def14a
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
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
SPIRIT AEROSYSTEMS HOLDINGS, 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):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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computed pursuant to Exchange Act Rule 0-11 (set forth the
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing 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. |
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March 24,
2008
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of
Stockholders of SPIRIT AEROSYSTEMS HOLDINGS, INC., which will be
held on Tuesday, April 22, 2008, at the Marriot Westfields
Washington Dulles located at 14750 Conference Center Drive,
Chantilly, Virginia, at 11:00 A.M. Eastern Time.
Details of the business to be conducted at the Annual Meeting
are given in the attached Notice of Annual Meeting of
Stockholders and Proxy Statement.
Your Board of Directors recommends a vote for the election of
the nominees for directors, approval of amendments to the
Companys Short-Term Incentive Plan, approval of amendments
to the Companys Amended and Restated Long-Term Incentive
Plan and ratification of the selection of the Companys
independent registered public accounting firm. You will have an
opportunity to submit questions or comments on matters of
interest to stockholders generally.
Your vote is important. Whether or not you plan to attend the
Annual Meeting in person, I urge you to complete, sign and date
the enclosed proxy card and return it promptly in the enclosed
envelope. If you decide to attend the Annual Meeting, you will
be able to vote in person, even if you have previously submitted
your proxy card.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the
Company. I look forward to greeting as many of our stockholders
as possible.
Sincerely,
Jeffrey L. Turner
Chief Executive Officer
The use of cameras at the Annual Meeting is prohibited and they
will not be allowed into the meeting or any other related areas,
except by credentialed media. We realize that many cellular
phones have built-in digital cameras, and while these phones may
be brought into the venue, the camera function may not be used
at any time.
SPIRIT
AEROSYSTEMS HOLDINGS, INC.
3801 South Oliver
Wichita, Kansas 67210
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TIME |
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Tuesday, April 22, 2008, 11:00 A.M. Eastern Time.
Registration will begin at 9:00 A.M. The Annual
Meeting will begin at 11:00 A.M. |
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PLACE |
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Marriot Westfields Washington Dulles located at 14750 Conference
Center Drive, Chantilly, Virginia 20151. |
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AGENDA |
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1.
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Elect the ten members of the Board of Directors of
the Company to serve until the 2009 Annual Meeting of
Stockholders and until their successors have been duly elected
and qualified. |
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2. |
Approve amendments to the Spirit AeroSystems
Holdings, Inc. Short-Term Incentive Plan to (i) increase
the number of shares of common stock available for grant under
the plan by 2,000,000 shares, and (ii) change the
class of shares of common stock granted under the plan from
Class B Common stock to Class A Common stock.
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3. |
Approve amendments to the Spirit AeroSystems
Holdings, Inc. Amended and Restated Long-Term Incentive Plan to
(i) increase the number of shares of common stock available
for grant under the plan by 3,000,000 shares, and
(ii) change the class of shares of common stock granted
under the plan from Class B Common stock to Class A
Common stock.
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Ratify the selection of PricewaterhouseCoopers LLP
as the Companys independent registered public accounting
firm for fiscal year 2008.
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Transact any other business properly brought
before the meeting.
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RECORD DATE |
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You can vote if you were a stockholder at the close of business
on March 14, 2008. |
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MEETING ADMISSION |
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Registered Stockholders. An admission ticket is attached
to your proxy card. Please bring the admission ticket with
you to the meeting. |
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Beneficial Stockholders. Stockholders whose stock is held
by a broker or bank (often referred to as holding in
street name) should come to the beneficial stockholders
table. In order to be admitted, beneficial stockholders must
bring account statements or letters from their brokers or banks
showing that they owned the Companys stock as of
March 14, 2008. In order to vote at the meeting, beneficial
stockholders must bring legal proxies, which they can obtain
only from their brokers or banks. In all cases, stockholders
must bring photo identification to the meeting for admission. |
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VOTING BY PROXY |
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Registered Stockholders. Please vote by mail by
completing, signing, dating and promptly mailing the proxy card
in the enclosed addressed envelope for which no postage is
required if |
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mailed in the United States. Any proxy may be revoked at any
time prior to its exercise at the meeting. |
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Beneficial Stockholders. If your shares are held in the
name of a broker, bank or other holder of record, follow the
voting instructions you receive from the holder of record to
vote your shares. |
The enclosed Proxy Statement is issued in connection with the
solicitation of a proxy on the enclosed form by the Board of
Directors of Spirit AeroSystems Holdings, Inc., for use at the
Companys 2008 Annual Meeting of Stockholders. The Proxy
Statement not only describes the items that stockholders are
being asked to consider and vote on at the Companys 2008
Annual Meeting, but also provides you with important information
about our company. Financial and other important information
concerning our company is also contained in our 2007 Annual
Report for the fiscal year ended December 31, 2007.
Pursuant to new rules promulgated by the Securities and Exchange
Commission (the SEC), we have elected to provide
access to our proxy materials both by sending you this full set
of proxy materials, including a proxy card, and by notifying you
of the availability of our proxy materials on the Internet. This
Proxy Statement and our 2007 Annual Report are available at the
Investor Relations portion of our web site at
www.spiritaero.com. We began distributing this Proxy Statement,
a form of proxy and the 2007 Annual Report on or about
March 24, 2008.
By order of the Board of Directors.
Sincerely,
Gloria Farha Flentje
Secretary
Spirit AeroSystems Holdings, Inc.
3801 South Oliver
Wichita, Kansas 67210
March 24, 2008
IMPORTANT
Whether or not you expect to attend the Annual Meeting in
person, we urge you to vote your shares at your earliest
convenience. Promptly voting your shares by completing, signing,
dating, and returning the enclosed proxy card will save the
Company the expense and extra work of additional solicitation.
An addressed envelope for which no postage is required if mailed
in the United States is enclosed if you wish to vote by mail.
Submitting your proxy now will not prevent you from voting your
shares at the meeting if you desire to do so, as your proxy is
revocable at your option.
Important
Notice Regarding the Availability of Proxy Materials for the
Companys
2008 Annual Meeting of Stockholders to be Held on
April 22, 2008
The Proxy Statement and 2007 Annual Report are available at
http://www.spiritaero.com/investor.aspx.
Information on the Companys
website does not constitute a part of this Proxy Statement.
PROXY
STATEMENT
TABLE OF CONTENTS
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PROXY STATEMENT FOR 2008 ANNUAL MEETING OF STOCKHOLDERS
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1
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General Information Regarding the Annual Meeting
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1
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Vote Required for Approval
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1
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Householding of Annual Meeting Materials
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2
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PROPOSAL 1: ELECTION OF DIRECTORS
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2
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Recommendation of the Board of Directors
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2
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Information Regarding Nominees for Election of Directors
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2
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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
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4
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Corporate Governance Information
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Director Independence
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Nomination of Directors
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Communications with the Board
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Committees of the Board
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Board Meetings and Attendance; Annual Meetings Attendance
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COMPENSATION OF NON-MANAGEMENT DIRECTORS
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Director Compensation for Fiscal Year 2007
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Certain Relationships and Related Transactions
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STOCK OWNERSHIP
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Information Regarding Beneficial Ownership of Principal
Stockholders, Directors, and Management
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12
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Compensation Committee Interlocks and Insider Participation
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Section 16(a) Beneficial Ownership Reporting Compliance
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EXECUTIVE COMPENSATION
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Compensation Discussion and Analysis
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Compensation Committee Report
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Summary Compensation Table for Fiscal Years 2006 and 2007
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Grants of Plan-Based Awards for Fiscal Year 2007
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Outstanding Equity Awards at End of Fiscal Year 2007
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Option Exercises and Stock Vested for Fiscal Year 2007
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Pension Benefits
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Nonqualified Deferred Compensation
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Potential Payments on Termination or
Change-in-Control
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PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE COMPANYS
SHORT-TERM INCENTIVE PLAN
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Proposed Amendments
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Discussion of the Amendments
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Recommendation of the Board of Directors
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Description of the STIP
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Federal Income Tax Considerations
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Specific Benefits
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Vote Required
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PROPOSAL 3: APPROVAL OF AMENDMENTS TO THE COMPANYS
AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
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Proposed Amendments
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Discussion of the Amendments
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Recommendation of the Board of Directors
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42
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Description of the LTIP
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Federal Income Tax Considerations
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Specific Benefits
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Vote Required
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Equity Compensation Plan Information
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PROPOSAL 4: RATIFICATION OF SELECTION OF THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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Overview
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Recommendation of the Board of Directors
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Report of the Audit Committee
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Fees Billed by the Independent Registered Public Accounting Firm
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Policy on Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of the Independent Registered Public
Accounting Firm
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OTHER MATTERS
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General
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The Companys Solicitation of Proxies
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Stockholders Proposals to Be Presented at the Next Annual Meeting
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The Companys Website
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APPENDIX A Amended and Restated
Short-Term
Incentive Plan
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A-1
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APPENDIX B Amended and Restated
Long-Term
Incentive Plan
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B-1
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SPIRIT
AEROSYSTEMS HOLDINGS, INC.
3801 South Oliver
Wichita, Kansas 67210
PROXY
STATEMENT FOR 2008 ANNUAL MEETING OF STOCKHOLDERS
General
Information Regarding the Annual Meeting
This Proxy Statement, which was first mailed to stockholders on
or about March 24, 2008 (the Mailing Date), is
furnished in connection with the solicitation of proxies by the
Board of Directors (the Board) of SPIRIT AEROSYSTEMS
HOLDINGS, INC. (the Company), to be voted at the
Companys 2008 Annual Meeting of Stockholders, which will
be held at 11:00 A.M. Eastern Time on Tuesday,
April 22, 2008, at the Marriot Westfields Washington Dulles
located at 14750 Conference Center Drive, Chantilly, Virginia
20151, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders.
Any stockholder signing and returning the enclosed proxy has the
power to revoke it by (1) giving written notice of
revocation of such proxy to the Companys Corporate
Secretary at the address set forth above, (2) completing,
signing and submitting a new proxy card relating to the same
shares and bearing a later date, or (3) attending the
Annual Meeting and voting in person, although attendance at the
meeting will not, by itself, revoke a proxy. The shares
represented by the enclosed proxy will be voted as specified
therein if said proxy is properly signed and received by the
Company prior to the time of the Annual Meeting and is not
properly revoked. The expense of this proxy solicitation will be
borne by the Company. The Companys principal executive
offices are located at 3801 South Oliver, Wichita, KS 67210.
The Board has fixed the close of business on March 14, 2008
as the record date for determining the holders of common stock
entitled to notice of and to vote at the Annual Meeting. On
March 14, 2008, there were 102,776,848 shares of
Class A Common stock outstanding, held of record by
54 stockholders. Each outstanding share of Class A
Common stock is entitled to one vote. On March 14, 2008,
there were 34,211,006 shares of Class B Common stock
outstanding, held of record by 96 stockholders, excluding
shares issued to certain employees and directors of the Company
which are subject to certain vesting requirements, and during
the pendency of such requirements, may not be voted. Each
outstanding share of Class B Common stock is entitled to
ten votes. Each outstanding share of Class B Common stock
is convertible, at any time after vesting, at the option of the
holder, into one share of Class A Common stock.
Vote
Required for Approval
The presence, in person or by proxy, of stockholders entitled to
cast a majority of the votes which all stockholders are entitled
to cast at the Annual Meeting is necessary to constitute a
quorum for the transaction of business. The Company will count
abstentions and broker non-votes only for the
purpose of determining the presence or absence of a quorum.
Broker non-votes occur when a person holding shares
through a bank or brokerage account does not provide
instructions as to how his or her shares should be voted and the
broker does not exercise discretion to vote those shares on a
particular matter. Under the rules of the New York Stock
Exchange (NYSE), brokers may exercise discretion to
vote shares as to which instructions are not given with respect
to the election of directors and the ratification of the
selection of our independent registered public accounting firm.
With respect to Proposal 1the election of the ten
members of the Board, a plurality of the votes cast in person or
by proxy at the Annual Meeting is necessary for election of each
member. Stockholders are not entitled to cumulate votes in
electing directors. Any shares not voted (whether by abstention,
broker non-vote or otherwise) will have no impact on
the election of the members of the Board.
Each of Proposals 2, 3 and 4 will be approved if
stockholders entitled to cast a majority of the votes which all
stockholders present, in person or by proxy, are entitled to
vote on the matter, vote FOR such Proposal.
Abstentions and broker non-votes will not be counted
as votes FOR or AGAINST
Proposals 2, 3 and 4.
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However, because abstentions and broker non-votes
will be counted as present at the Annual Meeting, they will have
the effect of votes AGAINST Proposals 2, 3 and
4.
Votes cast by proxy or in person at the Annual Meeting will be
received and tabulated by The Bank of New York, the
Companys transfer agent and the inspector of elections for
the Annual Meeting.
Householding
of Annual Meeting Materials
Some brokers and other nominee record holders may be
participating in the practice of householding proxy
statements. This means that only one copy of the Proxy Statement
may have been sent to multiple stockholders in a
stockholders household. The Company will promptly deliver
a separate copy of the Proxy Statement to any stockholder who
contacts the Companys Investor Relations Department by
writing to Spirit AeroSystems, Investor Relations,
P.O. Box 780008, Wichita, KS,
67278-0008,
or by calling
(316) 523-1797
or by sending an email request to
investorrelations@spiritaero.com. If a stockholder is receiving
multiple copies of the Proxy Statement at the stockholders
household and would like to receive a single copy of the Proxy
Statement for a stockholders household in the future, the
stockholder should contact his or her broker, other nominee
record holder, or the Companys Investor Relations
Department to request mailing of a single copy of the Proxy
Statement.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Board currently consists of ten directors and will consist
of ten directors following the Annual Meeting. Cornelius (Connie
Mack) McGillicuddy, III and Seth Mersky have informed the
Company that they will not be standing for re-election at the
Annual Meeting and as a result, their terms as directors will
expire effective as of the Annual Meeting.
The Corporate Governance and Nominating Committee has nominated
each of the ten persons listed below for election as directors,
with Charles L. Chadwell and James L. Welch being nominated to
fill the vacancies that will be created by the expiration of
Messrs. McGillicuddys and Merskys terms as
directors. In accordance with the terms of our Special Security
Agreement (the Special Security Agreement) with the
United States Department of Defense (the DoD), the
qualification of Messrs. Welch and Chadwell to serve on the
Board is subject to the approval by the DoD of at least one of
them. Their appointment is currently under consideration by the
DoD. If elected at the Annual Meeting, and in the case of
Messrs. Chadwell and Welch, if duly qualified to serve,
each of the ten nominees will hold office until the next Annual
Meeting of Stockholders, and until their successors are elected
and qualified. All of the nominees except Charles L. Chadwell
and James L. Welch have served as directors of the Company since
the last Annual Meeting of Stockholders.
Each nominee for election has agreed to serve if elected, and we
have no reason to believe that any nominee will be unavailable
to serve. If any nominee is unable or declines to serve as a
director at the time of the Annual Meeting, it is the intention
of the proxy holders to vote such proxy for such other person or
persons as designated by the present Board to fill such vacancy.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them FOR the nominees
named below. A director must receive a plurality of the votes of
the shares entitled to vote on the election of a director and
voted in favor thereof in order to be elected.
Recommendation
of the Board of Directors
THE BOARD
RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES.
Information
Regarding Nominees for Election as Directors
The following sets forth certain information with respect to the
ten nominees for election as Directors of the Company at the
Annual Meeting, based on information furnished to the Company by
each Director.
Charles L. Chadwell, 67. Mr. Chadwell
has been nominated to become a director of the Company. Until
his retirement in 2002, Mr. Chadwell served as Vice
President and General Manager of Commercial Engine Operations
for General Electric Aircraft Engines. Prior to that, he held a
variety of general management and
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senior management positions at General Electric Aircraft
Engines. Mr. Chadwell serves on the Board of Directors of
B/E Aerospace, Inc.
Ivor (Ike) Evans, 65. Mr. Evans became a
director of the Company on November 15, 2006.
Mr. Evans has been an Operating Partner at Thayer Capital
Partners since April 2005. Mr. Evans served as Vice
Chairman of Union Pacific Corporation and Union Pacific Railroad
from January 2004 through February 2005. From 1998 to February
2005 he was President and Chief Operating Officer of Union
Pacific Railroad. Prior to joining Union Pacific in 1998,
Mr. Evans held senior management positions at Emerson
Electric and Armtek Corporation. Mr. Evans serves on the
Board of Directors of Textron Inc., Cooper Industries, Ltd. and
Arvin Meritor, Inc.
Paul Fulchino, 61. Mr. Fulchino became a
director of the Company on November 15, 2006.
Mr. Fulchino has served as Chairman, President, and Chief
Executive Officer of Aviall, Inc. since January 2000. Aviall,
Inc. became a wholly-owned subsidiary of The Boeing Company
(Boeing) on September 20, 2006. From 1996
through 1999, Mr. Fulchino was President and Chief
Operating Officer of B/E Aerospace, Inc., a leading supplier of
aircraft cabin products and services. From 1990 to 1996,
Mr. Fulchino served in the capacities of President and Vice
Chairman of Mercer Management Consulting, Inc., an international
general management consulting firm. Earlier in his career,
Mr. Fulchino held various engineering positions at Raytheon
Company.
Richard Gephardt, 67. Mr. Gephardt
became a director of the Company on November 15, 2006.
Mr. Gephardt was a member of the U.S. House of
Representatives from 1977 to 2005 during which time he served as
the Majority and Minority Leader. Since 2005, Mr. Gephardt
has served as President and CEO of Gephardt Group, a
multi-disciplined consulting firm. Mr. Gephardt is also an
advisor to Goldman Sachs and Senior Counsel at DLA Piper.
Mr. Gephardt serves on the Board of Directors of
U.S. Steel, Centene Corporation, Embarq Corporation and
Dana Corporation.
Robert Johnson, 60. Mr. Johnson became a
director of the Company on November 15, 2006 and serves as
Chairman of the Board. On August 1, 2006, Mr. Johnson
became the Chief Executive Officer of Dubai Aerospace Enterprise
Ltd. Mr. Johnson was Chairman of Honeywell Aerospace from
January 2005 through January 2006, and from 2000 to 2004 he was
its President and Chief Executive Officer. From 1994 to 1999 he
served as AlliedSignals President of Marketing, Sales, and
Service, and as President of Electronic and Avionics, and
earlier as Vice President of Aerospace Services. Prior to
joining Honeywell in 1994, he held management positions at AAR
Corporation for two years and General Electric Aircraft Engines
for 24 years. Mr. Johnson serves on the Board of
Directors of Ariba, Inc. and Roper Industries, Inc.
Ronald Kadish, 59. Mr. Kadish became a
director of the Company on November 15, 2006.
Mr. Kadish served over 34 years with the U.S. Air
Force until he retired on September 1, 2004, at the rank of
Lieutenant General. During that time, Mr. Kadish served as
Director, Missile Defense Agency and Director, Ballistic Missile
Defense Organization, both of the Department of Defense. In
addition, Mr. Kadish served in senior program management
capacities, including the F-16, C-17, and F-15 programs. Since
February 15, 2005, he has served as a Vice President at
Booz Allen Hamilton. Mr. Kadish serves on the Board of
Directors of Orbital Sciences Corp.
Francis Raborn, 64. Mr. Raborn became a
director of the Company on November 15, 2006. Until his
retirement in 2005, Mr. Raborn served as Vice President and
Chief Financial Officer of United Defense, L.P. since its
formation in 1994 and as a director since 1997. Mr. Raborn
joined FMC Corporation, or FMC, the predecessor of United
Defense, L.P. in 1977 and held a variety of financial and
accounting positions, including Controller of FMCs Defense
Systems Group from 1985 to 1993 and Controller of FMCs
Special Products Group from 1979 to 1985.
Jeffrey L. Turner, 56. Mr. Turner became
a director of the Company on November 15, 2006, and has
served as its President and Chief Executive Officer since June
2006. Since June 16, 2005, he has also served in such
capacities for Spirit AeroSystems, Inc. Mr. Turner joined
Boeing in 1973, and was appointed as Vice President-General
Manager of Boeing Wichita Division in November 1995. Prior to
his appointment as Vice President-General Manager of Boeing
Wichita Division, Mr. Turner held various management
positions in systems development, quality, production, services
and finance in Boeing Computer Services, Boeing Military
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Airplane Company and Boeing Commercial Airplane Company.
Mr. Turner serves on the Board of Directors of INTRUST
Financial Corp.
James L. Welch, 53. Mr. Welch has been
nominated to become a director of the Company. Mr. Welch
currently serves as the Interim Chief Executive Officer of JHT
Holdings, Inc., a leading provider of truck transportation
services. From June 2000 until January 2007, Mr. Welch
served as President and Chief Executive Officer of Yellow
Transportation, a leading provider of transportation services
for industrial, commercial and retail goods. Mr. Welch
joined Yellow Transportation in 1978 and, prior to his
appointment as President and Chief Executive Officer, he held
various senior management positions at Yellow Transportation.
Mr. Welch received his Bachelor of Science in Psychology
from West Texas A&M. Mr. Welch serves on the Board of
Directors of SkyWest, Inc.
Nigel Wright, 44. Mr. Wright became a
director of the Company on February 7, 2005.
Mr. Wright was Vice President and Secretary of the Company
from February 2005 until November 15, 2006, and was
Treasurer of the Company from February 2005 through June 2006.
Mr. Wright is a Managing Director of Onex Corporation,
which he joined in 1997. Prior to joining Onex, Mr. Wright
was a Partner at the law firm of Davies, Ward & Beck
for seven years, practicing mergers and acquisitions and
securities law. Previously he worked for almost three years in
the policy unit of the Canadian Prime Ministers office.
Mr. Wright serves on the Board of Directors of Res-Care,
Inc.
CORPORATE
GOVERNANCE AND THE BOARD OF DIRECTORS
Corporate
Governance Information
The Companys Corporate Governance Guidelines and the
charters of the three standing committees of the Board describe
the governance practices the Company follows. The Corporate
Governance Guidelines and committee charters are intended to
ensure that the Board has the necessary authority and practices
in place to review and evaluate the Companys business
operations and to make decisions that are independent of the
Companys management. The Corporate Governance Guidelines
also are intended to align the interests of the Companys
directors and management with those of the Companys
stockholders. The Corporate Governance Guidelines establish the
practices the Board follows with respect to the obligations of
the Board and each director; Board composition and selection;
Board meetings and involvement of senior management; chief
executive officer performance evaluation and succession
planning; Board committee composition and meetings; director
compensation; director orientation and education; and director
access to members of management and to independent advisors. The
Board annually conducts a self-evaluation to assess compliance
with the Corporate Governance Guidelines and identify
opportunities to improve Board performance.
The Corporate Governance Guidelines and committee charters are
reviewed periodically and updated as necessary to reflect
changes in regulatory requirements and evolving oversight
practices. The Corporate Governance Guidelines comply with
corporate governance requirements contained in the listing
standards of the NYSE and make enhancements to the
Companys corporate governance policies. Current copies of
the Companys Corporate Governance Guidelines and Code of
Ethics and Business Conduct are available under the
Investor Relations portion of the Companys
website, www.spiritaero.com, and are available in print
free of charge to the Companys stockholders by written
request to the Company at Spirit AeroSystems Holdings, Inc.,
3801 South Oliver, Wichita, KS 67210, Attn: Corporate Secretary.
Director
Independence
The Company is deemed to be a controlled company
under the rules of the NYSE because more than fifty percent of
the voting power of the Company is held by Onex Corporation,
Onex Partners LP, and their affiliates (collectively,
Onex). See Information Regarding Beneficial
Ownership of Principal Stockholders, Directors, and
Management below. Therefore, the Company qualifies for the
controlled company exception to the board of
directors and committee composition requirements under the rules
of the NYSE. Pursuant to this exception, the Company is exempt
from the rules that would otherwise require that the Board be
comprised of a majority of independent directors and
that the Companys Compensation Committee and the Corporate
Governance and Nominating Committee be comprised solely of
independent directors, as defined
4
under the rules of the NYSE. The controlled company exception
does not modify the independence requirements for the
Companys Audit Committee, and the Company intends to
comply with the requirements of the Sarbanes-Oxley Act of 2002
and the NYSE rules, which require that the Companys Audit
Committee be comprised of independent directors exclusively.
The Board has analyzed the independence of each director and
nominee and has determined that the following directors and
nominees meet the standards of independence under the
Companys Corporate Governance Guidelines and applicable
NYSE listing standards, including that each such director or
nominee is free of any relationship that would interfere with
his individual exercise of independent judgment:
Mr. Raborn, Mr. Evans, Mr. Kadish,
Mr. Johnson, Mr. McGillicuddy, Mr. Chadwell and
Mr. Welch.
Independent directors do not currently comprise a majority of
the Board as the Company is a controlled company
within the meaning of NYSE rules and qualifies for an exception
to certain board of directors and committee composition
requirements under such rules. Likewise, the Companys
Compensation Committee and Corporate Governance and Nominating
Committee are not comprised solely of independent directors. If
all of the nominees for director are elected to the Board,
independent directors will comprise a majority of the Board
following the Annual Meeting.
Nomination
of Directors
The Corporate Governance and Nominating Committee is responsible
for identifying and evaluating qualified potential candidates to
serve on the Board and recommending to the Board for its
selection those nominees to stand for election as directors at
the Companys Annual Meeting of Stockholders. While the
Corporate Governance and Nominating Committee has established no
minimum eligibility requirements for candidates to serve on the
Board, in performing its duties, the Corporate Governance and
Nominating Committee considers any criteria approved by the
Board; the candidates judgment, skill, education,
diversity, age, relationships, experience with businesses and
other organizations; whether the candidate meets the
independence requirements of applicable legal and listing
standards; the organization, structure, size, and composition of
the Board and the interplay of the candidates experience
with the experience of other Board members; the qualifications
and areas of expertise needed to further enhance the
deliberations of the Board; whether the candidate maintains a
security clearance with the DoD; the requirements of the Special
Security Agreement among Onex, the Company, and the DoD; and the
extent to which the candidate would be a desirable addition to
the Board and any committees of the Board.
Each potential candidate to serve on the Board must satisfy the
requirements of the Companys certificate of incorporation
and bylaws, conform to high standards of integrity and ethics,
and have a commitment to act in the best interest of the Company
and its stockholders. Furthermore, potential candidates are
evaluated based on whether they, when considered with all other
members of the Board, allow the Company to satisfy the
requirements of the Special Security Agreement, which among
other things, (i) regulates the number of directors who are
representatives of Onex (Inside Directors), the
number of DoD-approved directors who previously had no
relationship with the Company or any entity controlled by Onex
(Outside Directors), and the number of directors who
are cleared officers of the Company
(Officer/Directors); (ii) requires notice to
and approval of the DoD concerning the appointment and
replacement of Outside Directors; and (iii) stipulates DoD
personnel security clearance-eligibility requirements for
Outside Directors and Officer/Directors.
The Corporate Governance and Nominating Committee will consider
stockholder recommendations for candidates to the Board on the
same basis that it considers all other candidates recommended to
it. To recommend a director candidate to the Corporate
Governance and Nominating Committee, the stockholder must
provide the Company with a written notice that contains
(1) the name and address of the nominating stockholder and
person to be nominated; (2) the number and class of all
shares of each class of common stock of the Company beneficially
owned by the person to be nominated, if any; (3) a
representation that the nominating stockholder is a stockholder
of record of the Companys stock entitled to vote at a
meeting to elect directors of the Company and stating the number
and class of all shares of each class of common stock of the
Company beneficially owned by the nominating stockholder, and
intends to appear in person or by proxy at the meeting to
nominate the person specified in the notice; (4) a
description of all arrangements or
5
understandings between the nominating stockholder, the person to
be nominated, and any other person or persons (naming such
person or persons) to which the nomination is to be made by the
stockholder; (5) such other information regarding the
person to be nominated by such stockholder as would be required
to be included in a proxy statement filed pursuant to the proxy
rules of the SEC, had the nominee been nominated, or intended to
be nominated, by the Board; and (6) the signed consent of
the person to be nominated to serve as a director of the
Company, if so elected, to be named in the Companys proxy
statement (whether or not nominated), and the signed consent of
the nominating stockholder to be named in the Companys
proxy statement (whether or not the Board chooses to nominate
the recommended nominee). If a stockholder wishes to formally
nominate a candidate, he or she must follow the procedures
described in the Companys bylaws.
