EX-99.E.10 18 t09060d9exv99wew10.txt SECTION ENTITLED "EXECUTIVE COMPENSATION" EXHIBIT (e)(10) EXECUTIVE COMPENSATION The following table sets out details of compensation paid, during the three years ended December 31, 2001, to the President and Chief Executive Officer of the Corporation and the four other most highly compensated executive officers (the "named executive officers"). SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION --------------------- ------------------------ RESTRICTED SECURITIES SHARES OTHER UNDER OR ANNUAL OPTIONS/ RESTRICTED ALL OTHER NAME AND COMPEN- SARs SHARE LTP COMPEN- PRINCIPAL POSITION YEAR SALARY BONUS SATION (1) GRANTED UNITS PAYOUTS SATION $ $ $ # $ $ $ (a) (b) (c) (d) (e) (f) (g) (h) (i) ---------------- ----- -------- -------- ------- -------- -------- ------- ------- DOUGLAS E. SPEERS 2001 $440,000 $176,000 $0 35,000 -- -- $0 President and 2000 $440,000 $ 0 $0 35,000 -- -- $0 Chief Executive Officer 1999 $440,000 $ 0 $0 35,000 -- -- $0 RICHARD J. FANTHAM 2001 $210,000 $ 85,000 $0 17,000 -- -- $0 President, Emco Wholesale 2000 $210,000 $ 0 $0 17,000 -- -- $0 Distribution 1999 $187,577 $ 0 $0 17,000 -- -- $0 GORDON E. CURRIE 2001 $200,000 $ 80,000 $0 17,000 -- -- $0 Vice President, Treasurer 2000 $196,067 $ 0 $0 17,000 -- -- $0 and Chief Financial Officer 1999 $169,750 $ 0 $0 15,000 -- -- $0 WALTER D. LEGROW 2001 $196,000 $ 80,000 $0 17,000 -- -- $0 Vice President, 2000 $194,385 $ 0 $0 17,000 -- -- $0 Human Resources 1999 $190,000 $ 0 $0 17,000 -- -- $0 SUSAN M. RABKIN (2) 2001 $187,000 $ 75,000 $0 15,000 -- -- $0 Vice President, General 2000 $185,654 $ 0 $0 13,000 -- -- $0 Counsel and Secretary 1999 $180,115 $ 0 $0 12,000 -- -- $0
------------------ (1) None of the Named Executive Officers received perquisites and benefits greater than the lesser of $50,000 and 10% of salary and bonus. (2) Susan M. Rabkin resigned from the Corporation effective February 10, 2002. OPTIONS AND SARs OPTION/SAR GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
MARKET VALUE % OF TOTAL OF SECURITIES SECURITIES OPTIONS/SARs UNDERLYING UNDER GRANTED TO OPTIONS/ OPTIONS/ EMPLOYEES EXERCISE SARs ON THE SARs IN FINANCIAL OR DATE OF GRANTED YEAR BASE PRICE GRANT EXPIRATION NAME (#) ($/SECURITY) ($/SECURITY) DATE (a) (b) (c) (d) (e) (f) ----------------- ---------- ------------ ------------ ------------- ------------- Douglas E. Speers 35,000 12.5% $5.10 $5.10 Feb. 22, 2011 Richard J. Fantham 17,000 6.1% $5.10 $5.10 Feb. 22, 2011 Gordon E.Currie 17,000 6.1% $5.10 $5.10 Feb. 22, 2011 Walter D. LeGrow 17,000 6.1% $5.10 $5.10 Feb. 22, 2011 Susan M. Rabkin 15,000 5.4% $5.10 $5.10 Feb. 22, 2011
AGGREGATED OPTION/SAR EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION/SAR VALUES
VALUE OF UNEXERCISED IN- UNEXERCISED THE-MONEY SECURITIES OPTIONS/SARs AT OPTIONS/SARs AT ACQUIRED AGGREGATE VALUE FY-END FY-END ON EXERCISE REALIZED (#) ($) Name (#) ($) ------------------------- ------------------------- (a) (b) (c) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE ----------------- ----------- --------------- -------- ------- -------- -------- Douglas E. Speers -- -- 199,220 114,000 $40,600 $64,400 Richard J. Fantham -- -- 49,200 49,800 $36,320 $31,280 Gordon E.Currie -- -- 44,260 48,600 $16,720 $31,280 Walter D. LeGrow -- -- 110,800 55,800 $18,540 $31,280 Susan M. Rabkin -- -- 20,400 39,600 $7,680 $26,320
1991 LONG-TERM INCENTIVE PROGRAM The Corporations's 1991 Long-Term Incentive Program (the "1991 LTI") is comprised of a stock option plan and a stock appreciation rights plan and is designed to provide incentives to key employees of the Corporation and its affiliates. The 1991 LTI provides that options may be granted to employees designated by the Corporation to purchase common shares of the Corporation at a price per share equal to the market price of the shares of the Corporation on the trading day preceding the date of grant. The number of shares issuable pursuant to the exercise of options under the 1991 LTI is limited to 2.2 million in the aggregate. The number of shares which may be reserved for issuance to any one person under the 1991 LTI, and all other option plans combined, is limited to 5% of the issued and outstanding shares of the Corporation. The 1991 LTI also provides that stock appreciation rights may be granted to designated employees whereby such employees will be entitled to a cash payment based on the number of rights allocated to them and the increase, if any, in the market price of the common shares of the Corporation from the date of allocation to the date of exercise. The expiry date of options and rights granted pursuant to the 1991 LTI is set at the time of the grant and may be any date between the second and