def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
EAGLE MATERIALS INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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previous filing by registration statement number, or the Form or Schedule and the date of its
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EAGLE MATERIALS INC.
3811 Turtle Creek Blvd, Suite 1100
Dallas, Texas 75219-4487
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 2, 2007
To the Stockholders of Eagle Materials Inc.:
The Annual Meeting of Stockholders of Eagle Materials Inc. will be held in the Ballroom of the
Melrose Hotel, located at 3015 Oak Lawn Avenue, Dallas, Texas 75219 at 8:00 a.m., local time, on
Thursday, August 2, 2007. At the meeting, stockholders will vote on:
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Election of Directors. Election of three Class I directors, each to hold
office for three years. |
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Ratification of the Appointment of Ernst & Young LLP. Ratification of the
appointment of Ernst & Young LLP as the Companys independent auditors for the fiscal
year ending March 31, 2008. |
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Other Business. Any other matters properly brought before the annual meeting,
or any adjournment thereof. |
The Board of Directors of Eagle Materials Inc. has fixed the close of business on June 8, 2007
as the record date for the determination of stockholders entitled to notice of and to vote at the
meeting or any adjournment thereof. Only record holders of Common Stock, par value $0.1 per share,
which we refer to as our Common Stock, at the close of business on the record date are entitled to
notice of and to vote at the annual meeting. A list of holders of Common Stock will be available
for examination by any stockholder at the meeting and, during the ten-day period preceding the
meeting date, at the executive offices of the Company located at 3811 Turtle Creek Blvd., Suite
1100, Dallas, Texas 75219-4487.
For further information regarding the matters to be acted upon at the annual meeting, I urge
you to carefully read the accompanying proxy statement. If you have more questions about these
proposals or would like additional copies of the proxy statement, please contact: Eagle Materials
Inc., Attention: James H. Graass, Secretary, 3811 Turtle Creek Blvd., Suite 1100, Dallas, Texas
75219-4487 (telephone: (214) 432-2000).
You are cordially invited to attend the annual meeting. Your vote is important. Whether or
not you expect to attend the annual meeting in person, please vote through the Internet or by
telephone or fill in, sign, date and promptly return the accompanying form of proxy in the enclosed
postage-paid envelope so that your shares may be represented and voted at the annual meeting. This
will not limit your right to attend or vote at the annual meeting. Your proxy will be returned to
you if you choose to attend the annual meeting and request that it be returned. Shares will be
voted in accordance with the instructions contained in the enclosed proxy, but if the proxies that
are signed and returned to us do not specify a vote on any proposal, the proxies will be voted
for the election of the nominees for director named in this proxy statement and for the
ratification of the appointment of Ernst & Young LLP as the Companys independent auditors for the
fiscal year ending March 31, 2008.
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By Order of the Board of Directors
JAMES H. GRAASS
Executive Vice President,
General Counsel and Secretary |
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Dallas, Texas
June 26, 2007
EAGLE MATERIALS INC.
3811 Turtle Creek Blvd., Suite 1100
Dallas, Texas 75219-4487
PROXY STATEMENT
INTRODUCTION
The accompanying proxy, mailed together with this proxy statement, is solicited by and on
behalf of the Board of Directors of Eagle Materials Inc., which we refer to in this proxy statement
as the Company, for use at the annual meeting of stockholders of the Company and at any
adjournment or postponement thereof. References in this proxy statement to we, us, our or
like terms also refer to the Company. This proxy statement and accompanying proxy were first
mailed to our stockholders on or about June 26, 2007.
Date, Time and Place of the Annual Meeting
The 2007 annual meeting of our stockholders will be held in the Ballroom of the Melrose Hotel,
located at 3015 Oak Lawn Avenue, Dallas, Texas 75219 at 8:00 a.m., local time, on Thursday, August
2, 2007.
Purposes of the Annual Meeting and Recommendations of our Board of Directors
At the meeting, action will be taken upon the following matters:
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Election of Directors. Stockholders will be asked to elect three Class I
directors, each to hold office for a term of three years. |
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Our board of directors recommends that you vote for the election of the three nominees
for director named in this proxy statement. |
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Ratification of the Appointment of Ernst & Young LLP. We are asking you to
ratify the appointment of Ernst & Young LLP as the Companys independent auditors for
the fiscal year ending March 31, 2008. |
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Our board of directors recommends that you vote for the ratification of Ernst & Young
LLP as the Companys independent auditors for the fiscal year ended March 31, 2008. |
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Other Business. In addition, you may be asked to vote upon such other matters,
if any, as properly come before the annual meeting, or any adjournment thereof. |
Our Board of Directors does not know of any matters to be acted upon at the meeting other than
the matters set forth in items (1) and (2) above.
1
ABOUT THE MEETING
Who Can Vote
The record date for the determination of holders of the Companys Common Stock, par value $.01
per share, which we refer to as our Common Stock, entitled to notice of and to vote at the meeting,
or any adjournment or postponement of the meeting, is the close of business on June 8, 2007. In
this proxy statement, we refer to this date as the record date. As of the record date, there
were 47,997,992 shares of our Common Stock issued and outstanding and entitled to vote at the
meeting. Out Common Stock is listed on the New York Stock Exchange (the NYSE) under the symbol
EXP.
The holders of Common Stock will be entitled to one vote per share upon the election of
directors and each other matter that may properly be brought before the meeting or any adjournment
thereof. There is no cumulative voting. Our stock transfer books will not be closed in connection
with the meeting.
How Proxies Will be Voted
Shares represented by valid proxies will be voted at the meeting in accordance with the
directions given. If the enclosed proxy card is signed and returned without any direction given,
the shares will be voted for election of the nominees for director named in the proxy and the
ratification of the appointment of Ernst & Young LLP as the Companys independent auditors. The
board of directors does not intend to present, and has no information indicating that others will
present, any business at the annual meeting other than as set forth in the attached Notice of
Annual Meeting of Stockholders. However, if other matters requiring the vote of the Companys
stockholders properly come before the meeting, it is the intention of the persons named in the
accompanying form of proxy to vote the proxies held by them in accordance with their best judgment
in such matters.
How to Revoke Your Proxy
You have the unconditional right to revoke your proxy at any time prior to the voting thereof
by submitting a later-dated proxy, by attending the meeting and voting in person, or by written
notice to us addressed to: Eagle Materials Inc., Attention: James H. Graass, Secretary, 3811
Turtle Creek Blvd., Suite 1100, Dallas, Texas 75219-4487. No such revocation shall be effective,
however, unless and until received by the Company at or prior to the meeting.
Quorum and Required Vote
The presence at the meeting, in person or represented by proxy, of the holders of a majority
of the voting power of the shares of capital stock of the Company entitled to vote on any matter
shall constitute a quorum for purposes of such matter. Abstentions and broker non-votes will be
counted as present for the purpose of establishing a quorum. Each Class I director will be elected
by a plurality of votes cast at the meeting by holders of Common Stock. Abstentions and broker
non-votes will not affect the outcome of the election of directors. The affirmative vote of the
holders of a majority of the shares of Common Stock present in person or represented by proxy at
the meeting is required to ratify the appointment by our board of directors of Ernst & Young LLP as
our independent auditors for the fiscal year ending March 31, 2008. Abstentions and broker
non-votes will have the same effect as votes against the ratification of our accountants.
Expenses of Soliciting Proxies
The cost of soliciting proxies for the meeting will be borne by the Company. Solicitations
may be made on behalf of our Board of Directors by mail, personal interview, telephone or other
electronic means by officers and other employees of the Company, who will receive no additional
compensation therefor. To aid in the solicitation of proxies, we have retained the firm of
Georgeson Shareholder Communications, Inc., which will receive a fee of approximately $8,500, in
addition to the reimbursement of out-of-pocket expenses. We will request banks, brokers,
custodians, nominees, fiduciaries and other record holders to forward copies of this proxy
statement to persons on whose behalf they hold shares of Common Stock and to request authority for
the exercise of proxies by the record holders on behalf of those persons. In compliance with the
regulations of the Securities and Exchange Commission (SEC), and the NYSE, we will reimburse such
persons for reasonable expenses incurred by them in forwarding proxy materials to the beneficial
owners of our Common Stock.
How You Can Vote
You can vote your shares at the meeting or by telephone, over the Internet or by completing,
signing, dating and returning your proxy in the enclosed envelope.
2
ELECTION OF DIRECTORS AND RELATED MATTERS
General
Our Board of Directors is the ultimate decision-making body of the Company except with respect
to those matters reserved to our stockholders. The primary responsibilities of our Board include:
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the selection, compensation and evaluation of our Chief Executive Officer and oversight over succession planning; |
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oversight of our strategic planning; |
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approval of all our material transactions and financings; |
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providing assurance that processes are in place to promote compliance with law and high standards of business ethics; |
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advising management on major issues that may arise; and |
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evaluating the performance of the Board and its committees, and making appropriate changes where necessary. |
Members of our Board of Directors are divided into three classes based on their term of office
(Class I, II and III). The directors in each such class hold office for staggered terms of three
years each. At present, we have three Class I directors, three Class II directors and three Class
III directors.
The following table shows the composition of our Board after the annual meeting, assuming the
election of the proposed slate of director nominees:
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Class I: Term expires at the 2010 annual meeting and every three years thereafter
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Robert L. Clarke
Frank W. Maresh
Steven R. Rowley |
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Class II: Term expires at the 2008 annual meeting
and every three years thereafter
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Laurence E. Hirsch
Michael R. Nicolais
Richard R. Stewart |
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Class III: Term expires at the 2009 annual meeting
and every three years thereafter
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F. William Barnett
O.G. Dagnan
David W. Quinn |
Director Independence
NYSE corporate governance rules require that our Board of Directors be comprised of a
majority of independent directors. Our Board of Directors has determined, upon the
recommendation of our Corporate Governance and Nominating Committee, that all members of our
Board of Directors, other than Messrs. Hirsch and Rowley, are independent within the
meaning of the independence requirements of the Securities Exchange Act of 1934, as amended
(the Exchange Act) and the corporate governance rules of the NYSE.
In determining that seven of our directors are independent, our Board of Directors
considered the following facts:
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Messrs. F. William Barnett, Robert L. Clarke, Richard R. Stewart and Frank W.
Maresh have no relationship with the Company or its management that potentially
affects their independence. |
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From 1987 until his retirement in March 2002, Mr. David W. Quinn was an
officer of Centex Corporation, our former parent. Because it has been over five
years since his retirement as an officer of Centex Corporation and in light of
the absence of any other material relationship with the Company (other than as a
director of the Company), our Board of Directors has determined that Mr. Quinn
has no material relationship with the Company. |
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From 1985 until his retirement in March 2004, Mr. Laurence E. Hirsch was an
officer of Centex Corporation, our former parent. Mr. Hirsch was also our
interim CEO for approximately six months from April 2003 until September 2003
prior to the appointment of Mr. Rowley as CEO in September 2003. Because it has
been over three years since his retirement from Centex Corporation and in light
of the absence of any other material relationship with the Company (other than as
a director of the Company), our Board of Directors has determined that Mr. Hirsch
has no material relationship with the Company. |
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Mr. O.G. Dagnan is a former Chief Executive Officer of the Company who retired
as an officer and employee of the Company in July 1999, and has had no
relationship with the Company since that time (other than as a |
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director of the Company). Mr. Dagnan was granted certain stock options by the
Company during the time he served as an executive officer, the last of which were
exercised in 2002. Because of the length of time since his retirement from the
Company, and in light of the absence of any compensatory or other arrangements
between the Company and Mr. Dagnan since the date of his retirement (other than
compensation for his services as a director and for exercised stock options, as
described above), our Board of Directors has determined that Mr. Dagnan has no
material relationship with the Company. |
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Mr. Michael R. Nicolais entered into an employment relationship with a company
owned by another member of our board of directors, Laurence E. Hirsch, in 2004.
In particular, in April 2004, Mr. Nicolais accepted employment as president of
Highlander Partners L.P. (Highlander), a newly formed private investment
partnership of which Mr. Laurence E. Hirsch, a director of the Company, is the
sole equity owner. In view of, among other things: (1) the fact that Mr.
Nicolais has never served as an officer or employee of the Company or any of its
parents or subsidiaries; (2) the fact that the employment relationship between
Mr. Nicolais and Highlander commenced after the completion of the spin-off from
Centex Corporation and after the date Mr. Hirsch retired as an executive officer
and director of Centex, which is the former parent of the Company; (3) the fact
that the investment services to be provided by Mr. Nicolais to Highlander are
largely unrelated to the Company (except to the extent that such services may in
the future involve investment services relating to shares of our Common Stock
held by Mr. Hirsch); and (4) the boards belief that Mr. Nicolais is able to act
independently from the Company and its management in connection with matters
submitted to and considered by our Board of Directors, our board determined in
its business judgment that Mr. Nicolais has no material relationship with the
Company. |
4
Nominees
Each of the nominees listed below is currently a member of our Board of Directors. Each of
these nominees has been nominated by our Corporate Governance and Nominating Committee after
considering the criteria described below under the heading Corporate Governance and Nominating
Committee. We have no reason to believe that any of the listed nominees will become unavailable
for election, but if for any reason that should be the case, proxies may be voted for substitute
nominees. A plurality of votes cast by the holders of our Common Stock will be required to elect
the nominees for director.
Recommendation of the Board
Our Board of Directors recommends that holders of Common Stock vote for the election of the
nominees listed below to serve as Class I directors for a three-year term ending at our 2010 annual
meeting of stockholders:
Robert L. Clarke
Frank W. Maresh
Steven R. Rowley
Set forth below is information about the nominees standing for election at our 2007 annual
meeting, as well as our continuing directors whose terms of office do not expire at the 2007 annual
meeting. The biographical information appearing below regarding the nominees for director and
continuing directors has been furnished to us by the respective nominees and directors:
Directors Whose Terms Expire at our 2007 Annual Meeting
(Class I Directors)
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Business Experience and Principal Occupation; |
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Directorships in Public Corporations and Investment Companies |
Robert L. Clarke
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64 |
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1994 |
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Mr. Clarke serves as chairman of the Audit Committee of our
Board of Directors. Mr. Clarke also serves on the
Compensation Committee of our Board. He was a partner in
the law firm of Bracewell & Giuliani LLP (formerly known as
Bracewell & Patterson) from 1971 to December 1985, returned
to the firm as a partner in March 1992 and continues to
serve in that capacity. From December 1985 to February
1992, he was Comptroller of the Currency of the United
States. Mr. Clarke is also a director of First Investors
Financial Services, Inc., a consumer finance company, and a
director of Stewart Information Services Corporation, a land
title and property information services company. |
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Frank W. Maresh
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68 |
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2004 |
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Mr. Maresh has been a member of our Board of Directors since
2004 and serves on our Audit Committee and our Compensation
Committee. Mr. Maresh is a certified public accountant and
currently works as a consultant and serves as a board member
for several private enterprises. He is also a member of
the board of directors of Argonaut Group, Inc., where he
serves as chairman of the audit committee. From 1993 to
1999, Mr. Maresh served on the Texas State Board of Public
Accountancy, first as Chairman of the Major Case Committee
and then as Chairman of the Board. Prior to joining the
Texas State Board of Public Accountancy, Mr. Maresh worked
for KPMG from 1962 until 1993 in a variety of capacities,
including Vice Chairman of the Board of Directors of that
firms U.S. operations, as a member of KPMGs firm-wide
management committee, as Managing Partner of the
Southwestern United States region and as Managing Partner of
KPMGs Houston office. Mr. Maresh graduated from the
University of Texas with a masters in professional
accounting. |
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Steven R. Rowley
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54 |
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2003 |
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Mr. Rowley has been the Companys Chief Executive Officer
and a member of our Board of Directors since September 2003.
Mr. Rowley is also a member of the Executive Committee of
our Board of Directors. Mr. Rowley joined the Company in
1991 as a plant manager in its Nevada cement operations and
subsequently became Executive Vice President of the
Companys Illinois Cement Company subsidiary in June of
1995. Mr. Rowley was named the Companys Executive Vice
President Cement in 1998. In 2001, Mr. Rowleys
operational responsibilities were expanded to include
concrete and aggregates. Mr. Rowley was named the Companys
Chief Operating Officer in October 2002. |
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Continuing Directors Whose Terms Expire at our 2008 Annual Meeting
(Class II Directors)
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Business Experience and Principal Occupation; |
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Elected |
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Directorships in Public Corporations and Investment Companies |
Laurence E. Hirsch
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61 |
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1985 |
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Mr. Hirsch has served as Chairman of our Board of Directors
from July 1999 to the present and also served in that
capacity from January 1994 through December 1997. He was
our interim Chief Executive Officer from April 2003 through
September 2003. Mr. Hirsch is a member of the Executive
Committee of our Board of Directors. Until his retirement
on March 31, 2004, Mr. Hirsch served Centex in various
capacities, including as a director beginning in 1985, as
Chief Executive Officer beginning in July 1988 and as
chairman of its board of directors beginning in July 1991.
