Delaware | 1-8462 | 16-1194720 | ||
(State or other jurisdiction of
incorporation) |
(Commission
File Number) |
(IRS Employer
Identification No.) |
20 Florence Avenue, Batavia, New York | 14020 | |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. | Entry into a Material Definitive Agreement. |
Senior Executive Officer | Amount of Increase | New Annual Salary | ||||||
William C. Johnson,
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$ | 15,000 | $ | 265,000 | ||||
Chief Executive Officer
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J. Ronald Hansen,
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$ | 4,950 | $ | 169,957 | ||||
Vice President of Finance and
Administration and
Chief Financial Officer |
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James R. Lines,
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$ | 4,890 | $ | 167,918 | ||||
Vice President and General Manager
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Position | Amount of Increase | New Annual Fee | ||||||
Chairman of the Board
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$ | 5,000 | $ | 15,000 | ||||
Audit Committee Chairman
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$ | 1,000 | $ | 6,000 | ||||
Compensation Committee Chairman
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$ | 3,000 | $ | 5,000 | ||||
Benefits Committee Chairman
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$ | 1,000 | $ | 3,000 | ||||
Nominating Committee Chairman
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$ | 1,000 | $ | 3,000 |
Item 8.01. | Other Events. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Description | |
99.1
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Graham Corporation Policy Statement for U.S. Foreign Service Employees. | |
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99.2
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Graham Corporation Annual Stock-Based Incentive Award |
Exhibit No.
Description
Plan for Senior Executives.
Graham Corporation Annual Executive Cash Bonus Program.
Graham Corporation
Date: March 30, 2006
By:
J. Ronald Hansen
J. Ronald Hansen
Vice President Finance & Administration and
Chief Financial Officer
I. | Less than Six Months |
II. | Six Months or Greater |
III. | Basic Compensation Package (FSE) |
a) | Assuming the foreign service assignment is of equal responsibility, the employees base compensation bonus and benefit package while on assignment will remain, at minimal, equal, provided benefits offered pre-foreign assignment can be extended to overseas locations. As determined by the CEO and Vice President of Administration, the employee may be given a one time special increase of up to 5% in base compensation while on assignment. | ||
b) | The Company may choose to cover various expenses associated with overseas assignments directly, such as housing, or have the employee arrange to pay for the expenses and be reimbursed. This will depend on the circumstances. | ||
c) | An employee may be given a cost of living adjustment (COLA) so that his base wage has equivalent purchasing power while abroad. Graham is currently using ORC Worldwide to calculate equalization allowances. | ||
d) | Foreign assignments of twelve consecutive months or greater may qualify for a foreign earned income and housing exclusion deduction up to $80,000 per annum. Any tax windfalls resulting from this exclusion may, with the approval of the CEO and Vice President of Administration, be retained by the employee. Current rules applicable to this exclusion are explained in IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. Granting this exclusion to an |
employee will only be considered when a person brings to the overseas assignment unique skills or special circumstances exist that justifies doing so. This benefit will not be extended to the employee except under rare circumstances. |
e) | Except for the foreign income exclusion if given to the employee, no employee should incur a greater income tax liability than if employed on the same base salary plus bonus in the U.S., nor should an employee experience a windfall as a result of lower income taxes. Therefore, a system of Income Tax Equalization is applicable to all U.S. Foreign Service Employees, the objective of which shall be after-tax income from base salary plus bonus earnings of no more and no less after-tax income, except for the tax benefit of the foreign income exclusion, than would be the case if the same base salary plus bonus earnings were received in the U.S. | ||
f) | In addition and subject to the approval of the CEO and Vice President of Administration, various related reimbursement of expenses may be granted. Examples of these include tax preparation expenses, up to four round trip airfares per year (one per quarter) for one family member to visit the employee or for the employee himself. Reimbursed expenses of direct pays that are included under this section will be included as additional compensation. |
IV. | While on foreign assignment, an employee is subject to the same code of ethics, applicable employee handbook policies, proper preparation of expense reports and all other policies as if stationed in the U.S. | ||
V. | The Company reserves the right to change this policy at any time going forward, with a six-month notice to current foreign service employees or sooner if required by law. |
Purpose
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The purpose of this Annual Stock-Based Incentive Award Plan for Senior Executives (the Plan) is to motivate the senior executive officers of Graham Corporation (the Company) to increase shareholder value by providing them long-term stock-based awards for above-average Company performance. | |
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Administration
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The Plan will be administered by the Compensation Committee of the Board of Directors of the Company (the Committee), which shall have final and conclusive authority to administer and interpret the Plan. | |
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Eligibility
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Eligible employees will include: (a) the Chief Executive Officer; (b) the Chief Financial Officer; (c) the Vice President of Asia Operations; (d) the Vice President and General Manager of the Company; and (e) such other employees of the Company selected by the Chief Executive Officer to participate in the Plan, subject to the approval by the Committee of such participation. | |
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Award Periods
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Annual awards under the Plan will be based on the fiscal year of the Company, beginning with its April 1, 2006 through March 31, 2007 fiscal year (each, a Fiscal Year). | |
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Awards
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Annual awards under the Plan will consist of nonqualified stock options (Options) and shares of restricted stock (Restricted Stock), which awards will be issued under the Amended and Restated 2000 Graham Corporation Incentive Plan to Increase Shareholder Value, or a successor plan thereto (the Incentive Plan), and will be subject to the terms thereof. |
| The Net Income Portion of Restricted Stock to be awarded to an eligible employee for a Fiscal Year will equal the number of shares of Company Stock determined by multiplying the eligible employees base salary in effect for the Fiscal Year by 11.25 percent (15% of base pay times 75%), further multiplied by the Net Income factor from the matrix for the Fiscal Year, and then divided by the closing price of a share of the Companys common stock on the last trading day prior to the date of grant, rounded to the nearest whole number. | ||
