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 12, 2008 (March 6, 2008)
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L.B. Foster Company
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(Exact name of registrant as specified in its charter)
Pennsylvania 000-10436 25-1324733
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
415 Holiday Drive, Pittsburgh, Pennsylvania 15220
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 412-928-3417
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None
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(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))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
The Registrant's named executive officers are Lee B. Foster II (Chairman of the
Board), Stan L. Hasselbusch (President and Chief Executive Officer), David J.
Russo (Sr. Vice President and Chief Financial Officer), John F. Kasel (Sr. Vice
President - Operations & Manufacturing) and Donald L. Foster (Sr. Vice President
- Construction Products). Since Mr. Lee B. Foster II was not and will not be
eligible to receive awards discussed in this report, his name is not repeated in
the following disclosure.
A. Annual Incentive Plan
On March 6, 2008, Registrant's Compensation Committee ( the "Committee") adopted
and its Board approved, subject to shareholder approval, the L.B. Foster
Executive Annual Incentive Compensation Plan which is attached hereto and
incorporated herein by reference (the "Annual Incentive Plan"). The Committee
has approved goals under which annual incentive awards for 2008 will be based
upon the extent to which Corporate and/or individual operating units approach or
surpass planned "Pre-Tax Income"(1) and, for Corporate only, planned
"ROIC"(2)).
The NEOs were assigned the following Target Percentages:
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Target Percentage
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Stan L. Hasselbusch - President and Chief Executive
Officer 65%
David J. Russo - Sr. V.P., CFO and Treasurer 45%
John F. Kasel - Sr. V.P. - Operations and Manufacturing 40%
Donald L. Foster - Sr. V.P. - Construction Products 40%
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A participant's base salary will be multiplied by his Target Percentage to
obtain a "Target Award". These Target Awards are then allocated as follows:
----------- ----------------------- ------------- ----------------- ------------
Metric Chief Sr. V.P. and Sr. V.P.-
Executive CFO; Sr. V.P. Construction
Officer - Operations & Products
Manufacturing
----------- ----------------------- ------------- ----------------- ------------
Corporate ROIC 25% 25%
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Financial Pre-Tax Income -
Performance Corporate 75% 55% 20%
Awards ----------------------- ------------- ----------------- ------------
Operating Unit Pre-Tax
Income 60%
----------- ----------------------- ------------- ----------------- ------------
Individual
Performance Personal Objectives 20% 20%
Awards
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Financial Performance Awards are meant to comply with IRS Section 162(m), while
Individual Performance Awards may not satisfy IRC Section 162(m) requirements.
Financial Performance Awards (but not Individual Performance Awards) shall be
determined by adjusting a participant's Target Award based on the actual
attainment of planned Pre-Tax Income and ROIC as set forth below:
Incentive Income Multiplier (Corporate/Operating Unit)
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% of Planned Pre-Tax Income Achieved Corporate or Operating Unit
Multiplier of Allocated
Target Award
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140% and Over 200.0%
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135% 187.5%
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130% 175.0%
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125% 162.5%
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120% 150.0%
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115% 137.5%
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110% 125.0%
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105% 112.5%
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100% 100.0%
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90% 73.0%
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80% 47.0%
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70% 20.0%
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Less than 70% 0.0%
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ROIC Multiplier
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Target ROIC Achieved Corporate Multiplier of
Allocated Target Award
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21.00% and Over 200.00%
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20.25% 187.50%
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19.50% 175.00%
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18.75% 162.50%
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18.00% 150.00%
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17.25% 137.50%
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16.50% 125.00%
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15.75% 112.50%
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15.00% 100.00%
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13.65% 73.00%
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12.35% 47.00%
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11.00% 20.00%
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Less than 11.00% 0.00%
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B. 2006 Omnibus Plan
The 2006 Omnibus Incentive Plan ("Original Omnibus Plan") provides for the
issuance of up to 500,000 shares of the Company's common stock, which may
include newly-issued or treasury shares, through the exercise of stock options
or the award of shares of common stock.
On March 6, 2008, Registrant's Compensation Committee and its Board of Directors
approved amendments to the Original Omnibus Plan, subject to shareholder
approval (the "Amended Omnibus Plan").
