def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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þ Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to Section 240.14a-12
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Diebold, Incorporated
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
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(1) |
Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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5995 Mayfair
Road
P. O. Box 3077 North Canton, Ohio
44720-8077
March 16, 2010
Dear Shareholder:
The 2010 Annual Meeting of Shareholders of Diebold, Incorporated
will be held at the Sheraton Suites, 1989 Front Street, Cuyahoga
Falls, Ohio 44221, on Thursday, April 29, 2010 at
10:00 a.m. EST. For your convenience, we are pleased
to offer a webcast of the annual meeting at
http://www.diebold.com.
All holders of record of Diebold Common Shares as of
March 1, 2010 are entitled to vote at the 2010 Annual
Meeting.
As described in the accompanying Notice and Proxy Statement, you
will be asked to (i) elect ten directors, (ii) ratify
the appointment of KPMG LLP as independent auditors for 2010,
and (iii) re-approve the Diebold, Incorporated Annual Cash
Bonus Plan.
Diebolds Annual Report for the year ended
December 31, 2009 is included herein as well as your proxy
card. Please indicate your voting instructions and sign, date
and return this proxy card promptly.
If you are planning to attend the meeting, directions to the
meeting location are included on the back page. If you are
unable to attend the meeting, you may listen to the broadcast
that will be available on Diebolds web site at
http://www.diebold.com.
The replay can also be accessed on the site for up to three
months.
We look forward to seeing those of you who will be attending the
meeting.
Sincerely,
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JOHN N. LAUER Chairman of the Board
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THOMAS W. SWIDARSKI
President and Chief Executive Officer
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5995 Mayfair Road
P.O. Box 3077 North Canton, Ohio
44720-8077
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 29, 2010
10:00 a.m. EST
Dear Shareholder,
The Annual Meeting of Shareholders of Diebold, Incorporated will
be held at the Sheraton Suites, 1989 Front Street, Cuyahoga
Falls, Ohio 44221, on April 29, 2010 at
10:00 a.m. EST, for the following purposes:
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1.
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To elect ten directors;
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2.
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To ratify the appointment of KPMG LLP as the Companys
independent auditors for the year 2010; and
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3.
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To re-approve the Diebold, Incorporated Annual Cash Bonus Plan.
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Your attention is directed to the attached proxy statement,
which fully describes these items.
Any action on the items of business described above may be
considered at the Annual Meeting at the time and on the date
specified above or at any time and date to which the Annual
Meeting may be properly adjourned or postponed.
Holders of record of Diebold Common Shares at the close of
business on March 1, 2010 will be entitled to vote at the
Annual Meeting.
The enclosed proxy card is solicited, and the persons named
therein have been designated, by the Board of Directors of the
Company.
By Order of the Board of Directors
CHAD F. HESSE
Senior Corporate Counsel and Corporate Secretary
March 16, 2010
(approximate mailing date)
YOU ARE
REQUESTED TO COOPERATE IN ASSURING A
QUORUM BY FILLING IN, SIGNING, DATING AND PROMPTLY
RETURNING THE ENCLOSED PROXY.
TABLE OF
CONTENTS
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Exhibit A
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Table of Contents
DIEBOLD,
INCORPORATED
5995 Mayfair Road
P.O. Box 3077 North Canton, Ohio
44720-8077
PROXY
STATEMENT
Annual
Meeting of Shareholders, April 29, 2010
This proxy statement is furnished to shareholders of Diebold,
Incorporated (the Company) in connection with the
solicitation by the Board of Directors of proxies that will be
used at the 2010 Annual Meeting of Shareholders to be held at
the Sheraton Suites, 1989 Front Street, Cuyahoga Falls, Ohio
44221, on April 29, 2010, at 10:00 a.m. EST, or
any adjournments thereof, for the purpose of considering and
acting upon the matters referred to in the preceding Notice of
Annual Meeting and more fully discussed below.
Record
Date and Share Ownership
On March 1, 2010, the record date for the meeting, the
outstanding voting securities of the Company consisted of
66,295,977 Common Shares, $1.25 par value per share, all of
one class. Each shareholder of record as of the close of
business on March 1, 2010 will be entitled to one vote for
each Common Share held on that date.
Submitting
and Revoking Your Proxy
This proxy statement and accompanying form of proxy were first
mailed to shareholders on or about March 16, 2010. If you
complete and submit your proxy, the persons named as proxies on
your proxy card, which we refer to as the Proxy Committee, will
vote the shares represented by your proxy in accordance with
your instructions.
If you submit a proxy card but do not fill out the voting
instructions on the proxy card, the Proxy Committee will vote
the shares represented by your proxy as follows:
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FOR the election of the director-nominees set forth in
Proposal No. 1: Election of Directors.
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FOR the ratification of the appointment of the
independent auditors set forth in Proposal No. 2:
Ratification of Appointment of Independent Auditors.
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FOR the re-approval of the Companys Annual Cash
Bonus Plan set forth in Proposal No. 3:
Re-Approval of the Diebold, Incorporated Annual Cash Bonus
Plan.
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In addition, if other matters are properly presented for voting
at the Annual Meeting, the Proxy Committee will vote on such
matters in accordance with their best judgment. We have not
received notice of other matters that may properly be presented
for voting at the Annual Meeting.
Shareholders may revoke the authority granted by their proxies
at any time before the exercise of the powers conferred thereby
by: providing notice in writing delivered to the Secretary of
the Company; submitting a subsequently dated proxy; or attending
the Annual Meeting, withdrawing the proxy and voting in person.
Cumulative
Voting
If a shareholder gives written notice to the President, any Vice
President or Secretary at least 48 hours prior to the time
fixed for holding the Annual Meeting that the shareholder
desires that the voting for the election of directors shall be
cumulative, and if an announcement of such notice is made upon
convening of the Annual Meeting by the Chairman or Secretary or
by or on behalf of the shareholder giving such notice, each
shareholder will have cumulative voting rights.
In cumulative voting, each shareholder may cast a number of
votes equal to the number of shares owned multiplied by the
number of directors to be elected, and the votes may be cast for
one nominee only or distributed among the nominees.
In the event that voting at the Annual Meeting is to be
cumulative, unless contrary instructions are received on the
enclosed proxy, it is presently intended
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that all votes represented by properly executed proxies will be
divided evenly among the candidates nominated by the Board.
However, if voting in such manner would not be effective to
elect all such nominees, such votes will be cumulated at the
discretion of the Proxy Committee so as to maximize the number
of such nominees elected.
Votes
Required to Adopt Proposals
The results of shareholder voting at the Annual Meeting will be
tabulated by the inspectors of elections appointed for the
Annual Meeting. We intend to treat properly executed proxies
that are marked abstain as present for purposes of
determining whether a quorum has been achieved at the Annual
Meeting, but will not count any broker non-votes for such
purpose.
The director-nominees receiving the greatest number of votes
will be elected. Votes withheld with respect to the election of
directors will not be counted in determining the outcome of that
vote. However, our Board of Directors has adopted a policy that
any director-nominee that is elected but receives a greater
number of votes withheld from his or her election than votes in
favor of election is expected to tender his or her resignation
following certification of the shareholder vote, as described in
greater detail below under Majority Voting
Policy. All other matters to be considered at the
Annual Meeting require, for approval, the affirmative vote of a
majority of Common Shares voted at the meeting in person or by
proxy. Broker non-votes and abstentions with respect to the
proposal to ratify the appointment of the independent auditors
and the proposal to re-approve the annual cash bonus plan will
not be counted for determining the outcome of those proposals.
Board
Leadership Structure
We currently separate the roles of our Chief Executive Officer,
or CEO, and our Chairman of the Board; however, in the past, we
have combined these roles. The Board separated the roles upon
the election of our current CEO in late 2005 to allow him to
concentrate on re-aligning our business priorities and running
our business operations as we transitioned to new leadership.
The Board does not have a specific policy with respect to
separating versus combining the CEO and Chairman roles, or
whether the Chairman should be an employee or non-employee
director. Therefore, while the Board currently separates the
roles of CEO and Chairman, the Board has the right to combine
those roles in the future if it determines that such a
combination would be in the best interest of the Company and its
shareholders. As such, the Board, primarily through the Board
Governance Committee, periodically reviews our leadership
structure to determine if it is still appropriate in light of
current corporate governance standards, market practices, our
specific circumstances and needs, and any other factors that may
be relevant to the discussion.
Board
Risk Oversight
The Board has an active role, as a whole and also at the
committee level, in overseeing management of the Companys
risks. The Board and the relevant committees receive regular
reports from members of senior management on areas of material
risk to the Company, including operational, financial,
strategic, competitive, reputational, legal and regulatory
risks. The Board also meets with senior management, at least
annually, for a
two-day
strategic planning session and discussion of the key risks
inherent in our short- and long-term strategies at the
development stage, and also receives periodic updates on our
strategic initiatives throughout the year.
At the committee level, our Audit Committee regularly reviews
our financial statements, financial and other internal controls,
and remediation of material weaknesses in internal controls. Our
Compensation Committee regularly reviews our executive
compensation policies and practices, and employee benefits, and
the risks associated with each. Our Board Governance Committee
manages risks associated with the independence of our Board,
corporate governance and potential
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conflicts of interest. Our Investment Committee oversees the
management of risks associated with the Companys credit,
liquidity, investments and investment strategy. While each
committee is responsible for evaluating certain risks and
overseeing the management of such risks, the entire Board of
Directors is regularly informed through committee reports about
such risks.
Further, we have several management committees that meet
regularly to discuss risks and potential risks as they arise or
may arise from
day-to-day
in their various functional areas, and regularly report to the
appropriate Board committees and the entire Board. Our
Management Investment Committee reports directly to our
Investment Committee; our Governance Risk and Compliance
Oversight Committee reports directly to our Audit Committee; and
our Benefits Committee reports directly to our Compensation
Committee.
Both the Audit Committee and the Compensation Committee of the
Board also rely on the advice and counsel of our independent
auditors and independent compensation consultant, respectively,
to raise awareness of any risk issues that may arise during
their regular reviews of the Companys financial
statements, audit work and executive compensation policies and
practices, as applicable.
Finally, we have robust internal dialog amongst our operations,
finance, treasury, tax, legal and internal audit departments,
among others, whenever a potential risk arises, and any such
discussions are escalated to our CEO, Chief Financial Officer,
or CFO, Vice President and General Counsel, Chief Human
Resources Officer, Vice President and Chief Technology Officer
or Vice President, Internal Audit, as appropriate, with open
lines of communication among them, the management committees
described above, the various committees of the Board and the
entire Board.
We believe that the Boards approach to risk oversight, as
described above, optimizes its ability to assess the various
risks, make informed cost-benefit decisions, and approach
emerging risks in a proactive manner for the Company. We also
believe that our board leadership structure complements our risk
management structure, as it allows our independent directors,
through the four fully independent committees, to exercise
effective oversight of the actions of management in identifying
risks and implementing effective risk management policies and
controls.
Board
Committees and Composition
During 2009, the Board held seven meetings, in person or
telephonically. All of our current directors attended 75% or
more of the aggregate of all meetings of the Board and the Board
committees on which they served during the period. During 2009,
the Board had four standing committees: Audit Committee, Board
Governance Committee, Compensation Committee and Investment
Committee. Below is a summary of our committee structure and
membership information during 2009:
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Mr. Bockius retired from the
Board effective as of the Annual Meeting of Shareholders held in
April 2009.
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Mr. Cheng joined the Board and
the Audit Committee effective as of August 1, 2009.
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Mr. Cox was named Chairman of
the Compensation Committee as of April 23, 2009, following
Mr. Lassiters move to the Audit Committee.
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Mr. Lassiter served as
Chairman of the Compensation Committee until April 23,
2009, at which time he stepped down from the Compensation
Committee and joined the Audit Committee.
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Mr. Roorda served on the Audit
and Investment Committees until April 23, 2009, at which
time he stepped down from those committees and joined the
Compensation and Board Governance Committees.
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Audit
Committee
This committee is a separately-designated standing audit
committee established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934,
and its functions are described below under Report of
Audit Committee. The committees current charter
is available on our web site at
http://www.diebold.com.
The current members of the Audit Committee are Henry D. G.
Wallace, Chair, Mei-Wei Cheng, Richard L. Crandall, Phillip B.
Lassiter and Alan J. Weber, all of whom are independent. In
addition, the Board has determined that Messrs. Wallace and
Weber are audit committee financial experts. This committee met
in person or telephonically seven times during 2009, and had
informal communications between themselves and management, as
well as with our independent auditors, at various other times
during the year.
Board
Governance Committee
This committees functions include reviewing the
qualifications of potential director candidates and making
recommendations to the Board to fill vacancies or to expand the
size of the Board, when appropriate. This committee also makes
recommendations as to the composition of the various committees
of the Board, compensation paid to the directors for their
services on the Board and on Board committees, and develops and
recommends corporate governance principles. The committees
current charter is available on our web site at
http://www.diebold.com.
The current members of the Board Governance Committee are Gale
S. Fitzgerald, Chair, Phillip B. Lassiter, John N. Lauer and
Eric J. Roorda, all of whom are independent. This committee met
in person or telephonically five times during 2009.
Compensation
Committee
This committee administers our executive pay program. The role
of the committee is to oversee our equity plans (including
reviewing and approving equity grants to executive officers) and
to annually review and approve all pay decisions relating to
executive officers. This committee also assesses achievement of
corporate and individual goals, as applicable, by the executive
officers under our short- (annual) and long-term incentive
plans. This committee reviews the management succession plan and
proposed changes to any of our benefit plans, such as retirement
plans, deferred compensation plans and 401(k) plans. The
committees current charter is available on our web site at
http://www.diebold.com.
The current members of the Compensation Committee are Phillip R.
Cox, Chair, Gale S. Fitzgerald, John N. Lauer and Eric J.
Roorda, all of whom are independent. This committee met in
person or telephonically four times during 2009.
Investment
Committee
This committees functions include establishing the
investment policies, including asset allocation, for our cash,
short-term securities and retirement plan assets, overseeing the
management of those assets, ratifying fund managers recommended
by management and reviewing at least annually the investment
performance of our retirement plans and 401(k) plans to assure
adequate and competitive returns. The committees current
charter is available on our web site at
http://www.diebold.com.
The current members of the Investment Committee are Alan J.
Weber, Chair, Phillip R. Cox, Richard L. Crandall and Henry D.
G. Wallace. This committee met one time in 2009.
Director
Independence
The Board has determined that each of Mei-Wei Cheng, Phillip R.
Cox, Richard L. Crandall, Gale S. Fitzgerald, Phillip B.
Lassiter, John N. Lauer, Eric J. Roorda, Henry D. G. Wallace and
Alan J. Weber, which includes each of the current members of the
Audit Committee, the Board Governance Committee and the
Compensation Committee, has no material relationship with the
Company (either directly or as a
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partner, shareholder or officer of an organization that has a
relationship with the Company) and is independent within our
director independence standards, which reflect the New York
Stock Exchange, or NYSE, director independence standards as
currently in effect.
In making this determination with respect to Mr. Weber, the
Board determined that the provision of proxy processing, mailing
and tabulation services by Broadridge Financial Solutions, Inc.,
the board of directors of which Mr. Weber is a member, did
not create a material relationship or impair the independence of
Mr. Weber because he serves only as a member of such board,
and the nature of the services provided and the fees paid by the
Company for such services were less than $100,000 in 2009.
Under our director independence standards, a director will be
determined not to be independent under the following
circumstances:
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The director is, or has been within the last three years, an
employee of ours, or an immediate family member is, or has been
within the last three years, an executive officer, of ours;
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The director has received, or has an immediate family member who
has received, during any
12-month
period within the last three years, more than $120,000 in direct
compensation from us, other than director and committee fees and
pension or other forms of deferred compensation for prior
service (provided such compensation is not contingent in any way
on continued service);
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(a) The director is a current partner or employee of a firm
that is our internal or external auditor; (b) the director
has an immediate family member who is a current partner of such
a firm; (c) the director has an immediate family member who
is a current employee of such a firm and personally works on our
audit; or (d) the director has been, or a member of his or
her immediate family has been, a partner or employee of such a
firm and personally worked on our audit during the last three
years;
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The director or an immediate family member is, or has been
within the last three years, employed as an executive officer of
another company where any of our present executive officers at
the same time serves or served on that companys
compensation committee;
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The director is a current employee, or an immediate family
member is a current executive officer, of a company that has
made payments to, or received payments from, us for property or
services in an amount which, in any of the last three fiscal
years, exceeds the greater of $1 million, or two percent of
such other companys consolidated gross revenues;
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The director has engaged in a transaction with us for which we
have been or will be required to make a disclosure under
Item 404(a) of
Regulation S-K
promulgated by the SEC; or
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The director has any other material relationship with us, either
directly or as a partner, shareholder or officer of an
organization that has a relationship with us.
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Thomas W. Swidarski does not meet the aforementioned
independence standards because he is our President and CEO, and
is our employee.
Our director independence standards are available on our web
site at
http://www.diebold.com.
In addition, except for employment arrangements with the Chief
Executive Officer and other management directors that may be on
the Board from time to time, we do not engage in transactions
with directors or their affiliates if a transaction would cause
an independent director to no longer be deemed independent,
would present the appearance of a conflict of interest or is
otherwise prohibited by law, rule or regulation. This includes,
directly or indirectly, any extension, maintenance or renewal of
an extension of credit to any of our directors.
This prohibition also includes significant business dealings
with directors or their affiliates, charitable contributions
which would require disclosure in our proxy statement under the
rules of the NYSE, and consulting contracts with, or other
indirect forms of compensation to, a director. Any waiver of
this policy may be made only by the Board and must be promptly
disclosed to our shareholders.
Communications
with Directors
In accordance with the NYSEs corporate governance
standards, our non-management directors meet at regularly
scheduled executive sessions without management present. Our
Chairman of the Board, John N. Lauer, is an independent director
and presides at these sessions. Shareholders and interested
parties
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may communicate with our committee chairs or with our
non-management directors as a group, by sending an email to:
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Audit Committee - auditchair@diebold.com
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Board Governance Committee - bdgovchair@diebold.com
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Compensation Committee - compchair@diebold.com
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Directors - nonmanagementdirectors@diebold.com
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Communication may also be directed in writing to such person or
group at Diebold, Incorporated, Attention: Corporate Secretary,
5995 Mayfair Road, P.O. Box 3077, North Canton,
Ohio
44720-8077.
The Board has approved a process for handling communications
received by the Company and addressed to non-management members
of the Board. Under that process, the Corporate Secretary will
review all such communications and determine whether such
communications require immediate attention. The Corporate
Secretary will forward such communications, or a summary of such
communications, to the appropriate director or directors.
A majority of the independent directors of the Board approved
the above-described process for determining which communications
are forwarded to various members of the Board.
Business
Ethics Policy
All of our directors, executive officers and employees are
required to comply with certain policies and protocols
concerning business ethics and conduct, which we refer to as our
Business Ethics Policy.
The Business Ethics Policy applies not only to the Company, but
also to all of those domestic and international companies which
we own or in which we control a majority interest. The Business
Ethics Policy describes certain responsibilities that our
directors, executive officers and employees have to the Company,
to each other and to our global partners and communities
including, but not limited to, compliance with laws, conflicts
of interest, intellectual property and the protection of
confidential information.
The Business Ethics Policy is available on our web site at
http://www.diebold.com.
Compensation
Committee Interlocks and Insider Participation
The members of the Compensation Committee during the year ended
December 31, 2009 were Phillip B. Cox, Chair, Gale S.
Fitzgerald, Phillip P. Lassiter (until April 23, 2009),
John N. Lauer and Eric J. Roorda (as of April 23, 2009).
No officer or employee of the Company served on the Compensation
Committee during such period.
2009
COMPENSATION OF NON-EMPLOYEE DIRECTORS
The following table details the cash retainers and fees received
by our non-employee directors during 2009, as well as the
aggregate grant date fair value of stock grants awarded during
2009 pursuant to our Amended and Restated 1991 Equity and
Performance Incentive Plan, which we refer to as the 1991 Plan:
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Fees Earned or
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All Other
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Paid in
Cash1
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Stock
Awards2
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Compensation3
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Total
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Name
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($)
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($)
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($)
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($)
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Louis V. Bockius III
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23,000
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91,840
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962
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115,802
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Mei-Wei Cheng
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26,667
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97,020
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1,820
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125,507
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Phillip R. Cox
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68,333
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91,840
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6,578
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166,751
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|
Richard L. Crandall
|
|
|
67,000
|
|
|
|
91,840
|
|
|
|
6,578
|
|
|
|
165,418
|
|
Gale S. Fitzgerald
|
|
|
70,000
|
|
|
|
91,840
|
|
|
|
6,578
|
|
|
|
168,418
|
|
Phillip B. Lassiter
|
|
|
70,000
|
|
|
|
91,840
|
|
|
|
6,578
|
|
|
|
168,418
|
|
John N. Lauer
|
|
|
157,000
|
|
|
|
91,840
|
|
|
|
8,762
|
|
|
|
257,602
|
|
Eric J. Roorda
|
|
|
67,001
|
|
|
|
91,840
|
|
|
|
6,578
|
|
|
|
165,419
|
|
Henry D. G. Wallace
|
|
|
73,000
|
|
|
|
91,840
|
|
|
|
8,762
|
|
|
|
173,602
|
|
Alan J. Weber
|
|
|
69,000
|
|
|
|
91,840
|
|
|
|
6,578
|
|
|
|
167,418
|
|
|
|
|
1 |
|
This column reports the amount of
cash compensation earned in 2009 for Board and committee
service, including the following committee fees earned in 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit
|
|
|
Board Governance
|
|
|
Compensation
|
|
|
Investment
|
Name
|
|
|
Committee
|
|
|
Committee
|
|
|
Committee
|
|
|
Committee
|
Louis V. Bockius III
|
|
|
$
|
3,000
|
|
|
|
$
|
1,667
|
|
|
|
$
|
|
|
|
|
$
|
|
|
Mei-Wei Cheng
|
|
|
|
3,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phillip R. Cox
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,333
|
|
|
|
|
3,000
|
|
Richard L. Crandall
|
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
Gale S. Fitzgerald
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
7,000
|
|
|
|
|
|
|
Phillip B. Lassiter
|
|
|
|
6,000
|
|
|
|
|
5,000
|
|
|
|
|
4,000
|
|
|
|
|
|
|
John N. Lauer
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
7,000
|
|
|
|
|
|
|
Eric J. Roorda
|
|
|
|
3,000
|
|
|
|
|
3,334
|
|
|
|
|
4,667
|
|
|
|
|
1,000
|
|
Henry D. G. Wallace
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
Alan J. Weber
|
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
2 |
|
This column represents the
aggregate grant date fair value computed in accordance with
Financial Accounting Standards Board (or FASB) ASC Topic 718 for
deferred shares granted to our non-employee directors in 2009,
as further described below. Each director received 3,500
deferred shares as of April 23, 2009 (except Mr. Cheng
who received 3,500 deferred shares when he joined the Board as
of August 1, 2009), with a closing price of our Common
Shares on that date of $26.24 ($27.72 for Mr. Cheng). The
actual value a director may realize will depend on the stock
price on the date the deferral period ends. As of
December 31, 2009, the aggregate number of deferred shares
outstanding held by each non-employee director was as follows:
Mr. Cheng, 3,500; Mr. Cox, 7,200; Mr. Crandall,
7,200; Ms. Fitzgerald, 7,200; Mr. Lassiter, 7,200;
Mr. Lauer, 9,300; Mr. Roorda, 7,200; Mr. Wallace,
9,300; and Mr. Weber, 7,200. In addition, as of
December 31, 2009, the aggregate number of Common Shares
issuable pursuant to options outstanding held by each
non-employee director was as follows: Mr. Bockius, 17,500;
Mr. Cox, 9,000; Mr. Crandall, 21,500;
Ms. Fitzgerald, 21,500; Mr. Lassiter, 21,500;
Mr. Lauer, 18,500; Mr. Roorda, 25,500;
Mr. Wallace, 17,500; and Mr. Weber, 9,000.
|
|
3 |
|
This column represents dividend
equivalents on deferred shares.
|
In 2009, our non-employee directors received an annual retainer
of $55,000 for their service as directors. Our non-employee
Chairman of the Board received an additional retainer of $7,500
per month.
