def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o |
|
Preliminary Proxy Statement |
o |
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ |
|
Definitive Proxy Statement |
o |
|
Definitive Additional Materials |
o |
|
Soliciting Material Pursuant to §240.14a-12 |
Ferro Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ |
|
No fee required. |
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 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
Rule 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: |
|
|
|
|
|
|
|
|
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 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: |
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
|
|
|
|
|
|
|
FERRO CORPORATION
100O LAKESIDE AVENUE
CLEVELAND, OHIO
44114-1147
USA
TELEPHONE:
(216) 641-8580
FACSIMILE:
(216) 875-7266
WEBSITE: www.ferro.com
|
March 29, 2011
Dear Shareholder:
I cordially invite you to attend the 2011 Annual Meeting of
Shareholders of Ferro Corporation, which will be held on Friday,
April 29, 2011. The meeting will be held at our corporate
offices located at 1000 Lakeside Avenue in Cleveland, Ohio, and
will begin at 10:00 a.m. (Eastern Time). At the 2011 Annual
Meeting, shareholders will (i) vote on the election of four
Directors, (ii) vote on the ratification of the appointment
of Deloitte & Touche LLP as our independent registered
public accounting firm for the fiscal year ending
December 31, 2011, (iii) vote in a non-binding
advisory capacity to approve our executive compensation,
(iv) vote in a non-binding advisory capacity to approve the
frequency of the advisory vote on our executive compensation,
and (v) transact such other business as may properly come
before the Annual Meeting or any adjournment or postponement
thereof. The following Proxy Statement contains information
about the Directors, a description of our corporate governance
practices, information about our relationship with
Deloitte & Touche LLP, a description of our executive
compensation and other relevant information about our Company
and the Annual Meeting.
Regardless of the number of shares you own, your participation
is important. I urge you to vote as soon as possible by
telephone, the Internet or mail, even if you plan to attend the
meeting. You may revoke your proxy at any time before the
meeting regardless of your voting method. If you choose, you may
also vote your shares personally at the meeting. In any case,
your vote is important.
I look forward to seeing you at the Annual Meeting.
Very truly yours,
James F.
Kirsch
Chairman, President
and
Chief Executive
Officer
PROXY
STATEMENT
This document is the Notice of Meeting and the Proxy Statement
of the Board of Directors of Ferro Corporation (the
Board) in connection with the Annual Meeting of
Shareholders to be held on April 29, 2011, at
10:00 a.m. (Eastern Time).
Who is soliciting
my proxy with this Proxy Statement?
The Board of Directors of Ferro is soliciting your proxy in
connection with Ferros Annual Meeting of Shareholders.
Where and when
will the meeting be held?
This years meeting will be held on April 29, 2011, at
the Companys corporate headquarters located at 1000
Lakeside Avenue in Cleveland, Ohio. The meeting will begin at
10:00 a.m. (Eastern Time). Parking is available at nearby
facilities.
What will be
voted on at the meeting?
At the meeting, shareholders will vote on the election of four
Directors for terms ending in 2014, vote on the ratification of
the appointment of Deloitte & Touche LLP as the
Companys independent registered public accounting firm for
2011, vote in a non-binding advisory capacity to approve the
Companys executive compensation, vote in a non-binding
advisory capacity on the frequency of the advisory vote on the
Companys executive compensation, and transact such other
business as may properly come before the Annual Meeting or any
adjournment or postponement thereof.
What if I wish to
attend the meeting?
If you wish to attend the meeting, you should so indicate on the
enclosed attendance response card and return the card to Ferro.
This will assist with meeting preparations and expedite your
admission to the meeting.
Who is entitled
to vote at the meeting?
The record date for this meeting is March 4, 2011. On that
date, we had 86,558,144 shares of Common Stock (which have
a par value of $1.00 per share) and 203,282 shares of
Series A ESOP Convertible Preferred Stock (which have no
par value) outstanding. Each of these shares will be entitled to
one vote at the meeting. (The Common Stock and Series A
ESOP Convertible Preferred Stock will vote together as a single
class.)
How do I
vote?
If you are a registered shareholder, you may cast your vote in
person at the meeting or by any one of the following ways:
By Telephone: You may call the toll-free
number (1-888-652-8683) printed on your proxy card. Follow the
simple instructions and use the personalized control number
printed on your proxy card to vote your shares. You will be able
to confirm that your vote has been properly recorded. Telephone
voting is available 24 hours a day. Telephone voting is
available through 11:59 p.m. Eastern Time on April 28,
2011. If you vote by telephone, you do not need to return your
proxy card.
Over the Internet: You may visit the Web site
(www.investorvote.com/FOE) printed on your proxy card. Follow
the simple instructions and use the personalized control number
printed on your proxy card to vote your shares. You will be able
to confirm that your vote has been properly recorded. Internet
voting is available 24 hours a day. Internet voting is
available through 11:59 p.m. Eastern Time on April 28,
2011. If you vote over the Internet, you do not need to return
your proxy card.
By Mail: You may mark, sign and date the
enclosed proxy card and return it in the enclosed postage-paid
envelope.
If you are a beneficial holder (your shares are held through
your bank or broker), you will receive instructions on how to
vote your shares with these proxy materials.
- 1 -
What if I change
my mind before the meeting?
If you change your mind, you may revoke your proxy by giving us
notice, either in writing before the meeting to: Secretary,
Ferro Corporation, 1000 Lakeside Avenue, Cleveland, Ohio
44114-1147
USA or at the meeting itself. (If you do revoke your proxy
during the meeting, it will not, of course, affect any vote that
has already been taken.)
What if I submit
a proxy without giving specific voting instructions?
If you properly submit a proxy without giving specific voting
instructions, the individuals named as proxies on the proxy card
will vote your shares:
|
|
|
|
o
|
FOR the election of the four nominees for Director named
on page 3.
|
|
|
o
|
FOR the ratification of Deloitte & Touche LLP
as the Companys independent registered public accounting
firm for 2011.
|
|
|
o
|
FOR the approval of the executive compensation of the
Companys named executive officers.
|
|
|
o
|
ONE YEAR for the frequency of an advisory vote on the
executive compensation of the Companys named executive
officers.
|
|
|
o
|
In accordance with the best judgment of the individuals named as
proxies on the proxy card on any other matters properly brought
before the Annual Meeting.
|
Will my shares be
voted if I do not provide my proxy?
If you are a registered shareholder and do not submit a proxy,
you must attend the meeting in order to vote your shares.
If you hold shares through an account with a bank or broker,
your shares may be voted even if you do not provide voting
instructions to your bank or broker. Banks and brokers have the
authority under the rules of the New York Stock Exchange, or
NYSE, to vote shares for which their customers do not provide
voting instructions on certain routine matters. The ratification
of the appointment of Deloitte & Touche LLP as the
Companys independent registered public accounting firm is
considered a routine matter for which banks and brokers may vote
without specific instructions from their customers. You must
provide voting instructions to your bank or broker for your
shares to be voted on all other matters presented at the Annual
Meeting.
- 2 -
PROPOSAL ONE:
ELECTION OF DIRECTORS
At the Annual Meeting, shareholders will consider the election
of four Directors for terms ending in 2014. The Directors are
divided into three classes with each class having a minimum of
three Directors. The Directors in each class are elected for
terms of three years so that the term of office of one class of
Directors expires at each Annual Meeting. The following pages
contain information about Ferros Directors, including both
the nominees for re-election and the Directors whose terms will
not expire at this
meeting.*
Nominees for
Election at this Annual Meeting
The current terms of office of Sandra Austin Crayton, Richard J.
Hipple, William B. Lawrence and Timothy K. Pistell will expire
on the day of this Annual Meeting (as soon as they or their
successors are elected). The Board has nominated each of these
incumbents for re-election at this Annual Meeting. Following is
information about the four Directors nominated for re-election
at this Annual Meeting:
|
|
|
|
|
|
|
|
|
|
|
|
SANDRA AUSTIN CRAYTON
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option: Committee Assignments:
|
|
63 1994 This Annual Meeting 37,167 shares 33,000 shares Audit Committee Governance & Nomination Committee
|
Biographical
Information:
Ms. Crayton is a Managing Director with Alvarez and Marsal,
a professional services firm. Ms. Crayton joined the firm
in January 2006. Prior to that, Ms. Crayton was President
and Chief Executive Officer of PhyServ, LLC, a health care
billing, collections, receivables and information company.
Ms. Crayton was appointed Senior Vice President and General
Manager of the Medical/Surgical and Psychiatry Management
Centers of University Hospitals of Cleveland in 1988. From 1990
to 1994, she served as Executive Vice President and Chief
Operating Officer of The University of Chicago Hospitals. In
1994, she was appointed President of Caremark Clinical
Management Services, a division of Caremark Rx, Inc. In 1995,
Ms. Crayton was named President of Caremark Physician
Services, a division of Caremark, Inc., which provides physician
practice management services. Between 1997 and 1999,
Ms. Crayton was President and Chief Executive Officer of
Sedona Health Care Group, Inc. In 1999, she became President and
Chief Executive Officer of PhyServ LLC and retired from that
position in 2001, when the company was acquired.
Ms. Crayton formerly served as a director of Gambro AB (a
medical technology and healthcare company) and NCCI Holdings,
Inc. (a workers compensation database management firm).
* For each of the
Directors, the number of shares reported as Common Stock
Owned is as of March 4, 2011, the record date for the
Annual Meeting, and includes shares that the Director owns
beneficially, deferred shares and deferred stock units that are
converted to Common Stock after a one-year vesting period. The
number of shares reported as Common Stock Under
Option is as of March 4, 2011, but includes
shares subject to options that would be issued if the Director
exercised all stock options vested within 60 days after
March 4, 2011.
- 3 -
|
|
|
|
|
|
|
|
|
|
|
|
RICHARD J. HIPPLE
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option: Committee Assignments:
|
|
58 2007 This Annual Meeting 22,800 shares 0 shares Compensation Committee (Chair)
|
Biographical
Information:
Mr. Hipple is the Chairman of the Board, President and
Chief Executive Officer of Materion Corporation (formerly known
as Brush Engineered Materials Inc.), a manufacturer of
high-performance engineered materials. Mr. Hipple has
served as Chairman of the Board and Chief Executive Officer of
Materion since May 2006 and President of Materion since May
2005. Mr. Hipple was Vice President of Strip Products of
Materion from July 2001 until May 2002, when he became President
of Alloy Products of Materion. Prior to joining Materion,
Mr. Hipple was President of LTV Steel Company, a business
unit of the LTV Corporation.
|
|
|
|
|
|
|
|
|
|
|
|
WILLIAM B. LAWRENCE
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option: Committee Assignments:
|
|
66 1999 This Annual Meeting 35,170 shares 33,000 shares Compensation Committee Governance & Nomination Committee (Chair)
|
Biographical
Information:
Before the sale of TRW Inc. to Northrop Grumman in December 2002
and his retirement from TRW in February 2003, Mr. Lawrence
served as TRWs Executive Vice President, General
Counsel & Secretary. TRW was a provider of advanced
technology products and services for the global automotive,
aerospace and information systems markets. Mr. Lawrence
first joined TRW in 1976 as counsel specializing in securities
and finance. He held positions of increasing responsibility
within the TRW law department until his appointment as
TRWs Executive Vice President of Planning, Development and
Government Affairs in 1989 and a member of TRWs Management
Committee. In 1997, Mr. Lawrence was named to the
additional position of Executive Vice President, General
Counsel & Secretary.
Mr. Lawrence also serves as a director of Materion
Corporation (formerly known as Brush Engineered Materials Inc.),
a manufacturer of high-performance engineered materials.
- 4 -
|
|
|
|
|
|
|
|
|
|
|
|
TIMOTHY K. PISTELL
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option: Committee Assignments:
|
|
63 2010 This Annual Meeting 10,200 shares 0 shares Audit Committee
|
Biographical
Information:
Mr. Pistell was elected to the Board in September 2010.
Mr. Pistell currently serves as the Executive Vice
President Finance & Administration and
Chief Financial Officer of Parker Hannifin Corporation, a
leading diversified manufacturer of motion and control
technologies and systems. On November 29, 2010, Parker
Hannifin announced Mr. Pistells plans to retire from
his position as Executive Vice President
Finance & Administration and Chief Financial Officer
effective March 31, 2011. Mr. Pistell was appointed
the Executive Vice President Finance &
Administration in April 2005 and has been Chief Financial
Officer since April 2003. Prior to his appointment as Chief
Financial Officer of Parker Hannifin, Mr. Pistell served as
the companys Vice President Treasurer from
July 1993 to April 2003.
Ms. Crayton and Messrs. Hipple, Lawrence and Pistell
have each agreed to stand for re-election. While we have no
reason to believe that any of these nominees will be unable or
unwilling to serve at the time of the Annual Meeting, in the
unlikely event any of them does not stand for re-election, the
shares represented by proxy at the Annual Meeting may be voted
for the election of a substitute nominee named by the Board.
Vote
Required
The four nominees who receive the greatest number of votes cast
by the shares present, in person or by proxy, and entitled to
vote will be elected Directors. Abstentions and broker non-votes
will not be considered as shares voted for or against the
election of the nominees. If you return a proxy without giving
specific voting instructions, then your shares will be voted for
the election of Ms. Crayton and Messrs. Hipple,
Lawrence and Pistell. If you own your shares through a bank or
broker and do not provide specific voting instructions to the
bank or broker or do not obtain a proxy to vote those shares,
then your shares will not be voted in the election of Directors.
If the election of Directors is by cumulative voting (see page
48 below), the persons appointed by your proxy intend to
cumulate the votes represented by the proxies they receive and
distribute such votes in accordance with their best judgment to
elect as many of the Board nominees as possible.
Board
Recommendation
The Board recommends that you vote FOR the
election of Ms. Crayton and Messrs. Hipple, Lawrence
and Pistell. Unless you instruct otherwise on your proxy card or
by telephone or Internet voting instructions, your proxy will be
voted in accordance with the Boards recommendation.
- 5 -
Directors
Continuing in Office
The following are the Directors who will continue in office
after the Annual Meeting:
|
|
|
|
|
|
|
|
|
|
|
|
RICHARD C. BROWN
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option: Committee Assignments:
|
|
51 2009 2013 12,200 shares 0 shares Compensation Committee
|
Biographical
Information:
Mr. Brown currently serves as the Chief Executive Officer
of Performance Fibers, a global leader in high-performance
industrial fibers and related materials. Mr. Brown has
worked in chemical and chemical-related businesses for the
majority of his career and has strong international experience.
Prior to joining Performance Fibers, Mr. Brown was Vice
President and President of the Performance Chemicals Business of
W.R. Grace & Co. from 2005 until 2007. Prior to his
position with W.R. Grace & Co., Mr. Brown spent
19 years at General Electric Company, where he served as
the President & Global Business Unit Leader of
GE Advanced Materials and Silicones from 2003 until 2005
and President and General Manager of General Electric Sealants
and Adhesives from 1999 until 2003.
Mr. Brown also serves as a director of Kraton Polymers LLC,
a leading producer of engineered polymers and styrenic block
copolymers.
|
|
|
|
|
|
|
|
|
|
|
|
JENNIE S. HWANG, Ph.D.
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option: Committee Assignments:
|
|
63 2001 2012 24,925 shares 30,500 shares Audit Committee Governance & Nomination Committee
|
Biographical
Information:
Dr. Hwang has over 30 years of experience in
materials, electronics, chemicals and coatings through her
management
and/or
ownership of businesses. She has served as the President of
H-Technologies Group since 1994, encompassing international
business, worldwide manufacturing services, intellectual
property management and joint ventures. Dr. Hwang is an
invited guest columnist for Global Solar Technology magazine.
Dr. Hwang was also the Chief Executive Officer of
International Electronic Materials Corporation (a manufacturing
company she founded, which was later acquired). Earlier in her
career, Dr. Hwang held senior executive positions with
Lockheed Martin Corp., SCM Corp. and The Sherwin-Williams
Company. Dr. Hwang holds a Ph.D. in engineering and M.S.
degrees in liquid crystals and in chemistry. She has served as
National President of the Surface Mount Technology Association
and in other global leadership positions and is an international
speaker and author of more than 300 publications and several
textbooks on leading technologies and global market thrusts.
Dr. Hwang has been elected to the National Academy of
Engineering and International Hall of Fame (Women in Technology).
Dr. Hwang is a board member of Singapore Asahi Chemical
Industries, Pte. Ltd. (a Singapore chemical company) and Case
Western Reserve University and formerly served on the board of
Second Bancorp, Inc.
- 6 -
|
|
|
|
|
|
|
|
|
|
|
|
GREGORY E. HYLAND
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option: Committee Assignments:
|
|
60 2009 2013 12,200 shares 0 shares Compensation Committee Goverance & Nomination Committee
|
Biographical
Information:
Mr. Hyland has comprehensive operations, sales and
international experience in multiple industries. Mr. Hyland
currently serves as Chairman, President and Chief Executive
Officer of Mueller Water Products, Inc. Prior to joining Mueller
Water Products, Inc., Mr. Hyland served as Chairman,
President and Chief Executive Officer of Walter Industries, Inc.
from September 2005 until December 2006. Prior to that time,
Mr. Hyland served as President, U.S. Fleet Management
Solutions of Ryder System, Inc. from June 2005 to September
2005. He served as Executive Vice President, U.S. Fleet
Management Solutions of Ryder from October 2004 to June 2005.
|
|
|
|
|
|
|
|
|
|
|
|
JAMES F. KIRSCH
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option:
|
|
53 2005 2012 256,722 shares 524,511 shares
|
Biographical
Information:
Mr. Kirsch was elected Chairman of Ferros Board of
Directors in December 2006. He was appointed Chief Executive
Officer and a Director in November 2005. Mr. Kirsch joined
Ferro in October 2004 as its President and Chief Operating
Officer. Prior to joining Ferro, Mr. Kirsch served as
President of Premix Inc. and Quantum Composites, Inc.,
manufacturers of thermoset molding compounds, parts and
sub-assemblies
for the automotive, aerospace, electrical and HVAC industries.
Prior to that, from 2002 through 2004, he served as President of
Quantum Composites, Inc. From 2000 through 2002, he served as
President and director of Ballard Generation Systems and Vice
President for Ballard Power Systems in Burnaby, British
Columbia, Canada. Mr. Kirsch started his career with The
Dow Chemical Company, where he spent 19 years and held
various positions of increasing responsibility, including global
business director of Propylene Oxide and Derivatives and Global
Vice President of Electrochemicals.
Mr. Kirsch also serves as a director of Cliffs Natural
Resources Inc. (an international mining and natural resources
company).
- 7 -
|
|
|
|
|
|
|
|
|
|
|
|
WILLIAM J. SHARP
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option: Committee Assignments:
|
|
69 1998 2012 34,425 shares 33,000 shares Governance & Nomination Committee
|
Biographical
Information:
Mr. Sharp serves as a consultant to various private equity
groups. In 2001, Mr. Sharp retired as President of North
American Tire for The Goodyear Tire & Rubber Company,
a tire, engineered rubber products and chemicals manufacturer.
Mr. Sharp began his career with Goodyear in 1964. Following
various assignments in the United States and abroad, he was
named director of European Tire Production in 1984. He was
appointed Vice President of Tire Manufacturing in 1987 and later
Executive Vice President of Product Supply in 1991. In 1992, he
became President and General Manager of Goodyears European
Regional Operations. He was elected President of Goodyear Global
Support Operations in 1996 and served as President of
North American Tire of Goodyear from 1998 until his
retirement in 2001.
Mr. Sharp is also a director of Jiangsu Xingda Tyre Cord
Co. Ltd. (a Chinese tire component supplier), Exceed Company
Ltd. (a designer and distributor of footwear, apparel and
accessories), 2020 ChinaCap Acquirco, Inc. (a special purpose
entity, which was acquired by Exceed Company Ltd. in October
2009) and Theotino, Inc. (a specialty IT outsourcing
company dedicated to servicing small and medium enterprises
worldwide).
|
|
|
|
|
|
|
|
|
|
|
|
RONALD P. VARGO
Age: First Became a Ferro Director: Current Term Expires: Common Stock Owned: Common Stock Under Option: Committee Assignments:
|
|
57 2009 2013 17,200 shares 0 shares Audit Committee (Chair) Compensation Committee
|
Biographical
Information:
Mr. Vargo has extensive global experience in treasury,
investor relations, business strategy, acquisitions and
divestitures, finance, and operations in global corporations. On
March 1, 2010, Mr. Vargo was named Vice President and
Chief Financial Officer of ICF International effective
April 1, 2010. Prior to joining ICF International,
Mr. Vargo served as the Executive Vice President and Chief
Financial Officer of Electronic Data Systems (EDS)
and served as a member of the EDS Executive Committee.
Mr. Vargo joined EDS in 2004 as Vice President and
Treasurer and was promoted to Co-Chief Financial Officer in
March 2006. Before joining EDS, Mr. Vargo served as
Corporate Treasurer and Vice President of Investor Relations at
TRW Inc., now part of Northrop Grumman, until 2003.
