UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
|
¨
|
Preliminary
Proxy Statement
|
|
¨
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
|
x
|
Definitive
Proxy Statement
|
|
¨
|
Definitive
Additional Materials
|
|
¨
|
Soliciting
Material under § 240.14a-12
|
TEREX
CORPORATION
(Name of
Registrant as Specified in Its Charter)
____________________________________________________________
(Name of
Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
|
x
|
No
fee required
|
|
o
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
|
(1)
|
Title
of each class of securities to which transaction
applies:
|
__________________________________________________________________________________________
|
(2)
|
Aggregate
number of securities to which transaction
applies:
|
__________________________________________________________________________________________
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was
determined):
|
__________________________________________________________________________________________
|
(4)
|
Proposed
maximum aggregate value of
transaction:
|
__________________________________________________________________________________________
|
|
(5)
|
Total
fee paid:
|
__________________________________________________________________________________________
¨ Fee paid
previously by written preliminary materials.
¨ Check box if
any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2), and
identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
______________________________________________________
(3)
Filing Party:
(4)
Date Filed:
TEREX
CORPORATION
200
Nyala Farm Road, Westport, Connecticut 06880
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 13, 2010
The
Annual Meeting of Stockholders of Terex Corporation (“Terex” or the “Company”)
will be held at the corporate offices of Terex Corporation, 200 Nyala Farm Road,
Westport, Connecticut, on Thursday, May 13, 2010, at 10:00 a.m., local time, for
the following purposes:
|
|
1.
|
To
elect nine (9) directors of the Company to hold office for one year or
until their successors are duly elected and
qualified.
|
|
|
2.
|
To
ratify the selection of PricewaterhouseCoopers LLP as the independent
registered public accounting firm for the Company for
2010.
|
|
|
3.
|
To
transact such other business as may properly come before the meeting or
any adjournment or postponement
thereof.
|
The
foregoing items of business are described more fully in the Proxy Statement
accompanying this Notice.
The Board
of Directors of the Company has fixed the close of business on March 17, 2010 as
the record date for determining the stockholders entitled to notice of, and to
vote at, the Annual Meeting.
Securities
and Exchange Commission rules allow us to furnish proxy materials to our
stockholders on the Internet. We are pleased to utilize these rules and believe
that they enable us to provide our stockholders with the information that they
need, while lowering the cost of delivery and reducing the environmental impact
of our Annual Meeting.
On or
about April 2, 2010, we will be mailing our Notice of Internet Availability of
Proxy Materials to most of our stockholders, which contains instructions for our
stockholders’ use of this process, including how to access our 2010 Proxy
Statement and 2009 Annual Report and how to vote online. In addition,
the Notice of Internet Availability of Proxy Materials contains instructions on
how you may receive a paper copy of the Proxy Statement and Annual Report, if
you received only a Notice of Internet Availability of Proxy Materials this
year.
EVERY
STOCKHOLDER’S VOTE IS IMPORTANT. While all stockholders are invited
to attend the Annual Meeting, we urge you to vote whether or not you will be
present at the Annual Meeting. You may vote by telephone or via the
Internet. If you received a paper copy of the proxy card by mail, you
may complete, date and sign the proxy card and return it in the envelope
provided. No postage is required if the proxy card is mailed in the
United States. You may withdraw your proxy or change your vote at any
time before your proxy is voted, either by voting in person at the Annual
Meeting, by proxy, by telephone or via the Internet. Please vote
promptly in order to avoid the additional expense of further
solicitation.
|
By
order of the Board of Directors,
|
|
|
Eric
I Cohen
Secretary
|
March 31,
2010
Westport,
Connecticut
TEREX
CORPORATION
200
Nyala Farm Road
Westport,
Connecticut 06880
Proxy
Statement for the
Annual
Meeting of Stockholders
to be
held on May 13, 2010
This Proxy Statement is furnished to
stockholders of Terex Corporation (“Terex” or the “Company”) in connection with
the solicitation of proxies by and on behalf of the Company’s Board of Directors
(the “Board”) for use at the Annual Meeting of Stockholders of the Company to be
held at 10:00 a.m., local time, on May 13, 2010, at the corporate offices of
Terex Corporation, 200 Nyala Farm Road, Westport, Connecticut, and at any
adjournments or postponements thereof (collectively, the “Meeting”), for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders
(the “Notice”).
As of
March 17, 2010, the record date for determining the stockholders entitled to
notice of, and to vote at, the Meeting, the Company had outstanding 108,584,623
shares of common stock, $.01 par value per share (“Common Stock”).
Under
rules and regulations of the Securities and Exchange Commission (“SEC”), instead
of mailing a printed copy of our proxy materials to each stockholder of record
or beneficial owner of our Common Stock, we are furnishing proxy materials,
which include our Proxy Statement and Annual Report, to our stockholders over
the Internet and providing a Notice of Internet Availability of Proxy Materials
by mail to all of our stockholders, other than to stockholders who previously
elected to receive a printed copy of the proxy materials. Those stockholders
that previously elected to receive printed proxy materials will each receive
such materials by mail. If you received a Notice of Internet Availability of
Proxy Materials by mail, you will not receive a printed copy of the proxy
materials unless you request to receive these materials in hard copy by
following the instructions provided in the Notice of Internet Availability of
Proxy Materials. Instead, the Notice of Internet Availability of Proxy Materials
will instruct you how you may access and review all of the important information
contained in the proxy materials over the Internet. The Notice of Internet
Availability of Proxy Materials also instructs you how you may submit your proxy
via telephone or the Internet. If you received a Notice of Internet Availability
of Proxy Materials by mail and would like to receive a printed copy of our proxy
materials, you should follow the instructions for requesting such materials
included in the Notice of Internet Availability of Proxy Materials.
We are
mailing the Notice of Internet Availability of Proxy Materials to our
stockholders on or about April 2, 2010.
Each share of Common Stock is entitled
to one vote per share for each matter to be voted on at the
Meeting. Except for the election of directors of the Company, the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by proxy and entitled to vote is required for the approval of any
matters voted upon at the Meeting. In an uncontested election of
directors, such as the election at the Meeting, each director shall be elected
by a majority of the votes cast with respect to such director.
A quorum
of stockholders is constituted by the presence, in person or by proxy, of
holders of record of Common Stock representing a majority of the aggregate
number of votes entitled to be cast. Abstentions and broker non-votes
will be considered present for purposes of determining the presence of a
quorum. With respect to all matters to be voted upon at the Meeting,
abstentions will have the effect of a negative vote and broker non-votes will
not be considered as votes cast and thus will have no effect on the outcome of
the vote.
Proxy solicitations by the Board will
be made by mail, by phone, via the Internet or by personal interviews conducted
by officers or employees of the Company. All costs of solicitations, including
(a) printing and mailing of the Notice of Internet Availability of Proxy
Materials, (b) the printing and mailing of this Proxy Statement and accompanying
material, (c) the reimbursement of brokerage firms and others for their expenses
in forwarding solicitation material to the beneficial owners of the Company’s
stock, and (d) supplementary solicitations to submit proxies, if any, will be
borne by the Company.
How To
Vote
In order that your shares of Common
Stock may be represented at the Meeting, you are requested to vote your proxy
using one of the following methods:
Via the
Internet – You can vote your shares via the Internet as
instructed in the Notice of Internet Availability of Proxy Materials. The
Internet procedures are designed to authenticate your identity to allow you to
vote your shares and confirm that your instructions have been properly recorded.
Internet voting facilities for stockholders of record are available
24 hours a day and will close at 11:59 p.m. (EDT) on May 12,
2010.
By Telephone – The Notice
of Internet Availability of Proxy Materials includes a toll-free number you can
call to request printed copies of proxy materials and instructions on how to
vote by telephone. The printed proxy materials include a different toll-free
number you may call for voting.
By Mail – Stockholders
who receive a paper proxy card may elect to vote by mail and should complete,
sign and date their proxy card and mail it in the pre-addressed envelope that
accompanies the delivery of paper proxy cards. Proxy cards submitted by mail
must be received by the time of the Meeting in order for your shares to be
voted. Stockholders who hold shares beneficially in street name may vote by mail
by requesting a paper proxy card according to the instructions contained in the
Notice of Internet Availability of Proxy Materials received from your broker or
other agent, and then completing, signing and dating the voting instruction card
provided by the brokers or other agents and mailing it in the pre-addressed
envelope provided.
Please
note that this year the rules regarding how brokers may vote your shares have
changed. Brokers may no longer vote your shares on the election of
directors in the absence of your specific instructions as to how to
vote. The Company encourages you to provide instructions to your
broker regarding the voting of your shares.
If you
vote via the Internet, by telephone or by mailing a proxy card, we will vote
your shares as you direct. For the election of directors, you can specify
whether your shares should be voted for all, some or none of the nominees for
director listed. With respect to the other items being submitted for stockholder
vote, you may vote “for” or “against” any proposal or you may abstain from
voting on any proposal.
If you
submit a proxy via the Internet, by telephone or by mailing a proxy card without
indicating your instructions, we will vote your shares consistent with the
recommendations of our Board as stated in this Proxy Statement and in the Notice
of Internet Availability of Proxy Materials, specifically in favor of our
nominees for directors and in favor of the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent registered public accounting firm.
If any other matters are properly presented at the Meeting for consideration,
then our officers named on your proxy will have discretion to vote for you on
those matters. As of the date of the Notice of Internet Availability of
Proxy Materials, we knew of no other matters to be presented at the
Meeting.
2
Revocation of Proxies – Any stockholder giving a
proxy has the right to attend the Meeting to vote his or her shares of Common
Stock in person (thereby revoking any prior proxy). Any stockholder
also has the right to revoke the proxy at any time by executing a later-dated
proxy, by telephone, via the Internet or by written revocation received by the
Secretary of the Company prior to the time the proxy is voted. All
properly executed and unrevoked proxies delivered pursuant to this solicitation,
if received at or prior to the Meeting, will be voted at the
Meeting.
NO PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROXY STATEMENT.
PROPOSAL
1: ELECTION OF DIRECTORS
At the Meeting, nine directors of the
Company are to be elected to hold office until the Company’s next Annual Meeting
of Stockholders or until their respective successors are duly elected and
qualified. Each director shall be elected by a majority of the votes
of shares of Common Stock represented at the Meeting in person or by proxy cast
with respect to such director. Unless marked to the contrary, the proxies
received by the Company will be voted FOR the election of the nine nominees
listed below, all of whom are presently members of the Board.
Each
nominee has consented to being named in this Proxy Statement and to serve as a
director if elected. However, should any of the nominees for director
decline or become unable to accept nomination if elected, it is intended that
the Board will vote for the election of such other person as director as it
shall designate. The Company has no reason to believe that any
nominee will decline or be unable to serve if elected.
In the
event of an uncontested election, as is the case this year, any nominee for
director who is a current director and receives less than a majority of the
votes cast in person or by proxy at the Meeting shall offer to resign from the
Board. While the Board does not believe that in each such case a
director should necessarily leave the Board, this presents an opportunity for
the Board, through its Governance and Nominating Committee, to consider the
resignation offer.
The information set forth below has
been furnished to the Company by the nominees and sets forth for each nominee,
as of March 25, 2010, such nominee’s name, business experience for at least the
past five years, other directorships held and age. There is no family
relationship between any nominee and any other nominee or executive officer of
the Company. For information regarding the beneficial ownership of
the Common Stock by the current directors of the Company, see “Security
Ownership of Management and Certain Beneficial Owners.”
The Governance and Nominating Committee
of the Board has nominated each of the following individuals based on various
criteria, including, among others, a desire to maintain a balanced experience
and knowledge base within the Board, the nominees’ personal integrity,
independence, diversity, experience, sound judgment and willingness to devote
necessary time and attention to properly discharge the duties of director, and
the ability of the nominees to make positive contributions to the leadership and
governance of the Company.
3
The Board recommends that the
stockholders vote FOR the following nominees for director.
|
Name
|
Age
|
Positions and
Offices with Company
|
First Year
As
Company
Director
|
|||
|
Ronald
M. DeFeo
|
58
|
Chairman
of the Board, Chief Executive
Officer
and Director
|
1993
|
|||
|
G.
Chris Andersen
|
71
|
Lead
Director
|
1992
|
|||
|
Paula
H. J. Cholmondeley
|
62
|
Director
|
2004
|
|||
|
Don
DeFosset
|
61
|
Director
|
1999
|
|||
|
William
H. Fike
|
73
|
Director
|
1995
|
|||
|
Thomas
J. Hansen
|
61
|
Director
|
2008
|
|||
|
David
A. Sachs
|
50
|
Director
|
1992
|
|||
|
Oren
G. Shaffer
|
67
|
Director
|
2007
|
|||
|
David
C. Wang
|
|
65
|
|
Director
|
|
2008
|
Ronald M.
DeFeo
Business
Experience: Ronald M. DeFeo joined the Company on
May 1, 1992, was appointed President and Chief Operating Officer of the Company
on October 4, 1993, Chief Executive Officer (“CEO”) of the Company on March 24,
1995 and Chairman of the Board on March 4, 1998. Mr. DeFeo relinquished the
titles of President and Chief Operating Officer of the Company on January 3,
2007. Pursuant to an Amended and Restated Employment and Compensation Agreement
between Mr. DeFeo and the Company, dated as of October 14, 2008 (the “DeFeo
Agreement”), Mr. DeFeo is to remain Chief Executive Officer of the Company
through December 31, 2012 and the Company will use its best efforts, consistent
with generally accepted best corporate governance standards, to have Mr. DeFeo
elected Chairman of the Board during this time. Prior to joining the
Company, Mr. DeFeo was a Senior Vice President of J.I. Case Company, the former
Tenneco farm and construction equipment division, and also served as a Managing
Director of Case Construction Equipment throughout Europe. While at J.I. Case,
Mr. DeFeo was also a Vice President of North American Construction Equipment
Sales and General Manager of Retail Operations. Mr. DeFeo serves as a director
of Kennametal Inc. (a supplier of the Company). Mr. DeFeo served as a
director of United Rentals, Inc. (a customer of the Company) until June
2005.
Qualifications: Mr.
DeFeo has 18 years of management and operating experience with the
Company. Mr. DeFeo is well regarded in the industry having been named
to the Association of Equipment Manufacturers (“AEM”) Hall of Fame and having
served as the Chairman of AEM. Based on his current role as CEO of
the Company and his history with the Company and the industry, Mr. DeFeo
provides the Board with skillful leadership and in-depth industry
knowledge.
4
G. Chris
Andersen
Business
Experience: G. Chris Andersen has been a merchant banker
since 1996 and is currently a partner of G. C. Andersen Partners, LLC, a
private merchant banking and advisory firm. Previously, Mr. Andersen
served as the non-executive Chairman of the Board of Directors of Millenium Cell
Inc.
Qualifications:
Mr. Andersen has an extensive knowledge of global capital markets, mergers and
acquisitions transactions and investment community concerns. Based on
his tenure with the Board, he also has an extensive knowledge of the Company
that, in addition to his professional and other experiences, strengthens the
Board’s collective knowledge, capabilities and experience.
Paula H. J.
Cholmondeley
Business
Experience: Paula H. J. Cholmondeley was a private
consultant on strategic planning from 2004 through 2009. Ms. Cholmondeley served
as Vice President and General Manager of Sappi Fine Paper, North America from
2000 through 2004, where she was responsible for their Specialty Products
division. Ms. Cholmondeley held senior positions with various other companies
from 1980 through 1998, including Owens Corning, The Faxon Company, Blue Cross
of Greater Philadelphia, and Westinghouse Elevator Company, and also served as a
White House Fellow assisting the U.S. Trade Representative during the Reagan
administration. Ms. Cholmondeley, a former certified public accountant, is an
alumnus of Howard University and received a Masters Degree in Accounting from
the University of Pennsylvania, Wharton School of Finance. Ms. Cholmondeley is
also a director of Dentsply International Inc., Ultralife Corporation, Albany
International Corp. and Minerals Technologies Inc., and is an independent
trustee of Nationwide Mutual Funds.
Qualifications: Ms.
Cholmondeley has significant financial and operations experience with several
international manufacturing companies, held executive positions where she was
responsible for leading strategic planning and involved in preparing financial
statements as the chief financial officer of a large insurance
company. As a result of these professional and other experiences, and
as Ms. Cholmondeley is an African American female raised in the Caribbean, she
brings diverse perspectives and experiences, which strengthens the
Board.
Donald
DeFosset
Business
Experience: Don DeFosset retired in 2005 as Chairman,
President and Chief Executive Officer of Walter Industries, Inc., a diversified
company with principal operating businesses in homebuilding and home financing,
water transmission products and energy services. Mr. DeFosset served
since November 2000 as President and CEO, and since March 2002 as Chairman, of
Walter Industries. Previously, he was Executive Vice President and
Chief Operating Officer of Dura Automotive Systems, Inc. (“Dura”), a global
supplier of engineered systems, from October 1999 through June
2000. Before joining Dura, Mr. DeFosset served as a Corporate
Executive Vice President, President of the Truck Group and a member of the
Office of Chief Executive Officer of Navistar International Corporation from
October 1996 to August 1999. Mr. DeFosset also serves as a director
of National Retail Properties Inc., Regions Financial Corporation and EnPro
Industries, Inc. Previously, Mr. DeFosset served as a director of James
Hardie Industries N.V. from 2006 through 2008.
Qualifications: Mr.
DeFosset has considerable experience as a chief executive of a large diversified
industrial company and as a senior executive of an international machinery
manufacturer. Based on his tenure with the Board, he has an extensive
knowledge of the Company that, in addition to his professional and other
experiences, strengthens the Board’s ability to perform its
functions.
5
William H.
Fike
Business
Experience: William H. Fike has been President of Fike &
Associates, a consulting firm, since January 2000. Mr. Fike retired as the Vice
Chairman and Executive Vice President of Magna International Inc., an automotive
parts manufacturer based in Ontario, Canada, in February 1999. Prior to joining
Magna International in August 1994, Mr. Fike was employed by Ford Motor Company
from 1965 to 1994, where he served most recently as a Corporate Vice President
and as President of Ford Europe. Previously, Mr. Fike served as a
director of Magna International from 1995 through 2007.
Qualifications: Mr.
Fike has substantial operations experience as a senior executive of a large
international automotive manufacturer. He also has substantial
international operating experience, having lived and managed overseas businesses
for many years. Based on his tenure with the Board, he has an
extensive knowledge of the Company that, in addition to his professional and
other experiences, strengthens the Board’s collective knowledge, capabilities
and experience.
Thomas J.
Hansen
Business
Experience: Thomas J. Hansen is Vice Chairman of Illinois
Tool Works Inc. (“ITW”), a manufacturer of fasteners and components, consumable
systems and a variety of specialty products and equipment, and is responsible
for ITW’s worldwide Automotive Components and Fastener, Fluids and Polymers,
Industrial Metal and Plastic and Construction businesses. From 1998 until May
2006, Mr. Hansen served as Executive Vice President of ITW. Mr. Hansen joined
ITW in 1980 as sales and marketing manager of the Shakeproof Industrial Products
businesses and held several other positions with the company. Mr. Hansen is a
member of the Northern Illinois University’s Executive Club, a member of the
Economics Club of Chicago, is Chairman of the ITW Better Government Council, and
is a former member of the Board of Trustees of MAPI (Manufacturers
Alliance).
Qualifications: Mr.
Hansen is a senior executive of a large diversified industrial manufacturing
company facing the same set of current external economic, social and governance
issues as the Company. He also has significant experience in the area
of mergers and acquisitions. As a result of these professional and
other experiences, Mr. Hansen brings knowledge, experience and operational
capabilities to the Board.
David A.
Sachs
Business
Experience: David A. Sachs is a Senior Advisor in the
Capital Markets Group and serves as an Investment Committee Member of Ares
Management LLC, a firm he co-founded in 1997. Mr. Sachs has been an investment
banker and investment manager since 1981.
Qualifications: Mr.
Sachs has extensive knowledge of global capital markets and is valuable to the
Board’s discussions of the Company’s capital and liquidity
needs. Based on his tenure with the Board, he has an extensive
knowledge of the Company that, in addition to his professional and other
experiences, brings value and insight to the Company and the
Board.
6
Oren G.
Shaffer
Business
Experience: Oren G. Shaffer retired in 2007 as the
Vice Chairman and Chief Financial Officer of Qwest Communications International
Inc., a telecommunications provider, having served in that capacity from 2002 to
2007. From 2000 to 2002, Mr. Shaffer was President and Chief
Operating Officer of Sorrento Networks, a company which develops intelligent
optical networking solutions for telecommunication applications, and was a
consultant for SBC Corp., a provider of wireless service
technology. From October 1994 to January 2000, he served as Executive
Vice President and Chief Financial Officer of Ameritech Corporation, a
telecommunications company. He also held various senior executive
positions in the areas of operations, finance and strategy in his 25 years with
Goodyear Tire & Rubber Co. Mr. Shaffer also serves as a
director of Belgacom SA and Intermec, Inc.
