def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Kimberly-Clark Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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March 12, 2010
Thomas J. Falk
Chairman of the Board and
Chief Executive Officer
FELLOW STOCKHOLDERS:
It is my pleasure to invite you to the Annual Meeting of
Stockholders of
Kimberly-Clark
Corporation. The meeting will be held on Thursday,
April 29, 2010, at 9:00 a.m. at the Four Seasons
Resort and Club, which is located at 4150 North MacArthur
Boulevard, Irving, Texas.
At the Annual Meeting, stockholders will be asked to elect
twelve directors for a one-year term, ratify the selection of
the Corporations independent auditors and vote on a
stockholder proposal. These matters are fully described in the
accompanying Notice of Annual Meeting and proxy statement.
Your vote is important. Regardless of whether you plan to
attend the meeting, I urge you to vote your shares as soon as
possible. You can vote by marking and dating the proxy form, by
using the Internet or by telephone. Instructions regarding all
three methods of voting are contained on the proxy form.
This year, we are utilizing rules that allow companies to
furnish proxy materials to their stockholders on the Internet.
We believe furnishing proxy materials in this manner allows us
to continue to make this information available to our
stockholders, while reducing printing and delivery costs and
acting in a sustainable manner.
Also provided is our annual report for 2009. You will notice
that we have taken a different approach to our annual report
this year. My letter to stockholders, along with other
information about Kimberly-Clark that in past years has been
included in the front portion of the annual report, will be
posted online in the Investors section of our website at
www.kimberly-clark.com. Posting this information online is more
cost-effective and sustainable.
Sincerely,
Thomas J. Falk
KIMBERLY-CLARK
CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 29, 2010
The Annual Meeting of Stockholders of Kimberly-Clark Corporation
will be held at the Four Seasons Resort and Club, 4150 North
MacArthur Boulevard, Irving, Texas, on Thursday, April 29,
2010, at 9:00 a.m. for the following purposes:
1. To elect as directors the twelve nominees named in the
accompanying proxy statement;
2. To ratify the selection of Deloitte & Touche
LLP as our independent auditors for 2010;
3. To vote on one stockholder proposal that may be
presented at the meeting; and
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To take action upon any other business that may properly come
before the meeting or any adjournments of the meeting.
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Stockholders of record at the close of business on March 1,
2010 are entitled to notice of and to vote at the meeting or any
adjournments.
It is important that your shares be represented at the meeting.
I urge you to vote promptly by using the Internet or telephone
or by signing, dating and returning your proxy form.
The accompanying proxy statement also is being used to solicit
voting instructions for shares of Kimberly-Clark common stock
that are held by the trustees of our employee benefit and stock
purchase plans for the benefit of the participants in the plans.
It is important that each participant in the plans indicates his
or her preferences using the Internet or telephone or otherwise
signs, dates and returns the voting instruction card, which is
enclosed with the proxy statement, in the business reply
envelope provided.
By Order of the Board of Directors.
John W. Wesley
Vice President and Secretary
P.O. Box 619100
Dallas, Texas
75261-9100
March 12, 2010
TABLE OF
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i
March 12, 2010
PROXY
STATEMENT
VOTING INFORMATION
A proxy is solicited on behalf of the Board of Directors of
Kimberly-Clark Corporation for use at the Annual Meeting of
Stockholders to be held on April 29, 2010 and at any
adjournment of the Annual Meeting. We are first mailing either a
notice containing instructions on how to access this proxy
statement and our annual report online, or a printed copy of
these proxy materials and the accompanying proxy form, to
holders of Kimberly-Clark common stock on or about
March 12, 2010.
Notice of
Electronic Availability of Proxy Statement and Annual
Report
As permitted by rules of the Securities and Exchange Commission
(SEC), we are making this proxy statement and our
annual report available to our stockholders electronically via
the Internet. The notice of electronic availability contains
instructions on how to access this proxy statement and our
annual report and vote online. If you received a notice by mail,
you will not receive a printed copy of the proxy materials in
the mail. Instead, the notice instructs you on how to access and
review all of the important information contained in the proxy
statement and annual report online. The notice also instructs
you on how you may submit your proxy over the Internet or by
telephone. If you received a notice by mail and would like to
receive a printed copy of our proxy materials, you should follow
the instructions for requesting these materials contained in the
notice.
Who May
Vote
Each stockholder of record at the close of business on
March 1, 2010 will be entitled to one vote for each share
registered in the stockholders name. On that date,
416,128,552 shares of our common stock were outstanding.
How You May
Vote
If you received a notice of electronic availability, you cannot
vote your shares by filling out and returning the notice. The
notice, however, provides instructions on how to vote in person,
by Internet, by telephone or by mail.
You may vote in person by attending the meeting, by using the
Internet or telephone, or (if you received printed proxy
materials) by completing and returning a proxy form by mail. To
vote your proxy using the Internet or telephone, see the
instructions on the notice of electronic availability or the
proxy form and have the notice or proxy form available when you
access the Internet website or place your telephone call. To
vote your proxy by mail, mark your vote on the proxy form, then
follow the instructions on the card.
The named proxies will vote your shares according to your
directions. If you sign and return your proxy form, or if you
vote using the Internet or by telephone, but do not specify how
you want to vote your shares, the named proxies will vote your
shares for the election of directors, for ratification of the
selection of our independent auditors and against approval of
the stockholder proposal.
How You May
Revoke or Change Your Vote
You may revoke your proxy before the time of voting at the
meeting in any of the following ways:
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by mailing a revised proxy form to the Secretary of the
Corporation
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by changing your vote on the Internet website
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by using the telephone voting procedures
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by voting in person at the meeting
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Confidential
Voting
Proxy forms are received by our independent proxy processing
agent, and the vote is certified by independent Inspectors of
Election. Proxy forms and ballots that identify the vote of
stockholders and plan participants will be kept confidential,
except as necessary to meet legal requirements, in cases where
stockholders and participants request disclosure or write
comments on their cards, or in a contested matter involving an
opposing proxy solicitation. During the proxy solicitation
period, we will receive daily tabulation reports from the
independent proxy processing agent, but these reports provide
only aggregate data. In addition, the agent may identify
stockholders who fail to vote so that we may contact them and
request they do so.
