WASHINGTON,RuleRULE 14a-101)Proxy Statement Pursuant to Sectionof the Securities Exchange Act ofOF THE SECURITIESxþ¨¨ Preliminary Proxy Statement¨ Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))x Definitive Proxy Statement¨ Definitive Additional Materials¨ Soliciting Material Pursuant to Section 240.14a-12inIn Its Charter)filing feeFiling Fee (Check the appropriate box):xþ No fee required. ¨o Fee computed on table below per Exchange ActRules 14a-6(i)(1) and0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act (setRule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):(4) Proposed maximum aggregate value of transaction: (5) Total fee paid: ¨(4) Proposed maximum aggregate value of transaction: (5) Total fee paid: o Fee paid previously with preliminary materials. ¨o Check box if any part of the fee is offset as provided by Exchange ActRule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: (1) Amount previously paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS | ||||||||||||
LIBBEY INC. PROXY STATEMENT | ||||||||||||
QUESTIONS AND ANSWERS | ||||||||||||
STOCK OWNERSHIP | ||||||||||||
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AUDIT-RELATED MATTERS | ||||||||||||
COMPENSATION-RELATED MATTERS | ||||||||||||
SUMMARY COMPENSATION TABLE FOR FISCAL 2006 |
• | elect three directors, each for a term of three years; |
• | vote to ratify the appointment of Ernst & Young LLP as Libbey’s independent auditors for our fiscal year ending December 31, 2007; and | |
• | transact such other business as properly may come before the meeting. |
You are entitled to vote at the meeting if you were an owner of record of Libbey Inc. common stock at the close of business on March 10, 2006.9, 2007. If your ownership is through a broker or other intermediary, you will need to have proof of your stockholdings in order to be admitted to the meeting. A recent account statement, letter or proxy from your broker or other intermediary will suffice.
March 30, 2006
April 2, 2007.
9, 2007.
• | Proposal 1: Election of three nominees — Carlos V. Duno, Peter C. McC. Howell and Richard I. Reynolds — to serve as Class II directors; and | |
• | Proposal 2: Ratification of the appointment of Ernst & Young LLP as Libbey’s independent auditors for the 2007 fiscal year. |
How does the Board recommend that I vote?
• | Proposal 1: FOR each of Carlos V. Duno, Peter C. McC. Howell and Richard I. Reynolds to serve as Class II directors; and | |
• | Proposal 2: FOR ratification of the appointment of Ernst & Young LLP as Libbey’s independent auditors for the 2007 fiscal year. |
How do I vote?
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• | sending us a proxy card dated later than your last vote; | |
• | notifying the Secretary of Libbey in writing; or | |
• | voting at the meeting. |
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Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||
Ariel Capital Management, LLC( 1 ) | 2,975,903 | 21.24 | ||
200 E. Randolph Drive, Suite 2900 | ||||
Chicago, IL 60601 | ||||
FMR Corp.( 2 ) | 866,700 | 6.19 | ||
82 Devonshire Street | ||||
Boston, MA 02109 | ||||
Zesiger Capital Group LLC( 3 ) | 799,500 | 5.71 | ||
320 Park Avenue, 30th Floor | ||||
New York, NY 10022 | ||||
Barclays Global Investors, NA. | 763,032 | 5.45 | ||
Barclays Global Fund Advisors( 4 ) | ||||
45 Fremont Street | ||||
San Francisco, CA 94105 |
Amount and Nature | ||||||||
Name and Address | of Beneficial | Percent | ||||||
of Beneficial Owner | Ownership | of Class | ||||||
Zesiger Capital Group LLC(1) | 1,987,000 | 13.9% | ||||||
320 Park Avenue, 30th Floor New York, NY 10022 | ||||||||
FMR Corp.(2) | 1,404,800 | 9.823% | ||||||
82 Devonshire Street Boston, MA 02109 | ||||||||
Dimensional Fund Advisors LP(3) | 1,012,997 | 7.08% | ||||||
1299 Ocean Avenue Santa Monica, CA 90401 |
(1) | Amendment No. |
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Schedule 13G filed with the Securities and Exchange Commission on behalf of Zesiger Capital Group LLC, an investment advisor, indicates that, as of December 31, | ||
(2) | Amendment No. 4 to Schedule 13G filed with the Securities and Exchange Commission by FMR Corp., a parent holding company, on behalf of FMR Corp., Edward C. Johnson 3d, Fidelity Management & Research Company (“Fidelity”) and Fidelity Low Priced Stock Fund, indicates that, as of December 31, 2006, Fidelity, an investment advisor, is the beneficial owner of 1,404,800 common shares as a result of acting as investment adviser to various companies. The ownership of one investment company, Fidelity Low Priced Stock Fund, amounts to 1,404,800 shares. The schedule further indicates that each of Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, and the Funds, has sole power to dispose of 1,404,800 common shares, and that neither FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp., has the sole power to vote or direct the voting of the shares owned directly by the Funds, such power residing in the Funds’ Boards of Trustees. |
(3) | Schedule 13G filed with the Securities and Exchange Commission on behalf of |
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Name of Beneficial Owner Amount and Nature of Beneficial Ownership( 1 ) Percent of Class Carlos V. Duno William A. Foley( 2 ) Daniel P. Ibele( 3 ) Susan A. Kovach( 3 ) Peter C. McC. Howell( 2 )( 4 ) John F. Meier( 3 )( 5 ) Deborah G. Miller( 2 ) Carol B. Moerdyk( 2 ) Gary L. Moreau Richard I. Reynolds( 3 ) Terence P. Stewart( 2 ) Kenneth G. Wilkes( 3 ) Directors & Executive Officers as a Group( 3 )( 2 ) 1,000 * 100 * 78,525 * 23,183 * 1,750 * 271,826 1.93 2,000 * 900 * 500 * 203,634 1.44 928 * 119,309 * 863,864 6.14
Amount and Nature | ||||||||
of Beneficial | Percent | |||||||
Name of Beneficial Owner | Ownership(1) | of Class | ||||||
Carlos V. Duno | 4,653 | * | ||||||
William A. Foley(2) | 3,745 | * | ||||||
Daniel P. Ibele(3) | 82,613 | * | ||||||
Peter C. McC. Howell(2)(4) | 5,402 | * | ||||||
John F. Meier(3)(5) | 275,790 | 1.9 | ||||||
Deborah G. Miller(2) | 5,645 | * | ||||||
Carol B. Moerdyk(2) | 4,545 | * | ||||||
Gary L. Moreau(2) | 834 | * | ||||||
Richard I. Reynolds(3) | 199,855 | 1.4 | ||||||
Scott M. Sellick(3) | 45,556 | * | ||||||
Terence P. Stewart(2) | 5,580 | * | ||||||
Kenneth G. Wilkes(3) | 119,069 | * | ||||||
Directors & Executive Officers as a Group(3)(2) | 906,193 | 6.3 |
(1) | Includes the following number of |
Number of | ||||
Outstanding Stock | ||||
Options Exercisable | ||||
Named Executive | Within 60 Days | |||
John F. Meier | 202,000 | |||
Scott M. Sellick | 37,000 | |||
Richard I. Reynolds | 152,400 | |||
Kenneth G. Wilkes | 96,300 | |||
Daniel P. Ibele | 72,900 |
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(2) | Does not include the following number of shares |
Number of | ||||
Name of Director | Phantom Shares | |||
William A. Foley | 11,565 | |||
Peter C. McC. Howell | 5,679 | |||
Deborah G. Miller | 2,152 | |||
Carol B. Moerdyk | 19,309 | |||
Gary L. Moreau | 1,239 | |||
Terence P. Stewart | 15,057 |
(3) | Includes the |
(4) | Includes 750 shares held by family members of Mr. Howell. Mr. Howell disclaims any beneficial interest in |
(5) | Includes 8,406 shares held by family members of Mr. Meier. Mr. Meier disclaims any beneficial interest in |
No. of RSUs | No. of RSUs | |||||||
with3-Year | with4-Year | |||||||
Named Executive | Vesting(1) | Vesting(2) | ||||||
J. Meier | 27,993 | 30,853 | ||||||
S. Sellick | 6,020 | 7,007 | ||||||
R. Reynolds | 15,199 | 16,346 | ||||||
K. Wilkes | 7,751 | 8,432 | ||||||
D. Ibele | 5,471 | 5,831 |
(1) | RSUs withthree-year vesting vest ratably (1/3 per year) on each of the first through third anniversaries of the grant date, provided the Named Executive remains in continuous employment with Libbey as of the date of vesting. One share of our common stock will be issued for each vested RSU. Dividends do not accrue on RSUs until they vest. |
(2) | RSUs withfour-year vesting vest ratably (1/4 per year) on each of the first through fourth anniversaries of the grant date, provided the Named Executive remains in continuous employment with Libbey as of the date of vesting. One share of our common stock will be issued for each vested RSU. Dividends do not accrue on RSUs until they vest. |
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Board Committee | Director | |||||||||||
Director | Age | Experience | Assignments | Since | ||||||||
Carlos V. Duno (Class II) | 59 | Owner and Chief Executive Officer of Marcia Owen Associates, a recruiting and staffing agency, from July 2006 to present; Chief Executive Officer and Owner, CDuno Consulting, from November 2004 to present; Chairman & CEO, Clean Fuels Technology, from June 2001 to October 2004; President, Business Development and Planning, Vitro S.A. from July 1995 to May 2001. | Member, Audit Committee; Member, Nominating and Governance Committee | 2003 | ||||||||
William A. Foley (Class III) | 59 | President and a Director of Arhaus, Incorporated, a retailer of home furnishings, from November 2006 to present; Chairman and Chief Executive Officer of Intelligence Inc. and Think Well Inc. from March 2005 to present; Co-founder of Entrenu Holdings LLC; Chairman and Chief Executive Officer of LESCO Inc. from July 1993 to April 2002. | Chair, Compensation Committee; Member, Nominating and Governance Committee | 1994 | ||||||||
Peter C. McC. Howell (Class II) | 57 | From 1997 to present, advisor to various business enterprises in the areas of acquisitions, marketing and financial reporting; Chairman and Chief Executive Officer of Signature Brands USA Inc. (formerly Health o meter, Inc.) from August 1994 to August 1997; President, Chief Executive Officer and a director of Mr. Coffee, inc. from 1989 to 1994; Member of the board of directors of Pure Cycle Corporation (NASDAQ: PCYO). | Member, Audit Committee; Chair, Nominating and Governance Committee | 1993 | ||||||||
John F. Meier (Class I) | 59 | Chairman of the Board and Chief Executive Officer of Libbey since June 1993; Director, Cooper Tire and Rubber Company (NYSE: CTB), since 1997. Director, Applied Industrial Technologies (NYSE: AIT), since October 2005. | 1987 |
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Director | Age | Experience | Board Committee Assignments | Director Since | ||||
Carlos V. Duno (Class II) | 58 | CDuno Consulting, CEO and Owner, November 2004 to present; Clean Fuels Technology, Chairman & CEO, from June 2001 to October 2004; Vitro, S.A., Monterrey, Mexico, President Business Development and Planning, from 1995 to 2001. | Member, Audit Committee; Member, Nominating and Governance Committee | 2003 | ||||
William A. Foley (Class III) | 58 | Chairman and CEO of both Intelligence Inc. and Think Well Inc. and Co-founder of Entrenu Holdings LLC; Chairman and Chief Executive Officer of LESCO Inc. from July 1993 to April 2002. | Chair, Compensation Committee; Member, Nominating and Governance Committee | 1994 | ||||
Peter C. McC. Howell (Class II) | 56 | From 1997 to present, advisor to various business enterprises in the areas of acquisitions, marketing and financial reporting; Chairman and Chief Executive Officer of Signature Brands USA, Inc. (formerly known as Health o meter, Inc.) from August 1994 to August 1997; President, Chief Executive Officer and a director of Mr. Coffee, inc. from 1989 to 1994. Mr. Howell is a member of the board of directors of Pure Cycle Corporation (NASDAQ: PCYO) and Global Lite Array (BVI) Inc. | Member, Audit Committee; Chair, Nominating and Governance Committee | 1993 |
Director Experience Board Committee Assignments Director Since John F. Meier (Class I) Deborah G. Miller (Class III) Age 58 Chairman of the Board and Chief Executive Officer of Libbey since June 1993; Director, Cooper Tire and Rubber Company (NYSE: CTB), since 1997. Director of Applied Industrial Technologies (NYSE: AIT), since October 2005. 1987 56 Chief Executive Officer of Enterprise Catalyst Group, a consulting firm specializing in high technology and biotechnology transformational applications, from 2003 to present, and in that role, President, Chief Executive Officer and Chairman of Ascendant Systems and, since March 10, 2006, Vice President, Ascendant Systems, of Research in Motion Limited; President and Chief Executive Officer of Egenera from April 2002 to 2003; from November 2001 to March 2002, Chief Executive Officer, On Demand Software; from May 2001 to September 2001, Chief Executive Officer, OPI Software; from September 1999 to April 2001, Chief Executive Officer, CoVia; and from September 1998 to September 1999, President and Chief Operating Officer, 2Bridge Software. Ms. Miller also serves on the board of directors of Sentinal Group Funds, Inc. Member, Compensation Committee; Member, Nominating and Governance Committee 2003
Board Committee | Director | |||||||||||||||||||
Director | Age | Experience | Board Committee Assignments | Director Since | Age | Experience | Assignments | Since | ||||||||||||
Deborah G. Miller (Class III) | 57 | Chief Executive Officer of Enterprise Catalyst Group, a consulting firm specializing in high technology and biotechnology transformational applications, from 2003 to present, and in that role, President, Chief Executive Officer and Chairman of Ascendant Systems from February 2005 to present and Chief Executive Officer of Maranti Networks from September 2003 to November 2004; President and Chief Executive Officer of Egenera from April 2002 to 2003; from November 2001 to March 2002, Chief Executive Officer, On Demand Software. Ms. Miller also serves on the board of directors of Sentinel Group Funds, Inc. | Member, Compensation Committee; Member, Nominating and Governance Committee | 2003 | ||||||||||||||||
Carol B. Moerdyk (Class I) | 55 | Senior Vice President, International, OfficeMax, Incorporated, from August 2004 to present; Senior Vice President, Administration, Boise Cascade Office Products Corporation, from January 2004 to August 2004; Senior Vice President, North American and Australasian Contract Operations, Boise Cascade Office Products Corporation from 1998 through 2003; Chief Financial Officer, Boise Cascade Office Products Corporation, from 1995 to 1998. Director of American Woodmark Corporation (NASDAQ: AMWD) since May 2005. | Chair, Audit Committee; Member, Compensation Committee | 1998 | 56 | Senior Vice President, International, OfficeMax, Incorporated (formerly Boise Cascade Corporation), from August 2004 to present; Senior Vice President, Administration, Boise Cascade Office Products Corporation, from January 2004 to August 2004; Senior Vice President, North American and Australasian Contract Operations, Boise Cascade Office Products Corporation from 1998 through 2003. Director of American Woodmark Corporation (NASDAQ: AMWD) since May 2005. | Chair, Audit Committee; Member, Compensation Committee | 1998 | ||||||||||||
Gary L. Moreau (Class I) | 51 | Writer, lecturer and advisor primarily in the areas of management and corporate governance; President of Pratt’s Hollow Advisors LLC (business consulting) from 1999 to 2003; President and Chief Executive Officer of Lionel L.L.C. from 1996 to 1999; President and Chief Operating Officer of Oneida Ltd. from 1991 to 1996. Mr. Moreau is a member of the board of directors of GSW Inc. (Toronto Stock Exchange: GSW.A and GSW.SV.B). | Member, Audit Committee; Member, Compensation Committee | 1996 | 52 | Writer, lecturer and advisor, primarily in the areas of corporate and organizational governance and culture, from 2003 to present; President of Pratt’s Hollow Advisors LLC (business consulting) from 1999 to 2003; President and Chief Executive Officer of Lionel L.L.C. from January 1996 to July 1999; President and Chief Operating Officer of Oneida Ltd. from 1991 to January 1996. | Member, Audit Committee; Member, Compensation Committee | 1996 | ||||||||||||
Richard I. Reynolds (Class II) | 59 | Executive Vice President and Chief Operating Officer of Libbey from November 1995 to present; Vice President and Chief Financial Officer of Libbey from 1993 to 1995. | 1993 | 60 | Executive Vice President and Chief Operating Officer of Libbey from November 1995 to present; Vice President and Chief Financial Officer of Libbey from 1993 to 1995. | 1993 | ||||||||||||||
Terence P. Stewart (Class III) | 57 | Managing partner of Stewart and Stewart, a Washington, D.C.-based law firm that specializes in trade and international law issues, where he has been employed since 1976. | 1997 |
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Board Committee | Director | |||||||||||
Director | Age | Experience | Assignments | Since | ||||||||
Terence P. Stewart (Class III) | 58 | Managing partner of Stewart and Stewart, a Washington, D.C.-based law firm that specializes in trade and international law issues, where he has been employed since 1976. | 1997 |
How are Libbey’s directors compensated?
In 2005, our non-management directors received the following compensation:
Outside Director | Annual Cash Retainer | Committee Chair Retainer( 1 ) | Meeting Fees( 2 ) | Other Fees( 3 ) | Total | ||||||||||
Carlos V. Duno | $ | 25,000 | 0 | $ | 19,250 | 1,500 | $ | 45,750 | |||||||
William A. Foley | $ | 25,000 | $ | 5,000 | $ | 19,750 | $ | 4,000 | $ | 53,750 | |||||
Peter C. McC. Howell | $ | 25,000 | $ | 5,000 | $ | 20,250 | $ | 3,000 | $ | 53,250 | |||||
Deborah G. Miller | $ | 25,000 | 0 | $ | 18,250 | 1,500 | $ | 44,750 | |||||||
Carol B. Moerdyk | $ | 25,000 | $ | 7,500 | 19,000 | $ | 1,500 | $ | 53,000 | ||||||
Gary L. Moreau | $ | 25,000 | 0 | $ | 21,000 | $ | 2,000 | $ | 48,000 | ||||||
Terence P. Stewart | $ | 25,000 | 0 | $ | 11,000 | 0 | $ | 36,000 | |||||||
Total | $ | 175,000 | $ | 17,500 | $ | 128,500 | $ | 13,500 | $ | 334,500 | |||||
The retainer and all fees are payable in cash or, pursuant to the Directors’ Deferred Compensation Plan, subject to deferral into an account, the value of which is based upon the value of our common stock plus dividends. In 2005, each of the directors except Messrs. Moreau, Duno and Foley and Ms. Miller elected to defer all or a portion of the retainer and fees. Effective January 1, 2006, directors may elect, pursuant to the 2006 Deferred Compensation Plan for Outside Directors, to defer all or any part of the retainer and fees payable to them into either a subaccount that is deemed invested in our common stock or a subaccount that has a fixed rate of return equal to the average yield on 10-year treasuries (determined as of the last day of the calendar quarter in which interest is being computed). Management directors do not receive additional compensation for service on the Board of Directors.
