Termination Fees at Armstrong: $55.6M

Lancaster, PA, April 3, 2007--No matter what happens to Armstrong World Industries, no matter who ends up buying the company, its top executives have a safety net, according to the Lancaster New Era. A large, $55.6 million safety net.

The newspaper reported that the top five executives would get that much money in total if they all were terminated, Armstrong has disclosed.

It said Individually, if any were let go, he would receive a check in the seven or eight figures.

Michael D. Lockhart, as the company's chairman and chief executive officer, its top executive, the newspaper said would get the most, $24.7 million.

That would equal nearly four times his 2006 total pay of $6.48 million, which the New Era reported Saturday.

The potential "change of control" payments to the executives were itemized in Armstrong's annual report, which was filed recently with the U.S. Securities & Exchange Commission.

The company howed what its top executives would receive if they left under various circumstances.

However, none would get a cent if he would resign, except for a narrow exception, or be fired "for cause."

"For cause" is defined as "willful and continued" failure to do their job even after receiving a written warning from the Armstrong board, or "willful" conduct that harms the company, or being convicted of any felony.

The "change of control" windfalls described here would not require a sale of Armstrong to come into play; Armstrong said in February it was for sale and that it expects a deal to be completed.

Rather, these "change of control" payouts would be triggered even if the executives were terminated now, without Armstrong being sold, because the provision was triggered when Armstrong exited bankruptcy in October.

At that time, Armstrong was reborn as a new corporation having a new stock, with two-thirds of the stock owned by a trust formed to pay asbestos claims filed against the old Armstrong corporation.

The "change of control" payouts, sometimes referred to as "golden parachutes," come with one twist. Generally speaking, they would be paid if the executives were terminated.

But all of the executives, including Lockhart, could collect their payouts if they choose to leave during a 30-day window that comes a year after the "change in control" occurred.

Lockhart's "change of control" payout of $24.7 million would include $7.0 million in severance, a $3.1 million retirement payment and $7.4 million in accelerated long-term incentive payments, among other items.

Those long-term incentives, to be paid in future years in cash, stock options and restricted stock if certain objectives were met, instead would be paid immediately in a lump sum.

Chief financial officer F. Nicholas Grasberger would receive a total of $7.0 million. Stephen J. Senkowski, president and CEO of the Armstrong Building Products division, would get $13.1 million.

General counsel John N. Rigas would receive $5.5 million. Frank J. Ready, president and CEO of the North American Flooring Operations division, would receive $5.4 million.