UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event March 6, 2009 (March 3, 2009)
reported) -------------------------------
L.B. Foster Company
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(Exact name of registrant as specified in its charter)
Pennsylvania 000-10436 25-1324733
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
415 Holiday Drive, Pittsburgh, Pennsylvania 15220
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 412-928-3417
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None
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
The Registrant's named executive officers ("NEOs") are Stan L. Hasselbusch
(President and Chief Executive Officer), Donald L. Foster (Sr. Vice President -
Construction Products), David J. Russo (Sr. Vice President and Chief Financial
Officer), Kevin R. Haugh (Vice President - Concrete Products) and John F. Kasel
(Sr. Vice President - Operations & Manufacturing).
A. Annual Incentive Plan
On March 3, 2009, Registrant's Compensation Committee ( the "Committee")
approved (and its Board approved on March 4, 2009), 2009 goals for annual
incentive awards under the L.B. Foster Annual Incentive Plan. Awards will be
paid based upon the extent to which Corporate and/or individual operating units
approach or surpass 2009 planned "Pre-Tax Income(1)", "Free Cash Flow(2)",
"EBITDA(3)" and, for Corporate only, planned "ROIC(4)".
The NEOs were assigned the following Target Percentages:
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Target Percentage
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Stan L. Hasselbusch - President and Chief Executive Officer 65%
Donald L. Foster - Sr. V.P. - Construction Products 40%
David J. Russo - Sr. V.P., CFO and Treasurer 45%
Kevin R. Haugh - V.P. - Concrete Products 35%
John F. Kasel - Sr. V.P. - Operations and Manufacturing 40%
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A participant's base salary will be multiplied by his Target Percentage to
obtain a "Target Award". These Target Awards are then allocated as follows:
------------------ ----------------- ------------------ --------------------- -------------------
Metric Stan L. David J. Russo; Donald L. Foster Kevin R. Haugh
Hasselbusch John F. Kasel
----------------- ------------------ ----------------- ------------------ --------------------- -------------------
Corporate ROIC 10% 10%
------------------ ----------------- ------------------ --------------------- -------------------
Pre-Tax Income - 60% 60% 20% 20%
Financial Corporate
Performance ------------------ ----------------- ------------------ --------------------- -------------------
Awards Operating Unit 60%
Pre-Tax Income
------------------ ----------------- ------------------ --------------------- -------------------
Free Cash Flow 30% 10% 10% 10%
------------------ ----------------- ------------------ --------------------- -------------------
EBITDA 60%
----------------- ------------------ ----------------- ------------------ --------------------- -------------------
Individual
Performance Personal 20% 10% 10%
Awards Objectives
----------------- ------------------ ----------------- ------------------ --------------------- -------------------
Financial Performance Awards are meant to comply with IRS Section 162(m), while
Individual Performance Awards may not satisfy IRC Section 162(m) requirements.
Financial Performance Awards shall be determined by adjusting a participant's
Target Award based on the actual attainment of planned Pre-Tax Income, Free Cash
Flow, EBITDA and ROIC as set forth below:
Pre-Tax Income Multiplier (Corporate/Operating Unit)
--------------------- ------------------
% of Planned Corporate or
Pre-Tax Income Operating Unit
Achieved Multiplier
--------------------- ------------------
170% and Over 200.0%
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160% 183%
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150% 167%
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140% 150%
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130% 133%
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120% 117%
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115% 108%
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95% - 110% 100%
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90% 91%
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80% 73%
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70% 56%
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60% 38%
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50% 20%
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Less than 50% 0.0%
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Free Cash Flow Multiplier
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% of Planned Target Corporate or
Free Cash Flow Operating Unit
Achieved Multiplier
--------------------- ------------------
140% and over 200%
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130% 175%
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120% 150%
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110% 125%
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100% 100%
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90% 75%
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80% 50%
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70% 25%
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Less than 70% 0.0%
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ROIC Multiplier
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% of Planned Target Corporate
ROIC Achieved Multiplier
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17% and Over 200%
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16% 167%
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15% 133%
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14% 100%
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13% 73%
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12% 47%
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11% 20%
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Less than 11% 0.00%
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EBITA Multiplier
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Corporate or
% of Planned EBITDA Operating Unit
Achieved Multiplier
--------------------- ------------------
170% and Over 200.0%
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160% 183%
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150% 167%
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140% 150%
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130% 133%
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120% 117%
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115% 108%
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95% - 110% 100%
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90% 91%
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80% 73%
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70% 56%
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60% 38%
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50% 20%
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Less than 50% 0.0%
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B. 2006 Omnibus Plan
The 2006 Omnibus Incentive Plan, as amended ("Omnibus Plan") provides for the
issuance of up to 500,000 shares of the Company's common stock, which may
include newly-issued or treasury shares, through the exercise of stock options,
the award of shares of common stock, and/or Performance Share Units.
On March 3, 2009 the Committee awarded (and the Board approved on March 4,
2009), the following "Performance Share Units", which Performance Share Units,
will be converted into Registrant's common stock based upon Registrant's average
"ROIC(1)" over the three (3) year performance period 2009 - 2011, inclusive:
Number of
Name Performance Share Units
---- -----------------------
Stan L. Hasselbusch 16,156
Donald L. Foster 3,877
David J. Russo 3,877
Kevin R. Haugh 2,262
John F. Kasel 3,877
Based upon the Company's average ROIC over the 3 year period, each NEO's
Performance Share Units shall be converted into Company common stock. "Average
ROIC" for the three (3) year performance period shall be calculated by adding
together the annual ROIC percentages and dividing by three (3). The Average ROIC
target for the 2009 - 2011 performance period shall be 16%. The number of
performance shares to be awarded to a participant shall be determined by
multiplying the participant's Performance Share Units by the "Percentage of
Performance Share" that corresponds to the Company's "Average ROIC" for the
three (3) year performance period, as follows:
ROIC
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Percent of
Performance Share
Level of Performance Average ROIC Units Earned
------------------------ ------------------------------- --------------------
Below Threshold Below 12.0% 0%
Threshold Equal to 12.0% 50%
Target Equal to 16.0% 100%
Outstanding Equal to or Greater than 200%
20.0%
The Committee plans to establish new targets annually for successive 3 year
performance periods. For example, in 2010, the Committee plans again to
establish targets and new financial metrics for the performance period 2010 -
2012, inclusive.
