| ITEM
1.01 |
ENTRY
INTO A MATERIAL DEFINITIVE
AGREEMENT
|
EMPLOYMENT
AGREEMENT
The
Employment Agreement is effective as of March 24, 2006 and governs the
terms and
conditions of Ms. Adler’s employment through August 31, 2009. The Employment
Agreement replaces and supersedes an agreement dated August 4, 2005 entered
into
between the Company and Ms. Adler in connection with the commencement
of her
employment.
The
Employment Agreement provides for an annual base salary of $550,000 beginning
on
January 1, 2006, subject to annual review in connection with the Company’s
normal compensation review for executive officers, and may be increased
from
time to time in the sole discretion of the Company’s President & Chief
Executive Officer. The Employment Agreement also provides for a cash
bonus for
the fiscal year ending August 31, 2006 to be determined by the Company’s
President & Chief Executive Officer in his sole discretion, subject to
review of the Compensation Committee, based on considerations including
a
variety of financial and organizational objectives and the overall performance
of the Company, as well as the achievement of personal goals agreed with
the
Company’s President & Chief Executive Officer. Ms. Adler’s target bonus for
the fiscal year ending August 31, 2006 is $550,000, but the actual amount
may be
higher or lower subject to the considerations discussed in the previous
sentence. At the beginning of fiscal years 2007, 2008 and 2009 the Company’s
President & Chief Executive Officer will establish bonus programs that
provide for annual bonuses payable to Ms. Adler based on predetermined
(i)
objective Company financial performance criteria and (ii) clearly measurable
management objectives for Ms. Adler. The target bonus for fiscal year
2007 is 1
times Ms. Adler’s base salary for 2007, but the actual amount may be higher or
lower subject to the considerations in the previous sentence. The target
bonuses
for fiscal years 2008 and 2009 shall be the same as 2007, unless otherwise
agreed to by the Company’s President and Chief Executive Officer and Ms. Adler.
Ms.
Adler
is eligible to participate in the Company’s long term incentive programs
(“LTIP”), and awards under the LTIP will be made at the discretion of the
Compensation Committee, as recommended by the Company’s President and Chief
Executive Officer. In addition, the amount and terms of any stock option
grants
to Ms. Adler after March 24, 2006 shall be at the discretion of the Compensation
Committee, as recommended by the Company’s President and Chief Executive
Officer. The Employment Agreement also provides that Ms. Adler is eligible
to
participate in the Company’s employee benefit plans (other than the Company’s
Economic Value
Added
Bonus Plan), with participation under the Company’s retirement programs,
including the Supplemental Executive Retirement Bonus Plan, to begin
after June
1, 2006.
In
the event that Ms. Adler’s employment is terminated by the Company without
“cause” or by Ms. Adler for “good reason” (as such terms are defined in the
Employment Agreement) before September 1, 2009 and not under circumstances
that
would give rise to severance payments to Ms. Adler under the Change
in Control
Agreement, Ms. Adler would be entitled to receive (i) her base salary
and any
other compensation or benefits which have been earned or become payable
as of
the date of termination but which have not yet been paid, (ii) all
paid time off
accrued but untaken through the effective date of such termination,
(iii)
reimbursement of expenses incurred through the effective date of such
termination pursuant to the Company’s normal expense reimbursement policy, (iv)
a severance payment in a lump sum in an amount equal to two times her
annual
base salary plus two times her target annual bonus, and (v) a pro rata
portion
of her target bonus for the fiscal year in which the termination occurs
(based
on the portion of the year worked). In addition, all options to purchase
Company
stock then held by Ms. Adler would become immediately vested and exercisable
in
full and all performance shares and restricted stock then held by Ms.
Adler
would become immediately vested and all related forfeiture provisions
would
lapse.
If
any
payments received by Ms. Adler in connection with the termination of
her
employment by the Company without “cause” or by Ms. Adler for “good reason” will
be subject to any “excise tax” (as such terms are defined in the Employment
Agreement), the Company will make an additional payment to Ms. Adler
such that
Ms. Adler will receive net benefits as if no such tax were payable.
Ms.
Adler
is an “at-will” employee of the Company and her employment can be terminated at
any time, for any reason or no reason, upon notice by either the Company
or Ms.
Adler, subject to certain obligations of the Company and Ms. Adler contained
in
the Employment Agreement.
CHANGE
IN CONTROL AGREEMENT
The
Change in Control Agreement is effective as of March 24, 2006 and shall
continue
in effect until August 31, 2009 or earlier termination of Ms. Adler’s
employment; provided that the Change in Control Agreement will continue
in
effect for a period of twenty-four (24) months beyond the term provided
therein
if a “change in control” (as such term in defined in the Change in Control
Agreement) shall have occurred during such term.
In
the
event that Ms. Adler’s employment is terminated by the Company without “cause”
or by Ms. Adler for “good reason” within twenty-four (24) months following a
“change in control” of the Company (as such terms are defined in the Change in
Control Agreement), Ms. Adler would be entitled to receive (i) her base
salary
and any other benefits or awards which pursuant to the terms of any “plans” (as
defined in the Change in Control Agreement) have been earned or become
payable
but which have not yet been paid and (ii) severance pay in a single payment
in
an amount equal to three times her annual salary and target bonus. Ms.
Adler
would also continue to receive her life, accident and health insurance
benefits
for a period of up to thirty-six (36) months. In addition, all options
to
purchase Company stock then held by Ms. Adler would
become
immediately vested and exercisable in full and all performance shares
and
restricted stock then held by Ms. Adler would become immediately vested
and all
related forfeiture provisions would lapse.
If
any
payments or benefits received by Ms. Adler in connection with a “change in
control” will be subject to an excise tax on “excess parachute payments,” the
Company will make an additional payment to Ms. Adler such that Ms. Adler
will
receive net benefits as if no such tax were payable. If such additional
payments
are required, the Company will not be able to deduct such additional
payments
for federal income tax purposes and also will be denied such a deduction
for
most of the other payments made pursuant to the Change in Control Agreement
and
its other plans and policies.
Ms.
Adler
is obligated under the Change in Control Agreement to remain in the employ
of
the Company for a period of 60 days following a “potential change in control”
unless employment is terminated by Company without “cause” or by Ms. Adler for
“good reason” (as such terms are defined in the Change in Control
Agreement).
| ITEM
9.01 |
FINANCIAL
STATEMENTS AND
EXHIBITS
|
(d) Exhibits
10.1 Employment
Agreement with Tamara L. Adler (Lundgren).
10.2 Change
in
Control Severance Agreement with Tamara L. Adler (Lundgren).
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned
hereunto
duly authorized.
| |
|
|
| |
SCHNITZER
STEEL INDUSTRIES, INC. |
| |
(Registrant) |
|
|
|
| Date:
April 11, 2006 |
By: |
/s/ Richard
C. Josephson |
| |
Name:
Richard C. Josephson |
| |
Title: Secretary |
| |
EXHIBIT
INDEX
| Exhibit No. |
|
Description |
| |
|
|
| 10.1 |
|
Employment Agreement with Tamara
L. Adler
(Lundgren). |
| |
|
|
| 10.2 |
|
Change in Control Severance Agreement
with
Tamara L. Adler (Lundgren). |