UPL » Topics » Potential Payouts Upon Change of Control and Termination

This excerpt taken from the UPL DEF 14A filed Apr 9, 2009.
Potential Payouts Upon Change of Control and Termination
Our named executive officers are entitled to severance benefits in the event their employment with the Company is involuntarily terminated other than for cause or is voluntarily terminated for good reason within two years of a change of control. Based on a hypothetical termination date of December 31, 2008, the change of control payments to our named executive officers would have been as follows:
    Mr. Watford(2)     Mr. Smith     Mr. Picquet     Mr. Nance  
Base Salary
  $ 1,500,000     $ 460,000     $ 530,000     $ 360,000  
    4,375,000       700,000       800,000       288,000  
Health & Welfare Benefits
    3,584       2,977       2,977       2,977  
Additional Retirement Benefits
  $ 5,878,584     $ 1,162,977     $ 1,332,977     $ 650,977  
Fair market value of accelerated equity compensation(1)
    3,727,500       1,027,500       1,093,125       536,325  
Tax gross-up
  $ 9,606,084     $ 2,190,477     $ 2,426,102     $ 1,187,302  
(1) Includes the 2006, 2007 and 2008 LTIP amounts and the 2008 Best in Class estimated at maximum levels.
(2) The base salary and bonus are calculated based on Mr. Watford’s employment agreement which was in effect on December 31, 2008. See “Employment Agreements.” The health and welfare benefits are assumed to continue for three years as provided in the employment agreement and are calculated using 2008 amounts.
For our executive officers (other than our CEO whose severance benefits were set forth in his employment agreement) we provide for: (i) a lump sum severance payment equal to two times the executive’s base salary plus the maximum bonus opportunity under the AIP; (ii) continuation of life and health insurance benefits for two years at existing group rates; (iii) immediate vesting of all stock options awards which are exercisable for one year following termination; and (iv) immediate vesting of all LTIP and Best in Class awards at maximum levels.
A change of control is generally defined as:
  •  The acquisition by an individual, entity or group of beneficial ownership of 35% or more of either (x) the then outstanding shares of common stock of the Company, or (y) the combined voting power of the then outstanding voting securities of the Company. An acquisition directly from the Company, by the Company or by an employee benefit plan sponsored by the Company would not constitute a change of control.
  •  Where individuals who constitute the Board of Directors of the Company, including new board members approved by the incumbent Board, cease for any reason to constitute at least a majority of the Board.
  •  The consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation, unless following such business combination current beneficial owners own at least 50.1% of the combined voting power of the combined company.
  •  Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
Good reason includes a reduction in the officer’s base salary, diminution of duties or relocation greater than 50 miles without consent.



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