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This excerpt taken from the DKS DEF 14A filed Apr 20, 2009. Understanding
Our Summary Compensation and Grants of Plan-Based Awards
Tables
Offer
Letters for Executive Officers
On November 28, 2005, the Company agreed to terms of
employment with Gwen Manto, whereby Ms. Manto agreed to
join the Company as Executive Vice President and Chief
Merchandising Officer. Ms. Manto joined the
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Company in January 2006. Under the offer letter, Ms. Manto
received an initial gross annual salary of $600,000, and is
eligible to participate in the Company’s management bonus
plan. Ms. Manto received a signing bonus of $385,000 and an
initial stock option grant of 150,000 shares, which cliff
vested January 9, 2009, three (3) years from her
starting employment date. The Company also paid to
Ms. Manto, in two yearly installments, the value of
8,000 units of unvested restricted stock held by
Ms. Manto in connection with her previous employment at
Sears, Roebuck and Company. These payments were made in two
installments during 2006 and 2007.
On February 13, 2007, we entered into an employment
agreement with Randall K. Zanatta, Golf Galaxy’s President
and Chief Executive Officer, in connection with our acquisition
of Golf Galaxy. Mr. Zanatta stepped down as Golf
Galaxy’s President and Chief Executive Officer effective
July 18, 2008. Mr. Zanatta’s employment agreement
was based on the prior agreement he had in place with Golf
Galaxy. Under the agreement, Mr. Zanatta received a base
salary (initially $355,000 per year), specified benefits, and
was entitled to receive an annual bonus, based primarily on the
performance of Golf Galaxy but also the performance of the
overall Company goals, in an amount equal to 0 to 150% of base
salary.
In addition to the above benefits, Mr. Zanatta received the
following stock option and restricted stock awards under his
employment agreement: a one-time special option exercisable for
330,000 shares of Company common stock, which, subject to
vesting, was exercisable at any time prior to February 13,
2012 or, if still employed by Golf Galaxy at that time, for such
longer period as is prescribed by our 2002 Plan, and
150,000 shares of Company restricted common stock, which,
if Mr. Zanatta continued to be employed by the Company on
February 13, 2010, would, with respect to half of the
shares, vest automatically, and would, with respect to the other
half of the shares, vest if certain performance targets were
achieved.
As set forth under his employment agreement, Mr. Zanatta
received severance in connection with his stepping down as
President and Chief Executive Officer of Golf Galaxy. See
“Potential Payments Upon Termination or
Change-in-Control”
on page 43 of this proxy statement for a description of the
severance received by Mr. Zanatta.
In February 2007, we agreed to employment terms with Timothy E.
Kullman, whereby Mr. Kullman agreed to join us as Senior
Vice President and Chief Financial Officer (now Executive Vice
President, Finance, Administration and Chief Financial Officer).
Mr. Kullman joined the Company in April 2007. Pursuant to
the offer letter, Mr. Kullman received an initial gross
annual salary of $450,000, and is eligible to participate in the
Company’s discretionary management incentive plan.
Mr. Kullman also received an initial stock option grant
exercisable for 100,000 shares, which vests at 25% per year
starting on the first anniversary of the grant, and an option
grant exercisable for 50,000 shares, which vests in its
entirety on the fourth anniversary of the date of grant.
Mr. Kullman is also eligible to participate in the full
range of benefits and 401(k) plans offered to other Company
officers.
Option
Awards
The Company’s 2002 Plan permits the granting of options,
both incentive stock options and non-qualified stock options, to
purchase shares of our common stock. The Company’s 1992
Stock Plan also permitted the granting of both incentive stock
options and non-qualified stock options. The 1992 Stock Plan
terminated in 2002, such that no new options can be granted
under the 1992 Stock Plan, although certain options previously
granted under the 1992 Stock Plan remain exercisable.
