UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. 1 )
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to § 240.14a-12
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CENTURY
ALUMINUM COMPANY
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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o
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Fee
Computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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o
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Fee
paid previously with preliminary materials.
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o
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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EXPLANATORY
NOTE: On April 13, 2009 Century Aluminum Company
(the "Company") filed with the Securities and Exchange Commission a
definitive proxy statement for the 2009 Annual Meeting of
Stockholders to be held on May 27, 2009. After filing but prior to
the mailing of the Proxy Statement to our stockholders, and after further
consideration of the Company's need and the views of shareholders, the
Company's board of directors has resolved to reduce the proposed increase
in the number of authorized shares of the Company's common stock pursuant
to Proposal 2 from 150,000,000 to 95,000,000. The Company has
granted Glencore certain preemptive rights in exchange for Glencore's
agreement to support Proposal 2. We are hereby amending and
restating the Proxy Statement to reflect these matters and certain
other changes to reflect the new mailing date (including changing the
deadline for stockholder proposals and eliminating Notice and
Access). Other than reducing the proposed number of authorized
shares for stockholder approval, adding a description of the Company's
agreement with Glencore and certain other changes to reflect the new
mailing date, there are no other changes to the information contained in
the Proxy Statement. We will only mail this amended and restated
Proxy Statement and proxy card to the Company's
stockholders.
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NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
May
27, 2009
___________
To the
Stockholders of Century Aluminum Company:
We invite
you to attend our 2009 Annual Meeting of Stockholders on May 27, 2009, at 8:30
a.m., local time, at our executive offices located at 2511 Garden Road, Building
A, Suite 200, Monterey, California. At the meeting, we will:
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1.
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Elect
three Class I directors to our Board, each for a term of three
years;
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2.
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Approve
amending the Company’s Restated Certificate of Incorporation, as amended
(the “Restated Charter”) to increase the number of authorized shares of
the Company’s common stock, par value $0.01 per share to
195,000,000 ;
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3.
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Approve
amending the Company’s Amended and Restated 1996 Stock Incentive Plan (the
“1996 Plan”) to increase the number of shares authorized for issuance
under the 1996 Plan to 10,000,000 and extend its term through May 27,
2019;
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4.
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Ratify
the appointment of Deloitte & Touche LLP as our independent registered
public accounting firm for the fiscal year ending December 31, 2009;
and
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5.
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Transact
any other business that may properly come before the meeting or at any
adjournments or postponements of the
meeting.
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You may
vote at the meeting if you owned our common stock at the close of business on
March 31, 2009. Please note, there are three ways that you can vote
before the meeting — by telephone, by the Internet or by mailing the proxy
card.
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By
Order of the Board of Directors,
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Robert
R. Nielsen
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Executive
Vice President and Secretary
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Monterey,
California
May 5,
2009
YOUR VOTE IS
IMPORTANT
If
you do not plan to attend the 2009 Annual Meeting, or if you do plan to
attend but
wish to vote by proxy,
please
complete, sign, date and
return promptly the
enclosed proxy card in
the
enclosed
postage-paid
envelope. You may
also vote by telephone or electronically by the Internet.
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___________
PROXY
STATEMENT
___________
ANNUAL
MEETING OF STOCKHOLDERS
May
27, 2009
Our
Board of Directors is soliciting proxies for the 2009 Annual Meeting of
Stockholders of Century Aluminum Company, which we refer to as Century or the
Company. This booklet of information contains information and the
accompanying proxy card contain information about the items you will vote on
at the Annual Meeting. Distribution of these documents is scheduled to begin on
or about May 5, 2009 .
Q. When
and where is the Annual Meeting of Stockholders being held?
A. The
2009 Annual Meeting is being held on May 27, 2009 at 8:30 a.m. local time, at
our principal executive offices which are located at 2511 Garden Road, Building
A, Suite 200, Monterey, California 93940.
Q. Who
is entitled to vote and how many votes do I have?
A. You
may vote at the 2009 Annual Meeting if you owned shares of our common stock at
the close of business on March 31, 2009. Each stockholder is entitled
to one vote for each share of common stock held.
Q. How
many shares are available to vote in the Annual Meeting?
A. On
March 31, 2009, the record date for the meeting, there were 74,139,488 shares of
Century common stock outstanding.
Q. What
constitutes a quorum for the meeting?
A. The
holders of a majority of the outstanding shares of Century’s common stock will
constitute a quorum for the transaction of business at the 2009 Annual
Meeting. Only shares of Century common stock that are present at the
Annual Meeting, either in person or represented by proxy (including shares that
the holder abstains from voting or does not vote with respect to one or more of
the matters present for stockholder approval), will be counted for purposes of
determining whether a quorum exists at the meeting.
Q. How
do I vote?
A. There
are three ways that you can vote your shares. Please choose only one
of the following methods:
Internet. The website for
voting is http://www.ProxyVote.com. To
vote on the Internet, please have the control number on your proxy
card available. The voting system is available 24 hours a day, seven
days a week, until 11:59 p.m. Eastern Time on Tuesday, May 26,
2009.
Telephone. If you
are located in the United States or Canada, you can vote your shares by calling
1-800-690-6903. This is a toll-free number available 24 hours a day,
seven days a week, until 11:59 p.m. Eastern Time on Tuesday, May 26,
2009. Please have the control number on your proxy card
available and follow the voice prompts to vote your
shares.
Mail. To
vote by mail, please mark, sign and date your proxy card and return it in the
postage-paid envelope provided with the proxy materials . If you mail your proxy card, we
must receive it before 10:00 a.m. Eastern Time on Tuesday, May 26,
2009.
In
Person. If you are the stockholder of record, you may
vote by attending the Annual Meeting on Wednesday, May 27, 2009 at 8:30 a.m.
local time, at our executive offices located at 2511 Garden Road, Building A,
Suite 200, Monterey, California. If your shares are held in “street
name,” you can vote in person at the Annual Meeting if you obtain a legal proxy
from your bank or broker. Please contact your bank or broker for
information.
Q. What
is the difference between holding shares as a stockholder of record and as a
beneficial owner?
A. Most
of our shareholders hold their shares through a stock broker, bank or other
nominee rather than directly in their own name. As summarized below, there are
some differences between shares held of record and those owned
beneficially.
Stockholder of Record. If
your shares are registered directly in your name with our transfer agent,
Computershare Investor Services LLC, you are considered the stockholder of
record of those shares. As the stockholder of record, you have the
right to grant your voting proxy directly to us or to vote in person at the
Annual Meeting.
Beneficial Owner. If
your shares are held in a stock brokerage account or by a bank or other nominee,
you are considered the beneficial owner of shares held in “street
name.” The Notice is being forwarded to you by your broker or
nominee, who is considered to be the stockholder of record for those
shares. As the beneficial owner, you have the right to direct your
broker, bank or nominee on how to vote. Your broker or nominee has
enclosed a voting instruction card for you to use in directing your broker or
nominee as to how to vote your shares. As a beneficial holder, you
are invited to attend the Annual Meeting; however, because you are not the
stockholder of record, you may not vote these shares in person at the Annual
Meeting unless you obtain a signed proxy from the record holder giving you the
right to vote the shares.
Q. How
do I vote my shares that are held in a Century 401(k) plan?
A. If
you participate in one of Century’s 401(k) plans, you must provide the trustee
of the 401(k) plan with your voting instructions in advance of the
meeting. You may do this by returning your voting instructions by
mail, or submitting them by telephone or electronically, using the
Internet. You cannot vote your shares in person at the Annual
Meeting; the trustee is the only one that can directly vote your
shares. The trustee will vote your shares as you have instructed. If
the trustee does not receive your instructions, your shares generally will be
voted in proportion to the way the other plan participants voted. To
allow sufficient time for voting by the trustee, your voting instructions must
be received before May 22, 2009.
Q.
May I change my vote?
A. Yes. If
you are the stockholder of record, you may revoke a proxy or change your voting
instructions by:
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delivering
a written notice of revocation or later-dated proxy to our Secretary at or
before the taking of the vote at the Annual Meeting;
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changing
your vote instructions via the Internet up to 11:59 p.m. Eastern Time on
May 26, 2009 (the day before the 2009 Annual Meeting);
or
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voting
in person at the Annual
Meeting.
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If
you hold your shares in one of Century’s 401(k) plans, notify the plan trustee
in writing prior to May 22, 2009, that your voting instructions are revoked or
should be changed.
If
your shares are held in “street name,” you must follow the specific instructions
provided to you to change or revoke any instructions that you may have already
provided to your bank, broker or other nominee.
Q.
What are the voting requirements to elect the directors and to approve each of
the proposals discussed in this proxy statement?
A. Directors
are elected by a plurality of votes, which means that the three nominees that
receive the highest number of votes will be elected as directors, even if a
nominee does not receive a majority of the votes cast. The
affirmative vote of the holders of a majority of the issued and outstanding
shares of common stock is required for the approval of the amendment to the
Restated Charter. The other items submitted to stockholders for a
vote at the meeting require the affirmative vote of a majority of the votes
cast.
Your
shares will be voted in accordance with your
instructions. Abstentions will be treated as shares that are present
and entitled to vote for purposes of determining a quorum for a matter, but will
not be counted as a vote in favor of such matter. Accordingly, an
abstention from voting on a matter will not be counted for the purposes of
electing directors and will have the same effect as a vote against other
matters. If a bank, broker or other nominee holding stock in “street
name” indicates on the proxy that it does not have discretionary authority to
vote as to a particular matter, those shares will count for quorum purposes, but
are not counted as shares present and entitled to vote on any matter other than
to amend the Restated Charter. Broker non-votes will have the effect
of a vote against the proposal to amend the Restated Charter and the proposal to
amend the Company’s 1996 Plan.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 27, 2009
The
Notice of Annual Meeting, 2009 Proxy Statement and 2008 Annual Report are
available at http://investor.shareholder.com/cenx/annuals.cfm.
Our
Board of Directors is divided into three classes: Class I, Class II and Class
III. Directors in each class are elected to serve for three-year terms, with
each class standing for election in successive years. Three Class I
Directors will be elected at the 2009 Annual Meeting to serve a three-year term
that will expire at the 2012 Annual Meeting. The persons named as
proxies intend to vote for the election of each of the nominees listed below
unless you indicate on the proxy card that your vote should be withheld from any
or all of the nominees. If any nominee declines or is unable to
serve, the persons named as proxies will use their best judgment in voting for
any available nominee. Each of the nominees named below has indicated
their willingness to serve if elected and the Board of Directors has no reason
to believe that any of the nominees will not be available to
serve. Set forth below is background information for each of the
three nominees for election as well as the other members of our Board whose
terms expire in 2010 and 2011. Each nominee is currently a director
of Century.
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Class
I Directors with Terms to Expire in 2012
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Name
and Age*
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Business
Experience and Principal Occupation or
Employment
During Past 5 Years; Other Directorships
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Director
Since
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Logan
W. Kruger
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58
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Our
President and Chief Executive Officer since December 2005; Director of
Cleco Corporation since October 2008; President, Asia/Pacific Inco Limited
from September 2005 to November 2005; and Executive Vice President,
Technical Services for Inco Ltd. from September 2003 to September
2005.
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2005
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Willy R.
Strothotte (1)
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64
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Chairman
of the Board of Glencore International AG since 1994 and Chief Executive
Officer from 1993 to December 2001; Director of KKR Financial Holdings LLC
since January 2007; Director of Minara Resources Ltd. since 2000; and
Chairman of the Board of Xstrata AG since 1994.
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1996
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Jarl
Berntzen
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Managing
Director and Portfolio Manager of Interlachen Capital Group from August
2008 through February 2009; Partner-Head of Mergers and Acquisitions,
ThinkEquity Partners LLC from March 2006 to August 2008; Director of
Universal Safety Response, Inc. from October 2007 to April 2009;
Senior Vice President, Barrington Associates, LLC from April 2005 to
February 2006; and Founder, Berntzen Capital Management, LLC from March
2003 to April 2005.
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2006
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Class
II Directors with Terms to Expire in 2010
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Name
and Age*
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Business
Experience and Principal Occupation or
Employment
During Past 5 Years; Other Directorships
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Director
Since
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John
C. Fontaine
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Our
Lead Director from 2005 to 2008; Of Counsel, law firm of Hughes Hubbard
& Reed LLP since January 2000 and Partner from July 1997 to December
1999; Chairman of the Samuel H. Kress Foundation from 1994 to 2006;
Trustee of the National Gallery of Art from 2003 to 2007 and Chairman of
the Board of Trustees from 2006 to 2007.
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1996
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John
P. O’Brien
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Our
Chairman of the Board since January 2008; Managing Director of Inglewood
Associates Inc. since 1990; Chairman of Allied Construction Products since
March 1993; Director of Preformed Line Products Company from May 2004 to
April 2008; Director of Globe Speciality Metals from May 2008 to October
2008; Director of Oglebay Norton Company from April 2003 to February 2008;
Member of the Board of Trustees of Saint Luke’s Foundation of Cleveland,
Ohio since 2006; Trustee of Cleveland Sight Center since 1990; Chairman,
Chagrin Falls Board of Zoning Appeals since 2005; and Trustee of Downtown
Chagrin Falls from 2000 to 2008.
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2000
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Peter
C. Jones
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Chairman
of Lakota Resources Inc. since September 2008; Director of Royal Nickel
Corp. since December 2008; Director of Mizuho Corporate Bank (Canada)
since December 2006; Director IAMGOLD Corporation since May 2006;
Director, President and Chief Operating Officer of Inco Ltd. from April
2002 to November 2006; President Commissioner P.T. Inco. Tbk from 1999 to
2006; Chairman Goro Nickel SAS from 2003 to February 2007; Member of the
Board and Executive Committee, Mining Association of Canada from 1997 to
2006; and Member of the Board, Royal Ontario Museum from 2003 to
2006.
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2007
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Class
III Directors Standing with Terms to Expire in 2011
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Name
and Age*
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Business
Experience and Principal Occupation or
Employment
During Past 5 Years; Other Directorships
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Director
Since
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Robert
E. Fishman, Ph.D.
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57
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President
and Chief Executive Officer of Ausra, Inc. since October 2007; Director of
Range Fuels, Inc. since November 2007; Executive Vice President, Power
Operations of Calpine Corporation from 2006 to 2007; Senior Vice President
of Calpine Corporation from 2001 to 2005.
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2002
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Jack
E. Thompson
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Director
of Tidewater Inc. since 2005; Director of Rinker Group Ltd. from May 2006
to June 2007; Director of Phelps Dodge Corp. from January 2003 to March
2007; Director of Stillwater Mining Co. from 2002 to June 2006; Vice
Chairman of Barrick Gold Corporation from December 2001 to April 2005;
Member of the Advisory Board of Resource Capital Funds III and IV, LLP
from 2002 to January 2009; Member of the Industry Advisory Council for the
College of Engineering at the University of Arizona since
2002.
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2005
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Catherine
Z. Manning
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Partner,
PricewaterhouseCoopers LLP from July 1986 to June 2008, Finance
Effectiveness and Merger Integration leader of PricewaterhouseCoopers’
Atlanta Advisory practice; Chairman, Atlanta Historical Society since
January 2007, Member since January 2002; member, Georgia Appleseed since
January 2006; Member, Museum of Contemporary Art of Georgia since February
2008.
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2008
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*
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Age
as of March 31, 2009
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(1)
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Mr.
Strothotte was designated to serve as one of our directors by Glencore
International AG, or
Glencore.
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Board
and Committee Meetings, Directors’ Compensation and Communication with
Directors
Our
Board of Directors presently consists of 9 directors. The Board, which is
responsible for supervision of the overall affairs of Century, establishes
corporate policies, sets strategic direction, and oversees management, which is
responsible for Century’s day-to-day operations. The Board met 8
times during 2008.
To
assist it in carrying out its duties, the Board has established various standing
committees. Each standing committee of the Board and its members are listed in
the table below. The Board designates the members of each committee
and the committee chair annually, based on the recommendations of the Governance
and Nominating Committee. The Board has adopted written charters for
each of its committees, which are available in the Investors section of our
website, www.centuryaluminum.com,
under the tab “Corporate Governance.” Each director attended
100% of all meetings of the Board and each Board committee on which such
director served. We encourage, but do not require, the attendance of
Board members at our Annual Meetings. All of our directors attended
in person or by telephone the 2008 Annual Meeting held on June 24,
2008.
Board
Committees and Meetings
The
table below identifies the name and current members of each standing committee
of our Board. Ms. Manning began serving on our Audit Committee
commencing July 1, 2008.
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Name
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Audit
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Compensation
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Governance
&
Nominating
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Health,
Safety &
Sustainability
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Jarl
Berntzen
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X
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X
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Robert
E. Fishman
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X
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X
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X*
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John
C. Fontaine
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X
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X
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Peter
C. Jones
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X
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X*
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X
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Catherine
Z. Manning
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X*
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X
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John
P. O’Brien
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X
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X
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Jack
E. Thompson
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X
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X*
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X
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*
Committee Chair
Independent
Directors
The
Board has determined that Jarl Berntzen, Robert E. Fishman, John C. Fontaine,
Peter C. Jones, John P. O’Brien, Jack E. Thompson and Catherine Manning are
independent directors under the criteria established by
NASDAQ.
Audit
Committee
The
Audit Committee:
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oversees
the financial reporting process for which management is
responsible;
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approves
the engagement of the independent auditors for audit and non-audit
services;
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monitors
the independence of the independent auditors;
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reviews
and approves all audit and non-audit services and fees;
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reviews
the scope and results of the audit with the independent
auditors;
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reviews
the scope and results of internal audit procedures with our internal
auditors;
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evaluates
and discusses with the independent auditors and management the
effectiveness of our system of internal accounting
controls;
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reviews
and approves related party transactions pursuant to our Statement of
Company Policy Regarding Related Party Transactions;
and
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makes
inquiries into other matters within the scope of its
duties.
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During
2008, the members of the Audit Committee were Messrs. Berntzen, Fishman,
O’Brien, Jones and Ms. Manning. Each member of the Audit Committee is
“independent,” as required under applicable NASDAQ listing standards and Rule
10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange
Act. In addition, the Board has determined that John P. O’Brien and
Catherine Z. Manning are each an “audit committee financial expert” within the
meaning set forth in regulations of the Securities and Exchange
Commission. In 2008, the Audit Committee held 5
meetings. Effective January 1, 2009, Mr. O’Brien was succeeded as
chair of the Audit Committee by Ms. Manning, who was elected as a director on
July 1, 2008.
Compensation
Committee
The
Compensation Committee reviews and establishes the compensation for our
executive officers and has oversight responsibility for administering and
awarding grants under our 1996 Stock Incentive Plan, as amended, which we refer
to as the 1996 Plan. Each member of the Compensation Committee is an
independent director as required under applicable NASDAQ listing
standards. During 2008, the members of the Compensation Committee
were Messrs. Fontaine, O’Brien, Thompson and Jones. Mr. Jones was
appointed Chair of the Compensation Committee on January 1, 2008. The
Compensation Committee held 9 meetings in 2008.
Governance
and Nominating Committee
The
Governance and Nominating Committee is responsible for:
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evaluating
the size and composition of the Board;
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identifying,
recruiting and recommending candidates for election to the Board and its
committees;
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overseeing
corporate governance matters; and
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reviewing
and making periodic recommendations concerning our corporate governance
policies and procedures.
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The
Governance and Nominating Committee solicits recommendations for potential Board
candidates from a variety of sources, including directors, officers, other
individuals with whom the Governance and Nominating Committee members are
familiar, through its own research, and third-party research. The
Governance and Nominating Committee will also consider nominees recommended by
stockholders who submit such recommendations in writing to our Corporate
Secretary. The qualifications and standards the Governance and
Nominating Committee will apply in evaluating any recommendations for nomination
to the Board include, but are not limited to:
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significant
business or public company experience;
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a
willingness and ability to make a sufficient time commitment to Century’s
affairs to perform effectively the duties of a director, including regular
attendance at Board and committee meetings;
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skills
in finance, international business and knowledge about Century’s business
or industries;
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personal
qualities of leadership, character, judgment and integrity;
and
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requirements
relating to composition of the Board under applicable law and listing
standards.
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During
2008, the members of the Governance and Nominating Committee were Messrs.
Berntzen, Fishman, Fontaine and Thompson. Mr. Thompson has served as
the Chairman of the Governance and Nominating Committee since March
2006. Each member of the Governance and Nominating Committee is
“independent” as required under applicable NASDAQ listing
standards.
The
Governance and Nominating Committee recommended to the Board that Logan W.
Kruger, Willy R. Strothotte and Jarl Berntzen be nominees for election as Class
I Directors at the 2009 Annual Meeting. After considering the
recommendations of the Governance and Nominating Committee, our Board approved
the slate of director nominees to stand for election at the 2009 Annual
Meeting. In 2008, the Governance and Nominating Committee held 4
meetings.
Lead
Director/Meetings of Independent Directors
On
the recommendation of the Governance and Nominating Committee, the Board
designated John C. Fontaine to serve as the Lead Director for meetings of the
independent Board members outside the presence of management. With
the appointment of Mr. O’Brien, an independent director, as Chairman of the
Board in January 2008, the Board determined that the Company no longer required
an additional independent lead director. Following the Annual Meeting
on June 24, 2008, Mr. Fontaine resigned as lead director. Our
independent directors are scheduled to meet in executive session without the
presence of management no fewer than two times each year. The independent
directors met 14 times during 2008.
Health,
Safety and Sustainability Committee
The
Health, Safety and Sustainability Committee (the “HSS Committee”) was formed in
2008 to assist the Board with regard to oversight of Century’s policies and
management systems with respect to health, safety and sustainability matters.
Specifically, the HSS Committee is responsible for the regular review of
Century’s health, safety and sustainability policies and related practices,
assessments, performance, compliance and reporting. The HSS Committee
must meet at least twice a year and provide recommendations to the
Board. The initial members of the HSS Committee are Messrs. Fishman,
Jones and Thompson. Ms. Manning became a member of the HSS Committee
when she was elected as a director on July 1, 2008.
Directors’
Compensation
Directors
who are full-time salaried employees of Century are not compensated for their
service on the Board. The Board’s general policy is that compensation
for non-employee directors should be a mix of cash and equity-based
compensation. Effective December 1, 2008, the Board determined that
non-employee, non-independent Board members will receive compensation only in
cash. This change affords the Company the ability to avoid indirectly
increasing the beneficial ownership of any stockholder at whose direction a
member of our Board serves. The Compensation Committee evaluates the
appropriate level and form of compensation for non-employee directors at least
annually and recommends changes to the Board when appropriate. The
Board reviews the committee’s recommendations and determines the amount of
director compensation.
