SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
________________________________________________________________
The Turner Corporation
(Name of Registrant as Specified in Its Charter)
The Turner Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a6(i)(1)
and0-11.
(1) Title of each class of securities to which
transaction applies:
_________________________________________________________________
(2) Aggregate number of securities to which
transaction applies:
_________________________________________________________________
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-
11:/1(set forth the amount on which the filing fee is
calculated and state how it was determined):
_________________________________________________________________
(4) Proposed maximum aggregate value of
transaction:
_________________________________________________________________
(5) Total fee paid:
_________________________________________________________________
/ / Fee paid previously with preliminary materials
_________________________________________________________________
<PAGE>
/ / 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, orthe form or
schedule and the date of its filing.
(1) Amount previously paid:
_________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_________________________________________________________________
(3) Filing party:
_________________________________________________________________
(4) Date filed:
_________________________________________________________________
<PAGE>
March 31, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Dear Sirs:
The Turner Corporation (the "Company") is filing
electronically the definition proxy statement, form of proxy and
form of instruction to ESOP trustee which the Company expects to
send to security holders beginning March 31, 1998.
The Company will file a registration on Form S-8 with
the Securities and Exchange Commission relative to the 1998 Stock
Incentive Plan of the Company after its adoption by the
Stockholders of the Company.
Very truly yours,
THE TURNER CORPORATION
/s/ S. J. Gozo
Secretary
<PAGE>
March 31, 1998
To Participants in the Employee Stock Ownership Plan:
As a participant in The Turner Corporation Employee Stock
Ownership Plan, you have the right to direct the Trustee of the
Plan, State Street Bank and Trust Company, as to the manner in
which to vote your shares at the Company's Annual Stockholders
Meeting on May 8, 1998. The instructions given by you will be
held by the Trustee in strict confidence.
The enclosed Voting Instruction Card can be used to provide your
instructions to the Trustee. This Card only covers the shares
held in the Employee Stock Ownership Plan for which you are
entitled to give direction and is not linked to any other shares
of Company stock or related Proxy Cards concerning the Annual
Meeting which you may receive.
Your voting direction will apply to those shares allocated to
your account as well as to a proportionate number of the shares
in the plan not yet allocated to any participant. If you own
Turner Corporation Stock outside of the Employee Stock Ownership
Plan, you will receive proxy materials covering these shares in a
separate mailing.
Also enclosed is a Proxy Statement that explains the items which
will be voted on at the Company's Annual Stockholders Meeting.
Please return your completed and signed Voting Instruction Card
as quickly as possible, using the envelope provided. Your vote
is important and you are encouraged to take advantage of this
opportunity to direct the voting of your shares.
Sara J.Gozo
Secretary
<PAGE>
April 20, 1998
Dear Stockholder:
Our records indicate that we have not yet received your proxy for
the Annual Meeting to be held on May 8, 1998. A proxy card was
mailed to you on
March 31. 1998, together with a Notice of Annual Meeting, Proxy
Statement and Annual Report.
We believe it is important that your views be represented at the
meeting. We are, therefore, enclosing a duplicate proxy and urge
you to sign, date and return it today in the enclosed return
envelope.
If you have already forwarded your proxy card, we thank you for
your cooperation.
Yours very truly,
Sara J. Gozo
Secretary
<PAGE>
/x/
Please mark your
votes as in this
example.
5184
If not otherwise specified, this Direction will be voted for the
election of the nominees named below.
The Board of Directors recommends a vote FOR the below matters.
1. Election of Directors.
FOR Withheld
/ / / /
To withhold authority to vote for an individual nominee, list
that nominee's name on the line below:
(Nominees: Leif Lomo, Harold J. Parmelee, G.
Jeffrey Records, Jr. )
2. Adoption of the 1998 Stock Incentive Plan
FOR AGAINST WITHELD
/ / / / / /
3. In their discretion upon any other matter that may
properly come before the meeting.
Do you plan to attend the Annual Meeting?
YES NO
/ / / /
These Voting Instructions Are Solicited
by the Trustee of
the Employee Stock Ownership Plan
Please sign exactly as name appears at the left.
SIGNATURE(S) DATE
<PAGE>
Detach Voting Instructions Card Here
Annual Meeting
of
The Turner Corporation
Stockholders
Friday, May 8, 1998
11:00 a.m.
TheAmerican Stock Exchange
13th Floor Boardroom
86 Trinity Place
New York, NY 10006
AGENDA
Election of three directors
Adoption of the 1998 Stock Incentive Plan
Report on the progress of the Corporation
Discussion on matters of current interest
There will be no reception following the above stated
agenda.
It is important that your shares are represented at this meeting,
whether or not you attend the meeting in person. To make sure
your shares are represented, we urge you to complete and mail the
voting instructions card above.
<PAGE>
THE TURNER CORPORATION
Voting Instructions Solicited on Behalf of the Board of Directors
of the Company for the Annual Meeting of Stockholders,
May 8, 1998
To the Trustees - Employee Stock Ownership Plan of
The Turner Corporation
The undersigned hereby directs State Street Bank and Trust
Company, Trustee, to vote as stated herein all shares allocated
to the account of the undersigned at the Annual Meeting of
Stockholders to be held on May8, 1998 at 11:00 A.M. Eastern
Daylight Saving Time, and at any adjournments thereof, upon the
matters set forth in the notice of such meeting. The Trustee
shall vote as checked upon the following matters, more fully set
forth in the Proxy Statement, and otherwise in their discretion
1. Election of Directors, Nominees:
Leif Lomo, Harold J. Parmelee, G. Jeffrey Records, Jr.
2. Adoption of the 1998 Stock Incentive Plan
You are encouraged to specify your choices by marking the
appropriate boxes, SEE REVERSE SIDE, but you need not mark any
boxes if you wish to vote in accordance with the Board of
Directors+ recommendations. Your instructions cannot be accepted
unless you sign and return this card.
SEE REVERSE SIDE
/ /
Detach Voting Instructions Card Here
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 1998, 11: 00 A.M.
American Stock Exchange
13th Floor Boardroom
86 Trinity Place
New York, NY 10006
<PAGE>
/x/
Please mark your
votes as in this
example.
0108
If not otherwise specified, this proxy will be voted for the
election of the nominees named below.
The Board of Directors recommends a vote FOR the below matters.
1. Election of Directors.
FOR WITHHELD
/ / / /
To withhold authority to vote for an individual nominee, list
that nominee+s name on the line below:
(Nominees: Leif lomo, Harold j. Parmelee, G.
Jeffrey Records, Jr.)
2. Adoption of the 1998 Stock Incentive Plan
FOR AGAINST WITHHELD
/ / / / / /
3. In their discretion upon any other matter that may
properly come before the meeting.
Do you plan
to attend the Annual Meeting?
YES NO
/ / / /
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
Please sign exactly as name appears at the left. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such.
SIGNATURE(S) DATE
Detach Proxy Card Here
Annual Meeting
of
The Turner Corporation
Stockholders
Friday, May 8, 1998
11:00 a.m.
The American Stock Exchange
13th Floor Boardroom
86 Trinity Place
New York, NY 10006
AGENDA
Election of three directors
Adoption of the 1998 Stock Incentive Plan
Report on the progress of the corporation
Discussion on matters of current interest
There will be no reception following the above stated
agenda
It is important that your shares are represented at this meeting,
whether or not you attend the meeting in person. To make sure
your shares are represented, we urge you to complete and mail the
proxy card above.
P
R
O
X
Y
PROXY
THE TURNER CORPORATION
Annual Meeting of Stockholders, May 8, 1998
The undersigned hereby appoints Ellis T. Gravette, Jr. and Sara
J. Gozo and each of them, with full power of substitution, as
attorneys and proxies for the undersigned to appear at the Annual
Meeting of Stockholders of The Turner Corporation to be held on
May 8, 1998 at 11:00 A.M. Eastern Daylight Saving Time, and at
any adjournments of that meeting, and at that meeting to act for
the undersigned and vote all shares of common stock of The Turner
Corporation held in the name of the undersigned, with all the
powers the undersigned would have if personally present as
follows:
You are encouraged to specify your choices by marking the
appropriate boxes, SEE REVERSE SIDE, but you need not mark any
boxes if you wish to vote in accordance with the Board of
Directors+ recommendations. The Proxies cannot vote your shares
unless you sign and return this card.
SEE REVERSE
SIDE
/ /
Detach Proxy Card Here
<PAGE>
Annual Meeting of Stockholders
May 8, 1998, 11:00 a.m.
American Stock Exchange
13th Floor Boardroom
86 Trinity Place
New York, NY 10006
THE TURNER CORPORATION
Notice of Annual Meeting of Stockholders
May 8, 1998
The Annual Meeting of Stockholders of The Turner
Corporation will be held on Friday, May 8, 1998, at 11:00 A.M.
Eastern Daylight Saving Time, in the 13th Floor Boardroom at the
American Stock Exchange, 86 Trinity Place, New York, New York,
for the following purposes:
1. To elect three directors;
2. To vote upon the adoption of The Turner
Corporation 1998 Stock Incentive Plan;
3. To transact such other
business as may properly come before the meeting
or any adjournment.
Stockholders of record at the close of business on
March 23, 1998 will be entitled to vote at the meeting. A list
of such stockholders will be open for examination by any
stockholder for any purpose germane to the meeting, during
ordinary business hours, for ten days prior to the meeting at the
offices of The Turner Corporation, 375 Hudson Street, New York,
New York 10014.
SARA J. GOZO
Secretary
March 31, 1998
Each stockholder's vote is important. In order to vote, date,
sign and return promptly the enclosed proxy in the accompanying
reply envelope. Stockholders who attend the Annual Meeting may
vote at the meeting even if they have sent in a proxy.
<PAGE>
THE TURNER CORPORATION
375 Hudson Street
New York, New York 10014
Proxy Statement
_____________
ANNUAL MEETING OF STOCKHOLDERS
May 8, 1998
__________
This Proxy Statement is being furnished beginning March
31, 1998 in connection with the solicitation of proxies for use
at the 1998 Annual Meeting of Stockholders of The Turner
Corporation (the "Company") to be held at the time and place and
for the purposes set forth in the attached notice.
ELECTION OF DIRECTORS
The Company's directors who are elected by the holders
of the Common Stock (voting together with the holders of the
Company's Series B ESOP Convertible Preference Stock ("Series B
ESOP Preferred Stock") and Series D 8.5% Convertible Preference
Stock ("Series D Preferred Stock") ) are divided into three
classes. They serve three year terms, with the directors in one
class being elected each year. The holder (or holders) of the
Company's Series C 8.5% Convertible Preference Stock ("Series C
Preferred Stock") have the right to elect three directors, who
are in addition to the directors elected by the holders of the
Common Stock, the Series B ESOP Preferred Stock and the Series D
Preferred Stock. As regards to voting on directors, Karl Steiner
Holding AG, the holder of the Series D Preferred Stock, is
required, pursuant to an agreement with the Company, to vote the
Series D Preferred Stock for directors in the same proportion as
the shares of Common Stock not owned by Karl Steiner Holding AG
or its affiliates are voted for directors.
At the 1998 Annual Meeting of Stockholders three
directors are to be elected. Election of a director requires a
plurality of the votes cast. Because no minimum vote is
required, shares which are present at the meeting but are not
voted (whether due to abstentions, broker non-votes or otherwise)
will not directly affect the outcome of the election.
The Board of Directors' nominees for the three
directorships, the directors who will continue in office and the
directors expected to be elected by the holders of the Company's
Series C Preferred Stock are as follows:
<PAGE>
Served as
Director Term
Principal Occupation Since Will
Name and Age and Other or During Expire
Directorships the Period
Nominees for
election as
directors to serve
until 2001:
Leif Lomo, 68 Former President, 1992 2001
Marley Pump Company,
1994-1995; Retired
Chairman and Chief
Executive Officer,
A.B. Chance Company
1987-1994; Director of
Young Broadcasting,
Inc. and Mercantile
Bank of Boone County
Harold J. Parmelee, President and Chief 1988 2001
60 Operating Officer, The
Turner Corporation
G. Jeffrey Records, Chairman and Chief 1997 2001
Jr., 38 (1) Executive Officer,
MidFirst Bank;
President and Chief
Executive Officer,
MidFirst Bank,
1995-February 1998;
President and Chief
Executive Officer,
Midland Mortgage, 1987-
1995; Director of
Midland Financial
Company; Midland
Mortgage Company and
Homeshield Insurance
Company
<PAGE>
Directors who will
continue in office:
Walter G. Ehlers, Retired President, 1985 2000
65 Chief Operating
Officer and Trustee,
Teachers Insurance and
Annuity Association
and College Retirement
Equities Fund,
1984-88; Director of
Neuberger &
Berman -- Advisors
Management Trust;
Trustee of China
Medical Board of New
York, Inc.
Robert E. Fee, 61 President and Chief 1997 2000
(2) Operating Officer,
Turner Construction
Company; Executive
Vice President,
1996-97; Senior Vice
President, 1994-96;
Vice President
1986-1994
Ellis T. Gravette, Chairman and Chief 1981 1999
Jr., 72 (3) Executive Officer, The
Turner Corporation;
President, Ardath
Associates, Inc., 1986-
1996; Retired Chairman
of the Board and Chief
Executive Officer, The
Bowery Savings Bank,
1981-86; Director of
MidFirst Bank, SSB
Charles H. Moore, Director of Athletics, 1990 1999
Jr., 68 Cornell University;
Chairman and Chief
Executive Officer,
Xpander Pak, Inc.;
Executive Vice
President, Illinois
Tool Works, Inc.,
1991-92; President and
Chief Executive
Officer, Ransburg
Corporation 1988-92;
Director of Elcotel,
Inc. and United States
Olympic Committee
Gordon A. Walker, Former Chairman and 1984 1999
70 (3) Chief Executive
Officer, Hollinee,
Inc., 1987-1997;
Former Chairman,
President and Chief
Executive Officer,
U.S. Industries, Inc.,
1981-1986
John O. Whitney, 70 Professor and 1988 2000
(3) Executive Director,
The Deming Center for
Quality Management,
Columbia Business
School; Director of
Atchison Castings and
Church & Dwight Co.,
Inc.
<PAGE>
Served as
Director Term
Principal Occupation Since Will
Name and Age and Other or During Expire
Directorships the Period
Directors expected
to be elected by
holders of Series C
Preferred Stock:
Heinrich Chairman and Managing 1992 1999
Baumann-Steiner, 56 Director, Karl
Steiner Holding AG;
Vice Chairman and
Managing Director,
Karl Steiner AG (an
affiliate of Karl
Steiner Holding AG)
A. Gary Fieger, 70 President, Fieger 1992 1999
International and A.