Non-qualified stock options were granted to the Company’s
named executive officers in fiscal 2008 as set forth in the
Grant of Plan Based Awards Table above. The option exercise
price for each share covered by an option was determined, in
accordance with the Company’s 2002 Plan, as the closing
sale price for our common stock as quoted on the NYSE for the
last market trading day prior to the time of determination, as
reported in The Wall Street Journal or such other source
as they deem reliable. The term of the option may not exceed
seven (7) years from the date of the grant. Generally,
options vest 25% per year over a four (4) year period on
each anniversary of the date of grant, although some options
have three (3) or four (4) year cliff vesting
features. See “Potential Payments Upon Termination or
Change-in-Control”
beginning on page 42 of this proxy statement for a
description of the effects of employment termination or a change
in control on stock option awards.
Restricted
Stock Awards
The Company’s 2002 Plan also permits the granting of
restricted shares of our common stock. Beginning in fiscal 2008
the Company incorporated the use of restricted shares into its
overall compensation program. Shares of
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restricted stock were granted to the Company’s named
executive officers in fiscal 2008 as set forth in the Grant of
Plan Based Awards Table above and to the Company’s
non-employee directors as set forth in the Director Compensation
Table on page 10 of this proxy statement. Generally,
restricted shares have three (3) year cliff vesting
features. See “Potential Payments Upon Termination or
Change-in-Control”
beginning on page 42 of this proxy statement for a
description of the effects of employment termination or a change
in control on restricted stock awards.
Incentive
Bonus Award
The Company’s 2002 Plan allows for the payment of incentive
bonus awards to executive officers. Incentive bonus awards
payable to named executive officers in fiscal 2008 are reflected
in column (g) of the above “Summary Compensation
Table”. Each incentive bonus award confers the
opportunity to earn a future payment tied to the level of
achievement with respect to one or more performance criteria
established for a performance period, which is typically the
fiscal year, established by the Compensation Committee. Each
incentive bonus award is documented with respect to the minimum,
threshold, target and maximum amount payable, the performance
criteria and level of achievement versus these criteria that
shall determine the amount of such payment, the term of the
performance period as to which performance shall be measured for
determining the amount of any payment and the timing of any
payment earned by virtue of performance. The maximum amount
payable as a bonus may be a multiple of the target amount
payable, but the maximum amount payable pursuant to that portion
of an incentive bonus award granted under the 2002 Plan for any
fiscal year that is intended to satisfy the requirements for
“performance-based compensation” under
Section 162(m) of the Code shall not exceed $5,000,000.
The Compensation Committee establishes the performance criteria
and level of achievement versus these criteria that shall
determine the amount payable under an incentive bonus award at
each performance level, which criteria may be based on financial
performance
and/or
personal performance evaluations. The Compensation Committee may
specify the percentage of the incentive bonus that is intended
to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. For
additional detail regarding the targets and criteria utilized in
connection with the payment of the incentive bonus awards in
fiscal 2008, see “Compensation Discussion and
Analysis” on page 20 of this proxy statement.
The Compensation Committee determines the timing of payment of
any incentive bonus, and may provide for or permit an election
for the payment of any incentive bonus to be deferred to a
specified date or event. An incentive bonus may be payable in
equity or in cash or other property, including any award
permitted under the 2002 Plan. Notwithstanding satisfaction of
any performance goals, the amount paid under an incentive bonus
award on account of either financial performance or personal
performance evaluations may be reduced by the Compensation
Committee on the basis of such further considerations as the
Compensation Committee shall determine.
The Company’s 2002 Plan allows the grant of awards that
qualify as performance-based compensation under
Section 162(m). One of the conditions to qualify as
performance-based is that the material terms of the performance
goals must be approved by the Company’s stockholders at
least every five (5) years. The Board of Directors and our
stockholders approved the 2002 Plan prior to our initial public
offering, and was again approved by our stockholders at our 2003
and 2008 annual meetings, which preserved the tax status of
certain awards as performance-based, and thereby allowed the
Company to continue to fully deduct the compensation expense
related to such awards.
