ENVIRI CORP
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
Harsco Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| þ | No fee required. | |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: | ||
| (2) | Aggregate number of securities to which transaction applies: | ||
| (3) | Per unit or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| (4) | Proposed maximum aggregate value of transaction: | ||
| (5) | Total fee paid: | ||
| o | Fee paid previously with preliminary materials. | |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: | ||
| (2) | Form, Schedule or Registration Statement No.: | ||
| (3) | Filing Party: | ||
| (4) | Date Filed: | ||
Table of Contents
Notice of
2010 Annual
Meeting and Proxy
Statement
Harsco Corporation
Table of Contents
Harsco Corporation
350 Poplar Church Road
Camp Hill, PA 17011 USA
Telephone: 717.763.7064
Fax: 717.763.6424
www.harsco.com
March 26, 2010
To Our Stockholders:
You are cordially invited to attend the 2010 Annual Meeting of
Stockholders of Harsco Corporation (the “Company”),
which will be held on Tuesday, April 27, 2010, beginning at
10:00 a.m., local time, at the Radisson Penn Harris Hotel
and Convention Center, Camp Hill, Pennsylvania.
Information about the Annual Meeting, including a listing and
discussion of the various matters on which you, as our
stockholders, will act, may be found in the formal Notice of
Annual Meeting of Stockholders and Proxy Statement included with
this mailing. We look forward to greeting as many of our
stockholders as possible.
The Company is providing you with the opportunity to vote your
shares by calling a toll-free number, by mailing the enclosed
Proxy Card or via the Internet as explained in the instructions
on your Proxy Card.
Whether you plan to attend the Annual Meeting or not, we urge
you to fill in, sign, date and return the enclosed Proxy Card in
the postage-paid envelope provided, or vote by telephone or via
the Internet, in order that as many shares as possible may be
represented at the Annual Meeting. The vote of every stockholder
is important and your cooperation in returning your executed
Proxy Card promptly will be appreciated.
Sincerely,
Salvatore D. Fazzolari
Chairman and Chief Executive
Officer
This document is intended to be mailed to stockholders on or
about March 26, 2010.
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Table of Contents
HARSCO CORPORATION
350 Poplar Church Road
Camp Hill, Pennsylvania 17011 USA
NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Harsco Corporation (the
“Company”) will be held on Tuesday, April 27,
2010, at 10:00 a.m., local time, at the Radisson Penn
Harris Hotel and Convention Center, Camp Hill, Pennsylvania to
consider and act upon the following matters:
| 1. | Election of ten Directors to serve until the next Annual Meeting of Stockholders, and until their successors are elected and qualified: |
G. D. H. Butler,
K. G. Eddy,
S. D. Fazzolari,
S. E. Graham,
T. D. Growcock,
H. W. Knueppel,
D. H. Pierce,
J. I. Scheiner,
A. J. Sordoni, and
R. C. Wilburn;
K. G. Eddy,
S. D. Fazzolari,
S. E. Graham,
T. D. Growcock,
H. W. Knueppel,
D. H. Pierce,
J. I. Scheiner,
A. J. Sordoni, and
R. C. Wilburn;
| 2. | Ratification of the appointment by the Audit Committee of the Board of Directors of the Company (the “Board”) of PricewaterhouseCoopers LLP as independent auditors to audit the accounts of the Company for the fiscal year ending December 31, 2010; and | |
| 3. | Such other business as may properly come before the Annual Meeting. |
The Board has fixed the close of business on March 2, 2010
as the record date for the determination of stockholders who are
entitled to notice of, and to vote at, the Annual Meeting and at
any adjournments thereof. Proxies will be accepted continuously
from the time of mailing until the closing of the polls at the
Annual Meeting.
Stockholders who do not expect to attend the Annual Meeting
in person are requested to fill in, sign, date and return the
enclosed Proxy Card in the envelope provided, or vote by
telephone or via the Internet, as explained in the instructions
on your Proxy Card.
By Order of the Board,
Mark E. Kimmel
Senior Vice President, Chief
Administrative Officer,
General Counsel and Corporate
Secretary
March 26, 2010
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PROXY
STATEMENT
ANNUAL MEETING
INFORMATION
General
This Proxy Statement has been prepared in connection with the
solicitation by the Board of Directors (the “Board”)
of Harsco Corporation, a Delaware corporation (the
“Company”), of proxies in the accompanying form to be
used at our Annual Meeting of Stockholders, to be held on
April 27, 2010, or at any adjournment of the Annual Meeting.
The following information relates to the Annual Meeting and the
voting of your shares at the meeting:
| Type of shares entitled to vote at the Annual Meeting: | Our common stock, par value $1.25 | |
| Record date for stockholders entitled to notice of, and to vote at, the Annual Meeting (“Record Date”): | Close of business on March 2, 2010 | |
| Shares of common stock issued and outstanding as of the Record Date (does not include treasury shares, which are not entitled to be voted at the Annual Meeting): | 80,505,994 shares | |
| Proxy Statements, Notice of Annual Meeting and Proxy Cards are intended to be mailed to stockholders: | On or about March 26, 2010 | |
| Location of our executive offices: | 350 Poplar Church Road, Camp Hill, Pennsylvania 17011 |
To obtain directions to attend the meeting and vote in person,
please contact Kenneth D. Julian, Senior Director —
Corporate Communications, by telephone at
(717) 730-3683
or by e-mail
at kjulian@harsco.com.
Information contained on our website is not incorporated by
reference into this Proxy Statement, and you should not consider
information contained on our website as part of this Proxy
Statement. Copies of our corporate governance principles, code
of business conduct and charters of the Board’s committees
are available in print to any stockholder who requests such
copies from us.
Important Notice
Regarding the Availability of Proxy Materials for the Annual
Meeting of Stockholders to be held on April 27,
2010
The Notice of 2010 Annual Meeting and Proxy Statement, our Proxy
Card and our 2009 Annual Report are available free of charge at
http://bnymellon.mobular.net/bnymellon/hsc.
Voting
All shares of common stock entitled to vote at the Annual
Meeting are of one class, with equal voting rights. Each share
of common stock held by a stockholder is entitled to cast one
vote on each matter voted on at the Annual Meeting. In order for
the Annual Meeting to be valid and the actions taken binding, a
quorum of stockholders must be present at the meeting, either in
person or
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by proxy. A quorum is a majority of the issued and outstanding
shares of common stock as of the Record Date. Assuming that a
quorum is present, the affirmative vote by the holders of a
plurality of the votes cast at the Annual Meeting will be
required to act on the election of directors, and the
affirmative vote of the holders of at least a majority of the
outstanding common stock present in person or by proxy and
entitled to vote on matters at the Annual Meeting will be
required for ratification of PricewaterhouseCoopers LLP as
independent auditors for the current fiscal year. The vote
required to act on all other matters to come before the Annual
Meeting will be in accordance with the voting requirements
established by our Restated Certificate of Incorporation and
By-Laws, each as amended to date.
Stockholder votes will be tabulated by an independent inspector
of election for the Annual Meeting. The shares of common stock
represented by each properly submitted proxy received by the
Board of Directors will be voted as follows at the Annual
Meeting:
If instructions are provided, in accordance with such
instructions, or
If no instructions are provided, (1) FOR the
election as Directors of the ten nominees of the Board of
Directors, (2) FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors for the
current fiscal year, and (3) in accordance with the best
judgment of the named proxies on any other matters properly
brought before the Annual Meeting.
Revocation of
Proxies
Any proxy granted pursuant to this solicitation or otherwise,
unless coupled with an interest, may be revoked by the person
granting the proxy at any time before it is voted at the Annual
Meeting. Proxies may be revoked by (i) delivering to the
Secretary of the Company a written notice of revocation bearing
a date later than that of the proxy, (ii) duly executing
and delivering a later dated written proxy relating to the same
shares, or (iii) attending the Annual Meeting and voting in
person. If you hold your shares through a bank, broker or other
nominee holder, only that bank, broker or other nominee holder
can revoke your proxy on your behalf.
Withheld Votes
and Broker Non-Votes
In certain circumstances, a stockholder will be considered to be
present at the Annual Meeting for quorum purposes but will not
be deemed to have cast a vote on a matter. That occurs when a
stockholder is present but specifically withholds a vote or
abstains from voting on a matter, or when shares are represented
at the Annual Meeting by a proxy conferring authority to vote
only on certain matters (“broker non-votes”). In
accordance with Delaware law, votes withheld will not be treated
as votes cast with respect to the election of directors, and
therefore will not affect the outcome of director elections.
With respect to the ratification of auditors, abstentions will
be treated as negative votes and broker non-votes will not be
counted in determining the outcome.
Other
Business
The Board of Directors knows of no other business to come before
the Annual Meeting. However, if any other matters are properly
presented at the Annual Meeting, or any adjournment of the
Annual Meeting, the persons voting the proxies will vote them in
accordance with their best judgment.
CORPORATE
GOVERNANCE
We have a long-standing commitment to good corporate governance
practices. These practices come in many different forms and
apply at all levels of our organization. They provide
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the Board of Directors and our senior management with a
framework that defines responsibilities, sets high standards of
professional and personal conduct and promotes compliance with
our various financial, ethical, legal and other obligations and
responsibilities.
Corporate
Governance Principles
The Board has adopted corporate governance principles that,
along with the charters of the Board committees, provide the
framework for our Board of Directors’ operation and
governance. The Board’s Nominating and Corporate Governance
Committee is responsible for overseeing and reviewing our
corporate governance principles at least annually and
recommending any proposed changes to the Board for approval. The
corporate governance principles are available on our website at
www.harsco.com/insight-on-harsco in the Corporate
Governance section.
Code of Business
Conduct
We have adopted a code of business conduct applicable to our
employees, officers and directors worldwide. The code of
business conduct is issued in booklet form and an online
training program facilitates new employee orientation and
individual refresher training. Our code of business conduct is
produced in over 20 languages. The code of business
conduct, including any amendments thereto or waivers thereof,
can be viewed at the Corporate Governance section of our website
at www.harsco.com/insight-on-harsco.
Stockholder and
Interested Party Communications with Directors
The Board of Directors has a formal process for stockholders and
interested parties to communicate directly with the Chairman and
CEO, lead independent director, the non-management directors or
with any individual member of the Board of Directors.
Stockholders and interested parties may contact any member of
the Board, including the lead independent director,
Dr. Robert Wilburn, and the Chairman and CEO, by writing to
the specific Board member in care of our Corporate Secretary at
our Corporate Headquarters (350 Poplar Church Road, Camp Hill,
PA 17011). Our Corporate Secretary will forward any such
correspondence to the applicable Board member; provided,
however, that any such correspondence that is considered by our
Corporate Secretary to be improper for submission to the
intended recipients will not be provided to such Directors. In
addition, Board members, including the lead independent director
and the Chairman and CEO, can be contacted by
e-mail at
BoardofDirectors@harsco.com.
Independence
Standards For Directors
The following NYSE Euronext standards, which are also posted
under the Corporate Governance section of our website at
www.harsco.com/insight-on-harsco, have been applied by
the Board of Directors in determining whether individual
directors qualify as “independent.” References to us
include our consolidated subsidiaries.
| 1. | No director will be qualified as “independent” unless the Board of Directors affirmatively determines that the director has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us. We will disclose these affirmative determinations. | |
| 2. | No director who is a former employee of ours can be deemed “independent” until three years after the end of his or her employment relationship with us. |
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| 3. | No director whose immediate family member is or has been an executive officer of ours can be deemed “independent” until three years after such family member has ceased to be an executive officer. | |
| 4. | No director who receives, or whose immediate family member receives, more than $120,000 during any twelve-month period in direct compensation from us, other than director and committee fees and deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), can be “independent” until three years after he or she ceases to receive more than $120,000 during any twelve-month period in such compensation. | |
| 5. | No director can be independent: |
| a. | who is a current partner or employee of our internal or external auditor; |
| b. | whose immediate family member is a current partner of our internal or external auditor; |
| c. | whose immediate family member is a current employee of our internal or external auditor and personally works on such auditor’s audit; or |
| d. | who, or whose immediate family member, was within the last three years (but is no longer) a partner or employee of such auditor and personally worked on our audit within that time. |
| 6. | No director who is employed, or whose immediate family member is employed, as an executive officer of another company where any of our present executives serve on that company’s compensation committee can be “independent” until three years after the end of such service or employment relationship. | |
| 7. | No director who is an employee, or whose immediate family member is an executive officer, of a company that makes payments to, or receives payments from, us for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues, can be “independent” until three years after falling below such threshold. |
The Board has affirmatively determined that the following eight
Directors who are standing for reelection are independent:
Messrs. Graham, Growcock, Knueppel, Pierce, Scheiner,
Sordoni, and Wilburn and Ms. Eddy. In addition, the Board
affirmatively determined that Ms. Scanlan and
Mr. Jasinowski were independent within the meaning of the
NYSE Euronext listing standards during their tenure.
Executive
Sessions of Independent Directors
Independent Directors regularly meet in executive sessions
without management. Our named lead director, Dr. Wilburn,
who is a non-management director, presides over each session of
the independent Directors. During the 2009 fiscal year, the
independent Directors held three meetings as a complete group
(i.e., all eight independent Directors) and commencing in
September 2009, meet as a group after every Board Meeting.
Director
Attendance at Annual Meeting of Stockholders
It is our policy to request that all Board members attend the
Annual Meeting of Stockholders. However, we also recognize that
personal attendance by all Directors is not always possible. The
ten individuals who are standing for election as Directors in
2010 attended the 2009 Annual Meeting of Stockholders.
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Current Structure
of the Board of Directors
Information regarding the current structure of our Board of
Directors:
| Current size: | 10 members | |
| Size of Board of Directors authorized in the By-Laws: | Not less than five nor more than 12 | |
| Number of Independent Directors: | Eight members | |
| Size of Board of Directors established by: | Board of Directors | |
| Lead Director: | R. C. Wilburn |
We currently combine the position of Chairman and Chief
Executive Officer. Our Board formally reviewed this structure in
2007 and determined, after much deliberation and after a review
of several studies, both U.S. and international, that this
structure was the appropriate leadership structure for Harsco,
as it provides the most efficient and effective leadership model
for us by enhancing the Chairman and Chief Executive
Officer’s ability to provide perspective and direction with
regard to business strategies and plans to both the Board and
management, thus avoiding the creation of two centers of
authority which could potentially dilute the CEO’s ability
to lead the organization. The Board believes Harsco can most
effectively execute its business strategies and plans if the
Chairman is also a member of the management team, such that
ultimate leadership and accountability rest in a single
position. This allows for unified leadership and focus.
Another key component of our leadership structure is our strong
governance practices, which ensure that the Board effectively
carries out its responsibility for the oversight of management.
All Directors, with the exception of the Chairman and
Mr. Butler, are independent. This heavy weighting of our
Board in favor of independent directors, combined with the
position of Lead Director, provides a strong counterbalance to
the role of management on the Board. We believe that the role of
Lead Director is a key mechanism for strengthening board
independence. The Lead Director has broad responsibilities,
including chairing regular meetings of the independent Directors
and presiding as chair in the absence of the Chairman. In
addition, the Lead Director serves as the liaison between the
independent Directors and the Chairman. The Lead Director
regularly consults with the Chairman and is involved in
discussing meeting agendas and in reviewing information that is
sent to the Board and all critical communications to the Board.
The Lead Director has the ability to call a meeting of the
independent Directors as required, and the independent Directors
meet after nearly every Board meeting in executive session.
Members of management do not attend these meetings.
Enterprise Risk
Management
Our management is responsible for assessing and managing our
exposure to risk. We have established an enterprise risk
management process to identify, assess and manage the most
significant risks facing the Company. The executive oversight of
this process is through a committee comprised of the Chairman
and CEO, the CFO and the Chief Administrative Officer. As part
of this process, we provide periodic updates to and receive
feedback from the Board regarding the risks identified by the
enterprise risk management process. In addition, the Audit
Committee has oversight responsibility for financial risks. Our
Audit Committee regularly meets with and discusses with
management and our independent auditors major financial risks
and the steps management has taken to monitor and control these
risks. The financial risks are regularly discussed with the
Board by management and through the reports of the Audit
Committee to the Board. The Company believes that its leadership
structure, discussed in detail above, supports the risk
oversight function of the Board.
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Meeting
Attendance and Committees
The Board of Directors held seven meetings during the fiscal
year ended December 31, 2009. All Directors who served
during the fiscal year ended December 31, 2009 attended at
least 95.8% of the total Board meetings and meetings of the
committee on which they served, and the average attendance by
such Directors at all Board and committee meetings was 99.20%.
The independent Directors held three meetings during 2009. We
have standing Audit, Management Development and Compensation,
and Nominating and Corporate Governance Committees. The
Executive Committee was dissolved in April 2009.
| Audit Committee | Meetings in 2009: five | |
| Members: Ms. Eddy (Chairman), Mr. Graham, Mr. Knueppel and Mr. Sordoni | ||
| Duties: Established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”). Oversees our financial reporting processes, including meeting with members of management, the external auditors and the internal auditors, reviewing and approving both audit and non-audit services, reviewing the results of the annual audit and reviewing the adequacy of our internal controls. The Committee also discusses with management and the independent auditors our guidelines, policies and controls with respect to risk assessment and risk management. The Committee is also responsible for managing the relationship with the external auditors. The Chairman of the Audit Committee meets quarterly with management and the independent auditors to review financial matters. See also the Report of the Audit Committee below. The Audit Committee approved revisions to the Audit Committee’s charter as of February 2010 to further clarify its responsibilities with respect to certain matters. A copy of the Audit Committee charter can be viewed at the Corporate Governance section of our website at www.harsco.com/insight-on-harsco. | ||
| Executive Committee | Meetings in 2009: none, dissolved in April 2009 | |
| Members prior to dissolution: Mr. Fazzolari (Chairman), Ms. Eddy, Messrs. Pierce, Sordoni and Wilburn | ||
| Duties prior to dissolution: Authorized to exercise all powers and authority of the Board of Directors when the Board is not in session, except as may be limited by the General Corporation Law of the State of Delaware. | ||
| Management Development and Compensation Committee |
Meetings in 2009: five Members: Mr. Pierce (Chairman), Messrs. Growcock, Scheiner and Wilburn |
|
| Duties: Administers our executive compensation policies and plans and advises the Board regarding management |
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| succession and compensation levels for members of management. The Compensation Committee approves compensation and cash incentives for our senior officers and makes recommendations to the Board regarding equity-based and incentive compensation plans. The Compensation Committee’s responsibilities include: (i) evaluating and approving the compensation of our executive officers, including reviewing and approving corporate performance goals and objectives related to the compensation of our executive officers; (ii) evaluating the executive officers’ and our performance relative to compensation goals and objectives; (iii) determining and approving the executive officers’ compensation levels based on the Committee’s evaluation of their performance; (iv) evaluating and approving compensation grants to executive officers under our annual and incentive compensation plans, policies and procedures and recommending to the Board for approval our grants under equity-based and incentive compensation plans; (v) overseeing our policies on structuring compensation programs for executive officers to preserve tax deductibility; (vi) delegating authority to subcommittees and to Harsco management for administration or other duties when the Committee deems it appropriate; (vii) adopting procedures and guidelines as the Committee deems appropriate to carry out its oversight functions; (viii) producing any required reports on executive compensation required to be included in our filings with the Securities and Exchange Commission (“SEC”); (ix) reviewing and discussing with our management the Compensation Discussion and Analysis (referred to herein as the CD&A) to be included in our filings with the SEC; (x) determining whether to recommend to the Board that the CD&A be included in our filings with the SEC; (xi) making regular reports to the full Board on the activities of the Committee; and (xii) performing such other duties as may be assigned to the Committee by law or the Board. The Compensation Committee recently completed a review of its charter and determined that no changes were required. A copy of the Compensation Committee’s charter can be viewed at the Corporate Governance section of our website at www.harsco.com/insight-on-harsco. | ||
| Nominating and Corporate Governance Committee | Meetings in 2009: three | |
| Members: Mr. Sordoni (Chairman), Ms. Eddy, and Messrs. Growcock, Wilburn and Graham | ||
| Duties: Recommends Director candidates to the Board for election at the Annual Meeting, reviews and recommends potential new Director candidates, reviews candidates |
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| recommended by our stockholders and oversees our corporate governance program. The role of the Nominating and Corporate Governance Committee (the “Nominating Committee”) is described in greater detail under the section entitled “The Nominating Process” below. The Nominating Committee recently completed a review of its charter and determined that no changes were required. A copy of the Nominating Committee’s charter can be viewed at the Corporate Governance section of our website at www.harsco.com/insight-on-harsco. |
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HARSCO STOCK
PERFORMANCE GRAPH
The following performance graph compares the yearly percentage
change in the cumulative total stockholder return (assuming the
reinvestment of dividends) on our common stock against the
cumulative total return of the Standard & Poor’s
MidCap 400 Index and the Dow Jones Industrial-Diversified Index
for the past five years. The graph assumes an initial investment
of $100 on December 31, 2004 in our common stock or in the
underlying securities which comprise each of those market
indices. The information contained in the graph is not
necessarily indicative of our future performance.
COMPARISON OF 5
YEAR CUMULATIVE TOTAL RETURN*
Among Harsco
Corporation, The S&P MidCap 400 Index
And The Dow Jones US Diversified Industrials Index
And The Dow Jones US Diversified Industrials Index
| * |
$100 invested on 12/31/04 in stock or index, including
reinvestment of dividends. Fiscal year ending December 31. |
Copyright©
2010 S&P, a division of The McGraw-Hill Companies Inc. All
rights reserved.
Copyright© 2010 Dow Jones & Co. All rights reserved.
Copyright© 2010 Dow Jones & Co. All rights reserved.
| 12/04 | 12/05 | 12/06 | 12/07 | 12/08 | 12/09 | |||||||||||||||||||||||||
|
Harsco Corporation
|
100.00 | 123.75 | 141.87 | 242.40 | 106.70 | 127.72 | ||||||||||||||||||||||||
|
S&P MidCap 400
|
100.00 | 112.55 | 124.17 | 134.08 | 85.50 | 117.46 | ||||||||||||||||||||||||
|
Dow Jones US Diversified Industrials
|
100.00 | 97.39 | 106.68 | 113.87 | 58.02 | 65.85 | ||||||||||||||||||||||||
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THE NOMINATING
PROCESS
The Nominating Committee of the Board of Directors is
responsible for overseeing the selection of qualified candidates
to serve as members of the Board of Directors and guiding our
corporate governance philosophy and practices. The Nominating
Committee is composed of five directors, each of whom is
“independent” under the rules of the NYSE Euronext.
The Nominating Committee operates according to a charter that
complies with the guidelines established by the NYSE Euronext.
The Nominating Committee has not adopted formal procedures in
selecting individuals to serve as members of the Board of
Directors. Instead, it utilizes general guidelines that allow it
to adjust the process to best satisfy the objectives established
for any director search. The first step in the general process
is to identify the type of candidate the Nominating Committee
may desire for a particular opening. This may involve
identifying someone with a specific background, skill set or set
of experiences. Once identified, the Nominating Committee next
determines the best method of finding a candidate who satisfies
the specified criteria. The Nominating Committee may consider
candidates recommended by management, by other members of the
Nominating Committee or the Board of Directors, by stockholders,
or it may engage a third party to conduct a search for possible
candidates. The Nominating Committee has used independent search
firms in the past to assist in the identification and evaluation
of possible candidates.
