UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the
Registrant
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Filed by a Party other than the
Registrant
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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Layne Christensen Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which
transaction applies:
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Aggregate number of securities to which
transaction applies:
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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LAYNE CHRISTENSEN COMPANY
May 8, 2008
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of Layne Christensen
Company to be held at the InterContinental Kansas City at the Plaza hotel, located at 401 Ward
Parkway, Kansas City, Missouri, on Thursday, June 5, 2008, commencing at 10:00 a.m., local time.
The business to be conducted at the meeting is described in the attached Notice of Annual Meeting
and Proxy Statement. In addition, there will be an opportunity to meet with members of senior
management and review the business and operations of the Company.
Your Board of Directors joins with me in urging you to attend the meeting. Whether or not you
plan to attend the meeting, however, please sign, date and return the enclosed proxy card promptly.
A prepaid return envelope is provided for this purpose. You may revoke your proxy at any time
before it is exercised and it will not be used if you attend the meeting and prefer to vote in
person.
Sincerely yours,
/s/ A. B. Schmitt
A. B. Schmitt
President and Chief Executive Officer
TABLE OF CONTENTS
LAYNE CHRISTENSEN COMPANY
1900 Shawnee Mission Parkway
Mission Woods, Kansas 66205
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 2008
The Annual Meeting of Stockholders of Layne Christensen Company, a Delaware corporation
(Layne Christensen or the Company), will be held at the InterContinental Kansas City at the
Plaza hotel, located at 401 Ward Parkway, Kansas City, Missouri, on Thursday, June 5, 2008,
commencing at 10:00 a.m., local time, and thereafter as it may from time to time be adjourned, for
the following purposes:
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1.
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To elect five directors to hold office for terms expiring at the 2009 Annual
Meeting of the Stockholders of Layne Christensen and until their successors are duly
elected and qualified or until their earlier death, retirement, resignation or removal;
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2.
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To consider and act upon ratification of the selection of the accounting firm
of Deloitte & Touche LLP as the independent auditors of Layne Christensen Company for
the fiscal year ending January 31, 2009; and
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3.
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To transact such other business as may properly come before the meeting and any
adjournment or adjournments thereof.
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The Board of Directors of Layne Christensen has fixed the close of business on April 22, 2008,
as the record date for determination of the stockholders entitled to notice of, and to vote at, the
Annual Meeting and any adjournment or adjournments thereof.
All stockholders are cordially invited to attend the meeting. Whether or not you intend to be
present at the meeting, the Board of Directors of Layne Christensen solicits you to sign, date and
return the enclosed proxy card promptly. A prepaid return envelope is provided for this purpose.
You may revoke your proxy at any time before it is exercised and it will not be used if you attend
the meeting and prefer to vote in person. Your vote is important and all stockholders are urged to
be present in person or by proxy.
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By Order of the Board of Directors
Steven F. Crooke
Senior Vice PresidentGeneral Counsel
and Secretary
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May 8, 2008
Mission Woods, Kansas
LAYNE CHRISTENSEN COMPANY
1900 Shawnee Mission Parkway
Mission Woods, Kansas 66205
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 5, 2008
INTRODUCTION
This Proxy Statement is being furnished to the stockholders of Layne Christensen Company, a
Delaware corporation (Layne Christensen or the Company), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting of Stockholders to
be held on Thursday, June 5, 2008, and at any adjournment or adjournments thereof (the Annual
Meeting). The Annual Meeting will commence at 10:00 a.m., local time, and will be held at the
InterContinental Kansas City at the Plaza hotel, located at 401 Ward Parkway, Kansas City, Missouri
64112.
This Proxy Statement and the enclosed form of proxy were first mailed to the Companys
stockholders on or about May 8, 2008.
Proxies
You are requested to complete, date and sign the enclosed form of proxy and return it promptly
to the Company in the enclosed postage prepaid envelope. Shares represented by properly executed
proxies will, unless such proxies have been revoked prior to exercise, be voted in accordance with
the stockholders instructions indicated in the proxies. If no instructions are indicated, such
shares will be voted in favor of the election of the nominees for directors named in this Proxy
Statement, in favor of ratifying the selection of the accounting firm of Deloitte & Touche LLP as
the Companys independent auditors for the current fiscal year, and, as to any other matter that
properly may be brought before the Annual Meeting, in accordance with the discretion and judgment
of the appointed proxies. A stockholder who has given a proxy may revoke it at any time before it
is exercised at the Annual Meeting by filing written notice of revocation with the Secretary of the
Company, by executing and delivering to the Secretary of the Company a proxy bearing a later date,
or by appearing at the Annual Meeting and voting in person.
If you plan to attend the Annual Meeting and vote in person, you will be given a ballot when
you arrive. However, if your shares are held in the name of your broker, bank or other nominee
(commonly referred to as being held in street name), proof of ownership may be required for you
to be admitted to the meeting. A recent brokerage statement or letter from a bank or broker are
examples of proof of ownership. If you want to vote your shares of common stock held in street
name in person at the meeting, you will have to get a written proxy in your name from the broker,
bank or other nominee who holds your shares.
Voting at the Meeting
For purposes of voting on the proposals described herein, the presence in person or by proxy
of stockholders holding a majority of the total outstanding shares of the Companys common stock,
$0.01 par value, shall constitute a quorum at the Annual Meeting. Only holders of record of shares
of the Companys common stock as of the close of business on April 22, 2008 (the Record Date),
are entitled to notice of, and to vote at, the Annual Meeting or any adjournment or adjournments
thereof. As of the Record Date, 19,176,077 shares of the Companys common stock were outstanding
and entitled to be voted at the Annual Meeting. Each share of common stock is entitled to one vote
on each matter properly to come before the Annual Meeting.
Directors are elected by a plurality (a number greater than those cast for any other
candidates) of the votes cast, in person or by proxy, of stockholders entitled to vote at the
Annual Meeting for that purpose. The affirmative vote of the holders of a majority of the shares of
the Companys common stock, represented in person or by proxy
and entitled to vote at the Annual Meeting, is required for (i) the ratification of the selection
of Deloitte & Touche
LLP as the Companys independent auditors for the current fiscal year and (ii)
the approval of such other matters as properly may come before the Annual Meeting or any
adjournment thereof.
In accordance with Delaware law, a stockholder entitled to vote in the election of directors
can withhold authority to vote for all nominees for directors or can withhold authority to vote for
certain nominees for directors. Votes withheld in connection with the election of one or more
nominees for director will not be counted as votes cast for such nominees. Abstentions from the
proposal to approve the ratification of the selection of the Companys independent auditors as
described herein are treated as votes against such proposal. Broker non-votes on a proposal are
treated as shares of Layne Christensen common stock as to which voting power has been withheld by
the respective beneficial holders and, therefore, as shares not entitled to vote on the proposal as
to which there is the broker non-vote. Accordingly, broker non-votes are not counted for purposes
of determining whether a proposal has been approved.
Solicitation of Proxies
This solicitation of proxies for the Annual Meeting is being made by the Companys Board of
Directors. The Company will bear all costs of such solicitation, including the cost of preparing
and mailing this Proxy Statement and the enclosed form of proxy. After the initial mailing of this
Proxy Statement, proxies may be solicited by mail, telephone, telegram, facsimile transmission or
personally by directors, officers, employees or agents of the Company. Brokerage houses and other
custodians, nominees and fiduciaries will be requested to forward soliciting materials to
beneficial owners of shares held of record by them, and their reasonable out-of-pocket expenses,
together with those of the Companys transfer agent, will be paid by Layne Christensen.
A list of stockholders entitled to vote at the Annual Meeting will be available for
examination at least ten days prior to the date of the Annual Meeting during normal business hours
at the Companys Corporate Headquarters, 1900 Shawnee Mission Parkway, Mission Woods, Kansas
66205. The list also will be available at the Annual Meeting.
ITEM 1
ELECTION OF DIRECTORS
The Companys Board of Directors currently consists of seven directors. The Board of
Directors of the Company was previously divided into three classes, with the term of office of each
class ending in successive years. In 2006, the Company amended its Certificate of Incorporation to
require that each Director elected at or after the 2007 Annual Meeting would be elected for a
one-year term. Directors elected before the 2007 Annual Meeting (including Directors appointed by
the Board to fill a vacancy) will serve the full duration of their existing terms. The present
terms of the directors formerly in Class I, Donald K. Miller, Anthony B. Helfet and Andrew B.
Schmitt, expire at this Annual Meeting. In addition, the one-year terms of the directors elected
at the 2007 Annual Meeting, J. Samuel Butler and Nelson Obus, also expire at this Annual Meeting.
Each of the nominees at this Annual Meeting, if elected, will serve one year until the 2009 Annual
Meeting and until a successor has been elected and qualified. Directors in Class II (David A.B.
Brown and Jeffrey J. Reynolds) will continue in office until their terms expire at the time of the
annual meeting of stockholders in 2009.
One of the purposes of this Annual Meeting is to elect five directors to serve one-year terms
expiring at the Annual Meeting of Stockholders in 2009 and until their successors are duly elected
and qualified or until their earlier death, retirement, resignation or removal. The Board of
Directors has designated Messrs. J. Samuel Butler, Anthony B. Helfet, Donald K. Miller, Nelson Obus
and Andrew B. Schmitt as the nominees proposed for election at the Annual Meeting. Messrs. Butler
and Helfet have been directors of the Company since 2003. Mr. Miller has been a director of the
Company since 1996. Mr. Obus has been a director of the Company since 2004 and Mr. Schmitt has been
a director of the Company since 1993. Unless authority to vote for the nominees is withheld, it is
intended that the shares represented by properly executed proxies in the form enclosed will be
voted for the election of the nominees as directors. In the event that one or more of the nominees
should become unavailable for election, it is intended that the shares represented by the proxies
will be voted for the election of such substitute nominee as may be designated by the Board of
Directors, unless the authority to vote for the nominee who has ceased to be a candidate has been
withheld. The nominees have indicated their willingness to serve as directors if elected, and the
Board of Directors has no reason to believe that the nominees will be unavailable for election.
The Board of Directors recommends that you vote for the election of J. Samuel Butler, Nelson
Obus, Donald K. Miller, Anthony B. Helfet and Andrew B. Schmitt as directors of the Company.
2
Nominees and Directors Continuing in Office
The following table sets forth certain information with respect to the persons nominated by
the Board of Directors for election as directors at the Annual Meeting and each director whose term
of office will continue after the Annual Meeting.
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Director
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Name
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Age
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Present Position with the Company
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Since
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NOMINEES
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Term to Expire in 2008
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J. Samuel Butler
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62
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Director
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2003
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Nelson Obus
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61
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Director
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2004
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Donald K. Miller
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76
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Director
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1996
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Anthony B. Helfet
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64
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Director
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2003
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Andrew B. Schmitt
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59
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Director, President and Chief Executive Officer
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1993
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DIRECTORS CONTINUING IN OFFICE
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Class II: Term to Expire in 2009
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David A. B. Brown
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64
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Director, Chairman of the Board
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2003
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Jeffrey J. Reynolds
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41
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Director, Executive Vice President
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2005
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The business experience during the last five fiscal years of the persons nominated by the
Board of Directors for election as directors at the Annual Meeting and each director whose term of
office will continue after the Annual Meeting is as follows:
J. Samuel Butler
has been president of Trinity Petroleum Management, LLC, an oil and gas
management outsourcing company, since 1996. Mr. Butler has also served as Chairman of the Board,
chief executive officer and president of ST Oil Company, an independent oil and gas exploration and
production company, since 1996. In 2006, Mr. Butler was appointed to the Colorado School of Mines
Advisory Board for a three-year term, and in 2007, Mr. Butler became the Chairman of Genesis Gas &
Oil Partners LLC, a private oil and gas partnership focused on the acquisition and exploitation of
coalbed methane and other unconventional oil and gas reserves.
Nelson Obus
has served as president of Wynnefield Capital, Inc. since November 1992 and as the
managing member of Wynnefield Capital Management, LLC since January 1997. Wynnefield Capital
Management manages two partnerships and Wynnefield Capital, Inc. manages one partnership, all three
of which invest in small-cap value U.S. public equities. Mr. Obus is also a member of the board of
directors of Gilman Ciocia, Inc., a company that provides income tax return preparation, accounting
and financial planning services.
Donald K. Miller
has been Chairman of Axiom International Investors, LLC, a company engaged in
international equity asset management, since 1999. He has also been President of Presbar
Corporation, a private firm engaged in private equity investing and investment banking, since 1986
and was formerly Chairman of Greylock Financial, Inc., an affiliate of Greylock Management
Corporation, from 1986 to 1996. In addition, Mr. Miller served as Chairman and Chief Executive
Officer of Thomson Advisory Group L.P. (subsequently PIMCO Advisors Holdings L.P.), an asset
management company, from 1990 to 1993 and as Vice Chairman from 1993 to 1994. Mr. Miller also
served as Chairman of the Board of Directors of Christensen Boyles Corporation (CBC) from 1986 to
December 1995 and was involved in the formation of CBC and in the acquisition of Boyles Bros.
Drilling Company and Christensen Mining Products. He currently is on the Board of Directors of RPM
International, Inc. and has spent the majority of his career in investment banking or as an
investor focusing on a variety of industries.
Anthony B. Helfet
, a retired investment banker, served as the Vice Chairman and co-head of
Mergers and Acquisitions for Merriman Curhan Ford & Co. from September 2005 to September 2007.
Prior to that, he was a special advisor to UBS from September 2001 through December 2001. From
1991 to August 31, 2001, Mr. Helfet was a managing director of the West Coast operations of Dillon,
Read & Co. Inc. and its successor organization, UBS. Mr. Helfet was also managing director of the
Northwest Region of Merrill Lynch Capital
Markets from 1979 to 1989. Historically, Mr. Helfet has held other positions with Dean Witter
Reynolds Inc. and Dillon, Read & Co. Mr. Helfet is a member of the board of directors of Alliance
Imaging Inc.
Andrew B. Schmitt
has served as President and Chief Executive Officer of the Company since
October 1993. For approximately two years prior to joining the Company, Mr. Schmitt was a partner
in two privately owned hydrostatic pump and motor manufacturing companies and an oil and gas
service company. He served as President
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of the Tri-State Oil Tools Division of Baker Hughes
Incorporated from February 1988 to October 1991. Mr. Schmitt is also a director of Euronet
Worldwide Inc.
David A. B. Brown
currently serves as Chairman of the Board of Directors of Pride
International, Inc. He is also on the board of directors of EMCOR Group, Inc., and from 1984 to
2005 Mr. Brown was president of The Windsor Group, a consulting firm that focuses on energy related
issues facing oilfield services and engineering companies. He has over 30 years of energy related
experience.
Jeffrey J. Reynolds
became a director of the Company on September 28, 2005, in connection with
the acquisition of Reynolds, Inc. by Layne Christensen Company. Mr. Reynolds has served as the
President of Reynolds, Inc., a company which provides products and services to the water and
wastewater industries, since 2001. Mr. Reynolds also became a Senior Vice President of the Company
on September 28, 2005. On March 30, 2006, Mr. Reynolds was promoted to Executive Vice President of
the Company overseeing the Water Infrastructure Division.
