As
filed with the Securities and Exchange Commission on April 29,
2008
SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No. )
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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Century
Aluminum Company
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
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previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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June
24, 2008
___________
To the
Stockholders of Century Aluminum Company:
We invite
you to attend our 2008 Annual Meeting of Stockholders on June 24, 2008, at 8:30
a.m., local time, at our executive offices located at 2511 Garden Road, Building
A, Suite 200, Monterey, California. At the meeting, we plan
to:
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Elect
three Class III directors to our Board, each for a term of three
years;
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2.
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Ratify
the appointment of Deloitte & Touche LLP as our independent auditors
for the fiscal year ending December 31, 2008; and
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3.
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Transact
any other business that may properly come before the meeting or at any
adjournments or postponements of the meeting.
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You may vote at the meeting if you owned our common stock at the
close of business on May 1, 2008. Please note, there are three ways
that you can vote before the meeting - by telephone, by the Internet or by
mailing the enclosed proxy card.
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By
Order of the Board of Directors,
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Robert
R. Nielsen
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Executive
Vice President,
General
Counsel,
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and
Secretary
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Monterey,
California
April 28,
2008
YOUR
VOTE IS IMPORTANT
If
you do not expect to attend the 2008 Annual Meeting, or if you do plan
to
attend
but wish to vote by proxy, please complete, sign, date and return
promptly
the enclosed proxy card in the enclosed postage-paid
envelope. You
may
also vote by telephone or electronically by the Internet.
___________
PROXY
STATEMENT
___________
June
24, 2008
Our board
of directors is soliciting proxies for the 2008 Annual Meeting of Stockholders
of Century Aluminum Company, which we refer to as Century. This
booklet of information and the accompanying proxy card contain information about
the items you will vote on at the Annual Meeting. Distribution of these
documents is scheduled to begin on or about May 13, 2008.
QUESTIONS
AND ANSWERS
Q. When
and where is the Annual Meeting of Stockholders being held?
A. The
2008 Annual Meeting is being held on June 24, 2008 at 8:30 a.m. local time, at
our principal executive offices which are located at 2511 Garden Road, Building
A, Suite 200, Monterey, California 93940.
Q. Who
is entitled to vote and how many votes do I have?
A. You
may vote at the 2008 Annual Meeting if you owned shares of our common stock at
the close of business on May 1, 2008. Each stockholder is entitled to
one vote for each share of common stock held.
Q. How
many shares are available to vote in the Annual Meeting?
A. On
April 25, 2008, there were 41,133,927 shares of Century common stock
outstanding. On our record date of May 1, 2008, we anticipate
approximately the same number of shares will be outstanding and entitled to vote
at the Annual Meeting. The number of shares outstanding and entitled
to vote at the Annual Meeting as of the record date may be increased by a de
minimus amount due to exercises of compensatory stock options and the vesting of
service based performance shares between April 25, 2008 and the record
date.
Q. What
constitutes a quorum for the meeting?
A. The
holders of a majority of the outstanding shares of Century’s common stock will
constitute a quorum for the transaction of business at the 2008 Annual
Meeting. Only shares of Century common stock that are present at the
Annual Meeting, either in person or represented by proxy (including shares that
the holder abstains from voting or does not vote with respect to one or more of
the matters present for stockholder approval), will be counted for purposes of
determining whether a quorum exists at the meeting.
Q. How
do I vote?
A. If
you are the stockholder of record, you may vote in person by attending the
Annual Meeting or by completing and returning a proxy by mail, telephone, or
electronically using the Internet, by the deadline indicated in the proxy
card. To vote your proxy by mail, mark your vote on the enclosed
proxy card, then follow the directions on the card. To vote your
proxy by telephone or electronically using the Internet, see the information on
the proxy card and have the proxy card available when you call or access the
Internet website. If you vote by proxy, your shares will be voted
according to your directions. If you sign and return your proxy card
but do not mark any selections, your shares represented by that proxy will be
voted as recommended by the board of directors. Whether you plan to
attend the meeting or not, we encourage you to vote by proxy as soon as
possible.
If you
are a beneficial owner, you must timely deliver your voting instructions to your
respective bank, broker or other nominee, following the specific instructions
that have been provided to you by your bank, broker or other
nominee.
Q. What
is the difference between holding shares as a stockholder of record and as a
beneficial owner?
A. Most
of our shareholders hold their shares through a stock broker, bank or other
nominee rather than directly in their own name. As summarized below, there are
some differences between shares held of record and those owned
beneficially.
Stockholder of
Record. If your
shares are registered directly in your name with our transfer agent,
Computershare Investor Services LLC, you are considered the stockholder of
record of those shares. As the stockholder of record, you have the
right to grant your voting proxy directly to us or to vote in person at the
Annual Meeting.
Beneficial
Owner. If your
shares are held in a stock brokerage account or by a bank or other nominee, you
are considered the beneficial owner of shares held in “street
name.” These proxy materials are being forwarded to you by your
broker or nominee, who is considered to be the stockholder of record for those
shares. As the beneficial owner, you have the right to direct your
broker, bank or nominee on how to vote. Your broker or nominee has
enclosed a voting instruction card for you to use in directing your broker or
nominee as to how to vote your shares. As a beneficial holder, you
are invited to attend the Annual Meeting; however, because you are not the
stockholder of record, you may not vote these shares in person at the Annual
Meeting unless you obtain a signed proxy from the record holder giving you the
right to vote the shares.
Q. How
do I vote my shares that are held in a Century 401(k) plan?
A. If
you participate in one of Century’s 401(k) plans, you must provide the trustee
of the 401(k) plan with your voting instructions in advance of the
meeting. You may do this by returning your voting instructions by
mail, or submitting them by telephone or electronically, using the
Internet. You cannot vote your shares in person at the Annual
Meeting; the trustee is the only one that can vote your shares. The
trustee will vote your shares as you have instructed. If the trustee does not
receive your instructions, your shares generally will be voted in proportion to
the way the other plan participants voted. To allow sufficient time
for voting by the trustee, your voting instructions must be received by June 20,
2008.
Q.
May I change my vote?
A. Yes. If
you are the stockholder of record, you may revoke a proxy or change your voting
instructions by:
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delivering
a written notice of revocation or later-dated proxy to our Secretary at or
before the taking of the vote at the Annual
Meeting;
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if
you voted by telephone or on the Internet, changing your voting
instructions via telephone or the Internet up to 1:00 a.m. (Central Time)
on June 24, 2008 (the date of the 2008 Annual Meeting);
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voting
in person at the Annual
Meeting.
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If you hold your shares in one of Century’s 401(k) plans, notify the plan trustee in writing prior to June 20, 2008, that your voting instructions are revoked or should be changed.
If your
shares are held in “street name,” you must follow the specific instructions
provided to you to change or revoke any instructions that you may have already
provided to your bank, broker or other nominee.
Q.
How will my votes be counted?
A. Directors
are elected by a plurality of votes, which means that the three nominees that
receive the highest number of votes will be elected as directors, even if a
nominee does not receive a majority of the votes cast. The other
items submitted to stockholders for a vote at the meeting require the
affirmative vote of a majority of the votes cast.
Your
shares will be voted in accordance with your
instructions. Abstentions will be treated as shares that are present
and entitled to vote for purposes of determining a quorum for a matter, but will
not be counted as a vote in favor of such matter. Accordingly, an
abstention from voting on a matter will not be counted for the purposes of
electing directors and will have the same effect as a vote against other
matters. If a bank, broker or other nominee holding stock in “street
name” indicates on the proxy that it does not have discretionary authority to
vote as to a particular matter, those shares will count for quorum purposes, but
are not counted as shares present and entitled to vote on such
matter.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 24, 2008
The
Notice of Annual Meeting, 2008 Proxy Statement and 2007 Annual Report are
available at http://investor.shareholder.com/cenx/annuals.cfm.
Our board
of directors is divided into three classes: Class I, Class II and Class III.
Directors in each class are elected to serve for three-year terms, with each
class standing for election in successive years. Three Class III
Directors will be elected at the 2008 Annual Meeting to serve a three-year term
that will expire at the 2011 Annual Meeting. The persons named as
proxies in the enclosed proxy card intend to vote for the election of each of
the nominees listed below unless you indicate on the proxy card that your vote
should be withheld from any or all of the nominees. If any nominee
declines or is unable to serve, the persons named as proxies will use their best
judgment in voting for any available nominee. Each of the nominees
named below has indicated their willingness to serve if elected, and the board
of directors has no reason to believe that any of the nominees will not be
available to serve. Set forth below is background information for
each of the three nominees for election as well as the other members of the
Board whose terms expire in 2009 and 2010. Each nominee with the
exception of Ms. Manning currently serves as a director on our board of
directors. If elected, Ms. Manning’s service on our board of
directors will not commence until July 1, 2008.
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Class
III Directors Standing for Election with Terms to Expire in
2011
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Name
and Age*
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Business
Experience and Principal Occupation or
Employment
During Past 5 Years; Other Directorships
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Director
Since
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Robert
E. Fishman, Ph.D.
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56
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Director
of Range Fuels, Inc. since November 2007; President and Chief Executive
Officer of Ausra, Inc. since October 1, 2007; Executive Vice President,
Power Operations of Calpine Corporation from 2006 to 2007; Senior Vice
President of Calpine Corporation from 2001 to 2005.
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2002
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Jack
E. Thompson
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Director
of Tidewater Inc. since 2005; Director of Rinker Group Ltd. from May 2006
to June 2007; Director of Phelps Dodge Corp. from January 2003 to March
2007; Director of Stillwater Mining Co. from 2002 to June 2006; Vice
Chairman of Barrick Gold Corporation from December 2001 to April 2005;
member of the Advisory Board of Resource Capital Funds III and IV, LLP
since 2002; member of the Industry Advisory Council for the College of
Engineering at the University of Arizona since 2002.
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2005
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Catherine
Z. Manning
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Partner,
PricewaterhouseCoopers LLP since July 1986, Finance Effectiveness and
Merger Integration leader for PricewaterhouseCoopers’ Atlanta Advisory
practice; Chairman, Atlanta Historical Society since January 2007, member
since January 2002; member, Georgia Appleseed since January 2006; member,
Museum of Contemporary Art of Georgia since February 2008.
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n/a
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Class
I Directors with Terms to Expire in 2009
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Name
and Age*
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Business
Experience and Principal Occupation or
Employment
During Past 5 Years; Other Directorships
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Director
Since
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Logan
W. Kruger
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Our
President and Chief Executive Officer since December 2005; President,
Asia/Pacific Inco Limited from September 2005 to November 2005; Executive
Vice-President, Technical Services for Inco Ltd. from September 2003 to
September 2005; Chief Executive Officer of Anglo American Chile Ltd. from
July 2002 to September 2003; and President and Chief Executive Officer,
Hudson Bay Mining & Smelting Co. from September 1996 to June
2002.
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2005
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Willy
R. Strothotte (1)
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64
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Chairman
of the Board of Glencore International AG since 1994 and Chief Executive
Officer from 1993 to December 2001; Director of KKR Financial Holdings LLC
since January 2007; Director of Minara Resources Ltd. since 2000; and
Chairman of the Board of Xstrata AG (formerly Sudelektra Holding AG) since
1994.
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1996
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Jarl
Berntzen
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41
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Partner
- Head of Mergers and Acquisitions, ThinkEquity Partners LLC since March
2006; Director of Universal Safety Response, Inc. since October 2007;
Senior Vice President, Barrington Associates, LLC from April 2005 to
February 2006; Founder, Berntzen Capital Management, LLC from March 2003
to April 2005; Managing Director of Providence Capital, Inc. from
September 2002 to March 2003; Various positions, including Vice President
of Goldman, Sachs & Co. from 1991 to 2001.
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2006
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Class
II Directors with Terms to Expire in 2010
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Name
and Age*
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Business
Experience and Principal Occupation or Employment During Past 5 Years;
Other Directorships
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Director
Since
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John
C. Fontaine
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76
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Our
Lead Director since 2005; Of Counsel, law firm of Hughes Hubbard &
Reed LLP since January 2000 and Partner from July 1997 to December 1999;
Chairman of the Samuel H. Kress Foundation from 1994 to 2006; Trustee of
the National Gallery of Art from 2003 to 2007 and Chairman of the Board of
Trustees from 2006 to 2007.
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1996
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John
P. O’Brien
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66
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Our
Chairman of the Board since January 2008; Managing Director of Inglewood
Associates Inc. since 1990; Chairman of Allied Construction Products since
March 1993; Director of Preformed Line Products Company since May 2004;
Director of Oglebay Norton Company from April 2003 to February 2008;
Director of International Total Services, Inc. from August 1999 to January
2003; Member of the Board of Trustees of Saint Luke’s Foundation of
Cleveland, Ohio since 2006; Trustee of Cleveland Sight Center since 1990;
Chairman, Chagrin Falls Board of Zoning Appeals since 2005; and Trustee of
Downtown Chagrin Falls since 2000.
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2000
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Peter
C. Jones
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60
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Partner,
Setter Group since June 2007; Director of Mizuho Corporate Bank (Canada)
since December 2006; Director of IAMGOLD Corporation since May 2006;
Director, President and Chief Operating Officer of Inco Ltd. from April
2001 to November 2006; President Commissioner P.T. Inco Tbk from 1999 to
2006; Chairman Goro Nickel SAS from 2003 to February 2007; Member of the
Board and the Executive Committee, Mining Association of Canada from 1997
to 2006; and Member of the Board, Royal Ontario Museum from 2003 to
2006.
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2007
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*
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Ages
as of April 25, 2008
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(1)
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Mr.
Strothotte was designated to serve as one of our directors by Glencore
International AG, or Glencore.
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Board
and Committee Meetings, Directors’ Compensation, Communication with
Directors
Our board
of directors presently consists of 8 directors with one vacancy. If
Ms. Manning is elected to the Board, she will fill the vacancy created with the
resignation of Mr. Davis. The Board, which is responsible for
supervision of the overall affairs of Century, establishes corporate policies,
sets strategic direction, and oversees management, which is responsible for
Century’s day-to-day operations. The Board met 7 times during
2007.
To assist
it in carrying out its duties, the Board has established various standing
committees. Each standing committee of the Board and its members are listed in
the table below. The Board designates the members of each committee
and the committee chair annually, based on the recommendations of the Governance
and Nominating Committee. The Board has adopted written charters for
each of its committees, which are available in the Investors section of our
website, www.centuryaluminum.com,
under the tab “Corporate Governance.” Each director attended
100% of all meetings of the Board and each Board committee on which such
director served. We encourage, but do not require, the attendance of
Board members at our Annual Meetings. All of our directors attended
in person or by telephone the 2007 Annual Meeting.
Board
Committees and Meetings
The table
below identifies the name and current members of each standing committee of our
Board. If elected, Ms. Manning is expected to serve on our Audit
Committee commencing July 1, 2008. We anticipate that Ms. Manning
will be an “audit committee financial expert” within the meaning set forth in
regulations of the Securities and Exchange Commission.
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Name
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Audit
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Compensation
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Governance & Nominating
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Health,
Safety & Sustainability
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Jarl
Berntzen
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X
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X
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Robert
E. Fishman
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X
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X
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X*
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John
C. Fontaine
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X
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X
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Peter
C. Jones
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X
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X*
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X
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John
P. O’Brien
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X*
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X
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Jack
E. Thompson
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X
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X*
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X
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*
Chair
Independent
Directors
The Board
has determined that each of Jarl Berntzen, Robert E. Fishman, John C. Fontaine,
Peter C. Jones, John P. O’Brien and Jack E. Thompson is an independent director
under the criteria established by NASDAQ. If elected, we anticipate
that upon commencement of service, Ms. Manning will also be an independent
director under the criteria established by NASDAQ. In considering Ms.
Manning’s independence, the Board considered Ms. Manning’s relationships with
PricewaterhouseCoopers and the Jones Day law firm, as described below under the
caption “Certain Business Relationships.”
Audit
Committee
The Audit
Committee:
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oversees
the financial reporting process for which management is
responsible;
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approves
the engagement of the independent auditors for audit and non-audit
services;
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monitors
the independence of the independent auditors;
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reviews
and approves all audit and non-audit services and fees;
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reviews
the scope and results of the audit with the independent
auditors;
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reviews
the scope and results of internal audit procedures with our internal
auditors;
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evaluates
and discusses with the independent auditors and management the
effectiveness of our system of internal accounting controls;
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reviews
and approves related party transactions pursuant to our Statement of
Company Policy Regarding Related Party Transactions; and
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makes
inquiries into other matters within the scope of its
duties.