In addition to the above, at our January 2010 Board meeting, we
initiated a process for the full Board to review and determine
our Directors’ and nominees’ qualifications. As part
of this process, we solicited a self-assessment in the form of a
skills matrix from each Director, pursuant to which we asked
each Director to personally assess their ability to meet the
requirements described in this section and in our charter, and
to allow us to periodically assess our current Board, and, as we
consider additional candidates for the Board, to determine
whether there are particular attributes which we should
particularly focus on with those candidates and that we would
most benefit from adding to our Board. Based on the compiled
results of these responses, we and the Board have determined
that, in light of our business structure, we currently have the
right mix of Directors for the strategic path of the Company.
Many of the attributes set forth in this section are
self-explanatory. The Board also considers diversity, as noted
below, when considering Director nominees, taking into
consideration not only diversity of national origin, gender, age
and race, but also of profession and geographic experience.
Although diversity is included as a selection criteria under our
Nominating and Corporate Governance charter, our Board has not
at this time adopted a separate diversity policy.
The Nominating Committee will consider all nominees in the same
manner regardless of the source of the recommendation of such
nominee. The Nominating Committee will consider recommendations
for director candidates from stockholders if such
recommendations are in writing and set forth the following
information:
| 1. | The full legal name, address and telephone number of the stockholder recommending the candidate for consideration and whether that person is acting on behalf of or in concert with other beneficial owners, and if so, the same information with respect to them. | |
| 2. | The number of shares held by any such person as of a recent date and how long such shares have been held, or if such shares are held in street name, reasonable evidence satisfactory to the Nominating Committee of such person’s ownership of such shares as of a recent date. | |
| 3. | The full legal name, address and telephone number of the proposed nominee for director. |
11
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| 4. | A reasonably detailed description of the proposed nominee’s background, experience and qualifications, financial literacy and expertise, as well as any other information required to be disclosed in the solicitation for proxies for election of directors pursuant to the rules of the SEC, and the reasons why, in the opinion of the recommending stockholder, the proposed nominee is qualified and suited to be one of our directors. | |
| 5. | Disclosure of any direct or indirect relationship (or arrangements or understandings) between the recommending stockholder and the proposed nominee (or any of their respective affiliates). | |
| 6. | Disclosure of any direct or indirect relationship between the proposed nominee and us, any of our employees or other directors, any beneficial owner of more than 5% of our common stock, or any of their respective affiliates. | |
| 7. | Disclosure of any direct or indirect interest that the recommending stockholder or proposed nominee may have with respect to any pending or potential proposal or other matter to be considered at this Annual Meeting or any subsequent annual meeting of our stockholders. | |
| 8. | A written, signed, and notarized acknowledgement from the proposed nominee consenting to such recommendation by the recommending stockholder, confirming that he or she will serve as a director if so elected and consenting to our undertaking of an investigation into their background, experience and qualifications, any direct or indirect relationship with the recommending stockholder, us, our management or 5% stockholders, or interests in proposals or matters, and any other matter reasonably deemed relevant by the Nominating Committee to its considerations of such person as a potential candidate. |
This information must be submitted as provided under the heading
“STOCKHOLDER PROPOSALS AND NOMINATIONS FOR
PRESENTATION AT 2011 ANNUAL MEETING OF STOCKHOLDERS.”
There have been no material changes to the procedures relating
to stockholder nominations during 2009. The Nominating Committee
believes that these procedural requirements are intended solely
to ensure that it has a sufficient basis on which to assess
potential candidates and are not intended to discourage or
interfere with appropriate stockholder nominations. The
Nominating Committee does not believe that any such requirements
subject any stockholder or stockholder nominee to any
unreasonable burden. The Nominating Committee and the Board
reserve the right to change the above procedural requirements
from time to time
and/or waive
some or all of the foregoing requirements with respect to
certain nominees, but any such waiver shall not preclude the
Nominating Committee from insisting upon compliance with any and
all of the above requirements by any other recommending
stockholder or proposed nominees.
Once candidates are identified, the Nominating Committee
conducts an evaluation of the candidate. The evaluation
generally includes interviews and background and reference
checks. There is no difference in the evaluation process of a
candidate recommended by a stockholder as compared to the
evaluation process of a candidate identified by any of the other
means described above. While the Nominating Committee has not
established minimum criteria for a candidate, it has established
important factors to consider in evaluating a candidate. These
factors include the following (although candidates need not
possess all of the following characteristics, and not all
factors are weighted equally):
| • | strength of character, | |
| • | mature judgment, |
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| • | strategic thinker, | |
| • | demonstrated leadership skills, | |
| • | business experience, including relevant industry experience, | |
| • | experience with international business issues and risk, | |
| • | public company experience, | |
| • | innovation, technology or information technology expertise, | |
| • | brand marketing expertise, | |
| • | availability, | |
| • | attendance, | |
| • | career specialization, | |
| • | relevant technical skills, | |
| • | diversity, and | |
| • | the extent to which the candidate would fill a present need on the Board of Directors. |
If the Nominating Committee determines that an individual should
be nominated as a candidate, the individual’s nomination is
then recommended to the Board of Directors, who may in turn
conduct its own review to the extent it deems appropriate. When
the Board of Directors has agreed upon a candidate to be
nominated at an Annual Meeting of Stockholders, that candidate
is then recommended to the stockholders for election at an
Annual Meeting of Stockholders.
All of our current directors are standing for reelection. Each
of the directors standing for reelection has been recommended by
the Nominating Committee to the Board of Directors for election
as our directors at the 2010 Annual Meeting of Stockholders and
the Board has approved the recommendation. We did not engage a
third party search firm to assist with the selection of director
candidates for the 2010 Annual Meeting of Stockholders. During
2009, we received no recommendations for directors from any
stockholders.
PROPOSAL 1:
ELECTION OF DIRECTORS
The first proposal to be voted on at the Annual Meeting is the
election of the following ten Directors, each of whom is
recommended by the Board of Directors. If elected, the Directors
will hold office from election until the next annual meeting or
until their successors are elected or appointed and qualified.
Biographical information about each of these nominees is
included below.
The Board of Directors recommends that stockholders vote
“FOR” the election of each of the following
nominees:
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Nominees for
Director
The information set forth below states the name of each nominee
for Director, his or her age (as of March 2, 2010), a
listing of present and recent employment positions, the year in
which he or she first became a Director of the Company, other
directorships held, the nominee’s specific experience,
qualifications, attributes or skills that qualify him or her to
serve as a Director of the Company and the committees of the
Board on which the individual serves.
|
Director |
||||||||||
|
of the |
||||||||||
|
Position with the Company, |
Company |
|||||||||
|
Name
|
Age |
Prior Business Experience and Qualifications, Attributes and
Skills
|
Since | |||||||
|
G. D. H. Butler
|
63 | President of the Company and CEO of the Harsco Infrastructure business group since January 1, 2008. Also served as CEO of the Harsco Metals business group between January 1, 2008 and June 1, 2009. Served as Senior Vice President — Operations of the Company from September 26, 2000 to December 31, 2007 and Director since January 2002. Concurrently served as President of the MultiServ Division and SGB Group Division. From September 2000 through December 2003, he was President of the Heckett MultiServ International and SGB Group Divisions. Was President of the Heckett MultiServ — East Division from July 1, 1994 to September 26, 2000. Served as Managing Director — Eastern Region of the Heckett MultiServ Division in 1994. Served in various officer positions within MultiServ International, N.V. prior to 1994 and prior to Harsco’s acquisition of that company in 1993. | 2002 | |||||||
|
|
||||||||||
| With over 15 years of senior-level managerial experience across multiple segments within the Company, including his multi- industry experience and having served as a Director of the Company since 2002, Mr. Butler brings to the Board demonstrated management capability coupled with a global background that fits well with our envisioned journey for the Company in the coming years. He has worked his entire career outside the United States and thus brings a global and culturally diverse perspective, particularly with Harsco’s recent expansion into emerging markets. Mr. Butler has gained critical international experience through his leadership roles across the globe, many of which are detailed above, which fills a much needed role on the Board. | ||||||||||
|
|
||||||||||
|
K. G. Eddy
|
59 | Certified Public Accountant. Founding partner of McDonough, Eddy, Parsons & Baylous, AC (a public accounting firm) since 1981. Chairman of the Board of Directors of the American Institute of Certified Public Accountants between 2000 and 2001. Current member of the AICPA Governing Council and Secretary of the West Virginia Higher Education Policy Commission. Chairman of the Audit Committee and member of the Nominating Committee. | 2004 | |||||||
|
|
||||||||||
| Ms. Eddy brings over 30 years of financial accounting experience to our Board, which experience is critical, particularly in terms of her role as Chair of our Audit Committee. Ms. Eddy has served as a certified public accountant for thirty- one years, providing accounting, auditing and tax services to a wide range of clients. Ms. Eddy’s experience with accounting principles, financial reporting rules and regulations, evaluating financial results and generally overseeing the financial reporting process from an independent auditor’s perspective; her role as a former chairman of the AICPA; and her receipt of the AICPA gold medal for distinguished service, makes her an integral part of our Board. | ||||||||||
|
|
||||||||||
|
S. D. Fazzolari
|
57 | Chairman and Chief Executive Officer of the Company since April 22, 2008. Chief Executive Officer of the Company since January 1, 2008. Served as President and Chief Financial Officer of the Company from October 10, 2007 to December 31, 2007. Served as President, Chief Financial Officer and Treasurer of the Company from January 24, 2006 to October 9, 2007 and as a Director since January 2002. Served as Senior Vice President, Chief Financial Officer and Treasurer from August 1999 until January 2006 and as Senior Vice President and Chief Financial Officer from January 1998 to August 1999. Served as Vice President and Controller from January 1994 to December 1997 and as Controller from January 1993 to January 1994. | 2002 | |||||||
|
|
||||||||||
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|
Director |
||||||||||
|
of the |
||||||||||
|
Position with the Company, |
Company |
|||||||||
|
Name
|
Age |
Prior Business Experience and Qualifications, Attributes and
Skills
|
Since | |||||||
| Mr. Fazzolari has been with the Company for 30 years. During this time, he has served in numerous leadership positions that have enabled him to develop significant business acumen, an in-depth knowledge of the various segments of our business, and a deep appreciation of the international business issues and risks facing a multinational company in today’s business environment. Mr. Fazzolari brings a high level of financial literacy to his role with the Board, having served the Company as Corporate Controller, as Treasurer and as Chief Financial Officer, making him a valuable asset to the Board. He was also President of Harsco for two years, where he assisted the CEO in operating the company and was responsible for many growth and transformational initiatives. Mr. Fazzolari has also lived outside the United States and brings a global perspective to the Board. In addition, Mr. Fazzolari has demonstrated success in his consensus-building and leadership skills through his increasingly more senior roles within the Company, and these skills have enabled him to be an effective Board member and Chairman. His leadership of our business also reflects his judgment and risk assessment skills as a Board member, which skills are necessary in today’s environment. | ||||||||||
|
|
||||||||||
|
S. E. Graham
|
64 | Chairman of Skanska USA (a leading provider of construction services) since September 1998. From 2002 until his retirement in April 2008, Mr. Graham served as President and Chief Executive Officer of Skanska AB, one of the world’s largest construction groups. From 2000 to 2002, Mr. Graham served as Executive Vice President and as a member of the Senior Executive Team of Skanska AB. Mr. Graham’s career includes more than four decades of worldwide experience in the infrastructure and construction industry, including executive management responsibilities for Skanska’s business units in the U.S. and U.K., Hong Kong and Latin America. Mr. Graham has also served as Chairman of the Engineering and Construction Governors Council of the World Economic Forum and founded the Engineering and Construction Risk Institute. He is Chairman of the New York City Building Congress and a member of the Board of Directors of Securitas AB, Skanska AB and PPL Corporation. Member of the Audit Committee and the Nominating Committee. | 2009 | |||||||
|
|
||||||||||
| Mr. Graham’s extensive experience in the infrastructure and construction industries and his senior leadership roles across various Skanska entities enable Mr. Graham to be an effective Board member who demonstrates an in-depth understanding of our business needs. He has lived and worked outside the United States for many years leading a large, multinational European construction group company. This experience is an invaluable asset to the Board of Directors. Mr. Graham further contributes leadership and consensus-building skills as a member of our Audit and Nominating Committees. His membership on other public company boards also enhances his contribution to the Board. | ||||||||||
|
|
||||||||||
|
T. D. Growcock
|
64 | Retired Chairman of the Board of The Manitowoc Company (a worldwide provider of lifting equipment and foodservice equipment, and a North American mid-size shipbuilder). Served as Chairman of The Manitowoc Company from January 2008 until December 2008. Previously served as Chairman and Chief Executive Officer of The Manitowoc Company from 2002 until 2007. Served as Manitowoc’s President and Chief Executive Officer from 1998 to 2002. Served as President of Manitowoc Foodservice Group from 1995 to 1998. Served as Executive Vice President of Manitowoc Ice from 1994 to 1995. Served in numerous management and executive positions with Invensys plc (a global industrial automation, transportation and controls group), formerly known as Siebe plc, and United Technologies Corporation (a diversified provider of high technology products) prior to joining Manitowoc in 1994. He is a former Chairman of Wisconsin Manufacturers and Commerce, one of the state’s leading business associations. Mr. Growcock is a Director of Harris Corporation and Carlisle | 2008 | |||||||
15
Table of Contents
|
Director |
||||||||||
|
of the |
||||||||||
|
Position with the Company, |
Company |
|||||||||
|
Name
|
Age |
Prior Business Experience and Qualifications, Attributes and
Skills
|
Since | |||||||
| Companies, Inc. Member of the Compensation Committee and the Nominating Committee. | ||||||||||
|
|
||||||||||
| Mr. Growcock has served on a number of corporate governance panels, which informs his judgment as a member of our Nominating Committee. Mr. Growcock has also led and directed global industrial businesses, which informs his judgment and risk assessment skills as a Board member. These skills allow him to contribute his experiences as an international business leader and his knowledge with regard to global procurement matters, economic value added, or EVA®, LeanSigma® and strategic planning, which initiatives currently contribute to the positioning of our business in 2010 and beyond. His membership on other public company boards also enhances his contribution to the Board. | ||||||||||
|
|
||||||||||
|
H. W. Knueppel
|
61 | Chairman, since April 2006, and Chief Executive Officer, since April 2005, of Regal Beloit Corporation (a multi-national organization serving the HVAC, industrial motor, power transmission and power generation markets). Served as President and Chief Operating Officer of Regal Beloit Corporation from April 2002 to December 2005. Served as Executive Vice President of Regal Beloit Corporation from 1987 to April 2002. Mr. Knueppel joined Regal Beloit Corporation in 1979. Mr. Knueppel is a Director of First National Bank of Beloit. Member of the Audit Committee. | 2008 | |||||||
|
|
||||||||||
| Mr. Knueppel’s leadership roles with Regal Beloit have allowed Mr. Knueppel to bring to the Board his demonstrated management ability at senior levels. His position as Chief Executive Officer of Regal Beloit has also led to his developing a critical level of insight into the operational requirements of a large, multinational company. Mr. Knueppel’s service as a director of another public company also serves to make him an invaluable addition to the Board. | ||||||||||
|
|
||||||||||
|
D. H. Pierce
|
68 | President and CEO of ABB Inc., the US subsidiary of global industrial, energy and automation provider ABB, from 1999 until his retirement in June 2001. Between 1998 and 1999 he was President of the Steam Power Plants and Environmental Systems division of ABB Inc., part of ABB Group (a provider of power and automation technologies) businesses. Between 1996 and 1998 he was Group Executive Vice President — The Americas Region and Member of ABB Ltd. Group Executive Committee. Between 1994 and 1996 he was President of ABB China Ltd. Director of Ambient Corporation. Chairman of the Compensation Committee. | 2001 | |||||||
|
|
||||||||||
| As a long-standing member of the Board, Mr. Pierce is able to demonstrate an extensive knowledge or our business, our history and the industries we serve. Mr. Pierce’s senior leadership roles at various ABB entities also provided him with relevant international business acumen and with an understanding of the business issues and risks that the Company faces. Mr. Pierce has extensive international experience, having lived and worked outside the United States for many years. In addition, his experience with regard to rail technology, engineering and construction and environmental and green technologies are of particular interest to us as a company, as we look to further position ourselves to take advantage of environmentally friendly and internationally scalable technologies and engineering services. | ||||||||||
|
|
||||||||||
|
J. I. Scheiner
|
65 | Vice President of Century Engineering, Inc. (an engineering firm). Was Chairman of Benatec Associates, Inc. (currently a division of Century Engineering, Inc.) from January 2006 to 2008, when Century Engineering, Inc. purchased Benatec Associates. Was President and Chief Operating Officer of Benatec Associates from 1991 to 2006. Prior to 1991, he was President of Stoner Associates, Inc. (an engineering software company) and Vice President of Huth Engineers (an engineering company). Served as Secretary of Revenue for the Commonwealth of Pennsylvania, and served as Deputy Secretary for Administration, Pennsylvania Department of Transportation. He is a member of the M&T Bank Advisory Board, the National Civil War Museum Board, the Pennsylvania Tobacco Settlement Investment Board and the Workforce Investment | 1995 | |||||||
16
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|
Director |
||||||||||
|
of the |
||||||||||
|
Position with the Company, |
Company |
|||||||||
|
Name
|
Age |
Prior Business Experience and Qualifications, Attributes and
Skills
|
Since | |||||||
| Board and the Pennsylvania Chamber of Business and Industry Board. Member of the Compensation Committee. | ||||||||||
|
|
||||||||||
| A considerable portion of our earnings are derived from our infrastructure and minerals businesses. Mr. Scheiner’s considerable business experience in these areas and in the field of engineering have led to his role as a continually contributing member of the Board. This background, combined with Mr. Scheiner long-standing membership on the Board, his pension- and tax-related knowledge, his distinguished career with Century Engineering and his long, distinguished career earned through his holding various positions with the Commonwealth of Pennsylvania, gives him leadership and consensus-building skills which are essential in the role of a Board member. Mr. Scheiner’s skills complement the skills of many of our other Board members, giving the Board as a whole competence and experience in a wide variety of areas. | ||||||||||
|
|
||||||||||
|
A. J. Sordoni, III
|
66 | Chairman of Sordoni Construction Services, Inc. (a building construction and management services company) and has been employed by that company since 1967. Director of Aqua America, Inc. Chairman of the Nominating Committee and member of the Audit Committee. | 1988 | |||||||
|
|
||||||||||
| Mr. Sordoni is an experienced, independent Director who has served as a director of public companies for more than 40 years, and as a member of the Board for more than twenty years. Mr. Sordoni’s public company experience has included tenures in the banking, energy and utility fields, service which allows Mr. Sordoni to bring notable, multi-industry experience to the Board. Mr. Sordoni’s experience in the construction industry makes him particularly suited to serve as a Director of the Company. Finally, Mr. Sordoni’s service on numerous public and private boards gives him valuable knowledge and perspective, which enhances his contributions to the Board. | ||||||||||
|
|
||||||||||
|
R. C. Wilburn
|
66 | Distinguished Service Professor at Carnegie Mellon University and Principal of The Wilburn Group (a management consulting firm). Former President of The Gettysburg Foundation (a nonprofit educational institution) between 2000 and 2009. Former President and Chief Executive Officer of the Colonial Williamsburg Foundation (a historic preservation organization with resort facilities) between 1992 and 1999. Other former positions include President of Carnegie Institute and Carnegie Library, Secretary of Budget and Administration and Secretary of Education for the Commonwealth of Pennsylvania. Mr. Wilburn served as President of Indiana University of Pennsylvania and has held several senior positions at Chase Manhattan Bank. He is a Director of Erie Indemnity Company. Member of the Nominating Committee, member of the Compensation Committee and Lead Director. | 1986 | |||||||
|
|
||||||||||
| Mr. Wilburn is our longest-serving Board member, providing over 20 years of board experience as well as extensive knowledge of our business. This, combined with his service on numerous public boards and chairmanship of two audit committees, three compensation committees and two nominating committees over his illustrious career, provide Mr. Wilburn with well- rounded, Board level leadership capabilities that would be difficult to duplicate. Mr. Wilburn’s leadership skills and business experience have enabled him to be a particularly effective Board member who has been able to strongly contribute to the Board, including in his role as Lead Director. Mr. Wilburn also has extensive government experience at both the state and national level and has led a distinguished career in finance and education. | ||||||||||
17
Table of Contents
NON-EMPLOYEE
DIRECTOR COMPENSATION
The general policy of our Board is that compensation for
non-employee Directors should be a mix of cash and equity-based
compensation. Our Compensation Committee has the primary
responsibility to review and consider any revisions to Director
compensation. As part of this responsibility, the Committee
annually reviews market data regarding comparable director
compensation programs. This data is prepared by management
utilizing several broad board compensation studies completed
within one year of the Board’s review.
Annual compensation for non-employee Directors for 2009 was
comprised of the following components: cash compensation,
consisting of an annual retainer; meeting and committee fees;
and equity compensation, consisting of restricted stock unit
awards. The current compensation amounts for non-employee
directors, effective for fiscal year 2009, are as follows:
|
Annual Retainer:
|
$35,000 | |
|
Lead Director Fee (Annual):
|
$20,000 | |
|
Audit Committee Chair Fee (Annual):(1)
|
$12,250 | |
|
Compensation Committee Chair Fee and Nominating Committee Chair
Fee (Annual):(1)
|
$7,500 | |
|
Board Meeting Fee (Per Meeting):
|
$1,500 | |
|
Committee Meeting Fee (Per Meeting):
|
$1,500 | |
|
Other Meetings and Duties (Per Day):
|
$1,500 | |
|
Telephonic Meeting Fee (Per Meeting):
|
$750 |
|
Restricted Stock Units:
|
2,000 restricted stock units annually (issued at a grant price equal to the average of the high and low market price on the date of grant. Grant date is the first business day of May.) | |
|
Plan Participation:
|
Deferred Compensation Plan for Non-Employee Directors |
| (1) | The Compensation Committee reviewed the compensation of non-employee Directors at its September 2008 meeting and recommended that Director compensation be changed to reflect increased annual fees for Committee Chairpersons, as reflected above, with the change effective January 1, 2009. |
The Deferred Compensation Plan for Non-Employee Directors allows
each non-employee Director to defer all or a portion of his or
her director compensation until some future date selected by the
Director. Pursuant to the Director’s election, the
accumulated deferred compensation is held in either an
interest-bearing account or a Harsco phantom share account. The
interest-bearing deferred account accumulates notional interest
on the account balance at a rate equal to the five-year United
States Treasury Note yield rate in effect from time to time.
Contributions to the phantom stock account are recorded as
notional shares of Harsco common stock. Deferred amounts are
credited to the Director’s account quarterly on the
15th of February, May, August and November. The number of
phantom shares recorded is equal to the number of shares of
common stock that the deferred compensation would have purchased
at the market price of the stock on the day the account is
credited. Dividends earned on the phantom shares are credited to
the account as additional phantom shares. All phantom shares
18
Table of Contents
are non-voting and payments out of the account are made solely
in cash based upon the market price of the common stock on the
date of payment selected by the Director. Under certain
circumstances, the accounts may be paid out early upon
termination of directorship following a change in control. This
plan has been amended to operate in accordance with the
provisions of the American Jobs Creation Act of 2004 and to
ensure compliance with Internal Revenue Code Section 409A.
Directors who are actively employed by us receive no additional
compensation for serving as Directors and we do not pay
consulting or professional service fees to Directors.
