fti_def14a.htm
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. )
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FTI CONSULTING, INC.
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SEC 1913
(04-05)
Persons who are to respond to the collection
of information contained in this form are not required to respond unless the
form displays a currently valid OMB control number.
777 South Flagler Drive
Phillips Point
Suite 1500 West Tower
West Palm Beach, Florida 33401
(561) 515-1900
April 23,
2010
Dear
Stockholder:
You are cordially invited to attend the 2010
Annual Meeting of Stockholders of FTI Consulting, Inc. on June 2, 2010, at 9:30
a.m., Eastern Time, at its executive office located at 777 South Flagler Drive,
Phillips Point, Suite 1500 West Tower, West Palm Beach, Florida
33401.
This year we are pleased to continue to take
advantage of the U.S. Securities and Exchange Commission rules that allow
companies to furnish their proxy materials over the Internet. As a result, on or
about April 23, 2010, we began mailing or emailing to most of our
stockholders of record on April 1, 2010 a Notice of Internet Availability of
Proxy Materials instead of paper copies of this proxy statement and our 2009
Annual Report to Stockholders. On or about April 23, 2010, we also began sending
a full set of the proxy materials and the 2009 Annual Report of Stockholders to
stockholders who previously requested delivery of the materials in paper
copy.
Beginning this year, your vote is especially
important because of a recent regulatory change. If you hold your shares with a
broker, bank, fiduciary or other nominee, they cannot vote your shares for the
election of directors unless you provide specific voting instructions. Whether
or not you plan to attend this meeting, we urge you to communicate your voting
decisions to your broker, bank, fiduciary or other nominee as soon as
possible.
If you plan to attend the meeting in person,
please respond affirmatively to the request for that information on the
Internet, or mark that box on the proxy card if you received a paper copy of the
proxy statement. You will be asked to present valid picture identification, such
as a driver’s license or passport. Cameras, recording devices and other
electronic devices will not be permitted at the meeting.
Whether or not you plan to attend the meeting
in person, you can ensure that your shares are represented by promptly voting by
telephone or the Internet, or by completing, signing, dating and returning your
proxy card in the return envelope.
Sincerely,
Jack B. Dunn, IV
President and Chief Executive Officer
FTI CONSULTING, INC.
NOTICE OF 2010 ANNUAL MEETING OF
STOCKHOLDERS
Date: June 2,
2010
Time: 9:30 a.m., ET
Place: FTI Consulting, Inc., Executive Office, 777 South Flagler Drive,
Phillips Point, Suite 1500 West Tower, West Palm Beach, Florida
33401
Dear
Stockholder:
At the Annual Meeting, we will ask
you to:
- elect as Class II directors the
four nominees named in the proxy statement;
- approve the amendment to the FTI
Consulting, Inc. 2009 Omnibus Incentive Compensation Plan to increase by
4,500,000 shares the number of shares of common stock authorized and reserved
for issuance under the plan;
- ratify the retention of KPMG LLP
as FTI Consulting, Inc.’s independent registered public accounting firm for
the year ending December 31, 2010; and
- transact any other business as may
properly come before the meeting or any adjournment or postponement thereof to
the extent permitted by applicable law.
The Board of Directors recommends a vote
FOR the election of each of the four nominees for
Class II director named in the proxy statement, FOR the approval of
the amendment to the FTI Consulting, Inc. 2009 Omnibus Incentive Compensation
Plan to increase by 4,500,000 shares the number of shares of common stock
authorized and reserved for issuance under the plan, and FOR the
ratification of the retention of KPMG LLP as FTI Consulting, Inc.’s independent
registered public accounting firm for the year ending December 31,
2010.
Stockholders of record at the close of
business on April 1, 2010, will be entitled to notice of and to vote at the 2010
Annual Meeting and any adjournment or postponement of the meeting.
By Order of the Board
of Directors,
Joanne F.
CataneseAssociate General Counsel and
Secretary
April 23,
2010
YOUR VOTE IS IMPORTANT
Every stockholder’s vote is important. Please
vote as promptly as possible by using the Internet, the telephone or by
completing, signing, dating and returning a proxy card even if you plan to
attend the meeting in person.
TABLE OF CONTENTS
|
Page |
Proxy Statement for Annual
Meeting |
1 |
Information About the 2010 Annual Meeting and Voting |
2 |
Additional Information |
6 |
Proposals to be Presented at the Annual Meeting |
7 |
Proposal No. 1 —
Elect as Class II Directors the Four Nominees Named in the Proxy
Statement |
7 |
Proposal No. 2 —
Approve the Amendment to the FTI Consulting, Inc. 2009 Omnibus
Incentive |
|
Compensation
Plan to Increase by 4,500,000 Shares the Number of Shares of Common
Stock |
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Authorized
and Reserved for Issuance under the Plan |
8 |
Proposal No. 3 —
Ratify the Retention of KPMG LLP as FTI Consulting, Inc.’s
Independent |
|
Registered
Public Accounting Firm for the Year Ending December 31, 2010 |
18 |
Information About the Board of Directors and Committees |
19 |
Independence of
Directors |
19 |
Information About
the Nominees for Class II Director and the Other Directors |
20 |
Director
Attendance at Meetings |
27 |
Committees of the
Board of Directors |
28 |
Nominating and
Corporate Governance Committee – Director Nomination Process |
31 |
Compensation of
Non-Employee Directors and Stock Ownership Guidelines |
32 |
Corporate Governance |
35 |
Governance
Principles |
35 |
Board Leadership
Structure and Presiding Director |
36 |
Oversight of Risk
Management |
36 |
Code of
Conduct |
36 |
Stockholder
Nominees for Director |
37 |
Communications
with Non-Management Directors |
37 |
Security Ownership of Certain Beneficial Owners and
Management |
38 |
Executive Officers and
Compensation |
40 |
Executive and Key
Officers |
40 |
Compensation
Discussion and Analysis |
42 |
Compensation
Committee Report |
52 |
Summary
Compensation Table |
53 |
Equity
Compensation Plans |
55 |
Employment
Agreements and Potential Termination and Change in Control
Payments |
61 |
Certain Relationships and Related Party Transactions |
77 |
Report of the Audit Committee of the
Board of Directors |
78 |
Principal Accountant Fees and Services |
80 |
Section 16(a) Beneficial Ownership
Reporting Compliance |
80 |
Proposals for the 2011 Annual Meeting |
81 |
Appendix A —FTI Consulting, Inc. 2009
Omnibus Incentive Compensation Plan |
|
[as Amended and
Restated Effective as of ____ __, 2010] |
A-1 |
777 South Flagler Drive
Phillips Point
Suite 1500 West Tower
West Palm Beach, Florida 33401
(561) 515-1900
April 23,
2010
——————————
PROXY STATEMENT FOR ANNUAL
MEETING
——————————
The 2010 Annual Meeting of Stockholders of FTI
Consulting, Inc. will be held on June 2, 2010, at 9:30 a.m., Eastern Time, at
FTI Consulting, Inc.’s executive office, located at 777 South Flagler Drive,
Phillips Point, Suite 1500 West Tower, West Palm Beach, Florida
33401.
Our Board of Directors is seeking a proxy to
vote your shares of common stock at our 2010 Annual Meeting of Stockholders
because you were a stockholder at the close of business on April 1, 2010, the
record date, and are entitled to vote at the meeting. This proxy statement
provides information that you should read before you vote on the proposals that
will be presented to you at the 2010 Annual Meeting of Stockholders and is
intended to assist you in deciding how to vote your shares.
Beginning this year, your vote is especially
important because of a recent regulatory change. If you hold your shares with a
broker, bank, fiduciary or other nominee, they cannot vote your shares for the
election of directors unless you provide specific voting instructions. Whether
or not you plan to attend this meeting, we urge you to communicate your voting
decisions to your broker, bank, fiduciary or other nominee as soon as
possible.
On or about April 23, 2010, we began mailing
or emailing a Notice of Internet Availability of Proxy Materials containing
instructions on how to access this proxy statement and our 2009 Annual Report to
Stockholders online and we began sending a full set of the proxy materials and
2009 Annual Report to Stockholders to stockholders who previously requested
delivery in paper copy.
INFORMATION ABOUT THE 2010 ANNUAL MEETING AND
VOTING
Why am I receiving these proxy
materials?
As a stockholder, you are invited to attend
the 2010 Annual Meeting of Stockholders and are entitled to vote on the items of
business described in this proxy statement. The proxy materials include the
proxy statement for that meeting and our 2009 Annual Report to Stockholders. If
you received a paper copy of these materials by mail or email, the proxy
materials also include a proxy card or voting instruction card for the annual
meeting.
The information in this proxy statement
relates to the proposals to be voted on at the 2010 Annual Meeting of
Stockholders, the voting process, the four nominees for Class II director named
in this proxy statement, information about our Board and its Committees, the
compensation of non-employee directors and our chief executive officer, chief
financial officer and the three other most highly paid executive officers for
the year ended December 31, 2009, and certain other information we are required
to provide to you.
Why did I receive a Notice of Internet
Availability of Proxy Materials?
We are pleased to continue to use the U.S.
Securities and Exchange Commission (“SEC”) rule that allows companies to furnish
proxy materials over the Internet. As permitted under the SEC rule, we are
sending a Notice of Internet Availability of Proxy Materials (the “Notice”) by
mail or email to stockholders instead of paper copies of the proxy materials.
All stockholders receiving the Notice will have the ability to access this proxy
statement and our 2009 Annual Report to Stockholders for the fiscal year ended
December 31, 2009 on a website referred to in the Notice or to request a printed
set of these materials at no charge. Instructions on how to access these
materials over the Internet or to request printed copies may be found in the
Notice or the email accompanying the Notice.
In addition, any stockholder may request to
receive proxy materials in printed form by mail or electronically by email on an
ongoing basis. Choosing to receive future proxy materials by email will save the
Company the cost of printing and mailing documents to stockholders and will
reduce the impact of annual meetings on the environment. A stockholder’s
election to receive proxy materials by email will remain in effect until the
stockholder terminates it.
Why did I receive a Notice by
email?
We are providing the Notice by email to those
stockholders who have previously elected delivery of the proxy materials
electronically. Those stockholders should have received an email containing a
link to the website where the proxy materials are available and a link to the
proxy voting website.
Can I vote my shares by filling out and
returning the Notice?
No. The Notice identifies the items to be
voted on at the 2010 Annual Meeting but you cannot vote by marking and returning
the Notice. The Notice provides instructions on how to vote by Internet, by
telephone, by requesting a paper proxy card or by attending the meeting and
submitting a ballot in person.
How can I access the proxy materials over the
Internet?
Your Notice will contain
instructions on how to:
- view our proxy materials for the
2010 Annual Meeting of Stockholders on the Internet;
- view our 2009 Annual Report to Stockholders on the Internet;
and
- instruct us to send future proxy materials to you
electronically by email.
Why did I receive paper copies of the proxy
materials and the 2009 Annual Report to Stockholders?
We are providing some of our stockholders,
including stockholders who have previously requested a paper copy of the proxy
materials, and some of our stockholders who live outside of the United States,
with paper copies of this proxy statement and the 2009 Annual Report to
Stockholders instead of the Notice.
2
How can I request paper copies of the proxy
materials and annual report?
Stockholders will find instructions about how
to obtain paper copies of the proxy materials and annual report on the Notice.
Stockholders receiving an email will find instructions about how to obtain paper
copies as part of the email. All stockholders of record on April 1, 2010 who do
not receive a Notice by mail or email or information by email will receive paper
copies of this proxy statement and the 2009 Annual Report to
Stockholders.
When and where will FTI hold the 2010 Annual
Meeting of Stockholders?
FTI’s 2010 Annual Meeting of Stockholders will
be held on Wednesday, June 2, 2010, at 9:30 a.m., Eastern Time, at FTI
Consulting, Inc.’s executive office, located at 777 South Flagler Drive,
Phillips Point, Suite 1500 West Tower, West Palm Beach, Florida 33401, telephone
no. (561) 515-1900.
Who pays the costs of the proxy
solicitation?
FTI will pay the cost of soliciting proxies.
In addition to the mailing and emailing of the Notice and these proxy materials,
the solicitation of proxies or votes may be made in person, by telephone or by
electronic communication by our officers and employees, who will not receive any
additional compensation for such solicitation activities.
We also hired Georgeson Inc., located at 199
Water Street, New York, New York 10038, to assist us with the solicitation of
votes. We will pay Georgeson a base fee of $8,000 plus customary costs and
expenses for these services.
How many votes must be present to hold the
2010 Annual Meeting of Stockholders?
On April 1, 2010, the record date for the 2010
Annual Meeting of Stockholders, 46,962,666 shares of our common stock were
issued and outstanding. A quorum must be present at the Annual Meeting in order
to transact business. A quorum will be present if a majority of the shares of
common stock entitled to vote are represented at the Annual Meeting, either in
person or by proxy. If a quorum is not present, a vote cannot occur, in which
case the Annual Meeting may be adjourned until such time as a quorum is present.
In deciding whether a quorum is present, abstentions and “broker non-votes” will
be counted as shares of common stock that are present at the Annual
Meeting.
What items of business will be voted on at the
Annual Meeting?
At the Annual Meeting, we will ask
you to:
- elect as Class II directors the
four nominees named in the proxy statement;
- approve the amendment to the FTI Consulting, Inc. 2009
Omnibus Incentive Compensation Plan to increase by 4,500,000 shares the number
of shares of common stock authorized and reserved for issuance under the
plan;
- ratify the retention of KPMG LLP as FTI Consulting, Inc.’s
independent registered public accounting firm for the year ending December 31,
2010; and
- transact any other business as may properly come before the
meeting or any adjournment or postponement thereof to the extent permitted by
applicable law.
How do I vote my shares?
You have one vote for each share of our common
stock that you owned of record at the close of business on April 1, 2010. Even
if you plan to attend the annual meeting in person, we recommend that you also
vote by proxy as described below so that your vote will be counted if you later
decide not to attend the meeting. By voting by proxy you will be directing the
person or persons designated on the proxy card as your proxies to vote your
shares of common stock at the Annual Meeting in accordance with your
instructions.
- How can I vote in person?
Shares held in your name
as the stockholder of record may be voted in person at the annual meeting. To
vote in person, you must attend the Annual Meeting and submit a ballot.
Ballots for voting in person will be available at the Annual Meeting. Shares
for which you are the beneficial owner but not the stockholder of record may
be voted in person at the annual meeting only if you obtain a legal proxy from
the broker, bank or other nominee or fiduciary that holds your shares giving
you the right to vote the shares.
3
- How can I vote by Internet? Stockholders who received a Notice by mail
or email may submit proxies over the Internet by following the instructions on
the Notice or the email. Stockholders who have received paper copies of the
proxy materials, including a proxy card or voting instruction card may submit
proxies over the Internet by following the instructions on the proxy card or
voting instruction card. Internet voting is available 24 hours a day until
11:59 p.m., Eastern Time, on June 1, 2010. You will be given the opportunity
to confirm that your instructions have been properly
recorded.
- How can I vote by telephone? If you are a registered “record”
stockholder, meaning that you hold your shares in certificate form or through
an account with our transfer agent, American Stock Transfer & Trust
Company, you may also vote by telephone by calling 1-800-690-6903, toll-free,
and following the instructions. Telephone voting is available 24 hours a day
until 11:59 P.M., Eastern Time, on June 1, 2010. Stockholders who are
beneficial owners and who receive a paper voting instruction card may vote by
telephone by calling the number specified on the voting instruction card
provided by their broker, bank or other nominee or fiduciary. Those
stockholders should check the voting instruction card for telephone voting
availability.
- How can I vote by mail? Stockholders who have received a paper copy
of a proxy card or voting instruction card may submit proxies by completing,
signing and dating their proxy card or voting instruction card and returning
it in the accompanying pre-addressed envelope. IF YOU DECIDE TO VOTE BY MAIL, YOUR PROXY CARD WILL BE VALID ONLY IF
YOU COMPLETE, SIGN, DATE AND RETURN IT BEFORE THE ANNUAL MEETING
DATE.
If you vote via the Internet or by
telephone, please do not return a paper proxy card to vote your
shares.
What does it mean if I received more than one
proxy card or instruction form?
If you receive more than one proxy card or
instruction form, it means that you have multiple accounts with our transfer
agent and/or a broker, bank or other nominee or fiduciary or you may hold shares
in different ways or in multiple names (e.g., joint tenancy, trusts and
custodial accounts). Please vote all of your shares.
Will my shares be voted if I do not complete,
sign, date and return my proxy card or voting instruction
card?
If you are a registered “record” stockholder
and do not vote your shares by Internet, by telephone or by completing, signing,
dating and returning a paper proxy card, you must attend the Annual Meeting in
order to vote.
If your shares are held in a brokerage account
or by another nominee or fiduciary, you are considered the “beneficial owner” of
shares held in “street name,” and must follow the voting instructions forwarded
to you by or on behalf of your broker, bank or other nominee or fiduciary.
Brokerage firms, banks and other fiduciaries or nominees are required to request
voting instructions for shares they hold on behalf of customers and others. As
the beneficial owner, you have the right to direct your broker, bank or other
nominee or fiduciary how to vote and you are also invited to attend the Annual
Meeting. We encourage you to provide instructions to your broker, bank or other
nominee or fiduciary to vote your shares. Since a beneficial owner is not the
record stockholder, you may not vote the shares in person at the Annual Meeting
unless you obtain a “legal proxy” from the broker, bank or other nominee or
fiduciary that holds your shares giving you the right to vote the shares at the
meeting.
Even if you do not provide voting instructions
on your instruction form, if you hold shares through an account with a broker,
bank or other nominee or fiduciary, your shares may be voted. Brokerage firms
have the authority under New York Stock Exchange (“NYSE”) rules to vote shares
for which their customers do not provide voting instructions on certain
“routine” matters. Proposal 3, the ratification of the retention of KPMG LLP as
our independent registered public accounting firm for the year ending December
31, 2010, is considered a routine matter for which brokers, banks or other
nominees or fiduciaries may vote in the absence of specific
instructions.
4
When a proposal is not considered “routine”
and the broker, bank or other nominee or fiduciary has not received voting
instructions from the beneficial owner of the shares with respect to such
proposal, such firm cannot vote the shares on that proposal. Under a recent NYSE
rule amendment, Proposal 1 is no longer a “routine” matter as to which firms may
vote in their discretion on behalf of clients who have not furnished voting
instructions with respect to an uncontested director election. Proposal 2, to
amend the FTI Consulting, Inc. 2009 Omnibus Incentive Compensation Plan to
increase by 4,500,000 shares of common stock the number of shares of common
stock authorized and reserved for issuance under the plan, is not considered
routine and brokerage firms and other nominees or fiduciaries may not vote on
Proposal 2 in the absence of specific instructions. Shares of common stock that
a broker, bank or other nominee or fiduciary is not authorized to vote are
counted as “broker non-votes.”
How will my shares of FTI common stock be
voted if I do not specify my voting instructions on the proxy
card?
If you sign, date and return a proxy card but
do not complete voting instructions for a proposal, then your shares will be
voted with respect to such proposal by the named proxies as
follows:
- FOR the election of the four nominees for Class
II directors named in the proxy statement;
- FOR the approval of the amendment to the FTI
Consulting, Inc. 2009 Omnibus Incentive Compensation Plan to increase by
4,500,000 shares the number of shares of common stock authorized and reserved
for issuance under the plan;
- FOR the ratification of the retention of KPMG
LLP as FTI Consulting, Inc.’s independent registered public accounting firm
for the year ending December 31, 2010; and
- in accordance with the discretion
of the named proxies on any other business that may properly come before the
meeting or any adjournment or postponement thereof to the extent permitted by
applicable law.
How can I revoke my proxy and change my vote
prior to the meeting?
You may change your vote at any time prior to
the vote at the Annual Meeting. You may revoke or change your vote in any one of
four ways:
- You may notify our Corporate
Secretary, at FTI Consulting, Inc. 500 East Pratt Street, Suite 1400,
Baltimore, MD 21202, in writing that you wish to revoke your
proxy.
- You may submit a proxy dated later
than your original proxy.
- You may attend the Annual Meeting
and vote by ballot if you are a stockholder of record. Merely attending the
Annual Meeting will not by itself revoke a proxy. You must submit a ballot and
vote your shares of our common stock at the Annual Meeting.
- For shares you hold beneficially
or in street name, you may change your vote by submitting a later dated voting
instruction form to your broker, bank or other nominee or fiduciary, or if you
obtained a legal proxy from your broker, bank nominee or fiduciary giving you
the right to vote your shares, by attending the meeting and voting in
person.
5
How many votes will be needed to approve each
of this year’s proposals?
Proposal 1: Elect as Class II directors
the four nominees named in the proxy statement |
|
The nominees
for election as Class II directors will be elected by a “plurality” of the
votes cast at the meeting. This means that the four nominees who receive
the highest number of “FOR” votes will be
elected as the Class II directors.
|
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Proposal 2:
Approve the amendment to the FTI Consulting, Inc. 2009 Omnibus Incentive
Compensation Plan to increase by 4,500,000 shares the number of shares of
common stock authorized and reserved for issuance under the
plan |
|
Under Maryland law, approval of the
amendment to the FTI Consulting, Inc. 2009 Omnibus Incentive Compensation
Plan to increase by 4,500,000 shares the number of shares of common stock
authorized and reserved for issuance under the plan requires a majority of
the votes cast at the Annual Meeting to be voted “FOR” this proposal (provided that the total votes
cast on Proposal 2 represents over 50% in interest of all securities
entitled to vote on the proposal).
|
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|
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Proposal 3: Ratify the retention of KPMG
LLP as FTI’s independent registered public accounting firm for the year
ending December 31, 2010 |
|
Ratification of
the retention of KPMG LLP as our independent registered public accounting
firm for the year ending December 31, 2010 requires a majority of the
votes cast at the Annual Meeting to be voted “FOR” this proposal.
|
What impact will abstentions, withheld votes
and broker non-votes have on the proposals?
Abstentions and broker non-votes will not be
counted as votes cast either for or against Proposals 1 or 3 and will have no
impact on the result of the vote for these Proposals.
If you indicate “withhold authority to vote”
for a particular director nominee on your proxy card, your withholding of
authority will not count as a vote cast either for or against the nominee and
will have no impact on the election of a director.
Approval of Proposal 2 requires that a
majority of the votes cast at the 2010 Annual Meeting to be voted “for” that
proposal and that total votes cast represent over 50% in interest of all
securities entitled to vote on such proposal. Under the NYSE stockholder
approval requirements, abstentions are treated as votes cast. Accordingly,
abstentions will have the effect of a vote against Proposal 2. Moreover, broker
non-votes are not counted as votes cast under the NYSE stockholder approval
requirement, which could prevent the Company from satisfying the requirement
that the total votes cast on Proposal 2 represent over 50% in interest of all
securities entitled to vote on that proposal.
How does the Board recommend that I
vote?
Our Board recommends that you vote
your shares:
- FOR the election of the four nominees for Class
II director named in the proxy statement;
- FOR
the approval of the amendment
to the FTI Consulting, Inc. 2009 Omnibus Incentive Compensation Plan to
increase by 4,500,000 shares the number of shares of common stock authorized
and reserved for issuance under the plan; and
- FOR
the ratification of the
retention of KPMG LLP as FTI Consulting, Inc.’s independent registered public
accounting firm for the year ending December 31, 2010.
ADDITIONAL INFORMATION
On or about April 23, 2010, we began sending a
Notice of Internet Availability of Proxy Materials, including Internet
availability of the 2009 Annual Report to Stockholders, or the 2009 Annual
Report to Stockholders in paper copy, to FTI stockholders of record on April 1,
2010. The Annual Report to Stockholders does not constitute a part of the proxy
solicitation material. The Annual Report to Stockholders provides you with
additional information about FTI. A copy of FTI’s 2009 Annual Report to
Stockholders is available on FTI’s website at http://www.fticonsulting.com, under About FTI – Governance – Corporate
Literature. FTI’s Annual Report on Form 10-K for the year ended December 31,
2009, as well as other information, is also available on our website at:
http://www.fticonsulting.com, under Investor Relations – SEC
Filings.
6
PROPOSALS TO BE PRESENTED AT THE ANNUAL
MEETING
We will present the following three proposals
at the 2010 Annual Meeting of Stockholders. We have described in this proxy
statement all the proposals that we expect will be made at the Annual Meeting.
If we or a stockholder properly presents any other proposal at the meeting, we
will, to the extent permitted by applicable law, use your proxy to vote your
shares of common stock on the proposal in our best judgment.
PROPOSAL NO. 1 — ELECT AS CLASS II DIRECTORS
THE FOUR NOMINEES NAMED IN THE PROXY STATEMENT
Our Board is divided into three classes. We
currently have nine directors, with Class I having two directors, Class II
having four directors and Class III having three directors. The members of each
class are elected for three-year terms. The terms of each class expire at
successive meetings so that stockholders elect one class of directors at each
annual meeting. Class II directors will stand for election by stockholders at
the 2010 Annual Meeting. The terms of the Class III directors and Class I
directors will expire at the annual meetings of stockholders to be held in 2011
and 2012, respectively. See “Information About the Board of Directors and
Committees – Nominating and Corporate Governance Committee – Director Nomination
Process – Identification and Nomination of Candidates as Class II Directors for
Election at 2010 Annual Meeting of Stockholders” for a discussion of the
director qualification, identification, nomination and appointment
process.
Upon the recommendation of the Nominating and
Corporate Governance Committee, the Board has nominated the following four
persons for election as Class II directors at the 2010 Annual Meeting of
Stockholders:
Brenda J.
Bacon
James W.
Crownover
Dennis J.
Shaughnessy
George P.
Stamas
Ms. Bacon and Messrs. Crownover,
Shaughnessy and Stamas currently are members of Class II of the Board. Ms. Bacon
and Mr. Crownover have been directors since 2006 and Messrs. Shaughnessy and
Stamas have been directors since 1992. The Board has affirmatively concluded
that Ms. Bacon and Mr. Crownover qualify as independent directors under our
Categorical Standards of Director Independence and the independence standards
established under Section 303A of the NYSE corporate governance rules. The Board
has concluded that Mr. Stamas, a partner with Kirkland & Ellis LLP
(“K&E”), should not be considered independent in light of corporate legal
services provided by K&E to the Company and anticipated future services. Mr.
Shaughnessy is the executive Chairman of the Board of the Company and as a
member of management does not qualify as independent. More detailed information
about the Board’s determination of director independence is provided in the
section of this proxy statement titled “Information About the Board of Directors
and Committees — Independence of Directors.”
Each of the four nominees for Class
II director, if elected, will serve for a three-year term until the annual
meeting of stockholders in 2013. We do not know any reason why any nominee would
be unable to serve as a director. If any of the nominees cannot serve for any
reason (which is not anticipated), the Nominating and Corporate Governance
Committee may identify and recommend a candidate or candidates to the Board as a
potential substitute nominee or nominees. If that happens, we will vote all
valid proxies for the election of the substitute nominee or nominees designated
by the Board. Alternatively, the Board may determine to keep a vacancy open or
reduce the size of the class of directors. Proxies cannot be voted for a greater
number of persons than the number of nominees named.
More detailed information about each of the
nominees is provided in the section of this proxy statement titled “Information
About the Board of Directors and Committees – Information About the Nominees for
Class II Director and The Other Directors.”
The Board of Directors Unanimously Recommends
That You Vote FOR the Election of
All the Nominees as Class II
Directors.
7
PROPOSAL NO. 2 — APPROVE THE AMENDMENT TO THE FTI CONSULTING, INC. 2009
OMNIBUS INCENTIVE COMPENSATION PLAN TO INCREASE BY 4,500,000 SHARES THE NUMBER
OF SHARES OF COMMON STOCK AUTHORIZED AND RESERVED FOR ISSUANCE UNDER THE
PLAN
We are asking our stockholders to approve the
amendment of the FTI Consulting, Inc. 2009 Omnibus Incentive Compensation Plan
(“2009 Plan”) to increase the number of shares of FTI common stock that FTI may
issue under the 2009 Plan by 4,500,000 shares to 6,000,000 shares. All of the
additional shares may be used to make stock-based awards, including restricted
and unrestricted stock awards. Our Board of Directors authorized the additional
shares under the 2009 Plan on March 31, 2010, subject to the approval of our
stockholders at this meeting. If the requisite stockholder approval is not
received, we will continue to administer the 2009 Plan in accordance with its
current terms and conditions.
These additional shares are necessary to allow
the Company to continue the use of equity as a significant component of its
compensation and incentive programs. The Company believes that these programs,
particularly the inclusion of a significant equity component of compensation,
have had a significant positive impact on the Company’s recruitment, motivation
and retention of its high caliber executives and professionals and have
contributed positively to the Company’s financial results and
growth.
