EXHIBIT 10

 

Compensation of Named Executive Officers

 

Our officers are at-will employees.  We do not have a written employment
contract with any of them.  We or the officer can terminate the employment
relationship at any time, for any reason, with or without cause.  For 2008, we
have set the following officers’ salaries and expect to contribute to their
defined contribution profit sharing trust accounts, as follows:

 

 

 

 

 

Estimated
Profit Sharing Trust
Contribution{1}

 

 

 

 

 

 

 

 

2008

Salary

 

 

 

 

 

 

 

 

 

 

 

 

Thomas J Fitzmyers,

 

$

336,037

 

$

34,500

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

Barclay Simpson,

 

150,000

 

22,500

 

Chairman of the Board

 

 

 

 

 

 

 

 

 

 

 

Phillip Terry Kingsfather,

 

185,658

 

27,849

 

President and Chief Operating Officer of

 

 

 

 

 

Simpson Strong-Tie

 

 

 

 

 

 

 

 

 

 

 

Michael J. Herbert,

 

209,695

 

31,454

 

Chief Financial Officer and Secretary

 

 

 

 

 

 

 

 

 

 

 

Stephen P. Eberhard,

 

200,788

 

30,118

 

President and Chief Executive Officer of

 

 

 

 

 

Simpson Dura-Vent

 

 

 

 

 

 

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{1}  If we employ the officer on December 31, 2008, we will contribute to his
profit sharing trust account 15% of his annual salary, with a contribution limit
of $34,500 for 2008, plus a pro rata share of forfeitures by other participants.

 

Those officers participate in our Executive Officer Cash Profit Sharing Plan,
which is designed to reward them with quarterly cash bonuses based on operating
profit for their respective profit centers less a return on assets, as
established by our Board of Directors.  For this purpose, we generally define
operating profit as:

 

 

Income from operations (of the relevant subsidiary)

 

 

 

 

 

 

 

 

 

Less:

Amortization of goodwill

 

 

 

 

 

 

 

 

Plus:

Stock compensation charges

 

 

 

 

Certain bonuses and commissions

 

 

 

 

Salaried pension contributions

 

 

 

 

Self-insured workers’ compensation costs

 

 

 

 

 

 

Equals:  operating profit

 

 

 

Once we determine the operating profit, we subtract qualifying levels based on a
specified return on assets (also as established by our Board of Directors) to
determine the pool of profit available to our participating employees.  We
generally determine the return on assets as follows:

 

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                Average assets, net of specified liabilities, for the 3 months
ended on the last day of the month prior to the end of the quarter

 

 

Less:

Cash

 

 

 

Real estate

 

 

 

Self-Insured workers’ compensation reserves

 

 

Multiplied by:

 

Specified return percentage for company or subsidiary

 

 

 

 

Equals:

 

Qualifying level

 

 

Based on our operating profit for each of the 4 quarters of 2008, our officers
may receive a payout after our quarterly earnings are announced to the public. 
If the operating profit is lower or higher than the targeted operating profit,
the payout will be correspondingly lower or higher, but we generally do not make
any payment when the operating profit is less than the qualifying level.

 

For 2008, the operating profit goals, qualifying levels and targeted payouts for
each of the Named Executive Officers are as follows:

 

 

 

Operating

Profit Goal

 

Qualifying

Level

 

Targeted

Payout

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thomas J Fitzmyers

 

$

162,431,000

 

$

94,945,000

 

$

1,097,000

 

 

 

 

 

 

 

 

 

Barclay Simpson

 

162,431,000

 

94,945,000

 

315,000

 

 

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

161,774,000

 

87,751,000

 

617,000

 

 

 

 

 

 

 

 

 

Michael J. Herbert

 

162,431,000

 

94,945,000

 

494,000

 

 

 

 

 

 

 

 

 

Stephen P. Eberhard

 

657,000

 

7,194,000

 

—

 

 

We use these parameters only to provide incentive to our officers and employees
who participate in our Executive Officer Cash Profit Sharing Plan and our Cash
Profit Sharing Plan.  You should not draw any inference whatsoever from these
parameters about our future financial performance.  You should not take these
parameters as projections or guidance of any kind.