Costs of
Solicitation
Kimberly-Clark will bear the cost of preparing, printing and
delivering materials in connection with this solicitation of
proxies, including the cost of the proxy solicitation and the
expenses of brokers, fiduciaries and other nominees in
forwarding proxy materials to beneficial owners. In addition to
the use of mail and electronic delivery, solicitation may be
made by telephone or otherwise by our employees. We have
retained D. F. King & Co., Inc. to aid in the
solicitation at a cost of approximately $17,000 plus
reimbursement of
out-of-pocket
expenses.
Votes
Required/Voting Procedures
A majority of the shares of our common stock, present in person
or represented by proxy, will constitute a quorum for purposes
of the Annual Meeting. The twelve nominees for director
receiving a majority of the votes cast at the meeting in person
or by proxy will be elected. If a nominee does not receive a
majority of the votes cast, then the nominee will be subject to
the Boards existing policy regarding resignations by
directors who do not receive a majority of for
votes. For approval, all other matters require the affirmative
vote of a majority of shares that are present at the Annual
Meeting in person or by proxy and entitled to vote on that
matter.
Abstentions are treated as votes against a proposal, and broker
non-votes will not be considered present and entitled to vote.
Generally, a broker non-vote occurs on a matter when a broker is
not permitted to vote on that matter without instructions from
the beneficial owner of the shares, and instructions are not
given.
Stockholders are urged to vote their shares. Previously, for
shares held by stockholders in street name, if the stockholders
did not indicate how to vote their shares in the election of
directors or for stockholder proposals, banks and brokers could
vote the shares on behalf of these stockholders for these items
as the banks and brokers deemed appropriate. Beginning this
year, banks and brokers are no longer permitted to vote
uninstructed shares for these items. Therefore, stockholders
should vote to ensure their shares are represented in these
matters.
Direct Stock
Purchase and Dividend Reinvestment Plan
If a stockholder is a participant in our Direct Stock Purchase
and Dividend Reinvestment Plan, the proxy form represents the
number of full shares in the stockholders account in the
plan, as well as shares registered in the stockholders
name.
Employee Benefit
Plans
We also are sending or otherwise making this proxy statement and
voting materials available to participants in various
Kimberly-Clark employee benefit and stock purchase plans. The
trustee of each plan, as the stockholder of record of the shares
of our common stock held in the plans, will vote whole
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shares of stock attributable to each participants interest
in the plans in accordance with the directions the participant
gives or, if no directions are given by the participant, in
accordance with the directions of the respective plan committee.
Attending the
Annual Meeting
Stockholders as of the record date, March 1, 2010, or their
duly appointed proxies, may attend the Annual Meeting. If you
plan to attend the meeting, please check your proxy form in the
space provided or so indicate electronically or by telephone.
This will assist us with meeting preparations and will help us
to expedite your admittance. If your shares are not registered
in your own name and you would like to attend the meeting,
please ask the broker, trust, bank or other nominee that holds
your shares to provide you with evidence of your share
ownership, which will enable you to gain admission to the
meeting.
To obtain directions to attend the meeting and vote in person,
please contact Stockholder Services by telephone at
(972) 281-1522
or by e-mail
at stockholders@kcc.com.
Reducing
Duplicate Mailings
Because many stockholders hold shares of our common stock in
multiple accounts or share an address with other stockholders,
stockholders may receive duplicate mailings of notices or proxy
materials. Stockholders may avoid receiving duplicate mailings
as follows:
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Stockholders of Record. If your shares are
registered in your own name and you are interested in consenting
to the delivery of a single notice or proxy materials, you may
contact Stockholder Services by mail at
P.O. Box 612606, Dallas, Texas
75261-2606,
by telephone at
(972) 281-1522
or by e-mail
at stockholders@kcc.com.
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Beneficial Stockholders. If your shares are
not registered in your own name, your broker, bank, trust or
other nominee that holds your shares may have asked you to
consent to the delivery of a single notice or proxy materials if
there are other Kimberly-Clark stockholders who share an address
with you. If you currently receive more than one copy of the
notice or proxy materials at your household and would like to
receive only one copy in the future, you should contact your
nominee.
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Right to Request Separate Copies. If you
consent to the delivery of a single proxy statement and annual
report but later decide that you would prefer to receive a
separate copy of the notice or proxy materials, as applicable,
for each stockholder sharing your address, then please notify us
or your nominee, as applicable, and we or they will promptly
deliver the additional notices or proxy materials. If you wish
to receive a separate copy of the notice or proxy materials for
each stockholder sharing your address in the future, you may
also contact Stockholder Services by mail at
P.O. Box 612606, Dallas, Texas
75261-2606,
by telephone at
(972) 281-1522
or by e-mail
at stockholders@kcc.com.
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3
PART TWO
CORPORATE GOVERNANCE INFORMATION
Board of
Directors and Board Committees
The Board of Directors met six times in 2009. All of the
directors attended in excess of 75 percent of the total
number of meetings of the Board and committees of the Board on
which they served.
Although we do not have a formal policy with respect to director
attendance at Annual Meetings, since 1997 all nominees and
continuing directors have attended the Annual Meetings. Each
director attended the 2009 Annual Meeting.
The standing committees of the Board include the Audit
Committee, Management Development and Compensation Committee,
Nominating and Corporate Governance Committee and Executive
Committee. In compliance with applicable New York Stock Exchange
(NYSE) corporate governance listing standards, the
Board has adopted charters for the Audit, Management Development
and Compensation, and Nominating and Corporate Governance
Committees. These charters are available in the Investors
section of our website at www.kimberly-clark.com.
Audit
Committee
Dennis R. Beresford is the Chairman of our Audit Committee. The
other members of this Committee are John R. Alm, John F.
Bergstrom, Robert W. Decherd and Linda Johnson Rice. The
Committee met eight times in 2009. In addition,
Mr. Beresford participated in three conference calls as
Chairman of the Committee to preview earnings press releases
during 2009.
