pre14a
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the
appropriate box:
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þ Preliminary
Proxy Statement
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o Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to
Rule 14a-12
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o Confidential,
for the Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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ITT Corporation
(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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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(Set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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March l ,
2010
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Steven R. Loranger
Chairman, President and Chief Executive Officer
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ITT Corporation
1133 Westchester Avenue White Plains, NY 10604-3543
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Dear Fellow Shareholders:
Enclosed are the Notice of Annual Meeting and Proxy Statement
for ITTs 2011 Annual Meeting of Shareholders. This
years meeting is intended to address only the business
included on the agenda. Details of the business to be conducted
at the Annual Meeting are given in the accompanying Notice of
Annual Meeting and Proxy Statement, which provides information
required by applicable laws and regulations.
Your vote is important and we encourage you to vote whether you
are a registered owner or a beneficial owner.
This year, in accordance with U.S. Securities and Exchange
Commission rules, we are again using the Internet as our primary
means of furnishing proxy materials to shareholders. Because we
are using the Internet, most shareholders will not receive paper
copies of our proxy materials. We will instead send these
shareholders a notice with instructions for accessing the proxy
materials and voting via the Internet. This notice also provides
information on how shareholders may obtain paper copies of our
proxy materials if they so choose. We believe use of the
Internet makes the proxy distribution process more efficient,
less costly and helps in conserving natural resources.
If you are the registered owner of ITT common stock, you may
vote your shares by making a toll-free telephone call or using
the Internet. Details of these voting options are explained in
the Proxy Statement. If you choose to receive paper copies of
our proxy materials, you can vote by completing and returning
the enclosed proxy card by mail as soon as possible.
If you are a beneficial owner and someone else, such as your
bank, broker or trustee is the owner of record, the owner of
record will communicate with you about how to vote your shares.
Whether or not you plan to attend the Annual Meeting, please
vote as soon as possible. If you are a registered owner of ITT
common stock and do not plan to vote in person at the Annual
Meeting, you may vote via the Internet, by telephone or, if you
receive a paper proxy card in the mail, by mailing the completed
proxy card. Voting by any of these methods will ensure your
representation at the Annual Meeting. Your vote is important.
Sincerely,
March l ,
2011
NOTICE OF 2011 Annual Meeting
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Time: |
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10:30 a.m. Eastern Time, on Tuesday, May 10, 2011 |
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Place: |
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1133 Westchester Avenue, White Plains, NY
10604-3543 |
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Items of Business: |
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1. Election of the ten nominees named in the attached Proxy
Statement as members of the Board of Directors.
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2. Ratification of the appointment of Deloitte &
Touche LLP as ITTs Independent Registered Public
Accounting Firm for 2011.
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3. Approval of the ITT Corporation 2011 Omnibus Incentive
Plan.
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4. Approval of a proposal to amend the Companys
Restated Articles of Incorporation to allow shareholders to call
special meetings.
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5. To approve, in a non-binding vote, the compensation of
our named executive officers.
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6. To determine, in a non-binding vote, whether a
shareholder vote to approve the compensation of our named
executive officers should occur every one, two or three years.
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7. To vote on a shareholder proposal requesting that the
Company amend, where applicable, ITTs policies related to
human rights.
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8. To transact such other business as may properly come
before the meeting.
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Who May Vote: |
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You can vote if you were a shareholder at the close of business
on March 16, 2011, the record date. |
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Annual Report to Shareholders and Annual Report on
Form
10-K: |
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Copies of our 2010 Annual Report on Form 10-K and Annual Report
to Shareholders are provided to shareholders. |
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Mailing or Availability Date: |
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Beginning on or about
March l ,
2011, this Notice of Annual Meeting and the 2011 Proxy Statement
are being mailed or made available, as the case may be, to
shareholders of record on March 16, 2011. |
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About Proxy Voting: |
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Your vote is important. Proxy voting permits shareholders unable
to attend the Annual Meeting to vote their shares through a
proxy. Most shareholders are unable to attend the Annual
Meeting. By appointing a |
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proxy, your shares will be represented and voted in accordance
with your instructions. If you do not provide instructions on
how to vote, the proxies will vote as recommended by the Board
of Directors. Most shareholders will not receive paper copies of
our proxy materials and can vote their shares by following the
Internet voting instructions provided on the Notice of Internet
Availability of Proxy Materials. If you are a registered owner
and requested a paper copy of the proxy materials you can vote
your shares by proxy by completing and returning your proxy card
or by following the Internet or telephone voting instructions
provided on the proxy card. Beneficial owners who received or
requested a paper copy of the proxy materials may vote their
shares by submitting voting instructions by completing and
returning their voting instruction form or by following the
Internet or telephone voting instructions provided on the voting
instruction form. You can change your voting instructions or
revoke your proxy at any time prior to the Annual Meeting by
following the instructions on pages 1 to 5 of this proxy
and on the proxy card. |
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Important Notice Regarding the Availability of Proxy
Materials for the Shareholder Meeting to be held on Tuesday,
May 10, 2011 at 10:30 a.m. at 1133 Westchester Avenue,
White Plains, NY
10604-3543.
The Companys 2011 Proxy Statement, 2010 Annual Report on
Form 10-K
and Annual Report to Shareholders will be available online at
https://www.proxydocs.com/itt. |
By order of the Board of Directors,
Burt M. Fealing
Vice President and Corporate Secretary
Table of
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2011
Proxy Statement
Why did I receive these proxy
materials? Beginning on or about
March l ,
2011, this Proxy Statement is being mailed or made available, as
the case may be, to shareholders who were shareholders as of the
March 16, 2011 record date, as part of the Board of
Directors solicitation of proxies for ITTs 2011
Annual Meeting and any postponements or adjournments thereof.
This Proxy Statement and ITTs 2010 Annual Report to
Shareholders and Annual Report on
Form 10-K
(which have been furnished to shareholders eligible to vote at
the 2011 Annual Meeting) contain information that the Board of
Directors believes offers an informed view of ITT Corporation
(herein referred to as ITT or the
Company) and meets the regulations of the Securities
and Exchange Commission (the SEC) for proxy
solicitations.
Who is entitled to vote? You can vote if you
owned shares of the Companys common stock as of the close
of business on March 16, 2011, the record date.
What items of business will I be voting
on? You are voting on the following items of
business, which are described on pages 7 to 29:
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1.
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Election of the ten nominees named in the attached Proxy
Statement as members of the Board of Directors.
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2.
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Ratification of the appointment of Deloitte & Touche
LLP as ITTs Independent Registered Public Accounting Firm
for 2011.
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3.
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Approval of the ITT Corporation 2011 Omnibus Incentive Plan.
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4.
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Approval of a proposal to amend the Companys Restated
Articles of Incorporation to allow shareholders to call special
meetings.
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Approval, in a non-binding vote, of the compensation of our
named executive officers.
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6.
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Determination, in a non-binding vote, of whether a shareholder
vote to approve the compensation of our named executive officers
should occur every one, two or three years.
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7.
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A shareholder proposal requesting that the Company amend, where
applicable, ITTs policies related to human rights.
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8.
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To transact such other business as may properly come before the
meeting.
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Information
about Voting
How do I vote? If you are registered owner,
you can either vote in person at the Annual Meeting or by proxy
whether or not you attend the Annual Meeting. If you are a
beneficial owner you may vote by submitting voting instructions
to your bank, broker, trustee or other nominee. If you are a
beneficial owner and your shares are held in a bank or brokerage
account you will need to obtain a proxy, executed in your favor,
from your bank or broker to be able to vote in person at the
Annual Meeting. If you are beneficial owner and your shares are
held through any of the ITT savings plans for salaried or hourly
employees your shares cannot be voted in person at the Annual
Meeting.
What are the proxy voting procedures? If you
vote by proxy, you can vote by following the voting procedures
on the proxy card. You may vote:
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By the Internet,
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By Telephone, by calling from the United States, or
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By Mail.
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Why does the Board solicit proxies from
shareholders? Since it is impractical for all
shareholders to attend the Annual Meeting and vote in person,
the Board of Directors recommends
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that you appoint the three people named on the accompanying
proxy card to act as your proxies at the 2011 Annual Meeting.
How do the proxies vote? The proxies vote your
shares in accordance with your voting instructions. If you
appoint the proxies but do not provide voting instructions, they
will vote as recommended by the Board of Directors. If any other
matters not described in this Proxy Statement are properly
brought before the meeting for a vote, the proxies will use
their discretion in deciding how to vote on those matters.
How many votes do I have? You have one vote
for every share of ITT common stock that you own.
How does the Board of Directors recommend that I vote on the
proposals? The Board of Directors recommends a
vote FOR the election of each of the nominees of the Board of
Directors (Item 1), FOR the ratification of the appointment
of Deloitte & Touche LLP as ITTs Independent
Registered Public Accounting Firm for 2011 (Item 2), FOR
the approval of the ITT Corporation 2011 Omnibus Incentive Plan
(Item 3), FOR the approval to Amend the Companys
Restated Articles of Incorporation to Allow Shareholders to Call
Special Meetings (Item 4), FOR the approval of the
compensation of our named executive officers
(Item 5) and ONE YEAR with respect to how frequently a
shareholder vote to approve the compensation of our named
executive officers should occur (Item 6) and AGAINST
the shareholder proposal requesting that the Company amend,
where applicable, ITTs policies related to human rights
(Item 7).
What if I change my mind? You can revoke your
proxy at any time before it is exercised by mailing a new proxy
card with a later date or casting a new vote by the Internet or
telephone, as applicable. You can also send a written revocation
to the Secretary at the address listed on the first page of the
Proxy Statement. If you come to the Annual Meeting, you can ask
that the proxy you submitted earlier not be used.
What is a broker non-vote? The New
York Stock Exchange (NYSE) has rules that govern
brokers who have record ownership of listed company stock held
in brokerage accounts for their clients who beneficially own the
shares. Under these rules, brokers who do not receive voting
instructions from their clients have the discretion to vote
uninstructed shares on certain matters (discretionary
matters) but do not have discretion to vote uninstructed
shares as to certain other matters (non-discretionary
matters). A broker may return a proxy card on behalf of a
beneficial owner from whom the broker has not received
instructions that casts a vote with regard to discretionary
matters but expressly states that the broker is not voting as to
non-discretionary matters. The brokers inability to vote
with respect to the non-discretionary matters to which the
broker has not received instructions from the beneficial owner
is referred to as a broker non-vote. Under current
NYSE interpretations, only agenda Item 2, the ratification
of Deloitte & Touche LLP as the Companys
Independent Registered Public Accounting Firm
(Deloitte) is considered a discretionary item. Your
broker does not have discretion to vote your shares held in
street name on Items 1, 3, 4, 5, 6 or 7, each of which is
considered a non-discretionary item. Under Indiana law, the law
of the state where the Company is incorporated, broker non-votes
and abstentions are counted to determine whether there is a
quorum present.
There are seven formal items, including the shareholder
proposal, scheduled to be voted upon at the Annual Meeting as
described on page 1. As of the date of this Proxy
Statement, the Board of Directors is not aware of any business
other than as described in this Proxy Statement that will be
presented for a vote at the 2011 Annual Meeting.
How many votes are required to elect Directors or approve a
proposal? How many votes are required for an agenda item to
pass? The Restated Articles of Incorporation of
ITT Corporation authorize the Companys By-laws to provide
for majority voting for Directors in uncontested elections, and
such By-laws further provide that in uncontested elections, any
Director nominee who receives less than a majority of the votes
cast shall not be elected. The Companys By-laws
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provide for majority voting in uncontested elections. The
By-laws provide that in uncontested elections, any Director
nominee who fails to be elected by a majority, but who also is a
Director at the time, shall promptly provide a written
resignation, as a holdover Director, to the Chair of the
Nominating and Governance Committee. The Nominating and
Governance Committee shall promptly consider the resignation and
all relevant facts and circumstances concerning any vote,
including whether the cause of the vote may be cured, and the
best interests of the Company and its shareholders. The
independent Directors of the Board will act on the Nominating
and Governance Committees recommendation at its next
regularly scheduled Board Meeting or within 90 days after
certification of the shareholder vote, whichever is earlier, and
the Board will promptly publicly disclose its decision and the
reasons for its decision. This means that in an uncontested
election, to be elected as a Director of ITT, each of the ten
director candidates must receive a majority of votes cast.
Item 2, Item 4, Item 5 and Item 7 of the
proposed agenda items require that the votes cast in favor of
the proposal exceed the votes cast against the proposal.
Item 6 will be determined by which of the options (i.e,
every year, every two years, every three years) receives a
majority of the votes cast. Item 2, Item 5,
Item 6 and Item 7 are advisory in nature and are
non-binding. Under current NYSE rules, Item 3 requires the
affirmative vote of a majority of the votes cast on the
proposal, provided that a majority of the outstanding shares of
common stock are voted on the proposal. Abstentions will have no
effect on the outcomes of Item 1, Item 2, Item 4,
Item 5, Item 6 or Item 7. In addition, broker
non-votes will have no effect on the outcomes of Item 1,
Item 4, Item 5, Item 6 or Item 7. With
respect to Item 3, abstentions are considered votes
cast under current NYSE rules and thus will have the same
effect as a vote against the proposal and will be counted in
determining whether a majority of the outstanding shares of
common stock are voted on the proposal. Broker non-votes with
respect to Item 3 will have no effect on the outcome of the
proposal, assuming a majority of the outstanding shares of
common stock are otherwise voted on the proposal.
How many shares of ITT stock are
outstanding? As of March 16, 2011, the
record date, XXX,XXX,XXX shares of ITT common stock were
outstanding.
How many holders of ITT outstanding shares must be present to
hold the Annual Meeting? In order to conduct
business at the Annual Meeting it is necessary to have a quorum.
To have a quorum, shareholders entitled to cast a majority of
votes at the Annual Meeting must be present in person or by
proxy.
How do I vote? With respect to agenda
Items 1, 2, 3, 4, 5 and 7, you may vote for, against or
abstain from voting. With respect to agenda Item 6, you may
vote one year, two years, three
years, or abstain from voting.
What is the difference between a beneficial owner and a
registered owner? If shares you own are held in
an ITT savings plan for salaried or hourly employees, a stock
brokerage account, bank or by another holder of record, you are
considered the beneficial owner because someone else
holds the shares on your behalf. If the shares you own are held
in a Morgan Stanley Smith Barney account for restricted shares
or registered in your name directly with The Bank of New York
Mellon, our transfer agent, you are the registered owner and the
shareholder of record.
How do I vote if I am a participant in ITTs savings
plans for salaried or hourly employees? If you
participate in any of the ITT savings plans for salaried or
hourly employees, your plan trustee will vote the ITT shares
credited to your savings plan account in accordance with your
voting instructions, except as otherwise provided in accordance
with the Employee Retirement Income Security Act of 1974
(ERISA), as amended. The trustee votes the shares on
your behalf because you are the beneficial owner, not the
shareholder of record, of the savings plan shares.
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The trustee votes the savings plan shares for which no voting
instructions are received (Undirected Shares) in the
same proportion as the shares for which the trustee receives
voting instructions, except as otherwise provided in accordance
with ERISA. Under the savings plans, participants are
named fiduciaries to the extent of their authority
to direct the voting of ITT shares credited to their savings
plan accounts and their proportionate share of Undirected
Shares. By submitting voting instructions by telephone, the
Internet or by signing and returning the voting instruction
card, you direct the trustee of the savings plans to vote these
shares, in person or by proxy at the Annual Meeting. ITT
salaried or hourly plan participants should mail their
confidential voting instruction card to Broadridge Financial
Solutions, Inc. (Broadridge), acting as tabulation
agent, or vote by telephone or Internet. Instructions must be
received by Broadridge no later than 11:59 p.m. Eastern
Time the day before the Annual Meeting.
I participate in the ITT savings plan for salaried employees
and am a shareholder of record of shares of ITT common stock.
How many proxy cards will I receive? You will
receive only one proxy card. Your savings plan shares and any
shares you own as the shareholder of record, including ownership
through the ITT Direct Purchase, Sale and Dividend Reinvestment
Plan, will be set out separately on the proxy card.
How many shares are held by participants in the ITT employee
savings plans? As of March 16, 2011, the
record date, Wells Fargo Institutional Trust Services, as
the trustee for the employee salaried savings plan, held
X,XXX,XXX,XXX shares of ITT common stock
(approximately l %
of the outstanding shares) and The Northern Trust Company,
as the trustee for the hourly employees savings plans, held
XXX,XXX shares of ITT common stock
(approximately 0. l %
of the outstanding shares).
Who counts the votes? Is my vote
confidential? Representatives of Broadridge count
the votes. Representatives of IVS Associates, Inc. will act as
Inspectors of Election for the 2011 Annual Meeting. The
Inspectors of Election monitor the voting and certify whether
the votes of shareholders are kept in confidence in compliance
with ITTs confidential voting policy.
Who pays for the proxy solicitation cost? ITT
pays the cost of soliciting proxies from registered owners. ITT
has appointed Innisfree M&A Incorporated to help with the
solicitation effort. ITT will pay Innisfree M&A
Incorporated a fee of $15,000 to assist with the solicitation
and reimburse brokers, nominees, custodians and other
fiduciaries for their costs in sending proxy materials to
beneficial owners.
Who solicits proxies? Directors, officers or
other regular employees of ITT may solicit proxies from
shareholders in person or by telephone, facsimile transmission
or other electronic communication.
How does a shareholder submit a proposal for the 2012 Annual
Meeting? Rule 14a-8
of the Securities Exchange Act of 1934, or the Exchange
Act, establishes the eligibility requirements and the
procedures that must be followed for a shareholder proposal to
be included in a public companys proxy materials. Under
the rule, if a shareholder wants to include a proposal in
ITTs proxy materials for its next Annual Meeting, the
proposal must be received by ITT at its principal executive
offices on or before November 29, 2011 and comply with
eligibility requirements and procedures. An ITT shareholder who
wants to present a matter for action at ITTs next Annual
Meeting, but chooses not to do so under Exchange Act
Rule 14a-8,
must deliver to ITT, at its principal executive offices, on or
before November 29, 2011 a written notice to that effect;
provided, however, in the event that the date of the 2012 Annual
Meeting is changed by more than 30 days from the
anniversary date of the 2011 Annual Meeting, such notice must be
received not later than 120 days calendar days prior to the
2012 Annual Meeting or 10 calendar days following the date on
which public announcement of the date of the annual meeting is
first made. In either case, as well as for shareholder
nominations for Directors, the shareholder must also comply with
the requirements in the Companys By-laws with respect to a
shareholder properly bringing business before the Annual
Meeting. (You can request a copy of the By-laws from the
Secretary of ITT.)
4
Can a shareholder nominate Director
Candidates? The Companys By-laws permit
shareholders to nominate Directors at the Annual Meeting. To
make a Director nomination at the 2012 Annual Meeting, you must
submit a notice with the name of the candidate on or before
November 29, 2011 to the Secretary of ITT. The nomination
and notice must meet all other qualifications and requirements
of the Companys Governance Principles, By-laws and
Regulation 14A of the Exchange Act. The nominee will be
evaluated by the Nominating and Governance Committee of the
Board using the same standards as it uses for all Director
nominees. These standards are discussed in further detail below
at pages 34 to 35 under Information about the Board of
Directors-Director
Selection and Composition. No one may be nominated for
election as a Director after he or she has reached 72 years
of age. (You can request a copy of the nomination requirements
from the Secretary of ITT.)
Internet
Availability of Proxy Materials
In accordance with SEC rules, we are using the Internet as our
primary means of furnishing proxy materials to shareholders.
Because we are using the Internet, most shareholders will not
receive paper copies of our proxy materials. We will instead
send these shareholders a Notice of Internet Availability of
Proxy Materials with instructions for accessing the proxy
materials, including our proxy statement and annual report, and
voting via the Internet. The Notice of Internet Availability of
Proxy Materials also provides information on how shareholders
may obtain paper copies of our proxy materials if they so choose.
Stock
Ownership Information
The Board of Directors share ownership guidelines
currently provide for share ownership levels at five times the
annual retainer amount. Non-Management Directors receive a
portion of their retainer in restricted stock or restricted
stock units, which are paid in shares when the restricted stock
units vest. Non-Management Directors are encouraged to hold such
shares until their total share ownership meets or exceeds the
ownership guidelines.
Share ownership guidelines for corporate officers, first
approved by ITTs Board of Directors during 2001, are
regularly reviewed. The guidelines specify the desired levels of
Company stock ownership and encourage a set of behaviors for
each officer to reach the guideline levels. The approved
guidelines require share ownership expressed as a multiple of
base salary for all corporate officers.
Specifically the guidelines apply as follows: chief executive
officer at five times annual base salary; chief financial
officer at three times annual base salary; senior vice
presidents and group presidents at two times annual base salary;
and all other corporate vice presidents at one times annual base
salary. In achieving these ownership levels, shares owned
outright, Company restricted stock and restricted stock units,
shares held in the Companys dividend reinvestment plan,
shares owned in the ITT Salaried Investment and Savings Plan,
and phantom shares held in a fund that tracks an
index of the Companys stock in the deferred compensation
plan are considered.
To attain the ownership levels set forth in the guidelines it is
expected that any restricted shares that become unrestricted
will be held, and that all shares acquired through the exercise
of stock options will be held, except, in all cases, to the
extent necessary to meet tax obligations.
Compliance with the guidelines is monitored periodically.
Consistent with the guidelines, the share ownership levels have
been substantially met for most Non-Management Directors and
Company officers as of January 31, 2011. Non-Management
Directors and Company officers are afforded a reasonable period
of time to meet the guidelines. The Company has taken the
individual tenure, and Non-Management Directors and corporate
officer share ownership levels into account in determining
compliance with the guidelines.
5
Share
Ownership Guideline Summary
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Non-Management Directors
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5 X Annual Retainer Amount
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CEO
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5 X Annual Base Salary
|
CFO
|
|
3 X Annual Base Salary
|
Senior Vice Presidents
|
|
2 X Annual Base Salary
|
Vice Presidents
|
|
1 X Annual Base Salary
|
The following table shows, as of January 31, 2011, the
beneficial ownership of ITT common stock and options exercisable
within 60 days by each Director, by each of the executive
officers named in the Summary Compensation Table at page 72, and
by all Directors and executive officers as a group. In addition,
with respect to Mr. Loranger and Non-Management Directors,
we have provided information about ownership of restricted stock
units that provides economic linkage to ITT common stock but
does not represent actual beneficial ownership of shares.
Stock
Ownership of Directors and Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of Beneficial Ownership
|
|
|
|
|
|
|
|
|
Total
|
|
|
ITT Common
|
|
|
|
|
|
|
|
|
|
|
|
Title of Class
|
|
|
Shares
|
|
|
Stock
|
|
|
|
|
|
|
|
|
Name of Beneficial
|
|
|
ITT Common
|
|
|
Beneficially
|
|
|
Shares
|
|
|
|
|
|
Stock
|
|
Percentage
|
Owner
|
|
|
Stock
|
|
|
Owned(1)
|
|
|
Owned
|
|
|
Options(2)
|
|
|
Units
|
|
of Class(5)
|
Steven R. Loranger(3)(4)
|
|
|
|
Common Stock
|
|
|
|
|
1,027,553
|
|
|
|
|
305,586
|
|
|
|
|
721,967
|
|
|
|
|
|
|
|
|
0.557
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Curtis J. Crawford
|
|
|
|
Common Stock
|
|
|
|
|
60,436
|
|
|
|
|
37,535
|
|
|
|
|
22,901
|
|
|
|
|
1,715
|
|
|
|
0.033
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christina A. Gold
|
|
|
|
Common Stock
|
|
|
|
|
49,323
|
|
|
|
|
26,422
|
|
|
|
|
22,901
|
|
|
|
|
1,715
|
|
|
|
0.027
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ralph F. Hake
|
|
|
|
Common Stock
|
|
|
|
|
36,312
|
|
|
|
|
16,971
|
|
|
|
|
19,341
|
|
|
|
|
1,715
|
|
|
|
0.020
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Hamre
|
|
|
|
Common Stock
|
|
|
|
|
47,233
|
|
|
|
|
24,332
|
|
|
|
|
22,901
|
|
|
|
|
1,715
|
|
|
|
0.026
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul J. Kern
|
|
|
|
Common Stock
|
|
|
|
|
10,007
|
|
|
|
|
4,926
|
|
|
|
|
5,081
|
|
|
|
|
1,715
|
|
|
|
0.005
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank T. MacInnis
|
|
|
|
Common Stock
|
|
|
|
|
42,992
|
|
|
|
|
20,091
|
|
|
|
|
22,901
|
|
|
|
|
1,715
|
|
|
|
0.023
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surya N. Mohapatra
|
|
|
|
Common Stock
|
|
|
|
|
14,848
|
|
|
|
|
7,607
|
|
|
|
|
7,241
|
|
|
|
|
1,715
|
|
|
|
0.008
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Linda S. Sanford
|
|
|
|
Common Stock
|
|
|
|
|
50,315
|
|
|
|
|
27,414
|
|
|
|
|
22,901
|
|
|
|
|
1,715
|
|
|
|
0.027
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Markos I. Tambakeras
|
|
|
|
Common Stock
|
|
|
|
|
40,577
|
|
|
|
|
17,676
|
|
|
|
|
22,901
|
|
|
|
|
1,715
|
|
|
|
0.022
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
Common Stock
|
|
|
|
|
71,618
|
|
|
|
|
37,074
|
|
|
|
|
34,544
|
|
|
|
|
|
|
|
|
0.039
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
Common Stock
|
|
|
|
|
160,178
|
|
|
|
|
86,295
|
|
|
|
|
73,883
|
|
|
|
|
|
|
|
|
0.087
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
Common Stock
|
|
|
|
|
35,451
|
|
|
|
|
15,224
|
|
|
|
|
20,227
|
|
|
|
|
|
|
|
|
0.019
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
Common Stock
|
|
|
|
|
16,587
|
|
|
|
|
7,111
|
|
|
|
|
9,476
|
|
|
|
|
|
|
|
|
0.009
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers as a Group
|
|
|
|
Common Stock
|
|
|
|
|
1,771,184
|
|
|
|
|
671,917
|
|
|
|
|
1,099,267
|
|
|
|
|
15,435
|
|
|
|
0.960
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
With respect to Mr. Loranger and certain Non-Management
Directors, total shares beneficially owned include restricted
stock units that have vested but are deferred until a later date. |
|
(2) |
|
More detail on outstanding option awards is provided in the 2010
Outstanding Equity Awards at Fiscal Year-End table at
page 79. |
|
(3) |
|
On June 28, 2004, Mr. Loranger received an award of
250,000 Restricted Stock Units (RSUs) under the ITT
Corporation 2003 Equity Incentive Plan (the 2003
Plan), as amended and restated, in connection with his
employment agreement. Approximately, one-third of the units,
85,342 units, vested on June 28, 2007 approximately,
one-third of the units, |
6
|
|
|
|
|
86,265 units, vested on June 28, 2008 and the
remaining one-third of the units vested on June 28, 2010.
Approximately one-half of the vesting RSUs settle upon the
vesting date and the remainder of one-half of the vesting RSUs
settle within ten days of Mr. Lorangers termination
of employment. During the restriction period, Mr. Loranger
may not vote the shares but is credited for RSU dividends. |
|
(4) |
|
Mr. Loranger received credit for 3,014 restricted stock
units as dividends during 2010. |
|
(5) |
|
Percentage of class includes restricted stock units. |
The number of shares beneficially owned by each Non-Management
Director or executive officer has been determined under the
rules of the SEC, which provide that beneficial ownership
includes any shares as to which a person has sole or shared
voting or dispositive power, and any shares which the person
would have the right to acquire beneficial ownership of within
60 days through the exercise of any stock option or other
right. Unless otherwise indicated, each Non-Management Director
or executive officer has sole dispositive and voting power, or
shares those powers with his or her spouse.
As of January 31, 2011, all Non-Management Directors and
executive officers as a group owned 0.960% of the shares deemed
to be outstanding. No individual Non-Management Director or
executive officer owned in excess of one percent of the shares
deemed to be outstanding.
Schedule 13G
Filings
Set forth below is information reported to the SEC on the most
recently filed Schedule 13G by the following persons who
owned more than 5% of ITT outstanding common stock. This
information does not include holdings by the trustee with
respect to individual participants in the ITT Salaried
Investment and Savings Plan.
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
nature of
|
|
|
Name and address
|
|
beneficial
|
|
Percent of
|
of beneficial owner
|
|
ownership
|
|
Class
|
|
Barrow, Hanley, Mewhinney & Strauss, LLC(1)
|
|
|
13,008,379
|
|
|
|
7.09
|
%
|
2200 Ross Avenue, 31st Floor
Dallas, TX
75201-2761
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As reported on Schedule 13G/A dated February 11, 2011,
Barrow, Hanley, Mewhinney & Strauss, LLC has sole
voting power with respect to 1,059,706 shares, shared
voting power with respect to 11,948,673 shares, and sole
dispositive power with respect to 13,008,379 shares. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that the
Companys executive officers and directors, and any persons
beneficially owning more than 10% of a registered class of the
Companys equity securities, file reports of ownership and
changes in ownership with the SEC within specified time periods.
To the Companys knowledge, based upon a review of the
copies of the reports furnished to the Company and written
representations that no other reports were required, all filing
requirements were satisfied in a timely manner for the year
ended December 31, 2010, except that Mr. Loranger
filed a late Form 5 to report gifts of shares of
ITT common stock on two successive dates in 2010 to his
wifes revocable trust.
Proposals
to be Voted on at the 2011 Annual Meeting
The Board of Directors has nominated ten individuals for
election as Directors at the 2011 Annual Meeting. Each of the
nominees is currently serving as a Director of ITT and has
agreed to continue
7
to serve if elected until his or her retirement, resignation or
death. If unforeseen circumstances arise before the 2011 Annual
Meeting and a nominee becomes unable to serve, the Board of
Directors could reduce the size of the Board or nominate another
candidate for election. If the Board nominates another
candidate, the proxies could use their discretion to vote for
that nominee. Each Director elected at the 2011 Annual Meeting
will be elected to serve as a Director until ITTs next
Annual Meeting.
The Board
of Directors recommends that you vote FOR the election of each
of the following ten nominees:
|
|
|
|
|
Steven R. Loranger
Chairman, President and Chief Executive Officer, ITT
Corporation
|
Director Biographical
Information: Mr. Loranger, 59, was appointed
President and Chief Executive Officer and elected a Director of
ITT on June 28, 2004. He was elected Chairman of the Board
of Directors on December 7, 2004. Mr. Loranger is a
member of the Business Roundtable, serves on the boards of the
National Air and Space Museum and the Congressional Medal of
Honor Foundation and is on the Executive Committee of the
Aerospace Industries Association Board of Governors.
Mr. Loranger received bachelors and masters
degrees in science from the University of Colorado.
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: Mr. Loranger has
extensive operational and manufacturing experience with
industrial companies and, in particular, he has intimate
knowledge of the Companys business and operations having
served as our Chief Executive Officer since 2004.
Mr. Loranger previously served as Executive Vice President
and Chief Operating Officer of Textron, Inc. from 2002 to 2004,
overseeing Textrons manufacturing businesses, including
aircraft and defense, automotive, industrial products and
components. From 1981 to 2002, Mr. Loranger held executive
positions at Honeywell International Inc. and its predecessor
company, AlliedSignal, Inc., including serving as President and
Chief Executive Officer of its Engines, Systems and Services
businesses. He also serves as a Director on the Board of FedEx
Corporation, providing additional relevant experience.
Directorships at Public Companies for the Preceding Five
Years: Mr. Loranger has been a Director of ITT since
2004 and has served as a Director of FedEx Corporation since
2006.
|
|
|
|
|
Curtis J. Crawford, Ph.D.
President and Chief Executive Officer, XCEO, Inc., a
leadership and corporate governance consulting firm
|
Director Biographical
Information: Dr. Crawford, 63, is President and
Chief Executive Officer of XCEO, Inc. He is a member of the
Board of Trustees of DePaul University. He received a B.A.
degree in business administration and computer science and an
M.A. degree from Governors State University, an M.B.A. from
DePaul University and a Ph.D. from Capella University. Governors
State University awarded him an honorary doctorate in 1996 and
he received an honorary doctorate degree from DePaul University
in 1999.
8
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: Dr. Crawford is an expert
on corporate governance and the author of three books on
leadership and corporate governance. He has significant
experience leading high-technology companies. From April 1,
2002 to March 31, 2003, he served as President and Chief
Executive Officer of Onix Microsystems, a private photonics
technology company. He was Chairman of the Board of Directors of
ON Semiconductor Corporation from September 1999 until
April 1, 2002. Previously, he was President and Chief
Executive Officer of ZiLOG, Inc. from 1998 to 2001 and its
Chairman from 1999 to 2001. Dr. Crawford has extensive
executive experience with AT&T Corporation and IBM
Corporation. He also serves on the Board of E.I. DuPont de
Nemours and Company, providing additional relevant experience.
Directorships at Public Companies for the Preceding Five
Years: Dr. Crawford has been a Director of ITT since
1996. He is a Director of E.I. DuPont de Nemours and Company and
ON Semiconductor Corporation. Dr. Crawford was previously a
Director of Agilysys, Inc. from April 2005 to June 2008.
|
|
|
|
|
Christina A. Gold
Former President, Chief Executive Officer and Director, The
Western Union Company, Inc., a global leader in money transfer
and financial services
|
Director Biographical Information: Mrs. Gold,
63, was President and Chief Executive Officer of The Western
Union Company, a leading company in global money transfer, from
September of 2006 to September of 2010. From May 2002 to
September 2006, Mrs. Gold was President of Western Union
Financial Services, Inc. and Senior Executive Vice President of
Western Unions parent company, First Data Corporation. She
serves as a Director of New York Life Insurance, a mutual
company. Mrs. Gold is a graduate of Carleton University,
Ottawa, Canada.
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: As President and Chief
Executive Officer of The Western Union Company, Mrs. Gold
has extensive experience as the Chief Executive Officer of a
public company with wide-ranging global leadership, management,
and marketing experience. From October 1999 to May 2002, she was
Chairman, President and Chief Executive Officer of Excel
Communications, Inc. Mrs. Gold served as President and
Chief Executive Officer of The Beaconsfield Group from March
1998 to October 1999. From 1997 to 1998, Mrs. Gold was
Executive Vice President of Global Development of Avon Products,
Inc., and from 1993 to 1997, she was President of Avon North
America. Mrs. Gold was recognized in 2003, 2006 and 2008 by
Fortune magazine as one of Americas 50 Most
Powerful Women in Business and by Forbes magazine on its
100 Most Powerful Women list as No. 56 in 2007,
No. 90 in 2008, and No. 76 in 2009. BusinessWeek
also named her as one of the top 25 U.S. managers in
1996.
Directorships at Public Companies for the Preceding Five
Years: Mrs. Gold has been a Director of ITT since 1997.
Mrs. Gold has served as Director of The Western Union
Company since 2006. Mrs. Gold has also served as a director
of New York Life Insurance Company since 2001, a mutual company,
and previously served as a Director of Torstar Corporation, a
broad-based Canadian media company, providing additional
relevant experience.
9
|
|
|
|
|
Ralph F. Hake
Former Chairman and Chief Executive Officer, Maytag Corporation,
a home and commercial appliance company
|
Director Biographical Information: Mr. Hake,
62, was Chairman and Chief Executive Officer of Maytag
Corporation from June of 2001 to March of 2006. Mr. Hake is
a 1971 business and economics graduate of the University of
Cincinnati and holds an M.B.A. from the University of Chicago.
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: Mr. Hake has extensive
global management and financial experience. He served as
Executive Vice President and Chief Financial Officer for Fluor
Corporation, an engineering and construction firm from 1999 to
2001. From 1987 to 1999, Mr. Hake served in various
executive capacities at Whirlpool Corporation, including Chief
Financial Officer and Senior Executive Vice President for global
operations. Mr. Hake also served on the Board of Directors
for the National Association of Manufacturers and was Chairman
of the groups taxation and economic policy group. He also
serves as a Director of Owens-Corning Corporation and is
non-executive Chairman of Smurfit-Stone Container Corporation,
providing additional relevant experience.
Directorships at Public Companies for the Preceding Five
Years: Mr. Hake has been a Director of ITT since 2002.
He has served as a Director of Owens-Corning Corporation since
2006. Mr. Hake was previously a Director of Maytag
Corporation from June 2001 through March 2006. He has served as
non-executive Chairman of Smurfit-Stone since 2010.
|
|
|
|
|
John J. Hamre, Ph.D.
President and Chief Executive Officer, Center for Strategic
& International Studies (CSIS), a public policy
research institution dedicated to strategic, bipartisan global
analysis and policy impact
|
Director Biographical Information: Dr. Hamre,
60, was elected President and Chief Executive Officer of CSIS in
April of 2000. Prior to joining CSIS, he served as
U.S. Deputy Secretary of Defense from 1997 to 2000 and
Under Secretary of Defense (Comptroller) from 1993 to 1997.
Dr. Hamre is a Director of MITRE Corporation, a
not-for-profit
organization chartered to work in the public interest, with
expertise in systems engineering, information technology,
operational concepts, and enterprise modernization. He received
a B.A. degree, with highest distinction, from Augustana College
in Sioux Falls, South Dakota, was a Rockefeller Fellow at
Harvard Divinity School and was awarded a Ph.D., with
distinction, from the School of Advanced International Studies,
Johns Hopkins University, in 1978.
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: Dr. Hamre has extensive
strategic and international experience, particularly with
respect to defense related businesses. He has achieved
recognized prominence in strategic, international and defense
fields. Dr. Hamre has also served as a Director in other
public companies, including SAIC, Inc. and Oshkosh Corporation,
providing additional relevant experience.
Directorships at Public Companies for the Preceding Five
Years: Dr. Hamre has been a Director of ITT since 2000.
He has served as a Director of SAIC, Inc. since 2005 and Oshkosh
10
Corporation since 2009. Dr. Hamre was previously a Director
of Choicepoint, Inc. from May 2002 through September 2008.
|
|
|
|
|
General Paul J. Kern, U.S. Army (Ret.)
Senior Counselor, The Cohen Group
|
Director Biographical Information: General Kern, 65,
has served as a Senior Counselor to the Cohen Group since
January 2005. He served as President and Chief Operating Officer
of AM General LLC from August of 2008 to January of 2010. In
November 2004, General Kern retired from the United States Army
as Commanding General, Army Materiel Command (AMC). General Kern
graduated from the U.S. Military Academy at West Point. He
holds masters degrees in both Civil and Mechanical
Engineering from the University of Michigan, and he was a Senior
Security Fellow at the John F. Kennedy School at Harvard
University. General Kern serves on the Board of Directors of
CoVant Technologies LLC, and AT Solutions, a subsidiary of
CoVant Technologies.
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: General Kern has extensive
international strategic business and defense-related experience.
General Kern has demonstrated leadership and management
experience during his
37-year
career with the U.S. Army. He is a leading figure on
defense transformation, as well as a highly decorated combat
veteran, and achieved recognized prominence as a four-star
general with the Army. General Kern spearheaded Army efforts to
direct supply chain improvement efforts, modernize weapons
systems, and maintain field readiness, while still controlling
costs. He is also a Director of iRobot Corporation, providing
additional relevant experience, and a member of the Defense
Science Board and National Academy of Engineering.
Directorships at Public Companies for the Preceding Five
Years: General Kern has been a Director of ITT Corporation
since August 2008. He has served as a Director of iRobot
Corporation since 2006. General Kern was a Director of EDO
Corporation from 2005 through 2007. The Company acquired EDO
Corporation on December 20, 2007. He was a director of
Anteon Corporation from 2005 until 2006 when it was sold to
General Dynamics.
|
|
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|
|
Frank T. MacInnis
Chairman and former Chief Executive Officer, EMCOR Group,
Inc., one of the worlds largest providers of electrical
and mechanical construction services, energy infrastructure and
facilities services.
|
Director Biographical
Information: Mr. MacInnis, 64, is currently
Chairman of the Board and was Chief Executive Officer of EMCOR
Group, Inc. from April of 1994 to January of 2011. He was also
President of EMCOR from April 1994 to April 1997.
Mr. MacInnis is a Director of The Greater New York Chapter
of the March of Dimes, ComNet Communications, LLC and The
Williams Companies, Inc. Mr. MacInnis received an
undergraduate degree from The University of Alberta and is a
graduate of The University of Alberta Law School, Alberta,
Canada.
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: Mr. MacInnis has over
25 years of broad-based experience as a Chief Executive
Officer of a leading, international mechanical and electrical
construction, energy infrastructure, and facilities
11
services provider. Mr. MacInnis provides knowledgeable
leadership and insight into the many commercial and defense
markets served by the Company and has a strong corporate and
finance background. He is also a Director of EMCOR Group, Inc.,
providing additional relevant experience.
Directorships at Public Companies for the Preceding Five
Years: Mr. MacInnis has been a Director of ITT since
2001. Mr. MacInnis has been Chairman of the Board and a
Director of EMCOR Group, Inc. since 1994 and a Director of The
Williams Companies, Inc. since 1998.
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|
|
|
|
Surya N. Mohapatra, Ph.D.
Chairman of the Board, President and Chief Executive Officer
of Quest Diagnostics Incorporated, the worlds leading
provider of diagnostic testing, information and services.
|
Director Biographical
Information: Dr. Mohapatra, 61, was appointed
President and Chief Operating Officer of Quest Diagnostics
Incorporated in June 1999, a Director in 2002, its Chief
Executive Officer in May 2004, and Chairman of the Board in
December 2004. Dr. Mohapatra joined Quest Diagnostics as
Senior Vice President and Chief Operating Officer in 1999.
Dr. Mohapatra earned a bachelor of science degree in
electrical engineering from Sambalpur University in India.
Additionally, he holds a master of science degree in medical
electronics from the University of Salford, England, as well as
a doctorate in medical physics from the University of London and
The Royal College of Surgeons of England.
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: Dr. Mohapatra has
extensive international business experience with a wide-ranging
operational and strategic background. He has a strong technical
background, with an emphasis on Six-Sigma processes and
customer-focused business practices. Prior to joining Quest,
Dr. Mohapatra was Senior Vice President of Picker
International, a worldwide leader in advanced medical imaging
technologies, where he served in various executive positions
during his
18-year
tenure. Dr. Mohapatra is also a Director at Quest
Diagnostics Incorporated, a Trustee of the Rockefeller
University and a member of the Corporate Advisory Board of Johns
Hopkins Carey Business School, providing additional relevant
experience.
Directorships at Public Companies for the Preceding Five
Years: Dr. Mohapatra has been a Director of ITT since
February 2008. Dr. Mohapatra has been a Director of Quest
Diagnostics Incorporated since 2002 and served as a Director of
Vasogen, Inc. from
2002-2006.
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|
Linda S. Sanford
Senior Vice President, Enterprise Transformation,
International Business Machines Corporation (IBM),
an information technology company
|
Director Biographical Information: Ms. Sanford,
58, was named Senior Vice President, Enterprise Transformation,
IBM in January 2003. Previously, she was Senior Vice President
and Group Executive, IBM Storage Systems Group, responsible for
development of IBMs Enterprise Storage Server and other
storage-related hardware and software. She also has held
positions as General Manager, IBM Global Industries and General
Manager of IBMs S/390 Division. Ms. Sanford is a
member of the Women in Technology International Hall of Fame and
the National Academy of
12
Engineers. She is on the Board of Trustees of St. Johns
University, Rensselaer Polytechnic Institute and the State
University of New York, serves on the Board of Directors of
Partnership for New York City and is a member of the Board of
Directors for the Business Council of New York State, Inc.
Ms. Sanford is a graduate of St. Johns University and
earned an M.S. degree in operations research from Rensselaer
Polytechnic Institute.
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: Ms. Sanford has extensive
global management and operational experience in information
technology and high-technology companies. Ms. Sanford has
run many large businesses within IBM and currently leads
IBMs Enterprise Transformation. In that role,
Ms. Sanford is responsible for working to transform core
business processes, create an IT infrastructure to support those
processes, and help create a culture that recognizes the value
of continual transformation. Ms. Sanford has also been
named one of the 50 Most Influential Women in Business by
Fortune Magazine, one of the Top Ten Innovators in the
Technology Industry by Information Week Magazine, and one
of the Ten Most Influential Women in Technology by Working
Woman Magazine. She is a senior officer in a large
publicly-traded company, providing additional relevant
experience. In addition, Ms. Sanfords experience in
analytics and information technology is particularly relevant
for understanding ITTs businesses.
Directorships at Public Companies for the Preceding Five
Years: Ms. Sanford has been a Director of ITT since
1998.
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Markos I. Tambakeras
Former Chairman, President and Chief Executive Officer,
Kennametal, Inc., a premier global tooling solutions, engineered
components and advanced materials supplier to the automotive,
aerospace, energy, mining, construction and other industries
|
Director Biographical
Information: Mr. Tambakeras, 60, served as
Chairman of the Board of Directors, Kennametal, Inc. from
July 1, 2002 until December 31, 2006. He was also
President and Chief Executive Officer of Kennametal from July
1999 through December 31, 2005. From 1997 to June 1999,
Mr. Tambakeras served as President, Industrial Controls
Business, for Honeywell Incorporated. He is a trustee of Arizona
State University and has served for two years on the
Presidents Council on Manufacturing. Mr. Tambakeras
received a B.Sc. degree from the University of Witwatersrand,
Johannesburg, South Africa and an M.B.A. from Loyola Marymount
University, Los Angeles, CA.
Director Experience, Qualifications, Attributes or Skills
Relevant to Board Membership: Mr. Tambakeras has strong
strategic and global operational industrial experience, having
worked in increasingly responsible positions in several
manufacturing companies, including leadership positions in South
Africa and the Asia-Pacific area. Mr. Tambakeras has an
extensive background in international operations, providing
experience and skills relevant to the Companys global
sales and manufacturing infrastructure. He was previously the
Chairman of the Board of Trustees of the Manufacturers
Alliance/MAPI, which is the manufacturing industrys
leading executive development and business research
organization. Mr. Tambakeras is also a Director of Parker
Hannifin Corporation, providing additional relevant experience.
Directorships at Public Companies for the Preceding Five
Years: Mr. Tambakeras has been a Director of ITT since
2001. Previously, Mr. Tambakeras was a Director of
Kennametal, Inc. from July 1999 through December 2006.
Mr. Tambakeras has served on the Board of Parker Hannifin
Corporation since 2005 and served as a Director of the Board of
Newport Corporation from May 2008 through December 31, 2009.
13
|
|
2.
|
Ratification
of Appointment of the Independent Registered Public Accounting
Firm
|
The Board of Directors has appointed Deloitte & Touche
LLP (Deloitte) as ITTs independent registered
public accounting firm for 2011. Shareholder ratification is not
required for making such appointment for the fiscal year ending
December 31, 2011 because the Audit Committee has
responsibility for the appointment of our independent registered
public accounting firm. The appointment is being submitted for
ratification with a view toward soliciting the opinion of
shareholders, which opinion will be taken into consideration in
future deliberations. No determination has been made as to what
action the Board of Directors or the Audit Committee would take
if shareholders do not ratify the appointment. Deloitte is a
registered public accounting firm by the Public Company
Accounting Oversight Board (PCAOB). Representatives
of Deloitte attended all regularly scheduled meetings of the
Audit Committee during 2010. The Audit Committee annually
reviews and considers Deloittes performance of the
Companys Audit. Performance factors reviewed include
Deloittes:
|
|
|
independence
|
|
experience
|
|
technical capabilities
|
|
client service assessment
|
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responsiveness
|
|
financial strength
|
|
industry insight
|
|
PCAOBs 2009 inspection results
|
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leadership
|
|
non-audit services
|
|
management structure
|
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peer review program
|
|
commitment to quality report
|
|
appropriateness of fees charged
|
|
compliance and ethics programs
|
The Audit Committee also reviewed the terms and conditions of
Deloittes engagement letter including an agreement by the
Company to submit disputes between Deloitte and the Company to a
dispute resolution process and to limit awards based on punitive
or exemplary damages under the dispute resolution procedures.
The Audit Committee discussed these considerations as well as
Deloittes fees and services with Deloitte and Company
management. The Audit Committee also determined that any
non-audit services (services other than those described in the
annual audit services engagement letter) provided by Deloitte
were permitted under the rules and regulations concerning
auditor independence promulgated by the SEC and rules
promulgated by the PCAOB in Rule 3526. Representatives of
Deloitte will be present at the 2011 Annual Meeting to answer
questions. Representatives of Deloitte also will have the
opportunity to make a statement if they desire to do so.
Independent
Registered Public Accounting Firm Fees
Aggregate fees billed to the Company for the fiscal years ended
December 31, 2010 and 2009 represent fees billed by the
member firms of Deloitte Touche Tohmatsu, and their respective
affiliates.
|
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|
Fiscal Year Ended
|
|
|
2010
|
|
2009
|
|
|
(In thousands)
|
|
Audit Fees(1)
|
|
$
|
8,423
|
|
|
$
|
8,319
|
|
Audit-Related Fees(2)
|
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|
2,745
|
|
|
|
1,015
|
|
Tax Fees(3)
|
|
|
|
|
|
|
|
|
Tax Compliance Services
|
|
|
1,448
|
|
|
|
1,163
|
|
Tax Planning Services
|
|
|
501
|
|
|
|
209
|
|
|
|
|
|
|
|
|
|
|
Total Tax Services
|
|
|
1,949
|
|
|
|
1,372
|
|
|
|
|
|
|
|
|
|
|
Other Fees(4)
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
14,617
|
|
|
$
|
10,706
|
|
|
|
|
|
|
|
|
|
|
14
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(1) |
|
Fees for audit services billed in 2010 and 2009 consisted of: |
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Audit of the Companys annual financial statements and
internal control over financial reporting;
|
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Reviews of the Companys quarterly financial statements;
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Statutory and regulatory audits, consents and other services
related to SEC matters; and
|
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Financial accounting and reporting consultations.
|
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(2) |
|
Fees for audit-related services billed in 2010 and 2009
consisted of: |
|
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|
Employee benefit plan audits;
|
|
|
|
Audits and other attest work related to acquisitions and
dispositions;
|
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Internal control advisory services; and
|
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Other miscellaneous attest services.
|
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(3) |
|
Fees for tax services billed in 2010 and 2009 consisted of tax
compliance and tax planning and advice: |
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|
Tax compliance services are services rendered, based upon facts
already in existence or transactions that have already occurred,
to document, compute, and obtain government approval for amounts
to be included in tax filings consisting primarily of:
|
i. Federal, foreign, state and local
income tax return assistance; and
ii. Internal Revenue Code and foreign tax
code technical consultations.
|
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|
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|
Tax planning services are services and advice rendered with
respect to proposed transactions or services that alter the
structure of a transaction to obtain an anticipated tax result.
Such services consisted primarily of:
|
i. Transfer pricing
consultations; and
ii. Tax advice related to intra-group
restructuring.
|
|
|
(4) |
|
Fees for other services consisted of consulting services in
connection with the Companys value-based commercial
excellence programs. |
Pre-Approval
of Audit and Non-Audit Services
The Audit Committee pre-approves audit services provided by
Deloitte. The Audit Committee has also adopted a policy on
pre-approval of non-audit services provided by Deloitte and
certain non-audit services provided by outside internal audit
service providers. The purpose of the policy is to identify
thresholds for services, project amounts and circumstances where
Deloitte and any outside internal audit service providers may
perform non-audit services. A second level of review and
approval by the Audit Committee is required when such non-audit
services, project amounts, or circumstances exceed the specified
amounts.
The Audit Committee has determined that, where practical, all
non-audit services shall first be placed for competitive bid
prior to selection of a service provider. Management may select
the party deemed best suited for the particular engagement,
which may or may not be Deloitte. Providers other than Deloitte
shall be preferred in the selection process for non-audit
service-related work. The policy and its implementation are
reviewed and reaffirmed on a regular basis to assure conformance
with applicable rules.
15
The Audit Committee has approved specific categories of audit,
audit-related and tax services incremental to the normal
auditing function, which Deloitte may provide without further
Audit Committee pre-approval. These categories include among
others, the following:
|
|
1.
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Due diligence, closing balance sheet audit services, purchase
price dispute support and other services related to mergers,
acquisitions and divestitures;
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|
2.
|
Employee benefit advisory services, independent audits and
preparation of tax returns for the Companys defined
contribution, defined benefit and health and welfare benefit
plans, preparation of the associated tax returns or other
employee benefit advisory services;
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3.
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Tax compliance and certain tax planning and advice work; and
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|
4.
|
Accounting consultations and support related to generally
accepted accounting principles (GAAP) or government
contract compliance.
|
The Audit Committee has also approved specific categories of
audit-related services, including the assessment and review of
internal controls and the effectiveness of those controls, which
outside internal audit service providers may provide without
further approval.
If fees for any pre-approved non-audit services provided by
either Deloitte or any outside internal audit service provider
exceed a pre-determined threshold during any calendar year, any
additional proposed non-audit services provided by that service
provider must be submitted for second-level approval by the
Audit Committee. Other audit, audit-related and tax services
which have not been pre-approved are subject to specific prior
approval. The Audit Committee reviews the fees paid or committed
to Deloitte on at least a quarterly basis.
The Company may not engage Deloitte to provide the services
described below:
|
|
1.
|
Bookkeeping or other services related to the accounting records
or financial statements of the Company;
|
|
2.
|
Financial information systems design and implementation;
|
|
3.
|
Appraisal or valuation services, fairness opinions, or
contribution-in-kind
reports;
|
|
4.
|
Actuarial services;
|
|
5.
|
Internal auditing services;
|
|
6.
|
Management functions or human resources services;
|
|
7.
|
Broker-dealer, investment adviser or investment banking
services; or
|
|
8.
|
Legal services and other expert services unrelated to the audit.
|
Employees of Deloitte who are senior manager level or above,
including lead or concurring partners and who have been involved
with the Company in the independent audit, shall not be employed
by the Company in any capacity for a period of five years after
the termination of their activities on the Company account.
The Board of Directors recommends you vote FOR the
ratification of appointment of the Companys Independent
Registered Public Accounting Firm.
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|
3.
|
Approval
of the ITT Corporation 2011 Omnibus Incentive Plan
|
We request shareholder approval of the ITT Corporation 2011
Omnibus Incentive Plan (the 2011 Plan). Upon
recommendation of our Compensation and Personnel Committee, the
2011 Plan was approved by our Board of Directors at its
February 23, 2011 meeting and will become effective upon
approval by the Companys shareholders at our 2011 Annual
Meeting. The 2011 Plan is intended to replace the ITT
Corporation 2003 Equity Incentive Plan (the Prior
Plan or the 2003 Plan) on a prospective basis.
If the 2011 Plan is approved by our shareholders, the 2011 Plan
will
16
replace the Prior Plan, on a prospective basis. If the 2011 Plan
is not approved by our shareholders, the 2011 Plan will be null
and void and the Prior Plan will remain in effect. Awards
previously granted under the Prior Plan will remain in effect in
accordance with their terms and the terms of the Prior Plan. We
currently have no other plan that provides for grants of stock
awards to our employees or directors.
A total of 9,200,00 shares of our common stock will be
reserved for issuance under the 2011 Plan, plus any shares that
remain available for grants of awards under the Prior Plan at
the time of the approval of the 2011 Plan, which will be
transferred to the 2011 Plan. For this purpose, shares that are
subject to outstanding awards under the Prior Plan are not
considered available for grants. The 2011 Plan contains a
separate limit on the number of shares that can be issued with
respect to full value awards, which includes
restricted stock, restricted stock units and other awards other
than stock options and stock appreciation rights granted with an
exercise price at least equal to the fair market value of our
shares on the grant date. This separate limit provides that
4,600,000 shares, plus any shares that remain available for
full value awards under the Prior Plan will be available for
issuance with respect to full value awards. As described in
greater detail below, the 2011 Plan also provides that in
certain circumstances where no shares are issued with respect to
Prior Plan awards, such as upon forfeiture of the award, the
shares subject to the Prior Plan award will be added to the 2011
Plans share reserves. As of December 31, 2010, the
Prior Plan had 2,881,070 shares available for future grants
of awards of which 1,447,257 could be issued as full value
awards.