Mr. Hirsch is the owner of Highlander Partners LP, an
investment partnership and also serves as a director of Belo
Corp., a diversified media company. Mr. Hirsch is also
Chairman of the Center for European Policy Analysis. |
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Michael R. Nicolais
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49 |
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2001 |
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Mr. Nicolais been a member of our Board of Directors since
2001 and serves on our Audit Committee and chairs our
Corporate Governance and Nominating Committee. In April
2004, Mr. Nicolais became president of Highlander Partners
L.P., an investment partnership. From August 2002 until
March 2004, Mr. Nicolais served as managing director of
Stephens, Inc., an investment banking firm. Prior to
joining Stephens, Inc., he was a partner in the private
investment firm of Olivhan Investments, L.P. from March 2001
until August 2002. From August 1986 to December 2000, he
was employed by Donaldson, Lufkin & Jenrette Securities
Corporations Investment Banking Division, most recently in
the position of Managing Director and co-head of that firms
Dallas office. |
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Richard R. Stewart
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58 |
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2006 |
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From 1998 until 2006 Mr. Stewart served as President and CEO
of GE Aero Energy, a division of GE Power Systems and as an
officer of General Electric Company. Mr. Stewart retired
from General Electric in 2006. Mr. Stewarts career at
General Electric began in 1998 as a result of General
Electrics acquisition of the gas turbine business of
Stewart & Stevenson Services, Inc. Mr. Stewart began his
career at Stewart & Stevenson in 1972 and while at Stewart &
Stevenson served in various positions including as Group
President and member of the board of directors. Mr. Stewart
also served as a director of Plug Power Inc. from July of
2003 to March 2006. Mr. Stewart holds a BBA in Finance from
the University of Texas. |
Continuing Nominees for Directors Whose Terms Expire at our 2009 Annual Meeting
(Class III Directors)
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Year First |
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Business Experience and Principal Occupation; |
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Elected |
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Directorships in Public Corporations and Investment Companies |
F. William Barnett
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60 |
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2003 |
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Mr. Barnett currently chairs our Compensation Committee.
Mr. Barnett also serves on our Corporate Governance and
Nominating Committee. Mr. Barnett retired in 2003 from his
position as a director in the Dallas office of McKinsey &
Company, Inc., an international consulting firm, after 23
years of employment. Mr. Barnett is also a director of Papa
Johns International, Inc. and an Adjunct Professor at the
Yale School of Management. |
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O.G. Dagnan
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67 |
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1990 |
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Mr. Dagnan served as our Chief Executive Officer from
January 1990 through his retirement in July 1999 and
Chairman of our Board of Directors from January 1990 to
January 1994 and December 1997 through his retirement in
July 1999. Mr. Dagnan served as our President from January
1990 through December 1997, and as our Senior Vice President
Operations from August 1989 to January 1990. From 1980
until 1989, he was employed by Southwestern Portland Cement,
where he served as Vice President from 1982 to 1987 and as
Executive Vice President from 1987 to 1989. Mr. Dagnan also
serves on our Corporate Governance and Nominating Committee. |
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David W. Quinn
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65 |
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1994 |
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Mr. Quinn has been a member of our Board of Directors since
1994. From May 1996 until his retirement from Centex in
March 2002, Mr. Quinn served as Vice Chairman of the Board
of Directors of Centex. Mr. Quinn also served as Chief
Financial Officer of Centex from February 1987 until June
1997 and again from October 1997 until May 2000. Mr. Quinn
continues to serve as a director of Centex. |
6
Board Meetings and Attendance Records
During the Companys fiscal year ended March 31, 2007, our Board of Directors held four
regularly scheduled meetings and two special meetings. During such fiscal year two directors
missed one special meeting. In accordance with our policy, we anticipate that all continuing
directors and nominees will attend our 2007 annual meeting. All such persons attended our 2006
annual meeting. We strongly encourage all Board members to attend our stockholder meetings. Our
non-employee directors (which currently constitute all our directors, except for Mr. Rowley) meet
immediately after all Board meetings without management present. Mr. Hirsch presides at all
executive sessions of the non-employee directors.
BOARD COMPENSATION
Board compensation is generally set for the following 12 months at our Board of Directors
meeting following our Annual Meeting Stockholders. In July of 2006, the Board of Directors
approved a director compensation structure in which Board members who are not employees of the
Company or any of its subsidiaries receive compensation for their services valued at $135,000 per
year, of which 50% must be received in the form of an equity grant (stock options and restricted
stock units (RSUs)). The equity grant was comprised of 50% stock options to purchase Common
Stock and 50% RSUs. Each non-employee director may elect to receive the remaining compensation
($62,500) in cash or in additional equity (stock options and RSUs), provided that each non-employee
director who elects to receive the remaining portion in additional equity will receive an
additional $16,875 of equity awards (representing 25% of the cash portion which the director is
electing to take in the form of equity). In accordance with the terms of our Incentive Plan, the
exercise price of the options is set at the average of the high and low price of the Common Stock
on the NYSE on the date of grant. The number of option shares is determined by valuing the options
on the date of grant using the Black-Scholes method. The options were fully exercisable beginning
on the date of grant and have a ten-year term. The number of RSUs is determined by reference to
the closing price for the Common Stock on the date of award.
The RSUs vest in full on the date of grant, but are not payable until the non-employee
directors service on the Board terminates because of the directors death or the directors
retirement in accordance with the Companys Director Retirement Policy, or under such circumstances
as approved by the Compensation Committee. Under the Companys Director Retirement Policy, no
person may stand for re-election if he/she is 70 years of age or older. In addition, the shares of
stock represented by the RSUs become payable upon a change-in-control of the Company. If the
directors service on the Board terminates by reason other than retirement or death, the shares
will be forfeited. Under the terms of the RSUs, the directors are paid dividend equivalent units
at any time the Company pays a cash dividend on its Common Stock.
For service as a Committee Chairman for the period from August 2006 through July 2007, the
Corporate Governance and Nominating Committee Chair receives $10,000 per year. The Chair of the
Audit Committee and the Chair of the Compensation Committee each receive $15,000 per year for
chairing a Board committee during such period. In addition, the Chairman of the Board receives
$50,000 per year for his service as Chairman of the Board during such period. Each Committee Chair
may elect to receive such fees in the form of equity. All Board members are reimbursed for
reasonable expenses of attending meetings. Directors who are employees of the Company or its
subsidiaries receive no compensation for Board service.
7
Non-Employee Director Compensation for Fiscal Year 2007
The table below summarizes the compensation paid by the Company to our non-employee directors
for the fiscal year ended March 31, 2007.
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Change in Pension |
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Value and |
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Nonqualified |
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Non-Equity |
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Deferred |
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Fees Earned or |
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Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
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All Other |
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|
Paid in Cash |
|
Awards |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Name |
|
($) |
|
($)(1) |
|
($)(2) |
|
($) |
|
($) |
|
($) |
|
($) |
F. William Barnett(3) |
|
|
|
|
|
$ |
37,056 |
|
|
$ |
158,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
195,838 |
|
Robert L. Clarke(4) |
|
|
|
|
|
$ |
42,505 |
|
|
$ |
180,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
222,700 |
|
O.G. Dagnan(5) |
|
|
|
|
|
$ |
40,914 |
|
|
$ |
126,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
167,475 |
|
Laurence E. Hirsch(6) |
|
|
|
|
|
$ |
49,822 |
|
|
$ |
190,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
240,141 |
|
Frank W. Maresh(7) |
|
$ |
67,500 |
|
|
$ |
29,553 |
|
|
$ |
62,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
159,808 |
|
Michael R.
Nicolais(8) |
|
$ |
77,500 |
(9) |
|
$ |
17,304 |
|
|
$ |
93,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
188,536 |
|
David W. Quinn(5) |
|
|
|
|
|
$ |
31,153 |
|
|
$ |
126,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
157,714 |
|
Richard R.
Stewart(10) |
|
$ |
74,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
74,250 |
|
|
|
|
(1) |
|
The amounts in this column reflect the dollar amount, recognized for financial statement
reporting purposes for the fiscal year ended March 31, 2007, in accordance with FAS 123(R), of
RSUs awards previously made to the director and thus may include amounts from awards granted
in and prior to fiscal 2007. Assumptions used in the calculation of these amounts are
included in footnote (I) to the Companys audited financial statements for the fiscal year
ended March 31, 2007 described in the Companys Annual Report on Form 10-K filed with the
Securities and Exchange Commission on May 29, 2007. The grant date fair value of each of the
RSU awards made to each director during the fiscal year ended March 31, 2007 was: Mr. Barnett
- $85,313; Mr. Clarke $85,313, Mr. Dagnan $75,938; Mr. Hirsch $108,688; Mr. Maresh -
$33,750; Mr. Nicolais $33,750; Mr. Stewart $0.00. The aggregate number of RSU awards
outstanding at fiscal year end for each director is shown below. |
|
(2) |
|
The amounts in this column reflect the dollar amount, recognized for financial statement
reporting purposes for the fiscal year ended March 31, 2007, in accordance with FAS 123(R), of
stock option awards previously made to the director and thus may include amounts from awards
granted in and prior to fiscal 2007. Assumptions used in the calculation of these amounts are
included in: (1) footnote (I) to the Companys audited financial statements for the fiscal
year ended March 31, 2007 included in the Companys Annual Report on Form 10-K filed with the
Securities and Exchange Commission on May 29, 2007; (2) footnote (A) to the Companys audited
financial statements for the fiscal year ended March 31, 2004 included in the Companys Annual
Report on Form 10-K filed with the Securities and Exchange Commission on June 14, 2004; and
(3) footnote (G) to the Companys audited financial statements for the fiscal year ended March
31, 2001 included in the Companys Annual Report on Form 10-K filed with the Securities and
Exchange Commission on June 27, 2001. The grant date fair value of each of the stock option
awards made to each of non-employee director during the fiscal year ended March 31, 2007 was:
Mr. Barnett $85,313; Mr. Clarke $85,313; Mr. Dagnan $75,938, Mr. Hirsch $108,688; Mr.
Maresh $33,750; Mr. Nicolais $33,750; Mr. Stewart $0.00. The aggregate number of stock
options outstanding at the end of fiscal 2007 for each director is shown below. |
|
(3) |
|
Mr. Barnett is the Chairman of the Compensation Committee. Mr. Barnett elected to receive
100% of his director compensation fiscal 2007 in the form of equity (including his chairperson
fee). |
|
(4) |
|
Mr. Clarke is the Chairman of the Audit Committee. Mr. Clarke elected to receive 100% of his
director compensation for fiscal 2007 in the form of equity (including his chairperson fee). |
|
(5) |
|
Mr. Dagnan and Mr. Quinn elected to receive 100% of their director compensation for fiscal
2007 in the form of equity. |
|
(6) |
|
Mr. Hirsch elected to receive 100% of his director compensation for fiscal 2007 in the form
of equity (including his Chairman of the Board fees). |
|
(7) |
|
Mr. Maresh elected to receive 50% of his director compensation for fiscal 2007 in the form of
equity and 50% in cash. |
|
(8) |
|
Mr. Nicolais is Chairman of the Corporate Governance and Nominating Committee. Mr. Nicolais
elected to receive 50% of his director compensation for fiscal 2007 in the form of equity and
50% in the form of cash. Mr. Nicolais elected to receive his committee chairperson fee in
cash. |
|
(9) |
|
This amount includes $10,000 in cash for services as the Chairman of the Corporate Governance
and Nominating Committee. |
|
(10) |
|
Mr. Stewart joined the Board in September of 2006. At the time of his appointment to the
Board, the Board determined to pay all of Mr. Stewarts director fees until the next annual
meeting of directors in the form of cash at the previously approved rate of $135,000 per year. |
8
The following chart shows all outstanding stock options and RSUs held by each director listed
in the table above as of March 31, 2007.
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|
|
|
|
|
|
|
|
Name |
|
Stock Options(1) |
|
RSUs(2) |
F. William Barnett |
|
|
32,053 |
(3) |
|
|
7,679 |
|
Robert L. Clarke |
|
|
81,718 |
(4) |
|
|
7,679 |
|
O.G. Dagnan |
|
|
16,333 |
|
|
|
5,729 |
|
Laurence E. Hirsch |
|
|
28,724 |
|
|
|
9,964 |
|
Frank W. Maresh |
|
|
9,800 |
|
|
|
3,377 |
|
Michael R. Nicolais |
|
|
49,532 |
(5) |
|
|
3,377 |
|
David W. Quinn |
|
|
16,333 |
|
|
|
5,729 |
|
Richard R. Stewart |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
All of these stock options are fully exercisable, except as indicated. |
|
(2) |
|
The RSUs granted to non-employee directors are vested in full on the date of grant but are
not payable until the non-employee directors service on the board terminates because of the
directors death or the directors retirement in accordance with the Companys director
retirement policy, or under such circumstances as are approved by the Compensation Committee. |
|
(3) |
|
All of such stock options are fully exercisable except for 594 option shares which become
exercisable on March 31, 2008. |
|
(4) |
|
All of such stock options are fully exercisable except for 1,778 option shares which become
exercisable on March 31, 2008. |
|
(5) |
|
All of such stock options are fully exercisable except for 2,372 option shares which become
exercisable on March 31, 2008. |
Board Committees
The Boards standing committees include the Audit Committee, the Compensation Committee, and
the Corporate Governance and Nominating Committee. The members of these committees are as follows:
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|
|
Corporate Governance and |
Audit Committee |
|
Compensation Committee |
|
Nominating Committee |
Robert L.
Clarke(1)
|
|
F. William Barnett(1)
|
|
F. William Barnett |
Frank W. Maresh
|
|
Robert L. Clarke
|
|
O.G. Dagnan |
Michael R. Nicolais
|
|
Frank W. Maresh
|
|
Michael R. Nicolais(1) |
Audit Committee
Our Board has a separately-designated standing Audit Committee, composed of three independent
directors. Our Audit Committee assists the Board in fulfilling its responsibility to oversee the
integrity of our financial statements, our compliance with legal and regulatory requirements, the
qualifications and independence of our independent auditors and the performance of our internal
audit function and independent auditors. Our Audit Committee is governed by an amended and
restated audit committee charter, a copy of which may be viewed on our website at
www.eaglematerials.com and will be provided free of charge upon written request to our Secretary at
our principal executive office.
Our Board has determined that each member of our Audit Committee is independent within the
meaning of applicable (1) corporate governance rules of the NYSE and (2) the requirements set forth
in the Exchange Act and the applicable SEC rules. In addition, our Board has determined that each
member of our Audit Committee satisfies applicable NYSE standards for financial literacy and that,
based on his auditing and financial experience, including over thirty (30) years with KPMG, Mr.
Maresh is an audit committee financial expert within the meaning of the rules of the SEC.
During the last fiscal year, our Audit Committee held eight meetings, of which two members
missed one meeting each. Unless otherwise determined by the Board, no member of our Audit
Committee may serve as a member of an audit committee of more than two other public companies.
The following are key functions and responsibilities of our Audit Committee:
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to select, appoint, compensate, evaluate, retain and oversee the independent auditors
engaged for purposes of preparing or issuing an audit report or related work or
performing other audit, review, or attest services for us; |
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|
to obtain and review, on a periodic basis, a formal written statement from our
independent auditors describing all relationships between our auditors and the Company
and engage in a dialogue with our auditors with respect to any |
9
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disclosed relationships or services that may impact the objectivity and independence of
the auditors and to recommend appropriate action in response to the reports to our board; |
|
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|
to pre-approve all audit engagement fees and terms and all permissible non-audit
services provided to us by our independent auditors, in accordance with the committees
policies and procedures for pre-approving audit and non-audit services; |
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|
|
to establish procedures for (i) the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls or auditing
matters and (ii) the confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters; |
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|
to discuss our annual audited financial statements, quarterly financial statements
and other significant financial disclosures with management and our independent
auditors; |
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|
|
to discuss with management the types of information to be disclosed and the types of
presentations to be made in our earnings press releases, as well as the financial
information and earnings guidance we provide to analysts and rating agencies; |
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|
to annually review and assess its performance and the adequacy of its charter; |
|
|
|
|
to discuss policies with respect to risk assessment and risk management; and |
|
|
|
|
to prepare the report that is required to be included in our annual proxy statement
regarding review of financial statements and auditor independence. |
Our Audit Committees report on our financial statements for the fiscal year ended March 31,
2007 is presented below under the heading Audit Committee Report.