All director candidate recommendations and formal nominations
for membership to the Board for the 2009 Annual Meeting of
Stockholders must be sent to the Company at the address set
forth below and received by the date specified for stockholder
proposals. See Stockholders Proposals to Be Presented at
the Next Annual Meeting below. The presiding officer of
the Annual Meeting of Stockholders may refuse to acknowledge the
nomination of any person not made in compliance with the
foregoing procedure.
Communications
with the Board
Stockholders and other interested persons may send
communications to the Board, the chairman of the Board,
individual members of the Board, members of any committee of the
Board, or one or more non-management directors by letter
addressed to Investor Relations at Spirit AeroSystems Holdings,
Inc., 3801 South Oliver, Wichita, KS 67210, or by contacting
Investor Relations at
(316) 523-1797.
These communications will be received and reviewed by the
Companys Investor Relations office. The receipt of
concerns about the Companys accounting, internal controls,
auditing matters, or business practices will be reported to the
Companys Audit Committee. The receipt of other concerns
will be reported to the appropriate committee(s) of the Board.
The Companys employees also can raise questions or
concerns confidentially or anonymously using the Companys
Ethics Hotline. Receipt of communications clearly not
appropriate for consideration by members of the Board, such as
unsolicited advertisements, inquiries concerning the products
and services of the Company, or harassing communications, will
not be forwarded to members of the Board.
Committees
of the Board
The Board has three standing committees: the Audit Committee,
the Compensation Committee and the Corporate Governance and
Nominating Committee. The board of directors of Spirit
AeroSystems, Inc. (Spirit), the Companys
wholly-owned subsidiary and operating company, whose directors
and many of whose executive officers are identical to the
Companys directors and executive officers, respectively,
has one standing committee: the Government Security Committee.
The members of the Audit Committee, the Compensation Committee
and the Corporate Governance and Nominating Committee were
appointed following the appointment of the full Board on
November 15, 2006, and before the initial public offering
of the Companys securities. The members of Spirits
Government Security Committee were appointed on July 19,
2005, except for Mr. Raborn, who was appointed on
October 19, 2005. Eight meetings of the Audit Committee,
four meetings of the Compensation Committee, six meetings of the
Corporate Governance and Nominating Committee, and four meetings
of Spirits Government Security Committee were held in
fiscal year 2007.
Below is a description of the duties and composition of each
standing committee of the Board. Each committee has authority to
engage legal counsel or other advisors or consultants as it
deems appropriate to carry out its responsibilities. Directors
hold committee memberships for a term of one year.
Audit Committee. The Audit Committee is responsible
for (1) selecting the independent registered public
accounting firm; (2) approving the overall scope of the
audit; (3) assisting the Board in monitoring the integrity
of the Companys financial statements, the independent
registered public accounting firms qualifications and
independence, the performance of the independent registered
public accounting firm, the Companys internal audit
function, and the Companys compliance with legal and
regulatory requirements; (4) annually reviewing the
independent registered public accounting firms report
describing the auditing
6
firms internal quality-control procedures and any material
issues raised by the most recent internal quality-control review
or peer review of the auditing firm; (5) reviewing and
discussing with management and the independent registered public
accounting firm the adequacy of the Companys internal
controls over financial reporting and disclosure controls and
procedures; (6) overseeing the Companys internal
audit function; (7) discussing the annual audited financial
and quarterly statements with management and the independent
registered public accounting firm; (8) discussing earnings
press releases, as well as financial information and earnings
guidance provided to analysts; (9) discussing policies with
respect to risk assessment and risk management;
(10) meeting periodically and separately with management,
internal auditors, and the independent registered public
accounting firm; (11) reviewing with the independent
registered public accounting firm any audit problems or
difficulties and managements response thereto;
(12) setting clear hiring policies for employees or former
employees of the independent registered public accounting firm;
(13) reviewing procedures for the receipt, retention, and
treatment of complaints, including anonymous complaints from
employees, concerning accounting, accounting controls, and audit
matters; (14) handling such other matters that are
specifically delegated to the Audit Committee by the Board from
time to time; and (15) reporting regularly to the full
Board.
The Companys Audit Committee consists of
Messrs. Raborn, Evans, and Johnson, with Mr. Raborn
serving as chairman. All of the committee members have been
determined to be independent within the meeting of the NYSE
listing standards, and Mr. Raborn has been determined to be
an audit committee financial expert, as such term is
defined in Item 407(d)(5) of SEC
Regulation S-K.
The Audit Committee has a written charter, the current copy of
which can be found under the Investor Relations
portion of the Companys website, www.spiritaero.com.
Compensation Committee. The Compensation Committee
is responsible for (1) developing and modifying, as
appropriate, a competitive compensation philosophy and strategy
for the Companys executive officers; (2) reviewing
and approving goals and objectives with respect to compensation
for the Companys chief executive officer;
(3) reviewing and approving the evaluation process and
compensation structure for the Companys officers;
(4) reviewing and approving employment contracts and other
similar arrangements between the Company and its executive
officers; (5) recommending to the Board any incentive plan,
including equity-based plans, and amendments to such plans;
(6) administration of incentive compensation plans,
including the granting of awards under equity-based plans;
(7) reviewing and approving any benefit plans or
perquisites offered to the Companys executive officers;
(8) reviewing and recommending to the Board compensation
paid to non-employee Directors; (9) preparing the
Compensation Committees report for inclusion in the
Companys proxy statement; (10) such other matters
that are specifically delegated to the Compensation Committee by
the Board; and (11) reporting regularly to the full Board.
The Companys Compensation Committee consists of
Messrs. Mersky, Fulchino, and Johnson, with Mr. Mersky
serving as chairman. Mr. Mersky has informed the Company
that he will not be standing for re-election at the Annual
Meeting and as a result, his term as a director will expire
effective as of the Annual Meeting. At the first meeting of the
Board after the Annual Meeting, the Board will appoint a new
chairman of the Compensation Committee to fill the vacancy
created by the expiration of Mr. Merskys term as a
director. One of the members of the Compensation Committee,
Mr. Johnson, is independent. Messrs. Fulchino and
Mersky are not independent within the meaning of the NYSE
listing standards. The Compensation Committee has a written
charter, the current copy of which is available under the
Investor Relations portion of the Companys
website, www.spiritaero.com.
Corporate Governance and Nominating Committee. The
Companys Corporate Governance and Nominating
Committees purpose is to assist the Board by identifying
individuals qualified to become members of the Board consistent
with the criteria established by the Board and to develop the
Companys corporate governance principles. The Corporate
Governance and Nominating Committee is responsible for
(1) evaluating the composition, size, and governance of the
Board and its committees; (2) identifying, evaluating, and
recommending candidates for election to the Board;
(3) making recommendations regarding future planning and
the appointment of Directors to the Boards committees;
(4) establishing a policy for considering stockholder
recommendations for nominees for election to the Board;
(5) recommending ways to enhance communications and
relations with the Companys stockholders;
(6) overseeing the Board performance and
7
self-evaluation process and developing orientation and
continuing education programs for Directors; (7) reviewing
the Companys Corporate Governance Guidelines and providing
recommendations to the Board regarding possible changes;
(8) reviewing and monitoring compliance with the
Companys Code of Ethics and Business Conduct and Insider
Trading Policy; and (9) reporting regularly to the full
Board.
The Companys Corporate Governance and Nominating Committee
consists of Messrs. Wright, Fulchino, Gephardt, and Kadish,
with Mr. Wright serving as chairman. One of the members of
the Corporate Governance and Nominating Committee,
Mr. Kadish, is independent. Messrs. Fulchino, Wright
and Gephardt are not independent within the meaning of the NYSE
listing standards. The Corporate Governance and Nominating
Committee has a written charter, the current copy of which is
available under the Investor Relations portion of
the Companys website, www.spiritaero.com.
Government Security Committee. In accordance with
the requirements of the Special Security Agreement, the
Companys Government Security Committee is comprised of
Outside Directors and Directors who are officers of the Company,
each of whom are cleared U.S. resident citizens. The
Government Security Committee is responsible to ensure that the
Company maintains policies and procedures to safeguard the
classified and export-controlled information in the
Companys possession, and to ensure that the Company
complies with its industrial security agreements and
obligations, U.S. export control laws and regulations, and
the National Industrial Security Program Operating Manual.
The Companys Government Security Committee consists of
Messrs. Kadish, Turner, Evans, Johnson, McGillicuddy, and
Raborn, with Mr. Kadish serving as chairman.
Mr. McGillicuddy has informed the Company that he will not
be standing for re-election at the Annual Meeting and as a
result, his term as a director will expire effective as of the
Annual Meeting. At such time, he will also resign as a director
of Spirit. Any newly elected, and in the case of
Messrs. Chadwell and Welch, qualified directors of the
Company will be appointed to Spirits board of directors
following the Annual Meeting. At the first meeting of
Spirits board of directors after the Annual Meeting,
Spirits board of directors will appoint any
newly-appointed Outside Directors to serve on the Government
Security Committee along with the continuing Outside Directors.
Other Committees. The Board may establish other
committees as it deems necessary or appropriate from time to
time.
Board
Meetings and Attendance; Annual Meeting Attendance.
During the fiscal year 2007, there were four formal meetings of
the Board and several actions by unanimous written consent. None
of the incumbent directors attended fewer than 75 percent
of the aggregate of (i) the total number of meetings
(whether regular or special meetings) of the Board (held during
the period for which such person was a director), and
(ii) the total number of meetings held by all committees of
the Board on which the director served (during the period that
such director served). The Company held its annual meeting of
stockholders for the fiscal year 2006 on May 1, 2007, and
it was attended by all of the members of the Board. The Company
encourages the members of the Board to attend its annual
meetings of the stockholders.
COMPENSATION
OF NON-MANAGEMENT DIRECTORS
Non-management directors compensation is set by the Board
at the recommendation of the Compensation Committee. In
developing its recommendations, the Compensation Committee is
guided by the following goals: compensation should fairly pay
directors for work required in companies similar in size and
scope to the Company; compensation should align directors
interests with the long-term interest of stockholders; and the
structure of the compensation should be simple, transparent, and
easy for stockholders to understand.
The Compensation Committee reviews and recommends to the Board
for its approval all compensation of the Companys
non-employee directors, but no member of the Compensation
Committee may act to fix his or her own compensation except as
uniformly applied to all of the Companys non-employee
directors.
In 2005, the Board adopted a Director Stock Plan to provide
certain non-employee directors of Spirit with the opportunity to
acquire equity in the Company through grants of restricted
shares of the Companys Class B
8
Common stock. Under the plan since inception, Spirits
non-employee directors, who are also members of the Board, have
received grants of an aggregate of 390,000 restricted shares.
Similar to the Companys Executive Incentive Plan for
executive officers, unless otherwise provided in the agreement
covering the grant of shares under the Director Stock Plan,
director recipients of restricted stock grants under the plan
generally acquire an interest in these shares only upon certain
liquidity events specified under the plan in which Onex
liquidates a portion of their investment in the Company. If,
upon such a liquidity event, the Onex entities have received a
positive return on the portion of their investment in the
Company that they have liquidated, recipients will receive an
interest in a portion of restricted stock granted to them equal
to the portion of Onexs investment liquidated in the
liquidity event. In addition, the remainder of the non-vested
stock vests on the first date on which (1) the directors
are no longer subject to restrictions on transfer pursuant to a
written agreement with the Company or the underwriter(s) of a
public offering and (2) Onex has received a positive return
on its investment, taking into account both amounts received by
Onex on account of shares and the value of shares which Onex
continues to hold. Upon ceasing to serve as a director, a
recipient will forfeit any restricted stock which was granted to
him within the one year period prior to his ceasing to serve as
a director and in which he has not before then acquired an
interest. Former directors will also forfeit any restricted
stock in which they have not acquired an interest within five
years of ceasing to serve as a director. Because of their
affiliation with Onex and the Companys management
arrangements with Onex (see Certain Relationships and
Related Transactions below), Messrs. Mersky and
Wright received no restricted stock grants from the Company. No
grants of restricted stock were made to non-management directors
in 2007.
As a result of the Companys initial public offering, the
directors acquired an interest in 100% of the shares granted to
them under the Director Stock Plan.
Non-management directors are paid an annual cash fee for general
Board service and individual cash fees for attendance at certain
meetings of committees of the Board and service as chairman of
the Board or one of its committees. No additional or other
compensation is paid to the Companys management who are
also members of the Board. All compensation paid to management
directors is described in the executive compensation tables and
narrative below. Fees earned or paid to non-management directors
in 2007 are listed in the Director Compensation for Fiscal
Year 2007 table below. Non-management directors received
an annual cash payment of $75,000, $5,000 for each Board meeting
attended in person, and $2,000 for each Audit Committee meeting
attended in person or via conference call, for their service as
members of the Board of the Company in 2007. The chairman of the
Audit Committee and the Government Security Committee received
an additional $15,000 and $5,000, respectively. The chairman of
the Board received $30,000 for the fiscal year 2007. All
directors are reimbursed for their out-of-pocket expenses
incurred in connection with their director services.
Occasionally, certain perquisites or personal benefits are
provided to non-management directors under the same general
standards as perquisites or personal benefits are provided to
the Companys executive officers.
Following a 2007 compensation review of non-management
directors, the Compensation Committee determined that for 2008
and beyond, the Company should replace the initial private
equity compensation arrangement and meeting attendance fees with
arrangements appropriate for recruiting and retaining public
company directors. The Compensation Committee reviewed benchmark
Board compensation data from Towers Perrin (using a peer group
established by revenue level), Heidrick & Struggles
(S&P500), and Spirits peer group of listed
aerospace & defense companies at the
75th percentile level to account for growth projections,
the international nature of Spirits business, and the
desire to maintain the high quality of board appointments.
For 2008, we will increase the annual cash payment to
non-employee directors and eliminate meeting attendance fees.
Board fees will be paid 50% in cash and 50% in shares of
restricted common stock or restricted stock units, which will be
subject to time-vesting requirements. Directors will have the
option to receive all of their compensation in the form of
restricted stock or restricted stock units. We will also
implement minimum stockholding requirements for directors.
9
Director
Compensation for Fiscal Year 2007
The following table presents information concerning compensation
attributable to the Companys non-management directors for
the fiscal year ended December 31, 2007.
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Fees Earned
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or Paid in
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Cash
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|
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Total
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Name
|
|
($)
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|
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($)
|
|
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Ivor Evans
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108,000
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108,000
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Paul Fulchino
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100,000
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|
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100,000
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Richard Gephardt
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|
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95,000
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|
|
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95,000
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Robert Johnson
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138,000
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|
|
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138,000
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Ronald Kadish
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105,000
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|
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105,000
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Cornelius McGillicuddy, III(1)
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|
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95,000
|
|
|
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95,000
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Seth Mersky(1)(2)
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|
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95,000
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|
|
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95,000
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Francis Raborn
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|
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123,000
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123,000
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Nigel Wright(2)
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100,000
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100,000
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(1) |
|
Messrs. McGillicuddy and Mersky have informed the Company
that they will not be standing for
re-election
at the Annual Meeting and as a result, their terms as directors
will expire effective as of the Annual Meeting. |
|
(2) |
|
The fees for Messrs. Mersky and Wright are paid to Onex
Partners Advisor LP. |
Certain
Relationships and Related Transactions
Related-party transactions have the potential to create actual
or perceived conflicts of interest between the Company and its
directors and executive officers or their immediate family
members. The Board reviews such matters as they pertain to
related-party transactions as defined by Item 404(b) of the
SECs
Regulation S-K.
Certain of the related-party transactions disclosed in this
Proxy Statement were in existence either prior to the
acquisition of the assets of Spirit from Boeing (the
Boeing Acquisition) in June 2005 or the initial
public offering of the Companys Class A Common stock
in November 2006. In deciding whether to continue to allow these
related-party transactions involving a director, executive
officer, or their immediate family members, the Board
considered, among other factors:
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information about the goods or services proposed to be or being
provided by or to the related party or the nature of the
transactions;
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the nature of the transactions and the costs to be incurred by
the Company or payments to the Company;
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an analysis of the costs and benefits associated with the
transaction and a comparison of comparable or alternative goods
or services that are available to the Company from unrelated
parties;
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the business advantage the Company would gain by engaging in the
transaction; and
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|
an analysis of the significance of the transaction to the
Company and to the related party.
|
The Board determined that the related party transactions
disclosed herein are on terms that are fair and reasonable to
the Company, and which are as favorable to the Company as would
be available from non-related entities in comparable
transactions. The Board believes that there is a Company
business interest supporting the transactions and the
transactions meet the same Company standards that apply to
comparable transactions with unaffiliated entities. Although the
aforementioned controls are not written, each determination was
made by the Board and reflected in its minutes. The Board is in
the process of preparing written related party transaction
policies that will be communicated to the appropriate level of
management and will be posted on the Companys internal
policy website.
10
Below are the transactions that occurred since the beginning of
the fiscal year 2007, or any currently proposed transactions, in
which, to the Companys knowledge, the Company was or is a
party, in which the amount involved exceeded $120,000, and in
which any director, director nominee, executive officer, holder
of more than 5% of any class of the Companys common stock,
or any member of the immediate family of any of the foregoing
persons had or will have a direct or indirect material interest.
On September 18, 2006, Spirit entered into a distribution
agreement with Aviall Services, Inc., a wholly-owned subsidiary
of Aviall, Inc. (Aviall). Aviall is a provider of
global parts distribution and supply chain services for the
aerospace industry. Spirit appointed Aviall as its exclusive
distributor to sell, market, and otherwise distribute certain
aftermarket products worldwide, excluding the United States and
Canada. The contract extends until September 18, 2011 and
automatically renews on an annual basis thereafter unless
terminated by either party. Mr. Fulchino, the president and
chief executive officer of Aviall, is a member of the Board. In
2007, the revenues to the Company under the agreement were
approximately $5.2 million.
Andrew John (Jack) Focht is the spouse of Gloria Farha Flentje,
the Companys Vice President, General Counsel, and
Secretary. Since 1998, Mr. Focht has served as special
counsel to Foulston Siefkin LLP, a law firm utilized by the
Company and at which Ms. Flentje was previously a partner.
Although Mr. Focht is not a partner, has no right to
participate in management, and holds no other positions in the
firm, he has phantom units that entitle him to an
undivided share in the net profits of the firm, including the
net profits attributable to fees received from the Company. In
2007, the firm received approximately $2.2 million in fees
from the Company for legal services, and Mr. Fochts
phantom unit interest in those fees was $31,000, before taking
into account firm expenses.
In addition, the Company paid during the fiscal year 2007
approximately $519,000 to Onex for various consulting services
rendered by it to the Company.
11
STOCK
OWNERSHIP
Information
Regarding Beneficial Ownership of Principal Stockholders,
Directors, and Management
The following table sets forth, as of March 14, 2008,
information regarding the beneficial ownership of the
Companys Class A Common stock and Class B Common
stock by all directors, the Companys chief executive
officer, chief financial officer, and the three most highly
compensated executive officers other than the chief executive
officer and chief financial officer, who were serving as
executive officers at the end of the last fiscal year
(collectively, the named executive officers), and
the Companys directors and all executive officers as a
group. It also sets forth the ownership of any person or group
who is known by the Company to be the beneficial owner of more
than five percent of either class of the Companys common
stock, together with such beneficial owners address.
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Title of
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Amount and
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Percentage
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Percentage
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Percentage
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Class of
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Nature of
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of Class A
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of Class B
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of Total
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Shares
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Beneficial
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Common
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Common
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Voting
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Name
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Owned
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Ownership
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Stock(+)
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Stock(+)(16)
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Power(+)(16)
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Five Percent Stockholders
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Onex Corporation
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Class B
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32,411,638
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(1)
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94.7
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%
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72.9
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%
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161 Bay Street, P.O. Box 700
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Toronto, Ontario M5J 2S1
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Canada
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Onex Partners LP
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Class B
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18,197,952
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(2)
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53.2
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%
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40.9
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%
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c/o Onex
Investment
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Corporation
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712 Fifth Avenue
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New York, New York
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10019
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OAH Wind LLC
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Class B
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8,604,867
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(3)
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25.2
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%
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19.3
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%
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421 Leader Street
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Marion, Ohio 43302
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Onex Spirit Co-Invest LP
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Class B
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4,892,892
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(4)
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14.3
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%
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11.0
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%
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c/o Onex
Investment
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Corporation
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712 Fifth Avenue
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New York, New York
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10019
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AXA Financial, Inc.
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Class A
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16,549,188
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(5)
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16.1
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%
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3.7
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%
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1290 Avenue of the
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Americas
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New York, New York
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10104
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FMR LLC
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Class A
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9,846,100
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(6)
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9.6
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%
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2.2
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%
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82 Devonshire Street
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Boston, Massachusetts
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02109
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Invesco Ltd.
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Class A
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7,229,260
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(7)
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7.0
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%
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1.6
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%
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1360 Peachtree Street NE
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Atlanta, GA 30309
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United States
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12
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Title of
|
|
Amount and
|
|
|
Percentage
|
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|
Percentage
|
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|
Percentage
|
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|
|
Class of
|
|
Nature of
|
|
|
of Class A
|
|
|
of Class B
|
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|
of Total
|
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|
|
Shares
|
|
Beneficial
|
|
|
Common
|
|
|
Common
|
|
|
Voting
|
|
Name
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|
Owned
|
|
Ownership
|
|
|
Stock(+)
|
|
|
Stock(+)(16)
|
|
|
Power(+)(16)
|
|
|
Directors and Executive Officers
|
|
|
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|
|
Ivor Evans
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|
Class B
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|
12,965
|
|
|
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|
*
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|
|
*
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Paul Fulchino
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|
Class B
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12,965
|
|
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*
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*
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Richard Gephardt
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|
Class B
|
|
|
10,059
|
|
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|
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*
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|
|
|
*
|
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Robert Johnson
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|
Class B
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12,965
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|
|
|
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|
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*
|
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|
|
*
|
|
Ronald Kadish
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|
Class B
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12,965
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*
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*
|
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Cornelius (Connie Mack)
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McGillicuddy, III(8)
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|
Class B
|
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12,965
|
|
|
|
|
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|
|
*
|
|
|
|
*
|
|
Seth Mersky(8)
|
|
Class B
|
|
|
34,719
|
(9)
|
|
|
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|
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*
|
|
|
|
*
|
|
Francis Raborn
|
|
Class B
|
|
|
45,000
|
|
|
|
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|
|
|
*
|
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|
|
*
|
|
Jeffrey L. Turner
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|
Class B
|
|
|
287,507
|
(10)
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|
|
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|
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*
|
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|
*
|
|
Nigel Wright
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|
Class B
|
|
|
66,888
|
(11)
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|
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*
|
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|
*
|
|
Ulrich (Rick) Schmidt
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|
Class B
|
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|
390,889
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(12)
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1.1
|
%
|
|
|
*
|
|
John Lewelling
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Class B
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81,495
|
(13)
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|
|
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|
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*
|
|
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|
*
|
|
Ronald C. Brunton
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|
Class B
|
|
|
96,355
|
(14)
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|
|
|
|
|
|
*
|
|
|
|
*
|
|
H. David Walker
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Class B
|
|
|
70,158
|
(15)
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|
|
|
|
|
|
*
|
|
|
|
*
|
|
All directors and executive officers as a group (19 persons)
|
|
Class B
|
|
|
1,265,809
|
(16)
|
|
|
|
|
|
|
3.7
|
%
|
|
|
2.8
|
%
|
|
|
|
* |
|
Represents beneficial ownership of less than 1%. |
|
(+) |
|
Class A Common stock has one vote per share. Class B
Common stock has ten votes per share. Each outstanding share of
Class B Common stock is convertible at any time after
vesting, at the option of the stockholder, into one share of
Class A Common stock. |
|
(1) |
|
Includes the following: (i) shares of Class B Common
stock held by Onex Partners LP; (ii) shares of Class B
Common stock held by OAH Wind LLC; (iii) shares of
Class B Common stock held by Wind EI II LLC;
(iv) shares of Class B Common stock held by Onex U.S.
Principals LP; and (v) shares of Class B Common stock
held by Onex Spirit Co-Invest LP. Onex Corporation may be deemed
to own beneficially the shares of Class B Common stock held
by (a) Onex Partners LP, through Onex Corporations
ownership of all of the common stock of Onex Partners GP, Inc.,
the general partner of Onex Partners GP LP, the general partner
of Onex Partners LP; (b) OAH Wind LLC, through Onex
Corporations ownership of all of the equity of Onex
American Holdings II LLC, which owns all of the equity of
Onex American Holdings Subco LLC, which owns all of the equity
of OAH Wind LLC; (c) Wind EI II LLC, through Onex
Corporations ownership of Onex American Holdings II
LLC which owns all of the voting power of Wind Executive
Investco LLC, which owns all of the equity of Wind EI II LLC;
(d) Onex U.S. Principals LP through Onex Corporations
ownership of all of the equity of Onex American Holdings GP LLC,
the general partner of Onex U.S. Principals LP; and
(e) Onex Spirit Co-Invest LP, through Onex
Corporations ownership of all of the common stock of Onex
Partners GP, Inc., the general partner of Onex Partners GP LP,
the general partner of Onex Spirit Co-Invest LP. Onex
Corporation disclaims such beneficial ownership. |
|
|
|
Mr. Gerald W. Schwartz, the Chairman, President, and Chief
Executive Officer of Onex Corporation, owns shares representing
a majority of the voting rights of the shares of Onex
Corporation and as such may be deemed to own beneficially all of
the shares of the Companys Class B Common stock owned
beneficially by Onex Corporation. Mr. Schwartz disclaims
such beneficial ownership. |
|
(2) |
|
All of the shares of Class B Common stock owned by Onex
Partners LP may be deemed owned beneficially by each of Onex
Partners GP LP, Onex Partners GP, Inc., and Onex Corporation. |
13
|
|
|
(3) |
|
All of the shares of Class B Common stock owned by OAH Wind
LLC may be deemed owned beneficially by each of Onex American
Holdings Subco LLC, Onex American Holdings II LLC, and Onex
Corporation. |
|
(4) |
|
All of the shares of Class B Common stock owned by Onex
Spirit Co-Invest LP may be deemed owned beneficially by each of
Onex Partners GP LP, Onex Partners GP, Inc., and Onex
Corporation. |
|
(5) |
|
Information is based on a Schedule 13G, Amendment No. 1,
filed by The Mutuelles AXA, as a group, acting as a parent
holding company on February 14, 2008. AXA Financial, Inc.
is a parent holding company. The group is composed of AXA
Assurances I.A.R.D. Mutuelle, AXA Assurance vie Mutuelle, AXA
Courtage Assurance Mutuelle, AXA as a parent holding company for
AXA Framlington, and AXA Financial, Inc. as a parent holding
company for Alliance Bernstein, L.P. and AXA Equitable Life
Insurance Company. A majority of the shares reported are held by
unaffiliated third-party client accounts managed by Alliance
Capital Management L.P., as investment advisor. Alliance Capital
Management L.P. is a majority-owned subsidiary of AXA Financial,
Inc. AXA Framlington is deemed to have the sole power to dispose
or direct the disposition of 115,000 shares; Alliance
Bernstein, a subsidiary, is deemed to have the sole power to
dispose or direct the disposition of 16,318,773 shares; and
AXA Equitable Life Insurance Company is deemed to have the sole
power to dispose or direct the disposition of
115,415 shares. |
|
(6) |
|
Information is based on a Schedule 13G, Amendment No. 1,
filed by FMR LLC on February 14, 2008. It reported
9,258,700 shares of Class A Common stock directly
owned by Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR LLC (Fidelity);
243,700 shares of Class A Common stock directly owned
by Pyramis Global Advisors Trust Company, an indirect
wholly-owned subsidiary of FMR LLC (Pyramis); and
343,700 shares of Class A Common stock directly owned
by Fidelity International Limited (Fidelity
Intl). The general partners of Fidelity, Pyramis and
Fidelity Intl have delegated certain management and
administrative duties of such funds to FRM LLC. |
|
(7) |
|
Information is based on a Schedule 13G, Amendment
No. 1, filed by Invesco Ltd. (Invesco) on
behalf of itself and its subsidiaries listed below on
February 12, 2008. It reported 6,696,036 shares of
Class A Common stock directly owned by AIM Advisors, Inc.
