SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No. )
Filed
by
the Registrant
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by
a Party other than the Registrant o
Check
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appropriate box:
o Preliminary
Proxy Statement
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for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to §240.14a-11(c) or §240.14a-12
Century
Aluminum Company
(Name
of
Registrant as Specified In Its Charter)
(Name
of
Person(s) Filing Proxy Statement if other than Registrant)
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of Filing Fee (check the appropriate box):
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required
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computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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class of securities to which transaction applies: N/A
2)
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Number of securities to which transaction applies: N/A
3)
Per unit
price or other underlying value of transaction computed pursuant to Exchange
Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state
how it was determined): N/A
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maximum aggregate value of transaction: N/A
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paid: N/A
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previously with preliminary materials.
o
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box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
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NOTICE
OF ANNUAL MEETING OF
STOCKHOLDERS
To
Be Held May 23, 2007
TO
THE
STOCKHOLDERS:
You
are
cordially invited to attend our 2007 Annual Meeting of Stockholders on May
23,
2007 at 9:00 a.m., local time, at our executive offices located at 2511 Garden
Road, Building A, Suite 200, Monterey, California. At the meeting, we plan
to:
|
1.
|
Elect
three Class II directors to our Board, each for a term of three
years;
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2.
|
Ratify
the appointment of Deloitte & Touche LLP as our independent auditors
for the fiscal year ending December 31, 2007;
and
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3.
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Transact
any other business that may properly come before the meeting or at
any
adjournments or postponements of the
meeting.
|
You
are
entitled to vote at the meeting if you owned shares of our common stock at
the
close of business on April 5, 2007. Please note, there are three ways that
you
can vote before the meeting - by telephone, by the Internet or by mailing the
proxy card.
By
Order
of the Board of Directors,
/s/
Robert R. Nielsen
Robert
R.
Nielsen
Executive
Vice President,
General
Counsel,
and
Secretary
Monterey,
California
April
23,
2007
|
YOUR
VOTE IS IMPORTANT
|
|
If
you do not expect to attend the 2007 Annual Meeting, or if you
do plan to
attend but wish to vote by proxy, please complete, sign, date and
return
promptly the enclosed proxy card in the enclosed postage-paid envelope.
You may also vote by telephone or electronically by the
Internet.
|
CENTURY
ALUMINUM COMPANY
_________________
________________
May
23, 2007
Our
board
of directors is soliciting proxies for the 2007 Annual Meeting of Stockholders
of Century Aluminum Company, which we refer to as Century. This booklet of
information and the accompanying proxy card contain information about the items
you will vote on at the Annual Meeting. Distribution of these documents is
scheduled to begin on or about April 23, 2007.
QUESTIONS
AND ANSWERS
Q. When
and where is the Annual Meeting of Stockholders being
held?
A. The
2007
Annual Meeting is being held on May 23, 2007 at 9:00 a.m. local time, at our
principal executive offices which are located at 2511 Garden Road, Building
A,
Suite 200, Monterey, California 93940.
Q. Who
is entitled to vote and how many votes do I have?
A. You
may
vote at the 2007 Annual Meeting if you owned shares of our common stock at
the
close of business on April 5, 2007. Each stockholder is entitled to one vote
for
each share of common stock held.
Q. How
many shares are available to vote in the Annual Meeting?
A. On
April
5, 2007, the record date for the meeting, there were 32,581,496 shares of
Century common stock outstanding.
Q. What
constitutes a quorum for the meeting?
A. The
holders of a majority of the outstanding shares of Century's common stock will
constitute a quorum for the transaction of business at the 2007 Annual Meeting.
Only shares of Century common stock that are present at the Annual Meeting,
either in person or represented by proxy (including shares that the holder
abstains from voting or does not vote with respect to one or more of the matters
present for stockholder approval), will be counted for purposes of determining
whether a quorum exists at the meeting.
Q. How
do I vote?
A. You
may
vote in person by attending the Annual Meeting or by completing and returning
a
proxy by mail, by telephone, or electronically using the Internet, by the
deadline indicated in the proxy card. To vote your proxy by mail, mark your
vote
on the enclosed proxy card, then follow the directions on the card. To vote
your
proxy by telephone or electronically using the Internet, see the information
on
the proxy card and have the proxy card available when you call or access the
Internet website. If you vote by proxy, your shares will be voted according
to
your directions. If you sign and return your proxy card but do not mark any
selections, your shares represented by that proxy will be voted as recommended
by the board of directors. Whether you plan to attend the meeting or not, we
encourage you to vote by proxy as soon as possible.
If
your
shares are held in a “street name” by a bank, broker or other nominee, you must
timely deliver your voting instructions to your respective bank, broker or
other
nominee, following the specific instructions that have been provided to you
by
your bank, broker or other nominee.
Q. How
do I vote my shares that are held in a Century 401(k)
plan?
A. If
you
participate in one of Century’s 401(k) plans, you must provide the trustee of
the 401(k) plan with your voting instructions in advance of the meeting. You
may
do this by returning your voting instructions by mail, or submitting them by
telephone or electronically, using the Internet. You cannot vote your shares
in
person at the Annual Meeting; the trustee is the only one that can vote your
shares. The trustee will vote your shares as you have instructed. If the trustee
does not receive your instructions, your shares generally will be voted in
proportion to the way the other plan participants voted. To allow sufficient
time for voting by the trustee, your voting instructions must be received by
May
21, 2007.
Q. May
I change my vote?
A. Yes.
You
may revoke a proxy or change your voting instructions by:
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·
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delivering
a written notice of revocation or later-dated proxy to our Secretary
at or
before the taking of the vote at the Annual
Meeting;
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·
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if
you voted by telephone or on the Internet, changing your voting
instructions via telephone or the Internet up to 1:00 a.m. (Central
Time)
on May 23, 2007 (the date of the 2007 Annual
Meeting);
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·
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if
you hold your shares in 401(k) plan, notifying the plan trustee in
writing
prior to May 21, 2007, that your voting instructions are revoked
or should
be changed; or
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|
·
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voting
in person at the Annual Meeting.
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If
your
shares are held in “street name,” you must follow the specific instructions
provided to you to change or revoke any instructions that you may have already
provided to your bank, broker or other nominee.
Q. How
will my votes be counted?
A. Directors
are elected by a plurality of votes, which means that the three nominees that
receive the highest number of votes will be elected as directors, even if a
nominee does not receive a majority of the votes cast. The other items submitted
to stockholders for a vote at the meeting require the affirmative vote of a
majority of the votes cast.
Your
shares will be voted in accordance with your instructions. Abstentions will
be
treated as shares that are present and entitled to vote for purposes of
determining a quorum for a matter, but will not be counted as a vote in favor
of
such matter. Accordingly, an abstention from voting on a matter will have the
same effect as a vote against the matter. If a bank, broker or other nominee
holding stock in “street name” indicates on the proxy that it does not have
discretionary authority to vote as to a particular matter, those shares will
have no impact on the vote for that matter.
Our
board
of directors is divided into three classes: Class I, Class II and Class III.
Directors in each class are elected to serve for three-year terms, with each
class standing for election in successive years. Three Class II Directors will
be elected at the 2007 Annual Meeting to serve a three-year term that will
expire at the 2010 Annual Meeting. The persons named as proxies in the enclosed
proxy card intend to vote for the election of each of the nominees listed below
unless you indicate on the proxy card that your vote should be withheld from
any
or all of the nominees. If any nominee declines or is unable to serve, the
persons named as proxies will use their best judgment in voting for any
available nominee. Each of the nominees named below has indicated his
willingness to serve if elected, and the board of directors has no reason to
believe that any of the nominees will not be available to serve. Set forth
below
is background information for each of the three nominees for election as well
as
the other members of the Board whose terms expire in 2008 and 2009. Each nominee
currently serves as a director on our board of directors.
Class
II Directors Standing for Election with Terms to Expire in
2010
|
Name
and Age*
|
Business
Experience and Principal Occupation or
Employment
During Past 5 Years; Other Directorships
|
Director
Since
|
|
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John
C. Fontaine
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75
|
Our
Lead Director since 2005; Of Counsel, law firm of Hughes Hubbard
&
Reed LLP since January 2000 and Partner from July 1997 to December
1999;
President of Knight-Ridder, Inc. from 1995 to 1997; Chairman of the
Board
of Trustees of the National Gallery of Art since September 2006 and
a
Trustee since 2003.
|
1996
|
|
John
P. O’Brien
|
65
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Managing
Director of Inglewood Associates Inc. since 1990; Chairman of Allied
Construction Products since March 1993; Director of Preformed Line
Products Company since May 2004; Director of Oglebay Norton Company
since
April 2003; Director of International Total Services, Inc. from August
1999 to January 2003; Chairman and Chief Executive Officer of Jeffrey
Mining Products L.P. from 1995 to 1999; Member of the Board of Trustees
of
Saint Luke’s Foundation of Cleveland, Ohio.
|
2000
|
|
Peter
C. Jones
|
59
|
Director
of Mizuho Corporate Bank (Canada) since December 2006; Director of
IAMGOLD
Corporation since May 2006; President and Chief Operating Officer
of Inco
Ltd. from April 2001 to November 2006; President Commissioner PT
International Nickel Indonesia Tbk. from 1999 to December 31, 2006,
and
Commissioner from 1997.
|
2007
|
Class
III Directors with Terms to Expire in 2008
|
Name
and Age*
|
Business
Experience and Principal Occupation or
Employment
During Past 5 Years; Other Directorships
|
Director
Since
|
|
|
Craig
A. Davis
|
66
|
Chairman
of the Board since August 1995; our Chief Executive Officer from
August
1995 to December 2002 and from October 2003 to December 2005; Director
of
Glencore International AG since 1993 and Executive of Glencore from
1990
to 1996.
|
1995
|
|
Robert
E. Fishman, PhD
|
55
|
Executive
Vice President of Calpine Corporation since 2001; President of PB
Power,
Inc. from 1998 to 2001.
|
2002
|
|
Jack
E. Thompson
|
57
|
Director
of Rinker Group Ltd. since May 2006; Director of Tidewater Inc. since
2005; Director of Phelps Dodge Corp. from January 2003 to March 2007;
Director of Stillwater Mining Co. from 2002 to June 2006; Vice Chairman
of
Barrick Gold Corporation from 2001 to April 2005; Chairman of the
Board
and Chief Executive Officer of Homestake Mining Company from 1998
to 2001;
member of the Advisory Board of Resource Capital Funds III, LLP since
2002; member of the Industry Advisory Counsel for the College of
Engineering at the University of Arizona since 2002.
|
2005
|
Class
I Directors with Terms to Expire in 2009
|
Name
and Age*
|
Business
Experience and Principal Occupation or
Employment
During Past 5 Years; Other Directorships
|
Director
Since
|
|
|
Logan
W. Kruger
|
56
|
Our
President and Chief Executive Officer since December 2005;
President, Asia/Pacific for Inco Limited, from September 2005 to
November
2005; Executive Vice-President, Technical Services for Inco Ltd.
from
September 2003 to September 2005; Chief
Executive Officer
of
Anglo American Chile Ltda., from July 2002 to September 2003; and
President and Chief
Executive Officer,
Hudson Bay Mining & Smelting Co., Ltd., from 1996 until June
2002.
|
2005
|
|
Willy
R. Strothotte (1)
|
63
|
Chairman
of the Board of Glencore International AG since 1994 and Chief Executive
Officer from 1993 to December 2001; Director of Minara Resources
Ltd.
since 2000; Chairman of the Board of Xstrata AG (formerly Südelektra
Holding AG) since 1990.
|
1996
|
|
Jarl
Berntzen
|
40
|
Partner
- Head of Mergers and Acquisitions, ThinkEquity Partners LLC since
March
2007, and Managing Director from March 2006; Senior Vice President,
Barrington Associates, LLC from April 2005 to February 2006; Founder,
Berntzen Capital Management, LLC from March 2003 to April 2005; Managing
Director of Providence Capital, Inc. from September 2002 to March
2003;
Vice President, Mergers and Acquisitions of Goldman, Sachs & Co. from
1998 to 2001.
|
2006
|
___________________
* Ages
as
of April 23, 2007
(1) Mr.
Strothotte was designated to serve as one of our directors by Glencore
International AG, or Glencore.
Board
and Committee Meetings; Directors’ Compensation; Communication with
Directors
Our
board
of directors presently consists of 9 directors. The Board, which is responsible
for supervision of the overall affairs of Century, establishes corporate
policies, sets strategic direction, and oversees management, which is
responsible for the day-to-day operations of Century. The Board met seven times
during 2006.
To
assist
it in carrying out its duties, the Board has established various standing
committees. Each standing committee of the Board and its members are listed
in
the table below. The Board designates the members of each committee and the
committee chair annually, based on the recommendations of the Governance and
Nominating Committee. The Board has adopted written charters for each of its
committees, which are available in the Investor section of our website,
www.centuryaluminum.com,
under
the tab “Corporate Governance.” During 2006, overall attendance at Board and
committee meetings was 98%. Each director attended at least 80% of all meetings
of the Board and each Board committee on which such director served. We
encourage, but do not require, the attendance of Board members at our Annual
Meetings. All of our directors attended the 2006 Annual Meeting.
Board
Committees and Meetings
The
table
below identifies the name and current members of each standing committee of
our
Board.
|
Name
|
Audit
|
Compensation
|
Governance
& Nominating
|
|
Jarl
Berntzen
|
X
|
|
X
|
|
Robert
E. Fishman
|
X
|
|
X
|
|
John
C. Fontaine
|
|
X*
|
X
|
|
Peter
C. Jones
|
X
|
X
|
|
|
John
P. O’Brien
|
X*
|
X
|
|
|
Jack
E. Thompson
|
|
X
|
X*
|
___________________
* Chair
Independent
Directors
The
Board
has determined that each of Jarl Berntzen, Robert E. Fishman, John C. Fontaine,
Peter C. Jones, John P. O’Brien and Jack E. Thompson is an independent director
under the criteria established by NASDAQ. In evaluating the independence of
Mr.
Jones, the Board considered that Mr. Kruger, our President and Chief Executive
Officer, held executive positions at Hudson Bay Mining & Smelting Co.,
Limited and Inco Limited while Mr. Jones served as the President of these
companies. In addition, the Board previously determined that Roman A. Bninski,
a
director from January through June 2006, was an independent director. In
evaluating the independence of Mr. Bninski, the Board considered that Mr.
Bninski is a partner of Curtis, Mallet-Prevost, Colt & Mosle LLP, which
furnishes legal services to us and Glencore, our largest
shareholder.
