-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PqgQ1ZMyYNBmwO5xxbNbbXfg4zrtiB9INGSSQF3oHVBWJVmLKnMLN8phddZysMGz ZZpU1b3draEudcQrA6MR5g== 0001012975-07-000194.txt : 20070312 0001012975-07-000194.hdr.sgml : 20070312 20070312171607 ACCESSION NUMBER: 0001012975-07-000194 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070306 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070312 DATE AS OF CHANGE: 20070312 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED INDUSTRIAL CORP /DE/ CENTRAL INDEX KEY: 0000101271 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 952081809 STATE OF INCORPORATION: DE FISCAL YEAR END: 1214 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04252 FILM NUMBER: 07688569 BUSINESS ADDRESS: STREET 1: 124 INDUSTRY LANE CITY: HUNT VALLEY STATE: MD ZIP: 21030 BUSINESS PHONE: (410) 628-3500 MAIL ADDRESS: STREET 1: 124 INDUSTRY LANE CITY: HUNT VALLEY STATE: MD ZIP: 21030 FORMER COMPANY: FORMER CONFORMED NAME: TOPP INDUSTRIES CORP DATE OF NAME CHANGE: 19710510 FORMER COMPANY: FORMER CONFORMED NAME: HAYES MANUFACTURING CORP DATE OF NAME CHANGE: 19660911 8-K 1 e93908988v8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): [March 6, 2007] UNITED INDUSTRIAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 1-4252 95-2081809 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 124 INDUSTRY LANE, HUNT VALLEY, MD 21030 (Address of principal executive offices) (Zip Code) (410) 628-3500 (Registrant's telephone number, including area code) (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b)under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS ADOPTION OF 2007 MANAGEMENT INCENTIVE PLAN On March 6, 2007, the Board of Directors adopted the 2007 Management Incentive Plan ("MIP") of the Company for the year ending December 31, 2007. The following description of the MIP is not complete and is qualified in its entirety by the full text of the MIP, a copy of which is attached as Exhibit 10.1 hereto and incorporated herein by reference. The MIP is a variable cash-based incentive plan designed to focus management's attention on performance factors important to the continued success of each business unit and the Company overall. The MIP is administered by the Compensation and Stock Option Committee (the "Compensation Committee"). Under the MIP, the Compensation Committee establishes a compensation "pool" based upon the extent to which the business unit meets or exceeds performance against annual performance measures set for each respective unit. The financial measures generally include, but are not limited to, orders, profit and cash flow. Participants in the MIP are executive officers, including the President and Chief Executive Officer, and other selected senior managers in a position to significantly affect the performance of their business unit. The senior managers are generally managers with responsibility across an entire business unit (i.e., headquarter executives, product line and other general program managers, and selected functional managers). The Compensation Committee approves the initial participants in the plan and any additions of executive officers during the plan year. The President and Chief Executive Officer has been delegated the authority by the Compensation Committee, during the plan year, to add participants based on new hires and promotions to, and to remove participants from, the MIP, other than executive officers. Annual incentive awards may range from zero to 200% of the target incentive compensation. Target incentive compensation is a percent of base salary. The target incentive percent varies from 10% to 50% of the participant's base salary, depending on the participant's salary grade, among other factors, and is determined using competitive data for short-term incentive compensation and in relation to the executive's total compensation package. Targets for the executive officers range between 20-45% and, in the case of the President and Chief Executive Officer, 50%. Awards for participants generally are based on a combination of business unit performance and personal performance objectives. The weighting of these factors can vary from one business unit to another, reflecting the relative importance of business performance to personal performance for that business unit during any year. If a certain threshold is not realized, the incentive is not paid. The business performance is based upon financial performance measures that are important to the business unit. Budgets, as well as past and expected future performance results, are criteria used in setting business performance targets. The Compensation Committee approves the business performance targets for all executive officers. The business performance targets for all other participants are reviewed and approved by the Company's chief executive officer, subject to approval by the Compensation Committee as it deems appropriate. The Compensation Committee has the discretion to adjust business performance measures in determining actual business performance to take into account events and circumstances not contemplated when the business performance measures were approved. The personal performance objectives are important personal objectives directly related to the participant's major responsibilities. For example, those objectives could include such areas as market and/or customer share improvement; cost improvements; product development; pricing; inventory levels; introduction or improvement of products, processes or systems; health, safety and environmental performance; or management development. The personal performance objectives of the President and Chief Executive Officer are approved by the Compensation Committee. The personal performance objectives of the other named executive officers are approved by the President and Chief Executive Officer, subject to approval by the Compensation Committee as it deems appropriate. The personal performance objectives for all other participants are mutually agreed to by the participant and his or her manager, subject to approval by the President and Chief Executive Officer as he deems appropriate. Personal performance objectives are reviewed and revised during the plan year to take into account significant achievements not contemplated at the time the personal performance objectives were initially approved. Revisions to the personal performance objectives of the President and Chief Executive Officer and other executive officers are approved by the Compensation Committee. The Compensation Committee has delegated the authority