Travel
Policy
Our Compensation Committee and Board of Directors approved a
Company Travel Policy for Non-Business Use of Corporate Aircraft
in November 2004, which was filed with the SEC on a
Form 8-K.
Under the policy, certain of our executives (including the Chief
Executive Officer, President, Executive Vice Presidents, members
of the Board of Directors and other officers designated by the
Chief Executive Officer) may use any aircraft owned or leased by
us for non-business purposes. The frequency and priority of the
non-business use of the aircraft by these executives is
determined by our Chief Executive Officer. Except as approved by
our Chief Executive Officer or the Company’s Compensation
Committee, the value of the non-business trip is billed to the
executive (done directly through our third-party aircraft
management company to the executive or director and paid by the
executive or director to our third-party aircraft management
company) at the aggregate incremental cost to the Company
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determined in accordance with Item 402 of
Regulation S-K,
as amended (but no less than $500 per hour for each hour of
flight time), and in accordance with Federal Aviation
Administration regulations. In any limited instances where the
executive or director is not billed, any non-reimbursed travel
will be considered income to the executive or director and
reported for tax purposes in the executive’s earnings in
accordance with the base aircraft valuation formula, which is
also known as the standard industry fare level formula.
At least yearly, the Company’s director of internal audit
conducts an internal audit of the non-business use of the
corporate aircraft to confirm adherence to the travel policy,
and prepares a report to the Company’s Compensation
Committee relating to such audit.
Reference is also made to our “Compensation Discussion
and Analysis” on page 20 of this proxy statement,
which discusses compensation paid to our executive officers, how
each component of executive officer compensation is structured,
and the rationale for such structure.
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This excerpt taken from the DKS DEF 14A filed May 7, 2008. Understanding
Our Summary Compensation and Grants of Plan-Based Awards
Tables
Offer
Letters for Executive Officers
On November 28, 2005, the Company agreed to terms of
employment with Gwen Manto, whereby Ms. Manto agreed to
join the Company as Executive Vice President and Chief
Merchandising Officer. Ms. Manto joined the Company in
January 2006. Under the offer letter, Ms. Manto received an
initial gross annual salary of $600,000, and is eligible to
participate in the Company’s management bonus plan.
Ms. Manto received a signing bonus of $385,000 and an
initial stock option grant of 150,000 shares, which are
cliff vested at three (3) years from her starting
employment date. The Company also agreed to pay to
Ms. Manto the value of 8,000 units of unvested
restricted stock held by Ms. Manto in connection with her
previous employment at Sears, Roebuck and Company. These
payments were made in two installments during 2006 and 2007,
with the first payment of $609,250 having been paid on
February 15, 2006 and the second payment of $405,000 having
been paid on February 15, 2007. Additionally,
Ms. Manto is eligible to participate in the full range of
benefits and 401(k) plan offered to other Company officers.
On February 13, 2007, we entered into an employment
agreement with Randall K. Zanatta, Golf Galaxy’s President
and Chief Executive Officer, in connection with our acquisition
of Golf Galaxy. Mr. Zanatta’s employment agreement is
based on the prior agreement he had in place with Golf Galaxy.
Under the agreement, Mr. Zanatta receives a base salary
(initially $355,000 per year), specified benefits, certain
option and restricted stock grants discussed below, and is
entitled to receive an annual bonus, based primarily on the
performance of Golf Galaxy but also the performance of the
overall Company goals, in an amount equal to 0 to 150% of base
salary. Mr. Zanatta will also be entitled to severance if
he is terminated without cause (as defined in the employment
agreement), and is subject to certain non-compete and
non-solicitation covenants set forth in the employment
agreement. If Mr. Zanatta’s employment is terminated
for a reason other than cause or he resigns under certain
specified circumstances (good reason), he is entitled to a lump
sum severance payment equal to two (2) times his
then-current base salary and incentive bonus for the fiscal year
in which termination occurred (if and to the extent certain
specified performance targets are achieved), continuation of
benefits for two (2) years, and all stock options
previously granted that were exercisable for Golf Galaxy common
stock prior to our acquisition (which have been converted to
options exercisable for our common stock) will vest.
