UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to §240.14a-12
CARBO CERAMICS INC.
(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):
þ
No fee required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) 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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
o
Fee paid previously with preliminary materials.
o
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
CARBO
CERAMICS INC.
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
The Shareholders of CARBO Ceramics Inc.:
Notice is hereby given that the Annual Meeting of Shareholders
of CARBO Ceramics Inc. will be held Tuesday, May 19, 2009,
at 9:00 A.M. local time, at The Mansion on Turtle Creek,
2821 Turtle Creek Boulevard, Dallas, Texas, for the following
purposes:
1. To elect seven Directors, the names of whom are set
forth in the accompanying proxy statement, to serve until the
2010 Annual Meeting.
2. To ratify and approve the CARBO Ceramics Inc. Omnibus
Incentive Plan.
3. To ratify the appointment of Ernst & Young LLP
as the Companys independent registered public accounting
firm.
4. To transact such other business as may properly be
brought before the meeting.
Shareholders of record at the close of business on
March 23, 2009 are the only shareholders entitled to notice
of, and to vote at, the Annual Meeting of Shareholders. A
complete list of shareholders entitled to vote at the Annual
Meeting will be available for examination at the Companys
principal offices located at 6565 MacArthur Boulevard,
Suite 1050, Irving, Texas 75039, for a period of ten days
prior to the Annual Meeting. This list of shareholders will also
be available for inspection at the Annual Meeting and may be
inspected by any shareholder for any purpose germane to the
Annual Meeting.
It is important that your shares be represented at the meeting.
Accordingly, even if you plan to attend the meeting in person,
please complete, sign, date and promptly return the enclosed
proxy card in the postage-prepaid envelope prior to the Annual
Meeting or follow the Internet or telephone voting procedures
described on the proxy card. If you attend the meeting and wish
to vote in person, you may withdraw your proxy and vote in
person. Your prompt consideration is greatly appreciated.
By Order of the Board of Directors,
/s/ R. Sean Elliott
R. Sean Elliott
Corporate Secretary
March 30, 2009
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 19,
2009: The Proxy Statement and Annual Report to Shareholders are
available at www.carboannualmeeting.com.
TABLE OF CONTENTS
CARBO
CERAMICS INC.
6565 MacArthur Boulevard
Suite 1050
Irving, Texas 75039
INFORMATION
CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited on behalf of the Board of
Directors (the Board) of CARBO Ceramics Inc. (the
Company) for use at the Companys Annual
Meeting of Shareholders (the Annual Meeting) to be
held May 19, 2009, at 9:00 A.M. local time, or at any
adjournment or postponement thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at The Mansion on
Turtle Creek, 2821 Turtle Creek Boulevard, Dallas, Texas.
The Companys principal executive offices are located at
6565 MacArthur Boulevard, Suite 1050, Irving, Texas 75039.
The telephone number at that address is
(972) 401-0090.
Most shareholders (including participants in the Company stock
fund in the Companys Savings and Profit Sharing Plan) have
a choice of granting their proxies by telephone, over the
Internet or by using a traditional proxy card. You should refer
to your proxy or voting instruction card to see which options
are available to you and how to use them. The Internet and
telephone voting procedures are designed to authenticate
shareholders identities and to confirm that their
instructions have been properly recorded.
The cost of preparing, assembling and mailing the proxy material
and of reimbursing brokers, nominees and fiduciaries for the
out-of-pocket and clerical expenses of transmitting copies of
the proxy material to the beneficial owners of shares held of
record by such persons, will be borne by the Company. The
Company has retained Mellon Investor Services LLC
(Mellon) to aid in the solicitation of proxies. It
is estimated that the cost of these services will be
approximately $7,500 plus expenses. In addition to the
solicitation of proxies by mail, proxies may also be solicited
by telephone, electronic communication, or personal
communication by employees of Mellon and the Company. These
proxy solicitation materials are being mailed on or about
April 6, 2009 to all shareholders entitled to vote at the
Annual Meeting.
A shareholder giving a proxy pursuant to this solicitation
(including via telephone or via the Internet) may revoke it at
any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a valid proxy
(including via telephone or via the Internet) bearing a later
date or by attending the Annual Meeting and voting in person.
Deadline
for Receipt of Shareholder Proposals
Pursuant to regulations of the SEC, in order to be included in
the Companys Proxy Statement for its 2010 Annual
Meeting, shareholder proposals must be received at the
Companys principal offices, 6565 MacArthur Blvd.,
Suite 1050, Irving, Texas 75039, Attention: Secretary, no
later than December 7, 2009 and must comply with additional
requirements established by the SEC. In addition, the
Companys Second Amended and Restated By-Laws provide that
any shareholder who desires either to bring a shareholder
proposal before an annual meeting of shareholders or to present
a nomination for director at an annual meeting of shareholders
must give advance notice to the Secretary of the Company with
respect to such proposal or nominee. The Companys Second
Amended and Restated Bylaws generally require that written
notice be delivered to the Secretary of the Company at the
Companys principal offices not less than 90 days nor
more than 120 days prior to the anniversary of the
preceding years annual meeting of shareholders and contain
certain information regarding the shareholder desiring to
present a proposal or make a nomination and, in the case of a
nomination, information regarding the proposed director nominee.
For the 2010 Annual Meeting, the Secretary of the Company must
receive written notice on or after January 19, 2010 and on
or before February 18, 2010. A copy of the Companys
Second Amended and Restated Bylaws is available upon request
from the Secretary of the Company.
Record
Date, Shares Outstanding and Voting
Only shareholders of record at the close of business on
March 23, 2009 are entitled to notice of, and to vote at,
the Annual Meeting. At the record date, 23,481,836 shares
of the Companys Common Stock were issued and outstanding
and entitled to be voted at the meeting.
Every shareholder is entitled to one vote for each share held
with respect to each matter, including the election of
Directors, which comes before the Annual Meeting. Shareholders
do not have the right to cumulate their votes in the election of
Directors. If a shareholder specifies how the proxy is to be
voted with respect to any of the proposals for which a choice is
provided, the proxy will be voted in accordance with such
specifications. If a shareholder fails to specify a choice with
respect to such proposals, the proxy will be voted FOR all
Director nominees, FOR the ratification and approval of the
CARBO Ceramics Inc. Omnibus Incentive Plan (the Incentive
Plan), and FOR the ratification of the appointment of
Ernst & Young LLP (Ernst &
Young) as the Companys independent registered public
accounting firm. The affirmative vote of holders of a plurality
of the shares of Common Stock present in person or represented
by proxy at the meeting and entitled to vote is required to
elect each Director nominee. The affirmative vote of a majority
of the shares of Common Stock present in person or represented
by proxy at the meeting and entitled to vote is required for the
ratification and approval of the Incentive Plan; provided that
the total number of votes cast with respect to such approval
must represent over 50% of the shares of the Companys
Common Stock outstanding on the record date. The affirmative
vote of a majority of the shares of Common Stock present in
person or represented by proxy at the meeting and entitled to
vote is required to ratify the appointment of Ernst &
Young as the Companys independent registered public
accounting firm. New York Stock Exchange (NYSE)
rules permit brokers to vote for Director nominees and the
ratification of the appointment of Ernst & Young
without receiving instructions from the beneficial owner of the
shares. NYSE rules prohibit brokers from voting on the adoption
of the Incentive Plan without receiving instructions from the
beneficial owner of the shares. In the absence of instructions,
the shares are viewed as being subject to broker
non-votes, which will not be treated as votes cast. Under
Delaware law, abstentions are treated as present and entitled to
vote and thus, will be counted in determining whether a quorum
is present and will have the effect of a vote cast against a
matter, except for the election of Directors in which case an
abstention will have no effect.
Householding
of Proxy Materials
The SEC has adopted rules that permit companies and
intermediaries such as brokers to satisfy delivery requirements
for proxy statements with respect to two or more shareholders
sharing the same address by delivering a single proxy statement
addressed to those shareholders. This process, which is commonly
referred to as householding, potentially provides
extra convenience for shareholders and cost savings for
companies. The Company and some brokers household proxy
materials, delivering a single proxy statement to multiple
shareholders sharing an address unless contrary instructions
have been received from the affected shareholders. Once you have
received notice from your broker or the Company that they will
be householding materials to your address, householding will
continue until you are notified otherwise or until you revoke
your consent. If, at any time, you no longer wish to participate
in householding and would prefer to receive a separate proxy
statement, or if you are receiving multiple copies of the proxy
statement and wish to receive only one, please notify your
broker if your shares are held in a brokerage account or the
Company if you hold shares registered in your name, and the
Company will promptly undertake to carry out your request. You
can notify the Company by sending a written request to the
Company at 6565 MacArthur Boulevard, Suite 1050, Irving,
Texas 75039, or by telephone at
(972) 401-0090.
2
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists as of March 23, 2009, with
respect to each person who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of
Common Stock of the Company, the name and address of such owner,
the number of shares of Common Stock beneficially owned and the
percentage such shares comprised of the outstanding shares of
Common Stock of the Company. Except as indicated, each holder
has sole voting and dispositive power over the listed shares.
Percentage of beneficial ownership is based on
23,481,836 shares of Common Stock outstanding on
March 23, 2009.
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Shares Beneficially
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Name and Address
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Owned
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of Beneficial Owner
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Number
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Percent
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William C. Morris(1)
100 Park Avenue
New York, New York 10017
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3,214,250
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13.7
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%
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Neuberger Berman Inc.(2)
605 Third Avenue
New York, New York 10158
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2,821,444
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12.0
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%
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Barclays Global Investors, NA(3)
400 Howard Street
San Francisco, California 94105
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1,295,462
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5.5
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%
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Royce & Associates, LLC(4)
1414 Avenue of the Americas
New York, New York 10019
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1,266,506
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5.4
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%
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(1)
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Shares shown as beneficially owned by Mr. Morris include
15,000 shares of Common Stock owned by certain charitable
foundations as to which Mr. Morris disclaims any beneficial
ownership.
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(2)
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Based on a Schedule 13G filing with the SEC, as of
December 31, 2008, Neuberger Berman Inc. reported sole
voting power as to 894 shares of Common Stock, reported
shared voting power as to 2,337,450 shares of Common Stock,
and shared dispositive power as to 2,821,444 shares of
Common Stock with Neuberger Berman, LLC, Neuberger Berman
Management LLC and Neuberger Berman Equity Funds.
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(3)
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Based on a Schedule 13G filing with the SEC, as of
December 31, 2008, Barclays Global Investors, NA reported
sole voting power of 374,491 shares of Common Stock and
reported sole dispositive power as to 422,136 shares of
Common Stock; Barclays Global Fund Advisors reported sole
voting power of 628,829 shares of Common Stock and reported
sole dispositive power as to 859,907 shares of Common
Stock; Barclays Global Investors, Ltd. reported sole voting
power of 435 shares of Common Stock and sole dispositive
power as to 13,419 shares of Common Stock.
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(4)
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Based on a Schedule 13G filing with the SEC, as of
December 31, 2008, Royce & Associates, LLC
reported sole voting and dispositive power as to
1,266,506 shares of Common Stock.
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3
The following table sets forth the number of shares of Common
Stock of the Company beneficially owned by (i) each
Director of the Company, (ii) each named executive officer
of the Company, and (iii) Directors and all executive
officers of the Company as a group, as of March 23, 2009.
For purposes of this proxy statement, Gary A. Kolstad, Paul
G. Vitek, Mark L. Edmunds, David G. Gallagher and R. Sean
Elliott are referred to as the Companys named
executive officers. Except as indicated, each holder has
sole voting and dispositive power over the listed shares. No
current Director, nominee Director or executive officer has
pledged any of the shares of Common Stock disclosed below.
Percentage of beneficial ownership is based on
23,481,836 shares of Common Stock outstanding on
March 23, 2009. The number and percentage of shares of
Common Stock beneficially owned is determined under the rules of
the SEC and is not necessarily indicative of beneficial
ownership for any other purpose. Under these rules, beneficial
ownership includes any shares of Common Stock for which a person
has sole or shared voting power or investment power and also any
shares of Common Stock underlying options that are exercisable
by that person within 60 days of March 23, 2009.
Unless otherwise indicated in the footnotes, the address for
each executive officer and Director is
c/o CARBO
Ceramics Inc., 6565 MacArthur Boulevard, Suite 1050,
Irving, Texas 75039.
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Percent of
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Amount and Nature of
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Common
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Beneficial Ownership
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Stock
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Currently
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Acquirable
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Beneficially
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Owned
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Within 60 Days(1)
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Owned
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Directors
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Claude E. Cooke, Jr.(2)
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4,250
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2,602
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*
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Chad C. Deaton
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2,750
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2,515
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*
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James B. Jennings
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2,000
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938
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*
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Randy L. Limbacher
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2,000
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938
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*
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Gary A. Kolstad(3)
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53,596
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*
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H. E. Lentz, Jr.
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8,000
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*
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William C. Morris(4)
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3,214,250
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13.7
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%
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Robert S. Rubin
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700,350
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3.0
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%
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Other Named Executive Officers
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Mark L. Edmunds
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13,590
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*
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R. Sean Elliott
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5,045
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*
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David G. Gallagher(5)
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17,458
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*
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Paul G. Vitek(6)
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7,593
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6,000
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*
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Directors and All Executive Officers as a Group
(13 persons)
(2)(3)(4)(5)(6)
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4,037,737
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12,993
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17.2
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%
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*
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Less than 1%.
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(1)
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With respect to the Directors set forth in the table, amounts
represent shares in bookkeeping accounts for each Director in
the Director Deferred Fee Plan. See Director
Compensation below.
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(2)
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Dr. Cooke is retiring from the Board on the day of the
Annual Meeting.
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(3)
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Shares shown as beneficially owned by Mr. Kolstad include
2,750 shares of Common Stock held jointly with his spouse,
with whom Mr. Kolstad shares voting and dispositive power.
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(4)
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Shares shown as beneficially owned by Mr. Morris include
15,000 shares of Common Stock owned by certain charitable
foundations as to which Mr. Morris disclaims any beneficial
ownership.
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(5)
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Shares shown as beneficially owned by Mr. Gallagher include
3,116 shares of Common Stock jointly held with his spouse,
with whom Mr. Gallagher shares voting and dispositive power.
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(6)
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Mr. Vitek retired from the Company effective
January 20, 2009. The information presented is as of such
date, and includes 6,000 employee stock options exercisable
within 60 days of January 20, 2009.
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4
ELECTION
OF DIRECTORS (PROPOSAL NO. 1)
Nominees.
A board of seven Directors is to be
elected at the meeting. Dr. Cooke is retiring from the
Board on the day of the Annual Meeting. The Board expresses its
appreciation to Dr. Cooke for his dedicated service as a
member of the Board of Directors. Per a resolution adopted on
January 20, 2009, upon the retirement of Dr. Cooke,
the Board will consist of seven Directors. Each Director elected
to the Board will hold office until the next Annual Meeting or
until his or her successor has been elected and qualified.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the seven nominees named below, all
of whom are presently Directors of the Company. In the event
that any nominee is unable or declines to serve as a Director at
the time of the Annual Meeting, the proxies will be voted for
any nominee who shall be designated by the present Board of
Directors to fill the vacancy, unless the size of the Board is
reduced. The proxies cannot be voted for a greater number of
persons than the number of nominees named in this proxy
statement. It is not expected that any nominee will be unable or
will decline to serve as a Director. Biographical information
regarding each nominee is set forth below.
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Director
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Name (Age)
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Business Experience During Past 5 Years and Other
Information
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Since
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William C. Morris (70)
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Mr. Morris currently serves as Chairman of the Board of the
Company. From December 1988 until November 2008, he served as
Chairman of the Board of Directors of J. & W. Seligman
& Co. Incorporated (a New York-based investment advisory
firm); Chairman of the Board of Tri-Continental Corporation; and
of each of the investment companies in the Seligman Group of
Funds. Mr. Morris retired as a Director of Kerr-McGee
Corporation in 2003.
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1987
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Chad C. Deaton (56)
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Mr. Deaton has served as Chairman of the Board, President and
Chief Executive Officer of Baker Hughes Incorporated (a
Houston-based oilfield services company)
(Baker Hughes) since February 2008. Mr. Deaton
served as Chairman of the Board and Chief Executive Officer of
Baker Hughes from October 2004 until January 2008. From August
2002 to October 2004, he served as President, Chief Executive
Officer and a Director of the Hanover Compressor Company (a
Houston-based natural gas compression package supplier). Mr.
Deaton was employed in a variety of positions by Schlumberger
Oilfield Services and/or its affiliates from 1976 through 2001.
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2004
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James B. Jennings (68)
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Mr. Jennings currently serves as a Senior Advisor to Brown
Brothers Harriman & Co. (a banking and financial services
firm). From April 2004 until December 2007, Mr. Jennings served
as Chairman of the Board of Hunt Oil Company (a Dallas-based oil
and natural gas company) and presently holds the position of
Chairman Emeritus. Prior to that time, Mr. Jennings held
various executive positions with Hunt Oil Company, including
President/Director and Executive Vice President of International
and U.S. Exploration, and Group Vice President World
Exploration and Production. Mr. Jennings served on the Board of
Directors of Hunt Oil Company from 1991 to 2007.
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2007
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Gary A. Kolstad (50)
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Mr. Kolstad was appointed by the Board of Directors to serve as
President and Chief Executive Officer and a Director of the
Company, effective as of June 1, 2006. Mr. Kolstad was
previously employed by Schlumberger, Ltd. (a Paris- and
Houston-based oilfield services company), from 1985 to June
2006, where he most recently served as Vice President, Global
Accounts for Schlumberger Oilfield Services and previously led
Schlumbergers onshore business unit as Vice
President/General Manager, Oilfield Services U.S.
Onshore.
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2006
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H. E. Lentz, Jr. (64)
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Chairman of the Board of Directors of Rowan Companies, Inc.
Formerly Managing Director of Barclays Capital, an investment
banking firm and successor to Lehman Brothers, from September
2008 to March 2009. In March 2009, Mr. Lentz accepted a
position as Managing Director of Lazard Frères & Co
(an investment banking firm), commencing in June 2009. Managing
Director of Lehman Brothers from 1993 to 2002; consultant to
Lehman in 2003 and Advisory Director of Lehman from 2004 to
September 2008. He also serves on the board of Peabody Energy
Corp.