There is no arrangement or understanding between any director and any other person pursuant to
which such director was selected as a director of the Company, except for the Agreement and Plan of
Merger, dated August 30, 2005, among Layne Christensen Company, Layne Merger Sub 1, Inc., Reynolds,
Inc. and the Stockholders of Reynolds, Inc. listed on the signature pages thereto (the Merger
Agreement).
Pursuant to the Merger Agreement, the Company agreed to increase the size of its Board of
Directors and appoint Mr. Reynolds to fill the newly created vacancy. The Company also agreed to
nominate Mr. Reynolds for re-election as a director at the Annual Meeting held on June 8, 2006, and
recommend and solicit proxies for his election to the Board of Directors at that Annual Meeting.
Compensation of Directors
Each director of the Company who is not also an employee of the Company, except the Chairman
of the Board, receives an annual retainer of $35,000. The Chairman of the Board receives an annual
retainer of $75,000. The Chairmen of the Audit Committee and the Compensation Committee each
receive an additional retainer of $5,000 per year and the Chairman of the Nominating & Corporate
Governance Committee receives an additional retainer of $1,500 per year. All such retainers are
payable in quarterly installments. In addition, each non-employee director receives $1,000 for
each board meeting he or she attends either in person or via teleconference and each member of the
Audit Committee, the Compensation Committee and the Nominating & Corporate Governance Committee
receives $1,000 for each meeting he or she attends either in person or via teleconference. As an
additional component of their compensation package, all non-employee directors of the Company
received a one-time award of an option to purchase 3,000 shares of the Companys common stock upon
the approval of the Amended and Restated Layne Christensen Company 2002 Stock Option Plan (the
2002 Option Plan) at the Companys Annual Meeting in 2002. Any newly elected non-employee
directors will receive the same one-time award of an option to purchase 3,000 shares of the
Companys common stock upon becoming a member of the Board. In the past, each non-employee
director, except the Chairman, was awarded an option to purchase 2,000 shares of the Companys
common stock on an annual basis. The Chairman of the Companys Board of Directors received a grant
of options for the purchase of 4,000 shares of the Companys common stock on an annual basis. The
director options were priced at the market price of the common stock on the day they were issued,
were 100% vested upon issuance, had a ten-year life and were otherwise subject to all of the terms
and conditions of the 2002 Option Plan or such other plan under which the options were issued.
However, in connection with the changes to director compensation that were effective as of February
1, 2007, instead of receiving an annual option award, each non-employee director, except the
Chairman, receives an annual award of restricted stock in the Company with a value equal to $40,000
on the date of the award. The Chairman receives an annual award of restricted stock in the Company
with a value equal to $75,000 on the date of the award. The annual award is made at the time of
the Companys annual meeting each year. The restricted stock is valued based on the market price
of the Companys common stock on the day the stock is issued, it is 100% vested upon issuance,
subject to a one-year
restriction on sale, and is otherwise subject to all of the terms and conditions of the Layne
Christensen Company 2006 Equity Incentive Plan (the 2006 Equity Plan) or such other plan under
which the restricted stock may be issued. Directors of the Company who are also employees of the
Company receive no compensation for service to Layne Christensen as directors.
A director may elect to defer receipt of all or a portion of their cash compensation in
accordance with the terms of the Companys Deferred Compensation Plan for Directors. Under the
Companys Deferred Compensation
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Plan for Directors, non-employee directors of the Company can elect
to receive deferred compensation in three formsa cash credit, a stock credit or a combination of
the two. The value of deferrals made in the form of a stock credit track the value of the
Companys common stock. Deferrals made in the form of a cash credit will accumulate interest at a
rate based on the annual yield of the longest term United States Treasury Bond outstanding at the
end of the preceding year. All payments made under the plan will be made in cash. As of January
31, 2008, Mr. Brown had accumulated the equivalent of 5,096.87 shares of common stock in his stock
credit account, Mr. Butler had accumulated the equivalent of 2,909.9 shares of common stock in his
stock credit account, Mr. Helfet had accumulated the equivalent of 3,135.26 shares of common stock
in his stock credit account, Mr. Obus had accumulated the equivalent of 3,433.75 shares of common
stock in his stock credit account, and Mr. Miller had accumulated the equivalent of 8,169.70 shares
of common stock in his stock credit account.
The following table sets forth the compensation paid to our directors during the fiscal year
ended January 31, 2008. Messrs. Schmitt and Reynolds are our only directors who are also employees
of the Company. Mr. Schmitts compensation is reported in our Summary Compensation Table and Mr.
Reynolds compensation is reported in the following table.
Fiscal 2008 Director Compensation Table
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Change in
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Pension Value
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Fees
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and
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Earned or
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Non-Equity
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Nonqualified
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Paid in
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Cash
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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David A. B. Brown
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$
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85,000
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$
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75,012
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$
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160,012
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J. Samuel Butler
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$
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49,786
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$
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40,020
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$
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89,806
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Anthony B. Helfet
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$
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54,360
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$
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40,020
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$
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94,380
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Donald K. Miller
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$
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54,114
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$
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40,020
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$
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94,134
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Nelson Obus
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$
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49,786
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$
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40,020
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$
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89,806
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John J. Quicke
(4)
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$
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15,536
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$
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15,536
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Jeffrey J. Reynolds
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$
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375,000
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(5)
|
|
|
|
|
|
$
|
270,948
|
(6)
|
|
$
|
645,948
|
|
|
|
|
(1)
|
|
Includes amounts deferred under the Companys Deferred Compensation Plan for Directors for
the accounts of Messrs. Brown, Butler, Helfet, Miller and Obus in the amounts of $66,250,
$20,332, $44,360, $54,114 and $37,786, respectively. Messrs. Brown, Butler and Obus elected
to defer all their deferred fees to the stock credit account, Mr. Helfet elected to defer
one-half of his deferred fees to the stock credit account and the other half to the cash
credit account, and Mr. Miller elected to defer all of his deferred fees to the cash credit
account.
|
|
(2)
|
|
As of January 31, 2008, the Company had aggregate outstanding stock awards to non-employee
directors in the amount of 947 shares held by each of Messrs. Butler, Helfet, Miller and Obus
and 2,775 shares held by Mr. Brown. The amount reported in this column is equal to the grant
date fair value computed in accordance with FAS 123R for each stock award.
|
|
(3)
|
|
As of January 31, 2008, the Company had aggregate outstanding option awards to non-employee
directors in the amount of 9,000 options held by each of Messrs. Butler, Helfet, Miller and
Obus and 13,000 options held by Mr. Brown.
|
|
(4)
|
|
Mr. Quicke did not stand for re-election at last years annual meeting and, as a result, his
term on the Companys Board ended on June 7, 2007.
|
|
(5)
|
|
Reflects incentive compensation earned for the fiscal year ended January 31, 2008. The
incentive amount reported includes $187,500 that was deferred by Mr. Reynolds under the
Companys Key Management Deferred Compensation Plan (the Deferred Compensation Plan).
|
|
(6)
|
|
Mr. Reynolds does not earn fees as a director since he is an employee of the Company. Mr.
Reynolds is an Executive Vice President of the Company overseeing the Water Infrastructure
Division. The amount reported as compensation includes $246,350 paid to Mr. Reynolds as
salary, of which $24,635 was deferred under the Companys Deferred Compensation Plan. The
compensation reported also includes a $9,000 contribution by the Company to Mr. Reynolds
account under the Companys Capital Accumulation Plan,
|
5
|
|
|
|
|
the cost of term life insurance paid by
the Company for the benefit of Mr. Reynolds in the amount of $534, and a Company matching
contribution to Mr. Reynolds account under the Companys Deferred Compensation Plan in the
amount of $15,064.
|
Meetings of the Board and Committees
During the fiscal year ended January 31, 2008, the Board of Directors of Layne Christensen
held eight meetings. All directors attended at least 75% of the meetings of the Board of Directors
and the committees of the Board of Directors on which they served which were held during such
fiscal year and during the period which such director served. It should be noted that the
Companys directors discharge their responsibilities throughout the year, not only at such Board of
Directors and committee meetings, but through personal meetings and other communications with
members of management and others regarding matters of interest and concern to the Company.
Pursuant to the Companys Bylaws, the Board of Directors has established an Audit Committee, a
Nominating & Corporate Governance Committee and a Compensation Committee.
Audit Committee
The Audit Committee assists the Board of Directors in fulfilling its responsibilities with
respect to the oversight of (i) the integrity of the Companys financial statements, financial
reporting process and internal control system; (ii) the Companys compliance with legal and
regulatory requirements; (iii) the independent registered public accounting firm qualifications and
independence; (iv) the performance of the Companys internal audit function and its independent
auditors and (v) the system of internal controls and disclosure controls and procedures established
by management. The Audit Committee is responsible for the appointment of the Companys independent
registered public accounting firm and the terms of their engagement, reviewing the Companys
policies and procedures with respect to internal auditing, accounting, financial and disclosure
controls and reviewing the scope and results of audits and any auditor recommendations. The Audit
Committee held five meetings during the fiscal year ended January 31, 2008, in addition to personal
meetings and other communications conducted throughout the year with members of management and each
other regarding issues within the committees area of responsibility. The Amended and Restated
Audit Committee Charter is available on the Companys website under the heading Investor
Relations
(
www.laynechristensen.com/investorrelations
). The current members of the Audit Committee
are Donald K. Miller (Chairperson), Anthony B. Helfet, J. Samuel Butler and Nelson Obus. All of
the members of the Audit Committee are independent within the meaning of SEC Regulations and the
Nasdaq listing standards. The Board has determined that each member of the Audit Committee is
qualified as an audit committee financial expert within the meaning of SEC regulations and that all
such members are financially literate and have experience in finance or accounting resulting in
their financial sophistication within the meaning of the Nasdaq listing standards. The Report of
the Audit Committee for fiscal year 2008 appears below.
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING MATERIAL AND SHOULD NOT
BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER COMPANY FILING UNDER THE SECURITIES ACT
OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY
INCORPORATES THIS REPORT BY REFERENCE THEREIN.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is composed of independent directors as required
by and in compliance with the listing standards of the Nasdaq Stock Market. The Audit Committee
operates pursuant to a written charter adopted by the Board of Directors.
The functions of the Audit Committee are set forth in its charter. One of the Audit
Committees principle functions is overseeing the Companys financial reporting process on behalf
of the Board of Directors. Management of the Company has the primary responsibility for the
Companys financial reporting process, principles and internal controls as well as preparation of
its financial statements. The Companys independent registered public accounting firm is
responsible for performing an audit of the Companys financial statements and expressing an opinion
as to the conformity of such financial statements with accounting principles generally accepted in
the United States.
The Audit Committee has reviewed and discussed the Companys audited financial statements as
of and for the year ended January 31, 2008, with management and the independent registered public
accounting firm. The Audit Committee has discussed with the independent registered accounting firm
the matters required to be discussed under the standards of the Public Company Accounting Oversight
Board (United States), including those matters set forth
6
in Statement on Auditing Standards No.
114, as amended and adopted by Rule 3200T. The independent registered public accounting firm has
provided to the Audit Committee the written disclosures and the letter required by Rule 3600T of
the Public Company Accounting Oversight Board, which adopted on an interim basis Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the Audit
Committee has discussed with the auditors their independence from the Company. The Audit Committee
has also considered whether the independent registered public accounting firms provision of
information technology and other non-audit services to the Company is compatible with maintaining
the registered public accounting firms independence. The Audit Committee has concluded that the
independent registered public accounting firm is independent from the Company and its management.
Based on the reports and discussions described above, the Audit Committee has approved the
inclusion of the Companys audited financial statements and Managements Report on Internal Control
Over Financial Reporting in the Companys Annual Report on Form 10-K for the fiscal year ended
January 31, 2008, which was filed with the Securities and Exchange Commission.
Respectfully submitted on April 29, 2008, by the members of the Audit Committee of the Board
of Directors:
|
|
|
|
|
Donald K. Miller, Chairman
|
|
Anthony B. Helfet
|
|
J. Samuel Butler
|
|
Nelson Obus
|
Nominating & Corporate Governance Committee
The Companys Board of Directors created a Nominating & Corporate Governance Committee (the
Nominating Committee) on February 16, 2004. In accordance with the process described below under
the heading Selection of Board Nominees, the Nominating Committee identifies individuals
qualified to become members of the Companys Board of Directors, recommends to the Board proposed
nominees for Board membership, recommends to the Board directors to serve on each standing
committee of the Board and assists the Board in developing and overseeing corporate governance
guidelines. The Charter of the Nominating Committee is available on the Companys website under
the heading Investor Relations (
www.laynechristensen.com/investorrelations
). The Nominating
Committee held one meeting during the fiscal year ended January 31, 2008, in addition to personal
meetings and other communications conducted throughout the year with members of management and each
other regarding issues within the committees area of responsibility. The current members of the
Nominating Committee are J. Samuel Butler (Chairperson), David A. B. Brown and Donald K. Miller.
All of the members of the Nominating Committee are independent within the meaning of SEC
regulations and the Nasdaq listing standards.
Compensation Committee
The Compensation Committee establishes annual and long-term performance goals and objectives
for the Companys management, evaluates the performance of management and makes recommendations to
the Board of Directors regarding the compensation and benefits of the Companys executive officers
and the members of the Board of Directors. The Compensation Committee also administers certain of
the Companys incentive plans,
including the Companys Executive Incentive Compensation Plan. The charter of the Compensation
Committee is available on the Companys website under the heading Investor Relations
(
www.laynechristensen.com/investorrelations
). The current members of the Compensation Committee
are Anthony B. Helfet (Chairperson), David A.B. Brown and Nelson Obus. All of the members of the
Compensation Committee are independent within the meaning of SEC regulations and the Nasdaq listing
standards. The Compensation Committee met five times during the fiscal year ended January 31,
2008, in addition to personal meetings and other communications conducted throughout the year with
members of management and each other regarding compensation issues within the committees area of
responsibility.
Selection of Board Nominees
The Nominating Committee considers candidates for Board membership suggested by its members
and other Board members, as well as management and stockholders. A stockholder who wishes to
recommend a prospective nominee for the Board should notify the Companys Secretary in writing with
whatever supporting material the stockholder considers appropriate or that is required by the
Companys bylaws relating to stockholder nominations as described below under the heading Advance
Notice Procedures. The Companys Secretary will forward the information to the members of the
Nominating Committee, who will consider whether to nominate any person nominated by a stockholder
pursuant to the provisions of the proxy rules, the Companys bylaws, the
7
Companys Nominating &
Corporate Governance Committee Charter, the Companys Corporate Governance Guidelines and the
director selection procedures established by the Nominating & Corporate Governance Committee.
