8-KMaterial Agreements

CARPENTER TECHNOLOGY CORP 8-K Report, Material Agreement (Aug 29, 2006)

Filed August 29, 2006For Securities:CRS

Summary

This 8-K filing from Carpenter Technology Corp. (CRS) on August 29, 2006, details the finalization of executive compensation packages for fiscal year 2007, effective July 2, 2006. Key adjustments include modest increases in base salaries for some Senior Vice Presidents and the Chief Financial Officer, who joined during the fiscal year. The report also outlines the performance-based incentive compensation structures for fiscal years 2006 and 2007, which are primarily tied to Return on Net Assets (RONA) and Earnings Per Share (EPS) at the corporate level, with additional business unit performance metrics for certain executives. Investors should note the shift in performance metrics and the potential bonus payouts and restricted stock awards, which are contingent upon achieving predetermined financial goals. The filing also mentions amendments to the company's Executive Bonus Compensation Plan and Stock-Based Incentive Compensation Plan, which will be subject to stockholder approval at the October 16, 2006, Annual Meeting. The potential for executive compensation is therefore linked to both financial performance and shareholder alignment.

Key Highlights

  • 1Executive compensation for fiscal year 2007 has been finalized, effective July 2, 2006.
  • 2Base salaries for some Senior Vice Presidents (Operations and Engineered Products) and the CFO saw modest increases.
  • 3CEO and Vice Chairman base salaries remained unchanged for FY2007.
  • 4Incentive compensation (cash bonuses and performance shares) for FY2007 is primarily linked to corporate RONA and EPS goals.
  • 5Certain executives (SVP of Specialty Alloys and Engineered Products) also have business unit-specific operating income and RONA goals tied to their bonuses.
  • 6The company granted time-vested restricted stock awards to several Named Executive Officers, vesting in 2009 and 2011.
  • 7Amendments to the Executive Bonus Compensation Plan and Stock-Based Incentive Compensation Plan are subject to stockholder approval at the October 16, 2006 Annual Meeting.

Frequently Asked Questions

For fiscal year 2007, base salaries for Dennis M. Oates (Senior Vice President - Specialty Alloys Operations) increased to $390,000 from $360,000, Michael L. Shor (Senior Vice President - Engineered Products Operations) increased to $380,000 from $350,000, and M. David Kornblatt (Senior Vice President - Finance and Chief Financial Officer) was set at $360,000 upon commencement of employment. Other Named Executive Officers saw their base salaries remain unchanged. The incentive compensation structures, tied to RONA and EPS, were also finalized for FY2007.

Incentive compensation for fiscal year 2007 is determined by achieving performance goals for Return on Net Assets (RONA) and Earnings Per Share (EPS) at the corporate level. For Messrs. Oates and Shor, a portion of their bonuses is also based on achieving operating income and RONA goals specific to the business units they manage. These goals are structured with Threshold, Target, and Maximum performance levels, influencing both cash bonus payouts and performance-based restricted stock awards.

No, the amendments adopted by the Subcommittee and Board of Directors to the company’s Executive Bonus Compensation Plan and Stock-Based Incentive Compensation Plan are subject to approval by the Company's stockholders at the Annual Meeting to be held on October 16, 2006. Incentive compensation opportunities are contingent upon this stockholder approval.

The company granted two types of equity compensation: performance shares of restricted stock and time-vested shares of restricted stock. Performance shares earned in fiscal year 2007 are tied to achieving corporate RONA goals and vest over two years. Time-vested restricted stock awards were also granted, with vesting dates set for June 30, 2011, for the CEO, and June 30, 2009, for other executives, provided they remain employed.