MPG » Topics » Change in Control Provisions

These excerpts taken from the MPG 10-K filed Apr 30, 2009.

Change in Control Provisions –

Pursuant to each of their employment agreements, Messrs. Nelson Rising, Koumriqian (pursuant to his 2009 employment agreement) and Lammas will receive severance payments and benefits in the event of a change in control if the executive is terminated by us without cause or if the executive terminates his employment with us for good reason within a specified period of time following the anniversary of a change in control. A change in control is defined in the executive’s employment agreement as the occurrence of any of the following events:

 

 

 

(1) The direct or indirect acquisition, by any person or group,1 of beneficial ownership of our voting securities that represent 35% or more of the combined voting power of the then outstanding voting securities, other than:

 

   

An acquisition of securities by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by us or any person controlled by us or by any employee benefit plan (or related trust) sponsored or maintained by us or any person controlled by us, or

 

   

An acquisition of securities by us or a corporation owned, directly or indirectly, by our stockholders in substantially the same proportions as their ownership of our stock, or

 

   

An acquisition of securities pursuant to a transaction described in clause (3) below that would not be a change in control under that clause;

 

   

(2) Individuals (in the case of Mr. Nelson Rising, excluding for the avoidance of doubt, Robert F. Maguire III) who, as of the applicable employment agreement’s effective date, constitute our board of directors (the incumbent board) cease for any reason to constitute at least a majority of our board of directors; however, in general, any individual (in the case of Mr. Nelson Rising, excluding for the avoidance of doubt, Robert F. Maguire III) who becomes a director after the applicable employment agreement’s effective date whose election by our stockholders, or nomination for election by our board of directors, was approved by a vote of at least a majority of the directors then comprising the incumbent board will be considered as though such individual were a member of the incumbent board;

 

   

(3) The consummation by us (whether directly involving us or indirectly involving us through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of our assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction:

 

   

which results in our voting securities outstanding immediately before the transaction continuing to represent, directly or indirectly, at least 50% of the combined voting power of the successor entity’s outstanding voting securities immediately after the transaction, and

 

   

after which no person or group beneficially owns voting securities representing 35% or more of the combined voting power of the successor entity; however, no person or group will be treated as beneficially owning 35% or more of combined voting power of the successor entity solely as a result of the voting power held in us prior to the consummation of the transaction; or

 

   

(4) Approval by our stockholders of our liquidation or dissolution.

In the event of an actual or constructive termination pursuant to a change in control, we provide more generous severance payments and benefits in comparison to the scenarios described above. This difference exists to reflect the unique concerns an executive faces upon a change in control. As applied to the Chief Executive Officer, a

 

1

Notwithstanding the above, an acquisition of our securities by us which causes our voting securities beneficially owned by a person or group to represent 35% or more of the combined voting power of our then outstanding voting securities does not constitute a change in control, unless that person or group subsequently becomes the beneficial owner of any additional voting securities.

 

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change in control can materially alter the authorities and responsibilities of the Chief Executive Officer and can fundamentally affect the Chief Executive Officer’s perceived role in our affairs if by virtue of the change in control he is to report to a different board of directors than that which was originally before him. Changes in corporate organization could lead to the Chief Executive Officer’s actual termination or to his constructive termination if the changes are so significant as to render him effectively unable to function in the new environment. Our change in control provisions are thus designed to appropriately compensate our Chief Executive Officer for such a possibility.

We also recognize that in the absence of a severance package, the potential of a change in control would result in a similar situation with respect to members of senior management at the Executive Vice President level. The possibility of a change in control and its attendant organizational changes creates uncertainties regarding the executives’ employment status and raises legitimate concerns for any executive in making the decision to join or remain with us. In order to remain competitive in the market for retaining and hiring top level executives, our severance payments and benefits packages are designed to compensate these executives for the uncertainties related to any change in control.

Under the employment agreement of Mr. Nelson Rising, if a change in control occurs during his employment period and his employment is terminated (a) by us without cause or by the executive for good reason, in each case within two years after the effective date of the change in control or (b) by the executive for any reason on or within 30 days after the one-year anniversary of the effective date of the change in control, then he will be entitled to the payments and benefits as though his employment was terminated without cause or for good reason as set forth above under the heading “—Severance Payments and Benefits,” except that the lump-sum cash severance payment multiple will by 300%.