The following is a summary of the material terms of the 2011
Plan, as amended. The description of the 2011 Plan is qualified
in its entirety by the actual provisions of the 2011 Plan, which
is attached to this Proxy Statement as Appendix B.
Summary
Description of the 2011 Plan
History of Stock Plans. The 2011 Plan is a new
plan that replaces, on a prospective basis, the Prior Plan. The
Prior Plan was approved by the Board of Directors on
March 11, 2003 and became effective upon approval by the
shareholders at the 2003 Annual Meeting. On May 13, 2003,
the Prior Plan replaced, on a prospective basis, the 2002 ITT
Industries Stock Option Plan for Non-Employee Directors, the ITT
Industries 1996 Restricted Stock Plan for Non-Employee
Directors, and the 1994 ITT Industries Incentive Stock Plan. No
new grants may be made from these prior plans.
Administration. The 2011 Plan is administered
by the Compensation and Personnel Committee (the
Committee) of the Board of Directors, which we refer
to in this summary as the committee. The committee interprets
the terms and intent of the 2011 Plan and determines who is
eligible to receive awards under the 2011 Plan. The committee
may adopt rules, regulations and guidelines for administering
the 2011 Plan and may delegate administrative duties to one or
more of its members or to one or more agents or advisors.
Additionally, the committee may, by resolution, authorize one or
more of our officers to designate who can receive awards and the
size of the awards, except that the committee may not delegate
these responsibilities to any officer for awards granted to an
employee that is considered one of our elected officers, or to
the extent it would unintentionally cause awards not to qualify
as performance-based compensation for purposes of
Section 162(m) of the Internal Revenue Code.
Eligibility. All of our employees and
directors and the employees of our subsidiaries and other
affiliates are eligible to participate in the 2011 Plan. All
employees and all non-employee directors are currently eligible
to participate. Because the 2011 Plan provides for broad
discretion in selecting participants and in making awards, the
total number of persons who will participate in the 2011 Plan
and the benefits that will be provided to the participants
cannot be determined at this time.
17
Stock Available for Issuance Under the 2011
Plan. Subject to adjustment as provided in the
2011 Plan, the number of shares of our common stock reserved for
issuance under the 2011 Plan shall be 9,200,000. In addition,
(i) any shares remaining available for issuance under the
Prior Plan that are not subject to outstanding awards as of the
date of approval of the 2011 Plan shall also become available
for grant under the 2011 Plan and (ii) any shares related
to awards under the 2011 Plan or the Prior Plan that terminate
by expiration, forfeiture, cancellation, or otherwise without
the issuance of such shares, or are settled in cash in lieu of
shares, or are exchanged with the committees permission
for awards not involving shares, shall be available again for
grant under the 2011 Plan. Notwithstanding the foregoing,
(x) upon the exercise of a stock-settled stock appreciation
right or net-settled option granted under the 2011 Plan, the
number of shares subject to the award (or portion of the award)
that is then being exercised shall be counted against the
maximum aggregate number of shares that may be issued under the
2011 Plan as provided above, on the basis of one share for every
share subject thereto, regardless of the actual number of shares
issued upon exercise and (y) any shares withheld (or, with
respect to restricted stock, returned) in satisfaction of tax
withholding obligations shall be counted as shares issued.
Subject to adjustment as provided in the 2011 Plan, the number
of shares of our common stock reserved for issuance of full
value awards shall not exceed 4,600,000. In addition,
(i) any shares remaining available for issuance of full
value awards under the Prior Plan as of the date of approval of
the 2011 Plan shall only be available for grant of full value
awards under the 2011 Plan and (ii) any shares related to
full value awards under the 2011 Plan or the Prior Plan that
terminate by expiration, forfeiture, cancellation, or otherwise
without the issuance of such shares, are settled in cash in lieu
of shares, or are exchanged with the committees permission
for awards not involving shares, shall only be available again
for grant of full value awards under the 2011 Plan.
Description of Awards Under the 2011
Plan. Stock-based compensation will typically be
issued in consideration for the performance of services to us
and our subsidiaries and other affiliates. The 2011 Plan
provides for a number of forms of stock-based compensation. The
committee may award stock options, stock appreciation rights,
restricted stock, restricted stock units and other awards as
described below.
Stock Options. The committee can award
incentive stock options, which are intended to comply with
Section 422 of the Internal Revenue Code, or nonqualified
stock options, which are not intended to comply with
Section 422 of the Internal Revenue Code. The committee
determines the terms of the stock options, including the period
during which the stock options may be exercised, which may not
exceed ten years, and the exercise price of the stock options,
which, except with respect to stock options granted outside the
United States, may not be less than the fair market value of the
underlying shares of common stock on the date the stock option
is granted. A nonqualified stock option granted outside the
United States may be granted with an exercise price less than
the fair market value of the underlying shares of common stock
on the date of grant if necessary to comply with local tax laws
and regulations. Subject to the specific terms of the 2011 Plan,
the committee has discretion to set any additional limitations
on stock option grants as it deems appropriate.
Each stock option award agreement sets forth the extent to which
the participant will have the right to exercise the stock option
following termination of the participants employment or
service as a director. The termination provisions are determined
within the discretion of the committee, need not be uniform
among all participants and may reflect distinctions based on the
reasons for termination of employment or service as a director.
Upon the exercise of a stock option granted under the 2011 Plan,
the exercise price is payable in full either in cash or its
equivalent, tendering (either by actual delivery or attestation)
previously acquired shares having an aggregate fair market value
at the time of exercise equal to the exercise
18
price, broker-assisted cashless exercise, net exercise, a
combination of the foregoing or by any other method approved by
the committee in its sole discretion.
Stock Appreciation Rights. The committee may
grant stock appreciation rights in tandem with stock options,
freestanding and unrelated to options, or any combination of
these forms. In any case, the form of payment of a stock
appreciation right will be determined by the committee at the
time of grant, and may be in shares of common stock, cash, or a
combination of the two. If granted other than in tandem, the
committee will determine the number of shares of common stock
covered by, and the exercise period for, the stock appreciation
right.
The 2011 Plan provides that, unless required to comply with
applicable foreign laws, a stock appreciation rights base
price may not be less than the fair market value of the
underlying shares of common stock on the date the stock
appreciation right is granted. Stock appreciation rights granted
outside the United States may be granted with a base price less
than the fair market value of the underlying shares of common
stock on the date of grant if necessary to comply with local tax
laws and regulations.
Upon exercise of the stock appreciation right, the participant
will receive an amount equal to the excess of the fair market
value of one share of stock on the date of exercise over the
fair market value of one share of the stock on the grant date,
multiplied by the number of shares of stock covered by the stock
appreciation right exercise. If granted in tandem with an
option, a stock appreciation rights exercise period may
not exceed that of the option. The participant may exercise a
tandem stock appreciation right when the option is exercisable,
surrender the option, and receive on exercise an amount equal to
the excess of the fair market value of one share of stock on the
date we receive the surrender election over the option exercise
price, multiplied by the number of shares of stock covered by
the stock appreciation right exercise.
Each stock appreciation right award agreement will set forth the
extent to which the participant will have the right to exercise
the stock appreciation right following termination of the
participants employment or service as a director. The
termination provisions will be determined within the discretion
of the committee, need not be uniform among all participants and
may reflect distinctions based on the reasons for termination of
employment or service as a director.
Restricted Stock. The committee is also
authorized to award shares of restricted common stock under the
2011 Plan upon such terms and conditions as it may establish.
The participants may be required to pay a purchase price for
each share of restricted stock granted. The award agreement will
specify the period(s) of restriction, the number of shares of
restricted common stock granted, such other provisions as the
committee determines
and/or
restrictions under applicable federal or state securities laws.
Although participants may have the right to vote these shares
from the date of grant, they will not have the right to sell or
otherwise transfer the shares during the applicable period of
restriction or until satisfaction of other conditions imposed by
the committee in its sole discretion. Participants may also
receive dividends on their shares of restricted stock and the
committee, in its discretion, will determine how such dividends
are to be paid.
Each award agreement for restricted stock will set forth the
extent to which the participant will have the right to retain
unvested restricted stock following termination of the
participants employment or service as a director. These
provisions are determined in the sole discretion of the
committee, need not be uniform among all shares of restricted
stock issued under the 2011 Plan and may reflect distinctions
based on reasons for termination of employment or service as a
director.
Restricted Stock Units. The committee is also
authorized to award restricted stock units under the 2011 Plan
upon such terms and conditions as it establishes. The award
agreement will specify the period(s) of restriction, the number
of restricted stock units granted, such other provisions as the
committee determines
and/or
restrictions under applicable federal or state securities laws.
The participants have no voting rights with respect to the
restricted stock units and do not have the
19
right to sell or otherwise transfer the units during the
applicable period of restriction or until earlier satisfaction
of other conditions imposed by the committee in its sole
discretion. Participants may receive credit for dividends or
dividend equivalents on their restricted stock units and the
committee, in its discretion, will determine how such credits
for dividends or dividend equivalents on restricted stock units
are to be paid.
Each award agreement for restricted stock units will set forth
the extent to which the participant will have the right to
retain unvested restricted stock units following termination of
the participants employment or service as a director.
These provisions will be determined in the sole discretion of
the committee, need not be uniform among all awards of
restricted stock units issued under the 2011 Plan and may
reflect distinctions based on reasons for termination of
employment or service as a director.
Other Awards. The committee may grant other
awards which may include, without limitation, unrestricted
shares, the payment of shares in lieu of cash, the payment of
cash based on attainment of performance goals, service
conditions or other goals established by the committee and the
payment of shares in lieu of cash under other incentive or bonus
programs. Payment under or settlement of any such other awards
shall be made in such manner at such times and subject to such
terms and conditions as the committee may determine.
Performance Measures. The committee may grant
awards under the 2011 Plan subject to the attainment of the
following performance measures: net earnings, earnings per
share, net income (before or after taxes), net sales growth, net
operating profit, return measures (including, but not limited
to, return on assets, capital, equity, or sales), productivity
ratios, expense targets, working capital targets, cash flow
(including, but not limited to, operating cash flow and free
cash flow), cash flow return on capital, earnings before or
after taxes, interest, depreciation
and/or
amortization, gross or operating margins, margins, operating
efficiency, customer satisfaction, employee satisfaction
metrics, human resources metrics, share price (including, but
not limited to, growth measures and total shareholder return),
and Economic Value Added or
EVA®.
Performance measures may be measured solely on the
companys or an affiliates performance, on a business
unit basis, or a combination thereof. Performance measures may
reflect absolute entity performance or a relative comparison of
entity performance to the performance of a group of comparator
companies, or published or special index that the committee
selects. The committee may also compare the companys stock
price to various stock market indices. The committee may provide
in any award that any evaluation of performance may include or
exclude any of the following events that occur during a
performance period: (1) asset write-downs,
(2) litigation or claim judgments or settlements,
(3) the effect of changes in tax laws, accounting
principles, or other laws or provisions affecting reported
results, (4) any reorganization and restructuring programs,
(5) extraordinary nonrecurring items as described in
Accounting Standards Codification (ASC) 225-30,
(formerly) Accounting Principles Board Opinion No. 30,
and/or in
managements discussion and analysis of financial condition
and results of operations appearing in the Companys annual
report to shareholders for the applicable year,
(6) acquisitions or divestitures, and (7) foreign
exchange gains and losses.
Subject to the individual and 2011 Plan limits described herein,
the number of performance-based awards granted to any
participant in any year is determined by the committee in its
sole discretion. The committee may reduce, but not increase, the
value of a performance-based award.
Individual Limits. The maximum number of
shares with respect to which stock options may be granted to an
individual during any one year is 3,500,000. The maximum number
of shares with respect to which stock appreciation rights may be
granted to any individual during any one year is 3,500,000. The
maximum number of shares of restricted stock or restricted stock
units that may be granted to an individual during any one year
is 700,000. The maximum number of shares with respect to which
other awards that may be granted to an individual during any one
year is 700,000 and the maximum cash that may be payable with
respect to other awards granted to an individual
20
in any one year is $15,000,000. The maximum aggregate value of
cash dividends or dividend equivalents that any individual may
receive pursuant to awards in any one year shall not exceed
$6,000,000.
Adjustment, Change of Control and
Amendments. The 2011 Plan provides for
appropriate adjustments in the number and nature of shares of
common stock subject to outstanding awards, the number of shares
available for awards under the 2011 Plan, the individual award
limits in the 2011 Plan and the exercise price of options and
the grant price of stock appreciation rights, in the event of
restructuring events and certain other events that change the
value of our stock, such as a merger, reorganization, stock
split, stock dividend, recapitalization through a large,
non-recurring cash dividend, spin off or other similar event.
The committee specifies in each Participants award
agreement the treatment of outstanding awards upon a change of
control.
The 2011 Plan may be modified or amended by the committee at any
time and for any purpose which the committee deems appropriate,
except that no amendment can adversely affect any outstanding
awards in a material way without the affected award
holders consent. Except for adjustments made in connection
with events described in the prior paragraph, the exercise price
of stock options and the grant price of stock appreciation
rights issued under the 2011 Plan may not be reduced without the
approval of shareholders.
Nontransferability. Unless otherwise
determined by the committee and provided in a participants
award agreement, awards may not be assigned or transferred by a
2011 Plan participant except by will or by the laws of descent
and distribution, and any stock option or stock appreciation
right is exercisable during a participants lifetime only
by the participant or by the participants guardian or
legal representative. Nonqualified stock options and stock
appreciation rights may not be transferred for value or
consideration.
Section 162(m). Section 162(m) of
the Internal Revenue Code places a limit of $1 million on
the amount we may deduct in any one year for compensation paid
to our principal executive officer and our other three most
highly-compensated executive officers other than our principal
financial officer. There is, however, an exception to this
limitation for certain performance-based compensation. Awards
made pursuant to the 2011 Plan may constitute performance-based
compensation that is not subject to the deductibility limitation
of Section 162(m). To qualify for this exception, the
shareholders must approve the material terms of the performance
goals of the plan. To continue to qualify for this exception,
the shareholders must reapprove the material terms of the
performance goals of the plan every five years.
Approval of the 2011 Plan by our shareholders at the 2011 Annual
Meeting will be deemed to constitute approval of the material
terms of the performance goals under the 2011 Plan for purposes
of Section 162(m). The material terms of the performance
goals include the persons eligible to participate in the 2011
Plan, as described under the heading Eligibility
above, the performance measures upon which performance awards
will be based, as described under the heading Performance
Measures above, and the maximum shares or cash value of
awards that may be granted to an individual in any one year, as
described under the heading Individual Limits above.
Duration of the 2011 Plan. Subject to the
committees right to terminate the 2011 Plan earlier, the
2011 Plan will remain in effect until all shares subject to the
2011 Plan have been purchased or acquired.
Federal Income Tax Consequences. The following
discussion covers some of the United States federal income tax
consequences with respect to awards that may be granted under
the 2011 Plan. It is a brief summary only. Participants should
consult with their tax advisors for a complete statement of all
relevant federal tax consequences. This summary does not
describe state, local, or foreign tax consequences of an
individuals participation in the 2011 Plan.
21
Federal
Income Tax Consequences Participants
Options. A plan participant will not recognize
income for federal income tax purposes when incentive stock
options are granted or exercised. If the participant disposes of
shares acquired by exercise of an incentive stock option either
before the expiration of two years from the date the options are
granted or within one year after the issuance of shares upon
exercise of the incentive stock option, the participant will
recognize in the year of disposition: (a) ordinary income,
to the extent the lesser of either (1) the fair market
value of the shares on the date of option exercise, or
(2) the amount realized on disposition, exceeds the option
exercise price; and (b) capital gain, to the extent the
amount realized on disposition exceeds the fair market value of
the shares on the date of option exercise. If the shares are
sold after expiration of these holding periods, the participant
generally will recognize capital gain or loss equal to the
difference between the amount realized on disposition and the
option exercise price.
The exercise of an incentive stock option may result in
alternative minimum tax liability. The excess of the fair market
value of the shares purchased on exercise of an incentive stock
option over the exercise price paid for such shares is
considered alternative minimum taxable income for alternative
minimum tax purposes.
With respect to nonqualified stock options, the participant will
recognize no income upon grant of the option, and, upon
exercise, will recognize ordinary income to the extent of the
excess of the fair market value of the shares on the date of
option exercise over the stock option exercise price.
Upon a subsequent disposition of the shares received from the
exercise of an option, the participant generally will recognize
capital gain or loss to the extent of the difference between the
fair market value of the shares at the time of exercise and the
amount realized on the disposition.
Stock Appreciation Rights. The recipient of a
grant of stock appreciation rights will not realize taxable
income on the date of such grant. Upon the exercise of a stock
appreciation right, the recipient will realize ordinary income
equal to the amount of cash or fair market value of stock
received.
Restricted Stock. A participant holding
restricted stock will, at the time the shares vest, realize
ordinary income in an amount equal to the fair market value of
the shares and any cash received at the time of vesting.
Dividends paid to the participant on the restricted stock during
the restriction period will generally be ordinary income to the
participant.
Restricted Stock Units. A participant holding
restricted stock units will, at the time the units vest, realize
ordinary income in an amount equal to the fair market value of
the shares and any cash received at the time of vesting.
Other Awards. The tax consequences of other
awards will depend upon the terms and conditions of such awards
as determined by the committee. However, a participant holding
other awards will generally realize ordinary income in an amount
equal to the fair market value of the shares or cash received at
the time of payment of shares or cash.
Federal Tax Consequences ITT
Corporation. In general, we will receive an
income tax deduction at the same time and in the same amount as
the amount which is taxable to the employee as ordinary income,
except to the extent prohibited by Section 162(m) of the
Internal Revenue Code. To the extent a participant realizes
capital gains, as described above, we will not be entitled to
any corresponding deduction for federal income tax purposes.
Section 162(m). As described above, under
Section 162(m) of the Internal Revenue Code, compensation
paid to covered employees in excess of $1 million for any
taxable year generally is not deductible by us unless such
compensation qualifies as performance-based compensation, which
requires, among other things, that the compensation is paid
pursuant to a plan, the material terms of which have been
approved by our shareholders.
22
Generally, a covered employee under Section 162(m) means
the principal executive officer and our three other highest
compensated executive officers, other than our principal
financial officer, as of the last day of the applicable taxable
year.
It is presently anticipated that the committee will at all times
consist of outside directors as required for purposes of
Section 162(m), and that the committee will take the effect
of Section 162(m) into consideration in structuring plan
awards.
Future Plan Benefits. The future benefits that
will be received under the plan by particular individuals or
groups are not determinable at this time.
The Board
of Directors Recommendation
Under the laws of the State of Indiana, this matter is approved
if the votes cast in favor of the proposal exceed the votes cast
against the proposal. Accordingly, neither abstentions nor
broker non-votes have any effect on the votes required under
Indiana law. However, under NYSE rules, the 2011 Plan must be
approved by a majority of the votes cast and the number of votes
cast must represent more than 50% of all the shares entitled to
vote. For purposes of the approval required under the New York
Stock Exchange rules, abstentions will have the effect of a vote
against this agenda item and broker non-votes will have no
effect, except to the extent they impact whether the 50% of all
common shares entitled to vote test has been satisfied. For the
purpose of determining whether the number of votes cast
represents more than 50% of the shares of common stock entitled
to vote, abstentions will count as votes cast and broker
non-votes will not count as votes cast. Approval of the material
terms of the plan for purposes of Section 162(m) requires
the affirmative vote of a majority of votes cast. For this
purpose, abstentions will have the same effect as a vote against
this proposal and broker non-votes will have no effect.
The Board of Directors recommends you vote FOR approval of
the ITT Corporation 2011 Omnibus Incentive Plan.
Equity
Compensation Plan Information
The following sets forth information concerning the shares of
common stock that may be issued under equity compensation plans
as of December 31, 2010.
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(c)
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Number of Securities
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Remaining Available
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for Future Issuance
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(a)
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Under Equity
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Number of Securities
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Compensation Plans
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to be Issued Upon
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(b)
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(Excluding
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Exercise of
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Weighted-Average
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Securities
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Outstanding Options,
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Exercise Price of
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Reflected in
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Warrants and Rights
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Outstanding Options,
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Column (a))
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Plan Category
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(Thousands)
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Warrants and Rights
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(Thousands)
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Equity Compensation Plans Approved by Security Holders(1)(2)
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9,116
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(3)
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$
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42.54
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(4)
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2,881
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(5)
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Equity Compensation Plans Not Approved by Security Holders
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Total
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9,116
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$
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42.54
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2,881
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(1) |
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Equity compensation plans approved by shareholders include the
1994 ITT Incentive Stock Plan, the 1996 Plan, the 2002 ITT Stock
Option Plan for Non-Employee Directors and the 2003 Plan. |
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(2) |
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Since the approval of the 2003 Plan, no additional awards,
including awards of restricted stock, will be granted under the
other plans referred to in footnote (1) above. Under the
2003 Plan |
23
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currently in effect, restricted stock and restricted stock units
may be awarded up to a maximum aggregate grant of
300,000 shares or units in any one plan year to any one
participant. |
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(3) |
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The weighted-average remaining contractual life of the total
number of outstanding options was 3.1 years as disclosed in
Note 17 to the Consolidated Financial Statements in the
Companys 2010 Annual Report on
Form 10-K. |
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(4) |
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The weighted-average exercise price pertains only to 7,405
outstanding options and not to outstanding restricted stock
units, which by their nature have no exercise price. |
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(5) |
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As of December 31, 2010, the number of shares available for
future issuance under the 2003 Plan with respect to restricted
stock and restricted stock unit awards was approximately
1,447,257, which is included in the 2,881,070 disclosed above. |
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4.
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Approval
of a Proposal to Amend the Companys Restated Articles of
Incorporation to Allow Shareholders to Call Special
Meetings
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The Companys Board of Directors has proposed, and
recommends that shareholders approve at the Annual Meeting, an
amendment to the Companys Restated Articles of
Incorporation that would add a right permitting the Secretary of
the Company to call a special meeting upon the written request
of shareholders of record having, as of the date of the special
meeting request, least thirty-five (35%) percent of the voting
power (excluding derivative securities from the determination of
satisfaction of such threshold in order to ensure that the
shareholder(s) seeking to call a special meeting have a true
economic interest in the Company) of the outstanding shares of
capital stock of the Company, provided that such special meeting
request complies and is in accordance with the By-laws of the
Company. Currently, only the entire Board of Directors (by
majority vote) and the Chairman of the Board may call a special
meeting of shareholders. The Board of Directors believes that
establishing an ownership threshold of, and economic interest
in, at least 35% of the voting power of the outstanding shares
of capital stock of the Company in order for shareholders to
request a special meeting strikes an appropriate balance between
enhancing the rights of shareholders and seeking to avoid the
situations that could arise if the threshold were set too low.
The Board of Directors believes that calling a special meeting
of shareholders is not a matter to be taken lightly. We believe
that a special meeting should only be held to cover special or
extraordinary events when fiduciary, strategic, significant
transactional or similar considerations dictate that the matter
be addressed on an expeditious basis, rather than waiting until
the next annual meeting. Organizing and preparing for a special
meeting involves significant management commitment of time and
focus, and imposes substantial legal, administrative and
distribution costs. We believe that setting the threshold too
low carries a risk of frequent meeting requests, potentially
covering agenda items relevant to particular constituencies as
opposed to shareholders generally, with significant cost,
management distraction and diversion of other corporate
resources. We therefore have concluded that a lower threshold
would not be in the best interest of shareholders and
accordingly have chosen to propose a threshold percentage of 35%.
The Board of Directors has also adopted corresponding amendments
to Companys By-laws, which amendments shall become
effective upon the approval by shareholders of this proposal to
amend the Companys Restated Articles of Incorporation. The
By-laws amendment contains procedural and informational
requirements for shareholders to call a special meeting and
modifies the advance notice requirements for shareholder
nominations of directors and the proposal of other business, as
applicable, at an annual or special meeting of shareholders
(whether called by shareholders or otherwise). The procedural
and informational requirements for shareholders to call a
special meeting include: no business may be conducted at the
special meeting except as set forth in the Companys notice
of meeting; no shareholder special meeting request shall be
effective if received by the Secretary during the period
commencing 90 days prior to the first anniversary of the
date of the immediately preceding annual meeting and ending on
the date of the next annual meeting; a special meeting request
shall not be effective if an annual or special meeting of
shareholders that included an identical or substantially similar
item of business (similar business) was held not
more than 120 days before the special meeting request was
received by the Secretary; a special meeting will not be held if
the Board of
24
Directors or the Chairman of the Board has called or calls for
an annual or special meeting to be held within 90 days
after the special meeting request is received by the Secretary
and the business to be conducted at such meeting included the
similar business; any reduction in the aggregate net long
position of the requesting shareholder below the 35% threshold
following the delivery of the special meeting request shall
constitute a revocation of such special meeting request; and in
determining whether the 35% threshold has been satisfied where
multiple requests are submitted, only requests dated and
delivered to the Secretary within 60 days of the earliest
dated special meeting request and identifying substantially the
same purpose or purposes of the special meeting and
substantially the same matters proposed to be acted on at the
meeting will be considered together. The modifications to the
advance notice requirements for shareholder nominations of
directors and the proposal of other business, as applicable, at
an annual or special meeting of shareholders (whether called by
shareholders or otherwise) include that the requesting
shareholders notice must include information as to the
business proposed to be conducted, and/or as to each nominee (as
applicable), as to the shareholder giving notice and the
beneficial owner, if any, on whose behalf the proposal is made
and a description of any agreement, arrangement or understanding
(including without limitation any swap or other derivative or
short position, profits interest, hedging transaction, borrowed
or loaned shares, any contract to purchase or sell, acquisition
or grant of any option, right or warrant to purchase or sell, or
other instrument), the intent or effect of which may be
(x) to transfer any of the economic consequences of
ownership of any security of the Company, (y) to increase
or decrease the voting power with respect to shares of any class
or series of capital stock of the Company
and/or
(z) to provide the opportunity to profit or share in any
profit derived from, or to otherwise benefit economically from,
or to mitigate any loss resulting from, the value (or any
increase or decrease in the value) of any security of the
Company, as well as require periodic updating and supplementing
of the information required to be provided so such information
shall be true and correct as of the record date for the meeting
and date that is 15 days prior to the meeting or any adjournment
or postponement thereof. In addition, a shareholder seeking to
submit a director nomination or propose other business at an
annual meeting must provide notice to the Company not less than
90 days nor more than 120 days prior to the date of
the Companys Proxy Statement released to shareholders in
connection with the previous years annual meeting;
provided however, that if no annual meeting was held in the
previous year or the date of the annual meeting is changed by
more than 30 days from the anniversary date of the previous
years annual meeting, notice by the shareholder must be
received not earlier than 120 days prior to such meeting
and not later than the later of 90 days prior to such
meeting or 10 days following the date on which the public
announcement of the date of the meeting is first made. In the
case of a special meeting called by the Company for the purpose
of electing directors, shareholder notice must be given not
earlier than 120 days prior to such special meeting and not
later than 90 days prior to such special meeting or
10 days following the date on which public announcement is
first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at
such meeting.
The descriptions of the amendments to the Restated Articles of
Incorporation and By-laws are qualified in their entirety by the
complete text of the proposed amendment to the Restated Articles
of Incorporation, set forth in Appendix C, and
corresponding the amendment to the By-laws, set forth in
Appendix D.
Under the laws of the state of Indiana, this proposal is
approved if the votes cast in favor of the proposal exceed the
votes cast against, and the amendment to the Restated Articles
of Incorporation will become effective upon the filing of
Articles of Amendment to the Restated Articles of Incorporation
with the Secretary of State of the State of Indiana
substantially in the form attached as Appendix C,
which the Company intends to do promptly after the Annual
Meeting, at which time the corresponding amendments to the
By-laws,
substantially in the form attached as Appendix D,
would be come effective.
The Board of Directors recommends you vote FOR the proposal
to amend the Companys Restated Articles of Incorporation
to allow shareholders to call special meetings.
25
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5.
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Non-Binding
Advisory Vote to Ratify Named Executive Officers
Compensation
|
In accordance with the requirements of Section 14A of the
Exchange Act (which was added by the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the Dodd-Frank
Act)) and the related rules of the SEC, we are including
in these proxy materials a separate resolution subject to
shareholder vote to approve, in a non-binding vote, the
compensation of our named executive officers as disclosed on
pages 50 to 101. The text of the resolution in respect of
Proposal No. 5 is as follows:
RESOLVED, that the compensation paid to the Companys
named executive officers as disclosed in this Proxy Statement
pursuant to the rules of the SEC, including the Compensation
Discussion and Analysis, compensation tables, and any related
narrative discussion, is hereby APPROVED.
In considering their vote, shareholders may wish to review with
care the information on the Companys compensation policies
and decisions regarding the named executive officers presented
in Compensation Discussion and Analysis on pages 50 to 101.
In particular, shareholders should note that the Companys
Compensation Committee bases its executive compensation
decisions on the following:
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alignment of executive and shareholder interests by providing
incentives linked to earnings per share performance, revenue,
free cash flow and return on invested capital;
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the ability for executives to achieve long-term shareholder
value creation without undue business risk;
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creating a clear link between an executives compensation
and his or her individual contribution and performance;
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the extremely competitive nature of the industries in which we
operate, whether in manufacturing or defense, and our need to
attract and retain the most creative and talented industry
leaders; and
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comparability to the practices of peers in the industries that
we operate in and other comparable companies generally.
|
While the results of the vote are advisory in nature the Board
of Directors intends to carefully consider the results of the
vote.
The Board of Directors recommends that you vote FOR the
approval of the compensation of our named executive officers.
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6.
|
Non-Binding
Advisory Vote on the Frequency of Shareholder Votes on Executive
Compensation
|
In accordance with the requirements of Section 14A of the
Exchange Act (which was added by the Dodd-Frank Act) and the
related rules of the SEC, we are including in these proxy
materials a separate resolution subject to shareholder vote to
recommend, in a non-binding vote, whether a non-binding
shareholder vote to approve the compensation of our named
executive officers (that is, votes similar to the non-binding
vote in Proposal No. 5) should occur every one,
two or three years.
In considering their vote, shareholders may wish to review with
care the information presented in connection with
Proposal No. 5 on page 26, as well as the
information on the Companys compensation policies and
decisions regarding the named executive officers presented in
Compensation Discussion and Analysis on pages 50 to 101.
We believe that a non-binding shareholder vote on executive
compensation should occur every year. We believe the one-year
frequency provides the highest level of accountability and
communication by enabling the non-binding shareholder vote to
approve the compensation of our named
26
executive officers to correspond with the most recent executive
compensation information presented in our proxy statement for
our annual meetings of shareholders.
We believe that providing the vote only every two or three years
may prevent shareholders from communicating in a meaningful and
coherent manner. For example, we may not know whether the
shareholder vote approves or disapproves of compensation for the
reporting period or the compensation for previous reporting
periods or both. As a result, the implications of the
shareholder vote could be difficult to discern.
If the non-binding vote on executive compensation will occur
every year, a resolution subject to a non-binding shareholder
vote to approve the compensation of our named executive officers
will be presented in the proxy materials for the 2012 Annual
Meeting of shareholders.
For the reasons stated above, the Board of Directors is
recommending a vote for a one-year frequency for the non-binding
shareholder vote to approve the compensation of our named
executive officers. Note that shareholders are not voting to
approve or disapprove the recommendation of the Board of
Directors with respect to this proposal. Instead, each proxy
card provides for four choices with respect to this proposal: a
one, two or three year frequency or shareholders may abstain
from voting on the proposal.
Your vote on this proposal will be non-binding on us and the
Board of Directors, and it will not be construed as overruling a
decision by us or the Board of Directors. Your vote will not
create or imply any change to our fiduciary duties or create or
imply any additional fiduciary duties for us or the Board of
Directors. However, the Board of Directors values the opinions
that our shareholders express in their votes and will consider
the outcome of the vote when making future decisions on the
inclusion of such proposals in the proxy materials as it deems
appropriate.
The Board of Directors recommends that you vote ONE YEAR with
respect to how frequently a non-binding shareholder vote to
approve the compensation of our named executive officers should
occur.
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7.
|
Shareholder
Proposal Requesting the Company Amend, where Applicable,
ITTs Policies Related to Human Rights
|
Several shareholders have advised the Company that they intend
to present the following resolution at the Annual Meeting. In
accordance with applicable proxy regulations, the proposed
resolution and supporting statement, for which the Board of
Directors and the Company accept no responsibility, are set
forth below. Approval of this proposal would require the
affirmative vote of a majority of the votes cast of ITT stock
present in person or by proxy and entitled to vote at the Annual
Meeting. Identical shareholder proposals were received from each
of the following Mercy Investment Services, Inc., 2039 North
Geyer Road St. Louis, MO
63131-3332;
the Presbyterian Church (USA), 100 Witherspoon Street
Louisville, KY
40202-1396;
and The Domestic and Foreign Missionary Society of the
Protestant Episcopal Church in the United States of America, 815
Second Avenue New York, NY
10017-4503
(collectively, the Proponents), which shareholders
hold 56, 54, and 8,100 shares respectively.
2011 ITT
Shareholder Resolution on Human Rights Policy
Whereas, ITT, as a global corporation, faces increasingly
complex problems as the international social, and cultural
context within which ITT operates changes.
Companies confront ethical and legal challenges arising from
diverse cultures and political and economic contexts or
operating in regions of conflict. Today, management must address
issues that include human rights, workers right to
organize and bargain collectively, non-discrimination in the
workplace, environmental protection and sustainable community
development. ITT does business in countries with human rights
challenges including Colombia, Egypt and Israel.
27
Several international conventions, declarations and treaties
contain internationally recognized standards designed to protect
human rights civil, political, social environmental,
cultural and economic that should be reflected in
ITTs policies. These include the Universal Declaration of
Human Rights, the Fourth Geneva Convention, the Hague
Conventions, International Covenant on Civil and Political
Rights, the core labor standards of the International Labor
Organization, and the International Covenant on Economic,
Cultural and Social Rights. We believe these documents will help
inform ITTs revision of its human rights policy. Also,
United Nations resolutions and reports of special rapporteurs on
countries where ITT does business, and Norms on the
Responsibilities of Transnational Corporations and Other
Business Enterprises with Regard to Human Rights, adopted
by the United Nations
Sub-Commission
on the Promotion and Protection of Human Rights in August 2003
are helpful, as are the comprehensive human rights policies
designed for global companies found in Principles for
Global Corporate Responsibility: Bench Marks for Measuring
Business Performance, developed by an international group
of religious investors.
As companies formulate comprehensive policies, we believe
significant commercial advantages may accrue through enhanced
corporate reputation, improved employee recruitment and
retention, improved community and stakeholder relations and
reduced risk of adverse publicity, consumer boycotts, divestment
campaigns and lawsuits.
Resolved, shareholders request the Board to amend, where
applicable, within ten months of the 2011 Annual Meeting,
ITTs policies related to human rights that guide its
international and U.S. operations to conform more fully
with international human rights and humanitarian standards.
SUPPORTING
STATEMENT
We believe ITTs current human rights policies are limited
in scope, and provide little or no guidance for determining
business relationships where our products or services could
entangle the company in human rights violations. Although we do
not recommend inclusion of any specific provision of the
above-named documents in the revised policy, we believe
ITTs policies should reflect a more comprehensive
understanding of human rights.
ITT should be able to assure shareholders that employees are
treated fairly and with dignity wherever they work in the global
economy. Going beyond internal practices, however, ITT should
also provide similar assurance that its products and services
are not used in human rights violations. One element of ensuring
compliance is utilization of independent monitors composed of
respected local human rights, religious and non-governmental
organizations that know local culture and conditions. We believe
the adoption of a more comprehensive human rights policy,
coupled with implementation, enforcement and independent
monitoring, will assure shareholders of ITTs global
leadership.
Board of
Directors Statement in Opposition of the
Proposal
The proposal requests that, within ten months of the 2011 annual
meeting of shareholders, the Company revise its policies related
to human rights that guide its international and
U.S. operations in order to have them conform more fully
with international human rights and humanitarian standards.
ITT has long supported human rights through its business
practices and directly through a specific provision in its Code
of Conduct. ITT has also included such rights in its ITT
Management System (IMS) which incorporates
ITTs values. Over the past several years, ITT has
continued to demonstrate progress in benchmarking and
communicating its commitment to human rights. This commitment
was further evidenced this year with the adoption of this Policy
on Human Rights.
28
Beginning in 2008, ITTs Vision and Values instituted a
systematic company-wide commitment to respect, responsibility
and integrity:
ITT Management System Values: Respect, Responsibility, &
Integrity
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Our values are our compass we strive to do the right
thing always
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Treat others fairly and courteously
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Sustain a culture of diversity and inclusion
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This Vision and Values are fundamental to our culture and they
are codified in ITTs Code of Conduct which is available on
the Companys web site at
http://www.itt.com/citizenship/governance/code-conduct/.
To ensure awareness of ITTs leadership commitments, the
Company conducts training for its employees. This training
reinforces the responsibility of all employees to act ethically
and report possible violations.
In 2009, ITT modified its Code of Conduct to add specific
language regarding its commitment to Human Rights:
Code of Conduct:
We are committed to conducting our business in a manner that
respects and advances human rights based on our values and
operating principles. We uphold human rights at all times and in
all locations, regardless of local business customs.
In particular, we are committed to:
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Providing safe and secure conditions for those working on our
Companys behalf
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Protecting the environment
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Following all applicable wage and hour laws
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Strictly prohibiting human trafficking and the use of child or
forced labor, including prison or bonded labor
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Treating each other fairly and equitably
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To ensure that every facet of our business upholds these
standards, we seek business partners who share these commitments.
Then, in 2010, ITT conducted further researched and benchmarked
corporate best practices on Human Rights. Based on the results
from that external benchmarking effort, and with a desire to
continuously improve ITTs ethical culture, in 2011, ITT
implemented a specific Policy on Human Rights. The policy, which
operates in conjunction with ITTs Vision and Values and
Code of Conduct, applies to all ITT employees worldwide and to
ITTs global supply chain partners within ITTs sphere
of influence.
ITTs newly implemented Policy on Human Rights states that
ITT fully supports and adheres to the principles of both the
Universal Declaration of Human Rights and the United Nations
Global Compact where we operate. Furthermore, the policy states
that ITT will work to identify and do business with supply chain
partners who aspire to conduct their business in a similar
manner. To underscore this commitment, the Company has published
the full policy on its web site at
http://www.itt.com/citizenship/employees/.
For the foregoing reasons, the Board of Directors believes that
ITT has substantially fulfilled the request of this shareholder
proposal with the adoption of its Policy on Human Rights.
The Board of Directors unanimously recommends a vote AGAINST
this shareholder proposal.
29
Information
about the Board of Directors
Responsibilities of the Board of
Directors. The Board of Directors sets policy for
ITT and advises and counsels the chief executive officer and the
executive officers who manage the Companys business and
affairs. The Board of Directors is responsible for assuring that:
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the Companys businesses are conducted in conformity with
applicable laws and regulations;
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the Companys systems of financial reporting and internal
controls are adequate and properly implemented and the Company
has appropriate risk management structures in place;
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there is continuity in the leadership of the Company;
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management develops sound business strategies;
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adequate capital and managerial resources are available to
implement the business strategies;
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the Companys long-term strategies, significant investments
in new businesses, joint ventures and partnerships and
significant business acquisitions, including assessment of
balance sheet impacts and other financial matters, are reviewed
and approved; and
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the Companys operating plans and capital, research and
development and engineering budgets are reviewed and approved.
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Governance Principles. The Board of Directors
has adopted principles for governance of the Board (the
Corporate Governance Principles) and charters for
each of its standing committees. The Corporate Governance
Principles provide, among other things, that an Independent
Presiding Director shall be appointed on an annual basis (but no
Non-Management Director shall serve more than three consecutive
annual terms) to preside at meetings of the Board of Directors
at which the Chairman is not present, including regularly
scheduled private sessions of the Non-Management Directors.
The Corporate Governance Principles further provide that
Directors must be able to devote the requisite time for
preparation and attendance at regularly scheduled Board and
Board Committee meetings, as well as be able to participate in
other matters necessary for good corporate governance. To help
assure that Directors are able to fulfill their commitments to
the Company, the Corporate Governance Principles provide that
Directors who are chief executive officers of publicly traded
companies may serve on not more than two public company boards
(including the ITT Board) in addition to service on their own
board and other Directors may not serve on more than four public
company boards (including the ITT Board). The Corporate
Governance Principles and Committee Charters are reviewed by the
Board at least annually and posted on the Companys website
at
http://www.itt.com/responsibility/governance/corporate-governance/governance-controls/.
A copy of the Corporate Governance Principles will be provided,
free of charge, to any shareholder upon request to the Secretary
of ITT Corporation.
Leadership Structure. The Board has considered
the leadership structure of the Company and has determined that
the chief executive officer of the Company shall also serve as
the Chairman of the Board of Directors. The Board feels that the
combination of these two roles provides efficient and effective
use of resources and that Mr. Lorangers position as
Chief Executive Officer gives him unique and valuable insight
into matters addressed by the Board of Directors. The Board also
believes that it is important for long-term and short-term
strategies to be controlled by a singular executive. However,
the Board of Directors appoints an Independent Presiding
Director, whose position is described more fully at
Section III.G of the Boards Corporate Governance
Principles,
http://www.itt.com/responsibility/governance/principles/.
The Independent Presiding Director is available to address
issues or concerns raised by other Non-Management Directors,
senior executives or major shareholders not readily addressable
directly to the Chairman, President and Chief Executive Officer.
The Independent Presiding Director advises the Chairman,
President and Chief Executive Officer and communicates any
issues or concerns to or from the full Board and
30
the Chairman, President and Chief Executive Officer. The
Independent Presiding Director assists the Chairman, President
and Chief Executive Officer in developing appropriate schedules
and agendas for Board and Committee meetings, and acts on behalf
of the Chairman, President and Chief Executive Officer and the
Board as a formal coordinating point for facilitating,
canvassing, reconciling and communicating board issues, concerns
and recommendations. The Independent Presiding Director chairs
regular meetings of the independent directors, including
presiding over executive sessions. The Board of Directors has
selected Ralph F. Hake as its Independent Presiding Director, to
serve a one-year term, expiring in May 2011.
Communication with the Board of
Directors. Interested parties may contact the
Independent Presiding Director, all outside Directors as a
group, the entire Board of Directors, a committee of the Board
of Directors or an individual Director by submitting a letter to
the desired recipient in a sealed envelope labeled
Independent Presiding Director, Outside
Directors, Board of Directors, or with the
name of the Board committee or a specific director. This sealed
envelope should be placed in a larger envelope and mailed to the
Secretary, ITT Corporation, 1133 Westchester Avenue, White
Plains, NY 10604, USA. The Secretary will forward the sealed
envelope to the designated recipient.
Policies for Approving Related Person
Transactions. The Company and the Board have
adopted formal written policies for evaluation of potential
related person transactions, as those terms are defined in the
SECs rules for executive compensation and related person
disclosure, which provide for review and pre-approval of
transactions which may or are expected to exceed $120,000
involving Non-Management Directors, Executive Officers,
beneficial owners of five percent or more of the Companys
common stock or other securities and any immediate family of
such persons. The Companys policy generally groups
transactions with related persons into two categories:
(1) transactions requiring the approval of the Nominating
and Governance Committee and (2) certain transactions,
including ordinary course transactions below established
financial thresholds, that are deemed pre-approved by the
Nominating and Governance. The Nominating and Governance
Committee is deemed to have pre-approved certain transactions
identified in Item 404(a) of
Regulation S-K
that are not required to be disclosed even if the amount
involved exceeds $120,000. In addition, any transaction with
another company at which a related persons only
relationship is as an employee (other than an executive
officer), director and/or beneficial owner of less than 10% of
that companys shares is deemed pre-approved; provided,
however, that with respect to directors, if a director is a
current employee, or an immediate family member is a current
executive officer, of a company that has made payments to, or
received payments from, the Company for property or services in
an amount which, in any of the last three fiscal years, exceeds
the greater of $1 million, or 2% of such other
companys consolidated gross revenues, such transaction
shall be reviewed by the Nominating and Governance Committee and
not considered appropriate for automatic pre-approval.
Regardless of whether a transaction is deemed pre-approved, all
transactions in any amount are required to be reported to the
Nominating and Governance Committee. Subsequent to the adoption
of the written procedures above, the Company has followed these
procedures regarding all reportable related person transactions.
The Companys Related Person Transaction Policy is posted
on the Companys website at:
http://www.itt.com/responsibility/governance/related-party-transactions/.
Code of Corporate Conduct. The Company has
also adopted the ITT Code of Corporate Conduct which applies to
all employees, including the Companys Chief Executive
Officer, Chief Financial Officer and Principal Accounting
Officer and, where applicable, to its Non-Management Directors.
The Code of Corporate Conduct is also posted on the
Companys website at
http://www.itt.com/responsibility/conduct/.
The Company discloses any changes or waivers from the Code of
Corporate Conduct on its website for the Companys Chief
Executive Officer, Chief Financial Officer, Principal Accounting
Officer, its Non-Management Directors and other executive
officers. In addition, the Company will disclose within four
business days any substantive changes in or waivers of the Code
of Corporate Conduct granted to our Chief Executive Officer,
Chief
31
Financial Officer and Principal Accounting Officer, or persons
performing similar functions, by posting such information on our
website as set forth above rather than by filing a
Form 8-K.
A copy of the Code of Corporate Conduct will be provided, free
of charge, to any shareholder upon request to the Secretary of
ITT Corporation.
Independent Directors. The Companys
By-laws require that a majority of the Directors must be
independent directors. Additionally, the Companys
Non-Management Directors must meet the NYSE independence
standards and the Companys Corporate Governance Principles
independence standards. The Companys Corporate Governance
Principles define independence. The Charters of the Audit,
Compensation and Personnel, Nominating and Governance, and
Strategy and Finance Committees as well as the resolution
establishing the Special Litigation Committee also require all
members to be independent directors.
Based on its review, the Board of Directors affirmatively
determined, after considering all relevant facts and
circumstances, that no Non-Management Director has a material
relationship with the Company and that all Non-Management
Directors, including all members of the Audit, Compensation and
Personnel, Corporate Responsibility, Nominating and Governance
and Strategy and Finance Committees, meet the independence
standards of the Companys Corporate Governance Principles
and By-laws as well as the independence definition in the
current NYSE corporate governance rules for listed companies.
NYSE Independence Requirements:
(a) A Director qualifies as independent when
the board of directors affirmatively determines that the
director has no material relationship with the company, or any
subsidiary in a consolidated group (either directly or as a
partner, shareholder or officer of an organization that has a
relationship with the company). Companies must identify which
directors are independent and disclose the basis for that
determination.
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In addition, a director is not independent if:
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(i)
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The director is, or has been within the last three years, an
employee of the listed company, or an immediate family member
is, or has been within the last three years, an executive
officer, of the listed company.
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(ii)
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The director has received, or has an immediate family member who
has received, during any twelve-month period within the last
three years, more than $120,000 in direct compensation from the
listed company, other than director and committee fees and
pension or other forms of deferred compensation for prior
service (provided such compensation is not contingent in any way
on continued service).
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(iii)
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(A) The director or an immediate family member is a current
partner of a firm that is the companys internal or
external auditor; (B) the director is a current employee of
such a firm; (C) the director has an immediate family
member who is a current employee of such a firm and who
participates in the firms audit, assurance or tax
compliance (but not tax planning) practice; or (D) the
director or an immediate family member was within the last three
years (but is no longer) a partner or employee of such a firm
and personally worked on the listed companys audit within
that time.
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(iv)
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The director or an immediate family member is, or has been
within the last three years, employed as an executive officer of
another company where any of the listed companys present
executive officers at the same time serves or served on that
companys compensation committee.
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(v)
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The director is a current employee, or an immediate family
member is a current executive officer, of a company that has
made payments to, or received payments from, the listed company
for property or services in an amount which, in any of the last
three
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fiscal years, exceeds the greater of $1 million, or 2% of
such other companys consolidated gross revenues.
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In addition to the NYSE standards, and the independence
standards in the Companys By-laws, the Board has adopted
the following additional standards for independence described
below, which are included in the Boards Corporate
Governance Principles.
Under the Corporate Governance Principles, an independent
director is someone who is free of any relationship that would
interfere with the exercise of independent judgment, and within
the past 5 years:
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has not been employed by the Company in an executive capacity;
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has not been an advisor or consultant to the Company, and has
not been affiliated with a company or a firm that is;
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has not been affiliated with a significant customer or supplier
of the Company;
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has not had a personal services contract with the Company;
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has not been affiliated with a tax-exempt entity that receives
significant contributions from the Company;
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has not been related to any of the persons described
above; and
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has not been part of an interlocking directorate in which an
executive officer of the Company is a member of the compensation
committee of the company that employs the Director.
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Each year, the Companys Directors and executive officers
complete annual questionnaires designed to elicit information
about potential related person transactions. Additionally,
Directors and executive officers must promptly advise the
Corporate Secretary if there are any changes to the information
previously provided.
The Nominating and Governance Committee reviews and considers
all relevant facts and circumstances with respect to
independence for each Director standing for election prior to
recommending selection as part of the slate of Directors
presented to the shareholders for election at the Companys
Annual Meeting. The Nominating and Governance Committee reviews
its recommendations with the full Board, which separately
considers and evaluates the independence of Directors standing
for re-election using the additional standards described above.
In February 2011, the Board considered regular commercial sales
and payments in the ordinary course of business as well as
charitable contributions with respect to each of the
Non-Management Directors standing for re-election at the
Companys 2011 Annual Meeting. In particular, the Board
evaluated the amount of sales to ITT or purchases by ITT with
respect to companies where any of the Directors serve or served
as an executive officer or director.
With respect to General Kern, in 2009 the Nominating and
Governance Committee and Board of Directors considered the
employment by the Company of General Kerns
brother-in-law
noting the employment was in a non-executive capacity. The Board
further noted that neither General Kern nor the family member
was aware of the relationship of the other to the Company prior
to employment. After consideration, the Board determined that
the employment matter did not alter General Kerns status
and he continues as an independent director. In no other
instances was a Director a current employee, or was an immediate
family member of a Director a current executive officer, of a
company that has made payments to, or received payments from the
Company for property or services in an amount which, in any of
the last three fiscal years, exceeded the greater of
$1 million, or 2% of each respective companys
consolidated gross revenues. The Board also considered the
Companys charitable contributions to non-profit
organizations with respect to each of the Non-Management
Directors. No contributions exceeded 1% of the consolidated
gross revenues of any non-profit organization.
33
Mr. Loranger is not independent because of his position as
Chairman, President and Chief Executive Officer of the Company.
The following are the independent directors standing for
election: Drs. Crawford, Hamre, and Mohapatra; General
Kern; Messrs. Hake, MacInnis, and Tambakeras;
Mrs. Gold and Ms. Sanford.
Board and Committee Roles in Oversight of
Risk. The Board of Directors has primary
responsibility for overall risk oversight, including the
Companys risk profile and management controls. The Audit
Committee of the Board monitors the Companys operational
and regulatory risk management and risk assessment program,
including all risk mitigation processes. The General Internal
Auditor, who has responsibility for assessing, monitoring and
auditing the Companys global risk profile, reports
directly to the Audit Committee and reports on a functional
basis to the Chief Financial Officer. The Strategy and Finance
Committee of the Board monitors financial liquidity and
financing risk. The Compensation and Personnel Committee reviews
and assesses compensation and incentive program risks to ensure
that the Companys compensation programs encourage
innovation and balance appropriate business risk and rewards
without encouraging risk-taking behaviors which may have a
material adverse effect on the Company. The Compensation and
Personnel Committee structures compensation so that unnecessary
or excessive risk-taking behavior is discouraged and behaviors
correlated with long-term value creation are encouraged. The
Board, Audit, Compensation and Personnel and Strategy and
Finance Committees receive regular reports with respect to the
Companys risk profile and risk management controls.
Compensation Committee Interlocks and Insider
Participation. None of the members of the
Compensation and Personnel Committee during fiscal year 2010 or
as of the date of this proxy statement has been an officer or
employee of the Company and no executive officer of the Company
served on the Compensation Committee or board of any company
that employed any member of the Companys Compensation and
Personnel Committee or Board of Directors.
Director Selection and
Composition. Directors of the Company must be
persons of integrity, with significant accomplishments and
recognized business stature. The Nominating and Governance
Committee desires that the Board of Directors be diverse in
terms of its viewpoints, professional experience, education and
skills as well as race, gender and national origin. In addition,
ITTs corporate governance principles state that as part of
the membership criteria for new Board members, individuals must
possess such attributes and experiences as are necessary to
provide a broad range of personal characteristics including
diversity, management skills, and technological, business and
international experience. On an annual basis, as part of its
self-evaluation, the Board of Directors assesses whether the mix
of directors is appropriate for the Company. In addition, the
Nominating and Governance Committee assesses the effectiveness
of these criteria by referring to the criteria when it
periodically assesses the composition of the Board. The Board of
Directors actively seeks to consider diverse candidates for
membership on the Board when it has a vacancy to fill and
includes diversity as a specific factor when conducting any
search. As part of its process in identifying new candidates to
join the Board of the Directors, the Nominating and Governance
Committee considers whether and to what extent the
candidates attributes and experiences will individually
and collectively complement the existing Board, recognizing that
ITTs businesses and operations are diverse and global in
nature. Currently, the Board consists of ten directors. Out of
the ten directors, two are female, one is African American and
one is from India. The directors come from diverse professional
backgrounds, including technology, financial and manufacturing
industries as well as governmental and non-governmental agencies.
To be considered by the Nominating and Governance Committee as a
Director candidate, a nominee must meet the requirements of the
Companys By-laws and Corporate Governance Principles. A
nominee should also have experience as a board member, chief
executive officer or senior officer of a publicly traded or
large privately held company, or have achieved recognized
prominence in a relevant field as, for example, a distinguished
faculty member of a highly regarded
34
educational institution or senior governmental official. In
addition to these minimum qualifications, the Nominating and
Governance Committee evaluates each nominees skills to
determine if those skills are complementary to the skills
demonstrated by current Board members. The Nominating and
Governance Committee also evaluates the Boards needs for
operational, technical, management, financial, international or
other expertise.
Prior to recommending nominees for election as Directors, the
Companys Nominating and Governance Committee engages in a
deliberative, evaluative process to ensure each nominee
possesses the skills and attributes that individually and
collectively will contribute to an effective Board of Directors.
Biographical information for each candidate for election as a
Director is evaluated and candidates for election participate in
interviews with existing Board members and management. Each
candidate is subject to thorough background checks. Director
nominees must be willing to commit the requisite time for
preparation and attendance at regularly scheduled Board and
Committee meetings and participation in other matters necessary
for good corporate governance.
The Nominating and Governance Committee identifies Director
candidates through a variety of sources including personal
references and business contacts. On occasion, the Nominating
and Governance Committee utilizes a search firm to identify and
screen Director candidates and pays a fee to that firm for each
such candidate elected to the Board of the Company. The
Nominating and Governance Committee will consider director
nominees recommended by shareholders for election to the
Companys Board who meet the qualification standards
described above. (See Section II.E. of the Nominating and
Governance Charter at
http://www.itt.com/responsibility/governance/nominating/.)