(AIM Advisors); 530,606 shares of Class A
Common stock directly owned by AIM Capital Management, Inc.
(AIM Capital); and 2,618 shares of Class A
Common stock directly owned by Invesco National
Trust Company (Invesco Trust). The general
partners of AIM Advisors, AIM Capital and the managers of
Invesco Trust have delegated certain management and
administrative duties of such funds to Invesco. |
|
(8) |
|
Messrs. McGillicuddy and Mersky have informed the Company
that they will not be standing for
re-election
at the Annual Meeting and as a result, their terms as directors
will expire effective as of the Annual Meeting. |
|
(9) |
|
These shares include (i) a portion of the shares
beneficially owned by Onex Partners LP, which may be deemed
beneficially owned by Mr. Mersky by reason of his pecuniary
interest in Onex Partners LP, (ii) a portion of the shares
beneficially owned by Onex Spirit Co-Invest LP, which may be
deemed beneficially owned by Mr. Mersky by reason of his
pecuniary interest in Onex Spirit Co-Invest LP, and (iii) a
portion of the shares beneficially owned by Onex U.S. Principals
LP in which Mr. Mersky has acquired a pecuniary interest
pursuant to Onex Corporations management incentive plans.
Mr. Mersky disclaims beneficial ownership of the shares
beneficially owned by Onex Partners L.P., Onex Spirit Co-Invest
LP, and Onex U.S. Principals L.P. |
|
(10) |
|
An additional 17,294 shares of Class B Common stock
will vest on February 22, 2009, if Mr. Turner
continues to be employed by the Company at that time. On
June 17, 2005 and August 1, 2005, Mr. Turner was
granted an aggregate of 1,440,000 shares of restricted
Class B Common stock. Of those shares 414,871 are still
subject to vesting upon certain liquidity events if certain
performance criteria are met. |
|
(11) |
|
These shares include (i) a portion of the shares
beneficially owned by Onex Partners LP, which may be deemed
beneficially owned by Mr. Wright by reason of his pecuniary
interest in Onex Partners LP, (ii) a portion of the shares
beneficially owned by Onex Spirit Co-Invest LP, which may be
deemed beneficially owned by Mr. Wright by reason of his
pecuniary interest in Onex Spirit Co-Invest LP, and (iii) a
portion of the shares beneficially owned by Wind EI II LLC, in
which Mr. Wright has acquired a pecuniary |
14
|
|
|
|
|
interest pursuant to Onex Corporations management
incentive plans. Mr. Wright disclaims beneficial ownership
of the shares beneficially owned by Onex Partners LP, Onex
Spirit Co-Invest LP, and Wind EI II LLC. |
|
|
|
(12) |
|
Represents shares of Class B Common stock owned by Ulrich
Schmidt, as Trustee of the Ulrich Schmidt Revocable Trust, which
may be deemed to be beneficially owned by Mr. Schmidt. An
additional 11,359 shares of Class B Common stock will
vest on February 22, 2009, if Mr. Schmidt continues to
be employed by the Company at that time. On August 3, 2005,
Mr. Schmidt was granted an aggregate of
1,200,000 shares of restricted Class B Common stock.
Of those shares, 345,726 are still subject to vesting upon
certain liquidity events if certain performance criteria are met. |
|
(13) |
|
An additional 7,387 shares of Class B Common stock
will vest on February 22, 2009, if Mr. Lewelling
continues to be employed by the Company at that time. On
February 20, 2006, Mr. Lewelling was granted an
aggregate of 360,000 shares of restricted Class B
Common stock. Of those shares, 103,718 shares are still
subject to vesting upon certain liquidity events if certain
performance criteria are met. |
|
(14) |
|
An additional 6,566 shares of Class B Common stock
will vest on February 22, 2009, if Mr. Brunton
continues to be employed by Spirit at that time. On
July 18, 2005 Mr. Brunton was granted an aggregate of
360,000 shares of restricted Class B Common stock. Of
those shares, 103,718 are still subject to vesting upon certain
liquidity events if certain performance criteria are met. |
|
(15) |
|
An additional 3,940 shares of Class B Common stock
will vest on February 22, 2009, if Mr. Walker
continues to be employed by Spirit at that time. On
September 27, 2005 Mr. Walker was granted an aggregate
of 240,000 shares of restricted Class B Common stock.
Of those shares, 69,145 are still subject to vesting upon
certain liquidity events if certain performance criteria are met. |
|
(16) |
|
Excludes shares issued to employees and directors of the Company
which are subject to certain vesting requirements. |
Compensation
Committee Interlocks and Insider Participation
None of the Companys executive officers served during
fiscal year 2007 or currently serves and the Company anticipates
that none will serve, as a member of the board of directors or
compensation committee of any entity (other than the Company)
that has one or more executive officers that serves on the
Companys Board or Compensation Committee. Mr. Mersky
was an executive officer of the Company until November 15,
2006, and currently serves on the Companys Compensation
Committee; however, Mr. Mersky has informed the Company
that he will not be standing for re-election at the Annual
Meeting and as a result, his term as director and as a member of
any Board committee will expire effective as of the Annual
Meeting. Mr. Fulchino serves on the Companys
Compensation Committee and has a relationship that qualified as
a related-party transaction. See Certain Relationships and
Related Transactions concerning this relationship.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act of 1934, as amended (the
Exchange Act), or Section 16(a),
requires that directors, executive officers, and persons who own
more than ten percent of any registered class of a
companys equity securities, or reporting
persons, file with the SEC initial reports of beneficial
ownership and report changes in beneficial ownership of common
stock and other equity securities. Such reports are filed on
Form 3, Form 4 and Form 5 under the Exchange Act,
as appropriate. Reporting persons holding the Companys
stock are required by the Exchange Act to furnish the Company
with copies of all Section 16(a) reports they file.
To the Companys knowledge, based solely on the
Companys review of copies of these reports, and written
representations from such reporting persons, the Company
believes that, except as stated in the paragraph below, all
filings required to be made by reporting persons holding the
Companys stock were timely filed for the year ended
December 31, 2007, in accordance with Section 16(a).
Messrs. Evans, Fulchino, Johnson, Kadish, McGillicuddy and
Raborn, all of whom are members of the Board, each inadvertently
failed to timely report the vesting in August 2007 of
12,965 shares of Class B Common
15
stock granted to them in 2005, and Mr. Gephardt, who is
also a member of the Board, inadvertently failed to timely
report the vesting in August 2007 of 34,572 shares of
Class B Common stock granted to him in 2005. The vesting of
such grants was reported on Forms 4, filed on
March 11, 2008, and the grants pursuant to which these
directors initially acquired such shares and the vesting
conditions were previously disclosed in Company filings with the
SEC.
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION & ANALYSIS
This Compensation Discussion and Analysis contains statements
regarding our performance targets and goals. These targets and
goals are discussed in the limited context of our compensation
program and should not be considered statements of our
managements expectations or estimates of results or other
guidance. We specifically caution investors not to apply these
statements to other contexts.
Overview
The Compensation Committee of the Board has responsibility for
establishing, implementing and monitoring compliance with our
compensation philosophy. The Compensation Committee seeks to
ensure that the compensation paid to named executive officers is
reasonable and competitive. Generally, the Compensation
Committee strives for internal equity among our named executive
officers and, accordingly, the types of compensation and
benefits offered to our named executive officers are consistent
among the group.
General
Philosophy and Objectives
The Compensation Committee carries out the Boards overall
responsibility relating to compensation of our executive
officers. The Compensation Committees philosophy and
primary objectives in establishing compensation policies for our
executive officers are to:
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Attract, retain, and motivate highly qualified executive
officers by offering total compensation that is competitive with
that offered by similarly situated companies and that maintains
a substantial portion of total compensation at-risk;
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Provide differentiated compensation levels to reflect differing
performance levels and responsibilities among our executive
officers;
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Promote and reward the achievement of our short and long-term
objectives that the Board and management believe will lead to
sustained profitability and long-term growth in stockholder
value through the incorporation of measurable performance
objectives into the compensation arrangement; and
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Align the interests of our executive officers with those of our
stockholders by tying executive compensation to stockholder
return and value.
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As discussed later in this Compensation Discussion and Analysis,
on an aggregate basis, the Compensation Committee sets total
compensation of our executive officers, after taking into
consideration prior grants under the EIP, at market median
levels, with base salaries below the market median and the
variable portion of our executive officers compensation
above the market median. In addition, the Compensation Committee
offers long-term incentives for retention purposes.
Role of
Executive Officers and the Compensation Committee in
Compensation Decisions
With respect to the compensation of our executive officers, the
Compensation Committee is responsible for developing and
modifying, as appropriate, a competitive compensation philosophy
and strategy, which includes:
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Making recommendations to the full Board on the performance
goals and objectives for compensation of our chief executive
officer. In setting the chief executive officers
compensation, the
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Compensation Committee annually evaluates his performance under
the goals and objectives established by the Board, reviews the
chief executive officers self-evaluation, and makes a
recommendation to the full Board. The Compensation Committee
also recommends to the full Board whether to award the chief
executive officer an annual discretionary bonus.
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Making recommendations to the full Board concerning equity
incentive compensation plans (including the granting of awards
under such plans) and administering incentive compensation plans.
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Reviewing and approving with our chief executive officer the
performance evaluation process, compensation structure and
compensation recommendations with respect to our other officers.
This includes approving the annual salary, bonus, incentive,
equity compensation, benefit plans and perquisites and other
similar arrangements for such executive officers.
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Reviewing and approving with our chief executive officer annual
discretionary cash bonuses. The Compensation Committee has
annually approved a pool to award as discretionary cash bonuses
to our and our subsidiaries employees, including executive
officers, based upon a recommendation by our chief executive
officer. The Compensation Committee approves all individual
discretionary bonuses granted from this pool.
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Our executive officers other than the chief executive officer do
not play a role in their own compensation determinations, other
than preparing self-evaluations and discussing individual
performance objectives and results with the chief executive
officer.
In establishing the overall philosophy and strategy of our
executive officer compensation, the Compensation Committee takes
into consideration the counsel and recommendations of our chief
executive officer, chief financial officer, and senior vice
president of human resources, in addition to recommendations of
other members of the Board.
The Compensation Committee continues to examine existing and new
compensation programs and objectives to ensure that our
compensation philosophy and objectives remain appropriate and
consistent with our overall philosophy and objectives.
Role of
Compensation Consultants
We utilized the services of Towers Perrin to benchmark our
executive compensation, evaluate our existing pay philosophy,
and assess our long-term incentive design alternatives during
2007. This information was also used by the Compensation
Committee in establishing our executive officers base
salaries and target goals for compensation plan awards.
Our human resources department also had a compensation
co-sourcing arrangement with Mercer Human Resources Consulting
during 2007, through which we obtained industry intelligence on
compensation from a wide variety of sources for day-to-day
executive recruitment requirements.
Towers Perrin and Mercer Human Resources Consulting are engaged
by our management, with the prior and on-going approval of the
Compensation Committee. We do not currently use the services of
any other compensation consultants in matters affecting
executive officer compensation.
Market
Benchmarking and Positioning
In benchmarking 2007 executive compensation to determine
competitive levels of incentives and compensation to attract
executive talent and retain our executive officers, the
Compensation Committee considered portions of the Towers Perrin
Executive Compensation Database and other national, proprietary
compensation surveys. Specifically, data was prepared
principally using a Towers Perrin Executive Compensation survey
on aerospace, transportation, industrial manufacturing and
general industry companies with sales between $1 and
$5 billion, as well as a Mercer Human Resources Consulting
survey on Executive, Human Resources and Finance positions of
comparably sized general industry companies. The Compensation
Committee was also provided with and considered broader, general
industry market data for select industries when available.
17
In addition to the foregoing, the Compensation Committee also
compared the compensation against a peer group of companies
against which the Compensation Committee believes we compete for
talent and for stockholder investment. The following companies
were included in the benchmarking study:
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Goodrich Corp.
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Rockwell Collins Inc.
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Moog Inc.
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Precision Castparts Corp.
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Alliant Techsystems Inc.
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Curtiss-Wright Corp.
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Tenneco Inc.
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Teleflex Inc.
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Hexcel Corp.
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BorgWarner Inc.
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Sequa Corp.
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BE Aerospace Inc.
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The Compensation Committee believes that overall executive
compensation should be designed, in the aggregate, to be
competitive with comparable companies, to reward effective
execution of our goals and the individual objectives set for our
executive officers, and to recognize exceptional performance and
results.
The Compensation Committee sets the total compensation of our
executive officers, which includes base salary and annual
incentive awards, at an aggregate level, after taking into
consideration prior grants under the EIP, comparable to that of
the median for executive positions at the peer group companies
and at the companies included in the compensation surveys used.
In determining the compensation of individual executives,
experience, skills, responsibilities, competencies, performance
and organizational structure are considered.
Companys
At-Risk Philosophy
Under our
pay-at-risk
philosophy, executive officers have the opportunity to earn in
excess of market median levels for similar positions when
exceeding the achievement of both shorter-term performance
objectives and longer-term stockholder value. In general, base
salary, as the fixed component of the compensation package of
our executive officers, is maintained at levels below the market
median.
To this end, a significant portion of our executive
officers target annual compensation (base salary plus
annual cash and stock incentive awards) is at-risk as it is
based on Company
and/or
individual performance. The actual value realized from annual
incentive awards could be zero if minimum performance levels for
payouts are not met. The portion of target annual compensation
at-risk generally increases with the executive officers
position level and impact on our performance. This provides
significantly more upside potential and downside risk for more
senior positions because these executives have a greater
influence on our performance as a whole. The table below shows
the percentage of 2007 target annual compensation of our chief
executive officer and our other named executive officers that
was at-risk (variable compensation as a percentage of target
annual compensation). The percentages listed below do not take
into account prior grants under the EIP, which are
performance-based and are considered by the Compensation
Committee when they set target annual compensation for our
executive officers.
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% of Target Annual
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Name
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Title
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Compensation at Risk
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Jeffrey L. Turner
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President & CEO
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81
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%
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Ulrich (Rick) Schmidt
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EVP & CFO
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65
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%
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John Lewelling
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SVP/GM AeroStructures Segment
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59
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%
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Ronald C. Brunton
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EVP & Chief Operations Officer
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69
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%
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H. David Walker
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SVP of Sales & Marketing
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59
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%
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Changes
to Compensation Approach
During 2007, in addition to conducting the annual benchmarking
of our executive compensation, the Compensation Committee also
reviewed our existing pay philosophy and assessed long-term
incentive design alternatives to ensure they remain appropriate
for the future. As a result of this review, the Compensation
Committee recommended some slight modifications to our existing
approach for 2008 and beyond as outlined in the following
sections.
18
Elements
Used to Achieve the Philosophy and Objectives
The Compensation Committee believes that the compensation of our
executive officers should consist of base salary, annual cash
and stock incentives, special discretionary awards, and
longer-term equity incentives.
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Element
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Plan
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Award Level and Timing
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Base Salary
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N/A
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Generally set at a level that is slightly below market median
levels. With the exception of significant promotions and new
hires, base salaries generally are determined at the first
meeting of the Compensation Committee each year following the
availability of the financial results for the prior year. We set
base salaries below market median levels in order to maintain
total compensation packages at market median levels, while
providing stronger incentives for performance than comparable
companies.
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Annual Cash and
Stock Incentive
Awards
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Short-Term
Incentive
Plan (STIP)
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Each executive officer has a targeted STIP award expressed as a
percentage of base salary. The target is based on the position
level and market compensation. Each year the Board
pre-establishes performance objectives, targeted achievement
levels, and weightings to be used for the annual incentive award
determination, based on a recommendation from the Compensation
Committee. Generally, the Compensation Committee determines
awards at its first meeting each year following the availability
of our financial results for the prior year. We typically grant
awards in the form of cash and stock. We use the STIP to reward
performance on an annual basis, as well as for short-term
retention purposes.
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Special
Discretionary
Award
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If we meet our Company-wide target performance, executive
officer discretionary cash awards may be made from a pool equal
to 25% of aggregate base salaries of our executive officers. If
we exceed such target performance, the discretionary bonus pool
may be increased to as much as 50% of aggregate base salaries of
our executive officers. For 2008 and beyond, the special
discretionary cash award pool will be reduced to 10% of
aggregate base salaries of our executive officers, or up to 20%
if we exceed target performance. Generally, the Compensation
Committee determines awards at its first meeting each year
following the availability of the financial results for the
prior year. We use discretionary bonuses to reward outstanding
individual performance on an annual basis.
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Long-Term,
Equity-Based
Incentive
Compensation
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Executive
Incentive
Plan (EIP)
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We introduced the EIP at the time of the Boeing Acquisition.
Under the EIP, executive officers were entitled to purchase
Company stock and received grants of restricted Company stock.
The granted stock was subject to vesting conditions based on
length of service and investment returns to Onex. No stock has
been purchased or granted under the EIP since July 31,
2006, although approximately 29% of the initial grants remain
subject to vesting.
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Amended and
Restated
Long-Term
Incentive
Plan (LTIP)
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We originally introduced the LTIP as a retention tool for
certain key employees. Executive officers have previously
participated in the EIP as the vehicle for long-term incentive
awards and therefore, in the past the LTIP generally has not
been used for the grant of annual incentive awards to executive
officers. As discussed below, the LTIP will be used in the
future for grants of stock awards to our executive officers as a
replacement for the EIP. Shares granted under the LTIP will be
subject to time-based vesting conditions. We will use the LTIP
for retention purposes and to reward our executive officers for
achievement of sustainable profit growth over a period of more
than one year.
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19
Base
Salaries
We generally fix base salaries for executive officers at a level
that is below market median levels and place a larger portion of
the executive officers annual compensation at-risk, which
allows our executives to earn in excess of market median levels
for similar positions when exceeding the achievement of both
shorter-term performance objectives and longer-term stockholder
value. This is the case for all but two of our named executive
officers, both of whom we hired from outside not long after we
began operating as a standalone company. As a new company, we
needed to attract high caliber candidates with certain skill
sets and as a result, these two named executive officers have
highly leveraged packages with base salaries that more closely
reflect the market median.
In conducting the 2007 review of our executive compensation, the
Compensation Committee determined that for 2008 and beyond,
executive base salaries should be set closer to market median
levels (in the aggregate) for retention purposes, but still
below these levels to retain the compensation at-risk
philosophy. This change will not significantly impact the
compensation of any of our named executive officers, except for
Mr. Brunton, who will receive a 25% increase in base salary.
Annual
Incentive Awards
Short-Term Incentive Plan (STIP). We target annual
incentive awards at a level that, when combined with base
salaries, is intended to yield total annual compensation that,
after taking into account prior grants under the EIP, is below
the market median when personal and Company performance goals
are not met, approximates the market median upon achievement of
targeted personal and Company performance levels, and exceeds
the market median upon achievement in excess of targeted
personal and Company performance levels.
The STIP authorizes the grant of awards consisting of restricted
stock, cash or both, as determined by the Compensation
Committee. Each year the Board pre-establishes performance
objectives, targeted achievement levels, and weightings to be
used for the annual incentive award determination, based on a
recommendation from the Compensation Committee. In assessing our
performance against objectives following the close of each year,
the Compensation Committee considers actual results against the
specific budgetary objectives and whether significant unforeseen
obstacles or favorable circumstances altered the expected
difficulty of achieving the desired results. The Compensation
Committee then determines the percentage of the target award
that will be paid to each of our executive officers for the
Company performance component of the annual incentive award
based on its overall assessment of our performance.
Although the established target goals and the factors set forth
below are the primary factors which the Compensation Committee
currently uses in establishing the cash and restricted stock
incentive awards, the Compensation Committee reserves the right
to recommend different performance goals each year and to take
into consideration any other factors as it may choose in
recommending performance goals to the Board and in making actual
cash and restricted stock grants. This allows the Compensation
Committee flexibility when recommending the goals to take into
consideration unforeseen or extraordinary circumstances. Because
the Compensation Committee retains full discretion with respect
to annual incentive awards and because we have adopted
SFAS No. 123(R), the stock portion of these awards is
not deemed granted for financial accounting reporting purposes
until the date that the Compensation Committee confirms the
actual award has been earned, which was in February 2007 for
2006 performance and in February 2008 for 2007 performance.
The Compensation Committee recommended performance goals to the
Board in 2007 based on three primary factors: (1) earnings
before interest and taxes (EBIT) less research and development
spending on the Boeing 787 program, (2) free cash flow
(cash flow from operations less capital expenditures, excluding
787 program capital spending and customer advances), and
(3) our spending related to the Boeing 787 program
(research and development, capital expenditures, and capitalized
development). For 2007, the Compensation Committee and the Board
weighted the three factors as follows: EBIT 50%, free cash flow
30%, and Boeing 787 spending 20%. Subject to the Boards
discretion, the possible payout range was from 0 for poor
performance, to 100% for target performance to a maximum of 200%
for exceeding target performance.
20
The following table sets forth the 2007 targets and actual
results for certain of our performance measures.
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Percentage of
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Target Payable
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Performance Measure
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Target
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Actual Results(1)
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Based on Actual Results
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($ in millions)
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($ in millions)
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EBIT
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$
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420.0
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$
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439.5
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118.6
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%
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Free Cash Flow
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$
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267.0
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$
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166.5
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6.1
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%
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(1) |
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Adjusted to exclude effects of secondary offering and
acquisition evaluation-related expenses. |
The foregoing table does not include 2007 target and actual
results for 787 spending. The Compensation Committee set the
target for 787 spending consistent with our budgeted amount. As
a result, we believe we had a reasonable likelihood of obtaining
the target. During 2007, actual 787 spending corresponded to a
payout of 110.6% of the target payout for that performance
measure.
Our actual financial performance for 2007 based on the three
factors (EBIT, free cash flow and 787 spending) weighted as
described above did not meet the pre-established performance
targets for our named executive officers. The weighted financial
results for 2007 corresponded to a payout of 83.25% in
accordance with the schedule pre-determined by the Board, and
the Compensation Committee granted awards to our named executive
officers consistent with that schedule.
The 2007 incentive cash and restricted stock awards (the values
of which are disclosed in the tables below) were confirmed by
the Board and the Compensation Committee in February 2008. We
selected this schedule because it enables the Board and the
Compensation Committee to consider our prior year performance
and our named executive officers and our expectations for
the upcoming year. The 2006 incentive cash and restricted stock
awards were granted 17 days following the Compensation
Committees meeting in February 2007. The 2007 incentive
cash and restricted stock awards were granted 18 days
following the Compensation Committees meeting in February
2008. The Compensation Committees schedule is determined
several months in advance, and the proximity of any awards to
earnings announcements or other market events is coincidental.
In assessing our annual incentive target goals for 2008, the
Compensation Committee considered performance against objectives
following the close of the 2007 year, actual results
against the specific budgetary objectives and whether
significant unforeseen obstacles or favorable circumstances
altered the expected difficulty of achieving the desired
results. The Compensation Committee recommended to the Board to
remove 787 spending as a metric for 2008 as this is now an
established airplane program. Therefore, for 2008 there will be
two factors to measure Company performance, weighted as follows:
EBIT 75% and free cash flow 25%.
In conducting the 2007 review of executive compensation, the
Compensation Committee determined that for 2008 and beyond
executive annual incentive awards should be set closer to market
median levels (in the aggregate), which could result in a
reduction in annual incentive awards for some executives.
Incentive awards will continue to be a significant component of
compensation in order to retain our compensation at-risk
philosophy. Reducing annual incentive awards will allow us to
bring base salaries closer to market median levels without
significantly increasing total compensation. This change will
not significantly impact the executive compensation of any of
our named executive officers.
Except with regard to our chief executive officer, whose
employment agreement requires that annual awards be paid 50% in
cash and 50% in restricted stock, annual incentive awards are
generally payable 50% in cash and 50% in restricted stock, at
the discretion of the Compensation Committee. The awards are
denominated in dollars and the restricted stock portion is
converted into actual shares based on the fair market value of
our common stock. For the 2006 awards that were paid in 2007,
the fair market value was set by the Board to be the average of
the opening and closing trading price of the Class A Common
stock traded on February 13, 2007, which was the third
trading day after our quarterly earnings announcement. The
actual number of stock awards paid in 2007 can be seen on the
Grants of Plan-Based Awards for Fiscal Year 2007
table below. For the 2007 awards that were paid in 2008, the
fair market value was set by the Board to be the average of the
opening and closing trading price of the Class A Common
stock on February 12, 2008, which was the third trading day
after our quarterly earnings announcement. The 2006 STIP award
was confirmed by the Board on
21
February 6, 2007. The 2007 STIP award was confirmed by the
Board on February 4, 2008. Under the STIP, the stock
portion of the award vests upon completion of one year of
service following the date of the award. If a participant ceases
to be employed after an award, but prior to vesting, the entire
stock portion of the award is forfeited. This risk of forfeiture
helps satisfy our goal of retaining executive talent and better
assures that the interests of our executive officers are closely
tied to the return and value provided to our stockholders. The
2006 STIP stock award granted in 2007 vested on
February 22, 2008.
Special
Discretionary Award
In order to recognize performance and contribution toward
achievement of our goals, executive officers may have the
opportunity to earn an additional cash award for significant
individual performance. If, in the sole discretion of the
Compensation Committee upon consultation with the chief
executive officer, we meet our Company-wide target performance,
executive officer discretionary awards are made from a pool
equal to 25% of aggregate base salaries of our executive
officers. If, in the sole discretion of the Compensation
Committee upon consultation with our chief executive officer, we
achieve outstanding performance, executive officer discretionary
awards are made from a pool not exceeding 50% of aggregate base
salaries of our executive officers. Individual executive officer
discretionary awards are made based upon the recommendation of
our chief executive officer and approved by the Compensation
Committee. The Compensation Committee separately reviews the
chief executive officers performance to determine whether
any discretionary award for the chief executive officer is
appropriate and makes the award. We intend for potential awards
to be significant enough to further motivate the recipient and
be tied to the impact of specific individual achievements and
results that further our objectives. There is no restriction on
the factors that the chief executive officer
and/or the
Compensation Committee may consider.
For the Special Discretionary Award granted in 2008 for 2007
performance, the Compensation Committee approved executive
officer discretionary awards from a pool of approximately 25% of
aggregate base salaries of our executive officers.
In conducting the 2007 review of executive compensation, the
Compensation Committee determined that for 2008 and beyond, the
Special Discretionary Award pool will be reduced to 10% of
aggregate base salaries of our executive officers (or as high as
20% for outstanding performance) to allow us to bring base
salaries closer to market median levels without significantly
increasing total compensation.
Long-Term,
Equity-Based Incentive Compensation
We believe that long-term, equity-based incentive compensation
is an important component of our executive compensation because
it has the effect of retaining executive officers, aligning
executive officers financial interests with the interests
of our stockholders, and rewarding the achievement of our
long-term strategic goals. Payment of long-term incentive awards
is based on Company performance and is targeted at levels
comparable to those of the market median for comparable
positions, utilizing the same compensation data we use for
setting total annual compensation. Historically, our primary
longer-term, equity-based program for existing executive
officers has been the EIP.
Executive Incentive Plan (EIP). The EIP was
introduced at the time of the Boeing Acquisition, to provide an
opportunity for our key executive officers to acquire an equity
interest in the Company, as a way to ensure that they would
remain with the Company, and to attract other key executive
officers. Under the EIP, executive officers were entitled to
purchase Company stock and received grants of restricted Company
stock which were subject to vesting conditions described below.