Qualifications: Mr.
Shaffer has chief financial officer experience at large international companies
and operations experience at a large global manufacturing company. He
has significant experience with European businesses and is currently director of
a Belgian-based telecommunications company. As a result of these
professional and other experiences, Mr. Shaffer strengthens the Board’s
collective knowledge and capabilities.
David W.
Wang
Business
Experience: David C. Wang is President of Boeing China
Inc. and Vice President of International Relations of The Boeing Company
(“Boeing”), a large aerospace company and a manufacturer of commercial
jetliners and military aircraft, and has held these positions since November
2002. Prior to joining Boeing, Mr. Wang served as Chairman and CEO of
General Electric China from 1997 to 2001. Prior to that, Mr. Wang
served in various positions of increasing responsibility with General Electric
since 1980. Mr. Wang is also a director of KLA-Tencor
Corporation.
Qualifications: Mr.
Wang has substantial experience as a global manufacturing executive in the
international and Chinese markets. As Mr. Wang is a Chinese national,
he brings a unique perspective to the Board in a key developing market in which
the Company hopes to expand in the future. As a result of these
professional and other experiences, Mr. Wang provides a diverse outlook which
adds to the Board’s collective ability to provide guidance to the Company and
management.
Dr.
Donald P. Jacobs is a current director of the Company who is not standing for
election as a nominee for director at the Meeting. Dr. Jacobs is
Dean Emeritus and the Gaylord Freeman Distinguished Professor of Banking of the
J.L. Kellogg School of Management at Northwestern University. Prior
to that, Dr. Jacobs was Dean of the Kellogg School. He presently teaches
corporate governance, strategy and international business. Given Dr.
Jacobs’ extensive management experience and knowledge of the Company, Dr. Jacobs
will continue as an advisor to the Company in the capacity of Director
Emeritus. In this role, Dr. Jacobs will be invited to attend and
participate in all Board and Governance and Nominating Committee meetings, and
must attend at least one Board and Governance and Nominating Committee meeting
in person annually. As Director Emeritus, Dr. Jacobs will not be
entitled to a vote at such meetings.
Helge H. Wehmeier is a current director
of the Company who is not standing for election as a nominee for director at the
Meeting.
Board
Meetings and Corporate Governance
The Board met 12 times in 2009 at
regularly scheduled and special meetings, including telephonic
meetings. All of the directors in office during 2009 attended at
least 75% of the meetings of the Board and all committees of the Board on which
they served during 2009. It is the Company’s policy, as stated in the
Company’s Governance Guidelines (the “Guidelines”), that each director is
expected to attend the annual meeting of stockholders. All of the
directors then in office attended the Company’s previous annual meeting of
stockholders held on May 14, 2009.
7
Director
Independence
It is the
Company’s policy that the Board consists of a majority of directors who qualify
as independent directors under the listing standards of the New York Stock
Exchange (“NYSE”), the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the requirements of any other applicable regulatory
authority, including the SEC. The Board annually reviews the
relationship of each director with the Company, and only those directors who the
Board affirmatively determines have no material relationship with the Company
are deemed to be independent directors. The Guidelines specifically
define what is deemed to be a material relationship between the Company and an
independent director. The following are the relationships that the
Board considers in making its independence determination:
|
(i)
|
whether
the director or any of his or her immediate family members is or was
within the past five years an officer of the
Company;
|
|
(ii)
|
whether
the director is or was within the past five years an employee of the
Company;
|
|
(iii)
|
whether
the director or any of his or her immediate family members is or was
during the past five years affiliated with, or employed by, any past or
present auditor of the Company (or an affiliate
thereof);
|
|
(iv)
|
whether
the director or any of his or her immediate family members is or was
within the past five years part of an interlocking directorate in which an
executive officer of the Company serves or served on the compensation
committee of a company that concurrently employs or employed the director
or any of his or her immediate family
members;
|
|
(v)
|
whether
the director is an executive officer, a partner, member, of counsel or
beneficial owner of more than ten percent (10%) of the equity interest of
a customer of, or a supplier of goods or services (including without
limitation any investment banking firm or law firm) to, the Company where
the amount involved in any of the last three fiscal years exceeds certain
thresholds;
|
|
(vi)
|
whether
the director is an executive officer, a partner or beneficial owner of
more than ten percent (10%) of the equity interest of a company to which
the Company was indebted at the end of any fiscal quarter during the
Company’s most recently completed fiscal year or current fiscal year in an
amount in excess of five percent (5%) of the Company’s total consolidated
assets at the end of such fiscal
year;
|
|
(vii)
|
whether
the director is an executive officer, a partner or beneficial owner of
more than ten percent (10%) of the equity interest of a company which was
indebted to the Company;
|
|
(viii)
|
whether
the director or any of his or her immediate family members was indebted to
the Company, other than in the ordinary course of business of the Company
and the business of the director or the member of his or her immediate
family, as applicable, at the end of any fiscal quarter during the
Company’s most recently completed fiscal year or current fiscal year in an
amount in excess of $100,000 at the end of such fiscal
year;
|
|
(ix)
|
whether
the director is affiliated with a tax exempt entity that within the
preceding three years received the greater of (x) $1 million or (y) two
percent (2%) of its consolidated gross revenues from the Company (based on
the tax exempt entity’s most recently completed fiscal
year);
|
8
|
(x)
|
whether
the director or any of his or her immediate family members is during the
current fiscal year or was during the most recently completed fiscal year
a party to a transaction or series of similar transactions with the
Company or its subsidiaries (excluding director fees, stock options and
other director compensation), other than on arm’s-length terms where the
amount involved is not material to either
party;
|
|
(xi)
|
whether
the director or any of his or her immediate family members received more
than $100,000 per year in direct compensation from the Company, other than
director and committee fees and pension or other forms of deferred
compensation for prior service within the past three years;
and
|
|
(xii)
|
whether
the director has any other relationships with the Company or the members
of management of the Company that the Board has determined to be material
and which are not described in (i) through (xi)
above.
|
After
consideration of all applicable matters, the Board determined, based on the
above criteria, that none of the directors has a material relationship with the
Company other than as a director or as a stockholder except for Mr. DeFeo, who
is not an independent director. Accordingly, the Board has determined
that all of the nominees for director are independent directors except for Mr.
DeFeo, who has been nominated to serve on the Board as a result of his position
as Chief Executive Officer of the Company.
Director
Compensation
Directors who are employees of the
Company receive no additional compensation by virtue of being directors of the
Company. Outside directors receive compensation for their service as
directors and reimbursement of their expenses incurred as a result of their
service as directors. See “Director Compensation” for a detailed
description of director compensation, including the Company’s Common Stock
ownership objective for outside directors.
Board Leadership
Structure
The Board
believes that the Company’s Chief Executive Officer is best situated to serve as
Chairman because he is the director most familiar with the Company’s business
and industry, and most capable of effectively identifying strategic priorities
and leading the discussion and execution of strategy. The Company’s independent
directors bring experience, oversight and expertise from outside the Company and
industry, but the Company’s Chief Executive Officer, based on his proximity to
the business, is in the best position to identify areas of focus for the Board
and set the Board’s initial agenda. The Board believes that the
combined role of Chairman and Chief Executive Officer facilitates information
flow between management and the Board, which is essential to effective
governance.
One of
the key responsibilities of the Board is to approve management’s strategic
direction and hold management accountable for the execution of strategy once it
is approved. The Board believes the combined role of Chairman and Chief
Executive Officer, working collaboratively with an independent Lead Director
having the duties described below, is in the best interest of stockholders
because it provides the appropriate balance between strategy development and
independent oversight of management.
9
Management
is responsible for identification of key risks and for development and
implementation of processes for the mitigation and monitoring of
risks. Management provides a comprehensive enterprise risk management
assessment to the Board annually that describes the most significant risks
facing the Company, measures the relative magnitude of the risks, identifies the
risk owners for each major risk and describes the improvement plans surrounding
each major risk. The Board has an active role, as a whole and also at
the committee level, in overseeing management of the Company’s
risks. While each committee is responsible for evaluating certain
risks and overseeing the management of such risks, the entire Board is regularly
informed through direct presentations and committee reports about such
risks. The Audit Committee oversees management of financial risks,
financial controls, internal audit and potential conflicts of interest. The
Company’s Compensation Committee is responsible for overseeing the management of
risks relating to the Company’s human resources and executive compensation plans
and arrangements. The Governance and Nominating Committee manages risks
associated with the independence of the Board of Directors and receives regular
updates from the Company’s Chief Ethics and Compliance Officer on compliance
risks. The Corporate Responsibility and Strategy Committee oversees management
of risks associated with strategy, and environmental, health and safety
matters.
In
addition, the Board reviews information regarding the Company’s credit,
liquidity and operations, as well as the risks associated with each, on a
regular basis. In addition, commencing in 2010, management will engage in an
in-depth review and dialogue with the Board with respect to the most significant
risks facing the Company on a rotating basis at each Board meeting.
Corporate Governance
Principles
The Board
and the Governance and Nominating Committee annually review the Company’s
corporate governance policies and practices and the Guidelines. The
Board believes that the Guidelines effectively assist the Board in the exercise
of its duties and responsibilities and serve the best interests of the
Company. These Guidelines reflect the Board’s commitment to monitor
the effectiveness of policy and decision making both at the Board and management
levels, with a view to achieving strategic objectives of the Company while
enhancing stockholder value over the long term. The Board and the
Governance and Nominating Committee will continue to review the Guidelines
annually and may make changes as they determine are necessary and appropriate,
including changes that may be necessary to comply with new or proposed laws,
rules or regulations issued by the SEC and the NYSE. A copy of the
Guidelines is available at the Company’s website, www.terex.com, under “About
Terex” – “Investor Relations” – “Corporate Governance.” In addition, a copy of
the Guidelines is available in print, without charge, to any stockholder who
requests these materials from the Company.
Directors have complete access to
management and the Company’s outside advisors, and senior officers and other
members of management frequently attend Board and committee meetings at the
discretion of the Board. It is the policy of the Board that
non-management directors also meet privately in executive sessions without the
presence of any members of management at each regularly scheduled meeting of the
Board and at such other times as the Board shall determine. In
addition, the Board may retain and have access to independent advisors of its
choice with respect to any issue relating to its activities, and the Company
pays the expenses of such advisors.
10
If you
wish to communicate with the non-management directors of the Board, you may
correspond by filing a report through Ethicspoint, 24 hours a day, 7 days a
week, via the Internet at www.ethicspoint.com or by calling, toll free, (877)
584-8488 or 1-877-ETHICSP. Reports should be submitted under the
category “Director Communications.” Ethicspoint is an independent
third-party provider retained by the Company to offer a comprehensive,
confidential and, upon request, anonymous reporting system for receiving
communications, complaints and grievances. All communications
received by Ethicspoint are relayed to the Board.
Board
Committees
The Board
has an Audit Committee, Compensation Committee, Corporate Responsibility and
Strategy Committee, and Governance and Nominating Committee.
Audit Committee Meetings and
Responsibilities
The Audit Committee of the Board
consists of Messrs. DeFosset (chairperson), Hansen, Jacobs, Shaffer and
Wehmeier, each of whom is independent as defined in the listing standards of the
NYSE and under the Exchange Act. The Audit Committee met 15 times
during 2009.
Each
member of the Audit Committee is required to be financially literate or must
become financially literate within a reasonable time after appointment to the
Audit Committee, and at least one member of the Audit Committee must have
accounting or related financial management expertise.
The
Board, in its business judgment, believes that each of the current members of
the Audit Committee is financially literate and that each of its members has
accounting or financial management expertise: Mr. DeFosset through his business
experience as a corporate executive, his involvement in preparing financial
statements at various public companies and particularly his experience as a
Chief Executive Officer of a public company; Mr. Hansen through his business
experience as a corporate executive and his involvement in preparing financial
statements as a senior executive of a large multinational company; Dr. Jacobs
through his years of experience teaching business, finance, management and
accounting at the graduate level, as well as serving as a chairman of the public
review board of a national accounting firm and as Chairman of the board of
directors of Amtrak; Mr. Shaffer through his extensive experience and
involvement in preparing financial statements as the Chief Financial Officer of
a large public company; and Mr. Wehmeier through his business experience as a
corporate executive and his involvement in preparing financial statements as a
senior executive, including as a Chief Executive Officer, of a large
multinational company. The Board has determined that each of Mr.
DeFosset, Dr. Jacobs, and Mr. Shaffer is an “audit committee financial expert,”
as such term is defined under the regulations of the SEC.
The Audit
Committee assists the Board in fulfilling its oversight responsibilities by
meeting regularly with the Company’s independent registered public accounting
firm and operating and financial management personnel. The Audit
Committee reviews the audit performed by the Company's independent registered
public accounting firm and reports the results of such audit to the
Board. The Audit Committee reviews the Company’s annual financial
statements and all material financial reports provided to the stockholders and
reviews the Company’s internal auditing, accounting and financial
controls.
As stated
in the Audit Committee Charter, the Audit Committee also reviews related party
transactions and any other matters pertaining to potential conflicts of interest
or adherence to the Company’s standards of business conduct. Related
party transactions must be approved by the Audit Committee, who will approve the
transaction only if they determine that it is in the best interests of the
Company. In considering the transaction, the Audit Committee will consider all
relevant factors, including, as applicable: (i) the Company’s business
rationale for entering into the transaction; (ii) the alternatives to
entering into a related party transaction; (iii) whether the transaction is
on terms comparable to those available to third parties, or in the case of
employment relationships, to employees generally; (iv) the potential for
the transaction to lead to an actual or apparent conflict of interest and any
safeguards imposed to prevent such actual or apparent conflicts; and
(v) the overall fairness of the transaction to the
Company.
11
The Audit
Committee is also responsible for appointing, setting compensation for, and
overseeing the work of, the Company’s independent registered public accounting
firm. The Audit Committee has established a policy requiring its
pre-approval of all audit and permissible non-audit services provided by the
independent registered public accounting firm. On an annual basis, or
more frequently as needed, the Chief Financial Officer of the Company provides
the Audit Committee an estimate for the services needed and seeks pre-approval
of such services from the Audit Committee. The Audit Committee
considers whether such services are consistent with the rules of the SEC on
auditor independence. The policy prohibits the Audit Committee from
delegating to management the Audit Committee’s responsibility to pre-approve
permitted services of the independent registered public accounting
firm.
Requests
for pre-approval for services must be detailed as to the services to be provided
and the estimated total cost and must be submitted to the Company’s Chief
Financial Officer. The Chief Financial Officer then determines whether the
services requested fall within the guidance of the Audit Committee as to the
services eligible for pre-approval. If the service was not of a type
that was already pre-approved or the estimated cost would exceed the amount
already pre-approved, then the Chief Financial Officer seeks pre-approval of the
Audit Committee on a timely basis.
The Audit
Committee operates under a written charter adopted by the Board that complies
with all applicable requirements of the SEC and the NYSE. A copy of
the Audit Committee Charter is available at the Company’s website,
www.terex.com, under “About Terex” – “Investor Relations” – “Corporate
Governance.” In
addition, a copy of the charter is available in print, without charge, to any
stockholder who requests this material from the Company. This charter
sets out the responsibilities, authority and duties of the Audit
Committee.
See
“Audit Committee Report” for a discussion of the Audit Committee’s review of the
audited financial statements of the Company for the Company’s fiscal year ended
December 31, 2009.
Compensation
Committee Meetings and Responsibilities
The
Compensation Committee of the Board consists of Messrs. Sachs (chairperson),
DeFosset, Fike, Shaffer and Wang, each of whom is independent as defined in the
listing standards of the NYSE. Each member of the Compensation
Committee must have a basic understanding of the components of executive
compensation and the role of each component as part of a comprehensive program
linking compensation to corporate and individual performance in support of the
Company’s objectives. The Compensation Committee met 11 times during
2009.
The
Compensation Committee assists the Board in its responsibilities regarding
compensation of the Company’s senior executives and outside directors, including
overall responsibility for approving, evaluating and modifying the Company’s
plans, policies and programs for compensation of key management
personnel. The Compensation Committee establishes compensation
arrangements for executive officers and for certain other key management
personnel.
The
Compensation Committee operates under a written charter adopted by the Board
that complies with all applicable requirements of the NYSE. A copy of
the Compensation Committee Charter is available at the Company’s website,
www.terex.com, under “About Terex” – “Investor Relations” – “Corporate
Governance.” In
addition, a copy of the charter is available in print, without charge, to any
stockholder who requests this material from the Company. This charter
sets out the responsibilities, authority and duties of the Compensation
Committee. The charter does not provide for any delegation of the
Compensation Committee’s duties.
12
See
“Compensation Discussion and Analysis” for a description of the Company’s
executive compensation philosophy and executive compensation program, including
a discussion of how the compensation of the Company’s executive officers was
determined.
Compensation
Risk Assessment
The
Company conducted a risk assessment of its compensation policies and practices
for its employees, including those related to its executive compensation
programs. The findings of the risk assessment were discussed with the
Compensation Committee. Based upon the assessment, the Company believes that its
compensation policies and practices do not encourage excessive or unnecessary
risk-taking and are not reasonably likely to have a material adverse effect on
the Company.
Compensation
Committee Interlocks and Insider Participation
No member
of the Compensation Committee served as one of the Company’s officers or
employees during 2009 or was formerly an officer of the Company. None of the
Company’s executive officers served as a member of the compensation committee of
any other company that has an executive officer serving as a member of the Board
or Compensation Committee during 2009. None of the Company’s executive officers
served as a member of the board of directors of any other company that has an
executive officer serving as a member of the Compensation Committee during
2009.
Corporate
Responsibility and Strategy Committee Meetings and Responsibilities
The Corporate Responsibility and
Strategy Committee of the Board consists of Ms. Cholmondeley (chairperson), and
Messrs. Fike, Sachs and Wang, each of whom is independent as defined in the
listing standards of the NYSE. The Corporate Responsibility and
Strategy Committee met six times during 2009.
The Corporate Responsibility and
Strategy Committee assists the Board in fulfilling its oversight responsibility
of the Company’s citizenship responsibilities, as well as preliminarily
reviewing management’s long-term strategic planning, including potential
acquisitions and divestitures. The Committee assesses policies and activities of
the Company in light of the interests of the Company’s stockholders and the
ethical principles expected of a socially responsible
corporation. The Committee also reviews the Company’s employee health
and safety performance, product safety function and the environmental impact of
the Company’s facilities.
The
Corporate Responsibility and Strategy Committee operates under a written charter
adopted by the Board. A copy of the Corporate Responsibility and
Strategy Committee Charter is available at the Company’s website, www.terex.com,
under “About Terex” – “Investor Relations” – “Corporate Governance.” In addition, a copy of
the charter is available in print, without charge, to any stockholder who
requests this material from the Company. This charter sets out the
responsibilities, authority and duties of the Corporate Responsibility and
Strategy Committee.
Governance
and Nominating Committee Meetings and Responsibilities
The Governance and Nominating Committee
of the Board consists of Messrs. Wehmeier (chairperson), Hansen and Jacobs and
Ms. Cholmondeley, each of whom is independent as defined in the listing
standards of the NYSE. The Governance and Nominating Committee met
five times during 2009.
13
The
Governance and Nominating Committee plays a central role in planning the size
and composition of the Board, developing criteria and implementing the process
of identifying, screening and nominating candidates for election to the Board,
recommending corporate governance guidelines and actions to improve corporate
governance and evaluating individual director and full Board
performance. The Governance and Nominating Committee is also
responsible for overseeing a review and assessment of the performance of the
Board and its committees at least annually, including establishing the
evaluation criteria and implementing the process for evaluation. The
Governance and Nominating Committee, as well as the Board as a whole, does a
self-assessment of its performance annually, including with respect to the
nomination process.
In
considering whether to recommend any candidate for inclusion in the Board’s
slate of recommended director nominees, including candidates recommended by
stockholders, the Governance and Nominating Committee applies the criteria set
forth in the Guidelines and gives strong consideration to a wide range of
diversity factors as a matter of practice when evaluating director nominees,
such as race, gender, age, national origin, work experience and tenure with the
Company. These criteria include the candidate’s independence,
integrity, diversity, experience, sound judgment in areas relevant to the
Company’s businesses, and willingness to commit sufficient time to the Board,
all in the context of an assessment of the perceived needs of the Board at that
point in time. Maintaining a balanced experience and knowledge base
within the total Board includes considering whether the candidate: (i) is a CEO
in companies engaged in capital and industrial goods industries; (ii) has
significant executive management experience for multinational business
operations; (iii) has extensive knowledge and experience in financial services
and capital markets; (iv) has substantial knowledge of the Company and its
business; and (v) has unique knowledge and experience and can provide
significant contributions to the Board’s effectiveness. The Board
does not have a formal policy regarding director diversity, but considers how
the differences in its directors’ backgrounds broaden its business
perspective. All candidates for director are reviewed in the same
manner, regardless of the source of the recommendation. For details on how
stockholders may submit nominations for directors, see “Stockholder
Proposals.”