Board Meetings
and Attendance
During 2010, the Board met 7 times and each Director attended at
least 75% of the total number of meetings of the Board and the
committees on which he or she served. Mr. Pistell, who was
elected to the Board during September 2010, did not attend
meetings until after his election. In accordance with
Ferros Corporate Governance Guidelines, the Directors are
encouraged to attend the Annual Meeting of Shareholders. All of
the Directors who were in office at the time attended the 2010
Annual Meeting held on April 30, 2010.
- 8 -
CORPORATE
GOVERNANCE
Corporate
Governance
The Board of Directors and management believe that good
corporate governance enhances investor confidence in Ferro and
increases shareholder value. The imperative to continue to
develop and implement best practices throughout Ferros
corporate governance structure is fundamental to Ferros
strategy to enhance performance by creating an environment that
increases operational efficiency and ensures long-term
productivity and growth. Sound corporate governance practices
also ensure alignment with shareholder interests by promoting
fairness, transparency and accountability in business activities
among employees, management and the Board. Representative steps
Ferro has taken to fulfill this commitment include, among others:
|
|
|
|
o
|
The Board has long followed, both formally and informally,
corporate governance principles designed to assure that the
Board, through its membership, composition and committee
structure, is able to provide informed, competent and
independent oversight of the Company;
|
|
|
o
|
All members of the Audit Committee, Compensation Committee and
Governance & Nomination Committee are independent
under Ferros Guidelines for Determining Director
Independence, which meet or exceed the independence standards
set forth by the NYSE;
|
|
|
o
|
The non-management members of the Board, all of whom are
independent, meet regularly without the presence of management;
|
|
|
o
|
All Directors, officers and employees are responsible for
complying with Ferros policies on business conduct and
ethics;
|
|
|
o
|
The charters for the committees of the Board clearly establish
each committees respective roles and responsibilities;
|
|
|
o
|
Ferro has a hotline available to all employees and our Audit
Committee has procedures in place for the anonymous submission
of employee complaints on accounting, internal accounting
controls and auditing matters to encourage employees to report
questionable activities to the legal department and Audit
Committee;
|
|
|
o
|
Ferros internal audit function maintains critical
oversight over key areas of Ferros business and financial
processes and controls, and reports directly to the Audit
Committee;
|
|
|
o
|
Ferros independent accountants report directly to the
Audit Committee; and
|
|
|
o
|
Ferro has established procedures for shareholders to communicate
directly and confidentially with the Lead Director or the
non-management Directors.
|
Corporate
Governance Principles
The Board has adopted Corporate Governance Principles. These
Corporate Governance Principles, which may be found on
Ferros Web site (www.ferro.com), are intended to assure
that Ferros Director qualifications, committee structure
and overall Board processes provide good corporate governance
and independent oversight of the Companys management.
Director
Independence
The Board has also adopted formal Guidelines for Determining
Director Independence, which are available on Ferros Web
site (www.ferro.com). The purpose of these Guidelines is to
assist the Board in its evaluation of and determination as to
the independence of members of the Board. The Guidelines meet or
exceed in all respects the standards set forth in
section 303A of the New York Stock Exchange listing
standards, and the Board has determined that all Directors,
other than Mr. Kirsch, qualify as independent
under such standards.
- 9 -
Board
Committees
The Board of Directors has three committees, which are the Audit
Committee, the Compensation Committee and the
Governance & Nomination Committee.
Audit
Committee
The Audit Committee assists the Board with oversight of the
integrity of Ferros financial statements, compliance with
legal and regulatory requirements relating to Ferros
financial reports, Ferros independent registered public
accounting firms qualifications, independence, and
performance, the performance of the internal audit and risk
management functions, compliance with legal and ethical policies
and accounting practices and systems of internal controls. The
Audit Committee is not, however, responsible for conducting
audits, preparing financial statements or the accuracy of any
financial statements or filings, all of which remain the
responsibility of management and the Companys independent
registered public accounting firm. The Audit Committees
charter may be found on Ferros Web site (www.ferro.com).
The current members of the Audit Committee are Ms. Crayton,
Dr. Hwang and Messrs. Pistell and Vargo.
Messrs. Brown, Lawrence and Sharp and former directors,
Messrs. Premdas and Sullivan, also served on the Audit Committee
during 2010. Mr. Sharp served as the Chair of the Audit
Committee until the date of the 2010 annual meeting. Since the
date of the 2010 annual meeting, Mr. Vargo has served as
the Chair of the Audit Committee. Each member of the Audit
Committee is independent as required under
section 301 of the Sarbanes-Oxley Act of 2002, as well as
under the standards contained in section 303A of the New
York Stock Exchanges listing standards and the
Companys Guidelines for Determining Director Independence.
The Board has designated Mr. Vargo as the Audit
Committees named financial expert, as defined in
section 407 of the Sarbanes-Oxley Act and the Securities
and Exchange Commissions (the SEC) rules under
that statute. (Mr. Vargos biography is on page 8
above.) Each member of the Audit Committee has the requisite
financial literacy required under section 303A of the New
York Stock Exchange (the NYSE) listing standards to
serve on the Audit Committee.
The Audit Committee met 7 times in 2010. The Audit
Committees report is on page 45 below.
Compensation
Committee
The Compensation Committee is responsible for recommending
policies for compensation of Directors and setting the
compensation of the Senior Management Committee, which is
comprised of the Companys executive officers. The
Compensation Committee also oversees the various compensation
and benefit plans and policies of the Company generally. The
Compensation Committees charter may be found on
Ferros Web site (www.ferro.com).
The current members of the Compensation Committee are
Messrs. Brown, Hipple, Hyland, Lawrence and Vargo.
Mr. Sharp and former directors, Messrs. Bulkin and
Mee, also served on the Compensation Committee during 2010, with
Mr. Bulkin serving as the Chair until the date of the 2010
annual meeting. Following the 2010 annual meeting,
Mr. Hipple has served as the Chair of the Compensation
Committee. All members of this Committee meet the
independence standards contained in
section 303A of the NYSEs listing standards and the
Companys Guidelines for Determining Director Independence.
The Compensation Committee met 5 times in 2010. The Compensation
Committees report is on page 26 below.
The Compensation Committee retained Towers Watson (formerly
Towers Perrin), a nationally recognized executive compensation
consulting firm, to serve as its compensation consultant until
the third quarter of 2010. During the third quarter of 2010, the
Committee retained Pay Governance LLC (Pay
Governance) as its compensation consultant. Pay Governance
is a consulting firm formed by former partners of Towers Watson,
including the consultants that served the Compensation
Committee. Pay Governance is totally independent of Towers
Watson and only offers executive compensation consulting
services, eliminating any potential concerns regarding the
independence of the Compensation Committees advisor or
conflicts of interest. Pay Governance assists with the design of
pay plans and reviewing the effectiveness and competitiveness of
the Companys
- 10 -
compensation programs. Pay Governance also provides the
Compensation Committee and management with market data on the
compensation programs of peer companies. To ensure that Pay
Governances consulting services are independent and
objective, the Compensation Committee and Pay Governance take
the following steps: (i) Pay Governance reports directly to
the Compensation Committee Chair; (ii) at least annually,
the Compensation Committee conducts a review of Pay
Governances performance; and (iii) Pay
Governances fees are not linked to the size of the
Companys executive compensation programs.
The Chief Executive Officer (CEO) and Vice
President, Human Resources make recommendations regarding
compensation of the Senior Management Committee (other than for
the CEO) based on competitive market data, internal pay equity,
responsibilities and performance. The Compensation Committee
makes all final determinations regarding executive compensation,
including salary, bonus targets, equity awards and related
performance goals. From time to time, the Compensation Committee
delegates to the CEO and Vice President, Human Resources
authority to carry out certain administrative duties regarding
the compensation programs, including grants of equity awards to
non-executive employees and new hires. For more information on
how executive compensation decisions are made, see the
Executive Compensation Discussion &
Analysis section beginning on page 17 below.
Governance & Nomination Committee
The Governance & Nomination Committee is responsible
for recommending to the Board corporate governance principles,
overseeing adherence to the corporate governance principles
adopted by the Board, recommending to the Board criteria and
qualifications for new Board members, recommending to the Board
nominees for election as Directors and recommending to the Board
the composition and chairs of each committee. The
Governance & Nomination Committees charter may
be found on Ferros Web site (www.ferro.com).
The current members of the Governance & Nomination
Committee are Ms. Crayton, Dr. Hwang and
Messrs. Hyland, Lawrence and Sharp. Mr. Lawrence
serves as the Chair. Former director, Mr. Sullivan, also
served on the Governance & Nomination Committee during
2010. All members of this Committee meet the
independence standards contained in
section 303A of the NYSEs listing standards and the
Companys Guidelines for Determining Director Independence.
The Governance & Nomination Committee met 3 times in
2010.
In its role as the nominating body for the Board, the
Governance & Nomination Committee reviews the
credentials of potential Director candidates (including
potential candidates recommended by shareholders), conducts
interviews and makes formal recommendations to the Board for the
annual and any interim election of Directors. In making its
recommendations, pursuant to the Companys Corporate
Governance Principles, the Governance & Nomination
Committee considers a variety of factors, including skills,
independence, background, experience, diversity and
compatibility with existing Board members. The
Governance & Nomination Committee may also consider
such other factors as it deems appropriate in the best interests
of the Company and its shareholders. The Governance &
Nomination Committee does not have a policy exclusively focused
on the consideration of diversity; however, diversity is one of
the factors that the Governance & Nomination Committee
considers when identifying potential Director candidates and
making recommendations to the Board.
The Governance & Nomination Committee identifies
nominees by first evaluating the current members of the Board
willing to continue in service. If any Board member is of
retirement age or does not wish to continue in service or if the
Governance & Nomination Committee or the Board decides
not to nominate a member for re-election, then the Committee
identifies the desired skills and experience in light of the
criteria outlined above. The Governance & Nomination
Committee then considers potential Director candidates that may
be recommended by the Board, senior management, shareholders and
consultants. During 2010, an independent member of the Board
identified Mr. Pistell as a Director candidate.
The Governance & Nomination Committee considered each
Directors leadership experience, specific industry or
manufacturing experience and familiarity with global operations.
The Directors hold or have held executive officer positions in
organizations that have provided them experience in operations,
management, risk management and leadership development. The
Board and the Governance & Nomination Committee
believe that
- 11 -
these skills and qualifications combined with each
Directors diverse background and ability to work in a
positive and collegial fashion benefit Ferro and Ferros
shareholders by creating a strong and effective Board. Set forth
below are qualifications with respect to each member of the
Board:
Mr. Kirsch brings to the Board an extensive understanding
of Ferros business and has experience working as a senior
officer for major organizations with international operations.
As the Chief Executive Officer since 2005 and the Chairman of
the Board since 2006, Mr. Kirsch has played an integral
role in shaping Ferros strategic direction.
Mr. Browns distinguished career in chemical and
chemical-related businesses and strong international experience
adds to the Board relevant knowledge for Ferros future
success. In addition, Mr. Brown has demonstrated leadership
experience and currently serves as the chief executive officer
of an industrial fibers company and a member of the board of
another publicly traded company.
Ms. Crayton has experience serving in several senior
management positions in both the public and private sector and
is currently a managing director of Alvarez and Marsal, a
professional services firm. In addition, Ms. Crayton has
served as a director of the Company since 1994 and has extensive
knowledge of the Companys industry and its strategic
challenges.
Mr. Hipple has leadership and management experience with a
business that produces and supplies high performance engineered
materials globally. Mr. Hipple currently serves as chairman
of the board, chief executive officer and president of a
publicly-traded company and provides the board with insight and
experience leading a public company comparable in size and with
international sales.
Dr. Hwang has three decades of international business
experience in materials, electronics, chemicals and coatings
through her management
and/or
ownership of businesses. She has served in a number of senior
management positions, including president and chief executive
officer. Her knowledge of the materials industries and
experience in manufacturing infrastructure offers a broad
perspective on the industries in which Ferro participates. In
addition, she has served on international advisory boards and
the boards of both public and private companies and non-profit
organizations.
Mr. Hyland has comprehensive operations, sales and
international experience in multiple industries, which will
benefit the Companys diverse business units. In addition,
Mr. Hyland currently serves as the chairman, chief
executive officer and president of another publicly traded
company.
Mr. Lawrence has experience with legal compliance, risk
assessment, government relations and business development in
global automotive, aerospace and information systems markets.
Mr. Lawrence served as secretary and general counsel of a
Fortune 500 company and has extensive experience dealing
with corporate governance issues. In addition, Mr. Lawrence
also serves as a member of the board of another publicly traded
company.
Mr. Pistell has extensive experience in corporate finance,
treasury, international business and diversified manufacturing.
In addition, Mr. Pistell has served in a number of senior
management positions in accounting and finance including as the
chief financial officer of a publicly traded company.
Mr. Sharp has extensive experience in international
operations. He served in several senior management positions in
the United States and abroad, which provides the Board with
global perspective. In addition, Mr. Sharp serves as a
member of the board of both public and private international
companies.
Mr. Vargo has extensive experience in treasury, investor
relations, business strategy, acquisitions and divestitures,
finance and operations in global corporations. In addition,
Mr. Vargo has served in numerous senior management
positions at other publicly traded companies and is currently
the chief financial officer of a publicly traded company.
The Governance & Nomination Committee will consider
candidates for Director who are recommended by shareholders.
Shareholder recommendations should be submitted in writing to:
Secretary, Ferro Corporation, 1000 Lakeside Avenue, Cleveland,
Ohio
44114-1147
USA. The recommendation letter should include the
shareholders own name, address and the number of shares
owned and the candidates name, age, business address,
residence
- 12 -
address and principal occupation, as well as the number of
shares, if any, the candidate owns. The letter should provide
all of the information that would need to be disclosed in the
solicitation of proxies for the election of directors under
federal securities laws. Finally, the shareholder should also
submit the recommended candidates written consent to be
elected and commitment to serve if elected. Ferro may also
require a candidate to furnish additional information regarding
his or her eligibility and qualifications.
Board Leadership
Structure
Ferros board leadership structure is comprised of a
combined Chief Executive Officer and Chairman of the Board of
Directors and a Lead Director. Currently, Mr. Kirsch serves
as the Chief Executive Officer and Chairman of the Board of
Directors. Ferro believes that a combined Chief Executive
Officer and Chairman of the Board role is appropriate because it
provides an efficient and effective leadership structure for
Ferro and ensures that the Board of Directors agenda and
Ferros strategic objectives and challenges are aligned,
that the Board of Directors is presented with information
required for it to fulfill its responsibilities and that Board
of Directors meetings are as productive and effective as
possible.
Ferros non-management Directors, all of whom are
independent, meet at regularly scheduled executive sessions
several times each year. These meetings are chaired by a Lead
Director selected from among the committee Chairs.
Mr. Hipple, the Chair of the Compensation Committee,
currently serves as the Lead Director. Neither the CEO nor any
other member of management attends these meetings except in
limited circumstances if requested by the Directors. Following
each executive session, the Lead Director or the other
non-management Directors shares with the CEO such observations,
comments or concerns as the Lead Director and the other
non-management Directors deem appropriate.
The independent Directors have access to Ferro management as
they deem necessary or appropriate. In addition, the Chairs of
the Audit Committee, Governance & Nomination Committee
and Compensation Committee meet periodically with members of
senior management.
Boards Role
in Risk Management Oversight
The Board oversees the Audit Committee, which has the primary
role in risk management oversight. The Board receives periodic
reports from the Audit Committee with respect to its discussions
with management regarding Ferros guidelines and policies
governing the assessment and management of risks, any major risk
exposures and steps management has taken to monitor and control
such exposures and Ferros use of certain financial
instruments. Management uses an enterprise risk management
process to identify, assess, manage and mitigate risks to the
Company. Each of the CEO, Chief Financial Officer
(CFO), the Director of Internal Audit and the
General Counsel of the Company periodically report to the Audit
Committee with respect to risk management. In addition, each of
the CFO and the Treasurer periodically report to the Audit
Committee with respect to financial risk management and
Ferros use of certain financial instruments. With respect
to risk related to compensation matters, the Compensation
Committee considers, in establishing and reviewing Ferros
executive compensation program, whether the program encourages
unnecessary or excessive risk-taking. The Compensation Committee
periodically reports to the Board. Ferros Board leadership
structure facilitates the effectiveness of the risk oversight
process by having an experienced Chairman and Chief Executive
Officer who has extensive knowledge of and experience with the
risks that Ferro faces.
Other Corporate
Governance Measures
Finally, Ferro has adopted a series of policies dealing with
business conduct and ethics. These policies apply to all Ferro
Directors, officers and employees. A summary of these policies
may be found on Ferros Web site (www.ferro.com), and the
full text of the policies is available in print, free of charge,
by writing to: Secretary, Ferro Corporation, 1000 Lakeside
Avenue, Cleveland, Ohio
44114-1147
USA. The Audit Committee is responsible for the review and
oversight of the Companys ethical policies. The Audit
Committee must approve any exception, amendment or waiver to
these policies. In addition, a description of any exception,
amendment or waiver to these policies with respect to the CEO,
CFO and the Companys principal accounting officer,
controller or persons
- 13 -
performing similar functions will be posted on the
Companys Web site within four business days following the
date of the exception, amendment or waiver. Ferro also maintains
a hotline that allows employees throughout the world to report
confidentially any detected violations of these legal and
ethical conduct policies consistent with local legal
requirements and subject to local legal limitations. In
addition, the Governance & Nomination Committee is
responsible for reviewing and approving any related party
transaction. Any shareholder or other interested party who
wishes to communicate directly and confidentially with the Lead
Director or the non-management Directors as a group may contact
the non-management Directors at the following Web site:
www.ferrodirectors.com. The non-management Directors will handle
such communications confidentially.
- 14 -
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Stock Ownership
by Directors, Executive Officers and Employees
Ferro encourages share ownership by its Directors and executive
officers and has ownership guidelines as described in Executive
Compensation Discussion & Analysis. The information
below shows beneficial ownership of Ferro Common Stock by
(i) each Director, (ii) each executive officer named
in the Summary Compensation Table on page 28 below, and
(iii) all Directors and current executive officers as a
group. Except as otherwise noted, each person has sole voting
and investment power as to his or her shares of Common Stock.
The information set forth below is as of March 4, 2011.
None of our current Directors or executive officers own any of
the outstanding shares of Series A ESOP Convertible
Preferred Stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
|
Shares of Common
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Stock Underlying
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
|
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
Directly or
|
|
|
|
Within 60 Days
|
|
|
|
Total Shares of
|
|
|
|
Outstanding
|
|
|
|
|
Indirectly
|
|
|
|
of Record Date
|
|
|
|
Common Stock
|
|
|
|
Common Stock
|
|
Richard C.
Brown(1)
|
|
|
|
8,000
|
|
|
|
|
0
|
|
|
|
|
8,000
|
|
|
|
|
*
|
|
|
Sandra Austin
Crayton(1)
|
|
|
|
32,967
|
|
|
|
|
33,000
|
|
|
|
|
65,697
|
|
|
|
|
*
|
|
|
Richard J.
Hipple(1)
|
|
|
|
18,600
|
|
|
|
|
0
|
|
|
|
|
18,600
|
|
|
|
|
*
|
|
|
Jennie S.
Hwang(1)
|
|
|
|
20,725
|
|
|
|
|
30,500
|
|
|
|
|
51,225
|
|
|
|
|
*
|
|
|
Gregory E.
Hyland(1)
|
|
|
|
8,000
|
|
|
|
|
0
|
|
|
|
|
8,000
|
|
|
|
|
*
|
|
|
James F.
Kirsch(2)
|
|
|
|
256,722
|
|
|
|
|
524,511
|
|
|
|
|
781,233
|
|
|
|
|
*
|
|
|
William B.
Lawrence(1)
|
|
|
|
30,970
|
|
|
|
|
33,000
|
|
|
|
|
63,970
|
|
|
|
|
*
|
|
|
Timothy K.
Pistell(1)
|
|
|
|
6,000
|
|
|
|
|
0
|
|
|
|
|
6,000
|
|
|
|
|
*
|
|
|
William J.
Sharp(1)
|
|
|
|
30,225
|
|
|
|
|
33,000
|
|
|
|
|
63,225
|
|
|
|
|
*
|
|
|
Ronald P.
Vargo(1)
|
|
|
|
13,000
|
|
|
|
|
0
|
|
|
|
|
13,000
|
|
|
|
|
*
|
|
|
Officers Named in Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R.
Miklich(2)
|
|
|
|
52,500
|
|
|
|
|
0
|
|
|
|
|
52,500
|
|
|
|
|
*
|
|
|
Michael J.
Murry(2)
|
|
|
|
48,477
|
|
|
|
|
115,023
|
|
|
|
|
163,500
|
|
|
|
|
*
|
|
|
Peter T.
Thomas(2)
|
|
|
|
47,149
|
|
|
|
|
110,283
|
|
|
|
|
157,432
|
|
|
|
|
*
|
|
|
Mark H.
Duesenberg(2)
|
|
|
|
33,200
|
|
|
|
|
38,750
|
|
|
|
|
71,950
|
|
|
|
|
*
|
|
|
Sallie B.