Equity
Awards, Meeting Fees and Retainers. In 2008, each newly elected
non-employee independent director received a one-time grant of 1,000
time-based performance share units. These time-based performance
share units vest 50% on the one year anniversary of the grant date and 50% on
the second anniversary of the grant date. In addition, each
non-employee director continuing in office after the Annual Meeting of
stockholders received an annual grant of time-based performance share units
valued at $75,000. These time-based performance share units vest 100%
on the one year anniversary of the grant date. The shares were
granted on the business day following the Annual Meeting based on the average
closing price of Century’s common stock for the 60 trading days preceding the
grant date and exceeded the fair market value of our common stock as determined
in accordance with the 1996 Plan. Vesting of time-based performance
share unit awards are subject to acceleration under certain circumstances
pursuant to the terms of an award agreement.
During
2008, non-employee directors (other than the Chairman) received an annual
retainer of $45,000 for their services. The Chairman of the Board received an
annual retainer of $110,000. The Lead Director received an additional $25,000
annual retainer, the Chairs of the Audit and Compensation Committees each
received an additional $10,000 and the Chairs of the Governance and Nominating
and Health, Safety and Sustainability Committees each received an additional
$5,000 annual retainer. In addition, each non-employee director received a fee
of $2,000 for each Board or Board committee meeting attended. The Chair of the
Audit Committee received an additional $1,000 per Audit Committee meeting
attended.
The
equity awards, meeting fees and retainers above, were made based on a
competitive assessment in 2008 of director pay practices among the peer
companies used for our executive compensation benchmarking. Based on
the results of this study, in April 2008, the Board approved the following
modifications to non-employee director compensation, effective January 1,
2008:
|
Ÿ
|
annual
retainers for all non-employee directors were increased by $10,000 to more
closely align them with the mid-range of competitive practices; and
|
|
Ÿ
|
the
annual retainer for the Compensation Committee Chair was increased by
$5,000 to reflect the increased burden and complexity of Compensation
Committee oversight.
|
The
Board did not seek to modify the value of equity awards; however, the Board
decided to change the forms of future equity awards to non-employee
directors. Rather than stock options, continuing directors will now
receive annual grants of time-based performance share units that vest following
12 months of service with a targeted value of $75,000, and new directors will
receive a one-time initial award of 1,000 performance share units that vest 50%
following 12 months of service and 50% following 24 months of service for
2008. The annual performance share unit awards were calculated based
on the average closing price of Century’s common stock for the 60 trading days
preceding the grant date. Non-employee independent directors now also
have the option to elect to defer cash retainers into time-based performance
share units which would then vest at the termination of their service (subject
to acceleration due to death or disability), and may also elect to defer
settlement of the awards of time-based performance share units until their
termination of service. Effective December 1, 2008, non-employee
directors who are not independent will be paid the annual retainer in cash and
of the equivalent value the annual equity award in cash.
Expense Reimbursement. All
directors were reimbursed for their travel and other expenses incurred in
attending Board and Board committee meetings, other than Mr. Strothotte who
waived his right to receive expense
reimbursement.
The
following table sets forth the compensation paid to each director in
2008.
2008
Director Compensation
|
Name(a)
|
Fees
Earned or Paid in Cash ($)(b)
|
Stock
Awards ($)(c)
|
Option
Awards ($)(d)
|
All
Other Compensation ($)(e)
|
Total
($)
|
|
Jarl
Berntzen
|
95,000
|
51,874
|
25,108
|
—
|
171,982
|
|
Craig
A. Davis
|
6,011
|
387,318
|
25,108
|
930,000
|
1,348,437
|
|
Robert
E. Fishman
|
124,750
|
51,874
|
25,108
|
—
|
201,732
|
|
John
C. Fontaine
|
113,500
|
51,874
|
25,108
|
—
|
190,482
|
|
Peter
C. Jones
|
121,000
|
51,874
|
113,358
|
—
|
286,232
|
|
Catherine
Z. Manning
|
44,500
|
52,168
|
—
|
—
|
96,668
|
|
John
P. O’Brien
|
175,637
|
51,874
|
25,108
|
—
|
252,619
|
|
Willy
R. Strothotte
|
—
|
51,874
|
25,108
|
—
|
76,982
|
|
Jack
E. Thompson
|
114,000
|
51,874
|
25,108
|
—
|
190,982
|
|
(a)
|
Represents
all non-employee directors that served on the Board during
2008. Mr. Kruger did not receive additional compensation for
serving as a Board member. In January 2008, Mr. Davis resigned from
his position as Chairman and a member of the Board of
Directors. Mr. O’Brien was elected to succeed Mr. Davis as
Chairman.
|
|
(b)
|
Represents
retainer and meeting fees paid to each non-employee director during 2008
(other than Mr. Strothotte, who waived his right to receive cash
compensation).
|
|
(c)
|
Amounts
shown in this column reflect the expense recognized for financial
statement reporting purposes during 2008 in accordance with Statement of
Financial Accounting Standards 123(R), Share Based Payment, or
FAS 123(R), for equity award expenses, disregarding assumptions for the
forfeiture of awards. See note 14 to the financial statements
in our Annual Report on Form 10-K for the year ended December 31, 2008,
for the assumptions used in the valuation of these awards and related
disclosures. Pursuant to the terms of the Implementation
Guidelines to our 1996 Plan, following his retirement as our Chief
Executive Officer, Mr. Davis’s performance-based share awards vested on
March 19, 2008 for our 2005-2007 performance period on an approximate
one-third basis. As such, amounts included in this column
include the re-measurement of performance share expense in accordance with
FAS 123(R) that was awarded to Mr. Davis when he served as Chief Executive
Officer.
|
|
(d)
|
Amounts
shown in this column reflect the expense recognized for financial
statement reporting purposes during 2008 in accordance with FAS 123(R),
for equity award expenses, disregarding assumptions for the forfeiture of
awards. See note 14 to the financial statements in our Annual
Report on Form 10-K for the year ended December 31, 2008 for the
assumptions used in the valuation of these awards and related
disclosures. Presented below are the grant date fair value of
each equity award granted in 2008 (calculated in accordance with FAS
123(R) using the Black-Scholes option pricing model) and the aggregate
number of vested and unvested stock options and stock awards held by each
director (other than Mr. Kruger) as of December 31,
2008:
|
|
Name
|
Grant
Date Fair Value of 2008 Equity Awards ($)
|
Number
of Options Outstanding as of 12/31/08
|
Number
of Stock Awards Outstanding as of 12/31/08
|
|
Jarl
Berntzen
|
69,165
|
16,000
|
1,047
|
|
Craig
Davis
|
—
|
6,000
|
—
|
|
Robert
E. Fishman
|
69,165
|
3,000
|
1,047
|
|
John
C. Fontaine
|
69,165
|
19,000
|
1,047
|
|
Peter
C. Jones
|
69,165
|
13,000
|
1,047
|
|
Catherine
Z. Manning
|
137,968
|
—
|
2,049
|
|
John
P. O’Brien
|
69,165
|
14,000
|
1,047
|
|
Willy
R. Strothotte
|
69,165
|
22,500
|
1,047
|
|
Jack
E. Thompson
|
69,165
|
3,000
|
1,047
|
|
(e)
|
For
Mr. Davis, all other compensation includes $930,000 for payments made
under our retirement plans.
|
Stockholder
Communications with the Board of Directors
Stockholders may communicate with the Board or any individual director(s) by
sending a written communication in an envelope addressed to the Board or the
appropriate director(s) in care of our Corporate Secretary at the address for
our principal executive offices located on the cover page of this proxy
statement.
OWNERSHIP
OF CENTURY COMMON STOCK
Security
Ownership of Certain Beneficial Owners
The
following table sets forth certain information concerning the beneficial
ownership of our common stock as of March 31, 2009 (except as otherwise noted)
by each person known by us to be the beneficial owner of five percent or more of
the outstanding shares of our common stock. The percent of class
shown below is based on 74,139,488 shares of common stock outstanding as of
March 31, 2009.
|
Name
|
Amount
and Nature of
Beneficial
Ownership(a)
|
Percent
of Class
|
|
Glencore
Investment Pty Ltd
|
28,285,638(b)
|
38.15%
|
|
Prudential
Financial, Inc.
|
7,374,596(c)
|
9.95%
|
|
(a)
|
Each
entity has sole voting and investment power, except as otherwise
indicated.
|
|
(b)
|
Based
on information set forth in a Schedule 13D/A filing dated February 4,
2009, by Glencore Investment Pty Ltd, Glencore Investments AG, Glencore
International AG and Glencore Holding AG
(“Glencore”). Glencore’s principal business address is
Baarermattstrasse 3, P.O. Box 666, CH 6341, Baar, Switzerland. The
principal business address of Glencore Investment Pty Ltd is Level 4,
30 The Esplanade, Perth, 6000, Australia. In addition, the above
information as to Glencore’s beneficial ownership of our outstanding
common stock includes 223,252 shares acquired through the automatic
conversion of our Series A Convertible Preferred Stock in the first
quarter of 2009 and excludes the 15,355,466 shares of our common
stock issuable upon conversion of Series A Convertible Preferred
Stock owned by Glencore Investment Pty Ltd, which are convertible only
upon the occurrence of events that have not transpired and that are
outside of the control of Glencore Investment Pty Ltd, or in circumstances
that would not result in an increase in the percentage of the outstanding
shares of our common stock beneficially owned by Glencore.
|
|
(c)
|
Based
on information set forth in a Schedule 13G/A filing dated February 6,
2009, by Prudential Financial, Inc., as the direct or indirect parent of
various registered investment advisors and broker dealers, including
Jennison Associates LLC (an investment advisor), may be deemed to have
direct or indirect voting and/or investment power over 7,374,596 shares of
our common stock held for its own benefit or for the benefit of its
clients by its separate accounts, externally managed accounts, registered
investment companies, subsidiaries and/or other affiliates. The principal
business address of Prudential Financial, Inc., is 751 Broad Street,
Newark, New Jersey 07102-3777. Based on information set forth in a
Schedule 13G/A filed on February 17, 2009, Jennison Associates LLC
has sole voting power over 5,730,420 shares of our common stock and
shared investment power over 5,915,320 shares. According to the
schedule, Jennison Associates LLC is a registered investment advisor 100%
of the equity interests of which are indirectly owned by Prudential
Financial, Inc.
|
Security
Ownership of Directors and Executive Officers
The
following table sets forth certain information concerning the beneficial
ownership of our common stock as of March 31, 2009 by: (i) each of our current
directors, (ii) each executive officer named in the Summary Compensation Table
under the heading “Executive Compensation,” and (iii) all of our directors and
executive officers as a group. No director or executive officer
beneficially owned more than 1% of our outstanding common stock. All of our
directors and executive officers as a group beneficially owned 0.88% of our
outstanding common stock.
|
Amount
and Nature of Beneficial Ownership(a)
|
|||
|
Name
|
Common
Stock
|
Exercisable
Stock Options(b)
|
|
|
Jarl
Berntzen
|
—
|
16,000
|
|
|
Michael
A. Bless
|
65,007
|
(c)
|
30,000
|
|
Giulio
Casello
|
28,553
|
15,000
|
|
|
Robert
E. Fishman
|
—
|
3,000
|
|
|
John
C. Fontaine
|
1,250
|
(c)
|
19,000
|
|
Wayne
R. Hale
|
49,024
|
50,000
|
|
|
Peter
C. Jones
|
2,000
|
13,000
|
|
|
Logan
W. Kruger
|
108,290
|
70,000
|
|
|
Catherine
Z. Manning
|
1,000
|
—
|
|
|
Robert
R. Nielsen
|
39,731
|
8,335
|
|
|
John
P. O’Brien
|
18,000
|
14,000
|
|
|
Willy
R. Strothotte
|
—
|
(d)
|
22,500
|
|
Jack
E. Thompson
|
3,500
|
3,000
|
|
|
All
directors and executive officers as a group (17 persons)
|
374,421
|
279,102
|
|
|
(a)
|
Each
individual has sole voting and investment power except as otherwise
noted.
|
|
(b)
|
Represents
shares that are subject to options that are presently exercisable or
exercisable within 60 days of March 31, 2009.
|
|
(c)
|
Represents
shares that are jointly owned and subject to shared voting and investment
power.
|
|
(d)
|
Excludes
28,285,638 shares owned by Glencore, for which Mr. Strothotte serves as
Chairman.
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our directors and executive officers, and
persons owning more than 10% of a registered class of our equity securities, to
file with the Securities and Exchange Commission reports of ownership and
changes in ownership of our equity securities. These same persons are
also required to furnish us with copies of all such forms. Based
solely on a review of the copies of the forms furnished to us and written
representations that no Form 5 filings were required, we believe that, with
respect to the 2008 fiscal year, all required Section 16(a) filings were timely
made, except each of our Section 16 officers, being Messrs. Logan W. Kruger,
Michael A. Bless, Wayne R. Hale, Robert R. Nielsen, Giulio Casello, Steve
Schneider, William J. Leatherberry and Jerry E. Reed, and Ms. Michelle M. Lair
filed late Form 4’s related to the granting of time-based performance share
units on April 7, 2008; Mr. Strothotte and Glencore filed late Form 4’s
with respect to Mr. Strothotte’s sale and Glencore’s purchase of Mr.
Strothotte’s shares on June 9, 2008; and Mr. Steve Schneider filed a late Form 4
with respect to a rebalancing of shares held in his 401(k) account on November
4, 2008.
CERTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Related
Person Transaction Policy
We
have a written policy and written procedures for the review, approval and
monitoring of transactions involving Century or its subsidiaries and “related
persons.” For the purposes of the policy, “related persons” include executive
officers, directors and director nominees and their immediate family members,
and stockholders owning five percent or greater of our outstanding stock and
their family members. Certain transactions are to be approved by the independent
directors acting as a separate body. A copy of our Related Person Transaction
Policy is available in the Investor section of our website,
www.centuryaluminum.com, under the tab “Corporate Governance.”
Our
Related Person Transaction Policy is administered by the Audit Committee and
applies to all related person transactions entered into after its adoption. This
policy applies, subject to certain specific exclusions, to any transaction,
arrangement or relationship or any series of similar transactions, arrangements
or relationships in which Century or any of its subsidiaries was or is to be a
participant and where any related person had or will have a direct or indirect
interest. Transactions involving less than $50,000 are not subject to review and
approval under the policy. In addition, the policy defines certain ordinary
course transactions with Glencore that are not material and not subject to
review and approval under the policy, although those transactions are otherwise
reviewed and approved by our Audit Committee. Pursuant to the policy, the Audit
Committee is responsible for reviewing qualifying related person transactions.
However, all transactions with Glencore for new long-term supply agreements are
subject to review under the policy and any other transaction the Audit Committee
Chair determines is material is reviewed by the independent directors, acting as
a separate body of our Board of Directors. Based on its consideration of all
relevant facts and circumstances, whether the transaction is on terms that are
fair and reasonable to Century and whether the transaction is in the business
interests of Century, the Audit Committee or independent directors, as the case
may be, will decide whether or not to approve or ratify such transaction. If a
related person transaction is submitted to the Audit Committee after the
commencement of the transaction, the Audit Committee or independent directors,
as the case may be, will evaluate all options available, including the
ratification, rescission or termination of such transaction.
Recent
Transactions with Glencore
As
of December 31, 2008, we had no outstanding forward financial sales contracts
with Glencore. In November 2004 and June 2005, we entered into forward financial
sales contracts with Glencore for the years 2006 through 2010 and 2008 through
2015, respectively (“Financial Sales Contracts”), for a minimum of 300,600 and
460,200 metric tons of primary aluminum, respectively, over the entire terms of
the contracts, which contained clauses that triggered additional shipment
volumes when the market price for a contract month was above the contract
ceiling price. These contracts were to be settled monthly. On July 7, 2008,
Century and Glencore agreed to terminate the Financial Sales
Contracts. The transaction consisted of the issuance by Century to
Glencore of 160,000 shares of non-voting preferred stock, which shares are
convertible under certain circumstances into our common stock at a conversion
ratio of 100 shares of common stock per each share of Series A Convertible
Preferred Stock, for $1,090.3 million, followed immediately by a cash payment by
Century to Glencore of $1,315 million (with an additional $505.3 million
cash payment being deferred). On July 16, 2008, we completed an
equity offering and used the net proceeds, after underwriter’s commissions and
discounts and offering expenses, of $442.1 million to pay a portion of the
deferred termination amount. In October 2008, we made the final $25 million
principal payment to Glencore of the deferred termination amount.
Financial Sales Contract Cash Settlement
Sensitivity
Cash
payments for the historical settlements of the recently terminated Financial
Sales Contracts with Glencore were based on the contract shipment volume,
contract price and the actual LME price for primary aluminum for the
corresponding period. In 2008 through the date of the termination transaction on
July 7, 2008, we settled 100,200 metric tons, which consisted of the original
contract volume plus the additional volume that was triggered when the LME
exceeded certain thresholds. Our cash payments for the contract settlements in
2008 were $115 million.
Approval of Transactions with
Glencore
During
2008, all transactions with Glencore, subject to our approval policy described
above, were approved by the Audit Committee or by a special committee comprised
solely of independent directors. As well, our independent directors were advised
by independent financial and legal advisors in connection with
the termination of the Financial Sales Contracts discussed
above.
Purchases from Glencore
In
2008, we purchased alumina from Glencore on both a spot and long-term contract
basis. In 2008, we purchased $137.2 million of alumina from Glencore under
negotiated long-term alumina supply contracts at prices that were based on the
LME price for primary aluminum. We believe that all of the alumina purchased
under these contracts was purchased at prices which approximated market. We also
purchased $9.2 million of alumina from Glencore in 2008 on a spot basis. We
determined the market price for the spot alumina we purchased based on a survey
of suppliers at the time that had the ability to deliver spot alumina on the
specified terms. Based on this survey, we believe that all of the
spot alumina purchased from Glencore in 2008 was purchased at market prices.
During 2008, we purchased from Glencore all of our alumina requirements for
Ravenswood. The supply agreement for Ravenswood runs through December
31, 2009.
Sales
to Glencore
We
sold primary aluminum and alumina to Glencore in 2008 on both a spot and
long-term contract basis. For the year ended December 31, 2008, net
sales to Glencore amounted to $496 million, excluding gains and losses realized
on the settlement of cash flow hedges. Sales of primary aluminum to Glencore
amounted to approximately 25.2% of our total revenues in
2008.
In
2008, we sold $310 million in primary aluminum under our long-term sales
contracts with Glencore at prices
based on the LME price for primary aluminum, as adjusted to reflect the Midwest
Premium (a premium typically added for deliveries of aluminum within the U.S.).
In addition, we received $186 million in tolling fees from Glencore in 2008
under tolling contracts that provide for delivery of primary aluminum produced
at Grundartangi. The fee paid by Glencore under these tolling contracts is based
on the LME price for primary aluminum, as adjusted to reflect the reduced
European Union import duty paid on Icelandic primary aluminum. We believe that
all of the transactions with Glencore under these contracts were at market
prices.
We
have a contract to sell Glencore approximately 50,000 metric tons of primary
aluminum each year through December 31, 2009, at a variable price determined by
reference to the LME. We have a long-term contract to sell Glencore 20,400 mtpy
of primary aluminum through December 31, 2013, at a variable price based on the
LME, adjusted by a negotiated U.S. Midwest market premium with a cap and floor
as applied to the current U.S. Midwest Premium.
Other Transactions with Glencore
We are
party to separate ten-year and seven-year LME-based alumina tolling agreements
with Glencore, for 90,000 and 40,000 metric tons of capacity per year,
respectively, at Grundartangi, which run through 2016 and 2014, respectively. In
December 2005, Glencore assigned 50% of its tolling rights under the ten-year
agreement to Hydro Aluminum AS for the period 2007 to 2010. Deliveries under
these agreements commenced in July 2006 and June 2007.
We
signed a long-term agreement to buy alumina from Glencore in April 2008.
Glencore has agreed to supply Century with 290,000 metric tons of alumina in
2010, 365,000 metric tons in 2011, 450,000 metric tons in 2012, 450,000 metric
tons in 2013, and 730,000 metric tons in 2014. The alumina price will be indexed
to the LME price of primary aluminum.
Prior
to our initial public offering in April 1996, we were an indirect, wholly-owned
subsidiary of Glencore. As of March 31, 2009, Glencore, our largest stockholder,
owned 38.15% of our outstanding common stock. Glencore is an
important business partner, as a customer, a supplier of alumina to our
facilities, and from time to time has been a counterparty to our metal hedges.
As of March 31, 2009, Glencore beneficially owned 153,555 shares of our Series A
Convertible Preferred Stock, that are convertible under certain circumstances
into 15,355,466 shares of our common stock. Together, the shares of our common
stock and preferred stock beneficially owned by Glencore give Glencore an
approximate 48.74% economic ownership of Century.
Certain
Business Relationships
During 2008, we retained PricewaterhouseCoopers
LLP to provide actuarial pension benefit, accounting, and human resource
consulting work. We paid $1,206,000 in fees to PricewaterhousCoopers
for this work. Ms. Manning, a director and the chair of our Audit
Committee, retired from PricewaterhouseCoopers in June 2008 prior to her
commencing service on the Board. In addition, during 2008 we retained the law
firm of Jones Day to provide legal services. We paid $1,204,000 in
fees to the Jones Day firm for this work. Ms. Manning’s spouse is a
partner of the Jones Day firm and managing partner of one of its U.S.
offices. We believe that all services were provided by
PricewaterhouseCoopers and the Jones Day firm at market rates and terms and on
an arms-length basis. Mr. Willy R. Strothotte, a director, is
Chairman of the Board of Directors of Glencore and served as its Chief Executive
Officer from 1993 through 2001.
EXECUTIVE
COMPENSATION
Introduction
Our
Compensation Committee (“Committee”) is a standing committee of our Board of
Directors. The Committee reviews and establishes the compensation for our
executive officers and is responsible for administering and awarding grants of
equity awards under our 1996 Stock Incentive Plan, which we refer to as the 1996
Plan.