The
Governance and Nominating Committee operates under a written charter adopted by
the Board that complies with all applicable requirements of the
NYSE. A copy of the Governance and Nominating Committee Charter is
available at the Company’s website, www.terex.com, under “About Terex” –
“Investor Relations” – “Corporate Governance.” In addition, a copy of
the charter is available in print, without charge, to any stockholder who
requests this material from the Company. This charter sets out the
responsibilities, authority and duties of the Governance and Nominating
Committee.
14
SECURITY
OWNERSHIP OF MANAGEMENT
AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain
information regarding the beneficial ownership of the Common Stock by each
person known by the Company to own beneficially more than 5% of the Company’s
Common Stock, by each director, by each director nominee, by each executive
officer of the Company named in the summary compensation table below, and by all
directors and executive officers as a group, as of March 1, 2010 (unless
otherwise indicated below). Each person named in the following table
has sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by such person, except as otherwise set forth in the
notes to the table. Shares of Common Stock that any person has a
right to acquire within 60 days after March 1, 2010, pursuant to an exercise of
options or otherwise, are deemed to be outstanding for the purpose of computing
the percentage ownership of such person, but are not deemed to be outstanding
for computing the percentage ownership of any other person shown in the
table.
|
NAME AND ADDRESS OF
BENEFICIAL OWNER (1)
|
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP (2)
|
PERCENT
OF CLASS
|
||||||
|
BlackRock,
Inc.
|
9,875,384 | (3) | 9.1 | % | ||||
|
40
East 52nd
Street
|
||||||||
|
New
York, NY 10022
|
||||||||
|
Wellington
Management Company, LLP
|
7,569,883 | (4) | 7.0 | % | ||||
|
75
State Street
|
||||||||
|
Boston,
MA 02109
|
||||||||
|
Eton
Park (as defined below)
|
6,750,000 | (5) | 6.2 | % | ||||
|
399
Park Avenue, 10th
Floor
|
||||||||
|
New
York, NY 10022
|
||||||||
|
G.
Chris Andersen
|
206,444 | (6) | * | |||||
|
Paula
H. J. Cholmondeley
|
14,860 | * | ||||||
|
Ronald
M. DeFeo
|
1,466,789 | (7) | 1.3 | % | ||||
|
Don
DeFosset
|
79,549 | (8) | * | |||||
|
William
H. Fike
|
107,941 | (9) | * | |||||
|
Thomas
J. Hansen
|
12,150 | * | ||||||
|
Dr.
Donald P. Jacobs
|
60,585 | (10) | * | |||||
|
David
A. Sachs
|
364,369 | (11) | * | |||||
|
Oren
G. Shaffer
|
19,986 | * | ||||||
|
David
C. Wang
|
12,812 | * | ||||||
|
Helge
H. Wehmeier
|
45,159 | * | ||||||
|
Phillip
C. Widman
|
287,607 | (12) | * | |||||
|
Thomas
J. Riordan
|
346,030 | * | ||||||
|
Stoyan
(Steve) Filipov
|
100,850 | (13) | * | |||||
|
Richard
Nichols
|
134,281 | (14) | * | |||||
|
All
directors and executive officers
|
3,897,500 | (15) | 3.6 | % | ||||
|
as
a group (20 persons)
|
||||||||
15
|
*
|
Amount
owned does not exceed one percent (1%) of the class so
owned.
|
|
(1)
|
Unless
indicated otherwise, each person’s principal address is c/o Terex
Corporation, 200 Nyala Farm Road, Westport, CT
06880.
|
|
(2)
|
Certain
executive officers and directors maintain margin securities accounts, and
the positions held in such margin accounts, which may from time to time
include shares of Common Stock, are pledged as collateral security for the
repayment of debit balances, if any, in the accounts. At March
1, 2010, no executive officer or director had debit balances in such
accounts.
|
|
(3)
|
Blackrock,
Inc. (“Blackrock”) filed a Schedule 13G, dated January 20, 2010,
disclosing the beneficial ownership of 9,875,834 shares of Common
Stock. This includes Blackrock having sole voting power over
9,875,834 shares of Common Stock and sole dispositive power over 9,875,834
shares of Common Stock.
|
|
(4)
|
Wellington
Management Company, LLP (“Wellington”) filed a Schedule 13G, dated
February 12, 2010, disclosing the beneficial ownership of 7,569,883 shares
of Common Stock. This includes Wellington having shared voting
power over 5,285,593 shares of Common Stock and shared dispositive power
over 7,569,883 shares of Common
Stock.
|
|
(5)
|
Eton
Park Fund, L.P., Eton Park Master Fund, Ltd., Eton Park Associates, L.P.,
Eton Park Capital Management, L.P. and Eric M. Mindich (collectively,
“Eton Park”) filed a Schedule 13G, dated December 31, 2009, disclosing the
beneficial ownership of 6,750,000 shares of Common Stock. This
includes Eton Park having shared voting power over 6,750,000 shares of
Common Stock and shared dispositive power over 6,750,000 shares of Common
Stock.
|
|
(6)
|
Includes
5,174 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
|
|
(7)
|
Includes
167,202 shares that are owned indirectly by Mr. DeFeo through a grantor
retained annuity trust. Also includes 333,230 shares of Common
Stock issuable upon the exercise of options exercisable within 60
days.
|
|
(8)
|
Includes
2,587 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
|
|
(9)
|
Includes
48,464 shares that are owned indirectly by Mr. Fike through a grantor
trust. Also includes 2,587 shares of Common Stock issuable upon
the exercise of options exercisable within 60
days.
|
|
(10)
|
Includes
13,826 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
|
16
|
(11)
|
Includes
7,800 shares of Common Stock owned by Mr. Sachs’ wife. Mr. Sachs disclaims
the beneficial ownership of such shares. Also includes 27,524 shares of
Common Stock issuable upon the exercise of options exercisable within 60
days.
|
|
(12)
|
Includes
47,000 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
|
|
(13)
|
Includes
12,500 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
|
|
(14)
|
Includes
36,000 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
|
|
(15)
|
Includes
597,293 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
|
17
EXECUTIVE
OFFICERS
The following table sets forth, as of
March 25, 2010, the respective names and ages of the Company’s executive
officers, indicating all positions and offices held by each such person. Each
officer is elected by the Board to hold office for one year or until his or her
successor is duly elected and qualified.
|
NAME
|
AGE
|
POSITIONS AND OFFICES WITH
COMPANY
|
||
|
Ronald
M. DeFeo
|
58
|
Chairman
of the Board, Chief Executive Officer and Director
|
||
|
Thomas
J. Riordan
|
53
|
President
and Chief Operating Officer
|
||
|
Phillip
C. Widman
|
55
|
Senior
Vice President and Chief Financial Officer
|
||
|
Eric
I Cohen
|
51
|
Senior
Vice President, Secretary and General Counsel
|
||
|
Brian
J. Henry
|
51
|
Senior
Vice President, Finance and Business Development
|
||
|
Kevin
A. Barr
|
50
|
Senior
Vice President, Human Resources
|
||
|
Richard
Nichols
|
48
|
President,
Terex Cranes
|
||
|
Timothy
A. Ford
|
48
|
President,
Terex Aerial Work Platforms
|
||
|
Stoyan
(Steve) Filipov
|
41
|
President,
Developing Markets and Strategic Accounts
|
||
|
George
Ellis
|
|
49
|
|
President,
Terex
Construction
|
For information regarding Mr. DeFeo,
refer to the section above titled “Election of Directors.”
Thomas J. Riordan became President and
Chief Operating Officer (“COO”) of the Company on January 3,
2007. Prior to joining the Company, Mr. Riordan was Executive Vice
President and Chief Operating Officer of SPX Corporation, a diversified global
industrial manufacturer. From 1996 to 2006, he held a number of
positions of increasing responsibility at SPX, resulting in his appointment as
Executive Vice President and COO of SPX. Prior to joining SPX, he was
President of Portland, Oregon based Consolidated Sawmill Machinery
International. Prior to that, Mr. Riordan held a series of
manufacturing and management positions of increasing responsibility with J.I.
Case and Borg-Warner Automotive.
Phillip C. Widman was appointed Senior
Vice President and Chief Financial Officer of the Company on September 16, 2002.
Prior to joining the Company, Mr. Widman served as Executive Vice President,
Chief Financial Officer of Philip Services Corporation (“Philip Services”), an
industrial outsourcing and metal services company, from 1998 to 2001, and as an
independent consultant from 2001 to 2002. Prior to joining Philip Services, Mr.
Widman worked at Asea Brown Boveri Ltd. (“ABB”) for eleven years in various
financial and operational capacities in the transportation, power generation and
power distribution businesses. During his last two years at ABB, he served as
Vice President, Chief Financial Officer and Supply Management of its diverse
businesses in the United States. Additionally, Mr. Widman’s experience includes
12 years with Unisys Corporation in a variety of financial roles. Mr.
Widman serves as a director of The Lubrizol Corporation and Sturm, Ruger &
Co., Inc.
Eric I Cohen became Senior Vice
President, Secretary and General Counsel of the Company on January 1, 1998.
Prior to joining the Company, Mr. Cohen was a partner with the New York City law
firm of Robinson Silverman Pearce Aronsohn & Berman LLP (which firm has
since merged with Bryan Cave LLP) since January 1992 and was an associate
attorney with that firm from 1983 to 1992.
18
Brian J. Henry was appointed Senior
Vice President, Finance and Business Development on October 18, 2002. Mr. Henry
previously held the positions of Vice President, Finance and Business
Development, Vice President-Finance and Treasurer, and Vice President-Corporate
Development and Acquisitions. Mr. Henry also served as the Company’s Director of
Investor Relations. Mr. Henry has been employed by the Company since 1993. From
1990 to 1993, Mr. Henry was employed by KCS Industries, L.P. and its
predecessor, KCS Industries, Inc., an entity that until December 31, 1993,
provided administrative, financial, marketing, technical, real estate and legal
services to the Company and its subsidiaries.
Kevin A. Barr was named Senior Vice
President, Human Resources of the Company on January 3, 2006. Prior
to that, Mr. Barr had been serving as Vice President, Human Resources of the
Company since September 25, 2000. Prior to joining the Company, Mr.
Barr served as Vice President-Human Resources at DBT Online since 1998. From
1995 to 1998, Mr. Barr was at Nabisco, Inc. as Vice President-Human Resources,
Asia/Pacific. Prior to that, Mr. Barr served as Vice President-Human Resources,
Asia/Pacific and Latin America with Dun and Bradstreet Corporation from 1990 to
1995, and in various human resources executive positions at Chase Manhattan
Bank, N.A. from 1981 to 1990.
Richard Nichols was named President,
Terex Cranes on January 16, 2008. At that time, Mr. Nichols had been
serving as President, Terex Materials Processing & Mining since January 23,
2004. Prior to that, Mr. Nichols served as the Company’s Vice President and
General Manager, Infrastructure since April 2003. Mr. Nichols previously held
the position of Vice President and General Manager of Terex Mining Trucks since
joining the Company in October 2000. Prior to joining the Company, Mr. Nichols
spent 15 years in the aerospace industry at Honeywell International Inc. in
various senior management positions.
Timothy A. Ford became President, Terex
Aerial Work Platforms on October 2, 2006. Prior to joining the Company,
since 2005, Mr. Ford was Executive Vice President of The Toro Company, a lawn
care and turf maintenance product and service provider. Previous to that,
Mr. Ford held various senior executive positions with The Toro Company since
2001. Prior to that, he held various senior management positions with
Honeywell International Inc. from 1998 through 2001. Mr. Ford began his
career at General Electric Company in 1985.
Stoyan (Steve) Filipov was named
President, Developing Markets and Strategic Accounts on January 16,
2008. Prior to that, Mr. Filipov had been serving as President, Terex
Cranes since January 1, 2004. At that time, Mr. Filipov had been serving as
President of the international operations for Terex Cranes since July 1, 2002.
Prior to that, Mr. Filipov held various other positions with a number of the
Company’s international businesses. Mr. Filipov started with the Company on
September 1, 1995 as Export Manager for one of the Company’s crane operations in
France.
George Ellis became President, Terex
Construction on October 1, 2009. At that time, Mr. Ellis had been
serving as Senior Vice President, Terex Business System, with additional
responsibilities leading the Company’s Roadbuilding, Manufacturing Services and
Health Safety & Environment organizations. Prior to that, he was
Vice President and General Manager of the Terex Utility group. Mr.
Ellis joined Genie Industries as a site director in 2000 and after the Terex
acquisition of Genie Industries in 2002, he became General Manager of the
Southaven operation of Terex Construction. Prior to joining Genie
Industries, Mr. Ellis held leadership positions at General Electric Company, the
Pratt & Whitney division of United Technologies Corporation, and PPG
Industries, Inc.
19
Code
of Ethics and Conduct
The Company has adopted a code of
ethics and conduct that applies to all of its directors and employees, including
the Company’s principal executive officer, principal financial officer and
principal accounting officer, among others. This code of ethics and
conduct is a set of written standards reasonably designed to deter wrongdoing
and to promote: honest and ethical conduct; full, fair, accurate, timely and
understandable disclosure; compliance with applicable governmental laws, rules
and regulations; prompt internal reporting of code violations; and
accountability for adherence to the code. The Company periodically
reviews, updates and revises its code of ethics and conduct when it considers
appropriate. A copy of the current code of ethics and conduct is
available at the Company’s website, www.terex.com, under “About Terex” –
“Investor Relations” – “Corporate Governance.” In addition, a copy of
the code of ethics and conduct is available in print, without charge, to any
stockholder who requests this material from the Company.
20
COMPENSATION
DISCUSSION AND ANALYSIS
Executive Compensation
Philosophy
The
objectives of the Company’s executive compensation program are to: (i) attract
and retain executives with the skills critical to the long-term success of the
Company; (ii) motivate and reward individual and team performance in attaining
business objectives and maximizing stockholder value; and (iii) link a
significant portion of compensation to achieving performance goals and
appreciation in the total stockholder return of the Company, so as to align the
interests of the executives with those of the stockholders. The
Compensation Committee (the “Committee”) aims to achieve the proper balance
between individual goals, the corporate strategic plan, enhancing stockholder
value and stockholder interests. The Committee believes that its
objectives of pay-for-performance and retention should be appropriately balanced
even in periods of temporary downturns, so that programs should continue to
ensure that successful, high-achieving executives will remain motivated and
committed to the Company during all phases of the business cycle.
The executive compensation program has
three principal components: short-term compensation (salary and annual bonus),
long-term incentive compensation and post-employment compensation, each of which
is described below. While the components of compensation are
considered separately, the Committee takes into account the full compensation
package afforded by the Company to the individual executive. The
Committee annually reviews all components of an executive officer’s
compensation, including the CEO’s, which includes a detailed review of an
executive’s salary, bonus, long-term incentives, realized and unrealized equity
gains, dollar value of perquisites received, earnings and accumulated payments
under the Company’s deferred compensation plan, projected payments under the
Company’s supplemental executive retirement plans and tally sheets setting forth
the amounts that would be paid under various termination
events. Examples of this review are described throughout the
“Compensation Discussion and Analysis” and “Executive Compensation” sections of
this Proxy Statement. Consideration is given to the executive’s
overall responsibilities, professional qualifications, business experience, job
performance, technical expertise and career potential, as well as the combined
value of these factors to the Company’s immediate and long-term strategic goals
and performance.
Compensation
is based on the level of job responsibility, individual performance, and Company
performance. As executives progress to higher levels in the Company,
an increasing proportion of their pay is linked to Company performance and
stockholder returns, because in these roles the executives have a greater
ability to affect the Company’s results. The Committee believes that
generally more than half of an executive’s total compensation opportunity should
be aligned with the performance of the Company. Therefore, an
executive officer will receive a significant portion of his or her target
compensation in annual bonus and long-term incentive awards, a majority of which
is linked to the performance of the Company. The allocation in
compensation between current and long-term compensation is based on employment
market conditions with an emphasis on attraction and retention, as well as
attempting to motivate executive officers to achieve excellent
results. Typically, an executive will receive less than half of
his/her total target compensation opportunity in salary. Generally,
as an executive has greater responsibility within the Company, salary will be a
less significant portion of the executive’s total target
compensation.
To meet
these objectives, the Company designs its total compensation program to be
motivational and competitive with the programs of other corporations of
comparable revenue size, corporations in the same industry, corporations with
which the Company competes for executives, and other manufacturing corporations
that may not be in the same industry as the Company but that provide similar
returns to their stockholders (the “Benchmark Companies”). The
companies currently comprising the Benchmark Companies are:
21
|
3M
Company
|
Eaton
Corporation
|
Oshkosh
Corporation
|
||
|
AGCO
Corporation
|
FMC
Technologies, Inc.
|
PACCAR
Inc.
|
||
|
Astec
Industries, Inc.
|
General
Electric Company*
|
Parker-Hannifin
Corporation
|
||
|
Bucyrus
International, Inc.
|
Honeywell
International Inc.*
|
Rockwell
Automation, Inc.
|
||
|
Caterpillar
Inc.
|
Illinois
Tool Works Inc.
|
Sauer-Danfoss
Inc.
|
||
|
Cameron
International Corporation
|
Ingersoll-Rand
Company Limited
|
Textron
Inc.
|
||
|
Cummins
Inc.
|
ITT
Corporation
|
The
Black & Decker Corporation
|
||
|
Danaher
Corporation
|
Johnson
Controls, Inc.*
|
The
Manitowoc Company, Inc.
|
||
|
Deere
& Company
|
Joy
Global Inc.
|
United
Technologies Corporation*
|
||
|
Dover
Corporation
|
Masco
Corporation
|
Executive Compensation
Program
Each year
the Committee, which is comprised entirely of independent directors, determines
the Company’s executive compensation arrangements, with guidance from outside
compensation consultants to the Committee. The Committee has the sole
authority to hire and dismiss the outside compensation consultants to the
Committee. For 2009, the Committee retained Hewitt Associates, LLC
(“Hewitt”), an independent, outside consultant, to support it in determining the
compensation of the Company’s executive officers, including its
CEO. Hewitt was not given a narrow list of instructions, but rather
was engaged to provide the Committee with any and all information and advice
that might assist the Committee in performing its duties and analyzing executive
pay packages. Hewitt provided the Committee with compensation data
that it utilized in making its decisions. The Committee relied on both Hewitt
and the Company’s human resources department for support in its
work. In accordance with the Guidelines, the Committee’s compensation
consultant did not provide the Company with any other services other than
providing the Company with survey compensation data for certain of its
non-executive officers that is comparable to the data provided for the Company’s
executive officers.
In
February 2010, Hewitt spun-off a portion of its executive compensation practice
into a separate, independent entity named Meridian Compensation Partners, LLC
(“Meridian”). The Committee retained Meridian as its independent
compensation consultant in February 2010.
The CEO
plays an integral role, in conjunction with the Committee, in determining the
compensation of the other executive officers of the Company. In
addition, the CEO and the COO annually evaluate each of the Company’s senior
executives that report to them. This assessment includes setting
goals for the coming year for each senior executive and periodically evaluating
the senior executive’s performance against the goals for the prior
year. Consistent with the Committee’s charter, the CEO then makes
recommendations to the Committee regarding the performance goals and the
compensation of the Company’s senior executives. Typically, the CEO
also makes recommendations to the Committee regarding salary increases, bonus
targets and amounts, and equity grants for each of the other executive officers
of the Company. These recommendations are made after the CEO’s review
of compensation materials provided by the Committee’s compensation
consultant.
In
response to a stockholder inquiry on “say on pay”, the Board has determined that
it will be amending the Guidelines to provide, effective in 2011, a mechanism to
receive annual feedback from its stockholders on its executive compensation
practices. The intention of the Board in instituting this mechanism
is to allow for effective interaction between the Committee and the Company’s
stockholders on compensation matters.
22
Internal Pay
Equity
As is the
case with many companies, the Company relies more heavily on the management and
leadership skills of its Chairman and CEO than its other named executive
officers. Mr. DeFeo has been with the Company since 1992, has been
CEO since 1995 and Chairman since 1998, and has overseen the transformation of
Terex during that time. As a result, Mr. DeFeo receives a
significantly greater amount of compensation than the other named executive
officers.
Deductibility of Executive
Compensation
Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), limits to
$1 million a year the deduction that a publicly held corporation may take for
compensation paid to its chief executive officer and the three other most highly
compensated employees other than the chief financial officer, unless the
compensation is “performance-based.” Performance-based compensation must be
based on the achievement of pre-established, objective performance goals under a
plan approved by stockholders.