Participants in the EIP purchased shares of restricted Company
stock with cash
and/or
traded the transferred, frozen value of their Boeing SERP
(non-qualified supplemental employee retirement plan) for
phantom shares of Company stock. The EIP provides for up to a
four-to-one match on the participants stock or phantom
stock investment. Matching grants vest upon certain liquidity
events specified under the plan in which entities affiliated
with Onex liquidate a portion of their investment in the
Company. Upon such a liquidity event, recipients may receive an
interest in all or a portion of the shares granted to them,
which portion is determined pursuant to a formula (the EIP
Vesting Formula) based on the portion of the Onex
entities
22
investment liquidated, the return on the Onex entities
investment, and the recipients period of service with
Spirit if no longer employed with Spirit. If the liquidity event
is a change in control (as defined in the plan), recipients may
receive an interest in all remaining shares granted to them. In
addition, recipients may receive an interest in granted shares
on June 16, 2015, if no change in control has occurred by
then. Because the EIP was established to retain key executive
officers at the time of the initial acquisition of our business
and initially to attract additional key executive officers, it
was closed to participation shortly after the acquisition of the
aerostructures division of BAE Systems (Operations) Limited
(Spirit Europe) in April 2006. No stock has been
purchased or granted under the EIP since July 31, 2006.
We completed an initial public offering in November 2006 that
resulted in a partial vesting, approximately 43%, of the EIP
matching stock that we granted to our named executive officers.
In May 2007, certain of our stockholders completed a secondary
offering which resulted in an additional partial vesting,
approximately 28%, of the EIP matching stock that we granted to
our named executive officers. Following the initial public
offering and secondary offering, 29% of the matching stock
granted to our named executive officers remains subject to
vesting conditions. However, as a result of the returns earned
by the Onex entities in the initial public offering and the
secondary offering, the element of the EIP Vesting Formula based
on the return realized on the Onex entities investment
will be satisfied at the highest level for all subsequent
liquidity events, assuming no additional investment in the
Company is made by the Onex entities and subject to the right of
the Compensation Committee to exercise discretion as to whether
the return on investment capital requirement of the EIP is
satisfied.
Details of resultant payouts can be found in the Summary
Compensation Table for Fiscal Years 2006 and 2007 and
Option Exercises and Stock Vested for Fiscal Year
2007 tables below.
Amended and Restated Long-Term Incentive Plan
(LTIP). The LTIP was implemented for grants of stock
awards for some key employees. Executive officers have
previously participated in the EIP as a long-term incentive
vehicle and therefore, generally the LTIP has not been used for
the executive officers.
As part of the 2007 executive compensation review, the
Compensation Committee determined that for 2008 and beyond, the
LTIP will be an important component of compensation,
particularly as the EIP fully vests. The LTIP will be used to
provide long-term, equity-based incentive compensation in
keeping with our executive compensation philosophy for the
entire executive group. As the STIP provides the at-risk
component of the executive package, the LTIP, which is a
time-based vesting plan, will be primarily used for attraction
and retention purposes. Our ability to use the LTIP as a
significant component of long-term incentive compensation is
dependent on the approval by our stockholders of an increase in
the number of shares which may be granted under the LTIP. See
Proposal No. 3Approval of Amendments to
the Companys Amended and Restated Long-Term Incentive
Plan.
Subject to stockholder approval of the increase in the number of
shares which may be granted under the LTIP, we expect to grant
restricted stock awards with multi-year vesting schedules to all
of our executive officers for 2008 and beyond. Typically,
one-third of the shares granted will vest on each of the 2nd,
3rd and 4th anniversaries of the grant date. However,
grants of LTIP awards to EIP participants will take into account
EIP grants which remain unvested, and LTIP grants to these
participants will not begin to vest until one year after the
remaining EIP grants vest.
Other
Compensation Elements
Payments for Executive Recruitment. We seek to
obtain some of the most highly qualified executive talent in a
highly competitive industry. Because we have only recently been
formed, we have not had the opportunity to grow executive talent
in-house. As such, we must seek to attract executive talent from
other companies, including our competitors, who have proven
records of skill and performance. To satisfy our goal of
attracting highly qualified executive talent, the Compensation
Committee strongly believes that the initial compensation
package provided to an executive officer must be significant
enough to cause such executive officer to leave his or her
current employment in which he or she may have significant
tenure and significant value tied to long-term incentive and
other compensation arrangementsmost of which would be
forfeited upon joining us.
23
Therefore, we have structured a variety of compensation
arrangements and approved payments to recruit executive talent.
Several of these compensation arrangements provided for the
transfer of equivalent benefits that several of our executive
officers enjoyed while they worked for Boeing. See the
discussion accompanying the Nonqualified Deferred
Compensation and Pension Plan table below. In other cases,
the Compensation Committee has approved cash payments designed
to compensate individual executive officers for compensation
that they would forgo by leaving their current employers. For
the named executive officers, those payments for 2007 (and with
regard to named executive officers who were also named executive
officers in 2006, those payments for 2006) are listed in
the Summary Compensation Table for Fiscal Years 2006 and
2007 below. Payments designed to compensate for forgone
salary and general benefits are listed under the All Other
Compensation column of that table, and payments designed
to compensate for forgone bonuses are listed under the
Bonus column of that table. The Compensation
Committee believes that its decision to adopt those compensation
arrangements and approve those payments was reasonable and
necessary to achieve overall Company goals and was consistent
with our compensation philosophy.
Perquisites and Personal Benefits. Perquisites and
other benefits represent a small part of the overall
compensation package for our executive officers, and are offered
only after consideration of business need. The Compensation
Committee annually reviews the perquisites and other personal
benefits that we provide to our executive officers. For 2006 and
2007, the primary perquisites and personal benefits were private
use of aircraft and other travel expenses, Company-provided
automobiles, relocation expenses, and club memberships. We
maintain certain country club memberships for the purpose of
business entertainment which memberships, by club rules, are in
our executive officers names. When an executive officer
uses a club membership exclusively for Company business
purposes, it is our policy not to attribute the cost of such
membership to the executive officer as personal income. When an
executive officer also uses a membership for personal reasons,
we attribute the value of the membership to the executive
officer as additional income. For each of 2006 and 2007, we
authorized two club membershipsone each to our chief
executive officer and our chief financial officer. For 2006 and
2007, Mr. Turner did not make personal use of his club
membership and Mr. Schmidt did make personal use of his
club membership. The amounts attributed to Mr. Schmidt are
shown in the Summary Compensation Table for Fiscal Years
2006 and 2007 below.
Retirement Plans. We adopted a supplemental
executive retirement plan (SERP) in connection with
the Boeing Acquisition in order to attract certain employees to
join our Company from Boeing. The SERP provides deferred
compensation benefits to those of our executive officers and
certain other members of management that previously participated
in Boeings Supplemental Executive Retirement Plan for
Employees of Boeing, prior to the Boeing Acquisition. Also in
connection with the Boeing Acquisition, we adopted the Pension
Value Plan (PVP) for those former employees of
Boeing who did not retire from Boeing by August 1, 2005.
Both the SERP and the PVP are frozen plans, so no additional
employees are becoming participants in the plans and no current
participants are accruing any additional benefit. The PVP
allowed the transfer of pension values from Boeing pension
plans. The PVP is fully paid for by us and our employees are
vested after reaching five years of service. We list the benefit
numbers for the named executive officers in the Pension
Benefits table below and the additional narrative
following that table.
We provide our executive officers, including our named executive
officers, benefits provided to all other salaried, non-union
employees, including medical and dental insurance and
tax-qualified defined contribution participation and matching
(our 401(k) plan). These benefits are important for retaining
our executive officers and enhancing their compensation through
tax excluded or tax deferred vehicles. Our contributions to our
401(k) plan on behalf of the named executive officers are
described in the All Other Compensation column of
the Summary Compensation Table for Fiscal Years 2006 and
2007 below. This plan furthers our objectives of
attracting and retaining well-qualified employees and executive
officers and are consistent with our compensation philosophy.
Compensation
in Connection with Termination of Employment and
Change-In-Control
We do not maintain any programs of broad application
specifically designed to provide compensation in connection with
the termination of employment or a change in control of the
Company. Our view toward creating sustainable growth and
long-term stockholder value has been deemed best served by
encouraging the
24
attraction and retention of high quality executive officers
through performance-based incentives without overemphasizing
compensation at terminal events, such as termination or change
in control.
Compensation practices in connection with termination of
employment generally have been designed on a
case-by-case
basis as the Compensation Committee deems necessary to achieve
our goal of attracting highly-qualified executive talent. We
recognize that an appropriate incentive in attracting talent is
to provide reasonable protection against loss of income in the
event the employment relationship terminates without fault of
the employee. Thus, we have provided for termination
compensation through individual employment agreements in the
form of salary and benefit continuation for a moderate period of
time following involuntary termination of an executive
officers employment. We have also agreed to individual
severance arrangements at the time of termination of employment,
taking into account the specific facts and circumstances
surrounding termination, including other compensation available
at such time.
To the extent our compensation arrangements provide for a
payment or earning event in connection with a change in control,
our intent generally has been to reward employees for the
long-term performance that culminates in the change in control
event and to provide that reward at a time of sufficient
liquidity (when value also is being returned to stockholders).
For example, we designed our EIP to encourage long-term
performance by deferring the vesting of awards until the
occurrence of a liquidity event (including a change in control),
but even then only to the extent objective performance goals are
obtained. Similarly, payment of value attributable to phantom
stock investments under our Supplemental Executive Retirement
Plan is deferred until a liquidity event occurs and is then made
at the earliest time permitted in accordance with applicable
income tax rules (generally the earlier of a separation from
service or a qualifying change in control).
No arrangements providing for a payment or earning event in
connection with a change in control are designed to require a
double trigger (a combination of a change in control
with some other event, such as a separation from employment or
change in responsibilities) in order to realize value (except to
the extent applicable income tax rules require deferral of
payment to termination of employment). We are of the view that
our management and workforce add materially to the value of our
business as a going concern, and that value may be impaired if
employees are encouraged to leave in order to realize value. We
have designed our compensation arrangements to strike a balance
between encouraging retention and providing appropriate
protection. The EIP, for example, which takes an employees
years of service with the Company into account in determining
vesting upon a liquidity event, provides full service credit for
employees that continue their employment through the date of a
liquidity event (even if full credit has not yet been earned),
thereby providing an incentive to remain employed through the
date of the liquidity event (which might be a change in
control). The EIP also provides an acceleration of credited
service (to the extent not yet earned) in the event employment
is involuntarily terminated (actually or constructively)
following a change in control, thereby ensuring that an employee
involuntarily terminated following a change in control is not
adversely affected as to future liquidity events because the
employee did not have a full opportunity to earn full service
credit for vesting purposes.
You can find additional information regarding our practices in
providing compensation in connection with termination of
employment and change in control under the heading
Potential Payments on Termination or
Change-In-Control
below.
Accounting
and Tax Treatment of Compensation
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code), imposes a $1 million limit
on the amount that a public company may deduct for compensation
paid to a companys chief executive officer or any of a
companys three other most highly compensated executive
officers (other than its chief financial officer) who are
employed as of the end of the year. This limitation does not
apply to compensation that meets the requirements under
Section 162(m) for qualifying performance-based
compensation (i.e., compensation paid only if the
individuals performance meets pre-established objective
goals based on performance criteria approved by stockholders).
For compensation reported in fiscal years 2006 and 2007, the
grants of stock and the payments of incentive cash awards were
designed to satisfy the Internal Revenue Service requirements
for deductible compensation.
Upon our inception, we adopted SFAS No. 123(R),
Share-Based Payment, which generally requires companies
to measure the cost of employee and non-employee services
received in exchange for an award of equity
25
instruments based on the grant-date fair value and to recognize
this cost over the requisite service period or immediately if
there is no service and there are no other performance
requirements. The notes to our consolidated financial
statements, included in our Annual Report on
Form 10-K
for fiscal year 2007 filed with the SEC, contain further
information concerning our policies with respect to
SFAS No. 123(R).
Compensation
Committee Report
The Compensation Committee establishes and oversees the design
and functioning of our executive compensation program. The
Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis contained in this Proxy
Statement with our management. Based on such review and
discussions, the Compensation Committee recommended to the Board
that the Compensation Discussion and Analysis be included in
this Proxy Statement for the 2008 Annual Meeting of Stockholders
and also be incorporated by reference in our Annual Report on
Form 10-K
for the fiscal year 2007.
Compensation Committee
Seth Mersky, Chairman
Paul Fulchino
Robert Johnson
26
Summary
Compensation Table for Fiscal Years 2006 and 2007
The following table summarizes compensation information for the
fiscal year ended December 31, 2007, for
(i) Mr. Turner, our chief executive officer,
(ii) Mr. Schmidt, our chief financial officer, and
(iii) our three most highly compensated executive officers
other than our chief executive officer and our chief financial
officer who were serving as our executive officers at the end of
such fiscal year. The following table also summarizes
compensation information for the fiscal year ended
December 31, 2006, for those of the foregoing officers who
were listed as named executive officers in our Proxy Statement
for our 2007 Annual Meeting of stockholders.
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Change in
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Pension
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Non-
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Value and
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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
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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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Principal Position
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Year
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($)
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($)
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($)(3)
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($)
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($)(4)
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($)
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($)
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($)
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Jeffrey L. Turner,
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2007
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263,390
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200,000
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(1)
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4,646,487
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438,561
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(35,686
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)(5)
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31,006
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(7)(8)
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5,543,758
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President & CEO
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2006
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263,393
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200,000
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(1)
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6,272,439
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895,560
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68,850
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(6)
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68,814
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(9)
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7,769,056
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Ulrich (Rick) Schmidt,
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2007
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432,494
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80,000
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(1)
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4,085,527
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288,045
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33,591
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(10)
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4,919,657
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EVP & CFO
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2006
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432,496
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50,000
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(1)
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5,403,078
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588,200
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2,649,170
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(11)
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9,122,944
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John Lewelling,
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2007
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375,003
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50,000
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(1)
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2,339,853
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187,313
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67,914
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(12)
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3,020,083
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SVP/GM AeroStructures
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2006
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315,868
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300,000
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(2)
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2,181,670
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382,500
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1,632,344
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(13)
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4,812,382
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Segment
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Ronald C. Brunton,
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2007
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199,992
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100,000
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(1)
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1,377,685
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166,500
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21,464
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(7)(14)
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1,865,641
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EVP & Chief
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2006
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194,018
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200,000
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(1)
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1,759,207
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330,953
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20,246
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(15)
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2,504,424
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Operations Officer
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H. David Walker,
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2007
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199,992
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50,000
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(1)
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1,115,129
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99,900
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15,839
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(7)(16)
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1,480,860
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SVP of Sales &
Marketing
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(1) |
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Represents a discretionary bonus paid to the respective
executive officer. |
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(2) |
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Represents a one-time cash payment for a sign-on bonus paid to
Mr. Lewelling. |
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(3) |
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Represents the dollar amount recognized for financial statement
reporting purposes with respect to fiscal years 2006 and 2007 in
accordance with SFAS 123(R), and includes amounts from
awards granted in and prior to 2006 and 2007. Additional
information concerning the Companys accounting for stock
awards may be found in Note 12 to the Companys
consolidated financial statements in our Annual Report on
Form 10-K
for 2007. |
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(4) |
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Represents cash compensation paid under the STIP for the fiscal
year 2007. |
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(5) |
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$35,686 represents the aggregate change in the actuarial present
value of Mr. Turners interest under the
Companys Pension Value Plan. There were no above-market
earnings on Mr. Turners interest under the
Companys Deferred Compensation Plan. |
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(6) |
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$68,434 represents the aggregate change in the actuarial present
value of Mr. Turners interest under the
Companys Pension Value Plan, and $416 represents the
above-market earnings on Mr. Turners interest under
the Companys Deferred Compensation Plan. |
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(7) |
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The total value of all perquisites and personal benefits has
been excluded as their total is less than $10,000. |
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(8) |
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Includes $29,810 for Company contributions to defined
contributions plans and (b) $1,196 for Company
contributions toward life insurance coverage. |
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(9) |
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Includes (a) $38,987 for a Company provided car,
(b) $625 for personal use of Company aircraft, and
(c) $29,202 for Company contributions to defined
contribution plans. |
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(10) |
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Includes (a) $7,065 for country club dues, (b) $3,804
of Company paid for dependent travel (c) $20,581 for
Company contributions to defined contribution plans, and
(d) $2,141 for Company contributions toward life insurance
coverage. |
27
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(11) |
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Includes (a) $4,121 for country club dues,
(b) $239,702 for relocation expenses, (c) $22,711 for
Company contributions to defined contribution plans, and
(d) $2,382,635 for a one-time payment in lieu of forgone
executive compensation from prior employer. |
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(12) |
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Includes (a) $25,025 for relocation expenses reimbursed by
the Company, (b) $15,000 for value of financial planning
services provided by the Company, (c) $27,255 for Company
contributions to defined contribution plans, and (d) $634
for Company contributions toward life insurance coverage. |
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(13) |
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Includes (a) $245,349 for relocation expenses,
(b) $1,224,165 for compensation cost of purchase of stock
from the Company at discount from fair market value,
(c) $17,848 for Company contribution to defined
contribution plans, and (d) $144,982 for payment of taxes
for sign-on bonus. |
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(14) |
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Includes (a) $20,625 for Company contributions to defined
contribution plans and (b) $839 for Company contributions
toward life insurance coverage. |
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(15) |
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Represents $20,246 for Company contribution to defined
contribution plans. |
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(16) |
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Includes (a) $15,000 for Company contributions to defined
contribution plans and (b) $839 for Company contributions
toward life insurance coverage. |
Grants of
Plan-Based Awards for Fiscal Year 2007
The following table presents information regarding grants of
plan-based awards to our named executive officers during the
fiscal year ended December 31, 2007.
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All
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All
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Other
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Other
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Option
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Stock
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Awards
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Grant
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Estimated Possible Payouts
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Awards:
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Number of
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Exercise
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Date Fair
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Under
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Estimated Future Payouts
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Number of
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Securities
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or Base
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Value of
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Non-Equity Incentive Plan
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Under
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Shares of
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Under-
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Price of
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Stock and
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Awards(1)
|
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Equity Incentive Plan Awards(2)
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Stock
|
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lying
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Option
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Option
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Threshold
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Target
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Maximum
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Threshold
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Target
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Maximum
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or Units
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Option
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Awards
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Awards
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Name
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Grant Date
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($)
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($)
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($)
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($)
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($)
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($)
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(#)
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(#)
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|
($/Sh)
|
|
|
($)
|
|
|
Jeffrey L. Turner,
|
|
|
2/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,360
|
|
|
|
526,800
|
|
|
|
1,053,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
882,659
|
|
President & CEO
|
|
|
N/A
|
|
|
|
105,360
|
|
|
|
526,800
|
|
|
|
1,053,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
Ulrich (Rick) Schmidt,
|
|
|
2/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,200
|
|
|
|
346,000
|
|
|
|
692,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
579,725
|
|
EVP & CFO
|
|
|
N/A
|
|
|
|
69,200
|
|
|
|
346,000
|
|
|
|
692,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
John Lewelling,
|
|
|
2/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
225,000
|
|
|
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
377,007
|
|
SVP/GM AeroStructures
|
|
|
N/A
|
|
|
|
45,000
|
|
|
|
225,000
|
|
|
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald C. Brunton,
|
|
|
2/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
200,000
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
326,193
|
|
EVP & Chief Operations
|
|
|
N/A
|
|
|
|
40,000
|
|
|
|
200,000
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. David Walker,
|
|
|
2/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
120,000
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201,065
|
|
SVP of Sales & Marketing
|
|
|
N/A
|
|
|
|
24,000
|
|
|
|
120,000
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
(1) |
|
2007 STIP cash awards, paid in February 2008, were granted and
earned in 2007. The actual cash awards for the named executive
officers for 2007 are reported in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation
Table for Fiscal Years 2006 and 2007. |
|
(2) |
|
The STIP restricted stock awards are denominated in dollars and
then converted and paid in shares of Class B Common stock.
Mr. Turner was granted 29,373 shares, Mr. Schmidt
was granted 19,292 shares, Mr. Lewelling was granted
12,546 shares, Mr. Brunton was granted
10,855 shares, and Mr. Walker was granted
6,691 shares under the STIP in February 2007 for 2006
performance. |
2007 STIP restricted stock awards are not included in the
foregoing table because they were granted in February 2008. The
restricted stock awards were denominated in dollars and then
converted and paid in shares of Class B Common stock, at
$25.88 per share, the closing trading price of our Class A
Common stock on February 12, 2008, which was the third
trading day after our quarterly earnings announcement.
Mr. Turner was granted 17,294 shares, Mr. Schmidt
was granted 11,359 shares, Mr. Lewelling was granted
7,387 shares, Mr. Brunton was granted
6,566 shares and Mr. Walker was granted
3,940 shares in February 2008 for 2007 performance.
28
Outstanding
Equity Awards at End of Fiscal Year 2007
The following table presents information concerning the number
and value of unvested restricted stock grants to our named
executive officers under our STIP and EIP plans outstanding as
of December 31, 2007. We have not granted any options or
option-like awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Payout
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
of
|
|
Value of
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
Unearned
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Shares,
|
|
Shares,
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
Market Value
|
|
Units or
|
|
Units or
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
of Shares or
|
|
Other
|
|
Other
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
Rights
|
|
Rights
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
Units of
|
|
Stock That
|
|
That
|
|
That Have
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Stock That
|
|
Have Not
|
|
Have Not
|
|
Not
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Price
|
|
Expiration
|
|
Have Not
|
|
Vested(1)
|
|
Vested
|
|
Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
($)
|
|
Date
|
|
Vested (#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Jeffrey L. Turner,
|
|
|
|
|
|
|
|
|
|
|
|
444,244
|
|
15,326,418
|
|
|
|
|
President & CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ulrich (Rick) Schmidt,
|
|
|
|
|
|
|
|
|
|
|
|
365,018
|
|
12,593,121
|
|
|
|
|
EVP & CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Lewelling,
|
|
|
|
|
|
|
|
|
|
|
|
116,264
|
|
4,011,108
|
|
|
|
|
SVP/GM AeroStructures Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald C. Brunton,
|
|
|
|
|
|
|
|
|
|
|
|
114,573
|
|
3,952,769
|
|
|
|
|
EVP & Chief Operations Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. David Walker,
|
|
|
|
|
|
|
|
|
|
|
|
75,836
|
|
2,616,342
|
|
|
|
|
SVP of Sales & Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Market value calculated by multiplying the number of shares by
$34.50, the closing price per share of our Class A Common
stock on the last trading day of our fiscal year 2007. Upon
vesting, shares of Class B Common stock are convertible
into shares of Class A Common stock on a
one-for-one
basis. |
Option
Exercises and Stock Vested for Fiscal Year 2007
The following table presents information concerning the vesting
of restricted stock for our named executive officers during the
fiscal year ended December 31, 2007. We have not granted
any options or option-like awards.
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number
|
|
|
|
Number
|
|
|
|
|
of Shares
|
|
Value
|
|
of Shares
|
|
Value
|
|
|
Acquired on
|
|
Realized on
|
|
Acquired on
|
|
Realized on
|
|
|
Exercise
|
|
Exercise
|
|
Vesting
|
|
Vesting(1)
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Jeffrey L. Turner, President & CEO
|
|
|
|
|
|
481,645
|
|
16,046,141
|
Ulrich (Rick) Schmidt, EVP & CFO
|
|
|
|
|
|
368,751
|
|
12,387,644
|
John Lewelling, SVP/GM AeroStructures Segment
|
|
|
|
|
|
101,774
|
|
3,449,251
|
Ronald C. Brunton, EVP & Chief Operations Officer
|
|
|
|
|
|
126,410
|
|
4,192,519
|
H. David Walker, SVP of Sales & Marketing
|
|
|
|
|
|
83,500
|
|
2,771,680
|
|
|
|
(1) |
|
Each share of restricted stock awarded by us under the STIP or
LTIP vested on February 17, 2007, at $30.17, the closing
price of our Class A Common stock on such date. Certain shares
of restricted stock awarded by us under the EIP vested on
May 25, 2007, at $33.80, the closing price of our
Class A Common stock on such date. Additional shares of
restricted stock awarded by us under the EIP vested on
May 31, 2007, at $34.91, the closing price of our
Class A Common stock on such date. |
29
Pension
Benefits
The following table presents information concerning benefits
received under the Companys Pension Value Plan by the
named executive officers during the fiscal year ended
December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Present Value
|
|
|
|
|
|
|
|
|
Years
|
|
|
of
|
|
|
Payment
|
|
|
|
|
|
Credited
|
|
|
Accumulated
|
|
|
During Last
|
|
|
|
|
|
Service
|
|
|
Benefit
|
|
|
Fiscal Year
|
Name
|
|
Plan Name
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
Jeffrey L. Turner, President & CEO
|
|
|
Pension Value Plan
|
|
|
|
29.6715
|
(1)
|
|
|
749,253
|
|
|
0
|
Ulrich (Rick) Schmidt, EVP & CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Lewelling, SVP/GM AeroStructures Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald C. Brunton, EVP & Chief Operations Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. David Walker, SVP of Sales & Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As reported by Boeing under a Boeing Prior Plan (as defined
below), and includes service with Boeing. See narrative below. |
Effective June 17, 2005, pension assets and liabilities
were spun-off from three of Boeings qualified plans (each,
a Prior Plan) into four Spirit qualified plans for
each Spirit employee who did not retire from Boeing by
August 1, 2005. Each Prior Plan was frozen as of
June 16, 2005, for future service credits and pay
increases. Effective December 31, 2005, all four qualified
plans were merged together into the Spirit AeroSystems Holdings,
Inc. Pension Value Plan (PVP).
One of our named executive officers, the chief executive
officer, is a participant in the PVP. Mr. Brunton retired
from Boeing and is not a participant in the PVP. Our other three
named executive officers were not employees of Boeing. Benefits
under the PVP applicable to Mr. Turner are based upon a
Prior Plan benefit plus a Cash Balance benefit. An actuarial
determination of the Prior Plan benefit was completed by Boeing
based on service and final average pay through December 31,
1998, and indexed for changes in base pay through June 16,
2005. The Prior Plan amounts are payable as a life annuity
beginning at normal retirement (age 65), with the full
benefit payable upon retirement on or after age 60. Under
the Cash Balance benefit formula, employees received Benefit
Credits based on their age at the end of each plan year through
June 16, 2005. The annual Benefit Credit was a specified
percentage of eligible pay, ranging from 3% at ages younger than
30 to 11% upon reaching age 50. Eligible pay included base
pay and executive incentive pay, limited to Codes
Section 401(a)(17) limits. The Benefit Credits ceased upon
freezing of the Prior Plan; however, employees continue to
receive Interest Credits each year. The Interest Credits for
each year are based on the
30-year
Treasury Rate as of November of the prior year, with a minimum
of 5.25% and maximum of 10%. The Cash Balance account is
converted to a life annuity upon an active employees
retirement using a factor of 11.
The PVP is fully paid for by the Company and employees are
vested after reaching five years of service. Vesting service
continues to accumulate after June 16, 2005, for continued
employment. At least as early as November 30, 2006 (the end
of the PVPs fiscal year), Mr. Turner
(32.4167 years for vesting) was fully vested in his benefit.
The normal retirement age under the Plan is 65. There are
various early retirement ages allowed under the plan for the
various benefits provided to employees. Mr. Turner is
currently entitled to early retirement benefits. The Prior Plan
benefit is reduced by 2% for each year that benefits commence
prior to age 60. Mr. Turner is currently 56 years
of age. Projected annual benefits payable upon retirement at
age 60 are $81,199 for Mr. Turner. If he retires at
age 65, the annual benefit amount is $86,776.
For purposes of the calculations shown in the Pension
Benefits table, we assume that the named executive officer
elects a single life annuity form of payment. The present value
determination is based on the RP 2000 Mortality Table projected
to 2010 with white collar adjustment and a 5.75% interest rate.