Bailey(2)
|
|
|
|
12,000
|
|
|
|
|
0
|
|
|
|
|
12,000
|
|
|
|
|
*
|
|
|
16 Directors and Executive Officers as a
Group(3)
|
|
|
|
656,071
|
|
|
|
|
1,029,442
|
|
|
|
|
1,669,254
|
|
|
|
|
1.89
|
%
|
|
|
|
|
*
|
|
Less than 1 percent.
|
|
(1)
|
|
Shares of Common Stock reported
above does not include 4,200 deferred stock units awarded to
each non-employee Director in February 2011, because no voting
rights are conferred with the deferred stock units. The deferred
stock units will be converted to Common Stock after a one-year
vesting period, unless deferred into the Ferro Director Deferred
Compensation Plan, and are subject to forfeiture if the
recipient is no longer serving as a Director at the end of the
deferral period except in the case of retirement, disability or
death. Amounts reported include shares held on behalf of each
Director under the Ferro Director Deferred Compensation Plan
because the Directors have the ability to direct the voting of
shares held in such plan.
|
|
(2)
|
|
Shares of Common Stock reported
above include 27,500, 4,750 and 4,750 performance shares awarded
to Mr. Kirsch, Mr. Murry and Mr. Thomas,
respectively, with regard to the
2008-2010
performance period (all of which shares of Common Stock are
subject to forfeiture under the LTIP), as well as 162,000,
27,500, 36,500, 36,500 and 33,200 restricted shares of common
stock awarded to Mr. Kirsch, Mr. Miklich,
Mr. Murry, Mr. Thomas and Mr. Duesenberg,
respectively, under the LTIP, but do not include 45,626
phantom shares held for the accounts of
Mr. Kirsch, Mr. Murry, Mr. Thomas and
Mr. Duesenberg in the Supplemental 401(k) Plan. Shares of
Common Stock reported above for Ms. Bailey do not include
any performance shares or restricted shares because any unvested
performance shares or restricted shares awarded to
Ms. Bailey were forfeited upon the termination of her
employment. See Employment Agreements and Termination and Change
in Control Payments on page 35.
|
|
(3)
|
|
Shares reported above include
41,175 performance shares awarded to the executive officers with
regard to the
2008-2010
performance period (all of which shares of Common Stock are
subject to forfeiture under the terms of the respective plans),
as well as 323,700 restricted shares of common stock, but do not
include 50,362 phantom shares held for the accounts
of the executive officers in the Supplemental Executive Defined
Contribution Plan.
|
- 15 -
Stock Ownership
by Other Major Shareholders
The following table sets forth information about each person
known by us to be the beneficial owner of more than 5% of
Ferros outstanding Common Stock or shares convertible into
Common Stock.
|
|
|
|
|
|
|
|
|
|
Nature and Amount of
|
|
|
Percentage of
|
|
|
|
Beneficial Ownership
|
|
|
Outstanding
|
Name and Address of Beneficial Owner
|
|
|
(Shares of Common Stock)
|
|
|
Common Stock
|
Mario J. Gabelli and related
entities(1)
One Corporate Center Rye,
New York 10017
|
|
|
11,073,181
|
|
|
12.86%
|
|
Lord, Abbett & Co.,
LLC(2)
90 Hudson Street
Jersey City, NJ 07302
|
|
|
6,383,556
|
|
|
7.41%
|
|
BlackRock,
Inc.(3)
40 East 52nd Street
New York, NY 10022
|
|
|
5,694,297
|
|
|
6.61%
|
|
TIAA-CREF Investment Management, LLC, and related
entities(4)
730 Third Avenue
New York, NY 10017
|
|
|
5,100,743
|
|
|
5.92%
|
|
The Vanguard Group,
Inc.(5)
100 Vanguard Blvd.
Malvern, PA 19355
|
|
|
4,556,583
|
|
|
5.28%
|
|
|
|
|
(1)
|
|
We obtained the information
regarding share ownership from the Schedule 13D/A filed
August 18, 2010, by Mario J. Gabelli and related entities,
which reported sole voting power as to 10,890,181 shares of
Common Stock and sole dispositive power as to
11,073,181 shares of Common Stock as of August 17,
2010.
|
|
(2)
|
|
We obtained the information
regarding share ownership from the Schedule 13G/A filed
February 14, 2011, by Lord, Abbett & Co., LLC,
and related entities, which reported sole voting power as
5,597,147 shares of Common Stock and sole dispositive power
as to 6,383,556 shares of Common Stock as of
December 31, 2010.
|
|
(3)
|
|
We obtained the information
regarding share ownership from the Schedule 13G/A filed
February 4, 2011, by BlackRock, Inc., which reported sole
voting power as to 5,694,297 shares of Common Stock and
sole dispositive power as to 5,694,297 shares of Common
Stock as of December 31, 2010.
|
|
(4)
|
|
We obtained the information
regarding share ownership from the Schedule 13G/A filed
February 11, 2011, by TIAA-CREF Investment Management, LLC,
and related entities, which reported sole voting power as to
5,100,743 shares of Common Stock and sole dispositive power
as to 5,100,743 shares of Common Stock as of
December 31, 2010.
|
|
(5)
|
|
We obtained the information
regarding share ownership from the Schedule 13G filed
February 10, 2011, by The Vanguard Group, Inc, which
reported sole voting power as to 124,871 shares of Common
Stock and sole dispositive power as to 4,431,712 shares of
Common Stock as of December 31, 2010.
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our officers and Directors, and persons who own more
than 10% of a registered class of our equity securities, to file
reports of ownership and changes in ownership with the SEC.
Officers, Directors and greater than ten percent shareholders
are required by SEC regulation to furnish Ferro with copies of
all Section 16(a) forms they file.
To Ferros knowledge, based solely on review of the copies
of such reports furnished to Ferro, during the fiscal year ended
December 31, 2010, or with respect to such fiscal year, all
Section 16(a) filing requirements were met, except for the
disposition of 7,600 Common Shares by Dr. Hwang was filed
late on a Form 5 and the disposition of 9,764 Common Shares
by Mr. Thomas was filed late on a Form 4.
- 16 -
EXECUTIVE
COMPENSATION DISCUSSION & ANALYSIS
Set forth below is a description of the process by which the
Company, through its Compensation Committee, set the
compensation of its Chief Executive Officer and other members of
the Senior Management Committee for 2010. (The Senior Management
Committee is comprised of the Companys executive officers.
See page 17 of the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010.)
Executive
Summary 2010 Compensation Actions and
Outcomes
The Companys performance in 2010 demonstrated a strong
recovery from 2009, a year in which financial performance was
significantly impacted by the global recession. Financial
performance exceeded the budgeted targets that had been
established for the year for all metrics. Net sales increased by
26.8% compared with 2009 and gross margin percentage, excluding
precious metals, increased to 27.1% of sales from 22.4% in the
prior-year period. Operating profit margin increased to 11.1% of
sales excluding precious metals, up from 4.2% for 2009. Both the
gross margin and the operating profit margin have been adjusted
to exclude special charges. Also during 2010, the Company
successfully refinanced its debt offerings to extend maturities,
improve liquidity and reduce future interest expense.
As a result of the Companys strong recovery in 2010,
certain extraordinary compensation actions implemented in 2009
were reversed. Specifically, salary increases for all non-union
employees including executive officers, payment of matching
contributions under the 401(k) Plan and Supplemental 401(k)
Plan, and annual incentive plan payments were reinstated in 2010.
During 2010, the Company also took the following actions to
further align the interests of executive officers with those of
shareholders and to enhance the Companys compensation
practices:
|
|
|
|
o
|
On June 23, 2010, the Compensation Committee approved a
formal separation policy for certain senior executives,
including the CEO. The Committee determined that the adoption of
the separation policy obviated the need for a continued
employment agreement with the CEO. That agreement expired,
pursuant to its terms, on December 31, 2010.
|
|
|
o
|
The change in control form of agreement covering new executives
was amended to eliminate the tax
gross-up and
modified single trigger provisions.
|
|
|
o
|
An anti-hedging provision was incorporated into the
Companys Insider Trading Policy.
|
|
|
o
|
Executive allowances were eliminated to improve transparency and
simplify the compensation program.
|
The Companys strong financial performance in 2010 resulted
in maximum payouts under the 2010 Annual Incentive Plan.
Accordingly, annual cash compensation for the executive officers
was above market median, consistent with the plan design of
delivering pay that is above median for performance that greatly
exceeds targeted results. This was in contrast to 2009 during
which weak financial performance resulted in annual cash
compensation levels below market median. This was also
consistent with the incentive plan design of delivering less
than competitive pay for results that fall below the
Companys performance targets. Long-term incentive grants
made to executive officers, although higher in grant value due
primarily to stock price improvement from 2009, remained below
the market median due to limited share availability. With the
approval of the 2010 Long-Term Incentive Plan and strong stock
price appreciation, long-term incentive grants to executive
officers in 2011 will be targeted at the market median,
consistent with the Companys pay philosophy.
Compensation
Philosophy and Objectives
The primary objectives of the Companys executive
compensation program are:
|
|
|
|
o
|
To provide a total compensation opportunity designed to attract,
retain and align the efforts of an experienced and
high-performing senior management team toward the achievement of
the financial goals of the Company and growth in shareholder
value;
|
- 17 -
|
|
|
|
o
|
To reward the achievement of specific annual and long-term
financial goals and align the interests of executives with those
of shareholders;
|
|
|
o
|
To target executive compensation levels for base salary, annual
incentives and long-term incentive compensation at the 50th
percentile of the competitive market, which includes
Ferros peer companies and additional companies that
participate in a similar industry and have comparable revenues,
to ensure the Companys ability to compete in the market
for executive talent;
|
|
|
o
|
To target appropriate portions of long-term incentive
compensation, when necessary, toward retention of our executive
team; and
|
|
|
o
|
To ensure that compensation plans are designed with a strong
pay-for-performance
relationship and that the actual compensation paid to executives
is aligned and correlated with financial performance results and
changes in shareholder value.
|
Compensation
Committee Oversight
The Compensation Committee of the Board (the
Committee) is responsible for establishing,
implementing and monitoring adherence to the Companys
compensation philosophy for the CEO and the other members of the
Senior Management Committee. The Committee sets the compensation
of the Companys executive officers, recommends to the
Board compensation for the Directors and committee Chairs and
oversees compensation and benefit plans and policies of the
Company generally.
In carrying out its oversight responsibilities, the Committee is
supported by external executive compensation consultants and
management. The Committee has the sole authority to retain (and
terminate) any consultants used to evaluate the Companys
executive compensation.
The nature of this support is summarized below:
Role of External Compensation
Consultants. During 2010, the Committee initially
retained Towers Watson and later, beginning in the third
quarter, transitioned to Pay Governance LLC as the
Committees executive compensation consulting firm (the
Compensation Consultant). Neither Towers Watson nor
Pay Governance LLC provided any other services to the Company
during 2010.
The Compensation Consultant reports directly to the Committee
and provides expertise to management and the Committee on the
design of appropriate pay plans, analysis of the effectiveness
of existing plans and the market-competitiveness of base salary,
annual incentive levels and long-term incentive awards. The
Compensation Consultant, with the knowledge and approval of the
Committee, also provided advice to management and the Committee
on the competitive elements of the separation policy and the
revised form change in control agreement put in place during
2010, as well as on the pay program for non-employee Directors.
In fulfilling this role, the Compensation Consultant provides
the Committee with competitive market data from two main
sources. Compensation data is collected and analyzed from the
proxies for Ferros peer group of specialty chemical
companies in the S&P index and from other Mid-Cap
companies. The peer group is selected based on factors including
company size (e.g., revenues and employees), products, end-use
markets and degree of global operations. Ferros peer group
of companies that the Compensation Consultant analyzed for 2010
was updated to reflect Ferros growth in sales since the
prior peer group was established in 2005. The 2009 sales for the
new peer group companies generally ranged from one-half to two
times Ferros sales and these companies
- 18 -
overlapped significantly with Ferros businesses and
end-use markets. Ferros peer group of companies for 2010
included the following:
|
|
|
A. Schulman, Inc.
|
|
PolyOne Corporation.
|
Albemarle Corporation
|
|
RPM International Inc.
|
Arch Chemicals
|
|
Rockwood Holdings, Inc.
|
Cabot Corporation
|
|
Sensient Technologies Corporation
|
Cytec Industries Inc.
|
|
Sigma-Aldrich Corporation
|
FMC Corporation
|
|
Stepan Company
|
H.B. Fuller Company
|
|
Valhi, Inc.
|
The Lubrizol Corporation
|
|
Valspar Corporation
|
Nalco Company
|
|
|
In addition to reviewing the proxies of peer group companies,
the Compensation Consultant reviews data obtained from
nationally recognized compensation surveys that include hundreds
of companies comparable in revenues to Ferro but from a broader
range of industries. These additional data help confirm results
found in the proxies of Ferros peers and represent the
broader market within which the Company competes for senior
executives. Data from both sources are used to develop
competitive base salaries, annual bonuses, total
cash compensation (salary plus bonus), long-term incentives and
total direct compensation (cash compensation plus long-term
incentives) for the CEO and other executive officers. These
results serve as a basis for the annual review of the
Companys pay programs done by the Compensation Consultant
for the Committee and for advising the Committee with respect to
the effectiveness and competitiveness of the pay program. The
Committee and the CEO use this information to establish base
salaries, annual incentives and long-term incentive awards. The
Compensation Committee approves all pay decisions related to the
Senior Management Committee.
Role of Management. Management of the Company
supports the Committee in its assessment of executive
compensation, implements decisions made by the Committee and
ensures that the Companys compensation plans are
administered in accordance with the provisions of the plans. The
Companys Vice President, Human Resources and Director,
Compensation provide the Compensation Consultant with
information concerning executives responsibilities,
compensation, benefits, Company financial data and business
goals as necessary for them to complete their work for the
Committee. The CEO and Vice President, Human Resources
participate in an advisory capacity in the Committees
meetings, including the annual compensation review in February
each year, provide the Committee with data and analyses and make
recommendations with respect to awards under the long-term
incentive program. The Committee makes its decisions with
respect to the compensation of the CEO in executive session.
Current
Compensation Program
The Companys current compensation program includes a base
salary, an annual incentive, long-term incentives, retirement
benefits and a deferred compensation plan. Executive allowances
were eliminated in 2010. In addition, the Company provides its
executives with protection in the event of fundamental changes
in the Companys ownership and control through change in
control agreements. A separation policy, put in place in 2010,
provides executives with specified payments in the event of a
termination by the Company without cause or by the
executive for good reason. The total compensation
and the individual elements of compensation are periodically
reviewed by the Committee based upon data provided by the
Compensation Consultant on market practices of peers, as well as
other companies comparable in size to Ferro. The competitive
market provides a larger range of companies and more information
regarding the compensation of officers than the data from
Ferros peer companies because certain officers
information is not available in the public disclosure by peer
companies. Each element of the Companys compensation
program is discussed below.
Base Salary. An executives base salary
is cash compensation that is generally not at risk and is paid
to the executive regardless of the performance of the Company in
a particular year. The amount of base salary is reviewed on an
annual basis and adjusted, if warranted, to reflect scope of
responsibilities, individual performance and external market
conditions. The Company targets base salary at the 50th
percentile of the competitive market but considers other
factors, including individual performance and experience,
internal pay equity and scope and influence of the position, in
setting an individuals base salary and overall
compensation level. This helps ensure
- 19 -
the Companys ability to compete in the market for
executive talent while maintaining fixed compensation costs at
levels that are comparable to other companies of similar size.
Annual Incentives. The Companys Annual
Incentive Plan (the AIP) provides an executive with
an opportunity to earn additional cash compensation based upon
the achievement of pre-determined Company financial and personal
performance goals for the year. The AIP is designed to deliver
incentive payouts at the 50th percentile of the competitive
market for achievement of target performance levels. Target
incentive opportunities, performance metrics and performance
goals are established by the Committee after reviewing and
discussing managements recommendations and are
communicated to participants near the beginning of each year.
The financial AIP goals are linked to the financial goals in the
annual operating plan approved by the Board of Directors and,
for 2010, determine 80% of an executives bonus. Personal
performance goals, weighted at 20% in 2010, are established at
the beginning of the year and are closely linked to the
Companys business and strategic objectives. At the
Committees discretion, AIP payments earned by the CEO and
each Senior Management Committee member related to established
financial goals may be adjusted upward or downward by as much as
20% to reflect individual performance in a given year. In
addition, the Committee may adjust AIP performance results to
account for certain special charges in exceptional or
extraordinary circumstances where the effects of the item are
auditable.
Long-Term Incentives. In April 2010, the
Companys shareholders approved the 2010 Long-Term
Incentive Plan (the 2010 LTIP). The 2010 LTIP
replaced the earlier 2006 Long-Term Incentive Compensation Plan
(the 2006 LTIP). (The 2006 LTIP and the 2010 LTIP
constitute the Companys Long-Term Incentive Plan and are
collectively referred to as the LTIP in this
Executive Compensation Discussion & Analysis.) Grants
in February of 2010 were made under the 2006 LTIP but all future
grants will be made under the 2010 LTIP. The Company also has
outstanding option awards under the 2003 Long-Term Incentive
Plan (the 2003 LTIP) and the Employee Stock Option
Plan.
The LTIP is a critical component of the compensation program. It
is designed to promote Ferros long-term financial
interests and growth by attracting, retaining and motivating
high-quality key employees and Directors and aligning their
interests with those of the Companys shareholders. The
LTIP is administered by the Committee. Management proposes to
the Committee the employees who will participate in the program
and the number of shares to be granted to each participant. The
Committee reviews, discusses and approves the types and number
of awards to be made to each participant and approves the terms,
conditions and limitations applicable to each award. The
Committee delegates authority to the CEO, within pre-established
limitations, to make awards to newly-hired employees or current
employees who are not executive officers during the course of
the year. Long-term incentive grant values are targeted at the
50th percentile of the competitive market, but may be adjusted
after consideration of factors that include share availability,
burn rate, and unusual changes in stock price.
The LTIP allows the Company to award six different types of
long-term incentives, i.e., stock options, stock
appreciation rights, restricted shares, performance shares,
other common stock-based awards (such as phantom common stock
units and deferred common stock units) and dividend equivalent
rights. In 2010, the Committee authorized two types of LTIP
awards stock options and restricted shares. Stock
options, comprising 80 to 85% of the targeted grant award value,
provide strong alignment with shareholder returns. Restricted
stock grants are directed towards retention of the executive
team. The basic terms of those awards are described below:
|
|
o |
Stock Options. Stock options are issued with
an exercise price at no less than the closing market price of
Ferro Common Stock on the date the options are granted. Stock
options granted in 2010 had a maximum term of ten years and vest
evenly over the first four anniversaries of the grant date.
Stock option grants made on or after February 24, 2011 will
vest evenly over the first three anniversaries of the grant
date. After receiving the recommendation of management, the
Committee determines which employees receive stock options and
the number of option shares granted to employees in accordance
with the terms of the LTIP.
|
- 20 -
|
|
o |
Restricted Shares. Restricted shares are
shares of Common Stock that are forfeitable if certain
conditions are not satisfied. Under the terms of the LTIP,
restricted shares that vest based solely on the lapse of time
may not vest in whole in less than three years from the date of
grant and no installment of an award may vest in less than
12 months. The restricted shares granted to executive
officers by the Committee in 2010 vest three years from the date
of grant. These shares vest only if the executive is employed by
the Company at the end of the vesting period or if his or her
employment was ended due to death, disability or a change in
control during that period. At the end of the vesting period,
the executive receives shares of the Companys Common Stock
and the nominal amount of any dividends paid on such shares
during the three-year vesting period. The executive will be
obliged to hold the shares remaining, after satisfying any tax
withholding obligations, for a period of two years after the end
of the vesting period. This approach strengthens the retention
aspects of the Companys pay program, consistent with one
of its key principles.
|
The Committee generally makes all LTIP awards at its meeting on
a pre-determined date in February. The exercise price of any
awards, including stock option strike price, is determined by
the closing price of Ferro Common Stock on the NYSE on the date
the Committee approves the grants. From time to time during the
year, the Committee (or the CEO pursuant to the authority
delegated to him by the Committee) may award shares to a new
hire or to a current employee. In such cases, the strike price
of the grant is based on the closing price of the Ferro Stock on
the NYSE on the date the award is granted which, in the case of
new hires, is the first date he or she is employed.
Retirement Benefits. In previous years, the
Company offered its employees a defined benefit plan, known as
the Ferro Corporation Retirement Plan (the DB Plan),
and, for executive employees, a supplemental defined benefit
program, known as the Ferro Corporation Supplemental Defined
Benefit Plan for Executive Employees (the Supplemental DB
Plan). The DB Plan and the Supplemental DB Plan provided
employees annuity payments in retirement according to
pre-determined formulas. Effective March 31, 2006, the DB
Plan and the Supplemental DB Plan were frozen for
purposes of future accruals. The plans have been frozen as to
new entrants since July 1, 2003. Mr. Thomas, who was
hired prior to July 1, 2003, is the only executive officer
who has earned a benefit under the DB Plan and under the
Supplemental DB Plan.
