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 2009, we
have set the following officers’ salaries and expect to contribute to their
defined contribution profit sharing trust accounts, as follows:

 

 

2009
Salary

 

Estimated
Profit Sharing
Trust
Contribution(1)

 

 

 

 

 

 

 

Thomas J Fitzmyers
President and Chief Executive Officer

 

$

336,036

 

$

36,750

 

 

 

 

 

 

 

Barclay Simpson
Chairman of the Board

 

150,000

 

22,500

 

 

 

 

 

 

 

Phillip Terry Kingsfather
President and Chief Operating Officer of Simpson Strong-Tie

 

275,000

 

36,750

 

 

 

 

 

 

 

Michael J. Herbert
Chief Financial Officer, Treasurer and Secretary

 

262,119

 

36,750

 

 

 

 

 

 

 

Jeffrey E. Mackenzie
Vice President

 

160,000

 

24,000

 

 

 

 

 

 

 

Stephen P. Eberhard
President and Chief Executive Officer of Simpson Dura-Vent

 

250,985

 

36,750

 

 

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(1)  If we employ the officer on December 31, 2009, we will contribute to his
profit sharing trust account, paid in 2010, 15% of his annual salary, with a
contribution limit of $36,750 for 2009, 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 Simpson Manufacturing Co., Inc. or relevant subsidiary

 

                               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 of Simpson Manufacturing Co., Inc. or relevant subsidiary, 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

 

 

 

Goodwill and indefinite lived intangible assets

 

 

 

Self-Insured workers’ compensation reserves

 

 

 

 

 

Multiplied by:

 

Specified return percentage for Simpson Manufacturing Co., Inc. or relevant
subsidiary

 

 

 

 

 

Equals:

 

Qualifying level

 

Based on our operating profit for each of the 4 quarters of 2009, our officers
may receive a payout after our quarterly earnings are announced to the public.
Whether or not we pay amounts in any quarter under the Executive Officer Cash
Profit Sharing Plan does not affect our officer’s ability to earn amounts in any
other quarter. 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 2009, 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

 

$

66,205,000

 

$

76,897,000

 

$

270,000

 

 

 

 

 

 

 

 

 

Barclay Simpson

 

66,205,000

 

76,897,000

 

78,000

 

 

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

62,497,000

 

70,468,000

 

102,000

 

 

 

 

 

 

 

 

 

Michael J. Herbert

 

66,205,000

 

76,897,000

 

85,000

 

 

 

 

 

 

 

 

 

Jeffrey E. Mackenzie

 

66,205,000

 

76,897,000

 

37,000

 

 

 

 

 

 

 

 

 

Stephen P. Eberhard

 

3,708,000

 

6,429,000

 

30,000

 

 

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 2009, 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

 

$

65,620,000

 

18,000 shares

 

 

 

 

 

 

 

Barclay Simpson

 

65,620,000

 

2,000 shares

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

61,912,000

 

106,000 shares

 

 

 

 

 

 

 

Michael J. Herbert

 

65,620,000

 

40,000 shares

 

 

 

 

 

 

 

Jeffrey E. Mackenzie

 

65,620,000

 

40,000 shares

 

 

 

 

 

 

 

Stephen P. Eberhard

 

3,708,000

 

32,000 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 2009 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 2009 will be
approximately $16,000.

 

The Compensation Committee renewed the housing allowance for Mr. Kingsfather for
an additional 2 years, through 2011.  We estimate our cost for this allowance
for 2009 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, Herbert and Mackenzie.  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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