Audit
Committee
The
Audit
Committee:
|
·
|
oversees
the financial reporting process for which management is responsible;
|
|
·
|
approves
the engagement of the independent auditors for audit and non-audit
services;
|
|
·
|
monitors
the independence of the independent
auditors;
|
|
·
|
reviews
and approves all audit and non-audit services and
fees;
|
|
·
|
reviews
the scope and results of the audit with the independent
auditors;
|
|
·
|
reviews
the scope and results of internal audit procedures with our internal
auditors;
|
|
·
|
evaluates
and discusses with the independent auditors and management the
effectiveness of our system of internal accounting controls;
and
|
|
·
|
makes
inquiries into other matters within the scope of its
duties.
|
During
2006, the members of the Audit Committee were Messrs. Berntzen, Fishman, O’Brien
and Thompson. Each member of the Audit Committee is “independent,” as required
under applicable NASDAQ listing standards and Rule 10A-3 of the Securities
Exchange Act of 1934, as amended, or the Exchange Act. In addition, the Board
has determined that John P. O’Brien is an “audit committee financial expert”
within the meaning set forth in regulations of the Securities and Exchange
Commission. In 2006, the Audit Committee held four meetings. Effective March
20,
2007, Mr. Thompson was succeeded on the Audit Committee by Mr. Jones, who
was elected as a director on March 20, 2007.
Compensation
Committee
The
Compensation Committee reviews and establishes the compensation for our
executive officers and has oversight responsibility for administering and
awarding grants under our 1996 Stock Incentive Plan, as amended, which we refer
to as the 1996 Plan. Each member of the Compensation Committee is an independent
director as required under applicable NASDAQ listing standards. During 2006,
the
members of the Compensation Committee were Messrs. Fontaine, O’Brien and
Thompson. Effective March 20, 2007, Mr. Jones became a member of the
Compensation Committee. The Compensation Committee held eight meetings in
2006.
Governance
and Nominating Committee
The
Governance and Nominating Committee is responsible for:
|
·
|
evaluating
the size and composition of the Board;
|
|
·
|
identifying,
recruiting and recommending candidates for election to the Board;
|
|
·
|
overseeing
corporate governance matters; and
|
|
·
|
reviewing
and making periodic recommendations concerning our corporate governance
policies and procedures.
|
The
Governance and Nominating Committee solicits recommendations for potential
Board
candidates from a variety of sources, including directors, officers, other
individuals with whom the Governance and Nominating Committee
members are familiar, through its own research, and third-party research.
The
Governance and Nominating Committee will also consider nominees recommended
by
stockholders who submit such recommendations in writing to our Corporate
Secretary. The qualifications and standards the Governance and Nominating
Committee will apply in evaluating any recommendations for nomination to
the
Board include, but are not limited to:
|
·
|
significant
business or public experience;
|
|
·
|
a
willingness and ability to make a sufficient time commitment to Century’s
affairs to perform effectively the duties of a director, including
regular
attendance at Board and committee meetings;
|
|
·
|
skills
in finance, international business and knowledge about Century’s business
or industries;
|
|
·
|
personal
qualities of leadership, character, judgment and integrity; and
|
|
·
|
requirements
relating to composition of the Board under applicable law and listing
standards.
|
During
2006, the members of the Governance and Nominating Committee were Messrs.
Fishman, Fontaine and Thompson. Each member of the Governance and Nominating
Committee is “independent” as required under applicable NASDAQ listing
standards. Effective March 20, 2007, Mr. O’Brien was succeeded on the Governance
and Nominating Committee by Mr. Berntzen.
The
Governance and Nominating Committee recommended John C. Fontaine, Peter C.
Jones
and John P. O’Brien as nominees for election as Class II Directors to the Board
at the 2007 Annual Meeting. After considering the recommendations of the
Governance and Nominating Committee, our Board approved the slate of director
nominees to stand for election at the 2007 Annual Meeting. In 2006, the
Governance and Nominating Committee held five meetings.
In
2006,
on the recommendation of Mr. Jack E. Thompson, chairman of the Governance and
Nominating Committee, the Governance and Nominating Committee considered Mr.
Peter C. Jones as a candidate for service on our Board. Following his evaluation
by the committee, the committee recommended that the board of directors elect
Mr. Jones as a director, and Mr. Jones was subsequently elected to the Board
effective March 20, 2007.
Lead
Director/Meetings of Independent Directors
On
the
recommendation of the Governance and Nominating Committee, the Board has
designated John C. Fontaine to serve as the Lead Director for meetings of the
independent Board members outside the presence of management. The independent
directors met four times during 2006. Our independent directors will meet in
executive session without the presence of management no fewer than two times
each year.
Directors’
Compensation
Directors
who are full-time salaried employees of Century are not compensated for their
service on the Board or on any Board committee. The Board’s general policy is
that compensation for non-employee directors should be a mix of cash and
equity-based compensation. The Compensation Committee evaluates the appropriate
level and form of compensation for non-employee directors at least annually
and
recommends changes to the Board when appropriate. The Board reviews the
committee’s recommendations and determines the amount of director compensation.
Meeting
Fees and Retainers.
In
August 2006, the Compensation Committee approved changes to the compensation
for
non-employee directors. Effective July 1, 2006, non-employee directors (other
than the Chairman) receive an annual retainer of $35,000 for their services.
The
Chairman of the board of directors receives an annual retainer of $100,000.
The
Lead Director receives an additional $25,000 annual retainer, the Chairman
of
the Audit Committee receives an additional $10,000 annual retainer and the
Chairman of each of the Compensation Committee and the Governance and Nominating
Committee receives an additional $5,000 annual retainer. In addition, each
non-employee director receives a fee of $2,000 for each Board or Board committee
meeting attended. The Chairman of the Audit Committee receives an additional
$1,000 per Audit Committee meeting attended.
Stock
Options.
Each
non-employee director receives a one-time grant of options to purchase 10,000
shares of Century common stock. The options vest one-third on the grant date,
and an additional one-third vest on each of the first
and
second anniversaries of the grant date. In addition, each non-employee director
continuing in office after the Annual Meeting of stockholders each year receives
an annual grant of options that vest one-fourth on each of the three, six,
nine
and 12 month anniversaries of the date of grant. The options are granted
on the
business day following the Annual Meeting at the average of the high and
low
price of Century’s common stock on that date.
During
2006, non-employee directors each received options to purchase 3,000
shares.
Expense
Reimbursement. All
directors are reimbursed for their travel and other expenses incurred in
attending Board and Board committee meetings.
The
following table sets forth the compensation paid to each director in
2006.
2006
Director Compensation
|
Name
|
Fees
Earned or Paid in Cash
|
Option
Awards
|
All
Other Compensation
|
Total
|
|||||||||
|
(a)
|
(b)
|
(d)
|
(g)
|
(h)
|
|||||||||
|
Jarl
Berntzen
|
$
|
41,750
|
$
|
197,223
|
-
|
$
|
238,973
|
||||||
|
Craig
A. Davis
|
$
|
304,000
|
$
|
50,875
|
$
|
2,317,570
|
$
|
2,672,445
|
|||||
|
Robert
E. Fishman
|
$
|
70,000
|
$
|
50,875
|
-
|
$
|
120,875
|
||||||
|
John
C. Fontaine
|
$
|
95,000
|
$
|
50,875
|
-
|
$
|
145,875
|
||||||
|
John
P. O’Brien
|
$
|
87,500
|
$
|
50,875
|
-
|
$
|
138,375
|
||||||
|
Willy
R. Strothotte
|
-
|
$
|
50,875
|
-
|
$
|
50,875
|
|||||||
|
Jack
E. Thompson
|
$
|
86,500
|
$
|
50,875
|
-
|
$
|
137,375
|
||||||
|
Roman
A. Bninski
|
$
|
24,500
|
-
|
-
|
$
|
24,500
|
|||||||
|
Stuart
M. Schreiber
|
$
|
22,500
|
-
|
$
|
333,209
|
$
|
355,709
|
||||||
___________________
Column
(a)
- This
column lists all non-employee directors who served on the Board during 2006.
Mr.
Kruger did not receive compensation for serving as a member of the Board.
Messrs. Bninski and Schreiber did not stand for re-election when their terms
expired in June 2006.
Column
(b)
- The
amounts in this column reflect the retainer and meeting fees paid to each
non-employee director during 2006 (other than Mr. Strothotte, who waived his
right to receive cash compensation). For the period from January 1, 2006 to
June
30, 2006, Mr. Davis received $250,000 for his services as Chairman of the Board.
For the remainder of 2006, Mr. Davis received a retainer of $50,000, which
represents the pro rated portion of the annual retainer paid to the Chairman
of
the Board. Mr. Davis received meeting fees, travel and other expense
reimbursement and other compensation generally paid to our non-employee
directors beginning July 1, 2006.
Column
(d)
-
Amounts shown in this column reflect the dollar amount recognized for financial
statement reporting purposes during 2006 in accordance with Statement of
Financial Accounting Standards 123R, or FAS 123R, for equity award expenses,
disregarding assumptions for the forfeiture of awards. See footnote 9 of our
Annual Report on Form 10-K for the year ended December 31, 2006 for the
assumptions used in the valuation of these awards and related disclosures.
Presented below are the grant date fair value of each option award granted
in
2006 (computed in accordance with FAS 123R and using the Black-Scholes option
pricing model to calculate fair value) and the aggregate number of vested and
unvested stock options and stock awards held by each continuing director (other
than Mr. Kruger) as of December 31, 2006:
(footnotes
continued on following page)
(footnotes
continued from previous page)
|
Name
|
Grant
Date Fair Value of 2006 Option Awards
|
Number
of Options Outstanding as of 12/31/06
|
Number
of Stock Awards Outstanding as of 12/31/06
|
|||||||
|
Jarl
Berntzen
|
$
|
287,360
|
13,000
|
-
|
||||||
|
Craig
A. Davis
|
$
|
67,833
|
3,000
|
29,778
(1)
|
|
|||||
|
Robert
E. Fishman
|
$
|
67,833
|
4,500
|
-
|
||||||
|
John
C. Fontaine
|
$
|
67,833
|
16,000
|
-
|
||||||
|
John
P. O’Brien
|
$
|
67,833
|
14,000
|
-
|
||||||
|
Willy
R. Strothotte
|
$
|
67,833
|
22,500
|
-
|
||||||
|
Jack
E. Thompson
|
$
|
67,833
|
9,334
|
-
|
||||||
|
(1)
|
Represents the value of performance share units
for the
2005-2007 performance program period which were granted to Mr. Davis
when
he served as our Chief Executive Officer. Our Compensation Committee
will
determine vesting for the 2005-2007 performance period in
2008.
|
|||||||||
Column
(g)
- For
Mr. Davis, all other compensation includes $1,360,597 attributed to the cash
value realized from the vesting of performance-based share awards, $950,000
from
payments under our retirement plans, and $6,973 representing the value of a
retirement gift presented by us to Mr. Davis. Pursuant to the terms of the
Implementation Guidelines to our 1996 Plan, following his retirement as our
Chief Executive Officer, Mr. Davis’s performance-based share awards could
continue to vest during our 2004-2006 and 2005-2007 performance program periods
on an approximately two-thirds and one-third basis, respectively. As such,
amounts included in this column include stock-based compensation that was
awarded to Mr. Davis when he served as Chief Executive Officer. For Mr.
Schreiber, all other compensation is comprised of (i) $4,000 in payments made
to
Mr. Schreiber while he served as a director in his role as a consultant to
the
Compensation Committee, (ii) $25,002 in consulting fees paid to Mr. Schreiber
pursuant to his consulting arrangement following his service as a director,
and
(iii) $304,207 in executive search and placement fees paid to Integis, a
corporation owned by Mr. Schreiber.
Stockholder
Communications with the Board of Directors
Stockholders
may communicate with the Board or any individual director(s) by sending a
written communication in an envelope addressed to the Board or the appropriate
director(s) in care of our Corporate Secretary at the address for our executive
offices located on the cover page of this proxy statement.
OWNERSHIP
OF CENTURY COMMON STOCK
Security
Ownership of Certain Beneficial Owners
The
following table sets forth certain information concerning the beneficial
ownership of our common stock as of April 16, 2007 (except as otherwise noted)
by each person known by us to be the beneficial owner of five percent or more
of
the outstanding shares of our common stock. The percent of class shown below
is
based on the 32,582,663 shares of common stock outstanding of April 16, 2007.
|
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership(1)
|
Percent
of Class
|
|
Glencore
International AG(2)
|
9,320,089(2)
|
28.6
|
|
Guardian
Life Insurance Company of America(3)
|
3,121,437(3)
|
9.6
|
|
Prudential
Financial, Inc(4)
|
1,863,899(4)
|
5.7
|
|
Citadel
Limited Partnership(5)
|
1,816,395(5)
|
5.6
|
|
(1)
|
Each
entity has sole voting and investment power, except as otherwise
indicated.
|
|
(2)
|
Based
on information set forth in a Schedule 13D filing dated May 25,
2004,
Glencore International AG beneficially owns such shares through
its
subsidiary, Glencore AG (together with Glencore International AG,
“Glencore”). The principal business address of each of Glencore
International AG and Glencore AG is Baarermattstrasse 3, P.O. Box
555, CH
6341, Baar, Switzerland.
|
|
(3)
|
Based
on information set forth in a Schedule 13G filed on February 9,
2007, by
Guardian Life Insurance Company (“Guardian”), Guardian Investor Services
LLC (“GIS”), and RS Investment Management Co. LLC (“RIMC”) (collectively,
the “Guardian Reporting Persons”). Guardian is an insurance company and
the parent company of GIS and RIMC. GIS is a registered investment
adviser, a registered broker-dealer, and the parent company of
RIMC, a
registered investment adviser. The Guardian Reporting Persons each
share
voting and investment power over 3,121,437 shares. The business
address of
the Guardian Reporting Persons is 7 Hanover Square, New York, New
York
10004.
|
|
(4)
|
Based
on information set forth in a Schedule 13G filed on February 9,
2007,
Prudential Financial, Inc. (“Prudential”) shares voting and investment
power with respect to 1,713,797 shares. The shares reported by
Prudential
are held for Prudential’s benefit or for the benefit of its clients. The
principal business address of Prudential is 751 Board Street, Newark,
New
Jersey 07102. 1,790,102 shares reported as beneficially owned by
Prudential are reported as beneficially owned by Jennison Associates
LLC
(“Jennison”), a wholly-owned subsidiary of Prudential, in a Schedule 13G
filed by Jennison on February 13, 2007. Jennison, which shares
investment
power with respect to all 1,790,102 shares, beneficially owns such
shares
in its capacity as an investment advisor. The business address
of Jennison
is 466 Lexington Avenue, New York, New York 10017.
|
|
(5)
|
Based
on information set forth in a Schedule 13G filed on March 6, 2007,
Citadel
Limited Partnership shares voting and investment power with respect
to all
of the reported shares with Citadel Derivatives Group LLC, Citadel
Equity
Fund Ltd., Citadel Investment Group, L.L.C. and Kenneth Griffin
(collectively, the “Citadel Reporting Persons”). The business address for
the Citadel Reporting Persons is 131 S. Dearborn Street, 32nd Floor,
Chicago, Illinois 60603.
|
Security
Ownership of Directors and Executive Officers
The
following table sets forth certain information concerning the beneficial
ownership of our common stock as of April 16, 2007 by: (i) each of our current
directors, (ii) each executive officer named in the Summary Compensation Table
under the heading “Executive Compensation,” and (iii) all of our directors and
executive officers as a group. No director or executive officer beneficially
owned more than 1% of our outstanding common stock. All of our directors and
executive officers as a group beneficially owned 1.1% of our outstanding common
stock.
|
Amount
and Nature of Beneficial Ownership(1)
|
|||
|
Name
|
Common
Stock
|
Restricted
Shares(2)
|
Exercisable
Stock Options(3)
|
|
David
W. Beckley
|
11,551
|
8,526
|
-
|
|
Jarl
Berntzen
|
-
|
-
|
9,666
|
|
Michael
A. Bless
|
6,607
|
14,080
|
19,998
|
|
Craig
A. Davis
|
106,244(4)
|
29,778
|
3,000
|
|
Robert
E. Fishman
|
-
|
-
|
4,500
|
|
John
C. Fontaine
|
250(5)
|
-
|
16,250
|
|
E.
