Deltic Timber 8-K 2006
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
February 15, 2006
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):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a- 12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On February 15, 2006, 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, 2005, under the Companys Annual Incentive Compensation Plan had been met, and the Committee awarded bonuses for 2005 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 the year 2006 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 and some on business unit 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 15, 2006, meeting, the Committee established return on capital employed (ROCE) as the financial performance measure under the Annual Incentive Compensation Plan for fiscal year 2006. The Committee established the matrix indicated below for its 2006 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 segment operating budget.
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. The Committee made its determination following consideration of information supplied by its 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 (classified under the Companys 2002 SIP as performance units) that may vest depending on the Companys total shareholder return measured against the relative return of a selected S&P Paper and Forest Products Index over the same four year period (Performance Vesting). At its February 15, 2006, 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 selected 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 15, 2006, the Committee approved new annual base salaries for each of the named executive officers effective March 1, 2006. Indicated below are the salaries that the Committee approved.
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 15, 2006, the Nominating and Corporate Governance Committee determined that each of the annual retainer paid to non employee directors in the amount of $20,000, the annual retainer paid to the Companys non executive Chairman in the amount of $75,000 and the annual retainer paid to the Chairmen of the Boards Executive Compensation Committee and Nominating and Corporate Governance Committee in the amount of $3,000 shall remain unchanged in 2006. The Nominating and Corporate Governance Committee decided the annual retainer paid to the Chairman of the Boards Audit Committee shall be increased to $10,000 for 2006, and that meeting fees for attendance at meetings of the Board and Committees of the Board in 2006 shall be $1,000 per meeting, provided that the fees for attendance via telephone conference connection shall be $500, except for meetings of the Boards Audit Committee. Each of the annual retainers paid to Board and Committee Chairmen are in addition to the non-employee director annual retainer, and all retainers
are paid quarterly in arrears. The Nominating and Corporate Governance Committee also recommended to the Committee awards of 500 shares of Time Vesting restricted stock. The Committee accepted the recommendation of the Nominating and Corporate Governance Committee and on February 15, 2006, 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 17, 2006