| The Working Capital Portion of Restricted Stock to be awarded to an eligible employee for a Fiscal Year will equal the number of shares of Company Stock determined by multiplying the eligible employees base salary in effect for the Fiscal Year by 3.75 percent (15% of base times 25%), further multiplied by the Working Capital factor from the matrix for the Fiscal Year, and then divided by the closing price of a share of the Companys common stock on the last trading day prior to the date of grant, rounded to the nearest whole number. |
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| Upon the death of an eligible employee, any outstanding Options and Restricted Stock awarded under the Plan will vest in full, and any Options may be exercised by the eligible employees designated beneficiary, estate or heir, as applicable, within one year from the date of the eligible employees death. | ||
| Upon the Disability (as such term is defined by the Incentive Plan) of an eligible employee, any outstanding Options and Restricted Stock awarded under the Plan will vest in full, and any Options may be exercised by the eligible employee or his legal representative within one year from the date of the eligible employees Disability. | ||
| Except as otherwise provided by the Plan or by the Committee, the unvested portion of any Options and Restricted Stock awarded under the Plan will terminate upon the termination or resignation of an eligible employees employment, and any vested Options may be exercised by the eligible employee within three months from the date of the eligible employees termination. | ||
| Unless the Committee determines otherwise, upon the termination of an eligible employee for cause (as such term shall be defined by the Committee), the vested and unvested portion of all unexercised Options and the unvested portion of all Restricted Stock awarded under the Plan will terminate, and no such Options will be exercisable thereafter. |
Payment
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Annual awards for a Fiscal Year will be approved by the Committee and will be issued as soon as practicable after the end of the Fiscal Year. | |
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Amendment &
Termination |
The Plan may be amended or terminated by the Committee at any time. No eligible employee will have any right to an award under the Plan until such award is approved by the Committee. | |
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Neither the existence of the Plan nor the grant of an award in any year shall give an eligible employee any right to an award or similar award in future years or any right to continue such eligible employees employment relationship with the Company. All eligible employees shall remain subject to discharge to the same extent as if the Plan were not in effect. |
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1. | Eligible employees shall include the CEO and direct reports. Direct reports means (a) the CFO, (b) the VP of Asia Operations, (c) the VP and General Manager, and (d) such other employees of the Company selected by the CEO to participate in this plan, subject to the approval by the Compensation Committee of such participation. | ||
2. | Target participation levels at 100% of financial budget and full attainment of personal objectives are as follows: |
3. | Participants for this compensation plan are eligible upon employment unless otherwise determined by the CEO for direct reports and the Compensation Committee in the case of the CEO. | ||
4. | Executives who resign before the end of the fiscal year shall receive no bonus except as approved by the Compensation Committee. |
1. | Financial goals shall be set during the annual budgeting process and shall be approved by the Board along with the annual budget. | ||
2. | Individual objectives shall be set on or before the annual budget. The Chairman shall approve individual objectives for the CEO. The CEO shall approve individual objectives for direct reports. The Chairman and CEO shall determine the number and weighting of objectives. | ||
3. | Bonus components shall be as follows with financial objectives representing 90% of bonus, and personal objectives representing 10%. For bonus purposes, Average Working |
4. | The Bonus metrics are: |
Net Income
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70% of bonus | |
Average Working Capital %
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20% of bonus | |
Personal Objectives
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10% of bonus |
Payout Matrix for Net Income | ||||||||||||
% Achieved | Payout % | % Achieved | Payout % | |||||||||
0-69%
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0 | % | 120 | % | 120 | % | ||||||
70%
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10 | % | 130 | % | 130 | % | ||||||
80%
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60 | % | 140 | % | 140 | % | ||||||
90%
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80 | % | 150 | % | 150 | % | ||||||
100%
|
100 | % | ||||||||||
110%
|
110 | % |
Payout Matrix for Working Capital | ||||||||||||
% Achieved | Payout % | % Achieved | Payout % | |||||||||
110%
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50 | % | 80 | % | 138 | % | ||||||
105%
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75 | % | 75 | % | 150 | % | ||||||
100%
|
100 | % | ||||||||||
95%
|
108 | % | ||||||||||
90%
|
118 | % | ||||||||||
85%
|
128 | % |
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Personal Objective Matrix | ||||
% Attainment | Payout | |||
0%
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0 | % | ||
10%
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1 | % | ||
20%
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2 | % | ||
30%
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3 | % | ||
40%
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4 | % | ||
50%
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5 | % | ||
60%
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6 | % | ||
70%
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7 | % | ||
80%
|
8 | % | ||
90%
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9 | % | ||
100%
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10 | % |
1. | Participants who change position during the fiscal year shall receive bonus on a pro rated basis. | ||
2. | Special awards may be made to any executive or employee who has made an extra ordinary contribution to the Company during the year. Such awards must be recommended in writing by the CEO to the Chair of the Compensation Committee and may be approved by the Committee. | ||
3. | Extraordinary events that either positively or negatively affect financial performance may be included or excluded in financial calculations at the discretion of the Compensation Committee. | ||
4. | Nothing herein shall be construed to limit or affect the normal and usual powers of management, including right to terminate any individual at any time. | ||
5. | The Compensation Committee shall have final and conclusive authority on the existence and administration of this plan. | ||
6. | In the event of death, a participants designated beneficiary will be entitled to the participants plan benefits. If the participant has not designated a beneficiary, the participants beneficiary or beneficiaries will be determined in accordance with the participants will. If there is no will, the beneficiary or beneficiaries shall be determined by the laws of descent and distribution in the state in which the participant was a resident at the time of death. |
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