Exhibit 10

 

Compensation of Named Executive Officers of Simpson Manufacturing Co., Inc.

 

Our executive 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’ annual salaries and expect to
contribute to their defined contribution profit sharing trust accounts, as
follows:

 

 

 

 

 

Estimated

 

 

 

2009

 

Profit Sharing

 

 

 

Salary

 

Trust Contribution(1)

 

 

 

 

 

 

 

Thomas J Fitzmyers

 

$

336,036

 

$

24,500

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

Barclay Simpson

 

150,000

 

15,000

 

Chairman of the Board

 

 

 

 

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

275,000

 

24,500

 

President and Chief Executive Officer of Simpson Strong-Tie Company Inc.

 

 

 

 

 

 

 

 

 

 

 

Michael J. Herbert

 

262,119

 

24,500

 

Vice President

 

 

 

 

 

 

 

 

 

 

 

Karen W. Colonias

 

262,119

 

24,500

 

Chief Financial Officer, Treasurer and Secretary

 

 

 

 

 

 

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(1)        If we employ the officer on December 31, 2009, we will (in 2010)
contribute to his or her profit sharing trust account 10% of his or her annual
salary, with a contribution limit of $24,500 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:

 

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

 

 

Acquired assets (excluding cash, real estate, goodwill and indefinite lived
intangible assets) based on tiered phase-in schedule

 

 

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

 

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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 officers’ 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 for the quarter is
less than the qualifying level for the quarter.

 

For the full year 2009, the annual operating profit goals, qualifying levels and
targeted payouts for each of the following executive officers are as follows:

 

 

 

Operating

 

Qualifying

 

Targeted

 

 

 

Profit Goal

 

Level(1)

 

Payout(1)

 

 

 

 

 

 

 

 

 

Thomas J Fitzmyers

 

$

66,205,000

 

$

66,069,000

 

$

271,000

 

 

 

 

 

 

 

 

 

Barclay Simpson

 

66,205,000

 

66,069,000

 

78,000

 

 

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

62,497,000

 

60,819,000

 

118,000

 

 

 

 

 

 

 

 

 

Michael J. Herbert

 

66,205,000

 

66,069,000

 

85,000

 

 

 

 

 

 

 

 

 

Karen W. Colonias

 

66,205,000

 

66,069,000

 

85,000

 

 

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(1)        Amounts represent actual qualifying level and payout for the first
two quarters of 2009 plus the expected qualifying level and the expected payout
for the last two quarters of 2009 if operating profit goals established at the
beginning of the year are met and qualifying levels are as projected at the
beginning of the year.

 

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.

 

2

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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 or branch meets the applicable operating
profit goal for the preceding year.  If we or the relevant subsidiary or branch
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, salaried pension contributions and self-insured
workers’ compensation costs, we anticipate granting stock options to the
following executive officers for the following numbers of shares of our common
stock:

 

 

 

Operating

 

Option

 

 

 

Profit Goal(1)

 

Grant

 

 

 

 

 

 

 

Thomas J Fitzmyers

 

$

65,578,000

 

18,000 shares

 

 

 

 

 

 

 

Barclay Simpson

 

65,578,000

 

2,000 shares

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

61,876,000

 

106,000 shares

 

 

 

 

 

 

 

Michael J. Herbert

 

65,578,000

 

40,000 shares

 

 

 

 

 

 

 

Karen W. Colonias

 

61,876,000

 

2,000 shares

 

 

 

19,245,000

 

4,000 shares

 

 

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(1)        Each Operating Profit Goal relates to Simpson Manufacturing
Co., Inc., except that the $61,876,000 Operating Profit Goal for each of Phillip
Terry Kingsfather and Karen W. Colonias relates to Simpson Strong-Tie Company
Inc., and the $19,245,000 Operating Profit Goal for Karen W. Colonias relates to
the Simpson Strong-Tie Company Inc. branch in Stockton, California.

 

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 less,
depending on the extent of the use of the airplane for business travel.

 

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 and Leadership Development Committee,
the Governance and Nominating Committee, and the Acquisition and Strategy
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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