8-KLeadership ChangesMaterial AgreementsExhibits & Filings

CARPENTER TECHNOLOGY CORP 8-K Report, Material Agreement (Jul 5, 2006)

Filed July 5, 2006For Securities:CRS

Summary

This 8-K filing from Carpenter Technology Corp. on July 5, 2006, announces the upcoming submission of three new compensation plans to shareholders for approval at the annual meeting. These plans include a Stock-Based Incentive Plan for Officers and Key Employees, a Stock-Based Compensation Plan for Non-Employee Directors, and an Executive Bonus Compensation Plan. The primary objective of these plans is to align executive and director compensation with shareholder interests through stock-based awards and performance-based bonuses, with provisions for accelerated vesting upon a change in control. Additionally, the report details the appointment of M. David Kornblatt as the new Senior Vice President - Finance and Chief Financial Officer, effective July 5, 2006. Mr. Kornblatt's compensation package includes a base salary, a signing bonus, restricted stock, and eligibility for future bonus plans and retirement benefits. This appointment, along with the proposed compensation plans, signals management's focus on attracting and retaining key talent and incentivizing performance.

Key Highlights

  • 1Carpenter Technology Corp. is seeking shareholder approval for three new compensation plans: Stock-Based Incentive Plan for Officers and Key Employees, Stock-Based Compensation Plan for Non-Employee Directors, and Executive Bonus Compensation Plan.
  • 2The Stock-Based Incentive Plan for Officers and Key Employees allows for grants of up to 2,300,000 shares of common stock.
  • 3The Stock-Based Compensation Plan for Non-Employee Directors allows for grants of up to 500,000 shares of common stock and includes provisions for directors to receive a portion of their retainer in stock units.
  • 4Both stock-based plans include provisions for accelerated vesting of awards in the event of a change in control.
  • 5M. David Kornblatt has been appointed as the new Senior Vice President - Finance and Chief Financial Officer, effective July 5, 2006.
  • 6Mr. Kornblatt's compensation includes a $360,000 annual salary, a $50,000 signing bonus, 2,000 restricted shares, and eligibility for future bonus and retirement plans.
  • 7The appointment of Mr. Kornblatt and the proposed compensation plans are intended to incentivize and retain key leadership talent.

Frequently Asked Questions

The main purposes of the new compensation plans are to align the interests of officers, key employees, and non-employee directors with those of shareholders through stock-based awards and performance-based incentives, and to aid in attracting and retaining executive talent. The plans also include provisions to incentivize continued service, particularly in the event of a change in control.

The Stock-Based Incentive Plan for Officers and Key Employees allows for awards covering up to an additional 2,300,000 shares of Carpenter common stock. The Stock-Based Compensation Plan for Non-Employee Directors allows for awards covering up to an additional 500,000 shares. Investors should monitor the number of shares granted under these plans relative to the total outstanding shares to assess potential dilution.

M. David Kornblatt's compensation package includes an annual base salary of $360,000, a one-time signing bonus of $50,000, an award of 2,000 restricted shares, and eligibility for Carpenter's annual bonus plan for fiscal year 2007 (specific targets TBD), the Supplemental Executive Retirement Plan, and other benefit programs. He will also receive a change of control agreement.

While the Executive Bonus Compensation Plan is contingent upon the attainment of certain performance goals, this 8-K filing does not specify what those performance goals are. The filing indicates that compensation is also contingent upon the executive remaining employed during the performance period.