% |
|
|
|
10 year term |
|
|
|
dividend yield of 0% |
30
FISCAL
2007 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
Option
|
|
|
Options
|
|
|
Options
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
Stock
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
Grant
|
|
|
(#) (2)
|
|
|
(#) (2)
|
|
|
Unearned
|
|
|
Price
|
|
|
Expiration
|
|
|
Grant
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options (#)
|
|
|
($) (1)
|
|
|
Date
|
|
|
Date
|
|
|
(#) (2)
|
|
|
($) (3)
|
|
|
Gordon A. Ulsh
|
|
|
04/02/2005
|
|
|
|
76,667
|
|
|
|
153,360
|
|
|
|
|
|
|
$
|
13.22
|
|
|
|
08/29/15
|
|
|
|
04/02/2005
|
|
|
|
24,000
|
|
|
$
|
208,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04/02/2005
|
|
|
|
66,666
|
|
|
$
|
579,994
|
|
|
|
|
11/29/2005
|
|
|
|
66,309
|
|
|
|
132,683
|
|
|
|
|
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
|
11/29/2005
|
|
|
|
80,372
|
|
|
$
|
699,236
|
|
|
|
|
09/21/2006
|
|
|
|
|
|
|
|
332,200
|
|
|
|
|
|
|
$
|
3.64
|
|
|
|
09/21/16
|
|
|
|
09/21/2006
|
|
|
|
137,400
|
|
|
$
|
1,195,380
|
|
|
|
|
03/22/2007
|
|
|
|
|
|
|
|
191,939
|
|
|
|
|
|
|
$
|
7.559
|
|
|
|
03/22/17
|
|
|
|
03/22/2007
|
|
|
|
158,751
|
|
|
$
|
1,381,134
|
|
Francis M. Corby, Jr.
|
|
|
03/01/2006
|
|
|
|
|
|
|
|
61,013
|
|
|
|
|
|
|
$
|
3.89
|
|
|
|
03/01/16
|
|
|
|
|
|
|
|
38,590
|
|
|
$
|
335,733
|
|
Mitchell S. Bregman
|
|
|
10/13/2004
|
|
|
|
13,333
|
|
|
|
6,667
|
|
|
|
|
|
|
$
|
15.82
|
|
|
|
08/29/15
|
|
|
|
10/13/2004
|
|
|
|
1,800
|
|
|
$
|
15,660
|
|
|
|
|
11/29/2005
|
|
|
|
10,040
|
|
|
|
20,089
|
|
|
|
|
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
|
11/29/2005
|
|
|
|
9,687
|
|
|
$
|
84,277
|
|
|
|
|
09/21/2006
|
|
|
|
|
|
|
|
66,400
|
|
|
|
|
|
|
$
|
3.64
|
|
|
|
09/21/16
|
|
|
|
09/21/2006
|
|
|
|
27,500
|
|
|
$
|
239,250
|
|
|
|
|
03/22/2007
|
|
|
|
|
|
|
|
31,990
|
|
|
|
|
|
|
$
|
7.559
|
|
|
|
03/22/17
|
|
|
|
03/22/2007
|
|
|
|
26,459
|
|
|
$
|
230,193
|
|
Edward J. OLeary
|
|
|
06/06/2005
|
|
|
|
10,000
|
|
|
|
20,000
|
|
|
|
|
|
|
$
|
4.88
|
|
|
|
08/29/15
|
|
|
|
06/06/2005
|
|
|
|
8,202
|
|
|
$
|
71,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/06/2005
|
|
|
|
4,000
|
|
|
$
|
34,800
|
|
|
|
|
11/29/2005
|
|
|
|
10,000
|
|
|
|
1,190
|
|
|
|
|
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
|
11/29/2005
|
|
|
|
6,569
|
|
|
$
|
57,150
|
|
|
|
|
09/21/2006
|
|
|
|
595
|
|
|
|
67,500
|
|
|
|
|
|
|
$
|
3.64
|
|
|
|
09/21/16
|
|
|
|
09/21/2006
|
|
|
|
27,900
|
|
|
$
|
242,730
|
|
|
|
|
03/22/2007
|
|
|
|
|
|
|
|
32,490
|
|
|
|
|
|
|
$
|
7.559
|
|
|
|
03/22/17
|
|
|
|
03/22/2007
|
|
|
|
26,872
|
|
|
$
|
233,786
|
|
Phillip A. Damaska
|
|
|
01/31/2005
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
$
|
13.41
|
|
|
|
08/29/15
|
|
|
|
01/31/2005
|
|
|
|
1,800
|
|
|
$
|
15,660
|
|
|
|
|
11/29/2005
|
|
|
|
8,000
|
|
|
|
10,666
|
|
|
|
|
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
|
11/29/2005
|
|
|
|
5,146
|
|
|
$
|
44,770
|
|
|
|
|
09/21/2006
|
|
|
|
5,334
|
|
|
|
34,900
|
|