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2003
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Randy L. Limbacher (50)
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Since November 2007, Mr. Limbacher has served as President and
Chief Executive Officer and a Director of Rosetta Resources,
Inc. (a Houston-based oil and natural gas company). From April
2006 until November 2007, Mr. Limbacher held the position of
President, Exploration and Production Americas for
ConocoPhillips (a Houston-based energy company). Prior to that
time, Mr. Limbacher spent over twenty years with Burlington
Resources Inc. (a Houston-based oil and natural gas company),
where he served as Executive Vice President and Chief Operating
Officer from 2002 until acquired by ConocoPhillips in April
2006. He was a Director of Burlington Resources from January
2004 until the sale of the company.
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2007
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Robert S. Rubin (77)
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Mr. Rubin has served as a Senior Vice President of JPMorgan
Chase & Co. (a New York-based financial holding company)
(JP Morgan) and a predecessor firm since 2001.
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1997
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5
The Board of Directors recommends a vote FOR the election of
each of the nominees for Director named in this proxy
statement.
The Board of Directors has determined that each of the following
Directors is independent within the meaning of the applicable
rules of the SEC and the listing standards of the NYSE:
William C. Morris
Dr. Claude E. Cooke, Jr.
Chad C. Deaton
James B. Jennings
Randy L. Limbacher
H. E. Lentz, Jr.
Robert S. Rubin
The Board has evaluated the independence of the members of the
Board under the independence standards promulgated by the NYSE.
In conducting this evaluation, the Board and Audit Committee
considered transactions and relationships between each Director
nominee or his immediate family and the Company to determine
whether any such transactions or relationships were material
and, therefore, inconsistent with a determination that each such
Director nominee is independent. Based upon that evaluation, the
Board determined that Messrs. Morris, Cooke, Deaton,
Jennings, Limbacher, Lentz, and Rubin have no material
relationship with the Company and, as a result, are independent.
In determining the independence of Mr. Deaton, the Board
specifically considered his employment as Chairman of the Board
and Chief Executive Officer of Baker Hughes and Baker
Hughess status as a customer of the Company and concluded
that such employment was not inconsistent with a determination
that Mr. Deaton is independent. In determining the
independence of Mr. Morris, the Board specifically
considered that the Company reimburses Directors for direct
expenses incurred in connection with Company related-travel, and
that Mr. Morris may travel on Company business by means of
a private aircraft owned by Mr. Morris. The Board concluded
that such expense reimbursements are not inconsistent with a
determination that Mr. Morris is independent. In
determining the independence of Mr. Lentz, the Board
specifically considered his employment as an Advisory Director
to Lehman Brothers Inc. and Barclays Capital and their provision
of financial services to the Company and concluded that such
employment was not inconsistent with a determination that
Mr. Lentz is independent. In determining the independence
of Mr. Rubin, the Board specifically considered his
employment as a Senior Vice President of JP Morgan and JP
Morgans provision of banking services to the Company and
concluded that such employment was not inconsistent with a
determination that Mr. Rubin is independent.
Please see the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 for information
about the Companys executive officers.
Interested parties may contact the Board of Directors, or the
non-management Directors as a group, at the following address:
Board of Directors
Or
Non-Management Directors
c/o CARBO
Ceramics Inc.
6565 MacArthur Boulevard
Suite 1050
Irving, Texas 75039
Communications may also be sent to individual Directors at the
above address. Communications to Directors will be reviewed and
referred in compliance with the Procedures for Unsolicited
Communications, as approved by the Nominating and Corporate
Governance Committee of the Board of Directors on July 12,
2004. Communications to the Board, the non-management Directors
or any individual Director that relate to the Companys
accounting, internal accounting controls or auditing matters
will also be referred to the Chairman of the Audit Committee.
Other communications will be referred to the appropriate
Committee chairman and may also be sent, as appropriate, to the
Companys Chief Compliance Officer.
6
COMMITTEES
OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors met ten times during the last fiscal
year. Each Director attended at least 75% of the meetings of the
Board of Directors. Although there is no formal policy as to
Director attendance at the Annual Meeting of Shareholders, all
Directors attended the 2008 Annual Meeting of Shareholders and
all are anticipated to attend the 2009 Annual Meeting of
Shareholders as well.
The Board of Directors has an Audit Committee currently
comprised of six members and Compensation Committee and
Nominating and Corporate Governance Committee, each of which is
currently comprised of seven members. The charters of each of
these Committees and the Companys Corporate Governance
Guidelines are available free of charge on the Companys
website at www.carboceramics.com or by writing to the Company
at: CARBO Ceramics Inc.,
c/o Corporate
Secretary, 6565 MacArthur Blvd., Suite 1050, Irving, Texas
75039. The Board of Directors votes annually on the membership
and chairmanship of all Committees.
Audit Committee.
The Audit Committee currently
consists of Robert S. Rubin (Chairman), Dr. Claude E.
Cooke, Jr., Chad C. Deaton, James B. Jennings, H. E.
Lentz, Jr., and Randy L. Limbacher. The Committee met seven
times during the last fiscal year and each Committee member,
other than Mr. Deaton, attended at least 75% of these
meetings. The Board of Directors has determined that all of the
members of the Audit Committee are independent within the
meaning of the applicable rules of the SEC and the listing
standards of the NYSE. The Board of Directors has also
determined that Robert S. Rubin meets the requirements for being
an audit committee financial expert, as that term is
defined by applicable SEC and NYSE rules. The Audit Committee
appoints and retains the Companys independent registered
public accounting firm, approves the fee arrangement and scope
of the audit, reviews the financial statements and the
independent registered public accounting firms report,
considers comments made by the independent registered public
accounting firm with respect to the Companys internal
control structure and reviews internal accounting procedures and
controls with the Companys financial and accounting staff.
The Audit Committee also conducts the review of the non-audit
services provided by the independent registered public
accounting firm to determine their compatibility with its
independence. The Audit Committee reviews the independent
registered public accounting firms performance,
qualification and quality control procedures and establishes
policies for: (i) the pre-approval of audit and permitted
non-audit services by the independent registered public
accounting firm; (ii) the hiring of former employees of the
independent registered public accounting firm; and
(iii) the submission and confidential treatment of concerns
from employees or others about accounting, internal controls,
auditing or other matters.
The Audit Committee reviews with management the Companys
disclosure controls and procedures and internal control over
financial reporting and the processes supporting the
certifications of the Chief Executive Officer and Chief
Financial Officer. It also reviews with management and the
Companys independent registered public accounting firm the
Companys critical accounting policies. The Audit Committee
reviews the Companys annual and quarterly SEC filings and
other related Company disclosures. The Audit Committee reviews
the Companys compliance with the Code of Business Conduct
and Ethics as well as other legal and regulatory matters. The
Committee reviews and approves related person transactions in
accordance with the Companys Code of Business Conduct and
Ethics and applicable SEC guidelines. Such reviews are conducted
annually and otherwise on an as-needed basis, and are reflected
in the recorded minutes of the Audit Committee.
In performing these duties, the Audit Committee has full
authority to: (i) investigate any matter brought to its
attention with full access to all books, records, facilities and
personnel of the Company; (ii) retain outside legal,
accounting or other consultants to advise the Committee; and
(iii) request any officer or employee of the Company, the
Companys in-house or outside counsel, internal auditor,
internal audit service providers or independent registered
public accounting firm to attend a meeting of the Committee or
to meet with any members of, or consultants to, the Committee.
Compensation Committee.
The Compensation
Committee currently consists of H.E. Lentz, Jr. (Chairman),
Dr. Claude E. Cooke, Jr., Chad C. Deaton, James B.
Jennings, Randy L. Limbacher, William C. Morris, and
Robert S. Rubin. The Committee met four times during the
last fiscal year and each Committee member attended at least 75%
of these meetings. The Board of Directors has determined that
all of the members of the Compensation Committee are independent
within the meaning of the listing standards of the NYSE. The
Compensation Committee (i) establishes policies relating to
the compensation of the non-employee Directors, officers and
7
key management employees of the Company; (ii) reviews and
approves the compensation of the non-employee Directors,
officers and the President and Chief Executive Officer;
(iii) reviews the President and Chief Executive
Officers recommendations with respect to cash incentive
compensation awards for non-officer employees; and
(iv) oversees the administration of the Companys
restricted stock and stock option plans. The Compensation
Committee also evaluates and approves post-service arrangements
with management and establishes and reviews periodically the
Companys perquisite policies for management and Directors.
In performing its duties, the Compensation Committee has
ultimate authority and responsibility to engage and terminate
any outside consultant to assist in determining appropriate
compensation levels for the Chief Executive Officer or any other
member of the Companys management and to approve the terms
of any such engagement and the fees of any such consultant. In
addition, the Committee has full access to any relevant records
of the Company and may also request that any officer or other
employee of the Company (including the Companys senior
compensation or human resources executives), the Companys
in-house or outside counsel, or any other person meet with any
members of, or consultant to, the Committee. The officers of the
Company also annually collect peer group compensation data for
review by the Committee.
The Committee sets the compensation policy for the Company as a
whole and specifically decides all compensation matters related
to the officers of the Company. The Committee also delegated to
its Chairman the ability to grant interim equity awards to
non-officer employees of the Company under the
shareholder-approved equity plans of the Company in an amount
not to exceed 1,000 shares of Company Common Stock per
employee award with such awards reported to the full Committee
at its next meeting.
Nominating and Corporate Governance
Committee.
The Nominating and Corporate
Governance Committee currently consists of William C. Morris
(Chairman), Dr. Claude E. Cooke, Jr., Chad C. Deaton,
James B. Jennings, Randy L. Limbacher, H. E. Lentz, Jr.,
and Robert S. Rubin. The Nominating and Corporate Governance
Committee acted unanimously in recommending the nomination of
the Directors in Proposal One, subject to shareholder
approval. The Committee met two times during the last fiscal
year, and each Committee member, other than Messrs. Deaton
and Lentz, attended at least 75% of these meetings. The Board of
Directors has determined that all of the members of the
Nominating and Corporate Governance Committee are independent
within the meaning of the listing standards of the NYSE. The
Nominating and Corporate Governance Committee establishes the
Companys corporate governance principles and guidelines.
These principles and guidelines address, among other matters,
the size, composition and responsibilities of the Board of
Directors and its Committees, including their oversight of
management. The Committee also advises the Board of Directors
with respect to the charter, structure and operation of each
Committee of the Board of Directors. The Nominating and
Corporate Governance Committee oversees the evaluation of the
Board of Directors and senior executives of the Company and
reviews Company succession planning periodically. The Committee
has full access to any relevant records of the Company and may
retain outside consultants to advise it. The Committee has the
ultimate authority and responsibility to engage or terminate any
outside consultant to identify Director candidate(s) and to
approve the terms and fees of such engagement of any such
consultant. The Committee may also request that any officer or
other employee of the Company, the Companys outside
counsel, or any other person meet with any members of, or
consultant to, the Committee.
The Companys Board of Directors has charged the Nominating
and Corporate Governance Committee with identifying individuals
qualified to become members of the Board and recommending
Director nominees for each Annual Meeting of Shareholders,
including the recommendation of nominees to fill any vacancies
on the Board of Directors. The Nominating and Corporate
Governance Committee considers Director candidates suggested by
its members, other Directors, senior management and
shareholders. Shareholders desiring to make such recommendations
should timely submit the candidates name, together with
biographical information and the candidates written
consent to be nominated and, if elected, to serve to: Chairman,
Nominating and Corporate Governance Committee of the Board of
Directors of CARBO Ceramics Inc., 6565 MacArthur Boulevard,
Suite 1050, Irving, Texas, 75039. To assist it in
identifying Director candidates, the Committee is also
authorized to retain, at the expense of the Company, third party
search firms and legal, accounting, or other advisors, including
for purposes of performing background reviews of potential
candidates. The Committee provides guidance to search firms it
retains about the particular qualifications the Board of
Directors is then seeking.
8
All Director candidates, including those recommended by
shareholders, are evaluated on the same basis. Candidates are
selected for their character, judgment, business experience and
specific areas of expertise, among other relevant
considerations, such as the requirements of applicable law and
listing standards (including independence standards). The Board
of Directors recognizes the importance of soliciting new
candidates for membership on the Board of Directors and that the
needs of the Board of Directors, in terms of the relative
experience and other qualifications of candidates, may change
over time. In determining the needs of the Board of Directors
and the Company, the Nominating and Corporate Governance
Committee considers the qualifications of sitting Directors and
consults with other members of the Board of Directors (including
as part of the Boards annual self-evaluation), the Chief
Executive Officer and other members of senior management and,
where appropriate, external advisors. All Directors are expected
to exemplify the highest standards of personal and professional
integrity and to assume the responsibility of challenging
management through their active and constructive participation
and questioning in meetings of the Board of Directors and its
various Committees, as well as in less formal contacts with
management. Director candidates, other than sitting Directors,
are interviewed at the direction of the Committee, which may
include (at the Committees direction) interviews by the
Chairman of the Board of Directors, other Directors, the Chief
Executive Officer and other key management personnel, and the
results of those interviews are considered by the Committee in
its deliberations.
The members of the Nominating and Corporate Governance Committee
constitute all of the non-management Directors on the
Companys Board of Directors. As the Chairman of the
Nominating and Corporate Governance Committee, William C. Morris
serves as the presiding Director for non-management executive
sessions of these Directors.
CODE OF
BUSINESS CONDUCT AND ETHICS
The Company has adopted a Code of Business Conduct and Ethics
that applies to its Directors and employees, including its Chief
Executive Officer, Chief Financial Officer and Controller. The
Code of Business Conduct and Ethics, including future
amendments, is available free of charge on the Companys
website at www.carboceramics.com or by writing to the Company
at: CARBO Ceramics Inc.,
c/o General
Counsel, 6565 MacArthur Blvd., Suite 1050, Irving, Texas
75039. The Company will also post on its website any amendment
to or waiver under the Code of Business Conduct and Ethics
granted to any of its Directors or executive officers. No such
waivers were requested or granted in 2008.
DIRECTOR
COMPENSATION
The following table sets forth information regarding the
compensation of the Companys non-employee Directors.
Mr. Kolstad did not receive any additional compensation for
his service on the Board in 2008. Compensation received by
Mr. Kolstad in his capacity as President and Chief
Executive Officer is disclosed under Compensation of
Executive Officers.
9
Director
Compensation for Fiscal Year 2008
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Change in
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Pension
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Value and
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Fees
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Nonqualified
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Earned
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Non-Equity
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Deferred
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or 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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($)(1)
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($)(2)(3)
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($)
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($)
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($)
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($)
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($)
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Claude E. Cooke, Jr.(4)
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42,000
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0
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42,000
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Chad C. Deaton
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39,500
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42,162
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81,662
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James B. Jennings
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42,000
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0
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42,000
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H.E. Lentz, Jr.
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50,500
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0
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50,500
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Randy L. Limbacher
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42,000
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27,766
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69,766
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William C. Morris
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59,000
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0
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59,000
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Jesse P. Orsini(5)
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8,250
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0
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8,250
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Robert S. Rubin
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52,000
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0
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52,000
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(1)
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Messrs. Cooke, Deaton, Jennings, and Limbacher elected to
defer all of their cash fees under the Director Deferred Fee
Plan (described below), resulting in the crediting of an
aggregate of 3,710 shares of Common Stock, collectively, to
bookkeeping accounts in fiscal year 2008. Of the total shares
credited in fiscal year 2008, Messrs. Cooke, Deaton,
Jennings, and Limbacher were credited 956, 886, 934, and
934 shares of Common Stock, respectively.
Messrs. Cooke, Deaton, Jennings, and Limbacher had 2,589,
2,503, 934, and 934 shares of Common Stock credited to each
of their accounts, respectively, as of December 31, 2008.
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(2)
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Amounts shown do not reflect compensation actually received by
Directors. Rather, amounts set forth in the Stock Awards column
represent the amounts recognized as compensation expense for
financial statement reporting purposes in fiscal year 2008 by
the Company with respect to restricted stock awards in
accordance with the Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 123
(revised 2004) (FAS 123R) (disregarding the
estimate of forfeitures related to service-based vesting
conditions). A discussion of the assumptions used in this
valuation with respect to restricted stock awards made in fiscal
year 2008 may be found in Note 9 to the Companys
financial statements contained in the Companys Annual
Report on
Form 10-K
for 2008. Dividends are paid on shares of restricted stock at
the same rate, and at the same time, that dividends are paid to
shareholders of the Company.
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(3)
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Each non-employee Director other than Messrs. Jennings,
Limbacher and Orsini received a grant of 2,000 shares of
restricted stock in April 2006 pursuant to the Restricted Stock
Plan (as defined below). Mr. Orsini received a grant of
2,000 shares of restricted stock in July 2006 upon his
becoming a non-employee member of the Board of Directors.
Additionally, Messrs. Jennings and Limbacher received a
similar grant of 2,000 shares of restricted stock in July
2007 upon joining the Board of Directors. These awards vest
ratably over a period of three years from their date of grant,
but will vest immediately upon termination of service on the
Board as a result of death, disability or retirement at
age 62 or older. Because Messrs. Cooke, Jennings,
Morris, Orsini and Rubin were at or above the Restricted Stock
Plan retirement age of 62, their awards were fully expensed at
the time of grant. Because Mr. Lentz reached age 62
approximately 10 months after receiving his award, his
award was fully expensed over such 10 month period. As of
December 31, 2008, Messrs. Deaton and Limbacher held
667 and 1,334 shares of restricted Common Stock,
respectively.
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(4)
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Dr. Cooke will retire as a Director at the Annual Meeting
of Shareholders on May 19, 2009.
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(5)
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Mr. Orsini retired as a Director in April 2008.
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Effective April 14, 2008, all Directors who are not
employees of the Company are paid retainers of $6,250 per
calendar quarter plus $1,500 per meeting for attending meetings
of the Board of Directors. Directors are also paid $1,000 for
each Committee meeting that does not immediately precede or
follow a meeting of the Board of Directors. In addition to their
compensation as Directors, the Chairmen of the Audit and
Compensation Committees each receive $10,000 annually as
compensation for their service as Chairmen of these Committees.
The Chairman of the Nominating and Corporate Governance
Committee does not currently receive a separate payment for
service
10
as Chairman of this Committee. In addition to his compensation
as a Director, the Chairman of the Board of Directors receives
$20,000 annually as compensation for his service as Chairman of
the Board. All Directors are reimbursed for out-of-pocket
expenses incurred by them in attending meetings of the Board of
Directors and its Committees and otherwise in performing their
duties. All retainers are paid quarterly and all meeting
attendance payments are made at the end of each quarter in which
the meeting(s) took place. Additionally, payments of annual
compensation amounts are paid quarterly in equal installments.