Once the Nominating Committee has identified a prospective nominee candidate, the Committee
makes an initial determination as to whether to conduct a full evaluation of the candidate. This
initial determination is based on the information provided to the Nominating Committee with the
recommendation of the prospective candidate, as well as the Nominating Committees own knowledge of
the candidate. This information may be supplemented by inquiries to the person making the
recommendation or others. The preliminary determination is based primarily on the need for
additional Board members to fill vacancies or expand the size of the Board and the likelihood that
the prospective nominee can satisfy the criteria and qualifications described below. If the
Nominating Committee determines, in consultation with the Chairman of the Board and other Board
members as appropriate, that additional consideration is warranted, the Nominating Committee then
evaluates the prospective nominees against the criteria and qualifications set out in the
Nominating Committees Charter. Such criteria and qualifications include:
|
|
|
a general understanding of management, marketing, accounting, finance and other
elements relevant to the Companys success in todays business environment;
|
|
|
|
|
an understanding of the principal operational, financial and other plans, strategies
and objectives of the Company;
|
|
|
|
|
an understanding of the results of operations and the financial condition of the
Company and its significant business segments for recent periods;
|
|
|
|
|
an understanding of the relative standing of the Companys significant business
segments vis-à-vis competitors;
|
|
|
|
|
the educational and professional background of the prospective candidate;
|
|
|
|
|
the prospective nominees standards of personal and professional integrity;
|
|
|
|
|
the demonstrated ability and judgment necessary to work effectively with other
members of the Board to serve the long-term interests of the stockholders;
|
|
|
|
|
the extent of the prospective nominees business or public experience that is
relevant and beneficial to the Board and the Company;
|
|
|
|
|
the prospective nominees willingness and ability to make a sufficient time
commitment to the affairs of the Company in order to effectively perform the duties of
a director, including regular attendance at Board and committee meetings;
|
|
|
|
|
the prospective nominees commitment to the long-term growth and profitability of
the Company; and
|
|
|
|
|
the prospective nominees ability to qualify as an independent director as defined
in the Nasdaq listing standards.
|
However, as determining the specific qualifications or criteria against which to evaluate the
fitness or eligibility of potential director candidates is necessarily dynamic and an evolving
process, the Board believes that it is not
always in the best interests of the Company or its stockholders to attempt to create an exhaustive
list of such qualifications or criteria. Appropriate flexibility is needed to evaluate all
relevant facts and circumstances in context of the needs of the Board and the Company at a
particular point in time.
The Nominating Committee also considers such other relevant factors as it deems appropriate,
including the current composition of the Board, the balance of management and independent
directors, the need for Audit Committee expertise and the evaluations of other prospective
nominees. In connection with this evaluation, the Nominating Committee determines whether to
interview the prospective nominee, and if warranted, one or more members of the Nominating
Committee, and others as appropriate, interview prospective nominees in person or by telephone.
After completing this evaluation and interview, the Nominating Committee makes a recommendation to
the full Board as to the persons who should be nominated by the Board, and the Board determines the
nominees after considering the recommendation and report of the Nominating Committee.
Other Corporate Governance Matters
All of the members of the Board are independent within the meaning of SEC regulations and the
Nasdaq listing standards, with the exception of Andrew B. Schmitt and Jeffrey J. Reynolds. Mr.
Schmitt and Mr. Reynolds are considered inside directors because of their employment as executives
of the Company.
On November 25, 2003, the Company adopted a Code of Business Conduct and Ethics that applies
to all directors and employees of the Company, including the chief executive officer, chief
financial officer and controller.
8
The Code of Business Conduct and Ethics is available free of
charge on the Companys website under the heading Investor Relations
(
www.laynechristensen.com/investorrelations
).
COMPENSATION DISCUSSION AND ANALYSIS
Objectives of Compensation Program
The objectives of our executive compensation program for the five Named Executive Officers
listed on page 21 (the Executives) are:
|
|
|
to attract and retain top-quality Executives;
|
|
|
|
|
to tie annual and long-term equity incentives to achievement of measurable
corporate, business unit and individual performance objectives; and
|
|
|
|
|
to align the Executives incentives with stockholder value creation.
|
To achieve these objectives, the Compensation Committee (the Committee) implements and
maintains compensation plans that tie a significant portion of Executives overall compensation to
our financial performance. The Committee generally believes that the Companys total compensation
program should be set at, or near, the 50
th
percentile of competitive market companies.
Role of Compensation Consultants
When determining base salaries for fiscal 2008 (which became effective on February 1, 2007),
the Committee reviewed a compensation report prepared by XBS Partners, a third-party consulting
firm retained by the Companys Vice President, Human Resources, John Wright, in fiscal 2007. Mr.
Wright asked XBS Partners to evaluate certain aspects of the Companys Executive compensation
program, including base salary. XBS Partners reviewed data from five different sources for salary
trend analysis (Mercer-U.S. Compensation Planning Survey, Hewitt-Salary Planning Survey, ORC World
Wide, The Conference Board and World at Work Salary Budget Survey). In addition, XBS Partners
compiled actual competitive salary data from published salary surveys based upon job descriptions
and scope of responsibility data. Such sources included:
|
|
|
The Conference Board Top Executive Compensation Report;
|
|
|
|
|
Mercer Benchmark Executive Survey;
|
|
|
|
|
National Executive Compensation Survey (Employers Association Group); and
|
|
|
|
|
Watson Wyatt Top Management.
|
XBS Partners met individually with the Companys Vice President of Human Resources to learn
about our business operations and the job responsibilities of each of the Executives.
In addition, in March 2007, the Committee retained the third-party compensation consulting
firm of Towers Perrin to (i) perform a competitive review and analysis of base salary and other
components of the Companys compensation program, relative to survey market data and the Companys
identified peer group, and (ii) advise the Committee on its annual incentive plan design. Towers
Perrin compiled actual competitive salary data from two sources:
|
|
|
General industry survey data from Towers Perrins 2006 Executive Compensation
Database; and
|
|
|
|
|
Proxy data from peer group companies selected from industries comparable to the
Company.
|
Towers Perrin advised the Committee to place more emphasis on the general industry survey data
when making compensation decisions for the Executive because (i) it provides a large sample of
companies where data can be regressed based on company size; (ii) the Company is a holding company,
involved in many different businesses (including minerals, energy and water) and there are few, if
any, companies of comparable size and industry; and (iii) the Company competes with companies in
the general industry when attracting and recruiting executive talent.
Towers Perrin took direction from the Committee, but also worked with the Companys Vice
President of Human Resources to learn about our business operations and the job responsibilities of
each of the Executives. Towers Perrin also conducted background interviews with the Executives to
obtain additional background information about the business and operations of the Company. Mr.
Schmitt and Mr. Fanska also attended Committee meetings where Towers Perrin was present.
Towers Perrin presented its executive compensation review to the Committee in June 2007. The
Committee reviewed the Towers Perrin report before granting incentive awards to the Executives in
June 2007. The Committee
9
considered the information and recommendations of Towers Perrin, but all
decisions on executive compensation were made solely by the Committee.
Role of the Peer Group
In addition to general industry survey data, Towers Perrin provided the Committee with proxy
data for 14 peer companies. The peer group data provided additional insights regarding competitive
pay data and pay mix. Towers Perrin selected the group of peer companies on the basis of
comparable size and operating activities to the Company; however, all of the peer group companies
were in only one line of business, rather than in multiple lines of business like the Company. All
of the peer group companies had a significant portion of revenues in drilling or drilling-related
businesses. Based on such data, Towers Perrin advised the Committee that the Companys peer group
generally had less fixed pay and more variable pay than the broader general industry survey
companies. The peer group companies were:
|
|
|
|
|
Hecla Mining Co.
|
|
SJW Corp.
|
|
Coeur dAlene Mines Corp.
|
|
Sterling Construction Co. Inc.
|
|
Stillwater Mining Co.
|
|
Insituform Technologies Inc.
|
|
Parker Drilling Co.
|
|
AMCOL International Corp.
|
|
St. Mary Land & Exploration Co.
|
|
Penn Virginia Corp.
|
|
Grey Wolf Inc.
|
|
Unit Corp.
|
|
Cimarex Energy Co.
|
|
Newfield Exploration Co.
|
Role of Executive Officers
Mr. Schmitt submitted written compensation recommendations to the Committee for each of the
Executives, other than himself. Mr. Schmitt based his compensation recommendations on such factors
as the nature and scope of the Executives responsibilities, the achievement of Company, division
and individual goals, and Executive recruitment and retention considerations. Mr. Schmitt
regularly attended meetings of the Committee in 2007 and 2008, but is not a member of the Committee
and does not vote on Committee matters. Mr. Schmitt, however, was not present for certain portions
of Committee meetings, such as when the Committee held executive sessions or discussed his
individual compensation.
Compensation Components
Our compensation program consists of the following components:
Base Salary
. The Committee establishes a base salary for each Executive based on his scope of
responsibilities, taking into account competitive market compensation paid by other companies for
similar positions. The Committee annually reviews base salaries, and makes adjustments from time
to time to realign our salaries with market levels after taking into account individual
performance, responsibilities, experience, autonomy, strategic perspectives and marketability, as
well as the recommendation of the chief executive officer.
Generally, the Committee believes that Executive base salaries should be targeted at, or
slightly above, the 50
th
percentile for executives at competitive market companies in
similar positions and with similar responsibilities. As shown in the table below, the Committee
(i) increased the fiscal 2008 base salaries of Messrs. Schmitt, Fanska, Crooke and Despain by
approximately 4% and of Mr. Aluce by approximately 9%; and (ii) increased the fiscal 2009 base
salaries for Messrs. Schmitt, Fanska, Crooke, Despain and Aluce by approximately 19%, 46%, 38%, 20%
and 22%, respectively, primarily to bring them within a competitive range of the market medians for
their positions.
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Fiscal 2007
|
|
Fiscal 2008
|
|
Fiscal 2009
|
|
Andrew B. Schmitt, President and Chief Executive Officer
|
|
$
|
500,000
|
|
|
$
|
520,000
|
|
|
$
|
620,000
|
|
Jerry W. Fanska, Senior Vice PresidentFinance
|
|
$
|
240,000
|
|
|
$
|
250,000
|
|
|
$
|
365,000
|
|
Steven F. Crooke, Senior Vice PresidentGeneral Counsel
|
|
$
|
215,000
|
|
|
$
|
225,000
|
|
|
$
|
310,000
|
|
Eric R. Despain, Senior Vice President and President,
Mineral Exploration Division
|
|
$
|
240,000
|
|
|
$
|
250,000
|
|
|
$
|
300,000
|
|
Gregory F. Aluce, Senior Vice President
|
|
$
|
205,000
|
|
|
$
|
225,000
|
|
|
$
|
275,000
|
|
When determining fiscal 2008 base salaries in March 2007, the Committee reviewed a
compensation report provided by XBS Partners and also considered the recommendations of Mr. Schmitt
(for Executives other than
10
himself). The Committee increased the base salaries of the Executives
primarily to bring them closer to the market median ranges provided in the XBS Partners
compensation report.
When determining fiscal 2009 base salaries in December 2007, the Committee thoroughly reviewed
and discussed a June 2007 executive compensation report provided by Towers Perrin. The report
indicated that base salaries for all Executives were outside the competitive range of market
medians, except for base salaries compared to the peer group companies. Towers Perrin recommended
that the Committee target the market median of the general industry data, rather than the peer
group data, primarily because the peer companies had only one line of business. Because of the
Companys multiple lines of business and significant growth in the last two years, as well as the
recommendation of Towers Perrin, the Committee determined that the base salary targets of the
Executives should be the market median levels of the general industry data.
The Committee increased Mr. Schmitts fiscal 2009 base salary by 19%, primarily to bring him
closer to the 50
th
percentile of the general industry data and also because of the
Companys growth, strong financial performance and Mr. Schmitts increased scope of
responsibilities.
The Committee increased Mr. Fanskas base salary by 46%, primarily to bring him to the
50
th
percentile of the general industry data and also because of the Companys growth,
strong financial performance and Mr. Fanskas increased scope of responsibilities. The Committee
increased Mr. Crookes base salary by approximately 38% primarily to bring him to the
50
th
percentile of the general industry data and also because of the Companys growth,
financial performance and Mr. Crookes increased scope of responsibilities. The Committee increased
Mr. Despains base salary by 20%, which is slightly above the 50
th
percentile of the
general industry data, primarily because his mineral exploration division has been an earnings
leader for the Company in recent years, and because of the scope of his job responsibilities, which
include extensive international travel. The Committee increased Mr. Aluces base salary by
approximately 22%, which is slightly above the 50
th
percentile of the general industry
data, primarily because of the increased scope of his job responsibilities.
Annual Incentives
.
Targets and Awards for Fiscal 2008
Our Executive Incentive Compensation Plan is intended to provide additional incentives for
Executives to promote the best interests and profitable operation of the Company. Only Executives
Andrew Schmitt, Jerry Fanska and Steven Crooke participated in the Executive Incentive Compensation
Plan in fiscal 2008. Executive Eric Despain participated in the Mineral Exploration Division
Incentive Compensation Plan and Executive Greg Aluce participated in the Water and Wastewater
Infrastructure Group Incentive Compensation Plan, all as described below.
On March 20, 2007, the Board, based on input from the Committee, developed targets for Messrs.
Schmitt Fanska and Crooke based on (i) return of net assets (50% of total incentive compensation
award), and (ii) net income (50% of total incentive compensation award), as follows:
Objective Criteria
|
|
|
|
|
|
|
|
|
Executive
|
|
Return on Net Assets (50%)
|
|
Net Income (50%)
|
Mr. Schmitt, Chief Executive Officer
|
|
|
10
|
%
|
|
$
|
29,486,000
|
|
Mr. Fanska, Chief Financial Officer
|
|
|
10
|
%
|
|
$
|
29,486,000
|
|
Mr. Crooke, General Counsel
|
|
|
10
|
%
|
|
$
|
29,486,000
|
|
In setting the targets, the Board, with input from the Committee, considered information in
the Companys business plans and preliminary recommendations from Mr. Schmitt. Although Towers
Perrin was in the early stages of its work for the Company, as a preliminary step, Towers Perrin
recommended that the Committee change the payout percentages, based on preliminary competitive
market data. As a result, the Committee recommended, and the Board approved, amending the
Executive Incentive Compensation Plan effective as of February 1, 2007, to provide for the payment
of incentive compensation awards based upon the attainment of certain specified goals and
objectives, as follows:
If Mr. Schmitt achieves 100% of his target goals, his incentive award under the plan will be
85% of his base salary. If Mr. Schmitt achieves more than 100% of his target goals, then for each
1% increase above the target goals, his base salary percentage will be increased by 1.5%, but his
base salary percentage cannot exceed 100%. If Mr. Schmitt achieves less than 100% of his target
goals, then for each 1% decrease below the targets, the 85% base salary percentage will be reduced
by 1.0%, but if Mr. Schmitt achieves 80% or less of the target, his base salary percentage will be
zero.
11
If Messrs. Fanska and Crooke achieve 100% of their target goals, their incentive awards under
the plan will be 60% of their base salary. If Messrs. Fanska and Crooke achieve more than 100% of
their target goals, then for each 1% increase above the target goals, their base salary percentages
will be increased by 1.5%, but their base salary percentages cannot exceed 100%. If Messrs. Fanska
and Crooke achieve less than 100% of their target goals, then for each 1% decrease below the
targets, the 60% base salary percentage will be reduced by 1.0%; but if Messrs. Fanska and Crooke
achieve 80% or less of the targets, their base salary percentages will be zero.