Jack Gates
|
23,524
|
16,025
|
-
|
|
Peter
C. Jones
|
-
|
-
|
3,333
|
|
Gerald
J. Kitchen
|
15,179
|
8,600
|
-
|
|
Logan
W. Kruger
|
10,228
|
31,682
|
13,333
|
|
Robert
R. Nielsen
|
2,140
|
12,320
|
8,333
|
|
John
P. O’Brien
|
5,000
|
-
|
14,000
|
|
Steve
Schneider
|
1,490
|
8,155
|
-
|
|
Willy
R. Strothotte
|
- (4)
|
-
|
22,500
|
|
Jack
E. Thompson
|
3,500
|
-
|
9,334
|
|
All
directors and executive officers as a group (19 persons)
|
189,121(4)
|
146,505
|
157,348
|
|
(1)
|
Each
individual has sole voting and investment power, except as otherwise
indicated.
|
|
(2)
|
Includes
the target level of shares of common stock issuable upon vesting
of
performance shares awarded to certain executive officers under
the 1996
Plan. Vesting is based upon achievement of specified performance
targets.
Award recipients do not have voting or investment power with respect
to
performance shares until vesting. Dividend equivalents accrue and
are paid
upon vesting of the performance shares.
|
|
(3)
|
Represents
shares that are subject to options that are presently exercisable
or
exercisable within 60 days of April 16, 2007.
|
|
(4)
|
Excludes
9,320,089 shares beneficially owned by Glencore, for which Mr.
Strothotte
serves as Chairman and Mr. Davis serves as a director.
|
|
(5)
|
Mr.
Fontaine owns 250 shares jointly with his
wife.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our directors and executive officers, and
persons owning more than 10% of a registered class of our equity securities,
to
file with the Securities and Exchange Commission reports of ownership and
changes in ownership of our equity securities. These same persons are also
required to furnish us with copies of all such forms. Based solely on a review
of the copies of the forms furnished to us and written representations that
no
Form 5 filings were required, we believe that, with respect to the 2006 fiscal
year, all required Section 16(a) filings were timely made, except that the
Forms
4 for Steve Schneider and Peter McGuire, filed on May 8, 2006 and May 9, 2006,
respectively, were not timely filed.
Certain
Relationships and Related Transactions
On
March
20, 2007, the board of directors adopted an expanded and updated written policy
and written procedures for the review, approval and monitoring of transactions
involving Century and its subsidiaries and ‘‘related persons.’’ For the purposes
of the policy, ‘‘related persons’’ include executive officers, directors and
director nominees and their immediate family members, and stockholders owning
five percent or greater of our outstanding stock and their family members.
A
copy of our related person transaction policy is available in the Investor
section of our website, www.centuryaluminum.com,
under
the tab “Corporate Governance.”
Our
related person transaction policy is administered by the Audit Committee and
applies to all related person transactions entered into after its adoption.
This
policy applies, subject to certain specific exclusions, to any transaction,
arrangement or relationship or any series of similar transactions, arrangements
or relationships in which Century or any of its subsidiaries was or is to be
a
participant and where any related person had or will have a direct or indirect
interest. Transactions involving less than $50,000 are not subject to review
and
approval under the policy. In addition, the policy defines certain ordinary
course transactions with Glencore that are not material and not subject to
review and approval under the policy, although those transactions are otherwise
reviewed and approved by our Audit Committee. Pursuant to the policy, the Audit
Committee will review all qualifying related person transactions. Based on
its
consideration of all relevant facts and circumstances, along with considering
whether the transaction is on terms that are fair and reasonable to Century
and
whether the transaction is in the business interests of Century, the Audit
Committee will decide whether or not to approve or ratify such transaction.
If a
related person transaction is submitted to the Audit Committee after the
commencement of the transaction, the Audit Committee will evaluate all options
available, including the ratification, rescission or termination of such
transaction.
Approval
of Transactions with Glencore in 2006
Prior
to
our initial public offering in April 1996, we were an indirect, wholly-owned
subsidiary of Glencore. As of April 16, 2007, Glencore, our largest stockholder,
owned 28.6 % of our outstanding common stock. Glencore is an important business
partner, as a customer, a supplier of alumina to our facilities, and as a
counterparty to our hedges. During 2006, all transactions with Glencore were
approved by the Audit Committee or by a special committee comprised solely
of
independent directors.
Mr.
Craig
A. Davis, the Chairman of our Board, is a director of Glencore International
AG
and was an executive of Glencore International AG and Glencore AG from September
1990 until June 1996.
Mr.
Willy
R. Strothotte, a director, is Chairman of the board of directors of Glencore
International AG and served as its Chief Executive Officer from 1993 through
2001.
Purchases
from Glencore
In
2006,
we purchased alumina and primary aluminum from Glencore on both a spot and
long-term contract basis. Such purchases, which we believe were made at
approximate market prices, totaled $185.5 million in 2006. During 2006, we
purchased from Glencore all of our alumina requirements for our Ravenswood,
West
Virginia production facility and for our 49.7% interest in a Mt. Holly, South
Carolina production facility under separate supply agreements. The supply
agreements for Ravenswood and for 54% of our alumina requirements for Mt. Holly
expired December 31, 2006. The supply agreement for the remaining 46% of our
requirements for Mt. Holly runs through January 31, 2008. We entered into an
alumina supply agreement with Glencore that will supply all of our alumina
requirements for Ravenswood from January 1, 2007 until December 31, 2009.
Sales
to Glencore
We
sold
primary aluminum to Glencore in 2006 on both a spot and long-term contract
basis, at prices that approximate market prices. For the year ended December
31,
2006, net sales to Glencore amounted to $259.5 million, including gains and
losses realized on the settlement of cash flow hedges. Sales of primary aluminum
to Glencore amounted to 16.7% of our total revenues in 2006.
We
have a
long-term contract to sell Glencore approximately 50,000 metric tons of primary
aluminum produced at Mt. Holly each year through December 31, 2009 at a variable
price determined by reference to the price for primary aluminum on the London
Metal Exchange, or the LME. We have a long-term contract to sell Glencore 20,400
metric tons per year of primary aluminum produced at Ravenswood and Mt. Holly
through December 31, 2013 at a variable price based on the LME, adjusted by
a
negotiated U.S. Midwest market premium with a cap and floor as applied to the
current U.S. Midwest premium.
As
of
December 31, 2006, we had outstanding forward financial sales contracts with
Glencore for 864,100 metric tons of primary aluminum, of which 128,500 metric
tons were designated as cash flow hedges. These cash flow hedges are scheduled
for settlement at various dates through 2008. In November 2004 and June 2005,
we
entered into forward financial sales contracts with Glencore for the years
2006
through 2010 and 2008 through 2015, respectively. These sales contracts, which
are for a minimum of 300,600 and 460,200 metric tons of primary aluminum,
respectively, over the entire term of the contracts, contain clauses that
trigger additional shipment volume when the market price for a contract month
is
above the contract ceiling price. These contracts will be settled monthly,
and
if the market price exceeds the ceiling price for all contract months through
each contract’s term, the maximum remaining additional shipment volume under
each set of contracts would be 275,400 and 460,200 metric tons,
respectively.
Other
Transactions with Glencore
We
are
party to a 10-year LME-based alumina tolling agreement with Glencore for 90,000
metric tons of capacity at our Nordural production facility in Iceland. In
December 2005, Glencore assigned 50% of its tolling rights under this agreement
to Hydro Aluminum AS for the period 2007 to 2010. Deliveries under that
agreement commenced in July 2006.
Certain
Business Relationships
Mr.
Stuart M. Schreiber, a director from January through June, 2006, is the managing
director and owner of Integis, Inc., which we paid $304,207 in fees for
management and executive search services provided to us in 2006. During 2006,
Mr. Schreiber, who is not independent, served as a consultant to both the
Compensation Committee and the Governance & Nominating Committee. Our Board
determined that his service to those committees was in the best interest of
Century and its stockholders due to his industry experience and knowledge.
Mr.
Schreiber received a fee of $2,000 per committee meeting he attended as a
consultant. In 2006, Mr. Schreiber received $4,000 as a consultant to the
Compensation Committee and Governance and Nominating Committee while serving
as
a director. On March 8, 2006, Mr. Schreiber informed the Board that he would
not
stand for reelection when his current term expired on the date of our 2006
Annual Meeting. Effective July 1, 2006, our Board approved retaining Mr.
Schreiber as a consultant to us and our board of directors based on an annual
retainer of $50,000. Mr. Schreiber was paid $25,002 in fees in 2006 under this
retention arrangement.
EXECUTIVE
COMPENSATION
Introduction
We
have a
Compensation Committee which is a standing committee of our board of directors.
The Committee reviews and establishes the compensation for our executive
officers and is responsible for administering and awarding grants of equity
awards under our 1996 Stock Incentive Plan, which we refer to as the 1996 Plan.
Each member of the Committee is “independent” as required under applicable
NASDAQ listing standards. During 2006, the members of the Compensation Committee
were Messrs. Fontaine, O’Brien and Thompson. The Committee held eight meetings
in 2006.
The
Committee recognizes the benefit of reviewing and modifying as appropriate
Century’s compensation and benefit programs, and the principles and philosophies
on which these programs are based. The Committee also from time to time reviews
the historical application and implementation of our compensation and benefit
programs. Examples of recent Committee Actions include:
|
·
|
Adopting
a formal written charter (a copy of this charter is posted in the
Investor
section of our website, www.centuryaluminum.com,
under the tab “Corporate
Governance”);
|
|
·
|
Formalizing
its historical practice of using compensation tally sheets for the
named
executive officers;
|
|
·
|
Reviewing
the impact of Section 162(m) of the Internal Revenue Code of 1986,
as
amended (the “Code”) on the different components of our executive
compensation programs; and
|
|
·
|
Hiring
an external independent compensation consultant to review the Committee’s
past procedures and compensation decisions.
|
Our
Philosophy on Executive Compensation
Our
compensation programs are designed to enable Century and its subsidiaries to
attract and retain talented executives and managers. We compete for talent
with
companies both within and outside the aluminum industry as a whole, and also
with multinational growth-oriented companies not in our industry. Accordingly,
the Committee and management believe that our compensation programs must remain
flexible to afford the Committee discretion in making awards to both retain
and
attract talented managers.
Our
Structure for Executive Compensation
Our
compensation programs are structured to reflect our philosophy that total
compensation should be equally weighted among a competitive base salary, annual
cash incentive awards and long-term performance awards. This structure is
designed to provide the Committee the discretion to balance between the overall
performance of Century and the individual performance of our executive officers,
and also appropriately to “pay-for-performance” by aligning management’s and
stockholders’ interests in the enhancement of stockholder value.
Our
annual incentive awards are generally determined in December and made in the
form of annual cash bonuses, which allow the Committee, in its discretion,
to
recognize and award individual performance that occurred during the ending
fiscal year. In addition to rewarding individual performance, we base a
significant portion of the annual incentive award and long-term compensation
of
our executive officers on the operating performance of Century and its progress
toward achieving its long term strategic objectives. These objectives are
growing and diversifying our primary aluminum reduction capacity, improving
our
cost competitive position in the industry, and expanding upstream into bauxite
and alumina. Long-term incentive awards are granted in the form of performance
share units that are designed to reward participants for company achievements
relative to our business plan, and the performance of our common stock over
a
set period. See “Our Compensation Programs - Long-Term Incentive Compensation”
below.
Our
Process for Executive Compensation
The
Committee and management recognize that to be competitive, executive
compensation should remain flexible to adapt to the competitive landscape in
which we operate. Therefore, when implementing the philosophy and structure
of
our compensation arrangements, and in making compensation decisions, the
Committee, with the assistance of compensation consultants (discussed below),
and input from our Chief Executive Officer (also discussed below), engages
in a
multi-step process.
First,
our consultants review and consider compensation packages offered both by
employers with whom we compete, and also by other companies of similar or larger
size. The Committee recognizes that, while Century competes in the primary
aluminum market, there is no company that is directly comparable in terms of
size, operating locations and production capabilities. The North American
aluminum market is dominated by two principal competitors, Alcoa Inc. and Alcan
Inc. However, because of the diversified nature of each of Alcoa’s and Alcan’s
businesses, and also their substantially greater size, they do not serve well
as
direct comparables for Century. Through its compensation consultants, the
Committee reviews the compensation packages of Alcoa and Alcan, but does so
together with those of 17 other of our direct and indirect competitors, such
as
Novelis and Nucor, when making compensation decisions. In addition, the
Committee reviews the total compensation paid to executives at a large range
of
industrial companies of similar size ($1 billion to $2 billion in sales) whose
need for highly qualified and capable executives is similar to Century’s. The
inclusion of data for these companies, such as Lone Star Technologies, Oregon
Steel Mills Inc., Quanex Corp., Steele Dynamics Inc., Synalloy Corp. and
Titanium Metals Corp, provides the Committee with a “size-adjusted” view (using
regression analysis) of the broader, and we believe a more accurate, market
perspective for executive compensation.