Since April 18, 2006, each newly elected or appointed
non-employee Director receives a grant of 2,000 shares of
restricted stock pursuant to the CARBO Ceramics Inc. 2004
Long-Term Incentive Plan (the Restricted Stock Plan)
on the first day he or she is elected or appointed as a
non-employee Director. Generally, one-third of the shares of
such restricted stock vests on each anniversary of the grant
date provided the grantee is still serving as a Director on each
such anniversary. In the event the Directors service with
the Company terminates prior to the applicable vesting date,
other than as a result of such Directors death,
disability, or retirement, all restricted shares are immediately
forfeited. However, if the Directors service is terminated
due to his or her death, disability or retirement as described
in the Restricted Stock Plan, then such unvested shares
immediately vest. The Restricted Stock Plan also provides for
accelerated vesting upon a change in control of the Company. For
more information regarding such accelerated vesting, see
Termination and Change in Control Payments below.
Under the terms of the Director Deferred Fee Plan (the
Deferral Plan), Directors are permitted to defer
their annual cash compensation otherwise payable in a given
fiscal year and to receive such fees instead in the form of
shares of the Companys Common Stock on the later of a date
certain chosen by the Director or the cessation of the
Directors service on the Board, either in a lump sum or in
installment payments. The Deferral Plan requires each Director
who wishes to defer compensation for any fiscal year to have
notified the Company in writing no later than 10 calendar days
before the beginning of such fiscal year. Four Directors have
elected to defer their 2009 compensation.
Each non-employee Director is required to hold 2,000 shares
of Company stock (including shares of restricted stock) so long
as he or she is a member of the Board of Directors. Each
non-employee Director currently meets this requirement.
COMPENSATION
OF EXECUTIVE OFFICERS
Compensation
Discussion and Analysis
Compensation Policy.
The goal of the
Companys compensation policy is to ensure that executive
compensation aligns managements overall goals and
objectives for improving profitability and enhancing shareholder
value with those of shareholders. To achieve this goal, the
Compensation Committee has adopted the following guidelines to
direct compensation decisions:
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provide a competitive compensation package that enables the
Company to attract and retain superior management personnel;
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relate compensation to the performance of the Company and the
individual; and
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align employee objectives with the objectives of shareholders by
encouraging executive stock ownership.
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Elements of Compensation.
In order to achieve
its objectives, the Committee has combined current and deferred
cash compensation with equity-based compensation. The
Companys compensation program for executive officers and
other key employees consists of:
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base salary;
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performance-based bonuses based upon individual performance and
the Companys annual net income before tax under incentive
compensation plans or individual employment agreements;
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restricted stock grants and other long-term incentives; and
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matching and discretionary contributions under the
Companys Savings and Profit Sharing Plan.
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11
Base Salary.
Officer base salary levels are
reviewed annually to determine whether they are near the median
range for persons holding similar positions with companies that
are of a similar size and nature and companies that are included
in the S&P Small Cap 600 Index, Oil and Gas Equipment and
Services sub-industry group. Annually, the officers of the
Company collect and collate for the Compensation
Committees review, the publicly available information
about the compensation of comparable executives of the
Companys peer group companies as well as information
regarding compensation from any third party sources which they
determine to be relevant, such as Stone Partners, Inc. or other
similar sources. The Compensation Committee is provided with
this data and has the authority to engage directly any
consultants that the Committee deems necessary in the course of
determining executive compensation.
For purposes of setting 2008 compensation, the peer group
companies included Basic Energy Services, Bristow Group, Core
Labs, Hornbeck Offshore Services, Inc., Input/Output, Lufkin
Industries, NATCO Group, Inc., RPC, Superior Well Services,
Inc., TESCO Corp., Tetra Technologies and W-H Energy Services
Inc. (Similar Companies). Many of the Companys
direct competitors cannot be included in such comparisons as
they are private
and/or
foreign entities and, as such, relevant compensation data may
not be readily available to the public. The Compensation
Committee reviews detailed spreadsheets with respect to the
Chief Executive Officer and the Chief Financial Officer (and
summary spreadsheets with respect to the other executive
officers) that compare their base salaries to those of
executives in similar positions at the Similar Companies. The
spreadsheets are prepared by the Company for the Compensation
Committee, show the Companys position relative to the
Similar Companies with respect to market capitalization,
revenue, net income and compensation and are based upon
information gathered from various survey sources.
The Compensation Committee typically targets base salaries for
the Companys executive officers at the
50th percentile of base salary ranges of the Similar
Companies in order to stay competitive with its market peers.
Individual salaries are then set based on individual performance
in the most recently completed twelve months, subject, for
Mr. Kolstad, to the base salary requirements set forth in
his employment agreement. For 2008, Mr. Kolstads base
salary was $500,000 pursuant to the terms of his employment
agreement. To further emphasize the correlation between Company
performance and executive pay, the Compensation Committee
typically uses the 50th to 75th percentile range of
the total equity and cash compensation of the Similar Companies
to set the range of total compensation for its executive
officers. Individual performance is rated annually against the
achievement of predetermined performance objectives specific to
the individuals roles and responsibilities. The executive
officers are evaluated by the Nominating and Corporate
Governance Committee, which then communicates their evaluation
results to the Compensation Committee to use in setting the
following years compensation.
Annual Bonuses.
Since its inception, the
Company has sought to have a significant portion of key employee
compensation be performance-based. In order to achieve this
objective, the Company established its first incentive
compensation plan in 1987. For 2008, the Compensation Committee
approved the CARBO Ceramics Inc. Incentive Compensation Plan for
Key Employees (the 2008 ICP).
The 2008 ICP provides for cash incentive payments to key
employees (including Messrs. Vitek, Edmunds, Gallagher and
Elliott) based on components of both Company and individual
performance as described in Compensation of Executive
Officers. For 2008, the majority of cash incentive
payments earned by Messrs. Vitek, Edmunds, Gallagher and
Elliott were based on Company or Company business unit
performance, with no more than 20% of any such incentive payment
based on individual performance. The Company believes that this
formula provides the appropriate emphasis on Company and
individual performance. The Company further believes that its
net income before taxes (NIBT) overall Company and
business segment targets under the 2008 ICP were appropriate
aggressive benchmarks for performance. The Companys actual
NIBT was approximately 33% greater than the target NIBT under
the 2008 ICP for that year, with the NIBT for the Companys
Proppant business segment being approximately 30% greater than
the 2008 target NIBT for that business segment. The
Companys NIBT for 2008 is equal to the sum of its income
from continuing operations and income from discontinued
operations as reported in its consolidated financial statements
for 2008, plus income taxes on such amounts of approximately
$27.9 million and $3.5 million, respectively. This
calculation of NIBT as approved by the Compensation Committee
for the 2008 ICP excludes the gain on the sale of a substantial
portion of the assets of Pinnacle Technologies, Inc. (the
Pinnacle Sale), which was completed in October 2008.
Similarly, the target Company NIBT for the 2008 ICP
12
was reduced to take into account the absence of planned earnings
from the businesses included in the Pinnacle Sale during the
fourth quarter of 2008.
For 2008, the bonuses for each of Messrs. Vitek, Edmunds,
Gallagher and Elliott were established pursuant to the 2008 ICP
with target incentive percentages of 90%, 85%, 85% and 60% of
base salary, respectively. Of these targets, (i) 90% of
Mr. Viteks target award was based on Company
performance and 10% was based on personal performance,
(ii) 85% of Mr. Edmunds target award was based
on Company and Company business unit performance and 15% was
based on personal performance, and (iii) 80% of each of
Mr. Gallaghers and Mr. Elliotts target
award was based on Company performance and 20% was based on
personal performance.
Mr. Kolstads annual cash bonus is determined in
accordance with his employment agreement, rather than the 2008
ICP. Mr. Kolstads bonus is equal to the sum of
(i) 0.5% of the Companys earnings before interest
income and expense and taxes (EBIT) for such fiscal
year up to $75,000,000 of EBIT, plus (ii) 1.0% of EBIT in
excess of $75,000,000. The Compensation Committee determined
that with respect to the Chief Executive Officer, 100% of his
bonus should be determined by Company performance, and EBIT was
determined to be the appropriate performance measure because it
closely aligns the performance of the Chief Executive Officer
with shareholder goals and interests. Notwithstanding the
foregoing, the calculation of EBIT applied to
Mr. Kolstads 2008 bonus calculation was reduced by
the amount of the gain on the Pinnacle Sale.
In order to enhance the retention of key employees, in prior
years, a portion of the amount awarded under the Companys
incentive compensation plans was paid on a deferred basis over a
three-year period and was subject to forfeiture if the key
employees employment with the Company ceased for any
reason other than death, permanent disability or normal
retirement. Beginning in 2007, with the adoption of the Company
incentive compensation plan for that year, the deferral feature
was eliminated. This change was adopted upon the recommendation
of a consulting firm, Hewitt Associates LLC, hired by management
with the approval of the Compensation Committee, which reviewed
the arrangement and determined the deferral feature was not
reflective of the norm in the industry and had the effect of
making the Companys compensation appear uncompetitive.
Restricted Stock.
The Company strongly
believes that the interests of shareholders and executives
become more closely aligned when executives are provided with an
opportunity to acquire an equity interest in the Company through
ownership of the Companys Common Stock. Accordingly, the
Company established the Restricted Stock Plan.
Individual grants under the Restricted Stock Plan are determined
based on individual and Company performance. In recognition of
their responsibility for the Companys financial
performance, a portion of compensation is given in the form of
equity to senior management.
By reference to Similar Companies, for the executive officers,
grants are designed to target the 50th to
75th percentile range with respect to the mix of equity and
cash compensation. With respect to Company performance, pursuant
to the Restricted Stock Plan, the Compensation Committee will
only grant restricted stock awards in a calendar year if the
Companys net income in the immediately preceding calendar
year was greater than zero (other than inducement awards granted
to persons who become employees of the Company during such
calendar year). Annual equity grants are traditionally given at
the first Board of Directors meeting held shortly after the
year-end close of the Companys books.
In addition, under the Restricted Stock Plan, executive officers
may be required to hold their restricted shares for an
additional two years after the initial three-year vesting period.
The Restricted Stock Plan expires in April 2009. Among other
reasons, the Company is seeking approval of the Incentive Plan
to replace the Restricted Stock Plan. The Incentive Plan would
allow the Company to grant restricted stock and other long term
incentives to executive officers and key employees of the
Company, including awards that are performance-based. See
Ratification and Approval of the CARBO Ceramics Inc.
Omnibus Incentive Plan (Proposal No. 2).
Termination and Change in
Control.
Mr. Kolstads employment
agreement provides for certain payments to be made in the event
of his termination of employment both before and following a
change in control. These provisions were part of the employment
agreement negotiated with Mr. Kolstad in connection with
his joining the
13
Company. The Company believes that having these provisions in
the employment agreement enables Mr. Kolstad to focus
solely on the performance of his job by providing him with
security in the event of certain terminations of employment or
change in control.
As is typical of many companies, the restricted stock issued by
the Company vests immediately upon a change in control of the
Company. This vesting provision is designed to preserve employee
productivity during the potentially disruptive time prior to a
change in control by assuring them of their opportunity to
realize the value of their stock awards.
Retirement.
The Company does not provide
retirement benefits to its executive officers other than
pursuant to its tax-qualified Savings and Profit Sharing Plans
available to all employees. It does provide that restricted
stock awards under the Restricted Stock Plan will vest upon
Retirement, which is defined as a participants
voluntary termination of employment or service on the Board of
Directors (with the approval of the Board of Directors) at or
after age 62 (unless otherwise defined in the award
agreement).
Internal Revenue Code
Section 162(m).
Internal Revenue Code
Section 162(m), and the regulations thereunder, place a
limit of $1,000,000 on the amount of compensation that may be
deducted by the Company in any year with respect to certain of
the Companys most highly compensated officers. The limit
imposed by Section 162(m) does not however, apply to
deductions for qualified performance-based
compensation, the material terms of which are disclosed to
and approved by shareholders. The Companys policy is to
carefully monitor the potential impact of Section 162(m) on
the tax deductibility of executive compensation, and to pay
executive compensation that may not be deductible if it believes
it is necessary and appropriate in light of the Companys
compensation objectives and in the interests of the Company and
its shareholders.
Summary
Compensation Table
The following table sets forth information concerning
(i) annual compensation paid to the Companys Chief
Executive Officer and Chief Financial Officer during the fiscal
years ended December 31, 2006, 2007, and 2008 and
(ii) annual compensation during such periods for the
Companys three most highly compensated executive officers,
other than the Chief Executive Officer and Chief Financial
Officer, who were serving as executive officers as of
December 31, 2008.
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Change in
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Pension
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Value and
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Non-Equity
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Nonqualified
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Incentive
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Deferred
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Stock
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Option
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Plan
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Compensation
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All Other
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Name and Principal
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Salary
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Bonus
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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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Position
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Year
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($)
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($)(3)
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($)(4)
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($)(4)
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($)
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($)
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($)(5)
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($)
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Gary A. Kolstad,
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2008
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500,000
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596,877
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444,140
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16,788
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1,557,805
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President and Chief
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2007
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300,000
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434,810
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383,600
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16,336
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1,134,746
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Executive Officer(1)
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2006
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175,000
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262,217
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195,104
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56,331
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688,652
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Paul G. Vitek,
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2008
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214,167
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338,741
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105,091
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16,788
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674,787
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Senior Vice President
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2007
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196,250
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150,079
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105,579
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14,899
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466,807
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Finance & Administration, Chief Financial Officer and
Treasurer
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2006
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182,500
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164,414
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90,826
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19,596
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457,336
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Mark L. Edmunds,
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2008
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203,500
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280,899
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105,016
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16,788
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606,203
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Vice President of Operations
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2007
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191,250
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133,719
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103,445
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9,195
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15,153
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452,762
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2006
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177,500
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154,798
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87,562
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85,393
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19,596
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524,849
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David G. Gallagher,
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2008
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213,383
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302,249
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182,014
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32,402
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730,048
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Vice President of Marketing and
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2007
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149,390
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109,928
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112,694
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82,068
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454,080
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Sales(2)
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R. Sean Elliott,
General Counsel, Corporate Secretary and Chief Compliance Officer
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2008
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189,250
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188,606
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23,274
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16,788
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417,918
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(1)
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Mr. Kolstad joined the Company as President and Chief
Executive Officer in June 2006.
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(2)
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Mr. Gallagher joined the Company as Vice President of
Marketing and Sales in April 2007.
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14
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(3)
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For Messrs. Vitek and Edmunds, the 2006 bonus amount
includes amounts of such bonus deferred under the Companys
former incentive compensation plan, which are payable in equal
annual amounts over a consecutive three-year period and may be
forfeited to the Company under certain circumstances. The
deferred portion of the bonus for Messrs. Vitek and Edmunds
in 2006 was $82,207 and $77,399, respectively.
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(4)
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Amounts shown do not reflect compensation actually received by
the named executive officer. Rather, amounts set forth in the
Stock Awards and Option Awards columns represent the amounts
recognized as compensation expense for financial statement
reporting purposes in the fiscal year indicated by the Company
with respect to stock awards and option awards, respectively, in
accordance FAS 123R (disregarding the estimate of
forfeitures related to service-based vesting conditions). A
discussion of the assumptions used in this valuation with
respect to awards made in fiscal year 2008 may be found in
Note 9 to the Companys financial statements contained
in the Companys Annual Report on
Form 10-K
for 2008. A discussion of the assumptions used in this valuation
with respect to awards made in fiscal years prior to fiscal year
2008 may be found in the corresponding sections of the
Companys financial statements and accompanying footnotes
for the fiscal year in which the award was made. Dividends are
paid on shares of restricted stock at the same rate, and at the
same time, that dividends are paid to shareholders of the
Company.
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(5)
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The compensation disclosed for each named executive officer in
2008 includes Company contributions under the Companys
Savings and Profit Sharing Plan. In addition, the compensation
disclosed for Mr. Gallagher includes payment of club
membership dues and the payment of educational expenses in
connection with the relocation benefits offered to him in April
2007.
|
Grants of
Plan-Based Awards in Fiscal Year 2008
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All
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All
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Other
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Other
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Grant
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Stock
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Option
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Date
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Awards:
|
|
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Awards:
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Fair
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise
|
|
|
Value of
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Under Equity Incentive Plan
|
|
|
Shares of
|
|
|
Securities
|
|
|
Price of
|
|
|
Stock and
|
|
|
|
|
|
|
Plan Awards
|
|
|
Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
|
|
|
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Threshold
|
|
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Target
|
|
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Maximum
|
|
|
Threshold
|
|
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Target
|
|
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Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Grant Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)(1)
|
|
|
Gary A. Kolstad,
President and Chief Executive Officer
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
179,600
|
|
Paul G. Vitek,
Senior Vice President Finance & Administration, Chief
Financial Officer and Treasurer
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,065
|
|
|
|
|
|
|
|
|
|
|
|
110,095
|
|
Mark L. Edmunds,
Vice President of Operations
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
3,065
|
|
|
|
|
|
|
|
|
|
|
|
110,095
|
|
David G. Gallagher,
Vice President of Marketing and Sales
|
|
|
1/15/2008
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
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|
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|
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1,950
|
|
|
|
|
|
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|
|
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|
|
70,044
|
|
R. Sean Elliott,
General Counsel, Corporate Secretary and Chief Compliance Officer
|
|
|
1/15/2008
|
|
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835
|
|
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|
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|
|
|
|
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|
29,993
|
|
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|
|
(1)
|
|
Amounts shown do not reflect compensation actually received by
the named executive officer. Rather, amounts set forth in the
stock award column represent the aggregate grant date fair value
computed in accordance with FAS 123R (disregarding the
estimate of forfeitures related to service-based vesting
conditions) based on the assumptions in Note 9 to the
Companys financial statements contained in the
Companys Annual Report on
Form 10-K
for 2008.
|
15
Employment
Agreements and Other Plans
Kolstad Employment Agreement.