As a professional services company dependent
upon the high quality of our people, the Company relies heavily on its ability
to continue to provide competitive compensation to attract, motivate and retain
the highest caliber executives and professionals required to generate strong
financial results and build FTI’s market position and brand. Over the years, we
have carefully developed various multi-faceted compensation and incentive
programs in which equity is a key component of total compensation. Among other
things, we believe that this equity aligns our professionals’ long-term
interests with those of the Company’s stockholders. In addition, the Company
uses equity to compete more effectively for top talent and to maintain its
strong base of highly talented professionals.
The expansion of the equity-based award
programs (and the need for additional shares at this time) reflects our
substantial growth as a company. In addition, through our judicious
administration of the 2009 Plan, the terms of our equity-based incentive
programs and our past practice of repurchasing shares of our common stock in the
market, from time to time, as conditions warrant, we have sought to ensure that
our stock-based awards promote overall stockholder value and align the interests
of our employees and our stockholders more closely than would be possible with a
program more heavily dependent upon cash compensation. Stockholders should
consider the following key reasons why the Company believes that approving
additional shares so that we may continue with our equity-based compensation
programs is vital to the future success of the Company:
- Equity-based compensation is necessary to recruit and retain revenue
generating professionals and expand our business through strategic
acquisitions. As
a professional services company, the Company’s ability to use equity-based
compensation is vital to attract and retain our executives and revenue
generating professionals and to expand our business through the strategic
acquisition of professional services businesses. Competition for professionals
with the level of expertise, specialization and education that we employ is
intense. Many of our competitors are privately-owned companies, including the
“Big Four” accounting firms, private consulting partnerships, private banks
and investment banks, and private equity firms. These competitors can offer
partnership and other equity incentives to recruit and retain professionals.
We believe that if additional equity is not available, FTI will be at a
significant disadvantage with respect to hiring and retaining revenue
generating professionals and making strategic acquisitions. This, in turn, may
negatively affect our future growth and the development of our
business.
- Our equity incentive compensation program for key employees directly
contributes to our growth and lower employee
turnover. We
credit our Senior Managing Director Incentive Compensation Program (“ICP”),
which provides for stock option and restricted stock awards on admission into
the program and, thereafter, annual stock option and restricted stock awards
to participants in the program as a result of deferral of cash bonuses, as
directly contributing to the significant growth of our business during the
past five years. By aligning the annual equity awards to the participant’s
annual bonus compensation, we motivate the participant to grow the Company’s
business and improve net income. In addition, all equity awards made under the
ICP are subject to vesting conditions ranging from three to five years and
long-term stock ownership conditions that must be met in order for certain
awards to vest. Therefore, a significant portion of each participant’s
compensation is subject to investment risk, just like our stockholders. The
8
Company believes that the potential for admission into the ICP operates
as a key recruiting and retention tool of both senior and junior professionals
and has directly contributed to the reduction of turnover of senior managing
directors and equivalent level professionals that we have experienced from 8.8%
in 2005 to 3.3% in 2009.
- Our equity-based compensation programs align the interests of our
executives and employees with those of our stockholders more efficiently than
cash compensation. We believe that a significant equity-based compensation component is
critical because equity-based awards:
- create commonality of interest
between our executives and professionals and the growth of our business and increasing value to our
stockholders;
- are an efficient way of aligning
compensation to increases in stockholder value and financial metrics;
- reward continuous improvement in
earnings and growth in stockholder value; and
- can be designed to incentivize
different goals based on an officer’s and employee’s duties and contributions to company performance more
efficiently than cash.
If we are unable to continue to pay a significant portion of our overall
incentives with equity awards, these benefits of our overall compensation
program will be diminished, and our incentive awards may be less effective in
promoting behavior that supports our growth and increases in stockholder
value.
- The Company has significantly reduced the potential impact of dilution
by repurchasing a significant number of our shares in the open market over the
past five years.
From 2005 through 2010, the Company has repurchased 7,448,484 shares of common
stock in the open market for an aggregate purchase price of $307.3 million,
thereby significantly offsetting any potential dilution from the award of
stock options and restricted stock during that same period. During the same
period, an aggregate of 2,403,000 stock-based awards and stock options
exercisable for 5,541,00 shares of our common stock, were awarded under our
equity compensation plans to incentivize our executives and other
professionals. The Company has authorization to repurchase additional shares
of common stock with an aggregate value of up to $250.0 million through
November 2011.
- The 2009 Plan incorporates best practice plan terms and governance
standards. The
2009 Plan does not (i) provide for the automatic reload of stock options, (ii)
permit the repricing of stock options and stock appreciation rights without
the approval of stockholders, (iii) contain an evergreen provision, (iv)
permit loans to plan participants to finance the acquisition of shares or (iv)
permit the grant of stock options with an exercise price per share less than
100% of the fair market value of a share of our common stock on the date of
grant.
- The Company’s long-term growth and operating results support the
addition of shares of common stock to the 2009 Plan. As the following charts illustrate (i) our
revenue generating headcount grew from 1,005 as of December 31, 2005, to 1,596
as of December 31, 2006, 1,954 as of December 31, 2007, 2,521 as of December
31, 2008, and 2,638 as of December 31, 2009 for a compound annual growth rate
(“CAGR”) of 27.3%, (ii) our annual revenue increased from $539.5 million for
fiscal 2005, to $707.9 million for fiscal 2006, $1.0 billion for fiscal 2007,
$1.3 billion for fiscal 2008 and $1.4 billion for fiscal 2009, reflecting a
CAGR of 26.9%, and (iii) stockholders equity has grown from $471.5 million as
of December 31, 2005, to $577.1 million as of December 31, l 2006, $978.3
million as of December 31, 2007, $1.128 billion as of December 31, 2008, and
$1.104 billion as of December 31, 2009, for a CAGR of 23.7%, such that
$100,000 invested in our common stock on March 30, 2005 would have grown to
approximately $227,716 on December 31, 2009, based on the closing price of FTI
common stock as reported on the NYSE for that day of $47.16 per share.
9
10
If Proposal 2 is not approved by stockholders
and, as a result, we are not able to continue granting stock-based awards at the
levels required by our current compensation programs or necessary to support the
ongoing development of our business, we will have to use more of our cash to
fund incentive payments. Cash compensation may not incentivize our
professionals, or align their interests with those of our stockholders, as
effectively as equity. In addition, we use the prospect of admission into the
ICP as a key recruiting and retention tool of both senior and junior
professionals. If the equity-based component of awards in the ICP is
significantly reduced or eliminated, we believe that the ICP will be less
successful as a recruiting and retention tool, since such key employees may not
perceive cash as having the same potential for substantial long-term increases
in value as our equity. Finally, if the Company adopts equity-like incentive
programs payable in cash, the Company may face more variability in its periodic
earnings due to accounting requirements applicable to such cash-based awards,
which differ from the accounting requirements applicable to equity-based
awards.
DESCRIPTION OF THE 2009
PLAN
Summary
The following is a summary of the 2009 Plan
(as amended and restated). The following general summary is qualified in its
entirety by the complete text of the 2009 Plan attached to this proxy statement
as Appendix A.
You may request a copy of the 2009 Plan, free of charge, from the Corporate
Secretary of FTI Consulting, Inc., at 500 East Pratt Street, Suite 1400,
Baltimore, Maryland 21202, telephone no. (410) 951-4800.
Shares Available; Limitation on Issuance of
Stock-Based Awards
As of April 1, 2010, the record date, (i)
54,146 authorized shares of common stock remain available under the 2009 Plan,
all of which may be used for stock-based awards, including restricted and
unrestricted stock awards, (ii) no authorized shares remain available under the
FTI Consulting, Inc. 2006 Global Long-Term Incentive Plan, as Amended and
Restated Effective May 14, 2008 (the “2006 Plan), and (iii) no authorized shares
remain available for award under the FTI Consulting, Inc. 2004 Long-Term
Incentive Plan, as Amended and Restated Effective May 14, 2008 (the “2004
Plan”).
The proposed amendment would increase the
total number of shares authorized under the 2009 Plan by 4,500,000 up to
6,000,000 shares, and the total number of shares available for stock-based
awards (including restricted stock and performance-based stock awards) following
the amendment of the 2009 Plan by 4,500,000 up to 5,400,000 shares.
The maximum number of shares of our common
stock granted during any calendar year to any one individual under the 2009 Plan
will be limited to 200,000 shares of our common stock per type of award. Such
per-individual limit will not be adjusted for any award (and related shares of
common stock) of an individual who has been terminated, surrendered or
canceled.
The maximum dollar award that may be paid to
any one individual as cash-based awards under the 2009 Plan in any year shall
not exceed the aggregate amount of $15.0 million.
The maximum number of shares of our common
stock as to which awards may be granted, in the aggregate and with respect to
any type of award, the maximum number of shares with respect to which awards may
be granted during any one calendar year to any individual, and the number of
shares covered by and the exercise price and other terms of outstanding awards,
shall be subject to adjustment in the event of a corporate transaction affecting
our common stock, or our capitalization, by reason of a spin-off, split-up,
dividend, recapitalization, merger, consolidation, share exchange or other
similar transaction, or a stock dividend, stock split, reverse stock split,
issuance of rights or warrants or other similar events. Shares of common stock
that relate to awards that have been settled in cash, terminate or expire
unexercised, are withheld to pay taxes, are withheld to pay the exercise price
of stock option and stock appreciation rights, or are repurchased, surrendered
or otherwise forfeited will be restored to the 2009 Plan and, thereafter, will
be available for future awards; provided, however, that any shares that are
repurchased by us in connection with any award or that are otherwise forfeited
after issuance will not be available for purchase pursuant to incentive stock
options intended to qualify under Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”). The shares of common stock to be issued under the
2009 Plan will come from authorized but unissued shares of our common stock,
treasury shares or our open market purchases of our common stock.
11
Plan Administration; Terms of
Awards
The 2009 Plan will be administered by a
committee of the Board comprised of directors who are “independent directors”
for purposes of the applicable exchange requirements, who are “outside
directors” within the meaning of Section 162(m) of the Code (“Code Section
162(m)”), and who are “non-employee directors” within the meaning of Rule 16b-3
promulgated by the SEC under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). The administrator has the sole authority to interpret the
2009 Plan and set the terms of all awards under the 2009 Plan, including the
authority to: (1) determine the eligible persons to whom, and the time or times
at which awards shall be granted; (2) determine the types of awards to be
granted; (3) determine the number of shares to be covered by or used for
reference purposes for each award; (4) impose such other terms, limitations,
restrictions and conditions upon any award as the administrator shall deem
appropriate; (5) establish the performance goals and payment terms of
performance-based awards; (6) determine conclusively whether (and, if
applicable, when) a participant is a “specified employee” or “disabled” (as each
term or terms of similar import are defined in the 2009 Plan), or has
experienced a “separation from service” or “unforeseeable emergency” (as each
term is defined in the 2009 Plan), and shall make such determination consistent
with Section 409A of the Code (“Code Section 409A”); (7) accelerate or otherwise
change the time in which an award may be exercised or becomes payable and to
waive or accelerate the lapse, in whole or in part, of any restriction or
condition with respect to such award, including, but not limited to, any
restriction or condition with respect to the vesting or exercisability of an
award; provided, however, that no such acceleration or waiver shall be allowed
with regard to a “deferral of compensation” within the meaning of Code Section
409A, except as otherwise permitted thereunder; and (8) establish objectives and
conditions, if any, for earning awards and determining whether awards will be
paid after the end of a performance period.
No Stock Option and Stock Appreciation Right
Reloads, Repricings or Cancellations
The 2009 Plan does not provide for the
automatic reload of stock options once they are exercised. In addition, the 2009
Plan prohibits the repricing, replacement or regrant of any stock options or
stock appreciation rights granted under the 2009 Plan, (i) through cancellation
and replacement or regrant with lower priced options or stock appreciation
rights, (ii) through exchange, replacement or buyouts of awarded options or
stock appreciation rights with cash, or (iii) by lowering the option exercise
price or stock appreciation right base price of previously granted awards,
without the prior approval of our stockholders.
No Annual “Evergreen”
Provision
The 2009 Plan provides for a fixed
allocation of shares of common stock.
No Loans
The 2009 Plan does not authorize FTI
to make loans to plan participants to finance the acquisition of
shares.
No Discount Stock Options
The 2009 Plan prohibits the grant of a stock
option with an exercise price of less than the fair market value of a share of
our common stock on the date of grant.
Types of Awards and Grants
Pursuant to written award agreements, and
subject to the provisions of the 2009 Plan, the administrator may award stock
options (including nonstatutory and incentive stock options), stock appreciation
rights, restricted and unrestricted stock, stock and cash-based phantom stock,
performance awards, other incentive and stock-based awards, and cash-based
awards, or any combination thereof as described below:
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a. |
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Stock Options. A stock option represents the right to
purchase a share of common stock at a predetermined exercise price. The
administrator, in its discretion, may grant nonstatutory stock options or
incentive stock options to qualified participants. The administrator will
set the terms of each stock option, including the number of shares,
exercise price, vesting period and option duration, but in no event will
any option term exceed ten years. All options must have an exercise price
at least equal to the closing price of one
share |
12
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of FTI
common stock as reported on the NYSE (or other principal securities
exchange on which shares of our common stock are then listed) on the date
of grant. The administrator, in its sole discretion, in the applicable
award agreement may authorize stock options to be exercised, in whole or
in part, by payment in full of the exercise price in cash, or by delivery
of previously owned shares of common stock, or through a broker cashless
exercise program. |
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b. |
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Stock Appreciation Rights.
The administrator
may from time to time grant to eligible participants awards of stock
appreciation rights (“SARs”). A SAR entitles the recipient to receive a
payment having an aggregate value equal to the product of (1) the excess
of (A) the fair market value on the exercise date of one share of common
stock over (B) the base price per share specified in the applicable award
agreement, times (2) the number of shares specified by the SAR, or portion
thereof, which is exercised. Payment of the amount payable upon any
exercise of a SAR may be made by the delivery of shares of common stock or
cash, or any combination of shares of common stock and cash, as determined
in the sole discretion of the administrator. If upon settlement of the
exercise of a SAR the holder is to receive a portion of such payment in
shares of common stock, the number of shares will be determined by
dividing such portion by the fair market value of a share of common stock
on the exercise date. No fractional shares will be used for such payment
and the administrator will determine whether cash will be given in lieu of
such fractional shares or whether such fractional shares will be
eliminated. For purposes of counting against the aggregate share
limitation of the 2009 Plan, SARs to be settled in shares of common stock
will be counted based upon the number of actual shares issued upon
settlement of the SARs. |
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c. |
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Stock Awards. Restricted stock awards consist of
shares of common stock that are awarded to a participant and that are
subject to forfeiture or vesting during a pre-established period if
certain conditions are met. Unrestricted stock awards consist of shares of
common stock that are not subject to forfeiture or vesting conditions.
Restricted stock may not be sold, assigned, transferred, pledged or
otherwise encumbered so long as it is subject to forfeiture or has not
vested. A holder of restricted stock will generally have all the rights of
a holder of shares of common stock, including the right to receive any
dividends and to vote, even during the restricted period. Any dividends
with respect to shares of restricted stock that are payable in shares of
common stock will be paid in the form of shares of restricted stock and
any cash dividends with respect to shares of restricted stock will be
reserved and held by us for the holder and paid upon the satisfaction of
applicable vesting conditions in a manner consistent with the requirements
of Code Section 409A. |
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d. |
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Phantom Stock. Phantom stock awards, including phantom
stock units, restricted stock units and stock units are full value awards
denominated in stock-equivalent units. The amount and terms of a stock
unit award will be set by the administrator pursuant to a written award
agreement. Stock units granted to a participant will be credited to a
bookkeeping reserve account solely for accounting purposes, and will not
require a segregation of any of our assets. An award of stock units may be
settled in shares of our common stock, in cash, or in a combination of
shares of common stock and cash, as determined in the sole discretion of
the administrator. Except as otherwise provided in the applicable award
agreement, in the sole discretion of the administrator, the holder of
stock units will not have any rights of a stockholder with respect to any
shares of common stock represented by a stock unit solely as a result of
the grant of a stock unit. |
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e. |
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Performance Awards. Performance awards are awards of cash,
shares of common stock, or a combination of cash and shares of common
stock, which become vested or payable upon the satisfaction of
pre-determined performance goals over the pre-determined performance
period established by the administrator. The performance goals will be
based on one or more of the following criteria: earnings before interest,
taxes, depreciation and amortization, or EBITDA, stock price, earnings per
share, net earnings, operating or other earnings, profits, revenues, net
cash flow, financial return ratios, return on assets, stockholder return,
return on equity, growth in assets, market share or strategic business
criteria consisting of one or more objectives based on meeting specified
goals such as business or operating goals, revenue or other financial
goals, market penetration goals, geographic business expansion goals or
goals relating to acquisitions or strategic partnerships. Upon completion
of a performance period, the administrator will determine whether the
performance goals have been met within the established performance period,
and certify in writing to the extent such goals have been
satisfied. |
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f. |
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Other Stock-Based Awards.
Other stock-based
awards are awards, which are denominated or valued in whole or in part by
reference to, or otherwise based on or related to, the value of our common
stock. Other stock-based awards may be denominated in cash, in shares of
common stock or other securities, in stock-equivalent units, in stock
appreciation units, in securities or debentures convertible into shares of
common stock, or in any combination of the foregoing and may be paid in
shares of common stock or other securities, in cash, or in a combination
of shares of common stock or other securities and cash, all as determined
in the sole discretion of the administrator. The administrator will set
the terms and amounts of other stock-based awards, if any, pursuant to a
written award agreement. |
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g. |
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Other Cash-Based Awards.
The administrator
may from time to time grant cash-based awards to eligible participants in
such amounts, on such terms and conditions, and for such consideration,
including no consideration or such minimum consideration as may be
required by law, as it shall determine. Cash-based awards shall be
credited to a bookkeeping reserve account solely for accounting purposes
and shall not require a segregation of any of our assets, and will be
payable in only cash. |
Other Changes to 2009 Plan
Other amendments authorized by our Board on
March 31, 2010 include revisions to: (a) eliminate limits on the percentage of
(i) stock-based awards (other than performance-based awards) that may be issued
with vesting terms of less than three years and (ii) performance-based stock
awards that may be issued with vesting terms of less than one year and (b)
eliminate conditions on the administrator’s ability to accelerate vesting of
awards. None of the foregoing amendments required the consent of stockholders
and they are not being submitted to stockholders for approval at this
meeting.
Incentive Stock Option
Limits
For purposes of the grant of incentive stock
options under the 2009 Plan, (i) only the first $100,000 of shares of common
stock (valued as of the date of grant) that become exercisable under an
individual’s incentive stock options in a given year will be eligible to receive
incentive stock option tax treatment, (ii) the exercise price must be at least
equal to 100% of the fair market value of the shares on the date of grant of the
option (or, in the case of incentive stock options granted to a ten percent
(10%) stockholder of FTI, at least 110% of the fair market value of a share of
our common stock on the date of grant), and (iii) the maximum term of an
incentive stock option is ten years from the date of grant (or, in the case of
incentive stock options granted to a ten percent (10%) stockholder of FTI, five
years from the date of grant).
No Separate Consideration
FTI will not receive separate consideration
for the granting of awards under the 2009 Plan, other than related to the
services the participants provide or as otherwise required by applicable
law.
Change in Control
In the event of any transaction resulting in a
“change in control” (as defined in the 2009 Plan) of FTI, outstanding stock
options and other awards that are payable in or convertible into common stock
under the 2009 Plan will terminate upon the effective time of such change in
control unless provision is made in connection with the transaction for the
continuation or assumption of such awards by, or for the substitution of
equivalent awards of, the surviving or successor entity or parent thereof. In
the event of such termination, (i) the outstanding stock options and other
awards that will terminate upon the effective time of the change in control will
become fully vested immediately before the effective time of the change in
control and (ii) the holders of stock options and other awards under the 2009
Plan will be permitted, immediately before the change in control, to exercise or
convert all portions of such stock options or other awards under the 2009 Plan
that are then exercisable or convertible or which become exercisable or
convertible upon or immediately prior to the effective time of the change in
control. The administrator may, in its discretion, provide for a different
treatment of outstanding awards in the applicable award agreement.
14
Amendments and Termination
The Board may terminate, amend or modify the
2009 Plan or any portion thereof at any time; provided, however, that without
approval of our stockholders, no such amendment or modification will be made
that (a) increases the total number of shares of common stock that may be
granted under the 2009 Plan, in the aggregate, with respect to any type of
award, or with respect to any individual during any one calendar year (except in
each case for adjustments to common stock for corporate transactions or other
events such as stock splits, reverse stock splits and stock dividends, as
provided in the 2009 Plan) or (b) is required to be submitted to stockholders
for approval under applicable law or the rules of the SEC and/or NYSE (or other
principal securities exchange on which shares of our common stock are then
listed). Except as otherwise determined by the Board, termination of the 2009
Plan will not affect the administrator’s ability to exercise the powers granted
to it hereunder with respect to awards granted under the Plan prior to the date
of such termination. The administrator may take such actions as it deems
appropriate to ensure that the 2009 Plan and awards made thereunder comply with
any tax, securities or other applicable laws. In general, no amendment or
termination of the 2009 Plan will adversely affect the rights of a participant
that has been established prior to such amendment or termination absent the
written consent of the affected participant.
Vesting and Transferability of
Awards
Subject to the limitations of the 2009 Plan,
the administrator, in its discretion, has the general authority to enact terms
and conditions with respect to the vesting or exercisability of an award during
and following the end of a participant’s employment or other relationship with
FTI or its subsidiaries or affiliates. In general, no award under the 2009 Plan
may be subject in any manner to sale, transfer, assignment, pledge, attachment,
garnishment or other alienation or encumbrance of any kind, other than by will
or by the laws of descent and distribution.
Eligibility and Awards
As of April 1, 2010, nine executive officers,
seven non-employee directors and approximately 3,415 employees, including 290
senior managing directors and five practice leaders, as well as individual
service providers of FTI and our subsidiaries, are eligible to participate in
the 2009 Plan. The administrator has the authority to select participants and to
determine the amount, type and terms of each award granted under the 2009 Plan.
The administrator may also grant new awards to replace outstanding options or
other equity-based compensation when we acquire another company and, where
appropriate, to mirror the terms of those replaced options or other equity-based
compensation awards.
We have certain programs in place that provide
for programmatic or standing equity awards each year. Programs for key
professionals include the ICP, which provides for payments upon the execution
and annually during the term of their employment agreements in the form of stock
options and restricted stock awards, and the deferred compensation program,
which provides for voluntary annual deferrals of cash bonus compensation in the
form of stock units that will be paid out in shares of common stock on a
one-for-one basis upon a separation from service event or elected payment date.
The administrator has approved automatic quarterly awards of shares of
restricted stock with a value equivalent to $250,000 to our Chief Executive
Officer. In addition, our Non-Employee Director Compensation Plan provides that
non-employee directors will receive an annual equity award in the form of
restricted shares (or restricted stock units if a deferral election is made)
with a value of $250,000 on each annual meeting date so long as he or she
continues as a director following such annual meeting. We are unable to predict
the number of shares that we will need to fund those awards at this time because
they are dependent on the value per share of our common stock, nor can we
predict the number of shares that will be used to fund other equity awards
granted at the discretion of the administrator.
15
The following table sets forth the aggregate
number of stock option, restricted stock and performance-based stock awards
granted under the 2006 Plan and 2009 Plan during the year ended December 31,
2009, to each of our named executive officers (“NEOs”), all executive officers
as a group, all directors who are not executive officers as a group and our
non-executive officer employee group. The fair market value of one share of FTI
common stock on April 1, 2010, as reported on the NYSE for that day, was
$38.97.
|
|
Stock
Awards |
|
Option
Awards |
|
|
Aggregate |
|
|
|
|
|
|
|
|
|
|
|
|
Number
of |
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of |
|
|
|
|
|
|
|
|
|
|
|
|
Restricted |
|
Aggregate |
|
Aggregate |
|
Weighted |
|
Aggregate |
|
|
Stock, |
|
Dollar |
|
Number |
|
Average |
|
Dollar |
|
|
Restricted |
|
Value of |
|
of Shares |
|
Exercise |
|
Value of |
|
|
Stock Units |
|
Stock |
|
Underlying |
|
Price Per |
|
Option |
|
|
or Stock |
|
Awards |
|
Option |
|
Share |
|
Award |
|
|
Units |
|
($) (1) |
|
Awards |
|
($) |
|
($) (1) |
Name and Position as of April 1,
2010 |
|
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
Jack B. Dunn, IV, |
|
|
20,727 |
(2) |
|
999,928 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
President and Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J. Shaughnessy, |
|
|
33,692 |
|
|
1,499,967 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Executive Chairman of the
Board |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jorge A. Celaya, (3) |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Executive Vice President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominic DiNapoli, |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Executive Vice President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Operating Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger D. Carlile, (4) |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Executive Vice President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Administrative Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Group (10
persons) |
|
|
54,419 |
|
|
2,499,895 |
|
|
15,000 |
|
|
|
37.83 |
|
|
|
172,587 |
|
|
Non-Executive Director Group (7
persons) |
|
|
20,455 |
|
|
1,035,423 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Non-Executive Officer Employee
Group |
|
|
1,250 |
|
|
47,288 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
(5 persons) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
(1) |
|
Represents the
aggregate grant date fair value computed in accordance with FASB ASC Topic
718. |
|
(2) |
|
Includes
automatic standing restricted stock awards authorized by our Compensation
Committee on July 31, 2008, pursuant to our 2006 Plan, with a value
equivalent to $250,000, which number of shares of restricted stock has
been determined by dividing (i) $250,000, by (ii) the closing price per
share of FTI common stock as reported on the NYSE for the day following
the date of the relevant quarterly and annual FTI earnings release. See
“Executive Officers and Compensation – Compensation Discussion and
Analysis – NEO Compensation – 2009 Equity Compensation – Standing Equity
Awards to our CEO”. |
|
(3) |
|
Mr. Celaya joined
FTI on July 9, 2007 and was employed by FTI until March 2010. |
|
(4) |
|
Mr. Carlile was
our Executive Vice President and Chief Human Resources Officer until March
24, 2010. |
16
U.S. FEDERAL INCOME TAX
CONSEQUENCES
The following summary is intended only as a
general guide to the U.S. federal income tax consequences of incentive stock
options and nonstatutory stock options, which are authorized for grant under the
2009 Plan, under current law. It does not attempt to describe all possible
federal or other tax consequences of participation in the 2009 Plan or tax
consequences based on particular circumstances. The tax consequences may vary
for non-U.S. awards.
Incentive Stock Options
An option holder recognizes no taxable income
for regular income tax purposes as a result of the grant or exercise of an
incentive stock option qualifying under Code Section 422. However, an option
holder may be subject to the alternative minimum tax if the fair market value of
our common stock on the date of exercise exceeds the option holder’s purchase
price for the shares. Option holders who neither dispose of their shares within
two years following the date the option was granted nor within one year
following the exercise of the option will normally recognize a capital gain or
loss upon a sale of the shares equal to the difference, if any, between the sale
price and the purchase price of the shares. If an option holder satisfies such
holding periods upon a sale of the shares, we will not be entitled to any
deduction for federal income tax purposes. If an option holder disposes of
shares within two years after the date of grant or within one year after the
date of exercise (a “disqualifying disposition”), the option holder will
normally recognize ordinary income in the tax year during which the
disqualifying disposition occurs equal to the lesser of the difference between
(i) the fair market value of the shares on the date of exercise and the purchase
price of such shares, and (ii) the sales price and the purchase of such shares.
The option holder will normally also recognize a capital gain equal to the
difference, if any, between the sales price and the fair market value of such
shares on the exercise date. However, if a loss is recognized on the sale (i.e.,
the sales price is less than the purchase price of the disposed shares), the
option holder will not recognize any ordinary income and such loss will be a
capital loss. Any ordinary income recognized by the option holder upon the
disqualifying disposition of the shares generally will result in a deduction by
us for federal income tax purposes.
Nonstatutory Stock Options
Options not designated or qualifying as
incentive stock options will be nonstatutory stock options having no special tax
status. An option holder generally recognizes no taxable income as the result of
the grant of such an option. Upon exercise of a nonstatutory stock option, the
optionee normally recognizes ordinary income in the amount of the difference
between the option exercise price and the fair market value of the shares on the
exercise date. If the option holder is an employee, such ordinary income
generally is subject to withholding of income and employment taxes. Upon the
sale of stock acquired by the exercise of a nonstatutory stock option, any gain
or loss, based on the difference between the sale price and the fair market
value on the exercise date, will be taxed as a capital gain or loss. No tax
deduction is available to us with respect to the grant of a nonstatutory stock
option or the sale of the stock acquired pursuant to such grant. We generally
should be entitled to a deduction equal to the amount of ordinary income
recognized by the option holder as a result of the exercise of a nonstatutory
stock option.
