Rayovac 2008 Annual Report Download - page 88

Table of Contents
Index to Financial Statements
The Compensation Committee, in evaluating the critical roles performed by the members of the Spectrum Leadership Team and the potential negative impact on
the Company as a whole if any of those executives were to end their employment relationship with the Company, determined it to be in the best interests of the
Company to put in place for those executives a retention program designed to give those executives additional incentive not to seek alternative employment
opportunities. For each executive, the retention agreement provides such an executive with the opportunity to earn an additional cash amount equal to 150% of
such executive’s annual base salary as in effect on the date the retention agreement was executed in two installments contingent upon such executive remaining
employed by the Company through December 31, 2009. If the executive continues to be an employee of the Company on through December 31, 2008, such
executive would receive the first payment in an amount equal to 75% of such executive’s annual base salary. If the executive continues to be employed by the
Company through December 31, 2009, such executive would receive the second and final payment in an amount equal to 75% of such executive’s annual base
salary. In the event that prior to December 31, 2009 (i) the executive’s employment with the Company is considered to have been terminated by the executive for
Good Reason (as defined in the relevant employment agreement) or (ii) the Company terminates executive’s employment without Cause (as defined in the
relevant employment agreement), the executive would be entitled to receive any portion of the total potential award that has not yet been paid. As a result of
Ms. Yoder’s departure on October 8, 2008 from the Company, she is no longer eligible for the foregoing retention payments.
One-Time Performance-Based Restricted Stock Incentive Grant
As described above, the Compensation Committee continually evaluates the compensation of the Company’s senior executives to determine if they are
properly attuned to the strategic plan of the business as a whole. In August 2007, the Compensation Committee reviewed the equity ownership of the current
senior management team of the Company in light of the following factors (1) the significant equity interest held by former members of the Company’s
management team, (2) the announcement of the Company’s business strategy to pursue one or more strategic asset sales and (3) the desire to increase the tie
between the interests of the Company’s shareholders generally and that of its current senior management team. As a result of this review, the Compensation
Committee determined that it would be in the best interests of the Company to more closely align the interests of senior management with the interests of the
Company and its shareholders by increasing such senior management’s equity stake in the Company. To this end, the Compensation Committee authorized an
additional one-time restricted stock award to each of Mr. Hussey, Mr. Genito, Mr. Lumley, Mr. Heil and Ms. Yoder with a value at the time of grant on
August 27, 2007 equal to 100% of each such executive’s annual base salary. This restricted stock will be earned based on continued employment and Company
performance in excess of the stated adjusted EBITDA goal in the Company’s Fiscal 2008 annual operating plan for, in the case of Mr. Hussey and Mr. Genito,
the Company as a whole and, in the case of Mr. Lumley, Mr. Heil and Ms. Yoder, their respective business segments (for each, the “2008 AOP Goal”). If the
Company achieved a certain percentage of the 2008 AOP Goal, then the restrictions on a percentage of such restricted shares would lapse. To the extent 100% of
the restricted shares did not lapse, the executive retains the ability to earn the remaining restricted shares, as described below, based on Fiscal 2009 performance
and/or Fiscal 2010 performance. The following chart sets forth the applicable percentages for the 2008 AOP Goals:
% for Achievement of 2008 AOP Goal Restricted Shares Lapse
less than 104% 0%
at least 104%, but less than 105% 50%
at least 105%, but less than 106% 75%
at least 106% 100%
Pursuant to these awards, any restricted stock not earned based on Fiscal 2008 performance could be earned based on continued employment and the
Company performance in excess of the stated adjusted EBITDA goal in the Company’s Fiscal 2009 annual operating plan for, in the case of Mr. Hussey and
Mr. Genito, the Company as a whole and, in the case of Mr. Lumley, Mr. Heil and Ms. Yoder, their respective business segments (for each, the “2009 AOP
Goal”). If the Company achieves a certain percentage of the 2009 AOP Goal, then the restrictions
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008