Additionally, the vesting of shares of restricted stock
described below that vest based only on the passage of time
(i.e., no performance or other conditions are imposed) will also
accelerate. The shares of restricted stock described below that
vest only if certain performance targets are achieved will vest
to the extent that the performance targets have been met
and/or the
Company is on target to meet the performance targets as of the
termination date. The agreement has a term ending at the end of
our third fiscal year following February 13, 2007. See
“Potential Payments Upon Termination or
Change-in-Control”
on page 39 of this proxy statement for a description of
these severance payment agreements.
On November 16, 2006, Mr. Zanatta was granted, subject
to the completion of the merger, a one-time special option
exercisable for 330,000 shares of our common stock, which,
subject to vesting, is exercisable at any time prior to
February 13, 2012 or, if he is still employed by Golf
Galaxy at that time, for such longer period as is prescribed by
our 2002 Plan. Additionally, under his employment agreement,
Mr. Zanatta received 150,000 shares of our restricted
common stock, which, if he continues to be employed by the
Company on February 13, 2010, will,
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with respect to half of the shares, vest automatically, and
will, with respect to the other half of the shares, vest if
certain performance targets are achieved.
In February 2007, we agreed to employment terms with Timothy E.
Kullman, whereby Mr. Kullman agreed to join us as Senior
Vice President and Chief Financial Officer (now Executive Vice
President, Finance, Administration and Chief Financial Officer)
to replace Mr. Hines. Mr. Kullman joined the Company
in April 2007. The offer letter provided to Mr. Kullman
indicated that he would receive an initial gross annual salary
of $450,000, and is eligible to participate in the
Company’s discretionary management incentive plan.
Mr. Kullman also received an initial stock option grant
exercisable for 100,000 shares, which vests at 25% per year
starting on the first anniversary of the grant, and an option
grant exercisable for 50,000 shares, which vests in its
entirety on the fourth anniversary of the date of grant.
Mr. Kullman is also eligible to participate in the full
range of benefits and 401(k) plans offered to other Company
officers.
Option
Awards
The Company’s 2002 Plan permits the granting of options,
both incentive stock options and non-qualified stock options, to
purchase shares of our common stock, as well as the granting of
shares of restricted stock. The Company’s 1992 Stock Plan
also permitted the granting of both incentive stock options and
non-qualified stock options. The 1992 Stock Plan terminated in
2002, such that no new options can be granted under the 1992
Stock Plan, although certain options previously granted under
the 1992 Stock Plan remain exercisable. Non-qualified stock
options were granted to the Company’s named executive
officers in fiscal 2007 as set forth in the Grant of Plan Based
Awards Table above. The option exercise price for each share
covered by an option was determined, in accordance with the
Company’s 2002 Plan, as the closing sale price for our
common stock as quoted on the New York Stock Exchange for the
last market trading day prior to the time of determination, as
reported in The Wall Street Journal or such other source
as they deem reliable. The term of the option may not exceed ten
(10) years from the date of the grant. Generally, options
vest 25% per year over a four (4) year period on each
anniversary of the date of grant, although some options have
three (3) or four (4) year cliff vesting features. See
“Potential Payments Upon Termination or
Change-in-Control”
beginning on page 39 of this proxy statement for a
description of the effects of employment termination or a change
in control on stock option awards.