The Company has
entered into an employment agreement with Gary A. Kolstad, dated
May 10, 2006, which was amended and restated as of
October 31, 2008, pursuant to which Mr. Kolstad is
employed as President and Chief Executive Officer of the
Company. The agreement runs through December 31, 2009, with
automatic extensions for successive one-year periods unless
written notice of an election not to extend is given by either
party, or unless the Company or Mr. Kolstad terminates his
employment earlier. From June 1, 2006 until
December 31, 2007, Mr. Kolstad received an annual base
salary of $300,000. Based on a variety of factors, including the
base salary range for Chief Executive Officers of the Similar
Companies, effective January 1, 2008,
Mr. Kolstads annual base salary was increased to
$500,000. The employment agreement gives the Company the right
to increase Mr. Kolstads annual base salary, but does
not expressly permit for it to be decreased. Mr. Kolstad is
eligible to receive an incentive bonus for each fiscal year
equal to the sum of (i) 0.5% of the Companys EBIT for
such fiscal year up to $75,000,000 of EBIT, plus (ii) 1.0%
of EBIT in excess of $75,000,000. On June 1, 2006, the
Company granted Mr. Kolstad 20,000 restricted shares of
Common Stock of the Company. One-third of the restricted shares
vest on the later of (i) the first, second and third
anniversaries or (ii) in each case, the first open
window trading date of the Company, pursuant to the
Companys Securities Trading Policy, following each such
anniversary. Mr. Kolstad is entitled to four weeks of paid
vacation per year, subject to the Companys applicable
policies. Mr. Kolstad shall be reimbursed for all
reasonable, ordinary and necessary expenses incurred in the
performance of his duties, provided he accounts to the Company
for such expenses. Mr. Kolstad shall also be entitled to
such benefits and perquisites as are generally made available to
senior executive officers of the Company except that he shall
not be eligible to participate in the Companys annual
incentive compensation plans. For more information regarding
Mr. Kolstads employment agreement, see
Termination and Change in Control Payments below.
Restricted Stock Plan.
Shares of restricted
stock granted pursuant to the Companys Restricted Stock
Plan are subject to transfer restrictions and forfeiture during
the three-year period following the date of grant. Generally,
one-third of the shares subject to each award will vest
(
i.e.
, will no longer be subject to transfer restrictions
or forfeiture) on the first, second and third anniversaries of
the date of grant. Generally, awards that have not vested will
be forfeited upon any termination of employment other than
termination due to death, disability or retirement in which case
the awards will immediately vest. To encourage officers to
retain their ownership of the Companys stock, the
Compensation Committee may provide that officers
restricted shares will continue to be subject to transfer
restrictions for an additional two-year period, except that if
an officers employment terminates prior to the end of such
two-year period, the shares will cease to be subject to transfer
restrictions at the time of termination. All shares of
restricted stock will vest upon a change in control of the
Company. Dividends are paid currently with respect to shares of
restricted stock granted pursuant to the Restricted Stock Plan.
For more information regarding the Restricted Stock Plan, see
Termination and Change in Control Payments below.
Incentive Compensation Plan.
For each plan
year, target incentive payments (stated as a percentage of base
salary) are determined for each plan participant. In addition, a
target is established annually for the Companys financial
performance. For 2008, the Company established a NIBT goal to
measure financial performance. Payments to plan participants are
calculated based on a formula that takes into consideration both
the individuals performance appraisal and the
Companys actual performance relative to the NIBT target
under the 2008 ICP. For executive officers, the weighting
between the two factors is determined by the Compensation
Committee and is based primarily upon the participants
position in the Company. With respect to Company performance
under the 2008 ICP, the percentage of incentive payment target
earned runs from 0% (if actual NIBT is less than 75% of target
NIBT) to 200% (if actual NIBT is 140% or more above target
NIBT). Individual performance is rated on a scale of 1 to 5. If
a plan participants performance appraisal rating is less
than 3, then the participant is not eligible to receive any
payment regardless of company performance. Between a performance
appraisal rating of 3 and 5, the percentage of incentive payment
target earned runs from 80% to 120%. Alternatively, individual
performance may be based on revenue generation, NIBT or other
measures approved by the Compensation Committee. In order for
individual performance awards to be earned under this
alternative, performance must meet or exceed a minimum of 75% of
the applicable goal or 75% of the corresponding prior
periods actual performance result. The portion of the
bonus determined by individual performance is paid regardless of
the level of NIBT achieved by the Company. In 2006 and
previously, a portion of the amount awarded under the
Companys incentive compensation plan was
16
paid on a deferred basis over a three-year period and was
subject to forfeiture if the key employees employment with
the Company ceased for any reason other than death, permanent
disability or normal retirement. In 2006, the portion of
incentive compensation that was deferred for executive officers
was 50%. Beginning in 2007, this deferral feature was eliminated.
The 2008 ICP allows the Compensation Committee to interpret the
plan, and to adopt rules and regulations that are necessary or
advisable for the proper administration of the plan.
Additionally, the 2008 ICP allows the Compensation Committee to
make certain adjustments in the event that a plan participant
receives quarterly awards that are not reflective of full-year
performance or has a change in eligibility status under the plan
during the 2008 fiscal year. During 2008, the Compensation
Committee did not take any action that resulted in an award of
compensation absent the attainment of the relevant performance
goal or reduce or increase the size of any award or payout under
the 2008 ICP. However, the calculation of NIBT approved by the
Compensation Committee for the 2008 ICP was decreased by the
amount of the gain on the Pinnacle Sale. Similarly, the target
corporate NIBT for the 2008 ICP was reduced to take into account
the absence of planned earnings from the businesses included in
the Pinnacle Sale during the fourth quarter of 2008.
The following table sets forth information regarding outstanding
equity awards held by the Companys named executive
officers as of December 31, 2008.
Outstanding
Equity Awards at End of Fiscal Year 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Number of
|
|
|
Value
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Unearned
|
|
|
of Unearned
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Shares, Units
|
|
|
Shares, Units
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
or Other
|
|
|
or Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights That
|
|
|
Rights That
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)(2)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)
|
|
|
Gary A. Kolstad,
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,550
|
|
|
|
516,962
|
|
|
|
|
|
|
|
|
|
Paul G. Vitek,
Senior Vice President Finance and Administration, Chief
Financial Officer and Treasurer
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
23.01
|
|
|
|
04/10/2011
|
|
|
|
5,538
|
|
|
|
196,765
|
|
|
|
|
|
|
|
|
|
Mark L. Edmunds,
Vice President of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,538
|
|
|
|
196,765
|
|
|
|
|
|
|
|
|
|
David G. Gallagher,
Vice President of Marketing and Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,617
|
|
|
|
306,162
|
|
|
|
|
|
|
|
|
|
R. Sean Elliott,
General Counsel, Corporate Secretary and Chief Compliance Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,502
|
|
|
|
53,366
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Market Value is computed by multiplying the closing market price
of the Companys stock at the end of fiscal year 2008 of
$35.53 by the number of shares subject to the award.
|
|
(2)
|
|
Pursuant to the Restricted Stock Plan, one-third of the shares
subject to award vest on each of the first three anniversaries
of the grant date. For Mr. Kolstad, 1,666 shares
vested on January 15, 2009, 1,442 shares vested on
|
17
|
|
|
|
|
January 16, 2009, 6,666 shares will vest on the later
of June 1, 2009 or the date of the next open trading window
under the Companys insider trading policy,
1,667 shares will vest on January 15, 2010,
1,442 shares will vest on January 16, 2010 and
1,667 shares will vest on January 15, 2011. For
Mr. Vitek, 1,021 shares vested on January 15,
2009, 961 shares vested on January 16, 2009 and
550 shares vested on January 17, 2009. The remaining
restricted shares were forfeited in connection with
Mr. Viteks departure from the Company on
January 20, 2009. For Mr. Edmunds, 1,021 shares
vested on January 15, 2009, 961 shares vested on
January 16, 2009, 550 shares vested on
January 17, 2009, 1,022 shares will vest on
January 15, 2010, 962 shares will vest on
January 16, 2010 and 1,022 shares will vest on
January 15, 2011. For Mr. Gallagher, 650 shares
vested on January 15, 2009, 3,333 shares will vest on
April 17, 2009, 650 shares will vest on
January 15, 2010, 3,334 shares will vest on
April 17, 2010 and 650 shares will vest on
January 15, 2011. For Mr. Elliott, 278 shares
vested on January 15, 2009, 333 shares vest on
November 21, 2009, 278 shares vest on January 15,
2010, 334 shares will vest on November 21, 2010 and
279 shares will vest on January 15, 2011.
|
The following table sets forth information regarding equity
awards held by the Companys named executive officers that
were exercised or that vested during fiscal year 2008.
Option
Exercises and Stock Vested in Fiscal Year 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired
|
|
|
Realized
|
|
|
Acquired
|
|
|
Realized
|
|
|
|
on Exercise
|
|
|
on Exercise
|
|
|
on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Gary A. Kolstad,
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
8,109
|
|
|
|
370,264
|
|
Paul G. Vitek,
Senior Vice President Finance & Administration, Chief
Financial Officer and Treasurer
|
|
|
27,750
|
|
|
|
936,341
|
|
|
|
2,146
|
|
|
|
74,081
|
|
Mark L. Edmunds,
Vice President of Operations
|
|
|
22,500
|
|
|
|
704,178
|
|
|
|
2,111
|
|
|
|
72,919
|
|
David G. Gallagher,
Vice President of Marketing and Sales
|
|
|
|
|
|
|
|
|
|
|
3,333
|
|
|
|
149,285
|
|
R. Sean Elliott,
General Counsel, Corporate Secretary and Chief Compliance Officer
|
|
|
|
|
|
|
|
|
|
|
333
|
|
|
|
12,537
|
|
EQUITY
COMPENSATION PLAN INFORMATION
The following table sets forth certain information regarding the
Companys equity compensation plans as of December 31,
2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C.
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
A.
|
|
|
|
|
|
Remaining Available
|
|
|
|
Number of
|
|
|
|
|
|
for Future Issuance
|
|
|
|
Securities to be
|
|
|
B.
|
|
|
Under Equity
|
|
|
|
Issued Upon
|
|
|
Weighted-Average
|
|
|
Compensation Plans
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
(Excluding
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Securities
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Reflected in Column
|
|
Plan Category
|
|
and Rights
|
|
|
and Rights
|
|
|
(A))
|
|
|
Equity compensation plans approved by security holders
|
|
|
53,675
|
|
|
$
|
23.85
|
|
|
|
120,690(2
|
)
|
Equity compensation plans not approved by security holders(1)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Total(1)
|
|
|
53,675
|
|
|
$
|
23.85
|
|
|
|
120,690(2
|
)
|
18
|
|
|
(1)
|
|
In December 2005, the Board of Directors adopted the CARBO
Ceramics Inc. Director Deferred Fee Plan (the Deferral
Plan). Pursuant to the Deferral Plan, Directors of the
Company are permitted to defer their annual cash compensation
for Board of Directors service that is otherwise payable in a
given fiscal year and receive such fees in shares of the
Companys Common Stock upon their retirement from the Board
of Directors, or such later date as the Director may specify. As
fees are earned, shares of Common Stock are credited to
bookkeeping accounts for future issuance. No set amount of
shares is authorized for issuance under the terms of the
Deferral Plan. As of December 31, 2008, the outstanding
balance for all bookkeeping accounts under the Deferral Plan was
6,960 shares.
|
|
(2)
|
|
Represents shares available for issuance under the Restricted
Stock Plan as of December 31, 2008.
|
TERMINATION
AND CHANGE IN CONTROL PAYMENTS
The following tables set forth the estimated value of payments
and benefits that the Companys named executive officers
would be entitled to receive assuming certain terminations of
employment
and/or
assuming a change in control of the Company, in each case
occurring on December 31, 2008 and using the closing market
price of the Common Stock at the end of fiscal year 2008 of
$35.53.
Gary
A. Kolstad
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash-Out Value of
|
|
|
Cash-Out Value of
|
|
|
|
|
|
|
Equity-Based Awards
|
|
|
Cash-Based Awards
|
|
|
|
|
|
|
that Vest as
|
|
|
that Vest as
|
|
|
|
|
|
|
a Result of a
|
|
|
a Result of a
|
|
|
Value of Salary
|
|
Triggering Event
|
|
Triggering Event ($)
|
|
|
Triggering Event ($)
|
|
|
Continuation ($)
|
|
|
Termination of Employment Prior to a Change In Control without
Cause
|
|
|
|
|
|
|
596,877
|
|
|
|
1,000,000
|
|
After a Change In Control without Cause or for Good Reason
|
|
|
516,962
|
|
|
|
596,877
|
|
|
|
1,000,000
|
|
Retirement
|
|
|
516,962
|
|
|
|
|
|
|
|
|
|
Disability
|
|
|
516,962
|
|
|
|
596,877
|
|
|
|
|
|
Death
|
|
|
516,962
|
|
|
|
596,877
|
|
|
|
|
|
Voluntary Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Control
|
|
|
516,962
|
|
|
|
|
|
|
|
|
|
Paul
G. Vitek
|
|
|
|
|
|
|
|
|
|
|
Cash-Out Value of
|
|
|
Cash-Out Value of
|
|
|
|
Equity-Based Awards
|
|
|
Cash-Based Awards
|
|
|
|
that Vest as
|
|
|
that Vest as
|
|
|
|
a Result of a
|
|
|
a Result of a
|
|
Triggering Event
|
|
Triggering Event ($)
|
|
|
Triggering Event ($)
|
|
|
Termination of Employment
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
196,765
|
|
|
|
83,549
|
|
Disability
|
|
|
196,765
|
|
|
|
83,549
|
|
Death
|
|
|
196,765
|
|
|
|
83,549
|
|
Voluntary Termination
|
|
|
|
|
|
|
|
|
Change in Control
|
|
|
196,765
|
|
|
|
|
|
19
Mark
L. Edmunds
|
|
|
|
|
|
|
|
|
|
|
Cash-Out Value of
|
|
|
Cash-Out Value of
|
|
|
|
Equity-Based Awards
|
|
|
Cash-Based Awards
|
|
|
|
that Vest as
|
|
|
that Vest as
|
|
|
|
a Result of a
|
|
|
a Result of a
|
|
Triggering Event
|
|
Triggering Event ($)
|
|
|
Triggering Event ($)
|
|
|
Termination of Employment
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
196,765
|
|
|
|
78,972
|
|
Disability
|
|
|
196,765
|
|
|
|
78,972
|
|
Death
|
|
|
196,765
|
|
|
|
78,972
|
|
Voluntary Termination
|
|
|
|
|
|
|
|
|
Change in Control
|
|
|
196,765
|
|
|
|
|
|
David
G. Gallagher
|
|
|
|
|
|
|
|
|
|
|
Cash-Out Value of
|
|
|
Cash-Out Value of
|
|
|
|
Equity-Based Awards
|
|
|
Cash-Based Awards
|
|
|
|
that Vest as
|
|
|
that Vest as
|
|
|
|
a Result of a
|
|
|
a Result of a
|
|
Triggering Event
|
|
Triggering Event ($)
|
|
|
Triggering Event ($)
|
|
|
Termination of Employment
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
306,162
|
|
|
|
|
|
Disability
|
|
|
306,162
|
|
|
|
|
|
Death
|
|
|
306,162
|
|
|
|
|
|
Voluntary Termination
|
|
|
|
|
|
|
|
|
Change in Control
|
|
|
306,162
|
|
|
|
|
|
R.
Sean Elliott
|
|
|
|
|
|
|
|
|
|
|
Cash-Out Value of
|
|
|
Cash-Out Value of
|
|
|
|
Equity-Based Awards
|
|
|
Cash-Based Awards
|
|
|
|
that Vest as
|
|
|
that Vest as
|
|
|
|
a Result of a
|
|
|
a Result of a
|
|
Triggering Event
|
|
Triggering Event ($)
|
|
|
Triggering Event ($)
|
|
|
Termination of Employment
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
53,366
|
|
|
|
|
|
Disability
|
|
|
53,366
|
|
|
|
|
|
Death
|
|
|
53,366
|
|
|
|
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Voluntary Termination
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Change in Control
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53,366
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Kolstad Employment Agreement.
In the event
that Mr. Kolstads employment is terminated due to
disability or death, Mr. Kolstad, or his estate, shall be
entitled to receive (i) all earned but unpaid base salary,
(ii) payment for all earned but unused vacation time, and
(iii) reimbursement for business expenses incurred prior to
the date of termination (together, the Accrued
Obligations). He, or his estate, shall also receive a
pro-rated bonus based on the bonus he would have received for
the year in which his employment terminated had his employment
continued. If the Company terminates Mr. Kolstads
employment for Cause, he shall only be entitled to receive the
Accrued Obligations. In the event the Company terminates
Mr. Kolstads employment without Cause, he shall be
entitled to
20
receive (i) the Accrued Obligations, (ii) a pro-rated
bonus based on the bonus he would have received for the year in
which his employment terminated had his employment continued and
(iii) contingent upon his execution of a general release of
claims against the Company, an amount equal to two times his
base salary. The Accrued Obligations, pro-rated bonus and a
portion of the base salary payment would be paid in a lump sum,
and the remaining portion of the base salary payment would be
paid over an 18 month period. Notwithstanding the
foregoing, in the event Mr. Kolstads employment is
terminated by the Company without Cause or by him for Good
Reason, and in either case, during the one-year period following
a change in control of the Company, he shall be entitled to
receive (i) the Accrued Obligations, (ii) a pro-rated
bonus based on the bonus he received in the year prior to his
termination of employment and (iii) an amount equal to two
times his base salary. In this instance, the Accrued Obligations
and a portion of the bonus and base salary payment would be paid
in a lump sum, with the remaining portion of the bonus and base
salary payment to be paid over an 18 month period.
In Mr. Kolstads employment agreement,
Cause is defined as (i) any material violation
by Mr. Kolstad of the agreement; (ii) any failure by
Mr. Kolstad to substantially perform his duties thereunder;
(iii) any act or omission involving dishonesty, fraud,
willful misconduct or gross negligence on the part of
Mr. Kolstad that is or may be materially injurious to the
Company; and (iv) commission of any felony or other crime
involving moral turpitude.
Good Reason is defined as, without
Mr. Kolstads express written consent, the occurrence
of any one or more of the following: (i) the assignment of
Mr. Kolstad to duties materially inconsistent with his
authorities, duties, responsibilities and status (including
offices, titles and reporting requirements) as an officer of the
Company, or a reduction or alteration in the nature or status of
his authorities, duties or responsibilities from those in effect
immediately prior to a change in control, including a failure to
reelect him to, or a removal of him from, any office of the
Company that he held immediately prior to a change in control;
or (ii) the Companys requiring Mr. Kolstad to be
based at a location more than 50 miles from Irving, Texas,
except for required travel on the Companys business to an
extent substantially consistent with his business obligations
immediately prior to a change in control; or (iii) the
Company materially breaches the agreement or any other written
agreement with Mr. Kolstad; or (iv) a material
reduction in his level of participation in any of the
Companys welfare benefit, retirement or other employee
benefit plans, policies, practices or arrangements in which he
participates as of the date of the change in control. The
Company is entitled to written notice and a 30 day cure
period for any event that may constitute Good Reason.