The
Committee periodically reviews and modifies Century’s compensation and benefit
programs, and the principles and philosophies on which these programs are
based. Key matters recently addressed by the Committee include the
following:
|
Ÿ
|
Affirmed
the Company’s Compensation philosophy: After evaluating our
business needs, our pay competitiveness, our existing “mid-range” pay
philosophy, and the merits of establishing a more focused competitiveness
objective, we re-affirmed the appropriateness of our “mid-range”
philosophy and the flexibility that it provides the Committee in its
oversight of executive pay.
|
|
Ÿ
|
Benchmarking
of compensation: In assessing the competitiveness of our
executive pay levels, we have refined the process and approach used to
establish market pay levels; our focus is on the peer companies described
below in the Benchmarking Executive Compensation section, and our
assessment is complemented by a review of a compilation of data derived
from a broader sample of asset-intensive, comparably-sized industrial
companies.
|
|
Ÿ
|
Redesigned
the annual and long-term incentive plans effective in 2008: To emphasize
our operating, financial, and strategic goals, we revised the annual
incentive plan by incorporating three operating measures historically used
within the long-term incentive plan. At the same time, we revised the
long-term incentive plan to focus on strategic goals, free cash flow, and
relative total shareholder return. In each plan, we maintained
the flexibility of the prior plans through the retention of Committee
discretion in reviewing, making and modifying
awards.
|
Challenging
Economic Climate
The
events of 2008 presented the Company with special challenges. While
the first half of 2008 represented a strong start to the year, during the second
half, the crisis in financial and credit markets led to a pronounced downturn in
global economic activity, producing an unprecedented decline in the LME price
for aluminum in late 2008. This rapid and substantial decline had a
negative impact on the Company’s performance and stock price. The
Committee believes that this decline in Company performance was primarily the
result of global economic forces beyond the control of executive
management. The Compensation Committee viewed favorably management’s
actions in 2008, prior to as well as in response to, the extraordinary
challenges which included:
|
Ÿ
|
Securing
operating licenses and power supply agreements for the Helguvik
smelter;
|
|
Ÿ
|
Entering
into a joint venture agreement whereby the Company acquired a 40% stake in
Baise Haohai Carbon Co., Ltd., an anode manufacturing facility in
China;
|
|
Ÿ
|
Launching
of two public common stock offerings, one of which closed in July 2008,
and the other in early 2009;
|
|
Ÿ
|
Significant
cost reduction actions in response to the declining price of aluminum;
and
|
|
Ÿ
|
Navigating
changing political and financial conditions in
Iceland.
|
In deliberating pay decisions for the named executive officers, the Committee considered the challenging economic conditions in the U.S. and abroad, the decrease in demand for aluminum, the decline in the Company’s stock price, the reductions in the Company’s workforce in late 2008 and early 2009, management’s response to these challenges, actual performance versus goals, and the Company’s current financial position. Pay decisions in relation to the named executive officers are summarized below and described in more detail in subsequent sections of this analysis.
|
Ÿ
|
Named
executive officer base salaries were frozen at their 2008
levels;
|
|
|
Ÿ
|
Incentives
for periods ending December 2008 were down 57% in total for the named
executive officers in comparison to incentives for periods ending December
2007;
|
|
|
°
|
Total
annual incentives for 2008 were down 34% from 2007 levels;
|
|
|
°
|
Awards
for the three-year period ending in 2008 were down 75% from 2007
levels.
|
|
In addition, management and the Committee continue to consider the role of stock compensation as a tool to reinforce key strategic, financial, and market-based successes and to retain those needed to lead Century out of the current economic climate, but decisions about any 2009 long-term incentive were yet to be made as of the date of this proxy statement.
Our
Philosophy on Executive Compensation
Our
compensation programs are designed to enable Century and its subsidiaries to
provide competitive compensation packages that attract, retain and motivate
talented executives and managers. The Committee and management
believe that our compensation programs must therefore remain flexible to afford
the Committee and management discretion in making awards that account for both
individual and corporate performance.
Our
compensation programs are structured as a balanced portfolio using multiple
elements to deliver the total package (base salary, annual cash incentive,
long-term performance awards, retirement, and other benefits). In
addition, the Committee retains discretion to make adjustments necessary to
balance the overall performance of Century and the individual performance of our
executive officers and to pay for performance by aligning management’s and
stockholders’ interests in the enhancement of stockholder value.
Benchmarking
Executive Compensation
Our
philosophy emphasizes competitive objectives for executive pay. Target total
compensation levels are managed around the mid-range of competitive practices,
i.e., the Committee generally targets annual base salaries that, together with
annual incentive cash compensation, long-term incentive compensation and
retirement, provide the named executive officers with total compensation, on
average, at or around the mid-range of the compensation ranges for similarly
situated officers at the surveyed companies. We prefer a competitive
range to a single point to provide the Committee the discretion needed to
discharge its duties, while being mindful of individual differences such as
tenure and performance, as well as the practical implications of pay, on
occasion, being the product of an arms-length negotiation at the time an
executive is hired. Elements of compensation that are benchmarked,
separately - and in total - include base salary, annual incentive, long-term
incentive, and retirement benefits.
Our
compensation programs are thus established to provide Century’s officers total
compensation that, in an average year, is positioned around the mid-range of the
market. Our incentive plans are designed to allow the Committee the
discretion to reward outstanding performance significantly above the mid-range
in the case of outstanding performance; conversely, when performance is below
expectations, our plans are designed to deliver compensation that is below the
mid-range. In addition, where management’s performance and Century’s
performance differ, in the Committee’s view due to market forces or otherwise,
our plans are flexible enough to allow the Committee discretion in the form of
compensation delivered.
With
respect to the named executive officers, we primarily focus on the practices of
a group of comparably-sized, asset-intensive, metals and other industrial
companies. We chose these parameters, and ultimately the companies
noted below, to permit pay to be evaluated in a context that considers
businesses with similar exposure to economic forces and business
cycles. The composition of this group is reviewed regularly, and at
least annually, and the group is refined to ensure its relevance in light of
Century’s position, as well as mergers, acquisitions, growth, etc. among the
companies. The table below identifies the companies that have been
included in the group in 2007 and 2008.
|
Company
|
2007
Status
|
2008
Status
|
|
AK
Steel Holdings
|
NA
|
Added
|
|
Allegheny
Technologies
|
NA
|
Added
|
|
Arch
Chemicals
|
Included
|
Included
|
|
Carpenter
Technology Corp
|
Included
|
Included
|
|
Castle
(A.M.) & Co.
|
Included
|
Included
|
|
Chaparral
Steel Co.
|
Included
|
Removed,
acquired
|
|
Cleveland—Cliffs
Inc.
|
Included
|
Included
|
|
Commercial
Metals Company
|
NA
|
Added
|
|
Gibraltar
Industries Inc.
|
Included
|
Included
|
|
Kaiser
Aluminum Corp.
|
Included
|
Included
|
|
Martin
Marietta Materials
|
NA
|
Added
|
|
Metal
Management Inc.
|
Included
|
Removed,
acquired
|
|
Nucor
Corp.
|
Included
|
Removed,
size
|
|
Quanex
Corp.
|
Included
|
Removed,
re-organized
|
|
Reliance
Steel & Aluminum Co.
|
Included
|
Included
|
|
Schnitzer
Steel Industries Inc.
|
Included
|
Included
|
|
Steel
Dynamics Inc.
|
Included
|
Included
|
|
The
Timken Company
|
NA
|
Added
|
|
Titanium
Metals Corp.
|
Included
|
Included
|
|
Vulcan
Materials Company
|
NA
|
Added
|
|
Worthington
Industries
|
NA
|
Added
|
In
addition to evaluating the total cash compensation (salary and annual bonus) and
total compensation (salary, annual bonus, long-term incentive and retirement
benefits) of the peer companies, we compare the pay of our executives, including
the named executive officers, to the summary results of a survey-based
analysis. This secondary approach is useful because it provides a
broader market assessment (i.e., includes more than 30
companies). It allows us to benchmark more than five executives, and
it allows us to tailor our benchmarking based on the roles and responsibilities
of our executive officers. For our additional evaluations, we use
compensation for companies participating in Towers Perrin’s Executive
Compensation Data Bank, a proprietary survey, within the materials and
industrials sectors. Company size generally is accounted for by
regression or by limiting the size of the companies considered to under $5
billion in revenue. We evaluate the peer data and the survey data
independently and as a composite (average of the two), but there is no algorithm
that dictates pay at a precise level in comparison to these various data
points.
Overview
of Compensation Elements
The
list below summarizes the general elements and characteristics of our executive
compensation programs. Detailed narratives of these compensation
elements are provided in a later section.
|
Ÿ
|
Salary:
Base salary is determined by our philosophy, the position (skills, duties,
responsibilities, etc.), market pay levels and trends, individual
performance, and prior salary.
|
|
Ÿ
|
Annual
incentive: Variable compensation is normally payable in cash following the
fiscal year the pay is earned; historically, this component was based on a
subjective evaluation of Company and individual
performance. Achievement of pre-set key operating goals became
an important component of the annual incentive in 2008. In
addition a portion of the incentive is dependent on a subjective review of
individual performance and contributions to our overall strategic
successes.
|
|
Ÿ
|
Long-term
incentives: Variable compensation based on sustained performance success;
historically based on the Committee’s assessment of operating performance
and strategic achievements and settled in shares of
stock. Effective for 2008, the long-term incentive includes a
cash and a stock component. For the 2008-2010 period,
strategic, financial, and relative total shareholder return measures
determine the cash portion of the long-term incentive. In
addition, time-vested performance share units are awarded to balance the
long-term incentive portfolio, contribute to our retention objectives and
recognize the important aspect of aligning compensation and shareholder
returns.
|
|
Ÿ
|
Retirement:
Tax qualified defined benefit and defined contribution plans apply to
salaried employees of our U.S. companies who meet eligibility
requirements. In addition, our nonqualified defined benefit plan provides
a select group of participants with benefits above the level permitted
under a qualified plan.
|
Our
Process for Executive Compensation
We
review market pay levels, with the help of consultants, on a regular basis. We
evaluate Company performance against our plans and budgets, pay levels at
comparable companies and in the context of the broader economy. The Committee
retains final discretion in determining annual incentive awards and the vesting
of performance share units. In general the Committee will make its final
determination of both annual incentive awards and awards earned based on
long-term performance in the first quarter following the end of the performance
period.
The
Committee has adopted a charter which is posted on the Company’s website. The
Committee maintains an annual agenda to help ensure that it discharges its
duties in a thoughtful and timely manner. Each meeting has a primary
purpose, e.g., reviewing market benchmarking, finalizing incentive awards,
approving salary adjustments and new incentive plan terms, reviewing market
trends or completing a self-assessment. Other matters may be added to the
agenda. As a general practice, the Committee makes significant decisions over
multiple meetings: discussing conceptual matters, reviewing
preliminary recommendations, and reviewing final recommendations before
acting.
Role
of the Chief Executive Officer
As
part of its review and determination of Century’s compensation objectives,
philosophy, programs and decisions, the Committee works with and receives advice
and recommendations from our CEO. The Committee’s charter formalizes the
working relationship with our CEO and includes the following actions to be taken
by the CEO:
|
Ÿ
|
working
with the Committee in its decisions regarding the approval of all general
compensation plans and policies, including pension, savings, incentive and
equity-based plans;
|
|
Ÿ
|
consulting
on the corporate and individual goals and objectives relevant to the
compensation of the CEO;
|
|
Ÿ
|
reviewing
and determining the respective corporate and individual goals and
objectives for the other named executive officers relevant to their
compensation;
|
|
Ÿ
|
providing
the Committee an evaluation of the performance of the other named
executive officers in light of their respective corporate and individual
goals and objectives; and
|
|
Ÿ
|
recommending
to the Committee the compensation levels of the other named executive
officers.
|
The
Committee considers the recommendations of our CEO, together with the review by
our compensation consultant in making independent determinations regarding
executive compensation.
Our
CEO attends all Committee meetings, other than those portions that are held in
executive session and he is not present during deliberations or when voting on
matters involving his compensation. As appropriate, the Committee
follows an executive session by reconvening with our CEO present.
Role of
Compensation Committee Consultants
The Company uses the services of a compensation consultant. The
Company first engaged Towers Perrin in 2007 to evaluate the Company’s executive
compensation programs: philosophy, objectives, plan designs, and market pay
levels. The analysis by Towers Perrin culminated in recommendations
that generally became effective in 2008 addressing our pay philosophy, and our
annual and long-term incentive plan designs. Towers Perrin continued
to be Century’s consultant in 2008, including participation at several Committee
meetings throughout the year. Towers Perrin also conducted compensation
consulting projects for management in 2008, with the Committee’s prior and
ongoing approval; the Committee is apprised of any and all projects for which
management engages Towers Perrin and monitors their status at each meeting as
part of its effort to ensure that it receives objective advice from the
Company’s consultant.
Compensation
Program Details
Base
Salary
The
Committee typically reviews the salaries of our named executive officers
annually (in the fourth quarter or early the following year). In
addition, the Committee may review the salaries of our named executive officers
in connection with a promotion or other change in responsibility. The
Committee generally targets annual base salaries that, together with annual
incentive cash compensation, long-term incentive compensation and retirement,
provide the named executive officers with total compensation that is, on
average, at or around the mid-range of the market. Actual salary
levels for each individual vary based upon an assessment of individual
performance, experience, level of responsibility, potential contribution to our
future growth and profitability, and our financial performance. The
Committee has not found it practicable to assign relative weights to specific
factors in determining base salary adjustments, and the specific factors used
may vary among individual executives.
At
the Committee’s meeting in December 2007, the Committee, based on its review of
competitive pay practices, the recommendation of the CEO with respect to the
other executive officers, and in its own judgment, approved salary increases of
4.8% in the aggregate for the named executive officers. The Committee authorized
base salary increases, effective January 1, 2008, of 4.9% in the case of Mr.
Kruger, 4.9% for Mr. Hale, 4.2% for Mr. Bless, 4.9% for Mr. Nielsen, and 5.2%
for Mr. Casello.
In
late 2008, management recommended and the Committee subsequently agreed to
freeze officers’ salaries for 2009 at their 2008 levels, other than in the case
of promotion-based adjustments. No named executive officer received
an adjustment in his base salary from his 2008 level.
Annual
Cash Incentive Awards
Under our
annual incentive plan, executives (including the named executive officers) are
eligible to receive an award, which is normally paid in
cash.
Effective in
2008, the annual incentive plan was redesigned to: (a) emphasize
operating results, (b) add a level of objective measurability into the
evaluation and determination of awards, and (c) allow the long-term incentive
plan to emphasize strategic goals rather than short-term operational
performance. The new design retains a significant element of
discretionary evaluation by the Committee but incorporates several operating
measures, as described below.
|
Ÿ
|
Operating
results determine 30% to 60% (varying by an officer’s position and duties)
of the award at target:
|
|
|
°
|
Operating
income: this operating measure has long been important, having
been a factor in our long-term incentive plan; in 2008 we believe we
improved our focus on this measure by shortening the performance
period;
|
|
|
°
|
Conversion
cost: measures our cost to convert alumina into aluminum; this
useful measure of operating efficiency has been used in our long-term
incentive plan; in 2008 we believe we improved our focus on this measure
by shortening the performance period;
|
|
| ° |
Safety: in
2008 we shifted the emphasis on this important measure from the long-term
plan to the annual plan.
|
|
| Ÿ |
Subjective
evaluation of two elements determines the remainder of the
incentive:
|
|
|
°
|
Strategic: recognize
achievement of strategic milestones;
|
|
|
°
|
Discretionary/Individual: recognize
individual contributions to operating, financial, and strategic
success.
|
|
The
Committee generally assigns different weights to these elements for each named
executive officer. For instance, the evaluation of the Chief
Executive Officer is generally weighted more heavily toward strategic
achievement while the evaluation of the Chief Operating Officer is generally
weighted toward operational results. In this way, the Committee can
focus its evaluation in areas where each executive has greater responsibility
and opportunity to influence results.
In
March 2009, the Committee and the CEO discussed his annual incentive award and
his recommendations for Century’s other officers. The recommendations
considered the level of prior cash incentive awards, expected market
compensation for 2008, operating results (operating income, conversion cost, and
safety), strategic results (access to bauxite, progress at Helguvik, long-term
access to anodes, terms of power supplies, and business development), and
individual performance. After its discussion with the CEO, in
executive session the Committee discussed Century’s performance, the potential
cash incentive award for the CEO, and the CEO’s recommendations for the other
officers.
The
Committee approved incentive awards for 2008 performance to the named executive
officers that totaled 34% below the awards earned in 2007 (as shown in the table
below). The amounts earned are shown in the bonus column of the
Summary Compensation Table.
|
Name
|
Annual
Incentive Award Earned:
Change
from 2007 to 2008 Award
|
|
Mr.
Kruger
|
-43%
|
|
Mr.
Hale
|
-21%
|
|
Mr.
Bless
|
-22%
|
|
Mr.
Nielsen
|
-27%
|
|
Mr.
Casello
|
-43%
|
Long-term Incentive
Compensation
Overview
The
Committee has oversight responsibility for administering and awarding grants of
equity awards under the 1996 Plan. The following award types have
been used to address different purposes:
|
Ÿ
|
Performance
share awards were the primary form of long-term incentive for named
executive officers through 2007.
|
|
Ÿ
|
Beginning
in 2008 our long-term incentive compensation includes performance units
(generally payable in cash) and time-vested performance share units
(generally payable in shares).
|
|
Ÿ
|
Special
awards, such as stock options and time-vested performance shares, have
been awarded by the Committee on a selective basis generally in the case
of hiring and promotion.
|
Performance
Shares (through 2007)
Historically,
operating and strategic goals were established for overlapping sequential
three-year periods. The Committee, based on its review of performance
against those goals then determines the degree to which the shares awarded for
the performance period vest (which can range from 0% to
150%). Because our financial performance is highly dependent on the
price of aluminum, the Committee retains discretion to adjust the
operational/financial goals to reflect changes in the London Metals Exchange and
Midwest transactions prices of aluminum and other conditions affecting
performance during a performance program period, and regularly does
so.
At
the end of a three-year performance period, our CEO reports on
Century’s performance against goals set at the beginning of the three year
period and makes a recommendation to the Committee regarding the percentage at
which goals were achieved and the percentage of the shares awarded during that
period that should vest. The Committee reviews management’s
recommendation and performs an independent analysis. The Committee
then determines the appropriate vesting percentage for the three-year plan
period based on its assessment of Century’s achievement of the stated strategic,
operational and financial targets.
On
March 23, 2009, the Committee evaluated Century’s performance relative to the
criteria set for the 2006-2008 period, as noted below:
|
Ÿ
|
Strategic
goals, which accounted for 50% of the award opportunity:
|
||
|
°
|
Growth;
|
||
|
°
|
Secure
competitive contracts for Company’s operations;
|
||
|
°
|
Decrease
leverage and improve liquidity;
|
||
|
°
|
Build
and maintain management team.
|
||
|
Ÿ
|
Operating/financial
goals, which accounted for 50% of the award opportunity:
|
||
|
°
|
Safety;
|
||
|
°
|
Free
cash flow;
|
||
|
°
|
Operating
income;
|
||
|
°
|
Conversion
costs.
|
||
The guidelines by
which the Committee administers the plan provide that from 0% to 150% of the
share units conditionally awarded may ultimately vest based on the Committee’s
assessment of Century’s performance, although the Committee retains the
discretion to adjust these awards. Based on its review of performance
and of competitive compensation, and reflecting its ongoing use of discretion
under these guidelines, the Committee determined that during the 2006-2008
period the Company had performed such that the named executive officers should
receive awards which total, 75% less than the value the named executive officers
earned under the three-year period that ended in 2007. The amounts
are included in the Option Exercise and Stock Vested Table.
|
Name
|
Long-Term
Incentive Award Earned:
Change
from Period Ending 2007
to
Period Ending 2008 Award
|
|
Mr.
Kruger
|
-80%
|
|
Mr.
Hale
|
-65%
|
|
Mr.
Bless
|
-72%
|
|
Mr.
Nielsen
|
-72%
|
|
Mr.
Casello
|
-72%
|
Performance
Units & Time-vested Performance Share Units (beginning in 2008)
We
changed the long-term incentive program, effective in January
2008. Rather than relying on a single type of award as the primary
incentive, we granted two types of awards. Half of each officer’s annual
long-term incentive opportunity was allocated to performance units and the
remainder to time-vested performance share units. In addition, the
Committee may still make special awards as described elsewhere.
|
Ÿ
|
Performance
units are generally cash-settled awards based on the achievement of
strategic objectives, free cash flow goals, and Century’s total
shareholder return in relation to its peer group over a three-year
period. Moving three operating measures from the old
performance share plan into the annual incentive plan allows the Committee
to emphasize current operating focus on those operating measures and
permits the long-term program to focus on longer-term strategic
objectives. Moreover, the cash settlement provision is expected to help
executives retain the shares earned under the program described below;
however, the Committee retains the discretion to settle these awards in
stock.
|
|
Ÿ
|
Time-vested
performance share units are stock-settled awards that vest, in their
entirety, after three years. This program is intended to help
retain our executives and promote stock
ownership.
|
The
sizes of previous equity-based grants and current equity holdings do not affect
future grants and are not considered by the Committee when making long-term
incentive award decisions. The Committee does, however, consider the
combination of the major compensation and benefit offerings; for example, the
long-term incentive award for our Chief Executive Officer is determined, in
part, after accounting for the competitiveness of his Enhanced SERP benefit
(which is described below).
Stock
Options
Option
grants are made on a case-by-case basis to executive officers in connection with
hiring awards and to recognize promotions. It has been the
Committee’s practice to approve all option grants at Committee
meetings. For initial option grants to our executives made in
connection with their employment by Century, the Committee approves the options
at the time it approves the executive’s overall compensation arrangement and the
terms of his or her employment agreement, if any. All awards of stock
options on shares of Century common stock granted in 2008 were granted under the
1996 Plan with an exercise price equal to the average of the high and low sales
price for shares of our common stock on the date of grant.
Retirement
Plans
The
Century Aluminum 401(k) Plan is a tax-qualified retirement savings plan pursuant
to which our U.S. based salaried employees, including our named executive
officers, are able to contribute a percentage, up to the limits prescribed by
the Internal Revenue Service, of their annual compensation on a pre-tax
basis. In 2008, we match 100% of the first 3% of pay that is
contributed to the savings plan and 50% of the next 2% of pay contributed, and
all matching contributions are fully vested on
contribution. Effective January 1, 2009, Century indefinitely
suspended the company match due to market conditions.