tenth anniversaries of the grant. Subject to earlier expiration as a result of termination of employment, early retirement or death, the options issued to date expire on the tenth anniversary of the date of the grant. The percentage of each option or the number of rights exercisable in any one year is also determined by the Corporation at the time of the grant. In the event that such options or rights are not exercised in any one year, they are exercisable cumulatively throughout the period. Rights and options are non-transferable by participants. SHARE OWNERSHIP GUIDELINES The board of directors has established share ownership guidelines for the Chief Executive Officer and certain senior management employees to enhance alignment of executive and shareholder interests, to provide an incentive to achieve corporate financial targets and to communicate management commitment and confidence to the external financial community. These guidelines provide for shareholdings which are a multiple of the employee's salary. PENSION PLANS The standard retirement plan for executives is a defined benefit program (the "Plan"), which provides an annual pension, payable from age 65, equal to 2% of final average earnings for each year of executive service and is funded under a registered pension plan up to the maximum permitted by the Income Tax Act. Final average earnings are based on the 36 consecutive months of highest earnings in the 120 months prior to retirement. Earnings for this purpose include salary and bonus. The normal form of pensions is a 60% Joint and Survivor benefit. Amounts payable under the Plan are not subject to any offsets. The Corporation pays the full cost of the Plan. Named executive officers are eligible to participate under the Plan, other than Mr. Speers, who participates in the plan described below. The following table represents the estimated annual pension payable to a member with a spouse, following retirement at age 65. A discount is applicable on retirement prior to age 62.
Years of Service ------------------------------------------------------------ Remuneration 15 20 25 30 35 ----------------------------------------------------------------------------- $175,000 $ 52,500 $ 70,000 $ 87,500 $105,000 $122,500 ----------------------------------------------------------------------------- 200,000 60,000 80,000 100,000 120,000 140,000 ----------------------------------------------------------------------------- 225,000 67,500 90,000 112,500 135,000 157,500 ----------------------------------------------------------------------------- 250,000 75,000 100,000 125,000 150,000 175,000 ----------------------------------------------------------------------------- 300,000 90,000 120,000 150,000 180,000 210,000 ----------------------------------------------------------------------------- 350,000 105,000 140,000 175,000 210,000 245,000 ----------------------------------------------------------------------------- 400,000 120,000 160,000 200,000 240,002 280,000 ----------------------------------------------------------------------------- 450,000 135,000 180,000 225,000 270,000 315,000 ----------------------------------------------------------------------------- 500,000 150,000 200,000 250,000 300,000 350,000 -----------------------------------------------------------------------------
As at December 31, 2001, Mr. Fantham's credited services was 2.3 years, Mr. Currie's credited service was 2.3 years, Mr. LeGrow's credited service was 13.2 years and Ms. Rabkin's credited services was 4.7 years. D.E. SPEERS As part of the purchase of the Building Products business from Imperial Oil Limited ("IOL"), the Corporation agreed to maintain a pension plan equivalent to the IOL pension plan for the employees who had been covered by that plan. The only named executive officer in the plan is Douglas E. Speers. The annual pension, before offsets, is 1.6% of the best 36 months credited earnings times credited service and is funded under a registered pension plan up to the maximum permitted by the Income Tax Act. The pension is offset, from age 65, by Canada/Quebec Pension Plan benefits in proportion to service and, from retirement, by any pension payable under the IOL pension plan. As at December 31, 2001, the estimated IOL offset pension for Mr. Speers is $45,000. The following table represents the estimated annual pension payable to a member, following retirement at age 60, before any reduction due to offsets. An adjustment of less than the full actuarial value is applied in the case of retirement between ages 55 and 60, unless the employee has 30 years or more of credited service. These pension values are based on the 50% surviving spouse benefit contained in the plan.