Mr. Kolstad is subject to a covenant not to compete for a
period of two years following the termination of his employment
with the Company. He is also subject to standard covenants not
to solicit employees and not to solicit clients for a period of
one year following a termination.
Restricted Stock Plan.
All named executive
officers were participants in the Restricted Stock Plan and had
unvested awards of restricted shares pursuant to this plan as of
December 31, 2008. The Restricted Stock Plan provides that
upon a termination of employment or service, other than due to
death, disability or retirement, a participant forfeits any
unvested shares of restricted stock. If the participants
employment or service terminates due to death, disability or
retirement, all unvested shares shall immediately vest.
Retirement is defined as a participants
voluntary termination of employment or service on the Board of
Directors (with the approval of the Board of Directors) at or
after age 62 (unless otherwise defined in the award
agreement). None of the named executive officers are currently
eligible for retirement. The Restricted Stock Plan provides that
unvested awards shall immediately vest upon a change in control.
CARBO Ceramics Inc. 2008 Incentive Compensation Plan for Key
Employees.
The 2008 ICP was adopted effective
January 1, 2008, and sets forth the terms and conditions of
the incentive payments for Messrs. Vitek, Edmunds,
Gallagher and Elliott for the 2008 fiscal year. The 2008 ICP
does not have any provisions for accelerated vesting upon
termination of employment (regardless of the reason) or upon a
change of control of the Company.
CARBO Ceramics Inc. Incentive Compensation
Plan.
As of December 31, 2008,
Messrs. Vitek and Edmunds were participants in the CARBO
Ceramics Inc. Incentive Compensation Plan (the ICP),
which was discontinued in fiscal 2007. Under the terms of the
ICP, 50% of all annual incentive awards (with respect to fiscal
year 2006 and earlier) are deferred and paid in three equal
annual installments beginning in the year in which the
participant is informed of the award. A participant forfeits all
rights to receive any unpaid portion of deferred amounts if such
participants employment with the Company terminates for
any reasons other than normal retirement, death or
21
permanent disability. In the event of normal retirement, death
or permanent disability, the unpaid portion of any deferred
amounts can be either paid out in lump sum or at the discretion
of the Company. There is no provision to accelerate the vesting
schedules under the ICP upon a change in control of the Company.
REPORT OF
THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by the Securities
Exchange Act of 1934, as amended (the Exchange Act)
with management and, based on the Compensation Committees
review and discussions with management, the Compensation
Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this proxy statement.
The report of the Compensation Committee is not
solicitation material and shall not be deemed
incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except
to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed
filed under such acts.
CARBO Ceramics Inc. Compensation Committee
H.E. Lentz, Jr., Chairman
Dr. Claude E. Cooke, Jr.
Chad C. Deaton
James B. Jennings
Randy L. Limbacher
William C. Morris
Robert S. Rubin
March 16, 2009
RATIFICATION
AND APPROVAL OF THE CARBO CERAMICS INC. OMNIBUS INCENTIVE
PLAN
(PROPOSAL NO. 2)
General.
In January 2009, the Compensation
Committee recommended to the Board of Directors and the Board of
Directors adopted the CARBO Ceramics Inc. Omnibus Incentive
Plan, subject to the approval of the Companys
shareholders. The purpose of the Incentive Plan is to provide
the Company with the means to attract and retain highly
qualified key employees, as well as to align the interests of
the employees and the Companys shareholders by encouraging
employees of the Company to acquire or increase their equity
interest in the Company, and to relate compensation to the
performance goals of the Company. The Incentive Plan will become
effective on the date it is approved by the Companys
shareholders and no award will be granted under the Incentive
Plan after the fifth anniversary of such date. The Incentive
Plan is intended to replace the Restricted Stock Plan, which
expires in April 2009.
Summary of Incentive Plan.
The following
summary of the material terms of the Incentive Plan is qualified
in its entirety by reference to the copy of the Incentive Plan
attached hereto as Appendix A.
Under the Incentive Plan, the Compensation Committee may grant
cash-based awards, stock options (both non-qualified and
incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as
amended (the Code)), or other equity-based awards
(including stock appreciation rights, phantom stock, restricted
stock, restricted stock units, performance shares, deferred
share units or share-denominated performance units) with respect
to a number of shares of Common Stock of the Company that in the
aggregate does not exceed 750,000 shares, plus (i) the
number of shares subject to previously issued awards that are
subsequently forfeited, cancelled or returned; and (ii) the
number of shares subject to awards that are withheld by the
Company or tendered by the participant to the Company to satisfy
exercise price or tax withholding obligations in connection with
such awards. The maximum number of shares of Common Stock that
may be issued through options designated as incentive
stock options within the meaning of Section 422 of
the Code shall not exceed 750,000 shares of
22
Common Stock in the aggregate. The aggregate limit described in
this paragraph does not take into account any stock options
assumed as of a result of any merger or consolidation involving
the Company in which the Company is the surviving corporation.
No more than 50,000 shares of stock may be granted to any
single employee in any calendar year pursuant to the Incentive
Plan. The amount paid under the Incentive Plan to any single
employee in any calendar year with respect to any cash-based
award shall not exceed $2,000,000. Shares issued under the
Incentive Plan may be either newly issued shares or treasury
shares, as determined by the Compensation Committee. In the
event of any change in the capitalization of the Company or in
the event of any corporate change involving the Company, the
Compensation Committee will adjust the share limitations
described above, the type of securities available for grant
under the Incentive Plan, and the number and the type of
securities underlying outstanding awards, in each case, as it
considers appropriate in order to prevent dilution or
enlargement of rights.
Only Directors and key employees (including officers of the
Company, whether or not they are members of the Board) of the
Company and its affiliates who have made or who the Compensation
Committee believes will make substantial contributions to the
management, growth and protection of the Companys business
are eligible to participate in the Incentive Plan. As of March
2009, it is expected that approximately 85 employees and
seven Directors will be eligible to participate in the Incentive
Plan. The closing per share price on the NYSE of a share of the
Companys Common Stock on March 23, 2009, was $30.64.
The Compensation Committee is authorized to grant awards,
designating both the employees and Directors of the Company or
its affiliates who will be granted the awards, the type of
award, the number of shares or amount of cash underlying such
awards and the terms and conditions of such awards from time to
time. Subject to Section 157 of the Delaware General
Corporation Law, the Compensation Committee may also from time
to time authorize a subcommittee consisting of one or more
members of the Board or officers of the Company to grant awards
to persons who are not executive officers of the Company (within
the meaning of
Rule 16a-1
of the Exchange Act). The Compensation Committee has the full
discretionary authority to administer the Incentive Plan,
including the authority to interpret and construe any provision
of the Incentive Plan and the terms of any award granted
thereunder.
In the case of any stock options or stock appreciation rights
issued under the Incentive Plan, the exercise price per share of
Common Stock covered by any such option or stock appreciation
right shall be not less than 100% of the fair market value of a
share of Common Stock on the date on which such option or stock
appreciation right is granted. Any stock option or stock
appreciation right granted under the Incentive Plan shall expire
on the ten-year anniversary of the date such option or stock
appreciation right is granted.
The amount payable with respect to any award that is intended to
qualify as Performance-Based Compensation under
Section 162(m) of the Code shall be determined in any
manner permitted by Section 162(m) of the Code. The payment
or vesting of such awards will depend upon performance targets
related to one or more of the following performance measures:
(i) net income or operating net income (before or after
taxes, interest, depreciation, amortization,
and/or
nonrecurring/unusual items), (ii) return on assets, return
on capital, return on equity, return on economic capital, return
on other measures of capital, return on sales or other financial
criteria, (iii) revenue or net sales, (iv) gross
profit or operating gross profit, (v) cash flow,
(vi) productivity or efficiency ratios, (vii) share
price or total shareholder return, (viii) earnings per
share, (ix) budget and expense management,
(x) customer and product measures, including market share,
high value client growth, and customer growth, (xi) working
capital turnover and targets, (xii) margins,
(xiii) economic value added or other value added
measurements, (xiv) sales volume or other sales performance
criteria and (xv) goals related to the research,
development, implementation or marketing of new products or
business initiatives, in any such case (A) considered
absolutely or relative to historic performance or relative to
one or more other businesses and (B) determined for the
Company or any business unit or division thereof.
The Compensation Committee may, in its discretion, reduce or
eliminate the amount payable to any participant with respect to
an award that is intended to qualify as Performance-Based
Compensation, based on such factors as the Compensation
Committee may deem relevant, but the Compensation Committee may
not increase any such amount above the amount established in
accordance with the relevant performance schedule. The
measurement of any performance measure(s) may exclude the impact
of charges for restructurings, discontinued operations,
23
extraordinary items, and other unusual or non-recurring items,
and the cumulative effects of accounting changes, each as
defined by generally accepted accounting principles and as
identified in the Companys audited financial statements,
including the notes thereto.
Each award agreement will specify the consequences with respect
to such award of any termination of employment, leave of
absence, and the employees death or disability. Unless
otherwise set forth in an award grant agreement, upon a Change
in Control of the Company, awards will immediately vest. For
purposes of the Incentive Plan, a Change in Control
means the occurrence of any of the following after the Incentive
Plans effective date: (i) the occurrence of a change
in control of the Company of a nature that would be required to
be reported or is reported in response to Item 5.01 of the
current report on
Form 8-K,
as in effect on the effective date, pursuant to Sections 13
or 15(d) of the Exchange Act; or (ii) any person is or
becomes the beneficial owner (as defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company representing 30% or more of the combined voting
power of the Companys outstanding securities (other than
any person who was a beneficial owner of securities
of the Company representing 30% or more of the combined voting
power of the Companys outstanding securities prior to the
effective date); or (iii) individuals who constitute the
Board on the effective date (the Incumbent Board)
cease for any reason to constitute at least a majority of the
members of the Board, provided that any person becoming a
director subsequent to the effective date whose appointment to
fill a vacancy or to fill a new Board position was approved by a
vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the
Companys shareholders was approved by the same nominating
committee serving under an Incumbent Board, shall be, for
purposes of this clause (iii), considered as though he were a
member of the Incumbent Board; or (iv) the occurrence of
any of the following of which the Incumbent Board does not
approve: (A) merger or consolidation in which the Company
is not the surviving corporation or (B) sale of all or
substantially all of the assets of the Company; or
(v) consummation of a plan of reorganization, merger or
consolidation of the Company with one or more corporations as a
result of which the outstanding shares of the class of
securities then subject to the plan of reorganization are
exchanged or converted into cash or property or securities not
issued by the Company, which was approved by shareholders
pursuant to a proxy statement soliciting proxies from
shareholders of the Company, by someone other than the then
current management of the Company.
Notwithstanding the foregoing and for the purposes of timing of
payment, distribution or settlement only, a Change in Control
shall not be deemed to occur under the Incentive Plan with
respect to any award that constitutes non-qualified
deferred compensation within the meaning of
Section 409A of the Code, unless the events that have
occurred would also constitute a Change in the Ownership
or Effective Control of a Corporation or in the Ownership of a
Substantial Portion of the Assets of a Corporation under
Treasury Department Final
Regulation 1.409A-3(i)(5),
or any successor thereto.
Awards shall not vest more rapidly than ratably over a
three-year period;
provided
,
however
, that
(i) to the extent permitted by Section 409A of the
Code, the Compensation Committee may, in its sole discretion,
provide for accelerated vesting of any such award on account of
a participants retirement, death, disability, leave of
absence, termination of employment or any other similar event,
(ii) to the extent permitted by Section 409A of the
Code, the Compensation Committee may, in its sole discretion,
provide for accelerated vesting of any such award upon the
achievement of performance criteria specified by the
Compensation Committee, related to a period of performance of
one year or more, and (iii) up to twenty percent (20%) of
the shares of Common Stock reserved for issuance under the
Incentive Plan may be granted subject to awards with such other
vesting requirements (if any) as the Compensation Committee may
establish in its sole discretion (which number of shares shall
not include any shares subject to Performance-Based Compensation
awards). On or after the date of grant of an award under the
Incentive Plan, and subject to applicable law and the
limitations and requirements set forth in the preceding
sentence, the Compensation Committee may (i) accelerate the
date on which any such Award becomes vested, exercisable or
transferable, as the case may be, (ii) extend the term of
any such Award, including, without limitation, extending the
period following a termination of a Participants
employment during which any such Award may remain outstanding,
(iii) waive any conditions to the vesting, exercisability
or transferability, as the case may be, of any such Award or
(iv) provide for the payment of dividends or dividend
equivalents with respect to any such Award.
24
A participant will generally have none of the rights of a
shareholder with respect to the shares underlying an award until
the date of the issuance of a stock certificate with respect to
such shares or the date as of which the Company records the
participant or his or her nominee as the owner of such shares,
free and clear of any restrictions or conditions pursuant to the
Incentive Plan or any award agreement thereunder. At a
participants request, the Compensation Committee may
withhold or permit the participant to tender a portion of the
shares underlying an award to satisfy tax withholding
obligations incurred in connection with such award.
The Board of Directors may amend, modify, or terminate the
Incentive Plan at any time, except that the participants
consent will be required if such amendment, modification or
termination reduces any participants award or otherwise
materially affects the rights of such participant. With respect
to awards subject to Section 409A of the Code, any
amendment, modification or termination of the Incentive Plan or
any such award shall conform to the requirements of
Section 409A of the Code.
Certain Federal Income Tax Consequences.
The
following is a brief description of the principal
United States federal income tax consequences related to
options granted under the Incentive Plan.
Non-Qualified Options.
Generally, a grantee
will not be subject to tax at the time a non-qualified option is
granted, and no tax deduction is then available to the Company.
Upon the exercise of a non-qualified option, an amount equal to
the excess of the fair market value of the shares acquired on
the date of exercise over the exercise price paid will be
included in the grantees ordinary income and the Company
will generally be entitled to deduct the same amount. Upon
disposition of shares acquired upon exercise, appreciation or
depreciation after the date of exercise will be treated by the
grantee or transferee of the non-qualified option as either
capital gain or capital loss and, depending upon the length of
period following exercise, either short term or long term.
If a non-qualified option provides for issuance of Common Stock
subject to restrictions upon exercise, the grantee receiving
such restricted stock will not recognize income for tax purposes
until the restrictions lapse, unless he or she elects otherwise,
as described below. Rather, the grantee will have taxable income
upon lapse of the restrictions equal to the amount by which the
fair market value of the shares at the time the restrictions
lapse exceeds the exercise price paid on exercise, and the
Company will generally have a tax deduction in the same amount.
Proceeds from the sale of stock sold after the restrictions
lapse will be taxable as a capital gain or capital loss,
depending upon the amount by which the sale price exceeds or is
less than the fair market value of the stock at the time the
restrictions lapse.
Alternatively, a grantee who receives Common Stock subject to
restrictions can elect to recognize income immediately upon
exercise of the non-qualified option, in which case the
grantees taxable income and the Companys tax
deduction are generally determined at the time of option
exercise, as explained in the first paragraph of this section.
However, if the grantee subsequently forfeits the stock or is
required to sell it to the Company by the terms of the
restriction, the grantees tax deduction for any loss on
the sale will be limited to the amount, if any, by which the
exercise price exceeds the amount paid by the Company on such
sale.
If the grantee pays the exercise price, in whole or in part,
with previously acquired shares, the exchange will not affect
the tax treatment of the exercise. No gain or loss is recognized
on delivery of the previously acquired shares to the Company,
and shares received by the grantee equal in number to the
previously acquired shares so exchanged will have the same basis
and holding period for capital gain purposes as the previously
acquired shares. Shares received by the grantee in excess of the
number of previously acquired shares will have a basis equal to
the fair market value of such additional shares as of the date
ordinary income equal to such fair market value is realized, and
a holding period beginning as of such date.
Incentive Stock Options.
A grantee will not be
subject to tax at the time an incentive stock option is granted
or exercised, and no tax deduction is available to the Company;
however, the grantee may be subject to the alternative minimum
tax on the excess of the fair market value of the shares
received upon exercise of the incentive stock option over the
exercise price paid. Upon disposition of the shares acquired
upon exercise of an incentive stock option, capital gain or
capital loss will generally be recognized in an amount equal to
the difference between the sale price and the exercise price, as
long as the grantee has not disposed of the shares within two
years of the date of grant of the option or within one year from
the date of exercise and has been employed by the Company at all
times from the grant date until the date three months before the
date of exercise (one year in the case of permanent disability).
If the
25
grantee disposes of the shares without satisfying both the
holding period and employment requirements (a disqualifying
disposition), the grantee will recognize ordinary income at the
time of the disqualifying disposition to the extent of the
excess of the amount realized on such disqualifying disposition
over the exercise price paid or, if the disqualifying
disposition resulted from a failure to satisfy the holding
period requirement, the fair market value of the shares on the
date the incentive stock option is exercised (if less). Any
remaining gain or loss is treated as a capital gain or capital
loss.
If the grantee pays the exercise price, in whole or in part,
with previously acquired shares, the exchange will not affect
the tax treatment of the exercise. Upon such exchange, and
except for disqualifying dispositions, no gain or loss is
recognized upon the delivery of the previously acquired shares
to the Company, and the shares received by the grantee equal in
number to the previously acquired shares exchanged therefor will
have the same basis and holding period for capital gain or
capital loss purposes as the previously acquired shares. Shares
received by the grantee in excess of the number of previously
acquired shares will have a basis of zero and a holding period
which commences as of the date the shares are issued to the
grantee upon exercise of the incentive stock option. If such an
exercise is effected using shares previously acquired through
the exercise of an incentive stock option, the exchange of the
previously acquired shares will be considered a disposition of
such shares for the purpose of determining whether a
disqualifying disposition has occurred.
The Company is not entitled to a tax deduction upon either the
exercise of an incentive stock option or upon disposition of the
shares acquired pursuant to such exercise, except to the extent
that the grantee recognized ordinary income in a disqualifying
disposition.
Limits on Companys Deductions.