Each member of the Audit Committee is an Independent Director
under the independence standards set forth in our Corporate
Governance Policies. See Director Independence for
additional information on Independent Directors.
Each member of the Audit Committee satisfies the financial
literacy requirements of the NYSE, and the Board has determined
that Mr. Beresford is an audit committee financial
expert under the rules and regulations of the SEC.
The principal functions of the Audit Committee, as specified in
its charter, include the following:
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the quality and integrity of our financial statements,
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our compliance programs,
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the independence, qualification and performance of our
independent auditors, and
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the performance of our internal auditors.
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Subject to stockholder ratification, selecting and engaging our
independent auditors.
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Reviewing the scope of the audits and audit findings, including
any comments or recommendations of our independent auditors.
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Establishing policy in connection with internal audit programs.
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Pre-approving all audit and non-audit services provided by our
independent auditors.
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Providing oversight of our risk management program and receiving
periodic reports from management on risk assessments, the risk
management process and issues related to the risks of managing
our business.
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For additional information about the Audit Committees
oversight activities in 2009, see
Part Three Proposals to be Voted on at
the 2010 Annual Meeting Ratification of
Auditors Audit Committee Report.
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No member of the Audit Committee simultaneously serves on the
audit committees of more than three public companies. If a
member were to simultaneously serve on more than three public
company audit committees, information regarding the Boards
determination of whether this simultaneous service impairs the
ability of the member to effectively serve on the Audit
Committee will be available in the Investors section of our
website at www.kimberly-clark.com.
Management
Development and Compensation Committee
James M. Jenness is the Chairman of our Management Development
and Compensation Committee. In addition to Mr. Jenness, the
current members of this Committee are Abelardo E. Bru, Mae C.
Jemison, M.D. and Ian C. Read. The Committee met six times
in 2009. Each member of this Committee is an Independent
Director.
The principal functions of the Management Development and
Compensation Committee, as specified in its charter, include the
following:
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Establishing and administering the policies governing annual
compensation and long-term compensation, including stock option
awards, restricted stock awards and restricted share unit awards.
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Overseeing:
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leadership development for senior management and future senior
management candidates, and
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key organizational effectiveness and engagement policies.
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Reviewing diversity and inclusion programs and key metrics.
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Compensation
Processes and Procedures
On an annual basis, the Committee reviews and sets the
compensation of our elected officers, including all of our
executive officers. The Committees charter does not permit
the Committee to delegate to anyone the authority to establish
any compensation policies or programs for elected officers,
including our executive officers. Our Chief Executive Officer
has the authority to establish compensation programs for
non-elected officers. Additionally, as discussed in
Part Four Other Important
Information Executive Compensation
Compensation Discussion and Analysis, the Committee has
delegated limited authority to our Chief Executive Officer to
grant stock options, restricted stock and restricted share units
to non-executive officers for recruiting or retention purposes.
Our Chief Executive Officer makes a recommendation to the
Committee each year on the appropriate target direct annual
compensation to be paid to our executive officers, excluding
himself. The Committee makes the final determination of the
target direct annual compensation to be awarded to each
executive officer, including our Chief Executive Officer. While
our Chief Executive Officer and Chief Human Resources Officer
typically attend Committee meetings, none of the other executive
officers is present during the portion of the Committees
meetings when compensation for executive officers is set. In
addition, our Chief Executive Officer is not present during the
portion of the Committees meetings when his compensation
is set.
For additional information on the Committees processes and
procedures for determining executive compensation, and for a
detailed discussion of our compensation policies, see
Part Four Other Important
Information Executive Compensation
Compensation Discussion and Analysis.
Use of
Compensation Consultants
The Committees charter provides that the Committee has the
authority to retain advisors, including compensation
consultants, to assist the Committee in its work. The Committee
believes that compensation consultants can provide important
market information and perspectives that can help
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the Committee determine compensation programs that best meet the
objectives of our compensation policies.
Corporation Consultant. To assist management
and the Committee in assessing and determining appropriate,
competitive compensation for our executive officers, we annually
engage an outside compensation consultant. In 2009, Mercer Human
Resource Consulting (Mercer) was retained for this
purpose. Mercer has provided consulting services to the
Corporation on a wide variety of human resources and
compensation matters, both at the officer and non-officer
levels. In 2009, Mercer was retained by the Corporation to
provide advice and counsel regarding executive and director
remuneration matters on an ongoing basis, including the
following services in connection with our executive compensation
program:
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Assessing market compensation levels for executive officer
positions and other selected positions, within the
Corporations peer groups.
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Reviewing historic and projected performance for peer group
companies for metrics used by the Corporation in its annual and
long-term incentive plans.
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Assisting in incentive plan design and modifications, as
requested.
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Providing market research on various issues as requested by
management.
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Preparing for and participating in Committee meetings, as
requested.
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Reviewing the Compensation Discussion and Analysis and other
disclosures, as requested.
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Consulting with management on compensation matters.
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Independent Committee Consultant. The
Committee has also retained The Delves Group as its independent
executive compensation consultant. The Committee has adopted a
written policy providing that the independent Committee
consultant may provide services only to the Committee and not to
the Corporation. The Delves Group has no other business
relationship with the Corporation and receives no payments from
us other than fees for services to the Committee. The Delves
Group reports directly to the Committee, and the Committee may
replace The Delves Group or hire additional consultants at any
time. The Delves Group attends Committee meetings and
communicates with the Chairman of the Committee between meetings
from time to time.
The Committee instructed The Delves Group to provide an
independent review of the data and recommendations provided by
management and Mercer. The scope of The Delves Groups
engagement in 2009 included:
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Conducting a review of the competitive market data (including
base salary, annual incentive targets and long-term incentive
targets) for our executive officers, including our Chief
Executive Officer.
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Reviewing and commenting on recommendations by management and
Mercer concerning executive pay programs, including program
changes and redesign, special awards, change in control
provisions, executive contract provisions, promotions,
retirement and related items, as desired by the Committee.
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Reviewing and commenting on the Committees report for the
proxy statement.
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Attending Committee meetings.