The Nominating and Governance Committee also evaluates and makes
recommendations to the Board of Directors concerning appointment
of Directors to Board Committees, selection of Board Committee
Chairs, Committee member qualifications, Committee member
appointment and removal, Committee structure and operations and
proposal of the Board slate for election at the Annual Meeting
of Shareholders, consistent with criteria approved by the Board
of Directors.
Committees of the Board of
Directors. The standing Committees of the
Board described below perform essential corporate governance
functions. In October of 2007 the Board also formed a Special
Litigation Committee to oversee an independent investigation
involving the Companys Night Vision matter.
Audit
Committee
2010 Audit Committee Members are:
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Frank T. MacInnis, Chair
Christina A. Gold
Ralph F. Hake
Surya N. Mohapatra
Linda S. Sanford |
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Meetings in 2010: |
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Responsibilities: |
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Subject to any action that may be taken by the full
Board, the Audit Committee has the ultimate authority and
responsibility to determine Deloitte qualifications and
independence, and to appoint (or nominate for shareholder
ratification), evaluate, and where appropriate, consider
rotation or replacement of Deloitte.
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Review and discuss with management and Deloitte, and
approve the audited financial statements of the
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Company and make a recommendation regarding inclusion of those
financial statements in any public filing including the
Companys Annual Report on
Form 10-K
(or the Annual Report to Shareholders if distributed prior to
the filing of
Form 10-K),
including discussion of the Companys disclosures under
Managements Discussion and Analysis of Financial Condition
and Results of Operations. |
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Review and consider with Deloitte matters required
to be discussed by PCAOB Standards, Statement of Auditing
Standards (SAS) No. 114 (The Auditors
Communication with Those Charged with Governance) and all other
applicable regulatory agencies.
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Review with management and Deloitte the effect of
regulatory and accounting initiatives on the Companys
financial statements.
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As a whole, or through the Committee chair, review
and discuss with Deloitte the Companys interim financial
results to be included in the Companys earnings report or
quarterly reports to be filed with the SEC, including discussion
of the Companys disclosures under Managements
Discussion and Analysis of Financial Condition and Results of
Operations prior to the filing of its
Form 10-Q
with the SEC.
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Review and discuss with management the types of
information to be disclosed and the types of presentations to be
made with respect to the Companys earning releases and
rating agency presentations.
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Monitor and discuss with management and Deloitte the
quality and adequacy of the Companys internal controls and
their effectiveness, and meet regularly and privately with the
General Auditor.
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Annually request from Deloitte a formal written
statement delineating all relationships between Deloitte and the
Company, consistent with the PCAOB Rule 3526.
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With respect to such relationships, the Audit
Committee shall:
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Discuss with Deloitte any disclosed
relationships and the impact of the relationship on Deloitte
independence; and
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Assess and recommend appropriate action
in response to the Deloitte report to satisfy itself of the
auditors independence.
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Adopt and monitor implementation and compliance with
the Companys Non-Audit Services Policy, which addresses
approval requirements and the
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limited circumstances in which Deloitte or other service
providers may be retained for non-audit services. |
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Confirm the scope of audits to be performed by
Deloitte and any outside internal audit service provider,
monitor progress and review results. Review fees and expenses
charged by Deloitte and any party retained to provide internal
audit services.
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On an annual basis, discuss with Deloitte its
internal quality control procedures, material issues raised in
quality control or peer review and any inquiries by governmental
or professional authorities regarding the firms
independent audits of other clients.
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Review significant findings or unsatisfactory
internal audit reports or audit problems or difficulties
encountered by Deloitte, and monitor managements response
to such findings.
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Provide oversight and discuss with management,
internal auditors and Deloitte, the adequacy and effectiveness
of the Companys overall risk assessment and risk
management process, including all risk mitigation processes.
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Review its performance and Charter at least annually
and make recommendations to the Board of Directors for approval
and adoption of its Charter.
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|
Review regularly and consider the Companys
environmental, safety and health reserves.
|
|
|
|
Review expense accounts of senior executives.
|
|
|
|
Update the Board of Directors on a regular basis
with respect to matters coming to its attention that may have a
significant impact on the Companys financial condition or
affairs and the Companys compliance with legal or
regulatory requirements and the performance and independence of
Deloitte and the internal audit function.
|
|
|
|
Review major issues regarding accounting principles
and financial statement presentations, significant changes to
the Companys selection or application of accounting
principles and major issues relating to the Companys
internal controls including any specifically required steps to
correct identified major internal control issues. The Audit
Committee also reviews management or Deloittes analyses
regarding significant financial reporting issues and judgments
made in preparing financial statements including analyses of
alternative GAAP methods as well as the effect of regulatory and
accounting initiatives and
|
37
|
|
|
|
|
off-balance sheet structures, if any, on the Companys
financial statements. |
|
|
|
Review all material related party transactions prior
to initiation of the transaction and make recommendations to the
Board of Directors for approval or disapproval.
|
|
|
|
In conjunction with the Board of Directors, evaluate
the qualifications of its members and its own performance on an
annual basis.
|
|
|
|
Meet separately, on a regular basis, with Deloitte,
internal auditors, and members of management, as well as
privately as a Committee.
|
|
|
|
Establish policies regarding the Companys
employment and retention of current or former employees of
Deloitte or outsourced internal auditor.
|
|
|
|
With respect to complaints concerning accounting,
internal accounting controls or auditing matters:
|
|
|
|
Review and approve procedures for
receipt, retention and treatment of complaints received by the
Company; and
|
|
|
|
Establish procedures for the
confidential, anonymous submission of complaints to the Audit
Committee.
|
|
|
|
Establish levels for payment by the Company of fees
to Deloitte and any advisors retained by the Audit Committee.
|
|
|
|
Receive regular reports from the Chief Executive
Officer, Chief Financial Officer and from the Companys
disclosure control committee representative on the status of the
Companys disclosure controls and related certifications,
including disclosure of any material weaknesses or significant
deficiencies in the design or operation of internal controls and
any fraud that involves management or other employees with a
significant role in internal controls.
|
|
|
|
Prepare the Report of the Audit Committee for the
Companys Proxy Statement.
|
|
|
|
Although more than one member of the Board of Directors
satisfies the requirements of the audit committee financial
expert, the Board of Directors has identified Ralph F. Hake as
the audit committee financial expert. |
Independence
The Board of Directors has determined that each member of the
Audit Committee meets the independence standards set out in the
Boards Corporate Governance Principles and its Audit
Committee Charter and the requirements of the NYSE currently in
effect and
Rule 10A-3
of the
38
Exchange Act. The Board of Directors has evaluated the
performance of the Audit Committee consistent with the
regulatory requirements.
A copy of the Audit Committee Charter is available on the
Companys website
http://www.itt.com/responsibility/governance/audit/.
The Company will provide, free of charge, a copy of the Audit
Committee Charter to any shareholder, upon request to the
Secretary of ITT.
Compensation
and Personnel Committee
2010 Compensation and Personnel Committee Members are:
|
|
|
|
|
Linda S. Sanford, Chair
Curtis J. Crawford
Ralph F. Hake
Frank T. MacInnis |
|
Meetings in 2010: |
|
6 |
|
|
|
The Committees primary objective is to establish a
competitive executive compensation program that clearly links
executive compensation to business performance and shareholder
return, without excessive enterprise risk. |
|
Responsibilities: |
|
Approve and oversee administration of the
Companys employee compensation program including incentive
plans and equity-based compensation plans.
|
|
|
|
Evaluate senior management and Chief Executive
Officer performance, evaluate enterprise risk and other risk
factors with respect to compensation objectives, set annual
performance objectives for the Chief Executive Officer and
approve individual compensation actions for the Chief Executive
Officer and officers at the vice president level and above, as
well as certain other selected positions.
|
|
|
|
Oversee the establishment and administration of the
Companys benefit programs.
|
|
|
|
Select, retain and determine the terms of engagement
for independent compensation and benefits consultants and other
outside counsel, as needed, to provide independent advice to the
Committee with respect to the Companys current and
proposed executive compensation and employee benefit programs.
In 2010 and prior years, the Committee obtained such advice.
|
|
|
|
Oversee and approve the continuity planning process
and review with the full Board of Directors, which provides
final approval.
|
|
|
|
Regularly report to the Board of Directors on
compensation, benefits, continuity and related matters.
|
|
|
|
Prepare the Compensation Committee Report for the
Companys Proxy Statement.
|
39
|
|
|
|
|
Review regularly and consider the Companys
Inclusion & Diversity strategy and the effectiveness
of related programs and policies.
|
|
|
|
Review its performance and Charter at least annually
and make recommendations to the Board of Directors for approval
and adoption of its Charter.
|
More detail regarding the processes and procedures used to
determine executive compensation is found in the Compensation
Discussion and Analysis starting on page 50.
Independence
The Board of Directors has determined that each member of the
Compensation and Personnel Committee meets the independence
standards set out in the Boards Corporate Governance
Principles and its Compensation and Personnel Committee Charter
and the requirements of the NYSE currently in effect.
A copy of the Compensation and Personnel Committee Charter is
available on the Companys website
http://www.itt.com/responsibility/governance/compensation/.
The Company will provide, free of charge, a copy of the
Compensation and Personnel Committee Charter to any shareholder,
upon request to the Secretary of ITT.
Corporate
Responsibility Committee
2010 Corporate Responsibility Committee Members are:
|
|
|
|
|
John J. Hamre, Chair
Linda S. Sanford
Markos I. Tambakeras |
|
Meetings in 2010: |
|
1 |
|
Responsibilities: |
|
Review and make recommendations concerning the
Companys roles and responsibilities as a good corporate
citizen.
|
|
|
|
Review and consider major claims and litigation
involving the Company and its subsidiaries.
|
|
|
|
Regularly assess the adequacy and effectiveness of
the Companys Code of Corporate Conduct and review any
violations of the Code.
|
|
|
|
Review its performance and Charter at least annually
and make recommendations to the Board of Directors for approval
and adoption of its Charter.
|
The Board of Directors has determined that each member of the
Corporate Responsibility Committee meets the independence
standards set out in the Boards Corporate Governance
Principles and Company By-laws.
A copy of the Corporate Responsibility Committee Charter is
available on the Companys website
http://www.itt.com/responsibility/governance/corporate-responsibility/.
The Company will provide, free of charge, a copy of the
Corporate Responsibility Committee Charter to any shareholder,
upon request to the Secretary of ITT.
40
Nominating
and Governance Committee
2010 Nominating and Governance Committee Members are:
|
|
|
|
|
John J. Hamre, Chair
Curtis J. Crawford
Paul J. Kern
Markos I. Tambakeras |
|
Meetings in 2010: |
|
4 |
|
Responsibilities: |
|
Develop, annually review, update and recommend to
the Board of Directors corporate governance principles for the
Company.
|
|
|
|
In the event it is necessary to select a new chief
executive officer, lead the process for candidate evaluation,
consideration and screening. The full Board of Directors has the
final responsibility to select the Companys chief
executive officer.
|
|
|
|
Evaluate and make recommendations to the Board of
Directors concerning the composition, governance and structure
of the Board.
|
|
|
|
Make recommendations to the Board of Directors
concerning the qualifications, compensation and retirement age
of Directors.
|
|
|
|
Administer the Board of Directors annual
evaluation process.
|
|
|
|
Review and recommend to the full Board matters and
agenda items relating to the Companys Annual Meeting of
shareholders.
|
|
|
|
Review the form of Annual Report to Shareholders,
Proxy Statement and related materials.
|
|
|
|
Review the Companys business continuity and
disaster recovery programs and plans.
|
|
|
|
Review the Companys communication and
advertising program and other activities involving community
relations, major charitable contributions and promotion of the
Companys public image.
|
|
|
|
Determine desired Board and Director skills and
attributes and conduct searches for prospective board members
whose skills and attributes reflect those desired for the Board
of Directors.
|
|
|
|
Identify, evaluate and propose nominees for election
to the Board of Directors.
|
|
|
|
Make recommendations to the Board of Directors
concerning the appointment of Directors to Board Committees and
the selection of Board Committee Chairs.
|
|
|
|
Evaluate and make recommendations regarding senior
management requests for approval to accept membership on outside
boards.
|
41
|
|
|
|
|
Review regularly and consider the Companys
programs and policies for effecting compliance with laws and
regulations involving the environment, safety and health.
|
|
|
|
Provide oversight and discuss with management,
internal auditors and Deloitte the adequacy and effectiveness of
the Companys insurance programs.
|
|
|
|
Review and consider the Companys policies and
efforts with respect to compliance with government contracts,
international laws and regulations and export controls.
|
|
|
|
Review its performance and Charter at least annually
and make recommendations to the Board of Directors for approval
and adoption of its Charter.
|
As described on pages 34 to 35 the Nominating and Governance
Committee will consider director nominees recommended by
shareholders for election to the Companys Board who meet
the qualification standards. (See Section II.E of the
Nominating and Governance Charter at
http://www.itt.com/responsibility/governance/nominating/).
Independence
The Board of Directors has determined that each member of the
Nominating and Governance Committee meets the independence
standards set out in the Boards Nominating and Governance
Committee Charter, its Corporate Governance Principles and the
requirements of the NYSE currently in effect.
A copy of the Nominating and Governance Committee Charter is
available on the Companys website
http://www.itt.com/responsibility/governance/nominating/.
The Company will provide, free of charge, a copy of the
Nominating and Governance Committee Charter to any shareholder,
upon request to the Secretary of ITT.
Strategy
and Finance Committee
2010 Strategy and Finance Committee Members are:
|
|
|
|
|
Markos I. Tambakeras, Chair
Christina A. Gold
John J. Hamre
Paul J. Kern
Surya N. Mohapatra |
|
Meetings in 2010: |
|
4 |
|
Responsibilities: |
|
Receive periodic updates on global macroeconomic
issues.
|
|
|
|
Review and consider the Companys:
|
|
|
|
Strategic plans;
|
|
|
|
Operations excellence performance;
|
|
|
|
Operating plan;
|
|
|
|
Capital structure, including stock
repurchases, debt offerings and financing, and dividends;
|
|
|
|
Corporate guarantees;
|
|
|
|
Acquisition integration;
|
42
|
|
|
|
|
Pension plan performance, style and
asset allocation and ERISA compliance;
|
|
|
|
Tax compliance, tax planning and related
matters;
|
|
|
|
Commodity hedge transactions and
strategies;
|
|
|
|
Investor relations matters;
|
|
|
|
Risk assessment with respect to
financial liquidity and financing; and
|
|
|
|
Strategic issues.
|
|
|
|
Review and recommend for approval significant
business acquisitions and divestitures, and other related
matters.
|
|
|
|
Review and assess its performance on an annual basis.
|
|
|
|
Review and approve its Charter at least annually and
make recommendations to the Board of Directors for approval and
adoption of its Charter.
|
|
|
|
The Strategy and Finance Committee oversees all areas of
strategy and corporate finance to ensure the Company maintains
adequate financial liquidity and appropriate credit ratings and
to ensure the Companys strategic initiatives are
consistent with the Companys financial and strategic
plans. The Board of Directors retains the ultimate power and
authority with respect to strategic direction and major
strategic and financial decisions. |
Independence
The Board of Directors has determined that each member of the
Strategy and Finance Committee meets the independence standards
set out in the Boards Corporate Governance Principles and
the Strategy and Finance Committee Charter.
A copy of the Strategy and Finance Committee Charter is
available on the Companys website
http://www.itt.com/responsibility/governance/strategy-finance/.
The Company will provide, free of charge, a copy of the Strategy
and Finance Committee Charter to any shareholder, upon request
to the Secretary of ITT.
Special
Litigation Committee
On April 17, 2007, ITTs Board of Directors received a
letter on behalf of a shareholder requesting that the Board take
appropriate action against the employees responsible for the
violations at our Night Vision facility described above. During
2007 and 2008, the Company also received notice of four
shareholder derivative actions each filed in the
U.S. District Court for the Southern District of
New York. On July 10, 2010, the Court granted
ITTs Motion to Terminate the proceedings. This matter is
concluded.
Meetings
of the Board and Committees
During 2010, there were five regularly scheduled Board meetings
and 25 meetings of standing Committees. All Directors
attended at least 75% of the aggregate of all meetings of the
Board and standing Committees on which they served. It is
Company practice that all Directors attend the Companys
Annual Meeting. All Directors attended the Companys 2010
Annual Meeting. For 2011, the Board has scheduled five regular
meetings. In conjunction with the regular meetings, those
Directors who are not employees of ITT are scheduled to meet
privately (without
43
management) following each Board meeting during the year. The
Independent Presiding Director presides over these private
meetings.
2010
Non-Management Director Compensation
The following table represents the 2010 grant date fair value of
Non-Management Director compensation computed in accordance with
GAAP. As discussed in more detail in the narrative following the
table, all Non-Management Directors receive the same cash,
stock, and options awards for service as a Non-Management
Director (except Mr. MacInnis as the Audit Committee Chair
received an additional $10,000 cash payment). Mr. Loranger,
as an employee Director, does not receive compensation for his
Board service. The grant date fair value of stock awards and
option awards granted to Non-Management Directors in 2010 is
provided in footnotes (c) and (d) to the table. Stock awards are
composed of restricted stock units. Option awards are composed
of non-qualified stock options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
Name
|
|
Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Total
|
(a)
|
|
(b) ($)
|
|
(c) ($)
|
|
(d) ($)
|
|
(g) ($)
|
|
(h) ($)
|
|
Curtis J. Crawford
|
|
|
90,000
|
|
|
|
90,192
|
|
|
|
40,126
|
|
|
|
|
|
|
|
220,318
|
|
Christina A. Gold
|
|
|
90,000
|
|
|
|
90,192
|
|
|
|
40,126
|
|
|
|
|
|
|
|
220,318
|
|
Ralph F. Hake
|
|
|
90,000
|
|
|
|
90,192
|
|
|
|
40,126
|
|
|
|
|
|
|
|
220,318
|
|
John J. Hamre
|
|
|
90,000
|
|
|
|
90,192
|
|
|
|
40,126
|
|
|
|
|
|
|
|
220,318
|
|
Paul J. Kern
|
|
|
90,000
|
|
|
|
90,192
|
|
|
|
40,126
|
|
|
|
|
|
|
|
220,318
|
|
Frank T. MacInnis
|
|
|
100,000
|
|
|
|
90,192
|
|
|
|
40,126
|
|
|
|
|
|
|
|
230,318
|
|
Surya N. Mohapatra
|
|
|
90,000
|
|
|
|
90,192
|
|
|
|
40,126
|
|
|
|
|
|
|
|
220,318
|
|
Linda S. Sanford
|
|
|
90,000
|
|
|
|
90,192
|
|
|
|
40,126
|
|
|
|
|
|
|
|
220,318
|
|
Markos I. Tambakeras
|
|
|
90,000
|
|
|
|
90,192
|
|
|
|
40,126
|
|
|
|
|
|
|
|
220,318
|
|
|
|
|
(b) |
|
Fees earned may be paid, at the election of the Director, in
cash or deferred cash. Non-Management Directors may irrevocably
elect deferral into an interest-bearing cash account or an
account that tracks an index of the Companys stock.
Mr. MacInnis received an additional $10,000 as the Audit
Committee Chair. |
|
(c) and (d) |
|
Awards reflect the grant date fair value computed in accordance
with Financial Accounting Standards Board Accounting Standards
Codification (FASB ASC) Topic 718, Stock
Compensation. Non-Management Directors do not receive differing
amounts of equity compensation, the grant date fair value for
restricted stock units was $52.59 and was determined on
May 11, 2010, the date of the Companys Annual
Meeting. The grant price reflects the closing price of ITT stock
on the grant date. The grant date fair value of
non-qualified
stock options was $14.03, determined on March 5, 2010, the
date on which Director stock options were awarded. The
assumptions used in calculating these values may be found in
Note 17, Long-Term Incentive Employee Compensation, to the
Consolidated Financial Statements in the Companys 2010
Form 10-K. |
|
(g) |
|
No perquisites or other personal benefits were received by
Non-Management Directors. |
44
The following table represents restricted common stock and stock
options outstanding as of December 31, 2010 for
Non-Management Directors. Outstanding restricted common stock
awards include unvested restricted stock units and vested but
deferred restricted stock units.
Non-Management
Director Restricted Common Stock and
Stock Option Awards Outstanding at 2010 Fiscal
Year-End
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
Outstanding
|
Non-Management
|
|
Restricted Common
|
|
Stock Option
|
Director Name
|
|
Stock Awards
|
|
Awards
|
|
Curtis J. Crawford
|
|
|
22,160
|
|
|
|
26,130
|
|
Christina A. Gold
|
|
|
23,026
|
|
|
|
26,130
|
|
Ralph F. Hake
|
|
|
10,466
|
|
|
|
22,570
|
|
John J. Hamre
|
|
|
14,224
|
|
|
|
26,130
|
|
Paul J. Kern
|
|
|
3,910
|
|
|
|
9,050
|
|
Frank T. MacInnis
|
|
|
13,314
|
|
|
|
26,130
|
|
Surya N. Mohapatra
|
|
|
3,412
|
|
|
|
10,470
|
|
Linda S. Sanford
|
|
|
8,591
|
|
|
|
26,130
|
|
Markos I. Tambakeras
|
|
|
4,674
|
|
|
|
26,130
|
|
On May 10, 2010, the Board of Directors approved
compensation for Non-Management Directors consistent with
allocation recommendations provided by Towers Watson, a
compensation consultant the Nominating and Governance Committee
had retained in 2008. The components of Non-Management Director
compensation are weighted toward restricted stock or restricted
stock units and stock option awards to align the interests of
Non-Management Directors with shareholders of the Company. As
approved in 2008, for payment in 2010, Non-Management Directors
received total annual compensation valued at approximately
$220,000 when awarded, as follows:
|
|
|
$90,000 payable at the election of each Non-Management Director
in cash or deferred cash. Directors choosing deferred cash
payment may irrevocably elect to have the deferred cash
deposited into an interest-bearing cash account, at an interest
rate determined as of the Companys next Annual Meeting, or
deposited into an account that tracks an index of the
Companys common stock. No deferred compensation selections
provide for preferential treatment for Directors;
|
|
|
Approximately
2/3
of the remainder provided in the form of restricted stock units
(such restricted stock units payable in shares following the
Non-Management Directors termination of service on the
Board of Directors or on a date selected by the
Director); and
|
|
|
Approximately
1/3
of the remainder provided in the form of non-qualified stock
options (vesting over a three-year period in one-third
installments on the anniversary of the date of grant).
|
Additionally, the Board of Directors approved (with the Audit
Committee Chair abstaining) a supplemental retainer of $10,000
payable in cash to Mr. MacInnis, the 2010 Audit Committee
Chair, effective as of the Companys 2010 Annual Meeting to
reflect the significant responsibilities and time commitments
associated with leadership of the Audit Committee.
The number of restricted stock units granted in May 2010 to all
Non-Management Directors under the Non-Management Director
compensation program, adopted in 2003, was determined by
dividing $90,000 by $52.48, the average of the high and low
trading prices per share of ITT common stock on May 11,
2010, the date of the 2010 Annual Meeting. The resulting number
of restricted stock units, 1,715, was rounded up to the nearest
whole unit. Directors receive dividend equivalents on the
restricted stock units but have no other rights as shareholders
with respect to the restricted stock units. Non-Management
Director non-qualified stock option grants are priced and
awarded on the same day as employee stock options are priced and
awarded. The grant date fair value of Non-Management
Directors non-qualified stock options is calculated using
a binomial
45
lattice valuation model. The exercise price of Non-Management
Directors non-qualified stock options granted reflects the
closing price of ITT common stock on March 5, 2010, the
grant date.
The Board of Directors typically reviews Non-Management Director
compensation on a biennial basis. They last reviewed
Non-Management Director compensation in 2010. In 2010, the
Nominating and Governance Committee retained Pay Governance LLC,
a compensation consulting firm to assist with a review of
compensation for Non-Management Directors. As part of its
review, Pay Governance compared Non-Management Director
compensation components and total director compensation paid
with director compensation components and total director
compensation paid for those companies in the
S&P®
Industrials Companies with revenue comparable to ITT as
referenced in Appendix A. Upon the recommendation of
Pay Governance and after review, the Nominating and Governance
Committee and the Compensation and Personnel Committee
recommended, and the full Board of Directors approved, an
increase in overall Non-Management Director cash compensation to
raise Director compensation to a level closer to the median of
companies in the
S&P®
Industrials Companies with revenues comparable to ITT. The Board
approved Non-Management Director compensation changes to be
effective with the Companys 2011 Annual Meeting to
increase the cash component of the Non-Management Director
compensation to $100,000, to provide for an equity retainer
solely in the form of restricted stock units of $150,000 and to
provide the Audit Committee Chair with an additional cash
payment in the amount of $15,000.
Restricted shares previously awarded under the ITT 1996
Restricted Stock Plan for Non-Employee Directors (the 1996
Plan), which preceded the 2003 Plan, and under which
restricted shares are still outstanding, provided that each
Directors restricted shares are held in escrow and may not
be transferred in any manner until one of the following events
occurs:
|
|
|
|
|
the fifth anniversary of the grant of the shares unless extended
as described below;
|
|
|
|
the Director retires at age 72;
|
|
|
|
there is a Change of Control of the Company;
|
|
|
|
the Director becomes disabled or dies;
|
|
|
|
the Directors service is terminated in certain specified,
limited circumstances; or
|
|
|
|
any other circumstance in which the Compensation and Personnel
Committee believes, in its sole discretion, that the purposes
for which the grants of restricted stock were made have been
fulfilled and, as such, is consistent with the intention of the
Plan.
|
Under the 2003 Plan and the 1996 Plan, Non-Management Directors
may choose to extend the restriction period for not more than
two successive five-year periods, or until six months and one
day following the Non-Management Directors termination
from service from the Board under certain permitted
circumstances.
The 1996 Plan also provided if a Director ceased serving on the
Board under any other circumstances, shares with respect to
which the 1996 Plan restrictions have not been lifted would be
forfeited. Under the 2003 Plan, the period of restriction for
restricted stock granted is five years. The Compensation and
Personnel Committee may determine that a Director, whose service
from the Board is terminated, has fulfilled the purpose for
which the grant of restricted stock was made and lift the
restriction for all or a portion of restricted stock grants.
Time and form of payment for outstanding restricted stock
received after 2004, as well as elections to have the cash
retainer deferred after 2004, have been modified, with the
consent of each Director, to comply with Section 409A of
the Internal Revenue Code of 1986, as amended
(Section 409A). Section 409A is an
Internal Revenue Code section that deals specifically with
non-qualified deferred compensation plans and provides
requirements and rules for timing of deferrals and distributions
under those plans.
ITT reimburses Directors for expenses they incur to travel to
and from Board, Committee and shareholder meetings and for other
Company-business related expenses (including travel expenses
46
of spouses if they are specifically invited to attend an event
for appropriate business purposes). Such travel may include use
of the Company aircraft, if available and approved in advance by
the Chairman of the Board and Chief Executive Officer. Director
airfare is reimbursed at no greater than first-class travel
rates.
Indemnification and Insurance. As permitted by
its By-laws, ITT indemnifies its Directors to the full extent
permitted by law and maintains insurance to protect the
Directors from liabilities, including certain instances where it
could not otherwise indemnify them. All Directors are covered
under a non-contributory group accidental death and
dismemberment policy that provides each of them with $1,000,000
of coverage. They may elect to purchase additional coverage
under that policy. Non-Management Directors also may elect to
participate in an optional non-contributory group life insurance
plan that provides $100,000 of coverage.
Report of
the Audit Committee
The following Report of the Audit Committee does not
constitute soliciting material and the Report should not be
deemed filed or incorporated by reference into any other
previous or future filings by the Company under the Securities
Act of 1933 or the Exchange Act of 1934, except to the extent
the Company specifically incorporates this Report by reference
therein.
Role of the Audit Committee. The Audit
Committee of the Board of Directors provides oversight on
matters relating to the Companys financial reporting
process and ensures that the Company develops and maintains
adequate financial controls and procedures, and monitors
compliance with these processes. This includes responsibility
for, among other things:
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determination of qualifications and independence of
Deloitte & Touche LLP (Deloitte);
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the appointment, compensation and oversight of Deloitte in
preparing or issuing audit reports and related work;
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review of financial reports and other financial information
provided by the Company, its systems of internal accounting and
financial controls, and the annual independent audit of the
Companys financial statements;
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oversight and review of procedures developed for consideration
of accounting, internal accounting controls and auditing-related
complaints;
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review of risk assessment and risk management processes on a
company-wide basis; and
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adoption of and monitoring the implementation and compliance
with the Companys Non-Audit Services Policy.
|
The Audit Committee also has oversight responsibility for
confirming the scope and monitoring the progress and results of
internal audits conducted by the Companys internal
auditor. The Audit Committee discussed with the Companys
internal auditors and Deloitte the plans for their respective
audits. The Audit Committee met with the internal auditors and
Deloitte, with and without management present, and discussed
results of their examinations, their evaluation of the
Companys internal controls, and the Companys
financial reporting.
The Companys management has primary responsibility for the
financial statements, including the Companys system of
disclosure and internal controls. The Audit Committee may
investigate any matter brought to its attention. In that regard,
the Audit Committee has full access to all books, records,
facilities and personnel of the Company and the Audit Committee
may retain outside counsel, auditors or other independent
experts to assist the Committee in performing its
responsibilities. Any individual may also bring matters to the
Audit Committee confidentially or on an anonymous basis, by
submitting the matter in a sealed envelope addressed to the
Audit Committee to the Corporate Secretary who then
forwards the sealed envelope to the Audit Committee.
47
Sarbanes-Oxley Act of 2002 (SOX)
Compliance. The Audit Committee has
responsibility for monitoring all elements of the Companys
compliance with Sections 302 and 404 of SOX relating to
internal control over financial reporting.
Audit Committee Charter. The Board of
Directors has adopted a written charter for the Audit Committee,
which the Board of Directors and the Audit Committee review, and
at least annually update and reaffirm. The Charter sets out the
purpose, membership and organization, and key responsibilities
of the Audit Committee.
Composition of the Audit Committee. The Audit
Committee comprises five members of the Companys Board.
The Board of Directors has determined that each Audit Committee
member meets the independence standards set out in the Audit
Committee Charter and in the Companys Corporate Governance
Principles and the requirements of the New York Stock Exchange
currently in effect, including the audit committee independence
requirements of
Rule 10A-3
of the Exchange Act. No member of the Audit Committee has any
relationship with the Company that may interfere with the
exercise of independence from management and the Company. All
members of the Audit Committee, in the business judgment of the
full Board of Directors, are financially literate and several
have accounting or related financial management expertise.
Regular Review of Financial Statements. During
2010, the Audit Committee reviewed and discussed the
Companys audited financial statements with management. The
Audit Committee, management and Deloitte reviewed and discussed
the Companys unaudited financial statements before the
release of each quarters earnings report and filing on
Form 10-Q,
and the Companys audited financial statements before the
annual earnings release and filing on
Form 10-K.
Communications with Deloitte. The Audit
Committee has discussed with Deloitte the matters required to be
discussed by required to be discussed by the statement on
Auditing Standards No. 61, as amended (AICPA,
Professional Standards, Vol. 1. AU
section 380) as adopted by the Public Company
Accounting Oversight Board in Rule 3200T (SAS
61) . These discussions included all matters required by
SAS 61, including Deloittes responsibilities under
generally accepted auditing standards in the United States,
significant accounting policies and management judgments, the
quality of the Companys accounting principles and
accounting estimates. The Audit Committee met privately with
Deloitte four times during 2010.
Independence of Deloitte. Deloitte is directly
accountable to the Audit Committee and the Board of Directors.
The Audit Committee has received the written disclosures and the
letter from the Deloitte required by applicable requirements of
the Public Company Accounting Oversight Board regarding
Deloittes communications with the Audit Committee
concerning independence and has discussed with Deloitte their
independence from management and the Company, any disclosed
relationships and the impact of those relationships on
Deloittes independence.
Recommendation Regarding Annual Report on
Form 10-K. In
performing its oversight function with regard to the 2010
financial statements, the Audit Committee relied on financial
statements and information prepared by the Companys
management. It also relied on information provided by the
internal audit staff as well as Deloitte. The Audit Committee
reviewed and discussed with management the Companys
audited financial statements as of and for the year ended
December 31, 2010. Based on these discussions, and the
information received and reviewed, the Audit Committee
recommended to the Companys Board of Directors that the
financial statements be included in the 2010 Annual Report on
Form 10-K.
This report is furnished by the members of the Audit Committee.
Frank T. MacInnis, Chair
Christina A. Gold
Ralph F. Hake
Surya N. Mohapatra
Linda S. Sanford
48
Compensation
Committee Report
The following Report of the Compensation and Personnel
Committee does not constitute soliciting material and the Report
should not be deemed filed or incorporated by reference into any
other previous or future filings by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent the Company specifically incorporates this
Report by reference therein.
ITTs Compensation and Personnel Committee approves and
oversees administration of the Companys executive
compensation program and senior leadership development and
continuity programs. The Committees primary objective is
to establish a competitive executive compensation program that
clearly links executive compensation to business performance and
shareholder return. The Compensation and Personnel Committee
considers appropriate risk factors in structuring compensation
to discourage unnecessary or excessive risk-taking behaviors and
encourage long-term value creation.
Recommendation
Regarding Compensation Discussion and Analysis
In performing its oversight function during 2010 with regard to
the Compensation Discussion and Analysis prepared by management,
the Compensation and Personnel Committee relied on statements
and information prepared by the Companys management. It
also relied on information provided by Pay Governance, LLC, the
compensation consultant to the Committee. The Committee reviewed
and discussed the Compensation Discussion and Analysis included
in this proxy statement with management. Based on this review
and discussion, the Compensation and Personnel Committee
recommended to the Companys Board of Directors that the
Compensation Discussion and Analysis be included in the
Companys Annual Report on
Form 10-K
for 2010 and this Proxy Statement.
This report is furnished by the members of the Compensation and
Personnel Committee.
Linda S. Sanford, Chair
Curtis J. Crawford
Ralph F. Hake
Frank T. MacInnis
49
Compensation
Discussion and Analysis
ITTs Compensation and Personnel Committee (the
Committee) approves and oversees administration of
the Companys executive compensation program. In this
Compensation Discussion and Analysis, we explain the
Committees executive compensation philosophy and
objectives for each of the Named Executive Officers
(NEOs), describe all elements of the Companys
executive compensation program, and explain why the Committee
selected each compensation component.
Executive
Summary NEO Compensation
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1. |
NEO Compensation Tied to Internal Business Performance and
Long-Term Share Price Performance
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ITTs compensation philosophy ties a substantial portion of
NEO compensation to internal business performance and share
price performance. Compensation design for NEOs is structured to
achieve long-term shareholder value creation without undue
business risk. If internal business performance or share price
performance falls below identified thresholds, at-risk
compensation is reduced or not paid at all.
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2. |
Pay for Performance Compensation At Risk
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The Companys share price performance significantly lagged
industrial companies in the TSR Performance Index (the S&P
Industrials Companies, without consideration of utility and
transportation service industries, (described herein as the
TSR Performance Index)) for the
2008-2010
Total Shareholder Return (TSR) award performance
period (TSR is an element of NEO compensation based on relative
share price performances over three years). The payout for TSR
awards for this performance period was zero, as the
Companys total shareholder return over the three year
measurement period, ending December 31, 2010 was ranked at
the 25.89 percentile relative to the TSR Performance Index.
This rank was below the threshold required for any payment.
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In 2010, the Companys internal business performance was
strong, resulting in an Annual Incentive Plan (AIP)
payout above target (where target is 100%). The AIP award is an
element of NEO compensation which rewards annual operating
performance and earnings per share appreciation. The 2010 AIP
emphasized total Company performance and collaboration among
businesses.
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Stock option and restricted stock grants directly tie NEO
compensation to absolute share price performance.
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3. |
Changes in the NEO Compensation Program
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Tax reimbursements for financial counseling have been eliminated
for financial counseling and tax preparation associated with the
2011 tax year. No compensating salary increase will be provided.
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In 2011, the Committee determined to award restricted stock
units, rather than restricted stock. This change was made to
provide more uniform tax treatment on a global basis.
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The Committee has adopted an executive compensation program
which reflects best pay practices in light of the business needs
of the Company.
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Recoupment Policy (p. 67)
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Officer Stock Ownership Guidelines (p. 6)
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Policy Prohibits Speculation in Company Stock (p. 52)
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50
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Independent Compensation Consultant Advises the Committee
(p. 52)
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No Repricing or Replacing of Stock Options Without Shareholder
Approval (p. 63)
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Business Risk and Compensation. In 2010, as in
past years, the Committee evaluated risk factors associated with
the Companys businesses in determining compensation
structure and pay practices. The structure of the Board of
Director Committees facilitates this evaluation and
determination. During 2010, the Chair of the Committee was a
member of the Audit Committee and the Audit Committee Chair was
a member of the Committee. This membership overlap provides
insight into the Companys business risks and affords the
Committee access to the information necessary to consider the
impact of business risks on compensation structure and pay
practices. Further, overall enterprise risk is considered and
discussed at Board meetings, providing additional important
information to the Committee. The Chairman, President and Chief
Executive Officer and Chief Financial Officer attend those
portions of the Committee meetings at which plan features and
design configurations of the Companys annual and long-term
incentive plans are considered and approved.
Compensation across the enterprise is structured so that
unnecessary or excessive risk-taking behavior is discouraged.
Further, total compensation for senior officers is heavily
weighted toward long-term compensation consistent with the
Companys compensation philosophy, which is focused on
long-term value creation. This long-term weighting discourages
behaviors that encourage short-term risks.
Named Executive Officer Compensation. Annual
base salary, annual incentives, and long-term incentives provide
the foundation for NEO compensation. Additional compensation
components, which supplement these foundational components, are
also discussed in this Compensation Discussion and Analysis.
The following table summarizes representative compensation
components or policies and relevant risk mitigation factors:
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Compensation Component or
Policy
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Risk Mitigation Factor
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Salary
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Based on market rates.
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Provides stability and minimizes
risk-taking incentives.
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Annual Incentive Plan
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AIP design emphasizes overall
performance and collaboration among business Groups. The
Companys Fluid Technology, Motion & Flow Control and
Defense & Information Solutions businesses are each a
business segment or (Group).
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AIP components focus on metrics which
encourage operating performance and earnings per share
appreciation.
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AIP design tailored to meet unique
business considerations for Corporate headquarters and business
Groups.
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Individual AIP components and total AIP
awards are capped.
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Long-Term Incentive Awards
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The three-year vesting threshold for
senior vice presidents and the Chief Executive Officer and seven
and ten-year option terms encourage long-term behaviors.
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Restricted Stock or
Restricted Stock Units
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Restricted stock or restricted stock
units generally vest after three years.
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Stock Options
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Stock options vest after three years for
the Chief Executive Officer and for senior vice presidents and
in one-third cumulative annual installments after the first,
second and third anniversary of the grant date for other
optionees. Options awarded in 2010 and 2011 and options awarded
prior to 2005 expire ten years after the grant date. Options
awarded between 2005 and 2009 expire seven years after the grant
date.
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Total Shareholder
Return Awards
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The TSR long-term award is based on
three-year share price performance and encourages behaviors
focused on long-term goals, while discouraging behaviors focused
on short-term risks.
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51
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Compensation Component or
Policy
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Risk Mitigation Factor
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Perquisites
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Limited perquisites are based on competitive market data. The
Committee has determined that tax reimbursements related to
financial counseling and tax preparation for senior executives
associated with the 2011 tax year will be eliminated. No salary
increase will be provided to offset the elimination of tax
reimbursement.
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Severance and Pension benefits
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Severance and pension benefits are in line with competitive
market data.
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Recoupment Policy
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Provides mechanism for senior executive compensation recapture
in certain situations involving fraud or willful misconduct.
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Officer Share Ownership Guidelines
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Company officers are required to own Company shares or share
equivalents up to 5x base salary, depending on the level of the
officer (discussed on page 6). Share ownership guidelines
align executive and shareholder interests. Company policy
prohibits speculative trading in and out of ITT securities,
including prohibitions on short sales and leverage transactions,
such as puts, calls, and listed and unlisted options.
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Independent Compensation Consultant: In 2010,
the Committee retained Pay Governance LLC as its independent
compensation consultant (Pay Governance or the
Compensation Consultant). Pay Governance LLC
provides independent consulting services in support of the
Compensation and Personnel Committees charter, the
material terms of which are described beginning on page 39.
The Compensation Consultant also provided independent consulting
services in support of the Nominating and Governance Committee
charter including providing competitive data on director
compensation, the material terms of which are described
beginning on page 41.
The Compensation Consultants engagement leader provided
objective expert analyses, assessments, research and
recommendations for executive and non-executive employee
compensation programs, incentives, perquisites, and compensation
standards. In this capacity, the Compensation Consultant
provided services that related solely to work performed for and
at the direction of the Committee including analysis of material
prepared by the Company for the Committees review. In
2010, the Companys human resources, finance and legal
departments supported the work of the Committee, provided
information, answered questions and responded to requests.
Additionally, the Compensation Consultant provided analyses to
the Nominating and Governance Committee and the full Board of
Directors on Non-Management Director compensation. The
Compensation Consultant provided no other services to the
Company during 2010.
Fees for Compensation Consultant:
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Services performed that related solely to work performed for,
and at the direction of, the Committee or the Nominating and
Governance Committee, and analyses of documents prepared by
management for the Committees review during 2010:
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$308,460
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Other services performed for the Company during 2010:
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$0
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The Committee annually reviews the Compensation
Consultants independence and engaged in such a review in
2010. Based on that review, the Committee determined the
Compensation Consultant was independent. The Committee has sole
authority to retain and terminate the Compensation Consultant
with respect to compensation matters and the Nominating and
Governance Committee has sole authority to retain and terminate
the Compensation Consultant with respect to nominating and
governance matters.
Our
Executive Compensation Program
Overall compensation policies and programs. In
2010, as in past years, the Committee looked to competitive
market compensation data for companies comparable to ITT to
establish overall polices and programs that address executive
compensation, benefits and perquisites. This review included
analysis of the Towers Watson Compensation Data Bank
(CDB) information provided by the Compensation
Consultant. The analyses used a sample of 174 companies
from the
S&P®
52
Industrials Companies that were available in the CDB. The
compensation data from these companies were evaluated by the
Compensation Consultant for differences in the scope of
operation as measured by annual revenue. Appendix A
to this Proxy Statement lists the sample of companies from the
S&P®
Industrials Companies that were used in the CDB analyses. The
Committee believes that these 174 companies most closely
reflect the labor market in which ITT competes for talent.
The Committee has delegated to the Companys senior human
resources executive responsibility for administering the
executive compensation program. During 2010, the Companys
Chief Executive Officer, senior human resources executive, as
well as other senior executives, made recommendations to the
Committee regarding executive compensation actions and incentive
awards. The Committee reviewed each compensation element for the
Chief Executive Officer and other NEOs, and made the final
determination regarding executive compensation for these
officers using the processes described in this Compensation
Discussion and Analysis. The Committee believes the
Companys compensation programs reflect the Companys
overarching business rationale and are designed to be
reasonable, fair, fully disclosed, and consistently aligned with
long-term value creation. The Committee further believes this
compensation philosophy encourages individual and group
behaviors that balance risk and reward and assist the Company in
achieving steady, sustained growth and earnings performance.
Individual executive positions. The
Companys senior management positions, including each of
its NEO positions, were compared to positions with similar
attributes and responsibilities based on the CDB information.
This information was used to provide the market median dollar
value for annual base salary, annual incentives and long-term
incentives. The Committee used the CDB, along with other
qualitative information, described on page 54, in making
its determination of target and actual compensation provided to
each of the Companys NEOs. The Committee generally targets
total compensation and each compensation component at the
competitive median of the CDB sample group, but may consider
deviations from the competitive median depending on a
positions strategic value, the Companys objectives
and strategies, and individual experience and performance in the
position. The Committee may, but is not required to, consider
prior years compensation, including short-term or
long-term incentive payouts, restricted stock vesting or option
exercises in compensation decisions for the NEOs.
Except as discussed below, NEO 2010 total compensation, which
consists of base salary, AIP target opportunities, regular
annual stock option and restricted stock (or restricted stock
unit grants in 2011) based on grant date fair value and TSR
award target opportunities, were generally aligned, individually
and in the aggregate, with the competitive median compensation
levels reflected in the CDB survey described on pages 52 to
53 of this 2011 Proxy Statement.
Most of the deviations from the competitive median compensation
levels were within what the Committee considered to be a
competitive range of approximately 10% above or below the market
median. Deviations beyond this competitive range were primarily
related to the relatively short tenure of Ms. Ramos,
Ms. McClain, Mr. Melcher and Mr. Jimenez in their
current positions and a desire to tie a significant portion of
Mr. Lorangers compensation to the achievement of
sustained, long-term company performance.
53
The following chart sets out 2010 total target NEO compensation
for annual base salary, annual incentive, long-term incentive
and total compensation relative to the competitive market
median. Percentages of the market median between 90% and 110%
are considered to be at the market median.
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Annual Base Salary
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Annual Incentive Target
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Long-Term Incentive
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Total Compensation
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Named Executive
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Position as Percentage of
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Position as Percentage of
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Position as Percentage of
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Position as Percentage of
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Officer and Title
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Market Median
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Market Median
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Market Median
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Market Median
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Steven R. Loranger,
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96%
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91%
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112%
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105%
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Chairman, President and Chief Executive Officer
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Above targeted percentage
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Denise L. Ramos, SVP
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98%
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100%
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82%
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90%
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and Chief Financial Officer
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Below targeted percentage
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Gretchen W. McClain,
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96%
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94%
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84%
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89%
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SVP and President, Fluid and Motion Control
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Below targeted percentage
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Below targeted percentage
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David F. Melcher, SVP
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91%
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83%
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70%
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77%
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and President, Defense and Information Solutions
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Below targeted percentage
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Below targeted percentage
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Below targeted percentage
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Frank R. Jimenez, VP
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82%
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66%
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50%
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61%
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and General Counsel
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Below targeted percentage
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Below targeted percentage
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Below targeted percentage
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Below targeted percentage
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Our compensation cycle. Compensation is
reviewed in detail every year during the first quarter. This
review includes:
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Annual performance reviews for the prior year,
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Base salary merit increases normally established in
March,
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AIP target awards, and
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Long-term incentive target awards (including stock options,
restricted stock or restricted stock units and TSR awards).
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The actual award date of stock options, restricted stock or
restricted stock units and target TSR awards is determined on
the date on which the Committee approves these awards. In recent
years, this date has been in March. TSR awards reflect a
performance period starting on January 1 of the year in
which the Committee approved the TSR award. Restricted stock or
restricted stock units, TSR and stock option award recipients
receive communication of the award as soon as reasonably
practical after the grant date of the award. The Committee
reviewed and assessed the performance of the Companys NEOs
during 2010. The Committee will continue to review and assess
the performance of the Chief Executive Officer and all senior
executives and authorize salary actions it believes are
appropriate and commensurate with relevant competitive data and
the approved salary program.
Qualitative considerations. The Company
considers individual performance, including consideration of the
following qualitative performance factors, in addition to the
quantitative measures discussed in this Compensation Discussion
and Analysis. While there is no formal weighting of qualitative
factors, the following factors may be considered important in
making compensation decisions:
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Portfolio Repositioning,
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Differentiated Organic Growth,
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Strategic Execution, and
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Cultural Transformation.
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54
Compensation
Program Objectives
The following sections, including material supplied in tabular
form, provide more information about our compensation program,
and its objectives, general principles and specific approaches.
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How We Achieve Our Objectives
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Objective
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General Principle
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Specific Approach
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Attract and retain well-rounded, capable leaders.
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Design our executive compensation program to attract, reward and
retain capable executives. Design total executive compensation
to provide a competitive balance of salary, short-term and
long-term incentive compensation.
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The Companys overarching philosophy is to target total
compensation at the competitive median of the CDB. We consider
total compensation (salary plus short-term and long-term
compensation) when determining each component of NEO
compensation.
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Match compensation components to the Companys short-term
and long-term operating and strategic goals.
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In addition to salary, we include short-term and long-term
performance incentives in our compensation program.
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We believe the mix of short-term and long-term performance-based
incentives focuses executive behavior on annual performance and
operating goals, as well as strategic business objectives that
will promote long-term shareholder value creation.
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Provide a clear link between at-risk compensation with business
performance.
|
|
|
We believe the measures of performance in our compensation
programs must be aligned with measures key to the success of our
businesses. The clear link between compensation and performance
is intended to provide incentives for achieving performance and
business objectives and increasing the long-term value of the
Companys stock. If our businesses succeed, our
shareholders will benefit.
|
|
|
The Company links compensation and performance through its
long-term incentive program, comprised of restricted stock or
restricted stock unit awards, non-qualified stock options awards
and total shareholder return target awards. If performance goals
are not met, at-risk compensation is reduced or not paid at all.
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|
Align at-risk compensation with levels of executive
responsibility.
|
|
|
As executives move to greater levels of responsibility, the
proportion of compensation at risk, whether through annual
incentive plans or long-term incentive programs, increases in
relation to the increased level of responsibility.
|
|
|
NEO compensation is structured so that a substantial portion of
compensation is at risk for executives with greater levels of
responsibility. The Committee considered allocation of
short-term and long-term compensation, cash and non-cash
compensation and different forms of non-cash compensation for
NEOs based on its assessment of the proper compensation balance
needed to achieve the Companys short-term and long-term
goals. The Compensation Consultant compiled and analyzed data
that the Committee considered in weighting compensation
components for each of the NEOs.
|
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|
Tie short-term executive compensation to specific business
objectives.
|
|
|
The AIP performance metrics are designed to further the
Companys total enterprise objectives. By linking AIP
performance to total enterprise performance, collaboration
across the enterprise is rewarded.
|
|
|
The AIP sets out short-term performance components. If specific
short-term performance goals are met, cash payments that reflect
performance across the enterprise may be awarded.
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|
Tie long-term executive compensation to increasing shareholder
return.
|
|
|
The long-term incentive award programs link executive
compensation to increases in absolute shareholder return or
relative shareholder return against industrial peers.
|
|
|
Long-term executive compensation is comprised of restricted
stock or restricted stock units, stock options and target TSR
cash awards that are tied to the achievement of three-year
relative total shareholder return goals.
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|
55
|
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|
How We Achieve Our Objectives
|
Objective
|
|
|
General Principle
|
|
|
Specific Approach
|
Provide reasonable and competitive benefits and perquisites.
|
|
|
Make sure that other employee benefits, including perquisites,
are reasonable in the context of a competitive compensation
program.
|
|
|
NEOs participate in many of the same benefit plans with the same
benefit plan terms as other employees. Certain other benefit
plans are available to NEOs and described more fully on
pages 82 to 85. The Compensation Consultant provides survey
data on perquisites to the Committee. Perquisites provided to
NEOs are designed to be consistent with competitive practice and
are regularly reviewed by the Committee. Mr. Loranger has a
Special Pension Arrangement discussed on page 83 of this
Proxy Statement.
|
|
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|
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|
Primary
Compensation Components
The following sections, including information supplied in
tabular form, provide information about Base Salary, the AIP and
Long-Term Incentive Target Awards.
BASE
SALARY
|
|
|
|
General Principle
|
|
|
Specific Approach
|
A competitive salary provides a necessary element of stability.
|
|
|
Salary levels reflect comparable salary levels based on survey
data provided by the Compensation Consultant. Salary levels are
reviewed annually.
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|
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|
|
Base salary should recognize individual performance, market
value of a position and the incumbents tenure, experience,
responsibilities, contribution to the Company and growth in his
or her role.
|
|
|
Merit increases are based on overall performance and relative
competitive market position.
|
|
|
|
|
ANNUAL
INCENTIVE PLAN (AIP)
|
|
|
|
General Principle
|
|
|
Specific Approach
|
The AIP award recognizes contributions to the years
results and is determined by performance against specific
premier metrics on the enterprise level, as well as qualitative
factors, as described in more detail on page 54. The 2010
AIP is structured to reward and emphasize overall enterprise
performance and emphasizes collaboration among the
Companys Groups.
|
|
|
The AIP focuses on operating performance, targeting premier metrics considered predictive of top-ranking operating performance. 2010 AIP targets were established based on these four internal premier performance metrics:
earnings per share performance,
free cash flow,
sum of Group return on invested capital, and
the sum of Group revenue.
|
|
|
|
|
Structure AIP target awards to achieve competitive compensation
levels when targeted performance results are achieved. Use
objective formulas to establish potential AIP performance awards.
|
|
|
The Companys AIP provides for an annual cash payment to
participating executives established as a target percentage of
base salary. AIP target awards are set with reference to the
median of competitive practice based on the CDB. Any AIP payment
is the product of the annual base salary rate multiplied by the
target base salary percentage multiplied by the AIP annual
performance factor based on the approved metrics. The Committee
may approve negative discretionary adjustments with respect to
NEOs.
|
|
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|
|
56
LONG-TERM
INCENTIVE AWARDS
|
|
|
|
General Principle
|
|
|
Specific Approach
|
Design long-term incentives for NEOs to link payouts to success
in the creation of shareholder value over time.
|
|
|
The Committee believes that long-term incentives directly reward NEOs for success in the creation of long-term value creation and enhanced total shareholder return. The Committee employed four considerations in designing the long-term incentive award program:
alignment of executive interests with shareholder interests,
a multi-year plan that balances short-term and long-term decision-making,
long-term awards included as part of a competitive total compensation package, and
retention.
|
|
|
|
|
For NEOs, long-term equity-based incentives should recognize
current performance as well as the expectation of future
contributions.
|
|
|
The Committee grants restricted stock or restricted stock units
and stock options awards to link executive compensation to
absolute share price performance. It grants TSR awards to
provide a link to the Companys total shareholder return
relative to the TSR Performance Index.
|
|
|
|
|
Review award programs annually to provide for regular assessment.
|
|
|
As part of its annual compensation review, the Committee
determines long-term incentive award program components, the
percentage weight of each component, and long-term award target
amounts.
|
|
|
|
|
Use competitive market survey data provided by the Compensation
Consultant from a sample of
S&P®
Industrial Companies to select long-term components designed to
advance the Companys long-term business goals as well as
determining competitive target amounts.
|
|
|
In 2010, the Committee, based on management recommendations,
used competitive market data for each of the NEO positions to
determine the 2010 long-term award value for each NEO.
|
|
|
|
|
Balance absolute share price return and relative share price
return.
|
|
|
The Committee balanced long-term awards among awards designed to
encourage relative share price performance and awards designed
to encourage absolute share price performance. More information
on this allocation is provided on pages 62 to 67.
|
|
|
|
|
Consider the median of competitive market data, as well as
individual contributions and business performance in determining
target awards.
|
|
|
Specific target awards are set out in the Grants of Plan-Based
Awards table on page 74.
|
|
|
|
|
57
Overview
of the AIP And Long-Term Incentive Target Awards
Establishing
AIP Performance
The 2010 AIP format is designed to consider internal business
achievements. For 2010, NEOs include officers from the Fluid
Technology and the Motion & Flow Control segment,
Defense & Information Solutions segment, and Corporate
headquarters.
Internal
Premier Performance Metrics
The Committee studied past and projected earnings per share and
other performance measures of comparable multi-industry peers.