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During
2007, the members of the Audit Committee were Messrs. Berntzen, Fishman,
O’Brien, Thompson and Jones. Each member of the Audit Committee is
“independent,” as required under applicable NASDAQ listing standards and Rule
10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange
Act. In addition, the Board has determined that John P. O’Brien is an
“audit committee financial expert” within the meaning set forth in regulations
of the Securities and Exchange Commission. In 2007, the Audit
Committee held 5 meetings. Effective March 20, 2007, Mr. Thompson was succeeded
on the Audit Committee by Mr. Jones, who was elected as a director on March 20,
2007.
Compensation
Committee
The
Compensation Committee reviews and establishes the compensation for our
executive officers and has oversight responsibility for administering and
awarding grants under our 1996 Stock Incentive Plan, as amended, which we refer
to as the 1996 Plan. Each member of the Compensation Committee is an
independent director as required under applicable NASDAQ listing
standards. During 2007, the members of the Compensation Committee
were Messrs. Fontaine, O’Brien, Thompson and Jones. Effective March
20, 2007, Mr. Jones became a member of the Compensation Committee and on January
1, 2008, Mr. Jones was appointed Chair of the Compensation Committee. The
Compensation Committee held 13 meetings in 2007.
Governance
and Nominating Committee
The
Governance and Nominating Committee is responsible for:
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evaluating
the size and composition of the Board;
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identifying,
recruiting and recommending candidates for election to the
Board;
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overseeing
corporate governance matters; and
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reviewing
and making periodic recommendations concerning our corporate governance
policies and procedures.
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The
Governance and Nominating Committee solicits recommendations for potential Board
candidates from a variety of sources, including directors, officers, other
individuals with whom the Governance and Nominating Committee members are
familiar, through its own research, and third-party research. The
Governance and Nominating Committee will also consider nominees recommended by
stockholders who submit such recommendations in writing to our Corporate
Secretary. The qualifications and standards the Governance and
Nominating Committee will apply in evaluating any recommendations for nomination
to the Board include, but are not limited to:
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significant
business or public experience;
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a
willingness and ability to make a sufficient time commitment to Century’s
affairs to perform effectively the duties of a director, including regular
attendance at Board and committee meetings;
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skills
in finance, international business and knowledge about Century’s business
or industries;
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personal
qualities of leadership, character, judgment and integrity;
and
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requirements
relating to composition of the Board under applicable law and listing
standards.
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During
2007, the members of the Governance and Nominating Committee were Messrs.
Berntzen, Fishman, Fontaine, O’Brien and Thompson. Each member of the
Governance and Nominating Committee is “independent” as required under
applicable NASDAQ listing standards. Effective March 20, 2007, Mr.
O’Brien was succeeded on the Governance and Nominating Committee by Mr.
Berntzen.
The
Governance and Nominating Committee recommended Catherine Z. Manning, Robert E.
Fishman and Jack E. Thompson as nominees for election as Class III Directors to
the Board at the 2008 Annual Meeting. Ms. Manning was recommended for
consideration by the Governance and Nominating Committee by Mr. O’Brien, a
non-management Director. If elected, Ms. Manning’s service on the
Board will not commence until July 1, 2008. After considering the
recommendations of the Governance and Nominating Committee, our Board approved
the slate of director nominees to stand for election at the 2008 Annual
Meeting. In 2007, the Governance and Nominating Committee held 3
meetings.
Lead
Director/Meetings of Independent Directors
On the
recommendation of the Governance and Nominating Committee, the Board has
designated John C. Fontaine to serve as the Lead Director for meetings of the
independent Board members outside the presence of management. The
independent directors met 5 times during 2007. Mr. Fontaine has
advised the Board that with the appointment of Mr. O’Brien, an independent
director, as Chairman of the Board, he will cease serving as lead director
effective June 24, 2008, the date of our 2008 Annual Meeting. Our
independent directors are scheduled to meet in executive session without the
presence of management no fewer than two times each year.
Health
Safety and Sustainability Committee
In 2008
we formed the Health, Safety and Sustainability Committee (the “HSS Committee”)
to assist the Board with regard to oversight of Century’s policies and
management systems with respect to health, safety and sustainability matters.
Specifically, the HSS Committee is responsible for the regular review of
Century’s health, safety and sustainability policies and related practices,
assessments, performance, compliance and reporting. The HSS Committee
must meet at least twice a year and provide recommendations to the
Board. The initial members of the HSS Committee are Messrs. Fishman,
Jones and Thompson.
Directors’
Compensation
Directors
who are full-time salaried employees of Century are not compensated for their
service on the Board or on any Board committee. The Board’s general
policy is that compensation for non-employee directors should be a mix of cash
and equity-based compensation. The Compensation Committee evaluates
the appropriate level and form of compensation for non-employee directors at
least annually and recommends changes to the Board when
appropriate. The Board reviews the committee’s recommendations and
determines the amount of director compensation.
Equity Awards,
Meeting Fees and Retainers. In 2007, each newly elected non-employee
director received a one-time grant of options to purchase 10,000 shares of
Century common stock. The options vest one-third on the grant date,
and an additional one-third vest on each of the first and second anniversaries
of the grant date. In addition, each non-employee director continuing
in office after the Annual Meeting of stockholders received an annual grant of
3,000 options that vest one-fourth on each of the three, six, nine and 12 month
anniversaries of the date of grant. The options were granted on the
business day following the Annual Meeting at the average of the high and low
price of Century’s common stock on that date.
During 2007, non-employee directors
(other than the Chairman) received an annual retainer of $35,000 for their
services. The Chairman of the Board received an annual retainer of $100,000. The
Lead Director received an additional $25,000 annual retainer, the Chair of the
Audit Committee received an additional $10,000 annual retainer and the Chair of
each of the Compensation Committee and the Governance and Nominating Committee
received an additional $5,000 annual retainer. In addition, each non-employee
director received a fee of $2,000 for each Board or Board committee meeting
attended. The Chair of the Audit Committee received an additional $1,000 per
Audit Committee meeting attended.
In 2008, the Board conducted a
competitive assessment of director pay practices among the peer companies used
for our executive compensation benchmarking. Based on the results of
this study, in April 2008, the Board approved the following modifications to
non-employee director compensation, effective January 1, 2008. Annual
retainers for all non-employee directors were increased by $10,000 to more
closely align them with the mid-range of competitive practices. The
annual retainer for the Compensation Committee Chair was increased by $5,000 to
reflect the increased burden and complexity of Compensation Committee
oversight. The Board did not seek to modify the value of equity
awards; however, the Board decided to change the forms of future equity awards
to non-employee directors. Rather than stock options, continuing
directors will now receive annual grants of performance share units that vest
following 12 months of service with a targeted value of $75,000, and new
directors will receive a one-time initial award of 1,000 performance share units
that vest 50% following 12 months of service and 50% following 24 months of
service. The annual performance share unit awards will be calculated
based on the average closing price of Century’s common stock for the 60 trading
days preceding the grant date. Using performance share units rather
than options is viewed as more consistent with our increased emphasis on stock
ownership. Directors also may now elect to defer cash retainers into
stock awards which vest at the termination of their service, and may also elect
to defer awards of performance share units until their termination of
service.
Expense
Reimbursement. All directors are reimbursed for their travel
and other expenses incurred in attending Board and Board committee
meetings.
The
following table sets forth the compensation paid to each director in
2007. In January 2008, Mr. Davis resigned from his position as
Chairman and a member of the Board of Directors. Mr. O’Brien was
appointed to succeed Mr. Davis as Chairman.
2007 Director
Compensation
|
Name
|
Fees
Earned or
Paid
in Cash ($)
|
Stock
Awards ($)
|
Option Awards
($)
|
All
Other Compensation ($)
|
Total
($)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
|
Jarl
Berntzen
|
63,000
|
--
|
165,462
|
--
|
228,462
|
|
Craig
A. Davis
|
114,000
|
393,238
|
92,283
|
930,000
|
1,529,521
|
|
Robert
E. Fishman
|
48,250
|
--
|
92,283
|
--
|
140,533
|
|
John
C. Fontaine
|
111,000
|
--
|
92,283
|
--
|
203,283
|
|
Peter
C. Jones
|
75,000
|
--
|
251,811
|
--
|
326,811
|
|
John
P. O’Brien
|
97,000
|
--
|
92,283
|
--
|
189,283
|
|
Willy
R. Strothotte
|
--
|
--
|
92,283
|
--
|
92,283
|
|
Jack
E. Thompson
|
86,000
|
--
|
92,283
|
--
|
178,283
|
Column (a) - This column lists
all non-employee directors who served on the Board during 2007. Mr. Kruger did
not receive compensation for serving as a member of the Board.
Column (b) - The amounts in this column
reflect the retainer and meeting fees paid to each non-employee director during
2007 (other than Mr. Strothotte, who waived his right to receive cash
compensation).
Column (c) - Amounts shown in this column
reflect the dollar amount recognized for financial statement reporting purposes
during 2007 in accordance with Statement of Financial Accounting Standards 123R,
or FAS 123R, for equity award expenses, disregarding assumptions for the
forfeiture of awards. See note 10 to the financial statements in our
Annual Report on Form 10-K for the year ended December 31, 2007 for the
assumptions used in the valuation of these awards and related
disclosures. Pursuant to the terms of the Implementation Guidelines
to our 1996 Plan, following his retirement as our Chief Executive Officer, Mr.
Davis’s performance-based share awards vested for our 2005-2007 performance
program period on an approximate one-third basis. As such, amounts
included in this column include stock-based compensation recognized for
financial statement reporting purposes for the fiscal year ended December 31,
2007 in accordance with FAS 123(R) that was awarded to Mr. Davis when he served
as Chief Executive Officer. In January 2008, Mr.
Davis resigned from his position as Chairman and a member of the Board of
Directors. Mr. O’Brien was elected to succeed Mr. Davis as
Chairman.
Column (d) - Amounts shown in
this column reflect the dollar amount recognized for financial statement
reporting purposes during 2007 in accordance with Statement of Financial
Accounting Standards 123R, or FAS 123R, for equity award expenses, disregarding
assumptions for the forfeiture of awards. See note 10 to the
financial statements in our Annual Report on Forth 10-K for the year ended
December 31, 2007 for the assumptions used in the valuation of these awards and
related disclosures. Presented below are the grant date fair value of
each option award granted in 2007 (computed in accordance with FAS 123R and
using the Black-Scholes option pricing model to calculate fair value) and the
aggregate number of vested and unvested stock options and stock awards held by
each director (other than Mr. Kruger) as of December 31, 2007:
|
Name
|
Grant
Date Fair Value of 2007 Option Awards ($)
|
Number
of Options Outstanding as of 12/31/07
|
Number
of Stock Awards Outstanding as of 12/31/07
|
|
Jarl
Berntzen
|
100,433
|
16,000
|
-
|
|
Craig
A. Davis
|
100,433
|
6,000
|
9,926(1)
|
|
Robert
E. Fishman
|
100,433
|
3,000
|
-
|
|
John
C. Fontaine
|
100,433
|
19,000
|
- |
|
Peter
C. Jones
|
365,169
|
13,000
|
- |
|
John
P. O’Brien
|
100,433
|
17,000
|
- |
|
Willy
R. Strothotte
|
100,433
|
24,000
|
- |
|
Jack
E. Thompson
|
100,433
|
6,000
|
- |
|
(1)
|
Represents
the number of performance share units for the 2005-2007 performance
program period which were granted to Mr. Davis when he served as our Chief
Executive Officer. Our Compensation Committee determined
vesting for the 2005-2007 performance period in March 2008. In
January 2008, Mr. Davis resigned from his position as Chairman and a
member of the Board of Directors. Mr. O’Brien was elected to
succeed Mr. Davis as Chairman. This stock award was also
disclosed in our 2007 proxy statement and is not in addition to the award
previously disclosed.
|
Column (e) - For Mr. Davis,
all other compensation includes $930,000 for payments made under our retirement
plans.
Stockholder
Communications with the Board of Directors
Stockholders
may communicate with the Board or any individual director(s) by sending a
written communication in an envelope addressed to the Board or the appropriate
director(s) in care of our Corporate Secretary at the address for our principal
executive offices located on the cover page of this proxy
statement.
OWNERSHIP
OF CENTURY COMMON STOCK
Security
Ownership of Certain Beneficial Owners
The
following table sets forth certain information concerning the beneficial
ownership of our common stock as of April 25, 2008 (except as otherwise noted)
by each person known by us to be the beneficial owner of five percent or more of
the outstanding shares of our common stock. The percent of class
shown below is based on 41,133,927 shares of common stock outstanding of April
25, 2008.
|
Name
|
Amount
and Nature of Beneficial Ownership (1)
|
Percent
of Class
|
|
Glencore
International AG (2)
|
11,704,807(2)
|
28.5%
|
|
The
Guardian Life Insurance Company of America (3)
|
4,216,966(3)
|
10.3%
|
|
Citadel
Limited Partnership(4)
|
2,152,677(4)
|
5.2%
|
|
S.A.C.
Capital Advisors, LLC(5)
|
2,113,733(5)
|
5.1%
|
|
(1)
|
Each
entity has sole voting and investment power, except as otherwise
indicated.
|
|
(2)
|
Based
on information set forth in a Schedule 13D/A filing dated November 27,
2007, by Glencore International AG, Glencore AG and Glencore Holding AG
(“Glencore”). The principal business address of each of
Glencore International AG, Glencore AG and Glencore Holding AG is
Baarermattstrasse 3, P.O. Box 555, CH 6341, Baar,
Switzerland.
|
|
(3)
|
Based
on information set forth in a Schedule 13G filed on February 8, 2008, by
The Guardian Life Insurance Company (“Guardian”), Guardian Investor
Services LLC (“GIS”), and RS Investment Management Co. LLC (“RIMC”)
(collectively, the “Guardian Reporting Persons”). Guardian is
an insurance company and the parent company of GIS and RIMC. GIS is a
registered investment adviser, a registered broker-dealer, and the parent
company of RIMC, a registered investment adviser. The Guardian
Reporting Persons each share voting and investment power over 4,216,966
shares. The business address of the Guardian Reporting Persons
is 7 Hanover Square, New York, New York 10004.
|
|
(4)
|
Based
on information set forth in a Schedule 13G filed on February 8, 2008,
Citadel Limited Partnership shares voting and investment power with
respect to all of the reported shares with Citadel Investment Group,
L.L.C., Citadel Investment Group II, L.L.C., Citadel Limited Partnership,
Citadel Holdings I LP, Citadel Holdings II LP, Citadel Advisors LLC,
Citadel Equity Fund Ltd., Citadel Derivatives Group LLC, Citadel
Derivatives Trading Ltd. and Kenneth Griffin (collectively, the “Citadel
Reporting Persons”). The business address for the Citadel
Reporting Persons is 131 S. Dearborn Street, 32nd Floor, Chicago, Illinois
60603.
|
|
(5)
|
Based
on information set forth in a Schedule 13G/A filed on February 14, 2008
by: (i) S.A.C. Capital Advisors, LLC (“SAC Capital Advisors”) with respect
to shares beneficially owned by S.A.C. Capital Associates, LLC (“SAC
Capital Associates”) and S.A.C. Select Fund, LLC (“SAC Select Fund”); (ii)
S.A.C. Capital Management, LLC, (“SAC Capital Management”) with respect to
shares beneficially owned by SAC Capital Associates and SAC Select Fund;
(iii) SAC Capital Associates with respect to shares beneficially owned by
it; and (iv) Steven A. Cohen with respect to shares beneficially owned by
SAC Capital Advisors, SAC Capital Management, SAC Capital Associates and
SAC Select Fund. The address of the principal business office
of (i) SAC Capital Advisors and Mr. Cohen is 72 Cummings Point Road,
Stamford, Connecticut 06902, (ii) SAC Capital Management is 540 Madison
Avenue, New York, New York 10022, and (iii) SAC Capital Associates is P.O.