Gary Fieger
Associates, Inc.;
Former President and
Chief Executive
Officer, Hammerson
Property Corporation
Peter K. Steiner, Chairman and Managing 1992 1999
52 Director, Karl
Steiner AG (an
affiliate of Karl
Steiner Holding AG);
Vice Chairman and
Managing Director,
Karl Steiner Holding
AG
__________________________________
(1)Mr. Records was appointed as a Director at the October 10,
1997 Board meeting and accepted on November 6, 1997 filling
the Directorship previously held by Frederick W. Zuckerman.
Mr. Zuckerman passed away on September 20, 1997.
(2)Mr. Fee was appointed as a Director by the Board of Directors
on December 11, 1997 and assigned to the class of Directors
whose term expires in the year 2000.
(3)In keeping with the Company's policy with regard to directors
who are 70 years old or older, although Messrs. Gravette,
Walker and Whitney were elected for three-year terms, each has
committed that he will resign effective at the time of any
Annual Meeting of Stockholders unless the Board of Directors
requests that he serve for the year following that Annual
Meeting of Stockholders.
Non-employee members of the Board of Directors are paid
annual fees of $21,000, plus $1,000 and travel expenses for each
meeting attended. Non-employee chairmen of committees of the Board
of Directors receive additional annual fees of $2,100. All non-
employee Directors also receive stock option grants totaling 4,500
shares each year. Mr. Records, as a Director appointed on October
10, 1997 received only an initial stock option grant of 2,000
shares for 1997 pursuant to the Company's 1992 Stock Option Plan.
Employee members of the Board of Directors do not receive any
directors' fees.
During 1997, the Board of Directors held seven meetings.
Each director attended at least 75% of the meetings of the Board
of Directors and of each Committee of which he was a member.
Effective August 7, 1997, the Board of Directors
terminated the Directors' Retirement Plan (the "Directors' Plan
"). Under the Directors' Plan, each non-employee Director was
entitled to receive, beginning on the later of the person's
seventieth birthday or the time the person ceased to be a
Director, annual benefits equal to the annual fee paid to
non-employee Directors, reduced proportionally to the extent a
Director served for less than five years. Any non-employee
Director who was receiving retirement payments under the
Directors' Plan as of August 7, 1997 is entitled to continue to
receive such retirement payments. Each Director who was a non-
employee Director as of August 7, 1997, but who had not retired
as of that date (the "Eligible Directors"), was granted the right
to receive 11,450 shares of common stock of the Company (the
"Share Right") in lieu of vested retirement benefits under the
Directors' Plan. Mr. Gravette, who was a non-employee Director
from 1981 until 1996, is also entitled to the Share Right. The
Share Right is to be paid on the ninetieth day following the
later of such Eligible Director's seventieth birthday or such
Eligible Director's ceasing to be a Director for any reason.
The Committees of the Board of Directors include an
Executive Committee, a Compensation and Stock Option Committee,
an Audit Committee, and a Committee on Corporate Governance
(formerly the Committee on Directors' Affairs).
The members of the Executive Committee are Messrs.
Gravette (Chairman), Ehlers, Fieger, Moore, Parmelee, and
Whitney. The Executive Committee may exercise the authority of
the Board during the intervals between the meetings of the Board,
except in respect of certain matters specified in the Company's
By-Laws. The Executive Committee met three times during 1997.
<PAGE>
The Compensation and Stock Option Committee, which is
composed of Messrs. Walker (Chairman), Baumann-Steiner, Fieger
and Lomo, approves the salaries of all executive officers of The
Turner Corporation (other than the Chairman and President, whose
salaries are approved by the Board), makes or recommends awards
under the Company's Incentive Compensation Plan and authorizes
the grant of stock options under the Company's stock option
plans. The Compensation and Stock Option Committee also reviews
senior management organizational plans. The Compensation and
Stock Option Committee met four times in 1997.
The Audit Committee, which is composed of Messrs. Lomo
(Chairman), Moore, Records, Steiner, Walker, and Whitney,
recommends the firm of independent public accountants to act as
the Company's independent auditors, confers with the Company's
independent auditors as to the scope of their proposed audit,
reviews the findings and recommendations of the independent
auditors, reviews with the Company's accounting personnel the
auditors' recommendations regarding the Company's financial
controls, procedures and practices, and reviews the Company's
compliance with its operating policy statement. The Audit
Committee met three times during 1997.
The Committee on Corporate Governance (formerly the
Nominating Committee and more recently the Committee on
Directors' Affairs), which is composed of Messrs. Moore
(Chairman), Baumann-Steiner, Ehlers, Walker and Whitney, selects
and recommends nominees for directorships to the Board. Pursuant
to a resolution adopted by the Board in 1989, the Committee, in
nominating members of the Board for reelection, will consider any
material changes which have occurred in their employment
relationships, memberships on other boards and other
circumstances affecting their availability for and participation
in board activities, and any material changes which have occurred
in the Company's business or affairs. The Committee on Corporate
Governance also establishes goals and objectives for the Board of
Directors and the process for reviewing the performance of the
Chief Executive Officer, the full Board and individual Directors.
The Committee on Corporate Governance met three times in 1997.
<PAGE>
As of March 23, 1998, the Company's directors
(including nominees), its five highest compensated executive
officers (including its Chief Executive Officer) and its
directors and officers as a group, beneficially owned the
following numbers of shares of Common Stock of the Company:
Name of Amount and
Beneficial Owner Nature of Percent of Class(6)
Beneficial
Ownership(1)
Heinrich 7,000 (2)
Baumann-Steiner
Walter G. Ehlers 27,000
Robert E. Fee 19,280
A. Gary Fieger 14,700 (3)
Ellis T. Gravette, Jr. 84,070 1.5%
Ralph W. Johnson 21,935
Leif Lomo 10,000
Charles H. Moore, Jr. 8,000
Harold J. Parmelee 69,376 1.3%
G. Jeffrey Records, Jr. 134,165 2.5%
David J. Smith 9,000
Peter K. Steiner 1,627,500 (4) 23.1%(7)
Gordon A. Walker 18,100
John O. Whitney 15,000 (5)
Directors and Officers 2,086,573 (4) 28.9%
as a Group(20 persons)
____________
(1)Includes shares issuable on exercise of currently exercisable
stock options as follows: Robert E. Fee 7,180; Ellis T.
Gravette, Jr. 6,000; Ralph W. Johnson 13,140; Harold J.
Parmelee 48,440; David J. Smith 8,800; G. Jeffrey Records,
Jr., 2,000; all other non-employee Directors, Messrs. Baumann-
Steiner, Ehlers, Fieger, Lomo, Moore, Steiner, Walker and
Whitney 7,000 each and Directors as a group 157,968. Does
not include 844,966 shares of Common Stock issuable on
conversion of Series B ESOP Preferred Stock shares or shares
issuable on exercisable on exercise of options which are not
exercisable prior to 60 days after March 23, 1998.
(2)Does not include 1,000,000 shares of Common Stock issuable on
conversion of Series C Preferred Stock, 600,000 shares of
Common Stock issuable on conversion of Series D Preferred
Stock or 20,500 shares of Common Stock, held by Karl Steiner
Holding AG. Heinrich Baumann-Steiner is the Chairman of Karl
Steiner Holding AG and his wife is the beneficial owner of
50% of the shares of that company.
(3)Includes 3,000 shares owned by A. Gary Fieger Associates,
Inc., of which Mr. Fieger is the President and sole owner.
(4)Includes 1,000,000 shares of Common Stock issuable on
conversion of Series C Preferred Stock, 600,000 shares of
Common Stock issuable on conversion of Series D Preferred
Stock and 20,500 shares of Common Stock, held by Karl Steiner
Holding AG. Peter K. Steiner is the Vice Chairman of Karl
Steiner Holding AG and the beneficial owner of 50% of the
shares of that company.
(5)Includes 8,000 shares held by the Marcia Whitney Trust of
which Mr. Whitney and his wife are co-trustees.
(6)Computed in accordance with Rule 13d-3(c) under the
Securities Exchange Act of 1934. Unless noted, less than 1%.
(7)Assumes that Karl Steiner Holding AG converts all convertible
securities held by it and that no other convertible
securities, including Series B ESOP Preferred Stock, are
converted. If the Series B ESOP Preferred Stock were also
converted, Mr. Steiner's beneficial ownership would be 20.6%.
<PAGE>
The following persons are known by the Company to have
owned beneficially more than 5% of any of the Company's voting
securities as of March 23, 1998.
Name and Address of Amount and
Title of Class Beneficial Owner Nature of Percent of
Beneficial Class
Ownership
Common Stock The Turner Corporation 775,000 14.2%
Employees' Retirement
Plan
375 Hudson Street
New York, New York
10014
Common Stock Granite Capital 399,000 7.3%(1)
126 East 56th Street,
25th Floor
New York City, New York
10022
Common Stock Dimensional Fund 334,432 6.1%(1)
Advisors Inc.
1299 Ocean Avenue
Santa Monica, California
90401
Series B ESOP The Turner Corporation 844,966 100%(1)
Preferred Stock Employee Stock Ownership
Plan
375 Hudson Street
New York, New York
10014
Series C Karl Steiner Holding AG 9,000 100%(2)
Preferred Stock Hagenholzstrasse 60
CH-8050 Zurich
Switzerland
Series D Karl Steiner Holding AG 6,000 100%(2)
Preferred Stock Hagenholzstrasse 60
CH-8050 Zurich
Switzerland
<PAGE>
________________
__________
(1) Information
is based on
Schedules 13D,
13F, or 13G
filed with the
Securities and
Exchange
Commission.
(2)The 9,000
shares of
Series C
Preferred
Stock are
convertible
into
1,000,000
shares of
Common Stock
and the 6,000
shares of
Series D
Preferred
Stock are
convertible
into 600,000
shares of
Common Stock.
Karl Steiner
Holding AG
also owned
20,500 shares
of Common
Stock. Based
on the Common
Stock
outstanding
on March 23,
1998 and
assuming
conversion
solely of the
Series C
Preferred
Stock and
Series D
Preferred
Stock, Karl
Steiner
Holding AG
would have
owned 23.0%
of the
outstanding
Common Stock,
assuming no
conversion of
the Series B
ESOP
Preferred
Stock, and
20.5% of the
outstanding
Common Stock
if all of the
Series B ESOP
Preferred
Stock had
been
converted.
The shares of Series B ESOP Preferred Stock and the
Series D Preferred Stock vote together with the Common Stock on
all matters, including election of directors, with each share of
Series B ESOP Preferred Stock entitled to one vote and each share
of Series D Preferred Stock entitled to 100 votes. The Series B
ESOP Preferred Stock will constitute 12.3% and the Series D
Preferred Stock 8.7% of the shares entitled to vote in the
election of directors. However, as noted above, Karl Steiner
Holding AG, the holder of the Series D Preferred Stock, is
required, pursuant to an agreement with the Company, to vote the
Series D Preferred Stock for directors in the same proportion as
the shares of Common Stock not owned by Karl Steiner Holding AG
or its affiliates are voted for directors.
The holders of the Series C Preferred Stock, voting
separately, are entitled to elect three directors (decreasing to
no directors if the holders of the outstanding Series C Preferred
Stock, in the aggregate, hold less than a specified portion of
the Company's Common Stock on a diluted basis, as determined
pursuant to the terms of the Series C Preferred Stock). While
the holders of the Series C Preferred Stock are entitled to elect
any directors, they cannot vote the Series C Preferred Stock with
regard to directors to be elected by the holders of the Common
Stock. If the holders of the Series C Preferred Stock become no
longer entitled to elect directors as a separate class, they will
be entitled to vote as part of the same class as the Common
Stock, the Series B ESOP Preferred Stock and the Series D
Preferred Stock, and will be entitled to 1,000 votes for each 9
shares of Series C Preferred Stock (a total of 1,000,000 votes
for the entire 9,000 shares). The holders of the Series C
Preferred Stock are at all times
entitled to 1,000 votes for each 9 shares of Series C Preferred
Stock with regard to all matters other than the election of
directors. Peter K. Steiner, who is a director of the Company,
is the Vice Chairman, and the beneficial owner of 50% of the
shares of Karl Steiner Holding AG. Esther Baumann-Steiner, who
is the sister of Peter K. Steiner and the wife of Heinrich
Baumann-Steiner, is the beneficial owner of the other 50% of the
shares of Karl Steiner Holding AG. Mr. Baumann-Steiner, who is a
director of the Company, is the Chairman of Karl Steiner Holding
AG.
A. Gary Fieger owns 35%, and the Company owns 30%, of a
limited liability company which is engaged in building
diagnostics.
Section 16(a) Beneficial Ownership Reporting Compliance
John O. Whitney, a Director of the Company, was late in
filing three reports under Section 16(a) of the Securities
Exchange Act of 1934 (the "Exchange Act"). One of the reports
related to a transfer of 3,000 shares from Mr. Whitney to the
Marcia Whitney Trust on July 29, 1994; the other two were amended
Form 4 reports to show that purchases of 2,000 shares each on
March 11, 1996 and December 6, 1996 had been for the account of
the Marsha Whitney Trust rather than, as originally reported, for
Mr. Whitney's account.
A. Gary Fieger, a Director of the Company, was 2 days
late in filing one Form 4 report with the Securities and Exchange
Commission regarding a purchase of 1,700 shares on December 16,
1997.
In March 1998, G. Jeffrey Records, a Director of the
Company, filed one amended Form 5 report to indicate the receipt
from the Company of an option to purchase 2,000 shares of Common
Stock.
<PAGE>
REMUNERATION OF EXECUTIVE OFFICERS
The following table sets forth the annual
compensation, long-term compensation and all other
compensation during each of the three years ended December 31,
1997, for the Company's chief executive officer and for the
four additional most highly compensated executive officers for
the year ended December 31, 1997.