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Periodically consulting with the Chairman of the Committee.
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During 2009, at the request of the Committee, Don Delves, the
President of The Delves Group, attended all of the in-person
Committee meetings, as well as one of the teleconference
Committee meetings.
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Committee
Report
The Committee has reviewed the Compensation Discussion and
Analysis section of this proxy statement and has
recommended that it be included in this proxy statement. The
Committees report is located at
Part Four Other Important
Information Executive Compensation
Management Development and Compensation Committee Report.
Nominating and
Corporate Governance Committee
G. Craig Sullivan is the Chairman of our Nominating and
Corporate Governance Committee. In addition to
Mr. Sullivan, the current members of this Committee are
Abelardo E. Bru, Mae C. Jemison, M.D. and Ian C. Read. The
Committee met four times in 2009. Each member of this Committee
is an Independent Director.
The principal functions of the Nominating and Corporate
Governance Committee, as specified in its charter, include the
following:
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Overseeing the process by which individuals are nominated to
become Board members.
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Overseeing matters of corporate governance, including developing
and recommending to the Board changes to our Corporate
Governance Policies.
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Advising the Board on:
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Board organization, membership, function, performance and
compensation,
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committee structure and membership, and
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policies and positions regarding significant stockholder
relations issues.
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Reviewing director independence standards and making
recommendations to the Board with respect to the determination
of the independence of directors.
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Monitoring and recommending improvements to the practices and
procedures of the Board.
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Reviewing stockholder proposals and considering responses or
actions regarding these proposals.
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The Nominating and Corporate Governance Committee, in accordance
with its charter and our Certificate of Incorporation, has
established criteria and processes for director nominees,
including nominations proposed by stockholders. Those criteria
and processes are described in Director Nominee Criteria
and Process and Stockholder Nominations for
Directors.
Executive
Committee
Marc J. Shapiro is the Chairman of our Executive Committee. In
addition to Mr. Shapiro, the current members of this
Committee are Dennis R. Beresford, Thomas J. Falk, James M.
Jenness and G. Craig Sullivan. The Committee met one time in
2009.
The principal function of the Executive Committee is to exercise
the powers of the Board to direct our business and affairs
between meetings of the Board.
Compensation
Committee Interlocks and Insider Participation
None of the members of the Management Development and
Compensation Committee is a current or former officer or
employee of the Corporation. No interlocking relationship exists
between the members of our Board of Directors or the Management
Development and Compensation Committee and the board of
directors or compensation committee of any other company.
7
Director
Independence
Since 1996, our By-Laws have provided that a majority of our
directors be independent directors (Independent
Directors). In addition, our Corporate Governance Policies
adopted by the Board provide independence standards consistent
with the rules and regulations of the SEC and the listing
standards of the NYSE. Our Corporate Governance Policies are
available in the Investors section of our website at
www.kimberly-clark.com, and the independence standards are set
forth in Section 17 of our Corporate Governance Policies.
The nominees for director are such that immediately after the
election of the nominees to the Board, eleven of the twelve
directors holding office will be Independent Directors. Our
independent Board helps ensure good corporate governance and
strong internal controls. We are in compliance with all
corporate governance requirements of the NYSE, the SEC and the
Sarbanes-Oxley Act of 2002.
The Board has determined that all directors and nominees, except
for Thomas J. Falk, are Independent Directors and meet the
independence standards set forth in our Corporate Governance
Policies. When making these determinations, the Board considered
the following:
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We made charitable contributions of $375,000 in 2007, $65,000 in
2008 and $55,000 in 2009 to the Fox Cities Performing Arts
Center in Appleton, Wisconsin, where Mr. Bergstrom is a
director. These donations constituted less than five percent of
the Fox Cities Performing Arts Centers gross revenues for
the years in which the donations were made. We have significant
operations and a significant number of employees in the Fox
Cities area of Wisconsin.
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We made charitable contributions of $1,000 in 2008 and $3,000 in
2009 to the Theda Clark Hospital Foundation, where
Mr. Bergstrom is a director.
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Companies majority-owned by Mr. Bergstrom paid us
approximately $58,000 in 2007 and 2008 and $56,000 in 2009 to
lease excess hangar space at an airport near Appleton, Wisconsin
and approximately $150,000 in 2007, $172,000 in 2008 and
$174,000 in 2009 for pilot services pursuant to a pilot sharing
contract. In addition, these companies paid us approximately
$162,000 in 2007, $169,000 in 2008 and $177,000 in 2009 for
scheduling and aircraft services for their airplane.
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We paid approximately $3,000 in 2007, $65,000 in 2008 and $2,800
in 2009 for automobiles and related services to car dealerships
in the Neenah, Wisconsin area that are majority-owned by
Mr. Bergstrom.
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We made a charitable contribution of $50,000 in each of 2007,
2008 and 2009 to the Education is Freedom Foundation, where
Mr. Bru is a director.
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We made charitable contributions of $50,000 in 2007, $25,000 in
2008 and $26,000 in 2009 to the United Negro College Fund, where
Ms. Johnson Rice is a director.
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We paid approximately $734,000 in 2007, $697,000 in 2008 and
$505,000 in 2009 to JPMorgan Chase & Co.
(JPMC) for investment banking services.
Mr. Shapiro serves as a consultant to JPMC and as
non-executive Chairman of its Texas operations. We do not
believe his relationship with JPMC gives him a direct or
indirect material interest in our transactions with JPMC.
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The amount involved in each of these items is less than the
amounts established by the NYSE and our Corporate Governance
Policies as potentially affecting a directors independence.
Director Nominee
Criteria and Process
The Board of Directors is responsible for approving candidates
for Board membership. The Board has delegated the screening and
recruitment process to the Nominating and Corporate Governance
Committee, in consultation with the Chairman of the Board and
Chief Executive Officer. The Nominating and Corporate Governance
Committee believes that the criteria for director nominees
should ensure effective corporate governance, support our
strategies and businesses, include
8
consideration of diversity, account for individual director
attributes and the effect of the overall mix of those attributes
on the Boards effectiveness and support the successful
recruitment of qualified candidates for the Board.
