def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the
Registrantþ
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Filed by a Party other than the
Registranto
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Check the appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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þ Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to §240.14a-12
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USEC INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table
below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
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(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): |
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or
schedule and the date of its filing. |
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
USEC
Inc.
Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
March 19,
2009
Dear Shareholder:
You are cordially invited to attend our annual meeting of
shareholders to be held on Thursday, April 30, 2009, at
10:00 a.m., Eastern Time, at the Bethesda Marriott Suites,
6711 Democracy Boulevard, Bethesda, Maryland.
Matters scheduled for consideration at this meeting are
(1) the election of ten directors, (2) the approval of
the proposed USEC Inc. 2009 Equity Incentive Plan, (3) the
approval of the proposed USEC Inc. 2009 Employee Stock Purchase
Plan, and (4) the ratification of the appointment of the
Companys independent auditors. The meeting will also
provide an opportunity to review with you USECs business
during the year ended December 31, 2008.
Your vote is important no matter how many shares you own. We
encourage you to vote your shares today. You may vote by
completing and returning the enclosed proxy card in the
postage-paid envelope provided or by using telephone or Internet
voting systems. If you do attend the meeting and desire to vote
in person, you may do so even though you have previously
submitted your proxy.
We appreciate your continued confidence in the Company and look
forward to seeing you at the annual meeting.
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James R. Mellor
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John K. Welch
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Chairman of the Board
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President and Chief Executive Officer
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USEC
Inc.
Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
To Be Held April 30,
2009
The Annual Meeting of Shareholders of USEC Inc. will be held on
Thursday, April 30, 2009, at 10:00 a.m., Eastern Time,
at the Bethesda Marriott Suites, 6711 Democracy Boulevard,
Bethesda, Maryland, for the purpose of considering and voting
upon:
1. The election of ten directors for a term of one year;
2. The approval of the proposed USEC Inc. 2009 Equity
Incentive Plan;
3. The approval of the proposed USEC Inc. 2009 Employee
Stock Purchase Plan;
4. The ratification of the appointment of
PricewaterhouseCoopers LLP as USECs independent auditors
for 2009; and
5. Such other business as may properly come before the
meeting or any adjournments thereof.
We are enclosing a copy of the Companys Annual Report for
the year ended December 31, 2008 with this Notice and Proxy
Statement.
The record date for determining shareholders entitled to notice
of, and to vote at, the meeting was the close of business on
March 6, 2009. Please complete and return the enclosed
proxy card in the postage-paid envelope provided at your
earliest convenience, or use telephone or Internet voting
systems to vote your shares.
By Order of the Board of Directors,
Peter B. Saba
Senior Vice President, General Counsel and Secretary
Bethesda, Maryland
March 19, 2009
2009
PROXY STATEMENT
TABLE OF
CONTENTS
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Appendix A Proposed USEC Inc. 2009 Equity
Incentive Plan
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A-1
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Appendix B Proposed USEC Inc. 2009 Employee
Stock Purchase Plan
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B-1
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USEC
Inc.
Two Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817
Important
Notice Regarding the Availability of Proxy Materials
for the Shareholder Meeting to Be Held on April 30,
2009
This
proxy statement and our Annual Report for
the year ended December 31, 2008 are available at
www.edocumentview.com/USU.
PROXY
STATEMENT
We are providing these proxy materials in connection with the
solicitation by the Board of Directors of USEC Inc. of proxies
to be voted at USEC Inc.s (USEC, the
Company, we, us, or
our) 2009 Annual Meeting of Shareholders. The
meeting will be held at the Bethesda Marriott Suites, 6711
Democracy Boulevard, Bethesda, Maryland, on April 30, 2009,
beginning at 10:00 a.m., Eastern Time. The proxies also may
be voted at any adjournments or postponements of the meeting.
This Proxy Statement, proxy card and our Annual Report for the
year ended December 31, 2008 are being mailed starting
March 20, 2009.
QUESTIONS
AND ANSWERS ABOUT THE MEETING AND VOTING
Who may
vote at the meeting?
The Board set March 6, 2009 as the record date for the
meeting. If you were the owner of USEC Inc. common stock at the
close of business on March 6, 2009, you may vote at the
meeting. You are entitled to one vote for each share of common
stock you held on the record date, including shares:
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held directly in your name with our transfer agent,
Computershare Trust Company, N.A., as a shareholder
of record;
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held for you in an account with a broker, bank or other nominee
(shares held in street name for a beneficial
owner); and
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held for you under a USEC employee stock ownership plan with our
plan administrator, Computershare Trust Company, N.A., or
under the USEC 401(k) plan with our plan administrator, Fidelity
(each a USEC stock ownership plan).
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How many
shares must be present to hold the meeting?
A majority of USECs outstanding shares of common stock as
of the record date, March 6, 2009, must be present at the
meeting in order to hold the meeting and conduct business. This
is called a quorum. On the record date, there were
111,348,742 shares of USEC common stock outstanding, each
entitled to one vote. Your shares are counted as present at the
meeting if you:
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are present and vote in person at the meeting; or
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have properly submitted a proxy card or voting instructions
prior to the meeting.
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Abstentions and broker non-votes are counted as
present and entitled to vote for purposes of determining a
quorum. A broker non-vote occurs when a bank, broker
or nominee holding shares for a beneficial owner does not vote
on a particular matter because it does not have discretionary
voting power for that particular matter and has not received
voting instructions from the beneficial owner. If you are a
beneficial owner, your bank, broker or other nominee is
permitted to vote your shares on the election of directors and
the ratification of the appointment of PricewaterhouseCoopers
LLP as our independent auditors even if the nominee does not
receive voting instructions from you, as these matters are
deemed to be routine in nature. Your broker does not have
discretionary voting power with respect to the proposal to
approve the USEC Inc.
2009 Equity Incentive Plan or on the proposal to approve the
USEC Inc. 2009 Employee Stock Purchase Plan, as these matters
are deemed to be non-routine.
How do I
vote my shares?
You may vote using any of the following methods:
By
Mail
If you are a shareholder of record or hold shares through a USEC
stock ownership plan, be sure to complete, sign and date the
proxy card accompanying this Proxy Statement and return it in
the prepaid envelope. You should sign your name exactly as it
appears on the proxy card. If you are signing in a
representative capacity (for example as guardian, executor,
trustee, custodian, attorney or officer of a corporation), you
should indicate your name and title or capacity. If you are a
shareholder of record and you return your signed proxy card but
do not indicate your voting preferences, the persons named as
proxies in the proxy card will vote the shares represented by
that proxy as recommended by the Board of Directors.
If you are a beneficial owner whose shares are held of record by
a bank, broker or other nominee, be sure to complete, sign and
return the voting instruction card received from your nominee.
By
Telephone or on the Internet
The telephone and Internet voting procedures established by USEC
for shareholders of record are designed to authenticate your
identity, allow you to give your voting instructions and confirm
that those instructions have been properly recorded.
You can vote by calling the toll-free telephone number on your
proxy card and following the voice prompts that you hear during
the call. By following the voice prompts, you may vote your
shares and confirm that your instructions have been properly
recorded.
The website for Internet voting is
www.envisionreports.com/USU. As with telephone voting,
you can confirm that your instructions have been properly
recorded.
Telephone and Internet voting facilities for shareholders of
record will be available 24 hours a day. Proxies submitted
by telephone or the Internet must be received by
10:00 a.m. Eastern Time on April 30, 2009.
The availability of telephone and Internet voting for beneficial
owners will depend on the voting processes of your broker, bank
or other nominee. Therefore, we recommend that you follow the
voting instructions in the materials you receive.
If you vote by telephone or on the Internet, you should not
separately return your proxy card or voting instruction card.
In
Person at the Annual Meeting
Even if you plan to attend the meeting, we encourage you to vote
by completing, signing, dating, and returning the enclosed proxy
card or by voting using the Internet or telephone so your vote
will be counted if you later decide not to attend the meeting.
If you decide to change your vote at the meeting, you may do so
by voting in person at the meeting. If you choose to vote at the
Annual Meeting:
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If you are a shareholder of record, you may vote by the ballot
provided at the meeting.
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If you hold your shares in street name, you must
obtain and bring with you to the Annual Meeting a legal proxy
from your bank, broker, nominee or other holder of record in
order to vote by ballot at the meeting.
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If you hold your shares through a USEC stock ownership plan, you
cannot vote in person at the Annual Meeting. Please vote by
signing and dating your proxy card and mailing it in the
postage-paid envelope provided or by using the Internet or
telephone.
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What are
my voting choices when voting for director nominees
(Item 1) and what vote is needed to elect
directors?
In the vote on the election of ten directors to serve until the
2010 Annual Meeting of Shareholders, shareholders may:
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vote FOR all nominees;
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WITHHOLD votes as to all nominees; or
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WITHHOLD votes as to one or more specific nominees.
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Directors will be elected by a plurality of the votes cast. This
means that the ten nominees who receive the largest number of
FOR votes cast will be elected as directors. If you
WITHHOLD authority to vote with respect to any
director nominee, your shares will be counted for purposes of
establishing a quorum, but will have no effect on the election
of that nominee.
The Board of Directors recommends that you vote FOR
each of the director nominees.
What are
my voting choices when voting on the proposal to approve the
USEC Inc. 2009 Equity Incentive Plan (Item 2) and what vote
is needed for approval?
In the vote on the proposal to approve the USEC Inc. 2009 Equity
Incentive Plan, shareholders may:
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vote FOR the proposed USEC Inc. 2009 Equity
Incentive Plan;
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vote AGAINST the proposed USEC Inc. 2009 Equity
Incentive Plan; or
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ABSTAIN from voting on the proposed USEC Inc. 2009
Equity Incentive Plan.
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The approval of the proposed USEC Inc. 2009 Equity Incentive
Plan requires the FOR vote of a majority of the
shares present in person or by proxy at the meeting and entitled
to vote on that proposal; provided that the total votes cast on
the proposal represent more than 50% of USECs outstanding
shares of common stock as of the record date. Abstentions will
have the same effect as a vote AGAINST the approval
of the proposed USEC Inc. 2009 Equity Incentive Plan.
The Board of Directors recommends that you vote FOR
the approval of the proposed USEC Inc. 2009 Equity Incentive
Plan.
What are
my voting choices when voting on the proposal to approve the
USEC Inc. 2009 Employee Stock Purchase Plan (Item 3) and
what vote is needed for approval?
In the vote on the proposal to approve the USEC Inc. 2009
Employee Stock Purchase Plan, shareholders may:
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vote FOR the proposed USEC Inc. 2009 Employee Stock
Purchase Plan;
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vote AGAINST the proposed USEC Inc. 2009 Employee
Stock Purchase Plan; or
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ABSTAIN from voting on the proposed USEC Inc. 2009
Employee Stock Purchase Plan.
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The approval of the proposed USEC Inc. 2009 Employee Stock
Purchase Plan requires the FOR vote of a majority of
the shares present in person or by proxy at the meeting and
entitled to vote on that proposal. Abstentions will have the
same effect as a vote AGAINST the approval of the
proposed USEC Inc. 2009 Employee Stock Purchase Plan.
The Board of Directors recommends that you vote FOR
the approval of the proposed USEC Inc. 2009 Employee Stock
Purchase Plan.
3
What are
my voting choices when voting on the ratification of the
appointment of PricewaterhouseCoopers LLP as the Companys
independent auditors (Item 4), and what vote is needed to
ratify their appointment?
In the vote on the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent auditors for 2009,
shareholders may:
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vote FOR the ratification;
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vote AGAINST the ratification; or
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ABSTAIN from voting on the ratification.
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The ratification of the appointment of the independent auditors
requires the FOR vote of a majority of the shares
present in person or by proxy at the meeting and entitled to
vote on that proposal. Abstentions will have the same effect as
a vote AGAINST the ratification of the appointment
of the independent auditors.
The Board of Directors recommends that you vote FOR
the ratification of the appointment of PricewaterhouseCoopers
LLP as independent auditors.
What if I
do not specify a choice for a matter when returning a
proxy?
Shareholders should specify their choice for each matter on the
enclosed proxy card. If you just sign and submit your proxy card
without marking your vote, your shares will be voted:
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Item 1: FOR each director nominee;
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Item 2: FOR the approval of the proposed USEC
Inc. 2009 Equity Incentive Plan;
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Item 3: FOR the approval of the proposed USEC
Inc. 2009 Employee Stock Purchase Plan; and
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Item 4: FOR the ratification of the appointment
of PricewaterhouseCoopers LLP as USECs independent
auditors for 2009.
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May I
revoke my proxy and change my vote?
You may revoke your proxy at any time before it is voted at the
meeting by:
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submitting a properly executed proxy card with a later date,
which proxy card is received prior to the date of the Annual
Meeting;
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delivering to the Secretary of USEC, prior to the date of the
Annual Meeting, a written notice of revocation bearing a later
date than the proxy; or
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voting in person at the Annual Meeting.
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How are
proxies solicited and what is the cost?
We have hired Morrow & Co., LLC, located at
470 West Avenue, Stamford, CT 06902, to assist us in
soliciting proxies from banks, brokers, and nominees and we will
pay Morrow & Co., LLC a fee of approximately $10,000,
plus expenses, for these services. We will reimburse banks,
brokerage houses, and other institutions, custodians, nominees,
and fiduciaries for reasonable expenses in forwarding proxy
material to their principals.
Our directors, officers, and employees may also solicit proxies
by mail,
e-mail,
telephone or personal contact. They will not receive additional
compensation for these activities.
What is
householding?
If you and other residents at your mailing address own shares of
USEC stock in street name, your broker or bank or
other nominee may have notified you that your household will
receive only one annual report, proxy statement and Notice of
Internet Availability of Proxy Materials for each company in
which you
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hold stock through that broker or bank or other nominee. This
practice is known as householding. Unless you
responded that you did not want to participate in
householding, you were deemed to have consented to
the process. Your broker or bank or other nominee will send one
copy of our annual report, proxy statement and Notice of
Internet Availability of Proxy Materials to your address. Each
shareholder will continue to receive a separate proxy card or
voting instruction card.
If you would like to receive your own set of USECs future
annual report, proxy statement and Notice of Internet
Availability of Proxy Materials or if you share an address with
another USEC shareholder and together both of you would like to
receive only a single set of USEC annual disclosure documents,
please contact Broadridge Financial Solutions, Householding
Department, 51 Mercedes Way, Edgewood, New York 11717 or call
them at
(800) 542-1061.
Be sure to indicate your name, the name of your brokerage firm
or bank or other nominee, and your account number. Any
revocation of your consent to householding will be effective
30 days following its receipt.
If you did not receive an individual copy of this years
proxy statement, our annual report, or the Notice of Internet
Availability of Proxy Materials, we will promptly send a copy to
you if you address a written request to USEC Inc., Two Democracy
Center, 6903 Rockledge Drive, Bethesda, Maryland 20817,
Attention: Investor Relations or call
(301) 564-3238.
5
ITEM 1.
ELECTION OF DIRECTORS
On the nomination of our Board of Directors, James R. Mellor,
Michael H. Armacost, Joyce F. Brown, Joseph T. Doyle, H. William
Habermeyer, John R. Hall, William J. Madia, W. Henson Moore,
Joseph F. Paquette, Jr., and John K. Welch will stand for
re-election at the meeting, each to hold office until the next
Annual Meeting of Shareholders and until his or her successor is
elected and qualified. Each of the nominees presently is a
member of our Board.
Unless otherwise directed, shares represented by proxies
solicited on behalf of the Board of Directors will be voted for
the nominees listed below. All nominees have consented to serve
if elected, but if any nominee becomes unavailable to serve, the
persons named as proxies may exercise their discretion to vote
for a substitute nominee.
The principal occupations of and certain other information about
the nominees are set forth on the following pages.
The Board recommends a vote FOR the election of these
nominees as directors.
NOMINEES FOR DIRECTORS
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James R. Mellor
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Director since 1998
Age 78
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Mr. Mellor retired in 1997 as Chairman and Chief Executive
Officer of General Dynamics Corporation, a company engaged in
shipbuilding and marine systems, land and amphibious combat
systems, information systems, and business aviation businesses,
a position he held since 1994. Prior to assuming that position,
Mr. Mellor was President and Chief Executive Officer from 1993
to 1994 and was previously President and Chief Operating Officer
of General Dynamics. Mr. Mellor served as interim President and
Chief Executive Officer of the Company from December 2004 to
October 2005. Mr. Mellor also serves on the Board of Trustees of
the Scripps Research Institute and the Board of Directors of IDT
Corporation.
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Michael H. Armacost
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Director since 2002
Age 71
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Mr. Armacost is a Walter H. Shorenstein distinguished fellow and
visiting professor in the Asia/Pacific Research Center at
Stanford University. Mr. Armacost served as President and a
Trustee of The Brookings Institution from 1995 to 2002. He
served as Undersecretary of State for Political Affairs from
1984 to 1989, as U.S. Ambassador to Japan from 1989 to 1993 and
to the Philippines from 1982 to 1984. Mr. Armacost also serves
on the Board of Directors of AFLAC Inc.
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Joyce F. Brown
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Director since 1998
Age 62
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Dr. Brown is the President of the Fashion Institute of
Technology of the State University of New York, a position she
has held since 1998. From 1994 to 1997, Dr. Brown was a
professor of clinical psychology at the City University of New
York, where she previously held several Vice Chancellor
positions. From 1993 to 1994, she served as the Deputy Mayor for
Public and Community Affairs in the Office of the Mayor of the
City of New York. Dr. Brown also serves on the Board of
Directors of Polo Ralph Lauren Corporation.
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Joseph T. Doyle
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Director since 2006
Age 61
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Mr. Doyle is a consultant to and a director of several for
profit companies and not for profit organizations. From July
2002 through March 2003, he served as Senior Vice President and
Chief Financial Officer of Foster Wheeler, Inc. Prior to joining
Foster Wheeler, Mr. Doyle was Executive Vice President and Chief
Financial Officer of U.S. Office Products from 1998 through
2001, Chief Financial Officer of Westinghouse Electric
Companys Industrial Group from 1996 through 1998, and
Chief Financial Officer of Allison Engine Company (now Rolls
Royce Allison) from 1994 through 1996.
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H. William Habermeyer
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Director since 2008
Age 66
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Mr. Habermeyer retired in 2006 as President and Chief Executive
Officer of Progress Energy Florida, a subsidiary of Progress
Energy, Inc., a diversified energy company. Mr. Habermeyer
joined Progress Energy predecessor, Carolina Power & Light
in 1993 and served as Vice President of Nuclear Services and
Environmental Support, Vice President of Nuclear Engineering,
and Vice President of the Western Region in North Carolina,
before assuming the role of President and Chief Executive
Officer of Progress Energy Florida in 2000. Prior to that, Mr.
Habermeyer had a 28-year career in the U.S. Navy, retiring as a
Rear Admiral. Mr. Habermeyer also serves on the Board of
Directors of Raymond James Financial, Inc. and Southern Company.
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John R. Hall
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Director since 1998
Age 76
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Mr. Hall retired in 1997 as Chairman of the Board of Directors
of Ashland, Inc., a company engaged in specialty chemicals,
lubricants, car-care products, chemical and plastics
distribution businesses, a position he held since 1981. Mr. Hall
also was Chief Executive Officer of Ashland, Inc. from 1981 to
1996. Mr. Hall was Chairman of the Board of Directors of Arch
Coal, Inc. from 1997 to 1998, and a director until 1999.
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William J. Madia
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Director since 2008
Age 61
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Dr. Madia is a vice president at Stanford University
responsible for oversight of the SLAC National Accelerator
Laboratory, a U.S. Department of Energy national science lab.
Dr. Madia retired in 2007 as Executive Vice President of
Laboratory Operations of the Battelle Memorial Institute, a
non-profit independent research and development organization,
where he oversaw the management or co-management of six
Department of Energy National Laboratories. Dr. Madia
served in that position since 1999. In addition, he was
President and CEO of UT-Battelle, LLC, he managed
Battelles global environmental business, served as
president of Battelle Technology International, director of
Battelles Columbus Laboratories, and corporate vice
president and general manager of Battelles Project
Management Division.
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W. Henson Moore
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Director since 2001
Age 69
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Mr. Moore was President and Chief Executive Officer of the
American Forest and Paper Association, the national trade
association of the forest, paper and wood products industry,
from 1995 to 2006. He was also President of the International
Council of Forest Product Associations from 2002 to 2004. Mr.
Moore was previously Deputy Secretary of Energy from 1989 to
1992 and in 1992 became Deputy Chief of Staff for President
George Bush. From 1975 to 1987 he represented the Sixth
Congressional District of Louisiana in the U.S. House of
Representatives. Mr. Moore also serves on the Board of Directors
of Domtar Corporation.
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Joseph F. Paquette, Jr.
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Director since 2001
Age 74
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Mr. Paquette retired in 1997 as Chairman and Chief Executive
Officer of PECO Energy Company, a company engaged in the
production, purchase, transmission, distribution, and sale of
electricity and the distribution and sale of natural gas, a
position he held since 1988. Before that, Mr. Paquette held
positions with Consumers Power Company as President, and Senior
Vice President and Chief Financial Officer, and with
Philadelphia Electric Company as Chief Financial Officer. Mr.
Paquette also serves on the Board of Directors of CMS Energy
Corporation.
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John K. Welch
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Director since 2005
Age 58
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Mr. Welch has been President and Chief Executive Officer since
October 2005. Prior to joining USEC, he served as a consultant
to several government and corporate entities. He was Executive
Vice President and Group Executive, Marine Systems at General
Dynamics Corporation from March 2002 to March 2003, and Senior
Vice President and Group Executive, Marine Systems from January
2000 to March 2002. Prior to that, Mr. Welch held several
executive positions over a ten-year period at General
Dynamics Electric Boat Corporation, including President
from 1995 to 2000. Mr. Welch currently serves on the Board of
Directors of Battelle Memorial Institute, the U.S. Naval Academy
Foundation and Precision Custom Components Inc.
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8
GOVERNANCE
OF THE COMPANY
Governance
Information
Our
Governance Guidelines
The Board of Directors recognizes that good corporate governance
is an important means of protecting the interests of USECs
shareholders, employees, customers, and the community. We have
adopted Governance Guidelines, which serve as principles
addressing the role of the Board of Directors in the areas of
fiduciary oversight, independence, evaluation of the chief
executive officer, and succession planning. The Governance
Guidelines also set standards relating to the composition and
operation of the Board of Directors and its committees,
including standards relating to the selection and qualification
of directors, evaluation of the Board and its committees, and
director education. The Governance Guidelines are administered
by the Boards Nominating and Governance Committee, which
regularly reviews director criteria and qualifications, and
leads the performance assessments of the Board and its
Committees. The Board annually assesses the adequacy and
effectiveness of its Governance Guidelines. Copies of the
current Governance Guidelines are available on our website at
www.usec.com or upon written request, addressed to the
Secretary, USEC Inc. at Two Democracy Center, 6903 Rockledge
Drive, Bethesda, Maryland 20817.
Executive
Sessions of Non-Management Directors
Our Governance Guidelines contemplate that non-management
directors meet regularly in executive session. During 2008, the
non-management directors met without management at regularly
scheduled executive sessions, and Michael Armacost, Chairman of
the Nominating and Governance Committee, presided at these
executive sessions.
Communications
with the Board of Directors
The Board has an established process to receive communications
from shareholders and other interested parties. This process has
been approved by a majority of the independent directors.
Shareholders and other interested parties may contact the Board,
the presiding director for executive sessions of the
non-management directors, or the non-management directors as a
group, by mail or electronically. To communicate with the Board
of Directors, the presiding director for executive sessions of
the non-management directors, or the non- management directors
as a group, correspondence should be addressed to such recipient
or recipients in care of USECs Secretary at the following
address:
c/o Secretary,
USEC Inc., Two Democracy Center, 6903 Rockledge Drive, Bethesda,
Maryland 20817.
To communicate electronically with the Board, the presiding
director for executive sessions of the non-management directors,
or the non-management directors as a group, shareholders should
go to our website at www.usec.com. Under the Corporate
Governance section, you will find a link to the
e-mail
address for writing an electronic message to the Board, the
presiding director for executive sessions of the non-management
directors, or the non-management directors as a group.
Director
Independence
The New York Stock Exchange (NYSE) listing standards
require that the boards of listed companies have a majority of
independent directors and that audit, nominating and governance,
and compensation committee members must all be independent as
affirmatively determined by the Board. At its February 2009
meeting, after reviewing the NYSE standards of independence, the
Board of Directors affirmatively determined that the following
seven directors were independent: Mr. Armacost,
Dr. Brown, Mr. Doyle, Mr. Habermeyer,
Mr. Hall, Mr. Moore and Mr. Paquette. The basis
for these determinations was that each of these seven directors
(other than Mr. Habermeyer) had no relationships with the
Company other than being a director
and/or
shareholder of the Company. The Board determined that
Mr. Habermeyer had no material relationships with the
Company, taking into consideration his service on the board of
directors of Southern Company, a customer of USEC. All of the
members of the Companys Audit and Finance, Nominating and
Governance, and Compensation committees are independent.
9
Criteria
for Board Membership
The Nominating and Governance Committee believes that the
minimum qualifications for serving as a director of the Company
are that a nominee demonstrate, by significant accomplishment in
his or her field, an ability to make a meaningful contribution
to the Boards oversight of the business and affairs of the
Company. This assessment includes the consideration of each
directors, or each nominees, business background,
experience and capabilities complementary to other
directors experience and capabilities, financial acumen,
experience with government, willingness and ability to devote
adequate time to the Company, integrity, and any other factor
deemed appropriate, all in the context of an assessment of the
perceived needs of the Board at that point in time. In addition,
the Board considers the diversity of its members when
considering a candidate.
The Nominating and Governance Committee identifies potential
nominees by asking current directors to notify the Committee if
they become aware of persons meeting the criteria described
above, who might be available to serve on the Board. The
Nominating and Governance Committee also, from time to time, may
engage firms that specialize in identifying director candidates.
As described below, the Committee will also consider candidates
recommended by shareholders.
Once a person has been identified by the Nominating and
Governance Committee as a potential candidate, the Committee may
collect and review publicly available information regarding the
person to assess whether the person should be considered
further. If the Nominating and Governance Committee determines
that the candidate warrants further consideration, the Chairman
or another member of the Committee contacts the person.
Generally, if the person expresses a willingness to be
considered and to serve on the Board, the Nominating and
Governance Committee requests information from the candidate,
reviews the persons accomplishments and qualifications,
including in light of any other candidates that the Committee
might be considering, and conducts one or more interviews with
the candidate. In certain instances, Committee members may
contact one or more references provided by the candidate or may
contact other members of the business community or other persons
that may have greater first-hand knowledge of the
candidates accomplishments. The Committees
evaluation process does not vary based on whether or not a
candidate is recommended by a shareholder.
Director
Nominations by Shareholders
The Nominating and Governance Committee will consider director
candidates recommended by shareholders. In considering
candidates submitted by shareholders, the Nominating and
Governance Committee will take into consideration the needs of
the Board and the qualifications of the candidate. To have a
candidate considered by the Nominating and Governance Committee,
a shareholder must comply with notification requirements in
USECs bylaws. The bylaws require, among other things, that
a shareholder must submit the recommendation in writing and must
include the following information:
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the name of the shareholder and evidence of the persons
ownership of Company stock, including the number of shares owned
and the length of time of ownership; and
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the name of the candidate, the candidates resume or a
listing of his or her qualifications to be a director of the
Company and the persons consent to be named as a director
if selected by the Nominating and Governance Committee and
nominated by the Board.
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Under our bylaws, a shareholders nomination for director
must be delivered to the Companys Secretary not less than
90 days nor more than 120 days prior to the
anniversary date of the previous years annual meeting,
unless the date of the next annual meeting is more than
30 days before or more than 60 days after such
anniversary date, in which case notice must be received not
later than the tenth day following the day on which notice of
the meeting is mailed or public disclosure of the date of the
annual meeting is made. Accordingly, shareholder nominations for
director must be received by the Company between
December 31, 2009 and January 30, 2010, in order to be
considered timely, unless the Company gives notice that the date
of the annual meeting is more than 30 days before, or more
than 60 days after, April 30, 2010.
10
Code of
Business Conduct
USEC has a Code of Business Conduct, applicable to all of our
directors, officers and employees, that provides a summary of
the standards of conduct that are at the foundation of our
business operations. The code of business conduct states that we
conduct our business in strict compliance with all applicable
laws and addresses other important matters such as conflicts of
interest and how violations of the code may be reported and will
be handled. Each director, officer and employee must read the
code of business conduct and sign a form stating that he or she
has read, understands and agrees to comply with the code of
business conduct. Our Business Conduct Committee is responsible
for monitoring performance under the code of business conduct
and for addressing any issues that arise with respect to the
code. A copy of the code of business conduct is available on our
website at www.usec.com or upon written request,
addressed to the Secretary, USEC Inc. at Two Democracy Center,
6903 Rockledge Drive, Bethesda, Maryland 20817.
Transactions
with Related Persons
The Board has adopted a policy and procedures for review,
approval or ratification of transactions involving the Company
and related persons (the Companys directors
and executive officers and shareholders owning five percent or
greater of the Companys outstanding stock, or their
immediate family members). The policy covers any related person
transaction that meets the minimum threshold for disclosure
under the relevant SEC rules or that is otherwise referred to
the Board for review. This generally includes transactions
involving amounts exceeding $120,000 in which a related person
has a direct or indirect material interest. Under this policy,
related person transactions must be approved by the Nominating
and Governance Committee, although the Chairman of the Board may
direct that the full Board review specific transactions. The
transaction must be approved in advance whenever feasible and,
if not feasible, must be ratified at the Nominating and
Governance Committees next meeting. In determining whether
to approve or ratify a related person transaction, the
Nominating and Governance Committee will take into account all
factors it deems appropriate, including: whether the subject
matter of the transaction is available from other non-affiliated
sources; whether the transaction is on terms no less favorable
to the Company than terms generally available from an
unaffiliated third party; the extent of the related
persons interest in the transaction; and whether the
transaction is in the best interests of the Company.
Management is responsible for the development and implementation
of processes and controls to ensure that related person
transactions are identified and that disclosure is made as
required by law. To that end, currently we annually require each
of our directors and executive officers to complete a
directors and officers questionnaire that elicits
information about related person transactions.
Corporate
Governance Information
Shareholders will find information about our corporate
governance practices on our website at www.usec.com. Our
website contains information about our Board of Directors, Board
committees, current copies of our bylaws and charter, committee
charters, Code of Business Conduct and Governance Guidelines.
Shareholders may obtain, without charge, hard copies of the
above documents by writing to the Secretary, USEC Inc. at Two
Democracy Center, 6903 Rockledge Drive, Bethesda, Maryland 20817.
Board and
Committee Membership
Pursuant to the Delaware General Corporation Law, under which
USEC is organized, our business, property, and affairs are
managed under the direction of our Board of Directors. Members
of the Board are kept informed of our business through
discussions with the Chief Executive Officer and other officers,
by reviewing materials prepared for them by management, by
participating in meetings of the Board and its committees and by
other means.
It is the Boards policy that all directors attend the
annual meeting. We had ten directors at the time of the 2008
Annual Meeting, all of whom attended the 2008 Annual Meeting.
11
During 2008, the Board of Directors held eight regular meetings
and no special meetings. All directors attended 75% or more of
the Board of Directors meetings and meetings of the
committees on which they served. The average attendance of all
directors at all Board and committee meetings in 2008 was 95%.
During 2008, the Board had designated five committees, each
identified in the table below. All five committees are composed
entirely of non-employee directors. The Board has adopted a
written charter for each of these committees. The full text of
each charter is available on the Companys website located
at www.usec.com.
The table below sets forth the membership of these committees as
of March 6, 2009 and the number of meetings held in 2008:
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Regulatory and
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Audit and
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Nominating and
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Government
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Technology and
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Finance
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Compensation
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Governance
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Affairs
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Competition
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Director
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Committee
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Committee
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Committee
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Committee
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Committee
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James R. Mellor
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X
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Michael H. Armacost
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X
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X
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*
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Joyce F. Brown
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X
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X
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Joseph T. Doyle
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X
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X
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H. William Habermeyer
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X
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X
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John R. Hall
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X
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*
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X
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William J. Madia
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X
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X
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*
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W. Henson Moore
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X
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X
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*
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Joseph F. Paquette, Jr.
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X
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*
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X
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Number of Meetings in 2008
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7
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6
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5
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5
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4
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The functions performed by our five standing committees are
described below.
Audit and
Finance Committee
The Audit and Finance Committee represents and assists the Board
with the oversight of: the integrity of the Companys
financial statements and internal controls, the Companys
compliance with legal and regulatory requirements, the
independent auditors qualifications and independence, the
performance of the Companys internal audit function, and
the performance of the independent auditors. In addition, the
Committee is responsible for appointing, overseeing and
terminating the Companys independent auditors, and
reviewing the Companys accounting processes, financial
controls, reporting systems, and the scope of the audits to be
conducted. The Committee is also responsible for advising the
Board regarding significant financial matters. The Committee
meets regularly in executive session with the Companys
independent auditors and with the Companys internal
auditors.
The Board has determined that each member of the Audit and
Finance Committee is an independent director in
accordance with NYSE listing standards. Under the NYSE listing
standards, all audit committee members must be financially
literate, as that term is determined by the Board in its
business judgment. Further, under the Securities and Exchange
Commissions (the SEC) rules, the Board must
determine whether at least one member of the audit committee is
an audit committee financial expert, as defined by
the SECs rules. The Board has determined that all members
of the Audit and Finance Committee are financially
literate and that Mr. Paquette and Mr. Doyle
qualify as audit committee financial experts.
Compensation
Committee
The Compensation Committees responsibilities include
annually reviewing the performance of the Chief Executive
Officer and other senior management; overseeing and
administering the Companys executive compensation program
and advising and making recommendations to the Board with
respect thereto; and
12
reviewing, overseeing and evaluating overall compensation
programs and policies for the Company and its employees and
making recommendations to the Board. The Compensation Committee
is also responsible for periodically reviewing compensation for
non-employee directors and making recommendations to the Board.
The Compensation Committee also establishes annual performance
objectives under the Companys incentive programs and
oversees administration of employee benefit plans. Additional
information on the processes and procedures for consideration of
executive and director compensation are addressed in the
Compensation Discussion and Analysis.
The Board has determined that each member of the Compensation
Committee is an independent director in accordance
with NYSE listing standards.
Nominating
and Governance Committee
The functions of the Nominating and Governance Committee include
the following: identifying and recommending to the Board
individuals qualified to serve as directors of the Company;
recommending to the Board directors to serve on committees of
the Board; advising the Board with respect to matters of Board
composition and procedures; developing and recommending to the
Board a set of corporate governance principles applicable to the
Company and overseeing corporate governance matters generally;
and overseeing the annual evaluations of the Chief Executive
Officer, the Board and its committees. The Nominating and
Governance Committee will consider director candidates
recommended by shareholders in accordance with the procedures
previously described under Governance
Information Director Nominations by
Shareholders. In addition, the Nominating and Governance
Committee is responsible for reviewing the Companys Code
of Business Conduct and overseeing the Companys processes
for monitoring compliance, and for reviewing and approving all
transactions between the Company and any related person under
the Companys related person transaction policy previously
described.
The Board has determined that each member of the Nominating and
Governance Committee is an independent director in
accordance with NYSE listing standards.
Regulatory
and Government Affairs Committee
The Regulatory and Government Affairs Committees
responsibilities include monitoring the Companys
compliance with regulatory requirements, overseeing the
Companys initiatives with and involving various agencies
of the United States government and applicable State
governments, and advising the Board on regulatory and other
governmental considerations in the Boards deliberations
and decision-making processes.
Technology
and Competition Committee
The Technology and Competition Committees responsibilities
include providing oversight and guidance to management with
respect to the Companys technology initiatives, with a
focus on the potential technological advances and technological
risk related to the Companys centrifuge technology,
informing the Board of significant energy policy developments
and developments in enrichment technology, monitoring
competition and market demand in the enrichment industry,
monitoring the protection of the Companys intellectual
property and monitoring issues with respect to the
Companys information technology.
Compensation
of Directors
Standard
Non-Employee Director Compensation Arrangement
Annual compensation for non-employee directors covers service
for the one-year term commencing at the annual meeting. The
compensation is unchanged for the 2009 2010 term.
Mr. Welch, President and Chief Executive Officer, did not
receive separate compensation for his Board activities in 2008.
During the 2008 2009 term, non-employee directors
received an annual retainer of $200,000, consisting of $80,000
in cash and restricted stock units with a value of $120,000
under the USEC Inc. 1999 Equity Incentive Plan. The restricted
stock unit portion of the annual retainer was increased in 2008
for the
13
2008-2009
term by $20,000 from $100,000. These restricted stock units will
vest one year from the date of grant, however, vesting is
accelerated upon (1) the director attaining eligibility for
retirement, (2) termination of the directors service
by reason of death or disability, or (3) a change in
control. No separate meeting fees are paid. The chairman of the
Audit and Finance Committee receives an annual chairmans
fee of $20,000 in cash, the chairman of the Compensation
Committee receives an annual chairmans fee of $10,000 in
cash, and the chairman of each other committee receives an
annual chairmans fee of $7,500 in cash. Directors have the
option to receive their cash fees in restricted stock units. A
director who elects to receive their cash fees in restricted
stock units will receive an incentive payment of restricted
stock units equal to 20% of the portion of the cash fees that
the director elects to take in restricted stock units in lieu of
cash. These incentive restricted stock units will vest in equal
annual installments over three years from the date of grant,
however, vesting is accelerated upon (1) the director
attaining eligibility for retirement, (2) termination of
the directors service by reason of death or disability, or
(3) a change in control. All fees are payable at the
beginning of the term. Settlement of restricted stock units
granted to non-employee directors is made in shares of USEC
stock upon the directors retirement or other end of
service. All non-employee directors are reimbursed for any
reasonable expenses incurred in connection with their duties as
directors of the Company.