Years of Service ------------------------------------------------------------ Remuneration 15 20 25 30 35 ----------------------------------------------------------------------------- $400,000 $ 96,000 $128,000 $160,000 $192,000 $224,000 ----------------------------------------------------------------------------- 450,000 108,000 144,000 180,000 216,000 252,000 ----------------------------------------------------------------------------- 500,000 120,000 160,000 200,000 240,000 280,000 ----------------------------------------------------------------------------- 550,000 132,000 176,000 220,000 264,000 308,000 ----------------------------------------------------------------------------- 600,000 144,000 192,000 240,000 288,000 336,000 ----------------------------------------------------------------------------- 650,000 156,000 208,000 260,000 312,000 364,000 ----------------------------------------------------------------------------- 700,000 168,000 224,000 280,000 336,000 392,000 ----------------------------------------------------------------------------- 750,000 180,000 240,000 300,000 360,000 420,000 ----------------------------------------------------------------------------- 800,000 192,000 256,000 320,000 384,000 448,000 -----------------------------------------------------------------------------
Mr. Speers' credited service as of December 31, 2001 was 30.7 years. AGREEMENTS WITH CERTAIN NAMED EXECUTIVE OFFICERS The Corporation is party to agreements with certain of the named executive officers, pursuant to which certain named executive officers are entitled to compensation for the termination of his/her employment with the Corporation for any reason (including a fundamental adverse change in the terms of the executive's employment), other than voluntary resignation, cause, retirement, death or disability, at any time within eighteen months following a change in control of the Corporation. The principal component of the compensation payable is an amount equal to three years' total compensation for Mr. Spears and two years' total compensation for the other certain named executive officers. REPORT ON EXECUTIVE COMPENSATION The Human Resources Committee, which is responsible for the design and administration of the executive compensation program, annually reviews compensation levels for the Corporation's executive officers and submits recommendations to the board for approval. One of the Corporation's primary business objectives is to maximize long-term shareholder returns. In order to do this, it is necessary to attract, retain and motivate employees at all levels who are of the highest quality. Accordingly, the Corporation's executive compensation program has been designed to: 1. Attract and retain high quality employees by offering competitive compensation. 2. Motivate and reward performance by tying incentive compensation to the achievement of corporate goals. 3. Link executive and shareholder interests and retain top performing executives through the use of equity based compensation. In arriving at its recommendations, the Committee uses third party competitive data to help determine the appropriate level of compensation. The Committee also considers the performance of the Corporation compared with the performance of other firms and the extent to which internal business objectives and strategies are being achieved. Performance measures considered include stock price, earnings per share, operating profit, cash flow and other criteria. In addition, the Committee considers economic conditions, executive retention and other related factors. Base salary is normally reviewed annually and adjustments, if any, are made effective in April to reflect the competitive environment. The annual bonus is tied to operating results and other key goals. The Corporation allows employees to defer their annual bonuses to the extent permitted for income tax purposes. Stock options are awarded to focus the recipient on enhancing long-term shareholder value and to help retain key performers. Stock options are normally granted annually at the discretion of the board. Share ownership guidelines have been established to, in part, align executive and shareholder interests and to provide an incentive to achieve corporate financial targets. Report Presented By: David L. Johnston, Chairman, Human Resources Committee Wayne B. Lyon Frank M. Hennessey