def14a
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant þ
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2. |
Harsco Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
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Check box if any part of the fee is offset as provided by Exchange
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Date Filed: |
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Notice of
2007 Annual
Meeting and Proxy
Statement
Harsco Corporation
Harsco Corporation
350 Poplar Church Road
Camp Hill, PA 17011 USA
Mail: P.O. Box 8888
Camp Hill, PA
17001-8888
USA
Telephone:
717.763.7064
Fax: 717.763.6424
Web: www.harsco.com
March 22, 2007
To Our Stockholders:
You are cordially invited to attend the 2007 Annual Meeting of
Stockholders of your Company, which will be held on Tuesday,
April 24, 2007, beginning at 10:00 a.m. at the
Radisson Penn Harris Hotel and Convention Center, Camp Hill,
Pennsylvania.
Information about the Annual Meeting, including a listing and
discussion of the various matters on which you, as our
stockholders, will act, may be found in the formal Notice of
Annual Meeting of Stockholders and Proxy Statement included with
this mailing. We look forward to greeting as many of our
stockholders as possible.
The Company is providing you with the opportunity to vote your
shares by calling a toll-free number, by mailing the enclosed
Proxy Card or via the Internet as explained in the instructions
on your Proxy Card.
Whether you plan to attend the Annual Meeting or not, we urge
you to fill in, sign, date and return the enclosed Proxy Card in
the postage-paid envelope provided, or vote by telephone or via
the Internet, in order that as many shares as possible may be
represented at the Annual Meeting. The vote of every stockholder
is important and your cooperation in returning your executed
Proxy Card promptly will be appreciated.
Sincerely,
Derek C. Hathaway
Chairman and Chief
Executive Officer
This document is intended to be mailed to stockholders on or
about March 22, 2007.
TABLE OF
CONTENTS
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EXECUTIVE COMPENSATION
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HARSCO CORPORATION
350 Poplar Church Road
Camp Hill, Pennsylvania 17011 USA
Mail: P.O. Box 8888
Camp Hill, Pennsylvania
17001-8888
USA
NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Harsco Corporation will be
held on Tuesday, April 24, 2007, at 10:00 a.m. at the
Radisson Penn Harris Hotel and Convention Center, Camp Hill,
Pennsylvania to consider and act upon the following matters:
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1.
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Election of eleven Directors to serve until the next Annual
Meeting of Stockholders, and until their successors are elected
and qualified;
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2.
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Ratification of the appointment by the Audit Committee of the
Board of Directors of PricewaterhouseCoopers LLP as independent
auditors to audit the accounts of the Company for the fiscal
year ending December 31, 2007; and
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3.
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Such other business as may properly come before the Annual
Meeting.
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The Board of Directors has fixed the close of business on
March 2, 2007 as the record date for the determination of
stockholders who are entitled to notice of, and to vote at, the
Annual Meeting and at any adjournments thereof. Proxies will be
accepted continuously from the time of mailing until the closing
of the polls at the Annual Meeting.
Stockholders who do not expect to attend the Annual Meeting
in person are requested to fill in, sign, date and return the
enclosed proxy card in the envelope provided, or vote by
telephone or via the Internet, as explained in the instructions
on your proxy card.
By Order of the Board of Directors,
Mark E. Kimmel
General Counsel and Corporate Secretary
March 22, 2007
PROXY
STATEMENT
ANNUAL MEETING
INFORMATION
General
This Proxy Statement has been prepared in connection with the
solicitation by the Board of Directors of Harsco Corporation, a
Delaware corporation (the Company), of proxies in
the accompanying form to be used at our Annual Meeting of
Stockholders, to be held April 24, 2007, or at any
adjournment or adjournments of the Annual Meeting.
The following information relates to the Annual Meeting and the
voting of your shares at the meeting:
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Type of shares entitled to vote at
the Annual Meeting:
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Our common stock, par value $1.25
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Record date for stockholders
entitled to notice of, and to vote at, the Annual Meeting
(Record Date):
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Close of business on March 2,
2007
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Shares of common stock issued and
outstanding as of the Record Date (does not include treasury
shares, which are not entitled to be voted at the Annual
Meeting):
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42,026,532 shares
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Proxy Statements, Notice of Annual
Meeting and Proxy Cards are intended to be mailed to
stockholders:
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On or about March 22, 2007
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Location of our executive offices:
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350 Poplar Church Road, Camp Hill,
Pennsylvania 17011
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The Company has declared a two-for-one stock split payable on
March 26, 2007 to shareholders of record on
February 28, 2007. The numbers shown above and all share
information in this Proxy Statement reflect ownership of our
stock on a pre-split basis, and all votes at the Annual Meeting
will be tallied and a quorum will be established based on the
number of shares of our common stock issued and outstanding as
of the Record Date, on a pre-split basis.
Voting
All shares of common stock entitled to vote at the Annual
Meeting are of one class, with equal voting rights. Each share
of common stock held by a stockholder is entitled to cast one
vote on each matter voted on at the Annual Meeting. In order for
the Annual Meeting to be valid and the actions taken binding, a
quorum of stockholders must be present at the meeting, either in
person or by proxy. A quorum is a majority of the issued and
outstanding shares of common stock as of the Record Date.
Assuming that a quorum is present, the affirmative vote by the
holders of a plurality of the votes cast at the Annual Meeting
will be required to act on the election of directors and the
affirmative vote of the holders of at least a majority of the
outstanding common stock present in person or by proxy and
entitled to vote on the matter at the Annual Meeting will be
required for the ratification of PricewaterhouseCoopers LLP as
independent auditors for the current fiscal year. The vote
required to act on all other matters to come before the Annual
Meeting will be in accordance with the voting requirements
established by our Restated Certificate of Incorporation and
By-Laws.
2
The shares of common stock represented by each properly
submitted proxy received by the Board of Directors will be voted
as follows at the Annual Meeting:
If instructions are provided, in accordance with such
instructions specified, or
If no instructions are provided, those shares of common
stock will be voted (1) FOR the election of eleven nominees
for Directors; (2) FOR the ratification of the appointment
of PricewaterhouseCoopers LLP as independent auditors for the
current fiscal year; and (3) in accordance with the best
judgment of the named proxies on any other matters properly
brought before the Annual Meeting.
Revocation of
Proxies
Any proxy granted pursuant to this solicitation or otherwise,
unless coupled with an interest, may be revoked by the person
granting the proxy at any time before it is voted at the Annual
Meeting. Proxies may be revoked by (i) delivering to the
Secretary of the Company a written notice of revocation bearing
a later date than the proxy, (ii) duly executing and
delivering a later dated written proxy relating to the same
shares, or (iii) attending the Annual Meeting and voting in
person. If you hold your shares through a bank, broker or other
nominee holder, only they can revoke your proxy on your behalf.
Withheld Votes
and Broker Non-Votes
In certain circumstances, a stockholder will be considered to be
present at the Annual Meeting for quorum purposes but will not
be deemed to have cast a vote on a matter. That occurs when a
stockholder is present but specifically withholds a vote or
abstains from voting on a matter or when shares are represented
at the Annual Meeting by a proxy conferring authority to vote
only on certain matters (broker non-votes). In
accordance with Delaware law, votes withheld and broker
non-votes will not be treated as votes cast with respect to
election of directors, and therefore will not affect the outcome
of director elections. With respect to the ratification of
auditors, abstentions will be treated as negative votes and
broker non-votes will not be counted in determining the outcome.
Other
Business
The Board of Directors knows of no other business to come before
the Annual Meeting. However, if any other matters are properly
presented at the Annual Meeting, or any adjournment of the
Annual Meeting, the persons voting the proxies will vote them in
accordance with their best judgment.
CORPORATE
GOVERNANCE
We have a long-standing commitment to good corporate governance
practices. These practices come in many different forms and
apply at all levels of our organization. They provide the Board
of Directors and our senior management with a framework that
defines responsibilities, sets high standards of professional
and personal conduct and promotes compliance with our various
financial, ethical, legal and other obligations and
responsibilities.
Corporate
Governance Principles
Corporate
Governance Principles
The Board has adopted corporate governance principles that,
along with the charters of the Board committees, provide the
framework for our Board of Directors operation and
governance.
3
The Boards Nominating and Corporate Governance Committee
is responsible for overseeing and reviewing our corporate
governance principles at least annually and recommending any
proposed changes to the Board for approval. The corporate
governance principles are available on our website at
www.harsco.com in the Corporate Governance section.
Code of Business
Conduct
We have adopted a code of business conduct applicable to our
employees, officers and directors. The code of business conduct
is issued in booklet form and an online training program
facilitates new employee orientation and individual refresher
training. In 2006 a comprehensive update of our code of business
conduct was developed and distributed throughout our operations.
Our update was produced in nearly 20 languages. The code of
business conduct, including any amendments thereto or waivers
thereof, can be viewed at the Corporate Governance section of
our website at www.harsco.com.
Information contained on our website is not incorporated by
reference into this Proxy Statement, and you should not consider
information contained on our website as part of this Proxy
Statement. Copies of our corporate governance principles, code
of business conduct and charters of the Boards committees
are available in print to any stockholder who requests such
copies from us.
Stockholder and
Interested Party Communications with Directors
The Board of Directors has a formal process for stockholders and
interested parties to communicate directly with the chairman,
lead independent director, the non-management directors or with
any individual member of the Board of Directors. Stockholders
and interested parties can contact the Board through the
Chairman and Chief Executive Officer, who is located at our
headquarters in Camp Hill, Pennsylvania. In addition,
stockholders and interested parties may contact any member of
the Board, including the lead independent director,
Dr. Robert Wilburn, by writing to the specific Board member
in care of our Corporate Secretary at our Corporate Headquarters
(350 Poplar Church Road, Camp Hill, PA 17011). Our Corporate
Secretary will forward any such correspondence to the applicable
Board member; provided, however, that any such correspondence
that is considered by our Corporate Secretary to be improper for
submission to the intended recipients will not be provided to
such Directors. In addition, Board members, including the lead
independent director, can be contacted by
e-mail at
BoardofDirectors@harsco.com.
Independence
Standards For Directors
The following standards, which are also posted to the Corporate
Governance section of our website at www.harsco.com, have
been applied by the Board of Directors in determining whether
individual directors qualify as independent under
the Rules of the New York Stock Exchange. The Board has
affirmatively determined that the following eight Directors are
independent: Messrs. Jasinowski, Pierce, Scheiner, Sordoni,
Viviano, and Wilburn and Ms. Eddy and Ms. Scanlan.
References to us include our consolidated subsidiaries.
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No director will be qualified as independent unless
the Board of Directors affirmatively determines that the
director has no material relationship with us, either directly
or as a partner, stockholder or officer of an organization that
has a relationship with us. We will disclose these affirmative
determinations.
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No director who is a former employee of ours can be deemed
independent until three years after the end of his
or her employment relationship with us.
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No director whose immediate family member is or has been an
executive officer of ours can be deemed independent
until three years after such family member has ceased to be an
executive officer.
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No director who receives, or whose immediate family member
receives, more than $100,000 during any twelve-month period in
direct compensation from us, other than director and committee
fees and pension or other forms of deferred compensation for
prior service (provided such compensation is not contingent in
any way on continued service), can be independent
until three years after he or she ceases to receive more than
$100,000 during any twelve-month period in such compensation.
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5. No director can be independent:
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who is, or whose immediate family member is, a current partner
of our internal or external auditor;
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who is a current employee of our internal or external auditor;
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whose immediate family member is a current employee of our
internal or external auditor and participates in such
auditors audit, assurance or tax compliance (but not tax
planning) practice; or
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who, or whose immediate family member, was within the last three
years (but is no longer) a partner or employee of such auditor
and personally worked on our audit within that time.
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No director who is employed, or whose immediate family member is
employed, as an executive officer of another company where any
of our present executives serve on that companys
compensation committee can be independent until
three years after the end of such service or employment
relationship.
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No director who is an employee, or whose immediate family member
is an executive officer, of a company that makes payments to, or
receives payments from, us for property or services in an amount
which, in any single fiscal year, exceeds the greater of
$1 million, or 2% of such other companys consolidated
gross revenues, can be independent until three years
after falling below such threshold.
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Executive
Sessions of Independent Directors
Independent directors regularly meet in executive sessions
without management. Our named lead director, Dr. Wilburn,
who is a non-management director, presides over each session of
the independent directors. During the 2006 fiscal year, the
independent directors held three meetings.
Director
Attendance at Annual Meeting of Stockholders
It is our policy to request that all Board members attend the
Annual Meeting of Stockholders. However, we also recognize that
personal attendance by all Directors is not always possible. All
eleven Directors did attend the 2006 Annual Meeting of
Stockholders.
5
Structure of the
Board of Directors
Information regarding the structure of our Board of Directors:
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Current size:
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11 members
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Size of Board of Directors
authorized in the
By-Laws:
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Not less than five nor more than 12
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Number of Independent Directors:
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Eight members
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Size of Board of Directors
established by:
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Board of Directors
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Lead Director:
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R. C. Wilburn
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Meeting
Attendance and Committees
The Board of Directors held nine meetings during the fiscal year
ended December 31, 2006. All Directors attended at least
75% of the total Board and committee meetings on which they
served, and the average attendance by Directors at all Board and
committee meetings was 98.86%. The Independent Directors held 3
meetings during 2006. We have standing Audit, Executive,
Management Development and Compensation, and Nominating and
Corporate Governance Committees.
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Audit Committee |
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Meetings in 2006: five |
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Members: Mr. Scheiner, Chairman, Ms. Eddy,
Mr. Pierce, Ms. Scanlan and Mr. Viviano |
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Duties: Established in accordance with Section 3(a)(58)(A)
of the Securities Exchange Act of 1934. Oversees our financial
reporting processes, including meeting with members of
management, the external auditors and the internal auditors,
reviewing and approving both audit and non-audit services,
reviewing the results of the annual audit and reviewing the
adequacy of our internal controls. The Committee is also
responsible for managing the relationship with the external
auditors. The Chairman of the Audit Committee meets quarterly
with management and the independent auditors to review financial
matters. See also the Report of the Audit Committee beginning on
page 17. The Audit Committee recently completed a review of
its charter and determined that several amendments were
appropriate. A copy of the revised Audit Committee charter can
be viewed at the Corporate Governance section of our website at
www.harsco.com. |
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Executive Committee |
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Meetings in 2006: None |
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Members: Mr. Hathaway, Chairman, Messrs. Scheiner,
Sordoni and Wilburn |
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Duties: Authorized to exercise all powers and authority of the
Board of Directors when the Board is not in session, except as
may be limited by the General Corporation Law of the State of
Delaware. |
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Management Development and Compensation Committee |
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Meetings in 2006: six |
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Members: Mr. Wilburn, Chairman, Messrs. Jasinowski,
Scheiner and Sordoni and Ms. Scanlan |
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Duties: Administers our executive compensation policies and
plans and advises the Board regarding management succession and
compensation levels for members of senior management. The role
of the Management Development and Compensation Committee (the
Compensation Committee) is described in greater
detail under the section entitled Compensation Discussion
and Analysis beginning on page 19 of this Proxy
Statement. The Board approved revisions to the Compensation
Committees charter as of January 2007 to further clarify
its responsibilities with respect to certain matters. A copy of
the Compensation Committees charter can be viewed at the
Corporate Governance section of our website at
www.harsco.com. |
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Nominating and Corporate Governance Committee |
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Meetings in 2006: three |
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Members: Mr. Sordoni, Chairman, Messrs. Jasinowski,
Pierce, Viviano and Wilburn |
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Duties: Recommends Director candidates to the Board for election
at the Annual Meeting, reviews and recommends potential new
Director candidates, reviews candidates recommended by our
stockholders and oversees our corporate governance program. The
role of the Nominating and Corporate Governance Committee (the
Nominating Committee) is described in greater detail
under the section entitled The Nominating Process
beginning on page 9 of this Proxy Statement. The Board
approved revisions to the Nominating Committees charter as
of January 2007 to further clarify its responsibilities with
respect to certain matters. A copy of the Nominating
Committees charter can be viewed at the Corporate
Governance section of our website at www.harsco.com. |
7
HARSCO STOCK
PERFORMANCE GRAPH
The following performance graph compares the yearly percentage
change in the cumulative total stockholder return (assuming the
reinvestment of dividends) on our common stock against the
cumulative total return of the Standard & Poors
MidCap 400 Index and the Dow Jones Industrial-Diversified Index
for the past five years. The graph assumes an initial investment
of $100 on December 31, 2001 in our common stock or in the
underlying securities which comprise each of those market
indices. The information contained in the graph is not
necessarily indicative of our future performance.