In addition to the retainers and fees listed above, the Company reimburses the directors for their travel expenses incurred in attending meetings of the Board or its committees, as well as for fees and expenses incurred in attending director education seminars and conferences. The directors do not receive any other personal benefits.
SEC regulations, the listing standards of the New York Stock Exchange and our Corporate Governance Guidelines. The Board has further determined that Ms. Moerdyk,each of the current chairmembers of the Audit Committee Mr. Howell, the immediate past chair of the Audit Committee, Mr. Duno and Mr. Moreau areis qualified as an audit committee financial experts,expert, as defined in SEC regulations, and that each of Ms. Moerdyk, Mr. Howell, Mr. Duno and Mr. Moreau is financially literate and has accounting and related financial management expertise.
• | The Compensation Committee reviews executive compensation at comparable companies and recommends to the Board compensation levels and incentive compensation plans for our executives; | |
• | The Compensation Committee reviews and approves the corporate goals and objectives relevant to the targets of the executive incentive compensation plans; | |
• | Following the Board’s annual evaluation of the performance of the Chief Executive Officer (which is to be reviewed with the Chief Executive Officer by the chair of the Committee), the Compensation Committee establishes the compensation of the Chief Executive Officer based on the evaluation, and in determining the long-term incentive compensation component of the Chief Executive Officer’s compensation, the Compensation Committee consider the Company’s performance, relative |
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shareholder return, the value of similar awards to chief executive officers at comparable companies and the awards given to the Company’s Chief Executive Officer in prior years. |
• | The Compensation Committee performs an annual evaluation of the performance and effectiveness of the Compensation Committee. |
Upon the conclusion of the annual meeting of stockholders on May 3, 2007, Carlos V. Duno will assume responsibility for chairing and coordinating these executive sessions, as Mr. Moreau will be assuming the chairmanship of the Audit Committee.
• | Board members must possess the highest professional and personal ethics and values, consistent with longstanding company values and standards; | |
• | Board members must possess broad experience at the policy-making level in business, government, education, technology or public interest; | |
• | Board members must possess a commitment to enhancing shareholder value; |
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• | Board members must possess and devote sufficient time to carry out their duties and to provide insight and practical wisdom based upon experience; and | |
• | Board members must possess expertise in areas that add strategic value to the Boardand/or knowledge of business in foreign locations strategic to our then-current or potential future operations. For example, successful candidates for the Board will have current or recent experience as a chief executive officer of a public company; expertise in logistics and advanced supply chain management; experience as an executive with a large multinational or as an expatriate executive in the Far East, Europe or Latin America; management experience in the foodservice market in the fast food, restaurant or food distribution industry; or management or board experience in a highly leveraged environment. |
In addition, the Board seeks directors who are strategic thinkers, understand complex capital structures and the operational constraints that they create, are members of the boards of directors of other public companies and have experience and expertise in corporate governance, marketing expertiseand/or experience in the consumer products industry. The Board also seeks directors who, as compared to then-existing members of the Board, are diverse with respect to geography, employment, age, race or gender.
The Committee also
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During 2005
In that connection, because our Board believes that Libbey’s General Counsel is best suited to select legal counsel for Libbey, the Board does not require that we seek the approval of the Board, or of any committee of the Board, in connection with our engagement of Stewart and Stewart. However, the Board has determined that, as a result of our engagement of Stewart and Stewart with respect to international trade matters, Mr. Stewart is not independent of Libbey.
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They also are available in print, upon request, to any holder of our common stock. Requests should be directed to Corporate Secretary, Libbey Inc., 300 Madison Avenue, P.O. Box 10060, Toledo, Ohio43699-0060.
Nature of Fees | 2005 Fees | 2004 Fees | ||||
Audit Fees( 1 ) | $ | 814,110 | $ | 1,023,586 | ||
Audit Related Fees( 2 ) | $ | 59,000 | $ | 154,322 | ||
Tax Fees( 3 ) | $ | 3,970 | $ | 9,350 | ||
All Other Fees | 0 | 0 | ||||
Total | $ | 879,085 | $ | 1,189,262 | ||
Nature of Fees | 2006 Fees | 2005 Fees | ||||||
Audit Fees(1) | $ | 1,932,920 | $ | 1,167,610 | ||||
Audit Related Fees(2) | $ | 76,000 | $ | 59,000 | ||||
Tax Fees(3) | $ | 0 | $ | 3,970 | ||||
All Other Fees | $ | 0 | 0 | |||||
Total | $ | 2,008,920 | $ | 1,230,580 | ||||
(1) | Fees for audit services include fees associated with the annual audit of |
(2) | Audit-related fees principally include fees for audits of |
(3) | Tax services relate to expatriate compliance |
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Upon the conclusion of the annual meeting of stockholders on May 3, 2007, Gary L. Moreau will assume the chairmanship of the Audit Committee and will be responsible for pre-approving these services.
• | confirming the independence of our independent auditors; | |
• | the appointment, compensation and retention of our independent auditors; | |
• | reviewing the scope of the audit services to be provided by our independent auditors, including the adequacy of staffing and compensation; | |
• | approving non-audit services; | |
• | overseeing management’s relationship with our independent auditors; | |
• | overseeing management’s implementation and maintenance of effective systems of internal and disclosure controls; and | |
• | reviewing our internal audit program. |
The Audit Committee reviews and discusses with management and the independent auditors all annual and quarterly financial statements prior to their issuance. The Audit Committee’s discussions with management and the independent auditors include a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
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The following Report of the Compensation CommitteeDiscussion and the performance graph included elsewhere in this proxy statement do not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report or the performance graph by reference therein.Analysis
The Compensation Committee of the Board has furnished the following report with respect to Libbey’s executive compensation for fiscal year 2005.
During
In 2005, Libbey took significant action to implement it. This strategy encompassed, among other things:
• | the January 2005 acquisition of Crisal-Cristalaria Automática, S.A., a manufacturer of glass tableware in low-cost Portugal; | |
• | the February 2005 closure of our glassware facility in City of Industry, California, and the related shifting of production from that facility to our facilities in Toledo, Ohio and Shreveport, Louisiana, in order to maximize capacity utilization; |
• | the construction of our new glassware manufacturing facility in China; |
• | the adoption of LEAN manufacturing principles across our enterprise; and | |
• | the acquisition, completed in June 2006, of the remaining 51% equity interest that we did not previously own in Vitrocrisa, S. de R.L. de C.V. and related entities (which we call “Crisa”), our Mexican joint venture, and the subsequent restructuring of Crisa’s business. |
Libbey’s business strategy is complex and implementation of the strategy entails considerable risk, particularly given the financial and operational challenges currently facing Libbey.strategy. Nevertheless, we believed then, and the remainder of the Board of Directorswe continue to believe, that achievementsuccessful execution of this strategy is critical to increasing stockholder value in the long term. And we believetransformation of Libbey that Libbey’sis required to ensure long-term growth.
Accordingly, during 2005 we undertook a review of Libbey’s executive compensation program in order to determine whether it is adequately geared to promote thesuccessful execution of this complex and challenging business strategy described above. After evaluating the qualifications of a number of executive compensation advisors, werisky strategy. The Committee selected Hewitt Associates to assist us with our review. We requested that Hewitt perform a comprehensive study (which we refer to as the “Hewitt study”) of Libbey’sour executive compensation program, with the following objectives in mind:
• | Talent Attraction and Retention Objective. Our executive compensation program should be designed to attract and retain the highly qualified executives whose talents, energy and hard work are critical to accomplishment of our business strategies, including the strategy described above. | |
• | Motivational Objective. Our executive compensation program should provide sufficient financial incentives to motivate our executives to achieve our business objectives. | |
• | Alignment Objective. Our executive compensation program should align the interests of our executives with the long-term interests of our stockholders by awarding equity- and other performance-based compensation. |
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• | Reasonableness Objective. Our executive compensation program should balance the need to provide sufficient financial incentives to achieve the motivational objective described above with the need to ensure that executive compensation is reasonable. |
• | Base salary; | |
• | Performance-based compensation; | |
• | Stock options and restricted stock units (which we refer to as “RSUs”); | |
• | Other compensation; and | |
• | With respect to our executive officers, employment agreements, and with respect to our executive officers and other key members of senior management, change in control agreements. |
The results of Hewitt’s study are described in more detail under “How do Libbey’s executive compensation practices compare to those of its peer group?” below.
What are the components of Libbey’s executive officer compensation?
Executive officer compensation consists of annual base salary,potential for annual cash incentive awards and long-term incentive awards payable in cash. Based upon the Hewitt study, the Compensation Committee determined that our performance-based compensation awards. Perquisitescomponent provided inadequate financial incentives to achieve our motivational objective. In addition, the Compensation Committee determined that the performance-based compensation component should include an equity-based element in order to promote our alignment objective. Accordingly, beginning in 2006, the Compensation Committee instituted an incentive compensation program utilizing two types of awards:
• | An annual cash incentive award under our Senior Management Incentive Plan approved on March 31, 2006 (which we refer to as the “SMIP”); and | |
• | Performance share awards (which we refer to as “performance shares”) under our Long-Term Incentive Plan (which we refer to as our “LTIP”). |
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Target LTIP Award as a | ||||
Percentage of Base Salary | ||||
Named Executive | (%) | |||
J. Meier | 150 | |||
S. Sellick | 80 | |||
R. Reynolds | 115 | |||
K. Wilkes | 80 | |||
D. Ibele | 60 |
• | Matching contributions to our qualified defined contribution plan (namely, our 401(k) savings plan) on the same basis as we provide for all salaried employees. | |
• | Matching contributions to our Executive Savings Plan (which we refer to as our “ESP”). | |
• | Limited perquisites, consisting only of: |
• | tax return preparation and financial planning, together with related tax“gross-ups”; | |
• | an annual executive physical examination; and | |
• | executive car service for personal and business trips for the executive (and the executive’s spouse in the case of trips on which the spouse is accompanying the executive) between the Toledo, Ohio area and the Detroit/ Wayne County Metropolitan airport. |
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Change in Control”below.
As indicated above, weprogram. In discharging that responsibility, the Compensation Committee engaged Hewitt Associates to perform a comprehensive executive compensation study to determine whether Libbey’sour executive compensation practices areprogram was competitive with market compensation practices. Forour peers and, more importantly, whether it was adequately geared to accomplish our objectives. In connection with that purpose,study, Hewitt compared the net total compensation (base, bonus and long-term incentives) payable to 10 of Libbey’sour executives to net total compensation for comparable executive positions at Libbey’sour peer group. Hewitt’sConsistent with our reasonableness objective, the Hewitt study focused upon compensation opportunities at the 50th50th percentile of the peer group, reflecting our belief that Libbey’s executive compensation opportunities should be competitive with those at the 50th50th percentile of its peer group. Libbey’sOur peer group, which Hewitt suggested and wethe Compensation Committee approved, comprises 25the following industrial companies, which, at the time of the study (2005), were public companies of similar size, as measured by revenues,revenues.
Ameron International Corporation | Haggar Corp. | Polaris Industries Inc. | ||
Ametek, Inc. | Jacuzzi Brands, Inc. | Sypris Solutions, Inc. | ||
Applica Inc. | Jarden Corp. | Teradyne, Inc. | ||
Blyth Inc. | Johnson Outdoors Inc. | Thermadyne Holdings | ||
Brady Corporation | Lancaster Colony Corp. | Tupperware Corporation | ||
Church & Dwight Company, Inc. | Milacron Inc. | Waters Corporation | ||
EnPro Industries Inc. | Oneida Ltd. | Woodward Governor Company | ||
ESCO Technologies Inc. | Playtex Products, Inc. | Yankee Candle Co. | ||
Graco Inc. |
• | Average target bonus opportunities and actual bonuses for our executives were significantly below market. | |
• | The average values of long-term incentive opportunities and actual long-term incentive payouts for our executives were more than 80% below market. | |
• | Our executive compensation program lacked meaningful performance-based and other equity-based compensation opportunities. |
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• | in connection with the initial hiring of an executive; and | |
• | in early December of each year (through 2005) in conjunction with the regular meeting of the Board. |
• | The Compensation Committee has limited the total number of non-qualified stock options or restricted shares, as the case may be, that may be granted; | |
• | The exercise price of any stock options that the Chairman awards cannot be less than the closing price of our common stock on the date of grant; | |
• | Grants may not be made during “quiet periods”; and | |
• | The Chairman must report periodically to the Compensation Committee with respect to the awards that he has made pursuant to this delegation of authority. |
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• | as a result of misconduct, we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the securities laws; and | |
• | any of our executives knowingly engaged, or was grossly negligent in engaging, in the misconduct, or knowingly failed, or was grossly negligent in failing, to prevent the misconduct or is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, |
The study concludedthe financial document embodying the financial reporting requirement in question.
How are base salaries for Libbey’s executive officers determined?
We subjectively evaluate the following factors, none of which has any particular weight,relatively modest increases in determining whether the base salaries of Libbey’s executive officersour executives should be increased:made in order to bring base salaries to a competitive market practice; time in position; experience; and individual and corporate performance. Based upon Hewitt’s analysis, we concluded that Libbey’s base compensation for our executives is, on average, approximately 7% below base compensation for the comparable executive positions at companies in the 50th percentile of our peer group.level. In light of Libbey’sour financial challenges in 2005, management recommended,however, we declined to implement those salary increases in 2005. During the course of 2006, we increased the base salaries of all our executives, other than our CEO and COO, to bring them into line with competitive, 2006 base salaries. Although the Compensation Committee declined to increase the base salaries of our CEO and COO during 2006, the Compensation Committee determined that, in light of the significant progress made during 2006 with respect to achievement of our strategic initiatives, the base salaries of our CEO and COO would be increased prospectively, effective January 1, 2007, to $615,000 and $425,000 per year, respectively.
Target SMIP Award as a | ||||
Percentage of Base Salary | ||||
Named Executive | (%) | |||
J. Meier | 90 | |||
S. Sellick | 60 | |||
R. Reynolds | 75 | |||
K. Wilkes | 55 | |||
D. Ibele | 50 |
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• | Achievement of a specified level of quantifiable savings from implementation of LEAN initiatives; | |
• | Achievement, on time and within budget, of specified benchmarks with respect to the consolidation of Crisa’s two manufacturing facilities into a single facility; | |
• | Achievement ofstart-up of our new glassware manufacturing facility in China by a date certain and within the budgeted capital for the project; | |
• | Achievement of budgeted North American net sales; | |
• | Achievement of budgeted International IFO; | |
• | Development and implementation of specified compliance and risk management initiatives; and | |
• | Achievement of a new debt structure within specified parameters. |
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• | January 1, 2006 through December 31, 2006; |
• | January 1, 2006 through December 31, 2007; and |
• | January 1, 2006 through December 31, 2008. |
How is performance-based compensation determined?
In orderthe performance shares would be subject to align our executive officers’ interests more closely with those of stockholders, we believe that our executive officers’ incentive compensation should be linked directly to Libbey’s achievement of a specified financialpercentage of cumulative budgeted earnings before interest, income taxes, depreciation and non-financial objectives. amortization (which we refer to as “EBITDA”) over each performance cycle listed above.
Senior Management Incentive Plan. Under our Senior Management Incentive Plan,Committee elected to phase in, over a three-year period, the portion of each executive officer is eligible for an annual cash incentiveparticipant’s target LTIP award in an amount uprepresented by performance shares, with performance shares having a grant date fair value equal to a target percentageonly 16% of the executive officer’s base salary. respective participants’ target LTIP awards being awarded under the January 2006 LTIP.
• | Allocated 25% of the performance shares awarded pursuant to the January 2006 LTIP to the period January 1 through June 30, 2006, with the balance being allocated to the period July 1, 2006 through December 31, 2008; |
• | Terminated the January 2006 LTIP and cancelled the performance shares awarded on March 31, 2006, except to the extent necessary to enable the vesting of the performance shares (and issuance of the corresponding common shares) allocated to the period January 1 through June 30, 2006; |
• | Determined that we had, for the period January 1 through June 30, 2006, achieved 163% of budgeted EBITDA (based upon the budget submitted to the Board in February 2006), resulting in a payout of 200% of the performance shares allocated to that period, including the issuance to the Named Executives of the following number of common shares in February 2007: |
No. of Shares | ||||
Named Executive | Awarded | |||
J. Meier | 9,458 | |||
S. Sellick | 2.034 | |||
R. Reynolds | 5,135 | |||
K. Wilkes | 2,619 | |||
D. Ibele | 1,848 |
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• | Adopted a new LTIP (which we refer to as the “July 2006 LTIP”) that contemplates three performance cycles beginning on July 1, 2006 and ending on December 31 of each of 2006, 2007 and 2008, respectively; |
• | Awarded performance shares under the July 2006 LTIP, electing to accelerate the phase-in of the performance share component by awarding performance shares having a grant date fair value equal to 20% of the respective participants’ target LTIP awards; and |
• | Determined that vesting of the performance shares awarded under the July 2006 LTIP would be subject to achievement of a specified percentage of budgeted EBITDA, excluding special charges and as may be adjusted to take into account subsequent acquisitions or dispositions that may be significant, and that the relevant budget for measuring achievement of this performance goal would be the revised budget submitted to the Board on July 25, 2006. |
Named Executive Officer | No. of Shares | |||
J. Meier | 1,357 | |||
S. Sellick | 292 | |||
R. Reynolds | 737 | |||
K. Wilkes | 376 | |||
D. Ibele | 265 |
• | A grant of non-qualified stock options and RSUs vesting ratably over three years and having an exercise price equal to the closing price of our common stock on February 16, 2007, the first business day after we released our financial results for our 2006 fiscal year; and | |
• | A grant of non-qualified stock options and RSUs vesting ratably over four years and having an exercise price equal to the closing price of our common stock on February 16, 2007, the first business day after we released our financial results for our 2006 fiscal year. |
For 2005, the performance measures included components based upon income from operations (representing 20% of each executive officer’s potential award); earnings before interest, taxes, depreciation and amortization (representing 20% of each executive officer’s potential award); and net sales (representing 20% of each executive officer’s potential award), in each case as measured against our annual budget. The 2005 incentive measures also included an individual component (representing 40% of each executive officer’s potential award) based upon satisfaction by each executive of other goals developed early in 2005 and tailored specifically for the position that he or she holds. Examples of these other goals include quantifiable improvement in financial indicators of our success other than the financial measures indicated above, effective response to adverse economic conditions or to events beyond Libbey’s control, implementation of legal and ethical compliance and corporate governance initiatives and similar goals.