2009 DIRECTOR
COMPENSATION
The table below details the compensation earned by our
non-employee Directors for 2009:
|
Change in |
||||||||||||||||||||||||||||
|
Fees |
Pension Value |
|||||||||||||||||||||||||||
|
Earned |
Non-Equity |
and |
||||||||||||||||||||||||||
|
or Paid |
Stock |
Option |
Incentive Plan |
Nonqualified |
All Other |
|||||||||||||||||||||||
|
in Cash |
Awards |
Awards |
Compensation |
Deferred |
Compensation |
Total |
||||||||||||||||||||||
|
Name
|
($)(1) | ($)(2) | ($) | ($) | Earnings ($) | ($) | ($) | |||||||||||||||||||||
|
Kathy G. Eddy
|
72,750 | 54,560 | -0- | -0- | -0- | -0- | 127,310 | |||||||||||||||||||||
|
Stuart E. Graham
|
48,583 | 54,560 | -0- | -0- | -0- | -0- | 103,143 | |||||||||||||||||||||
|
Terry D. Growcock
|
57,200 | 54,560 | -0- | -0- | -0- | -0- | 111,760 | |||||||||||||||||||||
|
Jerry J. Jasinowski(3)
|
17,667 | -0- | -0- | -0- | -0- | -0- | 17,667 | |||||||||||||||||||||
|
Henry W. Knueppel
|
53,750 | 54,560 | -0- | -0- | -0- | -0- | 108,310 | |||||||||||||||||||||
|
D. Howard Pierce
|
62,750 | 54,560 | -0- | -0- | -0- | -0- | 117,310 | |||||||||||||||||||||
|
Carolyn F. Scanlan(3)
|
18,417 | -0- | -0- | -0- | -0- | -0- | 18,417 | |||||||||||||||||||||
|
James I. Scheiner
|
55,250 | 54,560 | -0- | -0- | -0- | -0- | 109,810 | |||||||||||||||||||||
|
Andrew J. Sordoni, III
|
67,250 | 54,560 | -0- | -0- | -0- | -0- | 121,810 | |||||||||||||||||||||
|
Robert C. Wilburn
|
74,500 | 54,560 | -0- | -0- | -0- | -0- | 129,060 | |||||||||||||||||||||
| (1) | Includes fees associated with chairing a Board Committee. | |
| (2) | The amounts shown in this column represent the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718 (formerly FAS 123(R)) for the restricted stock units granted during 2009, as further described below. As of December 31, 2009, each non-employee Director other than Ms. Eddy, Mr. Growcock, Mr. Graham and Mr. Knueppel had 11,007 restricted stock units outstanding. Ms. Eddy had 9,909 restricted stock units outstanding as of December 31, 2009. Mr. Growcock had 4,054 restricted stock units outstanding as of December 31, 2009. Both Mr. Graham and Mr. Knueppel had 2,000 restricted stock units outstanding as of December 31, 2009. Each non-employee Director was granted 2,000 restricted stock units on May 1, 2009 and these restricted stock units vest on April 27, 2010 and are not payable in common stock until a Director ceases to serve on our Board (in which case the shares of common stock are issued within 60 days following the termination of the non-employee Director’s service as a Director). The aggregate grant date fair value of each non-employee director’s 2009 restricted stock unit award shown above was computed in accordance with FASB ASC Topic 718, at a per share grant date fair value of $27.28, which was determined using the average of the high and low price of the stock on the previous day’s trading, less a discount for dividends not received during the vesting period. The information in this column does not reflect an estimate for forfeitures, and none of these awards has been forfeited as of March 2, 2010. See Note 12, “Stock-Based Compensation” to Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2009 for a discussion of the assumptions used by us to calculate share-based employee compensation expense, as outlined in FASB ASC Topic 718. The 1995 Non-Employee Directors’ Stock Plan was amended in 2009 to ensure compliance with Internal Revenue Code Section 409A. | |
| (3) | Did not stand for reelection at the 2009 Annual Meeting. |
19
Table of Contents
SHARE OWNERSHIP
OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 2, 2010,
information with respect to the beneficial ownership of our
outstanding voting securities, stock options and other stock
equivalents by:
(a) Our Chief Executive Officer, Chief Financial Officer
and the other four executive officers named in the 2009 Summary
Compensation Table, who we refer to collectively as our named
executive officers,
(b) each Director,
(c) all Directors and executive officers as a
group, and
(d) certain beneficial owners holding more than 5% of the
common stock.
All of our outstanding voting securities are common stock.
|
Number of |
Percent of |
Number of |
Number of Other |
|||||||||||||
| Shares(1) | Class | Exercisable Options(2) | Stock Equivalents | |||||||||||||
|
Named Executive Officers
|
||||||||||||||||
|
G. D. H. Butler
|
31,103 | * | 68,000 | 10,667 | (3) | |||||||||||
|
S. D. Fazzolari
|
82,618 | * | 48,000 | 29,653 | (3) | |||||||||||
|
M. E. Kimmel
|
19,142 | * | 4,000 | 11,494 | (3) | |||||||||||
|
R. C. Neuffer
|
16,095 | * | 14,000 | 7,723 | (3) | |||||||||||
|
G. J. Claro
|
4,927 | * | -0- | 7,500 | (3) | |||||||||||
|
S. J. Schnoor
|
11,462 | * | -0- | 5,457 | (3) | |||||||||||
|
Directors who are not Named Executive Officers
|
||||||||||||||||
|
K. G. Eddy
|
2,000 | * | -0- | 9,909 | (5) | |||||||||||
|
S. E. Graham
|
5,000 | * | -0- | 2,000 | (5) | |||||||||||
|
T. D. Growcock
|
1,000 | * | -0- | 4,679 | (5) | |||||||||||
|
H. W. Knueppel
|
1,000 | * | -0- | 2,000 | (5) | |||||||||||
|
D. H. Pierce
|
4,000 | * | 12,000 | 11,305 | (5) | |||||||||||
|
J. I. Scheiner
|
7,052 | * | 12,000 | 17,326 | (5) | |||||||||||
|
A. J. Sordoni, III
|
224,800 | (4) | * | 16,000 | 11,007 | (5) | ||||||||||
|
R. C. Wilburn
|
7,000 | * | 12,000 | 14,246 | (5) | |||||||||||
|
All Directors and executive officers as a group (15 persons
in total, including those listed above)
|
418,269 | * | 186,000 | 146,632 | ||||||||||||
|
More Than 5% Beneficial Owners (6)
|
||||||||||||||||
| BlackRock, Inc., 40 East 52nd Street, New York, NY 10022 | 6,312,030 | 7.86 | ||||||||||||||
| * | Less than one percent. | |
| (1) | Includes, in the case of Messrs. Butler, Claro, Fazzolari, Kimmel, Neuffer, Schnoor and all Directors and executive officers as a group, -0- shares, -0- shares, 18,574 shares, 2,226 shares, 4,070 shares, 2,203 shares and 27,310 respectively, pursuant to our Retirement Savings and Investment Plan in respect of which such persons have shared voting power and sole investment power. |
20
Table of Contents
| (2) | Represents all stock options exercisable within 60 days of March 2, 2010 awarded under the 1995 Incentive Plan and the 1995 Non-Employee Directors’ Stock Plan. Unexercised stock options have no voting power. | |
| (3) | Includes non-voting phantom shares held under the Supplemental Retirement Benefit Plan which will ultimately be paid out in cash based upon the value of shares of common stock at the time of the payout, as well as non-voting phantom shares held in our non-qualified Retirement Savings and Investment Plan. Also includes for Mr. Butler 10,667 restricted stock units; for Mr. Fazzolari, 20,000 restricted stock units; for Mr. Kimmel, 10,000 restricted stock units; for Mr. Neuffer 7,000 restricted stock units; and for Mr. Schnoor 4,667 restricted stock units that were awarded in January 2008 and January 2009 and vest on a pro rata basis over a three-year period, subject to the terms of the 1995 Incentive Plan. Mr. Claro, received a grant of 15,000 restricted stock units in November 2009, pursuant to the terms of his employment offer letter with the Company, 7,500 of which vested in January 2010. Mr. Claro did not receive a grant in 2008 as he joined the Company in 2009. No named executive officer received a grant of restricted stock units in January 2010. | |
| (4) | Includes 42,600 shares owned by his wife as to which Mr. Sordoni disclaims beneficial ownership. | |
| (5) | Certain Directors have elected to defer a portion of their Directors’ fees in the form of credits for non-voting phantom shares under the terms of our Deferred Compensation Plan for Non-Employee Directors. These phantom shares are included. They will ultimately be paid out in cash based upon the value of the shares at the time of payout. Also includes 500, 750, 1,000, 2,000, 2000 and 2,000 restricted stock units that were granted under the 1995 Non-Employee Directors’ Stock Plan on May 3, 2004, May 2, 2005, May 1, 2006, May 1, 2007, May 1, 2008 and May 1, 2009, respectively. | |
| (6) | This information is derived from a Schedule 13G filing by such person with the Securities and Exchange Commission in January 2010, representing sole voting power over 6,312,030 shares, shared voting power over zero shares and sole dispositive power over 6,312,030 shares. These holdings represent 7.86% of our common stock. |
Except as otherwise stated, each individual or entity has sole
voting and investment power over the shares set forth opposite
his, her or its name. None of the Directors and executive
officers individually beneficially owned more than 1% of our
common stock, and our Directors and executive officers as a
group beneficially owned approximately .70% of our outstanding
common stock. The mailing address for our Directors and
executive officers is
c/o Harsco
Corporation, Corporate Secretary, 350 Poplar Church Road, Camp
Hill, PA 17011.
REPORT OF THE
AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the “Audit
Committee”) is composed of four Directors, each of whom is
considered independent under the rules of the NYSE Euronext and
the Securities and Exchange Commission (“SEC”). The
Audit Committee, has, as part of its membership, an individual
who satisfies the definition of a “financial expert,”
as promulgated by the SEC. Ms. Kathy Eddy, a certified
public accountant and former Chairman of the American Institute
of Certified Public Accountants, has been a member of the Audit
Committee since September 28, 2004 and serves as the Audit
Committee’s “financial expert.”
The Audit Committee operates pursuant to a written charter which
was adopted in 1992 and which was most recently amended in
February of 2010. A copy of the Audit Committee Charter can be
viewed at the Corporate Governance section of our website at
www.harsco.com/insight-on-harsco.
The Audit Committee reports to and acts on behalf of the Board
of Directors by monitoring our financial reporting processes and
system of internal controls, and monitoring our internal
auditors and overseeing the independence and performance of the
independent auditors. In carrying out these responsibilities,
the Audit Committee discussed with our internal auditors and
independent
21
Table of Contents
auditors the overall scope and plans for their respective audits
of our financial statements. The Audit Committee also meets with
members of management, our independent auditors and our internal
auditors on a regular basis or as may otherwise be needed. The
Audit Committee Chairman or her designee meets with management
and with the independent auditors each quarter to review and
discuss our Quarterly Report on
Form 10-Q
or Annual Report on
Form 10-K
prior to its filing with the SEC.
While the Audit Committee and Board of Directors monitor our
financial record keeping and controls, it is our management that
is ultimately responsible for our financial reporting process,
including our system of internal controls, disclosure control
procedures and the preparation of the financial statements. The
independent auditors support the financial reporting process by
performing an audit of our financial statements and issuing a
report thereon.
The Audit Committee has reviewed and discussed with management
and the independent auditors the audited consolidated financial
statements for the year ended December 31, 2009 and related
periods. These discussions focused on the quality, not just the
acceptability, of the accounting principles used by us, key
accounting policies followed in the preparation of the financial
statements and the reasonableness of significant judgments made
by management in the preparation of the financial statements and
alternatives that may be available.
In addition, the Audit Committee has discussed with the
independent auditors the matters required to be discussed
pursuant to Statement on Auditing Standards No. 61, as
amended (AICPA, Professional Standard, Vol. 1. AU
section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T, including the quality of our
accounting principles, the reasonableness of significant
judgments and the clarity of disclosures in the financial
statements. The Audit Committee has also received the written
disclosures and the letter from the independent auditors
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
auditors’ communications with the audit committee
concerning independence, and has discussed with the independent
auditors the independent auditors’ independence.
Based on the review and discussions referred to above, the Audit
Committee’s review of the representations of management and
the report of the independent auditors, the Audit Committee
recommended to our Board of Directors, and our Board of
Directors approved, that our audited financial statements be
included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 for filing with
the SEC.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS:
K. G. Eddy, Chairman
S E. Graham
H. W. Knueppel
A. J. Sordoni, III
22
Table of Contents
FEES BILLED BY
THE INDEPENDENT AUDITORS FOR AUDIT AND NON-AUDIT
SERVICES
The following table sets forth the amount of audit fees,
audit-related fees, tax fees and all other fees billed or
expected to be billed by PricewaterhouseCoopers LLP, our
principal auditor for the fiscal years ended December 31,
2009 and December 31, 2008.
|
Amount |
Amount |
|||||||
| 2009 | 2008 | |||||||
|
Audit Fees(1)
|
$ | 4,830,885 | $ | 6,357,580 | ||||
|
Audit-Related Fees(2)
|
$ | 570,622 | $ | 753,489 | ||||
|
Tax Fees(3)
|
$ | 1,313,879 | $ | 1,562,341 | ||||
|
All Other Fees(4)
|
$ | 61,026 | $ | 190,799 | ||||
|
Total Fees
|
$ | 6,776,412 | $ | 8,864,209 | ||||
| (1) | Includes the integrated audit of the consolidated financial statements and internal controls over financial reporting as well as statutory audits, quarterly reviews and issuance of comfort letters. | |
| (2) | Includes due diligence procedures and accounting consultations. | |
| (3) | Includes services performed in connection with income tax services other than those directly related to the audit of the income tax accrual. Tax compliance services were $724,938 and $971,000 in 2009 and 2008, respectively. | |
| (4) | Includes certain agreed upon procedures and licensing fees for software products. |
The Audit Committee has considered the possible effect of
non-audit services on the auditors’ independence and
pre-approved the type of non-audit services that were rendered.
The Audit Committee has adopted a policy for pre-approval of
audit, non-audit and tax services by the independent auditors.
The Audit Committee may pre-approve services, such as the annual
audit fee and statutory audits. The services to be provided are
to be reviewed with the Audit Committee and approval is given
for a specific dollar amount and for a period of not greater
than 12 months. Services that are not pre-approved in this
manner must be pre-approved on a
case-by-case
basis throughout the year. Additionally, if the pre-approved fee
is to be exceeded, approval of the Audit Committee must be
obtained. In making its decision regarding the approval of
services, the Audit Committee will consider whether such
services are consistent with the SEC’s rules on auditor
independence, whether the independent auditor is best positioned
to provide such services and whether the services might enhance
our ability to manage or control risk or improve audit quality.
No services were provided during the last two fiscal years
pursuant to the de minimis safe harbor exception from the
pre-approval requirements. All of the fees included in the table
above under
Audit-Related
Fees, Tax Fees and All Other Fees, were
pre-approved
by the Audit Committee, or, if the
pre-approval
amount was exceeded, approval of the Audit Committee was
obtained in accordance with the procedure above.
PROPOSAL 2:
APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has designated PricewaterhouseCoopers LLP as
independent auditors to audit our financial statements for the
fiscal year ending December 31, 2010. This firm has audited
the financial statements of the Company and its predecessors
since 1929. Although not required to do so by law or otherwise,
the Audit Committee desires that stockholders ratify its
selection of PricewaterhouseCoopers LLP as our independent
auditors. Therefore, the Audit Committee’s choice of
independent auditors will be submitted for ratification or
rejection at the Annual Meeting. In the absence of contrary
direction from stockholders, all proxies that are submitted will
be voted in favor of the confirmation of PricewaterhouseCoopers
LLP as our independent auditors. A representative of
PricewaterhouseCoopers LLP will attend the Annual Meeting, with
the opportunity to make a statement and answer questions of
stockholders.
23
Table of Contents
If this proposal is not ratified by a majority of the shares
entitled to vote at the Annual Meeting, the appointment of the
independent auditors will be reevaluated by the Audit Committee.
Due to the difficulty and expense of making any substitution of
auditors, it is unlikely that their appointment for the audit of
the financial statements for the fiscal year ending
December 31, 2010 would be changed. However, the Audit
Committee may review whether to seek new independent auditors
for the fiscal year ending December 31, 2011.
The Audit Committee, at its meeting held in June 2009, reviewed
and approved the fee estimate for the annual audit of our fiscal
2009 financial statements and, taking into consideration the
possible effect of non-audit services on the auditors’
independence, also reviewed specific non-audit services to be
rendered for income tax services.
The Board of Directors recommends a vote FOR the ratification
of the appointment of PricewaterhouseCoopers LLP as our
independent auditors.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive
Summary
In the following pages, we discuss and analyze how our CEO, CFO,
and four other most highly compensated executive officers (who
we refer to as our named executive officers) were compensated
for fiscal 2009, and describe how this compensation fits within
our executive compensation philosophy. We also describe certain
changes to our executive compensation programs for fiscal 2010
and later years.
Harsco Corporation is a diversified industrial services company
serving global industries that are fundamental to worldwide
economic growth, including infrastructure, metals, railways and
energy. As with most global companies, through 2009, as compared
to the first three quarters of 2008, we experienced extreme
economic turbulence, and we saw the world’s financial and
economic conditions deteriorate significantly. As a consequence
of the global crisis, our full year’s economic value added,
or
EVA®,
results for most of our segments and for the Company as a whole
were below established targets for 2009. Only our Harsco Rail
business unit, which provides worldwide track maintenance
services, reached its maximum EVA payout for 2009. The only
other units that earned sufficient EVA to warrant any annual
incentive bonus payouts in 2009 were our Harsco Industrial
Air-X-Changers business unit, the leading manufacturer of
air-cooled heat exchangers for the natural gas industry, our
Harsco Industrial Patterson-Kelly business unit, an
internationally recognized market leader and major producer of
heat transfer equipment, including hot water boilers and water
heaters for institutional and commercial building applications,
and our Harsco Minerals business unit, which generates value
through its specialty expertise for capturing and processing
industrial co-products to serve specific commercial
applications. As discussed further below, the vast majority of
individuals within the Company earned little or no annual
incentive bonus, including all of our named executive officers
except Galdino Claro, who is guaranteed a bonus under his
employment offer letter, and Rich Neuffer, who heads the Harsco
Rail and the Harsco Industrial business units. For our long-term
performance goal of corporate EVA, we met our established
2006-2008 targets, which payout is reflected in the 2009 Summary
Compensation Table and 2009 Grants of
Plan-Based
Awards Table, but did not meet our established 2007-2009 targets
for grants which would have been paid in 2010 and therefore no
long-term incentive was paid to any executive or other employee
in the Company for 2007-2009 performance period. Galdino Claro,
who is guaranteed certain long-term incentive pay in accordance
with the terms of his employment offer letter, received a
separate RSU grant in 2009, a portion of which was paid out
24
Table of Contents
in January 2010. Mr. Claro, who is our newest named
executive officer, joined us in June 2009 and serves as CEO of
our Harsco Metals and Harsco Minerals Groups. Prior to joining
the Company, among other positions, he served as CEO —
Aleris Americas for Aleris International, a global leader in the
production of aluminum rolled and extruded products, recycled
aluminum and special alloys, from 2008 to 2009. Before joining
Aleris International, Mr. Claro served as President and CEO
of the Heico Metals Processing Group, a diversified conglomerate
with operations in the U.S., Canada and Europe.
Our executive officer pay determinations in 2009 were based in
significant part on our above-mentioned financial performance.
In addition to the direct compensation issues relating to
payment of annual and long-term incentives, the top issues
considered by the Company and our Compensation Committee during
2009 included the following:
| • | Revising our annual incentive plan to better align participation and payouts under the program with our new global compensation system and the overall needs of the Company and our individual business units; | |
| • | Addressing the proper structure of long-term incentives in order to balance the performance and retention objectives of the program; | |
| • | Determining the appropriate level of employees to participate in our performance-based restricted stock unit (or RSU) long-term equity program, considering overall reward levels, our costs, competitive factors and internal compensation equity; | |
| • | Undertaking a review process and selecting a compensation consultant to work directly with and for the Committee; and | |
| • | Overseeing our continued rigorous implementation of our new human capital framework, which is underpinned by our core values of building a strong global leadership team with the talent and abilities required to achieve our strategic and financial objectives. |
General
Compensation Philosophy
Our compensation programs are structured to align the long-term
interests of our executives and our stockholders. They are
designed to reflect our goal of fair, but conservative wages,
while both ensuring that we attract, retain and motivate a
premier management team to sustain our competitive advantage in
the marketplace and providing a framework that encourages
outstanding financial results over the long term. In
administering our executive compensation program, we look to
accomplish the following:
| • | Attract and retain top-level executives who are critical to our long-term success; | |
| • | Promote and reward individual initiative and achievement; | |
| • | Provide levels of compensation that are fair, reasonable and competitive with comparable companies; and | |
| • | Incentivize and reward management to achieve our annual performance goals, which are specifically designed to reinforce the creation and enhancement of stockholder value. |
25
Table of Contents
In addition to these goals, we, through our Compensation
Committee, administer our executive compensation programs with
the following guiding principles in mind:
|
Guiding Principles
|
Rationale
|
|
|
Maintain total compensation packages that range from moderately
below to moderately above industry medians
|
Compensation must be competitive with the marketplace in order to attract and help retain talent while retaining some flexibility to provide higher rewards for superior achievement | |
|
An increasing portion of officers’ total compensation
should be based on performance as their seniority increases
|
Executives most able to affect our performance should have a significant portion of their potential total compensation at risk and dependent upon our performance | |
|
A portion of an officer’s total compensation should be
stock-based
|
Executive officers should share in the common stock gains and losses experienced by our stockholders in order to reinforce the alignment of their respective interests |
Overview of
Compensation Program
Our executive compensation program is carried out through
several compensation methods. Each has its own purpose, but
together they work to create a compensation package that both
fairly compensates the individual for the services rendered to
us and the results achieved and provides appropriate value to us
for the payments we have made.
The primary compensation methods that we use and the manner in
which they are administered include the following:
| • | Annual base salary; | |
| • | Annual cash incentive compensation; | |
| • | Long-term, performance-based equity compensation in the form of RSUs; and | |
| • | Various health, disability, retirement and other benefits, including post-termination arrangements, commonly provided by similar companies. |
In allocating these various compensation components, our
management believes that employees in higher ranks should have a
higher proportion of their total compensation delivered through
pay-for-performance-based
cash incentives and long-term equity compensation. As a result,
their compensation will be more significantly connected to our
financial performance. We also believe that as executives rise
to positions that can have a greater impact on our performance,
the compensation program should place more emphasis on the value
of our common stock. In all cases, however, we strive to ensure
that there is a clear correlation between our performance and
the compensation of our employees, such that a difficult year
for the Company, such as 2009, will result in a reduction in
total compensation for our employees who work for affected
segments of our business. We believe this best aligns our
compensation interests and the investment interests of our
stockholders, and allows our Board to responsibly perform their
duties as they relate to compensation.
Compensation
Policies and Practices as They Relate to Risk
Management
We have reviewed our compensation policies and practices for all
employees and concluded that any risks arising from our policies
and programs are not reasonably likely to have a material
adverse effect on the Company. In addition, the Committee
reviews the relationship between our
26
Table of Contents
risk management policies and practices and the incentive
compensation we provide to our named executive officers and
other key employees to confirm that our incentive compensation
does not encourage unnecessary and excessive risks.
It is our view that:
| • | our compensation programs provide a balance between our short-term and long-term goals and objectives; | |
| • | under our compensation program, the highest amount of compensation can be achieved through consistent superior performance over sustained periods of time, which discourages short-term risk taking; | |
| • | our goals are appropriately set to avoid targets that, if not achieved, result in a large percentage loss of compensation; | |
| • | rolling three-year performance targets for our long-term incentive plan discourage short-term risk taking; | |
| • | incentive awards are capped by the Compensation Committee; and | |
| • | equity ownership guidelines discourage excessive risk taking. |
Furthermore, as described in our Compensation Discussion and
Analysis, compensation decisions include subjective
considerations, which restrain the influence of formulae or
objective factors on excessive risk taking.
