Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 8, 2009, the Sparton Corporation 2010 Long-Term Stock Option
Incentive Plan (the "LTIP") was approved and adopted, subject to shareholder
approval. The LTIP is designed to align the interests of employees and directors
of Sparton Corporation, an Ohio corporation ("Sparton") selected to receive
awards with those of its shareholders by rewarding long-term decision-making and
actions for the betterment of Sparton. Sparton believes that equity-based
compensation assists in the attraction and retention of qualified employees and
directors and provides them with additional incentive to devote their best
efforts to pursue and sustain Sparton's superior long-term performance,
enhancing the value of Sparton for the benefit of its shareholders.
The LTIP will be administered and interpreted by the Compensation Committee
appointed by the Board of Directors ("Committee"), which is required to have at
least two members who qualify as non-employee directors. The Committee is
authorized to (a) construe and interpret the LTIP, the rules and regulations
under the LTIP, and all grants under the LTIP, (b) adopt, amend and rescind
rules and procedures relating to the administration of the LTIP as, in its
opinion, may be advisable in the administration of the LTIP, and (c) except as
provided in the LTIP, make all other determinations deemed necessary or
advisable under the LTIP. The Committee may, except to the extent prohibited by
applicable law or the listing standards of the New York Stock Exchange, allocate
all or any portion of its responsibilities and powers to any one or more of its
members or to any other person or persons selected by it, including, without
limitation, Sparton's Chief Executive Officer. However, the Committee may not
delegate its responsibilities and powers if such delegation would cause an award
made to an individual subject to Section 16 of the Securities Exchange Act of
1934 ("Exchange Act") not to qualify for an exemption from Section 16(b) of the
Exchange Act. In addition, it may not delegate its authority with respect to
qualified performance-based grants, except to the extent permitted by the
performance exception under Section 162(m) of the Internal Revenue Code.
Any directors, officers and employees of Sparton and its subsidiaries and
affiliates, as well as prospective officers and employees who have accepted
offers of employment, may be selected by the Committee to become participants in
the LTIP (collectively, "Participants") in accordance with the terms of the
LTIP.
The Committee may, in its discretion, grant awards in the form of stock options,
stock appreciation rights, restricted stock, restricted stock units, performance
awards and other stock-based awards to the Participants under the LTIP
(collectively, "Awards"), subject to approval of the Board of Directors.
The Committee may cancel all or any portion of any Award, whether or not vested
or deferred, as set forth below. Upon cancellation, the Award recipient shall
forfeit the Award and any benefits attributable to such canceled Award or
portion thereof. The Committee may cancel an Award if, in its sole discretion,
the Committee determines in good faith that the Award recipient has done any of
the following: (i) committed a felony; (ii) committed fraud; (iii) embezzled;
(iv) disclosed confidential information or trade secrets; (v) was terminated for
cause; (vi) engaged in any activity in competition with the business of Sparton
or any subsidiary or affiliate of Sparton; or (vii) engaged in conduct that
adversely affected Sparton.
Awards under the LTIP will be non-transferable except by will or pursuant to the
laws of intestacy.
Participants are required to pay to Sparton, or make arrangements satisfactory
to Sparton regarding the payment of, any taxes that are required to be withheld
with respect to Awards under the LTIP. Unless otherwise determined by Sparton,
the legally required minimum withholding obligations may be settled with shares
of Sparton common stock, including shares that are part of the grant that gives
rise to the withholding requirement.
The LTIP will be effective as of the date it is approved by the shareholders. It
will terminate on the tenth anniversary of that date, unless earlier terminated
in accordance with its provisions. Awards outstanding as of the date of
termination of the LTIP will not be affected or impaired by the termination.
The Committee or the Board of Directors may amend, alter, or discontinue the
LTIP, but no amendment, alteration or discontinuation shall be made which would
materially impair the rights of an Award recipient with respect to a previously
granted Award without such Award recipient's consent, except such an amendment
made to comply with applicable law, including, without limitation, Section 409A
of the Internal Revenue Code, stock exchange rules or accounting rules. In
addition, no such amendment shall be made without the approval of Sparton's
shareholders to the extent such approval is required by applicable law or the
listing standards of the applicable stock exchange.
Because Awards under the LTIP are discretionary, no specific Award grants or
amounts are determinable at this time.
The description of the LTIP above does not purport to be complete and is
qualified in its entirety by reference to the full text of the LTIP which is
attached hereto as Exhibit 10.1 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit 10.1 Sparton Corporation 2010 Long-Term Stock Option Incentive Plan