|
|
|
|
|
$
|
3.64
|
|
|
|
09/21/16
|
|
|
|
09/21/2006
|
|
|
|
14,400
|
|
|
$
|
125,280
|
|
|
|
|
03/22/2007
|
|
|
|
|
|
|
|
16,795
|
|
|
|
|
|
|
$
|
7.559
|
|
|
|
03/22/17
|
|
|
|
03/22/2007
|
|
|
|
13,891
|
|
|
$
|
120,852
|
|
Neil S. Bright
|
|
|
10/13/2004
|
|
|
|
8,333
|
|
|
|
4,167
|
|
|
|
|
|
|
$
|
15.82
|
|
|
|
08/29/15
|
|
|
|
10/13/2004
|
|
|
|
1,800
|
|
|
$
|
15,660
|
|
|
|
|
11/29/2005
|
|
|
|
|
|
|
|
36,529
|
|
|
|
|
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
|
11/29/2005
|
|
|
|
14,685
|
|
|
$
|
127,760
|
|
|
|
|
09/21/2006
|
|
|
|
|
|
|
|
72,500
|
|
|
|
|
|
|
$
|
3.64
|
|
|
|
09/21/16
|
|
|
|
09/21/2006
|
|
|
|
30,000
|
|
|
$
|
261,000
|
|
|
|
|
(1) |
|
As noted on p. 20 of the CD&A, the Committee does not
set the exercise price of stock options as of the date the award
is granted. This column represents the exercise price as based
on the average closing price of our common stock for the ten
days preceding the grant date. |
|
(2) |
|
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. 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. Pursuant to
the terms of his Stock Option Award Agreements, Mr. Bright
forfeited all unvested/unexercised options upon his separation
from the Company on October 20, 2006. |
|
(3) |
|
The market value of unvested restricted stock is based on the
$8.70 closing price of our stock on The NASDAQ Global Market on
March 31, 2007. Mr. Bright forfeited unvested option
awards upon his separation from the Company effective
October 20, 2006, but values of unvested shares have been
calculated at March 31, 2007. |
31
FISCAL
2007 OPTION EXERCISES AND STOCK VESTED TABLE
The following table provides information for the named executive
officers, on (1) stock option exercises during fiscal 2007,
including the number of shares acquired upon exercise and the
value realized and (2) the number of shares acquired upon
the vesting of stock awards and the value realized,. No stock
options were exercised by our named executive officers in fiscal
2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)(3)
|
|
|
Gordon A. Ulsh
|
|
|
|
|
|
|
|
|
|
|
59,427
|
|
|
$
|
207,351
|
|
Francis M. Corby, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell S. Bregman(1)
|
|
|
|
|
|
|
|
|
|
|
3,021
|
|
|
$
|
13,762
|
|
Edward J. OLeary(2)
|
|
|
|
|
|
|
|
|
|
|
6,743
|
|
|
$
|
31,842
|
|
Phillip A. Damaska
|
|
|
|
|
|
|
|
|
|
|
1,887
|
|
|
$
|
10,429
|
|
Neil S. Bright
|
|
|
|
|
|
|
|
|
|
|
600
|
|
|
$
|
2,238
|
|
|
|
|
(1) |
|
Mr. Bregman forfeited 890 of the shares listed above to pay
withholding tax obligations related to the vested shares. |
|
(2) |
|
Mr. OLeary forfeited 2,413 of the shares listed above
to pay withholding tax obligations related to the vested shares. |
|
(3) |
|
Values based on the closing price of our common stock on the
respective vesting dates. |
FISCAL
2007 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
|
|
|
2.00
|
|
|
$
|
21,983
|
|
|
$
|
22,746
|
|
|
|
|
|
Francis M. Corby, Jr.