Under Mr. Koumriqian’s 2009 employment agreement and Mr. Lammas’ employment agreement, if a change in control occurs during his employment period and his employment is terminated (a) by us without cause or by the executive for good reason, in each case within two years after the effective date of the change in control or (b) by the executive for any reason on or within 30 days after the one-year anniversary of the effective date of the change in control, then the executive will be entitled to the payments and benefits set forth above under the heading “—Severance Payments and Benefits,” except that (i) the lump-sum cash severance multiple will be 200%, (ii) the period during which the executive will be entitled to health insurance coverage will be 24 months, and (iii) all outstanding stock options, restricted stock and other equity awards (other than the performance award) held by the executive will become fully vested.

In the case of our Chief Executive Officer and our other named executive officers, we believe that it is important to provide the severance payments and benefits in both the case of actual termination and the case of constructive termination. Including instances of constructive termination in the types of termination covered by our severance packages ensures that any eventual acquirer of our company could not avoid paying severance by intentionally fostering a difficult work environment for the executives, thereby greatly increasing the chance of their voluntary exit. For further information on the actual payouts, please see the table below under the heading “Executive Compensation—Potential Payments upon Termination or Change in Control.”

Change in Control Provisions –

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Pursuant to each of their employment agreements, Messrs. Nelson Rising, Koumriqian (pursuant to his 2009 employment agreement) and Lammas will receive
severance payments and benefits in the event of a change in control if the executive is terminated by us without cause or if the executive terminates his employment with us for good reason within a specified period of time following the anniversary
of a change in control. A change in control is defined in the executive’s employment agreement as the occurrence of any of the following events:

 







 

 

(1) The direct or indirect acquisition, by any person or group,1
of beneficial ownership of our voting securities that represent 35% or more of the combined voting power of the then outstanding voting securities, other than:

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

An acquisition of securities by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by us or
any person controlled by us or by any employee benefit plan (or related trust) sponsored or maintained by us or any person controlled by us, or

 







  

An acquisition of securities by us or a corporation owned, directly or indirectly, by our stockholders in substantially the same proportions as their ownership of
our stock, or

 







  

An acquisition of securities pursuant to a transaction described in clause (3) below that would not be a change in control under that clause;

 







  

(2) Individuals (in the case of Mr. Nelson Rising, excluding for the avoidance of doubt, Robert F. Maguire III) who, as of the applicable employment
agreement’s effective date, constitute our board of directors (the incumbent board) cease for any reason to constitute at least a majority of our board of directors; however, in general, any individual (in the case of Mr. Nelson Rising,
excluding for the avoidance of doubt, Robert F. Maguire III) who becomes a director after the applicable employment agreement’s effective date whose election by our stockholders, or nomination for election by our board of directors, was
approved by a vote of at least a majority of the directors then comprising the incumbent board will be considered as though such individual were a member of the incumbent board;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

(3) The consummation by us (whether directly involving us or indirectly involving us through one or more intermediaries) of (x) a merger, consolidation,
reorganization, or business combination or (y) a sale or other disposition of all or substantially all of our assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction:

 







  

which results in our voting securities outstanding immediately before the transaction continuing to represent, directly or indirectly, at least 50% of the combined
voting power of the successor entity’s outstanding voting securities immediately after the transaction, and

 







  

after which no person or group beneficially owns voting securities representing 35% or more of the combined voting power of the successor entity; however, no person
or group will be treated as beneficially owning 35% or more of combined voting power of the successor entity solely as a result of the voting power held in us prior to the consummation of the transaction; or

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

(4) Approval by our stockholders of our liquidation or dissolution.

FACE="Times New Roman" SIZE="2">In the event of an actual or constructive termination pursuant to a change in control, we provide more generous severance payments and benefits in comparison to the scenarios described above. This difference exists to
reflect the unique concerns an executive faces upon a change in control. As applied to the Chief Executive Officer, a

 





1

Notwithstanding the above, an acquisition of our securities by us which causes our voting securities beneficially owned
by a person or group to represent 35% or more of the combined voting power of our then outstanding voting securities does not constitute a change in control, unless that person or group subsequently becomes the beneficial owner of any additional
voting securities.