In addition to their annual retainer, our non-employee directors
also received the following committee fees for their
participation as members or as Chairs of one or more Board
committees:
|
|
|
|
|
|
|
|
|
|
|
Members
|
|
|
Chair
|
|
|
Audit Committee
|
|
$
|
9,000/yr.
|
|
|
$
|
15,000/yr.
|
|
Compensation Committee
|
|
$
|
7,000/yr.
|
|
|
$
|
12,000/yr.
|
|
Board Governance Committee
|
|
$
|
5,000/yr.
|
|
|
$
|
8,000/yr.
|
|
Investment Committee
|
|
$
|
3,000/yr.
|
|
|
$
|
5,000/yr.
|
|
The differences in fees between the committees and between the
committee members and Chairs are intended to reflect differing
levels of responsibility, meeting requirements and fiduciary
duties.
7
A director may elect to defer receipt of all or a portion of his
or her cash compensation pursuant to the Deferred Compensation
Plan No. 2 for Directors.
In addition to cash compensation, each non-employee director may
also receive equity awards under the 1991 Plan. The aim of the
Board is to provide a balanced mix of cash and equity
compensation to our directors, and it targets directors
total pay at the median of a peer group of companies in similar
industries and of comparable size and revenue. This peer group
is the same one used by our Compensation Committee and which is
discussed in more detail below under Market
Benchmarking of Executive Pay.
Prior to 2007, our non-employee directors received stock option
awards under the 1991 Plan. All such stock options that vested
prior to December 31, 2005 are entitled to reload rights,
under which an optionee can elect to pay the exercise price
using previously owned shares and receive a new option at the
then-current market price for a number of shares equal to those
surrendered. The reload feature is only available, however, if
the optionee agrees to defer receipt of the balance of the
option shares for at least two years.
In 2007, however, the Board decided to shift from stock option
awards to deferred Common Shares, which vest one year from the
date of grant, but receipt of which is deferred until the later
of (1) three years from the date of grant,
(2) retirement from the Board or (3) attainment of the
age of 65. The decision to shift to deferred shares was intended
to strengthen the directors ties to shareholder interests
by providing awards that more effectively build stock ownership
and ensure that the directors long-term economic interests
are aligned with those of other shareholders.
In 2009, each non-employee director was awarded 3,500 deferred
Common Shares.
Director
Stock Ownership Guidelines
In 2007, the Board Governance Committee established stock
ownership guidelines for each non-employee director of the
Company. Under the ownership guidelines, each non-employee
director is expected to own at least 6,500 Common Shares. These
ownership guidelines are intended to build stock ownership among
non-employee directors and ensure that their long-term economic
interests are aligned with those of other shareholders. As
reflected below under the Security Ownership of
Directors and Management table, the majority of our
directors have exceeded the ownership guidelines, while our
directors who were appointed most recently are on track to
achieve the ownership guidelines within the next few years.
However, we do not impose any penalties on directors who fail to
meet the stock ownership guidelines.
CONSIDERATION
OF DIRECTOR-NOMINEES
Shareholder
Nominees
The policy of the Board Governance Committee is to consider
properly submitted shareholder nominations for candidates for
membership on the Board as described below under
Identifying and Evaluating Nominees for
Directors. In evaluating such nominations, the Board
Governance Committee seeks to achieve a balance of knowledge,
experience and capability on the Board and to address the
membership criteria set forth below under Board
Diversity, Director Qualifications and Corporate Governance
Guidelines.
Any shareholder nominations proposed for consideration by the
Board Governance Committee should include:
|
|
|
complete information as to the identity and qualifications of
the proposed nominee, including name, address, present and prior
business
and/or
professional affiliations, education and experience, and
particular fields of expertise;
|
|
|
an indication of the nominees consent to serve as a
director of the Company if elected; and
|
|
|
reasons why, in the opinion of the recommending shareholder, the
proposed nominee is qualified and suited to be a director of the
Company.
|
8
Shareholder nominations should be addressed to Diebold,
Incorporated, 5995 Mayfair Road, P.O. Box 3077,
North Canton, Ohio
44720-8077,
Attention: Corporate Secretary. See also below under
Proposals of Shareholders.
Identifying
and Evaluating Nominees for Directors
The Board Governance Committee utilizes a variety of methods for
identifying and evaluating nominees for director. The Board
Governance Committee regularly reviews the appropriate size of
the Board and whether any vacancies on the Board are anticipated
due to retirement or otherwise.
In the event that vacancies are anticipated, or otherwise arise,
the Board Governance Committee considers various potential
candidates for director. Candidates may come to the attention of
the Board Governance Committee through current Board members,
professional search firms, shareholders or other persons.
As described above, the Board Governance Committee considers
properly submitted shareholder nominations for candidates for
the Board. Following verification of the recommending
shareholders status, recommendations are considered by the
Board Governance Committee at a regularly scheduled meeting.
Majority
Voting Policy
In 2007, the Board adopted a majority voting policy whereby, in
an uncontested election, any nominee for director who receives a
greater number of votes withheld from his or her
election than votes for such election, which we
refer to as a Majority Withheld Vote, is expected to tender his
or her resignation following certification of the shareholder
vote. In such an event, the Board Governance Committee shall
consider the tendered resignation and make a recommendation to
the Board. The Board will act on the Board Governance
Committees recommendation within 90 days following
certification of the shareholder vote. Any director who tenders
his or her resignation pursuant to this policy shall not
participate in the Board Governance Committee recommendation or
Board action regarding whether to accept or reject the tendered
resignation.
However, if each member of the Board Governance Committee
received a Majority Withheld Vote in the same election, then the
Board will appoint a committee comprised solely of independent
directors who did not receive a Majority Withheld Vote at that
election to consider each tendered resignation offer and
recommend to the Board whether to accept or reject each
resignation. Further, if all of the directors received a
Majority Withhold Vote in the same election, then the Board will
appoint a committee comprised solely of independent directors to
consider each tendered resignation offer and recommend to the
Board whether to accept or reject each resignation.
Board
Diversity, Director Qualifications and Corporate Governance
Guidelines
In evaluating director-nominees, the Board Governance Committee
considers such factors as it deems appropriate, consistent with
our Corporate Governance Guidelines and other criteria
established by the Board. While the Board Governance Committee
does not have a formal diversity policy, in general, the Board
Governance Committees goal in selecting directors for
nomination to the Board is to create a well-balanced team that
combines diverse business and industry experience, skill sets
and other leadership aspects, that represents diverse viewpoints
and that enables us to pursue our strategic objectives.
The Board Governance Committee identifies candidates whose
business experience, knowledge, skills, diversity, integrity and
global experiences are considered desirable to strengthen the
talent and capabilities of the Board and any committees thereof.
Such qualifications for service have not been reduced to a
checklist of specific standards or minimum qualifications,
skills or qualities.
The Board Governance Committee makes its determinations as to
director selection based upon the facts and circumstances at the
time of the receipt of the director candidate recommendation.
Applicable considerations include:
|
|
|
whether the Board Governance Committee is currently looking to
fill a new position created
|
9
|
|
|
|
|
by an expansion of the number of directors, or a vacancy that
may exist on the Board;
|
|
|
|
whether the current composition of the Board is consistent with
the criteria described in our Corporate Governance Guidelines;
|
|
|
whether the candidate possesses the qualifications that are
generally the basis for selection of candidates to the
Board; and
|
|
|
whether the candidate would be considered independent under the
rules of the NYSE and our standards with respect to director
independence.
|
Final approval of any candidate is determined by the full Board.
In addition, the Board Governance Committee annually conducts a
review of incumbent directors using the same criteria as
outlined above, in order to determine whether a director should
be nominated for re-election to the Board.
A copy of our Corporate Governance Guidelines is available on
our web site at
http://www.diebold.com.
The Board Governance Committee has identified the
director-nominees below as fitting the general qualifications
described above, and in particular, due to the specific
experience, skills and qualifications each of them would bring
to the Board as set forth in more detail below.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The Board recommends that its ten nominees for director be
elected at the Annual Meeting, each to hold office for a term of
one year from the date of the Annual Meeting or until the
election and qualification of a successor. In the absence of
contrary instruction, the Proxy Committee will vote the proxies
for the election of the ten nominees.
With the exception of Mr. Byrnes, all director-nominees are
presently members of the Board. A substantial majority of the
director-nominees are independent as required by the corporate
governance standards of the NYSE. While the Company does not
have a formal policy about directors attendance at the
Annual Meeting of Shareholders, it is expected that all
directors attend the Annual Meeting unless there are extenuating
circumstances for nonattendance. All directors standing for
re-election attended the 2009 Annual Meeting.
If for any reason any director-nominees are not available for
election when the election occurs, the designated proxies, at
their option, may vote for substitute nominees recommended by
the Board.
Alternatively, the Board may reduce the number of
director-nominees. The Board has no reason to believe that any
director-nominee will be unavailable for election when the
election occurs.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ITS
TEN NOMINEES AS DIRECTORS.
The
Director-Nominees are:
|
|
|
|
|
Position, Principal Occupation, Business Experience and
Directorships
|
Name, Term and Age
|
|
Last Five Years, and
Qualifications to Serve
|
Bruce L. Byrnes
Director since:
Age 62
|
|
July 2008: Retired Vice Chairman, Global Brand Building Training, Procter & Gamble, Inc. (consumer goods); 2004 2007: Vice Chairman, Household Care, Procter & Gamble, Inc.
Currently a director of Cincinnati Bell Inc. (telecommunications) since 2003; and Boston Scientific Corp. (medical devices) since 2009. Formerly a director of Procter & Gamble from 2002 2008.
We believe Mr. Byrnes qualifications to sit on our Board include his 28 years in various leadership roles of an $80 billion global business, including his extensive marketing and strategy experience at Procter & Gamble. Further, as a result of Procter & Gambles business-to-consumer focus, he will bring a different perspective to our Board and our business-to-business focus.
|
|
|
|
10
|
|
|
|
|
Position, Principal Occupation, Business Experience and
Directorships
|
Name, Term and Age
|
|
Last Five Years, and
Qualifications to Serve
|
Mei-Wei Cheng
Director since: 2009
Age 60
|
|
2008 April 2009: Retired Group Vice President, Ford Motor Company, and Executive Chairman, Ford Motor (China), Ltd. (automotive industry); 1998 2008: Chairman and Chief Executive Officer, Ford Motor (China) Inc.
Member of our Audit Committee.
We believe Mr. Chengs experience as Chief Executive Officer of a major division of a $100+ billion global manufacturing company, including extensive experience in Asia Pacific, and China in particular, has been and will continue to be a tremendous asset to us as we continue to focus on growth in that key region. We also believe that Mr. Chengs experience in Asia Pacific provides an important perspective on potential risk exposure in this region to our Audit Committee.
|
|
|
|
Phillip R. Cox
Director since: 2005
Age 62
|
|
1972 Present: President and Chief Executive Officer, Cox Financial Corporation, Cincinnati, Ohio (financial planning and wealth management services).
Chair of our Compensation Committee and member of our Investment Committee.
Currently also a director of Cincinnati Bell Inc. (telecommunications) since 1993, where he has served as Chairman of the Board since 2003; The Timken Company (engineered steel products) since 2004, where he has served as Chairman of the Finance Committee since 2008; and Touchstone Investments (mutual fund company) since 1993, where he has served as Chairman of the Board since 2008. Formerly a director of Duke Energy Corporation/Cinergy Corporation (gas and electric) from 1994 2008, where he served as Chairman of the Audit Committee from 2006 2008.
We believe Mr. Coxs 38 years experience as a president and Chief Executive Officer in the financial services industry, as well as his experience as a director on the boards of several government-regulated businesses, a global manufacturing company, and the Federal Reserve Bank of Cleveland, has provided and will continue to provide the Board with experience relevant to many key aspects of our business. We also believe that Mr. Coxs experience as a Chief Executive Officer provides appropriate insight into executive compensation and succession planning issues that are ideal for the Chairman of our Compensation Committee, and his extensive experience in the financial services industry provides the understanding necessary to serve on our Investment Committee.
|
|
|
|
11
|
|
|
|
|
Position, Principal Occupation, Business Experience and
Directorships
|
Name, Term and Age
|
|
Last Five Years, and
Qualifications to Serve
|
Richard L. Crandall
Director since: 1996
Age 66
|
|
May 2008 Present: Non-executive Chairman of the Board, Novell, Inc., Waltham, Massachusetts (IT management software); 2007 Present: Chairman, Pelstar LLC, Chicago, Illinois (medical equipment manufacturing and sales); 2002 Present: Managing Partner, Aspen Partners LLC, Aspen, Colorado (private equity); 1995 Present: Chairman, Enterprise Software Roundtable, Aspen, Colorado (CEO roundtable for software industry).
Member of our Audit and Investment Committees.
Currently a director of Novell, Inc. since 2003, where he has served as Chairman of the Board since 2008; and Claymore Dividend & Income Fund (management investment company) since 2004.
We believe Mr. Crandalls extensive experience as an entrepreneur, leader and Board member with several companies in the information technology and technology fields and in the financial industry, including as chairman of a $900 million dollar global information technology business, will bring diversity of thought to our Board. Further, during his 14 years on our Board, Mr. Crandall has provided and will continue to provide immeasurable assistance to our technology-driven businesses. We also believe that Mr. Crandalls background in the financial services industry provides important financial and investment expertise to our Audit and Investment Committees, and his information technology experience provides perspective on technology risks facing the company.
|
|
|
|
Gale S. Fitzgerald
Director since: 1999
Age 59
|
|
December 2008: Retired President and Director, TranSpend, Inc., Bernardsville, New Jersey
(total spend optimization).
Chair of our Board Governance Committee and member of our Compensation
Committee.
Currently a director of Health Net, Inc. (managed healthcare) since 2001, where she serves
as Chair of the Compensation Committee; and Cross Country Healthcare,
Inc. (healthcare staffing) since 2007.
We believe Ms. Fitzgeralds international experience as a
Chief Executive Officer in the information technology industry, a Chief Executive Officer of a business unit of
International Business Machines, and the President and Chief Executive Officer of two privately-held consulting
companies bring a well-rounded and diverse perspective to our Board discussions. Further, during her 11 years
on our Board, Ms. Fitzgerald has provided and will continue to provide significant insight in these areas. We also
believe that Ms. Fitzgeralds service on the Compensation Committee of Health Net brings valuable experience
with compensation and succession planning issues to our Compensation Committee, and her 20 years of multiple board
experiences bring a unique point of view to our Board Governance Committee.
|
|
|
|
12
|
|
|
|
|
Position, Principal Occupation, Business Experience and
Directorships
|
Name, Term and Age
|
|
Last Five Years, and
Qualifications to Serve
|
Phillip B. Lassiter
Director since: 1995
Age 66
|
|
July 2006: Retired Chairman of the Board and Chief Executive Officer, Ambac Financial Group, Inc., New York, New York (financial guarantee insurance holding company).
Member of our Audit and Board Governance Committees
Formerly a director of Ambac Financial Group, Inc. from 2001 2007, where he served as Chairman of the Board from 2004 2006; and Fidelity National Information Services, Inc./Certegy, Inc. (financial services and payment systems) from 2002 2006.
We believe Mr. Lassiters 13 years of experience as a Chief Executive Officer in the financial services industry, including six years as a board chairman and 22 years as a senior bank executive, bring an important understanding of our industry. Further, during his 15 years on our Board, Mr. Lassiter has provided and will continue to provide, demonstrated leadership to our Board and a vital perspective from a former customers standpoint. We also believe that Mr. Lassiters extensive background as a Chief Executive Officer in the financial services industry provides the necessary financial acumen to serve on our Audit Committee, and his experience as a board chairman is ideal for service on our Board Governance Committee.
|
|
|
|
John N. Lauer
Director since: 1992
Age 71
|
|
2005 Present: Non-executive Chairman of the Board, Diebold, Incorporated, Canton, Ohio; May 2003: Retired Chairman of the Board, Oglebay Norton Co. (industrial minerals), Cleveland, Ohio.
Member of our Board Governance and Compensation Committees.
We believe that Mr. Lauers experience as a former Chief Executive Officer of a global manufacturing company, with extensive experience in Europe and Asia Pacific, brings directly relatable experience to our Board. Further, during his 18 years on our Board, Mr. Lauer has provided and will continue to provide demonstrated leadership to our Board. We also believe that Mr. Lauers background as a board chairman of two global corporations brings significant corporate governance experience to our Board Governance Committee, and his experience as a Chief Executive Officer of a global manufacturing company brings an understanding of global compensation issues to our Compensation Committee.
|
|
|
|
Thomas W. Swidarski
Director since: 2005
Age 51
|
|
2005 Present: President and Chief Executive Officer, Diebold, Incorporated, Canton, Ohio; June 2005 December 2005: President and Chief Operating Officer; 2001 2005: Senior Vice President, Global Financial Self-Service.
We believe that as President and Chief Executive Officer of Diebold, Mr. Swidarskis day-to-day leadership provides him with intimate knowledge of our operations that are a vital component of our Board discussions.
|
|
|
|
13
|
|
|
|
|
Position, Principal Occupation, Business Experience and
Directorships
|
Name, Term and Age
|
|
Last Five Years, and
Qualifications to Serve
|
Henry D. G. Wallace
Director since: 2003
Age 64
|
|
December 2001: Former Group Vice President and Chief Financial Officer, Ford Motor Company (automotive industry).
Chair of our Audit Committee and member of our Investment Committee.
Currently a director of Hayes-Lemmerz International Inc. (steel and aluminum wheels) since 2003; Ambac Financial Group, Inc. (financial guarantee insurance holding company) since 2004; and Lear Corporation (automotive components) since 2005, serving as presiding director since 2009 and Chairman of the Audit Committee since 2007.
We believe that Mr. Wallaces experience in various senior leadership positions, including as Chief Financial Officer, of several major divisions of a $100+ billion global manufacturing company, bring a broad understanding of our global manufacturing operations. Further, Mr. Wallaces financial expertise, extensive experience in Europe and his demonstrated leadership on the boards of several other publicly-traded companies, has been and will continue to be a tremendous asset to our Board. As a result of Mr. Wallaces background as a Chief Financial Officer and his service on the board of a publicly-traded financial services company, he is exceptionally qualified to serve on both our Audit Committee and our Investment Committee.
|
|
|
|
Alan J. Weber
Director since: 2005
Age 61
|
|
2007 Present: Chief Executive Officer, Weber
Group LLC, Greenwich, Connecticut (investment consulting);
May 2005: Retired Chairman and Chief Executive Officer,
U.S. Trust Corporation, New York, New York (financial
services).
Chair of our Investment Committee and member of our Audit
Committee.
Currently a director of Broadridge Financial Solutions, Inc.
(securities processing, clearing and outsourcing) since 2007.
We believe Mr. Webers experience as a Chief Executive
Officer and Chief Financial Officer in the financial industry,
as well as his 27 years at Citibank, including
10 years as an Executive Vice President, have provided and
will continue to provide a tremendous depth of knowledge of our
customers and our industry. We also believe that
Mr. Webers experience as Chief Financial Officer of
Aetna, Inc., an insurance services company, brings extensive
financial expertise to both our Audit Committee and our
Investment Committee.
|
|
|
|
14
To the knowledge of the Company, no person beneficially owned
more than five percent of the outstanding Common Shares as of
December 31, 2009, except for the shareholders listed
below. The information provided below is derived from Schedules
13D or 13G filed with the SEC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
|
|
Percent of
|
Title of Class
|
|
|
Name of Beneficial Owner
|
|
|
Beneficial Ownership
|
|
|
|
Class
|
|
Common Shares
|
|
|
GGCP, Inc. et al.
One Corporate Center
Rye, New York 10580
|
|
|
|
5,621,965
|
1
|
|
|
8.49
|
Common Shares
|
|
|
Janus Capital Management LLC
151 Detroit Street
Denver, Colorado 80206
|
|
|
|
4,799,120
|
2
|
|
|
7.20
|
Common Shares
|
|
|
BlackRock, Inc.
40 East
52nd
Street
New York, New York 10022
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3,471,353
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5.24
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1 |
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The Schedule 13D/A filed with
the SEC on November 4, 2009 indicates that, as of
November 3, 2009: (A) Gabelli Funds, LLC had sole
voting and dispositive power with respect to 1,291,000 Common
Shares; (B) GAMCO Asset Management Inc. had sole voting
power with respect to 3,940,265 Common Shares and sole
dispositive power with respect to 4,200,065 Common Shares;
(C) MJG Associates, Inc. had sole voting and dispositive
power with respect to 15,000 Common Shares; (D) Gabelli
Securities, Inc. had sole voting and dispositive power with
respect to 17,900 Common Shares; (E) Gabelli Foundation,
Inc. had sole voting and dispositive power with respect to
22,000 Common Shares; (F) GGCP, Inc. had sole voting and
dispositive power with respect to 10,000 Common Shares; and
(G) Mario J. Gabelli had sole voting and dispositive power
with respect to 66,000 Common Shares. Mario Gabelli is deemed to
have beneficial ownership of the securities owned beneficially
by each of the foregoing persons. Gabelli Securities, Inc. is
deemed to have beneficial ownership of the securities owned
beneficially by Gabelli & Company, Inc. GAMCO
Investors, Inc., and GGCP, Inc. are deemed to have beneficial
ownership of the securities owned beneficially by each of the
foregoing persons other than Mario Gabelli and the Gabelli
Foundation, Inc.
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2 |
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The Schedule 13G filed with
the SEC on February 16, 2010, indicates that, as of
December 31, 2009, Janus Capital Management LLC, an
investment adviser, had sole and dispositive power with respect
to 13 shares and shared voting and dispositive power with
respect to 4,799,107 shares through its ownership stake in
INTECH Investment Management and Perkins Investment Management
LLC.
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The following table shows the beneficial ownership of Common
Shares of the Company, including those shares which individuals
have a right to acquire (for example, through exercise of
options under the 1991 Plan) within the meaning of
Rule 13d-3(d)(1)
under the Securities Exchange Act of 1934, by (a) each
director-nominee, (b) the Chief Executive Officer, each
individual who served as Chief Financial Officer during 2009,
and the three other most highly compensated executive officers
of the Company, whom we refer to collectively as the Named
Executive Officers, and (c) all director-nominees, Named
Executive Officers and other executive officers of the Company
as a group as of March 1, 2010.
Ownership is also reported as of January 30, 2010 for
shares in the 401(k) Savings Plan over which the individual has
voting power, together with shares held in the Employee Stock
Purchase Plan.
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Common Shares
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Stock Options
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Beneficially
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Exercisable
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Deferred
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Percent of
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Director-Nominees:
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Owned
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Within 60 Days
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Shares
1
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Class
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Bruce L. Byrnes
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Mei-Wei Cheng
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3,500
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*
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Phillip R. Cox
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9,000
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7,200
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*
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Richard L. Crandall
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9,089
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21,500
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7,200
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0.05
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Gale S. Fitzgerald
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6,089
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21,500
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7,200
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0.04
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Phillip B. Lassiter
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8,771
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21,500
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7,200
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0.05
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John N. Lauer
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19,721
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18,500
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10,577
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0.06
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Thomas W. Swidarski
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102,767
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2,3
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263,400
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0.55
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Henry D. G. Wallace
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1,000
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17,500
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9,300
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0.03
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Alan J. Weber
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1,500
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9,000
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7,200
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0.02
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15
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Common Shares
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Stock Options
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Beneficially
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Exercisable
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Deferred
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Percent of
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Owned
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Within 60 Days
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Shares
1
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Class
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Other Named Executive Officers:
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Bradley C. Richardson
4
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Executive Vice President and Chief Financial Officer
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31,850
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0.05
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James L.M. Chen
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Executive Vice President, International Operations
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58,263
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52,375
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0.17
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George S. Mayes Jr.