The Amended and Restated 1999 Equity Participation Plan of Libbey Inc. The Amended and Restated 1999 Equity Participation Plan of Libbey Inc., approved by the stockholders in 2004, is a broad-based plan that covers executive officers and other management personnel and that permits Libbey to grantcommon stock options to incentivize employees and to provide additional flexibility, if circumstances of our business and opportunities warrant, to grant other forms of equity-based compensation. We base the number of shares covered by option grants in large part upon the respective individuals’ potential to contribute to the earnings growth of Libbey. We set option exercise prices at market value on the date of grant in order to focus management’s attention on sustaining earnings performance over an extended term. We typically award nonqualified stock options that vest over a 4-year period, with the first installment vesting 1 year from the date of grant. Because the executives may not exercise options until they vest, and because the exercise price of the options is the fair market value on the date of grant, the executives will not realize any benefit as a result of the options in the absence of Libbey stock price appreciation over a period of time.60 consecutive days ending on February 16, 2007.
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Annual Retainer: | $25,000 | |
Equity Awards: | • On December 1, 2006, Restricted Stock Units (RSUs) vesting on January 2, 2007 | |
• On the date of each annual meeting of stockholders beginning with the annual meeting to be held on May 3, 2007, outright grant of shares of common stock, in each case having a grant date fair equal to $40,000(1) | ||
Audit Committee Chair Retainer: | $7,500 per year | |
Compensation Committee Chair and Nominating and Governance CommitteeChair Retainers: | $5,000 per year | |
Regular Board Meeting Fees: | $1,500 per meeting | |
Regular Committee Meeting Fees: | $750 per meeting | |
Telephonic Board or Committee Meeting Fees: | $500 per meeting | |
Other Fees: | $500 per half day for performance of special Board or committee business requested of the director |
(1) | The number of RSUs or shares of common stock, as the case may be, is determined by dividing $40,000 by the average closing price of our common stock for a period of 60 consecutive trading days ending on the date of grant. |
and long-term incentive components of executive compensation. Accordingly, in 2005, the only awards of long-term incentive compensation were awards of stock optionsIn addition, directors may elect, pursuant to the Amended and Restated 1999 Equity Participation2006 Deferred Compensation Plan of Libbey Inc.
We recently completed our reviewfor Outside Directors, to defer receipt of the equity and long-term incentive components of Libbey’s executive compensation program. As indicated above, we concluded thataward referred to above. Amounts deferred are, at the compensation opportunities that Libbey provides to its executives are significantly below market. Although a portionelection of the compensation opportunities that Libbey provides to its executives currently is performance-based, we also concluded that changes to the mix of long-term incentive compensation, including changes to the kinds of awards and the percentage of compensation that is performance-based, are desirable asapplicable director, payable either in a means to ensure that our executives’ compensation opportunities are competitive and drive Libbey’s performance. While we anticipate that we will finalize a new executive compensation during the 2nd quarter of 2006, we believe that the Amended and Restated 1999 Equity Participation Plan of Libbey Inc. does not provide us with adequate resources to put into place a new executive compensation program that is competitive and designed to drive Libbey’s performance. Accordingly, we have recommended to the Board of Directors, and it has approved, the Libbey Inc. 2006 Omnibus Incentive Plan. Welump sum or in turn are asking that you approve the 2006 Omnibus Incentive Plan so that we have the tools necessary to accomplish the executive compensation objectives set forth in this report.
How is compensation for Libbey’s Chief Executive Officer determined?
The compensation objectives and policies described above apply equally to the compensation of the Chief Executive Officer (“CEO”). We are directly responsible for determining the salary level of the CEO and for all awards and grants to the CEO under the incentive components of the compensation program.
The incentive components of the CEO’s compensation package in 2005 consisted of participation in the Senior Management Incentive Plan and an award of 17,500 stock options under the Amended and Restated 1999 Equity Participation Plan of Libbey Inc. Libbey did not achieve its financial performance goals for 2005 under the Senior Management Incentive Plan and, in light of Libbey’s financial challenges, we agreed with the CEO’s recommendation that we make no awards under the Senior Management Incentive Plan to the CEO or any other executive officer for 2005. Pending completion of the compensation study performed by Hewitt, we determined that the long-term incentive component of the CEO’s compensation for 2005 would consist of an award of the same number of options as were awarded to the CEO in 2004, although we recognized that the value of the 2005 award was significantly below the value of the 2004 award as well as the market level for long-term incentive compensation.
We recognize that accomplishment of Libbey’s strategic initiatives, including those described under “What are the objectives of Libbey’s executive compensation policies?” above, is critical to Libbey’s future profitability and competitiveness. Accordingly, it is imperative that we provide an overall compensation package for the CEO that is designed to motivate and reward him for driving Libbey to achieve these initiatives.
In that connection, it is significant to note that Hewitt’s study concluded that:
As indicated above, the disparity between the compensation opportunities that Libbey offers to its executives, including its CEO, and those offered by comparable companies in the 50th percentile of Libbey’s peer group is widest with respect to bonus and long-term incentive compensation opportunities. We believe that it is in the best interests of Libbey’s stockholders to close this gap by increasing,installments over a period of time these “at-risk” components of Libbey’s compensation program.
What actions hasselected by the Compensation Committee taken to ensure that executive compensation is reasonable?
director.
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• | Death of the executive officer; |
• | Permanent disability of the executive officer; or |
• | We terminate the executive officer’s employment without “cause” or the executive officer terminates his or her employment for “good reason.” |
• | the executive officer’s willful and continued failure (other than as a result of an incapacity due to physical or mental illness or after the executive officer issues a notice of termination for good reason) to substantially perform his or her duties after our Board delivers to the executive officer a written demand for substantial performance that specifically identifies the manner in which the Board believes that the executive officer has not substantially performed his or her duties; |
• | the executive officer’s willful and continued failure (other than as a result of an incapacity due to physical or mental illness or after the executive officer issues a notice of termination for good reason) to substantially follow and comply with the specific and lawful directives of our Board, as reasonably determined by our Board, after our Board delivers to the executive officer a written demand for substantial performance that specifically identifies the manner in which our Board believes that the executive officer has not substantially followed or complied with the directives of the Board; |
• | the executive officer’s willful commission of an act of fraud or dishonesty resulting in material economic or financial injury to Libbey; or |
• | the executive officer’s willful engagement in illegal conduct or gross misconduct, in each case which is materially and demonstrably injurious to Libbey. |
Based uponuntil we deliver to the tally sheet reviewedexecutive officer a copy of a resolution, duly adopted by the Compensation Committee, Mr. Meier would beaffirmative vote of not less than 3/4 of the entire membership of our Board at a meeting of our Board, finding that, in the Board’s good faith opinion, the Executive committed any of the conduct described in the definition of “Cause” above and specifying, in reasonable detail, the particulars of that conduct. The executive officer is entitled to receive reasonable notice of the benefits set forth below if, on December 31, 2006, Mr. Meier’s employment were terminated undermeeting of the Board and must be provided the opportunity, together with the executive’s legal counsel, to be heard before the Board. The executive also must be provided a reasonable opportunity to correct the conduct that he or she is alleged to have committed.
• | With respect to Mr. Meier only: |
• | He ceases to be our Chief Executive Officer reporting to the Board, or he fails to be elected as a member of the Board. | |
• | There is a change in the reporting or responsibilities of any other executive officer that has not been approved by Mr. Meier. |
• | With respect to each of our Named Executives other than Mr. Meier, the Named Executive ceases to be an executive officer reporting to another executive officer. |
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Termination for Good Reason or without Cause. If Mr. Meier were
• | With respect to each of our Named Executives, including Mr. Meier: |
• | His base salary is reduced by a greater percentage than the reduction applicable to any other executive officer. | |
• | There is a reduction in the incentive compensation target established for the position held by the Named Executive that is not applied in the same or similar manner to all other executive officers. | |
• | An executive benefit provided to the Named Executive is reduced or eliminated and the reduction or elimination is not applicable to all other executive officers in the same or similar manner; unless the reduction or elimination is with respect to the number of equity awards granted to the respective executive officers. | |
• | We materially breach the employment agreement and do not remedy our breach within 30 days after we receive written notice of breach from the Named Executive. |
• | We exercise our right not to extend the term of the Named Executive’s employment agreement beyond the then current term, unless we exercise that right with respect to all employment agreements (excluding change in control agreements) in effect with respect to our other executive officers. In that connection, the initial term of each employment agreement began on March 22, 2004 and expired on December 31, 2006. However, each employment agreement was automatically extended for an additional one-year period. Each employment agreement will continue to be extended automatically for additional one-year periods unless either we notify the Named Executive, or the Named Executive notifies us, on or before September 30 of the year in question, that the agreement will not be further extended. |
• | Benefits payable upon death — Within sixty (60) days after we receive written notice of appointment of a personal representative on behalf of the Named Executive’s estate, together with reasonable evidence of the personal representative’s authority to act: |
• | Base salary through the date of death; |
• | Annual and long-term incentive compensation paid at target but prorated over the period of each applicable plan through the date of death; |
• | In the case of Mr. Meier, two times his annual base salary, and in the case of all other Named Executives, one times his annual base salary, in each case at the rate in effect on the date of death and payable in a lump sum; |
• | Continuation of medical, prescription drug, dental and vision benefits for covered dependents for a period of 12 months following the date of death without any contribution by the dependents; |
• | Vesting, as of the date of death, of previously unvested equity participation awards, which will be exercisable for a period of three years following the date of death or for such longer period following the date of death as is specified by the award; and |
• | If and to the extent that the Named Executive is determined to be subject to excise tax under Section 4999 of the Internal Revenue Code (which applies to amounts paid in connection with a change in control), an amount (which we refer to as the “taxgross-up”) such that the amount retained by the Named Executive after the calculation and deduction of all applicable federal, state and local income, employment and excise taxes (including any interest or penalties imposed with respect to such taxes and taking into account any lost or reduced tax deductions on account of the |
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taxgross-up payment) is equal to the sum of the payments to which the Named Executive is entitled under the first five bullet points immediately above. |
• | Upon permanent disability, termination by us without cause or termination by the Named Executive with good reason — We must pay or provide the following benefits (subject to withholding) in accordance with our normal pay practices (which contemplate semi-monthly payments): |
• | Any long-term disability coverage in effect; |
• | Base salary accrued through the date of termination; |
• | Annual incentive compensation paid at the lesser of the annual target or the average percentage of the target paid to all other executive officers, but prorated over the period of each applicable plan through the date of termination; |
• | Long-term incentive compensation under all plans in effect at the date of termination, paid at target, but prorated over the period of each applicable plan through the date of termination; |
• | Two times (or, in the case of Mr. Meier, three times) the sum of annual base salary at the then current rate, payable in equal installments over a period of 24 months (or, in Mr. Meier’s case, 36 months) following the date of termination, although we may elect to pay this amount in a lump sum; |
• | Annual incentive compensation at the lesser of annual target or the average percentage of the target paid to all other executive officers, for all annual compensation periods ending 24 months (or, in Mr. Meier’s case, 36 months) after the date termination, with the final payment prorated to the end of the 24 month (or, in Mr. Meier’s case, 36 month) period; |
• | Continuation of medical, prescription drug, dental and life insurance benefits for a period of 24 months (or, in Mr. Meier’s case, 36 months) following the date of termination, without any contribution by the Named Executive or his dependents; |
• | Vesting, as of the date of termination, of previously unvested equity participation awards, which will be exercisable for a period of three years following the date of termination or for such longer period following the date of termination as is specified by the award granted to the Named Executive; and |
• | If and to the extent the Named Executive is determined to be subject to excise tax pursuant to Section 4999 of the Internal Revenue Code, the taxgross-up, as applied to the benefits provided in the eight bullet points immediately above. |
• | Termination upon permanent disability, by us without cause or by the Named Executive for good reason — Our obligation to pay the benefits described above is subject to the following conditions or other obligations of the respective Named Executives: |
• | The Named Executive’s execution and delivery of a release of all claims against us; and |
• | The Named Executive’s obligations with respect to: confidentiality of our proprietary information; assignment to us of any inventions and copyrights obtained in connection with his employment; assisting us with any litigation with respect to which the Named Executive has, or may have reason to have, knowledge, information or expertise; not interfering with customer accounts for 24 months (or, in Mr. Meier’s case, for 36 months); not competing for 24 months (or, in Mr. Meier’s case, 36 months); not diverting business opportunities of which the Named Executive became aware while an employee for 24 months or, in Mr. Meier’s case, 36 months; not soliciting our employees for 24 months or, in Mr. Meier’s case, 36 months; and not disparaging us for 24 months or, in Mr. Meier’s case, 36 months. |
• | Termination for any other reason as to which benefits are payable under the agreement — Our obligation to pay benefits is not subject to receipt of a release of claims signed by the Named |
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Executive, but the Named Executive or his personal representative must covenant with respect to: confidentiality of our proprietary information; assignment to us of any inventions and copyrights obtained in connection with his employment; assisting us with any litigation with respect to which the Named Executive has, or may have reason to have, knowledge, information or expertise; not interfering with customer accounts for 24 months (or, in Mr. Meier’s case, for 36 months); not competing for 24 months (or, in Mr. Meier’s case, 36 months); not diverting business opportunities of which the Named Executive became aware while an employee for 24 months or, in Mr. Meier’s case, 36 months; not soliciting our employees for 24 months or, in Mr. Meier’s case, 36 months; and not disparaging us for 24 months or, in Mr. Meier’s case, 36 months. |
• | We terminate the executive’s employment, without cause, within two years following a change in control; |
• | The executive terminates his employment for good reason (as defined below) within two years following a change in control; or |
• | The executive voluntarily terminates his employment within 30 days after the first anniversary of the change in control. |
• | We assign to the executive duties that are inconsistent with the executive’s position immediately prior to the change in control, or we significantly and adversely alter the nature or status of the executive’s responsibilities or the conditions of the executive’s employment from those in effect immediately prior to the change in control (including if we cease to be a publicly-held corporation), or we take any other action that results in a material diminution in the executive’s position, authority, duties or responsibilities; |
We reduce the executive’s annual base salary as in effect on the date of the Named Executive’s change in control agreement and as increased from time to time thereafter; |
• | We relocate the offices at which the executive principally is employed immediately prior to the date of the change in control (which we refer to as the executive’s “Principal Location”) to a location more than 30 miles from that location, or we require the executive, without his or her written consent, to be |
• | We fail to pay to the executive any portion of his |
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• | We fail to continue in effect any material compensation or benefit plan or practice in which the executive participates immediately prior to the change in control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to the plan, or we fail to continue the executive’s participation in the plan (or in the substitute or alternative plan) on a basis that is not materially less favorable, both in terms of the amount of benefits provided and the level of the executive’s participation relative to other participants, as existed at the time of the change in control; |
• | We fail to continue to provide the executive with benefits substantially similar in the aggregate to those enjoyed by the executive under any of our life insurance, medical, health and accident, disability, pension, retirement or other benefit plans or practices in which the executive and his or her eligible family members were participating at the time of the change in control, or we take any action that would directly or indirectly materially reduce any of those benefits, or we fail to provide the executive with the number of paid vacation days to which the executive is entitled on the basis of years of service with us in accordance with our normal vacation policy in effect at the time of the change in control; |
• | We fail to obtain a satisfactory agreement from any successor to assume and agree to perform our obligations under the executive’s change in control agreement; |
• | We purport to terminate the executive’s employment without complying with our obligations with respect to providing notice of termination; or |
• | The executive continues, after giving us written notice of his or her objection, to be subjected to harassing or denigrating treatment in the workplace that is inconsistent with his or her position with us. |
• | Amount payable and timing of payments — With respect to the Named Executives, we are obligated to pay or provide the following benefits, at the times indicated, if a Named Executive’s employment is terminated in accordance with any of the triggers discussed above: |
• | Base salary when due through the date of termination at the rate in effect at the time the notice of termination is given, plus all other amounts to which the Named Executive is entitled under any compensation plan or practice that we have in place at the time the payments are due; |
• | Within five days after the date of termination, a lump sum severance equal to the sum of: |
• | Three times the Named Executive’s annual base salary in effect as of |
• | Three times the greater of |
• | Immediate vesting of restricted stock grants, with the shares of stock to be |
Mr. Meier would be entitled immediately, and for a period of 3 years after termination, to exercise all stock options granted in prior years (all of which previously have been disclosed). The
• | Immediate vesting of unvested stock options; |
• | For one year following |
• | For two years following the date of termination, outplacement services; |
• | For 36 months after the date of termination, medical and dental health benefits at least equal to those |
Option Grant Date | Number of Shares Underlying Outstanding Options | Grant Date Exercise Price( 1 ) | Value at Lowest Stock Price ($10.22/Share) | Value at Average Stock Price ($17.58/Share) | Value at Highest Stock Price ($24.91/Share) | |||||||||
December 2, 1996 | 25,000 | $ | 26.88 | $ | 0 | $ | 0 | $ | 0 | |||||
June 5, 1998 | 30,000 | $ | 38.44 | $ | 0 | $ | 0 | $ | 0 | |||||
August 24, 1999 | 30,000 | $ | 31.38 | $ | 0 | $ | 0 | $ | 0 | |||||
September 8, 2000 | 30,000 | $ | 32.31 | $ | 0 | $ | 0 | $ | 0 | |||||
November 13, 2001 | 35,000 | $ | 30.55 | $ | 0 | $ | 0 | $ | 0 | |||||
November 20, 2002 | 35,000 | $ | 23.93 | $ | 0 | $ | 0 | $ | 0 | |||||
December 15, 2003 | 17,500 | $ | 28.53 | $ | 0 | $ | 0 | $ | 0 | |||||
December 10, 2004 | 17,500 | $ | 20.39 | $ | 0 | $ | 0 | $ | 79,100 | |||||
December 8, 2005 | 17,500 | $ | 11.79 | $ | 0 | $ | 101,325 | $ | 229,600 | |||||
Totals | 237,500 | N/A | $ | 0 | $ | 101,325 | $ | 308,700 | ||||||
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Executive is re-employed during that period and is eligible to receive medical and dental benefits from the new employer, our obligations are reduced to the extent comparable benefits are actually received by the Named Executive during the36-month period following the date of termination; |
• | Full and immediate vesting of accrued benefits under any qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plans that we maintain for the Named Executive’s benefit, plus additional fully vested benefits in an amount equal to the benefits that would have accrued had the Named Executive continued his or her employment for three additional years following the date of termination, provided that (a) if the then-present value of all those benefits is less than $250,000, we are obligated to pay a lump sum equal to the difference between $250,000 and the then-present value of the benefits, and (b) with respect to Mr. Meier and Mr. Reynolds, the full vesting of benefits applies to the pension plan benefits without reduction for age; |
• | Taxgross-up; and |
• | Directors and officers liability coverage for the Named Executive for six years after the date of termination, with policy limits not less than those in effective immediately prior to the change in control. |
Option Grant Date | Number of Shares Underlying Outstanding Options | Grant Date Exercise Price( 1 ) | Value at Lowest Stock Price ($10.22/Share) | Value at Average Stock Price ($17.58/Share) | Value at Highest Stock Price ($24.91/Share) | |||||||||
December 2, 1996 | 25,000 | $ | 26.88 | $ | 0 | $ | 0 | $ | 0 | |||||
June 5, 1998 | 30,000 | $ | 38.44 | $ | 0 | $ | 0 | $ | 0 | |||||
August 24, 1999 | 30,000 | $ | 31.38 | $ | 0 | $ | 0 | $ | 0 | |||||
September 8, 2000 | 30,000 | $ | 32.31 | $ | 0 | $ | 0 | $ | 0 | |||||
November 13, 2001 | 35,000 | $ | 30.55 | $ | 0 | $ | 0 | $ | 0 | |||||
November 20, 2002 | 35,000 | $ | 23.93 | $ | 0 | $ | 0 | $ | 0 | |||||
December 15, 2003 | 17,500 | $ | 28.53 | $ | 0 | $ | 0 | $ | 0 | |||||
December 10, 2004 | 17,500 | $ | 20.39 | $ | 0 | $ | 0 | $ | 79,100 | |||||
December 8, 2005 | 17,500 | $ | 11.79 | $ | 0 | $ | 101,325 | $ | 229,600 | |||||
Totals | 237,500 | N/A | $ | 0 | $ | 101,325 | $ | 308,700 | ||||||
Termination following Change in Control. If (a) prior to December 31, 2006, a “Change in Control” were to occur (as described under “Change in Control Agreements” below) and (b) on December 31, 2006, (i) Mr. Meier were to terminate his employment for “good reason” or (ii) Libbey were to terminate his employment without “cause,” in each case pursuant to and as defined in Mr. Meier’s change in control agreement, he would be entitled to the following benefits:
Based upon this review,these reviews and discussions into account, the Compensation Committee findshas recommended to the Board of Directors that the total compensation (and,Compensation Discussion and Analysis be included in the case of severance and change-in-control scenarios, the potential payouts), in the aggregate, and the mix of components of that compensation, with respect to Mr. Meier to be reasonable and not excessive, particularly given his long service to Libbey and its parent.
