8-KLeadership Changes

CARPENTER TECHNOLOGY CORP 8-K Report, Executive Changes (Aug 4, 2009)

Filed August 4, 2009For Securities:CRS

Summary

Carpenter Technology Corporation (CRS) filed an 8-K on August 4, 2009, detailing the fiscal year 2010 executive compensation packages approved by its Human Resources Committee. The compensation structure for Named Executive Officers (NEOs) was finalized on July 29, 2009, and includes base salary, potential incentive cash compensation, performance stock units, time-vested stock units, and stock options. The compensation decisions were based on individual and company performance, responsibilities, and market data. Key components of the compensation for fiscal year 2010 aim to align executive interests with company performance through various incentive structures. The base salaries for the top executives remain substantial, while the incentive plans are tied to corporate objectives such as free cash flow, operating income, on-time delivery, and safety. Long-term incentives include performance-based stock units linked to total shareholder return and earnings per share, alongside time-vested stock units and stock options, with the latter having an exercise price based on the stock's closing price on the grant date.

Key Highlights

  • 1Fiscal Year 2010 executive compensation packages for Named Executive Officers (NEOs) finalized on July 29, 2009.
  • 2CEO Anne L. Stevens has a base salary of $876,000 for FY2010.
  • 3Incentive cash compensation opportunities are tied to corporate performance goals including free cash flow, operating income, on-time delivery, and safety.
  • 4The CEO, Anne L. Stevens, has the highest potential incentive cash compensation, with opportunities ranging from 25% (threshold) to 100% (target) and up to 200% (maximum) of base salary, plus an additional 100% for achieving specific operating income, free cash flow, and total shareholder return targets.
  • 5Long-term incentives include performance stock units based on three-year total shareholder return (TSR) and one-year earnings per share (EPS), with varying vesting conditions.
  • 6Time-vested stock units were granted to NEOs, vesting three years from the grant date, contingent on continued employment.
  • 7Stock options were granted to NEOs with an exercise price of $17.29, equal to the stock's closing price on the grant date, vesting ratably over three years.

Frequently Asked Questions

The executive compensation for FY2010 comprises base salary, potential incentive cash compensation (tied to corporate performance goals like free cash flow and operating income), performance stock units (linked to TSR and EPS), time-vested stock units, and stock options. The specific amounts and opportunities vary by executive.

Incentive cash compensation is determined based on the achievement of corporate performance goals set for fiscal year 2010. These goals include free cash flow, operating income, on-time delivery, and safety objectives. The payout opportunity ranges from a threshold level to a target and a maximum level, varying as a percentage of base salary for each executive.

Performance stock units are based on two categories of performance goals: Category 1 is based on a three-year total shareholder return (TSR) goal, and Category 2 is based on a one-year earnings per share (EPS) goal. The number of units earned depends on achieving specific threshold, target, or maximum performance levels.

The stock options were granted with an exercise price equal to the closing price of the Company's common stock on the grant date, which was $17.29. The options become exercisable ratably over a three-year period, on each anniversary of the grant date.