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Executive Vice President, Global Operations
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26,406 2
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26,875
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0.08
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Charles E. Ducey Jr.
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Executive Vice President, North America Operations
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24,354 2
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54,875
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1,180
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0.12
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Leslie A. Pierce
5
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Former Interim Chief Financial Officer
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4,267 2
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6,987
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0.02
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Kevin J. Krakora
6
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Former Chief Financial Officer
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34,828 2
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98,500
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0.20
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All Current Director-Nominees and Executive Officers as a
Group (25)
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549,887 2,
3
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1,059,636
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75,887
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2.43
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1 |
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The deferred shares awarded to the
director-nominees, as discussed above under 2009
Compensation of Non-Employee Directors, and shares
deferred by Mr. Lauer pursuant to our deferred incentive
compensation plans are not included in the shares reported in
the Common Shares Beneficially Owned column,
nor are they included in the Percent of Class column.
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2 |
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Includes shares held in his or her
name under the 401(k) Savings Plan over which he or she has
voting power, and/or shares held in the Employee Stock Purchase
Plan.
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3 |
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Includes shares held in the name of
the spouse of the Named Executive Officer.
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4 |
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Mr. Richardson was appointed
Executive Vice President and Chief Financial Officer effective
as of November 23, 2009.
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5 |
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Ms. Pierce served as interim
Chief Financial Officer from March 25, 2009 through
November 22, 2009, and she currently serves as Vice
President and Corporate Controller.
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6 |
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Mr. Krakora served as
Executive Vice President and Chief Financial Officer until
stepping down as of March 25, 2009, and he currently serves
as Executive Vice President, Corporate Development.
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Section 16(a) of the Securities Exchange Act of 1934
requires our directors and executive officers, and persons who
own more than 10% of our Common Shares, to file with the SEC
reports of ownership of our securities on Form 3 and
changes in reported ownership on Form 4 or Form 5.
Such directors, executive officers and 10% shareholders are also
required by SEC rules to furnish us with copies of all
Section 16(a) forms they file.
Based solely upon a review of the reports furnished to us, or
written representations from reporting persons that all
reportable transactions were reported, we believe that during
the year ended December 31, 2009, our directors, executive
officers and 10% shareholders timely filed all reports they were
required to file under Section 16(a).
The Compensation Committee has reviewed and discussed with
management the following Compensation Discussion and
Analysis section of the Companys 2010 proxy
statement. Based on our review and discussions, we recommend to
the Board that the Compensation Discussion and Analysis be
included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009 and this proxy
statement.
The foregoing report was submitted by the Compensation Committee
of the Board and shall not be deemed to be soliciting
material or to be filed with the SEC or
subject to Regulation 14A promulgated by the SEC or
Section 18 of the Securities Exchange Act of 1934.
The Compensation Committee:
Phillip B. Lassiter, Chair
Phillip R. Cox
Gale S. Fitzgerald
John N. Lauer
16
Our executive pay program is managed by the Compensation
Committee, which we refer to in this Compensation Discussion and
Analysis as the Committee. The role of the Committee is to
oversee our executive pay plans and policies, administer our
stock plans and annually review and make recommendations to the
Board for all pay decisions relating to our executives,
including the Named Executive Officers (the Chief Executive
Officer, each individual who served as Chief Financial Officer
during 2009, and our three other most highly compensated
executive officers).
Our executive pay program is designed to:
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Provide a total pay opportunity that is commensurate with our
performance and competitive with a relevant peer group of
companies, as well as other industrial companies similar in
revenue size to us.
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Link the financial interests of executives with those of
shareholders through short- (annual) and long-term incentive
plans that are clearly tied to corporate, business unit and
individual performance.
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Provide a balance of both short- and long-term goals.
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Emphasize performance-based, variable pay.
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Build substantial stock ownership by executives.
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Enable us to attract, retain and motivate high quality
executives.
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Our executive pay program is consistent with these objectives.
The following table summarizes the key elements of our 2009
executive pay program:
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Target Pay Position
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Element
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Primary Purpose
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Factors Increasing or Decreasing Rewards
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Relative to Peer Group
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Base Salary
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Reward individuals skills, competencies, experience and
performance
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Performance against objectives
Individual responsibilities and experience level
Company financial performance
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Historically below median in order to emphasize variable pay
components; however, the Committee has begun shifting towards
median for all pay elements
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Annual Cash Bonuses
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Motivate and reward achievement of annual financial objectives
and individual goals
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Corporate earnings per share, or EPS
Achievement of key initiatives or other corporate
goals
Achievement of individual financial and
non-financial goals
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Above median to bring total cash compensation to or around
median for target performance
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Long-Term Incentives (LTI)
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Performance Shares
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Incentivize performance and achievement of strategic goals over
a three-year period
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Total shareholder return, or TSR, relative to peers
and S&P 400 Mid-Cap companies
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Total potential value is above median to provide competitive
total pay and build equity ownership. Value is typically
delivered in the form of:
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Stock Options
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Incentivize increase in shareholder value
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Stock price growth
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Approximately 50% performance shares for target results
Approximately 50% options, valued using the Black-Scholes method
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Benefits and Perquisites
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Provide for basic life and income security needs, and overall
benefits that are competitive with our peers
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Years of service
Base salary
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Median levels
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Change-in-Control
Benefits
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Bridge to future employment if employment is terminated
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None; only paid in the event the executives
employment is terminated
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Below median levels
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The mix of base salary, annual cash bonuses and LTI noted in the
above table, which we refer to throughout this Compensation
Discussion and Analysis as total pay, generally makes up our
executive pay program. In addition to the pay elements noted in
the above table, we occasionally award special grants of
restricted stock units, or RSUs, in cases of the hiring,
promotion and retention of executives. In order to confirm the
continued appropriateness of each element of our executive pay
program, the Committee annually reviews the pay practices of
similarly sized peer companies in related industries.
17
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2009-2010 Summary of
Executive Compensation Actions/Results
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2009 Actions/Results
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2010 Actions
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Base Salary
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Due to the economic downturn, the Committee, at
managements recommendation, froze salaries for the
majority of our executives, including our Named Executive
Officers, for the duration of 2009, with only a few exceptions
relating to promotional or equitable increases, as discussed in
more detail below under Analysis of 2009
Elements of Executive Pay.
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The Committee reinstated merit increases for
executives, with annual merit increases for all executives as a
whole, excluding promotional or equity increases, generally 3%
on average, as discussed in more detail below under
Analysis of 2009 Elements of Executive Pay.
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Annual Cash Bonus
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In 2009, the Committee modified our Annual Cash
Bonus Plan, or Cash Bonus Plan, as discussed in further detail
below under Analysis of 2009 Elements of Executive
Pay.
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For 2010 cash bonuses payable in 2011, the Committee
set minimum non-GAAP EPS at $1.05 to fund awards under the
Cash Bonus Plan.
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For 2009, the Committee set minimum non-GAAP EPS at
$1.10, or 50% of the target non-GAAP EPS of $2.20. The Committee
set threshold and maximum non-GAAP EPS at $1.70 and $2.50, or
70% and 114% of target, respectively.
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2010 target non-GAAP EPS was set at $2.00, which approximates the mid-point of our 2010 guidance to investors.
Threshold and maximum non-GAAP EPS levels for 2010 were set at $1.60 and $2.30, or 80% and 115% of target, respectively.
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Actual payout of cash bonuses for 2009 was
determined based on the following weighted performance metrics:
for Mr. Swidarski, Mr. Chen and Mr. Krakora, 50% on EPS, 30% on
key initiatives, and 20% on individual goals; and for Mr. Mayes,
Mr. Ducey and Ms. Pierce, 60%, 20%, and 20%, respectively.
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The 2010 cash bonus payout will be determined based
on the following weighted performance metrics: for
Mr. Swidarski, Mr. Richardson, Ms. Pierce and
Mr. Krakora, 60% on EPS, 20% on key initiatives, and 20% on
individual goals; for Mr. Ducey, 50%, 30% and 20%,
respectively; and for Mr. Chen and Mr. Mayes, 40%, 40%
and 20%, respectively.
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In 2009, we achieved a non-GAAP EPS of $1.78, which
exceeded the minimum non-GAAP EPS required for funding awards,
and resulted in a weighted EPS payout slightly above threshold.
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The weighting, EPS, key initiatives and individual
goals in 2010 for the Named Executive Officers are discussed in
more detail below under Analysis of 2009 Elements of
Executive Pay.
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Achievement of key initiatives and individual goals
in 2009 is discussed in more detail below under
Analysis of 2009 Elements of Executive Pay.
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Performance Shares Results/Objectives
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Our TSR for the 2007 to 2009 performance period was
24th out of an original peer group (discussed below) comprised
of 31 companies, and 241st in the S&P Mid-Cap 400
Index, producing an award equal to 55% of the target award.
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The performance criteria for the 2010 to 2012
performance period are identical to that for the 2007 to 2009
performance period: our relative TSR against our current peer
group and the S&P Mid-Cap 400 Index, equally weighted.
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Performance share awards for 2009 are discussed in
more detail below under Analysis of 2009 Elements of
Executive Pay.
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Performance share awards for 2010 are discussed in
more detail below under Analysis of 2009 Elements of
Executive Pay.
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RSUs
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Mr. Richardson was the only Named Executive Officer
to receive RSUs in 2009 in connection with his recruitment and
appointment as Chief Financial Officer. Mr. Richardsons
RSUs are discussed in more detail below under Analysis
of 2009 Elements of Executive Pay.
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As discussed in more detail below under
2010 Grants to Named Executive Officers, for
2010, the Committee changed the LTI pay mix in the table above,
awarding approximately 20% of total potential LTI value in the
form of RSUs.
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In addition, the Committee awarded special one-time
RSU grants to certain executives, including many of the Named
Executive Officers.
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Executive Perks/Miscellaneous
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Due to the economic downturn, the Committee, at
managements recommendation, reduced or eliminated our
401(k) company match for all associates, including our
executives, effective April 1, 2009.
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As a result of cost-cutting actions taken in 2009
and early 2010, and significant free cash flow during 2009, the
Committee anticipates reinstating at least some portion of our
401(k) match during 2010.
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18
Prior to filing this proxy statement for our Annual Meeting, the
Committee also approved the following 2010 annual cash bonus (at
target) and LTI awards to our Named Executive Officers:
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Target
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Payout Under
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2010-2012 Performance
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2010 Stock
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Special One-Time
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2010 Annual
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Share Awards
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Option Grants
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RSUs with
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Cash Bonus
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Minimum
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Target
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Maximum
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Stock
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Exercise
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Performance
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Grant
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Plan
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Payout
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Payout
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Payout
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Options
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Price
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2010 RSUs
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Hurdles
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Name
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Date
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($)
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(#)
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(#)
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(#)
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(#)
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($/Sh)
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(#)
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(#)
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Thomas W. Swidarski
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2/11/10
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800,000
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10,625
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42,500
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85,000
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127,500
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27.88
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20,500
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0
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Bradley C. Richardson
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2/11/10
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363,750
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1,625
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6,500
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13,000
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25,000
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27.88
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3,000
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5,000
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James L.M. Chen
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2/11/10
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277,007
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1,375
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5,500
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11,000
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15,000
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27.88
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2,500
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5,000
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George S. Mayes Jr.
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2/11/10
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257,559
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1,375
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5,500
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11,000
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15,000
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27.88
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2,500
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5,000
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Charles E. Ducey Jr.
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2/11/10
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268,132
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1,375
|
|
|
|
|
5,500
|
|
|
|
|
11,000
|
|
|
|
|
15,000
|
|
|
|
|
27.88
|
|
|
|
|
2,500
|
|
|
|
|
5,000
|
|
|
|
|
|
Leslie A. Pierce
|
|
|
|
2/11/10
|
|
|
|
|
119,056
|
|
|
|
|
687
|
|
|
|
|
2,750
|
|
|
|
|
5,500
|
|
|
|
|
8,000
|
|
|
|
|
27.88
|
|
|
|
|
1,250
|
|
|
|
|
2,000
|
|
|
|
|
|
Kevin J. Krakora
|
|
|
|
2/11/10
|
|
|
|
|
160,000
|
|
|
|
|
1,125
|
|
|
|
|
4,500
|
|
|
|
|
9,000
|
|
|
|
|
12,000
|
|
|
|
|
27.88
|
|
|
|
|
2,000
|
|
|
|
|
0
|
|
|
|
|
|
For 2010, the Committee changed its LTI mix to provide for the
delivery of total potential value in the form of approximately
40% performance shares (at target results), 40% stock options
(valued using the Black-Scholes method), and 20% RSUs. The
Committee made this change to (1) better align our LTI pay
mix with market practice, and (2) provide an LTI mix with
more of a balance between long-term company performance,
shareholder alignment and value creation, and executive
retention.
The Committee also awarded special one-time RSU grants to
certain of the Named Executive Officers in 2010. These RSUs have
special vesting requirements in order to emphasize retention and
to reward only for sustained long-term results. Unlike most RSU
grants, which vest after three years, these one-time RSU awards
do not vest until the seventh anniversary of the grant. However,
one-half of the award may vest early if our stock price reaches
$45 per share for 20 consecutive trading days, and the other
half of the award may vest early if our stock price reaches $55
per share for 20 consecutive trading days.
All of these 2010 grants will be discussed in more detail in our
2011 proxy statement.
Based on a payout of annual cash bonuses and performance shares
at target (notwithstanding actual cash bonus payout in 2010 and
actual performance share payout in 2012), our Named Executive
Officers had, on average, the following pay mix in 2009, which
supports the Committees goals of balancing short- versus
long-term goals (salary/bonus versus LTI), emphasizing
performance-based (variable) pay, and encouraging share
ownership by our executives:
19
CEO:
Other NEOs:
As noted below under Committee Deliberation and
Rationale, the Committee does not have a specific
formula for allocating total pay between short- and long-term
pay elements or between cash and non-cash pay elements. However,
the Committee does vary the mix of these elements based on
competitive practices, ensuring the program remains competitive
with our peers, and management level to recognize each
individuals operating responsibilities and ability to
impact our short- and long-term results.
In setting pay for our executives, including the Named Executive
Officers, we target total pay at the median of a peer group of
companies, which we refer to throughout this Compensation
Discussion and Analysis as the peer group. However, actual pay
can vary significantly from
year-to-year
and among individuals within a given year based on corporate and
individual performance and experience.
The Committee reviews peer group practices annually to determine
total pay levels and periodically to identify new pay elements
or emerging trends. In addition to peer group data, the
Committee also reviews data obtained from nationally recognized
compensation surveys for a broad range of companies of
comparable size and similar revenue. This additional information
helps confirm peer group results and represents the broader
market in which we compete for senior executives. In 2009, we
developed data from both sources to benchmark all elements of
total pay.
Peer
Group
Each year the Committee also reviews the peer group itself, as
companies may merge or be acquired, liquidated or otherwise
disposed of, or may no longer be deemed to adequately represent
our peers in the market. The peer group was expanded from
28 companies in 2008 to 44 companies in 2009, because
the Committee determined that, as a result of attrition over
time, the peer group no longer represented an appropriately
sized sampling of peer companies.
Several factors are used to select peer group companies:
|
|
|
Company size: revenue, number of employees and market
capitalization.
|
|
|
Products: capital equipment, technologically advanced systems
and repair or maintenance services to such equipment or systems.
|
|
|
Markets: banking, financial services, health care, education,
government, utilities and retail.
|
|
|
Percent of revenue from global operations.
|
The Committee believes that the new peer group of
44 companies, which includes 27 of the 28 companies
from the prior group, fairly represents the companies with which
we compete for executive talent.
20
These companies range from approximately
1/2
to 2 times our annual revenue. The peer group also serves as one
of the indexes used to assess our TSR as part of our performance
share plan. Thermo Fisher Scientific Inc. was the only company
removed from the prior peer group, as the Committee determined
that it was too large and no longer represented a comparable
sized company from the standpoint of revenue, number of
employees and market capitalization.
During 2009, the following companies made up the peer group and,
as such, served as the primary basis for benchmarking our pay
levels and practices for both our directors and our executives,
including our Named Executive Officers (companies in bold were
added in 2009):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/08 Market
|
|
|
|
|
|
|
|
|
|
|
|
2008 Revenue
|
|
|
|
Capitalization
|
|
|
|
No. of Employees
|
|
2009 Peer Group:
|
|
|
Products/Markets:
|
|
|
($ in Millions):
|
|
|
|
($ in Millions):
|
|
|
|
(2008):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuant Corp.
|
|
|
Global manufacturing/sales (industrial products)
|
|
|
1,664
|
|
|
|
1,072
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliated Computer Services, Inc.
|
|
|
Business process outsourcing and information technology
|
|
|
6,160
|
|
|
|
4,476
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agilent Technologies Inc.
|
|
|
Bio-analytical and electronic measurement solutions provider
|
|
|
5,774
|
|
|
|
5,471
|
|
|
|
19,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ametek, Inc.
|
|
|
Global manufacturing/sales (electromechanical devices)
|
|
|
2,531
|
|
|
|
3,224
|
|
|
|
11,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benchmark Electronics, Inc.
|
|
|
Global electronics manufacturing services
|
|
|
2,590
|
|
|
|
839
|
|
|
|
10,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brady Corp.
|
|
|
Manufacturing/sales (identification solutions)
|
|
|
1,523
|
|
|
|
1,262
|
|
|
|
7,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooper Industries plc
|
|
|
Global manufacturing/sales (electrical products and tools)
|
|
|
6,521
|
|
|
|
5,066
|
|
|
|
31,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corning Inc.
|
|
|
Global manufacturing/sales (specialty glass and ceramics)
|
|
|
5,948
|
|
|
|
14,743
|
|
|
|
27,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crane Co.
|
|
|
Global manufacturing/sales (engineered industrial products)
|
|
|
2,604
|
|
|
|
1,031
|
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Curtiss-Wright Corp.
|
|
|
Global manufacturing/sales (precision components and systems)
|
|
|
1,830
|
|
|
|
1,502
|
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deluxe Corp.
|
|
|
Provider of personalized printed products to financial
institutions
|
|
|
1,469
|
|
|
|
765
|
|
|
|
7,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donaldson Company, Inc.
|
|
|
Global manufacturing/sales (filtration systems)
|
|
|
2,240
|
|
|
|
2,592
|
|
|
|
12,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dover Corp.
|
|
|
Global manufacturing/sales (industrial products and components)
|
|
|
7,569
|
|
|
|
6,122
|
|
|
|
32,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiserv, Inc.
|
|
|
Information management and electronic commerce systems/services
|
|
|
4,739
|
|
|
|
5,870
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flowserve Corp.
|
|
|
Global manufacturing/sales (precision-engineered flow control
equip)
|
|
|
4,473
|
|
|
|
2,874
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FMC Technologies, Inc.
|
|
|
Global technology solutions provider to industrial markets
|
|
|
4,551
|
|
|
|
2,979
|
|
|
|
9,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodrich Corp.
|
|
|
Global supplier (aerospace components, systems and services)
|
|
|
7,062
|
|
|
|
4,557
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harman International Industries Inc.
|
|
|
Global manufacturing/sales (audio products and electronic
systems)
|
|
|
4,113
|
|
|
|
979
|
|
|
|
11,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harris Corp.
|
|
|
Global communications and information technology provider
|
|
|
5,311
|
|
|
|
5,039
|
|
|
|
16,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hubbell Inc.
|
|
|
Global manufacturing/sales (electrical and electronic products)
|
|
|
2,704
|
|
|
|
1,837
|
|
|
|
13,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Game Technology
|
|
|
Global manufacturing/sales (computerized gaming equipment)
|
|
|
2,529
|
|
|
|
3,504
|
|
|
|
5,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Itron, Inc.
|
|
|
Global energy and water products and service provider
|
|
|
1,910
|
|
|
|
2,197
|
|
|
|
8,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lennox International Inc.
|
|
|
Global manufacturing/sales (HVAC and refrigeration)
|
|
|
3,481
|
|
|
|
1,788
|
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ManTech International Corp.
|
|
|
Global technologies/solutions provider for national security
programs
|
|
|
1,871
|
|
|
|
1,918
|
|
|
|
7,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mettler-Toledo International Inc.
|
|
|
Global manufacturing/sales (precision weighing instruments)
|
|
|
1,973
|
|
|
|
2,259
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moog Inc.
|
|
|
Global manufacturing/sales (precision motion/fluid
controls/systems)
|
|
|
1,903
|
|
|
|
1,561
|
|
|
|
8,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NCR Corp.
|
|
|
Global manufacturing/sales (financial technologies/services)
|
|
|
5,315
|
|
|
|
2,282
|
|
|
|
22,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pall Corp.
|
|
|
Global manufacturing/sales (filtration/purification products and
systems)
|
|
|
2,572
|
|
|
|
3,356
|
|
|
|
10,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pentair, Inc.
|
|
|
Global diversified industrial manufacturing/sales
|
|
|
3,352
|
|
|
|
2,335
|
|
|
|
14,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PerkinElmer, Inc.
|
|
|
Global health and safety technology solutions provider
|
|
|
1,937
|
|
|
|
1,643
|
|
|
|
7,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pitney Bowes Inc.
|
|
|
Global mail processing and integrated mail solutions provider
|
|
|
6,262
|
|
|
|
5,252
|
|
|
|
35,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rockwell Automation
|
|
|
Global industrial automation power, control and information
solutions
|
|
|
5,698
|
|
|
|
4,617
|
|
|
|
21,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rockwell Collins, Inc.
|
|
|
Global design and production of communications and aviation
electronics
|
|
|
4,780
|
|
|
|
6,200
|
|
|
|
20,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roper Industries, Inc.
|
|
|
Global manufacturing/sales (energy systems/industrial imaging
products)
|
|
|
2,306
|
|
|
|
3,894
|
|
|
|
7,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sauer-Danfoss Inc.
|
|
|
Global manufacturing/sales (engineered hydraulic and electronic
systems)
|
|
|
2,091
|
|
|
|
422
|
|
|
|
9,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPX Corp.
|
|
|
Global flow technology products and industrial services provider
|
|
|
5,856
|
|
|
|
2,206
|
|
|
|
17,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teledyne Technologies Inc.
|
|
|
Global electronic components and communications products provider
|
|
|
1,893
|
|
|
|
1,598
|
|
|
|
8,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teleflex Inc.
|
|
|
Global manufacturing/sales (single-use medical devices)
|
|
|
2,421
|
|
|
|
1,990
|
|
|
|
14,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Brinks Company
|
|
|
Global security and cash management services
|
|
|
3,164
|
|
|
|
1,231
|
|
|
|
56,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Timken Company
|
|
|
Global manufacturing/sales (engineered steel products)
|
|
|
5,664
|
|
|
|
1,895
|
|
|
|
25,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas & Betts Corp.
|
|
|
Manufacturing/sales (electrical components for industrial
construction)
|
|
|
2,474
|
|
|
|
1,335
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unisys Corp.
|
|
|
Global design and management of information technology systems
|
|
|
5,233
|
|
|
|
308
|
|
|
|
29,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Varian Medical Systems, Inc.
|
|
|
Global manufacturing/sales (cancer therapy systems and x-ray
products)
|
|
|
2,070
|
|
|
|
4,401
|
|
|
|
4,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waters Corp.
|
|
|
Global manufacturing/sales (analytical instruments)
|
|
|
1,575
|
|
|
|
3,602
|
|
|
|
5,033
|
|
Removed from peer group in 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thermo Fisher Scientific Inc.
|
|
|
Global analytical and laboratory products and systems provider
|
|
|
10,498
|
|
|
|
23,145
|
|
|
|
34,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
21
Pay recommendations for our executives, including the Named
Executive Officers, are typically made at the Committees
first meeting each year, which is normally held in February.