 


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change in control can materially alter the authorities and responsibilities of the Chief Executive Officer and can fundamentally affect the Chief Executive
Officer’s perceived role in our affairs if by virtue of the change in control he is to report to a different board of directors than that which was originally before him. Changes in corporate organization could lead to the Chief Executive
Officer’s actual termination or to his constructive termination if the changes are so significant as to render him effectively unable to function in the new environment. Our change in control provisions are thus designed to appropriately
compensate our Chief Executive Officer for such a possibility.

We also recognize that in the absence of a severance package, the potential
of a change in control would result in a similar situation with respect to members of senior management at the Executive Vice President level. The possibility of a change in control and its attendant organizational changes creates uncertainties
regarding the executives’ employment status and raises legitimate concerns for any executive in making the decision to join or remain with us. In order to remain competitive in the market for retaining and hiring top level executives, our
severance payments and benefits packages are designed to compensate these executives for the uncertainties related to any change in control.

SIZE="2">Under the employment agreement of Mr. Nelson Rising, if a change in control occurs during his employment period and his employment is terminated (a) by us without cause or by the executive for good reason, in each case within two
years after the effective date of the change in control or (b) by the executive for any reason on or within 30 days after the one-year anniversary of the effective date of the change in control, then he will be entitled to the payments and
benefits as though his employment was terminated without cause or for good reason as set forth above under the heading “—Severance Payments and Benefits,” except that the lump-sum cash severance payment multiple will by 300%.

Under Mr. Koumriqian’s 2009 employment agreement and Mr. Lammas’ employment agreement, if a change in control occurs during
his employment period and his employment is terminated (a) by us without cause or by the executive for good reason, in each case within two years after the effective date of the change in control or (b) by the executive for any reason on
or within 30 days after the one-year anniversary of the effective date of the change in control, then the executive will be entitled to the payments and benefits set forth above under the heading “—Severance Payments and
Benefits,” except that (i) the lump-sum cash severance multiple will be 200%, (ii) the period during which the executive will be entitled to health insurance coverage will be 24 months, and (iii) all outstanding stock options,
restricted stock and other equity awards (other than the performance award) held by the executive will become fully vested.

In the case of
our Chief Executive Officer and our other named executive officers, we believe that it is important to provide the severance payments and benefits in both the case of actual termination and the case of constructive termination. Including instances
of constructive termination in the types of termination covered by our severance packages ensures that any eventual acquirer of our company could not avoid paying severance by intentionally fostering a difficult work environment for the executives,
thereby greatly increasing the chance of their voluntary exit. For further information on the actual payouts, please see the table below under the heading “Executive Compensation—Potential Payments upon Termination or Change in
Control.”

This excerpt taken from the MPG DEF 14A filed Sep 5, 2008.

Change in Control Provisions

Consistent with our commitment to providing competitive compensation packages, we also offer our Executive Vice Presidents and Chief Executive Officer severance payments and benefits in the event of a change in control if the executive is terminated by us without cause or if the executive terminates his employment with us for good reason within a specified period of time or if the executive terminates his employment for any reason within a specified period of time following the anniversary of a change in control. A change in control is defined in each applicable executive’s employment agreement as the occurrence of any of the following events:

 

   

(1) the direct or indirect acquisition, by any person or group,2 of beneficial ownership of our voting securities that represent 35% or more of the combined voting power of the then outstanding voting securities, other than:

 

2 Notwithstanding the above, an acquisition of our securities by us which causes our voting securities beneficially owned by a person or group to represent 35% or more of the combined voting power of our then outstanding voting securities does not constitute a change in control, unless that person or group subsequently becomes the beneficial owner of any additional voting securities.

 

40


   

an acquisition of securities by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by us or any person controlled by us or by any employee benefit plan (or related trust) sponsored or maintained by us or any person controlled by us, or

 

   

an acquisition of securities by us or a corporation owned, directly or indirectly, by our stockholders in substantially the same proportions as their ownership of our stock, or

 

   

an acquisition of securities pursuant to a transaction described in clause (3) below that would not be a change in control under that clause; or

 

   

in the case of Mr. Lammas, any direct or indirect acquisition of securities by Robert F. Maguire III or his family, or any entity controlled thereby;

 

   