Our Audit Committee meets separately with our independent auditors and with members of our
internal audit staff outside the presence of the Companys management or other employees to discuss
matters of concern, to receive recommendations or suggestions for change and to exchange relevant
views and information.
Compensation Committee
Our Boards Compensation Committee is composed of independent directors who meet the corporate
governance standards of the NYSE, qualify as non-employee directors within the meaning of Rule
16b-3(b)(3) of the Exchange Act and as outside directors within the meaning of the Internal
Revenue Code of 1986, as amended. Under its amended and restated charter, which you may review on
our web site at www.eaglematerials.com (and a copy of which will be provided to you free of charge
upon written request to our Secretary at our principal executive office), the primary purposes of
our Compensation Committee are to assist the Board in discharging its responsibilities relating to
compensation of our Chief Executive Officer and other senior executives and to direct the
preparation of the reports regarding executive compensation that the rules of the SEC require to be
included in our annual proxy statement.
The following are key functions and responsibilities of our Compensation Committee:
|
|
|
to periodically review and make recommendations to our Board as to our general
compensation philosophy and structure, including reviewing the compensation programs for
senior executives and all of our benefit plans to determine whether they are properly
coordinated and achieving their intended purposes; |
|
|
|
|
to annually review and approve corporate goals and objectives relevant to the
compensation of our Chief Executive Officer, evaluate his or her performance as measured
against such goals and objectives and to set the salary and other cash and equity
compensation for our Chief Executive Officer based on such evaluation; |
|
|
|
|
to review and, after the end of the fiscal year and in consultation with our Chief
Executive Officer, approve the compensation of our senior executives; |
|
|
|
|
to administer the Companys compensation plans for which it is named as plan
administrator, including the Companys Incentive Plan, as amended, which we refer to as
our Incentive Plan; |
|
|
|
|
to report on compensation policies and practices with respect to our executive
officers as required by SEC rules; and |
|
|
|
|
to review and assess the performance of the Committee and the adequacy of its charter
annually and recommend any proposed changes to the Board. |
Our Compensation Committees report for the fiscal year ended March 31, 2007 is presented
below under the heading Compensation Committee Report.
Our Compensation Committee meets as often as it deems appropriate, but no less than twice per
year. During the fiscal year ended March 31, 2007, the Compensation Committee held six meetings,
of which one member missed one meeting.
10
Corporate Governance and Nominating Committee
Our Boards Corporate Governance and Nominating Committee, which we refer to as our Governance
Committee, is composed of independent directors who meet the corporate governance standards of the
NYSE. The primary purposes of this committee are: (1) to advise and counsel our Board and
management regarding, and oversee our governance including our Boards selection of directors; (2)
to develop and recommend to the Board a set of corporate governance principles for the Company; and
(3) to oversee the evaluation of our Board and management. Our Corporate Governance and Nominating
Committee has adopted a written charter, which you may review on our web site at
www.eaglematerials.com and will be provided free of charge upon written request to our Secretary at
our principal executive office. Our Board has also adopted Corporate Governance Guidelines, a copy
of which may be viewed on our website at www.eaglematerials.com and which will be provided free of
charge upon written request to our Secretary at our principal executive office.
The following are certain key functions and responsibilities of our Governance Committee:
|
|
|
to develop, periodically review and recommend a set of corporate governance
principles for the Company to the Board; |
|
|
|
|
to periodically review corporate governance matters generally and recommend action to
the Board where appropriate; |
|
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|
|
to review and assess the adequacy of its charter annually and recommend any proposed
changes to our Board for approval; |
|
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|
to monitor the quality and sufficiency of information furnished by management to our
Board; |
|
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|
to actively seek, recruit, screen, and interview individuals qualified to become
members of the Board, and consider managements recommendations for director candidates; |
|
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|
to evaluate the qualifications and performance of incumbent directors and determine
whether to recommend them for re-election to the Board; |
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|
to establish and periodically re-evaluate criteria for Board membership; |
|
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|
to recommend to the Board the director nominees for each annual stockholders meeting; and |
|
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|
to recommend to the Board nominees for each committee of the Board. |
The Governance Committee initiates and oversees an annual evaluation of the effectiveness of
the Board and each committee, as well as the composition, organization (including committee
structure, membership and leadership) and practices of the board. Among the criteria the
Governance Committee uses in evaluating the suitability of individual nominees for director
(whether such nominations are made by management, a stockholder or otherwise) are their integrity,
experience, achievements, judgment, intelligence, personal character, ability to make independent
analytical inquiries, willingness to devote adequate time to Board duties and the likelihood that
he or she will be able to serve on the Board for a sustained period. In connection with the
selection of nominees for director, due consideration will be given to our Boards overall balance
of perspectives, backgrounds and experiences.
Members of the Governance Committee, other members of the Board or executive officers may,
from time to time, identify potential candidates for nomination to our Board. All proposed
nominees, including candidates recommended for nomination by stockholders in accordance with the
procedures described below, will be evaluated in light of the criteria described above and the
projected needs of the Board at the time. As set forth in its charter, the Governance Committee
may retain a search firm to assist in identifying potential candidates for nomination to the board
of directors. During the fiscal year ended March 31, 2007, the Governance Committee engaged a
director search firm to assist in identifying and evaluating potential nominees.
Our Governance Committee will consider candidates recommended by stockholders for election to
our Board. A stockholder who wishes to recommend a candidate for evaluation by our Governance
Committee should forward the candidates name, business or residence address, principal occupation
or employment and a description of the candidates qualifications to the Chairman of the Governance
Committee at the following address: Eagle Materials Inc., Attention: Secretary, 3811 Turtle Creek
Boulevard, Suite 1100, Dallas, Texas 75219-4487.
Our Bylaws provide that, to be considered at the 2008 annual meeting, stockholder nominations
for the Board of Directors must be submitted in writing and received by our Secretary at the
executive offices of the Company during the period beginning on February 8, 2008 and ending May 8,
2008, and must contain the information specified by and otherwise comply with the terms of our
Bylaws. Any stockholder wishing to receive a copy of our Bylaws should direct a written request to
our Secretary at the Companys principal executive offices.
No nominees for election to the Board at our 2007 annual meeting of stockholders were
submitted by stockholders or groups of stockholders owning more than 5% of our Common Stock.
During the fiscal year ended March 31, 2007, our Governance Committee held five meetings; one
committee member missed one meeting.
11
Compensation Committee Interlocks and Insider Participation
All members of our Compensation Committee (Mr. Barnett, Mr. Clarke and Mr. Maresh) are
independent in accordance with the New York Stock Exchange listing standards. No member of the
Compensation Committee was an officer or employee of the Company or its subsidiaries during or
prior to the fiscal year ended March 31, 2007.
How to Contact Our Board
You can communicate directly with our Board, a committee of our Board, our independent
directors as a group, our Chairman of the Board or any other individual member of our Board by
sending the communication to Eagle Materials Inc., 3811 Turtle Creek Blvd., Suite 1100, Dallas,
Texas 75219-4487, to the attention of the director or directors of your choice (e.g., Attention:
Chairman of the Board of Directors or Attention: All Independent Directors, etc.). We will
relay communications addressed in this manner as appropriate. Communications addressed to the
attention of the entire Board are forwarded to the Chairman of the Board for review and further
handling.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following list sets forth the names, ages as of the date of this proxy statement and
principal occupations of each person who was an executive officer of the Company during the fiscal
year ended March 31, 2007 who is not also a member of our Board. All of these persons have been
elected to serve until the next annual meeting of our Board or until their earlier resignation or
removal.
|
|
|
|
|
|
|
Name |
|
Age |
|
Title |
David B. Powers
|
|
|
57 |
|
|
Executive Vice President Gypsum
(Executive Vice President Gypsum and President of
American Gypsum Company since January 2005; Executive
Vice President Marketing, Sales and Distribution of
American Gypsum Company from June 2002 through December
2004; Vice President, Customer Service of USG
Corporation from 2000 2002; Vice President, Specialty
Products and Architectural Systems Business of USG
Corporation from 1998 2000). |
|
|
|
|
|
|
|
Gerald J. Essl
|
|
|
57 |
|
|
Executive Vice President Cement/Concrete and Aggregates
(Executive Vice President Cement/Concrete and
Aggregates since January 2003; President of Texas Lehigh
Cement Company from 1985 through December 2002). |
|
|
|
|
|
|
|
Arthur R. Zunker,
Jr.
|
|
|
63 |
|
|
Senior Vice President Finance and Treasurer
(Senior Vice President Finance and Treasurer since
January 1994; Senior Vice President Administration
from August 1984 to January 1994). |
|
|
|
|
|
|
|
James H. Graass
|
|
|
49 |
|
|
Executive Vice President, General Counsel and Secretary
(Executive Vice President and General Counsel since
November 2000; Mr. Graass was named Secretary of the
Company in July 2001). |
|
|
|
|
|
|
|
William R. Devlin
|
|
|
41 |
|
|
Vice President and Controller
(Vice President and Controller since October 2005;
Director of Internal Audit from September 2004 through
September 2005; Senior Manager of PricewaterhouseCoopers
LLP from July 1999 through August, 2004). |
12
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis
set forth below with management, which has the responsibility for preparing the Compensation
Discussion and Analysis. Based on such review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in
the Proxy Statement.
Compensation Committee
F. William Barnett, Chairman
Robert L. Clarke
Frank W. Maresh
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis is intended to provide investors with an
understanding of our compensation policies and decisions for our Named Executive Officers during
fiscal 2007. Our Named Executive Officers are our Chief Executive Officer, or CEO, our Chief
Financial Officer and our three other most highly compensated executive officers, all of whom are
identified in the Summary Compensation Table on page 21 of this Proxy Statement.
Our executive compensation and benefits programs are designed to create stockholder value by
attracting, motivating and retaining senior executives who can make significant contributions to
the growth and development of our business. The Compensation Committee of our Board, which we
refer to as the Compensation Committee, has a key role in ensuring that the compensation and
benefits we provide to our executives will lay the groundwork for the achievement of our strategic
objectives.
Compensation Committee
Under its charter, our Compensation Committee assists the Board in discharging its
responsibilities relating to the compensation of the CEO and the other senior executive officers
who are required to make disclosures under Section 16 of the Securities Exchange Act of 1934, whom
we refer to as senior executive officers. The senior executive officers include all of the Named
Executive Officers. In particular, the Compensation Committee is charged with the responsibility
to: (1) annually review and approve corporate goals and objectives relevant to the compensation of
our CEO, (2) evaluate his performance as measured against such goals and objectives, and (3) to set
the salary and other cash and equity compensation for our CEO based on such evaluation. In
addition, the Compensation Committee, with the advice of the CEO, reviews and approves the
compensation of our senior executive officers. See Board Committees Compensation Committee
above. The Compensation Committee also administers our Incentive Plan and is authorized under that
plan to grant cash awards (including annual incentive bonuses) and equity awards (including
options, restricted stock and restricted stock units) to our officers and other key employees. The
Compensation Committee is also authorized under the Incentive Plan to grant equity awards
(including options, restricted stock and restricted stock units) to our non-employee directors.
The Compensation Committee consists solely of directors who are independent under the NYSE listing
standards and Section 162(m) of the Internal Revenue Code, and who are non-employee directors
under Rule 16b-3 under the Securities Exchange Act of 1934. The Compensation Committees charter
may be found at our website www.eaglematerials.com. The Compensation Committee is authorized to
hire outside advisors and during fiscal 2006 and 2007 it engaged Mercer Human Resource Consulting
to advise it on executive compensation matters. Mercer reports directly to the Compensation
Committee.
Process for Setting Compensation
The Compensation Committee sets compensation for the Named Executive Officers on an annual
basis. In general, the process for setting compensation involves the following steps:
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In the first quarter of each fiscal year, the Compensation Committee determines (1)
the salary of each Named Executive Officer for such fiscal year, (2) the amount of the
annual incentive bonus pools in which the Named Executive Officers will have the
opportunity to participate during such year and the percentage of the pool to be
designated for each Named Executive Officer, (3) performance criteria that will apply to
long-term incentive awards made to the Named Executive Officers during such year, (4)
the individual long-term compensation potential for each Named Executive Officer and (5)
the exercise or payment schedules that will apply if the performance criteria are
satisfied. |
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After the end of the fiscal year, the Compensation Committee determines (1) whether
to reduce the amount of the annual incentive bonus payment to be made to each Named
Executive Officer for the prior fiscal year based on an evaluation of individual
performance, and (2) the extent to which the performance criteria for the prior fiscal
year applicable to long-term incentive awards were satisfied. |
13
Our CEO, Mr. Steven R. Rowley, participates to a certain extent in the administration of our
compensation program for our Named Executive Officers. At the end of each fiscal year, Mr. Rowley
provides input on the performance of each of the Named Executive Officers and recommends
compensation adjustments (salary adjustments and annual incentive bonus levels for both the just
completed fiscal year as well as for the next fiscal year) and equity award levels for all Named
Executive Officers. Mr. Rowley also provides input on the structure of our equity awards for our
Named Executive Officers, including the dollar value of the equity award and the performance
criteria that determine vesting. Mr. Graass assists Mr. Rowley in presentations to the
Compensation Committee but does not make recommendations with respect to the compensation paid to
executive officers.
Compensation Philosophy
Our compensation philosophy is based on the principles that executive compensation should:
(1) align the interests of our executives with those of our shareholders, (2) reflect the
performance of the Company as well as the individual, (3) motivate management to achieve our
operational and strategic goals, (4) encourage stock ownership, and (5) maintain the
competitiveness of our total direct compensation so that we are able to attract, retain and
motivate highly qualified, energetic and talented executives. As a result, we believe that a
significant portion of the executives compensation should be at risk that is, dependent upon
the individuals performance, our financial and operational performance and the performance of our
share price. Consistent with this philosophy, Eagles executive compensation program is structured
to achieve the following objectives:
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align the interests of executives with those of our shareholders by: (1) creating a
direct and substantial link between the executives annual cash incentive bonus and our
annual operating earnings, (2) by using equity awards for long-term compensation, and
(3) implementing and maintaining stock ownership guidelines for executives, |
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promote pay-for-performance by: (1) basing our annual incentive bonus on earnings
and individual performance, and (2) tying the vesting of our equity-based awards to the
achievement of certain financial, operational and strategic goals. |
To achieve its compensation objectives for fiscal 2007, the executive compensation program
used a combination of short-term and long-term elements: (1) annual salary, (2) annual incentive
bonus and (3) long-term incentive compensation in the form of stock options and restricted stock
units, which we refer to as RSUs. The dollar level of compensation in each of these elements
varies from year to year depending on our financial, operational and strategic performance and on
the individual executives performance. The level of compensation in each element also varies by
position, with more senior executives having a higher proportion of their compensation in the form
of equity. In addition, our Named Executive Officers are eligible to receive other benefits, such
as medical benefits and profit sharing plan contributions, that are generally similar and available
to our other employees, and contributions under our Supplemental Executive Retirement Plan, which
we refer to as our SERP, that are accrued for the Named Executive Officers and certain other
officers of the Company and its subsidiaries.
We do not currently have employment agreements or change-in-control agreements with any Named
Executive Officer.
Benchmarking
To ensure that our executive compensation program is competitive, the Compensation Committee
engaged Mercer Human Resource Consulting to compare our total compensation (salary, incentive bonus
and long-term compensation) to a peer group of companies in the construction materials business,
which we refer to as our direct peer group, and a supplemental peer group of manufacturing
companies with similar market values which we refer to as our supplemental peer group. The direct
peer group was selected by the Compensation Committee in conjunction with Mercer and our management
from companies within the construction materials sector. However, because there is a limited
number of publicly-traded direct competitors in the construction materials sector and because most
of the companies in the direct peer group have larger revenues than we do, the Compensation
Committee, in conjunction with Mercer, selected a supplemental peer group of manufacturing
companies with similar market values. The Compensation Committee uses this study, which we refer
to as our benchmarking study, to guide it in establishing the components of executive compensation:
salaries, annual incentive bonus opportunity and long term compensation awards. The Compensation
Committee focused most of its attention on the direct peer group and looked to the supplemental
peer group to provide a basis for testing the determinations based on the direct peer group.
For fiscal 2007 the direct peer group consisted of the following nine companies:
USG Corp.
Lafarge North America Inc.
Vulcan Materials Co.
Martin Marietta Materials Inc.