Decisions with respect to prior year performance, performance
for other relevant periods and any resulting award payouts, as
well as equity awards, base salary increases and target
performance levels for the current year and beyond, are also
made at this meeting.
With respect to the CEOs pay, the Committee reviews and
evaluates the CEOs performance in executive session,
without management or the CEO. The Committees final pay
recommendations for the CEO are then presented to the
independent members of the Board. During an executive session of
the Board, the Board conducts its own review and evaluation of
the CEOs performance and after considering all input
ultimately approves pay actions for the CEO that it deems
appropriate.
In evaluating our total pay program for our executives,
conducting benchmarking, assessing our results, designing
appropriate plans and recommending other potential actions, the
Committee from time to time uses the services of an independent
compensation consultant in accordance with the Committees
charter. In 2009, the Committee again directly engaged the
services of Towers Perrin, a global professional services
consulting firm, in this capacity. The Committee engaged Towers
Perrin due to its knowledge and understanding of our business,
our industry, our pay philosophies and our historical pay
practices as a result of its many years of providing consulting
services to the Committee, and not as the result of any
recommendations made by management.
Role
of Compensation Consultant; Independence
Towers Perrin is engaged by, and serves at the will of, the
Committee and reports directly to its Chair. Towers Perrin does
not provide any consulting services directly to us or
management, unless directed to do so by the Committee or to
support the Committees administration of our executive pay
program. However, from time to time, Towers Perrin is also
engaged by the Board Governance Committee to review and provide
recommendations on our pay program for non-employee directors.
Towers Perrin is generally engaged by the Committee to develop
external pay data primarily consisting of comparative analyses
of our peer group and companies of comparable size that are
outside of our peer group, as well as Fortune
500 companies. Towers Perrin also provides advice on
current compensation trends such as long-term incentives,
executive retirement,
change-in-control
severance benefits, deferred compensation programs and
governance practices in connection with executive pay.
At the direction of the Committee, Towers Perrin also provides
this external pay data to our Chief Human Resources Officer for
use in preparing pay recommendations for our executives.
At the Committees discretion, Towers Perrin may also be
asked to attend Committee meetings dealing with executive pay
matters. On such occasions, Towers Perrin generally participates
in the Committees deliberations on executive pay
decisions, answers questions regarding compensation trends or
the market data it developed, and may provide additional advice
or input as requested by the Committee.
During 2009, Towers Perrin provided no additional services to us
or management. Any such additional services were generally
provided by Watson Wyatt. On December 31, 2009, however,
Towers Perrin and Watson Wyatt merged to form Towers
Watson. Accordingly, the Committee is reviewing the impact of
the merger to determine what actions, if any, should be taken to
ensure the independence of its compensation consultant.
Role
of Management
As our primary contact with the Committee, the Chief Human
Resources Officer attends and actively participates in all
Committee meetings. With respect to executive pay, the Chief
Human Resources Officer typically meets independently with
Towers Perrin in preparation for upcoming Committee meetings to
review the data prepared by Towers Perrin that will be presented
at the meeting. The Chief Human Resources Officer will then make
pay recommendations to the CEO based upon market pay comparisons
and an analysis of our executives individual performance
goals, as well as other internal factors (such as expanded job
responsibilities during the year or extraordinary performance
during the year that is not tied to any of the executives
stated goals). The CEO then reviews these recommendations and,
along with the Chief Human Resources Officer, makes final pay
recommendations to the Committee. The
22
Committee ultimately approves the executive pay actions it deems
appropriate after considering all input.
Role
of the CEO
At the Committees request, the CEO periodically attends
Committee meetings and provides input on pay decisions affecting
his management team. As discussed above, the CEO makes
recommendations to the Committee with respect to the pay actions
and target incentive levels for his management team.
The CEO may also meet with Towers Perrin, along with the Chief
Human Resources Officer, to review data that will be presented
at a Committee meeting. However, the only input the CEO and
Chief Human Resources Officer have with respect to Towers
Perrins data is to correct factual information about the
Company or management.
While the CEO does not make specific recommendations to the
Committee with respect to his own pay, the CEO does provide a
self-evaluation to the Committee that includes his achievement
against the prior years goals established by the Committee
and his proposed goals for the coming year, which goals are
based on the annual strategic, operational and financial plans
for the Company that are approved by the full Board prior to any
CEO pay discussions.
Committee
Deliberation and Rationale
There are many factors that the Committee evaluates in
determining increases or decreases in each pay element and in
total pay for each executive, including the Named Executive
Officers, including:
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Promotions/changes in the executives responsibilities;
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Division or business unit performance;
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Individual performance;
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Company performance as measured by EPS, Free Cash Flow, TSR and
stock price appreciation;
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Peer group and other comparable company practices; and
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Broader market developments or trends.
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Some of these factors are discussed in more detail below in
connection with the analysis of individual pay elements.
The amount of total pay achieved or potentially achievable from
prior awards does not directly impact annual pay decisions or
future pay opportunities. Moreover, the Committee does not have
a specific formula for allocating total pay between short- and
long-term pay elements or between cash and non-cash pay
elements. However, the Committee does vary the mix of these
elements based on competitive practices and management level, to
recognize each individuals operating responsibilities and
ability to impact our short- and long-term results. The mix of
these elements is reviewed by the Committee at least annually.
As part of its deliberation process, the Committee annually
reviews a snapshot of total direct pay for each
executive for purposes of general benchmarking and comparative
analysis with our peer group. In this way, the Committee can
validate target pay positions with respect to direct pay
elements relative to our peer group.
The Committee analyzes data from our peer group, as well as data
for executives in similar positions at companies of comparable
size that are outside of the peer group, to determine pay
positions for each element of compensation. The summary table
above under Executive Pay Program Overview
contains disclosure on how individual pay elements are targeted
against the peer group under the column Target Pay
Position Relative to Peer Group.
For example, historically, the Committee targeted base salaries
below median levels to ensure that a significant percentage of
total pay is contingent on short- and long-term achievement of
performance goals and shareholder value creation. Annual cash
bonuses were targeted slightly above median levels to produce
total cash pay at target results that approximate the median of
the peer group. The total value of long-term incentives was
targeted above median levels in order to provide competitive
total pay at target, as well as to build stock ownership,
enhance ties to shareholder returns and emphasize variable over
fixed pay.
For 2009, consistent with its pay philosophy, the Committee
approved pay elements for our executives at target that were at,
on average, the following percentages relative to our peer group:
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Base salary: 94% of peer group median;
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Base salary plus bonus: 100% of peer group median; and
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Total pay: 102% of peer group median.
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However, as discussed above, the Committee has begun shifting
all elements of pay toward median levels of our peer group at
target results, in order to provide more of a focus on executive
retention and more balance across all pay elements. The
Committee now believes that in keeping salaries below median of
23
our peer group, if we fail to consistently achieve target
results for the other, variable pay elements, then total pay
would consistently be below that of our peer group, which could
create retention issues. Given the economic uncertainty
beginning in 2008, it has become much more difficult to set
appropriate target levels for payout under our variable pay
plans. As such, the Committee believes that it is more
appropriate to continue shifting our pay elements towards median
levels over time, instead of all at once.
Internal
Equity
We provide similar pay ranges for positions with similar
characteristics and scope of responsibility, including Named
Executive Officer positions. Any differences in compensation
among the Named Executive Officers are based on each
individuals experience, operating responsibilities,
ability to impact short- and long-term results, demonstrated
performance and future potential, as determined by the
Committee. Further, in order to attract and retain quality
executive officers, the Committee believes it is necessary and
proper to provide total pay for each executive position that is
commensurate with market practice (determined specifically by
reference to the practices of our peer group).
The Committee makes no other distinctions in its pay policies
and decisions as among the Named Executive Officers or among the
Named Executive Officers and any other executive officer, and
such pay policies and decisions are applied consistently among
our executives.
Timing
of Pay Decisions and Equity Awards
As previously indicated, pay recommendations for our executives,
including the Named Executive Officers, are typically made by
the Committee at its first scheduled meeting of the year. This
is usually five to 15 days after we report our fourth
quarter and year-end financial results for the preceding fiscal
year and provide our financial guidance for the upcoming year.
It is also more than two months before we report our first
quarter earnings.
Generally, any increases in base salary approved at this meeting
are made effective retroactively to the beginning of the current
year. Further, any equity awards approved by the Committee at
this meeting are approved by the Board and dated as of the date
of the Board meeting held the following day. As such, the
Committee does not time the grants of options or any other
equity incentives to the release of material non-public
information.
The exceptions to this timing are awards to executives who are
promoted or hired from outside the company during the year.
These executives may receive salary increases or equity awards
effective or dated, as applicable, as of the date of their
promotion or hire.
Base
Salaries
We pay base salaries to recognize the skills, competencies,
experience and individual performance an executive brings to his
or her position. As a result, changes in salary result primarily
from changes in the executives responsibilities and an
assessment of annual performance.
At the start of each year, each executive, including the Named
Executive Officers, provides personal performance goals that
relate to
his/her
applicable position, business unit or department. As a result,
these personal goals vary for each executive to recognize
his/her
responsibilities and areas of influence. Performance against
these goals is subjectively assessed annually by the CEO and the
Chief Human Resources Officer, who then make salary
recommendations to the Committee. Our full Board assesses the
CEOs performance.
The Committee relies upon several factors when deciding on
increases in salary:
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The executives performance against
his/her
personal goals, which supports the Committees goal of
rewarding performance;
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Comparisons with base salaries for executives in similar roles
in peer group companies, which supports the Committees
goal of providing competitive pay;
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The Committees philosophy regarding salaries, which
targets salaries below the median of the peer group; and
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The Committees assessment of our overall performance
versus goals and our operating plan and forecasts.
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In assessing the results of an executives individual
performance, the Committee relies on its judgment and does not
rely on a specific formula. This
24
evaluation ensures that we have the financial capability to
provide the increases and that they are reasonable in light of
corporate performance.
Salary increases may take the form of merit, equity or
promotional increases. Merit increases are typically annual and
are intended to reflect individual experience level and
performance from the prior year and year over year, to keep our
executives competitive against our peer group, and to provide an
adjustment for inflation. Equity increases are provided from
time to time in order to account for a shortfall in an
executives salary against our peer group and provide a
one-time adjustment to bring it up to a more competitive pay
level. Finally, promotional increases may be given from time to
time to compensate for promotions or for a significant increase
in an executives responsibilities or areas of influence.
In 2009, due to the economic downturn and the significant
uncertainty in the financial industry impacting our customers,
the Committee, at managements recommendation, froze
salaries for the majority of our executives, including many of
our Named Executive Officers, for the duration of 2009, with
only a few exceptions relating to promotional or equitable
increases.
In particular, Mr. Mayes received a promotional increase of
11.5% effective in March 2009 due to his promotion in April 2008
to Executive Vice President, Global Operations, since his
responsibilities had been significantly increased and he did not
receive an increase at that time. In addition, Mr. Chen
received an equity increase of 7% beginning in July 2009 due to
the significant scope of his responsibilities (covering all of
Europe, the Middle East, Africa and Asia-Pacific) and his
year-over-year
performance. Finally, Ms. Pierce received a one-time salary
adjustment for assuming the role of interim CFO for a portion of
2009.
For 2010 base salaries, the Committee approved modest merit
increases because it believed that, as a result of cost-cutting
actions taken during 2009 and early 2010 and significant free
cash flow during 2009, these merit increases were reasonable in
order to remain competitive within our peer group and to
continue shifting base salary towards median the of our peer
group.
Annual
Cash Bonuses
Our executives, including the Named Executive Officers, also
have the ability to earn annual cash bonuses under our Cash
Bonus Plan that was approved by shareholders in 2005, and, in
order to maintain its deductibility under the applicable
provisions of the Internal Revenue Code, as discussed in more
detail below under Limitations on Deductibility of
Compensation, is being proposed for re-approval at our
Annual Meeting. Payout under the Cash Bonus Plan depends upon
our performance against objective performance measures
established by the Board at the beginning of each fiscal year.
Cash bonuses under the plan provide incentives to meet or
surpass specific short-term corporate financial goals. As a
result, the Cash Bonus Plan balances the objectives of our other
pay programs, which concentrate on long-term financial results
(performance shares) and stock price growth (performance shares,
stock options and RSUs). Finally, annual cash bonuses allow us
to maintain relatively low fixed compensation costs and still
provide our executives with competitive cash pay, subject to
performance.
Cash Bonus Opportunity. The Committee
intends target bonuses to be above median levels relative to the
peer group to make up for its below-median salary position and
to provide competitive overall cash pay at target results. For
2009, the target bonuses were as follows:
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CEO: 100% of salary;
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CFO: 90% of salary for Mr. Krakora, 75% of salary for
Mr. Richardson, and 50% of salary for Ms. Pierce;
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Other Named Executive Officers: 75% of salary; and
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Other executives: 50% to 75% of salary.
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The potential earnout levels of our executives, as a percentage
of income, are set by the Committee so as to provide a
reasonable opportunity to achieve total cash pay at target that
approximates the median total cash pay of our peer group.
Actual bonuses can range from 0% to 200% of target depending on
our actual performance. In this manner, we can reward our
executives with high levels of cash bonuses for results that
substantially exceed target performance expectations.
Conversely, we award relatively low levels of cash bonuses for
results that are below target performance expectations, or none
at all for results that fail to meet minimally acceptable
standards.
Performance Measures. The Cash Bonus
Plan allows the Committee to choose levels of, growth in, or
25
relative peer company performance in any one or more of the
following performance measures:
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EPS;
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Return on invested capital;
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Return on total capital;
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Return on assets;
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Return on equity;
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TSR;
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Net income, revenue, cash flow or operating profit; and/or
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Productivity improvement.
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The Committee has historically used EPS as the performance
criteria for annual cash bonuses. The Committee believes EPS
represents an important bottom-line financial result that
investors use to evaluate the value of our Common Shares. As a
result, consistent increases in EPS over time should lead to
improvements in shareholders investment. Although the
Committee made changes in 2009 to how cash bonuses are paid out,
as discussed in more detail below, EPS is still an important
component of both the funding of cash bonuses and determining
actual payouts.
Funding of Cash Bonuses. To pay cash
bonuses, we fund a bonus pool based on (1) achievement of a
minimum EPS and (2) the maximum bonus available to each
executive. For 2009, a minimum EPS was set at approximately 50%
of our annual EPS guidance to investors, achievement of which
funded maximum payouts under the Cash Bonus Plan:
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Minimum
à
EPS > $1.05
à
Maximum Bonuses Funded
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This approach preserves the tax deductibility of all bonuses
paid under the Cash Bonus Plan and provides the Committee the
greatest flexibility to assess and reward annual performance.
Determining Cash Bonuses. While this
minimum EPS is used to fund potential cash bonuses, the actual
payout of cash bonuses is based on achievement of certain
weighted corporate goals, key initiatives, and individual goals.
Weighting. For 2009, the Committee
changed the formula it uses to determine payouts under the Cash
Bonus Plan. Historically, payouts under the plan were based
entirely on the achievement of EPS targets, with the potential
for the Committee to use negative discretion based on the level
of achievement of individual performance measures. For 2009 cash
bonuses, however, the Committee approved the following weighting
of performance measures for our executives, including the Named
Executive Officers:
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For Mr. Swidarski, Mr. Chen and Mr. Krakora, 50%
based on EPS, 30% based on key initiatives, and 20% based on
individual goals; and
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For Mr. Mayes, Mr. Ducey and Ms. Pierce, 60%
based on EPS, 20% based on key initiatives, and 20% based on
individual goals.
|
The Committee made this change in order to allow more alignment
between cash bonuses and performance of each individual within
the division, business unit or functional group on which he or
she has the most impact, while still balancing the need for the
achievement of acceptable corporate goals.
For 2010, the Committee made the following additional changes to
the weighting of performance measures for the Named Executive
Officers: for Mr. Swidarski, Mr. Richardson,
Ms. Pierce and Mr. Krakora, 60% on EPS, 20% on key
initiatives, and 20% on individual goals; for Mr. Ducey,
50%, 30% and 20%, respectively; and for Mr. Chen and
Mr. Mayes, 40%, 40% and 20%, respectively.
The Committee made these changes in 2010 for Mr. Swidarski
and Mr. Krakora in order to further emphasize consolidated
company financial performance and shareholder value creation in
the form of EPS, reflective of their focus
and/or
influence on overall corporate results. For Mr. Chen,
Mr. Mayes and Mr. Ducey, the changes were made in
order to drive key strategic
and/or
operational results in their specific areas of responsibility,
and in turn, contribute to overall corporate results.
Mr. Richardson did not join us until November 2009, and so
did not participate in the Annual Cash Bonus Plan in 2009.
Ms. Pierces weighting percentages did not change
between 2009 and 2010.
Company Goals. For 2009, the Committee
again selected EPS as the appropriate corporate goal. The EPS
level fixed by the Committee for purposes of target payout of
cash bonuses is intended to approximately mirror our annual EPS
guidance to investors. The performance levels for payout of cash
bonuses at threshold and maximum are then generally set as a
percentage of the target EPS level. Because the Committees
pay philosophy has historically been to pay less than median for
base salary compared to our peer group, with the difference in
median total cash pay to be made up by cash bonus, the threshold
for payout was set at a level that was intended to be reasonably
capable of achievement. Conversely, the EPS level for
26
maximum payout was set at a level that would require a fairly
extraordinary effort to achieve.
The following levels of EPS were intended to pay out at the
following weighted results, with an interpolation of actual
results falling in between threshold and maximum:
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Below Threshold
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à
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EPS < $1.70
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à
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No weighted EPS payout
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Threshold
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à
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EPS = $1.70
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à
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40% of weighted EPS payout
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Target
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à
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EPS = $2.20
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à
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100% of weighted EPS payout
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Maximum
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à
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EPS = $2.50
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à
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200% of weighted EPS payout
|
Our 2009 EPS target of $2.20 was the mid-range of our 2009 EPS
guidance to investors of $2.05 to $2.35, and was set in February
2009, shortly after guidance was provided to the market.
Historically, the Committee has set threshold and maximum EPS
levels at approximately 80% and 120% of target, respectively, as
it considered these percentages to provide for a reasonable
range of performance for payout. For 2009, however, given the
economic uncertainty, the Committee felt that achievement of EPS
results above target would require significantly more effort
than in a typical year, and wanted to ensure that cash bonus
payouts for 2009 results were properly aligned with the
difficulty of achievement. Accordingly, threshold and maximum
EPS levels for 2009 were set at 77% and 114% of target,
respectively. Our EPS result for 2009 was $1.78, adjusted as
discussed below, leading to payout for EPS of 49.6% of target
payout for the weighted company goals.
Our 2010 EPS target of $2.00 again approximated the mid-range of
our 2010 EPS guidance to investors of $1.90 to $2.15. The 2010
EPS target was set below the 2009 EPS target level due to
continued economic uncertainty, particularly in the financial
sector, which continues to impact our customers and therefore
our EPS outlook. For 2010 the Committee set threshold and
maximum EPS levels more in line with historic practices, while
still recognizing the continued difficulty of achieving maximum
results. Accordingly, the Committee set threshold and maximum
EPS for 2010 at 80% and 115% of target, respectively.
In establishing these EPS goals and evaluating results, the
Committee may consider certain non-recurring or extraordinary
items to be outside the normal course of business and not
reflective of our core performance. Accordingly, the
Committees determination of EPS results for payout under
the Cash Bonus Plan may exclude these items. In addition, in
setting EPS targets in 2009, the Committee specifically excluded
any revenue from our elections systems and Brazilian lottery
businesses, since they are not part of our core businesses and,
in any given year, have the potential to impact EPS results (up
or down) in a way that does not necessarily reflect core company
performance. Further, under the plan, the Committee is
authorized to consider negative discretion with respect to
bonuses.
Key Initiatives. For 2009, the
Committee also approved certain key initiatives for our
executives, including the Named Executive Officers, which
initiatives were developed and proposed by management. These key
initiatives are intended to drive key strategic
and/or
operational results in the division, business unit or functional
group within which the executive has direct control and
influence, and target levels were tied directly to our 2009
financial plan, as well as our guidance to investors. Similar to
our company goals, the Committees assessment of key
initiatives may exclude certain non-recurring or extraordinary
items. In addition, for executives with multiple key
initiatives, the Committee has no set weighting system for each
key initiative.
For 2009, the Committee approved the following key initiatives
for our Named Executive Officers (excluding Mr. Richardson):
27
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Named Executive Officer:
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Key Initiatives:
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Target Levels:
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Achievement:
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Swidarski
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Free cash flow: Free cash flow is cash generated from our
operating activities and available for execution of our business
strategy.
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Threshold = $104 million
Target = $130 million
Maximum = $156 million
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Achieved
$207 Million -Maximum-
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Asia Pacific, or AP, operating profit: 2009 profit earned
from our core business activities in AP, excluding interest and
taxes.
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*
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Achieved -Maximum-
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Chen
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Europe, the Middle East and Africa, or EMEA, operating
profit: 2009 profit earned from our core business activities
in EMEA, excluding interest and taxes.
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*
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Achieved
-Below Threshold-
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Mayes
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SmartBusiness 200 (Cost Savings): Our second cost
reduction initiative to take an additional $100 million out of
our cost structure by 2011.
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Threshold = $30 million
Target = $40 million
Maximum = $45 million
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Achieved
$49 Million -Maximum-
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Global service margin improvement: Service margin is the
difference between our cost of providing services and revenue
received for such services.
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Threshold = 0.5%
Target = 0.7%
Maximum = 1.0%
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Achieved
0.6%
-Between Threshold and Target-
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Ducey
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Growth in Integrated
Services®
in U.S. from $95 million: Integrated
Services®
is our end-to-end outsourcing solution for financial
institutions.
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*
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Achieved -Maximum-
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Pierce
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Remediation of material weaknesses in financial controls:
In connection with the restatement of our financial statements
in 2008 we determined that we had six material weaknesses in our
financial controls.
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Threshold = 4 of 6
Target = 5 of 6
Maximum = 6 of 6
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Achieved
5+ of 6
-Between Target
and Maximum-
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Krakora
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Direct and assist in completion of 2009 strategic plan.
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Subjective assessment
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Achieved
-Target-
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* |
As indicated above, management develops and proposes the key
initiatives that are approved by the Committee. These key
initiatives are based on strategic and operational objectives
that are tied to our short- and long-term strategic and
financial plans. These key initiatives have been selected
because they ultimately lead to customer satisfaction and
increased shareholder value. We believe that disclosing certain
performance measures relating to specific division or business
unit performance or other confidential strategic initiatives,
which we do not otherwise disclose publicly, would cause us
competitive harm by potentially disrupting our customer
relationships and providing competitors with, among other
things, insight into our business strategy, pricing margins and
capabilities. We typically set target performance at a level
that would provide results that are in line with our guidance to
our investors or that are otherwise reasonably difficult to
achieve relative to historical trends and future expectations at
the time the levels are set. Threshold and maximum performance
levels are then set to have slightly decreased and increased
difficulty, respectively, as compared to target levels.
|
Individual Goals. In addition to EPS
and the key initiatives, each executive typically has from four
to six individualized goals that can vary greatly amongst the
executives and the Named Executive Officers. These goals are
even more directly tied to the individuals operating unit,
functional area or department, and may consist of a mixture of
quantitative measures (for example, revenue growth, cost
reduction, cash conversion, quality improvement and inventory
goals) and qualitative measures (for example, operational and
organizational improvements, product/service development and
customer loyalty). The CEO develops and proposes the individual
goals for his management team, which are approved by the
Committee at the beginning of each fiscal year, and the Board
sets the CEOs individual performance objectives.