Director
Deferred Compensation Plan
Directors also have the option to defer all or a portion of
their cash fees into the USEC Inc. Director Deferred
Compensation Plan. This plan is intended to be a non-qualified
deferred compensation plan that complies with the regulations of
Section 409A of the Internal Revenue Code of 1986, as
amended. Participants in the plan may defer up to a maximum of
100% and a minimum of 5% of cash director fees. A director may
receive a distribution from the plan upon a qualifying
distribution event such as a separation from service,
disability, death, or in-service distribution, change in control
or an unforeseeable emergency all as defined in the plan.
Distributions from the plan will be made in cash in a lump sum,
annual installments, or a combination of both, in the manner
elected by the director and provided for in the plan. During
2008, no directors participated in the plan.
Arrangement
with James R. Mellor
James R. Mellor, Chairman of the Board, receives an annual
chairmans fee of $100,000 in cash in connection with his
duties as Chairman of the Board. This is in addition to the
annual compensation payable to all non-employee directors. In
2008, Mr. Mellor elected to receive all fees, including his
annual chairmans fee, in restricted stock units in lieu of
cash and was eligible to receive an incentive payment of
restricted stock units equal to 20% of the cash fees that he
elected to take in restricted stock units in lieu of cash.
Director
Stock Ownership Guidelines
In order to more closely align directors interests with
the interests of shareholders, directors are required to hold
25,000 shares of Company common stock. As an incentive to
take more of their compensation in the form of Company stock,
directors are eligible to receive incentive restricted stock
units described above under Standard Non-Employee Director
Compensation Arrangement.
14
Director
Compensation in Fiscal Year 2008
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Fees Earned or
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Stock
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Name
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Paid in Cash(1)
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Awards(2)(3)
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Total
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James R. Mellor
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$
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336,000
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$
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336,000
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Michael H. Armacost
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$
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87,500
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$
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120,000
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$
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207,500
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Joyce F. Brown
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$
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80,000
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$
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120,000
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$
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200,000
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Joseph T. Doyle
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$
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216,000
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$
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216,000
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H. William Habermeyer
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$
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96,658
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$
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140,822
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$
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237,480
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John R. Hall
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$
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228,000
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$
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228,000
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William J. Madia
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$
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105,719
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$
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140,822
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$
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246,541
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W. Henson Moore
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$
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87,500
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$
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120,000
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$
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207,500
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Joseph F. Paquette, Jr.
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$
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240,000
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$
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240,000
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(1) |
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The amounts shown in the Fees Earned or Paid in Cash column
include the following: |
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Annual Retainers: Cash paid in 2008 to Mr. Armacost,
Dr. Brown, Mr. Habermeyer, Dr. Madia, and
Mr. Moore for $80,000 cash portion of annual retainers for
the 2008 2009 term. Mr. Mellor, Mr. Doyle,
Mr. Hall, and Mr. Paquette elected to take all fees in
restricted stock units in lieu of cash as shown in the Stock
Awards column. Cash paid in 2008 to Mr. Habermeyer and
Dr. Madia for $16,658 cash portion of pro-rated annual
retainer for the
2007-2008
term. Mr. Habermeyer and Dr. Madia joined the Board in
February 2008.
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Committee Chairmans Fees: Cash paid in 2008 to
Mr. Armacost, Dr. Madia and Mr. Moore for annual
committee chairmans fees of $7,500 for the
2008 2009 term. Cash paid in 2008 to Dr. Madia
for $1,561 pro-rated committee chairmans fee for the
2007-2008
term.
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(2) |
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The amounts shown in the Stock Awards column represents the
compensation cost recognized by USEC in 2008 related to stock
awards to directors, computed in accordance with Statement of
Financial Accounting Standards No. 123 Revised
2004, Share Based Payment (SFAS No. 123(R)) and
do not reflect whether the director has actually realized a
financial benefit from the award. For a discussion of valuation
assumptions, see Note 11 to our consolidated financial
statements included in our annual report on
Form 10-K
for the year ended December 31, 2008. In accordance with
SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. |
|
|
|
Mr. Mellor, Mr. Doyle, Mr. Hall and
Mr. Paquette elected to take all fees in restricted stock
units in lieu of cash and so amounts include $200,000 annual
retainer for the
2008-2009
term, chairman fees, and incentive restricted stock units.
Amount for Mr. Armacost, Dr. Brown,
Mr. Habermeyer, Dr. Madia and Mr. Moore includes
$120,000 annual retainer payable in restricted stock units.
Amount for Mr. Habermeyer and Dr. Madia includes
$20,822 pro-rated annual retainer payable in restricted stock
units for the
2007-2008
term. The amounts shown in the Stock Awards column for each of
the non-employee directors includes the following grants of
restricted stock units, which have the following grant date fair
value, |
15
|
|
|
|
|
calculated using the closing price of USECs common stock
on the date of grant in accordance with
SFAS No. 123(R): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Restricted
|
|
Grant Date
|
Name
|
|
Grant Date
|
|
Stock Units
|
|
Fair Value
|
|
James R. Mellor
|
|
|
05/06/08
|
|
|
|
64,245
|
|
|
$
|
336,000
|
|
Michael H. Armacost
|
|
|
05/06/08
|
|
|
|
22,945
|
|
|
$
|
120,000
|
|
Joyce F. Brown
|
|
|
05/06/08
|
|
|
|
22,945
|
|
|
$
|
120,000
|
|
Joseph T. Doyle
|
|
|
05/06/08
|
|
|
|
41,300
|
|
|
$
|
216,000
|
|
H. William Habermeyer
|
|
|
02/08/08
|
|
|
|
2,666
|
|
|
$
|
20,822
|
|
|
|
|
05/06/08
|
|
|
|
22,945
|
|
|
$
|
120,000
|
|
John R. Hall
|
|
|
05/06/08
|
|
|
|
43,595
|
|
|
$
|
228,000
|
|
William J. Madia
|
|
|
02/08/08
|
|
|
|
2,666
|
|
|
$
|
20,822
|
|
|
|
|
05/06/08
|
|
|
|
22,945
|
|
|
$
|
120,000
|
|
W. Henson Moore
|
|
|
05/06/08
|
|
|
|
22,945
|
|
|
$
|
120,000
|
|
Joseph F. Paquette, Jr.
|
|
|
05/06/08
|
|
|
|
45,889
|
|
|
$
|
240,000
|
|
The aggregate number of stock awards, including shares of
restricted stock and restricted stock units, outstanding at
December 31, 2008 for each of the non-employee directors
are as follows:
|
|
|
|
|
|
|
Number of Shares of
|
|
|
Restricted Stock or
|
Name
|
|
Restricted Stock Units
|
|
James R. Mellor
|
|
|
262,793
|
|
Michael H. Armacost
|
|
|
56,487
|
|
Joyce F. Brown
|
|
|
75,681
|
|
Joseph T. Doyle
|
|
|
52,806
|
|
H. William Habermeyer
|
|
|
25,611
|
|
John R. Hall
|
|
|
163,202
|
|
William J. Madia
|
|
|
25,611
|
|
W. Henson Moore
|
|
|
63,884
|
|
Joseph F. Paquette, Jr.
|
|
|
106,601
|
|
|
|
|
(3) |
|
No stock option grants were made to directors in 2008 and all
prior stock option grants to directors had been fully expensed
prior to 2008. The following table shows the number of stock
options held by each non-employee director as of
December 31, 2008, all of which are immediately exercisable: |
|
|
|
|
|
|
|
Number of Securities
|
|
|
Underlying
|
Name
|
|
Unexercised Options
|
|
James R. Mellor
|
|
|
211,876
|
|
Michael H. Armacost
|
|
|
16,750
|
|
Joyce F. Brown
|
|
|
17,250
|
|
Joseph T. Doyle
|
|
|
1,227
|
|
John R. Hall
|
|
|
47,222
|
|
W. Henson Moore
|
|
|
10,500
|
|
Joseph F. Paquette, Jr.
|
|
|
17,250
|
|
16
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 6, 2009,
the beneficial ownership of the Companys common stock
for the following persons: (a) all shareholders known by
the Company to beneficially own more than 5% of the common
stock; (b) each of the Companys directors;
(c) the Companys Chief Executive Officer, Chief
Financial Officer, and the three other most highly paid
executive officers of the Company serving as executive officers
at December 31, 2008; and (d) all of the
Companys directors and executive officers as a group.
Unless otherwise indicated in the table, each person has the
sole power to vote and dispose of the shares reported as
beneficially owned by such person. Certain information in the
table is based on information contained in filings made by the
beneficial owner with the SEC.
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Beneficially Owned(1)
|
Name of Beneficial Owner
|
|
Shares Owned
|
|
Percent of Class
|
|
FMR LLC(2)
82 Devonshire Street
Boston, Massachusetts 02109
|
|
|
12,701,820
|
|
|
|
8.0
|
%
|
Tradewinds Global Investors, LLC(3)
2049 Century Park East, 20th Floor
Los Angeles, California 90067
|
|
|
12,018,278
|
|
|
|
10.8
|
%
|
Donald Smith & Co., Inc.(4)
152 West 57th Street
New York, New York 10019
|
|
|
11,108,700
|
|
|
|
10.0
|
%
|
SouthernSun Asset Management(5)
600 Poplar Avenue, Suite 220
Memphis, Tennessee 38119
|
|
|
8,209,379
|
|
|
|
7.4
|
%
|
Dimensional Fund Advisors LP(6)
6300 Bee Cave Road
Austin, Texas 78746
|
|
|
7,367,590
|
|
|
|
6.6
|
%
|
Directors
|
|
|
|
|
|
|
|
|
Michael H. Armacost
|
|
|
74,552
|
(7)
|
|
|
|
*
|
Joyce F. Brown
|
|
|
69,934
|
(7)
|
|
|
|
*
|
Joseph T. Doyle
|
|
|
42,181
|
(7)
|
|
|
|
*
|
H. William Habermeyer
|
|
|
35,611
|
(7)
|
|
|
|
*
|
John R. Hall
|
|
|
212,424
|
(7)
|
|
|
|
*
|
William J. Madia
|
|
|
2,666
|
(7)
|
|
|
|
*
|
James R. Mellor
|
|
|
475,669
|
(7)
|
|
|
|
*
|
W. Henson Moore
|
|
|
74,384
|
(7)
|
|
|
|
*
|
Joseph F. Paquette, Jr.
|
|
|
142,659
|
(7)
|
|
|
|
*
|
Officers
|
|
|
|
|
|
|
|
|
John K. Welch
|
|
|
1,007,226
|
(7)
|
|
|
|
*
|
John C. Barpoulis
|
|
|
291,552
|
(7)
|
|
|
|
*
|
Philip G. Sewell
|
|
|
465,639
|
(7)
|
|
|
|
*
|
Robert Van Namen
|
|
|
373,816
|
(7)
|
|
|
|
*
|
W. Lance Wright
|
|
|
249,905
|
(7)
|
|
|
|
*
|
Directors and all executive officers as a group (21 persons)
|
|
|
4,067,898
|
(8)
|
|
|
3.6
|
%
|
|
|
|
* |
|
Less than 1% |
|
(1) |
|
For purposes of computing the percentage of outstanding shares
beneficially owned by each person, the number of shares owned by
that person and the number of shares outstanding includes shares
as to which such person has a right to acquire beneficial
ownership within 60 days (for example, through the exercise |
17
|
|
|
|
|
of stock options or conversion of securities), in accordance
with Rule 13d-3(d)(1) under the Securities Exchange Act of 1934,
as amended. |
|
(2) |
|
According to the Schedule 13G/A filed with the SEC by FMR
LLC and Edward C. Johnson 3d on February 17, 2009, the
beneficial owner of 11,524,135 shares of the Companys
common stock is Fidelity Management & Research
Company, a wholly owned subsidiary of FMR LLC, and the
beneficial owner of the remaining 1,177,685 shares is
Pyramis Global Advisors, LLC, a wholly owned subsidiary of FMR
LLC. The Schedule 13G/A states that the number of shares of
common stock owned by the investment companies includes
2,482,435 shares of common stock resulting from the assumed
conversion of $29,680,000 principal amount of the Companys
3% convertible senior notes due October 1, 2014
(83.64 shares of common stock for each $1,000 principal
amount of notes), and so in calculating the percentage of the
class owned by FMR LLC we have assumed the conversion of the
entire $575,000,000 principal amount of the Companys 3%
convertible senior notes. The predominant owners of Class B
shares of common stock of FMR LLC representing 49% of the voting
power of FMR LLC are members of the Edward C. Johnson 3d family.
The Schedule 13G/A states that FMR LLC has sole voting
power with respect to 1,177,685 shares and sole dispositive
power with respect to 12,701,820 shares. For additional
information on FMR LLCs beneficial ownership please see
the Schedule 13G/A. |
|
(3) |
|
The Schedule 13G/A filed on February 13, 2009 with the
SEC by Tradewinds Global Investors, LLC states that it has sole
power to vote 8,654,841 shares and sole power to dispose of
12,018,278 shares. Tradewinds Global Investors, LLC states
in its Schedule 13G/A that all securities reported therein
are owned by its clients. |
|
(4) |
|
The Schedule 13G filed on February 11, 2009 with the
SEC by Donald Smith & Co., Inc. states that it has
sole power to vote 8,455,962 shares and sole power to
dispose of 11,108,700 shares. Donald Smith & Co.,
Inc. states in its Schedule 13G that all securities
reported therein are owned by its advisory clients, no one of
which, to its knowledge, owns more than 5% of the class of
securities. |
|
(5) |
|
The Schedule 13G/A filed on January 12, 2009 with the
SEC by Michael W. Cook Asset Management, Inc. d/b/a SouthernSun
Asset Management states that it has the sole power to vote
7,531,819 shares and the sole power to dispose of
8,209,379 shares. |
|
(6) |
|
The Schedule 13G/A filed on February 9, 2009 with the
SEC by Dimensional Fund Advisors LP states that it has sole
power to vote 7,189,428 shares and sole power to dispose of
7,367,590 shares. Dimensional Fund Advisors states in
its Schedule 13G/A that all securities reported therein are
owned by its funds, no one of which, to its knowledge, owns more
than 5% of the class of securities. In its Schedule 13G/A,
Dimensional Fund Advisors disclaims beneficial ownership of
all such securities. |
|
(7) |
|
Includes shares subject to options granted pursuant to the USEC
Inc. 1999 Equity Incentive Plan exercisable, as of March 6,
2009, or within 60 days from such date as follows:
Mr. Armacost 16,750; Dr. Brown 17,250; Mr. Doyle
1,227; Mr. Hall 47,222; Mr. Mellor 211,876;
Mr. Moore 10,500; Mr. Paquette 17,250; Mr. Welch
347,563; Mr. Barpoulis 89,785; Mr. Sewell 280,606;
Mr. Van Namen 160,830; and Mr. Wright 83,312. Also
includes restricted stock units that can be converted into USEC
common stock within 60 days from March 6, 2009 as
follows: Mr. Armacost 31,960; Dr. Brown 8,863;
Mr. Doyle 10,954; Mr. Habermeyer 25,611; Mr. Hall
64,356; Dr. Madia 2,666; Mr. Mellor 91,016;
Mr. Moore 31,960; and Mr. Paquette 52,172. |
|
(8) |
|
Includes 1,372,172 shares subject to options granted
pursuant to the USEC Inc. 1999 Equity Incentive Plan exercisable
as of March 6, 2009, or within 60 days from such date.
Includes 320,051 restricted stock units that can be converted
into USEC common stock within 60 days from March 6,
2009. |
18
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers, directors, and persons who own
more than 10% of our common stock to file reports of beneficial
ownership and changes in beneficial ownership with the SEC and
to furnish us with copies of the reports. We received written
representations from each such person who did not file an annual
report with the SEC on Form 5 that no Form 5 was due.
Based on our review of the reports and representations, except
as follows, we believe that all required Section 16(a)
reports were timely filed in 2008: Stephen S. Greene and J.
Tracy Mey, executive officers, both filed an amended Form 4
on March 6, 2008 which corrected the number of shares of
restricted stock granted to them that was reported on their
Form 4 filed on March 5, 2008. Joseph F.
Paquette, Jr., a director, filed an amended Form 4 on
May 22, 2008 which included the late reporting of
restricted stock units which had been omitted from his
Form 4 filed on May 7, 2008.
19
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The following discussion and analysis contains statements
regarding future individual and company performance targets and
goals. These targets and goals are disclosed in the limited
context of USECs executive compensation programs and
should not be understood to be statements of managements
expectations or estimates of financial results or other
guidance. USEC specifically cautions investors not to apply
these statements to other contexts.
Executive
Summary
USEC is a global energy company that currently operates the only
uranium enrichment plant in the United States. We are in the
midst of a critical transition period for our enrichment
business as we move from the older gaseous diffusion enrichment
technology to the advanced technology of the American Centrifuge
through our deployment of the American Centrifuge Plant
(ACP). The transition period has several challenges
and opportunities and during this period our ability to attract,
motivate and retain employees and executives with the requisite
skills and experience to meet these challenges is essential to
our success and to the creation of long-term value for our
shareholders. In recognition of this, in February 2008, the
Compensation Committee determined to reposition overall total
direct compensation for certain executives for 2008 to
approximately the 75th percentile of the market. This
included an increase in base salary levels and annualized target
levels of restricted stock and nonqualified stock options for
2008. These changes are discussed more fully below in
Elements of Executive Compensation Total
Direct Compensation. However, in early 2009, as part of
the Companys cash conservation efforts, steps were taken
to limit executive compensation as more fully described below.
USEC began 2008 with a business plan focused on retiring or
mitigating a number of key risks that faced the business and
getting us to the next step with respect to the American
Centrifuge program. At the beginning of 2008, when the annual
performance goals were set, the financial outlook for 2008
included projected net income for the year in a range of $25 to
$45 million, projected gross profit margin for 2008 of
roughly 13% to 14%, and projected cash flows used by operations
for the year of $60 to $80 million. As reported in our
Annual Report on
Form 10-K
for the year ended December 31, 2008, we ended 2008 with
net income of approximately $49 million and a gross profit
margin of 14.2%, which exceeded the high end of the range for
both items, notwithstanding greater than expected increases in
costs of production that were seen in 2008. Management was also
successful in its efforts to control selling, general and
administrative (SG&A) expense at just below our initial
forecast of $55 million. However, on the cash side, our
business was severely impacted by rising costs for electric
power (which makes up
70-75% of
our cost of production), which are largely outside of
managements control. We ended 2008 with cash flow used by
operations of approximately $105 million. This was
unfavorable compared to our initial outlook and our annual
incentive award target. However, management initiated efforts in
2008 that although they had a negative impact on 2008 cash flow
were value-adding. For example, the Companys early
repurchase in 2008 of notes due in January 2009 had a negative
cash impact in 2008 but yielded net savings of approximately
$2 million. As more fully described below under
Elements of Executive Compensation Annual
Incentive, adjustments were made in calculating cash flow
for purposes of determining 2008 annual incentive awards in
order not to penalize management for these efforts.
USEC management also achieved a number of key business
objectives in 2008, including (1) progress in our efforts
with respect to the centrifuge machine that we will deploy in
the American Centrifuge Plant, with the continued operation of
prototype machines in our Lead Cascade test program, which has
now operated for more than 150,000 total machine hours;
(2) transferring technology to our strategic suppliers to
manufacture components for our centrifuge machines;
(3) selling output from the American Centrifuge Plant;
(4) positioning the Company to receive a loan guarantee
from the U.S. Department of Energy (DOE) to
fund the completion of the ACP; (5) performing a
comprehensive analysis of the activities, steps, processes,
systems and organization infrastructure needed during the period
of transition through commercial deployment of the ACP;
20
and (6) strengthening our core operations by producing the
most enrichment at our Paducah gaseous diffusion plant in
14 years while achieving one of their best safety records
ever.
However, we ended 2008 with one important disappointment: the
Bush administrations Department of Energy did not take
action to select any advanced energy projects for funding under
its Loan Guarantee Program. That remains one of
managements top priorities as we enter 2009. The
uncertainty surrounding project funding forced us in early 2009
to begin taking steps to conserve cash and reduce the planned
escalation of American Centrifuge project construction and
machine manufacturing activities until we gain greater clarity
on potential funding for the project through the DOE Loan
Guarantee Program.
Setting the tone at the top, management began the
cash conservation program with recommending to the Compensation
Committee a freeze in base salaries for senior officers, capping
2008 annual incentive awards at the target level, and requiring
that 50% (rather than 35%, or 0% for someone who had met their
stock ownership guidelines) of 2008 annual incentive awards for
officers be taken in restricted stock instead of cash.
Mr. Welch, President and Chief Executive Officer, elected
to take his entire 2008 annual incentive award in restricted
stock, as he has done now for three consecutive years. Director
compensation for
2009-2010
was also frozen at the
2008-2009
level (all non-employee directors already receive more than 50%
of their compensation in equity and have not received an
increase in their cash compensation since 2007). The
Compensation Committee determined that these actions were
appropriate in responding to the current business circumstances
while rewarding performance and recognizing the importance of
retention of executives and other key employees who are critical
to the Companys success.
Taking into account the achievements of management and other key
employees combined with the focus on cash conservation discussed
above, the five executives named in the Summary Compensation
Table that follows this discussion (whom we refer to as our
named executive officers) were awarded annual
incentive awards that were just below target for 2008 and that
were payable at least 50% in restricted stock (100% in the case
of Mr. Welch).
December 2008 marked the end of the three-year performance
component of the Long-Term Incentive Program described below
under Long-Term Incentive Compensation
2006 2008 Executive Incentive Plan, which
covers the performance period March 1, 2006 through
December 31, 2008. Despite the significant achievements of
management during the period and the continued progress on the
American Centrifuge project, the failure to fully achieve
financial and economic performance targets related to the
American Centrifuge project that were set back in 2006 at an
early stage in the project, coupled with declines in the
Companys stock price, led to performance and payout well
below target for the plan (56% of target levels). In light of
general economic and market conditions and the short-term
uncertainty facing the Company with respect to the financing of
the American Centrifuge project, which impacts the project cost
and schedule, the Compensation Committee determined to postpone
the implementation of a new three-year Executive Incentive Plan
until at least 2010 and instead to replace the plan for 2009
with a one-year performance based award that vests over three
years, as discussed under Long-Term Incentive
Compensation 2009 Performance Plan.
Looking ahead, the Compensation Committee is particularly
focused on retention of key executives and employees during this
critical transition period while still maintaining a focus on
pay-for-performance.
Compensation
Philosophy and Objectives
The Compensation Committee on behalf of the Board of Directors
oversees an executive compensation program designed to enable
USEC to attract highly talented individuals. This program
reflects the Companys philosophy that the majority of an
executives compensation should be based on his or her
overall contribution to the success of the Company and the
creation of long-term value for our shareholders. This
pay-for-performance philosophy is the basis for the development
of the Companys executive compensation program.
21
In keeping with this philosophy, the Compensation Committee has
established the following objectives for the Companys
executive compensation program:
|
|
|
|
|
Compensation should be aligned with shareholders
interests: The program seeks to align the
interests of executives with the long-term interests of our
shareholders by providing strong incentives to maximize
long-term value for our shareholders. Long-term stock ownership
by our executives is emphasized to provide ongoing alignment.
|
|
|
|
Compensation should support our business
strategy: Our compensation program is designed to
reinforce our underlying business strategy and objectives by
rewarding successful execution of our business plan, with
performance goals tied to our business plan. Our success is
heavily dependent on our ability to attract and retain
experienced executives who consistently deliver operational and
financial results.
|
|
|
|
Compensation should reward performance: A
substantial portion of the total compensation opportunity is
variable and dependent upon the Companys operating and
financial performance.
|
|
|
|
Compensation opportunities should be market
competitive: To accomplish these guiding
principles, it is essential for the compensation and benefits
programs to provide competitive compensation relative to the
labor markets for our executives while maintaining fiscal
responsibility for our shareholders.
|
|
|
|
Compensation and benefits programs should encourage long-term
retention: Our compensation and benefits
programs, including our retirement plans are intended to
encourage retention and reward continuity of service, which is
particularly important due to the unique skill sets of our
executives.
|
The elements of direct compensation for the named executive
officers are base salary, cash and restricted stock awards under
the Companys annual incentive program, and long-term
incentive awards. The long-term awards include restricted stock,
non-qualified stock options and a performance component. Named
executive officers are also eligible for other elements of
indirect compensation, including retirement benefits. In setting
the terms of executive compensation, the Compensation Committee
considers all elements of compensation, both direct and
indirect. In addition, the Compensation Committee has instituted
stock ownership guidelines for all executives providing an
additional alignment between the interests of executives and
shareholders.
Director compensation is established by the Board upon the
recommendation of the Compensation Committee. In recommending
director compensation, the Compensation Committee consults with
Watson Wyatt Worldwide (Watson Wyatt), an
independent compensation consultant. Watson Wyatt utilizes
compensation information from a peer group of companies with
board members with comparable experience to the Companys
Board. Watson Wyatts role is more fully described under
Setting Executive Compensation.
Role of
Executive Officers in Compensation Decisions
The Compensation Committee believes that input from management
provides useful information and points of view to assist the
Compensation Committee. The Chief Executive Officer and the
Senior Vice President of Human Resources and Administration
provide support to the Compensation Committee. The Chief
Executive Officer gives the Compensation Committee performance
assessments and compensation recommendations for each of the
other named executive officers. Those recommendations are
considered by the Compensation Committee with the assistance of
the compensation consultant. The Chief Executive Officer and the
Senior Vice President of Human Resources and Administration
generally attend Compensation Committee meetings but are not
present for the executive sessions or for any discussion of
their own compensation. The Chief Financial Officer also attends
Compensation Committee meetings as needed to report on financial
items. Each Compensation Committee meeting usually includes an
executive session without members of management present.
22
Setting
Executive Compensation
Based on the foregoing objectives, the Compensation Committee
has structured the Companys executive compensation program
to motivate executives to achieve the business goals set by the
Company and to reward executives for achieving these goals.
In furtherance of this, the Compensation Committee has retained
the services of Watson Wyatt. Watson Wyatt provides the
Compensation Committee with independent compensation data,
analysis and advice. Watson Wyatt reports to the Compensation
Committee and under the Compensation Committees charter,
the Compensation Committee has sole authority to retain and
terminate the compensation consultant and to approve the
consultants fees and other retention terms. Watson Wyatt
does not do any work for USEC other than work performed for the
Compensation Committee. Throughout 2008, Watson Wyatt worked
closely with the Compensation Committee and attended all
Compensation Committee meetings. Examples of projects assigned
to Watson Wyatt included market studies of executive pay and of
Board pay, development of a revised peer group for executive
compensation benchmarking, a review of the value of Company
equity owned by executives, a review of walk-away values as of
year end, and a presentation on executive compensation trends to
the Board.
Watson Wyatt uses compensation information from (1) a
Peer Group of companies in specific industries in
which we compete for executive talent, through a review of their
proxy statements; and (2) general industry companies with
revenues comparable to USECs through the pooled survey
data described below.
Currently, as the only uranium enrichment company in the United
States, USEC does not have direct publicly traded
U.S. peers. Therefore, the Peer Group was selected by the
Compensation Committee on the recommendation of Watson Wyatt and
includes energy/utility and processing-oriented companies
similar in size to the Company. The selected companies in the
Peer Group are companies that fall within a reasonable range of
comparison factors such as revenue and market capitalization,
and/or that
we may compete with for executive talent. The Peer Group was not
picked on the basis of executive compensation levels. The Peer
Group during 2008 was comprised of the following
15 companies:
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2007
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12/31/08
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Ticker
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Revenue
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Market Cap
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Company Name
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Symbol
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($MM)
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($MM)
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SIC Code
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SIC Description
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Western Refining Inc
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WNR
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7,305
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691
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2911
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PETROLEUM REFINING
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Frontier Oil Corp
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FTO
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5,270
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|
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1,913
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|
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|
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2911
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PETROLEUM REFINING
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Holly Corp
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HOC
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|
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4,792
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1,435
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|
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2911
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PETROLEUM REFINING
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Bemis Co Inc
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BMS
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3,779
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2,360
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2670
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CONVRT PAPR,PAPRBRD,EX BOXES
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Cytec Industries Inc
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CYT
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|
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3,640
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|
|
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1,000
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|
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|
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2890
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MISC CHEMICAL PRODUCTS
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NSTAR
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|
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NST
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|
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|
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3,345
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|
|
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3,897
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|
|
|
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4911
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|
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ELECTRIC SERVICES
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Georgia Gulf Corp
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GGC
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|
|
|
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3,157
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|
|
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86
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|
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2810
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INDL INORGANIC CHEMICALS
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Arch Coal Inc
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ACI
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2,984
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2,327
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1220
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BITUMINOUS COAL, LIGNITE MNG
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FMC Corp
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FMC
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|
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2,633
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|
|
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3,311
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|
|
|
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2800
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CHEMICALS & ALLIED PRODUCTS
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Cabot Corp
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|
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CBT
|
|
|
|
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2,616
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|
|
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1,001
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|
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|
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2890
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|
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MISC CHEMICAL PRODUCTS
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Albemarle Corp
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|
|
ALB
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|
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2,336
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|
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2,034
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|
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2890
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MISC CHEMICAL PRODUCTS
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Hercules Inc
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HPC
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2,136
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N/A
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|
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2890
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MISC CHEMICAL PRODUCTS
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USEC Inc
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USU
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|
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1,928
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|
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602
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|
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2810
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INDL INORGANIC CHEMICALS
|
PNM Resources Inc
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|
PNM
|
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1,914
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|
|
|
872
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4931
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ELECTRIC & OTHER SERV COMB
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Westar Energy Inc
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|
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WR
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|
|
|
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1,727
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|
|
|
2492
|
|
|
|
|
4931
|
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ELECTRIC & OTHER SERV COMB
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Arch Chemicals Inc
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ARJ
|
|
|
|
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1,492
|
|
|
|
649
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|
|
|
|
2800
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|
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CHEMICALS & ALLIED PRODUCTS
|
50th Percentile
|
|
|
|
|
|
|
|
2,808
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|
|
|
2,344
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|
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|
During 2008, the Compensation Committee asked Watson Wyatt to
conduct a review of its Peer Group in light of potential changes
in the types of companies we may be competing with for executive
talent as we focus on the deployment of the American Centrifuge
project. Watson Wyatt worked with members of the Compensation
Committee to develop a new Peer Group of companies for purposes
of evaluating executive
23
compensation for 2009. In selecting companies for the Peer
Group, consideration was given to several factors, including
industry relevance (focusing on specialty chemicals, aerospace
and defense, construction and engineering, utilities with
nuclear operations, and other utilities), business operations
and comparable size. This new Peer Group includes the following
nineteen companies, five of which were included in the 2008 Peer
Group (denoted by an asterisk): Albemarle Corp.*, Alliant
Techsystems Inc., Arch Chemicals Inc.*, Arch Coal Inc.*, Cameco
Corp., CONSOL Energy Inc., Curtiss-Wright Corp., Cytec
Industries Inc.*, Esterline Technologies Corp., FMC Corp.*,
Goodrich Corp., Hexcel Corp., McDermott International Inc., OM
Group, Orbital Sciences Corp., Rockwell Collins Inc., Rockwood
Holdings Inc., Shaw Group Inc., and Teledyne Technologies. The
Peer Group is different from the peer group index utilized in
the performance graph included in our annual report on
Form 10-K,
which is more focused on companies with similar business
attributes, primarily utilities with nuclear power generation
capabilities, but also including chemical processing companies
and aluminum companies (that are also large users of electric
power).
Peer Group compensation data is limited to publicly available
information and therefore does not provide precise comparisons
by position as offered by more comprehensive survey data. As a
result, our Compensation Committee uses Peer Group data on a
limited basis to analyze the competitiveness of our target
compensation and our general compensation philosophy.
Because the Peer Group data is limited, our Compensation
Committee also used commercially available survey data provided
to it by Watson Wyatt to identify market-median and other market
elements related to our 2008 compensation program. This survey
data included the 2008/2009 Watson Wyatt Data Services Top
Management Report, the 2008 Mercer Executive Compensation
Survey, and a proprietary Watson Wyatt large company
compensation survey. This survey data includes pooled
compensation data from many companies and the findings are
segregated by, for example, revenue level, number of employees,
and industry. Using survey cuts of durable goods manufacturing
organizations and general manufacturing organizations with
comparable annual revenues, the Compensation Committee reviewed
pooled compensation data for positions similar to those held by
each named executive officer. In the case of Messrs. Welch
and Barpoulis, whose positions are the most directly comparable
with those in other companies, the Compensation Committee also
used a survey cut of metals and mining organizations with
comparable annual revenues. The Compensation Committee is not
provided with the names of the companies making up these surveys
and is only privy to the statistical summaries provided in these
surveys.
Based on the objectives outlined above, the Compensation
Committee strives to set target opportunity compensation levels
to be competitive with the market in which the Company competes
for executive talent. Actual compensation may be above or below
targets based on both the performance of the Company and of the
individual. Executives may realize compensation above target
levels based on achieving outstanding results. This approach is
intended to ensure that there is a direct relationship between
the Companys overall performance in the achievement of its
financial, operational and strategic goals and each individual
executives total compensation. In making its decisions on
an individuals compensation, the Compensation Committee
considers the nature and scope of all elements of an
executives total compensation package, the
executives responsibilities and his or her effectiveness
in supporting Company performance.
The Compensation Committee strives to align each component of
the executives compensation as well as the total
compensation opportunity with the competitive market and the
Companys objectives. Generally, as employees move to
higher levels of responsibility with greater ability to
influence the Companys results, a greater proportion of
pay will be at risk and dependent on Company
performance. The Compensation Committees goal is to strike
the appropriate balance among base salary, annual, and long-term
incentives, and it may adjust the allocation of pay to best meet
the Companys objectives or maintain compensation equity
with the competitive market in which the Company competes for
executive talent.
24
Elements
of Executive Compensation
TOTAL
DIRECT COMPENSATION
For 2008, total direct compensation for the named executive
officers consisted of three key elements: base salary,
performance-based annual incentive, and performance-based and
time-based long-term incentive compensation. The chart below
shows the relative proportion of each program (based on target
levels):
Information
Related to the CEO
Base
Salary: $900,000
Target Annual Incentive: $900,000 (1X or 100% of base salary)
Target Long-Term Incentive: $2,250,000 (2.5X or 250% of base
salary)
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Fixed vs. Variable Pay
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Short-Term vs. Long-Term Pay
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Cash vs. Equity-Based Pay
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Fixed 22%
(Base Salary)
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Short-Term 44%
(Salary + Annual Incentive Value)
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Cash 37%
(Salary + 65% of Annual Incentive Value)
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Variable 78%
(Annual + Long-Term Incentive Value)
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Long-Term 56%
(Long-Term Incentive Value)
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Equity-Based 63%
(35% of Annual Incentive Value + Long-Term Incentive Value)
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Information
Related to the Other Named Executive Officers
Base
Salary: $370,000 $470,000 (Range)
Target Annual Incentive: $259,000 $329,000 (.7X or 70% of
base salary)
Target Long-Term Incentive: $518,000 $846,000 (1.4X or
140% of base salary to 1.8X or 180% of base salary)
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Fixed vs. Variable Pay
|
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Short-Term vs. Long-Term Pay
|
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Cash vs. Equity-Based Pay
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Fixed 29-32%
(Base Salary)
|
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Short-Term 49-55%
(Salary + Annual Incentive Value)
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Cash 42-47%
(Salary + 65% of Annual Incentive Value)
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Variable 58-61%
(Annual + Long-Term Incentive Value)
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Long-Term 45-51%
(Long-Term Incentive Value)
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Equity-Based 53-58%
(35% of Annual Incentive Value +
Long-Term Incentive Value)
|
|
Observations
Regarding Mix of Total Direct Compensation
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The value of long-term incentives is generally about double that
of the annual incentive to weight an executives
compensation toward a focus on long-term rather than short-term
goals.
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The amount of variable or at-risk compensation is
higher for the Chief Executive Officer than the other named
executive officers in light of his greater responsibility and
ability to influence the Companys results.
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Annual incentives are normally paid 65% in cash and 35% in
restricted stock. If an executive has met his or her stock
ownership guidelines, the amount of restricted stock received
may be less as they may elect to receive a greater proportion of
their annual incentive in cash. Alternatively, an executive may
elect to receive a greater proportion of his annual incentive in
restricted stock in lieu of cash.
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|
|
|
For 2008, annual incentive awards were paid 50% in restricted
stock (100% in the case of the CEO). This had the effect of
further reducing the amount of cash compensation.
|
Each year, using the resources and services of its compensation
consultant, the Compensation Committee evaluates compensation
levels for each of the executive officers of the Company. In
setting compensation for 2008, the Compensation Committee
reviewed and considered total compensation for each named
executive
25
officer, including a review of tally sheets that provide the
value of (1) historic and current elements of each
officers compensation (including savings plans, pension
plans, health and welfare benefits and perquisites);
(2) stock, stock options and restricted stock units held by
the executive at year-end in the Companys incentive and
benefits plans; and (3) a review of compensation that would
be paid upon termination of employment under various scenarios.
Base
Salary
The base salary element of compensation is intended to provide a
stable annual salary at a level consistent with individual
contributions. The Compensation Committee recommends base salary
levels for executive officers to the Board of Directors for its
approval. The Compensation Committee consults with the Chief
Executive Officer with respect to the recommended base salaries
for the other officers.
USEC is engaged in a complicated, unique and technologically
sophisticated business, whose success will have a major impact
on the nations energy, environmental and national security
goals. The success of our business depends on our ability to
retain key executives, managers and other skilled personnel,
some of whom have been involved in the development of centrifuge
technology since the early 1980s and whose experience is
virtually irreplaceable. In light of the unique qualifications
and experience of our key executives and the importance of
retaining these executives during the Companys critical
transition period, following a review of executive pay and
consultation with its compensation consultant, in February 2008,
the Compensation Committee decided to reposition 2008 base
salaries to approximately the 75th percentile of the market
(from within plus or minus 10% of the 50th percentile of
the market for 2007), as determined using market data provided
to the Compensation Committee by Watson Wyatt, which includes a
combination of commercially available pooled survey data and
Peer Group data. Watson Wyatt averages the data from the Peer
Group with the survey data to create the market data reviewed by
the Compensation Committee. In setting individual base salaries,
consideration was given to (1) the performance of the
Company; (2) the individual performance of each executive;
(3) the executives scope of responsibility in
relation to other officers and key executives within the
Company; and (4) any retention issues. In evaluating
performance, the Compensation Committee considers the
recommendations of the Chief Executive Officer with respect to
the performance and contribution of individual named executive
officers and also considers the performance measures under the
Annual Incentive Program. Base salaries are set at the beginning
of the year at the same time that annual incentive awards for
the prior year are made under the Annual Incentive Program.
