UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __ )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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RENTECH, 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):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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(3)
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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):
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Proposed maximum aggregate value of transaction:
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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.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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Rentech, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 2011
You are cordially invited to attend the annual meeting of shareholders of Rentech, Inc.
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Time and Date:
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10:00 a.m. PDT on Wednesday, May 11, 2011. Check-in will begin at 9:00 a.m. PDT and you should allow
ample time for the check-in procedures.
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Place:
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Sheraton Gateway Los Angeles Hotel, 6101 W. Century Boulevard, Los Angeles, California 90045
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Items of Business:
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(1) To elect four directors for terms of three years each;
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(2) To approve the adoption of the Amended and Restated 2009 Incentive Award Plan;
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(3) To approve, on an advisory (non-binding) basis, the compensation of our named executive officers;
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(4) To approve, on an advisory (non-binding) basis, the frequency with which shareholders will have an
opportunity to provide an advisory approval of our executive compensation program;
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(5) To ratify the selection of PricewaterhouseCoopers LLP as Rentechs independent registered public
accounting firm; and
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(6) To transact such other business as may properly come before the meeting or any adjournments or
postponements of the meeting.
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Adjournments and
Postponements:
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Any action on the items of business described above may be considered at the annual meeting at the time
and on the date specified above or at any time and date to which the annual meeting may be properly
adjourned or postponed.
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Record Date:
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You are entitled to vote only if you were a Rentech shareholder as of the close of business on March 24,
2011.
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Meeting Admission:
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You are entitled to attend the annual meeting only if you were a Rentech shareholder as of the close of
business on the Record Date or hold a valid proxy for the annual meeting, or are a guest of the Company.
You should be prepared to present photo identification for admittance. If you are a registered
shareholder, an admission ticket is attached to your proxy card. Please detach and bring the admission
ticket with you to the meeting. Shareholders who do not present admission tickets at the meeting will be
admitted only upon verification of ownership. If your shares are held in the name of your broker, bank,
or other nominee, you must bring to the meeting an account statement or letter from the nominee
indicating that you beneficially owned the shares on the Record Date for voting. Persons acting as
proxies must bring a valid proxy from a record holder who owns shares as of the close of business on the
Record Date. If you do not provide photo identification and comply with the other procedures outlined
above, you will not be admitted to the annual meeting.
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Voting:
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Your vote is very important. Whether or not you plan to attend the annual meeting, we hope you will vote
as soon as possible. You may vote your shares via a toll-free telephone number or over the Internet. If
you received a paper copy of a proxy or voting instruction card by mail, you may submit your proxy or
voting instruction card for the annual meeting by completing, signing, dating and returning your proxy or
voting instruction card in the pre-addressed envelope provided. Votes submitted through the Internet or
by telephone must be received by 12:00 p.m. Eastern Time, on May 10, 2011. Internet and telephone voting
are available 24 hours per day. If you vote via Internet or telephone, you do not need to return a proxy
card. You are invited to attend the meeting; however, to ensure your representation at the meeting, you
are urged to vote via the Internet or telephone, or mark, sign, date, and return the enclosed proxy card
as promptly as possible in the postage-prepaid envelope enclosed for that purpose. Any shareholder of
record attending the meeting may vote in person even if he or she has voted via the Internet or
telephone, or returned a proxy card.
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By Order of the Board of Directors,
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Los Angeles, California
Date: March 31, 2011
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Colin M. Morris
Secretary
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YOUR VOTE IS IMPORTANT
This proxy statement is furnished in connection with the solicitation of proxies by Rentech,
Inc. on behalf of the Board of Directors, for the 2011 annual meeting of shareholders. The proxy
statement and the related proxy form are first being distributed to shareholders on or about April
7, 2011. You can vote your shares using one of the following methods:
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Vote through the Internet at the website shown on the proxy card.
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Vote by telephone using the toll-free number shown on the proxy card.
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Complete and return a written proxy card.
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Attend Rentechs 2011 annual meeting of shareholders and vote.
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Votes submitted through the Internet or by telephone must be received by 12:00 p.m. Eastern Time,
on May 10, 2011. Internet and telephone voting are available 24 hours per day. If you vote
via Internet or telephone, you do not need to return a proxy card.
You are invited to attend the meeting; however, to ensure your representation at the meeting, you
are urged to vote via the Internet or telephone, or mark, sign, date, and return the enclosed proxy
card as promptly as possible in the postage-prepaid envelope enclosed for that purpose. Any
shareholder of record attending the meeting may vote in person even if he or she has voted via the
Internet or telephone, or returned a proxy card.
TABLE OF CONTENTS
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APPENDIX A Amended and Restated 2009 Incentive Award Plan
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RENTECH, INC.
10877 Wilshire Blvd., Suite 600
Los Angeles, California 90024
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 2011
This proxy statement is furnished to shareholders in connection with the solicitation by the Board
of Directors of Rentech, Inc. (Rentech, the Company, we, us or our) of proxies for use at
the annual meeting of shareholders to be held at the Sheraton Gateway Los Angeles Hotel, 6101 W.
Century Boulevard, Los Angeles, California, on Wednesday, May 11, 2011 at 10:00 a.m. (PDT), and at
any adjournments or postponements of the meeting.
Rentech anticipates that this proxy statement and the accompanying form of proxy will be first sent
or given to shareholders on or about April 7, 2011.
VOTING SECURITIES AND VOTING RIGHTS
Only shareholders of record at the close of business on March 24, 2011 are entitled to notice of
and to vote at the annual meeting or any adjournments or postponements of the meeting. On March 24,
2011, 222,234,542 shares of common stock were outstanding held by 542 shareholders of record. Each
share of common stock outstanding on that date entitles the holder to one vote on each matter
submitted to a vote at the meeting. Cumulative voting is not allowed. Shares may only be voted by
or on behalf of the shareholder of record. If a holders shares are held of record by another
person, such as a stock brokerage firm or bank, that person must vote the shares as the shareholder
of record.
Shareholders may vote in person or by proxy at the annual meeting. All properly executed proxies
received prior to the commencement of voting at the meeting, and which have not been revoked, will
be voted in accordance with the directions given. If no specific instructions are given for a
matter to be voted upon, the proxy holders will vote the shares covered by proxies received by them
(i) FOR the election of the four nominees to the Board of Directors; (ii) FOR the adoption of the
Amended and Restated 2009 Incentive Award Plan; (iii) FOR the approval, on an advisory
(non-binding) basis, of the compensation of our named executive officers; (iv) FOR the approval, on
an advisory (non-binding) basis, of the frequency with which shareholders will have an opportunity
to provide an advisory approval of our executive compensation program; and (v) FOR the ratification
of the selection of PricewaterhouseCoopers LLP as Rentechs independent registered public
accounting firm.
A quorum for the transaction of business at the meeting requires the presence at the annual
meeting, in person or by proxy, of the holders of not less than a majority of the issued and
outstanding shares of common stock. If a quorum is present, the four nominees for election as
directors who receive the greatest number of votes in favor of their election at the meeting will
be elected. Cumulative voting is not allowed for the election of directors. The proposals to
approve the adoption of the Amended and Restated 2009 Incentive Plan, to approve, on an advisory
(non-binding) basis, the compensation of our named executive officers, to approve, on an advisory
(non-binding) basis, the frequency with which shareholders will have an opportunity to provide an
advisory approval of our executive compensation program and to ratify the selection of
PricewaterhouseCoopers LLP as Rentechs independent registered public accounting firm will be
approved if the votes cast favoring the proposal exceed the votes cast opposing the proposal.
1
If brokers have not received any instruction from their customers on how to vote the customers
shares on a particular proposal, the brokers are allowed to vote on routine matters but not on
non-routine proposals. The absence of votes by brokers on non-routine matters are broker
non-votes. Abstentions and broker non-votes will be
counted as present for purposes of establishing a quorum, but will have no effect on the election
of directors, the proposal to adopt the Amended and Restated 2009 Incentive Award Plan, the
proposal to approve, on an advisory (non-binding) basis, the compensation of our named executive
officers, the proposal to approve, on an advisory (non-binding) basis, the frequency with which
shareholders will have an opportunity to provide an advisory approval of our executive compensation
program or the proposal to ratify the appointment of PricewaterhouseCoopers LLP as Rentechs
independent registered public accountants.
Any shareholder giving a proxy pursuant to the present solicitation has the power to revoke it at
any time before it is exercised. It may be revoked by giving a subsequent proxy or by mailing to
our principal executive offices at 10877 Wilshire Boulevard, Suite 600, Los Angeles, California
90024, Attn: Secretary, an instrument of revocation. If you vote electronically via the Internet or
telephone, a proxy may be revoked by the submission of a later electronic proxy. A proxy may also
be revoked by attending the meeting and giving our Secretary a vote in person (subject to the
restriction that a shareholder holding shares in street name must bring to the meeting a legal
proxy from the broker, bank, or other nominee holding that shareholders shares which confirms that
shareholders beneficial ownership of the shares and gives the shareholder the right to vote the
shares).
Rentech will bear the cost of solicitation of proxies, including expenses in connection with
preparing and mailing this proxy statement. We will furnish copies of solicitation materials to
brokerage houses, fiduciaries, and custodians to forward to beneficial owners of our common stock
that are held in their names. In addition, we will reimburse brokerage firms and other persons
representing beneficial owners of stock for their expenses in forwarding solicitation materials to
such beneficial owners. We have retained MacKenzie Partners, Inc. to assist us with the
solicitation of proxies and will pay an aggregate fee of $10,000 plus expenses. Original
solicitation of proxies by mail may be supplemented by telephone, facsimile, and personal
solicitation by our directors, officers, and other employees. No additional compensation will be
paid to our directors, officers, or other employees for these services.
The purposes of the meeting and the matters to be acted upon are set forth in the foregoing
attached Notice of Annual Meeting. As of the date of this proxy statement, management knows of no
other business that will be presented for consideration at the meeting. However, if any such other
business shall properly come before the meeting, votes will be cast pursuant to said proxies in
respect of any such other business in accordance with the best judgment of the persons acting under
said proxies.
2
ELECTION OF DIRECTORS
(Proxy Item 1)
There are currently nine positions on Rentechs Board of Directors. The Board of Directors
currently is divided into three classes, one of which currently consists of four directors, one of
which currently consists of two directors and one of which currently consists of three directors.
The directors in each class are elected for three years and until the election and qualification of
their successors.
Michael S. Burke, General (ret) Wesley K. Clark
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Ronald M. Sega and Dennis L. Yakobson have been
nominated for election as directors for a term of three years each and until their successors have
qualified and are elected. The four nominees are presently members of the Board of Directors. All
other members of the Board of Directors will continue in office until the expiration of their
respective terms at the 2012 or 2013 annual meetings of shareholders.
If your vote is properly submitted, it will be voted for the election of the nominees, unless
contrary instructions are specified. Each nominee has consented to serve if elected. Although the
Board of Directors has no reason to believe that any of the nominees will be unable to serve as a
director, should that occur, the persons appointed as proxies in the accompanying proxy card will
vote, unless the number of nominees or directors is reduced by the Board of Directors, for such
other nominee or nominees as the Nominating Committee of the Board may propose and the Board
approves.
Information Regarding Nominees for Election to the Board of Directors:
Michael S. Burke
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Director, Age 48
Mr. Burke was appointed as a member of our Board of Directors
in March 2007. Mr. Burke is currently the Executive Vice President, Chief Financial Officer of
AECOM Technology Corporation (NYSE: ACM), a global provider of professional technical and
management support services to government and commercial clients. Mr. Burke joined AECOM as Senior
Vice President, Corporate Strategy in October 2005. From 1990 to 2005, Mr. Burke was with the
accounting firm, KPMG LLP. He served in various senior leadership positions, most recently as a
Western Area Managing Partner from 2002 to 2005 and was a member of KPMGs Board of Directors from
2000 through 2005. While on the KPMG Board of Directors, Mr. Burke served as the Chairman of the
Board Process and Governance Committee and a member of the Audit and Finance Committee. Mr. Burke
also serves on various charitable and community boards. Mr. Burke received a B.S. degree in
accounting from the University of Scranton and a J.D. degree from Southwestern University. Our
Board of Directors has determined that Mr. Burke brings to our Board extensive accounting,
financial and business experience, including experience with a public company, and therefore he
should serve on our Board.
General (ret) Wesley K. Clark, Director, Age 66
General Clark was appointed as a member of our
Board of Directors in December 2010. General Clark is a businessman, educator, writer and
commentator. In 2003, General Clark founded the strategic consulting firm of Wesley K. Clark &
Associates, where he currently serves as chairman and chief executive officer. From June 2000
through March 2003, General Clark was a managing director at Stephens, Inc., an investment banking
firm based in Arkansas. Prior to that, from June 1966 through June 2000, General Clark served in
the U.S. Army where he held numerous staff and command positions and rose to the rank of 4-star
general. He served as NATO Supreme Allied Commander and Commander in Chief of the U.S.-European
Command from July 1997 through May 2000. General Clark serves on the board of directors of AMG
Advanced Metallurgical Group N.V., a global producer of specialty metals and metallurgical vacuum
furnace systems; BNK Petroleum Inc., an energy company focused on the acquisition, exploration and
production of large oil and gas reserves; Bankers Petroleum Ltd., a Canadian based oil and gas
exploration and production company; Juhl Wind Inc., a wind energy provider; Prysmian S.r.L., a
provider of high-technology cables and systems for energy and telecommunication; Amaya Gaming, a
Canadian company in the electronic gaming industry; and Rodman & Renshaw, an investment banking
firm. General Clark previously served on the board of directors of Argyle Security, Inc., a
provider of security solutions; NutraCea, a processor of rice-bran based products; and EWT, N.V., a
producer of wind farms. General Clark graduated first in his class from the United States Military
Academy at West Point in 1966. He received degrees in Philosophy, Politics and Economics from
Oxford University (B.A. and M.A.) where he was a Rhodes Scholar from 1966 to 1968. Our Board of
Directors has determined that General Clark brings to our Board extensive leadership experience,
including having held high-ranking positions in the U.S. Army, and directorial and governance
experience and familiarity with our industry as a result of having served on boards of
directors of numerous companies in the renewable and alterative energy industry, and therefore he
should serve on our Board.
3
Ronald M. Sega, Director, Age 58
Dr. Sega was appointed as a member of our Board of Directors in
December 2007. Currently Dr. Sega serves as Vice President and Enterprise Executive for Energy and
the Environment at both Colorado State University (CSU) and The Ohio State University (OSU). He is
the Woodward Professor of Systems Engineering, Director of Graduate Studies in Systems Engineering
and serves as chair of the Sustainability, Energy, and Environment Advisory Committee at CSU. Dr.
Sega also serves on the Presidents and the Provosts Council on Sustainability at OSU. Since 2008,
Dr. Sega has served as a member of the Board of Directors of Woodward, Inc. (NASDAQ: WWD), a
company that designs, manufactures and services energy control systems and components for aircraft
and industrial engines and turbines. From August 2005 to August 2007, Dr. Sega served as Under
Secretary for the U.S. Air Force. In that capacity, he oversaw the recruiting, training and
equipping of approximately 700,000 people and a budget of approximately $110 billion. Designated as
the Department of Defense Executive Agent for Space, Dr. Sega developed, coordinated and integrated
plans and programs for space systems of all Department of Defense space major defense acquisition
programs. From August 2001 until July 2005, Dr. Sega was Director of Defense Research and
Engineering, Office of the Secretary of Defense. Dr. Sega worked for NASA from 1990 until 1996 and
made two shuttle flights during his career as an astronaut. Dr. Sega received a B.S. in
mathematics and physics from the United States Air Force Academy in 1974, a master of science
degree in physics from The Ohio State University in 1975, and a doctorate in electrical engineering
from the University of Colorado at Boulder in 1982. Our Board of Directors has determined that Mr.
Sega brings to our Board a strong background in science and research, aerospace, energy and
operations with significant experience in leadership positions, including those involving
responsibility for large budgets, and therefore he should serve on our Board.
Dennis L. Yakobson, Director and Chairman of the Board, Age 74
Mr. Yakobson has served as a
director of Rentech and Chairman of the Board since 1983 and is one of the founders. In December
2005, he resigned from his position as Chief Executive Officer and currently serves as the
Chairman. He was employed as Vice President of Administration and Finance of Nova Petroleum
Corporation, Denver, Colorado, from 1981 to 1983. From 1979 to 1983, he served as a Director and
Secretary of Nova Petroleum Corporation. He resigned from those positions in November 1983 to
become a Director and assume the presidency of Rentech. From 1976 to 1981, he served as a Director,
Secretary and Treasurer of Power Resources Corporation in Denver, a mineral exploration company,
and was employed by it as the Vice President-Land. From 1975 to 1976, he was employed by Wyoming
Mineral Corporation in Denver as a contract administrator. From 1971 through 1975, he was employed
by Martin Marietta Corporation, Denver, as marketing engineer in space systems. From 1969 to 1971,
he was employed by Martin Marietta in a similar position. From 1960 to 1969, he was employed by
Grumman Aerospace Corporation, his final position with it being contract administrator with
responsibility for negotiation of prime contracts with governmental agencies. He is a Director of
GTL Energy Pty Ltd., a private company based in Adelaide, Australia. He received a Bachelor of
Science degree in Civil Engineering from Cornell University in 1959 and a Masters in Business
Administration degree from Adelphi University in 1963. Our Board of Directors has determined that
Mr. Yakobson brings to our Board knowledge of our business and, as the founder, his historical
understanding of our operations combined with his experience in leadership positions, including
directorial and governance experience on boards of directors, at multiple engineering and energy
companies, and therefore he should serve on our Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION
OF THE NOMINEES
Information Regarding Continuing Directors with Terms Expiring in 2012:
D. Hunt Ramsbottom, Chief Executive Officer, President and Director, Age 53
Mr. Ramsbottom was
appointed President and director of Rentech in September 2005 and Chief Executive Officer in
December 2005. Mr. Ramsbottom had been serving as a consultant to Rentech since August 2005 under
the terms of a Management Consulting Agreement Rentech entered into with Management Resource
Center, Inc. Mr. Ramsbottom has over 25 years of experience building and managing growth companies.
Prior to accepting his position at Rentech, Mr. Ramsbottom held various key management positions
including: Principal and Managing Director of Circle Funding Group, LLC, from 2004 to 2005; Chief
Executive Officer and Chairman of M2 Automotive, Inc., from 1997 to 2004; and Chief Executive
Officer of Thompson PBE (NASDAQ: THOM), from 1989 to 1997, which was acquired by FinishMaster, Inc.
in 1997. On April 17, 2005, M2 Automotive, Inc. completed an assignment for the benefit of
its creditors pursuant to a state law insolvency proceeding. Mr. Ramsbottom holds a Bachelor of
Science degree from Plymouth State College. Our Board of Directors has determined that Mr.
Ramsbottom brings to our Board knowledge of our business and his historical understanding of our
operations gained through his service as Rentechs President and Chief Executive Officer and
experience with growth companies as Chief Executive Officer and Principal and Managing Director,
and therefore he should serve on our Board.
4
Halbert S. Washburn, Director, Age 51
Mr. Washburn was appointed as a director of Rentech in
December 2005. Mr. Washburn has over 25 years of experience in the energy industry. Since April
2010, Mr. Washburn has been the Chief Executive Officer of BreitBurn GP, LLC, the general partner
of BreitBurn Energy Partners LP (NASDAQ: BBEP). From March 2006 through April 2010 he was the
Co-Chief Executive Officer and served on the Board of Directors of BreitBurn GP, LLC. He has served
as the Co-founder, Co-President and Director of BreitBurn Energy Corporation since 1988. He also
serves as Director and Co-Chief Executive Officer for BreitBurn Energy Holdings, LLC and serves as
Co-Chief Executive Officer of BEH (GP), LLC. Mr. Washburn previously served as Chairman on the
Executive Committee of the Board of Directors of the California Independent Petroleum Association.
He also served as Chairman of the Stanford University Petroleum Investments Committee and as
Secretary and Chairman of the Wildcat Committee. Mr. Washburn holds a Bachelor of Science degree in
Petroleum Engineering from Stanford University. Our Board of Directors has determined that Mr.
Washburn brings to our Board knowledge of our business, extensive experience in our industry,
including his service as an executive officer and director of several BreitBurn entities, and
familiarity with start-up and public energy companies, and therefore he should serve on our Board.
Information Regarding Continuing Directors with Terms Expiring in 2013:
Michael F. Ray, Director, Age 58
Mr. Ray was appointed as a member of our Board of Directors in
May 2005. Mr. Ray founded and has served as President of ThioSolv, LLC since 2001. ThioSolv, LLC is
in the business of developing and licensing technology to the refining and chemical sector. Mr. Ray
was appointed to the Board of Directors for Cyanco Corporation in October 2008. Cyanco Corporation,
a producer of sodium cyanide in the Western United States, is a subsidiary of Oaktree Capital
Management which holds a controlling interest. From 1995 to 2001, Mr. Ray served as Vice President
of Business Development for the Catalyst and Chemicals Division of The Coastal Corporation. Mr. Ray
worked for Coastal Chem, Inc. as President from 1990 to 1995 and Vice President of Corporate
Development and Administration from 1986 to 1990. From 1985 to 1986, Mr. Ray served as Vice
President of Carbon Dioxide Marketing. Mr. Ray worked for Liquid Carbonic Corporation as Regional
Operations Manager from 1981 to 1985 and Plant Manager from 1980 to 1981. Mr. Ray received his
Bachelor of Science in Industrial Technology from Western Washington University and his Masters of
Business Administration from Houston Baptist University. Mr. Ray previously served as a member of
the Board of Directors of Coastal Chem, Inc., Cheyenne LEADS and Wyoming Heritage Society. Mr. Ray
also served on the Nitrogen Fertilizer Industry Ad Hoc Committee, University of Wyoming EPSCOR
Steering Committees and Wyoming Governors committee for evaluating state employee compensation.
Our Board of Directors has determined that Mr. Ray brings to our Board experience with start-up and
technology companies, familiarity with the business of developing and licensing technology and with
the nitrogen fertilizer industry and directorial and governance experience as a director of Coastal
Chem, Inc., and therefore he should serve on our Board.
Edward M. Stern, Director, Age 52
Mr. Stern was appointed as a member of our Board of Directors in
December 2006 and has more than 25 years of experience leading the successful development,
financing and operation of major energy and infrastructure projects. Mr. Stern is the President and
Chief Executive Officer of PowerBridge, LLC and under his guidance, Neptune Regional Transmission
System, LLC, a PowerBridge company has developed, constructed and since 2007 has operated the
Neptune Project, a 660 MW, 65 mile long, high voltage direct current undersea and underground
electric transmission system that interconnects the PJM market at Sayreville, New Jersey with Long
Island, New York. Mr. Stern is also leading the development of several other large transmission and
renewable energy projects domestically and abroad. From 1991 through 2003, Mr. Stern was employed
by Enel North America, Inc. (a subsidiary of Enel SpA, an Italian electric utility company) and its
predecessor, CHI Energy, Inc., an energy company which owned or operated nearly one hundred power
plants in seven countries, specializing in renewable energy technologies including hydroelectric
projects and wind farms. While at Enel North America, Inc. and CHI Energy, Inc., Mr. Stern served
as General Counsel and, commencing in 1999, as President, Director and Chief Executive Officer. Mr.
Stern currently serves on the Board of Directors of Deepwater Wind Holdings, LLC, an offshore wind
energy developer and Capital Access Network, Inc., a small
business lender. Mr. Stern also serves on the Advisory Board of Starwood Energy Group Global, LLC,
a private equity firm specializing in energy and infrastructure investments. Mr. Stern received
B.A., J.D. and M.B.A. degrees from Boston University and is a member of the Massachusetts Bar and
the Federal Energy Bar. Our Board of Directors has determined that Mr. Stern brings to our Board
significant management and legal experience at energy companies, including substantial project
development experience, and his directorial and governance experience as a director at numerous
companies in the industry in which we operate, and therefore he should serve on our Board.
5
John A. Williams, Director, Age 68
Mr. Williams was appointed as a member of our Board of
Directors in November 2009. Mr. Williams has over 40 years of business experience, principally in
the real estate and banking industries. Since January 2004, Mr. Williams has served as the Chief
Executive Officer, President and Managing Member of Corporate Holdings, LLC, a diversified holdings
company, and since November 2004, he has served as Chief Executive Officer and Managing Member of
Williams Realty Advisors, LLC, a real estate fund advisor to over $3 billion in assets. Mr.
Williams is currently chairman of the board and chief executive officer of Preferred Apartment
Communities, Inc., a new real estate investment trust. Mr. Williams founded Post Properties, Inc.,
a developer, owner and manager of upscale multifamily apartment communities in selected markets in
the United States, in 1970. Mr. Williams served as Chief Executive Officer of Post Properties from
1970 until 2002, and he served on its board from inception until 2004. Mr. Williams served as
Chairman for Post Properties from inception until February 2003 and Chairman Emeritus from February
2003 until August 2004. Mr. Williams currently serves on the Board of Directors of the Atlanta
Falcons of which he is also a minority owner. Mr. Williams previously served on a variety of boards
of directors, including those of NationsBank Corporation, Barnett Banks, Inc. and Crawford &
Company. Mr. Williams earned a B.S. degree in industrial management from the Georgia Institute of
Technology. Our Board of Directors has determined that Mr. Williams brings to our Board over 40
years of business experience and directorial and governance experience on boards of directors, and
therefore he should serve on our Board.
Executive Officers
Information concerning the business experience of Mr. Ramsbottom, who serves as President and Chief
Executive Officer, is provided above.
Dan J. Cohrs, Executive Vice President, Chief Financial Officer and Treasurer, Age 58
Mr. Cohrs
was appointed our Executive Vice President and Chief Financial Officer in October 2008. Mr. Cohrs
was also Treasurer of Rentech from October 2008 until November 2009 and was re-appointed Treasurer
in October 2010. Mr. Cohrs has more than 20 years of experience in corporate finance, strategy and
planning, and mergers and acquisitions. Mr. Cohrs worked as Chief Development and Financial Officer
of, and served as a Partner and Board Member of Agency 3.0, LLC, a private digital advertising and
consulting agency in Los Angeles from April 2008 until September 2009. He worked as Chief
Development & Financial Officer of Skycrest Ventures, LLC, a private investment and consulting firm
in Los Angeles from August 2007 to October 2008. From June 2006 until May 2007, Mr. Cohrs served as
a consultant for finance and corporate development, as well as Interim Chief Financial Officer for
a period of time, for Ampd Mobile, a private mobile media entertainment company in Los Angeles. On
June 1, 2007, Ampd Mobile, Inc. filed a petition for bankruptcy under chapter 11 of title 11 of
the United States Code, 11 U.S.C. § 101 (the Bankruptcy Code),
et seq.
with the United States
Bankruptcy Court for the District of Delaware. Mr. Cohrs worked as an independent consultant and
advised companies regarding financings, investor presentations and business plans from 2003 through
2007. In addition, Mr. Cohrs served as a Visiting Senior Lecturer at Cornell Universitys Johnson
School of Management in the area of corporate governance from November 2005 until March 2006. Mr.
Cohrs served as Executive Vice President and Chief Financial Officer of Global Crossing Ltd. from
May 1998 through June 2003. On January 28, 2002, Global Crossing Ltd., and certain of its direct
and indirect subsidiaries, filed a petition for bankruptcy under chapter 11 of title 11 of the
Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. On
April 11, 2005, the Securities and Exchange Commission (the SEC), Global Crossing, Mr. Cohrs (at
the relevant time, the Chief Financial Officer of Global Crossing) and other members of Global
Crossings senior management reached a settlement related to an SEC investigation regarding alleged
violations of the reporting provisions of Section 13(a) of the Exchange Act (and the regulations
thereunder). The parties to the agreement (other than the SEC) agreed not to cause any violations
of such reporting provisions in the future. In the SEC order none of the allegations related to
fraud, no party admitted liability, and no other violations of securities laws were alleged. Mr.
Cohrs earned M.S. and Ph.D. degrees in
finance, economics and public policy from Cornell Universitys Johnson Graduate School of
Management and a B.S. degree in Engineering from Michigan State University.