Qualified candidates for director are those who, in the judgment
of the Nominating and Corporate Governance Committee, possess
all of the personal attributes and a sufficient mix of the
experience attributes listed below to ensure effective service
on the Board.
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Personal Attributes
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Experience Attributes
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leadership: lead in personal and professional lives
ethical character: possess high standards for ethical behavior
collaborative: actively participate in Board and committee matters
independence: for non-management directors, are independent of management and the Corporation
ability to communicate: possess good interpersonal skills
effectiveness: bring a proactive and solution-oriented approach
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financial acumen: have good knowledge of business finance and financial statements
general business experience: possess experience that will aid in judgments concerning business issues
industry knowledge: possess reasonable knowledge about the Corporations industries
diversity of background and viewpoint: bring to the Board an appropriate level of diversity
special business experience: possess global management experience and experience with branded consumer packaged goods
other attributes: provide special attributes identified as needed or as may be required
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The Nominating and Corporate Governance Committee may receive
recommendations for Board candidates from various sources,
including our directors, management and stockholders. In
addition, the Nominating and Corporate Governance Committee has
retained a search firm to assist it in identifying and
recruiting director candidates meeting the criteria specified by
the Committee.
The Nominating and Corporate Governance Committee recommends to
the Board nominees to fill any vacancies. As provided in the
Corporations Certificate of Incorporation, the Board
elects a new director when a vacancy occurs between annual
meetings of stockholders. The Nominating and Corporate
Governance Committee also recommends to the Board any new
appointments and nominees for election as directors at our
annual meeting of stockholders, as well as assesses the
performance of each director at least once every three years in
accordance with our Corporate Governance Policies.
Committee Review
of Attributes of Current Directors
The Nominating and Corporate Governance Committee has reviewed
the background of each of the Corporations current
directors and his or her service on the Board and committees on
which he or she serves, based on the personal and experience
attributes described above. The Committee has determined
9
that each director possesses all of the personal attributes, as
well as a sufficient mix of the experience attributes. For the
experience attributes, the Committee considered the following:
Financial acumen:
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Satisfies the financial literacy requirements of the NYSE
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Qualifies as an audit committee financial expert under the rules
and regulations of the SEC
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Has an accounting, finance or banking background
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Industry knowledge:
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Possesses knowledge about our industries
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Special business experience:
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Has international experience
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Has branded consumer packaged goods experience
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Has health care experience
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General business experience:
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Has leadership experience as a chief executive officer or as a
senior executive officer
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Diversity of background and viewpoint:
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Brings a diverse viewpoint that is representative of our
customer, consumer, employee and stockholder base
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Provides a different perspective (stemming, for example, from an
academic background or experience from outside the consumer
packaged goods or health care industries)
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Other attributes:
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Has marketing experience
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Has compensation experience (including from executive officer
experience)
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Has governance/public company board experience
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The Committee has identified specific experience attributes for
each director, based on the list above. See Certain
Information Regarding Directors and Nominees for
information regarding these specific attributes.
Diversity of
Directors
As noted above, the Nominating and Corporate Governance
Committee believes that diversity of backgrounds and viewpoints
is a key attribute for directors. As a result, the Committee
seeks to have a diverse Board that is representative of its
customer, consumer, employee and stockholder base. While the
Committee carefully considers this diversity when considering
nominees for director, the Committee has not established a
formal policy regarding diversity in identifying director
nominees.
Stockholder
Nominations for Directors
The Nominating and Corporate Governance Committee considers
nominees recommended by stockholders as candidates for election
to the Board of Directors. A stockholder wishing to nominate a
candidate for election to the Board at an annual stockholders
meeting is required to give written notice to the Secretary of
the Corporation of his or her intention to make a nomination in
accordance with the Corporations Certificate of
Incorporation and By-Laws. The notice of nomination must be
received by us not less than 75 days nor more than
100 days prior to the stockholders meeting, or if we
give less than 75 days notice of the meeting date, the
notice of nomination must be received within 10 days after
the meeting date is announced. The notice of nomination is
required to contain information, as set forth in the Certificate
of Incorporation and By-Laws, about both the nominee and the
stockholder making the nomination, including information
sufficient to allow the Nominating and Corporate Governance
Committee to determine if the candidate meets the director
nominee criteria described above. The notice must also contain
information about certain stock holdings of the nominee and the
stockholder making the nomination, including derivative
holdings, dividend rights that are separated from or separable
from the underlying shares and certain performance-related fees,
as well as information that would be required to be disclosed in
connection with a proxy solicitation (and whether a proxy
solicitation will be conducted). The notice is also required to
contain information about certain related person transactions,
contact and related information regarding the nominee,
understandings regarding the nomination of the
10
nominee and the nominees consent to be nominated. We may
require that the proposed nominee furnish other information to
determine that persons eligibility to serve as a director.
A nomination that does not comply with the requirements set
forth in the Certificate of Incorporation and By-Laws will not
be considered for presentation at the annual meeting, but will
be considered by the Nominating and Corporate Governance
Committee for any vacancies arising on the Board between annual
meetings in accordance with the process described in
Director Nominee Criteria and Process. There are
twelve director positions on the Board, and there are no vacant
director positions as of the date of this proxy statement.
Communications to
Directors
The Board has established a process by which stockholders and
other interested parties may communicate with the Board,
including the Lead Director. That process can be found in the
Investors section of our website at www.kimberly-clark.com.
Board Leadership
Structure
The Board has established a leadership structure in which
responsibilities are allocated between the Chairman of the Board
and Chief Executive Officer and the Lead Director. The Board
believes this allocation of responsibilities between these two
positions provides for dynamic Board leadership while
maintaining strong independence and is therefore an effective
and appropriate leadership structure.
Chairman of the Board and Chief Executive Officer
Positions. Mr. Falk serves as Chairman of
the Board and Chief Executive Officer. As noted in our Corporate
Governance Policies, the Board believes that it is appropriate
for a single person to serve in both positions. The Board
believes that combining these roles unifies the
Corporations leadership and enhances the
Corporations ability to execute its Global Business Plan.