The following adjustments were made in 2008 to the base salaries
for the named executive officers. Following these adjustments,
the base salaries of the named executive officers were between
approximately 95% and 108% of the 75th percentile of the
market as determined by the compensation consultant. The Chief
Executive Officers base salary was increased to
approximately 100% of the 75th percentile of the market.
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Name
|
|
2007 Salary
|
|
|
Adjustment
|
|
|
2008 Salary
|
|
|
John K. Welch
|
|
$
|
830,000
|
|
|
$
|
70,000
|
|
|
$
|
900,000
|
|
John C. Barpoulis
|
|
$
|
350,000
|
|
|
$
|
50,000
|
|
|
$
|
400,000
|
|
Philip G. Sewell
|
|
$
|
425,000
|
|
|
$
|
45,000
|
|
|
$
|
470,000
|
|
Robert Van Namen
|
|
$
|
371,000
|
|
|
$
|
39,000
|
|
|
$
|
410,000
|
|
W. Lance Wright
|
|
$
|
320,000
|
|
|
$
|
50,000
|
|
|
$
|
370,000
|
|
Increases in base salaries have the effect of increasing other
elements of total compensation, including annual incentives,
long-term incentives, and retirement benefits. In setting base
salaries for the named executive officers, the Compensation
Committee considers the effects of such increases on other
elements of total compensation.
As part of its previously described cash conservation efforts,
the Compensation Committee froze the base salaries for the named
executive officers for 2009 at the 2008 level.
26
Annual
Incentive
The Company has established an Annual Incentive Program to
reward the achievement of critical annual financial and
operational performance goals. Under the Annual Incentive
Program, executive officers and certain other key employees have
the opportunity to earn an annual incentive based on the
achievement of pre-determined annual performance objectives.
Executive officers may earn between 0% and 150% of their target
annual incentive based on a combination of Company financial and
individual performance measures described below. The Annual
Incentive Program is a subset of the Companys 1999 Equity
Incentive Plan, a shareholder approved plan.
Form of Awards. Annual incentives are
generally paid 65% in cash and 35% in restricted stock. As
discussed above, for 2008 awards paid in 2009, executives were
required to take 50% of their annual incentive award in
restricted stock in order to conserve cash and Mr. Welch
elected to take his entire annual incentive award in restricted
stock. The restricted stock portion of the award is granted
seven days after the release of the Companys annual
earnings and vests one year from the date of grant, subject to
accelerated vesting in certain circumstances. The number of
shares of restricted stock to be issued is calculated based on
the New York Stock Exchanges closing price of the
Companys common stock on the date of grant. The
Compensation Committee determined that including a restricted
stock component in the annual incentive conserves cash, provides
the executive with an additional incentive to maintain
shareholder value, further links Company management and
shareholders, promotes executive ownership and acts as a
management retention vehicle.
Normally, if a named executive officer has met his stock
ownership guidelines, he is viewed as having already built a
significant ownership stake in the Company and is entitled to
receive all of his annual incentive in cash. If instead he
elects to receive any portion of his annual incentive in the
form of restricted stock he would receive an additional
incentive payment (in the form of restricted stock that vests in
equal annual installments over three years from the date of
grant) equal to 20% of the portion of the annual incentive that
he took in restricted stock in lieu of cash. For 2008, all of
the named executive officers had satisfied their stock ownership
guidelines. Since the Compensation Committee determined that the
20% additional restricted stock incentive payment remained
applicable on any amounts being taken in restricted stock that
would have been payable in cash and since the named executive
officers received 50% (100% for Mr. Welch) of their annual
incentive in restricted stock, they also received additional
restricted stock with a value equal to 10% (20% for
Mr. Welch) of their annual incentive award.
Target Levels. Target annual incentive levels
are set by the Compensation Committee in consultation with its
compensation consultant. The Compensation Committee uses
commercially available survey data (previously described) and
analysis by its compensation consultant to compare annual
incentive payments to the market. For 2008, target levels were
set based on a percentage of the executives base salary,
as follows:
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Position
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|
Target Level
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|
|
Rationale
|
|
CEO
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100%
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|
|
Provides executives with the motivation
and reward to perform at the highest level in achieving critical
annual financial and operating objectives.
Goal of targeting the named executive
officers base salary plus the annual incentive to a
competitive level.
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|
|
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Other named executive officers
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|
|
70%
|
|
Performance Measures. For 2008 annual
incentive awards, our Compensation Committee set the performance
measures as described in the table below:
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|
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|
|
|
|
Performance Measure
|
|
Weight
|
|
|
Rationale
|
|
Corporate Quantitative Goals
|
|
|
55
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%
|
|
|
Gross profit margin percentage (30%)
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|
|
|
|
|
Gross profit margin percentage is an
important measure of the Companys operational
profitability.
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27
|
|
|
|
|
|
|
Performance Measure
|
|
Weight
|
|
|
Rationale
|
|
Cash flow from operations before
American Centrifuge expense, interest and taxes (Adjusted
cash flow from operations) (25%)
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|
|
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|
|
Adjusted cash flow from operations is a
non-GAAP measure of cash created by existing operations with a
slightly lower weighting due to potential timing variances. ACP
expense is excluded because it is covered by the ACP earned
value metric. Interest and taxes are excluded because most
members of management cannot influence these factors.
|
American Centrifuge project (ACP) earned
value (35%) (measures project performance quantitatively by
comparing work completed against work planned at a given date in
the project schedule)
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|
|
|
|
|
ACP earned value is an important
non-GAAP measure of managements progress on the ACP for
capital invested, and is weighted most heavily because of its
strategic importance.
|
Selling, general and administrative
(SG&A) expense, not including other compensation and stock
based compensation (Adjusted SG&A expense) (10%)
|
|
|
|
|
|
Adjusted SG&A expense is a non-GAAP
measure of controllable overhead expenses. Other compensation
and stock based compensation are excluded because they can be
influenced by stock price volatility and other subjective
variables.
|
Key Performance Objectives
|
|
|
45
|
%
|
|
|
Individual performance measures weighted
between 10% and 35%
|
|
|
|
|
|
Based on the Companys strategic
initiatives and operating plan. The weight of each of the key
performance objectives varied by individual based on their areas
of responsibility.
|
Each corporate financial performance measure, or corporate
quantitative goal, comprises threshold, target and maximum
performance levels, which, if achieved, results in payments of
0%, 100% and 150% of that target financial performance measure
component, respectively. Proportional payments are made for
achievement between threshold, target and maximum performance
levels. If the threshold corporate financial performance is not
achieved, no amount is paid for that financial performance
measure component. The threshold levels were set based on the
Companys budget for 2008 and the target and maximum levels
were set based on stretch targets taking into account potential
opportunities for management to effect positive impacts and were
not designed to encourage or reward the taking of excessive or
unnecessary risk. The table below describes the corporate
quantitative goal target and achievement levels for 2008.
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
Adjusted Cash
|
|
|
|
|
|
|
Margin
|
|
Flow from
|
|
ACP Earned
|
|
Adjusted SG&A
|
Level
|
|
Percentage (30%)
|
|
Operations (25%)
|
|
Value (35%)
|
|
Expense (10%)
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|
Maximum (150%)
|
|
15.5%
|
|
$220 million
|
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1.5
|
|
$36 million
|
Target (100%)
|
|
14.0%
|
|
$140 million
|
|
1.0
|
|
$43 million
|
Threshold (0%)
|
|
11.5%
|
|
$25 million
|
|
0.5
|
|
$50 million
|
Actual Performance (95%)
|
|
14.2% (102%)
|
|
$98 million* (81%)
|
|
0.97 (97%)
|
|
$42.6 million (101%)
|
|
|
* |
The Annual Incentive Program permits the Compensation Committee
to adjust performance based criteria or awards in recognition of
unusual or non-recurring events affecting the Company.
Adjustments to Cash Flow from Operations totaling
$45.9 million were made for net interest savings and bond
discount on the early repurchase in 2008 of notes due in January
2009, power cost credits received in early 2009 for 2008
payments, and prepaid taxes.
|
For 2008, the Compensation Committee set specific individual
performance measures for our Chief Executive Officer and adopted
specific individual performance measures recommended by the
Chief Executive Officer for our remaining named executive
officers (which flow down from the key performance objectives
established for the Chief Executive Officer). The 2008 key
performance objectives for the Chief Executive Officer and the
other named executive officers included objectives aimed at the
following five objectives. As detailed in the table below, the
2008 key performance objectives were all designed to achieve the
Companys
28
strategic business plan and accordingly were designed to be
achievable and not to encourage or reward excessive or
unnecessary risk, but to require a substantial effort and
initiative on the part of the individual named executive
officers.
|
|
|
Key Performance Objective
|
|
Difficulty
|
|
Strengthen near-term performance of the
business through efforts to control costs and increase revenues.
|
|
Achievement of initiatives relating to
expanding revenue generation and controlling costs involve
substantial effort and initiative, including efforts with
respect to contracting, managing electric power costs, and
improving plant operations.
|
Meet critical design, performance and
deployment objectives relating to the Companys American
Centrifuge Plant.
|
|
The American Centrifuge project is a
unique project and the Companys deployment schedule and
objectives are ambitious; therefore achievement of this
objective is subject to a number of uncertainties and involves
substantial effort and initiative.
|
Perform a comprehensive analysis of the
activities, steps, processes, systems and organization
infrastructure needed during the period of transition through
commercial deployment of the American Centrifuge Plant,
including optimal use of the Paducah gaseous diffusion plant,
Russian purchases and inventory.
|
|
Due to the number of risks and
uncertainties facing the Company, implementation of a smooth
transition plan involves a great deal of strategic planning and
substantial effort and initiative.
|
Refine, document and begin
implementation of a centrifuge production-based business model,
focusing on long-term enrichment contracts with customers and
managements capital structure goals. Take steps to improve
the Companys long-term credit profile in advance of
issuing debt.
|
|
This includes contracting for output
from the American Centrifuge Plant and securing the significant
amount of capital needed to complete construction of the
American Centrifuge Plant, both of which are challenging because
of the uncertainties relating to the American Centrifuge Plant;
therefore achievement of this objective involves substantial
effort and initiative.
|
Maintain a stable supply under the
Russian highly enriched uranium contract and appropriate
restrictions on imports of low enriched uranium into the U.S.
market.
|
|
USEC purchases low enriched uranium from
dismantled Soviet nuclear weapons under the Megatons to
Megawatts nonproliferation program with Russia, which is a
unique program. In addition, Russia has the largest nuclear fuel
industry in the world and is aggressively seeking to expand its
share of the world market, in particular the United States.
Therefore, this objective is subject to a number of
uncertainties and involves substantial effort and initiative.
|
For individual named executive officers (other than the Chief
Executive Officer), their particular objectives were a more
detailed subset of these five objectives with a focus on such
named executive officers functional area. For example,
Mr. Barpoulis specific objectives as Chief Financial
Officer generally related to financial and accounting matters;
Mr. Sewells specific objectives as Senior Vice
President, American Centrifuge and Russian HEU generally related
to American Centrifuge and Russian HEU program management
matters; Mr. Van Namens specific objectives as Senior
Vice President, Uranium Enrichment generally related to uranium
enrichment operations and marketing and sales matters; and
Mr. Wrights specific objectives as Senior Vice
President, Human Resources and Administration generally related
to functions providing centralized IT, human resources and
security support to the Company. There are no individual
performance factors in addition to, and separate from, the five
factors listed in the table above and each of the named
executive officers key performance objectives were
designed to be difficult to achieve and to challenge the
executive as set forth in the table above.
29
The Compensation Committee reviews and approves the achievement
level and incentive payment for each named executive officer
under the Annual Incentive Program. The achievement levels and
incentive payment percentages approved by the Compensation
Committee for the named executive officers for 2008 are
summarized in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
|
|
|
Corporate
|
|
|
Annual Incentive
|
|
|
|
Objective
|
|
|
Quantitative Goals
|
|
|
Award (as a
|
|
|
|
Achievement Level
|
|
|
Achievement Level
|
|
|
percentage of
|
|
Name
|
|
(45%)
|
|
|
(55%)
|
|
|
target)
|
|
|
John K. Welch
|
|
|
99
|
%
|
|
|
95
|
%
|
|
|
97
|
%
|
John C. Barpoulis
|
|
|
103
|
%
|
|
|
95
|
%
|
|
|
99
|
%
|
Philip G. Sewell
|
|
|
103
|
%
|
|
|
95
|
%
|
|
|
99
|
%
|
Robert Van Namen
|
|
|
100
|
%
|
|
|
95
|
%
|
|
|
97
|
%
|
W. Lance Wright
|
|
|
100
|
%
|
|
|
95
|
%
|
|
|
97
|
%
|
Long-Term
Incentive Compensation
The Compensation Committee is committed to long-term equity
incentive programs for executives that promote the long-term
growth and success of the Company. The long-term incentive
compensation is designed to ensure that the executive
decision-making process maintains a balanced focus on both
immediate measures of success and on the effective growth and
development of the business three to five years in the future.
The Long-Term Incentive Program under the shareholder-approved
1999 Equity Incentive Plan permits the Compensation Committee to
grant a variety of stock-based awards, including restricted
stock, stock options and restricted stock units (RSUs).
Long-term incentives are designed to more closely align
executive officers and other employees interests
with those of the shareholders and are a key element and
significant component of market-competitive total compensation.
The Long-Term Incentive Program is designed to make annual
grants of restricted stock and non-qualified stock options with
vesting periods of three years to executive officers and other
program participants. The Long-Term Incentive Program for 2008
also includes a three-year performance component. In
consultation with its compensation consultant, the Compensation
Committee established stock option and restricted stock award
levels that are designed to provide the executive with total
direct compensation (base salary, annual incentives and
long-term incentives) at a competitive level.
Annualized target award levels for named executive officers
under the Long-Term Incentive Program for 2008 ranged from 140%
to 250% of base salary depending on the executives
position, and were comprised of the following (as more fully
described below):
|
|
|
|
|
|
|
|
|
|
|
Annualized Target
|
|
Percentage of Annualized Long-Term Incentive Value
|
|
|
Long-Term Incentive Value
|
|
Restricted Stock
|
|
Stock Option
|
|
Executive
|
Position
|
|
(as a Multiple of Base Salary)
|
|
Awards
|
|
Awards
|
|
Incentive Plan
|
|
CEO
|
|
2.5X
|
|
30%
|
|
30%
|
|
40%
|
Other named executive officers
|
|
1.4X to 1.8X
|
|
29% to 33%
|
|
29% to 33%
|
|
33% to 43%
|
As previously described, in light of the unique qualifications
and experience of our key executives and the importance of
retaining these executives during the Companys critical
transition period, the Compensation Committee determined during
2008 to make certain changes to the Companys compensation
program. The Compensation Committee determined to reposition
overall total direct compensation for the named executive
officers and certain other executives to approximately the
75th percentile of the market, as determined using market
data provided to the Compensation Committee by Watson Wyatt.
Accordingly, adjustments were made to the annualized target
levels of restricted stock and nonqualified stock options
granted to the named executive officers. These changes are
described below.
30
Restricted Stock Awards. Named executive
officers (and other program participants) receive an annual
grant of restricted stock as a part of their long-term
incentive. The value of the grant is equal to a percentage of
the named executive officers base salary as follows:
|
|
|
|
|
|
|
|
|
|
|
2007 Target %
|
|
|
2008 Target %
|
|
Name
|
|
(of base salary)
|
|
|
(of base salary)
|
|
|
John K. Welch
|
|
|
50
|
%
|
|
|
75
|
%
|
John C. Barpoulis
|
|
|
35
|
%
|
|
|
60
|
%
|
Philip G. Sewell
|
|
|
35
|
%
|
|
|
60
|
%
|
Robert Van Namen
|
|
|
35
|
%
|
|
|
60
|
%
|
W. Lance Wright
|
|
|
35
|
%
|
|
|
40
|
%
|
These shares are granted by the Compensation Committee at fair
market value on the date of grant and vest ratably over three
years, subject to accelerated vesting under certain
circumstances. This grant of restricted stock has no performance
component associated with it. It is a time-based award designed
as a retention-based component in achieving market-based total
direct compensation for the executive. It is also designed to
help increase share ownership by the executive officers. It is
the Compensation Committees belief that stock awards
combined with the Companys requirement for executive
officers to hold significant levels of Company stock provide a
direct incentive to achieve the longer-term performance goals
for the Company.
Stock Option Awards. Named executive officers
(and certain other program participants) also receive an annual
grant of non-qualified stock options. The value of the grant is
equal to a percentage of the named executive officers base
salary as follows:
|
|
|
|
|
|
|
|
|
|
|
2007 Target %
|
|
|
2008 Target %
|
|
Name
|
|
(of base salary)
|
|
|
(of base salary)
|
|
|
John K. Welch
|
|
|
50
|
%
|
|
|
75
|
%
|
John C. Barpoulis
|
|
|
35
|
%
|
|
|
60
|
%
|
Philip G. Sewell
|
|
|
35
|
%
|
|
|
60
|
%
|
Robert Van Namen
|
|
|
35
|
%
|
|
|
60
|
%
|
W. Lance Wright
|
|
|
35
|
%
|
|
|
40
|
%
|
Stock options are valued using the Black-Scholes methodology and
are calculated with the assistance of the compensation
consultant. It is the Companys policy that stock option
grants are made seven days after the release of the
Companys annual earnings and are awarded at the New York
Stock Exchanges closing price of the Companys common
stock on the date of grant. Stock option grants vest ratably
over three years and expire five years after grant, subject to
accelerated vesting under certain circumstances. Each named
executive officers 2008 grant of stock options is detailed
on the Grants of Plan-Based Awards in Fiscal Year 2008 table.
While a number of organizations have recently eliminated or
significantly reduced stock option grants to executives, the
Compensation Committee believes that stock options are a highly
effective way to focus executives on ensuring the long-term
performance of the Company. In addition, the Compensation
Committee believes they are a highly effective tool in aligning
the interests of the executive officers and shareholders toward
sustained, long-term stock performance. Consequently, they
remain a significant component of the incentive mix.
2006 2008 Executive Incentive
Plan. In April 2006, the Compensation Committee
approved a three-year performance component of the
Companys long-term incentive program (the
2006 2008 Executive Incentive Plan)
under the USEC Inc. 1999 Equity Incentive Plan, effective
March 1, 2006. Each of the named executive officers
participated in the 2006 2008 Executive Incentive
Plan. The Compensation Committee, in consultation with its
compensation consultant, identified the need for a focused
long-term program with measurable performance goals. The
2006 2008 Executive Incentive Plan was designed to
focus rewards on a limited number of highly important objective
targets that if completed would significantly add to the
long-term value of the business.
The 2006 2008 Executive Incentive Plan was an
objective, performance-based program which rewarded participants
for successful performance against financial and business
strategy-based targets over a three-year period. The performance
period ran from March 1, 2006 through December 31,
2008 (this reflected a shortened performance period due to
implementation in the first quarter of 2006). Under the
2006 2008
31
Executive Incentive Plan, the Companys named executive
officers were awarded the right to earn shares of the
Companys common stock (or an equivalent amount of cash or
restricted stock units settleable for cash).
Each participants target award was based on an annual
percentage of his base salary at the start of the performance
period as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Target Award
|
|
|
|
|
|
|
(based on a 3-year
|
|
|
|
Annualized Value
|
|
|
performance period,
|
|
Name
|
|
(as a % of base salary)
|
|
|
as a % of base salary)
|
|
|
CEO
|
|
|
100
|
%
|
|
|
300
|
%
|
Other named executive officers
|
|
|
60
|
%
|
|
|
180
|
%
|
For this three-year period, the annual target percentages were
set based on the degree to which an individuals efforts
influence the Companys long-term performance. In setting
the award levels for the 2006 2008 Executive
Incentive Plan, the Compensation Committee worked closely with
its compensation consultant. The consultant analyzed the
three-year award opportunity both as a stand-alone award and as
a part of the executive officers overall total
compensation. Using both commercially available survey data and
Peer Group data (as previously discussed), the Compensation
Committee determined that these award levels were consistent
with the market for similar-sized companies and that executive
officers were receiving market competitive total compensation.
December 2008 marked the end of the three-year performance
period March 1, 2006 through December 31, 2008. Actual
payouts of the awards were determined based on performance
against pre-determined performance goals, described below.
Participants were eligible to receive from 80% (threshold) to
120% (maximum) of their target award for each goal based on
performance, with performance below the 80% (threshold) level
resulting in no award for a goal.
|
|
|
|
|
|
|
Performance Goal
|
|
Weight
|
|
|
Measure/Difficulty
|
|
1. Gross profit for 2008 as measured against internal targets
|
|
|
30%
|
|
|
Threshold: Internal target minus $13 million
Target: Specified internal target (in $ millions) Maximum:
Internal target plus at least $35 million
The Compensation Committee believed that these internal gross
profit targets were achievable yet required considerable effort
and innovation on the part of the executive management team
|
Actual Performance:
|
|
|
|
|
|
$228.2 million, Capped at Maximum (120%)
|
2. USECs total shareholder return (TSR) for the
period as measured against the S&P 500 total shareholder
return (without dividends)
|
|
|
20%
|
|
|
Threshold: USEC TSR between the 45th and 54th
percentile of the S&P 500
Target: USEC TSR between the 55th and 64th
percentile of the S&P 500
Maximum: USEC TSR at the 65th percentile or greater of the
S&P 500
|
Actual Performance:
|
|
|
|
|
|
$4.49/share, Below Threshold (0%)
|
3. Two business performance targets
|
|
|
50%
|
|
|
Related to achieving USECs internal goals relating to the
American Centrifuge program
|
|
|
|
|
|
|
|
3a. Achieving a specified economic
performance of the centrifuge machine (50%)
|
|
|
|
|
|
Threshold: Performance level is within minus 10% of specified
performance level
Target: Specified performance level* is achieved
Maximum: Performance level is 10% or more above specified
performance level
*The specified performance level is classified for purposes of
national security.
|
Actual Performance:
|
|
|
|
|
|
Below Threshold (0%)
|
3b. Completion of a financing plan for
the Companys American Centrifuge plant (50%)
|
|
|
|
|
|
Achievable yet requires considerable effort and innovation on
the part of the executive management team
|
Actual Performance:
|
|
|
|
|
|
Threshold (80%)
|
Total Achievement: 56%
|
|
|
|
|
|
|
32
Each named executive officers payout is included in the
Summary Compensation Table under Non-Equity Incentive Plan
Compensation.
2009 Performance Plan. In light of general
economic and market conditions and the short-term uncertainty
facing the Company with respect to the financing of the American
Centrifuge project, which impacts the project cost and schedule,
in 2009, the Compensation Committee determined to postpone the
implementation of a new three-year Executive Incentive Plan
until at least 2010 and instead to replace the Executive
Incentive Plan for 2009 with a one-year performance based award
that vests over three years (the 2009 Performance
Plan). Under the 2009 Performance Plan, executives are
awarded the right to earn shares of restricted stock of the
Company that vest ratably over three years from March 4,
2009. Target awards for the named executive officers are based
on a percentage of the executives base salary as follows:
CEO: 100%; other named executive officers: 60%. This amount is
equal to the annualized value of the 2006 2008
Executive Incentive Plan that it is replacing. The target number
of shares of restricted stock was calculated based on the
Companys stock price on March 4, 2009 (seven days
after the release of earnings for the year ended
December 31, 2008).
Actual awards, if any, will be determined by performance of the
Company during the period January 1, 2009 through
December 31, 2009 against a pre-determined performance goal
relating to ensuring sufficient liquidity for ongoing Company
operations and attracting capital to support the financing of
the Companys American Centrifuge Plant. Awards will be
granted following the completion of the performance period.
Participants may receive from 80% (threshold) to 120% (maximum)
of their target award based on performance, with performance
below 80% (threshold) level resulting in no award. If, prior to
the grant of an award with respect to the performance period:
(1) there is a change in control of the Company and a
participants employment is terminated by the Company other
than for cause (or by the participant for good reason), fully
vested awards will be made at target regardless of performance;
(2) a participant leaves the Company due to retirement or
termination other than for cause, fully vested pro rated awards
will be made in accordance with performance at the end of the
performance period; and (3) a participant leaves the
Company due to death or disability, fully vested pro rated
awards will be made at target regardless of performance.
Performance must be approved by the Compensation Committee prior
to any award being made.
The Compensation Committee believes that placing a significant
portion of executive officer compensation opportunity in equity
sends a clear message that a primary role of the executive
officer is in building the long-term value of the Company, and
that his own long-term wealth is tied to the long-term success
of the Company.
INDIRECT
COMPENSATION
Retirement
Plans
The Company provides its executive officers with benefits that
are described below and that are intended to be a part of a
competitive compensation package that provides health, welfare
and retirement programs comparable to those provided to
employees and executives at other companies in similar
industries. All employees of USEC Inc., including the named
executive officers, are eligible to participate in the USEC
Savings Program. In addition, all employees of USEC Inc. other
than certain American Centrifuge employees and any non-union
employees hired on or after September 1, 2008 are eligible
to participate in the Employees Retirement Plan of USEC
Inc.
In addition, named executive officers and other executives
designated by the Company are entitled to participate in the
USEC Inc. Executive Deferred Compensation Plan and the Pension
Restoration Plan. Each of the named executive officers also
participates in a supplemental executive retirement plan. The
benefit plan descriptions here and in the Pension Benefits in
Fiscal Year 2008 table provide an explanation of the major
features of these benefit plans.
Savings Plans. Named executive officers have
the opportunity to participate in two defined contribution
savings plans: The USEC Savings Program and the USEC Inc.
Executive Deferred Compensation Plan.
33
The USEC Savings Program is a tax-qualified broad-based 401(k)
employee savings plan. USEC Inc. employees, including the named
executive officers, are able to contribute the lesser of up to
50% of their annual base salary or dollar limits established
annually by the Internal Revenue Service (IRS). The
Company will match 100% of the first 3% of pay that is
contributed to the USEC Savings Program and 50% on the next 2%
of pay contributed. Employee contributions are fully vested upon
contribution and Company match contributions vest 50% after two
years of service and 100% after three years of service. Those
USEC Inc. employees who are not eligible to participate in the
Employees Retirement Plan of USEC Inc. are provided an
enhanced employer matching contribution under the USEC Savings
Program.
In addition to the USEC Savings Program, during 2008, executives
designated by the Company, including the named executive
officers, could participate in the USEC Inc. Executive Deferred
Compensation Plan (the Deferred Compensation Plan).
Mr. Welch, Mr. Van Namen, and Mr. Wright
participated in the Deferred Compensation Plan in 2008. The
Deferred Compensation Plan is intended to be a non-qualified
deferred compensation plan that complies with the regulations of
Section 409A of the Internal Revenue Code of 1986, as
amended. The Deferred Compensation Plan replaced the USEC Inc.
401(k) Restoration Plan, effective January 1, 2008. Account
balances under the 401(k) Restoration Plan were transferred to
the Deferred Compensation Plan. Participation in the Deferred
Compensation Plan is not limited to the Companys officers
but also includes a select group of management and highly
compensated employees. Participants in the Deferred Compensation
Plan may defer up to a maximum of 90% and a minimum of 5% of
base salary and a maximum of 100% and a minimum of 5% of cash
bonus amounts received through the Companys incentive
compensation programs. The Company matches participant
contributions under the Deferred Compensation Plan at the rate
that would apply if they had been contributed to the USEC
Savings Program without regard for any statutory limitations,
reduced by amounts contributed to the USEC Savings Program. A
participant may receive a distribution from the Deferred
Compensation Plan upon a qualifying distribution event such as a
separation from service, disability, death, or in-service
distribution on a specified date, change in control or an
unforeseeable emergency all as defined in the plan.
Distributions from the Deferred Compensation Plan will be made
in cash in a lump sum, annual installments, or a combination of
both, in the manner elected by the participant and provided for
in the plan.
Participants in the USEC Savings Program direct the investment
of their account balances among various funds available under
the plan. Deferred Compensation Plan accounts are deemed to be
invested in a number of mutual funds made available for
designation by the participant.
Pension Plans. Named executive officers have
the opportunity to participate in a qualified pension plan, a
pension restoration plan and one of two supplemental executive
retirement plans (each, a SERP).
The Employees Retirement Plan of USEC Inc. is a broad
based, tax-qualified pension plan whose maximum benefits are
limited by legislation, while the USEC Inc. Pension Restoration
Plan is a non-qualified supplemental pension benefit that is
designed to continue the accrual of pension benefits that exceed
the legislated limits under the Employees Retirement Plan
of USEC Inc. All officers, including the named executive
officers, whose compensation exceeds the qualified plan limits
are automatically enrolled in the USEC Inc. Pension Restoration
Plan. Information regarding the calculation of benefits under
the Employees Retirement Plan of USEC Inc. and the USEC
Inc. Pension Restoration Plan can be found in the narrative
accompanying the Pension Benefits in Fiscal Year 2008 table.
The Company also maintains two SERPs. The USEC Inc. 1999
Supplemental Executive Retirement Plan (the 1999
SERP) was approved by the Compensation Committee in 1999
and Mr. Sewell is the only active participant. The
Compensation Committee decided not to add any additional
participants after 2001. The 1999 SERP provides Mr. Sewell
with a benefit calculated in the form of a monthly annuity equal
to 55% of his final average compensation, with offsets for
benefits received under the Companys retirement programs
and any U.S. government retirement program to which the
Company contributed, and Social Security benefits. More
information regarding the calculation of benefits payable to
Mr. Sewell under the 1999 SERP can be found in the
narrative accompanying the Pension Benefits in Fiscal Year 2008
table.
Messrs. Welch, Barpoulis, Van Namen and Wright participate
in the USEC Inc. 2006 Supplemental Executive Retirement Plan
(the 2006 SERP). As applicable to Mr. Welch,
the 2006 SERP incorporates the
34
terms of a SERP agreed to by the Company in September 2005 in
connection with setting Mr. Welchs initial terms of
employment. The Company agreed to provide Mr. Welch with a
SERP that generally provided for a benefit equal to 30% of final
average pay with five years of service, increasing to 50% with
ten or more years of service, with offsets for benefits received
under the Companys other retirement programs and Social
Security benefits. This new SERP was designed to be less
expensive than the 1999 SERP.
As applicable to other participants, the 2006 SERP provides for
a monthly supplemental retirement benefit equal to 2.5% of final
average pay for each year of service, to a maximum benefit of
50% after 20 years of service, with offsets for benefits
received under the Companys other retirement programs and
Social Security benefits. In determining to implement the 2006
SERP and determining the level of benefits to be provided, the
Compensation Committee worked with its compensation consultant
and reviewed tally sheets that showed the value of total
compensation paid to executives. More information regarding the
calculation of benefits under the 2006 SERP can be found in the
narrative accompanying the Pension Benefits in Fiscal Year 2008
table.
Participation in the 2006 SERP is contingent on the
participants agreeing to comply with certain restrictive
covenants relating to confidentiality, non-competition and
non-solicitation of Company employees for a period of time
following his termination of employment.
Severance
Arrangements
Executive Severance Plan. The Compensation
Committee believes that in the absence of employment agreements
between the Company and its key employees, it is appropriate to
have a reasonable severance policy in place in order to
attenuate concerns about short-term continuity of income and
allow executives to focus on the Companys business. In
2008, the Board approved the USEC Inc. Executive Severance Plan
(the Executive Severance Plan), intended to be an
unfunded welfare plan subject to the Employee Retirement Income
Security Act of 1974, as amended. Payment and benefit levels
under the Executive Severance Plan were not changed from what
was provided under the Companys existing executive
severance policy based on an assessment by the Compensation
Committee, in consultation with its compensation consultant,
that they continued to be competitive and reasonable with
respect to the intent of the program.
Under the Executive Severance Plan, if an executive officer is
terminated by the Company without cause, he is eligible to
receive his current base salary and a prorated share of his
current annual incentive (payable at the end of the performance
period based on actual performance) up to the date of
termination. In addition, as a severance payment he would
receive a cash payment equal to one years base salary at
his current rate and an amount equal to his final average bonus
(generally the average of his last three years annual
incentive awards, both cash and restricted stock). He would also
receive continuation of medical and dental coverage as well as
life insurance paid for by the Company for one year after
termination (or until he received similar coverage from a
subsequent employer, whichever occurs first) and outplacement
assistance services. Severance benefits are contingent upon the
executive executing a release and agreeing to comply with
certain restrictive covenants relating to non-competition and
non-solicitation of Company employees for one year following his
termination of employment. No severance is paid to an employee
who is terminated for cause or who resigns voluntarily.
In addition, if an employee is terminated by the Company other
than for cause, all unvested restricted stock (that vests based
on performance of service) and all stock options would vest and
the employee would have up to one year to exercise all vested
stock options. Awards under the one-year Performance Plan would
be pro-rated based on the period of time in which the
participant was in the plan and would be made at the end of the
one-year performance period based on actual performance.
Change in Control Agreements. The Compensation
Committee believes that change in control agreements are an
important tool for executive retention and the retention of
other key employees. The Company has entered into change in
control agreements with each of the named executive officers.
These agreements have an initial term of three years, which is
automatically extended for additional one-year periods unless
the Board of Directors has given notice of non-renewal. Upon a
change in control, the agreements will expire no earlier than
three years following the date that the change in control
occurs. A change in control is generally
35
defined as the acquisition by a person of 30% or more of the
voting power of the Company, a change in the majority of the
Companys Board, the consummation of certain mergers or
consolidations involving the Company, a sale or disposition of
40% or more of the Companys assets, or a liquidation of
the Company involving the sale of at least 40% of the
Companys assets.
Payment and benefit levels under the change in control
agreements were set when these agreements were put into place
and were based on an assessment by the Compensation Committee of
what was competitive and reasonable with respect to the intent
of the program. The Compensation Committee periodically reviews
the payment and benefit level under these agreements and
reviewed them in 2008, in consultation with its compensation
consultant, and made only technical modifications to the change
in control agreements.
The change in control agreements provide each named executive
officer with certain benefits if there is a change in control of
the Company and within a protected period
beginning three months before and ending three years after that
change in control (the protected period) the Company
terminates his employment for any reason other than cause, or
the executive terminates his employment for good
reason (as defined in the agreement). The Compensation
Committee believes this double trigger is
appropriate because the purpose of the change in control
agreements is to provide enhanced severance protection and not
to provide a windfall upon the change in control. These benefits
are in lieu of any severance benefits the named executive
officer would otherwise be eligible to receive under the
Companys Executive Severance Plan. In order to receive
these benefits, the named executive officer must comply with the
non-competition, non-solicitation, and confidentiality
provisions of the change in control agreement during the term of
the agreement and for 2.5 years thereafter (five years in
the case of the confidentiality provision).
Under the terms of each named executive officers change in
control agreement, if during a protected period he is terminated
other than for cause or terminates his employment for good
reason, he would receive a cash payment of his unpaid base
salary through the date of termination plus all other amounts to
which he was entitled under any compensation or benefit plan of
the Company under the terms of such plans. In addition, as a
change in control payment, he would receive a cash lump sum
payment equal to 2.5 times the sum of his final base salary and
his final average bonus (generally the average of his last three
years annual incentive awards, both cash and restricted
stock). In addition, under the terms of each agreement, the
Company would provide him and his dependents with continuation
of life, accident and health insurance benefits for
2.5 years following the occurrence of the change in control
or, if sooner, until he is covered by comparable programs of a
subsequent employer. In addition, the executive will receive 2.5
additional years of service for purposes of retirement plan
benefits under the SERPs. If the executive receives payments,
whether or not under his or her agreement that would subject him
to any federal excise tax due under section 4999 of the
Internal Revenue Code, the executive will also receive a cash
payment equal to the amount of such excise tax.
In addition, if an employee is terminated by the Company other
than for cause (or by the participant for good reason)
coincident with or following a change in control, all unvested
restricted stock and stock options would vest and the employee
would have up to one year to exercise all vested stock options.
Under the 2009 Performance Plan, in the case of a termination of
employment coincident with or following a change in control for
reasons other than for cause, fully vested awards will be made
at target.
For details of payments under the above arrangements, see the
Potential Payments Upon Termination or Change in Control table.
Perquisites
The Company maintains a limited number of perquisites for senior
executive officers. These include an annual financial counseling
allowance of $7,500 ($15,000 for the Chief Executive Officer)
and an annual executive physical valued at approximately $4,000.
In addition, the Company reimburses the Chief Executive Officer
for annual dues for up to two business or golf organizations or
clubs. Perquisites do not represent a significant compensation
element for any of the named executive officers and the
Compensation Committee is considering phasing some or all of
these out beginning in 2010.
36
Recoupment
of Previously Paid Bonuses
The Companys equity incentive plan includes a claw
back provision that requires repayment of all payments in
settlement of any awards earned or accrued during the
twelve-month period following the first public issuance or
filing with the SEC of a financial document that is subsequently
restated as a result of misconduct. The claw back applies to a
grantee who knowingly or through gross negligence engaged in or
failed to prevent the misconduct or who is subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002.
Tax and
Accounting Treatments of Elements of Compensation
In its deliberations, the Compensation Committee considers the
potential impact of IRC Section 162(m). IRC
Section 162(m) currently disallows a tax deduction for the
Company for individual executive compensation exceeding
$1 million in any taxable year for the Chief Executive
Officer and the other three highest compensated officers (other
than the Chief Financial Officer), other than compensation that
is performance-based under a plan that is approved by the
shareholders of the Company and that meets certain other
technical requirements. Annual incentive awards and awards under
the 2006 2008 Executive Incentive Plan and the 2009
Performance Plan are intended to meet the performance-based
compensation requirements, while base salary, long-term
incentive awards of time-vested restricted stock and stock
options are not.
While the Compensation Committee designs certain components of
executive compensation to preserve deductibility, it believes
that shareholder interests are best served by not restricting
the Compensation Committees discretion and flexibility in
crafting compensation programs, even though such programs may
result in certain non-deductible compensation expenses.