Six multi-industry companies were identified as
premier based on their rankings in the top quartile
of the majority of the quantitative metrics evaluated. These six
companies are:
|
|
|
3M Co.
|
|
General Electric Co.
|
United Technologies Corp.
|
|
Emerson Electric Co.
|
Illinois Tool Works, Inc.
|
|
Danaher Corp.
|
Based on an analysis of these premier companies, the Company
identified four internal premier performance metrics as most
closely predictive of top-ranking operating performance. The AIP
design for the 2010 performance year was modified to emphasize
business collaboration across the enterprise.
|
|
|
|
Premier Performance
Metric
|
|
|
Why this metric
|
Sum of Group revenue
|
|
|
Revenue reflects the Companys emphasis on growth. Revenue
is defined as reported GAAP revenue excluding the impact of
foreign currency fluctuations and contributions from
acquisitions and divestitures. The Companys definition of
revenue may not be comparable to similar measures utilized by
other companies. Revenue is based on the local currency exchange.
|
|
|
|
|
Free cash flow
|
|
|
Free cash flow reflects the Companys emphasis on cash flow
generation. Free cash flow is defined as GAAP net cash flow from
operating activities, less capital expenditures and adjusted for
other non-cash special items and discretionary pension
contributions. Free cash flow should not be considered a
substitute for cash flow data prepared in accordance with GAAP.
The Companys definition of free cash flow may not be
comparable to similar measures utilized by other companies.
Management believes that free cash flow is an important measure
of performance and it is utilized as a measure of the
Companys ability to generate cash.
|
|
|
|
|
Sum of Group return on invested capital
(ROIC)
|
|
|
The Committee considers ROIC to be an appropriate measurement of
capital utilization in the Companys businesses and a key
element of premier performance.
|
|
|
|
|
Earnings per share (EPS)
performance
|
|
|
The Committee believes that EPS performance is an appropriate
measure of the Companys total performance and employed the
ITT EPS performance metric to encourage focus on the achievement
of premier earnings performance for the overall Company. EPS
performance is defined as GAAP net income from continuing
operations per diluted share, adjusted to exclude items such as
unusual and infrequent
non-operating
items, non-operating tax settlements or adjustments relating to
prior periods and impacts from acquisitions and divestitures.
|
|
|
|
|
58
Internal performance metrics are weighted to represent
operational goals. In order to encourage focus on total Company
performance, earnings per share performance across the
enterprise represented 40% of the overall performance metrics
for the Companys 2010 AIP.
2010
Internal Performance Metrics Weight
|
|
|
|
|
|
|
|
|
Total Enterprise
|
2010 Metrics
|
|
|
Performance Percentage
|
Sum of Group Revenue
|
|
|
|
20
|
%
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
|
20
|
%
|
|
|
|
|
|
|
Sum of Group ROIC
|
|
|
|
20
|
%
|
|
|
|
|
|
|
EPS Performance
|
|
|
|
40
|
%
|
|
|
|
|
|
|
In addition, four qualitative business goals were considered for
the NEOs in 2010: Portfolio Repositioning, Differentiated
Organic Growth, Strategic Execution, and Cultural Transformation.
2010
Internal Performance Metric Attainment and Payout
Design
We pay for AIP performance that clearly demonstrates substantial
achievement of plan goals. We established strong incentives for
revenue performance and set aggressive goals for other metrics.
In order to achieve an AIP payout each metric must meet a
certain threshold for that component to be considered in the
calculation. For example, EPS performance below the 50% payout
percentage of target would result in that metric being reflected
as zero in the AIP calculation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share Performance
|
|
|
$
|
3.75
|
|
|
|
$
|
4.00
|
|
|
|
$
|
4.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share Payout Percentage of Target
|
|
|
|
50%
|
|
|
|
|
100%
|
|
|
|
|
200%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sum of Group revenue must meet or exceed a 90% threshold
performance. The remaining metrics must meet or exceed an 85%
threshold performance level (as described in the chart below).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 AIP Attainment and Payout Design
|
|
|
|
Revenue
|
|
|
Remaining Metrics
|
Performance Percentage of Target
|
|
|
|
90%
|
|
|
|
|
100%
|
|
|
|
|
110%
|
|
|
|
|
85%
|
|
|
|
|
100%
|
|
|
|
|
120%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout Percentage of Target
|
|
|
|
50%
|
|
|
|
|
100%
|
|
|
|
|
200%
|
|
|
|
|
50%
|
|
|
|
|
100%
|
|
|
|
|
200%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In 2010, each performance component of the AIP and the overall
AIP award were capped at 200%. Results are interpolated between
points.
2010 AIP
Performance Targets and Performance
The Committee, after considering management recommendations,
established 2010 AIP performance targets for the NEOs based on
the applicable internal premier performance metrics and the
Companys approved annual operating plan, taking into
consideration the Companys aspirational business goals.
Successful attainment of both qualitative factors and
quantitative factors (described on page 54 and
pages 59 to 61 of the Proxy Statement) are achievable only
if the enterprise and the individual NEO perform at levels
established by the Committee. As permitted by the 1997 Annual
Incentive Plan for Executive Officers, the Committee may exclude
the impact of acquisitions, dispositions and other special items
in computing AIP. The 2010 targets for EPS
59
performance, free cash flow performance for the Company, and the
sum of Group revenue performance targets are described below:
|
|
|
|
|
|
|
Metric (all $ amounts in millions other than earnings per
share performance)
|
|
|
Performance Target at 100% Payment
|
|
|
2010 Performance
|
EPS Performance
|
|
|
$4.00
|
|
|
$4.34
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
$740
|
|
|
$924
|
|
|
|
|
|
|
|
Sum of Group Revenue
|
|
|
$11,200
|
|
|
$10,831
|
|
|
|
|
|
|
|
Remaining Performance Target. We set the
remaining performance target, the sum of Group ROIC, at a
challenging level that is consistent with our long-term premier
targets and designed to meet high shareholder expectations. We
consider the sum of Group ROIC level difficult to attain.
Specific Internal Metrics for Mr. Loranger
All elements of compensation for Mr. Loranger are reviewed
by the Committee. Mr. Loranger participates in the AIP
described above. In 2010, with respect to Mr. Loranger, the
Committee determined and considered the same four quantifiable
goals related to free cash flow, sum of Group revenue, sum of
Group ROIC and EPS performance, as provided above. Sum of Group
ROIC goals were set at challenging levels that were considered
difficult to attain.
|
|
|
|
|
|
|
|
|
|
Performance Target at
|
|
|
|
Metric (all $ amounts in millions other than earnings per
share performance)
|
|
|
100% Payment
|
|
|
2010 Performance
|
EPS Performance
|
|
|
$4.00
|
|
|
$4.34
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
$740
|
|
|
$924
|
|
|
|
|
|
|
|
Sum of Group Revenue
|
|
|
$11,200
|
|
|
$10,831
|
|
|
|
|
|
|
|
In addition, four qualitative business goals were considered for
Mr. Loranger in 2010:
|
|
|
|
|
Portfolio Repositioning,
|
|
|
|
Differentiated Organic Growth,
|
|
|
|
Strategic Execution, and
|
|
|
|
Cultural Transformation.
|
Mr. Lorangers progress in meeting these qualitative
goals, as well as progress in meeting all AIP metrics, is
regularly reviewed by the Committee during the year. Most
qualitative goals were either met or were substantially achieved.
Target
AIP Award Percentage of Base Salary and
Weighting of AIP Performance Components
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
Sum of Group
|
|
|
Free Cash
|
|
|
Sum of Group
|
|
|
ITT EPS
|
|
|
|
|
|
|
of
|
|
|
Revenue
|
|
|
Flow
|
|
|
ROIC
|
|
|
Performance
|
|
|
Total Enterprise
|
Named Executive Officer
|
|
|
Base Salary
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
Performance
|
Steven R. Loranger
|
|
|
|
130
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
40
|
%
|
|
|
|
a+b+c+d
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
85
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
40
|
%
|
|
|
|
a+b+c+d
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
80
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
40
|
%
|
|
|
|
a+b+c+d
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
80
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
40
|
%
|
|
|
|
a+b+c+d
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
60
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
20
|
%
|
|
|
|
40
|
%
|
|
|
|
a+b+c+d
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60
For NEOs, the 2010 AIP potential payment was calculated as
follows:
2010 AIP Potential Payout = Target Award Percentage of Base
Salary x (Results of Total Enterprise Performance) interpolated
up to 200% for performance above goal. (Subject to negative
discretion).
2010 AIP
Awards Paid in 2011
On March 3, 2011, the Committee determined the 2010 AIP
awards for the Chief Executive Officer and the other NEOs. No
negative discretion was exercised by the Committee. As permitted
by the 1997 Annual Incentive Plan for Executive Officers, the
Committee excluded the impact of acquisitions, dispositions and
other special items in computing AIP performance relating to AIP
targets, which AIP targets also excluded these items. The
Committee met privately, without any members of management
present, to determine Mr. Lorangers 2010 AIP award.
|
|
|
|
Named Executive Officers
|
|
|
AIP 2010 Awards ($)
|
Steven R. Loranger
|
|
|
$2,328,352
|
|
|
|
|
Denise L. Ramos
|
|
|
$774,300
|
|
|
|
|
Gretchen W. McClain
|
|
|
$654,700
|
|
|
|
|
David F. Melcher
|
|
|
$654,700
|
|
|
|
|
Frank R. Jimenez
|
|
|
$384,500
|
|
|
|
|
2010 AIP Awards for NEOs are also included in the Summary
Compensation Table on page 72.
Performance targets for the 2011 AIP have not yet been
established.
Long-Term
Incentive Awards Program
The Companys long-term incentive awards component for
senior executives has three subcomponents, each of which
directly ties long-term compensation to long-term value creation
and shareholder return:
|
|
|
|
|
restricted stock or restricted stock unit awards. In 2010 the
Committee awarded restricted stock awards. In 2011 the Committee
determined to award restricted stock units, which will be
settled in shares upon vesting. Restricted stock units provide
the same economic risk or reward as restricted stock, but
recipients do not have voting rights and do not receive cash
dividends during the restriction period. Dividend equivalents
are accrued and paid in cash upon vesting of the restricted
stock units. The Committee determined to award restricted stock
units rather than restricted stock in 2011 because restricted
stock unit awards provide consistent tax treatment for domestic
and international employees,
|
|
|
|
non-qualified stock option awards, and
|
|
|
|
TSR, a target cash award that directly links the Companys
three-year total shareholder return performance to the
performance of companies in the TSR Performance Index on a
relative basis.
|
61
The following table describes the 2010 TSR target and equity
awards for the NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSR
|
|
|
Non-Qualified
|
|
|
|
|
|
|
(Target Cash
|
|
|
Stock Option
|
|
|
Restricted Stock
|
|
|
|
Award)
|
|
|
Award
|
|
|
Award
|
Named Executive Officer
|
|
|
$
|
|
|
# Options
|
|
|
# Shares
|
Steven R. Loranger
|
|
|
|
1,980,000
|
|
|
|
|
132,265
|
|
|
|
|
41,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
400,000
|
|
|
|
|
26,721
|
|
|
|
|
8,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
360,000
|
|
|
|
|
24,049
|
|
|
|
|
7,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
360,000
|
|
|
|
|
24,049
|
|
|
|
|
7,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
166,700
|
|
|
|
|
11,890
|
|
|
|
|
3,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation
of Long-Term Incentive Components
The 2010 Long-Term Incentive Program Awards were allocated as
follows:
1/3
TSR calculated at target payment amount;
1/3
non-qualified stock options calculated at the grant date fair
value of the non-qualified options; and
1/3
restricted stock or restricted stock units calculated at grant
date fair value.
2010
Long-Term Incentive Program
Restricted
Stock Subcomponent
Grants of restricted stock provide NEOs with stock ownership of
unrestricted shares after the restriction lapses. NEOs received
restricted stock awards because, in the judgment of the
Committee and based on management recommendations, these
individuals are in positions most likely to assist in the
achievement of the Companys long-term value creation goals
and to create shareholder value over time. The Committee reviews
all proposed grants of shares of restricted stock for executive
officers prior to award, including awards based on performance,
retention-based awards and awards contemplated for new employees
as part of employment offers.
Key elements of the 2010 restricted stock program were:
|
|
|
|
|
Holders of restricted stock have the right to receive dividends
and vote the shares during the restriction period,
|
|
|
|
Restricted stock generally is subject to a three-year
restriction period,
|
|
|
|
If an acceleration event occurs (as described on pages 90
to 91 of this Proxy Statement) the restricted stock vests in
full,
|
|
|
|
If an employee dies or becomes disabled, the restricted stock
vests in full,
|
|
|
|
If an employee leaves the Company prior to vesting, whether
through resignation or termination for cause, the restricted
stock is forfeited, and
|
62
|
|
|
|
|
If an employee retires or is terminated other than for cause, a
pro-rata portion of the restricted stock award vests.
Mr. Loranger is currently eligible to retire pursuant to a
Special Pension Arrangement under the Steven R. Loranger
Employment Agreement described on page 75-77 and the 2010
Nonqualified Deferred Compensation Table on page 86.
|
In certain cases, such as for new hires or to facilitate
retention, selected employees may receive restricted stock
subject to different vesting terms as determined by the
Committee.
Non-Qualified
Stock Options Subcomponent
Non-qualified stock options permit optionees to buy Company
stock in the future at a price equal to the stocks value
on the date the option was granted, which is the option exercise
price. Non-qualified stock option terms were selected after the
Committees review and assessment of the CDB and
consideration of terms best suited to the Company.
For Messrs. Loranger and Melcher, Ms. Ramos and
Ms. McClain, non-qualified stock options do not vest until
three years after the award date. This delayed vesting is
referred to as three-year cliff vesting. This vesting schedule
prohibits early option exercises, notwithstanding share price
appreciation, and focuses senior executives on the
Companys long-term value creation goals. Stock options
awarded to Mr. Jimenez in 2010 vest in one-third annual
installments.
In 2010, the fair value of stock options granted under the
employee stock option program was calculated using a binomial
lattice valuation model. The Committee considered this a
preferred model since the model can incorporate multiple and
variable assumptions over time, including assumptions such as
employee exercise patterns, stock price volatility and changes
in dividends.
Key elements of the 2010 non-qualified stock option program were:
|
|
|
|
|
The option exercise price of stock options awarded is the NYSE
closing price of the Companys common stock on the date the
award is approved by the Committee,
|
|
|
|
For options granted to new executives, the option exercise price
of approved stock option awards is the closing price on the
grant date, generally the day following the first day of
employment,
|
|
|
|
Options cannot be exercised prior to vesting,
|
|
|
|
Three-year cliff vesting is required for executives at the level
of senior vice president or above. Stock options vest in
one-third cumulative annual installments for executives below
the senior vice president level,
|
|
|
|
If an acceleration event occurs (as described on pages 90
to 91 of this Proxy Statement) the stock option award vests in
full,
|
|
|
|
Options awarded in 2010 and 2011 and prior to 2005 expire ten
years after the grant date. Options awarded between 2005 and
2009 expire seven years after the grant date. In 2010, the
seven-year option term was extended to ten years based on a
review of competitive market practices,
|
|
|
|
If an employee is terminated for cause, vested and unvested
portions of the options expire on the date of termination,
|
|
|
|
The 2003 Plan and the proposed 2011 Omnibus Incentive Plan
prohibit the repricing of, or exchange of, stock options and
stock appreciation rights which are priced below the prevailing
market price with lower-priced stock options or stock
appreciation rights without shareholders approval, and
|
|
|
|
There may be adjustments to the post-employment exercise period
of an option grant if an employees tenure with the Company
is terminated due to death, disability, retirement or
|
63
|
|
|
|
|
termination by the Company other than for cause. Any
post-employment exercise period, however, cannot exceed the
original expiration date of the option. If employment is
terminated due to an acceleration event or because the option
holder believes in good faith that he or she would be unable to
discharge his or her duties effectively after the acceleration
event, the option expires on the earlier of the date seven
months after the acceleration event or the normal expiration
date.
|
|
|
|
|
|
Currently, no individual may receive more than 600,000 options
under the 2003 Plan in any one year.
|
Why both restricted stock or restricted stock units and stock
options. A balanced award of restricted stock or restricted
stock units and non-qualified stock options provides a
combination of incentives for absolute share price appreciation.
The following table provides an overview of some of the main
characteristics of restricted stock or restricted stock units
and non-qualified stock options.
|
|
|
|
Restricted Stock or Restricted Stock Units
|
|
|
Non-qualified Stock Options
|
A restricted stock award is a grant of Company stock, subject to
certain vesting restrictions. A restricted stock unit award is a
promise to deliver to the recipient, upon vesting, shares of
Company stock. Both restricted stock and restricted stock units
carry the same economic risk and reward.
|
|
|
Non-qualified stock options provide the opportunity to purchase
Company stock at a specified price called the exercise
price at a future date.
|
|
|
|
|
Holders of restricted stock, as shareholders of the Company, are
entitled to vote the shares and receive dividends or dividend
equivalents prior to vesting. Holders of restricted stock units
are not entitled to vote the shares and do not receive cash
dividends during the restriction period. Dividend equivalents
are paid in cash upon restricted stock unit vesting beginning
with the 2011 awards.
|
|
|
Stock option holders do not receive dividends on shares
underlying options and cannot vote their shares.
|
|
|
|
|
Restricted stock and restricted stock units have intrinsic value
on the day the award is received and retain some realizable
value even if the share price declines during the restriction
period. Since restricted stock and restricted stock units do not
expire, each provides strong employee retention value even after
vesting.
|
|
|
Non-qualified stock options increase focus on activities
primarily related to absolute share price appreciation. The
Companys non-qualified stock options expire ten or seven
years after their grant date depending on the year of award. If
the value of the Companys stock increases and the optionee
exercises his or her option to buy at the exercise price, the
optionee receives a gain in value equal to the difference
between the option exercise price and the price of the stock on
the exercise date. If the value of the Companys stock
fails to increase or declines, the stock option has no
realizable value. Stock options provide less retention value
than restricted stock since stock options have realizable value
only if the share price appreciates over the option exercise
price before the options expire.
|
|
|
|
|
The Committee has selected vesting terms for restricted stock,
restricted stock units and stock options based on the
Compensation Consultants review and assessment of the CDB,
as well as the Committees view of the vesting terms
appropriate for the Company. The Committee considers the
Compensation Consultants review and assessment of CDB, as
well as individual performance, in determining the quantity of
restricted stock, restricted stock units and stock option awards.
64
Total
Shareholder Return (TSR) Awards Subcomponent
The following table describes some of the main features of TSR
awards and describes how the Committee considers those features
as it determines target TSR awards.
|
|
|
|
Feature
|
|
|
Implementation
|
TSR rewards comparative stock price appreciation relative to
that of the TSR Performance Index
|
|
|
The Committee, at its discretion, determines the size and
frequency of target TSR awards, performance measures and
performance goals, in addition to performance periods. In
determining the size of target TSR awards for executives, the
Committee considers comparative data provided by the
Compensation Consultant and the Companys internal desired
growth in share price. The Companys target TSR awards
provided to NEOs are generally based on a participants
position, competitive market data, individual performance and
anticipated potential contributions to the Companys
long-term goals.
|
|
|
|
|
Three-year performance period
|
|
|
A three-year TSR performance period encourages behaviors and
performance geared to the Companys long-term goals and, in
the view of the Committee, discourages behaviors that might
distract from the three-year period focus. The three-year
performance period is consistent with Companys business
cycle because it allows sufficient time for focus on long-term
goals and mutes market swings not based on performance. The
three-year performance period is also somewhat independent of
short-term market cycles.
|
|
|
|
|
Performance measurement and award frequency
|
|
|
The Companys performance for purposes of the TSR awards is
measured by comparing the average stock price over the trading
days in the month of December immediately prior to the start of
the TSR three-year performance period to the average stock price
over the trading days in the last month of the three-year cycle
as well as dividend yields and other forms of shareholder return.
|
|
|
|
|
TSR awards are expressed as target cash awards and paid in cash.
|
|
|
Cash awards compensate relative performance while reducing share
dilution.
|
|
|
|
|
Components of TSR
|
|
|
The Committee considered the components of a measurable return
of value to shareholders, reviewed peer practices and received
input from the Compensation Consultant. Based on that review the
Committee determined that the most significant factors to
measure return of value to shareholders were:
|
|
|
|
dividend yields,
|
|
|
|
cumulative relative change in stock
price, and
|
|
|
|
extraordinary shareholder payouts.
|
|
|
|
|
TSR calculation
|
|
|
TSR = the sum of 1) dividends paid and reinvested and any other
extraordinary shareholder payouts during the three-year
performance period and 2) the cumulative change in stock price
from the beginning to the end of the performance period as a
percentage of beginning stock price.
|
|
|
|
|
65
Amount of target TSR awards. The Committee considers
individual performance and competitive market data in
determining target TSR awards.
Key elements of the long-term incentive plan under which TSR
awards are granted include:
|
|
|
If a participants employment terminates before the end of
the three-year performance period, the award is forfeited except
in two cases: 1) if a participant dies or becomes disabled,
the TSR award vests in full and payment, if any, is made
according to its original terms. Vesting in full in the case of
death or disability reflects the inability of the participant to
control the triggering event and is consistent with benefit plan
provisions related to death and disability; and 2) if a
participant retires or is terminated by the Company other than
for cause, a pro-rata payout, if any, is provided based on the
number of full months of employment during the measurement
period divided by thirty-six months (the term of the three-year
TSR). This pro-rated payout, if any, is provided because it
reflects the participants service during the pro-rated
period.
|
|
|
The Companys performance for purposes of the TSR awards is
measured by comparing the average stock price performance over
the trading days in the month of December immediately prior to
the start of the TSR three-year performance period to the
average stock price performance, over the trading days in the
last month of the three-year cycle, including adjustments for
dividends and extraordinary payments. (For example, trading days
in the month of December 2010 are used as a base for 2011 TSR
awards, which will be measured from January 1, 2011 to
December 31, 2013).
|
|
|
Payment, if any, of cash awards generally will be made following
the end of the applicable three-year performance period and will
be based on the Companys performance measured against the
total shareholder return performance of the TSR Performance
Index.
|
|
|
Subject to the provisions of Section 409A, in the event of
an acceleration event in a change of control (described on pages
90 to 91 of this Proxy Statement), a pro-rata portion of
outstanding awards will be paid through the date of the change
of control based on actual performance and the balance of the
award will be paid at target (100%). There may be up to three
outstanding TSR awards at any time.
|
|
|
Performance goals for the applicable TSR performance period are
established in writing no later than ninety days after the
beginning of the applicable performance period.
|
Performance Goals and Payments for the
TSR. Individual targets for the NEOs for the
2010-2012
performance period are provided in the Grants of Plan Based
Awards table on page 74 of this Proxy Statement. Payouts, if
any, are based on a non-discretionary formula and interpolated
for values between the 35th and 80th percentile of
performance. The Committee felt these breakpoints were properly
motivational and rewarded the desired behavior.
|
|
|
|
|
If Companys Total Shareholder Return Rank Against
the
|
|
|
Companies that Comprise the
|
|
Payout Factor
|
TSR Performance Index is
|
|
(% of Target Award)
|
|
less than the
35th
percentile
|
|
|
0
|
%
|
at the
35th
percentile
|
|
|
50
|
%
|
at the
50th
percentile
|
|
|
100
|
%
|
at the
80th
percentile or more
|
|
|
200
|
%
|
66
The following performance goals were established for TSR awards
for the performance period January 1, 2008 through
December 31, 2010:
|
|
|
|
|
If Companys Total Shareholder Return Rank Against
the
|
|
|
Companies that Comprise the
|
|
Payout Factor
|
TSR Performance Index is
|
|
(% of Target Award)
|
|
less than the
35th
percentile
|
|
|
0
|
%
|
at the
35th
percentile
|
|
|
50
|
%
|
at the
50th
percentile
|
|
|
100
|
%
|
at the
80th
percentile or more
|
|
|
200
|
%
|
The Company achieved a 25.89th percentile ranking in the TSR
Performance Index for this performance period, resulting in no
cash payment under the TSR for this performance period.
2011
Long-Term Incentive Awards
The following table describes the 2011 long-term incentive
awards for the NEOs, as determined by the Committee on
March 3, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSR
|
|
|
Non-Qualified
|
|
|
|
|
|
|
(Target Cash
|
|
|
Stock Option
|
|
|
Restricted Stock
|
Named Executive
|
|
|
Award)
|
|
|
Award
|
|
|
Unit Award
|
Officer
|
|
|
$
|
|
|
# Options
|
|
|
# Units
|
Steven R. Loranger
|
|
|
|
2,133,300
|
|
|
|
|
133,835
|
|
|
|
|
36,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
533,300
|
|
|
|
|
33,459
|
|
|
|
|
9,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
533,300
|
|
|
|
|
33,459
|
|
|
|
|
9,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
533,300
|
|
|
|
|
33,459
|
|
|
|
|
9,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
233,300
|
|
|
|
|
16,205
|
|
|
|
|
3,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoupment Policy. In 2008, the
Company, upon the recommendation of the Committee, adopted a
policy that provides for recoupment of performance-based
compensation if the Board of Directors determines that a senior
executive has engaged in fraud or willful misconduct that caused
or otherwise contributed to the need for a material restatement
of the Companys financial results. In such a situation,
the Board will review all compensation awarded to or earned by
that senior executive on the basis of the Companys
financial performance during fiscal periods materially affected
by the restatement. This would include annual cash incentive and
bonus awards and all forms of equity-based compensation. If, in
the Boards view, the compensation related to the
Companys financial performance would have been lower if it
had been based on the restated results, the Board will, to the
extent permitted by applicable law, seek recoupment from that
senior executive of any portion of such compensation as it deems
appropriate after a review of all relevant facts and
circumstances. The NEOs are covered by this policy.
Consideration of Material Non-Public Information. The
Company typically closes the window for insiders to trade in the
Companys stock in advance of, and for a period of time
immediately following, earnings releases and Board and Committee
meetings because the Company and insiders may be in possession
of material non-public information. The first quarter Committee
meeting at which compensation decisions and awards are typically
made for employees usually occurs during a Board meeting period,
so stock option awards may occur at a time when the Company is
in possession of material non-public information. The Committee
does not consider the possible possession of material non-public
information when it determines the number of non-qualified stock
options granted, price of options granted or timing of
non-qualified stock options granted. Rather, it uses competitive
data, individual performance and retention considerations when
it grants
67
non-qualified stock options, restricted stock or restricted
stock units and TSR awards under the long-term incentive program.
Non-qualified stock option awards and restricted stock awards or
restricted stock unit awards granted to NEOs, senior and other
executives, and Directors are awarded and priced on the same
date as the approval date. The Company may also award
non-qualified stock options in the case of the promotion of an
existing employee or hiring of a new employee. Again, these
non-qualified stock option grants may be made at a time the
Company is in possession of material non-public information
related to the promotion or the hiring of a new employee or
other matters. The Company does not time its release of material
non-public information for the purpose of affecting the value of
executive compensation and executive compensation decisions are
not timed to the release of material non-public information.
ITT
SALARIED INVESTMENT AND SAVINGS PLAN
Most of the Companys salaried employees who work in the
United States participate in the ITT Salaried Investment and
Savings Plan, a tax-qualified savings plan, which allows
employees to contribute to the plan on a before-tax basis
and/or on an
after-tax basis. The Company makes a floor contribution of
1/2
of 1% of base salary to the plan for all eligible employees and
matches employee contributions up to 6% of base salary at the
rate of 50%. Participants can elect to have their contributions
and those of the Company invested in a broad range of investment
funds including ITT stock. Federal law limits the amount of
compensation that can be used to determine employee and employer
contribution amounts ($245,000 in 2010) to the
tax-qualified plan. Accordingly, the Company has established and
maintains a non-qualified, unfunded ITT Excess Savings Plan that
is discussed in more detail in the narrative to the 2010
Nonqualified Deferred Compensation table on page 86.
POST-EMPLOYMENT
COMPENSATION
Salaried Retirement Plan. Most of the
Companys salaried employees who work in the United States
participate in the ITT Salaried Retirement Plan. Under the plan,
participants have the option, on an annual basis, to elect to be
covered by either a Traditional Pension Plan or a Pension Equity
Plan formula for future pension accruals. The ITT Salaried
Retirement Plan is a tax-qualified plan, which provides a base
of financial security for employees after they cease working.
The plan is described in more detail in the narrative related to
Pension Benefits on pages 81 to 82 and in the 2010 Pension
Benefits table on page 83.
Excess Pension Plans. Because federal law limits the
amount of benefits that can be paid and the amount of
compensation that can be recognized under tax-qualified
retirement plans, the Company has established and maintains
non-qualified, unfunded excess pension plans solely to pay
retirement benefits that could not be paid from the ITT Salaried
Retirement Plan. Benefits under the excess pension plans are
generally paid directly by the Company. Participating officers
with excess plan benefits had the opportunity to make a one-time
election prior to December 31, 2008 to receive their excess
benefit earned under the Traditional Pension Plan formula
(described on page 82) in a single discounted sum payment
or as an annuity. An election of a single-sum payment is only
effective if the officer meets the requirements for early or
normal retirement benefits under the plan; otherwise, the excess
benefit earned under the Traditional Pension Plan formula will
be paid as an annuity. Since the excess pension plans are an
unfunded obligation of the Company, in the event of a change of
control, any excess plan benefit would be immediately payable,
subject to any applicable Section 409A restrictions with
respect to form and timing of payments, and would be paid in a
single discounted sum. The single-sum payment provision provides
executives the earliest possible access to the funds in the
event of a change of control, and avoids leaving unfunded
pension payments in the hands of the acquirer.
68
Deferred Compensation Plan. Our NEOs are also eligible to
participate in the ITT Deferred Compensation Plan, which is
described in more detail on pages 84 to 85. This plan
provides executives an opportunity to defer receipt of between
2% and 90% of any AIP payments they earn. The amount of deferred
compensation ultimately received reflects the performance of
benchmark investment funds made available under the Deferred
Compensation Plan as selected by the executive. Participants in
the Deferred Compensation Plan may elect a fund that tracks the
performance of ITT common stock.
Mr. Lorangers Non-Qualified Pension
Arrangement. Mr. Lorangers employment agreement,
(the Steven R. Loranger Employment Agreement), as
described on pages 75 to 77, provides for a non-qualified
pension arrangement. Because Mr. Loranger forfeited certain
employment benefits, including pension arrangements, when he
left his prior employer, the Steven R. Loranger Employment
Agreement provides him with a pension arrangement similar to the
arrangement he forfeited.
Pensions and other post-retirement compensation for the NEOs are
discussed in more detail in the 2010 Pension Benefits narrative,
table and footnotes on pages 81 to 84, the Potential
Post-Employment Compensation Tables and footnotes on
pages 92 to 101 and in descriptions of the compensation
arrangements for Mr. Loranger and Ms. Ramos on
pages 75 to 78. The Steven R. Loranger Employment Agreement
was negotiated when Mr. Loranger joined the Company.
SEVERANCE
PLAN ARRANGEMENTS
The Company maintains two severance plans for its senior
executives the Senior Executive Severance Pay Plan
and the Special Senior Executive Severance Pay Plan. The
Companys Senior Executive Severance Pay Plan and Special
Senior Executive Severance Pay Plan were originally established
in 1984 and are regularly reviewed by the Committee. These plans
are described in more detail on pages 88 to 90. The
severance plans apply to the Companys key employees as
defined by Section 409A. The Companys severance plan
arrangements are not considered in determining other elements of
compensation.
Senior Executive Severance Pay Plan.
The purpose of this plan is to provide a period of transition
for senior executives. Senior executives, other than
Mr. Loranger, who are U.S. citizens or who are
employed in the United States are covered by this plan. The plan
generally provides for severance payments if the Company
terminates a senior executives employment without cause.
The exceptions to severance payment are:
|
|
|
|
|
the executive terminates his or her own employment,
|
|
|
|
the executives employment is terminated for cause,
|
|
|
|
termination occurs after the executives normal retirement
date under the ITT Salaried Retirement Plan, or
|
|
|
|
termination occurs in certain divestiture instances if the
executive accepts employment or refuses comparable employment.
|
No severance is provided for termination for cause, because the
Company believes employees terminated for cause should not
receive additional compensation. No severance is provided in the
case of termination after a normal retirement date because the
executive will be eligible for retirement payments under the ITT
Salaried Retirement Plan. No severance is provided where an
executive accepts or refuses comparable employment because the
executive has the opportunity to receive employment income from
another party under comparable circumstances.
Ms. Ramos, Ms. McClain and Messrs. Melcher and
Jimenez participate in this plan. Mr. Loranger does not
participate in this plan because his severance arrangements,
including severance pay and benefits upon termination from the
Company, are provided separately under the Steven R. Loranger
Employment Agreement described on pages 75 to 77.
69
Special Senior Executive Severance Pay
Plan. The purpose of this plan is to provide
compensation in the case of termination of employment in
connection with an acceleration event (defined on pages 90 to 91
of this Proxy Statement) including a change of control. The
provisions of this plan are specifically designed to address the
inability of senior executives to influence the Companys
future performance after certain change of control events. The
plan is structured to encourage executives to act in the best
interests of shareholders by providing for certain compensation
and retention benefits and payments, including change of control
provisions, in the case of an acceleration event.
The purposes of these provisions are to:
|
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provide for continuing cohesive operations as executives
evaluate a transaction, which, without change of control
protection, could be personally adverse to the executive,
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keep executives focused on preserving value for shareholders,
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|
retain key talent in the face of potential transactions, and
|
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aid in attracting talented employees in the competitive
marketplace.
|
As discussed above, this plan provides severance benefits for
covered executives, including any NEO whose employment is
terminated by the Company other than for cause, or where the
covered executive terminates his or her employment for good
reason within two years after the occurrence of an acceleration
event as described below (including a termination due to death
or disability) or if during the two-year period following an
acceleration event, the covered executive had grounds to resign
with good reason or the covered executives employment is
terminated in contemplation of an acceleration event that
ultimately occurs.
The plan is designed to put the executive in the same position,
from a compensation and benefits standpoint, as he or she would
have been in without the acceleration event. With respect to
incentive plan awards, since the executive will no longer have
the ability to influence the corporate objectives upon which the
awards are based, the plan provides that any AIP awards are paid
out at target 100%. In the event of a change of control, a
pro-rata portion of outstanding TSR awards will be paid through
the date of the change of control based on actual performance
and the balance of the award will be paid at target (100%). More
information about the Special Senior Executive Severance Pay
Plan is provided on pages 89 to 90 of this Proxy Statement.
Ms. Ramos and Ms. McClain and Messrs. Melcher and
Jimenez participate in the Special Senior Executive Severance
Pay Plan. Mr. Loranger does not participate in the plan
because his severance arrangements, which include severance pay
and benefits upon termination from the Company in connection
with an acceleration event, are set forth in the Steven R.
Loranger Employment Agreement, described on pages 75 to 77.
Change of Control Arrangements. As described more fully
on pages 90 to 91, many of our short-term and long-term
incentive plans, severance arrangements and nonqualified
deferred compensation plans provide additional or accelerated
benefits upon a change of control. Generally, these change of
control provisions are intended to put the executive in the same
position he or she would have been in had the change of control
not occurred. Executives then can focus on preserving value for
shareholders when evaluating situations that, without change of
control provisions, could be personally adverse to the executive.
EMPLOYEE
BENEFITS AND PERQUISITES
Executives, including the NEOs, are eligible to participate in
ITTs broad-based employee benefits program. The program
includes a pension program, an investment and savings plan which
includes before-tax and after-tax savings features, group
medical and dental coverage, group life insurance, group
accidental death and dismemberment insurance and other benefit
plans. These other benefit
70
plans include short- and long-term disability insurance,
long-term care insurance and a flexible spending account plan.
Certain perquisites to the NEOs. The Company provides
only those perquisites that it considers to be reasonable and
consistent with competitive practice. Beginning with tax year
2011, the Committee eliminated any tax
gross-up
provisions for the NEOs associated with financial counseling and
tax preparation for senior executives. No offsetting salary
increase will be provided. Perquisites (which are described more
fully on page 73 in the All Other Compensation Table and related
narrative) available for NEOs include a car allowance up to
$1,300 per month and financial and estate planning.
Mr. Lorangers perquisites are separately discussed on
pages 76 to 77.
CONSIDERATION
OF TAX AND ACCOUNTING IMPACTS
Section 162(m) of the Internal Revenue Code places a limit
of $1,000,000 on the amount of compensation that the Company may
deduct in any one year with respect to its Chief Executive
Officer and the three other highest-paid NEOs, other than the
Chief Financial Officer. There is an exception to the $1,000,000
limitation for performance-based compensation meeting certain
requirements. Compensation attributable to awards under the
Companys AIP and long-term incentive program are generally
structured to qualify as performance-based compensation under
Section 162(m).
However, the Committee realizes that evaluation of the overall
performance of the senior executives cannot be reduced in all
cases to a fixed formula. There may be situations in which the
prudent use of discretion in determining pay levels is in the
best interests of the Company and its shareholders and,
therefore, desirable. In those situations where discretion is
used, awards may be structured in ways that will not permit them
to qualify as performance-based compensation under
Section 162(m). The compensation of Mr. Loranger may
not be fully deductible under these criteria. However, the
Committee does not believe that such loss of deductibility would
have any material impact on the financial condition of the
Company.
The Company has also agreed to provide a tax reimbursement
should an NEOs post-termination compensation be determined
to constitute an excess parachute payment. The Companys
plans are intended to comply with Section 409A, to the
extent applicable, and the Company made amendments to the plans
during 2008 in this regard. While the Company complies with
other applicable sections of the Internal Revenue Code with
respect to compensation, the Company and the Committee do not
consider other tax implications in designing its compensation
programs.
71
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Change in
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Pension
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Non-
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Value &
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Equity
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Nonqualified
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Incentive
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Deferred
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Name and Principal
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Stock
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Option
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Plan
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Compensation
|
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All Other
|
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Position
|
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Year
|
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Salary
|
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|
Bonus
|
|
|
Awards
|
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Awards
|
|
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Compensation
|
|
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Earnings
|
|
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Compensation
|
|
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Total
|
(a)
|
|
|
(b)
|
|
|
($)(c)
|
|
|
($)(d)
|
|
|
($)(e)
|
|
|
($)(f)
|
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|
($)(g)
|
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($)(h)
|
|
|
($)(i)
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|
|
($)(j)
|
Steven R. Loranger
|
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|
|
2010
|
|
|
|
|
1,154,231
|
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|
|
|
|
|
|
|
|
4,187,372
|
|
|
|
|
2,047,462
|
|
|
|
|
2,328,352
|
|
|
|
|
2,602,844
|
|
|
|
|
314,791
|
|
|
|
|
12,635,052
|
|
Chief Executive Officer
|
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|
|
2009
|
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|
|
|
1,130,000
|
|
|
|
|
|
|
|
|
|
3,713,945
|
|
|
|
|
1,744,716
|
|
|
|
|
1,909,700
|
|
|
|
|
4,940,075
|
|
|
|
|
406,545
|
|
|
|
|
13,844,981
|
|
|
|
|
|
2008
|
|
|
|
|
1,119,615
|
|
|
|
|
|
|
|
|
|
4,806,163
|
|
|
|
|
1,499,000
|
|
|
|
|
2,534,025
|
|
|
|
|
2,508,911
|
|
|
|
|
211,125
|
|
|
|
|
12,678,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Denise L. Ramos
|
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|
|
2010
|
|
|
|
|
580,384
|
|
|
|
|
|
|
|
|
|
845,946
|
|
|
|
|
413,641
|
|
|
|
|
774,300
|
|
|
|
|
124,047
|
|
|
|
|
67,981
|
|
|
|
|
2,806,299
|
|
Senior Vice President
|
|
|
|
2009
|
|
|
|
|
540,000
|
|
|
|
|
|
|
|
|
|
675,272
|
|
|
|
|
317,269
|
|
|
|
|
596,700
|
|
|
|
|
135,414
|
|
|
|
|
63,377
|
|
|
|
|
2,328,032
|
|
and Chief Financial Officer
|
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|
|
2008
|
|
|
|
|
533,077
|
|
|
|
|
150,000
|
|
|
|
|
873,838
|
|
|
|
|
272,593
|
|
|
|
|
870,900
|
|
|
|
|
70,593
|
|
|
|
|
184,727
|
|
|
|
|
2,955,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
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|
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Gretchen W. McClain
|
|
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|
2010
|
|
|
|
|
527,604
|
|
|
|
|
|
|
|
|
|
761,335
|
|
|
|
|
372,279
|
|
|
|
|
654,700
|
|
|
|
|
97,308
|
|
|
|
|
74,141
|
|
|
|
|
2,487,367
|
|
Senior Vice President and
|
|
|
|
2009
|
|
|
|
|
504,054
|
|
|
|
|
61,000
|
|
|
|
|
2,426,708
|
|
|
|
|
317,269
|
|
|
|
|
474,600
|
|
|
|
|
70,753
|
|
|
|
|
65,453
|
|
|
|
|
3,919,837
|
|
President, Fluid and Motion Control
|
|
|
|
2008
|
|
|
|
|
426,462
|
|
|
|
|
|
|
|
|
|
801,010
|
|
|
|
|
249,883
|
|
|
|
|
527,700
|
|
|
|
|
39,611
|
|
|
|
|
139,099
|
|
|
|
|
2,183,765
|
|
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|
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|
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|
|
|
|
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|
|
|
|
|
|
David F. Melcher
|
|
|
|
2010
|
|
|
|
|
509,808
|
|
|
|
|
|
|
|
|
|
761,335
|
|
|
|
|
372,279
|
|
|
|
|
654,700
|
|
|
|
|
93,107
|
|
|
|
|
56,959
|
|
|
|
|
2,448,188
|
|
Senior Vice President and President, Defense &
Information Solutions
|
|
|
|
2009
|
|
|
|
|
425,000
|
|
|
|
|
|
|
|
|
|
468,921
|
|
|
|
|
224,733
|
|
|
|
|
386,750
|
|
|
|
|
66,150
|
|
|
|
|
58,217
|
|
|
|
|
1,629,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
Vice President and General Counsel
|
|
|
|
2010
|
|
|
|
|
412,115
|
|
|
|
|
|
|
|
|
|
352,524
|
|
|
|
|
166,817
|
|
|
|
|
384,500
|
|
|
|
|
47,578
|
|
|
|
|
54,855
|
|
|
|
|
1,418,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) |
|
Ms. Ramos joined the Company on July 1, 2007.
Ms. Ramos received a sign-on payment in 2008 following one
year of service. For the 2009 performance year, the Committee
awarded Ms. McClain a discretionary bonus of $61,000, which
payment was outside the AIP plan. This award was in recognition
of Ms. McClains exceptional business leadership of
the Fluid Technology and Motion and Flow Control business
segments during difficult economic conditions. |
|
(e) |
|
Amounts in the Stock Awards column include the aggregate grant
date fair value computed in accordance with FASB ASC Topic 718
for TSR units and restricted stock. The TSR is considered a
liability plan under the provisions of FASB ASC Topic 718. A
discussion of restricted stock units, restricted stock, the TSR
and assumptions used in calculating these values may be found in
Note 17 to the Consolidated Financial Statements in the
Companys 2010 Annual Report on
Form 10-K.
The values of TSR units at target for the
2010-2012
performance period for Mr. Loranger, Ms. Ramos,
Ms. McClain, Mr. Melcher, and Mr. Jimenez were
$1,980,000, $400,000, $360,000, $360,000 and $166,700,
respectively. Assuming the maximum value at the highest level of
achievement, Mr. Loranger, Ms. Ramos,
Ms. McClain, Mr. Melcher, and Mr. Jimenez would
receive TSR unit payouts of $3,960,000, $800,000, $720,000,
$720,000 and $333,400, respectively, following the end of the
performance period. |
|
(f) |
|
Amounts in the Option Awards column include the aggregate grant
date fair value of: non-qualified stock option awards in the
year of grant based on a binomial lattice value of $15.48 for
Mr. Loranger, Ms. Ramos, Ms. McClain, and
Mr. Melcher and $14.03 for Mr. Jimenez for the 2010
grant year; $10.53 for Mr. Loranger, Ms. Ramos,
Ms. McClain, and $9.06 for Mr. Melcher for the 2009
grant year; and $14.99 for Mr. Loranger, Ms. Ramos and
Ms. McClain for the 2008 grant year. A discussion of
assumptions relating to option awards may be found in Note 17 to
the Consolidated Financial Statements in the Companys 2010
Form 10-K. |
|
(g) |
|
Amounts in the Non-Equity Incentive Plan Compensation column
represent AIP awards for performance year 2010, determined by
the Committee on March 3, 2011, which to the extent not
deferred by an executive, were paid out shortly after that date. |
|
(h) |
|
No NEO received preferential or above-market earnings on
deferred compensation. The change in the present value in
accrued pension benefits was determined by measuring the present
value of the accrued benefit at the respective dates using a
discount rate of 6.25% at |
72
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|
|
|
|
December 31, 2008, 6.00% at December 31, 2009, and
5.75% at December 31, 2010 (corresponding to the discount
rates used for the ITT Salaried Retirement Plan, which is a
component of the Companys consolidated pension plans, as
described in Note 16 to the Consolidated Financial
Statements for the Companys 2010 Annual Report on
Form 10-K
and based on the assumption that retirement occurs at the
earliest date the individual could retire with an unreduced
retirement benefit.) The amount for Mr. Loranger includes
an increase in value of $593,304 and $1,971,058 representing an
increase in the value of his accrued benefit under the ITT
Excess Pension Plan and the Special Pension Arrangement,
respectively, described on pages 82 to 83. |
|
(i) |
|
Amounts in this column for 2010 represent items specified in the
All Other Compensation Table below. |
All Other
Compensation Table
|
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|
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|
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|
|
|
|
|
|
|
|
Other Compensation
|
|
|
|
|
|
|
Personal
|
|
|
|
|
|
|
|
|
|
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|
Use of
|
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|
|
|
|
|
|
|
|
Excess
|
|
|
Tax
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Corporate
|
|
|
Financial
|
|
|
Auto
|
|
|
Total
|
|
|
Savings Plan
|
|
|
Reimburse-
|
|
|
401(K)
|
|
|
|
|
|
All Other
|
|
|
|
Aircraft
|
|
|
Counseling
|
|
|
Allowances
|
|
|
Perquisites
|
|
|
Contributions
|
|
|
ments
|
|
|
Match
|
|
|
Other
|
|
|
Compensation
|
Name
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Steven R. Loranger
|
|
|
|
152,979
|
|
|
|
|
63,166
|
|
|
|
|
15,600
|
|
|
|
|
231,745
|
|
|
|
|
31,823
|
|
|
|
|
37,746
|
|
|
|
|
8,575
|
|
|
|
|
4,902
|
|
|
|
|
314,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
|
|
|
|
|
16,331
|
|
|
|
|
15,600
|
|
|
|
|
31,931
|
|
|
|
|
11,738
|
|
|
|
|
14,273
|
|
|
|
|
8,575
|
|
|
|
|
1,464
|
|
|
|
|
67,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
8,936
|
|
|
|
|
15,895
|
|
|
|
|
15,600
|
|
|
|
|
40,431
|
|
|
|
|
10,011
|
|
|
|
|
14,263
|
|
|
|
|
8,575
|
|
|
|
|
861
|
|
|
|
|
74,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
|
|
|
|
|
14,648
|
|
|
|
|
15,139
|
|
|
|
|
29,787
|
|
|
|
|
9,267
|
|
|
|
|
6,957
|
|
|
|
|
8,575
|
|
|
|
|
2,373
|
|
|
|
|
56,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
|
|
|
|
|
14,800
|
|
|
|
|
15,600
|
|
|
|
|
30,400
|
|
|
|
|
5,849
|
|
|
|
|
9,079
|
|
|
|
|
8,575
|
|
|
|
|
952
|
|
|
|
|
54,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
|
Amounts reflect the aggregate incremental cost to ITT for
personal use of the corporate aircraft for Mr. Loranger and
Ms. McClain. Mr. Lorangers employment agreement
with the Company permits occasional personal use of the Company
aircraft. Ms. McClains personal use of the corporate
aircraft related to a trip where Ms. McClain was a
passenger on a trip previously scheduled by Mr. Loranger.
The aggregate incremental cost to the Company is determined on a
per flight basis and includes the cost of fuel, a pro-rata share
of repairs and maintenance, landing and storage fees,
crew-related expenses and other miscellaneous variable costs. A
different value attributable to personal use of the corporate
aircraft (as calculated in accordance with Internal Revenue
Service guidelines) is included as compensation on the
W-2s for
Mr. Loranger and Ms. McClain in the amounts of $30,542
and $1,771 respectively. |
|
(c) |
|
Amounts represent financial counseling and tax service fees paid
during 2010. Financial counseling and tax service fees reflect
fees for invoices submitted during the calendar year. |
|
(d) |
|
Auto allowances are provided to a range of executives, including
the NEOs. |
|
(g) |
|
Company contributions to the ITT Excess Savings Plan are
unfunded and earnings accrue at the same rate as the Stable
Value Fund available to participants in the Companys ITT
Salaried Investment and Savings Plan. |
|
(h) |
|
Amounts for Mr. Loranger, Ms. Ramos, Ms. McClain,
Mr. Melcher and Mr. Jimenez are tax reimbursement
allowances intended to offset the inclusion of taxable income of
financial counseling and tax preparation services. Tax
reimbursement for financial counseling has been eliminated for
the 2011 tax year. No compensating salary increase will be
provided. Mr. Jimenezs amount also includes a
tax-related relocation reimbursement of $130. |
|
(i) |
|
Amounts represent the aggregate of the Companys floor and
matching contributions to the participants ITT Salaried
Investment and Savings Plan account. |
|
(j) |
|
Amounts include taxable group term-life insurance premiums
attributable to each NEO. |
73
Grants of
Plan-Based Awards Table
The following table provides information about 2010 equity and
non-equity awards for the NEOs. The table includes the grant
date for equity-based awards, the estimated future payouts under
non-equity incentive plan awards (which consist of potential
payouts under the 2010 AIP) and estimated future payouts under
2010 equity incentive plan awards (including the TSR target
award granted in 2010 for the
2010-2012
performance period (each unit equals $1)). Also provided is the
number of shares underlying all other stock awards, comprised of
restricted stock and non-qualified stock option awards. The
table also provides the exercise price of the non-qualified
stock option awards, reflecting the closing price of ITT stock
on the grant date and the grant date fair value of each equity
award computed under FASB ASC Topic 718. The compensation plans,
under which the grants in the following table were made are
described in the Compensation Discussion and Analysis, beginning
on page 58 of this Proxy Statement, and include the AIP,
TSR, restricted stock awards, and non-qualified stock options
awards.
Grants of
Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
All Other
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Option
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Fair
|
|
|
|
|
|
|
Non-Equity Incentive Plan
|
|
|
Estimated Future Payouts Under
|
|
|
of
|
|
|
Number
|
|
|
or Base
|
|
|
Value
|
|
|
|
|
|
|
Awards
|
|
|
Equity Incentive Plan Awards
|
|
|
Shares
|
|
|
of Securities
|
|
|
Price of
|
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
and Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
Name
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
Steven R. Loranger
|
|
|
|
|
|
|
|
|
754,000
|
|
|
|
|
1,508,000
|
|
|
|
|
3,016,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
990,000
|
|
|
|
|
1,980,000
|
|
|
|
|
3,960,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,980,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,207,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,265
|
|
|
|
|
53.49
|
|
|
|
|
2,047,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
|
|
|
|
|
250,750
|
|
|
|
|
501,500
|
|
|
|
|
1,003,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
400,000
|
|
|
|
|
800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
445,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,721
|
|
|
|
|
53.49
|
|
|
|
|
413,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
|
|
|
|
|
212,000
|
|
|
|
|
424,000
|
|
|
|
|
848,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,000
|
|
|
|
|
360,000
|
|
|
|
|
720,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,049
|
|
|
|
|
53.49
|
|
|
|
|
372,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
|
|
|
|
|
212,000
|
|
|
|
|
424,000
|
|
|
|
|
848,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,000
|
|
|
|
|
360,000
|
|
|
|
|
720,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,049
|
|
|
|
|
53.49
|
|
|
|
|
372,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
|
|
|
|
|
124,500
|
|
|
|
|
249,000
|
|
|
|
|
498,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,350
|
|
|
|
|
166,700
|
|
|
|
|
333,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
185,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05-Mar-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,890
|
|
|
|
|
53.49
|
|
|
|
|
166,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)(d)(e) |
|
Amounts reflect the threshold, target and maximum payment
levels, respectively, if an award payout is achieved under the
Companys AIP described on pages 58 to 61. These potential
payments are based on achievement of specific performance
metrics and are completely at risk. The target award is computed
based upon the applicable range of net estimated payments
denominated in dollars where the target award is equal to 100%
of the award potential, the threshold is equal to 50% of target
and the maximum is equal to 200% of target. |
74
|
|
|
(f)(g)(h) |
|
Amounts reflect the threshold, target and maximum payment
levels, if an award payout is achieved, under the Companys
TSR Plan for the
2010-2012
performance period described on pages 65 to 67. Each unit
under the TSR Plan equals $1. Payments, if any, under the TSR
Plan are paid in cash at the end of the performance period. The
performance period for awards under the Companys TSR Plan,
reflected in the Estimated Future Payouts Under Equity Incentive
Plan Awards column, for the
2010-2012
performance period is January 1,
2010-December 31,
2012. |
|
(i) |
|
Amounts reflect the number of shares of restricted stock granted
in 2010 to the NEOs. The number of shares underlying restricted
stock awards are determined by the average of the high and low
stock price on the program valuation date, February 8, 2010.
Restricted stock grants to NEOs generally vest in full at the
end of the three-year restriction period following the grant
date. During the restriction period, the holder receives
dividends and may vote the shares. |
|
(j) |
|
Amounts reflect the number of non-qualified stock options
granted in 2010 to the NEOs. Such non-qualified stock options
generally become exercisable at the end of the three-year period
following the grant date and expire ten years after the grant
date. For Mr. Jimenez, one-third of non-qualified stock
options granted in 2010 vest in 2011, one-third vest in 2012 and
one-third vest in 2013. |
|
(k) |
|
The option exercise price for non-qualified stock options
granted in 2010 was the closing price of ITT common stock on
March 5, 2010, the date the non-qualified stock options
were granted. |
|
(l) |
|
Amounts in this column represent the aggregate grant date fair
value computed in accordance with FASB ASC Topic 718 for
restricted stock awards and non-qualified stock option awards
granted to the NEOs in 2010. |
Specific
Compensation Arrangements
Mr. Loranger
Term: The original term of the Steven R. Loranger
Employment Agreement was from June 28, 2004 to
June 27, 2007, subject to automatic
12-month
extensions unless the Company or Mr. Loranger provides at
least 180 days prior written notice of non-extension.
Mr. Lorangers employment agreement has been extended
to June 27, 2011 as no notice of non-extension was provided
in 2010.
Annual Base Salary: Mr. Loranger receives a base
salary under his employment agreement, subject to increase by
the Board of Directors. On March 8, 2010,
Mr. Lorangers base salary was $1,160,000. Effective
March 7, 2011 Mr. Lorangers base salary was
$1,200,000.
Mr. Loranger participates in our AIP and Long-Term Incentive
Award programs discussed on pages 58 through 67 and in the
Summary Compensation Table and Grants of Plan-Based Awards in
2010 Table on pages 72 and 74, respectively.
Restricted Stock Units
(RSU): Mr. Loranger received 250,000
restricted stock units granted on June 28, 2004, in
connection with the Steven R. Loranger Employment Agreement. The
units vested in one-third installments on June 28, 2007,
June 28, 2008 and June 28, 2010. One-half of the
vesting RSUs settle upon the vesting date and the remaining
one-half of the vesting RSUs settle within ten days of
Mr. Lorangers termination of employment. During the
restriction period, Mr. Loranger could not vote the shares
but was credited for RSU dividends that vested and settled
following the terms of the original award.
Mr. Lorangers Special Pension
Arrangement: Mr. Loranger has a Special Pension
Arrangement, which is described on page 83 of this Proxy
Statement.