Consequently, the primary retirement benefits for executive
officers in 2010 and going forward are a qualified defined
contribution 401(k) plan, the Ferro Corporation Savings and
Stock Ownership Plan (the 401(k) Plan) and its
companion non-qualified defined contribution plan, the Ferro
Corporation Supplemental Defined Contribution Plan for Executive
Employees (the Supplemental 401(k) Plan). The
Supplemental 401(k) Plan provides participants with Company
contributions that would have been made to their 401(k) and
basic pension contribution accounts under the 401(k) Plan, were
it not for tax law limitations. The Supplemental 401(k) Plan
allows participants the option of a deemed investment in either
Ferro Common Stock or the stable asset fund under the 401(k)
Plan. No premium or guaranteed investment return is provided. In
March 2009, the Company announced that it was temporarily
suspending matching contributions under the 401(k) Plan and
supplemental matching contributions under the Supplemental
401(k) Plan for all non-union employees effective with the first
pay period on or after March 15, 2009. The Company
reinstated the matching contributions to the 401(k) Plan and the
Supplemental 401(k) Plan in April of 2010.
Deferred Compensation Plan. Senior Management
Committee members are eligible to participate in the Ferro
Corporation Deferred Compensation Plan for Executive Employees
(the Deferred Compensation Plan). Under the Deferred
Compensation Plan, participants may elect to defer a percentage
of their annual salary, as well as their annual bonus
and/or
performance share payout, to be paid at a certain time specified
by the participant and consistent with the terms of the plan.
The Deferred Compensation Plan allows participants the option of
a deemed investment in either Ferro Common Stock or the stable
asset fund under the 401(k) Plan. No premium or guaranteed
investment return is provided. There are no executive officers
participating in the plan at this time and, due to the low
levels of participation, the Deferred Compensation Plan election
process was suspended for 2010 and 2011.
Executive Allowance and Other
Benefits. Executive allowances, which had been
paid on an annual basis to the CEO and other Senior Management
Committee members, were eliminated for 2010 to increase
transparency and simplify the compensation program. Salary
adjustments were made in 2010, in part, to
- 21 -
compensate for the elimination of the executive allowances.
Additionally, during 2010, the Committee adopted a separation
policy for executive officers, consistent with recommended
compensation practices and policies.
Change in Control Agreements. For many years,
the Board has recognized that, as is the case with many
publicly-held corporations, there is always a possibility of a
fundamental change in the Companys ownership and control
through a change in control. Any such threatened or
actual change in control would create uncertainties and raise
questions that could result in the departure or distraction of
management personnel to the detriment of the Company and its
shareholders. In light of these facts, the Board determined that
appropriate steps needed to be taken to reinforce and encourage
the continued attention and dedication of members of the
Companys management to their assigned duties without
distraction in the face of potentially disturbing circumstances
arising from the possibility of a change in control.
Consequently, the Company has entered into change in control
agreements with each of the executive officers. These agreements
were revised effective January 1, 2009, for the primary
purpose of compliance with Internal Revenue Code
Section 409A. Change in control agreements offered to new
executives during 2010 do not include an excise tax
gross-up or
a modified single trigger provision. For additional information
on payments to executive officers as a result of a change in
control, see the discussion under Employment Agreements and
Termination and Change in Control Payments beginning on
page 35 below.
Executive
Compensation Process in 2010
The onset of the recession and the associated drop in sales and
earnings that occurred beginning in the fourth quarter of 2008
caused the Committee to reconsider its approach for long-term
incentive awards for 2009 and 2010. Goal setting was
particularly difficult during this period as a result of
extraordinary levels of economic uncertainty. In addition, the
Committee was concerned about retaining the management team in
light of the recent decline in the Companys stock price,
which resulted in an underwater position of most
prior stock options grants and a reduction in expected payouts
for outstanding performance share grants because of the
unlikelihood of meeting performance targets. After discussing
these concerns with the Compensation Consultant and considering
other factors such as share availability, burn rate and the
desire to avoid potential windfall pay gains as the economy
improved, the Committee decided to modify the mix of long-term
incentive awards granted to executive officers in 2009 to
consist of only stock options and restricted shares. The
Committee decided not to grant performance shares due to the
difficulty of setting multi-year performance goals in an
uncertain economic environment. The Committee decided to
continue this approach for grants made in 2010. Due primarily to
limited share availability, grants made in 2010 were similar in
number of shares to those made in 2009. Competitive market
long-term incentive data and stock price, therefore, were not
primary considerations since there were insufficient shares to
grant at the 50th percentile of the competitive market.
Accordingly, at its February 25, 2010, meeting, the
Committee made long-term incentive grants to the CEO and Senior
Management Committee, split between stock options and restricted
shares. Mr. Kirsch was awarded 270,000 stock options and
53,500 restricted shares; Ms. Bailey and Messrs. Murry
and Thomas were each awarded 60,000 stock options and 12,500
restricted shares; and Mr. Duesenberg was awarded 35,000
stock options and 8,000 restricted shares. The grant date value
of these awards was at the 28th percentile of the
competitive market.
Also, at its February 25, 2010, meeting, the Committee
reviewed current levels of pay for the Senior Management
Committee. The Committee considered the market data provided by
the Compensation Consultant, the increase in job
responsibilities assumed by Messrs. Murry and Thomas as a
result of organization changes made in October of 2009, the
decision to eliminate the executive allowances effective in 2010
and the recommendations of the Chief Executive Officer. After
discussion, the Committee approved the following changes:
Ms. Bailey, who was below the market median, received a
2.85% increase; Mr. Duesenberg, who was also below the
market median, received a 6.8% increase; Mr. Murry, who was
slightly above market median, received a 4.2% increase and
Mr. Thomas, who was below market median, received a 17%
increase. In addition, Ms. Bailey and
Messrs. Duesenberg, Murry and Thomas received an additional
$9,600 salary adjustment to compensate for the elimination of
their executive allowances effective in 2010. The Committee also
decided to increase the AIP target percentages for
Messrs. Murry and Thomas from 55% to 60%, in recognition of
their expanded job
- 22 -
responsibilities. These changes brought executive officers
target bonuses and target cash compensation levels in line with
the median of competitive market data, consistent with the
Companys pay philosophy.
Mr. Kirschs base salary rate, which was in the bottom
quartile of the market data, was increased from $725,000 to
$850,000 bringing him to market median. In addition,
Mr. Kirsch received a $35,000 salary adjustment to
compensate for the elimination of his executive allowance
effective in 2010. Mr. Kirschs AIP target of 100% was
consistent with market median and, therefore, no adjustment was
made.
On February 15, 2011, the Committee reviewed the
Companys performance compared to the goals for the AIP.
The AIP goals established for all participants worldwide,
including the named executive officers, included the following
Company level metrics: (i) gross margin;
(ii) operating margin; (iii) operating profit;
(iv) inventory days; (v) accounts receivable days and
(v) personal performance goals. Threshold, target and
maximum levels for each metric were established and communicated
at the beginning of the year. These metrics were selected to
focus managements efforts on working capital management
and improving the level and quality of operating earnings.
Actual results, which met or exceeded maximum on all metrics,
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 AIP
Goals(1)(2)
|
|
|
|
|
|
|
|
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
|
|
Metrics
|
|
|
Weighting
|
|
|
|
25% Payout
|
|
|
|
100% Payout
|
|
|
|
200% Payout
|
|
|
|
Actual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
Percentage(3)
|
|
|
|
20
|
%
|
|
|
|
21.8
|
%
|
|
|
|
22.8
|
%
|
|
|
|
23.8
|
%
|
|
|
|
27.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin
Percentage(4)
|
|
|
|
15
|
%
|
|
|
|
5.0
|
%
|
|
|
|
6.2
|
%
|
|
|
|
7.4
|
%
|
|
|
|
11.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit(5)
|
|
|
|
15
|
%
|
|
|
$
|
75.6
|
|
|
|
$
|
94.5
|
|
|
|
$
|
113.4
|
|
|
|
$
|
192.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
Days(6)
|
|
|
|
15
|
%
|
|
|
|
52
|
|
|
|
|
49
|
|
|
|
|
46
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Receivable
Days(7)
|
|
|
|
15
|
%
|
|
|
|
70
|
|
|
|
|
68
|
|
|
|
|
66
|
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Performance Goals
|
|
|
|
20
|
%
|
|
|
|
25
|
%
|
|
|
|
100
|
%
|
|
|
|
200
|
%
|
|
|
|
200
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In millions, except days and
percentages; (2) please note 2010 results represent
only past performance of the Company and are not necessarily
indicative of future results; (3) gross profit, excluding
special charges, as a percentage of sales excluding precious
metals; (4) operating profit, excluding special charges, as
a percentage of sales excluding precious metals;
(5) operating profit, excluding special charges;
(6) average inventory divided by average cost of goods sold
per day, excluding special charges; (7) average accounts
receivable divided by average sales per day.
|
Note: For Gross Margin Percentage, Operating Margin
Percentage and Operating Profit, better performance is indicated
by higher values. For Inventory Days and Accounts Receivable
Days, better performance is indicated by lower values.
- 23 -
The Committee also reviewed and discussed the accomplishments of
each executive officer with respect to the 2010 personal
performance goals specified in the following chart.
|
|
|
|
|
|
|
Personal Performance Goals
|
|
|
NEOs Responsible for Goal
|
|
|
Results
|
|
|
|
|
|
|
|
Deliver the operating plan
|
|
|
Kirsch, Murry & Thomas
|
|
|
Operating plan exceeded on all financial metrics
Occupational Safety & Health Administration (OSHA) reportable injuries of 67 for the year, down from 71 in 2009, and lowest OSHA recordable injury rates in Ferro history
|
|
|
|
|
|
|
|
Execution of restructuring initiatives
|
|
|
Kirsch, Murry & Thomas
|
|
|
Fifteen separate multi-year restructuring projects completed in
2010; in total, fixed cost reduction targets were exceeded
|
|
|
|
|
|
|
|
Continue to deleverage the company and strengthen the balance
sheet
|
|
|
Kirsch, Miklich
|
|
|
Achieved leverage ratio of 1.3, well below target of 2.5
|
|
|
|
|
|
|
|
Implement a corporate capital financing strategy
|
|
|
Kirsch, Miklich
|
|
|
Completed a total debt restructuring with new five-year revolver
of $350M and eight-year high yield bond of $250M
|
|
|
|
|
|
|
|
Advance enterprise risk management program
|
|
|
Kirsch, Duesenberg
|
|
|
Program designed; risks, responsible executives, and related
actions identified
|
|
|
|
|
|
|
|
Retention & development of leadership talent
|
|
|
Kirsch, Miklich, Murry, Thomas
|
|
|
Succession and development plans in place for two levels below SMC; talent management leader hired and priorities identified and budgeted for 2011
Leadership team voluntary turnover at 5%
|
|
|
|
|
|
|
|
Define three-year corporate transition strategy to accelerate
profitable growth
|
|
|
Kirsch, Miklich, Murry, Thomas
|
|
|
Strategic review of growth strategies with Board in June; proceeding with agreed upon approach including identification of acquisition candidates
Continuing to evolve financial and growth strategies
|
|
|
|
|
|
|
|
Finance/IS function goals
o Enhance skills and effectiveness of the financial organization
o Complete IS review and determine roadmap for the future
o Standardize financial management and Board reporting
|
|
|
Miklich
|
|
|
Key leadership and organization changes implemented
IS review and roadmap completed resulting in approval for launch of Ferro Business Systems initiative in 2011
Improved, standardized reporting implemented
|
|
|
|
|
|
|
|
Legal function goals
o Enhance
compliance program with emphasis on legal & ethical
training
o Improve
commercial contract review process
|
|
|
Duesenberg
|
|
|
Completed Code of Conduct training for global workforce
Improved contract review process through establishing a common database for standard form agreements and creating a clause bank
|
|
|
|
|
|
|
|
At their meeting on February 24, 2011, after review and
discussion, the Committee determined that maximum performance
had been attained and therefore approved the following AIP
payouts: Mr. Miklich $255,000; Mr. Murry $468,000;
Mr. Thomas $468,000; and Mr. Duesenberg $330,000.
Likewise, the Committee approved an AIP payout of $1,770,000 for
Mr. Kirsch. Total annual cash compensation for 2010 for
Mr. Kirsch and the other executive officers, was
significantly above targeted levels as a result of the maximum
attainment on the AIP. Long-term incentive compensation was
below median, due to limited share availability and stock price.
As a result of more than competitive annual compensation and
less than competitive long-term incentives, the Companys
total compensation for the executive officers was positioned
between the
50th and
75th
percentiles.
Stock Ownership
Guidelines
Ferro has had stock ownership guidelines for its Directors and
executive officers since 1998 reinforcing one of the key
objectives of the Companys pay program, the alignment of
pay with the interests of shareholders. The guidelines are
reviewed and updated periodically to ensure they achieve their
intended purpose. The current guidelines require the CEO and
other Senior Management Committee members to achieve target
ownership levels of 150,000 shares and 30,000 shares,
respectively, by December 31, 2011. Newly hired executives
have five years
- 24 -
to achieve their target ownership level. Currently,
Messrs. Kirsch, Miklich, Murry, Thomas and Duesenberg have
exceeded 100% of their full ownership guideline.
For non-employee Directors, the stock ownership guideline is
10,000 shares. New non-employee Directors have five years
from the date of election to achieve the target ownership level.
Currently, all non-employee Directors have achieved the target
ownership level.
Shares of Common Stock deemed to be owned by each executive
officer and Director include shares owned outright with no
restrictions, restricted share grants, shares owned in the
401(k) Plan, shares deemed to be invested in Ferro Common Stock
through the Deferred Compensation Plan and Supplemental 401(k)
Plan, 20% of vested options that are
in-the-money
by more than 30%, and shares represented by deferred stock units
granted to non-employee Directors.
Section 162(m)
Limitation
Section 162(m) of the Internal Revenue Code generally
provides that certain compensation in excess of
$1.0 million per year paid to a companys chief
executive officer and any of its three highest paid executive
officers is not deductible by a company unless the compensation
qualifies for an exception. Section 162(m) provides an
exception for performance-based compensation if certain
procedural requirements, including shareholder approval of the
material terms of the performance goals, are satisfied. The LTIP
contains the provisions necessary to qualify certain awards
under the LTIP under the Section 162(m) exception and
preserve the tax deductibility to the Company of compensation
paid to executives under these plans in the future.
- 25 -
Compensation
Committee Report
The Compensation Committee has reviewed and discussed with
Ferros management the Compensation Discussion &
Analysis set forth above. Based on the review and discussions
noted above, the Compensation Committee recommended to the Board
that the Compensation Discussion & Analysis be
included in Ferros Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010, for filing
with the Securities and Exchange Commission.
Respectfully submitted,
Richard J. Hipple, Chair
Richard C. Brown
Gregory E. Hyland
William B. Lawrence
Ronald P. Vargo
Compensation
Policies and Practices as Related to Risk Management
The Compensation Committee and management do not believe that
Ferro maintains compensation policies or practices that are
reasonably likely to have a material adverse effect on Ferro. As
part of a larger enterprise risk management review, during 2010
Ferro reviewed its compensation policies and practices with
respect to executive and non-executive employees to ensure that
Ferros compensation program continues to align the
interests of Ferros employees with those of Ferros
shareholders and does not create any unnecessary or excessive
risk. In addition, the Compensation Committee annually analyzes
Ferros compensation program when establishing executive
compensation to ensure that they do not encourage unnecessary or
excessive risk-taking and determined that the compensation
policies or practices are not reasonably likely to have a
material adverse effect on Ferro.
Compensation
Committee Interlocks and Insider Participation
During 2010, no officer or employee of Ferro served as a member
of the Compensation Committee. Also, during 2010, there were no
interlocking relationships (as described in Item 407(e)(4)
of SEC
Regulation S-K)
between members of the Compensation Committee and Ferro.
- 26 -
Plans Described
in This Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
Where
|
|
|
|
|
Plan Name
|
|
|
Described
|
|
|
|
Abbreviation
|
|
|
|
|
|
|
|
|
|
Annual Incentive Plan
|
|
|
|
Page 20
|
|
|
|
AIP
|
|
|
|
|
|
|
|
|
|
2010 Long-Term Incentive Plan
|
|
|
|
Page 20
|
|
|
|
2010 LTIP
|
|
|
|
|
|
|
|
|
|
2006 Long-Term Incentive Plan
|
|
|
|
Page 20
|
|
|
|
2006 LTIP
|
|
|
|
|
|
|
|
|
|
2003 Long-Term Incentive Compensation Plan
|
|
|
|
Page 20
|
|
|
|
2003 LTIP
|
|
|
|
|
|
|
|
|
|
The 2010 LTIP and the 2006 LTIP
|
|
|
|
Page 20
|
|
|
|
LTIP
|
|
|
|
|
|
|
|
|
|
Employee Stock Option Plan
|
|
|
|
Page 20
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
Ferro Corporation Retirement Plan
|
|
|
|
Page 21
|
|
|
|
DB Plan
|
|
|
|
|
|
|
|
|
|
Ferro Corporation Supplemental Defined Benefit Plan for
Executive Employees
|
|
|
|
Page 21
|
|
|
|
Supplemental DB Plan
|
|
|
|
|
|
|
|
|
|
Ferro Corporation Savings and Stock Ownership Plan
|
|
|
|
Page 21
|
|
|
|
401(k) Plan
|
|
|
|
|
|
|
|
|
|
Ferro Corporation Supplemental Defined Contribution Plan for
Executive Employees
|
|
|
|
Page 21
|
|
|
|
Supplemental 401(k) Plan
|
|
|
|
|
|
|
|
|
|
Ferro Corporation Deferred Compensation Plan for Executive
Employees
|
|
|
|
Page 21
|
|
|
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
- 27 -
2010 EXECUTIVE
COMPENSATION
The following table shows the elements of compensation paid or
earned during 2010, 2009 and 2008 to the Chief Executive Officer
and the Chief Financial Officer and to the Companys other
three highest-paid executive officers as of December 31,
2010:
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
All
|
|
|
|
Name and
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
Other
|
|
|
|
Principal Position
|
|
|
Year
|
|
|
Salary(1)
|
|
|
Bonus(2)
|
|
|
Awards(3)
|
|
|
Awards(4)
|
|
|
Compensation(5)
|
|
|
Earnings(6)
|
|
|
Compensation(7)
|
|
|
Total
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
James F. Kirsch
|
|
|
2010
|
|
|
885,000
|
|
|
0
|
|
|
441,375
|
|
|
1,530,900
|
|
|
1,770,000
|
|
|
0
|
|
|
115,268
|
|
|
4,742,543
|
Chairman, President and
|
|
|
2009
|
|
|
711,031
|
|
|
362,500
|
|
|
73,295
|
|
|
112,700
|
|
|
0
|
|
|
0
|
|
|
73,043
|
|
|
1,332,569
|
Chief Executive Officer
|
|
|
2008
|
|
|
725,000
|
|
|
0
|
|
|
1,303,130
|
|
|
610,280
|
|
|
0
|
|
|
0
|
|
|
217,904
|
|
|
2,856,314
|
|
Thomas R.
Miklich(8)
|
|
|
2010
|
|
|
206,234
|
|
|
0
|
|
|
91,500
|
|
|
301,800
|
|
|
255,000
|
|
|
0
|
|
|
7,103
|
|
|
861,637
|
Vice President and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Murry
|
|
|
2010
|
|
|
390,000
|
|
|
0
|
|
|
103,125
|
|
|
340,200
|
|
|
468,000
|
|
|
0
|
|
|
33,975
|
|
|
1,335,300
|
Vice President,
|
|
|
2009
|
|
|
357,967
|
|
|
100,375
|
|
|
17,125
|
|
|
19,600
|
|
|
0
|
|
|
0
|
|
|
28,515
|
|
|
523,582
|
Electronic, Color and Glass Materials
|
|
|
2008
|
|
|
365,000
|
|
|
0
|
|
|
206,257
|
|
|
104,500
|
|
|
0
|
|
|
0
|
|
|
50,846
|
|
|
726,603
|
|
Peter T. Thomas
|
|
|
2010
|
|
|
390,000
|
|
|
0
|
|
|
103,125
|
|
|
340,200
|
|
|
468,000
|
|
|
43,394
|
|
|
53,293
|
|
|
1,398,012
|
Vice President,
|
|
|
2009
|
|
|
318,738
|
|
|
89,375
|
|
|
17,125
|
|
|
19,600
|
|
|
0
|
|
|
43,784
|
|
|
32,678
|
|
|
521,300
|
Polymer and Ceramic Engineered Materials
|
|
|
2008
|
|
|
325,000
|
|
|
0
|
|
|
206,257
|
|
|
104,500
|
|
|
0
|
|
|
6,153
|
|
|
58,847
|
|
|
700,757
|
|
Mark H.