2009 PLAN AWARDS TO EMPLOYEES IN FOREIGN
COUNTRIES
The administrator has the authority to grant
awards to employees of FTI and our subsidiaries who are foreign nationals or
employed outside the U.S. on any different terms and conditions than those
specified in the 2009 Plan that the administrator, in its discretion, believes
to be necessary or desirable to accommodate differences in applicable law, tax
policy or custom, or to qualify for preferred tax treatment under foreign tax
laws or otherwise complying with the regulatory requirements of local or foreign
jurisdictions, while furthering the purposes of the 2009 Plan. The administrator
has delegated to a management committee the authority to establish or approve
sub-plans to the 2009 Plan to comply with foreign laws (but not the authority to
grant awards or set the terms of awards). The administrator may allocate all or
a portion of authorized shares under the 2009 Plan for award pursuant to such
sub-plan(s), as it believes to be necessary or appropriate for these purposes
without altering the terms of the 2009 Plan in effect for other participants;
provided, however, that the administrator, without stockholder approval, may not
(a) increase individual share ownership limitations in the 2009 Plan, (b)
increase the number of shares available under the 2009 Plan (c) increase the
number of shares available for stock-based awards under the 2009 Plan; (d)
increase the limitations on cash-based awards under the 2009 Plan or (e) cause
the 2009 Plan to cease to satisfy any conditions under Rule 16b-3 under the
Exchange Act. Subject to the foregoing, the management committee may amend,
modify, administer and terminate, as well as prescribe, amend and rescind rules
relating to such sub-plans.
17
BURN RATE
The total number of time-based stock option
and weighted stock-based awards granted in a given year, and performance-based
equity awards paid in a given year, expressed as a percentage of the number of
basic common shares outstanding as of the end of the year, is referred to as the
“Burn Rate.” In 2009, we committed to our stockholders that for the three years
commencing on January 1, 2009, we will limit the number of shares of common
stock subject to options, stock appreciation rights and stock awards under our
equity compensation plans, including the 2009 Plan, to an average of 4.01% of
our weighted average basic shares outstanding. For 2008 and 2009, our “Burn
Rates” were 2.77% and 3.17%, respectively, well below the limits we agreed to in
2009, and our Burn Rate for 2007 was 4.68%, for an average Burn Rate over those
three fiscal years of 3.54%.
OTHER CONSIDERATIONS
The Code allows publicly held corporations to
deduct compensation in excess of $1,000,000 paid to a corporation’s chief
executive officer and the three other most highly compensated executive officers
serving on the last day of the fiscal year, excluding the chief financial
officer, if the compensation is payable solely based on the attainment of one or
more performance goals and certain statutory requirements are satisfied. We
intend for compensation arising from grants of awards under the 2009 Plan that
are based on performance goals, and compensation arising from grants of stock
options and stock appreciation rights granted at fair market value, to be
deductible by us as qualified performance-based compensation not subject to the
$1,000,000 limitation on deductibility. However, other considerations, such as
providing our executive officers who are subject to Code Section 162(m) with
competitive and adequate incentives to remain with and increase our business
operations, financial performance and prospects, as well as rewarding
extraordinary contributions, also significantly factor into the administrator’s
compensation decisions. The administrator has and expects to continue to
authorize payment of compensation to executive officers outside the limits of
Code Section 162(m).
NEW PLAN BENEFITS
No awards will be granted with respect to the
additional shares of common stock for which we are seeking approval under
Proposal 2 prior to approval by the stockholders of the Company.
The Board of Directors Unanimously Recommends
That You Vote FOR Proposal 2.
PROPOSAL NO. 3 — RATIFY THE RETENTION OF KPMG
LLP AS FTI CONSULTING, INC.’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
THE YEAR ENDING DECEMBER 31, 2010
The Audit Committee has retained the firm of
KPMG LLP (“KPMG”) as the independent registered public accounting firm to audit
the Company’s books and accounts for the year ending December 31, 2010. KPMG has
served as the Company’s independent registered public accounting firm since
2006. KPMG has confirmed to the Audit Committee and us that it complies with all
rules, standards and policies of the Public Company Accounting Oversight Board
(“PCAOB”) and the SEC governing auditor independence.
We are seeking stockholder ratification of
that action. Although stockholder ratification of the retention of our
independent registered public accounting firm is not required by our By-Laws or
otherwise, we are submitting the selection of KPMG for ratification as a matter
of good corporate governance practice. Even if the retention is ratified, the
Audit Committee in its discretion may appoint an alternative independent
registered public accounting firm if it deems such action appropriate. If the
Audit Committee’s selection is not ratified, the Audit Committee will take that
fact into consideration, together with such other factors it deems relevant, in
determining its retention of an independent registered public accounting
firm.
KPMG’s representative will be present at the
annual meeting and will have the opportunity to make a statement if he desires
to do so and to respond to appropriate questions asked by stockholders. See
“Principal Accountant Fees and Services” for a description of the fees paid to
KPMG for the fiscal years ended December 31, 2008 and December 31, 2009, and
other matters relating to the procurement of services.
The Board of Directors Unanimously Recommends
That You Vote FOR Proposal 3.
18
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES
INDEPENDENCE OF DIRECTORS
For a director to be considered independent,
the Board must affirmatively determine that the director does not have any
direct or indirect material relationship with FTI or our subsidiaries, and is
not otherwise automatically disqualified by the NYSE independence standards as
set forth in Section 303A of the NYSE corporate governance rules. The Board has
established Categorical Standards of Director Independence, which are the same
as the NYSE Section 303A standards governing director independence, as currently
in effect, and recognizes that a director is “independent” if he or she does not
have a material relationship with us (directly or as a partner, stockholder or
officer of an organization that has a relationship with us), considering all
facts and circumstances that the Board determines are relevant.
The Board, upon the recommendation of the
Nominating and Corporate Governance Committee, determined that each of the
following non-employee directors who served during the year ended December 31,
2009, satisfied the independence requirements set forth in the Company’s
Categorical Standards of Director Independence and Section 303A of the NYSE
corporate governance rules during that year. Our Categorical Standards of
Director Independence are available on our website at http://www.fticonsulting.com, under “About FTI—Governance.”
(1)
|
|
Brenda J. Bacon |
|
(5) |
|
Matthew F. McHugh |
(2) |
|
Mark H. Berey |
|
(6) |
|
Gerard E. Holthaus (1) |
(3) |
|
Denis J. Callaghan |
|
(7) |
|
Gary C. Wendt (2) |
(4) |
|
James W. Crownover |
|
|
|
|
____________________
(1) |
|
In determining
Mr. Holthaus’ independence, the Board considered the April 2009 engagement
of FTI by certain lenders to Algeco Scotsman to provide financial advisory
services. During 2009, Mr. Holthaus was the Chief Executive Officer and
executive Chairman of the Board of Algeco Scotsman. During the course of
FTI’s engagement, the Board determined that it could not affirmatively
find that Mr. Holthaus was independent. FTI’s engagement by such lenders
concluded in the fourth quarter of 2009. At its December 16, 2009 meeting,
the Board affirmatively found that Mr. Holthaus qualifies as an
independent director. Fees in connection with the engagement, amounted to
less than the greater of $1.0 million or 2% of that firm’s consolidated
gross revenues for 2009 and, accordingly, Mr. Holthaus is not
automatically disqualified from being independent under the NYSE
rules. |
|
(2) |
|
Mr. Wendt was a
director of FTI until June 3, 2009. |
During 2009, the Board determined that George
P. Stamas, a Partner with K&E, has a material indirect relationship with
FTI, based on corporate legal services provided to the Company by K&E. Fees
paid to K&E amounted to less than the greater of $1.0 million or 2% of that
firm’s consolidated gross revenues for each of 2007, 2008 and 2009 and,
accordingly, Mr. Stamas is not automatically disqualified from being independent
under the NYSE rules. Jack B. Dunn, IV and Dennis J. Shaughnessy do not qualify
as independent directors because they are executive officers of the Company. In
2009 and during the preceding three years, we have not made charitable
contributions to any organization in which a director serves as an employee,
officer, director or trustee, which in any single year exceeded the greater of
$1.0 million or 2% of such organization’s gross revenues.
19
INFORMATION ABOUT THE NOMINEES FOR CLASS II
DIRECTOR AND THE OTHER DIRECTORS
Ms. Bacon and Messrs. Crownover, Shaughnessy
and Stamas are currently the Class II directors of FTI. The Class II nominees
were recommended for nomination by the Nominating and Corporate Governance
Committee, and nominated by the full Board, on February 23, 2010. See “Proposals
to be Presented at the Annual Meeting — Proposal 1 — Elect as Class II Directors
the Four Nominees Named in the Proxy Statement” and “ — Nominating and Corporate
Governance Committee – Director Nomination Process” in this proxy statement for
additional information.
Information about the four nominees
for Class II director and the other directors is set forth below:
|
|
|
|
Director |
|
Principal
Occupation, |
Name |
|
Age |
|
Since |
|
Business Experience and Director
Qualifications |
Class II Nominees for |
|
|
|
|
|
|
Director |
|
|
|
|
|
|
|
Brenda J. Bacon |
|
59 |
|
2006 |
|
Ms. Bacon has
extensive experience in the healthcare industry and management experience
at the executive officer level. She is currently the President and Chief
Executive Officer of Brandywine Senior Living, a company she co-founded in
1996 and which now owns and operates 19 senior living communities in five
states. Ms. Bacon became President and Chief Executive Officer in July
2004. From May 2003 to July 2004, Ms. Bacon was its President and Chief
Operating Officer. From 1989 to 1993, Ms. Bacon served as Chief of
Management and Planning, a cabinet-level position under New Jersey
Governor James J. Florio. In this capacity, she oversaw all health care
and human services reform efforts and departments, and served as a senior
advisor to the Governor. Ms. Bacon currently serves on the Board of the
Assisted Living Federation of America and the Executive Board of the
American Senior Housing Association. She is also a director of the Boys
and Girls Club of Camden County, New Jersey. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
Qualifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
- Business and management
leadership – current CEO of the owner and operator of 19 senior living
communities.
- Industry sector experience – healthcare sector
experience, an important industry focus of FTI.
- U.S. governmental and policy making experience in
healthcare sector – former cabinet level position under former New
Jersey Governor, James Florio.
- Other leadership experience - director or trustee of
healthcare policy making associations and charitable
institutions.
|
20
|
|
|
|
Director |
|
Principal
Occupation, |
Name |
|
Age |
|
Since |
|
Business Experience and Director
Qualifications |
Class II Nominees for |
|
|
|
|
|
|
Director |
|
|
|
|
|
|
|
James W. Crownover |
|
66 |
|
2006 |
|
Mr. Crownover has extensive global consulting company experience
and management experience at the executive level. Mr. Crownover had a
30-year career with McKinsey & Company, Inc., a global management
consulting firm, from which he retired in 1998. During his 30-year career,
he advised leading businesses, governments and institutions, primarily in
the energy industry sector. He headed McKinsey’s Southwest practice for
many years, and also served as co-head of the firm’s worldwide energy
practice, working in Asia, Europe and Latin America, as well as in the
U.S. In addition, he served as a member of McKinsey’s Board of Directors.
Mr. Crownover also is Chairman of the Board of Trustees of Rice University
and a director of the Houston Grand Opera.
Mr. Crownover is a director
and a member of the Organization, Compensation and Governance, and
Environment, Health and Safety (Chair) Committees of Chemtura Corporation,
a diversified chemical company offering a wide portfolio of products to a
number of markets, including agriculture, building and construction,
consumer, electrical and electronics, industrial and transportation. He is
a director and member of the Governance (Chair) and Compensation
Committees of Weingarten Realty, a real estate leasing company offering
shopping center and industrial locations across the U.S. Mr. Crownover is
also a director and a member of the Audit and Integration Committees of
Republic Services, Inc., a solid waste and environmental services
company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
Qualifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
- Global business and
management leadership – former leader of McKinsey & Company’s
Southwest practice and worldwide energy practice, working in Asia,
Europe and Latin America as well as in the U.S.
- Industry sector experience –
30-year career providing consulting services with McKinsey & Company
and energy sector experience, important business and industry focuses of
FTI.
- Outside public board and
committee experience - director of three other public
companies.
- Other leadership experience
- former member of board of directors of McKinsey & Company and
director or trustee of educational and charitable institutions.
|
21
Name |
|
Age |
|
Director Since |
|
Principal Occupation, Business Experience and Director
Qualifications |
Class II Nominees
for Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J.
Shaughnessy
|
|
62
|
|
1992
|
|
Since October
2004, Mr. Shaughnessy has been our executive Chairman of the Board. From
1989 to October 2004, Mr. Shaughnessy was a General Partner of Grotech
Capital Group, Inc., a private equity firm, which managed approximately
$1.0 billion in private equity funds. He headed up Grotech’s “traditional
investment group,” which invested in expansion, mid-market buyouts and
restructuring opportunities. The group focused on consumer and financial
products and services, healthcare, and industrial outsourcing and
distribution. Mr Shaughnessy continues to be a non-voting special general
partner of certain partnerships affiliated with Grotech. Prior to becoming
a General Partner of Grotech, Mr. Shaughnessy was the Chief Executive
Officer of CRI International, Inc., an international petroleum refining
service business. He successfully sold its manufacturing subsidiary, the
Katalistiks Group, to Union Carbide Corporation in 1984 and sold the
entire CRI group to Shell Oil in 1989.
Mr. Shaughnessy
is a director and a member of the Compensation and Nominating Committees
of TESSCO Technologies, Inc., an innovative wireless technologies
supplier.
Director
Qualifications:
- Global business and
management leadership - current executive Chairman of the Board of FTI
and former chief executive officer of CRI International,
Inc.
- Industry sector experience –
capital markets, mergers and acquisitions and financial transactions
experience, important business focuses of FTI, as Chairman of the Board
of FTI, former chief executive officer of CRI International, Inc. and a
former general partner of Grotech Capital Group.
- Outside public board and
committee experience – director of other public
company.
- Outside private board
experience – former director of private companies.
- Other leadership experience
- director or trustee of non-public and charitable institutions.
|
22
Name |
|
Age |
|
Director Since |
|
Principal Occupation, Business
Experience and Director Qualifications |
Class II Nominees
for Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George P.
Stamas
|
|
58
|
|
1992
|
|
Since 2002, Mr.
Stamas has been a Partner of the law firm of Kirkland & Ellis LLP,
advising leading U.S. and international public and private corporations in
planning and structuring complex business transactions, including mergers
and acquisitions, buy-outs, private equity investing, fund formations,
initial public offerings and debt and equity restructurings, in numerous
industries, including energy, finance, construction, health care, and
professional sports, as well as counseling corporations and boards of
directors on corporate governance matters and crisis situations. From 1999
to January 2002, Mr. Stamas was Vice Chairman of the Board of Deutsche
Banc Alex Brown, Inc. He is a venture partner of New Enterprise
Associates, an international venture capital firm with approximately $10.0
billion under management. He serves on the board of directors of Gridpoint
Technologies, a private smart grid solutions company based in Washington,
DC. Mr. Stamas is active in numerous local and national civic affairs. He
is a limited partner of the Baltimore Orioles L.P., the Washington
Capitals and the Washington Wizards.
Mr. Stamas is a
director of NexCen Brands, Inc., a company that owns and manages seven
brands covering quick service restaurants and retail footwear and
accessories.
Director
Qualifications:
- Global business and
management leadership – partner of Kirkland & Ellis
LLP.
- Industry sector experience –
capital markets, mergers and acquisitions and financial transactions
experience, important business focuses of FTI, as a partner of Kirkland
& Ellis LLP, former vice chairman of Deutsche Bank Securities, Inc.
and venture partner of private equity firm.
- Outside public board and
committee experience – director of other public
company.
- Outside private board and
committee experience – director of private technology company and former
vice chairman of investment bank.
- Other leadership experience
- director or trustee of charitable institutions.
|
23
Name |
|
Age |
|
Director Since |
|
Principal Occupation, Business
Experience and Director Qualifications |
Class I Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denis J.
Callaghan
|
|
67
|
|
2000
|
|
Mr. Callaghan
has extensive experience analyzing the insurance and banking industry
sectors. He retired from Deutsche Bank Securities Inc. in February 2000,
where he was the Director of North American Equity Research. Prior to
becoming Director of Equity Research in 1992, Mr. Callaghan was
responsible for the Insurance and Financial Services Research Groups of
Alex. Brown & Sons Incorporated, an investment banking firm that was
acquired by Deutsche Bank in 2000. Prior to joining Alex. Brown in 1988,
he was a senior insurance analyst and first vice president with Paine
Webber.
Director
Qualifications:
- Business, management and
finance leadership – former director of North American Equity Research
of Deutsche Bank Securities, Inc., director of Equity Research of Alex.
Brown & Sons Incorporated and vice president of Paine
Webber.
- Industry sector experience –
capital markets, mergers and acquisitions, banking and insurance
industry experience, important business and industry focuses of
FTI.
- Other leadership experience
– former member of private company boards in private equity
industry.
|
|
|
|
|
|
|
|
Matthew F.
McHugh
|
|
71
|
|
2005
|
|
Congressman
McHugh, after retiring from Congress, was a senior advisor at The World
Bank, an international financial institution that provides leveraged loans
to developing countries for capital programs. Congressman McHugh was a
senior counselor to the President of The World Bank from May 1993 to June
2005, an employee until December 2000, and beginning in December 2000 a
consultant. From 1975 through 1992, Congressman McHugh was a U.S.
Representative in Congress for the 27th and 28th Congressional Districts
of New York. He was also a member of the House Appropriations Committee,
from 1978 through 1992, and the House Permanent Select Committee on
Intelligence, from 1985 through 1990. In 1991, he was appointed Acting
Chairman of the Committee on Standards of Official Conduct. Congressman
McHugh is an attorney. He is a director of the U.S. Association of Former
Members of Congress, a non-profit public service organization promoting
public understanding of the U.S. Congress, the Villanova Law School Board
of Consultants, an advisory board, and the Central European and Eurasia
Law Initiative of the American Bar Association, an international technical
legal assistance program.
Director
Qualifications:
- U.S. governmental,
regulatory and policy making leadership – former U.S. Congressman for 18
years and member of important committees (House Appropriations
Committee, House Permanent Select Committee on Intelligence and acting
chairman of Committee on Standards of Official
Conduct).
- Business experience – former
advisor to the president of The World Bank and general counsel of
Cornell University.
- Other leadership experience
– director or trustee of associations and educational and charitable
institutions.
|
24
Name |
|
Age |
|
Director Since |
|
Principal Occupation, Business
Experience and Director Qualifications |
Class III
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark H.
Berey
|
|
57
|
|
2004
|
|
Mr. Berey has
extensive knowledge and experience of the real estate industry and
executive level management experience of both public and private
companies. He is President of MHB Ventures LLC, a real estate and
hospitality consulting company founded by him in September 2007. During
2008 and 2009, Mr. Berey served as an Executive Vice President of Miller
Global Properties, a real estate company specializing in the development
of office and hotel properties in the U.S. From its formation in 2001 to
December 2007, Mr. Berey was Executive Vice President, Chief Financial
Officer and a director of Avendra, LLC, a spinoff of Marriott
International’s online procurement division, serving the hospitality
industry in North America and the Caribbean. He’s had further extensive
executive management and finance experience as a Senior Vice President and
Chief Financial Officer of Giant Food of Landover Maryland, an Executive
Vice President and Chief Financial Officer of Discovery.com, and
President, Chief Executive Officer and Chairman of the Board of Sutton
Place Gourmet, Inc. Mr. Berey is a director of Gilchist & Soames, a
worldwide supplier of custom logo and stock brand guest amenities to
luxury hotels and resorts. Mr. Berey is a director of R.E.A.P., which
promotes professional opportunities for minorities in commercial real
estate, and a trustee of National Jewish Health, the leading respiratory
hospital and research institute in the U.S.
Director
Qualifications:
- Business, management and
finance leadership – president of MHB Ventures, LLC, former chief
financial officer of Avendra LLC, Discovery.com and Giant Food of
Landover Maryland, and chairman, president and chief executive officer
of Sutton Place Gourmet, Inc.
- Industry sector experience –
real estate and hospitality industry sector experience, important
industry focuses of FTI, as an officer of MHB Ventures and former
officer of Avendra LLC, Discovery.com, Giant Foods of Landover Maryland
and Sutton Place Gourmet, Inc.
- Outside private board and
committee experience – director of a private company in the hospitality
industry.
- Other leadership experience
– director or trustee of charitable institutions.
|
25
Name |
|
Age |
|
Director Since |
|
Principal Occupation, Business
Experience and Director Qualifications |
Class III
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack B. Dunn,
IV
|
|
58
|
|
1992
|
|
Mr. Dunn has
served as our Chief Executive Officer since October 1995 and as a director
since 1992. In May 2004, he assumed the position of President, a position
he also held from October 1995 to December 1998. He also served as our
Chairman of the Board from December 1998 to October 2004. From May 1994 to
October 1995, he served as our Chief Operating Officer. He joined FTI as
its Chief Financial Officer in 1992. Prior to joining us, he was a member
of the Board of Directors and a Managing Director of Legg Mason Wood
Walker, Incorporated, a regional investment banking firm where he directed
its Baltimore corporate finance and investment banking activities. Mr.
Dunn is a limited partner of the Baltimore Orioles L.P. Prior to his
investment banking career, Mr. Dunn practiced corporate and securities
law.
Mr. Dunn is a
director and a member of the Compensation and Corporate
Governance/Nominating Committees (Chair) of Pepco Holdings, Inc., one of
the largest energy delivery companies in the Mid-Atlantic
region.
Director
Qualifications:
- Global business, management
and finance leadership – current President and Chief Executive Officer
and former Chief Financial Officer of FTI.
- Industry sector experience –
capital markets, investment banking and mergers and acquisitions
experience, important FTI business focuses, as President and Chief
Executive Officer of FTI Consulting, Inc. and managing director and
member of board of directors of Legg Mason Wood Walker
Incorporated.
- Outside public board and
committee experience – director and former director of other public
companies.
- Other leadership experience
- director or trustee of non-public and charitable institutions.
|
26
Name |
|
Age |
|
Director Since |
|
Principal Occupation, Business
Experience and Director Qualifications |
Class III
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerard E.
Holthaus
|
|
60
|
|
2004
|
|
Mr. Holthaus
has extensive management experience at the executive officer level with
both public and private companies and finance experience. In April 2010,
Mr. Holthaus stepped down as Chief Executive Officer of Algeco Scotsman
and assumed the position of non-executive Chairman of the Board. From
November 2007 to April 2010, Mr. Holthaus held the positions of executive
Chairman of the Board and Chief Executive Officer of Algeco Scotsman,
responsible for all operations of the combined company in North America
and Europe. Algeco Scotsman is the leading global provider of modular
space solutions and a top-five global company in the rental services
market. From April 1997 to October 2007, Mr. Holthaus was President and
Chief Executive Officer of Williams Scotsman International, Inc., which is
now a subsidiary of Algeco Scotsman. Williams Scotsman International, Inc.
was a public company, prior to its acquisition by Algeco Scotsman. Before
joining Williams Scotsman, Mr. Holthaus served as a senior vice president
of MNC Financial, Inc. from April 1988 to June 1994. From 1971 to 1988,
Mr. Holthaus was associated with Ernst & Young LLP, where he served as
a Baltimore-based partner from 1982 to 1988. Mr. Holthaus is a director of
The Baltimore Life Companies, a mutual life insurance company. In
addition, he is a trustee of the Sellinger School of Business at Loyola
University. He is a certified public accountant.
Director
Qualifications:
- Global business, management
and finance Leadership – former chief executive officer of Algeco
Scotsman and former chief executive officer and chief financial officer
of Williams Scotsman International, which is now a subsidiary of Algeco
Scotsman.
- Industry and business sector
experience – accounting, real estate, construction and banking sector
experience, important industry focuses of FTI, as a former executive of
Algeco Scotsman and MNC Financial, Inc., a former partner of Ernst &
Young LLP and as a certified public accountant.
- Outside private board and
committee experience – Chairman of the Board of Algeco Scotsman and
director of insurance company.
- Other leadership experience
– director or trustee of educational and charitable institutions.
|
DIRECTOR ATTENDANCE AT
MEETINGS
Director Attendance at Board and Committee
Meetings
Our policy is that each director should attend
all meetings of the Board and each Committee on which he or she serves, unless
excused for reasons of serious illness or extreme hardship. During 2009, the
Board held seven regular and five special meetings for a total of 12 meetings,
the Audit Committee held six regular and five special meetings for a total of 11
meetings, the Nominating and Corporate Governance Committee held six regular
meetings and three special meetings for a total of nine meetings, and the
Compensation Committee held six regular and six special meetings for a total of
12 meetings. Each joint meeting of the Board and any Committee has been counted
as a separate meeting of the Board and the applicable Committee(s) for purposes
of presenting this information. During 2009, each director attended at least 75%
of the regular and special meetings of the Board and each Committee held during
the time period he or she served as a Committee member.
27
Director Attendance at Other
Meetings
Our non-management and independent directors
met in closed (executive) sessions without the presence of management
periodically throughout the year. The Presiding Director chairs the meetings of
the non-management and independent directors. During 2009, our non-management
directors (which consist of our independent non-employee directors and Mr.
Stamas) met in closed (executive) session five times without management and our
independent directors met in closed (executive) session four times without
management. Each of the non-management and independent directors attended at
least 75% of those meetings.
The Company’s policy is that all directors
should attend the annual meeting of stockholders absent a good reason. All
continuing directors attended our 2009 Annual Meeting of
Stockholders.
COMMITTEES OF THE BOARD OF
DIRECTORS
Committees
During 2009, our Board of Directors had three
standing committees: Audit, Compensation and Nominating and Corporate
Governance. In addition to the standing Committees, during 2009, the Board
convened a special committee, composed of Messrs. Shaughnessy, Dunn, Callaghan
and Holthaus to establish the terms of the accelerated stock buyback transaction
entered into with an investment bank in November 2009. The special committee met
once in 2009 and all members were in attendance.
The members of each Committee during 2009 who
are currently directors of FTI and the primary functions and other information
relating to each Committee are discussed below:
|
|
|
|
Nominating and |
|
|
|
|
|
|
Corporate |
|
|
Name |
|
Audit(1) |
|
Governance |
|
Compensation (1) |
Brenda J. Bacon (2) |
|
|
|
X |
|
X |
Mark H. Berey (3) |
|
X |
|
X |
|
|
Denis J. Callaghan (4) |
|
X |
|
X |
|
|
James W. Crownover (5) |
|
|
|
X |
|
Chair |
Gerard E. Holthaus (6) |
|
Chair |
|
|
|
X |
Matthew F. McHugh (7) |
|
|
|
Chair |
|
X |
____________________
(1) |
|
Gary C. Wendt was
a member of the Audit Committee and a member and Chair of the Compensation
Committee until June 3, 2009. |
|
|
|
(2) |
|
Ms. Bacon was a
member of the Nominating and Corporate Governance Committee throughout
2009. In February 2009, Ms. Bacon was appointed to the Compensation
Committee. |
|
(3) |
|
Mr. Berey was a
member of the Nominating and Corporate Governance Committee and Audit
Committee throughout 2009 and held the position of Chair of the Audit
Committee from April to December 2009. |
|
(4) |
|
Mr. Callaghan was
a member of the Nominating and Corporate Governance Committee throughout
2009. In February 2009, Mr. Callaghan rotated off of the Compensation
Committee and joined the Audit Committee. |
|
(5) |
|
Mr. Crownover was
a member of the Nominating and Corporate Governance Committee throughout
2009. In February 2009, Mr. Crownover joined the Compensation Committee
and rotated off of the Audit Committee. In June 2009, Mr. Crownover was
appointed Chair of the Compensation Committee. In June 2009, Mr. Crownover
rejoined the Audit Committee until December 2009. |
|
(6) |
|
Mr. Holthaus was
a member and Chair of the Audit Committee and the Compensation Committee
until April 2009 and rejoined the Audit Committee as a member and its
Chair in December 2009. Mr. Holthaus rejoined the Compensation Committee
in January 2010. |
|
(7) |
|
Mr. McHugh was a
member and Chair of the Nominating and Corporate Governance Committee and
a member of the Compensation Committee throughout
2009. |
28
Audit Committee
The Audit Committee is comprised solely of
non-employee directors, none of whom sit on more than three other audit
committees. The Board has determined that all Audit Committee members are
independent pursuant to our Categorical Standards of Director Independence and
the rules of the NYSE and otherwise qualify as audit committee members. The
Board has determined that all the members of the Audit Committee qualify as
“audit committee financial experts” within the meaning stipulated by the
SEC.