On March 3, 2009, the Committee also authorized (and the Board approved on March
4, 2009) the issuance, pursuant to the Omnibus Plan, to the NEOs of
non-certificated and non-voting shares of restricted stock, which will not vest
until March 5, 2013:
Name Restricted Stock
---- ----------------
Stan L. Hasselbusch 5,386
Donald L. Foster 1,293
David J. Russo 1,293
Kevin R. Haugh 754
John F. Kasel 1,293
(1) " Pre-Tax Income" shall mean the pre-tax income for the Corporation or, as
applicable, for an Operating Unit for the Fiscal Year, but determined in
accordance with generally accepted accounting principles, but excluding: (i) the
"Milestone Payments" or other amounts, if any, paid to the former shareholders
(and their respective successors and assigns) of the Dakota Minnesota and
Eastern Railroad Corporation ("DM&E") arising from or in connection with the
2007 merger of the DM&E, (ii) all gains or losses arising from sales of capital
assets when the sale or purchase price for an individual asset exceeds $50,000;
(iii) all expenses, costs, profits, losses or gains attributable to (a) the
sale; other than sales of inventory in the ordinary course of business, of more
than 25% of the assets of an "Operating Unit" or 50% of the assets of a
Component in the Fiscal Year, or (b) the acquisition of a business in 2009 for a
gross purchase price of more than $1M; (iv) with respect to Operating Units
only, the costs of the Plan; and (v) interest, investment gains or losses
arising from cash or marketable securities of $105M. Notwithstanding the
foregoing, in the event more than 25% of the assets of an Operating Unit or 50%
of the assets of a Component are sold, excluding sales of inventory in the
ordinary course of business, during the Fiscal Year, such Operating Unit's or
Component's, as applicable, Planned Pre-Tax Income shall be eliminated from all
calculations (if a stipulated amount of a Component's assets are sold, the
Operating Unit's Planned Pre-tax Incentive Income and Corporate Planned Pre-tax
Income shall be reduced to the extent of the Component's Planned Pre-tax
Income), together with the Component's or Operating Unit's, as applicable,
profits, losses or Pre-tax Income for the Fiscal Year.
(2) "Free Cash Flow" shall mean the sum of net cash provided by (or used in)
operating activities and capital expenditures on property plant and equipment
reduced by proceeds from capital asset sales as adjusted for unusual gains or
losses or other transactions outside of the ordinary course of business.
(3) "EBITDA " (Earnings before interest, taxes, depreciation and amortization)
shall mean for any period (a) income from continuing operations excluding
certain items detailed below; (b) plus income tax expense; (c) plus interest
expense; (d) minus interest income; (e) plus depreciation expense; and (f) plus
amortization expense. Excluded items are: (i) the "Milestone Payments" or other
amounts, if any, paid to the former shareholders (and their respective
successors and assigns) of the Dakota Minnesota and Eastern Railroad Corporation
("DM&E") arising from or in connection with the 2007 merger of the DM&E; (ii)
all gains or losses arising from sales and all expenses, costs, profits, losses
or gains attributable to (a) the sale, other than sales of inventory in the
ordinary course of business, of more than 25% of the assets of an "Operating
Unit" or 50% of the assets of a Component in the Fiscal Year, or (b) the
acquisition of a business in 2009 for a gross purchase price of more than $1M;
and (iv) with respect to Operating Units only, the costs of the Plan.
Notwithstanding the foregoing, in the event more than 25% of the assets of an
Operating Unit or 50% of the assets of a Component are sold, excluding sales of
inventory in the ordinary course of business, during the Fiscal Year, such
Operating Unit's or Component's, as applicable, Planned and Actual Pre-Tax
EBITDA shall be eliminated from all calculations.
(4) "ROIC" shall mean, with respect to the Fiscal Year: (A) after tax earnings
from continuing operations before interest income and interest expense and
amortization charges (tax affected using the effective corporate tax rate) and
excluding: (i) all "Milestone Payments" or other amounts, if any, paid to the
former shareholders (and their respective successors and assigns) of the DM&E
arising from or in connection with the 2007 merger of the DM&E, (ii) all gains
or losses arising from sales of capital assets when the gross sale or purchase
price for an individual asset exceeds $50,000; and (iii) all expenses, costs,
profits, losses, gains, attributable to (a) the sale, excluding sales of
inventory in the ordinary course of business, of more than 25% of the assets of
an "Operating Unit" or, more than 50% of the assets of a Component, or (b) the
acquisition of a business for a gross purchase price exceeding $1,000,000,
divided by (B) an average of month end total assets less the sum of cash,
marketable securities and non-interest bearing current liabilities, determined
in accordance with generally accepted accounting principles.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
L.B. FOSTER COMPANY
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(Registrant)
Date: March 6, 2009
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/s/ David J. Russo
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David J. Russo
Senior Vice President
Chief Financial Officer and Treasurer