to the President and Chief Executive Officer the right to make changes to the personal performance objectives of participants other than executive officers. Revisions to the personal performance objectives for all other participants are approved by the participant's manager, subject to approval by the President and Chief Executive Officer as he deems appropriate. To determine an employee's incentive award, both performance the business performance and personal performance objectives factors are rated and weighted according to the predetermined split. The two results are totaled and multiplied by the participant's base salary to determine the incentive compensation. If the requisite performance objectives are not realized, no incentive compensation is paid to the participant. The predetermined split for the President and Chief Executive Officer is approved by the Compensation Committee. The predetermined split for the other executive officers is approved by the President and Chief Executive Officer, subject to approval by the Compensation Committee as it deems appropriate. The predetermined split for all other participants is approved by the President and Chief Executive Officer. Commencing in 2007, the Compensation Committee has determined that the predetermined split for all corporate and business unit participants, including all executive officers, shall be 75% for business performance and 25% for personal performance objectives. Because of the discretionary nature of the MIP targets and objectives, the MIP is not intended to satisfy Internal Revenue Code ("Code") Section 162(m). Payment of awards earned under the MIP will generally be made by March 15, 2008, subject to a participant's continued employment with the Company at the time of payment. However, if a participant dies, retires, is laid off, or becomes disabled after the close of 2007, but before payment is made, payment of the award will be made by March 15, 2008. If death, retirement, layoff or disability occurs during 2007, the award will be prorated based on the portion of the year in which the participant was employed and payment will be made by March 15, 2008. 2006 MANAGEMENT INCENTIVE PLAN AWARDS On March 6, 2007, the Board of Directors approved the following payments under the Company's 2006 MIP to the Company's executive officers for services provided during the fiscal year ended December 31, 2006. Frederick M. Strader President and Chief Executive $500,000 Officer of the Company James H. Perry Vice President, Chief Financial $206,736 Officer and Controller of the Company Jonathan A. Greenberg Vice President, General Counsel and $174,103 Secretary of the Company Stuart F. Gray Treasurer of the Company $ 41,597 In January 2007, the Company determined that John F. Michitsch and Michael A. Boden were executive officers of the Company for purposes of Section 16 of the Securities Exchange Act of 1934, as amended. On March 6, 2007, the Board of Directors also approved the following payments under the Company's 2006 MIP to John F. Michitsch and Michael A. Boden for services provided during the fiscal year ended December 31, 2006. John F. Michitsch Executive Vice President $151,742 of AAI Corporation Michael A. Boden Executive Vice President, $185,279 Operations of AAI Corporation The business performance and personal performance objectives under the 2006 MIP for each of the Company's executives were met or exceeded. Under the 2006 MIP calculations, the award to Mr. Strader was $492,436. Because of Mr. Strader's substantial efforts during 2006, the Compensation Committee determined to increase the award to $500,000. EMPLOYEE STOCK OPTION GRANT AGREEMENT A copy of the form of Company's form of employee stock option grant agreement is attached as Exhibit 10.2. SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (d) Exhibits. EXHIBIT DESCRIPTION 10.1 2007 Management Incentive Agreement 10.2 Form of Employee Stock Option Grant Agreement Under 2006 Long Term Incentive Plan SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. United Industrial Corporation By: /s/ James H. Perry ----------------------------------------------------- James H. Perry Chief Financial Officer and Vice President Date: March 12, 2007 EXHIBIT INDEX EXHIBIT DESCRIPTION 10.1 2007 Management Incentive Agreement 10.2 Form of Employee Stock Option Grant Agreement Under 2006 Long Term Incentive Plan EX-10.1 2 e9390988ex101.txt Exhibit 10.1 UNITED INDUSTRIAL CORPORATION Management Incentive Plan January 2007 TABLE OF CONTENTS Definitions...................................................................1 Plan Amendment and Termination................................................2 Effective Date of the Plan....................................................2 MANAGEMENT INCENTIVE PLAN (MIP)...............................................2 Philosophy....................................................................2 General Features..............................................................2 Payments......................................................................3 Entitlements..................................................................3 Administration................................................................4 Miscellaneous.................................................................5 SETTING FINANCIAL TARGETS AND PERFORMANCE OBJECTIVES..........................6 FINANCIAL TARGETS.............................................................6 Financial Target Measurement..................................................6 Guidelines for Objective Setting and Evaluation...............................6 PERFORMANCE OBJECTIVES........................................................7 Guidelines for Setting and Evaluating the Performance Objective...............7 Guidelines for Reviewing Overall Personal Performance.........................9 Incentive Calculation.........................................................9 Target Incentive Compensation Award (TICA) Amount Calculation- EXAMPLE.......10 SUMMARY......................................................................11 Termination of Employment....................................................14 Definitions Except as otherwise specified or as the context otherwise may require, the following terms have the meanings indicated below for the purposes of this Plan: BOARD means the Board of Directors of United Industrial Corporation, a Delaware corporation, and its successors. COMMITTEE means the Board's Compensation and Stock Option Committee, as constituted from time