|
|
Cash Balance
|
|
|
1.00
|
|
|
$
|
11,167
|
|
|
$
|
11,359
|
|
|
|
|
|
Mitchell S. Bregman(2)
|
|
GNB
|
|
|
21.67
|
|
|
$
|
248,930
|
|
|
|
|
|
|
|
|
|
|
|
Cash Balance
|
|
|
6.00
|
|
|
$
|
58,224
|
|
|
$
|
63,954
|
|
|
|
|
|
Edward J. OLeary
|
|
Cash Balance
|
|
|
2.00
|
|
|
$
|
14,328
|
|
|
$
|
16,146
|
|
|
|
|
|
Phillip A. Damaska
|
|
Cash Balance
|
|
|
2.00
|
|
|
$
|
14,601
|
|
|
$
|
16,316
|
|
|
|
|
|
Neil S. Bright(3)
|
|
CMP Batteries Pension
|
|
|
15.50
|
|
|
$
|
1,070,931
|
|
|
|
|
|
|
$
|
22,216
|
|
|
|
|
(1) |
|
Benefits are valued as of December 31, 2006, the standard
measurement date we use for such plans. |
|
(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. |
|
(3) |
|
Mr. Brights pension valuation, which is calculated in
Pounds Sterling, is converted at the exchange rate in effect at
March 31, 2007 of 1.9679 U.S. dollars to 1 Pound Sterling. |
32
FISCAL
2007 DIRECTOR COMPENSATION TABLE
Directors who are employees receive no additional compensation
for serving on the board or its committees. In fiscal 2007, we
provided the following annual compensation to directors who are
not employees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)
|
|
|
($)
|
|
|
John P. Reilly, Chairman
|
|
$
|
145,000
|
|
|
$
|
16,709
|
|
|
$
|
24,533
|
|
|
|
0
|
|
|
$
|
186,242
|
|
Herbert F. Aspbury
|
|
$
|
44,000
|
|
|
$
|
10,668
|
|
|
$
|
16,472
|
|
|
|
0
|
|
|
$
|
71,140
|
|
Michael R. DAppolonia
|
|
$
|
81,500
|
|
|
$
|
16,709
|
|
|
$
|
24,533
|
|
|
|
0
|
|
|
$
|
122,742
|
|
Mark C. Demetree(4)
|
|
$
|
25,000
|
|
|
$
|
6,041
|
|
|
$
|
8,061
|
|
|
|
0
|
|
|
$
|
39,102
|
|
David S. Ferguson
|
|
$
|
93,000
|
|
|
$
|
16,709
|
|
|
$
|
24,533
|
|
|
|
0
|
|
|
$
|
134,242
|
|
Paul W. Jennings
|
|
$
|
29,000
|
|
|
$
|
10,668
|
|
|
$
|
16,472
|
|
|
|
0
|
|
|
$
|
56,140
|
|
Joseph V. Lash(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Phillip M. Martineau(4)
|
|
$
|
40,000
|
|
|
$
|
6,041
|
|
|
$
|
8,061
|
|
|
|
|
|
|
$
|
54,102
|
|
Michael R. Ressner
|
|
$
|
84,000
|
|
|
$
|
16,709
|
|
|
$
|
24,533
|
|
|
|
0
|
|
|
$
|
125,242
|
|
Carroll R. Wetzel
|
|
$
|
101,500
|
|
|
$
|
16,709
|
|
|
$
|
24,533
|
|
|
|
0
|
|
|
$
|
142,742
|
|
|
|
|
(1) |
|
This column represents the amount of cash compensation received
by the non-management directors for meeting fees, annual
retainer, Chairman retainer and Committee Chair retainers. |
|
(2) |
|
The amounts in this column reflect the compensation expense
recognized in accordance with FAS 123R for fiscal 2007
financial statement reporting purposes related to stock awards.