6
Tom Samson, Executive Vice President and Chief Development Officer, Age 42
Mr. Samson was
appointed Executive Vice President and Chief Development Officer of Rentech in October 2010. Mr.
Samson is responsible for project development and construction, technology licensing and commercial
affairs. Mr. Samson has more than 20 years of experience in development and management of power and
utility projects. The majority of his career was spent with Marubeni Corporation in a number of
international roles; in addition, Mr. Samson has worked for PA Consulting Group, a
management and IT consulting and technology firm, Mirant Europe, a power production and
trading company, and GEC Alstom, an infrastructure and power generation company. Mr. Samson served
from April 2009 until September 2010 as President and Chief Executive Officer of Marubeni TAQA
Caribbean, a partnership of Marubeni Corporation, and Abu Dhabi National Energy Company (TAQA) with
a portfolio of utility and independent power producer businesses in the Caribbean with over 2,000
megawatts of production capacity. From March 2005 until April 2009, Mr. Samson was Executive
Managing Director of Taweelah Asia Power Company, a 2,000 megawatt and 160 million imperial gallons
per day power and water facility in Abu Dhabi. From 2003 to 2005, Mr. Samson worked for Marubeni
Power International Inc. as a Vice President responsible for business development in the United
States. Prior to 2003, Mr. Samson worked for over ten years in the power industry with
responsibility for the development and management of large scale energy projects within the
independent private power (IPP) industry. Mr. Samson is a Chartered Mechanical Engineer and a
graduate from Napier University.
Douglas M. Miller, Executive Vice President, Project Development, Age 51
Mr. Miller was appointed
to the position of Executive Vice President for Renewable Energy Businesses in January 2009 (in
October 2009 the title was changed to Executive Vice President Project Development). Mr. Miller
is responsible for the development of Rentechs biomass initiatives. Mr. Miller served as Executive
Vice President and Chief Operating Officer of Rentech from January 2006 through December 2008.
Between July 2008 and October 2008, Mr. Miller served as the Companys Chief Financial Officer on
an interim basis. Prior to his employment at Rentech, Mr. Miller was employed by Unocal Corporation
from 1991 through its acquisition by Chevron Corporation in October 2005, and for more than five
years prior to the acquisition, served as Vice President, Corporate Development. Mr. Miller
received his Bachelors of Earth Sciences from the University of California, Berkeley and his
Masters of Business Administration from the University of California, Los Angeles.
Harold A. Wright, Senior Vice President and Chief Technology Officer, Age 46
Mr. Wright was
appointed Senior Vice President and Chief Technology Officer of Rentech in March 2007. Mr. Wright
served as Vice President of Technology for Eltron Research & Development, a technology research and
commercialization company headquartered in Boulder, Colorado, from June 2005 until February 2007.
This followed a 14-year tenure with ConocoPhillips during which Mr. Wright worked in various
capacities including Director of Gas-To-Liquids (GTL) research and development from February 2004
to June 2005 and director of Synthesis Gas Development from July 2000 to February 2004. In these
positions, Mr. Wright was responsible for synthesis gas technology development, GTL commercial
reactor design, directing GTL catalyst development and product upgrading technology development.
Mr. Wright oversaw all aspects of the companys scale-up of GTL technology, which resulted in a 400
barrel per day demonstration plant in Ponca City, Oklahoma. With 30 U.S. patents issued to his
credit, Mr. Wright is also a registered patent agent and is authorized to practice patent law
before the U.S. Patent and Trademark Office. Mr. Wright received a B.S. in chemical engineering,
cum laude, from the University of Missouri-Columbia and a Ph.D. in chemical engineering from Purdue
University.
Colin M. Morris, Vice President and General Counsel, Age 38
Mr. Morris has served as the Vice
President and General Counsel of Rentech since June 2006. Mr. Morris practiced Corporate and
Securities Law at the Los Angeles office of Latham & Watkins LLP from June 2004 to May 2006. From
September 2000 to May 2004, Mr. Morris practiced Corporate and Securities Law in the Silicon Valley
office of Wilson, Sonsini, Goodrich and Rosati. Prior to that Mr. Morris practiced Corporate and
Securities Law in the Silicon Valley office of Pillsbury Winthrop Shaw Pittman LLP. Mr. Morris
received an A.B. degree in Government from Georgetown University and a J.D. from the University of
California, Berkeley, Boalt Hall School of Law.
7
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding beneficial ownership of Rentechs
common stock as of March 15, 2011 by (i) all owners of record or those who are known to Rentech to
beneficially own more than 5% of the issued and outstanding shares of Rentechs common stock, (ii)
each director and named executive officer identified in the tables under Executive
Compensation, and (iii) by all named executive officers and directors as a group:
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
|
|
|
Directors and Executive Officers (1)(2)
|
|
Beneficial
|
|
|
Percent
|
|
Listed in alphabetical order
|
|
Ownership (3)
|
|
|
of Class
|
|
Michael S. Burke
|
|
|
242,600
|
|
|
|
*
|
|
General Wesley K. Clark
|
|
|
20,000
|
|
|
|
*
|
|
Dan J. Cohrs
|
|
|
304,150
|
|
|
|
*
|
|
Douglas M. Miller
|
|
|
615,358
|
|
|
|
*
|
|
Colin M. Morris
|
|
|
399,276
|
|
|
|
*
|
|
D. Hunt Ramsbottom (4)(5)
|
|
|
3,394,080
|
|
|
|
1.5
|
%
|
Michael F. Ray (6)
|
|
|
386,337
|
|
|
|
*
|
|
Richard T. Penning(7)
|
|
|
288,944
|
|
|
|
*
|
|
Ronald M. Sega
|
|
|
212,600
|
|
|
|
*
|
|
Edward M. Stern
|
|
|
252,600
|
|
|
|
*
|
|
Halbert S. Washburn
|
|
|
249,600
|
|
|
|
*
|
|
John A. Williams
|
|
|
3,656,843
|
|
|
|
1.6
|
%
|
Harold A. Wright
|
|
|
332,778
|
|
|
|
*
|
|
Dennis L. Yakobson (8)
|
|
|
680,604
|
|
|
|
*
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers as a Group (15 persons)
|
|
|
11,035,770
|
|
|
|
4.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
|
|
|
Beneficial Owners of
|
|
Beneficial
|
|
|
Percent
|
|
more than 5%
|
|
Ownership
|
|
|
of Class
|
|
BlackRock, Inc. (9)
|
|
|
28,572,196
|
|
|
|
12.9
|
%
|
|
|
|
*
|
|
Less than 1%.
|
|
(1)
|
|
Except as otherwise noted and subject to applicable community property laws, each shareholder
has sole voting and investment power with respect to the shares beneficially owned. The
business address of each director and executive officer is c/o Rentech, Inc., 10877 Wilshire
Blvd., Suite 600, Los Angeles, CA 90024.
|
|
(2)
|
|
If a person has the right to acquire shares of common stock subject to options and other
convertible or exercisable securities within 60 days of March 15, 2011, then such shares are
deemed outstanding for purposes of computing the percentage ownership of that person, but are
not deemed outstanding for purposes of computing the percentage ownership of any other person.
The following shares of common stock subject to stock options, warrants and RSUs may be
acquired within 60 days of March 15, 2011 and are included in the table above. A portion of
the RSUs attributed to the executive officers below may or may not vest depending on the
Companys volume weighted average stock price and total shareholder return on April 1, 2011.
|
|
|
|
Michael S. Burke 91,500 under options;
|
|
|
|
|
General Wesley K. Clark 20,000 under options;
|
|
|
|
|
Dan J. Cohrs 110,500 under RSUs;
|
|
|
|
|
Douglas M. Miller 130,000 under options and 142,999 under RSUs;
|
8
|
|
|
Colin M. Morris 75,000 under options and 122,978 under RSUs;
|
|
|
|
|
D. Hunt Ramsbottom 2,082,500 under warrants, 250,000 under options and 457,687 under
RSUs;
|
|
|
|
|
Michael F. Ray 86,500 under options;
|
|
|
|
|
Ronald M. Sega 76,500 under options;
|
|
|
|
|
Edward M. Stern 91,500 under options;
|
|
|
|
|
Halbert S. Washburn 86,500 under options;
|
|
|
|
|
John A. Williams 46,500 under options;
|
|
|
|
|
Harold A. Wright 119,599 under RSUs; and
|
|
|
|
|
Dennis L. Yakobson 186,500 under options.
|
|
|
|
(3)
|
|
Information with respect to beneficial ownership is based upon information furnished by each
shareholder or contained in filings with the SEC.
|
|
(4)
|
|
Includes a warrant held by East Cliff Advisors, LLC for 2,082,500 shares and excludes a warrant
held by East Cliff Advisors, LLC for 787,500 shares. With respect to the warrant for 787,500
shares, half of these warrants will vest upon the earlier of Rentechs stock price reaching
$5.25 or higher for 12 consecutive trading days or December 31, 2011 as long as Mr. Ramsbottom
is still an employee of the Company. The other 393,750 warrants will vest upon Rentechs stock
price reaching $5.25 or higher for 12 consecutive trading days. The exercise price of each of
the warrants is $1.82 per share. Mr. Ramsbottom is the managing member and has sole investment
and voting power in East Cliff Advisors, LLC.
|
|
(5)
|
|
Includes 38,000 shares held for the benefit of Mr. Ramsbottoms children as to which Mr.
Ramsbottom disclaims beneficial ownership.
|
|
(6)
|
|
Includes 7,500 shares held by Mr. Rays spouses IRA as to which Mr. Ray disclaims beneficial
ownership.
|
|
(7)
|
|
Reflects Mr. Pennings holdings as of June 18, 2010, his last day of employment with the
Company.
|
|
(8)
|
|
Includes 20,000 shares held in custodial accounts as to which Mr. Yakobson disclaims beneficial
ownership.
|
|
(9)
|
|
Based on information in a Schedule 13G filed by BlackRock, Inc. (BlackRock) with the SEC on
January 10, 2011 for its holdings as of December 31, 2010. BlackRock reported that it has sole
power to vote and to dispose of all 28,572,196 shares. BlackRocks principal business office
address is 40 East 52
nd
Street, New York, NY 10022.
|
Equity Compensation Plan Information
The following table provides information as of September 30, 2010 with respect to our
compensation plans, including individual compensation arrangements, under which our equity
securities are authorized for issuance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
securities remaining
|
|
|
|
Number of securities
|
|
|
|
|
|
|
available for future
|
|
|
|
to be issued
|
|
|
Weighted-average
|
|
|
issuance under equity
|
|
|
|
upon exercise of
|
|
|
exercise price of
|
|
|
compensation plans
|
|
|
|
outstanding options,
|
|
|
outstanding options,
|
|
|
(excluding securities
|
|
Plan category
|
|
warrants and rights (a)
|
|
|
warrants and rights (b)
|
|
|
reflected in column (a)) (c)
|
|
Equity compensation plans approved by security holders
|
|
|
9,640,000
|
|
|
$
|
0.72
|
|
|
|
4,707,000
|
|
Equity compensation plans not approved by security holders
|
|
|
2,409,000
|
|
|
$
|
1.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
12,049,000
|
|
|
$
|
0.89
|
|
|
|
4,707,000
|
|
|
|
|
|
|
|
|
|
|
|
|
9
The equity securities issued as compensation under shareholder approved compensation plans
consist of stock options, RSUs and performance shares. The equity securities issued as compensation
without shareholder approval consist of stock options, stock purchase warrants and RSUs. The stock
options and stock purchase warrants have exercise prices equal to the fair market value of our
common stock, as reported by the NYSE Amex, as of the date the securities were granted. The options
and warrants may be exercised for a term ranging from five to ten years after the date they were
granted.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Rentechs executive
officers and directors, and persons who own more than ten percent of a registered class of
Rentechs equity securities (collectively, Insiders), to file initial reports of ownership and
reports of changes in ownership with the SEC. Insiders are required by SEC regulations to furnish
Rentech with copies of all Section 16(a) forms they file. To Rentechs knowledge, based solely on
its review of the copies of such reports furnished to Rentech or written representations from
certain Insiders that they were not required to file a Form 5 to report previously unreported
ownership or changes in ownership, we believe that, during our fiscal year ended September 30,
2010, the Insiders complied with all such filing requirements.
Meetings and Committees of the Board of Directors
The Board of Directors held eight meetings during the fiscal year ended September 30, 2010. Actions
were also taken during the year by written consent. Each of our directors attended at least 75% of
the meetings of the Board of Directors held during the period for which he has been a director or
of the meetings of committees of the Board of Directors on which he served during the period that
he served. Each director attended the annual meeting of shareholders held in 2010. Our directors
are reimbursed for expenses incurred in attending meetings. We encourage all incumbent directors
and director nominees to attend our annual meetings of shareholders.
The Board of Directors has three standing committees, an Audit Committee, a Compensation Committee,
and a Nominating Committee. The Board of Directors has determined that all the members of our Board
of Directors, other than Mr. Ramsbottom, Mr. Williams and Mr. Yakobson, are independent within
the meaning of the listing standards of the NYSE Amex, including each member of our Audit
Committee, Compensation Committee, and Nominating Committee. The Board of Directors has also
determined that each member of the Audit Committee is independent within the meaning of the rules
of the SEC.
The charters of our Audit Committee, Compensation Committee, and Nominating Committee are available
on the Corporate Governance section of our website at http://www.rentechinc.com. The Board of
Directors regularly reviews developments in corporate governance and modifies these policies and
charters as warranted. Modifications are reflected on our website at the address previously given.
Information contained on our website is not incorporated into and does not constitute a part of
this proxy statement. Our website address referenced above is intended to be an inactive textural
reference only and not an active hyperlink to the website.
The Audit Committee of the Board of Directors has been delegated responsibility for reviewing with
the independent auditors the plans and results of the audit engagement; reviewing the adequacy,
scope and results of the internal accounting controls and procedures; reviewing the degree of
independence of the auditors; reviewing the auditors fees; and recommending the engagement of the
auditors to the full Board of Directors. The Audit Committee currently consists of Mr. Burke, Mr.
Ray and Mr. Washburn. The Board of Directors has determined that Mr. Burke, the Chairman of the
Audit Committee, qualifies as an audit committee financial expert as defined by the rules of the
SEC. The committee met five times during fiscal year 2010. Actions were also taken during the year
by written consent.
The Compensation Committee is currently comprised of Mr. Burke, Mr. Stern, and Mr. Washburn. None
of them is or has been an employee of Rentech. The Compensation Committee reviews and approves
executive officer compensation and equity grants, administers Rentechs equity plans, and
establishes compensation philosophy for executive officers. The committee met six times during
fiscal year 2010. Actions were also taken during the year by written consent.
10
The Nominating Committee currently consists of Mr. Sega and Mr. Stern. The primary duty of the
Committee is to make recommendations to the Board of Directors regarding recruitment of new
directors and re-election of incumbent directors. The committee took actions by written consent
twice during fiscal year 2010.
Board Leadership and Role in Risk Oversight
Our Board of Directors does not have a policy on whether the offices of Chairman of the Board of
Directors and Chief Executive Officer should be separate and, if they are to be separate, whether
the Chairman of the Board should be selected from among the independent directors. Our Board of
Directors believes that it should have the flexibility to make these determinations at any given
time in the way that it believes best to provide appropriate leadership for Rentech at that time.
Our Board of Directors has reviewed our current Board of Directors leadership structure in light
of the composition of the Board of Directors, Rentechs size, the nature of Rentechs business,
Rentechs peer group and other relevant factors. Considering these factors, Rentech has determined
to have a separate Chief Executive Officer and Chairman of the Board. However, our Chairman is not
independent (as currently defined in Section 803(A)(2) of the NYSE Amex Company Guide). We have
determined that this structure is currently the most appropriate board leadership structure for
Rentech. Rentech does not have a lead independent director. Given the size of our Board of
Directors, the Board of Directors believes that the presence of six independent directors out of
the nine directors, which independent directors sit on the Boards committees, is sufficient
independent oversight of the Chairman and Chief Executive Officer. The independent directors work
well together in the current Board structure and the Board of Directors does not believe that
selecting a lead independent director would add significant benefits to the Board of Directors
oversight role at this time.
Rentech faces a variety of risks. An effective risk management system will identify the material
risks Rentech faces in a timely manner, communicate necessary information to senior executives and
the Board of Directors related to those material risks, implement appropriate and responsive
strategies to manage those risks, and integrate the process of risk management into regular
decision-making. The Board of Directors has designated the Audit Committee to take the lead in
overseeing risk management as the Audit Committee regularly reviews Rentechs internal audit
reports, independent compliance audit reports, regulatory examination reports and financial
information of Rentech. In addition to the Audit Committee, the Board of Directors encourages
management to promote a corporate culture that incorporates risk management into Rentech strategies
and day-to-day operations.
Compensation Discussion and Analysis
Compensation Program Objectives and Executive Summary
The following discussion and analysis describes our compensation objectives and policies as applied
to D. Hunt Ramsbottom, our Chief Executive Officer, Dan J. Cohrs, our Chief Financial Officer,
Douglas M. Miller, Executive Vice President Project Development, Harold A. Wright, our Senior
Vice President and Chief Technology Officer, Colin M. Morris, our General Counsel and Richard T.
Penning, our former Executive Vice President of Commercial Affairs and Technology Development.
Messrs. Ramsbottom, Cohrs, Miller, Wright, Morris and Penning are referred to in this proxy
statement as the Named Executive Officers or NEOs. At the end of fiscal year 2010, Mr. Penning
no longer served as an executive officer of our Company.
Rentechs goal is to create value for its shareholders by becoming a global provider of clean
energy solutions, through the commercialization of its proprietary technologies for the production
of ultra-clean synthetic fuels and chemicals, natural gas substitutes, and electric power from
renewable and fossil feedstocks, as well as by maximizing the value of the nitrogen fertilizer
plant owned and operated by our subsidiary, Rentech Energy Midwest Corporation, located in East
Dubuque. Our technology portfolio includes Rentechs Fischer-Tropsch process and the
Rentech-SilvaGas biomass gasification technology, which we acquired in June 2009 with the
acquisition of the SilvaGas Holding Corporation. We offer integrated technology solutions for the
conversion of biomass and wastes to syngas and subsequently into clean fuels and electric power. We
believe the successful commercialization of our technologies should result in a significant number
of opportunities to have our technologies deployed in ultra clean synthetic fuel, power and
chemical plants both domestically and internationally. We expect to have our technologies deployed
in projects which Rentech develops and owns, as well as projects in which Rentech is solely a
technology licensor. We expect that successful commercialization of our technologies will
enable Rentech to significantly increase its market capitalization and result in a very substantial
increase in revenues, assets, and business complexity.
11
Rentechs key operational goals include: developing pioneer commercial-scale synthetic fuels and
power projects using the Rentech Process (using biomass feedstocks, fossil feedstocks, or a
combination of both) and the Rentech-SilvaGas biomass gasification technology; producing fuels and
chemicals at our Product Demonstration Unit, or PDU, to demonstrate that the production of fuels
can meet commercial criteria; entering into contracts for the sale of those products; maximizing
the value from our nitrogen fertilizer plant in East Dubuque, Illinois through improved product mix
and plant reliability; signing license agreements for the use of our technologies; and securing the
financing necessary for our working capital needs and for our first commercial scale reactor, and
then building our first commercial scale reactor. Our compensation packages are designed to
incentivize the achievement of these goals, and to recruit and retain key employees.
We have focused on building an experienced management team that is capable of managing the Company
through a period of growth in order to meet our goals. We believe it is important both to retain
our key executives and to recruit the additional talent we need to expand the Company. We have made
it a policy to hire executives who are not only highly qualified for their positions at our current
size, but who also have the skills we believe to be necessary to perform their roles at the same
high standard if we are successful in our commercial development, and our company achieves
significantly greater size and complexity.
In fiscal year 2007, and again in fiscal year 2010, we retained compensation consulting firms to
compare the pay levels of our executives to those in selected groups of peer companies set forth in
more detail below. In 2010, we found that our base salaries were above the median of our peers, and
that our target total cash compensation was above the peer group median. Our total compensation
packages, including long-term incentives, were also found to be above the median of our peer group.
We believe that in our marketplace for talent, each component of compensation, as well as the total
compensation package, is significant in our recruitment and retention of talent. Our base salaries
are competitive, because they are in line with the median of those paid by our peer companies. Our
annual cash bonuses are above the median, and are structured to provide short term incentives that
place a focus on specific, defined business objectives for the Company during the year. The
majority of those objectives were achieved in fiscal 2010. The Compensation Committee of our Board
of Directors approved new long-term incentive awards in fiscal 2008 as well as after the end of
fiscal years 2009 and 2010 (the LTI Awards) that were structured to reward performance and retain
talent. The fiscal 2008 awards are designed to reward both absolute stock price performance and
stock price performance relative to that of our peer companies, paying nothing for 25th percentile
performance, but offering an opportunity for pay at the 75th percentile for performance at or above
the 75th percentile, with a sliding scale for performance between those benchmarks. The
Compensation Committee believes that the successful commercialization of the Companys technologies
is critical to the creation of shareholder value, and as a result, the fiscal 2010 awards are
designed to reward the achievement of milestones in the financing and development of commercial
projects. The fiscal 2011 awards are a combination of time vesting RSUs and stock option awards
designed to reward stock price performance and retain management.
Our philosophy is to provide a market-level salary for our executives with the opportunity to
exceed market levels for total compensation if short- and long-term performance exceeds
expectations. Based on the 2010 evaluation of compensation, the Company believes that the total
compensation package for fiscal year 2011 will continue to pay our executives at the median level
of the market for average performance, with compensation approximating the 75th percentile of the
market for exceptional performance.
12
Independent Compensation Consultant
During fiscal year 2010, the Compensation Committee, composed of Mr. Stern as Chairman and Messrs.
Burke and Washburn, retained Radford, an Aon Hewitt Company, as a new compensation consultant to
assist the Committee in formulating and evaluating the executive compensation program for a group
of its officers including its NEOs. Rentech pays the fees for the services provided by Radford to
the Compensation Committee, which for fiscal year 2010 included:
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Assisting in the selection of Rentechs peer group companies and applicable
benchmarks;
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Providing compensation survey data to benchmark NEO compensation;
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Helping the Compensation Committee interpret compensation data;
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Advising on the reasonableness and effectiveness of our NEO compensation levels
and programs; and
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Assisting in the review of executive compensation disclosure in this proxy
statement.
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During fiscal year 2010, fees for all services performed by Radford were than less $120,000.
Peer Group Generation and Comparison Results
Based on discussions among the members of the Compensation Committee, management, and Radford, the
Committee determined to develop a new set of peer companies in light of significant market changes,
among other factors. Radford recommended the following criteria to establish the compensation peer
group for 2010:
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Companies in the alternative energy space, as well as technology companies with
related focus
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Companies with revenue between $50 million and $550 million
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Companies with market values between $80 million and $750 million
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In addition to the above, Radford also examined employee size, revenue growth, and net income as
additional metrics to help determine appropriate peer companies. Finally, in order to establish a
peer group sufficient in number of companies, Radford recommended that we expand beyond Rentechs
pure industry focus into the broader, but related, technology industry where we may also compete
for talent.
The final group of companies that was reviewed and approved by the Compensation Committee consisted
of the following:
Advanced Energy Industries
Broadwind Energy
Cohu, Inc.
Converge, Inc.
Echelon Corp.
EMCORE Corp.
Energy Conversion Devices
EnerNoc Inc.
Evergreen Solar
FormFactor Inc
Fuel Tech
Fuelcell Energy
LSB industries
Maxwell Technologies
MGP ingredients
Satcon Technology
Rudolph Technologies
Ultra Clean Holdings
Vicor Corp
Zoltek
In mid-2010, data were gathered from these peer companies, as well as from published survey data
from Radfords 2010 Global Technology Survey using a data set of public high technology companies
with revenue between $50 million and $500 million, on various elements of executive compensation
including base salaries, target incentive as a percent of salary, total cash compensation,
long-term incentives and total direct compensation.
13
Rentechs compensation was found to be above the market median in totality and by components of
compensation, yet still within reasonable market practices and in line with our compensation
philosophy and strategy. Specifically, Rentechs base salaries and our target total cash
compensation were on average higher than the median of the market data. A comparison of our
long-term incentives (LTIs) and total direct compensation (base, bonus, and LTI), including
annualized grant values from 2006 and part of sign-on equity, was also above the median of the
market data. The results of the comparison were used by the Compensation Committee as a factor in
considering the level and mix of compensation for the Companys executives. We have concluded from
this that the level of our total compensation was well positioned to attract and retain the type of
management team that we believe is necessary to successfully implement our commercialization
strategy. We believe that our long term equity strategy closely aligns managements compensation
with the performance of the Company and the return to shareholders. We have developed and
implemented a variety of LTI Awards that closely align managements long term compensation with
returns to shareholders, provide incentives to perform better than our peer companies, reward the
achievement of specific milestones in the development of commercial projects using our technologies
and encourage retention.
Core Components of Executive Compensation
Base Salary
Base salaries for the executive officers at Rentech were set during the hiring process for the
executives. The base salaries were again reviewed at the end of 2010. The Board considered data on
executives in comparable positions, using a compensation study conducted in 2007, in addition to
the above mentioned compensation survey information and their assessment of the Companys and
individuals performance. Mr. Ramsbottoms salary was increased 5% to $440,000, effective January
2011, in recognition of his leadership of the Company and to bring his salary closer to the median
in relation to the Companys peer group. Mr. Cohrs salary was increased 4% to $377,500, effective
January 2011, in recognition of his effective capital raising efforts on behalf of the Company. Mr.
Millers salary was not changed. Mr. Wrights salary was increased 3% to $278,000, effective
January 2011, in recognition of the continuing improvements to the Companys technologies. Mr.
Morris salary was increased 5% to $248,300, effective January 2011 in recognition of his
performance and to bring his base salary closer to the median in relation to the Companys peer
group.
Annual Bonus
Rentech maintains an annual incentive plan for its executive officers. Successful completion of the
short-term objectives of the Company are critical in achieving the planned level of growth. Our
goals include specific financial targets for REMC. Given the stage of development of our
Alternative Energy segment, some of our corporate goals are more focused on technology, financing
and development milestones than on traditional incentive plan targets such as financial growth or
profitability metrics. The annual incentive plan is designed to reward our executives for
successfully taking the immediate steps needed to implement our long-term strategy. The target
bonus for the Chief Executive Officer (CEO) in his employment agreement is set at 100% of his
base salary. The target bonus of our Chief Financial Officer, Dan Cohrs, is set at 60% of his base
salary. The targets for the other NEOs in their employment agreements are set at 50% of their
respective base salaries. Our practice is to award target bonuses for average performance against
goals. Bonuses may range from 0% of target in the case of poor performance to 200% of target in the
case of outstanding performance, all at the discretion of the Board of Directors.
In the beginning of each fiscal year, the CEO and other senior officers develop a series of broad
objectives for the year. This plan is then reviewed by the Compensation Committee and the Board,
which provides substantial input and revisions and sets the goals for the year. The decision on
objectives is made by the Board. These goals are then widely distributed among eligible
participants.
At the end of the year, management provides the Compensation Committee and the Board with an
assessment of the Companys performance against its goals during the year, including an assessment
of any key accomplishments that were incremental to those included in the goals for the year. In
addition, the CEO develops a scorecard that summarizes performance for each of his direct reports
compared to the goals set by the Board, with each goal ranked on a scale from zero (did not meet)
to two (exceptional performance). Managements assessment and the scorecard are reviewed by the
Compensation Committee and the Board, and modified as appropriate in their discretion. Final bonus
payments for the CEO and the other executives are determined based on a combination of Company
performance compared to goals and the individuals contributions to the Companys overall success
during the year, as determined by the CEO, the Compensation Committee and the Board. The bonuses
may range from 0% of target to 200% of target depending on performance and the discretionary
determination of the Board. The decision as to the level of executive bonuses is made by the
Compensation Committee and the Board.
14
In fiscal 2010, we had the following goals and results:
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1.
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Goal: A continued strong safety record at our facilities with an OSHA recordable rate at
or below a target rate.