SUMMA
RY
COMPE
NSATI
ON
TABLE
Annual Long-Term Compensation
Compen
sation
Awards
Securities All
Restricted Underlying Other
Name and Stock Options/ Compen
Principa Salary Bonus Award(s) SARs (1) sation
l Year ($)(2) ($)(3) ($)(4) (#) ($)
Position (5)
Ellis T. 1997 625,00 180,000 1,828,125 112,500 1,720
Gravette 1996 0 0 0 1,000 0
, Jr. 259,09
(6) 1
Chairman
and
Chief
Executiv
e
Officer
Harold 1997 375,20 90,000 0 7,000
J. 1996 0 0 0 3,000 8,651
Parmelee 1995 367,70 0 0 3,000
Presiden 0 6,865
t and 343,95
Chief 0 22,406
Operatin
g
Officer
Robert 1997 314,23 90,000 10,110
E. Fee 1996 0 0 0 1,500 5,829
Presiden 1995 255,83 40,000 1,500
t and 3 0 5,128
Chief 230,82
Operatin 5 0 5,217
g
Officer,
Turner
Construc
tion
Company
David J. 1997 229,17 40,000 0 8,350
Smith 1996 5 0 0 1,500 4,368
Senior 1995 219,59 0 0 1,500
Vice 2 2,947
Presiden 205,82
t, and 5 3,786
Chief
Administ
rative
Officer
Ralph W. 1997 219,15 60,000 0 2,430
Johnson 1996 0 0 1,500 5,723
Senior 1995 202,37 0 0 1,500
Vice 5 4,296
Presiden 184,00 0
t 0 2,726
________________
(1) The Company has not granted any stock appreciation
rights.
(2)Until 1995, the annual salaries of all staff employees, other
than officers, included a holiday supplement equal to 1/2
month's pay.
Effective in 1995, officers also received this automatic
addition to their annual pay.
(3) Represents bonuses under the Incentive Compensation
Plan.
(4) Mr. Gravette received a grant of 112,500 Restricted Stock
Units ("RSUs"), pursuant to action of the Board on August 7,
1997. In March 1998, the Board authorized the immediate
distribution to Mr. Gravette of the 112,500 shares of Common
Stock subject to the RSUs. In conjunction with this
distribution, 42,930 shares were withheld to satisfy tax
withholding requirements. At December 31, 1997 the RSUs had
a total value of $2,967,188. Each RSU entitled Mr.
Gravette to one share of Common Stock.
(5)Includes matching contributions by the Company to its 401(k)
plan which in 1997 were $2,188, $2,388, $2,388 and $2,225
for Messrs. Parmelee, Fee, Smith and Johnson respectively;
allocations under the Company's Employee Stock Ownership
Plan which in 1997 were 59, 115, 111, 68 and 106 shares
valued at $1,720, $3,355, $3,239, $1,980 and $3,077 to
Messrs. Gravette, Parmelee, Fee, Smith and Johnson,
respectively, and the interest earned, calculated at 4.5%,
on the supplemental retirement accounts which in 1997 for
Messrs. Parmelee, Fee and Johnson was $3,108, $202 and $421,
respectively. Mr. Gravette did not participate in the 401
(k) plan and Messrs. Gravette and Smith were not eligible
for the supplemental retirement benefits.
(6)Mr. Gravette was employed by the Company effective August
9, 1996.
<PAGE>
The following table sets forth certain information with regard
to options granted during the fiscal year ended December 31, 1997
and potential realizable values. No stock appreciation rights (SARs)
were granted during that year.
OPTION/SAR GRANTS IN LAST
FISCAL YEAR
Individual Grants
(1)(2)
Number
of Percent
Securit of Total Exerc
ies Options/ ise
Underly SARs or Mark Expir
ing Granted Base et ation
Name Options to Price Pric Date
/SARs Employee ($/Sh e(3)
Granted s )(2)
(#) in
Fiscal
Year
Ellis T. 112,500 30.18% $16.1 8/06/
Gravette, Jr. 25 $16. 07
125
Harold J. 1.89% $11.0 $14. 5/09/
Parmelee 7,030 92 000 07
Robert E. Fee 2.71% $11.0 $14. 5/09/
10,110 92 000 07
David J. Smith 2.24% $11.0 $14. 5/09/
8,350 92 000 07
Ralph W. 0.65% $11.0 $14. 5/09/
Johnson 2,430 92 000 07
(1)Mr. Gravette's options become fully exercisable on the
second anniversary of the grant date or earlier upon a
"change in control."
(2)The options granted in 1997 to Messrs. Parmelee, Fee, Smith
and Johnson were priced at 85% of the average of the mean of
the high and low prices on the 20 trading days preceding the
grant date and are not exercisable until the third
anniversary of the grant date or earlier upon a "change in
control."
(3)Market price on grant dates.
The following table sets forth certain information
with regard to exercises of options during 1997 and options
held at December 31, 1997. No SARs have been granted by
the Company.
Potential
Realizable
Value
at Assumed
Name Annual
Rates
of Stock
Price
Appreciatio
n
For Option
Term
0% 5% 10%
($)(3 ($) ($)
)
Ellis T. n/a $1,14 $2,891
Gravette, Jr. 0,862 ,070
Harold J.
Parmelee $20,4 $82,3 $177,2
43 40 95
Robert E. Fee
$29,3 $118, $254,9
40 414 72
David J. Smith
$24,2 $97,8 $210,5
82 00 85
Ralph W.
Johnson $7,06 $28,4 $61,28
6 62 4
note!! footnotes for
this table are the last
row of the table!!
AGGREGATED OPTION/SAR
EXERCISES IN LAST
FISCAL YEAR AND FISCAL
YEAR-END
OPTION/SAR VALUES
Number of
Securities
Underlying Value of
Unexercised Unexercised
Options/SARs in-the-Money
at Options/SARs
Fiscal Year- at Fiscal Year-
End End (1) ($)
(#)
Share
s Value Exercisable(E Exercisable(E)/
Name Acqui Realize )/ Unexercisable
red d ($) Unexercisable (U)
on ( U)
Exerc
ise
(#)
Ellis T. ___ ___ 6,000 (E) $99,003
Gravette, Jr. 112,500 (U) (E)
1,153,125 (U)
Harold J. ___ ___ 52,940 (E) $777,432 (E)
Parmelee 7,030 (U) 107,439
(U)
Robert E. Fee 12,10 157,169 7,180 (E) $84,935 (E)
0 10,110 (U) 154,511 (U)
David J. Smith ___ ___ 8,800 (E) $161,806 (E)
8,350 (U) 127,614 (U)
Ralph W. 3,500 28,687 13,140 (E) $192,401 (E)
Johnson 2,430 (U) 37,138
(U)
(1)Includes only those options whose exercise prices are lower
than the closing price of $26.375 on December 31, 1997.
Change In Control Arrangements
The Company or its subsidiaries have entered into
change of control agreements with a number of their executive
officers, including the executive officers named above other than
Mr. Gravette. These agreements expire on November 25, 2000 and
will be automatically extended for one year each on each November
25 thereafter unless the Company shall have given written notice
to the executive officer at least ninety days prior to the
expiration date. They provide that in the event of "termination"
(as defined) of an executive's employment after a "change of
control" (as defined) of the Company, the executive will be
entitled to receive a lump sum payment equal to 2.99 years' (in
the case of six senior executives including Messrs. Parmelee, Fee
and Smith) or one year's (in the case of other executives
including Mr. Johnson) compensation, including average bonus, as
well as continued eligibility for certain employee welfare
benefits. Options granted under the 1997 Stock Option Plan also
become immediately exercisable in the event of a change in
control.
Retirement Plans
Until March 31, 1991, the Company had an Employees'
Retirement Plan (the "Retirement Plan"), a Supplemental Executive
Defined Benefit Retirement Plan, and a Defined Benefit Retirement
Equalization Plan under which an employee would receive
retirement benefits under a formula based upon years of service,
salary during the years preceding retirement and the Social
Security wage base. Effective March 31, 1991, the Company
curtailed these Retirement Plans so that no years of service or
salary past that date would be considered in determining
retirement benefits. This froze the benefits employees who
continued working for the Company past March 31, 1991 will
receive under these Retirement Plans. The annual benefits Messrs.
Parmelee, Fee and Johnson will receive under the Retirement Plan,
the Supplemental Executive Defined Benefit Retirement Plan and
the Defined Benefit Retirement Equalization Plan, assuming
retirements at age 65, will be $131,730, $87,034, and $85,594,
respectively. Mr. Gravette and Mr. Smith were employed after
March 31, 1991.
<PAGE>
Effective April 1, 1991, the Company instituted a new
defined contribution plan, the Employee's Retirement Income Plan
(the "Income Plan"), to replace the Retirement Plan. Effective
December 31, 1993, the Company froze the benefits under the
Income Plan. There will be no further contributions to the Income
Plan. The lump sum benefits (as of January 31, 1995) that Messrs.
Parmelee, Fee and Johnson had accrued under the Income Plan were
$51,986, $51,466 and $50,582, respectively. Mr. Gravette and Mr.
Smith were not eligible for the Income Plan. The Income Plan
benefits were transferred to the Tax Deferred Savings Plan,
401(k), as of February 1, 1995.
The Income Plan lump sum benefits (shown above) do not
include the non-qualified Supplemental Plan benefits associated
with the Income Plan which are to date for Mr. Parmelee, Mr. Fee
and Mr. Johnson $72,194, $4,693 and $ 9,785, respectively.
Effective January 1, 1994, the Company introduced the
Employees' Cash Balance Retirement Plan (the "Cash Balance
Plan"), a defined benefit plan. Amounts allocated to their
respective accounts under the Cash Balance Plan during 1997 for
Messrs. Gravette, Parmelee, Fee, Smith and Johnson were $56,996,
$54,372, $44,222, $16,132 and $31,677, respectively. The
estimated lump sum benefits Messrs. Parmelee, Fee, Smith and
Johnson, will receive under the Cash Balance Plan, assuming no
change in their current salary levels, a fixed rate of return of
4.5% and retirement at age 65 will be $488,520, $319,505, $203,051
and $271,012, respectively. Mr. Gravette will receive the value
of his account which is currently $56,996 plus interest accrued
until his retirement date.
Compensation Committee Interlocks and Insider Participation
Mr. Heinrich Baumann-Steiner who is a member of the
Compensation Committee is chairman of Karl Steiner Holding AG.
Karl Steiner Holding AG acquired the 9,000 shares of
Series C Preferred Stock from the Company in July 1992 for $9
million. At the same time, it acquired 6,000 shares of Series D
Preferred Stock from the Company for $6 million. Shortly
thereafter it exercised a contractual right to exchange the
Series D Preferred Stock for an 8.5% Convertible Debenture of the
Company in the principal amount of $6 million. Prior to the
maturity of this Debenture in July of 1997, Karl Steiner Holding
AG converted it into 6,000 shares of Series D Preferred Stock. In
connection with the July 1992 transaction, Karl Steiner Holding
AG and the Company also executed an agreement which gives each of
them options under certain circumstances to purchase or sell
Preferred Stock or Common Stock from or to the other of them.
<PAGE>
Karl Steiner Holding AG and the Company each own 50% of
Turner Steiner International S.A. and Turner Steiner
International, LLC. (jointly referred to as "TSI"), entities
formed to engage in construction-related activities in most of
the world, other than North and Central America, Switzerland,
Germany and France. During 1997, the Company made employees and
space available to TSI for which the Company was reimbursed, the
Company guaranteed obligations of TSI with regard to a
construction contract, letters of credit and a line of credit,
and the Company from time to time made working capital loans to
TSI (at December 31, 1997, the outstanding balance of these
loans, including the balance from prior years and accrued
interest, was $7,956,769). These guarantees and loans were
matched by Karl Steiner Holding AG.
COMPENSATION COMMITTEE REPORT
To the Shareholders of The Turner Corporation
The purpose of this report is to describe the
compensation policies applied by the Compensation Committee of
the Board of Directors of The Turner Corporation with regard to
the Company's executive officers and the basis for the
compensation of Ellis T. Gravette, Jr., the Chief Executive
Officer of the Company, for the year ended December 31, 1997.
In 1989, the Compensation Committee and the management
of the Company undertook a review of the Company's policies for
compensating its senior executives. With the approval of the
Compensation Committee, the Company hired Towers Perrin to assist
in this review. Representatives of Towers Perrin worked with the
management to develop possible compensation programs, and then
met privately with the Compensation Committee to discuss them.
As a result of the review, the Compensation Committee
recommended, and the Board of Directors adopted, a four pronged
compensation program, designed to reward senior executives for
both long term and short term achievements on behalf of the
Company and its stockholders. Subsequently, one of the four
prongs, the Stockholder Gain Award, terminated. Accordingly,
there are now three elements to the compensation program for
senior executives, which are:
Base Salary the fundamental compensation to
a senior executive for fulfilling his or her job
responsibilities.
Executive Incentive Compensation Plan a
reward for achieving or exceeding corporate and
individual goals established with regard to each senior
executive at the beginning of each year payable in
either cash or stock. In 1997, the Company ceased
granting awards under the Executive Incentive
Compensation Plan and adopted a new Incentive
Compensation Plan (the "ICP"), which authorizes
payments of awards to executive officers and other
designated employees of the Company solely in cash.
Stock Options stock options enable key
employees to profit from increases in the price of the
Company's stock. The Company has had stock option plans
since its shares first were sold to the public in 1969.
However, in connection with the 1989 review, it was
decided that stock options would be awarded uniformly
to all officers of the Company and its subsidiaries
holding similar positions.
In March 1997, the Compensation Committee accepted
management's recommendation to amend the Stock Option program by
placing more emphasis on granting options based on promotions and
performance rather than to provide stock awards on a once a year
"shotgun" approach to all officers. Towards that end, the
Committee approved a Performance Based Bonus Compensation Plan
designed to offer stock based incentives at the business unit
level by rewarding successful performers based on measurable
accomplishments. In conjunction with this new plan, the Committee
recommended to the board, on management's recommendation, the
adoption of the 1997 Non-Qualified Stock Option Plan. The options
granted under this plan become exercisable on the third
anniversary of the grant date and will have a term of 10 years
except that the Committee has the discretion to grant options
with different vesting periods and for different terms as it
determines which cannot exceed 10 years.
Each year the Compensation Committee reviews
recommendations from management as to base salaries of senior
executives (other than the Chief Executive Officer and the
President), total awards to senior executives and other
designated employees under the ICP, and numbers of stock options
to be awarded to executives in particular positions. It then
makes recommendations to the entire Board as to the following
year's salaries of the Chief Executive Officer and of the
President, the total amount (as a percentage of the Company's
earnings) to be awarded under the ICP and the
portions of that total amount to be allocated to the Chief
Executive Officer and the President. In addition, it determines,
without action of the Board, the following year's salaries of
senior executives other than the Chief Executive Officer and the
President, and the portion of the total amount awarded under the
ICP to be allocated to each of those senior executives. In 1997,
the Compensation Committee reviewed with management the policies
regarding compensation of senior executives. It discussed
possible types of bonuses for executives who had rendered
outstanding service, but ultimately left it to management to
determine the form these bonuses would take. It approved
promotions recommended by management and management's
recommendations regarding stock options. It also approved
management's recommendations regarding 1997 salaries for senior
executives. In doing this, the Compensation Committee reaffirmed
that management is principally responsible for compensation
decisions, except with regard to the Chief Executive Officer and
the President. Consistent with this, it authorized management to
make any changes it deemed appropriate in salaries which had not
been presented to the Compensation Committee. The Compensation
Committee expressed general approval of the fact that recommended
salary increases were based on individuals' performance, not
solely on the positions held by them.