Compensation
Consultants
Our Compensation Committee has the authority under its charter
to engage the services of outside advisors, experts and others
to assist the Committee. Exercising this authority during 2009,
the Committee directly engaged Pearl Meyer & Partners
as its independent compensation consultant.
The Compensation Committee utilizes the following information
provided by the following, management-engaged consultants and by
its directly engaged compensation consultant:
|
Component of Compensation |
||||
|
Consultant
|
Reviewed
|
Advice Provided
|
||
|
Stern Stewart & Co.
|
Annual EVA-based Incentive Plan and Long-Term RSU Equity Compensation Program | Advises on economic value-added program, both from an operations and from a compensation standpoint and assists in developing both annual and long-term EVA goals | ||
|
Towers Watson
|
Executive compensation benchmarking | Develops the annual compensation review of our top senior executives, which is then utilized by our Compensation Committee. Provides actuarial services |
27
Table of Contents
|
Component of Compensation |
||||
|
Consultant
|
Reviewed
|
Advice Provided
|
||
|
Pearl Meyer & Partners
|
All aspects of compensation | Provides the Committee with its view on all executive compensation issues considered by the Committee and with a second view of all compensation data that is provided by the Company’s consultants. Pearl Meyer has also developed its own benchmark group for use with the Committee in evaluating overall executive compensation |
Stern Stewart & Co. was selected and engaged by
management because of their expertise in working with economic
value-added programs, both from an operating and compensation
standpoint. Towers Watson was chosen by management to provide
compensation services to us because of their broad level of
expertise in the compensation and benefits area and their
expansive knowledge of relevant market data in these areas.
Pearl Meyer & Partners was selected and engaged by the
Committee because of their broad expertise in many executive
compensation issues as well as their fit with the philosophy and
personality of the Committee. Stern Stewart & Co. and
Towers Watson have in the past attended Compensation Committee
meetings upon invitation from our Compensation Committee, though
neither consultant attends Compensation Committee meetings on a
regular basis. Pearl Meyer attends Compensation Committee
meetings on a regular basis.
In 2009, Towers Watson received aggregate fees in the amount of
$117,892 for
compensation-related
services it provided to management and the Compensation
Committee. Towers Watson also provides pension plan-related
advice to our Human Resources group and has also assisted in due
diligence reviews of potential acquisition candidates, and in
2009 was compensated for these services in the amount of
$1,418,180. The decision to engage Towers Watson for these
non-compensation related services was made by management. The
Compensation Committee and the Board did not approve these
services. No other compensation consultant received in excess of
$120,000 during 2009 for
non-compensation
related services.
Peer Group and
Market Data
To ensure that total compensation for the named executive
officers is aligned with the market, the Compensation Committee
benchmarks salaries, total cash compensation (in other words,
salary plus annual cash incentives) and total direct
compensation (in other words, salary plus annual cash
incentives and long-term incentive awards) annually against
survey data provided by Towers Watson during Towers
Watson’s annual review of executive compensation for our
senior executive officers. In addition, for the first time, in
2009, the Committee also looked at benchmark data developed by
Pearl Meyer. Pearl Meyer developed a smaller group of fourteen
publicly-traded companies that the Committee and management
agreed were peer companies, when looking at factors including
lines of business, total revenues and global revenues (in other
words, their multinational status). As we are a diversified
industrial services company, no other company perfectly matches
our profile. Companies included in the Pearl Meyer survey,
therefore, are
28
Table of Contents
companies that had one or more business aspects that correspond
with one or more aspects of our business. The fourteen peer
group companies are:
|
AMETEK, Inc.
|
Kennametal Inc. | |
|
Commercial Metals Company
|
The Manitowoc Company, Inc. | |
|
Cooper Industries, Ltd.
|
Minerals Technologies Inc. | |
|
Dover Corporation
|
Sauer-Danfoss, Inc. | |
|
EMCOR Group, Inc.
|
SPX Corporation | |
|
Flowserve Corporation
|
Teleflex Incorporated | |
|
Jacobs Engineering Group Inc.
|
United Rentals, Inc. |
Performance and compensation data for the peer group was tracked
by Pearl Meyer and provided to the Committee as part of the
annual executive compensation review process. The Committee
also, on a periodic basis, reviews the competitiveness of
aspects of the Company’s benefits package.
In preparing the compensation survey data it provides to the
Compensation Committee, Towers Watson, in contrast, utilizes a
broad industry-wide benchmarking database of approximately
760 companies. In completing its analysis for each of our
named executive officers, Towers Watson begins by screening its
database for compensation data related to positions with duties
and responsibilities similar to those of the executives. Towers
Watson then subjects that data to a regression analysis (which
helps define the relationship between revenue and an
executive’s compensation). The regression analysis is then
used to calculate a compensation level for the executive
consistent with our total revenues. In this way, Tower
Watson’s use of regression analysis adjusts the data in its
benchmarking database.
Benchmarking and
Impact of Individual Performance
Initial
Benchmarking
In reviewing salaries, total cash compensation and total direct
compensation, the Compensation Committee initially considers how
each named executive officer’s compensation compares to the
50th percentile. We chose to target the
50th percentile based on our belief that our executive
officers should be compensated at neither the high nor the low
end of compensation as compared to their peers, but should
receive a reasonable level of compensation based on both our
performance and their individual performance when they perform
at the target level.
For 2009, our named executive officers’ established
compensation was determined to be above or below the
50th percentiles of the Towers Watson benchmark group as
follows:
|
Total Cash |
Total Direct |
|||||||||||
|
Name
|
Salary | Compensation | Compensation | |||||||||
|
Mr. Fazzolari
|
46.35 | % | 46.35 | % | 30.36 | % | ||||||
|
Mr. Butler
|
47.24 | % | 49.60 | % | 48.98 | % | ||||||
|
Mr. Neuffer
|
58.31 | % | 61.23 | % | 46.76 | % | ||||||
|
Mr. Schnoor
|
44.44 | % | 41.83 | % | 33.54 | % | ||||||
|
Mr. Kimmel
|
47.88 | % | 46.68 | % | 36.05 | % | ||||||
|
Mr. Claro
|
65.93 | % | 63.95 | % | 44.95 | % | ||||||
Our Compensation Committee then sets final compensation amounts
either above or below the initial benchmarks, taking into
account additional factors such as:
| • | Differences in the scope of responsibilities held by the named executive officers; | |
| • | Length of service with us and in specific positions; |
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| • | Performance (specifically the effect of what the Compensation Committee has viewed as exceptional performance) of duties during a named executive officer’s tenure with us; and | |
| • | Market requirements. |
Individual
Performance
As described above, the Compensation Committee considers our
overall corporate performance when making compensation decisions
for the named executive officers. To a lesser extent, the
Compensation Committee considers individual performance by each
of the named executive officers during the course of the year,
as evaluated by the Compensation Committee in the case of the
CEO, and by the CEO and the Compensation Committee in the case
of our other named executive officers, as further discussed
below. The Compensation Committee also considers the performance
of our divisions in the case of the named executive officers who
lead such divisions. Individual performance generally has an
impact on compensation decisions in only two ways, both of which
involve the significant use of discretion on the part of the
Compensation Committee.
First, if applicable, the Compensation Committee considers
individual performance when determining the named executive
officers’ base salaries. In such cases, certain
non-quantifiable factors may be considered by the Compensation
Committee when establishing executives’ salaries, including
the executives’ performance in leading improvements in the
financial performance of poorly performing businesses or
divisions, or addressing specific and major Company events or
issues outside the ordinary course of business (for example,
acquisitions, divestitures, financings or restructurings). Many
of these “other” factors are clearly not established,
“hard and fast” performance goals, but are qualitative
individual performance factors that, if and when taken into
consideration, would generally have a significant impact on our
performance for the year and the individual officer’s
success in his or her position.
Second, if applicable, the Compensation Committee also generally
considers individual performance when determining our named
executive officers’ long-term incentive compensation
awards. When determining the equity awards to be paid out to the
named executive officers, the Compensation Committee will first
look at our overall performance with respect to the
pre-established financial goal or goals. If our overall goals
are satisfied, the Compensation Committee next looks to the
financial performance of the division for which the officer is
responsible, and then to the officer’s individual and
non-quantifiable contributions to the Company during the
applicable performance period. If the Compensation Committee
does not believe that a named executive officer has adequately
contributed to our overall performance during the fiscal year,
the Compensation Committee may reduce the number of RSUs awarded
to the officer (assuming that Company-wide performance targets
have been achieved such that RSU payouts would have otherwise
been approved). The Compensation Committee did not exercise this
type of discretion when determining equity payouts for 2009
specifically because no equity payouts for 2009 were earned due
to the Company’s failure to meet its performance goals.
For 2009, the Compensation Committee specifically considered the
following individual performance and other quantifiable and
non-quantifiable factors (including financial performance
factors involving particular divisions within a named executive
officer’s area of responsibility) when making compensation
decisions for the following named executive officers:
| • | For Mr. Fazzolari: leadership of the Company by developing, articulating and communicating a clear strategy; disciplined execution of strategy; setting values and tone through implementation of a core ideology; management, recruitment, development and succession planning; our overall growth in revenues, earnings, EVA and cash flow; and our successful completion of significant transactions; |
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| • | For Mr. Butler: EVA improvement; overall growth in revenues and earnings for our Harsco Infrastructure and Harsco Metals segments; management succession and development for our Harsco Infrastructure and Harsco Metals segments; and the successful handling and integration of key transactions; | |
| • | For Mr. Schnoor: our overall growth in revenues, earnings and EVA and improved performance, looking primarily to financial measures and overall strategic development goals; | |
| • | For Mr. Kimmel: our successful completion of significant transactions; our handling of major litigation matters and other legal issues; implementation of human resources strategic initiatives; and the successful oversight of risk management issues; | |
| • | For Mr. Neuffer: EVA improvement, overall growth in revenues and earnings for our Harsco Minerals group, Harsco Industrial group and Harsco Rail group; reorganization of certain companies within our Harsco Minerals group and Harsco Rail group; and management succession and development for our Harsco Minerals and Harsco Rail group; and | |
| • | For Mr. Claro: EVA improvement, overall growth in revenues and earnings for our Harsco Metals and Harsco Minerals groups; reorganization of certain operations and methods of doing business within our Harsco Metals and Harsco Minerals groups; and management succession and development for our Harsco Metals and Harsco Minerals groups. |
The Compensation Committee did not specifically structure its
compensation decisions to create notable disparity between the
compensation elements paid to our named executive officers.
Instead, the differences between the amounts paid to our named
executive officers result from the standard application of our
compensation policies and formulae, and specifically from the
above-noted considerations.
Role of
Management in the Compensation Process
As noted above, our Chairman and CEO plays several roles in our
compensation process. In general, he reviews our proposed
overall budget increases for executive officer salaries and
approves, on an individual basis, recommendations made by
management regarding
year-to-year
executive compensation increases. More specifically, for 2009,
our Chairman and CEO reviewed both (1) benchmark
compensation materials and other related information provided by
Towers Watson and Pearl Meyer and (2) recommendations
submitted by members of our senior management team, before
submitting management’s recommendations to the Compensation
Committee regarding salary increases and changes to bonus
percentages and equity compensation awards for members of our
senior management team, as well as the reasons for these
recommended changes. Our Chairman and CEO also generally
provides factual support to the Committee with regard to
recommendations to the Committee of senior management salary and
incentive where discretion is utilized by the Committee.
Our Chairman and CEO also provides the Compensation Committee
with factual information on which it bases its decisions
regarding his compensation. As an example, our Chairman and CEO
meets with the Compensation Committee in executive session
during each November meeting to review the progress made on key
priorities as well as our results for that fiscal year. Our
independent Directors participate in the November session. The
Chairman and CEO has no decision-making involvement with respect
to his own compensation, however. Instead, the Compensation
Committee determines its recommendation regarding the Chairman
and CEO’s compensation package for the subsequent fiscal
year based on the facts gathered from its meeting with the
Chairman and CEO, plus compensation survey information provided
to us by Towers Watson and Pearl Meyer, and whatever other
information and factors it chooses to consider from
year-to-year.
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The Chairman and CEO has the authority to call Compensation
Committee meetings, but no such meetings have been called by the
Chairman and CEO in the past two years. Additionally, the
Chairman and CEO has the authority to call and hold meetings
with each of Towers Watson and Stern Stewart & Co. We
are aware of only one individual meeting between the Chairman
and CEO and any of our compensation consultants in recent
history, namely, a meeting between the Chairman and CEO and
Pearl Meyer that took place in August 2009, during which the
Chairman and CEO briefed Pearl Meyer on our strategy and human
resources policy as part of Pearl Meyer’s orientation, as
the newly appointed consultant to the Committee, to the role of
advising the Committee, which is Pearl Meyer’s standard
practice.
Components of
2009 Executive Compensation Program
Each component of direct and indirect compensation paid to our
named executive officers for 2009 is summarized in the table
below:
|
Where Reported in |
||||||
|
Component
|
Characteristics |
Purpose
|
Accompanying Tables
|
|||
|
Base Salary
|
Base salary generally comprised 39.0% to 52.2% of the total compensation for our named executive officers. Determined based upon competitive salary data provided by Towers Watson and Pearl Meyer, each individual’s past performance and their level of responsibility within our organization | To provide a base level of compensation for the services provided to the Company |
2009 Summary Compensation Table under the “Salary”
column
|
|||
|
Annual Cash Incentive Compensation
|
Payout is based on the extent of the achievement of independently pre-established EVA targets, both at a company and division level, taking into account the executive’s salary and bonus percentage | To compensate for the achievement of pre-established annual goals that the Board believes will increase stockholder value |
2009 Summary Compensation Table under the “Non-Equity
Incentive Plan Compensation” column and 2009 Grants of
Plan-Based Awards Table under the “Estimated Possible
Payouts Under Non-Equity Incentive Plan Awards” column
|
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|
Where Reported in |
||||||
|
Component
|
Characteristics |
Purpose
|
Accompanying Tables
|
|||
|
Long-Term Equity Compensation
|
Restricted stock units granted to an executive based on the level of achievement attained by us based on specified performance targets and the exercise of discretion by the Compensation Committee, which may, in its discretion, reduce an award below the targeted payout amount | To compensate for the achievement by the Company of longer-term goals which are pre-established by the Board and whose achievement is believed to increase stockholder value over the longer term |
2009 Summary Compensation Table under the “Stock
Awards” column; 2009 Grants of Plan-Based Awards Table
under the “Grant Date Fair Value of Stock and Option
Awards” column; Outstanding Equity Awards at
2009 Year-End Table; and 2009 Option Exercises and Stock
Vested Table
|
|||
|
Perquisites
|
Of a nature other than cash and designed to meet certain needs of our executives while providing a competitive compensation package | To provide our executives with selected benefits commensurate with those provided to executives at our peer group companies which permit the employee to address certain health, disability and other needs |
2009 Summary Compensation Table under the “All Other
Compensation” column
|
|||
|
Retirement Benefits
|
Primarily delivered through defined contribution and defined benefit plans that are similar in form to those benefits available to our other employees | To provide an appropriate level of replacement income upon retirement |
2009 Summary Compensation Table under the “Change in
Pension Value and Nonqualified Deferred Compensation
Earnings” column and “All Other Compensation”
column
|
|||
|
Potential Payments upon Change in Control
|
Contingent in nature. Most elements are payable only if a named executive officer’s employment is terminated as specified under the change in control provisions of various plans | To encourage executives to consider as objectively as possible whether a possible change in control transaction is in the Company’s best interests |
Termination or Change in Control Arrangements Tables
|
|||
|
Other Potential Post-Employment Payments
|
Contingent in nature. Amounts are payable only if a named executive officer’s employment is terminated as specified under the arrangements of various plans | To provide additional amounts in cases of death, disability, retirement, termination without cause or for cause, and voluntary separation |
Termination or Change in Control Arrangements Tables
|
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Analysis of 2009
Executive Compensation Decisions
Salaries
In determining annual salary levels for each of our named
executive officers, our Compensation Committee took into
consideration the following factors:
| • | benchmark information independently developed by each of Towers Watson and Pearl Meyer; | |
| • | the officer’s current and historical performance and contribution to our business, including the achieved results of the operations for which he or she is responsible and other key strategic accomplishments on pre-established goals within his or her areas of responsibility; | |
| • | each officer’s level and amount of responsibility within our business, focusing particularly on the individual’s ability to impact financial results either directly or through the groups of people they manage; | |
| • | comparison to other internal salaries, with the goal of internal equity that aligns positions with similar levels of responsibility; | |
| • | the overall operating results that have been achieved by us and each individual division; and | |
| • | our salary range structure for various grade levels. |
Of continuing importance for 2009 were the 2008 promotions
experienced by our senior management team in light of the
implementation of our senior management succession plan. As a
result, our Compensation Committee, in reviewing salaries for
2009, took into account the continued expansion of the named
executive officers’ roles during calendar year 2009. In
late 2009, however, our management team, together with our
Compensation Committee made the difficult decision to freeze
salaries across the board at Harsco, including freezing the
salaries of the named executive officers (with the exception of
Galdino Claro, who was guaranteed an increase in salary under
his employment offer letter, as discussed above). Our management
team and the Committee made this difficult decision in light of
current economic conditions and in keeping with our core values
of tying compensation not only to individual performance but
also to the performance of the Company as a whole.
Annual Incentive
Compensation Plan
After the end of each fiscal year, management presents to our
Compensation Committee a summary and recommendation for payouts
of management incentive bonuses. The presentation includes the
following:
| • | Information on our EVA performance for the fiscal year just ended, both on an overall company and individual division basis; | |
| • | Awards to each executive officer under the plan during the prior three years; | |
| • | Salaries for the fiscal year just ended and target award information; and | |
| • | A specific recommendation for management incentive bonuses based on the above criteria. |
The performance criteria under the 1995 Incentive Plan are
periodically approved by our stockholders, and were last
approved at our 2009 Annual Meeting.
Target Annual Incentive Payouts
Payments of annual incentives are a function of the
executive’s annual salary multiplied by an applicable bonus
percentage, which in turn is multiplied by a performance
percentage. The bonus percentage is the executive’s annual
incentive opportunity as determined by the Compensation
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Table of Contents
Committee for each individual executive and is a function of the
individual’s level of responsibilities and his or her
ability to impact our overall results.
The performance percentage is determined based on achievement of
EVA objectives and can range from zero to 200%. A target bonus
is awarded for 100% performance. Zero and 200% were set as outer
limits based on recommendations by our consultant, Stern
Stewart & Co., and our desire to keep incentive
payments within a certain range. Because of the way the
incentive system is structured, there is a 15% probability that
either an award of zero or 200% will be achieved. In the past,
certain divisional officers have achieved zero payouts as well
as 200% payouts. Since the annual incentive program is formula
driven and the formula is approved at the same time as the
annual performance targets, our Committee only has discretion to
reduce the recommended awards for the named executive officers.
The target bonus percentages for the named executive officers
for 2009 were as follows:
|
Executive
|
Minimum | Target | Maximum | |||||||||
|
S.D. Fazzolari
|
0 | % | 100 | % | 200 | % | ||||||
|
G.D.H. Butler
|
0 | % | 68 | % | 136 | % | ||||||
|
R.C. Neuffer
|
0 | % | 68 | % | 136 | % | ||||||
|
S.J. Schnoor
|
0 | % | 60 | % | 120 | % | ||||||
|
M.E. Kimmel
|
0 | % | 56 | % | 112 | % | ||||||
|
G. J. Claro
|
0 | % | 65 | % | 130 | % | ||||||
Actual annual incentive award payouts to the named executive
officers are detailed in the 2009 Summary Compensation Table. As
was the case with many companies, we as a whole were impacted by
the economic turmoil during calendar year 2009, and annual
incentive bonuses were significantly below prior years’
levels. Most of our named executive officers, namely
Messrs. Fazzolari, Butler, Schnoor and Kimmel, received
zero incentive award payouts for 2009 due to our failure to
achieve our EVA objectives. Our Harsco Minerals, Harsco
Rail and Harsco Industrial business groups, however, performed
very well and were only slightly impacted by the economic
downturn; as a result, Mr. Neuffer earned a bonus at 185%
of his target. Mr. Claro received a guaranteed bonus award
in accordance with the terms of his employment offer letter.
Performance Metric for Annual Incentive Compensation Plan and
Fiscal 2009 Performance Results
EVA is an operating mindset that is instilled in our employees
and is utilized in the way we operate our businesses. In light
of this, it was deemed the appropriate measure by which to judge
results for incentive purposes. EVA is calculated by subtracting
from net operating profit after tax (which is similar to
operating earnings less taxes) a charge for capital employed in
the particular business (which is the product of the amount of
capital utilized multiplied by our cost of capital).
EVA improvement is a measure of the growth anticipated by
stockholders. It represents the amount that EVA (calculated as
described above) must improve each year in order for our current
operations value (referred to as COV) to increase to the
Company’s total market value. COV is calculated as the sum
of our current EVA capital plus the value that would be produced
if EVA was maintained at its current level (in other words,
no growth in EVA) into perpetuity.
The 2009 EVA improvement target was developed by our
compensation consultant, Stern Stewart & Co., based on
the principles outlined above. The payout under the annual
incentive bonus program is based on the amount of economic value
created in the appropriate year, both for the Company as a whole
and for the business units for which a named executive officer
has responsibility. The EVA improvement target for 2009 for the
Company as a whole was a negative
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Table of Contents
$7,400,000. The EVA improvement required for a target bonus
payout for the business units for which Mr. Butler was
responsible was a negative $2,345,000, the EVA improvement
required for a target bonus payout for the business units for
which Mr. Neuffer was responsible was a negative $5,055,000
and the EVA improvement required for a target bonus payout for
the business units for which Mr. Claro was responsible was
a negative $2,712,000.
In addition to the EVA improvement target, an EVA interval both
above and below the EVA improvement target is also calculated.
The EVA intervals serve as the guide for determining an
officer’s performance bonus multiplier in terms of the
amount of EVA improvement actually achieved. For example:
| • | If the annual EVA improvement achieved equals the target, the officer receives 100% of his target performance bonus. | |
| • | Similarly, if the annual EVA improvement achieved is within one interval above or below the target, the officer receives a percentage of his target performance bonus, which is calculated by interpolating the percentage of the interval achieved. | |
| • | If the annual EVA improvement achieved is more than one interval above the target, the officer would receive his maximum performance bonus, which is twice his target performance bonus. | |
| • | Conversely, if the annual EVA improvement achieved is more than one interval shy of the target, the officer receives no bonus. |
For 2009, the EVA interval for the Company as a whole was
$39,000,000. The EVA interval for those business units for which
Mr. Butler has responsibility was $33,700,000, the EVA
interval for the business units for which Mr. Neuffer has
responsibility was $13,600,000 and the EVA interval for the
business units for which Mr. Claro has responsibility was
$26,900,000.
An example of how the EVA system works may provide
clarification. If we as a whole achieved a negative $7,400,000
in EVA improvement, those individuals paid on Company-wide
performance would receive their target payout amount (100%). If,
instead, we as a whole achieved $31,600,000 or more (that is,
negative $7,400,000 plus $39,000,000) in EVA improvement, an
individual paid on corporate performance would receive his or
her maximum payout amount (200%). If the amount of EVA
improvement achieved was less than negative $7,400,000 but more
than a negative $46,400,000 (that is, negative $7,400,000 minus
$39,000,000), then the officer would be entitled to a payout,
but the payout would be an amount less than the target payout
and calculated by interpolating the percent of the interval
achieved. If the amount of EVA improvement achieved was more
than negative $7,400,000 but less than $31,600,000, then the
officer would be entitled to a payout in an amount more than the
target payout, but calculated by interpolating the percent of
the interval achieved.