For our stock awards, compensation expense is based on fair
value, which is calculated using the closing price of our common
stock on the date of grant. For additional information, refer to
Note 11 of the Companys financial statements in our
Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007. |
|
(3) |
|
The amounts in this column reflect the compensation expense
recognized in accordance with FAS 123R for fiscal 2007
financial statement reporting purposes related to stock option
awards. For our stock options, compensation expense is based on
fair value, which is calculated using a BSVM. For additional
information, refer to Note 11 of the Companys
financial statements in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007. |
|
(4) |
|
Messrs. Demetree and Martineau did not seek re-election at
the Companys August 22, 2006 Annual Meeting of
Shareholders. Based on the provisions in the restricted stock
and stock option award agreements, vesting of both matters were
accelerated to August 22, 2006. |
|
(5) |
|
Mr. Lash has opted to forego payment of cash fees and
equity compensation for his service on the Board. |
Each non-employee director receives an annual retainer of
$40,000 payable prospectively in quarterly cash installments.
Additionally, the Chairman of the Board of Directors receives an
annual retainer of $50,000 payable prospectively in quarterly
installments. Effective for the fiscal quarter beginning
October 1, 2006, the Chairmans annual retainer was
increased to $90,000. The Chairman of the Audit Committee
receives an additional annual retainer of $15,000. The annual
retainer for the Chairmen of the Compensation Committee was
increased from $10,000 to $15,000 effective with the fiscal
quarter beginning October 1, 2006. The Chairman of the
Finance Committee receives an annual retainer of $10,000.
Effective with the fiscal quarter beginning October 1,
2006, the retainer paid to the Chairman of the Nominating and
Corporate Governance Committee was increased from $3,000 to
$10,000. Each member of our Board of Directors also receives
$2,000 for each board or committee meeting attended in person
and $1,000 for each board or committee meeting attended
telephonically.
On August 22, 2006, the Board approved a change in the
annual equity grants provided to our directors. Each
non-employee director will continue to receive an annual grant
of restricted shares equal to $20,000, but will now receive
stock options with a value of $40,000. The value of both awards
is based on the average closing price of our stock over the ten
trading days prior to the date of grant. These options and
restricted
33
shares have a one-year vesting period. On September 21,
2006 each of the directors was awarded options to purchase
13,290 shares of common stock at $3.64 per share and 5,494
restricted shares.
Directors who are also employees of our company receive no
additional compensation for service as a director. Additionally,
we do not provide retirement benefits to non-employee directors
under any current program.
FISCAL
2007 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
w/o Cause within
|
|
|
|
|
|
|
|
|
|
|
|
w/o Cause or by
|
|
|
w/ Cause or
|
|
|
12 months after a
|
|
|
|
|
|
|
|
|
|
|
|
employee for
|
|
|
by employee
|
|
|
Change in
|
|
|
|
|
|
|
|
Name
|
|
Benefit
|
|
Good Reason
|
|
|
w/o Good Reason
|
|
|
Control
|
|
|
Death
|
|
|
Disability
|
|
|
Gordon A. Ulsh
|
|
Base salary (1)
|
|
$
|
1,600,000
|
|
|
|
|
|
|
$
|
1,600,000
|
|
|
|
|
|
|
|
|
|
|
|
Bonus/EP (2)
|
|
$
|
1,600,000
|
|
|
$
|
800,000
|
|
|
$
|
1,600,000
|
|
|
$
|
800,000
|
|
|
$
|
800,000
|
|
|
|
Stock Options (3)
|
|
|
|
|
|
|
|
|
|
$
|
2,462,226
|
|
|
$
|
281,150
|
|
|
$
|
281,150
|
|
|
|
Restricted shares/RSU (4)
|
|
$
|
579,994
|
|
|
|
|
|
|
$
|
4,064,544
|
|
|
|
|
|
|
|
|
|
|
|
Performance Unit Cash Award (5)
|
|
|
|
|
|
|
|
|
|
$
|
785,714
|
|
|
$
|
785,714
|
|
|
$
|
785,714
|
|
|
|
Tax Gross-Up (6)
|
|
|
|
|
|
|
|
|
|
$
|
2,538,730
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Values based on Mr. Ulshs base salary in effect as of
March 31, 2007. 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, payment of the fiscal 2007 EP is assumed at target
(100% of base salary). Additionally, Mr. Ulsh would be
entitled to a pro rata portion of any bonus paid in the
succeeding fiscal year based on the service during the fiscal
year in which employment ceases. |
|
(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
closing price of our common stock on March 30, 2007.