The Board has the discretion to separate the roles in the future
if it deems it advisable and in the best interest of the
Corporation to do so.
Lead Director. Mr. Shapiro served as Lead
Director in 2009. The Lead Director serves as Chairman of the
Executive Committee. Our Corporate Governance Policies outline
the role and responsibilities of the Lead Director, which
include coordinating the activities of the independent
directors, providing input with regard to agendas and schedules
for Board meetings, leading (with the Chairman of the Nominating
and Corporate Governance Committee) the annual Board evaluation
discussion, leading (with the Chairman of the Management
Development and Compensation Committee) the Boards review
and discussion of the Chief Executive Officers
performance, providing feedback to individual directors
following their periodic evaluations, speaking on behalf of the
Board and chairing Board meetings when the Chairman of the Board
is unable to do so and acting as a direct conduit to the Board
for stockholders, employees and others pursuant to policies
adopted by the Board.
The Lead Director also chairs executive session meetings of
non-management directors. The non-management directors are
scheduled to meet in executive session without the presence of
management at least quarterly.
Other Corporate
Governance Matters
Corporate Governance Policies. The Board of
Directors adopted Corporate Governance Policies in 1994, which
have been amended from time to time in accordance with changes
in rules and regulations and developing governance practices.
These policies guide the Corporation and the Board on matters of
corporate governance, including director responsibilities, Board
committees and their charters, director independence, director
compensation and performance assessments, director orientation
and education, director access to management, Board access to
outside financial, business and legal advisors, and management
development and succession planning. These policies, which
include our director independence standards, are available in
the Investors section of our website at www.kimberly-clark.com.
Code of Conduct. Kimberly-Clark has a Code of
Conduct that applies to all of our directors, executive officers
and employees, including our Chief Executive Officer, Chief
Financial Officer and
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Corporate Controller. Our Code of Conduct is available in the
Investors section of our website at www.kimberly-clark.com. Any
amendments to or waivers of our Code of Conduct applicable to
our Chief Executive Officer, Chief Financial Officer or
Corporate Controller will be posted at this location.
Board and Management Roles in Risk
Oversight. The Board reviews and oversees
managements response to key risks facing us as we
implement our Global Business Plan, which provides a long-term
roadmap for our overall strategic direction, business operations
and finances. Our senior executive team identifies and monitors
key enterprise-wide and business unit risks, which are
integrated into our Global Business Plan, providing the basis
for the Boards risk review and oversight process. The
Board believes these roles complement the Boards
leadership structure described above, including the combination
of the Chairman of the Board and Chief Executive Officer
positions.
The Audit Committees role regarding risk oversight, as
specified in its charter, is to provide oversight of our risk
management program and receive periodic reports from management
on risk assessments, the risk management process and issues
related to the risks of managing our business. As part of its
oversight role, the Audit Committee receives an annual
enterprise risk management update, which discusses our key
financial, strategic, operational and compliance risks, as well
as other periodic updates and reports regarding risks in these
and other areas. Our Global Risk Oversight Committee, consisting
of management members from key business units, finance,
treasury, information technology, global risk management and
legal, identifies key risks for review and updates our policies
in risk management areas such as hedging and foreign currency
and country risks, property and casualty risks and supplier and
customer risks.
Committee Authority to Retain Independent
Advisors. Each of the Audit, Management
Development and Compensation, and Nominating and Corporate
Governance Committees has the authority to retain independent
advisors and consultants, with all fees and expenses to be paid
by the Corporation.
Whistleblower Procedures. The Audit Committee
has established procedures for (1) the receipt, retention
and treatment of complaints we receive regarding accounting,
internal accounting controls or auditing matters and
(2) the confidential and anonymous submission by our
employees and others of concerns regarding questionable
accounting or auditing matters. We also maintain a toll-free,
around-the-clock
Code of Conduct telephone hotline that allows our employees and
others to voice their concerns anonymously. The whistleblower
procedures and information on how to access the hotline are
available in the Investors section of our website at
www.kimberly-clark.com.
Chief Compliance Officer. Thomas J. Mielke is
the Senior Vice President Law and Government Affairs
and Chief Compliance Officer and oversees our compliance
programs. He reports to the Audit Committee on the
programs effectiveness, provides periodic reports to the
Board and works closely with our various compliance functions to
provide coordination and sharing of best practices across the
compliance groups.
Disclosure Committee. We have established a
Disclosure Committee composed of members of management and
chaired by our Vice President and Controller to assist in
fulfilling our obligations to maintain disclosure controls and
procedures and to coordinate and oversee the process of
preparing our periodic securities filings with the SEC.
No Executive Loans. We do not extend loans to
our executive officers or directors and do not have any such
loans outstanding.
Stockholder Rights Plan. The Board has adopted
the following policy statement on stockholder rights plans:
Kimberly-Clark does not have a poison pill or
stockholder rights plan. If Kimberly-Clark were to adopt a
stockholder rights plan, the Board would seek prior stockholder
approval of the plan unless, due to timing constraints or other
reasons, a majority of independent directors of the Board
determines that it would be in the best interests of
stockholders to adopt a plan before obtaining stockholder
approval. If a stockholder rights plan is adopted without prior
stockholder approval, the plan must either be ratified by
stockholders or must expire, without being renewed or replaced,
within one year. The Nominating and Corporate Governance
Committee shall review this policy statement periodically and
report to the Board on any recommendations it may have
concerning the policy.
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Annual Election of Directors. Our Certificate
of Incorporation provides that directors are elected on an
annual basis. Our Certificate of Incorporation is available in
the Investors section of our website at www.kimberly-clark.com.
Majority Voting for Election of Directors. The
Corporations By-Laws provide that, in uncontested
elections, directors will be elected by a majority vote rather
than by a plurality. If an incumbent director does not receive a
majority of votes, the director is required to tender his or her
resignation for consideration by the Board. Our By-Laws are
available in the Investors section of our website at
www.kimberly-clark.com.
Simple Majority Voting Provisions. In 2008,
stockholders approved an amendment to our Certificate of
Incorporation to eliminate supermajority voting provisions.