Assisted
by Century’s compensation consultants, the Committee then augments this review
of specific companies by blending the results of both public and private
compensation surveys of a broad range of comparable companies. The composition
of this group of relevant comparable companies is reviewed by the Committee
from
time to time and is subject to change.
Overall,
our compensation programs are established to provide Century’s officers in an
average year with total compensation that, on average, is targeted at the
mid-range of the total compensation paid for comparable positions within the
surveyed companies. For years that are considered good or exceptional, the
Committee retains the discretion to increase the total compensation payable
to
the executive officers set forth in the Summary Compensation Table, which are
referred to as the named executive officers. The Committee also retains the
discretion to award “special” bonuses when the Committee believes that Century’s
performance or an individual’s performance has significantly exceeded what was
otherwise expected. The Committee last awarded a special bonus to named
executive officers in 2004, in recognition of management’s significant
achievements during that year, including the successful acquisition of our
Nordural smelter, completion of an equity offering, the restructuring of our
long-term debt, and the successful acquisition of our interests in our Gramercy
alumina refinery and Jamaican bauxite mine.
The
principal components of Century’s compensation are designed to operate
independently. The Committee generally does not adjust one component in response
to other compensation components. However, the Committee does track total
compensation and regularly compares the total compensation of our executives
with the total compensation of similarly situated officers among our surveyed
companies. In addition, the Committee reviews projections of performance share
awards at the time annual cash bonuses are paid. Accordingly, because the
Committee retains discretion in making annual incentive awards and determining
the vesting of performance share units, the Committee retains the ability to
make appropriate adjustments if necessary, in the Committee’s discretion, to
adjust total compensation.
In
addition to its internal review, the Committee from time to time engages an
independent compensation consultant to conduct a comprehensive review of our
executive compensation process; i.e.,
philosophy, objectives, programs and decisions. The last such review occurred
in
the fourth quarter of 2005, when the Committee engaged Pearl Meyer &
Partners, as discussed below. This review was updated by our compensation
consultant in the fourth quarter of 2006.
Role
of the Chief Executive Officer
As
part
of its review and determination of Century’s compensation objectives,
philosophy, programs and decisions, the Committee works with, and receives
recommendations and advice from, our Chief Executive Officer. The Committee’s
charter formalizes the working relationship with our Chief Executive Officer
and
includes the following actions to be taken by the Chief Executive
Officer:
|
·
|
working
with the Committee in its decisions regarding the approval of all
general
compensation plans and policies of Century, including pension, savings,
incentive and equity-based plans;
|
|
·
|
consulting
on the corporate and individual goals and objectives relevant to
the
compensation of the Chief Executive
Officer;
|
|
·
|
reviewing
and determining the respective corporate and individual goals and
objectives for the other named executive officers of Century relevant
to
their compensation;
|
|
·
|
providing
the Committee with an evaluation of the performance of the other
named
executive officers of Century in light of their respective corporate
and
individual goals and objectives;
and
|
|
·
|
working
with the Committee by recommending the compensation levels of the
other
named executive officers of
Century.
|
The
Committee considers the recommendations of our Chief Executive Officer, together
with the review by our compensation consultant, and the Committee makes its
independent determinations regarding executive compensation.
Our
Chief
Executive Officer attends all Committee meetings, other than those portions
that
are held in executive session, and he is not present during deliberations or
voting in matters involving his compensation. As appropriate, the Committee
follows an executive session by reconvening with our Chief Executive Officer
present.
Role
of Compensation Committee Consultants
Historically,
the Committee’s practice has been to use the services of Mr. Stuart M. Schreiber
and Integis, Inc., a firm that specializes in executive recruitment and
compensation matters, to provide data showing executive compensation practices
and information. Mr. Schreiber, a former director of Century, is the managing
director and owner of Integis. We retained Integis in connection with the search
for and recruitment of our current Chief Financial Officer in 2005 and 2006.
Integis also assisted in the recruitment of a Chief Operating Officer in 2006
and 2007 and in the recruitment of our Chief Executive Officer in 2005. We
paid
Integis, $304,207 in fees for management and executive search services provided
to us in 2006.
During
2006, Mr. Schreiber served as a consultant to the Compensation and Governance
and Nominating Committees of our board of directors. For the first half of
2006,
Mr. Schreiber also served on our Board as a director who was not “independent”
under applicable NASDAQ listing standards. On March 8, 2006, Mr. Schreiber
informed the board that he would not stand for reelection when his term as
a
Century director expired on June 9, 2006, the date of our 2006 Annual Meeting.
Our
Board
has determined that Mr. Schreiber’s service to our Compensation and Governance
and Nominating Committees was and is in the best interests of Century and its
stockholders due to his experience and knowledge of both Century and the
industry in which we operate. Through June 2006, Mr. Schreiber received a fee
of
$2,000 per Committee meeting he attended as a consultant. In July 2006, we
retained Mr. Schreiber and Integis on a year-to-year basis at an annual retainer
rate of $50,000 plus expenses. In 2006, we paid Mr. Schreiber and Integis the
sum of $29,002 in fees for consulting services.
As
discussed above, the Committee periodically commissions a formal review of
its
compensation objectives, philosophy, programs and historical decisions. The
most
recent formal review occurred in late 2005 and was prepared by Pearl Meyer
&
Partners, a firm of executive compensation experts that had no prior association
with Century. In 2005, Pearl Meyer & Partners reviewed Century’s executive
compensation objectives, philosophy, programs and historical decisions,
interviewed the members of the Committee and Century’s executive officers and
performed analyses of Century and the surveyed companies. This consultant
provided the Committee with its final written report in December 2005. After
carefully reviewing the consultant’s report and discussing it with the
consultant, the Committee concluded that its past procedures and compensation
decisions had been appropriate and so advised the Board at its December 2005
meeting and thereafter in a written report.
In
2006,
the Committee asked Mr. Schreiber to provide an update of the compensation
data
produced for the Committee by Pearl Meyer & Partners in late 2005. Using
Conference Board TM
data on
comparable and similarly sized companies, Mr. Schreiber reported to the
Committee his conclusions regarding annual percentage increases in base salary,
cash bonuses and total compensation paid, and made recommendations to the
Committee for compensation adjustments. The Committee considered both the
surveyed company data presented in the Pearl Meyer & Partners report and the
information prepared by Mr. Schreiber in determining the executives’ 2006 cash
incentive awards and 2007 base salary adjustments.
Because
the Committee recognizes the importance of maintaining effective executive
compensation, and because of the changes in management since the Committee
last
commissioned an independent review of executive compensation, the Committee
has
decided that in 2007 it will engage an independent compensation consultant to
assist and advise the Committee as it makes its decisions with regard to
compensation programs and their implementation.
Our
Compensation Programs
Base
Salary
Base
salary is one component of the total compensation provided to our named
executive officers. The Committee typically reviews the salaries of our named
executive officers annually. However, the Committee may review the salaries
of
our executive officers in connection with a promotion or other change in
responsibility. The Committee generally targets annual base salaries that,
together with annual incentive cash compensation and long-term incentive
compensation, provide the named executive officers with total compensation,
on
average, at or around the mid-range of the compensation ranges for similarly
situated officers at the surveyed companies. Actual salary levels for each
individual vary based upon an assessment of individual performance, experience,
level of responsibility, potential contribution to our future growth and
profitability, and our financial performance. The Committee has not found it
practicable to assign relative weights to specific factors in determining base
salary adjustments, and the specific factors used may vary among individual
executives.
In
December 2005, the Committee reviewed its historical practice of setting annual
salaries for officers effective August 1, and determined that it would be a
better policy to review any annual salary increases in December, at the time
of
awarding annual incentive awards. At the Committee meeting in December 2006,
and
after reviewing information about salary increases at other companies as
provided by our compensation consultant, Integis, the historical increases
in
the salaries of the named officers in recent years, and the recommendation
of
our Chief Executive Officer (for our other officers) the Committee authorized
increases, effective January 1, 2007, of 8.7% in the case of Mr. Kruger, 8.0%
for Mr. Bless, 5.7% for Mr. Nielsen, and 4.0% for Mr. Schneider. Because Mr.
Gates’ employment agreement expired on December 31, 2006, and the terms of his
new employment arrangement remained to be negotiated, the Committee did not
authorize an increase in his base salary at the time it approved annual
increases for the other named officers. A description of Mr. Gates’ new
employment agreement is set forth under “Executive Compensation—Narrative to the
Summary Compensation Table and Grants of Plan-Based Awards Table—Employment
Agreements” below.
Short-Term
Annual Cash Incentive Awards
We
have
an annual incentive compensation plan for our named executive officers. Under
this plan, executive officers (including the Chief Executive Officer) are
eligible to receive each year as a bonus a percentage of their base salary
in
cash. The plan provides for suggested percentage ranges of 35% to 100% for
the
named executive officers. Although our Annual Incentive Plan requires no pre-set
performance criteria, awards under this plan are based on year-end review by
the
Committee of performance against budgets, financial objectives, and other goals.
The terms of our employment arrangement with certain of our named officers
provide for minimum first year bonuses and suggested percentage ranges
thereafter. A description of the agreements in place with named executive
officers of Century is set forth below under the caption “Executive
Compensation—Narrative to the Summary Compensation Table and Grants of
Plan-Based Awards Table—Employment Agreements” and “Executive
Compensation—Post-Employment Compensation.” The Committee provides for minimum
first year bonuses because it believes it is appropriate for newly hired
executive officers to have some certainty as to their minimum total compensation
in their first year of employment.
Actual
cash incentive awards are made by the Committee, in its discretion, taking
into
account the recommendation of the Chief Executive Officer (for Century’s other
officers), the recommendation of the Committee’s compensation consultant, our
performance, and a subjective evaluation by the Committee of individual
performance. The Committee may also, on an executive-by-executive basis, adjust
awards to provide the executive with what the Committee believes, in its
judgment, to be the appropriate level of total compensation. In addition, as
mentioned above, for years that are considered good or exceptional, or where
Century’s or an individual executive officer’s performance significantly exceeds
expectations, the Committee retains the discretion to increase the total
compensation payable to a named executive officer by awarding “special”
bonuses.
For
2006,
in reviewing individual performances, the Committee determined that annual
cash
incentive awards ranging from 70% to 75% of each named executive officer’s
salary would be appropriate for the named executive officers serving in December
2006, and granted incentive awards of $562,500, $262,500, $252,000, $164,500
and
$175,000, respectively, to Messrs. Kruger, Bless, Gates, Nielsen and Schneider.
The Committee prorated Mr. Nielsen’s cash incentive award for the portion of
calendar year 2006 that he was employed by Century. At the time of his
retirement from Century on April 30, 2006, the Committee awarded Mr. Kitchen
with a cash incentive award of $100,000, which was prorated for the portion
of
calendar year 2006 that he was employed by Century. Mr. Beckley did not receive
a cash incentive award for 2006. No special bonuses were awarded in
2006.
Long-Term
Incentive Compensation
The
Committee has oversight responsibility for administering and awarding grants
of
equity awards under the 1996 Plan. Historically, the Committee has awarded
performance-based performance shares, service (time)-based performance shares,
and stock options under the 1996 Plan. The Committee believes that such awards
align executive interests with stockholder interests by creating a link between
compensation and stockholder return and Century’s performance.
Generally,
the Committee grants officers at the vice president level and higher, and
certain other senior managers, awards of performance shares as the long-term
incentive and equity component of their compensation. The Committee believes
that this annual performance share program generally provides appropriate equity
compensation to the named officers. The Committee retains the discretion to
make
other equity grants such as stock options and time-vested performance shares
on
a case-by-case basis. However, grants of this type are generally due to unusual
circumstances. These circumstances can include hiring, promotion and the
occurrence of significant corporate events. Except as part of the total hiring
package provided to Messrs. Bless and Nielsen, no equity grants outside of
the
annual performance share program were made to the named executive officers
in
2006.
The
sizes
of previous equity-based grants and current equity holdings are not
determinative of future grants and are not considered by the Committee when
making long-term incentive award decisions. Century does not have a policy
on
stock ownership for its executive officers or its directors.
Performance
Shares
Century
generally favors grants of performance shares as the annual equity and long-term
performance awards for senior executive officers. The Committee has established
guidelines governing the granting of performance shares. The guidelines provide
for the award of performance share units with performance program periods for
successive three-year periods of time. Each award is determined by creating
a
monetary award within a percentage range of the executive officer’s base salary,
and converting the award into performance share units based on the average
closing price for Century’s common stock for the 60 trading days preceding the
date on which the award is made. The percentage ranges of base salary are 45%
to
100% for the named executive officers. When participants become eligible for
performance share awards, either as new hires, through promotion, or as
recommended by our Chief Executive Officer, they are generally also eligible
to
participate in awards for prior performance program periods on a rolling basis,
based on the percentage of the relevant performance program period during which
they serve in their award-eligible positions. Awards for these prior performance
program periods are granted at the same price per share for Century common
stock
used for other award participants for the relevant performance program
period.
Awards
for the 2006-2008 performance program period were granted in 2006. Vesting
of
performance shares in 2008 will be based on Century’s performance relative to
achievement of strategic, operating and financial targets. The number of actual
shares that vest can range between 0% and 150% of the performance share award.
The Committee developed and set these performance measures, taking into account
recommendations of management and Century’s three-year business plan, which was
finalized in June 2006. This business plan was developed by management and
approved by the Board, and performance goals were set by the Committee based
on
management recommendations, as reported to the Committee by the Chief Executive
Officer.
For
the
2006-2008 performance program period, as noted above, the Committee set both
strategic and operational/financial goals for management. Strategic goals and
operational/financial goals, as a group, were weighted equally. The strategic
goals center on growing our core businesses and improving our competitiveness,
as follows:
|
·
|
expanding
our primary reduction plant located in Grundartangi, Iceland to an
annual
production capacity of 260,000 metric tons per year by the end of
2008;
|
|
·
|
pursuing
greenfield opportunities in Iceland through the acquisition of commitments
for electrical power, location, harbor and other facilities;
and
|
|
·
|
pursuing
other acquisition and joint venture opportunities as appropriate
and in
Century’s interest.
|
Other
strategic goals include:
|
·
|
securing
long-term competitive contracts for the operations of our primary
reduction facilities, including contracts for electrical power, labor
and
alumina;
|
|
·
|
increasing
the proportion of long-term
stockholders;
|
|
·
|
issuing
equity to reduce our leverage and improve the liquidity of our securities;
and
|
|
·
|
building
and maintaining the management team to accomplish our strategic
goals.
|
Management
believes the probability of achieving additional strategic goals not
specifically listed above, based on current information, is between 25% and
90%,
depending on the goal.