The Compensation Committee reviewed and recommended to
the Board of Directors approval of a revised form of Change of
Control Agreement to be entered into with senior executives when
the then current agreements expired in November of 1997. The new
agreements expire on November 25, 2000 and will be automatically
extended for one year each November 25 thereafter unless the
Company shall have given written notice to the executive officer
at least ninety days prior to the expiration date.
In its discussion of the compensation for the Chief
Executive Officer, the Committee decided that it was in the best
interest of the Company and its stockholders to secure the
continued services of Mr. Gravette as Chief Executive Officer.
The Committee recommended that the Board grant Mr. Gravette an
option to purchase 112,500 shares of Common Stock under the 1997
Non-Qualified Stock Option Plan and a grant of 112,500
Restricted Stock Units. In March 1998, the Compensation
Committee recommended to the Board for approval the immediate
distribution to Mr. Gravette of the 112,500 shares of Common
Stock subject to the Restricted Stock Units. In conjunction with
this distribution, 42,930 shares were withheld to satisfy tax
withholding requirements.
Section 162(m) of the Internal Revenue Code places a
limit on the amount of certain types of compensation for the
chief executive officer and each of the four other most highly
compensated executive officers which may be tax deductible by the
Company. The Company's policy is, primarily, to design and
administer compensation plans which support the achievement of
the Company's objectives and enhance stockholder value. Where it
is consistent with this compensation philosophy, the Compensation
Committee will also take into consideration structuring
compensation programs that are tax deductible by the Company. The
stock option, stock appreciation rights and performance award
provisions of the 1998 Stock Incentive Plan that is being
submitted to shareholders at the 1998 Annual Meeting have been
designed so that compensation attributable to such awards can
qualify as "performance based compensation" for purposes of
Section 162(m) and consequently be tax deductible.
GORDON A. WALKER
A. GARY FIEGER LEIF LOMO
HEINRICH BAUMANN-STEINER
<PAGE>
The Turner Corporation
Comparison of Five-Year Cumulative Return
Turner vs. AMEX and Construction Peer Group
Cumulative Total Return
12/92 12/93 12/94 12/95 12/96 12/97
The Turner Corporation 100 109 114 116 141
364
AMEX Market Value Index 100 120 109 137 146 177
Construction Peer group 100 98 105 118 110 115
Companies in Peer Groups weighted by market
capitalization: indexed to 100 at December 31, 1992.
Dividends reinvested over period.
The Turner Corporation has one active
business segment: Construction. The Construction Peer
Group is made up of companies with market
capitalization of not more than $500 million who are
engaged primarily in providing construction/
engineering services for business sectors other than
home building and infrastructure: Guy F. Atkinson of
California, Michael Baker Corp., Perini Corp., and
Stone & Webster Inc. The Construction Peer Group has
dropped CRSS Inc., which no longer meets the group
criteria.
Until 1996, the chart included a Real Estate
Peer Group. Since the Company has substantially
reduced its real estate holdings over the past five
years and its real estate holdings no longer have
significant impact on the Company's earnings, the
Company decided it would no longer be relevant to
compare the Company to a Real Estate Peer Group.
PROPOSAL FOR ADOPTION OF 1998 STOCK INCENTIVE PLAN
The Turner Corporation 1998 Stock Incentive Plan
General
On March 13, 1998, the Company's Board of
Directors adopted, subject to the approval of the Company's
stockholders at the Annual Meeting, The Turner Corporation 1998
Stock Incentive Plan (the "Plan") in order to (i) attract and
retain valuable personnel and (ii) provide additional incentive
and reward opportunities to current employees and directors to
encourage them to enhance the profitable growth of Company. The
Plan provides for the granting of options, stock appreciation
rights, dividend equivalent rights, restricted stock, performance
units and performance shares to employees, officers, consultants,
advisors and directors of the Company and its Subsidiaries.
The principal provisions of the Plan are
summarized below. This summary, however, does not purport to be
complete and is qualified in its entirety by reference to the
Plan which has been filed as an exhibit to this Proxy Statement.
All capitalized terms used below have the meanings set forth in
the Plan, unless otherwise indicated.
Description of The Plan
Administration. The Plan will be administered by a
committee consisting of at least two directors of the Company,
each of whom will be a "nonemployee director" within the meaning
of Rule 16b-3 promulgated under Section 16(b) of the Exchange
Act. To the extent necessary for any Option or Award to qualify
as performance-based compensation under Section 162(m) of the
Code, each member of the Committee will be an "outside director"
within the meaning of Section 162(m) of the Code. The Committee
will (i) select those individuals to whom Options and Awards will
be granted, and (ii) determine the type, the size and the terms
and conditions of Options and Awards, the vesting provisions of
restricted stock and Options, and the restrictions or performance
criteria relating to restricted stock, performance units and
performance shares. The Committee will also construe and
interpret the Plan.
<PAGE>
Shares. The maximum number of Shares that may be made
the subject of Options and Awards granted under the Plan is
500,000. The maximum number of Shares with respect to which
Options and Awards may be granted to any individual in any three
calendar year period is 250,000. The maximum dollar amount of
cash or the Fair Market Value of Shares that may be granted to
any individual in any calendar year with respect to Performance
Units denominated in dollars may not exceed $500,000. In the
event of any Change in Capitalization, however, the Committee may
adjust the maximum number and class of Shares with respect to
which Options and Awards may be granted, the number and class of
Shares which are subject to outstanding Options and Awards and
the exercise price therefor. If any Option is exercised by
tendering Shares, either actually or by attestation, to the
Company as full or partial payment of the exercise price, the
number of Shares tendered will be added back to the number of
Shares available under the Plan. In addition, if any Award is
canceled, is settled in cash (including the settlement of tax
withholding obligations using Shares) or expires or terminates
without having been exercised, the Shares subject to that Option
or Award again become available for grant under the Plan.
Eligibility. Any of the Company's or its Subsidiaries'
employees, officers, consultants, advisors or directors
designated by the Committee as eligible to receive Options or
Awards are eligible to participate in the Plan (each an "Eligible
Individual").
Options. Pursuant to the Plan, the Committee will
grant to each non-employee director of the Company (an "Eligible
Director") nonqualified stock options ("Director Options") to
purchase 3,500 Shares on August 7th in each year (or the first
Trading Day thereafter if August 7th is not a Trading Day), if
such Eligible Director continues to serve on the Board as of such
date. The per share exercise price of the Director Options is
equal to 100% of the Fair Market Value of the Shares on the date
the option is granted. The Director Options will be exercisable
with respect to 100% of the underlying Shares at any time after
the date on which they were granted. The Director Options will
have a ten-year term but may expire earlier upon a director
ceasing to serve as a director.
In addition, the Committee may grant Nonqualified Stock
Options and Incentive Stock Options to any Eligible Individual.
The per share exercise price of the Options is fixed by the
Committee when the Options are granted and must be no less than
85% of the average of the Fair Market Value on the 20 Trading
Days prior to the date the Option is granted. In the case of an
Incentive Stock Option, the per share exercise price must be at
least 100% of the Fair Market Value of the Shares on the date the
Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder). Notwithstanding the above,
the per share exercise price of Options granted to an Eligible
Individual who is a Director of the Company and not an employee
must be no less than 100% of the Fair Market Value of the Shares
on the date the Option is granted.
Each Option (other than a Director Option) will be
fully vested and exercisable with respect to 100% of the
underlying Shares on the third anniversary of the date on which
they were granted, unless as otherwise determined by the
Committee at the time of grant and as provided for in the
Agreement evidencing the grant. All outstanding Options will
become fully exercisable upon a Change in Control (as defined in
the Plan). In addition, the Committee reserves the authority to
accelerate the exercisability of any Option (other than a
Director Option). Each Option terminates at the time determined
by the Committee, except that the term of each Option may not
exceed ten years (five years in the case of an Incentive Stock
Option granted to a Ten-Percent Stockholder); provided, however,
that the Committee may and in the case of a Director Option shall
provide that an Option (other than an Incentive Stock Option)
may, upon the death of the Optionee, be exercised for up to one
(1) year following the date of the Optionee's death even if such
period extends beyond ten (10) years from the date the Option is
granted. Options are not transferable by the Optionee except by
will or the laws of descent and distribution or pursuant to a
domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act) and may be exercised during
the Optionee's lifetime only by the Optionee or the Optionee's
guardian or legal representative. Notwithstanding the foregoing,
the Committee may set forth in the Agreement evidencing an Option
(other than an Incentive Stock Option) at the time of grant or
thereafter, that the Option may be transferred to members of the
Optionee's immediate family, to trusts solely for the benefit of
such immediate family members and to partnerships in which such
family members and/or trusts are the only partners. In the
<PAGE>
discretion of the Committee, the exercise price for Shares
acquired pursuant to the exercise of an Option may be paid (i) in
cash, (ii) by transferring Shares (either actually or by
attestation) to the Company, or (iii) by a combination of the
foregoing. Further, the Committee may permit Optionees to elect
to defer the issuance of Shares upon the exercise of Options
granted pursuant to the Plan.
Stock Appreciation Rights. The Plan permits the
granting of stock appreciation rights to employees of the Company
or its Subsidiaries in connection with an Option or as a
freestanding right. A stock appreciation right permits the
Grantee to receive, upon exercise of the stock appreciation
right, cash and/or Shares, at the discretion of the Committee,
equal in value to the excess, if any, of the then per Share Fair
Market Value over the per Share Fair Market Value on the date the
stock appreciation right was granted, multiplied by the number of
Shares as to which the stock appreciation right is being
exercised. When a stock appreciation right is granted, however,
the Committee may establish a limit on the maximum amount the
Optionee may receive upon exercise of the stock appreciation
right. A stock appreciation right granted in connection with an
Option shall be exercisable at such time or times and only to the
extent that the related Options are exercisable. The Committee
will decide, when each freestanding stock appreciation right is
granted, the time or times when the stock appreciation right will
be exercisable. However, the Committee reserves the authority to
thereafter accelerate the exercisability of any stock
appreciation right.
Dividend Equivalent Rights. Dividend equivalent rights
may be granted to Eligible Individuals and Eligible Directors in
tandem with an Option or Award or as a separate Award. The terms
and conditions applicable to each dividend equivalent right shall
be specified in the Agreement under which the dividend equivalent
right is granted. Amounts payable in respect of dividend
equivalent rights may be payable currently or deferred until the
lapsing of restrictions on such dividend equivalent rights or
until the vesting or other lapse of restrictions on the Option or
Award to which the dividend equivalent rights relate. Dividend
equivalent rights may be settled in cash or Shares or a
combination thereof.
<PAGE>
Restricted Stock. Restricted Stock Awards may be
granted by the Committee to Eligible Individuals and the
Committee will determine, when each Restricted Stock Award is
made, the terms of the Restricted Stock Award, including the
price, if any, to be paid by the Grantee for the restricted
stock, the restrictions placed on the Shares and the time or
times when the restrictions will lapse. Unless the Committee
shall determine otherwise at the time of the grant of an Award of
Restricted Stock, the restrictions upon Shares of Restricted
Stock shall lapse upon a Change in Control.
Performance Units and Performance Shares. Performance
Units and Performance Shares will be awarded as the Committee may
determine, and the vesting of Performance Units and Performance
Shares will be based upon the Company's attainment of specified
performance objectives within the Performance Cycle. Performance
Objectives and the length of the Performance Cycle for
Performance Units and Performance Shares will be determined by
the Committee when the Award is made. Performance Objectives may
be expressed in terms of (i) earnings per Share, (ii) Share
price, (iii) pre-tax profits, (iv) net earnings, (v) return on
equity or assets or (vi) any combination of the foregoing.
Performance Objectives may be in respect of the performance of
the Company, any of its Subsidiaries, any of its Divisions or any
combination thereof. Performance Objectives may be absolute or
relative (to prior performance or to the performance of one or
more other entities or external indices) and may be expressed in
terms of a progression within a specified range. The Agreements
evidencing Awards of Performance Units and Performance Shares
will set forth the terms and conditions of the Awards, including
those applicable in the event of the Grantee's termination of
employment or a Change in Control. Performance Units may be
denominated in dollars or in Shares, and payments in respect of
vested Performance Units will be made in cash or Shares or any
combination of the foregoing, as determined by the Committee.
Amendment and Termination. The Plan will terminate
on March 12, 2008, the day before the tenth anniversary of its
adoption. The Board may sooner terminate the Plan and the
Board may at any time and from time to time amend, modify or
suspend the Plan; provided, however, that: (i) no such
amendment or termination of the Plan may adversely affect any
Options or Awards theretofore granted under the Plan, without
<PAGE>
the consent of the Optionee or Grantee; and (ii) to the extent
necessary under any applicable law, no amendment will be
effective unless approved by the stockholders of the Company. No
modification of an Option or Award shall adversely affect any
rights or obligations under the Option or Award without the
consent of the Optionee or Grantee.
Options To Be Granted To Certain Individuals And Groups
As of the date of this Proxy Statement, no grants have
been made under the Plan and the Committee has no immediate
intention or plans to make any grants. Presently there are
approximately 80 Eligible Individuals and 12 Eligible Directors
(as such terms are defined in the Plan) who could qualify to
participate in the Plan. Because adoption of the Plan is subject
to stockholder approval and because the granting of Options and
Awards will be entirely within the discretion of the Committee
and the Board of Directors in the case of the Chief Executive
Officer, it is not possible to determine the employees, directors
and other persons to whom Options or Awards will be granted under
the Plan or the number of Shares or value of dollar-denominated
grants to be covered by such Options and Awards.