Box 58, Victoria House, The Valley, Anguilla, British West
Indies.
|
Security
Ownership of Directors and Executive Officers
The
following table sets forth certain information concerning the beneficial
ownership of our common stock as of April 25, 2008 by: (i) each of our current
directors, (ii) each executive officer named in the Summary Compensation Table
under the heading “Executive Compensation,” and (iii) all of our directors and
executive officers as a group. No director or executive officer
beneficially owned more than 1% of our outstanding common stock. All of our
directors and executive officers as a group beneficially owned 0.77% of our
outstanding common stock.
|
Amount
and Nature of Beneficial Ownership (1)
|
|||||
|
Name
|
Common
Stock
|
Service
Based Shares (2)
|
Exercisable
Stock Options (3)
|
||
|
Jarl
Berntzen
|
-
|
|
-
|
16,000
|
|
|
Michael
A. Bless
|
18,930
|
(5)
|
-
|
30,000
|
|
|
Giulio
Casello
|
4,073 |
-
|
15,000
|
||
|
Robert
E. Fishman
|
-
|
|
-
|
3,000
|
|
|
John
C. Fontaine
|
250
|
(5)
|
-
|
19,000
|
|
|
Wayne
R. Hale
|
8,116
|
|
-
|
33,333
|
|
|
Peter
C. Jones
|
-
|
-
|
9,667
|
||
|
Logan
W. Kruger
|
34,988
|
|
-
|
36,667
|
|
|
Robert
R. Nielsen
|
3,804
|
(5)
|
5,000
|
8,335
|
|
|
John
P. O’Brien
|
5,000
|
|
-
|
17,000
|
|
|
Willy
R. Strothotte
|
-
|
(4)
|
-
|
24,000
|
|
|
Jack
E. Thompson
|
3,500
|
|
-
|
3,000
|
|
|
All
directors and executive officers as a group (16 persons)
|
85,767
|
|
5,000
|
226,936
|
|
|
(1)
|
Each
individual has sole voting and investment power, except as otherwise
indicated.
|
|
(2)
|
Includes
shares of common stock issuable upon vesting of service based performance
shares awarded to certain executive officers under the 1996 Plan that vest
within 60 days of April 25, 2008. Award recipients do not have
voting or investment power with respect to service based performance
shares until vesting. Dividend equivalents accrue and are paid upon
vesting of the service based performance shares.
|
|
(3)
|
Represents
shares that are subject to options that are presently exercisable or
exercisable within 60 days of April 25, 2008.
|
|
(4)
|
Excludes
11,704,807 shares beneficially owned by Glencore, for which Mr. Strothotte
serves as Chairman.
|
|
(5)
|
Represents
shares that are jointly owned and subject to shared voting and investment
power.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our directors and executive officers, and
persons owning more than 10% of a registered class of our equity securities, to
file with the Securities and Exchange Commission reports of ownership and
changes in ownership of our equity securities. These same persons are
also required to furnish us with copies of all such forms. Based
solely on a review of the copies of the forms furnished to us and written
representations that no Form 5 filings were required, we believe that, with
respect to the 2007 fiscal year, all required Section 16(a) filings were timely
made, except that Messrs. Kruger and Bless filed late Form 4s related to the
vesting of service-based performance shares and Glencore filed a late Form 4
with respect to its purchase of shares of our common stock in our public equity
offering in June 2007.
In March
2007, the board of directors adopted an expanded and updated written policy and
written procedures for the review, approval and monitoring of transactions
involving Century or its subsidiaries and “related persons.” For the
purposes of the policy, “related persons” include executive officers, directors
and director nominees and their immediate family members, and stockholders
owning five percent or greater of our outstanding stock and their family
members. In December 2007, the Board of Directors modified this
policy to provide that certain transactions will be approved by the independent
directors acting as a separate body. A copy of our related person
transaction policy is available in the Investor section of our website, www.centuryaluminum.com,
under the tab "Corporate Governance."
Our
related person transaction policy is administered by the Audit Committee and
applies to all related person transactions entered into after its
adoption. This policy applies, subject to certain specific
exclusions, to any transaction, arrangement or relationship or any series of
similar transactions, arrangements or relationships in which Century or any of
its subsidiaries was or is to be a participant and where any related person had
or will have a direct or indirect interest. Transactions involving
less than $50,000 are not subject to review and approval under the
policy. In addition, the policy defines certain ordinary course
transactions with Glencore that are not material and not subject to review and
approval under the policy, although those transactions are otherwise reviewed
and approved by our Audit Committee. Pursuant to the policy, the
Audit Committee is responsible for reviewing qualifying related person
transactions. However, all transactions with Glencore for new supply
agreements are subject to review under the policy and any other transaction the
Audit Committee Chair determines is material is reviewed by the independent
directors, acting as a separate body. Based on its consideration of
all relevant facts and circumstances, whether the transaction is on terms that
are fair and reasonable to Century and whether the transaction is in the
business interests of Century, the Audit Committee or independent directors, as
the case may be, will decide whether or not to approve or ratify such
transaction. If a related person transaction is submitted to the
Audit Committee after the commencement of the transaction, the Audit Committee
or independent directors, as the case may be, will evaluate all options
available, including the ratification, rescission or termination of such
transaction.
Approval
of Transactions with Glencore in 2007
Prior to
our initial public offering in April 1996, we were an indirect, wholly-owned
subsidiary of Glencore. As of April 25, 2008 Glencore, our largest
stockholder, owned 28.5% of our outstanding common stock. Glencore is
an important business partner, customer, supplier of alumina to our facilities,
and counterparty to our metal hedges. During 2007, all transactions
with Glencore were approved by the Audit Committee or by a special committee
comprised solely of independent directors.
Mr. Craig
A. Davis, the former Chairman of our Board, is a director of Glencore
International AG and was an executive of Glencore International AG and Glencore
AG from September 1990 until June 1996. Mr. Davis resigned from his
position as Chairman and a member of our Board of Directors in January
2008.
Mr. Willy
R. Strothotte, a director, is Chairman of the board of directors of Glencore
International AG and served as its Chief Executive Officer from 1993 through
2001.
Purchases
from Glencore
In 2007,
we purchased alumina and primary aluminum from Glencore on both a spot and
long-term contract basis. In 2007, we purchased $168.9 million of
alumina from Glencore under long-term alumina supply contracts at prices that
were based on the London Market Exchange (LME) price for primary
aluminum. We believe that 100% of the alumina purchased under these
contracts was purchased at market prices. We also purchased $10.1
million of alumina from Glencore in 2007 on a spot basis. We
determined the market price for the spot alumina we purchased based on a survey
of suppliers at the time that had the ability to deliver spot alumina on the
specified terms. Based on this survey, we believe that 100% of the
spot alumina purchased from Glencore in 2007 was purchased at market
prices. During 2007, we purchased from Glencore all of our alumina
requirements for our Ravenswood, West Virginia production facility and for a
portion of our 49.7% interest in a Mt. Holly, South Carolina production facility
under separate supply agreements. The supply agreement for Ravenswood
runs through December 31, 2009. The supply agreement for 46% of our
requirements for Mt. Holly ran through January 31, 2008.
Sales
to Glencore
We sold
primary aluminum to Glencore in 2007 on both a spot and long-term contract
basis. For the year ended December 31, 2007, net sales to Glencore
amounted to $348.4 million, excluding gains and losses realized on the
settlement of cash flow hedges. Sales of primary aluminum to Glencore
amounted to 19.4% of our total revenues in 2007.
In 2007, we sold $223.8 million in
primary aluminum under our long-term sales contracts with Glencore at prices
based on the LME price for primary aluminum, as adjusted to reflect the Midwest
Premium (a premium typically added for deliveries of aluminum within the
U.S.). In addition, we received $124.6 million in tolling fees from
Glencore in 2007 under tolling contracts that provide for delivery of primary
aluminum produced at our Grundartangi facility. The fee paid by
Glencore under these tolling contracts is based on the LME price for primary
aluminum, as adjusted to reflect the reduced European Union import duty paid on
Icelandic primary aluminum. We believe that 100% of the transactions
with Glencore under these contracts were at market prices.
We have a
long-term contract to sell Glencore approximately 50,000 metric tons of primary
aluminum produced at Mt. Holly each year through December 31, 2009, at a
variable price determined by reference to the LME. We have a
long-term contract to sell Glencore 20,400 metric tons per year of primary
aluminum produced at Ravenswood and Mt. Holly through December 31, 2013, at a
variable price based on the LME, adjusted by a negotiated U.S. Midwest market
premium with a cap and floor as applied to the current U.S. Midwest
premium.
As of
December 31, 2007, we had outstanding forward financial sales contracts with
Glencore for 694,200 metric tons of primary aluminum, of which 9,000 metric tons
were designated as cash flow hedges. These cash flow hedges are
scheduled for settlement at various dates through 2008. In November
2004 and June 2005, we entered into forward financial sales contracts with
Glencore for the years 2006 through 2010 and 2008 through 2015,
respectively. These sales contracts, which are for a minimum of
300,600 and 460,200 metric tons of primary aluminum, respectively, over the
entire terms of the contracts, contain clauses that trigger additional shipment
volume when the market price for a contract month is above the contract ceiling
price. These contracts will be settled monthly, and if the market
price exceeds the ceiling price for all contract months through each contract’s
term, the maximum remaining additional shipment volume under each set of
contracts would be 225,000 and 460,200 metric tons, respectively.
Other
Transactions with Glencore
We are
party to separate 10-year and 7-year LME-based alumina tolling agreements with
Glencore, for 90,000 and 40,000 metric tons of capacity, respectively, at our
Grundartangi production facility in Iceland, which run through 2016 and 2014,
respectively. In December 2005, Glencore assigned 50% of its tolling
rights under the 10-year agreement to Hydro Aluminum AS for the period 2007 to
2010. Deliveries under these agreements commenced in July 2006 and
June, 2007.
In April
2008, we entered into a LME-based alumina purchase agreement with Glencore
for 290,000 metric tons of alumina in 2010; 365,000 metric tons in
2011; 450,000 metric tons in 2012; 450,000 metric tons in 2013 and 730,000
metric tons in 2014.
Certain
Business Relationships
During 2007,
we retained PricewaterhouseCoopers LLP to provide actuarial and related pension
benefit and human resource consulting work. We paid $1,240,107 in
fees to PricewaterhousCoopers for this work. During this time period,
Ms. Manning, a nominee for director, was a partner of PricewaterhouseCoopers
LLP. In addition, during 2007 we retained the law firm of Jones Day
to provide legal services. We paid $549,213 in fees to the Jones Day
firm for this work. Ms. Manning’s spouse is a partner of the Jones
Day firm and managing partner of one of its U.S. offices. We believe
that all services were provided by PricewaterhouseCoopers and the Jones Day firm
at market rates and terms and on an arms-length basis. If
elected, prior to commencing service on the Board, Ms. Manning will retire from
PricewaterhouseCoopers.
EXECUTIVE
COMPENSATION
Introduction
Our
Compensation Committee (“Committee”) is a standing committee of our board of
directors (throughout this analysis we refer to Century Aluminum Company as
“Century”, “Company”, “our” or “we”). The Committee reviews and
establishes the compensation for our executive officers and is responsible for
administering and awarding grants of equity awards under our 1996 Stock
Incentive Plan, which we refer to as the 1996 Plan. Each member of
the Committee is “independent” as required under applicable NASDAQ listing
standards. During 2007, the members of the Compensation Committee
were Messrs. Fontaine, Jones, O’Brien and Thompson. The Committee
held 13 meetings in 2007.
The
Committee recognizes the benefit of reviewing periodically and modifying as
appropriate Century’s compensation and benefit programs, and the principles and
philosophies on which these programs are based. The Committee also
from time to time reviews the historical application and the implementation and
effect of our compensation and benefit programs. Key matters
addressed by the Committee in 2007 included the following, which are
subsequently addressed in more detail.
|
Ÿ
|
Re-affirmed
the Company’s Compensation philosophy: After evaluating our
business needs, our pay competitiveness, our existing “mid-range” pay
philosophy, and the merits of establishing a more focused competitiveness
objective, we re-affirmed the appropriateness of our “mid-range”
philosophy and the flexibility that it provides the Committee in its
oversight of executive pay.
|
|
Ÿ
|
Updated
the benchmarking process: In assessing the competitiveness of
our executive pay levels, we revisited the process and approach used to
establish market pay levels; our focus is on the peer companies described
below in the Benchmarking Executive Compensation section and is
complemented by a review of a compilation of data derived from a broader
sample of asset-intensive, comparably-sized industrial
companies.
|
|
Ÿ
|
Redesigned
the annual and long-term incentive plans for 2008: To emphasize our
operating, financial, and strategic goals, we revised the annual incentive
plan by incorporating three operating measures historically used within
the long-term incentive plan. At the same time, we revised the long-term
incentive plan to focus on strategic goals, free cash flow, and relative
total shareholder return.
|
Our
Philosophy on Executive Compensation
Our
compensation programs are designed to enable Century and its subsidiaries to
attract, retain and motivate talented executives and managers. We
compete for talent with companies both within and outside the aluminum industry,
including multinational growth-oriented companies in other
industries. Accordingly, the Committee and management believe that
our compensation programs must remain flexible to afford the Committee and
management discretion in making awards to both retain and attract talented
managers. To attract, retain and motivate executive talent, we
believe that we must provide compensation that is competitive and must also
reward executive officers for both individual and corporate
performance.
Our
compensation programs are structured as a balanced portfolio that relies on
multiple elements to deliver the total package (base salary, annual cash
incentive, long-term performance awards, retirement, and other
benefits). In addition, the Committee retains discretion to make
adjustments necessary to balance the overall performance of Century and the
individual performance of our executive officers, and also to pay for
performance by aligning management’s and stockholders’ interests in the
enhancement of stockholder value.
Benchmarking
Executive Compensation
As
described in the introduction, our philosophy emphasizes competitive objectives
for executive pay. Target total compensation levels are managed around the
mid-range of competitive practices, i.e., the Committee generally targets annual
base salaries that, together with annual incentive cash compensation, long-term
incentive compensation and retirement, provide the named executive officers with
total compensation, on average, at or around the mid-range of the compensation
ranges for similarly situated officers at the surveyed companies. We
prefer a competitive range to a single point in order to provide the Committee
the discretion needed to discharge its duties, while being mindful of individual
differences such as tenure and performance, as well as the practical
implications of pay, on occasion, being the product of an arms-length
negotiation at the time an executive is hired. Elements of
compensation that are benchmarked, separately – and in total – include base
salary, annual incentive, long-term incentive, and retirement
benefits.
Our
compensation programs are thus established to provide Century’s officers total
compensation that, in an average year, is positioned around the mid-range of the
market. Our incentive plans are designed to allow the Committee the
discretion to reward outstanding performance significantly above the mid-range
in the case of outstanding performance; conversely, when performance is below
expectations, our plans are designed to deliver compensation that is below the
mid-range.
With
respect to the named executive officers, we primarily focus on the practices of
a group of comparably-sized, asset-intensive, metals and other industrial
companies. We chose these parameters, and ultimately the companies
noted below, to permit pay to be evaluated in a context that considers
businesses with similar exposure to economic forces and business
cycles.
The peer
group described below was established in 2005 for the purpose of evaluating
executive pay. With the help of our consultants, we indexed these
2005 pay findings based on pay trends to provide a context for setting pay
levels for 2007.
|
Alcan
Inc.
|
Metals
USA
|
|
Alcoa
Inc
|
Novelis,
Inc.
|
|
Aleris
International
|
Nucor
Corp.
|
|
Arch
Chemicals Inc.
|
Oglebay
Norton Company
|
|
Carpenter
Technology
|
Oregon
Steel Mills Inc.
|
|
Chaparral
Steel Company
|
Quanex
Corp.
|
|
Cleveland
Cliffs Inc.
|
Reliance
Steel & Aluminum Co.
|
|
Gibraltar
Industries Inc.
|
Steel
Dynamics Inc.
|
|
Great
Lakes Chemical Corp.
|
Wheeling-Pittsburgh
Steel
|
|
Metal
Management Inc.
|
In 2007
we commissioned a comprehensive study of executive compensation. With
the help of our consultants, we refined the peer group to include those
companies we currently believe serve as more appropriate comparables, based on
our industry and size. The resulting group includes four new
companies and excludes nine of the 2005 peers, including the larger peers (Alcoa
and the company formerly known as Alcan).
|
Arch
Chemicals Inc.
|
Metal
Management Inc.
|
|
Carpenter
Technology Corp.
|
Nucor
Corp.
|
|
Castle
(A.M.) & Co.
|
Quanex
Corp.
|
|
Chaparral
Steel Co.
|
Reliance
Steel & Aluminum Co.
|
|
Cleveland-Cliffs
Inc.
|
Schnitzer
Steel Industries Inc.
|
|
Gibralter
Industries Inc.
|
Steel
Dynamics Inc.
|
|
Kaiser
Aluminum Corp.
|
Titanium
Metals Corp.
|
In
addition to evaluating the total cash compensation (salary and annual bonus) and
total compensation (salary, annual bonus, long-term incentive and retirement
benefits) levels of the peer companies, we compare the pay of our executives,
including the named executive officers, to the summary results of a survey-based
analysis. This secondary approach is useful because it provides a
broader market assessment (i.e., includes 41 more companies). It
allows us to benchmark more than five executives, and it allows us to more
narrowly tailor our benchmarking based on roles and
responsibilities. For our additional evaluations, we decided to use
compensation for companies participating in Towers Perrin’s Executive
Compensation Data Bank, a proprietary survey, within the materials and
industrials sectors. Company size was accounted for by regression or
by limiting the size of the companies considered to under $4 billion in
revenue. We evaluate the peer data and the survey data independently
and as a composite (average of the two), but there is no algorithm that dictates
pay at a precise level within these various data points.