Code
Section 162(m) generally places a $1 million annual
limit on a companys tax deduction for compensation paid to
a covered employee. A covered employee
is defined as the chief executive officer and the other three
highest paid officers named in the companys proxy
statement (other than the chief executive officer). This limit
does not apply to compensation that satisfies the applicable
requirements for the performance-based compensation
exception (Performance Exception), including
approval by shareholders of the material terms of the
compensation. Approval of the Incentive Plan at the Annual
Meeting will satisfy this shareholder-approval requirement.
The Incentive Plan incorporates the provisions required to
satisfy the Performance Exception for options and stock
appreciation rights, in addition to the shareholder approval
requirements. These requirements include limiting the maximum
number of shares of Common Stock for which options and stock
appreciation rights may be granted to any single participant
during any one-year period to 50,000 (subject to adjustments as
described above under Summary of Incentive Plan),
allowing such awards to only be granted by the Compensation
Committee which must be comprised of outside
directors as defined under Code Section 162(m), and
requiring that the exercise price of such awards be not less
than the fair market value of the underlying stock on the date
of grant.
If the Committee makes awards other than options and stock
appreciation rights subject to the achievement of performance
goals, and complies with the other procedures required by the
Performance Exception, the awards should qualify for the
Performance Exception. These procedures require that the
Committee establish objective performance-based goals based upon
one or more of the performance measures outlined above within
the time allowed by the Performance Exception and at a time when
achievement of the goals is not substantially certain, and that
it certify the achievement of those goals before the vesting or
payment of the awards.
It is anticipated that in general, the Committee will operate
the Incentive Plan in a manner designed to avoid loss of the
Companys tax deduction because of Code
Section 162(m). However, it is possible that in some cases,
awards granted to covered employees may not qualify for the
Performance Exception. Further, if awards vest or are paid on an
accelerated basis upon a Change in Control or a subsequent
termination of employment, some or all of the value of that
acceleration may be considered an excess parachute
payment under Section 280G of the Code. This would
result in the imposition of a 20 percent federal excise tax
on the recipients of the excess parachute payments and a loss of
the Companys deduction for the excess parachute payments.
New Plan Benefits.
Except as set forth below,
awards to be granted under the Incentive Plan are not
determinable at this time. Any such grant will be in the
discretion of the Compensation Committee in accordance with the
terms of the Incentive Plan.
26
The Compensation Committee has granted certain cash-based awards
under the Incentive Plan as set forth below, subject to
shareholder approval of the Incentive Plan. If the Incentive
Plan is not approved by shareholders, these awards will be
cancelled, but the Compensation Committee may, in its
discretion, pay other compensation which may not be deductible
under Section 162(m). The amounts set forth below presume
achievement of 100% of the stipulated target level of the
relevant performance measurement for each award.
|
|
|
|
|
Name and Position
|
|
Dollar Value ($)
|
|
|
Gary A. Kolstad, President and Chief Executive Officer
|
|
|
225,000
|
|
Ernesto Bautista, III, Vice President and Chief Financial
Officer
|
|
|
70,000
|
|
Mark L. Edmunds, Vice President of Operations
|
|
|
63,000
|
|
David G. Gallagher, Vice President of Marketing and Sales
|
|
|
66,250
|
|
R. Sean Elliott, General Counsel, Corporate Secretary and Chief
Compliance Officer
|
|
|
37,500
|
|
Executive Officer Group
|
|
|
461,750
|
|
Non-Executive Director Group
|
|
|
|
|
Non-Executive Officer Employee Group
|
|
|
29,500
|
|
The Board of Directors recommends a vote FOR the
ratification and approval of the CARBO Ceramics Inc. Omnibus
Incentive Plan.
SECTION 16(a)
BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys directors, executive
officers and persons who are beneficial owners of more than 10%
of the Common Stock to file with the SEC initial reports of
ownership and reports of changes in ownership of shares of
Common Stock beneficially owned by them. Directors, executive
officers and beneficial owners of more than 10% of the Common
Stock are also required to furnish the Company with copies of
all Section 16(a) reports that they file with the SEC.
To the Companys knowledge, no director, executive officer
or greater than 10% beneficial owner of the Common Stock failed
to timely file with the SEC one or more required reports on
Form 3, 4 or 5, during 2008.
27
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee met seven times during 2008. The Audit
Committee reviewed with management and the independent
registered public accounting firm the interim financial
information included in the March 31, June 30 and
September 30, 2008 Quarterly Reports on
Form 10-Q
prior to their filing with the SEC. In addition, the Audit
Committee reviewed all earnings releases with management and the
Companys independent registered public accounting firm
prior to their release.
Consistent with the applicable requirements of the Public
Company Accounting Oversight Board, the Companys
independent registered public accounting firm provided the Audit
Committee a written statement describing all the relationships
between it and the Company that might bear on its independence.
The Audit Committee also discussed and reviewed with the
Companys independent registered public accounting firm all
communications required by generally accepted auditing
standards, including those described in Statement of Auditing
Standards No. 61, as amended, Communication with
Audit Committees.
The Audit Committee oversees the Companys financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities,
the Audit Committee reviews and discusses with management the
audited financial statements in the Companys Annual Report
on
Form 10-K,
including a discussion of the acceptability and quality of the
accounting principles, the reasonableness of significant
judgments and the clarity of disclosures in the financial
statements.
The Audit Committee reviewed with the Companys independent
registered public accounting firm, which is responsible for
expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting
principles, their judgments as to the acceptability and quality
of the Companys accounting principles and such other
matters appropriate for discussion with the Audit Committee
under generally accepted auditing standards. In addition, the
Audit Committee has discussed with the independent registered
public accounting firm its independence from management and the
Company and considered the compatibility of non-audit services
with its independence.
The Audit Committee discussed with the Companys
independent registered public accounting firm the overall scope
and plans for its audit. The Audit Committee meets with the
independent registered public accounting firm, with and without
management present, to discuss the results of its examinations,
its evaluations of the Companys internal controls and the
overall quality of the Companys financial reporting.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2008, for filing
with the SEC. The Audit Committee also approved, subject to
shareholders ratification, the selection of the
Companys independent registered public accounting firm.
This report of the Audit Committee is not solicitation
material and shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed
filed under such acts.
CARBO Ceramics Inc. Audit Committee
Robert S. Rubin, Chairman
Dr. Claude E. Cooke, Jr.
Chad C. Deaton
James B. Jennings
H. E. Lentz, Jr.
Randy L. Limbacher
March 16, 2009
28
RATIFICATION
OF APPOINTMENT OF THE COMPANYS INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM (PROPOSAL NO. 3)
Subject to ratification by the shareholders, the Audit Committee
of the Board of Directors intends to reappoint Ernst &
Young as the Companys independent registered public
accounting firm to audit the financial statements of the Company
for 2009. Ernst & Young has acted as the
Companys independent registered public accounting firm
since its formation in 1987. Representatives of the firm of
Ernst & Young are expected to be present at the Annual
Meeting and will have an opportunity to make a statement if they
so desire and will be available to respond to appropriate
questions.
Audit Fees.
Ernst & Youngs
fees for the Companys annual audit and review of interim
financial statements were $745,462 in 2008, $624,206 in 2007,
and $577,195 in 2006.
Audit-Related Fees.
Ernst &
Youngs fees for audit-related services were $35,749 in
2008, $33,388 in 2007, and $22,000 during 2006. Audit-related
services for 2008, 2007 and 2006 primarily include fees for
employee benefit plan audits.
Tax Fees.
Ernst & Youngs fees
for tax services were $144,135 in 2008, $134,663 in 2007, and
$90,898 during 2006. Tax services primarily involve assistance
with tax return compliance and consultations regarding foreign
tax jurisdictions.
All Other Fees.
Ernst & Youngs
fees for all other products and services were $6,924 during
2008, $2,592 during 2007, and $0 during 2006. These other
products and services include various training and consultation
services.
Under the Audit Committees Pre-Approval Procedures for
Audit and permitted Non-Audit Services, the Chairman of the
Audit Committee is allowed to pre-approve audit and non-audit
services if such services will commence prior to the next
regularly scheduled meeting of the Audit Committee and where the
cost of such services in the aggregate will not exceed $50,000.
The Audit Committee is then informed of such pre-approval at its
next meeting. For 2008, there were no non-audit related services
approved in this manner.
The Audit Committee and the Board of Directors recommend the
shareholders vote FOR such ratification.
OTHER
MATTERS
The Board of Directors knows of no other matters to be brought
before the Annual Meeting. However, if other matters should
properly come before the Annual Meeting, it is the intention of
each of the persons named in the proxy to vote in accordance
with his judgment on such matters.
29
APPENDIX A
CARBO
CERAMICS INC.
OMNIBUS INCENTIVE PLAN
1. Purpose
of the Plan
This CARBO Ceramics Inc. Omnibus Incentive Plan is intended to
promote the interests of the Company and its stockholders by
providing the key employees of the Company, and eligible
non-employee directors of CARBO Ceramics, with incentives and
rewards to encourage them to continue in the service of the
Company. The Plan is designed to serve this goal by providing
such employees and eligible non-employee directors with a
proprietary interest in pursuing the long-term growth,
profitability and financial success of the Company.
2. Definitions
As used in the Plan or in any instrument governing the terms of
any Award, the following definitions apply to the terms
indicated below:
(a)
Award
means an Option or Other Award
granted pursuant to the terms of the plan.
(b)
Board
means the Board of Directors
of CARBO Ceramics.
(c)
CARBO Ceramics
means CARBO Ceramics
Inc., a Delaware corporation, and any successor thereto.
(d)
Code
means the Internal Revenue Code
of 1986, as amended from time to time, and all regulations,
interpretations and administrative guidance issued thereunder.
(e)
Committee
means the Compensation
Committee of CARBO Ceramics or such other committee appointed by
the Board from time to time to administer the Plan (and to
otherwise exercise and perform the authority and functions
assigned to the Committee under the terms of the Plan) that
meets the criteria set forth in Section 4 of the Plan.
(f)
Common Stock
means the common stock
of CARBO Ceramics, par value $0.01 per share, or any other
security into which such common stock shall be changed pursuant
to the adjustment provisions of Section 10 of the Plan.
(g)
Company
means CARBO Ceramics,
together with its Subsidiaries.
(h)
Covered Employee
means a Participant
who at the time of reference is a covered employee
as defined in Section 162(m) of the Code.
(i)
Director
means a member of the Board
who is not at the time of reference an employee of the Company.
(j)
Disability
shall mean any physical
or mental impairment which qualifies a Participant for
(i) disability benefits under any long-term disability plan
maintained by the Company, (ii) workers compensation
total disability benefits or (iii) Social Security
disability benefits, or as otherwise determined by the Board.
For purposes of this Plan, a Participants employment shall
be deemed to have terminated as a result of Disability on the
date as of which he or she is first entitled to receive
disability benefits under such policy, law or regulation;
provided that with respect to any Award that is subject to
Section 409A of the Code, if such Award provides for any
payment or distribution upon a Participants
(i) Disability, then Disability shall have the
meaning given to such term in
Section 1.409A-3(i)(4)
of the Treasury Regulations or (ii) termination of
employment as a result of Disability, then such
Participants employment shall be deemed to have terminated
as a result of Disability on the date on which such Participant
experiences a Separation from Service.
(k)
Effective Date
means the date on
which the Plan is approved by the stockholders of CARBO Ceramics.
(l)
Exchange Act
means the Securities
Exchange Act of 1934, as amended from time to time, and all
regulations, interpretations and administrative guidance issued
thereunder.
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(m)
Fair Market Value
means, with
respect to a share of Common Stock, as of the applicable date of
determination, (i) the closing price of a share of Common
Stock, as reported on the principal securities exchange on which
shares of Common Stock are then listed or admitted to trading,
on the date of determination (or, if not reported on such date,
on the next preceding date on which such price was reported) or
(ii) if the Common Stock is not listed or admitted to
trading on any securities exchange, the fair market value of a
share of Common Stock as reasonably determined by the Committee
in its sole discretion using a reasonable valuation method.
(n)
Option
means a stock option to
purchase shares of Common Stock granted to a Participant
pursuant to Section 6.
(o)
Other Award
means an award granted
to a Participant pursuant to Section 7.
(p)
Participant
means a Director or
employee of the Company who is eligible to participate in the
Plan and to whom one or more Awards have been granted pursuant
to the Plan and, following the death of any such Person, his
successors, heirs, executors and administrators, as the case may
be.
(q)
Performance-Based Compensation
means
compensation that satisfies the requirements of
Section 162(m) of the Code for deductibility of
remuneration paid to Covered Employees.
(r)
Performance Measures
means such
measures as are described in Section 8 on which Performance
Targets are based in order to qualify certain awards granted
hereunder as Performance-Based Compensation.
(s)
Performance Percentage
means the
factor determined pursuant to a Performance Schedule that is to
be applied to a Target Award and that reflects actual
performance compared to the Performance Target.
(t)
Performance Period
means the period
of time during which the performance goals must be met in order
to determine the degree of payout
and/or
vesting with respect to an Award that is intended to qualify as
Performance-Based Compensation. Performance Periods may be
overlapping.
(u)
Performance Schedule
means a
schedule or other objective method for determining the
applicable Performance Percentage to be applied to each Target
Award.
(v)
Performance Target
means performance
goals and objectives with respect to Performance Measures for a
Performance Period.
(w)
Person
means a person as
such term is used in Section 13(d) and 14(d) of the
Exchange Act, including any group within the meaning
of Section 13(d)(3) under the Exchange Act.
(x)
Plan
means this CARBO Ceramics Inc.
Omnibus Incentive Plan, as it may be amended from time to time.
(y)
Securities Act
means the Securities
Act of 1933, as amended from time to time, and all regulations,
interpretations and administrative guidance issued thereunder.
(z)
Separation from Service
shall have
the meaning set forth in Section 1.409A-1(h) of the Treasury
Regulations.
(aa)
Specified Employee
shall have
meaning set forth in Section 1.409A-1(i) of the Treasury
Regulations.
(bb)
Subsidiary
shall mean any entity
that is directly or indirectly controlled by CARBO Ceramics or
any entity, including an acquired entity, in which CARBO
Ceramics has a significant equity interest, as determined by the
Committee in its sole discretion, provided that with respect to
any Award that is subject to Section 409A of the Code,
Subsidiary shall mean a corporation or other entity
in a chain of corporations or other entities in which each
corporation or other entity, starting with CARBO Ceramics, has a
controlling interest in another corporation or other entity in
the chain, ending with such corporation or other entity. For
purposes of the preceding sentence, the term controlling
interest has the same meaning as provided in
Section 1.414(c)-2(b)(2)(i)
of the Treasury Regulations, provided that the language at
least 50 percent is used instead of at least
80 percent each place it appears in
Section 1.414(c)-2(b)(2)(i)
of the Treasury
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Regulations. Notwithstanding the foregoing, for the purpose of
determining whether a corporation or other entity is a
Subsidiary for purposes of Section 5(a) hereof, if the
Awards proposed to be granted to employees of such corporation
or other entity would be granted based upon legitimate business
criteria, the term controlling interest has the same
meaning as provided in
Section 1.414(c)-2(b)(2)(i)
of the Treasury Regulations, provided that the language at
least 20 percent is used instead of at least
80 percent each place it appears in Code Section
1.414(c)-2(b)(2)(i). For purposes of determining ownership of an
interest in an organization, the rules of
Sections 1.414(c)-3
and 1.414(c)-4 of the Treasury Regulations apply.
(cc)
Target Award
means a target Award
determined by the Committee to be payable upon satisfaction of
any applicable Performance Targets.
(dd)
Treasury Regulations
shall mean the
regulations promulgated under the Code by the United States
Internal Revenue Service, as amended.
(ee)
Voting Securities
means, at any
time, CARBO Ceramics then outstanding voting securities.
3. Stock
Subject to the Plan and Limitations on Awards
(a)
Stock Subject to the Plan
The maximum number of shares of Common Stock that may be covered
by Awards granted under the Plan shall not exceed
750,000 shares of Common Stock in the aggregate. The
maximum number of shares of Common Stock that may be issued
through Options designated as incentive stock
options within the meaning of Section 422 of the Code
under the Plan shall not exceed 750,000 shares of Common
Stock in the aggregate. The shares referred to in the preceding
sentences of this paragraph shall in each case be subject to
adjustment as provided in Section 10 and the following
provisions of this Section 3. Shares of Common Stock issued
under the Plan may be either authorized and unissued shares or
treasury shares, or both, at the sole discretion of the
Committee.
For purposes of the preceding paragraph, shares of Common Stock
covered by Awards shall only be counted as used to the extent
they are actually issued and delivered to a Participant (or such
Participants permitted transferees as described in the
Plan) pursuant to the Plan. For purposes of clarification, in
accordance with the preceding sentence, if an Award is settled
for cash or if shares of Common Stock are withheld to pay the
exercise price of an Option or to satisfy any tax withholding
requirement in connection with an Award, only the shares issued
(if any), net of the shares withheld, will be deemed delivered
for purposes of determining the number of shares of Common Stock
that are available for delivery under the Plan. In addition, if
shares of Common Stock are issued subject to conditions which
may result in the forfeiture, cancellation or return of such
shares to the Company, any portion of the shares forfeited,
cancelled or returned shall be treated as not issued pursuant to
the Plan. In addition, if shares of Common Stock owned by a
Participant (or such Participants permitted transferees as
described in the Plan) are tendered (either actually or through
attestation) to the Company in payment of any obligation in
connection with an Award, the number of shares tendered shall be
added to the number of shares of Common Stock that are available
for delivery under the Plan. Shares of Common Stock covered by
Awards granted pursuant to the Plan in connection with the
assumption, replacement, conversion or adjustment of outstanding
equity-based awards in the context of a corporate acquisition or
merger (within the meaning of Section 303A.08 of the New
York Stock Exchange Listed Company Manual) shall not count as
used under the Plan for purposes of this Section 3(a).
(b)
Individual Award Limits
Subject to adjustment as provided in Section 10, the
maximum number of shares of Common Stock that may be covered by
Awards granted under the Plan to any single Participant in any
calendar year shall not exceed 50,000 shares. The amount
paid under the Plan to any single Participant in any calendar
year with respect to any cash-based Award shall not exceed
$2,000,000.
