This excerpt taken from the TWMC DEF 14A filed May 20, 2009.
General Objectives and Overview
As noted above, the Company believes that a component of its officers compensation should consist of share-based incentive compensation, which appreciates or depreciates in value in relation to the market price of our common stock. Accordingly, the Compensation Committee has in recent years made, and intends in the future continue to make, annual and other grants of share-based awards to the named executive officers and other key employees in such amounts as the Committee believes will accomplish the objectives of our compensation programs. As discussed below, the holders ability to realize any financial benefit from these awards typically requires the fulfillment of substantial vesting requirements that are performance contingency-related in some cases and time-related in others. Accordingly, the Company believes that these awards provide substantial benefit to the Company in creating appropriate performance incentives and in facilitating the long-term retention of employees who add significant value.
Share-based awards to the named executive officers take two different forms: stock settled appreciation rights (referred to below as SSARS), and restricted share units (Share Units), which entitle the recipient to receive a cash payment equal to the value of such units upon the completion of a vesting period, along with dividend equivalents during the period that such units are outstanding. Such compensation is awarded under the Long Term Share and Incentive Award Plan. A summary description of the plan begins at page 22.
Stock Settled Appreciation Rights
SSARS give the holder the right, generally for a period of ten years, to receive value tied to the post-grant appreciation in the value of the underlying shares subject to the award. The SSARS will provide a financial benefit to the holder only to the extent that the price of our stock increases above the exercise price and the holder remains employed during the vesting period, which is generally three years, thus providing a substantial incentive for the employee to continue employment with the Company. Employees generally forfeit any SSARSs not vested at the time that their employment terminates. In addition, the SSARSs serve to align employees interests with those of our stockholders by providing an incentive to make contributions that will assist in increasing the market price of our stock.
Share Units give the holder the right to receive the cash equivalent of one share of Company Common Stock for each unit held and to receive dividend equivalents while the units are outstanding. As in the case of the SSARS that we grant, Share Units are subject to vesting requirements that provide the Company with benefits from the standpoint of employee retention. All of these requirements have been time-based to date, with the exception of performance based share units granted to Mr. Higgins as discussed under Employment agreements on page 15.
The Company has generally granted share-based awards to employees at a regular time each year. These grants have been approved at the regular Compensation Committee meeting held in March, as discussed above. The Company did not award its customary annual grant in 2008 and will not award such grant in 2009.
On October 10, 2008, the Compensation Committee of the Company approved the grant of cash-settled restricted share units under the 2005 Long Term Incentive Plan and deferred cash grants to the named executive officers, other than Mr. Higgins. The restricted share units were granted on November 3, 2008, and 68,807 Share Units were granted with a fair market value of $150,000 on that date, based on the closing price of the Company stock. They will vest as to 50% on the second anniversary of the date of grant and as to 50% on the third anniversary, and they will be settled in cash on the date of vesting. Each of the deferred cash grants will
provide for a $150,000 cash payment that will be payable on November 3, 2009, and $75,000 cash payments that will be payable on each of November 3, 2010 and November 3, 2011.