COMPARISON OF 5
YEAR CUMULATIVE TOTAL RETURN
Among Harsco
Corporation, The S&P MidCap 400 Index
And The Dow Jones US Diversified Industrials Index(1)(2)
Fiscal Year Ending December 31
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2001
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2003
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2005
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2006
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Harsco Corporation
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100.00
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95.79
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135.69
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176.82
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218.81
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250.86
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S & P Midcap 400
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100.00
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85.49
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115.94
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135.05
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152.00
|
|
|
|
|
167.69
|
|
Dow Jones US Diversified
Industrials
|
|
|
|
100.00
|
|
|
|
|
64.93
|
|
|
|
|
87.84
|
|
|
|
|
104.69
|
|
|
|
|
101.95
|
|
|
|
|
111.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Peer companies included in the Dow Jones Industrial-Diversified
Index as of December 31, 2006 are: 3M Co., Actuant Corp.,
Carlisle Companies Inc., Dover Corporation, Eaton Corp., General
Electric Co., Honeywell International Inc., ITT Industries
Inc., Kennametal Inc., Rockwell International Corp., Teleflex
Inc., Textron Inc., Tyco International Ltd. and Walter
Industries Inc.
|
|
(2)
|
In December 2001, Dow Jones restructured its industry
classification system. The net result of this change is that all
US indices will show differences when compared to the prior
index series.
|
8
THE NOMINATING
PROCESS
The Nominating Committee of the Board of Directors is
responsible for overseeing the selection of qualified candidates
to serve as members of the Board of Directors and guiding our
corporate governance philosophy and practices. The Nominating
Committee is composed of five directors each of whom is
independent under the rules of the New York Stock
Exchange. The Nominating Committee operates according to a
charter that complies with the guidelines established by the New
York Stock Exchange.
The Nominating Committee has not adopted formal procedures in
selecting individuals to serve as members of the Board of
Directors. Instead, it utilizes general guidelines that allow it
to adjust the process to best satisfy the objectives established
for any director search. The first step in the general process
is to identify the type of candidate the Nominating Committee
may desire for a particular opening. This may involve
identifying someone with a specific background, skill set or set
of experiences. Once identified, the Nominating Committee next
determines the best method of finding a candidate who satisfies
the specified criteria. The Nominating Committee may consider
candidates recommended by management, by other members of the
Nominating Committee or the Board of Directors, by stockholders,
or it may engage a third party to conduct a search for possible
candidates. The Nominating Committee will consider all nominees
in the same manner regardless of the source of the
recommendation of such nominee. The Nominating Committee will
consider recommendations for director candidates from
stockholders if such recommendations are in writing and set
forth the following information:
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1.
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The full legal name, address and telephone number of the
stockholder recommending the candidate for consideration and
whether that person is acting on behalf of or in concert with
other beneficial owners, and if so, the same information with
respect to them.
|
|
|
2.
|
The number of shares held by any such person as of a recent date
and how long such shares have been held, or if such shares are
held in street name, reasonable evidence satisfactory to the
Nominating Committee of such persons ownership of such
shares as of a recent date.
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3.
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The full legal name, address and telephone number of the
proposed nominee for director.
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4.
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A reasonably detailed description of the proposed nominees
background, experience and qualifications, financial literacy
and expertise, as well as any other information required to be
disclosed in the solicitation for proxies for election of
directors pursuant to the rules of the Securities and Exchange
Commission, and the reasons why, in the opinion of the
recommending stockholder, the proposed nominee is qualified and
suited to be one of our directors.
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5.
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Disclosure of any direct or indirect relationship (or
arrangements or understandings) between the recommending
stockholder and the proposed nominee (or any of their respective
affiliates).
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6.
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Disclosure of any direct or indirect relationship between the
proposed nominee and us, any of our employees or other
directors, any beneficial owner of more than 5% of our common
stock, or any of their respective affiliates.
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7.
|
Disclosure of any direct or indirect interest that the
recommending stockholder or proposed nominee may have with
respect to any pending or potential proposal or other matter to
be considered at this Annual Meeting or any subsequent annual
meeting of our stockholders.
|
9
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8.
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A written, signed, and notarized acknowledgement from the
proposed nominee consenting to such recommendation by the
recommending stockholder, confirming that he or she will serve
as a director if so elected and consenting to our undertaking of
an investigation into their background, experience and
qualifications, any direct or indirect relationship with the
recommending stockholder, us, our management or 5% stockholders,
or interests in proposals or matters, and any other matter
reasonably deemed relevant by the Nominating Committee to its
considerations of such person as a potential candidate.
|
This information must be submitted as provided under the heading
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR
PRESENTATION AT 2008 ANNUAL MEETING OF STOCKHOLDERS.
There have been no material changes to the procedures relating
to stockholder nominations during 2006. The Nominating Committee
believes that these procedural requirements are intended solely
to ensure that it has a sufficient basis on which to assess
potential candidates and are not intended to discourage or
interfere with appropriate stockholder nominations. The
Nominating Committee does not believe that any such requirements
subject any stockholder or stockholder nominee to any
unreasonable burden. The Nominating Committee and the Board
reserve the right to change the above procedural requirements
from time to time
and/or waive
some or all of the foregoing requirements with respect to
certain nominees, but any such waiver shall not preclude the
Nominating Committee from insisting upon compliance with any and
all of the above requirements by any other recommending
stockholder or proposed nominees.
Once candidates are identified, the Nominating Committee
conducts an evaluation of the candidate. The evaluation
generally includes interviews and background and reference
checks. There is no difference in the evaluation process of a
candidate recommended by a stockholder as compared to the
evaluation process of a candidate identified by any of the other
means described above. While the Nominating Committee has not
established minimum criteria for a candidate, it has established
important factors to consider in evaluating a candidate. These
factors include: strength of character, mature judgment,
business experience, availability, attendance, career
specialization, relevant technical skills, diversity and the
extent to which the candidate would fill a present need on the
Board of Directors.
If the Nominating Committee determines that a candidate should
be nominated as a candidate in the Proxy Statement, the
candidates nomination is then recommended to the Board of
Directors, who may in turn conduct its own review to the extent
it deems appropriate. When the Board of Directors has agreed
upon a candidate to be nominated at an Annual Meeting of
Stockholders, that candidate is then recommended to the
stockholders for election at an Annual Meeting of Stockholders.
All of our current directors are standing for reelection. Each
of these directors has been recommended by the Nominating
Committee to the Board of Directors for election as our
directors at the 2007 Annual Meeting of Stockholders and the
Board has approved the recommendation. We did not engage a third
party search firm to assist with the selection of the director
candidates for the 2007 Annual Meeting of Stockholders. During
2006, we received no recommendation for directors from any
stockholders.
PROPOSAL 1:
ELECTION OF DIRECTORS
The first proposal to be voted on at the Annual Meeting is the
election of the following eleven Directors, each of whom is
recommended by the Board of Directors. Biographical information
about each of these nominees is included below.
10
The Board of Directors Recommends that Stockholders Vote
FOR the Election of Each of the
Following Nominees:
Nominees for
Director
The information set forth below states the name of each nominee
for Director, his or her age (as of March 2, 2007), a
listing of present and previous employment positions, the year
in which he or she first became a Director of the Company, other
directorships held and the committees of the Board on which the
individual serves.
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Director
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of the
|
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|
|
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Position with the
Company
|
|
Company
|
Name
|
|
Age
|
|
and Prior
Business Experience
|
|
Since
|
|
G. D. H. Butler
|
|
|
60
|
|
|
Senior Vice President
Operations of the Company since 2000. Concurrently serves as
President of the MultiServ Division and President of the SGB
Division. President of Heckett MultiServ International and SGB
from 2000 to 2003, and from 1994 to 2000 served as President of
the Heckett MultiServ East Division. Served as
Managing Director Eastern Region of the Heckett
MultiServ Division in 1994. Served in various officer positions
within MultiServ International, N.V. prior to 1994 and prior to
Harscos acquisition of that corporation in 1993.
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2002
|
|
K. G. Eddy
|
|
|
56
|
|
|
Certified Public Accountant.
Founding partner of McDonough, Eddy, Parsons & Baylous, AC
(a public accounting firm) since 1981. Chairman of the Board of
Directors of the American Institute of Certified Public
Accountants between 2000-2001. Current member of the AICPA
Governing Council.
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2004
|
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Member of the Audit Committee.
|
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S. D. Fazzolari
|
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54
|
|
|
President, Chief Financial Officer
and Treasurer of the Company since January 2006. Served as
Senior Vice President, Chief Financial Officer and Treasurer
from August 1999 until January 2006 and as Senior Vice President
and Chief Financial Officer from January 1998 to August 1999.
Served as Vice President and Controller from January 1994 to
December 1997 and as Controller from January 1993 to January
1994.
|
|
|
2002
|
|
D. C. Hathaway
|
|
|
62
|
|
|
Chairman and Chief Executive
Officer of the Company since January 2006 and from January 1998
to July 2000. Served as Chairman, President and Chief Executive
Officer of the Company from July 2000 to January 2006 and from
April 1994 to January 1998. Served as President and Chief
Executive Officer of the Company from January 1994 to April
1994. Served as President and Chief Operating Officer of the
Company from May 1991 to January 1994. Held various executive
positions with the Company prior to 1991.
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|
1991
|
|
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Chairman of the Executive
Committee.
|
|
|
|
|
11
|
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|
|
|
|
|
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|
Director
|
|
|
|
|
|
|
of the
|
|
|
|
|
Position with the
Company
|
|
Company
|
Name
|
|
Age
|
|
and Prior
Business Experience
|
|
Since
|
|
J. J. Jasinowski
|
|
|
68
|
|
|
Former President of The
Manufacturing Institute (research and education unit of a
business advocacy group) from 2004 to March 2007. Former
President of the National Association of Manufacturers (business
advocacy and policy association) between 1990 and 2004.
Mr. Jasinowski is also an author and commentator on
economic, industrial and governmental issues. Former positions
include Assistant Professor of Economics at the Air Force
Academy, Director of Research at the Joint Economic Committee of
Congress, Director of the Carter Administrations Economic
transition team, and Assistant Secretary of Policy at the
U.S. Department of Commerce. Mr. Jasinowski is a
director of The Phoenix Companies, Inc., The Timken Company and
webMethods, Inc.
|
|
|
1999
|
|
|
|
|
|
|
|
Member of the Compensation
Committee and the Nominating Committee.
|
|
|
|
|
D. H. Pierce
|
|
|
65
|
|
|
President and CEO of ABB Inc., the
US subsidiary of global industrial, energy and automation
provider ABB, from 1999 until his retirement in June 2001.
Between 1998 and 1999 he was President of Steam Power Plants and
Environmental Systems of ABB Inc. Between 1996 and 1998 he was
Group Executive Vice President The Americas Region
and Member of ABB Ltd. Group Executive Committee. Between 1994
and 1996 he was President of ABB China Ltd. Director of Ambient
Corporation.
|
|
|
2001
|
|
|
|
|
|
|
|
Member of the Audit Committee and
the Nominating Committee.
|
|
|
|
|
C. F. Scanlan
|
|
|
59
|
|
|
President, Chief Executive Officer
and Board Member of The Hospital and Healthsystem Association of
Pennsylvania (representation and advocacy organization) since
June 1995. Served as President and Chief Executive Officer of
the Hospital and Healthsystem Association of Pennsylvania from
1995 to date. Member of the Board of Directors of PHICO Group
Inc.
|
|
|
1998
|
|
|
|
|
|
|
|
Member of the Compensation
Committee and the Audit Committee.
|
|
|
|
|
J. I. Scheiner
|
|
|
62
|
|
|
Chairman of Benatec Associates,
Inc. (an engineering and environmental company) since January
2006. Was President and Chief Operating Officer of Benatec
Associates from 1991 to 2006. Prior to 1991, he was President of
Stoner Associates, Inc. (an engineering software company) and
Vice President of Huth Engineers (an engineering company).
Served as Secretary of Revenue for the Commonwealth of
Pennsylvania, and served as Deputy Secretary for Administration,
Pennsylvania Department of Transportation. He is a member of the
Pennsylvania Chamber of Business and Industry Board.
|
|
|
1995
|
|
|
|
|
|
|
|
Chairman of the Audit Committee
and member of the Executive Committee and the Compensation
Committee.
|
|
|
|
|
A. J. Sordoni, III
|
|
|
63
|
|
|
Chairman of Sordoni Construction
Services, Inc. (a building construction and management services
company) and has been employed by that company since 1967.
Director of Aqua America, Inc.
|
|
|
1988
|
|
|
|
|
|
|
|
Chairman of the Nominating
Committee; Member of the Compensation and the Executive
Committees.
|
|
|
|
|
12
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
of the
|
|
|
|
|
Position with the
Company
|
|
Company
|
Name
|
|
Age
|
|
and Prior
Business Experience
|
|
Since
|
|
J. P. Viviano
|
|
|
68
|
|
|
Retired Vice Chairman of Hershey
Company (a confectionery and grocery products company). Was
President and Chief Operating Officer of Hershey Company from
1994 to 1998. Mr. Viviano is a director of Chesapeake
Corporation, Reynolds American, Inc. and RPM, Inc.
|
|
|
1999
|
|
|
|
|
|
|
|
Member of the Audit Committee and
the Nominating Committee.
|
|
|
|
|
R. C. Wilburn
|
|
|
63
|
|
|
President of The Gettysburg
Foundation (a nonprofit educational institution) since 2000.
Former President and Chief Executive Officer of the Colonial
Williamsburg Foundation (a historic preservation and educational
outreach organization) between 1992 and 1999. Other former
positions include Distinguished Service Professor at Carnegie
Mellon University, President of Carnegie Institute and Carnegie
Library and Secretary of Education for the Commonwealth of
Pennsylvania. He is a Director of Erie Indemnity Company.
|
|
|
1986
|
|
|
|
|
|
|
|
Chairman of the Compensation
Committee; Member of the Nominating and the Executive Committee.
|
|
|
|
|
NON-EMPLOYEE
DIRECTOR COMPENSATION
The general policy of our Board is that compensation for
non-employee Directors should be a mix of cash and equity-based
compensation. Our Compensation Committee has the primary
responsibility to review and consider any revisions to Director
Compensation. As part of this responsibility, the Committee
annually reviews market data regarding comparable director
compensation rates. This data is prepared by management
utilizing several broad board compensation studies completed
within one year of the Boards review. Annual compensation
for non-employee Directors for 2006 was comprised of the
following components: cash compensation, consisting of an annual
retainer; meeting and committee fees; and equity compensation,
consisting of Restricted Stock Unit awards. The current fees for
non-employee directors, effective January 1, 2006, are as
follows:
|
|
|
|
|
|
Annual Retainer:
|
|
$35,000
|
|
|
|
Audit Committee Chair Fee (Annual):
|
|
$7,500
|
|
|
|
Compensation Committee Chair Fee
and Nominating Committee Chair Fee (Annual):
|
|
$5,000
|
|
|
|
Board Meeting Fee (Per Meeting):
|
|
$1,500
|
|
|
|
Committee Meeting Fee (Per
Meeting):
|
|
$1,500
|
|
|
|
Other Meetings and Duties (Per
Day):
|
|
$1,500
|
|
|
|
Telephonic Meeting Fee (Per
Meeting):
|
|
$750
|
13
|
|
|
|
|
|
Restricted Stock Units (1):
|
|
1,000 restricted stock units
annually
(issued at a grant
price equal to the average of the
high and low market
price on the date of grant. Grant
date is first business day of May.)
|
|
|
|
Plan Participation (2):
|
|
Deferred Compensation Plan for
Non-Employee Directors
|
Directors who are actively employed by us receive no additional
compensation for serving as Directors and by policy, we do not
pay consulting or professional service fees to Directors.
|
|
|
(1) |
|
At the November 2005 meeting of the Compensation Committee, the
Compensation Committee reviewed the compensation of the
non-employee Directors and recommended that the annual equity
portion of the compensation be increased from 750 to 1,000
restricted stock units. The Board of Directors approved the
recommendation effective January 1, 2006. The Compensation
Committee also reviewed the compensation of non-employee
Directors at its September 2006 meeting and recommended no
change in compensation for 2007. |
|
(2) |
|
The Deferred Compensation Plan for Non-Employee Directors (the
Plan) allows each non-employee Director to defer all
or a portion of his or her director compensation until some
future date selected by the Director. Pursuant to the
Directors election, the accumulated deferred compensation
is held in either an interest-bearing account or a Harsco
phantom share account. The interest-bearing deferred account
accumulates notional interest on the account balance at a rate
equal to the five-year United States Treasury Note yield rate in
effect from time to time. Contributions to the phantom stock
account are recorded as notional shares of Harsco common stock.
