This excerpt taken from the FO DEF 14A filed Mar 6, 2008.
Long-Term Performance Incentives: Stock Options and Performance Share Awards
All long-term incentive payment opportunities are performance-based. The Company designed its Long-Term Incentive Plan, which was approved by stockholders, to ensure that incentive compensation reflects the profitability of the Company and the performance of the Companys common stock. The Company offers a combination of awards, each intended to reward specified results. These awards promote a long-term view, reward long-term positive performance of the Company, and are intended to align executives interests with stockholders interests.
In 2007, except as described in the next sentence, long-term incentives provided by the Company consisted of 1) stock options, and 2) performance share awards (based on a three-year performance period) along with dividend equivalents on earned performance shares. Although Mr. Carbonari received in 2007 long-term compensation
grants for future performance periods consistent with the preceding sentence, for the 2005-2007 performance period he received a payment under a legacy long-term incentive program as described in more detail on page 27. Previously, long-term incentives for named executive officers were allocated approximately one-third to performance shares and two-thirds to stock options. In July 2007 the Committee decided, in response to competitive market conditions, to place greater emphasis on performance share awards, for a compensation mix of approximately one-half stock options and one-half performance shares. The Compensation Committee believes this mix provides an adequate incentive to management to perform well for stockholders and is more aligned to market comparables. Other than by a general desire to keep total direct compensation in the 50th-75th percentile range, levels of long-term incentive grants are not directly influenced by the levels of other elements of compensation.