Excludes valuation of shares otherwise exerciseable at
March 31, 2007. |
|
(4) |
|
Values based on the number of shares that would vest upon
termination multiplied by the closing price of our common stock
on March 30, 2007. |
|
(5) |
|
Value is based on a termination at March 31, 2007 and
target level reached for performance unit cash awards. |
|
(6) |
|
Calculations based on the assumed excise tax under
Section 280G of the Internal Revenue Code for the change in
control payment at March 31, 2007. This calculation does
not incorporate any requirements of Internal Revenue Service
Code §409A. |
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Termination
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Termination w/o
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w/o Cause or by
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Termination
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Cause within
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employee for
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with Cause or
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12 months after a
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Name
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Benefit
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Good Reason
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w/o Good Reason
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Death
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Disability
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Change in Control
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Francis M. Corby, Jr.
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Base Salary (1)
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$
|
450,000
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|
|
|
|
|
|
|
|
|
|
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|
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$
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450,000
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|
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Bonus/EP (2)
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$
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825,000
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$
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225,000
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|
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$
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225,000
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|
|
$
|
225,000
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|
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$
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825,000
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|
|
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Stock Options (3)
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$
|
293,473
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|
|
|
|
|
|
|
|
|
|
|
|
|
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$
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293,473
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|
|
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Restricted Shares (4)
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$
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335,733
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|
|
|
|
|
|
|
|
|
|
|
|
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$
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335,733
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|
|
|
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(1) |
|
Assumes there would be no change in the terms of
Mr. Corbys employment agreement after a change in
control. For a termination by the employer without cause or by
Mr. Corby with good reason, Mr. Corby would receive a
lump sum payment equal to the salary and earned but unpaid
vacation that would have been earned for the remainder of the
employment period. Mr. Corby would also receive earned but
unpaid salary through the date of termination under any other
termination event, including death or disability. |
34
|
|
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(2) |
|
For a termination by the Company without cause or by
Mr. Corby with good reason, Mr. Corby is entitled to
receive any earned but unpaid bonus for the prior fiscal year.
For purposes of this table, payment is assumed at target (50% of
base salary) for fiscal 2007. Mr. Corby would be entitled
to the target bonus for the fiscal year in which employment
ceases (100% of base salary). Additionally, Mr. Corby would
be entitled to $150,000 at March 31, 2008. Under any other
termination event, including death or disability, Mr. Corby
is entitled to receive any earned but unpaid bonus for the prior
fiscal year, which is assumed at the target award level (50% of
base salary). |
|
(3) |
|
Values shown were determined by multiplying the number of
options that would vest upon termination by the difference
between the exercise price and the closing price of our common
stock on March 30, 2007. |
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(4) |
|
Values based on the number of shares that would vest upon
termination multiplied by the closing price of our common stock
on March 30, 2007. |
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Termination w/o
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Cause within
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Termination
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Voluntary
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12 months after a
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Name
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Benefit
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w/o Cause(1)
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Termination(2)
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Death
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Disability
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Change in Control
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Mitchell S. Bregman
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Base salary (1)
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$
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320,000
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|
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|
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$
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320,000
|
|
|
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Stock Options (3)
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|
|
|
|
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|
|
|
|
|
|
|
|
|
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$
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457,615
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|
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Restricted Shares/RSU (4)
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|
|
|
|
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|
|
|
|
|
|
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$
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569,380
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Performance Unit Cash Award (5)
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$
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143,429
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$
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143,429
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$
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143,429
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Edward J. OLeary
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Base salary (1)
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$
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325,000
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|
|
|
|
|
|
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$
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325,000
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|
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Stock Options (3)
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|
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$
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460,067
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Restricted Share/RSU (4)
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$
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639,824
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Performance Unit Cash Award (5)
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$
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159,598
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$
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159,598
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$
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159,598
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Phillip A. Damaska
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Base salary (1)(2)
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$
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280,000
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$
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140,000
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|
|
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|
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|
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$
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280,000
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|
|
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Stock Options (3)
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$
|
240,981
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|
|
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Restricted Shares/RSU (4)
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$
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306,562
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|
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Performance Unit Cash Award (5)
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$
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76,071
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$
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76,071
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$
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76,071
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(1) |
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Messrs. Bregman and OLeary would receive one year of
unmitigated severance upon termination by the Company.