Duesenberg(9)
|
|
|
2010
|
|
|
330,000
|
|
|
0
|
|
|
66,000
|
|
|
198,450
|
|
|
330,000
|
|
|
0
|
|
|
28,619
|
|
|
953,069
|
Vice President,
|
|
|
2009
|
|
|
294,220
|
|
|
75,000
|
|
|
10,960
|
|
|
17,150
|
|
|
0
|
|
|
0
|
|
|
22,281
|
|
|
419,611
|
General Counsel and Secretary
|
|
|
2008
|
|
|
86,561
|
|
|
0
|
|
|
153,216
|
|
|
147,750
|
|
|
0
|
|
|
0
|
|
|
45,044
|
|
|
432,571
|
|
Sallie B.
Bailey(10)
|
|
|
2010
|
|
|
195,461
|
|
|
100,000
|
|
|
103,125
|
|
|
340,200
|
|
|
208,470
|
|
|
0
|
|
|
934,489
|
|
|
1,881,745
|
Former Vice President and
|
|
|
2009
|
|
|
357,967
|
|
|
209,500
|
|
|
17,125
|
|
|
29,400
|
|
|
0
|
|
|
0
|
|
|
35,724
|
|
|
649,716
|
Chief Financial Officer
|
|
|
2008
|
|
|
365,000
|
|
|
100,000
|
|
|
309,817
|
|
|
158,840
|
|
|
0
|
|
|
0
|
|
|
62,238
|
|
|
995,895
|
|
|
|
|
(1)
|
|
Salary. The
amounts in this column consist of salary actually paid, and
therefore they reflect the mid-year hiring of
Messrs. Miklich and Duesenberg in 2010 and 2008,
respectively, and the mid-year termination of Ms. Bailey.
For a description of the base salary rate in this column
relating to 2010, see the Executive Compensation
Discussion & Analysis on page 17 above. During
2009, many salaried employees, including the executive officers
listed in this table who were employed then, were required to
take a one-week, unpaid furlough, which is reflected in the
figures in this column for 2009.
|
|
(2)
|
|
Bonus. The
amounts in this column generally consist of discretionary or
guaranteed payments as bonuses. The amounts for 2009 in this
column include amounts paid under the AIP relating to that year
because they were considered discretionary under SEC rules. The
amounts for 2010 under the AIP are listed in the
Non-Equity Incentive Plan Compensation column of
this table because, under SEC rules, they were primarily
non-discretionary and based on pre-determined financial
measurements. For a discussion of the AIP, see the Executive
Compensation Discussion & Analysis on page 20
above. In addition, the figures in this column that relate to
Ms. Bailey include the first, second and third of three
$100,000 installments of the retention bonus paid to her in
2008, 2009 and 2010. For a description of Ms. Baileys
retention bonus, see Employment Agreements and Termination and
Change in Control Payments on page 35.
|
|
(3)
|
|
Stock
Awards. The
figures reported in this column are based on performance share
and restricted share awards made under the LTIP. Specifically,
the figures represent performance share awards made in 2008 for
the three-year performance period beginning January 1,
2008. Those values are based upon the probable outcome of the
relevant performance goals. Performance shares were not awarded
in 2009 and 2010. The figures in this column also include the
aggregate grant date fair value of restricted shares awarded to
the executive officers listed in this table in 2008, 2009 and
2010, computed in accordance with the Financial Accounting
Standards Boards (FASB) FASB Accounting
Standards
CodificationTM
(ASC) Topic 718, Compensation Stock
Compensation. Changes in SEC rules relating to the 2010 Proxy
Statement altered the requirement that the figures in this
column reflect the dollar amount recognized for financial
statement reporting purposes for the fiscal year with respect to
all outstanding awards granted to such individuals.
Consequently, 2008 figures for executive officers listed in this
column will be the same as previously reported in the 2010 Proxy
Statement, but they will differ from the figures previously
reported for 2008 in the 2009 Proxy Statement. The maximum value
of these awards (i.e., the award-date value of the performance
share awards computed at maximum performance plus the award-date
value of any restricted shares) for 2008 is as follows:
Mr. Kirsch ($1,777,780), Mr. Murry ($288,242),
Mr. Thomas ($288,242), Mr. Duesenberg ($153,216) and
Ms. Bailey ($433,266). Mr. Duesenberg, who began his
employment on September 17, 2008, received only restricted
shares for 2008, while Mr. Miklich, who began his
employment on July 7, 2010, did not receive any stock
awards for 2008 and 2009. The maximum award-date value of these
awards for 2009 and 2010 are as reflected in this column of the
table because there were no performance-based equity awards
(i.e., performance shares awarded) in 2009 and 2010 and
restricted share amounts in this column reflect the award date
values. The valuation methodology used to calculate the figures
in this column is described in footnote 13 (Stock-Based
Compensation) in the audited financial statements included in
the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010. For a
description of the Companys performance share awards and
restricted share awards, see the Executive Compensation
Discussion & Analysis on page 20 above.
|
|
(4)
|
|
Option
Awards. The
figures reported in this column are based on stock option awards
made under the LTIP equal to the grant date fair value of the
awards computed in accordance with FASB ASC Topic 718. Changes
in SEC rules that took effect beginning with the 2010 Proxy
Statement altered the requirement that the figures in this
column reflect the dollar amount recognized for financial
statement reporting purposes for the fiscal year with respect to
all outstanding awards granted to such individuals.
Consequently, 2008 figures for executive officers
|
- 28 -
|
|
|
|
|
listed in this column will be the
same as previously reported in the 2010 Proxy Statement, but
they will differ from the figures previously reported for that
year in the 2009 Proxy Statement. The valuation methodology used
to calculate the figures in this column is described in footnote
13 (Stock-Based Compensation) of the audited financial
statements included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010. For a
description of the Companys stock option awards, see the
Executive Compensation Discussion & Analysis on
page 20 above.
|
|
(5)
|
|
Non-Equity Incentive Plan
Compensation. The
amounts in this column consist of any AIP payments based
primarily on predetermined financial measurements relating to
the year indicated. The figure in this column for
Mr. Miklich is a prorated AIP amount based on his mid-2010
hire date. The figure in this column for 2010 for
Ms. Bailey was calculated consistent with her termination
of employment on July 2, 2010 and is equal to the amount
Ms. Bailey would have earned under the AIP if she had been
employed on the last day of 2010, based on the actual level of
performance attained for 2010 and prorated based on the time she
was employed in 2010, but deeming personal performance for
purposes of the calculation to be at the target level. See
footnote 10 to this table for more information regarding
Ms. Baileys termination of employment. The amounts
under the AIP relating to 2010 were paid in March 2011. See also
the Grants of Plan-Based Awards on page 30 for the
estimated future payouts under this plan for threshold, target
and maximum attainments. Due to the discretionary determination
of bonuses under the AIP for 2009, consistent with SEC rules,
the AIP payout to the executive officers relating to 2009
appears in the Bonus column of this table and not this column.
For a discussion of the AIP, see the Compensation
Discussion & Analysis on page 20 above.
|
|
(6)
|
|
Change in Pension Value and
Non-Qualified Deferred Compensation
Earnings. Amounts
in this column include the change in value under the
Companys defined benefit pension plans: the DB Plan and
the Supplemental DB Plan. As of July 1, 2003, the DB Plan
and the Supplemental DB Plan were frozen as to participation for
new hires and, as of March 31, 2006, the plans were
generally frozen as to future benefit accruals. Mr. Thomas
is the only executive officer listed in this table who is
eligible for a benefit under the DB Plan or the Supplemental DB
Plan because he was hired before July 1, 2003. However, he
did not accrue any additional benefits after 2006 because the
plans were frozen as to future benefit accruals. Consequently,
the changes in pension value listed in this table for
Mr. Thomas, relating to 2008, 2009 and 2010, are due to the
changes in present value factors that are required to be updated
each year. In addition, as a result of a change in the
measurement date under SEC rules, the measurement period for
2008 is the
15-month
period ending December 31 of that year. The measurement periods
for 2009 and 2010 are the
12-month
periods ending December 31, 2009 and December 31,
2010, respectively. For additional information regarding these
plans, please see the Executive Compensation
Discussion & Analysis on page 21 above and
Post-Employment Compensation on page 34 below.
|
|
(7)
|
|
All Other
Compensation. The
amounts in this column for 2010 include (a) Company
matching contributions and the basic pension contribution under
the 401(k) Plan, (b) supplemental Company matching
contributions and the supplemental basic pension contribution
under the Supplemental 401(k) Plan, (c) amounts taxable to
each of the named executives relating to group term life
insurance under Internal Revenue Code Section 79, and
(c) amounts paid in connection with the termination of
Ms. Baileys employment.
|
|
|
|
|
(a) and (b)
|
The 2010 amounts in this column include Company contributions
made under the 401(k) Plan and the Supplemental 401(k) Plan,
regardless of the vesting status of those contributions. Company
contributions under the 401(k) Plan and the Supplemental 401(k)
Plan vest 20% for each year of service, with full vesting after
five years of service. For a description of the 401(k) Plan and
the Supplemental 401(k) Plan, see the Executive Compensation
Discussion & Analysis on page 21 above.
|
|
|
|
|
(c)
|
The Company provides U.S. salaried and certain hourly employees
with group term life insurance coverage. The Company provides
one times base salary (or, if greater, $50,000) of coverage (up
to a maximum of $1 million of coverage) at no charge to the
employee, and the employee can elect to pay for more coverage.
Internal Revenue Code Section 79 requires that a certain
portion of employer-paid life insurance coverage be included in
gross income for federal income tax purposes. The 2010 amounts
in this column include the taxable amount of the group term life
insurance coverage.
|
|
|
(d)
|
The amounts for Ms. Bailey include the following payments
made in connection with Ms. Baileys termination of
employment in 2010: (i) a severance payment totaling
$577,500, that is equal to 18 months of
Ms. Baileys base salary prior to the termination of
her employment, (ii) a payment of $346,500, that is
equivalent to 1.5 times the annual incentive that
Ms. Bailey would have earned under the AIP for 2010
assuming that performance had been attained at the target level,
and (iii) payment of $10,000 to a firm for the provision of
outplacement services. See footnote 10 to this table below for
more information regarding Ms. Baileys termination of
employment.
|
|
|
|
|
|
During 2008 and 2009, the Company
provided members of the Senior Management Committee with a fixed
annual executive allowance of $35,000 for the CEO and $9,600 for
each other executive officer. For 2010, the Company no longer
provides the members of the Senior Management Committee with a
fixed annual allowance and the base salaries of the Senior
Management Committee have been adjusted accordingly. The amounts
in this column for Mr. Duesenberg for 2008 and 2009 include
company-paid relocation expenses of $37,706 and $1,448,
respectively.
|
|
(8)
|
|
Mr. Miklich began employment
with the Company on July 7, 2010.
|
|
(9)
|
|
Mr. Duesenberg began
employment with the Company on September 17, 2008.
|
|
(10)
|
|
On July 2, 2010,
Ms. Baileys employment as Vice President and Chief
Financial Officer was terminated. Under the Companys
Executive Separation Policy, the Company entered into a
Separation and Release Agreement with Ms. Bailey pursuant
to which the Company made certain severance payments. See
footnotes 5 and 7(d) to this table above and Employment
Agreements and Termination and Change in Control Payments on
page 35 below.
|
- 29 -
Grants of
Plan-Based Awards
The following table sets forth information regarding 2010 awards
under the AIP and under the LTIP, i.e., awards of
performance shares, restricted shares and stock options to each
of the executives named in the Summary Compensation Table:
Grants of
Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts
|
|
|
|
Estimated Future
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under
|
|
|
|
Payouts Under Equity Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
Awards(2)
|
|
|
|
All
|
|
|
|
All
|
|
|
|
or Base
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
Other
|
|
|
|
Other
|
|
|
|
Price of
|
|
|
|
Value of Stock
|
|
|
|
|
Grant
|
|
|
|
Plan
|
|
|
|
Restricted
|
|
|
|
Stock
|
|
|
|
Stock
|
|
|
|
Option
|
|
|
|
Option
|
|
|
|
and Option
|
|
Name
|
|
|
Date
|
|
|
|
Awards(1)
|
|
|
|
Shares(3)
|
|
|
|
Options(4)
|
|
|
|
Awards
|
|
|
|
Awards
|
|
|
|
Awards(5)
|
|
|
|
Awards(6)
|
|
|
|
|
Date
|
|
|
|
$
|
|
|
|
Shares
|
|
|
|
Shares
|
|
|
|
Shares
|
|
|
|
Shares
|
|
|
|
$/Share
|
|
|
|
$
|
|
James F. Kirsch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Threshold
|
|
|
|
|
|
|
|
|
221,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Target
|
|
|
|
|
|
|
|
|
885,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Maximum
|
|
|
|
|
|
|
|
|
1,770,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
53,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
270,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
|
1,530,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R.
Miklich(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Threshold
|
|
|
|
|
|
|
|
|
31,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Target
|
|
|
|
|
|
|
|
|
127,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Maximum
|
|
|
|
|
|
|
|
|
255,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
07/07/10
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
07/07/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.32
|
|
|
|
|
301,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Murry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Threshold
|
|
|
|
|
|
|
|
|
58,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Target
|
|
|
|
|
|
|
|
|
234,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Maximum
|
|
|
|
|
|
|
|
|
468,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
|
340,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter T. Thomas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Threshold
|
|
|
|
|
|
|
|
|
58,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Target
|
|
|
|
|
|
|
|
|
234,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Maximum
|
|
|
|
|
|
|
|
|
468,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
|
340,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark H. Duesenberg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Threshold
|
|
|
|
|
|
|
|
|
41,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Target
|
|
|
|
|
|
|
|
|
165,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Maximum
|
|
|
|
|
|
|
|
|
330,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
|
198,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sallie B.
Bailey(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Threshold
|
|
|
|
|
|
|
|
|
57,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Target
|
|
|
|
|
|
|
|
|
231,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP Maximum
|
|
|
|
|
|
|
|
|
462,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
|
340,200
|
|
|
|
|
|
(1)
|
|
This column contains the possible
payouts under the AIP. See Executive Compensation
Discussion & Analysis on page 20 above for a
discussion of the AIP. For the 2010 AIP, 80% is based on the
achievement of financial metrics, while 20% is based on
achievement of personal performance goals. The AIP target
percentages for 2010 are multiplied by the executives base
annual salary rate to arrive at the target amount in this table.
The AIP target percentages for 2010 are 100% for
Mr. Kirsch, 60% for Messrs. Miklich, Murry, Thomas and
50% for Mr. Duesenberg. The AIP threshold reflects 25% of
the applicable target percentage and the AIP maximum reflects
200% of the applicable target percentage. The actual payout of
the AIP for 2010 appears in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table on
page 28 above. See the Executive Compensation
Discussion & Analysis on page 23 above for more
information on the 2010 AIP.
|
|
(2)
|
|
The only plan-based awards granted
to executive officers in 2010 were restricted shares and stock
options. Performance shares were not awarded in 2010. See the
Executive Compensation Discussion & Analysis on
page 20 above for a discussion of all three of those types
of plan-based awards.
|
|
(3)
|
|
The amounts reported in this column
represent restricted shares awarded to each executive officer in
2010 under the LTIP. No exercise price or other consideration is
paid by the executive officers with respect to restricted share
awards. These restricted shares vest three years after the grant
date. See the Executive Compensation Discussion &
Analysis on page 20 above for a discussion of restricted
shares.
|
|
(4)
|
|
The amounts in this column are the
number of underlying stock options awarded to each executive
officer in 2010 under the LTIP. The options have a maximum term
of ten years and vest evenly at 25% per year on each annual
anniversary of the grant date over four years. In the case of
death, retirement, disability or change in control, the options
become 100% vested and exercisable for the remainder of their
applicable term. See the Executive Compensation
Discussion & Analysis on page 20 above for a
discussion of stock options.
|
- 30 -
|
|
|
(5)
|
|
The amount reported in this column
is the per share exercise price of the stock options, which
represents the closing price on the NYSE for the Companys
Common Stock on the date of grant.
|
|
(6)
|
|
The amounts reported in this column
were calculated as follows: for restricted shares, the grant
date value of $8.25 ($7.32 for Mr. Miklich) per share was
multiplied by the number of shares awarded, and for stock
options, the grant date value of $5.67 ($5.03 for
Mr. Miklich) per option was multiplied by the number of
stock options. The restricted share awards are valued at the
closing market price of Ferros Common Stock on the date of
the grant reduced by the discounted value of expected interest
on the dividends associated with these shares. The fair value of
each stock option on the grant date is determined using the
Black-Scholes option pricing method, as further described on
page 81 of the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010. See also
footnotes 3 and 4 to the Summary Compensation Table on
page 28 above.
|
|
(7)
|
|
The Estimated Future Payouts of
Non-equity Incentive Compensation relating to Mr. Miklich
reflect a 50% proration due to his mid-year hire date.
|
|
(8)
|
|
Consistent with Ferros LTIP
and Executive Severance Policy, following Ms. Baileys
termination of employment, all of Ms. Baileys
restricted share and stock option awards set forth in this table
were unvested and therefore were forfeited. For a description of
the Executive Severance Policy, see Employment Agreements and
Termination and Change in Control Payments on page 35. For
the actual AIP payout for 2010 pursuant to the terms of her
termination of employment on July 2, 2010, see the
Non-Equity Incentive Plan Compensation column of, and footnote 5
to, the Summary Compensation Table on page 28 above.
|
- 31 -
Outstanding
Equity Awards, Option Exercises and Vesting of Stock
Awards
The following table sets forth information with respect to each
of the executives named in the Summary Compensation Table
regarding vested and unvested options and stock awards held as
of December 31, 2010:
Outstanding
Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
|
|
Equity
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
|
Incentive
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
Shares
|
|
|
|
Plan
|
|
|
|
Market or
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
|
or
|
|
|
|
Awards:
|
|
|
|
Payout
|
|
|
|
|
of
|
|
|
|
Number of
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Units
|
|
|
|
Number of
|
|
|
|
Value of
|
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
or Units
|
|
|
|
of
|
|
|
|
Unearned
|
|
|
|
Unearned
|
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
|
Stock
|
|
|
|
Shares,
|
|
|
|
Shares,
|
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
That
|
|
|
|
That
|
|
|
|
Units or
|
|
|
|
Units or
|
|
|
|
|
Options
|
|
|
|
Options
|
|
|
|
Unexercised
|
|
|
|
Option
|
|
|
|
Option
|
|
|
|
Have
|
|
|
|
Have
|
|
|
|
Other Rights
|
|
|
|
Other Rights
|
|
|
|
|
That Are
|
|
|
|
That Are Not
|
|
|
|
Unearned
|
|
|
|
Exercise
|
|
|
|
Expiration
|
|
|
|
Not
|
|
|
|
Not
|
|
|
|
That Have
|
|
|
|
That Have
|
|
Name
|
|
|
Exercisable
|
|
|
|
Exercisable
|
|
|
|
Options
|
|
|
|
Price
|
|
|
|
Date
|
|
|
|
Vested(1)
|
|
|
|
Vested(1)
|
|
|
|
Not
Vested(2)
|
|
|
|
Not
Vested(2)
|
|
|
|
|
Shares
|
|
|
|
Shares
|
|
|
|
Shares
|
|
|
|
$
|
|
|
|
Date
|
|
|
|
Shares
|
|
|
|
$
|
|
|
|
Shares
|
|
|
|
$
|
|
James F.
Kirsch(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
125,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
21.15
|
|
|
|
|
10/18/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
140,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
20.69
|
|
|
|
|
02/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
112,500
|
|
|
|
|
37,500
|
|
|
|
|
|
|
|
|
|
21.99
|
|
|
|
|
02/06/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
73,000
|
|
|
|
|
73,000
|
|
|
|
|
|
|
|
|
|
17.26
|
|
|
|
|
02/28/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
3
|
|
|
|
|
172,500
|
|
|
|
|
|
|
|
|
|
1.37
|
|
|
|
|
02/25/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
0
|
|
|
|
|
270,000
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
|
02/25/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,000
|
|
|
|
|
702,720
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,500
|
|
|
|
|
783,240
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,500
|
|
|
|
|
783,240
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,500
|
|
|
|
|
402,600
|
|
|
Thomas R.
Miklich(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
0
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
7.32
|
|
|
|
|
07/7/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
183,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
Michael J.
Murry(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
44,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
21.01
|
|
|
|
|
07/11/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
22,750
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
20.69
|
|
|
|
|
02/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
22,125
|
|
|
|
|
7,375
|
|
|
|
|
|
|
|
|
|
21.99
|
|
|
|
|
02/06/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
12,500
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
17.26
|
|
|
|
|
02/28/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
23
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
1.37
|
|
|
|
|
02/25/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
0
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
|
02/25/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200
|
|
|
|
|
105,408
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
183,000
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
183,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,750
|
|
|
|
|
69,540
|
|
|
Peter T.