(2) individuals (in the case of Messrs. Nelson Rising and Gardner, excluding, for the avoidance of doubt, Robert F. Maguire III) who, as of the applicable employment agreement’s effective date, constitute the Board (the incumbent board) cease for any reason to constitute at least a majority of the Board; however, in general, any individual (in the case of Messrs. Nelson Rising and Gardner, excluding, for the avoidance of doubt, Robert F. Maguire III) who becomes a director after the applicable employment agreement’s effective date whose election by our stockholders, or nomination for election by the Board, was approved by a vote of at least a majority of the directors then comprising the incumbent board will be considered as though such individual were a member of the incumbent board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an (in the case of Messrs. Nelson Rising and Gardner, actual or threatened) election contest with respect to the election or removal of directors or other (in the case of Messrs. Nelson Rising and Gardner, actual or threatened) solicitation of proxies or consents by or on behalf of a person other than the Board;

 

   

(3) the consummation by us (whether directly involving us or indirectly involving us through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of our assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction:

 

   

which results in our voting securities outstanding immediately before the transaction continuing to represent, directly or indirectly, at least 50% of the combined voting power of the successor entity’s outstanding voting securities immediately after the transaction, and

 

   

after which no person or group beneficially owns voting securities representing 35% or more of the combined voting power of the successor entity; however, no person or group will be treated as beneficially owning 35% or more of combined voting power of the successor entity solely as a result of the voting power held in us prior to the consummation of the transaction; or

 

   

(4) approval by our stockholders of our liquidation or dissolution.

In the event of an actual or constructive termination pursuant to a change in control, we provide more generous severance payments and benefits in comparison to the scenarios described above. This difference exists to reflect the unique concerns an executive faces upon a change in control. As applied to the Chief Executive Officer, a change in control can materially alter the authorities and responsibilities of the Chief Executive Officer and can fundamentally affect the Chief Executive Officer’s perceived role in our affairs if by virtue of the change in control he is to report to a different Board of Directors than that which was originally before him. Changes in corporate organization could lead to the Chief Executive Officer’s actual termination or to his constructive termination if the changes are so significant as to render him effectively unable to function in the new environment. Our change in control provisions are thus designed to appropriately compensate our Chief Executive Officer for such a possibility.

 

41


We also recognize that in the absence of a severance package, the potential of a change in control would result in a similar situation with respect to members of senior management at the Executive Vice President level. The possibility of a change in control and its attendant organizational changes creates uncertainties regarding the executives’ employment status and raises legitimate concerns for any executive in making the decision to join or remain with us. In order to remain competitive in the market for retaining and hiring top level executives, our severance payments and benefits packages are designed to compensate these executives for the uncertainties related to any change in control.

Under the employment agreements of each of Mr. Nelson Rising and Mr. Gardner, if a change in control occurs during the executive’s employment period and his employment is terminated (a) by us without cause or by the executive for good reason, in each case within two years after the effective date of the change in control or (b) by the executive for any reason on or within 30 days after the one-year anniversary of the effective date of the change in control, then the executive will be entitled to the payments and benefits as though the executive’s employment was terminated without cause or for good reason as set forth above under the heading “– Severance Payments and Benefits,” except that the lump-sum cash severance payment multiple will be 300% (in the case of Mr. Nelson Rising) and 200% (in the case of Mr. Gardner).

Under Mr. Lammas’ employment agreement, if a change in control occurs during his employment period and the employment is terminated (a) by us without cause or by Mr. Lammas for good reason, in each case within two years after the effective date of the change in control or (b) by Mr. Lammas for any reason on or within 30 days after the one-year anniversary of the effective date of the change in control, then Mr. Lammas will be entitled to the payments and benefits as though his employment was terminated without cause or for good reason as set forth above under the heading “– Severance Payments and Benefits,” except that (i) the lump-sum cash severance payment multiple will be 200%, (ii) the period during which Mr. Lammas will be entitled to health insurance coverage will be 24 months, and (iii) all outstanding stock options, restricted stock and other equity awards (other than the performance award) held by Mr. Lammas will become fully vested.

In the case of our Chief Executive Officer and our other named executive officers, we believe that it is important to provide the severance payments and benefits in both the case of actual termination and the case of constructive termination. Including instances of constructive termination in the types of termination covered by our severance packages ensures that any eventual acquirer of the Company could not avoid paying severance by intentionally fostering a difficult work environment for the executives, thereby greatly increasing the chance of their voluntary exit. For further information on the actual payouts, please see the table below under the heading “Executive Compensation – Potential Payments upon Termination or Change in Control.”

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