Deltic Timber 8-K 2005
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
February 16, 2005
Date of Report (date of earliest event reported)
Deltic Timber Corporation
(Exact name of registrant as specified in its charter)
Registrants telephone number, including area code (870) 881-9400
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
ENTRY MATERIAL AGREEMENT
Item 1.01 Entry into a Material Definitive Agreement
On February 16, 2005, the Executive Compensation Committee of the Board of Directors (the Committee) of Deltic Timber Corporation (Deltic or the Company) acted in regard to several compensation matters related to the Companys chief executive officer, Mr. Ray C. Dillon, and its four other most highly compensated executive officers for Deltics last completed fiscal year (the named executive officers).
Annual Incentive Compensation
The Committee determined that the performance measure, which had been established in February, 2004, under the Companys Annual Incentive Compensation Plan had been met, and the Committee awarded bonuses for 2004 performance to Mr. Dillon and the other named executive officers in the amounts indicated below.
The Committee also established the financial and business performance measures for granting bonuses for fiscal year 2005 under Deltics Annual Incentive Compensation Plan. These criteria are applicable to all participants under the Plan, although some participants potential bonuses are dependent only on the financial performance measure and some on a combination of the financial
and business segment performance measures. Under Deltics Annual Incentive Compensation Plan, an annual cash bonus pool is established and funded based on performance as measured against established financial and/or business segment performance measures of the Company. In general, the bonus pool is allocated to each participant based on the participants target bonus percentage (a percentage of such participants current salary) and the extent to which Deltic meets the established financial and/or business segment performance measures. At its February 16, 2005 meeting, the Committee established return on capital employed (ROCE) as the financial performance measure under the Annual Incentive Compensation Plan for fiscal year 2005. The Committee also established the matrix indicated below for its 2005 financial performance measure.
Where the relative value falls between these percentages, the actual amount of bonus will be determined by interpolation.
In addition, individual business segment performance measures were also established related to the Companys business segments operating budgets.
The Committee approved the target bonus percentage indicated below for each of the named executive officers
Pursuant to the terms of Deltics Annual Incentive Compensation Plan, a bonus equal to a multiple of the named executive officers target bonus percentage will be paid depending on the level of performance achieved by Deltic with respect to its financial and/or business segment performance measures described above.
2002 Stock Incentive Plan Awards
The 2002 Stock Incentive Plan (2002 SIP) was approved at the Annual Meeting of Stockholders held on April 25, 2002. Under the 2002 SIP, each of the named executive officers is eligible to receive long-term incentive awards in amounts determined by the Committee after consideration of information supplied by the Committees independent compensation consultant. Each named executive officers award is divided between non-qualified stock options (NQSO), restricted stock that vests at the end of four years (Time Vesting), and performance restricted stock that may vest depending on the Companys total shareholder return measured against the relative return of the S&P Paper and Forest Products Index over the same four year period (Performance Vesting). At its February 16, 2005, meeting, the Committee granted awards under the 2002 SIP indicated below to the named executive officers.
Each Performance Vesting restricted stock award is subject to forfeiture should the total shareholder return of Deltic fall below 80% of the relative return of the S&P Paper and Forest Product Index and may increase up to 200% should the relative return meet or exceed 130% of the same index. Where the relative return falls between these percentages, the actual number of shares issued will be determined by interpolation.
Base Salary of Named Executive Officers
On February 16, 2005, the Committee approved new annual base salaries for each of the named executive officers effective March 1, 2005. Indicated below are the salaries that the Committee approved.
Other Committee Actions
The Committee also: 1) reaffirmed Mr. Dillons change-in-control agreement disclosed in the Companys proxy statement dated March 22, 2004, under which the Company agreed to pay two years base salary and benefits, plus two years of the target bonus percentage should there occur a change in control of the Company, and Mr. Dillon is dismissed or suffers a reduction in salary and
potential bonus and/or a meaningful diminution of job responsibility within two years of the change in control event; 2) approved change in-control agreements for the named executive officers other than Mr. Dillon, entitling each of them to one years salary, bonus, and benefits upon the same terms as described above for Mr. Dillons agreement; and 3) established an involuntary severance agreement for Mr. Dillon whereby should he be terminated for any reason other than by the Company for cause, Mr. Dillon will be entitled to two years salary, bonus, and benefits.
Compensation of Non-Employee Directors
The Nominating and Corporate Governance Committee of the Board of Directors establishes the cash compensation for the Companys non-employee directors, and makes recommendations to the Committee as to any equity component of compensation for non-employee directors. On February 16, 2005, this committee approved the following 2005 compensation package for non-employee directors and recommended to the Committee awards of 500 shares of Time Vesting restricted stock. The Nominating and Corporate Governance Committee determined that non-employee directors shall be paid an annual retainer in the amount of $20,000.00. Also, each Chairperson of the Audit Committee, the Executive Compensation Committee and the Nominating and Corporate Governance Committee shall be paid an annual retainer of $3,000.00, and the Companys non- employee Chairman of the Board shall be paid an annual retainer of $75,000.00, each in addition to the non-employee director annual retainer. All retainers are paid quarterly in arrears. The Committee accepted the recommendation of the Nominating and Corporate Governance Committee and awarded 500 shares of Time Vesting restricted stock to each non-employee director.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 23, 2005