Mr. Damaska would receive six months unmitigated, and be
eligible for up to an additional six months mitigated
severance. Also assumes there would be no change in severance
policy after a change in control. |
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(2) |
|
Mr. Damaska will receive six months mitigated
severance if he is not named Chief Financial Officer by
June 30, 2008 and provides notice of voluntarily
termination within 30 days thereafter. |
|
(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
closing price of our stock on March 30, 2007. Excludes
valuation of shares otherwise exerciseable at March 31,
2007. |
|
(4) |
|
Values based on the number of shares not vested at
March 31, 2007 multiplied by the closing price of our
common stock on March 30, 2007. |
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(5) |
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Value is based on a termination at March 31, 2007 and
target level reached for performance unit cash awards. |
35
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of June 30,
2007, 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 of Directors;
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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,
Alpharetta, GA 30004.
We determined 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
61,210,421 shares of common stock outstanding at
June 28, 2007. 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 June 28, 2007. 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.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Percent
|
|
Name of Beneficial Owner
|
|
Beneficially Owned
|
|
|
of Class
|
|
|
5% Shareholders
|
|
|
|
|
|
|
|
|
Jeffrey L. Gendell(1)
|
|
|
17,183,870
|
|
|
|
28.1
|
%
|
C/o Tontine Capital Management,
L.L.C.
55 Railroad Avenue, 1st Floor
Greenwich, CT 06830
|
|
|
|
|
|
|
|
|
Legg Mason(2)
|
|
|
8,452,431
|
|
|
|
13.8
|
%
|
100 Light Street
Baltimore, MD 21202
|
|
|
|
|
|
|
|
*
|
Directors and Executive
Officers(3)
|
|
|
|
|
|
|
|
|
Herbert F. Aspbury
|
|
|
5,494
|
|
|
|
|
|
Michael R. DAppolonia
|
|
|
23,124
|
|
|
|
|
|
David S. Ferguson
|
|
|
18,664
|
|
|
|
|
*
|
Paul W. Jennings
|
|
|
7,494
|
|
|
|
|
*
|
Joseph V. Lash
|
|
|
0
|
|
|
|
|
*
|
John P. Reilly
|
|
|
23,124
|
|
|
|
|
*
|
Michael P. Ressner
|
|
|
18,579
|
|
|
|
|
*
|
Gordon A. Ulsh(4)
|
|
|
835,381
|
|
|
|
1.3
|
%
|
Carroll R. Wetzel
|
|
|
18,664
|
|
|
|
|
*
|
Francis M. Corby, Jr.
|
|
|
92,182
|
|
|
|
|
*
|
Mitchell S. Bregman
|
|
|
67,371
|
|
|
|
|
*
|
Phillip A. Damaska
|
|
|
53,454
|
|
|
|
|
*
|
Edward J. OLeary
|
|
|
81,596
|
|
|
|
|
*
|
All Directors and executive
officers as a group (16 persons)
|
|
|
1,427,732
|
|
|
|
2.3
|
%
|
36
|
|
|
* |
|
Represents less than 1% of the outstanding common stock. |
|
(1) |
|
The information reflects the Schedule 13D filed jointly by
Jeffrey L. Gendell (Mr. Gendell) and the
entities described below. Mr. Gendell is the managing
member of Tontine Capital Management, L.L.C. (TCM),
a Delaware limited liability company, the general partner of
Tontine Capital Partners, L.P., a Delaware limited partnership
(TCP). Mr. Gendell is the managing member of
Tontine Management, L.L.C. (TM), a Delaware limited
liability company, the general partner of Tontine Partners,
L.P., a Delaware limited partnership (TP).
Mr. Gendell is also the managing member of Tontine Overseas
Associates, L.L.C., a Delaware limited liability company
(TOA), the investment advisor to Tontine Overseas
Fund, Ltd., a Cayman Islands corporation (TOF) and
certain separately managed accounts. Mr. Gendell is also
the managing member of Tontine Capital Overseas GP, L.L.C., a
Delaware limited liability company (TCO), the
general partner of Tontine Capital Overseas Master Fund, L.P., a
Cayman Islands limited partnership (TMF).