In order
to reduce or eliminate the amount of compensation that would not qualify for a
tax deduction should the compensation of the CEO or any other executive officer
exceed $1 million in any year, the Company’s 2009 Omnibus Incentive Plan (the
“2009 Plan”), 2004 Annual Incentive Compensation Plan (the “2004 Plan”), 2000
Incentive Plan (the “2000 Plan”) and 1996 Long Term Incentive Plan (the “1996
Plan”) were submitted to and previously approved by the Company’s stockholders,
so that amounts earned thereunder by certain employees will qualify as
performance-based.
Short-Term
Compensation
Salary
Salary is determined by evaluating the
responsibilities of the position held, the individual’s past experience in
his/her current position, current performance, future potential and the
competitive marketplace for executive talent. The Company’s objective
is to provide its executive officers with competitive salaries that are, on
average, at or slightly below the median of the Benchmark
Companies. Salaries are reviewed annually to ensure that strong
performance is reflected in any increase in an executive’s base salary
level. The Committee believes that salary ranges for the Company’s
executive officers in 2009 were, in the aggregate, slightly above the 50th
percentile of the Benchmark Companies.
In December 2008, the Committee
determined, based upon recommendations from the CEO and management, that it
would not be increasing base salaries for the executive ranks of the Company in
2009. This was in recognition of the challenging market conditions
that the Company faced, along with the uncertainty of the 2009 global economic
outlook. As a result of continued market weakness, in March 2009, the
Company implemented a program that resulted in the base salaries for its
executive officers being reduced by 10%, and by 5% - 10% for its non-executive
officers, for the remainder of 2009. This program included granting
of additional vacation days. The salary reductions did not affect
other compensation and benefit programs, such as targets for bonus compensation,
pension plan calculations and certain other items, which continued to be based
upon the applicable base salary prior to the reduction.
In
December 2009, the Committee determined, based upon recommendations from the CEO
and management, that the base salary levels of its executive and non-executive
officers who experienced these reductions would be restored effective with the
first full pay period beginning on or after January 1, 2010. Mr. DeFeo, the
Company’s Chairman and CEO, voluntarily determined that he would not return to
his previous base salary level until it is more fully assured that the Company
is on the path to financial recovery. The restoration of the CEO’s
salary will be determined by the Committee.
23
As more
fully described below, effective January 1, 2010, the Company eliminated
substantially all perquisites that applied only to its executive officers.
While there were generally no base salary increases in 2009 for executive
officers, to compensate for the loss of these perquisites, the Committee
approved a one-time base salary adjustment for each of the Company’s executive
officers in an amount substantially comparable to the perquisites
eliminated.
Annual Cash
Bonus
In
addition to salary, each executive officer is eligible for an annual cash bonus
under the 2009 Plan, which was adopted by the Board and the stockholders of
Terex in 2009. Bonus payouts are based upon the Company’s performance
and the executive’s individual performance, both measured against previously
determined targets. The individual targets include both financial and
non-financial metrics, and contain individual and Company performance
measures. The CEO’s bonus target is two times his base
salary. The bonus targets of the other executive officers generally
range from 50% - 100% of their base salary.
The
Company’s objective is to provide its executive officers with a competitive
bonus opportunity that is generally within the third quartile of bonus target
percentage ranges for the Benchmark Companies. The objective of the
management annual incentive bonus program is to provide bonus opportunity and
reward executives when their actions drive the overall performance of the
Company. While there is downside risk to the executive in having a
performance component that can result in no bonus, there is also an upside
opportunity if the Company and the individual both perform well. This
meets the Committee’s objective that superior performance that adds value to the
Company should be rewarded and performance that does not meet expectations
should have significant negative consequences. The Committee, in its
sole discretion, may increase, decrease or eliminate the payment of a bonus to
any executive officer who is not a Covered Employee (as defined in Section
162(m) of the Code) under certain extraordinary events in accordance with the
bonus plan.
For
performance that meets the pre-determined objectives, the executive would
receive 100% of the bonus target. For performance that fails to meet
the pre-determined objectives, but which is within a satisfactory range of
achievement, the executive would receive less than 100% of the bonus target,
with the actual payment amount corresponding directly with the level of
achievement under the predetermined target. Alternatively, for
performance that exceeds the pre-determined objectives, the executive would
receive greater than 100% of the bonus target, with the actual payment amount
corresponding directly with the level of achievement in excess of the
predetermined target. For each 1% increase or decrease in attainment
above or below the target performance level, the payment will increase or
decrease by 2.5% from the target payout level. For attainment at or
above 120% of the target performance level, the payment will be capped at 150%
of the target payout level. If attainment is at 80% of the target
performance level, the payout will be 50% of the target payout
level. For attainment below 80% of the target performance level, no
payout will be earned.
In 2009,
for executive officers with corporate functional responsibilities who reported
directly to the Company’s CEO or COO, 60% of the bonus target was based upon an
after-tax return on invested capital (“ROIC”) measurement determined at the
overall Terex level and the other 40% was based on individual performance areas
under the individual’s control and influence. For 2009, the targeted ROIC value
was 14.3%, which was based upon the 2009 budgeted operating forecast of the
Company, approved by the Board in December 2008, and was not adjusted to reflect
the disposition of the Company’s Mining business.
24
The
Committee historically has used ROIC as one of the primary measures to assess
operational performance, as it measures how effectively the Company uses money
invested in its operations, and the Committee believes this is a metric that is
strongly aligned to stockholder interests. For example, ROIC
highlights the level of value creation when compared to the Company’s cost of
capital. The after tax measurement of ROIC is important because the
Committee believes tax performance is an important component of the Company’s
overall performance. ROIC is determined by dividing the sum of net operating
profit for continuing and discontinued operations after tax for each of the
previous four quarters by the average of the sum of total stockholders’ equity
plus debt less cash and cash equivalents for the previous five
quarters. The Committee believes that earnings from discontinued
operations, as well as the net assets that comprise that operations invested
capital, should be included in this calculation because it captures the
financial returns on the Company’s capital allocation decisions for the measured
periods. Non-cash impairment charges are not included in the
calculation of ROIC as the Committee does not believe they are indicative of
returns on invested capital. The Committee uses operating earnings
and cash flow as additional measures to assess operational performance, as
operating earnings show the relationship between sales and costs for a business
and the generation of cash provides the Company with the opportunity to pursue
opportunities that enhance stockholder value.
In 2009,
for executive officers who reported directly to the COO and who have direct
operating responsibility, 40% of the bonus target was based on ROIC (with the
same target ROIC as described above), 20% based on business segment performance,
and 40% based on individual performance. Business segment performance
was based upon an equal rating of cash flow and operating earnings at the
operating segment level, with performance measured against approved
management-operating plans. For 2009, the operating earnings targets
and cash flow targets for Mr. Nichols for the Company’s Cranes segment were
$339.8 million and $365.5 million, respectively.
Individual
performance for each of the executive officers could include all or any
combination of personal goals, talent development, business development,
inventory management and operational excellence, as well as other financial and
non-financial measurements. The CEO and COO are responsible for
determining individual performance measurements for each of their direct
reports. The individual performance calculation for the executive
officers, other than the CEO, is done on a holistic basis in evaluating the
achievement of such goals rather than based upon a rigid formula. The
difficulty in achieving the targeted goals depends on a variety of factors, some
of which are in the executive’s control and some of which are
not. These targets are established annually based on the business
plan of the Company for the coming year and in conjunction with the executive’s
annual review by the CEO and/or COO. If the Company achieves its
business plan objectives for the year, the Committee believes the goals are
attainable.
In
addition to the elements of the 2009 bonus plan described above, there was an
additional incremental incentive of 10% of a participant’s target bonus,
including Mr. DeFeo’s, if corporate quarterly inventory turn targets were met or
exceeded. The targets were stretch goals above what was set forth in
the 2009 budget approved by the Board in December 2008. The inventory
turn targets for each of the four quarters of 2009 were: 3.5 times, 4.1 times,
4.2 times and 4.7 times, respectively. The Committee implemented this
incremental incentive to emphasize the Company’s short term objective of
managing for cash. Inventory turns are calculated by dividing (i) the
product of the trailing three months Cost of goods sold multiplied by four, by
(ii) Inventories. The inventory turn rates for each of the four quarters
of 2009 were: 2.2 times, 2.4 times, 2.2 times and 2.7 times, respectively, and
therefore no bonus amount was earned based on this performance
metric.
Executive
officers did not receive any bonus in 2009 based on ROIC or other financial
measures. In addition, in light of the financial performance of the Company in
2009, the bonus amounts received by most of the Company’s executive officers for
individual qualitative performance was generally limited to a maximum of 75% of
their qualitative bonus targets. The following table shows the total 2009 Plan
bonus payout, and details the bonus amount that was earned for the quantitative
and qualitative portions of the 2009 Plan bonus, for each of the named executive
officers other than the CEO.
25
|
Name
|
Bonus Amount for
Achievement of
Quantitative Targets
|
Bonus Amount for
Achievement of
Qualitative Targets
|
Total Bonus
|
|||||||||
|
Phillip
C. Widman
|
$ | 0 | $ | 150,000 | $ | 150,000 | ||||||
|
Thomas
J. Riordan
|
$ | 0 | $ | 200,000 | $ | 200,000 | ||||||
|
Steve
Filipov
|
$ | 0 | $ | 87,750 | $ | 87,750 | ||||||
|
Richard
Nichols
|
$ | 0 | $ | 83,850 | $ | 83,850 | ||||||
For 2009,
the Committee approved a bonus plan for Mr. DeFeo with an overall total bonus
target of 200% of his base salary (calculated before the 10% salary reduction),
which equated to a bonus target of $2,300,000. This was contingent on
Mr. DeFeo satisfying both quantitative financial performance measures and
qualitative performance measures.
The 2009
quantitative financial performance measures for Mr. DeFeo focused on three
specific areas of financial performance:
|
Performance Measure*
|
Weighting (%)
|
Target
|
Achievement
|
|||||||||
|
ROIC
|
30.0 | % | 14.3 | % | (9.6 | )% | ||||||
|
Earnings
Per Share, on a fully diluted basis (“EPS”)
|
10.0 | % | $ | 3.75 | $ | (2.70 | ) | |||||
|
Management
of Working Capital**
|
10.0 | % |
73 net cash days
|
141 net cash days
|
||||||||
**
Management of working capital was measured based on a target of net cash
days. Net cash days are determined by using the following
mathematical formula: (i) the number of days sales are outstanding, plus the
inventory turn rate (measured in days), minus (ii) the number of days payables
are outstanding. The result of this calculation will determine the
net number of cash days.
Mr. DeFeo had a number of qualitative
performance measures that were considered in determining his award under the
Plan. The following table provides a detailed listing of the
qualitative performance measures that were considered by the Committee and their
percentage weighting:
26
|
Performance Measure
|
Weighting
(%)
|
Goals
|
|||
|
Operational
Improvements
|
10.0 | % |
Achieve
significant supply chain savings and selling, general and administrative
cost reductions. Improve the Company’s manufacturing footprint. Improve
organizational structures in developing markets.
|
||
|
Marketing
Improvements
|
5.0 | % |
Complete
net promoter score review and customer value proposition
planning. Continue brand building strategy. Conduct
meaningful customer summits. Reduce trade show
expenses.
|
||
|
Financial
Controls and Ethics
|
7.5 | % |
Continue
business practices and ethics education. Begin implementation
of shared services. Improve risk assessment process and
financial planning analysis process.
|
||
|
Strategic
Planning and Business Development
|
10.0 | % |
Find
a solution for certain of the Company’s underperforming
businesses. Continue to pursue transformative
transactions.
|
||
|
Workforce
Development
|
7.5 | % |
Continue
focus on team member health and safety. Improve non-majority
representation in leadership positions. Focus on team member
engagement and leadership development.
|
||
|
Financial
Structure
|
10.0 | % |
Achieve
significant cash generation from operations. Continue
compliance with all debt covenants. Continue expansion of the
Terex global enterprise
system.
|
||
The
following tables detail the quantitative and qualitative portions of Mr. DeFeo’s
2009 Plan bonus amount:
|
Quantitative Bonus Goal
|
Quantitative Bonus
Target Amount
|
Bonus Amount for
Achievement of
Quantitative Targets
|
||||||
|
ROIC
|
$ | 690,000 | $ | 0 | ||||
|
EPS
|
$ | 230,000 | $ | 0 | ||||
|
Management
of Working Capital
|
$ | 230,000 | $ | 0 | ||||
|
Total
|
$ | 1,150,000 | $ | 0 | ||||
|
Qualitative Bonus Goal
|
Qualitative Bonus
Target Amount
|
Bonus Amount for
Achievement of
Qualitative Targets
|
||||||
|
Operational
Improvements
|
$ | 230,000 | $ | 172,500 | ||||
|
Marketing
Improvements
|
$ | 115,000 | $ | 57,500 | ||||
|
Financial
Controls and Ethics
|
$ | 172,500 | $ | 138,000 | ||||
|
Strategic
Planning and Business Development
|
$ | 230,000 | $ | 138,000 | ||||
|
Workforce
Development
|
$ | 172,500 | $ | 138,000 | ||||
|
Financial
Structure
|
$ | 230,000 | $ | 138,000 | ||||
|
Total
|
$ | 1,150,000 | $ | 782,000 | ||||
The
qualitative measures accounted for all of the 2009 Plan bonus amounts that the
CEO earned.
27
The
Committee believes that bonus target percentage ranges for the Company’s
executive officers were, in the aggregate, above the third quartile of bonus
target percentage ranges for the Benchmark Companies and the actual 2009 bonus
payouts for each of the named executive officers were below the third quartile
of bonus target percentage ranges for the Benchmark Companies.
In 2010, an annual bonus pool will be
established and funded based on the Company’s operating earnings
performance. If the Company achieves approximately $160 million of
operating earnings, the bonus pool would fund at approximately 100% of the
executive’s corresponding bonus target, and would be paid out based on
individual and Company performance. If the Company achieves
approximately $250 million of operating earnings, the bonus pool would fund at
approximately 150% of the executive’s corresponding bonus target, and would be
paid out based on individual and Company performance. If the Company
does not generate any operating earnings, the bonus pool would fund at
approximately 30% of the executive’s corresponding bonus target and would be
paid out based solely on the achievement of individual performance
targets. For operating earnings achievement between the thresholds
mentioned above, the bonus pool funding and incentive opportunity for the
executive will increase as the amount of operating earnings increases, but in no
event shall the bonus payout exceed 150% of target. The Committee
adopted this bonus structure for 2010 as it believes it is important to have the
ability to recognize good business decisions even if the Company does not
generate any operating earnings. It was also important to the
Committee that the bonus pool fund at 100% only if the Company achieves a
significant level of operating earnings for 2010.
Benefits and
Perquisites
Perquisites
that were provided to executive officers in 2009 included Company-paid
automobiles, club memberships, financial planning services, supplemental
long-term disability coverage, housing allowances and other costs in connection
with relocation. In December 2009, the Company eliminated
substantially all perquisites that apply only to its executive officers.
This eliminated Company-paid automobiles, financial planning services, club
memberships, use of private aircraft, tax gross-ups on executive life insurance
and other similar perquisites, but did not impact benefits that are also
provided to the broader team member population, such as payment of relocation
expenses, Company-paid medical and life insurance, 401(k) match, wellness awards
and other similar benefits. As described above, the Committee
approved a one-time base salary adjustment for each of the Company’s executive
officers in an amount substantially comparable to the perquisites
eliminated.
The
Company generally provides its executive officers benefits, which are also
provided generally to all other U.S.-based salaried employees, such as
Company-paid life insurance and matching contributions in the Company’s 401(k)
Plan and Employee Stock Purchase Plan, medical, dental and vision plans,
flexible spending accounts and long and short-term disability
coverage. In addition, executive officers, as well as certain other
middle management team members of the Company, may upon their election, defer
compensation and receive matching contributions in the Company’s deferred
compensation plan.
Generally,
perquisites granted to executive officers are allocated to their income and they
are required to pay income taxes on such perquisites. In 2009, the
Company provided a tax gross-up to Mr. DeFeo on a portion of his life insurance
costs. As described above, in 2009 the Company eliminated future
payments of this type. In 2009, the Company also provided tax
gross-ups to Messrs. Riordan and Filipov related to certain relocation
benefits. The Company also provides these types of tax gross-ups to
many middle management team members, as they are often necessary to induce team
members and new hires to relocate based on the business needs of the
Company.
28
Long-Term Incentive
Compensation
The purpose of long-term incentive
compensation is both to align the interests of the executive officers with the
interests of the stockholders and to provide a level of reward and recognition
for superior performance. The Company’s objective is to provide its
executive officers with long-term incentive awards that are generally within the
third quartile of the award level at the Benchmark
Companies. Long-term incentive awards may include cash and non-cash
components.
One of the primary components of the
Company’s long-term incentive compensation is the granting of restricted stock
awards to executive officers, including awards which have a performance-based
component. In this way, the stock awards have the dual objective of
helping to build stockholder value while also serving to retain and motivate the
Company’s senior leadership. The long-term incentive compensation is
designed to provide wealth creation for executives if stockholder value is
created. In 2009, the Company issued long-term incentive compensation
designed to provide an economic value that was generally within the third
quartile of the long-term compensation level at the Benchmark
Companies.
When
determining the size of equity awards, the Committee believes that there is
merit in taking into account the amount of equity that an executive owns in the
Company, and the Committee undertook an extensive review in 2009 of the equity
ownership in the Company of each of the executives. However, the
overriding factor in determining the size and amount of equity grants is
ensuring that grants are motivational and measurable, while providing
competitive equity grants that are determined based on grant date economic
value.
In 2009,
the Company granted a significant portion of executive long-term incentive
compensation pursuant to programs which pay out in cash, due to the Company’s
low stock price at the time of grant. The Committee felt that the
granting of additional shares in 2009 would have had too much of a dilutive
effect on the Company’s stockholders and did not feel that such action was
appropriate. The long-term compensation awards granted by the Company
predominantly consisted of time based restricted stock awards and
performance-based cash awards. Messrs. DeFeo, Widman and Riordan
received a greater percentage of their awards in the form of performance-based
awards than the other executives, as the Committee believed that they are the
three executives with the greatest potential impact on the Company’s overall
performance and that they accordingly should have a greater percentage of their
long-term compensation directly tied to the performance of the
Company.
It is the
Company’s general intention to primarily grant long-term incentive compensation
in the future in shares of restricted stock with time and/or performance based
criteria, although other forms of awards may be considered. In 2010,
the long-term compensation awards granted by the Company consisted of time based
restricted stock awards and performance-based restricted stock awards (other
than for Mr. DeFeo, who received solely performance-based awards). On
the date of grant, the Company’s stock price was approximately $20 and in order
for the performance-based restricted stock awards to vest, among other criteria,
the Company’s closing stock price must equal or exceed $35.00 for certain awards
and $50.00 for other awards (the price thresholds are $45.00 and $60.00,
respectively, for Mr. DeFeo) for 10 consecutive trading days.
Stock
Awards
The
Company’s policy is to make grants of stock awards in the first quarter of each
calendar year, which is soon after the Company’s prior year’s results are
finalized and released publicly, as well as after the Company’s budget has been
finalized for the coming year. This is consistent with the Company’s
granting restricted stock awards that have a performance component, as it is
intended that generally the performance component would be based upon a specific
measure or measures from the Company’s budget for the coming year.
29
In the
first quarter of 2009, the executive officers were granted restricted stock
awards. The restricted stock grants for Messrs. DeFeo, Riordan and
Widman contained both time-based awards and performance-based
awards. The restricted stock grants for the other executives were
solely time based. Each time-based award will vest in full in the
first quarter of 2012, to the extent the executive officer is still employed
with the Company. The Committee determined that the time-based awards
would cliff vest in three years rather than have a pro rata vesting period as
was done in prior years and as had historically been the predominant Company
practice. The Committee believes that an award with cliff vesting
generally provides more retentive benefit to the Company than an award with pro
rata vesting over the same time period.
Each
grant to Messrs. DeFeo, Riordan and Widman also included two performance-based
awards. The first
performance-based restricted stock award (the “EPS Shares”) is contingent upon
the Company achieving a targeted EPS in each of 2009, 2010 and 2011 (the “EPS
Target”). For each of 2009, 2010 and/or 2011, the proportionate
target shares will be received if the Company achieves its EPS Target for such
year, with the share and cash amount subject to increase or decrease for
attainment above or below the EPS Target for such year. The EPS
Target for 2009 was $3.75 per share. As the Company’s EPS was
negative $2.70 in 2009, the 2009 portion of the performance-based award was not
earned. The EPS Target for 2010 is a net loss from continuing
operations of $1.00 per share for the year, excluding any impact from
restructuring or unusual items. The EPS Target for 2011 will be based
upon the budget approved by the Board for that year.