What is the Compensation Committee’s policy regarding deductibility of compensation?
Pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), publicly-held corporations are prohibited from deducting compensation paid to the named executive officers, as of the end of the fiscal year, in excess of $1 million, unless the compensation is “performance-based.” It is the Compensation Committee’s policy that the compensation paid to executive officers qualifies for deductibility to the extent not inconsistent with Libbey’s fundamental compensation policies. In furtherance of this policy, the stockholders have approved The Amended and Restated 1999 Equity Participation Plan of Libbey Inc. to satisfy Section 162(m)’s performance-based compensation requirements. The 2006 Omnibus Incentive Plan that we are asking you to approve also would satisfy the requirements for performance-based compensation under Section 162(m).
proxy statement.
Chair
29
Executive Employment Agreements:
We entered into new employment agreements in 2004 (the “New Employment Agreements”) with each of our executive officers. Under the New Employment Agreements, the executive officers are entitled to receive their base salaries and to participate in designated benefit plans of Libbey. Each employment agreement provides that the officer’s employment is not for any specified term and may be terminated at any time. Each New Employment Agreement provides that, in the event of the relevant officer’s termination other than for “cause” (as defined in the agreements), payment of base salary, annual incentive compensation and certain employee benefits will continue for 3 years in Mr. Meier’s case and 2 years in the case of the other executive officers who are parties to the New Employment Agreements. In addition, the New Employment Agreements provide for the acceleration of vesting of stock options upon the relevant officer’s termination other than for “cause.” The employment agreements also provide that the officer’s base salary may be adjusted periodically and that benefit plans in which the officer is entitled to participate may be adjusted or terminated by Libbey at any time, but that no vested or accrued benefit may be adversely affected.
To induce and help assure continuity of management and operations, we have entered into agreements (the “Agreements”) with certain executives, including the executive officers named in the Executive Summary Compensation Table, to provide for certain severance benefits if an executive’s employment is terminated following a Change in Control (as defined in the Agreements).
Under the Agreements with the named executive officers, benefits are paid if, after a Change in Control, we terminate a named executive officer other than for Cause (as defined in the Agreements) or disability or if the named executive officer terminates employment for “Good Reason” (as specified in the Agreements) or for any reason within a period of thirty days following the first anniversary of a Change in Control. These severance benefits include: (a) the executive’s salary through the termination date; (b) severance pay equal to 3 times the named executive’s annual base salary and 3 times the greater of the target annual bonus or the annual bonus for the prior year; (c) acceleration of the vesting of stock options; (d) medical and health benefits for 3 years following termination, reduced to the extent comparable benefits are received from another employer; (e) outplacement and financial planning services; and (f) full vesting in, and additional 3-year accrual of benefits under, our qualified and non-qualified retirement plans and any additional amount necessary to provide a minimum lump sum benefit of $250,000 under these plans. The Agreements provide that the benefits are net of any applicable federal excise tax and that we will pay legal fees and expenses incurred by the named executive to enforce his or her rights under the Agreements.
Executive Summary Compensation Table
Change in | ||||||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Option | Incentive | Compensation | All Other | ||||||||||||||||||||||||||||||||
Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($)(1) | ($) | ($)(2) | ($)(3) | ($)(4) | ($) | |||||||||||||||||||||||||||
John F. Meier | 2006 | 558,000 | 0 | 82,500 | 0 | 631,767 | 0 | 18,656 | 1,290,923 | |||||||||||||||||||||||||||
Chairman and Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
Scott M. Sellick | 2006 | 252,675 | 0 | 17,744 | 0 | 189,506 | 12,579 | 6,965 | 479,469 | |||||||||||||||||||||||||||
Vice President, Chief Financial Officer | ||||||||||||||||||||||||||||||||||||
Richard I. Reynolds | 2006 | 395,184 | 0 | 44,794 | 0 | 366,928 | 0 | 12,530 | 819,436 | |||||||||||||||||||||||||||
Executive Vice President, Chief Operating Officer | ||||||||||||||||||||||||||||||||||||
Kenneth G. Wilkes | 2006 | 300,315 | 0 | 22,848 | 0 | 213,734 | 22,022 | 12,863 | 571,782 | |||||||||||||||||||||||||||
Vice President, General Manager, International Operations | ||||||||||||||||||||||||||||||||||||
Daniel P. Ibele | 2006 | 240,097 | 0 | 16,118 | 0 | 158,224 | 16,124 | 10,403 | 440,966 | |||||||||||||||||||||||||||
Vice President, General Sales Manager, North America |
(1) | Represents the 2006 compensation cost that we recorded, for financial reporting purposes in accordance with FAS 123R, with respect to common stock issued in settlement of performance shares earned for 2006. |
|
| ||||||||||||||||
(2) | Represents annual cash incentive compensation that we paid to the Named Executives in February 2007 for performance during 2006. |
|
| ||||||||||||
(3) |
Change in Pension | Nonqualified Deferred | |||||||
Value | Compensation Earnings | |||||||
Named Executive | ($) | ($) | ||||||
J. Meier | (57,009 | ) | 0 | |||||
S. Sellick | 12,579 | 0 | ||||||
R. Reynolds | (39,897 | ) | 0 | |||||
K. Wilkes | 22,022 | 0 | ||||||
D. Ibele | 16,124 | 0 |
30
| ||||||||||
| Includes annual company contributions to our qualified and |
| ||||||
J. Meier | ||||||
S. Sellick | ||||||
R. Reynolds | 275 | |||||
K. Wilkes | 1,240 | |||||
D. Ibele | 1,015 |
Grant Date | ||||||||||||||||||||||||||||||
Estimated Future Payouts | Fair Value | |||||||||||||||||||||||||||||
Under Non-Equity Incentive | Estimated Future Payouts Under Equity | of Stock | ||||||||||||||||||||||||||||
Plan Awards(1) | Incentive Plan Awards | and Option | ||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | Awards | ||||||||||||||||||||||||
Name | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | ($) | ||||||||||||||||||||||
J. Meier | 251,100 | 502,200 | 1,004,400 | |||||||||||||||||||||||||||
March 31, 2006(2) | 2,365 | 4,729 | 9,458 | 66,963 | ||||||||||||||||||||||||||
September 27, 2006(3) | 7,982 | 15,963 | 31,926 | 15,538 | ||||||||||||||||||||||||||
S. Sellick | 67,500 | 135,000 | 270,000 | |||||||||||||||||||||||||||
March 31, 2006(2) | 509 | 1,017 | 2,034 | 14,401 | ||||||||||||||||||||||||||
September 27, 2006(3) | 1,717 | 3,433 | 6,866 | 3,343 | ||||||||||||||||||||||||||
R. Reynolds | 148,194 | 296,388 | 592,776 | 0 | 0 | 0 | ||||||||||||||||||||||||
March 31, 2006(2) | 1,284 | 2,568 | 5,135 | 36,356 | ||||||||||||||||||||||||||
September 27, 2006(3) | 4,334 | 8,667 | 17,334 | 8,439 | ||||||||||||||||||||||||||
K. Wilkes | 79,671 | 159,341 | 318,6810 | 0 | 0 | 0 | ||||||||||||||||||||||||
March 31, 2006(2) | 655 | 1,310 | 2,619 | 18,543 | ||||||||||||||||||||||||||
September 27, 2006(3) | 2,211 | 4,421 | 8,842 | 4,305 | ||||||||||||||||||||||||||
D. Ibele | 52,594 | 105,187 | 210,374 | 0 | 0 | 0 | ||||||||||||||||||||||||
March 31, 2006(2) | 462 | 924 | 1,848 | 13,084 | ||||||||||||||||||||||||||
September 27, 2006(3) | 1,560 | 3,120 | 6,240 | 3,034 |
31
| ||||||||||||||||||||
(1) | Represents awards under the SMIP for 2006. Awards made under the SMIP are payable only in cash. For 2006, the scale for payouts with respect to the corporate component was as follows: |
Percentage of | Payout as | |||||||
Budgeted IFO | Percentage of Target | |||||||
Payout Level | (%) | (%) | ||||||
Threshold | 95 | % | 50 | % | ||||
Target | 100 | % | 100 | % | ||||
Maximum | 115 | % | 200 | % |
| ||||||||||||||||||||
(2) | Represents performance shares awarded under the January 2006 LTIP and subsequently allocated to the period January 1 through June 30, 2006. |
| Represents performance shares awarded under the July 2006 LTIP for the three performance cycles beginning July 1, 2006. The following table shows the portions of those grants that are allocable to each of the performance cycles: |
J. Meier | ||||
First Cycle | 1,756 | |||
Second Cycle | ||||
Third Cycle | 8,939 | |||
S. Sellick | ||||
First Cycle | 378 | |||
Second Cycle | 1,133 | |||
Third Cycle | 1,922 | |||
R. Reynolds | ||||
First Cycle | 953 | |||
Second Cycle | 2,860 | |||
Third Cycle | 4,854 | |||
K. Wilkes | ||||
First Cycle | 486 | |||
Second Cycle | 1,459 | |||
Third Cycle | 2,476 | |||
D. Ibele | ||||
First Cycle | 343 | |||
Second Cycle | 1,030 | |||
Third Cycle | 1,747 |
32
Option Awards | Stock Awards | |||||||||||||||||||||||
Equity Incentive | ||||||||||||||||||||||||
Number of | Number of | Plan Awards: | Equity Incentive Plan | |||||||||||||||||||||
Securities | Securities | Number of | Awards: Market or | |||||||||||||||||||||
Underlying | Underlying | Unearned Shares, | Payout Value of | |||||||||||||||||||||
Unexercised | Unexercised | Option | Units or Other | Unearned Shares, | ||||||||||||||||||||
Options | Options | Exercise | Option | Rights That Have | Units or Other Rights | |||||||||||||||||||
(#) | (#) | Price | Expiration | Not Vested | That Have Not Vested | |||||||||||||||||||
Name | Exercisable | Unexercisable(1) | ($) | Date | (#)(2) | ($)(3) | ||||||||||||||||||
J. Meier | 30,000 | 0 | 38.4375 | 06/06/08 | 14,207 | 174,888 | ||||||||||||||||||
30,000 | 0 | 31.3750 | 08/25/09 | |||||||||||||||||||||
30,000 | 0 | 32.3125 | 09/08/10 | |||||||||||||||||||||
35,000 | 0 | 30.5500 | 11/14/11 | |||||||||||||||||||||
35,000 | 0 | 23.9300 | 11/21/12 | |||||||||||||||||||||
17,500 | 0 | 28.5300 | 12/16/13 | |||||||||||||||||||||
17,500 | 0 | 20.3900 | 12/11/14 | |||||||||||||||||||||
7,000 | 10,500 | 11.7900 | 12/09/15 | |||||||||||||||||||||
S. Sellick | 500 | 0 | 38.4375 | 06/06/08 | 3,055 | 36,966 | ||||||||||||||||||
750 | 0 | 31.3750 | 11/26/08 | |||||||||||||||||||||
1,250 | 0 | 31.3750 | 08/25/09 | |||||||||||||||||||||
1,500 | 0 | 32.3125 | 09/08/10 | |||||||||||||||||||||
3,000 | 0 | 31.1500 | 02/23/11 | |||||||||||||||||||||
3,000 | 0 | 30.5500 | 11/14/11 | |||||||||||||||||||||
7,000 | 0 | 23.9300 | 11/21/12 | |||||||||||||||||||||
7,000 | 0 | 28.5300 | 12/16/13 | |||||||||||||||||||||
8,000 | 0 | 20.3900 | 12/11/14 | |||||||||||||||||||||
4,000 | 6,000 | 11.7900 | 12/09/15 | |||||||||||||||||||||
R. Reynolds | 22,000 | 0 | 38.4375 | 06/06/08 | 7,714 | 94,959 | ||||||||||||||||||
22,000 | 0 | 31.3750 | 08/25/09 | |||||||||||||||||||||
22,000 | 0 | 32.3125 | 09/08/10 | |||||||||||||||||||||
27,000 | 0 | 30.5500 | 11/14/11 | |||||||||||||||||||||
27,000 | 0 | 23.9300 | 11/21/12 | |||||||||||||||||||||
13,500 | 0 | 28.5300 | 12/16/13 | |||||||||||||||||||||
13,500 | 0 | 20.3900 | 12/11/14 | |||||||||||||||||||||
5,400 | 8,100 | 11.7900 | 12/09/15 |
33
Option Awards | Stock Awards | |||||||||||||||||||||||
Equity Incentive | ||||||||||||||||||||||||
Number of | Number of | Plan Awards: | Equity Incentive Plan | |||||||||||||||||||||
Securities | Securities | Number of | Awards: Market or | |||||||||||||||||||||
Underlying | Underlying | Unearned Shares, | Payout Value of | |||||||||||||||||||||
Unexercised | Unexercised | Option | Units or Other | Unearned Shares, | ||||||||||||||||||||
Options | Options | Exercise | Option | Rights That Have | Units or Other Rights | |||||||||||||||||||
(#) | (#) | Price | Expiration | Not Vested | That Have Not Vested | |||||||||||||||||||
Name | Exercisable | Unexercisable(1) | ($) | Date | (#)(2) | ($)(3) | ||||||||||||||||||
K. Wilkes | 11,500 | 0 | 38.4375 | 06/06/08 | 3,935 | 48,440 | ||||||||||||||||||
11,500 | 0 | 31.3750 | 08/25/09 | |||||||||||||||||||||
11,500 | 0 | 32.3125 | 09/08/10 | |||||||||||||||||||||
17,000 | 0 | 30.5500 | 11/14/11 | |||||||||||||||||||||
17,000 | 0 | 23.9300 | 11/21/12 | |||||||||||||||||||||
11,000 | 0 | 28.5300 | 12/16/13 | |||||||||||||||||||||
12,000 | 0 | 20.3900 | 12/11/14 | |||||||||||||||||||||
4,800 | 7,200 | 11.7900 | 12/09/15 | |||||||||||||||||||||
D. Ibele | 5,500 | 0 | 38.4375 | 06/06/08 | 2,777 | 34,185 | ||||||||||||||||||
5,500 | 0 | 31.3750 | 08/25/09 | |||||||||||||||||||||
2,000 | 0 | 27.1250 | 12/17/09 | |||||||||||||||||||||
8,000 | 0 | 32.3125 | 09/08/10 | |||||||||||||||||||||
13,500 | 0 | 30.5500 | 11/14/11 | |||||||||||||||||||||
13,500 | 0 | 23.9300 | 11/21/12 | |||||||||||||||||||||
9,500 | 0 | 28.5300 | 12/16/13 | |||||||||||||||||||||
11,000 | 0 | 20.3900 | 12/11/14 | |||||||||||||||||||||
6,600 | 4,400 | 11.7900 | 12/09/15 |
| Twenty percent of these options will vest on each of December 8, 2007, December 8, 2008 and |
(2) | Represents the |
Option Grants During Fiscal 2005
The following table sets forth information on stock option grants to the named executive officers during 2005 pursuant to The Amended and Restated 1999 Equity Participation Plan of Libbey Inc. We have not granted stock appreciation rights to any of the named executive officers.