 

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Each of our officers participates in our 1994 Stock Option Plan.  Whether we
grant stock options under our 1994 Stock Option Plan each year depends on
whether we or our relevant subsidiary meets the applicable operating profit goal
for the preceding year.  If we or the relevant subsidiary does not achieve the
applicable operating profit goal for a year, we do not grant stock options to
the affected officer(s) for that year.  If we meet all applicable operating
profit goals for 2008, computed as income from operations of the relevant
business plus stock option charges, certain incentive compensation and
commissions and salaried pension contributions, we anticipate granting stock
options to the following officers for the following numbers of shares of our
common stock:

 

 

 

Operating
Profit Goal

 

Option
Grant

 

 

 

 

 

 

 

Thomas J Fitzmyers

 

$

163,583,000

 

9,000 shares

 

 

 

 

 

 

 

Barclay Simpson

 

163,583,000

 

1,000 shares

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

162,442,000

 

28,000 shares

 

 

 

 

 

 

 

Michael J. Herbert

 

163,583,000

 

6,000 shares

 

 

 

 

 

 

 

Stephen P. Eberhard

 

1,141,000

 

16,000 shares

 

 

We also pay allowances for travel costs.  Mr. Fitzmyers receives compensation
for the cost to hire an airplane for travel between his home and our offices or
for business travel.  We compute the cost of the use of airplanes using the
Standard Industrial Fare Level tables in the applicable Internal Revenue Service
Regulations. We estimate our cost for this allowance for 2008 will be
approximately $400,000, although the amount of compensation to be recognized by
Mr. Fitzmyers under the Internal Revenue Service Regulations may be somewhat
less, depending on the extent of the use of the airplane for business travel.

 

We pay Mr. Eberhard an allowance for an automobile for business use and for his
personal use.  We estimate our cost for this allowance for 2008 will be
approximately $15,600.

 

We pay Mr. Kingsfather an allowance for housing.  We estimate our cost for this
allowance for 2008 will be approximately $130,000.

 

Compensation of Directors

 

We pay each of our directors whom we do not compensate as an officer or employee
–

 

·                  an annual retainer of $32,000,

·                  a fee of $2,000 for attending a scheduled meeting of our
Board of Directors, whether he or she attends in person or by telephone,

·                  a fee of $2,000 for attending a scheduled committee meeting
held on a day when our Board of Directors does not meet, whether he or she
attends in person or by telephone,

·                  a fee of $1,000 for attending a committee meeting on the same
day as a scheduled meeting of our Board of Directors or another committee,
whether he or she attends in person or by telephone, and

·                  a fee of half the normal meeting fee for attending an
unscheduled Board of Directors or committee meeting held by telephone.

 

We pay the Chair of the Audit Committee an additional annual fee of $8,000.  We
pay the Chair of each of the Compensation Committee and the Governance and
Nominating Committee an additional annual fee of $4,000.  We reimburse outside
directors for expenses that they incur in attending Board of Directors and
committee meetings and educational programs.  We pay each outside director
$3,000 per day and reimburse his or her expenses when he or she visits our
facilities to observe operations.

 

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Each of our independent directors is eligible to receive stock options under our
1995 Independent Director Stock Option Plan for each year that we meet our
annual operating profit goal.  The operating profit goal for stock option grants
for our independent directors is the same as the operating profit goal for stock
option grants to Messrs. Fitzmyers, Simpson and Herbert.  We grant each
independent director an option to purchase 4,000 shares of our common stock in
the first year we make our operating profit goal after he or she is appointed to
our Board of Directors and an option to purchase 5,000 shares of our common
stock for each subsequent year that we make our operating profit goal.

 

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