75
Severance Arrangements: Under
Mr. Lorangers employment agreement, if
Mr. Lorangers employment is terminated prior to
June 28, 2011 by the Company without cause or
by Mr. Loranger for good reason (as each such
term is defined in the employment agreement), in either case
upon or following a Change of Control (as defined in
the employment agreement), Mr. Loranger would be entitled
to receive a lump-sum payment of the actuarial present value of
his non-qualified pension as a Special Pension Arrangement.
These pension benefits are offset by any benefits to which he is
entitled (or which he already has received) under other defined
benefit pension arrangements maintained by the Company or any
prior employer. Mr. Loranger is also entitled to retiree
medical coverage as such coverage is in effect for persons
joining the Company on June 28, 2004 (the effective date of
Mr. Lorangers employment), provided that if his
employment is terminated by the Company without cause or by him
for good reason on or after June 28, 2005, that termination
will be considered a retirement under the
Companys retiree medical plan and will entitle
Mr. Loranger to receive benefits under that arrangement.
If Mr. Loranger resigns or is terminated for cause he would
receive no TSR payment. In the event of termination without
cause he would receive payment, if any, on a pro-rata portion of
the outstanding TSR as of the termination date, based on the
Companys performance. If Mr. Lorangers
employment terminates due to disability, death or retirement, he
(or his estate) will be entitled to receive a pro-rata payment
of the target AIP award for the year of termination and payment
of the pro-rata target award for each outstanding TSR award. If
Mr. Lorangers employment is terminated by the Company
without cause or by Mr. Loranger for good reason (other
than during the two-year period following a Change of Control),
he will be entitled to receive a pro-rata target AIP for the
year of termination, plus continued payment of his base salary
and target bonus for a period of two years from the date of
termination. If, within the two-year period following a Change
of Control, the Company terminates Mr. Lorangers
employment without cause or Mr. Loranger terminates his
employment for good reason, the Company will pay
Mr. Loranger a lump-sum payment consisting of (i) a
pro-rata target bonus for the year of termination, and
(ii) a severance payment equal to three times the sum of
his base salary and the highest bonus paid to him in the three
years prior to the Change of Control. Mr. Loranger would
also receive continued health and welfare benefits for up to two
years following a termination without cause or for good reason
(whether before or after a Change of Control). If
Mr. Lorangers employment is terminated at the end of
the initial term or any successive twelve-month renewal period
due to the Company giving a non-extension notice, such
termination will be treated as a termination without cause,
except that his base salary and target bonus will only be
continued for one year. If any payments to Mr. Loranger are
determined to be excess parachute payments under
Section 280G of the Internal Revenue Code, he will receive
a gross-up
payment with respect to the excise taxes incurred by him. All
severance payments are conditioned upon Mr. Lorangers
execution of a general release.
Restrictive Covenants: In his employment agreement,
Mr. Loranger agreed that during the employment term and for
two years after termination, he would not compete with the
Company. He also agreed that he would not solicit or hire any of
the Companys employees or anyone who was an employee in
the previous six months before his departure without the
Companys consent, or solicit any of the Companys
customers or business. Mr. Loranger also agreed not to make
any false or disparaging statements at any time about the
Company. The Company has agreed that after
Mr. Lorangers termination we will instruct our
directors and officers not to make any false or disparaging
remarks about Mr. Loranger. In addition, Mr. Loranger
agreed to follow our Code of Conduct, and he agreed not to
reveal any confidential Company information or personal
information about our officers, directors or employees except as
necessary during employment. Mr. Loranger has assigned all
rights to any Company discoveries, inventions or ideas to the
Company. If Mr. Loranger violates any of these covenants,
the Company may stop paying any post-termination benefits.
Perquisites and Other Compensation: Mr. Loranger
is eligible to participate in the Companys benefit plans
on the same basis as other senior executives, may use corporate
aircraft for business
76
travel, and occasional personal use (when not otherwise
scheduled for business use) and may bring his spouse on such
travel. Mr. Loranger receives a monthly car allowance of
$1,300.
Mr. Loranger receives employee benefits, fringe benefits
and employment and post-employment privileges on terms no less
favorable to Mr. Loranger than to our other senior
executives or those provided to our former Chief Executive
Officer. As with other senior executives, however, the Committee
uses the same CDB, regressed for size and adjusted for scope of
operations, to evaluate Mr. Lorangers compensation
and market trends.
Financial Planning: Mr. Loranger receives
reimbursement for reasonable costs associated with tax planning
and financial counseling. Such costs are not subject to tax
reimbursement starting with financial counseling and tax
planning associated with the 2011 tax year. The Company also
agreed to reimburse Mr. Loranger for any legal and
accounting expenses paid in connection with the filing of any
tax return or dispute with the Internal Revenue Service
regarding the golden parachute excise tax that may occur on a
change of control. Further, if a disagreement arises out of the
employment agreement and Mr. Loranger prevails on any
material issue, the Company will pay for all fees and any
expenses relating to the arbitration or litigation, including
his reasonable attorney fees and expenses.
Mr. Lorangers perquisites and other compensation are
discussed in more detail in the All Other Compensation Table on
page 73.
Ms.
Ramos
On July 1, 2007, Ms. Ramos accepted an offer of
employment with the Company as its Senior Vice President, Chief
Financial Officer, effective July 1, 2007.
Ms. Ramos employment agreement (the Ramos
Letter Agreement) provides for, among other things, annual
base salary, annual incentives and long-term incentives.
Annual Incentive Plan Awards: Ms. Ramos
standard AIP payment is currently calculated at 85% of base
salary. Ms. Ramos 2010 AIP Award is described on page
61 and the Summary Compensation Table on page 72.
Car Allowance: Ms. Ramos is eligible for a
monthly car allowance of $1,300.
Special Grant of Restricted Stock: Ms. Ramos
received a special grant of Restricted Stock at a target award
value of $200,000 under the 2003 Plan. These shares were subject
to a three-year period of restriction, subject to continued
employment and the terms of the Plan. The special grant of
restricted stock vested in full on July 2, 2010.
Long-Term Incentive Award Program: Ms. Ramos
participated in the 2010 Long-Term Incentive Award Program. Her
2010 awards under this program are described in the Grants of
Plan-Based Awards table on page 74.
Ms. Ramos was eligible to participate in the ITT Long-Term
Incentive Award Program for 2007. She was granted a total target
long-term incentive award of $1,100,000 for 2007 comprised as
follows:
|
|
|
One-half of the total award was in the form of a $550,000 target
award for January 1, 2007 through December 31, 2009. This award
was granted under the ITT 1997 Long-Term Incentive Plan. The
measurement period for this award was January 1, 2007 through
December 31, 2009. The ultimate value of this award was
determined based on TSR relative performance measured against
the TSR Performance Index, in accordance with the terms of the
plan, as described on pages 65 to 67, and its administrative
rules and award documents.
|
|
|
One-fourth of the total award ($275,000) was in the form of an
ITT restricted stock award under the 2003 Plan. These shares,
subject to a three-year period of restriction, continued
employment and the terms of the Plan, vested in full on
July 2, 2010.
|
|
|
One-fourth of the total award ($275,000) was in the form of a
non-qualified stock option award under the 2003 Plan. The option
exercise price was the closing price of ITT common shares on
|
77
|
|
|
|
|
the date of grant. These options vested on July 2, 2010 and will
expire seven years from the date of grant, subject to continued
employment and the terms of the Plan.
|
Restricted Stock Award: As an offset for forfeited
Furniture Brands Long-Term Incentive and Retention Awards that
would otherwise have vested in 2007, 2008 and 2009,
Ms. Ramos received a restricted stock award of
12,000 shares under the 2003 Plan as follows:
|
|
|
6,000 shares vested in 2009, and
|
|
|
the remaining 6,000 shares will vest four years after the
grant date of Ms. Ramos fourth anniversary of
employment (i.e., 2011).
|
In the event that Ms. Ramos is terminated by ITT, other
than for cause, prior to the lapse of restrictions, this grant
of restricted stock will vest in full upon termination.
Severance Arrangements: Ms. Ramos is covered
under the terms of the Senior Executive Severance Pay Plan
described on pages 88 to 89. Notwithstanding the terms of such
plan, should Ms. Ramos be terminated by the Company other
than for cause at any time, she will receive a severance benefit
equal to twenty-four months of base salary, subject to the
Companys severance policies. In the event of a termination
in connection with a change of control as described on
pages 90-91, Ms. Ramos would receive a severance pay
equivalent to the sum of three times the highest annual base
salary rate paid and three times the highest bonus paid in
respect of the three years preceding an acceleration event.
Other Compensation: Ms. Ramos also received
financial counseling and tax planning services. Such services
are not eligible for tax reimbursement as of the 2011 tax year.
78
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Market or Payout
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares
|
|
|
of Shares
|
|
|
Shares,
|
|
|
Shares,
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
or Units
|
|
|
or Units
|
|
|
Units or
|
|
|
Units or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
of Stock
|
|
|
of Stock
|
|
|
Other Rights
|
|
|
Other Rights
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
Name
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options
|
|
|
Price
|
|
|
Date
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(#)(d)
|
|
|
($)(e)
|
|
|
(f)
|
|
|
(#)(g)
|
|
|
($)(h)
|
|
|
(#)(i)
|
|
|
($)(j)
|
Steven R. Loranger
|
|
|
|
199,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45.47
|
|
|
|
|
3/8/2012
|
|
|
|
|
121,880
|
|
|
|
|
6,351,167
|
|
|
|
|
3,960,000
|
|
|
|
|
1,980,000
|
|
|
|
|
|
83,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52.68
|
|
|
|
|
3/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57.99
|
|
|
|
|
3/7/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41.52
|
|
|
|
|
6/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
53.09
|
|
|
|
|
3/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,690
|
|
|
|
|
|
|
|
|
|
33.19
|
|
|
|
|
3/5/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,265
|
|
|
|
|
|
|
|
|
|
53.49
|
|
|
|
|
3/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
16,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69.00
|
|
|
|
|
7/2/2014
|
|
|
|
|
28,994
|
|
|
|
|
1,510,877
|
|
|
|
|
760,000
|
|
|
|
|
380,000
|
|
|
|
|
|
|
|
|
|
|
18,185
|
|
|
|
|
|
|
|
|
|
53.09
|
|
|
|
|
3/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,130
|
|
|
|
|
|
|
|
|
|
33.19
|
|
|
|
|
3/5/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,721
|
|
|
|
|
|
|
|
|
|
53.49
|
|
|
|
|
3/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
33,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55.59
|
|
|
|
|
9/19/2012
|
|
|
|
|
74,500
|
|
|
|
|
3,882,195
|
|
|
|
|
720,000
|
|
|
|
|
360,000
|
|
|
|
|
|
8,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52.68
|
|
|
|
|
3/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57.99
|
|
|
|
|
3/7/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,670
|
|
|
|
|
|
|
|
|
|
53.09
|
|
|
|
|
3/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,130
|
|
|
|
|
|
|
|
|
|
33.19
|
|
|
|
|
3/5/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,049
|
|
|
|
|
|
|
|
|
|
53.49
|
|
|
|
|
3/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
3,690
|
|
|
|
|
1,845
|
|
|
|
|
|
|
|
|
|
66.45
|
|
|
|
|
8/18/2015
|
|
|
|
|
15,224
|
|
|
|
|
793,323
|
|
|
|
|
610,000
|
|
|
|
|
305,000
|
|
|
|
|
|
8,269
|
|
|
|
|
16,536
|
|
|
|
|
|
|
|
|
|
33.19
|
|
|
|
|
3/5/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,049
|
|
|
|
|
|
|
|
|
|
53.49
|
|
|
|
|
3/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
5,512
|
|
|
|
|
11,023
|
|
|
|
|
|
|
|
|
|
45.81
|
|
|
|
|
6/9/2016
|
|
|
|
|
7,111
|
|
|
|
|
370,554
|
|
|
|
|
333,400
|
|
|
|
|
166,700
|
|
|
|
|
|
|
|
|
|
|
11,890
|
|
|
|
|
|
|
|
|
|
53.49
|
|
|
|
|
3/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Vesting Schedule for Unexercisable Options (options vest on the
applicable anniversary of the grant date.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Schedule (#s)
|
Name
|
|
|
Grant Date
|
|
|
Expiration Date
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
Steven R. Loranger
|
|
|
|
3/10/2008
|
|
|
|
|
3/10/15
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2009
|
|
|
|
|
3/5/16
|
|
|
|
|
|
|
|
|
|
165,690
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
3/5/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
3/10/2008
|
|
|
|
|
3/10/15
|
|
|
|
|
18,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2009
|
|
|
|
|
3/5/16
|
|
|
|
|
|
|
|
|
|
30,130
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
3/5/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
3/10/2008
|
|
|
|
|
3/10/15
|
|
|
|
|
16,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2009
|
|
|
|
|
3/5/16
|
|
|
|
|
|
|
|
|
|
30,130
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
3/5/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
8/18/2008
|
|
|
|
|
8/18/15
|
|
|
|
|
1,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2009
|
|
|
|
|
3/5/16
|
|
|
|
|
8,268
|
|
|
|
|
8,268
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
3/5/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
6/9/2009
|
|
|
|
|
6/9/16
|
|
|
|
|
5,512
|
|
|
|
|
5,511
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
3/5/20
|
|
|
|
|
3,964
|
|
|
|
|
3,963
|
|
|
|
|
3,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79
|
|
|
(g) |
|
Vesting Schedule for Restricted Stock (restricted stock vests on
the applicable anniversary of the grant date.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Schedule(#)
|
Name
|
|
|
Grant Date
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
Steven R. Loranger
|
|
|
|
3/10/2008
|
|
|
|
|
28,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2009
|
|
|
|
|
|
|
|
|
|
52,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
7/2/2007
|
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/10/2008
|
|
|
|
|
5,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2009
|
|
|
|
|
|
|
|
|
|
9,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
3/10/2008
|
|
|
|
|
4,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2009
|
|
|
|
|
|
|
|
|
|
9,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,770
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
8/18/2008
|
|
|
|
|
1,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2009
|
|
|
|
|
|
|
|
|
|
6,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
6/9/2009
|
|
|
|
|
|
|
|
|
|
3,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(h) |
|
Reflects the Companys closing stock price of $52.11 on
December 31, 2010. |
|
(i)(j) |
|
Awards are typically expressed as target cash awards and
payment, if any, is in cash following the end of the performance
cycle. Column (i) represents the number of units (each unit
= $1) at target levels and column (j) represents the market
or payout value based on stock price performance. Disclosures
provide the TSR value at target based on current performance at
year-end. Pages 65 to 67 provide material terms of the
Companys TSR grants. |
|
|
|
The following table represents the vesting schedule of TSR on
December 31 of each year awards with each TSR unit reflecting $1
of value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Schedule
|
Equity Incentive Plan Awards
|
|
|
Approval Date(1)
|
|
|
Target Award in units(#)
|
|
|
2011
|
|
|
2012
|
Steven R. Loranger
|
|
|
|
3/5/2009
|
|
|
|
1,980,000
|
|
|
|
1,980,000
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
1,980,000
|
|
|
|
|
|
|
|
|
1,980,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
3/5/2009
|
|
|
|
360,000
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
3/5/2009
|
|
|
|
360,000
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
3/5/2009
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez(2)
|
|
|
|
6/9/2009
|
|
|
|
166,700
|
|
|
|
166,700
|
|
|
|
|
|
|
|
|
|
|
3/5/2010
|
|
|
|
166,700
|
|
|
|
|
|
|
|
|
166,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For purposes of the TSR, the grant date is January 1, the
first day of the performance period for the year in which the
award is approved. |
|
(2) |
|
Mr. Jimenez joined the Company on June 8, 2009. His target TSR
award was granted effective on the next business day. |
80
Option
Exercises & Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Value
|
|
|
Number of
|
|
|
Value
|
|
|
|
Shares
|
|
|
Realized
|
|
|
Shares
|
|
|
Realized
|
|
|
|
Acquired on
|
|
|
on
|
|
|
Acquired on
|
|
|
on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
Name
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)(1)
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
Steven R. Loranger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,522
|
|
|
|
|
5,562,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,930
|
|
|
|
|
309,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,671
|
|
|
|
|
195,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects aggregate dollar value upon vesting of restricted stock
reflected in column (d). |
|
(e) |
|
On June 28, 2004, Mr. Loranger received an award of
250,000 Restricted Stock Units (RSUs) under the ITT
2003 Equity Incentive Plan in connection with his employment
agreement. The last tranche of Mr. Lorangers June 28, 2004
award vested on June 28, 2010. This vesting included restricted
stock units and applicable restricted unit dividends, in an
amount equal to 88,821 shares. On the June 28, 2010 vesting date
approximately one-half of the restricted stock units settled,
with a value of $2,149,635 and the remainder of 42,869 shares
were deferred and will settle within ten days of
Mr. Lorangers termination of employment. The value of
this deferred amount was $2,005,412 on the vesting date. In
addition, 2,227 restricted stock unit dividends (representing
dividends attributable to shares which previously vested)
vested, of which 369 settled and 1,858 were deferred. |
|
|
|
With respect to all NEOs, the amount in column (e) does not
include payment for the 2008-2010 TSR award, which vested on
December 31, 2010, as the Companys relative share
price appreciation did not meet the minimum threshold
requirement for a payment. |
ITT
Pension Benefits
ITT Salaried Retirement Plan. Under the ITT Salaried
Retirement Plan, participants have the option, on an annual
basis, to elect to be covered under either a Traditional Pension
Plan or a Pension Equity Plan formula for future pension
accruals. The ITT Salaried Retirement Plan is a funded and
tax-qualified retirement program. The plan is described in
detail below. All of the NEOs participate in the Traditional
Pension Plan formula of the ITT Salaried Retirement Plan.
While the Traditional Pension Plan formula pays benefits on a
monthly basis after retirement, the Pension Equity Plan formula
enables participants to elect to have benefits paid as a single
sum payment upon employment termination, regardless of the
participants age. The Traditional Pension Plan benefit
payable to an employee depends upon the date an employee first
became a participant under the plan.
A participant first employed on or after January 1, 2000,
under the Traditional Pension Plan would receive an annual
pension that would equal:
|
|
|
|
|
11/2%
of his or her average final compensation (as defined below) for
each year of benefit service up to 40 years, reduced by
|
|
|
|
11/4%
of his or her primary Social Security benefit for each year of
benefit service up to a maximum of 40 years.
|
81
For a participant first employed prior to January 1, 2005,
average final compensation (including salary and approved bonus
or AIP payments) is the total of:
|
|
|
|
|
the participants average annual base salary for the five
calendar years of the last 120 consecutive calendar months of
eligibility service that would result in the highest average
annual base salary amount, plus
|
|
|
|
the participants average annual pension eligible
compensation, not including base salary, for the five calendar
years of the participants last 120 consecutive calendar
months of eligibility service that would result in the highest
average annual compensation amount.
|
For a participant first employed on or after January 1,
2005, average final compensation is the average of the
participants total pension eligible compensation (salary,
bonus and annual incentive payments for NEOs and other exempt
salaried employees) over the highest five consecutive calendar
years of the participants final 120 months of
eligibility service.
For participants first employed from January 1, 2000
through December 31, 2004, under the Traditional Pension
Plan, Standard Early Retirement is available as described above.
Special Early Retirement is also available to employees who have
attained at least age 55 with 15 years of eligibility
service (but not earlier than age 55). For Special Early
Retirement, the benefit payable at or after age 62 would be
at 100%; if payments commence prior to age 62 they would be
reduced by
5/12
of 1% for each of the first 48 months prior to age 62
and by an additional
4/12
of 1% for each of the next 12 months and by an additional
3/12
of 1% for each month prior to age 57. For participants
first employed on or after January 1, 2005, and who retire
before age 65, benefits may commence at or after
age 55 but they would be reduced by
5/9
of 1% for each of the first 60 months prior to age 65
and an additional
5/18
of 1% for each month prior to age 60.
In December 2007, effective January 1, 2008, the ITT
Salaried Retirement Plan and the ITT Excess Pension Plans were
amended to provide for a three-year vesting requirement. In
addition, for employees who are already vested and who are
involuntarily terminated and entitled to severance payments from
the Company, additional months of age and service (not to exceed
24 months) are to be imputed based on the employees
actual service to his or her last day worked, solely for
purposes of determining eligibility for early retirement.
The 2010 Pension Benefits table on page 83 of this Proxy
Statement provides information on the pension benefits for the
NEOs. At the present time, none of the NEOs listed in the
Summary Compensation Table has elected to accrue benefits under
the Pension Equity Plan formula. Mr. Loranger participates
under the terms of the plan in effect for employees hired
between January 1, 2000 and December 31, 2004 and
Ms. Ramos, Ms. McClain Mr. Melcher and
Mr. Jimenez participate under the terms of the plan in
effect for employees hired after January 1, 2005. The
accumulated benefit an employee earns over his or her career
with the Company is payable on a monthly basis starting after
retirement. Employees may retire as early as age 55 under
the terms of the plan. Pensions may be reduced if retirement
starts before age 65. Possible pension reductions are
described above.
Benefits under this plan are subject to the limitations imposed
under Sections 415 and 401(a) (17) of the Internal
Revenue Code in effect as of December 31, 2010.
Section 415 limits the amount of annual pension payable
from a qualified plan. For 2010, this limit is $195,000 per year
for a single-life annuity payable at an IRS-prescribed
retirement age. This ceiling may be actuarially adjusted in
accordance with IRS rules for items such as employee
contributions, other forms of distribution and different annuity
starting dates. Section 401(a)(17) limits the amount of
compensation that may be recognized in the determination of a
benefit under a qualified plan. For 2010, this limit is $245,000.
ITT Excess Pension Plan. Since federal law limits the
amount of benefits paid under and the amount of compensation
recognized under tax-qualified retirement plans, the Company
maintains the unfunded ITT Excess Pension Plan, which is not
qualified for tax purposes. The purpose of the
82
ITT Excess Pension Plan is to restore benefits calculated under
the ITT Salaried Retirement Plan formula that cannot be paid
because of the IRS limitations noted above. The Company has not
granted any extra years of benefit service to any employee under
either the ITT Salaried Retirement Plan or the Excess Pension
Plan. In the event of a change of control, certain extra years
of service may be allowed in accordance with the terms of the
Special Senior Executive Severance Pay Plan described on
pages 88-89 of this Proxy Statement.
In the event of a change of control, any excess plan benefit
would be immediately payable, subject to any applicable
Section 409A restrictions with respect to form and timing
of payments, and would be paid in a single discounted sum.
Amendments to the excess pension plan related to
Section 409A compliance, while not modifying the previously
disclosed definition of change in control in the excess pension
plan, provide that payouts of pension amounts earned since
January 1, 2005 require a change in control involving an
acceleration event of 30% or more of the Companys
outstanding stock.
Special Pension Arrangement. Mr. Lorangers
employment agreement provides for a non-qualified pension
arrangement if Mr. Lorangers employment is terminated
on or after June 28, 2009, or under certain circumstances
prior to that date. This arrangement provides for an annuity
paid monthly over Mr. Lorangers life, calculated as a
percentage of his average annual compensation for the five years
in which his compensation was highest, which percentage ranges
from 38%, if Mr. Loranger is age 57 upon the date of
his termination, to 50%, if Mr. Loranger is at least
age 60 on the date of his termination. Any amount so
determined will be reduced by the amount to which
Mr. Loranger is entitled to under the pension plans of ITT
or the plans of any prior employer. Quantification of
Mr. Lorangers pension arrangements, as of
December 31, 2010, is provided in the 2010 Pension Benefits
table below and the arrangements are further discussed in
footnote (5) to Mr. Lorangers Potential
Post-Employment Compensation table on page 93.
No pension benefits were paid to any of the named executives in
the last fiscal year.
Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value
|
|
|
Benefit at
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
of Accumulated
|
|
|
Earliest
|
|
|
Payments
|
|
|
|
|
|
|
Years
|
|
|
Benefit at
|
|
|
Date for
|
|
|
During
|
|
|
|
|
|
|
Credited
|
|
|
Normal
|
|
|
Unreduced
|
|
|
Last Fiscal
|
|
|
|
|
|
|
Service
|
|
|
Retirement
|
|
|
Benefit
|
|
|
Year
|
Name(a)
|
|
|
Plan Name(b)
|
|
|
(#)(c)
|
|
|
($)(d)(1)
|
|
|
(e)
|
|
|
($)(f)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven R. Loranger
|
|
|
ITT Salaried Retirement Plan
|
|
|
|
6.51
|
|
|
|
|
150,257
|
|
|
|
|
150,257
|
|
|
|
|
|
|
|
|
|
ITT Excess Pension Plan
|
|
|
|
6.51
|
|
|
|
|
2,017,943
|
|
|
|
|
2,017,943
|
|
|
|
|
|
|
|
|
|
Special Pension Arrangement
|
|
|
|
6.51
|
|
|
|
|
5,579,701
|
|
|
|
|
10,732,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
ITT Salaried Retirement Plan
|
|
|
|
3.50
|
|
|
|
|
68,423
|
|
|
|
|
68,423
|
|
|
|
|
|
|
|
|
|
ITT Excess Pension Plan
|
|
|
|
3.50
|
|
|
|
|
279,374
|
|
|
|
|
279,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
ITT Salaried Retirement Plan
|
|
|
|
5.29
|
|
|
|
|
72,062
|
|
|
|
|
72,062
|
|
|
|
|
|
|
|
|
|
ITT Excess Pension Plan
|
|
|
|
5.29
|
|
|
|
|
193,588
|
|
|
|
|
193,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
ITT Salaried Retirement Plan
|
|
|
|
2.38
|
|
|
|
|
50,938
|
|
|
|
|
50,938
|
|
|
|
|
|
|
|
|
|
ITT Excess Pension Plan
|
|
|
|
2.38
|
|
|
|
|
133,311
|
|
|
|
|
133,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
ITT Salaried Retirement Plan
|
|
|
|
1.56
|
|
|
|
|
17,912
|
|
|
|
|
17,912
|
|
|
|
|
|
|
|
|
|
ITT Excess Pension Plan
|
|
|
|
1.56
|
|
|
|
|
29,666
|
|
|
|
|
29,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumptions used to determine present value as of
December 31, 2010 are as follows: |
Measurement date: December 31, 2010; Discount Rate: 5.75%;
Mortality (pre-commencement): None; Mortality
(post-commencement): UP-94 Mortality Table; Termination of
Employment: Age 65 for all participants; Present value is
based on the single life annuity
83
payable beginning on the first day of the month at normal
retirement age 65 (column d)) or the earliest time at which
a participant may retire under the plan without any benefit
reduction due to age (column (e)). The six-month delay under the
Pension Plan for specified employees as required
under Section 409A of the Internal Revenue Code was
disregarded for this purpose. All results shown are estimates
only; actual benefits will be based on precise credited service
and compensation history, which will be determined at
termination of employment.
The 2010 row of the column titled Change in Pension Plan
Value & Nonqualified Deferred Compensation Earnings in
the Summary Compensation Table quantifies the change in the
present value of the Pension Plan benefit from December 31,
2009 to December 31, 2010. To determine the present value
of the plan benefit as of December 31, 2009, the same
assumptions that are described above to determine present value
as of December 31, 2010 were used, except a 5.75% interest
rate was used to determine the present value, as compared to a
6.00% interest rate as of December 31, 2009.
|
|
|
(d) |
|
The accumulated benefit is based on service and earnings (base
salary and bonus and/or AIP payment) considered by the plans for
the period through December 31, 2010, and represents the
actuarial present value under ASC Topic 715 of pension earned to
date and payable at the assumed normal retirement age for the
named executives as defined under each plan, based upon
actuarial factors and assumptions used in Note 16 to the
Consolidated Financial Statements in the 2010 Annual Report on
Form 10-K
and as described in (1) above, regardless of whether or not
the executive has vested in this benefit.
Mr. Lorangers Special Pension Arrangement is
described in detail in this Proxy Statement on page 83.
Mr. Loranger received a special pension arrangement in
connection with his employment agreement to reflect the pension
benefit with prior employers which he agreed to forego when he
entered into his employment agreement with the Company. |
|
(e) |
|
The amounts represent the actuarial present value of the
accumulated benefit at December 31, 2010, for the named
executives under each plan based upon actuarial factors and
assumptions used in Note 16 to the Consolidated Financial
Statements in the 2010
Form 10-K
and as described in (1) above, where the retirement age is
assumed to be the earliest age at which the individual can
receive undiscounted early retirement benefits.
Mr. Loranger has a Special Pension Arrangement. The present
value of the accumulated benefit at the earliest date for
unreduced benefits with respect to the Special Pension
Arrangement for Mr. Loranger is $10,732,988. |
ITT
Deferred Compensation Plan
ITT Deferred Compensation Plan. The ITT
Deferred Compensation Plan is a tax deferral plan. The ITT
Deferred Compensation Plan permits eligible executives with a
base salary of at least $200,000 to defer between 2% and 90% of
their AIP payment. The AIP amount deferred is included in the
Summary Compensation Table under Non-Equity Incentive Plan
Compensation. Withdrawals under the plan are available on
payment dates elected by participants at the time of the
deferral election. The withdrawal election is irrevocable except
in cases of demonstrated hardship due to an unforeseeable
emergency as provided by the ITT Deferred Compensation Plan.
Amounts deferred will be unsecured general obligations of the
Company to pay the deferred compensation in the future and will
rank with other unsecured and unsubordinated indebtedness of the
Company.
Participants can elect to have their account balances allocated
into one or more of the 25 phantom investment funds (including a
phantom Company stock fund) and can change their investment
allocations on a daily basis. All plan accounts are maintained
on the accounts of the Company and investment earnings are
credited to a participants account (and charged to
corporate earnings) to mirror the investment returns achieved by
the investment funds chosen by that participant.
84
A participant can establish up to six accounts into
which AIP payment deferrals are credited and he or she can elect
a different form of payment and a different payment commencement
date for each account. One account may be selected
based on a termination date (the Termination
Account) and five accounts are based on employee-specified
dates (each a Special Purpose Account). Each Special
Purpose and Termination Account may have different investment
and payment options. Termination Accounts will be paid in the
seventh month following the last day worked. Changes to Special
Purpose Account distribution elections must be made at least
12 months before any existing benefit payment date, may not
take effect for at least 12 months, and must postpone the
existing benefit payment date by at least five years.
Additionally, Termination Account distribution elections are
irrevocable.
ITT Excess Savings Plan. Since federal law
limits the amount of compensation that can be used to determine
employee and employer contribution amounts ($245,000 in
2010) to the tax-qualified plan, the Company has
established and maintains a non-qualified unfunded ITT Excess
Savings Plan to allow for employee and Company contributions
based on base salary in excess of these limits. Employee
contributions under this plan are limited to 6% of base salary.
All balances under this plan are maintained on the books of the
Company and earnings are credited to the accumulated savings
under the plan based on the earnings in the Stable Value Fund in
the tax-qualified plan. Benefits will be paid in a lump sum in
the seventh month following the last day worked.
Deferred Compensation. Non-qualified savings
represent amounts in the ITT Excess Savings Plan. Deferred
Compensation earnings under the ITT Deferred Compensation Plan
are calculated by reference to actual earnings of mutual funds
or ITT stock as provided in the accompanying chart.
85
The table below shows the activity within the Deferred
Compensation Plan for the NEOs for 2010.
2010
Nonqualified Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions in
|
|
|
Contributions
|
|
|
Aggregate
|
|
|
Withdrawals/
|
|
|
Balance at
|
Name
|
|
|
Last FY
|
|
|
in Last
|
|
|
Earnings in
|
|
|
Distributions
|
|
|
Last FYE
|
(a)
|
|
|
($)(b)
|
|
|
FY ($)(c)
|
|
|
Last FY ($)(d)
|
|
|
($)(e)
|
|
|
($)(f)
|
Steven R. Loranger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified savings
|
|
|
|
54,554
|
|
|
|
|
31,823
|
|
|
|
|
15,197
|
|
|
|
|
|
|
|
|
|
545,021
|
|
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
424,590
|
|
|
|
|
|
|
|
|
|
7,829,325
|
|
Vested but Undelivered Shares(1)
|
|
|
|
|
|
|
|
|
2,086,701
|
|
|
|
|
452,801
|
|
|
|
|
|
|
|
|
|
6,921,198
|
|
Total
|
|
|
|
54,554
|
|
|
|
|
2,118,524
|
|
|
|
|
892,588
|
|
|
|
|
|
|
|
|
|
15,295,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified savings
|
|
|
|
20,123
|
|
|
|
|
11,738
|
|
|
|
|
1,901
|
|
|
|
|
|
|
|
|
|
84,121
|
|
Deferred Compensation
|
|
|
|
696,870
|
|
|
|
|
|
|
|
|
|
24,951
|
|
|
|
|
|
|
|
|
|
1,258,851
|
|
Total
|
|
|
|
716,993
|
|
|
|
|
11,738
|
|
|
|
|
26,852
|
|
|
|
|
|
|
|
|
|
1,342,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified savings
|
|
|
|
16,956
|
|
|
|
|
10,011
|
|
|
|
|
2,498
|
|
|
|
|
|
|
|
|
|
100,417
|
|
Deferred Compensation
|
|
|
|
229,145
|
|
|
|
|
|
|
|
|
|
23,976
|
|
|
|
|
|
|
|
|
|
612,990
|
|
Total
|
|
|
|
246,101
|
|
|
|
|
10,011
|
|
|
|
|
26,474
|
|
|
|
|
|
|
|
|
|
713,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified savings
|
|
|
|
15,888
|
|
|
|
|
9,267
|
|
|
|
|
736
|
|
|
|
|
|
|
|
|
|
43,180
|
|
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
15,888
|
|
|
|
|
9,267
|
|
|
|
|
736
|
|
|
|
|
|
|
|
|
|
43,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified savings
|
|
|
|
10,027
|
|
|
|
|
5,849
|
|
|
|
|
105
|
|
|
|
|
|
|
|
|
|
15,981
|
|
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
10,027
|
|
|
|
|
5,849
|
|
|
|
|
105
|
|
|
|
|
|
|
|
|
|
15,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Approximately one-half of the restricted stock units awarded to
Mr. Loranger in 2004 vested in shares in one-third
cumulative installments in 2007, 2008 and 2010, but did not
settle. The vested but not settled shares were deferred and are
expected to settle within ten days of Mr. Lorangers
termination, as provided in the Steve R. Loranger Employment
Agreement. Amounts in column (c) for vested but undelivered
shares reflect the value of shares which vested but did not
settle pursuant to Mr. Lorangers final installment
vesting of restricted stock units on June 28, 2010 and the
value of dividends on restricted stock units on the dividend
grant date. Amounts in column (d) for vested but
undelivered shares include the sum of the: 1) Difference
between restricted stock unit value at December 31, 2009
and December 31, 2010 based on stock price appreciation or
depreciation of all deferred restricted stock units vested in
years prior to 2010; 2) Difference between restricted stock
unit value at June 28, 2010 and December 31, 2010 of
the deferred portion of the tranche which vested in 2010; and 3)
Difference between the value of dividends on any restricted
stock units on the date of dividend grant and December 31,
2010. Mr. Loranger had a beginning balance of $4,381,696 prior
to 2010 representing restricted stock units and related dividend
equivalents which previously vested but did not settle. |
|
(b) |
|
Amounts for Executive Contributions in Last Fiscal Year for Ms.
Ramos and Ms. McClain represent the deferred portion of the AIP
for each respective NEO, which amounts were included in the
Summary Compensation Table in the Companys 2011 Proxy
Statement. |
86
|
|
|
(c) |
|
The amounts in column (c) non-qualified savings are also
reflected in column (g) of the All Other Compensation Table
on page 73 as the ITT Excess Savings Plan Match and Floor
and included in the Summary Compensation Table on page 72. |
|
(d) |
|
See note (1) above for a discussion of Mr. Lorangers
restricted stock units. |
|
(f) |
|
The amounts in column (f), which include Executive Contributions
in the Last Fiscal Year, represent the deferred portion of the
earned 2010 AIP, which amounts were credited to the
executives accounts in 2011 and reported in the
Companys 2011 proxy statement and the Summary Compensation
Table on page 72. Registrant Contributions in the Last
Fiscal Year for Non-qualified savings for all NEOs are included
in the All Other Compensation Table on page 73 and the
Summary Compensation Table on page 72. |
The table below shows the funds available under the ITT Deferred
Compensation Plan, as reported by the administrator and their
annual rate of return for the calendar year ended
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate of
|
|
|
|
|
|
Rate of
|
|
|
|
Return
|
|
|
|
|
|
Return
|
|
|
|
1/1/10
|
|
|
|
|
|
1/1/10
|
Name of Fund
|
|
|
12/31/10
|
|
|
Name of Fund
|
|
|
12/31/10
|
Fixed Rate Option(1)
|
|
|
|
5.80
|
%
|
|
|
Vanguard Developed Markets Index (VDMIX)
|
|
|
|
8.54%
|
|
PIMCO Total Return Institutional (PTTRX)
|
|
|
|
8.86
|
%
|
|
|
Artio International Equity A (BJBIX)
|
|
|
|
8.52%
|
|
PIMCO Real Return Institutional (PRRIX)
|
|
|
|
7.68
|
%
|
|
|
American Fnds EuroPacific Growth (REREX)
|
|
|
|
9.39%
|
|
T Rowe Price High Yield (PRHYX)
|
|
|
|
14.40
|
%
|
|
|
First Eagle Overseas A (SGOVX)
|
|
|
|
19.24%
|
|
Dodge & Cox Stock (DODGX)
|
|
|
|
13.49
|
%
|
|
|
Lazard Emerging Markets Equity Open (LZOEX)
|
|
|
|
22.43%
|
|
Vanguard 500 Index (VFINX)
|
|
|
|
14.91
|
%
|
|
|
AIM Global Real Estate (AGREX)
|
|
|
|
16.97%
|
|
American Funds Growth Fund of America R4 (RGAEX)
|
|
|
|
12.29
|
%
|
|
|
Model Portfolio* Conservative
|
|
|
|
8.11%
|
|
Perkins Mid Cap Value (JMCVX)
|
|
|
|
14.81
|
%
|
|
|
Model Portfolio* Moderate Conservative
|
|
|
|
10.51%
|
|
Artisan Mid Cap (ARTMX)
|
|
|
|
31.57
|
%
|
|
|
Model Portfolio* Moderate
|
|
|
|
12.43%
|
|
American Century Small Cap Value (ASVIX)
|
|
|
|
24.15
|
%
|
|
|
Model Portfolio* Moderate Aggressive
|
|
|
|
13.45%
|
|
Perimeter Small Cap Growth (PSCGX)
|
|
|
|
25.14
|
%
|
|
|
Model Portfolio* Aggressive
|
|
|
|
14.70%
|
|
Harbor International (HIINX)
|
|
|
|
11.57
|
%
|
|
|
ITT Corporation Stock Fund (ITT)
|
|
|
|
6.97%
|
|
Vanguard Total Bond Market Index (VBMFX)
|
|
|
|
6.42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Fixed Rate Option 5.80% rate is based on guaranteed
contractual returns from the insurance company provider. |
|
* |
|
The returns shown in the model portfolio are not subsidized by
the Company, but represent returns for a managed portfolio based
on funds available to deferred compensation participants. |
87
POTENTIAL
POST-EMPLOYMENT COMPENSATION
The Potential Post-Employment Compensation tables on
pages 92 to 101 reflect the amount of compensation payable
to each of the NEOs in the event of employment termination under
several different circumstances, including voluntary
termination, termination for cause, death, disability,
termination without cause or termination in connection with a
change of control. Ms. Ramos, Ms. McClain and
Messrs. Melcher and Jimenez are covered under the Senior
Executive Severance Pay Plan or Special Senior Executive
Severance Pay Plan (applicable to change of control) described
on pages 88 to 90 of this Proxy Statement.
Mr. Loranger is covered under the Steven R. Loranger
Employment Agreement, described on pages 75 to 77 of this
Proxy Statement and does not participate in any severance plans.
The amounts shown in the potential post-employment compensation
tables are estimates (or the estimated present value of the ITT
Excess Pension Plan which may be paid in continuing annuity
payments), assuming that the triggering event was effective as
of December 31, 2010, including amounts which would be
earned through such date (or that would be earned during a
period of severance), and where applicable, are based on the ITT
closing stock price on December 31, 2010, the last trading
day of 2010, which was $52.11.
The actual amounts to be paid out can only be determined at the
time of such executives separation from ITT. For purposes
of calculating the estimated potential payments to our officers
under the ITT Excess Pension Plan, as reflected in the tables
below, we have used the same actuarial factors and assumptions
described in note (1) to the 2010 Pension Benefits table on
page 83 and those used for financial statement reporting
purposes as described in Note 16 to the Consolidated
Financial Statements in the 2010
Form 10-K.
The calculations assume a discount rate of 5.75% and take into
account the UP 1994 Mortality Table projected to 2010, except as
noted in the footnotes.
Payments and Benefits Provided Generally to Salaried
Employees. The amounts shown in the tables below do not
include payments and benefits to the extent these payments and
benefits are provided on a non-discriminatory basis to salaried
employees generally upon termination of employment. These
include:
|
|
|
|
|
Accrued salary and vacation pay;
|
|
|
|
Regular pension benefits under the ITT Salaried Retirement Plan;
|
|
|
|
Health care benefits provided to retirees under the ITT Salaried
Retirement Plan, including retiree medical and dental insurance.
Employees who terminate prior to retirement are eligible for
continued benefits under COBRA; and
|
|
|
|
Distributions of plan balances under the ITT Salaried Investment
and Savings Plan and amounts currently vested under the ITT
Excess Savings Plan.
|
No perquisites are available to any NEOs in any of the
post-employment compensation circumstances. With respect to the
ITT Salaried Retirement Plan, benefits under such plan may be
deferred to age 65, but may become payable at age 55
or, if the participant is eligible for early retirement, the
first of the month immediately following the last day worked
without regard to the period of the severance payments. Benefits
under the ITT Excess Pension Plan must commence as soon as
possible but generally would be payable seven months following
such date, retroactive to the date the ITT Excess Pension Plan
benefit became payable.
Senior Executive Severance Pay Plan. The
amount of severance pay under this plan depends on the
executives base pay and years of service. The amount will
not exceed 24 months of base pay or be greater than two
times the executives total annual compensation during the
year immediately preceding termination. The Company considers
these severance pay provisions appropriate transitional
provisions given the job responsibilities and competitive market
in which senior executives function. The Companys
obligation to continue severance payments stops if the executive
does not
88
comply with the Companys Code of Corporate Conduct. We
consider this cessation provision to be critical to the
Companys emphasis on ethical behavior. The Companys
obligation to continue severance payments also stops if the
executive does not comply with non-competition provisions of the
ITT Severance Policy or Senior Executive Severance Pay Plan.
These provisions protect the integrity of our businesses and are
consistent with typical commercial arrangements.
Ms. McClain, Ms. Ramos, and Messrs. Melcher and
Jimenez are covered under this plan. Mr. Loranger is
covered under the terms of the Steven R. Loranger employment
agreement as described on pages 75 to 77.
If a covered executive receives or is entitled to receive other
compensation from another company, the amount of that other
compensation could be used to offset amounts otherwise payable
under the ITT Senior Executive Severance Pay Plan. During the
severance payment period, the executive will have a limited
right to continue to be eligible for participation in certain
benefit plans. Severance pay will start within sixty days
following the covered executives scheduled termination
date.
Special Senior Executive Severance Pay
Plan. This plan provides two levels of benefits
for covered executives, based on their position within the
Company. The Committee considered two levels of benefits
appropriate based on the relative ability of each level of
employee to influence future Company performance. (Senior Vice
Presidents receive the higher level and Vice Presidents the
second level). Under the Special Senior Executive Severance Pay
Plan, if a covered executive is terminated within two years of
an acceleration event in a change of control or in contemplation
of an acceleration in a change of control event that ultimately
occurs or if the covered executive terminates his or her
employment for good reason within two years of an acceleration
event in the event of a change of control, he or she would be
entitled to:
|
|
|
|
|
any accrued but unpaid base salary, bonus (AIP payment),
unreimbursed expenses and employee benefits, including vacation;
|
|
|
|
two or three times the highest annual base salary rate during
the three fiscal years immediately preceding the date of
termination and two or three times the highest annual incentive
plan payment paid or awarded in the three years preceding an
acceleration event or termination;
|
|
|
|
continuation of health and life insurance benefits and certain
perquisites at the same levels for two or three years;
|
|
|
|
a lump-sum payment equal to the difference between the total
lump-sum value of his or her pension benefit under the
Companys pension plans, or any successor pension plans
(provided such plans are no less favorable to the executive than
the Company pension plans), and the total lump-sum value of his
or her pension benefit under the pension plans after crediting
an additional two or three years of age and eligibility and
benefit service using the highest annual base salary rate and
bonus for purposes of determining final average compensation
under the pension plans;
|
|
|
|
credit for an additional two or three years of age and two or
three years of eligibility service under the retiree health and
retiree life insurance benefits;
|
|
|
|
a lump-sum payment equal to two or three times the highest
annual base salary rate during the three years preceding
termination or an acceleration event times the highest
percentage rate of the Companys contributions to the ITT
Salaried Investment and Savings Plan and the ITT Excess Savings
Plan, such payment not to exceed 3.5% per year; and
|
|
|
|
tax gross-up
for excise taxes imposed on the covered employee; and
|
|
|
|
one year of outplacement.
|
89
Ms. Ramos, Ms. McClain and Mr. Melcher are
covered at the highest level of benefits. Mr. Jimenez is
covered at the lower level of benefits. Mr. Loranger does
not participate in this plan. Ms. Ramos is entitled to a
cash payment upon severance, as described on pages 77 to
78, which payment may be delayed, if required by
Section 409A.
Mr. Loranger. Mr. Lorangers
entitlement to severance pay and benefits upon a termination
from the Company during the two-year period following a change
of control was a negotiated provision of the Steven R. Loranger
Employment Agreement, which is described on pages 75 to 77.
Mr. Ramos. Under the Ramos Letter
agreement, should Ms. Ramos be terminated by the Company
other than for cause, Ms. Ramos is entitled to a severance
benefit equal to twenty-four months of base salary, subject to
the Companys severance policies.
The Potential Post-Employment Compensation tables on
pages 92 to 101 of this Proxy Statement provide additional
information.
CHANGE OF
CONTROL ARRANGEMENTS
The payment or vesting of awards or benefits under each of the
plans listed below would be accelerated upon the occurrence of a
change of control of the Company. The reasons for the change of
control provisions in these plans are to put the executive in
the same position he or she would have been in had the change of
control not occurred. Executives then can focus on preserving
value for shareholders when evaluating situations that, without
change of control provisions, could be personally adverse to the
executive. There would be a change of control of the Company if
one of the following acceleration events occurred:
1. A report on Schedule 13D was filed with the SEC
disclosing that any person, other than the Company or one of its
subsidiaries or any employee benefit plan that is sponsored by
the Company or a subsidiary, had become the beneficial owner of
20% or more of the Companys outstanding stock;
2. A person other than the Company or one of its
subsidiaries or any employee benefit plan that is sponsored by
the Company or a subsidiary purchased the Companys shares
in connection with a tender or exchange offer, if after
consummation of the offer the person purchasing the shares is
the beneficial owner of 20% or more of the Companys
outstanding stock;
3. The shareholders of the Company approved:
(a) any consolidation, business combination or merger of
the Company other than a consolidation, business combination or
merger in which the shareholders of the Company immediately
prior to the merger would hold 50% or more of the combined
voting power of the Company or the surviving corporation of the
merger and would have the same proportionate ownership of common
stock of the surviving corporation that they held in the Company
immediately prior to the merger; or
(b) any sale, lease, exchange or other transfer of all or
substantially all of the assets of the Company;
4. A majority of the members of the Board of Directors of
the Company changed within a
12-month
period, unless the election or nomination for election of each
of the new Directors by the Companys stockholders had been
approved by two-thirds of the Directors still in office who had
been Directors at the beginning of the
12-month
period or whose nomination for election or election was
recommended or approved by a majority of Directors who were
Directors at the beginning of the
12-month
period; or
90
5. Any person other than the Company or one of its
subsidiaries or any employee benefit plan sponsored by the
Company or a subsidiary became the beneficial owner of 20% or
more of the Companys outstanding stock.
At the time of an acceleration event, any unfunded pension plan
obligations will be funded using a Rabbi Trust. Pre-2005 awards
and benefits will be paid if the 20% threshold described above
is reached. For awards or benefits earned since January 1,
2005, payment of awards or benefits would be made if a person
other than the Company, its subsidiaries or any employment
benefit plan sponsored by the Company becomes the beneficial
owner of 30% or more of the Companys outstanding stock.
If the 2011 Omnibus Incentive Plan is approved by shareholders
at the Companys 2011 Annual Meeting, change of control
under that plan requires consummation of the transactions
described in 3(a) and (b) above.
The following Company plans have change of control provisions:
|
|
|
|
|
the 2011 Omnibus Incentive Plan, as proposed for shareholders
approval in this 2011 Proxy Statement;
|
|
|
|
the 2003 Equity Incentive Plan;
|
|
|
|
the 1994 Incentive Stock Plan;
|
|
|
|
the 1996 Restricted Stock Plan for Non-Employee Directors;
|
|
|
|
the 1997 Annual Incentive Plan for Executive Officers;
|
|
|
|
the 1997 Annual Incentive Plan;
|
|
|
|
the 1997 Long-Term Incentive Plan;
|
|
|
|
the Special Senior Executive Severance Pay Plan;
|
|
|
|
the Enhanced Severance Pay Plan;
|
|
|
|
the Deferred Compensation Plan;
|
|
|
|
the Excess Savings Plan;
|
|
|
|
the Excess Pension Plans;
|
|
|
|
the Salaried Retirement Plan;
|
|
|
|
the Steven R. Loranger Employment Agreement; and
|
|
|
|
the Ramos Letter Agreement.
|
Potential post-employment compensation arrangements are more
fully described for the NEOs in the tables on pages 92 to
101.
91
Potential
Post-Employment Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven R. Loranger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or With Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Termination
|
|
|
After Change
|
|
|
|
Resignation
|
|
|
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Not For Cause
|
|
|
Of Control
|
|
|
|
($)(a)
|
|
|
($)(b)
|
|
|
($)(c)
|
|
|
($)(d)
|
|
|
($)(e)
|
|
|
($)(f)
|
Cash Severance(1)
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,320,000
|
|
|
|
|
3,480,000
|
|
AIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,016,000
|
|
|
|
|
7,602,075
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,336,000
|
|
|
|
|
11,082,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Non-Equity Awards(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 11 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
660,000
|
|
2010 12 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,320,000
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,980,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Equity Awards(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/10/08 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/10/08 Restricted Stock
|
|
|
|
1,355,164
|
|
|
|
|
|
|
|
|
|
1,478,361
|
|
|
|
|
1,478,361
|
|
|
|
|
1,478,361
|
|
|
|
|
1,478,361
|
|
3/5/09 Stock Option
|
|
|
|
1,828,665
|
|
|
|
|
|
|
|
|
|
3,134,855
|
|
|
|
|
3,134,855
|
|
|
|
|
3,134,855
|
|
|
|
|
3,134,855
|
|
3/5/09 Restricted Stock
|
|
|
|
1,588,057
|
|
|
|
|
|
|
|
|
|
2,722,383
|
|
|
|
|
2,722,383
|
|
|
|
|
2,722,383
|
|
|
|
|
2,722,383
|
|
3/5/10 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/10 Restricted Stock
|
|
|
|
537,606
|
|
|
|
|
|
|
|
|
|
2,150,423
|
|
|
|
|
2,150,423
|
|
|
|
|
1,971,221
|
|
|
|
|
2,150,423
|
|
Total
|
|
|
|
5,309,492
|
|
|
|
|
|
|
|
|
|
9,486,022
|
|
|
|
|
9,486,022
|
|
|
|
|
9,306,820
|
|
|
|
|
9,486,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITT Excess Pension Plan(4)
|
|
|
|
2,017,943
|
|
|
|
|
2,017,943
|
|
|
|
|
1,060,143
|
|
|
|
|
|
|
|
|
|
2,017,943
|
|
|
|
|
3,329,785
|
|
Special Pension Arrangement(5)
|
|
|
|
10,689,765
|
|
|
|
|
10,689,765
|
|
|
|
|
10,689,765
|
|
|
|
|
|
|
|
|
|
10,689,765
|
|
|
|
|
13,741,918
|
|
ITT Excess Savings Plan(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,800
|
|
Total
|
|
|
|
12,707,708
|
|
|
|
|
12,707,708
|
|
|
|
|
11,749,908
|
|
|
|
|
|
|
|
|
|
12,707,708
|
|
|
|
|
17,193,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,992
|
|
|
|
|
4,992
|
|
|
|
|
7,488
|
|
IRC 280(g) Tax
Gross-Up(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,992
|
|
|
|
|
4,992
|
|
|
|
|
7,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
18,017,200
|
|
|
|
|
12,707,708
|
|
|
|
|
21,235,930
|
|
|
|
|
9,491,014
|
|
|
|
|
27,355,520
|
|
|
|
|
39,749,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
|
If Mr. Loranger voluntarily terminates without good reason
or is terminated for cause prior to the normal retirement age of
65 under the ITT Salaried Retirement Plan, he is entitled only
to his base salary through the date of termination. He has no
further rights to any compensation or any other benefits not
vested prior to his termination date. Mr. Loranger is
eligible to retire under the Steven R. Loranger Special
Pension Arrangement. |
|
(c) |
|
and (d) If Mr. Loranger terminates due to death or
disability, Mr. Loranger, or his estate, is entitled to
receive his 1) base salary and 2) any earned but
unpaid AIP award payment for any calendar year preceding the
year of termination plus 3) a pro-rata payment of the
target AIP and outstanding TSR award based on the number of days
elapsed during the applicable performance period or a greater
amount as may be provided under the TSR. |
|
(e) |
|
Termination not for cause includes termination by
Mr. Loranger for good reason as described on pages 75
to 77 of this Proxy Statement. |
|
(1) |
|
With respect to columns (e) and (f), in accordance with the
Steven R. Loranger Employment Agreement, as amended to conform
to Section 409A requirements as to timing and payments,
described at pages 75 to 77 of this Proxy Statement, the
Company will pay Mr. Loranger a lump-sum payment of any
earned but unpaid base salary through the termination date, any
earned but unpaid AIP award payment for the calendar year
preceding the year termination occurs, a pro-rata target AIP
award payment for the year of termination based on days elapsed |
92
|
|
|
|
|
(the accrued obligations) plus cash severance in the
amount of two times salary and two times the target AIP award
payable in twenty-four installments over two years. If
Mr. Loranger is terminated not for cause at the end of an
employment term, Mr. Loranger receives one times his base
salary plus his target bonus payable in twelve equal
installments. In the event of a change of control,
Mr. Loranger will receive the accrued obligations plus a
lump-sum payment of severance pay equal to the sum of three
times his base salary and three times an amount equal to
Mr. Lorangers highest AIP paid at any time during the
three years prior to a change of control. Cash severance after a
change of control will be paid as a lump sum. Each of the above
is subject to Section 409A timing and payment requirements.
If Mr. Loranger is terminated for cause, any AIP award is
forfeited. |
|
(2) |
|
Based on total shareholder return performance through
December 31, 2010, outstanding TSR awards for the
2009-11 and
2010-12
performance periods would not earn a payout. Should
Mr. Loranger resign or be terminated for cause, he would
receive no TSR payment. In the event of death or disability, he
would receive payment, if any, for outstanding TSR awards at
target and in the event of termination without cause he would
receive payment, if any, based on pro-rata portion of the
outstanding TSR awards as of the termination date, based on the
Companys performance during the three-year period, in
accordance with Section 409A. In the event of a change of
control, a pro-rata portion of outstanding awards will be paid
through the date of the change of control based on actual
performance and the balance of the award will be paid at target
(100%). |
|
(3) |
|
Equity awards vest according to the terms described on
pages 62 to 64 of this Proxy Statement. Unvested equity
awards reflect the market value of stock and
in-the-money
value of options based on the Companys December 31,
2010 closing stock price of $52.11. |
|
(4) |
|
Mr. Loranger became vested in the ITT Excess Pension Plan
benefit effective January 1, 2008 because of the plan
change described on page 82 of this Proxy Statement.