Accordingly, the Compensation Committee may from time to time
approve compensation arrangements for certain officers that are
not fully deductible. Further, because of ambiguities and
uncertainties as to the application and interpretation of IRC
Section 162(m) and the regulations issued thereunder, no
assurance can be given, notwithstanding the Companys
efforts, that compensation intended by the Company to satisfy
the requirements for deductibility under IRC Section 162(m)
does in fact do so.
In addition, in structuring compensation arrangements, the
Compensation Committee intends to permit participants to avoid
potential tax penalties under IRC Section 409A. During 2007
and 2008, the Compensation Committee and the Board approved a
number of technical changes to the Companys compensation
arrangements for executive officers in order to facilitate
compliance with IRC Section 409A. The Compensation
Committee also takes into account the impact of potential
gross-up
payments by the Company to cover federal excise taxes due under
section 4999 of the Internal Revenue Code.
The Compensation Committee considers the accounting and dilution
impact of equity awards made to executive officers. We account
for our equity incentive grants under SFAS No. 123(R)
and use the Black-Scholes option pricing formula for determining
the fair value of our stock option grants.
Stock
Ownership Guidelines
Every executive officer and certain other employees must hold an
ownership stake in the Company that is significant in comparison
to their base salary. The Compensation Committee has established
stock ownership guidelines which apply to all executive officers
and certain other employees. The amount required to be retained
varies depending on the executives position. These
guidelines must generally be achieved within five years after
the person becomes subject to the guidelines. The stock
ownership guidelines that apply to each of
37
the named executive officers as well as their achievement as of
December 31, 2008 are shown in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Stock
|
|
|
|
Stock Ownership Guideline
|
|
|
Years of
|
|
|
Ownership as
|
|
Name
|
|
(number of shares)
|
|
|
Service
|
|
|
of 12/31/08
|
|
|
John K. Welch
|
|
|
300,000
|
|
|
|
3
|
|
|
|
463,157
|
|
John C. Barpoulis
|
|
|
65,000
|
|
|
|
3
|
|
|
|
110,940
|
|
Philip G. Sewell
|
|
|
65,000
|
|
|
|
7
|
|
|
|
102,648
|
|
Robert Van Namen
|
|
|
65,000
|
|
|
|
10
|
|
|
|
108,907
|
|
W. Lance Wright
|
|
|
65,000
|
|
|
|
5
|
|
|
|
100,812
|
|
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
(Section 229.402(b)) with management. Based on this review
and discussions, the Compensation Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis
be included in this proxy statement.
Compensation Committee
John R. Hall, Chairman
Joyce F. Brown
Joseph T. Doyle
H. William Habermeyer
38
Summary
Compensation Table
The following table sets forth information regarding the
compensation of the Chief Executive Officer, the Chief Financial
Officer, and the three other most highly paid executive officers
of the Company serving as executive officers at
December 31, 2008 (collectively, the named executive
officers), for the years ended December 31, 2006,
2007 and 2008.
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Non-Qualified
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name and
|
|
Fiscal
|
|
|
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
|
|
Principal Position
|
|
Year
|
|
|
Salary
|
|
|
(1)
|
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
|
(5)
|
|
|
Total
|
|
|
John K. Welch
|
|
|
2008
|
|
|
$
|
900,000
|
|
|
$
|
1,122,858
|
|
|
$
|
518,712
|
|
|
$
|
371,853
|
|
|
$
|
1,298,226
|
|
|
$
|
61,512
|
|
|
$
|
4,273,161
|
|
President and CEO
|
|
|
2007
|
|
|
$
|
828,462
|
|
|
$
|
1,477,617
|
|
|
$
|
330,055
|
|
|
$
|
65,025
|
|
|
$
|
925,499
|
|
|
$
|
66,295
|
|
|
$
|
3,692,953
|
|
|
|
|
2006
|
|
|
$
|
750,000
|
|
|
$
|
931,392
|
|
|
$
|
182,934
|
|
|
$
|
0
|
|
|
$
|
317,658
|
|
|
$
|
49,650
|
|
|
$
|
2,231,634
|
|
John C. Barpoulis
|
|
|
2008
|
|
|
$
|
400,000
|
|
|
$
|
165,623
|
|
|
$
|
136,852
|
|
|
$
|
239,182
|
|
|
$
|
92,036
|
|
|
$
|
9,200
|
|
|
$
|
1,042,893
|
|
Senior Vice President and
|
|
|
2007
|
|
|
$
|
349,808
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|
|
$
|
281,543
|
|
|
$
|
63,375
|
|
|
$
|
168,232
|
|
|
$
|
29,725
|
|
|
$
|
9,000
|
|
|
$
|
901,683
|
|
Chief Financial Officer
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|
|
2006
|
|
|
$
|
317,538
|
|
|
$
|
255,836
|
|
|
$
|
21,991
|
|
|
$
|
190,326
|
|
|
$
|
20,856
|
|
|
$
|
8,800
|
|
|
$
|
815,347
|
|
Philip G. Sewell
|
|
|
2008
|
|
|
$
|
473,269
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|
|
$
|
169,575
|
|
|
$
|
334,358
|
|
|
$
|
282,677
|
|
|
$
|
396,197
|
|
|
$
|
0
|
|
|
$
|
1,656,076
|
|
Senior Vice President,
|
|
|
2007
|
|
|
$
|
424,615
|
|
|
$
|
328,585
|
|
|
$
|
188,928
|
|
|
$
|
544,926
|
|
|
$
|
749,935
|
|
|
$
|
0
|
|
|
$
|
2,236,989
|
|
American Centrifuge and
|
|
|
2006
|
|
|
$
|
401,423
|
|
|
$
|
338,343
|
|
|
$
|
91,437
|
|
|
$
|
352,592
|
|
|
$
|
695,653
|
|
|
$
|
0
|
|
|
$
|
1,879,448
|
|
Russian HEU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Van Namen
|
|
|
2008
|
|
|
$
|
410,000
|
|
|
$
|
13,461
|
|
|
$
|
151,958
|
|
|
$
|
240,696
|
|
|
$
|
214,180
|
|
|
$
|
30,038
|
|
|
$
|
1,060,333
|
|
Senior Vice President,
|
|
|
2007
|
|
|
$
|
370,404
|
|
|
$
|
215,500
|
|
|
$
|
78,386
|
|
|
$
|
473,866
|
|
|
$
|
129,257
|
|
|
$
|
26,466
|
|
|
$
|
1,293,879
|
|
Uranium Enrichment
|
|
|
2006
|
|
|
$
|
340,000
|
|
|
$
|
361,559
|
|
|
$
|
57,122
|
|
|
$
|
296,003
|
|
|
$
|
222,162
|
|
|
$
|
20,437
|
|
|
$
|
1,297,283
|
|
W. Lance Wright
|
|
|
2008
|
|
|
$
|
370,000
|
|
|
$
|
128,911
|
|
|
$
|
114,040
|
|
|
$
|
215,181
|
|
|
$
|
288,878
|
|
|
$
|
20,827
|
|
|
$
|
1,137,837
|
|
Senior Vice President,
|
|
|
2007
|
|
|
$
|
319,615
|
|
|
$
|
269,211
|
|
|
$
|
66,935
|
|
|
$
|
211,389
|
|
|
$
|
213,867
|
|
|
$
|
19,890
|
|
|
$
|
1,100,907
|
|
Human Resources and
|
|
|
2006
|
|
|
$
|
300,000
|
|
|
$
|
333,389
|
|
|
$
|
28,075
|
|
|
$
|
166,700
|
|
|
$
|
67,611
|
|
|
$
|
17,744
|
|
|
$
|
913,519
|
|
Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown in the Stock Awards column represents the
compensation cost recognized by us in the applicable fiscal year
related to stock awards to the named executive officers,
computed in accordance with SFAS No. 123(R) and do not
reflect whether the named executive officer has actually
realized a financial benefit from the award. Amounts for a
fiscal year include amounts taken into account in that fiscal
year for awards granted in and prior to that fiscal year and do
not include amounts for restricted stock awards made for
performance during that fiscal year under the Companys
Annual Incentive Program, which are made in the following fiscal
year. In April 2008, Mr. Sewell became eligible for
retirement under the Companys retirement plans, and
accordingly any unrecognized compensation cost for outstanding
equity awards was fully recognized at such time. In addition,
the compensation cost of any future equity award to
Mr. Sewell is recognized by us in full on the date of
grant. For a discussion of valuation assumptions, see
Note 11 to our consolidated financial statements included
in our annual report on
Form 10-K
for the year ended December 31, 2008, Note 15 to our
consolidated financial statements included in our annual report
on
Form 10-K/A
for the year ended December 31, 2007 and Note 13 to
our consolidated financial statements included in our annual
report on
Form 10-K
for the year ended December 31, 2006. In accordance with
SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. |
|
(2) |
|
The amounts shown in the Option Awards column represent the
compensation cost recognized by us in the applicable fiscal year
related to option awards to the named executive officers,
computed in accordance with SFAS No. 123(R). See
footnote 1 above regarding equity awards to Mr. Sewell. For
a discussion of valuation assumptions, see Note 11 to our
consolidated financial statements included in our annual report
on
Form 10-K
for the year ended December 31, 2008, Note 15 to our
consolidated financial statements included in our annual report
on Form
10-K/A for
the year ended December 31, 2007 and Note 13 to our
consolidated financial statements included in our annual report
on Form 10-K
for the year ended December 31, 2006. |
|
(3) |
|
The amounts shown in the Non-Equity Incentive Plan Compensation
column constitute the cash portion of the annual incentive
awards made to each of the named executive officers based on the
Compensation Committees evaluation of each officers
performance during the year. The amounts shown for a fiscal
year |
39
|
|
|
|
|
include cash amounts earned under the Companys Annual
Incentive Program for that year and paid in March of the
following year. |
|
|
|
For 2008, all of the named executive officers had met their
stock ownership guidelines and were eligible to receive their
entire 2008 annual incentive award in cash. Named executive
officers are eligible to receive 20% incentive payments of
restricted stock for taking amounts they are entitled to receive
in cash in restricted stock in lieu of cash. Amounts shown
represent only the portion of the annual incentive awards that
was paid in cash as follows: Welch 0%, Barpoulis 50%, Sewell
50%, Van Namen 50%, Wright 50%. Mr. Welch took his entire
annual incentive award of $871,190 in restricted stock and
therefore received an incentive payment of $174,238 in
restricted stock. Messrs. Barpoulis, Sewell, Van Namen and
Wright took 50% of their annual incentive awards of $276,077,
$324,394, $279,104 and $251,875, respectively, in restricted
stock and therefore received incentive payments of $27,608,
$32,439, $27,910 and $25,187, respectively, in restricted stock.
Restricted stock granted to Messrs. Welch, Barpoulis,
Sewell, Van Namen and Wright for 2008 annual incentive awards
was granted in March 2009 and is not shown in the Summary
Compensation Table for 2008. Amounts for 2008 also include cash
payouts made in March 2009 under the 2006 2008
Executive Incentive Plan for the performance period
March 1, 2006 through December 31, 2008 as follows:
Mr. Welch, $371,853; Mr. Barpoulis, $101,144;
Mr. Sewell, $120,480; Mr. Van Namen, $101,144; and
Mr. Wright, $89,244. |
|
|
|
For 2007, Mr. Sewell and Mr. Van Namen had met their
stock ownership guidelines and were eligible to receive their
entire 2007 annual incentive awards of $384,147 and $340,947,
respectively, in cash. All other named executive officers were
eligible to receive 65% of their annual incentive awards in
cash. Amounts shown represent only the portion of the annual
incentive awards that was paid in cash as follows: Welch 0%,
Barpoulis 52%, Sewell 100%, Van Namen 100%, Wright 52%.
Mr. Welch took his entire annual incentive award of
$1,086,678 in restricted stock and therefore received an
incentive payment of $141,268 in restricted stock.
Messrs. Barpoulis and Wright took 48% of their annual
incentive awards of $323,523 and $289,744, respectively, in
restricted stock and therefore received incentive payments of
$8,409 and $7,524, respectively, in restricted stock. Amounts
for 2007 also include cash payouts made in 2007 to the named
executive officers for a terminated performance program as
follows: Mr. Welch, $65,025, Mr. Sewell, $160,779,
Mr. Van Namen, $132,919 and Mr. Wright, $60,722. |
|
|
|
For 2006, Mr. Sewell and Mr. Van Namen had met their
stock ownership guidelines and were eligible to receive their
entire 2006 annual incentive awards of $352,592 and $296,003,
respectively, in cash. All other named executive officers were
eligible to receive 65% of their annual incentive awards in
cash. Amounts shown represent only the portion of the annual
incentive awards that was paid in cash as follows: Welch 0%,
Barpoulis 65%, Sewell 100%, Van Namen 100%, Wright 65%. For
2006, Mr. Welch took his entire annual incentive award of
$912,533 in restricted stock and therefore received an incentive
payment of $118,629 in restricted stock. |
|
(4) |
|
The amounts shown in the Change in Pension Value and
Non-Qualified Deferred Compensation earnings column represent
the change in the actuarial present value of the named executive
officers accumulated benefits under the Employees
Retirement Plan of USEC Inc., the USEC Inc. Pension Restoration
Plan and the USEC Inc. 2006 Supplemental Executive Retirement
Plan (or, in the case of Mr. Sewell, the 1999 Supplemental
Executive Retirement Plan) at December 31, 2008, as
compared to December 31, 2007; at December 31, 2007,
as compared to December 31, 2006; and at December 31,
2006, as compared to December 31, 2005. None of our plans
provide for above-market earnings on deferred compensation
amounts, and as a result, the amounts reported here do not
reflect any such earnings. |
|
(5) |
|
The amounts shown in the All Other Compensation column for 2008
for Mr. Welch, Mr. Barpoulis, Mr. Van Namen and
Mr. Wright include Company matching contributions of $9,200
made under the USEC Savings Program. The amounts for
Mr. Welch, Mr. Van Namen and Mr. Wright for 2008
also include Company matching contributions of $26,800, $20,838,
and $11,627, respectively, made under the USEC Inc. Executive
Deferred Compensation Plan (formerly the 401(k) Restoration
Plan), as included in the Nonqualified Deferred Compensation in
Fiscal Year 2008 table. For Mr. Welch, the amount shown for
2008 also includes $25,512 for perquisites and other personal
benefits received by him in 2008. These perquisites and other
personal benefits (none of which exceeded the greater of $25,000
or 10% of the total |
40
|
|
|
|
|
amount of these benefits for Mr. Welch) include:
(a) financial counseling; (b) golf club membership
dues; (c) an annual physical; and (d) spouse travel
and related expenses. |
Grants of
Plan-Based Awards in Fiscal Year 2008
The following table sets forth information concerning each grant
of an award to a named executive officer in the year ended
December 31, 2008 under any plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of
|
|
|
Estimated Possible
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
|
Compensation
|
|
|
Payouts Under
|
|
|
Number of
|
|
|
Number of
|
|
|
Base Price
|
|
|
Fair Value
|
|
|
|
|
|
|
Committee
|
|
|
Non-Equity Incentive
|
|
|
Shares of
|
|
|
Securities
|
|
|
Option
|
|
|
of Stock and
|
|
|
|
Grant
|
|
|
Action
|
|
|
Plan Awards(1)
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Awards
|
|
|
Option
|
|
Name
|
|
Date
|
|
|
(if different)
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
($/Sh)
|
|
|
Awards(2)
|
|
|
John K. Welch
|
|
|
2/06/08
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209,546
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
1,227,940
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,188
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
675,000
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
302,691
|
(6)
|
|
$
|
5.86
|
|
|
$
|
675,000
|
|
John C. Barpoulis
|
|
|
2/06/08
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
140,000
|
|
|
$
|
210,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,935
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
163,700
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,956
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
240,000
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,623
|
(6)
|
|
$
|
5.86
|
|
|
$
|
240,000
|
|
Philip G. Sewell
|
|
|
2/06/08
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
164,500
|
|
|
$
|
246,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,123
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
282,000
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126,457
|
(6)
|
|
$
|
5.86
|
|
|
$
|
282,000
|
|
Robert Van Namen
|
|
|
2/06/08
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
143,500
|
|
|
$
|
215,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,980
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
246,000
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,314
|
(6)
|
|
$
|
5.86
|
|
|
$
|
246,000
|
|
W. Lance Wright
|
|
|
2/06/08
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
129,500
|
|
|
$
|
194,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,017
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
146,600
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,256
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
148,000
|
|
|
|
|
3/03/08
|
|
|
|
2/06/08
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,368
|
(6)
|
|
$
|
5.86
|
|
|
$
|
148,000
|
|
|
|
|
(1) |
|
Amounts shown are estimated possible cash payouts under the
Companys 2008 Annual Incentive Program based on
performance against 2008 corporate and individual performance
goals at the threshold (0%), target (100%) and maximum (150%)
levels. Actual payouts under the 2008 Annual Incentive Program
were approved by the Compensation Committee in February 2009 and
were 97% to 99% of target for each of the named executive
officers. The cash portion of these payouts are shown in the
Non-Equity Incentive Plan Compensation column of the Summary
Compensation Table. The amounts shown in the table above
represent only the cash portion of the 2008 annual incentive
awards. Under the Annual Incentive Program annual incentives are
paid in a combination of cash and restricted stock. As described
in the Compensation Discussion and Analysis, for 2008 awards
were required to be paid at least 50% in restricted stock unless
an executive elected to take a greater portion of their annual
incentive in restricted stock. For 2008, Messrs. Barpoulis,
Sewell, Van Namen and Wright took 50% of their annual incentive
awards in cash, with the remainder in restricted stock, and
Mr. Welch took his entire annual incentive award in
restricted stock. The stock portion of these awards was awarded
in March 2009 and will be reflected in the Grants of Plan Based
Awards table for 2009. |
|
(2) |
|
The value of the stock awards is based on the fair value of such
award on the grant date, computed in accordance with
SFAS No. 123(R). |
|
(3) |
|
These annual incentive awards were made by the Compensation
Committee, effective as of a later date following the release of
the Companys audited financial results. |
|
(4) |
|
Includes shares of restricted stock granted to the named
executive officers in 2008 under the Companys Annual
Incentive Program based on performance against corporate and
individual performance goals in 2007. These shares vested on
March 3, 2009. |
41
|
|
|
(5) |
|
Includes shares of restricted stock granted to the named
executive officers in 2008 under the Companys Long-Term
Incentive Program. These shares will vest ratably over three
years from the date of grant. |
|
(6) |
|
Includes non-qualified stock options granted to the named
executive officers in 2008 under the Companys Long-Term
Incentive Program. These options will vest ratably over three
years from the date of grant. |
Outstanding
Equity Awards at Fiscal Year-End December 31,
2008
The following table sets forth information regarding unexercised
options, stock that has not vested, and outstanding equity
incentive plan awards as of the year ended December 31,
2008 for each of the named executive officers. If an
executives employment is terminated by the Company without
cause or is terminated by reason of the executives death,
disability or retirement, or upon a change in control, all of
the executives shares of restricted stock and unvested
stock options granted under the USEC Inc. 1999 Equity Incentive
Plan will become vested.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
Option Awards
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Date
|
|
|
Vested
|
|
|
Vested
|
|
|
John K. Welch
|
|
|
100,000
|
|
|
|
|
|
|
$
|
11.00
|
|
|
|
10/03/10
|
|
|
|
355,969
|
(1)
|
|
$
|
1,598,301
|
|
|
|
|
59,081
|
|
|
|
29,540
|
(2)
|
|
$
|
12.09
|
|
|
|
3/28/11
|
|
|
|
|
|
|
|
|
|
|
|
|
29,023
|
|
|
|
58,045
|
(3)
|
|
$
|
13.24
|
|
|
|
3/05/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
302,691
|
(4)
|
|
$
|
5.86
|
|
|
|
3/03/13
|
|
|
|
|
|
|
|
|
|
John C. Barpoulis
|
|
|
8,655
|
|
|
|
|
|
|
$
|
13.98
|
|
|
|
5/04/10
|
|
|
|
78,341
|
(5)
|
|
$
|
351,751
|
|
|
|
|
18,748
|
|
|
|
9,374
|
(2)
|
|
$
|
12.09
|
|
|
|
3/28/11
|
|
|
|
|
|
|
|
|
|
|
|
|
8,567
|
|
|
|
17,134
|
(3)
|
|
$
|
13.24
|
|
|
|
3/05/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,623
|
(4)
|
|
$
|
5.86
|
|
|
|
3/03/13
|
|
|
|
|
|
|
|
|
|
Philip G. Sewell
|
|
|
59,300
|
|
|
|
|
|
|
$
|
8.50
|
|
|
|
7/31/11
|
|
|
|
38,718
|
(6)
|
|
$
|
202,882
|
|
|
|
|
48,142
|
|
|
|
|
|
|
$
|
7.02
|
|
|
|
8/07/12
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
$
|
7.00
|
|
|
|
8/06/13
|
|
|
|
|
|
|
|
|
|
|
|
|
53,913
|
|
|
|
|
|
|
$
|
8.05
|
|
|
|
2/10/09
|
|
|
|
|
|
|
|
|
|
|
|
|
26,708
|
|
|
|
|
|
|
$
|
16.90
|
|
|
|
3/23/10
|
|
|
|
|
|
|
|
|
|
|
|
|
22,333
|
|
|
|
11,166
|
(2)
|
|
$
|
12.09
|
|
|
|
3/28/11
|
|
|
|
|
|
|
|
|
|
|
|
|
10,403
|
|
|
|
20,805
|
(3)
|
|
$
|
13.24
|
|
|
|
3/05/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126,457
|
(4)
|
|
$
|
5.86
|
|
|
|
3/03/13
|
|
|
|
|
|
|
|
|
|
Robert Van Namen
|
|
|
36,000
|
|
|
|
|
|
|
$
|
8.50
|
|
|
|
7/31/11
|
|
|
|
51,799
|
(7)
|
|
$
|
232,578
|
|
|
|
|
18,000
|
|
|
|
|
|
|
$
|
7.00
|
|
|
|
8/06/13
|
|
|
|
|
|
|
|
|
|
|
|
|
44,571
|
|
|
|
|
|
|
$
|
8.05
|
|
|
|
2/10/09
|
|
|
|
|
|
|
|
|
|
|
|
|
23,775
|
|
|
|
|
|
|
$
|
16.90
|
|
|
|
3/23/10
|
|
|
|
|
|
|
|
|
|
|
|
|
18,748
|
|
|
|
9,374
|
(2)
|
|
$
|
12.09
|
|
|
|
3/28/11
|
|
|
|
|
|
|
|
|
|
|
|
|
9,081
|
|
|
|
18,162
|
(3)
|
|
$
|
13.24
|
|
|
|
3/05/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,314
|
(4)
|
|
$
|
5.86
|
|
|
|
3/03/13
|
|
|
|
|
|
|
|
|
|
W. Lance Wright
|
|
|
5,250
|
|
|
|
|
|
|
$
|
8.05
|
|
|
|
2/10/09
|
|
|
|
58,808
|
(8)
|
|
$
|
264,048
|
|
|
|
|
20,710
|
|
|
|
|
|
|
$
|
16.90
|
|
|
|
3/23/10
|
|
|
|
|
|
|
|
|
|
|
|
|
16,543
|
|
|
|
8,271
|
(2)
|
|
$
|
12.09
|
|
|
|
3/28/11
|
|
|
|
|
|
|
|
|
|
|
|
|
7,833
|
|
|
|
15,655
|
(3)
|
|
$
|
13.24
|
|
|
|
3/05/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,368
|
(4)
|
|
$
|
5.86
|
|
|
|
3/03/13
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Shares of restricted stock vest as follows: 247,942 shares
with a vesting date of March 3, 2009; 10,448 shares
with a vesting date of March 5, 2009; 10,339 shares
with a vesting date of March 28, 2009; |
42
|
|
|
|
|
38,396 shares with a vesting date of March 3, 2010;
10,448 shares with a vesting date of March 5, 2010;
and 38,396 shares with a vesting date of March 3, 2011. |
|
(2) |
|
Stock options vest at the rate of
331/3%
per year, with vesting dates of March 28, 2007,
March 28, 2008 and March 28, 2009. |
|
(3) |
|
Stock options vest at the rate of
331/3%
per year, with vesting dates of March 5, 2008,
March 5, 2009, and March 5, 2010. |
|
(4) |
|
Stock options vest at the rate of
331/3%
per year, with vesting dates of March 3, 2009,
March 3, 2010, and March 3, 2011. |
|
(5) |
|
Shares of restricted stock vest as follows: 41,587 shares
with a vesting date of March 3, 2009; 3,084 shares
with a vesting date of March 5, 2009; 3,282 shares
with a vesting date of March 28, 2009; 13,652 shares
with a vesting date of March 3, 2010; 3,084 shares
with a vesting date of March 5, 2010; and
13,652 shares with a vesting date of March 3, 2011. |
|
(6) |
|
Shares of restricted stock vest as follows: 10,434 shares
with a vesting date of March 3, 2009; 2,436 shares
with a vesting date of March 5, 2009; 2,542 shares
with a vesting date of March 28, 2009; 10,435 shares
with a vesting date of March 3, 2010; 2,436 shares
with a vesting date of March 5, 2010; and
10,435 shares with a vesting date of March 3, 2011. |
|
(7) |
|
Shares of restricted stock vest as follows: 13,993 shares
with a vesting date of March 3, 2009; 3,269 shares
with a vesting date of March 5, 2009; 3,281 shares
with a vesting date of March 28, 2009; 13,993 shares
with a vesting date of March 3, 2010; 3,269 shares
with a vesting date of March 5, 2010; and
13,994 shares with a vesting date of March 3, 2011. |
|
(8) |
|
Shares of restricted stock vest as follows: 33,436 shares
with a vesting date of March 3, 2009; 2,820 shares
with a vesting date of March 5, 2009; 2,895 shares
with a vesting date of March 28, 2009; 8,419 shares
with a vesting date of March 3, 2010; 2,820 shares
with a vesting date of March 5, 2010; and 8,418 shares
with a vesting date of March 3, 2011. |
Option
Exercises and Stock Vested in Fiscal Year 2008
The following table sets forth information regarding each
exercise of stock options and each vesting of restricted stock
during the year ended December 31, 2008 for each of the
named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
Name
|
|
Acquired on Exercise
|
|
|
Exercise
|
|
|
Acquired on Vesting
|
|
|
Vesting(1)
|
|
|
John K. Welch
|
|
|
|
|
|
|
|
|
|
|
98,669
|
|
|
$
|
530,356
|
|
John C. Barpoulis
|
|
|
|
|
|
|
|
|
|
|
15,834
|
|
|
$
|
80,641
|
|
Philip G. Sewell
|
|
|
|
|
|
|
|
|
|
|
30,238
|
|
|
$
|
150,427
|
|
Robert Van Namen
|
|
|
|
|
|
|
|
|
|
|
8,135
|
|
|
$
|
35,770
|
|
W. Lance Wright
|
|
|
|
|
|
|
|
|
|
|
13,874
|
|
|
$
|
68,897
|
|
|
|
|
(1) |
|
Amounts reflect the market value of the stock on the day the
stock vested. |
43
Pension
Benefits in Fiscal Year 2008
We maintain the Employees Retirement Plan of USEC Inc., a
tax-qualified defined benefit plan that provides retirement
benefits to eligible employees. Section 415 and
Section 401(a)(17) of the Internal Revenue Code generally
place a limit on the amount of annual pension that can be paid
from a tax-qualified plan as well as on the amount of annual
earnings that can be used to calculate a pension benefit.
However, we maintain the USEC Inc. Pension Restoration Plan that
pays eligible employees the difference between the amount
payable under the tax-qualified plan and the amount they would
have received without the qualified plans limits. We also
maintain two supplemental executive retirement plans (each, a
SERP) in order to provide additional retirement
benefits to executives to be competitive with the market.
Mr. Welch, Mr. Barpoulis, Mr. Van Namen, and
Mr. Wright participate in the USEC Inc. 2006 Supplemental
Executive Retirement Plan (the 2006 SERP) and
Mr. Sewell is the sole active participant in the USEC Inc.
1999 Supplemental Executive Retirement Plan (the 1999
SERP). The USEC Inc. Pension Restoration Plan and the
SERPs are unfunded and are subject to forfeiture in the event of
insolvency.
The following table shows the present value of benefits that the
named executive officers are entitled to under the
Employees Retirement Plan of USEC Inc. (the
Retirement Plan), the USEC Inc. Pension Restoration
Plan (the Pension Restoration Plan), and the
applicable SERP. Mr. Welch and Mr. Barpoulis were not
vested in the Retirement Plan, the Pension Restoration Plan, or
the 2006 SERP as of December 31, 2008, however, they would
be entitled to a minimum benefit under the 2006 SERP in the case
of a change in control or death or disability as shown in the
Potential Payments Upon Termination or Change in Control table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
|
|
|
|
|
|
Number of Years of
|
|
Accumulated
|
|
|
Payments During
|
|
Name
|
|
Plan Name
|
|
Credited Service
|
|
Benefit(1)
|
|
|
Last Fiscal Year
|
|
|
John K. Welch
|
|
Retirement Plan
|
|
3 yr. 3 mos.
|
|
$
|
98,440
|
|
|
$
|
0
|
|
|
|
Pension Restoration Plan
|
|
3 yr. 3 mos.
|
|
$
|
497,355
|
|
|
$
|
0
|
|
|
|
2006 SERP
|
|
3 yr. 3 mos.
|
|
$
|
2,059,012
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
2,654,807
|
|
|
$
|
0
|
|
John C. Barpoulis
|
|
Retirement Plan
|
|
3 yr. 9 mos.
|
|
$
|
54,386
|
|
|
$
|
0
|
|
|
|
Pension Restoration Plan
|
|
3 yr. 9 mos.
|
|
$
|
77,010
|
|
|
$
|
0
|
|
|
|
2006 SERP
|
|
3 yr. 9 mos.
|
|
$
|
34,520
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
165,916
|
|
|
$
|
0
|
|
Philip G. Sewell
|
|
Retirement Plan
|
|
7 yrs. 7 mos.
|
|
$
|
300,710
|
|
|
$
|
0
|
|
|
|
Pension Restoration Plan
|
|
7 yrs. 7 mos.
|
|
$
|
740,708
|
|
|
$
|
0
|
|
|
|
1999 SERP
|
|
7 yrs. 7 mos.
|
|
$
|
3,831,506
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
4,872,924
|
|
|
$
|
0
|
|
Robert Van Namen
|
|
Retirement Plan
|
|
10 yrs.
|
|
$
|
157,063
|
|
|
$
|
0
|
|
|
|
Pension Restoration Plan
|
|
10 yrs.
|
|
$
|
347,370
|
|
|
$
|
0
|
|
|
|
2006 SERP
|
|
10 yrs.
|
|
$
|
279,568
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
784,001
|
|
|
$
|
0
|
|
W. Lance Wright
|
|
Retirement Plan
|
|
5 yrs. 4 mos.
|
|
$
|
153,249
|
|
|
$
|
0
|
|
|
|
Pension Restoration Plan
|
|
5 yrs. 4 mos.
|
|
$
|
236,443
|
|
|
$
|
0
|
|
|
|
2006 SERP
|
|
5 yrs. 4 mos.
|
|
$
|
283,488
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
673,180
|
|
|
$
|
0
|
|
|
|
|
(1) |
|
In determining the present value of each participants
pension benefit, a 6.09% discount rate is assumed. An assumed
interest rate of 6.29% is used in converting Pension Restoration
Plan, 2006 SERP and 1999 SERP annuities into lump sums. The lump
sum interest rate is determined at the time of benefit
commencement and reflects an average of the un-annualized
Moodys Aa index bond yield plus 75 basis |
44
|
|
|
|
|
points. For purposes of this table, the calculation assumes
retirement at the earliest age at which unreduced benefits could
be paid, including projected future service for eligibility
purposes only. |
The Retirement Plan and Pension Restoration Plan benefits shown
in the table above are net present values. All named executive
officers have elected a lump sum form of payment under the
Pension Restoration Plan for benefits earned and vested after
2004. Pension Restoration Plan benefits earned prior to 2005 are
payable as an annuity. As of December 31, 2008, benefits
under the Retirement Plan are not payable as a lump sum (except
that under the terms of the plan, Mr. Van Namen is eligible
to receive a lump sum for any benefit accrued prior to 2001).
The normal form of payment under the Retirement Plan is a single
life annuity or a 50% joint and survivor annuity. Retirement
benefits are calculated under the following three formulas, with
the formula that gives the participant the largest benefit used
for the final calculation:
|
|
|
|
|
Regular Formula: The monthly benefit under the
Regular Formula is calculated as 1.2% of final
average monthly compensation (base salary plus annual bonus)
times years and months of credited service plus $110. There are
no offsets to this benefit.
|
|
|
|
Alternate Formula: The monthly benefit under
the Alternate Formula is calculated as 1.5% of final
average monthly compensation (base salary plus annual bonus)
times years and months of credited service minus 1.5% times
actual or projected monthly primary Social Security benefit
times years and months of credited service up to
331/3
years (up to a maximum of 50% of the actual or projected monthly
Social Security benefit).
|
|
|
|
Minimum Formula: The monthly benefit under the
Minimum Formula is calculated as $5 multiplied by
the first ten years and months of credited service, plus $7
multiplied by the next ten years and months of credited service,
plus $9 times the years and months of credited service in excess
of 20 years, plus 10% (less 1% per year of credited service
less than 8) of the final average monthly compensation as
calculated under the Regular Formula plus $110. There are no
offsets to this benefit.
|
An employees final average monthly compensation includes
base salary plus annual incentive compensation, including cash
and restricted stock, and does not include the value of any
award under the Companys Long-Term Incentive Program.
Pension plan benefits are determined, in part, using the
employees actual age and credited service. The normal
retirement age under the Retirement Plan and Pension Restoration
Plan is 65. An employee is eligible for early retirement without
any reduction in benefits (1) if the employee has completed
at least 10 years of service and has attained the age of
62; or (2) if the sum of the employees age and years
of service equals 85 or greater. In addition, an employee is
eligible for early retirement after completing 10 years of
credited service and attaining the age of 50, with benefits
reduced based on employee age and credited service, per the
plans reduction factor schedule. As of December 31,
2008, Mr. Sewell was eligible for early unreduced
retirement. He was the only named executive officer eligible for
normal or early retirement under the Retirement Plan and Pension
Restoration Plan. As a practice, the Company generally does not
provide additional years of age or service (except under the
change in control agreements, which grant additional service)
and no named executive officer has been credited with additional
years of age or service for purposes of computing a retirement
benefit, under the Retirement Plan or the Pension Restoration
Plan.
The 1999 SERP provides Mr. Sewell with an annual benefit in
the form of a monthly annuity equal to 55% of final average
compensation, with offsets for (1) any benefits received
under the Companys other retirement programs and any
U.S. federal governmental retirement program to which the
Company has contributed on the participants behalf; and
(2) Social Security benefits should the participant be
eligible for such benefit. Mr. Sewell elected to receive a
lump sum that is the actuarial equivalent of the above-described
annuity for benefits earned and vested after 2004. Final average
compensation for this purpose includes base salary and annual
incentive compensation, including cash and restricted stock,
earned for the three years preceding the participants date
of termination, divided by three. As of December 31, 2008,
Mr. Sewell was eligible for normal retirement under the
1999 SERP.
Participants in the 2006 SERP will generally accrue a monthly
supplemental retirement benefit equal to 2.5% of their final
average compensation for each year of service, to a maximum
benefit equal to 50% of the final average compensation after
20 years of service. For Mr. Welch, no supplemental
retirement benefit is
45
accrued until five years of service, at which point
Mr. Welchs benefit is equal to 30% of final average
compensation. With seven years of service, this benefit
increases to 40% of final average compensation and with ten or
more years of service increases to 50% of final average
compensation. Final average compensation under the 2006 SERP
includes salary and annual incentive compensation, including
cash and restricted stock, paid (or vested, in the case of
restricted stock) for the three years preceding the
participants date of termination. The normal retirement
age under the 2006 SERP is 62. Benefits are reduced by 6% (3%
for Mr. Welch) for each year the executive commences
payment of benefits prior to age 62. Monthly benefits
payable under the 2006 SERP to a participant are offset by the
amount the participant is eligible to receive under the
Companys other retirement plans and Social Security.
Participants are generally vested in their benefits under the
2006 SERP after five years of service, although vesting will be
accelerated in the event of the participants death or
termination of employment as a result of disability or in the
event of a change in control of the Company. A minimum monthly
supplemental retirement benefit equal to 10% (20% for
Mr. Welch) of final average compensation applies where
vesting is so accelerated.
Benefits under the 2006 SERP are generally payable to a
participant in the form of a lump sum (or an annuity at the
election of the participant within the first 30 days of
participation) when the participant terminates, but no earlier
than age 55 (age 60 for Mr. Welch), except in the
case of disability or death. All named executive officers
participating in the 2006 SERP have elected a lump sum. Where a
participant is terminated for cause (as defined in the 2006
SERP) or where a participant violates certain restrictive
covenants, the participants benefits will be forfeited
whether or not then vested and subject to repayment to the
Company to the extent already paid to the participant.