Texas Industries Inc.
Florida Rock Industries Inc.
Caraustar Industries Inc.
Ameron International Corp.
US Concrete Inc.
14
The supplemental peer group consisted of the nine companies in the direct peer group plus the
following eleven companies:
Temple Inland Inc.
Sealed Air Corp.
Armstrong Holdings Inc.
Sonoco Products Co.
Bowater Inc.
Lennox International Inc.
Pactiv Corp.
Valspar Corp.
Cleveland Cliffs Inc.
Century Aluminum Co.
ElkCorp.
Elements of Compensation
Base Salary
Salaries of the Named Executive Officers are reviewed annually as well as at the time of a
promotion or significant change in responsibilities. As described above, the Compensation
Committee engaged Mercer to conduct the benchmarking study at the beginning of fiscal 2007.
Consistent with its philosophy that a significant portion of the Named Executive Officers
compensation should be at risk, for fiscal 2007 the Committee set the base salary level for the
CEO and the other Named Executive Officers in the third or fourth quartile of the companies
reviewed in the direct peer group. Other considerations that may influence the salary level for a
Named Executive Officer include individual performance, the Named Executive Officers skills or
experience, and the nature and responsibilities of the position. In setting Mr. Rowleys base
salary for FY 2007, the Compensation Committee also considered our operating performance and Mr.
Rowleys individual performance as Chief Executive Officer during fiscal 2006.
Annual Incentive Bonus
The Compensation Committee is also responsible for approving the annual incentive bonus for
our CEO and the other Named Executive Officers. Annual incentive bonuses paid to our Named
Executive Officers for fiscal 2007 were made under (1) the Eagle Materials Inc. Annual Salaried
Incentive Compensation Program for Fiscal 2007, which we refer to as the Eagle Annual Incentive
Program, or (2) annual incentive compensation programs for fiscal 2007 established for a particular
operating division of the Company, which we refer to as Divisional Annual Incentive Bonus Programs.
In general, Named Executive Officers whose responsibilities extend to the Company as a whole
participate in the Eagle Annual Incentive Plan and Named Executive Officers whose responsibilities
relate primarily to a particular operating division participate in Divisional Annual Incentive
Bonus Programs. The Eagle Annual Incentive Program was structured to create financial incentives
and rewards that are directly related to corporate performance and the participating Named
Executive Officers performance during the fiscal year. For fiscal 2007, Messrs. Rowley, Zunker
and Graass were participants in the Eagle Annual Incentive Program. Under this program, a
percentage of consolidated earnings before interest and taxes, which we refer to as EBIT, is
designated as a pool for bonuses, with each participating Named Executive Officer being assigned a
percentage of such pool representing the maximum bonus opportunity. At the end of the fiscal year,
the pool is divided, and annual incentive bonuses are paid among the executives participating in
the plan in accordance with such percentages, subject to reduction based on the executives
individual performance during the fiscal year. The amount of the annual incentive bonus paid to an
executive is based on the level of our EBIT, the percentage of the pool designated for such
executive and an assessment of such executives individual performance. For fiscal 2007, the
Compensation Committee approved the designation of 1.2% of EBIT for annual incentive bonuses for
all executives participating in the Eagle Annual Incentive Program. At the beginning of fiscal
2007, Mr. Rowley recommended to the Compensation Committee the percentages (representing the
incentive bonus potential) for each named executive officer (other than himself). Based in part on
these recommendations, the Compensation Committee then set Mr. Rowleys annual incentive bonus
potential at 40%, Mr. Zunkers at 20% and Mr. Graasss at 15% of the pool.
During fiscal 2007, each of Mr. Essl and Mr. Powers participated in a Divisional Annual
Incentive Bonus Program. Under these programs, a percentage of the division operating earnings is
allocated to the bonus pool with each participating employee assigned a percentage of the pool
representing the maximum bonus opportunity. At the end of the fiscal year, bonuses are paid to
participating employees in accordance with their respective percentage, subject to reduction based
on the employees individual performance during the fiscal year. For fiscal 2007, Mr. Powers
participated in the American Gypsum Company Salaried Incentive Plan for Fiscal 2007. Under this
plan, 2.25% of American Gypsums operating earnings were set aside for the bonus pool. At the
beginning of fiscal 2007, the Compensation Committee approved Mr. Powers maximum annual incentive
bonus potential at 22% of such pool. Because of his responsibilities for Cement and Concrete and
Aggregates, Mr. Essl participated in both the Eagle Materials Inc. Cement Companies Salaried
Incentive Compensation Program for Fiscal 2007 and the Eagle Materials Inc. Concrete and Aggregate
Companies Incentive Compensation Program for Fiscal 2007. At the beginning of Fiscal 2007, the
Compensation Committee approved Mr. Essls maximum annual incentive bonus potential at 22% of each
such bonus pool.
15
At the end of fiscal 2007, the Compensation Committee approved the EBIT calculation for the
Company and the operating earnings calculations for each Divisional Annual Incentive Bonus Program.
In addition, at the end of fiscal 2007, Mr. Rowley provided performance evaluations of each Named
Executive Officer (other than himself) to the Compensation Committee along with his recommendations
for the annual incentive bonus for each such Named Executive Officer. Based in part on these
performance evaluations and recommendations, the Committee approved the following annual incentive
bonuses for the Named Executive Officers (other than the CEO) under the applicable program: Mr.
Zunker $706,157; Mr. Powers $962,411; Mr. Graass $557,492; and Mr. Essl $516,226.
At the end of fiscal 2007, the Compensation Committee also conducted a performance evaluation
of Mr. Rowley after receiving input from the entire Board. At the Compensation Committees
request, Mr. Rowley also provided input on his achievement of his goals and objectives for fiscal
2007. Based on this evaluation, the Compensation Committee believes Mr. Rowley performed at a high
level during fiscal 2007 and largely achieved his goals and objectives. In particular, the
Committee considered the following factors (among others) in assessing Mr. Rowleys performance
over the past fiscal year: (i) Mr. Rowleys leadership in guiding the Company to excellent
financial performance (record revenues and operating earnings); (ii) the continuation of the
implementation of the Companys strategic expansion strategy as evidenced by: (a) the completion
of the expansion of the production capacity at the Companys Illinois Cement plant, (b) the
substantial progress made in the construction of a new synthetic gypsum wallboard plant in South
Carolina, (c) the continued development of the major capital projects relating to the expansion and
modernization of the Companys Mountain Cement and Nevada Cement plants; and (d) the successful
acquisition of a 15% interest (through our 50%-owned Texas Lehigh joint venture) in a major cement
import terminal in Houston; (iii) the successful communication of the Companys long-term goals and
opportunities to the Companys stockholders and the investment community, and (iv) the continued
development of a solid team and organizational structure at the Company.
The Compensation Committee believes these programs are consistent with our compensation
philosophy in that they place a significant portion of the executives compensation at risk.
Under these programs, a significant portion of the executives total compensation is dependent upon
the performance of the Company (or its operating divisions) as well as the individuals
performance. This compensation structure is designed so that a Named Executive Officers annual
incentive bonus compensation will exceed the median level of our direct peer group when the
operating earnings of the Company (or its operating divisions) are high relative to historical
levels and the individual performs well.
Long-Term Compensation
Consistent with the Compensation Committees philosophy of linking compensation to the
Companys performance, our equity compensation program has been structured to link the vesting of
equity awards to the achievement by the Company of specific performance levels. During fiscal
2007, the Compensation Committee granted stock options and restricted stock units, which we refer
to as RSUs, to the CEO and to all of the other Named Executive Officers. One-half of the grant
date value of the total award was provided in the form of non-qualified stock options and one-half
was provided in the form of RSUs. The Compensation Committee chose stock options and RSUs because
it believes that these types of equity awards appropriately align the interests of our executives
with the interests of our shareholders. In particular, stock options are of economic value to our
executives only if the market value of our Common Stock increases after the grant date. Similarly,
RSUs have a value directly tied to the value of our Common Stock, and therefore give our executives
an incentive to operate the business in a manner that positively affects our share price. Stock
options and RSUs also provide for employee ownership and promote the retention of executives
because they are subject to deferred exercise or payment provisions.
The grant date value of stock options and RSUs granted to each such senior executive was based
in part on the benchmarking study and was targeted to be in the second quartile of long term
compensation for such position in the direct peer group. The Compensation Committee structured the
equity awards so that each named executive officer was granted 50% of his or her award value in
RSUs and 50% in stock options. The Compensation Committee chose this mix of equity awards because
it provided a balance between stock options which provide a greater financial incentive for the
executive if the stock price increases and RSUs which result in direct stock ownership and promote
executive retention. The level of the equity awards is also influenced by the executives position
within the Company and the significance of the individual to the Companys success. The assumed
value of the stock options was based on a Black-Scholes valuation while the RSUs were valued by
reference to the closing stock price on the date of grant. The Compensation Committee makes its
grants to the Named Executive Officers once a year, typically at the Compensation Committee meeting
that occurs in the early part of the fiscal year which is customarily held in the first quarter of
the fiscal year after the Companys public release of the earnings for the fiscal year just
completed.
For fiscal 2007, the Compensation Committee decided to make awards of stock options vest based
a combination of the Companys financial performance over a three-year period and the achievement
of identified strategic execution goals during fiscal 2007. Specifically, 66-2/3% of the stock
options were designed to vest based on the Companys three-year average earnings before interest
and taxes, or EBIT, measured at the end of fiscal 2007, 2008 and 2009. These options may vest in
whole or in part at the end of any of these fiscal years, but any portion not vested at the end of
fiscal 2009 will be forfeited. The remaining 33-1/3% of the stock options were designed to vest
based on the percentage achievement of certain weighted strategic execution goals established by
the Compensation Committee at the time of the grant. Upon completion of the fiscal year, the
Compensation Committee is responsible
16
for assessing whether and to what extent the company has met these goals. The Compensation
Committees assessment is then used in a formula to compute the number of options vested.
For fiscal 2007, the applicable strategic execution goals were as follows:
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Completion of an analysis related to strategic expansion opportunities. |
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For wallboard operations: |
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success of certain project management goals related to a strategic project; |
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development of specific logistical plans; and |
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exploration of opportunities for future expansion. |
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success of certain project management goals related to a strategic project; |
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completion of analyses related to certain strategic projects; and |
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exploration opportunities for future expansion. |
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For paperboard operations, the creation of product differentiation in connection with
the implementation of certain projects. |
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For concrete and aggregates operations: |
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success of certain project management goals related to a strategic project; and |
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completion of a critical path deliverable in connection with certain expansion project. |
When the above financial performance and strategic execution goals were established, the
Compensation Committee regarded the achievement of these goals as possible but difficult. The
Compensation Committee believed that achievement of these goals would generally require significant
improvements in financial performance over a three-year period and substantial progress toward the
Companys strategic goals during fiscal 2007.
In addition to the stock options described above, in May 2006, the Compensation Committee made
awards of RSUs to the named executive officers, with the vesting of such awards being subject to
the achievement of certain operational goals and strategic execution goals. In particular, 66-2/3%
of the RSUs were designed to vest based on the percentage achievement of certain objective
operational excellence goals established by the Compensation Committee at the time of the grant.
The remaining 33-1/3% of the RSUs vest based on the achievement of the same strategic execution
goals discussed above in connection with stock option grants. Upon completion of the fiscal year,
the Compensation Committee is responsible for assessing whether and to what extent the Company has
met these goals. The Compensation Committees assessment is then used in a formula to compute the
number of vested RSUs.
For fiscal 2007, the operational criteria used to determine vesting of RSUs were as follows:
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For all operations, safety records. |
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For gypsum operations: |
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annual wallboard production output; |
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wallboard weight reduction; and |
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increase in sales volume. |
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annual clinker production; and |
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annual cement sales. |
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For paperboard operations: |
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operational efficiency; and |
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output quality. |
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For concrete and aggregates operations, annual production and gross margins. |
When the above operational goals were established, the Compensation Committee regarded the
achievement of these goals as possible but difficult. The Compensation Committee believed that
achievement of these goals would generally require a sustained superior level of operating
performance during the entire fiscal year.
The Compensation Committee met in April 2007 and determined that 33-1/3% of the RSUs granted
in May 2006 had vested based on the achievement of the operational and strategic execution goals
and that 66-2/3% of these RSUs had been forfeited. In addition, at the same meeting the
Compensation Committee determined that approximately 83% of the stock options granted in May
2006 had vested based on the achievement of the EBIT and strategic execution goals. Once
vested, one-third of the RSUs become
17
payable immediately and an additional one-third become payable
on each of the first and second anniversaries of the vesting date unless a grantee has previously
elected to defer payment to a later date. Similarly, one-third of the vested portion of the stock
options become immediately exercisable with an additional one-third becoming exercisable on each of
the first and second anniversaries of the vesting date. Vested but unpaid RSUs and vested but
exercisable stock options are forfeited if the employee leaves the Company before they are paid in
the case of RSUs or become exercisable in the case of stock options.
These grants were structured with these vesting criteria to provide a strong incentive to
award recipients for promoting both our strategic and operational objectives and superior financial
performance and to encourage recipients to continue with the Company. The Compensation Committee
believes that these awards properly align the interests of our Named Executive Officers with the
interests of our stockholders by linking the value of their long-term compensation with goals that
are directly relevant to creation of stockholder value and strategic projects that will benefit the
Company in the long-term. For these stock options and RSUs to fully vest, the Company must achieve
a superior three-year average EBIT and must meet challenging strategic and operational goals.
Except for certain options granted to certain employees at the time of hire, almost all of the
stock options and all of the RSUs granted by the Company to its officers and key employees have
been granted under performance oriented programs.
All of the Named Executive Officers participate in the Companys long term incentive
compensation program.
Fiscal 2008 Long-Term Compensation
For fiscal 2008, the Company is implementing a new long-term equity award program. This new
program is different from the structure of our program from the last three years in several ways:
(1) the entire award is in the form of stock options, (2) the award is intended to be a single
award for the next three years (except for special circumstances) rather than making annual grants
for each of the next three years, and (3) the stock option awards will vest over a seven-year
period based on the achievement of levels of earnings per share and operating earnings that we
regard as challenging performance targets. Since the spin-off from Centex in 2004, the Company has
formulated and embarked upon a strategic growth plan which includes the significant expansion of
our production and earnings capacity in both cement and wallboard. This growth plan contemplates
the completion of most of these expansion plans in the next 3 or 4 years. This new long-term
equity award program is structured to more strongly motivate and provide incentives to our
management to properly execute these growth plans in a timely and profitable manner. In addition,
the Committee set the vesting criteria at levels that will require operating earnings and earnings
per share to approximate our record fiscal 2007 levels in order to vest any portion of the award
and to nearly double the record fiscal 2007 levels in order to vest 100% of the stock options. Any
stock options not vested at the end of the 7 year term shall be forfeited. The Committee believes
that as a result of the structure of our new long-term equity award program, the interests of our
executives will be more closely aligned with the interests of our stockholders and they will be
strongly motivated to execute our strategic growth plans in a timely and profitable manner.
Consistent with our pay-for-performance philosophy, this structure will reward the executives when
operating earnings and earnings per share significantly increase. Each of the Named Executive
Officers was granted stock options under this new program, except for Mr. Zunker. Mr. Zunker, who
is expected to retire before the end of the stock option performance period, was granted a cash
award ($350,000) payable after the end of fiscal 2008 based upon the achievement of certain
individual performance goals.
The following table shows the equity awards granted to each of the Named Executive Officers in
fiscal 2008:
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Mr. Rowley |
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500,000 |
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Mr. Zunker |
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-0- |
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Mr. Powers |
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122,000 |
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Mr. Graass |
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122,000 |
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Mr. Essl |
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87,000 |
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Stock Ownership Guidelines
In order to align the interest of the Named Executive Officers with our shareholders, and to
promote a long-term focus for the officers, the Board of Directors has adopted executive stock
ownership guidelines for the officers of our Company and its subsidiaries.
The guidelines for the Named Executive Officers are expressed as a multiple of base salary as
set forth below:
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Multiple of Salary |
Name |
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Ownership Guidelines(1) |
Steven R. Rowley |
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5X |
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David B. Powers |
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3X |
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Arthur R. Zunker, Jr. |
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3X |
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Gerald J. Essl |
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3X |
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James H. Graass |
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3X |
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Types of ownership counted toward the guidelines include the following: |
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Stock holdings in our profit sharing plan; |
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Direct holdings; |
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Indirect holdings, such as shares owned by a family member residing in the same household; and |
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Shares represented by vested RSUs. |
Our stock ownership guidelines for executives are expressed as a number of shares of Common
Stock of the Company. The number of shares is determined by multiplying the executives annual
base salary on the date the executive becomes subject to the stock ownership guidelines by the
applicable multiple and then dividing the product by the closing price of our Common Stock on the
NYSE on the date the executive becomes subject to the policy. The amount is then rounded to the
nearest 100 shares.
