Exhibit 10

 

Compensation of Named Executive Officers

 

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
2012, we have set the following officers’ annual salaries and expect to
contribute to their defined contribution profit sharing trust accounts, as
follows:

 

 

 

 

 

Estimated

 

 

 

 

 

Profit Sharing

 

 

 

2012

 

Trust 

 

 

 

Salary

 

Contribution{1}

 

 

 

 

 

 

 

 

 

Karen Colonias
President and Chief Executive Officer

 

$

350,000

 

$

25,000

 

 

 

 

 

 

 

Thomas J Fitzmyers
Chairman of the Board

 

267,376

 

25,000

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

 

 

 

 

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

 

305,910

 

25,000

 

 

 

 

 

 

 

Michael J. Herbert
Vice President

 

291,582

 

25,000

 

 

 

 

 

 

 

Brian J. Magstadt
Chief Financial Officer, Treasurer and Secretary

 

225,000

 

22,500

 

 

 

 

 

 

 

Jeffrey E. Mackenzie
Vice President

 

169,744

 

16,974

 

 

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{1}      If we employ the officer on December 31, 2012, or if he or she is age
sixty or older, we will (in 2013) contribute to his or her profit sharing trust
account 10% of his or her salary, with a contribution limit of $25,000 for 2012,
plus a pro rata share of forfeitures by other participants. The estimates in
this table assume that no forfeitures will occur.

 

The 2012 salaries represent a 3% increase for each of Phillip Terry Kingsfather,
Michael J. Herbert and Jeffrey E. Mackenzie, a 24% increase for Karen Colonias,
a 79% increase for Brian J. Magstadt and a 23% decrease for Thomas J Fitzmyers
from their 2011 salaries. The changes in salary for Karen Colonias, Thomas J
Fitzmyers and Brian J. Magstadt are related to the changes in their positions
with the Company.

 

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 Simpson Strong-Tie Company Inc. 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 Strong-Tie Company Inc.

 

Plus:

 

Stock compensation charges

 

 

Certain incentive compensation 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 Strong-Tie Company Inc., net of specified liabilities,
for the 3 months ended on the last day of the second month 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 Strong-Tie Company Inc.

 

 

 

Equals:

 

Qualifying level

 

Based on our operating profit for each of the 4 quarters of 2012, our officers
may receive payouts 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 payouts 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 2012, 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

 

Payout{1}

 

 

 

 

 

 

 

 

 

Karen Colonias

 

$

86,753,000

 

$

57,671,000

 

$

950,000

 

 

 

 

 

 

 

 

 

Thomas J Fitzmyers

 

86,753,000

 

57,671,000

 

640,000

 

 

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

86,753,000

 

57,671,000

 

800,000

 

 

 

 

 

 

 

 

 

Michael J. Herbert

 

86,753,000

 

57,671,000

 

389,000

 

 

 

 

 

 

 

 

 

Brian J. Magstadt

 

86,753,000

 

57,671,000

 

225,000

 

 

 

 

 

 

 

 

 

Jeffrey E. Mackenzie

 

86,753,000

 

57,671,000

 

180,000

 

 

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{1}      Amounts expected to be paid for the full year of 2012 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.

 

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Each of our officers participates in our 2011 Incentive Plan.  Whether we grant
restricted stock units under our 2011 Incentive Plan each year depends on
whether we meet the applicable operating profit goal for the preceding year.  If
we do not achieve the applicable operating profit goal for a year, we do not
grant restricted stock units to the affected officers for that year.  If we
achieve our operating profit goals for 2012, computed as income from operations
plus stock compensation charges, certain incentive compensation and commissions,
salaried pension contributions and self-insured workers’ compensation costs, we
anticipate granting restricted stock units to the following executive officers
for the following numbers of shares of our common stock:

 

 

 

 

 

Restricted

 

 

 

Operating

 

Stock Unit

 

 

 

Profit Goal{1}

 

Award

 

 

 

 

 

 

 

Karen Colonias

 

$

86,753,000

 

21,350 shares

 

 

 

 

 

 

 

Phillip Terry Kingsfather

 

86,753,000

 

10,675 shares

 

 

 

 

 

 

 

Brian J. Magstadt

 

86,753,000

 

5,340 shares

 

 

 

 

 

 

 

Thomas J Fitzmyers

 

86,753,000

 

3,865 shares

 

 

 

 

 

 

 

Michael J. Herbert

 

86,753,000

 

1,720 shares

 

 

 

 

 

 

 

Jeffrey E. Mackenzie

 

86,753,000

 

11,440 shares

 

 

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{1}    The Operating Profit Goal relates to Simpson Strong-Tie Company Inc.  We
use these parameters only for the purposes stated above.  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.