to time by the Board. COMPANY means UIC and each Subsidiary (as defined below) of UIC. Compensation Year or Year means the fiscal year of UIC. DISABILITY means disability according to the terms of the United Industrial Corporation Long-Term Disability Plan, or comparable plan of any Subsidiary, as from time to time may be applicable with respect to the particular Participant. FULL PARTICIPANT means, other than a Limited Participant, an eligible Company employee selected for Plan participation in accordance with the procedures set forth herein, and whose compensation is calculated in U.S. dollars. LIMITED PARTICIPANT means an eligible Company employee selected for Plan participation in accordance with the procedures set forth herein, who is seconded, on a temporary basis from a foreign subsidiary, and/or paid compensation by Company with a basis in currency OTHER THAN U.S. dollars. PARTICIPANT means, either collectively or individually, Limited Participant(s) and Full Participant(s), as defined herein. Plan means the 2007 Management Incentive Plan (MIP) as set forth herein. Plan Compensation means the incentive compensation earned for the Year as a consequence of the Plan. Retirement means retirement according to the terms of the retirement plan of the Company or its Subsidiary. SUBSIDIARY means any corporation in which the Company owns total equity interest. PLAN AMENDMENT AND TERMINATION UIC, by action of the Board or the Committee, may, in its sole and absolute discretion, amend, suspend or terminate the Plan at any time, with or without advance notice to Participants. EFFECTIVE DATE OF THE PLAN This Plan shall be effective as of January 1, 2007 and relates to the 2007 Compensation Year. MANAGEMENT INCENTIVE PLAN (MIP) PHILOSOPHY The UIC Management Incentive Plan is a variable, cash-based incentive plan designed to focus management attention on performance factors important to the continued success of their business unit and the Company overall. Achievement of high standards of business and individual performance should be rewarded financially; conversely, significant compensation should be at risk for failure to achieve those high standards. The opportunity to earn incentive compensation in addition to base salary is an integral part of our total compensation approach. The Plan serves as a direct link between a Participant's compensation and the performance of a business unit or the Company overall. GENERAL FEATURES Participants are senior managers in a position to significantly affect the performance of their business unit. These are generally managers with responsibility across an entire business unit, i.e. headquarter executives; product line and other general or program managers; and selected functional managers. To be eligible to be selected to participate, a new hire to the Company or a newly eligible employee must be employed as of 30 September of the Compensation Year. Part-year Participants (i.e., employed after 1 January but prior to 30 September of the Compensation Year) shall be eligible for Plan Compensation calculated pro-rata to the number of days actively employed during the Compensation Year. Target incentives are a function of the annual results, both by the individual and their business unit. It is over and above the base salary, established using competitive comparisons. The Target Incentive Compensation Award (TICA) percentage, a percentage of base salary, is similarly determined. 7 Plan Compensation may range from zero (0) to two hundred percent (200%) of a Participant's TICA. The TICA percentage varies from ten (10) to fifty (50) percent of Participant's base salary. Plan Compensation is not guaranteed. The Plan requires reasonable risk on the part of the Participant, commensurate with potential reward--an opportunity to raise total compensation significantly. Full Participants are ELIGIBLE, but Limited Participants are INELIGIBLE, for the following benefits: o A maximum life insurance benefit of four hundred thousand dollars ($400,000.00) o If elected during enrollment, Long Term Disability (LTD)coverage on annual compensation, which shall include both the Participant's annual base salary and their TICA award, as though earned at the one hundred percent level), to a maximum benefit of two hundred thousand dollars ($200,000.00) up to a maximum benefit of $10,000 a month. o Accidental Death and Dismemberment benefit equal to three (3) times the Participant's annual compensation (which shall include both the Participant's annual base salary and their TICA award, as though earned at the one hundred percent (100%) level, rounded to the next higher one thousand dollars ($1,000.00) subject to a maximum of three hundred and thirty thousand dollars ($330,000.00)). PAYMENTS The distribution of Plan Compensation shall be made to Full Participants by March 15, and to Limited Participants by the next regular pay cycle after March 15, following the Compensation Year. ENTITLEMENTS GENERAL RULE: Except as otherwise set forth in the Plan, to receive Plan Compensation, a Participant must be an employee of the Company at the time of payment of Plan Compensation. DEATH, RETIREMENT, LAYOFF AND DISABILITY: If a Participant dies, retires, is laid off, or becomes disabled after the close of a Compensation Year, but before payment is made, the distribution of Plan Compensation shall be made by March 15 following the Compensation Year. If death, retirement, layoff or disability occurs during the Compensation Year, the award shall be prorated based on the portion of the year the Participant was employed and payment made by March 15 following the Compensation Year. For purposes of this clause, layoff is a termination which is not for cause, as defined below, but rather is due to a permanent or indefinite reduction in the work force, including, but not limited to, the elimination of a Participant's position as a result of facility closure, discontinuance or relocation of operations, acquisition, reorganization or sale (including a sale by the Company of a business unit, division, product line or functionally related group of assets.) With respect to a Participant's Termination of Employment prior to the date of Plan Compensation payment, termination shall be deemed to have been for cause: A. Absent an employment or service agreement, change in control agreement, or similar agreement between the Company and the Participant in effect as of the date of termination (or where such an agreement does not define "cause" (or words of like import)), in the event: (i) Participant