Once established, a participants ownership requirement generally does not change as a result
of changes in his or her compensation or fluctuations in the price of our Common Stock but could
change in the event of a promotion. Newly elected officers have five years to meet the applicable
ownership requirement. Compliance with the ownership guidelines is reviewed annually by the
Compensation Committee. Based on the current holdings of the Named Executive Officers, the Company
anticipates that all such officers will achieve their stock ownership goal within the five year
time frame.
Profit Sharing and Retirement Plan
Each of the Named Executive Officers are participants in the Companys Profit Sharing and
Retirement Plan, which we refer to as our PSRP. The PSRP is a qualified defined contribution plan
covering substantially all salaried employees of the Company and its subsidiaries. The PSRP is
funded by discretionary employer contributions and employee contributions on an after tax basis up
to 10% of base salary. Employees are fully vested to the extent of their contributions and become
vested in the employer contribution over a seven-year period. All of the Named Executive Officers
are fully vested, except for Mr. Powers who is 40% vested with respect to employer contributions.
SERP
In fiscal 1995, the Board approved our Supplemental Executive Retirement Program, which we
will refer to as our SERP, for certain employees participating in the PSRP. The Internal Revenue
Service sets a limit (currently $220,000) on the amount of annual compensation that may be
considered in determining our contribution to the PSRP for the account of an eligible participant.
The SERP was established to eliminate the adverse treatment that higher-salaried employees receive
as a result of such limit by funding balances for each participant in an amount substantially equal
to the additional contribution that he or she would have received under the PSRP had 100% of his or
her annual salary been eligible for a profit sharing contribution. Contributions accrued under the
SERP for the benefit of the Named Executive Officers vest under the same terms and conditions as
are in the PSRP. Annual incentive bonuses paid to participants are not included in making
calculations for contributions made or accrued to recipients accounts under either the PSRP or the
SERP.
Salary Continuation Plan
The Named Executive Officers, along with other officers and key employees, are participants in
our Salary Continuation Plan. Under this plan, in the event of the death of a participating
employee, such employees beneficiary will receive one full year of base salary in the first year
following death and 50% of base salary each year thereafter until the date such employee would have
reached 65 years of age, subject to a maximum amount. To cover these potential obligations, the
Company pays the premiums on life insurance policies covering the life of each participating
employee.
Grant Practice
It is the practice of the Compensation Committee to make equity awards to employees generally
on an annual basis at a meeting of the Compensation Committee held in the first quarter of the
fiscal year. The meeting is usually held within 30 days after the Companys earnings release for
the fourth quarter of the prior fiscal year. The Compensation Committee may make exceptions to
these guidelines for new hires, promotions and other special circumstances. In addition, the
Compensation Committee has authorized the CEO and the Executive Committee of the Board of Directors
to make grants of time-vesting stock options to certain employees. Under this authorization, the
CEO is authorized to grant stock options to newly-hired employees and the Executive Committee of
the Board of Directors is authorized to grant stock options to newly-promoted employees. This
authority, which expires on May 31, 2008, is limited to an aggregate of 60,000 option shares and no
one individual may receive more than 30,000 option shares. Stock options granted under this
delegation of authority vest 20% per year commencing on the first anniversary of the grant date.
During fiscal 2007 only 5,500 stock options were granted to employees under this authority, none of
whom were named executive officers.
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Limitations on Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction for public
corporations for compensation over $1,000,000 paid in any fiscal year to the corporations chief
executive officer and four other most highly compensated executive officers. However, this law
exempts performance-based compensation from the deduction limit if certain requirements are met.
Awards of annual incentive compensation pursuant to the Eagle annual incentive program and
long-term incentive compensation are made to the chief executive officer and named executive
officers under Eagles Incentive Plan, a compensation plan that has been approved by the
Compensation Committee and by our stockholders and otherwise meets the other performance-based
criteria under Section 162(m). All other compensation paid to the chief executive and the other
named executive officers was below the limit described above. The Compensation Committee will take
appropriate action in the future as it determines to be advisable to minimize any future impacts of
this limitation on the Company.
20
Summary Compensation Table
The following table summarizes all compensation earned during fiscal 2007 by our Chief
Executive Officer, our Chief Financial Officer and the three most highly compensated executive
officers other than the Chief Executive Officer and Chief Financial Officer who were serving as
executive officers at fiscal year-end.
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Change in |
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Pension |
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Value and |
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Non- |
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Nonquali- |
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Equity |
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fied |
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Incentive |
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Deferred |
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Plan |
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Compensa- |
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All Other |
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Stock |
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Option |
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Compensa- |
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tion |
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Compensa- |
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Name and Principal |
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Salary |
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Bonus |
|
Awards(1) |
|
Awards(2) |
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tion(3) |
|
Earnings |
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tion(4) |
|
Total |
Position |
|
Year |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Steven R. Rowley, President and Chief
Executive Officer |
|
|
2007 |
|
|
$ |
650,000 |
|
|
|
|
|
|
$ |
461,596 |
|
|
$ |
548,019 |
|
|
$ |
1,456,912 |
|
|
|
|
|
|
$ |
104,453 |
|
|
$ |
3,220,980 |
|
|
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|
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|
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|
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|
|
|
|
|
|
|
Arthur R. Zunker, Senior Vice
President
Finance and
Treasurer |
|
|
2007 |
|
|
$ |
250,000 |
|
|
|
|
|
|
$ |
89,898 |
|
|
$ |
207,484 |
|
|
$ |
706,157 |
|
|
|
|
|
|
$ |
26,771 |
|
|
$ |
1,280,310 |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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David B. Powers, Executive Vice
President Gypsum |
|
|
2007 |
|
|
$ |
300,000 |
|
|
|
|
|
|
$ |
90,519 |
|
|
$ |
91,395 |
|
|
$ |
962,411 |
|
|
|
|
|
|
$ |
35,885 |
|
|
$ |
1,480,210 |
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
James H. Graass, Executive Vice
President, General
Counsel and Secretary |
|
|
2007 |
|
|
$ |
280,000 |
|
|
|
|
|
|
$ |
85,323 |
|
|
$ |
345,855 |
|
|
$ |
557,492 |
|
|
|
|
|
|
$ |
35,903 |
|
|
$ |
1,304,573 |
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
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|
|
|
|
|
Gerald J. Essl,
Executive Vice
President
Cement/Concrete and
Aggregates |
|
|
2007 |
|
|
$ |
275,000 |
|
|
|
|
|
|
$ |
115,738 |
|
|
$ |
179,935 |
|
|
$ |
516,226 |
|
|
|
|
|
|
$ |
34,748 |
|
|
$ |
1,121,647 |
|
|
|
|
(1) |
|
The amounts in this column reflect the dollar amount, recognized for financial
statement reporting purposes for the fiscal year ended March 31, 2007, in accordance
with FAS 123(R), of RSU awards and restricted stock awards previously made to the
named executive and thus may include amounts from awards granted in and prior to
fiscal year 2007. Assumptions used in the calculation of these amounts are included
in footnote (I) to the Companys audited financial statements for the fiscal year
ended March 31, 2007 included in the Companys Annual Report on Form 10-K filed with
the Securities and Exchange Commission on May 29, 2007. At the end of fiscal 2007,
two-thirds of the RSUs granted to the Named Executive Officers were forfeited
because of failure to meet performance conditions. For each of the Named Executive
Officers, the RSUs forfeited were as follows: Mr. Rowley 5,981; Mr. Zunker
1,359; Mr. Powers 1,903; Mr. Graass 1,359; and Mr. Essl 1,903. |
|
(2) |
|
The amounts in this column reflect the dollar amount, recognized for financial
statement reporting purposes for the fiscal year ended March 31, 2007, in accordance
with FAS 123(R), of stock option awards previously made to the named executive and
thus may include amounts from awards granted in and prior to fiscal year 2007.
Assumptions used in the calculation of these amounts are included in: (1) footnote
(I) to the Companys audited financial statements for the fiscal year ended March
31, 2007 included in the Companys Annual Report on Form 10-K filed with the
Securities and Exchange Commission on May 29, 2007; (2) footnote (A) to the
Companys audited financial statements for the fiscal year ended March 31, 2004
included n the Companys Annual Report on Form 10-K filed with the Securities and
Exchange Commission on June 14, 2004; and (3) footnote (G) to the Companys audited
financial statements for the fiscal year ended March 31, 2001 included in the
Companys Annual Report on Form 10-K filed with the Securities and Exchange
Commission on June 27, 2001. |
|
(3) |
|
The amounts in this column represent payments to the named executive under the
applicable annual incentive compensation plan for fiscal year 2007. See footnote
(1) to the Grants of Plan-Based Awards Table on page 23 of this Proxy Statement. |
|
(4) |
|
The amounts shown in this column represent: (1) Company contributions to the
account of the Named Executive Officer under our Salaried Profit Sharing and
Retirement Plan, which we refer to as our PSRP; (2) Company contributions to the
account of the Named Executive Officer under our Supplemental Executive Retirement |
21
Program, which we refer to as our SERP; and (3) premium costs to the Company of life
insurance policies obtained by the Company in connection with its Salary Continuation
Plan, which we refer to as our SCP.
The PSRP is a qualified defined contribution plan covering substantially all salaried
employees of the Company and its subsidiaries. The PSRP is funded by discretionary
employer contributions and employee contributions on an after tax basis up to 10% of
base salary. Employees are fully vested to the extent of their contributions and
become vested in the employer contribution over a seven-year period. All of the Named
Executive Officers are fully vested with respect to employer contributions.
The SERP is an unfunded, non-qualified plan for certain executives of the Company.
The Internal Revenue Service sets a limit (currently $220,000) on the amount of annual
compensation that may be considered in determining our contribution to the PSRP for
the account of an eligible participant. The SERP was established to eliminate the
adverse treatment that higher-salaried employees receive as a result of such limit by
funding balances for each participant in an amount substantially equal to the
additional contribution that he or she would have received under the PSRP had 100% of
his or her annual salary been eligible for a profit sharing contribution.
Contributions accrued under the SERP for the benefit of the Named Executive Officers
vest under the same terms and conditions as are in the PSRP. Annual incentive bonuses
paid to participants are not included in making calculations for contributions made or
accrued to recipients accounts under either the PSRP or the SERP.
Under the SCP, in the event of the death of a participating employee, such employees
beneficiary will receive one full year of base salary in the first year following
death and 50% of base salary each year thereafter until the date such employee would
have reached 65 years of age, subject to a maximum amount of $1,500,000. To cover
these potential obligations, the Company pays the premiums on life insurance policies
covering the life of each participating employee.
During fiscal 2007, the named executives received the following contributions with respect to
the following plans:
|
(i) |
|
PSRP Mr. Rowley $21,840, Mr. Zunker $22,037, Mr. Powers $21,731, Mr. Graass
$21,840, Mr. Essl $21,988. |
|
|
(ii) |
|
SERP Mr. Rowley $76,307, Mr. Zunker $3,754, Mr. Powers $11,649, Mr. Graass
$10,910, Mr. Essl $10,534. These SERP contributions were made in fiscal 2007 but
represent contributions for both calendar 2005 and calendar 2006. |
During fiscal 2007, the Company paid premium costs in the following amounts for life insurance
policies obtained under the SCP with respect to the named executives:
Mr. Rowley $6,306, Mr. Zunker $980, Mr. Powers $2,505, Mr. Graass $3,153 and Mr.
Essl $2,226.
22
Grants of Plan-Based Awards
The following table sets forth the grants of plan-based awards made during fiscal 2007 to the
Named Executive Officers.
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Estimated Future Payouts Under |
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Exercise |
|
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Non-Equity Incentive Plan |
|
Estimated Future Payouts Under |
|
or Base |
|
Grant Date |
|
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Awards |
|
Equity Incentive Plan Awards |
|
Price of |
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Fair Value |
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Thresh- |
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Maxi- |
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Thresh- |
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Option |
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of Stock |
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Grant |
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old |
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Target |
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mum |
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old |
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Target |
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Maximum |
|
Awards |
|
and Option |
Name |
|
Date |
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
(#) |
|
($/Sh) |
|
Awards |
Steven R. Rowley |
|
|
5/9/06 |
|
|
|
|
|
|
$ |
1,456,912 |
(1) |
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
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5/9/06 |
|
|
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|
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|
|
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|
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|
|
|
|
|
|
|
|
17,794 |
(2) |
|
$ |
62.83 |
|
|
$ |
550,000 |
|
|
|
|
5/9/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,972 |
(3) |
|
|
|
|
|
$ |
550,000 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur R. Zunker |
|
|
5/9/06 |
|
|
|
|
|
|
$ |
706,157 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/9/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,044 |
(2) |
|
$ |
62.83 |
|
|
$ |
125,000 |
|
|
|
|
5/9/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,039 |
(3) |
|
|
|
|
|
$ |
125,000 |
(4) |
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Powers |
|
|
5/9/06 |
|
|
|
|
|
|
$ |
962,411 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/9/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,662 |
(2) |
|
$ |
62.83 |
|
|
$ |
175,000 |
|
|
|
|
5/9/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,855 |
(3) |
|
|
|
|
|
$ |
175,000 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James H. Graass |
|
|
5/9/06 |
|
|
|
|
|
|
$ |
557,492 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
5/9/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,044 |
(2) |
|
$ |
62.83 |
|
|
$ |
125,000 |
|
|
|
|
5/9/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,039 |
(3) |
|
|
|
|
|
$ |
125,000 |
(4) |
|
|
|
|
|
|
|
|
|
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|
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|
|
Gerald J. Essl |
|
|
5/9/06 |
|
|
|
|
|
|
$ |
516,226 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
5/9/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,662 |
(2) |
|
$ |
62.83 |
|
|
$ |
175,000 |
|
|
|
|
5/9/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,855 |
(3) |
|
|
|
|
|
$ |
175,000 |
(4) |
|
|
|
(1) |
|
With respect to Messrs. Rowley, Zunker and Graass, the amounts in this column represent the
annual incentive payments paid to the Named Executive Officers pursuant to the Eagle Annual
Salaried Incentive Compensation Program for the Fiscal Year 2007. Under this plan, a
percentage of the Companys operating earnings is designated as a pool for incentive payments,
with each participating executive being assigned a percentage of such pool. There were no
threshold or maximum amounts designated. For fiscal year 2007, which ended March 31, 2007,
1.2% of operating earnings of the Company was allocated for annual incentive payments for
participating executives with Mr. Rowley allocated up to 40% of such pool, Mr. Zunker
allocated up to 20% of such pool, and Mr. Graass allocated up to 15% of such pool. These
amounts are subject to reduction based on an assessment of the executives performance. The
amount of the incentive payment made to an executive was based on the level of the Companys
operating earnings, the percentage of the pool designated for such executive and an assessment
of such executives performance for fiscal year 2007. For fiscal 2007, Messrs. Essl and
Powers participated in subsidiary incentive compensation programs pursuant to which a
percentage of the operating earnings of the applicable subsidiary (or group of subsidiaries)
is available for incentive payments to the participating employees. Mr. Essl participated in
both the Eagle Materials Inc. Cement Companies Salaried Incentive Compensation Program for
Fiscal 2007 and the Eagle Materials Inc. Concrete and Aggregates Companies Salaried Incentive
Compensation Program for fiscal year 2007. In the programs in which Mr. Essl participated,
the 2.25% of operating earnings of each of our cement and concrete/aggregates subsidiaries for
Fiscal 2007 was available for incentive payments to participating employees, with 22% such
pool available for payment to Mr. Essl at the end of Fiscal 2007 (22%), subject to reduction
based on Mr. Essls 2007 performance. Mr. Powers participated in the American Gypsum Salaried
Incentive Compensation Plan for Fiscal Year 2007 under which 2.25% of American Gypsums
operating earnings are available for annual incentive payments to participating American
Gypsum employees, with 22% of such pool available for payment to Mr. Powers at the end of
fiscal year 2007, subject to reduction based on Mr. Powers individual performance. With
respect to Messrs. Essl and Powers, the annual incentive payment is calculated based on the
performance of the executives operating group as well as the executives individual
performance for the respective fiscal year. |
|
(2) |
|
These amounts represent grants of stock options to purchase shares of Common Stock made on
May 9, 2006 under our Incentive Plan. The vesting of the stock options is subject to the
Companys achievement of certain earnings and strategic execution goals. In particular,
66-2/3% of the stock options vest based on our three-year average earnings before interest and
taxes, measured at the end of each of fiscal 2007, 2008 and 2009. Such options may vest in
whole or in part at the end of any of these fiscal years, but any portion not vested at the
end of fiscal 2009 shall be forfeited. In addition, 33-1/3% of the stock options vest based
on certain strategic execution goals achieved during fiscal 2007. Once vested, the stock
options become exercisable 1/3 immediately and 1/3 on each of the first and second
anniversaries of vesting. Under the terms of the option agreements, all unvested shares and
vested but unexercisable shares become immediately exercisable upon a change-in-control, as
defined in the stock option agreement. At the end of fiscal 2007, approximately 83% of these
options vested based on achievement of the earnings and strategic execution performance
criteria during fiscal 2007. The remaining options are eligible for potential vesting at the
end of fiscal 2008 and 2009. Any portion not vested at the end of fiscal 2009 will be
forfeited. These stock options are described in greater detail under Long Term Compensation
on page 16 of this Proxy Statement. |
23
(3) |
|
These amounts represent grants of RSUs made on May 9, 2006 under our Incentive Plan. The
vesting of the RSUs is subject to the Companys achievement of certain operational goals and
strategic execution goals during fiscal 2007. In particular, 662/3% of
the RSUs vest based on certain operational excellence goals and 331/3%
of the RSUs vest based on the same strategic execution goals used for the stock options
described above. Unless deferred by the executive, one-third of such vested RSUs will be paid
in the form of Common Stock immediately, one-third will be paid at March 31, 2008 and
one-third at March 31, 2009. At the end of fiscal 2007, 331/3% of these
RSUs vested based on achievement of certain of the operational and strategic criteria. The
remaining unvested unpaid RSUs were forfeited. The number of RSUs shown in this column
includes the RSUs forfeited at the end of fiscal 2007. Under the terms of the RSUs, all
unvested RSUs and vested but unpaid RSUs become immediately payable upon a change-in-control,
as defined in the RSU agreement. These RSUs are described in greater detail under Long Term
Compensation on page 16 of this Proxy Statement. |
(4) |
|
662/3% of the RSUs granted on May 9, 2006 were forfeited as of March
31, 2007 because of the failure to achieve certain performance criteria during fiscal 2007.