Nonqualified
Deferred Compensation in Fiscal Year 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Balance
|
|
Name
|
|
in Last FY(1)
|
|
|
in Last FY(2)
|
|
|
in Last FY(3)
|
|
|
Distributions
|
|
|
at Last FYE(4)
|
|
|
John K. Welch
|
|
$
|
90,000
|
|
|
$
|
26,800
|
|
|
$
|
(27,466
|
)
|
|
|
|
|
|
$
|
198,835
|
|
John C. Barpoulis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip G. Sewell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Van Namen
|
|
$
|
37,547
|
|
|
$
|
20,838
|
|
|
$
|
(79,228
|
)
|
|
|
|
|
|
$
|
124,032
|
|
W. Lance Wright
|
|
$
|
52,067
|
|
|
$
|
11,627
|
|
|
$
|
(38,315
|
)
|
|
|
|
|
|
$
|
73,570
|
|
|
|
|
(1) |
|
Amount represents executives contributions to the USEC
Inc. Executive Deferred Compensation Plan (the Deferred
Compensation Plan). These amounts are also included in the
Summary Compensation Table in the Salary column. |
|
(2) |
|
Amount represents the Companys contributions to the
Deferred Compensation Plan. These amounts are also included in
the Summary Compensation Table in the All Other Compensation
column. |
|
(3) |
|
Amount represents earnings on the Deferred Compensation Plan
during 2008. |
|
(4) |
|
Amount represents the aggregate balance for the named executive
officers as of December 31, 2008 under the Deferred
Compensation Plan. Includes the executives contributions
to the Deferred Compensation Plan (formerly the USEC Inc. 401(k)
Restoration Plan) previously reported as compensation to the
named executive officers in the Summary Compensation Table in
the Salary column in 2007 and 2006, as follows: Mr. Welch
$34,081 in 2007, $22,500 in 2006; Mr. Van Namen $15,866 in
2007, $9,524 in 2006; and Mr. Wright $9,222 in 2007, $7,290
in 2006. Amount includes the Companys contributions to the
Deferred Compensation Plan (formerly the USEC Inc. 401(k)
Restoration Plan) previously reported as compensation in the
Summary Compensation Table in the All Other Compensation column
in 2007 and 2006 as follows: Mr. Welch $26,892 in 2007,
$21,200 in 2006; Mr. Van Namen $17,466 in 2007, $11,637 in
2006; and Mr. Wright $10,890 in 2007, $8,944 in 2006. |
46
Potential
Payments Upon Termination or Change in Control
The table below shows potential payments to our named executive
officers under existing agreements, plans or arrangements for
various scenarios involving a termination of employment or a
change in control of the Company. The table assumes a
December 31, 2008 termination date and is based on the
named executive officers compensation and service levels
as of that date. Where applicable, the table uses the closing
price of our common stock of $4.49 as reported on the New York
Stock Exchange as of December 31, 2008. The benefits in the
table below are in addition to certain benefits available
generally to salaried employees, such as accrued salary and
vacation pay and distributions of plan balances under the USEC
Savings Program.
Due to the number of factors that affect the nature and amounts
of any benefits provided upon the events discussed below, any
actual amounts paid or distributed may be different. Factors
that could affect these amounts include the timing during the
year of any such event, the Companys stock price and the
executives age.
Payments
Made Upon Termination
Under the USEC Inc. Executive Severance Plan, if an executive
officer is terminated by the Company without cause, he is
eligible to receive the following:
|
|
|
|
|
his current base salary and a prorated share of his current
annual incentive (payable at the end of the performance period
based on actual performance) up to the date of termination;
|
|
|
|
a cash severance payment equal to one years base salary at
his current rate and an amount equal to his final average bonus
(generally the average of his last three years annual
incentive awards, both cash and restricted stock); and
|
|
|
|
continuation of medical and dental coverage as well as life
insurance paid for by the Company for one year after termination
(or until he receives similar coverage from a subsequent
employer, whichever occurs first) and outplacement assistance
services.
|
Severance benefits are contingent upon the executive executing a
release and agreeing to comply with certain restrictive
covenants relating to non-competition and non-solicitation of
Company employees for a period of one year following his
termination of employment. No severance is paid to an employee
who is terminated for cause or who resigns voluntarily.
Payments
Made Upon a Change in Control
The Company has entered into change in control agreements with
each of the named executive officers. The change in control
agreements provide each named executive officer with the
following benefits (in lieu of any severance benefits under the
Executive Severance Plan described above) if there is a change
in control of the Company and within a protected period
beginning three months before and ending three years after that
change in control (the protected period), the
Company terminates the executives employment without cause
or the executive terminates his employment for good
reason (as defined in the agreement):
|
|
|
|
|
a cash lump sum payment of his unpaid base salary through the
date of termination, plus all other amounts to which he was
entitled under any of the Companys compensation or benefit
plans under the terms of such plans.
|
|
|
|
a cash lump sum payment equal to 2.5 times the sum of the
executives final annual base salary and his final average
bonus. The executives final average bonus is the average
of the three most recent annual incentive bonuses paid to the
executive prior to the date of termination (whether paid in the
form of cash or in grants of restricted stock). Any annual
incentive bonus paid to an executive during the prior three
years that was pro-rated or otherwise adjusted because the
executive was not employed by the Company during the entire
period to which the bonus related is annualized for purposes of
the calculation of the executives final average bonus. If
the executive has experienced a change in position that has
increased the executives annual bonus opportunity, any
annual bonus paid to the executive with respect to a period
prior to the change in position is not included in the
calculation of the
|
47
|
|
|
|
|
executives final average bonus. If the executive has not
been paid at least three annual bonuses prior to the date of
termination that are includable in the calculation of the
executives final average bonus, the executives final
average bonus is an amount equal to the average of such lesser
number of annual bonuses. If the executive has not been paid at
least one annual bonus prior to the date of termination that is
includable in the calculation of the executives final
average bonus, the executives final average bonus is an
amount equal to the executives annual target bonus as in
effect on the date of termination.
|
|
|
|
|
|
continuation of life, accident and health insurance benefits for
2.5 years following the change in control, or, if sooner,
until he is covered by comparable programs of a subsequent
employer.
|
|
|
|
two and one-half additional years of service for purposes of
vesting, eligibility and benefit accrual under the
Companys SERPs.
|
|
|
|
if the executive receives payments that would subject him to any
federal excise tax due under section 4999 of the Internal
Revenue Code, he would also receive a cash payment equal to the
amount of such excise tax. The calculation of the 280G
gross-up
amount in the tables below is based upon a 280G excise tax rate
of 20% and a 35% income tax rate.
|
In order to receive these benefits, the executive must comply
with the non-competition, non-solicitation and confidentiality
provisions of the change in control agreement during the term of
the agreement and for 2.5 years thereafter (five years in
the case of the confidentiality provision). For purposes of the
280G calculation we have not assumed that any amounts will be
discounted as attributable to reasonable compensation or that
any value will be attributed to executives being bound by
the agreements regarding non-competition, non-solicitation and
confidentiality contained in their change in control agreements,
because these amounts are too subject to the facts and
circumstances in place at the time of payment to be capable of
valuation.
Equity
Awards
If the executives employment is terminated by the Company
without cause or is terminated by reason of the executives
death, disability, or retirement (normal retirement or unreduced
early retirement), all of the executives shares of
restricted stock and unvested stock options granted under the
USEC Inc. 1999 Equity Incentive Plan will become vested.
In addition, under the 2006 2008 Executive Incentive
Plan, an executive whose employment was terminated by the
Company as of December 31, 2008 without cause or was
terminated by reason of the executives death, disability,
or retirement (normal retirement or unreduced early retirement)
would have received an award valued and paid at the end of the
performance period ended December 31, 2008. This
performance period has now been completed and actual payouts
were made in March 2009, as described in the Compensation
Discussion and Analysis.
If the executives employment is terminated for cause or if
the executive voluntarily terminates employment (other than
retirement), all of the executives restricted stock and
unvested stock options will be cancelled and forfeited. As of
December 31, 2008, the executive also would have forfeited
any award opportunities under the 2006 2008
Executive Incentive Plan because awards had not yet been made.
Upon a change in control, all of the executives shares of
restricted stock and unvested stock options will become vested.
In addition, as of December 31, 2008, the executive would
have received an award under the 2006 2008 Executive
Incentive Plan for the performance period ended
December 31, 2008. The awards would have been calculated
assuming achievement of all applicable performance goals at
target level.
The table below includes the intrinsic value (that is, the value
based on the closing price of the Companys stock of $4.49
as reported on the New York Stock Exchange as of
December 31, 2008 and, in the case of options, less the
exercise price) of stock options and restricted stock that would
become exercisable or vested if the named executive officer
terminated employment as of December 31, 2008. As of
December 31, 2008, all unvested stock options held by the
named executive officers had exercise prices that were greater
48
than the closing price of our common stock of $4.49 as reported
on the New York Stock Exchange as of December 31, 2008.
Retirement
Benefits
The Pension Benefits in Fiscal Year 2008 table describes the
general terms of each retirement plan in which the named
executive officers participate, the years of credited service
and the present value of each named executive officers
accumulated pension benefit. The table below includes the
present value of benefits under the Employees Retirement Plan of
USEC Inc. (the Retirement Plan), the USEC Inc.
Pension Restoration Plan (the Pension Restoration
Plan), the USEC Inc. 1999 Supplemental Executive
Retirement Plan (the 1999 SERP), and the USEC Inc.
2006 Supplemental Executive Retirement Plan (the 2006
SERP) that would have become payable if the named
executive officer had terminated employment as of
December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
Executive Benefits
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Involuntary
|
|
|
Termination
|
|
|
|
|
and Payments
|
|
Voluntary
|
|
|
Retirement
|
|
|
Not for Cause
|
|
|
For Cause
|
|
|
(Change
|
|
|
Death or
|
|
Upon Termination
|
|
Termination
|
|
|
(1)
|
|
|
Termination
|
|
|
Termination
|
|
|
in Control)
|
|
|
Disability
|
|
|
John K. Welch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payments(2)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
1,866,404
|
|
|
$
|
0
|
|
|
$
|
4,728,509
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted Stock
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
1,598,301
|
|
|
$
|
0
|
|
|
$
|
1,598,301
|
|
|
$
|
1,598,301
|
|
Executive Incentive Plan(3)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
448,823
|
|
|
$
|
0
|
|
|
$
|
448,823
|
|
|
$
|
448,823
|
|
Retirement Plan(4)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Pension Restoration Plan(4)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
2006 SERP(5)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,997,988
|
|
|
$
|
3,646,414
|
|
280G Tax
Gross-up
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,337,091
|
|
|
$
|
0
|
|
Continuing Benefits(6)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
12,956
|
|
|
$
|
0
|
|
|
$
|
32,390
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0
|
|
|
|
|
|
|
$
|
3,926,484
|
|
|
$
|
0
|
|
|
$
|
14,143,102
|
|
|
$
|
5,693,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John C. Barpoulis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payments(2)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
698,771
|
|
|
$
|
0
|
|
|
$
|
1,770,391
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted Stock
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
351,751
|
|
|
$
|
0
|
|
|
$
|
351,751
|
|
|
$
|
351,751
|
|
Executive Incentive Plan(3)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
122,079
|
|
|
$
|
0
|
|
|
$
|
122,079
|
|
|
$
|
122,079
|
|
Retirement Plan(4)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Pension Restoration Plan(4)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
2006 SERP(5)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
346,288
|
(9)
|
|
$
|
332,921
|
|
280G Tax
Gross-up
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
456,045
|
|
|
$
|
0
|
|
Continuing Benefits(6)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
15,832
|
|
|
$
|
0
|
|
|
$
|
39,580
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0
|
|
|
|
|
|
|
$
|
1,188,433
|
|
|
$
|
0
|
|
|
$
|
3,086,134
|
|
|
$
|
806,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip G. Sewell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payments(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
825,246
|
|
|
$
|
0
|
|
|
$
|
2,074,418
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted Stock
|
|
$
|
0
|
|
|
$
|
202,882
|
|
|
$
|
202,882
|
|
|
$
|
0
|
|
|
$
|
202,882
|
|
|
$
|
202,882
|
|
Executive Incentive Plan(3)
|
|
$
|
0
|
|
|
$
|
145,418
|
|
|
$
|
145,418
|
|
|
$
|
0
|
|
|
$
|
145,418
|
|
|
$
|
145,418
|
|
Retirement Plan(4)
|
|
$
|
300,710
|
|
|
$
|
300,710
|
|
|
$
|
300,710
|
|
|
$
|
300,710
|
|
|
$
|
300,710
|
|
|
$
|
156,046
|
(8)
|
Pension Restoration Plan(4)
|
|
$
|
740,708
|
|
|
$
|
740,708
|
|
|
$
|
740,708
|
|
|
$
|
740,708
|
|
|
$
|
740,708
|
|
|
$
|
649,541
|
(8)
|
1999 SERP(7)
|
|
$
|
3,831,506
|
|
|
$
|
3,831,506
|
|
|
$
|
3,831,506
|
|
|
$
|
0
|
|
|
$
|
3,831,506
|
(9)
|
|
$
|
2,502,553
|
|
280G Tax
Gross-up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Continuing Benefits(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,648
|
|
|
$
|
0
|
|
|
$
|
4,120
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,872,924
|
|
|
$
|
5,221,224
|
|
|
$
|
6,048,118
|
|
|
$
|
1,041,418
|
|
|
$
|
7,299,762
|
|
|
$
|
3,656,440
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
Executive Benefits
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Involuntary
|
|
|
Termination
|
|
|
|
|
and Payments
|
|
Voluntary
|
|
|
Retirement
|
|
|
Not for Cause
|
|
|
For Cause
|
|
|
(Change
|
|
|
Death or
|
|
Upon Termination
|
|
Termination
|
|
|
(1)
|
|
|
Termination
|
|
|
Termination
|
|
|
in Control)
|
|
|
Disability
|
|
|
Robert Van Namen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payments(2)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
717,983
|
|
|
$
|
0
|
|
|
$
|
1,818,583
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted Stock
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
232,578
|
|
|
$
|
0
|
|
|
$
|
232,578
|
|
|
$
|
232,578
|
|
Executive Incentive Plan(3)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
122,079
|
|
|
$
|
0
|
|
|
$
|
122,079
|
|
|
$
|
122,079
|
|
Retirement Plan(4)
|
|
$
|
91,600
|
|
|
|
N/A
|
|
|
$
|
91,600
|
|
|
$
|
91,600
|
|
|
$
|
91,600
|
|
|
$
|
111,964
|
(8)
|
Pension Restoration Plan(4)
|
|
$
|
233,484
|
|
|
|
N/A
|
|
|
$
|
233,484
|
|
|
$
|
233,484
|
|
|
$
|
233,484
|
|
|
$
|
247,609
|
(8)
|
2006 SERP(5)
|
|
$
|
400,540
|
|
|
|
N/A
|
|
|
$
|
400,540
|
|
|
$
|
0
|
|
|
$
|
610,559
|
(9)
|
|
$
|
389,234
|
|
280G Tax
Gross-up
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Continuing Benefits(6)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
15,874
|
|
|
$
|
0
|
|
|
$
|
39,685
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
725,624
|
|
|
|
|
|
|
$
|
1,814,138
|
|
|
$
|
325,084
|
|
|
$
|
3,148,568
|
|
|
$
|
1,103,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Lance Wright
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Payments(2)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
638,399
|
|
|
$
|
0
|
|
|
$
|
1,610,290
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted Stock
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
264,048
|
|
|
$
|
0
|
|
|
$
|
264,048
|
|
|
$
|
264,048
|
|
Executive Incentive Plan(3)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
107,717
|
|
|
$
|
0
|
|
|
$
|
107,717
|
|
|
$
|
107,717
|
|
Retirement Plan(4)
|
|
$
|
144,419
|
|
|
|
N/A
|
|
|
$
|
144,419
|
|
|
$
|
144,419
|
|
|
$
|
144,419
|
|
|
$
|
69,146
|
(8)
|
Pension Restoration Plan(4)
|
|
$
|
248,149
|
|
|
|
N/A
|
|
|
$
|
248,149
|
|
|
$
|
248,149
|
|
|
$
|
248,149
|
|
|
$
|
245,201
|
(8)
|
2006 SERP(5)
|
|
$
|
301,167
|
|
|
|
N/A
|
|
|
$
|
301,167
|
|
|
$
|
0
|
|
|
$
|
715,677
|
(9)
|
|
$
|
301,167
|
|
280G Tax
Gross-up
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
436,372
|
|
|
$
|
0
|
|
Continuing Benefits(6)
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
2,252
|
|
|
$
|
0
|
|
|
$
|
5,630
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
693,735
|
|
|
|
|
|
|
$
|
1,706,151
|
|
|
$
|
392,568
|
|
|
$
|
3,532,302
|
|
|
$
|
987,279
|
|
|
|
|
(1) |
|
As of December 31, 2008, Mr. Sewell is eligible for
normal retirement in the 1999 SERP and early retirement in the
Retirement Plan and the Pension Restoration Plan. Because of his
years of services, Mr. Sewell would have been eligible to
commence an immediate unreduced retirement benefit if he had
retired as of December 31, 2008. No other named executive
officer is eligible for an early or normal retirement under any
of the Companys retirement programs as of
December 31, 2008. |
|
(2) |
|
In calculating the Severance Payment payable upon involuntary
not for cause termination under the USEC Inc. Executive
Severance Plan, the calculation of the final average bonuses for
the named executive officers included each executives 2008
target annual incentive bonus because annual incentive bonuses
for 2008 had not been determined as of December 31, 2008. |
In calculating the Severance Payment under the executives
change in control agreements, the final average bonuses for the
named executive officers were calculated using the average of
any bonuses paid in 2007, 2006 and 2005, except that
Mr. Welchs pro-rated 2005 bonus was annualized for
purposes of this calculation and Mr. Barpoulis 2005
bonus was excluded because in 2006 he experienced a change in
position that increased his bonus opportunity.
|
|
|
(3) |
|
Amounts reflect the value of a target award as of
December 31, 2008 notwithstanding the actual performance
during the period ended December 31, 2008 of 56% of target,
which was determined by the Compensation Committee in February
2009. |
|
(4) |
|
Only Mr. Sewell, Mr. Van Namen and Mr. Wright are
vested under the Retirement Plan and the Pension Restoration
Plan as of December 31, 2008. Mr. Sewell (age 62
as of December 31, 2008) is eligible for early
retirement and would commence an immediate unreduced benefit
upon termination. Mr. Van Namen (age 47 as of
December 31, 2008) is not yet eligible for retirement
but is eligible for immediate commencement of benefits accrued
prior to 2001, payable as a lump sum. Mr. Van Namen will be
eligible to commence a reduced pension for benefits accrued
after 2000 at age 50. Mr. Wright (age 61 as of
December 31, 2008) is not yet eligible for retirement
but is eligible to commence an immediate, reduced benefit.
Pension Restoration Plan benefits earned and vested after
December 31, 2004 will be paid as a |
50
|
|
|
|
|
lump sum. Amounts shown are the actuarial present value of
annuity payments and lump sums, as applicable. The present value
of accumulated benefits is calculated using the assumptions
under SFAS No. 158, Employers Accounting
for Defined Benefit Pension and Other Postretirement
Plans, as shown in Note 10 to our consolidated
financial statements included in our annual report on
Form 10-K
for the year ended December 31, 2008. In the case of
disability, each of the executives would continue to accrue
service during periods of disability rather than commence a
retirement benefit. |
|
(5) |
|
Mr. Van Namen and Mr. Wright are the only named
executive officers vested under the 2006 SERP. Mr. Welch
and Mr. Barpoulis are only vested under the 2006 SERP in
the case of a change in control or death or disability. Accrued
SERP benefits are forfeited upon a termination for cause.
Mr. Barpoulis (in the case of a change in control) and
Mr. Van Namen are ineligible to commence payment so their
amounts represent the present value of an age 55 lump sum
payment. Mr. Welch (in the case of a change in control) and
Mr. Wright are eligible for immediate lump sum benefits.
Lump sum death benefits are payable immediately. The 2006 SERP
provides for a minimum benefit objective of 10% of final average
pay (20% in the case of Mr. Welch) in the case of a change
in control or death or disability. Amounts for all executives
represent the present value of accrued benefits payable in lump
sum form. The present value of accumulated benefits is
calculated using the assumptions under SFAS No. 158,
Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans, as shown in Note 10 to
our consolidated financial statements included in our annual
report on
Form 10-K
for the year ended December 31, 2008. |
|
(6) |
|
Includes (a) the cost of continuation of medical, dental
and life insurance benefits for a period of one year following
termination of employment in the case of an involuntary not for
cause termination; and (b) the continuation of medical,
dental, life insurance and disability benefits for a period of
2.5 years following termination of employment in the case
of a change in control. Amounts vary by executive based on their
specific benefit elections. |
|
(7) |
|
Mr. Sewell is the only named executive officer with
benefits under the 1999 SERP. Mr. Sewell is eligible to
commence an immediate, unreduced benefit upon termination.
Benefits accrued prior to 2005 are payable in the form of an
annuity and post-2004 benefits are payable as the lump sum
equivalent of such annuity. Accrued 1999 SERP benefits are
forfeited upon a termination for cause. The amount shown is the
actuarial present value of life annuity and lump sum payments.
Death benefits are 50% of Mr. Sewells pre-2005
accrued benefit and 100% of his post-2004 accrued benefit, with
survivor benefits payable as an annuity. The present value of
accumulated benefits is calculated using the assumptions under
SFAS No. 158, Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans, as
shown in Note 10 to our consolidated financial statements
included in our annual report on
Form 10-K
for the year ended December 31, 2008. |
|
(8) |
|
In the case of death, Mr. Sewells, Mr. Van
Namens and Mr. Wrights beneficiaries would be
entitled to survivor annuity benefits under the Retirement Plan
and the Pension Restoration Plan and would be eligible to
commence survivor benefits immediately. Mr. Sewells
survivor benefit is 50% of the amount Mr. Sewell would
receive in the form of a single life annuity. Mr. Van
Namens survivors benefit is 50% of the amount
Mr. Van Namen would receive in the form of a single life
annuity and is reduced for early commencement, subject to a
minimum survivor benefit of 25%. Mr. Wrights
survivors benefit is the 50% survivor portion of a joint
and survivor annuity and is reduced for early commencement.
Benefits accrued and vested after December 31, 2004 in the
Pension Restoration Plan are payable as a lump sum. In the case
of disability, each of the executives would continue to accrue
service during periods of disability rather than commence a
retirement benefit. |
|
(9) |
|
Change in control agreements provide for an additional
2.5 years of service for vesting, eligibility and benefit
accrual for the executives retirement benefits. This is
done through the executives SERP benefit and accordingly,
amount reflects gross benefit with 2.5 year service
enhancement, less vested accrued benefits under the Retirement
Plan and the Pension Restoration Plan. |
51
Equity
Compensation Plan Information
The following table gives information about the Companys
common stock that may be issued under the USEC Inc. 1999 Equity
Incentive Plan and the USEC Inc. 1999 Employee Stock Purchase
Plan as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
securities to be
|
|
|
Weighted-average
|
|
|
Number of securities
|
|
|
|
issued upon exercise
|
|
|
exercise price of
|
|
|
remaining available
|
|
|
|
of outstanding
|
|
|
outstanding
|
|
|
for future issuance
|
|
|
|
options, warrants
|
|
|
options, warrants
|
|
|
under equity
|
|
Plan category
|
|
and rights
|
|
|
and rights
|
|
|
compensation plans
|
|
|
Equity compensation plans approved by security holders
|
|
|
2,120,000
|
|
|
$
|
8.52
|
|
|
|
5,404,000
|
(1)
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,120,000
|
|
|
|
|
|
|
|
5,404,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes 5,193,000 shares available for issuance under the
USEC Inc. 1999 Equity Incentive Plan (net of awards which
terminate or are cancelled without being exercised or that are
settled for cash) and 211,000 shares (rounded) available
for issuance under the USEC Inc. 1999 Employee Stock Purchase
Plan. |
52
ITEM 2.
APPROVAL OF THE PROPOSED USEC INC. 2009 EQUITY INCENTIVE
PLAN
In 1999, the Companys shareholders approved the 1999
Equity Incentive Plan (the 1999 Plan) under which
9,000,000 shares of its common stock were available for
awards to be granted under the 1999 Plan. In 2004, the
Companys shareholders approved the First Amendment to the
1999 Plan which among other things increased the number of
shares of its common stock available for awards to be granted
under the 1999 Plan to 14,100,000.
On February 25, 2009, the Board approved the USEC Inc. 2009
Equity Incentive Plan (the 2009 Plan), subject to
shareholder approval at the 2009 Annual Meeting. If approved,
the 2009 Plan would replace the 1999 Plan and no further awards
would be granted under the 1999 Plan. The 2009 Plan is needed to
enable us to continue to provide equity-based incentives as a
key element of our compensation program and remain competitive
with our peers.
The purpose of the 2009 Plan is to advance the long-term
interests of the Company and its shareholders by providing
incentives to attract, retain and reward individuals and by
promoting the growth and profitability of the Company and its
affiliates. As with the 1999 Plan, the 2009 Plan also includes
the ability to grant awards to our non-employee directors.
As discussed in the Compensation Discussion and Analysis section
of this proxy statement, equity awards make up a significant
portion of total compensation for executives and certain other
key employees and are critical for attracting, motivating and
retaining these employees and aligning their interests with
those of the shareholders. USEC is in a critical transition
period as we move from the older gaseous diffusion enrichment
technology to the advanced technology of the American Centrifuge
Plant and during this period, our ability to attract, motivate
and retain employees and executives with the requisite skills
and experiences to meet these challenges is essential to our
success and the creation of long-term value for our
shareholders. As discussed in the Compensation Discussion and
Analysis section, we have been taking steps to conserve cash
until we gain greater clarity on potential funding for our
American Centrifuge Plant. One way to conserve cash is to divert
potential cash compensation into equity compensation as was done
with respect to a portion of the 2008 annual incentive awards.
It is critical that we maintain the ability to provide the
necessary equity incentive awards.
As of March 6, 2009, approximately 2,978 employees and
nine non-employee directors are eligible to participate in the
2009 Plan. If approved, it is expected that initially
approximately 46 employees and nine non-employee directors
would participate in the 2009 Plan. Future grants under the 2009
Plan will be made at the sole discretion of the Committee.
Summary
Description of the USEC Inc. 2009 Equity Incentive
Plan
General
The 2009 Plan is summarized below. This summary does not purport
to be a complete description of all the provisions of the 2009
Plan and is qualified in its entirety by reference to the
complete text of the 2009 Plan. A copy of the 2009 Plan is
attached as Appendix A to this proxy statement and
is incorporated by reference into this summary.
Key
Features of the 2009 Plan
|
|
|
|
|
An independent committee of the Board administers the 2009 Plan;
|
|
|
|
Awards may not be granted later than 10 years from the
effective date of the 2009 Plan;
|
|
|
|
Awards may be stock options, stock appreciation rights,
restricted stock, restricted stock units, performance awards,
and cash-based and other stock-based awards;
|
|
|
|
Stock options and stock appreciation rights may not be repriced
under the 2009 Plan;
|
|
|
|
Stock options and stock appreciation rights may not be granted
below fair market value;
|
|
|
|
Stock options and stock appreciation rights cannot be exercised
more than 10 years from the date of grant;
|
53
|
|
|
|
|
Awards are subject to the following vesting limits:
(1) awards other than non-employee director awards and
performance awards will vest no faster than proportionally over
a minimum period of three years; (2) performance awards
shall not be vested over a period of less than one year; and
(3) up to 210,000 awards may be granted without minimum
vesting;
|
|
|
|
Dividends, if any, may not be paid on unvested performance
awards;
|
|
|
|
Awards granted by the Committee under the 2009 Plan will provide
for acceleration of exercisability, vesting
and/or
settlement in connection with a change in control where there is
also an involuntary separation from service other than for cause
(or by the employee for good reason) (e.g., double
trigger);
|
|
|
|
Includes a claw back provision that requires
repayment of all payments in settlement of any awards earned or
accrued during the
12-month
period following the first public issuance or filing with the
SEC of a financial document that is subsequently restated as a
result of misconduct; and
|
|
|
|
The Board may not make material amendments to the 2009 Plan
without shareholder approval, including an amendment that would
(1) materially increase the benefits accrued to
participants under the 2009 Plan, (2) materially increase
the number of shares available under the 2009 Plan (except for
anti-dilution adjustments in the case of certain corporate
transactions or events), (3) change the type of awards that
may be granted under the 2009 Plan, (4) materially modify
the requirements for participation in the 2009 Plan, or
(5) require approval of the Companys shareholders
under applicable law, including the rules of any stock exchange
upon which the Companys shares are listed.
|
Administration
The 2009 Plan will be administered by the Compensation Committee
of the Board of Directors (the Committee) but may be
administered by another committee or subcommittee of our Board
appointed by the Board. The Committee has full power and
authority to take all actions necessary to construe and
interpret the 2009 Plan, to carry out the purpose and intent of
the 2009 Plan, and to establish such rules, regulations and
procedures for the administration of the 2009 Plan as it deems
appropriate. The Committee may delegate certain of its authority
under the 2009 Plan, except that no delegation may be made in
the case of awards intended to be qualified under
Section 162(m) of the Internal Revenue Code or to be made
to officers or directors of the Company who are subject to
Rule 16b-3
under the Securities Exchange Act of 1934, as amended.
Shares
Subject to the Plan
The number of shares of common stock reserved for delivery with
respect to awards under the 2009 Plan is the sum of:
(a) 4,500,000 shares, plus (b) the number of
shares, if any, underlying grants under the 1999 Plan that are
forfeited, canceled, terminated or settled in cash without
delivery of shares on or after the date of approval of the 2009
Plan by the shareholders of the Company. Authorized but unissued
shares or treasury shares, or any combination, may be delivered
under the 2009 Plan. If any award, or portion of an award,
expires, is forfeited, or becomes unexercisable, the shares will
become available for future grant. Restricted stock that is
forfeited will become available for future grant. In addition,
shares that are applied by the Company, including by net
exercise, as payment of the exercise price of any award or in
payment of any applicable withholding for taxes in relation to
any award will become available for future grant. As of
March 6, 2009, the closing price per share of common stock
of the Company as quoted on the New York Stock Exchange was
$3.37.
Awards granted to individuals reasonably expected to be Covered
Employees (as defined below) under Section 162(m) that are
intended to qualify for deduction under Section 162(m) of
the Internal Revenue Code (Section 162(m)), are
subject to limits under the 2009 Plan as follows:
|
|
|
|
|
For options or SARs, the annual grant limit per Covered Employee
is 1,000,000 shares;
|
|
|
|
For restricted stock or restricted stock units, the annual grant
limit per Covered Employee is 1,000,000 shares;
|
54
|
|
|
|
|
For performance awards settled in shares, the annual grant limit
per Covered Employee is 1,000,000 shares; and
|
|
|
|
For cash-based awards or performance awards settled in cash, the
annual grant limit per Covered Employee is $2,000,000.
|
If the Committee determines that any dividend or other
distribution, recapitalization, share split, reverse share
split, reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase, exchange of shares of common
stock or other securities of the Company, issuance of warrants
or other rights to purchase shares or other securities of the
Company, or other similar corporate transaction or event affects
the shares such that an adjustment is appropriate in order to
prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the 2009 Plan, then
the Committee will make adjustments it deems equitable, to any
or all of: (1) the number of shares with respect to which
awards may be granted; (2) the annual limits on grants to
individuals to comply with Section 162(m) described above;
(3) the number of shares subject to outstanding awards; and
(4) the exercise price or strike price with respect to any
award.
Eligibility
The Committee may select officers, directors, employees and
other individuals providing bona fide services to or for the
Company and its affiliates to receive awards under the 2009
Plan. Non-employee directors are only eligible to receive the
non-employee director awards.
The following types of awards are available under the 2009 Plan:
Stock
Options
Options may be either nonqualified stock options or incentive
stock options under Section 422 of the Internal Revenue
Code. The exercise price of any stock option may not be less
than the fair market value of the stock on the grant date.
Except as otherwise provided in the award, the exercise price of
any option is payable in cash, check or cash equivalent, by
tendering shares of common stock, by broker-assisted cashless
exercise, by net exercise, or by such other consideration as the
Committee approves (or by any combination thereof). No stock
option will be exercisable more than ten years after the grant.
The Committee determines the terms of each stock option at the
time of the grant.
Stock
Appreciation Rights
Stock appreciation rights may be granted either in tandem with
other awards or as freestanding stock appreciation rights. The
strike price of any stock appreciation right granted in tandem
with an option will be equal to the exercise price per share
under the related option. The strike price of any freestanding
stock appreciation right will not be less than the fair market
value of a share on the grant date. No stock appreciation right
will be exercisable more than ten years after the grant. Stock
appreciation rights will entitle the holder to receive a payment
in cash, in shares or a combination, having an aggregate value
equal to the difference between the fair market value of the
underlying shares on the date of exercise and the strike price.
The Committee determines the terms of each stock appreciation
right at the time of the grant.
Restricted
Stock
Restricted stock may be subject to restrictions, including
continued employment, achievement of performance goals or other
criteria. The Committee will determine the purchase price, if
any, applicable to restricted stock awards. Payment of the
purchase price for restricted stock, if any, may be made in
cash, by check or cash equivalent or by such other consideration
as the Committee approves (or by any combination thereof).
Except for restrictions on transfer and such other restrictions
as the Committee may impose on restricted stock, award holders
will have all the rights of a shareholder with respect to the
restricted stock, including dividend and voting rights. The
Committee determines the terms of each restricted stock award at
the time of the grant.
55
Restricted
Stock Units
Restricted stock units may become nonforfeitable contingent upon
continued employment, achievement of performance goals or other
criteria deemed appropriate by the Committee. Each restricted
stock unit will have a value equal to the fair market value of
one share. Award holders will not have shareholder rights with
respect to the restricted stock units but may receive dividend
equivalent rights. Restricted stock units may be paid in cash,
shares or other consideration, as determined by the Committee.
The Committee determines the terms of each restricted stock unit
award at the time of the grant.
Performance
Awards
Performance awards may be payable in cash or shares or a
combination of both, contingent on the level of attainment of
performance goals. The Committee will establish performance
measures and the performance period applicable to each
performance goal and will determine the level of attainment of
the performance goals. Performance awards may include dividend
equivalent rights, except that dividends may not be paid on
unvested performance awards. Performance awards may, but need
not, include performance criteria that satisfy
Section 162(m).
Section 162(m) disallows our deduction for compensation in
excess of $1,000,000 paid to our chief executive officer and the
three other most highly paid executive officers named in the
summary compensation table (other than the Chief Financial
Officer) (Covered Employees). However,
performance-based compensation payable solely on account of
attainment of one or more performance goals is not subject to
this deduction limitation if the performance goals are
objective, pre-established and determined by a compensation
committee comprised solely of two or more outside directors, the
material terms under which the compensation is to be paid are
disclosed to the shareholders and approved by a majority vote,
and the compensation committee certifies that the performance
goals and other material terms were in fact satisfied before the
compensation is paid. The deduction limitation would not apply
to compensation otherwise deductible on account of the exercise
of stock options (and stock appreciation rights) granted under
the 2009 Plan with an exercise price (or strike price) no less
than the fair market value of a share on the date of grant
provided the plan limits the number of shares that may be
awarded to any individual and is approved by our shareholders.
The 2009 Plan is designed so that if the 2009 Plan is approved
by our shareholders, the Committee may grant awards that satisfy
the performance-based compensation exception under
Section 162(m).
To the extent that awards are intended to qualify for the
performance-based compensation exception under
Section 162(m), the performance criteria will be based on
the achievement of any one or more of the following performance
measures, as determined by the Committee:
|
|
|
|
|
revenue;
|
|
|
|
sales;
|
|
|
|
expenses;
|
|
|
|
operating income;
|
|
|
|
gross profit;
|
|
|
|
gross margin;
|
|
|
|
operating margin;
|
|
|
|
earnings before any one or more or a combination of: stock-based
compensation expense, interest, taxes, depreciation and
amortization;
|
|
|
|
pre-tax profit;
|
|
|
|
operating income or profit;
|
|
|
|
net operating income;
|
|
|
|
net income;
|
|
|
|
after tax operating income;
|
|
|
|
economic value added;
|
|
|
|
cash flow(s);
|
|
|
|
free cash flow;
|
|
|
|
operating cash flow;
|
|
|
|
balance of cash, cash equivalents and marketable securities;
|
|
|
|
stock price;
|
|
|
|
earnings or book value per share;
|
|
|
|
earnings per share;
|
|
|
|
diluted earnings per share;
|
|
|
|
return on shareholder equity;
|
|
|
|
return on capital;
|
|
|
|
return on assets;
|
|
|
|
return on equity;
|
|
|
|
return on capital, capital employed or investment;
|
|
|
|
return on investment;
|
56
|
|
|
|
|
employee satisfaction;
|
|
|
|
employee retention, customer satisfaction, safety or diversity,
market share product development;
|
|
|
|
research and development expenses;
|
|
|
|
completion or attainment of objectively determinable targets
with respect to an identified special project;
|
|
|
|
total sales or revenues or sales or revenues per employee;
|
|
|
|
production (separative work units or SWUs);
|
|
|
|
stock price or total shareholder return;
|
|
|
|
dividends; and
|
|
|
|
strategic business objectives, consisting of one or more
objectives based on meeting specified cost targets, business
expansion goals, and goals relating to acquisitions or
divestiture.
|
Awards not subject to Section 162(m) and awards not
intended to qualify for the performance-based compensation
exception may be subject to any other performance criteria
established by the Committee.
Cash-Based
and Other Stock-Based Awards
Cash-based or other stock-based awards will be payable in cash,
shares or other securities or any combination thereof as the
Committee determines. Holders of other stock-based awards will
not have the rights of a shareholder until shares are delivered
but may receive dividend equivalent rights. The Committee
determines the terms of each cash-based award or other
stock-based award at the time of the grant.
Transferability
Unless otherwise determined by the Committee, awards under the
2009 Plan may not be transferred except by will or the laws of
descent and distribution and, during his or her lifetime, awards
may be exercised only by the grantee.
Non-Employee
Director Awards
The Committee may provide that all or any portion of a
non-employee directors annual retainer, any committee or
other chairman fees, and any other fees will be payable, either
automatically, or at the election of the non-employee director,
in the form of nonqualified stock options, restricted stock,
restricted stock units or other stock-based awards. Non-employee
director awards will be subject to the terms and conditions
established by the Committee.
Special
Vesting Rules
The vesting conditions for awards will be determined by the
Committee; provided, however, that awards other than
non-employee director awards and performance awards will vest no
faster than proportionally over a minimum period of three years.
Up to 210,000 shares may be granted under the 2009 Plan
without the above minimum vesting requirements.
Change
in Control
The Committee may provide for the full or partial acceleration
of the exercisability, vesting
and/or
settlement of an award or any portion thereof in connection with
a change in control, upon such conditions, including termination
of the grantees service prior to, upon, or following such
change in control, to such extent as the Committee shall
determine.
Amendment
and Termination
The Board may at any time suspend or terminate the 2009 Plan.