was convicted of, or plead guilty or nolo contendere to, a felony; (ii) Participant: committed illegal or willful or grossly negligent conduct, acted in violation of the Company Code of Business Conduct and Ethics (including but not limited to acts of dishonesty or fraud), caused potential reputational or economic injury to the Company; or (iii) Participant materially, willfully, and deliberately failed to perform his/her duties, despite written notice and an opportunity to effectively cure, as determined by the Committee; or B. As provided in any applicable employment or service agreement, change in control agreement, or similar agreement in effect as of the date of termination, provided, however, that with regard to any agreement under which the definition of "cause" only applies on occurrence of a change in control, such definition of "cause" shall not apply unless a change in control actually takes place (and then only with regard to a termination thereafter), in which case paragraph A above shall apply to any other termination for cause. ADMINISTRATION The Plan shall be administered and interpreted by the Committee. The Committee shall have full authority to select Participants in the Plan and to make all other necessary determinations under the Plan. In particular, the Committee shall have the authority: To determine the TICA Percentage for each Participant hereunder; To determine the terms and conditions, not inconsistent with the terms of this Plan, of Plan Compensation granted hereunder, based on such factors, if any, as the Committee shall determine in its sole discretion; To grant exceptions to this rule, including but not limited to partial Plan Compensation, which, unless otherwise indicated, shall not be deemed to be a general revision to entitlement under the Plan by any Participant(s); and To determine whether, to what extent, and under what circumstances, Plan Compensation amounts shall be deferred either automatically or at the Participant's election, in any case, subject to, and in accordance with, Section 409A of the Internal Revenue Code. 8 GUIDELINES. The Committee shall, in its sole discretion, have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing this Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by applicable law), as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of this Plan; and to otherwise supervise the administration of this Plan. The Committee may, in its sole discretion, correct any defect, supply any omission or reconcile any inconsistency in this Plan in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of this Plan. The Committee may, in its sole discretion, adopt special guidelines and provisions for persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdictions to comply with applicable laws and regulations, including, but not limited to, tax and securities laws of such domestic or foreign jurisdictions. DECISIONS FINAL. Any decision, interpretation or other action made or taken in good faith by or at the direction of the Company, the Board or the Committee (or any of its members) arising out of or in connection with this Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors and assigns. The Compensation Committee may delegate certain of these activities and all other matters as it determines in its sole discretion. MISCELLANEOUS NO CONTRACT OR GUARANTEE OF CONTINUED EMPLOYMENT. For Full and Limited Participants, unless otherwise superceded by a written service or employment agreement (if any), or as may be required under applicable laws, participation in the Plan shall not be deemed to be the grant of a right, a contract of employment, nor a guarantee of continued employment. Subject to the terms of such an agreement, the Company specifically reserves the right to terminate employment of a Participant at any time with or without cause and with or without notice or assigning a reason. NO GUARANTEE OF PLAN COMPENSATION. Eligibility to participate and participation in this Plan does not guarantee the payment of Plan Compensation. Participation by Full and Limited Participants is determined for each Compensation Year; participation in one or more Plan Year(s) does not guarantee participation in any future Plan Year(s). ASSIGNMENT AND TRANSFERS. Except for transfer by will or by the laws of descent and distribution, rights under the Plan may not be transferred or assigned. WITHHOLDING TAX. With respect to Plan Compensation, the Company will make deductions i) permitted under agreement between Participant and the Company, ii) required under applicable law, as of the date of distribution of the Plan Compensation. GOVERNING LAW. This Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws). SETTING FINANCIAL TARGETS AND PERFORMANCE OBJECTIVES Key to an effective and equitable management incentive plan are the quality, realism and stretch of the financial targets and personal performance objectives. In setting these targets and objectives, the Company focuses on high standards, continuous improvement and Participant involvement. Plan Compensation is built around these two basic factors: a Financial Target and a Performance Objective. The weighting varies from one business unit to another, reflecting the relative importance of business to individual performance for that unit during any Compensation Year. The sum of the Financial Target factor percentage and Performance Objective factor percentage is one hundred percent (100%). The two factors are intended to be based upon significant results that need to be achieved if the business unit's strategic and overall performance objectives are to be realized. The Financial Target measures metrics important to the business unit. Budgets, as well as past and expected future performance results, are the criteria used in setting the Financial Target. The Performance Objective consists of important personal objectives directly related to a Participant's major responsibilities. For example, these objectives could include such areas as market and/or customer share improvement; cost improvements; product development; pricing; inventory levels; introduction or improvement of products, processes or systems; health, safety and environmental performance; or management development. Personal performance objectives are set annually for each Participant through the Key Accountability Document (KAD). The Compensation Committee sets the personal performance objectives for the Chief Executive Officer. UIC recognizes circumstances change throughout the year. A Participant's significant achievements