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Performance: We performed better than this goal. We completed fiscal year 2010 with an OSHA
recordable rate of 3.8 recordable incidents for every 200,000 hours worked at the
Companys facilities, which is well below the industry average for comparable
operations.
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2.
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Goal: Financial performance expectations including a) consolidated EBITDA of approximately
$(8) million and REMC EBITDA of approximately $34 million, and b) a consolidated cash
balance at the end of the fiscal year reflecting cash spending in line with our
approved budget at both REMC and within our Alternative Energy Segment.
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Performance: We fell short of the stated goals for consolidated EBITDA and cash
balances. REMCs EBITDA for fiscal 2010 was $32 million, and consolidated EBITDA was
approximately ($14) million. Consolidated cash at the end of the year of approximately
$26 million was below the target. Cash spending within our alternative energy segment
was better than the target.
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3.
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Goal: Raise net capital proceeds sufficient to fund our budgeted activities and provide a
year-end cash cushion.
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Performance: As of the end of the fiscal year, we had raised approximately $43 million
of net capital, which was below our goal. In November 2010 we raised additional net
capital of approximately $51 million, which, when combined with the capital previously
raised, exceeded the amount of our goal for capital proceeds.
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4.
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Goal: Successful operation of the PDU during 2010 that is within the approved budget and
that meets or exceeds performance criteria targets measured by the cost of catalyst
used per barrel of product produced.
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Performance: The PDU operated within budget during fiscal 2010. The goals regarding
catalyst usage were not met during fiscal year 2010.
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5.
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Goal: For the Rialto Project, negotiate and sign a contract with a qualified engineering
firm for front-end engineering and design (FEED).
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Performance: We signed the contract for FEED for the Rialto Project, engaged the
contactor, and completed scheduled FEED activities during the fiscal year.
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6.
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Goal: Generate revenue from engineering services and licensing of our technologies that
contributes to EBITDA.
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Performance: We did not meet our goal for licensing and engineering revenue.
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7.
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Goal: Other factors and accomplishments in fiscal year 2010 incremental to the stated
goals, which contribute to the success of the Company, as determined in the discretion
of the Compensation Committee and the Board at the end of the year.
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15
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Performance: We achieved a number of important commercial and technology-related
milestones during fiscal year 2010 including, among others:
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A commercial flight by United Airlines using a 60/40 blend of traditional jet
fuel with RenJet produced at our PDU.
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Arranging for 100% RenDiesel fuel to be used in the Green Car Journals
1000-mile drive of two Audi A3 TDIs through California, in conjunction with
recognition of the Audi A3 TDI as the Green Car of the Year
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Validation of our integrated technologies for production of RenDiesel and
renewable power from biomass by a study performed by an independent engineer
for potential lenders.
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Receipt of a $23 million grant from the Department of Energy by our partner,
ClearFuels Technology Inc., to build a biomass gasifier at our PDU and
integrate the operations to produce synthetic fuels from biomass feedstocks.
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The Compensation Committee then considered both the Companys performance against these goals, as
well as the individual contributions of the executives toward achieving these goals. The
Compensation Committee then determined the bonus amounts for the NEOs in its discretion with the
approval of the Board.
For fiscal 2010, the bonuses as a percentage of the target bonuses were as follows: for Mr.
Ramsbottom 85% of his target bonus, for Mr. Cohrs 85% of his target bonus, for Mr. Miller 70% of
his target bonus, for Mr. Wright 85% of his target bonus, and for Mr. Morris 85% of his target
bonus. Mr. Penning left the Company during fiscal year 2010 and received a target bonus pursuant
to the severance terms of his employment agreement. The Board determined that the executive
bonuses should be below targeted amounts due to the fact that, although some goals were achieved,
some key goals such as revenue from licensing our technologies were not achieved; that other goals
were achieved, but after the end of the fiscal year; and that accomplishments in addition to the
stated goals were not sufficient to outweigh the shortfalls or lateness in achieving some of the
stated goals. Mr. Ramsbottoms bonus reflected the overall performance of the Company as discussed
above, his significant individual contributions in continuing the implementation of the renewable
energy strategy, and his leadership of the Company through a very difficult economic period. Mr.
Cohrs bonus reflected his role in improving the financial management and liquidity of the Company,
and in providing executive leadership to the development of the Rialto Project. Mr. Millers bonus
reflected his performance in developing and implementing the Companys renewable energy strategy.
Mr. Wrights bonus reflected his continued strong leadership of the Companys technology
development function, and his role in the ClearFuels project. Mr. Morriss bonus reflected the high
quality of the legal work necessary in every function of the Company.
The specific goals for the Company in fiscal year 2011 are designed to move the implementation of
the Companys strategy to the next steps required to commercialize our technology. The Board
believes that the 2011 goals are challenging and are increasingly based on quantitative performance
measures. Some of the goals set by the Board include proprietary information that, if disclosed,
might create a competitive disadvantage or otherwise negatively affect the performance of Rentech
in the marketplace. Therefore, the description of the goals below do not include some information
contained in the goals determined by the Board. The following is an overview of the goals.
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1.
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A continued strong safety record at our facilities with an OSHA recordable rate
at or below a target rate.
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2.
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Performance expectations including specific targets for consolidated EBITDA, REMCs
EBITDA, consolidated capital expenditures, and production of products by REMC.
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3.
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Raise capital proceeds sufficient to fund our budgeted activities and provide a year-end
cash cushion.
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4.
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Successful operation of the PDU during 2011 that meets or exceeds performance criteria
aimed at improving the economic efficiency of the Rentech Process.
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5.
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Construction and integration of the ClearFuels Gasifier at the PDU on schedule.
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6.
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Achieve financing milestones for the Rialto Project or alternate project and development
milestones for an additional project.
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7.
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Other factors which contribute to the success of the Company as determined by the Board.
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16
Long-Term Incentive Equity Awards
We have designed the Companys long term equity strategy to include a variety of equity awards with
different vesting schedules intended to closely align managements compensation with the
performance of the Company and the return to shareholders. We have developed and implemented LTI
Awards that vest based on returns to shareholders, stock performance that is better than peer
companies, the achievement of specific milestones in the development of commercial projects using
our technologies and that encourage retention.
In fiscal year 2008, the Compensation Committee of the Board of Directors approved LTI Awards for a
group of its officers including its named executive officers at that time. The awards are comprised
of performance shares and RSUs with a combination of performance vesting and time-based vesting
provisions. The awards are intended to balance the goals of retention, equity ownership and
performance. The goals for the performance share plan are expected to provide for maximum payout
only if the Company has relative performance at or above the 75th percentile of other companies in
the industry and a significant absolute share price increase. The performance-based elements of the
plan are expected to provide for no payout at all for performance at or below the 25th percentile
of the peer group and an absolute share price increase below a threshold. The performance metrics
are based on absolute share price appreciation and total shareholder return in order to closely
align the return to the Companys shareholders with management compensation. The following are
summary descriptions of the performance share awards:
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Under the absolute share price target award, zero to 100 percent of the performance stock
vests on April 1, 2011, with the final vesting amount dependent on the Companys volume
weighted average stock price falling within a share price target range. The Companys
volume weighted stock price must be greater than $2.00 per share on April 1, 2011 for any
shares to vest, and the amount of shares that vests increases pro-rata for a price greater
than $2.00 up to a maximum vesting at $4.00.
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Under the total shareholder return award, zero to 100 percent of the performance stock
vests on April 1, 2011, with the final vesting amount dependent on the Companys total
shareholder return ranking relative to the total shareholder return from April 1, 2008
until April 1, 2011 for a peer group developed in fiscal year 2007 by the Compensation
Committee in consultation with Watson Wyatt and management comprised of Methanex Corp.,
Tera Industries, Inc., Aventine Renewable Energy, Headwaters, Inc., Verasun Energy Corp.,
MGP Ingredients, Inc., Pacific Ethanol, Inc., Energy Conversion Devices, Inc., Fuel Tech.,
Inc., Ballard Power Systems, Inc., Evergreen Energy, Inc. and Fuelcell Energy, Inc. The
Companys ranking must be greater than the 25th percentile on April 1, 2011 for any shares
to vest, and the amount of shares that vests increases pro-rata for a ranking greater than
the 25th percentile up to a maximum vesting at the 75th percentile.
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Both performance share awards are subject to the recipients continued employment with
the Company, with vesting in a change of control and upon certain terminations without
cause.
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The LTI Awards in fiscal year 2008 also included a management stock purchase plan in which a
portion of each participants cash bonus award was allocated to purchase vested RSUs at the fair
market value of the Companys stock price on the date of grant. The Company then matched the
participants purchase with an equal number of RSUs that cliff vest on April 1, 2011, subject to
the recipients continued employment with the Company. Pursuant to the Companys management stock
purchase plan, twenty-five percent (25%) of the cash bonus awards for the NEOs in fiscal year 2008
was allocated to purchase vested RSUs, but the RSUs and the Company matching RSUs were not granted
until November 2009. The cash bonus amounts allocated to purchase the RSUs were reported as
compensation for fiscal year 2008. The number of RSUs awarded was equal to the number that would
have been awarded had the grants been made on schedule in the spring of 2009, plus a matching
contribution by the Company
of eighty percent (80%) of the amounts purchased with the amounts allocated from the cash bonuses.
The Company matching RSUs vest on November 3, 2012, subject to the recipients continued employment
with the Company.
17
The final portion of the equity awards granted in fiscal year 2008 vest over a three year period
with one-third of the shares underlying the RSUs vesting on the first three anniversaries of April
1, 2008, subject to the recipients continued employment with the Company.
The Compensation Committee and the Board of Directors approved LTI awards for a group of its
officers including its named executive officers in November 2009. The awards include both RSUs that
may vest upon the achievement of certain performance targets, and RSUs that vest over time. The
awards are intended to balance the objectives of retention, equity ownership by management, and
achievement of performance targets. Vesting of the performance awards is tied to milestones related
to the development, construction and operation of the Companys proposed renewable synthetic fuels
and power project in Rialto, California or another comparable project designated by the
Compensation Committee. We believe the successful implementation of our technologies in a
commercial scale plant will significantly enhance the ability of the Company to deploy its
technologies in additional plants and result in a significant increase in the value of the Company.
Under the performance vesting awards, sixty percent (60%) of the performance-based RSUs vest upon
the closing of financing for the project, twenty percent (20%) vest upon completion of construction
and initial operation of the project facility and twenty percent (20%) vest upon sustained
operation of the project facility. The Compensation Committee may also designate additional
performance vesting milestones in the awards. The performance vesting awards are subject to the
recipients continued employment with the Company, provided that a recipients award may vest with
respect to a milestone that is achieved within six months of (i) termination without cause related
to a change in control or (ii) death or disability. All unvested RSUs expire five years after the
date of grant.
The long-term incentive equity awards granted in November 2009 also include a time vesting RSU
award that vests over a three year period with one-third of the RSUs vesting on each of the first
three anniversaries of November 17, 2009. The time vesting awards are subject to the recipients
continued employment with the Company, provided that a recipients award may vest upon (i)
termination without cause related to a change in control or (ii) death or disability.
In fiscal year 2009, ten percent (10%) of the cash bonus awards for the NEOs was allocated to
purchase vested RSUs in December 2009 pursuant to the management stock purchase plan. The Company
matched these awards with an equal number of RSUs that vest on December 10, 2012, subject to the
recipients continued employment with the Company.
During fiscal year 2010, the Company issued a total of approximately 6,795,000 performance shares
and RSUs to members of management, including the NEOs, composed of the following:
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Type of Award
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Number of Awards
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Performance awards
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3,650,000
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Time-vested awards
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2,155,000
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Management stock purchase plan awards
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534,000
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Company matching of management stock purchase plan awards
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456,000
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Total
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6,795,000
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During fiscal year 2011, the Company issued a total of approximately 4,668,000 RSUs and stock
options to members of management, including the NEOs. There were approximately 1,645,000 and
3,023,000 of RSUs and stock options, respectively. The awards vest over a three year period with
one-third of the awards vesting on each of the first three anniversaries of October 4, 2010. The
awards are subject to the recipients continued employment with the Company, provided that a
recipients award may vest upon (i) termination without cause related to a change in control or
(ii) death or disability. The awards are designed to carefully balance the concept of providing
equity ownership to management, while aligning shareholder returns with management compensation.
There were no shares allocated to the management stock purchase program in conjunction with the
awards granted in fiscal year 2011.
18
Benefits and Perquisites
As part of the compensation package, Rentech provides its executives, including its NEOs, with a
car allowance and a financial advisor. Health insurance and a 401(k) matching program are
programs provided to all employees. We design our employee benefits programs to be affordable and
competitive in relation to the market, as well as compliant with applicable laws and practices.
The Compensation Committee does not believe that perquisites should play an important role in the
compensation of our executives, but also believes that the personal benefits are not a material
component of our executive compensation program and are reasonable and in line with those provided
to similarly-situated executives in our field.
Employment Contracts
Rentech has entered into employment agreements with certain members of executive management, which
provide severance and other benefits, including continuation of healthcare coverage upon
termination by us without cause, non-renewal of the executives employment agreement or resignation
by the executive for good reason, including in certain circumstances, in connection with a change
of control. We believe that terminations of employment, both within and outside of the change in
control context, are causes of great concern and uncertainty for senior executives and that
providing protections to our named executives in these contexts is therefore appropriate in order
to alleviate these concerns, and to enable and encourage the executives to focus their attention on
their duties and responsibilities to the Company in all situations. In addition, we believe that
change in control and severance benefits are essential in order to fulfill our objective of
attracting and retaining key managerial talent. The industry in which we operate is very volatile
and acquisitive, and we feel that these contracts provide our executive team with an adequate level
of security in their roles in such an environment. As of September 30, 2010, Rentech had entered
into employment agreements with Messrs. Ramsbottom, Cohrs, Miller, Wright and Morris. Mr. Penning
did not serve as an executive officer as of that date, but he received severance payments under the
terms of his employment agreement.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code
Generally, Section 162(m) of the Internal Revenue Code disallows a tax deduction to any
publicly-held corporation for any individual remuneration in excess of $1 million paid in any
taxable year to its chief executive officer and each of its other named executive officers, other
than its chief financial officer. However, remuneration in excess of $1 million may be deducted if,
among other things, it qualifies as performance-based compensation within the meaning of the
Internal Revenue Code. We do not have a formal policy with respect to Section 162(m) and in some
events may award compensation that is not exempt from Section 162(m).
Section 280G of the Internal Revenue Code
Section 280G of the Internal Revenue Code disallows a tax deduction with respect to excess
parachute payments to certain executives of companies which undergo a change in control. In
addition, Section 4999 of the Internal Revenue Code imposes a 20% excise tax on the individual with
respect to the excess parachute payment. Parachute payments are compensation linked to or triggered
by a change in control and may include, but are not limited to, bonus payments, severance payments,
certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans
including stock options and other equity-based compensation. Excess parachute payments are
parachute payments that exceed a threshold determined under Section 280G of the Internal Revenue
Code based on the executives prior compensation. In approving the compensation arrangements for
our named executive officers in the future, our compensation committee will consider all elements
of the cost to the Company of providing such compensation, including the potential impact of
Section 280G of the Internal Revenue Code. However, our compensation committee may, in its
judgment, authorize compensation arrangements that could give rise to loss of deductibility under
Section 280G of the Internal Revenue Code and the imposition of excise taxes under Section 4999 of
the Internal Revenue Code when it believes that such arrangements are appropriate to attract and
retain executive talent.
19
Under their employment agreements, each named executive officer is entitled to gross-up payments
that will make the executive whole in the event that any excise taxes are imposed on him. We have
historically provided these
protections to our senior executives to help ensure that they will be properly incentivized in the
event of a potential change in control of the Company to maximize shareholder value in a
transaction while minimizing concern for potential consequences of the transaction to these
executives.
Section 409A of the Internal Revenue Code
Section 409A of the Internal Revenue Code requires that nonqualified deferred compensation be
deferred and paid under plans or arrangements that satisfy the requirements of the statute with
respect to the timing of deferral elections, timing of payments and certain other matters. Failure
to satisfy these requirements can expose employees and other service providers to accelerated
income tax liabilities, penalty taxes and interest on their vested compensation under such plans.
Accordingly, as a general matter, it is our intention to design and administer our compensation and
benefits plans and arrangements for all of our employees and other service providers, including our
named executive officers, so that they are either exempt from, or satisfy the requirements of,
Section 409A of the Internal Revenue Code.
Accounting for Stock-Based Compensation
We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC
Topic 718, for our stock-based compensation awards. ASC Topic 718 requires companies to calculate
the grant date fair value of their stock-based awards using a variety of assumptions. ASC Topic
718 also requires companies to recognize the compensation cost of their stock-based awards in their
income statements over the period that an employee is required to render service in exchange for
the award. Grants of stock options, restricted stock, RSUs and other equity-based awards under our
equity incentive award plans will be accounted for under ASC Topic 718. Our compensation committee
will regularly consider the accounting implications of significant compensation decisions,
especially in connection with decisions that relate to our equity incentive award plans and
programs. As accounting standards change, we may revise certain programs to appropriately align
accounting expenses of our equity awards with our overall executive compensation philosophy and
objectives.
Compensation Committee Report
The Compensation Committee of the Board of Directors has reviewed and discussed with management the
foregoing Compensation Discussion and Analysis and, based on such review and discussion, the
Compensation Committee determined that the Compensation Discussion and Analysis should be included
in this proxy statement.
Edward M. Stern, Chairman
Michael S. Burke
Halbert S. Washburn
Compensation Committee Interlocks and Insider Participation
During fiscal year 2010, the following individuals served as members of the Compensation Committee:
Michael S. Burke, Halbert S. Washburn, and Edward M. Stern. None of these individuals has ever
served as an officer or employee of the Company or any of its subsidiaries. No executive officer of
the Company has served as a director or member of the compensation committee of another entity at
which an executive officer of such entity is also a director of the Company.
20
Executive Compensation
The following table summarizes the compensation for the fiscal years ended September 30, 2010, 2009
and 2008 for each of the following: (i) our chief executive office (principal executive officer),
(ii) our chief financial officer (principal financial officer), and (iii) our three next most
highly compensated executive officers as of September 30, 2010.
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
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|
Compen-
|
|
|
Compen-
|
|
|
Compen-
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
sation
|
|
|
sation
|
|
|
sation
|
|
|
Total
|
|
Name
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
($) (3)
|
|
|
($)
|
|
D. Hunt
Ramsbottom,
Chief Executive Officer
|
|
|
2010
|
|
|
$
|
419,000
|
|
|
$
|
356,150
|
|
|
$
|
1,289,725
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
31,275
|
|
|
$
|
2,096,150
|
|
|
|
|
2009
|
|
|
$
|
417,500
|
|
|
$
|
452,520
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,630
|
|
|
$
|
900,650
|
|
|
|
|
2008
|
|
|
$
|
381,601
|
|
|
$
|
309,750
|
|
|
$
|
860,435
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27,100
|
|
|
$
|
1,578,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dan J. Cohrs,
Chief Financial Officer (4)
|
|
|
2010
|
|
|
$
|
361,075
|
|
|
$
|
186,150
|
|
|
$
|
857,937
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
44,138
|
|
|
$
|
1,449,300
|
|
|
|
|
2009
|
|
|
$
|
296,500
|
|
|
$
|
249,480
|
|
|
$
|
187,339
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
62,628
|
|
|
$
|
795,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas M. Miller,
Executive Vice President,
Project Development
|
|
|
2010
|
|
|
$
|
351,500
|
|
|
$
|
123,025
|
|
|
$
|
658,229
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40,716
|
|
|
$
|
1,173,470
|
|
|
|
|
2009
|
|
|
$
|
351,500
|
|
|
$
|
158,175
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40,525
|
|
|
$
|
550,200
|
|
|
|
|
2008
|
|
|
$
|
312,874
|
|
|
$
|
105,450
|
|
|
$
|
273,360
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
38,699
|
|
|
$
|
730,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard T.
Penning,
Executive Vice President,
Technology and Commercial
Affairs (5)
|
|
|
2010
|
|
|
$
|
293,400
|
|
|
$
|
146,700
|
|
|
$
|
645,527
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
71,541
|
|
|
$
|
1,157,168
|
|
|
|
|
2009
|
|
|
$
|
293,400
|
|
|
$
|
112,230
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
93,878
|
|
|
$
|
499,508
|
|
|
|
|
2008
|
|
|
$
|
268,343
|
|
|
$
|
71,513
|
|
|
$
|
231,660
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
97,821
|
|
|
$
|
669,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harold A. Wright,
Senior Vice President and
Chief Technology Officer
|
|
|
2010
|
|
|
$
|
266,700
|
|
|
$
|
114,750
|
|
|
$
|
452,553
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
21,749
|
|
|
$
|
855,752
|
|
|
|
|
2009
|
|
|
$
|
256,800
|
|
|
$
|
127,125
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
21,899
|
|
|
$
|
405,824
|
|
|
|
|
2008
|
|
|
$
|
242,494
|
|
|
$
|
105,938
|
|
|
$
|
249,172
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
22,894
|
|
|
$
|
620,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colin M. Morris,
General Counsel
|
|
|
2010
|
|
|
$
|
234,750
|
|
|
$
|
100,515
|
|
|
$
|
411,292
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
36,640
|
|
|
$
|
783,197
|
|
|
|
|
2009
|
|
|
$
|
229,500
|
|
|
$
|
113,580
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
37,471
|
|
|
$
|
380,551
|
|
|
|
|
2008
|
|
|
$
|
210,757
|
|
|
$
|
86,063
|
|
|
$
|
242,118
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
28,847
|
|
|
$
|
567,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The bonuses that were awarded in December 2010 were payable 100% in cash.
|
|
(2)
|
|
The amount reflects the aggregate grant date fair value of the stock awards, calculated in
accordance with ASC Topic 718. We provide information regarding the assumptions used to
calculate the value of all stock awards made to executive officers in Note 15 Accounting
for Stock Based Compensation in our financial statements in our 2010 Form 10-K. The amounts
reported for fiscal years 2009 and 2008 do not match the amounts reported in last years proxy
statement, due to new rule amendments which requires that the Company shows the aggregate
grant date fair value for all years. Stock Awards in fiscal year 2010 include performance
based vesting components of $980,292, $686,205, $490,146, $490,146, $343,102 and $294,088 for
Messrs. Ramsbottom, Cohrs, Miller, Penning, Wright and Morris, respectively.
|
|
(3)
|
|
All Other Compensation includes 401(k) matching contributions of $0, $15,263, $11,841,
$10,156, $9,749 and $7,765 for Messrs. Ramsbottom, Cohrs, Miller, Penning, Wright and Morris,
respectively. All Other Compensation also includes perquisites valued at the aggregate
incremental cost to Rentech consisting of automobile allowance, payment for financial and tax
planning services and the other payments made by the Company described below under
Perquisites.
|
|
(4)
|
|
Mr. Miller served as interim CFO from July 2008 through September 2008. Subsequent to fiscal
year end, Mr. Cohrs was appointed as the CFO in October 2008.
|
|
(5)
|
|
As required by Item 402(a)(3)(iv) of Regulation S-K, the table includes Mr. Penning because
he would have qualified under Item 402(a)(3)(iii) except for the fact that he did not serve as
an executive officer of Rentech at the end of the completed fiscal year.
|
21
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto
|
|
|
Other
|
|
|
Financial &
|
|
|
|
|
Name
|
|
Allowance
|
|
|
Payments
|
|
|
Tax Planning
|
|
|
Total
|
|
D. Hunt Ramsbottom
|
|
$
|
14,400
|
|
|
|
|
|
|
$
|
16,875
|
|
|
$
|
31,275
|
|
Dan J. Cohrs
|
|
$
|
12,000
|
|
|
|
|
|
|
$
|
16,875
|
|
|
$
|
28,875
|
|
Douglas M. Miller
|
|
$
|
12,000
|
|
|
|
|
|
|
$
|
16,875
|
|
|
$
|
28,875
|
|
Richard T. Penning
|
|
$
|
9,000
|
|
|
$
|
35,510
|
(1)
|
|
$
|
16,875
|
|
|
$
|
61,385
|
|
Harold A. Wright
|
|
$
|
12,000
|
|
|
|
|
|
|
|
|
|
|
$
|
12,000
|
|
Colin M. Morris
|
|
$
|
12,000
|
|
|
|
|
|
|
$
|
16,875
|
|
|
$
|
28,875
|
|
|
|
|
(1)
|
|
Relocation expenses of $32,000 and medical benefits of $3,510 paid by Rentech in accordance
with severance provisions in Mr. Pennings employment agreement.
|
Grants of Plan-Based Awards
The following table sets forth information with respect to the NEOs concerning the grant of
plan-based awards during the last fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
Option
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
|
|
|
Estimated Future
|
|
|
Stock
|
|
|
Awards:
|
|
|
Exercise or
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts Under Non-Equity
|
|
|
Payouts Under Equity
|
|
|
Awards:
|
|
|
Number of
|
|
|
Base Price of
|
|
|
Closing
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
Equity or
|
|
|
Incentive Plan Awards
|
|
|
Incentive Plan Awards
|
|
|
Number of
|
|
|
Securities
|
|
|
Option
|
|
|
Market
|
|
|
Date
|
|
|
|
|
|
Grant
|
|
|
Non-Equity
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Shares of Stock
|
|
|
Underlying
|
|
|
Awards
|
|
|
Price
|
|
|
Fair Value
|
|
|
|
Name
|
|
Date
|
|
|
Award
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
or Units (#)
|
|
|
Options (#)
|
|
|
($ per Share)
|
|
|
Per Share
|
|
|
($) (1)
|
|
|
Notes
|
D. Hunt Ramsbottom
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
980,292
|
|
|
(2)
|
D. Hunt Ramsbottom
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
191,604
|
|
|
(3)
|
D. Hunt Ramsbottom
|
|
|
11/3/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133,226
|
|
|
|
|
|
|
|
|
|
|
$
|
1.35
|
|
|
$
|
92,086
|
|
|
(4)
|
D. Hunt Ramsbottom
|
|
|
12/10/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,751
|
|
|
|
|
|
|
|
|
|
|
$
|
1.69
|
|
|
$
|
25,743
|
|
|
(5)
|
Dan J. Cohrs
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,000
|
|
|
|
700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
686,205
|
|
|
(2)
|
Dan J. Cohrs
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
185,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
157,540
|
|
|
(3)
|
Dan J. Cohrs
|
|
|
12/10/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,402
|
|
|
|
|
|
|
|
|
|
|
$
|
1.69
|
|
|
$
|
14,192
|
|
|
(5)
|
Douglas M. Miller
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
490,146
|
|
|
(2)
|
Douglas M. Miller
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
127,736
|
|
|
(3)
|
Douglas M. Miller
|
|
|
11/3/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,355
|
|
|
|
|
|
|
|
|
|
|
$
|
1.35
|
|
|
$
|
31,349
|
|
|
(4)
|
Douglas M. Miller
|
|
|
12/10/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,399
|
|
|
|
|
|
|
|
|
|
|
$
|
1.69
|
|
|
$
|
8,998
|
|
|
(5)
|
Richard Penning
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
490,146
|
|
|
(2)(6)
|
Richard Penning
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
127,736
|
|
|
(3)(6)
|
Richard Penning
|
|
|
11/3/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,758
|
|
|
|
|
|
|
|
|
|
|
$
|
1.35
|
|
|
$
|
21,260
|
|
|
(4)(6)
|
Richard Penning
|
|
|
12/10/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,379
|
|
|
|
|
|
|
|
|
|
|
$
|
1.69
|
|
|
$
|
6,385
|
|
|
(5)(6)
|
Harold A. Wright
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
343,102
|
|
|
(2)
|
Harold A. Wright
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
85,158
|
|
|
(3)
|
Harold A. Wright
|
|
|
11/3/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,782
|
|
|
|
|
|
|
|
|
|
|
$
|
1.35
|
|
|
$
|
15,747
|
|
|
(4)
|
Harold A. Wright
|
|
|
12/10/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,876
|
|
|
|
|
|
|
|
|
|
|
$
|
1.69
|
|
|
$
|
8,546
|
|
|
(5)
|
Colin M. Morris
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
294,088
|
|
|
(2)
|
Colin M. Morris
|
|
|
11/17/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
$
|
85,158
|
|
|
(3)
|
Colin M. Morris
|
|
|
11/3/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,016
|
|
|
|
|
|
|
|
|
|
|
$
|
1.35
|
|
|
$
|
25,585
|
|
|
(4)
|
Colin M. Morris
|
|
|
12/10/09
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,467
|
|
|
|
|
|
|
|
|
|
|
$
|
1.69
|
|
|
$
|
6,461
|
|
|
(5)
|
|
|
|
(1)
|
|
Amounts reflect the full grant date fair value of RSUs granted during fiscal year 2010 computed
in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named
individual. We provide information regarding the assumptions used to calculate the fair value
of all stock awards made to named executive officers in Note 15 Accounting for Stock Based
Compensation in our financial statements to our 2010 Form 10-K.