Notwithstanding the foregoing, the amount of the incentive compensation award for a fiscal
year for each Executive under the Executive Incentive Compensation Plan may be increased or
decreased in the sole discretion of the Committee (acting on behalf of the Board) by an amount not
greater than one third of the incentive compensation award which would have been determined if 100%
of the target were achieved.
Incentive compensation awards may be paid in the form of cash, common stock or a combination
of both, in the discretion of the Committee (acting on behalf of the Board), and are based on an
Executives performance during the fiscal year as compared to the targets, although Executives may
choose to defer all or a portion of their incentive compensation awards under this plan. This
deferral option is separate from deferrals that may be made under the Companys Key Management
Deferred Compensation Plan described below. If an Executive elects to defer such an award under
this plan, the Executive will not be entitled to receive his deferred amount for six months after
separation from service. In the event an Executives employment with the Company terminates (for
reasons other than retirement, disability or death) said termination being instituted by the
Executive or by the Company for cause, prior to the close of a fiscal year, such Executive shall
not be entitled to any incentive compensation award for that fiscal year.
If an Executive elects to defer such an award and if his employment with the Company
terminates, the Executive will not be entitled to an incentive compensation award for that fiscal
year, unless such termination is by the Company without cause or because of the Executives
retirement, disability or death. In such event, the Executive shall be entitled to an incentive
compensation award, pro rated as of the date of termination.
The payments received by the Executives for fiscal 2008 under the Executive Incentive
Compensation Plan were paid in cash in the following amounts:
Objective Criteria
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Net Assets
|
|
Net Income
|
|
Discretionary Increase
|
|
Total Incentive
|
Executive
|
|
(50%)
|
|
(50%)
|
|
(1/3)
|
|
Award
|
Andrew B. Schmitt, CEO
|
|
$
|
247,591
|
1
|
|
$
|
308,355
|
1
|
|
$
|
125,000
|
|
|
$
|
645,000
|
|
Jerry W. Fanska, CFO
|
|
$
|
84,024
|
|
|
$
|
104,645
|
|
|
$
|
50,000
|
|
|
$
|
238,669
|
|
Steven F. Crooke, General Counsel
|
|
$
|
75,622
|
|
|
$
|
94,180
|
|
|
$
|
45,000
|
|
|
$
|
214,802
|
|
|
|
|
1
|
|
Under the Executive Incentive Compensation Plan, Mr. Schmitts base award cannot exceed
100% of his salary. As a result, the award achieved pursuant to the formulas in the plan was
capped at $520,000.
|
Messrs. Schmitt, Fanska and Crooke achieved approximately 108% of their return on net assets
target, and pursuant to the formulas set forth above, their awards were increased to 95% and 67% of
their base salaries, respectively. Such amounts were then weighted at 50% of their total incentive
compensation award. Messrs. Schmitt, Fanska and Crooke achieved approximately 126% of their net
income target, and pursuant to the formulas set forth above, their awards were increased to 119%
and 84% of their base salaries, respectively. Such amounts were then weighted at 50% of their
total incentive compensation award.
Pursuant to the provisions of the Executive Incentive Compensation Plan and as reflected in
the table above, the awards to the Executives under the Executive Incentive Compensation Plan were
increased by one third at the discretion of the Committee because of the Companys accomplishments
during fiscal 2008, which included a public offering of the Companys common stock, payment of the
Companys revolving bank debt and two significant acquisitions, among other things.
Targets for Fiscal 2009
In January 2008, based on the recommendations of management and Towers Perrin, the Committee
recommended that the Board amend the Executive Incentive Compensation Plan to allow Messrs. Despain
and Aluce to participate in the Plan and to change the method for determining the award amount.
The Committee believed that Messrs. Despain and Aluce should be included in the Executive Incentive
Compensation Plan as part of an overall
12
program to establish both a direct incentive and
accountability for Messrs. Despain and Aluce to efficiently use capital in their business units.
Otherwise, Messrs. Despain and Aluce would have no direct incentive (e.g., no accountability) for
achieving a return on the corporate capital they are allocated for their business units. The
Committee believed, based on competitive market information provided by Towers Perrin, that the
award determination method be changed to provide larger increases in bonus compensation (expressed
as a percentage of base salary) if the Executives exceed established targets and larger decreases
in bonus compensation if the Executives fail to meet established targets. The Board approved the
Committees proposed amendments to the Executive Incentive Compensation Plan effective as of
February 1, 2008.
In setting the targets, the Committee considered information in the Companys business plans,
preliminary recommendations from Mr. Schmitt and the competitive market data and recommendations
provided by Towers Perrin. Towers Perrin noted that the Companys target incentives had a flat
relationship between pay and performance, with relatively low penalties for missing target, but
relatively limited incentive to exceed target. For Messrs. Schmitt, Fanska and Crooke, the
Committee based the annual incentive on the achievement of targeted Company consolidated earnings
before interest and taxes (EBIT). For Messrs. Despain and Aluce, the Committee based the annual
incentive on the achievement of a targeted EBIT for their respective divisions. The Committee set
target EBIT performance based on budget plan performance, believing that it would be difficult for
the Executives to achieve the target without continued strong financial performance by the Company
as a whole and each of its respective divisions. Although they must meet at least 80% of their
respective division EBIT targets, the overall Company EBIT performance threshold (80% of plan) need
not be met for Messrs. Despain and Aluce to receive their individual portion of the bonus.
If Mr. Schmitt achieves 100% of his target goal, his incentive award under the plan will be
80% of his base salary. If Mr. Schmitt achieves more than 100% of his target goal, then for each
1% increase above the target, Mr. Schmitts base salary percentage will be increased by 5% but his
base salary percentage cannot exceed 100%. If Mr. Schmitt achieves less than 100% of his target
goal, then for each 1% decrease below the target, the
80% base salary percentage will be decreased by 2.5%, but if Mr. Schmitt achieves 80% or less
of the target, his base salary percentage will be zero.
For each Executive other than Mr. Schmitt, if he achieves 100% of his target goal, his
incentive award under the plan will be 60% of his base salary. If he achieves more than 100% of
his target goal, then for each 1% increase above the target goal, the Executives base salary will
be increased by 5%, but such base salary percentage cannot exceed 100%. If such Executive achieves
less than 100% of his target goal, then for each 1% decrease below the targets, the 60% base salary
percentage will be decreased by 2.5%; provided, however that if the Executive achieves 80% or less
of the target, his base salary percentage will be zero.
Notwithstanding the foregoing, the amount of the incentive compensation award for a fiscal
year for each Executive under the Executive Incentive Compensation Plan may be increased or
decreased in the sole discretion of the Committee (acting on behalf of the Board) by an amount not
greater than one third of the incentive compensation award.
Equity Compensation
The Committee believes that the long-term performance of its Executives is achieved through
ownership of stock-based awards, such as stock options and restricted stock, which expose
Executives to the risks of downside stock prices and provide an incentive for Executives to build
shareholder value.
2002 Stock Option Plan
The Companys 2002 Stock Option Plan (the 2002 Plan) is intended to provide additional
incentives for key employees to promote the success of the Company and its subsidiaries by allowing
such employees to share in the future growth of the business and to participate in ownership of the
Company. The 2002 Plan provides for both incentive stock option grants and nonqualified stock
option grants, which cannot be exercised until they have vested as a result of the Executives
completion of specified numbers of years of continuous service with the Company.
These option grants give Executives the right to purchase Company stock at a price equal to
its market price on the date the option was granted. Stock options granted under the 2002 Plan
expire 10 years from the date of grant (or in the case of Executives who have the power to vote
more than 10% of Company stock, five years from the date of grant). If an Executives employment is
terminated for any reason, the stock options expire 30 days after the date of termination (but if
the termination is caused by the executives death, the stock options expire 90 days after the date
of death).
13
None of the Executives received an award under the 2002 Plan during fiscal 2008.
2006 Equity Incentive Plan
Awards under the Companys 2006 Equity Incentive Plan (the 2006 Plan) are designed to
encourage Executives to acquire a proprietary and vested interest in the growth and performance of
the Company, as well as to assist the Company in attracting and retaining Executives by providing
them with the opportunity to participate in the success and profitability of the Company. The 2006
Plan permits the grant of stock options, stock appreciation rights, restricted stock, restricted
stock units, performance shares and performance units.
Fiscal 2008 Grants under 2006 Plan
The Committee briefly discussed fiscal 2008 awards of options and restricted stock under the
2006 Plan at its March 2, 2007 meeting. The Committee decided to postpone discussion of possible
awards until Towers Perrin had completed its report and given recommendations to the Committee. On
June 1, 2007, the Committee reviewed the June 2007 executive compensation report prepared by Towers
Perrin and discussed awards of options and restricted stock, and agreed to further discuss awards
at the June 7, 2007 Board meeting.
Stock Options
. On June 7, 2007, the Board, based upon input and recommendations of
the Committee, approved grants of nonqualified stock options under the 2006 Plan to the following
executives for the number of shares of Company common stock set forth opposite the respective
Executives name, at an exercise price equal to the Fair Market Value (as defined in the 2006 Plan)
based on the closing price of the Companys common stock as of June 7, 2007:
|
|
|
|
|
Name of Executive
|
|
Number of Stock Options
|
A.B. Schmitt
|
|
|
35,000
|
|
J.W. Fanska
|
|
|
17,500
|
|
S.F. Crooke
|
|
|
17,500
|
|
The nonqualified stock options granted under the 2006 Plan expire 10 years from the date of
grant. If the Executives employment is terminated for cause, the option will be forfeited as of
the time of the Executives removal. If the Executive resigns or is terminated by the Company
without cause, the Executive may exercise vested options for a period of 30 days following his
termination. If the Executive dies or is disabled, the option may be exercised for a period of
90 days following termination of employment. If the Executive retires, the Executive may exercise
the option for a period of three years following the effective date of the Executives qualified
retirement.
Based on information provided by Towers Perrin, the Committee believed the amount of stock options
granted was reflective of current trends in the marketplace, and would allow the Executives the
opportunity to participate in the future success of the Corporation. Based on the recommendation
of Mr. Schmitt and information provided by Towers Perrin, the Committee believed that Messrs.
Despain and Aluce were adequately compensated through their base salaries, bonuses and restricted
stock grants (described below). As a result, the Committee did not award stock options to Messrs.
Despain or Aluce.
Restricted Stock
. The Board, based upon the recommendation of the Committee, approved
grants of performance-contingent restricted stock under the 2006 Plan to the Executives, as of June
7, 2007, as follows:
|
|
|
|
|
Name of Executive
|
|
Number of Shares of Restricted Stock
|
A.B. Schmitt
|
|
|
15,000
|
|
J.W. Fanska
|
|
|
7,500
|
|
S.F. Crooke
|
|
|
7,500
|
|
E.R. Despain
|
|
|
7,500
|
|
G.F. Aluce
|
|
|
7,500
|
|
The restricted stock vests over a four-year period, with 25% vesting on June 7 of each year
through June 7, 2011. If an Executives position is terminated prior to the vesting date, the
Executive immediately forfeits any and all unvested restricted shares and the full ownership of
such restricted stock reverts back to the Company.
In making the fiscal 2008 awards under the 2006 Plan, the Committee considered information
provided by Towers Perrin regarding competitive market trends, as well as the recommendation of Mr.
Schmitt for all Executives other than himself. The Committee believed the restricted stock grants
would help retain Executives and would be an additional incentive for the Executives to advance the
interests of the Company.
14
Fiscal 2009 Grants under 2006 Plan
In fiscal 2008, Towers Perrin recommended to the Committee that the Company adopt a framework
to make equity grants on an annual basis to certain key employees. The Committee would grant
awards of both stock options and performance-contingent restricted stock in amounts initially
established (but subject to the Committees discretion to modify) on objective long-term incentive
plan targets with 50% of the total long-term incentive target level of award made in stock options
and 50% of the total long-term incentive level of award made in performance-contingent restricted
stock.
Towers Perrin recommended that the stock options vest ratably over three years, while the
performance-contingent restricted stock have a three-year cliff vesting if the Executives achieve
certain preestablished performance metrics. Towers Perrin also recommended that the performance
metrics be tied to the achievement of a corporate return on net assets (RONA) threshold
recommended by the Committee and approved by the Board based on the Companys cost of capital, and
that for the initial 2008 grant the RONA threshold be based solely on the RONA achieved between
February 1, 2010 and January 31, 2011, with future years being based on average RONA over the
entire three-year period beginning on February 1 of the year the performance-contingent restricted
stock is granted.
At a meeting in January 2008, the Committee reviewed the recommended proposals provided by
Towers Perrin and the recommendations of and modifications proposed by management of the Company
(including Mr.
Schmitt). The Committee determined that performance-contingent restricted stock awards should
have a three-year cliff vesting, but should permit an award holder who is retiring (defined as a
termination of all employment after age 60 and after having accrued at least five years of service
with the Company) to receive a pro-rata portion of the restricted stock (depending on the time of
the individuals retirement) if the requisite performance metrics are satisfied.
The Committee also determined that the nonqualified award agreements should contain terms such
that, upon an Executives qualified retirement (defined as a termination of all employment after
age 60 and after having accrued at least five years of service with the Company), all unvested
stock options would become exercisable and would continue to be exercisable until the earlier of
the third anniversary of the Executives retirement or the expiration of the options original
term.
Stock Options
. The Committee recommended, and the Board approved, grants of
nonqualified stock options under the 2006 Plan to the following Executives for the purchase of that
number of shares of Company common stock determined by dividing the Option Long-Term Incentive
Amount set forth opposite the respective Executives name by the Fair Market Value (as defined in
the 2006 Plan) based on the closing price of the Companys common stock as of February 5, 2008:
|
|
|
|
|
Name of Executive
|
|
Option Long-Term Incentive Amount
|
A.B. Schmitt
|
|
$
|
440,000
|
|
J.W. Fanska
|
|
$
|
220,000
|
|
S.F. Crooke
|
|
$
|
162,500
|
|
E.R. Despain
|
|
$
|
97,500
|
|
G.F. Aluce
|
|
$
|
89,500
|
|
The nonqualified stock options granted under the 2006 Plan expire 10 years from the date of
grant. If the Executives employment is terminated for cause, the option will be forfeited as of
the time of the Executives removal. If the Executive resigns or is terminated by the Company
without cause, the Executive may exercise vested options for a period of 30 days following his
termination. If the Executive dies or is disabled, the option may be exercised for a period of
90 days following termination of employment. If the Executive retires, all options become
exercisable and the Executive may exercise the option for the shorter of a three-year period
following the effective date of the Executives qualified retirement or the end of the ten-year
life of the option.
Based on information from Towers Perrin, the Committee believed it was appropriate to decrease
the number of stock options historically offered under the 2006 Plan and introduce
performance-vesting restricted shares. Under new accounting rules, stock options represent fixed
Company costs regardless of the actual value to Executives. In addition, the Committee was
concerned that most stock option recipients see little connection between what they do on a daily
basis and the price of the Companys stock. Option holders are subject to the vagaries of the
stock market and other factors not related to actual Company performance.