The Interest Credit
30
rate used in the calculations is 5.25% for each future year. The
present values were calculated assuming the named executive
officer retires and commences receipt of benefits at age 60.
We also maintain the SERP, which provides supplemental,
nonqualified retirement benefits to executives who (1) had
their benefits transferred from a Boeing nonqualified plan to
the SERP and (2) did not elect to convert their SERP
benefit into phantom shares as of June 17, 2005. Benefits
under this plan were also frozen as of the date of the Boeing
Acquisition. There are no SERP annuity benefits payable in the
future to the named executive officers.
Other
Retirement Benefits
We sponsor the Spirit AeroSystems Holdings, Inc.
Retirement & Savings Plan (RSP), a qualified plan
covering certain eligible employees. Under the RSP, we make a
matching contribution of 75 percent of the employees
contributions to a maximum 6 percent of compensation match
based on employee contributions of 8 percent of
compensation. Compensation for this plan is base pay, subject to
compensation limits prescribed by the IRS. The matching
contributions are immediately 100% vested.
Non-matching contributions, based on an employees age and
vesting service, are made at the end of each calendar year for
certain employee groups. Each named executive officer is
eligible for these contributions for each year that he
(1) is employed by us as of December 31 and
(2) receives a year of vesting service. If age plus vesting
service totals less than 60, employees receive 1.5% of base
salary as a non-matching Company contribution; if age plus
vesting service totals at least 60 but less than 80, employees
receive 3% of base salary; and if age plus vesting service
totals at least 80, employees receive a 4.5% of base salary
contribution. These contributions are 50% vested at three years,
75% vested at four years, and 100% vested at five years of
vesting service, which includes prior service with Boeing.
In addition, we contribute amounts for certain employees
eligible for transition contributions. In general, employees who
became our employees on June 17, 2005, did not retire from
Boeing, and had at least five years of vesting service as of
that date are eligible for such transition contributions.
Mr. Turner is our only named executive officer entitled to
such transition contributions. Transition contributions are paid
at the end of each calendar year for a number of years equal to
the employees vesting service as of June 17, 2005, up
to a maximum of 15 years. For vesting service from
5-9 years, such transition contribution is 1.5% of base
salary per year; for
10-14 years,
it is 2.5% of base salary per year; and for at least
15 years, it is 3.5% of base salary per year. These
contributions become vested after five years of vesting service
with us or upon reaching age 60, if earlier.
RSP matching contributions, non-matching contributions, and
Transition Contributions are included in the Summary
Compensation Table for Fiscal Years 2006 and 2007 above as
a component of All Other Compensation for the
eligible named executive officer.
We make post-retirement medical coverage available to all
employees who retire from the Company at age 55 or later,
provided they have at least 10 years of service. Employees
pay the full cost of coverage for this benefitwe do not
pay any subsidy. For employees previously employed by Boeing
whom we hired as of June 17, 2005, we provide subsidized
post-retirement medical coverage upon early retirement after
attaining age 62 with 10 years of service. Subject to
paying the same employee premiums as an active employee, the
early retiree may maintain their medical coverage until
attainment of age 65. This subsidized coverage is available
to Mr. Turner and Mr. Brunton, provided they retire
from the Company on or after age 62.
31
Nonqualified
Deferred Compensation
The following table presents information concerning each of our
defined contribution or other plans that provides for the
deferral of compensation of our named executive officers on a
basis that is not tax qualified.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings in
|
|
|
Withdrawls/
|
|
|
Balance at
|
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Last FY
|
|
|
Distributions
|
|
|
Last FYE
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Jeffrey L. Turner, President & CEO
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5,499
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0
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101,184
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Ulrich (Rick) Schmidt, EVP & CFO
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John Lewelling, SVP/GM AeroStructures Segment
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Ronald C. Brunton, EVP & Chief Operations Officer
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H. David Walker, SVP of Sales & Marketing
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We also sponsor the Spirit AeroSystems Holdings Deferred
Compensation Plan (DCP). This nonqualified plan
allows eligible employees to defer receipt of a portion of their
base salary or short-term incentive compensation. In addition,
the DCP allows for discretionary contributions by the Company
into a separate account in the DCP. Deferred amounts and amounts
which we contribute to our employees accounts in the DCP
are credited with a rate of return which we determine annually
prior to our fiscal year based on the current yield on
high-quality fixed income bonds (we have used Moodys AA
bond index as the basis for determination of this rate). For
2007, the interest crediting rate was 5.75%. Accumulated amounts
are payable to the participant in either a lump sum or
installments upon separation from employment with the Company,
or at the end of the deferral period selected by the participant
upon enrollment in the DCP.
Contributions to the DCP labeled as Registrant
Contributions are included as part of All Other
Compensation in the Summary Compensation Table for
Fiscal Years 2006 and 2007. Earnings under the plan that
are above-market (defined by SEC rule as that
portion of interest that exceeds 120% of the applicable federal
long-term rate, with compounding, which for October 2006, the
applicable month for which the crediting rate was determined,
was 6.04%) are disclosed in the Change in Pension Value
and Nonqualified Deferred Compensation Earnings column of
the Summary Compensation Table for Fiscal Years 2006 and
2007 above.
Potential
Payments on Termination or
Change-in-Control
Termination
of Employment
Spirit maintains employment agreements with the named executive
officers, except for Mr. Brunton, pursuant to which certain
payments may be made, or benefits provided, in the event the
executives employment is terminated. In addition, upon
termination of employment, amounts may become payable to the
named executive officers pursuant to the SERP
and/or the
DCP.
Employment
Agreements
Employment agreements entered into by Spirit with
Messrs. Turner and Schmidt provide for varying types and
amounts of payments and additional benefits upon termination of
employment, depending on the circumstances of the termination.
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Voluntary Termination by the Executive. In the event
of voluntary termination by the executive, payment of one-half
of the bonus that otherwise would have been payable pursuant to
the STIP will be made (pro-rated for a partial year). Salary and
benefits are continued only through the date of termination.
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Involuntary Termination by Spirit for Cause. In the
event of involuntary termination by Spirit for cause, no amounts
are payable by reason of termination, other than salary and
benefits payable through the
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32
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date of termination. Generally, each of the named executive
officers employment agreements define termination for
cause to mean (1) the executive committing a
material breach of his employment agreement or acts involving
moral turpitude, including fraud, dishonesty, disclosure of
confidential information, or the commission of a felony, or
direct and deliberate acts constituting a material breach of his
duty of loyalty to Spirit; (2) the executive willfully or
continuously refusing to or willfully failing to perform the
material duties reasonably assigned to him by the Board that are
consistent with the provisions of his employment agreement where
the refusal or failure does not result from a disability (as
discussed below); or (3) the inability of the executive to
obtain and maintain appropriate United States security
clearances. Messrs. Turners and Schmidts
employment agreements state that their termination is not deemed
to be for cause unless and until there shall have been delivered
to the executive a copy of a resolution, duly adopted by the
Board. Although Mr. Schmidts employment agreement
requires that he seek to obtain and maintain appropriate United
States security clearance, the termination of
Mr. Schmidts employment agreement for his failure to
do so (without regard to any underlying facts for such failure)
would constitute a termination without cause.
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Expiration of Employment Agreement or Involuntary Termination
by Spirit without Cause. In the event employment
terminates due to expiration of the employment agreement or
involuntary termination by Spirit without cause, base salary
generally will be continued for 24 months. In addition, a
bonus payment will be made pursuant to the STIP equal to the
full amount of the bonus that otherwise would have been payable
under the STIP (if any) for the year of termination, and a bonus
payment will be made pursuant to the STIP for each subsequent
year (pro rated for any partial year) during which salary
continuation payments are made (with such payments determined on
the assumption that target performance is achieved for such
years). Medical benefits will be continued during the period
that salary continuation payments are made (subject to early
termination in the event of new employment), with premiums paid
by Spirit in the same proportion that premiums are paid on
similar coverage for other executive officers. For
Mr. Schmidt, life insurance benefits also will be continued
in the event of involuntary termination without cause, with
premiums paid by Spirit in the same proportion that premiums are
paid for other executive officers.
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In addition to the foregoing payments and benefits, upon
termination of Mr. Schmidts employment under these
circumstances, vesting is accelerated with respect to any shares
of stock previously granted to Mr. Schmidt under the STIP.
Further, upon involuntary termination of either Mr. Turner
or Mr. Schmidt without cause, additional years of service
under the EIP may be credited (which may increase the portion of
restricted shares in which they acquire an interest upon a
future liquidity event).
Furthermore, in addition to the foregoing payments and benefits,
upon termination of Mr. Schmidts employment because
of expiration of his employment period without renewal or
termination without cause by Spirit, Mr. Schmidt has the
option to sell to Spirit (the Put Option) and Spirit
has the option to purchase from Mr. Schmidt (the Call
Option), in either case for a period of 180 days
following termination of his employment, all or any portion of
the shares of stock in the Company held by Mr. Schmidt at
that time (not including shares granted pursuant to the EIP in
which Mr. Schmidt has not yet acquired an interest) for an
amount equal to the closing price per share of our Class A
Common stock as of the date the Put Option or Call Option is
exercised.
Generally, any termination of any of the employment agreements
with the named executive officers by Spirit other than for
cause, death, disability, or expiration of the employment period
without renewal constitutes a termination without cause.
Mr. Schmidts employment agreement specifically
provides that the termination of his employment agreement by
Spirit without cause includes if (1) his duties and
responsibilities are materially and adversely altered without
his consent, (2) his base salary is materially reduced by
Spirit (other than as part of a general reduction to all
executive officers) without his consent, (3) Spirit commits
a material breach of his employment agreement, or
(4) certain adverse employment actions (as described in
more detail below) occur with respect to Mr. Schmidt
following a change in control. Except for
Mr. Schmidts employment agreement, none of the other
named executive officers employment agreements attempt to
define circumstances constituting constructive termination by
Spirit. However, each of the named executive officers
employment agreements are governed by
33
Kansas law, which recognizes the concept that a termination by
the employee may constitute a constructive termination by the
employer under certain circumstances.
For purposes of the EIP and the DCP, a termination for cause
means a separation from service involving (i) gross
negligence or willful misconduct in the exercise of the
executives responsibilities; (ii) breach of fiduciary
duty with respect to Spirit; (iii) material breach of any
provision of an employment or consulting contract; (iv) the
commission of a felony crime or crime involving moral turpitude;
(v) theft, fraud, misappropriation, or embezzlement (or
suspicion of the same); (vi) willful violation of any
federal, state, or local law (except traffic violations and
other similar matters not involving moral turpitude); or
(vii) refusal to obey any resolution or direction of the
executives supervisor or the Board. The Compensation
Committee determines, in its sole discretion, whether an
executive has incurred a separation from service that is a
termination for cause under the EIP and DCP.
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Disability. In the event employment terminates due
to disability, base salary, medical benefits, and life insurance
benefits generally are continued until age 65. For this
purpose, disability means the inability to render the services
required under the employment agreement for a period of
180 days during any
12-month
period. In addition to the foregoing payments and benefits, upon
termination of Mr. Schmidts employment due to
disability, vesting is accelerated with respect to any shares of
stock previously granted to Mr. Schmidt under the STIP, and
he may be credited with additional years of service under the
EIP (which may increase the portion of restricted shares in
which he acquires an interest upon a future liquidity event).
Upon termination of Mr. Schmidts employment due to
disability, he may exercise the Put Option and Spirit may
exercise the Call Option.
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Death. In the event employment terminates due to
death, base salary will be continued for the remaining term of
the agreement. In addition, a bonus payment will be made
pursuant to the STIP equal to the full amount of the bonus that
otherwise would have been payable under the STIP (if any) for
the year of termination, and a bonus payment for one subsequent
year will be made pursuant to the STIP (with such payment
determined on the assumption that target performance is achieved
for such year). Furthermore, additional years of service credit
may be given for vesting purposes under the EIP (which may
increase the portion of restricted shares in which an interest
is acquired upon a future liquidity event). In the event of
Mr. Schmidts termination of employment due to death,
vesting is accelerated with respect to any shares of stock
previously granted to Mr. Schmidt under the STIP, and
medical benefits for Mr. Schmidts family generally
will be continued during the period that base salary is
continued, with premiums paid by Spirit in the same proportion
that premiums are paid on similar coverage for other executive
officers. If Mr. Schmidts employment terminates due
to his death, his personal representative may exercise the Put
Option and Spirit may exercise the Call Option.
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The continued receipt of payments and benefits by
Messrs. Turner and Schmidt upon termination of employment
due to expiration of their employment agreements or involuntary
termination without cause is conditioned upon satisfaction, for
a period of 24 months after termination of employment, of a
covenant not to compete and a covenant not to solicit customers
or employees of Spirit.
Spirits employment agreements with Messrs. Lewelling
and Walker provide for the payment of certain compensation and
benefits to each of Mr. Lewelling and Mr. Walker only
upon termination of employment by Spirit without cause within
two years after the effective date of their respective
agreements. As each of Messrs. Lewelling and Walker has
been employed by Spirit for longer than two years under their
respective employment agreements, no additional compensation or
benefits will be payable to either Mr. Lewelling or
Mr. Walker pursuant to their respective employment
agreements by reason of termination of their employment with
Spirit.
Neither the Company nor Spirit has an employment agreement with
Mr. Brunton. Accordingly, upon termination of employment
for any reason, salary and benefits are continued only through
the date of termination.
34
Supplemental
Executive Retirement Plan
Pursuant to the SERP, Mr. Turner holds 228,675 phantom
stock units. Upon a Change in Control following a
Liquidity Event (as defined in the SERP),
Mr. Turner is entitled to receive payment with respect to
each of those phantom stock units in an amount equal to
(i) the market value of one share of Class B Common
stock in the Company (determined as of the business day
immediately preceding the date of payment), plus (ii) the
amount of all dividends (other than stock dividends), if any,
actually paid on one share of Class B Common stock in the
Company during the period from June 16, 2005 through the
date payment is made. A Change in Control under the
SERP is a transaction pursuant to which a person, or more than
one person acting as a group (in either case, however, excluding
Onex), acquires (i) more than 50% of the total voting power
of the stock of the Company (including, but not limited to,
acquisition by merger, consolidation, recapitalization,
reorganization, or sale or transfer of the Companys equity
interests), or (ii) all or substantially all of the assets
of the Company or Spirit and all or substantially all of the
proceeds from such transaction are distributed to the
stockholders of the Company. A Liquidity Event under
the SERP includes the initial public offering consummated by the
Company on November 27, 2006. Thus, Mr. Turner will be
entitled to payment under the SERP with respect to his phantom
stock units upon any future Change in Control.
Payment under the SERP will be made in a single lump sum in cash
or stock as soon as administratively practicable following the
change in control.
Deferred
Compensation Plan
Pursuant to the DCP, the named executive officers participating
in the DCP are entitled to receive payment of amounts credited
to their deferred compensation accounts under the DCP upon a
separation from service with Spirit and its affiliates. Amounts
are payable in a lump sum or in up to 15 annual installment
payments, as elected by each participant (subject to the terms
and conditions set forth in the DCP).
Payment to a participant of any employer matching or
discretionary contributions made under the DCP is subject to
satisfaction by the participant of noncompetition and
nonsolicitation requirements during the term of the
participants employment and for so long as the participant
receives payments under the DCP and confidentiality
requirements. In addition, the participant must not have been
terminated for cause.
Summary
Tables
The following tables summarize the amounts potentially payable
upon termination of employment for each of Mr. Turner and
Mr. Schmidt, assuming termination occurred on
December 31, 2007. For purposes of presenting amounts
payable over a period of time (e.g., salary continuation), the
amounts are shown as a single total but not as a present value
(i.e., the single sum does not reflect any discount).
Jeffrey
L. Turner
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Termination
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Upon
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Involuntary
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Expiration of
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Termination
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Termination
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Voluntary
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Termination
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Employment
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Without
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Due to
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Termination
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Termination
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for Cause
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Agreement
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Cause
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Disability
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Due to Death
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Salary Continuation
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$526,800
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(4)
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$526,800
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(4)
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$2,238,900
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(8)
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$120,725
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(11)
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Future STIP Award
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$438,561
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(3)
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$2,984,322
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(5)
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$2,984,322
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(5)
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$1,930,722
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(12)
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Medical/Dental Insurance
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$16,272
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(6)
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$16,272
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(6)
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$69,156
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(9)
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Life Insurance
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$4,692
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(10)
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SERP (Phantom Stock)(1)
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$7,889,288
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$7,889,288
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$7,889,288
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$7,889,288
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$7,889,288
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$7,889,288
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DCPEmployee(2)
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$101,184
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$101,184
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$101,184
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$101,184
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$101,184
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$101,184
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EIP
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$4,377,050
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(7)
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$4,377,050
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(7)
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(1) |
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228,675 phantom stock units multiplied by $34.50 (the NYSE
closing price for our Class A Common stock on
December 31, 2007). |
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(2) |
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Account balance as of December 31, 2007. |
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(3) |
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One-half of the 2007 STIP award of $877,122, which includes both
the cash and stock portions. |
35
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(4) |
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Base salary of $263,400 for 24 months. |
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(5) |
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100% of 2007 STIP award of $877,122, plus 2 additional years at
target performance (400% of $263,400 base salary each year). |
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(6) |
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Monthly company contribution toward medical and dental coverage
($607 medical and $71 dental) for 24 months. |
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(7) |
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126,871 shares multiplied by per share value. Assumes all
remaining equity interest in us held by Onex is disposed of in a
transaction occurring as of December 31, 2007 (after
termination of Mr. Turners employment), and
Return on Invested Capital equals or exceeds 26%.
Value per share of restricted stock assumed to be $34.50 (the
closing price for our Class A Common stock on
December 31, 2007). |
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(8) |
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Base salary ($263,400) continued to age 65
(81/2 years). |
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(9) |
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Monthly company contribution toward medical and dental coverage
($607 medical and $71 dental) continued to age 65
(81/2 years). |
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(10) |
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Monthly company contribution toward life insurance coverage
($46) continued to age 65
(81/2 years). |
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(11) |
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Base salary ($263,400) continued to June 15, 2008
(51/2 months). |
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(12) |
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100% of 2007 STIP award of $877,122, plus 1 additional year at
target performance (400% of $263,400 base salary). |
Ulrich
(Rick) Schmidt
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Termination
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Upon
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Expiration of
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Involuntary
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Termination
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Voluntary
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Termination
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Employment
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Termination
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Due to
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Termination
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Termination
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for Cause
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Agreement
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Without Cause
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Disability
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Due to Death
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Salary Continuation
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$865,000
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(2)
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$865,000
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(2)
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$3,027,500
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(8)
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$288,333
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(12)
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Acceleration of STIP Award
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$665,574
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(3)
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$665,574
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(3)
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$665,574
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(3)
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$665,574
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(3)
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Future STIP Award
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$288,045
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(1)
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$1,960,090
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(4)
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$1,960,090
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(4)
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$1,268,090
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(13)
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Medical/Dental Insurance
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$17,616
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(5)
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$17,616
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(5)
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$61,656
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(9)
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$5,872
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(14)
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Life Insurance
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$1,800
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(6)
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$6,300
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(10)
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EIP
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$3,647,547
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(7)
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$11,927,547
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(11)
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$11,927,547
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(11)
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(1) |
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One-half of the 2007 STIP award of $576,090, which includes both
the cash and stock portions. |
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(2) |
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Base salary of $432,500 for 24 months. |
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(3) |
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19,292 shares multiplied by $34.50 (the NYSE closing price
for our Class A Common stock on December 31, 2007). |
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(4) |
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100% of 2007 STIP award of $576,090, plus 2 additional years at
target performance (160% of $432,500 base salary each year). |
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(5) |
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Monthly company contribution toward medical and dental coverage
($734) for 24 months. |
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(6) |
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Monthly company contribution toward life insurance coverage
($75) for 24 months. |
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(7) |
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105,726 shares multiplied by per share value. Assumes all
remaining equity interest in us held by Onex is disposed of in a
transaction occurring as of December 31, 2007 (after
termination of Mr. Schmidts employment), and
Return on Invested Capital equals or exceeds 26%.
Value per share of restricted stock assumed to be $34.50 (the
closing price for our Class A Common stock on
December 31, 2007). |
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(8) |
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Base salary ($432,500) continued to age 65 (7 years). |
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(9) |
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Monthly company contribution toward medical and dental coverage
($734) continued to age 65 (7 years). |
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(10) |
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Monthly company contribution toward life insurance coverage
($75) continued to age 65 (7 years). |
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(11) |
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345,726 shares multiplied by per share value. Assumes all
remaining equity interest in us held by Onex is disposed of in a
transaction occurring as of December 31, 2007 (after
termination of Mr. Schmidts employment), and
Return on Invested Capital equals or exceeds 26%.
Value per share of restricted stock assumed to be $34.50 (the
closing price for our Class A Common stock on
December 31, 2007). |
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(12) |
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Base salary ($432,500) continued to September 1, 2008
(8 months). |
36
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(13) |
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100% of 2007 STIP award of $576,090, plus 1 additional year at
target performance (160% of $432,500 base salary). |
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(14) |
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Monthly company contribution toward family medical and dental
coverage ($734) continued to September 1, 2008
(8 months). |
Change in
Control
Neither the Company nor Spirit maintains a change in control
agreement or any other similar plan or arrangement intended
specifically to provide income protection for executive officers
upon a change in control. However, under the SERP, a change in
control may result in payment of amounts with respect to phantom
stock granted under the SERP. Under the EIP, a change in control
may provide participants the opportunity to acquire an interest
in restricted shares granted under the EIP
and/or may
increase the opportunity to acquire an interest in restricted
shares upon a future liquidity event. In addition, Spirits
employment agreement with Mr. Schmidt treats certain
adverse employment action in connection with a change in control
as an involuntary termination without cause for purposes of
determining amounts payable pursuant to that agreement.
Executive
Incentive Plan
Pursuant to the EIP, participants have the opportunity to
acquire an interest in restricted shares granted under the EIP
upon the occurrence of a Liquidity Event. A
Liquidity Event is defined under the EIP to include
a Change in Control. A Change in Control
is defined under the EIP as a transaction pursuant to which a
person, or more than one person acting as a group (in either
case, however, excluding Onex), acquires (i) more than 50%
of the total voting power of the stock of the Company
(including, but not limited to, acquisition by merger,
consolidation, recapitalization, reorganization, or sale or
transfer of the Companys equity interests), or
(ii) all or substantially all of the assets of the Company
or Spirit and all or substantially all of the proceeds from such
transaction are distributed to the stockholders of the Company.
Thus, upon a Change in Control under the EIP,
participants may have the opportunity to acquire an interest in
restricted shares granted under the EIP.
Upon the occurrence of a Liquidity Event under the
EIP (including a Change in Control), the number of
restricted shares in which a participant acquires an interest
(if any) depends on three factors, including a service factor
(based on the number of years of service credited or deemed
credited as of the Liquidity Event). Participants
who are employed on the date of a Liquidity Event
are deemed to have fully satisfied the service factor for
purposes of determining the number of restricted shares in which
such participant acquired an interest with respect to that
Liquidity Event. In addition, upon a Change in
Control, special rules apply for purposes of applying the
service factor in the event of a subsequent Liquidity
Event.
|
|
|
|
|
For each participant employed on the date of the Change in
Control who either is not offered continued employment in
a comparable position or continues employment after the
Change in Control but, within 12 months, is
either involuntarily terminated without cause or is assigned to
a position that is not a comparable position, the service factor
is deemed fully satisfied upon future liquidity events.
|
|
|
|
For each participant employed on the date of the Change in
Control who is offered a comparable position but declines
to accept it, the service factor is not deemed fully satisfied
upon future liquidity events, but a more accelerated schedule
applies for purposes of determining the extent to which the
service factor has been satisfied.
|
Accordingly, a Change in Control under the EIP may
increase the extent to which a participant may acquire an
interest in restricted shares under the EIP upon a future
Liquidity Event.
Ulrich
(Rick) Schmidt Employment Agreement
Pursuant to Spirits employment agreement with
Mr. Schmidt, his employment will be treated as
involuntarily terminated without cause if, following a change in
control (as defined in the EIP), either he is not offered
37
continued employment in a comparable position or he continues to
perform services following the change in control but is, within
12 months following the change in control, assigned to a
position that is not a comparable position. As more fully
described above, certain additional payments and benefits are
due upon an involuntary termination of Mr. Schmidts
employment without cause. Accordingly, a change in control may
result in the payment of those additional amounts if
Mr. Schmidts employment does not continue in a
comparable position following such change in control.
Summary
Table
The following table summarizes the compensation that may become
payable to the named executive officers upon a change in
control, assuming the change of control occurred on
December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
EIP
|
|
|
Employment Agreement
|
|
|
Jeffrey L. Turner
|
|
|
$7,889,288
|
(1)
|
|
|
$14,313,050
|
(2)
|
|
|
|
|
Ulrich (Rick) Schmidt
|
|
|
|
|
|
|
$11,927,547
|
(2)
|
|
|
$3,510,080
|
(3)
|
John A. Lewelling
|
|
|
|
|
|
|
$3,578,271
|
(2)
|
|
|
|
|
Ronald C. Brunton
|
|
|
|
|
|
|
$3,578,271
|
(2)
|
|
|
|
|
H. David Walker
|
|
|
|
|
|
|
$2,385,503
|
(2)
|
|
|
|
|
|
|
|
(1) |
|
228,675 phantom stock units multiplied by $34.50 (the closing
price for our Class A Common stock on December 31,
2007). |
|
(2) |
|
Number of restricted shares multiplied by per share value.
Assumes all remaining equity interest in us held by Onex is
disposed of in a transaction occurring as of December 31,
2007, and Return on Invested Capital equals or
exceeds 26%. Therefore, EIP participants acquire an interest in
all remaining shares of restricted stock. Value per share of
restricted stock assumed to be $34.50 (the closing price for our
Class A Common stock on December 31, 2007). |
|
(3) |
|
Sum of amounts payable in connection with involuntary
termination without cause, other than amounts payable as a
result of the crediting of additional years of service for
vesting purposes under the EIP, which are already included in
the EIP column. |
Change in
Responsibilities
As discussed above, under Spirits employment agreement
with Mr. Schmidt, if Mr. Schmidt is assigned to a
position following a change in control that is not a comparable
position, he may be treated as involuntarily terminated without
cause. The compensation payable to him in that event is
summarized in the immediately preceding table.
PROPOSAL 2:
APPROVAL OF AMENDMENTS TO THE COMPANYS SHORT-TERM
INCENTIVE PLAN
Proposed
Amendments
The Compensation Committee (which administers the STIP) has
recommended, and the Board has approved, subject to approval by
our stockholders at the Annual Meeting, the following amendments
to the Spirit AeroSystems Holdings, Inc. Short-Term Incentive
Plan (the STIP):
|
|
|
|
|
Increase of the number of shares of common stock available
for grant under the STIP by 2,000,000 shares; and
|
|
|
|
Modification of the class of common stock to be granted to
plan participants from Class B Common stock to Class A
Common stock.
|
If approved, this proposal would increase the maximum aggregate
number of shares of the Companys common stock authorized
for issuance pursuant to the STIP from 800,000 to
2,800,000 shares, all of which would be shares of
Class A Common stock. In the event that stockholder
approval is received, the STIP would be amended as set forth in
Appendix A.
38
Discussion
of the Amendments
The STIP was originally adopted on June 16, 2005. At that
time, 800,000 shares were reserved for issuance under the
plan. As of March 14, 2008, 39,534 shares remained
available for future award grants. We believe that the type and
number of shares currently available under the STIP does not
give us sufficient authority and flexibility to adequately
provide for future incentives. We believe that operation of the
STIP is critical to attracting and retaining employees,
consultants and independent contractors in a competitive labor
market, which is essential to our long-term growth and success.
We compete with several companies who are similarly engaged in
original parts design and manufacturing of commercial
aerostructures, including certain successful and high profile
organizations, for a limited pool of talented people. In
addition, as the size of awards granted under the STIP depends
on achievement of certain performance targets, we use the STIP
to create incentives for performance and to align the interests
of our executives with those of our stockholders.