We
also maintain a non-contributory defined benefit pension plan for our U.S. based
salaried employees who meet certain eligibility requirements, which we refer to
as our Qualified Plan. We have also adopted a Supplemental Retirement
Income Benefit Plan, or “SERP.” The SERP provides selected senior
executive officers with an additional retirement benefit equal to the amount
that would normally be paid under our Qualified Plan if there were no
limitations under Sections 415 and 401(a)(17) of the Internal Revenue Code of
1986, as amended (the “Code”). Final average monthly compensation for
purposes of calculating the supplemental benefit will be based on the greater of
(a) projected final annual compensation, assuming specified annual increases
until retirement age, or (b) the average of the highest three years’ annual
compensation over the last 10 years of employment. The SERP is an
unfunded Century obligation. Each named executive officer was
eligible to participate in these benefits in 2008.
On
selective occasions we have also provided enhanced retirement benefits, in the
form of an “Enhanced SERP”, which is designed to enhance the total retirement
income level, when, due to the executive’s age and potential years of service at
normal retirement age, benefits under the Qualified Plan and the SERP are
projected to be less than a specified percentage of the executive’s estimated
final average annual compensation. In developing the hiring package
that induced Mr. Kruger to join Century, we agreed to include him in the
Enhanced SERP. He is the only named executive officer currently
participating in the Enhanced SERP. If Mr. Kruger remains employed by
Century for a period of 10 years he will be fully vested in his Enhanced SERP
benefit. When fully vested, Mr. Kruger’s Enhanced SERP benefit will
be approximately 50% of his final average annual compensation.
We
have designed these retirement benefits to be competitive with industry
standards to attract and retain talented executive and management level
personnel. Benefits triggered by retirement are valued and described
below under the caption “Executive Compensation-Pension Benefits Table” and
“Executive Compensation-Potential Payments upon Termination or Change of
Control.”
Policies
& Other Technical Considerations
Stock
ownership guidelines
We
adopted stock ownership guidelines for our executives and nonemployee directors
effective March 26, 2008. We adopted them to further underscore our
belief that management’s interests should be aligned with those of the
stockholders. Moreover, the long-term incentive design changes, as
described earlier, added emphasis to the importance of retaining stock
awards.
The
guidelines for Century’s officers and directors are summarized in the table
below. The guidelines are based on a fixed number of shares, which was finalized
after giving consideration to the value of the fixed share guidelines as a
percent of pay (salary for executives and cash retainer for nonemployee
directors). The guidelines of peers and, on a broader basis, industry practices
were considered in developing this policy.
|
Category
|
Share
Guideline
|
|
|
Chief
Executive Officer
|
50,000
|
|
|
Executive
Vice Presidents
|
16,000
|
|
|
Senior
Vice Presidents
|
6,000
|
|
|
Vice
Presidents
|
2,000
|
|
|
Nonemployee,
independent directors
|
3,000
|
|
Nonemployee,
non-independent directors are not subject to these guidelines, although they are
urged to follow them.
Officers
and nonemployee directors have five years from the later of the date of hire or
the effective date of the guidelines to meet these ownership
guidelines. Officers who are subsequently promoted to a higher
category of participant level will have five years from the date of promotion to
achieve their increased share guideline.
Clawback
Effective
March 26, 2008, we adopted an Incentive Compensation Recoupment
Policy. Under this policy, our Board will, to the extent permitted by
applicable law, in all appropriate cases, require reimbursement of any bonus or
incentive compensation paid to an employee after January 1, 2008, cause the
cancellation of restricted or deferred stock awards and outstanding stock
options, and seek reimbursement of any gains realized on the exercise of stock
options attributable to such awards, if and to the extent that: (a)
the amount of incentive compensation was calculated based upon the achievement
of certain financial results that were subsequently reduced due to a
restatement, (b) our Board or an appropriate committee determines that the
employee engaged in any fraud or misconduct which caused or contributed to the
need for the restatement, and (c) the amount of the bonus or incentive
compensation that would have been awarded to the employee had the financial
results been properly reported would have been lower than the amount actually
awarded.
Timing
of Equity Awards
Generally,
the Committee makes incentive pay decisions at regularly scheduled Committee and
board meetings. The Committee may also make compensation determinations at other
times during the year for newly-hired executives or in connection with the
promotion of existing employees. The Committee does not time any form
of compensation award, including equity-based awards, to coincide with the
release of material non-public information.
Income
Tax Consequences
Section
162(m) of the Code generally disallows a tax deduction by Century for annual
compensation in excess of $1 million paid to certain executive officers;
however, compensation above $1 million is deductible if such compensation is
“performance based” and meets other criteria as specified under
Section 162(m) of the Code.
The
Committee agrees with the premise of pay for performance, and it has considered
the impact of Section 162(m) on the design of our compensation programs.
But the nature of our business, not the least of which is the impact of metal
prices on our results, limits the ability to pre-determine meaningful goals
without subsequent discretionary adjustments. The Committee believes that such
discretion is necessary and would not be available as a compensation management
tool if incentive payments were to be “performance based” as defined and
required under Section 162(m). Accordingly, it is not the
Committee’s goal for all compensation to be deductible by us under
Section 162(m).
The
Committee will continue to consider and weigh the potential loss of expense
deductions against its need for discretion in designing programs for the named
executive officers. The Committee does not expect the loss of any
such deductions to have a significant impact on Century.
Employment
Agreements
Historically
it has been our practice to enter into employment agreements with officers at
the executive vice president level and above. The terms of these
agreements, including base salary, initial equity grants, minimum guaranteed
bonuses, participation in Century benefit plans and other benefits, are approved
by the Compensation Committee. The amounts and types of such
compensation are negotiated terms with each officer. When reviewing
and negotiating these terms, the Committee is provided with market data by its
compensation consultants and considers practices of peer companies and, if
applicable, compensation earned and/or forfeited by the officer at a previous
employer.
We
have employment agreements with Messrs. Kruger, Hale, Bless and Nielsen.
Effective December 2008, the employment agreements with the named executive
officers were amended in connection with compliance with Section 409A of the
Code. The material provision of the employment agreements are
described below under the caption “Executive Compensation - Employment
Agreements."
Post-Termination
Compensation and Benefits
Other
Post-Termination Benefits
Selected
senior executive officers may also receive benefits triggered by death,
disability or termination without cause. Century has designed these
benefits to be competitive with industry standards to attract and retain
talented executive and management level personnel. Benefits triggered
by death, disability and termination without cause are valued and described
below under the caption “Executive Compensation-Potential Payments upon
Termination or Change of Control.”
It
is Century’s policy that accelerated benefits for executive officers should not
be triggered in circumstances where the executive is terminated for cause or
resigns voluntarily.
Change
in Control
Our
policy is to provide change in control protection to our named executive
officers based on competitive practice in the industry. Change in
control provisions are contained in various named executive officer employment
agreements, long-term compensation agreements, retirement plans and severance
protection agreements. We believe change in control protection is
particularly appropriate for executives who are unlikely to be retained in
comparable positions by the acquiring entity upon a change in
control. In addition, change in control protections are designed to
maximize stockholder value by creating incentives for named executive officers
to explore strategic transactions and work to bring such transactions to
fruition if appropriate. Our 1996 Plan and Severance Protection
Agreements and employment agreements are each intended to provide for certain
employee protections in the event of a change in control. These
arrangements are intended to attract and retain qualified executives that could
have other job alternatives that may appear to them to be less risky absent
these arrangements, particularly given the significant level of acquisition
activity in the primary aluminum and minerals sectors.
Under
our 1996 Plan, in the event of a change in control, any options and performance
shares outstanding upon the date of such change in control will have their
vesting accelerated as of the date of such change in control which is referred
to as a “single trigger” provision. These provisions are also
generally included in our employment agreements with certain named executive
officers. We believe these change of control arrangements, the value
of which are influenced significantly by the value obtained in a change of
control transaction, effectively create incentives for our executive officers to
build stockholder value and to obtain the highest value possible should we be
acquired in the future, despite the risk of losing employment and potentially
not having the opportunity to participate in future equity awards which comprise
a significant component of each executive’s compensation. As the
value of these awards will be significantly influenced by the change in control
and these awards will likely lose much of their purpose with respect to the
combined entity, we believe it is more appropriate for these awards to
accelerate immediately upon a change in control.
Our
Severance Protection Agreements are “double trigger,” meaning that payment of
severance benefits is not awarded upon a change in control unless the
executive’s employment is terminated involuntarily (other than for cause) within
36 months following the transaction. We believe this structure
strikes a balance between the incentives and the executive hiring and retention
effects described above, without providing these benefits to executives who
continue to enjoy employment with an acquiring company in the event of a change
of control transaction. We also believe this structure is more
attractive to potential acquiring companies, who may place significant value on
retaining members of our executive management and who may perceive this goal to
be undermined if executives receive significant acceleration payments in
connection with such a transaction and are no longer required to continue
employment to earn these payments.
Benefits
triggered by a change in control are valued and described below under the
caption “Executive Compensation - Potential Payments upon Termination or
Change of Control.”
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis set forth in this proxy statement with Century management and based
on such review and discussions, the Compensation Committee recommended to
Century’s Board of Directors that the Compensation Discussion and Analysis be
included in Century’s 2008 Annual Report on Form 10-K and this proxy
statement.
Respectfully
Submitted,
|
Peter
C. Jones (Chair)
|
John
P. O’Brien
|
John
C. Fontaine
|
Jack
E. Thompson
|
SUMMARY
COMPENSATION TABLE
The
following table sets forth the compensation earned by our Chief Executive
Officer, our Chief Financial Officer and each of our three other most highly
compensated executive officers for services rendered to us in all capacities in
2008.
2008 Summary
Compensation Table
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)(a)
|
Option
Awards
($)(a)
|
Non-Equity
Incentive Plan Compensation
($)(b)
|
Change
in Pension Value and Nonqualified Deferred Compensation
($)
|
All
Other
Compensation
($)(c)
|
Total
($)
|
|||||||||
|
Logan
W. Kruger
President
and Chief Executive Officer
|
2008
|
855,000
|
637,000
|
|
1,842,997
|
389,542
|
(d
(d)
|
92,625 |
|
1,511,827
|
(e
(e)
|
14,435 |
|
5,343,426
|
|
|||
|
2007
|
815,000
|
1,115,000
|
|
1,105,627
|
493,402
|
—
|
|
2,514,868
|
178,630
|
|
6,222.527
|
|
||||||
|
2006
|
750,000
|
562,500
|
783,332
|
428,479
|
—
|
|
3,755,628
|
65,035
|
6,344,974
|
|
||||||||
|
Michael
A. Bless
Executive
Vice President and Chief Financial Officer
|
2008
|
422,000
|
270,000
|
|
869,203
|
(
(g)
|
—
|
26,375
|
|
27,513
|
915
|
1,616,006
|
|
|||||
|
2007
|
405,000
|
345,000
|
|
421,283
|
186,163
|
—
|
|
13,427
|
915
|
|
1,371,788
|
|
||||||
|
2006
|
352,397
|
(f)(f)
|
262,500
|
|
278,012
|
378,100
|
—
|
|
68,615
|
425,698 |
|
1,765,322
|
|
|||||
|
Wayne
R. Hale
Executive
Vice President and Chief Operating Officer
|
2008
|
472,000
|
278,000
|
|
963,191
|
(h
(h)
|
443,443
|
(i)
(i)
|
43,267
|
|
58,978
|
14,332
|
|
2,273,211
|
|
|||
|
2007
|
375,000
|
(f)(f)
|
650,000
|
|
502,979
|
886,912
|
—
|
|
339,823
|
107,056 |
|
2,861,770
|
|
|||||
|
Robert
R. Nielsen
Executive
Vice President, General Counsel and Secretary
|
2008
|
388,000
|
230,000
|
|
834,743
|
(j
(j)
|
93,695
|
(k
(k)
|
24,250
|
|
54,171
|
20,255
|
|
1,645,114
|
|
|||
|
2007
|
370,000
|
315,000
|
|
433,228
|
250,531
|
—
|
|
23,216
|
20,055
|
|
1,412,030
|
|
||||||
|
2006
|
233,333
|
(f)(f)
|
164,500
|
|
251,188
|
449,549
|
—
|
|
177,084
|
720
|
|
1,276,374
|
|
|||||
|
Giulio
Casello
Senior
Vice President of Business Development
|
2008
|
305,000
|
151,000
|
|
421,491
|
—
|
16,521
|
|
49,707
|
13,310
|
|
957,029
|
|
|||||
|
2007
|
275,000
|
265,000
|
|
139,435
|
—
|
—
|
|
9,487
|
43,109
|
|
732,031
|
|
||||||
|
(a)
|
These
amounts represent the expense recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008, in accordance with
FAS 123(R) for awards pursuant to the 1996 Plan and thus includes amounts
from awards granted in and prior to 2008. Assumptions used in
the calculation of these amounts are included in note 14 to our audited
financial statements for the fiscal year ended December 31, 2008 included
in our Annual Report on Form 10-K.
|
|
|
(b)
|
These
amounts represent the expense recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008, for performance unit
awards granted pursuant to our Long-term Incentive Plan for the 2008-2010
Plan period.
|
|
|
(c)
|
All
other compensation includes: (i) matching contributions under our
401(k) Plan for each of the named executive officers (except for Mr. Bless
who did not participate in the plan) and (ii) Company-paid life insurance
premiums in 2008.
|
|
|
(d)
|
Represents
the expense recognized for financial statement reporting purposes for the
fiscal year ended December 31, 2008, in accordance with FAS 123(R) for
awards pursuant to the 1996 Plan for 100,000 options to purchase our
common stock awarded to Mr. Kruger on December 14, 2005, based on the
Black-Scholes fair value calculation of the award on the grant date. Mr.
Kruger's options vested one-third each on December 14, 2006, December 14,
2007, and December 14, 2008.
|
|
|
(e)
|
The
value reflects the aggregate change in the actuarial present value of Mr.
Kruger's accumulated benefit under the Enhanced SERP. Mr.
Kruger is the only named executive officer currently participating in the
Enhanced SERP. If Mr. Kruger remains employed by Century until
December 13, 2015, he will be fully vested in the Enhanced SERP
benefit.
|
|
|
(f)
|
The
amounts reflected are prorated for the portion of the year the executive
was employed by us. Messrs. Hale, Bless and Nielsen commenced
their employment on March 1, 2007, January 23, 2006 and May 1, 2006,
respectively.
|
|
|
(g)
|
The
value shown includes $196,399 recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008, in accordance with
FAS 123(R) for awards pursuant to the 1996 Plan for 20,000 service-based
performance shares awarded to Mr. Bless on January 23, 2006, based on the
Black-Scholes fair value calculation of the award on the grant date. Mr.
Bless’s service-based performance shares vested one-third each on January
22, 2007, January 22, 2008, and January 22, 2009. Although we
did not pay dividends on our common stock during the vesting period, to
the extent we pay dividends on our common stock, dividend equivalents will
accrue on the service-based performance shares from the date of grant and
will become payable upon vesting.
|
|
|
(h)
|
The
value shown includes $376,151 recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008, in accordance with
FAS 123(R) for awards pursuant to the 1996 Plan for 25,000 service-based
performance shares awarded to Mr. Hale on March 1, 2007, based on the
Black-Scholes fair value calculation of the award on the grant date. Mr.
Hale’s service-based performance shares vested one-third each on March 1,
2008 and March 1, 2009 and the balance vests on March 1,
2010. To the extent we pay dividends on our common stock,
dividend equivalents will accrue on the service-based performance shares
from the date of grant and will become payable upon vesting.
|
|
|
(i)
|
Represents
the expense recognized for financial statement reporting purposes for the
fiscal year ended December 31, 2008, in accordance with FAS 123(R) for
awards pursuant to the 1996 Plan for 50,000 options to purchase our common
stock awarded to Mr. Hale on March 1, 2007, based on the Black-Scholes
fair value calculation of the award on the grant date. Mr. Hale’s options
vested one-third each on March 1, 2007, March 1, 2008, and March 1,
2009.
|
|
|
(j)
|
The
value shown includes $238,050 recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008, in accordance with
FAS 123(R) for awards pursuant to the 1996 Plan for 15,000 service-based
performance shares awarded to Mr. Nielsen on May 1, 2006, based on the
Black-Scholes fair value calculation of the award on the grant date. Mr.
Nielsen’s service-based performance shares vested one-third each on May 1,
2007, May 1, 2008, and May 1, 2009. Although we did not pay dividends
on our common stock during the vesting period, to the extent we pay
dividends on our common stock, dividend equivalents will accrue on the
service-based performance shares from the date of grant and will become
payable upon vesting.
|
|
|
(k)
|
Represents
the expense recognized for financial statement reporting purposes for the
fiscal year ended December 31, 2008, in accordance with FAS 123(R) for
awards pursuant to the 1996 Plan for 20,000 options to purchase our common
stock awarded to Mr. Nielsen on May 1, 2006, based on the Black-Scholes
fair value calculation of the award on the grant date. Mr. Nielsen’s
options vested one-third each on May 1, 2006, May 1, 2007, and April 30,
2008.
|
|
Grants
of Plan Based Awards
The
following table sets forth information regarding the estimated future payouts
under our 1996 Plan to our named executive officers.
2008
Grants of Plan Based Awards Table
|
Estimated
Future Payouts Under
Non-Equity
Incentive Plan Awards
|
Estimated
Future Payouts Under
Equity
Incentive Plan Awards
|
Grant
Date Fair Value of Stock and Option Award($)(c)
|
|||||||
|
Name
|
Grant
Date
|
Threshold
($)
|
Target($)(a)
|
Maximum($)
|
Threshold
(#)
|
Target(#)(b)
|
Maximum(#)
|
||
|
Logan
W. Kruger
|
April
7, 2008
|
277,875
|
555,750
|
1,111,500
|
—
|
9,410
|
—
|
661,429
|
|
|
Michael
A. Bless
|
April
7, 2008
|
79,125
|
158,250
|
316,500
|
—
|
2,680
|
—
|
188,377
|
|
|
Wayne
R. Hale
|
April
7, 2008
|
129,800
|
259,600
|
519,200
|
—
|
4,400
|
—
|
309,276
|
|
|
Robert
R. Nielsen
|
April
7, 2008
|
72,750
|
145,500
|
291,000
|
—
|
2,460
|
—
|
172,913
|
|
|
Giulio
Casello
|
April
7, 2008
|
49,563
|
99,125
|
198,250
|
—
|
1,680
|
—
|
118,087
|
|
|
(a)
|
Represents
the value of the target award of Performance Units, valued at $1 per unit
under the 2008-2010 Long-term Incentive Plan. Units will be
awarded in 2011 after consideration by the Compensation
Committee.
|
|
(b)
|
Represents
the number of time-vested performance share units granted to the named
executive officer under the 2008-2010 Long-term Incentive
Plan. These performance share units will vest December 31,
2010.
|
|
(c)
|
Represents
the grant date fair value of equity awards determined in accordance with
FAS 123(R).
|
Narrative
to the Summary Compensation Table and Grants of Plan-Based Awards
Table
Employment
Agreements
We
have employment agreements with Mr. Logan W. Kruger, our President and CEO; Mr.
Wayne R. Hale, our EVP and COO; Mr. Michael A. Bless, our EVP and CFO and Mr.
Robert R. Nielsen, our EVP, General Counsel and Secretary. These
agreements provide for automatic extensions on each January 1 for an
additional one-year period unless timely notice of termination is delivered by a
party pursuant to the terms of the employment
agreement. Effective January 1, 2009, each of these agreements
was so extended to December 31, 2011. These agreements provide that
Messrs. Kruger’s, Hale’s, Bless’s and Nielsen’s base salaries shall not be
reduced below the executives’ prior year’s base salary and that such salaries
shall be subject to increase from time to time at the discretion of the
Compensation Committee. These agreements also provide that these
executive officers are eligible to receive an annual performance-based cash
bonus under our incentive compensation plan, subject to the discretion of the
Compensation Committee and they are also eligible for stock option grants and
performance share awards under the 1996 Plan and participation in the
SERP.
Our
employment agreements with Messrs. Kruger, Hale, Bless and Nielsen each provide
that upon termination of employment for any reason other than voluntary
resignation without cause, death or “for cause”, the terminated executive will
be entitled to receive termination payments equal to 100% of his base salary and
bonus (based on the highest annual bonus payment within the prior three years)
for the remainder of the term of the agreement (with a minimum of one year’s
salary plus bonus). If the executive is terminated as a result of the
executive’s disability, the payments due to the executive will be reduced by any
payments he receives under our disability plans. Also, any
termination payments under the employment agreements may not be duplicated under
the severance compensation agreements described below under “Executive
Compensation-Potential Payments upon Termination or Change of
Control.” Effective December 2008, the employment agreements
with each of these executive officers was amended to conform the employment
agreements with Section 409A of the Code. The amended agreements now
require that amounts payable to each officer by reason of his termination of
employment that are determined to constitute payments of “non-qualified deferred
compensation” as that term is used for purposes of 409A, shall be payable,
together with interest thereon, on the first business day following the
six-month anniversary of his termination of employment.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information regarding outstanding equity awards for
our named executive officers as of December 31, 2008.
2008
Outstanding Equity Awards at Fiscal Year-End Table
|
Option Awards
|
Stock
Awards
|
||||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexer-cisable
|
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
($)(g)
|
Equity
Incentive Plan Awards:
Number
of Unearned Shares, Units, or Other Rights That Have Not
Vested
(#)
|
Equity
Incentive Plan Awards:
Market
or Payout Value of Unearned Shares, Units or Other Rights That Have Not
Vested
($)(g)
|
||||||
|
Logan
W. Kruger
|
70,000
|
|
23.98
|
Dec.
14, 2015
|
|
|
|||||||||
|
|
9,410
|
(a)
|
94,100
|
|
|||||||||||
|
15,152
|
(b)
|
151,520
|
|
||||||||||||
|
Michael
A. Bless
|
30,000
|
29.92
|
Jan.
23, 2016
|
6,667
|
(d)
|
66,670
|
|
||||||||
|
2,680
|
(a)
|
26,800
|
|
||||||||||||
|
6,737
|
(b)
|
67,370
|
|
||||||||||||
|
Wayne
R. Hale
|
33,333
|
16,667(c)
|
45.14
|
March
1, 2017
|
16,667
|
(e)
|
166,670
|
|
|||||||
|
4,400
|
(a)
|
44,000
|
|
||||||||||||
|
7,485
|
(b)
|
74,850
|
|
||||||||||||
|
Robert
R. Nielsen
|
8,335
|
47.61
|
May
1, 2016
|
5,000
|
(f)
|
50,000
|
|
||||||||
|
2,460
|
(a)
|
24,600
|
|
||||||||||||
|
6,155
|
(b)
|
61,550
|
|
||||||||||||
|
Giulio
Casello
|
15,000
|
24.55
|
Sept.