Overview
of Compensation Elements
The list
below summarizes the elements and characteristics of our executive compensation
programs. Detailed narratives of these compensation elements are
provided in a later section.
|
Ÿ
|
Salary:
Base salary is determined by our philosophy, the position (skills, duties,
responsibilities, etc.), market pay levels and trends, individual
performance, and prior salary. On occasion, prior salary is the
subject of an arms-length negotiation at the time an executive is
hired.
|
|
Ÿ
|
Annual
incentive: Variable compensation normally payable in cash following the
fiscal year the pay is earned; historically, this component was based on a
subjective evaluation of Company and individual
performance. Beginning in 2008, achievement of pre-set key
operating goals will be an important component of this element of
pay. The subjective evaluation will remain, but now specific
objective factors will also be weighed in determining this pay
element.
|
|
Ÿ
|
Long-term
incentives: Variable compensation based on sustained performance success;
historically based on the Committee’s assessment of operating performance
and strategic achievements and settled in shares of
stock. Beginning in 2008, the long-term incentive will include
a cash and a stock component. For the 2008-2010 period,
strategic, financial, and market-based measures will determine the cash
portion of the long-term incentive. In addition, time-based
performance share units will be awarded to balance the long-term incentive
portfolio, contribute to our retention objectives and recognize the
important aspect of aligning compensation and shareholder
returns.
|
|
Ÿ
|
Retirement:
Tax qualified defined benefit and defined contribution plans apply to
salaried employees of our U.S. companies who meet eligibility
requirements. In addition, our nonqualified defined benefit plan provides
a select group of participants with benefits above the level permitted
under a qualified plan.
|
Our
Process for Executive Compensation
We review
market pay levels, with the help of consultants, on a regular basis. We evaluate
Company performance against our plans and budgets, pay levels at comparable
companies and in the context of the broader economy. The Committee retains final
discretion in determining annual incentive awards and the vesting of performance
share units. Historically, the Committee has determined annual incentive awards
in December, with payments following in January, and the vesting of performance
share awards in the first quarter. In the future, the determination
of both annual incentive awards and awards earned based on long-term performance
will be determined in the first quarter following the end of the performance
period.
Role
of the Chief Executive Officer
As part
of its review and determination of Century’s compensation objectives,
philosophy, programs and decisions, the Committee works with, and receives
recommendations and advice from, our Chief Executive Officer. The
Committee’s charter formalizes the working relationship with our Chief Executive
Officer and includes the following actions to be taken by the Chief Executive
Officer:
|
Ÿ
|
working
with the Committee in its decisions regarding the approval of all general
compensation plans and policies, including pension, savings, incentive and
equity-based plans;
|
|
Ÿ
|
consulting
on the corporate and individual goals and objectives relevant to the
compensation of the Chief Executive Officer;
|
|
Ÿ
|
reviewing
and determining the respective corporate and individual goals and
objectives for the other named executive officers relevant to their
compensation;
|
|
Ÿ
|
providing
the Committee an evaluation of the performance of the other named
executive officers in light of their respective corporate and individual
goals and objectives; and
|
|
Ÿ
|
recommending
to the Committee the compensation levels of the other named executive
officers.
|
The
Committee considers the recommendations of our Chief Executive Officer, together
with the review by our compensation consultant, and the Committee makes its
independent determinations regarding executive compensation.
Our Chief
Executive Officer attends all Committee meetings, other than those portions that
are held in executive session; however, he is not present during deliberations
or voting in matters involving his compensation. As appropriate, the
Committee follows an executive session by reconvening with our Chief Executive
Officer present.
Role
of Compensation Committee Consultants
The
Company has used the services of three consultants in recent years as described
below.
In 2005,
the Committee engaged Pearl Meyer & Partners to evaluate our executive
compensation philosophy, objectives, programs, decisions, and market pay
levels.
In 2006
and the first half of 2007, the Committee supplemented the findings
and services of Pearl Meyer & Partners through the services of Integis,
Inc., a firm that specializes in executive recruitment and compensation
matters. Mr. Schreiber, a former director of Century, is the managing
director and owner of Integis. We also retained Integis to assist in
connection with the recruitment of Wayne Hale, our Chief Operating Officer in
2007.
In 2007,
the Company engaged Towers Perrin to evaluate the Company’s executive
compensation programs: philosophy, objectives, plan designs, and market pay
levels. The analysis by Towers Perrin culminated in recommendations addressing
our pay philosophy, the optimal peer group for benchmarking, and designs for our
annual and long-term incentives.
In
assessing the Towers Perrin recommendations, the Committee engaged Pearl Meyer
& Partners in 2007 to provide a second opinion and to review Towers Perrin’s
analysis and recommendations, as well as those of management. Pearl
Meyer & Partners informed the Committee that based on the thorough process
utilized and the compensation governance practices employed, Pearl Meyer &
Partners was of the opinion as executive compensation consultants, that our
compensation programs and incentive plans and opportunities, with the changes
recommended by Towers Perrin, continue to reflect our stated compensation
philosophy and strategy, and are reasonable relative to market levels. With the
assistance of Towers Perrin, the Committee worked with management in reviewing
and ultimately approving changes in Century’s compensation
programs. In addition, the Committee determined that Towers Perrin
will continue to be Century’s consultant in 2008.
Compensation
Program Details
Base
Salary
The
Committee typically reviews the salaries of our named executive officers each
December. In addition, the Committee may review the salaries of our
named executive officers in connection with a promotion or other change in
responsibility. The Committee generally targets annual base salaries
that, together with annual incentive cash compensation, long-term incentive
compensation and retirement, provide the named executive officers with total
compensation that is, on average, at or around the mid-range of the
market. Actual salary levels for each individual vary based upon an
assessment of individual performance, experience, level of responsibility,
potential contribution to our future growth and profitability, and our financial
performance. The Committee has not found it practicable to assign
relative weights to specific factors in determining base salary adjustments, and
the specific factors used may vary among individual executives.
At the
Committee’s meeting in December 2006, the Committee reviewed information about
salary increases at other companies as provided by our compensation consultant,
Integis, the historical increases in the salaries of the named officers in
recent years, and the recommendation of our Chief Executive Officer (for our
officers other than our CEO). Based on the information provided to
the Committee, including that base salaries of officers in comparable positions
at the peer companies had increased, the Committee authorized base salary
increases, effective January 1, 2007, of 8.7% in the case of Mr. Kruger, 8.0%
for Mr. Bless, 5.7% for Mr. Nielsen, and 10% for Mr. Casello. The base salary
for Mr. Casello, our then vice president – bauxite and alumina, included
recognition by our CEO and the Committee of his leading work on Century’s
business development activities. In March 2007, Mr. Casello was
promoted to Senior Vice President- Business Development. In June
2007, based on the expanded responsibilities accompanying his promotion in March
and performance in the first half of 2007, our CEO recommended and the Committee
approved a 5.4% increase in his base salary to a new annual salary of $290,000.
Annual
Cash Incentive Awards
Under our
annual incentive plan, executives (including the named executive officers) are
eligible to receive an annual cash incentive award. We recently made changes to
the program, effective for the 2008 plan year. Outlined below are the material
terms of the plan in 2007 followed by a discussion of the changes for
2008.
The plan
used in 2007 established potential payout ranges of 35% to 100% of each named
executive officer’s salary. There were no pre-set performance
criteria. Actual cash incentive awards were determined by the
Committee, in its discretion, taking into account the recommendation of the
Chief Executive Officer (for Century’s officers other than the CEO), our
performance (against budgets, financial objectives, and other goals), a
subjective evaluation by the Committee of individual performance, and a
comparison of total cash compensation for comparable executive positions at the
peer companies, and in the case of Mr. Hale, our contractual obligation, agreed
at the time of his employment, to pay him a bonus of at least $225,000 for
2007.
In past
Decembers, the Committee has solicited the CEO’s annual cash incentive award
recommendations for Century’s officers other than the CEO. Following
such a discussion in December 2007, the final determination of such awards was
deferred until February 2008, in order to permit greater clarity
into:
|
Ÿ
|
Century’s
financial results for 2007;
|
|
Ÿ
|
macroeconomic
conditions; and
|
|
Ÿ
|
continuing
market pay trends.
|
Moreover,
the increased role of operating and financial results under the annual incentive
program applicable in 2008, as discussed below, reinforced the decision to move
the award determination date to the first quarter following the plan
year.
In
February 2008, the Committee and the CEO discussed his annual cash incentive
award and his recommendations for Century’s other officers. The
recommendations considered the level of prior cash incentive awards, expected
market compensation for 2007, company performance (rising profit margins, strong
cash generation and growth results, reduced risk by having successfully
completed an equity offering, and the successful completion of the expansion at
Century’s Grundartangi facility), and individual performance. After
its discussion with the CEO, in executive session, the Committee discussed
Century’s performance, the potential cash incentive award for the CEO, and the
CEO’s recommendations for the other officers.
The
Committee approved cash incentive awards ranging from 78% - 91% of base salary
for the named executive officers other than the CEO. Excluding Mr. Hale’s bonus
of 78% of base salary, the approved cash incentive awards range from 85% to 91%
of base salary for the named executive officers other than the
CEO. Mr. Hale joined Century March 1, 2007, and his award represents
approximately 93% of his earned base salary. The 2007 awards are
larger (by about 12% of salary) than for 2006, which is consistent with our
philosophy on executive compensation and with the Committee’s view of Century’s
performance and competitive market pay levels. The CEO’s cash
incentive award represented 137% of salary. This level, which
surpasses the original range, was arrived at based on the CEO’s leadership,
Century’s achievements, and the Committee’s understanding of evolving
competitive CEO pay practices. The amounts earned are shown in the
bonus column of the Summary Compensation Table.
Beginning
in 2008, the annual incentive plan was redesigned to (a) emphasize operating
results, (b) add a level of objective measurability into the evaluation and
determination of awards, and (c) allow the long-term incentive plan to emphasize
strategic goals rather than short-term operational performance. The
new design retains a significant element of discretionary evaluation by the
Committee but incorporates several operating measures, as described
below.
|
Ÿ
|
Operating
results will determine 30% to 60% (varying by an officer’s position and
duties) of the award at target:
|
|
|
°
|
Operating
income: this operating measure has long been important, having
been a factor in our long-term incentive plan, but further review suggests
that we can improve our focus on this measure by shortening the
performance period;
|
|
|
°
|
Conversion
cost: measures our cost to convert alumina into aluminum; this
useful measure of operating efficiency has been used in our long-term
incentive plan, but we believe that we can improve our focus on this
measure by shortening the performance period;
|
|
|
°
|
Safety: we
have shifted the emphasis on this important measure from the long-term
plan to the annual plan.
|
|
|
Ÿ
|
Subjective
evaluation of two elements will determine the remainder of the
incentive:
|
|
|
°
|
Strategic: recognize
achievement of strategic milestones;
|
|
|
°
|
Discretionary/Individual: recognize
individual contributions to operating, financial, and strategic
success.
|
|
The
Committee assigns different weights to these elements for each named executive
officer. For instance, the evaluation of the Chief Executive Officer
will be weighted more heavily toward strategic achievement while the evaluation
of the Chief Operating Officer will be weighted toward operational
results. In this way, the Committee may focus its evaluation in areas
where each executive has greater responsibility and opportunity to influence
results.
Long-Term
Incentive Compensation
Overview
The
Committee has oversight responsibility for administering and awarding grants of
equity awards under the 1996 Plan. The following award types have
been used to address different purposes:
|
Ÿ
|
Performance
share awards have been the primary form of long-term incentive for named
executive officers.
|
|
Ÿ
|
Special
awards, such as stock options and time vested performance shares, have
been awarded by the Committee on a selective basis generally in the case
of hiring and promotion. Except as part of the total hiring package
provided to Mr. Hale, no equity grants outside of the annual performance
share program were made to the named executive officers in
2007.
|
Performance
Shares
Historically,
operating and strategic goals were established for overlapping sequential
three-year periods. The Committee, based on its review of performance
against those goals then determines the degree to which the shares awarded for
the performance period vest (which can range from 0% to
150%). Because our financial performance is highly dependant on the
price of aluminum, the Committee retains discretion to adjust the
operational/financial goals performance criteria to reflect changes in the
London Metals Exchange and Midwest transactions prices of aluminum and other
conditions affecting performance during a performance program period, and
regularly does so.
At the
end of a three-year performance period, the Chief Executive Officer reports on
Century’s performance against goals during that period and makes a
recommendation to the Committee regarding the percentage of the prior three-year
plan period award that should vest. The Committee reviews
management’s recommendation and performs an independent analysis. The
Committee then determines the appropriate vesting percentage for the three-year
plan period based on its assessment of Century’s achievement of the stated
strategic, operational and financial targets. Although the
Committee’s compensation consultants are not involved in either setting initial
performance goals or final determination of vesting percentages, performance
share awards are considered by our consultants as part of the consultants’
review of total compensation and overall compensation program recommendations,
as noted above.
On March 19, 2008, the Committee
evaluated Century’s performance relative to the goals set for the 2005-2007
period, as noted below:
|
Ÿ
|
Strategic
goals, which accounted for 40% of the award
opportunity:
|
|
|
°
|
Growth;
|
|
|
°
|
Access
to raw materials;
|
|
|
°
|
Expansion
at the Grundartangi facility;
|
|
|
°
|
Equity
offering;
|
|
|
°
|
Deployment
of derivatives to stabilize margins and cash;
|
|
|
°
|
Management
of electricity costs;
|
|
|
Ÿ
|
Operating/financial
goals, which accounted for 60% of the award
opportunity:
|
|
|
°
|
Safety;
|
|
|
°
|
Cash
flow;
|
|
|
°
|
Pre-Tax
income;
|
|
|
°
|
Conversion
costs.
|
|
The
guidelines by which the Committee administers the plan provide that from 0% to
150% of the share units conditionally awarded may ultimately vest based on the
Committee’s assessment of Century’s performance. Based on its review
of performance and of competitive compensation, and consistent with its ongoing
use of discretion under these guidelines, the Committee determined that the
Company had performed well in the three-year 2005-2007 period. The
Committee determined that the Company had performed at 105% of its targeted
award levels. The Committee also determined that the CEO was entitled to an
additional award of stock equal in value to $250,000, based on his significant
contribution to Century’s strategic successes and comparable market pay levels
for long-term awards at the peer companies. This resulted in the
named executive officers, other than the CEO, receiving 105% of their targeted
award level, and the CEO effectively receiving 131% of his targeted
award.