Incentive
Bonus Award
The Company’s 2002 Plan allows for the payment of incentive
bonus awards to executive officers. Incentive bonus awards
payable to named executive officers in fiscal 2007 are reflected
in column (g) of the above “Summary Compensation
Table”. Each incentive bonus award confers the
opportunity to earn a future payment tied to the level of
achievement with respect to one or more performance criteria
established for a performance period, which is typically the
fiscal year, established by the Compensation Committee. Each
incentive bonus award is documented with respect to the
threshold, target and maximum amount payable, the performance
criteria and level of achievement versus these criteria that
shall determine the amount of such payment, the term of the
performance period as to which performance shall be measured for
determining the amount of any payment and the timing of any
payment earned by virtue of performance. The maximum amount
payable as a bonus may be a multiple of the target amount
payable, but the maximum amount payable pursuant to that portion
of an incentive bonus award granted under the 2002 Plan for any
fiscal year that is intended to satisfy the requirements for
“performance-based compensation” under
Section 162(m) of the Code shall not exceed $5,000,000.
The Compensation Committee establishes the performance criteria
and level of achievement versus these criteria that shall
determine the target and maximum amount payable under an
incentive bonus award, which criteria may be based on financial
performance
and/or
personal performance evaluations. The Compensation Committee may
specify the percentage of the target incentive bonus that is
intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. For
additional detail regarding the targets and criteria utilized in
connection with the payment of the incentive bonus awards in
fiscal 2007, see “Compensation Discussion and
Analysis” on page 23 of this proxy statement.
The Compensation Committee determines the timing of payment of
any incentive bonus, and may provide for or permit an election
for the payment of any incentive bonus to be deferred to a
specified date or event. An incentive
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bonus may be payable in equity or in cash or other property,
including any award permitted under the 2002 Plan.
Notwithstanding satisfaction of any performance goals, the
amount paid under an incentive bonus award on account of either
financial performance or personal performance evaluations may be
reduced by the Compensation Committee on the basis of such
further considerations as the Compensation Committee shall
determine.
The Company’s 2002 Plan allows the grant of awards that
qualify as performance-based compensation under
Section 162(m). One of the conditions to qualify as
performance-based is that the material terms of the performance
goals must be approved by the Company’s stockholders at
least every five (5) years. The Board of Directors and our
stockholders approved the 2002 Plan prior to our initial public
offering, and was again approved by our stockholders at our 2003
annual meeting. To preserve the tax status of certain awards as
performance-based, and thereby to allow the Company to continue
to fully deduct the compensation expense related to such awards,
we are asking the stockholders to re-approve the performance
goals and to approve certain other changes made to the 2002 Plan
in connection with Section 409A of the Code. For additional
information, see
“Item Three-
Approval of our Amended and Restated 2002 Stock and Incentive
Plan” on page 44 of this proxy statement.
Travel
Policy
Our Compensation Committee and Board of Directors approved a
Company Travel Policy for Non-Business Use of Corporate Aircraft
in November 2004, which was filed with the SEC on a
Form 8-K.
Under the policy, certain of our executives (including the Chief
Executive Officer, President, Executive Vice Presidents, members
of the Board of Directors and other officers designated by the
Chief Executive Officer) may use any aircraft owned or leased by
us for non-business purposes. The frequency and priority of the
non-business use of the aircraft by these executives will be
determined by our Chief Executive Officer. Except as approved by
our Chief Executive Officer or the Company’s Compensation
Committee, the value of the non-business trip is billed to the
executive (done directly through our aircraft management company
to the executive or director and paid by the executive or
director to our third-party aircraft management company) at the
aggregate incremental cost to the Company determined in
accordance with Item 402 of
Regulation S-K,
as amended (but no less than $500 per hour for each hour of
flight time), and in accordance with Federal Aviation
Association regulations. In any limited instances where the
executive or director is not billed, any non-reimbursed travel
will be considered income to the executive or director and
reported for tax purposes in the executive’s earnings in
accordance with the base aircraft valuation formula, which is
also known as the standard industry fare level formula.