|
|
(2)
|
|
Represents RSU awards that may vest upon the achievement of certain performance targets. Vesting
of the RSU awards is tied to milestones related to the development, construction and operation
of the Companys Rialto Project or another comparable project designated by the Compensation
Committee. Sixty percent (60%) of the shares underlying each RSU award will vest upon the
closing on financing for the project, twenty percent (20%) of the shares underlying each RSU
award will vest upon completion of construction and initial operation of the project facility
and twenty percent (20%) of the shares underlying each RSU award will vest upon sustained
operation of the project facility.
|
|
(3)
|
|
Represents RSU awards that vest in three equal annual installments starting on November 17,
2010.
|
|
(4)
|
|
Represents RSU awards of which 50% 55% have vested and the remaining portion will vest
November 3, 2012.
|
|
(5)
|
|
Represents RSU awards of which 50% have vested and the remaining portion will vest on December
10, 2012.
|
|
(6)
|
|
At the end of fiscal year 2010, Mr. Penning no longer served as an executive officer of our
Company and his awards were no longer outstanding.
|
22
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information with respect to the NEOs, concerning the outstanding
equity awards as of September 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Plan Awards:
|
|
|
Plan Awards:
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value
|
|
|
Number of
|
|
|
Market or
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
of Shares or
|
|
|
of Shares or
|
|
|
Unearned
|
|
|
Payout
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Shares, Units
|
|
|
Value of Unearned
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
|
Stock
|
|
|
Stock
|
|
|
or
|
|
|
Shares, Units or
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
that have not
|
|
|
that have not
|
|
|
Other Rights
|
|
|
Other Rights
|
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
that have not
|
|
|
that have not
|
|
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($) (1)
|
|
|
Vested (#)
|
|
|
Vested ($)(1)
|
|
|
Notes
|
|
|
D. Hunt Ramsbottom
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.15
|
|
|
|
7/13/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
787,500
|
|
|
$
|
1.82
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,687
|
|
|
$
|
57,110
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
49,500
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000
|
|
|
$
|
173,250
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000
|
|
|
$
|
173,250
|
|
|
|
(7)
|
|
|
|
|
2,082,500
|
|
|
|
|
|
|
|
|
|
|
$
|
1.82
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
$
|
990,000
|
|
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,000
|
|
|
$
|
222,750
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133,226
|
|
|
$
|
131,894
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,751
|
|
|
$
|
29,453
|
|
|
|
|
|
|
|
|
|
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dan J. Cohrs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216,667
|
|
|
$
|
214,500
|
|
|
|
|
|
|
|
|
|
|
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,250
|
|
|
$
|
54,698
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,250
|
|
|
$
|
54,698
|
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,000
|
|
|
$
|
693,000
|
|
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
185,000
|
|
|
$
|
183,150
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,402
|
|
|
$
|
16,238
|
|
|
|
|
|
|
|
|
|
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas M. Miller
|
|
|
130,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.15
|
|
|
|
7/13/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,665
|
|
|
$
|
12,538
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,834
|
|
|
$
|
19,636
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,250
|
|
|
$
|
54,698
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,250
|
|
|
$
|
54,698
|
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
$
|
495,000
|
|
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
$
|
148,500
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,355
|
|
|
$
|
44,901
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,399
|
|
|
$
|
10,295
|
|
|
|
|
|
|
|
|
|
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harold A. Wright
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,933
|
|
|
$
|
16,764
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,666
|
|
|
$
|
18,479
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,000
|
|
|
$
|
41,580
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,000
|
|
|
$
|
41,580
|
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
$
|
346,500
|
|
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
$
|
99,000
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,782
|
|
|
$
|
22,554
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,876
|
|
|
$
|
9,777
|
|
|
|
|
|
|
|
|
|
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colin M. Morris
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.15
|
|
|
|
7/13/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,644
|
|
|
$
|
15,488
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,334
|
|
|
$
|
16,171
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,500
|
|
|
$
|
45,045
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,500
|
|
|
$
|
45,045
|
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
$
|
297,000
|
|
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
$
|
99,000
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,016
|
|
|
$
|
36,646
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,467
|
|
|
$
|
7,392
|
|
|
|
|
|
|
|
|
|
|
|
(13)
|
|
|
|
|
(1)
|
|
Calculated based on the $0.99 closing price of Rentechs common stock on September 30, 2010.
|
|
(2)
|
|
Represents a stock option award that vested in three equal annual installments starting on July
14, 2007.
|
23
|
|
|
(3)
|
|
Represents a warrant granted in 2005 and held by East Cliff Advisors, LLC, an entity
affiliated with Mr. Ramsbottom. Half of the warrant will vest upon the sooner of Rentechs
stock price reaching $5.25 or higher for 12 consecutive trading days or December 31, 2011 as
long as Mr. Ramsbottom is still an employee of the Company. The expiration date for this half
of the warrant has been extended to December 31, 2012. The other
half of the warrant will vest upon Rentechs stock price reaching $5.25 or higher for 12
consecutive trading days and the expiration date for this half of the warrant has been extended
to the earlier of 90 days after Mr. Ramsbottom ceases to be employed by the Company or December
31, 2011.
|
|
(4)
|
|
Represents a RSU award that vests on April 1, 2011.
|
|
(5)
|
|
Represents a RSU award that vests in three equal annual installments starting on April 1, 2009.
|
|
(6)
|
|
Represents a performance share award, zero to 100% of which vests on April 1, 2011 depending on
the Companys volume weighted stock price on such date falling within a share price target
range of greater than $2.00 and up to $4.00.
|
|
(7)
|
|
Represents a performance share award, zero to 100% of which vests on April 1, 2011 depending on
the Companys total shareholder return ranking relative to the total shareholder return of a
specified peer group.
|
|
(8)
|
|
Represents a warrant held by East Cliff Advisors, LLC, an entity affiliated with Mr. Ramsbottom.
The expiration date for this warrant is the earlier of 90 days after Mr. Ramsbottom ceases to
be employed by the Company or December 31, 2011.
|
|
(9)
|
|
Represents a RSU award that vests in three equal annual installments starting on October 22,
2009.
|
|
(10)
|
|
Represents RSU awards that may vest upon the achievement of certain performance targets.
Vesting of the RSU awards is tied to milestones related to the development, construction and
operation of the Companys Rialto Project or another comparable project designated by the
Compensation Committee. Sixty percent (60%) of the shares underlying each RSU award will vest
upon the closing on financing for the project, twenty percent (20%) of the shares underlying
each RSU award will vest upon completion of construction and initial operation of the project
facility and twenty percent (20%) of the shares underlying each RSU award will vest upon
sustained operation of the project facility.
|
|
(11)
|
|
Represents RSU awards that vest in three equal installments starting on November 17, 2010.
|
|
(12)
|
|
Represents RSU awards of which 50% 55% have vested and the remaining portion will vest
November 3, 2012.
|
|
(13)
|
|
Represents RSU awards of which 50% have vested and the remaining portion will vest on
December 10, 2012.
|
Option Exercises and Stock Vested
The following table sets forth information with respect to the NEOs concerning the option exercises
and stock vested during the fiscal year ended September 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Value
|
|
|
Number of
|
|
|
Value
|
|
|
|
Shares Acquired
|
|
|
Realized
|
|
|
Shares Acquired
|
|
|
Realized
|
|
|
|
on Exercise
|
|
|
on Exercise
|
|
|
on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($) (1)
|
|
D. Hunt Ramsbottom
|
|
|
|
|
|
|
|
|
|
|
31,660
|
|
|
$
|
32,610
|
|
Dan J. Cohrs
|
|
|
|
|
|
|
|
|
|
|
69,604
|
|
|
$
|
109,278
|
|
Douglas M. Miller
|
|
|
|
|
|
|
|
|
|
|
11,545
|
|
|
$
|
11,891
|
|
Richard T. Penning
|
|
|
|
|
|
|
|
|
|
|
106,973
|
|
|
$
|
125,420
|
|
Harold A. Wright
|
|
|
|
|
|
|
|
|
|
|
44,226
|
|
|
$
|
45,553
|
|
Colin M. Morris
|
|
|
|
|
|
|
|
|
|
|
9,150
|
|
|
$
|
9,425
|
|
|
|
|
(1)
|
|
Represents the amount equal to the closing market price of the a share of the Companys common
stock on the date of vesting multiplied by the number of shares pursuant to the RSU award that
vested on such date.
|
24
Potential Payments upon Termination or Change-in-Control
The employment agreements of Messrs. Ramsbottom, Cohrs, Miller, Wright and Morris (discussed below)
provide for severance payments upon termination without cause, non-renewal of the executives
employment agreement and the executives resignation for good reason. The employment agreements
also provide for payments upon a
termination without cause and executives resignation for good reason upon a change in control at
the Company. In addition, the performance share and RSU agreements of Messrs. Ramsbottom, Cohrs,
Miller, Wright and Morris identified in the tables below provide for accelerated vesting upon the
occurrence of the same events. In the event that any severance payments to Messrs. Ramsbottom,
Cohrs, Miller, Wright and Morris are subject to federal excise taxes under the golden parachute
provisions of the Internal Revenue Code, Rentech is required to pay the executives a gross-up for
any such excise taxes plus any excise, income or payroll taxes owed on the payment of the gross-up
for the excise taxes. No severance payments or accelerated vesting events are provided if a NEO is
terminated for cause or resigns without good reason.
The potential payouts and vesting amounts that each of Messrs. Ramsbottom, Cohrs, Miller, Wright
and Morris would receive upon one of the qualifying termination or change in control events
described above, assuming such event occurred on September 30, 2010, are set forth in the tables
below. Mr. Penning was not an executive officer of the Company on such date and therefore is not
included in the tabular disclosure below. The amounts include the fair value of accelerated RSU
awards valued as of September 30, 2010.
Termination without Cause or for Good Reason as of September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Acceleration
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
of Restricted
|
|
|
Benefits
|
|
|
|
|
|
|
|
Name
|
|
Payments
|
|
|
Stock Units
|
|
|
Payments
|
|
|
Gross-up
|
|
|
Total
|
|
D. Hunt Ramsbottom (1)
|
|
$
|
1,257,000
|
|
|
$
|
86,625
|
|
|
$
|
26,895
|
|
|
|
|
|
|
$
|
1,370,520
|
|
Dan J. Cohrs (2)
|
|
$
|
580,800
|
|
|
$
|
134,599
|
|
|
$
|
26,895
|
|
|
|
|
|
|
$
|
742,294
|
|
Douglas M. Miller (3)
|
|
$
|
527,250
|
|
|
$
|
27,349
|
|
|
$
|
26,895
|
|
|
|
|
|
|
$
|
581,494
|
|
Harold A. Wright (4)
|
|
$
|
405,000
|
|
|
$
|
20,790
|
|
|
$
|
26,895
|
|
|
|
|
|
|
$
|
452,685
|
|
|
Colin M. Morris (5)
|
|
$
|
354,750
|
|
|
$
|
22,523
|
|
|
$
|
10,589
|
|
|
|
|
|
|
$
|
387,862
|
|
|
|
|
(1)
|
|
Mr. Ramsbottoms cash severance payments would equal three times his annual base salary paid
over the two year period after his termination date. Mr. Ramsbottoms medical benefits
would be paid by the Company for 18 months. Based upon the total shareholder return of the
Company as of September 30, 2010 relative to the specified peer group, 50% of Mr.
Ramsbottoms total shareholder return performance share award would accelerate and vest
upon termination.
|
|
(2)
|
|
Mr. Cohrs cash severance payments would equal the sum of (a) his annual base salary paid
over the one year period after executives termination date and (b) a target bonus equal to
60% of his annual base salary paid on the date when executive bonuses are paid for the
fiscal year in which the termination takes place. Mr. Cohrs medical benefits would be paid
by the Company for 18 months. Based upon the total shareholder return of the Company as of
September 30, 2010 relative to the specified peer group, 50% of Mr. Cohrs total
shareholder return performance share award would accelerate and vest upon termination. In
addition, the RSUs scheduled to vest over the next 12 months pursuant to his inducement
award would accelerate and vest upon termination.
|
|
(3)
|
|
Mr. Millers cash severance payments would equal the sum of (a) his annual base salary paid
over the one year period after executives termination date and (b) a target bonus equal to
50% of his annual base salary paid on the date when executive bonuses are paid for the
fiscal year in which the termination takes place. Mr. Millers medical benefits would be
paid by the Company for 18 months. Based upon the total shareholder return of the Company
as of September 30, 2010 relative to the specified peer group, 50% of Mr. Millers total
shareholder return performance share award would accelerate and vest upon termination.
|
|
(4)
|
|
Mr. Wrights cash severance payments would equal the sum of (a) his annual base salary paid
over the one year period after his termination date and (b) a target bonus equal to 50% of
his annual base salary paid on the date when executive bonuses are paid for the fiscal year
in which the termination takes place. Mr. Wrights medical benefits would be paid by the
Company for 18 months. Based upon the total shareholder return of the Company as of
September 30, 2010 relative to the specified peer group, 50% of Mr. Wrights total
shareholder return performance share award would accelerate and vest upon termination.
|
|
(5)
|
|
Mr. Morris cash severance payments would equal the sum of (a) his annual base salary paid
over the one year period after his termination date and (b) a target bonus equal to 50% of
his annual base salary paid on the date when executive bonuses are paid for the fiscal year
in which the termination takes place. Mr. Morris medical benefits would be paid by the
Company for 18 months. Based upon the total shareholder return of the Company as of
September 30, 2010 relative to the specified peer group, 50% of Mr. Morris total
shareholder return performance share award would accelerate and vest upon termination.
|
25
Termination For Non-Renewal of Employment Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Acceleration
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
of Restricted
|
|
|
Benefits
|
|
|
|
|
|
|
|
Name
|
|
Payments
|
|
|
Stock Units
|
|
|
Payments
|
|
|
Gross-up
|
|
|
Total
|
|
D. Hunt Ramsbottom (1)
|
|
$
|
1,257,000
|
|
|
$
|
86,625
|
|
|
$
|
26,895
|
|
|
|
|
|
|
$
|
1,370,520
|
|
Dan J. Cohrs (2)
|
|
$
|
363,000
|
|
|
$
|
134,599
|
|
|
|
|
|
|
|
|
|
|
$
|
497,599
|
|
Douglas M. Miller (3)
|
|
$
|
351,500
|
|
|
$
|
27,349
|
|
|
|
|
|
|
|
|
|
|
$
|
378,849
|
|
Harold A. Wright (4)
|
|
$
|
270,000
|
|
|
$
|
20,790
|
|
|
|
|
|
|
|
|
|
|
$
|
290,790
|
|
Colin M. Morris (5)
|
|
$
|
236,500
|
|
|
$
|
22,523
|
|
|
|
|
|
|
|
|
|
|
$
|
259,023
|
|
|
|
|
(1)
|
|
Mr. Ramsbottoms cash severance payments would equal three times his annual base salary
paid over the two year period after his termination date. Mr. Ramsbottoms medical benefits
would be paid by the Company for 18 months. Based upon the total shareholder return of the
Company as of September 30, 2010 relative to the specified peer group, 50% of Mr.
Ramsbottoms total shareholder return performance share award would accelerate and vest
upon termination.
|
|
(2)
|
|
Mr. Cohrs cash severance payments would equal to his annual base salary paid over the
one year period after executives termination date. Based upon the total shareholder
return of the Company as of September 30, 2010 relative to the specified peer group, 50% of
Mr. Cohrs total shareholder return performance share award would accelerate and vest upon
termination. In addition, the RSUs scheduled to vest over the next 12 months pursuant to
his inducement award would accelerate and vest upon termination.
|
|
(3)
|
|
Mr. Millers cash severance payments would equal to his annual base salary paid over
the one year period after executives termination date. Based upon the total shareholder
return of the Company as of September 30, 2010 relative to the specified peer group, 50% of
Mr. Millers total shareholder return performance share award would accelerate and vest
upon termination.
|
|
(4)
|
|
Mr. Wrights cash severance payments would equal to his annual base salary paid over
the one year period after executives termination date. Based upon the total shareholder
return of the Company as of September 30, 2010 relative to the specified peer group, 50% of
Mr. Wrights total shareholder return performance share award would accelerate and vest
upon termination.
|
|
(5)
|
|
Mr. Morris cash severance payments would equal to his annual base salary paid over the
one year period after executives termination date. Based upon the total shareholder return
of the Company as of September 30, 2010 relative to the specified peer group, 50% of Mr.
Morris total shareholder return performance share award would accelerate and vest upon
termination.
|
Termination without Cause, for Good Reason or Non-Renewal of Employment Agreement upon a Change in
Control as of September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Acceleration
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
of Restricted
|
|
|
Benefits
|
|
|
|
|
|
|
|
Name
|
|
Payments
|
|
|
Stock Units
|
|
|
Payments
|
|
|
Gross-up
|
|
|
Total
|
|
D. Hunt Ramsbottom (1)
|
|
$
|
1,257,000
|
|
|
$
|
837,207
|
|
|
|
|
|
|
|
|
|
|
$
|
2,094,207
|
|
Dan J. Cohrs (2)
|
|
$
|
580,800
|
|
|
$
|
523,283
|
|
|
|
|
|
|
|
|
|
|
$
|
1,104,083
|
|
Douglas M. Miller (3)
|
|
$
|
527,250
|
|
|
$
|
345,264
|
|
|
|
|
|
|
|
|
|
|
$
|
872,514
|
|
Harold A. Wright (3)
|
|
$
|
405,000
|
|
|
$
|
249,735
|
|
|
|
|
|
|
|
|
|
|
$
|
654,735
|
|
Colin M. Morris (3)
|
|
$
|
354,750
|
|
|
$
|
264,787
|
|
|
|
|
|
|
|
|
|
|
$
|
619,537
|
|
|
|
|
(1)
|
|
Mr. Ramsbottoms cash severance payments would equal the sum of (a) two times his
annual base salary and (b) the higher of (i) his target bonus equal to his annual base
salary or (ii) his prior years actual bonus. The cash severance payments would be due
within ten business days of his termination. All of Mr. Ramsbottoms RSU Awards and
performance share awards would accelerate and vest upon termination, excluding the RSU
award with vesting based on achievement of project milestones.
|
26
|
|
|
(2)
|
|
Mr. Cohrs cash severance payments would equal the sum of (a) his annual base salary
and (b) the higher of (i) his target bonus equal to 60% of his annual base salary or (ii)
his prior years actual bonus. The cash severance payments would be due within ten business
days of his termination. All of executives RSU Awards and performance share awards would
accelerate and vest upon termination, excluding the RSU award with vesting based on
achievement of project milestones.
|
|
(3)
|
|
The executives cash severance payments would equal the sum of (a) executives annual
base salary and (b) the higher of (i) executives target bonus equal to 50% of his annual
base salary or (ii) executives prior years actual bonus. The cash severance payments
would be due within ten business days of executives termination. RSU Awards and
performance share awards would accelerate and vest upon termination, excluding the RSU
award with vesting based on achievement of project milestones.
|
Change in Control or Termination upon Death or Disability
The employment agreements for the NEOs do not provide for any payments beyond those available to
all salaried employees upon a change in control without a termination, or upon termination for
death or disability. Various equity awards held by the NEOs may vest in the event of a change in
control, death or disability pursuant to the terms of the equity award agreements. The following
table provides the value of the portion of those equity awards that vest as a result of a change in
control, death or disability as of September 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
Death or
|
|
Name
|
|
Control
|
|
|
Disability
|
|
D. Hunt Ramsbottom
|
|
$
|
614,457
|
|
|
$
|
577,332
|
|
Dan J. Cohrs
|
|
$
|
125,633
|
|
|
$
|
441,237
|
|
Douglas M. Miller
|
|
$
|
196,764
|
|
|
$
|
263,218
|
|
Harold A. Wright
|
|
$
|
150,735
|
|
|
$
|
187,365
|
|
Colin M. Morris
|
|
$
|
165,786
|
|
|
$
|
197,219
|
|
Director Compensation
The following table sets forth compensation information with respect to our non-employee directors
as of the end of the last fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Pension
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($) (1)
|
|
|
($) (1)
|
|
|
($)
|
|
|
Earnings
|
|
|
($)
|
|
|
($)
|
|
Michael S. Burke
|
|
$
|
42,500
|
|
|
$
|
50,040
|
|
|
$
|
24,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
117,531
|
|
Michael F. Ray
|
|
$
|
39,750
|
|
|
$
|
50,040
|
|
|
$
|
24,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
114,781
|
|
Ronald M. Sega
|
|
$
|
32,250
|
|
|
$
|
50,040
|
|
|
$
|
24,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
107,281
|
|
Edward M. Stern
|
|
$
|
39,750
|
|
|
$
|
50,040
|
|
|
$
|
24,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
114,781
|
|
Halbert S. Washburn
|
|
$
|
37,000
|
|
|
$
|
50,040
|
|
|
$
|
24,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
112,031
|
|
John A. Williams
|
|
$
|
25,000
|
|
|
$
|
50,040
|
|
|
$
|
46,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
121,258
|
|
Dennis L. Yakobson
|
|
$
|
50,000
|
|
|
$
|
50,040
|
|
|
$
|
24,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
125,031
|
|
|
|
|
(1)
|
|
The amount reflects the aggregate grant date fair value for the 2010 awards, calculated in
accordance with ASC Topic 718. We provide information regarding the assumptions used to
calculate the value of all stock awards granted in Note 15 Accounting for Stock Based
Compensation in our financial statements to our 2010 Form 10-K.
|
27
Directors who are employees of Rentech do not receive additional compensation for their services.
The compensation plan for nonemployee directors provides for an annual retainer of $30,000 to be
paid in $7,500 quarterly increments to each outside director. Additional cash compensation is
provided for participation in committees of the Board, up to a maximum of $15,000 per year for all
committee work. The Chairman of the Board receives $25,000 per year, the Chairman of the Audit
Committee receives $15,000 per year; the Chairman of the Compensation and the Chairman of the
Nominating Committee receive $7,500 per year; and regular committee members receive $5,000 per
year. Directors are reimbursed for reasonable out-of-pocket expenses incurred in their capacity as
directors. No additional cash fees are paid to directors for attendance at Board or committee
meetings.
Each new non-employee member of the Board is granted a five-year, fully-vested option to purchase
20,000 shares of the Companys common stock at the fair market value of the Companys common stock
on the date of grant. Each non-employee director serving immediately following the Companys annual
meeting of shareholders also is granted the number of shares of fully vested Company common stock
obtained by dividing $50,000 by the fair market value of the Companys common stock on the date of
grant, rounded up to the nearest 100 shares. Each non-employee director serving immediately
following the Companys annual meeting of shareholders also is granted a stock option with a
six-year term to purchase shares of the Companys common stock equal in value to $25,000 based on
the Black-Scholes option-pricing model at an exercise price equal to the fair market value of a
share of the Companys common stock on the date of grant, determined in accordance with our
Incentive Plan. The stock option will vest in a single installment on the earlier of the one year
anniversary of the date of grant and the Companys annual meeting of shareholders, subject to the
directors continued Board service through such date.
Employment Contracts
As of September 30, 2010, we had entered into employment agreements with certain of our named
executive officers including, Messrs. Ramsbottom, Cohrs, Miller, Wright and Morris as described
below. Mr. Penning was not an executive officer of the Company on such date, but is included in the
descriptions below.
D. Hunt Ramsbottom
Mr. Ramsbottoms employment agreement continues through December 31, 2011, subject to automatic
one-year renewals, and provides for a current base salary of $440,000 per year (subject to
increase) and a bonus opportunity targeted at 100% of base salary (with actual bonus eligibility
ranging from 0 200% of base salary). Upon a termination of Mr. Ramsbottoms employment without
cause or with good reason (each as defined in his employment agreement) or due to a non-renewal
of his employment term by the Company, Mr. Ramsbottom is entitled to receive an amount equal to
three times his base salary, payable over two years, in addition to Company-paid continuation
health benefits for up to eighteen months. If Mr. Ramsbottoms employment terminates without
cause, with good reason or due to a non-renewal of his employment term by the Company in
connection with a change in control of the Company, his cash severance will be paid in a lump sum
and, if his annual bonus for the year immediately preceding his termination exceeds his
then-current base salary, the cash severance will equal twice his base salary plus the amount of
his prior year annual bonus (instead of three times his base salary). Payments made upon each
termination scenario are subject to the executive signing a release of claims against the Company.
Dan J. Cohrs
Mr. Cohrs employment agreement continues through October 22, 2011, subject to automatic one-year
renewals, and provides for a current base salary of $377,500 per year (subject to increase) and a
bonus opportunity targeted at 60% of base salary (with actual bonus eligibility ranging from 0
120% of base salary). Under Mr. Cohrs employment agreement, in December 2008 Mr. Cohrs was granted
325,000 RSUs (vesting in annual increments over three years) and 110,500 performance shares which
vest subject to the attainment of specified performance objectives. Mr. Cohrs employment agreement
also provides for a one-time commencement payment of $25,000. Upon a termination of Mr. Cohrs
employment without cause or with good reason (each as defined in his employment agreement), Mr.
Cohrs is entitled to receive an amount equal to one times his base salary, payable over one year,
in addition to payment of his target bonus and Company-paid continuation health benefits for up to
eighteen months. If Mr. Cohrs employment terminates without cause, with good reason or due to
a non-renewal of his employment term by the Company in connection with a change in control of the
Company, his cash severance will be paid in a lump sum and, if his annual bonus for the year
immediately preceding his termination exceeds his target bonus, the prior years actual bonus will
be substituted for the target bonus. If Mr. Cohrs employment terminates due to a non-renewal of
his employment term by the Company (other than in connection with a change in control of the
Company), Mr. Cohrs is entitled to receive an amount equal to one times his base salary, payable
over one year, in addition to which he may receive payment of a discretionary bonus. Payments made
upon each termination scenario are subject to the executive signing a release of claims against the
Company.
28
Richard T. Penning
Mr. Pennings employment agreement provided for a base salary of $293,400 per year (subject to
increase) and a bonus opportunity targeted at 50% of base salary (with actual bonus eligibility
ranging from 0 100% of base salary). Upon a termination of Mr. Pennings employment without
cause or with good reason (each as defined in his employment agreement), Mr. Penning was
entitled to receive an amount equal to one times his base salary plus up to an additional $32,000
in connection with certain relocation expenses, each payable over one year, in addition to
Company-paid continuation health benefits for up to eighteen months and payment of his target
bonus. If Mr. Pennings employment terminated without cause, with good reason or due to a
non-renewal of his employment term by the Company in connection with a change in control of the
Company, his cash severance would be paid in a lump sum and, if his annual bonus for the year
immediately preceding his termination exceeded his target bonus, the prior years actual bonus
would be substituted for the target bonus. If Mr. Pennings employment terminated due to a
non-renewal of his employment term by the Company (other than in connection with a change in
control of the Company), Mr. Penning was entitled to receive an amount equal to one times his base
salary plus up to an additional $32,000 in connection with certain relocation expenses, payable
over one year, in addition to which he may receive payment of a discretionary bonus. Payments made
upon each termination scenario are subject to the executive signing a release of claims against the
Company.