Operational/financial
goals include improvements over the plan period in our safety targets and safety
records at our reduction plants in Hawesville, Kentucky; Ravenswood, West
Virginia; and Grundartangi, Iceland. Achieving these safety targets and safety
records at our reduction plants accounts for 20% of the operational/financial
goals portion of the 2006-2008 performance program. Other financial goals
relating to free cash flow, operating income and conversion costs per pound
account for the remaining 30%, 30% and 20%, respectively, of the
operational/financial goals portion of the 2006-2008 performance program.
Management believes the probability of achieving additional
operational/financial goals not specifically listed above, based on current
information, is between 0% and 50%, depending on the goal. Because our financial
performance is highly dependant on the price of aluminum, the Committee retains
discretion to adjust the operational/financial goals performance criteria to
reflect changes in the London Metals Exchange and Midwest transactions prices
of
aluminum and other conditions affecting performance during a performance program
period, and regularly does so.
At
the
end of a performance program period, the Committee receives a recommendation
from management, as reported by the Chief Executive Officer, regarding the
percentage of the prior plan period award that should vest. The Committee
reviews management’s recommendation and performs an independent analysis. The
Committee then determines the appropriate vesting percentage for the plan period
based on the Committee’s assessment of Century’s achievement of the stated
strategic, operational and financial targets. Although the Committee’s
compensation consultants are not involved in either setting initial performance
goals or final determination of vesting percentages, performance share awards
are considered by our consultants as part of the consultants’ review of total
compensation and overall compensation program recommendations, as noted above.
On
June
9, 2006, based on the Committee’s assessment of the degree to which Century had
accomplished the relevant strategic and operating goals and its financial
results, performance shares granted in 2003 for the 2003-2005 performance
program period were vested at 50% of the performance share award level. On
March
19, 2007, the Committee, based on its assessment of the degree to which Century
had accomplished the relevant strategic and operating goals and its financial
results, performance shares granted in 2004 for the 2004-2006 performance
program period were vested at 65% of the performance share award level.
Stock
Options
Option
grants are made on a case-by-case basis to executives whose contributions have
or will have a significant impact on Century’s long-term performance. It has
been the Committee’s practice to approve all option grants at Committee
meetings. For initial option grants to our executives made in connection with
their employment by Century, the Committee approves the options at the time
it
approves the executive’s overall compensation arrangement and the terms of his
or her employment agreement, if any. In 2006, Mr. Bless received a grant of
30,000 options and Mr. Nielsen received a grant of 25,000 options under the
terms of their employment agreements. These option grants were awarded as part
of the total hiring packages for Messrs. Bless and Nielsen. No other option
awards were granted to named executive officers in 2006. All awards of stock
options on shares of Century common stock granted in 2006 were granted under
the
1996 Plan at the average of the high and low sales price for shares of our
common stock on the date of grant and generally vest one-third on the date
of
grant, and one-third on each of the one- and two-year anniversaries of the
date
of grant.
Time-Vested
(Service-Based) Performance Shares
Service-based
performance shares serve in a similar capacity as restricted stock and are
granted in circumstances such as new hires and promotions. In 2006, Mr. Bless
received a grant of 20,000 service-based performance shares and Mr. Nielsen
received a grant of 15,000 service-based performance shares under the terms
of
their respective employment agreements. These grants were awarded as part of
the
total hiring packages for Messrs. Bless and Nielsen, and generally vest in
equal
thirds on the one, two and three year anniversaries of the date of grant. No
other awards of service-based performance shares were granted to named executive
officers in 2006.
Timing
of Equity Awards
Generally,
the Committee undertakes annual salary reviews and incentive pay decisions
at
regularly scheduled Committee and Board meetings.
The
Committee may also make compensation determinations at other times during the
year for newly-hired executives or in connection with the promotion of existing
employees. The Committee does not time any form of compensation award, including
equity-based awards, to coincide with the release of material non-public
information.
Income
Tax Consequences
Section
162(m) of the Code generally disallows a tax deduction by Century for annual
compensation in excess of $1 million paid to our Chief Executive Officer or
any
of our other named executive officers. However, we may deduct compensation
above
$1 million if such compensation is “performance based”, as this term is defined
under 162(m) of the Code. While the Committee considers the impact of 162(m)
on
the overall design of our compensation programs, it is not the Committee’s goal
for all compensation to be deductible by us under 162(m). For example, our
short-term cash incentive awards are granted on the basis of Committee
discretion, taking into account the various elements described above, and are
therefore not designed to be “performance based” under 162(m). In the case of
annual incentive awards, the Committee retains discretion over the amounts
of
annual incentive payments to reward performance which is verifiable and in
the
Committee’s judgment has contributed to the results achieved by Century. The
Committee believes that this discretion is necessary, and would not be available
as a compensation management tool if annual incentive payments were to be
“performance based” as defined and required under 162(m).
Our
performance share award plan is designed to provide the opportunity for
“performance based” payments under 162(m). However, due to some of the strategic
goals/objectives approved for the 2004-2006, 2005-2007, and 2006-2008
performance programs, the awards for those performance program periods are
not
expected to be deductible under 162(m). The Committee will continue to consider
and weigh the potential loss of expense deductions against its need for
discretion in designing programs for the named officers. The Committee does
not
expect the loss of any such deductions to have a significant impact on
Century.
Compensation
of the Chief Executive Officer
The
base
compensation and equity awards of our Chief Executive Officer in 2006 reflect
the terms of the contract we entered into with him at the time he joined Century
in December 2005. The contract amounts are a reflection of both the total
compensation and benefits that the Committee believed were necessary to attract
him to Century and the amounts necessary to compensate him for the benefits
and
other compensation he would forgo in joining Century. Based on the input it
received from its compensation consultants, the Committee believes the total
compensation package provided to Mr. Kruger was comparable to those provided
by
the surveyed companies. Mr. Kruger’s annual cash incentive award is based on
similar considerations to that of the other named executive
officers.
Employment
Agreements
Historically
it has been our practice to enter into employment agreements with officers
at
the executive vice president level and above. The terms of these agreements,
including base salary, initial equity grants, minimum guaranteed bonuses,
participation in Century benefit plans and other benefits, are approved by
the
Compensation Committee. The amounts and types of such compensation are
negotiated terms with each officer. When reviewing and negotiating these terms,
the Committee is provided with market data by its compensation consultants
and
considers practices of peer companies and, if applicable, compensation earned
and/or forfeited by the officer at a previous employer. In 2006, the Committee
approved employment agreements with Messrs. Bless and Nielsen in connection
with
the commencement of their employment with Century. A description of the
agreements in place with named executive officers of Century is set forth below
under the caption “Executive Compensation—Narrative to the Summary Compensation
Table and Grants of Plan-Based Awards Table—Employment Agreements” and
“Executive Compensation—Post-Employment Compensation.”
Post-Termination
Compensation and Benefits
Savings
Plan
We
maintain our Century Aluminum 401(k) Plan. This savings plan is a tax qualified
retirement savings plan pursuant to which our U.S. based salaried employees,
including our named executive officers, are able to contribute a percentage,
up
to the limits prescribed by the Internal Revenue Service, of their annual
compensation on a pre-tax basis. In 2006, we matched 60% of the first 6% of
pay
that is contributed to the savings plan. Prior to January 1, 2007, all matching
contributions vested after 2 years of service with Century. Beginning January
1,
2007, we will match 100% of the first 3% of pay that is contributed to the
savings plan and 50% of the next 2% of pay contributed, and all matching
contributions will be fully vested on contribution.
Retirement
Plans
We
also
maintain a non-contributory defined benefit pension plan for our U.S. based
salaried employees who meet certain eligibility requirements, which we refer
to
as our Qualified Plan. We also have adopted a Supplemental Retirement Income
Benefit Plan, or “SERP.” The SERP is a supplemental plan that provides selected
senior executive officers with enhanced benefits to those provided under our
Qualified Plan. Those supplemental benefits include an unfunded additional
amount equal to the amount that would normally be paid under our Qualified
Plan
if there were no limitations under Sections 415 and 401(a)(17) of the Code.
Final average monthly compensation for purposes of calculating the supplemental
benefit will be based on the greater of (a) projected final annual compensation,
assuming specified annual increases until retirement age, or (b) the average
of
the highest three years’ annual compensation over the last 10 years of
employment. Messrs. Kruger, Bless, Gates, and Nielsen were eligible to
participate in these benefits in 2006.
The
SERP
also permits selected senior executives to achieve estimated levels of
retirement income when, due to the executive’s age and potential years of
service at normal retirement age, benefits under our existing qualified and
nonqualified defined benefit pension plans are projected to be less than a
specified percentage of the executive’s estimated final average annual
compensation (the “Enhanced SERP”). Mr. Kruger is the only named executive
officer currently eligible to participate in the Enhanced SERP, and his
eligibility is subject to certain vesting requirements. Mr. Kruger’s right to
participate in the Enhanced SERP benefit begins on the fifth anniversary of
his
employment date and vests 20 percent each year thereafter. If Mr. Kruger remains
employed by Century for a period of 10 years he will be fully vested in his
Enhanced SERP benefit. When fully vested, Mr. Kruger’s Enhanced SERP benefit
will be approximately 50% of his final average compensation.
We
have
designed these retirement benefits to be competitive with industry standards
to
attract and retain talented executive and management level personnel. Benefits
triggered by retirement are valued and described below under the caption
“Executive
Compensation—Pension Benefits”
and
“Executive Compensation—Post-Employment Compensation.”
Other
Post-Termination Benefits
Selected
senior executive officers may also receive benefits triggered by death,
disability or termination without cause. Century has designed these benefits
to
be competitive with industry standards to attract and retain talented executive
and management level personnel. Benefits triggered by death, disability and
termination without cause are valued and described below under the caption
“Executive Compensation—Post-Employment Compensation.”
It
is
Century’s policy that accelerated benefits for executive officers should not be
triggered in circumstances where the executive is terminated for cause or
resigns voluntarily.
Change
in Control
Our
policy is to provide change in control protection to our named executive
officers based on competitive practice in the industry. Change in control
provisions are contained in various named executive officer employment
agreements, long-term compensation agreements, retirement plans and severance
protection agreements. Our industry has been subject to consolidation and
reorganizations in recent times. Change in control protection provides a method
to attract and retain executives who are unlikely to be retained by the
acquiring entity upon a change in control. In addition, change in control
protections are designed to maximize stockholder value by creating incentives
for named executive officers to explore strategic transactions and work to
bring
such transactions to fruition if appropriate. Benefits
triggered by a change in control are valued and described below under the
caption “Executive Compensation—Post-Employment Compensation.”
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis set forth in this proxy statement with Century management and,
based on such review and discussions, the Compensation Committee recommended
to
Century’s board of directors that the Compensation Discussion and Analysis be
included in Century’s 2006 Annual Report on Form 10-K and this proxy
statement.
Respectfully
Submitted,
|
John
P. O’Brien
|
John
C. Fontaine
|
Jack
E. Thompson
|
SUMMARY
COMPENSATION TABLE
The
following table sets forth the compensation earned by our Chief Executive
Officer, our Chief Financial Officer and each of our three other most highly
compensated executive officers for fiscal 2006 for services rendered to us
in
all capacities in 2006. The table also includes Mr. Beckley, who retired from
Century effective March 31, 2006, due to his having served as our Executive
Vice
President and Chief Financial Officer from January 1, 2006 to January 22, 2006,
and Mr. Kitchen, who retired from Century effective April 30, 2006, based on
his
compensation earned for the fiscal year ended December 31, 2006.
Based
on
the fair value of equity awards granted to named executive officers in 2006
(exclusive of one-time initial employment related equity awards and changes
in
pension value) and the base salary of the named executive officers, “Salary”
ranged between approximately 23.5% and 49.6%, and “Bonus” ranged between
approximately 0% and 36.2%, respectively, of the total compensation package
of
the named executive officers. Because the table below reflects less than the
full fiscal year salary for individuals who were not our employees for the
full
fiscal year and because the value of certain equity awards included below
includes accrued share-based compensation expense from previous years as
calculated under FAS 123(R), these percentages may not be able to be derived
using the amounts reflected in the table below.
2006
Summary Compensation Table
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards (2)
|
Option
Awards (2)
|
Non-Equity
Incentive Plan Comp
|
Change
in Pension Value and Nonqualified Deferred Compensation
|
All
Other Comp (11)
|
Total
|
|||||||||||||||||||
|
Logan
W. Kruger
President
and CEO
|
2006
|
$
|
750,000
|
$
|
562,500
|
$
|
783,332(3
|
)
|
$
|
428,479
(8
|
)
|
-
|
$
|
3,755,628
|
$
|
61,660
(12
|
)
|
$
|
6,341,599
|
|||||||||
|
Michael
A. Bless
Executive
Vice President & CFO
|
2006
|
$
|
352,397
(1
|
)
|
$
|
262,500
|
$
|
278,012(4
|
)
|
$
|
378,100
(9
|
)
|
-
|
$
|
68,615
|
$
|
425,698
(13
|
)
|
$
|
1,765,322
|
||||||||
|
E.
Jack Gates
Executive
Vice President & COO (Former)
|
2006
|
$
|
360,000
|
$
|
252,000
|
$
|
323,659
|
-
|
-
|
$
|
164,153
|
$
|
12,530
|
$
|
1,112,342
|
|||||||||||||
|
Robert
R. Nielsen
Executive
Vice President, General Counsel & Secretary
|
2006
|
$
|
233,333
(1
|
)
|
$
|
164,500
|
$
|
251,188
(5
|
)
|
$
|
449,549(10
|
)
|
-
|
$
|
177,084
|
$
|
2,885
|
$
|
1,278,540
|
|||||||||
|
Steve
Schneider
Senior
Vice President & CAO
|
2006
|
$
|
230,000
|
$
|
175,000
|
$
|
156,299
|
-
|
-
|
$
|
27,131
|
$
|
11,170
(14
|
)
|
$
|
599,600
|
||||||||||||
|
David
W. Beckley
Executive
Vice President & CFO (Former)
|
2006
|
$
|
153,250
(1
|
)
|
-
|
$
|
284,808
(6
|
)
|
-
|
-
|
$
|
60,740
|
$
|
9,485
|
$
|
508,282
|
||||||||||||
|
Gerald
J. Kitchen
Executive
Vice President, General Counsel, Chief Administrative Officer, and
Secretary (Former)
|
2006
|
$
|
199,335
(1
|
)
|
$
|
100,000
|
$
|
292,222
(7
|
)
|
-
|
-
|
$
|
16,069
|
$
|
256,620
(15
|
)
|
$
|
864,265
|
||||||||||
(footnotes
continued on the following page)
(footnotes
continued from the previous
page)
|
(1)
|
The
amounts reflected are prorated for the portion of 2006 the executive
was
employed by us. Messrs. Beckley and Kitchen were full-time employees
through March 31, 2007 and April 30, 2007, respectively, while
Messrs.