4. Administration
of the Plan
The Plan shall be administered by a committee of the Board of
Directors consisting of two or more persons, each of whom
qualifies as a non-employee director (within the
meaning of
Rule 16b-3
promulgated under Section 16 of the Exchange Act), an
outside director within the meaning of Treasury
Regulation Section 1.162-27(e)(3)
and as
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independent within the meaning of any applicable
stock exchange or similar regulatory authority. The Committee
shall, consistent with the terms of the Plan, from time to time
designate those employees and Directors of the Company who shall
be granted Awards under the Plan and the amount, type and other
terms and conditions of such Awards. All of the powers and
responsibilities of the Committee under the Plan may be
delegated by the Committee, in writing, to any subcommittee
thereof. In addition, the Committee may from time to time
authorize a subcommittee consisting of one or more members of
the Board (including members who are employees of the Company)
or officers of CARBO Ceramics to grant Awards to persons who are
not executive officers of CARBO Ceramics (within the
meaning of
Rule 16a-1
under the Exchange Act), subject to such restrictions and
limitation as the Committee may specify and in accordance with
(and only to the extent permitted by) Section 157 of the
Delaware General Corporation Law.
The Committee shall have full discretionary authority to
administer the Plan, including discretionary authority to
interpret and construe any and all provisions of the Plan and
the terms of any Award (and any agreement evidencing any Award)
granted hereunder and to adopt and amend from time to time such
rules and regulations for the administration of the Plan as the
Committee may deem necessary or appropriate. Without limiting
the generality of the foregoing, the Committee shall determine
whether an authorized leave of absence, or absence in military
or government service, shall constitute termination of
employment and whether employment for any Person other than the
Company shall constitute employment for any purposes of the
Plan. The employment of a Participant with the Company shall be
deemed to have terminated for all purposes of the Plan if such
person is employed by or provides services to a Person that is a
Subsidiary of CARBO Ceramics and such entity ceases to be a
Subsidiary of CARBO Ceramics, unless the Committee determines
otherwise. Decisions of the Committee shall be final, binding
and conclusive on all parties.
On or after the date of grant of an Award under the Plan, the
Committee may, subject to applicable law and the limitations and
requirements set forth herein, (i) accelerate the date on
which any such Award becomes vested, exercisable or
transferable, as the case may be, (ii) extend the term of
any such Award, including, without limitation, extending the
period following a termination of a Participants
employment during which any such Award may remain outstanding,
(iii) waive any conditions to the vesting, exercisability
or transferability, as the case may be, of any such Award or
(iv) provide for the payment of dividends or dividend
equivalents with respect to any such Award; provided, that the
Committee shall not have any such authority to the extent that
the grant of such authority would cause any tax to become due
under Section 409A of the Code.
No member of the Committee shall be liable for any action,
omission, or determination relating to the Plan, and the Company
shall indemnify and hold harmless each member of the Committee
and each other director or employee of the Company to whom any
duty or power relating to the administration or interpretation
of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee)
arising out of any action, omission or determination relating to
the Plan, unless, in either case, such action, omission or
determination was taken or made by such member, director or
employee in bad faith and without reasonable belief that it was
in the best interests of the Company.
5. Eligibility
(a) The Persons who shall be eligible to receive Awards
pursuant to the Plan shall be those employees and Directors of
the Company whom the Committee shall select from time to time,
including those key employees (including officers of CARBO
Ceramics, whether or not they are members of the Board) who are
largely responsible for the management, growth and protection of
the business of the Company. With respect to employees subject
to U.S. income tax, Options and stock appreciation rights
shall only be granted to such employees who provide direct
services to CARBO Ceramics or a Subsidiary of CARBO Ceramics as
of the date of grant of the Option or stock appreciation right.
Each Award granted under the Plan shall be evidenced by an
instrument in writing in form and substance approved by the
Committee.
(b) Employees of Subsidiaries may participate in the Plan
upon approval of Awards to such employees by the Committee. A
Subsidiarys participation in the Plan may be conditioned
upon the Subsidiarys agreement to reimburse the Company
for costs and expenses of such participation, as determined by
the Company. The Committee may terminate the Subsidiarys
participation in the Plan at any time and for any reason. If a
Subsidiarys
A-4
participation in the Plan shall terminate, such termination
shall not relieve it of any obligations theretofore incurred by
it under the Plan, except with the approval of the Committee,
and the Committee shall determine, in its sole discretion, the
extent to which employees of the Subsidiary may continue to
participate in the Plan with respect to previously granted
Awards. Unless the Committee determines otherwise, a
Subsidiarys participation in the Plan shall terminate upon
the occurrence of any event that results in such entity no
longer constituting a Subsidiary as defined herein; provided,
however, that such termination shall not relieve such Subsidiary
of any of its obligations to the Company theretofore incurred by
it under the Plan, except with the approval of the Committee.
Notwithstanding the foregoing, unless otherwise specified by the
Committee, upon any such Subsidiary ceasing to be a Subsidiary
as defined herein, the Participants employed by such Subsidiary
shall be deemed to have terminated employment for purposes of
the Plan. With respect to Awards subject to Section 409A of
the Code, for purposes of determining whether a distribution is
due to a Participant, such Participants employment shall
be deemed terminated as described in the preceding sentence only
if the Committee determines that a Separation from Service has
occurred.
6. Options
The Committee may from time to time grant Options, subject to
the following terms and conditions:
(a)
Exercise Price
The exercise price per share of Common Stock covered by any
Option shall be not less than 100% of the Fair Market Value of a
share of Common Stock on the date on which such Option is
granted. The agreement evidencing the award of each Option shall
clearly identify such Option as either an incentive stock
option within the meaning of Section 422 of the Code
or as a non-qualified stock option.
(b)
Term and Exercise of Options
(1) Each Option shall become vested and exercisable on such
date or dates, during such period and for such number of shares
of Common Stock as shall be determined by the Committee and
specified in the agreement evidencing such Option;
provided
,
however
that no Option shall be
exercisable after the expiration of ten years from the date such
Option is granted; and,
provided
,
further
, that
each Option shall be subject to earlier termination, expiration
or cancellation as provided in the Plan or in the agreement
evidencing such Option.
(2) Each Option may be exercised in whole or in part. The
partial exercise of an Option shall not cause the expiration,
termination or cancellation of the remaining portion thereof.
(3) An Option shall be exercised by such methods and
procedures as the Committee determines from time to time,
including without limitation through net physical settlement or
other method of cashless exercise.
(4) Options may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent and distribution and may
be exercised, during the lifetime of a Participant, only by the
Participant;
provided
,
however
that the Committee
may (but shall not be obligated to) permit Options that are not
incentive stock options to be sold, pledged, assigned,
hypothecated, transferred, or disposed of, on a general or
specific basis, subject to such conditions and limitations as
the Committee may determine.
(c)
Effect of Termination of Employment or Other
Relationship
The agreement evidencing the award of each Option shall specify
the consequences with respect to such Option (if any) of the
Participants termination of employment or service as a
Director or other relationship between the Company and the
Participant holding the Option, a leave of absence and the
Participants death or Disability.
(d)
Special Rules for Incentive Stock Options
(1) The aggregate Fair Market Value of shares of Common
Stock with respect to which incentive stock options
(within the meaning of Section 422 of the Code) are
exercisable for the first time by a Participant during any
calendar year under the Plan and any other stock option plan of
CARBO Ceramics or any of its subsidiaries (within
the meaning of Section 424 of the Code) shall not exceed
$100,000. Such Fair Market
A-5
Value shall be determined as of the date on which each such
incentive stock option is granted. In the event that the
aggregate Fair Market Value of shares of Common Stock with
respect to such incentive stock options exceeds $100,000, then
incentive stock options granted hereunder to such Participant
shall, to the extent and in the order required by regulations
promulgated under the Code (or any other authority having the
force of regulations), automatically be deemed to be
non-qualified stock options, but all other terms and provisions
of such incentive stock options shall remain unchanged. In the
absence of such regulations (and authority), or in the event
such regulations (or authority) require or permit a designation
of which Options shall cease to constitute incentive stock
options, incentive stock options granted hereunder shall, to the
extent of such excess and in the order in which they were
granted, automatically be deemed to be non-qualified stock
options, but all other terms and provisions of such incentive
stock options shall remain unchanged.
(2) No incentive stock option may be granted to an
individual if, at the time of the proposed grant, such
individual owns stock possessing more than ten percent of the
total combined voting power of all classes of stock of CARBO
Ceramics or any of its subsidiaries (within the
meaning of Section 424 of the Code), unless (i) the
exercise price of such incentive stock option is at least one
hundred and ten percent of the Fair Market Value of a share of
Common Stock at the time such incentive stock option is granted
and (ii) such incentive stock option is not exercisable
after the expiration of five years from the date such incentive
stock option is granted.
7. Other
Awards
(a) The Committee may grant cash-based, equity-based or
equity-related awards not otherwise described herein in such
amounts and subject to such terms and conditions as the
Committee shall determine. Without limiting the generality of
the preceding sentence, each such Other Award may
(i) involve the transfer of actual shares of Common Stock
to Participants, either at the time of grant or thereafter, or
payment in cash or otherwise of amounts based on the value of
shares of Common Stock, (ii) be subject to
performance-based
and/or
service-based conditions, (iii) be in the form of cash,
stock appreciation rights, phantom stock, restricted stock,
restricted stock units, performance shares, deferred share units
or share-denominated performance units, (iv) be designed to
comply with applicable laws of jurisdictions other than the
United States and (v) be designed to qualify as
Performance-Based Compensation;
provided
, that each
equity-based or equity-related Other Award shall be denominated
in, or shall have a value determined by reference to, a number
of shares of Common Stock that is specified (or will be
determined using a formula that is specified) at the time of the
grant of such Other Award. The exercise price per share of
Common Stock covered by any stock appreciation right shall be
not less than 100% of the Fair Market Value of a share of Common
Stock on the date on which such stock appreciation right is
granted, and the compensation payable pursuant to any stock
appreciation right shall not exceed the excess of the Fair
Market Value of a share of Common Stock on the date on which
such stock appreciation right is exercised over the exercise
price.
(b) The agreement evidencing each Other Award shall specify
the consequences with respect to such Award (if any) of the
Participants termination of employment or service as a
Director or other relationship between the Company and the
Participant holding such Award, a leave of absence, and the
Participants death or Disability.
(c) Notwithstanding any provision of this Plan to the
contrary, and except as provided in this Section 7(c) and
with respect to Performance-Based Compensation as described in
Section 8 hereof, Awards shall not vest more rapidly than
ratably over a three-year period;
provided
,
however
, that (i) to the extent permitted by
Section 409A of the Code, the Committee may, in its sole
discretion, provide for accelerated vesting of any such Award on
account of a Participants retirement, death, Disability,
leave of absence, termination of employment or any other similar
event, (ii) to the extent permitted by Section 409A of
the Code, the Committee may, in its sole discretion, provide for
accelerated vesting of any such Award upon the achievement of
performance criteria specified by the Committee, related to a
period of performance of one year or more, and (iii) up to
twenty percent (20%) of the shares of Common Stock reserved for
issuance under the Plan may be granted subject to Awards with
such other vesting requirements (if any) as the Committee may
establish in its sole discretion (which number of shares shall
not include any shares subject to Performance-Based Compensation
Awards).
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8. Performance-Based
Compensation
(a)
Calculation
The amount payable with respect to an Award that is intended to
qualify as Performance-Based Compensation shall be determined in
any manner permitted by Section 162(m) of the Code.
(b)
Discretionary Reduction
The Committee may, in its discretion, reduce or eliminate the
amount payable to any Participant with respect to an Award that
is intended to qualify as Performance-Based Compensation, based
on such factors as the Committee may deem relevant, but the
Committee may not increase any such amount above the amount
established in accordance with the relevant Performance
Schedule. For purposes of clarity, the Committee may exercise
the discretion provided for by the foregoing sentence in a
non-uniform manner among Participants.
(c)
Performance Measures
The Performance Targets upon which the payment or vesting of any
Award (other than Options and stock appreciation rights) to a
Covered Employee that is intended to qualify as
Performance-Based Compensation depends shall relate to one or
more of the following Performance Measures: (i) net income
or operating net income (before or after taxes, interest,
depreciation, amortization,
and/or
nonrecurring/unusual items), (ii) return on assets, return
on capital, return on equity, return on economic capital, return
on other measures of capital, return on sales or other financial
criteria, (iii) revenue or net sales, (iv) gross
profit or operating gross profit, (v) cash flow,
(vi) productivity or efficiency ratios, (vii) share
price or total stockholder return, (viii) earnings per
share, (ix) budget and expense management,
(x) customer and product measures, including market share,
high value client growth, and customer growth, (xi) working
capital turnover and targets, (xii) margins,
(xiii) economic value added or other value added
measurements, (xiv) sales volume or other sales performance
criteria and (xv) goals related to the research,
development, implementation or marketing of new products or
business initiatives, in any such case (A) considered
absolutely or relative to historic performance or relative to
one or more other businesses and (B) determined for the
Company or any business unit or division thereof.
Within 90 days after the beginning of a Performance Period,
and in any case before 25% of the Performance Period has
elapsed, the Committee shall establish (I) Performance
Measures and Performance Targets for such Performance Period,
(II) Target Awards for each Participant, and
(III) Performance Schedules for such Performance Period.
The measurement of any Performance Measure(s) may exclude the
impact of charges for restructurings, discontinued operations,
extraordinary items, and other unusual or non-recurring items,
and the cumulative effects of accounting changes, each as
defined by generally accepted accounting principles and as
identified in the Companys audited financial statements,
including the notes thereto. Any Performance Measure(s) may be
used to measure the performance of any Participant or group of
Participants, or the Company or a Subsidiary as a whole or any
business unit of the Company or any Subsidiary or any
combination thereof, as the Committee may deem appropriate, or
any of the above Performance Measures as compared to the
performance of a group of comparator companies, or a published
or special index that the Committee, in its sole discretion,
deems appropriate.
Nothing in this Section 8 is intended to limit the
Committees discretion to adopt conditions with respect to
any Award that is not intended to qualify as Performance-Based
Compensation that relate to performance other than the
Performance Measures. In addition, the Committee may, subject to
the terms of the Plan, amend previously granted Awards in a way
that disqualifies them as Performance-Based Compensation.
In the event that the requirements of Section 162(m) of the
Code and the regulations thereunder change to permit Committee
discretion to alter the Performance Measures without obtaining
stockholder approval of such changes, the Committee shall have
sole discretion to make such changes without obtaining
stockholder approval.
9. Payments
and Deferrals
(a) Payment of vested Awards may be in the form of cash,
Common Stock or combinations thereof as the Committee shall
determine, subject to such terms, conditions, restrictions and
limitations as it may impose. The
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Committee may (i) postpone the exercise of Options or stock
appreciation rights (but not beyond their expiration dates),
(ii) require or permit Participants to elect to defer the
receipt or issuance of shares of Common Stock pursuant to Awards
or the settlement of Awards in cash under such rules and
procedures as it may establish, in its discretion, from time to
time, (iii) provide for deferred settlements of Awards
including the payment or crediting of earnings on deferred
amounts, or the payment or crediting of dividend equivalents
where the deferred amounts are denominated in common share
equivalents, (iv) stipulate in any agreement evidencing an
Award, either at the time of grant or by subsequent amendment,
that a payment or portion of a payment of an Award be delayed in
the event that Section 162(m) of the Code (or any successor
or similar provision of the Code) would disallow a tax deduction
by the Company for all or a portion of such payment; provided,
that the period of any such delay in payment shall be until the
payment, or portion thereof, is tax deductible, or such earlier
date as the Committee shall determine in its sole discretion.
Notwithstanding the forgoing, with respect to any Award subject
to Section 409A of the Code, the Committee shall not take
any action described in the preceding sentence unless it
determines that such action will not result in any adverse tax
consequences for any Participant under Section 409A of the
Code.
(b) If, pursuant to any Award granted under the Plan, a
Participant is entitled to receive a payment on a specified
date, such payment shall be deemed made as of such specified
date if it is made (i) not earlier than 30 days before
such specified date and (ii) not later than December 31 of
the year in which such specified date occurs or, if later, the
fifteenth day of the third month following such specified date,
in each case provided that the Participant shall not be
permitted, directly or indirectly, to designate the taxable year
in which such payment is made.
(c) Notwithstanding the foregoing, if a Participant is a
Specified Employee at the time of his or her Separation from
Service, any payment(s) with respect to any Award subject to
Section 409A of the Code to which such Participant would
otherwise be entitled by reason of such Separation from Service
shall be made on the date that is six months after the
Participants Separation from Service (or, if earlier, the
date of the Participants death).
(d) If, pursuant to any Award granted under the Plan, a
Participant is entitled to a series of installment payments,
such Participants right to the series of installment
payments shall be treated as a right to a series of separate
payments and not as a right to a single payment. For purposes of
the preceding sentence, the term series of installment
payments has the same meaning as provided in
Section 1.409A-2(b)(2)(iii)
of the Treasury Regulations.
10. Adjustment
Upon Certain Changes
(a) In the event of any change in the Companys
capital structure on account of (i) any extraordinary
dividend, stock dividend, stock split, reverse stock split, or
any similar equity restructuring, or (ii) any combination
or exchange of equity securities, merger, consolidation,
recapitalization, reorganization, divesture or other
distribution (other than ordinary cash dividends) of assets to
stockholders, or any other similar event affecting the
Companys capital structure, to the extent necessary to
prevent the enlargement or diminution of the rights of
Participants, the Committee shall make such adjustments as it
deems necessary or appropriate to (A) the maximum number of
shares of Common Stock that may be issued through Awards under
the Plan, (B) the maximum number of shares of Common Stock
that may be issued through Options under the Plan, (C) to
the extent permitted under Section 162(m) of the Code, the
maximum number of shares that may be granted to any individual
Participant under the Plan; (D) the number or kind of
shares subject to an outstanding Award; (E) subject to the
limitation contained in Section 10(d), the exercise price
applicable to an outstanding Award; (F) to the extent
permitted under Section 162(m) of the Code, any measure of
performance that relates to an outstanding Award; and
(G) any other terms or conditions of outstanding Awards as
the Committee in its discretion deems appropriate
,
in
each case in order to reflect such change in the Common Stock.
(b) Subject to any required action by the stockholders of
the Company, in the event that the Company shall be the
surviving corporation in any merger or consolidation (except a
merger or consolidation as a result of which the holders of
shares of Common Stock receive securities of another
corporation), the Awards outstanding on the date of such merger
or consolidation shall pertain to and apply to the securities
that a holder of the number of shares of Common Stock subject to
any such Awards would have received in such merger or
consolidation (it being understood that if, in connection with
such transaction, the stockholders of the Company retain their
shares of
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Common Stock and are not entitled to any additional or other
consideration, the Awards shall not be affected by such
transaction).