Douglas M. Miller
Mr. Millers employment agreement continues through January 20, 2012, subject to automatic one-year
renewals, and provides for a current base salary of $351,500 per year (subject to increase) and a
bonus opportunity targeted at 50% of base salary (with actual bonus eligibility ranging from 0
100% of base salary). Upon a termination of Mr. Millers employment without cause or with good
reason (each as defined in his employment agreement), Mr. Miller is entitled to receive an amount
equal to one times his base salary, payable over one year, in addition to Company-paid continuation
health benefits for up to eighteen months, and payment of his target bonus. If Mr. Millers
employment terminates without cause, with good reason or due to a non-renewal of his employment
term by the Company in connection with a change in control of the Company, his cash severance will
be paid in a lump sum and, if his annual bonus for the year immediately preceding his termination
exceeds his target bonus, the prior years actual bonus will be substituted for the target bonus.
If Mr. Millers employment terminates due to a non-renewal of his employment term by the Company
(other than in connection with a change in control of the Company), Mr. Miller is entitled to
receive an amount equal to one times his base salary, payable over one year, in addition to which
he may receive payment of a discretionary bonus. Payments made upon each termination scenario are
subject to the executive signing a release of claims against the Company.
Harold A. Wright
Mr. Wrights employment agreement continues through November 3, 2011, subject to automatic one-year
renewals, and provides for a current base salary of $278,000 per year (subject to increase) and a
bonus opportunity targeted at 50% of base salary (with actual bonus eligibility ranging from 0
100% of base salary). Upon a termination of Mr. Wrights employment without cause or with good
reason (each as defined in his employment agreement), Mr. Wright is entitled to receive an amount
equal to one times his base salary, payable over one year, in addition to Company-paid continuation
health benefits for up to eighteen months, and payment of his target bonus. If Mr. Wrights
employment terminates without cause, with good reason or due to a non-renewal of his employment
term by the Company in connection with a change in control of the Company, his cash severance will
be paid in a lump sum and, if his annual bonus for the year immediately preceding his termination
exceeds his target bonus, the prior years actual bonus will be substituted for the target bonus.
If Mr. Wrights employment terminates due to a non-renewal of his employment term by the Company
(other than in connection with a change in control of the Company), Mr. Wright is entitled to
receive an amount equal to one times his base salary, payable over one year, in addition to which
he may receive payment of a discretionary bonus. Payments made upon each termination scenario are
subject to the executive signing a release of claims against the Company.
29
Colin M. Morris
Mr. Morris employment agreement continues through November 3, 2011, subject to automatic one-year
renewals, and provides for a current base salary of $248,300 per year (subject to increase) and a
bonus opportunity targeted at 50% of base salary (with actual bonus eligibility ranging from 0
100% of base salary). Upon a termination of Mr. Morris employment without cause or with good
reason (each as defined in his employment agreement), Mr.
Morris is entitled to receive an amount equal to one times his base salary, payable over one year,
in addition to Company-paid continuation health benefits for up to eighteen months, and payment of
his target bonus. If Mr. Morris employment terminates without cause, with good reason or due
to a non-renewal of his employment term by the Company in connection with a change in control of
the Company, his cash severance will be paid in a lump sum and, if his annual bonus for the year
immediately preceding his termination exceeds his target bonus, the prior years actual bonus will
be substituted for the target bonus. If Mr. Morris employment terminates due to a non-renewal of
his employment term by the Company (other than in connection with a change in control of the
Company), Mr. Morris is entitled to receive an amount equal to one times his base salary, payable
over one year, in addition to which he may receive payment of a discretionary bonus. Payments made
upon each termination scenario are subject to the executive signing a release of claims against the
Company.
The employment agreements entitle the executives to a gross-up payment from the Company equal to
any excise taxes that the executive incurs under Internal Revenue Code Section 280G (and any taxes
on such gross-up payment) in connection with a change in control of the Company. The agreements
also provide in addition to customary health, welfare, retirement and vacation benefits and certain
other perquisites and contain customary confidentiality and other restrictive covenants. Each of
the executives covered by an employment agreement has also executed a corporate confidentiality and
proprietary rights agreement. Though not addressed in the employment agreements, each of the NEOs
is entitled to accelerated vesting of certain equity awards in the event of a change in control of
the Company.
Compensation Risk Assessment
The Company has assessed the compensation policies and practices for its employees and
concluded that they do not create risks that are reasonably likely to have a material
adverse effect on the Company. In reaching its conclusion, the Company considered the
following elements of the companys compensation plans and policies:
|
|
|
The mix of fixed (base salary) and variable (cash annual incentive and equity)
compensation, including short-term (cash annual incentive) and long-term (equity)
incentives, reduces the significance of any one particular compensation component;
|
|
|
|
The mix of various types of equity awards (including RSUs and stock options)
which have different vesting provisions that are based on a variety of factors
including stock performance, accomplishment of commercial milestones and time
vesting, so that no single event drives long-term compensation;
|
|
|
|
The fact that all of our equity awards vest over time, typically three years,
encouraging a long-term view by recipients;
|
|
|
|
The Compensation Committee oversees the Companys equity plans and incentive
based bonus awards and has the discretion to reduce or eliminate bonuses based on
performance; and
|
|
|
|
A formal performance evaluation approach based on quantitative and qualitative
performance is used company-wide setting cash and equity incentives.
|
Audit Committee and Audit Committee Financial Expert
The Board of Directors has a standing Audit Committee. The Board of Directors has determined that
each member of the Audit Committee is independent within the meaning of the rules of the SEC and
the NYSE Amex.
The charter of our Audit Committee is available on the Corporate Governance section of our website
at http://www.rentechinc.com. The Board of Directors regularly reviews developments in corporate
governance and modifies the charter as warranted. Modifications are reflected on our website at the
address previously given. Information contained on our website is not incorporated into and does
not constitute a part of this proxy statement. Our website address referenced above is intended to
be an inactive textual reference only and not an active hyperlink to the website.
30
The Audit Committee of the Board of Directors has been delegated responsibility for reviewing with
the independent auditors the plans and results of the audit engagement; reviewing the adequacy,
scope and results of the internal accounting controls and procedures; reviewing the degree of
independence of the auditors; reviewing the auditors fees; and recommending the engagement of the
auditors to the full Board of Directors.
The Audit Committee currently consists of Mr. Burke, Mr. Ray and Mr. Washburn. The Board of
Directors has determined that Mr. Burke, the Chairman of the Audit Committee, qualifies as an
audit committee financial expert as defined by the rules of the SEC.
Audit Committee Report
The Audit Committee of the Board of Directors is composed entirely of independent directors, as
independence is defined by the listing standards of the NYSE Amex and the rules of the SEC. The
Audit Committee assists the Board of Directors with overseeing the accounting and financial
reporting processes of Rentech and the audits of the financial statements of Rentech.
In fulfilling its responsibilities during the past fiscal year, the committee:
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Discussed with the independent accountants, among other issues, the matters to be
discussed by Statement of Auditing Standards No. 61, as amended (AICPA,
Professional
Standards
, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight
board in Rule 3200T;
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Received the written disclosures and the letter from the auditors required by the
applicable requirements of the Public Company Accounting Oversight Board regarding the
independent accountants communications with the audit committee concerning independence,
and discussed with the independent accountants their independence;
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Discussed the overall audit process and reviewed related reports;
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Involved the independent accountants in the committees review of Rentechs financial
statements and related reports with management as well as managements assessment of
internal controls;
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Provided independent accountants the full access to the committee and the Board, to
report on appropriate matters;
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Discussed with the independent accountants matters required to be reviewed by generally
accepted auditing standards;
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Assessed the competence and qualification of PricewaterhouseCoopers LLP. to serve as
Rentechs auditors; and
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Reviewed and discussed the audited financial statements with Rentechs management.
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In addition, the committee considered the quality and adequacy of Rentechs internal controls and
the status of pending litigation, taxation matters and other areas of oversight to the financial
reporting and audit process that the committee determined appropriate.
Based on these reviews and discussions, the committee recommended to the Board of Directors, and
the Board has approved, the annual report on Form 10-K for the fiscal year ended September 30,
2010. Subsequent to such recommendation, the Board has approved inclusion of the audited financial
statements in the annual report on Form 10-K for filing with the SEC.
31
The report and opinion of PricewaterhouseCoopers LLP are filed separately in Rentechs annual
report on Form 10-K for the fiscal year ended September 30, 2010, and should be read in conjunction
with the information contained in this section of the proxy statement and the review of the audited
financial statements.
AUDIT COMMITTEE
Michael S. Burke, Chairman
Michael F. Ray
Halbert S. Washburn
In accordance with the rules and regulations of the SEC, neither the report of the Audit Committee
nor the report of the Compensation Committee appearing in this proxy statement will be deemed to be
soliciting material or to be filed with the SEC or subject to Regulations 14A or 14C of the
Securities Exchange Act of 1934 or to the liabilities of Section 18 of the Exchange Act, and will
not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or
the Exchange Act, notwithstanding any general incorporation by reference of this proxy statement
into any other filed document.
Nominating Committee and Shareholder Communications
The Nominating Committee currently consists of Ronald M. Sega and Edward M. Stern. The Nominating
Committees primary duty is to make recommendations to the Board of Directors regarding composition
of the Board of Directors, recruitment of new directors, and performance of the Board. The
committees policy is to identify and consider candidates for election as directors, including
candidates recommended by our security holders. To submit recommendations to the Board of Directors
with suggestions for election, or to send communications to the Board about other corporate
matters, security holders may write to the Chairman of the Board or to any one or more individual
directors at our address given on the first page of this proxy statement.
In considering suggestions for nominations, the committee will review the composition of the Board
of Directors in relation to the efforts of Rentech to maintain effective corporate governance
practices. The committee will consider Rentechs business plan, the perspective of its security
holders, and applicable regulations regarding the duties and qualifications of directors. In
consultation with the Chairman of the Board, the committee will evaluate candidates against the
qualifications that the committee expects to develop, conduct appropriate verifications of the
background of candidates, interview selected candidates, identify potential conflicts of interest,
and present the candidates who have been suggested to the full Board of Directors, with the
committees recommendations for nominations.
Rentech does not have a formal policy with regard to the consideration of diversity in identifying
director nominees, but the Nominating Committee strives to nominate directors with a variety of
complementary skills so that, as a group, the Board of Directors will possess the appropriate
talent, skills and expertise to oversee the Companys business. When considering a potential
director candidate, the Nominating Committee evaluates the entirety of each candidates experience
and qualifications. The Nominating Committee looks for personal and professional integrity,
demonstrated ability and judgment and business experience.
To be considered by the Nominating Committee, suggestions by security holders must be submitted
before Rentechs fiscal year-end, and must be accompanied by a description of the qualifications of
the proposed candidate and a written statement by the proposed candidate that he or she is willing
to be nominated and desires to serve, if elected. The committee may require that the proposed
nominee furnish other information as it may reasonably request to assist in determining the
qualifications of the proposed nominee to serve as a director. This restriction on eligibility is
removed after the action or proceeding is finally resolved.
The Nominating Committee requires all candidates to complete a Prospective Director Questionnaire,
provide a current curriculum vitae, and satisfy a credit and background check. In addition, the
committee will conduct telephone and in-person meetings with all candidates. Factors the committee
considers vital for all candidates include industry experience, management experience, and public
company experience.
32
Stock Performance Chart
The following graph and table compares the cumulative total shareholder return on our common stock
to that of the NYSE Amex Composite Index (the NYSE Amex Composite), the Russell 2000 Index (the
Russell 2000), a new alternative energy peer group which is the Ardour Global Alternative Energy
Index North America (the New Alternative Energy Peer Group), and two customized peer groups
for the last five fiscal years ending September 30. The first customized peer group of six
companies includes: Evergreen Energy, Inc., Fuel Tech, Inc., Headwaters, Inc., Pacific Ethanol,
Inc., Syntroleum Corporation and Verasun Energy Corporation (the Old Peer Group). The second
customized peer group of four companies includes: Agrium Inc., CF Industries Holdings, Inc., Terra
Nitrogen Company, L.P., and Yara International (the New Fertilizer Peer Group). The following
graph and table assumes that a $100 investment was made at the close of trading on September 30,
2005 in our common stock and in the indexes and the peer groups, and that dividends, if any, were reinvested. The stock price
performance shown on the graph below should not be considered indicative of future price
performance.
Rentech has used the Old Peer Group for comparison purposes because Rentech believed that the
selected companies were more comparable to Rentech than the published indexes available at the
time. The Old Peer Group is made up of companies that engage in the development of lower emission
fuel technologies and related businesses as a significant element of their overall business.
However, the companies included in the Old Peer Group do not participate in the nitrogen products
manufacturing business, which is one of our principal lines of business. In addition, the market
capitalizations of many of the companies included in the Old Peer Group are different from
Rentechs market capitalization and at least one of the companies is not currently trading on a
public exchange. For fiscal year 2011, Rentech has ceased using the Old Peer Group and the NYSE
Amex Composite and has begun using the New Alternative Energy Peer Group, the New Fertilizer Peer
Group and the Russell 2000 for the comparison purposes described above. Rentech believes that the
Russell 2000 will be more comparable than the NYSE Amex Composite to Rentech because it measures
the performance of the small-cap segment of the U.S. equity market. Rentech believes that the New
Alternative Energy Peer Group (comprised of alternative energy companies) and the New Fertilizer
Peer Group (comprised of companies in the nitrogen fertilizer business) will be more comparable to
Rentechs alternative energy and nitrogen products manufacturing business segments than the more
narrow Old Peer Group.
33
Total Return Analysis
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9/05
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9/06
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9/07
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9/08
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9/09
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9/10
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Rentech, Inc.
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100.00
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183.00
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85.38
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52.57
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64.03
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38.97
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NYSE Amex Composite
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100.00
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110.96
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140.03
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108.33
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113.47
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134.74
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Russell 2000
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100.00
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109.92
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123.49
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105.60
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95.52
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108.27
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New Alternative Energy Peer Group
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100.00
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84.85
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101.48
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84.53
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62.74
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59.87
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Old Peer Group
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100.00
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66.20
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44.50
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25.46
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14.20
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9.78
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New Fertilizer Peer Group
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100.00
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101.77
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251.45
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272.53
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253.23
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347.09
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Transactions with Related Persons
Pursuant to its charter, the Audit Committee of the Board of Directors is responsible for reviewing
and approving all related party transactions. While we do not have a formal written policy or
procedure for the review, approval or ratification of related party transactions, the audit
committee must review the material facts of any such transaction and approve that transaction on a
case by case basis.
34
Mr. Williams was a greater than 10% shareholder of SilvaGas Holdings Corporation when it was
acquired by the Company in June of 2009 pursuant to the terms of an Agreement and Plan of Merger
(the Merger Agreement). In addition to the consideration paid at the closing, the former SilvaGas
stockholders may be entitled to receive additional shares of the Companys common stock as earn-out
consideration. Potential earn-out consideration will be calculated based on the degree to which the
biomass gasification unit implementing SilvaGas technology at the Companys proposed project in
Rialto, California, or an alternative project to be designated by the Company, achieves certain
performance criteria no later than March 29, 2022. Depending on the performance of the gasifier,
such additional earn-out consideration may vary from zero to the sum of (i) 6,250,000 shares of
Company common stock and (ii) that number of shares equal in value to $5,500,000 at the time of any
such payment (provided that such number may not exceed 11,000,000 shares). In the event the
SilvaGas biomass gasification unit fails to achieve the performance criteria, SilvaGas stockholders
may be entitled to receive shares of the Companys common stock with a value equal to a portion of
the licensing fees and other royalties the Company receives from licensing the SilvaGas technology.
The SilvaGas stockholders will not be entitled to receive such common stock unless the licensing
fees and other royalties received by the Company exceed a certain threshold. In no event will the
aggregate consideration paid in shares of the Company to SilvaGas stockholders at closing and as
earn-out consideration exceed 20% of the total outstanding common stock of the Company as of the date of the Merger Agreement. In addition,
approximately 6,800,000 of the shares of our common stock issuable at closing were be deposited
with an escrow agent to support certain indemnification obligations of the SilvaGas stockholders.
Fifty percent of the escrow shares were to be released after two years if no claims were made
against them and the remaining fifty percent were to be released after three years. No claims have
been made to date and fifty percent of the escrow shares were released in December 2010 in exchange
for extending the survival date of certain of the SilvaGas stockholders representations, warranties
and covenants by an additional six months.
Code of Ethics
Rentech has adopted a code of business and conduct ethics that applies to Rentechs directors,
officers and employees. This code includes a special section entitled Business Conduct and Ethics
for Senior Financial Officers which applies to the Companys principal executive officer,
principal financial officer, principal accounting officer or controller, and persons performing
similar functions. A copy of the code of ethics was filed as an exhibit to Rentechs annual report
on Form 10-K for the fiscal year ended September 30, 2008 and is available on the Corporate
Governance Section of our website at www.rentechinc.com. Our website address referenced above is
not intended to be an active hyperlink, and the contents of our website shall not be deemed to be
incorporated herein.
Independent Certified Public Accountants
The Board of Directors selected PricewaterhouseCoopers LLP as our independent certified public
accountants for fiscal year 2011. To the knowledge of management, neither such firm nor any of its
members has any direct or material indirect financial interest in Rentech nor any connection with
Rentech in any capacity otherwise than as independent accountants.
A representative of PricewaterhouseCoopers LLP is expected to be present at the annual meeting of
shareholders to answer appropriate questions and will be afforded an opportunity to make a
statement regarding the financial statements.
Principal Accountant Fees and Services
The following table presents fees billed and expected to be billed for professional audit services
rendered by PricewaterhouseCoopers LLP for fiscal years 2010 and 2009 and fees billed and expected
to be billed for other services rendered by PricewaterhouseCoopers LLP for fiscal years 2010 and
2009.
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Fiscal Year
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Fiscal Year
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2010
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2009
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PricewaterhouseCoopers LLP:
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Audit Fees (1)
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$
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1,047,235
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$
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905,229
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Audit-Related Fees (2)
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15,000
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33,970
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Tax Fees (3)
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157,000
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206,215
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All Other Fees
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Total
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$
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1,219,235
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$
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1,145,414
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(1)
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Represents the aggregate fees billed and expected to be billed for professional
services rendered for the audit of Rentechs consolidated financial statements for fiscal
years ended September 30, 2010 and 2009, and for the audit of Rentechs internal control
over financial reporting and for reviews of the financial statements included in Rentechs
quarterly reports on Form 10-Q, assistance with Securities Act filings and related matters,
consents issued in connection with SEC filings, and consultations on financial accounting
and reporting standards arising during the course of the audit for fiscal years 2010 and
2009.
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35
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(2)
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Represents fees billed for assurance and related services that are reasonably related
to the performance of the audit or review of Rentechs financial statements, and are not
reported as Audit Fees.
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(3)
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Represents the aggregate fees billed and expected to be billed for Rentechs 2010 and
2009 tax return and tax consultation regarding property and sales tax issues.
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The Audit Committee is required to pre-approve all audit services and non-audit services (other
than de minimis non-audit services as defined by the Sarbanes-Oxley Act of 2002). Non-audit
services were reviewed with the Audit Committee, which concluded that the provision of such
services by PricewaterhouseCoopers LLP were compatible with the maintenance of that firms
independence in the conduct of its auditing functions. The Audit Committee pre-approved all fees
incurred in fiscal year 2010.
ADOPTION OF AMENDED AND RESATED 2009 INCENTIVE AWARD PLAN
(Proxy Item 2)
The Board is recommending that stockholders approve the Amended and Restated 2009 Incentive Award
Plan (the Amended Plan) at the annual meeting. On March 10, 2011 the Board authorized the Amended
Plan, subject to stockholder approval. The Amended Plan is integral to the Companys compensation
strategies and programs. The Board believes that the Amended Plan provides the flexibility that the
Company needs to keep pace with its competitors and effectively recruit, motivate, and retain the
caliber of employees and directors essential for achievement of the Companys success.
The Amended Plan amends the 2009 Incentive Award Plan, as amended (the Plan) in the following
respects:
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Increasing the maximum number of shares of common stock which may be issued or awarded
under the Plan by 15,000,000 shares to a total of 24,500,000;
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Revising the eligibility provision so that individuals eligible to participate in the
Amended Plan include all employees, consultants, and independent directors of Rentech and
its subsidiaries;
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Providing that full value awards (which are awards other than stock options and stock
appreciation rights, such as restricted stock, restricted stock units and similar awards)
will count against the Amended Plans share limit as 1.5 shares for each share of stock
delivered in settlement of a full-value award granted on or after the Amendment Date (and
correspondingly, that full value awards that are terminated, expired, forfeited or settled
in cash on or after the Amendment Date will be added back to the Amended Plans share limit
as 1.5 shares);
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Removing certain vesting limitations applicable to full value awards; and
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Clarifying certain limitations on the transferability of awards and their underlying
shares.
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36
Shares Available Under Existing Arrangements and Burn Rate
As of December 31, 2010, (i) 299,429 shares were available for grant under the Plan; (ii) 158,430
shares were available for grant under our 2006 Amended and Restated Equity Incentive Award Plan;
(iii) 8,240,813 options and compensatory warrants were outstanding with a weighted average price of
$1.81 and a weighted average term of 6.11 years, and (iv) 8,471,420 full-value awards were
outstanding.
The following table provides our burn rate for grants of options, compensatory warrants and
full-value awards in each of the previous three fiscal years ended September 30, as well as the
number of awards in each fiscal year which included performance vesting requirements:
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Non-Performance
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Compensatory
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Contingent Full-Value
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Performance
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Performance
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Fiscal Year
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Options
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Warrants
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Awards Granted (1)
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Awards Granted (2)
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Awards Vested
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2010
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336,000
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3,802,000
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3,650,000
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22,750
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2009
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270,000
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753,000
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111,000
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2008
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395,000
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1,441,000
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914,000
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(1)
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Includes restricted stock unit awards and stock grants.
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(2)
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Represents the number of Options, Compensatory Warrants and Full-Value Awards granted
in each fiscal year which only vest upon the achievement of performance criteria. The
performance awards granted in fiscal year 2010 only vest upon the achievement of specific
milestones in the development of commercial projects using our technologies. The
performance awards granted in fiscal years 2009 and 2008 only vest based on meeting
absolute price performance targets or shareholder returns that are better than peer
companies. Detailed descriptions of these performance vesting provisions can be found in
this proxy statement under the heading Compensation Discussion and Analysis in the
section titled
Long-Term Incentive Equity Awards
.
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The Amended Plan is intended to provide the Company with the ability to motivate, attract and
retain the services of a broad number of employees, consultants and directors. While the Chief
Executive Officer is expected to participate in the Amended Plan, the Chief Executive Officer has
not received any awards from the Plan thus far.
General
The purpose of the Amended Plan is to promote the success and enhance the value of Rentech by
linking the personal interests of participants to those of our shareholders and by providing
participants with an incentive for outstanding performance.
The Amended Plan provides for the grant to eligible individuals of stock options (including both
incentive stock options and nonqualified stock options), restricted stock, stock appreciation
rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred
stock, restricted stock units, other stock-based awards, and cash and equity performance-based
awards. A summary of the principal provisions of the Amended Plan is set forth below. The summary
is qualified by reference to the full text of the Amended Plan, which is attached hereto as
Appendix A
.
Administration
The Amended Plan is currently administered by the Compensation Committee (the Committee). The
Committee consists of two or more directors, each of whom qualifies as a non-employee director
pursuant to Rule 16b-3 of the Securities and Exchange Act of 1934, as amended (the Exchange Act),
an outside director within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code) and an independent director under the rules of the NYSE Amex. The Committee
has the exclusive authority to administer the Amended Plan including, subject to the terms of the
Amended Plan and all applicable law, the power to determine eligibility, the types and sizes of
awards, the price and timing of awards, any applicable vesting requirements or restrictions, and
the acceleration or waiver of any such vesting requirements or restrictions, provided that the
Committee does not have the authority to accelerate vesting or waive the forfeiture of any
performance-based awards. The Board may at any time exercise all powers of the Committee other than
those powers that are required, under Section 162(m) of the Code or Rule 16b-3 under the Exchange
Act, to be exercised solely by the Committee.
37
The Committee may delegate to a committee of one or more members of the Board or one or more
officers of Rentech the authority to grant or amend awards to participants other than senior
executives of Rentech who are subject to Section 16 of the Exchange Act, employees who are covered
employees within the meaning of Section 162(m) of the Code or officers or directors to whom
authority to grant or amend awards has been delegated.
Eligibility
Persons eligible to participate in the Amended Plan include employees, consultants, and directors
of Rentech and its subsidiaries, as determined by the Committee.
Limitation on Awards and Shares Available
The aggregate number of shares of common stock which may be issued pursuant to awards under the
Amended Plan is 24,500,000 shares (subject to adjustment to reflect certain changes in Rentechs
capital structure, described below). This represents an increase of 15,000,000 shares over the
current number of shares available under the Plan. Full value awards granted under the Amended Plan
on or after the Amendment Date will be counted against this limit as 1.5 shares for every one (1)
share delivered in respect of such an award. Any shares that are subject to awards of options or
stock appreciation rights granted will be counted against this limit as one (1) share for every one
(1) share subject to such an award. The payment of dividend equivalents in cash in conjunction with
outstanding awards will not be counted against the shares available for issuance under the Amended
Plan. The shares of common stock covered by the Amended Plan may be treasury shares, authorized but
unissued shares, or shares purchased in the open market.
To the extent that an award terminates, expires, or lapses for any reason, any shares subject to
the award may be used again for new grants under the Amended Plan and will be added back to the
Amended Plans share limit as the number of shares by which such share limit would be debited by
the grant of that award on or after the Amendment Date; however, shares tendered or withheld to
satisfy the grant or exercise price or tax withholding obligations arising in connection with any
awards may not be used for subsequent grants under the Amended Plan. To the extent permitted by
applicable law or any exchange rule, shares issued in assumption of, or in substitution for, any
outstanding awards of any entity acquired in any form of combination by Rentech or any of its
subsidiaries will not be counted against the shares available for issuance under the Amended Plan.
The maximum number of shares of common stock that may be subject to one or more awards to a
participant pursuant to the Amended Plan during any rolling three calendar-year period is 4,000,000
shares, and the maximum amount that may be paid in cash under the Amended Plan during any calendar
year with respect to any performance-based award is $2,000,000. As of March 18, 2011 the closing
price of the common stock on the NYSE Amex was $1.15 per share.
Awards
The Amended Plan provides for the grant of incentive stock options, nonqualified stock options,
restricted stock, stock appreciation rights, performance shares, performance stock units, dividend
equivalents, stock payments, deferred stock, restricted stock units, other stock-based awards, and
performance-based awards.
Stock Options
Both incentive stock options, as defined under Section 422 of the Code, and nonqualified stock
options may be granted pursuant to the Amended Plan. The option exercise price of all stock options
granted pursuant to the Amended Plan will not be less than 100% of fair market value of our common
stock on the date of grant and, in the case of incentive stock options granted to individuals
owning stock possessing more than 10% of the total combined voting power of all classes of Rentech
stock, (10% Holders) the option exercise price will not be less than 110% of fair market value of
the stock on the date of grant. Stock options may be exercised as determined by the Committee, but
in no event after the tenth anniversary of the date of grant (and in no event after the fifth
anniversary of the date of grant with respect to incentive stock options granted to 10% Holders).
The aggregate fair market value of the shares with respect to which options intended to be
incentive stock options are exercisable for the first time by an employee in any calendar year may
not exceed $100,000, or such other amount as the Code may provide from time to time (and any
options exceeding such limitation will be treated as nonqualified stock options).
38
Upon the exercise of a stock option, the purchase price must be paid in full in either cash or its
equivalent or by tendering previously acquired shares of common stock with a fair market value at
the time of exercise equal to the exercise price (provided such shares have been held for such
period of time as may be required by the Committee in order to avoid adverse accounting
consequences and have a fair market value on the date of delivery equal to the aggregate exercise
price of the option or exercised portion thereof) or other property acceptable to the Committee
(including through the delivery of a notice that the participant has placed a market sell order
with a broker with respect to shares then issuable upon exercise of the option, and that the broker has been directed
to pay a sufficient portion of the net proceeds of the sale to Rentech in satisfaction of the
option exercise price, provided that payment of such proceeds is then made to Rentech upon
settlement of such sale). However, no participant who is a member of the Board or an executive
officer of Rentech within the meaning of Section 13(k) of the Exhange Act will be permitted to pay
the exercise price of an option in any method which would violate Section 13(k) of the Exchange Act
(prohibiting certain extensions of credit to directors and executive officers).