Mr. Loranger continues to be covered by the Special Pension
Arrangement described on page 83 of this Proxy Statement. |
|
(5) |
|
Mr. Loranger vested in The Special Pension Arrangement in
2010. Amounts in this table reflect the present value of 42% of
the benefit payable at age 58, the special pension amounts
in columns (a), (b), (c), and (e). The Special Pension
Arrangement is described in more detail on page 83 of this
Proxy Statement. In the event of a change of control,
Mr. Loranger is entitled to an immediate lump-sum payment
equal to the actuarial present value of the special pension upon
his termination of employment by the Company without cause or by
Mr. Loranger with good reason in either case upon or
following a change of control. |
|
(6) |
|
No additional ITT Excess Savings Plan payments are made in the
event of voluntary or involuntary termination or termination for
cause, because vesting in ITT Excess Savings Plan contributions
occurs at five years of employment. Mr. Loranger was fully
vested as of December 31, 2010 under the terms of the
Steven R. Loranger Employment Agreement. ITT Excess
Savings Plan amounts reflect credits in addition to any
currently vested amount. |
|
(7) |
|
In accordance with the Steven R. Loranger Employment Agreement,
in the event of total disability or termination by the Company
without cause, the Company will pay life insurance premiums for
two years and, in the event of a change of control, the Company
will pay life insurance premiums for three years. |
|
(8) |
|
Amounts in column (f) assume termination occurs immediately
upon a change of control based on the Companys
December 31, 2010 closing stock price of $52.11. |
93
Potential
Post-Employment Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise L. Ramos
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or With Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Termination
|
|
|
After Change
|
|
|
|
Resignation
|
|
|
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Not For Cause
|
|
|
of Control
|
|
|
|
$(a)
|
|
|
$(b)
|
|
|
$(c)
|
|
|
$(d)
|
|
|
$(e)
|
|
|
$(f)
|
Cash Severance(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,180,000
|
|
|
|
|
1,770,000
|
|
AIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,612,700
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,180,000
|
|
|
|
|
4,382,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Non-Equity Awards(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 11 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
2010 12 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
266,667
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
386,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Equity Awards(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/2/07 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
312,660
|
|
|
|
|
312,660
|
|
|
|
|
312,660
|
|
|
|
|
312,660
|
|
3/10/08 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/10/08 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
268,783
|
|
|
|
|
268,783
|
|
|
|
|
268,783
|
|
|
|
|
268,783
|
|
3/5/09 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
570,060
|
|
|
|
|
570,060
|
|
|
|
|
570,060
|
|
|
|
|
570,060
|
|
3/5/09 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
494,993
|
|
|
|
|
494,993
|
|
|
|
|
494,993
|
|
|
|
|
494,993
|
|
3/5/10 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/10 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
434,441
|
|
|
|
|
434,441
|
|
|
|
|
398,238
|
|
|
|
|
434,441
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,080,937
|
|
|
|
|
2,080,937
|
|
|
|
|
2,044,734
|
|
|
|
|
2,080,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITT Excess Pension Plan(4)
|
|
|
|
279,374
|
|
|
|
|
279,374
|
|
|
|
|
151,980
|
|
|
|
|
|
|
|
|
|
279,374
|
|
|
|
|
1,533,284
|
|
ITT Excess Savings Plan(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,611
|
|
|
|
|
10,611
|
|
|
|
|
|
|
|
|
|
61,950
|
|
Total
|
|
|
|
279,374
|
|
|
|
|
279,374
|
|
|
|
|
162,591
|
|
|
|
|
10,611
|
|
|
|
|
279,374
|
|
|
|
|
1,595,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
75,000
|
|
Health & Welfare(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,392
|
|
|
|
|
11,088
|
|
IRC 280(g) Tax
Gross-Up(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,711,673
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,392
|
|
|
|
|
2,797,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
279,374
|
|
|
|
|
279,374
|
|
|
|
|
2,243,528
|
|
|
|
|
2,091,548
|
|
|
|
|
3,586,500
|
|
|
|
|
11,243,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Under Ms. Ramos employment agreement, described on
pages 77 to 78 of this Proxy Statement, Ms. Ramos will
receive a severance benefit equal to 24 months of base
salary if terminated by the Company other than for cause. In the
event of a change of control, Ms. Ramos is covered under
the Companys Special Senior Executive Severance Pay Plan,
described on pages 89-90 of this Proxy Statement and, under
the terms of the plan, would be paid a lump sum payment equal to
the sum of three times her highest annual salary and three times
the highest AIP award paid in the three years preceding a change
of control. |
|
(2) |
|
Based on total shareholder return performance through
December 31, 2010, outstanding TSR awards for the 2009-11
and 2010-12 performance periods would not earn a payout. Should
Ms. Ramos resign or be terminated for cause, she would
receive no TSR payment. In the event of death or disability, she
would receive payment, if any, for outstanding TSR awards and in
the event of termination not for cause she would receive
payment, if any, based on a pro-rata portion of the outstanding
TSR awards as of the termination date, based on the
Companys performance during the three-year period, in
accordance with Section 409A. TSR awards, provide that in
the event of a change of control, a pro-rata portion of
outstanding awards will be paid through the date of the change
of control based on actual performance and the balance of the
award will be paid at target (100%). |
94
|
|
|
(3) |
|
Unvested equity awards reflect the market value of stock and in
the money value of options based on the Companys
December 31, 2010 closing stock price of $52.11. |
|
(4) |
|
Column (a) and column (b) amounts reflect the present
value of the annual vested benefit payable under the ITT Excess
Pension Plan, as of December 31, 2010 assuming a retirement
age at 65. Column (c) provides the value of the benefit
payable to Ms. Ramos beneficiary upon death. Column
(d) is inapplicable because disability would not affect
retirement benefits. Column (e) provides the present value
of the benefit payable by the Company after imputing
24 months of eligibility service in the determination of
the benefit. Column (f) provides the lump sum payable by
the Company in accordance with the Special Senior Executive
Severance Pay Plan in the event of a change of control. |
|
(5) |
|
No additional ITT Excess Savings Plan payments are made in the
event of voluntary or involuntary termination, or termination
for cause. In the case of death or disability, the participant
becomes 100% vested in the company match. Column
(f) reflects the additional cash payment representing
Company contributions, which would be made following a change of
control as described in the Special Senior Executive Severance
Pay Plan on pages 89 to 90 of this Proxy Statement. |
|
(6) |
|
The Companys Senior Executive Severance Pay Plan includes
one year of outplacement services. |
|
(7) |
|
In the event of termination not for cause, the Company will pay
life insurance premiums for two years and in the event of a
change of control, the Company will pay life insurance premiums
for three years. |
|
(8) |
|
Amounts in column (f) assume termination occurs immediately
upon a change of control based on the Companys
December 31, 2010 closing stock price of $52.11. |
95
Potential
Post-Employment Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gretchen W. McClain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or With Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Termination
|
|
|
After Change
|
|
|
|
Resignation
|
|
|
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Not For Cause
|
|
|
of Control
|
|
|
|
$(a)
|
|
|
$(b)
|
|
|
$(c)
|
|
|
$(d)
|
|
|
$(e)
|
|
|
$(f)
|
Cash Severance(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
618,333
|
|
|
|
|
1,590,000
|
|
AIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,606,800
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
618,333
|
|
|
|
|
3,196,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Non-Equity Units(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 11 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
2010 12 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Equity Awards(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/10/08 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/10/08 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246,376
|
|
|
|
|
246,376
|
|
|
|
|
246,376
|
|
|
|
|
246,376
|
|
3/5/09 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
570,060
|
|
|
|
|
570,060
|
|
|
|
|
|
|
|
|
|
570,060
|
|
3/5/09 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,244,838
|
|
|
|
|
3,244,838
|
|
|
|
|
2,085,319
|
|
|
|
|
3,244,838
|
|
3/5/10 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/10 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
390,081
|
|
|
|
|
390,081
|
|
|
|
|
249,794
|
|
|
|
|
390,081
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,451,355
|
|
|
|
|
4,451,355
|
|
|
|
|
2,581,489
|
|
|
|
|
4,451,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Retirement Benefits ITT Excess Pension
Plan(4)
|
|
|
|
193,588
|
|
|
|
|
193,588
|
|
|
|
|
105,312
|
|
|
|
|
|
|
|
|
|
193,588
|
|
|
|
|
1,057,111
|
|
ITT Excess Savings Plan(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,650
|
|
Total
|
|
|
|
193,588
|
|
|
|
|
193,588
|
|
|
|
|
105,312
|
|
|
|
|
|
|
|
|
|
193,588
|
|
|
|
|
1,112,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
75,000
|
|
Health & Welfare(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,940
|
|
|
|
|
8,910
|
|
IRC 280(g) Tax
Gross-Up(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,747,791
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,940
|
|
|
|
|
2,831,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
193,588
|
|
|
|
|
193,588
|
|
|
|
|
4,556,667
|
|
|
|
|
4,451,355
|
|
|
|
|
3,474,350
|
|
|
|
|
11,952,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Ms. McClain is covered under the Companys Senior
Executive Severance Pay Plan. Under that plan, described on
pages 88 to 89 of this Proxy Statement, the Company will
pay a severance benefit equal to 14 months of base salary
if terminated other than for cause unless termination occurs
after the normal retirement date. In the event of a change of
control, Ms. McClain is covered under the Companys
Special Senior Executive Severance Pay Plan, described on
pages 89 to 90 of this Proxy Statement and, under the terms
of the plan, would be paid a lump sum payment equal to the sum
of three times her highest annual salary and three times the
highest AIP award paid in the three years preceding a change of
control. |
|
(2) |
|
Based on total shareholder return performance through
December 31, 2010, outstanding TSR awards would not earn a
payout. Should Ms. McClain resign or be terminated for
cause, she would receive no TSR payment. In the event of death
or disability, she would receive payment, if any, for
outstanding TSR awards and in the event of termination without
cause she would receive payment, if any, based on a pro-rata
portion of the outstanding TSR awards as of the termination
date, based on the Companys performance during the
three-year period, in accordance with Section 409A. TSR
awards, provide that in the event of a change of control, a
pro-rata portion of outstanding awards will be paid through the
date of the change of control based on actual performance and
the balance of the award will be paid at target (100%). |
|
(3) |
|
Unvested equity awards reflect the market value of stock and
in-the-money
value of options based on the Companys December 31,
2010 closing stock price of $52.11. |
96
|
|
|
(4) |
|
Column (a) and column (b) amounts reflect the present
value of the annual vested benefit payable under the ITT Excess
Pension Plan, as of December 31, 2010 assuming a retirement
at age 65. Column (c) provides the value of the
benefit payable to Ms. McClains beneficiary upon
death. Column (d) is inapplicable because disability would
not affect retirement benefits. Column (e) provides the
present value of the benefit payable by the Company after
imputing 24 months of eligibility service in the
determination of the benefit. Column (f) provides the lump
sum payable by the Company in accordance with the Special Senior
Executive Severance Pay Plan in the event of a change of control. |
|
(5) |
|
No additional ITT Excess Savings Plan payments are made in the
event of voluntary or involuntary termination, or termination
for cause. In the case of death or disability, the participant
becomes 100% vested in the Company match. Column
(f) reflects the additional cash payment representing
Company contributions, which would be made following a change of
control as described in the Special Senior Executive Severance
Pay Plan on pages 89-90 this Proxy Statement. |
|
(6) |
|
The Companys Senior Executive Severance Pay Plan includes
one year of outplacement services. Amounts shown in columns
(e) and (f) are based on a current competitive bid. |
|
(7) |
|
In the event of termination not for cause, the Company will pay
life insurance premiums for fourteen months and in the event of
a change of control, the Company will pay life insurance
premiums for three years. |
|
(8) |
|
Amounts in column (f) assume termination occurs immediately
upon a change of control based on the Companys
December 31, 2010 closing stock price of $52.11. |
97
Potential
Post-Employment Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Melcher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or With Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Termination
|
|
|
After Change
|
|
|
|
Resignation
|
|
|
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Not For Cause
|
|
|
of Control
|
|
|
|
$(a)
|
|
|
$(b)
|
|
|
$(c)
|
|
|
$(d)
|
|
|
$(e)
|
|
|
$(f)
|
Cash Severance(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
530,000
|
|
|
|
|
1,590,000
|
|
AIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,460,700
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
530,000
|
|
|
|
|
3,050,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Non-Equity Awards(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 11 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,333
|
|
2010 12 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
323,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Equity Awards(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/18/08 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/18/08 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,624
|
|
|
|
|
58,624
|
|
|
|
|
58,624
|
|
|
|
|
58,624
|
|
3/5/09 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
312,861
|
|
|
|
|
312,861
|
|
|
|
|
156,431
|
|
|
|
|
312,861
|
|
3/5/09 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
343,718
|
|
|
|
|
343,718
|
|
|
|
|
315,074
|
|
|
|
|
343,718
|
|
3/5/10 Stock Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/10 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
390,981
|
|
|
|
|
390,981
|
|
|
|
|
228,072
|
|
|
|
|
390,981
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,106,184
|
|
|
|
|
1,106,184
|
|
|
|
|
758,201
|
|
|
|
|
1,106,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITT Excess Pension Plan(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,016,262
|
|
ITT Excess Savings Plan(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,166
|
|
|
|
|
8,166
|
|
|
|
|
|
|
|
|
|
55,650
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,166
|
|
|
|
|
8,166
|
|
|
|
|
|
|
|
|
|
1,071,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
75,000
|
|
Health & Welfare(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,872
|
|
|
|
|
2,808
|
|
IRC 280(g) Tax
Gross-Up(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,989,845
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,872
|
|
|
|
|
2,067,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,114,350
|
|
|
|
|
1,114,350
|
|
|
|
|
1,365,073
|
|
|
|
|
7,619,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Melcher is covered under the Senior Executive Severance
Pay Plan. Under that plan, the Company will pay a severance
benefit equal to 12 months of base salary if terminated other
than for cause unless termination occurs after the normal
retirement date. In the event of a change of control,
Mr. Melcher is covered under the Companys Special
Senior Executive Severance Pay Plan, described on pages 89
to 90 of this Proxy Statement, and under the terms of the plan,
would be paid a lump sum payment equal to three times his
current salary plus three times the highest AIP award paid in
the three years prior to a change of control. |
|
(2) |
|
Based on total shareholder return performance through
December 31, 2010, outstanding TSR awards for the
2009-11 and 2010-12 performance periods would not earn a payout.
Should Mr. Melcher resign or be terminated for cause, he
would receive no TSR payment. In the event of death or
disability, he would receive payment, if any, for outstanding
TSR awards and in the event of termination without cause he
would receive payment, if any, based on a pro-rata portion of
the outstanding TSR awards as of the termination date, based on
the Companys performance during the three-year period, in
accordance with Section 409A. TSR awards provide that, in
the event of a change of control, a pro-rata portion of
outstanding awards will be paid through the date of the change
of control based on actual performance and the balance of the
award will be paid at target (100%). |
|
(3) |
|
Unvested equity awards reflect the market value of stock and
in-the-money
value of options based on the Companys December 31,
2010 closing stock price of $52.11. |
98
|
|
|
(4) |
|
Mr. Melcher has not yet accrued a vested pension benefit.
Column (f) provides the lump sum payable by the Company in
accordance with the Special Senior Executive Severance Pay Plan
in the event of a change of control. |
|
(5) |
|
No additional ITT Excess Savings Plan payments are made in the
event of voluntary or involuntary termination, or termination
for cause. In the case of death or disability, the participant
becomes 100% vested in the Company match. Column
(f) reflects the additional cash payment representing
Company contributions, which would be made following a change of
control as described in the Special Senior Executive Severance
Pay Plan on pages 89 to 90 of this Proxy Statement. |
|
(6) |
|
The Companys Senior Executive Severance Pay Plan includes
one year of outplacement services. Amounts shown in
columns (e) and (f) are based on a current competitive
bid. |
|
(7) |
|
In the event of termination not for cause, the Company will pay
life insurance premiums for one year and in the event of a
change of control, the Company will pay life insurance for three
years. |
|
(8) |
|
Amounts in column (f) assume termination occurs immediately
upon a change of control based on the Companys
December 31, 2010 closing stock price of $52.11. |
99
Potential
Post-Employment Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank R. Jimenez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or With Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Termination
|
|
|
After Change
|
|
|
|
Resignation
|
|
|
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Not For Cause
|
|
|
of Control
|
|
|
|
$(a)
|
|
|
$(b)
|
|
|
$(c)
|
|
|
$(d)
|
|
|
$(e)
|
|
|
$(f)
|
Cash Severance(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
415,000
|
|
|
|
|
830,000
|
|
AIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
624,000
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
415,000
|
|
|
|
|
1,454,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested TSR Non-Equity Awards(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 11 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,567
|
|
2010 12 TSR Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,133
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Equity Awards(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/9/09 Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,445
|
|
|
|
|
69,445
|
|
|
|
|
34,726
|
|
|
|
|
69,445
|
|
6/9/09 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189,524
|
|
|
|
|
189,524
|
|
|
|
|
157,937
|
|
|
|
|
189,524
|
|
3/5/10 Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/10 Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181,030
|
|
|
|
|
181,030
|
|
|
|
|
105,601
|
|
|
|
|
181,030
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
439,999
|
|
|
|
|
439,999
|
|
|
|
|
298,264
|
|
|
|
|
439,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITT Excess Pension Plan(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
463,661
|
|
ITT Excess Savings Plan(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,037
|
|
|
|
|
4,037
|
|
|
|
|
|
|
|
|
|
29,050
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,037
|
|
|
|
|
4,037
|
|
|
|
|
|
|
|
|
|
492,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
75,000
|
|
Health & Welfare(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,494
|
|
|
|
|
1,494
|
|
IRC 280(g) Tax
Gross-Up(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,494
|
|
|
|
|
76,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
444,036
|
|
|
|
|
444,036
|
|
|
|
|
789,758
|
|
|
|
|
2,629,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Jimenez is covered under the Senior Executive Severance
Pay Plan. Under that plan, the Company will pay a severance
benefit equal to 12 months of base salary if terminated other
than for cause unless termination occurs after the normal
retirement date. In the event of a change of control,
Mr. Jimenez is covered under the Companys Special
Senior Executive Severance Pay Plan, described on pages 89 to 90
of this Proxy Statement, and under the terms of the plan, would
be paid a lump sum payment equal to two times his current salary
plus two times the highest AIP award paid in the three years
prior to a change of control. |
|
(2) |
|
Based on total shareholder return performance through
December 31, 2010, outstanding TSR awards for the
2009-11 and
2010-12
performance periods would not earn a payment. Should
Mr. Jimenez resign or be terminated for cause, he would
receive no TSR payment. In the event of death or disability, he
would receive payment, if any, for outstanding TSR awards and in
the event of termination without cause he would receive payment,
if any, based on a pro-rata portion of the outstanding TSR
awards as of the termination date, based on the Companys
performance during the three-year period, in accordance with
Section 409A. The TSR awards, in the event of a change of
control, provide that a pro-rata portion of outstanding awards
will be paid through the date of the change of control based on
actual performance and the balance of the award will be paid at
target (100%). |
|
(3) |
|
Unvested equity awards reflect the market value of stock and
in-the-money
value of options based on the Companys December 31,
2010 closing stock price of $52.11. |
100
|
|
|
(4) |
|
Mr. Jimenez has not yet accrued a vested pension benefit.
Column (f) provides the lump sum payable by the Company in
accordance with the Special Senior Executive Severance Pay Plan
in the event of a change of control. |
|
(5) |
|
No additional ITT Excess Savings Plan payments are made in the
event of voluntary or involuntary termination, or termination
for cause. In the case of death or disability, the participant
becomes 100% vested in the Company match. Amounts in column
(f) reflect the additional cash payment representing
Company contributions, which would be made following a change of
control as described in the Special Senior Executive Severance
Pay Plan on pages 89 to 90 of this Proxy Statement. |
|
(6) |
|
The Companys Senior Executive Severance Pay Plan includes
one year of outplacement services. Amounts shown in columns
(e) and (f) are based on a current competitive bid. |
|
(7) |
|
In the event of termination without cause, the Company will pay
life insurance premiums for one year and in the event of a
change of control, the Company will pay life insurance for two
years. |
|
(8) |
|
Amounts in column (f) assume termination occurs immediately
upon a change of control based on the Companys
December 31, 2010 closing stock price of $52.11. |
101
Appendix A
List of Companies from the
S&P®
Industrials Companies used in the Towers Watson Compensation
Data Bank Analyses:
|
|
|
|
|
|
|
Abbott Laboratories
|
|
eBay
|
|
Kohls
|
|
Sara Lee
|
Advanced Micro Devices
|
|
Ecolab
|
|
Leggett and Platt
|
|
Schering-Plough
|
Agilent Technologies
|
|
Eli Lilly
|
|
Lexmark International
|
|
Schlumberger
|
Air Products and Chemicals
|
|
El Paso Corporation
|
|
Life Technologies
|
|
Sealed Air
|
Alcoa
|
|
EMC
|
|
Limited
|
|
Sherwin-Williams
|
Allergan
|
|
Emerson
|
|
Lockheed Martin
|
|
Spectra Energy
|
Amazon.com
|
|
Equifax
|
|
Lorillard Tobacco
|
|
Sprint Nextel
|
Amgen
|
|
Fiserv
|
|
L-3 Communications
|
|
Staples
|
Apollo Group
|
|
Fluor
|
|
Marriott International
|
|
Starbucks
|
Applied Materials
|
|
Ford
|
|
Masco
|
|
Starwood Hotels & Resorts
|
AT&T
|
|
Forest Laboratories
|
|
Mattel
|
|
Sun Microsystems
|
Automatic Data Processing
|
|
Fortune Brands
|
|
McDonalds
|
|
Sunoco
|
Avery Dennison
|
|
Freeport-McMoRan Copper & Gold
|
|
McKesson
|
|
Target
|
Avon Products
|
|
Gannett
|
|
MeadWestvaco
|
|
Tellabs
|
Ball
|
|
Gap
|
|
Medco Health Solutions
|
|
Tenet Healthcare
|
Baxter International
|
|
General Dynamics
|
|
Medtronic
|
|
Teradata
|
Best Buy
|
|
General Electric
|
|
Merck & Co
|
|
Textron
|
Big Lots
|
|
General Mills
|
|
Microsoft
|
|
3M
|
Biogen Idec
|
|
Genzyme
|
|
Millipore
|
|
Time Warner
|
Boeing
|
|
Gilead Sciences
|
|
Molson Coors Brewing
|
|
Time Warner Cable
|
Boston Scientific
|
|
Goodrich
|
|
Monsanto
|
|
UnitedHealth
|
Bristol-Myers Squibb
|
|
Goodyear Tire & Rubber
|
|
Motorola
|
|
United States Steel
|
Brown-Forman
|
|
Google
|
|
Newmont Mining
|
|
United Technologies
|
CA
|
|
Harley-Davidson
|
|
New York Times
|
|
Valero Energy
|
Cameron International
|
|
Harman International Industries
|
|
NIKE
|
|
Verizon
|
Cardinal Health
|
|
Hershey
|
|
Northrop Grumman
|
|
VF
|
Caterpillar
|
|
Hess
|
|
Novell
|
|
Viacom
|
Celgene
|
|
Honeywell
|
|
Occidental Petroleum
|
|
Vulcan Materials
|
Cephalon
|
|
Hormel Foods
|
|
Office Depot
|
|
Walt Disney
|
CIGNA
|
|
Hospira
|
|
Owens-Illinois
|
|
Waste Management
|
Coca-Cola
Enterprises
|
|
Humana
|
|
Parker Hannifin
|
|
Watson Pharmaceuticals
|
Colgate-Palmolive
|
|
IBM
|
|
PepsiCo
|
|
Western Digital
|
ConAgra Foods
|
|
IMS Health
|
|
Pfizer
|
|
Western Union
|
Convergys
|
|
Intel
|
|
Pitney Bowes
|
|
Weyerhaeuser
|
CVS Caremark
|
|
International Flavors & Fragrances
|
|
PPG Industries
|
|
Whirlpool
|
Dean Foods
|
|
International Game Technology
|
|
Praxair
|
|
Whole Foods Market
|
Dentsply
|
|
International Paper
|
|
Pulte Homes
|
|
Williams Companies
|
DIRECTV
|
|
Jacobs Engineering
|
|
QUALCOMM
|
|
W.W. Grainger
|
Dow Chemical
|
|
Johnson Controls
|
|
Quest Diagnostics
|
|
Wyeth Pharmaceuticals
|
Dr Pepper Snapple
|
|
Johnson & Johnson
|
|
Qwest Communications
|
|
Wyndham Worldwide
|
DuPont
|
|
KB Home
|
|
Raytheon
|
|
Xerox
|
Eastman Chemical
|
|
Kellogg
|
|
Rockwell Automation
|
|
Yum! Brands
|
Eastman Kodak
|
|
Kimberly-Clark
|
|
Rockwell Collins
|
|
|
Eaton
|
|
KLA-Tencor
|
|
R.R. Donnelley
|
|
|
A-1
Appendix B
ITT
Corporation
2011 OMNIBUS
INCENTIVE PLAN
ESTABLISHMENT,
PURPOSE, AND DURATION
1.1 Establishment. ITT Corporation, an
Indiana corporation (hereinafter referred to as the
Company), establishes an incentive
compensation plan to be known as the 2011 Omnibus Incentive Plan
(hereinafter referred to as the Plan), as set
forth in this document. The Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights (SARs), Restricted Stock, Restricted Stock
Units and Other Awards.
The Plan was approved by the Board of Directors on
February 23, 2011 and shall become effective May 11,
2011, the day following the Companys 2011 Annual Meeting
of Shareholders, if approved by the Companys shareholders
at such Annual Meeting, or such other date as the Companys
shareholders shall approve such Plan, should the Companys
Annual Meeting of Shareholders be postponed or delayed (the
Effective Date). The Plan replaces the ITT
Corporation 2003 Equity Incentive Plan (the Prior
Plan). If the Plan is approved by the Companys
shareholders at the 2011 Annual Meeting of Shareholders, no
additional awards will be granted under the Prior Plan. If the
Plan is not approved by the Companys shareholders at the
2011 Annual Meeting of Shareholders, the Plan will be null and
void and the Prior Plan will remain in effect. Awards previously
granted under the Prior Plan will remain in effect subject to
their terms and the terms of the Prior Plan. If the Plan is
approved by the Companys shareholders, the Plan shall
remain in effect as provided in Section 1.3 hereof.
1.2 Purpose of the Plan. The purpose of
the Plan is to promote the long-term interests of the Company
and its shareholders by strengthening the Companys ability
to attract and retain Employees of the Company and its
Affiliates and members of the Board of Directors upon whose
judgment, initiative, and efforts the financial success and
growth of the business of the Company largely depend, and to
provide an additional incentive for such individuals through
share ownership and other rights that promote and recognize the
financial success and growth of the Company and create value for
shareholders.
1.3 Duration of the Plan. The Plan shall
commence as of the Effective Date, as described in
Section 1.1 hereof, and shall remain in effect, subject to
the right of the Compensation and Personnel Committee of the
Board, (the Committee) to amend or terminate the
Plan at any time pursuant to Article 14 hereof, until all
Shares subject to it shall have been purchased or acquired
according to the Plans provisions.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the
meanings set forth below, and when the meaning is intended, the
initial letter of the word shall be capitalized.
2.1 Acceleration Event shall
be deemed to have occurred as of the first day that any one or
more of the following conditions have been satisfied:
(a) a report on Schedule 13D shall be filed with the
Securities and Exchange Commission pursuant to
Section 13(d) of the Exchange Act disclosing that any
Person, other than the Company or a Subsidiary or any employee
benefit plan sponsored by the Company or a Subsidiary (or
related trust), is the Beneficial Owner directly or indirectly
of twenty percent (20%) or more of the outstanding Shares;
(b) any Person, other than the Company or a Subsidiary, or
any employee benefit plan sponsored by the Company or a
Subsidiary (or related trust), shall purchase shares pursuant to
a tender offer or exchange offer to acquire any Shares (or
securities convertible into Shares)
B-1
for cash, securities or any other consideration, provided that
after consummation of the offer, the Person in question is the
Beneficial Owner, directly or indirectly, of twenty percent
(20%) or more of the outstanding Shares (calculated as provided
in paragraph (d) of
Rule 13d-3
under the Exchange Act in the case of rights to acquire Shares);
(c) the consummation of
(i) any consolidation, business combination or merger
involving the Company, other than a consolidation, business
combination or merger involving the Company in which holders of
Shares immediately prior to the consolidation, business
combination or merger (x) hold fifty percent (50%) or more
of the combined voting power of the Company (or the corporation
resulting from the consolidation, business combination or merger
or the parent of such corporation) after the merger and
(y) have the same proportionate ownership of common stock
of the Company (or the corporation resulting from the
consolidation, business combination or merger or the parent of
such corporation), relative to other holders of Shares
immediately prior to the consolidation, business combination or
merger, immediately after the consolidation, business
combination or merger as immediately before; or
(ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets of the Company;
(d) there shall have been a change in a majority of the
members of the Board within a
12-month
period unless the election or nomination for election by the
Companys shareholders of each new director during such
12-month
period was approved by the vote of two-thirds of the directors
then still in office who (x) were directors at the
beginning of such
12-month
period or (y) whose nomination for election or election as
directors was recommended or approved by a majority of the
directors who where directors at the beginning of such
12-month
period; or
(e) any Person, other than the Company or a Subsidiary or
any employee benefit plan sponsored by the Company or a
Subsidiary (or related trust), becomes the Beneficial Owner of
twenty percent (20%) or more of the Shares.
2.2 Affiliate means any Subsidiary and
any other Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified.
2.3 Award means, individually or
collectively, a grant under this Plan of Nonqualified Stock
Options, Incentive Stock Options, SARs, Restricted Stock,
Restricted Stock Units and Other Awards.
2.4 Award Agreement means either
(i) an agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to
Awards granted under this Plan, or (ii) a statement issued
by the Company to a Participant describing the terms and
conditions of such Award.
2.5 Beneficial Owner shall have the
meaning ascribed to such term in
Rule 13d-3
of the General Rules and Regulations under the Exchange Act.
2.6 Board or Board of Directors
means the Board of Directors of the Company.
2.7 Code means the U.S. Internal Revenue Code
of 1986, as amended from time to time.
2.8 Committee means the Compensation and
Personnel Committee of the Board.
2.9 Company means ITT Corporation, an
Indiana corporation, and any successor thereto as provided in
Article 16 herein.
B-2
2.10 Covered Employee means a
Participant who is a Covered Employee, as defined in
Code Section 162(m) and the regulations promulgated under
Code Section 162(m), or any successor statute.
2.11 Director means any individual who
is a member of the Board of Directors.
2.12 Employee means any employee of the
Company or its Affiliates.
2.13 Exchange Act means the Securities
Exchange Act of 1934, as amended from time to time, or any
successor act thereto.
2.14 Fair Market Value means a price
that is based on the opening, closing, actual, high, low, or
average selling prices of a Share on the New York Stock Exchange
(NYSE) or other established stock exchange
(or exchanges) on the applicable date, the preceding trading
day, the next succeeding trading day, or an average of trading
days, as determined by the Committee in its discretion.
Such definition of Fair Market Value may differ depending on
whether Fair Market Value is in reference to the grant,
exercise, vesting, or settlement or payout of an Award. If,
however, the accounting standards used to account for equity
awards granted to Participants are substantially modified
subsequent to the Effective Date of the Plan, the Committee
shall have the ability to determine an Awards Fair Market
Value based on the relevant facts and circumstances. If Shares
are not traded on an established stock exchange, Fair Market
Value shall be determined by the Committee based on objective
criteria.
2.15 Freestanding SAR means a SAR that
is granted independently of any Options, as described in
Article 7 herein.
2.16 Full Value Award means an Award
other than an Option granted with an Option Price equal to at
least Fair Market Value on the date of grant or a SAR with a
Grant Price equal to at least Fair Market Value on the date of
grant.
2.17 Grant Price means the amount to
which the Fair Market Value of a Share is compared pursuant to
Section 7.6 to determine the amount of payment that should
be made upon exercise of a SAR.
2.18 Incentive Stock Option or
ISO means an Option that meets the requirements
of Code Section 422, or any successor provision, and that is not
designated as a Nonqualified Stock Option.
2.19 Insider means an individual who is,
on the relevant date, an officer, Director, or more than ten
percent (10%) Beneficial Owner of any class of the
Companys equity securities that is registered pursuant to
Section 12 of the Exchange Act, as determined by the Board
or the Committee in accordance with Section 16 of the
Exchange Act.
2.20 Nonqualified Stock Option or
NQSO means an Option that is not intended to
meet the requirements of Code Section 422, or that
otherwise does not meet such requirements.
2.21 Option means an Incentive Stock
Option or a Nonqualified Stock Option to purchase Shares, as
described in Article 6 herein.
2.22 Option Price means the price at
which a Share may be purchased by a Participant pursuant to an
Option.
2.23 Other Award means an Award granted
to a Participant pursuant to Article 9 herein.
2.24 Participant means an Employee or
Director who has been selected to receive an Award or who has an
outstanding Award granted under the Plan.
2.25 Performance-Based Compensation
means an Award that is qualified as Performance-Based
Compensation under Code Section 162(m).
B-3
2.26 Performance Measures means measures
as described in Article 10, the attainment of which may
determine the amount of payout
and/or
vesting with respect to Awards.
2.27 Performance Period means the period
of time during which the performance goals must be met in order
to determine the amount of payout
and/or
vesting with respect to an Award.
2.28 Period of Restriction means the
period when Restricted Stock or Restricted Stock Units are
subject to a substantial risk of forfeiture (based on the
passage of time, the achievement of performance goals, or upon
the occurrence of other events as determined by the Committee,
at its discretion) and transfer restrictions, as provided in
Article 8 herein.
2.29 Person shall have the meaning given
in Section 3(a) (9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof.
2.30 Plan Year means the fiscal year.
2.31 Restricted Stock means an Award
granted to a Participant pursuant to Article 8 herein.
2.32 Restricted Stock Unit means an Award granted to
a Participant pursuant to Article 8 herein.
2.33 Share means a share of common stock of the
Company, $1.00 par value per share.
2.34 Stock Appreciation Right or SAR
means an Award granted to a Participant pursuant to
Article 7 herein.
2.35 Subsidiary means any corporation,
partnership, joint venture, limited liability company, or other
entity (other than the Company) in an unbroken chain of entities
beginning with the Company if each of the entities other than
the last entity in the unbroken chain owns at least fifty
percent (50%) of the total combined voting power in one of the
other entities in such chain.
2.36 Tandem SAR means a SAR that is
granted in connection with a related Option pursuant to
Article 7.
Article 3. Administration
3.1 General. The Committee shall be
responsible for administering the Plan. The Committee may employ
attorneys, consultants, accountants, and other persons, and the
Committee, the Company, and its officers and Directors shall be
entitled to rely upon the advice, opinions, or valuations of any
such persons. All actions taken and all interpretations and
determinations made by the Committee shall be final and binding
upon the Participants, the Company, and all other interested
persons.
3.2 Authority of the Committee. The
Committee shall have full and exclusive discretionary power to
interpret the terms and the intent of the Plan and to determine
eligibility for Awards and to adopt such rules, regulations, and
guidelines for administering the Plan as the Committee may deem
necessary or proper. Such authority shall include, but not be
limited to, selecting Award recipients, establishing all Award
terms and conditions and, subject to Article 14, adopting
modifications and amendments to the Plan or any Award Agreement,
including without limitation, any that are necessary to comply
with the laws of the countries in which the Company and its
Affiliates operate.
Delegation. The Committee may delegate to one
or more of its members or to one or more agents or advisors such
administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with
respect to any responsibility the Committee or such person may
have under the Plan. The Committee may, by resolution, authorize
one or more officers of the Company to do one or both of the
following: (a) designate Employees and Directors to be
recipients of Awards; and (b) determine the size of the
Award; provided, however, the Committee shall not
delegate such responsibilities to any such officer for Awards
granted to an Employee that is considered an
B-4
elected officer of the Company, or to the extent it would
unintentionally cause Performance-Based Compensation to lose its
status as such.
Article 4. Shares Subject to the Plan
and Maximum Awards
4.1 Number of Shares Available for
Awards. Subject to adjustment as provided in
Section 4.2 herein, the number of Shares hereby reserved
for issuance to Participants under the Plan shall be nine
million two hundred thousand (9,200,000). In addition, any
Shares remaining available for issuance under the Prior Plan as
of the date of approval of the Plan by the shareholders at the
2011 Annual Meeting of Shareholders shall also become available
for grant under the Plan. For purposes of the prior sentence,
Shares subject to outstanding awards under the Prior Plan shall
not be considered available for issuance under the Prior Plan.
Any Shares related to Awards under the Plan or awards under the
Prior Plan that terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such Shares,
are settled in cash in lieu of Shares, or are exchanged with the
Committees permission for Awards not involving Shares,
shall be available again for grant under the Plan.
Notwithstanding the foregoing, (a) upon the exercise of a
stock-settled Stock Appreciation Right or net-settled Option,
the number of Shares subject to the Award (or portion of the
Award) that is then being exercised shall be counted against the
maximum aggregate number of Shares that may be issued under the
Plan as provided above, on the basis of one Share for every
Share subject thereto, regardless of the actual number of Shares
issued upon exercise and (b) any Shares withheld with
respect to an Award (or, with respect to Restricted Stock,
returned) in satisfaction of tax withholding obligations shall
be counted as Shares issued.
Subject to adjustment as provided in Section 4.2 herein,
the number of Shares hereby reserved for issuance under the Plan
for Full Value Awards shall not exceed four million six hundred
thousand (4,600,000). In addition, (x) any Shares remaining
available for issuance of Full Value Awards under the Prior Plan
as of the date of approval of the Plan by the shareholders at
the 2011 Annual Meeting of Shareholders shall be available for
grant of Full Value Awards under the Plan and (y) any
Shares related to Full Value Awards under the Plan or the Prior
Plan that terminate by expiration, forfeiture, cancellation, or
otherwise without the issuance of such Shares, are settled in
cash in lieu of Shares, or are exchanged with the
Committees permission for Awards not involving Shares,
shall be available again for grant of Full Value Awards under
the Plan.
All of the reserved Shares may be used as ISOs.
The Shares available for issuance under the Plan may be
authorized and unissued Shares or treasury Shares.
The following limits (Award Limits) shall
apply to Awards, dividends and dividend equivalent intended to
qualify as Performance-Based Compensation:
(a) Options: The maximum aggregate number
of Shares that may be granted in the form of Options, pursuant
to any Award granted in any one Plan Year to any one Participant
shall be three million five hundred thousand (3,500,000).
(b) SARs: The maximum number of Shares
that may be granted in the form of Stock Appreciation Rights,
pursuant to any Award granted in any one Fiscal Year to any one
Participant shall be three million five hundred thousand
(3,500,000).
(c) Restricted Stock or Restricted Stock
Units: The maximum aggregate grant with respect
to Awards of Restricted Stock or Restricted Stock Units granted
in any one Plan Year to any one Participant shall be seven
hundred thousand (700,000).
(d) Other Awards: The maximum aggregate
number of Shares with respect to which Other Awards may be
granted in any one Plan Year to any one Participant shall be
seven hundred thousand (700,000) and the maximum aggregate cash
that may be payable with respect to Other Awards granted in any
one Plan Year to any one Participant shall be fifteen million
($15,000,000) dollars.
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(e) Dividends and Dividend
Equivalents: The maximum aggregate value of cash
dividends (other than large, nonrecurring cash dividends) or
dividend equivalents that any one Participant may receive
pursuant to Awards in any one Plan Year shall not exceed six
million ($6,000,000) dollars.
4.2 Adjustments in Authorized Shares. In
the event of any equity restructuring (within the meaning of
FASB Accounting Standards Codification (ASC) 718 that causes the
per share value of Shares to change, such as a stock dividend,
stock split, spin off, rights offering, or recapitalization
through a large, nonrecurring cash dividend, the Committee shall
cause there to be made an equitable adjustment to: (a) the
number and, if applicable, kind of shares that may be issued
under the Plan or pursuant to any type of Award under the Plan,
(b) the Award Limits, (c) the number and, if
applicable, kind of shares subject to outstanding Awards and
(d) as applicable, the Option Price or Grant Price of any
then outstanding Awards. In the event of any other change in
corporate structure or capitalization, such as a merger,
consolidation, any reorganization (whether or not such
reorganization comes within the definition of such term in
Section 368 of the Code) or any partial or complete
liquidation of the Company, the Committee, in its sole
discretion, in order to prevent dilution or enlargement of
Participants rights under the Plan, shall cause there to
be made such equitable adjustments described in the foregoing
sentence. Any fractional shares resulting from adjustments made
pursuant to this Section 4.2 shall be eliminated. Any
adjustment made pursuant to this Section 4.2 shall be
conclusive and binding for all purposes of the Plan.
Except to the extent it would unintentionally cause Performance
Based Compensation to fail to qualify for the performance based
exception to Code Section 162(m), appropriate adjustments
may also be made by the Committee in the terms of any Awards
under the Plan to reflect such changes or distributions and to
modify any other terms of outstanding Awards on an equitable
basis, including modifications of performance goals and changes
in the length of Performance Periods. The determination of the
Committee as to the foregoing adjustments, if any, shall be
conclusive and binding on Participants under the Plan.
Subject to the provisions of Article 13, without affecting
the number of Shares reserved or available hereunder, the
Committee may authorize the issuance or assumption of benefits
under this Plan in connection with any merger, consolidation,
acquisition of property or stock, share exchange, amalgamation,
reorganization or similar transaction upon such terms and
conditions as it may deem appropriate; provided, however, that
no such issuance or assumption shall be made without affecting
the number of Shares reserved or available hereunder if it would
prevent the granting of ISOs under the Plan.
Article 5. Eligibility and Participation
5.1 Eligibility. Individuals eligible to
participate in this Plan include all Employees and Directors.
5.2 Actual Participation. Subject to the
provisions of the Plan, the Committee may, from time to time,
select from all eligible individuals, those to whom Awards shall
be granted and shall determine the form and amount of each Award.
Article 6. Stock Options
6.1 Grant of Options. Subject to the
terms and provisions of the Plan, Options may be granted to
Participants in such number, and upon such terms, and at any
time and from time to time as shall be determined by the
Committee.
ISOs may not be granted following the ten-year
(10) anniversary of the date the Plan was last approved by
shareholders in a manner that satisfies the shareholder approval
requirements applicable to ISOs. ISOs may be granted only to
Employees.
6.2 Award Agreement. Each Option grant
shall be evidenced by an Award Agreement that shall specify the
Option Price, the duration of the Option, the number of Shares
to which the Option
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pertains, the conditions upon which an Option shall become
vested and exercisable, and such other provisions as the
Committee shall determine which are not inconsistent with the
terms of the Plan. The Award Agreement also shall specify
whether the Option is intended to be an ISO or an NQSO.
6.3 Option Price. Subject to the
following sentence, the Option Price for each grant of an Option
under this Plan shall be as determined by the Committee;
provided, however, the Option Price shall not be less than one
hundred percent (100%) of the Fair Market Value of a Share on
the date the Option is granted.
6.4 Duration of Options. Each Option
granted to a Participant shall expire at such time as the
Committee shall determine at the time of grant; provided,
however, no Option shall be exercisable later than the tenth
(10th) anniversary of its grant.
6.5 Exercise of Options. Options granted
under this Article 6 shall be exercisable at such times and
be subject to such terms and conditions as the Committee shall
in each instance approve, which need not be the same for each
grant or for each Participant.
6.6 Payment. Options granted under this
Article 6 shall be exercised by the delivery of notice of
exercise to an agent designated by the Company or by complying
with any alternative procedures which may be authorized by the
Committee, setting forth the number of Shares with respect to
which the Option is to be exercised.
A condition of the issuance of the Shares as to which an Option
shall be exercised shall be the payment of the Option Price. The
Option may be exercised (and the Option Price may be satisfied)
by (a) delivering cash or its equivalent,
(b) tendering (either by actual delivery or attestation)
previously acquired Shares having an aggregate Fair Market Value
at the time of exercise equal to the Option Price,
(c) broker-assisted cashless exercise, (d) net
exercise, (e) a combination of the foregoing or (f) by
any other method approved by the Committee in its sole
discretion. The Committee shall determine acceptable methods for
tendering Shares as payment upon exercise of an Option and may
impose such limitations and prohibitions on the use of Shares to
exercise an Option as it deems appropriate.
Subject to any governing rules or regulations, as soon as
practicable after receipt of written notification of exercise
and full payment (including satisfaction of any applicable tax
withholding), the Company shall deliver to the Participant
evidence of book entry Shares, or upon the Participants
request, Share certificates in an appropriate amount based upon
the number of Shares purchased under the Option(s).
Unless otherwise determined by the Committee, all payments under
the methods indicated above shall be paid in United States
dollars.
6.7 Restrictions on Share
Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of
an Option granted under this Article 6 as it may deem
advisable, including, without limitation, restrictions under
applicable federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then
listed
and/or
traded, and under any blue sky or state securities laws
applicable to such Shares.
6.8 Termination of Employment or Service as a
Director. The impact of a termination of a
Participants employment on an Options vesting and
exercise period shall be determined by the Committee, in its
sole discretion, in the Participants Award Agreement, and
need not be uniform among Option grants or Participants. The
impact of a termination on a Participants service as a
Director on an Options vesting and exercise period shall
be determined by the Committee, in its sole discretion, in the
Participants Award Agreement, and need not be uniform
among Option grants or Participants.
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6.9 Transferability of Options. During
his or her lifetime, only the Participant shall have the right
to exercise the Options. After the Participants death, the
Participants estate or beneficiary shall have the right to
exercise such Options.
(a) Incentive Stock Options. No ISO
granted under the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution.
(b) Nonqualified Stock Options. Except as
otherwise provided in a Participants Award Agreement, no
NQSO granted under this Article 6 may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Under
no circumstances may an NQSO be transferable for value or
consideration.
6.10 Notification of Disqualifying
Disposition. If any Participant shall make any
disposition of Shares issued pursuant to the exercise of an ISO
under the circumstances described in Section 421(b) of the
Code (relating to certain disqualifying dispositions), such
Participant shall notify the Company of such disposition within
ten (10) days thereof.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms
and conditions of the Plan, SARs may be granted to Participants
at any time and from time to time as shall be determined by the
Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SARs.
Subject to the terms and conditions of the Plan, the Committee
shall have complete discretion in determining the number of SARs
granted to each Participant and, consistent with the provisions
of the Plan, in determining the terms and conditions pertaining
to such SARs.
The SAR Grant Price for each grant of a Freestanding SAR shall
be determined by the Committee and shall be specified in the
Award Agreement. Subject to the following sentence, the SAR
Grant Price shall not be less than one hundred percent (100%) of
the Fair Market Value of a Share on the date the SAR is granted.
The Grant Price of Tandem SARs shall be equal to the Option
Price of the related Option.
7.2 SAR Agreement. Each SAR Award shall
be evidenced by an Award Agreement that shall specify the Grant
Price, the term of the SAR, and such other provisions as the
Committee shall determine.
7.3 Term of SAR. Subject to the following
sentence, the term of a SAR granted under the Plan shall be
determined by the Committee, in its sole discretion,
provided that, except as determined otherwise by the
Committee and specified in the SAR Award Agreement, no SAR shall
be exercisable later than the tenth (10th) anniversary of its
grant.
7.4 Exercise of Freestanding
SARs. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole
discretion, imposes upon them.
7.5 Exercise of Tandem SARs. Tandem SARs
may be exercised for all or part of the Shares subject to the
related Option upon the surrender of the right to exercise the
equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related
Option is then exercisable.
Notwithstanding any other provision of this Plan to the
contrary, with respect to a Tandem SAR granted in connection
with an ISO: (a) the Tandem SAR will expire no later than
the expiration of the underlying ISO; (b) the value of the
payout with respect to the Tandem SAR may be for no more than
one hundred percent (100%) of the difference between the Option
Price of the underlying ISO and the Fair Market Value of the
Shares subject to the underlying ISO at the time the Tandem SAR
is exercised; and (c) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.
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7.6 Payment of SAR Amount. Upon the
exercise of a SAR, a Participant shall be entitled to receive
payment from the Company in an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share
on the date of exercise over the Grant Price; by
(b) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon a SAR
exercise may be in cash, in Shares of equivalent value, in some
combination thereof, or in any other manner approved by the
Committee at its sole discretion. The Committees
determination regarding the form of SAR payout shall be set
forth in the Award Agreement pertaining to the grant of the SAR.
7.7 Termination of Employment or Service as a
Director. The impact of a termination on a
Participants employment on a SARs vesting and
exercise period shall be determined by the Committee, in its
sole discretion, in the Participants Award Agreement, and
need not be uniform among SAR grants or Participants. The impact
of a termination on a Participants service as a Director
on a SARs vesting and exercise period shall be determined
by the Committee, in its sole discretion, in the
Participants Award Agreement, and need not be uniform
among SAR grants or Participants.
7.8 Nontransferability of SARs. Except as
otherwise provided in a Participants Award Agreement, no
SAR granted under the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. Under no
circumstances may a SAR be transferable for value or
consideration. Further, except as otherwise provided in a
Participants Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or
her lifetime only by such Participant.
7.9 Other Restrictions. The Committee
shall impose such other conditions
and/or
restrictions on any Shares received upon exercise of a SAR
granted pursuant to the Plan as it may deem advisable. This
includes, but is not limited to, requiring the Participant to
hold the Shares received upon exercise of a SAR for a specified
period of time.
Article 8. Restricted Stock and Restricted
Stock Units
8.1 Grant of Restricted Stock or Restricted Stock
Units. Subject to the terms and conditions of the
Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock
and/or
Restricted Stock Units to Participants in such amounts as the
Committee shall determine. Restricted Stock Units shall be
similar to Restricted Stock except that no Shares are actually
awarded to the Participant on the date of grant.
8.2 Restricted Stock or Restricted Stock Unit
Agreement. Each Restricted Stock
and/or
Restricted Stock Unit grant shall be evidenced by an Award
Agreement that shall specify the Period(s) of Restriction, the
number of Shares of Restricted Stock or the number of Restricted
Stock Units granted, and such other provisions as the Committee
shall determine.
8.3 Transferability. Except as provided
in this Article 8, the Shares of Restricted Stock
and/or
Restricted Stock Units granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Period of
Restriction established by the Committee and specified in the
Award Agreement (and in the case of Restricted Stock Units until
the date of delivery or other payment), or upon earlier
satisfaction of any other conditions, as specified by the
Committee, in its sole discretion, and set forth in the Award
Agreement.
8.4 Other Restrictions. The Committee
shall impose such other conditions
and/or
restrictions on any Shares of Restricted Stock or Restricted
Stock Units granted pursuant to the Plan as it may deem
advisable including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Share of
Restricted Stock or each Restricted Stock Unit, restrictions
based upon the achievement of specific performance goals,
time-based restrictions on vesting following
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the attainment of the performance goals, time-based
restrictions,
and/or
restrictions under applicable federal or state securities laws.
To the extent deemed appropriate by the Committee, the Company
may retain the certificates representing Shares of Restricted
Stock in the Companys possession until such time as all
conditions
and/or
restrictions applicable to such Shares have been satisfied or
lapse.
Except as otherwise provided in this Article 8, Shares of
Restricted Stock covered by each Restricted Stock Award shall
become freely transferable by the Participant after all
conditions and restrictions applicable to such Shares have been
satisfied or lapse (including satisfaction of any applicable tax
withholding obligations), and Restricted Stock Units shall be
paid in cash, Shares, or a combination of cash and Shares as the
Committee, in its sole discretion shall determine.
8.5 Voting Rights. To the extent
permitted or required by law, as determined by the Committee,
Participants holding Shares of Restricted Stock granted
hereunder may be granted the right to exercise full voting
rights with respect to those Shares during the Period of
Restriction. A Participant shall have no voting rights with
respect to any Restricted Stock Units granted hereunder.
8.6 Dividends and Other
Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock or Restricted
Stock Units granted hereunder may, if the Committee so
determines, be credited with dividends paid with respect to the
underlying Shares or dividend equivalents while they are so held
in a manner determined by the Committee in its sole discretion.
The Committee may apply any restrictions to the dividends or
dividend equivalents that the Committee deems appropriate. The
Committee, in its sole discretion, may determine the time and
form of payment of dividends or dividend equivalents, including
cash, Shares, Restricted Stock, or Restricted Stock Units;
provided, however, that if dividends or dividend
equivalents are granted with respect to any Shares of Restricted
Stock or Restricted Share Units that are subject to performance
goals, the dividends or dividend equivalents shall be
accumulated or reinvested and paid following the time such
performance goals are met, as set forth by the Committee in the
applicable Award Agreement.
8.7 Termination of Employment or Service as a
Director. The impact of a termination on a
Participants employment of a Restricted Stock or
Restricted Stock Units vesting and settlement shall be
determined by the Committee, in its sole discretion, in the
Participants Award Agreement, and need not be uniform
among Restricted Stock or Restricted Stock Unit grants or
Participants. The impact of a termination on a
Participants service as a Director of a Restricted Stock
or Restricted Stock Units vesting and settlement shall be
determined by the Committee, in its sole discretion, in the
Participants Award Agreement, and need not be uniform
among Restricted Stock or Restricted Stock Unit grants or
Participants.
8.8 Section 83(b) Election. The
Committee may provide in an Award Agreement that the Award of
Restricted Stock is conditioned upon the Participant making or
refraining from making an election with respect to the Award
under Section 83(b) of the Code. If a Participant makes an
election pursuant to Section 83(b) of the Code concerning a
Restricted Stock Award, the Participant shall be required to
file promptly a copy of such election with the Company.
Article 9. Other Awards
The Committee may grant Other Awards, which may include, without
limitation, unrestricted Shares, the payment of Shares in lieu
of cash, the payment of cash based on attainment of Performance
Goals, service conditions or other goals established by the
Committee and the payment of Shares in lieu of cash under other
Company incentive or bonus programs. Payment under or settlement
of any such Other Awards shall be made in such manner, at such
times and subject to such terms and conditions as the Committee
may determine.
Article 10. Performance Measures
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Unless and until the Committee proposes for shareholder vote and
the shareholders approve a change in the general Performance
Measures set forth in this Article 10, the performance
goals upon which the payment or vesting of an Award to a Covered
Employee that is intended to qualify as Performance-Based
Compensation shall be limited to one or more of the following
Performance Measures:
(a) Net earnings;
(b) Earnings per share;
(c) Net sales growth;
(d) Net income (before or after taxes);
(e) Net operating profit;
(f) Return measures (including, but not limited to, return
on assets, capital, equity, or sales);
(g) Cash flow (including, but not limited to, operating
cash flow and free cash flow);
(h) Cash flow return on capital;
(i) Earnings before or after taxes, interest, depreciation,
and/or
amortization;
(j) Gross or operating margins;
(k) Productivity ratios;
(l) Share price (including, but not limited to, growth
measures and total shareholder return);
(m) Expense targets;
(n) Margins;
(o) Operating efficiency;
(p) Customer satisfaction;
(q) Employee satisfaction metrics;
(r) Human resources metrics;
(s) Working capital targets; and
(t) EVA®.