Special Stockholder Meetings. In 2009,
stockholders approved an amendment to our Certificate of
Incorporation to allow the holders of not less than
25 percent of the Corporations issued and outstanding
shares of capital stock to request that a special meeting of
stockholders be called, subject to our By-Law procedures.
Charitable Contributions. The Nominating and
Corporate Governance Committee has adopted guidelines for review
and approval of charitable contributions by us and any
foundation we control to organizations or entities with which a
member of the Board of Directors or an executive officer is or
may be affiliated. Any contributions made by us to any
tax-exempt organization in which any Independent Director serves
as an executive officer will be disclosed in the Investors
section of our website at www.kimberly-clark.com, if within the
preceding three years contributions in any single year from us
to the organization exceeded the greater of $1 million or
2 percent of the tax-exempt organizations
consolidated gross revenues.
PART THREE
PROPOSALS TO BE VOTED ON AT THE 2010 ANNUAL
MEETING
General
Information
As of the date of this proxy statement, the Board of Directors
consists of twelve members. Each directors term expires at
this years Annual Meeting.
All the nominees for director set forth on the following pages
are proposed to be elected at this years Annual Meeting to
serve for a term to expire at the 2011 Annual Meeting of
Stockholders and until their successors have been duly elected
and qualified. Should any nominee become unable to serve,
proxies may be voted for another person designated by the Board.
All nominees have advised us that they will serve if elected.
Certain
Information Regarding Nominees for Director
The names of the nominees, their ages as of the date of the
Annual Meeting, the year they first became directors, their
principal occupations during at least the past five years, other
public company directorships held by them as of
February 23, 2010, public company boards they have served
on since January 1, 2005, information regarding director
attributes the Nominating and Corporate Governance Committee
determined qualify them to serve as directors and certain other
biographical information are set forth below. See
Committee Review of Attributes of Current Directors
for a discussion of director attributes considered by the
Nominating and Corporate Governance Committee.
John R. Alm,
64,
Director since 2006
Retired President
and Chief Executive Officer,
Coca-Cola
Enterprises Inc.
Mr. Alm retired as President and Chief Executive Officer of
Coca-Cola
Enterprises Inc., a beverage company, in 2005. He had been Chief
Executive Officer since 2004 and President and Chief Operating
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Officer since 2000. Mr. Alm joined
Coca-Cola
Enterprises Inc. in 1992 and held the position of Chief
Financial Officer until 2000.
Public company boards served on since 2005: Washington Group
International, Inc. (February 2006 through November 2007).
Experience attributes: Mr. Alm satisfies
the financial literacy requirements of the NYSE, has leadership
experience as a chief executive officer, has knowledge about our
industries, has international experience and experience with
branded consumer packaged goods, and has marketing,
compensation, governance and public company board experience.
Dennis R.
Beresford,
71,
Director since 2002
Ernst &
Young Executive Professor of Accounting, University of
Georgia
Mr. Beresford has served as Ernst & Young
Executive Professor of Accounting at the J.M. Tull School of
Accounting, Terry College of Business, University of Georgia
since 1997. From 1987 to 1997, he served as the Chairman of the
Financial Accounting Standards Board. Prior to that,
Mr. Beresford held various positions at the accounting firm
of Ernst & Young. He serves on the board of directors
and audit committees of Legg Mason, Inc. and the Federal
National Mortgage Association (Fannie Mae).
Public company boards served on since 2005: Legg Mason, Inc.,
Fannie Mae (since May 2006) and MCI, Inc. (July 2002
through January 2006).
Experience attributes: Mr. Beresford has
been determined to be an audit committee financial
expert under the SECs rules and regulations and has
a background in accounting, provides diversity of background and
viewpoint, and has governance and public company board
experience.
John F.
Bergstrom,
63,
Director since 1987
Chairman and
Chief Executive Officer, Bergstrom Corporation
Mr. Bergstrom has served as Chairman and Chief Executive
Officer of Bergstrom Corporation, Neenah, Wisconsin, for more
than the past five years. Bergstrom Corporation owns and
operates automobile sales and leasing businesses and a credit
life insurance company based in Wisconsin. Mr. Bergstrom is
a director of the Wisconsin Energy Corporation and its
wholly-owned subsidiary Wisconsin Electric Power Company. He
also is a member of the board of directors of Advance Auto
Parts, Inc., and a member of the board of directors and
executive committee of Green Bay Packers, Inc.
Public company boards served on since 2005: Wisconsin Energy
Corporation, Wisconsin Electric Power Company, Advance Auto
Parts, Inc. (since May 2008), Sensient Technologies Corp.
(through April 2006), Banta Corporation (through January
2007) and Midwest Air Group, Inc. (through June 2007).
Experience attributes: Mr. Bergstrom
satisfies the financial literacy requirements of the NYSE, has
leadership experience as a chief executive officer, provides
diversity of background and viewpoint, and has marketing,
compensation, governance and public company board experience.
Abelardo E. Bru,
61,
Director since 2005
Retired Vice
Chairman, PepsiCo, Inc.
Mr. Bru retired as Vice Chairman of PepsiCo, a food and
beverage company, in 2005. He joined PepsiCo in 1976.
Mr. Bru served from 1999 to 2003 as President and Chief
Executive Officer and in 2003 to 2004 as Chief Executive Officer
and Chairman of Frito-Lay Inc., a division of PepsiCo. Prior to
leading Frito-Lay, Mr. Bru led PepsiCos largest
international business, Sabritas Mexico, as President and
General Manager from 1992 to 1999. Mr. Bru is a member of
the board of directors of S. C. Johnson & Son, Inc.
and the Education is Freedom Foundation.
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Public company boards served on since 2005: Office Depot, Inc.
(through December 2008).
Experience attributes: Mr. Bru satisfies
the financial literacy requirements of the NYSE, has leadership
experience as a chief executive officer, has knowledge about our
industries, provides diversity of background and viewpoint, has
international experience and experience with branded consumer
packaged goods, and has marketing, compensation, governance and
public company board experience.
Robert W.