Individual Grants | Expiration Date | Grant Date Value | ||||||||||
Name | Number of Shares Underlying Options Granted (#) | % of Total Options Granted to Employees in Fiscal Year | Exercise Price | Grant Date Present Value( 1 ) | ||||||||
John F. Meier | 17,500 | 12.00 | $ | 11.79 | 12/09/15 | $ | 66,850 | |||||
Richard I. Reynolds | 13,500 | 9.26 | $ | 11.79 | 12/09/15 | $ | 51,570 | |||||
Kenneth G. Wilkes | 12,000 | 8.23 | $ | 11.79 | 12/09/15 | $ | 45,840 | |||||
Daniel P. Ibele | 11,000 | 7.54 | $ | 11.79 | 12/09/15 | $ | 42.020 | |||||
Susan Allene Kovach | 11,000 | 7.54 | $ | 11.79 | 12/09/15 | $ | 42,020 |
(3) | Represents the aggregate market value of shares of common stock underlying unearned and |
Present value is calculated using the Black-Scholes option pricing model. Assumptions used in calculating the reported values include (a) an expected average volatility of 34.6%, (b) a weighted average risk-free rate of return of 4.29%, (c) dividend yield of 2.3% and (d) a time of exercise of 6.1 years. No adjustments were made for non-transferability or forfeiture.34
Name | Shares Acquired on Exercise | Value Realized | Underlying Options at FY-end Exercisable/Unexercisable | In-the-Money Options at FY-end Exercisable/Unexercisable | |||||||||||
John F. Meier | 0 | $ | 0 | 220,000 | 17,500 | $ | 0 | $ | 0 | ||||||
Richard I. Reynolds | 0 | $ | 0 | 163,000 | 13,500 | $ | 0 | $ | 0 | ||||||
Kenneth G. Wilkes | 0 | $ | 0 | 100,000 | 12,000 | $ | 0 | $ | 0 | ||||||
Daniel P. Ibele | 0 | $ | 0 | 71,500 | 11,000 | $ | 0 | $ | 0 | ||||||
Susan Allene Kovach | 0 | $ | 0 | 22,000 | 11,000 | $ | 0 | $ | 0 |
July 2006 LTIP:
Option Awards | Stock Awards | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares | Value Realized | Shares | Value Realized | |||||||||||||
Acquired on | on | Acquired on | on | |||||||||||||
Exercise | Exercise | Vesting | Vesting | |||||||||||||
Name | (#) | ($) | (#) | ($)(1) | ||||||||||||
J. Meier | 0 | 0 | 10,815 | 136,913 | ||||||||||||
S. Sellick | 0 | 0 | 2,326 | 29,446 | ||||||||||||
R. Reynolds | 0 | 0 | 5,872 | 74,337 | ||||||||||||
K. Wilkes | 0 | 0 | 2,995 | 37,915 | ||||||||||||
D. Ibele | 0 | 0 | 2,113 | 26,750 |
(1) | Represents the sum of (a) the product of the number of performance shares earned under the January 2006 LTIP for the period January 1 through June 30, 2006, and $12.79, the closing price of our common stock on January 3, 2007, the first business day after December 31, 2006 (the date on which such shares vested) and (b) the product of the number of performance shares earned under the July 2006 LTIP for the First Cycle (July 1 through December 31, 2006), and $11.75, the closing price of our common stock on February 5, 2007, which is the date on which the Compensation Committee determined that such shares had been earned. |
We maintain
The following table illustrates the estimated annual retirement benefits that would be provided by the Special Minimum Benefit under the Salary Plan and the SERP in various average earnings classifications upon normal retirement at age 65 for those executive officers named in the Executive Summary Compensation Table for whom the Special Minimum Benefit is anticipated to apply, namely Messrs. Meier and Reynolds:
Highest | Years of Credited Service | |||||||||||||
15 | 20 | 25 | 30 | 35 | 40 | 45 | ||||||||
$ 100,000 | 18,444 | 24,592 | 30,740 | 36,888 | 43,036 | 45,536 | 48,306 | |||||||
$ 125,000 | 23,649 | 31,532 | 39,415 | 47,298 | 55,181 | 58,306 | 61,431 | |||||||
$ 150,000 | 28,854 | 38,472 | 48,090 | 57,708 | 67,326 | 71,076 | 74,826 | |||||||
$ 175,000 | 34,059 | 45,412 | 56,765 | 68,118 | 79,471 | 83,846 | 88,221 | |||||||
$ 200,000 | 39,264 | 52,352 | 65,440 | 78,528 | 91,616 | 96,616 | 101,616 | |||||||
$ 225,000 | 44,469 | 59,292 | 74,115 | 88,938 | 103,761 | 109,386 | 115,011 | |||||||
$ 250,000 | 49,674 | 66,232 | 82,790 | 99,348 | 115,906 | 122,156 | 128,406 | |||||||
$ 300,000 | 60,084 | 80,112 | 100,140 | 120,168 | 140,196 | 147,696 | 155,196 | |||||||
$ 400,000 | 80,904 | 107,872 | 134,840 | 161,808 | 188,776 | 198,776 | 208,776 | |||||||
$ 450,000 | 91,314 | 121,752 | 152,190 | 182,628 | 213,066 | 224,316 | 235,566 | |||||||
$ 500,000 | 101,724 | 135,632 | 169,540 | 203,448 | 237,356 | 249,856 | 262,356 | |||||||
$ 600,000 | 122,544 | 163,392 | 204,240 | 245,088 | 285,936 | 300,936 | 315,936 | |||||||
$ 700,000 | 143,364 | 191,152 | 238,940 | 286,728 | 334,516 | 352,016 | 369,516 | |||||||
$ 800,000 | 164,184 | 218,912 | 273,640 | 328,368 | 383,096 | 403,096 | 423,096 | |||||||
$ 900,000 | 185,044 | 246,672 | 308,340 | 370,008 | 431,676 | 454,176 | 476,676 | |||||||
$1,000,000 | 205,824 | 274,432 | 343,040 | 411,648 | 480,256 | 505,256 | 530,256 | |||||||
$1,100,000 | 226,644 | 302,192 | 377,740 | 453,288 | 528,836 | 556,336 | 583,836 | |||||||
$1,200,000 | 247,464 | 329,952 | 412,440 | 494,928 | 577,416 | 607,416 | 637,416 |
At December 31, 2005, Messrs. Meier, Reynolds, Wilkes and Ibele and Ms. Kovach had total Credited Service under the Salary Plan and the SERP of 35 years, 35 years, 12 years and 22 years and 2 years, respectively.
The above pension table sets forth benefits calculatedbased on a straight-life annuity basis and reflects the greater of two benefit formulas: (1) the regular benefit,cash balance formula, which is based upon the Special Minimum Benefitvalue of a notional account that had an opening balance determined based upon the final average pay formula described below as of January 1, 1998, or (2) the “grandfathered” benefit available underfinal average pay formula described below. Under the cash balance formula, in effectthe account balance is increased each year with a contribution amount based on the sum of age and years of service with Libbey and with interest based upon the30-year Treasury rate.
35
Annual covered
Under the amended retirement plans effective January 1, 1998, each participant in the plans on December 31, 1997, is credited with an opening cash balance equal to the single sum amount
Number of Years | Present Value of | Payments During | ||||||||||||
Credited Service | Accumulated Benefit | Last Fiscal Year | ||||||||||||
Name | Plan Name | (#)(1) | ($)(2) | ($) | ||||||||||
J. Meier | Salary Plan | 36.25 | 1,253,974 | 0 | ||||||||||
SERP | 36.25 | 3,751,721 | 0 | |||||||||||
S. Sellick | Salary Plan | 9.33 | 62,085 | 0 | ||||||||||
SERP | 9.33 | 3,704 | 0 | |||||||||||
R. Reynolds | Salary Plan | 36.83 | 1,238,895 | 0 | ||||||||||
SERP | 36.83 | 1,950,201 | 0 | |||||||||||
K. Wilkes | Salary Plan | 13.42 | 124,846 | 0 | ||||||||||
SERP | 13.42 | 76,415 | 0 | |||||||||||
D. Ibele | Salary Plan | 23.58 | 164,262 | 0 | ||||||||||
SERP | 23.58 | 35,078 | 0 |
(1) | Represents actual years of service to Libbey and Owens-Illinois Inc, our former parent company. We have not granted additional years of credited service to any of our executives. | |
(2) | Amounts were determined based on the assumptions outlined in our audited financial statements for the year ended December 31, 2006, except that assumptions relating to expected retirement age are as follows. Participants who are eligible for pension benefits under the Salary Plan’s final average pay formula (Messrs. Meier and Reynolds) are assumed to retire at the earliest age at which they can receive an unreduced benefit under the Salary Plan. All other participants are assumed to receive benefits under the cash balance design at their normal retirement age of 65. |
36
interest are credited
Executive | Registrant | Aggregate | Aggregate | |||||||||||||||||
Contributions in | Contributions in | Earnings in Last | Withdrawals/ | Aggregate Balance | ||||||||||||||||
Last FY | Last FY | FY | Distributions | at Last FYE | ||||||||||||||||
Name | ($) | ($)(1) | ($)(2) | ($) | ($)(3) | |||||||||||||||
J. Meier | 32,550 | 9,765 | 69,803 | 0 | 563,848 | |||||||||||||||
S. Sellick | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
R. Reynolds | 9,977 | 4,988 | 42,582 | 0 | 324,879 | |||||||||||||||
K. Wilkes | 8,273 | 2,364 | 11,327 | 0 | 93,059 | |||||||||||||||
D. Ibele | 0 | 0 | 1,127 | 0 | 8,312 |
(1) | Included in column headed“All Other Compensation”in the“Summary Compensation Table”above. | |
(2) | Not included in column headed“Change in Pension Value and Nonqualified Deferred Compensation Earnings”in the“Summary Compensation Table”because earnings are not at an above-market rate. | |
(3) | Included in column headed“All Other Compensation”in the“Summary Compensation Table”above to the extent of the contributions that are reflected in the “Registrant Contributions in Last FY” column of this table. |
Sum of Age and Years of Benefit Service | Contribution Percentage of Compensation Under Social Security Wage Base | Contribution Percentage of Compensation at or Above Social Security Wage Base | ||||
0 but less than 30 | 1.5 | % | 3.0 | % | ||
30 but less than 34 | 1.7 | 3.4 | ||||
34 but less than 38 | 1.9 | 3.8 | ||||
38 but less than 42 | 2.1 | 4.2 | ||||
42 but less than 46 | 2.3 | 4.6 | ||||
46 but less than 50 | 2.7 | 5.4 | ||||
50 but less than 60 | 3.2 | 6.4 | ||||
60 but less than 70 | 4.0 | 8.0 | ||||
70 but less than 80 | 5.5 | 11.0 | ||||
80 but less than 90 | 7.0 | 12.7 | ||||
90 and over | 9.0 | 14.7 |
Compensation Committee Interlocks and Insider Participation
William A. Foley, Deborah G. Miller, Carol B. Moerdyk and Gary L. Moreau served on our Compensation Committee during 2005. Nonepurpose of the Compensation Committeeplan is to restore certain benefits that would have been available to executives under our 401(k) plan but for IRS limitations on qualified plans. These limits include the annual maximum recognizable compensation for retirement plans ($220,000 for 2006), and the restrictions on excess contributions by highly compensated employees.
COMPARISON OF CUMULATIVE TOTAL RETURNS
The graph below comparesaccount that is deemed invested in either the Barclays Global Investors S&P 500 Index Fund, which seeks to replicate the total stockholder return on our common stock to the cumulative total return for the Standard & Poor’s SmallCap 600 Index (“S&P SmallCap 600”), a broad market index; the Standard & Poor’s SmallCap Housewares & Specialties Index, a capitalization-weighted index that measures the performance of the housewares sectorS&P 500 Index, or the Harbor Bond Fund, which seeks total return. The Company selected these two funds. Participants make allocation elections prior to the year in which the compensation is earned.
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Companies inrespect to the peer group that we used were chosen based upon their lines of business or product end uses being comparableamounts payable to our’s. The peer group is limited to those companies for whom market quotations are available and consists of Lancaster Colony Corp. and Oneida Ltd.