Restricted Stock
A restricted stock award is the grant of shares of common stock to a participant for consideration
determined by the Committee including services and/or cash, that is nontransferable and may be
subject to a substantial risk of forfeiture until specific conditions are met. Conditions may
include continuing employment and/or achieving performance goals. During the period of restriction,
participants holding shares of restricted stock may have full voting and dividend rights with
respect to such shares. The restrictions will lapse in accordance with a schedule or other
conditions determined by the Committee.
Stock Appreciation Rights
A stock appreciation right (a SAR) is the right to receive payment of an amount equal to the
excess of the fair market value of a share of common stock on the date of exercise of the SAR over
an amount equal to no less than the fair market value of a share of common stock on the date of
grant of the SAR, which payment may be made in cash, common stock or a combination of both, in the
discretion of the Committee. The term of any SAR will not exceed ten years from the date of grant.
Other Types of Awards
Performance share awards are shares granted to participants with restrictions that lapse only upon
the attainment of specified performance goals. Performance stock units are awards representing the
right to receive shares upon the attainment of specified performance goals. Dividend equivalent
awards entitle participants to receive the equivalent value (in cash or additional shares) of
dividends in respect of other awards held by participants when Rentech declares dividends with
respect to the common stock underlying such awards. Stock payments are compensation in the form of
shares of common stock that are granted without restrictions imposed by Rentech. Deferred stock
awards represent the right to receive shares of common stock at a later date or dates if specified
time-vesting or performance criteria are attained. Restricted stock units are awards representing
the right to receive shares upon the attainment of specified time or performance goals. Performance
bonus awards entitle participants to cash payments upon the attainment of specified performance
goals.
Performance-Based Awards Intended to Satisfy Section 162(m) of the Code
The Committee may grant awards to employees who are or may be covered employees, as defined in
Section 162(m) of the Code that are intended to be performance-based awards within the meaning of
Section 162(m) of the Code in order to preserve the deductibility of these awards for federal
income tax purposes. Participants are only entitled to receive payment for a performance-based
award for any given performance period to the extent that pre-established performance goals set by
the Committee for the period are satisfied. These pre-established performance goals must be based
on one or more of the following performance criteria: net earnings (either before or after
interest, taxes, depreciation and amortization), economic value-added, sales or revenue, net income
(either before or after taxes), operating earnings, cash flow (including, but not limited to,
operating cash flow, and free cash flow), cash flow return on capital, return on net assets, return
on shareholders equity, return on assets, return on capital, shareholder returns, return on sales,
gross or net profit margin, productivity, expense, margins, operating efficiency, customer
satisfaction, working capital, earnings per share, price per share, and market share. These
performance criteria may be measured in absolute terms, as compared to any incremental increase or
as compared to results of a peer group. With regard to a particular performance period, the
Committee shall have the discretion to select the length of the performance period, the type of
performance-based awards to be granted, if any, and the goals that will be used to measure the
performance for the period. In determining the actual size of an individual performance-based award
for a performance period, the Committee may reduce or eliminate (but not increase) the award.
Generally, a participant will have to be employed on the date the performance-based award is paid
to be eligible for a performance-based award for any period.
39
Adjustments
Certain transactions, including but not limited to stock dividends, stock splits, combinations or
exchanges of shares, mergers, consolidations or other distributions of Rentech assets to
shareholders, may affect the shares or the share price of Rentechs common stock. If any of these
events occurs, the Committee will equitably adjust the aggregate number and kind of shares that may
be issued under the Amended Plan, the number and kind of shares subject to outstanding awards, the
terms and conditions of any outstanding awards and the grant or exercise price per share for any
outstanding awards. In the event that any of the above transactions occurs, or any unusual or
nonrecurring transactions or events affecting Rentech or changes in applicable laws, regulations or
accounting principles occurs, and the Committee determines that an adjustment to the Amended Plan
and any outstanding awards would be appropriate to prevent any dilution or enlargement of benefits
under the Amended Plan, the Committee may, in such manner as it may deem equitable, (i) provide for
termination of an award in exchange for cash or the replacement of an award with other rights or
property, (ii) provide that an award be assumed or substituted by a successor entity, (iii) make
adjustments in the number and type of shares of common stock subject to outstanding awards and to
the terms and conditions of awards which may be granted in the future, (iv) provide that an award
will be exercisable, payable or fully vested with respect to all shares covered thereby, or (v)
provide that an award cannot vest, be exercised or become payable after such event.
In the event of a nonreciprocal transaction between Rentech and its shareholders, such as a stock
dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring
cash dividend, that affects the number, kind or share price of Rentech common stock and causes a
change in the per share value of the common stock underlying outstanding awards (any such
transaction, an Equity Restructuring), the Committee will equitably adjust the number and type of
securities subject to each outstanding award and the exercise or grant price thereof, and make any
other equitable adjustments the Committee may in its discretion deem appropriate to reflect such
Equity Restructuring with respect to the aggregate number and kind of shares that may be issued
under the Amended Plan. In addition, the Committee has broad discretion to include such further
provisions and limitations in any award as it may deem equitable and in Rentechs best interest
that are not inconsistent with the provisions of the Amended Plan.
Change in Control
If a change in control of Rentech occurs then, immediately prior to the change in control, awards
outstanding under the Amended Plan that were granted prior to November 2, 2009 will become fully
vested and exercisable and all forfeiture restrictions on such awards will lapse. In anticipation
of a change in control, the Committee may cause all such awards to terminate at a specific time in
the future, and may give each participant the right to exercise such awards during such period of
time as the Committee determines.
With respect to awards outstanding under the Amended Plan that were granted on or after November 2,
2009, if a change in control of Rentech occurs, all such awards shall be assumed or an equivalent
award substituted by the successor corporation or a parent or subsidiary thereof. In the event that
the successor corporation or a parent or subsidiary thereof refuses to assume or substitute any
such awards, then all such awards will fully vest, any restrictions thereon will lapse and, as
applicable, such awards will become exercisable immediately prior to the consummation of the change
in control. In anticipation of a change in control, all such awards will terminate upon the change
in control in exchange for payment of the consideration payable in the change in control for such
fully vested (and exercised, if applicable) award.
40
Transferability
Subject to exceptions for estate planning, no award under the Amended Plan may be (i) transferred
other than by will or the laws of descent and distribution or, subject to the consent of the
Committee, pursuant to a domestic relations order, unless and until such award has been exercised
or the shares underlying such award have been issued and all restrictions applicable to such shares
have lapsed or (ii) liable for the debts or contracts of the holder or his successors in interest
or shall be subject to disposition by any legal or equitable proceedings, unless and until such
award has been exercised or the shares underlying such award have been issued and all restrictions
applicable to such shares have lapsed.
Amendment and Termination
The Committee, subject to approval of the Board, may terminate, amend, or modify the Amended Plan
at any time; provided, that shareholder approval will be obtained for any amendment to the extent
necessary and desirable to comply with any applicable law, regulation or stock exchange rule, to
increase the number of shares available under the Amended Plan or that results in a material
increase in benefits or a change in eligibility requirements. In addition, no option or stock
appreciation right may be amended to reduce the per share exercise price or base price, as
applicable, of the shares subject to such option or stock appreciation right below the per share
exercise price or base price, as applicable, as of the date the option or stock appreciation right
was granted, and no option or stock appreciation right may be granted in exchange for other awards
or cash, or in connection with, the cancellation or surrender of an option or stock appreciation
right having a higher per share exercise price or base price, as applicable. No amendment shall
extend the term of any outstanding option or stock appreciation right beyond ten years from the
date of grant, or reduce an options exercise price or a stock appreciation rights base price
below the common stocks fair market value on the date of the option or stock appreciation right
grant. In no event may an award be granted pursuant to the Amended Plan on or after the tenth
anniversary of the date the shareholders originally approve the Amended Plan.
Federal Income Tax Consequences
With respect to nonqualified stock options, Rentech is generally entitled to deduct and the
optionee recognizes taxable income in an amount equal to the difference between the option exercise
price and the fair market value of the shares at the time of exercise. A participant receiving
incentive stock options will not recognize taxable income upon grant. Additionally, if applicable
holding period requirements are met, the participant will not recognize taxable income at the time
of exercise. However, the excess of the fair market value of the common stock received over the
option price is an item of tax preference income potentially subject to the alternative minimum
tax. If stock acquired upon exercise of an incentive stock option is held for a minimum of two
years from the date of grant and one year from the date of exercise, the gain or loss (in an amount
equal to the difference between the fair market value on the date of sale and the exercise price)
upon disposition of the stock will be treated as a long-term capital gain or loss, and Rentech will
not be entitled to any deduction. If the holding period requirements are not met, the incentive
stock option will be treated as one which does not meet the requirements of the Code for incentive
stock options and the tax consequences described for nonqualified stock options will apply.
The current federal income tax consequences of other awards authorized under the Amended Plan
generally follow certain basic patterns: SARs are taxed and deductible in substantially the same
manner as nonqualified stock options; nontransferable restricted stock subject to a substantial
risk of forfeiture results in income recognition equal to the excess of the fair market value over
the price paid, if any, only at the time the restrictions lapse (unless the recipient elects to
accelerate recognition as of the date of grant); stock-based performance awards, dividend
equivalents and other types of awards are generally subject to tax at the time of payment.
Compensation otherwise effectively deferred is taxed when paid. In each of the foregoing cases,
Rentech will generally have a corresponding deduction at the time the participant recognizes
income, subject to Code Section 162(m) with respect to covered employees.
To the greatest extent possible, awards granted under the Amended Plan are structured in a manner
intended to avoid the imposition of taxes under Internal Revenue Code Section 409A, which governs
the taxation of nonqualified deferred compensation, including certain equity awards, by complying
with the requirements of Internal Revenue Code Section 409A or an available exemption from such
requirements.
41
New Plan Benefits
The number of awards that our named executive officers, directors, other executive officers and
other employees may receive under the Amended Plan will be determined in the discretion of the
Committee in the future, and the Committee has not made any determination to make future grants to
any persons under the Amended Plan as of the date of this proxy statement. Therefore, it is not
possible to determine the future benefits that will be received by participants under the Amended
Plan. Furthermore, because all awards under the Amended Plan are discretionary, it is not possible
to determine what awards would have been granted during the prior fiscal year had the Amended Plan
been in effect at that time.
Certain tables in this proxy statement under the general heading Compensation Discussion and
Analysis, including the Summary Compensation Table, Grants of Plan-Based Awards Table, Outstanding
Equity Awards at Fiscal Year-End Table, Option Exercises and Stock Vested Table and Equity
Compensation Plan Information Table set forth information with respect to prior awards granted to
our individual named executive officers under the Plan and other stockholder-approved plans.
Stock Options Granted
In accordance with SEC rules, the table below sets forth summary information concerning the number
of shares of our common stock subject to stock option grants made under the Plan to the individuals
and groups indicated below since the inception of the Plan until March 15, 2011. As described
above, it is not possible to determine the amount of stock options that will be received by
participants under the Amended Plan.
|
|
|
|
|
Name and Position
|
|
Number of Shares Underlying Option Grants
|
|
D. Hunt Ramsbottom
Chief Executive Officer
|
|
|
0
|
|
Dan J. Cohrs
Chief Financial Officer
|
|
|
411,765
|
|
Douglas M. Miller
Executive Vice President, Project Development
|
|
|
164,706
|
|
Harold A. Wright
Senior Vice President and Chief Technology Officer
|
|
|
164,706
|
|
Colin M. Morris
General Counsel
|
|
|
164,706
|
|
All current executive officers as a group
|
|
|
905,883
|
|
All current directors who are not executive officers as a group
|
|
|
415,500
|
|
Each nominee for election as a director
|
|
|
|
|
Michael S. Burke
|
|
|
41,500
|
|
Wesley K. Clark
|
|
|
20,000
|
|
Ronald M. Sega
|
|
|
41,500
|
|
Dennis L. Yakobson
|
|
|
141,500
|
|
Each associate of any such directors, executive officers or nominees
|
|
|
0
|
|
Each other person who received or is to receive 5% of such options,
warrants or rights
|
|
|
0
|
|
All employees, including current officers who are not executive
officers, as a group
|
|
|
1,400,294
|
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE PROPOSAL TO ADOPT THE AMENDED AND RESTATED 2009 INCENTIVE AWARD PLAN.
42
ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY)
(Proxy Item 3)
Background
The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the
Dodd-Frank Act, enables our shareholders to vote to approve, on an advisory (non-binding) basis,
the compensation of our named executive officers as disclosed in this proxy statement in accordance
with the SECs rules.
Summary
We are asking our shareholders to provide advisory approval of the compensation of our Named
Executive Officers or NEOs, which consist of our Chief Executive Officer, Chief Financial Officer
and next three highest paid executive officers, as we have described it in the Compensation
Disclosure Compensation Discussion and Analysis section of this proxy statement and the related
executive compensation tables. This advisory approval does not extend to the description of Mr.
Pennings compensation described therein, as his employment with our company terminated prior to
the end of our most recently completed fiscal year. Our executive compensation programs are
designed to enable us to recruit, retain and develop superior management talent, who are critical
to our success. Such programs reward our NEOs for the achievement of specific annual and long-term
goals, including overall company goals and the realization of increased shareholder value. The
following is a summary of some of the key points of our executive compensation programs. We urge
our shareholders to review the Election of Directors (Proxy Item 1) Compensation Discussion and
Analysis section of this proxy statement and executive-related compensation tables for more
information.
We emphasize pay-for-performance and subject a considerable amount of our NEOs pay to Rentechs
performance.
We seek to provide market-level salaries for our executives with the opportunity to
exceed market levels for total compensation if short- and long-term performance exceeds
expectations. Our executive compensation program is designed so that above-median compensation is
awarded upon the attainment of exceptional performance.
Under our annual incentive plan, bonuses are awarded to management based on our companys
achievement of pre-determined performance goals. Target bonuses are awarded based on the attainment
of these goals, with the opportunity to award actual bonuses lower than target if some or all of
the goals are not achieved. For fiscal year 2010, the Board awarded actual bonuses less than target
amounts because certain key performance goals either were not achieved or were achieved after the
completion of the fiscal year, and other individual and company accomplishments were insufficient
to outweigh the companys inability to timely achieve these goals. Cash bonus awards for each of
our NEOs in fiscal year 2010 were lower than those awarded in fiscal year 2009.
As further emphasis on Rentechs pay-for-performance philosophy and commitment to aligning our
executives compensation with the performance of our company and with the interests of our
shareholders, we have developed and implemented a variety of long-term incentive equity awards that
are contingent upon the achievement of performance requirements and that align managements
long-term compensation with shareholder returns, provide incentive to perform better than our peer
companies, reward the achievement of specific milestones in the development of commercial projects
using our technologies and encourage retention.
In fiscal year 2009, we did not grant any long-term incentive equity awards to our NEOs, with the
exception of our Chief Financial Officer who received long-term incentive awards as part of his
compensation package for joining the Company. In fiscal year 2010, more than 50% of the long-term
incentive awards granted to each of our NEOs were performance-based equity awards that only vest in
the event we successfully implement of our technologies in a commercial scale plant. We believe the
successful implementation of our technologies in a commercial scale plant will significantly
enhance the ability of the Company to deploy its technologies in additional plants and result in a
significant increase in the value of the Company. Under the 2010 performance vesting awards, sixty
percent (60%) of the performance-based RSUs vest upon the closing of financing for a project
implanting our technologies, twenty percent (20%) vest upon completion of construction and initial operation of the project facility
and twenty percent (20%) vest upon sustained operation of the project facility.
43
We believe that our compensation programs are closely aligned with the long-term interests of our
shareholders.
We believe that equity awards serve to align the interests of our executive officers
with those of our shareholders by encouraging long-term performance. As such, equity awards are a
key component of our executive compensation program. Our long-term incentives have been designed
using a portfolio approach with a mix of awards and vesting requirements, including (i) grants of
performance shares and RSUs with a variety of performance vesting provisions based on absolute
share price appreciation, total shareholder return and the achievement of milestones in the
development of commercial projects using our technologies and (ii) grants of RSUs and stock options
that vest over three years.
We are committed to having strong governance standards with respect to our compensation program,
procedures and practices.
Pursuant to our commitment to strong governance standards, the
Compensation Committee is comprised solely of independent directors. The Compensation Committee
retains an independent compensation consultant to provide it with advice and guidance on Rentechs
executive compensation program design and evaluate our executive compensation. The Compensation
Committee oversees and periodically assesses the risks associated with our company-wide
compensation structure, policies and programs to determine whether such programs encourage
excessive risk taking. We have implemented equity compensation grant procedures that comply with
evolving best practices.
Recommendation
The Board believes that the information provided above and within the Election of Directors (Proxy
Item 1) section of this proxy statement demonstrates that our executive compensation program was
designed appropriately and is working to ensure that managements interests are aligned with our
shareholders interests to support long-term value creation.
The following resolution will be submitted for a shareholder vote at the Annual Meeting:
RESOLVED, that the shareholders of Rentech approve, on an advisory basis, the compensation of
Rentechs named executive officers, excluding Mr. Penning, as disclosed in the Compensation
Discussion and Analysis, compensation tables and narrative discussion of the proxy statement.
The say-on-pay vote is advisory, and therefore not binding on Rentech, the Compensation Committee
or the Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADVISORY (NON-BINDING) VOTE
APPROVING EXECUTIVE COMPENSATION.
ADVISORY VOTE ON DETERMINING THE FREQUENCY OF SAY-ON-PAY (FREQUENCY VOTE)
(Proxy Item 4)
Background
The Dodd-Frank Act also enables our shareholders to indicate how frequently they believe we should
seek an advisory vote on the compensation of our NEOs. We are seeking an advisory, non-binding
determination from our shareholders as to the frequency with which shareholders would have an
opportunity to provide an advisory approval of our executive compensation program. We are providing
shareholders the option of selecting a frequency of one, two or three years, or abstaining.
44
Summary
While we will continue to monitor developments in this area, the Board currently plans to seek an
advisory vote on executive compensation every three years. Our compensation program is designed to
incent performance over not just the short term but also the long term, and shareholder input on
executive compensation would be most useful if the effectiveness of our compensation program is
evaluated and judged over a multi-year period. Additionally, a three-year vote cycle will provide
the Board and Compensation Committee with sufficient time to consider the results of the advisory
vote and to implement any changes to our compensation practices. A three-year cycle will also
provide sufficient time for the implementation of any changes before shareholders must evaluate
their effectiveness in conjunction with our related business results.
The Boards determination was further based on the premise that this recommendation could be
modified in future years if it becomes apparent that a different frequency is more appropriate.
Recommendation
Based on the factors discussed, the Board determined to recommend that future Say-on-Pay advisory
votes occur every three years until the next frequency advisory vote. Shareholders are not being
asked to approve or disapprove the Boards recommendation, but rather to indicate their choice
among the following frequency options: one year, two years or three years, or to abstain from
voting.
The following resolution will be submitted for a shareholder vote at the Annual Meeting:
RESOLVED, that the compensation of Rentechs named executive officers, excluding Mr. Penning, as
disclosed in the Compensation Discussion and Analysis, compensation tables and narrative
discussion, be submitted to an advisory vote of Rentechs shareholders every: (i) one year, (ii)
two years, or (iii) three years; with such alternative that receives the highest number of votes
cast representing the vote of shareholders.
This vote is advisory, and therefore not binding on Rentech, the Compensation Committee or the
Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS SELECT EVERY THREE YEARS ON THE
PROPOSAL RECOMMENDING THE FREQUENCY OF ADVISORY VOTES ON EXECUTIVE COMPENSATION.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proxy Item 5)
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP as Rentechs
independent registered public accounting firm for the fiscal year ending September 30, 2011, and
has further directed that management submit the selection of PricewaterhouseCoopers LLP for
ratification by the shareholders at the annual meeting of shareholders. PricewaterhouseCoopers LLP
has audited Rentechs financial statements since fiscal year 2009. A representative of
PricewaterhouseCoopers LLP is expected to be present at the annual meeting of shareholders and will
have an opportunity to make a statement if he or she so desires and will be available to respond to
appropriate questions.
Shareholder ratification of the selection of PricewaterhouseCoopers LLP as Rentechs independent
registered public accounting firm is not required by the By-laws or otherwise. However, the Board
of Directors is submitting the selection of PricewaterhouseCoopers LLP to the shareholders for
ratification as a matter of corporate practice. If the shareholders fail to ratify the selection,
the Audit Committee may reconsider whether or not to retain PricewaterhouseCoopers LLP in the
future. Even if the selection is ratified, the Audit Committee in its discretion may direct the
appointment of a different independent registered public accounting firm at any time during the
year if the Audit Committee determines that such a change would be in the best interests of
Rentech.
Ratification of the selection of PricewaterhouseCoopers LLP as Rentechs independent registered
public accounting firm will be approved if the votes cast favoring the proposal exceed the votes
cast opposing the proposal.
45
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE
RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS RENTECHS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDED SEPTEMBER 30, 2011.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the annual meeting of shareholders held in
2012 must be received by Rentechs corporate secretary on or before December 9, 2011 in order to be
eligible for inclusion in Rentechs proxy statement and form of proxy. However, if the date of next
years annual meeting is changed by more than 30 days from the date of this years meeting, then
the deadline for inclusion in the proxy will be a reasonable time before we begin to print and mail
proxy materials for next years meeting. To be included, a proposal must also comply with all
applicable provisions of Rule 14a-8 under the Securities Exchange Act of 1934.
Under Rentechs By-laws, for business properly to be brought before the annual meeting of
shareholders held in 2012, a shareholder must have given timely notice in proper written form to
the Secretary of Rentech at the address set forth on the first page of this proxy statement in
accordance with the then current provisions of Rentechs By-laws. The By-laws currently require
that such notice be delivered to or mailed and received at the principal executive offices of
Rentech not later than the close of business on the 60th day nor earlier than the close of business
on the 90th day prior to the first anniversary of the preceding years annual meeting (i.e., no
earlier than February 11, 2012 and no later than March 12, 2012). If, however, Rentech advances the
date of the next annual meeting by more than 30 days or delays such date by more than 60 days,
notice by the shareholder must be given not earlier than the close of business on the 90th day in
advance of such meeting and not after the later of (i) the close of business on the 60th day prior
to such meeting, or (ii) the tenth day following the first public announcement of the date of such
meeting.
OTHER BUSINESS
Management does not know of any other matters to be brought before the annual meeting. If any other
business items not mentioned in this proxy statement are properly brought before the meeting, the
individuals named in the enclosed proxy intend to vote such proxy in accordance with the Boards
recommendation on those matters.
A copy of Rentechs Annual Report for the year ended September 30, 2010 has been mailed to you
concurrently with this proxy statement. The Annual Report is not incorporated into this proxy
statement and is not to be considered a part of these proxy soliciting materials or subject to
Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act. Rentech will
provide upon written request, without charge to each shareholder of record as of the record date, a
copy of the Annual Report on Form 10-K for the fiscal year ended September 30, 2010, as filed with
the SEC. Any exhibits listed in the Form 10-K report also will be furnished upon request at the
actual expense incurred by Rentech in furnishing such exhibits. Any such requests should be
directed to Rentechs principal executive offices at 10877 Wilshire Boulevard, Suite 600, Los
Angeles, California 90024, Attention: Secretary.
As permitted by the Exchange Act, only one copy of this proxy statement is being delivered to
Rentech shareholders residing at the same address, unless such shareholders have notified us of
their desire to receive multiple copies of the proxy statement. This is known as householding. We
will promptly deliver, upon oral or written request, a separate copy of this proxy statement to any
shareholder residing at an address to which only one copy was mailed. Requests for additional
copies for this year or future years should be directed in writing Rentechs principal executive
offices at 10877 Wilshire Boulevard, Suite 600, Los Angeles, California 90024, Attention:
Secretary, or by phone at 310-571-9800.
ALL SHAREHOLDERS ARE URGED TO VOTE BY TELEPHONE OR ELECTRONICALLY THROUGH THE INTERNET BY FOLLOWING
THE INSTRUCTIONS ON THE PROXY CARD, OR TO COMPLETE, SIGN, AND RETURN THE ACCOMPANYING PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE.
|
|
|
March 31, 2011
|
|
By Order of the Board of Directors,
Colin M. Morris
Secretary
|
46
APPENDIX A
AMENDED AND RESTATED RENTECH, INC.
2009 INCENTIVE AWARD PLAN
ARTICLE 1.
PURPOSE
The purpose of the Amended and Restated Rentech, Inc. 2009 Incentive Award Plan (the
Plan
) is to promote the success and enhance the value of Rentech, Inc. (the
Company
) by linking the personal interests of certain members of the Board, Employees,
and Consultants to those of Company stockholders and by providing such individuals with an
incentive for outstanding performance to generate superior returns to Company stockholders. The
Plan is further intended to provide flexibility to the Company in its ability to motivate, attract,
and retain the services of certain members of the Board, Employees, and Consultants upon whose
judgment, interest, and special effort the successful conduct of the Companys operation is largely
dependent. The Plan amends and restates in its entirety the Rentech, Inc. 2009 Incentive Award
Plan (the
Original Plan
).
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified
below, unless the context clearly indicates otherwise. The singular pronoun shall include the
plural where the context so indicates.
2.1
Award
means an Option, a Restricted Stock award, a Stock Appreciation Right
award, a Performance Share award, a Performance Stock Unit award, a Dividend Equivalents award, a
Stock Payment award, a Deferred Stock award, a Restricted Stock Unit award, a Performance Bonus
Award, or a Performance-Based Award granted to a Participant pursuant to the Plan.
2.2
Award Agreement
means any written agreement, contract, or other instrument or
document evidencing an Award, including through electronic medium.
2.3
Board
means the Board of Directors of the Company.
2.4
Change in Control
means:
(a) A transaction or series of transactions (other than an offering of Stock to the
general public through a registration statement filed with the Securities and Exchange
Commission) whereby any person or related group of persons (as such terms are used in
Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its
subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries
or a person that, prior to such transaction, directly or indirectly controls, is
controlled by, or is under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities
of the Company possessing more than 50% of the total combined voting power of the Companys
securities outstanding immediately after such acquisition; or
(b) During any twelve-month period, individuals who, at the beginning of such period,
constitute the Board together with any new director(s) (other than a director designated by
a person who shall have entered into an agreement with the Company to effect a transaction
described in Section 2.4(a) or Section 2.4(c)) whose election by the Board or nomination for
election by the Companys stockholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the
beginning of the twelve-month period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof; or
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(c) The consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (x) a merger,
consolidation, reorganization, or business combination or (y) a sale or other disposition of
all or substantially all of the Companys assets in any single transaction or series of
related transactions or (z) the acquisition of assets or stock of another entity, in each
case other than a transaction:
(i) Which results in the Companys voting securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding or
by being converted into voting securities of the Company or the person that, as a
result of the transaction, controls, directly or indirectly, the Company or owns,
directly or indirectly, all or substantially all of the Companys assets or
otherwise succeeds to the business of the Company (the Company or such person, the
Successor Entity
)) directly or indirectly, at least a majority of the
combined voting power of the Successor Entitys outstanding voting securities
immediately after the transaction, and
(ii) After which no person or group beneficially owns voting securities
representing 35% or more of the combined voting power of the Successor Entity;
provided
,
however
, that no person or group shall be treated for purposes of this
Section 2.4(c)(ii) as beneficially owning 35% or more of combined voting power of
the Successor Entity solely as a result of the voting power held in the Company
prior to the consummation of the transaction; or
(d) The Companys stockholders approve a liquidation or dissolution of the Company.