The Board may amend the 2009 Plan at any time, provided that the
Board may not make material amendments to the 2009 Plan without
shareholder approval, including an amendment that would
(1) materially increase the benefits accrued to
participants under the 2009 Plan, (2) materially increase
the number of shares available under the 2009 Plan (except for
anti-dilution adjustments in the case of certain corporate
transactions or events), (3) change the type of awards that
57
may be granted under the 2009 Plan, (4) materially modify
the requirements for participation in the 2009 Plan, or
(5) require approval of the Companys shareholders
under applicable law, including the rules of any stock exchange
upon which the Companys shares are listed.
No awards may be granted under the 2009 Plan after
February 25, 2019.
Certain
Federal Income Tax Consequences
The following discussion is a brief summary of the principal
United States federal income tax treatment under current federal
income tax laws, of awards authorized under the 2009 Plan, if
the plan is approved by our shareholders. This summary is not
intended to be exhaustive or to constitute tax advice, and,
among other things, does not describe state, local or foreign
income and other tax consequences.
Incentive
Stock Options
An optionee will not recognize any taxable income at the time of
grant or timely exercise of an incentive stock option, and the
Company will not be entitled to a tax deduction with respect to
such grant or exercise. Exercise of an incentive stock option
may, however, give rise to taxable income subject to applicable
withholding taxes, and a tax deduction to the Company, if the
incentive stock option is not exercised timely or if the
optionee subsequently engages in a disqualifying
disposition, as described below. To be a timely exercise
for this purpose, the exercise generally must occur while the
optionee is employed by the Company or within three months after
termination of employment. The amount by which the fair market
value of the common stock on the exercise date of an incentive
stock option exceeds the exercise price generally will increase
the optionees alternative minimum taxable income in the
year of exercise.
An optionee who pays the option exercise price upon exercise of
an option, in whole or in part, by delivering already owned
shares of stock generally will not recognize gain or loss on the
shares surrendered at the time of such delivery. Rather, such
gain or loss recognition generally will occur upon disposition
of the shares acquired in substitution for the shares
surrendered.
An optionee will recognize long-term capital gain or loss upon
his or her disposition of shares acquired upon the exercise of
an incentive stock option if such disposition occurs at least
one year after the transfer of the shares to such optionee and
at least two years after the date of grant of the incentive
stock option. Such long-term capital gain or loss will be
measured by the difference between the amount realized on such
disposition and the option exercise price. If, however, an
optionee disposes of shares acquired upon the exercise of an
incentive stock option within two years after the date of grant
of the incentive stock option or within one year from the date
of transfer of the incentive stock option shares to the
optionee, such sale or exchange will generally constitute a
disqualifying disposition of such shares and will
have the following results: any excess of (a) the lesser of
(i) the fair market value of the shares at the time of
exercise of the incentive stock option and (ii) the amount
realized on such disqualifying disposition of the shares over
(b) the option exercise price of such shares, will be
ordinary income to the optionee, and the Company will be
entitled to a tax deduction in the amount of such income. Any
further gain or loss after the date of exercise generally will
qualify as capital gain or loss and will not be deductible by
the Company.
Nonqualified
Stock Options
An optionee will not recognize any taxable income upon the grant
of a nonqualified stock option, and the Company will not be
entitled to a tax deduction with respect to such grant. Upon
exercise of a nonqualified stock option, the excess of the fair
market value of the common stock on the exercise date over the
option exercise price will be taxable as ordinary income to the
optionee and will be subject to applicable withholding taxes.
The Company will generally be entitled to a tax deduction at
such time in the amount of such ordinary income. The
optionees tax basis for the common stock received pursuant
to the exercise of a nonqualified stock option will equal the
sum of the ordinary income recognized and the exercise price.
An optionee who pays the option exercise price upon exercise of
an option, in whole or in part, by delivering already owned
shares of stock generally will not recognize gain or loss on the
shares surrendered at
58
the time of such delivery. Rather, such gain or loss recognition
generally will occur upon disposition of the shares acquired in
substitution for the shares surrendered.
In the event of a sale of common stock received upon the
exercise of a nonqualified stock option, any appreciation or
depreciation after the exercise date generally will be taxed as
capital gain or loss.
Stock
Appreciation Rights
An award holder will not recognize any income upon the grant of
a stock appreciation right. If the stock appreciation right is
settled in cash, the cash will be taxed as ordinary income to
the award holder at the time it is received. If the stock
appreciation right is settled in stock, the difference between
the fair market value of the stock received and the aggregate
strike price will be taxed as ordinary income to the award
holder. The Company will generally be entitled to a tax
deduction in the amount of and at the same time that ordinary
income is required to be recognized by the award holder as a
result of the exercise.
Restricted
Stock
An award holder will not recognize any income upon the grant of
restricted stock unless he or she elects under
Section 83(b) of the Internal Revenue Code, within thirty
days of such receipt, to recognize ordinary income in an amount
equal to the fair market value of the restricted stock at the
time of receipt, less any amount paid for the shares. If the
election is made, the award holder will not be allowed a
deduction for amounts subsequently required to be returned to
the Company. If the election is not made, the award holder
generally will recognize ordinary income, on the date that the
shares are no longer subject to a substantial risk of
forfeiture, in an amount equal to the fair market value of such
shares on such date, less any amount paid for the shares. At the
time ordinary income is recognized, the Company generally will
be entitled to a deduction in the same amount, subject to the
application of Section 162(m).
Generally, upon a sale or other disposition of restricted stock
with respect to which the award holder recognized ordinary
income, the award holder will recognize capital gain or loss in
an amount equal to the difference between the amount realized on
such sale or other disposition and the award holders basis
in such shares. The Company is not entitled to any further
deduction.
Restricted
Stock Units, Performance Awards, Cash-Based Awards and Other
Stock-Based Awards
In general, the grant of restricted stock units, performance
awards, cash-based awards and other stock-based awards will not
result in income for the award holder or in a tax deduction for
the Company. Upon the settlement of such an award, the award
holder will recognize ordinary income equal to the aggregate
value of the payment received, and the Company generally will be
entitled to a tax deduction in the same amount, subject to the
application of Section 162(m).
Plan
Benefits
Future benefits under the 2009 Plan are not currently
determinable because participation and the types of awards
available for grant under the plan are subject to the discretion
of the Committee. To date 181,452 awards have been granted under
the 2009 Plan, subject to approval of the plan by the
shareholders. This included a grant of restricted stock under
the Companys Long-Term Incentive Program to the Chief
Executive Officer for 2009. If the 2009 Plan is not approved by
the shareholders, this award will become null and void.
The approval of the 2009 Plan requires the affirmative vote of a
majority of the shares present at the annual meeting in person
or by proxy and entitled to vote on this matter; provided that
the total votes cast on the proposal represent more than 50% of
USECs outstanding shares of common stock as of the record
date.
The Board recommends voting FOR the approval of the proposed
USEC Inc. 2009 Equity Incentive Plan.
59
ITEM 3. APPROVAL
OF PROPOSED USEC INC. 2009 EMPLOYEE STOCK PURCHASE
PLAN
In February 1999, the Company established the 1999 Employee
Stock Purchase Plan (the 1999 Stock Purchase Plan),
an employee stock purchase plan under which
2,500,000 shares of its common stock were authorized for
sale to participating employees. In April 2008, the
Companys shareholders approved an increase in the number
of shares authorized for issuance under the 1999 Stock Purchase
Plan by 250,000 to 2,750,000 and extended the term by two years
from February 2, 2009 until February 2, 2011.
As of March 6, 2009, there were approximately
211,405 shares available for purchase in the current and
future offering periods under the 1999 Stock Purchase Plan,
which may not be sufficient for the program to continue beyond
2009. In order to continue this valuable program, on
February 25, 2009, the Board of Directors adopted the 2009
Employee Stock Purchase Plan (the 2009 Stock Purchase
Plan), subject to approval by our shareholders.
The purpose of the 2009 Stock Purchase Plan is to provide
employees with the opportunity to become equity owners of the
Company by purchasing shares of common stock through generally
semi-annual offerings financed by payroll deductions. As of
January 1, 2009 (the beginning of the current offering
period under the 1999 Stock Purchase Plan), approximately
2,800 employees were eligible to participate. During the
offering period ended December 31, 2008, approximately
340 employees participated in the 1999 Stock Purchase Plan.
Summary
Description of the USEC Inc. 2009 Employee Stock Purchase
Plan
The 2009 Stock Purchase Plan is summarized below. This summary
does not purport to be a complete description of all the
provisions of the 2009 Stock Purchase Plan and is qualified in
its entirety by reference to the complete text of the 2009 Stock
Purchase Plan. A copy of the 2009 Stock Purchase Plan is
attached as Appendix B to this proxy statement and
is incorporated by reference into this summary.
General
The 2009 Stock Purchase Plan is intended to comply with the
requirements of Section 423 of the Internal Revenue Code,
thereby assuring the participants the associated tax advantages.
These tax advantages are described below in the Section entitled
Certain Federal Income Tax Consequences.
Administration
The 2009 Stock Purchase Plan will be administered by a committee
of the Board (the Committee), which has been so
designated by the Board. The Compensation Committee of the Board
currently has been designated as the administrator of the 2009
Stock Purchase Plan. The Committee has full authority to
construe and interpret the 2009 Stock Purchase Plan, and may
make such rules and regulations and establish such procedures
for the administration of the 2009 Stock Purchase Plan as it
deems appropriate.
Shares
Available for Purchase
Subject to adjustment as described below, the number of shares
of common stock that may be sold under the 2009 Stock Purchase
Plan may not exceed 1,000,000. For purposes of the 2009 Stock
Purchase Plan, shares of common stock may be authorized but
unissued shares, treasury shares or shares purchased on the open
market or from private sources. If the Committee determines that
any dividend, other distribution, recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase, exchange of shares of common
stock or other securities of the Company, issuance of warrants
or other rights to purchase shares of common stock or other
securities of the Company, or other similar corporate
transaction or event, affects the common stock such that an
adjustment is appropriate to prevent dilution or enlargement of
the benefits under the 2009 Stock Purchase Plan, then the
Committee shall make such equitable adjustments in the 2009
Stock Purchase Plan and then outstanding offering, as it deems
necessary or appropriate, including changing the number of
shares of Company securities reserved under the 2009 Stock
Purchase Plan and the purchase price of the then current
offering.
60
Participation
and Offerings
Subject to certain procedural requirements, all employees of the
Company and any incorporated subsidiaries that are designated by
the Committee who have at least six months of service and work
at least 20 hours per week or five months in any calendar
year, will be eligible to participate in the 2009 Stock Purchase
Plan, except that employees who are 5% or more shareholders of
the Company or any subsidiary of the Company will not be
eligible to participate.
Pursuant to the 2009 Stock Purchase Plan, during each offering
period (generally a six-month period, or such other period, not
to exceed one year, as determined by the Committee), each
eligible employee will be permitted to make an election to
authorize regular payroll deductions for the purchase of shares
of common stock. Payroll deductions may be in an amount equal to
1% to 10% of the employees compensation (as defined in the
2009 Stock Purchase Plan), as elected by the employee, for each
payroll period. However, the fair market value of the shares of
common stock that may be purchased by any employee under the
2009 Stock Purchase Plan during any calendar year may not exceed
$25,000.
Payroll deductions are credited to recordkeeping accounts. At
the end of the offering period, shares of common stock will be
purchased on behalf of participating employees with their
accumulated payroll deductions at a purchase price equal to 85%
of the fair market value of the common stock on the date the
offering period ends. Participants may withdraw from the 2009
Stock Purchase Plan during an offering period and will receive
their accumulated payroll deductions, but may not resume
participation until the following offering period.
Change
in Control
Upon the occurrence of a change in control (as defined in the
2009 Stock Purchase Plan), if the Committee determines that the
operation or administration of the 2009 Stock Purchase Plan
could prevent participants from obtaining the benefit of accrued
purchase rights thereunder, the 2009 Stock Purchase Plan may be
terminated in any manner deemed by the Committee to provide
equitable treatment to participants.
Nontransferable
Right to Purchase
Neither payroll deductions credited to a participants
account, nor any rights with respect to the purchase of shares
of common stock that are granted to a participant under the 2009
Stock Purchase Plan may be assigned, transferred, pledged or
otherwise disposed of in any way, other than by will, the laws
of descent and distribution or beneficiary designation.
Restrictions
on Resale
Shares of common stock purchased under the 2009 Stock Purchase
Plan by a participant will be subject to a one-year restriction
on the sale of such shares.
Amendment
or Discontinuance
The Companys Board or the Committee may at any time and
for any reason amend, suspend or discontinue the 2009 Stock
Purchase Plan. However, no amendment will increase the maximum
aggregate number of shares that may be issued under the 2009
Stock Purchase Plan or change the designation of the
corporations or class of corporations whose employees may
participate in the 2009 Stock Purchase Plan without the approval
of the Companys shareholders within 12 months before
or after such action by the Companys Board or the
Committee.
Term
The 2009 Stock Purchase Plan will expire upon completion of any
offering period under which the limitation on the total number
of shares of common stock reserved for issuance under the 2009
Stock Purchase Plan has been reached unless the 2009 Stock
Purchase Plan is sooner terminated by the Companys Board.
61
Certain
Federal Income Tax Consequences
The following discussion is a brief summary of the principal
United States federal income tax consequences under current
federal income tax laws relating to purchases under the 2009
Stock Purchase Plan. This summary is not intended to be
exhaustive or to constitute tax advice, and, among other things,
does not describe state, local or foreign income and other tax
consequences.
The 2009 Stock Purchase Plan, and the right of participants to
make purchases thereunder, is intended to qualify under the
provisions of Section 423 of the Internal Revenue Code.
Under the applicable Internal Revenue Code provisions, no income
will be taxable to a participant until the sale or other
disposition of the shares purchased under the 2009 Stock
Purchase Plan. Upon such sale or disposition, the participant
will generally be subject to tax in an amount that depends upon
the length of time such shares are held by the participant prior
to disposing of them. If the shares are sold or disposed of more
than two years from the first day of the offering period during
which the shares were purchased and one year from the date of
purchase, or if the participant dies while holding the shares,
the participant (or his or her estate) will recognize ordinary
income measured as the lesser of (1) the excess of the fair
market value of the shares at the time of such sale or
disposition over the purchase price; or (2) an amount equal
to 15% of the fair market value of the shares as of the first
day of the offering period. Any additional gain will be treated
as long-term capital gain. If the shares are held for the
holding periods described above but are sold for a price that is
less than the purchase price, there is no ordinary income and
the participating employee has a long-term capital loss for the
difference between the sale price and the purchase price.
If the shares are sold or otherwise disposed of before the
expiration of the holding periods described above, the
participant will recognize ordinary income generally measured as
the excess of the fair market value of the shares on the date
the shares are purchased over the purchase price. Any additional
gain or loss on such sale or disposition will be long-term or
short-term capital gain or loss, depending on how long the
shares were held following the date they were purchased by the
participant prior to disposing of them.
The Company is not entitled to a deduction for amounts taxed as
ordinary income or capital gain to a participant except to the
extent of ordinary income recognized upon a sale or disposition
of shares prior to the expiration of the holding periods
described above.
Plan
Benefits
The benefits that will be received or allocated to eligible
employees under the 2009 Stock Purchase Plan cannot be
determined at this time because the amount of contributions set
aside to purchase shares of the common stock under the 2009
Stock Purchase Plan (subject to the limitations discussed above)
is entirely within the discretion of each participant.
As of March 6, 2009, 2,538,595 shares of our common
stock had been purchased under the 1999 Stock Purchase Plan. The
following table gives the dollar value of the benefit (the 15%
discount on the purchase
62
price) during the fiscal year ended December 31, 2008 and
the number of shares that were purchased under the 1999 Stock
Purchase Plan by the persons and groups identified below during
such period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Number of
|
|
|
|
|
Shares Purchased
|
|
|
Dollar Value of
|
|
under the 1999 Stock
|
|
|
Benefit in the
|
|
Purchase Plan in the
|
|
|
Fiscal Year Ended
|
|
Fiscal Year Ended
|
Name
|
|
December 31, 2008
|
|
December 31, 2008
|
|
Named Executive Officers:
|
|
|
|
|
|
|
|
|
John K. Welch
|
|
$
|
0
|
|
|
|
0
|
|
President and CEO
|
|
|
|
|
|
|
|
|
John C. Barpoulis
|
|
$
|
0
|
|
|
|
0
|
|
Senior Vice President and CFO
|
|
|
|
|
|
|
|
|
Philip G. Sewell
|
|
$
|
0
|
|
|
|
0
|
|
Senior Vice President, American Centrifuge and Russian HEU
|
|
|
|
|
|
|
|
|
Robert Van Namen
|
|
$
|
723
|
|
|
|
934
|
|
Senior Vice President, Uranium Enrichment
|
|
|
|
|
|
|
|
|
W. Lance Wright
|
|
$
|
0
|
|
|
|
0
|
|
Senior Vice President, Human Resources and Administration
|
|
|
|
|
|
|
|
|
Total for All Executive Officers (12 persons)
|
|
$
|
1,183
|
|
|
|
1,529
|
|
Non-Executive Director Group (9 persons)
|
|
|
N/A
|
|
|
|
N/A
|
|
All employees who are not executive officers, as a group
|
|
$
|
101,336
|
|
|
|
130,354
|
|
Total
|
|
$
|
102,519
|
|
|
|
131,883
|
|
The approval of the 2009 Stock Purchase Plan requires the
affirmative vote of a majority of the shares present at the
annual meeting in person or by proxy and entitled to vote on
this matter.
The Board recommends voting FOR the approval of the proposed
USEC Inc. 2009 Employee Stock Purchase Plan.
63
ITEM 4. RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit and Finance Committee of the Company has appointed the
firm of PricewaterhouseCoopers LLP to serve as the independent
auditors of the Company for 2009, subject to ratification of
this appointment by the shareholders of the Company.
PricewaterhouseCoopers LLP has advised the Company that neither
it nor any member thereof has any direct or material indirect
financial interest in the Company or any of its subsidiaries in
any capacity. One or more representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting
and will have an opportunity to make a statement if he or she
desires to do so. PricewaterhouseCoopers LLP representatives
will also be available to respond to appropriate questions.
The Audit and Finance Committee has sole authority for
appointing and terminating USECs independent auditors for
2009. Accordingly, shareholder approval is not required to
appoint PricewaterhouseCoopers LLP as USECs independent
auditors for 2009. The Audit and Finance Committee believes,
however, that submitting the appointment of
PricewaterhouseCoopers LLP to the shareholders for ratification
is a matter of good corporate governance. If the shareholders do
not ratify the appointment, the Audit and Finance Committee will
review its future selection of the Companys independent
auditors.
The ratification of the appointment of PricewaterhouseCoopers
LLP as USECs independent auditors requires the affirmative
vote of a majority of the shares present at the meeting in
person or by proxy and entitled to vote.
The Board recommends voting FOR ratification of the
appointment of PricewaterhouseCoopers LLP as USECs
independent auditors.
Audit and
Non-Audit Fees
The Audit and Finance Committee pre-approves all audit and
non-audit services provided by the independent auditors prior to
the engagement of the independent auditors with respect to such
services. The Audit and Finance Committee has delegated
pre-approval authority to the Chairman of the Audit and Finance
Committee, who presents any decisions to the full Audit and
Finance Committee at its next scheduled meeting. The following
amounts were billed to the Company by the independent auditors
for services rendered for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Amount Billed
|
|
|
Amount Billed
|
|
|
|
For Year Ended
|
|
|
For Year Ended
|
|
Type of Fee
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
|
(In thousands)
|
|
|
(In thousands)
|
|
|
Audit Fees(1)
|
|
$
|
996
|
|
|
$
|
1,088
|
|
Audit-Related Fees(2)
|
|
|
|
|
|
$
|
300
|
|
Tax Fees(3)
|
|
$
|
66
|
|
|
$
|
99
|
|
All Other Fees(4)
|
|
$
|
3
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,065
|
|
|
$
|
1,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Primarily audits of the financial statements for both periods
including internal control testing over financial reporting and
reviews of quarterly financial statements for both periods. |
|
(2) |
|
Securities issuance efforts in 2007 and SEC comment letter in
2007. |
|
(3) |
|
Primarily services related to selected tax projects and IRS
audit assistance for both periods. |
|
(4) |
|
Service fee for access to electronic publication. |
64
AUDIT AND
FINANCE COMMITTEE REPORT
The Audit and Finance Committee of the Board of Directors is
comprised of four independent directors and operates under a
written charter. The Committee meets with the internal and
independent auditors, with and without management present, to
facilitate and encourage private communication.
In fulfilling its responsibilities, the Committee has reviewed
and discussed with management and the independent auditors the
Companys audited consolidated financial statements for the
year ended December 31, 2008.
The Committee has discussed with the independent auditors the
matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees,
as amended. In addition, the Committee has received the
written disclosures and the letter from the independent
accountant required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent
accountants communications with the Committee concerning
independence, and has discussed with the independent accountant
the independent accountants independence.
The Committee considered and concluded that the provision of
non-audit services by the independent auditors was compatible
with maintaining their independence.
In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors that the
audited consolidated financial statements referred to above be
included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2008.
Audit and Finance Committee
Joseph F. Paquette, Jr., Chairman
Michael H. Armacost
Joseph T. Doyle
W. Henson Moore
In accordance with SEC rules, notwithstanding anything to the
contrary set forth in any of the Companys previous or
future filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might
incorporate this proxy statement or future filings made by the
Company under those statutes, the information included under the
captions Compensation Committee Report, and
Audit and Finance Committee Report shall not be
deemed soliciting material or to be
filed with the SEC and shall not be deemed
incorporated by reference into any of those prior filings or
into any future filings made by the Company under those
statutes, except to the extent that the Company specifically
incorporates these items by reference.
65
DATE FOR
SUBMISSION OF SHAREHOLDER PROPOSALS AND OTHER
INFORMATION
Date for
Submission of Shareholder Proposals
Under the SEC rules, in order to be considered for inclusion in
USECs proxy statement for the 2010 annual meeting of
shareholders, proposals from shareholders must be received by
the Secretary of the Company at Two Democracy Center, 6903
Rockledge Drive, Bethesda, Maryland 20817 not later than
November 20, 2009.
Our bylaws contain an advance notice provision regarding
shareholder proposals that are not sought to be included in the
Companys proxy statement, which provides that, to be
timely, a shareholders notice of intention to bring
business before a meeting must be delivered to the
Companys Secretary, at the Companys principal
executive office, not less than 90 days nor more than
120 days prior to the anniversary date of the previous
years annual meeting, unless the date of the next annual
meeting is more than 30 days before or more than
60 days after such anniversary date, in which case notice
must be received not later than the tenth day following the day
on which notice of the meeting is mailed or public disclosure of
the date of the annual meeting is made. Accordingly, shareholder
nominations for director or other proposed items of business
intended to be brought before the next annual meeting of
shareholders must be received by the Company between
December 31, 2009 and January 30, 2010 in order to be
considered timely, unless the Company gives notice that the date
of the annual meeting is more than 30 days before, or more
than 60 days after, April 30, 2010. Any proposals
received outside of that period will not be permitted to be
raised at the meeting.
Other
Matters
As of the date of this Proxy Statement, the Board of Directors
does not know of any matters to be presented at the 2009 Annual
Meeting other than those specifically set forth above. If other
matters should properly come before the Annual Meeting or any
adjournment thereof, including shareholder proposals that have
been excluded pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, the persons named as
proxies in the enclosed proxy card intend to vote the shares
represented by them in accordance with their best judgment with
respect to such matters.
By order of the Board of Directors,
Peter B. Saba
Senior Vice President, General Counsel and Secretary
Bethesda, Maryland
March 19, 2009
66
APPENDIX A
USEC
Inc.
2009
Equity Incentive Plan
1. Establishment, Duration and Purpose of
Plan.
1.1 Establishment and Duration of
Plan. USEC Inc., a Delaware corporation (the
Company), hereby establishes the USEC Inc.
2009 Equity Incentive Plan (the Plan). The Plan is
effective February 25, 2009 (the Effective
Date), subject to the approval of the shareholders of the
Company. The Plan shall continue in effect until its termination
by the Committee; provided, however, that any
Award shall be granted, if at all, within ten (10) years
from the Effective Date.
1.2 Purpose. The purpose of the
Plan is to advance the interests of the Company, its Affiliates
and its shareholders by providing incentives to attract, retain
and reward individuals performing services for the Company or
its Affiliates and by promoting the growth and profitability of
the Company and its Affiliates. The Plan seeks to achieve this
purpose by providing for Awards in the form of Options, Stock
Appreciation Rights, Restricted Stock Units, Restricted Stock,
Performance Awards, Cash-Based Awards and Other Stock-Based
Awards.
2. Definitions. Whenever
used herein, the following terms shall have their respective
meanings set forth below.
2.1 Affiliate means an entity that
directly, or indirectly through one or more intermediary
entities, controls the Company or (b) an entity that is
controlled by the Company directly or indirectly through one or
more intermediary entities. For this purpose, the terms
control and controlled by mean ownership
of (i) stock possessing more than fifty percent (50%) of
the total combined voting power of all classes of stock entitled
to vote, or more than fifty percent (50%) of the total value of
all shares of all classes of stock of such corporation, or
(ii) an aggregate of more than fifty percent (50%) of the
profits interest or capital interest of a non-corporate entity;
provided, that with respect to any entity in which the
Company owns at least a twenty percent (20%) interest but less
than or equal to a fifty percent (50%) interest, the Committee
may determine that such entity will be an Affiliate for purposes
of this Plan or for purposes of any Award under this Plan if the
Committee has determined prior to the granting of such Award
that there are legitimate business criteria for treating such
entity as an Affiliate.
2.2 Award means any Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit,
Performance Award, Cash-Based Award or Other Stock-Based Award.
2.3 Award Agreement means a written
agreement, contract, or other instrument evidencing an Award
setting forth the terms and conditions of an Award which shall
incorporate the terms of the Plan by reference.
2.4 Board means the Board of Directors
of the Company.
2.5 Cash-Based Award means an Award
granted to a grantee as described in Section 11.1.
2.6 Cause means, unless otherwise
defined in the applicable Award Agreement, any of the following:
(a) the engaging by the grantee in willful misconduct that
is injurious to the Company or its Affiliates, (b) the
embezzlement or misappropriation of funds or material property
of the Company or its Affiliates by the grantee, or the
conviction of the grantee of a felony or the entrance of a plea
of guilty, or nolo contendere by the grantee to a felony,
(c) the willful failure or refusal by the grantee to
substantially perform his or her duties or responsibilities that
continues after demand for substantial performance is delivered
by the Company to the grantee that specifically identifies the
manner in which the Company believes the grantee has not
substantially performed his or her duties (other than any such
failure resulting from the grantees incapacity due to
Disability). For purposes of this definition, no act, or failure
to act, on the grantees part shall be considered
willful unless done, or omitted to be done, by him
or her not in good faith and without reasonable belief that his
or her action or omission was in the best interest of the
Company. Any determination
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of Cause shall be made by the Committee in its sole discretion.
Any such determination shall be final and binding on a grantee.
2.7 Change in Control means, unless such
term or an equivalent term is otherwise defined in the
applicable Award Agreement, the occurrence of any of the
following:
(a) any Person, as such term is used in
Sections 13(d) and 14(d) of the Exchange Act or Persons
acting as a group (other than (A) the Company, (B) any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, and (C) any corporation owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of
Shares), is or becomes the beneficial owner (as
defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company by reason of having acquired such securities
during the
12-month
period ending on the date of the most recent acquisition (not
including any securities acquired directly from the Company or
its Affiliates) representing thirty percent (30%) or more of the
total voting power of the Companys then outstanding voting
securities;
(b) the majority of members of the Companys Board is
replaced during any
12-month
period by directors whose appointment or election is not
endorsed by a majority of the members of the Companys
Board before the date of the appointment;
(c) there is consummated a merger or consolidation of the
Company or any subsidiary of the Company with any other
corporation or other entity, resulting in a change described in
clauses (a), (b), (d), (e) or (f) of this definition,
other than (A) a merger or consolidation that would result
in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving or parent entity) more than sixty percent (60%) of the
total voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately after
such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person, directly or
indirectly, acquired forty percent (40%) or more of the total
voting power of the Companys then outstanding securities
(not including any securities acquired directly from the Company
or its Affiliates);
(d) a liquidation of the Company involving the sale to any
Person or Persons acting as a group of at least forty percent
(40%) of the total gross fair market value of all of the assets
of the Company immediately before the liquidation;
(e) the sale or disposition by the Company or any direct or
indirect subsidiary of the Company to any Person or Persons
acting as a group (other than any subsidiary of the Company) of
assets that have a total fair market value equal to forty
percent (40%) or more of the total gross fair market value of
all of the assets of the Company and its subsidiaries (taken as
a whole) immediately before such sale or disposition (or any
transaction or related series of transactions having a similar
effect), other than a sale or disposition by the Company or any
direct or indirect subsidiary of the Company to an entity, at
least sixty percent (60%) of the total voting power of the
voting securities of which is beneficially owned by shareholders
of the Company in substantially the same proportions as their
beneficial ownership of the Company immediately prior to such
sale;
(f) the sale or disposition by the Company or any direct or
indirect subsidiary of the Company to any Person or Persons
acting as a group (other than any subsidiary of the Company) of
a subsidiary or subsidiaries of the Company credited under GAAP
with forty percent (40%) or more of the total revenues of the
Company and its subsidiaries (taken as a whole) in the current
fiscal year or in any of the two most recently completed fiscal
years (or any transaction or related series of transactions
having a similar effect), other than a sale or disposition by
the Company or any direct or indirect subsidiary of the Company
to an entity, at least sixty percent (60%) of the total voting
power of the voting securities of which is beneficially owned by
shareholders of the Company in substantially the same
proportions as their beneficial ownership of the Company
immediately prior to such sale; or
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(g) a change of the kind described in clauses (a), (b),
(c), or (d) of this definition with respect to any Material
Subsidiary (with such determination made by replacing
Company with Material Subsidiary in each
instance in such clauses); provided, however, that for purposes
of applying this provision to clause (a) of this
definition, a Change in Control shall not be deemed
to occur solely as a result of a Person or Persons acting as a
group becoming the beneficial owner (as determined under
clause (a) of this definition) of less than fifty percent
(50%) of the ownership interests of a Material Subsidiary, but
shall be deemed to occur if such Person or Persons acting as a
group thereafter become the beneficial owner (as determined
under clause (a) of this definition) of fifty percent (50%)
or more of the ownership interests of such Material Subsidiary.
2.8 Code means the Internal Revenue Code
of 1986, as amended from time to time, and any regulations or
administrative guidelines promulgated thereunder.
2.9 Committee means the Compensation
Committee of the Board, or such other committee or subcommittee
of the Board as may be duly appointed to administer the Plan and
having such powers as shall be specified herein or by the Board.
If, at any time, there is no committee of the Board then
authorized or properly constituted to administer the Plan, the
Board shall exercise all of the powers of the Committee granted
herein, and, in any event, the Board may in its discretion
exercise any or all of such powers. For purposes of Awards
granted to Non-Employee Directors pursuant to Section 12 of
the Plan, references to the Committee shall be deemed to be
references to the Board. For purposes of qualifying transactions
as exempt under
Rule 16b-3,
the Committee shall be the entire Board or a Committee
established by the Board of two or more non-employee
directors within the meaning of
Rule 16b-3.
To the extent desirable to qualify Awards granted under the Plan
for the Section 162(m) Exemption, the Committee shall
consist exclusively of two or more outside directors
within the meaning of Section 162(m) of the Code.
2.10 Company means USEC Inc., a Delaware
corporation.
2.11 Covered Employee means any employee
who is designated by the Committee at the time of any Award or
at any subsequent time as reasonably expected to be a
covered employee as defined in Section 162(m)
of the Code and related regulations, or any successor statute,
and related regulations.
2.12 Disability means, unless otherwise
defined in the applicable Award Agreement, a disability that
would qualify as such under the Companys then current
long-term disability plan; provided, that with respect to
Incentive Stock Options, Disability means the
permanent and total disability of the grantee, within the
meaning of Section 22(e)(3) of the Code.
2.13 Dividend Equivalent Right means the
right of a grantee, granted at the discretion of the Committee
or as otherwise provided by the Plan or the Award Agreement, to
receive a credit for the account of such grantee in an amount
equal to the amount of ordinary cash dividends paid on one Share
represented by an Award held by such grantee payable in cash,
Shares or other securities or other property as determined by
the Committee. Dividend Equivalent Rights shall be forfeited or
cancelled if the underlying Award is forfeited or cancelled.
2.14 Exchange Act means the Securities
Exchange Act of 1934, as amended.
2.15 Exercise Price means the price at
which an Option shall be exercised.
2.16 Fair Market Value with respect to
Shares, as of any date, shall mean, as determined by the
Committee, (a) the closing sales price per Share on the New
York Stock Exchange (or, if the shares are no longer traded on
the New York Stock Exchange, any other such market on which the
Shares are traded) on such date, or in the absence of reported
sales on such date, the closing sales price on the immediately
preceding date on which sales were reported, (b) an
arithmetic mean of selling prices on all trading days over a
specified averaging period or a specified averaging period
weighted by volume of trading on each trading day in the period,
that is within thirty (30) days before or thirty
(30) days after the applicable date as determined by the
Committee in its discretion; provided, that if an
arithmetic mean of prices is used to set an Exercise Price or
Strike Price, the commitment to grant such Award based on such
arithmetic mean must be irrevocable before the beginning of the
specified averaging period in accordance with Treasury
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Regulation 1.409A-1(b)(5)(iv)(A),
or (c) in the event there is no public market for the
Shares, the fair market value as determined, in good faith, by
the Committee in its sole discretion; provided, that such
manner is consistent with Treasury
Regulation 1.409A-1(b)(5)(iv)(B).
2.17 Freestanding SAR means an SAR
granted independently of any Option.
2.18 Grant Date means the date an Award
is duly granted by the Committee or the Board or such later date
as may be specified by the Committee or the Board.
2.19 Incentive Stock Option means an
Option that is identified in the Award Agreement as intended to
qualify as an incentive stock option within the meaning of
Section 422 of the Code, and that actually does so qualify.
2.20 Material Subsidiary means any
subsidiary of the Company (a) whose total assets represent
forty percent (40%) or more of the total gross fair market value
of all of the assets of the Company and its subsidiaries (taken
as a whole) at any time in the current fiscal year or in any of
the two most recently completed fiscal years or
(b) credited under GAAP with forty percent (40%) or more of
the total revenues of the Company and its subsidiaries (taken as
a whole) in the current fiscal year or in any of the two most
recently completed fiscal years.
2.21 Net Exercise means a procedure for
exercising an Option, subject to Section 19.6, by which the
grantee will receive a number of Shares determined in accordance
with the following formula:
N = X(A-B)/A, where
N = the number of Shares to be delivered to the
grantee upon exercise of the Option, rounded to the next lower
whole number of Shares;
X = the total number of whole Shares with respect to
which the grantee has elected to exercise the Option;
A = the Fair Market Value of one (1) Share on
the exercise date; and
B = the Exercise Price per Share
2.22 Nonqualified Stock Option means an
option that is not an Incentive Stock Option.
2.23 Non-Employee Director means a
member of the Board who is not an employee of the Company or any
of its Affiliates.
2.24 Option means an Incentive Stock
Option or a Nonqualified Stock Option.
2.25 Other Stock-Based Award means any
Award granted under Section 11 of the Plan of unrestricted
Shares or other types of equity-based or equity-related Awards
not otherwise described by the terms of this Plan.
2.26 Performance Award means performance
shares or performance units or any other Award, denominated in
cash or Shares in accordance with Section 10 which are
based upon the achievement of Performance Goals.
2.27 Performance Goals means the
objective performance goals established by the Committee for
each performance period. Performance Goals may be based upon the
performance of the Company, of any Affiliate, of a division or
unit thereof, or of an individual, or groups of individuals,
using one or more of the Performance Measures or performance
formulas selected by the Committee. Performance Goals may be
expressed on an absolute
and/or
relative basis, may be based on or otherwise employ comparisons
based on internal targets, the past performance of the Company
and/or the
past or current performance of other companies, and in the case
of earnings-based measures, may use or employ comparisons
relating to capital, shareholders equity
and/or
shares outstanding, or to assets or net assets. With respect to
grantees who are not Covered Employees and for Awards not
intended to qualify for the Section 162(m) Exemption, the
Committee may establish other subjective or objective goals,
including individual Performance Goals, which it deems
appropriate.
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2.28 Performance Measures means measures
of business or financial performance as described in
Section 10.3(a) on which Performance Goals are based.
Performance Measures may be expressed on an absolute
and/or
relative basis, may be based on or otherwise employ comparisons
based on internal targets, the past performance of the Company
and/or the
past or current performance of other companies, and in the case
of earnings-based measures, may use or employ comparisons
relating to capital, shareholders equity
and/or
shares outstanding, or to assets or net assets.
2.29 Restricted Stock means any
restricted Share granted under Section 8 of the Plan.
2.30 Restricted Stock Unit means any
unit granted under Section 9 of the Plan.
2.31 Retirement means, unless otherwise
defined in the applicable Award Agreement, the termination of
employment of a grantee with a right to an immediate normal
retirement benefit or immediate unreduced early retirement
benefit under the terms of the applicable Company tax-qualified
retirement plan or, if a grantee is not covered by any such
plan, termination of such grantees employment for a reason
other than Cause on or after such grantees
65th birthday.
In the case of non-employee directors, retirement
shall mean a termination of service on or after the non-employee
directors
75th birthday.
2.32 Rule 16b-3
means
Rule 16b-3
as promulgated under the Exchange Act.
2.33 SAR or Stock Appreciation
Right means an Award granted under Section 7 of
the Plan.
2.34 Section 162(m) Exemption means
the exemption from the limitation on deductibility imposed by
Section 162(m)(4)(C) of the Code.
2.35 Section 409A means
Section 409A of the Code and related regulations, or any
successor statute, and related regulations.
2.36 Securities Act means the Securities
Act of 1933, as amended.