Thomas(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
2,500
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
23.60
|
|
|
|
|
02/09/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
3,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
25.50
|
|
|
|
|
02/11/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
7,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
21.26
|
|
|
|
|
02/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
7,500
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
26.26
|
|
|
|
|
02/09/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
8,500
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
19.39
|
|
|
|
|
02/07/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
15,500
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
20.69
|
|
|
|
|
02/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
18,750
|
|
|
|
|
6,250
|
|
|
|
|
|
|
|
|
|
21.99
|
|
|
|
|
02/06/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
12,500
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
17.26
|
|
|
|
|
02/28/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
33
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
1.37
|
|
|
|
|
02/25/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
0
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
|
02/25/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200
|
|
|
|
|
105,408
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
183,000
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
183,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,750
|
|
|
|
|
69,540
|
|
|
Mark H.
Duesenberg(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
12,500
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
21.28
|
|
|
|
|
09/17/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
8,749
|
|
|
|
|
26,251
|
|
|
|
|
|
|
|
|
|
1.37
|
|
|
|
|
02/25/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
0
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
|
02/25/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200
|
|
|
|
|
105,408
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
117,120
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
117,120
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
Sallie B.
Bailey(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
- 32 -
|
|
|
(1)
|
|
Shares listed in this column are
restricted share awards made under the 2006 LTIP and the 2010
LTIP (each of which vest three years after the grant date). The
value of the actual payout will be the number of shares times
the closing share price on the NYSE of Ferro Common Stock on the
date prior to the payout date; however, the value set forth in
the table is based on the closing share price on the NYSE of
Ferro Common Stock as of December 31, 2010.
|
|
(2)
|
|
Shares listed in this column are
performance share awards for the
2008-2010
performance period made under the LTIP. With these awards, the
actual number of shares on which the payout will be based for
each three-year performance period will depend upon the level of
achievement during such period and can equal up to twice the
number of shares awarded. For the
2008-2010
performance period, the performance measures are based on
cumulative earnings before interest, taxes, depreciation and
amortization (EBITDA) and return on invested capital. If such
measurements have been achieved as of the last day of the
performance period, the award becomes payable. Payouts are
generally made one-half in cash and one-half in shares and are
rounded, unless such amounts are deferred by the executive. The
value of the actual payout will be the number of shares earned
times the average closing share price on the NYSE for Ferro
Common Stock for the days in which the shares traded during the
first ten calendar days of the last month of the three-year
performance period (December 2010); however, the value set forth
in the table is based on the closing share price on the NYSE for
Ferro Common Stock as of December 31, 2010, and assumes
that the target performance goals have been precisely achieved
for each performance period.
|
|
(3)
|
|
Mr. Kirschs unvested
option awards reported in the table vest as follows: for grant
date 2/6/07: 37,500 vest on 2/6/11; for grant date
2/28/08: 36,500
vest on 2/28/11 and 36,500 vest on 2/28/12: for grant date
2/25/09: 57,500 vest on 2/25/2011; 57,500 vest on 2/25/2012; and
57,500 vest on 2/25/2013; and for grant date 2/25/10: 67,500
vest on 2/25/11; 67,500 vest on 2/25/12; 67,500 vest on 2/25/13;
and 67,500 vest on 2/25/14.
|
|
(4)
|
|
Mr. Miklichs unvested
option awards reported in the table vest as follows: for grant
date 7/7/10: 15,000 vest on 7/7/11; 15,000 vest on
7/7/12; 15,000
vest on 7/7/13; and 15,000 vest on 7/7/14.
|
|
(5)
|
|
Mr. Murrys unvested
option awards reported in the table vest as follows: for grant
date 2/6/07: 7,375 vest on 2/6/11: for grant date 2/28/08: 6,250
vest on 2/28/11 and 6,250 vest on 2/28/12; for grant date
2/25/09: 10,000, vest on 2/25/2011; 10,000 vest on 2/25/2012;
and 10,000 vest on 2/25/2013; and for grant date 2/25/10: 15,000
vest on 2/25/11; 15,000 vest on 2/25/12; 15,000 vest on 2/25/13;
and 15,000 vest on 2/25/14.
|
|
(6)
|
|
Mr. Thomas unvested
option awards reported in the table vest as follows: for grant
date 2/6/07: 6,250 vest on 2/6/11: for grant date
2/28/08: 6,250
vest on 2/28/11 and 6,250 vest on 2/28/12; for grant date
2/25/09: 10,000, vest on 2/25/2011; 10,000 vest on 2/25/2012;
and 10,000 vest on 2/25/2013; and for grant date 2/25/10: 15,000
vest on 2/25/11; 15,000 vest on 2/25/12; 15,000 vest on 2/25/13;
and 15,000 vest on 2/25/14.
|
|
(7)
|
|
Mr. Duesenbergs unvested
option awards reported in the table vest as follows: for grant
date 9/17/2008: 6,250 vest on 9/17/11 and 6,250 vest on 9/17/12;
for grant date 2/25/2009: 8,750 vest on 2/25/11; 8,750 vest on
2/25/12; and 8,750 vest on 2/25/13; and for grant date
2/25/10: 8,750
vest on 2/25/11; 8,750 vest on 2/25/12; 8,750 vest on 2/25/13;
and 8,750 vest on 2/25/14.
|
|
(8)
|
|
Consistent with Ferros LTIP
and Executive Severance Policy, following Ms. Baileys
termination of employment all of Ms. Baileys unvested
stock options, restricted shares and performance shares were
forfeited. Further, 90 days after Ms. Baileys
termination any unexercised vested options expired. For a
description of the Executive Severance Policy, see Employment
Agreements and Termination and Change in Control Payments on
page 35.
|
The following table sets forth for each of the executives named
in the Summary Compensation Table the exercises of stock options
and an estimate of the vesting of stock awards under the
Companys LTIP during the fiscal year ended
December 31, 2010:
Option Exercises
and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock
Awards(1)
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
Acquired on
|
|
|
|
Value Realized on
|
|
|
|
Acquired on
|
|
|
|
Value Realized on
|
|
Name
|
|
|
Exercise
|
|
|
|
Exercise
|
|
|
|
Vesting
|
|
|
|
Vesting
|
|
|
|
|
Shares
|
|
|
|
$
|
|
|
|
Shares
|
|
|
|
$
|
|
James F. Kirsch
|
|
|
|
57,497
|
|
|
|
|
596,819
|
|
|
|
|
24,365
|
|
|
|
|
364,988
|
|
|
Thomas R. Miklich
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
Michael J. Murry
|
|
|
|
9,977
|
|
|
|
|
102,065
|
|
|
|
|
4,209
|
|
|
|
|
63,043
|
|
|
Peter T. Thomas
|
|
|
|
9,967
|
|
|
|
|
103,457
|
|
|
|
|
4,209
|
|
|
|
|
63,043
|
|
|
Mark H. Duesenberg
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
Sallie B. Bailey
|
|
|
|
14,992
|
|
|
|
|
103,895
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
(1)
|
|
The number of shares listed in
these columns is the total number of shares under stock awards
that became vested during 2010, namely shares relating to the
2008-2010
performance share awards under the LTIP. The total number of
shares was calculated based on total attainment of 88.6% and,
therefore, 53,300 performance shares vested in 2010. In
addition, no restricted shares vested in 2010.
|
- 33 -
Post-Employment
Compensation
The following table sets forth the accumulated benefits under
the DB Plan and the Supplemental DB Plan (collectively, the
DB Program) for each of the executives named in the
Summary Compensation Table:
Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
|
Present Value of
|
|
|
Payments During
|
Name
|
|
|
Plan
|
|
|
of Credited Service
|
|
|
Accumulated Benefit
|
|
|
Last Fiscal Year
|
|
|
|
|
|
|
Years
|
|
|
$
|
|
|
$
|
James F. Kirsch
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Thomas R. Miklich
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Michael J. Murry
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Peter T.
Thomas(1)
|
|
|
DB Plan
|
|
|
7.0833
|
|
|
182,731
|
|
|
|
|
|
|
|
Supplemental DB Plan
|
|
|
7.0833
|
|
|
156,045
|
|
|
|
|
Mark H. Duesenberg
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Sallie B. Bailey
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
(1)
|
|
These amounts reflect
Mr. Thomas accumulated present values of his benefit
under the DB Plan and his benefit under the Supplemental DB
Plan, each as of the applicable measurement date of
December 31, 2010, used for financial reporting purposes
for the 2010 fiscal year. Mr. Thomas is fully vested in his
DB Program benefit because he has more than the required five
years of service for vesting purposes. His credited service is
limited to 7.0833 years due to the freeze of the DB Program
on March 31, 2006 (including a freeze on credited service
used to calculate the amount of his benefits under the DB
Program). The Present Value of Accumulated Benefit
was calculated based on certain assumptions made by the
Companys actuaries, including those regarding discount
rate and mortality, which are consistent with DB Program
disclosures. As a result of the differences in assumptions and
methodology between the SECs rules for disclosure and the
terms of the Supplemental DB Plan (which involve different
calculation dates, interest rates and mortality assumptions),
the present value of Mr. Thomas accumulated benefits
in this table is not the same as the present value of his
Supplemental DB Plan benefits that actually would have been paid
to him under the terms of the Supplemental DB Plan using the
measurement date of December 31, 2010. In addition,
Mr. Thomas DB Plan benefit will not be payable to him
in the form of a lump sum.
|
Under the DB Program, an eligible participant who retires at
age 65 with at least 30 years of service will receive
a monthly benefit equal to 50% of the monthly average of the
participants highest five consecutive calendar years of
compensation (which includes base salary and certain incentive
payouts), reduced for 50% of the monthly primary social security
benefits. Benefits are subject to reduction for service of less
than 30 years and for commencement prior to age 65
(age 60 for certain eligible elected officers). Service in
excess of 30 years is not taken into account for accrual of
retirement benefits. DB Plan benefits are payable in a life
annuity form with 120 monthly payments guaranteed
(Life Annuity). Depending on the outcome of a
participants benefit calculations, and consistent with the
plan document and Internal Revenue Code Section 409A,
Supplemental DB Plan benefits may be payable in a Life Annuity
and/or those
benefits may be commuted and paid in one or two lump sum
payments. Furthermore, the benefits payable under the
Supplemental DB Plan to an eligible participant are conditioned
upon the execution of, and compliance with, a non-competition,
non-solicitation, non-disparagement and confidentiality
agreement.
The Companys United States defined benefit pension program
for salaried and certain hourly employees was significantly
changed in 2003 and 2006. Effective July 1, 2003, new hires
were not eligible for participation in the DB Program. In
addition, effective March 31, 2006, benefits accrued for
active employees who were participating in the DB Program were
frozen. (This freeze did not affect the benefits of then-current
retirees, former employees or employees hired on or after
July 1, 2003.) Beginning April 1, 2006, the affected
employees joined salaried and certain hourly employees in the
United States who were hired on or after July 1, 2003, in
receiving an additional basic pension contribution each year
from the Company under the 401(k) Plan, and as executives, they
are also eligible to receive the supplemental basic pension
contribution under the Supplemental 401(k) Plan.
Ms. Bailey and Messrs. Kirsch, Miklich, Murry and
Duesenberg, who were hired after June 30, 2003, were never
eligible for participation in the DB Program. Of the executives
listed in the Summary Compensation Table, only Mr. Thomas
participated in these plans during 2010 because he was hired
before July 1, 2003. See the Change in Pension Value and
Non-qualified Deferred Compensation Earnings column of the
Summary Compensation Table on page 28 above for information
regarding the change in value of Mr. Thomas benefits
under the DB Program for 2010.
- 34 -
Non-Qualified
Deferred Compensation
The following table sets forth information regarding
non-qualified deferred compensation plans for 2010 with respect
to each of the executives named in the Summary Compensation
Table:
Non-Qualified
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
Aggregate
|
|
|
|
|
Executives
|
|
|
|
Companys
|
|
|
|
Aggregate
|
|
|
|
Withdrawals/
|
|
|
|
Balance at
|
|
Name
|
|
|
Contributions
|
|
|
|
Contributions(1)
|
|
|
|
Earnings(2)
|
|
|
|
Distributions
|
|
|
|
December 31,
2010(3)
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
James F. Kirsch
|
|
|
|
0
|
|
|
|
|
101,150
|
|
|
|
|
133,381
|
|
|
|
|
0
|
|
|
|
|
406,258
|
|
|
Thomas R.
Miklich(4)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
Michael J. Murry
|
|
|
|
0
|
|
|
|
|
19,146
|
|
|
|
|
42,302
|
|
|
|
|
0
|
|
|
|
|
115,911
|
|
|
Peter T. Thomas
|
|
|
|
0
|
|
|
|
|
27,531
|
|
|
|
|
44,834
|
|
|
|
|
0
|
|
|
|
|
130,088
|
|
|
Mark H. Duesenberg
|
|
|
|
0
|
|
|
|
|
12,213
|
|
|
|
|
1,529
|
|
|
|
|
0
|
|
|
|
|
15,711
|
|
|
Sallie B.
Bailey(5)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
15,126
|
|
|
|
|
0
|
|
|
|
|
39,851
|
|
|
|
|
|
(1)
|
|
Amounts in this column are included
as part of each executives 2010 compensation in the
All Other Compensation column of the Summary
Compensation Table on page 28 above.
|
|
(2)
|
|
Aggregate Earnings in 2010 consist
of deemed gains and/or losses.
|
|
(3)
|
|
Amounts in this column relating to
the Supplemental 401(k) Plan account include any vested and
non-vested portions. Company contributions under the
Supplemental 401(k) Plan vest 20% for each year of vesting
service, with full vesting after five years of vesting service.
See footnote 5 to this table regarding Ms. Baileys
benefit under the Supplemental 401(k) Plan.
|
|
(4)
|
|
Mr. Miklich was not a
participant in the Supplemental 401(k) Plan in 2010 under the
terms of that plan because he was hired in the middle of that
year. His Supplemental 401(k) Plan participation began on
January 1, 2011.
|
|
(5)
|
|
Ms. Baileys employment
terminated in July 2010. Under the Supplemental 401(k) Plan, the
participants account is frozen as of the end of the month
in which that participants employment terminates, and the
vested portion is the participants benefit payable under
the Plan. The amount shown in this column for Ms. Bailey
reflects the balance of her vested amount as of July 31,
2010, which is the end of the month in which her employment
terminated. Under the Supplemental 401(k) Plan and Internal
Revenue Code Section 409A, Ms. Bailey could not
receive payment of her plan benefit until January 2011.
Accordingly, Ms. Bailey received the vested portion of her
Supplemental Plan Account in the gross amount of $39,851 in
January 2011.
|
The non-qualified deferred compensation plans in this table
consist of the Deferred Compensation Plan and the Supplemental
401(k) Plan. There are no Company Contributions under the
Deferred Compensation Plan, and, among the executive officers
listed in this table, none had an account balance as of
December 31, 2010.
Under the Supplemental 401(k) Plan, participants may receive a
supplemental matching contribution
and/or a
supplemental basic pension contribution. These are primarily
contributions that would have been made to the account of a
participant in the 401(k) Plan but for the application of
Federal tax law limitations. There are no employee contributions
under the Supplemental 401(k) Plan. Under the Supplemental
401(k) Plan, each executive officer listed in this table had an
account balance as of December 31, 2010 (other than
Mr. Miklich who was not eligible to participate in the plan
in 2010 see footnote 4 to the table above).
The Supplemental 401(k) Plan permits participants the option of
a deemed investment in either Company Common Stock or the stable
asset fund under the 401(k) Plan. During 2010, all of the
Companys contributions under the Supplemental 401(k) were
deemed invested in Company Common Stock for the named executive
officers, and earnings include any deemed dividends, gains and
losses. No actual shares of Company Common Stock are held by the
Supplemental 401(k) Plan.
Employment
Agreements and Termination and Change in Control
Payments
Employment Agreement. The only employment
agreement with an executive officer in effect in 2010 was with
Mr. Kirsch. On September 24, 2010, the Compensation
Committee notified Mr. Kirsch of the Boards intent
not to renew the agreement when the current term expired on
December 31, 2010 because of the Compensation
Committees view that the Companys adoption in June
2010 of the Executive Separation Policy (described below)
obviated the need for the employment agreement. That agreement
expired, pursuant to its terms, on December 31, 2010.
- 35 -
The Company and Mr. Kirsch entered into the employment
agreement when Mr. Kirsch joined the Company on
October 18, 2004. The agreement was amended effective
December 31, 2008, to reflect changes in
Mr. Kirschs status and salary and to revise the
manner in which certain benefits are provided in order to comply
with Section 409A of the Internal Revenue Code
(Section 409A). The agreement was renewable for
one-year periods and terminated on Mr. Kirschs death,
employment termination due to disability, voluntary termination,
involuntary termination (with or without cause) or if not
renewed.
Mr. Kirschs base salary rate for 2010 was $885,000.
His target bonus was 100% of his base salary rate in 2010.
Mr. Kirsch is also eligible for awards under the
Companys LTIP, including awards of stock options,
performance shares and restricted shares, to the extent
determined by the Compensation Committee of the Board, and to
participate in other benefit plans generally available to senior
management.
If Mr. Kirschs employment were to end on account of
an involuntary Termination Without Cause (as that
term is defined in his employment agreement), the Company would
be obligated to:
|
|
o
|
Pay Mr. Kirsch a lump sum severance payment (subject to any
required delay in payment as a result of Section 409A)
equal to two times his full years compensation (base
salary plus targeted annual bonus);
|
|
o
|
Provide Mr. Kirsch continued participation in certain of
Ferros employee benefit programs for up to 24 months;
|
|
o
|
Provide Mr. Kirsch outplacement services; and
|
|
o
|
Under certain circumstances, reimburse Mr. Kirsch for legal
fees he incurs as a result of his termination of employment.
|
If Mr. Kirschs employment had terminated without
cause on December 31, 2010, he would have been entitled to
cash compensation of $3,540,000, continuation of group health
benefits with an estimated value of $26,742, and outplacement
services with an estimated value of up to $25,000. If
Mr. Kirschs employment had terminated due to
disability, and long-term disability benefits had not been
available to him under the Companys long-term disability
plan, he would have been eligible for the severance payment and
benefits relating to Termination Without Cause described above.
If Mr. Kirschs employment were terminated under the
Change in Control Agreement (defined below), then the terms of
the Change in Control Agreement, and not the employment
agreement, would govern.
The Companys payment and benefit continuation obligations
would cease if Mr. Kirsch were to breach any of his
agreements contained in the Companys standard employee
confidentiality agreement or if Mr. Kirsch were to decline
to sign and return, or revoke, a release agreement containing
the standard noncompetition, nonsolicitation, nondisparagement
and confidentiality commitments the Company ordinarily requires
of executives who receive additional benefits or payments on
termination of employment.
Employment Inducement
Agreements. Ms. Bailey joined the Company on
January 2, 2007. Pursuant to her offer letter from the
Company, Ms. Bailey received a sign-on bonus of $100,000
during 2007 and earned an additional retention bonus of
$300,000, which was paid in equal installments of $100,000 on
the first, second and third anniversary of her employment with
Ferro.
With the expiration of Mr. Kirschs employment
agreement on December 31, 2010 and the payment of the third
of three installments of the retention bonus to Ms. Bailey
(and her subsequent termination of employment in 2010), other
than customary offer letters and confidentiality and non-compete
agreements, the Company is not a party to any employment
agreements with any of the executives named in the Summary
Compensation Table.
Executive Separation Policy. On June 23,
2010, the Compensation Committee approved a formal separation
policy for certain senior executives, including the CEO. The
policy outlines the expected separation payments to certain
senior executives if their employment is terminated without
cause or if an executive officer
- 36 -
terminates his or her employment for good reason.
Under the policy, eligible senior executives will receive the
following benefits:
|
|
o
|
a lump sum payment equal to 24 months of salary and target
level bonus in the case of the CEO or 18 months of salary
and target level bonus for certain other senior executives;
|
|
o
|
a pro-rated bonus for the portion of the year of termination
that the executive officer was employed based on actual
performance against bonus plan targets;
|
|
o
|
continuation of health benefits for 24 months for the CEO
or 18 months for certain other executive officers; and
|
|
o
|
outplacement services for 24 months in an amount not to
exceed $25,000 in the aggregate for the CEO or 12 months in
an amount not to exceed $10,000 in the aggregate for certain
other executive officers.
|
Payments are designed to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (the
Code). Separation benefits under the policy are
payable only if (i) the executive officer has executed an
agreement for non-competition, non-solicitation,
confidentiality, non-disparagement (and, if specified by the
Company, arbitration) and a release of all claims that the
executive may have against the Company, its officers,
fiduciaries, directors, agents and employees and (ii) the
executive agrees to provide reasonable assistance and
cooperation with the Company concerning business or legal
related matters about which the executive possesses relevant
knowledge or information. The Compensation Committee may modify
or terminate this policy from time to time; however, any
modification or termination will not affect the rights of any
executive whose termination or departure preceded such
modification or termination.
On July 2, 2010, Ms. Bailey left her position at the
Company. In connection with her departure, and in conjunction
with the Companys Executive Separation Policy,
Ms. Bailey entered into a Separation Agreement and Release.