A copy of the Charter of the Audit Committee
is available on our website at http://www.fticonsulting.com, under About FTI -
Governance. The Charter of the Audit Committee is reviewed annually, and more
frequently as necessary, to address any new, or changes to, rules relating to
audit committees. The Audit Committee recommends changes to its Charter to the
Nominating and Corporate Governance Committee and the Board for approval. The
Charter of the Audit Committee was last amended and restated as of December 16,
2009, to conform to changes to the NYSE corporate governance rules that were
approved by the SEC on November 25, 2009. The Charter of the Audit Committee (as
Amended and Restated Effective December 16, 2009) has been filed as an exhibit
to our Annual Report on Form 10-K for the year ended December 31, 2009, filed
with the SEC on February 26, 2010.
Functions of the Audit
Committee
- Selects, oversees and approves
fees of our independent registered public accounting firm.
- Reviews and discusses the scope of
the annual audit and written communications to the Audit Committee and
management.
- Oversees our financial reporting
activities, including the annual audit and accounting standards and principles
we follow.
- Approves audit and non-audit
services by our independent registered public accounting firm and authorizes
payment of applicable fees.
- Reviews and discusses our periodic
reports filed with the SEC.
- Reviews and discusses our earnings
press releases and communications with financial analysts and
investors.
- Oversees our internal audit
activities.
- Oversees disclosure controls and
procedures.
- Reviews Section 404 of the
Sarbanes-Oxley Act of 2002 - internal controls over financial
reporting.
- Oversees and monitors our
Whistleblower Policy and related reports.
- Reviews and discusses FTI’s risk
assessment and risk management policies and practices.
- Oversees administration of FTI’s
Policy on Ethics and Business Conduct and other ethics
policies.
- Reviews, discusses and approves
insider and affiliated party transactions.
- Advises the Board with respect to
FTI’s policies and procedures regarding compliance with applicable laws and
regulations.
- Performs an annual self-evaluation
of the Audit Committee.
- Reviews its Charter and recommends
changes.
- Prepares the disclosure required
by Item 407(d)(3)(i) of Regulation S-K promulgated under the Securities Act of
1933, as amended (the “Securities Act”) in the annual proxy statement.
Compensation Committee
The Compensation Committee is comprised solely
of non-employee directors, all of whom the Board has determined are independent
pursuant to our Categorical Standards of Director Independence and rules of the
NYSE. All of the members of the Compensation Committee qualify as “outside
directors” under Code Section 162(m). All of
29
the members of the
Compensation Committee qualify as “non-employee” directors under Rule 16b-3 of
the Exchange Act. A copy of the Charter of the Compensation Committee is
available on our website at http://www.fticonsulting.com, under About FTI - Governance. The Charter of
the Compensation Committee is reviewed annually, and more frequently as
necessary, to address any new, or changes to, rules relating to compensation
committees. The Compensation Committee recommends changes to its Charter to the
Nominating and Corporate Governance Committee and the Board for approval. The
Compensation Committee Charter was last amended and restated as of December 16,
2009, primarily to conform to changes to the NYSE corporate governance rules
that were approved by the SEC on November 25, 2009. A copy of the Charter of the
Compensation Committee (as Amended and Restated Effective December 16, 2009) has
been filed as an exhibit to our Annual Report on Form 10-K for the year ended
December 31, 2009 filed with the SEC on February 26, 2010.
Mr. Dunn, our President and Chief Executive
Officer (“CEO”), and Mr. Shaughnessy, our executive Chairman of the Board
(“Chairman”), attend substantially all regularly scheduled Compensation
Committee meetings but do not attend executive sessions and specially scheduled
meetings of the Compensation Committee to which they have not been invited. They
do not vote on matters before the Compensation Committee; however, the
Compensation Committee and Board of Directors solicit recommendations from the
CEO and Chairman on compensation matters, including as they relate to their own
compensation and the compensation of the executive officers and others. They
also assist the Compensation Committee by providing information such as
financial results, short-term and long-term business and financial plans and
strategic objectives and their views on current compensation programs and
levels, and by recommending individual annual performance measures and/or target
award levels under the FTI Consulting, Inc. Incentive Compensation
Plan.
In the past, the Compensation Committee has
selectively engaged outside compensation consultants for advice regarding
compensation issues.
Functions of the Compensation
Committee
- Approves compensation of FTI’s
president and chief executive officer and executive chairman of the
board.
- Approves compensation of other
executive officers.
- Administers our equity-based
compensation plans.
- Establishes performance goals,
individual target awards, subjective criteria and oversees all aspects of our
executive officer incentive compensation plan.
- Approves awards of stock options
and other forms of equity-based compensation under our equity compensation
plans.
- Reviews and approves employment,
consulting and other contracts or arrangements with present and former
executive officers.
- Performs annual performance
evaluations of our CEO and Chairman in conjunction with the Presiding Director
and Nominating and Corporate Governance Committee.
- Performs an annual self-evaluation
of the Compensation Committee.
- Reviews its Charter and recommends
changes.
- Prepares the disclosures required
by Item 407(e)(5) of Regulation S-K promulgated under the Securities Act in
the annual proxy statement.
Compensation Committee Interlocks and Insider
Participation
During the fiscal year ended December 31,
2009, no director who served as a member of the Compensation Committee has
served as one of our officers or employees at any time. None of our executive
officers serves as a member of the board or compensation committee of any other
company that has an executive officer serving as a member of our Board or
Compensation Committee.
30
Nominating and Corporate Governance
Committee
The Nominating and Corporate Governance
Committee consists of only non-employee directors, who qualify as independent
directors under our Categorical Standards of Director Independence and the NYSE
corporate governance rules. The Nominating and Corporate Governance Committee
operates under a written Charter, last amended and restated as of December 16,
2009, which has been approved by the Board and adopted by that Committee. A copy
of the Charter of the Nominating and Corporate Governance Committee is available
on our website at http://www.fticonsulting.com, under About
FTI-Governance. The Charter of the Nominating and Corporate Governance Committee
is reviewed annually, and more frequently as necessary, to address any new, or
changes to, rules relating to nominating and governance committees. The
Nominating and Corporate Governance Committee recommends changes to its Charter
to the Board for approval. The Charter of the Nominating and Corporate
Governance Committee was last amended and restated as of December 16, 2009, to
clarify the division of certain responsibilities relating to the oversight of
non-employee director compensation. The Charter of the Nominating and Corporate
Governance Committee (as Amended and Restated Effective December 16, 2009) has
been filed as an exhibit to our Annual Report on Form 10-K for the year ended
December 31, 2009 filed with the SEC on February 26, 2010.
Functions of the Nominating and Corporate
Governance Committee
- Identifies, qualifies and
recommends the slate of director nominees for election to our
Board.
- Reviews and recommends
non-employee director compensation.
- Identifies, qualifies and
recommends the slate of nominee members and Chairs for appointment to Board
Committees.
- Identifies, qualifies and
recommends candidates to fill vacancies occurring between annual stockholder
meetings.
- Monitors compliance with, reviews
and recommends changes to, our Corporate Governance Guidelines, the Committee
Charters and other policies and practices relating to corporate governance and
responsibility.
- Monitors, reviews and responds to
stockholder communications with non-management directors together with the
Presiding Director.
- Oversees the process for director
education.
- Oversees the process for Board and
Committee annual self-evaluations.
- Oversees the process for
performance evaluations of our CEO and Chairman in conjunction with the
Presiding Director and Compensation Committee.
- Responsible for the process
relating to succession planning for the CEO, Chairman and other executive
officer positions.
- Reviews directors’ and officers’
liability insurance terms and limits.
- Performs an annual self-evaluation
of the Nominating and Corporate Governance Committee.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
– DIRECTOR NOMINATION PROCESS
Identification and Nomination of Candidates as
Class II Directors for Election at 2010 Annual Meeting of
Stockholders
Each year the Nominating and Corporate
Governance Committee reviews our Categorical Standards of Director Independence
and applicable NYSE and SEC governance rules, and works with the Board to
develop the education, credentials and characteristics required of Board and
Committee nominees in light of current Board and Committee composition, our
business, operations, long-term and short-term plans, applicable legal and
listing requirements and other factors they consider relevant. The Nominating
and Corporate Governance Committee evaluates existing
31
directors for
reelection each year as if they were new candidates. The Committee may identify
other candidates, if necessary, through recommendations from our directors,
management, employees, the stockholder nomination process or outside
consultants. For a description of how the stockholder nomination process works,
see “Corporate Governance – Stockholder Nominees for Director.” The Nominating
and Corporate Governance Committee will review candidates in the same manner
regardless of the source of the recommendation, and is authorized, in its sole
discretion, to engage outside search firms and consultants to assist with the
process of identifying and qualifying candidates, and has sole authority to
negotiate the fees and terms of such retention.
The Nominating and Corporate Governance
Committee and Board focus on identifying directors and candidates for director
that have a diversity of age, backgrounds, skills and experience, although the
Board does not have a written policy position on this issue. Key attributes that
are considered by the Committee and the Board include:
- leadership and management
experience in complex organizations or experience dealing with complex
problems, including practical understanding of strategy, processes, risk
management and other factors that drive growth and change;
- finance experience that
demonstrates an understanding of finance and financial information and
processes;
- industry experience as executives,
directors or leaders of companies in industries to which we provide services;
and
- global experience managing or
growing companies outside of the U.S.
In addition, the Committee considers
other factors, as it determines to be appropriate, including:
- demonstrated strength of character
and integrity, credibility and sound judgment;
- mature and practical
judgment;
- public company board or equivalent
experience, as well as the number of boards of other public companies on which
such candidate sits, which may not exceed three;
- the extent to which the candidate
would fill a present need on the Board; and
- sufficient time to devote to the
affairs of FTI, as well as other factors related to the ability and
willingness of a candidate to serve, or an existing member of the Board to
continue his or her service.
All of FTI’s current directors have leadership
experience at companies, many with operations outside the U.S., as well as
experience on boards of companies or organizations, which provide the directors
with an understanding of different business processes, challenges and
strategies. Many of our directors have experience in industries that provide
services similar to those provided by industry segments serviced by FTI
professionals, which enables them to contribute unique perspectives to the
Board. Further, current directors have other experiences that make them valuable
members, such as prior public policy or regulatory experience that provide
insight into issues faced by our clients and our corporation. The Committee and
the Board believe that the above-mentioned attributes, along with the leadership
skills and other experiences of the nominees as Class II director and its other
directors, provide the Board with the perspectives and judgment necessary to
guide the Company’s strategies and monitor their execution.
On February 23, 2010, the Nominating and
Corporate Governance Committee took action to recommend the nominations of Ms.
Bacon and Messrs. Crownover, Shaughnessy and Stamas as Class II directors to
stand for election at the 2010 Annual Meeting. The Board accepted the
Committee’s recommendations and approved the nominations on February 23, 2010.
The directors’ experiences, qualifications and skills that the Board considered
in their renomination are included in their individual biographies as described
under “Information about the Board of Directors and Committees – Information
about the Nominees for Class II Director and the Other Directors.”
COMPENSATION OF NON-EMPLOYEE DIRECTORS AND
STOCK OWNERSHIP GUIDELINES
General
Non-employee directors receive an annual
retainer payment and equity compensation as described below. Employee directors
do not receive any separate compensation for their Board activities. We
reimburse our non-employee directors for their out-of-pocket expenses incurred
in the performance of their duties as our directors
32
(including expenses
related to spouses when spouses are invited to attend Board events), and
non-employee directors may travel on the corporate aircraft to Board events. We
do not pay fees for attendance at Board and Committee meetings.
Non-Employee Director Compensation
Plan
Annual Retainer
The annual retainer amount payable to
non-employee directors for 2009 was $50,000, plus the following additional
payments to Chairs of Committees and the Presiding Director: Chair of the Audit
Committee - $10,000, Chair of the Compensation Committee - $7,500, Chair of the
Nominating and Corporate Governance Committee - $5,000 and Presiding Director -
$15,000.
Annual Equity
Award
Non-employee directors receive an annual
payment denominated at a fixed value of $250,000 (U.S. dollars) per year in the
form of restricted stock valued at the closing price per share of FTI common
stock as reported on the NYSE for the date of grant. The restricted stock will
be nontransferable and will vest in full on the first anniversary of the date of
grant. Vesting of restricted stock will accelerate upon the non-employee
director’s death or permanent disability, immediately prior to a change in
control and in the event of a non-employee director’s cessation of service at
the expiration of his or her then-current term as a director of the Company due
to (i) the Company’s failure to renominate such non-employee director for
service on the Board, (ii) the request of such non-employee director, or as a
result of a voluntary resignation, or (iii) the failure of the Company’s
stockholders to re-elect such director for service on the Board, in each case
other than for “cause” (as reasonably determined by the Board in its good faith
discretion). If no shares are then available under a stockholder approved equity
compensation plan, the non-employee director will receive the payment in cash,
subject to the vesting terms described above.
Non-Employee Director Deferred
Compensation Election
Non-employee directors may elect to defer all
or a portion of their annual retainer and equity award. Deferred annual
retainers will be designated as a number of stock units determined by dividing
(a) the applicable annual retainer payments, by (b) the closing price per share
of FTI common stock as reported on the NYSE for the applicable date of grant.
All stock units will be (i) immediately vested , (ii) nontransferable and (iii)
settled in shares of common stock on a one-for-one basis.
Each director who elects to defer his or her
annual equity payment will receive a number of restricted stock units determined
by dividing (i) $250,000 by (ii) the closing price per share of FTI common stock
as reported on the NYSE for the date of grant. Restricted stock units will be
(i) subject to vesting on the first anniversary of the date of grant, (ii)
nontransferable and (iii) settled in shares of common stock on a one-for- one
basis, to the extent vested.
Non-employee directors may elect a payment
date for a year’s deferred payment(s) in accordance with Code Section 409A. The
common stock represented by the stock unit or restricted stock unit awards will
be paid out to the applicable non-employee director or his or her estate on the
earlier to occur of (i) the elected payment date (if one has been elected) or
(ii) a separation from service event as defined in Code Section 409A, such as
the non-employee director’s death, permanent disability, other date that he or
she is no longer a director of the Company or upon a change in control
of the Company. Non-employee directors with stock units and restricted stock
units will have no voting or other rights as a stockholder until shares of our
common stock are issued to the holder upon settlement.
33
Vesting of restricted stock units will
accelerate in the event of a non-employee director’s cessation of service at the
expiration of his or her then-current term as a director of the Company due to
(i) the Company’s failure to re-nominate such non-employee director for service
on the Board, (ii) the request of such non-employee director, or as a result of
a voluntary resignation, or (iii) the failure of the Company’s stockholders to
re-elect such director for service on the Board, in each case other than for
“cause” (as reasonably determined by the Board in its good faith
discretion).
If a director elects to defer his or her
annual retainer in the form of stock units and/or annual equity payment in the
form of restricted stock units, dividend equivalents will be credited in the
form of additional stock units or restricted stock units, should the Board
declare and pay dividends on our common stock. Stock units or restricted stock
units are awarded pursuant to the 2009 Plan.
If no shares are then available under a
stockholder approved equity compensation plan, the non-employee director will
receive the payment in cash, subject to the vesting terms described
above.
Participation and Payment Dates under
the Non-Employee Director Compensation Plan
New non-employee directors joining the Board
after December 31, 2007, will receive their first annual retainer payment on the
date they join the Board and their first annual equity award on the date of the
annual meeting of stockholders for the year they join the Board. Beginning in
2008, the Non-Employee Director Compensation Plan was amended to provide that
incumbent non-employee directors would begin receiving the annual retainer
payment on the date of the annual meeting of stockholders each year. Under the
amended plan, each incumbent director has or will become eligible to receive the
annual equity award on the annual stockholder meeting date for the year
following his or her name: Matthew F. McHugh and George P. Stamas – 2008, Brenda
J. Bacon, Denis J. Callaghan and James W. Crownover – 2009 and Mark H. Berey and
Gerard E. Holthaus – 2010, assuming each is a member of the Board following the
annual stockholders’ meeting for that year. Thereafter, the annual equity award
will be made on the annual stockholders’ meeting date each year. The annual
equity award for the first year that a non-employee director participates in the
amended plan will be prorated based on the date that such director would have
otherwise received payment under the plan as in effect prior to 2008, and the
annual retainer and annual equity award to a new director who joins the Board in
2009 or later will be prorated, depending on when such director first joins the
Board.
Director Summary Compensation
Table
The table below summarizes the compensation
paid by the Company to non-employee directors for the year ended December 31,
2009:
|
|
Fees Earned or |
|
Stock |
|
Option |
|
All Other |
|
|
|
|
|
|
Paid in Cash |
|
Awards |
|
Awards |
|
Compensation |
|
Total |
|
|
($) (1) |
|
($) (2) |
|
($) (2) |
|
($) (3) |
|
($) |
Name of Non-Employee
Director |
|
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
Current Non-Employee
Directors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brenda J. Bacon |
|
|
50,000 |
|
|
|
119,159 |
|
|
— |
|
— |
|
|
169,159 |
|
Mark H. Berey |
|
|
50,000 |
|
|
|
— |
|
|
— |
|
— |
|
|
50,000 |
|
Denis J. Callaghan |
|
|
— |
|
|
|
264,996 |
|
|
— |
|
— |
|
|
264,996 |
|
James W. Crownover |
|
|
57,500 |
|
|
|
151,354 |
|
|
— |
|
— |
|
|
208,854 |
|
Gerard E. Holthaus |
|
|
75,000 |
|
|
|
— |
|
|
— |
|
— |
|
|
75,000 |
|
Matthew F. McHugh |
|
|
55,000 |
|
|
|
249,962 |
|
|
— |
|
— |
|
|
304,962 |
|
George P. Stamas |
|
|
50,000 |
|
|
|
249,962 |
|
|
— |
|
— |
|
|
299,962 |
|
Former Non-Employee
Director: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary C. Wendt (4) |
|
|
— |
|
|
|
— |
|
|
— |
|
— |
|
|
— |
|
____________________
(1) |
|
Includes additional retainer fees in excess of $50,000 per annum
that were paid to the Chairs of the Audit Committee, Nominating and
Corporate Governance Committee and Compensation Committee in the amounts
of $10,000, $5,000 and $7,500, respectively, and the Presiding Director in
the amount of $15,000. All non-employee directors elected to receive their
annual retainers in cash, other than Mr. Callaghan who elected to receive
the 2009 annual retainer in the form of 987 deferred stock units.
|
34
(2) |
|
For
awards of stock, the aggregate grant date fair value has been computed in
accordance with FASB ASC Topic 718. As of December 31, 2009, each director
has the following aggregate number of unvested restricted stock awards or
unreleased stock unit and restricted stock unit awards: Ms. Bacon – 2,354;
Mr. Berey – 6,250; Mr. Callaghan – 6,027; Mr. Crownover – 40,490; Mr.
Holthaus – 34,375; Mr. McHugh – 4,938; and Mr. Stamas – 4,938. These stock
awards have been included in the Stock Ownership Table for each
director. |
|
|
|
There
were no stock options granted to non-employee directors in 2009. As of
December 31, 2009, each director has unexercised stock options outstanding
exercisable for the following number of shares of common stock: Ms. Bacon
– 7,206; Mr. Berey – 73,000; Mr. Callaghan – 183,898; Mr. Crownover – 0;
Mr. Holthaus – 107,700; Mr. McHugh – 0; and Mr. Stamas – 102,945, pursuant
to the 1997 Stock Option Plan, as amended (the “1997 Plan”), the 2004 Plan
or the 2006 Plan, as applicable. These stock option awards have been
included in the Stock Ownership Table for each director to the extent they
have vested or will vest within 60 days of March 30, 2010. |
|
(3) |
|
No
non-employee director received perquisites or other benefits aggregating
more than $10,000. |
|
(4) |
|
Mr.
Wendt was a director of the Company until June 3,
2009. |
Non-Employee Director Equity Ownership
Guidelines
We have adopted equity ownership guidelines
for non-employee directors. Under these guidelines, non-employee directors are
encouraged to attain an investment level in our equity securities having a
cumulative value as of the Equity Ownership Compliance Date (as defined below)
equal to at least $100,000, which is two times the amount of the base annual
retainer. Each non-employee director is encouraged to attain this investment
level by the third anniversary of the date the first non-employee director
equity compensation award is received by him or her (the “Equity Ownership
Compliance Date”). Shares of common stock owned by the non-employee director and
shares of common stock held in trust over which the non-employee director has or
shares investment and/ or voting power are counted towards attaining the
investment level. Option holdings, whether or not vested, do not count. However,
restricted stock and deferred stock units, to the extent vested, will be counted
towards such director’s equity ownership. All non-employee directors currently
have FTI stock holdings that meet or exceed the non-employee director equity
ownership guidelines.
CORPORATE GOVERNANCE
GOVERNANCE PRINCIPLES
We have long believed that sound principles of
corporate governance are required to build stockholder value. Our governance
policies, including Categorical Standards of Director Independence, Corporate
Governance Guidelines, Policy on Ethics and Business Conduct, Policy on
Conflicts of Interest, Anti-Corruption Policy, Whistleblower Policy, Policy on
Disclosure Controls, Committee Charters and Policy Statement on Inside
Information and Insider Trading, can be found on our website at http://www.fticonsulting.com, under About FTI
-Governance. The Nominating and Corporate Governance Committee regularly reviews
corporate governance developments and recommends modifications or new policies
for adoption by the Board and the Committees, as appropriate, to enhance our
corporate governance policies and practices and to comply with laws and rules of
the SEC, the NYSE and other applicable governmental and regulatory
authorities.
In January 2010, the Board and each Committee
conducted their 2009 self-assessments. The Presiding Director compiled the data.
At a February 2010 meeting, the Board and each of the Committees discussed its
own assessment, and the Board reviewed the assessments of the Board and the
Committees to determine whether any revisions to existing practices or policies
or new practices or policies were advisable.
35
BOARD LEADERSHIP STRUCTURE AND PRESIDING
DIRECTOR
To ensure independence and breadth of needed
expertise and diversity of our Board of Directors, our Corporate Governance
Guidelines provide that the Board should have no less than seven and no more
than ten Directors. The Board believes this size permits a full range of
experience and fosters effective interaction and productivity. Pursuant to the
Corporate Governance Guidelines, our Board is free to choose its Chairman of the
Board in any way that it deems best for the Company at any time and we believe
that this flexibility allows our Board to re-evaluate the particular leadership
needs of the Company at any point in time based on the particular facts and
circumstances then affecting our business. Currently, the Chairman of the Board
and CEO position is separated, with Dennis J. Shaughnessy holding the position
of Chairman.
The Board has established the role of
independent Presiding Director as an integral part of our Board leadership
structure to serve as the liaison between the independent and non-management
directors and the executive Chairman and CEO. During 2009, Gerard E. Holthaus
and Matthew F. McHugh have held the position as Presiding Director, with Mr.
Holthaus currently holding that position. Our Presiding Director is elected by
and from our non-management Board members. The role of our Presiding Director
includes (i) presiding over meetings of non-management and independent directors
and providing feedback regarding those meetings to the Chairman and CEO, (ii)
assuring that the Board and the Chairman and CEO understand each other’s views
on critical matters, (iii) monitoring significant issues occurring between Board
meetings and assuring Board involvement when appropriate, (iv) serving as a
sounding board for our Chairman and CEO, (v) ensuring, in consultation with our
Chairman and CEO, the adequate and timely exchange of information and supporting
data between the Company’s management and the Board, (vi) overseeing the Board
and Committee annual self-assessments, (vii) overseeing the CEO and Chairman
annual performance assessments, and (viii) receiving stockholder communications
to the non-management directors.
OVERSIGHT OF RISK
MANAGEMENT
The Audit Committee is responsible for
overseeing of the Company’s risk management policies and procedures. The Company
is exposed to a number of risks including financial risks, competitive risks,
risks relating to operating in foreign countries, operational risks, strategic
risks, day-to-day management risks and general economic and business risks. Our
Chief Risk Officer (“CRO”) and Director of Internal Audit manage our internal
enterprise risk management function. Our CRO and Director of Internal Audit work
closely with our executive management, business segments and corporate functions
to identify and assess risks and mitigate exposures. Our CRO and Director of
Internal Audit regularly report to and discuss with our executive management and
Audit Committee our policies and procedures to assess risk exposure and manage
risks, risks facing the Company, and plans and steps identified or taken to
mitigate risks. Directors who are not members of the Audit Committee attend
these meetings as well. The Audit Committee will also report to the Board on a
regular basis to apprise them of discussions with our executive management, CRO
and Director of Internal Audit regarding the Company’s risk profile and risk
management efforts.
CODE OF CONDUCT
Our written Policy on Ethics and Business
Conduct (the “Code of Ethics” and together with the Policy on Conflicts of
Interest and the Anti-Corruption Policy, the “Ethics Policy”) reflects our
longstanding policies. The Ethics Policy applies to financial professionals,
including our CFO, Corporate Controller and Corporate Treasurer, as well as our
Chairman, President and CEO, Chief Operating Officer and other officers,
directors, employees and independent contractors. We require that they avoid
conflicts of interest, comply with applicable laws, including the Foreign
Corrupt Practices Act, and other legal requirements, protect company assets, and
conduct business in an honest and ethical manner, and otherwise act with
integrity, in our best interest, and in accordance with the Ethics Policy. The
Ethics Policy prohibits insiders from knowingly taking advantage of corporate
opportunities for personal benefit, and taking unfair advantage of our business
associates, competitors and employees through manipulation, concealment, abuse
of privileged information, misrepresentation of material facts, or any other
practice of unfair dealing. Our Code of Ethics is publicly available and can be
found on our website at http://www.fticonsulting.com, under About FTI -
Governance. If we make substantive amendments to the Code of Ethics or grant any
waiver, including any implicit waiver, from a provision of the Ethics Policy to
our Chairman, President and CEO, CFO, Chief Operating Officer or Corporate
Controller, Corporate Treasurer and any of our other officers, financial
professionals and persons performing similar functions, we will disclose the
nature of such amendment or waiver on our website or in a report filed with the
SEC on Form 8-K.
36
STOCKHOLDER NOMINEES FOR
DIRECTOR
We did not receive any notices of stockholder
nominees for director prior to the deadline for 2010 nominations described in
our 2009 proxy statement. Under our By-Laws, nominations for director may be
made by a stockholder who is a stockholder of record on the date of the giving
of the notice of a meeting and on the record date for the determination of
stockholders entitled to vote at such meeting and who delivers notice along with
the additional information and materials required by our By-Laws, including: (a)
as to each person whom the stockholder proposes to nominate for election as a
director, all information relating to such person that is required to be
disclosed in connection with solicitations of proxies for election of directors
by the SEC’s proxy rules and (b) as to the stockholder giving the notice (i) the
name and address of such stockholder as they appear on our books and of the
beneficial owner, if any, on whose behalf the nomination is made, (ii) the class
or series and number of shares of our capital stock owned beneficially or of
record by such stockholder and such beneficial owner, as applicable, (iii) a
description of all arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice, and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors by the SEC’s proxy rules.
Such notice must be accompanied by a written consent of each proposed nominee to
be named as a nominee and to serve as a director if elected. Under our By-Laws a
stockholder must deliver notice of nominees for director to our Corporate
Secretary not less than 90 days and no more than 120 days before the first
anniversary date of the mailing date of the proxy for the preceding year’s
annual meeting, provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
the anniversary date of the preceding year’s annual meeting, notice by the
stockholder must be so delivered not earlier than the 90th day prior to such
annual meeting and not later than the close of business on the later of the 60th
day prior to such annual meeting or the tenth day following the day on which
public announcement of the date of such annual meeting is first made. For the
annual meeting of stockholders in 2011, we must receive this notice no earlier
than December 24, 2010 and no later than January 23, 2011. You may obtain a copy
of our By-Laws, without charge, or submit a nominee for director, by writing to
our Corporate Secretary, c/o FTI Consulting, Inc., 500 East Pratt Street, Suite
1400, Baltimore, Maryland 21202, telephone no. (410) 951-4800. We filed a copy
of our By-Laws, as amended and restated through September 17, 2004, with the SEC
on November 9, 2004 as an exhibit to our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004. We filed Amendment No. 6 to our By-Laws dated
as of December 18, 2008 with the SEC on December 22, 2008 as an exhibit to our
Current Report on Form 8-K dated December 18, 2008. We filed Amendment No. 7 to
our By-Laws dated as of February 25, 2009 with the SEC on March 3, 2009 as an
exhibit to our Current Report on Form 8-K dated February 25, 2009.