The purpose of these amendments to the STIP is to
(1) authorize adequate shares to fund expected awards under
our short-term incentive program, and (2) allow us to grant
awards of the same class of common stock held by our public
stockholders, which have one vote per share, instead of the
shares of Class B Common stock currently granted, which
have ten votes per share. We believe that the increased number
of shares represents a reasonable amount of potential equity
dilution and will allow us to continue awarding short-term
equity incentives, which are an important component of our
overall compensation program. We currently expect, based on
anticipated future grants of awards under the STIP, that the
additional 2,000,000 shares requested will fund the
short-term equity incentive program through the end of fiscal
2012. As of December 31, 2007, the market value of the
additional 2,000,000 shares proposed to be made available
for issuance under the STIP would have been $69,000,000,
calculated by multiplying the number of shares by $34.50, the
closing price per share of the Companys Class A
Common stock on the last trading day of the Companys
fiscal year 2007.
Recommendation
of the Board of Directors
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENTS TO
THE COMPANYS SHORT-TERM INCENTIVE PLAN.
Description
of the STIP
The following is a summary of the principal features of the
STIP. This summary does not purport to be a complete description
of all of the provisions of the STIP. It is qualified in its
entirety by reference to the full text of the STIP. A copy of
the STIP as proposed to be amended pursuant to this
Proposal 2 has been filed electronically with the SEC and
included as Appendix A to this Proxy Statement. Any
stockholder who desires to obtain a copy of the plan may do so
by written request to us.
Administration. The Compensation Committee
administers the STIP. Subject to the terms of the STIP, the
Compensation Committee has complete discretion and authority to:
(i) interpret the STIP, (ii) establish and amend rules
and regulations relating to the STIP, (iii) designate the
individuals that are eligible to participate in the STIP,
(iv) determine whether an award will be made in cash,
shares or both, (v) determine the amount of an award and
the terms, conditions, restrictions and limitations of awards,
including requiring, as a condition precedent to such restricted
stock grant under the STIP that a STIP participant execute a
stockholders agreement or other agreements with us (the
Stockholders Agreement)
and/or our
stockholders, in such form and substance it deems necessary or
appropriate, in its sole discretion and (vi) make all other
determinations it deems necessary or advisable for the
administration of the STIP.
Eligibility, Limitations and Types of Awards Under the
STIP. Awards under the STIP may be granted only to
employees, consultants and contractors of the Company and
Spirit. The Compensation Committee selects, in its sole
discretion, the individuals who participate in the STIP.
The STIP authorizes the grant of awards consisting of restricted
stock, cash or both, as determined by the Compensation
Committee. No STIP participant may elect the form or amount of
his or her benefit under the STIP, it being within the sole
discretion of the Compensation Committee to determine the form
and amount of benefits to be offered under the STIP, if any.
39
Restricted Stock. An award of restricted stock is a
grant to the recipient of a specified number of shares of common
stock, subject to certain forfeiture conditions as described
below under Service and Performance Based Awards.
STIP participants are not required to pay any consideration to
the Company at the time of a grant of restricted stock. Shares
that are subject to awards which expire or for any reason are
cancelled, terminated, or forfeited, or for any other reason are
not paid or delivered under the STIP will again be available for
subsequent awards under the plan. Shares exchanged or withheld
to satisfy the tax withholding obligations related to any award
will not be available for subsequent awards under the plan.
Cash Awards. The Compensation Committee may make
awards under the STIP in the form of a cash payment in such
amounts as the Compensation Committee may determine, in its sole
discretion. Subject to the Compensation Committees
determination otherwise, the STIP provides that cash awards, if
earned, will be paid in a lump sum as soon as administratively
practicable after the end of the calendar year to which the
award relates, but in no event later than
21/2 months
after the end of such year. Participants may elect to defer
payment of all or part of such benefit in accordance with the
terms and provisions of our Deferred Compensation Plan.
As of February 22, 2008, aggregate cash payments of
approximately $16 million have been made under the STIP.
Service and Performance-Based Awards. In each
calendar year, the Compensation Committee establishes certain
performance targets or goals and corresponding incentive
benefits for the selected STIP participants for the year. The
size of participants awards for a calendar year depends on
performance levels achieved during that year. Recipients of
restricted stock grants under the STIP acquire an interest in
these shares only after completing one year of continuous
employment with us after the date such restricted stock grants
are made. Cash awards, if earned, are typically paid in a lump
sum no later than
21/2 months
after the end of the year in which they are earned. Subject to
certain exceptions contained in the STIP, the Compensation
Committee may increase the number of shares of restricted stock
granted, decrease the period of employment required for a STIP
participant to acquire an interest in such restricted stock or
receive such cash payment or modify performance objectives in
whole or in part, during the performance period, as it deems
appropriate and equitable. In the event of a participants
death, payment of any remaining amounts are made to the
participants beneficiary.
Dividends/Ownership Rights. In the event a dividend
is declared on shares of the Companys common stock,
dividends on the restricted stock grants will be cumulated and
paid to STIP participants only at the time and to the extent
they acquire an interest in such restricted stock. A participant
under the STIP does not have the rights of a stockholder with
respect to any restricted stock unless and until the stockholder
acquires such an interest in such restricted stock.
Non-Transferability of Awards. Subject to certain
exceptions contained in the STIP, awards of restricted stock
granted under the STIP generally are not transferable by the
recipient, and are further subject to such conditions and
restrictions on transfer as are set forth in the Companys
certificate of incorporation and bylaws, the Stockholders
Agreement, as well as any other agreements to be entered into by
the Company and the STIP participants as the Compensation
Committee deems necessary or appropriate. The Compensation
Committee has discretion, however, to establish written
conditions and procedures for the transfer of awards of
restricted stock to other persons or entities, provided that
such transfers comply with applicable federal and state
securities laws and otherwise comply with the governing
documents of the Company and the Stockholders Agreement.
Duration, Effectiveness, Amendment and
Termination. The STIP will continue in effect until
terminated by us. The Board may amend the STIP at any time and
for any reason; provided, that, any such amendment will be
subject to stockholder approval to the extent required by
applicable laws, regulations or rules. An amendment will also be
subject to a participants consent if such amendment will
reduce the amount of the benefit that the participant is then
entitled to receive; provided, that, no consent shall be
required to the extent the Board determines, in its sole
discretion, that such amendment is required by applicable laws.
40
Federal
Income Tax Considerations
The following is a brief summary of the U.S. federal income
tax consequences applicable to awards granted under the STIP
based on the federal income tax laws in effect on the date of
this Proxy Statement. This summary is not intended to be
exhaustive and does not address all matters relevant to a
particular participant based on his or her specific
circumstances. The summary expressly does not discuss the income
tax laws of any state, municipality, or
non-U.S. taxing
jurisdiction, or the gift, estate, excise (including the rules
applicable to deferred compensation under Code
Section 409A), or other tax laws other than federal income
tax law. The following is not intended or written to be used,
and cannot be used, for the purposes of avoiding taxpayer
penalties.
Cash-Based Awards. A recipient of a cash award under
the STIP will recognize ordinary income, which amount will be
includable in the participants taxable income in the year
the award is paid. We will be entitled to a deduction equal to
the amount of the award in the year in which the award is earned
as long as the Company makes the payment by March 15 of the
following year.
Restricted Stock. Restricted stock received pursuant
to awards under the STIP is subject to a substantial risk of
forfeiture for federal income tax purposes. A participant who
receives an award of restricted stock and who does not make the
election described below recognizes no taxable income upon the
grant of restricted stock. When the restrictions with respect to
the stock lapse, the participant recognizes ordinary income
equal to the then fair market value of the shares and, subject
to Section 162(m) of the Code, we are entitled to a
corresponding deduction. Upon a subsequent sale of the shares,
the participant realizes short-term or long-term capital gain or
loss, depending upon whether the shares have been held for more
than one year at the time of sale. Dividends on restricted stock
are treated as ordinary income at the time paid.
A participant may elect, pursuant to Section 83(b) of the
Code, to recognize compensation income with respect to the
shares when the shares are granted rather than at the time the
restrictions lapse, in an amount equal to the fair market value
of the shares at the time of the grant. We are generally
entitled to a corresponding deduction at that time. By making a
Section 83(b) election, the STIP participant realizes no
additional compensation income with respect to the shares when
the restrictions lapse. A participant will recognize capital
gain or loss with respect to the shares when they are
subsequently sold. A Section 83(b) election must be filed
with the Internal Revenue Service within 30 days of the
date the shares of restricted stock are granted.
Section 162(m) Limitations. Code
Section 162(m) contains special rules regarding the federal
income tax deductibility of compensation paid to our chief
executive officer and to each of our other three most highly
compensated executive officers (other than our chief financial
officer). The general rule is that annual compensation paid to
any of these specified executives is deductible only to the
extent that it does not exceed $1,000,000. However, we can
preserve the deductibility of certain compensation in excess of
$1,000,000 if such compensation qualifies as
performance-based compensation by complying with
certain conditions imposed by the Code Section 162(m) rules
(including the establishment of a maximum number of shares with
respect to which awards may be granted to any one employee
during one fiscal year) and if the material terms of such
compensation are disclosed to and approved by the Companys
stockholders.
Withholding. The Company is entitled to deduct from
the payment of any award under the STIP all applicable income
and employment taxes required by federal, state, local or
foreign law to be withheld.
Specific
Benefits
The Company has not approved any awards that are conditioned on
stockholder approval of the STIP proposal. The Company cannot
currently determine the benefits or number of shares subject to
awards that may be granted in the future to the STIP
Participants under the STIP and will be granted at the sole
discretion of the Compensation Committee. If the proposed
increase in the share limit for the STIP had been in effect in
2007, the Company expects that its award grants for 2007 would
not have been different from those actually made in that year
under the plan.
41
Vote
Required
Unless otherwise instructed, the proxy holders will vote proxies
received by them FOR this Proposal 2. The
affirmative vote of a majority of the votes of the shares of
common stock represented at the meeting is required to approve
the amendments to the STIP.
PROPOSAL 3:
APPROVAL OF AMENDMENTS TO THE COMPANYS AMENDED AND
RESTATED LONG-TERM INCENTIVE PLAN
Proposed
Amendments
The Compensation Committee (which administers the LTIP) has
recommended, and the Board has approved, subject to approval by
our stockholders at the Annual Meeting, the following amendments
to the Spirit AeroSystems Holdings, Inc. Amended and Restated
Long-Term Incentive Plan (the LTIP):
|
|
|
|
|
Increase of the number of shares of common stock available
for grant under the LTIP by 3,000,000 shares; and
|
|
|
|
Modification of the class of common stock to be granted to
plan participants from Class B Common stock to Class A
Common stock.
|
If approved, this proposal would increase the maximum aggregate
number of shares of the Companys common stock authorized
for issuance pursuant to the LTIP from 400,000 to
3,400,000 shares. All shares remaining available for future
grants under the LTIP would be shares of Class A Common
stock. In the event that stockholder approval is received, the
LTIP would be amended as set forth in Appendix B.
Discussion
of the Amendments
The LTIP was originally adopted on January 1, 2006 and
amended and restated on December 1, 2006. When the LTIP was
adopted, 400,000 shares of Class B Common stock were
reserved for issuance under the plan. As of March 14, 2008,
263,603 shares remained available for future award grants.
We believe that the number of shares currently available under
the LTIP does not give us sufficient authority and flexibility
to adequately provide for future incentives. We believe that
operation of the LTIP is critical to attracting and retaining
employees, consultants and independent contractors in a
competitive labor market, which is essential to our long-term
growth and success. We compete with several companies who are
similarly engaged in original parts design and manufacturing of
commercial aerostructures, including certain successful and high
profile organizations, for a limited pool of talented people. In
addition, as the awards granted under the LTIP will typically
vest over several years, the LTIP will be an important retention
tool, especially as remaining grants under the EIP vest.
The purpose of these amendments to the LTIP is to
(1) authorize adequate shares to fund expected awards under
our long-term incentive program, and (2) allow us to grant
awards of the same class of common stock held by our public
stockholders, which have one vote per share, instead of the
shares of Class B Common stock currently granted, which
have ten votes per share. We believe that the increased number
of shares represents a reasonable amount of potential equity
dilution and will allow us to continue awarding long-term equity
incentives, which are an important component of our overall
compensation program. We currently expect, based on anticipated
future grants of awards under the LTIP, that the additional
3,000,000 shares requested will fund the long-term equity
incentive program through the end of fiscal 2012. As of
December 31, 2007, the market value of the additional
3,000,000 shares proposed to be made available for issuance
under the LTIP would have been $103,500,000, calculated by
multiplying the number of shares by $34.50, the closing price
per share of the Companys Class A Common stock on the
last trading day of the Companys fiscal year 2007.
Recommendation
of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
AMENDMENTS TO THE COMPANYS AMENDED AND RESTATED LONG-TERM
INCENTIVE PLAN.
42
Description
of the LTIP
The following is a summary of the principal features of the
LTIP. This summary does not purport to be a complete description
of all of the provisions of the LTIP. It is qualified in its
entirety by reference to the full text of the LTIP. A copy of
the LTIP as proposed to be amended pursuant to this
Proposal 3 has been filed electronically with the SEC and
included as Appendix B to this Proxy Statement. Any
stockholder who desires to obtain a copy of the plan may do so
by written request to us.
Administration. The Compensation Committee
administers the LTIP. Subject to the terms of the LTIP, the
Compensation Committee has complete discretion and authority to:
(i) interpret the LTIP, (ii) establish and amend rules
and regulations relating to the LTIP, (iii) designate the
individuals that are eligible to participate in the LTIP,
(iv) determine whether an award will be made in cash,
shares or both, (v) determine the amount of an award and
the terms, conditions, restrictions and limitations of awards,
including requiring, as a condition precedent to such restricted
stock grant under the LTIP that an LTIP participant execute the
Stockholders Agreement and (vi) make all other
determinations it deems necessary or advisable for the
administration of the LTIP.
Eligibility, Limitations and Types of Awards Under the
LTIP. Awards under the LTIP may be granted only to
employees, consultants and contractors of the Company and the
Companys wholly-owned subsidiary, Spirit. The Compensation
Committee selects, in its sole discretion, the individuals who
participate in the LTIP.
The LTIP authorizes the grant of awards consisting of restricted
stock. No LTIP participant may elect the amount of his or her
benefit under the LTIP, it being within the sole discretion of
the Compensation Committee to determine the amount of benefits
to be offered under the LTIP, if any.
Restricted Stock. An award of restricted stock is a
grant to the recipient of a specified number of shares of common
stock, subject to certain forfeiture conditions as described
below under Service and Performance Based Awards.
LTIP participants are not required to pay any consideration to
the Company at the time of a grant of restricted stock. Shares
that are subject to awards which expire or for any reason are
cancelled, terminated, or forfeited, or for any other reason are
not paid or delivered under the LTIP will again be available for
subsequent awards under the plan. Shares exchanged or withheld
to satisfy the tax withholding obligations related to any award,
will not be available for subsequent awards under the plan.
Service-Based Awards. The Compensation Committee
will determine the vesting schedules for shares granted under
the LTIP. We expect to grant restricted stock awards under the
LTIP with multi-year vesting schedules.
Dividends/Ownership Rights. In the event a dividend
is declared on shares of the Companys common stock,
dividends on the restricted stock grants will be cumulated and
paid to LTIP participants only at the time and to the extent
they acquire an interest in such restricted stock. A participant
under the LTIP does not have the rights of a stockholder with
respect to any restricted stock unless and until the stockholder
acquires such an interest in such restricted stock.
Non-Transferability of Awards. Subject to certain
exceptions contained in the LTIP, awards of restricted stock
granted under the LTIP generally are not transferable by the
recipient, and are further subject to such conditions and
restrictions on transfer as are set forth in the Companys
certificate of incorporation and bylaws, the Stockholders
Agreement, as well as any other agreements to be entered into by
the Company and the LTIP participants as the Compensation
Committee deems necessary or appropriate. The Compensation
Committee has discretion, however, to establish written
conditions and procedures for the transfer of awards of
restricted stock to other persons or entities, provided that
such transfers comply with applicable federal and state
securities laws and otherwise comply with the governing
documents of the Company and the Stockholders Agreement.
Duration, Effectiveness, Amendment and
Termination. The LTIP will continue in effect until
terminated by us. The Board may amend the LTIP at any time and
for any reason; provided, that, any such amendment will be
subject to stockholder approval to the extent required by
applicable laws, regulations or rules. An amendment will also be
subject to a participants consent if such amendment will
reduce the amount of the benefit that the
43
participant is then entitled to receive; provided, that, no
consent shall be required to the extent the Board determines, in
its sole discretion, that such amendment is required by
applicable laws.
Federal
Income Tax Considerations
The following is a brief summary of the U.S. federal income
tax consequences applicable to awards granted under the LTIP
based on the federal income tax laws in effect on the date of
this Proxy Statement. This summary is not intended to be
exhaustive and does not address all matters relevant to a
particular participant based on his or her specific
circumstances. The summary expressly does not discuss the income
tax laws of any state, municipality, or
non-U.S. taxing
jurisdiction, or the gift, estate, excise (including the rules
applicable to deferred compensation under Code
Section 409A), or other tax laws other than federal income
tax law. The following is not intended or written to be used,
and cannot be used, for the purposes of avoiding taxpayer
penalties.
Restricted Stock. Restricted stock received pursuant
to awards under the LTIP is considered subject to a substantial
risk of forfeiture for federal income tax purposes. A
participant who receives an award of restricted stock and who
does not make the election described below recognizes no taxable
income upon the grant of restricted stock. When the restrictions
with respect to the stock lapse, the participant recognizes
ordinary income equal to the then fair market value of the
shares and, subject to Section 162(m) of the Code, we are
entitled to a corresponding deduction. Upon a subsequent sale of
the shares, the participant realizes short-term or long-term
capital gain or loss, depending upon whether the shares have
been held for more than one year at the time of sale. Dividends
on restricted stock are treated as ordinary income at the time
paid.
A participant may elect, pursuant to Section 83(b) of the
Code, to recognize compensation income with respect to the
shares when the shares are granted rather than at the time the
restrictions lapse, in an amount equal to the fair market value
of the shares at the time of the grant. We are generally
entitled to a corresponding deduction at that time. By making a
Section 83(b) election, the LTIP participant realizes no
additional compensation income with respect to the shares when
the restrictions lapse. A participant will recognize capital
gain or loss with respect to the shares when they are
subsequently sold. A Section 83(b) election must be filed
with the Internal Revenue Service within 30 days of the
date the shares of restricted stock are granted.
Section 162(m) Limitations. Code
Section 162(m) contains special rules regarding the federal
income tax deductibility of compensation paid to our chief
executive officer and to each of our other three most highly
compensated executive officers (other than our chief financial
officer). The general rule is that annual compensation paid to
any of these specified executives is deductible only to the
extent that it does not exceed $1,000,000.
Withholding. The Company is entitled to deduct from
the payment of any award under the LTIP all applicable income
and employment taxes required by federal, state, local or
foreign law to be withheld.
Specific
Benefits
The Company has approved awards under the LTIP that are
conditioned on stockholder approval of Proposal 3. If the
proposed increase in the share limit for the LTIP had been in
effect in 2007, the Company expects that its award grants for
2007 would not have been different from those actually made in
that year under the plan.
44
The following table shows information regarding the LTIP awards
that have been approved by the Board, to be granted to the
Companys named executive officers and other persons and
groups identified below, subject to stockholder approval.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
% of 2008 Base Salary
|
|
|
Award
|
|
Name and Position
|
|
(1)
|
|
|
($)
|
|
|
Named Executive Officers:
|
|
|
|
|
|
|
|
|
Jeffrey L. Turner,
President & CEO
|
|
|
350%
|
|
|
$
|
921,900
|
|
Ulrich (Rick) Schmidt,
EVP & CFO
|
|
|
100%
|
|
|
$
|
432,500
|
|
John Lewelling,
SVP/GM AeroStructures Segment
|
|
|
100%
|
|
|
$
|
375,000
|
|
Ronald C. Brunton,
EVP & Chief Operations Officer
|
|
|
200%
|
|
|
$
|
500,000
|
|
H. David Walker,
SVP of Sales & Marketing
|
|
|
120%
|
|
|
$
|
264,000
|
|
Total for all current executive officers,
including the named executive officers
identified above (average % of 2008 Base Salary)
|
|
|
147%
|
|
|
$
|
3,754,139
|
|
Total for all employees, including all current officers
who are not executive officers, as a group
(average % of 2008 Base Salary)
|
|
|
130%
|
|
|
$
|
4,654,139
|
|
|
|
|
(1) |
|
Amount of the LTIP Awards is expressed as a percentage of 2008
base salary and is expected to be converted into shares of the
Companys Class A Common stock at the average of the
opening and closing trading price of the Companys
Class A Common stock on the third trading day after the
Companys announcement of its earnings for the first
quarter of 2008. |
Vote
Required
Unless otherwise instructed, the proxy holders will vote proxies
received by them FOR this Proposal 3. The
affirmative vote of a majority of the votes of the shares of
common stock represented at the meeting is required to approve
the amendments to the LTIP.
Equity
Compensation Plan Information
The following table represents restricted shares outstanding
under the EIP, the Director Stock Plan, and the STIP and LTIP
plans as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
|
|
|
|
|
Future Issuances Under
|
|
|
|
Number of Securities to be
|
|
|
Weighted Average
|
|
|
Equity Compensation
|
|
|
|
Issued Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Plans (Excluding
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Securities Reflected in
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Column(a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Restricted Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders(1)
|
|
|
2,762,879
|
|
|
$
|
|
|
|
|
7,516,626
|
|
Equity compensation plans not approved by security holders(2)
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,762,879
|
|
|
$
|
|
|
|
|
7,516,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Approved by previous stockholders in place before our initial
public offering. |
|
(2) |
|
Our equity incentive plans provide for the issuance of incentive
awards to officers, directors, employees and consultants in the
form of stock appreciation rights, restricted stock and deferred
stock, in lieu of cash compensation. |
45
PROPOSAL 4:
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Overview
PricewaterhouseCoopers LLP currently serves as the
Companys independent registered public accounting firm,
and that firm conducted the audit of the Companys accounts
for fiscal year 2007. The Audit Committee has selected
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm for the fiscal year 2008, and
the Board is asking stockholders to ratify that selection.
Selection of the Companys independent registered public
accounting firm is not required to be submitted to a vote of the
stockholders of the Company for ratification. Although the
Sarbanes-Oxley Act of 2002, as well as the charter of the Audit
Committee, require the Audit Committee to engage, retain, and
supervise the Companys independent registered public
accounting firm, the Board considers the selection of the
independent registered public accounting firm to be an important
matter of stockholder concern and is submitting the selection of
PricewaterhouseCoopers LLP for ratification by stockholders as a
matter of good corporate practice.
If a majority of votes cast on this matter are not cast in favor
of the selection of PricewaterhouseCoopers LLP, the Audit
Committee and the Board will reconsider the selection of such
firm as the Companys independent registered public
accounting firm. Even if stockholders vote on an advisory basis
in favor of the selection, the Audit Committee may, in its
discretion, direct the selection of different independent
auditors at any time during the year if it determines that such
a change would be in the best interests of the Company and the
stockholders.
The Company expects that representatives of
PricewaterhouseCoopers LLP will be present at the Annual
Meeting, will have an opportunity to make a statement, and will
be available to respond to appropriate questions.
Unless otherwise instructed, the proxy holders will vote proxies
received by them FOR the proposal. The affirmative
vote of a majority of the votes of the shares of common stock
represented at the meeting is required to approve the
ratification of the selection of PricewaterhouseCoopers LLP as
the Companys independent registered public accounting firm
for the current fiscal year.
Recommendation
of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
Report of
the Audit Committee
The Board has a separately-designated standing Audit Committee,
established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended. The Audit Committee
assists the Board in fulfilling its oversight responsibilities
by reviewing the financial reports and other financial
information provided by the Company to any governmental body or
the public, the Companys systems of internal controls
regarding finance, accounting, legal and regulatory compliance,
and ethics that the Board and the Companys management have
established, and the Companys auditing, accounting, and
financial reporting processes generally. The Audit Committee
annually selects the Companys independent registered
public accounting firm and evaluates the independence,
qualifications, and performance of the Companys internal
auditors and the independent registered public accounting firm.
The Audit Committee establishes procedures for and oversees
receipt, retention, and treatment of complaints received by the
Company regarding accounting, internal control, or auditing
matters and the confidential, anonymous submission by the
Companys employees of concerns regarding questionable
accounting or auditing matters.
The Audit Committee has reviewed and discussed with management
and the independent registered public accounting firm the
Companys audited financial statements as of and for the
year ended December 31, 2007, as well as the
representations of management regarding the Companys
internal control over financial
46
reporting. The Audit Committee discussed with the Companys
internal auditors and independent registered public accounting
firm the overall scope and plans for their respective audits.
The Audit Committee met with the internal auditors and the
independent registered public accounting firm, with and without
management present, to discuss the results of their
examinations, the evaluation of the Companys internal
controls, managements representations regarding internal
control over financial reporting, and the overall quality of the
Companys financial reporting.
The Audit Committee has discussed with the independent
registered public accounting firm all items required by the
standards of the Public Company Accounting Oversight Board,
including the Statement on Auditing Standards, No. 61, as
amended, Communication with Audit Committees. The Audit
Committee has received the written disclosures and the letter
from the independent registered public accounting firm required
by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and the
Audit Committee has discussed with the independent registered
public accounting firm its independence from the Company and its
management.
The Audit Committee has relied on management representations
that the financial statements have been prepared in accordance
with generally accepted accounting principles in the United
States of America and on the opinion of the independent
registered public accounting firm included in their report to
the Companys audited financial statements.
Based on the review and discussions referred to above, the Audit
Committee has recommended to the Board that the audited
financial statements referred to above be included in the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2007, for filing with the
SEC, and selected PricewaterhouseCoopers LLP as the
Companys independent registered public accounting firm for
fiscal year 2008.
Audit Committee
Francis Raborn, Chairman
Ivor (Ike) Evans
Robert Johnson
Fees
Billed by the Independent Registered Public Accounting
Firm
The fees incurred by the Company, including its majority-owned
subsidiaries, for services provided by PricewaterhouseCoopers
LLP, the independent registered public accounting firm, in 2007
and 2006 are set forth below.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Dollars in thousands)
|
|
|
Audit Fees(1)
|
|
$
|
3,343.6
|
|
|
$
|
2,743.6
|
|
Audit-Related Fees(2)
|
|
$
|
1,847.8
|
|
|
$
|
1,312.0
|
|
Tax Fees(3)
|
|
|
|
|
|
|
|
|
All Other Fees(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,191.4
|
|
|
$
|
4,055.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents fees and expenses for professional services provided
in connection with the audit of the Companys annual
financial statements and review of the Companys quarterly
financial statements, statutory audits, and advice on accounting
matters directly related to the audit and audit services
provided in connection with other regulatory filings. |
|
(2) |
|
For 2006, amount is primarily for assistance with the
Companys initial public offering and Registration
Statement on
Form S-1,
technical accounting and reporting consultations, and assistance
with the Companys acquisition of Spirit Europe. For 2007,
amount is primarily for assistance with the Companys
secondary offering and Registration Statement on
Form S-1,
technical accounting and reporting consultations and due
diligence associated with the evaluation of Airbus manufacturing
sites in Europe. |
47
|
|
|
(3) |
|
Represents fees and expenses for preparation and review of tax
returns and filings, tax consultations and advice related to
compliance with tax laws, and tax planning strategies. For
fiscal years 2006 and 2007, no fees or expenses were incurred
for tax services. |
|
(4) |
|
No fees or expenses were incurred in this category for fiscal
years 2006 and 2007. |
The Audit Committee has concluded the provision of the non-audit
services listed above is compatible with maintaining the
independence of PricewaterhouseCoopers LLP.
Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of the Independent Registered Public Accounting
Firm
The Audit Committee has established a policy regarding
pre-approval of all audit and permissible non-audit services
provided by the independent registered public accounting firm.
Each year, the Audit Committee approves the terms on which the
independent registered public accounting firm is engaged for the
ensuing fiscal year. All non-audit services must be approved by
the Audit Committee.
OTHER
MATTERS
General
The Board does not intend to bring any other business before the
meeting, and so far as is known to the Board, no matters are to
be brought before the meeting except as specified in the notice
of the meeting. In addition to the scheduled items of business,
the meeting may consider stockholder proposals (including
proposals omitted from the Proxy Statement and form of proxy
pursuant to the proxy rules of the SEC) and matters relating to
the conduct of the meeting. As to any other business that may
properly come before the meeting, it is intended that proxies
will be voted in respect thereof in accordance with the judgment
of the persons voting such proxies.
The
Companys Solicitation of Proxies
The Proxy accompanying this Proxy Statement is solicited by the
Board. Proxies may be solicited by officers, directors, and
regular supervisory and executive employees of the Company, none
of whom will receive any additional compensation for their
services. The Company will pay persons holding shares of common
stock in their names or in the names of nominees, but not owning
such shares beneficially, such as brokerage houses, banks, and
other fiduciaries, for the expense of forwarding solicitation
materials to their principals. All of the costs of solicitation
of proxies will be paid by the Company.
Stockholders
Proposals to Be Presented at the Next Annual Meeting
Stockholders Proposals. Proposals of stockholders
intended to be presented at the Companys 2009 Annual
Stockholder Meeting (i) must be received by the Company at
its offices no later than November 24, 2008 (120 days
preceding the one year anniversary of the Mailing Date),
(ii) may not exceed 500 words, (iii) must satisfy the
conditions established by the Securities and Exchange Commission
for stockholder proposals to be included in the Companys
Proxy Statement and form of proxy for that meeting, and
(iv) must otherwise contain certain information specified
in the Companys By-laws.
Discretionary Proposals. Stockholders intending to
commence their own proxy solicitations and present proposals
from the floor of the 2009 Annual Stockholder Meeting in
compliance with
Rule 14a-4
promulgated under the Exchange Act must notify the Company of
such intentions before February 9, 2009 (the first business
day following 45 days preceding the one year anniversary of
the Mailing Date). After such date, the Companys proxy in
connection with the 2009 Annual Stockholder Meeting may confer
discretionary authority on the Board to vote.
The
Companys Website
In addition to the information about the Company and its
subsidiaries contained in this Proxy Statement, extensive
information about the Company can be found on its website
located at www.spiritaero.com,
48
including information about its management team, products and
services and its corporate governance practices. The content on
the Companys website is available for information purposes
only, and should not be relied upon for investment purposes, and
is not deemed to be incorporated by reference into this Proxy
Statement.
The Company makes available through its Internet website under
the heading Investor Relations, its Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K,
and amendments to those reports after it electronically files
such materials with the SEC. Copies of the Companys key
corporate governance documents, including its Corporate
Governance Guidelines, Code of Ethics and Business Conduct, and
charters for the Audit Committee and the Compensation Committee
are also available on the Companys website.
The Companys 2007 Annual Report, including a copy of
its Annual Report on
Form 10-K
(which is not a part of the Companys proxy soliciting
materials), excluding exhibits, is being mailed to stockholders
with this proxy statement. A copy of any or all exhibits to the
Form 10-K
will be furnished to any stockholder, without charge, upon
receipt of a phone call or written request from such person.
Such request may be made to the Companys Investor
Relations Department by writing to Spirit AeroSystems, Investor
Relations, P.O. Box 780008, Wichita, KS,
67278-0008,
or by calling
(316) 523-1797
or by sending an email request to
investorrelations@spiritaero.com.
By order of the Board of Directors.
Sincerely,
Gloria Farha Flentje
Secretary
Spirit AeroSystems Holdings, Inc.
3801 South Oliver
Wichita, Kansas 67210
March 24, 2008
49
APPENDIX A
Spirit
AeroSystems
Holdings, Inc.
Amended and
Restated Short-Term
Incentive Plan
SPIRIT
AEROSYSTEMS HOLDINGS, INC.
AMENDED
AND RESTATED SHORT-TERM INCENTIVE PLAN
Table
of Contents
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE I PURPOSE
|
|
|
A-1
|
|
Section 1.01.
|
|
Purpose
|
|
|
A-1
|
|
ARTICLE II DEFINITIONS
|
|
|
A-1
|
|
Section 2.01.
|
|
Beneficiary or Beneficiaries
|
|
|
A-1
|
|
Section 2.02.
|
|
Board of Directors
|
|
|
A-1
|
|
Section 2.03.
|
|
Code
|
|
|
A-1
|
|
Section 2.04.
|
|
Committee
|
|
|
A-1
|
|
Section 2.05.
|
|
Company
|
|
|
A-1
|
|
Section 2.06.
|
|
Effective Date
|
|
|
A-1
|
|
Section 2.07.
|
|
Employee
|
|
|
A-1
|
|
Section 2.08.
|
|
Employer
|
|
|
A-2
|
|
Section 2.09.
|
|
Participant
|
|
|
A-2
|
|
Section 2.10.
|
|
Plan
|
|
|
A-2
|
|
Section 2.11.
|
|
Plan Year
|
|
|
A-2
|
|
Section 2.12.
|
|
Separation from Service
|
|
|
A-2
|
|
Section 2.13.
|
|
Shares
|
|
|
A-2
|
|
Section 2.14.
|
|
Sole Discretion
|
|
|
A-2
|
|
ARTICLE III ELIGIBILITY
|
|
|
A-2
|
|
Section 3.01.
|
|
Eligibility
|
|
|
A-2
|
|
ARTICLE IV BENEFITS
|
|
|
A-2
|
|
Section 4.01.
|
|
Benefits
|
|
|
A-2
|
|
Section 4.02.
|
|
Grants of Shares
|
|
|
A-2
|
|
Section 4.03.
|
|
Interest in Shares
|
|
|
A-3
|
|
Section 4.04.
|
|
Conditions
|
|
|
A-3
|
|
Section 4.05.
|
|
Restriction on Transfer of Shares
|
|
|
A-3
|
|
Section 4.06.
|
|
Dividends
|
|
|
A-3
|
|
Section 4.07.
|
|
No Rights of Stockholder
|
|
|
A-3
|
|
Section 4.08.
|
|
Certificates and Legends
|
|
|
A-3
|
|
ARTICLE V PAYMENT OF BENEFITS
|
|
|
A-4
|
|
Section 5.01.
|
|
Payment of Cash Benefits
|
|
|
A-4
|
|
Section 5.02.
|
|
Payments in the Event of Death
|
|
|
A-4
|
|
ARTICLE VI SOURCE OF BENEFITS
|
|
|
A-4
|
|
Section 6.01.
|
|
Source of Benefits
|
|
|
A-4
|
|
Section 6.02.
|
|
Multiple Employers
|
|
|
A-4
|
|
ARTICLE VII ADMINISTRATION
|
|
|
A-4
|
|
Section 7.01.
|
|
Committee
|
|
|
A-4
|
|
Section 7.02.
|
|
Reliance on Certificates, etc.
|
|
|
A-5
|
|
Section 7.03.
|
|
Plan Records
|
|
|
A-5
|
|
A-i
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE VIII AMENDMENT AND TERMINATION
|
|
|
A-5
|
|
Section 8.01.
|
|
Amendment
|
|
|
A-5
|
|
Section 8.02.
|
|
Termination
|
|
|
A-5
|
|
ARTICLE IX RESTRICTIONS ON ALIENATION
|
|
|
A-5
|
|
Section 9.01.
|
|
Restrictions on Alienation
|
|
|
A-5
|
|
ARTICLE X MISCELLANEOUS
|
|
|
A-6
|
|
Section 10.01.
|
|
Effective Date
|
|
|
A-6
|
|
Section 10.02.
|
|
Payments Net of Withholding
|
|
|
A-6
|
|
Section 10.03.
|
|
Binding on Successors
|
|
|
A-6
|
|
Section 10.04.
|
|
Adoption by Other Employers
|
|
|
A-6
|
|
Section 10.05.
|
|
Minors and Incompetents
|
|
|
A-6
|
|
Section 10.06.
|
|
Erroneous Payments
|
|
|
A-7
|
|
Section 10.07.
|
|
Headings
|
|
|
A-7
|
|
Section 10.08.
|
|
Notices
|
|
|
A-7
|
|
Section 10.09.
|
|
Severability
|
|
|
A-7
|
|
Section 10.10.
|
|
No Contract of Employment
|
|
|
A-7
|
|
Section 10.11.
|
|
Certain Limitations
|
|
|
A-7
|
|
Section 10.12.
|
|
State Law
|
|
|
A-7
|
|
Section 10.13.
|
|
Government and Other Regulations
|
|
|
A-7
|
|
Section 10.14.
|
|
Nonexclusivity of the Plan
|
|
|
A-7
|
|
A-ii
SPIRIT
AEROSYSTEMS HOLDINGS, INC.
AMENDED AND RESTATED SHORT-TERM INCENTIVE PLAN
W I T N E S
S E T H: That;
WHEREAS, the Company sponsors and maintains the Spirit
AeroSystems Holdings, Inc. Short-Term Incentive Plan, pursuant
to which specified incentive benefits are provided to
Participants in the form of cash or shares of the Companys
common stock, or both, on the terms and conditions set forth
herein; and
WHEREAS, the Company desires to amend the Plan
(i) to provide for additional shares of the Companys
common stock to be available for awards under the Plan, and
(ii) to provide that all awards of stock under the Plan
after the Effective Date will be made only in shares of the
Companys Class A common stock; and
WHEREAS, it has become desirable to amend and restate the
Plan in its entirety; and
WHEREAS, the Board of Directors of the Company has
reviewed the terms and provisions hereof and found them
satisfactory; and
WHEREAS, the shareholders of the Company have approved
increasing the number of Shares available for awards under the
Plan.
NOW, THEREFORE, effective as of the Effective Date, the
Company hereby adopts this amended and restated Plan on the
terms and conditions set forth herein, which Plan will be known
as the Spirit AeroSystems Holdings, Inc. Amended and
Restated Short-Term Incentive Plan (the Plan).
ARTICLE I
PURPOSE
Section 1.01. Purpose. The purpose of the
Plan is to provide specified incentive benefits, in the form of
cash or Shares or both, to Employees who are eligible to
participate in the Plan, subject to certain conditions and
restrictions, as set forth in the Plan. Effective as of the
Effective Date, the maximum aggregate number of Shares that may
be granted to Participants under the Plan shall be
2,800,000 shares of the Companys Class A common
stock.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms shall have the
following meanings, unless the context clearly indicates
otherwise.
Section 2.01. Beneficiary or Beneficiaries means the
person, persons, entity, or entities entitled to receive any
benefits under this Plan pursuant to the designation of the
Participant (or in default of such designation) as provided in
Section 5.02 hereof.
Section 2.02. Board of Directors means the Board of
Directors of the Company.
Section 2.03. Code means the Internal Revenue Code
of 1986, as amended.
Section 2.04. Committee means the Board of Directors
or a committee appointed by, and serving at the pleasure of, the
Board of Directors for purposes of administering the Plan, which
committee shall operate under rules and procedures established
by the Board of Directors from time to time for such purpose.
Section 2.05. Company means Spirit AeroSystems
Holdings, Inc., a Delaware corporation, or its successor.
Section 2.06. Effective Date has the meaning set
forth in Section 10.01.
Section 2.07. Employee means a consultant or
independent contractor of the Employer or any individual who is
employed and compensated (by a payroll check issued directly
from the Employer or Employer agent to the Employee or direct
payroll deposit made to the Employees account by the
Employer or Employer agent) by the Employer.
A-1
Section 2.08. Employer means the Company, Spirit
AeroSystems, Inc. (or its successor), and any other entity that
adopts this Plan with the consent and approval of the Committee.
Section 2.09. Participant means an Employee who has
been designated by the Committee as eligible to participate in
this Plan pursuant to Section 3.01. Where the context
requires, the term Participant also shall include a
former Participant.
Section 2.10. Plan means this Spirit AeroSystems
Holdings, Inc. Amended and Restated Short-Term Incentive Plan,
as amended.
Section 2.11. Plan Year means the
12-month
period commencing January 1 each year.
Section 2.12. Separation from Service means the
termination of employment (including termination of a consulting
or independent contractor arrangement) with the Employer. The
term includes, but is not limited to, a termination which arises
from a Participants death, disability, discharge (with or
without cause), or voluntary termination. In the case of an
employee, the term shall not include any temporary absences due
to vacation, sickness, or other leaves of absence granted to a
Participant by the Employer. A Separation from Service shall not
be deemed to occur, however, upon a transfer involving any
combination of any entity comprising the Employer.
Section 2.13. Shares means shares of the
Companys common stock.
Section 2.14. Sole Discretion means the right and
power to decide a matter, which right may be exercised
arbitrarily at any time and from time to time.
ARTICLE III
ELIGIBILITY
Section 3.01. Eligibility. The Committee
shall have the unrestricted right and power, which may be
exercised in its Sole Discretion at any time and from time to
time, to designate Employees who are eligible to participate in
this Plan. The Committee also shall have the right, in its Sole
Discretion, to terminate an individuals future
participation in this Plan.
ARTICLE IV
BENEFITS
Section 4.01. Benefits. For each Plan
Year, the Committee may, in its Sole Discretion, establish an
individual schedule or schedules for each Participant setting
forth certain performance targets or goals for such Participant
and corresponding incentive benefits available to such
Participant under the Plan, which schedule may be revised by the
Committee at any time and from time to time, in its Sole
Discretion. Benefits may be offered under the Plan in the form
of cash, Shares, or both, in such amounts as the Committee may
determine in its Sole Discretion. No Participant shall have the
right or be offered the opportunity to elect the form or amount
of the Participants benefit under the Plan, it being
within the Sole Discretion of the Committee to determine the
form and amount of benefits to be offered under the Plan (if
any).
From and after the Effective Date, grants of Shares under the
Plan may be made only in shares of the Companys
Class A common stock.
Section 4.02. Grants of Shares. In the
event Shares are granted to a Participant under the Plan (which
Shares shall be subject to the restrictions contained in this
Plan, Restricted Shares), the Committee shall have
the unrestricted right and power, in its Sole Discretion, to
establish such terms, conditions, restrictions, or procedures
related to a grant of such Restricted Shares as the Committee
deems necessary or appropriate, including, but not limited to,
requiring, as a condition precedent to a grant of such
Restricted Shares under the Plan, that a Participant execute the
Investor Stockholders Agreement, dated as of June 16, 2005,
between the Company and its shareholders (the Stockholders
Agreement), and such other agreements with the Company
and/or other
shareholders in the Company as the Committee deems necessary or
appropriate, in such form and substance as may be satisfactory
to the Committee, in its Sole Discretion. Participation by a
Participant in any grant of Restricted Shares under the Plan
shall neither limit nor require participation by the Participant
in any other benefits under Plan, it being within the Sole
Discretion of the Committee to determine the individuals
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eligible to participate in the Plan and in a grant of benefits
under the Plan. The Restricted Shares may be either previously
issued Shares that have been reacquired by the Company or
authorized but unissued Shares, as the Board of Directors shall
from time to time determine. If any Participants interest
in Restricted Shares granted under the Plan terminates, any
Shares in which the Participant has no further interest shall
again become available to be granted under the Plan.
Section 4.03. Interest in Shares. A
Participant granted Restricted Shares shall have no interest in
those Shares upon grant and shall only acquire an interest in
those Shares upon the Participant being credited with one year
of service after the date such Shares are granted to the
Participant. A Participant shall be credited with one year of
service after the date Shares are granted to the Participant if
the Participant is continuously performing services (or deemed
to be continuously performing services) for the Employer for the
12-month
period ending on the anniversary of the date the Restricted
Shares are granted to the Participant. Restricted Shares granted
to a Participant shall be deemed to have been granted as of the
date designated and prescribed by the Committee. If a Separation
from Service occurs during the
12-month
period following the grant of a Restricted Share, the
Participants interest in such Share shall automatically
terminate and be of no further force or effect.
Notwithstanding the foregoing, the Committee may at any time, in
its Sole Discretion, credit a Participant with a year of service
after the date Restricted Shares are granted to the Participant
or otherwise increase the number of, or any Participants
interest in, Restricted Shares granted under the Plan, if the
Committee determines, in its Sole Discretion, it is in the best
interests of the Company to do so.
Section 4.04. Conditions. Shares acquired
under the Plan shall be subject to any and all terms,
conditions, and restrictions set forth in the Companys
certificate of incorporation and bylaws, as well as the
Stockholders Agreement and any other agreement entered into with
respect to such Shares.
Section 4.05. Restriction on Transfer of
Shares. Shares acquired under this Plan shall be
subject to such conditions and restrictions on transfer as are
set forth in the Companys certificate of incorporation and
bylaws, as well as the Stockholders Agreement and any other
agreement entered into with respect to such Shares. Any
voluntary or involuntary sale, assignment, transfer, or exchange
of Shares acquired under the Plan that fails to satisfy or
comply with any applicable condition or restriction on such
sale, assignment, transfer, or exchange shall be void and of no
effect and shall not bind or be recognized by the Company. No
Shares may be transferred unless the transferee first executes,
acknowledges, and delivers to the Company such instruments as
the Company may deem necessary or advisable to effect the
transfer.
Section 4.06. Dividends. Dividends
declared by the Board of Directors with respect to Shares shall,
with respect to any Restricted Shares, be cumulated and paid to
the Participant only if and at the time, and to the extent that,
the Participant acquires an interest in any such Restricted
Shares in accordance with this Article IV.
Section 4.07. No Rights of
Stockholder. Restricted Shares shall not be
subject to transfer or assignment, and a Participant shall not
have the rights of a stockholder in the Company with respect to
Restricted Shares unless and until the Participant acquires an
interest in such Restricted Shares in accordance with this
Article IV.
Section 4.08. Certificates and
Legends. The Company may, but shall not be
required, to issue certificates with respect to Restricted
Shares granted under the Plan. If certificates representing
Restricted Shares are issued, such certificates will bear
(until, in the opinion of counsel, which opinion must be
reasonably satisfactory in form and substance to counsel for the
Company, it is no longer necessary or required) the following
legend:
The securities represented by this document are subject to the
terms, conditions, restrictions, and contingencies, including
restrictions on transfer and risk of forfeiture, contained in
the Spirit AeroSystems Holdings, Inc. Amended and Restated
Short-Term Incentive Plan, as amended from time to time, a copy
of which is on file at the principal office of Spirit
AeroSystems Holdings, Inc.
A-3
ARTICLE V
PAYMENT OF BENEFITS
Section 5.01. Payment of Cash
Benefits. To the extent a Participant is entitled
to receive a cash benefit under Section 4.01 hereof with
respect to services performed during a Plan Year, such benefit
shall be payable in a lump sum as soon as administratively
practicable after the end of such Plan Year, but in no event
later than
21/2
months after the end of such Plan Year, subject to any timely
election to defer payment of all or part of such benefit in
accordance with the terms and provisions of the Spirit
AeroSystems Holdings, Inc. Deferred Compensation Plan.
Section 5.02. Payments in the Event of
Death. In the event a Participant dies before
receiving all benefits payable to Participant under the Plan,
payment of the remaining amounts shall be made to the
Participants Beneficiary. The Beneficiary of a Participant
shall be the person, persons, entity, or entities designated by
the Participant on a beneficiary designation form provided by
the Committee. A Participant shall have the right to change the
Participants Beneficiary designation at any time;
provided, however, that no change of a beneficiary
shall be effective until received and accepted by the Committee.
In the event a Participant dies without having a valid
Beneficiary designation in force, or in the event no designated
Beneficiary is alive or in being at the time of the
Participants death, the Participants Beneficiary
shall be deemed to be the Participants surviving spouse
or, if the Participant leaves no surviving spouse, the
Participants estate.
If the Committee has any doubt as to the proper person(s) or
entity(ies) to receive payments hereunder, it shall have the
right to withhold payment until the matter is finally
adjudicated. Any payment made in good faith and in accordance
with the provisions of the Plan and a Participants
Beneficiary designation form shall fully discharge the Employer
from all further obligations with respect to such payment.
ARTICLE VI
SOURCE OF BENEFITS
Section 6.01. Source of Benefits. Amounts
payable hereunder shall be paid exclusively from the general
assets of the Employer. The Employers obligation under
this Plan shall constitute a mere promise to pay benefits in the
future, and no person entitled to payment hereunder shall have
any claim, right, security interest, or other interest in any
fund, trust, account, insurance contract, or other asset of
Employer. The Employer is not obligated to invest in any
specific assets or fund, but it may invest in any asset or
assets it deems advisable in order to provide a means for the
payment of any liabilities under this Plan and may contribute
amounts to a trust conforming to the requirements of Revenue
Procedure
92-64, as
amended. With respect to cash benefits (if any), each
Participant shall be an unsecured general creditor of the
Employer and shall have no interest whatsoever in any such
assets or fund. The Employers liability for the payment of
benefits hereunder shall be evidenced only by this Plan.
Section 6.02. Multiple Employers. In the
event a Participant is or has been employed by two or more
Employers and is entitled to a benefit from more than one
Employer under this Plan, the liability for the payment of such
Participants benefits under this Plan shall be apportioned
among the Employers based upon a determination made by the
Committee, in its Sole Discretion. A Participant may only secure
payment of benefits from the Employer to whom the Committee has
apportioned liability for the benefits.
ARTICLE VII
ADMINISTRATION
Section 7.01. Committee. The Committee
shall have full power to administer this Plan in all of its
details, which powers shall include, but are not limited to, the
authority, in addition to all other powers provided by this
Plan, to:
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A.
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Determine in its Sole Discretion the eligibility of any
individual to participate in the Plan;
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B.
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Make discretionary interpretations regarding the terms of the
Plan and make factual findings with respect to any issue arising
under the Plan, including, but not limited to, the power to
determine whether an individual is eligible to participate in
the Plan or receive benefits under the Plan and whether an
individual has incurred a Separation from Service, with its
interpretation to be final and conclusive;
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C.
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Compute the amounts payable for any Participant or other person
in accordance with the provisions of the Plan, determine the
manner and time for making such payments in accordance with the
provisions of the Plan, and determine and authorize the person
or persons to whom such payments will be paid;
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D.
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Receive and review claims for benefits and render decisions
respecting such claims under the Plan;
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E.
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Make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of this
Plan;
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F.
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Appoint such agents, specialists, legal counsel, accountants,
consultants, or other persons as the Committee deems advisable
to assist in administering the Plan; and
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G.
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Maintain all records of the Plan.
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Section 7.02. Reliance on Certificates,
etc. The members of the Committee, the Board of
Directors, and the officers and employees of the Company shall
be entitled to rely on all certificates and reports made by any
duly appointed accountants and on all opinions given by any duly
appointed legal counsel. Such legal counsel may be counsel for
the Employer.
Section 7.03. Plan Records. In all
matters related to administration of the Plan, the official
determinations and records of the Plan, as made, identified, and
maintained by the Committee, in its Sole Discretion, will
control. In the event of any discrepancy between the official
determinations and records of the Plan and any other document or
communication, the official determinations and records of the
Plan will control.
ARTICLE VIII
AMENDMENT AND TERMINATION
Section 8.01. Amendment. The Board of
Directors reserves the right, at will, at any time and from time
to time, to modify, alter, or amend this Plan (including without
limitation a retroactive modification, alteration, or
amendment), in whole or in part, and any such modification,
alteration, or amendment shall be binding upon the Company, the
Committee, each Participant, any adopting Employer, and all
other persons; provided, however, that no
amendment shall, without the Participants (or present
interest Beneficiarys) written consent, reduce the amount
of the benefit that a Participant (or present interest
Beneficiary) is then entitled to receive (the same as if the
Participant had incurred a Separation from Service as of such
date), including, but not limited to, any interest in Shares the
Participant may have acquired under the Plan, subject to the
terms and conditions of the Companys certificate of
incorporation and bylaws, the Stockholders Agreement, and any
other agreement entered into with respect to such Shares.
Notwithstanding the foregoing, no consent shall be required and
the Board of Directors shall have the right to modify, alter, or
amend this Plan (including a retroactive modification,
alteration or amendment), at will and at any time, if it
determines, in its Sole Discretion, that such amendment is
necessary to comply with applicable law, which shall include,
but shall not be limited to, the right to retroactively apply
any amendments necessary to comply with any provision of the
Code or any judicial or administrative guidance.
Section 8.02. Termination. The Company
will have no obligation whatsoever to maintain this Plan for any
given length of time and may, at will and at any time,
discontinue or terminate this Plan in whole or in part. In
addition, an adopting Employer shall have the right to
discontinue or terminate its participation in this Plan as to
its Employees. Upon a complete or partial termination of the
Plan, each affected Participant (and present interest
Beneficiary) shall be entitled to receive benefits in accordance
with Article V. Further, upon termination of the Plan, the
rights of each Participant to acquire an interest in the Shares
granted to such Participant under the Plan shall terminate.
ARTICLE IX
RESTRICTIONS ON ALIENATION
Section 9.01. Restrictions on
Alienation. Until the actual receipt of any
benefit under this Plan by a Participant or Beneficiary, no
right or benefit under the Plan shall be subject in any manner
to anticipation, alienation, sale, assignment, transfer, pledge,
encumbrance, garnishment, execution, levy, or charge of any
A-5
kind, whether voluntary or involuntary, including assignment or
transfer to satisfy any liability for alimony or other payments
for property settlement or support of a spouse or former spouse
or other relative of a Participant or Beneficiary, whether upon
divorce, legal separation, or otherwise. Any attempt to
anticipate, alienate, sell, assign, transfer, pledge, encumber,
garnish, execute upon, levy upon, or charge any right or benefit
under the Plan shall be void. No right or benefit hereunder
shall in any manner be liable for or subject to the debts,
contracts, liabilities, engagements, or torts of the person
entitled to such benefit, and no right or benefit hereunder
shall be considered an asset of such person in the event of his
or her divorce, insolvency, or bankruptcy. The rights of a
Participant or a Beneficiary hereunder shall not be subject in
any manner to attachment or other legal process for the debts of
the Participant or such Beneficiary.
ARTICLE X
MISCELLANEOUS
Section 10.01. Effective Date. This
amended and restated Plan shall be effective from and after the
later of (i) the date of its adoption and approval by the
Board of Directors and (ii) the date of approval by the
stockholders of the Company of the increased number of shares
available for awards under the Plan (the Effective
Date).
Section 10.02. Payments Net of
Withholding. Notwithstanding any other provision
of the Plan, all transfers or payments shall be net of any
amount sufficient to satisfy all federal, state, and local
withholding tax requirements, and shall also be net of all
amounts owed by Participant to the Employer.
With respect to Shares granted to a Participant under this Plan,
any required withholdings or reductions may be accomplished by
any of the following methods (or any combination of the
following methods), as determined by the Committee in its Sole
Discretion: (i) the total number of Shares granted to the
Participant may be reduced by a number of whole or fractional
Shares (as determined by the Committee, in its Sole Discretion),
the value of which will be applied to satisfy such withholdings
or reductions, but if the value of the Shares so withheld
exceeds the amount of such withholdings or reductions, such
excess will be paid in cash to the Participant within
21/2
months after the date the withholding occurs; (ii) the
amount of the withholdings or reductions may be withheld from
other amounts payable to the Participant by the Employer,
including, but not limited to, other compensation;
(iii) the Participant may be required, as a condition
precedent to transfer or release of the Shares, to make a
payment to the Employer in an amount equal to the amount of the
withholdings or reductions (e.g., by selling a sufficient number
of Shares); or (iv) such other method or combination of
methods as the Committee deems appropriate, in its Sole
Discretion.
The Committee will have the right, in its Sole Discretion, to
require, as a condition precedent to the transfer or release of
any Shares granted under this Plan, that the transferee execute
such agreements or documents (e.g., power of attorney) as the
Committee deems necessary or appropriate.