Certain Federal Income Tax Consequences Relating to Awards Under
the Plan
Incentive Stock Option ("ISO"). In general, an
Optionee will not recognize taxable income upon the grant or
exercise of an ISO, and the Company and its subsidiaries will not
be entitled to any business expense deduction with respect to the
grant or exercise of an ISO. (However, upon the exercise of an
ISO, the excess of the Fair Market value on the date of exercise
of the shares received over the exercise price of the option will
be treated as an adjustment to alternative minimum taxable
income.) In order for the exercise of an ISO to qualify as an
ISO, an Optionee generally must be an employee of the Company or
a subsidiary (within the meaning of Section 422 of the Code) from
the date the ISO is granted through the date three months before
the date of exercise (one year preceding the date of exercise in
the case of an Optionee whose employment is terminated due to
disability). The employment requirement does not apply where an
Optionee's employment is terminated due to his or her death.
If an Optionee has held the shares acquired upon
exercise of an ISO for at least two years after the date of grant
and for at least one year after the date of exercise, when the
Optionee disposes of the shares, the difference, if any, between
the sales price of the shares and the exercise price of the
option will be treated as long-term capital gain or loss subject
to reduced rates of tax, provided that any gain will be subject
to further reduced rates of tax if shares are held for more than
eighteen months after the date of exercise. If an Optionee
disposes of the shares prior to satisfying these holding period
requirements (a "Disqualifying Disposition"), the Optionee will
recognize ordinary income (treated as compensation) at the time
of the Disqualifying Disposition, generally in an amount equal to
the excess of the Fair Market value of the shares at the time the
option was exercised over the exercise price of the option. The
balance of the gain realized, if any, will be short-term or long-
term capital gain, depending upon whether the shares have been
held for at least twelve months after the date of exercise, with
the lowest capital gain rates available if shares are held for
more than eighteen months after the date of exercise. If the
Optionee sells the shares in a Disqualifying Disposition at a
price below the Fair Market value of the shares at the time the
option was exercised, the amount of ordinary income (treated as
compensation) will be limited to the amount realized on the sale
over the exercise price of the option. In general, if the
Company and its Subsidiaries comply with applicable income
reporting requirements, the Company and its Subsidiaries will be
allowed a business expense deduction to the extent an Optionee
recognizes ordinary income.
Nonqualified Stock Option. In general, an Optionee who
receives a nonqualified stock option will recognize no income at
the time of the grant of the option. In general, upon exercise
of a nonqualified stock option, an Optionee will recognize
ordinary income (treated as compensation) in an amount equal to
the excess of the Fair Market value of the shares on the date of
exercise (or in the case of an Optionee who has timely elected to
defer the issuance of Shares upon exercise of an Option, the date
of issuance of the Shares) over the exercise price of the option.
The basis in shares acquired upon exercise of a nonqualified
stock option will equal the Fair Market value of such shares at
the time of exercise, and the holding period of the shares (for
capital gain purposes) will begin on the date of exercise. In
general, if the Company and its Subsidiaries comply with
applicable income reporting requirements, they will be entitled
to a business expense deduction in the same amount and at the
same time as the Optionee recognizes ordinary income. In the
event of a sale of
the shares received upon the exercise of a nonqualified stock
option, any appreciation or depreciation after the exercise date
generally will be taxed as capital gain or loss, provided that
any gain will be subject to reduced rates of tax if the shares
were held for more than twelve months and will be subject to
further reduced rates if the shares were held for more than
eighteen months.
Special rules may apply with respect to persons who may
be subject to Section 16(b) of the Exchange Act. Optionees who
are or may become subject to Section 16 of the Exchange Act
should consult with their own tax advisors in this regard.
Generally, if an Optionee delivers previously owned
shares to pay the exercise price, no gain or loss will be
recognized in respect of the shares delivered, and there will be
a carryover basis and holding period for a like number of shares
acquired. If the option being exercised is an ISO and the shares
delivered were acquired upon exercise of an ISO and are delivered
prior to satisfaction of the ISO holding period requirements
described above, the delivery of shares will constitute a
Disqualifying Disposition as to which the rules described above
will apply. If the option being exercised is a nonqualified
stock option, ordinary income (treated as compensation) will be
recognized only on the additional shares acquired and will be
equal to the Fair Market value of the shares on the date of
exercise less any additional cash paid. Special rules apply in
computing the amount and character of an Optionee's income (or
loss) upon the subsequent sale of shares acquired upon the
exercise of an ISO where the exercise price is paid by the
delivery of previously owned shares.
Excise Taxes. Under certain circumstances, the
accelerated vesting or exercise of options in connection with a
Change in Control might be deemed an "excess parachute payment"
for purposes of the golden parachute tax provisions of
Section 280G of the Code. To the extent it is so considered, an
Optionee may be subject to a 20% excise tax and the Company and
its Subsidiaries may be denied a tax deduction.
Section 162(m) of the Internal Revenue Code generally
disallows a federal income tax deduction to any publicly-held
corporation for compensations paid in excess of $1 million in any
taxable year to the chief executive officer or any of the four
other most highly compensated executive officers who are employed
by the Company on the last day of the taxable year, but does not
disallow a deduction for qualified "performance-based
compensation," the material terms of which are disclosed to and
approved by stockholders. The Company has structured the Plan
with the intention that compensation resulting from awards of
options, stock appreciation rights, performance shares and
performance units may qualify as "performance-based compensation"
and, if so qualified, would be deductible.
Adoption of this proposal requires the affirmative vote
of a majority of the voting power of the shares of Common Stock,
Series B ESOP Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock represented in person or by proxy, and
entitled to vote on the matter at the Annual Meeting.
Abstentions will be considered shares present and entitled to
vote and, accordingly, will have the same effect as a vote
against this proposal. Broker non-votes will not be considered
as present and entitled to vote and, accordingly, will have no
effect on the vote with respect to the proposal.
Proxies will be voted FOR approval of the Plan unless otherwise
specified in the proxy. The Board of Directors recommends that
stockholders vote FOR this proposal.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP was appointed by the Board of
Directors, with the recommendation of the Audit Committee, as
independent public accountants to audit the accounts of the
Company and its subsidiaries for 1997. A representative of
Arthur Andersen LLP is expected to be present at the annual
meeting and will have an opportunity to make a statement if he or
she desires to do so. That person will be available to answer
appropriate questions.
Arthur Andersen LLP rendered the following services to
the Company in 1997: reading of unaudited quarterly financial
information, assistance and consultation in connection with
filings with the Securities and Exchange Commission and with
various other governmental and regulatory agencies, consultation
in connection with various tax and audit-related accounting
matters, contract audit and tax services.
GENERAL
The enclosed proxy is solicited by the Board of
Directors of The Turner Corporation to be voted at the 1998
Annual Meeting of Stockholders. All shares represented by
proxies delivered prior to the meeting will be voted in the
manner specified on the proxies. If no vote is specified, and
the proxy does not show that the stockholder wants to abstain or
that for any other reason the shares are not to be voted, proxies
will be voted for the nominees for directorships named above and
in favor of the adoption of the 1998 Stock Incentive Plan. Any
stockholder who signs and returns a proxy may revoke it at any
time prior to the vote by notifying the Secretary in writing. A
vote in person at the meeting will revoke a proxy as to the
matters voted upon. However, the presence of a stockholder at the
meeting will not revoke a proxy as to matters on which the
stockholder does not vote in person.
The Board of Directors has no reason to believe that
any nominee for a directorship will be unable to serve if
elected. If any nominee should become unable to serve, proxies
may be voted for the election of another person designated by the
Board of Directors.
The Board of Directors knows of no other matters which
may be presented for stockholder action at the meeting. If other
matters do properly come before the meeting, the persons named in
the proxies will have authority to vote in accordance with their
judgment.
Stockholders of record at the close of business on
March 23, 1998 will be entitled to vote at the meeting. At the
close of business on March 23, 1998, the Company had outstanding
5,446,949 shares of Common Stock, 844,966 shares of Series B ESOP
Preferred Stock, 6,000 shares of Series D Preferred Stock
(convertible into 600,000 shares of Common Stock) and 9,000
shares of Series C Preferred Stock (convertible into 1,000,000
shares of Common Stock). The Common Stock, the Series B ESOP
Preferred Stock and the Series D Preferred Stock are voted as a
single class on all matters. The Series C Preferred Stock is
voted together with the Common Stock, the Series B ESOP Preferred
Stock and the Series D Preferred Stock on any matters other than
the election of directors. Each share of Common Stock and each
share of Series B ESOP Preferred Stock outstanding on March 23,
1998 is entitled to one vote. Each 9 shares of Series C Preferred
Stock is entitled to 1,000 votes and each share of Series D
Preferred Stock is entitled to 100 votes.
In addition to the distribution of proxy material by
mail, directors, officers and employees of the Company and its
subsidiaries may solicit proxies by telephone or in person. The
cost of all such solicitations will be borne by the Company. The
Company will reimburse brokerage houses, custodians, nominees and
fiduciaries for expenses in forwarding solicitation material to
beneficial owners. The Company has retained D. F. King & Co. to
assist in the solicitation of proxies. The fee of that firm is
estimated not to exceed $9,000 plus out-of-pocket costs and
expenses.
NEXT ANNUAL MEETING
Proposals of security holders intended to be presented
at the 1999 Annual Meeting must be received by The Turner
Corporation by December 2, 1998 for inclusion in the proxy
statement and form of proxy relating to that meeting.
By Order of the Board of Directors
THE TURNER CORPORATION
SARA J. GOZO
Secretary
March 31 , 1998
THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS INCLUDES A COPY OF
ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1997 WHICH WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING FINANCIAL STATEMENTS. ANYONE ENTITLED TO VOTE AT THE
MEETING WHO DID NOT RECEIVE A COPY OF THE ANNUAL REPORT TO
STOCKHOLDERS MAY OBTAIN A COPY WITHOUT COST BY REQUESTING IT FROM
THE SECRETARY OF THE COMPANY AT THE ADDRESS SPECIFIED ON THE
FIRST PAGE OF THIS PROXY STATEMENT.
.
THE TURNER CORPORATION
1998 STOCK INCENTIVE PLAN
(As Adopted March 13, 1998)
THE TURNER CORPORATION
1998 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to strengthen The Turner Corporation,
a Delaware corporation (the "Company"), by providing an incentive
to its employees, officers, consultants, advisors and directors
and thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise. It
is intended that this purpose be achieved by extending to
employees, officers, consultants, advisors and directors of the
Company and its Subsidiaries an added long-term incentive for
high levels of performance and unusual efforts through the grant
of Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Dividend Equivalent Rights, Performance
Awards and Restricted Stock (as each term is herein defined).
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the
event of a Change in Control, the greater of (a) the highest
price per Share paid to holders of the Shares in any transaction
(or series of transactions) constituting or resulting in a Change
in Control or (b) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in
Control.
2.2 "Affiliate" means any entity, directly or
indirectly, controlled by, controlling or under common control
with the Company or any corporation or other entity acquiring,
directly or indirectly, all or substantially all the assets and
business of the Company, whether by operation of law or
otherwise.
2.3 "Agreement" means the written agreement
between the Company and an Optionee or Grantee evidencing the
grant of an Option or Award and setting forth the terms and
conditions thereof.
2.4 "Award" means a grant of Restricted Stock, a
Stock Appreciation Right, a Performance Award, a Dividend
Equivalent Right or any or all of them.
2.5 "Board" means the Board of Directors of the
Company.
2.6 "Cause" means:
(a) for purposes of Section 6.4, the commission
of an act of fraud or intentional misrepresentation or an act of
embezzlement, misappropriation or conversion of assets or
opportunities of the Company or any of its Subsidiaries; and
(b) in all other cases, unless otherwise set
forth in an Agreement, (i) intentional failure to perform
reasonably assigned duties, (ii) dishonesty or willful misconduct
in the performance of duties, (iii) involvement in a transaction
in connection with the performance of duties to the Company or
any of its Subsidiaries which transaction is adverse to the
interests of the Company or any of its Subsidiaries and which is
engaged in for personal profit or (iv) willful violation of any
law, rule or regulation in connection with the performance of
duties (other than traffic violations or similar offenses).
2.7 "Change in Capitalization" means any increase
or reduction in the number of Shares, or any change (including,
but not limited to, in the case of a spin-off, dividend or other
distribution in respect of Shares, a change in value) in the
Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation,
by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance of
warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change
in corporate structure or otherwise.
2.8 "Change in Control" means any of the following
occurrences:
(a) any "person" (as defined in Sections 13(d) and 14(d) of
the Exchange Act) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
either (a) thirty-five percent (35%) (or such other percentage as
the Board of Directors may from time to time determine before a
Change in Control takes place to be the appropriate Change in
Control threshold for purposes of Options granted under this
Plan) or more of the outstanding common stock of the Company, or
(b) thirty-five percent (35%) (or such other percentage as the
Board of Directors may from time to time determine before a
Change in Control takes place to be the appropriate Change in
Control threshold for purposes of Options granted under this
Plan) of the outstanding securities of any other class or classes
which individually or together have the power (other than upon a
failure to pay dividends, unless that failure has occurred) to
elect a majority of the members of the Board of Directors of the
Company, except that an acquisition of securities by an employee
benefit plan of the Company or a subsidiary will never be a
Change in Control; or
(b) the Board of Directors of the Company determines that a
tender offer statement filed by any person with the Securities
and Exchange Commission indicates an intention on the part of
that person to acquire control of the Company; or
(c) there is a change in the membership of the Board of
Directors of the Company and immediately following the change a
majority of the members of the Board of Directors of the Company
are not persons who (a) had been directors of the Company for at
least the preceding twenty-four (24) consecutive months or (b)
when they initially were elected to the Board, (x) were nominated
(if they were elected by the stockholders) or elected (if they
were elected by the directors) with the affirmative vote of two-
thirds of the directors who were Continuing Directors at the time
of the nomination or election by the Board and (y) were not
elected as a result of an actual or threatened solicitation of
proxies or consents by a person other than the Board of Directors
of the Company or an agreement intended to avoid or settle such a
proxy solicitation (the directors described in clauses (a) and
(b) being "Continuing Directors").
2.9 "Code" means the Internal Revenue Code of
1986, as amended.
2.10 "Committee" means a committee, as described
in Section 3.1, appointed by the Board from time to time to
administer the Plan and to perform the functions set forth
herein.
2.11 "Company" means The Turner Corporation.
2.12 "Director" means a director of the Company.
2.13 "Director Option" means an Option granted
pursuant to Section 6.
2.14 "Disability" means:
(a) the term "Disability" as used in the
Company's long-term disability plan, if any; and
(b) in all other cases, the term "Disability" as
used in this Plan or any Agreement shall mean a physical or
mental infirmity which impairs the Optionee's or Grantee's
ability to perform substantially his or her duties for a period
of one hundred eighty (180) consecutive days.