To the extent possible, individual quantitative goals are
approved at threshold, target and maximum achievement levels,
similar to the company goals and key initiatives. Further,
similar to our company goals and key initiatives, quantitative
individual goals may exclude certain non-recurring or
extraordinary items. However, apart from the overall weighting
of individual goals relative to company goals and key
initiatives, the Committee has no set criteria, formula or
weighting system for determining overall achievement of
individual goals. Instead, the Committee bases its determination
primarily on a subjective assessment made by the CEO and
reported to the Committee, on the overall achievement level of
each executives individual goals, including the Named
Executive Officers. Similarly, the Committee and the Board, make
a
28
subjective assessment of the CEOs achievement of
individual goals.
For 2009, the Committee approved the following individual goals
for the Named Executive Officers (excluding Mr. Richardson):
|
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|
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Named Executive Officer:
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Individual Goals*:
|
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Achievement:
|
Swidarski
|
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Successfully remediate material
weaknesses
Deliver SmartBusiness 200 $35 million
cost reduction target
Successfully release Enhanced-Note
Acceptor within timing/reliability/cost framework
Drive expansion of Integrated
Services®
globally, achieve $80 million in new contract value
Realign global organizational structures
to increase business performance and profitability
|
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|
Achieved
-95% of Maximum-
|
Chen
|
|
|
Drive AP cash conversion cycle improvement
Drive EMEA cash conversion cycle improvement
Deliver Integrated Services® revenue growth in EMEA/AP
Achieve China product quality improvements
Drive emerging markets flow share gain
|
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|
Achieved
-95% of Maximum-
|
Mayes
|
|
|
Deliver
inventory turns improvement
Quality improvements
reduction in defective ppm in manufacturing plants
Successfully release Enhanced-Note
Acceptor within timing/reliability/cost framework
Support
Oracle®
and information technology plan within timing/cost framework
|
|
|
Achieved
-95% of Maximum-
|
Ducey
|
|
|
Reduce
Opteva®
service call rate
Drive growth in remote monitoring
sites
Support SmartBusiness 200 cost reduction
target
Drive service margin improvement in
barrier security business
Drive installation cost improvement
|
|
|
Achieved
-90% of Maximum-
|
Pierce
|
|
|
Support SmartBusiness 200 cost reduction
target
Oversee successful completion of
corporate accounting consolidation project
Establish Balance Sheet monitoring
policy/process/tools within global controllers
organization
Successfully implement revised
controllers organization structure
Support revisions to management and SEC
reporting
Support information technology and
business transformation initiatives
|
|
|
Achieved
-95% of Maximum-
|
Krakora
|
|
|
Direct and assist in continued efforts
to divest Premier Election Solutions subsidiary
Direct and assist in efforts to address
enterprise and product level risk
|
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Achieved
-90% of Maximum-
|
|
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|
*
|
|
As indicated above, management
develops and proposes the individual goals that are approved by
our Compensation Committee. These individual goals are based on
strategic and operational objectives that are tied to the
Companys short- and long-term strategic and financial
plans. These individual goals have been selected because they
ultimately lead to customer satisfaction and increased
shareholder value. Although not all of these individual goals
are quantitative in nature, for those that are, we believe that
disclosing the quantitative performance measures relating to
specific division or business unit performance or other
confidential strategic initiatives, which we do not otherwise
disclose publicly, would cause us competitive harm by
potentially disrupting our customer relationships and providing
competitors with, among other things, insight into our business
strategy, pricing margins and capabilities. We typically set
target performance at a level that would provide results that
are in line with our guidance to our investors or that are
otherwise reasonably difficult to achieve relative to historical
trends and future expectations at the time the levels are set.
Threshold and maximum performance levels are then set to have
slightly decreased and increased difficulty, respectively, as
compared to target levels.
|
2009 Annual Cash Bonus Payout. Based on
the Named Executive Officers cash bonus opportunities
(threshold / target / maximum as a
percentage of base salary), and their weighted achievement of
the foregoing company goals, key initiatives and individual
goals, the Committee recommended, and the Board approved, a
payout of cash bonuses as follows:
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|
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|
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|
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|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Cash Bonus
|
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|
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Weighting
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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Opportunity
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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(%)
|
|
|
|
Achievement of
|
|
|
|
|
|
Achievement of
|
|
|
|
|
|
Achievement of
|
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|
|
|
|
|
|
|
|
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|
Base
|
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|
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|
|
|
|
|
|
|
|
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|
|
Company Goals
|
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|
|
|
|
Key Initiatives
|
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|
|
|
|
Individual Goals
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Total
|
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|
Salary
|
|
|
|
|
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Payout
|
|
Named Executive Officer:
|
|
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Thresh.
|
|
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Target
|
|
|
Max.
|
|
|
|
(50%)
|
|
|
|
|
|
(30%)
|
|
|
|
|
|
(20%)
|
|
|
|
|
|
|
(%)
|
|
|
|
|
|
($)
|
|
|
|
|
|
($)
|
|
Swidarski
|
|
|
|
40
|
|
|
|
100
|
|
|
|
200
|
|
|
|
|
24.8%
|
|
|
|
+
|
|
|
|
60.0%
|
|
|
|
+
|
|
|
|
38.0%
|
|
|
|
=
|
|
|
|
|
122.8
|
%
|
|
|
x
|
|
|
|
750,000
|
|
|
|
=
|
|
|
|
921,000
|
|
Chen
|
|
|
|
30
|
|
|
|
75
|
|
|
|
150
|
|
|
|
|
18.6%
|
|
|
|
+
|
|
|
|
22.5%
|
|
|
|
+
|
|
|
|
28.5%
|
|
|
|
=
|
|
|
|
|
69.6
|
%
|
|
|
x
|
|
|
|
351,754
|
|
|
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=
|
|
|
|
244,821
|
|
Krakora
|
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35
|
|
|
|
90
|
|
|
|
180
|
|
|
|
|
21.9%
|
|
|
|
+
|
|
|
|
27.0%
|
|
|
|
+
|
|
|
|
32.4%
|
|
|
|
=
|
|
|
|
|
81.3
|
%
|
|
|
x
|
|
|
|
320,000
|
|
|
|
=
|
|
|
|
260,160
|
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|
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|
|
|
|
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|
|
Cash Bonus
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|
Weighting
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|
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|
|
|
|
|
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|
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|
|
|
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|
|
Opportunity
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
(%)
|
|
|
|
Achievement of
|
|
|
|
|
|
Achievement of
|
|
|
|
|
|
Achievement of
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Goals
|
|
|
|
|
|
Key Initiatives
|
|
|
|
|
|
Individual Goals
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Salary
|
|
|
|
|
|
Payout
|
|
Named Executive Officer:
|
|
|
Thresh.
|
|
|
Target
|
|
|
Max.
|
|
|
|
(60%)
|
|
|
|
|
|
(20%)
|
|
|
|
|
|
(20%)
|
|
|
|
|
|
|
(%)
|
|
|
|
|
|
($)
|
|
|
|
|
|
($)
|
|
Mayes
|
|
|
|
30
|
|
|
|
75
|
|
|
|
150
|
|
|
|
|
22.3%
|
|
|
|
+
|
|
|
|
30.0%
|
|
|
|
+
|
|
|
|
28.5%
|
|
|
|
=
|
|
|
|
|
80.8
|
%
|
|
|
x
|
|
|
|
335,036
|
|
|
|
=
|
|
|
|
270,776
|
|
Ducey
|
|
|
|
30
|
|
|
|
75
|
|
|
|
150
|
|
|
|
|
22.3%
|
|
|
|
+
|
|
|
|
22.5%
|
|
|
|
+
|
|
|
|
27.0%
|
|
|
|
=
|
|
|
|
|
71.8
|
%
|
|
|
x
|
|
|
|
325,008
|
|
|
|
=
|
|
|
|
233,421
|
|
Pierce
|
|
|
|
20
|
|
|
|
50
|
|
|
|
100
|
|
|
|
|
14.9%
|
|
|
|
+
|
|
|
|
15.0%
|
|
|
|
+
|
|
|
|
19.0%
|
|
|
|
=
|
|
|
|
|
48.9
|
%
|
|
|
x
|
|
|
|
231,176
|
|
|
|
=
|
|
|
|
112,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
Long-Term
Incentives
Overview. The 1991 Plan provides us
with flexibility in the types of long-term incentives we can
award to our executives, including the Named Executive Officers,
and includes stock options, performance shares, restricted stock
and RSUs. The LTI granted in 2009 collectively and
individually support our pay philosophy:
|
|
|
Stock options align our executives interests with those of
shareholders because options only produce rewards to executives
if our stock price increases after options are granted.
|
|
|
Performance shares reward our executives for achieving sustained
financial results as well as for increasing our stock price. As
a result, they tie rewards to performance and provide an
additional means to own stock.
|
|
|
Special grants of restricted stock
and/or RSUs
help in attracting and retaining key executives. Normally,
however, our LTI focus on options and performance shares.
|
LTI opportunities are based largely on competitive practices of
and benchmarking against our peer group. In addition, the
Committee takes into account the competitiveness of our
executives target cash pay (salary plus target bonus) and
competitive total pay levels. This dollar difference represents
the target value of LTI that the Committee delivers in the form
of options and performance shares.
Stock Options. For 2009, approximately
50% of the target LTI was delivered in the form of stock
options. In this manner, the Committee strikes a balance between
awards tied only to stock price appreciation and those based on
the full value of our Common Shares, as well as other
performance factors. LTI delivered in the form of stock options
is valued using the Black-Scholes option valuation method, the
same method we use to determine its accounting cost.
Grant guidelines are developed by management and then reviewed
and approved by the Committee, and are based on an
executives salary grade or level, organizational level,
reporting relationships and job responsibilities in order to
maintain internal equity in the grants to participants. Actual
grants also vary based on an assessment of several factors,
including the market value of our Common Shares, our financial
performance, shares available under the 1991 Plan, an
individuals target total compensation and his or her
performance against individual performance goals. In addition,
grants awarded to Mr. Richardson in 2009 took into account
the value of equity awards and other benefits
Mr. Richardson forfeited upon leaving his former job.
Our executives, including the Named Executive Officers, receive
option grants with the following characteristics:
|
|
|
Non-qualified stock options, which provide us with a tax
deduction at the time of exercise to the degree executives incur
taxable income.
|
|
|
Exercise price equal to the closing price of our Common Shares
on the date of grant so that executives do not receive options
that are in the money.
|
|
|
Vest ratably over a four-year period to support executive
retention.
|
|
|
Expire ten years after the date of grant to reward for long-term
stock price appreciation.
|
Grants of stock options approved by the Committee to the Named
Executive Officers during 2009 were as follows:
|
|
|
|
|
|
Named Executive Officer:
|
|
|
Stock Options Granted:
|
|
Swidarski
|
|
|
|
150,000
|
|
Richardson
|
|
|
|
30,000
|
|
Chen
|
|
|
|
15,000
|
|
Mayes
|
|
|
|
15,000
|
|
Ducey
|
|
|
|
15,000
|
|
Pierce
|
|
|
|
7,000
|
|
Krakora
|
|
|
|
25,000
|
|
The number of stock options granted to our Named Executive
officers in 2009, reflected in the table above, approximates 50%
of their target value of LTI, using the Black-Scholes option
valuation method.
Performance Shares. For 2009, the
Committee delivered the remaining 50% of target LTI in the form
of performance shares. Performance shares are earned over a
three-year performance period, determined as of the date of our
fourth quarter and year-end earnings release immediately
following such performance period, with actual awards varying
from target based on the achievement of financial objectives
established by the Committee at the start of the period. No
dividends are paid on performance shares until earned.
The award of performance shares in this way is consistent with
the Committees objective to take a balanced approach to
LTI by rewarding sustained financial performance as well as
stock price appreciation. The expected value of a performance
share at the time of grant (based on our stock price) determines
the number of target performance shares potentially awarded. The
Committee then reviews and approves
30
the performance share grant guidelines developed by management,
which are based on the same principles used to develop stock
option grant guidelines.
Our executives, including the Named Executive Officers, received
target performance share awards for the 2009 to 2011 period with
the following characteristics:
|
|
|
Our TSR for the period relative to our peer group and the
S&P Mid-Cap 400 Index determines the actual number of
performance shares earned. Results in each area are weighted
equally. This approach underscores the importance of providing
shareholder returns equal to or greater than those companies
similar to us as well as to the broader market of companies we
compete with for investment. Moreover, it also balances the
focus of stock options, the value of which is tied to the
absolute growth in our stock price.
|
|
|
The actual number of shares earned will range from 0% to 200% of
an individuals target award:
|
|
|
If our relative TSR is below both groups 20th percentile,
no performance shares will be earned. As a result, the Committee
requires executives to provide shareholders a minimally
acceptable performance relative to our peers before any rewards
can be earned.
|
|
|
Our executives can earn the maximum number of shares if our TSR
equals or exceeds (1) the 60th percentile of one group and
100th percentile in the other, (2) the 70th percentile in
one group and 90th percentile in the other, or (3) the 80th
percentile of both groups. In this manner, our executives
receive the highest level of rewards under the plan only when
our performance is superior to that of other similar companies.
|
|
|
A matrix is used to determine awards for results between
threshold and maximum.
|
|
|
An executives individual performance is not a factor in
determining actual performance shares awarded.
|
Grants of performance shares, at target, approved by the
Committee to the Named Executive Officers during 2009 were as
follows:
|
|
|
|
|
|
Named Executive Officer:
|
|
|
Target Performance Shares Granted:
|
|
Swidarski
|
|
|
|
50,000
|
|
Richardson
|
|
|
|
5,625
|
|
Chen
|
|
|
|
7,500
|
|
Mayes
|
|
|
|
7,500
|
|
Ducey
|
|
|
|
7,500
|
|
Pierce
|
|
|
|
3,500
|
|
Krakora
|
|
|
|
12,500
|
|
The target performance shares granted to our Named Executive
officers in 2009, reflected in the table above, approximates the
remaining 50% of their target value of LTI.
Goals for the 2007 to 2009 performance period were identical to
those established for the 2009 to 2011 period. However, unlike
for the 2009 to 2011 performance period, the calculation of
payouts for prior performance periods is determined by our
actual rank, as opposed to our percentile ranking, relative to
our peer group and the S&P Mid-Cap 400 Index. The Committee
changed to a percentile ranking methodology in 2009 for ease of
administration. In the past, when companies have dropped out of
our peer group or the S&P Mid-Cap 400 Index during a
performance period, it has not always been clear how best to
adjust for such changes when using actual rankings. In certain
situations, such as with a bankruptcy, it might be appropriate
to assume poor performance and, therefore, deem the companies to
have performed at the bottom of the rankings. However, in other
situations, it may be less clear, such as in the case of a
merger or acquisition. Changing to percentile rankings removes
the ambiguity.
As discussed above, our actual TSR for the 2007 to 2009
performance period was ranked 24th out of an original peer group
(discussed above) comprised of 31 companies, and
241st in the S&P Mid-Cap 400 Index, which produced a
payout equal to 55% of each executives target award. Our
executives received shares equal to this percent of target, as
no discretion was used to increase or decrease the results based
on our relative TSR. Accordingly, the performance shares earned
by the Named Executive Officers for the 2007 to 2009 performance
period were as follows: Thomas W. Swidarski, 11,000 shares;
James L. M. Chen, 2,750 shares; George S. Mayes Jr.,
2,750 shares; Charles E. Ducey Jr., 2,750; and Kevin J.
Krakora, 5,500 shares.
Restricted Stock and RSUs. At times, we
may hire new executives or a current executive may take on a new
role or greatly expanded responsibilities. As a result, the
Committee believes that it is sometimes important to provide
such executives with an additional incentive in the form of
restricted stock or RSUs. These awards typically vest three
years after the date of grant and may include performance
features for early vesting. The purpose of these awards is to
ensure retention of the executives services for a
specified period of time and to enhance their incentive for
building shareholder value. In furtherance of these
31
purposes, in 2009, Mr. Richardson was awarded 12,500 RSUs
as a newly hired executive. The value of these RSUs was
intended, in part, to provide compensation for the value of
equity awards and other benefits Mr. Richardson forfeited
upon leaving his former job. In addition, for similar reasons
Mr. Richardson was given a sign-on bonus of $250,000,
payable at his discretion in cash or RSUs, with a 20% increase
in value if he chose RSUs. Mr. Richardson decided to take
the sign-on bonus in the form of an additional 11,350 RSUs.
Providing the sign-on bonus in the form of RSUs allows the
company to expense the value over the three-year term of the
RSUs, instead of all at once, and also enabled
Mr. Richardson to accelerate progress in meeting his stock
ownership requirements. None of the other Named Executive
Officers received restricted stock or RSUs in 2009.
Our executives, including the Named Executive Officers, are also
eligible to participate in the following additional pay elements
as part of their total pay package.
Benefits
We provide our executives with medical, dental, long-term
disability, life insurance and severance benefits under the same
programs used to provide benefits to all
U.S.-based
associates. Our executives may buy additional life insurance
coverage at their own expense, but not long-term disability. The
maximum life insurance coverage that may be bought by an
executive is $1.5 million. Our executives benefits
are not tied to individual or company performance, which is the
same approach used for other associates. Moreover, changes to
our executives benefits reflect the changes to the
benefits of other associates.
Perquisites
We provide our executives with perquisites that are also not
tied to individual or company performance. The Committee
believes that these benefits are set at a reasonable level, are
highly valued by recipients, have limited cost, are part of a
competitive reward program and help in attracting and retaining
high quality executives. Our executives receive the following
perquisites, the values of which differ based on an
executives reporting level:
|
|
|
Company car or car allowance, including a repair and maintenance
allowance, and insurance allowance, although this perquisite is
being phased out except for a limited number of grandfathered
positions, which include each of the Named Executive Officers,
except Ms. Pierce.
|
|
|
Country club memberships, which are anticipated to be used for
business as well as personal purposes. As of December 2008, this
perquisite has been discontinued for all of our executives,
except our CEO, as it was felt that he, more so than our other
executives, would benefit from the business development and
networking opportunities provided by his club memberships.
|
|
|
Reimbursement for financial planning services to assist
executives in managing the rewards earned under our programs.
|
|
|
A complete annual physical exam (assessment of overall health,
screening and risk reviews for chronic diseases, exercise and
dietary analysis, and other specialty consultations), which
helps protect in small measure the investment we make in these
key individuals.
|
The Committee periodically reviews our practices in this area
and makes any necessary adjustments based on competitive
practices, consistency with our total pay philosophy and
objectives, and cost to provide these personal benefits. As a
result of the Committees review, beginning in 2008, we no
longer provide tax
gross-ups in
connection with any executive perquisites. The trend in our peer
group and in the market is to discontinue the practice of
providing tax
gross-ups in
connection with executive perquisites and, further, providing
tax
gross-ups on
perquisites is not consistent with our global cost reduction
efforts.
Deferred
Compensation
Our executives, including the Named Executive Officers, have the
ability to defer receipt of annual cash bonuses and performance
shares pursuant to our Deferred Incentive Compensation Plan.
Current investment choices under the plan for cash deferrals
(cash bonuses and dividends on deferred performance shares)
mirror those in our 401(k) plan, except it does not include our
Common Shares. As a result, the plan offers our executives
another means to save for retirement. Our deferred compensation
plan does not provide participants with additional pay, but
merely provides a tax deferred investment vehicle. Deferrals
represent earned incentives that would have been paid to the
executive except for the voluntary election of the
32
executive. Moreover, we do not guarantee any specific rate of
return and do not contribute to the return that may be earned.
As a result, the current program does not increase our
compensation costs.
Retirement
We also maintain qualified and non-qualified retirement
programs. Our executives, including the Named Executive
Officers, participate in our qualified defined benefit (pension)
and defined contribution (401(k)) plans on the same terms as all
other associates. Under our 401(k) plan, for executives hired
prior to July 1, 2003, we have historically matched 60% of
the first 3% of pay that was contributed by the associate to the
plan, and 40% of the next 3% of pay contributed. For executives
hired on or after such date, we have historically matched 100%
of the first 3% of pay that was contributed by the associate to
the plan, and 60% of the next 3% of pay contributed. However, as
a result of the global economic downturn beginning in late 2008,
in early 2009 we discontinued our 401(k) match for all
associates hired prior to July 1, 2003, and reduced our
401(k) match for all associates hired after July 1, 2003 to
60% of the first 3% of pay contributed by the associate. It is
our hope to reinstate all aspects of the 401(k) match at some
point during 2010.
We also have five non-qualified supplemental retirement plans as
follows: the Supplemental Employee Retirement Plan I, or
SERP I, the Pension Supplemental Executive Retirement Plan,
or Pension SERP, the Pension Restoration Supplemental Executive
Retirement Plan, or Pension Restoration SERP, the 401(k)
Restoration Supplemental Executive Retirement Plan, or 401(k)
Restoration SERP, and the 401(k) Supplemental Executive
Retirement Plan, or 401(k) SERP, although none of the Named
Executive Officers are in the SERP I, and the SERP I is now
closed to new participants.
These plans are described in detail below under 2009
Pension Benefits.
Participation in the plans is limited to executive officers in
positions that help develop, implement and modify our long-term
strategic plan, as nominated by the CEO and approved by the
Committee.
Mr. Swidarski, Mr. Ducey and Mr. Krakora
participate in the Pension SERP, Pension Restoration SERP and
the 401(k) Restoration SERP; however, any benefits accrued under
the Restoration SERPs offset benefits accrued under the Pension
SERP to avoid duplication of benefits provided.
Mr. Richardson and Mr. Mayes participate in the 401(k)
Restoration SERP and the 401(k) SERP.
Employment
Agreements
We typically only enter into employment agreements with the CEO
and also the President when that title is held by someone other
than the CEO. When an employment agreement is deemed necessary,
the Committee usually models the agreement after prior
employment agreements, and makes adjustments as necessary given,
among other factors, a competitive analysis of the market for
the position, our needs and the relative experience level of the
individual accepting the position. These employment agreements
may then go through a negotiation process with the individual
and his or her legal counsel.
Mr. Swidarskis employment agreement is described in
more detail below under Narrative Disclosure to 2009
Summary Compensation Table and 2009 Grants of Plan-Based Awards
Table and a copy of his amended and restated agreement
has been filed as Exhibit 10.28 to our Annual Report on
Form 10-K
for the year ended December 31, 2008.
Change-in-Control
Benefits
We have an historical practice of providing
change-in-control
agreements to our executive officers, including the Named
Executive Officers. These agreements provide our executives with
the potential for continued employment for three years following
a
change-in-control.
As a result, these agreements help retain these executives and
provide for management continuity in the event of an actual or
threatened
change-in-control
of the company. They also help ensure that our executives
interests remain aligned with shareholders interests
during a time when their continued employment may be in
jeopardy. Finally, they provide some level of income continuity
should an executives employment be terminated without
cause.
The agreements provide:
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Severance of three times salary for the CEO and two times salary
for the other Named Executive Officers and other executives.
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One year of continued participation in employee retirement
income, health and welfare benefit plans, including all
executive perquisites.
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One year of additional service for determining the
executives non-qualified retirement benefits.
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33
In addition, the agreements provide a tax
gross-up for
any excise tax imposed under Section 280G of the Internal
Revenue Code, covering severance amounts payable under any other
agreement, plan or arrangement. The Committee feels that this
tax gross-up
is reasonable to ensure that our executives are kept
whole in the event of a
change-in-control
so that the individual receives the same after-tax amount as he
or she would have received without the imposition of the excise
tax.
Finally,
change-in-control
benefits are only paid upon the occurrence of two
events a so-called double trigger.