See footnote (3) above. |
24
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes stock-based compensation awards outstanding at the end of
fiscal 2007 for each of the Named Executive Officers.
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|
Option Awards |
|
Stock Awards |
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Equity |
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|
Equity |
|
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|
Incentive Plan |
|
Equity Incentive |
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Plan Awards: |
|
|
Number |
|
|
|
|
|
Plan Awards: |
|
|
|
|
|
|
|
|
|
Number |
|
Market |
|
Number of |
|
Market or |
|
|
of |
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
of Shares |
|
Value of |
|
Unearned |
|
Payout Value of |
|
|
Securities |
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
or Units |
|
Shares or |
|
Shares, Units |
|
Unearned |
|
|
Underlying |
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
of Stock |
|
Units of |
|
or Other |
|
Shares, Units or |
|
|
Unexercised |
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
|
|
That |
|
Stock That |
|
Rights That |
|
Other Rights |
|
|
Options |
|
Options |
|
Unearned |
|
Exercise |
|
Option |
|
Have Not |
|
Have Not |
|
Have Not |
|
That Have Not |
|
|
Exercisable |
|
Unexercisable |
|
Options |
|
Price |
|
Expiration |
|
Vested |
|
Vested |
|
Vested |
|
Vested |
Name |
|
(#) |
|
(#) |
|
(#) |
|
($) |
|
Date |
|
(#) |
|
($)(1) |
|
(#) |
|
($) |
Steven R. Rowley |
|
|
92,709 |
|
|
|
|
|
|
|
|
|
|
$ |
10.5426 |
|
|
|
04/28/2009 |
|
|
|
25,716 |
(2) |
|
$ |
1,147,705 |
|
|
|
|
|
|
|
|
|
|
|
|
42,709 |
|
|
|
|
|
|
|
|
|
|
$ |
6.7956 |
|
|
|
06/26/2010 |
|
|
|
34,259 |
(3) |
|
$ |
1,528,979 |
|
|
|
|
|
|
|
|
|
|
|
|
77,834 |
|
|
|
4,942 |
(4) |
|
|
|
|
|
$ |
11.7639 |
|
|
|
05/08/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,318 |
|
|
|
1,352 |
(4) |
|
|
|
|
|
$ |
23.42 |
|
|
|
06/26/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,094 |
|
|
|
552 |
(4) |
|
|
|
|
|
$ |
23.30 |
|
|
|
08/04/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,164 |
|
|
|
17,081 |
(4) |
|
|
|
|
|
$ |
29.0767 |
|
|
|
06/09/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,919 |
|
|
|
9,836 |
(5) |
|
|
3,039 |
|
|
$ |
62.83 |
|
|
|
05/09/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur R. Zunker |
|
|
10,531 |
|
|
|
2,965 |
(4) |
|
|
|
|
|
$ |
11.7639 |
|
|
|
05/08/2013 |
|
|
|
1,568 |
(6) |
|
$ |
69,980 |
|
|
|
|
|
|
|
|
|
|
|
|
16,439 |
|
|
|
451 |
(4) |
|
|
|
|
|
$ |
23.42 |
|
|
|
06/26/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,698 |
|
|
|
184 |
(4) |
|
|
|
|
|
$ |
23.30 |
|
|
|
08/04/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,765 |
|
|
|
3,882 |
(4) |
|
|
|
|
|
$ |
29.0767 |
|
|
|
06/09/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,118 |
|
|
|
2,236 |
(7) |
|
|
690 |
|
|
$ |
62.83 |
|
|
|
05/09/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Powers |
|
|
18,680 |
|
|
|
1,186 |
(4) |
|
|
|
|
|
$ |
9.5742 |
|
|
|
10/24/2012 |
|
|
|
2,194 |
(8) |
|
$ |
97,874 |
|
|
|
|
|
|
|
|
|
|
|
|
10,870 |
|
|
|
5,435 |
(4) |
|
|
|
|
|
$ |
29.0767 |
|
|
|
06/09/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,565 |
|
|
|
3,130 |
(9) |
|
|
967 |
|
|
$ |
62.83 |
|
|
|
05/09/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James H. Graass |
|
|
92,709 |
|
|
|
|
|
|
|
|
|
|
$ |
7.2675 |
|
|
|
10/26/2010 |
|
|
|
2,903 |
(10) |
|
$ |
129,561 |
|
|
|
|
|
|
|
|
|
|
|
|
87,176 |
|
|
|
5,533 |
(4) |
|
|
|
|
|
$ |
8.1456 |
|
|
|
05/10/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,176 |
|
|
|
5,533 |
(4) |
|
|
|
|
|
$ |
13.425 |
|
|
|
05/09/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,700 |
|
|
|
2,965 |
(4) |
|
|
|
|
|
$ |
11.7639 |
|
|
|
05/08/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,450 |
|
|
|
368 |
(4) |
|
|
|
|
|
$ |
23.42 |
|
|
|
06/26/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,484 |
|
|
|
150 |
(4) |
|
|
|
|
|
$ |
23.30 |
|
|
|
08/04/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,765 |
|
|
|
3,882 |
(4) |
|
|
|
|
|
$ |
29.0767 |
|
|
|
06/09/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,118 |
|
|
|
2,236 |
(7) |
|
|
690 |
|
|
$ |
62.83 |
|
|
|
05/09/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerald J. Essl |
|
|
46,700 |
|
|
|
2,965 |
(4) |
|
|
|
|
|
$ |
11.7639 |
|
|
|
05/08/2013 |
|
|
|
2,194 |
(11) |
|
$ |
97,918 |
|
|
|
|
|
|
|
|
|
|
|
|
16,439 |
|
|
|
451 |
(4) |
|
|
|
|
|
$ |
23.42 |
|
|
|
06/26/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,698 |
|
|
|
84 |
(4) |
|
|
|
|
|
$ |
23.30 |
|
|
|
08/04/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,870 |
|
|
|
5,435 |
(4) |
|
|
|
|
|
$ |
29.0767 |
|
|
|
06/09/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,565 |
|
|
|
3,130 |
(9) |
|
|
967 |
|
|
$ |
62.83 |
|
|
|
05/09/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the closing price per share of Common Stock on the NYSE on March 30, 2007 ($44.63). |
|
(2) |
|
These shares represent the remaining unvested shares under a restricted stock grant of 45,000
shares made to Mr. Rowley on September 18, 2003. 42.85% of such shares vested on September 18,
2006 (the third anniversary of the grant date) with the remaining shares vesting ratably over the
next 4 years. |
|
(3) |
|
This amount represents earned RSUs, 997 shares of which become payable on March 31, 2008, 18,559
shares on March 31, 2009 and 14,703 shares on March 31, 2010. |
|
(4) |
|
This amount represents options to purchase Common Stock which become exercisable on March 31,
2008. |
|
(5) |
|
This amount represents options to purchase Common Stock, 4,918 shares of which become exercisable
on March 31, 2008 and 4,918 of which become exercisable on March 31, 2009. |
|
(6) |
|
This amount represents earned RSUs, 1,342 shares of which become payable on March 31, 2008 and
226 shares on March 31, 2009. |
|
(7) |
|
This amount represents options to purchase Common Stock, 1,118 shares of which become exercisable
on March 31, 2008 and 1,118 of which become exercisable on March 31, 2009. |
|
(8) |
|
This amount represents earned RSUs, 1,877 shares of which become payable on March 31, 2008 and
317 shares on March 31, 2009. |
|
(9) |
|
This amount represents options to purchase Common Stock, 1,565 shares of which become exercisable
on March 31, 2008 and 1,565 of which become exercisable on March 31, 2009. |
25
(10) |
|
This amount represents earned RSUs, 1,566 shares of which become payable on March 31, 2008 and
1,337 shares on March 31, 2009. |
|
(11) |
|
This amount represents earned RSUs 1,877 shares of which become payable on March 31, 2008 and 317
shares March 31, 2009. |
Option Exercises and Stock Vested
The following table sets forth information regarding the exercise of stock options and the
vesting of restricted stock or restricted stock units during fiscal 2007 for each of our Named
Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
Number of Shares |
|
|
|
|
|
Number of Shares |
|
|
|
|
Acquired on |
|
Value Realized on |
|
Acquired on |
|
Value Realized |
|
|
Exercise |
|
Exercise(1) |
|
Vesting(2) |
|
on Vesting(3) |
Name |
|
(#) |
|
($) |
|
(#) |
|
($) |
Steven R. Rowley |
|
|
66,918 |
(4) |
|
$ |
3,771,473 |
|
|
|
20,281 |
(5) |
|
$ |
729,251 |
|
Arthur R. Zunker, Jr. |
|
|
40,804 |
(6) |
|
$ |
1,822,946 |
|
|
|
3,290 |
|
|
$ |
146,813 |
|
David B. Powers |
|
|
|
|
|
|
|
|
|
|
1,877 |
|
|
$ |
83,764 |
|
James H. Graass |
|
|
|
|
|
|
|
|
|
|
2,721 |
|
|
$ |
121,438 |
|
Gerald J. Essl |
|
|
|
|
|
|
|
|
|
|
3,825 |
|
|
$ |
170,702 |
|
|
|
|
(1) |
|
Value realized on exercise based on the difference between the market price of our Common
Stock on the date of exercise and the option exercise price, multiplied by the number of
shares exercised. |
|
(2) |
|
Except for Mr. Rowley, all of the amounts in this column represent shares of common stock
received by the Named Executive Officer in connection with the payment of shares in accordance
with the terms of previously granted RSUs. These amounts include shares that were received
during fiscal year 2007 (or after the end of fiscal year 2007 to the extent the vesting of
such shares related to the achievement of performance criteria during fiscal 2007). See
footnote (3) to the Grants of Plan Based Awards Table for a more detailed description of these
RSUs. |
|
(3) |
|
The amounts in this column represent the dollar value of the stock award valued at the
closing price of our Common Stock on the vesting date of such shares. |
|
(4) |
|
On March 2, 2007, Mr. Rowley exercised an option to purchase 92,709 shares of Common Stock.
In connection with this exercise, Mr. Rowley tendered 22,311 shares of Common Stock to pay for
the exercise price and the Company withheld 23,480 shares to satisfy tax withholding for
required taxes. As a result of this transaction, Mr. Rowley acquired an additional 46,918
shares of Common Stock. This amount also includes 20,000 shares of Common Stock acquired by
Mr. Rowley in connection with the exercise of a stock option on September 28, 2006. |
|
(5) |
|
This amount includes 19,284 shares of Common Stock for which restrictions lapsed during
fiscal 2007 under the terms of Mr. Rowleys restricted stock grant dated September 18, 2003. |
|
(6) |
|
This amount represents shares exercised and sold by Mr. Zunker on May 12, 2006. |
26
Nonqualified Deferred Compensation
In FY 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
|
Registrant |
|
Aggregate |
|
Aggregate |
|
Aggregate |
|
|
Contributions in |
|
Contributions in |
|
Earnings in |
|
Withdrawals/ |
|
Balance at |
|
|
Last FY |
|
Last FY(1) |
|
Last FY(2) |
|
Distributions |
|
Last FYE(3) |
Name |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Steven R. Rowley |
|
|
|
|
|
$ |
76,307 |
|
|
$ |
44,135 |
|
|
|
|
|
|
$ |
464,342 |
|
Arthur R. Zunker |
|
|
|
|
|
$ |
3,754 |
|
|
$ |
32,867 |
|
|
|
|
|
|
$ |
523,897 |
|
David B. Powers |
|
|
|
|
|
$ |
11,649 |
|
|
$ |
505 |
|
|
|
|
|
|
$ |
12,154 |
|
James H. Graass |
|
|
|
|
|
$ |
10,910 |
|
|
$ |
3,984 |
|
|
|
|
|
|
$ |
49,831 |
|
Gerald J. Essl |
|
|
|
|
|
$ |
10,534 |
|
|
$ |
9,876 |
|
|
|
|
|
|
$ |
243,210 |
|
|
|
|
(1) |
|
The amounts in this column represent contributions made by the Company for the account
of the Named Executive Officers during fiscal 2007 under our SERP. The SERP is an
unfunded, non-qualified plan for certain executives of the Company. Under the SERP, the
Company makes contributions to the account of the executive in an amount substantially
equal to the additional contributions he or she would have received under the Companys
Profit Sharing and Retirement Plan had 100% of his or her annual salary been eligible for a
profit sharing contribution. Because of delays in making the contribution for calendar
2005, the calendar 2005 contribution was actually made in fiscal 2007. As a result, these
amounts include contributions by the Company made during fiscal 2007 but which relate to
service during both calendar 2005 and calendar 2006. |
|
(2) |
|
The Company also maintains the Eagle Materials Inc. Deferred Compensation Plan. Under
this Deferred Compensation Plan, eligible executives were allowed to defer the receipt of a
portion of their salary or annual bonus for the fiscal year 2001, up to 75% of such
amounts. For fiscal years after FY 2001, the Deferred Compensation Plan was closed to
additional employee deferrals. The earnings in this column reflect earnings on balances in
the named executives SERP account and Deferred Compensation Plan account. A Named
Executive Officer may designate how his account balances are to be invested by selecting
among the investment options available under our Profit Sharing and Retirement Plan. These
earnings are not included in the Summary Compensation Table on page 21 of this Proxy
Statement. The table below shows the investment options available under our Profit Sharing
and Retirement Plan and the annual rate of return for the 12 month period ended March 31,
2007, as reported to us by the administrator of the plan. |
|
|
|
|
|
|
|
Rate of |
Fund |
|
Return |
Fidelity Dividend Growth Fund |
|
|
9.74 |
% |
Fidelity Equity Income II Fund |
|
|
10.33 |
% |
Spartan U.S. Equity Index Fund |
|
|
11.75 |
% |
TCW Select Equity Fund Class N |
|
|
-4.47 |
% |
Fidelity Low Price Stock Fund |
|
|
11.23 |
% |
JP Morgan Diversified Midcap Growth Fund Class A |
|
|
3.85 |
% |
Spartan Extended Market Index Fund |
|
|
9.52 |
% |
ABF Small Cap Value PA |
|
|
8.52 |
% |
Baron Small Cap Fund |
|
|
4.34 |
% |
Fidelity Diversified International Fund |
|
|
15.18 |
% |
Eagle Materials Common Stock Fund |
|
|
-28.12 |
% |
Fidelity Freedom 2000 Fund |
|
|
6.72 |
% |
Fidelity Freedom 2010 Fund |
|
|
8.17 |
% |
Fidelity Freedom 2020 Fund |
|
|
8.95 |
% |
Fidelity Freedom 2030 Fund |
|
|
9.40 |
% |
Fidelity Freedom 2040 Fund |
|
|
9.68 |
% |
Fidelity Freedom Income Fund |
|
|
6.54 |
% |
Fidelity Managed Income Portfolio |
|
|
4.20 |
% |
Fidelity US Bond Index Fund |
|
|
6.53 |
% |
(3) |
|
The amounts in this column represent the sum of: (i) the balance in the Named
Executive Officers account under the Companys SERP; and (ii) the balance in the Named
Executive Officers account under the Companys Deferred Compensation Plan. |
27
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
The following is a summary of the potential payments payable to the Named Executive Officers
upon termination of employment or a change-in-control of the Company under current compensation
programs. Specifically, compensation payable to each Named Executive Officer upon voluntary
termination, involuntary termination and in the event of death or disability and change in control
is discussed below. The amounts shown in the tables below assume that such termination was
effective as of March 31, 2007, and are therefore estimates of the amounts which would be paid out
to the executives (or their beneficiaries) upon their termination. Due to the number of factors
that affect the nature and amount of any benefits provided upon the events discussed below, any
actual amounts paid or distributed may be different. Factors that could affect these amounts
include the timing during the year of any such event, the price of our Common Stock and the
executives age.