2.15 "Division" means any of the operating units
or divisions of the Company designated as a Division by the
Committee.
2.16 "Dividend Equivalent Right" means a right to
receive all or some portion of the cash dividends that are or
would be payable with respect to Shares.
2.17 "Eligible Director" means a director of the
Company who is not an employee of the Company or any Subsidiary.
2.18 "Eligible Individual" means any director,
officer or employee of the Company or a Subsidiary, or any
consultant or advisor of the Company or a Subsidiary, designated
by the Committee as eligible to receive Options or Awards subject
to the conditions set forth herein.
2.19 "Employee Option" means an Option granted
pursuant to Section 5.
2.20 "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
2.21 "Fair Market Value" on any date means the
closing sales prices of the Shares on such date on the principal
national securities exchange on which such Shares are listed or
admitted to trading, or, if such Shares are not so listed or
admitted to trading, the average of the per Share closing bid
price and per Share closing asked price on such date as quoted on
the National Association of Securities Dealers Automated
Quotation System or such other market in which such prices are
regularly quoted, or, if there have been no published bid or
asked quotations with respect to Shares on such date, the Fair
Market Value shall be the value established by the Board in good
faith and, in the case of an Incentive Stock Option, in
accordance with Section 422 of the Code.
2.22 "Grantee" means a person to whom an Award has
been granted under the Plan.
2.23 "Incentive Stock Option" means an Option
satisfying the requirements of Section 422 of the Code and
designated by the Committee as an Incentive Stock Option.
2.24 "Nonemployee Director" means a director of
the Company who is a "nonemployee director" within the meaning of
Rule 16b-3 promulgated under the Exchange Act.
2.25 "Nonqualified Stock Option" means an Option
which is not an Incentive Stock Option.
2.26 "Option" means an Employee Option, a
Nonqualified Stock Option, an Incentive Stock Option, a Director
Option, or any or all of them.
2.27 "Optionee" means a person to whom an Option
has been granted under the Plan.
2.28 "Outside Director" means a director of the
Company who is an "outside director" within the meaning of
Section 162(m) of the Code and the regulations promulgated
thereunder.
2.29 "Parent" means any corporation which is a
parent corporation (within the meaning of Section 424(e) of the
Code) with respect to the Company.
2.30 "Performance Awards" means Performance Units,
Performance Shares or either or both of them.
2.31 "Performance-Based Compensation" means any
Option or Award that is intended to constitute "performance based
compensation" within the meaning of Section 162(m)(4)(C) of the
Code and the regulations promulgated thereunder.
2.32 "Performance Cycle" means the time period
specified by the Committee at the time Performance Awards are
granted during which the performance of the Company, a Subsidiary
or a Division will be measured.
2.33 "Performance Objectives" has the meaning set
forth in Section 11.
2.34 "Performance Shares" means Shares issued or
transferred to an Eligible Individual under Section 11.
2.35 "Performance Units" means Performance Units
granted to an Eligible Individual under Section 11.
2.36 "Plan" means The Turner Corporation 1998
Stock Incentive Plan, as amended and restated from time to time.
2.37 "Pooling Transaction" means an acquisition of
the Company in a transaction which is intended to be treated as a
"pooling of interests" under generally accepted accounting
principles.
2.38 "Restricted Stock" means Shares issued or
transferred to an Eligible Individual pursuant to Section 10.
2.39 "Shares" means the common stock, par value
$1.00 per share, of the Company.
2.40 "Stock Appreciation Right" means a right to
receive all or some portion of the increase in the value of the
Shares as provided in Section 8 hereof.
2.41 "Subsidiary" means any corporation which is a
subsidiary corporation (within the meaning of Section 424(f) of
the Code) with respect to the Company.
2.42 "Successor Corporation" means a corporation,
or a parent or subsidiary thereof within the meaning of Section
424(a) of the Code, which issues or assumes a stock option in a
transaction to which Section 424(a) of the Code applies.
2.43 "Ten-Percent Stockholder" means an Eligible
Individual, who, at the time an Incentive Stock Option is to be
granted to him or her, owns (within the meaning of Section
422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock
of the Company, or of a Parent or a Subsidiary.
2.44 "Trading Day" means a day on which there is
trading in equity securities in the principal market in which the
Shares are traded.
3. Administration.
3.1 The Plan shall be administered by the
Committee, which shall hold meetings at such times as may be
necessary for the proper administration of the Plan. The
Committee shall keep minutes of its meetings. A quorum shall
consist of not fewer than two (2) members of the Committee and a
majority of a quorum may authorize any action. Any decision or
determination reduced to writing and signed by a majority of all
of the members of the Committee shall be as fully effective as if
made by a majority vote at a meeting duly called and held. The
Committee shall consist of at least two (2) directors of the
Company, each of whom shall be a Nonemployee Director and, to the
extent necessary for any Option or Award intended to qualify as
Performance-Based Compensation to so qualify, an Outside
Director. No member of the Committee shall be liable for any
action, failure to act, determination or interpretation made in
good faith with respect to this Plan or any transaction
hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of
his or her duties. The Company hereby agrees to indemnify each
member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in
connection with defending against, responding to, negotiating for
the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any
actions in administering this Plan or in authorizing or denying
authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions
set forth herein, the Committee shall have the power from time to
time to:
(a) determine those Eligible Individuals to whom
Employee Options shall be granted under the Plan and the number
of such Employee Options to be granted and to prescribe the terms
and conditions (which need not be identical) of each such
Employee Option, including the exercise price per Share subject
to each Employee Option, and make any amendment or modification
to any Option Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom
Awards shall be granted under the Plan and to determine the
number of Stock Appreciation Rights, Performance Awards, Shares
of Restricted Stock and/or Dividend Equivalent Rights to be
granted pursuant to each Award, the terms and conditions (which
need not be identical) of each such Award, and make any amendment
or modification to any Award Agreement consistent with the terms
of the Plan;
(c) to construe and interpret the Plan and the
Options and Awards granted hereunder and to establish, amend and
revoke rules and regulations for the administration of the Plan,
including, but not limited to, correcting any defect or supplying
any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem
necessary or advisable so that the Plan complies with applicable
law including Rule 16b-3 under the Exchange Act and the Code to
the extent applicable, and otherwise to make the Plan fully
effective. All decisions and determinations by the Committee in
the exercise of this power shall be final, binding and conclusive
upon the Company, its Subsidiaries, the Optionees and Grantees,
and all other persons having any interest therein;
(d) to determine the duration and purposes for
leaves of absence which may be granted to an Optionee or Grantee
on an individual basis without constituting a termination of
employment or service for purposes of the Plan;
(e) to exercise its discretion with respect to
the powers and rights granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to
perform such acts as are deemed necessary or advisable to promote
the best interests of the Company with respect to the Plan.
4. Stock Subject to the Plan; Grant Limitations.
4.1 The maximum number of Shares that may be made
the subject of Options and Awards granted under the Plan is
500,000. The maximum number of Shares that may be the subject of
Options and Awards granted to an Eligible Individual in any three
(3) calendar year period may not exceed 250,000 Shares. The
maximum dollar amount of cash or the Fair Market Value of Shares
that any Eligible Individual may receive in any calendar year
during the term of the Plan in respect of Performance Units
denominated in dollars may not exceed $500,000. Upon a Change in
Capitalization, the maximum number of Shares referred to in the
first two sentences of this Section 4.1 shall be adjusted in
number and kind pursuant to Section 13. The Company shall
reserve for the purposes of the Plan, out of its authorized but
unissued Shares or out of Shares held in the Company's treasury,
or partly out of each, such number of Shares as shall be
determined by the Board.
4.2 Upon the granting of an Option or an Award,
the number of Shares available under Section 4.1 for the granting
of further Options and Awards shall be reduced as follows:
(a) In connection with the granting of an Option
or an Award (other than the granting of a Performance Unit
denominated in dollars), the number of Shares shall be reduced by
the number of Shares in respect of which the Option or Award is
granted or denominated; provided, however, that if any Option is
exercised by tendering Shares, either actually or by attestation,
to the Company as full or partial payment of the exercise price,
the maximum number of Shares available under Section 4.1 shall be
increased by the number of Shares so tendered.
(b) In connection with the granting of a
Performance Unit denominated in dollars, the number of Shares
shall be reduced by an amount equal to the quotient of (i) the
dollar amount in which the Performance Unit is denominated,
divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or
portion thereof expires, is canceled, is settled in cash
(including the settlement of tax withholding obligations using
Shares) or is otherwise terminated for any reason without having
been exercised or payment having been made in respect of the
entire Option or Award, the Shares allocable to the expired,
canceled, settled or otherwise terminated portion of the Option
or Award may again be the subject of Options or Awards granted
hereunder.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the
provisions of the Plan, the Committee shall have full and final
authority to select those Eligible Individuals who will receive
Employee Options, and the terms and conditions of the grant to
such Eligible Individuals shall be set forth in an Agreement.
5.2 Exercise Price. The exercise price or the
manner in which the exercise price is to be determined for Shares
under each Employee Option shall be determined by the Committee
and set forth in the Agreement; provided, however, that the
exercise price per share under each Nonqualified Stock Option
shall not be less than 85% of the average of the Fair Market
Value of Shares on the twenty (20) Trading Days prior to the date
the Employee Option is granted; provided further, however, that
the exercise price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share
on the date the Employee Option is granted (110% in the case of
an Incentive Stock Option granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Employee Options granted
hereunder shall be for such term as the Committee shall
determine, provided that an Incentive Stock Option shall not be
exercisable after the expiration of ten (10) years from the date
it is granted (five (5) years in the case of an Incentive Stock
Option granted to a Ten-Percent Stockholder) and a Nonqualified
Stock Option shall not be exercisable after the expiration of ten
(10) years from the date it is granted; provided, however, that
the Committee may provide that an Option (other than an Incentive
Stock Option) may, upon the death of the Optionee, be exercised
for up to one (1) year following the date of the Optionee's death
even if such period extends beyond ten (10) years from the date
the Option is granted. The Committee may, subsequent to the
granting of any Employee Option, extend the term thereof, but in
no event shall the term as so extended exceed the maximum term
provided for in the preceding sentence.
5.4 Vesting. Subject to Section 7.4, each
Employee Option shall become fully vested and exercisable with
respect to 100% of the Shares subject thereto on the third
anniversary of the date of grant, unless as otherwise designated
by the Committee and set forth in the Agreement. Employee
Options shall be exercisable, in whole or in part, at any time
after becoming exercisable, but not later than the date the
Employee Option expires. The Committee may accelerate the
exercisability of any Employee Option or portion thereof at any
time.
6. Option Grants for Nonemployee Directors.
6.1 Grant. Each Eligible Director shall be
granted a Director Option in respect of 3,500 Shares on August
7th (or if August 7th is not a Trading Day, on the first Trading
Day thereafter) in each year that the Plan is in effect provided
that the Eligible Director is a Director on such date. All
Director Options shall be evidenced by an Agreement containing
such other terms and conditions not inconsistent with the
provisions of this Plan as determined by the Board; provided,
however, that such terms shall not vary the price, amount or
timing of Director Options provided under this Section 6,
including provisions dealing with vesting, forfeiture and
termination of such Director Options.
6.2 Exercise price. The exercise price for
Shares under each Director Option shall be equal to 100% of the
Fair Market Value of such Shares on the date the Director Option
is granted.
6.3 Vesting. Subject to Sections 6.4 and 7.4,
each Director Option shall become fully vested and exercisable
with respect to 100% of the Shares subject thereto at any time
after the date of grant; provided, however, that the Optionee
continues to serve as a Director as of such date.
6.4 Duration. Subject to Section 7.4, each
Director Option shall terminate on the date which is the tenth
anniversary of the date of grant (or if later, the first
anniversary of the date of the Director's death if such death
occurs prior to such tenth anniversary), unless terminated
earlier as follows:
(a) If an Optionee's service as a Director
terminates for any reason other than Disability, death or Cause,
the Optionee may for a period of three (3) months after such
termination exercise his or her Option to the extent, and only to
the extent, that such Option or portion thereof was vested and
exercisable as of the date the Optionee's service as a Director
terminated, after which time the Option shall automatically
terminate in full.
(b) If an Optionee's service as a Director
terminates by reason of the Optionee's resignation or removal
from the Board due to Disability, the Optionee may, for a period
of twelve (12) months after such termination, exercise his or her
Option to the extent, and only to the extent, that such Option or
portion thereof was vested and exercisable, as of the date the
Optionee's service as Director terminated, after which time the
Option shall automatically terminate in full.
(c) If an Optionee's service as a Director
terminates for Cause, the Option granted to the Optionee
hereunder shall immediately terminate in full and no rights
thereunder may be exercised.
(d) If an Optionee dies while a Director or
within three (3) months after termination of service as a
Director as described in clause (a) of this Section 6.4 or within
twelve (12) months after termination of service as a Director as
described in clause (b) of this Section 6.4, the Option granted
to the Optionee may be exercised at any time within twelve (12)
months after the Optionee's death by the person or persons to
whom such rights under the Option shall pass by will, or by the
laws of descent or distribution, after which time the Option
shall terminate in full; provided, however, that an Option may be
exercised to the extent, and only to the extent, that the Option
or portion thereof was exercisable on the date of death or
earlier termination of the Optionee's services as a Director.