Bless and Nielsen commenced their employment on January 23, 2006
and May
1, 2006, respectively.
|
|
(2)
|
The
values reflected represent the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December
31, 2006,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan
and
thus may include amounts from awards granted in and prior to 2006.
Assumptions used in the calculation of these amounts are included
in
footnote 9 to our audited financial statements for the fiscal year
ended
December 31, 2006 included in our Annual Report on Form 10-K filed
with
the Securities and Exchange Commission on March 1,
2007.
|
|
(3)
|
The
value reflected includes the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December
31, 2006,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan
for
50,000 service-based performance shares awarded to Mr. Kruger on
December
14, 2005, based on the Black-Scholes fair value calculation of
the award
on the grant date. Mr. Kruger's restricted shares vested one-half
on
January 1, 2007 and will vest one-half on January 1, 2008. To the
extent
we pay dividends on our common stock, dividend equivalents will
accrue on
the restricted shares from the date of grant and will become payable
upon
vesting.
|
|
(4)
|
The
value reflected includes the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December
31, 2006,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan
for
20,000 service-based performance shares awarded to Mr. Bless on
January
23, 2006, based on the Black-Scholes fair value calculation of
the award
on the grant date. Mr. Bless’s restricted shares vested one-third on
January 22, 2007, and the balance will vest equally on each of
January 22,
2008 and January 22, 2009. To the extent we pay dividends on our
common
stock, dividend equivalents will accrue on the restricted shares
from the
date of grant and will become payable upon vesting.
|
|
(5)
|
The
value reflected includes the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December
31, 2006,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan
for
15,000 service-based performance shares awarded to Mr. Nielsen
on May 1,
2006, based on the Black-Scholes fair value calculation of the
award on
the grant date. Mr. Nielsen’s restricted shares vest one-third on each of
May 1, 2007, May 1, 2008 and May 1, 2009. To the extent we pay
dividends
on our common stock, dividend equivalents will accrue on the restricted
shares from the date of grant and will become payable upon
vesting.
|
|
(6)
|
Pursuant
to the terms of the Implementation Guidelines to our 1996 Plan,
following
his retirement, Mr. Beckley remained a participant in our 2004-2006
and
2005-2007 performance program periods on an approximately two-thirds
and
one-third basis, respectively.
|
|
(7)
|
Pursuant
to the terms of the Implementation Guidelines to our 1996 Plan,
following
his retirement, Mr. Kitchen remained a participant in our 2004-2006
and
2005-2007 performance program periods on an approximately two-thirds
and
one-third basis, respectively.
|
|
(8)
|
The
value reflected represents the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December
31, 2006,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan
for
100,000 options to purchase our common stock awarded to Mr. Kruger
on
December 14, 2005, based on the Black-Scholes fair value calculation
of
the award on the grant date. Mr. Kruger's options vested one-third
on
December 14, 2006, and the balance will vest equally on each of
December
14, 2007 and December 14, 2008.
|
|
(9)
|
The
value reflected represents the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December
31, 2006,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan
for
30,000 options to purchase our common stock awarded to Mr. Bless
on
January 23, 2006, based on the Black-Scholes fair value calculation
of the
award on the grant date. Mr. Bless’s options vested one-third on January
23, 2006 and the balance will vest equally on each of January 23,
2007 and
January 22, 2008.
|
|
(10)
|
The
value reflected represents the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December
31, 2006,
in accordance with FAS 123(R) for awards pursuant to the 1996 Plan
for
20,000 options to purchase our common stock awarded to Mr. Nielsen
on May
1, 2006, based on the Black-Scholes fair value calculation of the
award on
the grant date. Mr. Nielsen’s options vested one-third on May 1, 2006 and
the balance will vest equally on each of May 1, 2007 and April
30,
2008.
|
|
(11)
|
All
other compensation is comprised of (i) matching contributions under
our
401(k) Plan for each of the named executive officers (other than
for
Messrs. Bless and Nielsen, who did not participate in the plan)
and (ii)
Company-paid life insurance premiums in 2006.
|
|
(12)
|
For
Mr. Kruger, all other compensation also includes reimbursement
payments of
$55,300 relating to temporary housing costs, other relocation expenses
and
gross-ups for taxes thereon, incurred in connection with his
relocation.
|
|
(13)
|
For
Mr. Bless, all other compensation also includes reimbursement payments
of
$424,783 relating to temporary housing costs, other relocation
expenses
and gross-ups for taxes thereon, incurred in connection with his
relocation.
|
|
(14)
|
For
Mr. Schneider, all other compensation also includes reimbursement
payments
for our executive medical wellness program.
|
|
(15)
|
For
Mr. Kitchen, the all other compensation also includes $243,751
in
compensation paid pursuant to his Consulting Agreement, which was
effective at the time of his retirement, and $7,160 representing
the value
of a retirement gift presented by us to Mr. Kitchen. A copy of
Mr.
Kitchen’s Consulting Agreement was filed as Exhibit 10.12 to our Quarterly
Report on Form 10-Q for the period ended June 30, 2005.
|
Grants
of Plan Based Awards
The
following table sets forth information regarding the estimated future payouts
under our 1996 Plan to our named executive officers.
2006
Grants of Plan Based Awards Table
|
|
|
Estimated
Future Payouts Under Equity Incentive Plan
Awards
|
||||||||||||||||||||||||||
|
Name
|
Grant
Date
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
All
Other Stock Awards: # of Shares of Stock
|
All
Other Option Awards: # of Underlying Options
|
Exercise
or Base Price of Option Awards (7)
|
Grant
Date Stock Closing Price
|
Grant
Date Fair Value of Stock and Option Award (8)
|
|||||||||||||||||||
|
Logan
W. Kruger
|
June
9, 2006
|
-
|
8,044
|
40,222(1)(2
|
)
|
-
|
-
|
-
|
-
|
$
|
224,991
|
|||||||||||||||||
|
|
June
9, 2006
|
-
|
16,595
|
41,486(1)(3
|
)
|
-
|
-
|
-
|
-
|
$
|
450,007
|
|||||||||||||||||
|
|
June
9, 2006
|
-
|
15,087
|
25,145(4
|
)
|
-
|
-
|
-
|
-
|
$
|
674,992
|
|||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Michael
A. Bless
|
June
9, 2006
|
-
|
3,575
|
20,111(1)(2
|
)
|
-
|
-
|
-
|
-
|
$
|
99,993
|
|||||||||||||||||
|
|
June
9, 2006
|
-
|
7,375
|
20,743(1)(3
|
)
|
-
|
-
|
-
|
-
|
$
|
199,988
|
|||||||||||||||||
|
|
June
9, 2006
|
-
|
6,705
|
12,573(4
|
)
|
-
|
-
|
-
|
-
|
$
|
299,982
|
|||||||||||||||||
|
|
January
23, 2006
|
-
|
-
|
-
|
20,000(5
|
)
|
-
|
-
|
-
|
$
|
598,400
|
|||||||||||||||||
|
|
January
23, 2006
|
-
|
-
|
-
|
-
|
30,000(5
|
)
|
$
|
29.92
|
$
|
29.75
|
$
|
554,400
|
|||||||||||||||
|
|
|
|||||||||||||||||||||||||||
|
E.
Jack Gates
|
June
9, 2006
|
-
|
6,437
|
12,070(4
|
)
|
-
|
-
|
-
|
-
|
$
|
540,012
|
|||||||||||||||||
|
Robert
R. Nielsen
|
June
9, 2006
|
-
|
3,128
|
18,770(1)(2
|
)
|
-
|
-
|
-
|
-
|
$
|
87,490
|
|||||||||||||||||
|
|
June
9, 2006
|
-
|
6,453
|
19,360(1)(3
|
)
|
-
|
-
|
-
|
-
|
$
|
174,986
|
|||||||||||||||||
|
|
June
9, 2006
|
-
|
5,867
|
11,734(4
|
)
|
-
|
-
|
-
|
-
|
$
|
262,490
|
|||||||||||||||||
|
|
May
1, 2006
|
-
|
-
|
-
|
15,000(6
|
)
|
-
|
-
|
-
|
$
|
714,150
|
|||||||||||||||||
|
|
April
28, 2006
|
-
|
-
|
-
|
-
|
25,000(6
|
)
|
$
|
47.61
|
$
|
47.61
|
$
|
749,500
|
|||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Steve
Schneider
|
June
9, 2006
|
-
|
3,911
|
8,382(4
|
)
|
-
|
-
|
-
|
-
|
$
|
375,011
|
|||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
David
W. Beckley
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Gerald
J. Kitchen
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
(footnotes
continued on the following
page)
(footnotes
continued from the previous
page)
|
(1)
|
When
an employee first becomes a participant and therefore eligible
for
performance share awards, they also become eligible to participate
in
awards for prior performance program periods on a rolling basis,
based on
the percentage of the relevant performance program period during
which
they served. These awards for prior years are determined based
on the same
price per share for Century common stock used for other award
participants
for the relevant performance program period. Messrs. Kruger,
Bless and
Nielsen first became a participant and eligible for performance
share
awards on June 9, 2006.
|
|
(2)
|
The
amounts shown represent the number of performance share units
awarded to
the named executive officer for the 2004-2006 performance program
period.
On March 19, 2007, our Compensation Committee approved a 65%
vesting of
the performance share units for the 2004-2006 performance program
period,
resulting in the awards of 5,229, 2,324, 5,578, 2,033, 2,475,
3,951 and
3,793, respectively, of shares of our common stock to Messrs.
Kruger,
Bless, Gates, Nielsen, Schneider, Kitchen and Beckley.
|
|
(3)
|
The
amounts shown represent the number of performance share units
awarded to
the named executive officer for the 2005-2007 performance program
period
which performance program period will be considered by our
Compensation
Committee in 2008.
|
|
(4)
|
The
amounts shown represent the number of performance share units
awarded to
the named executive officer for the 2006-2008 performance program
period
which performance program period will be considered by our
Compensation
Committee in 2009.
|
|
(5)
|
Upon
his employment with Century, Mr. Bless received 20,000 service-based
performance shares, and options to purchase 30,000 shares of
our common
stock with a grant price equal to $29.915, which was the average
of the
high and low sales price for our common stock on NASDAQ on
the grant
date.
|
|
(6)
|
Upon
his employment with Century, Mr. Nielsen received 15,000 service-based
performance shares, and options to purchase 25,000 shares of
our common
stock with a grant price equal to $47.61, which was the average
of the
high and low sales price for our common stock on NASDAQ on
the grant
date.
|
|
(7)
|
Our
1996 Plan provides that options are granted at not less than
the “fair
market value” of the shares subject to such option, which is defined in
the Plan as the average of the high and low sales price for
shares of our
common stock on the grant date. Mr. Nielsen’s employment agreement
provides that the exercise price for his options will equal
the closing
price of our common stock on April 28, 2006, the last trading
day
immediately before his employment start date. The average of
the high and
low sales price for shares of our common stock on April 28,
2006 was
$46.72.
|
|
(8)
|
The
values reflected represent the grant date fair value of the
awards
determined in accordance with FAS
123(R).
|
Narrative
to the Summary Compensation Table and Grants of Plan-Based Awards
Table
Employment
Agreements
As
discussed above on page 20, we have employment agreements with certain of our
named executive officers. Our employment agreement with Logan W. Kruger, our
President and Chief Executive Officer, is made as of December 13, 2005, and
extends through December 31, 2008;
however
beginning on January 1, 2008, and on each January 1 thereafter, unless timely
notice of termination is delivered by a party pursuant to the terms of the
employment agreement, the period of employment is automatically extended for
successive three-year periods.
Under
the terms of his employment agreement, Mr. Kruger will receive a minimum base
salary of $750,000 per year, which amount is subject to increase from time
to
time at the discretion of the Compensation Committee. Mr. Kruger is also
eligible to receive an annual performance-based cash bonus under our incentive
compensation plan, subject to the discretion of the Compensation Committee.
Mr.
Kruger's agreement provided that his annual cash bonus for 2006 would be no
less
than $325,000. Under the terms of his agreement, Mr. Kruger is also eligible
to
receive stock option grants and performance share awards under the 1996 Plan
and
to participate in the SERP.
We
also
had an employment agreement with Mr. E. Jack Gates, effective October 14, 2003,
as amended December 8, 2005, that provided for a term of employment through
December 31, 2006. Under the terms of his employment agreement, Mr. Gates
received a minimum base salary of $342,500 per year, which could be increased
from time to time at the discretion of the Compensation Committee. Mr. Gates
was
also eligible to receive an annual performance-based cash bonus under Century's
incentive compensation plan, subject to the discretion of the Compensation
Committee, and was eligible to receive stock option grants and performance
share
awards under the 1996 Plan and to participate in the SERP. Effective March
1,
2007, Wayne R. Hale succeeded Mr. Gates as our Executive Vice President and
Chief Operating Officer. At that time, we entered into a letter agreement with
Mr. Gates which provided that Mr. Gates would continue as an employee through
June 30, 2007, when he will retire. Following his retirement, Mr. Gates has
agreed to serve as our consultant through December 31, 2007. Mr. Gates will
be
paid a minimum of $70,000 during the consulting term, which will compensate
Mr.
Gates for providing consulting services for up to an aggregate of 35 days.
Mr.
Gates will be paid an additional $2,000 for each day during the consulting
term
he provides consulting services in excess of 35 days.
We
entered into an employment agreement with Michael A. Bless effective January
23,
2006, the date Mr. Bless succeeded Mr. Beckley as Executive Vice President
and
Chief Financial Officer. On May 1, 2006, we entered into an employment agreement
with Robert R. Nielsen, the day he succeeded Mr. Kitchen as Executive Vice
President, General Counsel and Secretary. Our employment agreements with Messrs.
Bless and Nielsen extend through December 31, 2008; however beginning on January
1, 2008, and on each January 1 thereafter, unless timely notice of termination
is delivered by a party pursuant to the terms of the employment agreement,
the
period of employment is automatically extended for successive three-year
periods. These agreements provide that the base salaries paid to Messrs. Bless
and Nielsen shall not be reduced below $375,000 and $350,000 per year,
respectively, and shall be subject to increase from time to time at the
discretion of the Compensation Committee. Mr. Bless and Mr. Nielsen will each
be
eligible to receive an annual performance-based cash bonus under our incentive
compensation plan, subject to the discretion of the Compensation Committee.