In 2009, we as a whole produced negative $133,637,000 in EVA
improvement ($126,237,000 below the applicable EVA target),
which resulted in a bonus percentage of zero percent for those
individuals whose bonuses were based on corporate performance.
The business units for which Mr. Butler was responsible
generated negative $127,139,000 in EVA improvement ($124,794,000
below the applicable EVA target), which resulted in a bonus
percentage of zero percent for Mr. Butler. The business
units for which Mr. Neuffer was responsible generated
$6,556,000 in EVA improvement ($11,611,000 above the applicable
EVA target), which resulted in a bonus percentage of 185% for
Mr. Neuffer. The business units for which Mr. Claro
was responsible generated negative $44,894,000 in EVA
improvement ($42,182,000 below the applicable EVA target), which
would have resulted in a bonus percentage of zero percent for
Mr. Claro. Mr. Claro,
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Table of Contents
however, was guaranteed a target level payout under the annual
incentive plan pursuant to the terms of his employment offer
letter with the Company.
We, with the input of Stern Stewart, have established minimum,
target and maximum objectives for overall EVA performance for
2010 and allocated that target objective among the divisions.
Thus, the annual incentive compensation awards of the corporate
officers are closely related to the overall performance of the
divisions against their EVA goals. Goals are recommended by
Stern Stewart & Co. to the Committee, and senior
management has very limited input into the establishment of the
EVA targets.
Equity
Compensation
The primary purpose of our long-term incentive compensation
program, as evidenced by grants of RSUs, is to drive maximum
stockholder return by directly aligning the interests of
management and stockholders and motivating key executives to
remain with us. For our purposes, an RSU refers to an award of a
share of deferred stock that is subject to a risk of forfeiture
or performance conditions. We believe our long-term incentive
program achieves this goal by:
| • | Rewarding the named executive officers for the creation of sustained stockholder value; | |
| • | Encouraging ownership of our stock by management; | |
| • | Fostering teamwork; and | |
| • | Providing us with a means to retain and motivate high-caliber executives. |
Review of RSU Target Awards
During its November 2005 meeting, the Compensation Committee
reviewed proposed RSU grants for each named executive officer
for the three-year performance period ending December 31,
2008 (that is, RSUs that, if the performance criteria are met,
would be granted in January 2009), as follows:
|
Named Executive Officer
|
Target Award
|
|
|
S.D. Fazzolari
|
20,000 RSUs | |
|
G.D.H. Butler
|
16,000 RSUs | |
|
R.C. Neuffer
|
7,000 RSUs | |
|
S.J. Schnoor
|
4,000 RSUs | |
|
M.E. Kimmel
|
10,000 RSUs | |
|
G.J. Claro
|
Not applicable |
During its November 2006 meeting, the Compensation Committee
reviewed proposed RSU grants for each named executive officer
for the three-year performance period ending December 31,
2009 (that is, RSUs that, if the performance criteria are met,
would be granted in January 2010), as follows:
|
Named Executive Officer
|
Target Award
|
|
|
S.D. Fazzolari
|
20,000 RSUs | |
|
G.D.H. Butler
|
16,000 RSUs | |
|
R.C. Neuffer
|
7,000 RSUs | |
|
S.J. Schnoor
|
4,000 RSUs | |
|
M.E. Kimmel
|
10,000 RSUs | |
|
G.J. Claro
|
Not applicable |
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Performance Metrics for RSUs
In furtherance of the Company’s pay-for-performance
culture, payouts for RSUs are contingent upon satisfaction of
certain pre-established performance goals spanning a three-year
period. We believe performance-based RSUs are less commonly used
among companies offering long-term equity incentives in the form
of RSUs than time-based RSUs.
The performance goals for the
2006-2008
performance period were diluted earnings per share from
continuing operations and cash flow from operating activities.
These goals were approved for each of 2006, 2007 and 2008 by our
full Board. The performance goals for the
2007-2009
performance period were cumulative EVA, which is more fully
described on pages 35 and 36 of this Proxy Statement.
Performance goals for EVA improvement are recommended by
management to the Board and are based upon expectations
regarding the targeted growth in these measures over the
applicable performance periods. The recommended objectives were
consistent with the objectives discussed with the investment
community by management for the longer term periods.
Actual RSU Awards
RSUs Based on
2006-2008
Performance Criteria
The Compensation Committee determines final RSU payouts at the
first Committee meeting at the beginning of the next fiscal year
after the applicable performance period based on performance
results for the covered period. The
2006-2008
performance criteria of diluted earnings per share from
continuing operations and cash flow from operating activities
were achieved during the applicable years, and as a result all
of our named executive officers except for Mr. Butler
received their full RSU payout for the
2006-2008
performance period. With regard to Mr. Butler, while the
performance targets were satisfied, the Committee determined it
appropriate to reduce his RSU payout in light of the performance
of the operating segments for which he was responsible from
16,000 RSUs to 8,000 RSUs. Actual RSU awards to the named
executive officers for the
2006-2008
performance period were settled in January 2009, and due to
their three-year, service-based vesting requirements, are
reflected in the 2009 Summary Compensation Table and the 2009
Grants of Plan-Based Awards Table below.
RSUs Based on
2007-2009
Performance Criteria
Due to the extreme turbulence experienced across the
world’s economies during 2008 and 2009, our performance
during those years was negatively impacted and the long-term
incentive goal for the
2007-2009
RSU awards was not met. As a result, none of our named executive
officers received any final RSU payout for the
2007-2009
performance period.
In accordance with the terms of his employment contract,
however, Mr. Claro received a separate RSU payout in 2009.
This RSU payout is also reflected in the 2009 Summary
Compensation Table and the 2009 Grants of Plan-Based Awards
Table below.
Stock Ownership
Guidelines
In addition to the strong performance culture as well as holding
periods for RSU grants, in 2007, we established stock ownership
guidelines which apply to the named executive officers and
certain other RSU plan participants, to encourage the retention
of stock acquired through our RSU award program. These
guidelines are based on a multiple of an individual’s base
salary and were benchmarked against the stock ownership
guidelines of similar companies and were also based on the
Board’s determination of appropriate share ownership levels
based on our compensation system. Under the guidelines, a
participant is required to maintain certain share ownership
levels of our common stock and is restricted from selling shares
held by them until the restrictions have been
38
Table of Contents
met. The share ownership levels (based on fair market value as
measured periodically) for each named executive officer are as
follows:
|
Named Executive Officer
|
Multiple of Salary
|
|
|
S.D. Fazzolari
|
Five times salary | |
|
G.D.H. Butler
|
Three times salary | |
|
R.C. Neuffer
|
Three times salary | |
|
S.J. Schnoor
|
Three times salary | |
|
M.E. Kimmel
|
Three times salary | |
|
G.J. Claro
|
Three times salary |
Individuals to whom the stock ownership guidelines apply have
five years from the date they are first granted RSUs to comply
with the guidelines in light of their recent establishment. All
common stock held by the individual, whether acquired as a
result of an RSU grant or otherwise, is included in determining
whether a named executive officer has achieved the applicable
ownership guideline. Stock options are not included in
calculating whether the guidelines have been met. Failure to
meet the guidelines within the applicable five-year period on
the part of an individual could result in such individual being
penalized by the Compensation Committee, whether through a
reduction in future grants or otherwise.
Total Direct
Compensation
The Compensation Committee believes the pay elements described
above are consistent with our compensation philosophy of paying
for performance, paying competitively and attracting and
retaining key talent. Each pay element is designed to complement
the other and reward the achievement of short-term and long-term
objectives. In establishing total direct compensation, after
review and consideration of market data, our Compensation
Committee reviews each aspect of direct compensation (that
is, salary, annual bonus and RSU awards) on both an
individual component and a combined basis. The Compensation
Committee intends that the total direct compensation combination
will result in compensation at the market median.
Total direct compensation is further intended to be
interrelated, such that the positive or negative performance in
one area will directly or indirectly affect the performance of
the other components. For example, the annual EVA incentive
program is directly tied to the level of the individual’s
salary because the payment is based on a percentage of salary.
Also, as discussed above, the percentage of salary that is
received as an annual incentive bonus is a function of the level
of achievement of the EVA target and the individual’s
target bonus percentage. The level of RSU grants is not a direct
function of salary, as target grants are established by our
Compensation Committee based on a number of other factors,
including the individual’s ability to impact long-term
results, his or her performance history and his or her level of
salary.
During the review of compensation for 2009, which was completed
in 2008, and in connection with the preparation of this report,
our Compensation Committee did review and take into
consideration all aspects of compensation which might be paid to
an executive, whenever earned in his or her career.
The following table summarizes the direct compensation elements
awarded to the named executive officers for the 2009 calendar
year. Our performance during 2009 impacted our payouts under
both the annual incentive plan and with regard to RSUs. The
payouts under the annual incentive plan and with regard to RSUS
are further analyzed on
pages 34-38
of this Proxy Statement, including with regard to the details of
our EVA performance for 2009 shown on pages 35-37 of this
Proxy Statement. The RSU award numbers shown below differ from
the
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numbers shown in the 2009 Summary Compensation Table, as the
numbers below reflect the RSU grant that would have been made in
January 2010 based on the 2007 — 2009 performance
period. As further detailed on page 38 of this Proxy
Statement, none of our named executive officers received any
final RSU payout for the 2007 — 2009 performance
period, except that Mr. Claro received a separate RSU
payout in accordance with the terms of his employment offer
letter.
|
Annual Incentive |
||||||||||||||||
|
Compensation |
Total Direct |
|||||||||||||||
|
Name
|
Salary | or other Bonuses | RSU Awards | Compensation | ||||||||||||
|
S.D. Fazzolari
|
890,000 | -0- | -0- | 890,000 | ||||||||||||
|
G.D.H. Butler
|
649,919 | -0- | -0- | 649,919 | ||||||||||||
|
R.C. Neuffer
|
414,000 | 520,812 | -0- | 934,812 | ||||||||||||
|
S.J. Schnoor
|
400,000 | -0- | -0- | 400,000 | ||||||||||||
|
M.E. Kimmel
|
383,000 | -0- | -0- | 383,000 | ||||||||||||
|
G.J. Claro
|
357,885 | 490,000 | 239,250 | 1,087,135 | ||||||||||||
The conversion rate used for amounts included above with respect
to Mr. Butler was £1.00 = $1.65.
As noted above, our performance during 2009 has impacted our
payouts under the annual incentive plan and with regard to RSUs.
Proposed Changes
to Compensation Plans
Long-Term
Incentive Program
During 2009, the Committee continued its ongoing review of the
Company’s long term incentive program as it relates to
RSUs. The goal of the review was to bring the program more in
line with market practices both from a participation standpoint
and from a compensation standpoint. After several meetings
throughout the year to review the Company’s program as well
as other market plans, the Committee, with agreement from the
Board, approved the following changes to the long term incentive
plan, effective for the
2010-2012
performance cycle:
| • | Awards will be based on a market-determined percentages of salary versus a predetermined number of shares; | |
| • | Awards will be based on country specific market data; | |
| • | One-half of an award will be performance-based, with the applicable target continuing to be the Company’s EVA improvement in total for the period and the other half of the award will be time-based; | |
| • | Vesting will occur immediately upon satisfaction of the performance targets; | |
| • | The time-based award will be paid out in shares of Company common stock while the performance portion of the award will be paid in stock unless the individual satisfies their stock ownership requirements, in which case the payment will be in cash; | |
| • | Stock ownership requirements have been updated and revised so that no shares may be sold by participants until their applicable holding requirements are satisfied. The Committee has implemented a hardship exception that it will administer. |
These changes will be effective starting with the
2010-2012
performance cycle.
At its February 2010 meeting the Compensation Committee
recommended, and the Board subsequently approved, a new
long-term equity incentive award for our global leadership team,
including the named executive officers, covering the
two-year
period ending December 31, 2011.
40
Table of Contents
The award is
performance-based
and payout will only occur if the EVA targets for that
two-year
period is achieved by us. The EVA performance targets were
established by Stern Stewart & Co.
The Compensation Committee and the Board granted this award
because of their concerns with regard to retention of key
executives and senior level employees who will not likely
receive
long-term
incentive payouts for a period of at least three years (in other
words, no payout would conceivably be received until 2013), as a
result of the significant negative impact our 2009 results will
have on the achievement of current and future EVA targets
relating to applicable
three-year
performance periods, which targets are 100% performance based
with no time-based award component. The Board felt that without
the new two-year program, we would be at a competitive
employment disadvantage as compared with companies that base all
or a portion of their long-term incentive awards on individual
merit or on time-based vesting.
The Compensation Committee and the Board also took into account
our low share utilization burn rate (.22% average for the three
years ending December 31, 2008) and stock overhang
(4.28% average for the three year period ending
December 31, 2008) for our equity compensation plans
when considering the new equity incentive award, and determined
that it was very conservative.
Annual Incentive
Program
The Committee also made several changes to the annual incentive
program in order for the plan to better reflect several of the
Company’s principal goals. The first change is that all
participants will have at least 20% of their annual bonus based
on the Company’s overall EVA performance. This is in
furtherance of the Company’s “One Harsco”
philosophy and of our globally integrated organization goals.
The second change is that no individual will be entitled to an
annual EVA bonus if he or she did not achieve at least a
“Meets Objectives” rating on their individual
performance appraisal. This is to promote a culture of
discipline as well as to pay for performance, including
individual performance. In the past, since the annual incentive
program is based on EVA goals that may apply at some level of
the organization and not at the individual level, it was
possible for a participant to receive a bonus payout while
having unsatisfactory individual performance. The Committee
believes that this is no longer acceptable. These changes will
be effective starting with the 2010 performance period.
Indirect
Compensation Elements
We have in place the following broad-based employee benefit
plans in which the U.S. executive officers participate on
the same terms as U.S. non-executive employees:
| • | health insurance; | |
| • | disability insurance; | |
| • | a term life insurance benefit equal to two times the individual’s salary up to a maximum benefit of $500,000; | |
| • | a defined benefit pension plan; and | |
| • | a 401(k) Savings Plan. |
Many of the above benefits are now offered on the same basis to
all similarly situated employees (for example, to all
U.S. employees). The relative amount of life insurance and
disability insurance offered to a named executive officer is a
function of the individual’s salary, as is the amount
contributed to the individual’s 401(k) account, although
that is also a function of the percentage of salary that the
individual chooses to contribute to the plan and Internal
Revenue Service maximum contribution limitations. In addition,
the executive officers, other than Mr. Butler, are eligible
to participate in the Supplemental Retirement Benefit Plan
(which we refer to as the SERP) as described under the section
“Retirement Plans” below, which supplements the
qualified
41
Table of Contents
pension plan, and in the non-qualified Retirement Savings and
Investment Plan (referred to as the RSIP), which supplements our
401(k) Savings Plan with respect to contributions that could not
be made because of Internal Revenue Service compensation and
contribution limitations.
We also provide other benefits to certain executives including a
change in control severance policy described below. Certain
named executive officers, namely Messrs. Butler, Fazzolari
and Neuffer, are entitled to cars provided by us or a cash
allowance alternative, and the Board of Directors has approved a
policy regarding the CEO’s personal use of our aircraft.
Corporate aircraft are used primarily for business travel and
the Board policy includes a limitation on annual personal use
unless the additional use is approved by the Lead Director of
the Board. The CEO is taxed on the imputed income attributable
to personal aircraft use and does not receive tax assistance
from us with respect to those amounts. For more information on
the perquisites provided and to whom they apply, see the All
Other Compensation Table which serves as a supplement to the
2009 Summary Compensation Table.
Our philosophy is to position the aggregate of these elements of
compensation at a level that is competitive with our size and
performance relative to other leading peer companies, as well as
a larger group of general industry companies. We further believe
that these other aspects of the executive compensation program
are reasonable, competitive and consistent with the overall
executive compensation program in that they help us attract and
retain the best leaders.
Potential
Payments upon Change in Control and Other Potential
Post-Employment Payments
Change in Control
Severance Agreements
On June 21, 2005, the Board of Directors authorized us to
amend employment agreements then in place with
Messrs. Fazzolari and Butler and one other officer who has
since retired, and to enter into similar forms of agreement with
certain of our corporate officers, including Messrs. Kimmel
and Schnoor (together with Messrs. Fazzolari and Butler,
referred to as the Change in Control Officers), which provide
that in the event of a change in control, each such officer will
remain in our employ for a period of three years from the date
of the change in control (or to such officer’s normal
retirement date, if earlier), subject to the Change in Control
Officers’ right to resign during a
thirty-day
period commencing one year from the date of the change in
control or for good reason. As a result of its reviews and
analyses, the Compensation Committee also approved reductions in
certain features of our change in control arrangements due to
the fact that prior payment levels were no longer consistent
with our philosophy regarding severance payments in general,
which looks inward and to our overall employee severance
arrangements rather than outward and toward a review of peer
company policies. The Compensation Committee, following such
review, determined that the remaining payment and benefit levels
provided for under the change in control and other termination
arrangements were consistent with our general severance
philosophy. The change in control agreements were further
amended in 2008 to ensure their compliance with Internal Revenue
Code Section 409A. For more information, see Termination or
Change in Control Arrangements and the corresponding tables
below.
The Compensation Committee believes that the change in control
agreements serve the following purposes:
| • | assuring that we have the continued dedication and full attention of certain key employees prior to and after the consummation of a change in control event; | |
| • | ensuring that, if a possible change in control should arise and a Change in Control Officer should be involved in deliberations or negotiations in connection with the possible change in control, such officer would be in a position to consider as objectively as possible whether the |
42
Table of Contents
| possible change in control transaction is in our best interests and those of our stockholders, without concern for his position or financial well-being; and |
| • | protecting us by retaining key talent in the face of corporate changes. |
The change in control arrangements are reviewed on a regular
basis, but not necessarily as part of the annual compensation
review. This is because we generally consider the change in
control agreements as compensation elements separate and apart
from the other elements of our compensation arrangements. More
specifically, the payments or benefits available under the
change in control agreements do not have any significant impact
on the Compensation Committee’s general compensation
decisions relating to salary and incentive payments. Instead,
the Compensation Committee considers that the change in control
agreements are in place to cover a specific and unlikely
circumstance, namely if we are acquired and the executives lose
their jobs. In this way, payments and benefits available under
the change in control agreements are not viewed by the
Compensation Committee as amounts that should impact the
compensation amounts awarded on a
year-to-year
basis to the named executive officers for their ongoing
management of the Company.
Other Potential
Post Employment Payments
Upon certain types of terminations of employment not related to
a change in control, payments under various Company policies and
plans may be paid to the named executive officers. These events
and amounts are more fully explained in the Termination or
Change in Control Arrangements section below.
Policy Regarding
Tax Impact on Executive Compensation
Deductibility of
Executive Compensation
Section 162(m) of the Internal Revenue Code generally
limits to $1 million the U.S. federal tax
deductibility of compensation paid in one year by
publicly-traded corporations to the chief executive officer and
certain other executives named in the compensation table of the
Proxy Statement. Performance-based compensation is not subject
to the limits on deductibility of Section 162(m), provided
such compensation meets certain requirements, including
stockholder approval of material terms of compensation.
We intend, to the extent practicable, to preserve deductibility
under the Internal Revenue Code of compensation paid to our
executive officers while maintaining compensation programs that
effectively attract and retain exceptional executives in a
highly competitive environment and, accordingly, compensation
paid under our incentive compensation plans is generally
tax-deductible. However, on occasion it is not possible to
satisfy all conditions of the Internal Revenue Code for
deductibility and still meet our compensation needs, and in such
limited situations, we may choose to pay compensation that would
otherwise not be deductible under Section 162(m) if we
believe that it is appropriate and in our best interest.
Personal Use of
Corporate Aircraft
In connection with our allowing personal use of our corporate
aircraft by certain of our named executive officers, a portion
of our related expense is non-deductible under recent changes to
U.S. federal income tax law. We treat such personal use as
compensation, as reported in the “All Other
Compensation” column of the 2009 Summary Compensation Table.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with management. Based on
this review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be
43
Table of Contents
included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 and our Proxy
Statement for our 2010 Annual Meeting of Stockholders, for
filing with the SEC.
SUBMITTED BY THE MANAGEMENT DEVELOPMENT AND COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS:
D. H. Pierce, Chairman
T. D. Growcock
J. I. Scheiner
R. C. Wilburn
The foregoing report shall not be deemed to be “soliciting
material” or to be “filed” with the SEC or
subject to Regulation 14A promulgated by the SEC or
Section 18 of the Securities Exchange Act of 1934.