COMMUNICATIONS WITH NON-MANAGEMENT
DIRECTORS
Our Whistleblower Policy covers communications
with the non-management directors. It is available on our website at
http://www.fticonsulting.com, under About FTI -
Governance. Stockholders, employees and other interested persons can communicate
with an individual director, the Chair of the Audit Committee, the Presiding
Director or the non-management directors as a group, using the EthicsPoint
system, which allows interested persons to place confidential and anonymous
reports by either telephone or the Internet, without divulging their names or
other personal information. The reporting website can be accessed from any
Internet-enabled computer at www.ethicspoint.com. Telephone reports can be placed by calling toll free (866) 294-3576 in
the United States. EthicsPoint will send reports to designated recipients within
FTI, which includes our Executive Vice President, General Counsel and Chief
Ethics Officer, Executive Vice President and Chief Risk Officer and Associate
General Counsel and Corporate Secretary. If interested persons do not feel
comfortable using the EthicsPoint system, they may communicate with
non-management directors by telephone to our General Counsel at (410) 951-4800,
by mail to FTI Consulting, Inc., 500 East Pratt Street, Suite 1400, Baltimore,
Maryland 21202, or by e-mail to eric.miller@fticonsulting.com. The designated recipients will forward
interested party communications, depending upon the subject matter, to the Chair
of the Nominating and Corporate Governance Committee or Audit Committee, the
Presiding Director, or other appropriate person who is responsible for ensuring
that the interested persons’ concerns are investigated and appropriately
addressed. The designated recipients of the reports will not filter the
communications. Communications to non-management directors relating to our
business will be retained for seven years.
37
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
There were 46,962,666 shares of our common
stock issued and outstanding on April 1, 2010, the record date of this 2010
Annual Meeting of Stockholders. The following table shows the beneficial
ownership of our common stock as of April 1, 2010, by:
- each of the named executive
officers;
- each person known to own
beneficially more than 5% of our outstanding common stock;
- each of our directors and director
nominees; and
- all of our executive officers and
directors as a group.
The amounts and percentages of shares of
common stock beneficially owned are reported on the basis of SEC regulations
governing the determination of beneficial ownership of securities. Under SEC
rules, a person is deemed to be a “beneficial owner” of a security if that
person has or shares voting power or investment power, which includes the power
to dispose of or to direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities with respect to which that
person has a right to acquire beneficial ownership within 60 days. Securities
that can be so acquired are deemed to be outstanding for purposes of computing
such person’s ownership percentage but not for purposes of computing any other
person’s percentage. Under these rules, more than one person may be deemed to be
a beneficial owner of the same securities, and a person may be deemed to be a
beneficial owner of securities as to which such person has no economic
interest.
Except as otherwise indicated in these
footnotes, each of the beneficial owners listed has, to our knowledge, sole
voting and investment power with respect to the indicated shares of common
stock.
|
|
Number of Share |
|
Percentage of Shares |
Name of Beneficial Owner (1) |
|
Beneficially Owned |
|
Beneficially Owned
(%) |
Jack B. Dunn, IV (2) |
|
|
658,722 |
|
|
|
1.40 |
|
Dennis J. Shaughnessy (3) |
|
|
377,708 |
|
|
|
* |
|
Roger D. Carlile (4) |
|
|
89,651 |
|
|
|
* |
|
Jorge A. Celaya (5) |
|
|
66,601 |
|
|
|
* |
|
Dominic DiNapoli (6) |
|
|
274,725 |
|
|
|
* |
|
Brenda J. Bacon (7) |
|
|
28,310 |
|
|
|
* |
|
Mark H. Berey (8) |
|
|
101,625 |
|
|
|
* |
|
Denis J. Callaghan (9) |
|
|
177,546 |
|
|
|
* |
|
James W. Crownover (10) |
|
|
3,600 |
|
|
|
* |
|
Gerard E. Holthaus (11) |
|
|
107,700 |
|
|
|
* |
|
Matthew F. McHugh (12) |
|
|
22,478 |
|
|
|
* |
|
George P. Stamas (13) |
|
|
115,302 |
|
|
|
* |
|
BlackRock, Inc. (14) |
|
|
|
|
|
|
|
|
40
East 52nd Street |
|
|
|
|
|
|
|
|
New
York, New York 10022 |
|
|
3,723,963 |
|
|
|
7.93 |
|
All directors and executive officers as a group (15
persons) |
|
|
2,400,439 |
|
|
|
5.11 |
|
____________________
* |
|
Less than 1% |
|
|
|
(1) |
|
Unless
otherwise specified, the address of these persons is c/o FTI Consulting,
Inc.’s executive office at 777 South Flagler Drive, Phillips Point, Suite
1500 West Tower, West Palm Beach, Florida 33401. |
|
(2) |
|
Includes 47,202 shares of restricted stock and 72,414
performance-based shares, subject to vesting conditions, 424,901 shares of
common stock issuable upon the exercise of stock options, 18,000 shares of
common stock held by his spouse, 450 shares of common stock over which Mr.
Dunn and his son share voting and investment power and 26,250 shares of
common stock held by a GRAT over which Mr. Dunn exercises voting and
investment power. |
38
(3) |
|
Includes 91,481 shares of restricted stock and 22,462
performance-based shares, subject to vesting conditions, and 160,000
shares of common stock issuable upon exercise of stock options.
|
|
(4) |
|
Includes 10,019 shares of restricted stock, subject to vesting
conditions, and 25,508 shares of our common stock issuable upon exercise
of stock options. |
|
(5) |
|
Includes 60,000 shares of our common stock issuable upon exercise
of stock options. Mr. Celaya resigned as an employee of the Company
effective March 30, 2010 and he has been excluded from “all directors and
executive officers as a group” for purposes of the presentation of that
information. |
|
(6) |
|
Includes 80,958 shares of restricted stock, subject to vesting
conditions, and 167,052 shares of our common stock issuable upon exercise
of stock options. |
|
(7) |
|
Includes 2,354 shares of restricted stock, subject to vesting
conditions, and 7,206 shares of our common stock issuable upon exercise of
stock options. |
|
(8) |
|
Includes 3,125 shares of restricted stock, subject to vesting
conditions, and 73,000 shares of our common stock issuable upon exercise
of stock options. |
|
(9) |
|
Includes 4,248 shares of restricted stock, subject to vesting
conditions, 167,023 shares of our common stock issuable upon exercise of
stock options, and excludes 1,779 deferred stock units issued under the
2009 Plan. |
|
(10) |
|
Excludes 40,490 deferred restricted stock units issued under the
2009 Plan. |
|
(11) |
|
Includes 107,700 shares of common stock issuable upon exercise of
stock options. Excludes 37,500 deferred restricted stock units issued
under the 2009 Plan. |
|
(12) |
|
Includes 4,938 shares of restricted stock, subject to vesting
conditions. |
|
(13) |
|
Includes 4,938 shares of restricted stock, subject to vesting
conditions, 102,945 shares of our common stock issuable upon exercise of
stock options and 7,419 shares of our common stock over which Mr. Stamas
and his spouse share voting and investment power. |
|
(14) |
|
Based
on Schedule 13G filed on January 29, 2010. The reporting person reported
sole voting and investment power with respect to the shares.
|
39
EXECUTIVE OFFICERS AND
COMPENSATION
EXECUTIVE AND KEY OFFICERS
We have set forth below information as of
April 1, 2010 about each executive officer and other key officer who is not also
a director:
|
|
|
|
Officer
|
|
|
|
|
Name
|
|
Age
|
|
Since
|
|
Position
|
|
Principal Business Experience For Past
Five Years |
David G. Bannister |
|
54 |
|
2005 |
|
Executive
Vice President and Chief Financial Officer
|
|
Mr. Bannister has been our Executive Vice
President and Chief Financial Officer since March 2010. Mr. Bannister will
retain his role in corporate development. Prior to that appointment, Mr.
Bannister served as our Executive Vice President – Corporate Development
and Chief Administrative Officer from December 2008 to March 2010, our
Executive Vice President – Corporate Development from June 2006 to
December 2008, and our Senior Vice President—Business Development from May
2005 to June 2006. From 1998 to 2004, Mr. Bannister was a General Partner
of Grotech Capital Group. From 1983 to 1998, Mr. Bannister was employed in
the investment banking division of Alex Brown & Sons Incorporated
holding the position of Managing Director when he left in 1998. Mr.
Bannister is a director of Landstar System, Inc., the Chairman of its
Audit Committee and a member of other committees.
|
|
|
|
|
|
|
|
|
|
Roger D. Carlile |
|
47 |
|
2009 |
|
Executive Vice President
and Chief Administrative Officer |
|
Mr. Carlile has been our Executive Vice
President and Chief Administrative Officer since March 2010. Prior to
March 2010, Mr. Carlile served as our Executive Vice President and Chief
Human Resources Officer. In his new role as Chief Administrative Officer,
Mr. Carlile will retain oversight of human resources, in addition to
adding oversight of our client relationship management, internal
technology, procurement, real estate and insurance functions. From
November 2003 to January 2009, Mr. Carlile was a Senior Managing Director
and the global Segment Leader of our Forensic and Litigation Consulting
segment. Prior to joining FTI, Mr. Carlile was a partner of KPMG LLP
serving as its global head of Forensic Services.
|
|
|
|
|
|
|
|
|
|
Dominic DiNapoli |
|
55 |
|
2004 |
|
Executive Vice President and Chief
Operating Officer |
|
Mr. DiNapoli has been our Executive Vice
President and Chief Operating Officer since February 2004. From August
2002 to February 2004, Mr. DiNapoli was a Senior Managing Director in our
Corporate Finance/Restructuring segment. From 1998 to 2002, Mr. DiNapoli
was a Managing Partner of PricewaterhouseCoopers LLP’s U.S. business
recovery services practice.
|
40
|
|
|
|
Officer
|
|
|
|
|
Name
|
|
Age
|
|
Since
|
|
Position
|
|
Principal Business Experience For Past
Five Years |
John A. MacColl |
|
61 |
|
2006 |
|
Executive Vice President and Chief Risk Officer |
|
Mr. MacColl has been an Executive Vice
President and our Chief Risk Officer since January 2006. In August 2007,
Mr. MacColl assumed the position of Chief Compliance Officer. From January
2006 to February 2008, he also held the position of Chief Legal Officer.
From April 2004 to April 2005, Mr. MacColl was Vice Chairman of St. Paul
Travelers, a position he held with its predecessor, The St. Paul
Companies, Inc. from May 2002 to April 2004. From May 1999 to August 2004,
he also held the position of General Counsel of The St. Paul Companies,
Inc. Mr. MacColl joined the St. Paul Companies in 1998, following the
company’s merger with USF&G Corporation, where he served as Executive
Vice President of Human Resources and General Counsel. From April 2005 to
January 2006, Mr. MacColl pursued personal business interests.
|
|
|
|
|
|
|
|
|
|
Eric B. Miller |
|
50 |
|
2006 |
|
Executive Vice President, General Counsel and Chief
Ethics Officer |
|
Mr. Miller joined us in May 2006 and was
elected Senior Vice President and General Counsel in June 2006. In May
2008, Mr. Miller was elected an Executive Vice President of FTI. He
assumed the chief legal officer role in February 2008, and was elected
Chief Ethics Officer effective March 2010. From 1995 to May 2006, Mr.
Miller was a Partner with DLA Piper.
|
|
|
|
|
|
|
|
|
|
Catherine M. Freeman |
|
53 |
|
2007 |
|
Senior Vice President, Controller and
Chief Accounting Officer |
|
Ms. Freeman has been Senior Vice President
and our Controller and Chief Accounting Officer since November 2007. From
April 2004 to July 2007, Ms. Freeman held the position of Vice President,
Corporate Controller, and from July 2007 to November 2007 held the
position of Vice President and Deputy Chief Financial Officer, of AES
Corporation. From August 2001 to March 2004, Ms. Freeman was Vice
President and Corporate Controller of World Kitchen, Inc., and from 1983
to March 2001, held various finance and accounting positions with Fort
James Corporation. During Ms. Freeman’s term as an officer of World
Kitchen, Inc., World Kitchen, Inc. filed for Chapter 11 bankruptcy
protection.
|
|
|
|
|
|
|
|
|
|
Liz Nickles |
|
62 |
|
2010 |
|
Senior Vice President and
Chief Marketing Officer |
|
Ms. Nickels joined FTI as its Senior Vice
President and Chief Marketing Officer in January 2010. From April 2002 to
December 2009, Ms. Nickles was the President of Liz Nickles &
Associates, Inc. and from October 2007 to January 2010 she was also
President of Black Label Financial Brand Development.
|
Our executive officers are appointed by the
Board of Directors, and they serve at the pleasure of our Board, subject to the
terms of written employment arrangements that we have with some of
them.
41
COMPENSATION DISCUSSION AND ANALYSIS
The following discussion of named executive officer (“NEO”) compensation
contains descriptions of various employment related agreements and employee
compensation plans. These descriptions are qualified in their entirety by
reference to the full text or detailed descriptions of the agreements and plans
that we have filed as exhibits to our Annual Report on Form 10-K for the year
ended December 31, 2009 filed with the SEC on February 26,
2010.
The Compensation Committee
All of the Company’s NEOs are elected to their
positions by the Board. As of December 31, 2009, the Company’s NEOs were: its
President and CEO – Jack B. Dunn, IV; Chairman – Dennis J. Shaughnessy; CFO –
Jorge A. Celaya; and Executive Vice President and Chief Operating Officer
(“COO”) – Dominic DiNapoli. Roger D. Carlile was also a NEO as of December 31,
2009, at which time he held the position of Executive Vice President and Chief
Human Resources Officer. In March 2010, Mr. Carlile was appointed our Executive
Vice President and Chief Administrative Officer (“CAO”) and he is referred to by
that position in this proxy statement. Mr. Celaya resigned from the Company
effective March 30, 2010.
The Compensation Committee is responsible for
setting the compensation of our NEOs. It reviews and approves corporate and
individual goals for our CEO and Chairman and reviews the goals of the other
NEOs. It sets the compensation of our CEO and Chairman and reviews the
recommendations of our CEO and Chairman relating to the compensation of other
NEOs and approves the compensation of those officers. See “Information About the
Board of Directors and Committees – Committees of the Board of Directors –
Compensation Committee” for a discussion of the powers of the Compensation
Committee and the roles our CEO and Chairman play in compensation
decisions.
Primary Objectives of Our Compensation
Program
The primary objectives of the
compensation program for our NEOs are to:
- motivate, attract and retain
highly qualified and experienced executives;
- align the interests of our NEOs
with those of our stockholders by rewarding our NEOs for the achievement of
strategic goals that successfully drive our operations and enhance stockholder
value;
- provide incentives for the
creation of long-term stockholder value;
- reward corporate performance;
and
- reward individual
performance.
Design of Our Compensation
Program
The compensation program for our
NEOs is intended to reward performance by:
- maintaining base salary at a
competitive market level;
- evaluating performance on both an
individual and company-wide basis reflecting our progress in meeting
short-term and long-term growth objectives based on designated performance
metrics, including revenue, EBITDA (earnings before interest, taxes,
depreciation and amortization) and earnings per share
targets;
- linking short-term compensation to
individual performance goals set at the beginning of the
year;
- balancing short-term and long-term
goals by delivering compensation through short-term and long-term
incentives;
- delivering a mix of fixed and
at-risk compensation; and
- using equity-based awards that are
linked to stockholder value.
42
In designing the compensation program and in
determining NEO compensation, we also considered the following
factors:
- our size and
complexity;
- our projected growth and expansion
into other businesses;
- our long-term strategic
goals;
- our operating and financial
performance compared with targeted goals;
- our current compensation
levels;
- the level of responsibility,
experience and longevity of our current executive officers;
and
- the competition for strong senior
executives.
The Compensation Committee has not targeted
salary, bonus, equity compensation and total compensation to any peer group. The
Compensation Committee did not engage any compensation consultant to look at the
compensation of any NEO in 2009. In the past, the Compensation Committee has
selectively engaged outside compensation consultants for advice regarding
compensation issues. In 2010, the Compensation Committee retained a compensation
consultant to advise the Committee on market practices and specific FTI
compensation policies and programs. The compensation consultant reports directly
to the Compensation Committee Chairman, and takes direction from the Committee.
The consultant’s work for the Compensation Committee includes data analyses,
market assessments and preparation of related reports. The work done by the
compensation consultant for the Committee is documented in a formal scope of
work and contract which has been executed by the consultant and the Compensation
Committee.
NEO Compensation
General
We pay our NEO’s an annual base salary and we
also put a significant portion of the executive’s compensation at risk through
the use of annual cash bonus and equity awards by tying those elements to
Company and/or individual performance for the year and longer periods of time.
The elements of compensation paid to our NEOs are intended to reward performance
as follows:
- Annual Base Salary. Annual base salary is a fixed annual rate
of pay received by the NEO. Annual base salary rewards the NEO for his or her
day-to-day responsibilities, experience, time employed by the Company,
position within the organization, skills and abilities. The complexity and
growth of the Company’s businesses are also considered when setting annual
base compensation. The Compensation Committee reviews the base salary of our
CEO and Chairman at least annually and sometimes more often. The Compensation
Committee also considers our CEO’s and Chairman’s recommendations regarding
the annual base salary of other NEOs. The Compensation Committee will adjust
annual base salary on a case-by-case basis after considering any changes to
the NEO’s employment terms, the NEOs responsibilities and whether those
responsibilities have increased or decreased, corporate performance, the
results of annual individual performance evaluations as measured against the
subjective performance criteria established for the NEO, the NEO’s employment
contract terms, if applicable, and the NEO’s total compensation package. See
“– 2009 NEO Base Salary Adjustments.” The Compensation Committee does not
assign relative weights to the items it considers nor does it assign relative
weights to each subjective criteria considered to evaluate individual
performance of an NEO. See “– The FTI Consulting, Inc. Incentive Compensation
Plan – 2009 Incentive Compensation Payments,” for a discussion of subjective
factors considered by the Compensation Committee when setting NEO incentive
compensation in 2009.
43
- Cash Incentive
Compensation. For 2009,
65% of each NEOs 2009 incentive compensation was paid in the form of cash and
the balance was deferred in the form of restricted stock with associated
vesting conditions. Cash incentive compensation, or incentive compensation, is
an amount of cash compensation in addition to annual base salary that is
intended to reward the NEO for meeting or exceeding company-wide objective and
individual subjective goals established each year by the Compensation
Committee. As a result, a substantial portion of a NEO’s annual incentive
compensation is at risk. The cash incentive compensation rewards NEOs for
organization-wide performance as measured against financial goals for the year
and individual performance as measured against individual subjective goals
considered by the Compensation Committee. Cash incentive compensation set by
the Compensation Committee pursuant to the Incentive Compensation Plan, is
designed to meet the requirements of Code Section 162(m) to allow the Company
to receive a deduction for that compensation; therefore, individual subjective
performance goals can only be considered to reduce but not increase an
individual’s bonus payment.
- Equity Compensation. In general, the Company believes that stock
options and restricted stock link a NEO’s compensation to stockholder return
and value. Stock options and restricted stock, the value of which increase as
our stock price increases, provide a strong incentive for the NEO to remain
with the Company. The Compensation Committee is the administrator of our
long-term equity compensation plans and determines the type, number of shares,
other terms and timing of equity awards granted to NEOs. The Compensation
Committee primarily uses equity awards to provide continuing incentives that
will keep NEOs engaged and vested with the interests of stockholders. The
Compensation Committee generally but not specifically considers corporate
performance, stock price and individual responsibilities and performance to
determine whether to make an award, when to make an award and what kind and
how many equity incentives to grant to an NEO. No weights are assigned to
specific aspects of performance.
- LTIP Awards. Long-Term Incentive Plan (“LTIP”) awards
represent stock option and restricted stock awards that vest upon meeting
variable, specified financial-based performance goals. The financial metrics
may include financial results, such as revenues, EBITDA, earnings per share,
foreign revenues and cash flow or financial ratios, such as debt-to-equity, or
combinations of such metrics. We believe that performance-based equity awards
link a NEO’s compensation to financial metrics that are important to the
Company and its stockholders. Performance-based awards reward long-term
financial goals established internally for the Company such as long-term
improvement of revenue, EBITDA, earnings per share, financial ratios and
business mix. They also allow executives to earn more if the Company achieves
superior performance or earn less if all or some of the performance goals are
not met. The Compensation Committee primarily uses performance-based equity
awards to provide continuing incentives to NEOs to drive the long-term
performance of the Company. Our general forms of performance-based award
documents do not grant discretion to the Compensation Committee to vest the
awards if the applicable performance goals have not been met.
- Sign-on or Retention
Payments. We may provide
contractual or other incentive payment opportunities, including sign-on or
retention bonuses, which may be in the form of cash and/or equity, to
individuals who join us as officers or, in some cases, to officers who enter
into new employment arrangements with us. These payments are designed to
reward individuals for joining or continuing their employment with the
Company.
- Other Benefits and Perquisites.
We provide our NEOs with
substantially the same benefits that we provide to employees generally,
including medical and dental insurance, a life insurance benefit and the
opportunity to participate in the Company’s 401(k) savings plan. In addition,
the Company provides NEOs with certain perquisites designed to facilitate
their ability to perform their positions and develop client relations,
including, an automobile and a corporate aircraft to facilitate security. In
2009, the Company discontinued the practice of paying club dues for NEOs.
Historically, the Compensation Committee and
the Company have not used a formula to allocate among cash and non-cash, short
and long-term, and fixed and at-risk compensation and has subjectively made
decisions as to the form of compensation, amount of compensation and timing of
compensation after considering the periodic financial results of the Company and
their subjective assessment of each NEO’s performance. The Compensation
Committee has not assigned weights to specific aspects of performance,
compensation objections and components of NEO compensation.
44
2009 NEO Annual Base Salary and
Transition Payment Adjustments
The Compensation Committee considers
adjustments to annual base compensation each year but not necessarily at the
same time each year. The Compensation Committee discusses annual base salary
levels directly with our CEO and Chairman and considers their recommendations
regarding the annual base salary levels of the other NEOs. See “Executive
Officers and Compensation – Summary Compensation Table” for the base salaries
paid to the NEOs.
In February 2009, the Compensation Committee
authorized a merit annual base salary adjustment to increase our CFO’s base
salary from $500,000 to $600,000, effective March 1, 2009, which brought his
salary level more in line with the base salary levels of other executive
officers below the COO level.
In 2009, the Compensation Committee did not
take action to adjust the base salary levels of our CEO, in light of the base
salary adjustment from $1,250,000 to $1,500,000, which was effective on July 1,
2008. In January 2009, our Chairman entered into an amendment to his employment
agreement to extend the term to January 2, 2012. In lieu of an annual base
salary adjustment, at his request the Compensation Committee increased his post
full-time employment annual transition payment from $400,000 to $700,000. We
believe when considering the present value of the adjustment, the compensation
adjustments for our CEO and Chairman approximately equate in value. See
“Executive Officers and Compensation – Employment Agreements and Potential
Termination and Change in Control Payments” for a description of the amendment
to our Chairman’s employment agreement.
Our COO’s annual base salary of $2,000,000 was
established by contract in November 2005 through arms-length negotiations. The
Compensation Committee concluded that his salary was competitive and did not
warrant an increase in 2009.
Prior to our CAO’s election as a corporate
Executive Vice President in January 2009, he was the leader of our Forensic and
Litigation Consulting segment. During negotiations of our CAO’s employment
arrangements in January 2009, the Company agreed that our CAO should maintain
the same annual base salary level of $1,300,000 per annum that he earned in his
capacity as segment leader.
In 2009, we paid total annual base salary
compensation to each of our CEO, COO and CAO in excess of the deductibility
limits of Code Section 162(m). See “Executive Officers and Compensation –
Summary Compensation Table” for the base salaries and other compensation paid to
the NEOs for 2009.
2010 NEO Annual Base Salary
Adjustments
In February 2010, effective April 1, 2010, the
Compensation Committee increased the annual base salary of each of our CEO,
Chairman and COO by an additional $50,000 each. Following, these salary
adjustments, the annual base salaries of our CEO, Chairman and COO, are
$1,550,000, $1,050,000 and $2,050,000, respectively.
The FTI Consulting, Inc. Incentive
Compensation Plan
General
On June 6, 2006, our stockholders approved the
FTI Consulting, Inc. Incentive Compensation Plan (the “Incentive Plan”). Annual
cash incentive compensation is intended to focus and reward individuals based on
measures identified as having a positive impact on our annual business results
and that are aligned with the interests of our stockholders. The Incentive Plan
requires that the Compensation Committee designate those executive officers who
will participate in the plan for any year and establish performance goals and
maximum dollar amounts to be paid to each plan participant if the performance
goals have been achieved. In conjunction with a NEO’s equity incentives, annual
incentive compensation is intended to tie a potentially large portion of such
officer’s total compensation to that year’s financial performance and place it
at-risk. The Compensation Committee has not assigned any weights to incentive
compensation as a specific multiple of base salary or as a percentage of total
compensation.
Under the Incentive Plan, the Compensation
Committee may choose from a range of defined objective performance measures:
EBITDA, stock price, earnings per share, earnings per share before stock option
expense, net earnings, operating or other earnings, revenues, net cash flow,
financial return ratios, return on assets, stockholder
45
return, return on
equity, growth in assets, and market share or strategic business criteria
consisting of one or more objectives meeting specified revenue goals, market
penetration goals, geographic business expansion goals, or goals relating to
acquisitions or strategic partnerships.
The incentive compensation measures are
objective measures that reflect our operating results for the year for which the
performance goals are established. The Compensation Committee seeks to establish
performance goals that are challenging but attainable based on our business and
financial plan for the year. When establishing performance goals for a plan
year, the Compensation Committee reviews and discusses our business and
financial plans for that year and their key underlying assumptions, expectations
under then-existing and anticipated market conditions and the opportunity to
generate stockholder value. The Compensation Committee establishes a range of
performance goals for the plan year as well as individual payment maximums for
each goal within the range for the participants in the plan.
In the case of the NEOs whose overall annual
cash compensation may, in some instances, exceed $1,000,000, performance goals
and payment maximums have been established by the Compensation Committee no
later than 90 days following our fiscal year end, to ensure that their award
payouts that are solely attributable to and dependent upon satisfaction of a
performance goal will be fully deductible under the federal tax laws. Under our
Incentive Plan, payments based on the prior year’s performance must be made (if
earned) by no later than March 15th of the following year.
2009 Incentive Compensation
Payments
On March 27, 2009, the Compensation Committee
approved the participants, performance goals and individual maximum target bonus
levels for the year ended December 31, 2009 under our Incentive Plan. When
establishing performance goals for 2009, the Compensation Committee reviewed and
discussed FTI’s budget, business and financial plans for 2009, company
expectations, anticipated market conditions, FTI’s published financial guidance
and the recommendations of the CEO and Chairman. For 2009, the Compensation
Committee designated a range of performance goals based on earnings per share
(“EPS”), with a low EPS performance goal and high EPS performance goal,
consistent with the prior year practices. For the purpose of presenting that
information in our proxy statement, we report the threshold as the lowest
performance goal, the target as a mid-range performance goal and the maximum as
the highest performance goal established within the applicable range of
performance goals set by the Compensation Committee. The Compensation Committee
did not use a formula to set the goals and individual target payment levels in
2009. The Compensation Committee did approve an approach for adjusting EPS to
reflect acquisitions or dispositions of all or parts businesses that occur
during the year, however, no adjustment to EPS was made in connection with the
award of the 2009 incentive compensation payments. The Compensation
Committee designated our CEO, Chairman, COO, CFO and CAO, as well as four other
executive officers, who are not NEOs, as plan participants for
2009.
As permitted under the Incentive Plan and Code
Section 162(m), the Compensation Committee approved subjective individual
performance criteria relating to the performance of the participants that could
be considered by the Compensation Committee, in it sole discretion, to reduce
but not increase maximum individual target payment levels once an EPS goal has
been achieved. The criteria set for the NEOs were general in nature and related
to 2009 cost savings initiatives, business development, financial performance,
employee retention, business development and branding. The Compensation
Committee did not assign weights to each subjective criteria but each
participant was informed that the failure to meet such participant’s individual
performance goals could result in a reduction of such participant’s maximum
target bonus. The Compensation Committee also established quarterly financial
benchmarks for 2009 based on information provided by management. These quarterly
financial goals did not constitute guidance or projections but were established
as benchmarks against which to measure progress and were intended as subjective
criteria that could be considered by the Compensation Committee to reduce but
not increase a participant’s maximum target award.