2.37 Shares means common stock
$0.10 par value, of the Company, or such other securities
of the Company as may be designated by the Committee from time
to time, and as adjusted from time to time in accordance with
Section 16.
2.38 Strike Price means the price with
reference to which the value of an SAR is measured.
2.39 subsidiary means, with respect to
any Person (the parent) at any date, any
corporation, limited liability company, partnership, association
or other entity the accounts of which would be consolidated with
those of the parent in the parents consolidated financial
statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association
or other entity (a) of which securities or other ownership
interests representing more than fifty percent (50%) of the
equity or more than fifty percent (50%) of the ordinary voting
power or, in the case of a partnership, more than fifty percent
(50%) of the general partnership interests are, as of such date,
or were, prior to a Change of Control, owned, controlled or
held, or (b) that is, or was prior to a Change of Control,
otherwise Controlled, by the parent or one or more subsidiaries
of the parent or by the parent and one or more subsidiaries of
the parent. For purposes of this paragraph,
Controlled shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability
to exercise voting power, by contract, or otherwise.
2.40 Tandem SAR means an SAR granted
with all or any portion of a related Option.
2.41 1999 Plan means the USEC Inc. 1999
Equity Incentive Plan, as amended.
3. Administration.
3.1 Administration by the
Committee. The Plan shall be administered by the
Committee. Subject to the express provisions of the Plan, all
designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award shall
be within the sole discretion of the Committee, may be made at
any time and shall be final, conclusive, and binding upon all
persons, including the Company, any Affiliate,
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any grantee, any holder or beneficiary of any Award, any
employee, any Non-Employee Director and any individual providing
bona fide services to or for the Company.
3.2 Delegation of Authority. The
Committee shall have the right, from time to time, to delegate
to one or more of its members or to one or more officers of the
Company the authority of the Committee to grant and determine
the terms and conditions of Awards granted under the Plan,
subject to the requirements of Section 157(c) of the
Delaware General Corporation Law (or any successor provision)
and such other limitations as the Committee shall determine. In
no event shall any such delegation of authority be permitted
with respect to Awards to any members of the Board or to any
person who is subject to
Rule 16b-3
under the Exchange Act, to any Covered Employee, or to such
delegate. The Committee shall also be permitted to delegate, to
any appropriate officer or employee of the Company,
responsibility for performing certain ministerial functions
under the Plan. In the event that the Committees authority
is delegated to officers or employees in accordance with the
foregoing, all provisions of the Plan relating to the Committee
shall be interpreted in a manner consistent with the foregoing
by treating any such reference as a reference to such officer or
employee for such purpose. Any action undertaken in accordance
with the Committees delegation of authority hereunder
shall have the same force and effect as if such action was
undertaken directly by the Committee and shall be deemed for all
purposes of the Plan to have been taken by the Committee.
3.3 Powers of the Committee. In
addition to any other powers set forth in the Plan and subject
to the express provisions of the Plan, the Committee shall have
the full and final power and authority, in its discretion to:
(a) determine the persons to whom, and the time or times at
which, Awards shall be granted and the number of Shares, units
or monetary value to be subject to each Award;
(b) determine the number of Shares to be covered by or with
respect to which payments, rights, or other matters are to be
calculated in connection with Awards; (c) determine the
type of Awards to be granted; (d) determine the Fair Market
Value of Shares or other property; (e) determine the terms
and conditions applicable to each Award (which need not be
identical) and any Shares or cash or other property acquired
pursuant thereto; (f) determine the exercise or purchase
price of Shares pursuant to any Award; (g) determine the
method of payment for Shares purchased pursuant to any Award;
(h) determine the method for satisfaction of any tax
withholding obligation arising in connection with Award,
including by the withholding or delivery of Shares;
(i) determine the timing, terms and conditions of the
exercisability or vesting of any Award or any Shares acquired
pursuant thereto; (j) determine the Performance Measures,
performance period, performance formula and Performance Goals
applicable to any Award and to determine and certify the extent
to which such Performance Goals have been attained;
(k) determine the time of the expiration of any Award; (l)
determine the type and time of the grantees termination of
service and the effect of such termination on any Award;
(m) determine all other terms and conditions applicable to
any Shares acquired pursuant an Award not inconsistent with the
terms of the Plan; (n) determine whether and under what
circumstances an Award will be settled in Shares, cash, other
securities, other Awards or other property, or any combination
thereof, or canceled, forfeited, or suspended, and the method by
which Awards may be settled, exercised, canceled, forfeited or
suspended; (o) approve one or more forms of Award
Agreement; (p) amend, modify, extend, cancel or renew any
Award or waive any restrictions or conditions applicable to any
Award or any Shares or other securities acquired pursuant
thereto; (q) accelerate, continue, extend or defer the
exercisability or vesting of any Award or any Shares acquired
pursuant thereto, including with respect to the period following
a grantees termination of service; (r) determine
whether, to what extent, and under what circumstances amounts
payable with respect to an Award shall be deferred either
automatically or at the election of the holder thereof or of the
Committee; (s) construe and interpret the Plan, any Award
Agreement, and any other document affecting Awards under the
Plan or rights under such Awards; (t) prescribe, amend,
suspend, waive or rescind rules, guidelines and policies
relating to the Plan, and adopt sub-plans or supplements to, or
alternative versions of, the Plan, including, without
limitation, as the Committee deems necessary or desirable to
comply with the laws or regulations of or to accommodate the tax
policy, accounting principles or custom of, foreign
jurisdictions whose citizens or residents may be granted Awards;
(u) appoint such agents as it shall deem appropriate for
proper administration of the Plan; (v) correct any defect,
supply any omission or reconcile any inconsistency in the Plan
or any Award Agreement; and (w) to make all other
determinations and take such other actions with respect to the
Plan or any Award as the Committee may deem advisable to the
extent not inconsistent with the express provisions of the Plan
or applicable law. The Committees actions and
determinations under the Plan need not
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be uniform and may be made by the Committee selectively among
individuals who receive, or are eligible to receive, Awards
under the Plan, whether or not such individuals are similarly
situated.
3.4 Indemnification. In addition to
such other rights of indemnification as they may have as members
of the Board or the Committee or as officers or employees of the
Company or its Affiliates and subject to Delaware law, the
members of the Committee and individuals to whom authority to
act for the Board, the Committee or the Company is delegated in
accordance with Section 3 hereof, shall have no liability
for any action taken or determination made in good faith with
respect to the Plan or any Award granted hereunder and shall be
indemnified by the Company against all reasonable expenses,
including attorneys fees, actually and necessarily
incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken
or failure to act, determination made in good faith under or in
connection with the Plan, or any Award or right granted
hereunder; provided, however, that within sixty
(60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.
4. Shares Subject to Plan.
4.1 Maximum Number of
Shares. Subject to adjustment as provided in
Section 16, the number of Shares reserved for delivery
under the Plan pursuant to Awards settled in Shares shall be the
sum of: (i) 4,500,000 Shares, plus (ii) the
number of Shares, if any, underlying grants under the 1999 Plan
that are forfeited, canceled, terminated or are settled in cash
without delivery of Shares on or after the date of approval of
the Plan by the shareholders of the Company. The Shares that may
be delivered under the Plan may consist of authorized but
unissued Shares or treasury Shares or any combination thereof.
4.2 Awards Intended to Qualify for the
Section 162(m) Exemption. The following
limitations shall apply to any Award intended to qualify for the
Section 162(m) Exemption:
(i) Options and Freestanding
SARs. The maximum aggregate number of Shares
underlying any Option or SAR that may be granted to any one
Covered Employee within any fiscal year of the Company is
1,000,000 Shares.
(ii) Restricted Stock and Restricted Stock
Units. The maximum aggregate number of Shares
underlying any Restricted Stock or Restricted Stock Unit to be
settled in Shares that may be granted to any one Covered
Employee within any fiscal year of the Company is
1,000,000 Shares.
(iii) Performance Awards. The
maximum aggregate number of Shares underlying any Performance
Award to be settled in Shares that may be granted to any one
Covered Employee in any fiscal year of the Company is
1,000,000 Shares.
(iv) Cash-Based Awards. The
maximum aggregate value as of the Grant Date of any Cash-Based
Award or Performance Award payable in cash that may be granted
during any fiscal year of the Company to any one Covered
Employee is U.S. $2,000,000.
4.3 Share Counting Rules. If an
Award for any reason expires, is forfeited, or becomes
unexercisable without having been exercised in full, any
unpurchased Shares which were subject thereto shall become
available for future grant under the Plan. Restricted Stock that
is forfeited shall become available for future grant or sale
under the Plan. Shares that are tendered, whether by physical
delivery, by attestation, or by Net Exercise to the Company by
the grantee as full or partial payment of the Exercise Price of
any Award or in payment of any applicable withholding for
federal, state, local or foreign taxes incurred in connection
with the exercise, vesting or settlement of any Award shall
become available for future grant under the Plan. Except as
otherwise provided in this Section, the Committee may determine
rules for counting Shares.
5. Eligibility and Participation.
5.1 Persons Eligible for
Awards. Awards may be granted to employees,
officers, directors and other individuals providing bona fide
services to or for, the Company or any Affiliate, as selected by
the Committee, in its sole discretion, from time to time;
provided, that Non-Employee Directors shall only be
eligible to
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receive Awards granted pursuant to Section 12. The
Committee may also grant Awards to individuals in connection
with hiring or other initial engagement, prior to the date the
individual first performs services for the Company or an
Affiliate, provided, that such Awards shall not become
vested or exercisable, and no Shares shall be delivered to such
individual, prior to the date the individual first commences
performance of such services.
5.2 Participation in the
Plan. Awards are granted solely at the discretion
of the Committee. Eligible persons may be granted more than one
Award.
6. Stock Options.
6.1 Grant. Options shall be
evidenced by an Award Agreement specifying the number of Shares
subject to the Award, the Exercise Price, and such other terms
and conditions as the Committee shall provide, subject to the
provisions of this Section 6 and subject to the vesting
limits in Section 13.1.
6.2 Exercise Price. The Exercise
Price for each Option shall be established in the discretion of
the Committee; provided, however, that the
Exercise Price per Share shall not be less than the Fair Market
Value of a Share on the Grant Date.
6.3 Exercisability and Term of
Options. Options shall be exercisable at such
time or times, or upon such event or events, and subject to such
terms and conditions as shall be determined by the Committee and
set forth in the Award Agreement; provided,
however, that no Option shall be exercisable after the
expiration of ten (10) years after the Grant Date, and no
Option shall be exercisable after an act or omission of the
Grantee that constitutes Cause (whether before, coincident with,
or after the grantees termination of employment). Subject
to the foregoing, unless otherwise specified in the Award
Agreement, each Option shall terminate ten (10) years after
the Grant Date, unless earlier terminated in accordance with its
provisions.
6.4 Payment of Exercise
Price. Except as otherwise provided in the Award
Agreement and subject to Section 19.6, payment of the
Exercise Price for the number of Shares being purchased pursuant
to any Option shall be made (i) in cash or by check or cash
equivalent, (ii) by tender to the Company, or attestation
to the ownership, of Shares owned by the grantee having a Fair
Market Value not less than the Exercise Price, (iii) by
delivery of a properly executed notice of exercise together with
irrevocable instructions to a broker providing for the
assignment to the Company of the proceeds of a sale or loan with
respect to some or all of the Shares being acquired upon the
exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T
as promulgated from time to time by the Board of Governors of
the Federal Reserve System), (iv) by delivery of a properly
executed notice electing a Net Exercise, (v) by such other
consideration as may be approved by the Committee from time to
time to the extent permitted by applicable law, or (vi) by
any combination thereof. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or
attestation to the ownership, of Shares to the extent such
tender or attestation would constitute a violation of the
provisions of any law, regulation or agreement restricting the
redemption of the Shares.
6.5 Effect of Termination of
Service. Subject to earlier termination of the
Option as otherwise provided herein and except as otherwise set
forth in the Award Agreement, an Option shall terminate
immediately upon the grantees termination of service to
the extent that it is then unvested and shall be exercisable
after the grantees termination of service to the extent it
is then vested only during the applicable time period determined
in accordance with this section, and thereafter shall terminate.
(a) Death, Disability, Retirement and Termination
Without Cause. If the grantees service
terminates by reason of the death, Disability or Retirement of
the grantee, or termination of the grantees service by the
Company or an Affiliate for reasons other than for Cause, the
Option shall become vested and nonforfeitable, and to the extent
unexercised, may be exercised by the grantee (or the
grantees guardian or legal representative, if applicable)
at any time prior to the expiration of twelve (12) months
after the date the grantees service terminates, but in any
event no later than the expiration of the term of the Option,
and shall thereafter terminate.
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(b) Termination for Cause. If the
grantees service is terminated by the Company or an
Affiliate for Cause, the Option shall terminate in its entirety
and cease to be exercisable immediately upon the act or omission
of the Grantee that constituted Cause.
(c) Voluntary Termination of Service. If
the grantee voluntarily terminates his or her service for any
reason other than Retirement, the Option, to the extent
unexercised and exercisable for vested Shares on the date the
grantees service terminates, may be exercised by the
grantee at any time prior to the expiration of thirty
(30) days after the date the grantees service
terminates, but in any event no later than the expiration of the
term of the Option, and shall thereafter terminate.
6.6 Incentive Stock Option Limitations and
Terms.
(a) Persons Eligible. Incentive Stock
Options may be granted only to a person who, on the Grant Date,
is an employee of the Company, or any parent
corporation or a subsidiary corporation of the
Company as defined in Sections 424(e) and (f) of the
Code, respectively.
(b) $100,000 Limitation. To the extent
that Incentive Stock Options (granted under all plans of the
Company or any subsidiary corporation become
exercisable by a grantee for the first time during any calendar
year for Shares having a Fair Market Value greater than One
Hundred Thousand Dollars ($100,000), the portion of such Options
which exceeds such amount shall be treated as Nonqualified Stock
Options. For purposes of this section, Options designated as
Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value per Share
shall be determined as of the Grant Date.
(c) Exercise Price. No Incentive Stock
Option granted to any employee who as of the Grant Date owns
stock possessing more than ten percent (10%) of the total
combined voting power of the Company shall have an Exercise
Price per Share less than one hundred ten percent (110%) of the
Fair Market Value of a Share on the Grant Date of the Option.
Notwithstanding the foregoing, an Option (whether an Incentive
Stock Option or a Nonqualified Stock Option) may be granted with
an Exercise Price lower than the minimum Exercise Price set
forth above if such Option is granted pursuant to an assumption
or substitution for another Option in a manner qualifying under
the provisions of Section 424(a) of the Code.
(d) Term. No Incentive Stock Option
granted to any employee who as of the Grant Date owns stock
possessing more than ten percent (10%) of the total combined
voting power of the Company shall be exercisable after the
expiration of five (5) years after the Grant Date of such
Option.
(e) Transferability. Incentive Stock
Options shall not be assignable or transferable other than by
will or the laws of descent and distribution and may be
exercised, during the grantees lifetime, only by the
grantee; provided, however, that the grantee may, to the
extent provided in the Plan in any manner specified by the
Committee, designate in writing a beneficiary to exercise his or
her Incentive Stock Option after the grantees death.
(f) Notification of Disqualifying
Disposition. If any grantee shall make any
disposition of Shares delivered pursuant to the exercise of an
Incentive Stock Option under the circumstances described in
Section 421(b) of the Code (relating to certain
disqualifying dispositions), such grantee shall notify the
Company of such disposition within ten (10) days thereof.
7. Stock Appreciation Rights.
7.1 Grant. An SAR shall be
evidenced by an Award Agreement specifying the number of Shares
subject to the Award, the Strike Price and such other terms and
conditions as the Committee shall provide, subject to the
provisions of this Section 7 and subject to the vesting
limits in Section 13.1.
7.2 Types of SARs Authorized and Strike
Price. Tandem SARs and Freestanding SARs may be
granted under the Plan.
7.3 Strike Price. The Strike Price
for each SAR shall be established in the discretion of the
Committee on the Grant Date; provided, however,
that (a) the Strike Price per Share subject to a Tandem SAR
shall be equal to the Exercise Price per Share under the related
Option on the Grant Date, and (b) the Strike Price per
Share subject to a Freestanding SAR shall be not less than the
Fair Market Value of a Share on the Grant Date.
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7.4 Exercisability and Term of SARs.
(a) Tandem SARs. Tandem SARs shall be
exercisable only at the time and to the extent the related
Option is exercisable, subject to such provisions as the
Committee may specify where the Tandem SAR is granted with
respect to less than the full number of Shares subject to the
related Option. A Tandem SAR shall terminate and cease to be
exercisable no later than the date on which the related Option
expires, terminates or is forfeited or canceled. Upon the
exercise of a Tandem SAR with respect to some or all of the
Shares subject to such SAR, the related Option shall be canceled
automatically as to the number of Shares with respect to which
the Tandem SAR is exercised. Upon the exercise of an Option
related to a Tandem SAR as to some or all of the Shares subject
to such Option, the related Tandem SAR shall be canceled
automatically as to the number of Shares with respect to which
the related Option is exercised.
(b) Freestanding SARs. Freestanding SARs
shall be exercisable at such time or times, or upon such event
or events, and subject to such terms and conditions as shall be
determined by the Committee and set forth in the Award
Agreement; provided, however, that no Freestanding
SAR shall be exercisable after the expiration of ten
(10) years after the Grant Date.
7.5 Exercise of SARs. Upon the
exercise of an SAR, the grantee (or the grantees legal
representative or other person who acquired the right to
exercise the SAR by reason of the grantees death) shall be
entitled to receive payment of an amount for each Share with
respect to which the SAR is exercised equal to the excess, if
any, of the Fair Market Value of a Share on the date of exercise
of the SAR over the Strike Price. Payment of such amount
following exercise shall be made in Shares or cash (or in any
combination thereof) as provided in the Award Agreement. When
the Award Agreement provides for payment in Shares, the number
of Shares to be delivered shall be determined on the basis of
the Fair Market Value of a Share on the date of exercise of the
SAR.
7.6 Effect of Termination of
Service. Subject to earlier termination of the
SAR as provided herein, an SAR shall be exercisable after a
grantees termination of service only to the extent and
during the applicable time period determined in accordance with
Section 6.5 (treating the SAR as if it were an Option) and
thereafter shall terminate.
8. Restricted Stock.
8.1 Grant. Restricted Stock shall
be evidenced by Award Agreements specifying the number of Shares
subject to the Award and such other terms and conditions as the
Committee shall provide, subject to the provisions of this
Section 8.
8.2 Vesting. Restricted Stock shall
be made subject to vesting conditions based upon the
satisfaction of such service requirements, conditions,
restrictions or Performance Goals, as shall be established by
the Committee and set forth in the Award Agreement, and shall be
subject to the vesting limits in Section 13.1. Unless
otherwise provided in the Award Agreement, Restricted Stock that
vests based on continued provision of service shall vest
automatically when the grantee becomes eligible for Retirement.
If either the grant of or satisfaction of vesting conditions
applicable to a Restricted Stock Award is to be contingent upon
the attainment of one or more Performance Goals and the Award is
intended to qualify for the Section 162(m) Exemption, the
Committee shall follow procedures substantially equivalent to
those set forth in Section 10.
8.3 Purchase Price. The Committee
shall determine the purchase price, if any, that a grantee shall
pay for a Restricted Stock. Notwithstanding the foregoing, if
required by applicable state corporate law, the grantee shall
furnish consideration in the form of cash or past services
rendered to a Company or any Affiliate or for its benefit having
a value not less than the par value of the Shares subject to a
Restricted Stock Award. The purchase price, if any, shall be
paid no more than thirty (30) days from the Grant Date of
the Restricted Stock.
8.4 Payment of Purchase
Price. Payment of the purchase price, if any, for
the number of Shares being purchased pursuant to any Restricted
Stock shall be made (a) in cash or by check or cash
equivalent, (b) by such other consideration as may be
approved by the Committee from time to time to the extent
permitted by applicable law, or (c) by any combination
thereof.
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8.5 Voting Rights; Dividends and
Distributions. Except as provided in the Award
Agreement, during any period in which Shares acquired pursuant
to a Restricted Stock Award remain subject to vesting
conditions, the grantee shall have all of the rights of a
shareholder of the Company holding Shares, including the right
to vote such Shares and to receive all dividends and other
distributions paid with respect to such Shares. The right to
receive dividends shall end on the date on which the Restricted
Stock Award is terminated, canceled or forfeited.
8.6 Effect of Termination of
Service. Unless otherwise provided in the Award
Agreement,
(a) if the grantees service terminates for any reason
except as provided below in (b), (c) or (d), all Restricted
Stock shall automatically be forfeited and the Company shall pay
the grantee the lesser of the Fair Market Value of a number of
shares equal to the number of Shares of Restricted Stock
forfeited or the original purchase price paid by the grantee for
the Restricted Stock, if any;
(b) if the grantees service terminates by reason of
the death or Disability of the grantee, all Restricted Stock
held by the grantee as of the date of such termination shall
become vested and nonforfeitable as of the date of such
termination;
(c) if the grantees service is involuntarily
terminated by the Company or an Affiliate for reasons other than
for Cause, all Restricted Stock held by the grantee as of the
date of such termination that vests based on performance of
service shall become vested and nonforfeitable as of the date of
such termination; and
(d) if the grantee has a Retirement or the grantees
service is involuntarily terminated by the Company or an
Affiliate for reasons other than for Cause, all Restricted Stock
held by the grantee as of the date of such termination that
vests based on the satisfaction of Performance Goals or similar
conditions or restrictions other than service shall vest at the
time and in accordance with the terms and conditions of such
Performance Goals or similar conditions or restrictions.
9. Restricted Stock Units.
9.1 Grant. Restricted Stock Units
shall be evidenced by Award Agreements specifying the number of
Restricted Stock Units subject to the Award and such other terms
and conditions as the Committee shall provide, subject to the
provisions of this Section 9.
9.2 Vesting. Restricted Stock Units
may (but need not) be made subject to vesting conditions based
upon the satisfaction of such service requirements, conditions,
restrictions or Performance Goals, as shall be established by
the Committee and set forth in the Award Agreement and shall be
subject to the vesting limits in Section 13.1. If either
the grant of Restricted Stock Units or the vesting conditions
with respect to such Award is to be contingent upon the
attainment of one or more Performance Goals and the Award is
intended to qualify for the Section 162(m) Exemption, the
Committee shall follow procedures substantially equivalent to
those set forth in Section 10.
9.3 Settlement of Restricted Stock
Units. The Company shall deliver to a grantee on
the date on which Restricted Stock Units subject to the
grantees Restricted Stock Unit Award vest or on such other
date as provided in the Award Agreement one (1) Share for
each Restricted Stock Unit then becoming vested or otherwise to
be settled on such date, subject to the withholding of
applicable taxes, if any. Notwithstanding the foregoing, the
Committee, in its discretion, may provide in the Award Agreement
on the Grant Date for settlement of any Restricted Stock Units
by payment to the grantee in cash of an amount equal to the Fair
Market Value on the payment date of the Shares or other property
otherwise to be delivered to the grantee pursuant to this
section.
9.4 Voting Rights, Dividend Equivalent Rights and
Distributions. A grantee shall have no voting
rights with respect to Shares represented by Restricted Stock
Units until the delivery of the Shares subject to such Award (as
evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). However,
the Committee, in its discretion, may provide in the Award
Agreement that the grantee shall be entitled to Dividend
Equivalent Rights with respect to a Restricted Stock Unit during
the period beginning on the date such Award is granted and
ending, with respect to each Share subject to the Award, on the
earlier of the date the Award is settled or the date on which it
is terminated, canceled or
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forfeited. Notwithstanding the foregoing, the receipt of
Dividend Equivalent Rights shall not be made contingent on the
exercise of any Award.
9.5 Effect of Termination of
Service. Unless otherwise provided in the Award
Agreement,
(a) if the grantees service terminates prior to the
date the Restricted Stock Units become vested for any reason
except as provided below in (b) or (c), all Restricted
Stock Units shall automatically be forfeited for no
consideration on the date of such termination of service;
(b) if the grantees service terminates by reason of
the death or Disability of the grantee, all Restricted Stock
Units held by the grantee as of the date of such termination
shall become vested and nonforfeitable as of the date of such
termination; and
(c) if the grantees service is involuntarily
terminated by the Company or an Affiliate for reasons other than
for Cause, or in the event of the grantees Retirement, all
Restricted Stock Units held by the grantee as of the date of
such termination that vest based on performance of service shall
become vested and nonforfeitable as of the date of such
termination, and all Restricted Stock Units held by the grantee
as of the date of such termination that vest based on the
satisfaction of Performance Goals or similar conditions or
restrictions other than service shall vest at the time and in
accordance with the terms and conditions of such Performance
Goals or similar conditions or restrictions.
10. Performance Awards.
10.1 Grant. Performance Awards may
be denominated as performance shares, performance units or other
Awards payable in cash or Shares, and shall be evidenced by an
Award Agreement specifying the number of Shares or units or the
amount of cash subject thereto, the Performance Goals, the
Performance Measures, the performance period, the performance
formula determining the amount of cash or Shares or combination
thereof to be earned based on achievement of the Performance
Goals and such other terms and conditions as the Committee shall
provide, subject to the provisions of this Section 10. The
Plan is designed to permit the grant of Performance Awards that
qualify for the Section 162(m) Exemption. Whenever the
Committee determines that it is advisable, the Committee may
grant Awards that do not qualify for the Section 162(m)
Exemption. Each performance unit shall have an initial value
that is established by the Committee on the Grant Date. Each
performance share shall have an initial value equal to the Fair
Market Value of a Share on the Grant Date.
10.2 Establishment of Performance Period,
Performance Goals and Performance Formula. With
respect to each Performance Award intended to qualify for the
Section 162(m) Exemption, the Committee shall establish the
Performance Goals and the performance formula, as applicable, no
later than the earlier of (a) the date ninety
(90) days after the commencement of the applicable
performance period or (b) the date on which 25% of the
performance period has elapsed, and, in any event, at a time
when the outcome of the Performance Goals remain substantially
uncertain. Once established, the Performance Goals and the
performance formula for an Award intended to qualify for the
Section 162(m) Exemption shall not be changed during the
performance period.
10.3 Measurement of Performance
Goals. Performance Goals shall be established by
the Committee on the basis of one or more Performance Measures,
subject to the following:
(a) Performance Measures. Performance
Measures shall have the same meanings as used in the
Companys financial statements, or, if such terms are not
used in the Companys financial statements, they shall have
the meaning applied pursuant to applicable accounting
principles, or as used generally in the Companys industry.
Performance Measures may be one or more of the following, as
determined by the Committee: revenue; sales; expenses; operating
income; gross profit; gross margin; operating margin; earnings
before any one or more or a combination of: stock-based
compensation expense, interest, taxes, depreciation and
amortization; pre-tax profit; operating income or profit; net
operating income; net income; after tax operating income;
economic value added; cash flow(s); free cash flow; operating
cash flow; balance of cash, cash equivalents and marketable
securities; stock price; earnings or book value per share;
earnings per share; diluted earnings per share; return on
shareholder equity; return on capital;
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return on assets; return on equity; return on capital, capital
employed or investment; return on investment; employee
satisfaction; employee retention, customer satisfaction, safety
or diversity, market share product development; research and
development expenses; completion or attainment of objectively
determinable targets with respect to an identified special
project; total sales or revenues or sales or revenues per
employee; production (separative work units or SWUs); stock
price or total shareholder return; dividends; strategic business
objectives, consisting of one or more objectives based on
meeting specified cost targets, business expansion goals, and
goals relating to acquisitions or divestiture, and except in the
case of Awards to Covered Employees intended to qualify for the
Section 162(m) Exemption, any other performance criteria
established by the Committee.
(b) Permitted Adjustments. In its
discretion, the Committee may, either at the time it grants a
Performance Award or at any time thereafter, provide for the
positive or negative adjustment of the performance formula
applicable to a Performance Award granted to any grantee, except
in the case of an Award intended to qualify for the
Section 162(m) Exemption with respect to a Covered
Employee, to reflect such factors as the Committee may
determine. Notwithstanding the foregoing, Performance Goals
shall, to the extent applicable, and to the extent provided in
the Award Agreement, be adjusted by the Committee to take into
account the effect of the following: changes in accounting
standards that may be required by the Financial Accounting
Standards Board after the Performance Goal is established;
realized investment gains
and/or
losses; extraordinary, unusual, non-recurring or infrequent
items; currency fluctuations; acquisitions; divestitures;
litigation losses; financing activities; expenses for
restructuring or productivity initiatives; other non-operating
items; new laws, cases or regulatory developments that result in
unanticipated items of gain, loss, income or expense; executive
severance arrangements; investment returns relating to
investment vehicles which are unaffiliated with a Company or
divisional operating strategy; bonus expense; the impact on
pre-tax income of interest expense attributable to the
repurchase of Shares; extraordinary dividends or Share
dividends; the effect of corporate reorganizations or
restructuring, spinoff, or a sale of a business unit; and other
items as the Committee determines to be required so that the
operating results of the Company, division, or a Affiliate shall
be computed on a comparative basis from performance period to
performance period; in each case as those terms are defined
under applicable accounting principles and provided in each case
that such excluded items are objectively determinable by
reference to the Companys financial statements, notes to
the Companys financial statements,
and/or
managements discussion and analysis in the Companys
financial statements. Determination by the Committee shall be
final and conclusive on all parties, but shall be based on
relevant objective information or financial data. The Committee
shall have the discretion, on the basis of such criteria as may
be established by the Committee, to reduce some or all of the
value of the Performance Award that would otherwise be paid to
the Covered Employee notwithstanding the attainment of any
Performance Goals and the resulting value of the Performance
Award determined in accordance with the performance formula. No
such reduction may result in an increase in the amount payable
upon settlement of another grantees Performance Award that
is intended to qualify for the Section 162(m) Exemption.
10.4 Settlement of Performance Awards
(a) Determination of Final
Value. Following the completion of the
performance period applicable to a Performance Award, the
Committee shall certify in writing the extent to which the
applicable Performance Goals have been attained and the
resulting final value of the Award earned by the grantee and to
be paid upon its settlement in accordance with the applicable
performance formula.
(b) Payment in Settlement of Performance
Awards. Following the Committees
determination and certification in accordance with
Section 10.4(a), payment shall be made to each eligible
grantee (or such grantees legal representative or other
person who acquired the right to receive such payment by reason
of the grantees death) of the final value of the
grantees Performance Award. Payment of such amount shall
be made in cash, Shares, or a combination thereof as determined
by the Committee on the Grant Date and set forth in the Award
Agreement. Unless otherwise provided in the Award Agreement,
payment shall be made in a lump sum following the close of the
performance period at the time and in accordance with procedures
established by the Committee but in no event later than
21/2
months following the calendar year in which the Performance
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Goals are achieved. If permitted by the Committee, and
consistent with the requirements of Section 409A, the
grantee may elect to defer receipt of all or any portion of the
payment to be made to the grantee pursuant to this section on
such terms and conditions as the Committee may allow. If any
payment is to be made on a deferred basis, the Committee may,
but shall not be obligated to, provide for the payment during
the deferral period of Dividend Equivalent Rights.
(c) Provisions Applicable to Payment in
Shares. If a Performance Award is denominated in
Shares, the number of Shares delivered pursuant to such Award
shall be set forth in the Award Agreement or determined by the
Committee based on the achievement of the applicable Performance
Goals. If payment of a Performance Award that is not denominated
in Shares is to be made in Shares, the number of such Shares
shall be determined by dividing the final value of the
Performance Award by the Fair Market Value of a Share. Shares
delivered in payment of any Performance Award may be fully
vested and freely transferable Shares or may be Shares subject
to vesting conditions as provided in Section 8.2. Any
Shares subject to vesting conditions shall be evidenced by an
appropriate Award Agreement and shall be subject to the
provisions of Section 8.6.
(d) Performance Awards. The vesting
conditions for Performance Awards shall be determined by the
Committee and set forth in the Award Agreement; provided,
that such Awards shall vest proportionally over a minimum period
of one year.
10.5 Voting Rights; Dividend Equivalent Rights and
Distributions. Grantees shall have no voting
rights with respect to Shares represented by Performance Awards
until the date of the delivery of such Shares, if any, in
settlement of such Awards (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer
agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement that the grantee
shall be entitled to Dividend Equivalent Rights during the
period beginning on the date the Award becomes vested and
ending, with respect to each Share subject to the Award, on the
earlier of the date on which the Award is settled or the date on
which it is terminated, canceled or forfeited. Notwithstanding
the foregoing, the receipt of Dividend Equivalent Rights shall
not be made contingent on the exercise of any Award.
10.6 Effect of Termination of
Service. Unless otherwise provided in the Award
Agreement,
(a) if the grantees service terminates for any reason
except as provided below in (b) or (c), all unvested
Performance Units shall automatically be forfeited for no
consideration on the date of such termination of service;
(b) if the grantees service terminates by reason of
the death or Disability of the grantee, all Performance Units
held by the grantee as of the date of such termination shall
become vested and nonforfeitable as of the date of such
termination, and the prorata portion thereof shall become
payable (or any lapse restrictions shall lapse as to a pro rata
portion of the Performance Units, as applicable) as though the
performance needed to achieve target payment had been achieved.
The prorata portion shall be a fraction, the
numerator of which is the number of days of employment during
the performance period, and the denominator of which is the
number of days in the performance period; and
(c) if the grantees service is involuntarily
terminated by the Company or an Affiliate for reasons other than
for Cause, or in the event of the grantees Retirement, a
prorata portion (as defined above) of the Performance Units held
by the grantee as of the date of such termination shall be paid
at the time set forth in the Award Agreement (or any lapse
restrictions shall lapse as to a pro rata portion of the
Performance Units, as applicable), to the extent otherwise
earned on the basis of achievement of the applicable Performance
Goals.
11. Cash-Based Awards and Other Stock-Based
Awards.
11.1 Grant of Cash-Based and Other Stock-Based
Awards. The Committee may grant Cash-Based Awards
and Other Stock-Based Awards evidenced by an Award Agreement in
such form and containing such terms and conditions as the
Committee shall provide, subject to the provisions of this
Section 11. Other Stock-Based Awards, other than
unrestricted Shares, shall be subject to the vesting limits in
Section 13.1.
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11.2 Payment or Settlement of Cash-Based Awards
and Other Stock-Based Awards. Payment or
settlement, if any, with respect to a Cash-Based Award or an
Other Stock-Based Award shall be made in accordance with the
terms of the Award Agreement, in cash, Shares or other
securities or any combination thereof as the Committee
determines. The determination and certification of the final
value with respect to any Cash-Based Award or Other Stock-Based
Award intended to qualify for the Section 162(m) Exemption
shall comply with the requirements applicable to Performance
Awards set forth in Section 10.
11.3 Voting Rights; Dividend Equivalent Rights and
Distributions. Grantees shall have no voting
rights with respect to Shares represented by Other Stock-Based
Awards until the delivery of such Shares (as evidenced by the
appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), in settlement of such
Award. However, the Committee, in its discretion, may provide in
the Award Agreement that the grantee shall be entitled to
Dividend Equivalent Rights with respect to the payment of
ordinary cash dividends on Shares subject to Other Stock-Based
Awards during the period beginning on the date such Award is
granted and ending, with respect to each Share subject to the
Award, on the earlier of the date the Award is settled or the
date on which it is terminated, canceled or forfeited.
Notwithstanding the foregoing, the receipt of Dividend
Equivalent Rights shall not be made contingent on the exercise
of any Award.
11.4 Effect of Termination of
Service. Each Award Agreement shall set forth the
extent to which the grantee shall have the right to receive upon
or after termination of service Cash-Based Awards and Other
Stock-Based Awards outstanding as of such termination of service.
12. Non-Employee Director Awards.
The Committee may provide that all or a portion of a
Non-Employee Directors annual retainer, any committee or
other chairman fees, and any other fees be payable (either
automatically or at the election of an Non-Employee Director) in
the form of Nonqualified Stock Options, Restricted Stock,
Restricted Stock Units,
and/or Other
Stock-Based Awards evidenced by Award Agreements containing such
terms and conditions as the Committee shall determine.
13. Vesting Limits and Change in
Control.
13.1 Vesting Limits. The vesting
conditions for Awards shall be determined by the Committee and
set forth in the Award Agreement provided, however, that
Awards other than Non-Employee Director Awards and Performance
Awards shall vest no faster than proportionally over a minimum
period of three years. Up to 210,000 Shares subject to such
Awards, may be granted without minimum vesting otherwise
required by this Section.
13.2 Change in Control. The
Committee may, in its discretion, provide in any Award
Agreement, or in the event of a Change in Control may take such
actions as it deems appropriate, to provide for the acceleration
of the exercisability, vesting
and/or
settlement in connection with a Change in Control of each or any
outstanding Award or any portion thereof and Shares acquired
pursuant thereto upon such conditions, including termination of
the grantees service prior to, upon, or following such
Change in Control, to such extent as the Committee shall
determine; provided that there shall be no such acceleration
where it could result in additional taxes, penalties or interest
under Section 409A of the Code.
14. Compliance with Securities Law.
The Committee may refuse to deliver any Shares or other
consideration under an Award if, acting in its sole discretion,
it determines that the issuance, delivery or transfer of such
Shares or such other consideration might violate any applicable
law or regulation (including applicable
non-U.S. laws
or regulations) or entitle the Company to recover the same under
Section 16(b) of the Exchange Act, and any payment tendered
to the Company by a grantee, other holder or beneficiary in
connection with the exercise of such Award shall be promptly
refunded to the relevant grantee, holder, or beneficiary.
Without limiting the generality of the foregoing, no Award
granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be
outstanding, unless and until the Committee in its sole
discretion has determined that any such offer, if made, would be
in compliance with all applicable requirements of the
U.S. federal or
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non-U.S. securities
laws and any other laws to which such offer, if made, would be
subject. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any,
deemed by the Companys legal counsel to be necessary to
the lawful delivery and sale of any Shares hereunder shall
relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite
authority shall not have been obtained. As a condition to
delivery of any Share, the Company may require the grantee to
satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation and
to make any representation or warranty with respect thereto as
may be requested by the Company.