2009 Summary
Compensation Table
The following table presents the compensation provided to our
named executive officers for services rendered to us in 2007,
2008 and 2009.
|
Change in |
||||||||||||||||||||||||||||||||||||
|
Pension Value |
||||||||||||||||||||||||||||||||||||
|
Non-Equity |
and |
|||||||||||||||||||||||||||||||||||
|
Incentive |
Nonqualified |
|||||||||||||||||||||||||||||||||||
|
Name and |
Stock |
Option |
Plan |
Deferred |
All Other |
|||||||||||||||||||||||||||||||
|
Principal |
Salary |
Bonus |
Awards |
Awards |
Compensation |
Compensation |
Compensation |
Total |
||||||||||||||||||||||||||||
|
Position
|
Year | ($) | ($)(1) | ($)(2) | ($) | ($)(3) | Earnings ($)(4) | ($) | ($) | |||||||||||||||||||||||||||
|
Salvatore D. Fazzolari
|
2009 | 890,000 | -0- | 503,000 | -0- | -0- | 190,026 | 45,879 | 1,628,905 | |||||||||||||||||||||||||||
|
Chairman and
|
2008 | 850,000 | -0- | 919,000 | -0- | 129,200 | 526,519 | 44,689 | 2,469,408 | |||||||||||||||||||||||||||
|
Chief Executive Officer
|
2007 | 500,000 | -0- | 611,880 | -0- | 675,500 | 176,377 | 48,873 | 2,012,630 | |||||||||||||||||||||||||||
|
S. J. Schnoor
|
2009 | 400,000 | -0- | 125,750 | -0- | -0- | 45,603 | 22,437 | 593,790 | |||||||||||||||||||||||||||
|
Senior Vice President
|
2008 | 370,000 | -0- | 183,800 | -0- | 36,556 | 91,041 | 19,613 | 701,010 | |||||||||||||||||||||||||||
|
and Chief Financial Officer
|
2007 | 255,000 | -0- | 133,849 | -0- | 196,860 | 21,587 | 23,920 | 631,216 | |||||||||||||||||||||||||||
|
G. D. H. Butler
|
2009 | 646,919 | -0- | 201,200 | -0- | -0- | 1,584,216 | 59,426 | 2,491,761 | |||||||||||||||||||||||||||
|
President and
|
2008 | 646,919 | -0- | 735,200 | -0- | -0- | -0- | 87,556 | 1,469,675 | |||||||||||||||||||||||||||
|
Group CEO(5)
|
2007 | 705,800 | -0- | 611,880 | -0- | 659,358 | 296,898 | 93,258 | 2,367,194 | |||||||||||||||||||||||||||
|
R. C. Neuffer
|
2009 | 414,000 | -0- | 176,050 | -0- | 520,812 | 34,559 | 27,427 | 1,172,848 | |||||||||||||||||||||||||||
|
Senior Vice President
|
2008 | 400,000 | -0- | 321,650 | -0- | 512,000 | 129,120 | 33,366 | 1,396,136 | |||||||||||||||||||||||||||
|
and Group CEO(6)
|
2007 | 275,000 | -0- | 191,213 | -0- | 253,000 | 47,593 | 35,350 | 802,156 | |||||||||||||||||||||||||||
|
G. J. Claro
|
2009 | 357,885 | 490,000 | 478,500 | -0- | -0- | -0- | 7,372 | 1,333,757 | |||||||||||||||||||||||||||
|
Group CEO(7)
|
||||||||||||||||||||||||||||||||||||
|
M. E. Kimmel
|
2009 | 383,000 | -0- | 251,500 | -0- | -0- | 5,713 | 22,437 | 662,650 | |||||||||||||||||||||||||||
|
Senior Vice
|
2008 | 370,000 | -0- | 459,500 | -0- | 36,556 | 13,875 | 18,280 | 898,211 | |||||||||||||||||||||||||||
|
President,
|
2007 | 275,501 | -0- | 382,425 | -0- | 265,858 | 6,714 | 23,920 | 954,418 | |||||||||||||||||||||||||||
|
Chief Administrative
|
||||||||||||||||||||||||||||||||||||
|
Officer, General Counsel and
|
||||||||||||||||||||||||||||||||||||
|
Corporate Secretary
|
||||||||||||||||||||||||||||||||||||
| (1) | The amount shown in this column for Mr. Claro represents (i) the guaranteed target level payout under the annual incentive plan pursuant to the terms of Mr. Claro’s employment offer letter with us and (ii) a signing bonus paid pursuant to the terms of Mr. Claro’s employment offer letter. | |
| (2) | The amounts shown in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 (formerly FAS 123(R)) for the restricted stock units granted during the indicated fiscal year (amounts for 2008 and 2007 have been recomputed). All grants of restricted stock units were made under the 1995 Incentive Plan. See Note 12, “Stock-Based Compensation,” to Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2009 for a discussion of the assumptions used by us to calculate share-based employee compensation expense, as outlined in FASB ASC Topic 718. These awards are discussed in further detail under the heading “Equity Compensation” in the Compensation Discussion and Analysis. |
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Table of Contents
| The full grant date fair value of the RSU awards for the 2006-2008 performance period was $2,681,619, which was determined using the average of the high and low price of the stock on that day’s trading, less a discount for dividends not received during the performance period. This amount does not include the grant to Mr. Claro in 2009, which was provided pursuant to the terms of his employment offer letter (rather than with reference to the applicable performance period) and has a full grant date fair value of $478,500. The above information does not reflect an estimate for forfeitures, and none of these awards has been forfeited as of March 2, 2010. | ||
| Harsco does not have any RSU awards which are classified as liability awards under FASB ASC Topic 718. | ||
| (3) | The amounts shown in this column for 2009 constitute the annual cash incentive compensation paid to each officer under the 1995 Incentive Plan based on the achievement of specific EVA goals. | |
| (4) | All amounts shown represent changes in pension values. There were no above-market or preferential earnings on deferred compensation during fiscal year 2009. The conversion rates used for the amounts included in this column for Mr. Butler were £1.00 = $1.59. | |
| (5) | Mr. Butler was appointed to the position of President effective January 1, 2008. Mr. Butler also serves as Chief Executive Officer of the Harsco Infrastructure Segment. Mr. Butler served as CEO of the Harsco Metals Segment between January 1, 2008 and June 1, 2009. Prior to that date, Mr. Butler served as Senior Vice President-Operations and President of the MultiServ and SGB Group Divisions. Mr. Butler’s salary and bonus are determined and paid in British pounds and are designated in the table in U.S. dollars. The conversion rates used for the amounts included in the 2009 Summary Compensation Table other than the Pension Values were £1.00 = $1.65 for 2009 and 2008 and £1.00 = $2.00 for 2007. | |
| (6) | Mr. Neuffer has served as Harsco Senior Vice President since January 1, 2008 and as CEO for our Harsco Rail Segment and Harsco Industrial Group since January 1, 2009. Mr. Neuffer also served as CEO of our Minerals Group between January 1, 2009 and September 1, 2009. | |
| (7) | Mr. Claro was appointed to the position of Group CEO, Harsco Metals and Harsco Minerals Groups, effective September 1, 2009. Mr. Claro has served as CEO of the Company’s Metals Group since June 1, 2009. |
All Other
Compensation
We also provide certain perquisites and other payments or
benefits to the named executive officers. The following table
summarizes the incremental cost of perquisites and other
benefits for the named executive officers in 2009 and describes
the other benefits included in the “All Other
Compensation” column for 2009.
| Mr. Fazzolari | Mr. Schnoor | Mr. Butler(a) | Mr. Neuffer | Mr. Claro | Mr. Kimmel | |||||||||||||||||||||||
|
Personal use of corporate aircraft(b)
|
2009 | $ | 12,594 | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | -0- | |||||||||||||||
|
Personal use of automobile
|
2009 | 10,848 | -0- | 34,338 | (c) | 17,302 | -0- | -0- | ||||||||||||||||||||
|
Other travel and related expenses(d)
|
2009 | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Our contributions to defined contribution plans
|
2009 | 9,800 | 9,800 | -0- | 1,889 | -0- | 9,800 | |||||||||||||||||||||
|
Dollar value of life insurance premiums paid by us or on our
behalf
|
2009 | 1,386 | 1,386 | 11,171 | 1,386 | 809 | 1,386 | |||||||||||||||||||||
|
Dollar value of health insurance premiums paid by us or on our
behalf
|
2009 | 10,995 | 10,995 | 1,526 | 6,594 | 6,414 | 10,995 | |||||||||||||||||||||
|
Dollar value of long-term disability premiums paid by us or on
our behalf
|
2009 | 256 | 256 | 12,391 | 256 | 149 | 256 | |||||||||||||||||||||
|
Total
|
2009 | $ | 45,879 | $ | 22,437 | $ | 59,426 | $ | 27,427 | $ | 7,372 | $ | 22,437 | |||||||||||||||
| (a) | The conversion rate used for the amounts included in this table for Mr. Butler for 2009 was £1.00 = $1.65. | |
| (b) | The value of personal use of corporate aircraft reflects the calculated incremental cost to us of personal use of corporate aircraft. Incremental costs have been calculated based on the variable operating costs to us. Variable costs consist of trip-specific costs including fuel, catering, mileage, maintenance, labor and parts, |
45
Table of Contents
| engine reserve, crew expenses, universal weather monitoring, landing/ramp fees and other miscellaneous variable costs. Incremental cost calculations do not include fixed costs associated with owning our aircraft since we would incur these costs anyway. On certain occasions, an executive’s spouse or other family member may accompany the executive on a flight. | ||
| (c) | Includes an annual fuel allowance of $4,691. | |
| (d) | We occasionally invite named executive officers’ spouses to accompany the officers to Board-related events for appropriate business purposes, for which we pay or reimburse travel and related expenses. These amounts are included in the “Other travel and related expenses” row to the extent they do not include travel on the corporate aircraft, which is discussed in footnote (b) above. |
2009 Grants of
Plan-Based Awards Table
The following table sets forth information concerning plan-based
awards to the named executive officers during 2009:
|
Awards: |
||||||||||||||||||||||||
|
Estimated Possible |
Number of |
Grant Date |
||||||||||||||||||||||
|
Payouts Under |
Shares of Stock |
Fair Value |
||||||||||||||||||||||
|
Non-Equity Incentive |
or Units |
of Stock and |
||||||||||||||||||||||
| Plan Awards(1) | (2)(3) |
Option |
||||||||||||||||||||||
|
Grant |
Threshold |
Target |
Maximum |
Target |
Awards |
|||||||||||||||||||
|
Name
|
Date | ($) | ($) | ($) | (#) | ($)(4) | ||||||||||||||||||
| S. D. Fazzolari | 8,900 | 890,000 | 1,780,000 | |||||||||||||||||||||
| 01-27-09 | 20,000 | 503,000 | ||||||||||||||||||||||
|
S. J. Schnoor
|
2,400 | 240,000 | 480,000 | |||||||||||||||||||||
| 01-27-09 | 5,000 | 125,750 | ||||||||||||||||||||||
|
G. D. H. Butler(5)
|
4,399 | 439,905 | 879,810 | |||||||||||||||||||||
| 01-27-09 | 8,000 | 201,200 | ||||||||||||||||||||||
|
R. C. Neuffer
|
2,815 | 281,520 | 563,040 | |||||||||||||||||||||
| 01-27-09 | 7,000 | 176,050 | ||||||||||||||||||||||
|
M. E. Kimmel
|
2,145 | 214,480 | 428,960 | |||||||||||||||||||||
| 01-27-09 | 10,000 | 251,500 | ||||||||||||||||||||||
|
G. J. Claro
|
3,900 | 390,000 | 780,000 | |||||||||||||||||||||
| 11-19-09 | 15,000 | 478,500 | ||||||||||||||||||||||
| (1) | These columns reflect potential awards under our annual incentive compensation program, made under our 1995 Incentive Plan and described more fully on page 34 of this Proxy Statement. Actual payouts for 2009 are disclosed in the “Non-Equity Incentive Plan Compensation” column of the 2009 Summary Compensation Table. | |
| (2) | This column reflects awards for (i) the 2006-2008 performance period under our restricted stock unit program, granted under our 1995 Incentive Plan and described more fully on page 37 of this Proxy Statement and (ii) in the case of Mr. Claro, his grant in 2009 that was provided pursuant to the terms of his employment offer letter. | |
| (3) | Our Compensation Committee has complete discretion on whether to settle and the amount of any settlement of restricted stock units that may be made annually to any officer, including the discretion to reduce the share payout to zero. | |
| (4) | The grant date fair value of the restricted stock unit awards for the 2006-2008 performance period, computed in accordance with FASB ASC Topic 718, was $25.15 per unit, which was determined using the average of the high and low price of the stock on the previous day’s trading, less a discount for dividends not received during the vesting period. Mr. Claro’s grant was made on November 19, 2009 and is based on a grant date fair value of $31.90 per unit, computed in accordance with FASB ASC Topic 718, determined using the average of the high and low price of the stock on the previous day’s trading, less a discount for dividends not received during the vesting period. | |
| (5) | Dollar amounts shown are based on an exchange rate of $1.65 = £1.00. |
46
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Annual Incentive
Compensation Plan; Long-Term Compensation Plan
For additional details of our Annual Incentive Compensation Plan
and Long-Term Compensation Plan payments, please see the
descriptions set forth on pages 34 and 37 of this Proxy
Statement. For additional details about the relationship of
salary, bonus and long-term compensation to total compensation,
please see the “Compensation Discussion and Analysis”
section of this Proxy Statement.
Outstanding
Equity Awards at 2009 Fiscal Year-End
The following table sets forth information concerning the
outstanding equity awards of the named executive officers as of
December 31, 2009.
| Option Awards(1) | Stock Awards(2) | |||||||||||||||||||||||||||||||||||
|
Equity |
||||||||||||||||||||||||||||||||||||
|
Incentive |
||||||||||||||||||||||||||||||||||||
|
Equity |
Plan Awards: |
|||||||||||||||||||||||||||||||||||
|
Equity |
Incentive |
Market or |
||||||||||||||||||||||||||||||||||
|
Incentive |
Plan Awards: |
Payout |
||||||||||||||||||||||||||||||||||
|
Plan |
Number |
Value of |
||||||||||||||||||||||||||||||||||
|
Awards: |
Market |
of Unearned |
Unearned |
|||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Number of |
Number of |
Value of |
Shares, |
Shares, |
||||||||||||||||||||||||||||||
|
Securities |
Securities |
Securities |
Shares or |
Shares or |
Units or |
Units or |
||||||||||||||||||||||||||||||
|
Underlying |
Underlying |
Underlying |
Units of |
Units of |
Other |
Other |
||||||||||||||||||||||||||||||
|
Unexercised |
Unexercised |
Unexercised |
Option |
Stock That |
Stock That |
Rights |
Rights That |
|||||||||||||||||||||||||||||
|
Options |
Options |
Unearned |
Exercise |
Option |
Have Not |
Have Not |
That Have |
Have Not |
||||||||||||||||||||||||||||
|
(#) |
(#) |
Options |
Price |
Expiration |
Vested |
Vested |
Not Vested |
Vested |
||||||||||||||||||||||||||||
|
Name
|
Exercisable | Unexercisable | (#) | ($) | Date | (#)(3) | ($)(4) | (#)(5) | ($)(4) | |||||||||||||||||||||||||||
|
S. D. Fazzolari
|
40,000 | -0- | -0- | 14.50 | 01-23-10 | |||||||||||||||||||||||||||||||
| 48,000 | -0- | -0- | 16.325 | 01-20-12 | ||||||||||||||||||||||||||||||||
| 18,667 | 601,637 | 20,000 | 644,600 | |||||||||||||||||||||||||||||||||
|
S. J. Schnoor
|
— | — | — | — | — | 3,833 | 123,538 | 5,000 | 161,150 | |||||||||||||||||||||||||||
|
G. D. H. Butler
|
20,000 | -0- | -0- | 12.8150 | 01-21-11 | |||||||||||||||||||||||||||||||
| 48,000 | -0- | -0- | 16.3250 | 01-20-12 | ||||||||||||||||||||||||||||||||
| 16,000 | 515,680 | 8,000 | 257,840 | |||||||||||||||||||||||||||||||||
|
R. C. Neuffer
|
8,000 | -0- | -0- | 12.815 | 01-21-11 | |||||||||||||||||||||||||||||||
| 6,000 | -0- | -0- | 16.325 | 01-20-12 | ||||||||||||||||||||||||||||||||
| 6,333 | 204,113 | 7,000 | 225,610 | |||||||||||||||||||||||||||||||||
|
M. E. Kimmel
|
4,000 | -0- | -0- | 16.325 | 01-20-12 | |||||||||||||||||||||||||||||||
| 10,000 | 322,300 | 10,000 | 322,300 | |||||||||||||||||||||||||||||||||
|
G. J. Claro
|
— | — | — | — | — | -0- | -0- | 15,000 | 483,450 | |||||||||||||||||||||||||||
| (1) | The Board of Directors has not issued any stock options since 2002 and instead issues restricted stock or restricted stock units as our long-term compensation method. For grants prior to 2003, the named executive officers were awarded stock options with an exercise price equal to the fair market value of our common stock on the date of grant. Fair market value was defined as the average of the high and low price of the stock on the date of grant. The grants were made pursuant to the 1995 Incentive Plan. The number of options granted to each officer was determined by grade level and our Compensation Committee’s evaluation of the strategic performance of the individual and the individual’s business unit. The maximum stock option award as provided in the 1995 Incentive Plan is 150,000 shares for any single participant in a calendar year. Our Committee does have the discretion to limit or entirely eliminate the number of stock options granted in any period, and, acting upon this authority, declined to award any stock options in calendar years 2003 through 2009 | |
| (2) | Our Compensation Committee awarded restricted stock units to each of the named executive officers for the three-year performance periods beginning in each of 2001, 2002, 2003, 2004, 2005 and 2006 under the 1995 Incentive Plan. No shares were issued in settlement of the 2007-2009 performance period to any named executive officer other than Mr. Claro, which payout was made in accordance with the terms of his employment offer letter. A target award level is established by our Compensation Committee and if the performance goal is obtained, then the restricted stock units are settled unless our Compensation |
47
Table of Contents
| Committee exercises its discretion to lower the amount of the payout. The restricted stock units vest as provided in footnote 3 on page 21 of this Proxy Statement and the restricted stock unit program is more fully described on page 37 of this Proxy Statement. | ||
| (3) | The numbers shown in this column reflect all unvested restricted stock units that were earned under our long-term incentive restricted stock unit program. A portion of these awards vest in years 2010, 2011 and 2012. | |
| (4) | The market value was computed by multiplying the closing market price of our stock on December 31, 2009 by the number of restricted stock units in the previous column. | |
| (5) | The numbers shown in this column reflect all unvested restricted stock units for which performance targets have been set by us but that were unearned in fiscal year 2009 under our long-term incentive restricted stock unit program. |
2009 Option
Exercises and Stock Vested
| Option Awards | Stock Awards | |||||||||||||||
|
Number of Shares |
Value Realized |
Number of Shares |
Value Realized |
|||||||||||||
|
Acquired on |
on Exercise |
Acquired on |
on Vesting |
|||||||||||||
|
Name
|
Exercise (#) | ($) | Vesting (#) | ($)(1) | ||||||||||||
|
S. D. Fazzolari
|
24,000 | 648,480 | 22,000 | 576,560 | ||||||||||||
|
S. J. Schnoor
|
-0- | -0- | 5,200 | 136,296 | ||||||||||||
|
G. D. H. Butler
|
20,000 | 641,822 | 20,667 | 541,686 | ||||||||||||
|
R. C. Neuffer
|
4,800 | 162,537 | 9,000 | 235,895 | ||||||||||||
|
M. E. Kimmel
|
-0- | -0- | 9,367 | 245,437 | ||||||||||||
|
G. J. Claro
|
-0- | -0- | -0- | -0- | ||||||||||||
| (1) | One hundred percent of the RSUs granted in 2006 vested on January 24, 2009, one-third of the RSUs granted in 2007 vested on January 23, 2009 and one-third of the RSUs granted in 2008 vested on January 22, 2009. The fair market value of the 2006 grant was $26.23 per share on the vesting date, based on the average of the high and low sales price of our common stock on January 23, 2009. The fair market value of the portion of the 2007 grant that vested in 2009 was $26.23 per share on the vesting date, based on the average of the high and low sales price of our common stock on January 23, 2009. The fair market value of the portion of the 2008 grant that vested in 2009 was $26.16 per share on the vesting date, based on the average of the high and low sales price of our common stock on January 22, 2009. |
48
Table of Contents
2009 Pension
Benefits Table
The following table describes pension benefits provided to the
named executive officers.
|
Payments |
||||||||||||||
|
Number of |
Present |
During |
||||||||||||
|
Years |
Value of |
Last |
||||||||||||
|
Credited |
Accumulated |
Fiscal |
||||||||||||
|
Service |
Benefit |
Year |
||||||||||||
|
Name
|
Plan Name
|
(#) | ($)(1) | ($) | ||||||||||
| S. D. Fazzolari | Harsco Employees Pension Plan | 23.333 | 563,204 | -0- | ||||||||||
| Supplemental Retirement Benefit Plan | 23.333 | 1,644,696 | -0- | |||||||||||
|
S. J. Schnoor
|
Harsco Employees Pension Plan | 15.750 | 288,229 | -0- | ||||||||||
| Supplemental Retirement Benefit Plan | 15.750 | 203,752 | -0- | |||||||||||
|
G. D. H. Butler
|
Harsco Pension Scheme | 38.000 | 8,527,997 | -0- | ||||||||||
|
R. C. Neuffer
|
Harsco Employees Pension Plan | 12.250 | 374,589 | -0- | ||||||||||
| Supplemental Retirement Benefit Plan | 12.250 | 342,386 | -0- | |||||||||||
|
M. E. Kimmel
|
Harsco Employees Pension Plan | 2.417 | 33,063 | -0- | ||||||||||
| Supplemental Retirement Benefit Plan | 2.417 | 22,695 | -0- | |||||||||||
|
G. J. Claro
|
Harsco Employees Pension Plan | -0- | -0- | -0- | ||||||||||
| Supplemental Retirement Benefit Plan | -0- | -0- | -0- | |||||||||||
| (1) | The disclosed amounts are estimates only and do not necessarily reflect the actual amounts that will be paid to the named executive officers, which will only be known at the time that they become eligible for payment. | |
| (2) | The conversion rate used for the amounts included in this row was £1.00 = $1.59, which was the currency exchange rate on the plan measurement date of December 31, 2009. |
Retirement
Plans
All of the named executive officers, with the exception of Mr.
Butler and Mr. Claro, are covered under the Harsco Employees
Pension Plan (referred to as the HEPP) and the Supplemental
Retirement Benefit Plan (referred to as the Supplemental Plan).
As described below, pension benefits were frozen effective
December 31, 2008 under the HEPP and Supplemental Plan. Mr.
Claro and all other U.S.-based officers are now covered by the
Retirement Savings and Investment Plan established
January 1, 2004 and as described in the narrative
disclosure to the 2009 Nonqualified Deferred Compensation Table.
Mr. Butler is covered by the U.K. pension plan described
below. Prior to January 1, 2003, the Supplemental Plan
replaced the 401(k) Company match lost due to government
limitations on such contributions. The replacement was in the
form of phantom shares as more fully described in the narrative
disclosure to the 2009 Nonqualified Deferred Compensation Table.
The Supplemental Plan was amended effective January 1, 2003
to eliminate any further granting of phantom shares.
The HEPP and the Supplemental Plan are defined benefit plans
providing for normal retirement at age 65. Early retirement
may be taken commencing with the first day of any month
following the attainment of age 55, provided at least
15 years of service have been completed. Early retirement
benefits commencing prior to age 65 are reduced. The Plans
also provide for unreduced pension benefits if retirement occurs
after age 62, provided at least 30 years of service
have been
49
Table of Contents
completed. The HEPP and the Supplemental Plan also provide for a
pre-retirement death benefit payable to a beneficiary designated
by the participant for participants who die after qualifying for
benefits. The Supplemental Plan also includes provisions which
fully vest participants upon termination of employment following
a “change in control” of the Company, as defined in
the Supplemental Plan.
Total pension benefits are based on final average compensation
and years of service. The normal retirement benefit under the
Supplemental Plan is equal to a total of 0.8% of final average
compensation up to the “Social Security Covered
Compensation” multiplied by years of service up to a
maximum of 33 years as defined in the Supplemental Plan plus
1.6% of the final average compensation in excess of the
“Social Security Covered Compensation” multiplied by
up to 33 years of service, reduced by the benefits under
the HEPP. Final average compensation is defined as the aggregate
compensation (base salary plus nondiscretionary incentive
compensation) for the 60 highest consecutive months out of the
last 120 months prior to the date of retirement or
termination of employment.
The Supplemental Plan was amended in 2002 to provide that for
any retirements on or after January 1, 2003, the 1.6%
factor in the benefit formula is reduced to 1.5% and the
definition of final average compensation was amended to reduce
the amount of nondiscretionary incentive compensation included
in the benefit calculation from 100% to 50% for such amounts
paid on or after January 1, 2003. Notwithstanding these
amendments, no participant’s retirement benefit shall be
reduced by reason of these amendments, below the benefit accrued
at December 31, 2002.
The normal retirement benefit under the HEPP is equal to 1.2%
times final average compensation times years of service, up to a
maximum of 33 years (the initial product), plus 1.5% times
the initial product times benefit service in excess of
33 years, but not in excess of 40 years of service.
This amount cannot be less than the minimum benefit determined
at December 31, 2002, which was determined based on a
normal retirement benefit under the HEPP equal to 1.3% times
final average compensation (the final product) times the final
product times years of service, up to a maximum of
33 years, plus 1.5% times benefit service in excess of
33 years, but not in excess of 40 years of service.
Final average compensation is defined as the aggregate
compensation (base salary plus non-discretionary incentive
compensation) for the 60 highest consecutive months out of the
last 120 months prior to the date of retirement or
termination of employment. Effective January 1, 2003, the
HEPP was amended to reduce the amount of nondiscretionary
incentive compensation included in the benefit calculation from
100% to 50% for such amounts paid on or after that date.
The Supplemental Plan and the HEPP were amended on
December 31, 2003 to provide that pension benefit accrual
service would not be granted to any of our salaried employees
after December 31, 2003, provided, however, that
compensation earned for services performed for us for current
Supplemental Plan and HEPP participants through
December 31, 2013 shall be included in determining their
Final Average Compensation under the Supplemental Plan and the
HEPP.
The Supplemental Plan and the HEPP were further amended
effective December 31, 2008 to provide that compensation
earned after December 31, 2008 would not be included in
determining Final Average Compensation. As a result of this
action and the December 31, 2003 freeze on pension benefit
accrual service, Supplemental Plan and HEPP accrued pension
benefits were frozen as of December 31, 2008. In
conjunction with this change and effective January 1, 2009
for covered employees, the plans were amended to include a full
lump sum form of payment.