For the
2007-2009 performance program, strategic goals were collectively assigned a 50%
weight and focused on the following:
|
Ÿ
|
Add
low cost production capacity, including in Iceland;
|
|
Ÿ
|
Improve
access to bauxite/alumina and carbon materials;
|
|
Ÿ
|
Manage
electrical power, labor and alumina costs;
|
|
Ÿ
|
Enhance
capital structure to support
growth.
|
For the
2007-2009 performance program, operational/financial goals were assigned a 50%
weight and addressed the following measures:
|
Ÿ
|
Safety
(5% weight);
|
|
Ÿ
|
Free
cash flow less maintenance capital expenditures (15%
weight);
|
|
Ÿ
|
Operating
income (15% weight);
|
|
Ÿ
|
Conversion
cost (15% weight).
|
We
changed the long-term incentive program, effective in January
2008. As described below, rather than relying on a single type of
award as the primary incentive, we will rely on two types of awards beginning in
2008. Half of each officer’s annual long-term incentive opportunity will be
allocated to performance units and the remainder to time-vested performance
share units. In addition, the Committee may still make special awards
as described above.
|
Ÿ
|
Performance
units are cash-settled awards based on the achievement of strategic
objectives, free cash flow goals, and Century’s total shareholder return
in relation to its peer group over a three-year period. Moving
three operating measures from the old performance share plan into the new
annual incentive plan allows the Committee to emphasize current operating
focus on those operating measures and permits and allows the revised
long-term program to focus on longer-term strategic objectives. Moreover,
the cash settlement provision is expected to help executives retain the
shares earned under the program described below.
|
|
Ÿ
|
Time-vested
performance share units are stock-settled awards that vest, in their
entirety, after three years. This program is intended to help
retain our executives and promote stock
ownership.
|
The sizes
of previous equity-based grants and current equity holdings do not affect future
grants and are not considered by the Committee when making long-term incentive
award decisions. The Committee does, however, consider the
combination of the major compensation and benefit offerings; for example, the
long-term incentive award for our Chief Executive Officer is determined, in
part, after accounting for the competitiveness of his Enhanced SERP benefit
(which is described below).
Stock
Options
Option
grants are made on a case-by-case basis to executive officers in connection with
hiring awards and to recognize promotions. It has been the
Committee’s practice to approve all option grants at Committee
meetings. For initial option grants to our executives made in
connection with their employment by Century, the Committee approves the options
at the time it approves the executive’s overall compensation arrangement and the
terms of his or her employment agreement, if any. Aside from stock
options awarded to Mr. Hale in connection with his hiring package, no option
awards were granted to any other named executive officer in 2007. All
awards of stock options on shares of Century common stock granted in 2007 were
granted under the 1996 Plan with an exercise price equal to the average of the
high and low sales price for shares of our common stock on the date of
grant.
Time-Vested
(Service-Based) Performance Shares (Units)
Service-based
performance shares serve in a similar capacity as restricted stock and are
granted in circumstances such as new hires and promotions. Aside from
time-vested performance shares awarded to Mr. Hale in connection with his hiring
package, no other awards of service-based performance shares were granted to
named executive officers in 2007. Going forward we expect that
time-vested performance share units will be an integral part of our long-term
incentive program and will address our retention and stock ownership
objectives.
Retirement
Plans
The
Century Aluminum 401(k) Plan is a tax-qualified retirement savings plan pursuant
to which our U.S. based salaried employees, including our named executive
officers, are able to contribute a percentage, up to the limits prescribed by
the Internal Revenue Service, of their annual compensation on a pre-tax
basis. Effective January 1, 2007, we match 100% of the first 3% of
pay that is contributed to the savings plan and 50% of the next 2% of pay
contributed, and all matching contributions are fully vested on
contribution.
We also
maintain a non-contributory defined benefit pension plan for our U.S. based
salaried employees who meet certain eligibility requirements, which we refer to
as our Qualified Plan. We have also adopted a Supplemental Retirement
Income Benefit Plan, or “SERP.” The SERP provides selected senior
executive officers with an additional retirement benefit equal to the amount
that would normally be paid under our Qualified Plan if there were no
limitations under Sections 415 and 401(a)(17) of the Internal Revenue Code of
1986, as amended (the “Code”). Final average monthly compensation for
purposes of calculating the supplemental benefit will be based on the greater of
(a) projected final annual compensation, assuming specified annual increases
until retirement age, or (b) the average of the highest three years’ annual
compensation over the last 10 years of employment. The SERP is an
unfunded Century obligation. Messrs. Kruger, Hale, Bless, and Nielsen
were eligible to participate in these benefits in 2007. Effective January 1,
2008, Messrs. Schneider and Casello were eligible to participate in the SERP
benefits.
On
selective occasions we have also provided enhanced retirement benefits, in the
form of an “Enhanced SERP”, which is designed to enhance the total retirement
income level, when, due to the executive’s age and potential years of service at
normal retirement age, benefits under the Qualified Plan and the SERP are
projected to be less than a specified percentage of the executive’s estimated
final average annual compensation. In developing the hiring package
that induced Mr. Kruger to join Century, we agreed to include him in the
Enhanced SERP. He is the only named executive officer currently
participating in the Enhanced SERP. If Mr. Kruger remains employed by
Century for a period of 10 years he will be fully vested in his Enhanced SERP
benefit. When fully vested, Mr. Kruger’s Enhanced SERP benefit will
be approximately 50% of his final average annual compensation.
Effective
August 2007 we amended Mr. Kruger’s employment agreement to clarify the vesting
provisions under the Enhanced SERP in his employment and severance protection
agreements. The terms of the agreements are discussed in more detail
below. We amended the agreements to reconcile differing language
within the Enhanced SERP and Mr. Kruger’s employment agreement and severance
protection agreement and to differentiate the vesting status of the SERP based
on the type of termination; for example, a voluntary termination in the first
five years results in the forfeiture of the Enhanced SERP benefit, whereas
involuntary termination due to disability would now result in pro rata vesting
through the date of the disability.
We have
designed these retirement benefits to be competitive with industry standards to
attract and retain talented executive and management level
personnel. Benefits triggered by retirement are valued and described
below under the caption “Executive Compensation—Pension Benefits Table” and
“Executive Compensation—Potential Payments upon Termination or Change of
Control.”
Policies
& Other Technical Considerations
Stock
ownership guidelines
We
adopted stock ownership guidelines for our executives and nonemployee directors
effective March 26, 2008. We adopted them to further underscore our
belief that management’s interests should be aligned with those of the
stockholders. Moreover, the long-term incentive design changes, as
described earlier, added emphasis to the importance of retaining stock
awards.
The
guidelines for Century’s officers and directors are summarized in the table
below. The guidelines are based on a fixed number of shares, which was finalized
after giving consideration to the value of the fixed share guidelines as a
percent of pay (salary for executives and cash retainer for nonemployee
directors). The guidelines of peers and, on a broader basis, industry practices
were considered in developing this policy.
|
Category
|
Share
Guideline
|
|
Chief
Executive Officer
|
50,000
|
|
Executive
Vice Presidents
|
16,000
|
|
Senior
Vice Presidents
|
6,000
|
|
Vice
Presidents
|
2,000
|
|
Nonemployee
directors
|
3,000
|
Officers
and nonemployee directors have five years from the later of the date of hire or
the effective date of the guidelines to meet these ownership
guidelines. Officers who subsequently get promoted to a higher
category of participant level will have five years from the date of promotion to
achieve their increased share guideline.
Clawback
Effective
March 26, 2008, we have adopted an Incentive Compensation Recoupment
Policy. Under this policy, our board of directors will, to the extent
permitted by applicable law, in all appropriate cases, require reimbursement of
any bonus or incentive compensation paid to an employee after January 1, 2008,
cause the cancellation of restricted or deferred stock awards and outstanding
stock options, and seek reimbursement of any gains realized on the exercise of
stock options attributable to such awards, if and to the extent
that: (a) the amount of incentive compensation was calculated based
upon the achievement of certain financial results that were subsequently reduced
due to a restatement, (b) our board of directors or an appropriate committee
determines that the employee engaged in any fraud or misconduct which caused or
contributed to the need for the restatement, and (c) the amount of the bonus or
incentive compensation that would have been awarded to the employee had the
financial results been properly reported would have been lower than the amount
actually awarded.
Timing
of Equity Awards
Generally,
the Committee makes incentive pay decisions at regularly scheduled Committee and
board meetings. The Committee may also make compensation determinations at other
times during the year for newly-hired executives or in connection with the
promotion of existing employees. The Committee does not time any form
of compensation award, including equity-based awards, to coincide with the
release of material non-public information.
Income
Tax Consequences
Section
162(m) of the Code generally disallows a tax deduction by Century for annual
compensation in excess of $1 million paid to our Chief Executive Officer and up
to three additional executives not including our Chief Financial Officer whose
total compensation is required to be reported in our proxy statement; however,
compensation above $1 million is deductible if such compensation is “performance
based” and meets other criteria as specified under Section 162(m) of the
Code.
The
Committee agrees with the premise of pay for performance, and it has considered
the impact of Section 162(m) on the design of our compensation programs.
But the nature of our business, not the least of which is the impact of metals
prices on our results, limits the ability to pre-determine meaningful goals
without subsequent discretionary adjustments. The Committee believes that such
discretion is necessary and would not be available as a compensation management
tool if incentive payments were to be “performance based” as defined and
required under Section 162(m). Accordingly, it is not the
Committee’s goal for all compensation to be deductible by us under
Section 162(m).
The
Committee will continue to consider and weigh the potential loss of expense
deductions against its need for discretion in designing programs for the named
executive officers. The Committee does not expect the loss of any
such deductions to have a significant impact on Century.
Employment
Agreements
Historically
it has been our practice to enter into employment agreements with officers at
the executive vice president level and above. The terms of these
agreements, including base salary, initial equity grants, minimum guaranteed
bonuses, participation in Century benefit plans and other benefits, are approved
by the Compensation Committee. The amounts and types of such
compensation are negotiated terms with each officer. When reviewing
and negotiating these terms, the Committee is provided with market data by its
compensation consultants and considers practices of peer companies and, if
applicable, compensation earned and/or forfeited by the officer at a previous
employer. In 2007, the Committee approved an employment agreement
with Mr. Hale in connection with the commencement of his employment with
Century. A description of the agreements in place with named
executive officers of Century is set forth below under the caption “Executive
Compensation—Narrative to the Summary Compensation Table and Grants of
Plan-Based Awards Table—Employment Agreements” and “Executive
Compensation—Post-Employment Compensation.”
Effective
August 2007, we amended the employment agreements with Messrs. Kruger, Hale,
Bless and Nielsen. The agreements were amended to reflect the Committee’s
long-held view that these employment agreements should not lapse without notice
from either Century or the executive, thus better enabling both Century and the
executive to anticipate and prepare for changes in the senior management of
Century. In addition, the agreements were amended to provide clarity
as to what obligations Century owes to the executive under certain termination
arrangements. Accordingly, the revised employment agreements provide
that if the executive’s employment with Century is terminated by Century without
“cause” or is terminated by the executive for “good reason”, the executive will
continue to receive his salary and bonus, and the vesting of his stock options
and performance shares will continue, for the remaining term of his
contract. In addition, the agreements of Messrs. Kruger, Bless and
Nielsen were amended to provide for an initial term ending December 31,
2009. Commencing on January 1, 2008 and on each January thereafter,
unless Century or the executive provides a termination notice, the terms of
these agreements will be automatically extended for one year. Mr.
Hale’s agreement already included this provision.
Effective
August 2007, we also amended Mr. Kruger’s employment agreement to clarify the
vesting provisions relating to his Enhanced SERP. Benefits were
originally scheduled to vest 20% each year beginning on December 13,
2010. The amended schedule calls for benefits to vest 1/120th per
calendar month for 120 months beginning December 13, 2005; provided, however,
that any vested enhanced supplemental retirement benefit will be forfeited if
Mr. Kruger’s employment with the Company terminates prior to December 13, 2010,
except by reason of his death or disability, termination by the Company “without
cause” or termination by Mr. Kruger for “good reason”, or upon a change in
control. If Mr. Kruger dies or becomes disabled before December 13, 2010, Mr.
Kruger or his estate will retain all enhanced supplemental retirement benefits
that have vested through the date of his death or disability. If Mr.
Kruger dies or becomes disabled after December 13, 2010, or if there is a change
in control of the Company, the enhanced supplemental retirement benefits will
fully vest. Finally, the amendment provides that if Mr. Kruger’s employment with
the Company is terminated by the Company without “cause” or is terminated by Mr.
Kruger for “good reason”, Mr. Kruger’s supplemental retirement benefits will
continue to vest over the remaining portion of the contract term, as described
above. During that period, Mr. Kruger will also continue to receive his salary
and an annual bonus equal to the highest annual bonus payment he received in the
previous three years, and his stock options and performance shares will continue
to vest.
Post-Termination
Compensation and Benefits
Other
Post-Termination Benefits
Selected
senior executive officers may also receive benefits triggered by death,
disability or termination without cause. Century has designed these
benefits to be competitive with industry standards to attract and retain
talented executive and management level personnel. Benefits triggered
by death, disability and termination without cause are valued and described
below under the caption “Executive Compensation—Potential Payments upon
Termination or Change of Control.”
It is
Century’s policy that accelerated benefits for executive officers should not be
triggered in circumstances where the executive is terminated for cause or
resigns voluntarily.
Change
in Control
Our
policy is to provide change in control protection to our named executive
officers based on competitive practice in the industry. Change in
control provisions are contained in various named executive officer employment
agreements, long-term compensation agreements, retirement plans and severance
protection agreements. We believe change in control protection is
particularly appropriate for executives who are unlikely to be retained in
comparable positions by the acquiring entity upon a change in
control. In addition, change in control protections are designed to
maximize stockholder value by creating incentives for named executive officers
to explore strategic transactions and work to bring such transactions to
fruition if appropriate. Our 1996 Plan and Severance Protection
Agreements and employment agreements are each intended to provide for certain
employee protections in the event of a change in control, as
defined. These arrangements are intended to attract and retain
qualified executives that could have other job alternatives that may appear to
them to be less risky absent these arrangements, particularly given the
significant level of acquisition activity in the primary aluminum and minerals
sectors.
Under our
1996 Plan, in the event of a change in control, any options and performance
shares outstanding upon the date of such change in control will have their
vesting accelerated as of the date of such change in control which is referred
to as a “single trigger” provision. These provisions are also
generally included in our employment agreements with certain named executive
officers. We believe these change of control arrangements, the value
of which are influenced significantly by the value obtained in a change of
control transaction, effectively create incentives for our executive officers to
build stockholder value and to obtain the highest value possible should we be
acquired in the future, despite the risk of losing employment and potentially
not having the opportunity to participate in future equity awards which comprise
a significant component of each executive’s compensation. As the
value of these awards will be significantly influenced by the change in control
and these awards will likely lose much of their purpose with respect to the
combined entity, we believe it is more appropriate for these awards to
accelerate immediately upon a change in control.
Our
Severance Protection Agreements are “double trigger,” meaning that payment of
severance benefits is not awarded upon a change in control unless the
executive’s employment is terminated involuntarily (other than for cause) within
36 months following the transaction. We believe this structure
strikes a balance between the incentives and the executive hiring and retention
effects described above, without providing these benefits to executives who
continue to enjoy employment with an acquiring company in the event of a change
of control transaction. We also believe this structure is more
attractive to potential acquiring companies, who may place significant value on
retaining members of our executive management and who may perceive this goal to
be undermined if executives receive significant acceleration payments in
connection with such a transaction and are no longer required to continue
employment to earn these payments.
Benefits
triggered by a change in control are valued and described below under the
caption “Executive Compensation—Potential Payments upon Termination or Change of
Control.”
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis set forth in this proxy statement with Century management and,
based on such review and discussions, the Compensation Committee recommended to
Century’s board of directors that the Compensation Discussion and Analysis be
included in Century’s 2007 Annual Report on Form 10-K and this proxy
statement.
Respectfully
Submitted,
Peter C.
Jones John
P. O’Brien John
C.
Fontaine Jack
E. Thompson
SUMMARY
COMPENSATION TABLE
The
following table sets forth the compensation earned by our Chief Executive
Officer, our Chief Financial Officer and each of our three other most highly
compensated executive officers for fiscal 2007 for services rendered to us in
all capacities in 2007.