15. Tax Withholding.
15.1 Tax Withholding in
General. The Company shall have the right to
deduct from any and all payments made under the Plan, or to
require the grantee, through payroll withholding, cash payment
or otherwise, to make adequate provision for, the federal,
state, local and foreign taxes, if any, required by law to be
withheld by the Company or any Affiliate with respect to an
Award or the Shares acquired pursuant thereto. The Company shall
have no obligation to deliver Shares, to release Shares from an
escrow established pursuant to an Award Agreement, or to make
any payment in cash under the Plan until the Companys or
any Affiliates tax withholding obligations have been
satisfied by the grantee.
15.2 Withholding in Shares. Subject
to Section 19.6, the Company shall have the right, but not
the obligation, to deduct from the Shares deliverable to a
grantee upon the exercise or settlement of an Award, or to
accept from the grantee the tender of, a number of whole Shares
having a Fair Market Value, as determined by the Company, equal
to all or any part of the tax withholding obligations of the
Company or any Affiliate. The Fair Market Value of any Shares
withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the
applicable minimum statutory withholding rates.
16. Adjustments for Corporate Transactions and
Other Events.
16.1 Adjustments. In the event that
the Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other
property), recapitalization, Share split, reverse Share split,
reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase, exchange of Shares or other
securities of the Company, issuance of warrants or other rights
to purchase Shares or other securities of the Company, or other
similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, without the
grantees consent, in such manner as it may deem equitable:
(a) adjust any or all of (i) the number of Shares or
other securities of the Company (or number and kind of other
securities or property) with respect to which Awards may be
granted, (ii) the maximum number of Shares subject to
Awards granted to a grantee pursuant to Section 4.2 of the
Plan, (iii) the number of Shares or other securities of the
Company (or number and kind of other securities or property)
subject to outstanding Awards, and (iv) the Exercise Price
or Strike Price with respect to any Award; (b) if deemed
appropriate, subject to Section 16.3, provide for
(i) the continuation of the outstanding Options if the
Company is the surviving entity of any merger, consolidation or
event of a transaction providing for the sale of all or
substantially all of the Companys Shares or assets or
other transaction or event having a similar effect, or
(ii) the assumption of the Plan and outstanding Options or
the substitution of an equivalent award in respect of securities
of the surviving entity of any merger, consolidation or
transaction providing for the sale of all or substantially all
of the Companys Shares or assets or other transaction or
event having a similar effect; or (c) if deemed
appropriate, make provision for the settlement of the intrinsic
value of the outstanding Options (whether or not exercisable) in
cash, cash equivalents or equity followed by the cancellation of
such Options or other cash payment to the holder of an
outstanding Award; provided, that in each case
(I) with respect to Awards of Incentive Stock Options no
such adjustment shall be authorized to the extent that such
authority would cause the Plan to violate Section 422(b)(1)
of the Code, as from time to time amended, unless otherwise
determined by the Committee, (II) with respect to any Award
no such adjustment shall be authorized to the extent that such
authority would be inconsistent with the Plans
qualification for the Section 162(m) Exemption, unless
otherwise determined by the Committee, and (III) such
adjustment shall be in accordance with Treasury
Regulation Section 1.409A-1(b)(5)(v)(D).
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16.2 Adjustment of Awards Upon the Occurrence of
Certain Unusual or Nonrecurring Events. Subject
to Section 16.1, the Committee may make adjustments in the
terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including,
without limitation, the events described in Section 16.1
hereof) affecting the Company, any Affiliate, or the financial
statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate
in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan;
provided, that no such adjustment shall be authorized to
the extent that such authority would be inconsistent with an
Awards qualification for the Section 162(m)
Exemption, unless otherwise determined by the Committee.
16.3 Limitation on Adjustments and
Substitutions. With respect to Options or SARs,
no substitutions or adjustments under Sections 16.1 or 16.2
shall be made if such substitution or adjustment would cause
such Option or SAR to be treated as deferred compensation
subject to taxes and penalties under Section 409A. With
respect to Options and SARs, any substitutions or adjustments
under Sections 16.1 or 16.2 shall be based on the intrinsic
value of such Option or SAR as determined by the Committee, in
its discretion, as of the date of such substitution or
adjustment. For the absence of doubt, if the Exercise Price per
Share or Strike Price per Share of an Option or SAR is higher
than the Fair Market Value of a Share, the intrinsic value of
such Option or SAR shall equal zero.
17. Amendment or Termination of Plan.
The Board may at any time suspend or terminate the Plan. The
Board may amend the Plan at any time, provided that any material
amendment to the Plan will not be effective unless approved by
the Companys shareholders. For this purpose, a material
amendment is any amendment that would (a) materially
increase the benefits accrued to participants under the Plan,
(b) materially increase the number of Shares available
under the Plan (except by operation of the provisions of
Section 16), (c) change the types of awards that may
be granted under the Plan, (d) materially modify the
requirements for participation in the Plan, or (e) require
approval of the Companys shareholders under any applicable
law, regulation or rule, including the rules of any stock
exchange or market system upon which the Shares may then be
listed. The Committee may, in its sole and absolute discretion
and without the consent of any grantee, amend the Plan or any
Award Agreement, to take effect retroactively or otherwise, as
it deems necessary or advisable for the purpose of conforming
the Plan or such Award Agreement to any present or future law,
regulation or rule applicable to the Plan. The Committee may
amend any Award Agreement in any other manner or may waive any
conditions or rights under, or alter, suspend, discontinue,
cancel or terminate, any Award theretofore granted,
prospectively or retroactively; provided, that any such
amendment, waiver, alteration, suspension, discontinuance,
cancellation or termination that would materially adversely
affect the rights of any grantee or any holder or beneficiary of
any Award theretofore granted shall not to that extent be
effective without the consent of the affected grantee, holder,
or beneficiary. No amendment or termination of the Plan shall
result in any acceleration or delay in the payment of any amount
due under this Plan except to the extent such acceleration or
delay would not result in amounts granted or payable under the
Plan becoming subject to (i) the gross income inclusion set
forth in Section 409A(a)(1)(A) of the Code, or
(ii) the interest or additional tax set forth in
Section 409A(a)(1)(B) of the Code.
18. Section 409A.
18.1 Awards Subject to
Section 409A. The provisions of this
Section 18 shall apply to any Award or portion thereof that
is or becomes deferred compensation subject to
Section 409A, notwithstanding any provision to the contrary
contained in the Plan or the Award Agreement applicable to such
Award.
18.2 Termination of
Employment/Service. The term termination of
employment or termination of service shall
mean the grantees separation from service as
defined in Code Section 409A. For this purpose, a
separation from service is deemed to occur on the
date that the Company, and the grantee reasonably anticipate
that the level of bona fide services the grantee would perform
for the Company
and/or any
Affiliates after that date (whether as an employee, director or
other service provider) would permanently decrease to a level
that, based on the facts and circumstances, would constitute a
separation from service; provided that a decrease to a level
that is 50% or more of the average level of bona fide services
provided over the prior
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36 months shall not be a separation from service, and a
decrease to a level that is 20% or less of the average level of
such bona fide services shall be a separation from service. The
Committee retains the right and discretion to specify, and may
specify, whether a separation from service occurs for
individuals providing services to the Company or an Affiliate
immediately prior to an asset purchase transaction in which the
Company or an Affiliate is the seller who provide services to a
buyer after and in connection with such asset purchase
transaction; provided, such specification is made in accordance
with the requirements of Treasury
Regulation Section 1.409A-1(h)(4).
To the extent that settlement of an Award subject to
Section 409A is triggered by a grantees separation
from service, if the grantee is then a specified
employee (as defined in Section 409A(a)(2)(B)(i) of
the Code) of the Company, no distribution shall be made before
the date which is six (6) months after such grantees
date of separation from service, or, if earlier, the date of the
grantees death.
18.3 Avoidance of Section 409A
Penalties. The Company intends for the Plan, as
described herein and as may be subsequently amended from time to
time, and for every Award Agreement under this Plan, to be
written, construed and operated (and the Plan and each Award
Agreement shall be written, construed and operated) in a manner
such that no amounts granted or payable under the Plan or such
Award Agreement become subject to (a) the gross income
inclusion set forth within Section 409A(a)(1)(A) of the
Code, or (b) the interest and additional tax set forth
within Section 409A(a)(1)(B) of the Code. The provisions of
the Plan shall not be construed as a guarantee by the Company of
any particular tax effect to any grantee. The Company shall not
be liable to any grantee for any payment or grant made under
this Plan that is determined to result in an additional tax,
penalty or interest under Section 409A of the Code, nor for
reporting in good faith any payment or grant made under this
Plan as an amount includible in gross income under
Section 409A of the Code.
19. Miscellaneous Provisions.
19.1 Forfeiture Events. If the
Company is required to prepare an accounting restatement due to
the material noncompliance of the Company, as a result of
misconduct, with any financial reporting requirement under the
securities laws, any grantee who knowingly or through gross
negligence engaged in the misconduct, or who knowingly or
through gross negligence failed to prevent the misconduct, and
any grantee who is one of the individuals subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002, shall reimburse the Company the amount of any payment in
settlement of an Award earned or accrued during the twelve-
(12-) month period following the first public issuance or filing
with the United States Securities and Exchange Commission
(whichever first occurred) of the financial document embodying
such financial reporting requirement.
19.2 Rights as Employee or Service
Provider. No person, even though eligible
pursuant to Section 5, shall have a right to be selected as
a grantee, or, having been so selected, to be selected again as
a grantee. Nothing in the Plan or any Award granted under the
Plan shall confer on any grantee a right to remain an employee,
service provider or a director of the Company or interfere with
or limit in any way any right of the Company or any Affiliate to
terminate the grantees service at any time. To the extent
that an employee of any Affiliate receives an Award under the
Plan, that Award shall in no event be understood or interpreted
to mean that the Company is the employees employer or that
the employee has an employment relationship with the Company.
19.3 Rights as a Shareholder. A
grantee shall have no rights as a shareholder with respect to
any Shares covered by an Award until the date of the delivery of
Shares pursuant to the Award (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized
transfer agent of the Company). No adjustment shall be made for
dividends, distributions or other rights for which the record
date is prior to the date such Shares are delivered, except as
provided in Section 16 or another provision of the Plan.
For the absence of doubt, a grantee to whom Restricted Shares
are delivered is entitled to all rights of a shareholder of the
Company.
19.4 Transferability of
Awards. Except as provided below, no Award shall
be assigned, alienated pledged, attached, sold or otherwise
transferred or encumbered by a grantee, except by will or the
laws of descent and distribution. Notwithstanding the foregoing,
an Award Agreement may provide that a grantee may
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transfer any vested Award, other than an Incentive Stock Option,
to members of his or her immediate family (as defined as his or
her spouse, children or grandchildren) or to one or more trusts
for the exclusive benefit of such grantee or his or her
immediate family members or partnerships in which such grantee
or his or her immediate family members are the only partners, if
the transfer is approved by the Committee and the grantee does
not receive any consideration for the transfer. Any such
transferred Award shall continue to be subject to the same terms
and conditions that were applicable to such Award immediately
prior to its transfer (except that such transferred Award shall
not be further transferable by the transferee), Compliance with
Section 15 of the Plan (respecting tax withholding) shall
remain the responsibility of the original grantee, and the
rights of any person under the Award upon or after the
termination of service of the original grantee shall depend on
the circumstances of the original grantees termination of
service. Any transfer shall be subject to such other rules and
procedures as the Committee may specify.
19.5 Delivery of Title to
Shares. Subject to any governing rules or
regulations, the Company shall issue or cause to be delivered
the Shares acquired pursuant to an Award and shall deliver such
Shares to or for the benefit of the grantee by means of one or
more of the following: (a) by delivering to the grantee
evidence of book entry Shares credited to the account of the
grantee, (b) by depositing such Shares for the benefit of
the grantee with any broker with which the grantee has an
account relationship, or (c) by delivering such Shares to
the grantee in certificate form.
19.6 Fractional Shares. No
fractional Shares shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled,
terminated or otherwise eliminated. In the event of any payment
by a grantee of any Exercise Price, withholding obligation or
otherwise under the Plan, where such payment is made in Shares,
payment shall be made in whole Shares only, in a number whose
Fair Market Value does not exceed the amount to be paid. Any
amount payable with a value of a fractional Share shall be paid
by grantee or the Company, as applicable, in cash or such other
manner as determined by the Committee.
19.7 Retirement and Welfare
Plans. Neither Awards made under this Plan nor
Shares or cash paid pursuant to such Awards may be included as
compensation for purposes of computing the benefits
payable to any grantee under the Companys or any
Affiliates retirement plans (both qualified and
non-qualified) or welfare benefit plans unless such other plan
expressly provides that such compensation shall be taken into
account in computing a grantees benefit.
19.8 Beneficiary Designation. Each
grantee may file with the Company a written designation of a
beneficiary who is to receive any benefit under the Plan to
which the grantee is entitled in the event of such
grantees death before he or she receives any or all of
such benefit. The grantee may change or revoke any such
designation without the consent of any designated beneficiary.
Each designation will revoke all prior designations by the same
grantee, shall be in a form prescribed by or acceptable to the
Committee, and will be effective only when filed by the grantee
in writing with the Committee during the grantees
lifetime. If a grantee dies without an effective designation of
a beneficiary who is living (or in existence) at the time of the
grantees death, the Company will pay any remaining unpaid
benefits to the grantees surviving spouse, if any, or if
none then to the grantees estate.
19.9 Severability. If any one or
more of the provisions (or any part thereof) of this Plan shall
be held invalid, illegal or unenforceable in any respect, such
provision shall be modified so as to make it valid, legal and
enforceable, and the validity, legality and enforceability of
the remaining provisions (or any part thereof) of the Plan shall
not in any way be affected or impaired thereby.
19.10 No Constraint on Corporate
Action. Nothing in this Plan shall be construed
to: (a) limit, impair, or otherwise affect the
Companys or any Affiliates right or power to make
adjustments, reclassifications, reorganizations, or changes of
its capital or business structure, or to merge or consolidate,
or dissolve, liquidate, sell, or transfer all or any part of its
business or assets; or (b) limit the right or power of the
Company or any Affiliate to take any action which such entity
deems to be necessary or appropriate.
A-19
19.11 Governing Law. The validity,
construction, and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall
be determined in accordance with the laws of the State of
Delaware without giving effect to the conflict of law principles
thereof.
19.13 No Trust or
Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund
of any kind or a fiduciary relationship between the Company or
any Affiliate and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general
creditor of the Company or any Affiliate.
19.14 Construction. Captions and
titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the
Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include
the singular. Use of the term or is not intended to
be exclusive, unless the context clearly requires otherwise.
A-20
APPENDIX B
USEC Inc.
2009 Employee Stock Purchase Plan
SECTION 1.
Purpose. The purpose of the USEC Inc. 2009
Employee Stock Purchase Plan (the Plan) is to
provide employees of USEC Inc. (the Company) and its
subsidiaries with an opportunity to become part owners of the
Company by purchasing Shares (as defined below) through periodic
offerings financed by payroll deductions. It is the intention of
the Company to have the Plan qualify as an Employee Stock
Purchase Plan under Section 423 of the Code (as
defined below). The provisions of the Plan shall be construed
accordingly.
SECTION 2.
Definitions. As used in the Plan, the
following terms shall have the meanings set forth below:
Affiliate shall mean (i) any entity that,
directly or indirectly, is controlled by the Company;
(ii) any entity in which the Company has a significant
equity interest; and (iii) an affiliate of the Company, as
defined in
Rule 12b-2
promulgated under Section 12 of the Exchange Act, in each
case determined by the Committee.
Board shall mean the Board of Directors of the
Company.
Code shall mean the Internal Revenue Code of 1986,
as amended from time to time.
Change in Control shall mean the occurrence of any
of the following:
(i) any Person, as such term is used in
Sections 13(d) and 14(d) of the Exchange Act or Persons
acting as a group (other than (A) the Company, (B) any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, and (C) any corporation owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of
Shares), is or becomes the beneficial owner (as
defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company by reason of having acquired such securities
during the
12-month
period ending on the date of the most recent acquisition (not
including any securities acquired directly from the Company or
its Affiliates) representing thirty percent (30%) or more of the
total voting power of the Companys then outstanding voting
securities; or
(ii) the majority of members of the Companys Board is
replaced during any
12-month
period by directors whose appointment or election is not
endorsed by a majority of the members of the Companys
Board before the date of the appointment; or
(iii) there is consummated a merger or consolidation of the
Company or any subsidiary of the Company with any other
corporation or other entity, resulting in a change described in
clauses (i), (ii), (iv), (v), or (vi) of this definition,
other than (A) a merger or consolidation that would result
in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving or parent entity) more than sixty percent (60%) of the
total voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately after
such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person, directly or
indirectly, acquired forty percent (40%) or more of the total
voting power of the Companys then outstanding securities
(not including any securities acquired directly from the Company
or its Affiliates); or
(iv) a liquidation of the Company involving the sale to any
Person or Persons acting as a group of at least forty percent
(40%) of the total gross fair market value of all of the assets
of the Company immediately before the liquidation; or
(v) the sale or disposition by the Company or any direct or
indirect subsidiary of the Company to any Person or Persons
acting as a group (other than any subsidiary of the Company) of
assets that have a total fair market value equal to forty
percent (40%) or more of the total gross fair market value of
all of the
B-1
assets of the Company and its subsidiaries (taken as a whole)
immediately before such sale or disposition (or any transaction
or related series of transactions having a similar effect),
other than a sale or disposition by the Company or any direct or
indirect subsidiary of the Company to an entity, at least sixty
percent (60%) of the total voting power of the voting securities
of which is beneficially owned by shareholders of the Company in
substantially the same proportions as their beneficial ownership
of the Company immediately prior to such sale; or
(vi) the sale or disposition by the Company or any direct
or indirect subsidiary of the Company to any Person or Persons
acting as a group (other than any subsidiary of the Company) of
a subsidiary or subsidiaries of the Company credited under GAAP
with forty percent (40%) or more of the total revenues of the
Company and its subsidiaries (taken as a whole) in the current
fiscal year or in any of the two most recently completed fiscal
years (or any transaction or related series of transactions
having a similar effect), other than a sale or disposition by
the Company or any direct or indirect subsidiary of the Company
to an entity, at least sixty percent (60%) of the total voting
power of the voting securities of which is beneficially owned by
shareholders of the Company in substantially the same
proportions as their beneficial ownership of the Company
immediately prior to such sale; or
(vii) a change of the kind described in clauses (i), (ii),
(iii), or (iv) of this definition with respect to any
Material Subsidiary (with such determination made by replacing
Company with Material Subsidiary in each
instance in such clauses); provided, however, that for purposes
of applying this provision to clause (i) of this
definition, a Change in Control shall not be deemed
to occur solely as a result of a Person or Persons acting as a
group becoming the beneficial owner (as determined under
clause (i) of this definition) of less than fifty percent
(50%) of the ownership interests of a Material Subsidiary, but
shall be deemed to occur if such Person or Persons acting as a
group thereafter become the beneficial owner (as determined
under clause (i) of this definition) of fifty percent (50%)
or more of the ownership interests of such Material Subsidiary.
Committee shall mean a committee of the Board
designated by the Board to administer the Plan.
Compensation shall mean the total earnings, prior to
withholding and prior to employee elective contributions to a
plan described in Sections 125 or 401(k) of the Code, paid
to an Employee during the applicable pay period, including
overtime and bonus payments. Compensation shall exclude
relocation expenses, tax gross ups, referral bonuses, tuition
reimbursement, the imputed value of group life insurance, car
allowances, contest earnings, any employer contributions to a
401(k) plan, or other similar extraordinary remuneration
received by such Employee.
Employee shall mean any individual who is an
employee of the Company or of any Subsidiary whose customary
employment with the Company (or such Subsidiary) is at least
twenty (20) hours per week or five (5) months in any
calendar year (within the meaning of Sections 423(b)(4)(B)
and (C) of the Code, respectively). For purposes of the
Plan, the employment relationship shall be treated as continuing
intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave
exceeds ninety (90) days and the Employees right to
reemployment is not guaranteed either by statute or by contract,
the employment relationship shall be deemed to have terminated
on the ninety-first (91st) day of such leave.
Enrollment Date shall mean the first day of each
Offering Period.
Exchange Act shall mean the Securities Exchange Act
of 1934, as amended.
Fair Market Value with respect to the Shares, as of
any date, shall mean (i) the closing sales price of the
Shares on the New York Stock Exchange (or, if the Shares are no
longer traded on the New York Stock Exchange, any other such
market on which the Shares are traded), or in the absence of
reported sales on such date, the closing sales price on the
immediately preceding date on which sales were reported; and
(ii) in the event there is no public market for the Shares,
the fair market value as determined, in good faith, by the
Committee in its sole discretion.
B-2
Material Subsidiary shall mean any subsidiary of the
Company (a) whose total assets represent forty percent
(40%) or more of the total gross fair market value of all of the
assets of the Company and its subsidiaries (taken as a whole) at
any time in the current fiscal year or in any of the two most
recently completed fiscal years or (b) credited under GAAP
with forty percent (40%) or more of the total revenues of the
Company and its subsidiaries (taken as a whole) in the current
fiscal year or in any of the two most recently completed fiscal
years. For purposes of the definitions of Change in
Control and Material Subsidiary only,
subsidiary shall mean, with respect to any Person
(the parent) at any date, any corporation, limited
liability company, partnership, association or other entity the
accounts of which would be consolidated with those of the parent
in the parents consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of
such date, as well as any other corporation, limited liability
company, partnership, association or other entity (a) of
which securities or other ownership interests representing more
than fifty percent (50%) of the equity or more than fifty
percent (50%) of the ordinary voting power or, in the case of a
partnership, more than fifty percent (50%) of the general
partnership interests are, as of such date, or were, prior to a
Change of Control, owned, controlled or held, or (b) that
is, or was prior to a Change of Control, otherwise Controlled,
by the parent or one or more subsidiaries of the parent or by
the parent and one or more subsidiaries of the parent. For
purposes of this paragraph, Controlled shall mean
the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by
contract, or otherwise.
Offering Period shall mean a period of approximately
six (6) months, or such other period (not to exceed one
(1) year) as determined by the Committee.
Participant shall mean an Employee who elects to
participate in the Plan by filing an Enrollment Form (as defined
in Section 6(b) hereof).
Person shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, government or political subdivision
thereof or other entity.
Purchase Date shall mean the date the Plan
administrator shall acquire Shares for Participants (which shall
be the last business day of the Offering Period, unless
otherwise determined by the Committee).
SEC shall mean the Securities and Exchange
Commission or any successor thereto and shall include the staff
thereof.
Shares shall mean shares of common stock,
$0.10 par value, of the Company, or such other securities
of the Company as may be designated by the Committee from time
to time.
Subsidiary shall mean a subsidiary of the Company as
defined under Section 424(f) of the Code.
SECTION 3.
Administration.
(a) Authority of Committee. The Plan shall be administered
by the Committee. Subject to the express provisions of the Plan
and applicable law, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to construe and
interpret the Plan and may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem
necessary or desirable for the administration of the Plan,
including, but not limited to, the determination of Offering
Periods hereunder.
(b) Committee Discretion Binding. Unless otherwise
expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or
with respect to the Plan, shall be within the sole discretion of
the Committee, may be made at any time and shall be final,
conclusive, and binding upon all Persons, including the Company,
any Subsidiary, any Participant, any Employee, and any
designated beneficiary.
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(c) Delegation. Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more
officers or managers of the Company or any Subsidiary, or to a
committee of such officers or managers, the authority, subject
to such terms and limitations as the Committee shall determine,
to administer the Plan.
(d) No Liability. No member of the Board or Committee or
any delegate pursuant to Section 3(c) shall be liable for
any action taken or determination made in good faith with
respect to the Plan.
SECTION 4.
Shares
Available for Awards.
(a) Shares Available. Subject to adjustment as provided in
Section 4(b), the number of Shares which may be sold under
the Plan shall not exceed 1,000,000 Shares. The Board or
Committee may specify the number of Shares to be offered during
an Offering Period. In the event that any Shares offered during
an Offering Period are not purchased, such unpurchased Shares
may again be sold under the Plan.
(b) Adjustments. In the event that the Committee determines
that any dividend or other distribution (whether in the form of
cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase, or exchange of Shares or
other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or
other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it
may deem appropriate, make such equitable adjustments in the
Plan and the then outstanding offerings as it deems necessary
and appropriate, including but not limited to changing the
number of Shares reserved under the Plan and the price of the
current offering.
(c) Source of Shares. Shares which are to be delivered
under the Plan may be obtained by the Company from its treasury,
by purchases on the open market or from private sources, or by
issuing authorized but unissued Shares. Any issuance of
authorized but unissued Shares shall be approved by the Board or
the Committee. Authorized but unissued Shares may not be
delivered under the Plan if the purchase price thereof is less
than the par value of the Shares. Subject to the provisions of
Section 11(i) below, fractional Shares may not be issued
and sold under the Plan.
(d) Oversubscription. If the number of Shares that
Participants become entitled to purchase is greater than the
number of Shares offered in a particular Offering Period or
remaining available, the available Shares shall be allocated by
the Committee among such Participants in such manner as it deems
fair and equitable.
SECTION 5.
Eligibility. All Employees (including
Employees who are directors) of the Company or of any Subsidiary
designated by the Committee, will be eligible to participate in
the Plan, in accordance with such rules as may be prescribed
from time to time; provided, however, that such
rules shall neither permit nor deny participation in the Plan
contrary to the requirements of the Code (including, but not
limited to, Sections 423(b)(3), (4) and
(5) thereof) and regulations promulgated thereunder. No
Employee shall be eligible to participate in the Plan until the
completion of six (6) months of service. During an Offering
Period, no Employee may participate under the Plan if such
Employee would own 5% or more of the total combined voting power
or value of all classes of stock of the Company or any
Subsidiary. For purposes of the preceding sentence, the rules of
Section 424(d) of the Code shall apply in determining the
stock ownership of an Employee, and Shares which the Employee
would be permitted to purchase under the current Offering Period
shall be treated as Shares owned by the Employee.
B-4
SECTION 6.
Participation
and Offerings.
(a) The Company may authorize one or more Offering Periods
to Employees to purchase Shares under the Plan. The Committee
may at any time suspend an Offering Period if required by law or
if the Committee determines in good faith that it is in the best
interests of the Company.
(b) Eligible Employees may become Participants in such
Offering Periods at such time(s) as determined by the Committee
by filing a form of enrollment (Enrollment Form)
with the Company authorizing specified regular payroll
deductions. Subject to paragraph (c) below, payroll
deductions for such purpose shall be in one percent (1%)
increments of Compensation subject to a minimum of one percent
(1%) and a maximum deduction of ten percent (10%) of
Compensation per pay period.
(c) Notwithstanding anything else contained herein, no
Employee may purchase Shares under this Plan and any other
qualified employee stock purchase plan (within the meaning of
Section 423 of the Code) of the Company or its Subsidiaries
at a rate which exceeds $25,000 of Fair Market Value of Shares
for each calendar year in which a purchase is executed. For
purposes of this Section, Fair Market Value shall be determined
as of the first date of the applicable Offering Period.
(d) The Company and participant Subsidiaries will establish
Participant recordkeeping accounts for the payroll deductions
authorized pursuant to Section 6(b). No interest shall be
earned by or credited to any recordkeeping account.
(e) A Participant may, by written notice at any time during
the Offering Period, direct the Company to reduce or increase
payroll deductions, subject to a maximum of one change per
Offering Period.
(f) A Participant may elect to withdraw all of his or her
entire account prior to the end of the Offering Period. No
partial withdrawal will be permitted unless otherwise determined
by the Committee. Any such withdrawal will terminate such
Participants participation for the remainder of the
Offering Period. If a Participant withdraws from an Offering
Period, payroll deductions shall not resume at the beginning of
the succeeding Offering Period unless the Participant delivers
to the Company a new Enrollment Form.
(g) As of the last day of the Offering Period, the
recordkeeping account of each Participant shall be totaled.
Subject to the provisions of Section 6(f) above, if such
account contains sufficient funds to purchase one or more Shares
as of that date, the employee shall be deemed to have purchased
the largest number of Shares at the price determined under
Section 7 below; such Participants account will be
charged, on that date for the amount of the purchase, and for
all purposes under the Plan, the Participant shall be deemed to
have acquired the Shares on that date. The registrar for the
Company will make an entry on its books and records evidencing
that such Shares have been duly issued as of that date.
(h) Any Shares purchased pursuant to Section 6(g)
above shall include a one-year restriction on their sale. The
Participant will not be allowed to sell the Shares during the
one-year restriction period and the registrar of the Company
will note in its records the restriction during the one-year
restriction period.
(i) Each Participant may be requested to notify the Company
of any disposition of Shares purchased pursuant to the Plan
prior to the expiration of the holding periods set forth in
Section 423(a) of the Code.
SECTION 7.
Purchase Price. The purchase price of a Share
pursuant to a transaction under the Plan shall be 85% of the
Fair Market Value of a Share on the Purchase Date of the
applicable Offering Period.
SECTION 8.
Termination of Employment. Upon a
Participants ceasing to be an Employee of the Company or a
participating Subsidiary, for any reason, he or she shall be
deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such Participants account during
the Offering Period, but not yet used shall be returned the
Participant or, in the case of his or her death, to the
Participants designated beneficiary
B-5
or estate. If the Participant ceases to be an Employee of the
Company because he or she voluntarily resigns his or her
position with the Company or retires or is terminated for cause,
the Shares in his or her account may not be sold or a stock
certificate issued until the restriction period under
Section 6(h) has expired. If the Participant ceases to be
an Employee of the Company because of death, disability or
termination other than for cause, then the restriction period of
Section 6(h) remaining on any Shares in his or her account
shall be deemed to have expired on the date employment is
terminated.
SECTION 9.
Transferability. Neither payroll deductions
credited to a Participants account nor any rights with
regard to the purchase of Shares under the Plan may be assigned,
transferred, pledged, or otherwise disposed of in any way (other
than by will, laws of descent and distribution, or beneficiary
designation) by a Participant. Any such attempt at assignment,
transfer, pledge, or other disposition shall be without effect,
except that the Company may treat such act as an election to
withdraw funds from an Offering Period in accordance with
Section 6(f) hereof.
SECTION 10.
Change in Control. Notwithstanding anything in
the Plan to the contrary, in the event of a Change in Control of
the Company, if the Committee determines that the operation or
administration of the Plan could prevent Participants from
obtaining the benefit of accrued purchase rights under the Plan,
the Plan may be terminated in any manner deemed by the Committee
to provide equitable treatment to Participants. Equitable
treatment may include, but is not limited to, payment to each
Participant of the amount of contributions standing to such
Participants account as of the date of the Change in
Control, plus an additional amount determined by
(A) calculating the number of full Shares that could have
been purchased for the Participant immediately prior to the
Change in Control at the purchase price (determined under
Section 7 at the beginning of the Offering Period (the
Purchase Price)); and (B) multiplying that
number of Shares by the difference between the Purchase Price
per Share and the highest price paid per Share in connection
with the Change in Control of the Company.
SECTION 11.
General
Provisions.
(a) Amendments. The Board or the Committee may, from time
to time, alter, amend, suspend, or discontinue the Plan;
provided, however, that no such alteration or
amendment shall increase the maximum aggregate number of Shares
that may be issued under the Plan or change the designation of
the corporations or class of corporations whose Employees may
participate in the Plan without the approval of the shareholders
within 12 months before or after such action of the Board
or the Committee.
(b) No Right to Employment. The grant of an Award shall not
be construed as giving a Participant the right to be retained in
the employment of the Company or any Subsidiary. Further, the
Company or any Subsidiary may at any time dismiss a Participant
from employment, free from any liability or claim under the
Plan, unless otherwise expressly provided in the Plan.
(c) No Rights as Shareholder. Subject to the provisions of
the Plan, no Participant or holder or beneficiary of any
purchase shall have any rights as a shareholder with respect to
any Shares to be distributed under the Plan until such Shares
have been purchased pursuant to Section 6(g) hereof.
(d) Obligatory Status. Participation in the Plan shall
impose no obligation upon a Participant to purchase any Shares
under the Plan.
(e) Application of Funds. The proceeds received by the
Company from the sale of Shares pursuant to purchases under the
Plan will be used for general corporate purposes.
(f) Severability. If any provision of the Plan becomes or
is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any person, or would disqualify the Plan
or any purchase under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended
to conform to the
B-6
applicable laws, or if it cannot be construed or deemed amended
without, in the determination of the Committee, materially
altering the intent of the Plan, such provision shall be
stricken as to such jurisdiction or person, and the remainder of
the Plan shall remain in full force and effect.
(g) Governing Law. The validity, construction, and effect
of the Plan and any rules and regulations relating to the Plan
shall be determined in accordance with the laws of the State of
Delaware, without giving effect to the conflict of law
principles thereof.
(h) Other Laws. The Committee may refuse to issue or
transfer any Shares if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such
other consideration might violate any applicable law or
regulation (including applicable
non-U.S. laws
or regulations) or entitle the Company to recover the same under
Section 16(b) of the Exchange Act, and any payment tendered
to the Company by a Participant, other holder or beneficiary in
connection with the purchase of such Shares shall be promptly
refunded to the relevant Participant, holder or beneficiary.
Without limiting the generality of the foregoing, no Plan
provision shall be construed as an offer to sell securities of
the Company, and no such offer shall be outstanding, unless and
until the Committee in its sole discretion has determined that
any such offer, if made, would be in compliance with all
applicable requirements of the U.S. federal or
non-U.S. securities
laws and any other laws to which such offer, if made, would be
subject.
(i) No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan. Any payroll deductions
credited to a Participants account which are not
sufficient to purchase a full Share shall in the discretion of
the Committee be retained in the Participants
recordkeeping account for the subsequent Offering Period,
subject to early withdrawal by the Participant as provided in
Section 6(f) hereof, or distributed as a cash payment on
the Purchase Date.
(j) Shareholder Approval. This Plan shall not be effective
until approved by the shareholders of the Company as provided in
Section 423(b)(2) of the Code and the regulations
thereunder.
(k) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or
any provision thereof.
SECTION 12.
Term of
the Plan.
(a) Effective Date. The Plan shall be effective as of
February 25, 2009, provided it has been approved by the
Companys shareholders.
(b) Expiration Date. The Plan shall terminate, subject to
the provisions of Sections 4(d) and 11(a) above, coincident
with the completion of any Offering Period under which the
limitation on the total number of Shares in Section 4(a)
above has been reached.
B-7
.NNNNNNNNNNNN000004000000000.000000 ext000000000.000000 ext NNNNNNNNN000000000.000000
ext000000000.000000 extMR A SAMPLEDESIGNATION (IF ANY)000000000.000000 ext000000000.000000 extADD
1Electronic Voting InstructionsADD 2ADD 3You can vote by Internet or telephone! ADD 4Available 24
hours a day, 7 days a week!ADD 5Instead of mailing your proxy, you may choose one of the two voting
ADD 6methods 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 10:00 a.m., Eastern Daylight
Time, on April 30, 2009.Vote by Internet Log on to the Internet and go to
www.envisionreports.com/USU 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.Using a black ink pen, mark your votes
with an X as shown inX Follow the instructions provided by the recorded message. this example.
Please do not write outside the designated areas.Annual Meeting Proxy Card123456 C0123456789
123453IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3A Proposals The Board of Directors
recommends a vote FOR each of the listed nominees and FOR Proposals 2, 3 and 4.1. Election of
Directors:For WithholdFor WithholdFor Withhold+01 James R. Mellor02 Michael H. Armacost03 -
Joyce F. Brown04 Joseph T. Doyle05 H. William Habermeyer06 John R. Hall07 William J.
Madia08 W. Henson Moore09 Joseph F. Paquette, Jr.10 John K. WelchFor Against AbstainFor
Against Abstain2. The approval of the proposed USEC Inc. 2009 Equity3. The approval of the proposed
USEC Inc. 2009 Employee Incentive Plan.Stock Purchase Plan.4. To ratify the appointment of
PricewaterhouseCoopers LLP as USECs independent auditors for 2009.B Non-Voting ItemsChange of
Address Please print new address below.C Authorized Signatures This section must be completed
for your vote to be counted. Date and Sign BelowPlease sign exactly as name(s) appears hereon.
Joint owners should each sign. When signing as attorney, executor, administrator, corporate
officer, trustee, guardian, or custodian, please give full title.Date (mm/dd/yyyy) Please print
date below.Signature 1 Please keep signature within the box.Signature 2 Please keep signature
within the box.C 1234567890J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE140 CHARACTERS) MR
A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE ANDNNNNNNN1 U P X0 2 1 0 7
3 1MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND +
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.3IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3Proxy USEC Inc.THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF USEC INC. FOR THE 2009 ANNUAL MEETING OF USEC SHAREHOLDERSJames
R. Mellor, John K. Welch and Peter B. Saba, or any of them, each with full power of substitution,
are hereby authorized to vote the undersigneds shares of common stock, par value $0.10 per share,
of USEC Inc. (USEC) at the 2009 Annual Meeting of Shareholders of USEC, scheduled to be held on
Thursday, April 30, 2009, at 10:00 a.m., local time, at the Bethesda Marriott Suites, 6711
Democracy Boulevard, Bethesda, MD 20817, and at any and all adjournments, postponements,
continuations or reschedulings thereof (the
Annual Meeting), upon the matters set forth in the Proxy Statement furnished by USEC (the Proxy
Statement) and upon such other matters as may properly come before the Annual Meeting, voting as
specified on this card with respect to the matters set forth in the Proxy Statement, and voting in
the discretion of the above-named persons on such other matters as may properly come before the
Annual Meeting.The undersigned hereby revokes all proxies previously given by the undersigned to
vote at the Annual Meeting.THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR DIRECTOR,
FOR THE PROPOSED USEC INC. 2009 EQUITY INCENTIVE PLAN, FOR THE PROPOSED USEC INC. 2009 EMPLOYEE
STOCK PURCHASE PLAN, AND FOR THE RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT
AUDITORS.PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED, POSTAGE-PREPAID,
BUSINESS REPLY ENVELOPE. NO ADDITIONAL POSTAGE IS NECESSARY IF SUCH ENVELOPE IS MAILED IN THE
UNITED STATES.(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) |