Under the Separation Agreement and Release, Ms. Bailey
received a cash payment of $577,500, which is equal to
18 months salary and a cash payment of $346,500, which is
equal to 1.5 times the annual incentive that Ms. Bailey
would have earned under the Companys annual incentive plan
for 2010, assuming that performance had been attained at the
target level. These cash payments were made in two
installments with $490,000 paid within 30 days of the
effective date of the Separation Agreement and the remainder
paid in January 2011, which was within 30 days after the
first day of the seventh month following the effective date of
the Agreement. In addition, consistent with her termination of
employment Ms. Bailey received a payment equal to the
amount Ms. Bailey would have earned under the AIP if she
had been employed on the last day of 2010, based on the actual
level of performance attained for 2010 and prorated based on the
time she was employed in 2010, but deeming personal performance
for purposes of the calculation to be at the target level. See
the non-equity equity incentive plans column of the Summary
Compensation Table on page 28 and footnotes 5, 7(d) and 10
to that table for more information regarding
Ms. Baileys termination of employment. Further, Ms
Bailey is entitled to continued participation in the medical and
dental plans for the earlier of 18 months or the date
Ms. Bailey becomes eligible for coverage provided through
another employer, and outplacement services for 12 months
in an amount not to exceed $10,000. The Separation Agreement and
Release also contains a release of claims and certain
restrictive covenants, including confidentiality,
non-competition, non-solicitation, and non-disparagement
obligations.
Termination Payments. The Executive Separation
Policy governs the separation pay and benefits that the Company
will provide to executive officers if their employment with the
Company terminates under certain circumstances. The AIP provides
an executive with an opportunity to earn additional cash
compensation based upon the achievement of pre-determined
financial goals for the fiscal year. See the Annual Incentives
discussion of the Executive Compensation & Discussion
Analysis on page 20 above for a discussion of this plan. If
an executives employment is terminated without
cause or if an executive officer terminates his or
her employment for good reason, then the policy will
provide for any AIP-related payments. In other termination
situations payment of any AIP is governed by the AIP itself.
Under the AIP, if the executives employment terminates as
a result of retirement, death or disability, the executive will
receive a prorated AIP payout based on his or her annual rate of
base salary at retirement and actual AIP results for that year
(provided that the executive worked
- 37 -
for a minimum of three months during the plan year) or, in other
termination situations, the executive will not receive any AIP
payment for the year in which his or her employment terminates.
The executives are eligible to participate in the Supplemental
401(k) Plan. See Non-Qualified Deferred Compensation on
page 35 above for a discussion of this plan. If an
executives employment terminates for any reason, he or she
will receive the portion, if any, of his or her account that had
vested prior to January 1, 2005 (plus earnings) soon after
the end of the month in which the termination occurs, and any
remaining vested portion of his or her account will be paid six
months following the termination of employment. Each
executives account vests 20% per year, with full vesting
upon the completion of five years of employment. Alternatively,
the executives account fully vests upon attainment of
age 65, disability, death or a change in control. If the
executive dies on the date of termination or during the six
months following termination, the payment will be made as of the
date of death. The form of the payment, whether stock or cash,
is dependent upon the executives election. If his or her
employment with the Company terminated as of December 31,
2010, each executive would have been entitled to receive the
following amount under the Supplemental 401(k) Plan:
Mr. Kirsch ($406,258), Mr. Murry ($115,911),
Mr. Thomas ($130,088) and Mr. Duesenberg ($6,284).
Ms. Baileys employment was terminated on July 2,
2010 and, consistent with the terms of Supplemental 401(k) Plan
and IRC Section 409A, she received a distribution under the
plan in the gross amount of $39,851 in January 2011.
Mr. Miklich, who began in employment in the middle of 2010,
was not eligible to participate in the plan in 2010.
Mr. Miklich began participation in the plan on
January 1, 2011.
Mr. Thomas is the only executive named in the Summary
Compensation Table who participates in the DB Plan and the
Supplemental DB Plan because these plans are available only to
executives who were hired prior to July 1, 2003 (when the
DB Plan was frozen as to new hires). If Mr. Thomas
employment terminates, under the Supplemental DB Plan, he would
receive the portion, if any, of his benefit under the plans that
had vested prior to January 1, 2005 (or he could begin the
payment of that benefit in the form of an annuity) soon after
the end of the month in which the termination occurs, and any
remaining vested portion of his account will be paid in a lump
sum six months following the termination of his employment. If
Mr. Thomas employment had terminated on
December 31, 2010, then his estimated benefit under the
Supplemental DB Plan would have been $120,583. In addition, if
Mr. Thomas employment had terminated on
December 31, 2010, he would receive a benefit under the DB
Plan in the form of an annuity, with 120 monthly payments
guaranteed, beginning as early as January 1, 2011, in the
gross amount of $1,071 per month (which includes a reduction for
early commencement). Benefit Accruals under both the DB Plan and
the Supplemental DB Plan (including those of Mr. Thomas)
were frozen on March 31, 2006. See Post-Employment
Compensation on page 34 for a discussion of these plans.
The executives are also eligible to participate in the LTIP.
(See the discussion of Long-Term Incentives in the Executive
Compensation Discussion & Analysis on page 20
above for a description of the LTIP.) The LTIP allows the
Company to award different types of long-term incentives;
however, the Compensation Committee has only awarded stock
options, performance shares and restricted shares. For stock
options, if an executive leaves the Company under the Executive
Separation Policy or for any reason other than a change in
control, death, disability or retirement, he or she has three
months to exercise stock options that were vested as of the date
of separation and any options that were not vested as of the
date of separation from service are forfeited. If there is a
change in control (whether or not the executive is terminated)
or the executive leaves the Company as a result of death,
disability or retirement, all options previously awarded to such
executive are fully vested and remain exercisable for the rest
of the applicable option period.
For performance shares, if an executive leaves the Company under
the Executive Separation Policy or for any reason other than a
change in control, death, disability or retirement, then he or
she is entitled to the value of the performance shares that have
vested for completed performance share periods, which will be
provided to the executive in the form of a cash payment equal to
50% of the value of the performance shares and the other 50%
will be in the form of Ferro Common Stock. Any performance
shares for any performance share period that has not been
completed are forfeited. If the executive leaves as a result of
death, disability or retirement, the executive will receive
prorated vesting of performance shares for performance periods
that have not been completed as of the date of separation, which
will be provided to the executive after the end of the
performance period in the form of a cash payment equal to 50% of
the value of the performance shares and the other 50%
- 38 -
will be in the form of Ferro Common Stock. For a description of
the effect of a change in control on performance share awards,
see the Change in Control Payments discussion on page 40
below.
Restricted shares were granted under the LTIP to certain
executives in 2008, 2009 and 2010. Those restricted shares vest
three years from the date of grant. If the executive leaves
during the three-year vesting period other then due to death,
disability or a change in control, then the restricted shares
are forfeited. If the executive leaves during the three-year
vesting period due to death, disability or a change in control,
then the restricted shares will vest and the executive will
receive the restricted shares. See Executive Compensation
Discussion & Analysis on page 20 for a discussion
of restricted shares.
The table below shows the estimated value of the payments under
the LTIP for each of the executives named in the Summary
Compensation Table (other than Ms. Bailey whose employment
terminated in July 2010) if they had left the Company on
December 31, 2010:
Estimated
Payments on Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation or
|
|
|
|
|
|
|
|
|
|
Termination by the
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
(Other Than by
|
|
|
|
|
|
|
|
|
|
Reason of a Change
|
|
|
|
|
|
Death or
|
Name
|
|
|
in
Control)(1)
(2)
|
|
|
Retirement(3)
|
|
|
Disability(3)
|
|
|
|
$
|
|
|
$
|
|
|
$
|
James F. Kirsch
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
0
|
|
|
0
|
|
|
4,014,415
|
Restricted Shares
|
|
|
0
|
|
|
0
|
|
|
1,539,640
|
Performance Shares
|
|
|
364,988
|
|
|
364,988
|
|
|
364,988
|
|
Thomas R. Miklich
(4)
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
0
|
|
|
0
|
|
|
439,200
|
Restricted Shares
|
|
|
0
|
|
|
0
|
|
|
183,000
|
Performance Shares
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Michael J. Murry
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
0
|
|
|
0
|
|
|
781,500
|
Restricted Shares
|
|
|
0
|
|
|
0
|
|
|
340,136
|
Performance Shares
|
|
|
63,043
|
|
|
63,043
|
|
|
63,043
|
|
Peter T. Thomas
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
0
|
|
|
781,500
|
|
|
781,500
|
Restricted Shares
|
|
|
0
|
|
|
0
|
|
|
340,136
|
Performance Shares
|
|
|
63,043
|
|
|
63,043
|
|
|
63,043
|
|
Mark H. Duesenberg
(5)
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
0
|
|
|
0
|
|
|
688,100
|
Restricted Shares
|
|
|
0
|
|
|
0
|
|
|
230,336
|
Performance Shares
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Sallie B. Bailey
(6)
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
0
|
|
|
0
|
|
|
0
|
Restricted Shares
|
|
|
0
|
|
|
0
|
|
|
0
|
Performance Shares
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
(1)
|
|
Payments for stock options,
performance shares and restricted shares upon termination
following a change in control are set forth in the Estimated
Change in Control Payments table on page 41 below.
|
|
(2)
|
|
The performance share amounts in
this column equal the actual amounts earned for the
2008-2010
performance period. The stock option amounts in this column are
zero because the executives would not have received accelerated
vesting of any stock options in the event of the
executives resignation or termination by the Company
(other than by reason of a change in control).
|
|
(3)
|
|
The stock option amounts in the
retirement and the death or disability columns show the value of
additional stock options that would have vested for each
executive if the executives employment had terminated due
to retirement, disability or death and is based on the
difference between the closing price of Ferros Common
Stock on December 31, 2010, and the exercise price of
in-the-money
accelerated stock options. Mr. Thomas is the only officer
listed in the table who would have been eligible for accelerated
vesting of stock options as he is the only officer who would
have been eligible for retirement on December 31, 2010. The
restricted shares are forfeited upon retirement or termination
of
|
- 39 -
|
|
|
|
|
employment, but become vested upon
death or disability. The performance share amounts in these
columns equal the actual amount earned for the
2008-2010
performance period. There were no performance shares granted for
the
2009-2011 or
2010-2012
performance periods.
|
|
(4)
|
|
Although Mr. Miklich was
granted stock options and restricted shares upon hire on
July 7, 2010, he was not granted any performance shares for
the 2008 2010 performance period.
|
|
(5)
|
|
Although Mr. Duesenberg was
granted stock options and restricted shares upon hire on
September 17, 2008, he was not granted any performance
shares for the 2008 2010 performance period.
|
|
(6)
|
|
Ms. Baileys employment
terminated on July 2, 2010. The Company entered into a
Separation Agreement and Release with Ms. Bailey. See
Employment Agreements and Termination and Change in Control
Payments on page 35 above for a discussion of the payments
made to Ms. Bailey by the Company.
|
Change in Control Payments. Effective
December 22, 2010, the Company entered into a change in
control agreement with Mr. Miklich that is substantially
similar to the form of change in control agreement between the
Company and other officers of the Company described below.
However, the Company made the following changes to
Mr. Miklichs change in control agreement:
(a) Mr. Miklichs change in control agreement
uses a revised definition of Good Reason, which no
longer includes a voluntary resignation during the
90-day
period commencing on the first anniversary of the change in
control and (b) the benefits in the agreement no longer
provide for an excise tax
gross-up;
but instead, provide Mr. Miklich with benefits equal to the
greater (i) the payments under the agreement net of any
excise taxes; or (ii) $1 less than the amount of payment
that would trigger the application of excise taxes under
Sections 280G of the Code.
Effective January 1, 2009, the Company entered into amended
and restated change in control agreements (the Change in
Control Agreements) with each of Messrs. Kirsch,
Murry, Thomas and Duesenberg. The purpose of these agreements is
to reinforce and encourage each officers continued
attention and dedication to his or her assigned duties without
distraction in the face of solicitations by other employers and
the potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
Under the respective Change in Control Agreements, if a change
in control of the Company occurs, then the following will happen:
|
|
o |
If the executives employment is terminated for any reason
other than by the Company for cause, by reason of the
executives death or retirement or by the executive without
good reason, the Company would be obligated to:
|
|
|
|
|
o
|
Pay the executive a lump sum severance payment equal to two
times (three times with respect to Mr. Kirsch) the
executives full years compensation (base salary plus
bonus at the targeted amount) (the Termination
Payment);
|
|
|
o
|
Provide the executive with continued participation in
Ferros employee benefit programs for up to 24 months
(36 months with respect to Mr. Kirsch), except in the
event of the executives death;
|
|
|
o
|
Pay the executive a lump sum amount in cash equal to the pro
rata portion of the executives annual bonus for the
calendar year in which the date of termination occurs (if that
termination date occurs in a calendar year following the
calendar year in which the change in control occurs);
|
|
|
o
|
Pay the executive a lump sum amount in cash equal to the sum of
(i) the present value of the excess of the benefits that
would have been paid or payable to the executive under any
defined-benefit retirement plan the executive participates in if
he or she had remained employed by Ferro for an additional
24 months (36 months with respect to Mr. Kirsch)
over the benefits that are payable at the time of termination
plus (ii) the contributions that Ferro would have been
required to make under any defined-contribution retirement plan
over the 24 months (36 months with respect to
Mr. Kirsch) following termination;
|
|
|
o
|
Provide the services of an outplacement firm; and
|
|
|
o
|
Maintain the executives indemnification insurance for at
least four years.
|
- 40 -
|
|
o |
If the executives employment is terminated by reason of
death, the Company will be obligated to:
|
|
|
|
|
o
|
Pay the executive a lump sum severance payment equal to the
Termination Payment; and
|
|
|
o
|
Pay the executive a lump sum amount in cash equal to the pro
rata portion of the executives annual bonus for the
calendar year in which the date of termination occurred.
|
In addition, within five days after the change in control
occurs, the Company will be obligated to pay the executive an
amount in cash (or stock if necessary for tax reasons related to
the change in control) for each grant of performance shares
previously awarded to the executive for any performance period
that had not expired immediately before the change in control
(even if the performance period has not been completed as of the
date of the change in control and regardless of whether or not
the executives employment were terminated).
Finally, with the exception of Mr. Miklich, if any of the
foregoing payments is subject to an excise tax, the Company will
provide a payment to cover such tax and the Company will pay the
fees of tax counsel for the executive in connection with
determining whether the payments will be subject to an excise
tax.
These agreements limit the executives right to compete
against Ferro after the termination of employment for a period
of 24 months after the date of termination in normal
circumstances and 36 months following the date of
termination if all of the following conditions are met:
|
|
o
|
The Company has not terminated the executives employment
because of disability;
|
|
o
|
The Company provides written notice to the executive not later
than two months after the date of termination that the Company
elects to impose the additional 12 month period; and
|
|
o
|
The Company pays the executive an aggregate amount equal to the
executives base salary for the calendar year of the date
of termination.
|
Each Change in Control Agreement also includes a
non-disparagement provision that is perpetual.
The table below describes the estimated value of the payments
for each of the executives named in the Summary Compensation
Table (other than Ms. Bailey whose employment terminated in
July 2010) would have received if there had been a change
in control and the executives employment had been
terminated as of December 31, 2010 (other than by the
Company for cause, by reason of the executives death or
retirement or by the executive without good reason):
Estimated Change
in Control
Payments(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout Under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Out-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
|
|
|
|
|
placement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
Assistance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parachute
|
|
|
|
|
|
|
|
|
Plan plus
|
|
|
|
|
|
|
|
Health &
|
|
|
|
Plan for
|
|
|
|
|
|
|
|
and
|
|
|
|
D & O
|
|
|
|
|
|
|
|
|
|
|
|
Payment
|
|
|
|
|
|
|
|
|
Vesting Stock
|
|
|
|
|
|
|
|
Welfare
|
|
|
|
2010 (at
|
|
|
|
Retirement
|
|
|
|
Executive
|
|
|
|
Coverage
|
|
|
|
Tax
|
|
|
|
Total CIC
|
|
|
|
and Tax
|
|
|
|
|
|
|
|
|
Options(2)
|
|
|
|
Severance(3)
|
|
|
|
Benefits(4)
|
|
|
|
target)
|
|
|
|
Benefits(5)
|
|
|
|
Allowances
|
|
|
|
Premiums(6)
|
|
|
|
Counsel
|
|
|
|
Value
|
|
|
|
Gross Up
|
|
|
|
Total
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James F. Kirsch
|
|
|
|
5,919,043
|
|
|
|
|
5,310,000
|
|
|
|
|
116,206
|
|
|
|
|
885,000
|
|
|
|
|
574,488
|
|
|
|
|
50,000
|
|
|
|
|
258,352
|
|
|
|
|
5,000
|
|
|
|
|
13,118,089
|
|
|
|
|
6,314,596
|
|
|
|
|
19,432,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Miklich
|
|
|
|
622,200
|
|
|
|
|
1,360,000
|
|
|
|
|
69,098
|
|
|
|
|
127,500
|
|
|
|
|
118,128
|
|
|
|
|
50,000
|
|
|
|
|
258,352
|
|
|
|
|
5,000
|
|
|
|
|
2,610,278
|
|
|
|
|
0
|
|
|
|
|
2,610,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Murry
|
|
|
|
1,184,984
|
|
|
|
|
1,248,000
|
|
|
|
|
51,379
|
|
|
|
|
234,000
|
|
|
|
|
130,872
|
|
|
|
|
50,000
|
|
|
|
|
258,352
|
|
|
|
|
5,000
|
|
|
|
|
3,162,587
|
|
|
|
|
1,420,009
|
|
|
|
|
4,582,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter T. Thomas
|
|
|
|
1,185,117
|
|
|
|
|
1,248,000
|
|
|
|
|
58,702
|
|
|
|
|
234,000
|
|
|
|
|
311,696
|
|
|
|
|
50,000
|
|
|
|
|
258,352
|
|
|
|
|
5,000
|
|
|
|
|
3,350,867
|
|
|
|
|
1,550,626
|
|
|
|
|
4,901,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark H. Duesenberg
|
|
|
|
918,436
|
|
|
|
|
990,000
|
|
|
|
|
43,901
|
|
|
|
|
165,000
|
|
|
|
|
84,828
|
|
|
|
|
50,000
|
|
|
|
|
258,352
|
|
|
|
|
5,000
|
|
|
|
|
2,515,517
|
|
|
|
|
1,151,406
|
|
|
|
|
3,666,923
|
|
|
|
|
|
(1)
|
|
Ms. Baileys employment
terminated on July 2, 2010. As a result she is not included
in this table. See Employment Agreements and Termination and
Change in Control Payments on page 35 above for a
discussion of the payments made to Ms. Bailey by the
Company.
|
|
(2)
|
|
This column includes the aggregate
amounts related to performance shares and stock options. The
performance share amounts in this column equal the actual payout
for the
2008-2010
performance period. The stock option and restricted stock
amounts in this column show the value of additional stock
options and restricted stock that would have vested for each
executive if the executives employment had terminated due
to a change in control and is based on the difference between
the closing share price on the NYSE of Ferro Common Stock on
December 31, 2010 and the exercise price of the
in-the-money
accelerated stock options.
|
- 41 -
|
|
|
(3)
|
|
The severance payment includes a
lump sum payment equal to two times (three times with respect to
Mr. Kirsch) each executives full years
compensation (base salary plus bonus at the target amount).
|
|
(4)
|
|
The health and welfare benefits
amounts equal the estimated value of health and welfare benefit
coverage under the applicable Change in Control Agreement.
|
|
(5)
|
|
The amounts in this column include
payments pursuant to the applicable Change in Control Agreement
relating to the 401(k) Plan and the Supplemental 401(k) Plan.
The amount for Mr. Thomas also includes payments pursuant
to his Change in Control Agreement relating to the DB Plan and
the Supplemental DB Plan.
|
|
(6)
|
|
The amounts in this column are
based on total estimated future premiums allocated among all
covered insureds.
|
Director
Compensation
In 2010, Directors (other than Mr. Kirsch, who is an
employee of the Company) were paid a quarterly retainer of
$16,250 ($65,000 per annum) and in February 2010 were awarded
8,000 deferred stock units. (Mr. Pistell, who joined the
Board in September 2010, did not receive deferred stock units in
2010.) The non-employee Directors do not receive a fee for
attending meetings unless the total number of meetings a
non-employee Director attends in a given year exceeds 24, in
which case the non-employee Director would be paid $1,500 for
each meeting in excess of 24. (In 2010, no director attended
more than 24 meetings.) In 2010, the Chair of the Audit
Committee was paid an additional quarterly fee of $5,000
($20,000 per annum); the Chair of the Finance Committee was paid
an additional quarterly fee of $2,500 for the first quarter of
2010, after which the Finance Committee was discontinued; and
the Chairs of the Compensation and Governance &
Nomination Committees were each paid an additional quarterly fee
of $2,500 for the first quarter of 2010 and $5,000 for the
subsequent quarters of 2010. Directors fees and other
compensation for 2010 were:
Directors
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
Deferred Stock
Units(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid In
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
|
|
Total
|
|
Name
|
|
|
Cash
|
|
|
|
Deferred(1)
|
|
|
|
Total Fees
|
|
|
|
Stock(3)
|
|
|
|
Value(4)
|
|
|
|
Compensation
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
Shares
|
|
|
|
$
|
|
|
|
$
|
|
Richard C. Brown
|
|
|
|
65,000
|
|
|
|
|
0
|
|
|
|
|
65,000
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
130,520
|
|
|
Michael H.
