WEDC » Topics » Executive Incentive Plans for Fiscal 2008 and 2009

This excerpt taken from the WEDC DEF 14A filed Apr 9, 2009.
Executive Incentive Plans for Fiscal 2008 and 2009
 
Cash Incentive Bonus Awards.  In connection with the evaluation program discussed above, in December 2007, our Compensation Committee determined and approved specific financial and operational performance goals for fiscal 2008 for possible cash incentive bonus awards for our Named Executive Officers. The achievement of certain minimum Earnings before Income Taxes, Depreciation and Amortization (“EBITDA”) amounts were not met. However, due to the significant changes in the business and senior management, the individual performances of Messrs. Derse and Tarantine, and the determination that it was in the best interests of the Corporation to retain such officers, the Compensation Committee approved a discretionary cash bonus of $30,000 for each of Messrs. Derse and Tarantine.
 
For fiscal 2009, the Compensation Committee approved a new cash incentive bonus award for our Named Executive Officers. If the approved EBITDA amount is attained, the cash bonus awards for Messrs. Tarantine and Derse are expected to be approximately 20% of their base salary. If 90% of this EBITDA amount is attained, then the cash bonus awards for Messrs. Tarantine and Derse are expected to be approximately 10% of their base salary. If 110% of this EBITDA amount is attained, then the cash bonus awards for Messrs. Tarantine and Derse are expected to be approximately 30% of their base salary.
 
Equity Incentive Awards.  We currently utilize two forms of equity awards for the Named Executive Officers, consisting of restricted stock units (“RSUs”) and performance shares.
 
In fiscal 2008, the Board of Directors granted and approved 25,000 RSUs for Mr. Derse. The RSUs will vest over a two-year period, with 50% of each RSU award vesting on the first-year anniversary of the date of grant and the remaining 50% of each RSU award vesting upon the end of the second-year anniversary of the date of grant. Upon a “Change in Control” of the Corporation (as such term is defined in his employment agreement) each RSU award will automatically and fully vest.
 
In fiscal 2009, the Compensation Committee granted and approved 50,000 RSUs for Messrs. Derse and Tarantine. The RSUs will vest over a two-year period, with 50% of each RSU award vesting on the first-year anniversary of the date of grant and the remaining 50% of each RSU award vesting upon the end of the second-year anniversary of the date of grant. Upon a “Change in Control” of the Corporation (as such term is defined in each of their respective employment agreements) each RSU award will automatically and fully vest. In addition, given the similar positions of responsibility, Mr. Tarantine was granted an additional 25,000 RSUs to match Mr. Derse’s earlier award, of which 50% immediately vested. The remaining 50% will vest on the first-year anniversary of the date of grant.
 
The performance share awards granted in fiscal 2008 were cancelled in fiscal 2009 due to the significant changes in the business and senior management. In fiscal 2009, a new performance share plan was approved by the Compensation Committee. If we achieve the approved annual EBITDA amount, then Messrs. Derse and Tarantine would each receive 18,750 performance shares. If we achieve 90% of annual EBITDA, then 12,500 shares would be awarded to each of Messrs. Derse and Tarantine. If we achieve 110% of annual EBITDA, then 25,000 shares would be awarded to each of Messrs. Derse and Tarantine. Upon a “Change in Control” of the Corporation (as such term is defined in each of their respective employment agreements) each performance share award will be automatically granted and fully vested regardless of the achievement of the EBITDA Target.
 
Difficulty in achieving performance targets.  As noted above, our performance targets for our cash bonus incentive awards and equity incentive awards for fiscal 2008 and 2009 were and are based on EBITDA targets set by the Compensation Committee. The EBITDA targets in fiscal 2008 were not met, in part due to the restructuring of the Corporation’s operational structure which resulted in discontinued operations. The Compensation Committee intended to set the fiscal 2008 and fiscal 2009 EBITDA targets at challenging levels to motivate high business performance and support attainment of longer-term financial objectives in light of our newly restructured business


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which will align management’s interests with the interests of our shareholders. The Compensation Committee ultimately believes that these EBITDA and other performance targets, individually or together, should be based on historic and estimated performance levels of the Corporation and we believe that while the current EBITDA targets are attainable, they are also challenging enough to require management to produce robust results to obtain them.
 
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