15
Restricted Stock
. The Committee recommended, and the Board approved, grants of
performance-contingent restricted stock under the 2006 Plan to the Executives, based in part on the
recommendations of Towers Perrin and Mr. Schmitt (who submitted recommendations for all Executives
other than himself), as of February 5, 2008, as follows:
|
|
|
|
|
Name of Executive
|
|
Amount of Grant
|
A.B. Schmitt
|
|
$
|
440,000
|
|
J.W. Fanska
|
|
$
|
220,000
|
|
S.F. Crooke
|
|
$
|
162,500
|
|
E.R. Despain
|
|
$
|
97,500
|
|
G.F. Aluce
|
|
$
|
89,500
|
|
The number of shares of restricted stock is determined by dividing the dollar amount of the
grant by the closing price of the Companys common stock on the February 5, 2008 grant date. The
restricted stock vests over a three-year period on a cliff basis, with vesting occurring only if
the applicable performance metric(s) for the Companys fiscal year ending January 31, 2011, are
satisfied. If an Executives position is terminated prior to the vesting date, the Executive
immediately forfeits any and all unvested restricted shares and the full ownership of such
restricted stock reverts back to the Company; provided, however, that if an Executive retires
(defined as a termination of all employment after age 60 and after having accrued at least five
years of service with the Company) before the vesting date, he is entitled to receive a pro-rata portion of the restricted
stock (depending on the time of the individuals retirement) if the requisite performance metrics
are satisfied.
In making the fiscal 2009 awards under the 2006 Plan, the Committee believed that the overall
incentive program would focus on achieving planned earnings in the short term, and sustained
earnings over time at a level that provides the return to investors they expect on the capital they
invested in the Company. The Committee set target performance metrics based on budget plan
performance, believing that it would be challenging for the Executives to achieve the target
because of current economic conditions and increased competition in the marketplace.
Layne Christensen Company Water and Wastewater Infrastructure Group Incentive Compensation
Plan.
In fiscal 2008, Executive Greg Aluce participated in the Layne Christensen Company Water and
Wastewater Infrastructure Group Incentive Compensation Plan (the Water Plan). The purpose of the
Water Plan is to provide additional incentives for key eligible employees to promote the best
interests and most profitable operation of the Companys Water Infrastructure Group.
Under the Water Plan, the Company establishes a bonus pool for each District, Region and the
Division (as defined in the Water Plan) in an amount equal to: (i) $0.02 for each $1.00 of Water
Division EBIT generated during such fiscal year to the extent such District, Region or the Division
achieves less than 80% of its respective EBIT benchmark; or (ii) $0.03 for each $1.00 of EBIT
generated during such fiscal year to the extent such District, Region or the Division achieves 80%
to 100% of its respective EBIT benchmark; or (iii) $0.045 for each $1.00 of EBIT generated during
such fiscal year to the extent such District, Region or the Division achieves more than 100%, but
less than 125%, of its respective EBIT benchmark; or (iv) $0.065 for each $1.00 of EBIT generated
during such fiscal year to the extent such District, Region or the Division achieves more than 125%
of its respective EBIT benchmark.
The Committee, in its sole discretion, determines whether to make an award to Mr. Aluce. In
fiscal 2008, the Water Plan bonus pool amount was $4,689,000, of which $225,000 was awarded to Mr.
Aluce. Mr. Aluces bonus was equal to 100% of his base salary and was approximately 4.8% of the
bonus pool accrued for distribution under the Water Plan. In making the award, the Committee
considered the bonus recommendation of Mr. Schmitt and the increased scope of responsibilities of
Mr. Aluce.
Layne Christensen Company Mineral Exploration Division Incentive Compensation Plan
. In fiscal
2008, Executive Eric Despain participated in the Layne Christensen Company Mineral Exploration
Division Incentive Compensation Plan (the Mineral Plan). The purpose of the Mineral Plan is to
provide additional incentives for key eligible employees to promote the best interests and most
profitable operation of the Companys Mineral Exploration Division.
Under the Mineral Plan, the Company establishes a bonus pool; for each District, Region and
the Division (as defined in the Mineral Plan) in an amount equal to: (i) $0.02 for each $1.00 of
Mineral Division EBIT generated during such fiscal year to the extent such District, Region or the
Division achieves less than 80% Mineral Division of its respective EBIT benchmark; or (ii) $0.03
for each $1.00 of EBIT generated during such fiscal year to the extent such District, Region or the
Division achieves 80% to 100% of its respective EBIT benchmark; or (iii)
16
$0.045 for each $1.00 of
EBIT generated during such fiscal year to the extent such District, Region or the Division achieves
more than 100%, but less than 125%, of its respective EBIT benchmark; or (iv) $0.065 for each $1.00
of EBIT generated during such fiscal year to the extent such District, Region or the Division
achieves more than 125% of its respective EBIT benchmark.
The Committee, in its sole discretion, determines whether to make an award to Mr. Despain. In
fiscal 2008, the Mineral Plan bonus pool amount was $6,130,000, of which $250,000 was awarded to
Mr. Despain. Mr. Despains bonus was equal to 100% of his base salary and was approximately 4.1%
of the bonus pool accrued for distribution under the Mineral Plan. In making the award, the
Committee considered the bonus recommendation of Mr. Schmitt and the performance of Mineral
Division, as well as the scope of responsibilities of Mr. Despain, which include worldwide travel.
Benefits
. Our employees who meet minimum service requirements are entitled to receive medical,
dental, life and short-term and long-term disability insurance benefits and may participate in a
capital accumulation plan, as described below. Such benefits are provided equally to all Company
employees, other than where benefits are provided pro rata based on the respective Executives
salary (such as the level of disability insurance coverage).
Capital Accumulation Plan
. The Company has adopted a capital accumulation plan (the Capital
Accumulation Plan). Each of the Companys executive officers, including the Named Executive
Officers, and substantially all other employees of the Company are eligible to participate in the
Capital Accumulation Plan. The Capital Accumulation Plan is a defined contribution plan qualified
under Section 401, including Section 401(k), of the Internal Revenue Code of 1986, as amended (the
Code). The Capital Accumulation Plan provides for two methods of Company contributions, a Company
matching contribution tied to and contingent upon participant deferrals and a Company profit
sharing contribution which is not contingent upon participant deferrals. The amount, if any, of
Company paid contributions, both matching and profit sharing, for each fiscal year under the
Capital Accumulation Plan is determined by the Board of Directors in its discretion. Each eligible
employee meeting certain service requirements and electing to defer a portion of his or her
compensation under the Capital Accumulation Plan participates in the Companys matching
contribution program pursuant to a formula as designated by the Board of Directors. Currently, the
Company makes a matching contribution that is equal to 100% of a participants salary deferrals
that do not exceed 3% of the participants compensation plus 50% of a participants salary
deferrals between 3% and 5% of the participants compensation. This form of matching contribution
qualifies as what is known as a safe harbor matching contribution under the Employee Retirement
Income Security Act of 1974. In addition, each eligible employee meeting certain service
requirements participates in Company profit sharing contributions to the Capital Accumulation Plan
in the proportion his or her eligible compensation bears to the aggregate compensation of the group
participating in the Capital Accumulation Plan. At the option of the Board of Directors, all or any
portion of Company contributions to this plan may be made in the Companys common stock.
Furthermore, each participant can voluntarily contribute, on a pre-tax basis, a portion of his or
her compensation (which cannot exceed $15,000 for participants who are 49 or younger, or $20,000
for participants who are 50 or older, for the calendar year 2007) under the Capital Accumulation
Plan. A participants account will be placed in a trust and invested at the participants direction
in any one or more of a number of available investment options. Each participant may receive the
funds in his or her Capital Accumulation Plan account upon termination of employment. For services
rendered in fiscal 2008, total Company contributions under the Capital Accumulation Plan of $9,060,
$9,023, $9,031, $9,031, and $9,062 accrued for the accounts of Messrs. Schmitt, Fanska, Crooke,
Despain and Aluce, respectively.
Deferred Compensation
. The Companys Key Management Deferred Compensation Plan was designed to
provide additional retirement benefits and income tax deferral opportunities for a select group of
management and highly compensated employees. The plan allows such key executives, including the
Executives, to defer the receipt of up to 25% of base salary and 50% of performance-based awards.
The Company matches contributions to this plan in an amount determined annually by the Committee,
generally based on recommendations from Company management. Currently, the matching contribution is
100% of deferrals up to $15,000. In addition, the Company may make contributions on a discretionary
basis. Company contributions to the plan are subject to a five-year vesting schedule, with 50% of
all such contributions becoming vested after three years of completed plan participation and 100%
of all such contributions becoming vested after five years of completed plan participation. However, Company contributions become fully vested if a participant is involuntarily terminated by
the Company within one year after a change of control of the Company. If a plan participant is not
employed by the Company as of the last day of the plan year other than by reason of his or her
retirement, death or disability, the Company contributions, if any, for such plan year shall be
zero. In the event of an Executives retirement, disability or death, he or she shall be credited
with the Company contribution, if any, for such plan year.
17
The deferred compensation plan is a nonqualified and unfunded plan, and participants have only
an unsecured promise from the Company to pay the amounts when they become due from the general
assets of the Company. The Committee offers this benefit to provide Executives with an opportunity
to save, on a tax deferred basis, amounts in addition to what they can save under the Companys
qualified retirement plans for retirement or future dates. The Committee believes this plan is
important as a retention and recruitment tool because most of the companies with which the Company
competes for executive talent provide a deferral plan for their executives.
Perquisites
. The Company believes its executive compensation program described above is
sufficient for attracting talented executives and that providing large perquisites is neither
necessary nor in the shareholders best interests. Accordingly, none of the executive officers
received any perquisites that have a value in the aggregate in excess of $10,000 during the fiscal
year ended January 31, 2008.
Potential Payments Upon Change of Control, Retirement, Death or Disability
Pursuant to an employment agreement between the Company and Mr. Schmitt dated October 12,
1993, Mr. Schmitt is entitled to a lump sum payment of 24 months salary in the event that his
employment is terminated in connection with a change of control of the Company. Under the 1993
letter agreement, Mr. Schmitt is entitled to (i) 24-months salary continuation after a termination
(other than for cause) and (ii) a lump sum severance payment of equivalent value in the event of a
change of control. The Company has entered into a new Severance Agreement with Mr. Schmitt dated
March 13, 2008 (as described below) that is intended to replace this agreement. However, this
agreement will again become effective if Mr. Schmitts Severance Agreement is terminated.
In addition, the Company has agreed to pay Mr. Schmitt, pursuant to his Supplemental Executive
Retirement Plan (SERP), an annual retirement benefit, beginning six months after Mr. Schmitts
separation from service with the Company, equal to 40% of the average of his total compensation (as
defined in the annual retirement benefit agreement) received during the highest five consecutive
years out of his last ten years of employment, less 60% of his annual primary Social Security
benefit (the Annual Benefit). The Annual Benefit is to be reduced, however, by the annual annuity
equivalent of the value of all funds, including earnings, in the Company funded portion of Mr.
Schmitts Capital Accumulation Plan account as of the date of his retirement (the Annuity
Equivalent). As of January 31, 2008, the Company funded balance in Mr. Schmitts account under
the Capital Accumulation Plan was $118,025. To the extent the Annual Benefit is not satisfied by
the Annuity Equivalent, payments will be made out of the general funds of the Company. If Mr.
Schmitt separates from service prior to age 65, reduced further by multiplying the Annual Benefit
by the percentage (referred to under the Plan as the Early Retirement Reduction Factor and set
forth below in the following table) depending on Mr. Schmitts age at the time of his separation
from service.
|
|
|
|
|
Age at Separation from Service
|
|
Percentage of Annual Benefit
|
55
|
|
|
48.81
|
%
|
56
|
|
|
52.06
|
%
|
57
|
|
|
55.59
|
%
|
58
|
|
|
59.45
|
%
|
59
|
|
|
63.68
|
%
|
60
|
|
|
68.32
|
%
|
61
|
|
|
73.43
|
%
|
62
|
|
|
79.06
|
%
|
63
|
|
|
85.31
|
%
|
64
|
|
|
92.26
|
%
|
Mr. Schmitt is entitled to a disability benefit determined in the same manner as the Annual
Benefit as of the date of termination of his service resulting from total and permanent disability
(the Disability Benefit). The Disability Benefit will also be reduced by the Annuity Equivalent
but is not subject to the Early Retirement Reduction Factor. Mr. Schmitt is deemed to have become
disabled if he (a) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than 3 months under a Company-sponsored
accident and health plan.
Mr. Schmitts surviving spouse, if any, will be entitled to receive a death benefit (the
Death Benefit) upon Mr. Schmitts death which will be equal to the Annual Benefit his surviving
spouse would have received if (i) he had
18
retired at the date of his death and had received an
Annual Benefit in the form of a monthly joint and survivor benefit and (ii) he subsequently died.
The Death Benefit will be reduced by the Annuity Equivalent.
Severance Agreements
On March 13, 2008, the Company entered into severance agreements with Messrs. Schmitt, Fanska,
Crooke and Aluce. The Committee recommended that the Company enter into such severance agreements
because of Board concerns about employee retention and information provided by Towers Perrin
indicating that such severance agreements are normal and customary for senior executives. The
Committee also discussed the economic impact of the severance agreements if severance payments were
triggered. Each of the severance agreements are the same except that Mr. Schmitts severance
agreement reflects that, if his severance agreement is terminated, the severance benefits that Mr.
Schmitt is currently entitled to receive under the 1993 letter agreement (described above) will
again become effective. The severance agreements generally provide:
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If before a change of control, the Company terminates the Executives employment
without cause or if the Company constructively terminates the Executives employment
(i.e., the Executive leaves for good reason), the Executive is entitled to receive
severance benefits that include (i) 24 months of continued base salary, (ii) continued
vesting of equity-based awards and a continued right to exercise outstanding stock
options during this 24-month severance period, (iii) for any performance-based equity
award that is exercisable, payable or becomes vested only if the applicable
performance-based criteria is satisfied, such performance-based award will become
exercisable, payable or become vested at the time of and only if the underlying
performance criteria is satisfied, (iv) for any performance-based stock options that
become exercisable after the end of the 24-month severance period, such stock options
will remain exercisable until the earlier of the original expiration date of the option
or 90 days after the end of the 24 month severance period, (v) continued participation
in the Companys welfare benefit plans (or comparable arrangements) throughout the 24
month severance period, and (vi) payment of any applicable COBRA premiums.
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If the Executives employment is terminated due to death, the Executives estate or
his beneficiaries will be entitled to receive (i) immediate acceleration of the vesting
of the Executives service-based equity awards and the right to exercise the
service-based stock options until the earlier of the original expiration date of the
options or 12 months after the Executives date of death, (ii) for any
performance-based equity award that is exercisable, payable or becomes vested only if
the applicable performance-based criteria is satisfied, such performance-based award
will become exercisable, payable or become vested at the time of and only if the
underlying performance criteria is satisfied, and (iii) for any performance-based stock
option that becomes exercisable due to the satisfaction of the underlying performance
criteria, the continued right to exercise the option until the earlier of the options
original expiration date or 12 months after the Executives date of death.
