Chief Executive Officer Compensation

 

The Company's current chief executive officer and president, Mr. Duffy, replaced Mr. Knapp as chief executive officer on August 15, 2003 and was appointed president on November 11, 2003. Prior to that, Mr. Duffy was chief operating officer from March 2003.

 

In determining Mr. Knapp's compensation package, the factors identified above in relation to executive officers were taken into account, as well as Mr. Knapp's lengthy service to the Company.

 

Mr. Duffy has an employment agreement covering the period from March 31, 2003 through December 31, 2004. In light of Mr. Duffy's promotion to chief executive officer and later appointment as president, the committee is discussing with Mr. Duffy appropriate arrangements related to compensation and other employment terms. In addition, on January 16, 2004, Mr. Duffy was awarded options to purchase 200,000 shares of the Company's common stock pursuant to the 2003 Stock Option Plan with an exercise price of $71.06 vesting over a four to five year period. In light of Mr. Duffy's promotion to chief executive officer and later promotion to president, we are discussing with Mr. Duffy appropriate arrangements related to compensation and other employment terms. Although we have not agreed to any new definitive arrangements, we currently expect to enter into a revised employment agreement with Mr. Duffy that provides for him to serve as our chief executive officer for at least three years at an annual base salary of 500,000, retroactive to August 15, 2003. We also expect to make Mr. Duffy a retroactive pro-rata bonus payment for 2003. Under the revised agreement, we expect Mr. Duffy will receive an annual pension contribution of 20% of his base salary and other benefits, including severance, substantially similar to his current employment agreement. We also expect to grant Mr. Duffy an option to purchase 200,000 shares of our common stock at an exercise price of $0.01 per share. Half of this option would vest in three equal annual installments commencing on August 15, 2004, and the other half of this option would vest in three equal annual installments upon satisfaction of annual performance goals, in each case subject to continued employment with us.

 

Each year, the compensation committee will review and approve the corporate goals and objectives with respect to compensation for the chief executive officer. In reviewing the chief executive officer's compensation, the committee will evaluate the chief executive officer's performance in light of these established goals and objectives and will consider other factors such as the Company's corporate performance, financial results, management of corporate assets, acquisitions, dispositions and new projects, individual experience and performance and market data. As described above, some of these factors will be given more weight when determining the various components of the chief executive officer's compensation package.