The
agreements provide that the 2006 annual cash bonuses for Messrs. Bless and
Nielsen would be no less than $187,500 and $122,500, respectively. In addition,
Messrs. Bless and Nielsen received options to purchase 30,000 and 25,000 shares,
respectively, of our common stock and one-time grants of 20,000 and 15,000,
respectively, service-based performance shares. Messrs. Bless and Nielsen are
also eligible for stock option grants and performance share awards under the
1996 Plan and participation in the SERP.
During
2006 and until they retired as our full-time employees, we had employment
agreements with David W. Beckley and Gerald J. Kitchen. Mr. Beckley and Mr.
Kitchen retired on March 31, 2006 and April 30, 2006, respectively. The
employment agreements with Messrs. Kitchen and Beckley provided for base
salaries of $325,000 and $305,000 per year, respectively. From January 1, 2006
to the date of their respective retirements, Messrs. Kitchen and Beckley
received additional monthly payments of $24,417 and $24,000, respectively,
in
addition to the base salaries provided for under their employment agreements.
Upon Mr. Kitchen's retirement, he was paid a bonus of $100,000 for the portion
of 2006 that he was our employee. Mr. Kitchen has entered into a consulting
agreement pursuant to which he agreed to act as a consultant following his
retirement. Mr. Kitchen’s consulting agreement compensates him for providing up
to 900 hours of general consulting services to us during the 12 months following
his retirement as reasonably requested by the Board or our Chief Executive
Officer. Under the consulting agreement, Mr. Kitchen is paid a monthly retainer
equal to his monthly base pay at the time of his retirement.
Our
employment agreements with Messrs. Kruger, Bless, Gates and Nielsen each provide
that upon termination of employment for any reason other than voluntary
resignation, death or “for cause”, the terminated executive will be entitled to
receive termination payments equal to 100% of his base salary and bonus (based
on the highest annual bonus payment within the prior three years) for the
remainder of the term of the agreement (with a minimum of one year's salary
plus
bonus). If the executive is terminated as a result of the executive’s
disability, the payments due to the executive will be reduced by any payments
he
receives under our disability plans. Also, any termination payments under the
employment agreements may not be duplicated under the severance compensation
agreements described below under “Executive Compensation—Post-Employment
Compensation.” Prior to their retirement, our employment agreements with Messrs.
Beckley and Kitchen contained similar terms.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information regarding outstanding equity awards
for
our named executive officers as of December 31, 2006.
2006
Outstanding Equity Awards at Fiscal Year-End Table
|
|
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (# )
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options(#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)(7)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units, or Other
Rights
That Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or
Other Rights That Have Not Vested ($)(7)
|
|||||||||||||||||||
|
Logan
W. Kruger
|
33,333
|
66,667
(1
|
)
|
-
|
$
|
23.98
|
12/14/2015
|
50,000(4
|
)
|
$
|
2,232,500
|
8,044
(8
|
)
|
$
|
359,165
|
|||||||||||||
|
|
16,595
(9
|
)
|
$
|
740,967
|
||||||||||||||||||||||||
|
|
15,087
(10
|
)
|
$
|
673,635
|
||||||||||||||||||||||||
|
Michael
A. Bless
|
9,999
|
20,001
(2
|
)
|
-
|
$
|
29.92
|
1/23/2016
|
20,000(5
|
)
|
$
|
893,000
|
3,575
(8
|
)
|
$
|
159,624
|
|||||||||||||
|
|
7,375
(9
|
)
|
$
|
329,294
|
||||||||||||||||||||||||
|
|
6,705
(10
|
)
|
$
|
299,378
|
||||||||||||||||||||||||
|
E.
Jack Gates
|
-
|
-
|
-
|
-
|
-
|
$
|
-
|
8,581
(8
|
)
|
$
|
383,142
|
|||||||||||||||||
|
|
9,588
(9
|
)
|
$
|
428,104
|
||||||||||||||||||||||||
|
|
6,437
(10
|
)
|
$
|
287,412
|
||||||||||||||||||||||||
|
Robert
R. Nielsen
|
8,333
|
16,667
(3
|
)
|
-
|
$
|
47.61
|
5/1/2016
|
15,000(6
|
)
|
$
|
669,750
|
3,128
(8
|
)
|
$
|
139,665
|
|||||||||||||
|
|
6,453
(9
|
)
|
$
|
288,126
|
||||||||||||||||||||||||
|
|
5,867
(10
|
)
|
$
|
261,962
|
||||||||||||||||||||||||
|
Steve
Schneider
|
-
|
-
|
-
|
-
|
-
|
-
|
3,808
(8
|
)
|
$
|
170,027
|
||||||||||||||||||
|
|
4,204
(9
|
)
|
$
|
187,709
|
||||||||||||||||||||||||
|
|
3,911
(10
|
)
|
$
|
174,626
|
||||||||||||||||||||||||
|
David
W. Beckley
|
-
|
-
|
-
|
-
|
-
|
-
|
5,835
(8
|
)
|
$
|
260,533
|
||||||||||||||||||
|
|
3,553
(9
|
)
|
$
|
158,619
|
||||||||||||||||||||||||
|
Gerald
J. Kitchen
|
-
|
-
|
-
|
-
|
-
|
-
|
6,095
(8
|
)
|
$
|
272,142
|
||||||||||||||||||
|
|
3,804
(9
|
)
|
$
|
169,842
|
||||||||||||||||||||||||
|
(1)
|
The
options vest equally on each of December 14, 2007 and December
14,
2008.
|
|
(2)
|
The
options vest equally on each of January 23, 2007 and January 22,
2008.
|
|
(3)
|
The
options vest equally on each of May 1, 2007 and April 30,
2008.
|
|
(4)
|
The
service-based performance shares vested one-half on January 1,
2007 and
will vest one-half on January 1, 2008.
|
|
(5)
|
The
service-based performance shares vested one-third on January 22,
2007, and
will vest one-third on each of January 22, 2008 and January 22,
2009.
|
|
(6)
|
The
service-based performance shares vest one-third on each of May
1, 2007,
May 1, 2008 and May 1, 2009.
|
|
(7)
|
Based
on the closing market price for shares of our common stock of $44.65
on
December 29, 2006, the last trading day for the fiscal year ended
December
31, 2006.
|
|
(8)
|
The
amounts shown represent the number of performance share units awarded
to
the named executive officer for the 2004-2006 performance program
period.
On March 19, 2007, our Compensation Committee approved a 65% vesting
of
the performance share units for the 2004-2006 performance program
period,
resulting in the awards of 5,229, 2,324, 5,578, 2,033, 2,475, 3,951
and
3,793, respectively, of shares of our common stock to Messrs. Kruger,
Bless, Gates, Nielsen, Schneider, Kitchen and Beckley.
|
|
(9)
|
The
amounts shown represent the number of performance share units awarded
to
the named executive officer for the 2005-2007 performance program
period
which performance program period will be considered by our Compensation
Committee in 2008.
|
|
(10)
|
The
amounts shown in represent the number of performance share units
awarded
to the named executive officer for the 2006-2008 performance program
period which performance program period will be considered by our
Compensation Committee in
2009.
|
Option
Exercises and Stock Vested
The
following table sets forth information regarding option exercises and vesting
of
performance shares for our named executive officers as of December 31, 2006.
None of our named executive officers exercised any stock options during the
fiscal year ended December 31, 2006.
2006
Option Exercise and Stock Vested Table
|
Option
Awards
|
Stock
Awards
|
||||||||||||
|
Name
|
Number
of Shares Acquired on Exercise
|
Value
Realized on Exercise
|
Number
of Shares Acquired on Vesting
|
Value
Realized on Vesting
|
|||||||||
|
Logan
W. Kruger
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||||
|
Michael
A. Bless
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||||
|
E.
Jack Gates
|
-
|
$
|
-
|
13,130(1
|
)
|
$
|
476,225
|
||||||
|
Robert
R. Nielsen
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||||
|
Steve
Schneider
|
-
|
$
|
-
|
7,086(1
|
)
|
$
|
257,009
|
||||||
|
David
W. Beckley
|
-
|
$
|
-
|
15,362(1
|
)
|
$
|
557,180
|
||||||
|
Gerald
J. Kitchen
|
-
|
$
|
-
|
15,522(1
|
)
|
$
|
562,983
|
||||||
|
(1)
|
Reflects
shares received pursuant to the long-term incentive program for the
2003-2005 performance program period by each named executive officer
in
June 2006.
|
Post-Employment
Compensation
Pension
Benefits
As
mentioned above beginning on page 20, we maintain both the Qualified Plan and
the SERP as retirement plans for our U.S. based salaried employees. The
Qualified Plan provides lifetime annual benefits starting at age 62 equal to
12
multiplied by the greater of: (i) 1.5% of final average monthly compensation
multiplied by years of credited service (up to 40 years), or (ii) $22.25
multiplied by years of credited service (up to 40 years), less the total monthly
vested benefit payable as a life annuity at age 62 under plans of a predecessor.
We determine final average monthly compensation under the qualified plans as
the
highest monthly average for 36 consecutive months in the 120-month period ending
on the last day of the calendar month completed at or prior to a termination
of
service. Participants' pension rights vest after a five-year period of service,
or earlier if the participant has reached the age of 62. An early retirement
benefit (actuarially reduced beginning at age 55) and a disability benefit
are
also available. The compensation covered by the plan includes all compensation,
subject to certain exclusions, before any reduction for 401(k) contributions,
subject to the maximum limits under the Code.
The
SERP
provides selected senior executives with supplemental benefits in addition
to
those benefits they are entitled to receive under the Qualified Plan. More
information about the SERP can be found under the heading “Retirement Plans”
beginning on page 20.
The
following table sets forth the present value of accumulated benefits payable
to
each of the named executive officers, including the number of years of service
credited to each such named executive officer, under the Qualified Plan and
the
SERP, determined using interest rate and mortality rate assumptions consistent
with those used in our financial statements.
2006
Pension Benefits Table
|
Name
|
Plan
|
Number
of Years Credited
|
Present
Value of Accumulated Benefit (1)
|
Payments
During Last fiscal Year
|
|
Logan
W. Kruger
|
Non-Contributory
Defined Pension Plan
|
1
|
$205,470
|
-
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
1
|
$5,996,628
(2)
|
-
|
|
|
Michael
A. Bless
|
Non-Contributory
Defined Pension Plan
|
1
|
$68,615
|
-
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
1
|
-
|
-
|
|
|
E.
Jack Gates (3)
|
Non-Contributory
Defined Pension Plan
|
6
|
$205,435
|
-
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
6
|
$250,163
|
-
|
|
|
Robert
R. Nielsen (3)
|
Non-Contributory
Defined Pension Plan
|
1
|
$177,084
|
-
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
1
|
-
|
-
|
|
|
|
||||
|
Steve
Schneider
|
Non-Contributory
Defined Pension Plan
|
6
|
$125,871
|
-
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
-
|
-
|
-
|
|
|
|
||||
|
David
W. Beckley
|
Non-Contributory
Defined Pension Plan
|
11
|
$2,189,656
|
$125,000
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
11
|
$1,221,327
|
$70,000
|
|
|
|
||||
|
Gerald
J. Kitchen
|
Non-Contributory
Defined Pension Plan
|
11
|
$2,050,462
|
$110,000
|
|
Supplemental
Retirement Income Benefit Plan (SERP)
|
11
|
$1,582,558
|
$85,000
|
|
(1)
|
Includes
amounts that the named executive officer may not currently be entitled
to
receive because such amounts are not vested.
|
|
(2)
|
When
determining present value, vesting is ignored. However, Mr. Kruger’s right
to participate in the Enhanced SERP benefit begins on the fifth
anniversary of his employment date and vests 20 percent each year
thereafter. In the absence of a change-in-control of Century, only
if Mr.
Kruger remains employed by Century for a period of 10 years would
he fully
vest in his Enhanced SERP benefit. If vesting were considered for
the
Enhanced SERP benefit only, the present value of his benefit under
the
SERP would be approximately 2,275,000.
|
|
(3)
|
As
of December 31, 2006, of our named executive officers employed
by us on
that date, only Messrs. Gates and Nielsen were eligible to retire
and
begin receiving a benefit under our retirement
plans.
|
Potential
Payments upon Termination or Change of Control
The
table
below reflects the amount of compensation to each of our named executive
officers upon termination of such executive’s employment. The amount of
compensation payable to each named executive officer following: termination
following a change of control, involuntary termination for cause, involuntary
termination not-for-cause, termination on death or disability, retirement and
voluntary resignation is shown. The amounts shown assume that such termination
was effective as of December 31, 2006, and thus includes amounts earned through
such time and are estimates of the amounts that would be paid out to the
executives on their termination. The actual amount to be paid can only be
determined at the time of such executive’s termination.
|
Event
|
Logan
W. Kruger
President
and CEO
|
Michael
A. Bless
Executive
Vice President & CFO
|
E.
Jack Gates
Executive
Vice President & COO (Former)
|
Robert
R. Nielsen
Executive
Vice President, General Counsel &
Secretary
|
Steve
Schneider
Senior
Vice President & CAO
|
David
W. Beckley
Executive
Vice President & CFO (Former)
|
Gerald
J.
Kitchen
Executive
Vice President, General Counsel, Chief Administrative Officer, and
Secretary
(Former)
|
|||||||||||||||
|
Under
a change in control, if termination occurs by the Company other than
for
cause or by the Executive for Good Reason (1)
|
$
|
26,239,975
|
$
|
5,415,286
|
$
|
4,004,711
|
$
|
4,173,824
|
$
|
2,112,555
|
$
|
419,152
|
$
|
441,983
|
||||||||
|
If
termination occurs by the Company involuntarily for cause
|
$
|
805,979
|
$
|
331,115
|
$
|
707,598
|
$
|
341,584
|
$
|
300,871
|
$
|
-
|
$
|
-
|
||||||||
|
It
termination occurs by the Company involuntarily without
cause
|
$
|
2,305,979
|
$
|
1,081,115
|
$
|
1,067,598
|
$
|
1,041,584
|
$
|
300,871
|
$
|
-
|
$
|
-
|
||||||||
|
If
termination occurs as a result of the Executive's
disability
|
$
|
12,532,614
|
$
|
3,066,211
|
$
|
2,166,256
|
$
|
2,401,087
|
$
|
300,871
|
$
|
-
|
$
|
-
|
||||||||
|
If
termination occurs as a result of the Executive's death
|
$
|
9,431,565
|
$
|
3,031,903
|
$
|
1,938,457
|
$
|
2,312,545
|
$
|
237,935
|
$
|
-
|
$
|
-
|
||||||||
|
If
termination occurs by reason of retirement
|
$
|
805,979
|
$
|
331,115
|
$
|
707,598
|
$
|
341,584
|
$
|
300,871
|
$
|
-
|
$
|
-
|
||||||||
|
If
termination occurs by voluntary resignation
|
$
|
805,979
|
$
|
331,115
|
$
|
707,598
|
$
|
341,584
|
$
|
300,871
|
$
|
-
|
$
|
-
|
||||||||
(1) Pursuant
to the terms of our 1996 Plan, following a change in control, all options vest
immediately and all restrictions applicable to any or all performance share
awards lapse and the awards are deemed to be fully vested.