Payments Made Upon Any Termination
The amounts shown in the table below do not include payments and benefits to the extent they
are provided on a non-discriminatory basis to salaried employees generally upon termination of
employment. These include:
Accrued Pay and Profit Sharing Plan Benefits.
|
|
|
accrued salary and vacation pay through the date of termination; |
|
|
|
|
non-equity incentive compensation earned and payable prior to the date of termination; |
|
|
|
|
option grants received under the Incentive Plan which have already vested and are
exercisable prior to the date of termination (subject to the terms of the applicable
Nonqualified Stock Option Agreement); |
|
|
|
|
restricted stock grants or restricted stock unit grants received under the Incentive
Plan which have already vested prior to the date of termination (subject to the terms of
the applicable Restricted Stock or Restricted Stock Unit Agreement); |
|
|
|
|
unused vacation pay; and |
|
|
|
|
distributions of vested plan balances under our Profit Sharing and Retirement Plan and SERP. |
Deferred Compensation. The amounts shown in the table below do not include
distribution of plan balances under our Deferred Compensation Plan. These balances are shown
in the Nonqualified Deferred Compensation in FY 2007 Table on page 27 of this Proxy
Statement.
Death and Disability. A termination of employment due to death or disability does
not entitle the Named Executive Officer to any payments or benefits that are not available to
salaried employees generally except for benefits payable to the beneficiaries of the Named
Executive Officers in the event of termination due to death under our Salary Continuation
Plan. A description of our Salary Continuation Plan is set forth in footnote (4) of the
Summary Compensation Table on page 21 of this Proxy Statement.
Mr. Rowley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
or Voluntary |
|
|
|
|
|
Change-in- |
|
|
Termination |
|
Death |
|
Control |
Type of Payment |
|
($) |
|
($) |
|
($) |
Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable and Accelerated Awards |
|
|
|
|
|
|
|
|
|
$ |
468,540 |
(1) |
Restricted Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Awards |
|
|
|
|
|
|
|
|
|
$ |
1,528,979 |
(2) |
Restricted Stock Award |
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Awards |
|
|
|
|
|
|
|
|
|
$ |
1,147,705 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
Salary Continuation Plan Payments |
|
|
|
|
|
$ |
1,500,000 |
(4) |
|
|
|
|
TOTAL |
|
|
|
|
|
$ |
1,500,000 |
|
|
$ |
3,145,224 |
|
|
|
|
(1) |
|
Represents the dollar value of the unexercisable stock options that are accelerated
because of a change-in-control based on the difference between the closing price of our
Common Stock on March 30, 2007 and the exercise price of the stock option. |
|
(2) |
|
Represents the dollar value of the RSUs that are accelerated or paid to the Named
Executive Officer in the form of Common Stock because of a change-in-control, based on the
closing price of our Common Stock on March 30, 2007. |
|
(3) |
|
Represents the dollar value of the restricted stock for which restrictions will lapse
upon a change-in-control. |
28
(4) |
|
Under the terms of our Salary Continuation Plan, in the event of Mr. Rowleys death
while employed by the Company, Mr. Rowleys beneficiaries would receive $650,000 in a lump
sum payment plus $325,000 per year until the beneficiaries have received a total of
$1,500,000 in payments. These payments would be paid from the proceeds of a life insurance
policy purchased by the Company. |
Mr. Powers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
or Voluntary |
|
|
|
|
|
Change-in- |
|
|
Termination |
|
Death |
|
Control |
Type of Payment |
|
($) |
|
($) |
|
($) |
Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable and Accelerated
Awards |
|
|
|
|
|
|
|
|
|
$ |
126,108 |
(1) |
Restricted Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Awards |
|
|
|
|
|
|
|
|
|
$ |
97,874 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
Salary Continuation Plan Payments |
|
|
|
|
|
$ |
1,500,000 |
(3) |
|
|
|
|
TOTAL |
|
|
|
|
|
$ |
1,500,000 |
|
|
$ |
223,982 |
|
|
|
|
(1) |
|
Represents the dollar value of the unexercisable stock options that are accelerated
because of a change-in-control, based on the difference between the closing price of our
Common Stock on March 30, 2007 and the exercise price of the stock option. |
|
(2) |
|
Represents the dollar value of the RSUs that are accelerated or paid to the Named
Executive Officer in the form of Common Stock because of a change-in-control, based on the
closing price of our Common Stock on March 30, 2007. |
|
(3) |
|
Under the terms of our Salary Continuation Plan, in the event of Mr. Powers death
while employed by the Company, Mr. Powers beneficiaries would receive $300,000 in a lump
sum payment plus $150,000 per year until the beneficiaries have received a total of
$1,500,000 in payments. These payments would be paid from the proceeds of a life insurance
policy purchased by the Company. |
Mr. Zunker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
or Voluntary |
|
|
|
|
|
Change-in- |
|
|
Termination |
|
Death |
|
Control |
Type of Payment |
|
($) |
|
($) |
|
($) |
Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable and Accelerated
Awards |
|
|
|
|
|
|
|
|
|
$ |
171,316 |
(1) |
Restricted Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Awards |
|
|
|
|
|
|
|
|
|
$ |
69,980 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
Salary Continuation Plan Payments |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
|
$ |
500,000 |
|
|
$ |
241,296 |
|
|
|
|
(1) |
|
Represents the dollar value of the unexercisable stock options that are accelerated
because of a change-in-control, based on the difference between the closing price of our
Common Stock on March 31, 2007 and the exercise price of the stock option. |
|
(2) |
|
Represents the dollar value of the RSUs that are accelerated or paid to the Named
Executive Officer in the form of Common Stock because of a change-in-control, based on the
closing price of our Common Stock on March 30, 2007. |
|
(3) |
|
Under the terms of our Salary Continuation Plan, in the event of Mr. Zunkers death
while employed by the Company, Mr. Zunkers beneficiaries would receive $250,000 in a lump
sum payment plus $125,000 per year until the date Mr. Zunker would have reached 65. These
payments would be paid from the proceeds of a life insurance policy purchased by the
Company. |
29
Mr. Graass
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
or Voluntary |
|
|
|
|
|
|
Change-in- |
|
|
|
Termination |
|
|
Death |
|
|
Control |
|
Type of Payment |
|
($) |
|
|
($) |
|
|
($) |
|
Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable and Accelerated
Awards |
|
|
|
|
|
|
|
|
|
$ |
543,356 |
(1) |
Restricted Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Awards |
|
|
|
|
|
|
|
|
|
$ |
129,561 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits |
|
|
|
|
|
$ |
1,500,000 |
(3) | |
|
|
|
Salary Continuation Plan Payments |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
|
$ |
1,500,000 |
|
|
$ |
672,917 |
|
|
|
|
(1) |
|
Represents the dollar value of the unexercisable stock options that are accelerated
because of a change-in-control, based on the difference between the closing price of our
Common Stock on March 30, 2007 and the exercise price of the stock option. |
|
(2) |
|
Represents the dollar value of the RSUs that are accelerated or paid to the Named
Executive Officer in the form of Common Stock because of a change-in-control, based on the
closing price of our Common Stock on March 30, 2007. |
|
(3) |
|
Under the terms of our Salary Continuation Plan, in the event of Mr. Graasss death
while employed by the Company, Mr. Graasss beneficiaries would receive $280,000 in a lump
sum payment under our Salary Continuation Plan plus $140,000 per year until the
beneficiaries have received a total of $1,500,000 in payments. These payments would be
paid from the proceeds of a life insurance policy purchased by the Company. |
Mr. Essl
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
or Voluntary |
|
|
|
|
|
Change-in- |
|
|
Termination |
|
Death |
|
Control |
Type of Payment |
|
($) |
|
($) |
|
($) |
Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable and Accelerated
Awards |
|
|
|
|
|
|
|
|
|
$ |
228,080 |
(1) |
Restricted Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated Awards |
|
|
|
|
|
|
|
|
|
|
97,918 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
Salary Continuation Plan Payments |
|
|
|
|
|
$ |
1,375,000 |
(3) |
|
|
|
|
TOTAL |
|
|
|
|
|
$ |
1,375,000 |
|
|
$ |
325,998 |
|
|
|
|
(1) |
|
Represents the dollar value of the unexercisable stock options that are accelerated
because of a change-in-control based on the difference between the closing price of our
Common Stock on March 30, 2007 and the exercise price of the stock option. |
|
(2) |
|
Represents the dollar value of the RSUs that are accelerated or paid to the Named
Executive Officer in the form of Common Stock because of a change-in-control based on the
closing price of our Common Stock on March 30, 2007. |
|
(3) |
|
Under the terms of our Salary Continuation Plan, in the event of Mr. Essls death while
employed by the Company, Mr. Essls beneficiaries would receive $275,000 in a lump sum
payment plus $137,500 per year until the date Mr. Essl would have reached 65. These
payments would be paid from the proceeds of a life insurance policy purchased by the
Company. |
30
STOCK OWNERSHIP
Management
We encourage stock ownership by our directors, officers and employees to align their interests
with your interests as stockholders. The following table shows the beneficial ownership of our
Common Stock, as of the record date for the annual meeting by: (a) each director (and each nominee
for election to the Board of Directors), (b) each of the Named Executive Officers in the Summary
Compensation Table on page 21 of this Proxy Statement and (c) by all directors, nominees and
executive officers of the Company as a group (14 persons). Except as otherwise indicated, all
shares are owned directly, and the owner of such shares has the sole voting and investment power
with respect thereto.
Amount and Nature of Beneficial Ownership (1)
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Percentage |
|
|
Shares |
|
of |
|
|
Beneficially |
|
Common |
|
|
Owned(2) |
|
Stock |
F. William Barnett |
|
|
31,459 |
|
|
|
* |
|
Robert L. Clarke |
|
|
115,194 |
|
|
|
* |
|
O.G. Dagnan |
|
|
64,894 |
|
|
|
* |
|
Gerald J. Essl |
|
|
100,468 |
|
|
|
* |
|
James H. Graass |
|
|
347,869 |
|
|
|
* |
|
Laurence E. Hirsch |
|
|
1,091,341 |
|
|
|
2.3 |
% |
Frank W. Maresh |
|
|
9,800 |
|
|
|
* |
|
Michael R. Nicolais |
|
|
59,184 |
(3) |
|
|
* |
|
David B. Powers |
|
|
34,533 |
|
|
|
* |
|
David W. Quinn |
|
|
34,594 |
|
|
|
* |
|
Steven R. Rowley |
|
|
468,639 |
(4) |
|
|
1.0 |
% |
Richard R. Stewart |
|
|
6,000 |
|
|
|
* |
|
Arthur R. Zunker, Jr. |
|
|
50,895 |
|
|
|
* |
|
All current directors, nominees and
executive officers as a group (14
persons) |
|
|
2,420,523 |
|
|
|
4.9 |
% |
(1) |
|
For purposes of this table, beneficial ownership is determined in accordance with
Rule 13d-3 under the Exchange Act, pursuant to which a person is deemed to have beneficial
ownership of shares of our stock that the person has the right to acquire within 60 days.
For purposes of computing the percentage of outstanding shares of the Companys stock held
by each person or group of persons named in the table, any shares that such person or
persons have the right to acquire within 60 days are deemed to be outstanding, but are not
deemed to be outstanding for the purpose of computing the percentage ownership of any other
persons. |
(2) |
|
Amounts include the following shares of Common Stock that may be acquired upon exercise
of stock options: Mr. Barnett 31,459 shares; Mr. Clarke 79,940 shares; Mr. Dagnan
16,333 shares; Mr. Essl 82,272 shares; Mr. Graass 341,578 shares; Mr. Hirsch 28,724
shares; Mr. Maresh 9,800 shares; Mr. Nicolais 47,160 shares; Mr. Powers 31,115
shares; Mr. Quinn 16,333 shares; Mr. Rowley 321,747 shares; Mr. Zunker 42,551 shares;
and all directors and executive officers of the Company as a group (14 persons) 1,052,945
shares. In addition, this table includes shares of Common Stock that are held for the
account of participants as of June 8, 2007, pursuant to the common stock fund of the
Companys profit sharing and retirement plans, as follows: Mr. Rowley 3,977 shares; Mr.
Graass 438 shares; and all directors, nominees and executive officers of the Company as a
group (14 persons) 4,854 shares. These amounts do not include the following number of
RSUs previously granted to the non-employee directors (including dividend equivalent units
accrued since the date of grant): Mr. Barnett 7709.5544 RSUs; Mr. Clarke 7709.5544
RSUs; Mr. Dagnan 5751.7438 RSUs; Mr. Hirsch 10,003.3549 RSUs; Mr. Maresh 3390.2655
RSUs; Mr. Nicolais 3390.2655 RSUs; and Mr. Quinn 5751.7438 RSUs. |
(3) |
|
Includes 1,386 shares of Common Stock owned by Mr. Nicolais wife; does not include
1,110 shares of Common Stock in trust for their two children (555 shares each child), of
which shares Mr. Nicolais has disclaimed beneficial ownership. Mr. Nicolais wife is
trustee of the trust. |
(4) |
|
Includes 25,716 shares of Common Stock representing the remaining unvested shares under
a restricted stock award originally made to Mr. Rowley on September 18, 2003. |
31
Certain Beneficial Owners
The table below provides information regarding the only persons we know of who are the
beneficial owners of more than five percent of our Common Stock. The number of shares of Common
Stock shown in the table as beneficially owned by each person as of the most recent practicable
date, which is generally the date as of which information is provided in the most recent beneficial
ownership report filed by such person with the SEC. The percentage of our Common Stock shown in
the table as owned by each person is calculated in accordance with applicable SEC rules based on
the number of outstanding shares of Common Stock as of June 8, 2006, the record date for our annual
meeting of stockholders.