The
executive will receive 100% of the EPS Shares for a particular year if the
Company achieves the EPS Target for such year. For performance that
fails to meet the EPS Target, less than 100% of the EPS Shares will be received,
with the actual payment amount corresponding directly with the level of
achievement under the target (e.g., 90% achievement would result in a 75%
payment, 80% achievement would result in a 50% payment and less than 80%
achievement would result in no payment). Alternatively, for
performance that exceeds the EPS Target, greater than 100% of the EPS Shares
will be received, with the actual payment amount corresponding directly with the
level of achievement in excess of the target (e.g., 110% achievement would
result in a 125% payment, 120% achievement would result in a 150% payment and
greater than 120% achievement is capped at a payment of 150%).
The second performance-based restricted
stock award (the “TSR Shares”) is contingent upon the Company achieving a
percentile rank of 60th (the
“TSR Target”) against a peer group of companies for three year annualized Total
Shareholder Return (“TSR”) for the period January 1, 2009 through December 31,
2011. TSR combines share price appreciation and dividends paid to
measure the total return to shareholders. TSR is calculated by adding
the change in a company’s stock price during a specified time period to any
dividends paid by such company during the time period and dividing that sum by
the stock price of such company at the beginning of the period.
The
executive will receive 100% of the TSR Shares if the Company achieves the TSR
Target. For each percentile increase or decrease in attainment above
or below the TSR Target, the amount of shares to be received will increase or
decrease by 2.5%. For attainment at or above the 80th
percentile, the amount of shares to be received will be capped at 150% of the
TSR Shares. If attainment is at the 40th
percentile, the amount of shares to be received will be 50% of the TSR
Shares. For performance below the 40th
percentile, no shares will be received.
The EPS
Shares and TSR Shares will vest in full on the later of (a) the third
anniversary of the date of grant, or (b) after the Company’s 2011 financial
statements are completed and filed with the SEC, provided that the performance
criteria are satisfied, and further provided that the executive remains actively
employed with the Company at such time. The Committee believes that
the three year measurement period for these awards and these performance metrics
helps motivate long-term decision making and better aligns the interests of the
executives and the Company’s stockholders.
30
Cash
Awards
In the
first quarter of 2009, the executive officers were granted two performance-based
cash awards. The first performance-based cash award (the “EPS Award”) is
contingent upon the Company achieving the EPS Target. For each of
2009, 2010 and/or 2011, the proportionate target cash award will be received if
the Company achieves its EPS Target for such year, with the cash amount subject
to increase or decrease for attainment above or below the EPS Target for such
year. The EPS Target for 2009 was $3.75 per share. As the
Company’s EPS was negative $2.70 in 2009, the 2009 portion of the
performance-based award was not earned. The EPS Target for 2010 is a
net loss from continuing operations of $1.00 per share for the year, excluding
any impact from restructuring or unusual items. The EPS Target for
2011 will be based upon the budget approved by the Board for that
year.
The
executive will receive 100% of the EPS Award for a particular year if the
Company achieves the EPS Target for such year. For performance that
fails to meet the EPS Target, less than 100% of the EPS Award will be received,
with the actual payment amount corresponding directly with the level of
achievement under the target (e.g., 90% achievement would result in a 75%
payment, 80% achievement would result in a 50% payment and less than 80%
achievement would result in no payment). Alternatively, for
performance that exceeds the EPS Target, greater than 100% of the EPS Award will
be received, with the actual payment amount corresponding directly with the
level of achievement in excess of the target (e.g., 110% achievement would
result in a 125% payment, 120% achievement would result in a 150% payment and
greater than 120% achievement is capped at a payment of 150%).
The second performance-based restricted
cash award (the “TSR Award”) is contingent upon the Company achieving the TSR
Target against a peer group of companies for three year annualized TSR for the
period January 1, 2009 through December 31, 2011.
The
executive will receive 100% of the TSR Award if the Company achieves the TSR
Target. For each percentile increase or decrease in attainment above
or below the TSR Target, the amount of cash to be received will increase or
decrease by 2.5%. For attainment at or above the 80th
percentile, the amount of cash to be received will be capped at 150% of the TSR
Award. If attainment is at the 40th
percentile, the amount of cash to be received will be 50% of the TSR
Award. For performance below the 40th
percentile, no cash will be received.
The EPS
Award and TSR Award will vest in full on the later of (a) the third anniversary
of the date of grant, or (b) after the Company’s 2011 financial statements are
completed and filed with the SEC, provided that the performance criteria are
satisfied, and further provided that the executive remains actively employed
with the Company at such time. The Committee believes that the three
year measurement period for these awards and these performance metrics helps
motivate long-term decision making and better aligns the interests of the
executives and the Company’s stockholders.
In
addition, on February 26, 2009, Mr. DeFeo was also granted a long-term cash
award with a minimum value of $900,000. The award is subject to
increase based upon increases in the Company’s stock price above $10.69, the
average closing stock price between January 29, 2009 and February 26,
2009. Each $1 increase in stock price above $10.69 would result in an
additional $84,190 paid to Mr. DeFeo, which additional amounts will be pro-rated
for stock price increases of less than $1. For example, if the
Company’s stock price increases to $25 or $50 on February 26, 2012, then Mr.
DeFeo would be entitled to receive $2,104,759 or $4,209,509,
respectively. In no event will Mr. DeFeo be entitled to receive less
than $900,000. There is no cap on the amount of the
award. The award will vest in full on February 26, 2012, provided Mr.
DeFeo has not voluntarily terminated his employment with the Company or been
terminated by the Company for cause. The Committee granted this cash
award to Mr. DeFeo as the Committee believes, as Mr. DeFeo is the executive with
the greatest potential impact on the Company’s performance, that it is important
that more of his compensation be tied directly to the performance of the
Company.
31
Post-Employment
Compensation
Retirement Plans and Life
Insurance
The
Company offers a variety of mechanisms for its executive officers to plan for
their retirement. These plans are offered to attract and retain
executive officers by offering them benefits that are similar to what is offered
by the Benchmark Companies. The retirement plans offered by the
Company to its executive officers generally include a 401(k) plan, which is also
offered to most of the Company’s U.S. based employees, a deferred compensation
plan, a defined benefit supplemental executive retirement plan (“DB SERP”), a
defined contribution supplemental executive retirement plan (“DC SERP”, and
together with the DB SERP, the “SERPs”) and, for the CEO, a defined benefit
pension plan which has been frozen since 1993. A senior executive
participating in the DB SERP is not eligible to participate in the DC
SERP. See “Pension Benefits” for a description of the SERPs and
“Nonqualified Deferred Compensation” for a description of the Company’s deferred
compensation plan.
In
addition, each executive officer receives a life insurance benefit that provides
his or her family with a core level of security in case of the premature death
of the executive officer. The Company provides each executive officer with a
group life insurance benefit that is approximately two times his or her base
salary. In addition, the Company owns a universal life insurance policy on the
life of Mr. DeFeo in the amount of $10,000,000. Pursuant to the terms
of this arrangement, the Trustee of the Ronald M. DeFeo 1996 Life Insurance
Trust has the right to designate a beneficiary or beneficiaries to receive the
insurance proceeds from this policy on Mr. DeFeo’s death, subject to the
Company’s right to first receive a certain portion of the insurance
proceeds.
Termination of Employment
and Change in Control Arrangements
Each of
the executive officers, other than Mr. DeFeo, is a party to a Change in Control
and Severance Agreement with the Company that was entered into in April 2008
(collectively, the “Executive Agreements”). The Company and Mr. DeFeo
entered into the DeFeo Agreement that contains provisions regarding termination
of employment and change in control circumstances.
These
agreements provide the executive officers with a core level of assurance that
their actions on behalf of the Company and its stockholders can proceed without
the potential distraction of short-term issues that may affect the Company
(e.g., merger, buyout, etc.) and helps ensure that they continue to act in the
best interests of the Company. In addition, these agreements contain
measures that protect the Company as well, such as confidentiality, non-compete
and non-solicitation provisions. The key terms of these agreements
are generally customary provisions for agreements of this type and are described
below in “Potential Payments Upon Termination or Change in
Control.” In December 2009, the Committee determined that any Change
in Control and Severance Agreements that the Company enters into in the future
will not provide for a gross-up payment if an excise tax is imposed on the
change of control payments and benefits under Sections 280G and 4999 of the
Code.
32
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The Summary Compensation Table below
shows the compensation for the three previous fiscal years of the Company’s CEO,
Chief Financial Officer and its three other highest paid executive officers who
had 2009 total qualifying compensation in excess of $100,000 (the “Named
Executive Officers”).
|
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($) (1) (2)
|
Option
Awards
($)
|
Non-
Equity
Incentive
Plan
Compens-
ation
($)
|
Change in
Pension
Value and
Nonquali-
fied
Deferred
Compen-
sation
Earnings
($)
|
All Other
Compens-
ation ($)
(3)
|
Total ($)
|
||||||||||||||||||
|
Ronald
M. DeFeo
|
2009
|
$ | 1,058,958 | -0- | $ | 1,289,478 | -0- | $ | 782,000 | $ | 1,282,244 | $ | 287,300 | $ | 4,699,980 | ||||||||||||
|
Chairman
and Chief
|
2008
|
$ | 1,150,000 | -0- | $ | 8,019,136 | -0- | -0- | (4) | $ | 1,374,573 | $ | 809,827 | $ | 11,353,536 | ||||||||||||
|
Executive
Officer
|
2007
|
$ | 1,025,000 | $ | 110,000 | $ | 5,178,543 | -0- | $ | 2,397,713 | $ | 1,585,928 | $ | 313,733 | $ | 10,610,917 | |||||||||||
|
Phillip
C. Widman
|
2009
|
$ | 492,646 | -0- | $ | 483,626 | -0- | $ | 150,000 | $ | 296,211 | $ | 61,409 | $ | 1,483,892 | ||||||||||||
|
Senior
Vice President and
|
2008
|
$ | 526,250 | -0- | $ | 2,672,978 | -0- | $ | 336,368 | $ | 142,353 | $ | 90,683 | $ | 3,768,632 | ||||||||||||
|
Chief
Financial Officer
|
2007
|
$ | 500,000 | $ | 100,000 | $ | 1,683,030 | -0- | $ | 431,288 | $ | 154,329 | $ | 76,928 | $ | 2,945,575 | |||||||||||
|
Thomas
J. Riordan
|
2009
|
$ | 727,458 | -0- | $ | 483,626 | -0- | $ | 200,000 | $ | 270,529 | $ | 292,882 | $ | 1,974,495 | ||||||||||||
|
President
and
|
2008
|
$ | 780,000 | -0- | $ | 2,672,978 | -0- | $ | 664,739 | $ | 165,759 | $ | 250,251 | $ | 4,533,727 | ||||||||||||
|
Chief
Operating Officer
|
2007
|
$ | 744,231 | -0- | $ | 5,355,338 | -0- | $ | 857,849 | $ | 93,595 | $ | 269,177 | $ | 7,320,190 | ||||||||||||
|
Steve
Filipov (5)
|
2009
|
$ | 414,375 | -0- | $ | 137,286 | -0- | $ | 87,750 | $ | 363,300 | (6) | $ | 351,049 | $ | 1,353,760 | |||||||||||
|
President,
Developing
|
2008
|
$ | 460,945 | -0- | $ | 1,444,788 | -0- | $ | 143,428 | $ | 143,791 | $ | 257,099 | $ | 2,450,051 | ||||||||||||
|
Markets
and Strategic Accounts
|
2007
|
$ | 397,535 | -0- | $ | 985,478 | -0- | $ | 356,121 | $ | 355,430 | $ | 42,182 | $ | 2,136,746 | ||||||||||||
|
Richard
Nichols
|
2009
|
$ | 395,958 | -0- | $ | 273,783 | -0- | $ | 83,850 | $ | 237,290 | (6) | $ | 85,286 | $ | 1,076,167 | |||||||||||
|
President,
Terex Cranes
|
2008
|
$ | 427,708 | -0- | $ | 1,444,788 | -0- | $ | 322,035 | $ | 96,301 | $ | 80,170 | $ | 2,371,002 | ||||||||||||
|
2007
|
$ | 375,000 | -0- | $ | 985,478 | -0- | $ | 339,979 | $ | 204,446 | $ | 85,008 | $ | 1,989,911 | |||||||||||||
(1) See
Note Q – “Stockholders’ Equity” in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2009 for a detailed description of the assumptions
that the Company used in determining the dollar amounts recognized for financial
statement reporting purposes of its stock awards.
(2) The
amounts listed in the Stock Awards column are the aggregate grant date fair
value amounts computed in accordance with Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The
amounts listed in the Stock Awards column include awards that are subject to
performance conditions. For the 2009 awards, if the maximum
performance is achieved, the stock award amounts for Messrs. DeFeo, Widman and
Riordan would be $1,696,334, $636,282 and $636,282,
respectively. Messrs. Filipov and Nichols did not receive any stock
awards in 2009 that were subject to performance conditions.
33
(3) As
part of its competitive compensation program, the Company in 2009 provided its
Named Executive Officers with certain perquisites and other personal
benefits. As noted in the “Compensation Discussion & Analysis”
section above, in December 2009, the Company eliminated substantially all
perquisites that apply only to its executive officers. The amounts listed
below are the aggregate incremental cost of the perquisites paid by the
Company. The aggregate incremental cost to the Company is computed as
the actual out-of-pocket cost to the Company of supplying such
perquisite. For example, the amount listed under the Company Car
column is the amount that the Company paid to a third party as a result of
providing a Company car to the Named Executive Officer. As part of
their compensation, each of the Named Executive Officers in 2009 received the
perquisites listed in the table below:
|
Name
|
Company
Car
|
Club
Memberships
|
Disability
Premiums
|
Financial
Planning
Services
|
401(k)
Matching
Contributions
|
Employee Stock
Purchase Plan
Company
Contributions
|
Company
Paid Life
Insurance
|
Other**
|
Total
|
|||||||||||||||||||
|
Ronald
M. DeFeo
|
$ | 30,406 | $ | 13,107 | $ | 4,786 | $ | 15,000 | $ | 9,800 | $ | 1,800 | $ | 212,401 | * | -0- | $ | 287,300 | ||||||||||
|
Phillip
C. Widman
|
$ | 27,197 | $ | 8,050 | $ | 5,376 | $ | 1,500 | $ | 9,800 | $ | 1,800 | $ | 7,686 | -0- | $ | 61,409 | |||||||||||
|
Thomas
J. Riordan
|
$ | 30,947 | -0- | $ | 5,701 | $ | 5,900 | $ | 9,800 | $ | 450 | $ | 9,007 | $ | 231,077 | $ | 292,882 | |||||||||||
|
Steve
Filipov
|
$ | 20,952 | -0- | $ | 2,539 | $ | 5,000 | $ | 9,800 | $ | 675 | $ | 2,853 | $ | 309,230 | $ | 351,049 | |||||||||||
|
Richard
Nichols
|
$ | 33,956 | -0- | $ | 4,479 | -0- | $ | 9,800 | -0- | $ | 3,551 | $ | 33,500 | $ | 85,286 | |||||||||||||
* The
amount includes $39,148 which is for the reimbursement of taxes associated with
Company-paid life insurance. As noted in the “Compensation Discussion
& Analysis” section above, this perquisite was eliminated in December
2009.
** The
amount shown for Mr. Riordan consists of $183,601 for a matching contribution to
the Company’s Deferred Compensation Plan, which matching contribution is
invested in Common Stock, and $47,476 for payments related to Mr. Riordan’s
relocation, of which $19,779 is for the reimbursement of taxes; the amount shown
for Mr. Filipov consists of $212,202 for payment of a housing allowance, of
which $92,204 is for the reimbursement of taxes, $48,572 for payments related to
Mr. Filipov’s relocation, of which $15,935 is for the reimbursement of taxes,
$43,372 is for the reimbursement of Mr. Filipov’s children’s education, of which
$18,780 is for the reimbursement of taxes and $5,084 is for payment of tax
services, of which $2,309 is for the reimbursement of taxes; and the amount
shown for Mr. Nichols consists of payment of a housing allowance.
(4) Pursuant
to the satisfaction of the performance criteria, Mr. DeFeo was entitled to
non-equity incentive plan compensation in the amount of
$1,171,620. However, as the Company has been making significant
headcount reductions and implementing other cost reductions, Mr. DeFeo believed
that he should lead by example and share some of the economic burden and
voluntarily declined receipt of this non-equity incentive plan
compensation.
(5) Mr.
Filipov received his 2007 compensation in Euros. Amounts shown are
converted into U.S. Dollars at an average rate of one Euro =
$1.3661. Mr. Filipov received the first six months of his 2008 salary
in Euros, which amount was converted into U.S. Dollars at an average rate of one
Euro = $1.5255.
(6) The
amounts shown include $249 and $73 for Messrs. Filipov and Nichols,
respectively, which amounts were earnings that were above-market or
preferential.
34
Grants
of Plan-Based Awards
The
following table sets forth information on grants of awards under the Company’s
equity and non-equity incentive plans during 2009 to the Named Executive
Officers. The amount of stock awards, option awards and non-equity
incentive plan compensation recognized for financial reporting purposes by the
Company for the Named Executive Officers during 2009 is also listed in the
Summary Compensation Table.
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
All
Other
Stock
Awards:
Number
of
Shares
|
All Other
Option
Awards:
Number of
Securities
|
Exercise
or Base
Price of
|
Grant Date
Fair Value
|
||||||||||||||||||||||||||
|
Name
|
Grant
Date
|
Thresh-
old
($)
|
Target
($)
|
Maxi-
mum ($)
|
Thresh
-old
(#)
|
Target
(#)
|
Maxi-
mum
(#)
|
of Stock
or Units
(#)
|
Underlying
Options
(#)
|
Option
Awards
($/Sh)
|
of Stock
and Option
Awards
|
||||||||||||||||||||
|
Ronald
M. DeFeo
|
2/26/2009
|
29,850 | 59,700 | 89,550 | $ | 471,033 | |||||||||||||||||||||||||
|
2/26/2009
|
29,850 | 59,700 | 89,550 | $ | 342,678 | ||||||||||||||||||||||||||
|
2/26/2009
|
60,300 | $ | 475,767 | ||||||||||||||||||||||||||||
| N/A | $ | 57,500 | $ | 2,300,000 | $ | 3,450,000 | |||||||||||||||||||||||||
|
2/26/2009
|
$ | 746,250 | $ | 1,492,500 | $ | 2,238,750 | |||||||||||||||||||||||||
|
2/26/2009
|
$ | 746,250 | $ | 1,492,500 | $ | 2,238,750 | |||||||||||||||||||||||||
|
2/26/2009
|
$ | 900,000 | * | * | |||||||||||||||||||||||||||
|
Phillip
C. Widman
|
2/26/2009
|
11,200 | 22,400 | 33,600 | $ | 176,736 | |||||||||||||||||||||||||
|
2/26/2009
|
11,200 | 22,400 | 33,600 | $ | 128,576 | ||||||||||||||||||||||||||
|
2/26/2009
|
22,600 | $ | 178,314 | ||||||||||||||||||||||||||||
| N/A | $ | 120,375 | $ | 401,250 | $ | 601,875 | |||||||||||||||||||||||||
|
2/26/2009
|
$ | 279,850 | $ | 559,700 | $ | 839,550 | |||||||||||||||||||||||||
|
2/26/2009
|
$ | 279,850 | $ | 559,700 | $ | 839,550 | |||||||||||||||||||||||||
|
Thomas
J. Riordan
|
2/26/2009
|
11,200 | 22,400 | 33,600 | $ | 176,736 | |||||||||||||||||||||||||
|
2/26/2009
|
11,200 | 22,400 | 33,600 | $ | 128,576 | ||||||||||||||||||||||||||
|
2/26/2009
|
22,600 | $ | 178,314 | ||||||||||||||||||||||||||||
| N/A | $ | 237,000 | $ | 790,000 | $ | 1,185,000 | |||||||||||||||||||||||||
|
2/26/2009
|
$ | 279,850 | $ | 559,700 | $ | 839,550 | |||||||||||||||||||||||||
|
2/26/2009
|
$ | 279,850 | $ | 559,700 | $ | 839,550 | |||||||||||||||||||||||||
|
Steve
Filipov
|
3/2/2009
|
17,400 | $ | 137,286 | |||||||||||||||||||||||||||
|
3/2/2009
|
$ | 85,850 | $ | 171,700 | $ | 257,550 | |||||||||||||||||||||||||
|
3/2/2009
|
$ | 85,850 | $ | 171,700 | $ | 257,550 | |||||||||||||||||||||||||
| N/A | $ | 101,250 | $ | 337,500 | $ | 506,250 | |||||||||||||||||||||||||
|
Richard
Nichols
|
2/26/2009
|
34,700 | $ | 273,783 | |||||||||||||||||||||||||||
|
2/26/2009
|
$ | 171,650 | $ | 343,300 | $ | 514,950 | |||||||||||||||||||||||||
|
2/26/2009
|
$ | 171,650 | $ | 343,300 | $ | 514,950 | |||||||||||||||||||||||||
| N/A | $ | 16,125 | $ | 322,500 | $ | 483,750 | |||||||||||||||||||||||||
35
* The
award is subject to increase based upon increases in the Company’s stock price
above $10.69, the average closing stock price between January 29, 2009 and
February 26, 2009. Each $1 increase in stock price above $10.69 would
result in an additional $84,190 paid to Mr. DeFeo, which additional amounts will
be pro-rated for stock price increases of less than $1. In no event
will Mr. DeFeo be entitled to receive less than $900,000. There is no
cap on the amount of the award. The award was worth $1,667,813 on
December 31, 2009.