Deferred amounts are credited to the Directors account
quarterly on the 15th of February, May, August and
November. The number of phantom shares recorded is equal to the
number of shares of common stock that the compensation which is
deferred would have purchased at the market price of the stock
on the day the account is credited. Dividends earned on the
phantom shares are credited to the account as additional phantom
shares. All phantom shares are non-voting and payments out of
the account are made solely in cash based upon the market price
of the common stock on the date of payment selected by the
Director. Under certain circumstances, the accounts may be paid
out early upon termination of directorship following a change in
control. The Plan has been amended to operate in accordance with
the provisions of the American Jobs Creation Act of 2004. |
14
FISCAL YEAR
2006 DIRECTOR COMPENSATION
The table below details the compensation earned by our
non-employee Directors in 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
Earnings
|
|
|
($)(3)
|
|
|
($)
|
|
|
Kathy G. Eddy
|
|
|
57,500
|
|
|
|
68,498
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
12,301
|
|
|
|
138,299
|
|
Jerry J. Jasinowski
|
|
|
59,000
|
|
|
|
68,498
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
10,826
|
|
|
|
138,324
|
|
D. Howard Pierce
|
|
|
62,000
|
|
|
|
68,498
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
130,498
|
|
Carolyn F. Scanlan
|
|
|
65,000
|
|
|
|
68,498
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
10,441
|
|
|
|
143,939
|
|
James I. Scheiner
|
|
|
78,500
|
|
|
|
68,498
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
6,121
|
|
|
|
153,119
|
|
Andrew J. Sordoni, III
|
|
|
68,500
|
|
|
|
68,498
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
10,735
|
|
|
|
147,733
|
|
Joseph P. Viviano
|
|
|
62,000
|
|
|
|
68,498
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
9,031
|
|
|
|
139,529
|
|
Robert C. Wilburn
|
|
|
68,500
|
|
|
|
68,498
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
10,296
|
|
|
|
147,294
|
|
|
|
|
(1) |
|
Includes fees associated with chairing a Board Committee. |
|
(2) |
|
The amounts shown in this column represent the compensation cost
recognized in 2006 for financial statement purposes with respect
to the restricted stock units, computed in accordance with FAS
123(R). As of December 31, 2006, each non-employee director
other than Ms. Eddy had 2,269 restricted stock units
outstanding. Ms. Eddy had 1,756 restricted stock units
outstanding as of December 31, 2006. Each non-employee
director was granted 1,000 restricted stock units on May 1,
2006 and these restricted stock units vest on April 24,
2007 and are payable in common stock within 60 days
following the termination of a non-employee directors
service as a director. The aggregate grant date fair value of
each non-employee directors 2006 restricted stock unit
award, computed in accordance with FAS 123(R), was $82,590,
which was determined using the average of the high and low price
of the stock on that days trading, less a discount for
dividends not received during the vesting period. The
information in this column does not reflect an estimate for
forfeitures, and none of these awards has been forfeited as of
March 2, 2007. See Note 12, Stock-based
Compensation to Notes to Consolidated Financial Statements
for a discussion of the assumptions used by the Company to
calculate share-based employee compensation expense, as outlined
in SFAS No. 123R in our Annual Report on
Form 10-K
for the year ended December 31, 2006. |
|
(3) |
|
Amounts in this column represent expenses for attendance by
spouses of Directors at Board-related business events, for which
we pay or reimburse travel and related expenses. |
SHARE OWNERSHIP
OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 2, 2007,
information with respect to the beneficial ownership of our
outstanding voting securities, stock options and other stock
equivalents by:
(a) Our Chief Executive Officer, Chief Financial Officer
and our three most highly compensated executive officers other
than the Chief Executive Officer and Chief Financial Officer,
who we refer to collectively as our Named Executive Officers,
(b) each Director,
(c) all Directors and executive officers as a
group, and
(d) certain beneficial owners holding more than 5% of the
common stock.
15
All of our outstanding voting securities are common stock.
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|
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|
|
|
|
Number of
|
|
|
Percent of
|
|
|
Number of
|
|
|
Number of
Other
|
|
Name
|
|
Shares(1)
|
|
|
Class
|
|
|
Exercisable
Options(2)
|
|
|
Stock
Equivalents
|
|
|
Named Executive
Officer
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. D. H. Butler
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|
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1,000
|
|
|
|
|
*
|
|
|
59,000
|
|
|
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18,000(3)
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S. D. Fazzolari
|
|
|
11,118
|
|
|
|
|
*
|
|
|
56,000
|
|
|
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21,017(3)
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D. C. Hathaway
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|
|
126,728
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|
|
|
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*
|
|
|
140,000
|
|
|
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15,393(3)
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M. E. Kimmel
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|
|
892
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|
|
|
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*
|
|
|
2,000
|
|
|
|
7,877(3)
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R. C. Neuffer
|
|
|
1,490
|
|
|
|
|
*
|
|
|
10,600
|
|
|
|
6,312(3)
|
|
Directors who are not Named
Executive Officers
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K. G. Eddy
|
|
|
800
|
|
|
|
|
*
|
|
|
0
|
|
|
|
1,756(5)
|
|
J. J. Jasinowski
|
|
|
1,200
|
|
|
|
|
*
|
|
|
6,000
|
|
|
|
13,433(5)
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|
D. H. Pierce
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|
|
2,000
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|
|
|
|
*
|
|
|
6,000
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|
|
|
9,295(5)
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C. F. Scanlan
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|
|
1,500
|
|
|
|
|
*
|
|
|
6,000
|
|
|
|
2,269(5)
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|
J. I. Scheiner
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|
|
3,526
|
|
|
|
|
*
|
|
|
10,000
|
|
|
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6,052(5)
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A. J. Sordoni, III
|
|
|
117,500
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(4)
|
|
|
|
*
|
|
|
12,000
|
|
|
|
2,269(5)
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|
J. P. Viviano
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|
|
5,400
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|
|
|
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*
|
|
|
7,000
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|
|
|
10,720(5)
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R. C. Wilburn
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|
|
3,500
|
|
|
|
|
*
|
|
|
10,000
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|
|
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3,699(5)
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All Directors and executive
officers as a group (14 persons in total, including those listed
above)
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|
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278,027
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|
|
|
*
|
|
|
|
324,600
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|
|
|
122,813
|
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Beneficial
Owners(6)
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Earnest Partners LLC
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1180 Peachtree Street NE,
Suite 2300 Atlanta, GA 30309
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3,388,197
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8.1
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* |
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Less than one percent. |
|
(1) |
|
Includes, in the case of Messrs. Butler, Fazzolari,
Hathaway, Kimmel, Neuffer and all Directors and executive
officers as a group, -0- shares, 8,754 shares,
31,165 shares, 892 shares and 1,490 shares, and
43,331 shares, respectively, pursuant to our Retirement
Savings and Investment Plan in respect of which such persons
have shared voting power and sole investment power. |
|
(2) |
|
Represents all stock options exercisable within 60 days of
March 2, 2007 awarded under the 1995 Executive Incentive
Compensation Plan and the 1995 Non-Employee Directors
Stock Plan. Unexercised stock options have no voting power. |
|
(3) |
|
Includes non-voting phantom shares held under the Supplemental
Retirement Benefit Plan which will ultimately be paid out in
cash based upon the value of shares of common stock at the time
of the payout as well as non-voting phantom shares held in our
non-qualified Retirement Savings and Investment Plan. Also
includes for Messrs. Butler and Fazzolari, 18,000
restricted stock units, for Mr. Kimmel, 7,600 restricted
stock units and for Mr. Neuffer 6,250 restricted stock
units that were awarded in January 2005, January 2006 and
January 2007 and vest in three years from the date of grant for
the 2005 and 2006 grants and on a pro rata basis over a
three-year period for the 2007 grants, subject to the terms of
the 1995 Executive Incentive Compensation Plan. |
|
(4) |
|
Includes 19,000 shares owned by his wife as to which
Mr. Sordoni disclaims beneficial ownership. |
16
|
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|
(5) |
|
Certain Directors have elected to defer a portion of their
Directors fees in the form of credits for non-voting
phantom shares under the terms of our Deferred Compensation Plan
for Non-Employee Directors. These phantom shares are included.
They will ultimately be paid out in cash based upon the value of
the shares at the time of payout. Also includes 500, 750 and
1,000 restricted stock units that were granted under the 1995
Non-Employee Directors Stock Plan on May 3, 2004,
May 2, 2005 and May 1, 2006, respectively. |
|
(6) |
|
This information is derived from a Schedule 13G filing by
such person with the Securities and Exchange Commission in
February 2007, representing sole voting power over
1,274,240 shares, shared voting power over
1,144,857 shares and sole dispositive power over
3,388,197 shares. These holdings represent 8.1% of our
common stock. |
Except as otherwise stated, each individual has sole voting and
investment power over the shares set forth opposite his or her
name. As of March 2, 2007, Mr. Hathaway beneficially
owned .63% of our common stock. None of the other Directors and
executive officers individually beneficially owned more than 1%
of our common stock, and our Directors and executive officers as
a group beneficially owned approximately 1.42% of our
outstanding common stock. The mailing address for our Directors
and executive officers is c/o Harsco Corporation Corporate
Secretary, 350 Poplar Church Road, Camp Hill, PA 17011.
REPORT OF THE
AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the Audit
Committee) is composed of five Directors each of whom is
considered independent under the rules of the New York Stock
Exchange and the Securities and Exchange Commission
(SEC). The Audit Committee, has, as part of its
membership, an individual who satisfies the definition of a
financial expert, as promulgated by the SEC.
Ms. Kathy Eddy, a certified public accountant and former
Chairman of the American Institute of Certified Public
Accountants has been a member of the Audit Committee since
September 28, 2004 and serves as the Audit Committees
financial expert.
The Audit Committee operates pursuant to a written charter which
was adopted in 1992 and which was most recently amended in
February of 2007. A copy of the Audit Committee Charter can be
viewed at the Corporate Governance section of our website at
www.harsco.com.
The Audit Committee has adopted a policy for pre-approval of
audit, non-audit and tax services by the independent auditors.
The Audit Committee may pre-approve services, such as the annual
audit fee and statutory audits. The services to be provided are
to be reviewed with the Audit Committee and approval is given
for a specific dollar amount and for a period of not greater
than 12 months. Services that are not pre-approved in this
manner must be pre-approved on a
case-by-case
basis throughout the year. Additionally, if the pre-approved fee
is to be exceeded, approval of the Audit Committee must be
obtained. In making its decision regarding the approval of
services, the Audit Committee will consider whether such
services are consistent with the SECs rules on auditor
independence, whether the independent auditor is best positioned
to provide such services and whether the services might enhance
our ability to manage or control risk or improve audit quality.
No services were provided during the last two fiscal years
pursuant to the de minimis safe harbor exception from the
pre-approval requirements.
The Audit Committee reports to and acts on behalf of the Board
of Directors by monitoring our financial reporting processes and
system of internal controls, and monitoring our internal
auditors and overseeing the independence and performance of the
independent auditors. In carrying out these responsibilities,
the Audit Committee meets with members of management, our
independent auditors and our internal auditors on a regular
basis or as may otherwise be needed. The Audit Committee
Chairman or his designee meets with management and with the
independent auditors
17
each quarter to review and discuss our Quarterly Report on
Form 10-Q
or Annual Report on
Form 10-K
prior to its filing with the SEC.
While the Audit Committee and Board of Directors monitor our
financial record keeping and controls, it is our management that
is ultimately responsible for our financial reporting process,
including our system of internal controls, disclosure control
procedures and the preparation of the financial statements. The
independent auditors support the financial reporting process by
performing an audit of our financial statements and issuing a
report thereon.
The Audit Committee has reviewed and discussed with management
and the independent auditors the audited consolidated financial
statements for the year ended December 31, 2006 and related
periods. These discussions focused on the quality, not just the
acceptability, of the accounting principles used by us, key
accounting policies followed in the preparation of the financial
statements and the reasonableness of significant judgments made
by management in the preparation of the financial statements and
alternatives that may be available.
The Audit Committee also discussed with our internal auditors
and independent auditors the overall scope and plans for their
respective audits of our financial statements. In addition, the
Audit Committee discussed with the independent auditors the
matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees), as
modified or supplemented, including the quality of our
accounting principles, the reasonableness of significant
judgments and the clarity of disclosures in the financial
statements. The Audit Committee also discussed with
PricewaterhouseCoopers LLP, our independent auditors, matters
relating to its independence, including a review of audit and
non-audit fees and the written disclosures and letter received
by the Audit Committee from our independent auditors required to
be delivered by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees).
Based on the review and discussions referred to above, the Audit
Committees review of the representations of management and
the report of the independent auditors, the Audit Committee
recommended to our Board of Directors that our audited financial
statements be included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006 for filing with
the SEC.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS:
J. I. Scheiner, Chairman
K. G. Eddy
D. H. Pierce
C. F. Scanlan
J. P. Viviano
FEES BILLED BY
THE INDEPENDENT AUDITORS FOR AUDIT AND NON-AUDIT
SERVICES
The following table sets forth the amount of audit fees,
audit-related fees, tax fees and all other fees billed or
expected to be billed by PricewaterhouseCoopers LLP, our
principal auditor for the fiscal years ended December 31,
2006 and December 31, 2005.
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|
|
Amount
|
|
|
Amount
|
|
|
|
2006
|
|
|
2005
|
|
|
Audit Fees(1)
|
|
$
|
5,873,600
|
|
|
$
|
5,195,000
|
|
Audit-Related Fees(2)
|
|
$
|
1,013,100
|
|
|
$
|
1,761,700
|
|
Tax Fees(3)
|
|
$
|
1,355,500
|
|
|
$
|
939,600
|
|
All Other Fees(4)
|
|
$
|
130,600
|
|
|
$
|
113,200
|
|
Total Fees
|
|
$
|
8,372,800
|
|
|
$
|
8,009,500
|
|
18
|
|
|
(1) |
|
Includes the integrated audit of the consolidated financial
statements and internal controls over financial reporting as
well as statutory audits and quarterly reviews. |
|
(2) |
|
Includes due diligence procedures and accounting consultations. |
|
(3) |
|
Includes services performed in connection with income tax
services other than those directly related to the audit of the
income tax accrual. |
|
(4) |
|
Includes the reclassification of approximately $107,000 in fees
classified as Audit-Related Fees in 2005. Includes
certain agreed upon procedures and licensing fees for software
products. |
The Audit Committee has considered the possible effect of
non-audit services on the auditors independence and
pre-approved the type of non-audit services that were rendered.
PROPOSAL 2:
APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has designated PricewaterhouseCoopers LLP as
independent auditors to audit our financial statements for the
fiscal year ending December 31, 2007. This firm has audited
the financial statements of the Company and its predecessors
since 1929. Although not required to do so by law or otherwise,
the Audit Committee desires that stockholders ratify its
selection of PricewaterhouseCoopers LLP as our independent
auditors. Therefore, the Audit Committees choice of
independent auditors will be submitted for ratification or
rejection at the Annual Meeting. In the absence of contrary
direction from stockholders, all proxies that are submitted will
be voted in favor of the confirmation of PricewaterhouseCoopers
LLP as our independent auditors. A representative of
PricewaterhouseCoopers LLP will attend the Annual Meeting, with
the opportunity to make a statement and answer questions of
stockholders.
If this proposal is not ratified by a majority of the shares
entitled to vote at the Annual Meeting, the appointment of the
independent auditors will be reevaluated by the Audit Committee.
Due to the difficulty and expense of making any substitution of
auditors, it is unlikely that their appointment for the audit of
the financial statements for the fiscal year ending
December 31, 2007 would be changed. However, the Audit
Committee may review whether to seek new independent auditors
for the fiscal year ending December 31, 2008.
The Audit Committee, at its meeting held on November 13,
2006, reviewed and approved the fee estimate for the annual
audit of our fiscal 2006 financial statements and, taking into
consideration the possible effect of non-audit services on the
auditors independence, also reviewed specific non-audit
services to be rendered for income tax services.
The Board of Directors Recommends a Vote FOR the
Ratification of the Appointment of PricewaterhouseCoopers LLP as
our Independent Auditors.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview of
Compensation Program
Our executive compensation program is carried out through
several compensation methods. Each has its own purpose, but
together they work to create a compensation package that both
fairly compensates the individual for the services rendered to
us and the results achieved and provides appropriate value to us
for the payments we have made. Depending upon the purpose of a
particular item of compensation, our Compensation Committee may
evaluate offering the particular compensation item to an
executive in conjunction with other items of compensation. The
primary goals of our executive compensation program are to
(1) fairly compensate individuals for services
19
rendered, (2) provide selective incentives that encourage
employee conduct that results in our achievement of specific
short-term objectives, our long-term growth and an increase in
stockholder value, and (3) provide a fringe benefit package
that is competitive and permits the applicable executives to
address health, disability and retirement needs.
The primary compensation methods that we use and the manner in
which they are administered include the following:
|
|
|
|
|
Annual base salary, which is predicated upon, among other
things, the degree of responsibility associated with the
executives position and the executives past
achievements. Salaries for the Named Executive Officers are
determined based upon competitive salary data provided by Towers
Perrin, each individuals past performance, their level of
responsibility within our organization and the levels of certain
incentives that they are eligible to receive. Salaries are
designed to compensate the employee for
day-to-day
services that are provided to us based on the responsibilities
of the particular job they hold;
|
|
|
|
Annual cash incentive compensation awarded under the
stockholder-approved 1995 Executive Incentive Compensation Plan
(as amended, the 1995 Incentive Plan), the amount of
which is based upon achievement of specific economic value-added
(EVA®)
goals established for us as a whole, as well as for a relevant
business unit or units. We believe that the attainment of
specific, measurable
EVA®
goals is an important determinant of total return to
stockholders over the long-term and has the advantage of not
being subject to fluctuations in our common stock price. The
amount of the annual bonus payout is a function of a formula
that takes into account our performance, an individuals
salary and his or her target bonus percentage, which is a
function of the level of responsibility they have within their
organization. The annual bonus program is designed to reward
executives for accomplishing specific pre-established goals
which we believe are vital to our ability to increase
stockholder value;
|
|
|
|
Long-term equity compensation issued under the 1995 Incentive
Plan in the form of restricted stock units (RSUs).