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If the Executives employment is terminated due to disability, the Executive will be
entitled to (i) payment of a lump sum disability benefit equal to 12 months base
salary, (ii) immediate acceleration of the vesting of his service-based equity awards
and a continuation of his right to exercise any service-based stock options for a
period of 12 months after the termination, (iii) for any performance-based equity award
that is exercisable, payable or becomes vested only if the applicable performance-based
criteria is satisfied, such performance-based award will become exercisable, payable or
become vested at the time of and only if the underlying performance criteria is
satisfied, and (iv) for any performance-based stock options that have become
exercisable due to the satisfaction of the underlying performance criteria, the
continued right to exercise the options until the earlier of the options original
expiration date or 12 months after the Executives termination.
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Upon a change of control of the Company, all of the Executives equity awards will
become immediately vested on the effective date of the change. Following a change of
control of the Company and for a three-year period following the change of control, the
successor Company is obligated to both (i) continue to employ the Executive in a
substantially similar position (at an equal or greater base salary as before the change
of control) and (ii) provide the Executive with certain welfare benefits and bonus
compensation opportunities similar to those of other similarly situated employees.
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If the Executives employment is terminated by the Company without cause or is
constructively terminated (i.e., the Executive leaves for good reason) during the
three-year period following a change of control of the Company, he is entitled to:
|
19
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A special lump-sum severance payment equal to the present value of the remaining
base salary he would receive if he remained an employee until the later of the end
of the third anniversary of the change of control or the second anniversary of his
termination date;
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Coverage under all employee benefit plans that covered him prior to termination
until the later of the end of the third anniversary of the change of control or the
second anniversary of his termination date; and
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If any payments made pursuant to the Severance Agreement are subject to the
Internal Revenue Codes penalty tax provisions for excessive golden parachute
payments, then the Company will reimburse (on an after tax basis) the Employee for
the amount of any such penalty tax.
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Generally, all severance payments under the agreements will begin following the
Executives termination of employment. However, as is provided for in the Severance
Agreements, certain delays in payment timing may occur in order to comply with Section
409A of the Internal Revenue Code.
|
Adjustments to Compensation Plan
The Company has no formal policy on recapturing salary or incentive awards (equity or cash)
granted to an Executive, in the event that the Company were to have to restate its financial
statements (whether arising from conduct or actions of the Executive, or otherwise). However, the
discretion retained by the Committee to make adjustments in all types of compensation, permits it
to decrease an Executives compensation under such circumstances if such compensation has not
already been paid or become final. There is currently no procedure to recover (claw back) an
element of compensation that has been paid and become final. To date, the Company has never been
required to restate its financial statements.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed with management the Compensation
Discussion and Analysis included in this proxy statement beginning at page 9.
Based on the review and discussion with management, the Compensation Committee recommended to
the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy
Statement for the Companys 2008 Annual Meeting of Stockholders and be incorporated by reference
into the Companys Annual Report on Form 10-K for the fiscal year ended January 31, 2008.
Respectfully submitted by the members of the Compensation Committee of the Board of Directors:
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Anthony B. Helfet, Chairman
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David A.B. Brown
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Nelson Obus
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth for the fiscal years ended January 31, 2008, 2007 and 2006,
respectively, the compensation of the Companys chief executive officer and of each of the
Companys four other most highly compensated executive officers whose remuneration for the fiscal
year ended January 31, 2008, exceeded $100,000 for services to the Company and its subsidiaries in
all capacities (collectively, the Named Executive Officers):
20
Summary Compensation Table
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Change in
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Pension
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Non-Equity
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Value and
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Incentive
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Nonqualified
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Plan
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Compen-
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All Other
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Stock
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Option
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Compen-
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sation
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Compen-
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Fiscal
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Salary
(1)
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Bonus
|
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Awards
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Awards
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sation
(2)
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Earnings
|
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sation
(3)
(4)
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Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
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($)
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($)
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($)
|
|
($)
|
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($)
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($)
|
Andrew B. Schmitt
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2008
|
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$
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519,770
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|
|
|
|
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$
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633,900
|
|
|
$
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728,000
|
|
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$
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645,000
|
|
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$
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182,030
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$
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26,428
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|
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$
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2,735,128
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President, Chief Executive
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2007
|
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484,423
|
|
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|
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887,600
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386,203
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277,771
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12,461
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2,048,458
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Officer and Director
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2006
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425,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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203,900
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n/a
|
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11,023
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639,923
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|
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Jerry W. Fanska
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2008
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249,885
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316,950
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364,000
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238,669
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26,529
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1,196,033
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Senior Vice President
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2007
|
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|
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239,847
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|
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163,380
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30,536
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433,701
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Finance and Treasurer
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2006
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212,000
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|
|
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|
|
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|
|
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410,200
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78,463
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n/a
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10,330
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710,993
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|
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Steven F. Crooke
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2008
|
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224,885
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|
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|
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316,950
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|
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364,000
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|
|
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214,802
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25,100
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|
|
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1,145,737
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Senior Vice President
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2007
|
|
|
|
214,884
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|
|
|
|
|
|
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|
|
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|
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146,288
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|
|
|
|
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25,638
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|
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386,810
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General Counsel and Secretary
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2006
|
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|
|
197,173
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|
|
|
|
|
|
|
|
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|
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410,200
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|
|
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61,238
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|
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n/a
|
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|
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9,117
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677,728
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Eric R. Despain
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2008
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249,885
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316,950
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|
|
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250,000
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26,346
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843,181
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Senior Vice President
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2007
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|
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239,847
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54,088
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(5)
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187,412
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27,193
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508,540
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2006
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220,000
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410,200
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47,220
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n/a
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10,412
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687,832
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Gregory F. Aluce
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2008
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224,770
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316,950
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|
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225,000
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25,156
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791,876
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Senior Vice President
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2007
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204,885
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|
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156,319
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25,036
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|
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386,240
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2006
|
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190,000
|
|
|
|
|
|
|
|
|
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410,200
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|
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8,438
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|
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n/a
|
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8,994
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|
|
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617,632
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|
|
|
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(1)
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Reflects salary earned for the fiscal years ended January 31, 2008, 2007 and 2006,
respectively. The salary amounts in 2008 for Messrs. Schmitt, Fanska, Crooke, Despain and
Aluce include amounts deferred under the Companys Deferred Compensation Plan of $15,046,
$62,472, $15,000, $15,000 and $15,000, respectively. The salary amounts in 2007 for Messrs.
Schmitt, Fanska, Crooke, Despain and Aluce include amounts deferred under the Companys
Deferred Compensation Plan of $1,154, $55,385, $16,154, $21,154 and $16,154, respectively.
All amounts deferred are also reflected in the Nonqualified Deferred Compensation table
appearing on page 24 in this Proxy Statement.
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(2)
|
|
Reflects incentive compensation earned for the fiscal years ended January 31, 2008, 2007 and
2006, respectively. The incentive amounts in 2008 for Messrs. Fanska and Aluce include
amounts deferred under the Companys Deferred Compensation Plan of $119,335 and $26,150,
respectively. The incentive amounts in 2007 for Messrs. Fanska and Aluce include amounts
deferred under the Companys Deferred Compensation Plan of $80,958 and $19,202, respectively.
All amounts deferred are also reflected in the Nonqualified Deferred Compensation table
appearing on page 24 in this Proxy Statement. The incentive amounts in 2007 and 2006 for
Messrs. Schmitt, Fanska, Crooke, Despain and Aluce also include incentive compensation awarded
in connection with the sale of certain non-strategic assets, which were completed in fiscal
2007 and 2006, in the amounts of $3,900, $1,463, $1,238, $1,500 and $1,313, respectively, in
each year.
|
|
(3)
|
|
Excludes perquisites and other benefits, unless the aggregate amount of such compensation
exceeds $10,000.
|
|
(4)
|
|
All Other Compensation for the fiscal year ended January 31, 2008, includes Layne Christensen
contributions in the amounts of $9,060, $9,023, $9,031, $9,031 and $9,062, which accrued
during such fiscal year for the accounts of Messrs. Schmitt, Fanska, Crooke, Despain and
Aluce, respectively, under the Companys Capital Accumulation Plan; and the cost of term life
insurance paid by the Company for the benefit of Messrs. Schmitt, Fanska, Crooke, Despain and
Aluce in the amounts of $2,322, $2,313, $1,069, $2,316 and $1,095, respectively; and Company
matching contributions to the accounts of Messrs. Schmitt, Fanska, Crooke, Despain and Aluce
under the Companys Deferred Compensation Plan in the amount of $15,046, $15,192, $15,000,
$15,000 and $15,000, respectively.
|
|
|
|
All Other Compensation for the fiscal year ended January 31, 2007, includes Layne
Christensen contributions in the amounts of $8,985, $8,702, $8,800, $8,815 and $7,887,
which accrued during such
|
21
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|
|
|
|
fiscal year for the accounts of Messrs. Schmitt, Fanska, Crooke, Despain and Aluce,
respectively, under the Companys Capital Accumulation Plan; the cost of term life
insurance paid by the Company for the benefit of Messrs. Schmitt, Fanska, Crooke,
Despain and Aluce in the amounts of $2,322, $2,219, $684, $2,224 and $995, respectively;
and Company matching contributions to the accounts of Messrs. Schmitt, Fanska, Crooke,
Despain and Aluce under the Companys Deferred Compensation Plan of $1,154, $19,615,
$16,154, $16,154 and $16,154, respectively.
|
|
|
|
All Other Compensation for the fiscal year ended January 31, 2006, includes Layne
Christensen contributions in the amounts of $8,400, $8,400, $8,508, $8,400, and $8,400,
which accrued during such fiscal year for the accounts of Messrs. Schmitt, Fanska,
Crooke, Despain and Aluce, respectively, under the Companys Capital Accumulation Plan;
the cost of term life insurance paid by the Company for the benefit of Messrs. Schmitt,
Fanska, Crooke, Despain and Aluce in the amounts of $2,623, $1,930, $609, $2,012 and
$594, respectively.
|
|
(5)
|
|
Due to the extraordinary performance of the Minerals Division, Mr. Despain received a
discretionary bonus for fiscal 2007 in the amount of $54,088 in the form of a company
contribution to Mr. Despains deferred compensation account. Since this contribution was not
made until fiscal 2008, it is reflected in the Nonqualified Deferred Compensation Table on
page 24 under the Registrant Contributions in Last Fiscal Year column.
|
Grants of Plan-Based Awards During Fiscal 2008
The following table sets forth information with respect to each Named Executive Officer
concerning grants during the fiscal year ended January 31, 2008, of awards under both the Companys
equity and non-equity plans.
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All Other
|
|
All Other
|
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|
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Stock
|
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Option
|
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Awards:
|
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Awards:
|
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Exercise
|
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|
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Number of
|
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Number of
|
|
or Base
|
|
|
|
|
|
|
Payouts Under Non-Equity Incentive
|
|
Estimated Future Payouts Under
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
|
|
|
|
|
Plan Awards
(1)
|
|
Equity Incentive Plan Awards
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
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Threshold
|
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Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
Andrew B. Schmitt
|
|
|
06/07/2007
|
|
|
$
|
353,600
|
|
|
$
|
442,000
|
|
|
$
|
667,333
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
15,000
|
|
|
|
35,000
|
|
|
$
|
42.26
|
|
Jerry W. Fanska
|
|
|
06/07/2007
|
|
|
|
120,000
|
|
|
|
150,000
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
17,500
|
|
|
$
|
42.26
|
|
Steven F. Crooke
|
|
|
06/07/2007
|
|
|
|
108,000
|
|
|
|
135,000
|
|
|
|
270,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
17,500
|
|
|
$
|
42.26
|
|
Eric R. Despain
|
|
|
06/07/2007
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
Gregory F. Aluce
|
|
|
06/07/2007
|
|
|
|
|
|
|
|
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
There are no estimated future payouts under the Companys non-equity incentive plans for
awards granted during the fiscal year ended January 31, 2008. All payouts under the Companys
non-equity incentive plans for awards granted during fiscal 2008 were made on April 11, 2008
and are reported in the Non-Equity Incentive Plan Compensation column in the Summary
Compensation Table, which appears on page 21 of this Proxy Statement. The amounts reported
under the Threshold, Target and Maximum columns in this table are the possible incentive
compensation awards calculated in accordance with the provisions set forth in the incentive
compensation plan applicable to each Named Executive Officer. The Threshold column reports
the awards that would have been paid if 80% of the performance targets were met. If less than
80% of a performance target is met, no incentive award is paid with respect to that target.
The Target column reports the awards that would have been paid if 100% of the performance
targets were met and the Maximum column reports the maximum awards available under the plan
regardless of the amount by which the performance targets are exceeded. The calculation of
the payouts actually received and reported in the Summary Compensation Table are explained in
detail in the Compensation Discussion and Analysis appearing on page 9 of this Proxy
Statement.
|
Outstanding Equity Awards at Fiscal Year-End
The following table lists all outstanding equity awards held by our Named Executive Officers
as of January 31, 2008.