12, 2015
|
|
|
||||||||||
|
1,680
|
(a)
|
16,800
|
|
||||||||||||
|
4,256
|
(b)
|
42,560
|
|
||||||||||||
|
(a)
|
Represents
the number of time-vested performance share units granted under the
2008-2010 Long-term Incentive Plan and vest on December 31,
2010.
|
|
(b)
|
Represents
the number of performance share units awarded to the named executive
officer for the 2007-2009 performance period which will be considered by
our Compensation Committee in 2010.
|
|
(c)
|
These
options vested on March 1, 2009.
|
|
(d)
|
These
service-based performance shares vested on January 22, 2009.
|
|
(e)
|
One
half of these service-based performance shares vested on March 1,
2009. The remaining shares will vest March 1,
2010.
|
|
(f)
|
These
service-based performance shares will vest on May 1, 2009.
|
|
(g)
|
Based
on the closing market price for shares of our common stock of $10.00 on
December 31, 2008, the last trading day for the fiscal
year.
|
Option
Exercises and Stock Vested
The
following table sets forth information regarding option exercises and vesting of
performance shares for our named executive officers as of December 31,
2008.
2008
Option Exercise and Stock Vested Table
|
Option
Awards
|
Stock
Awards
|
|||||
|
Name
|
Number
of Shares
Acquired
on Exercise
|
Value
Realized
on
Exercise ($)
|
Number
of Shares
Acquired
on Vesting(a)
|
Value
Realized
on
Vesting($)(b)
|
||
|
Logan
W. Kruger
|
—
|
162,611
|
802,452
|
|||
|
Michael
A. Bless
|
—
|
75,250
|
240,636
|
|||
|
Wayne
R. Hale
|
—
|
63,643
|
310,315
|
|||
|
Robert
R. Nielsen
|
16,665
|
342,211
|
65,177
|
245,578
|
||
|
Giulio
Casello
|
6,000
|
234,139
|
42,920
|
84,552
|
||
|
(a)
|
Includes
shares received pursuant to the long-term incentive program for the 2006 -
2008 performance program period by each named executive officer in March
2009.
|
|
(b)
|
Computed
by multiplying the number of shares vested by the market value of the
shares on the date of
vesting.
|
Post
Employment Compensation
Pension
Benefits
As discussed
above under the heading “Retirement Plans,” we maintain both the Qualified Plan
and the SERP as retirement plans for our U.S. based salaried employees. The
Qualified Plan provides lifetime annual benefits starting at age 62 equal to 12
multiplied by the greater of: (i) 1.5% of final average monthly
compensation multiplied by years of credited service (up to 40 years), or
(ii) $22.25 multiplied by years of credited service (up to 40 years), less
the total monthly vested benefit payable as a life annuity at age 62 under
predecessor plans which we acquired. We determine final average monthly
compensation under the qualified plans as the highest monthly average for 36
consecutive months in the 120-month period ending on the last day of the
calendar month completed at or prior to a termination of service. Participants’
pension rights vest after a five-year period of service, or earlier if the
participant has reached the age of 62. An early retirement benefit (actuarially
reduced beginning at age 55) and a disability benefit are also available. The
compensation covered by the plan includes all compensation, subject to certain
exclusions, before any reduction for 401(k) contributions, subject to the
maximum limits under the Code.
The
SERP provides selected senior executives with supplemental benefits in addition
to those benefits they are entitled to receive under the Qualified Plan. More
information about the SERP can be found under the heading “Retirement
Plans.”
The
following table sets forth the present value of accumulated benefits payable to
each of the named executive officers, including the number of years of service
credited to each such named executive officer, under the Qualified Plan and the
SERP, determined using interest rate and mortality rate assumptions consistent
with those used in our consolidated financial statements.
2008
Pension Benefits Table
|
Name
|
Plan
|
Number
of Years Credited
|
Present
Value of
Accumulated
Benefit ($)
|
Payments
During
Last
Fiscal Year ($)
|
|
|
Logan
W. Kruger
|
Non-contributory
Defined Pension Plan
|
3.08
|
288,162
|
|
—
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
9,940,632
|
|
—
|
||
|
Michael
A. Bless
|
Non-contributory
Defined Pension Plan
|
2.92
|
99,515
|
|
—
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
10,040
|
|
—
|
||
|
Wayne
R. Hale
|
Non-contributory
Defined Pension Plan
|
1.83
|
398,801
|
|
—
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
—
|
—
|
|||
|
Robert
R. Nielsen
|
Non-contributory
Defined Pension Plan
|
2.67
|
245,498
|
|
—
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
8,972
|
|
—
|
||
|
Giulio
Casello
|
Non-contributory
Defined Pension Plan
|
3.33
|
65,087
|
|
—
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
17,217
|
—
|
|||
Potential Payments upon Termination or Change of Control
The
following table sets forth the amount of compensation payable to each of our
named executive officers upon termination of such executive’s employment. The
amount of compensation payable to each named executive officer following:
termination following a change of control, involuntary termination for cause,
involuntary termination not-for-cause, death, disability, retirement and
voluntary resignation is shown. The amounts shown assume that such termination
was effective as of December 31, 2008, and thus includes amounts earned
through such time and are estimates of the amounts that would be paid out to the
executives on their termination. The actual amount to be paid can only be
determined at the time of such executive’s termination.
2008
Potential Payments upon Termination or Change of Control Tables
|
Type
of Termination
|
||||||||||||||
|
Name
|
Voluntary
|
By
Company
without
Cause
or
by Officer with Good Reason
|
By
Company
with
Cause
|
Retirement
|
Disability
|
Death
|
Following
a
Change
in Control
|
|||||||
|
Logan
W. Kruger
|
||||||||||||||
|
Salary
|
$ —
|
$
2,565,000
|
$
—
|
$ —
|
$ 1,710,000
|
$
—
|
$ 2,565,000
|
|||||||
|
Bonus
(c)
|
—
|
3,345,000
|
—
|
—
|
2,230,000
|
—
|
3,345,000
|
|||||||
|
Qualified
Retirement Benefits
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
SERP
|
614,409
|
(a)
|
614,409
|
(a)
|
614,409
|
(a)
|
614,409
|
(a)
|
614,409
|
(a)
|
307,204
|
(b)
|
1,134,948
|
(f)
|
|
SERP
with Enhancement
|
—
|
5,526,715
|
(a)(k)
|
2,498,050
|
(a) |
1,294,025
|
(b) |
5,981,386
|
(f)
|
|||||
|
Performance
Shares
|
—
|
—
|
—
|
—
|
94,100
|
(d) |
94,100
|
(d) |
245,620
|
(g)
|
||||
|
Service
Based Performance Shares
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
Performance
Units
|
—
|
—
|
—
|
—
|
—
|
(e)
|
—
|
(e)
|
556,000
|
(j)
|
||||
|
Excise
Tax Gross Up
|
—
|
—
|
—
|
—
|
—
|
—
|
6,940,000
|
|||||||
|
Insurance
Continuation
|
—
|
—
|
—
|
—
|
—
|
—
|
52,000
|
|||||||
|
Total
|
$
614,409
|
$ 12,051,124
|
$ 614,409
|
$ 614,409
|
$7,146,559
|
$
1,650,329
|
$ 20,819,954
|
|||||||
|
Michael
A. Bless
|
||||||||||||||
|
Salary
|
$ —
|
$ 1,266,000
|
$
—
|
$
—
|
$ 844,000
|
$ —
|
$
1,266,000
|
|||||||
|
Bonus
(c)
|
—
|
1,035,000
|
—
|
—
|
690,000
|
—
|
1,035,000
|
|||||||
|
Qualified
Retirement Benefits
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
SERP
|
109,555
|
(a)
|
109,555
|
(a)
|
109,555
|
(a)
|
109,555
|
(a)
|
109,555
|
(a)
|
54,777
|
(b)
|
168,514
|
(f)
|
|
SERP
with Enhancement
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
Performance
Shares
|
—
|
—
|
—
|
—
|
26,800
|
(d)
|
26,800
|
(d)
|
94,170
|
(g)
|
||||
|
Service
Based Performance Shares
|
—
|
—
|
—
|
—
|
66,670
|
(h)
|
66,670
|
(h)
|
66,670
|
(h)
|
||||
|
Performance
Units
|
—
|
—
|
—
|
—
|
—
|
(e)
|
—
|
(e)
|
158,500
|
(j)
|
||||
|
Excise
Tax Gross Up
|
—
|
—
|
—
|
—
|
—
|
—
|
1,235,000
|
|||||||
|
Insurance
Continuation
|
—
|
—
|
—
|
—
|
—
|
—
|
52,000
|
|||||||
|
Total
|
$ 109,555
|
$
2,410,555
|
$ 109,555
|
$ 109,555
|
$1,737,025
|
$
148,247
|
$
4,075,854
|
|||||||
|
Wayne
R. Hale
|
||||||||||||||
|
Salary
|
$ —
|
$
1,416,000
|
$
—
|
$
—
|
$ 944,000
|
$
—
|
$
1,416,000
|
|||||||
|
Bonus
(c)
|
—
|
1,050,000
|
—
|
—
|
700,000
|
—
|
1,050,000
|
|||||||
|
Qualified
Retirement Benefits
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
SERP
|
163,880
|
(a)
|
163,880
|
(a)
|
163,880
|
(a)
|
163,880
|
(a)
|
163,880
|
(a)
|
81,940
|
(b)
|
271,543
|
(f)
|
|
SERP
with Enhancement
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
Performance
Shares
|
—
|
—
|
—
|
—
|
44,000
|
(d)
|
44,000
|
(d)
|
118,850
|
(g)
|
||||
|
Service
Based Performance Shares
|
—
|
—
|
—
|
—
|
166,670
|
(h)
|
166,670
|
(h)
|
166,670
|
(h)
|
||||
|
Performance
Units
|
—
|
—
|
—
|
—
|
—
|
(e)
|
—
|
(e)
|
259,500
|
(j)
|
||||
|
Excise
Tax Gross Up
|
—
|
—
|
—
|
—
|
—
|
—
|
1,410,000
|
|||||||
|
Insurance
Continuation
|
—
|
—
|
—
|
—
|
—
|
—
|
52,000
|
|||||||
|
Total
|
$ 163,880
|
$ 2,629,880
|
$
163,880
|
$
163,880
|
$2,018,550
|
$ 292,610
|
$
4,744,563
|
|||||||
|
Robert
R. Nielsen
|
||||||||||||||
|
Salary
|
$
—
|
$ 1,164,000
|
$
—
|
$ —
|
$ 776,000
|
$
—
|
$
1,164,000
|
|||||||
|
Bonus
(c)
|
—
|
945,000
|
—
|
—
|
630,000
|
—
|
945,000
|
|||||||
|
Qualified
Retirement Benefits
|
245,498
|
(i)
|
245,498
|
(i)
|
245,498
|
(i) |
245,498
|
(i) |
245,498
|
(i)
|
122,749
|
(b) |
|
|
|
SERP
|
8,972
|
8,972
|
8,972
|
8,972
|
8,972
|
4,486
|
434,292
|
(f)
|
||||||
|
SERP
with Enhancement
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
Performance
Shares
|
—
|
—
|
—
|
—
|
24,600
|
(d)
|
24,600
|
(d)
|
86,150
|
(g)
|
||||
|
Service
Based Performance Shares
|
—
|
—
|
—
|
—
|
50,000
|
(h)
|
50,000
|
(h)
|
50,000
|
(h)
|
||||
|
Performance
Units
|
—
|
—
|
—
|
—
|
—
|
(e)
|
—
|
(e)
|
145,500
|
(j)
|
||||
|
Excise
Tax Gross Up
|
—
|
—
|
—
|
—
|
—
|
—
|
1,310,000
|
|||||||
|
Insurance
Continuation
|
—
|
—
|
—
|
—
|
—
|
—
|
36,100
|
|||||||
|
Total
|
$ 254,470
|
$
2,363,470
|
$ 254,470
|
$
254,470
|
$1,735,070
|
$ 201,835
|
$
4,171,042
|
|||||||
|
Giulio
Casello
|
||||||||||||||
|
Salary
|
$ —
|
$
—
|
$ —
|
$
—
|
$ —
|
$
—
|
$
610,000
|
|||||||
|
Bonus
(c)
|
—
|
—
|
—
|
—
|
—
|
—
|
530,000
|
|||||||
|
Qualified
Retirement Benefits
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
SERP
|
82,304
|
(a)
|
82,304
|
(a)
|
82,304
|
(a)
|
82,304
|
(a)
|
82,304
|
(a)
|
41,152
|
(b)
|
112,777
|
(f)
|
|
SERP
with Enhancement
|
—
|
—
|
—
|
—
|
||||||||||
|
Performance
Shares
|
—
|
—
|
—
|
—
|
16,800
|
(d)
|
16,800
|
(d)
|
59,360
|
(g)
|
||||
|
Service
Based Performance Shares
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||
|
Performance
Units
|
—
|
—
|
—
|
—
|
—
|
(e)
|
—
|
(e)
|
99,000
|
(j)
|
||||
|
Excise
Tax Gross Up
|
—
|
—
|
—
|
—
|
—
|
—
|
575,000
|
|||||||
|
Insurance
Continuation
|
—
|
—
|
—
|
—
|
—
|
—
|
36,100
|
|||||||
|
Total
|
$ 82,304
|
$
82,304
|
$
82,304
|
$ 82,304
|
$ 99,104
|
$
57,952
|
$
2,022,237
|
|||||||
|
(a)
|
Amount
shown will not be paid to named executive as a lump
sum. Rather, the amount represents the actuarial calculated
present value of benefits that will be received upon obtaining normal
retirement age (62).
|
|
(b)
|
Amount
shown will not be paid to named executive as a lump
sum. Rather, amount represents the actuarial calculated present
value of benefits that will be paid to a surviving spouse as an annuity
upon the death of the named executive.
|
|
(c)
|
Based
on the highest bonus of the most recent preceding 5 years.
|
|
(d)
|
Named
executive officer will continue to participate in our long-term incentive
plan and outstanding performance share units granted for the 2007-2009
performance period will be awarded after consideration by the Compensation
Committee in 2010. Amount shown represents the value of the
2008-2010 time-based performance share units which will vest immediately
upon disability or death. Value is based on our December 31,
2008 closing stock price.
|
|
(e)
|
Named
executive officer will continue to participate in our long-term incentive
plan for the 2008-2010 Plan Period. Final performance unit
award determination will be made by the Compensation Committee in
2011. Performance units are valued at $1 per unit.
|
|
(f)
|
Amount
represents the lump sum payment of the actuarial equivalent of the
difference between the retirement benefit the named executive is actually
entitled to receive under our qualified pension plan and a “recalculated”
retirement benefit that includes additional three full years of credited
service for Messrs. Kruger, Bless, Hale and Nielsen and two years of
credited service for Mr. Casello. In addition, the named
executive is entitled to retirement benefits upon obtaining normal
retirement age.
|
|
(g)
|
Amount
represents the value of outstanding performance share units granted to the
named executive officer for the 2007-2009 and 2008-2010 performance
periods. Shares will be immediately awarded at 100% and named
executive shall have the right to require the Company to purchase, for
cash, the stock awarded at the fair market value. The value
presented assumes 100% award valued at our December 31, 2008 closing stock
price.
|
|
(h)
|
Amount
represents the value of unvested time-based performance share units
granted to the named executive officer at date of hire. Upon
death or disability the unvested units will continue to vest over the
contractual term. Upon termination following a change in
control, unvested units will immediately vest and named executive shall
have the right to require the Company to purchase, for cash, the stock
awarded at the fair market value. The value presented is based
on our December 31, 2008 closing stock price of $10.00.
|
|
(i)
|
Named
executive officer has obtained normal retirement age. Amount
represents the actuarial calculated present value of retirement
benefits.
|
|
(j)
|
Amount
represents the value of performance units, at 100% of target award, under
our 2008-2010 long-term performance program that will vest immediately
upon a change in control. Performance units are valued at $1
per unit.
|
|
(k)
|
Amount
represents the present value of accrued SERP benefits as of December 31,
2008 with an additional 36 months service credit as specified in the named
executive officer's employment
agreement.
|
Severance
Compensation Arrangements
As
discussed under the heading “Post-Termination Compensation and Benefits,” we
have entered into severance compensation agreements with each of
Messrs. Kruger, Hale, Bless, Nielsen and Casello. The agreements generally
provide that if within 36 months after we experience a change in control the
executive’s employment is terminated either (i) by us for other than cause
or disability, or (ii) by such executive for good reason, then such
executive will receive a lump sum payment equal to three times for Messrs.
Kruger, Hale, Bless and Nielsen, and two times for Mr. Casello, the aggregate of
the highest base salary and the highest bonus received by such executive in any
of the most recent five years. Also, upon a change in control, the
exercisability of stock options and the vesting of performance shares held by
such executives will be accelerated assuming that all performance targets were
achieved at the 100% level. The agreements also provide that we will continue to
provide benefits to each executive for a period of three years for Messrs.
Kruger, Hale, Bless and Nielsen and two years for Mr. Casello, after the date of
his termination. In addition, the executive will be credited for pension
purposes, a period of two to three years, as the case may be, beyond the
termination date, at that executive’s highest base salary and highest bonus
level, and Century will pay to the executive in a single lump sum the difference
between the actuarial equivalent of (a) what the executive would have been
entitled to under our retirement plans and (b) what he is entitled to
taking into account the terms of the severance compensation agreement, assuming
the executive is 100% vested in the increased benefit under the retirement
plans. The agreements are for a set period of time, but are subject to automatic
one-year extensions on each January 1, unless the executive’s employment is
terminated prior to a change in control.
In
December 2008, we amended our severance agreements to conform with Internal
Revenue Code Section 409A. The amendments, among other 409A related
changes, require that any amounts payable to each officer by reason of his
termination of employment that are determined to constitute payments of
“nonqualified deferred compensation,” as that term is used for purposed of 409A,
shall be payable, together with interest thereon, on the first business day
following the six-month anniversary of his termination of employment; and, for
our officers that have employment agreements, require that the executive receive
any severance at the same time and in the same form as required under the
executive’s employment agreement in lieu of single lump sum severance payments
under certain circumstances and added a covenant on the part of the executive to
maintain the confidentiality of information the executive received in the course
of his employment.
The
Code imposes certain excise taxes on, and limits the deductibility of, certain
compensatory payments made by a corporation to or for the benefit of certain
individuals if such payments are contingent upon certain changes in the
ownership or effective control of the corporation or the ownership of a
substantial portion of the assets of the corporation, provided that such
payments to the individual have an aggregate present value in excess of three
times the individual’s annualized includible compensation for the base period,
as defined in the Code. The severance compensation agreements provide for
additional payments to the executives in order to fully offset any excise taxes
payable by an executive as a result of the payments and benefits provided in the
agreements. All benefits afforded the named executive officers under the
severance compensation agreements are included in the amounts set forth in the
“Potential Payments upon Termination or Change of Control” table
above.
The
following report of the Audit Committee shall not be deemed to be “soliciting
material” or to be “filed” with the Securities and Exchange Commission, nor
shall this information be incorporated by reference into any future filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, each as
amended, except to the extent that Century specifically incorporates it by
reference into a filing.
During
2008, our Audit Committee was comprised of Messrs. Robert E. Fishman, Ph.D.,
Jarl Berntzen, John P. O’Brien, Peter C. Jones and Ms. Catherine Z. Manning who
joined the committee in July 2008. All members of the Audit Committee
are independent directors, as that term is defined under NASDAQ listing
standards. The Audit Committee operates under a written charter adopted by the
Board. In accordance with its charter, the Audit Committee assists the Board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of Century.
The
Audit Committee’s job is one of oversight. Century’s management is responsible
for the preparation of Century’s financial statements and the independent
auditors are responsible for auditing those financial statements. The Audit
Committee and the Board recognize that management (including the internal audit
staff) and the independent auditors have more resources and time, and more
detailed knowledge and information regarding Century’s accounting, auditing,
internal control and financial reporting practices than the Audit Committee
does; accordingly, the Audit Committee’s oversight role does not include
providing any expert or special assurance as to the financial statements and
other financial information provided by Century to its stockholders and
others.
In
discharging its oversight responsibility as to the audit process, the Audit
Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and Century that might bear on
the auditors’ independence, consistent with “Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees,” discussed with
the auditors any relationships that may impact their objectivity and
independence, including the performance of non-audit services, and satisfied
itself as to the auditors’ independence. The Audit Committee also discussed with
management, the internal auditors and the independent auditors, the quality and
adequacy of Century’s internal controls and the internal audit function’s
organization, responsibilities, budget and staffing. The Audit Committee
reviewed with both the independent and the internal auditors their audit plans,
audit scope, and identification of audit risks. The Audit Committee has the
authority to obtain advice from outside legal, accounting or other advisors as
the Audit Committee deems necessary to carry out its duties and receives
appropriate funding, as determined by the Audit Committee, from Century for such
advice and assistance.
The
Audit Committee met with and discussed with the independent auditors all matters
required to be discussed under generally accepted auditing standards, including
those described in “Statement on Auditing Standards No. 61, Communication with
Audit Committees,” and, with and without management present, reviewed and
discussed the results of the independent auditors’ examination of the financial
statements. The Audit Committee also discussed the quality and adequacy of
Century’s internal controls and the results of the internal audit
examinations.
The
Audit Committee reviewed and discussed with management and the independent
auditors the interim financial information contained in each quarterly earnings
announcement in 2008 prior to its public release and the audited financial
statements of Century as of and for the year ended December 31,
2008.
Based
on the above mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that
Century’s audited financial statements be included in its Annual Report on Form
10-K for the year ended December 31, 2008, for filing with the Securities
and Exchange Commission. The Audit Committee also recommended the reappointment,
subject to stockholder approval, of the independent auditors and the Board
concurred in such recommendation. All audit and non-audit fees incurred in 2008
were pre-approved by the Audit Committee.
Respectfully
Submitted,
The
Audit Committee
|
Jarl
Berntzen
|
Robert
E. Fishman
|
John
P. O’Brien
|
Peter
C. Jones
|
Catherine Z. Manning
(Chair)
|
The Board of Directors
has adopted a resolution proposing and declaring advisable the amendment of the
Company's Restated Certificate of Incorporation, as amended (as presently in
effect, the "Restated Charter") to increase the total number of shares of common
stock the Company has the authority to issue from 100,000,000 to
195,000,000 (the "Charter Amendment").