Harsco has established maximum RSU grant guidelines for each
executive. The maximum number of RSUs for any executive is a
function of their level of responsibility in the Company. The
actual number of units granted to an executive is a function of
the level of achievement attained by us based on specified
performance targets and the exercise of discretion by the
Compensation Committee of our Board of Directors, which may, in
its discretion, reduce an award below the targeted payout
amount. We have exercised discretion in each of the past two
years to reduce the grant of RSUs for individuals that we did
not believe made an appropriate contribution to the overall
achievement by the Company. For 2006, the performance goals were
based on the attainment of pre-established earnings per share
amounts. For 2007 and 2008, the performance goals are a
combination of earnings per share and operating cash flow.
Earnings per share and operating cash flow goals are established
by our Compensation Committee based upon established growth
objectives recommended by management. The growth objectives for
the periods ended or ending December 31, 2006, 2007 and
2008, on a
year-over-year
revised basis, range from 10.3 to 39.1 percent for earnings
per share, and for the periods ending December 31, 2007 and
2008, on a
year-over-year
revised basis, range from 9.5 to 23.5 percent for cash flow
from operations. Grants of restricted stock units made in years
2005 and 2006 are subject to a three year holding period after
grant. Grants thereafter are subject to a pro-rata vesting
schedule over a three year period. Equity compensation is
included as part of our compensation program in order to reward
management for the achievement of longer-term goals which we
believe are key to the improvement of
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20
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|
|
stockholder value and to help in the alignment of
managements interest with those of stockholders; and
|
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|
|
|
Various health, disability, retirement and other benefits,
including post-termination arrangements, commonly found in
similar companies. Many of these benefits are offered to
management and non-management employees on a similar basis.
|
In establishing the weight of these various compensation
components, our management believes that employees in higher
ranks should have a higher proportion of their total
compensation delivered through
pay-for-performance
cash incentives and long-term equity compensation; as a result,
their compensation will be more significantly correlated, both
upward and downward, to our financial performance. We also
believe that as executives rise to positions that can have a
greater impact on our performance, the compensation program
should place more emphasis on the value of our common stock.
General
Compensation Philosophy
In administering our executive compensation program, we look to
accomplish the following goals:
|
|
|
|
|
Incentivize management to achieve our annual performance goals
(economic value added targets) and long-term performance goals
(earnings per share and operating cash flow objectives), which
are specifically designed to reinforce the creation and
enhancement of stockholder value;
|
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|
Promote individual initiative and achievement;
|
|
|
|
Provide levels of compensation that are fair, reasonable and
competitive with comparable industrial companies; and
|
|
|
|
Attract and retain qualified executives who are critical to our
long-term success.
|
This philosophy is reflected in our key strategic compensation
goals discussed above.
Other Key Guiding
Principles
In addition to the above goals, we, through our Compensation
Committee, administer our executive compensation programs with
these guiding principles in mind:
|
|
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|
|
In general, we strive to maintain total compensation packages
which range from moderately below to moderately above industry
medians.
|
|
|
|
The executives most able to affect our performance should have a
significant portion of their potential total compensation at
risk and dependent upon our performance.
|
|
|
|
Our executive officers should share in the gains and losses of
common stock experienced by stockholders in order to reinforce
the alignment of their respective interests.
|
|
|
|
While our Board of Directors encourages senior management to
hold our stock, and has instituted holding periods on grants of
RSUs, it has not established specific ownership guidelines for
these executives. Each executive does have exposure to the value
of our stock, either through stock held individually, stock held
in their retirement accounts, stock options which they hold or
RSUs which have been granted.
|
|
|
|
In the event that we were required to restate earnings for a
prior period, we would review the appropriateness of adjusting
prior bonus payments. In conducting such a review, we will
|
21
|
|
|
|
|
follow all legal requirements in place regarding the repayment
or adjustment of prior bonuses and will also examine all facts
and circumstances surrounding any restatement and take
appropriate actions based on our findings, including the
repayment of prior bonuses if appropriate.
|
Compensation
Consultants
Our Compensation Committee has the authority under its charter
to engage the services of outside advisors, experts and others
to assist the Committee. The Compensation Committee has not
directly engaged a compensation consultant but does utilize
information provided by both Stern Stewart & Company
with regard to our annual EVA incentive plan and Towers Perrin
with respect to most other compensation matters. Stern
Stewart & Company was selected by us because of their
expertise in working with economic value added programs, both
from an operating and from a compensation standpoint. Towers
Perrin also provides pension and actuarial consulting services
to us and was chosen to provide compensation services to us
because of their broad level of expertise in the compensation
and benefits area and their expansive knowledge of relevant
market data in these areas. Specifically, Towers Perrin develops
the annual compensation review of our top senior executives for
our Compensation Committee. Stern Stewart & Company and
Towers Perrin have in the past attended Compensation Committee
meetings upon invitation from our Compensation Committee, though
neither consultant attends Compensation Committee meetings on a
regular basis.
Total
Compensation
In establishing total cash compensation, our Committee reviews
each aspect of direct compensation (i.e., salary, annual
bonus and RSU awards) on both an individual component and a
combined basis. Many of the other benefits that we offer, such
as health benefits, disability benefits and retirement benefits,
are now offered on the same basis to all similarly situated
employees (for example, to all U.S. employees). Specific
consideration of the level of these benefits is not generally
included in the review. Benefits specific to an individual
executive, such as change in control agreements, are reviewed on
a regular basis, but not necessarily as part of the annual
compensation review. During the review of compensation for 2007,
which was completed in 2006, and in connection with the
preparation of this report, our Compensation Committee did
review all aspects of compensation which might be paid to an
executive, whenever earned in his or her career. In order for
this review to occur information was provided to the Committee
in various ways, none of which may qualify as a tally
sheet, as that term is generally understood.
Program
Components
A substantial amount of our Compensation Committees annual
cycle of work relates to the determination of compensation for
Harscos executive officers, including the Chief Executive
Officer. In November of each year, our Committee makes
determinations of base salaries for executive officers and other
employees for the following calendar year. At this meeting, the
Committee also determines the appropriate level for the annual
bonus program as well as determines whether adjustments are
appropriate prospectively for the target level of RSU grants.
During January of the following year, our Committee makes
determinations of annual incentive cash payments and grants of
RSUs for executive officers and other employees based on our
performance during the previous calendar year in relation to the
performance goals established at the beginning of the
performance cycle. Our Compensation Committee also reviews
incentive targets for the annual incentive plan and the equity
incentive plan so that they are finalized and established within
the first 90 days of the performance cycle. Our Committee
has established the 2007 and
22
2008 performance goals for EVA under the annual incentive plan
and for earnings per share and cash flow under the equity
incentive plan. We believe that the goals when established
require our executives and the Company to perform at a high
level in order to achieve target payout. Our outstanding
performance over the past several years has resulted in
above-target payouts under the annual incentive plan and payouts
at the target/maximum level for the equity incentive plan. The
excellent prior years results have made it likely that the
pre-established equity plan performance targets (earnings per
share and operating cash flow) for 2007 and 2008 will be
reached. Prior years performance will not impact the
achievability of the 2007
EVA®
incentive plan target.
Salaries
Our goal with regard to the establishment of salaries is to
provide a salary level that fairly compensates the individual
for the services they perform and that is competitive with
applicable going market rates. In making its decisions regarding
salary, our Committee utilizes information from the Towers
Perrin CDB Executive Compensation Database, which is a
broad-based survey of companies, participation in which is on a
voluntary basis, and which is not limited to the companies
within the Dow Jones Industrial-Diversified Index referenced
elsewhere in the Proxy Statement, though some of those companies
may have been included in the survey. Utilizing benchmark data,
such as the Towers Perrin survey, helps to assure our Committee
that we are not paying too much or too little for a given
position and therefore can attract and retain appropriately
qualified personnel for the given position. In general, we
strive to maintain salary levels that range from moderately
below to moderately above the industry medians.
We, through our Compensation Committee, annually review and
approve the base salaries of executive officers, taking into
consideration the following factors:
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the available salary budget, which is established based on
projected salary increases for comparable industries (taken from
various survey sources) and overall profit objectives;
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the officers current and historical performance and
contribution to our business, including the achieved results of
the operations for which they are responsible and other key
strategic accomplishments on pre-established goals within his or
her areas of responsibility;
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each officers level and amount of responsibility within
our business, focusing particularly on the individuals
ability to impact bottom line results either directly or through
the groups of people they manage;
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comparison survey data provided by one or more major consulting
firms;
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comparison to other internal salaries, with the goal of internal
equity that rewards positions with similar levels of
responsibility, similarly; and
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our salary range structure for various grade levels.
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Our Compensation Committee completed its annual review of
officer salaries for calendar year 2006 at its November 14,
2005 meeting. In establishing 2006 salaries, our Compensation
Committee considered information developed by Towers Perrin, as
well as the overall operating results that have been achieved by
us and each individual division, the progress made by each
individual on our key strategic goals which they can impact, any
change in the overall level of their responsibilities over the
past year and the recommendations of senior management which are
based on many of the factors stated above.
Annual increases in the base salary levels of the named
executive officers range from 0% to 8.23% over the prior
years salary. Base salary generally comprises 30% to 45.8%
of the total
23
compensation of our named executive officers. The average level
of salary increases for non-executive officers throughout our
business was 4.78% and ranged from 2 to 14.4 percent.
Annual Incentive
Compensation Plan
The annual incentive bonus program applies to employees across
our business, generally at the manager level and above. The
general application of the program is consistent across all
participants, although payouts differ based on the target bonus
percentage and the actual performance of the operating unit in
which the individual is employed. We implemented the EVA program
in 2002 as a financial operating system that not only addresses
operating results, but also considers the impact of the capital
used to achieve those results. EVA is an operating mindset that
is instilled in our employees and is utilized in the way we
operate our businesses. In light of this, it was deemed the
appropriate measure by which to judge results for incentive
purposes. EVA is calculated by subtracting from net operating
profit after tax (which is similar to operating earnings less
taxes) a charge for capital employed in the particular business
(which is the product of the amount of capital utilized
multiplied by the particular cost of capital assigned to that
business).
Payments for named executive officers under the 1995 Incentive
Plan for calendar year 2006 were dependent upon achievement of
EVA objectives for the business units in the case of
Mr. Butler and Mr. Neuffer, and the achievement of an
EVA objective for the Company, in the case of the other named
executive officers. These EVA objectives were established by our
Compensation Committee prior to the beginning of the year.
Payments of annual incentives under the 1995 Incentive Plan are
a function of the executives annual salary multiplied by
the applicable bonus percentage, which in turn is multiplied by
a performance percentage. The bonus percentage is determined for
each individual executive and is a function of the
individuals level of responsibilities and his or her
ability to impact the overall results of the Company. The
percentage is calculated by multiplying the individuals
salary grade by .02. The .02 is a factor which ties the various
salary grades used by us to an appropriate incentive range.
The performance percentage is determined based on achievement of
EVA objectives and can range from 0 to 200%. The target bonus is
at 100% performance. Zero and 200% were set as outer limits
based on recommendations by our consultant, Stern
Stewart & Company, and our desire to keep incentive
payments within a certain range. Because of the way the
incentive system is structured, it is unlikely that either an
award of zero or 200% will be achieved, with the probability
being approximately 15% of either result being attained. In the
past, certain divisional officers have achieved zero payouts as
well as 200% payouts. The target bonus percentage for
Mr. Hathaway in 2006 was 80% and the target bonus
percentages for the other executive officers ranged from 64% to
42%. At its November 2006 meeting, the Compensation Committee
revised Mr. Hathaways target bonus percentage for
2007 to 100% and increased various other executives salary
grades so that their target bonus percentages for 2007 now range
from 70% to 46%. The EVA objectives include minimum, target and
maximum levels. The 2006 EVA objectives were developed by Stern
Stewart & Company based on the required increase in EVA
that the Company and each division must obtain for the year to
meet the growth expectations that are inherent in our stock
price. Performance below the minimum performance level results
in a zero performance percentage and, therefore, no incentive
payments are made. The performance percentage increases above
zero once the minimum performance level is obtained and
increases as results increase above the minimum level. For 2006,
the performance percentage for achieving the target level of EVA
performance results was 100%. If the maximum performance level
is obtained or surpassed, the performance percentage is capped
at 200%.
24
We, with the input of Stern Stewart & Company, have
established minimum, target and maximum objectives for overall
EVA performance for 2007 and allocated that target objective
among the divisions. Thus, the annual incentive compensation
awards of the corporate officers are closely related to the
overall performance of the divisions against their EVA goals.
Goals are recommended by Stern Stewart to the Committee, and
senior management has very limited input into the establishment
of the EVA targets.
After the end of each fiscal year, management presents to our
Compensation Committee a summary and recommendation for
management incentive bonuses. Since the annual incentive system
is based on a formula payout, the recommendations are simply the
result of calculating the formula. The presentation includes:
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information on our EVA performance for the fiscal year just
ended, both on an overall Company and individual division basis;
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awards to each executive officer in the plan during the prior
three years;
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salary for the fiscal year just ended and target award
information; and
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a specific recommendation for management incentive bonuses based
on the above criteria.
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Our Compensation Committee then reviews the information and
recommendations with management, and makes a decision as to the
awards to be made. Since the annual incentive program is formula
driven and the formula is approved at the same time as the
annual performance targets, our Committee only has discretion to
reduce the recommended awards for the Named Executive Officers.
Based on each named executive officers business
units achievements against the established EVA targets,
Mr. Butler attained 135% of target achievement and
Mr. Neuffer attained 200% of target achievement. The other
three Named Executive Officers attained 143% of target
achievement for 2006 based on the overall Company EVA
achievement. The amounts of the awards to the Named Executive
Officers under the Plan are summarized in the Summary
Compensation Table.
Equity
Compensation
Until 2002, we utilized stock options in the equity portion of
our compensation program. In 2002, our Compensation Committee,
upon recommendation of management, suspended the issuance of
stock options for all employees. This was the result of concerns
that were being raised in the marketplace regarding the
appropriateness of using stock options as a compensation tool
and the belief among senior management and our Compensation
Committee that the stock option program was not achieving the
overall goals that an equity program should realize. No equity
compensation was issued in 2003 or 2004 to any employee. During
2004, our Compensation Committee worked with management to
develop an equity compensation program that they believed better
achieved the objectives our Compensation Committee wanted from
an equity compensation program. The RSU program was developed
and the first grants were made in January 2005. Our Compensation
Committee and our Board of Directors determined that restricted
stock unit grants based on our performance encouraged executives
to focus on our achievement of specific financial objectives
that are aimed at driving stockholder value and are consistent
with our strategic plan and growth initiatives.
The primary purpose of our long-term incentive compensation
program, as evidenced by grants of RSUs, is to drive maximum
stockholder return by directly aligning the interests of
management and stockholders and motivating key executives to
remain with us. Our Committee also decided it was appropriate to
utilize a different performance measure from EVA, and thus
25
selected earnings per share because of its importance to the
marketplace. After further review of the performance goals for
the RSU program, our Committee added operating cash flow as a
second performance measure for cycles ending December 31,
2007 and 2008, because of its belief in the importance of
operating cash flows to our long-term success. In September
2006, our Compensation Committee requested management to work
with appropriate consultants to review the operation of the RSU
program and report to our Committee on its findings. Several of
the questions that are to be answered include the appropriate
performance measure for the RSU program in the future, the
appropriate level of participation throughout the organization
and the payout scheme that should be utilized. Preliminary
results were presented to our Committee at its November meeting,
and our Committee asked management to provide further
information on the possibility of adjusting the RSU program to
be complementary to the annual incentive program, where the
payout is based on EVA achievement. Further work is being
carried out based on our Committees instructions and
findings and recommendations will be made in March 2007.
Our stockholders, at our 2004 Annual Meeting, approved an
amendment to the 1995 Incentive Plan which was intended to
qualify future grants of restricted stock or RSUs as
performance-based compensation under Section 162(m) of the
Internal Revenue Code.
Under the restricted stock unit program, performance goals for a
given year have historically been established at least one year
in advance by our Compensation Committee. Earnings per share
goals for calendar years 2004, 2005 and 2006 were established by
our Compensation Committee in early 2004. Our Compensation
Committee approved the 2007 goals of earnings per share and cash
flow at its January 2005 meeting and approved 2008 earnings per
share and cash flow goals at its November 14, 2005 meeting.
At its meeting in November 2006, our Committee increased these
goals for the 2007 and 2008 years for the expected level of
earnings per share and operating cash flow resulting from the
Hünnebeck and Brambles acquisitions that occurred in late
2005. The amount of the increase was 15.6% to 13.3% for earnings
per share and 16.7% to 15% for operating cash flow. In years
where two performance measures are utilized, each measure has
equal weighting. As discussed above, our Compensation Committee
is reviewing various aspects of the RSU program, but performance
objectives for the program will be established in the first
90 days of 2007, as is its practice. In light of the timing
of our Committee meeting in March, and the finalization and
mailing of our proxy statement, it is unlikely that the goals
will be established in time for their inclusion in this Proxy
Statement.
Performance goals for earning per share and free cash flow are
recommended by management to the Committee and are based upon
expectations regarding the targeted growth in these measures
over the performance period. The recommended objectives are
consistent with the objectives discussed with the investment
community by management for the longer term periods.
Long-term incentive compensation comprises 35% to 51.3% of the
total compensation of executive officers. Grants of restricted
stock units are made at the January meeting subsequent to the
end of the performance period if the performance goals for the
applicable period are achieved.