At least yearly, the Company’s director of internal audit
conducts an internal audit of the non-business use of the
corporate aircraft to confirm adherence to the travel policy,
and prepares a report to the Company’s Compensation
Committee relating to such audit.
Reference is also made to our “Compensation Discussion
and Analysis” on page 21 of this proxy statement,
which discusses compensation paid to our executive officers, and
how each component of executive officer compensation is
structured, and the rationale for such structure.
Table of Contents
This excerpt taken from the DKS DEF 14A filed May 3, 2007. Understanding
Our Summary Compensation and Grants of Plan-Based Awards
Tables.
Offer
Letters for Executive Officers
On November 28, 2005, the Company agreed to terms of
employment with Gwen Manto, whereby Ms. Manto agreed to
join the Company as Executive Vice President & Chief
Merchandising Officer. Ms. Manto joined the Company in
January 2006. Under the offer letter, Ms. Manto receives a
gross annual salary of $600,000, and is eligible to participate
in the Company’s management bonus plan. Ms. Manto
received a signing bonus of $385,000, and an initial stock grant
of 75,000 shares, which are cliff vested at three
(3) years from her starting employment date. The Company
also agreed to pay to Ms. Manto the value of
8,000 units of unvested restricted stock held by
Ms. Manto in connection with her previous employment at
Sears, Roebuck & Company. These payments were made in
two installments during 2006 and 2007, with the first payment of
$609,250 having been paid on February 15, 2006 and the
second payment being made in fiscal 2007. Additionally,
Ms. Manto is eligible to participate in the full range of
benefits and 401(k) plan offered to other Company officers.
We executed an offer letter with William R. Newlin, our Chief
Administrative Officer and Executive Vice President who joined
the Company on October 22, 2003. As part of his offer
letter, Mr. Newlin received a non-qualified stock option
grant exercisable for 600,000 shares of our common stock,
which vested 50%, 25% and 25% on the first, second and third
anniversaries of the grant and is exercisable for not less than
six years from the dates of vesting. All of the option vests
upon the occurrence of an event where Edward W. Stack (whether
by reason of stock ownership or position) is no longer in a
position to make controlling judgments concerning the
employee’s responsibilities with our Company.
Other than the offer letters referenced above, none of our named
executive officers had employment agreements in place with us as
of the end of the 2006 fiscal year. Randall K. Zanatta,
President and Chief Executive Office of our wholly-owned
subsidiary, Golf Galaxy, who became one of our executive
officers in 2007, has an employment agreement with us, and
Timothy E. Kullman, who became our Senior Vice President and
Chief Financial Officer in 2007, entered into an offer letter
with the Company, each as described in “Compensation
28
Table of Contents
Discussion and Analysis” beginning on page 19
of this proxy statement. All of our executive officers as of the
end of fiscal 2006 have executed agreements with us providing
them with severance payments upon termination of employment with
us under certain circumstances. See “Potential
Payments Upon Termination or
Change-in-Control”
on page 33 of this proxy statement for a description of
these severance payment agreements.
Option
Awards
The Company’s 2002 Stock Plan permits the granting of
options, both incentive stock options and non-qualified stock
options, to purchase shares of our common stock. The
Company’s 1992 Stock Plan also permitted the granting of
both incentive stock options and non-qualified stock options.
The 1992 Stock Plan terminated in 2002, such that no new options
can be granted under the 1992 Stock Plan, although certain
options previously granted under the 1992 Stock Plan remain
exercisable. Non-qualified stock options were granted to the
Company’s named executive officers in fiscal 2006 as set
forth in the Summary Compensation Table above. The option
exercise price for each share covered by an option was
determined, in accordance with the Company’s 2002 Stock
Plan, as the closing sale price for our common stock as quoted
on the New York Stock Exchange for the last market trading day
prior to the time of determination, as reported in The Wall
Street Journal or such other source as they deem reliable.