46
Effective February 26, 2010, the Company
achieved the 2009 EPS performance goal of $2.70, however, the Compensation
Committee exercised its discretion and paid incentive compensation at the EPS
level of $2.65, subject to further reduction in the discretion of the Committee
based on subjective criteria. We believe these payments will be deductible under
Section 162(m) of the Code. The Compensation Committee found that the NEOs
substantially met the subjective goals set for each of them, except in certain
cases due to challenges relating to the global economic recession. The
Compensation Committee approved total incentive compensation awards to the NEOs
for 2009, payable approximately 65% in cash and through the deferral of 35% of
the cash incentive compensation in the form of shares of restricted stock with
associated vesting terms (See “ – March 2010 Equity Grants”), as
follows:
|
|
Total Cash Equivalent
Value |
|
|
($) |
NEO |
|
(a) |
CEO |
|
|
1,600,000 |
|
Chairman |
|
|
1,600,000 |
|
COO |
|
|
1,000,000 |
|
CFO |
|
|
500,000 |
|
CAO |
|
|
300,000 |
|
March 2010 Equity
Grants
In March 2010, the Compensation Committee
authorized deferral of approximately 35% of the 2009 incentive compensation
awards to the NEOs in the form of shares of restricted stock, subject to future
vesting. The following number of restricted shares were awarded to each
NEO:
|
|
Restricted Stock |
|
|
(Shares) (1) |
NEO |
|
(a) |
CEO |
|
|
15,221 |
|
Chairman |
|
|
15,221 |
|
COO |
|
|
9,513 |
|
CFO |
|
|
4,756 |
|
CAO |
|
|
2,854 |
|
____________________
(1) |
|
The shares of
restricted stock will vest as to 33.33% on December 31, 2010, 33.33% on
December 31, 2011 and 33.34% on December 31,
2012. |
2010 Incentive
Compensation
2010 Incentive Compensation
Plan
On March 25, 2010, the Compensation Committee
approved the participants, range of performance goals and individual maximum
target bonus levels for 2010 under the Incentive Plan within the deadline for
establishing such terms under Code Section 162(m). The Compensation Committee
designated our CEO, Chairman, current chief financial officer, COO and CAO, as
well as one additional executive officer, as the only participants for the year
ending December 31, 2010. The 2010 participants in the Incentive Plan will not
necessarily correlate with those executive officers who are NEOs for 2010. The
performance goals for 2010 are based on a range of company-wide earnings per
share, subject to adjustment in certain circumstances, for the year ending
December 31, 2010. The maximum 2010 performance goal requires the Company to
meet or improve its 2010 year-end earnings per share in comparison to the actual
earnings per share reported by the Company for the year ended December 31, 2009.
The 2010 performance goals at the high end of the range are appropriately
aggressive and would require significant improvement of FTI’s financial results
for 2010 over 2009. If the Compensation Committee determines that an objective
performance goal has been achieved, each of the participants for 2010 would be
entitled to receive the corresponding target incentive compensation amount,
subject to reduction in the Compensation Committee’s discretion based on certain
subjective individual and company performance criteria.
47
Other 2010 Cash-Based Incentive
Compensation Opportunities
As of April 1, 2010, FTI does not have
sufficient authorized shares under its equity compensation plans to award
additional performance-based equity awards to NEOs or other employees and
non-employee directors eligible to participate in such plans. In order to
continue to incentivize the achievement of annual performance goals and to align
the interests of our executives with those of our stockholders, in March 2010,
the Compensation Committee authorized cash-based performance awards pursuant to
our 2009 Plan, to the NEOs as well as other executive officers and leaders of
our practice segments who are members of our executive committee. The
Compensation Committee established a range of performance goals based on EPS
(excluding special charges) as the relevant performance measures. If a
performance goal is achieved for the fiscal year ending December 31, 2010, each
participant may earn up to a maximum of 11,500 performance units depending upon
which goal has been achieved. Subject to continued employment, the units, if
earned, will vest as to one-third on March 1, 2011, 2012 and 2013. Each
performance unit earned by an NEO will be have a cash value equivalent to one
share of FTI common stock as reported on the NYSE (or such other principal
exchange on which FTI shares are then listed) for the applicable vesting
date.
2009 Equity Compensation
Equity incentives are used as a mechanism to
link compensation with increases in stockholder value. The Compensation
Committee believes that the use of equity incentives aligns the interests of
NEOs with long-term stockholder value better than cash alone. The Compensation
Committee also uses equity awards upon hiring of an officer or employee to
immediately link the interests of that person with our interests and those of
our stockholders. The level of equity awards are not tied to any peer group
analysis and are determined on a case-by-case basis based on management’s
recommendation and the perceived value of the services performed by the
individual to FTI.
2009 Standing Equity Awards to our
CEO
On July 31, 2008, the Compensation Committee
authorized a standing automatic restricted stock award to our CEO with a value
equivalent to $250,000 on the day following FTI’s quarterly and annual public
earnings release each year (the “Standing Stock Award”), without the necessity
of further action of the Compensation Committee. The number of shares of
restricted stock awarded to our CEO will be determined by dividing (i) $250,000,
by (ii) the closing price per share of FTI common stock as reported on the NYSE
for the day following the date of each relevant quarterly and annual FTI
earnings release. The Standing Stock Awards will be awarded out of the shares
available under any equity compensation plan in effect from time to time. The
Compensation Committee believes that the Standing Stock Awards directly align
with and keep our CEO focused on long-term increases in stockholder value. See
“– LTIP Awards” for a discussion of the performance-based restricted stock
awarded to our CEO.
LTIP Awards
In July 2008, our CEO agreed to extend his
employment term, and as partial consideration, the Compensation Committee
authorized the award of 67,522 performance-based shares of restricted stock
under our 2006 Plan with a value equivalent to $5.0 million on the grant date of
August 11, 2008 (based on $74.05 per share (the closing price per share of FTI
common stock reported on the NYSE for that day)). The restricted shares, if
fully earned, vest in five equal annual installments of 20% on the day following
the first through fifth anniversary dates of the grant date; subject to the
achievement of applicable performance goals based on the annual revenue and
earnings per share targets established for 2008 through 2012. The applicable
revenue and earnings per share targets will be adjusted for acquisitions and
dispositions of businesses or portions of businesses. The CEO may earn a
percentage of the number of restricted shares that would have otherwise vested
on an applicable vesting date, if one but not both of the revenue and earnings
per share targets for the applicable period has been achieved, and the balance
of the restricted shares that do not vest for the applicable period will be
forfeited. For the year ended December 31, 2008, 6,752 shares vested pursuant to
this grant in August 2009.
In January 2009, our Chairman agreed to extend
his employment term, and as partial consideration, the Compensation Committee
authorized the award of 33,692 performance-based shares of restricted stock
under our 2006 Plan with a value equivalent to $1.5 million on the grant date of
January 2, 2009 (based on the closing price per share of FTI common stock of
$44.52 reported on the NYSE for that day). The plan establishes performance
goals or a range of performance goals for the year ended December 31, 2009 and
the years ending December 31, 2010 through 2011. The applicable revenue and
earnings per share targets will be adjusted for acquisitions and dispositions
48
of businesses or
portions of businesses. The restricted shares, if fully earned, vest with
respect to one-third of the number of shares granted on the later of (i) the
first through third anniversary dates of the grant date or (ii) the
certification date of the achievement of the applicable performance goal(s). The
Chairman may earn a percentage of the number of restricted shares that would
have otherwise vested on an applicable vesting date, if one but not both of the
revenue and earnings per share targets for the applicable period has been
achieved and the balance of the restricted shares that do not vest for the
applicable period will be forfeited.
On March 27, 2009, the Compensation Committee
authorized the modification of the performance goals initially established for
the year ended December 31, 2009, to establish a broader range of contiguous EPS
and revenue goals for the year than initially established by the Compensation
Committee that would vest on a sliding percentage scale depending on the goal or
goals that have been achieved. The amended terms also provided that the vesting
of such award may be triggered by the provisions of one but not both contiguous
goals. For the year ended December 31, 2009, our CEO tentatively vested in 5,401
shares, subject to continued service and vesting in August 2010. For the year
ended December 31, 2009, our Chairman vested in 4,492 shares in February 2010.
The purpose of these LTIP awards was to
incentivize long-term performance by setting aggressive annual revenue and
earnings per share goals during the remaining term of our CEO’s and Chairman’s
employment under his current employment agreement.
Benefits and Perquisites
NEOs receive a variety of benefits, including
the following benefits that are available to all full-time
employees:
- medical, dental, vision,
prescription drug and mental health services;
- pre-tax health and dependent care
flexible spending accounts;
- parking and transit reimbursement
accounts;
- group life insurance and AD&D
coverage and supplemental life and AD&D insurance
coverage;
- life and AD&D coverage for
spouses and dependents;
- short-term disability insurance
coverage for illnesses lasting no more than 90 days;
- long-term disability insurance
coverage equal to 60% of base salary with the benefit capped at $300,000;
- parental leave;
- family and medical
leave;
- emergency travel
services;
- health advocacy
services;
- travel insurance;
- 401(k) match; and
- workers’ compensation
insurance.
Additional benefits and perquisites
that are provided to one or more NEOs include:
- company supplied automobile or car
allowance;
- use of the corporate aircraft;
and
- supplemental life, AD&D
insurance or long-term disability insurance.
During 2009, we were parties to Charter and
Management Services Agreements with FAA Part 135 air carriers (each, the
“Aircraft Management Company”), whereby the Aircraft Management Company provided
the crew and maintained, managed and operated our corporate leased aircraft to
carry our NEOs, non-employee directors, other
49
personnel and guests
of the Company on business travel. When not in use by the Company for business
travel, the Aircraft Management Company chartered the aircraft. In February
2006, upon the recommendation of the Compensation Committee, the Board approved
an internal Corporate Aircraft Policy to govern the use and administration of
the aircraft, including the personal use of the aircraft by authorized NEOs and
their family members and other invitees. During 2009, authorized NEOs directly
chartered the aircraft from Aircraft Management Company for personal use. The
hourly charter fee per in flight travel hour for personal charters by authorized
NEOs for 2009 was $1,800, which is less than the amount third parties would pay
to charter the aircraft. During 2009, the cost per hour for an executive to
personally charter the aircraft has equaled or exceeded the aggregate marginal
operating cost of the aircraft. In the event that a family member or other
invitee travels on the aircraft when a NEO is using it for a business purpose,
if the person is a family member, the related officer or non-employee director
is imputed taxable income relating to that person’s travel. If the invitee is a
third party, we issue a Form 1099 to such invitee for the taxable income imputed
to such third party. The taxable income is imputed at a rate equivalent to the
Standard Industry Fare Level formula calculation (“SIFL”), or such other
calculation as may be required under applicable rules and regulations of the
Internal Revenue Service, for the NEO and each family member or other invitee
over the age of two.
Retirement Benefits
We do not maintain defined benefit pension
plans. Retirement benefits to U.S. employees are currently provided through our
401(k) Plan. NEOs are eligible to receive matching benefits under our 401(k)
Plan up to the maximum allowed under the Code.
We provide a medical program that provides
health, dental, vision and prescription benefits to our NEOs and their spouses
and dependents after termination of employment at a level substantially the same
as that provided prior to termination. See “Executive Officers and Compensation
– Employment Agreements and Potential Termination and Change in Control
Payments.”
For a description of the perquisites
received by the NEOs in 2009, see “Executive Officers and Compensation – Summary
Compensation Table.”
Total 2009 Compensation
Comparisons
The following table compares each component of
a NEO’s compensation described in “Executive Officers and Compensation – Summary
Compensation Table” as a percentage of his total compensation for the year ended
December 31, 2009:
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
|
|
|
Option |
|
All Other |
|
|
Base Salary |
|
Bonus |
|
Compensation |
|
Stock Awards |
|
Awards |
|
Compensation |
|
|
(% of Total) |
|
(% of Total) |
|
(% of Total) |
|
(% of Total) |
|
(% of Total) |
|
(% of Total) |
Name and Principal
Position |
|
(a) |
|
(b) |
|
(c) |
|
(d) (1) |
|
(e) (1) |
|
(f) |
Jack B. Dunn, IV |
|
38.95 |
|
— |
|
27.00 |
|
|
32.82 |
|
|
— |
|
1.23 |
Jorge A. Celaya |
|
62.71 |
|
— |
|
34.52 |
|
|
— |
|
|
— |
|
2.77 |
Dennis J. Shaughnessy |
|
42.96 |
|
— |
|
44.67 |
|
|
9.44 |
|
|
— |
|
2.93 |
Dominic DiNapoli |
|
74.06 |
|
— |
|
24.07 |
|
|
— |
|
|
— |
|
1.87 |
Roger D. Carlile |
|
86.51 |
|
— |
|
12.98 |
|
|
— |
|
|
— |
|
0.52 |
____________________
(1) |
|
The
percentages in column (d) were derived based on the aggregate grant date
fair value computed in accordance with FASB ASC Topic 718. See “Executive
Officers and Compensation – Equity Compensation Plans – Grants of Plan
Based Awards for Fiscal Year Ended December 31,
2009.” |
Employment Agreements, Termination of
Employment and Change in Control Arrangements
As we discuss more fully in “Executive
Officers and Compensation – Employment Agreements and Potential Termination and
Change in Control Payments,” we have employment agreements with our CEO,
Chairman and COO. The employment agreements include annual base salary terms
that provide that specified annual salary levels cannot be reduced. Our
employment agreements with our CEO, Chairman and COO contain provisions relating
to
50
transition employment
opportunities and payments during that period. We did not have a long-term
employment agreement with the CFO during 2009, but his written offer letter
contains certain terms relating to his continuing employment and payments on
termination of his employment by FTI without “cause” and termination by the CFO
with “good reason” within three years of the commencement of his employment with
FTI or after three years from the effective date of his employment during the
one year period following a change in control. We did not have a long-term
employment agreement with our CAO during 2009, but his written employment letter
provides he will be entitled to certain payments in the event of death,
disability, termination by the Company without “cause” and termination by our
CAO for “good reason.”
We provide certain NEOs with
payments and benefits related to certain termination of employment events,
including in connection with a change in control, termination by us without
“cause” and termination by the NEO with “good reason” (as those terms are
defined in the relevant agreement). These protections limit our ability to
downwardly adjust compensation, including base salaries, to relocate an
executive and to change responsibilities of executives, without triggering the
right of the affected NEO to receive termination payments and benefits. These
termination protection payments and benefits are viewed as an important
component of the total compensation. In our view, having these protections helps
to maintain our NEOs’ objectivity in decision-making and provides another
vehicle to align the interests of our NEOs with the interests of our
stockholders. The Compensation Committee did not take the termination protection
payments and benefits into account in making decisions with respect to other
elements of NEO compensation as all or some of these payments and benefits may
never be triggered.
Decisions to enter into employment agreements,
the terms of those agreements and amendments to those agreements have been based
on the facts and circumstances at the time and arm’s length negotiations with
the applicable NEO.
Timing of Equity Grants
Equity awards to our NEOs, other officers and
employees have been awarded under our 1997 Plan, 2004 Plan, 2006 Plan and 2009
Plan. Our plans are administered by the Compensation Committee. As
administrator, the Compensation Committee has the authority, in its sole and
absolute discretion, to grant awards under the plans, establish the terms of
such awards, including vesting terms, prescribe grant agreements evidencing such
awards, and establish programs for granting awards. The Compensation Committee
has not delegated its authority to make awards or prescribe the terms (including
vesting terms) to our management. Management recommends to the Compensation
Committee the identities of the officers and employees to receive awards, the
type of award, the number of shares subject to an award and other terms of an
award, including vesting terms and the life of such award. In general, our stock
option awards have a ten year exercise term.
The Company’s 2004 Plan, 2006 Plan and 2009
Plan, by their terms, prohibit below-market equity grants. The plans also limit
aggregate annual individual equity awards to 750,000 shares of our common stock.
We do not adjust that limit for terminated, surrendered and cancelled
awards.
Stock option and stock-based awards, including
restricted stock awards, are only effective as of the later of the date (i) the
Compensation Committee takes action to approve the grant and (ii) all conditions
to the award have been met in accordance with FASB ASC Topic 718. In some cases,
the Compensation Committee will grant awards that are contingent, which
contingencies may include commencement of employment or the execution of new
written employment documents with us, or with grant dates as of a future date.
All option awards are made at an exercise price equal to or exceeding the “fair
market value” of our common stock on the date of grant.
The Compensation Committee does not generally
time equity awards to NEOs (or other employees) to correspond to the release of
material public information, including earnings announcements. However, by their
terms, Mr. Dunn’s Standing Stock Awards, which are made the day after each
quarterly and annual earnings release date, are timed to allow dissemination of
our quarterly and year-end earnings announcements prior to the award
dates.
The Compensation Committee does not follow a
set schedule for making equity grants under the plans. Throughout the year, as
management believes grants are merited, they will make recommendations for
equity awards to the Compensation Committee for approval. The Compensation
Committee may also make equity awards on its own initiative. The timing of
awards is influenced by new hires and promotions throughout the year and timing
51
of annual bonus
payments that may be in the form of equity. Typically, equity awards are
approved at regularly scheduled or special meetings of the Compensation
Committee but the Compensation Committee may also approve equity awards by
unanimous written consent of the members.
The equity awards to our NEOs are also subject
to contractual transition, termination and change in control provisions. See
“Executive Officers and Compensation – Employment Agreements and Potential
Termination and Change in Control Payments.”
Stock Ownership Guidelines and Return of
Incentive Compensation by NEOs
Our NEOs are stockholders of the Company. See
“Security Ownership of Certain Beneficial Owners and Management.” Currently, we
have stock ownership guidelines for our non-employee directors but not for the
NEOs. See “Information About the Board of Directors and Committees –
Compensation of Non-Employee Directors and Stock Ownership Guidelines.”
The NEOs would be subject to Section
304 of the Sarbanes-Oxley Act of 2002, which requires corporate executives to
forfeit their stock sale profits and bonuses earned when there has been a
financial restatement resulting from misconduct. The Board has not adopted a
policy that gives the Board the discretion to require an officer to reimburse
FTI for any bonus or incentive compensation that was paid, or any equity awards
that were granted, based on financial results that may become the subject of a
significant restatement of our financial statements other than as a result of
such officer’s misconduct.
Deductibility of NEO
Compensation
Code Section 162(m) limits the deductibility
of compensation in excess of $1.0 million paid to our chief executive officer
and the three other most highly compensated executive officers serving on the
last day of the fiscal year, excluding the chief financial officer. A company
can deduct compensation (including the exercise of options) above that limit if
it pays the compensation under a plan that its stockholders have approved and
that is performance-related and non-discretionary. The Compensation Committee
considers Code Section 162(m) when making compensation decisions but other
considerations, such as providing our NEOs with competitive and adequate
incentives to remain with and increase our business operations, financial
performance and prospects, as well as rewarding extraordinary contributions,
also significantly factor into the Compensation Committee’s decisions. The
Compensation Committee has and expects to continue to authorize payment of
compensation to NEOs outside the deductibility limits of Code Section 162(m).
The Compensation Committee has not consulted with any compensation consultant
with respect to the payment of compensation that is not deductible under Code
Section 162(m) and may or may not do so in the future.
COMPENSATION COMMITTEE
REPORT
The Compensation Committee of our Board has
reviewed and discussed the Compensation Discussion and Analysis with 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 relating to the 2010 Annual Meeting of
Stockholders.
Compensation
Committee
James W. Crownover,
Chair
Brenda J. Bacon
Gerard E. Holthaus
Matthew F.
McHugh
52
SUMMARY COMPENSATION TABLE
We have set forth below the total compensation
paid or earned by our President and Chief Executive Officer and the three other
most highly compensated persons who were serving as our executive officers on
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Deferred |
|
All |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan
|
|
Compensation |
|
Other |
|
|
|
|
|
|
|
|
Salary |
|
Bonus |
|
Awards
|
|
Awards
|
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Name and Principal |
|
Year |
|
($) (1) |
|
($) (1) |
|
($) (2) |
|
($) (3) |
|
($) (1)
(4) |
|
($) |
|
($) (5) |
|
($) |
Position |
|
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
Jack B. Dunn, IV |
|
|
2009 |
|
|
|
1,500,000 |
|
|
|
— |
|
|
|
1,264,174 |
|
|
|
— |
|
|
|
1,040,000 |
|
|
|
— |
|
|
|
47,282 |
|
|
3,851,456 |
President and
Chief |
|
|
2008 |
|
|
|
1,434,616 |
|
|
|
— |
|
|
|
5,499,908 |
|
|
|
1,373,175 |
|
|
|
1,100,000 |
|
|
|
— |
|
|
|
66,621 |
|
|
9,474,320 |
Executive
Officer |
|
|
2007 |
|
|
|
1,375,000 |
|
|
|
— |
|
|
|
997,460 |
|
|
|
1,929,511 |
|
|
|
1,750,000 |
|
|
|
— |
|
|
|
44,589 |
|
|
6,096,560 |
|
Jorge A. Celaya (6) |
|
|
2009 |
|
|
|
590,385 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
325,000 |
|
|
|
— |
|
|
|
26,119 |
|
|
941,504 |
Executive Vice |
|
|
2008 |
|
|
|
550,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
450,000 |
|
|
|
— |
|
|
|
27,427 |
|
|
1,027,427 |
President and
Chief |
|
|
2007 |
|
|
|
253,846 |
|
|
|
375,000 |
|
|
|
392,600 |
|
|
|
1,330,065 |
|
|
|
— |
|
|
|
— |
|
|
|
15,944 |
|
|
2,367,455 |
Financial
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J. Shaughnessy |
|
|
2009 |
|
|
|
1,000,000 |
|
|
|
— |
|
|
|
219,748 |
|
|
|
— |
|
|
|
1,040,000 |
|
|
|
— |
|
|
|
68,186 |
|
|
2,327,934 |
Chairman of the
Board |
|
|
2008 |
|
|
|
1,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,100,000 |
|
|
|
— |
|
|
|
73,105 |
|
|
2,173,105 |
|
|
|
2007 |
|
|
|
1,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,750,000 |
|
|
|
— |
|
|
|
49,862 |
|
|
2,799,862 |
|
Dominic DiNapoli |
|
|
2009 |
|
|
|
2,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
650,000 |
|
|
|
— |
|
|
|
50,615 |
|
|
2,700,615 |
Executive Vice |
|
|
2008 |
|
|
|
2,000,000 |
|
|
|
200,000 |
|
|
|
381,000 |
|
|
|
— |
|
|
|
600,000 |
|
|
|
— |
|
|
|
50,285 |
|
|
3,231,285 |
President and
Chief |
|
|
2007 |
|
|
|
2,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
800,000 |
|
|
|
— |
|
|
|
22,666 |
|
|
2,822,666 |
Operating
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger D. Carlile, |
|
|
2009 |
|
|
|
1,300,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
195,000 |
|
|
|
— |
|
|
|
7,800 |
|
|
1,502,800 |
Executive Vice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and
Chief |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
(1) |
|
All cash
compensation is presented in columns (b), (c) and (f) above. Column (c)
includes any cash bonus payments that were paid in 2008, 2009 and 2010 on
account of a NEO’s performance in 2007, 2008 and 2009, respectively, which
were not paid pursuant to our Incentive Plan. Cash bonus payments pursuant
to our Incentive Plan that were paid in 2008, 2009 and 2010 on account of
the 2007, 2008 and 2009 plan year, respectively, which are intended to
qualify as deductible under Code Section 162(m), are included in column
(f). The numbers in column (f) reflect the actual cash bonus awards paid
to a NEO in 2008, 2009 and 2010 upon attainment of a performance goal for
2007, 2008 and 2009, respectively, established by the Compensation
Committee pursuant to the Incentive Plan. |
|
|
|
(2) |
|
The amounts in
column (d) reflect the dollar amounts for awards of stock. Aggregate grant
date fair value has been computed in accordance with FASB ASC Topic
718. |
|
(3) |
|
The amounts in
column (e) reflect the dollar amounts for awards of stock options.
Aggregate grant date fair value has been computed in accordance with FASB
ASC Topic 718. |
|
(4) |
|
The short-term
incentive payouts approved by the Compensation Committee for the 2009
performance year were delivered in a combination of cash and shares of
restricted stock with vesting restrictions. The amounts in Column (f) for
2009 represent the cash portion of the short-term incentive awards. The
grant date fair value of the restricted stock portion of these payouts
will be reported in the Stock Awards column of the 2010 Summary
Compensation Table and in the 2010 Grants of Plan Based Awards table and
are not included in this Proxy Statement. These awards and the performance
criteria are discussed in more detail in “Compensation Discussion and
Analysis – NEO Compensation – 2009 Incentive Compensation Payments and –
March 2010 Equity Grants.” |
53
(5) |
|
The following
table presents an itemization of the amounts included in column
(h): |
|
|
|
Name |
|
Year |
|
Company 401(k) Matching Contribution ($) (a) |
|
Company Paid Premiums on
Life Insurance ($) (i) (b) |
|
Premiums on
Other Insurance Policies ($) (ii) (c) |
|
Company Car/Auto Allowance ($) (d) |
|
Personal Use
of Corporate Aircraft ($) (iii) (e) |
|
Club Dues, Memberships and
Season Tickets ($) (iv) (f) |
|
Total ($) (g) |
Jack B. Dunn, IV |
|
2009 |
|
|
7,350 |
|
|
|
1,290 |
|
|
|
— |
|
|
|
29,760 |
|
|
|
8,882 |
|
|
|
— |
|
|
47,282 |
|
|
2008 |
|
|
6,900 |
|
|
|
1,290 |
|
|
|
— |
|
|
|
29,783 |
|
|
|
5,868 |
|
|
|
22,780 |
|
|
66,621 |
|
|
2007 |
|
|
6,750 |
|
|
|
1,000 |
|
|
|
— |
|
|
|
24,589 |
|
|
|
— |
|
|
|
12,250 |
|
|
44,589 |
|
Jorge A. Celaya |
|
2009 |
|
|
7,350 |
|
|
|
300 |
|
|
|
— |
|
|
|
18,468 |
|
|
|
— |
|
|
|
— |
|
|
26,119 |
|
|
2008 |
|
|
6,900 |
|
|
|
300 |
|
|
|
— |
|
|
|
20,227 |
|
|
|
— |
|
|
|
— |
|
|
27,427 |
|
|
2007 |
|
|
6,750 |
|
|
|
— |
|
|
|
— |
|
|
|
9,194 |
|
|
|
— |
|
|
|
— |
|
|
15,944 |
|
Dennis J. Shaughnessy |
|
2009 |
|
|
7,350 |
|
|
|
1,980 |
|
|
|
11,148 |
|
|
|
43,414 |
|
|
|
4,294 |
|
|
|
— |
|
|
68,186 |
|
|
2008 |
|
|
6,900 |
|
|
|
1,980 |
|
|
|
11,148 |
|
|
|
37,824 |
|
|
|
10,107 |
|
|
|
5,146 |
|
|
73,105 |
|
|
2007 |
|
|
6,750 |
|
|
|
686 |
|
|
|
11,001 |
|
|
|
21,240 |
|
|
|
9,260 |
|
|
|
925 |
|
|
49,862 |
|
Dominic DiNapoli |
|
2009 |
|
|
7,350 |
|
|
|
690 |
|
|
|
— |
|
|
|
40,129 |
|
|
|
2,446 |
|
|
|
— |
|
|
50,615 |
|
|
2008 |
|
|
6,900 |
|
|
|
690 |
|
|
|
— |
|
|
|
33,483 |
|
|
|
— |
|
|
|
9,212 |
|
|
50,285 |
|
|
2007 |
|
|
6,750 |
|
|
|
331 |
|
|
|
— |
|
|
|
15,300 |
|
|
|
— |
|
|
|
285 |
|
|
22,666 |
|
Roger D. Carlile |
|
2009 |
|
|
7,350 |
|
|
|
450 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
7,800 |
____________________
|
(i) |
|
The amount in
column (b) reflects premiums paid by us for a life insurance
benefit. |
|
|
|
|
|
(ii) |
|
The amount in
column (c) reflects premium payments for additional liability coverage and
long-term disability coverage that are not generally provided to other
employees and executive officers. |
|
|
|
(iii) |
|
During 2009, we
were parties to a Charter and Management Services Agreements with FAA Part
135 air carrier (the “Aircraft Management Company”), whereby the Aircraft
Management Company provided the crew and maintained, managed and operated
our corporate leased aircraft to carry our NEOs, non-employee directors,
other personnel and guests of the Company on business travel. When the
aircraft is not in use for business purposes, the Aircraft Management
Company chartered the aircraft. The NEOs were permitted to directly
charter the corporate aircraft for personal use. In 2007, 2008 and 2009,
the hourly leasing fee per in flight travel hour for personal charters by
corporate executives and non-employee directors was $1,800, which is lower
than the hourly charter fee charged to third parties. During 2007, 2008
and 2009, the cost per hour for a NEO to personally charter the aircraft
has equaled or exceeded the aggregate marginal operating cost of the
aircraft. In the event that a family member or other invitee traveled on
the aircraft when a NEO or non-employee director was using it for a
business purpose, if the person was a family member, the related NEO or
non-employee director was imputed taxable income relating to that person’s
travel. If the invitee was a third party, we issued a Form 1099 to such
invitee for the taxable income imputed to such third party. The taxable
income was imputed at a rate equivalent to the SIFL formula calculation,
or such other calculation as required under applicable rules and
regulations of the Internal Revenue Service, for the executive or
non-employee director and each family member or other invitee over the age
of two. The amounts in column (e) include the SIFL imputed to the
applicable NEO for use by invitees. |
|
|
|
(iv) |
|
In 2009, the
Company discontinued paying for club memberships for executive
officers. |
|
|
|
(6) |
|
Mr. Celaya joined
FTI on July 9, 2007 and was employed by FTI until March 2010. This table
includes payments to Mr. Celaya for the portion of 2007 that he was
employed by FTI and the payments to him have not been annualized to
reflect a full 12 months. |
54
EQUITY COMPENSATION PLANS
Grants of Plan Based Awards for Fiscal Year
Ended December 31, 2009
The following table provides information on
performance-based cash incentive awards pursuant to our Incentive Plan and
performance-based and non-performance-based stock option and restricted stock
awards granted in 2009 to each NEO. There can be no assurance that the grant
date fair value of the stock and stock option awards will ever be
realized.