Our Compensation Committee has complete discretion on whether to
grant and the amount (i.e., discretion to reduce the maximum
grant by any amount, even to zero) of any grant of RSUs that may
be made annually to any officer. In making this determination,
our Committee focuses on whether the individual did, in fact,
make an appropriate contribution to our overall achievements,
since the objectives for this award are based on the overall
performance of our Company. If shares are granted, they must be
held by the individual for a period of three years for grants
made in 2005 and 2006. For grants made in 2007 and beyond, the
shares granted will vest on a pro-rata basis over a three-year
period. If the individual leaves employment with us during this
period, except as a
26
result of death, disability or retirement, the stock units are
forfeited. The vesting of the shares is also accelerated in the
event of a
change-of-control.
We have established the vesting period as a retention vehicle
for senior executives and have established the exceptions to
these vesting requirements because we believe these events are
generally not within the individuals control and it would
be inappropriate and a penalty to forfeit these shares upon
their occurrence in light of the fact that the performance goals
have been previously achieved. Performance goals for 2006 were
achieved and our Compensation Committee did make grants of
restricted stock units to Messrs. Butler, Fazzolari,
Neuffer and Kimmel as well as certain other of our officers
based on 2006 performance. As was described in a
Form 8-K
filing made by us on January 24, 2007, our Compensation
Committee and the Board approved a grant of restricted stock
units to Mr. Hathaway that was paid out in cash.
Mr. Hathaways current stock holdings and outstanding
stock options and the stage of his career with us were
considered in making this determination.
Mr. Hathaways cash payment was equal to $1,584,900
and was based on the average of the high and low sales price of
our common stock on January 23, 2007 and 20,000 shares.
The amounts shown in the Summary Compensation Table reflect the
dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2006, in
accordance with FAS 123(R), of RSU awards under the 1995
Incentive Plan. As a result, the Summary Compensation Table
includes amounts from awards granted in and prior to 2006 and
does not include the RSU awards made in January 2007 based
on 2006 performance measures, which are discussed in this
section.
The RSUs granted as our long-term incentive compensation were
granted under our 1995 Incentive Plan. The 1995 Incentive Plan
was approved by the stockholders in 1995, was amended and
re-approved by the stockholders in 1998, 2001 and 2004, and has
been used to make grants of options and RSUs to corporate
officers and key employees, including division officers as well
as the executive officers. On September 27, 2006, the Board
approved changes to future RSU award agreements. As a result of
these changes, RSUs granted in 2007 and beyond will vest on a
pro-rata basis over three years, and the specified retirement
age has been reduced from age 65 to age 62. The
maximum stock option award as provided in the 1995 Incentive
Plan is 150,000 shares for any single participant in a
calendar year, although the issuance of stock options has been
suspended since 2002. The 1995 Incentive Plan was amended in
2004 in order that the 150,000 share limit will also apply
to awards of restricted stock, deferred stock and stock grants
which may be issued under the 1995 Incentive Plan.
Other Aspects of
the Executive Compensation Program
We have in place the following broad-based employee benefit
plans in which the U.S. executive officers participate on the
same terms as U.S. non-executive employees:
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health insurance;
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disability insurance;
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a term life insurance benefit equal to two times the
individuals salary up to a maximum benefit of $500,000;
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a defined benefit pension plan; and
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a 401(k) Savings Plan.
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In addition, the executive officers other than Mr. Butler
participate in the Supplemental Retirement Benefit Plan
(SERP) as described under the section
Retirement Plans on page 38 of this Proxy
Statement, which supplements the qualified pension plan, and in
the non-qualified
27
Retirement Savings and Investment Plan (RSIP), which
supplements our 401(k) Savings Plan with respect to
contributions that could not be made because of Internal Revenue
Service compensation and contribution limitations. During 2003,
we amended most of our defined-benefit pension plans, including
the Harsco Employee Pension Plan (HEPP) in which
most U.S. executive officers participate, to end further
accruals under the plans for additional service with us. This
change was made to address the cost and volatility of our
defined benefit pension plans and to allow us to establish a
more stable and predictable method of providing retirement
benefits to our employees. The Supplemental Retirement Benefit
Plan was also amended to eliminate further accruals under the
plan, although the balances of the SERP participants will
continue to increase due to capital gains and dividend payments.
After 2003, benefits paid under these amended qualified plans
only take into account future salary increases of participants.
To replace the frozen pension benefit under the HEPP, we
instituted the Retirement Savings Income Security Plan, a 401(k)
that has increased our matching obligations from those made
under the previous 401(k) plan in which the executive officers
and other employees participated. In addition to the new RSIP
program, we also instituted a nonqualified RSIP which provides
for benefits which are lost under the RSIP because of income and
contribution limitations under the Internal Revenue Code. While
contributions to the SERP were invested in phantom stock,
contributions to the new non-qualified RSIP plan may be invested
in a range of investment funds currently available under the
RSIP. The RSIP and the non-qualified RSIP are offered on the
same basis to executive and non-executive officers who meet the
qualifications for participation. Qualification for
participation generally allows for the inclusion of those
individuals who had their HEPP benefits frozen or were hired
after the HEPP was frozen.
The benefits offered under the health, disability and life
insurance programs are offered to
U.S.-based
executive officers on the same basis as they are offered to
U.S.-based
non-executive employees. Mr. Butler receives a supplemental
health program paid for by us, which supplements the benefits
offered under the government-sponsored programs in the U.K. This
is a benefit that is only offered to a limited number of
management level employees in the U.K. Mr. Butler also
receives a life and disability benefit which is in addition to
these types of benefits offered to other employees in the U.K.
We also provide other benefits to certain executives including a
change in control severance policy described below. Certain
Named Executive Officers, namely Messrs. Hathaway, Butler,
Fazzolari and Neuffer, are entitled to cars provided by us or a
cash allowance alternative, and the Board of Directors has
approved a policy regarding Mr. Hathaways and
Mr. Fazzolaris personal use of our aircraft.
Corporate aircraft are used primarily for business travel and
the Board policy includes a limitation on annual personal use
unless the additional use is approved by the Lead Director of
the Board. Messrs. Hathaway and Fazzolari are taxed on the
imputed income attributable to personal aircraft use and do not
receive tax assistance from us with respect to those amounts.
Our philosophy is to position the aggregate of these elements of
compensation at a level that is competitive with our size and
performance relative to other leading peer companies, as well as
a larger group of general industry companies. We further believe
that these other aspects of the executive compensation program
are reasonable, competitive and consistent with the overall
executive compensation program in that they help us attract and
retain the best leaders.
Interaction of
Elements of Compensation
Many of the benefits that we offer are either directly or
indirectly impacted by the executives level of salary. The
annual EVA incentive program is directly tied to the level of
the individuals salary because the payment is based on a
percentage of salary. As discussed above, the percentage of
salary that is received as an annual incentive bonus is a
function of the level of achievement of the
28
EVA target and the individuals salary grade. The level of
RSU grants is not a direct function of salary, as target grants
are established by our Compensation Committee based on a number
of other factors, including the individuals ability to
impact long-term results, his or her performance history and his
or her level of salary. The relative amount of life insurance
and disability insurance is a function of the individuals
salary, as is the amount contributed to the individuals
401(k) account, although that is also a function of the
percentage of salary that the individual chooses to contribute
to the plan and IRS maximum contribution limitations. Since the
payout of the annual incentive plan is based on EVA and the RSU
grants are based on the achievement of earnings per share and
operating cash flow goals, there is no direct correlation
between the measures; however, there are interrelations among
these measures such that the positive or negative performance as
to one of the measures will likely be reflected in positive or
negative performance of the others. For example, one of the
components of EVA is net operating profit after tax. While this
is not the same as the net income used in determining earnings
per share, there is a strong correlation such that the failure
to achieve an earnings per share target, depending upon the
level at which it was established, may also be reflected in a
lower EVA award because of a lower net operating profit after
taxes.
Change in Control
Severance Agreements
On June 21, 2005 the Board of Directors authorized us to
amend employment agreements then in place with
Messrs. Hathaway, Fazzolari and Butler and to enter into
similar forms of agreements with certain of our corporate
officers, including Mr. Kimmel (together with
Messrs. Hathaway, Fazzolari and Butler, the CIC
Officers), which provide that in the event of a change in
control, each such officer will remain in our employ for a
period of three years from the date of the change in control (or
to such officers normal retirement date, if earlier),
subject to the CIC Officers right to resign during a
thirty-day
period commencing one year from the date of the change in
control or for good reason. The CIC Agreements contain an
initial term of three years and automatically extend for an
additional year on each one year anniversary of the same
beginning with June 20, 2006, resulting in a current term
that expires on June 19, 2009. If a change in control
occurs, the change in control agreements will expire on the last
day of the protection period.
As part of its periodic review of compensation arrangements and
based on the recommendation of our Compensation Committee, the
Board of Directors authorized the CIC Agreements in recognition
of the importance to us and our stockholders of assuring that we
have the continued dedication and full attention of certain key
employees prior to and after the consummation of a change in
control event. In addition to the foregoing, the CIC Agreements
are intended to ensure that, if a possible change in control
should arise and a CIC Officer should be involved in
deliberations or negotiations in connection with the possible
change in control, such officer would be in a position to
consider as objectively as possible whether the possible change
in control transaction is in our best interests and those of our
stockholders, without concern for his position or financial
well-being. The amendments approved in 2005 resulted from a
review of the change in control agreements and a recommendation
by management that the benefits offered under the prior
agreements were excessive. While the benefits were consistent
with industry norms, senior management and the Board of
Directors felt that potential payments of three times the
executives salary and bonus upon an officers
termination or involuntary departure following the occurrence of
a change of control were not consistent with our philosophy with
respect to severance payments in general. The Board of Directors
therefore reduced the amount to only three times the
executives annual salary. Our Committee also considered
whether other members of management should be covered by CIC
Agreements and, as a result, added Mr. Kimmel and certain
other executive officers, though at only one times annual salary.
29
The CIC Officers are entitled to certain severance benefits as
detailed above if a change in control occurs and their
employment terminates during the protection period. For purposes
of the CIC Agreements, a change in control would be
deemed to have occurred if
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any person or group acquires 20% or more of our issued and
outstanding shares of common stock;
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the members of the Board as of the date of the CIC Agreements
(the Incumbent Board), including any person
subsequently becoming a Director whose election, or nomination
for election by our stockholders, was approved by a majority of
the Directors then comprising the Incumbent Board, cease to
constitute a majority of the members of the Board as a result of
the election of Board members pursuant to a contested election;
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the stockholders approve a reorganization, merger,
consolidation, sale of substantially all of our assets or the
acquisition of the stock or assets of another corporation that
results in our stockholders immediately prior to such
reorganization, merger, consolidation, sale or acquisition
owning less than 50% of our combined voting power; or
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the stockholders approve our liquidation or dissolution or the
sale of all or substantially all of our assets.
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In order to receive payment under the CIC Agreements for any
termination of the CIC Officers during the protection period
other than for cause, disability or death, or if the executive
terminates his employment for good reason during the protection
period, such CIC Officer must sign and return our standard
release agreement (the Release Agreement) pursuant
to which such executive will waive any claims against us. At our
sole discretion, the executive may be bound by non-competition
and non-solicitation provisions in connection with such Release
Agreement, with the terms of the same to be determined by us at
the time the executive terminates his employment.
The Chief
Executive Officers 2006 Compensation
We believe that the
pay-for-performance
goals of the executive compensation program are exemplified in
the compensation of our CEO.
Mr. Hathaways 2006 salary was determined by our
Compensation Committee utilizing the same factors as are
explained in the Salaries section above. Our
Compensation Committee particularly considered the significant
accomplishments achieved by us in 2005, including:
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significantly improved earnings;
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cash flows;
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EVA;
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stock price; and
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the completion of several material acquisitions during the year.
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In 2005 and again in 2006, Mr. Hathaway informed the
Compensation Committee of his desire to decline any increase in
his base salary for 2006 and 2007 even though the Committee
determined that an increase was warranted based on
Mr. Hathaways performance and the peer group data
reviewed by the Committee. The Compensation Committee complied
with Mr. Hathaways request for no increase in his
base salary, and Mr. Hathaways base salary has
remained set at $1,000,000, allowing any increase in his total
compensation to be tied directly to the Companys
performance, exemplifying the
pay-for-performance
goals we are striving to achieve.
30
Mr. Hathaways annual incentive payment is directly
related to our overall EVA performance, as described above. As
described above, Mr. Hathaway also received a grant of
20,000 restricted stock units in 2007 based on our 2006
performance, that was paid out in cash. This payment was based
on the achievement of pre-established EPS goals by us. As
discussed above, this RSU grant is not reflected in the Summary
Compensation Table for 2006 due to the accounting treatment of
this award under FAS 123(R). Instead, amounts from awards
granted in and prior to 2006 are reflected in the Summary
Compensation Table. Of the total $2,859,100 in cash compensation
paid to Mr. Hathaway for 2006 as reflected in the Summary
Compensation Table, 65% was contingent and dependent upon the
achievement of the EVA and EPS performance objectives
established by our Compensation Committee for the relevant time
periods. This is consistent with our view that those executives
most able to affect our performance should have a significant
portion of their potential total compensation at risk and
dependent upon our performance.
Policy Regarding
Tax Impact on Executive Compensation
Deductibility of
Executive Compensation
Section 162(m) of the Internal Revenue Code limits the
deductibility of executive compensation for individuals in
excess of $1 million per year paid by publicly traded
corporations to the chief executive officer and the four other
executives named in the compensation table of the Proxy
Statement. We intend, to the extent practicable, to preserve
deductibility under the Internal Revenue Code of compensation
paid to our executive officers while maintaining compensation
programs that effectively attract and retain exceptional
executives in a highly competitive environment and, accordingly,
compensation paid under our incentive compensation plans is
generally tax-deductible. However, on occasion it is not
possible to satisfy all conditions of the Internal Revenue Code
for deductibility and still meet our compensation needs, and in
such limited situations, certain compensation paid to some
executives is not tax-deductible. Mr. Hathaways base
salary of $1,000,000 could result in a minor portion of his
compensation being exposed to non-deductibility of executive
compensation expense under Section 162(m) in the 2006 tax
year. We have considered the possibility of a portion of his
compensation being non-deductible and based on the limited
amounts that would be non-deductible and the determination of
the appropriate level of compensation for Mr. Hathaway, we
have concluded that it is in our best interest to pay
Mr. Hathaway at the levels determined by the Board and our
Compensation Committee. No compensation payable to any other
executive officer for 2006 was non-deductible under
Section 162(m).
While the tax deductibility of compensation paid is a key
concern for us, it is not the only concern, and we will look at
other factors to determine the appropriate compensation that
should be paid to an individual and may choose to pay
compensation that would otherwise not be deductible under
Section 162(m) if we believe that it is appropriate and in
our best interest.
Personal Use of
Corporate Aircraft
In connection with our allowing personal use of our corporate
aircraft by certain of our named executive officers, a portion
of our related expense is non-deductible under recent changes to
U.S. federal income tax law. We treat such personal use as
compensation, as reported in the All Other
Compensation column of the Summary Compensation Table.
Executive
Development and Succession
The executive development process ensures continuity of
leadership over the long-term, and it forms the basis on which
we make ongoing executive assignments. Through the integration
of the
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performance assessment and executive development processes,
position assignments are based on the most qualified and ready
executives. Our future leaders are developed through these
carefully selected assignments. We believe that consistent and
ongoing application of this process meets the long-range
requirements of the business and achieves competitive advantage.
During 2004 the Board of Directors, in connection with ongoing
discussions with senior management, requested that a review of
our talent pool be undertaken to assure that an appropriate
level of qualified management candidates were available
throughout our business to manage the significant growth that
was taking place and was expected to continue to take place in
the business. We undertook to develop an assessment process for
our senior executives to determine the strengths and weaknesses
of the leadership personnel within our business. Competencies
that were believed to be key to a successful manager within our
business were developed and then assessed. The results of these
assessments were reviewed and discussed with each management
participant and development plans were instituted. We are also
in the process of developing a training program to help provide
developmental training in each of these key competencies for
selected high-potential management talent. During 2006,
approximately 75 individuals attended four different training
sessions, and continued training will occur in 2007 and beyond.
Each year, our Compensation Committee reviews our leadership
talent development program to ensure good performance and
alignment between business strategies and operating plans. The
Board of Directors annually reviews the results of the
leadership capability and succession process with the Chairman
and Chief Executive Officer in executive session.
Conclusion
In addition to being consistent and linked to our performance,
our compensation plans are competitive in the marketplace and
allow us to attract and retain the best and brightest employees.
In addition, we believe the design of our compensation plans and
their relative mix successfully motivates our executive officers.
All aspects of compensation are performance driven and align
both the short-term and
long-term
interests of employees and stockholders. We will in the future
continue to focus on these factors and on maintaining a
compensation system that will encourage maximization of
long-term
stockholder value.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with management. Based on
this review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006 and our Proxy
Statement for our 2007 Annual Meeting of Stockholders, for
filing with the Securities and Exchange Commission.