for the Compensation Year which are not contemplated in the KAD will be reviewed and may be incorporated into the Participant's Performance Objective Factor at the discretion of their supervisor. As to such unanticipated significant achievements by CEO (or other Participants for whom the Committee determines its review to be appropriate), the discretion shall be exercised by the Committee. FINANCIAL TARGETS FINANCIAL TARGET MEASUREMENT At the beginning of the Compensation Year, Financial Targets are reviewed and approved by the Committee. Budgets and adjusted past and expected business unit performance are compared with previously set targets. GUIDELINES FOR OBJECTIVE SETTING AND EVALUATION A Financial Target of one (1.0) is the level at which the business unit is expected to perform for the Compensation Year; achievement of the expected level of financial performance would result in a Financial Target with a one (1.0) rating. Therefore, each unit's budget is the primary starting point for one (1.0) Financial Target level. o The one (1.0) Financial Target is generally established at a level judged to have a reasonable chance of attainment and match the commitments made to the UIC Board; the zero (0) and two (2.0) extremes are normally established in terms of reasonable stretch and relative risk. o Financial Targets are first developed by unit/division management. The CEO and appropriate staff discuss and agree upon Financial Targets that would equate to the zero (0), one (1) and two (2) levels. o In rating actual performance against the Financial Targets, actual performance is adjusted to level the effect of accounting changes, acquisition costs, land sales, strategic restructuring costs, capital expenditures, etc. o Adjusted actual performance is compared to the Financial Target. No award is made for results at or below the zero (0) level. Twice the target award is paid for adjusted actual performance at or above the two (2.0) level. o Financial Targets are approved by the Committee early in the Compensation Year but can be adjusted by the Committee in case of change in the business. PERFORMANCE OBJECTIVES GUIDELINES FOR SETTING AND EVALUATING THE PERFORMANCE OBJECTIVE Each Participant submits personal performance objectives in KAD format to his/her manager. Personal performance objectives are based on the major job responsibilities assigned to the individual and are related to the business unit's strategic and/or UIC's overall performance objectives. o To develop personal performance objectives, each Participant must understand and commit to the operating unit's business and human resources strategies. o The two to five most important personal performance objectives should be submitted to the next higher-level manager for review and approval. Objectives should state results required to help ensure that the personal performance can be measured. In many cases, measurement of results cannot be quantified. When this quantification is not possible, there should be a clear statement of the criteria that will be used to judge the accomplishment of the personal performance objectives. For example, if the objective is to develop a strategic plan, success is not determined primarily by a plan being developed on time but rather the quality of thinking that the plan portrays. The KAD should lay out the criteria to determine the quality. Measurements enable the Participant and manager to determine whether the objective or a portion of the objective has been successfully achieved. 10 o Objectives should be stated in measurable terms and should include timing. o Objectives should identify specific achievements expected and not merely restate major responsibilities or plans to accomplish them. o Objectives should be realistic with some stretch and be based on actual conditions. o The degree of difficulty may vary among the objectives. A priority ranking or assessment of relative difficulty, included with the statement of the objective, will be of value during the review to determine the level of the Performance Objective rating. o In determining the Performance Objective rating (using the scale of zero (0) to two (2)), the following are all to be considered: o The accomplishment of annual objectives and the significance of those objectives to overall business unit results. o Demonstration of leadership o Degree of difficulty of the objectives. o Overall performance of major responsibilities including self-development. o Performance in response to unanticipated circumstances or opportunities. o Contributions to the management team and important corporate initiatives. GUIDELINES FOR REVIEWING OVERALL PERSONAL PERFORMANCE Five general levels of personal performance are suggested, with definitions of possible performance and a suggested Performance Objective rating range for each. - ------------------------------------------------------------------------------- Performance Objective Rating - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 0 to .5 Overall performance was considerably less than standard. Did (KAD score not meet objectives primarily because of own performance. below 2) Performance in unplanned circumstances was below expectations. Individual did not demonstrate satisfactory improvement during the year. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ..5 to .95 Overall performance of major position responsibilities did not (KAD score meet all expectations. Some objectives were achieved but not between 2 in a totally satisfactory manner. Measurable progress was made and 2.8) during the year and current progress is satisfactory. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ..9 to 1.05 Overall performance of major responsibilities met current (KAD score standards. Objectives substantially met, especially those between of greater significance to business objectives. Performance in 2.8 and 3.1) unplanned circumstances met or exceeded expectations. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1.1 to 1.5 Overall performance consistently met or exceeded standards (KAD score for all responsibilities. Objectives were generally exceeded between during the year. Function for which responsible has shown 3.2 and 4) significant progress. Significant unplanned circumstances occurred during the year and related performance exceeded expectations - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1.5 to 2.0 Outstanding performance in all aspects of current job. All (KAD score objectives were exceeded with recognition of these between 4 accomplishments. Has demonstrated success of at least one major and 5 breakthrough or significant project. Professional performer on all job functions and 4 and 5) recognized as such by peers and superiors. - -------------------------------------------------------------------------------- Achievement of more difficult objectives receives a higher Performance Objective rating, which translates into a higher incentive award. For example, a Participant who sets unusually demanding objectives and then misses one might receive a 1.4 Performance Objective rating. A Participant who set more easily achieved objectives and then hits them all might receive a 1.0 Performance Objective rating. INCENTIVE CALCULATION To determine a Participant's Plan Compensation, the Financial Target and Performance Objective factors are rated and weighted according to the predetermined split. The two results are totaled and multiplied by the product of the Participant's Compensation Year base salary earnings multiplied times the Participant's TICA (prorated for partial-year participation as may be permitted or as otherwise approved). 1. TARGET INCENTIVE COMPENSATION AWARD (TICA) AMOUNT CALCULATION- EXAMPLE If your base salary is $100,000.00 and in the Plan Year, your Target Percentage is ten percent (10%), the TICA Amount is calculated as follows: Assume: Your Base Salary: $100,000 Your Target Percentage: 10% Your Target Incentive Compensation Award Amount: $10,000 You were employed the entire year 2. WEIGHTED PERFORMANCE FACTOR CALCULATION: Assume for the Plan Year: Your Performance Factor is weighted at thirty percent (30%) of the overall bonus award. Your Performance Factor rating was 1.2, (or a KAD score of 3.4) The Performance Factor calculation would be: $100,000 * 10% * (30% * 1.2) = $3,600.00 3. WEIGHTED FINANCIAL FACTOR CALCULATION Assume for the Plan Year: Your Financial Factor is weighted at seventy percent (70%) of the overall bonus award. To determine Your Financial Factor, examine the weighted result of each of the three Financial Target sub-factors (i.e., orders, profit, cash): Orders: with a weight of forty percent (40%), for which you achieved a result against target of 1.2, resulting in a sub-factor of .48 12 Profit: with a weight of thirty percent (30%), for which you achieved a result against target of .8 resulting in a sub-factor of .24 Cash: with a weight of thirty percent (30%), for which you achieved a result against target of 2 resulting in a sub-factor of .6 The overall Financial Factor in this example would be 1.32 (.48+.24+.6). The Financial Factor calculation would be: $100,000 * 10% * (70% * 1.32) = $9,240.00 4. FINAL MIP BONUS CALCULATION: Performance Factor + Financial Factor $3,600.00 + $9,240.00= $12,840.00 SUMMARY UIC's Management Incentive Plan is an integral part of our competitive total compensation program, offering incentives and rewards offset by commensurate risk. Participants are individually selected from among those managers whose decisions significantly affect UIC's performance. Financial Targets and Performance Objectives are set in areas that require focus and emphasis in the Compensation Year including actions intended to execute longer term strategies. Performance is rigorously measured against the Financial Targets and Performance Objectives and on an overall basis. Both business unit and individual performance affect incentive awards. EX-10.2 3 e9390988ex102.txt Exhibit 10.2 UNITED INDUSTRIAL CORPORATION 2006 LONG TERM INCENTIVE PLAN Name of Optionee: --------------------------- Grant Date: ------------------------------------------ Number of Shares: --------------------------- Exercise Price: ----------------------------- Re: GRANT OF INCENTIVE STOCK OPTION Dear : ----------- On May 18, 2006, the shareholders of United Industrial Corporation (the "Company") authorized and approved the Company's 2006 Long Term Incentive Plan (the "Plan"), which was previously adopted by the Board of Directors. A copy of the Plan is annexed hereto and shall be deemed a part hereof as if fully set forth herein. Unless the context otherwise requires, capitalized terms used herein but not defined shall have the meanings set forth in the Plan. 1. GRANT OF OPTION. Effective [GRANT DATE], the Compensation and Stock Option Committee (the "COMMITTEE") of the Board of Directors authorized this grant, as incentive compensation and not in lieu of any salary or other compensation for your services, of an option (the "OPTION") to purchase, in accordance with the terms and conditions set forth in the Plan, but subject to the terms and conditions set forth in this agreement (this "AGREEMENT") and in the Plan, an aggregate of ________ shares of common stock of the Company, $1.00 par value per share (the "COMMON STOCK"), at a price of $________ per share, which is the fair market value of a share of Common Stock on [GRANT DATE], as determined under the Plan. 2. TAX MATTERS. The Option is intended to qualify as an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), but it is specifically understood that no warranty is made to you as to such qualification. Notwithstanding the foregoing, the Option shall not qualify as an "incentive stock option," among other events, (i) if you dispose of the shares of Common Stock acquired pursuant to the Option at any time during the two (2) year period following the grant date of the Option or the one (1) year period following the date on which the Option is exercised; (ii) except in the event of your death or disability (as defined in section 22(e)(3) of the Code), if you are not employed by the Company at all times during the period beginning on the grant date of the Option and ending on the day three (3) months before the date of exercise of the Option; or (iii) to the extent that the aggregate fair market value (determined as of the time the Option is granted) of the shares of Common Stock subject to "incentive stock options" which become exercisable for the first time in any calendar year exceeds $100,000. To the extent that the Option does not qualify as an "incentive stock option," it shall not affect the validity of the Option and shall constitute a separate non-qualified stock option. 