The graph assumes a $100 investment in our common stock on January 1, 2001 and also assumes investments of $100 in each of the S&P SmallCap 600,Named Executives under the Housewares-Small indexemployment and change in control agreements to which they are party:
Long-Term | Acceleration of | Pension | ||||||||||||||||||||||||||
Base | Annual Incentive | Incentive | Unvested Equity | Misc. | Plan | |||||||||||||||||||||||
Salary | Compensation | Compensation | Awards | Benefits | Benefits | Total | ||||||||||||||||||||||
Named Executive | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($)(7) | |||||||||||||||||||||
John F. Meier | ||||||||||||||||||||||||||||
Death | 1,116,000 | 502,200 | 133,133 | 180,348 | 62,000 | 4,117,225 | 6,110,906 | |||||||||||||||||||||
Permanent disability | 1,674,000 | 502,200 | 133,133 | 180,348 | 38,901 | 4,117,225 | 6,645,807 | |||||||||||||||||||||
Voluntary termination for Good Reason or involuntary termination without Cause | 1,674,000 | 502,200 | 133,133 | 180,348 | 56,901 | 4,117,225 | 6,663,807 | |||||||||||||||||||||
Involuntary termination for Cause | 0 | 0 | 0 | 0 | 0 | 4,117,225 | 4,117,225 | |||||||||||||||||||||
Scott M. Sellick | ||||||||||||||||||||||||||||
Death | 261,900 | 151,605 | 28,633 | 40,086 | 12,000 | 21,517 | 515,741 | |||||||||||||||||||||
Permanent disability | 523,800 | 151,605 | 28,633 | 40,086 | 26,418 | 21,517 | 792,059 | |||||||||||||||||||||
Voluntary termination for Good Reason or involuntary termination without Cause | 523,800 | 151,605 | 28,633 | 40,086 | 44,418 | 21,517 | 810,059 | |||||||||||||||||||||
Involuntary termination for Cause | 0 | 0 | 0 | 0 | 0 | 21,517 | 21,517 | |||||||||||||||||||||
Richard I. Reynolds | ||||||||||||||||||||||||||||
Death | 395,184 | 296,388 | 72,284 | 99,171 | 62,000 | 2,185,747 | 3,110,774 | |||||||||||||||||||||
Permanent disability | 790,368 | 296,388 | 72,284 | 99,171 | 25,934 | 2,185,747 | 3,469,892 | |||||||||||||||||||||
Voluntary termination for Good Reason or involuntary termination without Cause | 790,368 | 296,388 | 72,284 | 99,171 | 43,934 | 2,185,747 | 3,487,892 | |||||||||||||||||||||
Involuntary termination for Cause | 0 | 0 | 0 | 0 | 0 | 2,185,747 | 2,185,747 | |||||||||||||||||||||
Kenneth G. Wilkes | ||||||||||||||||||||||||||||
Death | 315,162 | 165,173 | 36,868 | 52,184 | 62,000 | 107,569 | 738,956 | |||||||||||||||||||||
Permanent disability | 630,324 | 165,173 | 36,868 | 52,184 | 25,934 | 107,569 | 1,018,052 | |||||||||||||||||||||
Voluntary termination for Good Reason or involuntary termination without Cause | 630,324 | 165,173 | 36,868 | 52,194 | 43,934 | 107,569 | 1,036,062 | |||||||||||||||||||||
Involuntary termination for Cause | 0 | 0 | 0 | 0 | 0 | 107,569 | 107,569 | |||||||||||||||||||||
Daniel P. Ibele | ||||||||||||||||||||||||||||
Death | 249,078 | 120,048 | 26,011 | 36,473 | 12,000 | 79,883 | 523,493 | |||||||||||||||||||||
Permanent disability | 498,156 | 120,048 | 26,011 | 36,473 | 26,330 | 79,883 | 786,901 | |||||||||||||||||||||
Voluntary termination for Good Reason or involuntary termination without Cause | 498,156 | 120,048 | 26,011 | 36,473 | 44,330 | 79,883 | 804,901 | |||||||||||||||||||||
Involuntary termination for Cause | 0 | 0 | 0 | 0 | 0 | 79,883 | 79,883 |
(1) | Represents (a) in the event of termination due to death, two times 2006 base salary in the case of Mr. Meier or one times 2006 base salary in the case of the other Named Executives (in each case at the rate in effect on the date of termination), and (b) in the event of termination due to permanent disability, voluntary termination for good reason or involuntary termination without cause, three times 2006 base salary in the case of Mr. Meier and two times 2006 base salary in the case of the other Named Executives (in each case at the rate in effect on the date of termination). Since termination is assumed to have occurred on December 31, 2006, we have assumed that all 2006 base salary has been paid when due. In the event of termination as a result of death, the base salary component is payable in a lump sum. In the event of termination as a result of partial disability, voluntary termination for good reason or involuntary termination without cause, the base salary component is payable as salary continuation in accordance with our pay practices, unless we elect to pay it in a lump sum. |
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(2) | Represents (a) in the event of termination due to death, the product of 2006 actual base salary and the applicable Named Executive’s target percentage under our SMIP program (90% in the case of Mr. Meier, 75% in the case of Mr. Reynolds, 60% in the case of Mr. Sellick, 55% in the case of Mr. Wilkes and 50% in the case of Mr. Ibele), and (b) in the event of termination due to permanent disability, voluntary termination for good reason or involuntary termination without cause, the product of 2006 actual base salary and the lesser of (i) the applicable Named Executive’s target percentage under our SMIP program (see above) or (ii) the average percentage of target annual incentive compensation paid to all other executive officers. The average percentage of target annual incentive compensation paid to all executive officers for 2006 was 128%. |
(3) | Represents the estimated value of shares of common stock actually issued on February 19, 2007, as payment for awards earned under the January 2006 LTIP and July 2006 LTIP for the period January 1 through December 31, 2006. We have estimated the value by multiplying the number of shares by $12.31, the closing price of our common stock on the New York Stock Exchange on December 29, 2006. As of December 31, 2006, the only form of long-term incentive compensation that had been awarded consisted of performance shares. In order to avoid duplication, the unearned performance shares for the July 1, 2006 through December 31, 2007 and July 1, 2006 through December 31, 2008 performance cycles are treated in this table as unvested restricted stock, and the estimated value of the underlying shares is included under the column headed“Acceleration of Unvested Equity Awards.” |
(4) | Represents the sum of (a) the estimated value of common stock underlying performance shares for the July 1, 2006 through December 31, 2007 and July 1, 2006 through December 31, 2008 performance cycles and (b) thein-the-money/intrinsic value of unvested non-qualified stock options, in each case based upon the closing price of our common stock on the New York Stock Exchange on December 29, 2006 ($12.31 per share). |
(5) | Represents the sum of (a) the estimated cost of medical, prescription drug, dental and vision benefits for the Named Executive’s covered dependents for (i) 12 months following the date of termination if termination is a result of death or (ii) 24 months (or, in Mr. Meier’s case, 36 months) following the date of termination if termination is a result of permanent disability, voluntary termination for good reason or involuntary termination without cause; (b) with respect only to Messrs. Meier, Reynolds and Wilkes, in the event of termination as a result of death, a $50,000 death benefit under an insurance policy purchased for their benefit in approximately 1997; (c) in the event of termination as a result of death, a death benefit under our group life insurance policy applicable to all salaried employees equal to $250,000 in the case of Messrs. Meier, Sellick, Reynolds and Wilkes and equal to $241,000 in the case of Mr. Ibele; and (d) in the event of termination as a result of permanent disability, voluntary termination for good reason or involuntary termination without cause, the estimated cost of continued life insurance coverage, for a period of 24 months (or, in Mr. Meier’s case, 36 months) following the date of termination, under our group life insurance policy applicable to all salaried employees. |
(6) | Represents the sum of (a) the annuity payable to each of the Named Executives under our Salary Plan, (b) the lump sum payable to each of the Named Executives under our SERP and (c) the balances in the respective Named Executives’ ESP account. Although each of the Named Executives is entitled, under our Salary Plan, to elect either a lump sum benefit or an annuity, as of December 31, 2006 our ability to pay lump sum benefits under the Salary Plan was restricted as a result of limitations imposed by Section 401 of the Internal Revenue Code upon lump-sum distributions to highly compensated employees. Absent that restriction, the lump sum amounts that would have been payable to the Named Executives under the Salary Plan were $1,343,265 — Mr. Meier, $66,550 — Mr. Sellick, $1,325,651 — Mr. Reynolds, $131,876 — Mr. Wilkes and $175,227 — Mr. Ibele. Does not include the respective Named Executives’ account balances under our 401(k) savings plan. |
(7) | Does not include any taxgross-up because the excise tax contemplated by Section 4999 of the Internal Revenue Code does not apply in the absence of a change in control. |
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Acceleration | ||||||||||||||||||||||||||||||||
Acceleration | of Unvested | |||||||||||||||||||||||||||||||
of Unvested | Restricted | Pension | ||||||||||||||||||||||||||||||
Base | Annual Incentive | Stock | Stock | Misc. | Plan | Tax | ||||||||||||||||||||||||||
Salary | Compensation | Options | Awards | Benefits | Benefits | Gross-Up | Total | |||||||||||||||||||||||||
Named Executive | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($) | ($) | ||||||||||||||||||||||||
John F. Meier | 1,674,000 | 1,506,600 | 5,460 | 174,888 | 55,934 | 4,931,073 | 1,569,099 | 9,917,054 | ||||||||||||||||||||||||
Scott M. Sellick | 785,700 | 454,815 | 3,120 | 37,607 | 56,418 | 271,517 | 784,416 | 2,393,593 | ||||||||||||||||||||||||
Richard I. Reynolds | 1,185,552 | 889,164 | 4,212 | 94,959 | 55,934 | 2,760,626 | 1,006,768 | 5,997,215 | ||||||||||||||||||||||||
Kenneth G. Wilkes | 945,486 | 495,520 | 3,744 | 48,440 | 55,934 | 450,628 | 749,308 | 2,749,060 | ||||||||||||||||||||||||
Daniel P. Ibele | 747,234 | 360,146 | 2,288 | 34,185 | 56,330 | 338,195 | 659,073 | 2,197,451 |
(1) | Represents three times base salary in effect on December 31, 2006 and is payable in a lump sum. We have assumed that all 2006 base salary has been paid when due. | |
(2) | Represents three times the Named Executive’s target annual incentive compensation, since no annual incentive compensation was paid for 2005. Target annual incentive compensation is a percentage of base salary actually earned during the year (as reflected byW-2 wages). For information with respect to the target percentages of the respective Named Executives, see“What compensation did Libbey’s executives receive for 2006? — Annual Incentive Compensation under SMIP.” | |
(3) | Represents thein-the-money/intrinsic value of unvested non-qualified stock options based upon the closing price of our stock on the New York Stock Exchange on December 29, 2006 ($12.31 per share). | |
(4) | Represents the estimated value of common stock underlying performance shares for the July 1, 2006 through December 31, 2007 and July 1, 2006 through December 31, 2008 performance cycles. We have estimated the value by multiplying the number of performance shares for those performance cycles by $12.31, the closing price of our stock on the New York Stock Exchange on December 29, 2006. | |
(5) | Represents the sum of (a) the estimated cost of medical, prescription drug, dental and vision benefits for the Named Executive and his covered dependents for 36 months following the date of termination at an assumed annual cost of $12,000; (b) the estimated cost of life insurance for the respective Named Executives at an assumed annual cost of $967 for each of Messrs. Meier, Reynolds and Wilkes, $1,209 for Mr. Sellick and $1,165 for Mr. Ibele; (c) two years of outplacement services at an assumed annual cost of $7,500; and (d) one year of financial planning services at an assumed annual cost of $3,000. We are assuming that there is no incremental cost to us to continue the Named Executive as an insured on our directors and officers liability insurance policy. |
(6) | Represents the sum of (a) the annuity payable to each of the Named Executives under our Salary Plan, (b) the lump sum payable to each of the Named Executives under our SERP (including the effect of a special minimum benefit of $250,000, as contemplated by the change in control agreements) and (c) the balances in the respective Named Executives’ ESP accounts. Although each of the Named Executives is entitled, under our Salary Plan, to elect either a lump sum benefit or an annuity, as of December 31, 2006 our ability to pay lump sum benefits under the Salary Plan was restricted as a result of limitations imposed by Section 401 of the Internal Revenue Code upon lump-sum distributions to highly compensated employees. Absent that restriction, the lump sum amounts that would have been payable to the Named Executives under the Salary Plan were $1,343,265 — Mr. Meier, $66,550 — Mr. Sellick, $1,325,651 — Mr. Reynolds, $131,876 — Mr. Wilkes and $175,227 — Mr. Ibele. |
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TOTAL SHAREHOLDER RETURN2006
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN
INDEXED RETURNS
Base Period | Years Ending | |||||||||||
Company Name / Index | Dec 00 | Dec 01 | Dec 02 | Dec 03 | Dec 04 | Dec 05 | ||||||
LIBBEY INC | 100 | 108.46 | 87.22 | 97.05 | 77.02 | 36.28 | ||||||
S&P SMALLCAP 600 INDEX | 100 | 106.54 | 90.95 | 126.23 | 154.82 | 166.71 | ||||||
S&P 600 HOUSEWARES & SPECIALTIES | 100 | 117.88 | 123.30 | 137.34 | 133.66 | 83.56 | ||||||
PEER GROUP | 100 | 116.74 | 126.64 | 140.13 | 132.42 | 115.82 |
Change in Pension | ||||||||||||||||||||
Value and | ||||||||||||||||||||
Nonqualified | ||||||||||||||||||||
Fees Earned or | Deferred | All Other | ||||||||||||||||||
Paid in Cash | Stock Awards | Compensation | Compensation | Total | ||||||||||||||||
Name | ($)(1) | ($)(1)(2) | Earnings(3) | ($) | ($) | |||||||||||||||
Carlos V. Duno | $ | 51,750 | $ | 40,000 | $ | 0 | $ | 0 | $ | 91,750 | ||||||||||
William A. Foley | 60,000 | 40,000 | 0 | 0 | 100,000 | |||||||||||||||
Peter C. McC. Howell | 59,250 | 40,000 | 0 | 0 | 99,250 | |||||||||||||||
Deborah G. Miller | 53,500 | 40,000 | 0 | 0 | 93,500 | |||||||||||||||
Carol B. Moerdyk | 64,000 | 40,000 | 0 | 0 | 104,000 | |||||||||||||||
Gary L. Moreau | 56,500 | 40,000 | 0 | 0 | 96,500 | |||||||||||||||
Terence P. Stewart(4) | 40,750 | 40,000 | 0 | 0 | 80,750 |
(1) | Includes compensation deferred into the phantom stock subaccount or the interest-bearing subaccount pursuant to the 2006 Deferred Compensation Plan for Outside Directors adopted effective January 1, 2006, and the Amended and Restated 2006 Deferred Compensation Plan for Outside Directors adopted effective October 17, 2006. |
(2) | On December 1, 2006, we awarded each non-management director RSUs having a grant date fair value, pursuant to FAS 123R, of $40,000. The RSUs, which are the only equity awards that were outstanding as of December 31, 2006, vested on January 2, 2007. The number of shares of common stock issued to each non-management director upon settlement of the RSUs was determined by dividing $40,000 (the grant date fair value) by the average closing price of our common stock over a period of 60 consecutive trading days ending on December 1, 2006. |
(3) | We do not maintain a pension plan for our non-management directors. Compensation deferred into the phantom stock subaccount does not earn an above-market return, as dividends accrue only if and to the extent payable to holders of our common stock. Compensation deferred into the interest-bearing subaccount does not earn an above-market return, as the applicable interest rate is the yield on10-year treasuries. | |
(4) | For additional information with respect to compensation payable to Mr. Stewart’s law firm for services provided to Libbey, see“Corporate Governance — Certain Relationships and Related Transactions — What transactions involved directors or other related parties?” |
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We are submitting for stockholder approval the Libbey Inc. 2006 Omnibus Incentive Plan (the “2006 Plan”).
Why is Libbey submitting the 2006 Plan for stockholder approval?
We currently provide equity-based compensation under the terms of the Libbey Inc. Amended and Restated Stock Option Plan for Key Employees and the Amended and Restated 1999 Equity Participation Plan of Libbey Inc. (the “Prior Plans”). As of March 10, 2006, 749,860 shares remained available for grant under the Prior Plans, with 1,554,456 shares subject to outstanding awards under the Prior Plans.
The Prior Plans, however, are not adequate for the following reasons:
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What are the key features of the 2006 Plan?
The principal features of the 2006 Plan are summarized below, but the summary is qualified in its entirety by reference to the 2006 Plan itself, which is attached to this proxy statement as Appendix A.
The 2006 Plan is described in more detail below.
What is the purpose of the 2006 Plan?
As indicated above, the purpose of the 2006 Plan is to enable the Compensation Committee of our Board of Directors to make Awards to attract and retain our employees and non-employee directors, to further align their interests with those of our stockholders and to closely link executive compensation with our performance.
What shares of common stock are available for Awards under the 2006 Plan?
The shares of our common stock available under the 2006 Plan may be either previously authorized and unissued shares or treasury shares.
Can there be adjustments in the number and kind of shares granted under the 2006 Plan?
In the event of a corporate event or transaction, including a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock split, stock dividend, reverse stock split, split up, spin-off or other distribution of stock or property, combination of shares, exchange of shares or other similar change in capital structure, the Compensation Committee may, in its discretion, adjust the number and kind of shares granted under the 2006 Plan, the number and kind of shares subject to Awards and the exercise price of outstanding stock options.
What are the key terms of the 2006 Plan?
Administration. The 2006 Plan is generally administered by the Compensation Committee of our Board of Directors, or any subcommittee thereof, although the full Board of Directors may function as the Committee, The Committee is authorized to determine the individuals who will receive Awards (the “Participants”), when they will receive Awards, the number of shares to be subject to each Award, the price of the Awards granted, the payment terms, the payment method and the expiration date applicable to each Award. The Committee is also authorized to adopt, amend and rescind rules relating to the administration of the 2006 Plan. From time to time the Committee may delegate its authority to grant or amend awards to Libbey’s officers, but the delegation must set forth the total number of Awards the officer may grant, and the officer must report periodically to the Committee regarding the nature and scope of the Awards granted. The Committee may not, however, delegate to senior executives of the company who are subject to Section 16 of the Securities Exchange Act of 1934, as amended, authority to grant to, or to amend awards previously granted to, any individual who is subject to Section 162(m) of the Code.
Amendment and Termination. The Committee may at any time amend, modify, suspend or terminate the 2006 Plan or any Award made under the 2006 Plan, but the Committee may not, without stockholder approval, reprice, replace or regrant, through cancellation and substitution of another Award, options or SARs, or lower the option price or grant price of an option or SAR. If stockholder approval for any amendment to the 2006 Plan is required by law, regulation or stock exchange rule, then neither the Committee nor Libbey is authorized to amend the 2006 Plan without stockholder approval. However, the Board of Directors may amend the 2006 Plan or an Award to comply with law and administrative regulations.
Eligibility. Awards under the 2006 Plan may be granted to our employees or any of our present or future subsidiaries, and to any directors who are not our employees. More than one Award may be granted to an employee or to a nonemployee director.
Vesting. Except with respect to a maximum of 5% of the shares authorized for issuance under the 2006 Plan, full-value Awards that vest on the basis of continued service to or employment with Libbey must provide for vesting that is no more rapid than pro rata over a 3-year period, and full-value Awards that vest
upon the attainment of performance goals must provide for a performance period of at least 12 months. However, the Compensation Committee may, in its discretion, accelerate the vesting of full-value Awards upon the applicable Participant’s death, disability or retirement, or upon a change in control.
Awards. Each Award will be set forth in a separate agreement with the person receiving the Award and will indicate the type, terms and conditions of the Award. The following briefly describes the characteristics of each type of Award that may be made under the 2006 Plan.
Stock Options. Stock options granted under the 2006 Plan may be either “non-qualified” or “incentive” stock options. Non-qualified stock options are options not intended to receive favorable tax treatment for Participants applicable to incentive stock options under the Code. At the time of grant, the Committee will establish the provisions of each stock option, including:
However, there are certain requirements under the Code that apply to incentive stock options, including requirements that incentive stock options: (1) must have an exercise price per share of stock of not less than 100% of the fair market value on the date of grant; (2) may only be granted to employees; and (3) may not have a term longer than 10 years after the date of grant. In the case of an incentive stock option granted to an individual who owns, or is deemed to own, at least 10% of the total combined voting power of all classes of stock of the company, then the exercise price must be at least 110% of the fair market value of the stock underlying the subject options on the date of grant, and the incentive stock option must expire no later than the fifth anniversary of the date of its grant.
The exercise price for options, together with any applicable tax required to be withheld, must be paid in full at the time of exercise:
Stock Appreciation Rights. SARs granted by the Committee will provide for payments to the holder based upon increases in the price of our common stock over a set base price. Payment for SARs may be made in cash or shares or in a combination of cash and shares, as determined by the Committee at the time of grant. A SAR may be granted either in conjunction with an option or independently. At the time of grant, the Committee will establish the provisions of each SAR, including:
Otherwise, the 2006 Plan does not impose any restriction on the exercise of SARs or the amount of gain that can be realized. However, the Committee may restrict the shares received upon exercise of a SAR.
Restricted Stock. Restricted stock is the grant of shares that are nontransferable and may be subject to substantial risk of forfeiture until specific conditions are met. During the period of restriction, Participants holding shares of restricted stock may have full voting and dividend rights with respect to the shares. The restrictions on the restricted stock will lapse based upon conditions determined by the Committee at the time of grant. The restrictions can be time- or performance-based, including based on the performance criteria described under “Performance Units” below.
Restricted Stock Units. Restricted stock units give the Participant the right to receive shares at some designated time in the future, subject to the satisfaction of conditions determined by the Committee at the time of grant. The conditions can be time- or performance-based, including based on the performance criteria described in Performance Units below.
Performance Units/ Performance Shares. Performance Units give the Participant the right to receive an amount designated as a “unit” at the end of a specified performance period, provided that specified performance measures are satisfied. Performance Shares give the Participant the right to receive shares or cash based on the value of shares of our common stock at the end of a specified performance period, provided that specified performance measures are satisfied. The performance periods and performance measures are determined by the Committee at the time of grant, but the performance measures are limited to the following performance measures:
Any performance measures may be used to measure, in absolute terms, the performance of Libbey as a whole or of any of Libbey’s subsidiaries, affiliates or business units, or any combination of them, as the Committee determines to be appropriate. Alternatively, the performance measures may be used to measure performance as compared to any incremental increase, or as compared to the performance of a group of comparator companies, or to any published or special index that the Committee deems appropriate.
Other Cash Based and Other Stock Based Awards. From time to time, the Committee may grant Awards denominated in cash or other types of equity-based or equity-related awards that are not otherwise described above. Awards may be designed to comply with or take advantage of applicable local laws of jurisdictions other than the US. These other Awards will have such terms as the Committee determines at the time and may include payment upon meeting performance goals based on the performance measures described under “Performance Units/Performance Stock” above.
Nonemployee Director Awards. The Nominating and Governance Committee of the Board of Directors may establish the amounts and types of Awards that may be granted to our nonemployee directors on a periodic and nondiscriminatory basis, as well as any additional amounts based upon:
The terms of the Awards shall be set by the Nominating and Governance Committee, but cannot otherwise be inconsistent with the terms of the 2006 Plan.