Under the Restated Charter as currently in effect, the Company is authorized to
issue up to 100,000,000 shares of common stock with a par value of $0.01 per
share. As of March 31, 2009, there were 74,139,488 shares of common
stock issued and outstanding, approximately 686,932 shares reserved for issuance
upon the exercise of outstanding stock options and the vesting of performance
shares units awarded under the Company's Amended and Restated 1996 Stock
Incentive Plan and approximately 15,355,466 shares reserved for issuance upon
the conversion of our Series A Convertible Preferred Stock. In
addition, approximately 3,069,703 shares remained available for issuance under
the Company's Amended and Restated 1996 Stock Incentive Plan. As a
result, as of March 31, 2009, a total of 93,251,589 shares of common stock had
been issued or reserved for issuance and only 6,748,411 authorized shares
remained available.
Recent economic developments have had an adverse affect on aluminum markets
resulting in extreme volatility and decline in aluminum prices. These
events have had a profound impact on our strategic actions over the course of
2008 and into 2009. In February 2009, we issued 24,500,000 shares
of our common stock in a public offering to provide working
capital. At this time, except as described above, there are no plans,
agreements or understandings for issuance of any newly authorized shares of
common stock. However, to provide sufficient shares for future needs,
Company management and the Board believe it is the best interest of the Company
and its stockholders to adopt the amendment to Article 4 of the Restated Charter
to increase the number of shares of common stock authorized for
issuance. Adoption of the Charter Amendment will afford the Company
flexibility to use common stock to raise additional capital when the need arises
for general corporate purposes, including but not limited to, providing capital
for ongoing operations, to purchase property or other assets, for equity
compensation and various other employee benefits plans and other transactions
that may be deemed advisable by the Board from time to time.
If
authorized, the additional shares would be available for issuance without
further stockholder action, unless required by the Restated Charter, applicable
law or the rules of any stock exchange or automated dealer quotation system upon
which the Company's common stock is listed or quoted. The Company's
common stock is presently quoted on the NASDAQ Global Select Market, which
requires stockholder approval as a prerequisite to listing additional shares
that will be used for certain purposes, including certain acquisitions and for
use by equity compensation plans.
Although an increase in the number of authorized shares of common stock could,
under certain circumstances, be construed as having an anti-takeover effect (for
example, by diluting the ownership of a person seeking to obtain control of the
Company), the Board is not proposing the Charter Amendment in response to any
effort known to them to accumulate shares of the Company's common stock or to
obtain control of the Company.
The
Company has entered into a Support Agreement with Glencore pursuant to
which Glencore has agreed to vote in favor of this
proposal. In addition, the Company has given Glencore the option to
participate in future equity offerings up to its ownership percentage on the
date of such offering. Glencore’s ownership percentage includes its
ownership of shares of the Company’s common stock and Series A Convertible
Preferred Stock (on an as-converted basis), which was approximately 48.7 percent
as of March 31, 2009. This option applies to offerings by the Company for
cash in a registered public offering or a private offering pursuant to Rule 144A
of the Securities Act of 1933 or exempt transactions to five or more
persons. In addition, for an 18 month period, if the Company
issues over 30 million shares in exchange offers involving the Company’s debt
securities, Glencore would be entitled to purchase equity securities from the
Company up to its ownership percentage immediately prior to such exchange
offers at the implied per share price received in such exchange offers.
This option does not apply to (a) common stock or other equity securities issued
to officers, employees or directors of, or consultants to, the Company or its
subsidiaries pursuant to the terms of any stock option or similar stock
incentive plan adopted by the Company’s Board of Directors, (b) common stock or
other equity securities issued pursuant to any merger, acquisition,
consolidation, joint venture, strategic alliance, license agreement or similar
transaction, (c) stock splits or dividends or (d) common stock or other equity
securities issued pursuant to presently outstanding convertible
securities. This Support Agreement has been approved pursuant to the terms
of the Company’s Statement of Policy Regarding Related Party Transactions and a
copy of this agreement will be filed with the SEC as an exhibit to a Current
Report on Form 8-K.
If
the Charter Amendment is approved by the stockholders, the Restated Charter
would be amended by deleting paragraph (1) of Article Four in its entirety and
replacing it with the following:
|
|
"(1)
|
The
total number of shares of stock which the Corporation shall have authority
to issue is Two Hundred Million (200,000,000) shares divided
into the following classes:
|
|
(a)
|
One Hundred
and Ninety-Five Million (195,000,000 ) shares of Common Stock with
a par value of one cent ($0.01) per share; and
|
|
(b)
|
Five
Million (5,000,000) shares of Preferred Stock with a par value of one cent
($0.01) per share."
|
Recommendation
and Vote
An affirmative vote of the holders of a majority of shares of common stock
outstanding is required to approve the Charter Amendment. If no
direction is given to the contrary, all proxies received by the Board of
Directors will be voted "FOR" the Charter Amendment.
The
Board of Directors recommends that the stockholders vote "FOR" the Charter
Amendment.
The
Board of Directors has adopted a resolution proposing and declaring advisable
the second amendment and restatement of the Company’s Amended and Restated 1996
Stock Incentive Plan (as currently in effect, the “1996 Plan”). If approved by
our stockholders, the second amendment and restatement of the 1996 Plan (the
“Restated 1996 Plan”)
will further amend and update the 1996 Plan.
The
original 1996 Plan was approved by the Company’s stockholders in 1996, with
1,200,000 shares of Company common stock reserved for issuance
thereunder. Since 1996, the original number of shares of Company
common stock reserved for issuance under the 1996 Plan has increased to
5,000,000 to reflect: (i) a 1999 stockholder-approved amendment to the 1996 Plan
which, among other things, increased the total number of shares of Company
common stock available under the 1996 Plan by 300,000 shares; (ii) a 2001
stockholder-approved amendment to the 1996 Plan which, among other things,
increased the total number of shares of Company common stock available under the
1996 Plan by 500,000 shares; (iii) a 2004 stockholder-approved amendment to the
1996 Plan which, among other things, increased the total number of shares of
Company common stock available under the 1996 Plan by 1,000,000 shares; and (iv)
a 2005 stockholder-approved amendment and restatement of the 1996 Plan, which,
among other things, increased the total number of shares of Company common stock
available under the 1996 Plan by 2,000,000 shares. As of the date of
this proxy statement, 1,284,365 shares
of Company common stock have been issued under the 1996 Plan, 686,932 shares of
Company common stock are subject to outstanding awards and a total of 3,069,703
shares of Company common stock remain available for future
awards. Under the Restated 1996 Plan, 10,000,000 shares of Company
common stock will be authorized and reserved for issuance. The
closing price of the Company common stock on March 31, 2009 was
$2.11.
Under
the terms of the Restated 1996 Plan, the Company is authorized to make awards of
(i) performance shares or performance share units (collectively, “Performance Shares”), (ii)
stock options that qualify as incentive stock options (“ISOs”) under Section 422
of the Internal Revenue Code of 1996, as amended (the “Code”) and (iii) nonqualified
stock options (“NQSOs”
and together with ISOs, “stock
options”). Each type of award is described below under “Types
of Awards Under the Restated 1996 Plan.” Each of the awards will be
evidenced by an award document setting forth the terms and
conditions.
The
affirmative vote of a majority of the shares of the Company common stock present
at the annual meeting in person or by proxy is required to approve the Restated
1996 Plan. Accordingly, if our stockholders do not approve the
Restated 1996 Plan, the Restated 1996 Plan will not become
effective. However, the 1996 Plan will remain effective in its
current form.
The
Company believes that equity is a key element of its compensation package, and,
accordingly, has in the past used, and intends in the future to use, stock
options and Performance Shares as incentives to motivate and compensate its
officers and other key employees. Non-employee directors are also
eligible for awards under the Restated 1996 Plan, which enables the Company to
attract and retain outside directors and to provide an incentive for such
directors to increase their proprietary interest in the Company’s long-term
success.
To
maintain the Company’s ability to attract and retain officers, key employees and
non-employee directors, the Board of Directors has determined it is desirable to
amend the 1996 Plan in the following material respects:
|
Ÿ
|
The
aggregate number of shares of Company common stock authorized and reserved
for issuance will be increased by 5 million shares to 10 million
shares.
|
|
Ÿ
|
The
duration of the Restated 1996 Plan will be extended by four years through
May 27, 2019.
|
|
Ÿ
|
Fair
market value will be determined by utilizing the closing price of the
Company common stock on the date of grant.
|
|
Ÿ
|
Dividends
associated with awards of Performance Shares under the Restated 1996 Plan
that are subject to performance objectives may only be paid when and to
the extent the performance objectives have been
achieved
|
|
Ÿ
|
The
Restated 1996 Plan will contain certain other technical changes, including
changes to comply with Section 409A of the
Code.
|
The
following is a summary of certain features of the Restated 1996 Plan, qualified
in its entirety by reference to the full text of the Restated 1996 Plan, which
is attached to this proxy statement as Appendix A.
Summary
of the Restated 1996 Plan
Shares Subject to the Restated 1996
Plan. The Restated 1996 Plan permits the Company to
grant ISOs, NQSOs, and Performance Shares (each, an “Award,” and collectively,
“Awards”) to
(i) certain salaried officers and other salaried key employees of the
Company and its subsidiaries, and (ii) non-employee directors. The Restated 1996
Plan authorizes the issuance of a maximum of 10,000,000 shares of Company common
stock, subject to adjustment as described in the Restated 1996 Plan (13.5% of
the total shares of Company common stock outstanding on March 31,
2009). Shares of Company common stock reserved for issuance under the
Restated 1996 Plan will be made available from either authorized and unissued
shares of common stock or shares held in the Company’s treasury. No
individual may be granted Awards in any single fiscal year of the Company
covering more than 1,200,000 shares in the aggregate, except that a newly hired
person may be granted up to 1,500,000 shares.
When
an Award lapses, expires, terminates or is forfeited, or shares underlying an
Award are unissued for any reason, including shares withheld by or surrendered
to the Company to satisfy withholding tax obligations or in payment of the
exercise price of the Award, the related shares of common stock will be
available for distribution in connection with future Awards. In addition, any
authorized shares which were available or become available for grant under the
Non-Employee Directors’ Stock Option Plan on or after July 1, 2005 will
also be available for grant under the Restated 1996 Plan.
Under
the Restated 1996 Plan, fair market value of the shares is deemed to be the
closing price of the shares as reported by the NASDAQ Global Select Market on
the date the applicable Award is granted.
Participation. All of our
non-employee directors, and our officers and key employees, as well as those of
our subsidiaries, are eligible for selection to participate in the Restated 1996
Plan. As of March 31, 2009, it is estimated that approximately 100
people will be eligible to participate in the Restated 1996
Plan.
Administration. The Restated
1996 Plan is administered by the Compensation Committee of the Board of
Directors (the “Compensation
Committee”); provided that the full Board of Directors, at its sole
discretion, may exercise any authority granted to the Compensation Committee
under the Restated 1996 Plan. The Compensation Committee is comprised of
directors who are “non-employee directors” within the meaning of Rule 16b-3
promulgated under the Exchange Act. The Compensation Committee has the sole and
complete discretion, subject to the terms of the Restated 1996 Plan, to
(i) select the individuals from among the eligible employees of the Company
and its subsidiaries and non-employee directors of the Company to whom Awards
may be granted, (ii) determine the type of Awards to be granted and the
terms and conditions of any Awards granted, and (iii) determine the number of
shares of common stock subject to each Award granted. In addition,
the Compensation Committee is authorized to interpret the Restated 1996 Plan, to
make and rescind rules and regulations related thereto, and to make all
determinations necessary or advisable for the administration of the Restated
1996 Plan. The Board of Directors or the Compensation Committee is permitted to
designate an officer to make individual grants to persons who are not
Section 16 officers or directors, subject to individual and aggregate
limits established by the Board of Directors or the Compensation
Committee.
Types of
Awards Under the Restated 1996 Plan
Stock Options. A stock option
permits the holder to purchase shares of Company common stock at a specified
price under certain conditions. Stock options granted under the
Restated 1996 Plan may be either ISOs or NQSOs. Non-employee directors are only
entitled to receive grants for NQSOs. Stock options granted under the Restated
1996 Plan may be granted alone or in addition to other Awards. The
aggregate fair market value (determined as of the time of the grant of an ISO)
of the common stock with respect to which ISOs are exercisable for the first
time by a single optionee during any calendar year under the Restated 1996 Plan
and any other stock option plan of the Company may not exceed
$100,000.
The
price at which shares of Company common stock may be purchased (the exercise
price) is determined by the Compensation Committee and set forth in an option
agreement entered into with the optionee; provided, however, that the
exercise price for an option cannot be less than 100% of the fair market value
of the Company’s common stock on the date of grant (110% in the case of an ISO
granted to a 10% or more stockholder).
The
Compensation Committee specifies the time or times at which such options will be
exercisable, except that the termination date for any stock option may not
exceed 10 years from the date of grant (five years in the case of an ISO
granted to a 10% or more stockholder). Stock options may be exercised within
three years following the normal retirement, death or permanent disability of an
optionee, or up to 90 days following an optionee’s retirement prior to normal
retirement age; provided that no option may
be exercised following the period of exercisability set forth in the agreement
related thereto. Unless otherwise specified by the Board of Directors or the
Compensation Committee, unexercised options will be cancelled if the optionee’s
employment is terminated for reasons other than death, disability or
retirement. Any options that are issued or outstanding on or after
December 31, 2004 will continue to vest in accordance with their terms (up
to one year in the case of non-employee directors) if the option holder retires
as an officer, employee or director after reaching normal retirement age under
the Company’s employee retirement plan.
Stock
options may be exercised by an optionee in whole or in part by giving notice to
the Company and the exercise price therefor may be paid by delivering cash or,
if permitted by the Compensation Committee, shares of unrestricted Company
common stock having a fair market value equal to the cash exercise price of the
options being exercised. If permitted by the
Compensation Committee, optionees may also utilize a cashless exercise feature
which will enable them to exercise their options without a concurrent payment of
the exercise price, provided that the purchased option shares are immediately
sold by a designated broker and the option price is paid directly to the Company
out of the sale proceeds. The Restated 1996 Plan also permits stock options to
be exercised by any legally permissible method established by the Compensation
Committee. Stock options are nontransferable other than by will or by the laws
of descent and distribution, pursuant to a qualified domestic relations order,
or for the benefit of any immediate family member of the optionee, and are
exercisable during the optionee’s lifetime only by the optionee.
Performance Shares. The
Compensation Committee may award Performance Shares to eligible employees and
non-employee directors under the 1996 Restated Plan. Performance Shares may be
granted alone or in addition to other Awards granted under the 1996 Restated
Plan. Each Performance Share granted shall be evidenced by an agreement executed
by the Company and the recipient thereof. Each such agreement shall contain such
restrictions, terms and conditions as the Compensation Committee may, in its
sole discretion, determine.
Performance
Shares entitle the grantee to receive one share of Company common stock per
Performance Share upon vesting of the Performance Shares. The Compensation
Committee will determine (i) the time or times at which Performance Shares
will be granted, and (ii) the time or times at which Performance Shares
will become vested or forfeited. Vesting of Performance Shares may be based upon
the Company’s attainment of specified performance objectives and/or the passage
of time, if any. Company performance objectives may be expressed in
terms of (i) earnings per share, (ii) pre-tax profits (either on the
Company or business unit level), (iii) net earnings or net worth,
(iv) return on equity or assets, (v) any combination of the foregoing,
or (vi) any other standard or standards deemed appropriate by the Board of
Directors or the Compensation Committee at the time the Award is granted. Until
such time as the Performance Shares vest and shares of Company common stock are
issued, the Performance Shares may not be sold, transferred, pledged, assigned
or otherwise disposed of. The recipient of Performance Shares shall have no
right to vote the shares of Company common stock underlying the Performance
Shares until vesting. Dividend equivalents accrue on Performance
Shares to the extent dividends are paid on shares of Company common stock and
are paid upon vesting; provided that if a Performance Share award is subject to
performance objectives, any dividends shall be paid only when and to the extent
the Performance Shares are earned and paid.
Upon
termination of a recipient’s employment or service, all unvested Performance
Shares will be forfeited; provided, however, that
Performance Share agreements may provide for earlier lapse of the performance
period in the event of the death, disability or retirement of the
recipient.
The
Board of Directors or the Compensation Committee may also permit a recipient to
defer the receipt of shares that would otherwise be issued upon the vesting date
in accordance with such rules as it may establish.
Change of Control. Upon a
“Change of Control,” as defined in the Restated 1996 Plan, all options
outstanding shall be immediately and fully exercisable and all Performance
Shares shall become fully vested.
Amendment of the Restated 1996
Plan. The Board of Directors or the Compensation
Committee, as the case may be, may terminate, suspend or amend the Restated 1996
Plan, provided that such amendment, suspension, or termination may not affect
the validity of the then outstanding stock options or Performance Shares, and
provided further that the Board of Directors and the Compensation Committee may
not, without the approval of the stockholders (i) increase the maximum
number of shares which may be issued pursuant to the provisions of the Restated
1996 Plan, (ii) change the class of individuals eligible to receive stock
options or Performance Shares under the Restated 1996 Plan,
(iii) materially increase the benefits accruing to participants under the
Restated 1996 Plan, (iv) extend the term of the Restated 1996 Plan, or (v)
make any amendment that must otherwise be approved by the stockholders of the
Company in order to comply with applicable law or the rules of the NASDAQ Global
Select Market or, if the share of Company common stock are not traded on the
NASDAQ Global Select Market, the principal national securities exchange upon
which the shares are traded or quoted.
Termination or Suspension of the Restated 1996
Plan. The Restated 1996 Plan will terminate on May 27,
2019, except that the Board of Directors or the Compensation Committee may
terminate or suspend the Restated 1996 Plan at any time. Awards may
not be granted while the Restated 1996 Plan is suspended or after it is
terminated. Rights and obligations under any Awards granted while the
Restated 1996 Plan is in effect shall not be altered or impaired by suspension
or termination of the Restated 1996 Plan, except upon the consent of the person
to whom the Award was granted. The power of the Board of Directors or
the Compensation Committee, as the case may be, to construe and administer any
Awards granted prior to the termination or suspension of the Restated 1996 Plan
nevertheless shall continue after such termination or during such
suspension.
Withholding Taxes. The
Restated 1996 Plan provides that the Company may deduct from any distribution to
an employee participant an amount equal to all federal, state and local income
taxes or other amounts as may be required by law to be withheld with respect to
any Award. A participant exercising a NQSO or acquiring shares of Company common
stock pursuant to the vesting of Performance Shares may elect to have a
specified percentage of shares withheld by the Company in order to satisfy tax
obligations.
New
Plan Benefits
Because
grants under the Restated 1996 Plan are discretionary, the Company cannot now
determine the number of Awards that will be granted to any particular executive
officer, to all executive officers as a group or to non-executive officer
employees or directors as a group. The number of such Awards will be determined
by the Compensation Committee from time to time in accordance with the terms of
the Restated 1996 Plan. For information with respect to the Compensation
Committee’s guidelines for awards under the 1996 Plan, see the subsection of the
Compensation Discussion and Analysis section in this proxy entitled “Long-Term
Incentive Compensation.” Please refer to the Grants of Plan-Based Awards
Table above for Awards made during the most recent fiscal year under the 1996
Plan to our named executive officers.
Securities
Authorized for Issuance Under Compensation Plans
The
following table sets forth the amounts of securities authorized for issuance
under the Company’s compensation plans as of March 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 security holders
|
686,932
|
$38.05
|
3,069,703
|
Federal
Income Tax Consequences
The
following general description of federal income tax consequences is based on
current statutes, regulations and interpretations. This summary is not intended
to be complete and does not describe foreign, state or local tax
consequences. It is not intended as tax guidance to participants in
the Restated 1996 Plan. Unless otherwise indicated, this description
assumes that all awards granted under the Restated 1996 Plan are exempt from, or
comply with, the rules under Section 409A of the Code related to
nonqualified deferred compensation.
Incentive Stock Options. No
regular income tax consequences arise upon the grant of an ISO or the exercise
of an ISO by the employee. Provided the employee continues to hold
the stock acquired on the exercise of an ISO for the requisite holding periods
described below, the employee will be subject to regular tax only on the sale or
disposition of the stock acquired under an ISO and the gain recognized at that
time will be long-term capital gain. The holding period requirements necessary
for ISO treatment are as follows: (i) such shares may not be disposed of
within two years from the date the ISO is granted, and (ii) such shares
must be held for more than one year from the date the shares are transferred to
the employee upon the exercise of the ISO. In addition, to receive ISO
treatment, the option holder generally must be an employee of the Company or a
subsidiary of the Company from the date the stock option is granted until three
months before the date of exercise.
If
an employee disposes of stock acquired upon exercise of an ISO before expiration
of the applicable holding periods, the employee will be taxed at ordinary income
tax rates on the date of disposition on an amount equal to the excess of the:
(i) fair market value of the stock on the date of exercise of the ISO minus
the option price, and the Company generally will receive a corresponding income
tax deduction. The balance of the amount realized on disposition would be taxed
as capital gain, long-term or short-term depending on the holding period for the
shares. In the case of a sale where a loss, if sustained, would be
recognized, the amount of the optionee’s ordinary income, and the amount of the
Company’s corresponding tax deduction, will not exceed the difference between
the sale price and the adjusted basis of the shares.
The
amount by which the fair market value of shares received upon exercise of an ISO
exceeds the option price constitutes an item of tax preference that may be
subject to the alternative minimum tax. If an employee is subject to the
alternative minimum tax as a result of the exercise of an ISO, for purposes of
calculating the gain on a disposition of the stock solely for purposes of the
alternative minimum tax, the amount treated as a preference item will be added
to his tax basis for the stock.
Non-Qualified Stock Options.
With regard to NQSOs, the option holder will recognize ordinary income at the
time of the exercise of the stock option in an amount equal to the difference
between the exercise price and the fair market value of the shares received on
the date of exercise. Income recognized by employee stock option holders will be
subject to withholding by the Company; however, withholding typically does not
apply to non-employee directors. When the optionee disposes of shares acquired
upon the exercise of the stock option, any amount received in excess of the fair
market value of the shares on the date of exercise will be treated as long-term
or short-term capital gain, depending upon the holding period of the shares. If
the amount received upon sale is less than the fair market value of the shares
on the date of exercise, the loss will be treated as long-term or short-term
capital loss, depending upon the holding period of the shares. The Company will
generally be entitled to an income tax deduction in the amount and at the time
that the stock option holder recognizes ordinary income with respect to the
exercise of the stock option.