First, there must be a
change-in-control
of the company, as defined in the agreements. Second, the
executives must be terminated without cause or they must
terminate their own employment for good cause, as described in
the agreements. In this manner, benefits are only paid to
executives if they are adversely affected by a
change-in-control,
consistent with the agreements objectives.
The terms and conditions of these agreements are identical in
all material respects, except for the multiple of base salary
noted above. The Committee periodically reviews our policy with
respect to these
change-in-control
agreements, and engages Towers Perrin to provide a competitive
analysis of our practices. During 2008, it was determined that
this type of agreement was still a valued component of overall
compensation for purposes of attracting and retaining quality
executive officers. Based upon these reviews, the Committee
believes its
change-in-control
benefits, providing for payments of two and three times base
salary, as applicable, are below median levels for executives in
similar positions in its peer group and at other comparable
companies and, therefore, remained consistent with the
Committees philosophy relative to these types of awards.
As such, the Committee approved the continued award of these
agreements to new executives. The Committee does not take the
value of these agreements into consideration when making any
other compensation decisions.
Separation
Agreements
It is also our historical practice to enter into separation
agreements with our executive officers upon their separation
from service in order to reinforce that individuals
confidentiality, non-competition and non-solicitation
obligations. As with employment agreements, the Committee
usually models the agreement after prior separation agreements,
and makes appropriate adjustments, taking into consideration the
past service of the individual, the reason for the separation
and any other factors the Committee deems relevant. These
separation agreements generally then go through a negotiation
process with the individual and his or her legal counsel. These
agreements are only prepared at the time of an executives
separation from the company, and as such, do not affect the
Committees decisions on other compensation elements.
Expatriate
Benefits
Executives sent on expatriate assignments receive payments to
cover housing, automobile and other expenses under our standard
expatriate policies. With the exception of Mr. Chen, who
was asked to relocate to China when he was hired by us, none of
the Named Executive Officers received expatriate benefits in
2009. Mr. Chens expatriate benefits are described in
more detail below in footnote 5 to the 2009 Summary
Compensation Table.
Stock
Ownership Guidelines
We established stock ownership guidelines for our executives in
1996. Ownership guidelines reinforce the primary goals of our
LTI: to build stock ownership among our executives and ensure
their long-term economic interests are aligned with those of
other shareholders.
In 2007, we modified our ownership requirements, adopting fixed
share ownership guidelines instead of setting guidelines as a
percentage of salary, in order to:
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Provide shareholders and executives a clearer view on the level
of ownership required;
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Increase the financial flexibility our executives have in
meeting those requirements; and
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Maintain executives commitment to share ownership once
ownership targets are achieved.
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The new levels of ownership set forth in these guidelines are
approximately the same as our prior ownership guidelines, which
were based on the
34
executives salaries and our stock price on October 5,
2006, and are as follows:
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Chief Executive Officer: 130,000 shares;
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President and Chief Operating Officer: 100,000 shares;
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Executive and Senior Vice Presidents: 50,000 shares;
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Vice Presidents and Group Vice Presidents:
25,000 shares; and
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Other Senior Management: 15,000 shares.
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In addition, until guidelines are met, our executives must hold
at least 80% of the net shares of stock received from any
equity-based awards, after deductions for taxes and exercise
costs. Once the guidelines are met, our executives are required
to hold at least 40% of the net shares of stock received from
any equity-based awards, after such deductions.
In determining an executives stock holdings, we count the
shares directly owned by the executive, including unvested
restricted shares and shares deferred pursuant to our deferred
compensation program, as well as the following stock
equivalents: deferred shares/RSUs and the potential after-tax
shares owned through the executives 401(k) savings plan
account. Outstanding options and unearned performance shares do
not count toward the executives stock ownership guidelines.
The stock holdings of the Named Executive Officers are set forth
above under Security Ownership of Directors and
Management.
The Committee reviews managements stock holdings annually
to monitor progress toward the stock ownership guidelines.
However, we do not impose any penalties on executives who fail
to meet the stock ownership guidelines. This is because the new
guidelines mandate some level of stock ownership whenever an
executive would realize any value from an equity-based award.
Moreover, we do not allow executives to hedge the economic risk
associated with stock ownership.
Clawbacks
In addition to any other rights or remedies legally available to
us, all of our equity plans include provisions that allow us to
cancel awards or claw back any shares received
pursuant to awards or the exercise of stock options for certain
specified conduct that is deemed detrimental to the Company. To
the extent that an executive has already received value for such
awards, these provisions also allow us to seek reimbursement of
such value directly from the executive or through the
garnishment of salary or cash bonus.
Examples of such detrimental conduct include:
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Engaging, directly or indirectly, in any activity in competition
us, in any product, service or business activity for which he or
she had any direct responsibility or direct involvement during
the two previous years;
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Soliciting one of our employees to terminate his or her
employment;
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Unauthorized disclosure of confidential, proprietary or trade
secret information obtained during employment with us;
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Failure to promptly disclose and assign any interest in any
invention or idea conceived during his or her employment and
related to any of our actual or anticipated business, research
or development work; and
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Any activity that results in a termination for cause, including
gross neglect and any act of dishonesty constituting a felony.
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Company-Imposed
Black-Out Periods
Any time one of our executives is in possession of material
non-pubic information,
he/she is
prohibited from trading in our stock. Apart from these trading
restrictions, we also impose a routine black-out period that
prohibits executives, including the Named Executive Officers,
from trading during the period that begins two weeks prior to
the end of each quarter and extends through the first business
day following our next scheduled quarterly earnings release.
These self-imposed black-out periods are an example of good
corporate governance and help to protect both us and the
individual from allegations of insider trading violations.
However, our black-out policy was not intended to penalize
employees for this type of positive corporate behavior, and in
the past the Committee has approved a cash distribution to
employees, including Named Executive Officers, who were barred
from exercising stock options prior to their expiration due to a
company-imposed black-out period. In 2009, however, none of the
Named Executive Officers received any such cash distribution as
a result of expiring stock options.
Limitations
on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally
limits the tax deductibility of compensation
35
paid by a public company to its CEO and certain other highly
compensated executive officers to $1 million in the year
the compensation becomes taxable to the executive. There is an
exception to the limit on deductibility for performance-based
compensation that meets certain requirements.
In order to qualify as performance-based compensation, our
compensation plans must meet certain requirements, including
shareholder approval. We have taken steps intended to ensure we
are not adversely affected by Section 162(m). To that end,
our annual bonuses, grants of performance shares and awards of
stock options are designed to meet the sections
deductibility requirements. Nevertheless, the Committee also
believes that it must maintain flexibility to take actions that
it deems to be in our best interests, but that may not qualify
for tax deductibility under Section 162(m).
Base salaries and grants of restricted stock and RSUs do not
qualify as performance-based compensation and would not be
excluded from the limitation on deductibility. As a result, we
have a policy pursuant to which certain executives have entered
into agreements to automatically defer amounts affected by the
$1 million limitation until the time when that limitation
no longer applies.
At the request of our Compensation Committee, management has
undertaken a review and evaluation of our compensation policies
and practices applicable to all employees that may create risks
for our company. Participating in this review were members of
our human resources, legal, finance and internal audit
departments. In connection with this review, the Compensation
Committee also engaged its independent compensation consultant,
Towers Watson, to conduct a comprehensive risk assessment of our
executive compensation policies and practices.
The results of these reviews and assessments were presented to
the Compensation Committee for its review and final assessment.
Consequently, we have determined that our compensation policies
and practices do not create risk that is reasonably likely to
have a material adverse effect on the company.
The table below summarizes the total compensation paid or earned
by each of our Named Executive Officers for the fiscal years
ended December 31, 2009, 2008 and 2007. The amounts shown
include compensation for services in all capacities that were
provided to us.
36
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Change in Pension
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Value and Non-
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Non-Equity
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qualified Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Salary 1
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Bonus 2
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Awards3
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Awards4
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Compensation5
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Earnings6
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Compensation7
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Total
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Name and Principal Position
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Year
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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Thomas W. Swidarski
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2009
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750,000
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0
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1,158,000
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1,177,440
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921,000
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474,000
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114,410
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4,594,850
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President and Chief Executive
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2008
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750,000
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0
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765,900
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860,700
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1,500,000
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658,000
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172,587
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4,707,187
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Officer
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2007
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687,111
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365,913
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2,836,200
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2,178,300
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0
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|
177,000
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|
70,835
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6,315,359
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Bradley C. Richardson
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2009
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51,609
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60,625
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773,518
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269,397
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0
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0
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20,856
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1,176,005
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Executive Vice President and
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2008
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|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Chief Financial
Officer 8
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2007
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
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|
|
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James L.M. Chen
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2009
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340,248
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0
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|
173,700
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117,744
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244,821
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|
0
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724,820
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1,601,333
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Executive Vice President,
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2008
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328,742
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0
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344,655
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71,725
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486,538
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0
|
|
203,869
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1,435,529
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International Operations
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2007
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292,215
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117,721
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|
236,350
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|
137,959
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0
|
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0
|
|
236,864
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|
1,021,109
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George S. Mayes, Jr.
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2009
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329,277
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0
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173,700
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117,744
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270,776
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0
|
|
188,333
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1,079,830
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Executive Vice President,
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2008
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300,481
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0
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153,180
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71,725
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444,712
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0
|
|
103,489
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1,073,587
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Global Operations
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2007
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-
|
|
-
|
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-
|
|
-
|
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-
|
|
-
|
|
-
|
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-
|
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Charles E. Ducey, Jr.
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2009
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308,706
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0
|
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173,700
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117,744
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233,421
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|
229,000
|
|
40,011
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1,102,582
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Executive Vice President,
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2008
|
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-
|
|
-
|
|
-
|
|
-
|
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-
|
|
-
|
|
-
|
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-
|
North America Operations
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2007
|
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-
|
|
-
|
|
-
|
|
-
|
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-
|
|
-
|
|
-
|
|
-
|
|
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Leslie A. Pierce
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2009
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305,922
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0
|
|
81,060
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54,947
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112,998
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|
42,000
|
|
10,698
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607,625
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Former Interim Chief
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2008
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
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-
|
Financial
Officer 9
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2007
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
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|
|
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Kevin J. Krakora
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2009
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353,720
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0
|
|
289,500
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|
196,240
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|
260,160
|
|
189,000
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|
40,718
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1,329,338
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Former Chief Financial
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2008
|
|
377,805
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|
0
|
|
319,125
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|
179,313
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|
680,049
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|
254,000
|
|
77,167
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|
1,887,459
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Officer 10
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2007
|
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375,354
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0
|
|
590,875
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|
363,050
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|
0
|
|
127,000
|
|
38,668
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|
1,494,947
|
|
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1 |
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For Ms. Pierce, the amount
reflected in the Salary column includes a one-time
salary adjustment for her role as interim CFO in the amount of
$74,746.
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2 |
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For Mr. Richardson, the amount
reflected in the Bonus column represents a pro-rated
bonus for 2009 pursuant to his offer of employment, based on
target EPS results under the Annual Cash Bonus Plan.
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3 |
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For 2009, this column represents
the aggregate grant date fair value, computed in accordance with
FASB ASC Topic 718, for performance shares and RSUs awarded to
the Named Executive Officers in 2009, as reflected below under
2009 Grants of Plan-Based Awards. Pursuant to
SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. For the
performance shares, such amounts are based on the probable
outcome of the relevant performance conditions as of the grant
date. The maximum number of performance shares that may be
earned is also reflected below under 2009 Grants of
Plan-Based Awards, the grant date fair value of which
would be: for Mr. Swidarski, $2,316,000; for
Mr. Richardson, $286,326; for Mr. Chen, $347,400; for
Mr. Mayes, $347,400; for Mr. Ducey, $347,400; for
Ms. Pierce, $162,120; and for Mr. Krakora, $570,000.
The specific terms of the performance shares and RSUs are
discussed in more detail above under Compensation
Discussion and Analysis. For performance shares and
RSUs awarded to the Named Executive Officers in 2008 and 2007,
the grant date fair values have been recomputed in accordance
with FASB ASC Topic 718. For additional information on
performance shares and RSUs awarded to the Named Executive
Officers in prior years, see below under Outstanding
Equity Awards at 2009 Fiscal Year-End. These amounts
reflect the grant date fair value for these awards, and do not
necessarily correspond to the actual value that will be realized
by the Named Executive Officers.
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4 |
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For 2009, this column represents
the aggregate grant date fair value, computed in accordance with
FASB ASC Topic 718, for stock options granted to the Named
Executive Officers in 2009, as reflected below under
2009 Grants of Plan-Based Awards. Pursuant to
SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. The
assumptions used in calculating the fair value of these stock
options can be found under Note 3 to the Consolidated
Financial Statements in our Annual Report on
Form 10-K
for the year ended December 31, 2009. The specific terms of
the stock options are discussed in more detail above under
Compensation Discussion and Analysis. For
stock options awarded to the Named Executive Officers in 2008
and 2007, the grant date fair values have been recomputed in
accordance with FASB ASC Topic 718. For additional information
on stock options awarded to the Named Executive Officers in
prior years, see below under Outstanding Equity Awards
at 2009 Fiscal Year-End. These amounts reflect the
grant date fair value for these awards, and do not necessarily
correspond to the actual value that will be realized by the
Named Executive Officers.
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37
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5 |
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For 2009, this column reflects
amounts earned by the Named Executive Officers under our Cash
Bonus Plan for the 2009 fiscal year, but that were not actually
paid out until February 2010. For a more detailed description of
the related performance measures for the Cash Bonus Plan, see
above under Compensation Discussion and
Analysis.
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6 |
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For 2009, these amounts shown are
the difference between the value of pension benefits earned as
of December 31, 2009 based on a 6.33% discount rate and the
RP-2000 Combined Healthy Mortality Table with mortality
improvement to December 31, 2009 based on Scale AA and the
value of pension benefits earned as of December 31, 2008
based on a 6.41% discount rate and the RP-2000 Mortality Table
with no mortality improvement. Further, the values were
determined assuming the probability is nil that the Named
Executive Officer will terminate, retire, die or become disabled
before normal retirement date. There was no above-market or
preferential interest earned by any Named Executive Officer in
2009 on non-qualified deferred compensation.
|
|
7 |
|
For 2009, the amounts reported for
All Other Compensation consist of amounts
provided to the Named Executive Officers as outlined in the
table below, with respect to (a) the use of an automobile
or cash in lieu thereof for Mr. Chen, this amount includes
the cost of a driver, (b) club memberships for
Mr. Swidarski, (c) the dollar value of insurance
premiums paid by us for the benefit of the executive,
(d) amounts contributed for the executive by us under our
401(k) plan and any non-qualified defined contribution plan for
which the executive is a participant, (e) financial
planning services/tax assistance, (f) dividend equivalents
paid on unvested RSUs, and (g) other. For Mr. Mayes,
the amount in column (d) reflects a one-time adjustment to
include the $74,519 401(k) SERP contribution made in 2009 for
the 2008 fiscal year. For the Named Executive Officers,
excluding Mr. Richardson and Mr. Chen, the amount in
column (g) reflects the approximate value of an annual
physical exam provided to our executives. For
Mr. Richardson, the amount in column (g) reflects
miscellaneous benefits. For Mr. Chen, the amount in column
(g) includes the following expatriate cost of living
allowances for the location of his residence in Shanghai, China:
a housing allowance in the amount of $111,000; a goods and
services allowance in the amount of $37,000; a one-time
allowance of $45,793; pension payments in the amount of $51,037;
tax payments of $387,772; and miscellaneous other benefits
totaling $64,021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Compensation
|
Names
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
Thomas W. Swidarski
|
|
|
23,400
|
|
|
|
22,664
|
|
|
|
2,346
|
|
|
|
6,900
|
|
|
|
15,000
|
|
|
|
41,600
|
|
|
|
2,500
|
|
Bradley C. Richardson
|
|
|
2,961
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,145
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,750
|
|
James L.M. Chen
|
|
|
26,052
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,145
|
|
|
|
696,623
|
|
George S. Mayes, Jr.
|
|
|
14,256
|
|
|
|
0
|
|
|
|
1,108
|
|
|
|
156,622
|
|
|
|
9,167
|
|
|
|
4,680
|
|
|
|
2,500
|
|
Charles E. Ducey, Jr.
|
|
|
14,256
|
|
|
|
0
|
|
|
|
1,075
|
|
|
|
7,500
|
|
|
|
10,000
|
|
|
|
4,680
|
|
|
|
2,500
|
|
Leslie A. Pierce
|
|
|
0
|
|
|
|
0
|
|
|
|
480
|
|
|
|
7,350
|
|
|
|
0
|
|
|
|
368
|
|
|
|
2,500
|
|
Kevin J. Krakora
|
|
|
11,750
|
|
|
|
0
|
|
|
|
1,427
|
|
|
|
7,500
|
|
|
|
9,741
|
|
|
|
7,800
|
|
|
|
2,500
|
|
|
|
|
8 |
|
Mr. Richardson was appointed
Executive Vice President and Chief Financial Officer effective
as of November 23, 2009.
|
|
9 |
|
Ms. Pierce served as interim
Chief Financial Officer from March 25, 2009 through
November 22, 2009, and she currently serves as Vice
President and Corporate controller.
|
|
10 |
|
Mr. Krakora served as
Executive Vice President and Chief Financial Officer until
stepping down as of March 25, 2009, and he currently serves
as Executive Vice President, Corporate Development.
|
38
2009
Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Stock
|
|
|
All Other Option
|
|
|
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: Number
|
|
|
Awards: Number of
|
|
|
Exercise or Base
|
|
|
Value of Stock
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts Under Non-
|
|
|
|
|
|
|
|
|
|
|
|
of Shares of Stock
|
|
|
Securities Underlying
|
|
|
Price of Option
|
|
|
and Option
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan Awards
1
|
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards
2
|
|
|
or Units
3
|
|
|
Options 4
|
|
|
Awards
|
|
|
Awards 5
|
|
|
|
|
Name
|
|
Grant Date
|
|
|
Thresh. ($)
|
|
|
Target ($)
|
|
|
Max. ($)
|
|
|
Thresh. (#)
|
|
|
Target (#)
|
|
|
Max. (#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
|
|
|
|
Thomas W. Swidarski
|
|
2/11/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
150,000
|
|
|
24.79
|
|
|
1,177,440
|
|
|
|
|
|
|
|
3/26/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,500
|
|
|
50,000
|
|
|
100,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,158,000
|
|
|
|
|
|
|
|
2/11/2009
|
|
|
300,000
|
|
|
750,000
|
|
|
1,500,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
Bradley C. Richardson
|
|
11/23/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
30,000
|
|
|
26.43
|
|
|
269,397
|
|
|
|
|
|
|
|
11/23/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
23,850
|
|
|
-
|
|
|
-
|
|
|
630,356
|
|
|
|
|
|
|
|
11/23/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,406
|
|
|
5,625
|
|
|
11,250
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
148,669
|
|
|
|
|
|
|
|
11/23/2009
|
|
|
12,125
|
|
|
30,313
|
|
|
60,625
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
James L.M. Chen
|
|
2/11/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,000
|
|
|
24.79
|
|
|
117,744
|
|
|
|
|
|
|
|
3/26/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,875
|
|
|
7,500
|
|
|
15,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
173,700
|
|
|
|
|
|
|
|
2/11/2009
|
|
|
64,873
|
|
|
170,124
|
|
|
324,363
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
George S. Mayes, Jr.
|
|
2/11/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,000
|
|
|
24.79
|
|
|
117,744
|
|
|
|
|
|
|
|
3/26/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,875
|
|
|
7,500
|
|
|
15,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
173,700
|
|
|
|
|
|
|
|
2/11/2009
|
|
|
68,050
|
|
|
164,639
|
|
|
340,248
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
Charles E. Ducey, Jr.
|
|
2/11/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,000
|
|
|
24.79
|
|
|
117,744
|
|
|
|
|
|
|
|
3/26/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,875
|
|
|
7,500
|
|
|
15,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
173,700
|
|
|
|
|
|
|
|
2/11/2009
|
|
|
65,855
|
|
|
154,353
|
|
|
329,277
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
Leslie A. Pierce
|
|
2/11/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,000
|
|
|
24.79
|
|
|
54,947
|
|
|
|
|
|
|
|
3/26/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
875
|
|
|
3,500
|
|
|
7,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
81,060
|
|
|
|
|
|
|
|
2/11/2009
|
|
|
61,184
|
|
|
152,961
|
|
|
305,922
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
Kevin J. Krakora
|
|
2/11/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
25,000
|
|
|
24.79
|
|
|
196,240
|
|
|
|
|
|
|
|
3/26/2009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,125
|
|
|
12,500
|
|
|
25,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
289,500
|
|
|
|
|
|
|
|
2/11/2009
|
|
|
113,342
|
|
|
340,025
|
|
|
680,049
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
1 |
|
These columns present information
about the potential payout under our Cash Bonus Plan for fiscal
year 2009 (for Mr. Richardson, the amounts shown are
prorated for 2009). The actual amount paid in February 2010 is
reflected above in the 2009 Summary Compensation
Table under the column Non-Equity Incentive Plan
Compensation. For a more detailed description of the
related performance measures for our Cash Bonus Plan, see above
under Compensation Discussion and Analysis.
|
|
2 |
|
These columns present information
about performance shares awarded during 2009 pursuant to the
1991 Plan (for Mr. Richardson, the minimum, target and
maximum performance share payouts have been prorated for the
2009 to 2011 performance period). The performance measures will
be calculated over the three-year period beginning on
February 4, 2009 through the day of our year-end earnings
release in January 2012. No amount is payable unless the
threshold performance is exceeded. The maximum award amount,
which can be up to 200% of the target amount, will be earned
only if we achieve maximum performance. For a more detailed
description of the performance shares and the related
performance measures, see above under Compensation
Discussion and Analysis.
|
|
3 |
|
This column presents information
about RSUs awarded during 2009 pursuant to the 1991 Plan. For a
more detailed description of the RSUs, see above under
Compensation Discussion and Analysis.
|
|
4 |
|
All stock option grants were new
and not granted in connection with an option re-pricing
transaction, and the terms of the stock options were not
materially modified in 2009. For a more detailed description of
the stock options, see above under Compensation
Discussion and Analysis.
|
|
5 |
|
The value of performance shares and
RSUs was calculated using the closing market price of the shares
on the grant date of $23.16 ($26.43 for Mr. Richardson),
and reflects the total amount that we would expect to expense in
our financial statements over the awards three-year
performance period, based on the probable outcome of the
performance conditions, excluding the effect of estimated
forfeitures, in accordance with FASB ASC Topic 718. For stock
options, the fair value is calculated using the Black-Scholes
value on the grant date of $7.85 ($8.98 for
Mr. Richardson), calculated in accordance with FASB ASC
Topic 718. The assumptions used in calculating the fair value of
these stock options can be found under Note 3 to the
Consolidated Financial Statements in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
|
Narrative Disclosure
to 2009 Summary Compensation Table
and 2009 Grants of Plan-Based Awards Table
Many of the details on the amounts for the Named Executive
Officers reflected in the 2009 Summary Compensation
Table and the 2009 Grants of Plan-Based
Awards table are discussed in the footnotes to the
tables or elsewhere in this proxy statement (for example, above
under Compensation Discussion and Analysis).
However, the following narrative is intended to further clarify
these amounts or provide further explanation about the
decision-making process relative to these amounts.
Mr. Swidarskis
Employment Agreement
In April 2006, we entered into an employment agreement with
Mr. Swidarski, with a term of two
39
years and with automatic one-year renewals thereafter unless
either party notifies the other at least six months before the
scheduled expiration date that the term is not to renew.
