Rayovac 2008 Annual Report Download - page 84

Table of Contents
Index to Financial Statements
average of the high and low share prices on the date of grant. In order to utilize the remaining available shares under the 1997 Rayovac Incentive Plan prior to its
expiration on August 31, 2007, a part of the equity-based portion of the 2008 LTIP award for each of Mr. Hussey, Mr. Genito, Mr. Lumley, Mr. Heil and
Ms. Yoder was made on August 27, 2007 in the form of restricted stock awards. The remainder of the equity-based portion of the 2008 LTIP award was made on
October 1, 2007.
For Fiscal 2008, the lapsing of the restrictions on the equity-based portion of the LTIP award was based on continued employment and the achievement of
an adjusted EBITDA target tied to the annual operating plan. For Fiscal 2008, the performance target for each of Mr. Hussey and Mr. Genito was that for the
Company as a whole. With respect to Mr. Lumley, Mr. Heil and Ms. Yoder, the Fiscal 2008 LTIP performance targets were based 80% on the performance
targets established for their respective business segments and 20% on the performance target established for the Company as a whole. Adjusted EBITDA was
measured in the same manner as with the 2008 MIP. The Compensation Committee believed that adjusted EBITDA is an appropriate measure for a long term
award in light of the Company’s ongoing consideration of strategic alternatives for the Company, including the consideration of assets sales and the common
usage of multiples of EBITDA as a valuation tool in a sale of business context. In light of these considerations, the Compensation Committee for Fiscal 2008 also
reduced the period over which the restrictions for continued employment will lapse to two years, once the performance goals are met, rather than the four-year
period used for prior LTIP awards. The restricted stock award agreements for Fiscal 2008 provided that if 100% of the established performance goals for Fiscal
2008 were met, then 100% of the restricted shares awarded would be eligible for the two-year continued employment vesting. If the Company achieved less than
80% of the Fiscal 2008 LTIP performance goal, then the entire award amount would be forfeited to the Company. If the Company achieved at least 80%, but less
than 90% of the Fiscal 2008 LTIP performance goal, then the entire award would not be forfeited, but instead the award would be rolled into the ability to earn
such shares, as described below, based on Fiscal 2009 performance. If the Company achieved at least 90%, but less than 100% of the Fiscal 2008 LTIP
performance goal, then a certain percentage of the restricted shares awarded, based on the terms of the restricted stock award agreement, would be eligible for the
two-year continued employment vesting and the remaining shares of the award would be rolled into the ability to earn such shares, as described below, based on
Fiscal 2009 performance. For any restricted shares for which the only remaining restriction, after taking into account Fiscal 2008 performance, is continued
employment, the restrictions on 50% of such earned shares would lapse on December 1, 2008, and the restrictions on the other 50% of such earned shares would
lapse on December 1, 2009; provided, that the executive’s employment with the Company has not been terminated with cause by the Company or voluntarily by
the executive prior to such date. Based on Fiscal 2008 performance, LTIP participants earned only 55% of the restricted shares awarded under the equity-based
Fiscal 2008 LTIP. Where the executive earned less than 100% of the restricted shares based on Fiscal 2008 performance but retains the opportunity to earn the
remainder of such shares based on Fiscal 2009 performance, if the Company achieves 102.5% of the Fiscal 2009 LTIP performance goal or goals established by
the Compensation Committee, then the restrictions on 50% of such earned shares would lapse on December 1, 2009 and then the restrictions on 50% of such
earned shares would lapse on December 1, 2010. If such Fiscal 2009 performance goals are not met, such remaining restricted stock would be forfeited to the
Company.
As a retention mechanism, the Compensation Committee guaranteed that each of Mr. Hussey, Mr. Genito, Mr. Heil, Mr. Lumley and Ms. Yoder, provided
that such executive’s employment with the Company had not been terminated with cause by the Company or voluntarily by the executive prior to the payment
date, would receive a 2008 LTIP cash-based award equal to 100% of the target cash-based award amount.
For Fiscal 2008, the cash-based portion of the 2008 LTIP award was earned based on continued employment and on the achievement of the
Company-wide performance goal for Fiscal 2008, which was entirely based on achievement of an adjusted EBITDA target tied to the annual operating plan. For
Fiscal 2008, the performance target for each of Mr. Hussey and Mr. Genito was that for the Company as a whole. With respect to Mr. Lumley, Mr. Heil and
Ms. Yoder, the Fiscal 2008 LTIP performance targets were based 100% on the performance targets established for their respective business segments. If the
Company achieved 100% of the
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008