Section 10.03. Binding on
Successors. This Plan shall be binding upon all
Participants, their respective heirs, and personal
representatives, and upon the Employer, its successors, and
assigns.
Section 10.04. Adoption by Other
Employers. Any employer, corporation, or other
entity with employees now in existence or hereafter formed or
acquired, which is not already an Employer under this Plan, and
which is otherwise legally eligible, may in the future, with the
consent and approval of the Company, adopt this Plan, and
thereby, from and after the specified effective date, become an
Employer under this Plan. However, the sole and absolute right
to amend the Plan is reserved to the Company. It shall not be
necessary for the adopting corporation or entity to sign or
execute the original or the amended Plan documents. The
administrative powers and control of the Company as provided in
the Plan, including the sole right of amendment and of
appointment and removal of the Committee, shall not be
diminished by reason of the participation of any such adopting
entity in this Plan.
Section 10.05. Minors and
Incompetents. If any person to whom a benefit is
payable under this Plan is legally incompetent, either by reason
of age or by reason of mental or physical disability, the
Committee is authorized to cause the payments becoming due to
such person to be made to another for his or her benefit without
responsibility of the Company, the Employer, the Committee or
the Board of Directors to see to the
A-6
application of such payments. Payments made pursuant to this
authority shall constitute a complete discharge of all
obligations hereunder.
Section 10.06. Erroneous Payments. If any
person receives any amount of benefits that the Committee in its
Sole Discretion later determines that such person was not
entitled to receive under the terms of the Plan, such person
shall be required to immediately make reimbursement to the
Employer. In addition, the Committee shall have the right to
offset any future claims for benefits under the Plan against
amounts that person was not otherwise entitled to receive.
Section 10.07. Headings. The headings
used in this Plan are inserted for reference purposes only and
shall not be deemed to limit or affect in any way the meaning or
interpretation of any of the terms or provisions herein.
Section 10.08. Notices. Any notices or
communications permitted or required to be given herein by any
Participant, the Company, the Committee, the Employer, or any
other person shall be deemed given either (i) when
delivered, or (ii) three days after being placed in the
United States mail in an envelope addressed to the last
communicated address of the person to whom the notice is being
given, with adequate postage thereon prepaid.
Section 10.09. Severability. If any
provision of this Plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other
provisions thereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
Section 10.10. No Contract of
Employment. Nothing contained herein shall be
construed to constitute a contract of employment between any
employee and any employer. Nothing herein contained shall be
deemed to give any employee the right to be retained in the
employ of an employer or to interfere with the right of the
employer to discharge any employee at any time without regard to
the effect such discharge might have on the employee as a
Participant under this Plan.
Section 10.11. Certain Limitations. In
the event the Employer is subject to legal limitations on the
payment of benefits, then benefit payments hereunder shall be
reduced or eliminated, as the case may be, to comply with such
legal limitations.
Section 10.12. State Law. This Plan and
all agreements entered into under the Plan shall be governed,
construed, administered, and regulated in all respects under the
laws of the State of Delaware, without regard to the principles
of conflicts of law, to the extent such laws are not preempted
by the laws of the United States of America. Any action
concerning the Plan or any agreement entered into under the Plan
shall be maintained exclusively in the state or federal courts
in Delaware.
Section 10.13. Government and Other
Regulations. The obligation of the Company to
grant or sell and deliver Shares under the Plan shall be subject
to all applicable laws, rules, and regulations and such
approvals by any governmental agencies as may be required,
including, but not limited to, the effectiveness of a
registration statement under the Securities Act of 1933, as
amended, as deemed necessary or appropriate by legal counsel for
the Company.
Section 10.14. Nonexclusivity of the
Plan. The adoption of the Plan by the Board of
Directors shall not be construed as creating any limitations on
the power of the Board of Directors to adopt such other
incentive arrangements as it may deem desirable.
A-7
IN WITNESS WHEREOF, the Company has caused this amended
and restated Plan to be executed by a duly authorized officer as
of the Effective Date.
SPIRIT AEROSYSTEMS HOLDINGS, INC.
Name:
A-8
APPENDIX B
Spirit
AeroSystems
Holdings, Inc.
Second Amended and
Restated Long-Term
Incentive Plan
SPIRIT
AEROSYSTEMS HOLDINGS, INC.
SECOND
AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
Table
of Contents
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Page
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ARTICLE I PURPOSE
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B-1
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Section 1.01.
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Purpose
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B-1
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ARTICLE II DEFINITIONS
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B-1
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Section 2.01.
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Board of Directors
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B-1
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Section 2.02.
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Code
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B-1
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Section 2.03.
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Committee
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B-1
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Section 2.04.
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Company
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B-1
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Section 2.05.
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Effective Date
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B-1
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Section 2.06.
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Employee
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B-1
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Section 2.07.
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Employer
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B-1
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Section 2.08.
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Participant
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B-2
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Section 2.09.
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Plan
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B-2
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Section 2.10.
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Separation from Service
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B-2
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Section 2.11.
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Shares
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B-2
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Section 2.12.
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Sole Discretion
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B-2
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ARTICLE III ELIGIBILITY
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B-2
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Section 3.01.
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Eligibility
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B-2
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ARTICLE IV GRANTS OF SHARES
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B-2
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Section 4.01.
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Grants
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B-2
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Section 4.02.
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Interest in Shares
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B-3
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Section 4.03.
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Conditions
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B-3
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Section 4.04.
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Restriction on Transfer of Shares
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B-3
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Section 4.05.
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Dividends
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B-3
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Section 4.06.
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No Rights of Stockholder
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B-3
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Section 4.07.
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Certificates and Legends
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B-3
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ARTICLE V ADMINISTRATION
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B-3
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Section 5.01.
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Committee
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B-3
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Section 5.02.
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Reliance on Certificates, etc.
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B-4
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Section 5.03.
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Plan Records
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B-4
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ARTICLE VI AMENDMENT AND TERMINATION
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B-4
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Section 6.01.
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Amendment
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B-4
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Section 6.02.
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Termination
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B-4
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ARTICLE VII MISCELLANEOUS
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B-4
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Section 7.01.
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Effective Date
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B-4
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Section 7.02.
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Payments Net of Withholding
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B-5
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Section 7.03.
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Binding on Successors
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B-5
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Section 7.04.
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Adoption by Other Employers
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B-5
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Section 7.05.
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Headings
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B-5
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Section 7.06.
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Notices
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B-5
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Section 7.07.
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Severability
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B-5
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Section 7.08.
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No Contract of Employment
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B-5
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Section 7.09.
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Certain Limitations
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B-6
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Section 7.10.
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State Law
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B-5
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Section 7.11.
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Government and Other Regulations
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Section 7.12.
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Nonexclusivity of the Plan
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SPIRIT
AEROSYSTEMS HOLDINGS, INC.
SECOND
AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
W I T N E S
S E T H: That;
WHEREAS, the Company sponsors and maintains the Spirit
AeroSystems Holdings, Inc. Amended and Restated Long-Term
Incentive Plan (the Plan), pursuant to which
specified incentive benefits are provided to Participants in the
form of shares of the Companys common stock, on the terms
and conditions set forth herein; and
WHEREAS, the Company desires to amend the Plan
(i) to provide for additional shares of the Companys
common stock to be available for awards under the Plan, and
(ii) to provide that all awards of stock under the Plan
after the Effective Date will be made only in shares of the
Companys Class A common stock; and
WHEREAS, it has become desirable to amend and restate the
Plan in its entirety; and
WHEREAS, the Board of Directors of the Company has
reviewed the terms and provisions hereof and found them
satisfactory; and
WHEREAS, the shareholders of the Company have approved
increasing the number of Shares available for awards under the
Plan.
NOW, THEREFORE, effective as of the Effective Date, the
Company hereby adopts this second amended and restated Plan on
the terms and conditions set forth herein, which Plan will be
known as the Spirit AeroSystems Holdings, Inc. Second
Amended and Restated Long-Term Incentive Plan.
ARTICLE I
PURPOSE
Section 1.01. Purpose. The purpose of the
Plan is to provide specified benefits in the form of Shares to
Employees who are eligible to participate in the Plan, subject
to certain conditions and restrictions, as set forth in the
Plan. Effective as of the Effective Date, the maximum aggregate
number of Shares that may be granted to Participants under the
Plan shall be 3,400,000 shares of the Companys
Class A common stock.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms shall have the
following meanings, unless the context clearly indicates
otherwise.
Section 2.01. Board of Directors means the Board of
Directors of the Company.
Section 2.02. Code means the Internal Revenue Code
of 1986, as amended.
Section 2.03. Committee means the Board of Directors
or a committee appointed by, and serving at the pleasure of, the
Board of Directors for purposes of administering the Plan, which
committee shall operate under rules and procedures established
by the Board of Directors from time to time for such purpose.
Section 2.04. Company means Spirit AeroSystems
Holdings, Inc., a Delaware corporation, or its successor.
Section 2.05. Effective Date has the meaning set
forth in Section 7.01.
Section 2.06. Employee means a consultant or
independent contractor of the Employer or any individual who is
employed and compensated (by a payroll check issued directly
from the Employer or Employer agent to the Employee or direct
payroll deposit made to the Employees account by the
Employer or Employer agent) by the Employer.
Section 2.07. Employer means the Company, Spirit
AeroSystems, Inc. (or its successor), and any other entity that
adopts this Plan with the consent and approval of the Committee.
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Section 2.08. Participant means an Employee who has
been designated by the Committee as eligible to participate in
this Plan pursuant to Section 3.01. Where the context
requires, the term Participant also shall include a
former Participant.
Section 2.09. Plan means this Spirit AeroSystems
Holdings, Inc. Second Amended and Restated Long-Term Incentive
Plan, as amended.
Section 2.10. Separation from Service means the
termination of employment (including termination of a consulting
or independent contractor arrangement) with the Employer. The
term includes, but is not limited to, a termination which arises
from a Participants death, disability, discharge (with or
without cause), or voluntary termination. In the case of an
employee, the term shall not include any temporary absences due
to vacation, sickness, or other leaves of absence granted to a
Participant by the Employer. A Separation from Service shall not
be deemed to occur, however, upon a transfer involving any
combination of any entity comprising the Employer.
Section 2.11. Shares means shares of the
Companys common stock.
Section 2.12. Sole Discretion means the right and
power to decide a matter, which right may be exercised
arbitrarily at any time and from time to time.
ARTICLE III
ELIGIBILITY
Section 3.01. Eligibility. The Committee
shall have the unrestricted right and power, which may be
exercised in its Sole Discretion at any time and from time to
time, to designate Employees who are eligible to participate in
this Plan. The Committee also shall have the right, in its Sole
Discretion, to terminate an individuals future
participation in this Plan.
ARTICLE IV
GRANTS OF SHARES
Section 4.01. Grants. The Committee may,
in its Sole Discretion, establish an individual schedule or
schedules for each Participant setting forth certain performance
targets or goals for such Participant and a corresponding grant
of Shares to a Participant under the Plan, which schedule may be
revised by the Committee at any time and from time to time, in
its Sole Discretion. In addition, the Committee may, in its Sole
Discretion, make such other grants of Shares to Participants as
it deems desirable from time to time.
From and after the Effective Date, grants of Shares under the
Plan may be made only in shares of the Companys
Class A common stock.
In the event Shares are granted to a Participant under the Plan
(which Shares shall be subject to the restrictions contained in
this Plan, Restricted Shares), the Committee shall
have the unrestricted right and power, in its Sole Discretion,
to establish such terms, conditions, restrictions, or procedures
related to a grant of such Restricted Shares as the Committee
deems necessary or appropriate, including, but not limited to,
requiring, as a condition precedent to a grant of such
Restricted Shares under the Plan, that a Participant execute the
Investor Stockholders Agreement, dated as of June 16, 2005,
between the Company and its shareholders (the Stockholders
Agreement), and such other agreements with the Company
and/or other
shareholders in the Company as the Committee deems necessary or
appropriate, in such form and substance as may be satisfactory
to the Committee in its Sole Discretion. Participation by a
Participant in any grant of Restricted Shares under the Plan
shall neither limit nor require participation by the Participant
in any other benefits under the Plan, it being within the Sole
Discretion of the Committee to determine the individuals
eligible to participate in the Plan and in a grant of Shares
under the Plan. The Restricted Shares may be either previously
issued Shares that have been reacquired by the Company or
authorized but unissued Shares, as the Board of Directors shall
from time to time determine. If any Participants interest
in Restricted Shares granted under the Plan terminates, any
Shares in which the Participant has no further interest shall
again become available to be granted under the Plan.
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Section 4.02. Interest in Shares. A
Participant granted Restricted Shares on or after
December 1, 2006 shall have no interest in those Shares
upon grant and shall only acquire an interest in those Shares
upon the Participant being credited with such service as the
Committee may determine in its Sole Discretion after the date
such Shares are granted to the Participant. Restricted Shares
granted to a Participant shall be deemed to have been granted as
of the date designated and prescribed by the Committee. If a
Separation from Service occurs following the grant of a
Restricted Share and prior to completion of the prescribed
service requirement, the Participants interest in such
Share shall automatically terminate and be of no further force
or effect.
Restricted Shares granted prior to December 1, 2006 shall
be subject to the terms and conditions of this Plan at the time
such Restricted Shares were granted.
Notwithstanding the foregoing, the Committee may at any time, in
its Sole Discretion, credit a Participant service after the date
Restricted Shares are granted to the Participant or otherwise
increase the number of, or any Participants interest in,
Restricted Shares granted under the Plan, if the Committee
determines, in its Sole Discretion, it is in the best interests
of the Company to do so.
Section 4.03. Conditions. Shares acquired
under the Plan shall be subject to any and all terms,
conditions, and restrictions set forth in the Companys
certificate of incorporation and bylaws, as well as the
Stockholders Agreement and any other agreement entered into with
respect to such Shares.
Section 4.04. Restriction on Transfer of
Shares. Shares acquired under this Plan shall be
subject to such conditions and restrictions on transfer as are
set forth in the Companys certificate of incorporation and
bylaws, as well as the Stockholders Agreement, and any other
agreement entered into with respect to such Shares. Any
voluntary or involuntary sale, assignment, transfer, or exchange
of Shares acquired under the Plan that fails to satisfy or
comply with any applicable condition or restriction on such
sale, assignment, transfer, or exchange shall be void and of no
effect and shall not bind or be recognized by the Company. No
Shares may be transferred unless the transferee first executes,
acknowledges, and delivers to the Company such instruments as
the Company may deem necessary or advisable to effect the
transfer.
Section 4.05. Dividends. Dividends
declared by the Board of Directors with respect to Shares shall,
with respect to any Restricted Shares, be cumulated and paid to
the Participant only if and at the time, and to the extent that,
the Participant acquires an interest in any such Restricted
Shares in accordance with this Article IV.
Section 4.06. No Rights of
Stockholder. Restricted Shares shall not be
subject to transfer or assignment, and a Participant shall not
have the rights of a stockholder in the Company with respect to
Restricted Shares unless and until the Participant acquires an
interest in such Restricted Shares in accordance with this
Article IV.
Section 4.07. Certificates and
Legends. The Company may, but shall not be
required, to issue certificates with respect to Restricted
Shares granted under the Plan. If certificates representing
Restricted Shares are issued, such certificates will bear
(until, in the opinion of counsel, which opinion must be
reasonably satisfactory in form and substance to counsel for the
Company, it is no longer necessary or required) the following
legend:
The securities represented by this document are subject to the
terms, conditions, restrictions, and contingencies, including
restrictions on transfer and risk of forfeiture, contained in
the Spirit AeroSystems Holdings, Inc. Second Amended and
Restated Long-Term Incentive Plan, as amended from time to time,
a copy of which is on file at the principal office of Spirit
AeroSystems Holdings, Inc.
ARTICLE V
ADMINISTRATION
Section 5.01. Committee. The Committee
shall have full power to administer this Plan in all of its
details, which powers shall include, but are not limited to, the
authority, in addition to all other powers provided by this
Plan, to:
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A.
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Determine in its Sole Discretion the eligibility of any
individual to participate in the Plan;
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B.
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Make discretionary interpretations regarding the terms of the
Plan and make factual findings with respect to any issue arising
under the Plan, including, but not limited to, the power to
determine
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whether an individual is eligible to participate in the Plan or
receive benefits under the Plan and whether an individual has
incurred a Separation from Service, with its interpretation to
be final and conclusive;
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C.
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Compute the amounts payable for any Participant or other person
in accordance with the provisions of the Plan, determine the
manner and time for making such payments in accordance with the
provisions of the Plan, and determine and authorize the person
or persons to whom such payments will be paid;
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D.
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Receive and review claims for benefits and render decisions
respecting such claims under the Plan;
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E.
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Make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of this
Plan;
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F.
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Appoint such agents, specialists, legal counsel, accountants,
consultants, or other persons as the Committee deems advisable
to assist in administering the Plan; and
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G.
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Maintain all records of the Plan.
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Section 5.02. Reliance on Certificates,
etc. The members of the Committee, the Board of
Directors, and the officers and employees of the Company shall
be entitled to rely on all certificates and reports made by any
duly appointed accountants and on all opinions given by any duly
appointed legal counsel. Such legal counsel may be counsel for
the Employer.
Section 5.03. Plan Records. In all
matters related to administration of the Plan, the official
determinations and records of the Plan, as made, identified, and
maintained by the Committee, in its Sole Discretion, will
control. In the event of any discrepancy between the official
determinations and records of the Plan and any other document or
communication, the official determinations and records of the
Plan will control.
ARTICLE VI
AMENDMENT AND TERMINATION
Section 6.01. Amendment. The Board of
Directors reserves the right, at will, at any time and from time
to time, to modify, alter, or amend this Plan (including without
limitation a retroactive modification, alteration, or
amendment), in whole or in part, and any such modification,
alteration, or amendment shall be binding upon the Company, the
Committee, each Participant, any adopting Employer, and all
other persons; provided, however, that no
amendment shall, without the Participants (or present
interest Beneficiarys) written consent, reduce the amount
of Shares that a Participant (or present interest Beneficiary)
is then entitled to receive (the same as if the Participant had
incurred a Separation from Service as of such date), including,
but not limited to, any interest in Shares the Participant may
have acquired under the Plan, subject to the terms and
conditions of the Companys certificate of incorporation
and bylaws, the Stockholders Agreement, and any other agreement
entered into with respect to such Shares. Notwithstanding the
foregoing, no consent shall be required and the Board of
Directors shall have the right to modify, alter, or amend this
Plan (including a retroactive modification, alteration or
amendment), at will and at any time, if it determines, in its
Sole Discretion, that such amendment is necessary to comply with
applicable law, which shall include, but shall not be limited
to, the right to retroactively apply any amendments necessary to
comply with any provision of the Code or any judicial or
administrative guidance.
Section 6.02. Termination. The Company
will have no obligation whatsoever to maintain this Plan for any
given length of time and may, at will and at any time,
discontinue or terminate this Plan in whole or in part. In
addition, an adopting Employer shall have the right to
discontinue or terminate its participation in this Plan as to
its Employees. Further, upon termination of the Plan, the rights
of each Participant to acquire an interest in the Shares granted
to such Participant under the Plan shall terminate.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Effective Date. This second
amended and restated Plan shall be effective from and after the
later of (i) the date of its adoption and approval by the
Board of Directors and (ii) the date of approval by the
B-4
stockholders of the Company of the increased number of shares
available for awards under the Plan (the Effective
Date).
Section 7.02. Payments Net of
Withholding. Notwithstanding any other provision
of the Plan, all transfers shall be net of any amount sufficient
to satisfy all federal, state, and local withholding tax
requirements, and shall also be net of all amounts owed by
Participant to the Employer.
With respect to Shares granted to a Participant under this Plan,
any required withholdings or reductions may be accomplished by
any of the following methods (or any combination of the
following methods), as determined by the Committee in its Sole
Discretion: (i) the total number of Shares granted to the
Participant may be reduced by a number of whole or fractional
Shares (as determined by the Committee, in its Sole Discretion),
the value of which will be applied to satisfy such withholdings
or reductions, but if the value of the Shares so withheld
exceeds the amount of such withholdings or reductions, such
excess will be paid in cash to the Participant within
21/2
months after the date the withholding occurs; (ii) the
amount of the withholdings or reductions may be withheld from
other amounts payable to the Participant by the Employer,
including, but not limited to, other compensation;
(iii) the Participant may be required, as a condition
precedent to transfer or release of the Shares, to make a
payment to the Employer in an amount equal to the amount of the
withholdings or reductions (e.g., by selling a sufficient number
of Shares); or (iv) such other method or combination of
methods as the Committee deems appropriate, in its Sole
Discretion.
The Committee will have the right, in its Sole Discretion, to
require, as a condition precedent to the transfer or release of
any Shares granted under this Plan, that the transferee execute
such agreements or documents (e.g., power of attorney) as the
Committee deems necessary or appropriate.
Section 7.03. Binding on Successors. This
Plan shall be binding upon all Participants, their respective
heirs, and personal representatives, and upon the Employer, its
successors, and assigns.
Section 7.04. Adoption by Other
Employers. Any employer, corporation or other
entity with employees now in existence or hereafter formed or
acquired, which is not already an Employer under this Plan, and
which is otherwise legally eligible, may in the future, with the
consent and approval of the Company, adopt this Plan, and
thereby, from and after the specified effective date, become an
Employer under this Plan. However, the sole and absolute right
to amend the Plan is reserved to the Company. It shall not be
necessary for the adopting corporation or entity to sign or
execute the original or the amended Plan documents. The
administrative powers and control of the Company as provided in
the Plan, including the sole right of amendment and of
appointment and removal of the Committee, shall not be
diminished by reason of the participation of any such adopting
entity in this Plan.
Section 7.05. Headings. The headings used
in this Plan are inserted for reference purposes only and shall
not be deemed to limit or affect in any way the meaning or
interpretation of any of the terms or provisions herein.
Section 7.06. Notices. Any notices or
communications permitted or required to be given herein by any
Participant, the Company, the Committee, the Employer, or any
other person shall be deemed given either (i) when
delivered, or (ii) three days after being placed in the
United States mail in an envelope addressed to the last
communicated address of the person to whom the notice is being
given, with adequate postage thereon prepaid.
Section 7.07. Severability. If any
provision of this Plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other
provisions thereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
Section 7.08. No Contract of
Employment. Nothing contained herein shall be
construed to constitute a contract of employment between any
employee and any employer. Nothing herein contained shall be
deemed to give any employee the right to be retained in the
employ of an employer or to interfere with the right of the
employer to discharge any employee at any time without regard to
the effect such discharge might have on the employee as a
Participant under this Plan.
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Section 7.09. Certain Limitations. In the
event the Employer is subject to legal limitations on the
payment of benefits, then benefit payments hereunder shall be
reduced or eliminated, as the case may be, to comply with such
legal limitations.
Section 7.10. State Law. This Plan and
all agreements entered into under the Plan shall be governed,
construed, administered, and regulated in all respects under the
laws of the State of Delaware, without regard to the principles
of conflicts of law, to the extent such laws are not preempted
by the laws of the United States of America. Any action
concerning the Plan or any agreement entered into under the Plan
shall be maintained exclusively in the state or federal courts
in Delaware.
Section 7.11. Government and Other
Regulations. The obligation of the Company to
grant or sell and deliver Shares under the Plan shall be subject
to all applicable laws, rules, and regulations and such
approvals by any governmental agencies as may be required,
including, but not limited to, the effectiveness of a
registration statement under the Securities Act of 1933, as
amended, as deemed necessary or appropriate by legal counsel for
the Company.
Section 7.12. Nonexclusivity of the
Plan. The adoption of the Plan by the Board of
Directors shall not be construed as creating any limitations on
the power of the Board of Directors to adopt such other
incentive arrangements as it may deem desirable.
B-6
IN WITNESS WHEREOF, the Company has caused this second
amended and restated Plan to be executed by a duly authorized
officer as of the Effective Date.
SPIRIT AEROSYSTEMS HOLDINGS, INC.
Name:
B-7
Votes must be indicated Ple ase x Mark, Sign, Date and Return the Proxy Card Promptly Using
the Enclosed Envelope. Mark Here (x) in Black or Blue ink. for Address Change or Comments SEE
REVERSE SIDE SPIRIT AEROSYSTEMS HOLDINGS, INC. The Board of Directors recommends a vote FOR the
listed nominees and FOR Proposals 2 4. FOR WITHHELD EXCEPTIONS* ALL FOR ALL FOR AGAINST ABSTAIN
1. Election of Directors: 2. Approve amendments to the Companys Short-Term Incentive Plan. Nomin
ees: FOR AGAINST ABSTAIN 0 1 Charles L. Chadwell 06 Ronald Kadish 3 . Approve amendments to
the Companys Long-Term 0 2 Ivor Evans 07 Francis Raborn 0 3 Paul Fulchino 08 Jeffrey
L. Turner Incentive Plan. 0 4 Richard Gephardt 09 James L. Welch FOR AGAINST ABSTAIN 0 5
Robert Johnson 10 Nigel Wright 4. Ratify the sele ction of PricewaterhouseCoopers LLP
(INSTRUCTIONS: To withhold authorit y to vote for any in dividual nominee, mark the as the
Companys n i dependent registered public Exceptions box and write that nominees name n i the
space provided below. accounting firm for fiscal year 2008. *Exceptions ___
Signature Signature Date NOTE: Please sign exactly as name appears on your account. If the shares
are registered in the names of two or more persons, each should sign. If acting as attorney,
executor, trustee, or in another representative capacity, sign name and title. FOLD AND DETACH HERE
Choose MLinkSM for fast, easy and secure 24/7 onlin e access to your future proxy materia ls, n i
vestment plan statements, tax documents and more. Simply log on to Investor ServiceDirect® at
www.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you through
enrollment. |
PROXY / VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS SPIRIT AEROSYSTEMS
HOLDINGS, INC. ANNUAL MEETING OF STOCKHOLDERS APRIL 22, 2008 Each signatory on the reverse side
hereby appoin ts Gloria Farha Flentje and Nigel Wrig ht, and each of them, with the power of
substitutio n, proxies for the undersigned and authorizes them to represent and vote al of the
shares of stock of Spirit AeroSystems Hold n i gs, Inc., which the undersigned may be entit e l d
to vote at the Annual Meeting of Stockhold ers to be held on Tuesday, April 22, 2008 (the
Meeting), and at any adjournment thereof, with respect to all of the proposals n i dicated on the
reverse side of this card, and with discretio nary authority as to any other matters that may
properly come before the Meeting, in accordance with and as describ ed n i the Notic e and Proxy
Statement for the Meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS
OF SPIRIT AEROSYSTEMS HOLDINGS, INC. ON ALL THE PROPOSALS REFERRED TO ON THE REVERSE SIDE AND IN
THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
IMPORTANT: PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE. Address Change/Comments (Mark
the corresponding box on the reverse side) FOLD AND DETACH HERE You can now access your SPIRIT
AEROSYSTEMS HOLDINGS, INC. account online. Access your Spirit AeroSystems Hold ings, Inc.
stockholder account onlin e via Investor ServiceDirect® (ISD). The transfer agent for Spirit
AeroSystems Hold ings, Inc, now makes t i easy and convenie nt to get current n i formation on your
shareholder account. Vie w account status View payment his tory for dividends Vie w
certificate history Make address changes Vie w book-entry in formation Obtain a duplicate
1099 tax form Establish/change your PIN Visit us on the web at
http://www.bnymellon.com/shareowner/isd For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time Please keep this ticket to be admitted to the annual meeting.
NOTICE OF 2008 ANNUAL MEETING OF STOCKHOLDERS TIME: PLACE: WHO MAY VOTE: 11:00 a.m. Eastern Time on
Marriot Westfields You may vote f i you were Tuesday, April 22, 2008 Washington Dulle s stockholder
of record on March 14750 Conference Center Drive 14, 2008. Chantil y l , Virgin a i By Order of the
Board of Dir ectors Gloria Farha Flentje, Corporate Secretary |