The Committee shall have full and final authority, which shall be exercised in its discretion, to
determine conclusively whether a Change in Control of the Company has occurred pursuant to the
above definition, and the date of the occurrence of such Change in Control and any incidental
matters relating thereto. Notwithstanding anything herein or in any Award Agreement to the
contrary, if a Change in Control constitutes a payment event with respect to any Award which
provides for a deferral of compensation that is subject to Section 409A of the Code, the
transaction or event described in subsection (a), (b), (c) or (d) must also constitute a change in
control event, as defined in Treasury Regulation §1.409A-3(i)(5), in order to constitute a Change
in Control for purposes of payment of such Award.
2.5
Code
means the Internal Revenue Code of 1986, as amended, together with the
regulations and other official guidance promulgated thereunder.
2.6
Committee
means the committee of the Board described in Article 12.
2.7
Consultant
means any consultant or adviser if: (a) the consultant or adviser
renders bona fide services to the Company; (b) the services rendered by the consultant or adviser
are not in connection with the offer or sale of securities in a capital-raising transaction and do
not directly or indirectly promote or maintain a market for the Companys securities; and (c) the
consultant or adviser is a natural person who has contracted directly with the Company to render
such services.
2.8
Covered Employee
means an Employee who is, or could be, a covered employee
within the meaning of Section 162(m) of the Code.
2.9
Deferred Stock
means a right to receive a specified number of shares of Stock
during specified time periods pursuant to Section 8.5.
2.10
Disability
means that the Participant qualifies to receive long-term disability
payments under the Companys long-term disability insurance program, as it may be amended from time
to time or, if no such plan is applicable to a Participant, as determined in the sole discretion of
the Committee. Notwithstanding anything herein or in any Award Agreement to the contrary, if a
Disability constitutes a payment event with respect to any Award which provides for a deferral of
compensation that is subject to Section 409A of the Code, the Participant shall only experience a Disability hereunder for purposes of the payment of such Award if the Participant is
disabled within the meaning of Treasury Regulation Section 1.409A-3(i)(4).
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2.11
Dividend Equivalents
means a right granted to a Participant pursuant to Section
8.3 to receive the equivalent value (in cash or Stock) of dividends paid on Stock.
2.12
DRO
means a domestic relations order as defined under Title I of the Employee
Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder.
2.13
Effective Date
shall have the meaning set forth in Section 13.1.
2.14
Eligible Individual
means any person who is an Employee, a Consultant or an
Independent Director, as determined in the sole discretion of the Committee.
2.15
Employee
means any officer or other employee (as defined in accordance with
Section 3401(c) of the Code) of the Company or any Subsidiary.
2.16
Equity Restructuring
shall mean a nonreciprocal transaction between the Company
and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or
recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of
shares of Stock (or other securities of the Company) or the share price of Stock (or other
securities) and causes a change in the per share value of the Stock underlying outstanding Awards.
2.17
Exchange Act
means the Securities Exchange Act of 1934, as amended.
2.18
Fair Market Value
means, as of any given date, the value of a share of Stock
determined as follows:
(a) If the Stock is listed on any established stock exchange (such as the New York Stock
Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market) or national market system,
its Fair Market Value shall be the closing sales price for a share of Stock as quoted on such
exchange or system for such date or, if there is no closing sales price for a share of Stock on the
date in question, the closing sales price for a share of Stock on the last preceding date for which
such quotation exists, as reported in The Wall Street Journal or such other source as the Committee
deems reliable;
(b) If the Stock is not listed on an established stock exchange or national market system, but
the Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the
mean of the high bid and low asked prices for such date or, if there are no high bid and low asked
prices for a share of Stock on such date, the high bid and low asked prices for a share of Stock on
the last preceding date for which such information exists, as reported in The Wall Street Journal
or such other source as the Committee deems reliable; or
(c) If the Stock is neither listed on an established stock exchange or a national market
system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be
established by the Committee in good faith.
2.19
Full Value Award
means any Award other than an Option or other Award for which
the Participant pays the intrinsic value (whether directly or by forgoing a right to receive a
payment from the Company).
2.20
Incentive Stock Option
means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.
2.21
Independent Director
means a member of the Board who is not an Employee of the
Company.
2.22
Non-Employee Director
means a member of the Board who qualifies as a
Non-Employee Director as defined in Rule 16b-3(b)(3) under the Exchange Act, or any successor
rule.
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2.23
Non-Qualified Stock Option
means an Option that is not intended to be an
Incentive Stock Option or which is designated as an Incentive Stock Option but does not meet the
applicable requirements of Section 422 of the Code.
2.24
Option
means a right granted to a Participant pursuant to Article 5 of the Plan
to purchase a specified number of shares of Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.
2.25
Participant
means any Eligible Individual who, as a member of the Board,
Consultant or Employee, has been granted an Award pursuant to the Plan.
2.26
Performance-Based Award
means an Award granted to selected Covered Employees
pursuant to Section 8.7, but which is subject to the terms and conditions set forth in Article 9.
All Performance-Based Awards are intended to qualify as Qualified Performance-Based Compensation.
2.27
Performance Bonus Award
has the meaning set forth in Section 8.7.
2.28
Performance Criteria
means the criteria that the Committee selects for purposes
of establishing the Performance Goal or Performance Goals for a Participant for a Performance
Period. The Performance Criteria that will be used to establish Performance Goals are limited to
the following: net earnings (either before or after interest, taxes, depreciation and
amortization), economic value-added, sales or revenue, net income (either before or after taxes),
operating earnings, cash flow (including, but not limited to, operating cash flow and free cash
flow), cash flow return on capital, return on net assets, return on stockholders equity, return on
assets, return on capital, stockholder returns, return on sales, gross or net profit margin,
productivity, expense, margins, operating efficiency, achievement of milestones related to the
development of projects utilizing the Companys technologies, customer satisfaction, working
capital, earnings per share, price per share of Stock, and market share, any of which may be
measured either in absolute terms or as compared to any incremental increase or as compared to
results of a peer group. The Committee shall define in an objective fashion the manner of
calculating the Performance Criteria it selects to use for such Performance Period for such
Participant.
2.29
Performance Goals
means, for a Performance Period, the goals established in
writing by the Committee for the Performance Period based upon the Performance Criteria. Depending
on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the performance of a division, business unit,
or an individual. The Committee, in its discretion, may, within the time prescribed by Section
162(m) of the Code, adjust or modify the calculation of Performance Goals for such Performance
Period in order to prevent the dilution or enlargement of the rights of Participants (a) in the
event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event,
or development, or (b) in recognition of, or in anticipation of, any other unusual or nonrecurring
events affecting the Company, or the financial statements of the Company, or in response to, or in
anticipation of, changes in applicable laws, regulations, accounting principles, or business
conditions.
2.30
Performance Period
means the one or more periods of time, which may be of
varying and overlapping durations, as the Committee may select, over which the attainment of one or
more Performance Goals will be measured for the purpose of determining a Participants right to,
and the payment of, a Performance-Based Award.
2.31
Performance Share
means a right granted to a Participant pursuant to Section
8.1, to receive Stock, the payment of which is contingent upon achieving certain Performance Goals
or other performance-based targets established by the Committee.
2.32
Performance Stock Unit
means a right granted to a Participant pursuant to
Section 8.2, to receive Stock, the payment of which is contingent upon achieving certain
Performance Goals or other performance-based targets established by the Committee.
2.33
Qualified Performance-Based Compensation
means any compensation that is
intended to qualify as qualified performance-based compensation as described in Section
162(m)(4)(C) of the Code.
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2.34
Restatement Date
means [
], the date on which the Plan, as amended
and restated, was approved by the Companys stockholders.
2.35
Restricted Stock
means Stock awarded to a Participant pursuant to Article 6
that is subject to certain restrictions and may be subject to risk of forfeiture.
2.36
Restricted Stock Unit
means an Award granted pursuant to Section 8.6.
2.37
Securities Act
shall mean the Securities Act of 1933, as amended.
2.38
Share Limit
shall have the meaning set forth in Section 3.1.
2.39
Stock
means the common stock of the Company, par value $0.01 per share, and
such other securities of the Company that may be substituted for Stock pursuant to Article 11.
2.40
Stock Appreciation Right
or
SAR
means a right granted pursuant to
Article 7 to receive a payment equal to the excess of the Fair Market Value of a specified number
of shares of Stock on the date the SAR is exercised over the Fair Market Value on the date the SAR
was granted as set forth in the applicable Award Agreement.
2.41
Stock Payment
means (a) a payment in the form of shares of Stock, or (b) an
option or other right to purchase shares of Stock, as part of any bonus, deferred compensation or
other arrangement, made in lieu of all or any portion of the bonus, deferred compensation or other
arrangement, granted pursuant to Section 8.4.
2.42
Subsidiary
means any subsidiary corporation as defined in Section 424(f) of
the Code and any applicable regulations promulgated thereunder or any other entity of which a
majority of the outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
ARTICLE 3.
SHARES SUBJECT TO THE PLAN
3.1
Number of Shares
.
(a) Subject to Article 11 and Section 3.1(b), the aggregate number of shares of Stock
which may be issued or transferred pursuant to Awards under the Plan is 24,500,000 (the
Share Limit
), all of which may be issued as Incentive Stock Options; provided
,
however
,
that the Share Limit shall be reduced by 1.5 shares for each share of Stock
delivered in settlement of any Full Value Award that is granted on or after the Restatement
Date. For the avoidance of doubt, shares of Stock delivered in settlement of any Full Value
Award granted prior to the Restatement Date shall count against the Share Limit as 1 share.
(b) To the extent that an Award terminates, expires, or lapses for any reason or such
Award is settled in cash, any shares of Stock subject to the Award shall, to the extent of
such termination, expiration, forfeiture or cash settlement, be added back to the Share
Limit. To the extent that shares of Stock are added back to the Share Limit in accordance
with the preceding sentence, (i) each share of Stock added back in connection with the
termination, expiration, forfeiture or cash settlement of a Full Value Award shall increase
the Share Limit by 1.5 shares and (ii) each share of Stock added back in connection with the
termination, expiration, forfeiture or cash settlement of an Award other than a Full Value
Award shall increase the Share Limit by 1 share. Notwithstanding anything to the contrary
contained herein, any shares of Stock tendered or withheld to satisfy the grant or exercise
price or tax withholding obligation pursuant to any Award shall not again be available for
the grant of an Award pursuant to the Plan. To the extent permitted by applicable law or any
exchange rule, shares of Stock issued in assumption of, or in substitution for, any
outstanding awards of any entity acquired in any form of combination by the Company or any
Subsidiary shall not be counted against shares of Stock available for grant pursuant to this
Plan. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards
shall not be counted against the shares available for issuance under the Plan.
Notwithstanding the provisions of this Section 3.1(b), no shares of Stock may again be optioned, granted or awarded if such action would cause an Incentive Stock
Option to fail to qualify as an incentive stock option under Section 422 of the Code.
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3.2
Stock Distributed
. Any Stock distributed pursuant to an Award may consist, in
whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open
market.
3.3
Limitation on Number of Shares Subject to Awards
. Notwithstanding any provision in
the Plan to the contrary, and subject to Article 11, the maximum number of shares of Stock with
respect to one or more Awards that may be granted to any one Eligible Individual during a rolling
three-year period (measured from the date of any grant) shall be 4,000,000 and the maximum amount
that may be paid in cash during any calendar year with respect to any Performance-Based Award
(including, without limitation, any Performance Bonus Award) shall be $2,000,000.
ARTICLE 4.
ELIGIBILITY AND PARTICIPATION
4.1
Eligibility
. Each Eligible Individual shall be eligible to be granted one or more
Awards pursuant to the Plan.
4.2
Participation
. Subject to the provisions of the Plan, the Committee may, from time
to time, select from among all Eligible Individuals, those to whom Awards shall be granted and
shall determine the nature and amount of each Award. No Eligible Individual shall have any right to
be granted an Award pursuant to this Plan. No individual who is not an Eligible Individual shall
be granted any Award under this Plan.
4.3
Foreign Participants
. Notwithstanding any provision of the Plan to the contrary,
in order to comply with the laws in other countries in which the Company and its Subsidiaries
operate or have Eligible Individuals, the Committee, in its sole discretion, shall have the power
and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine
which Eligible Individuals outside the United States are eligible to participate in the Plan; (iii)
modify the terms and conditions of any Award granted to Eligible Individuals outside the United
States to comply with applicable foreign laws; (iv) establish subplans and modify exercise
procedures and other terms and procedures, to the extent such actions may be necessary or advisable
(any such subplans and/or modifications shall be attached to this Plan as appendices); provided,
however, that no such subplans and/or modifications shall increase the share limitations contained
in Sections 3.1 and 3.3 of the Plan; and (v) take any action, before or after an Award is made,
that it deems advisable to obtain approval or comply with any necessary local governmental
regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any
actions hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code,
any securities law or governing statute or any other applicable law.
ARTICLE 5.
STOCK OPTIONS
5.1
General
. The Committee is authorized to grant Options to Eligible Individuals on
the following terms and conditions:
(a)
Exercise Price
. The exercise price per share of Stock subject to an Option
shall be determined by the Committee and set forth in the Award Agreement; provided, that,
subject to Section 5.2(d), the exercise price for any Option shall not be less than 100% of
the Fair Market Value of a share of Stock on the date of grant.
(b)
Time and Conditions of Exercise
. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part; provided that the term of any
Option granted under the Plan shall not exceed ten years. The Committee shall also determine
the performance or other conditions, if any, that must be satisfied before all or part of an
Option may be exercised.
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(c)
Payment
. The Committee shall determine the methods by which the exercise
price of an Option may be paid, the form of payment, including, without limitation: (i)
cash, (ii) shares of Stock held for such period of time as may be required by the Committee
in order to avoid adverse accounting consequences and having a Fair Market Value on the date
of delivery equal to the aggregate exercise price of the Option or exercised portion
thereof, or (iii) other property acceptable to the Committee (including through the delivery
of a notice that the Participant has placed a market sell order with a broker with respect
to shares of Stock then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; provided that payment of such proceeds is then
made to the Company upon settlement of such sale), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants. Notwithstanding any other
provision of the Plan to the contrary, no Participant who is a member of the Board or an
executive officer of the Company within the meaning of Section 13(k) of the Exchange Act
shall be permitted to pay the exercise price of an Option, or continue any extension of
credit with respect to the exercise price of an Option with a loan from the Company or a
loan arranged by the Company in violation of Section 13(k) of the Exchange Act.
(d)
Evidence of Grant
. All Options shall be evidenced by an Award Agreement
between the Company and the Participant. The Award Agreement shall include such additional
provisions as may be specified by the Committee.
5.2
Incentive Stock Options
. Incentive Stock Options shall be granted only to Eligible
Individuals who are Employees and the terms of any Incentive Stock Options granted pursuant to the
Plan, in addition to the requirements of Section 5.1, must comply with the provisions of this
Section 5.2.
(a)
Expiration
. Subject to Section 5.2(c), an Incentive Stock Option shall
expire and may not be exercised to any extent by anyone after the first to occur of the
following events:
(i) Ten years from the date it is granted, unless an earlier time is set in the
Award Agreement;
(ii) Six months after the Participants termination of employment as an
Employee other than on account of the Participants Disability or death,
provided
,
that any exercise of an Option more than three months after the Participants
termination of employment as an Employee on account of the Participants Disability
or death shall cause such Option to be treated as a Non-Qualified Stock Option; and
(iii) One year after the date of the Participants termination of employment or
service on account of Disability or death. Upon the Participants Disability or
death, any Incentive Stock Options exercisable at the Participants Disability or
death may be exercised by the Participants legal representative or representatives,
by the person or persons entitled to do so pursuant to the Participants last will
and testament, or, if the Participant fails to make testamentary disposition of such
Incentive Stock Option or dies intestate, by the person or persons entitled to
receive the Incentive Stock Option pursuant to the applicable laws of descent and
distribution.
(b)
Dollar Limitation
. The aggregate Fair Market Value (determined as of the
time the Option is granted) of all shares of Stock with respect to which Incentive Stock
Options are first exercisable by a Participant in any calendar year may not exceed $100,000
or such other limitation as imposed by Section 422(d) of the Code, or any successor
provision. To the extent that Incentive Stock Options are first exercisable by a Participant
in excess of such limitation, the excess shall be considered Non-Qualified Stock Options.
(c)
Ten Percent Owners
. An Incentive Stock Option shall be granted to any
individual who, at the date of grant, owns stock possessing more than ten percent of the
total combined voting power of all classes of Stock of the Company only if such Option is
granted at a price that is not less than 110% of Fair Market Value on the date of grant and
the Option is exercisable for no more than five years from the date of grant.
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(d)
Notice of Disposition
. The Participant shall give the Company prompt notice
of any disposition of shares of Stock acquired by exercise of an Incentive Stock Option
within (i) two years from the date of grant of such Incentive Stock Option or (ii) one year
after the transfer of such shares of Stock to the Participant.
(e)
Right to Exercise
. During a Participants lifetime, an Incentive Stock
Option may be exercised only by the Participant.
(f)
Failure to Meet Requirements
. Any Option (or portion thereof) purported to
be an Incentive Stock Option, which, for any reason, fails to meet the requirements of
Section 422 of the Code shall be considered a Non-Qualified Stock Option.
5.3
Granting of Options to Independent Directors
. The Board may from time to time, in
its sole discretion, and subject to the limitations of the Plan:
(a) Select from among the Independent Directors (including Independent Directors who
have previously been granted Options under the Plan) such of them as in its opinion should
be granted Options;
(b) Subject to Section 3.3, determine the number of shares of Stock that may be
purchased upon exercise of the Options granted to such selected Independent Directors; and
(c) Subject to the provisions of this Article 5, determine the terms and conditions of
such Options, consistent with the Plan.
Options granted to Independent Directors shall be Non-Qualified Stock Options.
ARTICLE 6.
RESTRICTED STOCK AWARDS
6.1
Grant of Restricted Stock
. The Committee is authorized to make Awards of
Restricted Stock to any Participant selected by the Committee in such amounts and subject to such
terms and conditions as determined by the Committee. All Awards of Restricted Stock shall be
evidenced by an Award Agreement.
6.2
Issuance and Restrictions
. Restricted Stock shall be subject to such restrictions
on transferability and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on
the Restricted Stock). These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at
the time of the grant of the Award or thereafter.
6.3
Forfeiture
. Except as otherwise determined by the Committee at the time of the
grant of the Award or thereafter, upon termination of employment or service during the applicable
restriction period, Restricted Stock that is at that time subject to restrictions shall be
forfeited;
provided, however,
that the Committee may (a) provide in any Restricted Stock Award
Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in
whole or in part in the event of terminations resulting from specified causes, and (b) in other
cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.
6.4
Certificates for Restricted Stock
. Restricted Stock granted pursuant to the Plan
may be evidenced in such manner as the Committee shall determine. If certificates representing
shares of Restricted Stock are registered in the name of the Participant, certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.
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ARTICLE 7.
STOCK APPRECIATION RIGHTS
7.1
Grant of Stock Appreciation Rights
.
(a) A Stock Appreciation Right may be granted to any Participant selected by the
Committee. A Stock Appreciation Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose and shall be evidenced by an Award
Agreement.
(b) A Stock Appreciation Right shall entitle the Participant (or other person entitled
to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a
specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant
to its terms) and to receive from the Company an amount equal to the product of (i) the
excess of (A) the Fair Market Value of the Stock on the date the Stock Appreciation Right is
exercised over (B) the Fair Market Value of the Stock on the date the Stock Appreciation
Right was granted (or such greater value as the Committee shall determine at the time of
grant of the Stock Appreciation Right) and (ii) the number of shares of Stock with respect
to which the Stock Appreciation Right is exercised, subject to any limitations the Committee
may impose.
(c) The Committee shall determine the time or times a Stock Appreciation Right may be
exercised in whole or in part; provided that the term of any Stock Appreciation Right
granted under the Plan shall not exceed ten years.
7.2
Payment and Limitations on Exercise
.
(a) Subject to Section 7.2(b), payment of the amounts determined under Section 7.1(b)
above shall be in cash, in Stock (based on its Fair Market Value as of the date the Stock
Appreciation Right is exercised) or a combination of both, as determined by the Committee in
the Award Agreement.
(b) To the extent any payment under Section 7.1(b) is effected in Stock, it shall be
made subject to satisfaction of all provisions of Article 5 above pertaining to Options.
ARTICLE 8.
OTHER TYPES OF AWARDS
8.1
Performance Share Awards
. Any Participant selected by the Committee may be granted
one or more Performance Share awards which shall be denominated in a number of shares of Stock and
which may be linked to any one or more of the Performance Criteria or other specific performance
criteria determined appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. In making such determinations, the Committee
shall consider (among such other factors as it deems relevant in light of the specific type of
award) the contributions, responsibilities and other compensation of the particular Participant.
8.2
Performance Stock Units
. Any Participant selected by the Committee may be granted
one or more Performance Stock Unit awards which shall be denominated in unit equivalent of shares
of Stock and/or units of value including dollar value of shares of Stock and which may be linked to
any one or more of the Performance Criteria or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular Participant.
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8.3
Dividend Equivalents
.
(a) Any Participant selected by the Committee may be granted Dividend Equivalents based
on the dividends declared on the shares of Stock that are subject to any Award, to be
credited as of dividend payment dates, during the period between the date the Award is granted and the date the
Award is exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such formula and at
such time and subject to such limitations as may be determined by the Committee.
Notwithstanding the foregoing, to the extent that any dividend equivalents are credited with
respect to shares of Stock underlying a Performance Share Award or Performance Stock Unit,
such dividend equivalents shall be subject to the same vesting conditions applicable to the
Performance Share Award or Performance Stock Unit in respect of which such dividend
equivalents are credited and shall not be paid to the Participant holding such Award unless,
until and to the extent that the Award vests.
(b) Dividend Equivalents granted with respect to Options or SARs that are intended to
be Qualified Performance-Based Compensation shall be payable, with respect to pre-exercise
periods, regardless of whether such Option or SAR is subsequently exercised.
8.4
Stock Payments
. Subject to Section 10.5(b), any Participant selected by the
Committee may receive Stock Payments in the manner determined from time to time by the Committee;
provided, that unless otherwise determined by the Committee, such Stock Payments shall be made in
lieu of base salary, bonus, or other cash compensation otherwise payable to such Participant. The
number of shares shall be determined by the Committee and may be based upon the Performance
Criteria or other specific performance criteria determined appropriate by the Committee, determined
on the date such Stock Payment is made or on any date thereafter.
8.5
Deferred Stock
. Any Participant selected by the Committee may be granted an award
of Deferred Stock in the manner determined from time to time by the Committee. The number of shares
of Deferred Stock shall be determined by the Committee and may be linked to the Performance
Criteria or other specific performance criteria determined to be appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined by the Committee.
Subject to Section 10.5(b), stock underlying a Deferred Stock award will not be issued until the
Deferred Stock award has vested, pursuant to a vesting schedule or performance criteria set by the
Committee. Unless otherwise provided by the Committee, a Participant awarded Deferred Stock shall
have no rights as a Company stockholder with respect to such Deferred Stock until such time as the
Deferred Stock Award has vested and the Stock underlying the Deferred Stock Award has been issued.
8.6
Restricted Stock Units
. The Committee is authorized to make Awards of Restricted
Stock Units to any Participant selected by the Committee in such amounts and subject to such terms
and conditions as determined by the Committee. At the time of grant, the Committee shall specify
the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable,
and may specify such conditions to vesting as it deems appropriate. At the time of grant, the
Committee shall specify the maturity date applicable to each grant of Restricted Stock Units which
shall be no earlier than the vesting date or dates of the Award and may be determined at the
election of the grantee. On the maturity date, the Company shall, subject to Section 10.5(b),
transfer to the Participant one unrestricted, fully transferable share of Stock for each Restricted
Stock Unit scheduled to be paid out on such date and not previously forfeited.
8.7
Performance Bonus Awards
. Any Participant selected by the Committee may be granted
one or more Performance-Based Awards in the form of a cash bonus (a
Performance Bonus
Award
) payable upon the attainment of Performance Goals that are established by the Committee
and relate to one or more of the Performance Criteria, in each case on a specified date or dates or
over any period or periods determined by the Committee. Any such Performance Bonus Award paid to a
Covered Employee shall be based upon objectively determinable bonus formulas established in
accordance with Article 9.
8.8
Term
. Except as otherwise provided herein, the term of any Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Stock Payments, Deferred Stock or Restricted
Stock Units shall be set by the Committee in its discretion.
8.9
Exercise or Purchase Price
. The Committee may establish the exercise or purchase
price, if any, of any Award of Performance Shares, Performance Stock Units, Deferred Stock, Stock
Payments or Restricted Stock Units; provided, however, that such price shall not be less than the
par value of a share of Stock on the date of grant, unless otherwise permitted by applicable state
law.
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8.10
Exercise upon Termination of Employment or Service
. An Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Deferred Stock, Stock Payments and
Restricted Stock Units shall only be exercisable or payable while the Participant is an Employee,
Consultant or a member of the Board, as applicable;
provided, however
, that the Committee in its
sole and absolute discretion may provide that an Award of Performance Shares, Performance Stock
Units, Dividend Equivalents, Stock Payments, Deferred Stock or Restricted Stock Units may be
exercised or paid subsequent to a termination of employment or service, as applicable, or following
a Change in Control of the Company, or because of the Participants retirement, death or
disability, or otherwise;
provided, however,
that any such provision with respect to Performance
Shares or Performance Stock Units shall be subject to the requirements of Section 162(m) of the
Code that apply to Qualified Performance-Based Compensation.
8.11
Form of Payment
. Payments with respect to any Awards granted under this Article 8
shall be made in cash, in Stock or a combination of both, as determined by the Committee.
8.12
Award Agreement
. All Awards under this Article 8 shall be subject to such
additional terms and conditions as determined by the Committee and shall be evidenced by an Award
Agreement.
ARTICLE 9.
PERFORMANCE-BASED AWARDS
9.1
Purpose
. The purpose of this Article 9 is to provide the Committee the ability to
qualify Awards other than Options and SARs and that are granted pursuant to Articles 6 and 8 as
Qualified Performance-Based Compensation. If the Committee, in its discretion, decides to grant a
Performance-Based Award to a Covered Employee, the provisions of this Article 9 shall control over
any contrary provision contained in Articles 6 or 8; provided, however, that the Committee may in
its discretion grant Awards to Covered Employees that are based on Performance Criteria or
Performance Goals but that do not satisfy the requirements of this Article 9.
9.2
Applicability
. This Article 9 shall apply only to those Covered Employees selected
by the Committee to receive Performance-Based Awards. The designation of a Covered Employee as a
Participant for a Performance Period shall not in any manner entitle the Participant to receive an
Award for the period. Moreover, designation of a Covered Employee as a Participant for a particular
Performance Period shall not require designation of such Covered Employee as a Participant in any
subsequent Performance Period and designation of one Covered Employee as a Participant shall not
require designation of any other Covered Employees as a Participant in such period or in any other
period.
9.3
Procedures with Respect to Performance-Based Awards
. To the extent necessary to
comply with the Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) of
the Code, with respect to any Award granted under Articles 6 or 8 which may be granted to one or
more Covered Employees, no later than ninety (90) days following the commencement of any fiscal
year in question or any other designated fiscal period or period of service (or such other time as
may be required or permitted by Section 162(m) of the Code), the Committee shall, in writing, (a)
designate one or more Covered Employees, (b) select the Performance Criteria applicable to the
Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as applicable,
which may be earned for such Performance Period, and (d) specify the relationship between
Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be
earned by each Covered Employee for such Performance Period. Following the completion of each
Performance Period, the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned by a Covered
Employee, the Committee shall have the right to reduce or eliminate (but not to increase) the
amount payable at a given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate performance for the
Performance Period.
9.4
Payment of Performance-Based Awards
. Unless otherwise provided in the applicable
Award Agreement, a Participant must be employed by the Company or a Subsidiary on the day a
Performance-Based Award for such Performance Period is paid to the Participant. Furthermore, a
Participant shall be eligible to receive payment pursuant to a Performance-Based Award for a
Performance Period only if the Performance Goals for such period are achieved. In determining the
amount earned under a Performance-Based Award, the Committee may reduce or eliminate the amount of the Performance-Based Award earned for the Performance Period, if in its
sole and absolute discretion, such reduction or elimination is appropriate.