On March 6, 2008, the NEOs were awarded the following "Performance Share Units",
which Performance Share Units, subject to shareholder approval, will be
converted into Registrant's common stock based upon Registrant's average
"ROIC"(3)over the three (3) year performance period 2008 - 2010, inclusive:
Name Number of Performance Share Units
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Stan L. Hasselbusch 8,540
David J. Russo 2,053
Donald L. Foster 2,053
John F. Kasel 2,053
Based upon the Company's average ROIC over the 3 years period (and contingent
upon shareholder approval), each NEO's Performance Share Units shall be
converted into Company common stock. "Average ROIC" for the three (3) year
performance period shall be calculated by adding together the annual ROIC
percentages and dividing by three (3). The Average ROIC target for the 2008 -
2010 performance period shall be 16%. The number of performance shares to be
awarded to a participant shall be determined by multiplying the participant's
Performance Share Units by the "Percentage of Performance Share" that
corresponds to the Company's "Average ROIC" for the three (3) year performance
period, as follows:
ROIC
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Percent of
Performance Share
Level of Performance Average ROIC Units Earned
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Below Threshold Below 12.0% 0%
Threshold Equal to 12.0% 50%
Target Equal to 16.0% 100%
Outstanding Equal to or Greater than 200%
20.0%
The Committee plans to establish new targets annually for successive 3 year
performance periods. For example, in 2009, the Committee plans again to
establish targets and new financial metrics for the performance period 2009 -
2011, inclusive.
1. " Pre-Tax Income" with respect to the Annual Incentive Plan means the pre-tax
income for the Corporation or, as applicable, for an Operating Unit determined
in accordance with generally accepted accounting principles, but excluding: (i)
the "Milestone Payments" or other amounts, if any, paid to the former
shareholders (and their respective successors and assigns) of the Dakota
Minnesota and Eastern Railroad Corporation ("DM&E") arising from or in
connection with the 2007 merger of the DM&E; (ii) all gains or losses arising
from sales of capital assets when the sale or purchase price for an individual
asset exceeds $50,000; (iii) all expenses, costs, profits, losses or gains
attributable to (a) the sale, other than sales of inventory in the ordinary
course of business, of more than 25% of the assets of an "Operating Unit" or 50%
of the assets of a Component in the Fiscal Year, or (b) the acquisition of a
business in 2008 for a purchase price of more than $1M; (iv) with respect to
Operating Units only, the costs of the Plan; (v) interest, investment gains or
losses arising from cash or marketable securities of $105M; and (vi)interest
expense related to use of funds in excess of $105M, during the Fiscal Year in
connection with the purchase of a business or businesses for more than an
aggregate purchase price(s) of $105M; provided, however, that the loss of
investment income due to the use of funds in excess of $105M shall be added back
to calculate pre-tax income with such funds being deemed to have earned interest
at the effective average interest rate attained by the Corporation for the
Fiscal Year from the date such funds are so utilized. Notwithstanding the
foregoing, in the event more than 25% of the assets of an Operating Unit or 50%
of the assets of a Component are sold, excluding sales of inventory in the
ordinary course of business, during the Fiscal Year, such Component's or
Operating Unit's , as applicable, Planned re-tax Income shall be eliminated from
all calculations, together with the Component's or Operating Unit's, as
applicable, profits , losses and pre-tax income for the Fiscal Year.
2. "ROIC" means, with respect to the Annual Incentive Plan, after tax earnings
from continuing operations before interest income and interest expense and
amortization charges (tax affected using the effective corporate tax rate) and
excluding: (i) all "Milestone Payments" or other amounts, if any, paid to the
former shareholders (and their respective successors and assigns) of the DM&E
arising from or in connection with the 2007 merger of the DM&E; (ii) all gains
or losses arising from sales of capital assets when the sale or purchase price
for an individual asset exceeds $50,000; and (iii) all expenses, costs, losses,
gains, attributable to (a) the sale, excluding sales of inventory in the
ordinary course of business, of more than 25% of the assets of an "Operating
Unit" or, more than 50% of the assets of a Component, or (b) the acquisition of
a business for a purchase price exceeding $1,000,000, divided by an average of
month end total assets less the sum of cash, marketable securities and
non-interest bearing current liabilities, determined in accordance with
generally accepted accounting principles.
3. ROIC Percentages mean, with respect to the Amended Omnibus Plan and with
respect to any calendar year; (a) after tax earnings from continuing operations
before interest income and interest expense and amortization charges (tax
affected using the effective corporate tax rate) and excluding all "Milestone
Payments") or other amounts, if any, paid to the former shareholders (and their
respective successors and assigns) of the DM&E arising from or in connection
with the 2007 merger of the DM&E divided by (b) an average of month end total
assets less the sum of cash, marketable securities and non-interest bearing
current liabilities, determined in accordance with generally accepted accounting
principles.
Item 9.01 Exhibits
10.57.1 2006 Omnibus Incentive Plan, As Amended and Restated March 6, 2008.
10.59 Executive Annual Incentive Compensation Plan
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
L.B. FOSTER COMPANY
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(Registrant)
Date: March 12, 2008
/s/ David J. Russo
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David J. Russo
Senior Vice President
Chief Financial Officer and Treasurer
Exhibit Index
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Exhibit Number Description
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10.57.1 2006 Omnibus Incentive Plan, As Amended and Restated
March 6, 2008.
10.59 Executive Annual Incentive Compensation Plan