Pursuant to his agreement, Mr. Swidarski was to receive a
base salary of $550,000 for the first year, with a cash bonus
opportunity up to 200% of base salary, as well as other
compensation. Further, as part of his employment agreement,
Mr. Swidarski is also entitled to the following
perquisites: a monthly auto allowance up to $3,295; financial
planning and tax preparation services up to $20,000 annually;
country club dues and fees; and an annual physical examination.
Mr. Swidarski had previously been entitled to a tax
gross-up on
his auto allowance, but he agreed to the discontinuance of this
benefit in 2008.
In the event that Mr. Swidarski is terminated without
cause, he is entitled to receive severance payments, including:
a lump sum amount equal to two years base salary; a lump sum
amount equal to twice his target annual cash bonus for the year
in which termination occurs; a pro rata annual cash bonus for
the year in which termination occurs, but only to the extent an
annual cash bonus is paid to others for the year of termination;
and continued participation in our employee benefits plans for a
period of two years (not including any qualified or
non-qualified pension plan or 401(k) plan). Mr. Swidarski
is also subject to non-competition and non-solicitation
obligations for a period of two years following his termination
of employment, regardless of the circumstances surrounding such
termination.
Other than Mr. Swidarski, we have not entered into any
employment agreements with any of the other Named Executive
Officers.
Change
in Pension Value and Non-Qualified Deferred Compensation
Earnings
These benefits are discussed in more detail below under
2009 Pension Benefits; however, the benefit
values for Mr. Swidarski, Mr. Ducey and
Mr. Krakora reflect their January 1, 2009
participation in the Pension SERP and Restoration SERPs based
upon 13, 31 and eight years of service, respectively. The
benefit value for Ms. Pierce reflects her participation in
our qualified pension plan based upon 19 years of service.
Pay
Mix for the Named Executive Officers
Based on the fair value of equity awards granted to Named
Executive Officers in 2009, as of December 31, 2009:
|
|
|
Base salary accounted for approximately 21.3% of the total value
to the Named Executive Officers;
|
|
|
Cash bonus payments for 2009 performance made to the Named
Executive Officers in 2010 under our Cash Bonus Plan (non-equity
incentive plan compensation), accounted for approximately 18.5%
of the total value to the Named Executive Officers;
|
|
|
Total cash compensation for 2009 (base salary plus non-equity
incentive plan compensation) accounted for approximately 39.8%
of the total value to the Named Executive Officers; and
|
|
|
Short- and long-term performance-based compensation (non-equity
incentive plan compensation plus stock and option awards)
accounted for approximately 61.1% of the total compensation to
the Named Executive Officers.
|
Outstanding
Equity Awards at 2009 Fiscal Year-End
The following table provides information relating to exercisable
and unexercisable stock options as of December 31, 2009 for
the Named Executive Officers. In addition, the following table
provides information relating to grants of restricted shares,
RSUs and performance shares to the Named Executive Officers that
have not yet vested as of December 31, 2009. No stock
appreciation rights were outstanding as of December 31,
2009.
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
1
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
Number of
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Shares or
|
|
|
Equity Incentive Plan Awards:
|
|
|
|
|
|
|
Underlying Unexercised
|
|
|
Securities
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Units of
|
|
|
Number of
|
|
|
Market or Payout
|
|
|
|
|
|
|
Options
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Stock
|
|
|
Unearned Shares,
|
|
|
Value of Unearned
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
That
|
|
|
That
|
|
|
Units or Other
|
|
|
Shares, Units or
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Rights That Have
|
|
|
Other Rights That
|
|
|
|
Grant Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested 2
|
|
|
Vested 3
|
|
|
Not Vested
4
|
|
|
Have Not Vested
3
|
|
Name
|
|
of Award
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Thomas W. Swidarski
|
|
2/7/01
|
|
|
8,000
|
|
|
-
|
|
|
-
|
|
|
28.69
|
|
|
2/6/11
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/6/02
|
|
|
15,000
|
|
|
-
|
|
|
-
|
|
|
36.59
|
|
|
2/5/12
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/5/03
|
|
|
20,000
|
|
|
-
|
|
|
-
|
|
|
36.31
|
|
|
2/4/13
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/04
|
|
|
25,000
|
|
|
-
|
|
|
-
|
|
|
53.10
|
|
|
2/10/14
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/10/05
|
|
|
22,900
|
|
|
-
|
|
|
-
|
|
|
55.23
|
|
|
2/9/15
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
12/12/05
|
|
|
75,000
|
|
|
75,000
|
|
|
-
|
|
|
37.87
|
|
|
12/11/12
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/13/08
|
|
|
30,000
|
|
|
90,000
|
|
|
-
|
|
|
25.53
|
|
|
2/12/18
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/09
|
|
|
-
|
|
|
150,000
|
|
|
-
|
|
|
24.79
|
|
|
2/10/19
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
40,000
|
|
|
1,138,000
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
20,000
|
|
|
569,000
|
|
|
|
2/13/08
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
60,000
|
|
|
1,707,000
|
|
|
|
3/26/09
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
50,000
|
|
|
1,422,500
|
|
Bradley C. Richardson
|
|
11/23/09
|
|
|
-
|
|
|
30,000
|
|
|
-
|
|
|
26.43
|
|
|
11/22/19
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
11/23/09
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
23,850
|
|
|
678,533
|
|
|
-
|
|
|
-
|
|
|
|
11/23/09
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,625
|
|
|
160,031
|
|
James L.M. Chen
|
|
2/6/02
|
|
|
5,000
|
|
|
-
|
|
|
-
|
|
|
36.59
|
|
|
2/5/12
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/5/03
|
|
|
7,500
|
|
|
-
|
|
|
-
|
|
|
36.31
|
|
|
2/4/13
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/04
|
|
|
8,000
|
|
|
-
|
|
|
-
|
|
|
53.10
|
|
|
2/10/14
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/10/05
|
|
|
8,000
|
|
|
-
|
|
|
-
|
|
|
55.23
|
|
|
2/9/15
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/20/06
|
|
|
6,000
|
|
|
2,000
|
|
|
-
|
|
|
39.43
|
|
|
2/19/16
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
4,750
|
|
|
4,750
|
|
|
-
|
|
|
47.27
|
|
|
2/13/17
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/13/08
|
|
|
2,500
|
|
|
7,500
|
|
|
-
|
|
|
25.53
|
|
|
2/12/18
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/09
|
|
|
-
|
|
|
15,000
|
|
|
-
|
|
|
24.79
|
|
|
2/10/19
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/20/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
750
|
|
|
21,338
|
|
|
-
|
|
|
-
|
|
|
|
2/13/08
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,500
|
|
|
213,375
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,000
|
|
|
142,250
|
|
|
|
2/13/08
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,000
|
|
|
341,400
|
|
|
|
3/26/09
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,500
|
|
|
213,375
|
|
George S. Mayes Jr.
|
|
2/10/05
|
|
|
3,000
|
|
|
-
|
|
|
-
|
|
|
55.23
|
|
|
2/9/15
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/20/06
|
|
|
6,000
|
|
|
2,000
|
|
|
-
|
|
|
39.43
|
|
|
2/19/16
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
4,750
|
|
|
4,750
|
|
|
-
|
|
|
47.27
|
|
|
2/13/17
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/13/08
|
|
|
2,500
|
|
|
7,500
|
|
|
-
|
|
|
25.53
|
|
|
2/12/18
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/09
|
|
|
-
|
|
|
15,000
|
|
|
-
|
|
|
24.79
|
|
|
2/10/19
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/20/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,500
|
|
|
128,025
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,000
|
|
|
142,250
|
|
|
|
2/13/08
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,000
|
|
|
341,400
|
|
|
|
3/26/09
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,500
|
|
|
213,375
|
|
Charles E. Ducey Jr.
|
|
2/7/01
|
|
|
5,000
|
|
|
-
|
|
|
-
|
|
|
28.69
|
|
|
2/6/11
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/6/02
|
|
|
6,400
|
|
|
-
|
|
|
-
|
|
|
36.59
|
|
|
2/5/12
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/5/03
|
|
|
8,000
|
|
|
-
|
|
|
-
|
|
|
36.31
|
|
|
2/4/13
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/04
|
|
|
5,000
|
|
|
-
|
|
|
-
|
|
|
53.10
|
|
|
2/10/14
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/10/05
|
|
|
4,600
|
|
|
-
|
|
|
-
|
|
|
55.23
|
|
|
2/9/15
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/20/06
|
|
|
7,500
|
|
|
2,500
|
|
|
-
|
|
|
39.43
|
|
|
2/19/16
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
4,750
|
|
|
4,750
|
|
|
-
|
|
|
47.27
|
|
|
2/13/17
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/13/08
|
|
|
2,500
|
|
|
7,500
|
|
|
-
|
|
|
25.53
|
|
|
2/12/18
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/09
|
|
|
-
|
|
|
15,000
|
|
|
|
|
|
24.79
|
|
|
2/10/19
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/20/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,500
|
|
|
128,025
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,000
|
|
|
142,250
|
|
|
|
2/13/08
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,000
|
|
|
341,400
|
|
|
|
3/26/09
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,500
|
|
|
213,375
|
|
Leslie A. Pierce
|
|
2/7/01
|
|
|
600
|
|
|
-
|
|
|
-
|
|
|
28.69
|
|
|
2/6/11
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/6/02
|
|
|
600
|
|
|
-
|
|
|
-
|
|
|
36.59
|
|
|
2/5/12
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/5/03
|
|
|
600
|
|
|
-
|
|
|
-
|
|
|
36.31
|
|
|
2/4/13
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
625
|
|
|
625
|
|
|
-
|
|
|
47.27
|
|
|
2/13/17
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/13/08
|
|
|
1,250
|
|
|
3,750
|
|
|
-
|
|
|
25.53
|
|
|
2/12/18
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/09
|
|
|
-
|
|
|
7,000
|
|
|
-
|
|
|
24.79
|
|
|
2/10/19
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
285
|
|
|
8,108
|
|
|
-
|
|
|
-
|
|
|
|
2/13/08
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,000
|
|
|
199,150
|
|
|
|
3/26/09
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,500
|
|
|
99,575
|
|
Kevin J. Krakora
|
|
9/18/01
|
|
|
5,000
|
|
|
-
|
|
|
-
|
|
|
35.60
|
|
|
9/17/11
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/6/02
|
|
|
10,000
|
|
|
-
|
|
|
-
|
|
|
36.59
|
|
|
2/5/12
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/5/03
|
|
|
10,000
|
|
|
-
|
|
|
-
|
|
|
36.31
|
|
|
2/4/13
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/04
|
|
|
7,000
|
|
|
-
|
|
|
-
|
|
|
53.10
|
|
|
2/10/14
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/10/05
|
|
|
6,500
|
|
|
-
|
|
|
-
|
|
|
55.23
|
|
|
2/9/15
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/20/06
|
|
|
18,750
|
|
|
6,250
|
|
|
-
|
|
|
39.43
|
|
|
2/19/16
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
12,500
|
|
|
12,500
|
|
|
-
|
|
|
47.27
|
|
|
2/13/17
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/13/08
|
|
|
5,000
|
|
|
15,000
|
|
|
-
|
|
|
25.53
|
|
|
2/12/18
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/11/09
|
|
|
-
|
|
|
25,000
|
|
|
|
|
|
24.79
|
|
|
2/10/19
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2/20/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,500
|
|
|
213,375
|
|
|
-
|
|
|
-
|
|
|
|
2/14/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10,000
|
|
|
284,500
|
|
|
|
2/13/08
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
20,000
|
|
|
569,000
|
|
|
|
3/26/09
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,500
|
|
|
355,625
|
|
|
|
|
1 |
|
With the exception of
Mr. Swidarskis December 12, 2005 award of
150,000 stock options, all of the stock options outstanding at
2009 fiscal year-end vest ratably over a four-year period
beginning on the first anniversary of the date of grant.
Mr. Swidarskis award of 150,000 stock options has a
seven-year cliff vest; however, pursuant to the terms of the
option grants, one-half of this award vested on August 7,
2007, when
|
41
|
|
|
|
|
our stock price reached $50 per
share for 20 consecutive trading days. The remainder of this
award may vest early if our stock price reaches $60 per share
for 20 consecutive trading days.
|
|
2 |
|
This column reflects unvested RSUs
and restricted shares granted to the Named Executive Officers
that had not yet vested as of December 31, 2009. Included
in this column are special grants of RSUs awarded to
Messrs. Chen, Mayes, Ducey and Krakora on February 20,
2006 of 1,500 RSUs, 9,000 RSUs, 9,000 RSUs, and 15,000 RSUs,
respectively, with a seven-year cliff vest; however, pursuant to
the terms of the RSU grants, one-half of these awards vested on
August 7, 2007, when our stock price reached $50 per share
for 20 consecutive trading days. The remainder of these special
grants may vest early if our stock price reaches $60 per share
for 20 consecutive trading days. The remaining RSUs and
restricted shares included in this column have a three-year
cliff vest.
|
|
3 |
|
The market value was calculated
using the closing price of the shares of $28.45 as of
December 31, 2009.
|
|
4 |
|
This column reflects the probable
outcome, as of December 31, 2009, of performance shares
granted to the Named Executive Officer for the performance
periods 2007 to 2009, 2008 to 2010, and 2009 to 2011. For the
2007 to 2009 performance period, the current performance, as of
December 31, 2009, was between threshold and target and, as
such, pursuant to SEC rules, this column reflects the target
payout. For the 2008 to 2010 performance period, the current
performance, as of December 31, 2009, was between target
and maximum and, as such, pursuant to SEC rules, this column
reflects the maximum payout. For the 2009 to 2011 performance
period, the current performance, as of December 31, 2009,
was between threshold and target and, as such, pursuant to SEC
rules, this column reflects the target payout.
|
2009
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock Awards
|
|
|
|
|
Number of Shares
|
|
|
|
Value
|
|
|
|
Number of Shares
|
|
|
|
Value
|
|
|
|
|
Acquired on
|
|
|
|
Realized on
|
|
|
|
Acquired
|
|
|
|
Realized on
|
|
|
|
|
Exercise
|
|
|
|
Exercise
1
|
|
|
|
on Vesting
|
|
|
|
Vesting 2
|
|
Name
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
($)
|
|
Thomas W. Swidarski
|
|
|
|
1,500
|
|
|
|
$
|
6,675
|
|
|
|
|
12,597
|
|
|
|
$
|
312,280
|
|
Bradley C. Richardson
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
James L.M. Chen
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
4,845
|
|
|
|
|
120,108
|
|
George S. Mayes Jr.
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,309
|
|
|
|
|
82,030
|
|
Charles E. Ducey Jr.
|
|
|
|
1,300
|
|
|
|
|
9,521
|
|
|
|
|
3,081
|
|
|
|
|
76,378
|
|
Leslie A. Pierce
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
302
|
|
|
|
|
10,716
|
|
Kevin J. Krakora
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
6,276
|
|
|
|
|
155,582
|
|
|
|
|
1 |
|
The value realized is calculated by
multiplying the number of stock options by the difference
between the market value of the underlying securities on the
date of exercise and the exercise price of the stock option. In
2009, Mr. Swidarski exercised 1,500 stock options on
November 6, 2009, with a closing price of our Common Shares
on that date of $27.33 and an exercise price of $22.88;
Mr. Ducey exercised 1,300 stock options on August 13,
2009, with a market value of our Common Shares at the time of
exercise of $30.20 and an exercise price of $22.88.
|
|
2 |
|
The value realized is calculated
for RSUs, restricted shares and performance shares by
multiplying the number of shares of stock or units, as
applicable, by the market value of the underlying securities on
the vesting date. In 2009, Ms. Pierce received RSUs that
vested on February 19, 2009, with a closing price of our
Common Shares on that date of $24.08, and Mr. Swidarski,
Mr. Chen, Mr. Mayes, Mr. Ducey and
Mr. Krakora received a payout of performance shares on
February 11, 2009, for the 2006 2008
performance period, with a closing price of our Common Shares on
that date of $24.79. The number of shares actually received upon
vesting may be less than the number shown, due to shares being
withheld for the payment of applicable taxes.
|
42
2009
Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years of
|
|
|
|
Present Value of
|
|
|
|
Payment During
|
|
|
|
|
|
|
Credited Service
|
|
|
|
Accumulated
Benefit1
|
|
|
|
Last Fiscal Year
|
|
Name
|
|
Plan Name
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
($)
|
|
Thomas W. Swidarski
|
|
Qualified Plan
|
|
|
|
13.3333
|
|
|
|
$
|
166,000
|
|
|
|
|
-
|
|
|
|
Pension SERP
|
|
|
|
13.3333
|
|
|
|
|
635,000
|
|
|
|
|
-
|
|
|
|
Pension Restoration SERP
|
|
|
|
13.3333
|
|
|
|
|
621,000
|
|
|
|
|
-
|
|
Charles E. Ducey Jr.
|
|
Qualified Plan
|
|
|
|
31.1667
|
|
|
|
|
395,000
|
|
|
|
|
-
|
|
|
|
Pension SERP
|
|
|
|
31.1667
|
|
|
|
|
309,000
|
|
|
|
|
-
|
|
|
|
Pension Restoration SERP
|
|
|
|
31.1667
|
|
|
|
|
364,000
|
|
|
|
|
-
|
|
Leslie A. Pierce
|
|
Qualified Plan
|
|
|
|
19.0000
|
|
|
|
|
119,000
|
|
|
|
|
-
|
|
Kevin J. Krakora
|
|
Qualified Plan
|
|
|
|
8.2500
|
|
|
|
|
109,000
|
|
|
|
|
-
|
|
|
|
Pension SERP
|
|
|
|
8.2500
|
|
|
|
|
356,000
|
|
|
|
|
-
|
|
|
|
Pension Restoration SERP
|
|
|
|
8.2500
|
|
|
|
|
154,000
|
|
|
|
|
-
|
|
|
|
|
1 |
|
The values are determined based on
a 6.33% discount rate and the RP-2000 Combined Healthy Mortality
Table with projected mortality improvement to December 31,
2009 based on Scale AA and are calculated assuming that the
probability is nil that a Named Executive Officer terminates,
dies, retires or becomes disabled before normal retirement date.
|
All Named Executive Officers (except Mr. Richardson,
Mr. Chen and Mr. Mayes) participate in the Diebold,
Incorporated Retirement Plan for Salaried Employees, or
Qualified Retirement Plan, which provides funded, tax-qualified
benefits under the Internal Revenue Code to all salaried and
non-union hourly employees of the Company who were hired before
July 1, 2003. This plan provides benefits that are limited
by Internal Revenue Code requirements applicable to all
tax-qualified pension plans. We also maintain three defined
benefit Supplemental Executive Retirement Plans, which provide
unfunded, non-qualified benefits to select executives. The
purpose of the SERPs is to provide additional benefits above
those provided under the Qualified Retirement Plan.
Mr. Swidarski, Mr. Ducey and Mr. Krakora
participate in the Pension Restoration SERP and the Pension SERP.
Qualified
Retirement Plan
The benefit provided under the Qualified Retirement Plan is
payable as a life annuity beginning at normal retirement age
(age 65). The benefit is determined based on the following
formula:
|
|
|
0.8% of final average compensation up to the Covered
Compensation level, plus
|
|
|
1.25% of final average compensation in excess of the Covered
Compensation level,
|
|
|
which sum is multiplied by years of service (subject to a
maximum of 30 years).
|
In addition, a benefit equal to $50.40 times the number of years
of service (subject to a maximum of 30 years) is added to
the amount determined above.
Final average compensation is an average of the five highest
consecutive full calendar years of salary and bonus out of the
last ten full calendar years, with each years compensation
held to a maximum of the IRS compensation limit for that year
($245,000 in 2009). The participants individual
Covered Compensation is as defined under the
Internal Revenue Code. The benefit is payable for the lifetime
of the participant, with alternative forms of payment available
to the participant with an actuarial reduction.
Participants may retire early if they are at least age 50
and the sum of their age plus service is at least 70, or at any
age with 30 years of service. Benefits may begin upon
retirement on an actuarially reduced basis. Participants with at
least 15 years of service who become disabled while
employed are eligible for an immediate unreduced benefit.
Participants terminating with at least five years of service are
entitled to a deferred vested benefit at age 65, or may
commence the benefit on an actuarially reduced basis when the
sum of their age plus service is at least 70.
Mr. Swidarski has additional annual benefits payable from
the Qualified Retirement Plan in the amount of $4,668, also as a
result of a transfer of a portion of his Pension SERP benefits.
This amount is payable at the same time and in the same form as
those described below under the Pension SERP.
43
Pension
Restoration SERP
Benefits under the Pension Restoration SERP are determined using
the same formula as stated above for the Qualified Retirement
Plan except the IRS compensation limit is ignored. Net benefits
payable from the Pension Restoration SERP equal the difference
between the benefit determined using total pensionable pay,
ignoring qualified plan compensation limits, and the benefit
payable from the Qualified Retirement Plan. All other provisions
of the Pension Restoration SERP are identical to the Qualified
Retirement Plan. Mr. Swidarski, Mr. Ducey and
Mr. Krakora are the only Named Executive Officers who are
participants in the Pension Restoration SERP.
Pension
SERP
The Pension SERP provides a supplemental monthly retirement
benefit in an amount such that a participants total
retirement benefit from the Qualified Retirement Plan, the
Pension Restoration SERP, the annuity equivalent of the
employer-provided balance in the 401(k) Restoration SERP and the
Pension SERP, plus one-half of the participants
anticipated Social Security benefit payable at age 65,
equals 50% (prorated for less than 25 years of service) of
the participants final average compensation received from
us during the highest five consecutive full calendar years of
the last ten full calendar years of employment. Compensation is
defined for this purpose as salary plus bonus accrued for each
such calendar year. The Pension SERP benefits are payable at
age 65 as a straight life annuity. Joint and survivor
options are available on an actuarially equivalent basis.
Benefits are available to participants retiring or terminating
employment with at least 10 years of service, and are
payable at the later of: (i) attaining both the age of 50
and 70 points (determined by age plus years of service), or
(ii) separation from service (on a reduced basis if
payments begin before age 65). Participants who become
disabled while employed and have at least 15 years of
service are eligible for an immediate benefit.
Accrued benefits under the Pension SERP are fully vested in the
event of a change in control of the company. Mr. Swidarski,
Mr. Ducey and Mr. Krakora are the only Named Executive
Officers who are participants in the Pension SERP.
Mr. Swidarski and Mr. Krakora receive enhanced
benefits such that they accrue the full 50% target ratably over
their entire service at age 60 and age 62,
respectively.
Present
Value of Accumulated Benefits
The Present Value of Accumulated Benefit is the
single-sum value as of December 31, 2009, of the annual
pension benefit that was earned through that date payable under
a plan beginning at the Named Executive Officers normal
retirement age. The normal retirement age is defined as
age 65 for the Qualified Retirement Plan, Pension
Restoration SERP and Pension SERP. A portion of the Qualified
Retirement Plan benefit is payable at the same time and in the
same form of payment as benefits in the Pension SERP. We used
certain assumptions to determine the single-sum value of the
annual benefit that is payable beginning at normal retirement
age. The key assumptions are as follows:
|
|
|
An interest rate of 6.33%, the FASB ASC 715 discount rate as of
December 31, 2009;
|
|
|
The RP-2000 Combined Healthy Mortality Tables for males and
females projected with mortality improvement to
December 31, 2009 using Scale AA;
|
|
|
A probability of 100% that benefits are paid as
annuities; and
|
|
|
No probability of termination, retirement, death, or disability
before normal retirement age.
|
Extra
Credited Service
Mr. Swidarski and Mr. Krakora have been granted the
ability to accrue 1.124 and 1.546 years of service,
respectively, for each year of service until the full 50% target
benefit is accrued at age 60 and age 62, respectively.