3. VESTING AND EXERCISABILITY; OPTION TERM. Subject to the condition that you do not experience a Termination of Employment and subject to the provisions of Section 4 hereof, the Option may be exercised by you, on a cumulative basis, during a period of five (5) years commencing on the date of grant of the Option and terminating at the close of business on [EXPIRATION DATE], as follows: (a) up to _____ of the total number of shares subject to the Option may be purchased by you commencing _____ year(s) after the grant date; (b) up to an additional _____ of the total number of shares subject to the Option may be purchased by you commencing _____ years after the grant date; and (c) the balance of the total number of shares subject to the Option may be purchased by you commencing _____ years after the grant date. In no event shall the Option be exercised for a fraction of a share or for less than one hundred (100) shares (unless the number purchased is the total balance for which the Option is then exercisable). The unexercised portion of the Option granted herein shall automatically and without notice terminate and become null and void upon the expiration of five (5) years from the date of the grant of the Option. 4. TERMINATION OF EMPLOYMENT. If, prior to the expiration of five (5) years from the date of grant of the Option, you experience a Termination of Employment, the Option shall terminate on the applicable date specified in this Section 4; provided, however, that none of the events described in this Section 4 shall extend the period of exercisability of the Option beyond five (5) years from the date of grant of the Option. (a) TERMINATION FOR CAUSE; RESIGNATION. The Option shall terminate upon the date of your Termination of Employment, if you experience a Termination of Employment by the Company for Cause, by you as a result of your resignation for any reason (other than Retirement), or by you as a result of your Retirement after the occurrence of an event that would constitute grounds for a termination by the Company for Cause. (b) TERMINATION BY REASON OF DEATH. The Option shall terminate upon the expiration of one (1) year after your death if your death occurs either during your employment or within the one-year or three-month period after a Termination of Employment specified in Sections 4(c) and 4(d) hereof, except that the Option shall be exercisable during the one-year period after your death only to the extent that it would have been exercisable on the date of your death. (c) TERMINATION BY REASON OF DISABILITY. The Option shall terminate upon the expiration of one (1) year after your Termination of Employment by reason of your Disability, except that the Option shall be exercisable during such one-year period only to the extent that it would have been exercisable immediately prior to such Termination of Employment. (d) TERMINATION WITHOUT CAUSE; RETIREMENT. The Option shall terminate upon the expiration of three (3) months from the date of your Termination of Employment, if you experience a Termination of Employment by the Company without Cause or by you as a result of your Retirement (other than as described in Section 4(a) hereof), except that the Option shall be exercisable during such three-month period only to the extent that it would have been exercisable immediately prior to such Termination of Employment. (e) UNVESTED PORTION OF THE OPTION. In addition, any portion of the Option that is not vested and exercisable as of the date of your Termination of Employment for any reason shall terminate and expire as of the date of such termination. 5. METHOD OF EXERCISE. The Option may be exercised by notice to the Company in a form required by the Committee addressed to the Director of Fiscal or the Accounting Manager of the Company at the principal place of business of the Company, together with payment of the aggregate exercise price. Payment of the exercise price shall be made, in accordance with the provisions of Section 6.3(d) of the Plan, (i) in cash or by check, (ii) to the extent permitted under applicable law, through an open market, broker-assisted transaction authorized by the Committee and consistent with the provisions of Section 6.3(d)(ii) of the Plan, or (iii) on such other terms and conditions as may be acceptable to the Committee. 6. RESTRICTIONS ON TRANSFER. The Option is not transferable by you otherwise than by will or the laws of descent and distribution, and is exercisable, during your lifetime, only by you. The Option may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar proceeding. Any attempt to so assign, transfer, pledge or hypothecate the Option or subject the Option to execution, attachment or similar proceeding contrary to the provisions hereof, shall be null and void and without any force or effect. 7. LIMITATION OF RIGHTS. The Option shall not confer upon you any privileges of a shareholder of the Company with respect to any shares of Common Stock issuable upon exercise hereof, including without limitation any right to vote such shares of Common Stock or to receive dividends or other distributions in respect thereof, until the date of the issuance to you of a stock certificate evidencing the shares of Common Stock. In addition, nothing in this Agreement shall confer upon you any right to continued employment with the Company or any Subsidiary or to interfere in any way with the right of the Company to terminate your employment with the Company or any Subsidiary at any time. 8. LEGENDS. If the Company, in its sole discretion, shall determine that it is necessary in order to comply with applicable securities laws, the certificate or certificates representing the shares purchased pursuant to the exercise of the Option shall bear an appropriate legend in form and substance, as determined by the Company, giving notice of applicable restrictions on transfer under or in respect of such laws. 9. INVESTMENT REPRESENTATIONS. It shall be a condition of the exercise of the Option that if, at the time of exercise of the Option, there does not exist a registration statement on an appropriate form under the Securities Act of 1933, as mended (the "Act"), which registration statement shall have become effective and shall include a prospectus which is current with respect to the shares subject to the Option, you shall execute and deliver to the Company a written statement, in a form satisfactory to the Committee, in which you represent and warrant (i) that you are purchasing the shares for your own account and not with a view to the resale or distribution thereof and (ii) that any subsequent offer for sale or sale of any such shares shall be made either pursuant to (x) a registration statement on an appropriate form under the Act, which registration statement shall have become effective and shall be current with respect to the shares being offered and sold, or (y) a specific exemption from the registration requirements of the Act, but in claiming such exemption, you shall, prior to any offer for sale or sale of such shares, obtain a favorable written opinion from counsel for or approved by the Company as to the applicability of such exemption. 