Severance
Compensation Arrangements
As
discussed on page 20, we have entered into severance compensation agreements
with each of Messrs. Kruger, Gates, Bless, Nielsen, and Schneider. The
agreements generally provide that if within 36 months after we experience a
change in control the executive's employment is terminated either (i) by us
for
other than cause or disability, or (ii) by such executive for good reason,
then
such executive will receive a lump sum payment equal to two to three times,
as
the case may be, the aggregate of the highest base salary and the highest bonus
received by such executive in any of the most recent five years. Also, upon
a
change in control, the exercisability of stock options and the vesting of
performance shares held by such executives will be accelerated assuming that
all
performance targets were achieved at the 100% level. The agreements also provide
that we will continue to provide benefits to each executive for a period of
two
to three years, as the case may be, after the date of his or her termination.
In
addition, the executive will be credited for pension purposes, a period of
two
to three years, as the case may be, beyond the termination date, at that
executive’s highest base salary and highest bonus level, and Century will pay to
the executive in a single lump sum the difference between the actuarial
equivalent of (a) what the executive would have been entitled to under our
retirement plans and (b) what he or she is entitled to taking into account
the
terms of the severance compensation agreement, assuming the executive is 100%
vested in the increased benefit under the retirement plans. The agreements
are
for a set period of time, but are subject to automatic one-year extensions
on
January 1, unless the executive’s employment is terminated prior to a change in
control. Prior to their retirement, Messrs. Beckley and Kitchen were party
to
severance compensation agreements that contained similar terms.
The
Code
imposes certain excise taxes on, and limits the deductibility of, certain
compensatory payments made by a corporation to or for the benefit of certain
individuals if such payments are contingent upon certain changes in the
ownership or effective control of the corporation or the ownership of a
substantial portion of the assets of the corporation, provided that such
payments to the individual have an aggregate present value in excess of three
times the individual's annualized includible compensation for the base period,
as defined in the Code. The severance compensation agreements provide for
additional payments to the executives in order to fully offset any excise taxes
payable by an executive as a result of the payments and benefits provided in
the
agreements. All benefits afforded the named executive officers under the
severance compensation agreements are included in the amounts set forth in
the
“Potential Payments upon Termination or Change of Control” table
above.
AUDIT
COMMITTEE REPORT
The
following report of the Audit Committee shall not be deemed to be “soliciting
material” or to be “filed” with the Securities and Exchange Commission, nor
shall this information be incorporated by reference into any future filing
under
the Securities Act of 1933 or the Securities Exchange Act of 1934, each as
amended, except to the extent that Century specifically incorporates it by
reference into a filing.
During
2006, the Audit Committee of the board of directors was comprised of Messrs.
Robert E. Fishman, Jarl Berntzen, John P. O’Brien and Jack E. Thompson. All
members of the Audit Committee are independent directors, as that term is
defined under NASDAQ listing standards. The Audit Committee operates under
a
written charter adopted by the board of directors. In accordance with its
charter, the Audit Committee assists the board of directors in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of Century.
The
Audit
Committee’s job is one of oversight. Century’s management is responsible for the
preparation of Century’s financial statements and the independent auditors are
responsible for auditing those financial statements. The Audit Committee and
the
Board recognize that management (including the internal audit staff) and the
independent auditors have more resources and time, and more detailed knowledge
and information regarding Century’s accounting, auditing, internal control and
financial reporting practices than the Audit Committee does; accordingly, the
Audit Committee’s oversight role does not include providing any expert or
special assurance as to the financial statements and other financial information
provided by Century to its stockholders and others.
In
discharging its oversight responsibility as to the audit process, the Audit
Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and Century that might bear
on
the auditors’ independence, consistent with “Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees,” discussed with
the auditors any relationships that may impact their objectivity and
independence, including the performance of non-audit services, and satisfied
itself as to the auditors’ independence. The Audit Committee also discussed with
management, the internal auditors and the independent auditors, the quality
and
adequacy of Century’s internal controls and the internal audit function’s
organization, responsibilities, budget and staffing. The Audit Committee
reviewed with both the independent and the internal auditors their audit plans,
audit scope, and identification of audit risks. The Audit Committee has the
authority to obtain advice from outside legal, accounting or other advisors
as
the Audit Committee deems necessary to carry out its duties and receives
appropriate funding, as determined by the Audit Committee, from Century for
such
advice and assistance.
The
Audit
Committee met with and discussed with the independent auditors all matters
required to be discussed under generally accepted auditing standards, including
those described in “Statement on Auditing Standards No. 61, Communication with
Audit Committees,” and, with and without management present, discussed and
reviewed the results of the independent auditors’ examination of the financial
statements. The Audit Committee also discussed the quality and adequacy of
Century’s internal controls and the results of the internal audit
examinations.
The
Audit
Committee reviewed and discussed with management and the independent auditors
the interim financial information contained in each quarterly earnings
announcement in 2006 prior to its public release and the audited financial
statements of Century as of and for the year ended December 31, 2006.
Based
on
the above-mentioned review and discussions with management and the independent
auditors, the Audit Committee recommended to the Board that Century’s audited
financial statements be included in its Annual Report on Form 10-K for the
year
ended December 31, 2006, for filing with the Securities and Exchange Commission.
The Audit Committee also recommended the reappointment, subject to stockholder
approval, of the independent auditors and the Board concurred in such
recommendation. All audit and non-audit fees incurred in 2006 were pre-approved
by the Audit Committee.
Respectfully
Submitted,
The
Audit
Committee
|
Jarl
Berntzen
|
Robert
E. Fishman
|
John
P. O’Brien
|
Jack
E. Thompson
|
PROPOSAL
NO. 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT
AUDITORS
The
board
of directors, on the recommendation of the Audit Committee, has appointed
Deloitte & Touche LLP to act as our independent auditors for the current
fiscal year, subject to the ratification of such appointment by the affirmative
vote of the holders of a majority of shares of common stock present in person
or
by proxy and entitled to vote at the Annual Meeting. If no direction is given
to
the contrary, all proxies received by the board of directors will be voted
“FOR”
ratification of the appointment of Deloitte & Touche LLP as our independent
auditors for the current fiscal year.
In
addition to performing the audit of our consolidated financial statements,
Deloitte & Touche LLP provided various other services for us during the last
two years. The aggregate fees billed for the last two years for each of the
following categories of services are set forth below:
|
|
2006
|
2005
|
|||||
|
Audit
Fees
|
$
|
1,674,000
|
$
|
1,857,000
|
|||
|
Audit-Related
Fees
|
133,000
|
99,000
|
|||||
|
Tax
Fees
|
387,000
|
371,000
|
|||||
|
Total
All Fees
|
$
|
2,194,000
|
$
|
2,327,000
|
|||
Audit
Fees.
Audit
Fees include professional services rendered in connection with the audit of
our
consolidated financial statements, audit of management’s assessment of the
effectiveness of our internal control over financial reporting, audit of the
effectiveness of our internal control over financial reporting, audit of the
opening balance sheet of acquisitions accounted for as a purchase, reviews
of
the consolidated financial statements included in our Quarterly Reports on
Form
10-Q, consultation on accounting matters, and review of documents filed with
the
Securities and Exchange Commission.
Audit-Related
Fees.
Audit-Related Fees include audits of our employee benefit plans and consultation
on accounting matters or transactions.
Tax
Fees.
Tax fees
include the preparation of federal and state tax returns, and consultation
related to tax planning, tax advice, tax compliance, and
acquisitions.
All
services rendered by Deloitte & Touche LLP are pre-approved by the Audit
Committee in accordance with the Committee’s pre-approval procedures. Under
those procedures, the terms and fees of annual audit services, and changes
thereto, must be approved by the Audit Committee. The Audit Committee also
pre-approves the scope of audit-related, tax and other non-audit services that
may be performed by our independent auditors during the fiscal year, subject
to
dollar limitations set by the Committee. The foregoing pre-approval procedures
are subject to the de minimis exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit
Committee prior to completion of the audit.
Representatives
of Deloitte & Touche LLP are not expected to be present at the Annual
Meeting, but will have the opportunity to make a statement if they desire to
do
so, and will be available should any matter arise requiring their
presence.
The
board of directors recommends that the stockholders vote “FOR” ratification of
the appointment of Deloitte & Touche LLP as our independent auditors for the
current fiscal year.
OTHER
MATTERS
As
of the
date of this proxy statement, the board of directors does not know of any other
matters which may come before the Annual Meeting, nor have we received notice
of
any matter by the deadline prescribed by Rule 14a-4(c) under the Exchange Act.
If any other matters properly come before the meeting, the accompanying proxy
confers discretionary authority with respect to any such matters, and the
persons named in the accompanying proxy intend to vote in accordance with their
best judgment on such matters. All expenses in connection with the solicitation
of proxies will be borne by us. In addition to this solicitation, officers,
directors and regular employees of Century, without any additional compensation,
may solicit proxies by mail, telephone or personal contact. Morrow & Co.,
Inc. has been retained to assist in the solicitation of proxies for a fee of
$4,500, plus reasonable out-of-pocket expenses. We will, upon request, reimburse
brokerage houses and other nominees for their reasonable expenses in sending
proxy materials to their principals.
STOCKHOLDER
PROPOSALS
Stockholder
proposals for inclusion in the proxy materials for the Annual Meeting in 2008
should be addressed to our Corporate Secretary, 2511 Garden Road, Building
A,
Suite 200, Monterey, California 93940, and must be received no later than
December 25, 2007. In addition, our restated by-laws currently require that
for
business to be properly brought before an Annual Meeting by a stockholder,
regardless of whether included in our proxy statement, the stockholder must
give
written notice of his or her intention to propose such business to our Corporate
Secretary, which notice must be delivered to, or mailed and received at, our
principal executive offices not less than forty-five (45) days prior to the
date
on which we first mailed our proxy materials for the prior year’s Annual Meeting
(which cut-off date will be March 9, 2008 in the case of the Annual Meeting
in
2008). Such notice must set forth as to each matter the stockholder proposes
to
bring before the Annual Meeting: (i) a brief description of the business desired
to be brought before the meeting and the reasons for conducting such business
at
the meeting, (ii) the name and address of the stockholder proposing such
business, (iii) the class and number of shares which are beneficially owned
by
the stockholder, and (iv) any material interest of the stockholder in such
proposal. The restated by-laws further provide that the chairman of the Annual
Meeting may refuse to permit any business to be brought before an Annual Meeting
that does not comply with the foregoing procedures.
By
Order
of the Board of Directors,
/s/
Robert R. Nielsen
Robert
R.
Nielsen
Executive
Vice President, General
Counsel, and
Secretary
Monterey,
California
April
23,
2007
We
will provide without charge to each person solicited hereby, upon the written
request of any such person, a copy of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2006, as filed with the Securities and Exchange
Commission (without exhibits). Requests should be made to Office of the General
Counsel, 2511 Garden Road, Building A, Suite 200, Monterey, California 93940.
Electronic
Voting Instructions
You
can vote by Internet or telephone!
Available
24 hours a day, 7 days a week!
Instead
of mailing your proxy, you may choose one of the two voting methods outlined
below to vote your proxy.
VALIDATION
DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies
submitted by the Internet or telephone must be received by
1:00
a.m., Central Time, on May 23, 2007.
|
Vote
by Internet
•
Log on to the Internet and go to
www.investorvote.com
•
Follow the steps outlined on the secured website.
|
Vote
by telephone
• Call
toll free 1-800-652-VOTE (8683) within the United States,
Canada & Puerto Rico any time on a touch tone telephone.
There is NO CHARGE to you for the call.
•
Follow the instructions provided by the recorded
message.
|
Using
a
black ink pen, mark your votes with an X
as shown in this example.
Please
do
not write outside the designated
areas. x
Annual
Meeting Proxy Card
IF
YOU HAVE NOT VOTED VIA THE INTERNET OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION
IN
THE ENCLOSED ENVELOPE.
A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2.
1.
Election of Class II Directors:
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FOR
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WITHHOLD
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01
- John C. Fontaine (for a term to expire in 2010)
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02
- John P. O’Brien (for a term to expire in 2010)
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03
- Peter C. Jones (for a term to expire in 2010)
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2.
Proposal to ratify the appointment of Deloitte & Touche LLP as the Company’s
independent auditors for the fiscal year ending December 31, 2007.
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FOR
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AGAINST
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ABSTAIN
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3.
By signing below, the undersigned authorizes the proxies to vote, in their
discretion, upon such other matters as may properly come before the
meeting.
B Non-Voting
Items
| Consent
to Electronic Delivery
By
marking this box, I consent to access future Annual Reports and
Proxy
Statements of Century Aluminum electronically over the Internet.
I
understand that unless I request otherwise or revoke my consent,
Century
Aluminum will notify me when any such communications are available
and how
to access them. I understand that costs associated with the use
of the
Internet will be my responsibility. To revoke my consent, I can
contact
Century Aluminum’s transfer agent, Computershare Investor Services, at
1-312-360-5375.
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o
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| Change of Address — Please print your new address below. | ||||
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Meeting
Attendance
Mark
the box to the right if you plan to attend
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C
Authorized Signatures — This section must be completed for your vote to be
counted. — Date and Sign Below
NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint owners must sign. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please provide your FULL title.
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Date
(mm/dd/yyyy) - Please print date below.
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Signature
1 - Please keep signature within the box
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Signature
2 - Please keep signature within the box
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Proxy
- Century Aluminum Company
Proxy
Solicited on Behalf of the Board of Directors for the Annual Meeting on
May 23,
2007
The
undersigned appoints William J. Leatherberry and Robert R. Nielsen the
proxies
(each with power to act alone and with power of substitution) of the undersigned
to vote at the Annual Meeting of Stockholders of Century Aluminum Company
to be
held at the executive offices of the Company, Monterey,
CA at 9:00 a.m., local time, on Wednesday, May 23, 2007, and at any adjournment,
all shares of stock which the undersigned is entitled to vote thereat upon
all
matters properly brought before the meeting.
This
proxy when properly executed, will be voted in the manner directed herein
by the
undersigned stockholder. If no direction is made, this proxy will be voted
FOR
Proposals 1 and 2.
YOUR
VOTE IS IMPORTANT!
PLEASE
MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued
and to be signed on reverse side.)