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9.5
Additional Limitations
. Notwithstanding any other provision of the Plan, any Award
which is granted to a Covered Employee and is intended to constitute Qualified Performance-Based
Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified performance-based compensation as
described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the extent
necessary to conform to such requirements.
ARTICLE 10.
PROVISIONS APPLICABLE TO AWARDS
10.1
Stand-Alone and Tandem Awards
. Awards granted pursuant to the Plan may, in the
discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other
Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards
may be granted either at the same time as or at a different time from the grant of such other
Awards.
10.2
Award Agreement
. Awards under the Plan shall be evidenced by Award Agreements
that set forth the terms, conditions and limitations for each Award which may include the term of
an Award, the provisions applicable in the event the Participants employment or service
terminates, and the Companys authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind an Award.
10.3
Limits on Transfer
. No right or interest of a Participant in any Award may be
pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a
Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any
other party other than the Company or a Subsidiary, unless and until such Award has been exercised,
or the shares of Stock underlying such Award have been issued, and all restrictions applicable to
such shares of Stock have lapsed, and any attempted disposition of an Award prior to the
satisfaction of these conditions shall be null and void and of no effect, except to the extent that
such disposition is permitted by the immediately following sentence. Except as otherwise provided
by the Committee, no Award shall be assigned, transferred, or otherwise disposed of by a
Participant other than by will or the laws of descent and distribution or, subject to the consent
of the Committee, pursuant to a DRO, unless and until such Award has been exercised, or the shares
of Stock underlying such Award have been issued, and all restrictions applicable to such shares of
Stock have lapsed. The Committee by express provision in the Award or an amendment thereto may
permit an Award (other than an Incentive Stock Option) to be transferred to, exercised by and paid
to certain persons or entities related to the Participant, including but not limited to members of
the Participants family, charitable institutions, or trusts or other entities whose beneficiaries
or beneficial owners are members of the Participants family and/or charitable institutions, or to
such other persons or entities as may be expressly approved by the Committee, pursuant to such
conditions and procedures as the Committee may establish. Any permitted transfer shall be subject
to the condition that the Committee receive evidence satisfactory to it that the transfer is being
made for estate and/or tax planning purposes (or to a blind trust in connection with the
Participants termination of employment or service with the Company or a Subsidiary to assume a
position with a governmental, charitable, educational or similar non-profit institution) and on a
basis consistent with the Companys lawful issue of securities.
10.4
Beneficiaries
. Notwithstanding Section 10.3, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of the Participant and
to receive any distribution with respect to any Award upon the Participants death. A beneficiary,
legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If the Participant is
married and resides in a community property state, a designation of a person other than the
Participants spouse as his or her beneficiary with respect to more than 50% of the Participants
interest in the Award shall not be effective without the prior written consent of the Participants
spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to
the person entitled thereto pursuant to the Participants will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time
provided the change or revocation is filed with the Committee.
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10.5
Stock Certificates; Book Entry Procedures
.
(a) Notwithstanding anything herein to the contrary, the Company shall not be required
to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of
any Award, unless and until the Board has determined, with advice of counsel, that the
issuance and delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of any exchange
on which the shares of Stock are listed or traded. All Stock certificates delivered pursuant
to the Plan are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal, state, or foreign jurisdiction,
securities or other laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions applicable to
the Stock. In addition to the terms and conditions provided herein, the Board may require
that a Participant make such reasonable covenants, agreements, and representations as the
Board, in its discretion, deems advisable in order to comply with any such laws,
regulations, or requirements. The Committee shall have the right to require any Participant
to comply with any timing or other restrictions with respect to the settlement or exercise
of any Award, including a window-period limitation, as may be imposed in the discretion of
the Committee.
(b) Notwithstanding any other provision of the Plan, unless otherwise determined by the
Committee or required by any applicable law, rule or regulation, the Company shall not
deliver to any Participant certificates evidencing shares of Stock issued in connection with
any Award and instead such shares of Stock shall be recorded in the books of the Company
(or, as applicable, its transfer agent or stock plan administrator).
10.6
Paperless Exercise
. In the event that the Company establishes, for itself or
using the services of a third party, an automated system for the exercise of Awards, such as a
system using an internet website or interactive voice response, then the paperless exercise of
Awards by a Participant may be permitted through the use of such an automated system.
ARTICLE 11.
CHANGES IN CAPITAL STRUCTURE
11.1
Adjustments
.
(a) In the event of any stock dividend, stock split, combination or exchange of shares,
merger, consolidation or other distribution (other than normal cash dividends) of Company
assets to stockholders, or any other change affecting the shares of Stock or the share price
of the Stock other than an Equity Restructuring, the Committee shall make equitable
adjustments, if any, to reflect such change with respect to (i) the aggregate number and
kind of shares that may be issued under the Plan (including, but not limited to, adjustments
of the limitations in Section 3.1 above on the maximum number and kind of shares which may
be issued under the Plan, adjustments of the award limits under Section 3.3 of the Plan and
adjustments of the manner in which shares subject to Full Value Awards will be counted);
(ii) the number and kind of shares of Stock (or other securities or property) subject to
outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including,
without limitation, any applicable performance targets or criteria with respect thereto);
and (iv) the grant or exercise price per share for any outstanding Awards under the Plan.
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(b) In the event of any transaction or event described in Section 11.1(a) or any
unusual or nonrecurring transactions or events affecting the Company, any affiliate of the
Company, or the financial statements of the Company or any affiliate, or of changes in
applicable laws, regulations or accounting principles, the Committee, in its sole
discretion, and on such terms and conditions as it deems appropriate, either by the terms of
the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Participants request, is hereby authorized to take any one
or more of the following actions whenever the Committee determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or with respect to any Award under the
Plan, to facilitate such transactions or events or to give effect to such changes in laws,
regulations or principles:
(i) To provide for either (A) termination of any such Award in exchange for an
amount of cash, if any, equal to the amount that would have been attained upon the
exercise of such Award or realization of the Participants rights (and, for the
avoidance of doubt, if as of the date of the occurrence of the transaction or event
described in this Section 11.1, the Committee determines in good faith that no
amount would have been attained upon the exercise of such Award or realization of
the Participants rights, then such Award may be terminated by the Company without
payment) or (B) the replacement of such Award with other rights or property selected
by the Committee in its sole discretion having an aggregate value not exceeding the
amount that could have been attained upon the exercise of such Award or realization
of the Participants rights had such Award been currently exercisable or payable or
fully vested;
(ii) To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or survivor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as to
the number and kind of shares and prices;
(iii) To make adjustments in the number and type of shares of the Stock (or
other securities or property) subject to outstanding Awards, and in the number and
kind of outstanding Restricted Stock or Deferred Stock and/or in the terms and
conditions of (including the grant or exercise price), and the criteria included in,
outstanding Awards and Awards which may be granted in the future;
(iv) To provide that such Award shall be exercisable or payable or fully vested
with respect to all shares covered thereby, notwithstanding anything to the contrary
in the Plan or the applicable Award Agreement; and
(v) To provide that the Award cannot vest, be exercised or become payable after
such event.
(c) In connection with the occurrence of any Equity Restructuring, and notwithstanding
anything to the contrary in Sections 11.1(a) and 11.1(b) above:
(i) The number and type of securities subject to each outstanding Award and the
exercise price or grant price thereof, if applicable, shall be equitably adjusted.
The adjustments provided under this Section 11.1(c) shall be nondiscretionary and
shall be final and binding on the affected Participant and the Company.
(ii) The Committee shall make such equitable adjustments, if any, as the
Committee in its discretion may deem appropriate to reflect such Equity
Restructuring with respect to the aggregate number and kind of shares that may be
issued under the Plan (including, but not limited to, adjustments of the limitations
in Section 3.1 on the maximum number and kind of shares which may be issued under
the Plan, adjustments of the award limits under Section 3.3 of the Plan and
adjustments of the manner in which shares subject to Full Value Awards will be
counted).
(d) The Committee may, in its sole discretion, include such further provisions and
limitations in any Award, agreement or certificate, as it may deem equitable and in the best
interests of the Company that are not inconsistent with the provisions of the Plan.
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(e) With respect to Awards which are granted to Covered Employees and are intended to
qualify as Performance-Based Compensation, no adjustment or action described in this Section
11.1 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action
would cause such Award to fail to so qualify as Performance-Based Compensation, unless the
Committee determines that the Award should not so qualify. No adjustment or action
described in this Section 11.1 or in any other provision of the Plan shall be authorized to
the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1)
of the Code. Furthermore, no such adjustment or action shall be authorized to the extent
such adjustment or action would result in short-swing profits liability under Section 16 or
violate the exemptive conditions of Rule 16b-3 unless the Committee determines that the
Award is not to comply with such exemptive conditions.
(f) The existence of the Plan, the Award Agreement and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Companys capital structure or its business, any
merger or consolidation of the Company, any issue of stock or of options, warrants or rights
to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights
are superior to or affect the Stock or the rights thereof or which are convertible into or
exchangeable for Stock, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(g) No action shall be taken under this Section 11.1 which shall cause an Award to fail
to comply with Section 409A of the Code or the Treasury Regulations thereunder, to the
extent applicable to such Award.
11.2
Acceleration Upon a Change in Control
.
(a) With respect to an Award granted prior to November 2, 2009:
(i) Notwithstanding any provision to the contrary contained herein or in any applicable
Award Agreement or other written agreement entered into between the Company and a
Participant, if a Change in Control occurs then, immediately prior to the Change in Control,
all Awards outstanding under the Plan shall become fully vested and exercisable and all
forfeiture restrictions on such Awards shall lapse. Subject to the foregoing, upon, or in
anticipation of, a Change in Control, the Committee may cause any and all Awards outstanding
hereunder to terminate at a specific time in the future, including but not limited to the
date of such Change in Control, and may give each Participant the right to exercise such
Awards during a period of time as the Committee, in its sole and absolute discretion, shall
determine. In the event that the terms of any agreement between the Company or any Company
subsidiary or affiliate and a Participant contains provisions that conflict with and are
more restrictive than the provisions of this Section 11.2(a), this Section 11.2(a) shall
prevail and control and the more restrictive terms of such agreement (and only such terms)
shall be of no force or effect.
(b) With respect to an Award granted on or after November 2, 2009:
(i) Notwithstanding any other provision of the Plan, in the event of a Change
in Control, each outstanding Award shall be assumed or an equivalent Award
substituted by the surviving or successor corporation or a parent or subsidiary of
the surviving or successor corporation.
(ii) In the event that the surviving or successor corporation in a Change in
Control declines for any reason to assume or provide an equivalent substitute for
any Award, as determined by the pre-Change in Control Committee in its sole
discretion, the Committee shall cause all forfeiture restrictions applicable to such
Award to lapse and such Award shall become fully vested and, as applicable,
exercisable immediately prior to the consummation of such transaction. If an
Awards applicable forfeiture restrictions lapse and such Award becomes vested (and
exercisable, as applicable) in lieu of assumption or substitution of an equivalent
award in connection with a Change in Control, the Committee shall notify the
Participant that the Award will be deemed to be exercised, if applicable, and, in
any event, settled upon the occurrence of the Change in Control, and the Award shall
terminate upon the Change in Control in exchange for payment of the consideration payable in the Change in Control for such fully
vested (and exercised, if applicable) Award.
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11.3
No Other Rights
. Except as expressly provided in the Plan, no Participant shall
have any rights by reason of any subdivision or consolidation of shares of stock of any class, the
payment of any dividend, any increase or decrease in the number of shares of stock of any class or
any dissolution, liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Stock subject to an Award or the grant or exercise price of any Award.
ARTICLE 12.
ADMINISTRATION
12.1
Committee
. Unless and until the Board delegates administration of the Plan to a
Committee as set forth below, the Plan shall be administered by the full Board, and for such
purposes the term Committee as used in this Plan shall be deemed to refer to the Board. The
Board, at its discretion or as otherwise necessary to comply with the requirements of Section
162(m) of the Code, Rule 16b-3 promulgated under the Exchange Act or to the extent required by any
other applicable rule or regulation, shall delegate administration of the Plan to a Committee. The
Committee shall consist solely of two or more members of the Board each of whom is an outside
director, within the meaning of Section 162(m) of the Code, a Non-Employee Director and an
independent director under the rules of the American Stock Exchange (or other principal
securities market on which shares of Stock are traded). Notwithstanding the foregoing: (a) the full
Board, acting by a majority of its members in office, shall conduct the general administration of
the Plan with respect to all Awards granted to Independent Directors and for purposes of such
Awards the term Committee as used in this Plan shall be deemed to refer to the Board and (b) the
Committee may delegate its authority hereunder to the extent permitted by Section 12.5. Appointment
of Committee members shall be effective upon acceptance of appointment. In its sole discretion, the
Board may at any time and from time to time exercise any and all rights and duties of the Committee
under the Plan except with respect to matters which under Rule 16b 3 under the Exchange Act or
Section 162(m) of the Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may only be filled by the Board.
12.2
Action by the Committee
.
A majority of the Committee shall constitute a quorum.
The acts of a majority of the members present at any meeting at which a quorum is present, and acts
approved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the acts
of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other employee of the
Company or any Subsidiary, the Companys independent certified public accountants, or any executive
compensation consultant or other professional retained by the Company to assist in the
administration of the Plan.
12.3
Authority of Committee
. Subject to any specific designation in the Plan, the
Committee has the exclusive power, authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to each Participant;
(c) Determine the number of Awards to be granted and the number of shares of Stock to
which an Award will relate;
(d) Determine the terms and conditions of any Award granted pursuant to the Plan,
including, but not limited to, the exercise price, grant price, or purchase price, any
restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions
or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any
provisions related to non-competition and recapture of gain on an Award, based in each case
on such considerations as the Committee in its sole discretion determines; provided, however, that the Committee shall not have the authority to accelerate the vesting
or waive the forfeiture of any Performance-Based Awards;
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(e) Determine whether, to what extent, and pursuant to what circumstances an Award may
be settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards,
or other property, or an Award may be canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be identical for each
Participant;
(g) Decide all other matters that must be determined in connection with an Award;
(h) Establish, adopt, or revise any rules and regulations as it may deem necessary or
advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award
Agreement; and
(j) Make all other decisions and determinations that may be required pursuant to the
Plan or as the Committee deems necessary or advisable to administer the Plan.
12.4
Decisions Binding
. The Committees interpretation of the Plan, any Awards
granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the
Committee with respect to the Plan are final, binding, and conclusive on all parties.
12.5
Delegation of Authority
. To the extent permitted by applicable law, the
Committee may from time to time delegate to a committee of one or more members of the Board or one
or more officers of the Company the authority to grant or amend Awards to Participants other than
(a) senior executives of the Company who are subject to Section 16 of the Exchange Act, (b) Covered
Employees, or (c) officers of the Company (or members of the Board) to whom authority to grant or
amend Awards has been delegated hereunder. Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such delegation, and the
Committee may at any time rescind the authority so delegated or appoint a new delegatee. At all
times, the delegatee appointed under this Section 12.5 shall serve in such capacity at the pleasure
of the Committee.
ARTICLE 13.
EFFECTIVE AND EXPIRATION DATE
13.1
Effective Date
. The Original Plan was submitted to and approved by the
Companys stockholders on May 18, 2009. The Plan, as amended and restated, is effective as of the
date on which the Companys stockholders approve the Plan. The Plan, as amended and restated, will
be deemed to be approved by the stockholders if a quorum is present at a stockholder meeting duly
held in accordance with the applicable provisions of the Companys Bylaws and the votes cast in
favor of the Plan exceed the votes cast opposing the Plan. In the event that the Plan, as amended
and restated, is not approved by the Companys stockholders, then the Original Plan shall continue
on its existing terms and conditions and the modifications to the Original Plan effected by this
amendment and restatement shall not take effect.
13.2
Expiration Date
. The Plan will expire on, and no Award may be granted pursuant
to the Plan after the tenth anniversary of the Effective Date, except that no Incentive Stock
Options may be granted under the Plan after the earlier of the tenth anniversary of (i) the date
the Plan is approved by the Board or (ii) the Effective Date. Any Awards that are outstanding on
the tenth anniversary of the Effective Date shall remain in force according to the terms of the
Plan and the applicable Award Agreement.
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ARTICLE 14.
AMENDMENT, MODIFICATION, AND TERMINATION
14.1
Amendment, Modification, and Termination
. Subject to Section 15.14, with the
approval of the Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that (a) to the extent necessary and desirable to comply with
any applicable law, regulation, or stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as required, (b) stockholder
approval is required for any amendment to the Plan that (i) increases the number of shares
available under the Plan (other than any adjustment as provided by Article 11), or (ii) results in
a material increase in benefits or a change in eligibility requirements, and (c) no amendment to
the Plan shall permit the Committee to grant Options or SARs with an exercise price or base price,
as applicable, that is below Fair Market Value on the date of grant or to extend the exercise
period for an Option or SAR beyond ten years from the date of grant. Notwithstanding any provision
in this Plan to the contrary, (A) no Option or SAR may be amended to reduce the per share exercise
price or base price, as applicable, of the shares subject to such Option or SAR below the per share
exercise price or base price as of the date the Option or SAR is granted, and (B) no Option or SAR
may be granted in exchange for, or in connection with, the cancellation or surrender of an Option
or SAR having a higher per share exercise price or base price.
14.2
Awards Previously Granted
. Except with respect to amendments made pursuant to
Section 15.14, no termination, amendment, or modification of the Plan shall adversely affect in any
material way any Award previously granted pursuant to the Plan without the prior written consent of
the Participant.
ARTICLE 15.
GENERAL PROVISIONS
15.1
No Rights to Awards
. No Eligible Individual or other person shall have any
claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is
obligated to treat Eligible Individuals, Participants or any other persons uniformly.
15.2
No Stockholders Rights
. Except as otherwise provided herein, a Participant
shall have none of the rights of a stockholder with respect to shares of Stock covered by any Award
until the Participant becomes the record owner of such shares of Stock.
15.3
Withholding
. The Company or any Subsidiary shall have the authority and the
right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy federal, state, local and foreign taxes (including the Participants employment tax
obligations) required by law to be withheld with respect to any taxable event concerning a
Participant arising as a result of this Plan. The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold
shares of Stock otherwise issuable under an Award (or allow the return of shares of Stock) having a
Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of
the Plan, the number of shares of Stock which may be withheld with respect to the issuance,
vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such
Award within six months (or such other period as may be determined by the Committee) after such
shares of Stock were acquired by the Participant from the Company) in order to satisfy the
Participants federal, state, local and foreign income and payroll tax liabilities with respect to
the issuance, vesting, exercise or payment of the Award shall be limited to the number of shares
which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate
amount of such liabilities based on the minimum statutory withholding rates for federal, state,
local and foreign income tax and payroll tax purposes that are applicable to such supplemental
taxable income.
15.4
No Right to Employment or Services
. Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate
any Participants employment or services at any time, nor confer upon any Participant any right to
continue in the employ or service of the Company or any Subsidiary.
15.5
Unfunded Status of Awards
. The Plan is intended to be an unfunded plan for
incentive compensation. With respect to any payments not yet made to a Participant pursuant to an
Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general
creditor of the Company or any Subsidiary.
A-18
15.6
Indemnification
. To the extent allowable pursuant to applicable law, each
member of the Committee and of the Board shall be indemnified and held harmless by the Company from
any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such
member in connection with or resulting from any claim, action, suit, or proceeding to which he or
she may be a party or in which he or she may be involved by reason of any action or failure to act
pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of
judgment in such action, suit, or proceeding against him or her; provided he or she gives the
Company an opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such persons may be entitled
pursuant to the Companys Certificate of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.
15.7
Relationship to other Benefits
. No payment pursuant to the Plan shall be taken
into account in determining any benefits pursuant to any pension, retirement, savings, profit
sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to
the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.
15.8
Expenses
. The expenses of administering the Plan shall be borne by the Company
and its Subsidiaries.
15.9
Titles and Headings
. The titles and headings of the Sections in the Plan are
for convenience of reference only and, in the event of any conflict, the text of the Plan, rather
than such titles or headings, shall control.
15.10
Fractional Shares
. No fractional shares of Stock shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional
shares or whether such fractional shares shall be eliminated by rounding up or down as appropriate.
15.11
Limitations Applicable to Section 16 Persons
. Notwithstanding any other
provision of the Plan, the Plan, and any Award granted or awarded to any Participant who is then
subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth
in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 under the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
15.12
Government and Other Regulations
. The obligation of the Company to make
payment of awards in Stock or otherwise shall be subject to all applicable laws, rules, and
regulations, and to such approvals by government agencies as may be required. The Company shall be
under no obligation to register pursuant to the Securities Act, as amended, any of the shares of
Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the Securities Act, as amended, the Company
may restrict the transfer of such shares in such manner as it deems advisable to ensure the
availability of any such exemption.
15.13
Governing Law
. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of California.
A-19
15.14
Section 409A
. To the extent applicable, the Plan and all Award Agreements
shall be interpreted in accordance with Section 409A of the Code and Department of Treasury
regulations and other interpretive guidance issued thereunder, including without limitation any
such regulations or other guidance that may be issued after the Effective Date. Notwithstanding
any provision of the Plan to the contrary, in the event that following the Effective Date the Board
determines that any Award may be subject to Section 409A of the Code and related Department of
Treasury guidance (including such Department of Treasury guidance as may be issued after the
Effective Date), the Board may adopt such amendments to the Plan and the applicable Award Agreement
or adopt other policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Board determines are necessary or
appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax
treatment of the benefits provided with respect to the Award, or (b) comply with the requirements
of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section;
provided, however
, that this Section 15.14
does not create an obligation on the part of the Company to adopt any such amendment, policy or
procedure or take any such other action or to indemnify any Participant with regard to any such
action or inaction.
* * * * *
I hereby certify that the foregoing Plan was duly authorized by the Board of Directors of Rentech,
Inc. on March 14, 2011, subject to approval by its stockholders.
* * * * *
I hereby certify that the foregoing Plan was approved by the stockholders of Rentech, Inc. on
[
].
Executed on this [
] day of [
].
A-20
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IMPORTANT INFORMATION CONCERNING THE RENTECH ANNUAL MEETING
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Check-in
begins: 9:00 am PDT
Meeting begins: 10:00 am PDT
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Rentech shareholders, including joint holders, as of the close of business on March 24, 2011, the record date for
the annual meeting, are entitled to attend the annual meeting on May 11, 2011.
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All shareholders and their proxies should be prepared to present photo identification for admission to the meeting
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If you are a registered shareholder, an admission ticket is attached to your proxy card. Please detach and bring
the admission ticket with you to the meeting. Shareholders who do not present admission tickets at the meeting
will be admitted only upon verification of ownership.
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If your shares are held in the name of your broker, bank, or other nominee, you must bring to the meeting an
account statement or letter from the nominee indicating that you beneficially owned the shares on March 24, 2011,
the record date for voting.
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Persons acting as proxies must bring a valid proxy from a record holder who owns shares as of the close of
business on March 24, 2011.
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Failure to present identification or otherwise comply with the above procedures will result in exclusion from the
meeting.
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Meeting attendees will not be permitted to bring cameras, mobile phones, recording equipment, electronic devices
or large bags, briefcases or packages to the meeting.
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During the Annual Meeting the Secretary will report on the matters set forth in the Notice of the Meeting and
remarks about the Company will be provided by the management. Shareholders will have the opportunity to submit
questions in writing to management up through the conclusion of the management presentation.
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Please allow ample time for check-in.
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THANK YOU FOR YOUR INTEREST AND SUPPORTYOUR VOTE IS IMPORTANT!
Directions to the Sheraton Gateway Los Angeles Hotel:
From the Los Angeles International Airport:
Go east on Century Blvd. for less than one mile. Complimentary Airport Shuttle is provided to the
hotel.
From Downtown Los Angeles:
Take the CA-110 South to the I-105 West toward the Los Angeles Airport. Take exit 2A toward La
Cienega/Aviation Blvd. Turn left onto West Imperial Highway. Turn right onto Aviation Blvd and then
make a slight left onto West Century Blvd.
From Orange County:
Take the I-405 North toward Santa Monica and then take the Century Blvd. exit toward the Los
Angeles Airport. Turn left onto West Century Blvd.
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[Logo]
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RENTECH, INC.
10877 Wilshire Boulevard, Suite 600
Los Angeles, California 90024
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VOTE BY INTERNETwww.proxyvote.com
Use the Internet to transmit your
voting instructions and for
electronic delivery of information
up until 11:59 p.m. Eastern Time the
day before the meeting date. Have
your proxy card in hand when you
access the web site and follow the
instructions to obtain your records
and to create an electronic voting
instruction form.
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VOTE BY TELEPHONE
1-800-690-6903
Use any touch-tone telephone to
transmit your voting instructions up
until 11:59 p.m. Eastern Time the
day before the meeting date. Have
your proxy card in hand when you
call and then follow the
instructions.
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VOTE BY MAIL
Mark, sign and date your proxy card
and return it in the postage-paid
envelope we have provided or return
it to Vote Processing, c/o
Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE
OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
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The Board of Directors recommends you vote
FOR the following:
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual nominee(s), mark
For All Except and write the number(s) of the nominees(s) on the
line below.
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1.
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Election of Directors
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o
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o
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o
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Nominees
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01 Michael S. Burke 02 Gen. Wesley K. Clark 03 John A. Williams 04 Dennis L. Yakobson
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The Board of Directors recommends you vote FOR proposals 2 and 3:
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For
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Against
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Abstain
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2.
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Adoption of Amended and Restated 2009 Incentive Award Plan.
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o
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o
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o
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3.
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Advisory vote on executive compensation (Say-On-Pay).
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o
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o
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o
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The Board of Directors recommends you vote 3 YEARS on the following proposal:
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1
year
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2
years
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3
years
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Abstain
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4.
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Advisory vote on determining the frequency of Say-On-Pay (Frequency Vote).
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o
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o
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o
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o
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The Board of Directors recommends you vote FOR the following proposal:
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For
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Against
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Abstain
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5.
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Ratification of selection of independent registered public accounting firm.
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o
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o
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o
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Please sign exactly as name appears. When shares are held by joint tenants, both should sign. When
signing as attorney, as executor, administrator, trustee or guardian, please give full title as
such. If a corporation or partnership, please sign in full corporate or partnership name, by
authorized person.
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Signature [PLEASE SIGN WITHIN BOX] Date
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Signature (Joint Owners) Date
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Ticket for Admission to
2011 Rentech Annual Shareholders Meeting
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Time:
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10:00 am PDT, May 11, 2011
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Place:
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Sheraton Gateway Los Angeles Hotel, 6101 W. Century Boulevard, Los Angeles, California
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Admission:
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This ticket will admit shareholder. Ticket for one guest can be requested upon
admission to the annual meeting. Valid admission ticket and government issued picture
identification required to enter meeting.
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Detach along perforated lines and retain ticket for admission to Annual Meeting
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PROXY
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Rentech, Inc.
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PROXY
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Annual Meeting of ShareholdersMay 11, 2011
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) of Rentech, Inc., a Colorado corporation, hereby acknowledge(s)
receipt of the Proxy Statement dated March 31, 2011, and hereby appoint(s) Colin M. Morris, D. Hunt
Ramsbottom, and Dan J. Cohrs, and each of them, proxy and attorney-in-fact, with full of
substitution, on behalf and in the name of the undersigned at the Annual Meeting of Shareholders of
Rentech, Inc., to be held at the Sheraton Gateway Los Angeles Hotel, 6101 W. Century Boulevard, Los
Angeles, California on Wednesday, May 11, 2011 at 10:00 am (PDT) and at any adjournment or
postponements thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on all matters set forth on the reverse
side.
This proxy will be voted as specified by you. If no choice is specified, the proxy will be voted
according to the recommendations of the Board of Directors indicated on the reverse side, and
according to the discretion of the Board of Directors for any other matters that may properly come
before the meeting or any postponement or adjournment thereof.
PLEASE MARK, SIGN AND DATE THIS PROXY AND VOTE
BY ONE OF THE METHODS DESCRIBED ON THE REVERSE SIDE.
(Continued, and to be signed and dated, on the reverse side)