Dividend Equivalents. Dividend equivalents give the Participant the right to receive dividends on stock subject to another type of Award, or, if the grant is independent of another Award, on a number of shares set by the Committee at the time of the grant of the dividend equivalent. A dividend equivalent may be payable at the same time dividends are otherwise payable on the shares or at the time the shares subject to a corresponding Award are otherwise deliverable, if later. No dividend equivalents may be granted with respect to Awards of Options or SARs.
Change in Control. All options and SARs will become fully vested and exercisable, and all other Awards that are not then vested but vest based solely upon continued service to or employment with Libbey will become vested and payable in full, upon the occurrence of a change in control (as defined in the 2006 Plan), unless the Participant is provided with a replacement award that relates to a publicly traded security with a value and terms and conditions that are at least equal to the value of the Award being replaced. In connection with any change in control, the Committee, in its sole discretion, may (1) provide for the cancellation or termination of any Award in exchange for a cash payment (or delivery of shares of stock, other securities or a combination of stock or other securities equivalent to the cash payment), or (2) provide that the time period in which a Participant may exercise options or SARs shall be extended, but not beyond the original expiration date.
Miscellaneous Provisions. Generally, no Award granted under the 2006 Plan may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the Award has been exercised, or the shares underlying the Awards have been issued, and all restrictions applicable to the shares have lapsed. The Committee may allow Awards other than incentive stock options to be transferred without value subject to such terms and conditions as the Committee may prescribe.
We may deduct or withhold, or require a Participant to remit, the minimum statutory amount of taxes required to be withheld under federal, state, local or foreign law upon a taxable event occurring under the 2006 Plan or any Award. A Participant may elect irrevocably to satisfy his or her withholding requirement by having us withhold shares otherwise deliverable under the Award. The number of shares to be withheld must have a fair market value equal to the tax required to be withheld.
The 2006 Plan must be approved by the stockholders. If approved, the 2006 Plan will become effective upon approval. No Awards may be granted under the 2006 Plan after 10 years from its effective date, but any Awards outstanding upon its termination will remain effective for the remainder of their term.
The Committee may specify in the Award that a Participant will forfeit the Award, or any previously delivered shares, due to termination for cause or for violation of our material policies or any noncompete, confidentially or other restrictive covenants by which the Participant is bound. The issuance of shares pursuant to an Award will be subject to compliance with all laws, rules and regulations of any governmental agency or securities exchange.
What are the Federal income tax consequences of the 2006 Plan and Awards made under it?
The tax consequences of the 2006 Plan under current federal law are summarized in the following discussion. This discussion is limited to the general tax principles applicable to the 2006 Plan, and is intended for general information only. State and local income taxes are not discussed. Tax laws are complex and subject to change and may vary depending on individual circumstances and from locality to locality. The tax information summarized is not tax advice.
Nonqualified Stock Options. For federal income tax purposes, an optionee generally will not recognize taxable income at the time a non-qualified stock option is granted under the 2006 Plan. Upon exercise of a non-qualified stock option, the optionee will recognize ordinary income, and Libbey generally will be entitled to a deduction. The amount of income recognized (and the amount generally deductible by Libbey) generally will be equal to the excess, if any, of the fair market value of the shares at the time of exercise over the aggregate exercise price paid for the shares, regardless of whether the exercise price is paid in cash or in shares or other property. An optionee’s basis for the stock for purposes of determining his or her gain or loss upon a subsequent disposition of the shares generally will be the fair market value of the stock on the date of exercise of the non-qualified stock option, and any subsequent gain or loss generally will be taxable as capital gain or loss.
Incentive Stock Options. An optionee generally will not recognize taxable income either at the time an incentive stock option is granted or when it is exercised. However, the amount by which the fair market value of the shares at the time of exercise exceeds the exercise price will be an “item of tax preference” to the optionee for purposes of alternative minimum tax. Generally, upon the sale or other taxable disposition of the shares acquired upon exercise of an incentive stock option, the optionee will recognize taxable income. If shares acquired upon the exercise of an incentive stock option are held for the longer of 2 years from the date of grant or 1 year from the date of exercise, the gain or loss (in an amount equal to the difference between the fair market value on the date of sale and the exercise price) upon disposition will be treated as a long-term capital gain or loss, and Libbey will not be entitled to any deduction. If this holding period is not met and the stock is sold for a gain, then the difference between the option price and the fair market value of the stock on the date of exercise will be taxed as ordinary income, and any gain over that will be eligible for long- or short-term capital gain treatment. If the holding period is not met and the shares are disposed of for less than the fair market value on the date of exercise, then the amount of ordinary income is limited to the excess, if any, of the amount realized over the exercise price paid. Libbey generally will be entitled to a deduction in the amount of any ordinary income recognized by the optionee.
Stock Appreciation Rights. No taxable income is generally recognized upon the receipt of a SAR. Upon exercise of a SAR, the cash or the fair market value of the shares received generally will be taxable
as ordinary income in the year of such exercise. Libbey generally will be entitled to a compensation deduction for the same amount that the recipient recognizes as ordinary income.
Restricted Stock. A Participant to whom restricted stock is issued generally will not recognize taxable income upon the issuance of the restricted stock, and Libbey generally will not then be entitled to a deduction, unless the Participant makes an election under Section 83(b) of the Code. However, when restrictions on shares of restricted stock lapse and the shares are no longer subject to a substantial risk of forfeiture, the Participant generally will recognize ordinary income, and Libbey generally will be entitled to a deduction for an amount equal to the excess of the fair market value of the shares at the date the restrictions lapse over the purchase price of the shares. If the Participant makes an election under Section 83(b) of the Code, then the Participant generally will recognize ordinary income at the date of issuance equal to the excess, if any, of the fair market value of the shares at that date over the purchase price for the shares, and Libbey will be entitled to a deduction for the same amount.
Restricted Stock Unit. A Participant will generally not recognize taxable income upon the grant of a restricted stock unit. However, when the shares are delivered to the Participant, then the value of the shares at that time will be taxable to the Participant as ordinary income. Generally, Libbey will be entitled to a deduction for an amount equal to the amount of ordinary income recognized by the Participant.
Performance Unit/Performance Stock. A Participant who has been granted an Award of performance units or performance stock generally will not recognize taxable income at the time of grant, and Libbey will not be entitled to a deduction at that time. When an award is paid, whether in cash or shares, the Participant generally will recognize ordinary income, and Libbey will be entitled to a corresponding deduction.
Section 162(m) Limitation. In general, under Section 162(m), income tax deductions of publicly-held corporations may be limited to the extent total compensation (including base salary, annual bonus, stock option exercises and non-qualified benefits paid) for certain executive officers exceeds $1,000,000 (less the amount of any “excess parachute payments” as defined in Section 280G of the Code) in any one year. However, under Section 162(m), the deduction limit does not apply to certain “performance-based compensation” that is established by an independent compensation committee and that is adequately disclosed to, and approved by, stockholders. In particular, Awards of stock options and SARs under the 2006 Plan will satisfy the “performance-based compensation” exception if the awards are made by a qualifying compensation committee, the 2006 Plan sets the maximum number of shares that can be granted to any person within a specified period and the compensation is based solely on an increase in the stock price after the grant date (i.e., the option exercise price is equal to or greater than the fair market value of the stock subject to the award on the grant date). Awards of restricted stock, restricted stock units, performance units, performance share and other cash-based or equity-based awards granted under the 2006 Plan may qualify as “qualified performance-based compensation” for purposes of Section 162(m) if the Awards are granted or vest upon pre-established objective performance measures based on the performance goals described above under “Performance Units/ Performance Shares.”
We have attempted to structure the 2006 Plan in such a manner that the Committee can establish the terms and conditions of Awards granted under the 2006 Plan so that the remuneration attributable to the Awards will be subject to the $1,000,000 limitation. We have not, however, requested a ruling from the IRS or an opinion of counsel regarding this issue. This discussion will neither bind the IRS nor preclude the IRS from taking a contrary position with respect to the 2006 Plan.
Plan Benefits
The number of Awards that an employee may receive under the 2006 Plan is in the discretion of the Committee and therefore cannot be determined in advance. The Committee has not made any determination to grant any Awards to any persons under the 2006 Plan as of the date of this proxy statement.
Compensation Plans
The following table provides certain information, as of December 31, 2005, about our common stock that may be issued under our existing equity compensation plans:
Equity Compensation Plan Information
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans( 1 ) | ||||
(a) | (b) | (c) | |||||
Equity compensation plans approved by security holders | 1,555,556 | $ | 28.04 | 1,193,432 | |||
Equity compensation plans not approved by security holders | 0 | 0 | 0 | ||||
Total | 1,555,556 | $ | 28.04 | 1,193,432 | |||
As of March 10, 2006, the number of securities to be issued upon exercise of outstanding stock options granted under the Prior Plans was 1,554,456, as to which the weighted average exercise price was $27.46 and the weighted average life was 5.21 years.
The Board of Directors recommends a vote FOR this proposal.
PROPOSAL 3—— RATIFICATION OF AUDITORS
42
2006.
43
March 30, 2006
APPENDIX A
Libbey Inc.
2006 Omnibus Incentive Plan
Effective May 4, 2006
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Libbey Inc. 2006 Omnibus Incentive Plan
Article 1. Establishment, Purpose, and Duration
1.1 Establishment. Libbey Inc., a Delaware corporation (the “Company”), establishes an incentive compensation plan to be known as the Libbey Inc. 2006 Omnibus Incentive Plan (the “Plan”), as set forth in this document.
This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards.
This Plan shall become effective upon shareholder approval (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.
1.2 Purpose of this Plan. The purpose of this Plan is to enable the Company to obtain and retain the services of Employees and Non-employee Directors considered essential to the long-range success of the Company, to provide a means whereby Employees and Non-employee Directors develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its shareholders.
1.3 Duration of this Plan. Unless sooner terminated as provided in this Plan, this Plan shall terminate ten (10) years from the Effective Date. After this Plan is terminated, no Awards may be granted, but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and this Plan’s terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten (10) years after the earlier of (a) adoption of this Plan by the Board, or (b) the Effective Date.
Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.
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3.1 General. The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of this Plan. The Committee may employ attorneys, consultants, accountants, agents and other individuals, any of whom may be an Employee, and the Committee, the Company and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested individuals.
3.2 Authority of the Committee. The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan and any Award Agreement or other agreement or document ancillary to or in connection with this Plan, to determine eligibility of Employees for Awards and to adopt such rules, regulations, forms, instruments and guidelines for administering this Plan as the Committee may deem necessary or proper. That authority shall include, but not be limited to, selecting which Employees are Award recipients, establishing all Award terms and conditions, including the terms and conditions set forth in Award Agreements, granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, construing any ambiguous provision of the Plan or any Award Agreement, and, subject to Article 18, adopting modifications and amendments to this Plan or any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates and/or its Subsidiaries operate.
3.3 Delegation. The Committee may delegate to one or more of its members or to one or more officers of the Company, and/or its Subsidiaries and Affiliates, or to one or more agents or advisors, such administrative duties or powers as the Committee may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers may employ one or more individuals to render advice with respect to any responsibility the Committee or those individuals may have under this Plan. The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as can the Committee: (a) designate Employees to be recipients of Awards; and (b) determine the size of any such Awards; provided, however, that (i) in the case of Awards to be granted to Employees who are considered Insiders, the Committee shall not delegate these responsibilities to any officer; (ii) the resolution providing the authorization sets forth the total number of Awards the officer(s) may grant; and (iii) the officer(s) shall report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the delegated authority.
Article 4. Shares Subject to this Plan and Maximum Awards
4.2 Share Usage. Shares covered by an Award shall be counted as used only to the extent they are actually issued. Any Shares related to Awards under this Plan or under Prior Plans that terminate by expiration, forfeiture, cancellation or otherwise without the issuance of the Shares, or are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. Moreover, if the Option Price of any Option granted under this Plan or the tax withholding requirements with respect to any Award granted under this Plan are satisfied by tendering Shares to the Company (by either actual delivery or by attestation), the tendered Shares shall again be available for grant under this Plan. Furthermore, if a SAR is exercised and settled in Shares, the difference between the total Shares exercised and the net Shares delivered shall again be available for grant under this Plan, with the result being that only the number of Shares issued upon exercise of a SAR are counted against the Shares available. The Shares available for issuance under this Plan may be authorized and unissued Shares or treasury Shares.
4.3 Annual Award Limits. Unless and until the Committee determines that an Award to a Covered Employee shall not be designed to qualify as Performance-Based Compensation, the following limits (each an “Annual Award Limit” and, collectively, “Annual Award Limits”) shall apply to grants of Awards under this Plan:
4.4 Adjustments in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a change in the Shares or the capitalization of the Company), such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure, number of outstanding Shares or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award Limits, and other value determinations applicable to outstanding Awards.
The Committee, in its sole discretion, also may make appropriate adjustments in the terms of any Awards under this Plan to reflect or relate to the changes or distributions and to modify any other terms of outstanding Awards, including modifications of performance goals and changes in the length of Performance Periods. Notwithstanding anything in this Plan to the contrary, the Committee may not take any action described in this Section 4.4 if the action would result in a violation of the requirements of Code Section 409A. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.
Subject to the provisions of Article 18 and notwithstanding anything else in this Plan to the contrary, the Board or the Committee may authorize the issuance of Awards under this Plan in connection with the assumption of, or substitution for, outstanding benefits previously granted to individuals who become Employees of Libbey Inc. or any Subsidiary as a result of any merger, consolidation, acquisition of property or stock, or reorganization, upon such terms and conditions as the Committee may deem appropriate, subject to compliance with the rules under Code Sections 409A, 422, and 424, as and where applicable. Any Substitute Awards granted under the Plan shall not count against the share limitations set forth in Section 4.3 hereof, to the extent permitted by Section 303A.08 of the Corporate Governance Standards of the New York Stock Exchange.
Article 5. Eligibility and Participation
5.1 Eligibility. Individuals eligible to participate in this Plan include all Employees and Non-employee Directors.
5.2 Actual Participation. Subject to the provisions of this Plan, the Committee from time to time may select from all eligible individuals those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law with respect to, and the amount of each Award.
6.1 Grant of Options. Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee in its sole discretion, provided that ISOs may be granted only to eligible Employees of the Company or of any parent or Subsidiary (as permitted under Code Sections 422 and 424). However, an Employee who is employed by an Affiliate and/or Subsidiary may be granted Options only to the extent the Affiliate and/or Subsidiary is part of: (i) the Company’s controlled group of corporations or (ii) a trade or business under common control, as of the date of grant, as determined within the meaning of Code Section 414(b) or 414(c) and substituting for this purpose ownership of at least fifty percent (50%) of the Affiliate and/or Subsidiary to determine the members of the controlled group of corporations and the entities under common control.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee shall determine and as are not inconsistent with the terms of this Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.
6.3 Option Price. The Option Price for each grant of an Option under this Plan shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price must be at least equal to one hundred percent (100%) of the FMV of the Shares as determined on the date of grant.
Notwithstanding this Section 6.3 to the contrary, in the case of an Option that is a Substitute Award, the price per share of the Shares subject to the Option may be less than the Fair Market Value per Share on the date of grant; provided, however, that X shall not exceed Y, where X is the amount, if any, by which the aggregate Fair Market Value (as of the date the Substitute Award is granted) of the Shares subject to the Substitute Award exceeds the aggregate option price thereof, and Y is the amount, if any, by which the aggregate Fair Market Value (determined by the Committee as of the time immediately preceding the transaction giving rise to the Substitute Awards) of the Shares of the predecessor entity that were subject to the grant assumed or substituted for the Company exceeds the aggregate option price of such Shares.
6.4 Term of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. Notwithstanding the foregoing, the Committee has the authority to grant to Participants who are not residents of the United States Nonqualified Stock Options that have a term greater than ten (10) years.
6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve. The terms and restrictions applicable to Options need not be the same for each grant or for each Participant.
6.6 Payment. Options granted under this Article 6 shall be exercised by the delivery to the Company or an agent designated by the Company of a notice of exercise in a form specified or accepted by the Committee, or by complying with any alternative procedures authorized by the Committee,. The notice of exercise shall set forth the number of Shares with respect to which the Option is to be exercised and be accompanied by full payment for the Shares.
Payment of the Option Price shall be a condition to the issuance of the Shares as to which an Option shall be exercised. The Option Price of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price; (c) by a cashless (broker-assisted) exercise; (d) by a combination of (a), (b) and/or (c); or (e) any other method approved or accepted by the Committee, in its sole discretion.
Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares or, upon the Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).
Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.
6.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, minimum holding period requirements or restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which the Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to the Shares.
6.8 Termination of Employment. Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following Termination of Employment or termination of services to the Company, its Affiliates and/or its Subsidiaries, as the case may be. These provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.
6.9 Notification of Disqualifying Disposition. If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), the Participant shall notify the Company of such disposition within ten (10) days thereof.
6.10 No Other Feature of Deferral. No Option granted pursuant to this Plan shall provide for any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the Option.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and conditions of this Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. However, an Employee who is employed by an Affiliate and/or Subsidiary may be granted SARs only to the extent the Affiliate and/or Subsidiary is: (i) part of the Company’s controlled group of corporations or (ii) a trade or business under common control, as of the date of grant, as determined within the meaning of Code Section 414(b) or 414(c) and substituting for this purpose ownership of at least fifty percent (50%) of the Affiliate and/or Subsidiary to determine the members of the controlled group of corporations and the entities under common control.
Subject to the terms and conditions of this Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of this Plan, in determining the terms and conditions pertaining to the SARs.
The Grant Price for each grant of a SAR shall be determined by the Committee and shall be specified in the Award Agreement; provided, however, the Grant Price on the date of grant must be at least equal to one hundred percent (100%) of the FMV of the Shares as determined on the date of grant.
Notwithstanding this Section 7.1 to the contrary, in the case of a SAR that is a Substitute Award, the Grant Price of the Shares subject to the SAR may be less than the Fair Market Value per Share on the date of grant; provided, however, that the X shall not exceed Y, where X is the amount, if any, by which the aggregate Fair Market Value (as of the date on which the Substitute Award is granted) of the Shares
subject to the Substitute Award exceeds the aggregate Grant Price with respect to the Shares subject to the Substitute Award and Y is the amount, if any, by which the aggregate Fair Market Value (determined by the Committee as of the time immediately preceding the transaction giving rise to the Substitute Awards), of the Shares of the predecessor entity that were subject to the grant assumed or substituted for the Company exceeds the aggregate Grant Price of the Shares.