|
|
Grant Date (a) |
|
Compensation Committee Approval
Date (b) |
|
|
|
|
|
|
|
|
|
All
Other Stock Awards: Number of Shares of Stock or
Stock Units (2) (#) (i) |
|
All Other Option Awards: Number
of Securities Underlying Options (2) (#) (j) |
|
Exercise or Base Price
of Option Awards ($/Sh) (k) |
|
Grant Date Fair Value of
Stock and Option Awards (3) ($) (l) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
Payouts Under Non-Equity Incentive Plan Awards (1) |
|
Estimated Future
Payouts Under Equity Incentive Plan Awards (2) |
Name |
|
Threshold ($) (c) |
|
Target ($) (d) |
|
Maximum ($) (e) |
|
Threshold (#) (f) |
|
Target (#) (g) |
|
Maximum (#) (h) |
Jack B. Dunn, IV |
|
|
— |
|
|
|
|
03/27/09 |
|
|
|
500,000 |
|
|
1,475,000 |
|
|
2,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
(4) |
|
|
|
03/03/09 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,498 |
|
|
|
— |
|
|
|
— |
|
|
|
249,994 |
|
|
|
|
|
(4) |
|
|
|
04/30/09 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,555 |
|
|
|
— |
|
|
|
— |
|
|
|
249,978 |
|
|
|
|
|
(4) |
|
|
|
08/05/09 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,223 |
|
|
|
— |
|
|
|
— |
|
|
|
249,973 |
|
|
|
|
|
(4) |
|
|
|
11/05/09 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,451 |
|
|
|
— |
|
|
|
— |
|
|
|
249,983 |
|
|
|
Jorge A. Celaya |
|
|
— |
|
|
|
|
03/27/09 |
|
|
|
250,000 |
|
|
700,000 |
|
|
1,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Dennis J. Shaughnessy |
|
|
— |
|
|
|
|
03/27/09 |
|
|
|
500,000 |
|
|
1,475,000 |
|
|
1,850,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
(5) |
|
|
|
01/02/09 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
33,692 |
|
|
|
— |
|
|
|
— |
|
|
|
1,499,967 |
|
|
|
Dominic DiNapoli |
|
|
— |
|
|
|
|
03/27/09 |
|
|
|
500,000 |
|
|
800,000 |
|
|
1,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Roger D. Carlile |
|
|
— |
|
|
|
|
03/27/09 |
|
|
|
100,000 |
|
|
300,000 |
|
|
550,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
____________________
(1) |
On March 27,
2009, the Compensation Committee set the performance goals under our
Incentive Plan for the plan year ended December 31, 2009, as disclosed in
the table under the heading “Executive Officers and Compensation –
Compensation Discussion and Analysis –2009 Incentive Compensation.” For
2009, the Compensation Committee designated a range of target performance
goals based on EPS, with a low EPS performance goal and high EPS
performance goal. For the purpose of presenting information in this proxy
statement, we report the threshold as the lowest performance goal, the
target as a mid-range performance goal and the maximum as the highest
performance goal established within the applicable range of performance
goals set by the Compensation Committee.
|
|
|
55
|
As of February
26, 2010, the Compensation Committee certified that the Company achieved
the 2009 EPS performance goal of $2.70, however, the Compensation
Committee exercised its discretion and decided to pay incentive
compensation at the $2.65 EPS level, except in the case of our CFO and CAO
whose bonus payments were reduced in the discretion by the Compensation
Committee based on subjective criteria relating to the general economy.
The Compensation Committee approved and authorized payment of the
following total bonus for 2009 under the Incentive Plan to each executive,
of which approximately 65% was currently paid in cash and payment of
approximately 35% of the cash amount was deferred by substituting an
equivalent value of shares of restricted stock, subject to associated
vesting provisions (see “Executive Officers and Compensation –
Compensation Discussion and Analysis –2009 Incentive
Compensation”):
|
|
|
|
Performance |
|
Total Individual
Incentive |
|
Participant |
|
Criteria – EPS ($) |
|
Compensation Payments
($) |
|
Jack B.
Dunn, IV |
|
|
2.65 |
|
|
|
1,600,000 |
|
|
Dennis J. Shaughnessy |
|
|
2.65 |
|
|
|
1,600,000 |
|
|
Dominic DiNapoli |
|
|
2.65 |
|
|
|
1,000,000 |
|
|
Jorge A. Celaya |
|
|
2.65 |
|
|
|
500,000 |
|
|
Roger D. Carlile |
|
|
2.65 |
|
|
|
300,000 |
|
(2) |
Equity awards to
the NEOs in 2009 were awarded pursuant to our 2006 Plan and 2009
Plan. |
|
|
(3) |
Column (l)
represents the aggregate grant date fair value of restricted stock and
stock option awards to a NEO during the year ended December 31, 2009. The
Company used the Black-Scholes method of valuation to value all stock
options grants in 2009. Options allow the grantee to purchase shares of
our common stock at the closing price per share of FTI common stock as
reported on the NYSE for the date of grant. The grant date fair value of
restricted stock to the executive was determined by multiplying the number
of shares subject to the applicable award by the closing price per share
of FTI common stock as reported on the NYSE for the date of
grant. |
|
(4) |
Represents
Standing Stock Awards authorized by our Compensation Committee on July 31,
2008, with a value equivalent to $250,000 on the date following FTI’s
quarterly and annual public earnings release each year. The Standing Stock
Award is in lieu of the Standing Option Award and went into effect for the
second quarter ended June 30, 2008. The number of shares of restricted
stock awarded to Mr. Dunn is determined by dividing (i) $250,000, by (ii)
the closing price per share of FTI common stock as reported on the NYSE
for the day following the date of each relevant quarterly and annual FTI
earnings release (the “Stock Grant Date”). The restricted shares granted
pursuant to each Standing Stock Award will vest as follows: 33.33% of the
award shares on the first anniversary of the Stock Grant Date, 33.33% of
the award shares on the second anniversary of the Stock Grant Date, and
33.34% of the award shares on the third anniversary of the Stock Grant
Date, subject to the terms of the CEO Employment Agreement relating to the
continued vesting of equity awards during his “transition period” (as
defined in such employment agreement) and accelerated vesting on death,
disability, termination by Mr. Dunn for good reason, termination by the
Company without cause and a change in control. |
|
(5) |
Represents a
performance-based restricted stock award to Mr. Shaughnessy by the
Compensation Committee pursuant to the 2006 Plan with a grant date of
January 2, 2009, and a value equivalent to $1.5 million based on the
closing price per share of FTI common stock reported on the NYSE for that
day. See “Compensation Discussion and Analysis – NEO Compensation – 2009
Equity Compensation – LTIP Awards” for a description of the
award. |
56
Outstanding Equity Awards at Fiscal
Year-End
The following table shows the number
of shares covered by exercisable and unexercisable options and unvested shares
of restricted stock held by our NEOs on December 31, 2009:
|
|
Option Awards |
|
Stock Awards |
Name |
|
Number
of Securities Underlying Unexercised Options (#) Exercisable (a) |
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable (b) |
|
Equity Incentive Plan Awards: Number
of Securities Underlying Unexercised Unearned Options (#) (c) |
|
Option Exercise Price ($/Sh) (d) |
|
Option Expiration Date (e) |
|
Number of Shares or Units
of Stock that Have Not Vested (#) (f) |
|
Market Value of Shares or Units
of Stock that Have Not Vested ($) (g) |
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units
or Other Rights that Have
Not Vested (#) (h) |
|
Equity Incentive Plan Awards: Market or
Payout Value of Unearned Shares, Units or Other Rights
that Have Not Vested ($) (i) |
Jack B. Dunn, IV |
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
— |
|
26,993 |
(1) |
|
1,272,990 |
(2) |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
80,517 |
(3) |
|
3,797,182 |
(2) |
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
31.91 |
|
|
02/15/16 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
30.83 |
|
|
05/02/16 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
20,000 |
(5) |
|
|
— |
|
|
|
|
— |
|
|
|
|
26.45 |
|
|
10/24/16 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
23,750 |
(6) |
|
|
— |
|
|
|
|
— |
|
|
|
|
26.45 |
|
|
10/24/16 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
20,000 |
(6) |
|
|
— |
|
|
|
|
— |
|
|
|
|
26.45 |
|
|
10/24/16 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
30.77 |
|
|
11/01/16 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
28.86 |
|
|
11/01/15 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
29.48 |
|
|
03/03/13 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
33.25 |
|
|
04/25/13 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
18,651 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
28.58 |
|
|
07/25/12 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
30.50 |
|
|
11/01/12 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
50,000 |
(7) |
|
|
— |
|
|
|
|
— |
|
|
|
|
27.60 |
|
|
11/05/12 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
36.40 |
|
|
02/16/17 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
41.15 |
|
|
05/02/17 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
53.52 |
|
|
08/06/17 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
22,500 |
(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
59.25 |
|
|
11/01/17 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
22,500 |
(8) |
|
|
|
69.85 |
|
|
03/01/18 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
22,500 |
(8) |
|
|
|
67.91 |
|
|
05/08/18 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jorge A. Celaya |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,334 |
(9) |
|
157,231 |
(2) |
|
|
|
|
|
|
|
|
15,000 |
(10) |
|
|
— |
|
|
|
|
— |
|
|
|
|
39.26 |
|
|
07/09/17 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
45,000 |
(10) |
|
|
|
— |
|
|
|
|
39.26 |
|
|
07/09/17 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J. Shaughnessy |
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
— |
|
76,260 |
(11) |
|
3,596,422 |
(2) |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
33,692 |
(15) |
|
1,588,915 |
(2) |
|
|
50,000 |
(5) |
|
|
— |
|
|
|
|
— |
|
|
|
|
26.45 |
|
|
10/24/16 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
110,000 |
(6) |
|
|
|
|
|
|
|
— |
|
|
|
|
26.45 |
|
|
10/24/16 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Dominic DiNapoli |
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
— |
|
73,445 |
(12) |
|
3,463,666 |
(2) |
|
— |
|
|
— |
|
|
|
17,052 |
(13) |
|
|
— |
|
|
|
|
— |
|
|
|
|
24.28 |
|
|
08/30/12 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
50,000 |
(13) |
|
|
— |
|
|
|
|
— |
|
|
|
|
16.59 |
|
|
03/12/14 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
100,000 |
(14) |
|
|
— |
|
|
|
|
— |
|
|
|
|
26.24 |
|
|
11/01/15 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Roger D. Carlile |
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
— |
|
1,502 |
(16) |
|
70,834 |
(2) |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
— |
|
8,334 |
(17) |
|
393,031 |
(2) |
|
— |
|
|
— |
|
|
|
16,666 |
(18) |
|
|
33,334 |
(18) |
|
|
|
— |
|
|
|
|
27.89 |
|
|
01/02/17 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
254 |
(19) |
|
|
1,020 |
(19) |
|
|
|
— |
|
|
|
|
65.37 |
|
|
03/14/18 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
____________________
(1) |
|
26,993 unvested
shares of restricted stock awarded pursuant to the Standing Stock Award on
August 7, 2008, November 6, 2008, March 3, 2009, April 30, 2009, August 5,
2009 and November 5, 2009 pursuant to our 2006 Plan, which vest over three
years as follows: 33.33% on the first anniversary of the date of grant,
33.33% on the second anniversary of the date of grant and 33.34% on the
third anniversary of the date of grant, such that
the
|
57
|
|
award made on
August 7, 2008, will be fully vested on August 7, 2011, the award made on
November 6, 2008, will be fully vested on November 6, 2011, the award made
on March 3, 2009 will be fully vested on March 3, 2012, the award made on
April 30, 2009, will be fully vested on April 30, 2012, the award made on
August 5, 2009, will be fully vested on August 5, 2012 and the award made
on November 5, 2009, will be fully vested on November 5, 2012. The
Standing Stock Award with a value equivalent to $250,000 on the date of
grant is automatically made as of the day following the publication of
each quarterly and annual earnings press release. |
|
(2) |
|
The closing price
of FTI common stock reported by the NYSE for December 31, 2009 was $47.16
per share. Determined by multiplying $47.16 by the number of shares of
restricted stock that have not yet vested. |
|
(3) |
|
Includes: |
|
|
|
|
|
- 54,017 unvested
performance-based shares of restricted stock awards by the Compensation
Committee with a grant
date of August 11, 2008 pursuant to our 2006 Plan, which will vest in
five equal annual installments of 20% on the day following the first through fifth
anniversary dates of the grant date; provided that (i) the applicable
performance goals based on the achievement of annual revenue and
earnings per share targets for
the year ended December 31, 2008 and December 31, 2009 and ending
December 31, 2010, December 31,
2011, December 31, 2012 and December 31, 2013, have been achieved
and (ii) all other conditions
have been satisfied, including the condition that the achievement of the
relevant goal(s) be
confirmed by the final audit for the relevant year end. The applicable
revenue and earnings per share targets will be adjusted for acquisitions and dispositions
of businesses or portions of businesses. The executives may earn 50% of the
number of restricted shares that would have otherwise vested on
an applicable vesting
date, if one but not both of the revenue and earnings per share targets
for the applicable period
has been achieved and the balance of the restricted shares that do not
vest for the applicable period will be forfeited. For the year ended December 31, 2008, 6,752
shares vested pursuant to this grant. For the year ended December 31, 2009,
5,401 shares have been earned and will vest in August 2010,
and
- 26,500 unvested
performance-based shares of restricted awards by the Compensation
Committee for 26,500
shares to Mr. Dunn with a grant date of April 23, 2007 pursuant to our
2006 Plan. The associated performance goals have been met and the award will vest on April
23, 2010.
|
|
|
|
|
|
See “Compensation
Discussion and Analysis – NEO Compensation – 2009 Equity Compensation –
LTIP Awards” for a discussion of the modification of the 2009 performance
goals associated with these awards. |
|
|
|
(4) |
|
Represents
vested Standing Option Awards to the executive as first authorized by the
Compensation Committee on December 9, 1996, as affirmed and reauthorized
on March 2, 2005, pursuant to our equity-based plans in effect from time
to time. Each award is for a stock option exercisable for 22,500 shares of
common stock. The award was made automatically as of the day following the
publication of each of our quarterly and year-end earnings press releases
at an exercise price equal to 110% of the closing price per share of FTI
common stock as reported on the NYSE (or other principal exchange on which
our common stock is then traded) for the date of the award. Each option
becomes fully exercisable upon an increase of 25% in the market value of a
share of our common stock but not earlier than the first anniversary of
the award date, or eight years from the award date if the market value
does not reach the target value. The Standing Option Award was replaced by
the Standing Stock Award to the executive effective with the second
quarter ended June 30, 2008. The awards in column (a) represent stock
options granted pursuant to our 2004 Plan or 2006 Plan for which the
applicable market conditions have been achieved as of December 31, 2008,
which have been outstanding more than one-year, and have vested as
described below:
|
Grant Date |
|
Fully Vested Date |
|
Expiration Date |
02/16/07 |
|
02/16/08 |
|
02/16/17 |
05/02/07 |
|
05/02/08 |
|
05/02/17 |
08/06/07 |
|
08/06/08 |
|
08/06/17 |
11/01/07 |
|
11/01/08 |
|
11/01/17 |
02/15/06 |
|
02/15/07 |
|
02/15/16 |
05/02/06 |
|
05/02/07 |
|
05/02/16 |
11/01/06 |
|
11/01/07 |
|
11/01/16 |
11/01/05 |
|
02/15/07 |
|
11/01/15 |
03/03/03 |
|
04/11/07 |
|
03/03/13 |
04/25/03 |
|
04/25/07 |
|
04/25/13 |
07/25/02 |
|
02/15/07 |
|
07/25/12 |
11/01/02 |
|
04/11/07 |
|
11/01/12
|
58
(5) |
|
Represents an exercisable performance-based stock option granted to
the executive by the Compensation Committee pursuant to our 2006 Plan with
a grant date of October 24, 2006, which vested December 31, 2009,
following achievement of the associated performance goals. |
|
(6) |
|
Represents an exercisable stock option granted to the executive by
the Compensation Committee pursuant to our 2006 Plan with a grant date of
October 24, 2006, which vested in full as of October 24, 2009.
|
|
(7) |
|
Represents an exercisable stock option granted to the executive by
the Compensation Committee with a grant date of November 5, 2002 pursuant
to the 1997 Stock Option Plan (the “1997 Plan”) which vested in full as of
November 5, 2004. |
|
(8) |
|
Represents unvested stock option awards, each exercisable for
22,500 shares of common stock, granted to the executive by the
Compensation Committee pursuant to our 2004 and 2006 Plans pursuant to the
Standing Option Awards described in footnote (4). Each stock option award
will become fully exercisable upon an increase of 25% in the market value
of a share of our common stock but not earlier than the first anniversary
of the award date, or eight years from the award date if the market value
does not reach the target value. |
|
(9) |
|
Represents unvested portion of shares of restricted stock awarded
to the executive by the Compensation Committee pursuant to our 2006 Plan
for 10,000 shares of FTI common stock with a grant date of July 9, 2007,
which vest in three installments as follows: 3,333 shares on July 9, 2008,
3,333 shares on July 9, 2009 and 3,334 shares on July 9, 2010, such that
all shares will be fully vested on July 9, 2010. Mr. Celaya is no longer
employed by FTI as of March 30, 2010 and the vesting of this award
accelerated as of that date. |
|
(10) |
|
Represents vested and unvested unexercised portions of a stock
option exercisable for 75,000 shares of FTI common stock granted to the
executive by the Compensation Committee pursuant to our 2006 Plan on July
9, 2007, which vests in five installments as follows: 15,000 on July 9,
2008, 15,000 shares on July 9, 2009, 15,000 shares on July 9, 2010, 15,000
shares on July 9, 2011 and 15,000 shares on July 9, 2012, such that the
stock option will be fully vested on July 9, 2012. Mr. Celaya is no longer
employed by FTI as of March 30, 2010 and the vesting of this award
accelerated as of that date. |
|
(11) |
|
Represents the unvested portion of shares of restricted stock
awarded to the executive by our Compensation Committee pursuant to our
2004 Plan for 152,517 shares of FTI common stock with a grant date of
October 18, 2004, which vests in ten installments as follows: 15,252
shares on October 18, 2005, 15,251 shares on October 18, 2006, 15,251
shares on October 18, 2007, 15,251 shares on October 18, 2008, 15,252
shares on October 18, 2009, 15,252 shares on October 18, 2010, 15,252
shares on October 18, 2011, 15,252 shares on October 18, 2012, 15,252
shares on October 18, 2013 and 15,252 shares on October 18, 2014, such
that all shares will be fully vested on October 18, 2014. |
|
(12) |
|
Includes the unvested portion of a restricted stock award to the
executive by our Compensation Committee pursuant to our 2004 Plan for
125,000 shares of our common stock with a grant date of November 1, 2005,
which vests in nine installments as follows: 13,888 shares on December 31,
2006, 13,889 shares on December 31, 2007, 13,889 shares on December 31,
2008, 13,889 shares on December 31, 2009, 13,889 shares on December 31,
2010, 13,889 shares on December 31, 2011, 13,889 shares on December 31,
2012, 13,889 shares on December 31, 2013, 13,889 shares on December 31,
2014, such that all shares will be fully vested on December 31, 2014; and
6,000 shares of restricted stock awarded to the executive by our
Compensation Committee pursuant to our 2006 Plan with a grant date of
February 29, 2008, which vests in three installments as follows: 33.33% on
March 1, 2009, 33.33% on March 1, 2010 and 33.34% on March 1, 2011, such
that all shares will be fully vested on March 1, 2011, which was intended
as 2007 equity bonus compensation to reward his performance for the year
ended December 31, 2007. |
|
(13) |
|
Includes vested and unexercised stock option exercisable for 67,500
shares of FTI common stock granted to the executive by the Compensation
Committee pursuant to our 1997 Plan with a grant date of August 30, 2002,
which vested in three installments as follows: 22,500 shares on August 30,
2003, 22,500 shares on August 30, 2004 and 22,500 shares on August 30,
2005, such that the stock option was fully vested on August 30, 2005; and
vested and unexercised stock option exercisable for 50,000 shares of FTI
common stock granted to the executive by the Compensation Committee
pursuant to our 1997 Plan with a grant date of March 12, 2004, which
vested in three installments as follows: 16,666 shares on March 12, 2005,
16,667 shares on March 12, 2006 and 16,667 shares on March 12, 2007, such
that the stock option was fully vested on March 12, 2007.
|
59
(14) |
|
Represents the vested and unexercised stock option exercisable for
100,000 shares of FTI common stock granted to the executive by the
Compensation Committee pursuant to our 2004 Plan with a grant date of
November 1, 2005, which vested in three installments as follows: 33,333
shares on November 1, 2005, 33,333 shares on November 1, 2006 and 33,334
shares on November 1, 2007, such that the stock option was fully vested on
November 1, 2007. |
|
(15) |
|
Represents unvested performance-based restricted stock awards
granted to the executive by the Compensation Committee pursuant to the
2006 Plan with a grant date of January 2, 2009, which will vest in three
equal annual installments on the day following the first through third
anniversary dates of the grant date; provided that (i) applicable
performance goals based on the achievement of annual revenue and earnings
per share targets for the year ended December 31, 2009 and each of the
years ending December 31, 2010 and December 31, 2011, have been achieved
and (ii) all other conditions have been satisfied, including the condition
that the achievement of the relevant goal(s) be confirmed by the final
audit for the relevant year end. The applicable revenue and earnings per
share targets will be adjusted for acquisitions and dispositions of
businesses or portions of businesses. The executives may earn 50% of the
number of restricted shares that would have otherwise vested on an
applicable vesting date, if one but not both of the revenue and earnings
per share targets for the applicable period has been achieved and the
balance of the restricted shares that do not vest for the applicable
period will be forfeited. For the year ended December 31, 2009, 4,492
shares have been earned and vested on February 26, 2010. |
|
(16) |
|
Represents unvested portion of shares of restricted stock awarded
to the executive by the Compensation Committee pursuant to our 2006 Plan
for 2,086 shares of FTI common stock with a grant date of March 14, 2008;
1,274 of which vest in three installments as follows: 424 shares on March
14, 2009, 425 shares on March 14, 2010 and 425 shares on March 14, 2011,
such that the 1,274 shares will be fully vested on March 14, 2011; 812 of
which vest in five installments as follows: 160 shares on March 14, 2009,
163 shares on March 14, 2010, 163 shares on March 14, 2011, 163 shares on
March 14, 2012, and 163 shares on March 14, 2013, such that the 812 shares
will be fully vested on March 14, 2013. |
|
(17) |
|
Represents unvested portion of shares of restricted stock awarded
to the executive by the Compensation Committee pursuant to our 2006 Plan
for 12,500 shares of FTI common stock with a grant date of January 2,
2007; which vest in six installments as follows: 2,083 shares on January
2, 2008, 2,083 shares on January 2, 2009, 2,083 shares on January 2, 2010,
2,083 shares on January 2, 2011, 2,084 shares on January 2, 2012 and 2,084
shares on January 2, 2013, such that all shares will be fully vested on
January 2, 2013. |
|
(18) |
|
Represents vested and unvested unexercised portions of a stock
option exercisable for 50,000 shares of FTI common stock granted to the
executive by the Compensation Committee pursuant to our 2006 Plan on
January 2, 2007, which vests in six installments as follows: 8,333 shares
on January 2, 2008, 8,333 shares on January 2, 2009, 8,333 shares on
January 2, 2010, 8,333 shares on January 2, 2011, 8,334 shares on January
2, 2012 and 8,334 shares on January 2, 2013, such that the stock option
will be fully vested on January 2, 2013. |
|
(19) |
|
Represents vested and unvested unexercised portions of a stock
option exercisable for 1,274 shares of FTI common stock granted to the
executive by the Compensation Committee pursuant to our 2006 Plan on March
14, 2008, which vest in five installments as follows: 254 shares on March
14, 2009, 255 shares on March 14, 2010, 255 shares on March 14, 2011, 255
shares on March 14, 2012, and 255 shares on March 14, 2013, such that the
stock option will be fully vested on March 14, 2013.
|
60
Option Exercises and Stock
Vested
The following table shows the number of shares
of our common stock acquired during the fiscal year ended December 31, 2009 upon
the exercise of stock options and the vesting of restricted stock
awards:
|
|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
Value |
|
Number of |
|
Value |
|
|
Shares |
|
Realized |
|
Shares |
|
Realized |
|
|
Acquired on |
|
Upon |
|
Acquired |
|
on |
|
|
Exercise |
|
Exercise |
|
on Vesting |
|
Vesting |
|
|
(#) |
|
($) |
|
(#) |
|
($) |
Name of Executive
Officer |
|
(a) |
|
(b) (1) |
|
(c) |
|
(d) (2) |
Jack B. Dunn, IV: |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
76,029 |
|
|
1,849,528 |
|
|
— |
|
|
— |
Stock |
|
|
— |
|
|
— |
|
|
30,507 |
|
|
1,397,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jorge A. Celaya: |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
15,000 |
|
|
213,600 |
|
|
— |
|
|
— |
Stock |
|
|
— |
|
|
— |
|
|
3,333 |
|
|
169,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J. Shaughnessy: |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
100,000 |
|
|
3,130,415 |
|
|
— |
|
|
— |
Stock |
|
|
— |
|
|
— |
|
|
65,252 |
|
|
3,008,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominic DiNapoli: |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
50,448 |
|
|
1,469,118 |
|
|
— |
|
|
— |
Stock |
|
|
— |
|
|
— |
|
|
15,889 |
|
|
737,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger D. Carlile: |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Stock |
|
|
— |
|
|
— |
|
|
2,667 |
|
|
120,370 |
____________________
(1) |
|
The
value realized upon the exercise of stock options is computed by
multiplying (A) the difference between (i) the market price of the
underlying shares at the exercise date and (ii) the exercise price of the
option by (B) the number of shares for which the option was exercised.
|
|
(2) |
|
The
value realized on vesting of restricted stock is computed by multiplying
(A) the market value of the shares of common stock at the vesting date by
(B) the number of restricted shares that vested on that date.
|
EMPLOYMENT AGREEMENTS AND POTENTIAL
TERMINATION AND CHANGE IN CONTROL PAYMENTS
Employment Agreements
Jack B. Dunn, IV
We entered into an employment agreement with
Jack B. Dunn, IV as of November 5, 2002, to replace the employment agreement
that we previously had with him. The CEO Employment Agreement was amended as of
September 23, 2004. The CEO Employment Agreement was further amended as of
August 11, 2008 to extend the employment term to terminate on August 12, 2011.
Effective at the close of business on August 11, 2009, the term of Mr. Dunn’s
employment was extended for an additional one-year period to and including
August 12, 2012. Effective at the close of business on August 11, 2010, the term
of Mr. Dunn’s employment under the CEO Employment Agreement, if not otherwise
terminated, will be extended for an additional one-year period unless either
party has, before such time, given notice of his or its intention not to further
extend the term to and including August 12, 2013. The CEO Employment Agreement
includes provisions relating to termination by the Company with and without
“cause,” termination by the employee with and without “good reason” and events
of termination
61
such as death,
“disability” and a “change in control” (all such terms as defined in such
agreement). In addition, the CEO Employment Agreement was amended to provide
that the executive’s place of employment may be Baltimore, Maryland, Annapolis,
Maryland or Palm Beach (West Palm Beach), Florida.
If Mr. Dunn’s employment term expires or
earlier terminates other than upon death, disability or termination by the
Company for cause, Mr. Dunn will continue to provide services to us as a
part-time employee for five years (his transition term), providing not more than
500 hours of service per 12-month period. During his transition term, in lieu of
his salary, we will pay Mr. Dunn five annual transition payments of $500,000.
Mr. Dunn is also entitled to the use of a car during his transition term. Mr.
Dunn’s equity awards will continue to vest during the transition term. Mr.