Any Performance Measure(s) may be used to measure the
performance of the Company or an Affiliate as a whole or any
business unit of the Company or an Affiliate or any combination
thereof, as the Committee may deem appropriate, or any of the
above Performance Measures as compared to the performance of a
group of comparator companies, or published or special index
that the Committee, in its sole discretion, deems appropriate,
or the Company may select Performance Measure (l) above as
compared to various stock market indices. The Committee also has
the authority to provide for accelerated vesting of any Award
based on the achievement of performance goals pursuant to the
Performance Measures specified in this Article 10.
The Committee may provide in any such Award that any evaluation
of performance may include or exclude any of the following
events that occurs during a Performance Period: (a) asset
write-downs, (b) litigation or claim judgments or
settlements, (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting
reported results, (d) any reorganization and restructuring
programs, (e) extraordinary nonrecurring items as described
in Accounting Principles Board Opinion No. 30
and/or in
managements discussion and analysis of financial condition
and results of operations appearing in the Companys annual
report to shareholders for
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the applicable year, (f) acquisitions or divestitures, and
(g) foreign exchange gains and losses. To the extent such
inclusions or exclusions affect Awards to Covered Employees,
they shall be prescribed in a form that meets the requirements
of Code Section 162(m) for deductibility.
Awards that are designed to qualify as Performance-Based
Compensation, and that are held by Covered Employees, may not be
adjusted upward. The Committee shall retain the discretion to
adjust such Awards downward.
In the event that applicable tax
and/or
securities laws change to permit Committee discretion to alter
the governing Performance Measures without obtaining shareholder
approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder
approval.
Article 11. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all
of such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when
filed by the Participant in writing with the Company during the
Participants lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participants
death shall be paid to the Participants estate.
Article 12. Rights of Participants
12.1 Employment. Nothing in the Plan or
an Award Agreement shall interfere with or limit in any way the
right of the Company
and/or its
Affiliates to terminate any Participants employment or of
the Board of Directors to terminate service as a Director at any
time or for any reason not prohibited by law, nor confer upon
any Participant any right to continue his or her employment or
service as a Director for any specified period of time.
Neither an Award nor any benefits arising under this Plan shall
constitute an employment contract with the Company and,
accordingly, subject to Article 3 and Section 14.1,
this Plan and the benefits hereunder may be terminated at any
time in the sole and exclusive discretion of the Committee
without giving rise to any liability on the part of the Company,
its Affiliates,
and/or its
Subsidiaries.
12.2 Participation. No individual shall
have the right to be selected to receive an Award under this
Plan, or, having been so selected, to be selected to receive a
future Award.
12.3 Rights as a Shareholder. Except as
otherwise provided in Section 8 of the Plan or in an Award
Agreement, a Participant shall have none of the rights of a
shareholder with respect to Shares covered by any Award until
the Participant becomes the record holder of such Shares.
Article 13. Acceleration Event
The Compensation Committee shall specify in each
Participants Award Agreement the treatment of outstanding
Awards upon an Acceleration Event.
Article 14. Amendment, Modification,
Suspension, and Termination
14.1 Amendment, Modification, Suspension, and
Termination. Subject to Section 14.3, the
Committee may, at any time and from time to time, alter, amend,
modify, suspend, or terminate the Plan and any Award Agreement
in whole or in part; provided, however, that,
except for a change or adjustment made pursuant to
Section 4.2, no Option Price of an outstanding Option or
Grant Price of an outstanding SAR shall be reduced (whether
through amendment, cancellation or replacement of Awards with
other Awards or other payments of cash or property) without
shareholder approval.
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14.2 Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee may
make adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events
described in Section 4.2 hereof) affecting the Company or
the financial statements of the Company or of changes in
applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate
in order to prevent unintended dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan. The determination of the Committee as to the
foregoing adjustments, if any, shall be conclusive and binding
on Participants under the Plan.
14.3 Awards Previously
Granted. Notwithstanding any other provision of
the Plan to the contrary, no termination, amendment, suspension,
or modification of the Plan or an Award Agreement shall
adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the
Participant holding such Award.
Article 15. Withholding
15.1 Tax Withholding. The Company shall
have the power and the right to deduct or withhold, or require a
Participant to remit to the Company, the minimum statutory
amount to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with
respect to any taxable event arising as a result of this Plan.
15.2 Share Withholding. With respect to
withholding required upon the exercise of Options, or SARs, upon
the lapse of restrictions on Restricted Stock and Restricted
Stock Units, or any other taxable event arising as a result of
Awards granted hereunder, Participants may elect, subject to the
approval of the Committee, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax that could
be imposed on the transaction. All such elections shall be
irrevocable, made in writing, and signed by the Participant, and
shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
Article 16. Successors
All obligations of the Company under the Plan with respect to
Awards granted hereunder shall be binding on any successor to
the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business
and/or
assets of the Company.
Article 17. General Provisions
17.1 Forfeiture Events. The Committee may
specify in an Award Agreement that the Participants
rights, payments, and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture, or recoupment
upon the occurrence of certain specified events, in addition to
any otherwise applicable vesting or performance conditions of an
Award. Such events shall include, but shall not be limited to,
termination of employment for cause, violation of material
Company
and/or
Affiliate policies, breach of noncompetition, confidentiality,
or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is
detrimental to the business or reputation of the Company
and/or its
Affiliates.
17.2 Legend. The certificates for Shares
may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer of such Shares.
17.3 Gender and Number. Except where
otherwise indicated by the context, any masculine term used
herein also shall include the feminine, the plural shall include
the singular, and the singular shall include the plural.
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17.4 Severability. In the event any
provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been
included.
17.5 Requirements of Law. The granting
of Awards and the issuance of Shares under the Plan shall be
subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national
securities exchanges as may be required.
17.6 Securities Law Compliance. With
respect to Insiders, transactions under this Plan are intended
to comply with all applicable conditions of
Rule 16b-3
or its successor under the Exchange Act. To the extent any
provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
17.7 Registration and Listing. The
Company may use reasonable endeavors to register Shares allotted
pursuant to the exercise of an Award with the United States
Securities and Exchange Commission or to effect compliance with
the registration, qualification, and listing requirements of any
national securities laws, stock exchange, or automated quotation
system.
17.8 Delivery of Title. The Company shall
have no obligation to issue or deliver evidence of title for
Shares issued under the Plan prior to:
(a) Obtaining any approvals from governmental agencies that
the Company determines are necessary or advisable; and
(b) Completion of any registration or other qualification
of the Shares under any applicable national or foreign law or
ruling of any governmental body that the Company determines to
be necessary or advisable.
17.9 Inability to Obtain Authority. The
inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the
Companys counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been
obtained.
17.10 Employees or Directors Based Outside of the United
States. Notwithstanding any provision of the Plan
to the contrary, in order to comply with the laws in other
countries in which the Company and its Affiliates operate or
have Employees or Directors, the Committee, in its sole
discretion, shall have the power and authority to:
(a) Determine which Affiliates shall be covered by the Plan;
(b) Determine which Employees
and/or
Directors outside the United States are eligible to participate
in the Plan;
(c) Modify the administrative terms and conditions of any
Award granted to Employees
and/or
Directors outside the United States to comply with applicable
foreign laws;
(d) Establish subplans and modify exercise procedures and
other terms and procedures, to the extent such actions may be
necessary or advisable. Any subplans and modifications to Plan
terms and procedures established under this Section 17.10
by the Committee shall be attached to this Plan document as
appendices; and
(e) Take any action, before or after an Award is made, that
it deems advisable to obtain approval or comply with any
necessary local government regulatory exemptions or approvals.
Notwithstanding the above, the Committee may not take any
actions hereunder, and no Awards shall be granted, that would
violate the Exchange Act, the Code, any securities law, or
governing statute or any other applicable law.
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17.11 Uncertificated Shares. To the
extent that the Plan provides for issuance of certificates to
reflect the transfer of Shares, the transfer of such Shares may
be effected on a noncertificated basis, to the extent not
prohibited by applicable law or the rules of any stock exchange.
17.12 Unfunded Plan. Participants shall
have no right, title, or interest whatsoever in or to any
investments that the Company may make to aid it in meeting its
obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant,
beneficiary, legal representative, or any other person. To the
extent that any person acquires a right to receive payments from
the Company under the Plan, such right shall be no greater than
the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general
funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the
Plan. The Plan is not subject to ERISA.
17.13 No Fractional Shares. No fractional
Shares shall be issued or delivered pursuant to the Plan or any
Award. The Committee shall determine whether cash, Awards, or
other property shall be issued or paid in lieu of fractional
Shares or whether such fractional Shares or any rights thereto
shall be forfeited or otherwise eliminated.
17.14 Retirement and Welfare Plans. The
value of compensation paid under this Plan will not be included
as compensation for purposes of computing the
benefits payable to any participant under the Companys
retirement plans (both qualified and non-qualified) or welfare
benefit plans unless such other plan expressly provides that
such compensation shall be taken into account in computing a
participants benefit.
17.15 Governing Law. The Plan and each
Award Agreement shall be governed by the laws of the State of
New York, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or
interpretation of the Plan to the substantive law of another
jurisdiction. Unless otherwise provided in the Award Agreement,
recipients of an Award under the Plan are deemed to submit to
the exclusive jurisdiction and venue of the federal or state
courts of New York, to resolve any and all issues that may arise
out of or relate to the Plan or any related Award Agreement.
B-15
Appendix C
RESTATED ARTICLES OF INCORPORATION
OF
ITT CORPORATION
INDIANA
RESTATED
ARTICLES OF INCORPORATION
of
ITT CORPORATION ARTICLE FIRST
The name of the corporation is ITT Corporation (the
Corporation).
ARTICLE SECOND
The address of the registered office of the Corporation in the
State of Indiana is 251 East Ohio Street, Suite 1100,
Indianapolis, Indiana 46204. The name of the registered agent of
the Corporation at such address is The Corporation
Trust Company.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the
Indiana Business Corporation Law.
ARTICLE FOURTH
(a) The aggregate number of shares of stock that the
Corporation shall have authority to issue is
550,000,000 shares, consisting of 500,000,000 shares
designated Common Stock and 50,000,000 shares
designated Preferred Stock. The shares of Common
Stock shall have a par value of $1 per share, and the shares of
Preferred Stock shall not have any par or stated value, except
that, solely for the purpose of any statute or regulation
imposing any fee or tax based upon the capitalization of the
Corporation, the shares of Preferred Stock shall be deemed to
have a par value of $.01 per share.
(b) The Board of Directors of the Corporation shall have
the full authority permitted by law, at any time and from time
to time, to divide the authorized and unissued shares of
Preferred Stock into classes or series, or both, and to
determine the following provisions, designations, powers,
preferences and relative, participating, optional and other
special rights and the qualifications, limitations or
restrictions thereof for shares of any such class or series of
Preferred Stock:
(1) the designation of such class or series, the number of
shares to constitute such class or series and the stated or
liquidation value thereof;
(2) whether the shares of such class or series shall have
voting rights, in addition to any voting rights provided by law,
and, if so, the terms of such voting rights;
(3) the dividends, if any, payable on such class or series,
whether any such dividends shall be cumulative, and, if so, from
what dates, the conditions and dates upon which such dividends
shall be payable, the preference or relation which such
dividends shall bear to the dividends payable on any shares of
stock of any other class or any other series of the same class;
(4) whether the shares of such class or series shall be
subject to redemption at the election of the Corporation
and/or the
holders of such class or series and, if so, the times, price and
other conditions of such redemption, including securities or
other property payable upon any such redemption, if any;
(5) the amount or amounts, if any, payable upon shares of
such class or series upon, and the rights of the holders of such
class or series in, the voluntary or involuntary liquidation,
dissolution or winding up, or any distribution of the assets, of
the Corporation; provided that in no event shall the
amount or amounts, if any, exceed $100 per share plus accrued
dividends in the case of involuntary liquidation, dissolution or
winding up;
(6) whether the shares of such class or series shall be
subject to the operation of a retirement or sinking fund and, if
so, the extent to and manner in which any such retirement or
sinking fund shall be applied to the purchase or redemption of
the shares of such class or series for
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retirement or other corporate purposes and the terms and
provisions relative to the operation thereof;
(7) whether the shares of such class or series shall be
convertible into, or exchangeable for, shares of stock of any
other class or any other series of the same class or any
securities, whether or not issued by the Corporation, and, if
so, the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same, and any
other terms and conditions of conversion or exchange;
(8) the limitations and restrictions, if any, to be
effective while any shares of such class or series are
outstanding upon the payment of dividends or the making of other
distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of
stock of any other class or any other series of the same class;
(9) the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the issuance
of any additional shares of stock, including additional shares
of such class or series or of any other series of the same class
or of any other class;
(10) the ranking (be it pari passu, junior or
senior) of each class or series
vis-a-vis
any other class or series of any class of Preferred Stock as to
the payment of dividends, the distribution of assets and all
other matters; and
(11) any other powers, preferences and relative,
participating, optional and other special rights and any
qualifications, limitations or restrictions thereof, insofar as
they are not inconsistent with the provisions of these Articles
of Incorporation, to the full extent permitted in accordance
with the laws of the State of Indiana.
(c) Such divisions and determinations may be accomplished
by an amendment to this ARTICLE FOURTH, which amendment may
be made solely by action of the Board of Directors, which shall
have the full authority permitted by law to make such divisions
and determinations.
(d) The powers, preferences and relative, participating,
optional and other special rights of each class or series of
Preferred Stock and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and
all other classes or series at any time outstanding; provided
that each series of a class is given a distinguishing
designation and that all shares of a series have powers,
preferences and relative, participating, optional and other
special rights and the qualifications, limitations or
restrictions thereof identical with those of other shares of the
same series and, except to the extent otherwise provided in the
description of the series, with those other series of the same
class.
(e) Holders of shares of Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors,
out of funds legally available for the payment thereof,
dividends at the rates fixed by the Board of Directors for the
respective series before any dividends shall be declared and
paid, or set aside for the payment, on shares of Common Stock
with respect to the same dividend period. Nothing in this
ARTICLE FOURTH shall limit the power of the Board of
Directors to create a series of Preferred Stock with dividends
the rate of which is calculated by reference to, and the payment
of which is concurrent with, dividends on shares of Common Stock.
(f) In the event of the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
holders of shares of each series of Preferred Stock will be
entitled to receive the amount fixed for such series upon any
such event (not in excess of $100 per share in the case of
involuntary liquidation, dissolution or winding up) plus, in the
case of any series on which dividends will have been determined
by the Board of Directors to be cumulative, an amount equal to
all dividends accumulated and unpaid thereon to the date of
final distribution whether or not earned or declared before any
distribution shall be paid, or set aside for payment, to holders
of Common Stock. If the assets of the Corporation are not
sufficient to pay such amounts in full, holders of all shares of
Preferred Stock will participate in the distribution of assets
ratably in
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proportion to the full amounts to which they are entitled or in
such order or priority, if any, as will have been fixed in the
resolution or resolutions providing for the issue of the series
of Preferred Stock. Neither the merger nor consolidation of the
Corporation into or with any other corporation, nor a sale,
transfer or lease of all or part of its assets, will be deemed a
liquidation, dissolution or winding up of the Corporation within
the meaning of this paragraph except to the extent specifically
provided for herein. Nothing in this ARTICLE FOURTH shall
limit the power of the Board of Directors to create a series of
Preferred Stock for which the amount to be distributed upon any
liquidation, dissolution or winding up of the Corporation is
calculated by reference to, and the payment of which is
concurrent with, the amount to be distributed to the holders of
shares of Common Stock.
(g) The Corporation, at the option of the Board of
Directors, may redeem all or part of the shares of any series of
Preferred Stock on the terms and conditions fixed for such
series.
(h) Except as otherwise required by law, as otherwise
provided herein or as otherwise determined by the Board of
Directors as to the shares of any series of Preferred Stock
prior to the issuance of any such shares, the holders of
Preferred Stock shall have no voting rights and shall not be
entitled to any notice of meetings of shareholders.
(i) Each holder of shares of Common Stock shall be entitled
to one vote for each share of Common Stock held of record on all
matters on which the holders of shares of Common Stock are
entitled to vote. Subject to the provisions of applicable law
and any certificate of designation providing for the issuance of
any series of Preferred Stock, the holders of outstanding shares
of Common Stock shall have and possess the exclusive right to
notice of shareholders meetings and the exclusive power to
vote. No shareholder will be permitted to cumulate votes at any
election of directors.
(i) Subject to all the rights of the Preferred Stock, the
holders of the Common Stock shall be entitled to receive, when,
as and if declared by the Board of Directors, out of funds
legally available for the payment thereof, dividends payable in
cash, stock or otherwise. Upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary,
and after the holders of the Preferred Stock of each series
shall have been paid in full in cash the amounts to which they
respectively shall be entitled or a sum sufficient for such
payment in full shall have been set aside, the remaining net
assets of the Corporation shall be distributed pro rata to the
holders of the Common Stock in accordance with their respective
rights and interests, to the exclusion of the holders of the
Preferred Stock.
SERIES A
PARTICIPATING CUMULATIVE PREFERRED STOCK
A description of such Series A Participating Cumulative
Preferred Stock with the designations, voting powers,
preferences and relative, participating, optional and other
special rights and qualifications, limitations or restrictions
relating thereto is as follows:
SECTION 2. Designation and Number of
Shares. The shares of such series shall be
designated as Series A Participating Cumulative
Preferred Stock (the Series A Preferred
Stock), without par value. The number of shares initially
constituting the Series A Preferred Stock shall be 300,000;
provided, however, that, if more than a total of
300,000 shares of Series A Preferred Stock shall be
issuable upon the exercise of Rights (the Rights)
issued pursuant to that Rights Agreement between the Corporation
and The Bank of New York, a New York banking corporation, as
Rights Agent (the Rights Agreement), the Board of
Directors of the Corporation, pursuant to
Section 23-1-25-2(d)
of the Business Corporation Law of the State of Indiana, shall
direct by resolution or resolutions that articles of amendment
be properly executed and delivered to the Secretary of State for
the State of Indiana for filing in accordance with the
provisions of
Section 23-1-18-1
and
Section 23-1-38-6
thereof, providing for the total number of shares of
Series A Preferred Stock authorized to be issued to be
increased (to the extent that the Articles of Incorporation
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then permit) to the largest number of whole shares (rounded up
to the nearest whole number) issuable upon exercise of such
Rights.
SECTION 3. Dividends or
Distributions. (a) Subject to the prior and
superior rights of the holders of shares of any other series of
Preferred Stock or other class of capital stock of the
Corporation ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, the
holders of shares of the Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors, out of the assets of the Corporation legally
available therefor, (1) quarterly dividends payable in cash
on the last day of each fiscal quarter in each year, or such
other dates as the Board of Directors of the Corporation shall
approve (each such date being referred to herein as a
Quarterly Dividend Payment Date), commencing on the
first Quarterly Dividend Payment Date after the first issuance
of a share or a fraction of a share of Series A Preferred
Stock, in the amount of $.01 per whole share (rounded to the
nearest cent) less the amount of all cash dividends declared on
the Series A Preferred Stock pursuant to the following
clause (2) since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock (the total
of which shall not, in any event, be less than zero) and
(2) dividends payable in cash on the payment date for each
cash dividend declared on the Common Stock in an amount per
whole share (rounded to the nearest cent) equal to the Formula
Number (as hereinafter defined) then in effect times the cash
dividends then to be paid on each share of Common Stock. In
addition, if the Corporation shall pay any dividend or make any
distribution on the Common Stock payable in assets, securities
or other forms of noncash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each
such case, the Corporation shall simultaneously pay or make on
each outstanding whole share of Series A Preferred Stock a
dividend or distribution in like kind equal to the Formula
Number then in effect times such dividend or distribution on
each share of the Common Stock. As used herein, the
Formula Number shall be 1,000; provided,
however, that, if at any time after the Distribution Record
Date (as defined in that Notice of Special Meeting and Proxy
Statement, dated August 30, 1995, filed with the Securities
and Exchange Commission by ITT Corporation), the Corporation
shall (i) declare or pay any dividend on the Common Stock
payable in shares of Common Stock or make any distribution on
the Common Stock in shares of Common Stock, (ii) subdivide
(by a stock split or otherwise) the outstanding shares of Common
Stock into a larger number of shares of Common Stock or
(iii) combine (by a reverse stock split or otherwise) the
outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then in each such event the Formula
Number shall be adjusted to a number determined by multiplying
the Formula Number in effect immediately prior to such event by
a fraction, the numerator of which is the number of shares of
Common Stock that are outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that are outstanding immediately prior to such event (and
rounding the result to the nearest whole number); and
provided further, that, if at any time after the
Distribution Record Date, the Corporation shall issue any shares
of its capital stock in a merger, reclassification, or change of
the outstanding shares of Common Stock, then in each such event
the Formula Number shall be appropriately adjusted to reflect
such merger, reclassification or change so that each share of
Preferred Stock continues to be the economic equivalent of a
Formula Number of shares of Common Stock prior to such merger,
reclassification or change.
(b) The Corporation shall declare a dividend or
distribution of the Series A Preferred Stock as provided in
Section 2(a) immediately prior to or at the same time it
declares a dividend or distribution on the Common Stock (other
than a dividend or distribution solely in shares of Common
Stock; provided, however, that, in the event no dividend
or distribution (other than a dividend or distribution in shares
of Common Stock) shall have been declared on the Common Stock
during the period between any Quarterly Dividend
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Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $.01 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date. The Board of Directors may fix
a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a dividend or
distribution declared thereon, which record date shall be the
same as the record date for any corresponding dividend or
distribution on the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from and
after the Quarterly Dividend Payment Date next preceding the
date of original issue of such shares of Series A Preferred
Stock; provided, however, that dividends on such shares
which are originally issued after the record date for the
determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and on or prior
to the next succeeding Quarterly Dividend Payment Date shall
begin to accrue and be cumulative from and after such Quarterly
Dividend Payment Date. Notwithstanding the foregoing, dividends
on shares of Series A Preferred Stock which are originally
issued prior to the record date for the determination of holders
of shares or Series A Preferred Stock entitled to receive a
quarterly dividend on the first Quarterly Dividend Payment Date
shall be calculated as if cumulative from and after the last day
of the fiscal quarter next preceding the date of original
issuance of such shares. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall
be allocated pro rata on a
share-by-share
basis among all such shares at the time outstanding.
(d) So long as any shares of the Series A Preferred
Stock are outstanding, no dividends or other distributions shall
be declared, paid or distributed, or set aside for payment or
distribution, on the Common Stock unless, in each case, the
dividend required by this Section 2 to be declared on the
Series A Preferred Stock shall have been declared.
(e) The holders of the shares of Series A Preferred
Stock shall not be entitled to receive any dividends or other
distributions except as provided herein.
SECTION 4. Voting
Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be
entitled to a number of votes equal to the Formula Number then
in effect, for each share of Series A Preferred Stock held
of record on each matter on which holders of the Common Stock or
shareholders generally are entitled to vote, multiplied by the
maximum number of votes per share which any holder of the Common
Stock or shareholders generally then have with respect to such
matter (assuming any holding period or other requirement to vote
a greater number of shares is satisfied).
(b) Except as otherwise provided herein or by applicable
law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock shall vote together as one
class for the election of directors of the Corporation and on
all other matters submitted to a vote of shareholders of the
Corporation.
(c) If, at the time of any annual meeting of shareholders
for the election of directors, the equivalent of six quarterly
dividends (whether or not consecutive) payable on any share or
shares of Series A Preferred Stock are in default, the
number of directors constituting the Board of Directors of the
Corporation shall be increased by two. In addition to voting
together with the holders of Common Stock for the election of
other directors of the Corporation, the holders of record of the
Series A Preferred Stock, voting separately as a class to
the exclusion of the holders of Common Stock, shall be entitled
at said meeting of shareholders (and at each subsequent annual
meeting of shareholders), unless all
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dividends in arrears have been paid or declared and set apart
for payment prior thereto, to vote for the election of two
directors of the Corporation, the holders of any Series A
Preferred Stock being entitled to cast a number of votes per
share of Series A Preferred Stock equal to the Formula
Number. Until the default in payments of all dividends which
permitted the election of said directors shall cease to exist,
any director who shall have been so elected pursuant to the next
preceding sentence may be removed at any time, either with or
without cause, only by the affirmative vote of the holders of
the shares of Series A Preferred Stock at the time entitled
to cast a majority of the votes entitled to be cast for the
election of any such director at a special meeting of such
holders called for that purpose, and any vacancy thereby created
may be filled by the vote of such holders. If and when such
default shall cease to exist, the holders of the Series A
Preferred Stock shall be divested of the foregoing special
voting rights, subject to revesting in the event of each and
every subsequent like default in payments of dividends. Upon the
termination of the foregoing special voting rights, the terms of
office of all persons who may have been elected directors
pursuant to said special voting rights shall forthwith
terminate, and the number of directors constituting the Board of
Directors shall be reduced by two. The voting rights granted by
this Section 3(c) shall be in addition to any other voting
rights granted to the holders of the Series A Preferred
Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by
applicable law, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for authorizing or
taking any corporate action.
SECTION 5. Certain
Restrictions. (a) Whenever quarterly
dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid
in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions or any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock; provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares
of any stock of the Corporation ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the respective
series or classes.
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(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (a) of this Section 4, purchase
or otherwise acquire such shares at such time and in such manner.
SECTION 6. Liquidation
Rights. Upon the liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary,
no distribution shall be made (1) to the holders of shares
of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of
Series A Preferred Stock shall have received an amount,
equal to the accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment,
plus an amount equal to the greater of (x) $.01 per whole
share or (y) an aggregate amount per share equal to the
Formula Number then in effect times the aggregate amount to be
distributed per share to holders of Common Stock or (2) to
the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all other such parity
stock in proportion to the total amounts to which the holders of
all such shares are entitled upon such liquidation, dissolution
or winding up; provided that in no event shall the amount
or amounts, if any, exceed $100 per share plus accrued dividends
in the case of involuntary liquidation, dissolution or winding
up of the Corporation.
SECTION 7. Consolidation, Merger,
etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into
other stock or securities, cash or any other property, then in
any such case the then outstanding shares of Series A
Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share equal to the Formula Number
then in effect times the aggregate amount of stock, securities,
cash or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is
exchanged or changed. In the event both this Section 6 and
Section 2 appear to apply to a transaction, this
Section 6 will control.
SECTION 8. No Redemption; No Sinking
Fund. (a) The shares of Series A
Preferred Stock shall not be subject to redemption by the
Corporation or at the option of any holder of Series A
Preferred Stock; provided, however, that the Corporation
may purchase or otherwise acquire outstanding shares of
Series A Preferred Stock in the open market or by offer to
any holder or holders of shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not
be subject to or entitled to the operation of a retirement or
sinking fund.
SECTION 9. Ranking. The
Series A Preferred Stock shall rank junior to all other
series of Preferred Stock of the Corporation, unless the Board
of Directors shall specifically determine otherwise in fixing
the powers, preferences and relative, participating, optional
and other special rights of the shares of such series and the
qualifications, limitations or restrictions thereof.
SECTION 10. Fractional
Shares. The Series A Preferred Stock shall
be issuable upon exercise of the Rights issued pursuant to the
Rights Agreement in whole shares or in any fraction of a share
that is one one-thousandths (1/1,000ths) of a share or any
integral multiple of such fraction which shall entitle the
holder, in proportion to such holders fractional shares,
to receive dividends, exercise voting rights, participate in
distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock. In lieu of fractional
shares, the Corporation, prior to the first issuance of a share
or a fraction of a share of Series A Preferred Stock, may
elect (1) to make a cash payment as provided in the Rights
Agreement for fractions of a share other than one
one-thousandths (1/1,000ths) of a share or any integral multiple
thereof or (2) to issue depository receipts evidencing such
authorized fraction of a share of Series A Preferred Stock
pursuant to an appropriate agreement between the
C-7
Corporation and a depository selected by the Corporation;
provided that such agreement shall provide that the
holders of such depository receipts shall have all the rights,
privileges and preferences to which they are entitled as holders
of the Series A Preferred Stock.
SECTION 11. Reacquired
Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after
the acquisition thereof. All such shares shall upon their
cancelation become authorized but unissued shares of Preferred
Stock, without designation as to series until such shares are
once more designated as part of a particular series by the Board
of Directors pursuant to the provisions of ARTICLE FOURTH
of the Articles of Incorporation.
SECTION 12. Amendment. None
of the powers, preferences and relative, participating, optional
and other special rights of the Series A Preferred Stock as
provided herein or in the Articles of Incorporation shall be
amended in any manner which would alter or change the powers,
preferences, rights or privileges of the holders of
Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least
662/3%
of the outstanding shares of Series A Preferred Stock,
voting as a separate class, provided, however, that no
such amendment approved by the holders of at least
662/3%
of the outstanding shares of Series A Preferred Stock shall
be deemed to apply to the powers, preferences, rights or
privileges of any holder of shares of Series A Preferred
Stock originally issued upon exercise of a Right after the time
of such approval without the approval of such holder.
ARTICLE FIFTH
(a) The number of directors constituting the Board of
Directors of the Corporation shall be fixed in accordance with
the By-Laws of the Corporation. In a contested election of
directors (i.e. any election where the number of nominees
exceeds the number of directors to be elected), directors shall
be elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum
is present. In an uncontested election of directors, directors
shall be elected by a plurality, or such greater number as is
specified in the By-Laws of the Corporation, of the votes cast
by the shares entitled to vote in the election at a meeting at
which a quorum is present.
(b) Special meetings of shareholders of the Corporation may
be called only (i) by the Chairman of the Board of
Directors, (ii) by a majority vote of the entire Board of
Directors or (iii) by the Secretary of the Corporation upon
the written request (a Special Meeting Request) of
shareholders of record having, as of the date of the Special
Meeting Request, an aggregate net long position of
at least 35% of the voting power of the outstanding shares of
capital stock of the Corporation entitled to vote on the matter
or matters to be brought before the proposed special meeting
(provided that such Special Meeting Request complies and is in
accordance with the By-laws of the Corporation), and may not be
called by any other person or persons. Net long
position shall determined with respect to each requesting
holder in accordance with the definition thereof set forth in
Rule 14e-4
under the Securities Exchange Act of 1934, provided that
(x) for purposes of such definition, in determining such
holders short position, the reference in such
Rule to the date that a tender offer is first publicly
announced or otherwise made known by the bidder to holders of
the security to be acquired shall be the date of the
relevant Special Meeting Request and the reference to the
highest tender offer price or stated amount of the
consideration offered for the subject security shall refer
to the closing sales price of the Corporations common
stock on the New York Stock Exchange on such date (or, if such
date is not a trading day, the next succeeding trading day) and
(y) the net long position of such holder shall
be reduced by the number of shares as to which such holder does
not, or will not, have the right to vote or direct the vote at
the proposed special meeting or as to which such holder has
entered into any derivative or other agreement, arrangement or
understanding that hedges or transfers, in whole or in part,
directly or indirectly, any of the economic consequences of
ownership of such shares. The net long position
shall be determined in good faith by the Board, which
determination shall be conclusive and binding on the Corporation
and the shareholders.
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(c) Shareholders of the Corporation shall not have any
preemptive rights to subscribe for additional issues of stock of
the Corporation except as may be agreed from time to time by the
Corporation and any such shareholder.
(d) Notwithstanding the foregoing, whenever the holders of
any one or more classes or series of Preferred Stock issued by
the Corporation, if any, shall have the right, voting separately
by class or series, to elect directors at an annual or special
meeting of shareholders, an election, term of office, filling of
vacancies and other features of such directorships shall be
governed by the terms of the applicable resolution or
resolutions of the Board of Directors adopted pursuant to
ARTICLE FOURTH of these Articles of Incorporation.
ARTICLE SIXTH
To the fullest extent permitted by applicable law as then in
effect, no director or officer shall be personally liable to the
Corporation or any of its shareholders for damages for breach of
fiduciary duty as a director or officer, except for liability
(a) for breach of duty if such breach constitutes wilful
misconduct or recklessness or (b) for the payment of
distributions to shareholders in violation of
Section 23-1-28-3
of the Indiana Business Corporation Law. Any repeal or
modification of this ARTICLE SIXTH by the shareholders of
the Corporation shall not adversely affect any right or
protection of a director or officer of the Corporation existing
at the time of such repeal or modification with respect to acts
or omissions occurring prior to such repeal or modification.
ARTICLE SEVENTH
The holders of the capital stock of the Corporation shall not be
personally liable for the payment of the Corporations
debts and the private property of the holders of the capital
stock of the Corporation shall not be subject to the payment of
debts of the Corporation to any extent whatsoever.
ARTICLE EIGHTH
Subject to any express provision of the laws of the State of
Indiana, these Articles of Incorporation or the By-laws of the
Corporation, the By-laws of the Corporation may from time to
time be supplemented, amended or repealed, or new By-laws may be
adopted, by the Board of Directors at any regular or special
meeting of the Board of Directors, if such supplement,
amendment, repeal or adoption is approved by a majority of the
entire Board of Directors. Subject to any express provision of
the laws of the State of Indiana, these Articles of
Incorporation or the By-laws of the Corporation, the By-laws of
the Corporation may from time to time be supplemented, amended
or repealed, or new By-laws may be adopted, by the shareholders
at any regular or special meeting of the shareholders at which a
quorum is present, if such supplement, amendment, repeal or
adoption is approved by the affirmative vote of the holders of
at least a majority of the voting power of all outstanding
shares of stock of the Corporation entitled to vote generally in
an election of directors.
ARTICLE NINTH
The Corporation reserves the right to supplement, amend or
repeal any provision contained in these Articles of
Incorporation, in the manner now or hereafter prescribed by the
laws of the State of Indiana, and all rights conferred on
shareholders herein are granted subject to this reservation.
ARTICLE TENTH
The name and address of the original incorporator signing the
Articles of Incorporation is:
These Articles of Amendment of the Restated Articles of
Incorporation were duly adopted by the Board of Directors of the
Corporation in accordance with the provisions of
Section 23-1-38-7
of the Indiana Business Corporation Law.
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CERTIFICATION
I hereby certify that the foregoing is a true and complete copy
of the Restated Articles of Incorporation of ITT Corporation, an
Indiana corporation, as in effect on the date hereof.
WITNESS my hand and the seal of the Corporation.
Dated:
Secretary
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Appendix D
BY-LAWS
of
ITT Corporation
1.1 Place of Shareholders
Meetings. All meetings of the shareholders of the
Corporation shall be held at such place or places, within or
outside the state of Indiana, as may be fixed by the
Corporations Board of Directors (the Board,
and each member thereof a Director) from time to
time or as shall be specified in the respective notices thereof.
1.2 Day and Time of Annual Meetings of
Shareholders. An annual meeting of shareholders
shall be held at such place (within or outside the state of
Indiana), date and hour as shall be determined by the Board and
designated in the notice thereof. Failure to hold an annual
meeting of shareholders at such designated time shall not affect
otherwise valid corporate acts or work a forfeiture or
dissolution of the Corporation.
1.3 Purposes of Annual
Meetings. (a) At each annual meeting, the
shareholders shall elect the members of the Board for the
succeeding term. At any such annual meeting any business
properly brought before the meeting may be transacted.
(b) To be properly brought before an annual meeting,
business must be (i) specified in the notice of the meeting
(or any supplement thereto) given by or at the direction of the
Board, (ii) otherwise properly brought before the meeting
by or at the direction of the Board or (iii) otherwise
properly brought before the meeting by a shareholder. For
business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given written notice
thereof, either by personal delivery or by United States mail,
postage prepaid, to the Secretary, received at the principal
executive offices of the Corporation, not less than
90 calendar days nor more than 120 calendar days prior to
the date of the Corporations proxy statement released to
shareholders in connection with the previous years annual
meeting; provided, however, that in the event that
no annual meeting was held in the previous year or the date of
the annual meeting was changed by more than 30 days from
the anniversary date of the previous years annual meeting,
notice by the shareholder must be so received not earlier than
120 calendar days prior to such annual meeting and not later
than 90 calendar days prior to such annual meeting or 10
calendar days following the date on which public announcement of
the date of the meeting is first made. In no event shall the
public announcement of an adjournment or postponement of a
meeting commence a new time period, or extend any time period,
for the giving of written notice. Any such notice shall set
forth as to each matter the shareholder proposes to bring before
the annual meeting (i) a brief description of the business
desired to be brought before the meeting and the reasons for
conducting such business at the meeting and, in the event that
such business includes a proposal to amend either the Articles
of Incorporation or By-laws of the Corporation, the language of
the proposed amendment, (ii) the name and address of the
shareholder proposing such business and the beneficial owner, if
any, on whose behalf the proposal is made, (iii) a
representation that the shareholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
propose such business, (iv) any material interest of the
shareholder, and the beneficial owner, if any, on whose behalf
the proposal is made, in such business, (v) if the
shareholder or beneficial owner, if any, intends or is part of a
group that intents to (x) deliver a proxy statement
and/or form
of proxy to holders of at least the percentage of the
Corporations outstanding capital stock required to approve
or adopt the proposal or (y) otherwise solicit proxies or
votes in support of such shareholders proposal, a
representation to that effect, (vi) any other information
relating to such shareholder and beneficial owner, if any,
required to be disclosed
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in a proxy statement or other filings required to be made in
connection with solicitations of proxies for the proposal,
pursuant to and in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated
thereunder, (vii) a description of any agreement,
arrangement or understanding with respect to the proposal
and/or the
voting of shares of any class or series of stock of the
Corporation between or among the shareholder giving the notice,
the beneficial owner, if any, on whose behalf the proposal is
made, any of their respective affiliates or associates
and/or any
others acting in concert with any of the foregoing
(collectively, Proponent Persons, which term,
for purposes of Section 2.2 herein, shall include each
nominee (and his or her respective affiliates or associates
and/or any
others acting in concert with such nominee) and shall be defined
as if the foregoing clause had, in each case, replaced the word
proposal with the word nomination); and
(viii) a description of any agreement, arrangement or
understanding (including without limitation any swap or other
derivative or short position, profits interest, hedging
transaction, borrowed or loaned shares, any contract to purchase
or sell, acquisition or grant of any option, right or warrant to
purchase or sell, or other instrument) to which any Proponent
Person is a party, the intent or effect of which may be
(x) to transfer to or from any Proponent Person, in whole
or in part, any of the economic consequences of ownership of any
security of the Corporation, (y) to increase or decrease
the voting power of any Proponent Person with respect to shares
of any class or series of capital stock of the Corporation
and/or
(z) to provide any Proponent Person, directly or
indirectly, with the opportunity to profit or share in any
profit derived from, or to otherwise benefit economically from,
or to mitigate any loss resulting from, the value (or any
increase or decrease in the value) of any security of the
Corporation. A shareholder providing notice of business proposed
to be brought before a meeting (whether given pursuant to this
Section 1.3(b) or Section 1.4 of the By-Laws) shall
update and supplement such notice from time to time to the
extent necessary so that the information provided or required to
be provided in such notice shall be true and correct as of the
record date for the meeting and as of the date that is fifteen
calendar days prior to the meeting or any adjournment or
postponement thereof; such update and supplement shall be
delivered in writing to the Secretary of the Corporation at the
principal executive offices of the Corporation not later than
five (5) days after the record date for the meeting (in the
case of any update and supplement required to be made as of the
record date), and not later than ten calendar days prior to
the date for the meeting or any adjournment or postponement
thereof (in the case of any update and supplement required to be
made as of fifteen calendar days prior to the meeting or
any adjournment or postponement thereof). The foregoing notice
requirements shall be deemed satisfied by a shareholder if the
shareholder has notified the Corporation of his or her intention
to present a proposal at an annual meeting and such
shareholders proposal has been included in a proxy
statement that has been prepared by management of the
Corporation to solicit proxies for such annual meeting;
provided, however, that, if such shareholder does not appear or
send a qualified representative to present such proposal at such
annual meeting, the Corporation need not present such proposal
for a vote at such meeting, notwithstanding that proxies in
respect of such vote may have been received by the Corporation.
No business shall be conducted at an annual meeting of
shareholders except in accordance with this Section 1.3(b),
and the chairman of any annual meeting of shareholders may
refuse to permit any business to be brought before an annual
meeting without compliance with the foregoing procedures or if
the shareholder solicits proxies in support of such
shareholders proposal without such shareholder having made
the representation required by clause (v) of the preceding
sentence.
1.4 Special Meetings of
Shareholders. (a) Except as otherwise
expressly required by applicable law, special meetings of the
shareholders or of any class or series entitled to vote may be
called for any purpose or purposes by the Chairman, by a
majority vote of the entire Board or by the Secretary of the
Corporation in accordance with these By-Laws and the
Corporations Articles of Incorporation to be held at such
place (within or outside the state of Indiana), date and hour as
D-2
shall be determined by the Board and designated in the notice
thereof. Only such business as is specified in the notice of any
special meeting of the shareholders shall come before such
meeting.
(b) A special meeting of shareholders shall be called by
the Secretary of the Corporation at the written request or
requests (each, a Special Meeting Request and,
collectively, the Special Meeting Requests) of
shareholders who are shareholders of record having, as of the
date on which such Special Meeting Request is delivered to the
Secretary of the Corporation, an aggregate net long
position (as defined in Article Fifth of the Articles
of Incorporation) of at least thirty-five percent (35%) of
the voting power of the outstanding capital stock of the
corporation entitled to vote on the matter or matters to be
brought before the proposed special meeting (the Requisite
Percentage) if such Special Meeting Request complies with
the requirements of this Section 1.4(b) and all other
applicable sections of these By-Laws and the Corporations
Articles of Incorporation. The Board shall determine in good
faith whether all requirements set forth in these By-Laws have
been satisfied and such determination shall be binding on the
Corporation and its shareholders. A Special Meeting Request must
be delivered by hand or by mail by registered U.S. mail or
courier service, postage pre-paid, to the attention of the
Secretary during regular business hours. A Special Meeting
Request to the Secretary shall be signed and dated by each
shareholder of record (or a duly authorized agent of such
shareholder) requesting the special meeting (each, a
Requesting Shareholder), shall comply with the
shareholder notice and information requirements for annual
meetings set forth in Section 1.3(b) and, if applicable,
the shareholder notice and information requirements for
nominations of a person or persons for election as Director(s)
as set forth in Section 2.2, and shall also include
(i) a statement of the specific purpose or purposes of the
special meeting, (ii) the matter(s) proposed to be acted on
at the special meeting, (iii) the reasons for conducting
such business at the special meeting, (iv) the text of any
resolutions proposed for consideration, (v) an
acknowledgement by the Requesting Shareholder(s) and the
beneficial owners, if any, on whose behalf the Special Meeting
Request(s) are being made that any reduction in the aggregate
net long position of the Requesting Shareholder(s) below the
Requisite Percentage following the delivery of the Special
Meeting Request shall constitute a revocation of such Special
Meeting Request, and (vi) documentary evidence that the
Requesting Shareholders own the Requisite Percentage as of the
date of such written request to the Secretary; provided,
however, that, if the Requesting Shareholders are not the
beneficial owners of the shares representing the Requisite
Percentage, then to be valid, the Special Meeting Request(s)
must also include documentary evidence (or, if not
simultaneously provided with the Special Meeting Request(s),
such documentary evidence must be delivered to the Secretary
within ten (10) business days after the date on which the
Special Meeting Request(s) are delivered to the Secretary) that
the beneficial owners on whose behalf the Special Meeting
Request(s) are made beneficially own the Requisite Percentage as
of the date on which such Special Meeting Request(s) are
delivered to the Secretary. In addition, the Requesting
Shareholders and the beneficial owners, if any, on whose behalf
the Special Meeting Request(s) are being made shall promptly
provide any other information reasonably requested by the
corporation.
(c) Notwithstanding the foregoing provisions of this
Section 1.4, a special meeting requested by shareholders
shall not be held if (i) the Special Meeting Request
does not comply with this Section 1.4, (ii) the
Special Meeting Request relates to an item of business that is
not a proper subject for shareholder action under applicable
law, (iii) the Special Meeting Request is received by the
Secretary during the period commencing ninety calendar days
prior to the first anniversary of the date of the immediately
preceding annual meeting and ending on the date of the next
annual meeting, (iv) an annual or special meeting of
shareholders that included an identical or substantially similar
item of business (Similar Business) was held not
more than one hundred twenty calendar days before the
Special Meeting Request was received by the Secretary,
(v) the Board or the Chairman of the Board has called or
calls for an annual or special meeting of shareholders to be
held within ninety calendar days after the Special
D-3
Meeting Request is received by the Secretary and the business to
be conducted at such meeting includes the Similar Business, or
(vi) the Special Meeting Request was made in a manner that
involved a violation of Regulation 14A under the Securities
Exchange Act of 1934, as amended, or other applicable law. For
purposes of this Section 1.4(c), the nomination, election
or removal of Directors shall be deemed to be Similar Business
with respect to all items of business involving the nomination,
election or removal of Directors, changing the size of the Board
and filling of vacancies
and/or newly
created directorships resulting from any increase in the
authorized number of Directors. The Board shall determine in
good faith whether the requirements set forth in this
Section 1.4(c) have been satisfied.
(d) In determining whether a special meeting of
shareholders has been requested by the record holders of shares
representing in the aggregate at least the Requisite Percentage,
multiple Special Meeting Requests delivered to the Secretary
will be considered together only if (i) each Special
Meeting Request identifies substantially the same purpose or
purposes of the special meeting and substantially the same
matters proposed to be acted on at the special meeting (in each
case as determined in good faith by the Board), and
(ii) such Special Meeting Requests have been dated and
delivered to the Secretary within sixty (60) days of the
earliest dated Special Meeting Request. A Requesting Shareholder
may revoke a Special Meeting Request at any time by written
revocation delivered to the Secretary and if, following such
revocation, there are outstanding un-revoked requests from
Requesting Shareholders holding less than the Requisite
Percentage, the Board may, in its discretion, cancel the special
meeting. If none of the Requesting Shareholders appears or sends
a duly authorized agent to present the business to be presented
for consideration that was specified in the Special Meeting
Request, the corporation need not present such business for a
vote at such special meeting.
(e) Special meetings shall be held at such date, time and
place as may be fixed by the Board in accordance with these
by-laws; provided, however, that in the case of a
special meeting requested by shareholders, the date of any such
special meeting shall not be more than ninety calendar days
after a Special Meeting Request that satisfies the requirements
of this Section 1.4 (or, in the case of multiple Special
Meeting requests, the last Special Meeting Request necessary to
reach the Requisite Percentage) is received by the Secretary.
1.5 Notice of Meetings of
Shareholders. Except as otherwise expressly
required or permitted by applicable law, not less than ten days
nor more than sixty days before the date of every
shareholders meeting the Secretary shall give to each
shareholder of record entitled to vote at such meeting written
notice stating the place, day and time of the meeting and, in
the case of a special meeting, the purpose or purposes for which
the meeting is called and indication that notice is being issued
by or at the direction of the person or persons calling the
meeting. Except as provided in Section 1.6(d) or as
otherwise expressly required by applicable law, notice of any
adjourned meeting of shareholders need not be given if the time
and place thereof are announced at the meeting at which the
adjournment is taken. Any notice, if mailed, shall be deemed to
be given when deposited in the United States mail, postage
prepaid, addressed to the shareholder at the address for notices
to such shareholder as it appears on the records of the
Corporation.
1.6 Quorum of
Shareholders. (a) Unless otherwise expressly
required by applicable law, at any meeting of the shareholders,
the presence in person or by proxy of shareholders entitled to
cast a majority of votes thereat shall constitute a quorum.
Shares of the Corporations stock belonging to the
Corporation or to another corporation, if a majority of the
shares entitled to vote in an election of the directors of such
other corporation is held by the Corporation, shall neither be
counted for
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the purpose of determining the presence of a quorum nor entitled
to vote at any meeting of the shareholders.
(b) At any meeting of the shareholders at which a quorum
shall be present, a majority of those present in person or by
proxy may adjourn the meeting from time to time without notice
other than announcement at the meeting. In the absence of a
quorum, the officer presiding thereat shall have power to
adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting other than announcement
at the meeting shall not be required to be given, except as
provided in Section 1.6(d) below and except where expressly
required by applicable law.
(c) At any adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been
transacted at the meeting originally called, but only those
shareholders entitled to vote at the meeting as originally
noticed shall be entitled to vote at any adjournment or
adjournments thereof unless a new record date is fixed by the
Board.
(d) If a new date, time and place of an adjourned meeting
is not announced at the original meeting before adjournment, or
if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be
given in the manner specified in Section 1.5 to each
shareholder of record entitled to vote at the meeting.
1.7 Chairman and Secretary of
Meeting. The Chairman or, in his or her absence,
another officer of the Corporation designated by the Chairman,
shall preside at meetings of the shareholders. The Secretary
shall act as secretary of the meeting, or in the absence of the
Secretary, an Assistant Secretary shall so act, or if neither is
present, then the presiding officer may appoint a person to act
as secretary of the meeting.
1.8 Voting by
Shareholders. (a) Except as otherwise
expressly required by applicable law, at every meeting of the
shareholders each shareholder shall be entitled to the number of
votes specified in the Articles of Incorporation, in person or
by proxy, for each share of stock standing in his or her name on
the books of the Corporation on the date fixed pursuant to the
provisions of Section 5.6 of these By-laws as the record
date for the determination of the shareholders who shall be
entitled to receive notice of and to vote at such meeting.
(b) When a quorum is present at any meeting of the
shareholders, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast
within the voting group favoring the action exceed the votes
cast opposing the action, unless express provision of law or the
Articles of Incorporation require a greater number of
affirmative votes.
(c) Except as required by applicable law, the vote at any
meeting of shareholders on any question need not be by ballot,
unless so directed by the chairman of the meeting. On a vote by
ballot, each ballot shall be signed by the shareholder voting,
or by his or her proxy, if there be such proxy, and shall state
the number of shares voted.
1.9 Proxies. Any shareholder entitled to
vote at any meeting of shareholders may vote either in person or
by proxy. A shareholder may authorize a person or persons to act
for the shareholder as proxy by (i) the shareholder or the
shareholders designated officer, director, employee or
agent executing a writing by signing it or by causing the
shareholders signature or the signature of the designated
officer, director, employee or agent of the shareholder to be
affixed to the writing by any reasonable means, including by
facsimile signature; (ii) the shareholder transmitting or
authorizing the transmission of an electronic submission which
may be by any electronic means, including data and voice
telephonic communications and computer network to (a) the
person who will be the holder of the proxy; (b) a proxy
solicitation firm; or (c) a proxy support service
organization or similar agency authorized by the person who will
be the holder of the proxy to receive the electronic submission,
which electronic submission must either contain or be
accompanied by information from which it can be determined that
the electronic submission was transmitted by or authorized by
the shareholder; or (iii) any other method allowed by law.
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1.10 Inspectors. (a) The election of
Directors and any other vote by ballot at any meeting of the
shareholders shall be supervised by at least two inspectors.
Such inspectors may be appointed by the Chairman before or at
the meeting. If the Chairman shall not have so appointed such
inspectors or if one or both inspectors so appointed shall
refuse to serve or shall not be present, such appointment shall
be made by the officer presiding at the meeting. Each inspector,
before entering upon the discharge of his or her duties, shall
take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of
his or her ability.
(b) The inspectors shall (i) ascertain the number of
shares of the Corporation outstanding and the voting power of
each, (ii) determine the shares represented at any meeting
of shareholders and the validity of the proxies and ballots,
(iii) count all proxies and ballots, (iv) determine
and retain for a reasonable period a record of the disposition
of any challenges made to any determination by the inspectors,
and (v) certify their determination of the number of shares
represented at the meeting, and their count of all proxies and
ballots. The inspectors may appoint or retain other persons or
entities to assist the inspectors in the performance of their
duties.
1.11 List of Shareholders. (a) At
least five business days before every meeting of shareholders,
the Corporation shall cause to be prepared and made a complete
list of the shareholders entitled to vote at the meeting,
arranged in alphabetical order by voting group, if any, and
showing the address of each shareholder and the number of shares
registered in the name of each shareholder.
(b) During ordinary business hours for a period of at least
five business days prior to the meeting, such list shall be open
to examination by any shareholder for any purpose germane to the
meeting, either at the Corporations principal office or a
place identified in the meeting notice in the city where the
meeting will be held.
(c) The list shall also be produced and kept at the time
and place of the meeting, and it may be inspected during the
meeting by any shareholder or the shareholders agent or
attorney authorized in writing.
(d) The stock ledger shall be the only evidence as to who
are the shareholders entitled to examine the stock ledger, the
list required by this Section 1.11 or the books of the
Corporation, or to vote in person or by proxy at any meeting of
shareholders.
1.12 Confidential
Voting. (a) Proxies and ballots that
identify the votes of specific shareholders shall be kept in
confidence by the tabulators and the inspectors of election
unless (i) there is an opposing solicitation with respect
to the election or removal of Directors, (ii) disclosure is
required by applicable law, (iii) a shareholder expressly
requests or otherwise authorizes disclosure, or (iv) the
Corporation concludes in good faith that a bona fide dispute
exists as to the authenticity of one or more proxies, ballots or
votes, or as to the accuracy of any tabulation of such proxies,
ballots or votes.
(b) The tabulators and inspectors of election and any
authorized agents or other persons engaged in the receipt, count
and tabulation of proxies and ballots shall be advised of this
By-law and instructed to comply herewith.
(c) The inspectors of election shall certify, to the best
of their knowledge based on due inquiry, that proxies and
ballots have been kept in confidence as required by this
Section 1.12.
2.1 Powers of Directors. The business and
affairs of the Corporation shall be managed by or under the
direction of the Board, which may exercise all the powers of the
Corporation except such as are by applicable law, the Articles
of Incorporation or these By-laws required to be exercised or
performed by the shareholders.
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2.2 Number, Method of Election, Terms of Office of
Directors. The number of Directors which shall
constitute the whole Board shall be such as from time to time
shall be determined by resolution adopted by a majority of the
entire Board, but the number shall not be less than three nor
more than twenty-five, provided that the tenure of a Director
shall not be affected by any decrease in the number of Directors
so made by the Board. Each Director shall hold office until the
next annual meeting of shareholders and until his or her
successor is elected and qualified or until his or her earlier
death, retirement, resignation or removal. Directors need not be
shareholders of the Corporation or citizens of the United States
of America.