On
February 26, 2009, grants of Common Stock subject to restrictions on transfer,
conditions of forfeitability and other limitations and restrictions (“Restricted
Stock”) with performance-based criteria (“Performance Shares”) were made under
the 2000 Plan to Mr. DeFeo (59,700 shares), Mr. Widman (22,400 shares) and Mr.
Riordan (22,400 shares). The value of the Performance Shares set
forth in the table above is based on the closing price on the NYSE of the Common
Stock on the date of grant, which was $7.89 per share on February 26, 2009. When
performance targets are established for future years and the grant date
established per ASC Topic 718, any incremental change will be reflected in the
year in which such performance target is set. These Performance Shares will vest
in full in 2011 if the Company achieves a targeted EPS in each of 2009, 2010 and
2011. The number of shares in this grant is subject to adjustment, up
or down, based upon attainment above or below the targeted EPS measurement. No
portion of the 2009 performance-based award was earned. See the
“Compensation Discussion & Analysis” section above for a detailed
description of the performance measures used in this grant. Upon the
earliest to occur of a change in control of the Company or the death or
disability of the recipient of the grant, any unvested portion of such
Performance Shares shall vest immediately. Dividends, if any, are
paid on vested Performance Shares at the same rate as paid to all
stockholders.
In
addition, on February 26, 2009, grants of Performance Shares were made under the
2000 Plan to Mr. DeFeo (59,700 shares), Mr. Widman (22,400 shares) and Mr.
Riordan (22,400 shares). The value of the Performance Shares granted
to such Named Executive Officers set forth in the table above was not based on
the closing stock price on the NYSE of the Common Stock on February 26, 2009, as
the Performance Shares were based on a market condition. The Company used
the Monte Carlo method to provide grant date fair value for these Performance
Shares, determined to be $5.74 per share. See Note Q – “Stockholders’
Equity” in the Company’s Annual Report on Form 10-K for the year ended December
31, 2009 for a detailed description of the assumptions that the Company used to
arrive at this valuation. These Performance Shares will vest in full
in 2012 if the Company achieves a targeted percentile rank against a peer group
of 28 companies for three year annualized TSR. The number of shares
in this grant is subject to adjustment, up or down, based upon attainment above
or below the targeted TSR measurement. See the “Compensation
Discussion & Analysis” section above for a detailed description of the
performance measures used in this grant. Upon the earliest to occur
of a change in control of the Company or the death or disability of the
recipient of the grant, any unvested portion of such Performance Shares shall
vest immediately. Dividends, if any, are paid on vested Performance
Shares at the same rate as paid to all stockholders.
In
addition, on February 26, 2009, except for Mr. Filipov, whose grant was made on
March 2, 2009, grants of Restricted Stock were made under the 2000 Plan to Mr.
DeFeo (60,300 shares), Mr. Widman (22,600 shares), Mr. Riordan (22,600 shares),
Mr. Filipov (17,400 shares) and Mr. Nichols (34,700 shares). The
value of the Restricted Stock granted to such Named Executive Officers set forth
in the table above is based on the closing stock price on the NYSE of the Common
Stock of $7.89 per share on February 26, 2009. These shares of
Restricted Stock will vest in full in the first quarter of 2012, to the extent
the Named Executive Officer is still employed with the Company. Upon
the earliest to occur of a change in control of the Company or the death or
disability of the recipient of the grant, any unvested portion of such
Restricted Stock shall vest immediately. Dividends, if any, are paid
on Restricted Stock awards at the same rate as paid to all
stockholders.
36
See the
“Compensation Discussion & Analysis” section above for a detailed
description of the performance measures used in non-equity incentive plan
awards.
It is
generally the Company’s policy not to enter into employment contracts unless it
is legally required or customary to do so in a particular
country. However, the Board has determined that maintaining Mr.
DeFeo’s services is important to the long-term strategy of the Company and that
the loss of Mr. DeFeo’s services could have a significant, negative impact on
the Company’s business. Therefore, the Company feels it is prudent to
have an employment agreement with Mr. DeFeo. Mr. DeFeo’s employment
agreement expires on December 31, 2012. The Company relies on the
management and leadership skills of its other Named Executive Officers, but not
to the same extent that it relies on Mr. DeFeo, and accordingly these executives
are not bound by employment agreements. The Company’s other executive
officers are strictly at-will employees. Each of the Company’s
executive officers, including Mr. DeFeo, have their compensation reviewed on an
annual basis.
Under the
DeFeo Agreement, Mr. DeFeo receives an annual base salary, subject to adjustment
by the Board, as well as annual bonuses and long-term incentive compensation
during his term of employment in accordance with any plan or plans established
by the Company. The Company also agreed to use its best efforts to
have Mr. DeFeo elected as a member of the Board and, consistent with generally
accepted best corporate governance standards, Chairman of the Board during the
term of the DeFeo Agreement. For additional information regarding Mr.
DeFeo’s employment agreement, see “Potential Payments Upon Termination or Change
in Control.”
37
Outstanding
Equity Awards at Fiscal Year-End
The table
below summarizes the amount of unexercised stock options, Restricted Stock that
has not vested and equity incentive plan awards that have not yet vested for
each of the Named Executive Officers as of December 31, 2009.
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($) (1)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($) (1)
|
||||||||||||||||
|
Ronald
M. DeFeo
|
3,230 | $ | 8.40 |
4/5/2011
|
|||||||||||||||||||||
| 150,000 | $ | 11.18 |
3/19/2012
|
||||||||||||||||||||||
| 100,000 | $ | 5.59 |
3/13/2013
|
||||||||||||||||||||||
| 80,000 | $ | 16.35 |
5/7/2014
|
||||||||||||||||||||||
| 7,325 | (2) | $ | 145,108 | ||||||||||||||||||||||
| 31,823 | (3) | $ | 630,414 | ||||||||||||||||||||||
| 8,557 | (4) | $ | 169,514 | ||||||||||||||||||||||
| 17,092 | (5) | $ | 338,593 | ||||||||||||||||||||||
| 20,551 | (6) | $ | 407,115 | ||||||||||||||||||||||
| 61,792 | (7) | $ | 1,224,100 | ||||||||||||||||||||||
| 37,075 | (8) | $ | 734,456 | ||||||||||||||||||||||
| 60,300 | (9) | $ | 1,194,543 | ||||||||||||||||||||||
| 59,700 | (10) | $ | 1,182,657 | ||||||||||||||||||||||
| 59,700 | (11) | $ | 1,182,657 | ||||||||||||||||||||||
|
Phillip
C. Widman
|
25,000 | $ | 10.05 |
9/17/2012
|
|||||||||||||||||||||
| 12,000 | $ | 17.35 |
3/11/2014
|
||||||||||||||||||||||
| 10,000 | $ | 45.75 |
6/1/2016
|
||||||||||||||||||||||
| 10,000 | (12) | $ | 198,100 | ||||||||||||||||||||||
38
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($) (1)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($) (1)
|
||||||||||||||||
| 3,996 | (2) | $ | 79,161 | ||||||||||||||||||||||
| 5,785 | (3) | $ | 114,601 | ||||||||||||||||||||||
| 2,781 | (4) | $ | 55,092 | ||||||||||||||||||||||
| 5,556 | (5) | $ | 110,064 | ||||||||||||||||||||||
| 6,850 | (6) | $ | 135,699 | ||||||||||||||||||||||
| 20,597 | (7) | $ | 408,027 | ||||||||||||||||||||||
| 12,358 | (8) | $ | 244,812 | ||||||||||||||||||||||
| 22,600 | (9) | $ | 447,706 | ||||||||||||||||||||||
| 22,400 | (10) | $ | 443,744 | ||||||||||||||||||||||
| 22,400 | (11) | $ | 443,744 | ||||||||||||||||||||||
|
Thomas
J. Riordan
|
15,000 | (13) | $ | 297,150 | |||||||||||||||||||||
| 15,000 | (14) | $ | 297,150 | ||||||||||||||||||||||
| 3,209 | (4) | $ | 63,570 | ||||||||||||||||||||||
| 6,410 | (5) | $ | 126,982 | ||||||||||||||||||||||
| 6,850 | (6) | $ | 135,699 | ||||||||||||||||||||||
| 20,597 | (7) | $ | 408,027 | ||||||||||||||||||||||
| 12,358 | (8) | $ | 244,812 | ||||||||||||||||||||||
| 22,600 | (9) | $ | 447,706 | ||||||||||||||||||||||
| 22,400 | (10) | $ | 443,744 | ||||||||||||||||||||||
| 22,400 | (11) | $ | 443,744 | ||||||||||||||||||||||
|
Steve
Filipov
|
2,500 | $ | 17.35 |
3/11/2014
|
|||||||||||||||||||||
| 10,000 | $ | 45.75 |
6/1/2016
|
||||||||||||||||||||||
39
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($) (1)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($) (1)
|
||||||||||||||||
| 10,000 | (12) | $ | 198,100 | ||||||||||||||||||||||
| 2,664 | (2) | $ | 52,774 | ||||||||||||||||||||||
| 3,859 | (3) | $ | 76,447 | ||||||||||||||||||||||
| 3,423 | (4) | $ | 67,810 | ||||||||||||||||||||||
| 2,278 | (5) | $ | 45,127 | ||||||||||||||||||||||
| 9,848 | (6) | $ | 195,089 | ||||||||||||||||||||||
| 8,290 | (7) | $ | 164,225 | ||||||||||||||||||||||
| 3,553 | (8) | $ | 70,385 | ||||||||||||||||||||||
| 17,400 | (9) | $ | 344,694 | ||||||||||||||||||||||
|
Richard
Nichols
|
10,000 | $ | 14.99 |
2/1/2014
|
|||||||||||||||||||||
| 10,000 | $ | 17.35 |
3/11/2014
|
||||||||||||||||||||||
| 16,000 | $ | 45.75 |
6/1/2016
|
||||||||||||||||||||||
| 16,000 | (12) | $ | 316,960 | ||||||||||||||||||||||
| 2,664 | (2) | $ | 52,774 | ||||||||||||||||||||||
| 3,859 | (3) | $ | 76,447 | ||||||||||||||||||||||
| 3,423 | (4) | $ | 67,810 | ||||||||||||||||||||||
| 2,278 | (5) | $ | 45,127 | ||||||||||||||||||||||
| 9,848 | (6) | $ | 195,089 | ||||||||||||||||||||||
| 8,290 | (7) | $ | 164,225 | ||||||||||||||||||||||
| 3,553 | (8) | $ | 70,385 | ||||||||||||||||||||||
| 34,700 | (9) | $ | 687,407 | ||||||||||||||||||||||
40
(1) Values
based on the closing price of the Company’s Common Stock on the NYSE on December
31, 2009 of $19.81.
(2) The
shares of Restricted Stock vest on September 1, 2010.
(3) The
shares of Restricted Stock vest on December 31, 2010 because the Company
exceeded the targeted percentage return on invested capital for the five
consecutive calendar quarter period ended December 31, 2007.
(4) The
shares of Restricted Stock vest in equal increments on March 6, 2010 and March
6, 2011.
(5) The
shares of Restricted Stock vest on December 31, 2010 because the Company
exceeded the targeted percentage return on invested capital for the four
consecutive calendar quarter period ended December 31, 2007.
(6) The
shares of Restricted Stock vest on March 4, 2011.
(7) The
shares of Restricted Stock vest if the Company achieves a targeted annual
increase in EPS for the period January 1, 2008 through December 31,
2010. If this target is achieved, the shares will vest in full on the
later of March 4, 2011, or after the Company’s 2010 financial statements are
completed and filed with the SEC. The number of shares in this grant
are subject to adjustment, up or down, based upon attainment above or below the
targeted EPS measurement.
(8) The
shares of Restricted Stock vest if the Company achieves a targeted TSR
percentile rank for the period January 1, 2008 through December 31,
2010. If this target is achieved, the shares will vest in full on the
later of March 4, 2011, or after the Company’s 2010 financial statements are
completed and filed with the SEC. The number of shares in this grant
are subject to adjustment, up or down, based upon attainment above or below the
targeted TSR measurement.
(9) The
shares of Restricted Stock vest on February 26, 2012.
(10) The
shares of Restricted Stock vest if the Company achieves a targeted EPS in each
of 2009, 2010 and 2011. If the targets are achieved, the shares will
vest in full on the later of the third anniversary of the date of grant, or
after the Company’s 2011 financial statements are completed and filed with the
SEC. The number of shares in this grant are subject to adjustment, up
or down, based upon attainment above or below the targeted EPS. The
2009 portion of the performance-based award was not earned. See the
“Compensation Discussion and Analysis” section above for more details on this
grant.
(11) The
shares of Restricted Stock vest if the Company achieves a targeted TSR
percentile rank for the period January 1, 2009 through December 31,
2011. If this target is achieved, the shares will vest in full on the
later of the third anniversary of the date of grant, or after the Company’s 2011
financial statements are completed and filed with the SEC. The number
of shares in this grant are subject to adjustment, up or down, based upon
attainment above or below the targeted percentile rank. See the
“Compensation Discussion and Analysis” section above for more details on this
grant.
(12) The
shares of Restricted Stock vest on March 31, 2010.
(13) The
shares of Restricted Stock vest in equal increments on January 31, 2010 and
January 31, 2011.
(14) The
shares of Restricted Stock vest at a rate of 7,500 per year if the Company
achieves a targeted percentage ROIC for each such year. As the
Company’s ROIC was a negative 9.6% in the four consecutive calendar quarter
period ended December 31, 2009, Mr. Riordan did not receive any of the 2009
portion of the performance-based award.
41
Option
Exercises and Stock Vested
The table
below summarizes the stock options exercised and each vesting of Restricted
Stock during 2009 for each of the Named Executive Officers.
|
Option Awards
|
Stock Awards
|
||||||||||||||||
|
Name
|
Number of
Shares
Acquired
on Exercise
(#)
|
Value Realized
on Exercise
($)
|
Number of
Shares
Acquired
on Vesting
(#)
|
Value Realized
on Vesting
($)
|
|||||||||||||
|
Ronald
M. DeFeo
|
-0- | -0- | 200,518 | $ | 2,462,716 | ||||||||||||
|
Phillip
C. Widman
|
-0- | -0- | 16,727 | $ | 305,847 | ||||||||||||
|
Thomas
J. Riordan
|
-0- | -0- | 19,917 | $ | 265,008 | ||||||||||||
|
Steve
Filipov
|
-0- | -0- | 10,511 | $ | 181,197 | ||||||||||||
|
Richard
Nichols
|
-0- | -0- | 10,511 | $ | 181,197 | ||||||||||||
42
Pension
Benefits
The table
below provides information with respect to each of the Company’s pension plans
that provide for payments at, following, or in connection with the retirement of
a Named Executive Officer.
|
Name
|
Plan Name
|
Number of
Years Credited
Service
(#)
|
Present
Value of
Accumulated
Benefit
($)
|
Payments
During Last
Fiscal Year
($)
|
||||||||||||
|
Ronald
M. DeFeo
|
Supplemental
Executive Retirement Plan
|
18 | $ | 7,741,152 | -0- | |||||||||||
|
Terex
Pension Plan
|
1 | (1) | $ | 24,936 | -0- | |||||||||||
|
Phillip
C. Widman
|
Supplemental
Executive Retirement Plan
|
7 | (2) | $ | 766,924 | -0- | ||||||||||
|
Thomas
J. Riordan
|
Supplemental
Executive Retirement Plan
|
3 | (3) | $ | 529,883 | -0- | ||||||||||
|
Steve
Filipov
|
Supplemental
Executive Retirement Plan
|
14 | $ | 862,126 | -0- | |||||||||||
|
Richard
Nichols
|
Supplemental
Executive Retirement Plan
|
9 | $ | 537,924 | -0- | |||||||||||
(1) Participation
in the Terex Pension Plan was frozen as of May 7, 1993, and no participants,
including Mr. DeFeo, are credited with service for benefit purposes following
such date.
(2) Upon
completing ten years of service with the Company, Mr. Widman will be credited
with an additional five years of service for benefit and vesting
purposes.
(3) Following
the completion of five years of service with the Company, Mr. Riordan will be
credited with an additional ten years of service for vesting
purposes.
The SERPs
are intended to provide certain senior executives of the Company with retirement
benefits in recognition of their contributions to the long-term growth of the
Company. The DB SERP is closed to new participants. A
senior executive participating in the DB SERP is not eligible to participate in
the DC SERP.
Participants
in the DB SERP with ten or more years of eligible service are vested and
entitled to annual pension benefits beginning at a normal retirement age (“NRA”)
of 65 or when age plus years of service first equal 90 (the “Normal Retirement
Benefit”). The Board determined that for hiring and retention
purposes, Messrs. Riordan and Widman would be credited with additional years of
service as described above. Participants in the DB SERP who are
vested but terminate employment prior to NRA shall receive a retirement benefit
that is equal to the actuarial equivalent of the Normal Retirement
Benefit.
The
compensation covered by the DB SERP is based on a participant’s final five-year
average of annual salary and bonus. Benefits are computed assuming an
NRA of 65 or when age plus years of service first equal 90. Benefits
accrue at 2% of average compensation per year of service, payable at the NRA, up
to a maximum of 20 years of service. Benefits are payable monthly as
a life annuity with 120 monthly payments guaranteed. Benefits are
reduced by 50% for Social Security or similar payments and 100% for any other
Company-paid defined benefit retirement benefits.
43
Participants
in the DC SERP with ten or more years of eligible service are vested and
entitled to contributions made by the Company to their DC SERP
account. Annual contributions are based upon 10% of the participant’s
base salary and bonus earned. The Company credits contributions in
the DC SERP with an interest rate equal to a bond fund that mirrors an
investment strategy in corporate bonds of companies rated Baa or higher by
Moody’s. The annual rate of interest for 2009 was 6.6%. Benefits are
payable in a lump sum payout following termination of employment.
Mr. DeFeo participates in the Terex
Pension Plan (the “Retirement Plan”). None of the other Named Executive Officers
participate in the Retirement Plan. Participants in the Retirement
Plan with five or more years of eligible service are fully vested and entitled
to annual pension benefits beginning at age 65. Retirement benefits
under the Retirement Plan for Mr. DeFeo are equal to the product of (i) his
years of service (as defined in the Retirement Plan) and (ii) 1.08% of final
average earnings (as defined in the Retirement Plan) plus 0.65% of such
compensation in excess of amounts shown on the applicable Social Security
Integration Table. There is no offset for primary Social
Security. Participation in the Retirement Plan was frozen as of May
7, 1993, and no participants, including Mr. DeFeo, are credited with service for
benefit purposes following such date. However, participants not
currently fully vested will be credited with service for purposes of determining
vesting only. The annual retirement benefits payable at normal
retirement age under the Retirement Plan will be $3,687 for Mr.
DeFeo.
See Note
P – “Retirement Plans and Other Benefits” in the Company’s Annual Report on Form
10-K for the year ended December 31, 2009 for a detailed description of the
assumptions that the Company uses in determining the present value of the
accumulated benefit.
44
Nonqualified
Deferred Compensation
The table
below provides information for the Named Executive Officers with respect to the
Company’s Deferred Compensation Plan.
|
Name
|
Executive
Contributions in
Last FY
($)
|
Registrant
Contributions in
Last FY
($) (1)
|
Aggregate
Earnings in Last
FY
($) (1)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance
at Last
FYE
($) (2)
|
|||||||||||||||
|
Ronald
M. DeFeo
|
-0- | -0- | $ | 105,706 | -0- | $ | 840,975 | |||||||||||||
|
Phillip
C. Widman
|
-0- | -0- | -0- | -0- | -0- | |||||||||||||||
|
Thomas
J. Riordan
|
$ | 733,023 | $ | 183,256 | $ | 736,336 | -0- | $ | 1,898,270 | |||||||||||
|
Steve
Filipov
|
-0- | -0- | $ | 551 | $ | 551 | -0- | |||||||||||||
|
Richard
Nichols
|
-0- | -0- | $ | 28,354 | -0- | $ | 227,497 | |||||||||||||
______________________
(1) The
amounts shown in the “Registrant Contributions in Last FY” column are included
in the “All Other Compensation” column of the Summary Compensation table
above. The amounts shown in the “Aggregate Earnings in Last FY”
column include $249 and $73 for Messrs. Filipov and Nichols, respectively, which
amounts are included in the Summary Compensation Table above, as these earnings
were above-market or preferential.