We reserve the discretion to provide such grants of extra
service on a
case-by-case
basis. Factors that might warrant such a grant would include,
but not be limited by, the following: the recruitment of an
executive who is foregoing benefits under a prior
employers SERP or other non-qualified deferred
compensation plans or the provision for an executive who would
otherwise not qualify for a full accrual at the SERPs
normal retirement age of 65 because his or her years of service
are less than the required 25 years of service.
44
2009
Non-Qualified Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1992 Deferred Compensation
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
Registrant
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
Aggregate Balance
|
|
|
|
|
Contributions in
|
|
|
|
Contributions in
|
|
|
|
Aggregate Earnings
|
|
|
|
Withdrawals/
|
|
|
|
as of December 31,
|
|
|
|
|
2009
|
|
|
|
2009
|
|
|
|
in 2009 1
|
|
|
|
Distributions
|
|
|
|
2009 2
|
|
Name
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
Thomas W. Swidarski
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley C. Richardson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James L.M. Chen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George S. Mayes Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles E. Ducey Jr.
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,863
|
|
|
|
|
0
|
|
|
|
|
36,969
|
|
Leslie A. Pierce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin J. Krakora
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
This amount represents aggregate
earnings on cash deferrals, as well as dividends on deferred
Common Shares. This amount is not reflected above in the
2009 Summary Compensation Table, as it is not
considered preferential or above-market earnings on deferred
compensation.
|
|
2 |
|
This column reflects the balance of
all cash deferrals, including dividends on deferred Common
Shares, and the aggregate earnings in 2009 on such cash
deferrals. As of December 31, 2009, the aggregate balance
of all cash deferrals for Mr. Ducey was $3,398. This column
also reflects the value of Common Shares deferred by
Mr. Ducey calculated using the closing price of the shares
of $28.45 as of December 31, 2009. The aggregate number of
Common Shares deferred by Mr. Ducey and reflected in this
column was 1,180 shares, with a value as of
December 31, 2009, of $33,571. No portion of this amount is
reflected in the All Other Compensation column of
the 2009 Summary Compensation Table and no
portion of this amount was previously reported in our Summary
Compensation Tables in prior years proxy statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration SERP and
401(k) SERP
|
|
|
|
|
Executive
|
|
|
|
Registrant
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
Aggregate Balance
|
|
|
|
|
Contributions in
|
|
|
|
Contributions in
|
|
|
|
Aggregate Earnings
|
|
|
|
Withdrawals/
|
|
|
|
as of December 31,
|
|
|
|
|
2009 1
|
|
|
|
2009 2
|
|
|
|
in 2009 3
|
|
|
|
Distributions
|
|
|
|
2009 4
|
|
Participants Name
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
Thomas W. Swidarski
|
|
|
|
120,300
|
|
|
|
|
0
|
|
|
|
|
66,194
|
|
|
|
|
0
|
|
|
|
|
301,608
|
|
Bradley C. Richardson
|
|
|
|
0
|
|
|
|
|
14,145
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
14,145
|
|
James L.M. Chen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George S. Mayes Jr.
|
|
|
|
31,738
|
|
|
|
|
144,622 5
|
|
|
|
|
54,754
|
|
|
|
|
0
|
|
|
|
|
291,291
|
|
Charles E. Ducey Jr.
|
|
|
|
29,788
|
|
|
|
|
0
|
|
|
|
|
23,465
|
|
|
|
|
0
|
|
|
|
|
75,678
|
|
Leslie A. Pierce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin J. Krakora
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
5,152
|
|
|
|
|
0
|
|
|
|
|
22,114
|
|
|
|
|
1 |
|
These amounts are included in the
Salary column of the 2009 Summary
Compensation Table.
|
|
2 |
|
These amounts are included in the
All Other Compensation column of the 2009
Summary Compensation Table and include amounts
contributed in 2009, as well as amounts contributed in 2010 for
the 2009 plan year.
|
|
3 |
|
These amounts represent aggregate
earnings (or losses) on executive and registrant contributions.
These amounts are not reflected in the 2009 Summary
Compensation Table, as they are not considered
preferential or above-market earnings on deferred compensation.
|
|
4 |
|
This column reflects the balance of
all contributions and the aggregate earnings on such
contributions. No portion of this amount is reflected in the
All Other Compensation column of the 2009
Summary Compensation Table and, except for Executive
Contributions and Registrant Contributions reflected in the
Salary column in prior years, no portion of this
amount was previously reported in our Summary Compensation
Tables in prior years proxy statements.
|
|
5 |
|
Reflects a one-time adjustment to
include the $74,519 401(k) SERP contribution made in 2009 for
the 2008 fiscal year.
|
Non-Qualified
Deferred Compensation Plans
Deferred
Incentive Compensation Plan
Pursuant to our 1992 Deferred Incentive Compensation Plan,
certain executives, including the Named Executive Officers, were
able to defer cash bonuses received under our cash bonus plan
and performance share awards earned under the 1991 Plan.
Effective December 31, 2004, as a result of the passage by
Congress of the American Jobs Creation Act of 2004, we elected
to freeze the 1992 Deferred Incentive Compensation Plan and
closed the plan to future deferrals. Effective January 1,
2005, the Board approved the Deferred Incentive Compensation
Plan No. 2, which was substantially similar to the 1992
Deferred Incentive Compensation Plan in all material respects,
but was designed to be administered in
45
accordance with Section 409A of the Internal Revenue Code.
Under the Deferred Incentive Compensation Plan No. 2, an
executive may defer all or a portion of his or her Annual Cash
Bonus or performance share earnout. Deferral elections for cash
bonuses must be made prior to the end of the year preceding the
year in which such bonuses would be earned (and payable in the
following year). Deferral elections for performance shares must
be made at least six months prior to the end of the three-year
performance period specified in the grant. None of the Named
Executive Officers currently has any incentive compensation
deferred under the Deferred Incentive Compensation Plan
No. 2.
Deferrals of performance shares are treated as a line-item in
the executives deferred account with us; however, the
earnings on the performance shares (dividends and interest
thereon) are invested in the same manner as deferrals of cash
compensation. The Vanguard Group administers our cash deferrals.
As such, cash deferrals are transferred to Vanguard on a
quarterly basis, and the executive may invest such cash
deferrals in any funds available under our 401(k) plan (except
that the Oppenheimer Developing Markets Fund and Vanguard Prime
Money Market Fund are not available in our 401(k) plan). The
table below shows the funds available under the deferred
compensation plans and their annual rate of return for the year
ended December 31, 2009, as reported by Vanguard.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Fund
|
|
|
Rate of Return
|
|
|
|
Name of Fund
|
|
|
Rate of Return
|
|
Vanguard Total Bond Market Index Fund
|
|
|
|
5.93%
|
|
|
|
Vanguard International Value Fund
|
|
|
|
33.77%
|
|
Loomis Sayles Bond Fund
|
|
|
|
37.19%
|
|
|
|
Vanguard Target Retirement Income
|
|
|
|
14.28%
|
|
Vanguard STAR Fund
|
|
|
|
24.85%
|
|
|
|
Vanguard Target Retirement 2005
|
|
|
|
16.16%
|
|
Vanguard Windsor II Fund
|
|
|
|
27.05%
|
|
|
|
Vanguard Target Retirement 2010
|
|
|
|
19.32%
|
|
Vanguard 500 Index Fund
|
|
|
|
26.49%
|
|
|
|
Vanguard Target Retirement 2015
|
|
|
|
21.30%
|
|
Vanguard U.S. Growth Fund
|
|
|
|
34.95%
|
|
|
|
Vanguard Target Retirement 2020
|
|
|
|
23.10%
|
|
Vanguard Prime Money Market Fund
|
|
|
|
0.53%
|
|
|
|
Vanguard Target Retirement 2025
|
|
|
|
24.81%
|
|
Vanguard Selected Value Fund
|
|
|
|
36.26%
|
|
|
|
Vanguard Target Retirement 2030
|
|
|
|
26.72%
|
|
Vanguard Mid-Cap Index Fund
|
|
|
|
40.22%
|
|
|
|
Vanguard Target Retirement 2035
|
|
|
|
28.17%
|
|
Loomis Sayles Small Cap Value Fund
|
|
|
|
28.64%
|
|
|
|
Vanguard Target Retirement 2040
|
|
|
|
28.32%
|
|
Vanguard Explorer Fund
|
|
|
|
36.21%
|
|
|
|
Vanguard Target Retirement 2045
|
|
|
|
28.15%
|
|
Vanguard International Growth Fund
|
|
|
|
41.63%
|
|
|
|
Vanguard Target Retirement 2050
|
|
|
|
28.31%
|
|
Oppenheimer Developing Markets Fund
|
|
|
|
81.71%
|
|
|
|
Diebold Company Stock
|
|
|
|
5.25%
|
|
Executives deferring under the Deferred Incentive Compensation
Plan No. 2 select their period of deferral and method of
payment at the time of making their deferral elections.
Executives may elect to defer their payments until a specified
date or until the date they cease to be an associate of the
company. Further, the executives may elect to receive their
distribution either as a lump sum or in approximately equal
quarterly installments, not to exceed 40 installments.
401(k)
Restoration SERP
The 401(k) Restoration SERP is designed to replace lost
retirement benefits due solely to IRS compensation limits.
Benefits under this plan are determined exactly as in our 401(k)
Plan except that compensation limits are ignored. Named
Executive Officers are permitted to elect to defer compensation
above the annual IRS limit and we provide a matching
contribution at the same rate as under the 401(k) Plan. Vanguard
administers the 401(k) Restoration SERP. Both the salary
deferrals and our matching contributions are transferred to
Vanguard and the executive may invest in any funds available
under our Deferred Incentive Compensation Plan (except that the
Oppenheimer Developing Markets Fund is not available in the
401(k) Restoration SERP).
401(k)
SERP
The 401(k) SERP is designed to provide supplemental retirement
benefits to executives hired after July 1, 2003, because
those executives are not eligible to participate in the
Qualified Retirement Plan and Pension SERP. Each year the
executive is provided a contribution based upon a points formula
(age plus service) as follows:
|
|
|
|
|
|
Points
|
|
|
Contribution Credit
|
Under 50
|
|
|
|
5
|
%
|
50-59
|
|
|
|
10
|
%
|
60-69
|
|
|
|
12.5
|
%
|
70-79
|
|
|
|
15
|
%
|
80 and over
|
|
|
|
20
|
%
|
Vanguard administers the 401(k) SERP. Our
contributions are transferred to Vanguard and the executive may
invest the contributions in any
46
investment funds available under our 401(k) Restoration SERP.
The 401(k) SERP includes the Vanguard PRIMECAP Fund with a 2009
annual rate of return of 34.45%).
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The table below reflects the amount of compensation payable to
each of our Named Executive Officers in the event of termination
of his or her employment. The amount of compensation payable to
each Named Executive Officer upon voluntary or involuntary
termination (with and without cause), retirement, death,
disability or in the event of a
change-in-control
(with termination) is described qualitatively in the following
narrative and is shown quantitatively in the table below. The
amounts shown assume that such termination was effective as of
December 31, 2009, and thus include amounts earned through
such time and are estimates of the amounts that would be paid
out to the executives upon his or her termination or
change-in-control.
The actual amounts to be paid out can only be determined at the
time of each Named Executive Officers separation.
As described above under Compensation Discussion and
Analysis and except for the employment agreement
entered into with Mr. Swidarski described above under
Narrative Disclosure to 2009 Summary Compensation Table
and 2009 Grants of Plan-Based Awards Table, we have
not entered into employment agreements with any other Named
Executive Officer; however, we have entered into
change-in-control
agreements with each of the Named Executive Officers.
Payments
Made Upon Termination
Voluntary
or Involuntary With Cause
Whether a Named Executive Officers employment terminates
voluntarily or involuntarily with cause, he or she is only
entitled to base salary earned through the date of termination,
along with any deferred compensation earnings payable upon
separation from service and any benefits that have accrued under
our Qualified Retirement Plan, and any SERP or 401(k) plan
(except that no SERP benefits are payable in the event of
involuntary termination with cause). The Qualified Retirement
Plan benefit, under both termination scenarios, and the SERP
benefit, if termination is voluntary, is determined as described
in the narrative above under 2009 Pension
Benefits.
Involuntary
Without Cause
If, however, a Named Executive Officer is involuntarily
terminated without cause, in addition to the foregoing, he or
she would also be entitled to the following:
|
|
|
Separation payments and continued participation in our employee
health care plans pursuant to our Health Care Plan and
Separation Benefits Plan applicable to all
U.S.-based
employees, with the length of such benefits and payments ranging
from one to six months, depending upon the executives
years of service (and for Mr. Chen, such separation
payments as are required by applicable law);
|
|
|
Lapse of the restrictions on outstanding restricted
shares; and
|
|
|
A Qualified Retirement Plan benefit determined using the plan
provisions as described in the narrative above under
2009 Pension Benefits.
|
The Pension SERP, Pension Restoration SERP, 401(k) SERP and
401(k) Restoration SERP do not provide any additional benefits
upon an involuntary termination. The Named Executive officer
would only be entitled to a SERP benefit if he or she otherwise
qualifies for a normal, early or deferred vested SERP benefit at
termination.
Mr. Swidarski
Pursuant to Mr. Swidarskis employment agreement, in
the event of an involuntary termination without cause, in
addition to the benefits identified above, he would also be
entitled to the following:
|
|
|
A lump sum payment equal to 24 months base salary, as
in effect on the date of termination;
|
|
|
A pro-rata award under our Cash Bonus Plan, based upon the time
employed in the year of termination, to the extent such awards
are otherwise earned, payable when such awards are generally
paid to others;
|
|
|
A lump sum payment equal to twice the target bonus level for the
year in which termination occurs under our Cash Bonus Plan;
|
|
|
All outstanding unvested options would immediately vest;
|
|
|
Pro-rata performance share earnouts, based upon the time
employed in the year of termination relative to the performance
period, to the extent
|
47
|
|
|
such awards are earned, payable when such awards are generally
paid to others; and
|
|
|
|
Continued participation in all of our employee health and
welfare benefit plans for a period of 24 months (or the
date he receives equivalent coverage from a subsequent
employer), excluding perquisites and any qualified or
non-qualified pension or 401(k) plans.
|
Under his employment agreement, Mr. Swidarski is subject to
certain non-competition, non-solicitation and confidentiality
obligations for a period of two years following termination of
his employment.
Payments
Made Upon Retirement
In the event of the retirement of a Named Executive Officer at
or after the earliest voluntary retirement age, in addition to
the benefits identified above under Voluntary or
Involuntary With Cause and Involuntary
Without Cause, he or she or she would also be entitled
to the following:
|
|
|
All outstanding unvested options awarded prior to 2007 would
immediately vest;
|
|
|
All outstanding unvested options awarded after 2006 would
immediately vest if the Named Executive Officer had attained the
age of 65 and completed five or more years of continuous
employment;
|
|
|
All outstanding RSUs awarded prior to 2007 would immediately
vest and become nonforfeitable;
|
|
|
All outstanding RSUs awarded after 2006 would immediately vest
and become nonforfeitable if the Named Executive Officer had
attained the age of 65 and completed five or more years of
continuous employment;
|
|
|
All outstanding RSUs awarded after 2006 would vest pro-rata
based upon the time employed in the year of termination relative
to the deferral period of the RSUs, if the sum of the Named
Executive Officers age and years of continuous employment
equals or exceeds 70; and
|
|
|
Pro-rata performance share earnouts, as described above.
|
Payments
Made Upon Death or Disability
In the event of the death or disability of a Named Executive
Officer, the Named Executive Officer or his or her estate or
beneficiaries would receive the same benefits indicated above
under Payments Made Upon Retirement, except
that all outstanding and unvested options and RSUs, regardless
of when awarded, would immediately vest and become
nonforfeitable. In addition, the Named Executive Officer or his
or her estate or beneficiaries would receive benefits under our
disability plan or payments under our group term life insurance
plan or any supplemental life insurance plan, as appropriate.
Named Executive Officers who die while actively employed are
eligible for surviving spouse benefits from the Qualified
Retirement Plan payable at the Named Executive Officers
normal retirement date (or on an actuarially reduced basis at an
early retirement date) if the Named Executive Officer had at
least five years of service. The benefit is equal to 50% of the
benefit payable if the Named Executive Officer terminated
employment on the date of his death, survived to the payment
date as elected by his or her spouse, elected the 50% joint and
survivor form of payment and died the next day. Benefits payable
to the surviving spouse upon death of the Named Executive
Officer from the Pension SERP and the Pension Restoration SERP
are payable at the later of the executives early
retirement date or date of death. For the Pension SERP, the
death benefit is equal to the benefit that would have been
payable to the Named Executive Officer if he or she terminated
employment on the date of his death and survived to his or her
first payment date. Named Executive Officers must have ten years
of service at the time of their death for death benefits to be
payable under the Pension SERP. For the Pension Restoration
SERP, the death benefit is equal to 50% of the benefit,
actuarially adjusted for the difference in age between the Named
Executive Officer and spouse, that would have been payable to
the executive if he or she terminated employment on the date of
his or her death and survived to his or her first payment date.
Named Executive Officers must have five years of service at the
time of their death for their death benefits to be payable under
the Pension Restoration SERP The 401(k) SERP and 401(k)
Restoration SERP pay a death benefit equal to the
executives plan account if the executive had 10 years
of service and three years of service, respectively.
48
Disability benefits are payable immediately on an unreduced
basis from the Qualified Retirement Plan based on service at the
date of disability if the Named Executive Officer had at least
15 years of service and was determined to be totally and
permanently disabled. Disability benefits under the Pension
SERP, Pension Restoration SERP, 401(k) Restoration SERP, and
401(k) SERP are payable immediately on an unreduced basis.
Mr. Swidarski
Pursuant to Mr. Swidarskis employment agreement, in
the event of his death, in addition to the benefits identified
above, he would also be entitled to the following:
|
|
|
Base salary through the end of the month in which death
occurs; and
|
|
|
A pro-rata award under our Annual Cash Bonus Plan, as described
above.
|
In the event of his permanent and total disability, in addition
to the benefits identified above, he would also be entitled to
the following:
|
|
|
Disability benefits in accordance with the long-term disability
program in effect for our senior executives, which in no event
shall provide him with less than 60% of his base salary to
age 65;
|
|
|
Base salary through the end of the month in which disability
benefits commence;
|
|
|
A pro-rata award under our Annual Cash Bonus Plan, as described
above; and
|
|
|
Continued participation in our employee health and welfare
benefit plans for a period of 36 months, excluding
perquisites and any qualified or non-qualified pension or 401(k)
plans.
|
Payments
Made Upon a
Change-in-Control
or Termination Following a
Change-in-Control
In the event of a
change-in-control,
pursuant to the terms of the applicable equity compensation
agreements, each Named Executive Officer would be automatically
entitled to the following benefits:
|
|
|
Lapse of all restrictions on outstanding restricted shares
awarded prior to September 2009;
|
|
|
All outstanding unvested options awarded prior to September 2009
would immediately vest;
|
|
|
All outstanding RSUs awarded prior to September 2009 would
immediately vest and become nonforfeitable; and
|
|
|
All performance shares awarded prior to September 2009 would be
deemed to have been earned in full (at target) and become
immediately due and payable in the form of Common Shares.
|
For all equity compensation agreements entered into after
September 2009, the foregoing benefits would immediately vest
only in the event the Named Executive Officers employment
is terminated without cause following a
change-in-control
or if the Named Executive Officer terminates his or her own
employment under the circumstances identified below.
In addition to the aforementioned benefits, pursuant to the
change-in-control
agreements described previously, if a Named Executive
Officers employment is terminated without cause within
three years following a
change-in-control
or if the Named Executive Officer terminates his or her
employment within such time under the circumstances identified
below, in addition to the benefits indicated above, the Named
Executive Officer would be entitled to the following benefits:
|
|
|
A lump sum payment equal to two times base salary (for
Mr. Swidarski, three times base salary), as in effect on
the date of termination; and
|
|
|
Continued participation in all of our employee retirement
income, health and welfare benefit plans, including executive
perquisites (or substantially similar plans) for a period of
12 months, excluding any equity compensation plans, with
such benefits period being considered service for purposes of
service credits under any of our qualified or non-qualified
retirement plans (except that the continued service credit under
any qualified plan shall be paid for by us).
|
For purposes of both the equity compensation agreements and the
change-in-control
agreements, a
change-in-control
is deemed to occur upon any of the following events:
|
|
|
We are merged, consolidated or reorganized with another company,
and as a result, less than a majority of the combined voting
power of the then-outstanding securities is held by our
shareholders of record immediately prior to such transaction;
|
|
|
We sell or otherwise transfer all or substantially all of our
assets, and as a result, less than a majority of the combined
voting power of the then-outstanding securities is held by our
shareholders of record immediately prior to such transaction;
|
49
|
|
|
There is a report filed with the SEC disclosing that any person
or entity has become the beneficial owner of 20% or more of the
combined voting power of our then-outstanding securities (except
that for equity compensation agreements entered into after
September 2009, the applicable beneficial ownership threshold is
30%);
|
|
|
We file a current report or proxy statement with the SEC
disclosing that a change in control has or may have occurred or
will or may occur in the future pursuant to any then-existing
contract or transaction; or
|
|
|
If, during any period of two consecutive years, directors at the
beginning of such period cease to constitute at least a majority
of the board, unless the election or nomination for election of
each director first elected during such period was approved by a
vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period.
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Further, for purposes of the equity compensation agreements
entered into after September 2009 and the
change-in-control
agreements, a voluntary termination by a Named Executive Officer
will be deemed a constructive termination by us upon the
occurrence of any of the following events:
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Failure to elect, re-elect or otherwise maintain the executive
in the offices or positions held prior to the
change-in-control;
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A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties
attached to the position held by the executive, or a reduction
in his aggregate compensation or employee benefit plans;
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A good faith determination by the executive that the
change-in-control
has rendered him or her substantially unable to carry out or has
substantially hindered his or her ability to perform any of the
authorities, powers, functions, responsibilities or duties
attached to the position he or she held prior to the
change-in-control;
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We liquidate, dissolve, merge, consolidate or reorganize or
transfer all or a significant portion of our business or assets,
unless the successor has assumed all duties and obligations of
the
change-in-control
agreements; or
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We relocate and require the executive to change his or her
principal location of work to any location which is in excess of
25 miles from his or her previous location of work, or
requires the executive to travel significantly more than was
previously required.
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For purposes of calculating the retirement benefits payable when
a
change-in-control
occurs with termination, the Named Executive Officer is entitled
to the following:
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A Qualified Retirement Plan benefit determined using the plan
provisions as described in the narrative above under
2009 Pension Benefits; and
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A SERP benefit based on the formula applicable for normal
retirement.
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For both the Qualified Retirement Plan and all of the SERPs,
these benefits are determined assuming continuous participation
for an additional 12 months subsequent to termination as
described above (except that the continued service credit under
any qualified plan shall be paid for by us).
Each of the
change-in-control
agreements with the Named Executive Officers is substantially
similar. A form of these amended and restated agreements has
been filed as Exhibit 10.1 to our Annual Report on
Form 10-K
for the year ended December 31, 2008.
Effect
of Certain Tax Regulations on Payments
Effect
of Excise Tax on Parachute Payments
Under our
change-in-control
agreements, if any amount or benefit paid under the agreement,
taken together with any amounts or benefits otherwise paid to
the executives under any other agreement, are deemed to be
excess parachute payments subject to excise tax
under Sections 280G and 4999 of the Internal Revenue Code,
we will reimburse the executive for the excise tax and any
additional income, employment and excise taxes incurred on the
gross-up
payment.
Effect of
Section 409A on Timing of Payments
With respect to any severance amounts payable to our executives,
any amounts that are not exempt from Section 409A of the
Internal Revenue Code will be subject to the required six-month
delay in payment after termination of service, provided that the
executive is deemed a specified employee for
purposes of Section 409A at the time of termination of
service.
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