Mr. Gendell indirectly owns 17,183,870 shares of
common stock which is made up of the following: TCP directly
owns 8,002,971 shares of common stock; TP directly owns
5,798,717 shares of common stock; TMF directly owns
900,000 shares of common stock; TOF beneficially owns
2,389,305 shares of common stock; and certain separately
managed accounts own 92,877 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 such shares of common stock
for purposes of Section 16(a) of the Securities Exchange
Act of 1934, as amended, or otherwise, except as to securities
representing Mr. Gendells pro rata interest in, and
interest in the profits of, TCP, TP, TM, TOA, TMF and TOF. |
|
(2) |
|
The information reflects the Schedule 13G filed by LMM LLC
and Legg Mason Opportunity Trust, a portfolio of Legg Mason
Investment Trust, Inc. |
|
(3) |
|
Includes shares of our common stock that may be acquired by
exercise of stock options within 60 days of June 28,
2007 as follows: Messrs. DAppolonia, Reilly and
Ressner, 7,785 shares each; Messrs. Ferguson and
Wetzel, 5,673 shares each; Mr. Ulsh,
219,642 shares; Mr. Bregman, 23,373 shares;
Mr. Damaska, 13,334 shares; Mr. OLeary,
20,595 shares; and all directors and executive officers as
a group, 348,990 shares. |
|
(4) |
|
Includes 257,057 shares transferred to 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. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and holders of more
than 10% of our common stock to file with the SEC reports
regarding their ownership and changes in ownership of our
securities. 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%
shareholders complied during fiscal 2007 with the reporting
requirements of Section 16(a), with the exception of the
following: Mitchell S. Bregman filed a Form 4 indicating
the surrender of shares to pay applicable taxes on vested
restricted shares on October 13 and November 29, 2006. The
form was filed on December 5, 2006, 49 and 2 days
late, respectively. Edward J. OLeary filed a Form 4
indicating the surrender of shares to pay applicable taxes on
vested restricted shares on June 6 and November 29, 2006.
The form was filed on December 5, 2006, 180 and 2 days
late, respectively.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to our Corporate Governance Guidelines, as well as the
Related party Transaction policy adopted by the Board on
March 22, 2007, the Audit Committee is responsible for
review of related person transactions between the
Company and related persons, including directors, executive
officers, director nominees, 5% stockholder of the company since
the beginning of the last fiscal year, as well as the immediate
37
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. A
nominee for director is also requested to provide us the
foregoing information. The Audit Committee considers whether any
proposed related party transaction is on terms and conditions
that are reasonable under the circumstances and in the best
interest of shareholders.
On June 28, 2006, we entered into a Standby Purchase
Agreement (the Standby Agreement) with Tontine
Capital Partners, L.P. (Tontine), Arklow Capital,
LLC (Arklow) and Legg Mason Investment Trust, Inc.
(Legg Mason). Tontine and Arklow, or their
affiliates, were owners of our common stock on June 28,
2006 and Legg Mason is currently an owner of our common stock.
As of June 28, 2007, Tontine beneficially owned
approximately 28.1% of our outstanding common stock, Legg Mason
beneficially owned approximately 13.8% of our common stock and
Arklow beneficially owned approximately 3.7% of our outstanding
common stock (including warrants owned by Arklow). Under the
Standby Agreement, Tontine, Legg Mason and Arklow agreed to
certain standby commitments with regards to our
$75.0 million rights offering to holders of our common
stock (the Rights Offering). The subscription price
in the Rights Offering was $3.50 per share, which was equal to
80% of the average closing price per share of our common stock
for the
30-day-trading
period ending July 6, 2006. Under the Standby Agreement,
Tontine and Legg Mason also agreed to purchase additional shares
of our common stock for $3.50 per share. The Rights Offering and
sale of additional shares to Tontine and Legg Mason closed on
September 18, 2006 and resulted in the sale of 14,758,483,
8,452,431 and 1,574,641 shares of our common stock to
Tontine, Legg Mason and Arklow, respectively, for $3.50 per
share.
38
SHAREHOLDER
PROPOSALS AND DIRECTOR NOMINATIONS FOR 2008 ANNUAL
MEETING
You may submit proposals, including director nominations, for
consideration at future shareholder meetings.
Shareholder Proposals. For a
shareholder 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 March 11, 2008. Such
proposals must also comply with SEC regulations under
Rule 14a-8
of the Securities Exchange Act of 1934 regarding the inclusion
of shareholder proposals in company-sponsored proxy materials.