We do not provide retiree medical or retiree life insurance
benefits to our executive officers.
The above table shows the present value of accumulated pension
benefits payable to Mr. Butler, for life, under the Harsco
Pension Scheme (which we refer to as the Scheme), a
50
Table of Contents
qualified pension plan in the U.K., upon retirement at
age 60, which is normal retirement age under the Scheme,
assuming the total pension benefit was payable and retirement
took place on December 31, 2009. The benefit would be paid
in British pounds and all amounts in the table above are stated
in U.S. dollars at a conversion rate of $1.59 = £1.00,
which was the currency exchange rate on the plan measurement
date of December 31. The Scheme provides that if the
participant dies within five years after starting to receive a
pension, a lump sum will be paid equal to the pension payments
that would have been made during the remainder of the five year
period. The annual pension benefit is based on the highest
annual total of salary and bonus within the last five years (or
the highest average amount of annual salary plus bonus received
in any three consecutive scheme years within the last ten years,
if higher) (which we refer to as the Final Pensionable Salary)
and the years of service, subject to various deductions for
service prior to April 6, 1989, and a statutory limitation
of two-thirds of the Final Pensionable Salary. The Scheme was
amended in 2002 to provide that for any retirements on or after
January 1, 2003, the benefit accrual rate is reduced, and
the definition of Final Pensionable Salary is amended to reduce
the amount of incentive bonus included in the calculation from
100% to 50% for such amounts paid on or after January 1,
2003. The Scheme was amended in 2003 to provide that, in respect
of service after January 1, 2004 only, normal retirement
age is increased to 65, and the definition of Final Pensionable
Salary is amended so as to be equal to the average salary and
50% of bonus over the last five scheme years prior to retirement.
51
Table of Contents
2009 Nonqualified
Deferred Compensation Table
The following table describes the nonqualified deferred
compensation of the named executive officers.
|
Executive |
Registrant |
Aggregate |
Aggregate |
Aggregate |
||||||||||||||||||
|
Contributions |
Contributions |
Earnings |
Withdrawals/ |
Balance |
||||||||||||||||||
|
in Last FY |
in Last FY |
in Last FY |
Distributions |
at Last FYE |
||||||||||||||||||
|
Name
|
Plan Name
|
($) | ($)(1) | ($) | ($) | ($)(2) | ||||||||||||||||
| S. D. Fazzolari | Supplemental Retirement Benefit Plan | -0- | 3,129 | -0- | -0- | 112,295 | ||||||||||||||||
|
Non-Qualified Restoration Plan |
-0- | 32,276 | -0- | -0- | 195,594 | |||||||||||||||||
|
S. J. Schnoor
|
Supplemental Retirement Benefit Plan | -0- | 705 | -0- | -0- | 25,300 | ||||||||||||||||
|
Non-Qualified Restoration Plan |
-0- | 8,231 | -0- | -0- | 55,327 | |||||||||||||||||
|
G. D. H. Butler(3)
|
Supplemental Retirement Benefit Plan | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||
|
Non-Qualified Restoration Plan |
-0- | -0- | -0- | -0- | -0- | |||||||||||||||||
|
R. C. Neuffer
|
Supplemental Retirement Benefit Plan | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||
|
Non-Qualified Restoration Plan |
-0- | 27,855 | -0- | -0- | 92,156 | |||||||||||||||||
|
M. E. Kimmel
|
Supplemental Retirement Benefit Plan | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||
|
Non-Qualified Restoration Plan |
-0- | 7,552 | -0- | -0- | 45,954 | |||||||||||||||||
|
G. J. Claro(4)
|
Supplemental Retirement Benefit Plan | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||
|
Non-Qualified Restoration Plan |
-0- | -0- | -0- | -0- | -0- | |||||||||||||||||
| (1) | Ongoing contributions by us to the phantom share accounts of the named executive officers established under the Supplemental Plan ceased on December 31, 2002. As a result, this column reflects (A) dividend reinvestment contributions by us during fiscal year 2009 to the phantom share accounts of each executive officer established under the Supplemental Plan and (B) phantom contributions by us to the non-qualified restoration plan accounts of each named executive officer during fiscal year 2009. None of the amounts reported in this column are reported as compensation for 2009 in the 2009 Summary Compensation Table. | |
| (2) | Numbers shown with respect to phantom stock awards are based on a closing stock price on December 31, 2009 of $32.23 per share (payout for phantom shares would be based on the price of our stock on the date of termination of the relevant officer). Earnings would have included any increase in value of the phantom shares during 2009. None of the amounts reported in this column were reported as compensation in prior Summary Compensation Tables. | |
| (3) | Mr. Butler is not a participant in any of our U.K.- or U.S.-based nonqualified deferred compensation plans. | |
| (4) | Mr. Claro is not a participant in any of our U.K.- or U.S.-based nonqualified deferred compensation plans. |
52
Table of Contents
Nonqualified
Deferred Compensation
Phantom
Shares
We maintain the Harsco Corporation Savings Plan (which we refer
to as the HCSP), which includes the “Salary Reduction”
feature afforded by Section 401(k) of the Internal Revenue
Code. Our officers participated in the above plan until
December 31, 2002. Prior to January 1, 2003, we made
matching contributions under the HCSP for the account of each
participating employee equal to 50% of the first 1% to 6% of
such employee’s “Salary Reduction” contribution.
In addition, prior to January 1, 2003, the Supplemental
Plan replaced the 401(k) match lost due to government
limitations on such contributions. The replacement was in the
form of “phantom” shares to a non-qualified plan. Our
officers participated in the Supplemental Plan until
December 31, 2002. The HSCP and the Supplemental Plan were
amended effective January 1, 2003 to eliminate any future
replacement of lost Company match and any further granting of
phantom shares. As a result, no Company matches were made during
calendar year 2003 and no phantom shares were granted for
calendar year 2003.
Retirement
Savings and Investment Plan
A new, non-qualified restoration plan (which we refer to as the
NQ RSIP) was established on January 1, 2004, as part of our
new 401(k) savings plan, the Retirement Savings and Investment
Plan (which we refer to as the RSIP). The plans were
implemented, among other reasons, to provide coverage for
individuals affected by the amendments to the HCSP and the
Supplemental Plan, including by establishing new 401(k) matching
and company discretionary contributions to be made by us. Under
the RSIP, we make matching contributions for the account of each
participating employee equal to 100% of the first 3% of such
employee’s contributions and 50% of the next 2% contributed
by such employee. In addition, the RSIP provides for a
discretionary contribution of 2% of allowable earnings as
decided by the Company each year to the account of each eligible
employee who is an active employee as of December 31 of
each plan year. The NQ RSIP provides for the discretionary and
matching contributions that would be otherwise provided under
the qualified portion of the RSIP for salaried employees’
contributions made as of January 1, 2004, but for Internal
Revenue Code limitations under Section 402(g),
Section 401(a)(17), Section 415 or
Section 401(m). Pursuant to the NQ RSIP, we make
“phantom” contributions to an employee’s
(including the executive officers’ other than
Mr. Butler’s) account in an amount equal to the
above-described Company matching and discretionary contributions
under the RSIP, which we were not otherwise able to make for a
participant as a result of that participant reaching the
limitations imposed by the Internal Revenue Code.
Termination or
Change in Control Arrangements
We have entered into certain agreements with the named executive
officers (other than Messrs. Neuffer and Claro, who have
not entered into any such agreements) and maintain certain plans
that will require us to provide compensation to certain of our
named executive officers in the event of a termination of
employment, including as the result of a change in control.
Set forth below are tables, one for each named executive
officer, showing our payment obligations following the
termination of the officer’s employment with us, including
as the result of a change in control. The amounts disclosed
below in each table are estimates only and do not necessarily
reflect the actual amounts that would be paid to the officers,
which would only be known at the time that they become eligible
for payment and, in the case of payments related to a change in
control, would only be payable if a change in control were to
occur. The tables reflect the
53
Table of Contents
amounts that would be payable under the various arrangements
assuming that the termination event occurred on
December 31, 2009.
| Termination as a Result of | ||||||||||||||||||||
|
Involuntary |
Death |
|||||||||||||||||||
|
Change in |
For Cause or |
not for |
or |
|||||||||||||||||
|
Control |
Voluntary |
Cause |
Disability |
Retirement |
||||||||||||||||
| (2) | (4) | (5) | (6) | (7) | ||||||||||||||||
|
Compensation:
|
||||||||||||||||||||
|
Unpaid base salary through date of termination
|
X | (2) | X | X | X | X | ||||||||||||||
|
Unpaid non-equity incentive plan compensation
|
X | (2) | X | X | X | |||||||||||||||
|
Unpaid long-term performance incentives
|
||||||||||||||||||||
|
Restricted Stock Units
|
||||||||||||||||||||
|
Vested
|
X | (2) | X | X | X | X | ||||||||||||||
|
Acceleration of Unvested
|
X | X | X | (8) | ||||||||||||||||
|
Stock Options
|
||||||||||||||||||||
|
Vested
|
X | X | X | X | X | |||||||||||||||
|
Unvested and Accelerated(1)
|
X | X | X | |||||||||||||||||
|
Unpaid Deferred Compensation
|
X | (2) | X | X | X | X | ||||||||||||||
|
Multiple of Base Salary
|
X | (2)(3) | ||||||||||||||||||
|
Benefits and Perquisites:
|
||||||||||||||||||||
|
Defined benefit pension plan
|
X | X | X | X | X | |||||||||||||||
|
401(k) savings plan
|
X | X | X | X | X | |||||||||||||||
|
Supplemental retirement benefit plan
|
X | X | X | X | X | |||||||||||||||
|
Life insurance proceeds
|
X | |||||||||||||||||||
|
Accrued but unpaid vacation
|
X | (7) | X | X | X | X | ||||||||||||||
| (1) | The Board of Directors ceased granting stock options after 2002 following a review of the appropriateness of the use of stock options as the vehicle for long-term compensation. As a result, all outstanding stock options are vested. | |
| (2) | In accordance with the terms of the Change in Control Severance Agreements (which we refer to as the CIC Agreements) entered into by us and each named executive officer other than Messrs. Neuffer and Claro, Messrs. Butler, Fazzolari, Kimmel and Schnoor will be entitled to these payments if the executive’s employment is terminated by us other than for disability or death of the executive or “without cause”, or by the executive for “good reason” during the three-year period following the date on which a “change of control” occurs (which we refer to as the Protection Period). | |
| If the employment of Messrs. Butler, Fazzolari, Kimmel or Schnoor is terminated during the Protection Period by reason of the executive’s death or disability, the executive’s CIC Agreement will terminate without further obligations under the applicable CIC Agreement to the executive’s representatives, other than those obligations accrued or earned and vested (if applicable) by the executive as of the date of termination, including, (A) the executive’s full base salary through the date of termination at the rate in effect on the date of termination or, if higher, at the highest rate in effect at any time from the 90-day period preceding the effective date of a change in control through the date of termination (which we refer to as the Highest Base Salary), (B) the product of the annual bonus paid to the executive for the last full fiscal year and a fraction, the numerator of which is the number of days in the current fiscal year through the date of termination, and the denominator of which is 365 and (C) any compensation previously deferred by the executive (together with any accrued interest thereon) and not yet paid by us (the amounts specified in clauses (A), (B) and (C), the Accrued Obligations). |
54
Table of Contents
| The individual tables below for each named executive officer set forth the present value of lump sum payments for Accrued Obligations for each of the officers named in the tables based on 2009 salaries, assuming death occurs on December 31, 2009 and during the Protection Period. None of the amounts shown below are accrued as a result of death occurring during the Protection Period. Such amounts would have been paid to the named executive officers under existing plans and arrangements regardless of the CIC Agreements or the occurrence of a change in control. | ||
| The individual tables below for each named executive officer also set forth the present value of lump sum payments for Accrued Obligations for each of the officers named in the table based on 2009 salaries assuming disability occurs on December 31, 2009 and during the Protection Period. None of the amounts shown below are accrued as a result of disability occurring during the Protection Period. Such amounts would have been paid to the named executive officers under existing plans and arrangements regardless of the CIC Agreements or the occurrence of a change in control. | ||
| If the employment of Messrs. Butler, Fazzolari, Kimmel or Schnoor is terminated during the Protection Period for cause, the executive’s CIC Agreement will terminate without further obligations under the CIC Agreement to the executive, other than the obligation to pay to the executive the Highest Base Salary through the date of termination plus the amount of any compensation previously deferred by the executive (together with accrued interest thereon). The individual tables for each named executive officer set forth the present value of such payments under the CIC Agreements for each of the officers based on 2009 salaries assuming the “for cause” termination occurs on December 31, 2009 and during the Protection Period. None of the amounts shown in the tables below or with regard to Mr. Neuffer or Mr. Claro are accrued as a result of the termination occurring during the Protection Period, except that the vesting of each officer’s restricted stock units accelerates, in accordance with the terms of the restricted stock units agreements, upon the occurrence of a change in control. Other than payments relating to restricted stock units, such amounts would have been paid to the named executive officers under existing plans and arrangements regardless of the CIC Agreements or the occurrence of a change in control. | ||
| If Messrs. Butler, Fazzolari, Kimmel or Schnoor terminate their employment during the Protection Period other than for good reason, the executive’s CIC Agreements will terminate without further obligations under the CIC Agreement to the executive, other than those obligations accrued or earned and vested (if applicable) by the executive through the date of termination, including the executive’s base salary through the date of termination at the rate in effect on the date of termination plus the amount of any compensation previously deferred by the executive (together with accrued interest thereon). The individual tables for each named executive officer set forth the present value of such payments under the CIC Agreements for each of the officers named in the tables based on 2009 salaries assuming the “other than for good reason” termination occurs on December 31, 2009 and during the Protection Period. None of the amounts shown in the tables below or with regard to Mr. Neuffer or Mr. Claro are accrued as a result of the termination occurring during the Protection Period, except that the vesting of each officer’s restricted stock units accelerates, in accordance with the terms of the restricted stock units agreements, upon the occurrence of a change in control. Other than payments relating to restricted stock units, such amounts would have been paid to the named executive officers under existing plans and arrangements regardless of the CIC Agreements or the occurrence of a change in control. | ||
| If, during the Protection Period, we terminate the employment of Messrs. Butler, Fazzolari, Kimmel or Schnoor other than for cause, disability or death, or such executive terminates his employment for good reason, we shall pay the executive in a lump sum the aggregate of the following amounts (A) the executive’s full base salary and vacation pay accrued through the date of termination at the rate in effect on the date of termination plus pro-rated incentive compensation under our annual incentive compensation plan through the date of termination at the same percentage rate applicable to the calendar year immediately prior to the date of termination, plus all other amounts to which the executive is entitled under any of our compensation plans, programs, practices or policies in effect at the time such payments are due; (B) the amount of any compensation previously deferred by the executive (together with accrued interest thereon); and (C) a lump sum severance payment in an amount equal to one times the executive’s base salary, in the case of Mr. Kimmel and Mr. Schnoor, or three times the executive’s base salary, in the case of Messrs. Butler and Fazzolari. The payment may be subject to reduction to avoid certain adverse |
55
Table of Contents
| tax consequences. The individual tables for each named executive officer set forth the present value of such payments for each of the officers based on 2009 salaries assuming termination occurs on December 31, 2009. Of the amounts shown below, only the following amounts, made up of each officer’s multiple of base salary payment (except in the case of Mr. Neuffer and Mr. Claro) and payout for restricted stock units based on accelerated vesting of the same in accordance with the change in control provisions contained in each restricted stock units agreement, would directly result from the termination occurring during the Protection Period or the occurrence of a change in control: for Mr. Butler, $2,712,997; Mr. Fazzolari, $3,903,000; Mr. Neuffer, $425,010; Mr. Kimmel, $1,021,300; Mr. Claro, $245,250; and Mr. Schnoor, $681,000. All other amounts shown below would have been paid to the named executive officers under existing plans and arrangements regardless of the CIC Agreements or the occurrence of a change in control. The amounts shown for Mr. Butler for his multiple of base salary are stated at a conversion rate of $1.65 = £1.00 | ||
| (3) | The multiple is three times base salary in the case of Messrs. Butler and Fazzolari and one times base salary in the case of Mr. Kimmel and Mr. Schnoor. | |
| (4) | The individual tables below for each named executive officer set forth the present value of the lump sum payments for each executive officer assuming (A) the executive officer was terminated for cause on December 31, 2009 and (B) that such termination took place either prior to a change in control or following the Protection Period (as defined above and as applicable to the named executive). | |
| (5) | The individual tables below for each named executive officer set forth the present value of the lump sum payments for each executive officer assuming (A) the executive officer was terminated involuntarily without cause on December 31, 2009 and (B) that such termination took place either prior to a change in control or following the Protection Period (as defined above and as applicable to the named executive). | |
| (6) | The individual tables below for each named executive officer set forth the present value of the lump sum payments for each executive officer assuming (A) the executive’s death occurs on December 31, 2009 and (B) that such death took place either prior to a change in control or following the Protection Period (as defined above and as applicable to the named executive). | |
| The tables below also set forth the present value of the lump sum payments for each executive officer assuming (A) the executive’s disability occurs on December 31, 2009 and (B) that such disability took place either prior to a change in control or following the Protection Period (as defined above and as applicable to the named executive). | ||
| (7) | The individual tables below for each named executive officer set forth the present value of the lump sum payments for each executive officer assuming (A) the executive officer retires on December 31, 2009 and (B) that such retirement took place either prior to a change in control or following the Protection Period (as defined above and as applicable to the named executive). Since neither Messrs. Kimmel nor Schnoor were retirement-eligible on December 31, 2009, the numbers shown are the estimated present value of the retirement benefits that would be payable to each such individual at normal retirement age (in other words, age 65). | |
| (8) | The provisions of each restricted stock units agreement provide that the restricted stock units immediately vest and become non-forfeitable upon the grantee’s death, disability, a change in control (as defined in the 1995 Incentive Plan) or upon the grantee’s retirement at the specified retirement age. On September 27, 2006, the Board approved amendments to our performance-based restricted stock unit program which included a reduction of the specified retirement age from age 65 to age 62. The revisions apply to grants made after September 27, 2006. |
56
Table of Contents
The following table describes the potential compensation upon
termination or a change in control for Salvatore D. Fazzolari,
our Chairman and Chief Executive Officer.
| Termination as a Result of | ||||||||||||||||||||||||||||
|
Change in |
||||||||||||||||||||||||||||
|
Control — |
||||||||||||||||||||||||||||
|
Change in |
Involuntary |
Involuntary |
||||||||||||||||||||||||||
|
Control — |
not for |
For Cause or |
not for |
|||||||||||||||||||||||||
|
Voluntary |
Cause |
Voluntary |
Cause |
Death |
Disability |
Retirement |
||||||||||||||||||||||
| ($) | ($) | ($)(1) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
|
Executive Benefits and Payments Upon Termination
|
||||||||||||||||||||||||||||
|
Compensation
|
||||||||||||||||||||||||||||
|
Unpaid Base Salary
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Non-Equity Incentive Plan Compensation
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Long-Term Performance
Incentives: |
||||||||||||||||||||||||||||
|
Restricted Stock Units
|
1,233,000 | 1,233,000 | -0- | -0- | 1,233,000 | 1,233,000 | -0- | |||||||||||||||||||||
|
Stock Options
|
1,472,640 | 1,472,640 | 1,472,640 | 1,472,640 | 1,472,640 | 1,472,640 | 1,472,640 | |||||||||||||||||||||
|
Multiple of Base Salary
|
-0- | 2,670,000 | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Nonqualified Deferred Compensation
|
||||||||||||||||||||||||||||
|
NQ RSIP and Unpaid Deferred Compensation
|
307,889 | 307,889 | 307,889 | 307,889 | 307,889 | 307,889 | 307,889 | |||||||||||||||||||||
|
RSIP
|
1,035,982 | 1,035,982 | 1,035,982 | 1,035,982 | 1,035,982 | 1,035,982 | 1,035,982 | |||||||||||||||||||||
|
Benefits and Perquisites
|
||||||||||||||||||||||||||||
|
Pension
|
2,461,372 | 2,461,372 | 629,655 | 2,461,372 | 2,111,191 | 2,461,372 | 2,461,372 | |||||||||||||||||||||
|
Life Insurance Proceeds
|
-0- | -0- | -0- | -0- | 500,000 | -0- | -0- | |||||||||||||||||||||
|
Total:
|
6,510,883 | 9,180,883 | 3,446,166 | 5,277,883 | 6,660,702 | 6,510,883 | 5,277,883 | |||||||||||||||||||||
| (1) | The amounts payable to Mr. Fazzolari due to his death or disability during the Protection Period would match the amounts payable to him for such occurrences outside of the Protection Period. If Mr. Fazzolari were terminated during the Protection Period for cause, he would receive the payment shown above for termination for cause in a non-change-in-control scenario, plus payout of his RSUs in the amount of $1,233,000. |
57
Table of Contents
The following table describes the potential compensation upon
termination or a change in control for Geoffrey D. H. Butler,
our President.
| Termination as a Result of: | ||||||||||||||||||||||||||||
|
Change in |
||||||||||||||||||||||||||||
|
Control — |
||||||||||||||||||||||||||||
|
Change in |
Involuntary |
Involuntary |
||||||||||||||||||||||||||
|
Control— |
not for |
For Cause or |
not for |
|||||||||||||||||||||||||
|
Voluntary |
Cause |
Voluntary |
Cause |
Death |
Disability |
Retirement |
||||||||||||||||||||||
| ($) | ($) | ($)(1) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
|
Executive Benefits and
Payments Upon Termination |
||||||||||||||||||||||||||||
|
Compensation
|
||||||||||||||||||||||||||||
|
Unpaid Base Salary
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Non-Equity
Incentive Plan Compensation |
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Long-Term
Performance Incentives: |
||||||||||||||||||||||||||||
|
Restricted Stock Units
|
772,240 | 772,240 | -0- | -0- | 772,240 | 772,240 | 772,240 | |||||||||||||||||||||
|
Stock Options
|
1,151,740 | 1,151,740 | 1,151,740 | 1,151,740 | 1,151,740 | 1,151,740 | 1,151,740 | |||||||||||||||||||||
|
Multiple of Base Salary
|
-0- | 1,940,757 | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Nonqualified Deferred
Compensation |
||||||||||||||||||||||||||||
|
NQ RSIP and Unpaid
Deferred Compensation |
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
RSIP
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Benefits and Perquisites
|
||||||||||||||||||||||||||||
|
Pension
|
8,864,272 | 8,864,272 | 8,864,272 | 8,864,272 | 7,595,462 | 8,864,272 | 8,864,272 | |||||||||||||||||||||
|
Life Insurance Proceeds
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Total:
|
10,788,252 | 12,729,009 | 10,016,012 | 10,016,012 | 9,519,442 | 10,788,252 | 10,788,252 | |||||||||||||||||||||
| (1) | The amounts payable to Mr. Butler due to his death or disability during the Protection Period would match the amounts payable to him for such occurrences outside of the Protection Period. If Mr. Butler were terminated during the Protection Period for cause, he would receive the payment shown above for termination for cause in a non-change-in-control scenario, plus payout of his RSUs in the amount of $772,240. All amounts shown in the table with regard to Mr. Butler are stated at a conversion rate of $1.65 = £1.00, except that pension amounts are stated at a conversion rate of $1.59 = £1.00, which was the exchange rate on the pension plan measurement date of December 31, 2009. |
58
Table of Contents
The following table describes the potential compensation upon
termination or a change in control for Richard C. Neuffer, our
Senior Vice President Harsco Corporation and Group CEO of our
Harsco Rail Segment and our Harsco Industrial Group.