7.2 SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR and such other provisions as the Committee shall determine.
7.3 Term of SAR. The term of a SAR granted under this Plan shall be determined by the Committee, in its sole discretion, and, except as determined otherwise by the Committee and specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10th) anniversary date of its grant. Notwithstanding the foregoing, the Committee has the authority to grant to Participants who are not residents of the United States SARs that have a term greater than ten (10) years.
7.4 Exercise of SARs. SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes.
7.5 Settlement of SARs. Upon the exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount equal to the product of the excess of the Fair Market Value of a Share on the date of exercise over the Grant Price and the number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in cash, Shares or any combination of cash and Shares, or in any other manner approved by the Committee in its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.
7.6 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following Termination of Employment with, or provision of services to, the Company, its Affiliates and/or its Subsidiaries, as the case may be. These provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.
7.7 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares received upon exercise of a SAR granted pursuant to this Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received upon exercise of a SAR for a specified period of time.
7.8 No Other Feature of Deferral. No SAR granted pursuant to this Plan shall provide for any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the SAR.
Article 8. Restricted Stock and Restricted Stock Units
8.1 Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine.
8.2 Restricted Stock or Restricted Stock Unit Agreement. Each grant of Restricted Stock and/or Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.
8.3 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to this Plan as it may deem advisable, including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, restrictions under applicable laws or under the requirements of any stock exchange or market upon which the Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of the Restricted Stock or Restricted Stock Units.
To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to the Shares have been satisfied or have lapsed.
Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to the Shares have been satisfied or have lapsed (including satisfaction of any applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares or a combination of cash and Shares as the Committee, in its sole discretion, shall determine.
8.4 Certificate Legend. In addition to any legends placed on certificates pursuant to Section 8.3, each certificate representing Shares of Restricted Stock granted pursuant to this Plan may bear a legend such as the following or as otherwise determined by the Committee in its sole discretion:
8.5 Voting Rights. Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, to the extent permitted or required by law, Participants holding Shares of Restricted Stock granted pursuant to this Plan may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant shall have no voting rights with respect to any Restricted Stock Units granted pursuant to this Plan.
8.6 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following Termination of Employment with, or provision of services to, the Company, its Affiliates and/or its Subsidiaries, as the case may be. These provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.
8.7 Section 83(b) Election. The Committee may provide in an Award Agreement that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Code Section 83(b). If a Participant makes an election pursuant to Code Section 83(b) concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of the election with the Company.
Article 9. Performance Units/Performance Shares
9.1 Grant of Performance Units/Performance Shares. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Performance Units and/or Performance Shares to Participants in such amounts and upon such terms as the Committee shall determine.
9.2 Value of Performance Units/Performance Shares. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Performance Units/Performance Shares that will be paid out to the Participant.
9.3 Earning of Performance Units/Performance Shares. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and number of Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.
9.4 Form and Timing of Payment of Performance Units/Performance Shares. Payment of earned Performance Units/Performance Shares shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Units/Performance Shares in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Units/Performance Shares at the close of the applicable Performance Period, or as soon as practicable after the end of the Performance Period. Any Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of the Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.
9.5 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Performance Units and/or Performance Shares following Termination of Employment with, or provision of services to, the Company, its Affiliates and/or its Subsidiaries, as the case may be. These provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Performance Units or Performance Shares issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.
Article 10. Cash-Based Awards and Other Stock-Based Awards
10.1 Grant of Cash-Based Awards. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms as the Committee may determine.
10.2 Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or promise to deliver or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions as the Committee shall determine. Other Stock-Based Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares, and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.
10.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee. The Committee may establish performance goals in its discretion. If the Committee exercises its discretion to establish performance goals, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met.
10.4 Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made, in accordance with the terms of the Award, in cash or Shares as the Committee determines.
10.5 Termination of Employment. The Committee shall determine the extent to which the Participant shall have the right to receive Cash-Based Awards or Other Stock-Based Awards following Termination of Employment with, or provision of services to, the Company, its Affiliates and/or its Subsidiaries, as the case may be. These provisions shall be determined in the sole discretion of the Committee, may be included in an agreement entered into with each Participant, need not be uniform among all Awards of Cash-Based Awards or Other Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
Article 11. Transferability of Awards
11.1 Transferability. Except as provided in Section 11.2 below, during a Participant’s lifetime, his or her Awards shall be exercisable only by the Participant. Awards shall not be transferable other than by will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a DRO; no Awards shall be subject, in whole or in part, to attachment, execution or levy of any kind; and any purported transfer in violation of this Section 11.1 shall be null and void. The Committee may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or Shares deliverable in the event of, or following, the Participant’s death may be provided.
11.2 Committee Action. The Committee may, in its discretion, determine that notwithstanding Section 11.1, any or all Awards (other than ISOs) shall be transferable to and exercisable by such transferees, and subject to such terms and conditions, as the Committee may deem appropriate; provided, however, no Award may be transferred for value (as defined in the General Instructions to Form S-8).
Article 12. Performance Measures
12.1 Performance Measures. The performance goals upon which the payment or vesting of an Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to the following Performance Measures:
Any Performance Measure(s) may be used to measure the performance of the Company, Subsidiary and/or Affiliate as a whole or any business unit of the Company, Subsidiary and/or Affiliate, or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure (j) above as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Article 12.
12.2 Evaluation of Performance. The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) Extraordinary Items, (f) acquisitions or divestitures, and (g) foreign exchange gains and losses. To the extent the inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.
12.3 Adjustment of Performance-Based Compensation. Awards that are intended to qualify as Performance-Based Compensation may not be adjusted upward. The Committee shall retain the discretion to adjust the Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.
12.4 Committee Discretion. If applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of the changes, the Committee shall have sole discretion to make the changes without obtaining shareholder approval provided the exercise of such discretion does not violate Code Section 409A. In addition, if the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make the grants without satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth in Section 12.1.
Article 13. Non-employee Director Awards
Non-employee Directors may be granted Awards pursuant to this Plan only in accordance with this Article 13. Awards granted to Non-employee Directors pursuant to this Plan shall not be subject to management’s discretion. From time to time, the Nominating and Governance Committee shall set the amount(s) and type(s) of Awards that shall be granted to all Non-employee Directors on a periodic, nondiscriminatory basis pursuant to the Plan, as well as any additional amount(s), if any, to be awarded, also on a periodic, nondiscriminatory basis, based on each of the following: (a) the number of committees of the Board on which a Non-employee Director serves, (b) service of a Non-employee Director as the chair of a committee of the Board, (c) service of a Non-employee Director as Chairman of the Board, or
(d) the first selection or appointment of an individual to the Board as a Non-employee Director. Subject to the limits set forth in Section 4.1(c) and the foregoing, the Nominating and Governance Committee shall grant these Awards to Non-employee Directors and any Non-employee Chairman of the Board, and grant new Non-employee Director Awards, as it shall from time to time determine. The terms and conditions of any grant to any Non-employee Director shall be set forth in an Award Agreement.
Article 14. Dividend Equivalents
Any Participant selected by the Committee may be granted Dividend Equivalents on Shares that are subject to any Award, to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by the Committee. However, no Dividend Equivalents may be granted on any Award of Options or SARs.
Article 15. Beneficiary Designation
Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of his death before he receives any or all of the benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant’s death shall be paid to or exercised by the Participant’s executor, administrator or legal representative.
Article 16. Rights of Participants
16.1 Employment. Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Affiliates and/or its Subsidiaries to terminate any Participant’s employment or service on the Board or to the Company at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his employment or service as a Director for any specified period of time.
Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, its Affiliates and/or its Subsidiaries. Accordingly, subject to Articles 3 and 18, this Plan and the benefits under it may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates and/or its Subsidiaries.
16.2 Participation. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
16.3 Rights as a Shareholder. Except as otherwise provided in this Plan, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of the Shares.
17.1 Change of Control of the Company. Notwithstanding any other provision of this Plan to the contrary, the provisions of this Article 17 shall apply in the event of a Change of Control, unless otherwise determined by the Committee in connection with the grant of an Award as reflected in the applicable Award Agreement.
Upon a Change of Control, all then-outstanding Options and SARs shall become fully vested and exercisable immediately, and all other Awards that are not then vested and as to which vesting depends upon only the satisfaction of a service obligation by a Participant to the Company, Subsidiary or Affiliate
shall vest in full and be free of restrictions related to the vesting of the Awards, except to the extent that another Award meeting the requirements of Section 17.2 (a “Replacement Award”) is provided to the Participant to replace the Award in question (the “Replaced Award”). The treatment of any other Awards shall be as determined by the Committee in connection with the grant thereof, as reflected in the applicable Award Agreement.
Except to the extent that a Replacement Award is provided to the Participant, the Committee may, in its sole discretion: (i) determine that any or all outstanding Awards granted under the Plan, whether or not exercisable, will be canceled and terminated and that in connection with the cancellation and termination the holder of the Award may receive for each Share of Common Stock subject to the Awards a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to the cash payment) equal to the difference, if any, between the consideration received by shareholders of the Company in respect of a Share of Common Stock in connection with the transaction and the product of the purchase price, if any, per share under the Award and the number of Shares of Common Stock subject to the Award; provided, however, that if the product is zero or less, or to the extent that the Award is not then exercisable, the Awards will be canceled and terminated without payment therefor; or (ii) provide that the period to exercise Options or SARs granted under the Plan shall be extended (but not beyond the expiration of the Option or SAR).
17.2 Replacement Awards. An Award shall meet the conditions of this Section 17.2 (and hence qualify as a Replacement Award) if: (i) it has a value at least equal to the value of the Replaced Award as determined by the Committee in its sole discretion; (ii) it relates to publicly traded equity securities of the Company or its successor pursuant to the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control; and (iii) its other terms and conditions are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change of Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding sentence are satisfied. The determination as to whether the conditions of this Section 17.2 are satisfied shall be made by the Committee, as constituted immediately before the Change of Control, in its sole discretion.
17.3 Termination of Employment. Upon a Termination of Employment or, in the case of Directors, a termination of service as a Director, of a Participant occurring in connection with or during the period of two (2) years after the Change in Control, other than for Cause, (i) all Replacement Awards held by the Participant shall become fully vested and (if applicable) exercisable and free of restrictions, and (ii) all Options and SARs held by the Participant immediately before the termination of employment or termination of service as a Director that the Participant held as of the date of the Change in Control or that constitute Replacement Awards shall remain exercisable for not less than one (1) year following the termination or until the expiration of the stated term of the Option or SAR, whichever period is shorter; provided that, if the applicable Award Agreement provides for a longer period of exercisability, that provision shall control.
Article 18. Amendment, Modification, Suspension, and Termination
18.1 Amendment, Modification, Suspension, and Termination. Subject to Section 18.3, the Committee may, at any time and from time to time, alter, amend, modify, suspend or terminate this Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company’s shareholders and except as provided in Section 4.4, Options or SARs issued under this Plan will not be repriced, replaced or regranted through cancellation and substitution of another Award, or by lowering the Option Price of a previously granted Option or the Grant Price of a previously granted SAR, and no amendment of this Plan shall be made without shareholder approval if shareholder approval is required by law, regulation or stock exchange rule.
18.2 Awards Previously Granted. Notwithstanding any other provision of this Plan to the contrary (other than Section 18.3), no termination, amendment, suspension or modification of this Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding the Award.
18.3 Amendment to Conform to Law. Notwithstanding any other provision of this Plan to the contrary, the Board of Directors may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), and to the administrative regulations and rulings promulgated under the present or future law.
19.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.
19.2 Share Withholding. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award granted pursuant to this Plan, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction. All such elections shall be irrevocable, made in writing and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
All obligations of the Company under this Plan with respect to Awards granted pursuant to this Plan shall be binding on any successor to the Company, whether the existence of the successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
Article 21. General Provisions
21.1 Forfeiture Events.
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21.2 Legend. The certificates for Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer of the Shares.
21.3 Gender and Number. Except where otherwise indicated by the context, any masculine term used in this Plan also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.
21.4 Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
21.5 Requirements of Law. The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
21.6 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:
21.7 Inability to Obtain Authority. The inability of the Company to obtain from any regulatory body having jurisdiction such authority as the Company’s counsel deems to be necessary to the lawful issuance and sale of any Shares under this Plan, shall relieve the Company of any liability in respect of the failure to issue or sell the Shares as to which requisite authority shall not have been obtained.
21.8 Investment Representations. The Committee may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute the Shares.
21.9 Employees Based Outside of the United States. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other countries in which the Company, its Affiliates and/or its Subsidiaries operate or in which Employees or Directors of the Company, its Affiliates and/or its Subsidiaries are located, the Committee, in its sole discretion, shall have the power and authority to:
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Notwithstanding the above, the Committee may not take any actions under this Section 21.9, and no Awards shall be granted, that would violate applicable law.
21.10 Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of the Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.
21.11 Unfunded Plan. Participants shall have no right, title or interest in or to any investments that the Company and/or its Subsidiaries and/or its Affiliates may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other individual. To the extent that any individual acquires a right to receive payments from the Company, its Subsidiaries and/or its Affiliates under this Plan, the right shall be no greater than the right of an unsecured general creditor of the Company, a Subsidiary or an Affiliate, as the case may be. All payments to be made under this Plan shall be paid from the general funds of the Company, a Subsidiary or an Affiliate, as the case may be, and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of the amounts except as expressly set forth in this Plan.
21.12 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, Awards or other property shall be issued or paid in lieu of fractional Shares or whether fractional Shares or any rights to fractional Shares shall be forfeited or otherwise eliminated.
21.13 Retirement and Welfare Plans. Neither Awards made under this Plan nor Shares or cash paid pursuant to Awards may be included as “compensation” for purposes of computing the benefits payable to any Participant under the Company’s or any Subsidiary’s or Affiliate’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless the other plan expressly provides that the compensation shall be taken into account in computing a Participant’s benefit.
21.14 Deferred Compensation. It is intended that any Award made under this Plan that results in the deferral of compensation (as defined under Code Section 409A) complies with the requirements of Code Section 409A.
21.15 Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt the other compensation arrangements as it may deem desirable for any Participant.
21.16 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair or otherwise affect the Company’s or a Subsidiary’s or an Affiliate’s right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell or transfer all or any part of its business or assets; or (ii) limit the right or power of the Company or a Subsidiary or an Affiliate to take any action that the entity deems to be necessary or appropriate.
21.17 Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction. Unless otherwise
provided in the Award Agreement, recipients of an Award under this Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Agreement.
21.18 Indemnification. Subject to requirements of Delaware law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with Article 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless the loss, cost, liability or expense is a result of his/her own willful misconduct or except as expressly provided by statute.
The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which the individuals may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
21.19 No Guarantee of Favorable Tax Treatment.Although the Company intends to administer the Plan so that Awards will be exempt from, or will comply with, the requirements of Code Section 409A, the Company does not warrant that any Award under the Plan will qualify for favorable tax treatment under Code Section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Participant for any tax the Participant might owe as a result of the grant, holding, vesting, exercise or payment of any Award under the Plan.
o | DETACH PROXY CARD HERE 6 |
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LIBBEY INC.
TOLEDO, OH
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 4, 2006
2:00 P.M., LOCAL TIME
Sign, Date and Return the Proxy Card in the Enclosed Envelope. | x | |||||||||||||||||||||
Votes MUST be indicated (x) in Black or Blue ink. |
1. | Election of Directors | |||||||||||||||||||||
FOR all nominees listed below | WITHHOLD AUTHORITY to vote for all nominees listed below | *EXCEPTIONS |
*Exceptions | ||||||||||||||||||||||||
(INSTRUCTIONS: To vote your shares for all Director nominees, mark “For” box on Item 1. To withhold voting for all nominees mark “Withhold” box. If you do not wish your shares voted for a particular nominee, enter the name(s) of the exception(s) in the space provided above.) |
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LIBBEY INC.
TOLEDO, OH
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 4, 2006
2:00 P.M., LOCAL TIME
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FOR | ||||||||||||||||||||||
2. | Proposal to ratify the appointment of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, | |||||||||||||||||||||
3. | In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. | |||||||||||||||||||||
To change your address, please mark this box. | o | |||||||||||||||||||||
To include any comments, please mark this box. | o | |||||||||||||||||||||
S C A N L I N E | ||||||||||||||||||||||
Please sign exactly as name(s) appear hereon. Joint owners should each sign personally. When signing as an executor, administrator, corporation officer, attorney, agent, trustee, guardian or in other representative capacity, please state your full title as such. | ||||||||||||||||||||||
Date Share Owner sign here | Co-Owner sign here |
LIBBEY INC. | |||||||||
To: JPMorgan Chase Bank, Trustee of: | |||||||||
- Libbey Inc. Retirement Savings Plan | |||||||||
- Libbey Inc. Supplemental Retirement Plan | |||||||||
o | 6 DETACH PROXY CARD HERE 6 |
Sign, Date and Return the Proxy Card in the Enclosed Envelope. | x Votes MUST be indicated (x) in Black or Blue ink. |
1. | Election of Directors | |||||||||||
FOR all nominees listed below | o | WITHHOLD AUTHORITY to vote for all nominees listed below | o | *EXCEPTIONS | o |
*Exceptions | ||
(INSTRUCTIONS: To vote your shares for all Director nominees, mark “For” box on Item 1. To withhold voting for all nominees mark “Withhold” box. If you do not wish your shares voted for a particular nominee, enter the name(s) of the exception(s) in the space provided above.) |
FOR | AGAINST | ABSTAIN | ||||||||
2. | Proposal to ratify the appointment of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2007 | o | o | o | ||||||
3. | In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. | |||||||||
To change your address, please mark this box. |
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To include any comments, please mark this box. | ||||||||||||||||||
o | ||||||||||||||||||
S C A N L I N E | ||||||||||||||||||
Please sign exactly as name(s) appear hereon. Joint owners should each sign personally. When signing as an executor, administrator, corporation officer, attorney, agent, trustee, guardian or in other representative capacity, please state your full title as such. | ||||||||||||||||||
Date | Share Owner sign here | Co-Owner sign here |