Performance Shares. An
individual granted a Performance Share will not recognize income at the time of
grant but will recognize ordinary income when the restrictions with respect to
the shares of stock underlying the Performance Shares lapse and the shares are
issued. The amount of income recognized will be equal to the then fair market
value of such shares less any consideration paid by the grantee. The Company
generally will be entitled to an income tax deduction in an amount equal to
the income recognized by the grantee at the time the grantee recognizes such
income, provided the Company complies with applicable withholding requirements.
Any dividends with respect to the Performance Shares which are paid to a holder
of Performance Shares are treated as additional compensation taxable as ordinary
income to the grantee and deductible to the Company. Generally, the tax
consequences described above also apply to Performance Shares granted to
non-employee directors.
Awards
of Performance Shares under the Restated 1996 Plan may, in some cases, result in
the deferral of compensation, which is subject to the requirements of
Section 409A of the Code. Generally, to the extent that deferrals of these
awards fail to meet certain requirements under Section 409A, such awards
will be subject to immediate taxation and tax penalties imposed on the grantee
in the year they vest. It is the intent of the Company that Awards under the
Restated 1996 Plan will be structured and administered in a manner that complies
with the requirements of Section 409A.
The
above federal income tax information is a summary only and does not purport to
be a complete statement of the relevant provisions of the Code.
Recommendation
and Vote
An
affirmative vote of the holders of a majority of shares of Company common stock
present in person or by proxy and entitled to vote at the Annual Meeting is
required to approve the Restated 1996 Plan. If no direction is given to the
contrary, all proxies received by the Board of Directors will be voted “FOR”
approval of the Restated 1996 Plan.
The
Board of Directors recommends that the stockholders vote “FOR” approval of the
Restated 1996 Plan.
The
Board of Directors, on the recommendation of the Audit Committee, has appointed
Deloitte & Touche LLP to act as our independent registered public accounting
firm for the current fiscal year, subject to the ratification of such
appointment by the affirmative vote of the holders of a majority of shares of
common stock present in person or by proxy and entitled to vote at the Annual
Meeting. If no direction is given to the contrary, all proxies received by the
Board of Directors will be voted “FOR” ratification of the appointment of
Deloitte & Touche LLP as our independent auditors for the rent fiscal
year.
In
addition to performing the audit of our consolidated financial statements,
Deloitte & Touche LLP provided various other services for us during the last
two years. The aggregate fees billed for the last two years for each of the
following categories of services are set forth below:
|
2008
|
2007
|
|||||
|
Audit
Fees
|
$
|
1,802,000
|
|
$
|
1,660,000
|
|
|
Audit
– Related Fees
|
172,000
|
|
178,000
|
|
||
|
Tax
Fees
|
57,000
|
|
675,000
|
|
||
|
All
Other Fees
|
318,000
|
|
320,000
|
|
||
|
Total
All Fees
|
$
|
2,349,000
|
|
$
|
2,833,000
|
|
Audit Fees. Audit
Fees include professional services rendered in connection with the audit of our
consolidated financial statements, audit of management’s assessment of the
effectiveness of our internal control over financial reporting, audit of the
effectiveness of our internal control over financial reporting, audit of the
opening balance sheet of acquisitions accounted for as a purchase, reviews of
the consolidated financial statements included in our Quarterly Reports on Form
10-Q, consultation on accounting matters, and review of documents filed with the
Securities and Exchange Commission.
Audit-Related
Fees. Audit-Related Fees include audits of our employee
benefit plans and consultation on accounting matters or
transactions.
Tax Fees. Tax Fees include
the preparation of federal and state tax returns, and consultation related to
tax planning, tax advice, tax compliance, and
acquisitions.
All
Other Fees. All Other Fees include due diligence and
acquisition related fees.
All
services rendered by Deloitte & Touche LLP are pre-approved by the Audit
Committee in accordance with the Committee’s pre-approval procedures. Under
those procedures, the terms and fees of annual audit services, and changes
thereto, must be approved by the Audit Committee. The Audit Committee also
pre-approves the scope of audit-related, tax and other non-audit services that
may be performed by our independent auditors during the fiscal year, subject to
dollar limitations set by the Committee. The foregoing pre-approval procedures
are subject to the de minimis exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit
Committee prior to completion of the audit
Representatives
of Deloitte & Touche LLP are not expected to be present at the Annual
Meeting, but will have the opportunity to make a statement if they desire to do
so, and will be available should any matter arise requiring their
presence.
The
Board of Directors recommends that the stockholders vote “FOR” ratification of
the appointment of Deloitte & Touche LLP as our independent registered
public accounting firm for the current fiscal year.
As
of the date of this proxy statement, the Board of Directors does not know of any
other matters which may come before the Annual Meeting, nor have we received
notice of any matter by the deadline prescribed by Rule 14a-4(c) under the
Exchange Act. If any other matters properly come before the meeting, the
accompanying proxy confers discretionary authority with respect to any such
matters, and the persons named in the accompanying proxy intend to vote in
accordance with their best judgment on such matters. All expenses in connection
with the solicitation of proxies will be borne by us. In addition to this
solicitation, officers, directors and regular employees of Century, without any
additional compensation, may solicit proxies by mail, telephone or personal
contact. Morrow & Co., Inc. has been retained to assist in the solicitation
of proxies for a fee of $4,000 plus reasonable out-of-pocket expenses. We
will, upon request, reimburse brokerage houses and other nominees for their
reasonable expenses in sending proxy materials to their principals.
Stockholder
proposals for inclusion in the proxy materials for the Annual Meeting in 2010
should be addressed to our Corporate Secretary, 2511 Garden Road, Building A,
Suite 200, Monterey, California 93940, and must be received no later than
January 6, 2010 . In addition, our restated by-laws currently
require that for business to be properly brought before an Annual Meeting by a
stockholder, regardless of whether included in our proxy statement, the
stockholder must give written notice of his or her intention to propose such
business to our Corporate Secretary, which notice must be delivered to, or
mailed and received at, our principal executive offices not less than forty-five
(45) days prior to the date on which we first mailed our proxy materials
for the prior year’s Annual Meeting (which cut-off date will be March 21,
2010 in the case of the Annual Meeting in 2010). Such notice must set forth
as to each matter the stockholder proposes to bring before the Annual Meeting:
(i) a brief description of the business desired to be brought before the
meeting and the reasons for conducting such business at the meeting,
(ii) the name and address of the stockholder proposing such business,
(iii) the class and number of shares which are beneficially owned by the
stockholder, and (iv) any material interest of the stockholder in such
proposal. The restated by-laws further provide that the chairman of the Annual
Meeting may refuse to permit any business to be brought before an Annual Meeting
that does not comply with the foregoing procedures.
We
will provide without charge to each person solicited hereby,
upon the written request of any such person, a copy of our Annual Report on Form
10-K for the fiscal year ended December 31,
2008,
as filed with the Securities and Exchange Commission (without exhibits).
Requests should be made to Office of the General Counsel, 2511 Garden Road,
Building A, Suite 200, Monterey, California
93940.
Century
Aluminum Company
AMENDED
AND RESTATED 1996 STOCK INCENTIVE PLAN
(as
amended and restated ________, 2009)
|
I.
|
PURPOSES
AND SCOPE OF PLAN
|
Century
Aluminum Company (the “Company”)
desires to afford certain salaried officers and other salaried key employees of
the Company and its subsidiaries who are in a position to affect materially the
profitability and growth of the Company and its subsidiaries an opportunity to
acquire a proprietary interest in the Company, and thus to create in such
persons interest in and a greater concern for the welfare of the
Company. Non-employee Directors (as hereinafter defined) are also
eligible to participate in the Amended and Restated 1996 Stock Incentive Plan
(the “Plan”),
which enables the Company to attract and retain outside directors of the highest
caliber and experience and to provide an incentive for such directors to
increase their proprietary interest in the Company’s long-term
success. These objectives will be promoted through the granting to
such key employees and Non-employee Directors of equity instruments including
(i) incentive stock options (“Incentive
Options”) which are intended to qualify under Section 422 (or any
successor provision) of the Internal Revenue Code of 1986, as amended (the
“Code”);
(ii) options which are not intended to so qualify (“NQSOs”);
and (iii) performance shares or performance share units (collectively, “Performance
Shares”).
The
awards offered to employees pursuant to this Plan are a matter of separate
inducement and are not in lieu of any salary or other compensation for
services.
The
Company, by means of the Plan, seeks to retain the services of persons now
holding key positions and to secure the services of persons capable of filling
such positions.
|
II.
|
AMOUNT
OF STOCK SUBJECT TO THE PLAN
|
The
total number of shares of common stock, $0.01 par value, per share, of the
Company, or any other security into which such shares of common stock may be
changed by reason of any transaction or event of the type referred to below in
this Article II (the “Shares”)
reserved and available for distribution pursuant to options and awards granted
hereunder shall not exceed, in the aggregate, 10,000,000 (which consists of
those Shares that were previously authorized and 5,000,000 Shares
that are being added as part of this amendment and restatement), subject to
adjustment as described below. All Shares available for distribution
under the Plan may be issued pursuant to Incentive Options, NQSOs or Performance
Shares or a combination of the foregoing.
Shares
which may be acquired under the Plan may be either shares of original issuance
or treasury shares, or both, at the discretion of the
Company. Whenever any outstanding option or award or portion thereof
expires, is canceled, is forfeited or is otherwise terminated without having
been exercised or without having fully vested, or the underlying Shares are
unissued for any reason, including those withheld by or surrendered to the
Company to satisfy withholding tax obligations or in payment of the exercise
price of an award, the Shares allocable to the expired, canceled, forfeited or
otherwise terminated portion of the option or award, and any
Shares withheld by or surrendered to the Company, may again be the subject of
options or awards granted hereunder. In addition, any Shares which
are available or become available for grant under the Company’s Non-Employee
Directors Plan on or after July 1, 2005 shall be available for grant under this
Plan.
Upon
any stock dividend, stock split, combination or exchange of Shares,
recapitalization or other change in the capital structure of the Company,
corporate separation or division (including, but not limited to, split-up,
split-off, spin-off or distribution to Company shareholders other than a normal
cash dividend), sale by the Company of all or a substantial portion of its
assets, rights offering, merger, consolidation, reorganization or partial or
complete liquidation, or any other corporate transaction or event having an
effect similar to any of the foregoing, the aggregate number of Shares reserved
for issuance under the Plan, the number and option price of Shares subject to
outstanding options, the financial performance objectives contained in a
Performance Share award, the number of Shares subject to a Performance Share
award and any other characteristics or terms of the options and awards as the
Board of Directors (as hereinafter defined) or the Committee (as hereinafter
defined), as the case may be, shall deem necessary or appropriate to reflect
equitably the effects of such changes to the holders of options and awards,
shall be appropriately substituted for new shares or other consideration, or
otherwise adjusted, as determined by the Board of Directors or the Committee, as
the case may be, in its discretion. Notwithstanding the foregoing,
(i) each such adjustment with respect to an Incentive Option shall comply with
the rules of Section 424(a) (or any successor provision) of the Code, and (ii)
in no event shall any adjustment be made which would render any Incentive Option
granted hereunder other than an incentive stock option for purposes of Section
422 (or any successor provision) of the Code without the consent of the
grantee.
|
III.
|
ADMINISTRATION
|
The
Compensation Committee (the “Committee”)
will have the authority to administer the Plan, provided that the full Board of
Directors of the Company (the “Board of
Directors”), at its sole discretion, may exercise any authority granted
to the Committee under this Plan. The Committee shall consist of no
fewer than two members of the Board of Directors, each of whom shall be a
“non-employee director” within the meaning of Rule 16b-3 or any successor rule
or regulation (“Rule
16b-3”) promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”). The Committee shall administer the Plan so as to comply
at all times with Rule 16b-3. A majority of the members of the
Committee shall constitute a quorum, and the act of a majority of the members of
the Committee shall be the act of the Committee. Any member of the
Committee may be removed at any time, either with or without cause, by
resolution adopted by a majority of the Board of Directors, and any vacancy on
the Committee may at any time be filled by resolution adopted by a majority of
the Board of Directors. The Board of Directors or the Committee may
delegate to an officer of the Company the authority to make grants hereunder to
persons who are not subject to Section 16 of the Exchange Act, provided such
authority is limited as to time, aggregate and individual award amounts and/or
such other provisions as the Board of Directors or Committee deems necessary or
desirable.
Subject
to the express provisions of the Plan, the Board of Directors or the Committee,
as the case may be, shall have authority, in its discretion, to (i) select as
recipients of options or awards (a) employees of the Company and its
subsidiaries and (b) members of the Board of Directors who are not employees of
the Company (“Non-employee Directors”); (ii) determine the number and type of
options or awards to be granted; (iii) determine the terms and conditions, not
inconsistent with the terms hereof, of any options or awards granted; (iv)
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable; (v) interpret
the terms and provisions of the Plan and any option or award granted and any
agreements relating thereto; (vi) otherwise supervise the administration of the
Plan; and (vii) establish sub-plans with such terms as the Board of Directors or
the Committee, as the case may be, deems necessary or desirable to comply with,
or to qualify for preferred tax treatment under the laws, rules and regulations
of any jurisdiction outside of the United States.
The
determination of the Board of Directors or the Committee, as the case may be, on
matters referred to in this Article III shall be conclusive.
The
Board of Directors or the Committee, as the case may be, may employ such legal
counsel, consultants and agents as it may deem desirable for the administration
of the Plan and may rely upon any opinion received from any such counsel or
consultant and any computation received from any such consultant or
agent. Expenses incurred by the Board of Directors or the Committee
in the engagement of such counsel, consultant or agent shall be paid by the
Company. No member or former member of the Committee or of the Board
of Directors shall be liable for any action or determination made in good faith
with respect to the Plan or any option or award granted hereunder.
The
Company shall indemnify each member of the Board of Directors or the Committee,
as the case may be, for all costs and expenses and, to the extent permitted by
applicable law, any liability incurred in connection with defending against,
responding to, negotiation for the settlement of, or otherwise dealing with any
claim, cause of action or dispute of any kind arising in connection with any
actions in administering the Plan or in authorizing or denying authorization to
any transaction hereunder.
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IV.
|
ELIGIBILITY
|
Options
and Performance Share awards may be granted only to: (i) certain
salaried officers and other salaried key employees of the Company and its
subsidiaries, and (ii) Non-employee Directors; provided, that no person shall be
eligible for any award if the granting of such award to such person would
prevent the satisfaction by the Plan of the general exemptive conditions of Rule
16b-3. In no event may any eligible person be granted or awarded
options and Performance Shares covering, in the aggregate, more than 1,200,000
Shares, or 1,500,000 Shares
in the case of a newly hired person (subject to adjustment as described in
Article II above), in any fiscal year of the Company.
|
V.
|
STOCK
OPTIONS
|
1. General. Options
may be granted alone or in addition to other awards granted under the
Plan. Any options granted under the Plan shall be in such form as the
Board of Directors or the Committee, as the case may be, may from time to time
approve and the provisions of the option grants need not be the same with
respect to each optionee. Options granted under the Plan may be
either Incentive Options or NQSOs. The Board of Directors or the
Committee, as the case may be, may grant to any optionee Incentive Options,
NQSOs or a combination of the foregoing; provided that options granted to
Non-employee Directors may only be NQSOs.
Options
granted under the Plan shall be subject to the terms and conditions of the Plan
and shall contain such additional terms and conditions not inconsistent with the
terms of the Plan, as the Board of Directors or the Committee, as the case may
be, deems appropriate. Each option grant shall be evidenced by an
agreement executed on behalf of the Company by an officer designated by the
Board of Directors or the Committee, as the case may be, and accepted by the
optionee, which agreement may be in an electronic medium. Such
agreement shall describe the options and state that such options are subject to
all the terms and provisions of the Plan and shall contain such other terms and
provisions, consistent with the Plan, as the Board of Directors or the
Committee, as the case may be, may approve.
2. Exercise
Price and Payment. The price per Share under any option
granted hereunder shall be such amount as the Board of Directors or the
Committee, as the case may be, shall determine, provided, however, that such
price shall not be less than 100% of the fair market value of the Shares subject
to such option, as determined below, at the date the option is granted (110% in
the case of an Incentive Option granted to any person who, at the time the
option is granted, owns stock of the Company or any subsidiary or parent of the
Company possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any subsidiary or parent of the Company (a
“10%
Shareholder”)).
If
the Shares are listed on the NASDAQ Global Select Market on the date any option
is granted, the fair market value per Share shall be deemed to be the closing
price of the Shares on such exchange on the date upon which the option is
granted, or, if not listed on such exchange, on any other national securities
exchange on which the Shares are listed. If the Shares are not traded
on any given date, or the national securities exchange on which the Shares are
traded is not open for business on such date, the fair market value per Share
shall be the closing price of the Shares determined as of the closest preceding
date on which such exchange shall have been open for business and the Shares
were traded. If the Shares are listed on more than one national
securities exchange in the United States on the date any such option is granted,
the Board of Directors or the Committee, as the case may be, shall determine
which national securities exchange shall be used for the purpose of determining
the fair market value per Share. If the Shares are not listed on a
national securities exchange, the fair market value per Share shall be as
determined in good faith by the Board of Directors or the Committee, as the case
may be. The Board of Directors is authorized to adopt another fair
market value per Share pricing method, provided such method is stated in the
applicable award agreement, and is in compliance with the fair market value
pricing rules set forth in Section 409A of the Code and the regulations
promulgated thereunder.
For
purposes of this Plan, the determination by the Board of Directors or the
Committee, as the case may be, of the fair market value of a Share shall be
conclusive.
3. Term of
Options and Limitations on the Right of Exercise. The term of
each option will be for such period as the Board of Directors or the Committee,
as the case may be, shall determine, provided that, except as otherwise provided
herein, in no event may any option granted hereunder be exercisable more than 10
years from the date of grant of such option (five years in the case of an
Incentive Option granted to a 10% Shareholder). Each option shall
become exercisable in such installments and at such times as may be designated
by the Board of Directors or the Committee, as the case may be, and set forth in
the agreement related to the grant of options. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
option expires. Stock options may provide for acceleration of
exercisability in the event of the death, disability or retirement of the
optionee.
The
Board of Directors or the Committee, as the case may be, shall have the right to
limit, restrict or prohibit, in whole or in part, from time to time,
conditionally or unconditionally, rights to exercise any option granted
hereunder.
To
the extent that an option is not exercised within the period of exercisability
specified therein, it shall expire as to the then unexercised part.
4. Exercise
of Options. Options granted under the Plan shall be exercised
by the optionee as to all or part of the Shares covered thereby by the giving of
written notice of the exercise thereof to the Company’s stock plan
administration group, Wells Fargo Bank, NA, or such other nominee as may be
selected by the Company, specifying the number of Shares to be purchased,
accompanied by payment therefore made to the Company for the full purchase price
of such Shares or in such other manner as the Company may direct or as provided
in the applicable option agreement.
Upon
the exercise of an option granted hereunder, the Company shall cause the
purchased Shares to be issued only when it shall have received the full purchase
price for the Shares in cash; provided, however, that in lieu of cash, the
holder of an option may, to the extent permitted by applicable law, exercise an
option in whole or in part, by any method permitted by the
Committee.
Notwithstanding
the foregoing, the Company, in its sole discretion, may establish cashless
exercise procedures whereby an option holder, subject to the requirements of
Rule 16b-3, Regulation T, federal income tax laws, and other federal, state and
local tax and securities laws, can exercise an option or a portion thereof
without making a direct payment of the option price to the Company, including a
program whereby option shares would be sold on behalf of and at the request of
an option holder by a designated broker and the exercise price would be
satisfied out of the sale proceeds and delivered to the Company. If
the Company so elects to establish a cashless exercise program, the Company
shall determine, in its sole discretion, and from time to time, such
administrative procedures and policies as it deems appropriate and such
procedures and policies shall be binding on any option holder wishing to utilize
the cashless exercise program.
If
an option granted hereunder shall be exercised by the legal representative of a
deceased option holder or former option holder or by a person who acquired an
option granted hereunder by bequest or inheritance or by reason of the death of
any option holder or former option holder, written notice of such exercise shall
be accompanied by a certified copy of letters testamentary or equivalent proof
of the right of such legal representative or other person to exercise such
option.
5. Nontransferability
of Options. An Incentive Option granted hereunder shall not be
transferable, whether by operation of law or otherwise, other than by will or
the laws of descent and distribution, and any Incentive Option granted hereunder
shall be exercisable, during the lifetime of the holder, only by such
holder. Except as determined by the Board of Directors or the
Committee, as the case may be, or otherwise provided in the applicable option
agreement, a NQSO granted hereunder shall not be transferable, whether by
operation of law or otherwise, other than by will or the laws of descent and
distribution, pursuant to a qualified domestic relations order (as defined under
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder), or for the benefit of any immediate family member of the option
holder; provided that only gratuitous transfers of options shall be
permitted. The option of any person to acquire Shares and all his
rights thereunder shall terminate immediately if the holder: (a) attempts to or
does sell, assign, transfer, pledge, hypothecate or otherwise dispose of the
option or any rights thereunder to any other person except as permitted above;
or (b) becomes insolvent or bankrupt or becomes involved in any matter so that
the option or any rights thereunder becomes subject to being taken from him to
satisfy his debts or liabilities.