32
SUBMITTED BY THE MANAGEMENT DEVELOPMENT AND COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS:
R. C. Wilburn, Chairman
J. J. Jasinowski
C. F. Scanlan
J. I. Scheiner
A. J. Sordoni, III
The foregoing report shall not be deemed to be soliciting
material or to be filed with the Commission or
subject to Regulation 14A promulgated by the Commission or
Section 18 of the Securities Exchange Act of 1934.
2006 Summary
Compensation Table
The following table presents the compensation provided to
Mr. Hathaway, Chief Executive Officer and
Mr. Fazzolari, Chief Financial Officer, as well as the
three other most highly compensated executive officers, for
services rendered to us in 2006.
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
Name and
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
Principal
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)(3)
|
|
|
Earnings
($)
|
|
|
($)
|
|
|
($)
|
|
|
D. C. Hathaway,
|
|
|
2006
|
|
|
|
1,000,000
|
|
|
|
-0-
|
|
|
|
715,100
|
(4)
|
|
|
-0-
|
|
|
|
1,144,000
|
|
|
|
475,762
|
|
|
|
74,633
|
|
|
|
3,409,495
|
|
Chairman & CEO(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. D. H. Butler, Sr.
|
|
|
2006
|
|
|
|
630,160
|
|
|
|
-0-
|
|
|
|
189,562
|
|
|
|
-0-
|
|
|
|
425,357
|
|
|
|
762,200
|
|
|
|
78,380
|
|
|
|
2,085,659
|
|
VP Operations(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S. D. Fazzolari,
|
|
|
2006
|
|
|
|
450,000
|
|
|
|
-0-
|
|
|
|
189,562
|
|
|
|
-0-
|
|
|
|
411,840
|
|
|
|
101,952
|
|
|
|
42,041
|
|
|
|
1,195,395
|
|
President, CFO &
Treasurer(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. C. Neuffer,
|
|
|
2006
|
|
|
|
250,000
|
|
|
|
-0-
|
|
|
|
156,714
|
|
|
|
-0-
|
|
|
|
210,000
|
|
|
|
81,789
|
|
|
|
33,533
|
|
|
|
732,036
|
|
Group President(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. E. Kimmel
|
|
|
2006
|
|
|
|
245,501
|
|
|
|
-0-
|
|
|
|
49,502
|
|
|
|
-0-
|
|
|
|
168,512
|
|
|
|
5,494
|
|
|
|
33,972
|
|
|
|
502,981
|
|
General Counsel and Corporate
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On January 24, 2006, Mr. Hathaway was elected Chairman
and Chief Executive Officer and Mr. Fazzolari was elected
President, Chief Financial Officer and Treasurer. Prior thereto,
Mr. Hathaway served as Chairman, President and Chief
Executive Officer since July 2000 and Mr. Fazzolari as
Senior Vice President, Chief Financial Officer and Treasurer
since August 1999. |
|
(2) |
|
The amounts shown in this column represent the compensation cost
recognized for financial statement purposes with respect to
restricted stock units, computed in accordance with
FAS 123(R). All grants of restricted stock units were made
under the 1995 Incentive Plan. See Note 12,
Stock-based Compensation to Notes to Consolidated
Financial Statements for a discussion of the assumptions used by
the Company to calculate share-based employee compensation
expense, as outlined in SFAS No. 123R in our Annual
Report on
Form 10-K
for the year ended December 31, 2006. These awards are
discussed in further detail under the heading Equity
Compensation in the Compensation Discussion and Analysis. |
The grant date fair value of the 2005 RSU awards was
$50.41 per unit, which was determined using the average of
the high and low price of the stock on that days trading,
less a discount for dividends not received during the vesting
period. The grant date fair value of the 2006 RSU
33
awards was $67.70 per unit, which was determined using the
average of the high and low price of the stock on that
days trading, less a discount for dividends not received
during the vesting period. The above information does not
reflect an estimate for forfeitures, and none of these awards
has been forfeited as of March 2, 2007.
|
|
|
|
|
For the 2005 RSU awards, there was not accelerated recognition
of compensation expense for those employees who reached the
retirement age prior to vesting or who would reach retirement
age prior to the stated vesting date. |
|
|
|
Harsco does not have any RSU awards which are classified as
liability awards under FAS 123(R). |
|
(3) |
|
The amounts shown in this column constitute the annual cash
incentive compensation awarded to each officer under the 1995
Incentive Plan in calendar year 2006 based on the achievement of
specific economic value-added
(EVA®)
goals. |
|
(4) |
|
As was described in a
Form 8-K
filed by us on January 24, 2006, Mr. Hathaway received
a grant of 10,000 restricted stock units that was paid out in
cash in the amount of $715,100. Our Compensation Committee and
the Board considered Mr. Hathaways significant
holdings of our stock, the number of his unexercised stock
options and the stage of his career with us in making this
determination. |
|
(5) |
|
Mr. Butler also serves as President of the MultiServ and
SGB Divisions. Mr. Butlers salary and bonus are
determined and paid in British pounds and are designated in the
table in U.S. dollars. The conversion rate used for the
amounts included in the Summary Compensation Table was
£1.00 = $1.85. |
|
(6) |
|
Mr. Neuffer was elected President Engineered
Products and Services Business Group effective January 24,
2006. |
All Other
Compensation
We also provide certain perquisites to the executive officers.
The following table summarizes the incremental cost of
perquisites and other benefits for the Named Executive Officers
in 2006 and describes the other benefits included in the
All Other Compensation column.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Hathaway
|
|
|
Mr. Butler(a)
|
|
|
Mr. Fazzolari
|
|
|
Mr. Neuffer
|
|
|
Mr. Kimmel
|
|
|
Personal Use of Corporate
Aircraft(b)
|
|
|
41,464
|
|
|
|
-0-
|
|
|
|
8,793
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Personal Use of Automobile
|
|
|
8,542
|
|
|
|
41,755
|
(c)
|
|
|
8,683
|
|
|
|
16,661
|
|
|
|
-0-
|
|
Other Travel and Related
Expenses(d)
|
|
|
1,416
|
|
|
|
652
|
|
|
|
1,354
|
|
|
|
-0-
|
|
|
|
10,786
|
|
Our contributions to defined
contribution plans
|
|
|
13,000
|
|
|
|
-0-
|
|
|
|
13,000
|
|
|
|
6,123
|
|
|
|
13,000
|
|
Dollar value of life insurance
premiums paid by us or on our behalf
|
|
|
1,386
|
|
|
|
20,524
|
|
|
|
1,386
|
|
|
|
1,386
|
|
|
|
1,361
|
|
Dollar value of health insurance
premiums paid by us or on our behalf
|
|
|
8,533
|
|
|
|
1,504
|
|
|
|
8,533
|
|
|
|
10,353
|
|
|
|
8,533
|
|
Dollar value of long-term
disability premiums paid by us or on our behalf
|
|
|
292
|
|
|
|
13,945
|
|
|
|
292
|
|
|
|
292
|
|
|
|
292
|
|
Total
|
|
|
74,633
|
|
|
|
78,380
|
|
|
|
42,041
|
|
|
|
33,533
|
|
|
|
33,972
|
|
|
|
|
(a) |
|
The conversion rate used for the amounts included in this table
for Mr. Butler was £1.00 = $1.85. |
|
(b) |
|
The value of personal use of corporate aircraft reflects the
calculated incremental cost to us of personal use of corporate
aircraft. Incremental costs have been calculated based on the
variable operating costs to us. Variable costs consist of
trip-specific costs including fuel, |
34
|
|
|
|
|
catering, mileage, maintenance, labor and parts, engine reserve,
crew expenses, universal weather monitoring, landing/ramp fees
and other miscellaneous variable costs. Incremental cost
calculations do not include fixed costs associated with owning
our aircraft since we would incur these costs anyway. |
|
|
|
|
|
On certain occasions, an executives spouse or other family
member may accompany the executive on a flight. |
|
(c) |
|
Includes a fuel allowance of $6,523.00. |
|
(d) |
|
We occasionally invite Named Executive Officers spouses to
accompany the officers to Board-related events for appropriate
business purposes, for which we pay or reimburse travel and
related expenses. These amounts are included in the Other
travel and related expenses row to the extent they do not
include travel on the corporate aircraft, which is discussed in
footnote (b) above. |
Grants of
Plan-Based Awards for Fiscal Year 2006
The following table sets forth information concerning plan-based
awards to the Named Executive Officers during fiscal year 2006
as well as estimated future payouts under such plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Future
|
|
Estimated
Future
|
|
Grant Date
|
|
|
|
|
Payouts Under
|
|
Payouts Under
|
|
Fair Value
|
|
|
|
|
Non-Equity
Incentive
|
|
Equity
Incentive
|
|
of Stock and
|
|
|
|
|
Plan Awards
(1)
|
|
Plan Awards
(2)
|
|
Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Awards
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#) (3)
|
|
(#)
|
|
(#)
|
|
($) (4)
|
D. C. Hathaway
|
|
|
01-23-07
|
|
|
|
8,000
|
|
|
|
800,000
|
|
|
|
1,600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-0-
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
1,529,800
|
|
G. D. H. Butler(5)
|
|
|
01-23-07
|
|
|
|
3,150
|
|
|
|
315,079
|
|
|
|
630,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-0-
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
611,920
|
|
S. D. Fazzolari
|
|
|
01-23-07
|
|
|
|
2,880
|
|
|
|
288,000
|
|
|
|
576,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-0-
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
611,920
|
|
R. C. Neuffer
|
|
|
01-23-07
|
|
|
|
1,050
|
|
|
|
105,000
|
|
|
|
210,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-0-
|
|
|
|
2,500
|
|
|
|
2,500
|
|
|
|
191,225
|
|
M. E. Kimmel
|
|
|
01-23-07
|
|
|
|
11,784
|
|
|
|
117,840
|
|
|
|
235,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-0-
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
382,450
|
|
|
|
|
(1) |
|
These columns reflect potential awards under our Annual
Incentive Compensation Plan, made under our 1995 Incentive Plan
and described more fully on page 24 of this Proxy
Statement. Actual payouts for 2006 are disclosed in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table. |
|
(2) |
|
These columns reflect potential awards under our restricted
stock unit program, granted under our 1995 Incentive Plan and
described more fully on page 25 of this Proxy Statement. |
|
(3) |
|
Our Compensation Committee has complete discretion on whether to
grant and the amount of any grant of restricted stock units that
may be made annually to any officer, including the discretion to
reduce the grant to zero. |
|
(4) |
|
The aggregate grant date fair value of the 2006 restricted stock
units, computed in accordance with FAS 123(R), was $76.49
per unit, which was determined using the average of the high and
low price of the stock on that days trading, less a
discount for dividends not received during the vesting period. |
|
(5) |
|
Dollar amounts shown are based on an exchange rate of $1.85 =
£1.00. |
35
Annual Incentive
Compensation Plan; Long-Term Compensation Plan
For additional details of our Annual Incentive Compensation Plan
and Long-Term Compensation Plan payments please see the
descriptions set forth on pages 24 and 25 of this
Proxy Statement. For additional details about the relationship
of salary, bonus and long-term compensation to total
compensation please see the Compensation Discussion and
Analysis section of this Proxy Statement.
Outstanding
Equity Awards at 2006 Fiscal Year-End
The following table sets forth information concerning
outstanding equity awards of the Named Executive Officers as of
December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards(1)
|
|
|
Stock
Awards(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
of Unearned
|
|
|
Unearned
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Shares,
|
|
|
Shares,
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Units or
|
|
|
Units or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Other
|
|
|
Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights
|
|
|
Rights That
|
|
|
|
Options
|
|
|
Options
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That Have
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Unearned
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)(3)
|
|
|
($)(4)
|
|
|
(#)(5)
|
|
|
($)(4)
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
0
|
|
|
|
29.00
|
|
|
|
01-24-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
-0-
|
|
|
|
0
|
|
|
|
32.65
|
|
|
|
01-21-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
20,000(6
|
)
|
|
|
1,522,000
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
0
|
|
|
|
26.66
|
|
|
|
01-25-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
|
|
|
0
|
|
|
|
37.81
|
|
|
|
01-26-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
0
|
|
|
|
29.00
|
|
|
|
01-24-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
0
|
|
|
|
25.63
|
|
|
|
01-22-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
-0-
|
|
|
|
0
|
|
|
|
32.65
|
|
|
|
01-21-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
761,000
|
|
|
|
8,000
|
|
|
|
608,800
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
0
|
|
|
|
26.66
|
|
|
|
01-25-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
0
|
|
|
|
29.00
|
|
|
|
01-24-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
-0-
|
|
|
|
0
|
|
|
|
32.65
|
|
|
|
01-21-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
761,000
|
|
|
|
8,000
|
|
|
|
608,800
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
0
|
|
|
|
25.63
|
|
|
|
01-22-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,200
|
|
|
|
|
|
|
|
0
|
|
|
|
37.81
|
|
|
|
01-26-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
|
|
|
|
|
0
|
|
|
|
29.00
|
|
|
|
01-24-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
-0-
|
|
|
|
0
|
|
|
|
32.65
|
|
|
|
01-21-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
285,375
|
|
|
|
2,500
|
|
|
|
190,250
|
|
|
|
|
2,000
|
|
|
|
-0-
|
|
|
|
0
|
|
|
|
32.65
|
|
|
|
01-21-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
|
197,860
|
|
|
|
5,000
|
|
|
|
380,500
|
|
|
|
|
(1) |
|
The Board of Directors has not issued any stock options since
2002 and instead issues restricted stock or restricted stock
units as our long-term compensation method. |
|
|
|
For grants prior to 2003, the Named Executive Officers were
awarded stock options with an exercise price equal to the fair
market value of our common stock on the date of grant. Fair
market value was defined as the average of the high and low
price of the stock on the date of grant. The grants were made
pursuant to the 1995 Incentive Plan. The number of options
granted to each officer was determined by grade level and our
Compensation Committees |
36
|
|
|
|
|
evaluation of the strategic performance of the individual and
the individuals business unit. The maximum stock option
award as provided in the 1995 Incentive Plan is
150,000 shares for any single participant in a calendar
year. Our Committee does have the discretion to limit or
entirely eliminate the number of stock options granted in any
period, and, acting upon this authority, declined to award any
stock options in 2003, 2004, 2005 and 2006. |
|
(2) |
|
Our Compensation Committee awarded restricted stock units to
each of the Named Executive Officers for the 2004, 2005 and 2006
performance periods under the 1995 Incentive Plan. A target
award level is established by our Compensation Committee and if
the performance goal is obtained, then the restricted stock
units are granted unless our Compensation Committee exercises
its discretion to lower the amount of the award. The restricted
stock units vest as provided on page 16 of this Proxy
Statement and the restricted stock unit program is more fully
described on page 25 of this Proxy Statement. |
|
(3) |
|
The numbers shown in this column reflect all unvested restricted
stock units that were earned under our long-term incentive
restricted stock unit program. A portion of these awards vest in
years 2008 and 2009. |
|
(4) |
|
The market value was computed by multiplying the closing market
price of our stock on December 29, 2006 by the number of
units of restricted stock in the previous column. |
|
(5) |
|
The numbers shown in this column reflect all unvested restricted
stock units for which performance targets have been set by us
but that were unearned in fiscal year 2006 under our long-term
incentive restricted stock unit program. |
|
(6) |
|
As was described in a
Form 8-K
filing made by us on January 24, 2007, our Compensation
Committee and the Board approved a cash payment to
Mr. Hathaway, in lieu of the restricted stock units award
that was made to other officers. Our Compensation Committee and
the Board took into account Mr. Hathaways
significant holdings of our stock, the number of unexercised
stock options and the stage of his career with us in making this
determination. Mr. Hathaways cash payment was equal
to $1,584,900 and was based on the average of the high and low
sales price of our common stock on January 23, 2007 and
20,000 shares. |
2006 Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
|
Number of
Shares
|
|
|
|
|
|
Number of
Shares
|
|
|
Value Realized
on
|
|
|
|
Acquired on
|
|
|
Value Realized
on
|
|
|
Acquired on
Vesting
|
|
|
Vesting
|
|
Name
|
|
Exercise
(#)
|
|
|
Exercise
($)(1)
|
|
|
(#)
|
|
|
($)
|
|
|
D. C. Hathaway
|
|
|
100,000
|
|
|
|
4,585,235
|
|
|
|
-0-
|
|
|
|
-0-
|
|
G. D. H. Butler
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
S. D. Fazzolari
|
|
|
28,000
|
|
|
|
1,183,782
|
|
|
|
-0-
|
|
|
|
-0-
|
|
R. C. Neuffer
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
M. E. Kimmel
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
(1) |
|
Represents the difference between the exercise price and the
market price of our common stock on the date of exercise. |
37
2006 Pension
Benefits
The following table describes pension benefits to the Named
Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
|
|
|
Number of
|
|
|
Present
|
|
|
During
|
|
|
|
|
|
Years
|
|
|
Value of
|
|
|
Last
|
|
|
|
|
|
Credited
|
|
|
Accumulated
|
|
|
Fiscal
|
|
|
|
|
|
Service
|
|
|
Benefit
|
|
|
Year
|
|
Name
|
|
Plan
Name
|
|
(#)
|
|
|
($)(2)
|
|
|
($)
|
|
|
D. C. Hathaway
|
|
Harsco Employees Pension Plan
|
|
|
19.250
|
|
|
|
591,864
|
|
|
|
-0-
|
|
|
|
Supplemental Retirement Benefit
Plan
|
|
|
33.000
|
(1)
|
|
|
7,713,405
|
|
|
|
-0-
|
|
G. D. H. Butler
|
|
Harsco Pension Scheme
|
|
|
37.000
|
|
|
|
8,497,280
|
(3)
|
|
|
-0-
|
|
S. D. Fazzolari
|
|
Harsco Employees Pension Plan
|
|
|
23.333
|
|
|
|
439,363
|
|
|
|
-0-
|
|
|
|
Supplemental Retirement Benefit
Plan
|
|
|
23.333
|
|
|
|
787,862
|
|
|
|
-0-
|
|
R. C. Neuffer
|
|
Harsco Employees Pension Plan
|
|
|
12.250
|
|
|
|
344,323
|
|
|
|
-0-
|
|
|
|
Supplemental Retirement Benefit
Plan
|
|
|
12.250
|
|
|
|
139,860
|
|
|
|
-0-
|
|
M. E. Kimmel
|
|
Harsco Employees Pension Plan
|
|
|
2.417
|
|
|
|
22,520
|
|
|
|
-0-
|
|
|
|
Supplemental Retirement Benefit
Plan
|
|
|
2.417
|
|
|
|
4,623
|
|
|
|
-0-
|
|
|
|
|
(1) |
|
Mr. Hathaways actual credited service as one of our
covered employee is 19.25 years. Mr. Hathaway was
granted an additional 13.75 years of service as part of our
acquisition in 1979 of the company he founded, in order to
credit his years of service with the acquired company. The
present value associated with granting 13.75 additional years of
credited service in the Supplemental Retirement Benefit Plan is
$3,477,440 at year-end 2006. |
|
(2) |
|
The disclosed amounts are estimates only and do not necessarily
reflect the actual amounts that will be paid to the Named
Executive Officers, which will only be known at the time that
they become eligible for payment. |
|
(3) |
|
The conversion rate used for the amounts included in this row
was £1.00 = $1.87 which was the currency exchange rate on
the plan measurement date of September 30, 2006. |
Retirement
Plans
We provide retirement benefits for each officer under the Harsco
Employees Pension Plan (the HEPP) and the
Supplemental Retirement Benefit Plan (the Supplemental
Plan). All executive officers are covered by the
Supplemental Plan and the HEPP, excepting Mr. Butler, who
is covered by the U.K. pension plan described below. Prior to
January 1, 2003, the Supplemental Plan replaced the 401(k)
Company match lost due to government limitations on such
contributions. The replacement was in the form of phantom shares
as more fully described in the narrative disclosure to the
Nonqualified Deferred Compensation Table. The Supplemental Plan
was amended effective January 1, 2003 to eliminate any
further granting of phantom shares.