Nominations of persons for election as Directors may be made by
the Board or by any shareholder who is a shareholder of record
at the time of giving of the notice of nomination provided for
in this Section 2.2 and who is entitled to vote for the
election of Directors. Any shareholder of record entitled to
vote for the election of Directors at a meeting may nominate a
person or persons for election as Directors only if written
notice of such shareholders intent to make such nomination
is given in accordance with the procedures for bringing business
before the meeting set forth in Section 1.3(b) of these
By-Laws, either by personal delivery or by United States mail,
postage prepaid, to the Secretary, received at the principal
executive offices of the Corporation, not later than
(i) with respect to an election to be held at an annual
meeting of shareholders, not less than 90 calendar days nor
more than 120 calendar days prior to the date of the
Corporations proxy statement released to shareholders in
connection with the previous years annual meeting;
provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting was
changed by more than 30 days from the anniversary date of
the previous years annual meeting, notice by the
shareholder must be so received not earlier than 120 calendar
days prior to such annual meeting and not later than 90 calendar
days prior to such annual meeting or 10 calendar days following
the date on which public announcement of the date of the meeting
is first made, and (ii) with respect to an election to be
held at a special meeting of shareholders for the election of
Directors, not earlier than 120 calendar days prior to such
special meeting and not later than 90 calendar days prior to
such special meeting or 10 calendar days following the date on
which public announcement of the date of the special meeting is
first made and of the nominees to be elected at such meeting. In
no event shall the public announcement of an adjournment or
postponement of a meeting commence a new time period, or extend
any time period, for the giving of written notice. Any such
notice shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and the
beneficial owner, if any, on whose behalf the nomination is made
and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings
between the shareholder, any beneficial owner on whose behalf
the nomination is made and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder;
(d) such other information regarding each shareholder, the
beneficial owner, if any, on whose behalf the nomination is made
and nominee proposed by such shareholder as would have been
required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission in
connection with solicitations of proxies for the election of
directors in an election contest; (e) the consent of each
nominee to serve as a Director if so elected;(f) if the
shareholder or beneficial owner, if any, intends to
(x) deliver a proxy statement
and/or form
of proxy to the holders of at least the percent of the
Corporations outstanding capital stock required to elect
the nominee
and/or
(y) otherwise solicit proxies of votes from shareholders in
support of such shareholders nominee(s), a representation
to that effect; (g) a description of any agreement,
arrangement or understanding with respect to the nomination
and/or the
voting of shares of any class or series of stock of the
Corporation between or among the Proponent Persons; and
(viii) a description of any agreement, arrangement or
understanding (including without limitation any swap or other
derivative or short position, profits interest, hedging
transaction, borrowed or loaned shares, any contract to purchase
or sell, acquisition or grant of any option,
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right or warrant to purchase or sell or other instrument) to
which any Proponent Person is a party, the intent or effect of
which may be (x) to transfer to or from any Proponent
Person, in whole or in part, any of the economic consequences of
ownership of any security of the Corporation, (y) to
increase or decrease the voting power of any Proponent Person
with respect to shares of any class or series of capital stock
of the Corporation
and/or
(z) to provide any Proponent Person, directly or
indirectly, with the opportunity to profit or share in any
profit derived from, or to otherwise benefit economically from,
or to mitigate any loss resulting from, the value (or any
increase or decrease in the value) of any security of the
Corporation. A shareholder providing notice of a proposed
nomination (whether given pursuant to Section 2.2 or
Section 1.4 of these By-Laws) shall update and supplement
such notice from time to time to the extent necessary so that
the information provided or required to be provided in such
notice shall be true and correct as of the record date for the
meeting and as of the date that is fifteen calendar days
prior to the meeting or any adjournment or postponement thereof;
such update and supplement shall be delivered in writing to the
Secretary of the Corporation at the principal executive offices
of the Corporation not later than five calendar days after
the record date for the meeting (in the case of any update and
supplement required to be made as of the record date), and not
later than ten calendar days prior to the date for the
meeting or any adjournment or postponement thereof (in the case
of any update and supplement required to be made as of fifteen
calendar days prior to the meeting or any adjournment or
postponement thereof).The chairman of any meeting of
shareholders to elect Directors and the Board may refuse to
acknowledge the nomination of any person not made in compliance
with the foregoing procedures or if the shareholder solicits
proxies in support of such shareholders nominee(s) without
such shareholder having made the representation required by
(f) of the preceding sentence. The Corporation may require
any proposed nominee to furnish such other information as it may
reasonably require to determine the eligibility of such proposed
nominee to serve as a director of the Corporation.
In an uncontested election (i.e. any election in which the
number of nominees does not exceed the number of Directors to be
elected), Directors shall be elected by a majority of the votes
cast by the shares entitled to vote in the election at a meeting
at which a quorum is present. Any Director nominee that does not
receive the requisite votes shall not be elected. Any Director
nominee who fails to be elected but who is a Director at the
time of the election shall remain a Director until a successor
shall have been elected and qualified (a Holdover
Director). A Holdover Director shall promptly provide a
written resignation to the Chair of the Nominating and
Governance Committee of the Corporation.
The Nominating and Governance Committee shall promptly consider
the resignation and all relevant facts and circumstances
concerning the vote, including whether the cause of the vote may
be cured and the best interests of the Corporation and its
shareholders. After consideration, the Nominating and Governance
Committee shall make a recommendation to the independent
Directors of the Board.
The independent Directors of the Board will act on the
Nominating and Governance Committees recommendation at its
next regularly scheduled Board Meeting or within 90 days
after certification of the shareholder vote, whichever is
earlier.
The Board will promptly publicly disclose its decision (by a
press release, a filing with the Securities and Exchange
Commission or other broadly disseminated means of communication)
and the reasons for its decision.
Any Holdover Director who tenders a resignation shall not
participate in the Nominating and Governance Committees
recommendation or Board action regarding whether to accept the
resignation offer.
If each member of the Nominating and Governance Committee
receives less than a majority of the votes cast at the same
election, then the independent Directors who receive more than a
majority of the votes cast shall appoint a committee among
themselves to consider the resignation offers
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and recommend to the Board whether to accept the offers.
However, if the only Directors who receive a majority or more of
the votes cast in the same election constitute three or fewer
Directors then all Directors may participate in the action
regarding whether to accept the resignation offers. If all
Directors receive less than a majority of the votes cast at the
same election, the election shall be treated as a contested
election and the majority vote requirement shall be inapplicable.
2.3 Vacancies on Board. (a) Any
Director may resign from office at any time by delivering a
written resignation to the Chairman or the Secretary. The
resignation will take effect at the time specified therein, or,
if no time is specified, at the time of its receipt by the
Corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in
the resignation.
(b) Any vacancy and any newly created Directorship
resulting from any increase in the authorized number of
Directors may be filled by vote of a majority of the Directors
then in office, though less than a quorum, and any Director so
chosen shall hold office until the next annual election of
Directors by the shareholders and until a successor is duly
elected and qualified or until his or her earlier death,
retirement, resignation or removal. If there are no Directors in
office, then an election of Directors may be held in the manner
provided by applicable law.
2.4 Meetings of the Board. (a) The
Board may hold its meetings, both regular and special, either
within or outside the state of Indiana, at such places as from
time to time may be determined by the Board or as may be
designated in the respective notices or waivers of notice
thereof.
(b) Regular meetings of the Board shall be held at such
times and at such places as from time to time shall be
determined by the Board.
(c) The first meeting of each newly elected Board shall be
held as soon as practicable after the annual meeting of the
shareholders and shall be for the election of officers and the
transaction of such other business as may come before it.
(d) Special meetings of the Board shall be held whenever
called by direction of the Chairman or at the request of
Directors constituting one-third of the number of Directors then
in office.
(e) Members of the Board or any Committee of the Board may
participate in a meeting by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation shall constitute presence in person at such
meeting.
(f) The Secretary shall give notice to each Director of any
meeting of the Board by mailing the same at least two days
before the meeting or by telegraphing or delivering the same not
later than the day before the meeting. Such notice need not
include a statement of the business to be transacted at, or the
purpose of, any such meeting. Any and all business may be
transacted at any meeting of the Board. No notice of any
adjourned meeting need be given. No notice to or waiver by any
Director shall be required with respect to any meeting at which
the Director is present.
2.5 Quorum and Action. Except as
otherwise expressly required by applicable law, the Articles of
Incorporation or these By-laws, at any meeting of the Board, the
presence of at least one-third of the entire Board shall
constitute a quorum for the transaction of business; but if
there shall be less than a quorum at any meeting of the Board, a
majority of those present may adjourn the meeting from time to
time. Unless otherwise provided by applicable law, the Articles
of Incorporation or these By-laws, the vote of a majority of the
Directors present (and not abstaining) at any meeting at which a
quorum is present shall be necessary for the approval and
adoption of any resolution or the approval of any act of the
Board.
2.6 Presiding Officer and Secretary of
Meeting. The Chairman or, in the absence of the
Chairman, a member of the Board selected by the members present,
shall preside at meetings of
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the Board. The Secretary shall act as secretary of the meeting,
but in the Secretarys absence the presiding officer may
appoint a secretary of the meeting.
2.7 Action by Consent without
Meeting. Any action required or permitted to be
taken at any meeting of the Board or of any Committee thereof
may be taken without a meeting if all members of the Board or
Committee, as the case may be, consent thereto in writing and
the writing or writings are filed with the minutes of their
proceedings.
2.8 Standing Committees. By resolution
adopted by a majority of the entire Board, the Board shall
elect, from among its members, individuals to serve on the
Standing Committees established by this Section 2.8. Each
Standing Committee shall be comprised of such number of
Directors, not less than three, as shall be elected to such
Committee. Each Committee shall keep a record of all its
proceedings and report the same to the Board. One-third of the
members of a Committee, but not less than two, shall constitute
a quorum, and the act of a majority of the members of a
Committee present at any meeting at which a quorum is present
shall be the act of the Committee. Each Standing Committee shall
meet at the call of its chairman or any two of its members. The
chairmen of the various Committees shall preside, when present,
at all meetings of such Committees, and shall have such powers
and perform such duties as the Board may from time to time
prescribe. The Standing Committees of the Board, and functions
of each, are as follows:
(a) Compensation and Personnel
Committee. The Compensation and Personnel
Committee shall exercise the power of oversight of the
compensation and benefits of the employees of the Corporation,
and shall be charged with evaluating management performance, and
establishing executive compensation. This Committee shall have
access to its own independent outside compensation counsel and
shall consist of a majority of independent directors. For
purposes of this Section 2.8(a), independent
director shall mean a Director who: (i) has not been
employed by the Corporation in an executive capacity within the
past five years; (ii) is not, and is not affiliated with a
company or firm that is, an advisor or consultant to the
Corporation; (iii) is not affiliated with a significant
customer or supplier of the Corporation; (iv) has no
personal services contract(s) with the Corporation; (v) is
not affiliated with a tax-exempt entity that receives
significant contributions from the Corporation; and (vi) is
not a familial relative of any person described by
Clauses (i) through (v). This By-law shall not be amended
or repealed except by a majority of the voting power of the
shareholders present in person or by proxy and entitled to vote
at any meeting at which a quorum is present.
(b) Audit Committee. The Audit Committee
and the Board shall be the bodies to whom the independent
auditors of the Corporation shall be ultimately accountable and
shall have ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the independent
auditors (or to nominate the independent auditors to be proposed
for shareholder approval). The Audit Committee shall be
responsible for assessing the objectivity and independence of
said auditors; confirming the scope of audits to be performed by
said auditors; reviewing audit results, internal accounting and
control procedures and policies, fees paid to said auditors, and
expense accounts of senior executives; reviewing and
recommending approval of the audited financial statements of the
Corporation and the annual reports to shareholders; and
otherwise complying with the responsibilities and obligations of
the Securities and Exchange Commission and the New York Stock
Exchange applicable from time to time to audit committees. The
Audit Committee shall consist entirely of independent
directors as provided for in Section 2.12 of these
By-Laws and shall be in compliance with the requirements of the
Securities and Exchange Commission and the New York Stock
Exchange applicable from time to time to audit committee members.
(c) Corporate Responsibility
Committee. The Corporate Responsibility Committee
shall review and define social responsibilities and shall review
and consider major claims and litigation and legal, regulatory,
intellectual property and related governmental policy matters
affecting the Corporation and its subsidiaries. The Corporate
Responsibility Committee shall
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also review and approve management policies and programs
relating to compliance with legal and regulatory requirements
and business ethics.
(d) Nominating and Governance
Committee. The Nominating and Governance
Committee shall consider and make recommendations as to the
composition, structure, organization and future requirements of
the Board and Committees thereof and as to other corporate
governance issues relating to the Corporation; administer the
Board evaluation process; propose nominees for election to the
Board and Committees thereof; consider shareholder nominees for
election to the Board; and consider matters concerning the
qualifications, compensation and retirement of Directors. The
Nominating and Governance Committee shall consist entirely of
independent directors as provided for in
Section 2.12 of these By-Laws.
2.9 Other Committees. By resolution
passed by a majority of the entire Board, the Board may also
appoint from among its members such other Committees, Standing
or otherwise, as it may from time to time deem desirable and may
delegate to such Committees such powers of the Board as it may
consider appropriate, consistent with applicable law, the
Articles of Incorporation and these By-laws.
2.10 Limitations on
Committees. (a) Notwithstanding any other
provision of these By-laws, and except as otherwise expressly
required by applicable law, no Standing Committee created by
Section 2.8, nor any other committee hereafter established,
may:
(1) authorize dividends or other distributions, except a
committee may authorize or approve a reacquisition of shares if
done according to a formula or method prescribed by the Board of
Directors;
(2) approve or propose to shareholders action that is
required to be approved by shareholders;
(3) fill vacancies on the Board of Directors or on any of
its committees;
(4) except as permitted under Section 2.10(a)(7)
below, amend the Corporations Articles of Incorporation
under IC
23-1-38-2;
(5) adopt, amend, repeal or waive provisions of these
By-laws;
(6) approve a plan of merger not requiring shareholder
approval; or
(7) authorize or approve the issuance or sale or a contract
for sale of shares, or determine the designation and relative
rights, preferences, and limitations of a class or series of
shares, except the Board of Directors may authorize a committee
(or an executive officer of the Corporation designated by the
Board of Directors) to take action described in this
Section 2.10(a)(7) within limits prescribed by the Board of
Directors.
(b) Except to the extent inconsistent with the resolutions
creating a Standing Committee, Sections 2.2 to 2.7 and
Section 10 of these By-laws, which govern meetings, action
without meetings, notice and waiver of notice, quorum and voting
requirements and telephone participation in meetings of the
Board of Directors, apply to each committee and its members as
well.
2.11 Compensation of Directors. Unless
otherwise restricted by the Articles of Incorporation or these
By-laws, Directors shall receive for their services on the Board
or any Committee thereof such compensation and benefits,
including the granting of options, together with expenses, if
any, as the Board may from time to time determine. The Directors
may be paid a fixed sum for attendance at each meeting of the
Board or Committee thereof
and/or a
stated annual sum as a Director, together with expenses, if any,
of attendance at each meeting of the Board or Committee thereof.
Nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity and
receiving compensation therefor.
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2.12 Independent
Directors. (a) Independence of Nominees
for Election as Directors at the Annual Meeting. The persons
nominated by the Board for election as Directors at any annual
meeting of the shareholders of the Corporation shall include a
sufficient number of persons who have been, on the date of their
nomination, determined by the Board to be eligible to be
classified as independent directors such that if all such
nominees are elected, the majority of all Directors holding
office would be independent directors.
(b) Directors Elected to Fill Vacancies on the
Board. If the Board elects Directors between
annual meetings of shareholders to fill vacancies or newly
created Directorships, the majority of all Directors holding
office immediately after such elections shall be independent
directors.
(c) Definition of Independent
Director. For purposes of this Section 2.12,
independent director shall mean a Director who:
(i) has not been employed by the Corporation in an
executive capacity within the past five years; (ii) is not,
and is not affiliated with a company or a firm that is, an
adviser or consultant to the Corporation; (iii) is not
affiliated with a significant customer or supplier of the
Corporation; (iv) has no personal services contract(s) with
the Corporation; (v) is not affiliated with a tax-exempt
entity that receives significant contributions from the
Corporation; (vi) is not a familial relative of any person
described by Clauses (i) through (v); and (vii) is
free of any other relationship which would interfere with the
exercise of independent judgment by such Director.
2.13 Mandatory Classified Board
Structure. The provisions of IC
23-1-33-6(c)
shall not apply to the Corporation.
3.1 Officer, Titles, Elections,
Terms. (a) The Board may from time to time
elect a Chairman, a Chief Executive, a Vice Chairman, a
President, one or more Executive Vice Presidents, one or more
Senior Vice Presidents, one or more Vice Presidents, a Chief
Financial Officer, a Chief Accounting Officer, a Controller, a
Treasurer, a Secretary, a General Counsel, one or more Assistant
Controllers, one or more Assistant Treasurers, one or more
Assistant Secretaries, and one or more Deputy General Counsels,
to serve at the pleasure of the Board or otherwise as shall be
specified by the Board at the time of such election and until
their successors are elected and qualified or until their
earlier death, retirement, resignation or removal.
(b) The Board may elect or appoint at any time such other
officers or agents with such duties as it may deem necessary or
desirable. Such other officers or agents shall serve at the
pleasure of the Board or otherwise as shall be specified by the
Board at the time of such election or appointment and, in the
case of such other officers, until their successors are elected
and qualified or until their earlier death, retirement,
resignation or removal. Each such officer or agent shall have
such authority and shall perform such duties as may be provided
herein or as the Board may prescribe. The Board may from time to
time authorize any officer or agent to appoint and remove any
other such officer or agent and to prescribe such persons
authority and duties.
(c) No person may be elected or appointed an officer who is
not a citizen of the United States of America if such election
or appointment is prohibited by applicable law or regulation.
(d) Any vacancy in any office may be filled for the
unexpired portion of the term by the Board. Each officer elected
or appointed during the year shall hold office until the next
annual meeting of the Board at which officers are regularly
elected or appointed and until his or her successor is elected
or appointed and qualified or until his or her earlier death,
retirement, resignation or removal.
(e) Any officer or agent elected or appointed by the Board
may be removed at any time by the affirmative vote of a majority
of the entire Board.
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(f) Any officer may resign from office at any time. Such
resignation shall be made in writing and given to the President
or the Secretary. Any such resignation shall take effect at the
time specified therein, or, if no time is specified, at the time
of its receipt by the Corporation. The acceptance of a
resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
3.2 General Powers of Officers. Except as
may be otherwise provided by applicable law or in Article 6
or Article 7 of these By-laws, the Chairman, any Vice
Chairman, the President, any Executive Vice President, any
Senior Vice President, any Vice President, the Chief Financial
Officer, the General Counsel, the Chief Accounting Officer, the
Controller, the Treasurer and the Secretary, or any of them, may
(i) execute and deliver in the name of the Corporation, in
the name of any Division of the Corporation or in both names any
agreement, contract, instrument, power of attorney or other
document pertaining to the business or affairs of the
Corporation or any Division of the Corporation, including
without limitation agreements or contracts with any government
or governmental department, agency or instrumentality, and
(ii) delegate to any employee or agent the power to execute
and deliver any such agreement, contract, instrument, power of
attorney or other document.
3.3 Powers of the Chairman or Chief
Executive. The Chairman shall be the Chief
Executive (as defined in Section 3.11) of the Corporation
unless the Board specifically elects the President to be Chief
Executive of the Corporation, in which case the President shall
be the Chief Executive. If either the Chairman or the President
is the Chief Executive, then he or she shall report directly to
the Board. Except in such instances as the Board may confer
powers in particular transactions upon any other officer, and
subject to the control and direction of the Board, the Chief
Executive shall manage and direct the business and affairs of
the Corporation and shall communicate to the Board and any
Committee thereof reports, proposals and recommendations for
their respective consideration or action. He or she may do and
perform all acts on behalf of the Corporation. The Chairman
(whether or not the Chief Executive) shall preside at meetings
of the Board and the shareholders.
3.4 Powers and Duties of a Vice
Chairman. A Vice Chairman shall have such powers
and perform such duties as the Board or the Chairman may from
time to time prescribe or as may be prescribed in these By-laws.
3.5 Powers and Duties of the
President. Unless the President is Chief
Executive, the President shall have such powers and perform such
duties as the Board or the Chairman may from time to time
prescribe or as may be prescribed in these By-laws. If the
President is the Chief Executive, then Section 3.3 shall be
applicable.
3.6 Powers and Duties of Executive Vice Presidents,
Senior Vice Presidents and Vice
Presidents. Executive Vice Presidents, Senior
Vice Presidents and Vice Presidents shall have such powers and
perform such duties as the Board, the Chairman, or the Chief
Executive may from time to time prescribe or as may be
prescribed in these By-laws.
3.7 Powers and Duties of the Chief Financial
Officer. The Chief Financial Officer shall have
such powers and perform such duties as the Board, the Chairman,
Chief Executive, or any Vice Chairman may from time to time
prescribe or as may be prescribed in these By-laws. The Chief
Financial Officer shall cause to be prepared and maintained
(i) a stock ledger containing the names and addresses of
all shareholders and the number of shares of each class and
series held by each and (ii) the list of shareholders for
each meeting of the shareholders as required by
Section 1.11 of these By-laws. The Chief Financial Officer
shall be responsible for the custody of all stock books and of
all unissued stock certificates.
3.8 Powers and Duties of the Chief Accounting Officer,
Controller and Assistant
Controllers. (a) The Chief Accounting
Officer, Controller or the Vice President, Finance, as
determined by the Chief Financial Officer, shall be responsible
for the maintenance of adequate accounting records of
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all assets, liabilities, capital and transactions of the
Corporation. The Chief Accounting Officer, Controller, or the
Vice President, Finance as determined by the Chief Financial
Officer, shall prepare and render such balance sheets, income
statements, budgets and other financial statements and reports
as the Board or the Chairman or the Chief Executive may require,
and shall perform such other duties as may be prescribed or
assigned pursuant to these By-laws and all other acts incident
to the position of the Chief Accounting Officer, Controller, or
the Vice President, Finance.
(b) Each Assistant Controller shall perform such duties as
from time to time may be assigned by the Controller or by the
Board. In the event of the absence, incapacity or inability to
act of the Controller, then any Assistant Controller may perform
any of the duties and may exercise any of the powers of the
Controller.
3.9 Powers and Duties of the Treasurer and Assistant
Treasurers. (a) The Treasurer shall have the
care and custody of all the funds and securities of the
Corporation except as may be otherwise ordered by the Board, and
shall cause such funds (i) to be invested or reinvested
from time to time for the benefit of the Corporation as may be
designated by the Board, the Chairman, any Vice Chairman, the
President, the Chief Financial Officer or the Treasurer or
(ii) to be deposited to the credit of the Corporation in
such banks or depositories as may be designated by the Board,
the Chairman, any Vice Chairman, the President, the Chief
Financial Officer or the Treasurer, and shall cause such
securities to be placed in safekeeping in such manner as may be
designated by the Board, the Chairman, any Vice Chairman, the
President, the Chief Financial Officer or the Treasurer.
(b) The Treasurer, any Assistant Treasurer or such other
person or persons as may be designated for such purpose by the
Board, the Chairman, any Vice Chairman, the President, the Chief
Financial Officer or the Treasurer may endorse in the name and
on behalf of the Corporation all instruments for the payment of
money, bills of lading, warehouse receipts, insurance policies
and other commercial documents requiring such endorsement.
(c) The Treasurer, any Assistant Treasurer or such other
person or persons as may be designated for such purpose by the
Board, the Chairman, any Vice Chairman, the President, the Chief
Financial Officer or the Treasurer (i) may sign all
receipts and vouchers for payments made to the Corporation,
(ii) shall render a statement of the cash account of the
Corporation to the Board as often as it shall require the same;
and (iii) shall enter regularly in books to be kept for
that purpose full and accurate account of all moneys received
and paid on account of the Corporation and of all securities
received and delivered by the Corporation.
(d) The Treasurer shall perform such other duties as may be
prescribed or assigned pursuant to these By-laws and all other
acts incident to the position of Treasurer. Each Assistant
Treasurer shall perform such duties as may from time to time be
assigned by the Treasurer or by the Board. In the event of the
absence, incapacity or inability to act of the Treasurer, then
any Assistant Treasurer may perform any of the duties and may
exercise any of the powers of the Treasurer.
3.10 Powers and Duties of the Secretary and Assistant
Secretaries. (a) The Secretary shall keep
the minutes of all proceedings of the shareholders, the Board
and the Committees of the Board. The Secretary shall attend to
the giving and serving of all notices of the Corporation, in
accordance with the provisions of these By-laws and as required
by applicable law. The Secretary shall be the custodian of the
seal of the Corporation. The Secretary shall affix or cause to
be affixed the seal of the Corporation to such contracts,
instruments and other documents requiring the seal of the
Corporation, and when so affixed may attest the same and shall
perform such other duties as may be prescribed or assigned
pursuant to these By-laws and all other acts incident to the
position of Secretary.
(b) Each Assistant Secretary shall perform such duties as
may from time to time be assigned by the Secretary or by the
Board. In the event of the absence, incapacity or inability to
act of
D-14
the Secretary, then any Assistant Secretary may perform any of
the duties and may exercise any of the powers of the Secretary.
3.11 Applicable Definition. As used in
these By-laws, the term Chief Executive shall refer
to the Chairman unless the President is elected to be the Chief
Executive, pursuant to Section 3.3, in which case the term
Chief Executive shall refer to the President.
4.1(a) Right to Indemnification. The
Corporation, to the fullest extent permitted by applicable law
as then in effect, shall indemnify any person who is or was a
Director or officer of the Corporation and who is or was
involved in any manner (including, without limitation, as a
party or a witness) or is threatened to be made so involved in
any threatened, pending or completed investigation, claim,
action, suit or proceeding, whether civil, criminal,
administrative or investigative (including, without limitation,
any action, suit or proceeding by or in the right of the
Corporation to procure a judgment in its favor) (a
Proceeding) by reason of the fact that such person
is or was a Director, officer, employee or agent of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or agent
of another corporation, partnership, joint venture, trust or
other enterprise (including, without limitation, any employee
benefit plan) (a Covered Entity), against all
expenses (including attorneys fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
such person in connection with such Proceeding; provided,
however, that the foregoing shall not apply to a Director or
officer of the Corporation with respect to a Proceeding that was
commenced by such Director or officer prior to a Change in
Control (as defined in Section 4.4(e)(i) of this
Article 4). Any Director or officer of the Corporation
entitled to indemnification as provided in this
Section 4.1(a) is hereinafter called an
Indemnitee. Any right of an Indemnitee to
indemnification shall be a contract right and shall include the
right to receive, prior to the conclusion of any Proceeding,
payment of any expenses incurred by the Indemnitee in connection
with such Proceeding, consistent with the provisions of
applicable law as then in effect and the other provisions of
this Article 4.
(b) Effect of Amendments. Neither the
amendment or repeal of, nor the adoption of a provision
inconsistent with, any provision of this Article 4
(including, without limitation, this Section 4.1(b)) shall
adversely affect the rights of any Director or officer under
this Article 4 (i) with respect to any Proceeding
commenced or threatened prior to such amendment, repeal or
adoption of an inconsistent provision or (ii) after the
occurrence of a Change in Control, with respect to any
Proceeding arising out of any action or omission occurring prior
to such amendment, repeal or adoption of an inconsistent
provision, in either case without the written consent of such
Director or officer.
4.2 Insurance, Contracts and Funding. The
Corporation may purchase and maintain insurance to protect
itself and any indemnified person against any expenses,
judgments, fines and amounts paid in settlement as specified in
Section 4.1(a) or Section 4.5 of this Article 4
or incurred by any indemnified person in connection with any
Proceeding referred to in such Sections, to the fullest extent
permitted by applicable law as then in effect. The Corporation
may enter into contracts with any Director, officer, employee or
agent of the Corporation or any director, officer, employee,
fiduciary or agent of any Covered Entity in furtherance of the
provisions of this Article 4 and may create a trust fund or
use other means (including, without limitation, a letter of
credit) to ensure the payment of such amounts as may be
necessary to effect indemnification as provided in this
Article 4.
4.3 Indemnification; Not Exclusive
Right. The right of indemnification provided in
this Article 4 shall not be exclusive of any other rights
to which any indemnified person may otherwise be entitled, and
the provisions of this Article 4 shall inure to the benefit
of the heirs and legal representatives of any indemnified person
under this Article 4 and shall be applicable to
D-15
Proceedings commenced or continuing after the adoption of this
Article 4, whether arising from acts or omissions occurring
before or after such adoption.
4.4 Advancement of Expenses; Procedures; Presumptions
and Effect of Certain Proceedings; Remedies. In
furtherance, but not in limitation, of the foregoing provisions,
the following procedures, presumptions and remedies shall apply
with respect to the advancement of expenses and the right to
indemnification under this Article 4:
(a) Advancement of Expenses. All
reasonable expenses incurred by or on behalf of the Indemnitee
in connection with any Proceeding shall be advanced to the
Indemnitee by the Corporation within 20 days after the
receipt by the Corporation of a statement or statements from the
Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such
Proceeding. Any such statement or statements shall reasonably
evidence the expenses incurred by the Indemnitee and shall
include any written affirmation or undertaking required by
applicable law in effect at the time of such advance.
(b) Procedures for Determination of Entitlement to
Indemnification. (i) To obtain
indemnification under this Article 4, an Indemnitee shall
submit to the Secretary of the Corporation a written request,
including such documentation and information as is reasonably
available to the Indemnitee and reasonably necessary to
determine whether and to what extent the Indemnitee is entitled
to indemnification (the Supporting Documentation).
The determination of the Indemnitees entitlement to
indemnification shall be made not later than 60 days after
receipt by the Corporation of the written request for
indemnification together with the Supporting Documentation. The
Secretary of the Corporation shall, promptly upon receipt of
such a request for indemnification, advise the Board in writing
that the Indemnitee has requested indemnification. (ii) The
Indemnitees entitlement to indemnification under this
Article 4 shall be determined in one of the following ways:
(A) by a majority vote of the Disinterested Directors (as
hereinafter defined), if they constitute a quorum of the Board;
(B) by a written opinion of Independent Counsel as
hereinafter defined) if (x) a Change in Control (as
hereinafter defined) shall have occurred and the Indemnitee so
requests or (y) a quorum of the Board consisting of
Disinterested Directors is not obtainable or, even if
obtainable, a majority of such Disinterested Directors so
directs; (C) by the shareholders of the Corporation (but
only if a majority of the Disinterested Directors, if they
constitute a quorum of the Board, presents the issue of
entitlement to indemnification to the shareholders for their
determination); or (D) as provided in Section 4.4(c)
of this Article 4.
(iii) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 4.4(b)(ii), a majority of the Disinterested
Directors shall select the Independent Counsel, but only an
Independent Counsel to which the Indemnitee does not reasonably
object; provided, however, that if a Change in Control shall
have occurred, the Indemnitee shall select such Independent
Counsel, but only an Independent Counsel to which a majority of
the Disinterested Directors does not reasonably object.
(c) Presumptions and Effect of Certain
Proceedings. Except as otherwise expressly
provided in this Article 4, if a Change in Control shall
have occurred, the Indemnitee shall be presumed to be entitled
to indemnification under this Article 4 (with respect to
actions or failures to act occurring prior to such Change in
Control) upon submission of a request for indemnification
together with the Supporting Documentation in accordance with
Section 4.4(b) of this Article 4, and thereafter the
Corporation shall have the burden of proof to overcome that
presumption in reaching a contrary determination. In any event,
if the person or persons empowered under Section 4.4(b) of
this Article 4 to determine entitlement to indemnification
shall not have been appointed or shall not have made a
determination within 60 days after receipt by the
Corporation of the request therefor together with the Supporting
Documentation, the Indemnitee shall be deemed to be, and shall
be, entitled to indemnification unless
D-16
(A) the Indemnitee misrepresented or failed to disclose a
material fact in making the request for indemnification or in
the Supporting Documentation or (B) such indemnification is
prohibited by law. The termination of any Proceeding described
in Section 4.1 of this Article 4, or of any claim,
issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, adversely affect the right of
the Indemnitee to indemnification or create a presumption that
the Indemnitee did not act in good faith and in a manner which
the Indemnitee reasonably believed to be in or not opposed to
the best interests of the Corporation or, with respect to any
criminal Proceeding, that the Indemnitee had reasonable cause to
believe that his or her conduct was unlawful.
(d) Remedies of Indemnitee. (i) In
the event that a determination is made pursuant to
Section 4.4(b) of this Article 4 that the Indemnitee
is not entitled to indemnification under this Article 4,
(A) the Indemnitee shall be entitled to seek an
adjudication of his or her entitlement to such indemnification
either, at the Indemnitees sole option, in (x) an
appropriate court of the state of Indiana or any other court of
competent jurisdiction or (y) an arbitration to be
conducted by a single arbitrator pursuant to the rules of the
American Arbitration Association; (B) any such judicial
proceeding or arbitration shall be de novo and the
Indemnitee shall not be prejudiced by reason of such adverse
determination; and (C) if a Change in Control shall have
occurred, in any such judicial proceeding or arbitration the
Corporation shall have the burden of proving that the Indemnitee
is not entitled to indemnification under this Article 4
(with respect to actions or failures to act occurring prior to
such Change in Control).
(ii) If a determination shall have been made or deemed to
have been made, pursuant to Section 4.4(b) or (c) of
this Article 4, that the Indemnitee is entitled to
indemnification, the Corporation shall be obligated to pay the
amounts constituting such indemnification within five days after
such determination has been made or deemed to have been made and
shall be conclusively bound by such determination unless
(A) the Indemnitee misrepresented or failed to disclose a
material fact in making the request for indemnification or in
the Supporting Documentation or (B) such indemnification is
prohibited by law. In the event that (x) advancement of
expenses is not timely made pursuant to Section 4.4(a) of
this Article 4 or (y) payment of indemnification is
not made within five days after a determination of entitlement
to indemnification has been made or deemed to have been made
pursuant to Section 4.4(b) or (c) of this
Article 4, the Indemnitee shall be entitled to seek
judicial enforcement of the Corporations obligation to pay
to the Indemnitee such advancement of expenses or
indemnification. Notwithstanding the foregoing, the Corporation
may bring an action, in an appropriate court in the state of
Indiana or any other court of competent jurisdiction, contesting
the right of the Indemnitee to receive indemnification hereunder
due to the occurrence of an event described in
Subclause (A) or (B) of this Clause (ii) (a
Disqualifying Event); provided, however, that in any
such action the Corporation shall have the burden of proving the
occurrence of such Disqualifying Event.
(iii) The Corporation shall be precluded from asserting in
any judicial proceeding or arbitration commenced pursuant to
this Section 4.4(d) that the procedures and presumptions of
this Article 4 are not valid, binding and enforceable and
shall stipulate in any such court or before any such arbitrator
that the Corporation is bound by all the provisions of this
Article 4.
(iv) In the event that the Indemnitee, pursuant to this
Section 4.4(d), seeks a judicial adjudication of or an
award in arbitration to enforce his or her rights under, or to
recover damages for breach of, this Article 4, the
Indemnitee shall be entitled to recover from the Corporation,
and shall be indemnified by the Corporation against, any
expenses actually and reasonably incurred by the Indemnitee if
the Indemnitee prevails in such judicial adjudication or
arbitration. If it shall be determined in such judicial
adjudication or
D-17
arbitration that the Indemnitee is entitled to receive part but
not all of the indemnification or advancement of expenses
sought, the expenses incurred by the Indemnitee in connection
with such judicial adjudication or arbitration shall be prorated
accordingly.
(e) Definitions. For purposes of this
Article 4:
(i) Change in Control means a change in control
of the Corporation of a nature that would be required to be
reported in response to Item 6(e) (or any successor
provision) of Schedule 14A of Regulation 14A (or any
amendment or successor provision thereto) promulgated under the
Securities Exchange Act of 1934 (the Act), whether
or not the Corporation is then subject to such reporting
requirement; provided that, without limitation, such a change in
control shall be deemed to have occurred if (A) any
person (as such term is used in Sections 13(d)
and 14(d) of the Act) is or becomes the beneficial
owner (as defined in
Rule 13d-3
under the Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the voting power of all
outstanding shares of stock of the Corporation entitled to vote
generally in an election of Directors without the prior approval
of at least two-thirds of the members of the Board in office
immediately prior to such acquisition; (B) the Corporation
is a party to any merger or consolidation in which the
Corporation is not the continuing or surviving corporation or
pursuant to which shares of the Corporations common stock
would be converted into cash, securities or other property,
other than a merger of the Corporation in which the holders of
the Corporations common stock immediately prior to the
merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger,
(C) there is a sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or
substantially all, the assets of the Corporation, or liquidation
or dissolution of the Corporation; (D) the Corporation is a
party to a merger, consolidation, sale of assets or other
reorganization, or a proxy contest, as a consequence of which
members of the Board in office immediately prior to such
transaction or event constitute less than a majority of the
Board thereafter; or (E) during any period of two
consecutive years, individuals who at the beginning of such
period constituted the Board (including for this purpose any new
Director whose election or nomination for election by the
shareholders was approved by a vote of at least two-thirds of
the Directors then still in office who were Directors at the
beginning of such period) cease for any reason to constitute at
least a majority of the Board.
(ii) Disinterested Director means a Director
who is not or was not a party to the proceeding in respect of
which indemnification is sought by the Indemnitee.
(iii) Independent Counsel means a law firm or a
member of a law firm that neither presently is, nor in the past
five years has been, retained to represent: (a) the
Corporation or the Indemnitee in any matter material to either
such party or (b) any other party to the Proceeding giving
rise to a claim for indemnification under this Article 4.
Notwithstanding the foregoing, the term Independent
Counsel shall not include any person who, under applicable
standards of professional conduct, would have a conflict of
interest in representing either the Corporation or the
Indemnitee in an action to determine the Indemnitees
rights under this Article 4.
4.5 Indemnification of Employees and
Agents. Notwithstanding any other provision of
this Article 4, the Corporation, to the fullest extent
permitted by applicable law as then in effect, may indemnify any
person other than a Director or officer of the Corporation who
is or was an employee or agent of the Corporation and who is or
was involved in any manner (including, without limitation, as a
party or a witness) or is threatened to be made so involved in
any threatened, pending or completed Proceeding by reasons of
the fact that such person is or was an employee or agent of the
Corporation or, at the request of the Corporation, a director,
officer, employee, fiduciary or agent of a Covered Entity
against all expenses (including attorneys fees),
D-18
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such
Proceeding. The Corporation may also advance expenses incurred
by such employee, fiduciary or agent in connection with any such
Proceeding, consistent with the provisions of applicable law as
then in effect.
4.6 Severability. If any of this
Article 4 shall be held to be invalid, illegal or
unenforceable for any reason whatsoever: (i) the validity,
legality and enforceability of the remaining provisions of this
Article 4 (including, without limitation, all portions of
any Section of this Article 4 containing any such provision
held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall not in any
way be affected or impaired thereby; and (ii) to the
fullest extent possible, the provisions of this Article 4
(including, without limitation, all portions of any Section of
this Article 4 containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
5.1 Stock Certificates. (a) Shares
of stock of each class of the Corporation may be issued in
book-entry form or evidenced by certificates. However, every
holder of stock of the Corporation shall be entitled upon
request to a stock certificate evidencing the shares owned by
the shareholder, signed by, or in the name of, the Corporation
by the Chairman or any Vice Chairman or the President or any
Vice President, and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary. Every certificate
shall state on its face (or in the case of book-entry shares,
the statement evidencing ownership of such shares shall state)
the name of the Corporation and that it is organized under the
laws of the State of Indiana, the name of the person to whom the
certificate (or bookentry statement) was issued, and the number
and class of shares and the designation of the series, if any,
the certificate (or book-entry statement) represents, and shall
state conspicuously on its front or back that the Corporation
will furnish the shareholder, upon his written request and
without charge, a summary of the designations, relative rights,
preferences, and limitations applicable to each class and the
variations in rights, preferences, and limitations determined
for each series (and the authority of the Board of Directors to
determine variations for future series), which certificate, if
any, shall otherwise be in such form as the Board shall
prescribe and as provided in Section 5.1(d).
(b) If a certificate is countersigned by a transfer agent
other than the Corporation or its employee, or by a registrar
other than the Corporation or its employee, the signatures of
the officers of the Corporation may be facsimiles, and, if
permitted by applicable law, any other signature on the
certificate may be a facsimile.
(c) In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased
to be such officer before such certificate is issued, it may be
issued by the Corporation with the same effect as if such person
were such officer at the date of issue.
(d) Any certificates of stock shall be issued in such form
not inconsistent with the Articles of Incorporation. They shall
be numbered and registered in the order in which they are
issued. No certificate shall be issued until fully paid.
(e) All certificates surrendered to the Corporation shall
be cancelled (other than treasury shares) with the date of
cancellation and shall be retained by or under the control of
the Chief Financial Officer, together with the powers of
attorney to transfer and the assignments of the shares
represented by such certificates, for such period of time as
such officer shall designate.
5.2 Record Ownership. A record of the
name of the person, firm or corporation and address of each
holder of stock, the number of shares of each class and series
represented thereby and the date of issue thereof shall be made
on the Corporations books. The Corporation shall be
entitled
D-19
to treat the holder of record of any share of stock as the
holder in fact thereof, and accordingly shall not be bound to
recognize any equitable or other claim to or interest in any
share on the part of any person, whether or not it shall have
express or other notice thereof, except as required by
applicable law.
5.3 Transfer of Record
Ownership. Transfers of stock shall be made on
the books of the Corporation only by direction of the person
named in the certificate (or book-entry statement) or such
persons attorney, lawfully constituted in writing, and
only upon the surrender of the certificate, if any, therefor and
a written assignment of the shares evidenced thereby. Whenever
any transfer of stock shall be made for collateral security, and
not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates, if any, are presented to the
Corporation for transfer, both the transferor and transferee
request the Corporation to do so.
5.4 Lost, Stolen or Destroyed
Certificates. New certificates or uncertificated
shares representing shares of the stock of the Corporation shall
be issued in place of any certificate alleged to have been lost,
stolen or destroyed in such manner and on such terms and
conditions as the Board from time to time may authorize in
accordance with applicable law.
5.5 Transfer Agent; Registrar; Rules Respecting
Certificates. The Corporation shall maintain one
or more transfer offices or agencies where stock of the
Corporation shall be transferable. The Corporation shall also
maintain one or more registry offices where such stock shall be
registered. The Board may make such rules and regulations as it
may deem expedient concerning the issue, transfer and
registration of stock certificates (or book-entry statements) in
accordance with applicable law.
5.6 Fixing Record Date for Determination of Shareholders
of Record. (a) The Board may fix, in
advance, a date as the record date for the purpose of
determining the shareholders entitled to notice of, or to vote
at, any meeting of the shareholders or any adjournment thereof,
which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and
which record date shall not be more than sixty days nor less
than ten days before the date of a meeting of the shareholders.
If no record date is fixed by the Board, the record date for
determining the shareholders entitled to notice of or to vote at
a shareholders meeting shall be at the close of business
on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination
of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record
date for the adjourned meeting and shall fix a new record date
if such adjourned meeting is more than 120 days after the
date of the original meeting. (b) The Board may fix, in
advance, a date as the record date for the purpose of
determining the shareholders entitled to receive payment of any
dividend or other distribution or the allotment of any rights,
or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or in order to make a
determination of the shareholders for the purpose of any other
lawful action, which record date shall not precede the date upon
which the resolution fixing the record date is adopted by the
Board, and which record date shall not be more than sixty
calendar days prior to such action. If no record date is fixed
by the Board, the record date for determining the shareholders
for any such purpose shall be at the close of business on the
day on which the Board adopts the resolution relating thereto.
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6.
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SECURITIES
HELD BY THE CORPORATION.
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6.1 Voting. Unless the Board shall
otherwise order, the Chairman, any Vice Chairman, the President,
any Executive Vice President, any Senior Vice President, any
Vice President, the Chief Financial Officer, the Chief
Accounting Officer, the Controller, the Treasurer or the
Secretary shall have full power and authority, on behalf of the
Corporation, (i) to attend, act and vote at any meeting of
the shareholders of any corporation in which the Corporation may
hold stock and at
D-20
such meeting to exercise any or all rights and powers incident
to the ownership of such stock, and to execute on behalf of the
Corporation a proxy or proxies empowering another or others to
act as aforesaid, and (ii) to delegate to any employee or
agent such power and authority.
6.2 General Authorization to Transfer Securities Held by
the Corporation. (a) Any of the following
officers, to wit: the Chairman, any Vice Chairman, the
President, any Executive Vice President, any Senior Vice
President, any Vice President, the Chief Financial Officer, the
Chief Accounting Officer, the Controller, the Treasurer, any
Assistant Controller, any Assistant Treasurer, and each of them,
hereby is authorized and empowered (i) to transfer,
convert, endorse, sell, assign, set over and deliver any and all
shares of stock, bonds, debentures, notes, subscription
warrants, stock purchase warrants, evidences of indebtedness, or
other securities now or hereafter standing in the name of or
owned by the Corporation and to make, execute and deliver any
and all written instruments of assignment and transfer necessary
or proper to effectuate the authority hereby conferred, and
(ii) to delegate to any employee or agent such power and
authority.
(b) Whenever there shall be annexed to any instrument of
assignment and transfer executed pursuant to and in accordance
with the foregoing Section 6.2(a), a certificate of the
Secretary or any Assistant Secretary in office at the date of
such certificate setting forth the provisions hereof, stating
that they are in full force and effect, setting forth the names
of persons who are then officers of the corporation, and
certifying as to the employees or agents, if any, to whom any
such power and authority have been delegated, all persons to
whom such instrument and annexed certificate shall thereafter
come shall be entitled, without further inquiry or investigation
and regardless of the date of such certificate, to assume and to
act in reliance upon the assumption that (i) the shares of
stock or other securities named in such instrument were
theretofore duly and properly transferred, endorsed, sold,
assigned, set over and delivered by the Corporation, and
(ii) with respect to such securities, the authority of
these provisions of these Bylaws and of such officers, employees
and agents is still in full force and effect.
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7.
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DEPOSITARIES
AND SIGNATORIES.
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7.1 Depositaries. The Chairman, any Vice
Chairman, the President, the Chief Financial Officer, and the
Treasurer are each authorized to designate depositaries for the
funds of the Corporation deposited in its name or that of a
Division of the Corporation, or both, and the signatories with
respect thereto in each case, and from time to time, to change
such depositaries and signatories, with the same force and
effect as if each such depositary and the signatories with
respect thereto and changes therein had been specifically
designated or authorized by the Board; and each depositary
designated by the Board or by the Chairman, any Vice Chairman,
the President, the Chief Financial Officer, or the Treasurer
shall be entitled to rely upon the certificate of the Secretary
or any Assistant Secretary of the Corporation or of a Division
of the Corporation setting forth the fact of such designation
and of the appointment of the officers of the Corporation or of
the Division or of both or of other persons who are to be
signatories with respect to the withdrawal of funds deposited
with such depositary, or from time to time the fact of any
change in any depositary or in the signatories with respect
thereto.
7.2 Signatories. Unless otherwise
designated by the Board or by the Chairman, any Vice Chairman,
the President, the Chief Financial Officer or the Treasurer,
each of whom is authorized to execute any of such items
individually, all notes, drafts, checks, acceptances, orders for
the payment of money and all other negotiable instruments
obligating the Corporation for the payment of money, including
any form of guaranty by the Corporation with respect to any such
item entered into by any direct or indirect subsidiary of the
Corporation, shall be (a) signed by any Assistant Treasurer
and (b) countersigned by the Chief Accounting Officer,
Controller or any Assistant Controller, or (c) either
signed or countersigned by any Executive Vice President, any
Senior Vice President or any Vice President in lieu of either
the officers designated in Clause (a) or the officers
designated in Clause (b) of this Section 7.2.
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The seal of the Corporation shall be in such form and shall have
such content as the Board shall from time to time determine.
The fiscal year of the Corporation shall end on December 31 in
each year, or on such other date as the Board shall determine.
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10.
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WAIVER OF
OR DISPENSING WITH NOTICE.
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(a) Whenever any notice of the time, place or purpose of
any meeting of the shareholders is required to be given by
applicable law, the Articles of Incorporation or these By-laws,
a written waiver of notice, signed by a shareholder entitled to
notice of a shareholders meeting, whether by telegraph,
cable or other form of recorded communication, whether signed
before or after the time set for a given meeting, shall be
deemed equivalent to notice of such meeting. The waiver must be
included in the minutes or filed with the corporate records.
Attendance of a shareholder in person or by proxy at a
shareholders meeting shall constitute a waiver of notice
to such shareholder of such meeting, except when (i) the
shareholder attends the meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of
any business because the meeting was not lawfully called or
convened, or (ii) the shareholder objects to consideration
of a particular matter at the meeting at the time such matter is
presented because it is not within the purpose or purposes
described in the meeting notice.
(b) Whenever any notice of the time or place of any meeting
of the Board or Committee of the Board is required to be given
by applicable law, the Articles of Incorporation or these
By-laws, a written waiver of notice signed by a Director,
whether by telegraph, cable or other form of recorded
communication, whether signed before or after the time set for a
given meeting, shall be deemed equivalent to notice of such
meeting. Unless the Director is deemed to have waived notice by
attending the meeting, the waiver must be in writing, signed by
the Director entitled to the notice and filed with the minutes
or corporate records. Attendance of a Director at a meeting
shall constitute a waiver of notice to such Director of such
meeting, unless the Director at the beginning of the meeting (or
promptly upon the Directors arrival) objects to holding
the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
(c) No notice need be given to any person with whom
communication is made unlawful by any law of the United States
or any rule, regulation, proclamation or executive order issued
under any such law.
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11.
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POLITICAL
NONPARTISANSHIP OF THE CORPORATION.
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The Corporation shall not make, directly or indirectly, any
contributions or expenditures in connection with the election of
any candidate for federal, state or local political office, or
any committee campaigning for such a candidate, except to the
extent necessary to permit in the United States the expenditure
of corporate assets for the payment of expenses for
establishing, registering and administering any political action
committee and of soliciting contributions thereto, all as may be
authorized by federal or state laws.
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12.
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AMENDMENT
OF BY-LAWS.
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Except as otherwise provided in Section 2.8(a) of these
By-laws, these By-laws, or any of them, may from time to time be
supplemented, amended or repealed, or new By-laws may be
adopted, by the Board at any regular or special meeting of the
Board, if such supplement, amendment, repeal or adoption is
approved by a majority of the entire Board. These By-laws, or
any of them,
D-22
may from time to time be supplemented, amended or repealed, or
new By-laws may be adopted, by the shareholders at any regular
or special meeting of the shareholders at which a quorum is
present, if such supplement, amendment, repeal or adoption is
approved by the affirmative vote of the holders of at least a
majority of the voting power of all outstanding shares of stock
of the Corporation entitled to vote generally in an election of
directors.
(a) Registered Office and Agent. The
registered office of the Corporation in the State of Indiana
shall be 251 East Ohio Street, Suite 1100, Indianapolis,
Indiana 46204. The name of the registered agent is The
Corporation Trust Company. Such registered agent has a
business office identical with such registered office.
(b) Other Offices. The Corporation may
also have offices at other places, either within or outside the
State of Indiana, as the Board of Directors may from time to
time determine or as the business of the Corporation may require.
D-23
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ITT CORPORATION
1133 WESTCHESTER AVENUE WHITE PLAINS, NY 10604 WWW.ITT.COM |
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WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE
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VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A
WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time the day before the 2011
Annual Meeting. Your Internet or telephone vote authorizes the named proxies to vote the shares in
the same manner as if you marked, signed and returned your proxy card. If you vote your proxy by
Internet or by telephone, you do not need to mail back your proxy card.
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VOTE BY INTERNET - www.proxyvote.com
Use the Internet to vote your proxy. Have your proxy card in hand when you access the website.
VOTE BY TELEPHONE - 1-800-690-6903
Use any touch-tone telephone to vote your proxy. Have your proxy
card in hand when you call.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can
consent to receiving all future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to
vote using the Internet and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M30902-P06787
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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ITT CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5. |
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WITHHOLD ALL |
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FOR ALL EXCEPT |
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To withhold authority to vote for any individual
nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below. |
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Vote on Directors |
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1. |
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Election of ten members of the Board of Directors.
Nominees:
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01) Steven R. Loranger,
02) Curtis J. Crawford,
03) Christina A. Gold,
04) Ralph F. Hake,
05) John J. Hamre, |
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06) Paul J. Kern,
07) Frank T. MacInnis,
08) Surya N. Mohapatra,
09) Linda S. Sanford, and
10) Markos I. Tambakeras
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Vote on Proposals |
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AGAINST |
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ABSTAIN |
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Ratification of the appointment of Deloitte & Touche LLP as ITTs Independent
Registered Public Accounting Firm for 2011. |
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Approval of the ITT Corporation 2011 Omnibus Incentive Plan. |
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Approval of a proposal to amend the Companys Restated Articles of
Incorporation to allow shareholders to call special meetings. |
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To approve, in a non-binding vote, the compensation of our named executive officers. |
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THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE 1 YEAR ON THE FOLLOWING PROPOSAL: |
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1 YEAR |
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2 YEARS |
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3 YEARS |
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ABSTAIN |
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To determine, in a non-binding vote, whether a shareholder vote to approve the compensation of our named executive officers should occur every one, two or three years. |
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THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST PROPOSAL 7: |
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ABSTAIN |
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7. |
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To vote on a shareholder proposal requesting that the Company amend, where applicable, ITTs policies related to human rights. |
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For address changes and/or comments, please check this
box and write them on the back where indicated. |
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Please indicate if you plan to attend this meeting. |
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Yes |
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No |
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(When signing as attorney, executor, administrator,
trustee or guardian, give full title. If more than one
trustee, all should sign.) |
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date |
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Annual Meeting of Shareholders
10:30 a.m. Tuesday, May 10, 2011
1133 Westchester Avenue
White Plains, NY 10604-3543
PLEASE PRESENT THIS CARD AT THE ENTRANCE TO THE MEETING ROOM
Note: If you plan to attend the Annual Meeting of Shareholders, please indicate your
intention by marking the appropriate box on the attached proxy card. If you plan to attend the
Annual Meeting in person, please bring, in addition to this Admission Ticket, a proper form of
identification. The use of video, still photography or audio recording at the Annual Meeting is not
permitted. For the safety of attendees, all bags, packages and briefcases are subject to
inspection. Your compliance is appreciated.
This Admission Ticket should not be returned with your proxy but should be retained and brought with you to the Annual Meeting.
SEC Proxy Access Notice
Important Notice Regarding the Internet Availability of Proxy Materials for the Shareholder Meeting
to be held on May 10, 2011 at 10:30 a.m. EDT at 1133 Westchester Avenue, White Plains, NY
10604-3543: The proxy materials for ITTs 2011 Annual Meeting of Shareholders, including the 2010
Annual Report, Form 10-K and Proxy Statement are available on the Internet. To view these proxy
materials, please visit https://www.proxydocs.com/itt.
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FOLD AND DETACH HERE
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M30903-P06787 |
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ITT
CORPORATION FOR THE ANNUAL MEETING TO BE HELD MAY 10, 2011:
The shareholder(s) whose signature(s) appear(s) on the reverse side of this proxy form hereby
appoint(s) Frank R. Jimenez, Denise L. Ramos and Burt M. Fealing, or any of them, each with full
power of substitution as proxies, to vote all shares of ITT Corporation common stock that the
shareholder(s) would be entitled to vote on all matters that may properly come before the 2011
Annual Meeting and at any adjournments or postponements. The proxies are authorized to vote in
accordance with the specifications indicated by the shareholder(s) on the reverse side of this
form. If this form is signed and returned by the shareholder(s), and no specifications are
indicated, the proxies are authorized to vote as recommended by the Board of Directors. In either
case, if this form is signed and returned, the proxies thereby will be authorized to vote in their
discretion on any other matters that may be presented for a vote at the meeting and at adjournments
or postponements.
For participants in the ITT Salaried Investment and Savings Plan:
Under the savings plans, participants are named fiduciaries to the extent of their authority to
direct the voting of ITT shares credited to their savings plan accounts and their proportionate
share of allocated shares for which no direction is received and unallocated shares, if any
(together, Undirected Shares). ITT Salaried Plan participants should mail their confidential
voting instruction card to Broadridge, acting as tabulation agent, or vote by Phone or Internet.
Instructions must be received by Broadridge before 11:59 p.m. Eastern Time the day before the 2011
Annual Meeting. The trustee of the savings plans will vote Undirected Shares in the same proportion
as the shares for which directions are received, except as otherwise provided in accordance with
ERISA. By submitting voting instructions by telephone, Internet, or by signing and returning this
voting instruction card, you direct the trustee of the savings plans to vote these shares, in
person or by proxy, as designated herein, at the 2011 Annual Meeting of stockholders.
The Trustee will exercise its discretion in voting on any other matter that may be presented for a
vote at the meeting and at adjournments or postponements.
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued, and to be dated and signed on the reverse side.)