6. Termination
of Employment or Service. Except as set forth in Article VII,
unless otherwise specified by the Board of Directors or the Committee, as the
case may be, upon termination of employment of any option holder who was an
employee of the Company or its subsidiaries, any option previously granted to
such option holder, shall, to the extent not theretofore exercised, be cancelled
and become null and void, and all of the option holder’s rights thereunder shall
terminate provided that:
|
(a) if
the employee option holder shall die while in the employ of the Company or
any subsidiary of the Company, and at a time when such employee was
entitled to exercise an option as herein provided, his estate or the
legatees or distributees of his estate or of the option, as the case may
be, of such option holder, may, within three years following the date of
death, but not beyond that time and in no event later than the expiration
date of the option, exercise such option, to the extent not theretofore
exercised, in respect of any or all of such number of Shares which the
option holder was entitled to purchase;
|
|
(b) if
an employee option holder terminates his or her employment by reason of
taking retirement with the Company or a subsidiary on or after the
attainment of “normal retirement age” under the Company’s Employees
Retirement Plan, or disability (as described in Section 22(e)(3) of the
Code and in the Company’s Employees Retirement Plan), and at a time when
such employee was entitled to exercise an option as herein provided, the
optionee shall have the right to exercise such option up to the earlier of
(i) three years following the date of retirement or disability and (ii)
the expiration of the option; and
|
|
(c) if
an employee option holder terminates his or her employment by reason of
taking retirement with the Company or a subsidiary prior to the attainment
of “normal retirement age” under the Company’s Employees Retirement Plan,
and at a time when such employee was entitled to exercise an option as
herein provided, the optionee shall have the right to exercise such option
up to the earlier of (i) 90 days following the date of retirement and (ii)
the expiration of the option.
|
Any
options granted to a Non-employee Director of the Company shall terminate on the
earliest to occur of the following:
|
(i) Subject
to Article VII, three years after the date on which the optionee ceases to
be a member of the Board of Directors (during which period the option
shall be exercisable only to the extent exercisable on the date of such
cessation); and
|
|
(ii) 10
years after the date on which the option was granted.
|
Any
options issued or outstanding on or after December 31, 2004 shall continue to
vest in accordance with their terms (for up to one full year, in the case of
Non-employee Directors) if the option holder terminates his or her employment
with the Company or any of its subsidiaries or, in the case of Non-employee
Directors, ceases to be a director on or after attaining “normal retirement age”
under the Company’s Employee Retirement Plan (for this purpose, service on the
Board of Directors shall be deemed service under the Company’s Employee
Retirement Plan).
In
no event shall any person be entitled to exercise any option after the
expiration of the period of exercisability of such option as specified in the
applicable award agreement.
For
the purposes of the Plan, an employment relationship shall be deemed to exist
between an individual and a corporation if, at the time of the determination,
the individual was an “employee” of such corporation for purposes of Section
422(a) of the Code.
A
termination of employment shall not be deemed to occur by reason of (i) the
transfer of an employee from employment by the Company to employment by a
subsidiary of the Company or (ii) the transfer of an employee from employment by
a subsidiary of the Company to employment by the Company or by another
subsidiary of the Company.
7. Maximum
Allotment of Incentive Options. If the aggregate fair market
value of Shares with respect to which Incentive Options are exercisable for the
first time by an employee during any calendar year (under all stock option plans
of the Company and any parent or any subsidiary of the Company) exceeds
$100,000, any options which otherwise qualify as Incentive Options, to the
extent of the excess, will be treated as NQSOs.
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VI.
|
PERFORMANCE
SHARE AWARDS
|
1. General. Performance
Share awards may be granted alone or in addition to any other awards granted
under the Plan. The provisions of Performance Share awards need not
be the same with respect to each recipient. Performance Share awards
granted under the Plan shall be in such form as the Board of Directors or the
Committee, as the case may be, may from time to time approve. Each
grant of a Performance Share award shall be evidenced by an agreement executed
on behalf of the Company by an officer designated by the Board of Directors or
the Committee, as the case may be, and accepted by the recipient, which
agreement may be in an electronic medium. Such agreement shall
describe the Performance Share award and state that such award is subject to all
the terms and provisions of the Plan and shall contain such other terms and
provisions, consistent with the Plan, as the Board of Directors or the
Committee, as the case may be, may approve. Each Performance Share
awarded under the Plan shall entitle the grantee to receive one Share upon
vesting of such Performance Share.
2. Restrictions. Each
Performance Share award shall vest upon (A) the passage of time, if any, and/or
(B) the attainment by the Company of specified performance
objectives. Company performance objectives may be expressed in terms
of (i) earnings per share, (ii) pre-tax profits (either on the Company or
business unit level), (iii) net earnings or net worth, (iv) return on equity or
assets, (v) any combination of the foregoing, or (vi) any other standard or
standards deemed appropriate by the Board of Directors or the Committee, as the
case may be, at the time the award is granted. Such time periods (the
“Performance
Period”) and performance objectives shall be set by the Board of
Directors or the Committee, as the case may be, in its sole
discretion.
Performance
Share awards shall become vested in a recipient upon the lapse of the
Performance Period, if any, and/or the attainment of the associated performance
objectives set forth in the agreement between the recipient and the
Company. Performance Share awards shall vest in such installments and
at such times as may be designated by the Board of Directors or the Committee,
as the case may be, and set forth in the agreement related to the granting of
the Performance Share awards. The agreement evidencing the
Performance Share awards may provide for acceleration of vesting in the event of
the death, disability or retirement of the recipient.
3. Stock
Certificate. No stock certificates shall be issued to the
recipient with respect to Performance Share awards until such time as the
Performance Share awards vest.
4. Treatment
of Dividends. If any ordinary cash dividends are declared or
paid on Shares, the record date of which is prior to the forfeiture or the
vesting of Performance Share awards, the holder of the Performance Share awards
shall be entitled to receive an amount equal to the amount of the per Share
dividend declared for each Performance Share. Such dividends shall be
paid to such recipients at the same time and in the same manner as dividends are
paid to stockholders of the Company; provided that if a Performance Share award
is subject to performance objectives, any dividends shall be paid only when and
to the extent the Performance Shares are earned and paid.
5. Nontransferability. Subject
to the provisions of this Plan and the applicable agreement, during the period
when the Performance Shares have not vested, the recipient shall not be
permitted to sell, transfer, pledge, assign or otherwise encumber Performance
Shares awarded under the Plan.
6. Shareholder
Rights. The recipient shall have no rights with respect to the
Performance Shares or any Shares related thereto until they have vested,
including no right to vote the Performance Shares or such Shares, other than the
right to receive dividends as set forth in the Plan.
7. Termination
of Employment. Subject to the provisions of Paragraph 2 above,
all unvested Performance Shares shall be forfeited upon termination of
employment.
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VII.
|
CHANGE
OF CONTROL
|
Notwithstanding
anything to the contrary contained herein, upon a Change of Control (as defined
below) of the Company, (i) all options shall immediately vest and become
exercisable in full during the remaining term thereof, and shall remain so,
whether or not the option holder to whom such options have been granted remains
an employee of the Company or its subsidiaries, and (ii) the restrictions
applicable to any or all Performance Share awards shall lapse and such awards
shall be fully vested.
In
the event of certain transactions such as those involving a change in the
composition of the Board of Directors, sale of the Company’s shares of capital
stock or assets, reorganization, merger, liquidation, etc., the Board of
Directors, in its sole discretion, may, but is not required to, deem such event
to be a “Change of Control.” Notwithstanding the foregoing, a Change
of Control shall be deemed to have occurred upon the occurrence of any of the
following events:
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(a) any
person (which shall mean and include an individual, corporation,
partnership, group, association or other “person”, as such term is used in
Sections 13 and 14 of the Exchange Act) which theretofore beneficially
owned less than 20% of the Shares then outstanding, acquires Shares in a
transaction or series of transactions, not previously approved by the
Board of Directors, that results in such person directly or indirectly
owning at least 20% of the Shares then outstanding; or
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(b) the
individuals who, as of the effective date of the Plan, are members of the
Board of Directors (the “Incumbent Board”), cease for any reason to
constitute at least two-thirds of the Board of Directors; provided,
however, that if the election, or nomination for election by the Company’s
stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes
of this clause (b), be considered a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member
of the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened “Election Contest” (as described
in Rule 14a-11 promulgated under the Securities Exchange Act of 1934, or
such successor rule or provision) or other actual or threatened
solicitation of proxies or consents by or on behalf of a "person" other
than the Board of Directors (a “Proxy Contest”) including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
Contest.
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Notwithstanding
anything herein to the contrary, no Change of Control (only with respect to the
particular option holder or award grantee referred to therein in the case of
(A)) shall be deemed to have occurred by virtue of any event which results from
the acquisition, directly or indirectly, of 20% or more of the outstanding
Shares by (A) the option holder or Performance Share recipient or a person
including the option holder or Performance Share recipient, (B) the Company, (C)
a subsidiary of the Company, or (D) any savings, pension or other employee
benefit plan of the Company or of a subsidiary, or any entity holding securities
of the Company recognized, appointed, or established by the Company or by a
subsidiary for or pursuant to the terms of such plan.
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VIII.
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PURCHASE
FOR INVESTMENT
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Except
as hereafter provided, the Company may require the recipient of Shares pursuant
to an option or award granted hereunder, upon receipt thereof, to execute and
deliver to the Company a written statement, in form satisfactory to the Company,
in which such holder represents and warrants that such holder is purchasing or
acquiring the Shares acquired thereunder for such holder’s own account, for
investment only and not with a view to the resale or distribution thereof, and
agrees that any subsequent offer for sale or sale or distribution of any of such
Shares shall be made only pursuant to either (a) a Registration Statement on an
appropriate form under the Securities Act of 1933, as amended (the “Act”),
which Registration Statement has become effective and is current with regard to
the Shares being offered or sold, or (b) a specific exemption from the
registration requirements of the Act, but in claiming such exemption the holder
shall, prior to any offer for sale or sale of such Shares, obtain a prior
favorable written opinion, in form and substance satisfactory to the Company,
from counsel for or approved by the Company, as to the applicability of such
exemption thereto. The foregoing restriction shall not apply to (i)
issuances by the Company so long as the Shares being issued are registered under
the Act and a prospectus in respect thereof is current or (ii) reofferings of
Shares by affiliates of the Company (as defined in Rule 405 or any successor
rule or regulation promulgated under the Act) if the Shares being reoffered are
registered under the Act and a prospectus in respect thereof is
current.
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IX.
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ISSUANCE
OF CERTIFICATES; LEGENDS; PAYMENT OF
EXPENSES
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The
Company may endorse such legend or legends upon the certificates for Shares
issued pursuant to a grant hereunder and may issue such “stop transfer”
instructions to its transfer agent in respect of such Shares as, in its
discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Act, (ii) implement the provisions of the Plan and any agreement between the
Company and the optionee or grantee with respect to such Shares, or (iii) permit
the Company to determine the occurrence of a disqualifying disposition, as
described in Section 421(b) of the Code, of Shares transferred upon exercise of
an Incentive Option granted under the Plan.
The
Company shall pay all issue or transfer taxes with respect to the issuance or
transfer of Shares upon exercise of an option or grant of Performance Share
awards, as well as all fees and expenses necessarily incurred by the Company in
connection with such issuance or transfer, except fees and expenses which may be
necessitated by the filing or amending of a Registration Statement under the
Act, which fees and expenses shall be borne by the recipient of the Shares
unless such Registration Statement has been filed by the Company for its own
corporate purposes (and the Company so states).
All
Shares issued as provided herein shall be fully paid and non-assessable to the
extent permitted by law.
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X.
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WITHHOLDING
TAXES
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An
employee exercising an Option or acquiring Shares pursuant to the vesting of
Performance Shares may elect to have Shares withheld by the Company in order to
satisfy tax obligations. The amount of such Shares shall not be less
than nor exceed such number as determined by the Committee as appropriate to
avoid the award being subject to variable accounting under Accounting Principle
25 or treatment as a liability award under Financial Accounting Standard
123R. Any such election shall be made pursuant to a written notice
signed by the employee. The Company may require an employee
exercising an NQSO or disposing of Shares acquired pursuant to the exercise of
an Incentive Option in a disqualifying disposition (within the meaning of
Section 421(b) of the Code) or acquiring Shares pursuant to Performance Share
awards to reimburse the Company for any taxes required by any government to be
withheld or otherwise deducted and paid by the Company in respect of the
issuance or disposition of Shares. In lieu thereof, the Company shall
have the right to withhold the amount of such taxes from any other sums due or
to become due from the Company to the employee upon such terms and conditions as
the Board of Directors or the Committee, as the case may be, shall
prescribe. Notwithstanding the foregoing, the Committee may, by the
adoption of rules or otherwise, modify the provisions of this Article X or
impose such other restrictions or limitations as may be necessary to ensure that
the withholding transactions described above will be exempt transactions under
Section 16(b) of the Exchange Act.
With
respect to withholding required hereunder, an optionee or holder of a
Performance Share award may elect, subject to the approval of the Board of
Directors or the Committee, as the case may be, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares having a
fair market value (as determined under the provisions of Article V, Paragraph 2)
on the date the tax is to be determined equal to the minimum statutory total tax
which could be imposed on the transaction. All such elections shall
be irrevocable, made in writing, signed by the optionee or holder, and shall be
subject to any restrictions or limitations that the Board of Directors or the
Committee, as the case may be, in its sole discretion, deems
appropriate.
If
an optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any Share or Shares issued to
such optionee pursuant to the exercise of an Incentive Option within the
two-year period commencing on the day after the date of the grant or within the
one-year period commencing on the day after the date of transfer of such Share
or Shares to the optionee pursuant to such exercise, the optionee shall, within
10 days of such disposition, notify the Company thereof, by delivery of written
notice to the Company at its principal executive office.
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XI.
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DEFERRAL
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The
Board of Directors or the Committee, as the case may be, may permit an optionee
or holder of Performance Share awards to defer such individual’s receipt of
Shares that would otherwise be due to such optionee or holder by virtue of the
exercise of an option or the lapse of restrictions with respect to Performance
Share awards. If any such deferral election is required or permitted,
the Board of Directors or the Committee, as the case may be, shall, in its sole
discretion, establish rules and procedures for such deferrals. The
Committee may provide for such provisions as it deems necessary with respect to
an award, including after it is granted, to prevent the award from being subject
to or violating the requirements of Section 409A of the Code.
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XII.
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LISTING
OF SHARES AND RELATED
MATTERS
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If
at any time the Board of Directors or the Committee, as the case may be, shall
determine in its discretion that the listing, registration or qualification of
the Shares covered by the Plan upon any national securities exchange or under
any state or federal law or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the sale or purchase of Shares under the Plan, no Shares shall be issued
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Board of Directors or the Committee, as the
case may be. Notwithstanding the foregoing, none of the Company, the
Committee or the Board of Directors shall be obligated to list, register,
qualify or otherwise seek an exemption from the foregoing with respect to the
Shares.
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XIII.
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AMENDMENT
OF THE PLAN
|
The
Board of Directors or the Committee, as the case may be, may, from time to time,
amend the Plan, provided that no amendment shall be made, without the approval
of the stockholders of the Company, that will (i) increase the total number of
Shares which may be issued under the Plan (other than an increase resulting from
an adjustment provided for in Article II), (ii) modify the provisions of
the Plan relating to eligibility, (iii) materially increase the benefits
accruing to participants under the Plan, (iv) extend the maximum period of the
Plan or (v) must otherwise be approved by the stockholders of the Company in
order to comply with applicable law or the rules of the NASDAQ Global Select
Market or, if the Shares are not traded on the NASDAQ Global Select Market, the
principal national securities exchange upon which the Shares are traded or
quoted. The Board of Directors or the Committee, as the case may be,
shall be authorized to amend the Plan and the awards granted hereunder to permit
the Incentive Options granted hereunder to qualify as incentive stock options
within the meaning of Section 422 of the Code (or such successor provision) and
to comply with Rule 16b-3 of the Exchange Act. The rights and
obligations under any option or award granted before amendment of the Plan or
any unexercised portion of such option shall not be adversely affected by
amendment of the Plan or the option without the consent of the holder of the
option or the award.
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XIV.
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TERMINATION
OR SUSPENSION OF THE PLAN
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The
Board of Directors or the Committee, as the case may be, may at any time suspend
or terminate the Plan. The Plan, unless sooner terminated by action
of the Board of Directors or the Committee, as the case may be, shall terminate
as provided in Article XVII. An option or award may not be granted
while the Plan is suspended or after it is terminated. Rights and
obligations under any option or award granted while the Plan is in effect shall
not be altered or impaired by suspension or termination of the Plan, except upon
the consent of the person to whom the option or award was
granted. The power of the Board of Directors or the Committee, as the
case may be, to construe and administer any options and awards granted prior to
the termination or suspension of the Plan under Article III nevertheless shall
continue after such termination or during such suspension.
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XV.
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GOVERNING
LAW
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The
Plan, such options and awards as may be granted thereunder and all related
matters shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware.
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XVI.
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PARTIAL
INVALIDITY
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The
invalidity or illegality of any provision herein shall not be deemed to affect
the validity of any other provision.
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XVII.
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COMPLIANCE
WITH SECTION 409A OF THE
CODE
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To
the extent applicable, it is intended that this Plan and any options or awards
granted hereunder comply with the provisions of Section 409A of the Code, so
that the income inclusion provisions of Section 409A(a)(1) of the Code do not
apply to participants in the Plan. This Plan and any options or
awards granted hereunder shall be administered in a manner consistent with this
intent. Any reference in this Plan to Section 409A of the Code will
also include any regulations or any other formal guidance promulgated with
respect to such Section by the U.S. Department of the Treasury or the Internal
Revenue Service.
Neither
a participant in the Plan nor any of a participant’s creditors or beneficiaries
shall have the right to subject any deferred compensation (within the meaning of
Section 409A of the Code) payable under this Plan and options or awards granted
hereunder to any anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment. Except as permitted under
Section 409A of the Code, any deferred compensation (within the meaning of
Section 409A of the Code) payable to a participant in the Plan or for a
participant’s benefit under this Plan and options or awards hereunder may not be
reduced by, or offset against, any amount owing by a participant in the Plan to
the Company or any of its affiliates.
If,
at the time of a participant’s separation from service (within the meaning of
Section 409A of the Code), (i) the participant shall be a specified employee
(within the meaning of Section 409A of the Code and using the identification
methodology selected by the Company from time to time) and (ii) the Company
shall make a good faith determination that an amount payable hereunder
constitutes deferred compensation (within the meaning of Section 409A of the
Code) the payment of which is required to be delayed pursuant to the six-month
delay rule set forth in Section 409A of the Code in order to avoid taxes or
penalties under Section 409A of the Code, then the Company shall not pay such
amount on the otherwise scheduled payment date but shall instead pay it, without
interest, on the earlier of the first business day of the seventh month after
such six-month period or death.
Notwithstanding
any provision of this Plan and grants hereunder to the contrary, in light of the
uncertainty with respect to the proper application of Section 409A of the Code,
the Company reserves the right to make amendments to this Plan and options or
awards granted hereunder as the Company deems necessary or desirable to avoid
the imposition of taxes or penalties under Section 409A of the
Code. In any case, a participant in the Plan shall be solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on a participant or for a participant’s account in connection with
this Plan and options or awards hereunder (including any taxes and penalties
under Section 409A of the Code), and neither the Company nor any of its
affiliates shall have any obligation to indemnify or otherwise hold a
participant harmless from any or all of such taxes or penalties.
Notwithstanding
anything in this Plan or any award agreement to the contrary, to the extent any
provision of this Plan or an award agreement would cause a payment of deferred
compensation that is subject to Section 409A of the Code to be made upon the
occurrence of a Change of Control, then such payment shall not be made unless
such Change of Control satisfies the requirements for a change in the ownership
or effective control of the Company under Section 409A of the
Code. Any payment that would have been made except for the
application of the preceding sentence shall be made in accordance with the
payment schedule that would have applied in the absence of a Change of
Control.
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XVIII.
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EFFECTIVE
DATE, DURATION OF THE PLAN
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The
Plan shall become effective on the date it is approved by the Company’s
stockholders, and shall remain in effect, subject to the provisions of Article
VII, until terminated by the Board of Directors. In no event may any
options or Performance Shares be granted under the Plan on or after the tenth
anniversary of the date the Plan is approved by the Company’s stockholders;
provided, however, that the term of previously granted Options and Performance
Shares may extend beyond that date.
A -
11
 CENTURY
ALUMINUM COMPANY
2511
GARDEN ROAD
BLDG
A, SUITE 200
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VOTE
BY INTERNET – www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before
the cut-off or meeting date. Have your proxy card in hand when
you access the web site. You will be prompted to enter your
12-digit Control Number which is located below to obtain your records and
create an electronic voting instruction form.
VOTE
BY PHONE – 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off or meeting
date. Have your proxy card in hand when you
call. You will be prompted to enter your 12-digit Control
Number which is located below and then follow the simple instructions the
Vote Voice provides you.
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope
we’ve provided or return to Century Aluminum Company, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717
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TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP
THIS PORTION FOR YOUR RECORDS
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DETACH
AND RETURN THIS PORTION ONLY
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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CENTURY
ALUMINUM COMPANY
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||||||||||
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The Board of Directors recommends a vote FOR
the nominees listed and For Proposals 2, 3, and
4.
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||||||||||
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Vote on Directors
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||||||||||
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1.
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Election
of Class I Directors
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|||||||||
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Nominees
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||||||||||
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01
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Logan
W. Kruger
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FOR
ALL
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WITHHOLD
ALL
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FOR ALL
EXCEPT
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To
withhold authority to vote, mark “For All Except” and write the nominee’s
number on the line below
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02
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Willy
R. Strothotte
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o
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o
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o
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||||||
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03
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Jarl
Berntzen
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|||||||||
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Vote
On Proposals
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||||||||||
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For
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Against
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Abstain
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||||||||
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2.
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Proposal
to amend the Company’s Restated Certificate of Incorporation to increase
the number of authorized shares of the Company’s common stock, par value
$0.01 per share.
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o
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o
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o
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||||||
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3.
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Proposal
to amend and restate the Company’s Amended and Restated 1996 Stock
Incentive Plan (the “Plan”) to increase the number of shares authorized
for issuance under the Plan to 10,000,000 and extend its term through May
27, 2019.
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o
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o
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o
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||||||
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4.
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Proposal
to ratify the appointment of Deloitte & Touche LLP as the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2009.
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o
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o
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o
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||||||
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5.
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Authorize
the proxies to vote in their discretion, upon such other matters that may
properly come before the meeting or any adjournments or postponements
thereof.
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The
shares represented by this proxy when properly executed will be voted in
the manner directed herein by the undersigned
Stockholder(s). If no direction is made, this proxy will be
voted FOR items 1, 2, 3, and
4. If any other matters properly come before the
meeting, the person named in this proxy will vote in their
discretion.
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||||||||||
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Si
Signature (Joint Owners)
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D
Date
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Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting:
The Notice and
Proxy Statement and Annual Report are available at www.proxyvote.com.
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 THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS
May
27, 2009
The
stockholders hereby appoint Robert R. Nielsen and William J. Leatherberry,
or either of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and vote, as
designated on the reverse side of this ballot, all of the shares of common
stock of Century Aluminum Company that the stockholder is entitled to vote
at the Annual Meeting of Stockholders to be held at 8:30 a.m., local time
on Wednesday, May 27, 2009, at the Company’s executive offices located at
2511 Garden Road, Building A, Suite 200, Monterey, California, and any
adjournment or postponement thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE
BOARD OF DIRECTORS AND FOR EACH PROPOSAL.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
REPLY ENVELOPE
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
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