10. WITHHOLDING TAXES. As provided in the Plan, the Company may withhold from sums due or to become due to you from the Company an amount necessary to satisfy its obligation to withhold taxes incurred by reason of the disposition of the shares acquired by exercise of the Option in a disqualifying disposition (within the meaning of Section 421(b) of the Code), or may require you to reimburse the Company in such amount. The Company may hold the stock certificate to which you are entitled upon the exercise of the Option as security for payment of the withholding tax liability, until cash sufficient to pay such liability has been accumulated. 11. DISQUALIFYING DISPOSITIONS. In the event that you dispose of the shares issued upon exercise of the Option within either two (2) years following the date of grant or one year following the date of exercise of the Option, you must deliver to the Company, within seven (7) days following such disposition, a written notice specifying the date on which the shares were disposed of, the number of shares disposed, and, if such disposition was by a sale or exchange, the amount of consideration received. 12. PROHIBITED ACTIVITIES. It shall be a condition of the grant of the Option that, and upon exercise of the Option you shall be deemed to have certified that: (a) Non-Solicitation. For a period of _____ (___) years from and after your Termination of Employment, you shall not: (i) directly or indirectly solicit, entice or induce any employee of the Company or of any of its Subsidiaries or affiliated companies to be employed by any person, firm or corporation which is, directly or indirectly, in competition with the business or activities of the Company or any of its Subsidiaries or affiliated companies; or (ii) directly or indirectly approach any such employee for these purposes; or (iii)authorize or knowingly approve the taking of such actions by other persons on behalf of any such person, firm or corporation, or assist any such person, firm or corporation in taking such action; or (iv) directly or indirectly solicit, raid, entice or induce any person, firm or corporation (other than the U.S. Government or its agencies) who or which on the date hereof is, or at any time during the period hereunder shall be, a customer of the Company or of any of its Subsidiaries or affiliated companies to become a customer for the same or similar products which it purchased from the Company or any of its Subsidiaries or affiliated companies, or any other person, firm or corporation, and you shall not approach any such customer for such purpose or authorize or knowingly approve the taking of such actions by any other person. (b) NON-DISCLOSURE. You shall not divulge, furnish or make available to anyone at any time, except as part of your employment by the Company or any of its Subsidiaries or affiliated companies either during or subsequent to such employment, any knowledge or information with respect to confidential or proprietary information, methods, processes, plans or materials of the Company or any of its Subsidiaries or affiliated companies, or with respect to any other confidential or proprietary aspects of the business of the Company or any of its Subsidiaries or affiliated companies (the activities prohibited by Section 12(a) hereof and this Section 12(b) are collectively referred to herein as the "PROHIBITED ACTIVITIES"). (c) FORFEITURE; REMEDIES; ENFORCEMENT. (i) Upon the exercise of the Option, you shall be deemed to have certified and agreed that you are in compliance with the terms and conditions of the Plan and that you have not engaged in and do not intend to engage in any of the Prohibited Activities. In the event that you engage in any of the Prohibited Activities (i) prior to any exercise of the Option, the Committee shall have the right to immediately terminate the Option (whether or not vested and exercisable), and the Option shall thereupon immediately terminate and expire, and/or (ii) during the one-year period following the later of (x) your Termination of Employment and (y) the date on which the Option was exercised, the Committee shall have the right, as applicable, to immediately terminate the Option (whether or not vested and exercisable), and the Company shall be entitled to recover from you at any time within one year after the later of (x) and (y), and you shall pay over to the Company, an amount equal to any gain realized as a result of the exercise of the Option (whether at the time of exercise or thereafter). (ii) You acknowledge and agree that the Committee's and the Company's remedies at law for a breach or threatened breach of the foregoing provisions of the Option in respect of the Prohibited Activities would be inadequate and, in recognition of this fact, you agree that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Committee and/or the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available. (iii)If it is determined by a court of competent jurisdiction in any state that any restriction in this Agreement in respect of the Prohibited Activities is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the laws of that state. (d) SURVIVAL. The terms and provisions of this Section 12 shall survive your Termination of Employment and the expiration of the Option and this Agreement as set forth herein. 13. PROVISIONS OF THE PLAN CONTROL. This Agreement and the Option are subject to all of the terms, conditions, limitations and restrictions contained in the Plan, which shall be controlling in the event of any conflicting or inconsistent provisions. 14. ENTIRE AGREEMENT. This Agreement and the Plan constitute the entire agreement between you and the Company with respect to the subject matter hereof and thereof, merging any and all prior agreements. [SIGNATURES ON FOLLOWING PAGE] Please indicate your acceptance of all of the terms and conditions of the Option, this Agreement and the Plan by signing in the space provided below and returning the original of this letter to _________________ by _________________________. Very truly yours, UNITED INDUSTRIAL CORPORATION By: -------------------------------------------- Name: Jonathan A. Greenberg Title: Vice President, General Counsel and Secretary ACCEPTED - ------------------------ Signature: Date: ------------------ -----END PRIVACY-ENHANCED MESSAGE-----