(c) In the event of (i) a dissolution or liquidation
of the Company, (ii) a sale of all or substantially all of
the Companys assets, (iii) a merger or consolidation
involving the Company in which the Company is not the surviving
corporation or (iv) a merger or consolidation in which the
Company is the surviving corporation but the holders of shares
of Common Stock receive securities of another corporation
and/or
other
property, including cash, the Committee shall (x) provide
for the exchange of each Option or Other Award outstanding
immediately prior to such event (whether or not then exercisable
or vested) for a right with respect to some or all of the
property for which the stock underlying such Option or Other
Award is exchanged and, incident thereto, make any adjustment in
the exercise price of the Options or stock appreciation rights
or the number or kind of securities or amount of property
subject to any Award
and/or
(y) cancel, effective immediately prior to such event, any
outstanding Award (whether or not exercisable or vested) and in
full consideration of such cancellation pay to the Participant
an amount in cash, with respect to each underlying share of
Common Stock, equal to the excess of (A) the value, as
determined by the Committee in its discretion of securities
and/or
property (including cash) received by such holders of shares of
Common Stock as a result of such event over (B) the
exercise price, if applicable, in each case, as the Committee
may consider, in its sole discretion, necessary or appropriate
to prevent dilution or enlargement of rights.
(d) Notwithstanding any provision of this Plan to the
contrary, in no event shall (i) any repricing (within the
meaning of U.S. generally accepted accounting principles or
any applicable stock exchange rule) of Awards issued under the
Plan be permitted at any time under any circumstances or
(ii) any new Awards be issued in substitution for
outstanding Awards previously granted to Participants if such
action would be considered a repricing (within the meaning of
U.S. generally accepted accounting principles or any
applicable stock exchange rule).
(e) Notwithstanding anything to the contrary in this
Section 10, any action taken under this Section 10:
(i) with respect to incentive stock options, shall be taken
only to the extent that it does not constitute a
modification within the meaning of
Section 424(h)(3) of the Code, (ii) shall be made in a
manner that does not adversely affect the exemption provided
pursuant to
Rule 16b-3
under the Exchange Act, (iii) with respect to Awards
subject to Section 409A of the Code, shall conform to the
requirements of Section 409A of the Code, and
(iv) with respect to Awards intended to qualify as
performance-based compensation under
Section 162(m) of the Code, shall be taken only to the
extent that the Committee determines that such actions may be
taken without causing the Company to be denied a tax deduction
on account of Section 162(m) of the Code. The Company shall
give each Participant notice of an adjustment, substitution,
cancellation or other action hereunder and, upon notice, such
adjustment, substitution, cancellation or other action shall be
conclusive and binding for all purposes. Notwithstanding the
foregoing, the Committee may, in its discretion, decline to take
action under this Section 10 with respect to any Award if
the Committee determines that such action would violate (or
cause the Award to violate) applicable law or result in adverse
tax consequences to the Participant or to the Company. No
provision of this Section 10 shall be given effect to the
extent that such provision would cause any tax to become due
under Section 409A of the Code.
(f) Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision
or consolidation of shares of stock of any class, the payment of
any dividend, any increase or decrease in the number of shares
of stock of any class or any dissolution, liquidation, merger or
consolidation of CARBO Ceramics or any other corporation. Except
as expressly provided in the Plan, no issuance by CARBO Ceramics
of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by
reason thereof shall be made with respect to, the number of
shares or amount of other property subject to, or the terms
related to, any Award.
11. Rights
Under the Plan
Except as otherwise expressly provided in any Award grant
agreement, no person shall have any rights as a stockholder with
respect to any shares of Common Stock covered by or relating to
any Award granted pursuant to the Plan until the date (if any)
of the issuance of a stock certificate with respect to such
shares or the date as of which the Company records the
Participant or his or her nominee as the owner of such shares,
free and clear of any restrictions or conditions pursuant to the
Plan or any grant agreement hereunder, in its books and records.
Except as otherwise expressly provided in Section 10
hereof, no adjustment of any Award shall be made for dividends
or other
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rights for which the record date occurs prior to the date such
stock certificate is issued or such record is made. Nothing in
this Section 11 is intended, or should be construed, to
limit the authority of the Committee to cause the Company to
make payments based on the dividends that would be payable with
respect to any share of Common Stock underlying an Award if such
share were issued or outstanding on the record date of such
dividends, or from granting rights hereunder related to such
dividends.
The Company shall not have any obligation to establish any
separate fund or trust or other segregation of assets to provide
for payments under the Plan. To the extent any person acquires
any rights to receive payments hereunder from the Company, such
rights shall be no greater than those of an unsecured creditor.
12. No
Special Employment Rights; No Right to Award
(a) Nothing contained in the Plan or any Award shall confer
upon any Participant any right with respect to the continuation
of his or her employment by or service to the Company or
interfere in any way with the right of the Company at any time
to terminate such employment or service or to increase or
decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Award.
(b) No person shall have any claim or right to receive an
Award hereunder. The Committees granting of an Award to a
Participant at any time shall neither require the Committee to
grant any subsequent Award to such Participant (or any Award to
any other Participant or other person) at any time, nor preclude
the Committee from making subsequent grants to such Participant
or any other Participant or other person.
13. Securities
Matters
(a) CARBO Ceramics shall be under no obligation to effect
the registration pursuant to the Securities Act of any shares of
Common Stock to be issued hereunder or to effect similar
compliance under any state or
non-U.S. laws.
Notwithstanding anything herein to the contrary, CARBO Ceramics
shall not be obligated to cause to be issued or delivered any
certificates evidencing shares or recordation by the Company of
the Participant or his or her nominee as the owner of Common
Stock pursuant to the Plan unless and until CARBO Ceramics is
advised by its counsel that the issuance and delivery of such
certificates is in compliance with all applicable laws,
regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are
traded. The Committee may require, as a condition to the
issuance and delivery of certificates evidencing shares or
recordation by the Company of the Participant or his or her
nominee as the owner of Common Stock pursuant to the terms
hereof, that the recipient of such shares make such covenants,
agreements and representations, and that such certificates bear
such legends, as the Committee deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only
be effective at such time as counsel to CARBO Ceramics shall
have determined that the issuance and delivery of shares of
Common Stock pursuant to such exercise is in compliance with all
applicable laws and regulations and the requirements of any
securities exchange on which shares of Common Stock are traded.
CARBO Ceramics may, in its sole discretion, defer the
effectiveness of an exercise of an Option hereunder or the
issuance or transfer of shares of Common Stock pursuant to any
Award pending or to ensure compliance under federal, state or
non-U.S. securities
laws. CARBO Ceramics shall inform the Participant in writing of
its decision to defer the effectiveness of the exercise of an
Option or the issuance or transfer of shares of Common Stock
pursuant to any Award. During the period that the effectiveness
of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain the
refund of any amount paid with respect thereto.
14. Withholding
Taxes
(a)
Payment of Taxes
Participants shall be solely responsible for any applicable
taxes (including without limitation income and excise taxes) and
penalties, and any interest that accrues thereon, which they
incur in connection with the receipt, vesting, settlement or
exercise of any Award. Notwithstanding any provision of this
Plan to the contrary, in no event shall the Company or any
Subsidiary be liable to a Participant on account of an
Awards failure to (i) qualify for
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favorable U.S. or
non-U.S. tax
treatment or (ii) avoid adverse tax treatment under
U.S. or
non-U.S. law,
including, without limitation, Section 409A of the Code.
(b)
Cash Remittance
Whenever shares of Common Stock are to be issued upon the
exercise, grant or vesting of an Award, and whenever any cash
amount shall become payable in respect of any Award, CARBO
Ceramics shall have the right to require the Participant to
remit to CARBO Ceramics in cash an amount sufficient to satisfy
federal, state, local
and/or
non-U.S. withholding
tax requirements, if any, attributable to such exercise, grant,
vesting or payment prior to the delivery of any certificate or
certificates for such shares or recordation by the Company of
the Participant or his or her nominee as the owner of such
shares or the effectiveness of the lapse of such restrictions or
making of such payment. In addition, upon the exercise or
settlement of any Award in cash, or any payment with respect to
any Award, CARBO Ceramics shall have the right to withhold from
any payment required to be made pursuant thereto an amount
sufficient to satisfy the federal, state, local
and/or
non-U.S. withholding
tax requirements, if any, attributable to such exercise,
settlement or payment.
(c)
Stock Remittance
At the election of the Participant, subject to the approval of
the Committee, when shares of Common Stock are to be issued upon
the exercise, grant or vesting of an Award, the Participant may
tender to CARBO Ceramics a number of shares of Common Stock that
have been owned by the Participant for at least six months (or
such other period as the Committee may determine) having a Fair
Market Value at the tender date determined by the Committee to
be sufficient to satisfy the minimum federal, state, local
and/or
non-U.S. withholding
tax requirements, if any, attributable to such exercise, grant
or vesting, but not greater than the minimum withholding
obligations. Such election shall satisfy the Participants
obligations under Section 14(a) hereof, if any.
(d)
Stock Withholding
At the election of the Participant, subject to the approval of
the Committee, when shares of Common Stock are to be issued upon
the exercise, grant or vesting of an Award, CARBO Ceramics shall
withhold a number of such shares having a Fair Market Value at
the exercise date determined by the Committee to be sufficient
to satisfy the minimum federal, state, local
and/or
non-U.S. withholding
tax requirements, if any, attributable to such exercise, grant
or vesting, but not greater than the minimum withholding
obligations. Such election shall satisfy the Participants
obligations under Section 14(a) hereof, if any.
15. Amendment
or Termination of the Plan
(a) The Plan and any Award may be amended, suspended or
terminated at any time by the Board, provided that no amendment
shall be made without stockholder approval, if stockholder
approval is required under then applicable law, including any
applicable tax, stock exchange or accounting rules, and further
provided that no amendment to the Plan or any Award shall
violate the prohibition on repricing contained in
Section 10(d). Notwithstanding the foregoing, with respect
to Awards subject to Section 409A of the Code, any
amendment, suspension or termination of the Plan or any such
Award shall conform to the requirements of Section 409A of
the Code. Except as otherwise provided in Section 15(b), no
termination, suspension or amendment of the Plan or any Award
shall adversely affect the right of any Participant with respect
to any Award theretofore granted, as determined by the
Committee, without such Participants written consent.
(b) The Committee may amend or modify the terms and
conditions of an Award to the extent that the Committee
determines, in its sole discretion, that the terms and
conditions of the Award violate or may violate Section 409A
of the Code; provided, however, that (i) no such amendment
or modification shall be made without the Participants
written consent if such amendment or modification would violate
the terms and conditions of any other agreement between the
Participant and the Company and (ii) unless the Committee
determines otherwise, any such amendment or modification of an
Award made pursuant to this Section 15(b) shall maintain,
to the maximum extent practicable, the original intent of the
applicable Award provision without contravening the provisions
of Section 409A of the Code. The amendment or modification
of any Award pursuant to this Section 15(b) shall be at the
Committees sole discretion and the Committee shall not be
obligated to amend or modify any Award or the Plan, nor shall
the Company be liable for any adverse tax or other consequences
to a Participant resulting from such
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amendments or modifications or the Committees failure to
make any such amendments or modifications for purposes of
complying with Section 409A of the Code or for any other
purpose. To the extent the Committee amends or modifies an Award
pursuant to this Section 15(b), the Participant shall
receive notification of any such changes to his or her Award
and, unless the Committee determines otherwise, the changes
described in such notification shall be deemed to amend the
terms and conditions of the Award and the applicable agreement
governing the terms of such Award.
16. No
Obligation to Exercise
The grant to a Participant of an Award shall impose no
obligation upon such Participant to exercise such Award.
17. Transfers
Upon Death
Upon the death of a Participant, outstanding Awards granted to
such Participant may be exercised only by the executors or
administrators of the Participants estate or by any person
or persons who shall have acquired such right to exercise by
will or by the laws of descent and distribution. No transfer by
will or the laws of descent and distribution of any Award, or
the right to exercise any Award, shall be effective to bind
CARBO Ceramics unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of the will
and/or
such
evidence as the Committee may deem necessary to establish the
validity of the transfer and (b) an agreement by the
transferee to comply with all the terms and conditions of the
Award that are or would have been applicable to the Participant
and to be bound by the acknowledgements made by the Participant
in connection with the grant of the Award.
18. Expenses
and Receipts
The expenses of the Plan shall be paid by CARBO Ceramics. Any
proceeds received by CARBO Ceramics in connection with any Award
will be used for general corporate purposes.
19. Change
in Control.
(a) Unless otherwise set forth in the instrument evidencing
an Award, upon a Change in Control, (i) each outstanding
Award that is eligible to vest based solely on the passage of
time
and/or
the Participants continued service to the Company shall
become fully vested and exercisable or settled in cash or stock,
as applicable, and all restrictions thereon shall lapse and
(ii) each outstanding Award that is eligible to vest based
on the achievement of performance criteria shall vest and become
exercisable or settled in cash or stock, as applicable, and the
restrictions thereon shall lapse, with respect to the number of
shares of Common Stock underlying such Award or the amount of
cash that is equal to (a) the total number of shares of
Common Stock underlying such Award or cash amount under an Award
(including a Participants Target Award) that is eligible
to vest based on performance during a performance period that
includes the date of the Change in Control multiplied by
(b) a fraction, the numerator of which is the number of
days during such performance period that have elapsed prior to
(and including) the date of the Change in Control and the
denominator of which is the total number of days in such
performance period, in each case as determined by the Committee.
Any portion of a performance-based vesting award that does not
vest pursuant to clause (ii) of the preceding sentence
shall be forfeited as of the date of the Change in Control and
the Participant shall have no further rights with respect
thereto. With respect to any Award not described in the first
sentence of this Section 19, the effect of a Change in
Control on such Award (if any) shall be set forth in the
instrument governing the terms of such Award.
(b) For purposes of the Plan and any agreement governing
the terms of any Award hereunder, the term Change in
Control means the occurrence of any of the following after
the Effective Date: (i) the occurrence of a change in
control of the Company of a nature that would be required to be
reported or is reported in response to Item 5.01 of the
current report on
Form 8-K,
as in effect on the Effective Date, pursuant to Sections 13
or 15(d) of the Exchange Act; or (ii) any Person is or
becomes the beneficial owner (as defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company representing 30% or more of the combined voting
power of the Companys outstanding securities (other than
any Person who was a beneficial owner of securities
of the Company representing 30% or more of the combined voting
power of the Companys outstanding securities prior to
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the Effective Date); or (iii) individuals who constitute
the Board on the Effective Date (the Incumbent
Board) cease for any reason to constitute at least a
majority of the members of the Board, provided that any person
becoming a director subsequent to the Effective Date whose
appointment to fill a vacancy or to fill a new Board position
was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination
for election by the Companys stockholders was approved by
the same nominating committee serving under an Incumbent Board,
shall be, for purposes of this clause (iii), considered as
though he were a member of the Incumbent Board; or (iv) the
occurrence of any of the following of which the Incumbent Board
does not approve (A) merger or consolidation in which the
Company is not the surviving corporation or (B) sale of all
or substantially all of the assets of the Company; or
(v) consummation of a plan of reorganization, merger or
consolidation of the Company with one or more corporations as a
result of which the outstanding shares of the class of
securities then subject to the plan of reorganization are
exchanged or converted into cash or property or securities not
issued by the Company, which was approved by stockholders
pursuant to a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the then
current management of the Company.
Notwithstanding the foregoing and for the purposes of timing of
payment, distribution or settlement only, a Change in Control
shall not be deemed to occur under this Section 19 of this
Plan with respect to any Award that constitutes
non-qualified deferred compensation within the
meaning of Section 409A of the Code, unless the events that
have occurred would also constitute a Change in the
Ownership or Effective Control of a Corporation or in the
Ownership of a Substantial Portion of the Assets of a
Corporation under Treasury Department Final
Regulation 1.409A-3(i)(5),
or any successor thereto.
20. Governing
Law
The Plan and the rights of all persons under the Plan shall be
construed and administered in accordance with the laws of the
State of Delaware without regard to its conflict of law
principles.
21. Effective
Date and Term of Plan
The Plan was adopted by the Board on January 20, 2009
subject to the approval of the Plan by the stockholders of CARBO
Ceramics. No grants of Awards may be made under the Plan after
the fifth anniversary of the Effective Date.
A-13
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTIONS ARE INDICATED, WILL BE VOTED FOR THE
NOMINEES AND PROPOSALS.
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Please mark
your
votes as
indicated
in
this example
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*EXCEPTIONS
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1.
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To elect seven Directors. The Board of Directors recommends a vote FOR the nominees listed below.
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01 Chad C. Deaton
02 James B. Jennings
03 Gary A. Kolstad
04 H. E. Lentz, Jr.
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05 Randy L. Limbacher
06 William C. Morris
07 Robert S. Rubin
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(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the Exceptions box above and write that nominees name in the space provided below.)
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*Exceptions
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Proposal to ratify and approve the CARBO Ceramics Inc. Omnibus Incentive Plan.
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Proposal to ratify the appointment of Ernst & Young LLP, certified public
accountants, as the Companys independent registered public accounting firm for
the fiscal year ending December 31, 2009.
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In their discretion, to
vote upon such other business as may properly come before the meeting.
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The Board of Directors recommends that you vote FOR the nominees and proposals listed above. This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is given, this proxy will be voted FOR the nominees and proposals.
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Mark Here for
Address
Change or
Comments
SEE REVERSE
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Signature
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Signature
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Date
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
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5
FOLD AND DETACH HERE
5
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to the annual meeting day.
You can view the Annual Report and Proxy Statement On the
Internet at
www.carboannualmeeting.com
INTERNET
http://www.proxyvoting.com/crr
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
If you vote your proxy by Internet or by
telephone, you do NOT need to mail back your proxy
card.
To vote by mail, mark, sign and date your proxy
card and return it in the enclosed postage-paid
envelope.
Your Internet or telephone vote authorizes the
named proxies to vote your shares in the same
manner as if you marked, signed and returned your
proxy card.
44805
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CARBO CERAMICS INC.
The undersigned hereby appoints Gary A. Kolstad, R. Sean Elliott, Ernesto Bautista, III, or
any one of them, as proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote, as designated on the reverse side, all the shares of Common
Stock of CARBO Ceramics Inc., held of record by the undersigned on March 23, 2009, at the Annual
Meeting of Shareholders to be held on May 19, 2009, or any adjournment or continuation thereof.
Address Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed, on the other side)
5
FOLD AND DETACH HERE
5
44805
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