2007
Summary Compensation Table
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards(2)
|
Option
Awards (2)
|
Non-Equity
Incentive
Plan
Comp
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
|
All
Other Comp (12)
|
Total
|
|||||
|
Logan
W. Kruger
President
and CEO
|
2007
|
$815,000
|
$1,115,000
|
$1,105,627
|
(3) |
$493,402
|
(7)
|
-
|
$2,514,868
|
(11) |
$178,630
|
(13) |
$6,222,527
|
|
|
2006
|
$750,000
|
$562,500
|
$783,332
|
$428,479
|
-
|
$3,755,628
|
$65,035
|
$6,344,974
|
||||||
|
Wayne
R. Hale
Executive
Vice President and Chief Operating Officer
|
2007
|
(1) |
$375,000
|
$650,000
|
$502,979
|
(4) |
$886,912
|
(8)
|
-
|
$339,823
|
$107,056
|
(14) |
$2,861,770
|
|
|
Michael
A. Bless
Executive
Vice President & CFO
|
2007
|
$405,000
|
$345,000
|
$421,283
|
(5) |
$186,163
|
(9)
|
-
|
$13,427
|
$915
|
$1,371,788
|
|||
|
2006
|
(1) |
$352,397
|
$262,500
|
$278,012
|
$378,100
|
-
|
$68,615
|
$425,698
|
$1,765,322
|
|||||
|
Robert
R. Nielsen
Executive
Vice President, General
Counsel
& Secretary
|
2007
|
$370,000
|
$315,000
|
$433,228
|
(6) |
$250,531
|
(10) |
-
|
$23,216
|
$20,055
|
(15) |
$1,412,030
|
||
|
2006
|
(1) |
$233,333
|
$164,500
|
$251,188
|
$449,549
|
-
|
$177,084
|
$720
|
$1,276,374
|
|||||
|
Giulio
Casello
Senior
Vice President of Business Development
|
2007
|
$275,000
|
$265,000
|
$139,435
|
-
|
-
|
$9,487
|
$43,109
|
(15) |
$732,031
|
||||
|
(1)
|
The
amounts reflected are prorated for the portion of the year the executive
was employed by us. Messrs. Hale, Bless and Nielsen commenced
their employment on March 1, 2007, January 23, 2006 and May 1, 2006,
respectively.
|
|
(2)
|
The
values reflected represent the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December 31, 2007,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan and
thus includes amounts from awards granted in and prior to
2007. Assumptions used in the calculation of these amounts are
included in note 10 to our audited financial statements for the fiscal
year ended December 31, 2007 included in our Annual Report on Form 10-K
filed with the Securities and Exchange Commission on February 29,
2008.
|
|
(3)
|
The
value reflected also includes $603,750 recognized for financial statement
reporting purposes for the fiscal year ended December 31, 2007, in
accordance with FAS 123(R) for awards pursuant to the 1996 Plan for 50,000
service-based performance shares awarded to Mr. Kruger on December 14,
2005, based on the Black-Scholes fair value calculation of the award on
the grant date. Mr. Kruger's service-based performance shares vested
one-half on January 1, 2007 and one-half on January 1,
2008. Although we did not pay dividends on our common stock
during the vesting period, under the terms of our 1996 Plan, dividend
equivalents would have accrued on the service-based performance shares if
we had paid any dividends during the vesting
period.
|
|
(4)
|
The
value reflected also includes $376,166 recognized for financial statement
reporting purposes for the fiscal year ended December 31, 2007, in
accordance with FAS 123(R) for awards pursuant to the 1996 Plan for 25,000
service-based performance shares awarded to Mr. Hale on March 1, 2007,
based on the Black-Scholes fair value calculation of the award on the
grant date. Mr. Hale’s service-based performance shares vest one-third on
each of March 1, 2008, March 1, 2009 and March 1, 2010. To the extent we
pay dividends on our common stock, dividend equivalents will accrue on the
service-based performance shares from the date of grant and will become
payable upon vesting.
|
|
(5)
|
The
value reflected also includes $198,200 recognized for financial statement
reporting purposes for the fiscal year ended December 31, 2007, in
accordance with FAS 123(R) for awards pursuant to the 1996 Plan for 20,000
service-based performance shares awarded to Mr. Bless on January 23, 2006,
based on the Black-Scholes fair value calculation of the award on the
grant date. Mr. Bless’s service-based performance shares vested one-third
each on January 22, 2007 and January 22, 2008, and the balance will vest
on January 22, 2009. To the extent we pay dividends on our common stock,
dividend equivalents will accrue on the service-based performance shares
from the date of grant and will become payable upon vesting.
|
|
(6)
|
The
value reflected also includes $238,050 recognized for financial statement
reporting purposes for the fiscal year ended December 31, 2007, in
accordance with FAS 123(R) for awards pursuant to the 1996 Plan for 15,000
service-based performance shares awarded to Mr. Nielsen on May 1, 2006,
based on the Black-Scholes fair value calculation of the award on the
grant date. Mr. Nielsen’s service-based performance shares vested
one-third on May 1, 2007, and the balance will vest equally on each of May
1, 2008 and May 1, 2009. To the extent we pay dividends on our common
stock, dividend equivalents will accrue on the service-based performance
shares from the date of grant and will become payable upon
vesting.
|
|
(7)
|
The
value reflected represents the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December 31, 2007,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan for
100,000 options to purchase our common stock awarded to Mr. Kruger on
December 14, 2005, based on the Black-Scholes fair value calculation of
the award on the grant date. Mr. Kruger's options vested one-third each on
December 14, 2006 and December 14, 2007, and the balance will vest on
December 14, 2008.
|
|
(8)
|
The
value reflected represents the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December 31, 2007,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan for
50,000 options to purchase our common stock awarded to Mr. Hale on March
1, 2007, based on the Black-Scholes fair value calculation of the award on
the grant date. Mr. Hale’s options vested one-third each on March 1, 2007
and March 1, 2008, and the balance will vest on March 1,
2009.
|
|
(9)
|
The
value reflected represents the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December 31, 2007,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan for
30,000 options to purchase our common stock awarded to Mr. Bless on
January 23, 2006, based on the Black-Scholes fair value calculation of the
award on the grant date. Mr. Bless’s options vested one-third on each of
January 23, 2006, January 23, 2007 and January 23, 2008.
|
|
(10)
|
The
value reflected represents the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December 31, 2006,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan for
20,000 options to purchase our common stock awarded to Mr. Nielsen on May
1, 2006, based on the Black-Scholes fair value calculation of the award on
the grant date. Mr. Nielsen’s options vested one-third on May 1, 2006 and
the balance will vest equally on each of May 1, 2007 and April 30,
2008.
|
|
(11)
|
This
amount reflects the aggregate change in the actuarial present value of Mr.
Kruger's accumulated benefit under the Enhanced SERP. Mr. Kruger is
the only named executive officer currently participating in the Enhanced
SERP. If Mr. Kruger remains employed by Century for a period of 10
years he will be fully vested in the Enhanced SERP benefit. When
fully vested, Mr. Kruger's Enhanced SERP benefit will be approximately 50%
of his final average monthly compensation.
|
|
(12)
|
All
other compensation is comprised of (a) matching contributions under our
401(k) Plan for each of the named executive officers (except for Mr. Bless
who did not participate in the plan) and (ii) Company-paid life insurance
premiums in 2007.
|
|
(13)
|
For
Mr. Kruger, all other compensation also includes reimbursement payments of
$168,895 relating to temporary housing costs, other relocation expenses
and gross-ups for taxes thereon, incurred in connection with his
relocation, of which $62,365 is attributable to the tax
gross-up.
|
|
(14)
|
For
Mr. Hale, all other compensation also includes reimbursement payments of
$96,330 relating to temporary housing costs, other relocation expenses and
gross-ups for taxes thereon, incurred in connection with his
relocation.
|
|
(15)
|
For
Mr. Nielsen, all other compensation includes $10,140 relating to
Company-paid life insurance premiums in 2007.
|
|
(16)
|
For
Mr. Casello, all other compensation also includes relocation expenses and
$29,999 relating to payment by the Company of personal family travel
agreed to at the time of his employment, and gross-ups for taxes
thereon.
|
Grants
of Plan Based Awards
The
following table sets forth information regarding the estimated future payouts
under our 1996 Plan to our named executive officers.
2007
Grants of Plan Based Awards Table
| Name |
Estimated
Future Payouts Under Equity Incentive Plan Awards
|
|||||||||||||
|
All
Other Stock Awards:
# of Shares
of Stock
|
All
Other Option Awards:
# of Underlying
Options
|
Exercise
or Base
Price of
Option Awards
(6)
|
Grant
Date Stock
Closing
Price
|
Grant
Date Fair Value
of Stock and Option
Award(7)
|
||||||||||
|
Grant
Date
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
|||||||||||
|
Logan
W. Kruger
|
6/13/07
|
-
|
15,152 | (2) |
22,727
|
- | - |
-
|
-
|
$
|
795,614 | |||
|
Wayne R. Hale(1)
|
3/1/07
|
-
|
- |
-
|
25,000 | (5) | - |
-
|
-
|
$
|
1,125,750 | |||
|
3/1/07
|
-
|
- |
-
|
- | 50,000 | (5) |
$45.14
|
$45.03
|
$
|
1,330,500 | ||||
|
6/13/07
|
-
|
7,485 | (2) |
11,228
|
- | - |
-
|
-
|
$
|
393,054 | ||||
|
6/13/07
|
-
|
5,364 | (3) |
8,046
|
- | - |
-
|
-
|
$
|
281,664 | ||||
|
6/13/07
|
-
|
4,702 | (4) |
7,053
|
- | - |
-
|
-
|
$
|
246,885 | ||||
|
Michael
A. Bless
|
6/13/07
|
-
|
6,737 | (2) |
10,105
|
- | - |
-
|
-
|
$
|
353,749 | |||
|
Robert
R. Nielsen
|
6/13/07
|
-
|
6,155 | (2) |
9,232
|
- | - |
-
|
-
|
$
|
323,178 | |||
|
Giulio
Casello
|
6/13/07
|
-
|
4,256 | (2) |
6,385
|
- | - |
-
|
-
|
$
|
223,501 | |||
|
(1)
|
When
an employee first becomes a participant and therefore eligible for
performance share awards, they also become eligible to participate in
awards for prior performance program periods on a rolling basis, based on
the percentage of the relevant performance program period during which
they served. These awards for prior years are determined based
on the same price per share for Century common stock used for other award
participants for the relevant performance program period. Mr. Hale first
became a participant and eligible for performance share awards on June 13,
2007.
|
|
(2)
|
The
amounts shown represent the number of performance share units awarded to
the named executive officer for the 2007-2009 performance program period
which will be considered by our Compensation Committee in
2010.
|
|
(3)
|
The
amounts shown represent the number of performance share units awarded to
Mr. Hale for the 2006-2008 performance program period which will be
considered by our Compensation Committee in 2009.
|
|
(4)
|
The
amounts shown represent the number of performance share units awarded to
Mr. Hale for the 2005-2007 performance program period. On March
19, 2008, our Compensation Committee approved a 105% vesting of the
performance share units for the 2005-2007 performance program period,
resulting in the award of 4,937 shares of our common stock to Mr.
Hale.
|
|
(5)
|
Upon
commencement of his employment with Century, Mr. Hale received 25,000
service-based performance shares, and options to purchase 50,000 shares of
our common stock with a grant price equal to $45.14, which was the average
of the high and low sales price for our common stock on NASDAQ on the
grant date. To the extent we pay dividends on our common stock,
dividend equivalents will accrue on the service-based performance shares
from the date of grant and will become payable upon vesting.
|
|
(6)
|
Our
1996 Plan provides that options are granted at not less than the “fair
market value” of the shares subject to such option, which is defined in
the 1996 Plan as the average of the high and low sales price for shares of
our common stock on the grant date.
|
|
(7)
|
The
values relected represent the grant date fair value of the awards
determined in accordance with FAS
123(R).
|
Narrative
to the Summary Compensation Table and Grants of Plan-Based Awards
Table
Employment
Agreements
As
discussed above on page 26, we have employment agreements with certain of our
named executive officers. Our employment agreement with Logan W. Kruger, our
President and Chief Executive Officer, was made as of December 13, 2005 and
was amended on March 19, 2007 and August 30, 2007. This agreement
extends through December 31, 2009; however beginning on January 1,
2008, and on each January 1 thereafter, unless timely notice of termination
is delivered by a party pursuant to the terms of the employment agreement, the
period of employment is automatically extended for an additional one-year
period. Effective January 1, 2008, Mr. Kruger’s employment agreement
was so extended to December 31, 2010. Under the terms of his
employment agreement, Mr. Kruger will receive a minimum base salary of
$750,000 per year which is subject to increase from time to time at the
discretion of the Compensation Committee. Mr. Kruger is also
eligible to receive an annual performance-based cash bonus under our incentive
compensation plan, subject to the discretion of the Compensation
Committee. Under the terms of his agreement, Mr. Kruger is also
eligible to receive stock option grants and performance share awards under the
1996 Plan and to participate in the SERP.
On
March 1, 2007, we entered into an employment agreement with Wayne R. Hale,
our Executive Vice President and Chief Operating Officer, which was amended on
August 30, 2007. We entered into an employment agreement with Michael
A. Bless, our Executive Vice President and Chief Financial Officer, effective
January 23, 2006, as amended on August 30, 2007. On May 1,
2006, we entered into an employment agreement with Robert R. Nielsen, our
Executive Vice President, General Counsel and Secretary, which was amended on
August 30, 2007. Our employment agreements with Messrs. Hale, Bless
and Nielsen extend through December 31, 2009; however beginning on
January 1, 2008, and on each January 1 thereafter, unless timely
notice of termination is delivered by a party pursuant to the terms of the
employment agreement, the period of employment is automatically extended for an
additional one-year period. Effective January 1, 2008, each of these
agreements was so extended to December 31, 2010. These agreements
provide that the base salaries paid to Messrs. Hale, Bless and Nielsen shall not
be reduced below the executives’ prior year’s base salary, and such salaries
shall be subject to increase from time to time at the discretion of the
Compensation Committee. Messrs. Hale, Bless and Nielsen will each be
eligible to receive an annual performance-based cash bonus under our incentive
compensation plan, subject to the discretion of the Compensation
Committee. Mr. Hale’s agreement provided that his annual cash bonus
for 2007 would be no less than $225,000. Messrs. Hale, Bless and
Nielsen are also eligible for stock option grants and performance share awards
under the 1996 Plan and participation in the SERP.
Our
employment agreements with Messrs. Kruger, Hale, Bless and Nielsen each provide
that upon termination of employment for any reason other than voluntary
resignation without cause, death or “for cause”, the terminated executive will
be entitled to receive termination payments equal to 100% of his base salary and
bonus (based on the highest annual bonus payment within the prior three years)
for the remainder of the term of the agreement (with a minimum of one year’s
salary plus bonus). If the executive is terminated as a result of the
executive’s disability, the payments due to the executive will be reduced by any
payments he receives under our disability plans. Also, any
termination payments under the employment agreements may not be duplicated under
the severance compensation agreements described below under “Executive
Compensation—Potential Payments upon Termination or Change of
Control.”
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information regarding outstanding equity awards for
our named executive officers as of December 31, 2007.
2007
Outstanding Equity Awards at Fiscal Year-End Table
| Option Awards |
|
Stock
Awards
|
||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested (#)
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)(9)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units, or
Other Rights That Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned
Shares, Units or Other Rights That Have Not Vested
($)(9)
|
|||||
|
Logan
W. Kruger
|
36,667
|
33,333 |
(1)
|
-
|
$23.98
|
12/14/15
|
25,000 |
(5)
|
$ |
1,348,500
|
-
|
-
|
||
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
15,087 |
(10)
|
$813,793
|
|||||
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
15,152 |
(11)
|
$817,299
|
|||||
|
Wayne
R. Hale
|
16,667
|
33,333 |
(2)
|
-
|
$45.14
|
3/1/17
|
25,000 |
(6)
|
$ |
1,348,500
|
-
|
-
|
||
| 5,364 |
(10)
|
$289,334
|
||||||||||||
| 7,485 |
(11)
|
$403,741
|
||||||||||||
|
Michael
A. Bless
|
19,998
|
10,002 |
(3)
|
-
|
$29.92
|
1/23/16
|
13,333 |
(7)
|
$ |
719,182
|
-
|
-
|
||
| 6,705 |
(10)
|
$361,668
|
||||||||||||
| 6,737 |
(11)
|
$363,394
|
||||||||||||
|
Robert
R. Nielsen
|
16,665
|
8,335 |
(4)
|
-
|
$47.61
|
5/1/16
|
10,000 |
(8)
|
$ |
539,400
|
-
|
-
|
||
| 5,867 |
(10)
|
$316,466
|
||||||||||||
| 6,155 |
(11)
|
$332,001
|
||||||||||||
|
Giulio
Casello
|
21,000
|
-
|
-
|
$24.55
|
9/12/15
|
-
|
-
|
-
|
-
|
|||||
| 4,191 |
(10)
|
$226,063
|
||||||||||||
| 4,256 |
(11)
|
$229,569
|
||||||||||||
|
(1)
|
These
options will vest on December 14, 2008.
|
|
(2)
|
These
options vested one half on March 1, 2008 and the remaining options will
vest on March 1, 2009.
|
|
(3)
|
These
options vested on January 22, 2008.
|
|
(4)
|
These
options will vest on May 1, 2008.
|
|
(5)
|
These
service-based performance shares vested on January 1, 2008. Although we
did not pay dividends on our common stock during the vesting period, under
the terms of the service-based performance shares, dividend equivalents
would have accrued on the service-based performance shares if we had paid
any dividends during the vesting period.
|
|
(6)
|
These
service-based performance shares vested one-third on March 1, 2008, the
remaining shares will vest equally on March 1, 2009 and March 1, 2010. To
the extent we pay dividends on our common stock, dividend equivalents will
accrue on the service-based performance shares from the date of grant and
will become payable upon vesting.
|
|
(7)
|
These
service-based performance shares vested one-half on January 22, 2008, and
the remaining shares will vest on January 22, 2009. To the extent we pay
dividends on our common stock, dividend equivalents will accrue on the
service-based performance shares from the date of grant and will become
payable upon vesting.
|
|
(8)
|
These
service-based performance shares will vest equally on May 1, 2008 and May
1, 2009. To the extent we pay dividends on our common stock, dividend
equivalents will accrue on the service-based performance shares from the
date of grant and will become payable upon vesting.
|
|
(9)
|
Based
on the closing market price for shares of our common stock of $53.94 on
December 31, 2007, the last trading day for the fiscal year ended
December 31, 2007.
|
|
(10)
|
The
amounts shown represent the number of performance share units awarded to
the named executive officer for the 2006-2008 performance program period
which will be considered by our Compensation Committee in
2009.
|
|
(11)
|
The
amounts shown represent the number of performance share units awarded to
the named executive officer for the 2007-2009 performance program period
which will be considered by our Compensation Committee in
2010
|
Option
Exercises and Stock Vested
The
following table sets forth information regarding option exercises and vesting of
performance shares for our named executive officers as of December 31,
2007.