Proposals should be addressed to:
Exide
Technologies
13000 Deerfield Parkway
Building 200
Alpharetta, Georgia 30004
Attn: Corporate Secretary
Fax:
(678) 566-9229
For a shareholder proposal that is not intended to be included
in our proxy statement under
Rule 14a-8
of the Securities Exchange Act of 1934, the shareholder must
(1) deliver a proxy statement and form of proxy to holders
of a sufficient number of shares of our common stock to approve
the proposal, (2) provide the information required by our
Bylaws and (3) 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:
|
|
|
|
|
not earlier than the close of business on the one hundred
twentieth day prior to the first anniversary of the 2007 annual
meeting of shareholders, or April 24, 2008; and
|
|
|
|
not later than the close of business on the ninetieth day prior
to the first anniversary of the 2007 annual meeting of
shareholders, or May 24, 2008.
|
However, if the 2008 annual meeting of shareholders is moved
more than 30 days before or more than 70 days after
August 22, 2008, then notice must be delivered by the
shareholder 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 Board of Directors
Nominating and Corporate Governance Committee. Any such
recommendation should include the nominees name and
qualification for Board of Directors membership and should be
directed our Corporate Secretary at the address of our
companys principal executive offices set forth above.
In addition, our Bylaws permit shareholders to nominate
directors for election at an annual meeting of shareholders. To
nominate a director, the shareholder must provide the
information required by our Bylaws. In addition, the shareholder
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 shareholder proposals that are not intended
to be included in our proxy statement.
Copy of Bylaw
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 shareholder proposals and nominating director candidates.
The Board of Directors 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.
39
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, 2007, including the
financial statements and the financial statement schedules
required to be 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.
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
shareholders sharing the same address by delivering a single
proxy statement addressed to those shareholders. This process,
which is commonly referred to as householding,
potentially provides extra convenience for shareholders and cost
savings for companies. Our company and some brokers household
proxy materials, delivering a single proxy statement to multiple
shareholders sharing an address unless contrary instructions
have been received from the affected shareholders. 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 proxy statement, or if you are receiving multiple
copies of the 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, Alpharetta, 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 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.
40
EXIDE TECHNOLOGIES
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 22, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brad S. Kalter and Barbara 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 Shareholders of the Company to be held at the Hilton Garden Inn Atlanta
North/Alpharetta at 4025 Windward Plaza Drive, Alpharetta, Georgia 30005, on Wednesday, August 22,
2007, 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 proposals 2 and 3 and in the
discretion of the proxyholders on any other matter that properly comes before the meeting.
(Continued and to be signed on the reverse side.)
ANNUAL MEETING OF SHAREHOLDERS OF
EXIDE TECHNOLOGIES
AUGUST 22, 2007
PROXY VOTING INSTRUCTIONS
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as possible.
TO VOTE BY TELEPHONE
Please call toll-free 1-800-PROXIES and follow the instructions. Have your control number and
the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at www.voteproxy.com and follow the on-screen instructions. Have
your control number available when you access the web page.
YOUR CONTROL NUMBER IS:
Please detach and mail in the envelope provided.
[X] Please mark votes as in this example.
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FOR all |
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WITHHOLD |
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nominees |
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AUTHORITY |
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(except as |
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to vote for all |
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indicated) |
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nominees |
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1.
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The election of the following nine persons as directors
of the Company.
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[ ]
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Nominees:
Herbert F. Aspbury
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For all nominees
listed hereon,
except vote
withheld for the
following
nominee(s): |
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Michael R. DAppolonia |
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David S. Ferguson |
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Paul W. Jennings |
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Joseph V. Lash |
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Michael P. Ressner |
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John P. Reilly |
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Gordon A. Ulsh |
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Carroll R. Wetzel |
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FOR
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AGAINST |
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ABSTAIN |
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2.
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Amendment to the Companys
Certificate of Incorporation to increase authorized shares of Common
Stock.
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FOR
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AGAINST |
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ABSTAIN |
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3.
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Ratify the appointment of the Companys independent auditors
for fiscal 2008.
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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.
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Signature
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Signature if held jointly
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Dated |
NOTE: This Proxy Card should be dated, signed by the shareholder exactly as the shareholders
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 hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.