The term of the option may not exceed ten (10) years from
the date of the grant. Generally, options vest 25% per year
over a four (4) year period on each anniversary of the date
of grant. See “Potential Payments Upon Termination or
Change-in-Control”
beginning on page 33 of this proxy statement for a
description of the effects of employment termination or a change
in control on stock option awards.
Incentive
Bonus Award
The Company’s 2002 Stock Plan allows for the payment of
incentive bonus awards to executive officers. Incentive bonus
awards payable to named executive officers in fiscal 2006 are
reflected in column (g) of the above Summary Compensation
Table. Each incentive bonus award confers the opportunity to
earn a future payment tied to the level of achievement with
respect to one or more performance criteria established for a
performance period, which is typically the fiscal year,
established by the Compensation Committee. Each incentive bonus
award is documented with respect to the threshold, target and
maximum amount payable, the performance criteria and level of
achievement versus these criteria that shall determine the
amount of such payment, the term of the performance period as to
which performance shall be measured for determining the amount
of any payment and the timing of any payment earned by virtue of
performance. The maximum amount payable as a bonus may be a
multiple of the target amount payable, but the maximum amount
payable pursuant to that portion of an incentive bonus award
granted under the 2002 Stock Plan for any fiscal year that is
intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code shall
not exceed $5,000,000.
The Compensation Committee establishes the performance criteria
and level of achievement versus these criteria that shall
determine the target and maximum amount payable under an
incentive bonus award, which criteria may be based on financial
performance
and/or
personal performance evaluations. The Compensation Committee may
specify the percentage of the target incentive bonus that is
intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. For
additional detail regarding the targets and criteria utilized in
connection with the payment of the incentive bonus awards in
fiscal 2006, see “Compensation Discussion and
Analysis” on page 19 of this proxy statement.
The Compensation Committee determines the timing of payment of
any incentive bonus, and may provide for or may permit an
election for the payment of any incentive bonus to be deferred
to a specified date or event. An incentive bonus may be payable
in equity or in cash or other property, including any award
permitted under the 2002 Stock Plan. Notwithstanding
satisfaction of any performance goals, the amount paid under an
incentive bonus award on account of either financial performance
or personal performance evaluations may be reduced by the
Compensation Committee on the basis of such further
considerations as the Compensation Committee shall determine.
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Travel
Policy
Our Compensation Committee and Board of Directors approved a
Company Travel Policy for Non-Business Use of Corporate Aircraft
in November 2004, which was filed with the SEC on a
Form 8-K.
Under the policy, certain of our executives (including the Chief
Executive Officer, President, Executive Vice Presidents, members
of the Board of Directors and other officers designated by the
Chief Executive Officer) may use any aircraft owned or leased by
us for non-business purposes. The frequency and priority of the
non-business use of the aircraft by these executives will be
determined by our Chief Executive Officer. Except as approved by
our Chief Executive Officer or the Company’s Compensation
Committee, the value of the non-business trip is billed to the
executive (done directly through our aircraft management company
to the executive or director and paid by the executive or
director to our third-party aircraft management company) at the
aggregate incremental cost to the Company determined in
accordance with Item 402 of
Regulation S-K,
as amended (but no less than $500 per hour for each hour of
flight time), and in accordance with Federal Aviation
Association regulations. In any limited instances where the
executive or director is not billed, any non-reimbursed travel
will be considered income to the executive or director and
reported in the executive’s earnings in accordance with the
base aircraft valuation formula, which is also known as the
standard industry fare level formula.
At least yearly, the Company’s director of internal audit
conducts an internal audit of the non-business use of the
corporate aircraft to confirm adherence to the travel policy,
and prepares a report to the Company’s Compensation
Committee relating to such audit.
Reference is also made to our “Compensation Discussion
and Analysis” on page 19 of this proxy statement,
which discusses compensation paid to our executive officers, and
how each component of executive officer compensation is
structured, and the rationale for such structure.
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