The HEPP and the Supplemental Plan are defined benefit plans
providing for normal retirement at age 65. Early retirement
may be taken commencing with the first day of any month
following the attainment of age 55, provided at least
15 years of service have been completed. Early retirement
benefits commencing prior to age 65 are reduced. The
Supplemental Plan also provides for unreduced pension benefits
if retirement occurs after age 62, provided at least
30 years of service have been completed. The HEPP and the
Supplemental Plan also provide for a pre-retirement death
benefit payable in a monthly benefit to a beneficiary designated
by the participant for
38
participants who die after qualifying for benefits. The
Supplemental Plan also includes provisions which fully vest
participants upon termination of employment following a
change in control of the Company as defined in the
Supplemental Plan.
Mr. Hathaway is currently eligible for unreduced pension
benefits under the Supplemental Plan, as he has attained
age 62 and is credited with 33 years of service under
the Supplemental Plan. Mr. Hathaways actual credited
service as one of our covered employees is 19.25 years. The
additional 13.75 years of service were granted in order to
credit his years of service with Dartmouth Investments Limited,
which Mr. Hathaway founded and which was acquired by us in
1979.
Total pension benefits are based on final average compensation
and years of service. The normal retirement benefit under the
Supplemental Plan is equal to a total of 0.8% of final average
compensation up to the Social Security Covered
Compensation as defined in the Supplemental Plan plus 1.6%
of the final average compensation in excess of the Social
Security Covered Compensation multiplied by up to
33 years of service, reduced by the benefits under the
HEPP. final average compensation is defined as the aggregate
compensation (base salary plus nondiscretionary incentive
compensation) for the 60 highest consecutive months out of the
last 120 months prior to date of retirement or termination
of employment prior to normal retirement date.
The Supplemental Plan was amended in 2002 to provide that for
any retirements on or after January 1, 2003, the 1.6%
factor in the benefit formula is reduced to 1.5% and the
definition of final average compensation was amended to reduce
the amount of nondiscretionary incentive compensation included
in the benefit calculation from 100% to 50% for such amounts
paid on or after January 1, 2003. Notwithstanding these
amendments, no participants retirement benefit shall be
reduced by reason of these amendments, below the benefit accrued
at December 31, 2002. The normal retirement benefit under
the HEPP is equal to 1.2% times final average compensation times
years of service, up to a maximum of 33 years, plus 1.5%
times benefit service in excess of 33 years, but not in
excess of 40 years of service. This amount cannot be less
than the minimum benefit determined at December 31, 2002,
which was determined based on a normal retirement benefit under
the HEPP equal to 1.3% times final average compensation times
years of service, up to a maximum of 33 years, plus 1.5%
times benefit service in excess of 33 years, but not in
excess of 40 years of service. Final average compensation
is defined as the aggregate compensation (base salary plus
non-discretionary incentive compensation) for the 60 highest
consecutive months out of the last 120 months prior to the
date of retirement or termination of employment prior to the
normal retirement date.
The Supplemental Plan and the HEPP were amended on
December 31, 2003 to provide that pension benefit accrual
service shall not be granted to any of our employees after
December 31, 2003, provided, however, that compensation
earned for services performed for us for current Supplemental
Plan and HEPP participants through December 31, 2013 shall
be included in determining their Final Average Compensation
under the Supplemental Plan and the HEPP.
We do not provide retiree medical or retiree life insurance
benefits to our executive officers.
The above table also shows estimated total annual pension
benefits payable to Mr. Butler, for life, under the Harsco
Pension Scheme (the Scheme), a qualified pension
plan in the U.K., upon retirement at age 60, which is
normal retirement age under the Scheme, assuming the total
pension benefit was payable and retirement took place on
December 31, 2006. The benefit would be paid in British
pounds and all amounts in the table above are stated in
U.S. dollars at a conversion rate of $1.87 = £1.00,
which was the currency exchange rate on the plan measurement
date of September 30. The Scheme provides that if the
participant dies within five years after starting to receive a
pension, a lump sum will be paid equal to the pension payments
that would have been made
39
during the remainder of the five year period. The annual pension
benefit is based on the highest annual total of salary and bonus
within the last five years (or the highest average amount of
annual salary plus bonus received in any three consecutive
scheme years within the last ten years, if higher) (Final
Pensionable Salary) and the years of service, subject to
various deductions for service prior to April 6, 1989, and
a statutory limitation of two thirds of the Final Pensionable
Salary. The Scheme was amended in 2002 to provide that for any
retirements on or after January 1, 2003, the benefit
accrual rate is reduced, and the definition of Final Pensionable
Salary is amended to reduce the amount of incentive bonus
included in the calculation from 100% to 50% for such amounts
paid on or after January 1, 2003. The Scheme was amended in
2003 to provide that, in respect of service after
January 1, 2004 only, normal retirement age is increased to
65, and the definition of Final Pensionable Salary is amended so
as to be equal to the average salary and 50% of bonus over the
last five scheme years prior to retirement.
2006 Nonqualified
Deferred Compensation
The following table describes nonqualified deferred compensation
of the Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Balance
|
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
at Last FYE
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)(2)
|
|
|
D. C. Hathaway
|
|
|
-0-
|
|
|
|
162,286
|
|
|
|
100,753
|
|
|
|
-0-
|
|
|
|
1,108,861
|
|
G. D. H. Butler(3)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
S. D. Fazzolari
|
|
|
-0-
|
|
|
|
36,437
|
|
|
|
19,140
|
|
|
|
-0-
|
|
|
|
214,353
|
|
R. C. Neuffer
|
|
|
-0-
|
|
|
|
11,313
|
|
|
|
1,457
|
|
|
|
-0-
|
|
|
|
26,116
|
|
M. E. Kimmel
|
|
|
-0-
|
|
|
|
9,705
|
|
|
|
647
|
|
|
|
-0-
|
|
|
|
15,663
|
|
|
|
|
(1) |
|
Ongoing contributions by us to the phantom share accounts of the
named executive officers established under the Supplemental Plan
ceased on December 31, 2002. As a result, this column
reflects (1) dividend reinvestment contributions by us
during fiscal year 2006 to the phantom share accounts of each
executive officer established under the Supplemental Plan and
(2) phantom contributions by us to the non-qualified
restoration plan accounts of each Named Executive Officer during
fiscal year 2006. None of the amounts reported in this column
are reported as compensation for fiscal year 2006 in the Summary
Compensation Table. |
|
(2) |
|
Numbers shown with respect to phantom stock awards are based on
a stock price on December 29, 2006 of $76.10 per share
(payout for phantom shares would be based on the price of our
stock on the date of termination of the relevant officer).
Earnings include increase in value of the phantom shares during
2006. None of the amounts reported in the Aggregate
Earnings in Last FY column were reported as compensation
for fiscal year 2006 in the Summary Compensation Table. |
|
(3) |
|
Mr. Butler is not a participant in any of our U.K. or
U.S.-based
nonqualified deferred compensation plans. |
Nonqualified
Deferred Compensation
Phantom
Shares
We maintain the Harsco Corporation Savings Plan (the
HCSP), which includes the Salary
Reduction feature afforded by Section 401(k) of the
Internal Revenue Code. Our officers of Harsco participated in
the above plan until December 31, 2002. Prior to
January 1, 2003, we made matching contributions under the
HCSP for the account of each participating employee equal to
40
50% of the first 1% to 6% of such employees Salary
Reduction contribution. In addition, prior to
January 1, 2003, the Supplemental Plan replaced the 401(k)
match lost due to government limitations on such contributions.
The replacement was in the form of phantom shares to
a non-qualified plan. Our officers participated in the
Supplemental Plan until December 31, 2002. The HSCP and the
Supplemental Plan were amended effective January 1, 2003 to
eliminate any future replacement of lost company match and any
further granting of phantom shares. As a result, no company
matches were made during calendar year 2003 and no phantom
shares were granted for calendar year 2003.
Retirement
Savings and Investment Plan
A new, non-qualified restoration plan (the NQ RSIP)
was established on January 1, 2004, as part of our new
401(k) savings plan, the Retirement Savings and Investment Plan
(RSIP). These plans were implemented, among other
reasons, to provide coverage for individuals affected by the
amendments to the HCSP and the Supplemental Plan, including by
establishing new matching and phantom contributions
to be made by us. Under the RSIP, we make matching contributions
for the account of each participating employee equal to 100% of
the first 3% of such employees contributions and 50% of
the next 2% contributed by such employee. The NQ RSIP provides
for the discretionary and matching contributions that would be
otherwise provided under the qualified portion of the RSIP for
salaried employees contributions made as of
January 1, 2004, but for IRS Code limitations under
Section 402(g), Section 401(a)(17), Section 415
or Section 401(m). Pursuant to the NQ RSIP, we make
phantom contributions to an employees
(including the executive officers other than
Mr. Butlers) account in an amount equal to the
above-described company matching and discretionary contributions
under the RSIP, which we were not otherwise able to make for a
participant as a result of that participant reaching the
limitations imposed by the Code.
Termination or
Change in Control Arrangements
We have entered into certain agreements with the Named Executive
Officers (other than Mr. Neuffer, who has not entered into
any such agreements) and maintain certain plans that will
require us to provide compensation to our Named Executive
Officers in the event of a termination of employment, including
as the result of a change in control.
41
The following table sets forth our payment obligations following
the termination of a named executive officers employment
with us, including as the result of a change in control. The
amounts disclosed below are estimates only and do not
necessarily reflect the actual amounts that would be paid to the
Named Executive Officers, which would only be known at the time
that they become eligible for payment and, in the case of
payments related to a change in control, would only be payable
if a change in control were to occur. The tables reflect the
amounts that could be payable under the various arrangements
assuming that the termination event occurred on
December 31, 2006. All amounts shown in the tables with
regard to Mr. Butler are stated at a conversion rate of
$1.85 = £1.00, except that pension amounts are
stated at a conversion rate of $1.87 = £1.00,
which was the exchange rate on the pension plan measurement date
of September 30, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination as a
Result of
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Death
|
|
|
|
|
|
|
Change in
|
|
|
For Cause or
|
|
|
not for
|
|
|
or
|
|
|
|
|
|
|
Control
|
|
|
Voluntary
|
|
|
Cause
|
|
|
Disability
|
|
|
Retirement
|
|
|
|
(2)
|
|
|
(4)
|
|
|
(5)
|
|
|
(6)
|
|
|
(7)
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid base salary through date of
termination
|
|
|
X
|
(2)
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
Unpaid bonus
|
|
|
X
|
(2)
|
|
|
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
Unpaid long-term incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
X
|
(2)
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
Acceleration of Unvested
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
X
|
(8)
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
Unvested and Accelerated(1)
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
X
|
|
Unpaid Deferred Compensation
|
|
|
X
|
(2)
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
Multiple of Base Salary
|
|
|
X
|
(2);(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit pension plan
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
401(k) savings plan
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
Supplemental retirement benefit
plan
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
Life insurance proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
Post-retirement health care
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued but unpaid vacation
|
|
|
X
|
(7)
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
|
(1) |
|
The Board of Directors ceased granting stock options after 2002
following a review of the appropriateness of the use of stock
options as the vehicle for long-term compensation within the
Company. As a result, all outstanding stock options are vested. |
|
(2) |
|
In accordance with the terms of the Change in Control Severance
Agreements (the CIC Agreements) entered into by us
and each named executive officer other than Mr. Neuffer,
Messrs. Butler, Fazzolari, Hathaway and Kimmel will be
entitled to these payments if the executives employment is
terminated by us other than for disability or death of the
executive or without cause, or by the executive for
good reason during the three-year period following
the date on which a change of control occurs (the
Protection Period). |
42
If the employment of Messrs. Butler, Fazzolari, Hathaway or
Kimmel is terminated during the Protection Period by reason of
the executives death or disability, the executives
CIC Agreement will terminate without further obligations under
the applicable CIC Agreement to the executives
representatives, other than those obligations accrued or earned
and vested (if applicable) by the Executive as of the Date of
Termination, including, (a) the executives full base
salary through the date of termination at the rate in effect on
the date of termination or, if higher, at the highest rate in
effect at any time from the
90-day
period preceding the effective date of a change in control
through the date of termination (the Highest Base
Salary), (b) the product of the annual bonus paid to
the executive for the last full fiscal year and a fraction, the
numerator of which is the number of days in the current fiscal
year through the date of termination, and the denominator of
which is 365 and (c) any compensation previously deferred
by the executive (together with any accrued interest thereon)
and not yet paid by us (the amounts specified in clauses (a),
(b) and (c), the Accrued Obligations).
The following table sets forth the present value of such lump
sum payments for Accrued Obligations for each of the officers
named in the table based on 2006 salaries assuming death occurs
on December 31, 2006 and during the Protection Period. None
of the amounts shown below are accrued as a result of death
occurring during the Protection Period. Such amounts would have
been paid to the Named Executive Officers under existing plans
and arrangements regardless of the CIC Agreements or the
occurrence of a change in control. Mr. Neuffer would be
entitled to the payments shown in footnote (6) if his death
occurred on December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Butler
|
|
Mr. Fazzolari
|
|
Mr. Hathaway
|
|
Mr. Kimmel
|
|
$
|
14,703,415
|
|
|
$
|
7,108,401
|
|
|
$
|
19,286,213
|
|
|
$
|
1,809,445
|
|
The following table sets forth the present value of such lump
sum payments for Accrued Obligations for each of the officers
named in the table based on 2006 salaries assuming disability
occurs on December 31, 2006 and during the Protection
Period. None of the amounts shown below are accrued as a result
of disability occurring during the Protection Period. Such
amounts would have been paid to the Named Executive Officers
under existing plans and arrangements regardless of the CIC
Agreements or the occurrence of a change in control.
Mr. Neuffer would be entitled to the payments shown in
footnote (6) if he became disabled on December 31,
2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Butler
|
|
Mr. Fazzolari
|
|
Mr. Hathaway
|
|
Mr. Kimmel
|
|
$
|
12,837,072
|
|
|
$
|
6,853,401
|
|
|
$
|
19,080,527
|
|
|
$
|
1,329,716
|
|
If the employment of Messrs. Butler, Fazzolari, Hathaway or
Kimmel is terminated during the Protection Period for cause, the
executives CIC Agreement will terminate without further
obligations under the CIC Agreement to the executive, other than
the obligation to pay to the executive the Highest Base Salary
through the date of termination plus the amount of any
compensation previously deferred by the executive (together with
accrued interest thereon). The following table sets forth the
present value of such payments under the CIC Agreements for each
of the officers named in the table based on 2006 salaries
assuming the for cause termination occurs on
December 31, 2006 and during the Protection Period. None of
the amounts shown in the table below or with regard to Mr.