2007
Option Exercise and Stock Vested Table
|
Option
Awards
|
|
Stock
Awards
|
||||
|
Name
|
Number
of Shares Acquired on Exercise
|
Value
Realized on Exercise ($)
|
Number
of Shares Acquired
on
Vesting(1)
(2)
|
Value
Realized on Vesting ($)
|
||
|
Logan
W. Kruger
|
30,000
|
840,558
|
46,661
|
2,459,911
|
||
|
Wayne
R. Hale
|
-
|
-
|
4,937
|
310,290
|
||
|
Michael
A. Bless
|
-
|
-
|
14,411
|
760,591
|
||
|
Robert
R. Nielsen
|
-
|
-
|
11,776
|
662,922
|
||
|
Giulio
Casello
|
-
|
-
|
4,839
|
304,131
|
||
|
(1)
|
Includes
shares received pursuant to the long-term incentive program for the
2005-2007 performance program period by each named executive officer in
March 2008.
|
|
(2)
|
Excludes
shares received in 2007 by our named executive officers pursuant to the
long-term incentive program for the 2004-2006 performance program, which
shares were reported in our proxy statement for our 2007 annual
meeting.
|
Post
Employment Compensation
Pension
Benefits
As discussed
above beginning on page 24, we maintain both the Qualified Plan and the SERP as
retirement plans for our U.S. based salaried employees. The Qualified Plan
provides lifetime annual benefits starting at age 62 equal to 12 multiplied by
the greater of: (i) 1.5% of final average monthly compensation multiplied
by years of credited service (up to 40 years), or (ii) $22.25 multiplied by
years of credited service (up to 40 years), less the total monthly vested
benefit payable as a life annuity at age 62 under predecessor plans which we
acquired. We determine final average monthly compensation under the qualified
plans as the highest monthly average for 36 consecutive months in the 120-month
period ending on the last day of the calendar month completed at or prior to a
termination of service. Participants’ pension rights vest after a five-year
period of service, or earlier if the participant has reached the age of 62. An
early retirement benefit (actuarially reduced beginning at age 55) and a
disability benefit are also available. The compensation covered by the plan
includes all compensation, subject to certain exclusions, before any reduction
for 401(k) contributions, subject to the maximum limits under the
Code.
The SERP
provides selected senior executives with supplemental benefits in addition to
those benefits they are entitled to receive under the Qualified Plan. More
information about the SERP can be found under the heading “Retirement Plans”
beginning on page 24.
The
following table sets forth the present value of accumulated benefits payable to
each of the named executive officers, including the number of years of service
credited to each such named executive officer, under the Qualified Plan and the
SERP, determined using interest rate and mortality rate assumptions consistent
with those used in our financial statements.
2007
Pension Benefits Table
|
Name
|
Plan
|
Number
of Years
Credited
|
Present
Value of
Accumulated
Benefit (1)
|
Payments
During
Last
Fiscal Year
|
||
|
Logan
W. Kruger
|
Non-Contributory
Defined Pension Plan
|
2.08
|
$ | 223,221 |
|
-
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
-
|
$ |
8,493,745
|
(2)
|
-
|
|
|
Wayne
R. Hale
|
Non-Contributory
Defined Pension Plan
|
0.83
|
$ | 339,823 |
|
-
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
-
|
-
|
-
|
|||
|
Michael
A. Bless
|
Non-Contributory
Defined Pension Plan
|
1.92
|
$ |
82,042
|
-
|
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
-
|
-
|
-
|
|||
|
Robert
R. Nielsen(3)
|
Non-Contributory
Defined Pension Plan
|
1.67
|
$ | 200,300 |
|
-
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
-
|
-
|
-
|
|||
|
Giulio
Casello
|
Non-Contributory
Defined Pension Plan
|
2.33
|
$ | 32,597 |
|
-
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
-
|
-
|
-
|
|||
|
(1)
|
Includes
amounts that the named executive officer may not currently be entitled to
receive because such amounts are not
vested.
|
|
(2)
|
When
determining present value, vesting is ignored. Mr. Kruger's benefits
vest 1/120th per calendar month for 120 months beginning December 13,
2005; provided, however, that any vested enhanced supplemental retirement
benefit will be forfeited if Mr. Kruger’s employment with the Company
terminates prior to December 13, 2010, except by reason of his death or
disability, termination by the Company “without cause” or termination by
Mr. Kruger for “good reason”, or upon a change in control. If Mr. Kruger
dies or becomes disabled before December 13, 2010, Mr. Kruger or his
estate will retain all enhanced supplemental retirement benefits that have
vested through the date of his death or disability. If Mr. Kruger
dies or becomes disabled after December 13, 2010, or if there is a change
in control of the Company, the enhanced supplemental retirement benefits
will fully vest. Finally, if Mr. Kruger’s employment with the Company is
terminated by the Company without “cause” or is terminated by Mr. Kruger
for “good reason”, Mr. Kruger’s supplemental retirement benefits will
continue to vest over the remaining portion of the contract term, as
described above.
|
|
(3)
|
As
of December 31, 2007, of our named executive officers employed by us
on that date, only Mr. Nielsen was eligible to retire and begin receiving
a benefit under our retirement
plans.
|
Potential
Payments upon Termination or Change of Control
The table
below reflects the amount of compensation to each of our named executive
officers upon termination of such executive’s employment. The amount of
compensation payable to each named executive officer following: termination
following a change of control, involuntary termination for cause, involuntary
termination not-for-cause, termination on death or disability, retirement and
voluntary resignation is shown. The amounts shown assume that such termination
was effective as of December 31, 2007, and thus includes amounts earned
through such time and are estimates of the amounts that would be paid out to the
executives on their termination. The actual amount to be paid can only be
determined at the time of such executive’s termination.
2007
Potential Payments upon Termination or Change of Control Tables
|
Type
of Termination
|
|||||||||||||||
|
Named
Executive Officer
|
Voluntary
|
By
Company without Cause or by Officer with Cause
|
By
Company with Cause
|
Retirement
|
Disability
|
Death
|
Following
a Change in Control
|
||||||||
|
Logan
W. Kruger
|
|||||||||||||||
|
Salary
|
-
|
$2,445,000
|
-
|
-
|
$1,630,000
|
-
|
$2,445,000
|
||||||||
|
Bonus(3)
|
|
-
|
$3,345,000
|
-
|
-
|
$2,230,000
|
-
|
$3,345,000
|
|||||||
|
Qualified
Retirement benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
SERP
|
$485,791
|
(1)
|
$485,791
|
(1)
|
$485,791
|
(1)
|
$485,791
|
(1)
|
$485,791
|
(1)
|
$242,896
|
(2)
|
$776,251
|
(7)
|
|
|
SERP
with Enhancement
|
$1,329,953
|
(1)
|
$3,073,346
|
(1)
|
$1,329,953
|
(1)
|
$1,329,953
|
(1)
|
$1,329,953
|
(1)
|
$664,977
|
(2)
|
$10,031,863
|
(7)
|
|
|
Stock
options
|
-
|
-
|
-
|
-
|
$998,657
|
(4)
|
$998,657
|
(4)
|
$998,657
|
(4)
|
|||||
|
Performance
shares
|
-
|
-
|
-
|
-
|
-
|
(5)
|
-
|
(5)
|
$1,631,074
|
(8)
|
|||||
|
Service
based performance shares (6)
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||
|
Excise
tax gross up
|
-
|
-
|
-
|
-
|
-
|
-
|
$9,843,440
|
||||||||
|
Insurance
continuation
|
-
|
-
|
-
|
-
|
-
|
-
|
$55,791
|
||||||||
|
Total
|
$1,815,744
|
$9,349,137
|
$1,815,744
|
$1,815,744
|
$6,674,401
|
$1,906,530
|
$29,127,076
|
||||||||
|
Wayne
R. Hale
|
|||||||||||||||
|
Salary
|
-
|
$1,350,000
|
-
|
-
|
$900,000
|
-
|
$1,350,000
|
||||||||
|
Bonus(3)
|
|
-
|
$1,050,000
|
-
|
-
|
$700,000
|
-
|
$1,050,000
|
|||||||
|
Qualified
Retirement benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
SERP
|
$97,009
|
(1)
|
$97,009
|
(1)
|
$97,009
|
(1)
|
$97,009
|
(1)
|
$97,009
|
(1)
|
$48,505
|
(2)
|
$276,027
|
(7) | |
|
SERP
with Enhancement
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
Stock
options
|
-
|
-
|
-
|
-
|
$293,330
|
(4)
|
$293,330
|
(4)
|
$293,330
|
(4) | |||||
|
Performance
shares
|
-
|
-
|
-
|
-
|
-
|
(5)
|
-
|
(5)
|
$693,075
|
(8) | |||||
|
Service
based performance shares
|
-
|
-
|
-
|
-
|
$1,348,500
|
(9)
|
$1,348,500
|
(9)
|
$1,348,500
|
(9) | |||||
|
Excise
tax gross up
|
-
|
-
|
-
|
-
|
-
|
-
|
$2,200,481
|
||||||||
|
Insurance
continuation
|
-
|
-
|
-
|
-
|
-
|
-
|
$62,469
|
||||||||
|
Total
|
$97,009
|
$2,497,009
|
$97,009
|
$97,009
|
$3,338,839
|
$1,690,335
|
$7,273,882
|
||||||||
| Type of Termination |
|
||||||||||||||
|
Named
Executive Officer
|
Voluntary
|
By
Company without Cause or by Officer with Cause
|
By
Company with Cause
|
Retirement
|
Disability
|
Death
|
Following
a Change in Control
|
||||||||
|
Michael
A. Bless
|
|||||||||||||||
|
Salary
|
-
|
$1,215,000
|
-
|
-
|
$810,000
|
-
|
$1,215,000
|
||||||||
|
Bonus
(3)
|
|
-
|
$1,035,000
|
-
|
-
|
$690,000
|
-
|
$1,035,000
|
|||||||
|
Qualified
Retirement benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
SERP
|
$68,648
|
(1)
|
$68,648
|
(1)
|
$68,648
|
(1)
|
$68,648
|
(1)
|
$68,648
|
(1)
|
$34,324
|
(2)
|
$116,621
|
(7)
|
|
|
SERP
with Enhancement
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
Stock
options
|
-
|
-
|
-
|
-
|
$240,298
|
(4)
|
$240,298
|
(4)
|
$240,298
|
(4)
|
|||||
|
Performance
shares
|
-
|
-
|
-
|
-
|
-
|
(5)
|
-
|
(5)
|
$725,050
|
(8)
|
|||||
|
Service
based performance shares
|
-
|
-
|
-
|
-
|
$719,182
|
(9)
|
$719,182
|
(9)
|
$719,182
|
(9)
|
|||||
|
Excise
tax gross up
|
-
|
-
|
-
|
-
|
-
|
-
|
$1,884,876
|
||||||||
|
Insurance
continuation
|
-
|
-
|
-
|
-
|
-
|
-
|
$54,699
|
||||||||
|
Total
|
$68,648
|
$
2,318,648
|
$68,648
|
$68,648
|
$2,528,128
|
$993,804
|
$5,990,726
|
||||||||
|
Robert
R. Nielsen
|
|||||||||||||||
|
Salary
|
-
|
$1,110,000
|
-
|
-
|
$740,000
|
-
|
$1,110,000
|
||||||||
|
Bonus
(3)
|
|
-
|
$945,000
|
-
|
-
|
$630,000
|
-
|
$945,000
|
|||||||
|
Qualified
Retirement benefits
|
$200,300
|
(10)
|
$200,300
|
(10)
|
$200,300
|
(10)
|
$200,300
|
(10)
|
$200,300
|
(10)
|
$100,150
|
(2)
|
$200,300
|
(10)
|
|
|
SERP
|
-
|
-
|
-
|
-
|
-
|
-
|
$137,131
|
(7)
|
|||||||
|
SERP
with Enhancement
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
Stock
options
|
-
|
-
|
-
|
-
|
$52,761
|
(4)
|
$52,761
|
(4)
|
$52,761
|
(4)
|
|||||
|
Performance
shares
|
-
|
-
|
-
|
-
|
-
|
(5)
|
-
|
(5)
|
$648,467
|
(8)
|
|||||
|
Service
based performance shares
|
-
|
-
|
-
|
-
|
$539,400
|
(9)
|
$539,400
|
(9)
|
$539,400
|
(9)
|
|||||
|
Excise
tax gross up
|
-
|
-
|
-
|
-
|
-
|
-
|
$1,716,642
|
||||||||
|
Insurance
continuation
|
-
|
-
|
-
|
-
|
-
|
-
|
$69,972
|
||||||||
|
Total
|
$200,300
|
$2,255,300
|
$200,300
|
$200,300
|
$2,162,461
|
$692,311
|
$5,419,673
|
||||||||
|
Giulio
Casello
|
|||||||||||||||
|
Salary
|
-
|
-
|
-
|
-
|
-
|
-
|
$550,000
|
||||||||
|
Bonus
|
-
|
-
|
-
|
-
|
-
|
-
|
$530,000
|
||||||||
|
Qualified
Retirement benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
SERP
|
-
|
-
|
-
|
-
|
-
|
-
|
$71,735
|
||||||||
|
SERP
with Enhancement
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
Stock
options
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
Performance
shares
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
Service
based performance shares
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
Excise
tax gross up
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
Insurance
continuation
|
-
|
-
|
-
|
-
|
-
|
-
|
$30,353
|
||||||||
|
Total
|
-
|
-
|
-
|
-
|
-
|
-
|
$1,182,088
|
||||||||
|
(1)
|
The
amount shown will not be paid to the named executive as a lump
sum. Rather, the amount represents the actuarial calculated
present value of benefits that will be received upon obtaining normal
retirement age (62).
|
|
(2)
|
The
amount shown will not be paid to the named executive as a lump
sum. Rather, the amount represents the actuarial calculated
present value of benefits that will be paid to a surviving spouse as an
annuity upon the death of the named executive.
|
|
(3)
|
The
amount shown is based on the bonus earned in 2007 which was subsequently
paid in March 2008.
|
|
(4)
|
The
amount shown represents the value of unvested stock options based on our
closing stock price on December 31, 2007. Options will be
exercisable within three years of death or disability or the expiration
date of the options, whichever is sooner. Upon termination
following a change in control, unvested options will immediately vest and
the named executive has the right to require Century to purchase, for
cash, the stock acquired by the named executive from the option exercise
at the fair market value.