(2) Includes
$2,500,000 and $721,156 for Messrs. DeFeo and Riordan, respectively, which
amounts were included in Summary Compensation Tables in previous
years.
Under the
Deferred Compensation Plan, a Named Executive Officer may defer up to (i) 20% of
his/her salary and (ii) 100% of his/her bonus. The deferrals may be
invested in Common Stock or in a bond index. The Company credits the
deferrals in the bond index with an interest rate equal to a bond fund that
mirrors an investment strategy in corporate bonds of companies rated Baa or
higher by Moody’s. The annual rate of interest for 2009 was 6.6%. The
Company makes a contribution of 25% of the Named Executive Officer’s salary
and/or bonus that is invested in Common Stock. The Company does not
make a contribution with respect to any deferrals into the bond
index.
The Named
Executive Officers may receive payments under the Deferred Compensation Plan
after their employment terminates, upon their death or if they have an
unforeseeable emergency (as defined in the Deferred Compensation
Plan). In addition, they may elect to receive all or a portion of
their deferral, including the Company’s matching contribution, after the
deferral has been in the Deferred Compensation Plan for at least three
years. Furthermore, for deferrals made prior to December 31, 2004, if
they elect to receive an accelerated distribution under the Deferred
Compensation Plan, the Named Executive Officers shall (i) forfeit 10% of the
amount of the distribution to the Company, (ii) forfeit any Company matching
contribution that has not been in the plan for at least one year due to the
accelerated distribution and (iii) be unable to make further deferrals into the
plan for at least 12 months. In accordance with Section 409A of the
Code, accelerated distributions are not allowed under the Deferred Compensation
Plan for any deferrals made after December 31, 2004.
45
Potential
Payments Upon Termination or Change in Control
If Mr.
DeFeo’s employment with the Company is terminated for any reason, including for
Cause (as such term is defined in the DeFeo Agreement), due to Mr. DeFeo’s death
or disability, or by Mr. DeFeo voluntarily, or if Mr. DeFeo elects not to extend
the DeFeo Agreement at the end of its term, Mr. DeFeo or his beneficiary is to
receive, in addition to his salary, bonus and other compensation earned through
the time of such termination, (i) any deferred compensation then in effect, (ii)
any other compensation or benefits that have vested through the date of
termination or to which Mr. DeFeo may then be entitled, including long-term
incentive compensation awards, stock and stock option awards, and (iii)
reimbursement of expenses incurred by Mr. DeFeo through the date of termination
but not yet reimbursed. If Mr. DeFeo’s employment with the Company is
terminated as the result of Mr. DeFeo’s death or disability, then Mr. DeFeo or
his beneficiary would also be entitled to receive a prorated portion of his
bonus for the fiscal year during which such termination occurs.
If Mr.
DeFeo’s employment with the Company is terminated by the Company without Cause
or by Mr. DeFeo for Good Reason (as such terms are defined in the DeFeo
Agreement), or if the Company elects not to extend the DeFeo Agreement at the
end of its term, Mr. DeFeo is to receive, in addition to his salary, bonus and
other compensation earned through the time of such termination, (i) two times
his base salary, (ii) two times the average of his annual bonuses for the two
calendar years preceding termination, (iii) a prorated portion of his bonus for
the fiscal year during which such termination occurs, (iv) continuing insurance
coverage for up to two years from termination, (v) immediate vesting of
non-performance based unvested stock options and stock grants with a period of
one year following termination to exercise his options, and (vi) continuation of
all other benefits in effect at the time of termination for up to two years from
termination. The cash portion of this payment is spread over a 13-month period
following the date of termination, except if such termination occurs within 24
months following a Change in Control (as such term is defined in the DeFeo
Agreement), in which event the cash portion is to be paid in a lump
sum. In addition, if Mr. DeFeo’s employment is terminated by the
Company without Cause or by Mr. DeFeo for Good Reason within 24 months following
a Change in Control, Mr. DeFeo is entitled to (A) the greater of (1) the sum of
(i), (ii) and (iii) above and (2) an amount equal to all compensation required
to be paid to Mr. DeFeo for the balance of the term of the DeFeo Agreement, (B)
the immediate vesting of any unvested performance stock options, stock grants,
long-term incentive compensation awards and other similar awards, with a period
of one year following termination to exercise any such options and (C) any
amounts payable under the SERP for the number of years of service achieved by
Mr. DeFeo on the date of termination. The DeFeo Agreement also
provides for additional payments to Mr. DeFeo in the event that any payments
under the DeFeo Agreement are subject to excise tax under the Code, such that
Mr. DeFeo retains an amount of such additional payments equal to the amount of
such excise tax.
The DeFeo
Agreement requires Mr. DeFeo to keep certain information of the Company
confidential during his employment and thereafter. The DeFeo
Agreement also contains an agreement by Mr. DeFeo not to compete with the
business of the Company during his term of employment with the Company and for a
period of 18 months thereafter (24 months thereafter, if the date of Mr. DeFeo’s
termination is within 24 months following a Change in Control).
The
following table describes the potential payments upon termination or a Change in
Control of the Company for Mr. DeFeo assuming that the triggering event took
place on December 31, 2009 using the share price of Common Stock as of that day
(both as required by the SEC). However, a termination or change in
control did not occur on December 31, 2009 and Mr. DeFeo was not terminated
on that date. There can be no assurance that a termination or change
in control would produce the same or similar results as those described if it
occurs on any other date or when the Common Stock is trading at any other
price.
46
|
Executive Benefits
and Payments Upon
Termination
|
Voluntary
Termination
|
Early or
Normal
Retirement
|
Involuntary Not
For Cause or
Good Reason
Termination
|
For Cause
Termination
|
Involuntary Not For
Cause or Good
Reason Termination
(CIC)
|
Death
|
Disability
|
|||||||||||||||||||||
|
Base
Salary
|
-0- | -0- | $ | 2,300,000 | -0- | $ | 2,300,000 | -0- | -0- | |||||||||||||||||||
|
Annual
Incentive
|
$ |
782,000
|
$ | 782,000 | $ | 4,461,333 | $ | 782,000 | $ | 4,461,333 | $ | 782,000 | $ | 782,000 | ||||||||||||||
|
Restricted
Shares (time-based)
|
-0- | -0- | $ | 1,916,281 | -0- | $ | 1,916,281 | $ | 1,916,281 | $ | 1,916,281 | |||||||||||||||||
|
Restricted
Shares (performance-based)
|
-0- | -0- | -0- | -0- | $ | 5,292,875 | $ | 5,292,875 | $ | 5,292,875 | ||||||||||||||||||
|
Stock
Options
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Cash
Awards
|
-0- | -0- | -0- | -0- | $ | 2,985,000 | $ | 2,985,000 | $ | 2,985,000 | ||||||||||||||||||
|
Company
Car
|
-0- | -0- | $ | 60,000 | (1) | -0- | $ | 60,000 | (1) | -0- | -0- | |||||||||||||||||
|
Club
Memberships
|
-0- | -0- | $ | 25,000 | (1) | -0- | $ | 25,000 | (1) | -0- | -0- | |||||||||||||||||
|
Disability
Premiums
|
-0- | -0- | $ | 10,000 | (1) | -0- | $ | 10,000 | (1) | -0- | -0- | |||||||||||||||||
|
Life
Insurance Premiums
|
-0- | -0- | $ | 425,000 | (1) | -0- | $ | 425,000 | (1) | -0- | -0- | |||||||||||||||||
|
Financial
Planning Services
|
-0- | -0- | $ | 30,000 | (1) | -0- | $ | 30,000 | (1) | -0- | -0- | |||||||||||||||||
|
Use
of Private Aircraft
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Retirement
Plan Payments
|
$ |
9,300,000
|
(2) | $ | 9,300,000 | (2) | $ | 9,300,000 | (2) | $ | 9,300,000 | (2) | $ | 9,300,000 | (2) | $ | 9,300,000 | (2) | $ | 9,300,000 | (2) | |||||||
|
Life
Insurance Proceeds
|
-0- | -0- | -0- | -0- | -0- | $ | 12,160,000 | -0- | ||||||||||||||||||||
|
Disability
Benefits
|
-0- | -0- | -0- | -0- | -0- | -0- | $ | 1,000,000 | (3) | |||||||||||||||||||
|
Excise
Tax Gross
Up
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
______________________
(1)
Reflects the estimated value of a benefit or perquisite that Mr. DeFeo would be
entitled to receive. As noted in the “Compensation Discussion &
Analysis” section above, effective in 2010, the Company eliminated substantially
all perquisites that apply only to its executive officers.
(2)
Reflects the estimated value of Mr. DeFeo’s qualified and non-qualified
retirement plans on December 31, 2009.
(3)
Reflects the estimated value of all future payments that Mr. DeFeo would be
entitled to receive under the Company’s disability program.
Pursuant
to the Executive Agreements, if an executive’s employment with the Company is
terminated within six months of a Change in Control (as defined in the Executive
Agreements) in anticipation of such Change in Control or within 24 months
following a Change in Control, other than for Cause, by reason of death or
Permanent Disability, or by the executive without Good Reason (each as defined
in the Executive Agreements), the executive is to receive (i) two times his base
salary, (ii) two times his annual bonus for the last calendar year preceding
termination, and (iii) any accrued vacation pay. This payment is to be paid in a
lump sum simultaneously with the executive’s termination or on a monthly basis.
The Executive Agreements also provide for additional payments to the executive
in the event that any payments under the Executive Agreements are subject to
excise tax under the Code, such that the executive retains an amount of such
additional payments equal to the amount of such excise tax. In
addition, the executive also will receive (a) immediate vesting of unvested
stock options and stock grants, with a period of up to six months following
termination to exercise such options, (b) continuing insurance coverage for 24
months from termination, (c) continuation of all other benefits in effect at the
time of termination for 24 months from termination and (d) outplacement services
for a period of at least 12 months from termination.
47
In the
event an executive’s employment with the Company is terminated by the Company
without Cause or by the executive for Good Reason (other than in connection with
a Change in Control), the Company is to pay the executive (i) two times his base
salary, (ii) two times his annual bonus for the last calendar year preceding
termination and (iii) any accrued vacation pay. This amount is to be
paid in 24 equal monthly payments. In such event, the executive would also have
the right to exercise any stock options, long-term incentive awards or similar
awards for up to six months following termination, and would immediately vest in
non-performance based options and stock awards granted under the Company’s
incentive plans that would vest in the 24 months following the date of
termination. In addition, the Company would also provide continuing
insurance coverage, continuation of all other benefits in effect at the time of
termination for 24 months from termination and outplacement services for a
period of at least 12 months from termination.
As part
of the Executive Agreements, the executives agree to keep confidential certain
Company information and not to disparage the Company. In addition, Messrs.
Riordan, Filipov and Nichols agree that, for a period of 18 months, and Mr.
Widman agrees that, for a period of 12 months, following the date of termination
(or 24 months for Messrs. Riordan, Filipov and Nichols following such
termination, if such termination is within 24 months following a Change in
Control), the executive will not, without the prior written consent of the
Company, directly or indirectly engage in or render any services to any
Competitive Business (as such term is defined in the Executive Agreements) nor
solicit, induce or entice any employee of the Company to leave the
Company.
Each
Executive Agreement has an initial term of one year and automatically renews for
an additional term of one year commencing on each anniversary of the date of the
agreement until and unless either party sends written notice of non-renewal to
the other party at least six months prior to a renewal date; provided, however,
that if a Change in Control shall occur during the initial or renewed term of
this Agreement, then the Executive Agreement remains in effect until the third
anniversary of the date of the Change in Control.
48
The
following table describes the potential payments upon termination or a Change in
Control of the Company for Mr. Widman, assuming that the triggering event took
place on December 31, 2009 using the share price of Common Stock as of that day
(both as required by the SEC). However, a termination or Change in Control did
not occur on December 31, 2009 and Mr. Widman was not terminated on that
date. There can be no assurance that a termination or Change in Control would
produce the same or similar results as those described if it occurs on any other
date or when the Common Stock is trading at any other price.
|
Executive Benefits
and Payments Upon
Termination
|
Voluntary
Termination
|
Early or
Normal
Retirement
|
Involuntary Not
For Cause or
Good Reason
Termination
|
For Cause
Termination
|
Involuntary Not For
Cause or Good
Reason Termination
(CIC)
|
Death
|
Disability
|
|||||||||||||||||||||
|
Base
Salary
|
-0- | -0- | $ | 1,070,000 | -0- | $ | 1,070,000 | -0- | -0- | |||||||||||||||||||
|
Annual
Incentive
|
-0- | -0- | $ | 822,736 | $ | 822,736 | -0- | -0- | ||||||||||||||||||||
|
Restricted
Shares (time-based)
|
-0- | -0- | $ | 468,051 | -0- | $ | 915,757 | $ | 915,757 | $ | 915,757 | |||||||||||||||||
|
Restricted
Shares (performance-based)
|
-0- | -0- | -0- | -0- | $ | 1,764,992 | $ | 1,764,992 | $ | 1,764,992 | ||||||||||||||||||
|
Stock
Options
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Cash
Awards
|
-0- | -0- | -0- | -0- | $ | 1,119,400 | $ | 1,119,400 | $ | 1,119,400 | ||||||||||||||||||
|
Company
Car
|
-0- | -0- | $ | 50,000 | (1) | -0- | $ | 50,000 | (1) | -0- | -0- | |||||||||||||||||
|
Club
Memberships
|
-0- | -0- | $ | 15,000 | (1) | -0- | $ | 15,000 | (1) | -0- | -0- | |||||||||||||||||
|
Disability
Premiums
|
-0- | -0- | $ | 10,000 | (1) | -0- | $ | 10,000 | (1) | -0- | -0- | |||||||||||||||||
|
Life
Insurance Premiums
|
-0- | -0- | $ | 15,000 | (1) | -0- | $ | 15,000 | (1) | -0- | -0- | |||||||||||||||||
|
Financial
Planning Services
|
-0- | -0- | $ | 3,000 | (1) | -0- | $ | 3,000 | (1) | -0- | -0- | |||||||||||||||||
|
Use
of Private Aircraft
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Retirement
Plan Payments
|
$ | 300,000 | (2) | $ | 300,000 | (2) | $ | 1,100,000 | (2) | $ | 300,000 | (2) | $ | 1,100,000 | (2) | $ | 300,000 | (2) | $ | 1,100,000 | (2) | |||||||
|
Life
Insurance Proceeds
|
-0- | -0- | -0- | -0- | -0- | $ | 1,070,000 | -0- | ||||||||||||||||||||
|
Disability
Benefits
|
-0- | -0- | -0- | -0- | -0- | -0- | $ | 1,400,000 | (3) | |||||||||||||||||||
|
Excise
Tax Gross
Up
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
______________________
(1)
Reflects the estimated value of a benefit or perquisite that Mr. Widman would be
entitled to receive. As noted in the “Compensation Discussion &
Analysis” section above, effective in 2010, the Company eliminated substantially
all perquisites that apply only to its executive officers.
(2)
Reflects the estimated value of Mr. Widman’s qualified and non-qualified
retirement plans on December 31, 2009.
(3)
Reflects the estimated value of all future payments that Mr. Widman would be
entitled to receive under the Company’s disability program.
49
The
following table describes the potential payments upon termination or a Change in
Control of the Company for Mr. Riordan, assuming that the triggering event took
place on December 31, 2009 using the share price of Common Stock as of that day
(both as required by the SEC). However, a termination or Change in Control did
not occur on December 31, 2009 and Mr. Riordan was not terminated on that
date. There can be no assurance that a termination or Change in Control would
produce the same or similar results as those described if it occurs on any other
date or when the Common Stock is trading at any other price.
|
Executive Benefits
and Payments Upon
Termination
|
Voluntary
Termination
|
Early or
Normal
Retirement
|
Involuntary Not
For Cause or
Good Reason
Termination
|
For Cause
Termination
|
Involuntary Not For
Cause or Good
Reason Termination
(CIC)
|
Death
|
Disability
|
|||||||||||||||||||||
|
Base
Salary
|
-0- | -0- | $ | 1,580,000 | -0- | $ | 1,580,000 | -0- | -0- | |||||||||||||||||||
|
Annual
Incentive
|
-0- | -0- | $ | 1,529,478 | $ | 1,529,478 | -0- | -0- | ||||||||||||||||||||
|
Restricted
Shares (time-based)
|
-0- | -0- | $ | 496,419 | -0- | $ | 944,125 | $ | 944,125 | $ | 944,125 | |||||||||||||||||
|
Restricted
Shares (performance-based)
|
-0- | -0- | -0- | -0- | $ | 1,964,459 | $ | 1,964,459 | $ | 1,964,459 | ||||||||||||||||||
|
Stock
Options
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Cash
Awards
|
-0- | -0- | -0- | -0- | $ | 1,119,400 | $ | 1,119,400 | $ | 1,119,400 | ||||||||||||||||||
|
Company
Car
|
-0- | -0- | $ | 60,000 | (1) | -0- | $ | 60,000 | (1) | -0- | -0- | |||||||||||||||||
|
Club
Memberships
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Disability
Premiums
|
-0- | -0- | $ | 10,000 | (1) | -0- | $ | 10,000 | (1) | -0- | -0- | |||||||||||||||||
|
Life
Insurance Premiums
|
-0- | -0- | $ | 20,000 | (1) | -0- | $ | 20,000 | (1) | -0- | -0- | |||||||||||||||||
|
Financial
Planning Services
|
-0- | -0- | $ | 10,000 | (1) | -0- | $ | 10,000 | (1) | -0- | -0- | |||||||||||||||||
|
Use
of Private Aircraft
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Retirement
Plan Payments
|
$ | 2,000,000 | (2) | $ | 2,000,000 | (2) | $ | 2,500,000 | (2) | $ | 2,000,000 | (2) | $ | 2,500,000 | (2) | $ | 2,000,000 | (2) | $ | 2,500,000 | (2) | |||||||
|
Life
Insurance Proceeds
|
-0- | -0- | -0- | -0- | -0- | $ | 1,580,000 | -0- | ||||||||||||||||||||
|
Disability
Benefits
|
-0- | -0- | -0- | -0- | -0- | -0- | $ | 1,600,000 | (3) | |||||||||||||||||||
|
Excise
Tax Gross
Up
|
-0- | -0- | -0- | -0- | $ | 2,400,000 | -0- | -0- | ||||||||||||||||||||
______________________
(1)
Reflects the estimated value of a benefit or perquisite that Mr. Riordan would
be entitled to receive. As noted in the “Compensation Discussion
& Analysis” section above, effective in 2010, the Company eliminated
substantially all perquisites that apply only to its executive
officers.
(2)
Reflects the estimated value of Mr. Riordan’s qualified and non-qualified
retirement plans on December 31, 2009.
(3)
Reflects the estimated value of all future payments that Mr. Riordan would be
entitled to receive under the Company’s disability program.
50
The
following table describes the potential payments upon termination or a Change in
Control of the Company for Mr. Filipov, assuming that the triggering event took
place on December 31, 2009 using the share price of Common Stock as of that day
(both as required by the SEC). However, a termination or Change in Control did
not occur on December 31, 2009 and Mr. Filipov was not terminated on that
date. There can be no assurance that a termination or Change in Control would
produce the same or similar results as those described if it occurs on any other
date or when the Common Stock is trading at any other price.
|
Executive Benefits
and Payments Upon
Termination
|
Voluntary
Termination
|
Early or
Normal
Retirement
|
Involuntary Not
For Cause or
Good Reason
Termination
|
For Cause
Termination
|
Involuntary Not For
Cause or Good
Reason Termination
(CIC)
|
Death
|
Disability
|
|||||||||||||||||||||
|
Base
Salary
|
-0- | -0- | $ | 900,000 | -0- | $ | 900,000 | -0- | -0- | |||||||||||||||||||
|
Annual
Incentive
|
-0- | -0- | $ | 374,606 | $ | 374,606 | -0- | -0- | ||||||||||||||||||||
|
Restricted
Shares (time-based)
|
-0- | -0- | $ | 513,772 | -0- | $ | 858,466 | $ | 858,466 | $ | 858,466 | |||||||||||||||||
|
Restricted
Shares (performance-based)
|
-0- | -0- | -0- | -0- | $ | 356,184 | $ | 356,184 | $ | 356,184 | ||||||||||||||||||
|
Stock
Options
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Cash
Awards
|
-0- | -0- | -0- | -0- | $ | 343,400 | $ | 343,400 | $ | 343,400 | ||||||||||||||||||
|
Company
Car
|
-0- | -0- | $ | 40,000 | (1) | -0- | $ | 40,000 | (1) | -0- | -0- | |||||||||||||||||
|
Club
Memberships
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Disability
Premiums
|
-0- | -0- | $ | 5,000 | (1) | -0- | $ | 5,000 | (1) | -0- | -0- | |||||||||||||||||
|
Life
Insurance Premiums
|
-0- | -0- | $ | 5,000 | (1) | -0- | $ | 5,000 | (1) | -0- | -0- | |||||||||||||||||
|
Financial
Planning Services
|
-0- | -0- | $ | 10,000 | (1) | -0- | $ | 10,000 | (1) | -0- | -0- | |||||||||||||||||
|
Use
of Private Aircraft
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Retirement
Plan Payments
|
$ | 1,100,000 | (2) | $ | 1,100,000 | (2) | $ | 1,100,000 | (2) | $ | 1,100,000 | (2) | $ | 1,100,000 | (2) | $ | 1,100,000 | (2) | $ | 1,100,000 | (2) | |||||||
|
Life
Insurance Proceeds
|
-0- | -0- | -0- | -0- | -0- | $ | 900,000 | -0- | ||||||||||||||||||||
|
Disability
Benefits
|
-0- | -0- | -0- | -0- | -0- | -0- | $ | 2,400,000 | (3) | |||||||||||||||||||
|
Excise
Tax Gross
Up
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
______________________
(1)
Reflects the estimated value of a benefit or perquisite that Mr. Filipov would
be entitled to receive. As noted in the “Compensation Discussion
& Analysis” section above, effective in 2010, the Company eliminated
substantially all perquisites that apply only to its executive
officers.