Neuffer are accrued as a result of the termination occurring
during the Protection Period, except that the vesting of each
officers restricted stock units accelerates, in accordance
with the terms of the restricted stock units agreements, upon
the occurrence of a change in control. Other than payments
relating to restricted stock units, such amounts would have been
paid to the Named Executive Officers under existing plans and
arrangements regardless of the CIC Agreements or the occurrence
of
43
a change in control. Mr. Neuffer would be entitled to
payments with a present value of $1,296,038 if he were
terminated for cause on December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Butler
|
|
Mr. Fazzolari
|
|
Mr. Hathaway
|
|
Mr. Kimmel
|
|
|
$12,411,715
|
|
|
|
$6,092,296
|
|
|
|
$17,936,527
|
|
|
|
$1,161,204
|
|
If Messrs. Butler, Fazzolari, Hathaway or Kimmel terminate
their employment during the Protection Period other than for
good reason, the executives CIC Agreement will terminate
without further obligations under the CIC Agreement to the
executive, other than those obligations accrued or earned and
vested (if applicable) by the executive through the date of
termination, including the executives base salary through
the date of termination at the rate in effect on the date of
termination plus the amount of any compensation previously
deferred by the executive (together with accrued interest
thereon). The following table sets forth the present value of
such payments under the CIC Agreements for each of the officers
named in the table based on 2006 salaries assuming the
other than for good reason termination occurs on
December 31, 2006 and during the Protection Period. None of
the amounts shown in the table below or with regard to Mr.
Neuffer are accrued as a result of the termination occurring
during the Protection Period, except that the vesting of each
officers restricted stock units accelerates, in accordance
with the terms of the restricted stock units agreements, upon
the occurrence of a change in control. Other than payments
relating to restricted stock units, such amounts would have been
paid to the Named Executive Officers under existing plans and
arrangements regardless of the CIC Agreements or the occurrence
of a change in control. Mr. Neuffer would be entitled to
payments with a present value of $1,296,038 if he were
terminated other than for good reason on December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Butler
|
|
Mr. Fazzolari
|
|
Mr. Hathaway
|
|
Mr. Kimmel
|
|
$
|
12,837,072
|
|
|
$
|
6,504,136
|
|
|
$
|
19,080,527
|
|
|
$
|
1,329,716
|
|
If, during the Protection Period, we terminate the employment of
Messrs. Butler, Fazzolari, Hathaway or Kimmel other than
for cause, disability or death, or such executive terminates his
employment for good reason, we shall pay the executive in a lump
sum the aggregate of the following amounts (a) the
executives full base salary and vacation pay accrued
through the date of termination at the rate in effect on the
date of termination plus pro-rated incentive compensation under
our annual incentive compensation plan through the date of
termination at the same percentage rate applicable to the
calendar year immediately prior to the date of termination, plus
all other amounts to which the executive is entitled under any
of our compensation plans, programs, practices or policies in
effect at the time such payments are due; (b) the amount of
any compensation previously deferred by the executive (together
with accrued interest thereon); and (c) a lump sum
severance payment in an amount equal to one times the
executives base salary, in the case of Mr. Kimmel, or
three times the executives base salary, in the case of
Messrs. Butler, Fazzolari and Hathaway. The payment may be
subject to reduction to avoid certain adverse tax consequences.
The following table sets forth the present value of such
payments for each of the officers named in the table based on
2006 salaries assuming termination occurs on December 31,
2006. Of the amounts shown below, only the following amounts,
made up of each officers multiple of base salary payment
and payout for restricted stock units based on accelerated
vesting of the same in accordance with the change in control
provisions contained in each restricted stock units agreement,
would directly result from the termination occurring during the
Protection Period or the occurrence of a change in control: for
(a) Mr. Butler, $3,134,014; (b) Mr. Fazzolari, $2,593,535; (c)
Mr. Hathaway, $3,000,000; and (d) Mr. Kimmel, $801,271. All
other amounts shown below would have been paid to the Named
Executive Officers under existing plans and arrangements
regardless of the CIC Agreements or
44
the occurrence of a change in control. Mr. Neuffer would be
entitled to payments with a present value of $1,504,008 if he
were terminated for the above reasons on December 31, 2006,
which amount does not include a multiple of base salary payment
but does include a payout for restricted stock units based upon
their accelerated vesting in accordance with the change in
control provisions contained in Mr. Neuffer restricted stock
units agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Butler
|
|
Mr. Fazzolari
|
|
Mr. Hathaway
|
|
Mr. Kimmel
|
|
$
|
14,727,551
|
|
|
$
|
7,854,136
|
|
|
$
|
22,080,527
|
|
|
$
|
1,575,217
|
|
|
|
|
(3) |
|
The multiple is 3 times base salary in the case of
Messrs. Butler, Fazzolari and Hathaway and 1 time base
salary in the case of Mr. Kimmel. |
|
(4) |
|
The following table sets forth the present value of the lump sum
payments for each executive officer assuming (a) the
executive officer was terminated for cause on December 31,
2006 and (b) that such termination took place either prior
to a change in control or following the Protection Period (as
defined above and as applicable to the named executive). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Butler
|
|
Mr. Fazzolari
|
|
Mr. Hathaway
|
|
Mr. Neuffer
|
|
Mr. Kimmel
|
|
$
|
11,168,180
|
|
|
$
|
4,848,761
|
|
|
$
|
17,936,527
|
|
|
$
|
1,054,257
|
|
|
$
|
605,434
|
|
|
|
|
(5) |
|
The following table sets forth the present value of the lump sum
payments for each executive officer assuming (a) the
executive officer was terminated involuntarily without cause on
December 31, 2006 and (b) that such termination took
place either prior to a change in control or following the
Protection Period (as defined above and as applicable to the
named executive). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Butler
|
|
Mr. Fazzolari
|
|
Mr. Hathaway
|
|
Mr. Neuffer
|
|
Mr. Kimmel
|
|
$
|
11,593,537
|
|
|
$
|
5,260,601
|
|
|
$
|
19,080,527
|
|
|
$
|
1,264,227
|
|
|
$
|
773,946
|
|
|
|
|
(6) |
|
The following table sets forth the present value of the lump sum
payments for each executive officer assuming (a) the
executives death occurs on December 31, 2006 and
(b) that such death took place either prior to a change in
control or following the Protection Period (as defined above and
as applicable to the named executive). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Butler
|
|
Mr. Fazzolari
|
|
Mr. Hathaway
|
|
Mr. Neuffer
|
|
Mr. Kimmel
|
|
$
|
14,703,415
|
|
|
$
|
7,108,401
|
|
|
$
|
19,286,213
|
|
|
$
|
1,835,365
|
|
|
$
|
1,809,445
|
|
|
|
|
|
|
The following table sets forth the present value of the lump sum
payments for each executive officer assuming (a) the
executives disability occurs on December 31, 2006 and
(b) that such disability took place either prior to a
change in control or following the Protection Period (as defined
above and as applicable to the named executive). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Mr.
Butler
|
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Mr. Fazzolari
|
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Mr. Hathaway
|
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Mr. Neuffer
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Mr. Kimmel
|
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$
|
12,837,072
|
|
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$
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6,853,401
|
|
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$
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19,080,527
|
|
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$
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1,506,037
|
|
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$
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1,329,716
|
|
|
|
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(7) |
|
The following table sets forth the present value of the lump sum
payments for each executive officer assuming (a) the
executive officer retires on December 31, 2006 and
(b) that such retirement took place either prior to a
change in control or following the Protection Period (as defined
above and as applicable to the named executive). Since neither
of Messrs. Fazzolari or Kimmel were retirement-eligible on
December 31, 2006, the numbers shown are the estimated
present value of the retirement benefits that would be payable
to each such individual at normal retirement age (i.e.,
age 65). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Mr.
Butler
|
|
Mr. Fazzolari
|
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Mr. Hathaway
|
|
Mr. Neuffer
|
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Mr. Kimmel
|
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$
|
11,593,537
|
|
|
$
|
5,260,601
|
|
|
$
|
19,080,527
|
|
|
$
|
1,264,257
|
|
|
$
|
773,946
|
|
45
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|
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(8) |
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The provisions of each Restricted Stock Units Agreement provide
that the restricted stock units immediately vest and become
non-forfeitable upon the grantees death, disability, a
change in control (as defined in the 1995 Incentive Plan) or
upon the grantees retirement at the specified retirement
age. On September 27, 2006, the Board approved amendments
to our performance-based restricted stock unit program which
included a reduction of the specified retirement age from
age 65 to age 62. The revisions apply to grants made
after September 27, 2006. |
Severance
Benefits Payable Outside of a Change in Control
Upon certain types of terminations of employment (other than a
termination during the Protection Period) severance benefits may
be paid to the Named Executive Officers. However, the Named
Executive Officers are not covered by any type of arrangement or
general severance plan that would pay severance benefits to any
of them outside of a change in control situation and any
severance benefits payable to them would (1) in the case of
the Chief Executive Officer, be determined by the Compensation
Committee in its discretion and (2) in the case of the
other Named Executive Officers, be determined by us in our
discretion, subject to review and approval of the same by the
Compensation Committee.
Benefits and
Perquisites
Pension benefits, perquisites and other compensation and
benefits payable to the Named Executive Officers are discussed
in greater detail in the section entitled Compensation
Discussion and Analysis beginning on page 19 of this
Proxy Statement.
TRANSACTIONS WITH
RELATED PERSONS
One of our directors, Robert C. Wilburn, is President of the
Gettysburg National Battlefield Museum Foundation, a 501(c)(3)
nonprofit educational institution (the Foundation).
In September 2006, our Patent Construction Systems division
formalized a commitment to donate the rental, installation and
removal of scaffolding toward the Foundations fundraising
campaign in support of the construction of a new museum for the
Gettysburg National Military Park in Gettysburg, Pennsylvania.
The donation will be made over approximately a 30 month period
and has a fair market value of approximately $410,000 and a cost
to us of approximately $290,000.
Although our policies and procedures that were in place during
2006 for the review and approval of material transactions with
related persons did not require the review and approval of this
donation, our Nominating and Corporate Governance Committee
nonetheless reviewed and approved the transaction in February
2007 under the policies and procedures described below, which
were established during 2007.
Policies and
Procedures Regarding Transactions with Related Persons
The Nominating and Corporate Governance Committee of the Board
of Directors is responsible for reviewing and approving all
material transactions with any related person. Related persons
include any of our directors, director nominees or executive
officers, certain of our stockholders and their immediate family
members. This obligation is set forth in writing in our
Nominating and Corporate Governance Committee Charter. A copy of
the Nominating and Corporate Governance Committee Charter is
available at the Corporate Governance section of our website at
www.harsco.com.
46
We expect our directors, officers and employees to act and make
decisions that are in our best interests and encourage them to
avoid situations which present a conflict between our interests
and their own personal interests. We review related person
transactions due to the potential for a conflict of interest. A
conflict of interest occurs when an individuals private
interest interferes, or appears to interfere, in any way with
our interests. To identify related person transactions, each
year, we submit and require our directors and officers to
complete Director and Officer Questionnaires identifying any and
all transactions with us in which the officer or director or
their family members have an interest. Our directors, officers
and employees are prohibited from using their position of
employment or other relationship with us to influence decisions
concerning business transactions between us and a company in
which they or a member of their immediate family has a personal
interest through ownership, with the exception of investments in
publicly held corporations when the investment results in less
than a one percent ownership interest. In addition, directors,
officers and employees must not accept personal favors or
benefits from those dealing with us which could influence or
could give the impression of influencing their business judgment.
A copy of our Code of Conduct is available at the Corporate
Governance section of our website at www.harsco.com.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Wilburn, Jasinowski, Scheiner, Sordoni and
Ms. Scanlan served as members of our Compensation Committee
during 2006 and none of them was one of our officers or
employees or an officer or employee of any of our subsidiaries
during that time and did not serve as an executive officer of
any entity for which any of our executive officers serve as a
director or a member of its compensation committee.
No member of our Compensation Committee other than Mr. Wilburn
has had any relationship with us requiring disclosure under Item
404 of Regulation S-K under the Securities Exchange Act of 1934.
See the above Section entitled Transactions with Related
Persons for a description of this relationship.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers, directors and more than 10%
stockholders to file with the Securities and Exchange Commission
and the New York Stock Exchange reports of ownership and changes
in ownership in their holdings of our stock. Copies of these
reports also must be furnished to us. Based on an examination of
these reports and information furnished by these stockholders,
all such reports have been timely filed, except that in January
2006 a Form 4 report was inadvertently filed late on behalf
of J. I. Scheiner relating to the scheduled payout of previously
deferred compensation.
OTHER
MATTERS
The cost of this solicitation of proxies will be borne by us. In
addition to solicitation by use of mail, our employees may
solicit proxies personally or by telephone or facsimile but will
not receive additional compensation for these services.
Arrangements may be made with brokerage houses, custodians,
nominees and fiduciaries to send proxies and proxy materials to
their principals and we may reimburse them for their expense in
so doing. We have retained Morrow & Co. to assist in
the solicitation at a cost that is not expected to exceed
$10,000 plus reasonable
out-of-pocket
expenses.
47
Householding
of Proxy Materials
We and some brokers household the Annual Report to Stockholders
and proxy materials, delivering a single copy of each to
multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.
Once you have received notice from your broker or us that they
or we will be householding materials to your address,
householding will continue until you are notified otherwise or
until you revoke your consent. If at any time you no longer wish
to participate in householding and would prefer to receive a
separate copy of the proxy materials, including the Annual
Report to Stockholders, or if you are receiving multiple copies
of the proxy materials and wish to receive only one, please
notify your broker if your shares are held in a brokerage
account or us if you hold registered shares. You can notify us
by sending a written request to Harsco Corporation, 350 Poplar
Church Road, Camp Hill, PA 17011 or by calling
(717) 763-7064.
STOCKHOLDER
PROPOSALS AND NOMINATIONS FOR PRESENTATION AT 2008 ANNUAL
MEETING OF STOCKHOLDERS
If one of our stockholders wishes to submit a proposal for
consideration at the 2008 annual meeting of stockholders, such
proposal must be received at our executive offices no later than
November 20, 2007 to be considered for inclusion in our
proxy statement and proxy card relating to the 2008 annual
meeting. Although a stockholder proposal received after such
date will not be entitled to inclusion in our proxy statement
and proxy card, a stockholder can submit a proposal for
consideration at the 2008 annual meeting in accordance with our
By-Laws if written notice is given to the Secretary of the
Company not less than 60 days nor more than 90 days
prior to the annual meeting. In the event that we give less than
70 days notice of the annual meeting date to stockholders,
the stockholder must give notice of the proposal within ten days
after the mailing of notice or announcement of the annual
meeting date. In order to nominate a candidate for election as a
Director at the 2008 annual meeting, a stockholder must provide
written notice and supporting information to the Secretary of
the Company by personal delivery or mail not later than
January 24, 2008.
48
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THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR THE PROPOSALS.
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Mark Here
for Address
Change or
Comments
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o |
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WITHHELD |
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FOR |
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FOR ALL |
ITEM 1Election of eleven Directors to serve
until the next annual meeting of
stockholders;
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01 G. D. H. Butler,
02 K. G. Eddy,
03 S. D. Fazzolari,
04 D. C. Hathaway,
05 J. J. Jasinowski,
06 D. H. Pierce,
07 C. F. Scanlan,
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08 J. I. Scheiner,
09 A. J. Sordoni, III,
10 J. P. Viviano, and
11 R. C. Wilburn |
Withheld for the nominees you list below: (Write that
nominees name in the space provided below.)
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FOR |
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AGAINST |
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ABSTAIN |
ITEM 2Ratification of the appointment of
PricewaterhouseCoopers LLP as
independent auditors.
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o
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Signature
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Signature
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Date
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, 2007 |
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
5 FOLD AND DETACH HERE 5
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting are available through 11:59 PM Eastern Time
the day prior to the date of the Annual Meeting.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
INTERNET
http://www.proxyvoting.com/hsc
Use the internet to vote your proxy.
Have your proxy card in hand
when you access the web site.
TELEPHONE
1-866-540-5760
Use any touch-tone telephone to
vote your proxy. Have your proxy card
in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy
card.
To vote by mail, mark, sign and date your proxy card and return
it in the enclosed postage-paid envelope.
Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy
materials, investment plan statements, tax documents and more. Simply log on to Investor
ServiceDirect®
at www.melloninvestor.com/isd where step-by-step instructions will
prompt you through enrollment.
You can view the Annual Report and Proxy Statement
on the internet at www.harsco.com
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HARSCO CORPORATION
The undersigned hereby appoints D.C. Hathaway, S.D. Fazzolari and A.J. Sordoni, III and
each of them, with power to act without the other and with power of substitution, as proxies and
attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other
side, all the shares of Harsco Corporation Common Stock which the undersigned is entitled to
vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting
of Stockholders of the company to be held April 24, 2007 or at any adjournment
or postponement thereof, with all powers which the undersigned would possess of present at the Annual Meeting.
(Continued and to be marked, dated and signed, on the other side)
Address
Change/Comments (Mark the corresponding box on the reverse side)
5 FOLD AND DETACH HERE 5