Dunn’s agreement contains non-competition terms that will continue for three
years from the last day of his transition term. During this period, Mr. Dunn
also will be prohibited from soliciting any entity or person that has been our
client, customer, employee, contractor or vendor to terminate their relationship
with us. Mr. Dunn also agrees not to use or disclose proprietary information of
the Company in violation of his employment agreement. The transition term will
terminate if he breaches his obligations not to compete or solicit pursuant to
the employment agreement. See “– Potential Termination Payments.”
Dennis J.
Shaughnessy
We entered into an employment agreement with
Dennis J. Shaughnessy as of September 20, 2004, with an effective date of
October 18, 2004. Mr. Shaughnessy’s employment agreement provides that he will
serve as our full-time Chairman of the Board of Directors, which is an executive
officer’s position, reporting to the Board and our Chief Executive Officer. On
December 17, 2008, the Committee approved amendments to the term of the Chairman
Employment Agreement to extend the termination date to January 2, 2012 from
October 18, 2009, unless otherwise terminated pursuant to Section 9 of such
agreement). The amendment became effective as of January 2, 2009. Mr.
Shaughnessy’s employment agreement includes provisions relating to termination
by the Company with and without “cause,” termination by the employee with and
without “good reason” and events of termination such as death, “disability” and
a “change in control” (all such terms as defined in such
agreement).
If Mr. Shaughnessy’s employment term expires
or earlier terminates other than upon death, disability or termination by the
Company for cause), Mr. Shaughnessy will continue to provide services to us as a
part-time employee for five years (his transition term), at the request of our
chief executive officer or Board, of not more than 500 hours of service per
12-month period. On December 17, 2008, the Compensation Committee increased his
post-full-time employment annual transition payment, in lieu of salary, from
$400,000 to $700,000 effective as of January 2, 2009. Mr. Shaughnessy is also
entitled to the use of a car during his transition term. Mr. Shaughnessy’s
equity awards will continue to vest during the transition term. Mr.
Shaughnessy’s agreement contains non-competition terms that will continue for
three years from the last day of his transition term. During this period, Mr.
Shaughnessy also will be prohibited from soliciting any entity or person that
has been a client, customer, employee, contractor or vendor of ours to terminate
its relationship with us. Mr. Shaughnessy also agrees not to use or disclose
proprietary information of the Company in violation of his employment agreement.
The transition term will terminate if he breaches his obligations not to compete
or solicit pursuant to the employment agreement. See “– Potential Termination
Payments.”
Dominic DiNapoli
On November 1, 2005, we entered into an
employment agreement with Dominic DiNapoli effective as of that date that
superseded and replaced his employment agreement dated July 17, 2002 and the
letter agreement dated March 24, 2004. The effective date of the employment
agreement is November 1, 2005 and it terminates on December 31, 2011, unless
otherwise terminated pursuant to Section 9 of such agreement. During the term of
his employment agreement, Mr. DiNapoli will serve as our full-time Executive
Vice President and Chief Operating Officer. The Compensation Committee has
approved a minimum bonus amount of $500,000 per year at a minimum EPS
performance goal of $1.00 for the term of the employment agreement pursuant to
the Incentive Plan, or its successor plan. Mr. DiNapoli will be eligible to earn
additional bonus amounts pursuant to that plan, subject to the discretion of the
Compensation Committee, and the recommendation of Mr. Dunn or Mr. Shaughnessy.
Mr. DiNapoli’s employment agreement includes provisions relating to termination
by the Company with and without “cause,” termination by the employee with and
without “good reason” and events of termination such as death, “disability” and
a “change in control” (all such terms as defined in such
agreement).
62
If Mr. DiNapoli’s employment term expires or
earlier terminates other than upon death, disability, termination by the Company
for cause or the resignation of Mr. DiNapoli without good reason, Mr. DiNapoli
will continue to provide services to us as a part-time employee for three years
(his transition term), at such dates and time as may be mutually agreed to by
him and us, and upon the request and direction of the chief executive officer,
of not more than 500 hours of service per 12-month period. During the transition
term, in lieu of his salary, we will pay Mr. DiNapoli annual transition payments
of $500,000. Mr. DiNapoli is also entitled to the use of a car during his
transition term. Mr. DiNapoli’s equity awards will continue to vest during the
transition term. Mr. DiNapoli’s agreement contains non-competition terms that
will continue for three years from the last day of his transition term. During
this period, Mr. DiNapoli also will be prohibited from soliciting any entity or
person that has been a client, customer, employee, contractor or vendor of ours
to terminate its relationship with us. Mr. DiNapoli also agrees not to use or
disclose proprietary information of the Company in violation of his employment
agreement. The transition term will terminate if he breaches his obligations not
to compete or solicit pursuant to the employment agreement. See “– Potential
Termination Payment.”
Jorge A. Celaya
Jorge A. Celaya joined us as an Executive Vice
President and Chief Financial Officer in 2007. His offer letter provides that in
the event of termination by the Company without “cause” or termination by Mr.
Celaya for “good reason” (all such terms as defined in the Offer Letter) (i)
within three years from the effective date of his employment or (ii) after three
years from the effective date of his employment during the one year period
following a “change in control” (as defined in the Offer Letter) he will be
entitled to certain payments described under the section captioned “–
Termination Payments to our NEOs who are not Parties to Written Employment
Agreements.” Pursuant to the offer letter extended by the Company and accepted
by Mr. Celaya, Mr. Celaya’s employment with us is “at-will.” As an “at-will”
employee he is not subject to non-competition and non-solicitation
agreements.
As of March 30, 2010, Mr. Celaya is no longer
employed with the Company. Mr. Celaya has agreed to perform transition services
as an independent contractor consultant during the period from March 31, 2010
through May 31, 2010. FTI and Mr. Celaya entered into an employment separation
agreement providing for severance and certain other benefits. Under the terms of
this agreement, Mr. Celaya will be paid severance in an amount equal to his
current base salary plus $700,000, his equity grants will vest on an accelerated
basis, and he will also receive standard separation benefits on the same basis
as such benefits would be payable to other senior executives.
Roger D. Carlile
Mr. Carlile was elected a corporate Executive
Vice President in January 2009. Prior to assuming that position, Mr. Carlile was
the leader of our Forensic and Litigation Consulting segment. As leader of that
business segment, Mr. Carlile was a party to a written employment agreement with
FTI. That prior agreement was rescinded and superseded by an employment letter
dated as of December 31, 2008, which provided for at-will employment, subject to
certain terms relating to annual base salary and payments and treatment of
equity awards upon certain termination events. His employment letter provides
that in the event of death, “disability,” termination by the Company without
“cause” and termination by Mr. Carlile for “good reason,” he will be entitled to
certain payments described under the section captioned “– Termination Payments
to our NEOs who are not Parties to Written Employment Agreements.”Mr. Carlile’s
agreement contains non-competition terms that will continue for 12 months from
the last day of employment. During this period, Mr. Carlile also will be
prohibited from soliciting any entity or person that has been a client,
customer, employee, contractor or vendor of ours to terminate its relationship
with us. Mr. Carlile also agrees not to use or disclose proprietary information
of the Company in violation of his employment letter.
63
Potential Termination
Payments
General
The NEOs will receive various payments
described below upon termination of employment, including termination by the
Company without “cause,” termination by the employee for “good reason” and
termination upon death or “disability” or in anticipation of a “change in
control” of the Company. We believe that these payment rights and payments are
in the best interests of the Company as they tie the interests of the NEOs to
those of the Company, secure the services of the NEO and serve as a deterrent to
the NEO voluntarily leaving the Company’s employ. In addition, they may serve as
consideration for the agreements of certain NEOs not to compete with the
Company, not to solicit employees and clients of the Company, and not to use or
disclose proprietary information of the Company, as described under “–
Employment Agreements” above. Generally, the terms “cause,” “good reason,”
“change in control,” and “disability” have the meanings given those terms or
words of similar import in the executive’s employment agreement or offer or
employment letter, as the case may be.
Payments by the Company upon
Termination (Including Termination by the Company for “Cause” or by Executive
Without “Good Reason”)
Regardless of the manner in which an NEO’s
employment terminates, he will be entitled to receive the following payments
(collectively, “Accrued Compensation”) earned during his term of
employment:
- accrued but unpaid base
salary;
- unpaid amount, if any, of earned
and unpaid incentive bonus for the year preceding the year of
termination;
- unreimbursed substantiated
business expenses; and
- vested benefits, if any, under our
employee benefit plans in which such executive was a participant.
Payments upon Termination by the
Company Without “Cause” or by the Executive With “Good
Reason”
Messrs. Dunn, Shaughnessy and DiNapoli will be
entitled to receive the following payments upon (a) termination of his
employment by us without “cause” and (b) termination of employment by such
executive with “good reason:”
- Accrued
Compensation;
- continued payment of base salary
for the remainder of the employment term;
- transition payments as described
under “– Employment Agreements;”
- a fixed cash payment in the amount
of $2.0 million in the case of Messrs. Dunn and Shaughnessy and $800,000 in
the case of Mr. DiNapoli;
- full and immediate vesting of all
stock options and other equity awards; and
- continuing group health and group
life insurance coverage for the executive and his spouse and dependents for
their respective lifetimes or until a dependent is no longer eligible for
coverage, on the same terms as provided generally to employees; provided, that
the cost of such coverage during the transition term will be split between the
Company and the executive, in the same ratio as the cost-sharing in effect
under our policies and procedures for our executives at that time, and,
thereafter, will be borne 100% by the executive, or, if such coverage is not
available, cash payments sufficient to reimburse the executive on an after-tax
basis, for a proportionate amount of the reasonable cost of comparable
coverage through the end of the transition term.
64
Payments on or After Certain “Change
in Control” Events
Messrs. Dunn, Shaughnessy and DiNapoli will be
entitled to receive all or substantially all of the following payments, if such
executive’s employment is terminated by the Company without “cause” or by the
executive with “good reason” following a “change in control,” other than in the
event executive’s employment is terminated during the employment term (a) by
such NEO for any or no reason coincident with or during the 12-month period
after a “change in control” occurs, (b) by such NEO for “good reason” coincident
with or during the 24-month period after a “change in control” occurs, or (c) by
the Company without “cause” coincident with or during the 24-month period after
a “change in control” occurs:
- Accrued
Compensation;
- continued payment of base salary
for the remainder of the employment term;
- transition payments as described
under “– Employment Agreements;”
- a pro rated incentive bonus for
the year of termination based on the target annual incentive bonus for the
year, or, if no target annual bonus was established for the year or the target
annual bonus was materially reduced so as to constitute good reason, the
highest incentive bonus earned within the preceding three
years;
- an additional incentive bonus
equal to one-half of the annual incentive bonus paid to such executive on
account of the immediately preceding fiscal year;
- full and immediate vesting of all
stock options and equity-based awards; and
- continuing group health and group
life insurance coverage for the executive and his spouse and dependents for
their respective lifetimes or until a dependent is no longer eligible for
coverage, on the same terms as provided generally to employees; provided, that
the cost of such coverage during the transition term will be split between the
Company and the executive, in the same ratio as the cost-sharing in effect
under our policies and procedures for our executives at that time, and,
thereafter, will be borne 100% by the executive, or, if such coverage is not
available, cash payments sufficient to reimburse the executive on an after-tax
basis, for a proportionate amount of the reasonable cost of comparable
coverage through the end of the transition term.
Mr. Dunn, Mr. Shaughnessy and Mr. DiNapoli
will be entitled to receive all or substantially all of the following payments
if such executive’s employment is terminated during the employment term (a) by
such NEO for any or no reason coincident with or during the 12-month period
after a “change in control” occurs, (b) by such NEO for “good reason” coincident
with or during the 24-month period after a “change in control” occurs, or (c) by
the Company without “cause” coincident with or during the 24-month period after
a “change in control” occurs:
- Accrued
Compensation;
- pro rated incentive bonus for the
year of termination based on the target annual incentive bonus for the year
or, if no target annual incentive bonus was established for the year or if the
target annual incentive bonus for the year was materially reduced so as to
constitute good reason, the highest incentive bonus earned within the
preceding three years;
- lump sum severance payment equal
to three times the sum of (A) executive’s annualized base salary as in effect
immediately before executive’s termination of employment (without regard to
any reduction in salary that may have given rise to a termination for “good
reason” right), plus (B) the greater of the target annual incentive bonus for
the year in which the termination occurs or the highest annual incentive bonus
earned within the immediately prior three years, plus (C) the aggregate amount
of any other bonuses, including special bonuses, earned by the executive
within the immediately prior year;
- full and immediate vesting of all
stock options and other equity awards; and
- continuing group health and group
life insurance coverage for the executive and his spouse and dependents for
their respective lifetimes or until a dependent is no longer eligible for
coverage, on the same terms as provided generally to employees; provided, that
the cost of such coverage during the transition term will be split between the
Company and the executive, in the same ratio as the cost-sharing in effect
under
65
our policies and procedures for our executives at that time, and,
thereafter, will be borne 100% by the executive, or, if such coverage is not
available, cash payments sufficient to reimburse the executive on an after-tax
basis, for a proportionate amount of the reasonable cost of comparable coverage
through the end of the transition term.
If Mr. Dunn, Mr. Shaughnessy or Mr. DiNapoli
breaches his obligations not to compete or solicit pursuant to his employment
agreement, the Company may cease paying the executive the payments described
above.
Payments upon Death or
“Disability”
Each of Mr. Dunn, Mr. Shaughnessy or Mr.
DiNapoli, or his estate in the event of death, will be entitled to receive all
or substantially all of the following payments if his employment is terminated
due to death or “disability” as defined in his employment
agreement:
- Accrued
Compensation;
- only if such death or disability
occurs during the employment term (as opposed to the transition term), a pro
rated incentive bonus for the year of termination based on the target annual
incentive bonus for the year or, if no target annual incentive bonus was
established for the year, the highest incentive bonus earned within the
preceding three years;
- full and immediate vesting of all
stock options and other equity awards; and
- continuing group health and group
life insurance coverage for the executive and his spouse and dependents for
their respective lifetimes or until a dependent is no longer eligible for
coverage, on the same terms as provided generally to employees; provided, that
the cost of such coverage during the remaining balance of the employment term
will be split between the Company and the executive, in the same ratio as the
cost-sharing in effect under our policies and procedures for our executives at
that time, and, thereafter, will be borne 100% by the executive, or, if such
coverage is not available, cash payments sufficient to reimburse the executive
on an after-tax basis, for a proportionate amount of the reasonable cost of
comparable coverage through the end of the employment term.
Payments Due upon Expiration of the
Primary Employment Term
Messrs. Dunn, Shaughnessy and DiNapoli will be
entitled to receive all or substantially all of the following payments upon
expiration of the primary employment term of such executive’s contract (whether
or not as a result of a notice of non-renewal by such executive or the
Company):
- Accrued
Compensation;
- transition payments as described
under “– Employment Agreements;”
- in the case of our CEO, a lump-sum
fixed cash payment in the amount of $1.0 million, and in the case of each of
our Chairman and COO, a pro rated incentive compensation payment for the year
of termination based on actual results achieved (without regard to any
reduction that may apply due to any subjective performance goals);
and
- continuing group health and group
life insurance coverage for the executive and his spouse and dependents for
their respective lifetimes or until a dependent is no longer eligible for
coverage, on the same terms as provided generally to employees; provided, that
the cost of such coverage during the transition term will be split between the
Company and the executive, in the same ratio as the cost-sharing in effect
under our policies and procedures for our executives at that time, and,
thereafter, will be borne 100% by the executive, or, if such coverage is not
available, cash payments sufficient to reimburse the executive on an after-tax
basis, for a proportionate amount of the reasonable cost of comparable
coverage through the end of the transition term.
If any such executive breaches his obligations
not to compete or solicit pursuant to his employment agreement, the Company may
cease paying such executive the payments described above.
66
Payments Due upon Expiration of the
Transition Term
Messrs. Dunn, Shaughnessy and DiNapoli will be
entitled to receive all or substantially all of the following payments upon
expiration of such executive’s transition term:
- unreimbursed substantiated
business expenses;
- vested benefits, if any, under our
employee benefit plans in which the NEO was a participant;
and
- continuing group health and group
life insurance coverage for the executive and his spouse and dependents for
their respective lifetimes or until a dependent is no longer eligible for
coverage, on the same terms as provided generally to employees; provided, that
the cost will be borne 100% by the executive or his spouse.
In addition to the above payments, in the
event it is determined that any payment or distribution by FTI would be subject
to an excise tax imposed by Section 4999 of the Internal Revenue Code, the
Company will reimburse the executive for such excise taxes and related interest
and penalties.
Termination Payments to our NEOs who are not
Parties to Long-Term Written Employment Arrangements
CFO Termination
Payments
Pursuant to his offer letter, our CFO, Jorge
Celaya, would be entitled to the following payments if his employment is
terminated by the Company without cause or terminated by the executive with good
reason (i) within three years from the effective date of his employment or (ii)
after three years from the effective date of his employment during the one year
period following a change in control:
- base salary;
- an additional fixed cash payment
of $550,000;
- accelerated vesting of all stock
option and restricted stock awards upon death, disability, termination by the
Company without cause, and termination by the executive with good reason;
and
- continuation of medical benefits
for 18 months for the executive and/or his spouse and dependents, at the
Company’s expense, after death, disability, termination by the Company without
cause, and termination by the executive with good reason.
Mr. Celaya left the Company’s employment in
March 2010 and the Company paid Mr. Celaya an additional fixed cash payment of
$700,000.
CAO Termination
Payments
Pursuant to his employment letter, our CAO,
Roger Carlile, would be entitled to the following termination payments
upon:
- Termination of employment by FTI
upon death or “disability:”
- Accrued
Compensation;
- An amount equal to a pro rata
portion of the actual bonus for the year ended prior to the year of
termination determined by multiplying the bonus earned for such year by a
fraction, the (1) numerator of which is the number of days from the first day
of the calendar year in which the termination occurs to and including the date
of termination and (2) denominator is 365;
- continuation of health and group
life benefits for 12 months for the executive and/or his spouse and dependents
after disability, and for his spouse and dependents after death, at the
Company’s expense, at the same benefit and contribution levels in effect from
time to time with respect to active employees of FTI; provided, that, if group
health coverage is not permitted under applicable law, COBRA coverage will
begin immediately upon termination and the Company will pay the premiums under
COBRA for 12 months;
67
- the vesting of equity awards
granted prior to December 31, 2008 will be treated as specified in the
applicable grant agreement;
- For awards granted after December 31, 2008
- in the event of death, all
unvested equity awards will vest and unexercised stock options will be
exercisable until the earlier of (1) the expiration date of the award as set
forth in the applicable award agreement and (2) 12 months after the date of
death, and any unexercised portions will be forfeited
thereafter;
- in the event of “disability,” all unvested restricted stock
awards will vest; and
- in the event of “disability,” all unvested stock option
awards will continue to vest, and all stock option awards that have already
vested will continue to be exercisable, until the earlier of (A) the
expiration of the award as set forth in the applicable agreement or (B) 12
months after the date of termination due to disability (or five business days
after the latest date that your option becomes exercisable during those 12
months, if later), and any unexercised portion will be forfeited thereafter.
- Termination of employment by FTI
without “cause” or by the CAO with “good reason:”
- Accrued
Compensation;
- an amount equal to a pro rata
portion of the actual bonus for the year ended prior to the year of
termination determined by multiplying the bonus earned for such year by a
fraction, the (1) numerator of which is the number of days from the first day
of the calendar year in which the termination occurs to and including the date
of termination and (2) denominator is 365;
- continued payment of the NEO’s
annual base salary for a period of 12 months based upon the greater of (1) his
annual base salary for the year in which his employment terminates or (2) his
average annual base salary for the three years preceding the year in which
termination occurs;
- continuation of health and group
life benefits for 12 months for the executive and/or his spouse and
dependents, at the Company’s expense, after termination by FTI without cause
or by the NEO for good reason, at the same benefit and contribution levels in
effect from time to time with respect to active employees of FTI; provided,
that, if group health coverage is not permitted under applicable law, COBRA
coverage will begin immediately upon termination and the Company will pay the
premiums under COBRA for 12 months;
- the vesting of equity awards
granted prior to December 31, 2008 will be treated as specified in the
applicable grant agreement; and
- for awards granted after December
31, 2008:
- all unvested equity awards will
vest;
- all unvested stock option awards
that vest on termination will be exercisable until the earlier of (1) the
expiration date of the award as set forth in the applicable award agreement
and (2) 90 days after the date of vesting, and any unexercised portions will
be forfeited thereafter; and
- stock options that have already
vested prior to the termination date will be exercisable until the earlier of
(1) the expiration date of the award as set forth in the applicable award
agreement and (2) 90 days after the date of termination, and any unexercised
portions will be forfeited thereafter.
- Termination of employment upon a
“change in control:”
- all unvested restricted stock
awards will vest in accordance with the applicable award agreement;
and
- all stock options awards will
become exercisable in full immediately before the occurrence of a “change in
control.”
68
Potential Termination and Change in Control
Payment Amounts
The following tables show the potential
payments upon a termination event or change in control of the Company that a NEO
could receive pursuant to the terms of his employment agreement or offer or
employment letter if the termination or change in control occurred as of
December 31, 2009. The amounts are estimates based on the assumptions set forth
in the footnotes to each table and may differ substantially from the actual
amounts paid to the NEO.
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Termination During |
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the Employment Term |
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(1) by the Executive |
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for Any or No Reason |
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Coincident With or |
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During the 12-Month |
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Period After a “Change |
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in Control,” (2) by the |
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Termination |
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Executive for “Good |
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After a “Change |
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Reason” Coincident |
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in Control” by |
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With or During the |
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the Company |
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24-Month Period After |
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Termination |
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without “Cause” |
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a “Change in Control” |
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by the Company |
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or by the |
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Occurs, or (3) by the |
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Termination |
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Termination |
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Without
“Cause” |
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Executive
with |
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Company Without |
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Death and |
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by the |
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by the |
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or by the |
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“Good Reason” |
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“Cause” Coincident |
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Termination |
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Termination |
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“Disability” |
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Executive |
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Executive |
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Other Than |
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With or During the |
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at End of |
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at End of |
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During the |
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for |
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Without |
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With “Good |
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as Provided
in |
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After a |
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Employment |
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Transition |
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Employment |
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“Cause” |
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“Good
Reason” |
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Reason” |
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Column (e) |
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“Change In Control” |
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Term |
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Period |
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Term |
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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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($) |
Name |
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(a) |
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(b) |
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(c) |
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(d) |
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(e) |
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(f) |
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(g) |
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(h) |
Jack B. Dunn, IV: |
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Accrued Compensation (1) |
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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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Cash Compensation (2) |
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— |
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2,500,000 |
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6,420,548 |
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6,420,548 |
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|
|
2,500,000 |
|
|
|
2,500,000 |
|
|
|
— |
|
|
|
— |
|
Annual Incentive Bonus (3) |
|
— |
|
|
— |
|
|
|
— |
|
|
|
2,025,000 |
|
|
|
1,475,000 |
|
|
|
— |
|
|
|
— |
|
|
|
1,475,000 |
|
Acceleration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
Restricted Stock and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards (4) |
|
— |
|
|
— |
|
|
|
5,070,172 |
|
|
|
5,070,172 |
|
|
|
5,070,172 |
|
|
|
— |
|
|
|
5,070,172 |
|
|
|
5,070,172 |
|
Benefits & Perquisites (5) |
|
— |
|
|
256,414 |
|
|
|
256,414 |
|
|
|
256,414 |
|
|
|
256,414 |
|
|
|
256,414 |
|
|
|
— |
|
|
|
256,414 |
|
Tax Gross-up (6) |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cash Severance (7) |
|
— |
|
|
— |
|
|
|
2,000,000 |
|
|
|
— |
|
|
|
9,750,000 |
|
|
|
1,000,000 |
|
|
|
— |
|
|
|
— |
|
Total |
|
— |
|
|
2,756,414 |
|
|
|
13,747,134 |
|
|
|
13,772,134 |
|
|
|
19,051,586 |
|
|
|
3,756,414 |
|
|
|
5,070,172 |
|
|
|
6,801,586 |
|
____________________
(1) |
|
Assumes there
would have been no Accrued Compensation due and payable if termination
date is December 31, 2009. |
|
(2) |
|
Includes
transition payments of $500,000 per annum payable during the five-year
transition period (the “Transition Payments). Cash Compensation consists
of base annual salary for the remainder of the employment term through
August 12, 2012, plus the Transition Payments. |
|
(3) |
|
The executive
will be entitled to the following incentive compensation payments on the
following termination events: (A) on a “change in control,”
other than as provided in Column (e), a pro rated target incentive bonus
for the year of termination or, if no target bonus was established for the
year or the target annual incentive bonus for the year was materially
reduced so as to constitute “good reason,” the highest incentive bonus
earned within the preceding three years, plus an additional incentive
bonus equal to one-half of the annual incentive bonus paid to the
executive on account of the immediately preceding year and (B) on a “change in control” as
provided in Column (e), and on death or “disability” during the employment
term, a pro rated target incentive bonus for the year of termination or,
if no target bonus was established for the year or the target annual
incentive bonus for the year was materially reduced so as to constitute
“good reason,” the highest incentive bonus earned within the preceding
three years. Assumes payment of a cash incentive bonus of $1,475,000 for
year of termination based on 2009 EPS target of $2.60. On February 23,
2010, the Compensation Committee authorized a 2009 total
|
69
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|
incentive compensation payment of $1,600,000, of which $1,040,000
was paid currently in cash and $560,000 was deferred through the issuance
of shares of restricted stock, which vest as to 33.33% on December 31,
2010, 33.33% on December 31, 2011 and 33.34% on December 31, 2012.
|
|
(4) |
|
The
vesting of unvested stock options, shares of restricted stock and other
equity awards will accelerate if termination is due to death,
“disability,” termination by the Company without “cause,” or termination
by the executive with “good reason” or upon a “change in control.” Stock
option awards, shares of restricted stock and other equity awards that do
not immediately vest on a termination event will continue to vest during
the transition period. Includes the aggregate market value of such shares
of restricted stock for which vesting has accelerated, determined by
multiplying (a) the number of shares of restricted stock by (b) $47.16
(the closing price per share of FTI common stock as reported on the NYSE
for December 31, 2009). The vesting of all unvested stock option awards
will accelerate upon death, “disability,” termination by the Company
without “cause,” resignation by the employee with “good reason” and a
“change in control.” Options will terminate if termination is by the
Company without “cause” or the executive with “good reason” if not
exercised within 90 days of such event. Includes the aggregate market
value of such stock options for which vesting has accelerated, determined
by multiplying (a) the number of option shares by (b) the difference
between (i) $47.16 (the closing price per share of FTI common stock as
reported on the NYSE for December 31, 2009) and (ii) the applicable option
exercise price per share. On February 23, 2010, the Compensation Committee
authorized the deferral of 35% of the total 2009 incentive compensation
award to the executive through the issuance of shares of restricted stock,
which vest as to 33.33% on December 31, 2010, 33.33% on December 31, 2011
and 33.34% on December 31, 2012. |
|
(5) |
|
Includes the Company’s aggregate cost as of December 31, 2009 for
(i) dental and medical benefits to the executive and his dependents, (ii)
life insurance and accidental death and dismemberment insurance, (iii)
long- and short-term disability insurance, (iv) lease of an automobile,
and (v) 401(k) matching payments, during the five-year transition period,
except that on death and “disability” continuing benefits will consist of
group health and life insurance coverage for executive and his spouse for
their respective lifetimes and, in the case of eligible dependents, until
such dependent is no longer eligible to receive such benefits.
|
|
(6) |
|
In the
event an excise tax (including interest and penalties) is imposed by
Section 4999 of the Code, executive will be entitled to receive an
additional payment in an amount such that after the payment by executive
of all taxes (including interest and penalties), executive retains an
amount equal to the taxes (and interest and penalties) imposed on the
executive. |
|
(7) |
|
The
executive will be entitled to the following lump sum cash payments of (A)
$2.0 million upon termination by the Company without “cause” and
termination by the employee without “good reason” and (B) $1.0 million
upon termination at the end of the employment term. Upon a “change in
control” that is subject to column (e), the executive will be entitled to
a lump sum severance payment equal to three times the sum of (A) executive’s annualized base
salary as in effect immediately before executive’s termination of
employment (without regard to any reduction in salary that may have given
rise to a termination for “good reason” right), plus (B) the greater of the target
annual incentive bonus for the year in which the termination occurs or the
highest annual incentive bonus earned within the immediately prior three
years, plus (C) the
aggregate amount of any other bonuses, including special bonuses, earned
by the executive within the immediately prior year.
|
70
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|
Termination by the |
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|
Company Without |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
“Cause” or by the |
|
|
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|
|
|
|
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|
|
|
|