|
|
(5)
|
The
named executive officer will continue to participate in our long term
incentive program, and awards, if any, of the outstanding performance
share units granted for the 2006-2008 and 2007-2009 performance program
periods will be determined after consideration by the Compensation
Committee in 2009 and 2010, respectively. See 2007 Outstanding
Equity Awards at Fiscal Year-End Table on page 33 for the number of
performance share units awarded to the executive for the 2006-2008 and
2007-2009 performance programs.
|
|
(6)
|
Excludes
$1,350,000 realized for service based performance shares vesting on
January 1, 2008.
|
|
(7)
|
The
amount shown represents the lump sum payment of the actuarial equivalent
of the difference between the retirement benefit the named executive is
actually entitled to receive under our qualified pension plan and a
“recalculated” retirement benefit that includes additional three full
years of credited service. In addition, the named executive is
entitled to retirement benefits upon obtaining normal retirement
age.
|
|
(8)
|
The
amount shown represents the value of outstanding performance share units
granted to the named executive officer for the 2006-2008 and 2007-2009
performance program periods. Shares will be immediately awarded
at 100% and the named executive shall have the right to require the
Company to purchase, for cash, the stock awarded at the fair market
value. The value presented assumes 100% award valued at our
December 31, 2007 closing stock price.
|
|
(9)
|
The
amount shown represents the value of unvested service based performance
share units granted to the named executive officer. Upon death
or disability the unvested units will continue to vest over the
contractual term. Upon termination following a change in
control, unvested units will immediately vest and the named executive
shall have the right to require the Company to purchase, for cash, the
stock awarded at the fair market value. The value represented
is based on our December 31, 2007 closing stock price.
|
|
(10)
|
The
named executive officer has obtained normal retirement age. The
amount shown here represents the actuarial calculated present value of
retirement benefits.
|
Severance
Compensation Arrangements
As
discussed on page 27, we have entered into severance compensation agreements
with each of Messrs. Kruger, Hale, Bless, Nielsen and Casello. The
agreements generally provide that if within 36 months after we experience a
change in control the executive’s employment is terminated either (i) by us
for other than cause or disability, or (ii) by such executive for good
reason, then such executive will receive a lump sum payment equal to three times
for Messrs. Kruger, Hale, Bless and Nielsen, and two times for Mr. Casello, the
aggregate of the highest base salary and the highest bonus received by such
executive in any of the most recent five years. Also, upon a change in control,
the exercisability of stock options and the vesting of performance shares held
by such executives will be accelerated assuming that all performance targets
were achieved at the 100% level. The agreements also provide that we will
continue to provide benefits to each executive for a period of three years for
Messrs. Kruger, Hale, Bless and Nielsen and two years for Mr. Casello, after the
date of his termination. In addition, the executive will be credited for pension
purposes, a period of two to three years, as the case may be, beyond the
termination date, at that executive’s highest base salary and highest bonus
level, and Century will pay to the executive in a single lump sum the difference
between the actuarial equivalent of (a) what the executive would have been
entitled to under our retirement plans and (b) what he is entitled to
taking into account the terms of the severance compensation agreement, assuming
the executive is 100% vested in the increased benefit under the retirement
plans. The agreements are for a set period of time, but are subject to automatic
one-year extensions on January 1, unless the executive’s employment is
terminated prior to a change in control.
The Code
imposes certain excise taxes on, and limits the deductibility of, certain
compensatory payments made by a corporation to or for the benefit of certain
individuals if such payments are contingent upon certain changes in the
ownership or effective control of the corporation or the ownership of a
substantial portion of the assets of the corporation, provided that such
payments to the individual have an aggregate present value in excess of three
times the individual’s annualized includible compensation for the base period,
as defined in the Code. The severance compensation agreements provide for
additional payments to the executives in order to fully offset any excise taxes
payable by an executive as a result of the payments and benefits provided in the
agreements. All benefits afforded the named executive officers under the
severance compensation agreements are included in the amounts set forth in the
“Potential Payments upon Termination or Change of Control” table
above.
The
following report of the Audit Committee shall not be deemed to be “soliciting
material” or to be “filed” with the Securities and Exchange Commission, nor
shall this information be incorporated by reference into any future filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, each as
amended, except to the extent that Century specifically incorporates it by
reference into a filing.
During
2007, the Audit Committee of the board of directors was comprised of Messrs.
Robert E. Fishman, Ph.D, Jarl Berntzen, John P. O’Brien, Jack E. Thompson and
Peter C. Jones. Mr. Jones succeeded Mr. Thompson on the Audit Committee on March
20, 2007. All members of the Audit Committee are independent directors, as that
term is defined under NASDAQ listing standards. The Audit Committee operates
under a written charter adopted by the board of directors. In accordance with
its charter, the Audit Committee assists the board of directors in fulfilling
its responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of Century.
The Audit
Committee’s job is one of oversight. Century’s management is responsible for the
preparation of Century’s financial statements and the independent auditors are
responsible for auditing those financial statements. The Audit Committee and the
Board recognize that management (including the internal audit staff) and the
independent auditors have more resources and time, and more detailed knowledge
and information regarding Century’s accounting, auditing, internal control and
financial reporting practices than the Audit Committee does; accordingly, the
Audit Committee’s oversight role does not include providing any expert or
special assurance as to the financial statements and other financial information
provided by Century to its stockholders and others.
In
discharging its oversight responsibility as to the audit process, the Audit
Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and Century that might bear on
the auditors’ independence, consistent with “Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees,” discussed with
the auditors any relationships that may impact their objectivity and
independence, including the performance of non-audit services, and satisfied
itself as to the auditors’ independence. The Audit Committee also discussed with
management, the internal auditors and the independent auditors, the quality and
adequacy of Century’s internal controls and the internal audit function’s
organization, responsibilities, budget and staffing. The Audit Committee
reviewed with both the independent and the internal auditors their audit plans,
audit scope, and identification of audit risks. The Audit Committee has the
authority to obtain advice from outside legal, accounting or other advisors as
the Audit Committee deems necessary to carry out its duties and receives
appropriate funding, as determined by the Audit Committee, from Century for such
advice and assistance.
The Audit
Committee met with and discussed with the independent auditors all matters
required to be discussed under generally accepted auditing standards, including
those described in “Statement on Auditing Standards No. 61, Communication with
Audit Committees,” and, with and without management present, discussed and
reviewed the results of the independent auditors’ examination of the financial
statements. The Audit Committee also discussed the quality and adequacy of
Century’s internal controls and the results of the internal audit
examinations.
The Audit
Committee reviewed and discussed with management and the independent auditors
the interim financial information contained in each quarterly earnings
announcement in 2007 prior to its public release and the audited financial
statements of Century as of and for the year ended December 31,
2007.
Based on
the above-mentioned review and discussions with management and the independent
auditors, the Audit Committee recommended to the Board that Century’s audited
financial statements be included in its Annual Report on Form 10-K for the year
ended December 31, 2007, for filing with the Securities and Exchange
Commission. The Audit Committee also recommended the reappointment, subject to
stockholder approval, of the independent auditors and the Board concurred in
such recommendation. All audit and non-audit fees incurred in 2007 were
pre-approved by the Audit Committee.
Respectfully
Submitted,
The Audit
Committee
Jarl
Berntzen Robert
E.
Fishman John
P.
O’Brien Jack
E. Thompson
The board
of directors, on the recommendation of the Audit Committee, has appointed
Deloitte & Touche LLP to act as our independent auditors for the current
fiscal year, subject to the ratification of such appointment by the affirmative
vote of the holders of a majority of shares of common stock present in person or
by proxy and entitled to vote at the Annual Meeting. If no direction is given to
the contrary, all proxies received by the board of directors will be voted “FOR”
ratification of the appointment of Deloitte & Touche LLP as our
independent auditors for the rent fiscal year.
In
addition to performing the audit of our consolidated financial statements,
Deloitte & Touche LLP provided various other services for us during the last
two years. The aggregate fees billed for the last two years for each of the
following categories of services are set forth below:
|
2007
|
2006
|
|||
|
Audit
Fees
|
$ |
1,660,000
|
$ |
1,674,000
|
|
Audit-Related
Fees
|
178,000
|
133,000
|
||
|
Tax
Fees
|
675,000
|
387,000
|
||
|
All
Other Fees
|
320,000
|
-
|
||
|
Total
All Fees
|
$ |
2,833,000
|
$ |
2,194,000
|
Audit Fees. Audit Fees
include professional services rendered in connection with the audit of our
consolidated financial statements, audit of management’s assessment of the
effectiveness of our internal control over financial reporting, audit of the
effectiveness of our internal control over financial reporting, audit of the
opening balance sheet of acquisitions accounted for as a purchase, reviews of
the consolidated financial statements included in our Quarterly Reports on Form
10-Q, consultation on accounting matters, and review of documents filed with the
Securities and Exchange Commission.
Audit-Related Fees.
Audit-Related Fees include audits of our employee benefit plans and consultation
on accounting matters or transactions.
Tax Fees. Tax Fees include
the preparation of federal and state tax returns, and consultation related to
tax planning, tax advice, tax compliance, and acquisitions.
All Other
Fees. All Other Fees include due diligence and acquisition
related fees.
All
services rendered by Deloitte & Touche LLP are pre-approved by the Audit
Committee in accordance with the Committee’s pre-approval procedures. Under
those procedures, the terms and fees of annual audit services, and changes
thereto, must be approved by the Audit Committee. The Audit Committee also
pre-approves the scope of audit-related, tax and other non-audit services that
may be performed by our independent auditors during the fiscal year, subject to
dollar limitations set by the Committee. The foregoing pre-approval procedures
are subject to the de minimis exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit
Committee prior to completion of the audit
Representatives
of Deloitte & Touche LLP are not expected to be present at the Annual
Meeting, but will have the opportunity to make a statement if they desire to do
so, and will be available should any matter arise requiring their
presence.
The
board of directors recommends that the stockholders vote “FOR” ratification of
the appointment of Deloitte & Touche LLP as our independent auditors for the
current fiscal year.
As of the
date of this proxy statement, the board of directors does not know of any other
matters which may come before the Annual Meeting, nor have we received notice of
any matter by the deadline prescribed by Rule 14a-4(c) under the Exchange Act.
If any other matters properly come before the meeting, the accompanying proxy
confers discretionary authority with respect to any such matters, and the
persons named in the accompanying proxy intend to vote in accordance with their
best judgment on such matters. All expenses in connection with the solicitation
of proxies will be borne by us. In addition to this solicitation, officers,
directors and regular employees of Century, without any additional compensation,
may solicit proxies by mail, telephone or personal contact. Morrow & Co.,
Inc. has been retained to assist in the solicitation of proxies for a fee of
$4,000, plus reasonable out-of-pocket expenses. We will, upon request, reimburse
brokerage houses and other nominees for their reasonable expenses in sending
proxy materials to their principals.
Stockholder
proposals for inclusion in the proxy materials for the Annual Meeting in 2009
should be addressed to our Corporate Secretary, 2511 Garden Road, Building A,
Suite 200, Monterey, California 93940, and must be received no later than
January 13, 2008. In addition, our restated by-laws currently require that for
business to be properly brought before an Annual Meeting by a stockholder,
regardless of whether included in our proxy statement, the stockholder must give
written notice of his or her intention to propose such business to our Corporate
Secretary, which notice must be delivered to, or mailed and received at, our
principal executive offices not less than forty-five (45) days prior to the
date on which we first mailed our proxy materials for the prior year’s Annual
Meeting (which cut-off date will be March 29, 2009 in the case of the Annual
Meeting in 2009). Such notice must set forth as to each matter the stockholder
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, (ii) the name and address of the stockholder
proposing such business, (iii) the class and number of shares which are
beneficially owned by the stockholder, and (iv) any material interest of
the stockholder in such proposal. The restated by-laws further provide that the
chairman of the Annual Meeting may refuse to permit any business to be brought
before an Annual Meeting that does not comply with the foregoing
procedures.
We
will provide without charge to each person solicited hereby, upon the written
request of any such person, a copy of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2007, as filed with the Securities and
Exchange Commission (without exhibits). Requests should be made to Office of the
General Counsel, 2511 Garden Road, Building A, Suite 200, Monterey, California
93940.
|
Electronic
Voting Instructions
|
|
|
You
can vote by Internet or telephone!
|
|
|
Available
24 hours a day, 7 days a week!
|
|
|
Instead of
mailing your proxy, you may choose one of the two voting methods outlined
below to vote your proxy.
VALIDATION
DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
|
|
|
Proxies
submitted by the Internet or telephone must be received by 1:00 a.m.,
Central Time, on June 24, 2008
|
|
|
Vote
by Internet
|
|
| ▪ |
Log on to the
Internet and go to
www.investorvote.com/CENX
|
| ▪ |
Follow the
steps outlined on the secured website.
|
|
Vote
by telephone
|
|
| ▪ |
Call toll free
1-800-652-VOTE (8683) within the United States, Canada & Puerto Rico
any time on a touch tone telephone. There is NO CHARGE to you
for the call.
|
| ▪ |
Follow the instructions
provided by the recorded
message.
|
Using a black
ink pen, mark your votes with an X as shown in
this example. Please do not write outside
the designated areas. x
|
Annual
Meeting Proxy
Card
|
IF
YOU HAVE NOT VOTED VIA THE INTERNET OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN
THE ENCLOSED ENVELOPE.
|
A
|
Proposals
– The Board of Directors recommends a vote FOR
all the nominees listed and FOR
Proposal 2.
|
|
1.
|
Election of
Class III Directors
|
||||||||||||
|
For
|
Withhold
|
For
|
Withhold
|
For
|
Withhold
|
||||||||
|
01
|
- Robert
E. Fishman, Ph.D.
|
[ ]
|
[ ]
|
02
|
- Jack
E. Thompson
|
[ ]
|
[ ]
|
03
|
- Catherine
Z. Manning
|
[ ]
|
[ ]
|
||
|
(for a term
to expire on 2011)
|
(for a term
to expire on 2011)
|
(for a term
to expire on 2011)
|
|||||||||||
|
For
|
Against
|
Abstain
|
||||||
|
2.
|
Proposal to
ratify the appointment of Deloitte & Touche LLP as the Company’s
independent auditors for the fiscal year ending December 31,
2008
|
[ ]
|
[ ]
|
[ ]
|
3.
|
By signing
below, the undersigned authorizes the proxies to vote, in their
discretion, upon such other matters as may properly come before the
meeting.
|
||
|
B
|
Non-Voting
Items
|
Consent
to Electronic Delivery
|
By marking
this box, I consent to access future Annual Reports and Proxy Statements
of Century Aluminum electronically over the Internet. I
understand that unless I request otherwise or revoke my consent, Century
Aluminum will notify me when any such communications are available and how
to access them. I understand that costs associated with the use
of the Internet will be my responsibility. To revoke my
consent, I can contact Century Aluminum’s transfer agent, Computershare
Investor Services, at 1-312-360-5375.
|
[ ]
|
|
Change of
Address – Please print your new address
below.
|
Meeting
Attendance
Mark the box
to the right if you plan to attend the Annual Meeting.
|
[ ]
|
|
|
C
|
Authorized Signatures –
This section must be completed for your vote to be counted. – Date and
Sign Below
|
NOTE: Please
sign your name(s) EXACTLY as your name(s) appear(s) on this
proxy. All joint holders must sign. When signing as
attorney, trustee, executor, administrator, guardian or corporate officer,
please provide your FULL title.
|
Date
(mm/dd/yyyyy) – Please print date below.
|
Signature 1 –
Please keep signature within the box.
|
Signature 2 –
Please keep signature within the box.
|
||
IF
YOU HAVE NOT VOTED VIA THE INTERNET OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN
THE ENCLOSED ENVELOPE.
|
Proxy
– Century Aluminum Company
|
Proxy
Solicited on Behalf of the Board of Directors for the Annual Meeting on June 24,
2008
The undersigned
appoints William J. Leatherberry and Peter C. McGuire the proxies (each with
power to act alone and with power of substitution) of the undersigned to vote at
the Annual Meeting of Stockholders of Century Aluminum Company to be held at the
executive offices of the Company, 2511 Garden Road, Building A, Suite 200,
Monterey, CA at 8:30 a.m., local time, on Tuesday, June 24, 2008, and at any
adjournment, all shares of stock which the undersigned is entitled to vote
thereat upon all matters properly brought before the meeting.
This
proxy when properly executed, will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this proxy will be
voted FOR Proposals 1 and 2.
YOUR
VOTE IS IMPORTANT!
PLEASE
MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to
be signed on reverse side)