|
|
|
|
|
|
|
|
|
Name and Address |
|
Number of Shares |
|
Percentage of |
of Beneficial Owner |
|
Beneficially Owned |
|
Common Stock |
Stephen F. Mandell, Jr., Lone
Spruce, L.P., Loan Balsam, L.P.,
Lone Sequoia, L.P., Lone Cascade,
L.P., Lone Sierra, L.P., Lone Pine
Associates LLC, Lone Pine Members LLC and Lone Pine Capital LLC
(1)
Two Greenwich Plaza
Greenwich, CT 06830
|
|
|
2,863,484 |
|
|
|
5.97 |
% |
|
|
|
|
|
|
|
|
|
Barclays Global Investors, NA,
Barclays Global Fund Advisors,
Barclays Global Investors, Ltd.,
Barclays Global Investors Japan
Limited(2)
45 Fremont Street
San Francisco, CA 94105
|
|
|
6,058,397 |
|
|
|
12.62 |
% |
|
|
|
|
|
|
|
|
|
D.E. Shaw & Co., L.P. and
David E. Shaw(3)
120 W. 45th Street
Tower 45
39th Floor
New York, New York 10036
|
|
|
2,451,343 |
|
|
|
5.11 |
% |
|
|
|
(1) |
|
Based solely on the information contained in the Schedule 13G of Stephen F. Mandell, Jr.,
Lone Spruce, L.P., Loan Balsam, L.P., Lone Sequoia, L.P., Lone Cascade, L.P., Lone Sierra,
L.P., Lone Pine Associates LLC, Lone Pine Members LLC and Lone Pine Capital LLC filed with the
SEC on February 22, 2007, with respect to shares of Common Stock beneficially owned as of
February 12. According to the Schedule 13G, Stephen F. Mandell, Jr. has sole power to vote no
shares, shared power to vote 2,863,484 shares, sole dispositive power over no shares and
shared dispositive power over 2,863,484 shares. Furthermore, according to the Schedule 13G,
each of Stephen F. Mandell, Jr., Lone Spruce, L.P., Loan Balsam, L.P., Lone Sequoia, L.P.,
Lone Cascade, L.P., Lone Sierra, L.P., Lone Pine Associates LLC, Lone Pine Members LLC and
Lone Pine Capital LLC is a member of group with respect to our Common Stock for purposes of
Section 13(d) under the Securities Exchange Act. For additional information regarding the
direct beneficial ownership of our Common Stock by each of these entities, please see the
Schedule 13G.. |
|
(2) |
|
Based solely on the information contained in the Schedule 13G of Barclays Global Investors
N.A., Barclays Global Fund Advisors, Barclays Global Investors, Ltd., Barclays Global
Investors Japan Limited filed with the SEC on January 3, 2007, with respect to shares of
Common Stock owned as of December 31, 2006. According to the Schedule 13G, the entities
identified in the Schedule 13D had sole power to vote an aggregate of 5,489,323 shares,
shared power to vote no shares, sole dispositive power over an aggregate of 6,058,397 shares
and shared dispositive power over no shares. For additional information regarding the direct
beneficial ownership of our Common Stock by each of these entities, please see the Schedule
13G. |
|
(3) |
|
Based solely on the information contained in the Schedule 13G of D.E. Shaw & Co., L.P. and
David E. Shaw filed with the SEC on June 11, 2007 with respect to shares of Common Stock
beneficially owned as of June 6, 2007. According to the Schedule 13G, each of D.E. Shaw &
Co., L.P. and David E. Shaw has sole power to vote no shares, shared power to vote 2,225,643
shares, sole dispositive power over no shares and shared dispositive power over 2,451,343
shares. |
Related Party Transactions
Our code of conduct adopted by the Board, which we refer to as Eagle Ethics, includes
provisions addressing conflicts of interest which arise when a director, officer, or employee has
an interest in a transaction in which the Company is a participant. Eagle Ethics defines a
conflict of interest as an activity, investment or association that interferes or might appear to
interfere with the judgment or objectivity of an officer or employee in performing his or her job
in the best interests of the Company and our shareholders.
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Under Eagle Ethics, officers or employees are encouraged to consult with their supervisors
regarding any matter that may involve a conflict of interest. In addition, Eagle Ethics requires
that prior approval of both the supervisor of an officer or employee and the president of the Eagle
business unit in which such officer or employee is employed before: (1) obtaining an ownership
interest in, or position with, an Eagle supplier, contractor, customer or competitor, subject to
certain exceptions relating to the ownership of publicly traded securities; (2) employing any
relatives where there is either a direct or indirect reporting relationship or a substantial amount
of interaction between the relatives on the job; or (3) establishing a business relationship
between Eagle and a company in which the officer or employee or his or her relative has an
ownership interest or holds a position.
In addition to the above policies included in Eagle Ethics, we have implemented certain
informal processes in connection with transactions with related persons. For example, the
Companys legal staff is primarily responsible for the development of processes to obtain
information from the directors and executive officers with respect to related person transactions
and for determining, based on the facts and circumstances, whether the related person has a direct
or indirect material interest in the transaction. In addition, all of our employees, executive
officers and directors are required to disclose any conflicts of interest in an annual
certification reviewed by our Legal Department. After disclosure, some conflicts of interest may
be resolved through implementing appropriate controls for our protection. Depending on the
identity of the officer or employee involved in a transaction creating a potential conflict of
interest, the conflict of interest may be resolved by the Companys legal staff or may be referred
to the Audit Committee. Where an appropriately disclosed conflict of interest is minor and not
likely to adversely impact us, we may consent to the activity. Such consent may be subject to
appropriate controls intended to ensure that transaction as implemented is not adverse to the
company. In other cases where appropriate controls are not feasible, the person involved will be
requested not to enter into, or to discontinue, the relevant transaction or relationship. If a
potential conflict arises concerning a director or officer of the Company, the potential conflict
is disclosed to the Chair of the Audit Committee of the Board for review and disposition. As
required under SEC rules, transactions that are determined to be directly or indirectly material to
the Company or a related person are disclosed in the annual proxy statements.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Companys directors and executive officers, and
persons who beneficially own more than 10% of a registered class of the Companys equity
securities, to file initial reports of ownership, reports of changes in ownership and annual
reports of ownership with the SEC and the NYSE. These persons are required by SEC regulations to
furnish the Company with copies of all Section 16 forms that they file with the SEC.
Based solely on our review of the copies of such forms we received with respect to fiscal 2007
or written representations from certain reporting persons, the Company believes that, except as set
forth below, its directors and executive officers, and persons who beneficially own more than 10%
of a registered class of the Companys equity securities, have complied with all filing
requirements of Section 16(a) for fiscal 2006 applicable to such persons. The filing on Form 4 for
open market purchases of Common Stock by Richard R. Stewart made on September 19, 2006 were not
made until September 25, 2006.
Code of Conduct
The Company has adopted a code of conduct, called Eagle Ethics, that applies to all of the
Companys employees, including the Companys officers. Eagle Ethics also applies to the Board of
Directors. The Companys code of conduct is designed to deter wrongdoing and to promote:
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honest and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional relationships; |
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compliance with applicable governmental laws, rules and regulations; |
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the prompt internal reporting of violations of the code of conduct to an appropriate
person or persons identified in the code of conduct; and |
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accountability for adherence to the code of conduct. |
All of the Companys employees and directors are required to certify to the Company, on an
annual basis, that they have complied with the Companys code of conduct without exception or, if
they have not so complied, to list the exceptions.
The Company has posted the text of its code of conduct on its Internet website at
www.eaglematerials.com (click on Investor Relations, then on Corporate Governance, then on
Code of Ethics and then on Eagle Ethics). Additionally, the Company will provide without
charge a copy of the code of conduct to any person upon written request to our Secretary at our
principal executive office.
33
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, which we refer to as Ernst & Young, audited the Companys financial
statements for the fiscal years ended March 31, 2005, 2006 and 2007.
Ernst & Young reports directly to our Audit Committee. The Audit Committee has adopted
policies and procedures for pre-approving all audit and permissible non-audit services performed by
Ernst & Young. Under these policies, the Audit Committee pre-approves the use of audit and
specific permissible audit-related and non-audit services up to certain dollar limits. Other audit
and permissible non-audit services that exceed a $50,000 threshold must be pre-approved separately
by the Audit Committee, or, for such services that do not exceed $50,000, by a member of the Audit
Committee. Any such member must report the pre-approval at the next Audit Committee meeting. In
determining whether or not to pre-approve services, the Audit Committee determines whether the
service is a permissible service under the SECs rules, and, if permissible, the potential effect
of such services on the independence of Ernst & Young.
The following table sets forth the various fees for services provided to the Company by Ernst
& Young in the fiscal years ended March 31, 2007 and 2006, all of which services have been approved
by the Audit Committee:
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Fiscal Year |
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Audit Fees(1) |
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Audit Related Fees |
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Tax Fees |
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All Other Fees |
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Total |
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2007 |
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$ |
662,359 |
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$ |
110,500 |
(2) |
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$ |
772,859 |
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2006 |
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$ |
589,000 |
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$ |
122,900 |
(2) |
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$ |
711,900 |
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(1) |
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Includes fees for the annual audit and quarterly reviews, accounting and financial
reporting consultations regarding generally accepted accounting principles. |
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(2) |
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Includes fees for benefit plan audits. |
AUDIT COMMITTEE REPORT
To the Board of Directors of Eagle Materials Inc.:
We have reviewed and discussed with management Eagle Materials Inc.s audited financial
statements as of and for the fiscal year ended March 31, 2007.
We have discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended by
Statement on Auditing Standards No. 90, Audit Committee Communications, by the Auditing Standards
Board of the American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, as amended by the Independence Standards Board, and have discussed with the
auditors the auditors independence. We have also considered whether the auditors provision of
non-audit services to Eagle Materials Inc. and its affiliates is compatible with the auditors
independence.
Based on the reviews and discussions referred to above, we recommend to the Board of Directors
that the financial statements referred to above be included in Eagle Materials Inc.s Annual Report
on Form 10-K for the year ended March 31, 2007.
Audit Committee
Robert L. Clarke, Chairman
Frank W. Maresh
Michael R. Nicolais
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young acted as our independent auditors to audit our books and records for fiscal year
2007, and the Audit Committee has appointed Ernst & Young as our independent auditors for fiscal
year 2008, subject to ratification by our stockholders.
We believe ratification of this appointment is good corporate practice because the audit of
our books and records is a matter of importance to our stockholders. If our stockholders do not
ratify the appointment, our Audit Committee will reconsider whether or not to retain Ernst & Young,
but still may elect to retain them. Even if the appointment is ratified, the Audit Committee, in
its discretion, may change the appointment at any time during the year if it determines that such a
change would be in our best interests and the best interests of our stockholders.
34
Representatives of Ernst & Young are expected to be present for the annual meeting, with the
opportunity to make a statement if they choose to do so, and will be available to respond to
appropriate questions from our stockholders.
Recommendation of the Board
Our board unanimously recommends a vote for the ratification of the appointment by our Board
of Directors of Ernst & Young as the Companys auditors for fiscal year ended March 31, 2008.
OTHER MATTERS WHICH MAY BE PRESENTED FOR ACTION AT THE MEETING
Our Board of Directors does not intend to present for action at this annual meeting any matter
other than those specifically set forth in the Notice of Annual Meeting of Stockholders. If any
other matter is properly presented for action at the meeting, it is the intention of persons named
in the proxy to vote thereon in accordance with their judgment pursuant to the discretionary
authority conferred by the proxy.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Next years annual meeting of stockholders is scheduled to be held on August 6, 2008. In
order to be considered for inclusion in the Companys proxy material for that meeting, stockholder
proposals must be received at our executive offices, addressed to the attention of the Secretary,
not later than February 27, 2008.
For any proposal that is not submitted for inclusion in our proxy material for the 2008 annual
meeting of stockholders but is instead sought to be presented directly at that meeting, Rule
14a-4(c) under the Securities Exchange Act of 1934 permits the Companys management to exercise
discretionary voting authority under proxies it solicits unless the Company is notified about the
proposal on or before May 8, 2008, and the stockholder satisfies the other requirements of Rule
14a-4(c). Our Bylaws provide that, to be considered at the 2008 annual meeting, a stockholder
proposal must be submitted in writing and received by our Secretary at the executive offices of the
Company during the period beginning on February 8, 2008 and ending May 8, 2008, and must contain
the information specified by and otherwise comply with our Bylaws. Any stockholder wishing to
receive a copy of our Bylaws should direct a written request to our Secretary at the Companys
principal executive office.
FORM 10-K
Stockholders entitled to vote at the meeting may obtain a copy of the Companys Annual Report
on Form 10-K for the fiscal year ended March 31, 2007, including the financial statements required
to be filed with the SEC, without charge, upon written or oral request to Eagle Materials Inc.,
Attention: James H. Graass, Secretary, 3811 Turtle Creek Blvd., Suite 1100, Dallas, Texas
75219-4487, (214) 432-2000.
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By Order of the Board of Directors
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JAMES H. GRAASS |
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Executive Vice President, |
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General Counsel and Secretary |
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Dallas, Texas
June 26, 2007
35
EAGLE MATERIALS INC. COMMON STOCK THIS PROXY S I SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders August 2, 2007 The undersigned hereby appoints James H. Graass and
Steven R. Rowley (acting unanimously for, only one be present, by that one alone), and each of
them, proxies, with full power of substitution to each, o t vote, as specified on the reverse side,
at h t e Annual Meeting of Stockholders of Eagle Materials Inc. to be held August 2, 2007, or any
adjournment thereof, all shares of Common Stock of Eagle Materials Inc. registered in the name of t
h e undersigned at t h e close of business on June 8, 2007. THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED AS SPECIFIED ON THE BALLOT ON THE REVERSE SIDE, BUT IF NO N I STRUCTIONS ARE INDICATED,
THEN THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2. THE PROXIES WIL L USE THEIR DISCRETION WITH
RESPECT TO ANY MATTER REFERRED TO IN iteM 3. By execution on of this proxy, you here by acknowledge
receipt herewith of h t e Notice of Annual Meeting and Proxy Statement for h t e August 2, 2007
Annual Meeting. READ, EXECUTE AND DATE REVERSE SIDE AND MAIL in THE ENCLOSED ENVELOPE. Address
Change/Comments M(ark the co responding box on the reverse side) FOLD AND DETACH HERE Y o u a c n n
o w access a your Eagle Materials Inc. Account online. Access o y u r Eagle Materials Inc .
stockholder account on line Investor Service Direct ® I ( SD ). Mello n n I vestor
Services LLC, Tra nsfer Agent for Eagle Materials Inc., now makes t i easy and convenient o t get
current nformation i on your sto ckholder account. View account status View payment history o f
r dividends View certificate history Make address changes View book-entry informati on
Obtain a duplicate 1099 tax o f rm Establis h/change your PIN Visit us on the web t a http : //
ww w. mell oni nve stor co . m o F r e Tchni c a l As ist n a ce Call 1877- 7 9 8-7778 bet ween a
9 m- p 7 m Mo nd y a Fri day East r en i T me nvest I r o ServiceD rect i ® s i a eg r
ist ered trad m e ark of Mell on I n e v stor Services LLC ** T * RY T I OUT * * www.mello
ninvestor.c om/is d/ Inve stor Ser i vceD rect i ® Availa ble 24 hours per day, 7 days
per week TOLL FREE NUMBER: 1-800-370-1163 |
The Board of Directors recommends that you vote FOR the election of t h e nominees in Item 1 and
FOR t h e Proposal n i I t em 2. Ple ase Mark He re o f r Address Change or Comments SEE REVERSE
SIDE FOR AGAINST ABSTAIN 1 . Electi on of Directo rs FOR all nominees WITHHOLD AUTHORITY 2. Ratify
h t e appointment of Ernst & lis e t d below. s li ted below to vote f o r all Youn g LLP as in de
pendent (except as mark ed t o nom nees i li sted auditors o f r f i scal year 2008. t h e
contrary). below. 3 . n I h t eir discretion, on such other business as may properly be brought
before the meetin g or any adjournment thereof. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED (INSTRUCTIO NS: To withhold authorit y t o vote for any n i div idual nominee, write t h e
nominees name FOR ITEMS 1 AND 2 AND, AT THE DISCRETION OF THE NAMED n i he t space provided
below.) PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE THE MEETIN G OR ANY
ADJOURNMENT 0 1 Robert L. Clarke, 02 Frank W. Maresh and 03 Steven R. Rowle y THEREOF. BY EXECUTING
THIS PROXY, THE UNDERSIGNED HEREBY REVOKES PRIOR PROXIE S RELATING TO THE MEETING.
___THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT S I VOTED AT THE ANNUAL
MEETING. Signature Sig nature Dated , 2007 NOTE: Please sign as name appears hereon. Joint owners
should each sign. When signi ng as attorney, executor, admin is tra tor, trustee or guardian, pleas
e give full t i t l e as such. FOLD AND DETACH HERE WE ENCOURAGE YOU TO TAKE ADVANTAGE OF N I
TERNET OR TELEPHONE VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. Internet and
telephone voting s i available through 11:59 PM Eastern Time the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as f i you marked, signed and returned your proxy card. INTERNET TELEPHONE ht
p://www.proxyvoting.com/exp 1-866-540-5760 Use the n i e t rnet to vote your proxy. OR Use any o t
uch-tone t e lephone to Have your proxy card in hand vote your proxy. Have your proxy when you
access h t e web site . card in hand when you call. If you vote your proxy by I n e t rnet or by e
t lephone, you do NOT need to mail back your proxy card. To vote by mail , mark, sign and date your
proxy card and return it in the enclosed postage-paid envelope. Choose MLinkSM for fast,
easy and secure 24/7 onlin e access t o your future proxy mate rials, n i vestment plan sta e t
ments, tax documents and more. Sim ply o l g on o t n I vestor ServiceDirect® at www.mel
oninvestor. com/isd where step-by-step n i structions wil l prompt you through enrollm ent. |