 

At their meeting on January 30, 2012, the Compensation and Leadership
Development Committee of our Board of Directors finalized additional restricted
stock unit awards and goals for Karen Colonias, Phillip Terry Kingsfather and
Brian J. Magstadt. Theses awards will be based on performance against estimated
sales of the products from our recent strategic acquisitions of S&P Clever
Reinforcement Company AG, S&P Clever Reinforcement International AG, Fox
Industries, Inc., Automatic Stamping, LLC and Automatic Stamping Auxiliary
Services, LLC (collectively, the “Recently Acquired Businesses”). The number of
restricted stock units may be increased or decreased based on the percentage
above or below estimated sales, but at least 75% of the sales goal must be
reached for an award to be earned. The number of potential restricted stock
units earned and the goals for these individuals are as follows:

 

 

 

Restricted Stock Unit Award

 

 

 

 

 

Phillip

 

 

 

 

 

Karen

 

Terry

 

Brian J.

 

Recently Acquired Businesses

 

Colonias

 

Kingsfather

 

Magstadt

 

 

 

 

 

 

 

 

 

75% of sales goal – $30,000,000

 

4,575 shares

 

2,287 shares

 

1,145 shares

 

100% of sales goal – $40,000,000

 

9,150 shares

 

4,575 shares

 

2,290 shares

 

150% of sales goal – $60,000,000

 

18,300 shares

 

9,150 shares

 

4,580 shares

 

 

We use these parameters only for the purposes stated above.  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.

 

The total number of restricted stock units earned by achieving both the
operating profit goal and the sales goal of the Recently Acquired Businesses may
be modified up or down by 10% based on a peer group comparison of total
shareholder return, including stock price appreciation and dividends paid. The
peer group consists of the following companies:

 

Illinois Tool Works

Fastenal Company

Gibralter Industries

Eagle Material Inc.

Masco Corporation

Trex Co. Inc.

USG Corporation

Stanley Black & Decker, Inc.

 

If the Company’s total shareholder return is below the peer group average, 90%
of the restricted stock units will be awarded, if it is at the peer group
average 100% of the restricted stock units will be awarded, and if it is above
the peer group average, 110% of the restricted stock units will be awarded.
Therefore, the maximum potential restricted

 

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stock units awards is 43,615 shares for Karen Colonias, 21,807 shares for
Phillip Terry Kingsfather and 10,912 shares for Brian J. Magstadt.

 

Also on January 30, 2012, the Compensation and Leadership Development Committee
of our Board of Directors approved the additional grant of 1,250 restricted
stock units to Mr. Herbert if the Committee determines that he completes the
introduction of products from the Recently Acquired Businesses into Asia or the
Middle East and another grant of 1,250 restricted stock units if the Committee
determines that he identifies an acquisition target in Asia or the Middle East.
In addition, he will be granted at least 1,250 restricted stock units if we
exceed our 2012 budgeted goal for sales in Asia and the Middle East by 10%, to
increase to a maximum of 2,500 shares if we exceed our 2012 budgeted goal for
sales in Asia and the Middle East by 15%, as follows:

 

 

 

Restricted

 

 

 

Stock Unit

 

Asia and the Middle East

 

Award

 

 

 

 

 

110% of sales goal – $9,350,000

 

1,250 shares

 

115% of sales goal – $9,775,000

 

2,500 shares

 

 

We use these parameters only for the purposes stated above. 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.

 

We also pay allowances for travel costs. Thomas J 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 2012
will be approximately $665,000, although the amount of compensation to be
recognized by Thomas J 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 and Leadership Development Committee did not renew the housing
allowance for Phillip Terry Kingsfather, and it will expire at the end of
July 2012. We estimate our cost for this allowance for 2012 will be
approximately $76,000.

 

Compensation of Directors

 

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

 

·                  an annual retainer of $40,000,

·                  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 Lead Independent Director an additional annual fee of $10,000. 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
Acquisition and Strategy 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.

 

Each of our independent directors is eligible to receive 1,425 restricted stock
units under our 2011 Incentive Plan for each year that we meet our annual
operating profit goal.  The operating profit goal for awards for our independent
directors is the same as the operating profit goal for awards to our Named
Executive Officers.

 

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