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Market Value
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
or Payout
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Number
|
|
Market
|
|
Number of
|
|
Value of
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
Value of
|
|
Unearned
|
|
Unearned
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
|
or Units
|
|
Shares or
|
|
Shares,
|
|
Shares, Units
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
Units of
|
|
Units or
|
|
or Other
|
|
|
Unexercised
|
|
Unexpired
|
|
Unexercised
|
|
Option
|
|
Option
|
|
that Have
|
|
Stock that
|
|
Other Rights
|
|
Rights that
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Not
|
|
Have Not
|
|
that Have
|
|
Have Not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
(6)
|
|
Not
Vested (#)
|
|
Vested ($)
|
Andrew B. Schmitt
|
|
|
33,750
|
(1)
|
|
|
11,250
|
(1)
|
|
|
|
|
|
$
|
16.65
|
|
|
|
06/28/2014
|
|
|
|
15,000
|
|
|
$
|
553,500
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
(2)
|
|
|
52,500
|
(2)
|
|
|
|
|
|
$
|
29.29
|
|
|
|
06/08/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
35,000
|
(3)
|
|
|
|
|
|
$
|
42.26
|
|
|
|
06/07/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry W. Fanska
|
|
|
5,000
|
(1)
|
|
|
5,000
|
(1)
|
|
|
|
|
|
$
|
16.65
|
|
|
|
06/28/2014
|
|
|
|
7,500
|
|
|
$
|
276,750
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
(4)
|
|
|
17,500
|
(4)
|
|
|
|
|
|
$
|
27.87
|
|
|
|
01/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
17,500
|
(3)
|
|
|
|
|
|
$
|
42.26
|
|
|
|
06/07/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven F. Crooke
|
|
|
|
(1)
|
|
|
5,000
|
(1)
|
|
|
|
|
|
$
|
16.65
|
|
|
|
06/28/2014
|
|
|
|
7,500
|
|
|
$
|
276,750
|
|
|
|
|
|
|
|
|
|
|
|
|
8,750
|
(4)
|
|
|
17,500
|
(4)
|
|
|
|
|
|
$
|
27.87
|
|
|
|
01/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
17,500
|
(3)
|
|
|
|
|
|
$
|
42.26
|
|
|
|
06/07/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric R. Despain
|
|
|
15,000
|
(1)
|
|
|
5,000
|
(1)
|
|
|
|
|
|
$
|
16.65
|
|
|
|
06/28/2014
|
|
|
|
7,500
|
|
|
$
|
276,750
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
(4)
|
|
|
17,500
|
(4)
|
|
|
|
|
|
$
|
27.87
|
|
|
|
01/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory F. Aluce
|
|
|
24,875
|
(5)
|
|
|
|
(5)
|
|
|
|
|
|
$
|
5.25
|
|
|
|
04/20/2009
|
|
|
|
7,500
|
|
|
$
|
276,750
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(1)
|
|
|
5,000
|
(1)
|
|
|
|
|
|
$
|
16.65
|
|
|
|
06/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
(4)
|
|
|
17,500
|
(4)
|
|
|
|
|
|
$
|
27.87
|
|
|
|
01/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The options vest in 4 equal annual installments on June 28
th
of each year. If
they have not yet been exercised, the options in the grant are currently 75% vested and 25%
unvested.
|
|
(2)
|
|
The options vest in 4 equal annual installments on June 8
th
of each year. If they
have not yet been exercised, the options in the grant are currently 25% vested and 75%
unvested.
|
|
(3)
|
|
The options vest in 4 equal annual installments on June 7
th
of each year. All of
the options in the grant are currently unvested.
|
|
(4)
|
|
The options vest in 4 equal annual installments on January 20
th
of each year. If
they have not yet been exercised, the options in the grant are currently 50% vested and 50%
unvested.
|
|
(5)
|
|
The options are fully vested and exercisable.
|
|
(6)
|
|
The market value of the shares of restricted stock that have not vested was calculated by
multiplying $36.90, which was the closing market price of the Companys common stock on
January 31, 2008, by the number of unvested shares.
|
Option Exercises and Stock Vested
The following table sets forth information with respect to each Named Executive Officer
concerning the exercise of options and the vesting of stock during the fiscal year ended January
31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
Number of Shares
|
|
Value Realized on Exercise
(1)
|
|
Acquired on Vesting
|
|
Value Realized on
|
Name
|
|
Acquired on Exercise (#)
|
|
($)
|
|
(#)
|
|
Vesting ($)
|
Andrew B. Schmitt
|
|
|
87,500
|
|
|
$
|
3,266,829
|
|
|
|
|
|
|
|
|
|
Jerry W. Fanska
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven F. Crooke
|
|
|
13,750
|
|
|
$
|
243,157
|
|
|
|
|
|
|
|
|
|
Eric R. Despain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory F. Aluce
|
|
|
23,983
|
|
|
$
|
1,003,697
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The value realized on exercise was calculated using the closing price of the Companys common
stock on the date of exercise multiplied by the number of shares exercised and then
subtracting the exercise price.
|
23
Pension Benefits
The following table shows the number of years of credited service earned through December 31,
2007, and the actuarial present value of the accumulated benefits for Mr. Andrew B. Schmitt, our
President and Chief Executive Officer, under his SERP. The accumulated benefit present values were
determined using a discount rate of 6.49% and mortality assumptions based on RP2000 (made with
white collar adjustment) mortality tables. The values shown are estimates only. The actual
benefit payable will be determined upon Mr. Schmitts retirement or termination from the Company.
The terms of Mr. Schmitts SERP are set forth in detail in the compensation discussion and analysis
included in this Proxy Statement under the heading Potential Payments Upon Change of Control,
Retirement, Death or Disability. Mr. Schmitt is the only Named Executive Officer that is entitled
to receive any such pension benefit. No payments were made under the SERP to Mr. Schmitt during
the last fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
Present Value of
|
|
Payments During Last
|
Name
|
|
Plan Name
|
|
Credited Service (#)
|
|
Accumulated Benefit ($)
|
|
Fiscal Year ($)
|
Andrew B. Schmitt
|
|
Supplemental Executive Retirement Plan
|
|
|
14
|
|
|
$
|
1,721,997
|
|
|
$
|
0
|
|
Nonqualified Deferred Compensation
The following table sets forth the contributions made by our Named Executive Officers and the
earnings accrued on all such contributions under our Key Management Deferred Compensation Plan
during the fiscal year ended January 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
|
|
|
|
|
|
|
Contributions in
|
|
Contributions in
|
|
Earnings in
|
|
|
|
|
|
Aggregate
|
|
|
Last Fiscal
|
|
Last Fiscal
|
|
Last Fiscal
|
|
Aggregate
|
|
Balance at Last
|
|
|
Year
(1)
|
|
Year
(2)
|
|
Year
(3)
|
|
Withdrawals/Distributions
|
|
Fiscal Year End
(4)
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Andrew B. Schmitt
|
|
$
|
15,046
|
|
|
$
|
15,046
|
|
|
$
|
790
|
|
|
|
|
|
|
$
|
3,193
|
|
Jerry W. Fanska
|
|
|
143,430
|
|
|
|
15,192
|
|
|
|
95
|
|
|
|
|
|
|
|
239,806
|
|
Steven F. Crooke
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
(2,323
|
)
|
|
|
|
|
|
|
64,719
|
|
Eric R. Despain
|
|
|
15,000
|
|
|
|
69,088
|
|
|
|
1,859
|
|
|
|
|
|
|
|
124,979
|
|
Gregory F. Aluce
|
|
|
34,202
|
|
|
|
15,000
|
|
|
|
(4,395
|
)
|
|
|
|
|
|
|
80,453
|
|
|
|
|
(1)
|
|
The salary deferrals reported in this column are included in the salary of each executive for
fiscal 2008 as indicated in footnote (1) to the Summary Compensation Table. However, the
incentive compensation deferrals reported in this column are included in the incentive
compensation of each executive for fiscal 2007 as indicated in footnote (2) to the Summary
Compensation Table, since, due to the timing of the payments, they are not credited to the
account of the executive until the succeeding fiscal year.
|
|
(2)
|
|
The amounts reported in this column are included in either the All Other Compensation column
or the Bonus column for each executive as indicated in footnotes (4) and (5) to the Summary
Compensation Table.
|
|
(3)
|
|
The earnings reporting in this column are not included in the Summary Compensation Table as
they are not above-market or preferential.
|
|
(4)
|
|
Includes amounts reported as salary in the Summary Compensation Table for fiscal 2008 of
$15,046, $62,472, $15,000, $15,000 and $15,000 for Messrs. Schmitt, Fanska, Crooke, Despain
and Aluce, respectively, and amounts reported as salary in the Summary Compensation Table for
fiscal 2007 of $1,154, $55,385, $16,154, $21,154 and $16,154 for Messrs. Schmitt, Fanska,
Crooke, Despain and Aluce, respectively. Also includes amounts reported as either incentive
compensation or bonus in the Summary Compensation Table for fiscal 2007 of $80,958, $54,088
and $19,202 for Messrs. Fanska, Despain and Aluce, respectively.
|
Equity Compensation Plan Information
The following table provides information as of January 31, 2008, with respect to shares of the
Companys common stock that have been authorized for issuance under the existing equity
compensation plans, including the Companys 2006 Equity Plan and 2002 Option Plan.
The table does not include information with respect to shares subject to outstanding options
granted under equity compensation plans that are no longer in effect. Footnote 5 to the table sets
forth the total number of shares of
24
the Companys common stock issuable upon the exercise of options under expired plans as of January
31, 2008, and the weighted average exercise price of those options. No additional options may be
granted under such plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
|
|
|
|
remaining available for
|
|
|
Number of securities to
|
|
Weighted-average
|
|
future issuance under equity
|
|
|
be issued upon exercise
|
|
exercise price of
|
|
compensation plans
|
|
|
of outstanding options,
|
|
outstanding options,
|
|
(excluding securities
|
Plan Category
|
|
warrants and rights
|
|
warrants and rights
|
|
reflected in column (a))
|
|
|
(a)
|
|
(b)
|
|
(c)
|
Equity compensation
plans approved by
security holders
|
|
|
665,250
|
(1)
|
|
$
|
26.604
|
|
|
|
335,887
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved
by security holders
(3)
|
|
|
0
|
|
|
|
N/A
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
665,250
|
(5)
|
|
|
|
|
|
|
335,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Shares issuable pursuant to outstanding options under the 2006 Equity Plan and
the 2002 Option Plan.
|
|
(2)
|
|
Represents 332,137 shares of Company common stock which may be issued pursuant
to future awards under the 2006 Equity Plan and 3,750 shares of Company common stock
which may be issued pursuant to future awards under the 2002 Option Plan.
|
|
(3)
|
|
The equity compensation plans not approved by security holders include the
Companys Executive Incentive Compensation Plan (the Executive IC Plan), the District
Incentive Compensation Plan (the District IC Plan), the Corporate Staff Incentive
Compensation Plan (the Corporate IC Plan), the Water Infrastructure Group Incentive
Compensation Plan (the Water IC Plan) and the Mineral Exploration Division Incentive
Compensation Plan (the Mineral IC Plan).
|
|
(4)
|
|
The number of shares issuable pursuant to equity compensation plans not
approved by security holders is not presently determinable, as explained below under
Equity Compensation Plans not Approved by Security Holders.
|
|
(5)
|
|
The table does not include information for equity compensation plans that have
expired. The Companys 1992 Option Plan expired in May 2002. As of January 31, 2008, a
total of 24,875 shares of Company common stock were issuable upon the exercise of
outstanding options under the expired 1992 Option Plan. The weighted average exercise
price of those options is $5.25 per share. No additional options may be granted under
the 1992 Option Plan. The Companys 1996 Option Plan expired in May 2006. As of
January 31, 2008, a total of 159,825 shares of Company common stock were issuable upon
the exercise of outstanding options under the expired 1996 Option Plan. The weighted
average exercise price of those option is $18.955 per share. No additional options may
be granted under the 1996 Option Plan.
|
Equity Compensation Plans not Approved by Security Holders
The Executive IC Plan, the District IC Plan, the Corporate IC Plan, the Water IC Plan and the
Mineral IC Plan (collectively, the IC Plans) have each been adopted by the Board of Directors of
the Company. The Executive IC Plan and the Corporate IC Plan are each incentive compensation plans
that provide for an annual bonus equal to a certain percentage of a participants base salary to be
paid to the participants upon the attainment of certain financial and other goals, which are
adopted and approved by the Board of Directors for each fiscal year. The District IC Plan was
replaced by the Water IC Plan and the Mineral IC Plan for the Water Infrastructure and Mineral
Exploration Divisions. Both plans provide for a bonus pool which is divided among the participants
as determined by management of the division. The size of the bonus pool is determined based on the
attainment of certain financial and other goals. The IC Plans differ in the eligible participants,
the calculation of the annual bonuses, the goals, and the percentages of a participants salary
paid as an award. No shares of Company common stock have been authorized for future issuance under
the IC Plans and no options, warrants or rights may be granted under the IC Plans. The IC Plans
each provide that all or part of an employees incentive compensation under the IC Plans may, at
the discretion of the Board of Directors, be paid in either cash or shares of the Companys common
stock, which may be either restricted or unrestricted and may consist of authorized but unissued
shares of common stock or shares of
25
common stock reacquired by the Company on the open market. Prior to the payment of any
incentive compensation under the IC Plans in the form of shares of the Companys common stock, the
Board of Directors must authorize the issuance of such shares.
OWNERSHIP OF LAYNE CHRISTENSEN COMMON STOCK
The following table sets forth certain information as of March 31, 2008, except as otherwise
provided, regarding the beneficial ownership of Layne Christensen common stock by each person known
to the Board of Directors to own beneficially 5% or more of the Companys common stock, by each
director or nominee for director of the Company, by each Named Executive Officer, and by all
directors and executive officers of the Company as a group. All information with respect to
beneficial ownership has been furnished by the respective directors, officers or 5% or more
stockholders, as the case may be.
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
Nature of
|
|
Percentage of
|
|
|
Beneficial
|
|
Shares
|
Name
|
|
Ownership
(1)
|
|
Outstanding
(1)
|
Neuberger Berman Inc.
(2)
|
|
|
1,499,611
|
|
|
|
7.8
|
%
|
Keeley Asset Management Corp.
(3)
|
|
|
1,257,500
|
|
|
|
6.6
|
%
|
Invesco Ltd.
(4)
|
|
|
1,238,774
|
|
|
|
6.5
|
%
|
Jeffrey J. Reynolds
|
|
|
442,355
|
(5)
|
|
|
2.3
|
%
|
Andrew B. Schmitt
|
|
|
199,821
|
(5)
|
|
|
1.0
|
%
|
Jerry W. Fanska
|
|
|
36,160
|
(5)
|
|
|
*
|
|
Steven F. Crooke
|
|
|
20,800
|
(5)
|
|
|
*
|
|
Eric R. Despain
|
|
|
75,730
|
(5)
|
|
|
*
|
|
Gregory F. Aluce
|
|
|
88,125
|
(5)
|
|
|
*
|
|
Nelson Obus
(6)
|
|
|
110,637
|
|
|
|
*
|
|
Donald K. Miller
|
|
|
49,531
|
(7)
|
|
|
*
|
|
J. Samuel Butler
|
|
|
9,947
|
(7)
|
|
|
*
|
|
Anthony B. Helfet
|
|
|
9,947
|
(7)
|
|
|
*
|
|
David A. B. Brown
|
|
|
15,775
|
(7)
|
|
|
*
|
|
All directors and executive officers as a group (11 persons)
|
|
|
1,058,828
|
(8)
|
|
|
5.5
|
%
|
|
|
|
*
|
|
Less than 1%
|
|
(1)
|
|
Beneficial ownership is determined in accordance with the rules of the Securities and
Exchange Commission which generally attribute beneficial ownership of securities to persons
who possess sole or shared voting power and/or investment power with respect to those
securities and includes shares of common stock issuable pursuant to the exercise of stock
options exercisable within 60 days of March 31, 2008. Unless otherwise indicated, the persons
or entities identified in this table have sole voting and investment power with respect to all
shares shown as beneficially owned by them. Percentage ownership calculations are based on
19,161,452 shares of common stock outstanding plus 249,875 options exercisable within 60 days
of March 31, 2008, where said options are considered deemed shares attributed to a given
beneficial owner.
|
|
(2)
|
|
The ownership reported is based on a Schedule 13G filed with the Securities and Exchange
Commission on February 12, 2008, by Neuberger Berman Inc., on behalf of itself and the other
members of its group, including Neuberger Berman, LLC, Neuberger Berman Management Inc. and
Neuberger Berman Equity Funds. Neuberger Berman, LLC is deemed to be a beneficial owner of
the Companys stock since it has shared power to make decisions whether to retain or dispose,
and in some cases the sole power to vote, the securities of many unrelated clients. Neuberger
Berman, LLC does not, however, have any economic interest in the securities of those clients.