(2)
Reflects the estimated value of Mr. Filipov’s qualified and non-qualified
retirement plans on December 31, 2009.
(3)
Reflects the estimated value of all future payments that Mr. Filipov would be
entitled to receive under the Company’s disability program.
51
The
following table describes the potential payments upon termination or a Change in
Control of the Company for Mr. Nichols, assuming that the triggering event took
place on December 31, 2009 using the share price of Common Stock as of that day
(both as required by the SEC). However, a termination or Change in Control did
not occur on December 31, 2009 and Mr. Nichols was not terminated on that
date. There can be no assurance that a termination or Change in Control would
produce the same or similar results as those described if it occurs on any other
date or when the Common Stock is trading at any other price.
|
Executive Benefits
and Payments Upon
Termination
|
Voluntary
Termination
|
Early or
Normal
Retirement
|
Involuntary Not
For Cause or
Good Reason
Termination
|
For Cause
Termination
|
Involuntary Not For
Cause or Good
Reason Termination
(CIC)
|
Death
|
Disability
|
|||||||||||||||||||||
|
Base
Salary
|
-0- | -0- | $ | 860,000 | -0- | $ | 860,000 | -0- | -0- | |||||||||||||||||||
|
Annual
Incentive
|
-0- | -0- | $ | 727,920 | $ | 727,920 | -0- | -0- | ||||||||||||||||||||
|
Restricted
Shares (time-based)
|
-0- | -0- | $ | 632,632 | -0- | $ | 1,320,039 | $ | 1,320,039 | $ | 1,320,039 | |||||||||||||||||
|
Restricted
Shares (performance-based)
|
-0- | -0- | -0- | -0- | $ | 356,184 | $ | 356,184 | $ | 356,184 | ||||||||||||||||||
|
Stock
Options
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Cash
Awards
|
-0- | -0- | -0- | -0- | $ | 686,600 | $ | 686,600 | $ | 686,600 | ||||||||||||||||||
|
Company
Car
|
-0- | -0- | $ | 70,000 | (1) | -0- | $ | 70,000 | (1) | -0- | -0- | |||||||||||||||||
|
Club
Memberships
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Disability
Premiums
|
-0- | -0- | $ | 10,000 | (1) | -0- | $ | 10,000 | (1) | -0- | -0- | |||||||||||||||||
|
Life
Insurance Premiums
|
-0- | -0- | $ | 5,000 | (1) | -0- | $ | 5,000 | (1) | -0- | -0- | |||||||||||||||||
|
Financial
Planning Services
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Use
of Private Aircraft
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Retirement
Plan Payments
|
$ | 350,000 | (2) | $ | 350,000 | (2) | $ | 900,000 | (2) | $ | 350,000 | (2) | $ | 900,000 | (2) | $ | 350,000 | (2) | $ | 900,000 | (2) | |||||||
|
Life
Insurance Proceeds
|
-0- | -0- | -0- | -0- | -0- | $ | 860,000 | -0- | ||||||||||||||||||||
|
Disability
Benefits
|
-0- | -0- | -0- | -0- | -0- | -0- | $ | 2,000,000 | (3) | |||||||||||||||||||
|
Excise
Tax Gross
Up
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
______________________
(1)
Reflects the estimated value of a benefit or perquisite that Mr. Nichols would
be entitled to receive. As noted in the “Compensation Discussion
& Analysis” section above, effective in 2010, the Company eliminated
substantially all perquisites that apply only to its executive
officers.
(2)
Reflects the estimated value of Mr. Nichols’ qualified and non-qualified
retirement plans on December 31, 2009.
(3)
Reflects the estimated value of all future payments that Mr. Nichols would be
entitled to receive under the Company’s disability program.
52
DIRECTOR
COMPENSATION
The
compensation program for outside directors is designed to encourage outside
directors to receive a significant portion of their annual retainer for Board
service in Common Stock, to enable directors to defer receipt of their fees, and
to satisfy the Company’s Common Stock ownership objective for outside
directors.
The Company has established a Common
Stock ownership objective for outside directors. Each director is
expected to accumulate, over the director’s first four years of Board service,
the number of shares of Common Stock that is equal in market value to two times
the annual retainer for Board service ($300,000). Once this ownership
objective is achieved, the director is expected to maintain such minimum
ownership level. The intent is to encourage acquisition and retention
of Common Stock by directors, evidencing the alignment of their interests with
the interests of stockholders. To this end, each new director
receives an award of shares of Common Stock having a market value of $25,000 on
the date of the award. Each new director must defer receipt of this
award under the Company’s Deferred Compensation Plan. If a director
has not achieved the ownership objective, a director is expected to invest
$75,000 per year in shares of Common Stock until the director has satisfied the
ownership objective.
Directors who are employees of the
Company receive no additional compensation by virtue of their being directors of
the Company. For their service, outside directors receive an annual
retainer, as described below. All directors of the Company are reimbursed for
travel, lodging and related expenses incurred in attending Board and committee
meetings.
Each outside director receives
annually, on the first business day of each year, the equivalent of $150,000 for
service as a Board member (or a prorated amount if a director’s service begins
other than on the first day of the year). Each director elects
annually, for the particular year, to receive this fee in (i) shares of Common
Stock currently, which may be deferred into the stock fund of the Company’s
Deferred Compensation Plan, (ii) cash currently, (iii) cash deferred into the
bond fund of the Company’s Deferred Compensation Plan, or (iv) any two of the
preceding alternatives in equal amounts. If a director elects to
receive shares of Common Stock currently, then 40% of this amount is paid in
cash to offset the tax liability related to such election. For
purposes of calculating the number of shares of Common Stock into which any
fixed sum translates, Common Stock is valued at its per share closing price on
the NYSE on the day immediately preceding the grant date.
In
recognition of the 2009 base salary reductions of the Company’s team members, in
May 2009, the Board unanimously approved a 10% reduction in the 2010 annual
board retainer payable to outside directors, which was the next scheduled
payment of director fees for outside directors.
53
Each director who serves as Lead
Director or on a committee of the Board receives an annual committee retainer as
set forth in the table below:
|
Committee Position
|
Committee Retainer
|
|||
|
Lead
Director
|
$ | 40,000 | ||
|
Audit
Committee Chair
|
$ | 35,000 | ||
|
Compensation
Committee Chair
|
$ | 25,000 | ||
|
Governance
and Nominating Committee Chair
|
$ | 15,000 | ||
|
Corporate
Responsibility and Strategy Committee Chair
|
$ | 15,000 | ||
|
Audit
Committee Member
|
$ | 5,000 | ||
|
Compensation
Committee Member
|
$ | 3,000 | ||
|
Governance
and Nominating Committee
Member
|
$ | 3,000 | ||
|
Corporate
Responsibility and Strategy Committee Member
|
$ | 3,000 | ||
The
retainers listed above are payable in cash, and may be deferred into the bond
fund of the Company’s Deferred Compensation Plan. For a director
whose service begins other than on the first day of the year, any retainer is
prorated. The compensation to be paid to the Company’s director
emeritus has not yet been determined but will be set by the Committee before the
end of 2010.
A director who leaves the Board at any
time during the year, for any reason, will retain any retainer payments already
received for such year. The Compensation Committee has discretion to
authorize the payment of additional fees to any director under extraordinary
circumstances.
54
The compensation paid to the Company’s
outside directors in 2009 is summarized in the following table:
|
Name
|
Fees
Earned or
Paid in
Cash
($)
|
Stock
Awards
($) (1) (2)
|
Option
Awards
($) (3)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||
|
G.
Chris Andersen
|
$ | 40,000 | $ | 150,000 | -0- | -0- | -0- | -0- | $ | 190,000 | ||||||||||||||||||
|
Paula
H. J. Cholmondeley
|
$ | 168,000 | -0- | -0- | -0- | -0- | -0- | $ | 168,000 | |||||||||||||||||||
|
Don
DeFosset
|
$ | 38,000 | $ | 150,000 | -0- | -0- | -0- | -0- | $ | 188,000 | ||||||||||||||||||
|
William
H. Fike
|
$ | 6,000 | $ | 150,000 | -0- | -0- | -0- | -0- | $ | 156,000 | ||||||||||||||||||
|
Thomas
J. Hansen
|
$ | 83,000 | $ | 75,000 | -0- | -0- | -0- | -0- | $ | 158,000 | ||||||||||||||||||
|
Dr.
Donald P. Jacobs
|
$ | 158,000 | -0- | -0- | -0- | -0- | -0- | $ | 158,000 | |||||||||||||||||||
|
David
A. Sachs
|
$ | 28,000 | $ | 150,000 | -0- | -0- | -0- | -0- | $ | 178,000 | ||||||||||||||||||
|
Oren
G. Shaffer
|
$ | 8,000 | $ | 150,000 | -0- | -0- | -0- | -0- | $ | 158,000 | ||||||||||||||||||
|
David
C. Wang
|
$ | 81,000 | $ | 75,000 | -0- | -0- | -0- | -0- | $ | 156,000 | ||||||||||||||||||
|
Helge
H. Wehmeier
|
$ | 80,005 | $ | 89,995 | -0- | -0- | -0- | -0- | $ | 170,000 | ||||||||||||||||||
______________________
(1) See
Note Q – “Stockholders’ Equity” in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2009 for a detailed description of the assumptions
that the Company used in determining the dollar amounts recognized for financial
statement reporting purposes of its stock awards.
(2) The
grant date fair value of each stock award computed in accordance with FASB ASC
Topic 718 is the following: Mr. Andersen, $150,000 (annual retainer
paid on January 4, 2009); Mr. DeFosset, $150,000 (annual retainer paid on
January 4, 2009); Mr. Fike, $150,000 (annual retainer paid on January 4, 2009);
Mr. Hansen, $75,000 (portion of annual retainer paid on January 4, 2009); Mr.
Sachs, $150,000 (annual retainer paid on January 4, 2009); Mr. Shaffer, $150,000
(annual retainer paid on January 4, 2009); Mr. Wang, $75,000 (portion of annual
retainer paid on January 4, 2009); and Mr. Wehmeier, $89,995 (portion of annual
retainer paid on January 4, 2009).
(3) As
of December 31, 2009, the following directors had vested outstanding options in
these amounts: Mr. Andersen, 5,174; Mr. DeFosset, 2,587; Mr. Fike, 2,587; Dr.
Jacobs, 13,826; and Mr. Sachs, 27,524.
55
The
Compensation Committee of the Company has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of Regulation
S-K with management and, based on such review and discussions, the Compensation
Committee recommended to the Board that the Compensation Discussion and Analysis
be included in this Proxy Statement.
|
COMPENSATION
COMMITTEE
|
|
DON
DEFOSSET
|
|
WILLIAM
H. FIKE
|
|
DAVID
A. SACHS
|
|
OREN
G. SHAFFER
|
|
DAVID
C. WANG
|
56
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
Company intends that all transactions with affiliates are to be on terms no less
favorable to the Company than could be obtained in comparable transactions with
an unrelated person. The Board will be advised in advance of any such
proposed transaction or agreement and will utilize such procedures in evaluating
their terms and provisions as are appropriate in light of the Board’s fiduciary
duties under Delaware law. In addition, the Company has an Audit
Committee consisting solely of independent directors. Pursuant to the
terms of the written Audit Committee Charter, one of the responsibilities of the
Audit Committee is to review related party transactions. See “Audit
Committee Meetings and Responsibilities.”
From time
to time, the Company may have employees who are related to its executive
officers or directors. The spouse of Mr. Ellis (President, Terex
Construction) is an employee of the Company. The compensation and other terms of
employment of each employee are determined on a basis consistent with the
Company’s human resources policies. Mrs. Ellis received an equity grant and
compensation in 2009 in excess of $120,000.
Equity
Compensation Plan Information
The
following table summarizes information about the Company’s equity compensation
plans as of December 31, 2009.
|
Plan Category
|
Number of securities
to be issued upon
exercise of outstanding
options, warrants and
rights (a)
|
Weighted average
exercise price of
outstanding
options, warrants
and rights (b)
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
|
|||||||||
|
Equity
compensation plans approved by stockholders
|
1, 126,193 | (1) | $ | 18.54 | 3,364,688 | |||||||
|
Equity
compensation plans not approved by stockholders
|
- | - | - | |||||||||
|
Total
|
1, 126,193 | (1) | $ | 18.54 | 3,364,688 | |||||||
______________________
|
(1)
|
This
does not include 2,742,541 of restricted stock awards, which are also not
included in the calculation of weighted average exercise price of
outstanding options, warrants and rights in column (b) of this
table.
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act
requires the Company’s directors and executive officers, and each person who is
the beneficial owner of more than 10% of the Company’s outstanding equity
securities, to file with the SEC initial reports of ownership and changes in
ownership of equity securities of the Company. Specific due dates for
these reports have been established by the SEC and the Company is required to
disclose in this Proxy Statement any failure to file such reports by the
prescribed dates during 2009. Officers, directors and greater than
10% beneficial owners are required by SEC regulation to furnish the Company with
copies of all reports filed with the SEC pursuant to Section 16(a) of the
Exchange Act.
To the Company’s knowledge, based
solely on review of the copies of reports furnished to the Company and written
representations that no other reports were required, all filings required
pursuant to Section 16(a) of the Exchange Act applicable to the Company’s
officers, directors and greater than 10% beneficial owners were complied with
during the year ended December 31, 2009.
57
AUDIT
COMMITTEE REPORT
The Audit Committee of the Board has
reviewed and discussed the Company’s audited financial statements for the fiscal
year ended December 31, 2009 with the management of the Company and the
Company’s independent registered public accounting firm, PricewaterhouseCoopers
LLP. The Audit Committee has discussed with PricewaterhouseCoopers
LLP the matters required to be discussed by Statement on Auditing Standards No.
61, as amended, as adopted by the Public Company Accounting Oversight Board in
Rule 3200T. The Audit Committee also has received the written
disclosures and the letter from the independent registered public accounting
firm required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent registered public accounting firm’s
communications with the Audit Committee concerning independence and has
discussed with PricewaterhouseCoopers LLP the independence of such independent
registered public accounting firm. The Audit Committee also has
considered whether PricewaterhouseCoopers LLP’s provision of non-audit services
to the Company is compatible with the independent registered public accounting
firm’s independence.
Based on its review and discussions
referred to in the preceding paragraph, the Audit Committee recommended to the
Board that the audited financial statements for the Company’s fiscal year ended
December 31, 2009 be included in the Company’s Annual Report on Form 10-K for
the Company’s fiscal year ended December 31, 2009 for filing with the
SEC.
The Audit
Committee’s responsibility is to monitor and oversee the audit and financial
reporting processes. However, the members of the Audit Committee are
not practicing certified public accountants or professional auditors and rely,
without independent verification, on the information provided to them and on the
representations made by management, and the report issued by the independent
registered public accounting firm.
|
AUDIT
COMMITTEE
|
|
DON
DEFOSSET
|
|
THOMAS
J. HANSEN
|
|
DR.
DONALD P. JACOBS
|
|
OREN
G. SHAFFER
|
|
HELGE
H. WEHMEIER
|
58
PROPOSAL
2: INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of PricewaterhouseCoopers LLP
has audited the consolidated financial statements and the internal control over
financial reporting of the Company for 2009. The Board, at the recommendation of
the Audit Committee, desires to continue the service of this firm for 2010.
Accordingly, the Board recommends to the stockholders ratification of the
retention of PricewaterhouseCoopers LLP as the Company’s independent registered
public accounting firm for the fiscal year ending December 31,
2010. If the stockholders do not approve PricewaterhouseCoopers LLP
as the Company’s independent registered public accounting firm, the Board and
the Audit Committee will reconsider this selection.
Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Meeting with the
opportunity to make a statement if they desire to do so, and they are expected
to be available to respond to appropriate questions.
Audit
Fees
During the last two fiscal years ended
December 31, 2009 and December 31, 2008, PricewaterhouseCoopers LLP charged the
Company $7,460,000 and $7,375,000, respectively, for professional services
rendered by such firm for the audit of the Company’s annual financial statements
and internal control over financial reporting and review of the Company’s
financial statements included in the Company’s quarterly reports on Form 10-Q
for that fiscal year.
Audit-Related
Fees
Audit-related fees consist of fees for
assurance and related services that are reasonably related to the performance of
the audit or review of the Company’s financial statements. This
category includes fees related to various audit and attest services, due
diligence related to mergers, acquisitions, dispositions and investments, and
consultations concerning financial accounting and reporting
standards. The aggregate fees billed by PricewaterhouseCoopers LLP
for such audit-related services for the fiscal years ended December 31, 2009 and
December 31, 2008 were $2,303,000 and $1,790,000, respectively.
Tax
Fees
The aggregate fees billed for tax
services provided by PricewaterhouseCoopers LLP in connection with tax
compliance, tax consulting and tax planning services for the fiscal years ended
December 31, 2009 and December 31, 2008, were $1,659,000 and $620,000,
respectively.
All
Other Fees
The aggregate fees billed for services
not included in the above services for the fiscal years ended December 31, 2009
and December 31, 2008, were $11,000 and $16,000, respectively, and were
primarily related to miscellaneous items, including foreign government
filings.
All of the services related to the
Audit-Related Fees, Tax Fees or All Other Fees described above were approved by
the Audit Committee pursuant to the general pre-approval provisions set forth in
the Audit Committee’s pre-approval policies described in “Audit Committee
Meetings and Responsibilities.”
The Board recommends that the
stockholders vote FOR the ratification of PricewaterhouseCoopers LLP as the
Company’s independent registered public accounting
firm for
2010.
59
OTHER
MATTERS
The Board
does not know of any other business to be brought before the
Meeting. In the event any such matters are brought before the
Meeting, the persons named in the enclosed Proxy will vote the Proxies received
by them as they deem best with respect to all such matters.
All proposals of stockholders intended
to be included in the proxy statement to be presented at the 2011 Annual Meeting
of Stockholders must be received at the Company’s offices at 200 Nyala Farm
Road, Westport, Connecticut 06880, no later than December 1,
2010. All proposals must meet the requirements set forth in the rules
and regulations of the SEC in order to be eligible for inclusion in the proxy
statement for that meeting.
To nominate a candidate for election as
a director at an annual meeting of stockholders or propose business for
consideration at such a meeting, the Bylaws of the Company generally provides
that notice must be given to the Secretary of the Company no more than 90 days
or less than 60 days prior to the date of the annual meeting. The
Company anticipates that in order for a stockholder to nominate a candidate for
election as a director at the Company’s 2011 annual meeting or to propose
business for consideration at such meeting, notice must be given between
February 11, 2011 and March 13, 2011. The fact that the Company may
not insist upon compliance with these requirements should not be construed as a
waiver by the Company of its right to do so at any time in the
future.
Pursuant to the rules of the SEC,
services that deliver our communications to stockholders that hold their stock
through a bank, broker or other holder of record may deliver to multiple
stockholders sharing the same address a single copy of our Notice of Internet
Availability of Proxy Materials or Annual Report to Stockholders and Proxy
Statement. Upon written or oral request, we will promptly deliver a separate
copy of the Notice of Internet Availability of Proxy Materials or Annual Report
and Proxy Statement to any stockholder at a shared address to which a single
copy of each document was delivered. Stockholders may notify us of their
requests by calling (203) 222-7170 or writing Terex Corporation at 200
Nyala Farm Road, Westport, CT 06880.
STOCKHOLDERS ARE URGED TO VOTE THEIR PROXIES WITHOUT DELAY.
A
PROMPT RESPONSE WILL BE GREATLY APPRECIATED.
|
By
order of the Board of Directors,
|
|
Eric
I Cohen
Secretary
|
March 31,
2010
Westport,
Connecticut
60