| Termination as a Result of: | ||||||||||||||||||||||||||||
|
Change in |
||||||||||||||||||||||||||||
|
Control — |
||||||||||||||||||||||||||||
|
Change in |
Involuntary |
Involuntary |
||||||||||||||||||||||||||
|
Control — |
not for |
For Cause or |
not for |
|||||||||||||||||||||||||
|
Voluntary |
Cause |
Voluntary |
Cause |
Death |
Disability |
Retirement |
||||||||||||||||||||||
| ($) | ($) | ($)(1) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
|
Executive Benefits and Payments Upon
Termination |
||||||||||||||||||||||||||||
|
Compensation
|
||||||||||||||||||||||||||||
|
Unpaid Base Salary
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Non-Equity
Incentive Plan Compensation |
520,812 | 520,812 | -0- | 520,812 | 520,812 | 520,812 | 520,812 | |||||||||||||||||||||
|
Unpaid Long-Term
Performance Incentives: |
||||||||||||||||||||||||||||
|
Restricted Stock Units
|
425,010 | 425,010 | -0- | -0- | 425,010 | 425,010 | 425,010 | |||||||||||||||||||||
|
Stock Options
|
250,750 | 250,750 | 250,750 | 250,750 | 250,750 | 250,750 | 250,750 | |||||||||||||||||||||
|
Multiple of Base Salary
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Nonqualified Deferred Compensation
|
||||||||||||||||||||||||||||
|
NQ RSIP and Unpaid
Deferred Compensation |
92,156 | 92,156 | 92,156 | 92,156 | 92,156 | 92,156 | 92,156 | |||||||||||||||||||||
|
RSIP
|
385,764 | 385,764 | 385,764 | 385,764 | 385,764 | 385,764 | 385,764 | |||||||||||||||||||||
|
Benefits and Perquisites
|
||||||||||||||||||||||||||||
|
Pension
|
721,011 | 721,011 | 378,626 | 721,011 | 511,940 | 721,011 | 721,011 | |||||||||||||||||||||
|
Life Insurance Proceeds
|
-0- | -0- | -0- | -0- | 500,000 | -0- | -0- | |||||||||||||||||||||
|
Total:
|
2,395,503 | 2,395,503 | 1,107,296 | 1,970,493 | 2,686,432 | 2,395,503 | 2,395,503 | |||||||||||||||||||||
| (1) | The amounts payable to Mr. Neuffer due to his death or disability during the Protection Period would match the amounts payable to him for such occurrences outside of the Protection Period. If Mr. Neuffer were terminated during the Protection Period for cause, he would receive the payment shown above for termination for cause in a non-change-in-control scenario, plus payout of his RSUs in the amount of $425,010. |
59
Table of Contents
The following table describes the potential compensation upon
termination or a change in control for Stephen J. Schnoor, our
Senior Vice President and Chief Financial Officer.
| Termination as a Result of: | ||||||||||||||||||||||||||||
|
Change in |
||||||||||||||||||||||||||||
|
Control — |
||||||||||||||||||||||||||||
|
Change in |
Involuntary |
Involuntary |
||||||||||||||||||||||||||
|
Control— |
not for |
For Cause or |
not for |
|||||||||||||||||||||||||
|
Voluntary |
Cause |
Voluntary |
Cause |
Death |
Disability |
Retirement |
||||||||||||||||||||||
| ($) | ($) | ($)(1) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
|
Executive Benefits and Payments Upon
Termination |
||||||||||||||||||||||||||||
|
Compensation
|
||||||||||||||||||||||||||||
|
Unpaid Base Salary
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Non-Equity
Incentive Plan Compensation |
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Long-Term
Performance Incentives: |
||||||||||||||||||||||||||||
|
Restricted Stock Units
|
281,000 | 281,000 | -0- | -0- | 281,000 | 281,000 | -0- | |||||||||||||||||||||
|
Stock Options
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Multiple of Base Salary
|
-0- | 400,000 | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Nonqualified Deferred Compensation
|
||||||||||||||||||||||||||||
|
NQ RSIP and Unpaid
Deferred Compensation |
80,627 | 80,627 | 80,627 | 80,627 | 80,627 | 80,627 | 80,627 | |||||||||||||||||||||
|
RSIP
|
673,781 | 673,781 | 673,781 | 673,781 | 673,781 | 673,781 | 673,781 | |||||||||||||||||||||
|
Benefits and Perquisites
|
||||||||||||||||||||||||||||
|
Pension
|
699,775 | 699,775 | 409,664 | 699,775 | 471,572 | 699,775 | 699,775 | |||||||||||||||||||||
|
Life Insurance Proceeds
|
-0- | -0- | -0- | -0- | 500,000 | -0- | -0- | |||||||||||||||||||||
|
Total:
|
1,735,183 | 2,135,183 | 1,164,072 | 1,454,183 | 2,006,980 | 1,735,183 | 1,454,183 | |||||||||||||||||||||
| (1) | The amounts payable to Mr. Schnoor due to his death or disability during the Protection Period would match the amounts payable to him for such occurrences outside of the Protection Period. If Mr. Schnoor were terminated during the Protection Period for cause, he would receive the payment shown above for termination for cause in a non-change-in-control scenario, plus payout of his RSUs in the amount of $281,000. |
60
Table of Contents
The following table describes the potential compensation upon
termination or a change in control for Mark E. Kimmel, our
Senior Vice President, Chief Administrative Officer, General
Counsel and Corporate Secretary.
| Termination as a Result of: | ||||||||||||||||||||||||||||
|
Change |
||||||||||||||||||||||||||||
|
in Control — |
||||||||||||||||||||||||||||
|
Change in |
Involuntary |
Involuntary |
||||||||||||||||||||||||||
|
Control— |
not for |
For Cause or |
not for |
|||||||||||||||||||||||||
|
Voluntary |
Cause |
Voluntary |
Cause |
Death |
Disability |
Retirement |
||||||||||||||||||||||
| ($) | ($) | ($)(1) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
|
Executive Benefits and Payments Upon
Termination |
||||||||||||||||||||||||||||
|
Compensation
|
||||||||||||||||||||||||||||
|
Unpaid Base Salary
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Non-Equity
Incentive Plan Compensation |
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Long-Term
Performance Incentives: |
||||||||||||||||||||||||||||
|
Restricted Stock Units
|
638,300 | 638,300 | -0- | -0- | 638,300 | 638,300 | -0- | |||||||||||||||||||||
|
Stock Options
|
63,620 | 63,620 | 63,620 | 63,620 | 63,620 | 63,620 | 63,620 | |||||||||||||||||||||
|
Multiple of Base Salary
|
-0- | 383,000 | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Nonqualified Deferred Compensation
|
||||||||||||||||||||||||||||
|
NQ RSIP and Unpaid
Deferred Compensation |
45,954 | 45,954 | 45,954 | 45,954 | 45,954 | 45,954 | 45,954 | |||||||||||||||||||||
|
RSIP
|
529,759 | 529,759 | 529,759 | 529,759 | 529,759 | 529,759 | 529,759 | |||||||||||||||||||||
|
Benefits and Perquisites
|
||||||||||||||||||||||||||||
|
Pension
|
60,477 | 60,477 | 35,920 | 60,477 | 40,591 | 60,477 | 60,477 | |||||||||||||||||||||
|
Life Insurance Proceeds
|
-0- | -0- | -0- | -0- | 500,000 | -0- | -0- | |||||||||||||||||||||
|
Total:
|
1,338,110 | 1,721,110 | 675,253 | 699,810 | 1,818,224 | 1,338,110 | 699,810 | |||||||||||||||||||||
| (1) | The amounts payable to Mr. Kimmel due to his death or disability during the Protection Period would match the amounts payable to him for such occurrences outside of the Protection Period. If Mr. Kimmel were terminated during the Protection Period for cause, he would receive the payment shown above for termination for cause in a non-change-in-control scenario, plus payout of his RSUs in the amount of $638,300. |
61
Table of Contents
The following table describes the potential compensation upon
termination or a change in control for Galdino J. Claro, our
Global CEO, Harsco Metals and Harsco Minerals.
| Termination as a Result of: | ||||||||||||||||||||||||||||
|
Change in |
||||||||||||||||||||||||||||
|
Control — |
||||||||||||||||||||||||||||
|
Change in |
Involuntary |
Involuntary |
||||||||||||||||||||||||||
|
Control— |
not for |
For Cause or |
not for |
|||||||||||||||||||||||||
|
Voluntary |
Cause |
Voluntary |
Cause |
Death |
Disability |
Retirement |
||||||||||||||||||||||
| ($) | ($) | ($)(1) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
|
Executive Benefits and
Payments Upon Termination |
||||||||||||||||||||||||||||
|
Compensation
|
||||||||||||||||||||||||||||
|
Unpaid Base Salary
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Unpaid Non-Equity
Incentive Plan Compensation |
390,000 | 390,000 | 390,000 | 390,000 | 390,000 | 390,000 | 390,000 | |||||||||||||||||||||
|
Unpaid Long-Term
Performance Incentives: |
||||||||||||||||||||||||||||
|
Restricted Stock Units
|
245,250 | 245,250 | -0- | -0- | 245,250 | 245,250 | -0- | |||||||||||||||||||||
|
Stock Options
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Multiple of Base Salary
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Nonqualified Deferred
Compensation |
||||||||||||||||||||||||||||
|
NQ RSIP and Unpaid
Deferred Compensation |
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
RSIP
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Benefits and Perquisites
|
||||||||||||||||||||||||||||
|
Pension
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
|
Life Insurance Proceeds
|
-0- | -0- | -0- | -0- | 500,000 | -0- | -0- | |||||||||||||||||||||
|
Total:
|
635,250 | 635,250 | 390,000 | 390,000 | 1,135,250 | 635,250 | 390,000 | |||||||||||||||||||||
| (1) | The amounts payable to Mr. Claro due to his death or disability during the Protection Period would match the amounts payable to him for such occurrences outside of the Protection Period. If Mr. Claro were terminated during the Protection Period for cause, he would receive the payment shown above for termination for cause in a non-change-in-control scenario, plus payout of his RSUs in the amount of $245,250. |
Severance
Benefits Payable Outside of a Change in Control
Upon certain types of terminations of employment (other than a
termination during the Protection Period) severance benefits may
be paid to the named executive officers. However, the named
executive officers are not covered by any type of arrangement or
general severance plan that would pay severance benefits to any
of them outside of a change in control situation and any
severance benefits payable to them would (1) in the case of
the Chief Executive Officer, be determined by the Compensation
Committee in its discretion and (2) in the case of the
other named executive officers, be determined by us in our
discretion, subject to review and approval by the Compensation
Committee.
Benefits and
Perquisites
Pension benefits, perquisites and other compensation and
benefits payable to the named executive officers are discussed
in greater detail in the section entitled “Compensation
Discussion and Analysis” beginning on page 24 of this
Proxy Statement.
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Table of Contents
TRANSACTIONS WITH
RELATED PERSONS
One of our directors, Henry W. Knueppel, serves as Chairman and
Chief Executive Officer of Regal Beloit Corporation, a
multi-national organization serving the HVAC, industrial motor,
power transmission and power generation markets. During calendar
year 2009, our Harsco Rail business paid Regal Beloit
Corporation $817,582 for products purchased from Regal Beloit
Corporation. Our full Board has reviewed and approved these
transactions under the policies and procedures described below.
One of our directors, Andrew J. Sordoni, serves as Chairman of
Sordoni Construction Services, Inc., a building construction and
management services company. During calendar year 2009, our
Harsco Infrastructure business conducted business with Sordoni
Construction Services, Inc. through the rental of scaffolding
and equipment to Sordoni Construction Services, Inc. and was
paid $114,673 by Sordoni Construction Services, Inc. Our full
Board has reviewed and approved these transactions under the
policies and procedures described below.
One of our directors, Stuart E. Graham, serves as Chairman of
Skanska USA, a leading provider of world-class construction
services, and previously served as President and Chief Executive
Officer of Skanska AB, one of the world’s largest
construction groups, until his retirement in April 2008. During
calendar year 2009, our Harsco Infrastructure business was paid
$7,337,753 by various Skanska entities in connection with the
rental of equipment and provision of services to such entities.
Our full Board has reviewed and approved these transactions
under the policies and procedures described below.
For the fiscal year ended December 31, 2009, there were no
other transactions with the Company in which any related person
had a direct or indirect material interest that would need to be
disclosed pursuant to Item 404 of
Regulation S-K
nor were there any planned transactions.
Policies and
Procedures Regarding Transactions with Related Persons
Our policies and procedures regarding related person
transactions are set forth in writing in the Nominating and
Corporate Governance Committee Charter and in our Code of
Conduct. As set forth in its charter, the Nominating and
Corporate Governance Committee of the Board of Directors is
responsible for reviewing and approving all material
transactions with any related person. Related persons include
any of our directors, director nominees or executive officers,
certain of our stockholders and their immediate family members.
A copy of the Nominating and Corporate Governance Committee
Charter and our Code of Conduct are available at the Corporate
Governance section of our website at
www.harsco.com/insight-on-harsco. Approval of
related-party transactions by our full Board may also be
warranted under certain circumstances (for example, to allow for
approval of a related-party transaction by a majority of
disinterested Directors).
To identify related person transactions, each year, we submit
and require our directors and officers to complete
Directors’ and Officers’ Questionnaires identifying
any and all transactions with us in which the officer or
director or their family members have an interest. We review
related person transactions due to the potential for a conflict
of interest. A conflict of interest occurs when an
individual’s private interest interferes, or appears to
interfere, in any way with our interests. We expect our
directors, officers and employees to act and make decisions that
are in our best interests and encourage them to avoid situations
which present a conflict between our interests and their own
personal interests.
Our directors, officers and employees are prohibited from using
their position of employment or other relationship with us to
influence decisions concerning business transactions between us
and a company in which they or a member of their immediate
family has a personal interest through
63
Table of Contents
ownership, with the exception of investments in publicly held
corporations when the investment results in less than a one
percent ownership interest. In addition, directors, officers and
employees must not accept personal favors or benefits from those
dealing with us which could influence or could give the
impression of influencing their business judgment. Our code of
business conduct applies to each of our directors and employees
as, among other things, the primary guide for what we expect
regarding handling potential and actual conflicts of interest.
The section of the code of business conduct entitled
“Serving our Markets with Integrity” covers the
concept of conflicts of interest and our view about when an
inappropriate undertaking may be occurring. A copy of our code
of business conduct is available at the Corporate Governance
section of our website at
www.harsco.com/insight-on-harsco.
EXECUTIVE
DEVELOPMENT AND SUCCESSION
The executive development process ensures continuity of
leadership over the long-term, and it forms the basis on which
we make ongoing executive assignments. Through the integration
of the performance assessment and executive development
processes, position assignments are based on the most qualified
and ready executives. Our future leaders are developed through
these carefully selected assignments. We believe that consistent
and ongoing application of this process meets the long-range
requirements of the business and achieves competitive advantage.
Each year, our Compensation Committee reviews our leadership
talent development program to ensure good performance and
alignment between business strategies and operating plans. The
Board of Directors annually reviews the results of the
leadership capability and succession process with the Chairman
and Chief Executive Officer in executive session.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Pierce, Growcock, Knueppel, Wilburn, Scheiner and
Sordoni, and Ms. Scanlan served as members of our
Compensation Committee during 2009. None of them was one of our
officers or employees or an officer or employee of any of our
subsidiaries during that time or in the past, and none of them
or any other Director served as an executive officer of any
entity for which any of our executive officers serve as a
director or a member of its compensation committee.
No member of our Compensation Committee other than
Mr. Sordoni and Mr. Knueppel has had any relationship
with us requiring disclosure under Item 404 of
Regulation S-K
under the Securities Exchange Act of 1934. See the above section
entitled “Transactions with Related Persons” for a
description of this relationship.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers, directors and more than 10%
stockholders to file with the Securities and Exchange Commission
and the NYSE Euronext reports of ownership and changes in
ownership in their holdings of our stock. Copies of these
reports also must be furnished to us. Based on an examination of
these reports and information furnished by these stockholders,
all such reports have been timely filed, except that a
Form 4 report that should have been filed in January 2009
on behalf of R. M. Wagner relating to the grant of restricted
stock units was inadvertently filed late.
OTHER
MATTERS
The cost of this solicitation of proxies will be borne by us. In
addition to solicitation by use of mail, our employees may
solicit proxies personally or by telephone or facsimile but will
not receive
64
Table of Contents
additional compensation for these services. Arrangements may be
made with brokerage houses, custodians, nominees and fiduciaries
to send proxies and proxy materials to their principals and we
may reimburse them for their expense in so doing. We have
retained Morrow & Co. to assist in the solicitation at
a cost that is not expected to exceed $10,000 plus reasonable
out-of-pocket
expenses.
“Householding”
of Proxy Materials
We and some brokers household the Annual Report to Stockholders
and proxy materials, delivering a single copy of each to
multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.
Once you have received notice from your broker or us that they
or we will be householding materials to your address,
householding will continue until you are notified otherwise or
until you revoke your consent. If at any time you no longer wish
to participate in householding and would prefer to receive a
separate copy of the proxy materials, including the Annual
Report to Stockholders, or if you are receiving multiple copies
of the proxy materials and wish to receive only one, please
notify, whether in writing or orally, your broker if your shares
are held in a brokerage account or us if you hold registered
shares, at which time we will promptly deliver separate copies
of the materials to each of the affected stockholders. You can
notify us by sending a written request to Harsco Corporation,
350 Poplar Church Road, Camp Hill, PA 17011 or by calling
(717) 763-7064.
STOCKHOLDER
PROPOSALS AND NOMINATIONS FOR PRESENTATION AT 2011 ANNUAL
MEETING OF STOCKHOLDERS
The 2011 annual meeting of stockholders will be held on
April 26, 2011. If one of our stockholders wishes to submit
a proposal for consideration at the 2011 annual meeting of
stockholders, such proposal must be received at our executive
offices no later than November 26, 2010 to be considered
for inclusion in our Proxy Statement and Proxy Card relating to
the 2011 annual meeting. Although a stockholder proposal
received after such date will not be entitled to inclusion in
our Proxy Statement and Proxy Card, a stockholder can submit a
proposal for consideration at the 2011 annual meeting in
accordance with our By-Laws if written notice is given to the
Secretary of the Company not less than 60 days nor more
than 90 days prior to the annual meeting. In the event that
we give less than 70 days notice of the annual meeting date
to stockholders, the stockholder must give notice of the
proposal within ten days after the mailing of notice or
announcement of the annual meeting date. In order to nominate a
candidate for election as a Director at the 2011 annual meeting,
a stockholder must provide written notice and supporting
information to the Secretary of the Company by personal delivery
or mail not later than January 25, 2011.
65
Table of Contents
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting are available through 11:59 PM Eastern Time the day prior to the annual meeting day.
INTERNET |
||||||||
http://www.proxyvoting.com/hsc |
||||||||
Harsco Corporation |
Use the Internet to vote your proxy.
Have your proxy card in hand when you
access the web site. |
|||||||
OR |
||||||||
TELEPHONE |
||||||||
1-866-540-5760 |
||||||||
Use any touch-tone telephone to vote
your proxy. Have your proxy card in
hand when you call. |
||||||||
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card. |
||||||||
To vote by mail, mark, sign and date your proxy card
and return it in the enclosed postage-paid envelope. |
||||||||
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. |
WO#
70130
70130
▼
FOLD AND DETACH HERE ▼
| Please mark your votes as | ||||
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, WILL BE VOTED “FOR” THE PROPOSALS.
|
indicated in this example | ý |
||
| FOR | WITHHELD FOR ALL |
*EXCEPTIONS | FOR | AGAINST | ABSTAIN | |||||||||||||||
ITEM 1.
|
Election of ten Directors to serve until the next annual meeting of stockholders: |
o
|
o
|
o
|
ITEM 2. | Ratification of the appointment of
PricewaterhouseCoopers LLP as
independent auditors.
|
o
|
o
|
o
|
|||||||||||
| Nominees: | ||||||||||||||||||||
| 01 G. D. H. Butler, 02 K. G. Eddy, 03 S. D. Fazzolari, 04 S. E. Graham, 05 T. D. Growcock, |
06 H. W. Knueppel, 07 D. H. Pierce, 08 J. I. Scheiner, 09 A. J. Sordoni, III, and 10 R. C. Wilburn |
|||||||||||||||||||
(INSTRUCTIONS:
To withhold authority to vote for any individual nominee, mark the “Exceptions”
box and write that nominee’s name in the space provided below.) |
||||||||||||||||||||
*Exceptions |
||||||||||||||||||||
| Mark Here for Address Change or Comments SEE REVERSE |
o |
Signature
|
Signature | Date | ||||||||
NOTE: Please sign
as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
Table of Contents
Choose MLinkSM for fast, easy and secure 24/7 online access to your
future proxy materials, investment plan statements, tax documents and more.
Simply log on to Investor ServiceDirect® at
www.bnymellon.com/shareowner/isd where step-by-step instructions will
prompt you through enrollment.
Important notice regarding the Internet availability of proxy materials for the Annual
Meeting of shareholders. The Proxy Statement, our Proxy Card and the 2009 Annual
Report to Shareholders are available at: http://bnymellon.mobular.net/bnymellon/hsc
▼
FOLD AND DETACH HERE ▼
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HARSCO CORPORATION
The undersigned hereby appoints K.G. Eddy, S.D. Fazzolari and A.J. Sordoni, III and each of
them, with power to act without the other and with power of
substitution, as proxies and attorneys-in fact
and hereby authorizes them to represent and vote, as provided on the other side, all the shares of
Harsco Corporation Common Stock which the undersigned is entitled to vote, and, in their discretion,
to vote upon such other business as may properly come before the Annual Meeting of Stockholders of
the company to be held April 27, 2010 or at any adjournment or postponement thereof, with all powers
which the undersigned would possess if present at the Annual Meeting.
(Continued and to be marked, dated and signed, on the other side)
Address Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
WO #
70130
70130
TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERSANNUAL MEETING INFORMATIONGeneralImportant Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 27, 2010VotingRevocation of ProxiesWithheld Votes and Broker Non-VotesOther BusinessCORPORATE GOVERNANCECorporate Governance PrinciplesCode of Business ConductStockholder and Interested Party Communications with DirectorsIndependence Standards for DirectorsExecutive Sessions of Independent DirectorsDirector Attendance at Annual Meeting of StockholdersCurrent Structure of the Board of DirectorsEnterprise Risk ManagementMeeting Attendance and CommitteesHARSCO STOCK PERFORMANCE GRAPHTHE NOMINATING PROCESSPROPOSAL 1: ELECTION OF DIRECTORSNominees for DirectorNON-EMPLOYEE DIRECTOR COMPENSATION2009 DIRECTOR COMPENSATIONSHARE OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERSREPORT OF THE AUDIT COMMITTEEFEES BILLED BY THE INDEPENDENT AUDITORS FOR AUDIT AND NON-AUDIT SERVICESPROPOSAL 2: APPOINTMENT OF INDEPENDENT AUDITORSEXECUTIVE COMPENSATIONCompensation Discussion and AnalysisCompensation Committee Report2009 Summary Compensation TableAll Other Compensation2009 Grants of Plan-Based Awards TableOutstanding Equity Awards at 2009 Fiscal Year-End2009 Option Exercises and Stock Vested2009 Pension Benefits Table2009 Nonqualified Deferred Compensation TableTermination or Change in Control ArrangementsTRANSACTIONS WITH RELATED PERSONSEXECUTIVE DEVELOPMENT AND SUCCESSIONCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEOTHER MATTERSHouseholding of Proxy MaterialsSTOCKHOLDER PROPOSALS AND NOMINATIONS FOR PRESENTATION AT 2011 ANNUAL MEETING OF STOCKHOLDERS