Neuberger Berman, LLC and Neuberger Berman Management Inc. are deemed to be beneficial owners
of the Companys stock since they both have shared power to make decisions whether to retain
or dispose and vote the securities. Neuberger Berman, LLC and Neuberger Berman Management
Inc. serve as a sub-advisor and investment manager, respectively, of Neuberger Bermans
various Mutual Funds which hold such shares in the ordinary course of their business and not
with the purpose nor with the effect of changing or influencing the control of the issuer.
The holdings of Lehman Brothers Asset Management LLC, an affiliate of Neuberger Berman, LLC,
are also aggregated to comprise the holdings referenced herein. Neuberger Berman Inc. filed
the Schedule 13G since it owns 100% of both
|
26
|
|
|
|
|
Neuberger Berman, LLC and Neuberger Berman Management Inc., and is affiliated with Lehman
Brothers Asset Management LLC. The principal business address of Neuberger Berman Inc. is
605 Third Avenue, New York, New York 10158.
|
|
(3)
|
|
The ownership reported is based on a Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2008, by Keeley Asset Management Corp. and Keeley Small Cap Value
Fund, a series of Keeley Funds, Inc. The principal business address of both of these entities
is 401 South LaSalle Street, Chicago, Illinois 60605.
|
|
(4)
|
|
The ownership reported is based on a Schedule 13G filed with the Securities and Exchange
Commission on February 13, 2008, by Invesco Ltd. on behalf of itself and its subsidiaries,
PowerShares Capital Management LLC and Invesco National Trust Company. The principal business
address of these entities is 1360 Peachtree Street NE, Atlanta, Georgia 30309.
|
|
(5)
|
|
Includes options for the purchase of 51,250 shares, 28,750 shares, 22,250 shares, 8,750
shares, 32,500 shares and 57,375 shares of the Companys common stock exercisable within 60
days of March 31, 2008, granted to Messrs. Schmitt, Reynolds, Fanska, Crooke, Despain and
Aluce, respectively. Also includes 15,000 shares of restricted stock of the Company held by
Mr. Schmitt, and 7,500 shares of restricted stock of the Company held by each of Messrs.
Fanska, Crooke, Despain and Aluce, all of which vest 25% per year beginning on June 7, 2008.
Also includes 12,321, 6,160, 4,550, 2,730 and 2,506 shares of restricted stock of the Company
held by Messrs. Schmitt, Fanska, Crooke, Despain and Aluce, respectively, all of which vest at
the end of a three-year period, provided that the Company meets certain performance targets
during that period. Also includes 7,537 shares of common stock held indirectly by Mr. Aluce
through his 401(k) account.
|
|
(6)
|
|
Mr. Obus is president of Wynnefield Capital, Inc. and a managing member of Wynnefield Capital
Management, LLC. Both companies have indirect beneficial ownership in securities held in the
name of Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P.
I, Wynnefield Small Cap Value Offshore Fund, Ltd., Channel Partnership II, L.P. and the
Wynnefield Capital, Inc. Profit Sharing & Money Purchase Plan, which, combined, own 100,690 of
the indicated shares. Also includes options for the purchase of 9,000 shares of the Companys
common stock exercisable within 60 days of March 31, 2008, granted to Mr. Obus, and 947 shares
of restricted stock of the Company, held by Mr. Obus, which are 100% vested, but subject to a
restriction on transfer until June 7, 2008.
|
|
(7)
|
|
Includes options for the purchase of 9,000 shares of the Companys common stock exercisable
within 60 days of March 31, 2008, granted to each of Messrs. Miller, Butler and Helfet and
13,000 shares of the Companys common stock exercisable within 60 days of March 31, 2008,
granted to Mr. Brown. Also includes 947 shares of restricted stock of the Company, held by
each of Messrs. Miller, Butler and Helfet, and 1,775 shares of restricted stock of the
Company, held by Mr. Brown, all of which are fully vested, but subject to a restriction on
transfer until June 7, 2008.
|
|
(8)
|
|
Includes options for the purchase of 249,875 shares of the Companys common stock exercisable
within 60 days of March 31, 2008, granted to all directors and executive officers of the
Company as a group.
|
ITEM 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected the independent registered public
accounting firm of Deloitte & Touche LLP to audit the books, records and accounts of the Company
for the year ending January 31, 2009. Stockholders will have an opportunity to vote at the Annual
Meeting on whether to ratify the Audit Committees decision in this regard.
Deloitte & Touche LLP has served as the Companys independent registered public accounting
firm since fiscal 1990. A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting. Such representative will have an opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
27
Principal Accounting Fees and Services
During fiscal 2007 and 2008, Deloitte & Touche LLP, the member firms of Deloitte Touche
Tohmatsu, and their respective affiliates (collectively, Deloitte & Touche) provided various
audit and non-audit services to the Company as follows:
|
(a)
|
|
Audit Fees
: Aggregate fees billed for professional services rendered
for the audit of the Companys annual financial statements and assessment of internal
controls over financial reporting, and review of financial statements included in the
Companys Form 10-Q reports, as well as statutory audits for international entities and
procedures for registration statements.
|
|
|
|
Fiscal 2007
|
|
Fiscal 2008
|
$2,556,500
|
|
$2,504,000
|
|
(b)
|
|
Audit-Related Fees
: Audit-related fees include benefit plan audits and
consultation on various matters.
|
|
|
|
Fiscal 2007
|
|
Fiscal 2008
|
$112,100
|
|
$108,600
|
|
(c)
|
|
Tax Fees
: Tax fees include income tax consultation.
|
|
|
|
Fiscal 2007
|
|
Fiscal 2008
|
$146,700
|
|
$534,300
|
|
(d)
|
|
All Other Fees
: All other fees relate to licensing of access to an
on-line accounting research facility and miscellaneous fees for services in certain
foreign jurisdictions. The Company did not incur any fees relating to the design and
implementation of financial information systems in either fiscal 2007 or fiscal 2008.
|
|
|
|
Fiscal 2007
|
|
Fiscal 2008
|
$2,700
|
|
$27,900
|
The Audit Committee of the Board of Directors has considered whether provision of the services
described in sections (b), (c) and (d) above is compatible with maintaining the registered public
accounting firms independence and has determined that such services have not adversely affected
Deloitte & Touches independence.
The Audit Committees Policy for the Approval of Audit, Audit-Related, Tax and Other Services
provided by the Independent Auditor provides for the pre-approval of the scope and estimated fees
associated with the current year audit. The policy also requires pre-approval of audit-related,
tax and other services specifically described by management on an annual basis and, furthermore,
additional services anticipated to exceed the specified pre-approval limits for such services must
be separately approved by the Audit Committee. Finally, the policy outlines nine specific
restricted services outlined in the SECs rule on auditor independence that are not to be performed
by the independent auditor. None of the services performed by Deloitte & Touche, as described
above, were approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.
All of the services described in sections (b), (c) and (d) above were pre-approved by the
Audit Committee.
Submission of the selection of the independent registered public accounting firm to the
stockholders for ratification will not limit the authority of the Audit Committee to appoint
another independent registered public accounting firm to serve as independent auditors if the
present auditors resign or their engagement otherwise is terminated. If the stockholders do not
ratify the selection of Deloitte & Touche at the Annual Meeting, the Company intends to call a
special meeting of stockholders to be held as soon as practicable after the Annual Meeting to
ratify the selection of another independent registered public accounting firm as independent
auditors for the Company.
The Board of Directors recommends that you vote for approval of the selection of Deloitte &
Touche LLP.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the Exchange Act) requires the
Companys directors and executive officers, and certain persons who own more than 10% of the
Companys outstanding common stock, to file with the Securities and Exchange Commission (SEC)
initial reports of ownership and reports of changes in ownership in Layne Christensen common stock
and other equity securities. SEC regulations require
28
directors, executive officers and certain greater than 10% stockholders to furnish Layne
Christensen with copies of all Section 16(a) reports they file.
To the Companys knowledge, based solely on review of the copies of such reports furnished to
Layne Christensen and written representations that no other reports were required, during the
fiscal year ended January 31, 2008, all Section 16(a) filing requirements applicable to its
directors, executive officers and greater than 10% stockholders were met.
OTHER BUSINESS OF THE MEETING
The Board of Directors is not aware of, and does not intend to present, any matter for action
at the Annual Meeting other than those referred to in this Proxy Statement. If, however, any other
matter properly comes before the Annual Meeting or any adjournment, it is intended that the holders
of the proxies solicited by the Board of Directors will vote on such matters in their discretion in
accordance with their best judgment.
ANNUAL REPORT
A copy of the Companys Annual Report to Stockholders, containing financial statements for the
fiscal year ended January 31, 2008, is being mailed with this Proxy Statement to all stockholders
entitled to vote at the Annual Meeting. Such Annual Report is not to be regarded as proxy
solicitation material.
A COPY OF THE COMPANYS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2008
(THE FORM 10-K), EXCLUDING EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER OF
RECORD AS OF APRIL 22, 2008, UPON WRITTEN REQUEST ADDRESSED TO THE ATTENTION OF THE SECRETARY OF
LAYNE CHRISTENSEN COMPANY AT 1900 SHAWNEE MISSION PARKWAY, MISSION WOODS, KANSAS 66205. The
Companys Form 10-K is also available on its website at
www.laynechristensen.com.
Layne Christensen
will provide a copy of any exhibit to the Form 10-K to any such person upon written request and the
payment of the Companys reasonable expenses in furnishing such exhibits.
ADVANCE NOTICE PROCEDURES/
STOCKHOLDER NOMINATION SUBMISSION PROCESS
Under the Companys bylaws, no business may be brought before an annual meeting unless it is
specified in the notice of the meeting or is otherwise brought before the meeting by or at the
direction of the Board or by a stockholder entitled to vote who has delivered written notice to the
Companys Secretary (containing certain information specified in the bylaws about the stockholder
and the proposed action) not less than 120 or more than 150 days prior to the first anniversary of
the preceding years annual meetingthat is, with respect to the 2009 annual meeting, between
January 6 and February 5, 2009. In addition, any stockholder who wishes to submit to the Board a
potential candidate for nomination to the Board must deliver written notice of the nomination
within this time period. Such stockholders notice shall set forth as to each person whom the
stockholder proposes to nominate for election or reelection as a director:
(a) the name and address of the stockholder who intends to make the nomination and of
the person or persons to be nominated;
(b) a representation that such stockholder is a holder of record of stock of the
Company entitled to vote in the election of directors at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified in the
notice;
(c) the name and address of such stockholder, as it appears on the Companys books, and
of the beneficial owner, if any, on whose behalf the nomination is made;
(d) the class and number of shares of the Company which are owned beneficially and of
record by the nominating stockholder and each nominee proposed by such stockholder;
(e) a description of all arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder;
(f) such other information regarding each nominee proposed by such stockholder as would
have been required to be included in a proxy statement filed pursuant to Regulation 14A (17
C.F.R. Section
29
240.14a-1 et seq.) as then in effect under the Securities Exchange Act of 1934, as
amended (Exchange Act), had the nominee been nominated, or intended to be nominated, by
the Board of Directors; and
(g) the consent of each nominee to serve as a director of the Company if so elected.
The Company may require any proposed nominee to furnish such other information as may reasonably be
required by the Company to determine the eligibility of such proposed nominee to serve as director
of the Company.
These requirements are separate from and in addition to the SECs requirements that a
stockholder must meet in order to have a stockholder proposal included in the Companys proxy
statement.
STOCKHOLDER PROPOSALS FOR 2009 ANNUAL MEETING
It is presently anticipated that the 2009 Annual Meeting of Stockholders will be held on June 4,
2009. Stockholder proposals intended for inclusion in the proxy statement for the 2009 Annual
Meeting of Stockholders must be received at the Companys offices, located at 1900 Shawnee Mission
Parkway, Mission Woods, Kansas 66205, within a reasonable time before the solicitation with respect
to the meeting is made, but in no event later than January 5, 2009. Such proposals must also
comply with the other requirements of the proxy solicitation rules of the Securities and Exchange
Commission. Stockholder proposals should be addressed to the attention of the Secretary or
Assistant Secretary of Layne Christensen.
|
|
|
|
|
|
By Order of the Board of Directors.
Steven F. Crooke
Senior Vice PresidentGeneral Counsel
and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
May 8, 2008
Mission Woods, Kansas
|
|
|
|
|
c/o National City Bank
Shareholder Service Operations
Locator 5352
P. O. Box 94509
Cleveland, OH 44101-4509
|
|
|
|
|
|
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of
Stockholders, you can be sure your shares are represented at the
meeting
by promptly returning your proxy in the enclosed
envelope
.
ê
Please fold and detach card at perforation before mailing.
ê
LAYNE CHRISTENSEN COMPANY
2008 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David A.B. Brown, Andrew B. Schmitt and Steven F. Crooke, and each
of them, each with the power to act alone and
with full power of substitution and revocation, as attorneys and proxies of the undersigned to
attend the 2008 Annual Meeting of Stockholders of Layne
Christensen Company (Layne Christensen) to be held at the InterContinental Kansas City at the
Plaza hotel, located at 401 Ward Parkway, Kansas
City, Missouri, on Thursday, June 5, 2008, commencing at 10:00 a.m., local time, and at all
adjournments thereof, and to vote all shares of capital stock
of Layne Christensen which the undersigned is entitled to vote with respect to the matters on the
reverse side, all as set forth in the Notice of Annual
Meeting of Stockholders and Proxy Statement, dated May 8, 2008.
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature (if held jointly)
|
|
|
Please sign this proxy exactly as your name appears hereon. When
shares are held by joint tenants, both should sign. When signing as
an attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
|
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
ê
Please fold and detach card at perforation before mailing.
ê
|
|
|
LAYNE CHRISTENSEN COMPANY
|
|
PROXY
|
This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned
stockholder(s).
IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
THE BOARD OF DIRECTORS OF LAYNE CHRISTENSEN RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
|
|
|
Item 1:
|
|
Election of five directors to hold office for terms expiring at the 2009 annual meeting of stockholders.
|
|
|
|
|
|
o
FOR ALL
of the nominees listed below
|
|
o
WITHHOLD AUTHORITY
|
|
o
ALL NOMINEES EXCEPT
|
|
|
to vote for
ALL
of the nominees listed below
|
|
those lined through as noted below
|
|
|
|
|
|
|
|
|
|
|
|
NOMINEES:
|
|
J. Samuel Butler
|
|
Nelson Obus
|
|
Donald K. Miller
|
|
Anthony B. Helfet
|
|
Andrew B. Schmitt
|
To withhold authority to vote for any individual nominee(s), mark ALL NOMINEES EXCEPT and line
through or otherwise strike out the name of any nominee for which you would like to withhold
authority to vote.
|
|
|
Item 2:
|
|
Proposal to ratify the selection of the accounting firm of Deloitte & Touche LLP as Layne
Christensens independent auditors for the fiscal year ending January 31, 2009.
|
|
|
|
|
|
o
FOR
|
|
o
AGAINST
|
|
o
ABSTAIN
|
In their discretion, the proxies are authorized to vote upon such other business as properly may
come before the Annual Meeting.
(Continued, and to be signed, on other side)
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