Bulkin(5)
|
|
|
|
0
|
|
|
|
|
37,500
|
|
|
|
|
37,500
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
103,020
|
|
|
Sandra Austin Crayton
|
|
|
|
65,000
|
|
|
|
|
0
|
|
|
|
|
65,000
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
130,520
|
|
|
Richard J. Hipple
|
|
|
|
80,000
|
|
|
|
|
0
|
|
|
|
|
80,000
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
145,520
|
|
|
Jennie S. Hwang
|
|
|
|
65,000
|
|
|
|
|
0
|
|
|
|
|
65,000
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
130,520
|
|
|
Gregory E. Hyland
|
|
|
|
65,000
|
|
|
|
|
0
|
|
|
|
|
65,000
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
130,520
|
|
|
James F. Kirsch
(6)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
William B. Lawrence
|
|
|
|
82,500
|
|
|
|
|
0
|
|
|
|
|
82,500
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
148,020
|
|
|
Michael F.
Mee(7)
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
|
|
18,750
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
Timothy K.
Pistell(8)
|
|
|
|
16,250
|
|
|
|
|
0
|
|
|
|
|
16,250
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
16,250
|
|
|
Perry W.
Premdas(5)
|
|
|
|
0
|
|
|
|
|
32,500
|
|
|
|
|
32,500
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
32,500
|
|
|
William J. Sharp
|
|
|
|
75,000
|
|
|
|
|
0
|
|
|
|
|
75,000
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
140,520
|
|
|
Dennis W.
Sullivan(9)
|
|
|
|
0
|
|
|
|
|
32,500
|
|
|
|
|
32,500
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
98,020
|
|
|
Ronald P. Vargo
|
|
|
|
80,000
|
|
|
|
|
0
|
|
|
|
|
80,000
|
|
|
|
|
8,000
|
|
|
|
|
65,520
|
|
|
|
|
145,520
|
|
|
|
|
|
(1)
|
|
Fees have been deferred pursuant to
the deferred compensation program for Directors described below.
|
|
(2)
|
|
The deferred stock units will be
paid out in an equal number of shares of Company stock after a
one-year holding period unless the Directors elect to defer the
payout. Messrs. Bulkin, Hipple, Lawrence, Mee, Premdas and
Sullivan each elected to defer the payout of Common Stock into
the Ferro Director Deferred Compensation Plan. The date of grant
each year is generally the pre-determined date of the
Compensation Committee meeting in February of that year.
|
|
(3)
|
|
Mr. Mee forfeited his deferred
stock units upon his resignation effective March 3, 2010.
Mr. Premdas forfeited his deferred stock units upon the
expiration of his term at the 2010 annual meeting on
April 30, 2010. The expiration of each of
Mr. Bulkins and Mr. Sullivans term at the
2010 annual meeting on April 30, 2010 was treated as a
retirement and as a result they did not forfeit their deferred
stock units.
|
|
(4)
|
|
The amounts in this column reflect
full fair value of the award on February 26, 2010, the date
of grant, and are computed in accordance with FASB ASC Topic 718.
|
|
(5)
|
|
The terms of Messrs. Bulkin
and Premdas expired at the 2010 annual meeting on April 30,
2010 and they did not stand for re-election.
|
- 42 -
|
|
|
(6)
|
|
Mr. Kirsch is not paid any
additional fees for his service as a Director because he is an
employee of the Company.
|
|
(7)
|
|
Mr. Mee resigned from the
Board effective March 3, 2010.
|
|
(8)
|
|
Because he joined the Board of
Directors during the end of the third quarter, Mr. Pistell
received a single quarterly retainer and no Common Stock for his
services in 2010.
|
|
(9)
|
|
Mr. Sullivan retired from the
Board following the 2010 annual meeting on April 30, 2010.
|
Directors may defer their fees and Common Stock issuable upon
settlement of the deferred stock units into the Ferro Director
Deferred Compensation Plan. Amounts so deferred are invested in
shares of Common Stock, and dividends on those shares are
reinvested in additional shares of Common Stock. Ferro
distributes the shares of Common Stock credited to a
Directors deferred account after he or she ceases to be a
Director.
- 43 -
PROPOSAL TWO:
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2010
Deloitte & Touche LLP served as independent registered
public accounting firm to the Company in 2010 and is expected to
be retained to serve in such capacity in 2011. The Board of
Directors has directed that management submit the selection of
the independent registered public accounting firm for
ratification by the shareholders at the Annual Meeting.
Shareholder ratification of the selection of
Deloitte & Touche LLP as the Companys
independent registered public accounting firm is not required by
the Companys Code of Regulations or otherwise. However,
the Board of Directors is submitting the selection of
Deloitte & Touche LLP to the shareholders for
ratification as a matter of good corporate practice. If the
shareholders do not ratify the selection, the Audit Committee
will reconsider whether to retain the firm. In such event, the
Audit Committee may retain Deloitte & Touche LLP,
notwithstanding that the shareholders did not ratify the
selection, or select another nationally recognized accounting
firm without re-submitting the matter to the shareholders. Even
if the selection is ratified, the Audit Committee reserves the
right in its discretion to select a different nationally
recognized accounting firm at any time during the year if it
determines that such a change would be in the best interests of
the Company and its shareholders.
Vote Required for
Approval
The affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote is required for
approval. Abstentions will have the same effect as votes against
the proposal. Broker non-votes will not be considered shares
present and entitled to vote on the proposal and will not have a
positive or negative effect on the outcome of this proposal.
Board
Recommendation
The Board of Directors recommends that you vote
FOR the ratification of Deloitte &
Touche LLP as the independent registered public accounting firm
for the year ending December 31, 2011. Unless you instruct
otherwise on your proxy card or by telephone or Internet voting
instructions, your proxy will be voted in accordance with the
Board of Directors recommendation.
OTHER INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM INFORMATION
Appointment of
Independent Registered Public Accounting Firm
The Audit Committee has sole responsibility for appointing the
Companys independent registered public accountants, but
will consider the outcome of the shareholder vote on
ratification of any appointment.
Deloitte & Touche LLP has served as the Companys
independent registered public accounting firm since 2006 and is
expected to continue as Ferros auditors for the year 2011.
In accordance with its responsibilities under its charter and
the New York Stock Exchange listing standards, the Audit
Committee will assess periodically the advisability of rotating
audit firms for audits in future years. Representatives of
Deloitte & Touche LLP will attend the Annual Meeting.
They will have an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate
questions.
Fees
The Audit Committee has sole responsibility, in consultation
with management, for approving the terms and fees for the
engagement of the independent registered public accounting firm
for audits of Ferros financial statements and internal
control over financial reporting. In addition, the Audit
Committee has sole responsibility
- 44 -
for determining whether and under what circumstances
Ferros independent registered public accounting firm may
be engaged to perform audit-related services and must
pre-approve any non-audit related services performed by the
independent registered public accounting firm. Under no
circumstance is the Companys independent registered public
accounting firm permitted to perform services of the nature
described in Section 201 of the Sarbanes-Oxley Act.
For the years ended December 31, 2010 and 2009,
Deloitte & Touche LLP billed or will bill the Company
fees as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Audit Fees
|
|
|
Audit-Related Fees
|
|
Tax Fees
|
|
|
All Other Services
|
|
2010
|
|
$
|
3,351,000
|
|
|
$140,000
|
|
$
|
124,000
|
|
|
$
|
15,000
|
|
|
2009
|
|
$
|
4,368,000
|
|
|
$438,000
|
|
$
|
831,000
|
|
|
$
|
15,000
|
|
|
Fees noted in Audit-Related Fees in 2010 represents
fees primarily related to registration statements filed on
Forms S-3
and S-8. In
2009, fees were for a registration statement on
Form S-3
filed by the Company and consultation on financial accounting
and reporting matters.
Fees noted in Tax Fees in 2010 with respect to tax
compliance services such as global assistance in preparing
various types of tax returns and support of various credits was
$24,000 and with respect to tax planning services such as tax
restructuring activities was $100,000. Fees noted in Tax
Fees in 2009 were with respect to tax compliance services
such as global assistance in preparing tax returns and support
of various credits in the amount of $397,000 and with respect to
tax planning services such as tax restructuring activities and
available credit analysis and support in the amount of $434,000.
Fees noted in All Other Services in 2010 and 2009
represent subscription fees for access to accounting research
databases.
The Audit Committee has reviewed all non-audit services
described above and has concluded that the provision of these
non-audit services is compatible with maintaining
Deloitte & Touche LLP s independence.
Report of the
Audit Committee
The Audit Committee has reviewed and discussed with Ferros
management and Deloitte & Touche LLP, Ferros
independent registered public accounting firm, the audited
financial statements of the Company for the fiscal year ended
December 31, 2010. The Audit Committee has also discussed
with Deloitte & Touche LLP all matters required by the
Public Company Accounting Oversight Board. The Audit Committee
has received the written disclosures and the letter from
Deloitte & Touche LLP required by the applicable
requirements of the Public Company Accounting Oversight Board
regarding the communications of Deloitte & Touche
LLP concerning independence and has discussed with
Deloitte & Touche LLP its independence.
Based on the review and discussions noted above, the Audit
Committee recommended to the Board that the audited financial
statements be included in Ferros Annual Report on Form
10-K for the
fiscal year ended December 31, 2010, for filing with the
Securities and Exchange Commission.
Respectfully submitted,
Ronald P. Vargo, Chair
Sandra Austin Crayton
Dr. Jennie S. Hwang
Timothy K. Pistell
- 45 -
PROPOSAL THREE:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The recently enacted Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the Dodd-Frank Act) provides
shareholders an opportunity to vote to approve, on an advisory
(non-binding) basis, the compensation of our named executive
officers as disclosed in this Proxy Statement.
As described in detail under the heading Executive
Compensation Discussion & Analysis and in the
compensation tables and narrative disclosures that accompany the
compensation tables, the Companys compensation program for
the named executive officers is designed to attract, motivate
and retain talented executives who will provide leadership for
the Companys success. Under this program, the named
executive officers are rewarded for individual and collective
contributions to the Company consistent with a pay for
performance orientation. Furthermore, the executive
officer compensation program is aligned with the nature and
dynamics of the Companys business, which focuses
management on achieving the Companys annual and long-term
business strategies and objectives. The Compensation Committee
regularly reviews the executive compensation program to ensure
that it achieves the desired goals of emphasizing long-term
value creation and aligning the interests of management and
shareholders through the use of equity-based awards.
The Company is asking the shareholders to indicate their support
for the Companys named executive officer compensation as
described in this Proxy Statement. Accordingly, the Company asks
the shareholders to vote FOR the following
resolution at the Annual Meeting:
RESOLVED, that the Companys
shareholders approve, on an advisory basis, the compensation of
the named executive officers, as disclosed in the Companys
Proxy Statement for the 2011 Annual Meeting of Shareholders,
including the Compensation Discussion & Analysis, the
Summary Compensation Table and the other related tables and
disclosure.
As an advisory vote, this proposal is not binding upon the
Company. However, the Compensation Committee, which is
responsible for designing and administering the Companys
executive compensation program, values the opinions expressed by
shareholders in their vote on this proposal and will consider
the outcome of the vote when making future compensation
decisions for named executive officers.
Vote
Required
Although the vote is non-binding, the Company will consider the
affirmative vote of a majority of the votes cast on the proposal
as approval of the compensation of the Companys named
executive officers. Abstentions and broker non-votes will not be
considered votes cast on the proposal and will not have a
positive or negative effect on the outcome of this proposal.
Board
Recommendation
The Board of Directors recommends a vote FOR
the proposal to approve the compensation of the Companys
named executive officers. Unless you instruct otherwise on your
proxy card or by telephone or Internet voting instructions, your
proxy will be voted in accordance with the Board of
Directors recommendation.
- 46 -
PROPOSAL FOUR:
ADVISORY VOTE ON THE FREQUENCY OF HOLDING AN ADVISORY VOTE ON
EXECUTIVE COMPENSATION
As described in Proposal Three above, the Companys
shareholders are being provided the opportunity to cast an
advisory vote on the Companys compensation of its named
executive officers. Pursuant to Section 14A of the Exchange
Act of the 1934 (which was added by the Dodd-Frank Act), the
Company must also permit shareholders to cast an advisory vote
on how often the Company should include an advisory vote on the
Companys compensation of its named executive officers in
its proxy materials for future annual shareholder meetings (or
special shareholder meetings for which the Company must include
executive compensation information in the proxy statement for
that meeting). Under this Proposal Four, shareholders may
vote to have the non-binding advisory vote on the Companys
compensation of its named executive officers every year, every
two years or every three years.
The Board of Directors believes that the advisory vote on
compensation for the Companys named executive officers
should be conducted every year so that shareholders may annually
express their views on the Companys compensation
principles, policies and practices.
Accordingly, the following resolution is submitted for
shareholder vote at the Annual Meeting:
RESOLVED, that the Companys
shareholders recommend, in a non-binding vote, whether a
non-binding shareholder vote to approve the compensation of the
Companys named executive officers should occur every year,
every two years or every three years.
Vote
Required
As an advisory vote, this proposal is non-binding. However, the
Company will consider the outcome of the vote when deciding the
frequency with which to present to shareholders for a
non-binding vote the compensation of the Companys named
executive officers. Abstentions and broker non-votes will not be
considered votes cast on the proposal and will not have a
positive or negative effect on the outcome of this proposal.
Board
Recommendation
The Board of Directors recommends a vote ONE
YEAR with respect to how frequently a non-binding
shareholder vote to approve the compensation of the
Companys named executive officers should occur. Unless you
instruct otherwise on your proxy card or by telephone or
Internet voting instructions, your proxy will be voted in
accordance with the Board of Directors recommendation.
- 47 -
SHAREHOLDER
PROPOSALS FOR
THE 2012 ANNUAL MEETING
Any shareholder who intends to present a proposal at the 2012
Annual Meeting and who wishes to have the proposal included in
Ferros proxy statement and form of proxy for that meeting
must deliver the proposal to the Company at our headquarters at
1000 Lakeside Avenue, Cleveland, Ohio
44114-1147,
not later than November 29, 2011.
Any shareholder who intends to present a proposal at the 2012
Annual Meeting other than for inclusion in Ferros proxy
statement and form of proxy must deliver the proposal to Ferro
at our headquarters at 1000 Lakeside Avenue, Cleveland, Ohio
44114-1147,
no later than February 12, 2012, or such proposal will be
untimely. Ferro reserves the right to exercise discretionary
voting authority on the proposal if a shareholder fails to
submit the proposal by February 12, 2012.
SHAREHOLDER
VOTING
Under the Ohio General Corporation Law, if a shareholder desires
cumulative voting for election of the Directors, then the
shareholder must provide written notice to the President, a Vice
President or the Secretary of Ferro at least 48 hours
before the meeting. Upon announcement of this notice at the
meeting, each shareholder will have cumulative voting rights.
Cumulative voting means that each shareholder is entitled to
that number of votes equal to the number of shares that he or
she owns multiplied by the number of Directors to be elected.
Each shareholder may cast all of his or her votes for a single
nominee or may distribute his or her votes among as many
nominees as he or she sees fit. As indicated on page 5
above, if the election of Directors is by cumulative voting, the
persons appointed by the accompanying proxy intend to cumulate
the votes represented by the proxies they receive and distribute
such votes in accordance with their best judgment in order to
elect four nominees for Directors. Those nominees receiving the
largest number of votes for the Director positions to be filled
will be elected to those positions.
MISCELLANEOUS
Ferro will bear the cost of preparing and mailing this
statement, with the accompanying proxy and other instruments.
Ferro will also pay the standard charges and expenses of
brokerage houses, or other nominees or fiduciaries, for
forwarding such instruments to and obtaining proxies from
security holders and beneficiaries for whose account they hold
registered title to Ferro shares. In addition to using the mail,
Directors, officers and other employees of Ferro, acting on its
behalf, may also solicit proxies, and Innisfree M&A
Incorporated, 501 Madison Avenue, New York, NY 10022, has been
retained at an estimated cost of $15,000 plus expenses, to aid
in the solicitation of proxies from brokers, institutional
holders and individuals who own a large number of shares. This
Proxy Statement and the accompanying proxy will be sent to
shareholders by mail on or about March 29, 2011.
Only the business set forth above in this notice of meeting will
be acted upon at the Annual Meeting of Shareholders.
FERRO CORPORATION
Secretary
March 29, 2011
- 48 -
Important Notice Regarding the Availability of Proxy Materials
for the 2011 Annual Meeting of Shareholders of Ferro Corporation
to Be Held on April 29, 2011:
This Proxy Statement and annual report to security holders are
available at
http://phx.corporate-ir.net/phoenix.zhtml?c=73886&p=proxy.
Note
Under rules of the Securities Exchange Commission, to minimize
mailing costs we are permitted to send a single set of annual
reports and proxy statements to any household at which two or
more shareholders reside if they appear to be members of the
same family. A number of brokerage firms have also instituted
this practice with respect to the delivery of documents to
shareholders residing at the same address. With this practice,
however, each shareholder continues to receive a separate proxy
card for voting. Any shareholder affected by this practice who
desires to receive multiple copies of annual reports and proxy
statements in the future should call Investor Relations at
216.641.8580.
IMPORTANT ANNUAL MEETING INFORMATION 000004 ENDORSEMENT_LINE SACKPACK MR A SAMPLE DESIGNATION
(IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Using a black ink pen, mark your votes with an X as
shown in this example. Please do not write outside the designated areas. C123456789
000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext You can vote by Internet or telephone! Available 24
hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the two voting
methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 11:59 p.m. EST on April 28,
2011. Log on to the Internet and go to www.investorvote.com/FOE Follow the steps outlined on
the secured website. Vote by telephone Call toll free 1-800-652-VOTE (8683) within the USA, US
territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call.
Follow the instructions provided by the recorded message. Annual Meeting Proxy Card 1234 5678 9012
345 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals The Board of Directors
recommends a vote FOR all the nominees listed and FOR proposals 2 and 3. The Board recommends a
vote for ONE YEAR on Proposal 4. 1. ELECTION OF DIRECTORS Nominees for terms expiring in 2014: For
Withhold For Withhold For Withhold 01 Sandra Austin Crayton 02 Richard J. Hipple 03 William
B. Lawrence 04 Timothy K. Pistell For Against Abstain For Against Abstain 2. Ratification of the
appointment of Deloitte & Touche LLP as 3. Approval, in a non-binding advisory vote, of the the
Independent Registered Public Accountant. compensation for named executive officers as disclosed in
1 Year 2 Years 3 Years Abstain this proxy statement. 4. Recommendation, in a non-binding advisory
vote, for the frequency of future advisory votes on executive compensation. B Non-Voting Items
Change of Address Please print new address below. C Authorized Signatures This section must
be completed for your vote to be counted. Date and Sign Below When signing as attorney,
executor, administrator, trustee or guardian, please give your full title as such. A proxy given by
a corporation should be signed in the corporate name by the chairman of its board of directors, its
president, vice president, secretary, or treasurer. Date (mm/dd/yyyy) Please print date below.
Signature 1 Please keep signature within the box. Signature 2 Please keep signature within
the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A
SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1 U P X 1 1 0 0 1 3 1 MR
A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 01A0OD |
YOUR VOTE IS IMPORTANT Regardless of whether you plan to attend the Annual Meeting of Stockholders
you can be sure your shares are represented at the meeting by promptly returning your vote. IF YOU
HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE
BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy Ferro Corporation This proxy is solicited on
behalf of the Board of Directors for the Annual Meeting of Shareholders on April 29, 2011 The
undersigned shareholder of Ferro Corporation hereby appoints Mark H. Duesenberg, Thomas R. Miklich
and Peter T. Thomas, and each of them, the proxies of the undersigned, with full power of
substitution to vote the shares of the undersigned at the 2011 Annual Meeting of Shareholders of
the Corporation and any adjournment thereof upon the proposals on the reverse side. IMPORTANT
NOTICE TO PARTICIPANTS IN THE SAVINGS AND STOCK OWNERSHIP PLAN AND/OR THE 401(k) PLAN As a
participant in the Ferro Corporation Savings and Stock Ownership Plan and/or the Ferro Corporation
Bargaining Unit 401(k) Plan (the Plan), you have the right to instruct JPMorgan Chase Bank, as
Trustee, to vote the shares allocated to your Plan account, as specified on the reverse side. If no
instructions are given or if your voting instructions are not received on or before 10:00 am EST on
April 27, 2011, the Trustee will vote the uninstructed shares in the same proportion in which it
has received voting instructions. Please indicate how you wish your shares to be voted. Unless
otherwise indicated, the proxies will vote FOR the election as Directors of all nominees and FOR
Proposals 2 and 3, and for ONE YEAR on Proposal 4. IMPORTANT THIS PROXY MUST BE SIGNED AND DATED
ON THE REVERSE SIDE |