7. Terms and Conditions Applicable to All Options.
7.1 Non-Transferability. No Option shall be
transferable by the Optionee otherwise than by will or by the
laws of descent and distribution or, in the case of an Option
other than an Incentive Stock Option, pursuant to a domestic
relations order (within the meaning of Rule 16a-12 promulgated
under the Exchange Act), and such Option shall be exercisable
during the lifetime of such Optionee only by the Optionee or his
or her guardian or legal representative. Notwithstanding the
foregoing, the Committee may set forth in the Agreement
evidencing an Option (other than an Incentive Stock Option) at
the time of grant or thereafter, that an Option may be
transferred to members of the Optionee's immediate family, to
trusts solely for the benefit of such immediate family members
and to partnerships in which such family members and/or trusts
are the only partners. For purposes of this Plan, a transferee
of an Option shall be deemed to be the Optionee. Immediate
family means the Optionee's spouse, parents, children,
stepchildren and grandchildren and the spouses of such parents,
children, stepchildren and grandchildren. The terms of such
Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of
the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be
made only by a written notice delivered in person or by mail to
the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares in respect of which the
Option is being exercised and accompanied by payment therefor and
otherwise in accordance with the Agreement pursuant to which the
Option was granted; provided, however, that the Option may not be
exercised by an Optionee for twelve (12) months following a
hardship distribution to the Optionee, to the extent such
exercise is prohibited under Treasury Regulation 1.401(k)-
1(d)(2)(iv)(B)(4). The exercise price for any Shares purchased
pursuant to the exercise of an Option shall be paid, as
determined by the Committee in its discretion, in either of the
following forms (or any combination thereof): (a) cash or (b) the
transfer, either actually or by attestation, to the Company of
Shares that have been held by the Optionee for at least six (6)
months (or such shorter period as may be permitted by the
Committee) prior to the exercise of the Option and such transfer
to be upon such terms and conditions as determined by the
Committee. In addition, an Option may be exercised through a
registered broker-dealer pursuant to such cashless exercise
procedures which are, from time to time, deemed acceptable by the
Committee. Any Shares transferred to the Company as payment of
the exercise price under an Option shall be valued at their Fair
Market Value on the day preceding the date of exercise of such
Option. If requested by the Committee, the Optionee shall
deliver the Agreement evidencing the Option to the Secretary of
the Company who shall endorse thereon a notation of such exercise
and return such Agreement to the Optionee. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an
Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be
deemed for any purpose to be the owner of any Shares subject to
any Option unless and until (a) the Option shall have been
exercised pursuant to the terms thereof, (b) the Company shall
have issued and delivered Shares to the Optionee, and (c) the
Optionee's name shall have been entered as a stockholder of
record on the books of the Company. Thereupon, the Optionee
shall have full voting, dividend and other ownership rights with
respect to such Shares, subject to such terms and conditions as
may be set forth in the applicable Agreement.
7.4 Effect of Change in Control. In the event of
a Change in Control, all Options outstanding on the date of such
Change in Control shall become immediately and fully exercisable.
In addition, to the extent set forth in an Agreement evidencing
the grant of an Employee Option, an Optionee will be permitted to
surrender to the Company for cancellation within sixty (60) days
after such Change in Control any Employee Option or portion of an
Employee Option to the extent not yet exercised and the Optionee
will be entitled to receive a cash payment in an amount equal to
the excess, if any, of (a) (i) in the case of a Nonqualified
Stock Option, the greater of (A) the Fair Market Value, on the
date preceding the date of surrender, of the Shares subject to
the Employee Option or portion thereof surrendered or (B) the
Adjusted Fair Market Value of the Shares subject to the Employee
Option or portion thereof surrendered or (ii) in the case of an
Incentive Stock Option, the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the
Employee Option or portion thereof surrendered, over (b) the
aggregate exercise price for such Shares under the Employee
Option or portion thereof surrendered. In the event an
Optionee's employment with, or service as a Director of, the
Company and its Subsidiaries terminates following a Change in
Control, each Option held by the Optionee that was exercisable as
of the date of termination of the Optionee's employment or
service shall, notwithstanding any shorter period set forth in
the Agreement evidencing the Option, remain exercisable for a
period ending not before the earlier of (x) the first anniversary
of the termination of the Optionee's employment or service or
(y) the expiration of the stated term of the Option.
7.5 Deferred Delivery of Option Shares. The
Committee may, in its discretion, permit Optionees to elect to
defer the issuance of Shares upon the exercise of one or more
Nonqualified Stock Options granted pursuant to the Plan. The
terms and conditions of such deferral shall be determined at the
time of the grant of the Option or thereafter and shall be set
forth in the Agreement evidencing the grant.
8. Stock Appreciation Rights.
The Committee may in its discretion, either alone or in
connection with the grant of an Employee Option, grant to any
Eligible Individual Stock Appreciation Rights in accordance
with the Plan, the terms and conditions of which shall be set
forth in an Agreement. If granted in connection with an
Option, a Stock Appreciation Right shall cover the same Shares
covered by the Option (or such lesser number of Shares as the
Committee may determine) and shall, except as provided in this
Section 8, be subject to the same terms and conditions as the
related Option.
8.1 Time of Grant. A Stock Appreciation Right
may be granted (a) at any time if unrelated to an Option, or (b)
if related to an Option, either at the time of grant, or at any
time thereafter during the term of the Option.
8.2 Stock Appreciation Right Related to an
Option.
(a) Exercise. A Stock Appreciation Right granted
in connection with an Option shall be exercisable at such time or
times and only to the extent that the related Options are
exercisable, and will not be transferable except to the extent
the related Option may be transferable. A Stock Appreciation
Right granted in connection with an Incentive Stock Option shall
be exercisable only if the Fair Market Value of a Share on the
date of exercise exceeds the exercise price specified in the
related Incentive Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Option, the Grantee shall be
entitled to receive an amount determined by multiplying (i) the
excess of the Fair Market Value of a Share on the date preceding
the date of exercise of such Stock Appreciation Right over the
per Share exercise price under the related Option, by (ii) the
number of Shares as to which such Stock Appreciation Right is
being exercised. Notwithstanding the foregoing, the Committee
may limit in any manner the amount payable with respect to any
Stock Appreciation Right by including such a limit in the
Agreement evidencing the Stock Appreciation Right at the time it
is granted.
(c) Treatment of Related Options and Stock
Appreciation Rights Upon Exercise. Upon the exercise of a Stock
Appreciation Right granted in connection with an Option, the
Option shall be canceled to the extent of the number of Shares as
to which the Stock Appreciation Right is exercised, and upon the
exercise of an Option granted in connection with a Stock
Appreciation Right, the Stock Appreciation Right shall be
canceled to the extent of the number of Shares as to which the
Option is exercised or surrendered.
8.3 Stock Appreciation Right Unrelated to an
Option. The Committee may grant to Eligible Individuals Stock
Appreciation Rights unrelated to Options. Stock Appreciation
Rights unrelated to Options shall contain such terms and
conditions as to exercisability (subject to Section 8.7), vesting
and duration as the Committee shall determine, but in no event
shall they have a term of greater than ten (10) years. Upon
exercise of a Stock Appreciation Right unrelated to an Option,
the Grantee shall be entitled to receive an amount determined by
multiplying (a) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock
Appreciation Right over the Fair Market Value of a Share on the
date the Stock Appreciation Right was granted, by (b) the number
of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may
limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement
evidencing the Stock Appreciation Right at the time it is
granted.
8.4 Non-Transferability. No Stock Appreciation
Right shall be transferable by the Grantee otherwise than by will
or by the laws of descent and distribution or pursuant to a
domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act), and such Stock Appreciation
Right shall be exercisable during the lifetime of such Grantee
only by the Grantee or his or her guardian or legal
representative. The terms of such Stock Appreciation Right shall
be final, binding and conclusive upon the beneficiaries,
executors, administrators, heirs and successors of the Grantee.
8.5 Method of Exercise. Stock Appreciation
Rights shall be exercised by a Grantee only by a written notice
delivered in person or by mail to the Secretary of the Company at
the Company's principal executive office, specifying the number
of Shares with respect to which the Stock Appreciation Right is
being exercised. If requested by the Committee, the Grantee
shall deliver the Agreement evidencing the Stock Appreciation
Right being exercised and the Agreement evidencing any related
Option to the Secretary of the Company who shall endorse thereon
a notation of such exercise and return such Agreement to the
Grantee.
8.6 Form of Payment. Payment of the amount
determined under Sections 8.2(b) or 8.3 may be made in the
discretion of the Committee solely in whole Shares in a number
determined at their Fair Market Value on the date preceding the
date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares. If the Committee
decides to make full payment in Shares and the amount payable
results in a fractional Share, payment for the fractional Share
will be made in cash.
8.7 Effect of Change in Control. In the event
of a Change in Control, all Stock Appreciation Rights shall
become immediately and fully exercisable. In addition, to the
extent set forth in an Agreement evidencing the grant of a Stock
Appreciation Right unrelated to an Option, a Grantee will be
entitled to receive a payment from the Company in cash or stock,
in either case, with a value equal to the excess, if any, of (a)
the greater of (i) the Fair Market Value, on the date preceding
the date of exercise, of the underlying Shares subject to the
Stock Appreciation Right or portion thereof exercised and (ii)
the Adjusted Fair Market Value, on the date preceding the date of
exercise, of the Shares over (b) the aggregate Fair Market Value,
on the date the Stock Appreciation Right was granted, of the
Shares subject to the Stock Appreciation Right or portion thereof
exercised. In the event a Grantee's employment with the Company
terminates following a Change in Control, each Stock Appreciation
Right held by the Grantee that was exercisable as of the date of
termination of the Grantee's employment shall, notwithstanding
any shorter period set forth in the Agreement evidencing the
Stock Appreciation Right, remain exercisable for a period ending
not before the earlier of the first anniversary of (x) the
termination of the Grantee's employment or (y) the expiration of
the stated term of the Stock Appreciation Right.
9. Dividend Equivalent Rights.
Dividend Equivalent Rights may be granted to Eligible
Individuals and Eligible Directors in tandem with an Option or
Award or as a separate Award. The terms and conditions
applicable to each Dividend Equivalent Right shall be specified
in the Agreement under which the Dividend Equivalent Right is
granted. Amounts payable in respect of Dividend Equivalent
Rights may be payable currently or deferred until the lapsing
of restrictions on such Dividend Equivalent Rights or until the
vesting, exercise, payment, settlement or other lapse of
restrictions on the Option or Award to which the Dividend
Equivalent Rights relate. In the event that the amount payable
in respect of Dividend Equivalent Rights are to be deferred,
the Committee shall determine whether such amounts are to be
held in cash or reinvested in Shares or deemed (notionally) to
be reinvested in Shares. If amounts payable in respect of
Dividend Equivalent Rights are to be held in cash, there may be
credited at the end of each year (or portion thereof) interest
on the amount of the account at the beginning of the year at a
rate per annum as the Committee, in its discretion, may
determine. Dividend Equivalent Rights may be settled in cash
or Shares or a combination thereof, in a single installment or
multiple installments.
10. Restricted Stock.
10.1 Grant. The Committee may grant Awards to
Eligible Individuals of Restricted Stock, which shall be
evidenced by an Agreement between the Company and the Grantee.
Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its discretion, determine and
(without limiting the generality of the foregoing) such
Agreements may require that an appropriate legend be placed on
Share certificates. Awards of Restricted Stock shall be subject
to the terms and provisions set forth below in this Section 10.
10.2 Rights of Grantee. Shares of Restricted
Stock granted pursuant to an Award hereunder shall be issued in
the name of the Grantee as soon as reasonably practicable after
the Award is granted provided that the Grantee has executed such
documents as the Committee may require as a condition to the
issuance of such Shares. At the discretion of the Committee,
Shares issued in connection with a Restricted Stock Award shall
be deposited together with the stock powers with an escrow agent
(which may be the Company) designated by the Committee. Unless
the Committee determines otherwise and as set forth in the
Agreement, upon delivery of the Shares to the escrow agent, the
Grantee shall have all of the rights of a stockholder with
respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made
with respect to the Shares.
10.3 Non-transferability. Until all restrictions
upon the Shares of Restricted Stock awarded to a Grantee shall
have lapsed in the manner set forth in Section 10.4, such Shares
shall not be sold, transferred or otherwise disposed of and shall
not be pledged or otherwise hypothecated.
10.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of
Restricted Stock awarded hereunder shall lapse at such time or
times and on such terms and conditions as the Committee may
determine. The Agreement evidencing the Award shall set forth
any such restrictions.
(b) Effect of Change in Control. Unless the
Committee shall determine otherwise at the time of the grant of
an Award of Restricted Stock, the restrictions upon Shares of
Restricted Stock shall lapse upon a Change in Control. The
Agreement evidencing the Award shall set forth any such
provisions.
10.5 Modification or Substitution. Subject to the
terms of the Plan, the Committee may modify outstanding Awards of
Restricted Stock or accept the surrender of outstanding Shares of
Restricted Stock (to the extent the restrictions on such Shares
have not yet lapsed) and grant new Awards in substitution for
them. Notwithstanding the foregoing, no modification of an Award
shall adversely alter or impair any rights or obligations under
the Agreement without the Grantee's consent.
10.6 Treatment of Dividends. At the time an Award
of Shares of Restricted Stock is granted, the Committee may, in
its discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on
such Shares by the Company shall be (a) deferred until the
lapsing of the restrictions imposed upon such Shares and (b) held
by the Company for the account of the Grantee until such time.
In the event that dividends are to be deferred, the Committee
shall determine whether such dividends are to be reinvested in
Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. If deferred dividends are to be held in
cash, there may be credited at the end of each year (or portion
thereof) interest on the amount of the account at the beginning
of the year at a rate per annum as the Committee, in its
discretion, may determine. Payment of deferred dividends in
respect of Shares of Restricted Stock (whether held in cash or as
additional Shares of Restricted Stock), together with interest
accrued thereon, if any, shall be made upon the lapsing of
restrictions imposed on the Shares in respect of which the
deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any
Shares of Restricted Stock shall be forfeited upon the forfeiture
of such Shares.
10.7 Delivery of Shares. Upon the lapse of the
restrictions on Shares of Restricted Stock, the Committee shall
cause a stock certificate to be delivered to the Grantee with
respect to such Shares, free of all restrictions hereunder.
11. Performance Awards.
11.1 Performance Units. The Committee, in its
discretion, may grant Awards of Performance Units to Eligible
Individuals, the terms and conditions of which shall be set forth
in an Agreement between the Company and the Grantee. Performance
Units may be denominated in Shares or a specified dollar amount
and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle, represent the right to
receive payment as provided in Section 11.3(c) of (i) in the case
of Share-denominated Performance Units, the Fair Market Value of
a Share on the date the Performance Unit was granted, the date
the Performance Unit became vested or any other date specified by
the Committee, (ii) in the case of dollar-denominated Performance
Units, the specified dollar amount or (iii) a percentage (which
may be more than 100%) of the amount described in clause (i) or
(ii) depending on the level of Performance Objective attainment;
provided, however, that, the Committee may at the time a
Performance Unit is granted specify a maximum amount payable in
respect of a vested Performance Unit. Each Agreement shall
specify the number of Performance Units to which it relates, the
Performance Objectives which must be satisfied in order for the
Performance Units to vest and the Performance Cycle within which
such Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections
11.3(c) and 11.4, a Grantee shall become vested with respect to
the Performance Units to the extent that the Performance
Objectives set forth in the Agreement are satisfied for the
Performance Cycle.
(b) Payment of Awards. Subject to Section
11.3(c), payment to Grantees in respect of vested Performance
Units shall be made as soon as practicable after the last day of
the Performance Cycle to which such Award relates unless the
Agreement evidencing the Award provides for the deferral of
payment, in which event the terms and conditions of the deferral
shall be set forth in the Agreement. Subject to Section 11.4,
such payments may be made entirely in Shares valued at their Fair
Market Value as of the day preceding the date of payment or such
other date specified by the Committee, entirely in cash, or in
such combination of Shares and cash as the Committee in its
discretion shall determine at any time prior to such payment;
provided, however, that if the Committee in its discretion
determines to make such payment entirely or partially in Shares
of Restricted Stock, the Committee must determine the extent to
which such payment will be in Shares of Restricted Stock and the
terms of such Restricted Stock at the time the Award is granted.
11.2 Performance Shares. The Committee, in its
discretion, may grant Performance Shares to Eligible Individuals,
which shall represent the right, contingent upon the attainment
of specified Performance Objectives within the Performance Cycle
and subject to Section 11.3(c), to receive, as provided in the
Agreement, Shares free of all restrictions under the Plan or the
Agreement. Awards of Performance Shares shall be subject to the
following terms and provisions:
(a) Issuance of Shares. Performance Shares
granted pursuant to an Award shall be issued in the name of the
Grantee as soon as reasonably practicable after the Award is
granted provided that the Grantee has executed such documents as
the Committee may require as a condition to the issuance of such
Performance Shares. At the discretion of the Committee, Shares
issued in connection with an Award of Performance Shares shall be
deposited together with the stock powers with an escrow agent
(which may be the Company) designated by the Committee. Unless
the Committee determines otherwise, and as set forth in the
Agreement, upon delivery of the Shares to the escrow agent, the
Grantee shall have all of the rights of a stockholder with
respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made
with respect to the Shares.
(b) Treatment of Dividends. At the time the
Award of Performance Shares is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on
Shares represented by such Award which have been issued by the
Company to the Grantee shall be (i) deferred until the lapsing of
the restrictions imposed upon such Performance Shares and
(ii) held by the Company for the account of the Grantee until
such time. In the event that dividends are to be deferred, the
Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional
Performance Shares) or held in cash. If deferred dividends are
to be held in cash, there may be credited at the end of each year
(or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in
its discretion, may determine. Payment of deferred dividends in
respect of Performance Shares (whether held in cash or in
additional Performance Shares), together with interest accrued
thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Performance Shares in respect of which the
deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any
Performance Shares shall be forfeited upon the forfeiture of such
Performance Shares.
(c) Delivery of Shares. Upon the lapse of the
restrictions on Performance Shares awarded hereunder, the
Committee shall cause a stock certificate to be delivered to the
Grantee with respect to such Shares, free of all restrictions
hereunder
11.3 Performance Objectives
(a) Establishment. Performance Objectives for
Performance Awards may be expressed in terms of (i) earnings per
Share, (ii) Share price, (iii) pre-tax profits, (iv) net
earnings, (v) return on equity or assets or (vi) any combination
of the foregoing. Performance Objectives may be in respect of
the performance of the Company, any of its Subsidiaries, any of
its Divisions or any combination thereof. Performance Objectives
may be absolute or relative (to prior performance of the Company
or to the performance of one or more other entities or external
indices) and may be expressed in terms of a progression within a
specified range. The Performance Objectives with respect to a
Performance Cycle shall be established in writing by the
Committee by the earlier of (x) the date on which a quarter of
the Performance Cycle has elapsed or (y) the date which is ninety
(90) days after the commencement of the Performance Cycle, and in
any event while the performance relating to the Performance
Objectives remain substantially uncertain.
(b) Effect of Certain Events. At the time of the
granting of a Performance Award, or at any time thereafter, in
either case to the extent permitted under Section 162(m) of the
Code and the regulations thereunder without adversely affecting
the treatment of the Performance Award as Performance-Based
Compensation, the Committee may provide for the manner in which
performance will be measured against the Performance Objectives
(or may adjust the Performance Objectives) to reflect the impact
of specified corporate transactions, special charges, foreign
currency effects, accounting or tax law changes and other
extraordinary or nonrecurring events.
(c) Determination of Performance. Prior to the
vesting, payment, settlement or lapsing of any restrictions with
respect to any Performance Award that is intended to constitute
Performance-Based Compensation made to a Grantee who is subject
to Section 162(m) of the Code, the Committee shall certify in
writing that the applicable Performance Objectives have been
satisfied.
11.4 Effect of Change in Control. In the event of
a Change in Control:
(a) With respect to Performance Units, the
Grantee shall (i) become vested in all or a portion of the
Performance Units as determined by the Committee at the time of
the Award of such Performance Units and as set forth in the
Agreement and (ii) be entitled to receive in respect of all
Performance Units which become vested as a result of a Change in
Control a cash payment within ten (10) days after such Change in
Control in an amount as determined by the Committee at the time
of the Award of such Performance Unit and as set forth in the
Agreement.
(b) With respect to Performance Shares, all or a
portion of any unissued Performance Shares shall be issued and
restrictions shall lapse immediately on all or a portion of the
Performance Shares in each case as determined by the Committee at
the time of the Award of such Performance Shares and as set forth
in the Agreement.
(c) The Agreements evidencing Performance Shares
and Performance Units shall provide for the treatment of such
Awards (or portions thereof) which do not become vested as the
result of a Change in Control, including, but not limited to,
provisions for the adjustment of applicable Performance
Objectives.
11.5 Non-Transferability. Until the vesting of
Performance Units or the lapsing of any restrictions on
Performance Shares, as the case may be, such Performance Units or
Performance Shares shall not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated.
12. Effect of a Termination of Employment.
The Agreement evidencing the grant of each Option and each
Award shall set forth the terms and conditions applicable to
such Option or Award upon a termination or change in the status
of the employment of the Optionee or Grantee by the Company, a
Subsidiary or a Division (including a termination or change by
reason of the sale of a Subsidiary or a Division), which,
except for Director Options, shall be as the Committee may, in
its discretion, determine at the time the Option or Award is
granted or thereafter.
13. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization,
the Committee shall conclusively determine the appropriate
adjustments, if any, to (i) the maximum number and class of
Shares or other stock or securities with respect to which Options
or Awards may be granted under the Plan, (ii) the maximum number
and class of Shares or other stock or securities with respect to
which Options or Awards may be granted to any Eligible Individual
in any three (3) calendar year period, (iii) the number and class
of Shares or other stock or securities which are subject to
outstanding Options or Awards granted under the Plan and the
exercise price therefor, if applicable, (iv) the number and class
of Shares or other securities in respect of which Director
Options are to be granted under Section 6 and (v) the Performance
Objectives.
(b) Any such adjustment in the Shares or other
stock or securities subject to outstanding Incentive Stock
Options (including any adjustments in the exercise price) shall
be made in such manner as not to constitute a modification as
defined by Section 424(h)(3) of the Code and only to the extent
otherwise permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization,
a Grantee of an Award shall be entitled to, or an Optionee shall
be entitled to exercise an Option with respect to, new,
additional or different shares of stock or securities, such new,
additional or different shares shall thereupon be subject to all
of the conditions, restrictions and performance criteria which
were applicable to the Shares subject to the Award or Option, as
the case may be, prior to such Change in Capitalization.
14. Effect of Certain Transactions.
Subject to Sections 7.4, 8.7, 10.4(b) and 11.4 or as otherwise
provided in an Agreement, in the event of (a) the liquidation
or dissolution of the Company or (b) a merger or consolidation
of the Company (a "Transaction"), the Plan and the Options and
Awards issued hereunder shall continue in effect in accordance
with their respective terms, except that following a
Transaction each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding
Options or Awards, as the case may be, upon exercise of any
Option or payment or transfer in respect of any Award, the same
number and kind of stock, securities, cash, property or other
consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share; provided,
however, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions,
restrictions and performance criteria which were applicable to
the Options and Awards prior to such Transaction.
15. Interpretation.
The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and the Committee shall interpret and administer
the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule
shall be inoperative and shall not affect the validity of the
Plan. Unless otherwise expressly stated in the relevant
Agreement, each Option (other than those granted with an exercise
price less than 100% of the Fair Market Value on the date of the
grant), Stock Appreciation Right and Performance Award granted
under the Plan is intended to be Performance-Based Compensation.
The Committee shall not be entitled to exercise any discretion
otherwise authorized hereunder with respect to such Options or
Awards if the ability to exercise such discretion or the exercise
of such discretion itself would cause the compensation
attributable to such Options or Awards to fail to qualify as
Performance-Based Compensation.
16. Pooling Transactions.
Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event of a Change in Control which is
also intended to constitute a Pooling Transaction, the
Committee shall make such equitable adjustments to outstanding
Options and Awards, if any, as are specifically recommended by
an independent accounting firm retained by the Company to the
extent reasonably necessary in order to assure that the Pooling
Transaction will qualify as such, including but not limited to
(a) deferring the vesting, exercise, payment, settlement or
lapsing of restrictions with respect to any Option or Award,
(b) providing that the payment or settlement in respect of any
Option or Award be made in the form of cash, Shares or
securities of a successor or acquirer of the Company, or a
combination of the foregoing, and (c) providing for the
extension of the term of any Option or Award to the extent
necessary to accommodate the foregoing, but not beyond the
maximum term permitted for any Option or Award.
17. Termination and Amendment of the Plan; Modification
of Options and Awards.
17.1 Plan Amendment or Termination. The Plan
shall terminate on the day preceding the tenth anniversary of the
date of its adoption by the Board and no Option or Award may be
granted thereafter. The Board may sooner terminate the Plan and
the Board may at any time and from time to time amend, modify or
suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension
or termination shall impair or adversely alter any Options or
Awards theretofore granted under the Plan, except with the
consent of the Optionee or Grantee, nor shall any amendment,
modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through
or as a result of the Plan; and
(b) to the extent necessary under any applicable
law, regulation or exchange requirement no amendment shall be
effective unless approved by the stockholders of the Company in
accordance with applicable law, regulation or exchange
requirement.
17.2 Modification of Options and Awards. No
modification of an Option or Award shall adversely alter or
impair any rights or obligations under the Option or Award
without the consent of the Optionee or Grantee, as the case may
be.
18. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved
incentive arrangement or as creating any limitations on the power
of the Board to adopt such other incentive arrangements as it may
deem desirable, including, without limitation, the granting of
stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in
specific cases.
19. Limitation of Liability.
As illustrative of the limitations of liability of the Company,
but not intended to be exhaustive thereof, nothing in the Plan
shall be construed to:
(a) give any person any right to be granted an
Option or Award other than at the sole discretion of the
Committee;
(b) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or
any Subsidiary to terminate the employment of any person at any
time; or
(d) be evidence of any agreement or
understanding, expressed or implied, that the Company will employ
any person at any particular rate of compensation or for any
particular period of time.
20. Regulations and Other Approvals; Governing Law.
20.1 Except as to matters of federal law, the Plan
and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State
of Delaware without giving effect to conflicts of laws principles
thereof.
20.2 The obligation of the Company to sell or
deliver Shares with respect to Options and Awards granted under
the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate
by the Committee.
20.3 The Board may make such changes as may be
necessary or appropriate to comply with the rules and regulations
of any government authority, or to obtain for Eligible
Individuals granted Incentive Stock Options the tax benefits
under the applicable provisions of the Code and regulations
promulgated thereunder.
20.4 Each Option and Award is subject to the
requirement that, if at any time the Committee determines, in its
discretion, that the listing, registration or qualification of
Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with,
the grant of an Option or Award or the issuance of Shares, no
Options or Awards shall be granted or payment made or Shares
issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
20.5 Notwithstanding anything contained in the
Plan or any Agreement to the contrary, in the event that the
disposition of Shares acquired pursuant to the Plan is not
covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), and is
not otherwise exempt from such registration, such Shares shall be
restricted against transfer to the extent required by the
Securities Act and Rule 144 or other regulations thereunder. The
Committee may require any individual receiving Shares pursuant to
an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to
the Company in writing that the Shares acquired by such
individual are acquired without a view to any distribution
thereof and will not be sold or transferred other than pursuant
to an effective registration thereof under said Act or pursuant
to an exemption applicable under the Securities Act or the rules
and regulations promulgated thereunder. The certificates
evidencing any of such Shares shall be appropriately amended to
reflect their status as restricted securities as aforesaid.
21. Miscellaneous.
21.1 Multiple Agreements. The terms of each
Option or Award may differ from other Options or Awards granted
under the Plan at the same time, or at some other time. The
Committee may also grant more than one Option or Award to a given
Eligible Individual during the term of the Plan, either in
addition to, or in substitution for, one or more Options or
Awards previously granted to that Eligible Individual.
21.2 Withholding of Taxes.
(a) At such times as an Optionee or Grantee
recognizes taxable income in connection with the receipt of
Shares or cash hereunder (a "Taxable Event"), the Optionee or
Grantee shall pay to the Company an amount equal to the federal,
state and local income taxes and other amounts as may be required
by law to be withheld by the Company in connection with the
Taxable Event (the "Withholding Taxes") prior to the issuance, or
release from escrow, of such Shares or the payment of such cash.
The Company shall have the right to deduct from any payment of
cash to an Optionee or Grantee an amount equal to the Withholding
Taxes in satisfaction of the obligation to pay Withholding Taxes.
The Committee may provide in the Agreement at the time of grant,
or at any time thereafter, that the Optionee or Grantee, in
satisfaction of the obligation to pay Withholding Taxes to the
Company, may elect to have withheld a portion of the Shares then
issuable to him or her having an aggregate Fair Market Value
equal to the Withholding Taxes.
(b) If an Optionee makes a disposition, within
the meaning of Section 424(c) of the Code and regulations
promulgated thereunder, of any Share or Shares issued to such
Optionee pursuant to the exercise of an Incentive Stock Option
within the two-year period commencing on the day after the date
of the grant or within the one-year period commencing on the day
after the date of transfer of such Share or Shares to the
Optionee pursuant to such exercise, the Optionee shall, within
ten (10) days of such disposition, notify the Company thereof, by
delivery of written notice to the Company at its principal
executive office.
21.3. Effective Date. The effective date of this
Plan shall be as determined by the Board, subject only to the
approval by the affirmative vote of the holders of a majority of
the voting power of the shares of Common Stock, Series B ESOP
Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock of the Company present, or represented, and entitled to
vote at a meeting of stockholders duly held in accordance with
the applicable laws of the State of Delaware within twelve (12)
months of the adoption of the Plan by the Board.