Decherd,
59,
Director since 1996
Chairman of the
Board, President and Chief Executive Officer, A. H. Belo
Corporation
Mr. Decherd has served as Chairman of the Board, President
and Chief Executive Officer of A. H. Belo Corporation, a
newspaper publishing and Internet company, since it was spun off
from Belo Corp. in February 2008. Prior to February 2008,
Mr. Decherd was Chief Executive Officer of Belo Corp., a
broadcasting and publishing company, for 21 years. He is a
director of both A. H. Belo Corporation and Belo Corp., where he
is non-executive chairman. Mr. Decherd is a member of the
Advisory Council for the Harvard University Center for Ethics
and the Board of Visitors of the Columbia Graduate School of
Journalism. During the past decade, he has held appointments to
Presidential and Federal Communications Commission commissions
concerned with public policy matters related to the media
industry.
Public company boards served on since 2005: Belo Corp. and A. H.
Belo Corporation (since February 2008).
Experience attributes: Mr. Decherd
satisfies the financial literacy requirements of the NYSE, has
leadership experience as a chief executive officer, provides
diversity of background and viewpoint, and has marketing,
compensation, governance and public company board experience.
Thomas J. Falk,
51,
Director since 1999
Chairman of the
Board and Chief Executive Officer
Mr. Falk was elected Chairman of the Board and Chief
Executive Officer of the Corporation in 2003 and President and
Chief Executive Officer in 2002. Prior to that, he served as
President and Chief Operating Officer since 1999. Mr. Falk
previously had been elected Group President Global
Tissue, Pulp and Paper in 1998, where he was responsible for the
Corporations global tissue businesses. Earlier in his
career, Mr. Falk had responsibility for the
Corporations North American Infant Care, Child Care and
Wet Wipes businesses. Mr. Falk joined the Corporation in
1983 and has held other senior management positions in the
Corporation. He also serves on the board of directors of
Catalyst and the University of Wisconsin Foundation, and serves
as a governor of the Boys & Girls Clubs of America.
Public company boards served on since 2005: Centex Corporation
(through August 2009).
Experience attributes: Mr. Falk satisfies
the financial literacy requirements of the NYSE and has a
background in accounting, has leadership experience as a chief
executive officer, has knowledge about our industries, has
international experience and experience with branded consumer
packaged goods, and has marketing, compensation, governance and
public company board experience.
Mae C.
Jemison, M.D.,
53,
Director since 2002
President,
BioSentient Corporation
Dr. Jemison is founder and President of The Jemison Group,
Inc., a technology consulting company, and BioSentient
Corporation, a medical devices company. She chairs The Earth We
Share international science camp. Dr. Jemison served as a
professor of Environmental Studies at Dartmouth College from
1995 to 2002. From 1987 to 1993, she served as a National
Aeronautics and Space Administration (NASA)
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astronaut. Dr. Jemison serves on the board of directors of
Scholastic Corporation, Valspar Corporation and The Dorothy
Jemison Foundation for Excellence and is a member of the
National Academy of Sciences Institute of Medicine. She is
also the Chairman of the State of Texas Product Development and
Small Business Incubator Board, and she is a member of the
National Advisory Council for Biomedical Imaging and
Bioengineering, the Greater Houston Partnership Board of
Directors, and the Board of Trustees of Morehouse College.
Public company boards served on since 2005: Scholastic
Corporation, Valspar Corporation and Gen-Probe Incorporated
(through November 2007).
Experience attributes: Dr. Jemison
satisfies the financial literacy requirements of the NYSE, has
knowledge about our industries, provides diversity of background
and viewpoint, has experience in the health care field, and has
compensation, governance and public company board experience.
James M. Jenness,
63,
Director since 2007
Chairman of the
Board, Kellogg Company
Mr. Jenness was elected Chairman of the Board of Kellogg
Company, a producer of cereal and convenience foods, in 2005. He
also served as Chief Executive Officer of Kellogg from 2004
through 2006. Mr. Jenness was Chief Executive Officer of
Integrated Merchandising Systems LLC, a market leader in
outsource management for retail promotion and branded
merchandising, from 1997 to 2004. He served in various positions
of increasing responsibility at Leo Burnett Company,
Kelloggs major advertising agency partner, from 1974 to
1997, including as Vice Chairman, Chief Operating Officer and
Director. He is a senior director of Childrens Memorial
Hospital and a director of Mercy Home for Boys and Girls. He
also serves on the DePaul University College of Commerce
Advisory Council, is Vice Chairman of DePauls Board of
Trustees and is co-trustee of the W. K. Kellogg Foundation Trust.
Public company boards served on since 2005: Kellogg Company.
Experience attributes: Mr. Jenness
satisfies the financial literacy requirements of the NYSE, has
leadership experience as a chief executive officer, has
knowledge about our industries, has international experience and
experience with branded consumer packaged goods, and has
marketing, compensation, governance and public company board
experience.
Ian C. Read,
56,
Director since 2007
Senior Vice
President, Pfizer, Inc.
Mr. Read is a Senior Vice President of Pfizer, Inc., a drug
manufacturer, and Group President of its Worldwide
Biopharmaceutical Businesses. Mr. Read joined Pfizer in
1978 in its financial organization. He worked in Latin America
through 1995, holding positions of increasing responsibility,
and was appointed President of the Pfizer International
Pharmaceuticals Group, Latin America/Canada in 1996. In 2000,
Mr. Read was named Executive Vice President of
Europe/Canada and was named a corporate Vice President in 2001.
Experience attributes: Mr. Read satisfies
the financial literacy requirements of the NYSE and has a
background in finance, has leadership experience as a senior
executive officer, has knowledge about our industries, has
international experience and experience in the health care
field, and has marketing and compensation experience.
Linda Johnson
Rice,
52,
Director since 1995
Chairman and
Chief Executive Officer, Johnson Publishing Company,
Inc.
Ms. Johnson Rice is Chairman and Chief Executive Officer of
Johnson Publishing Company, Inc., a multi-media company. She
joined that company in 1980, became Vice President in 1985, was
elected
16
President and Chief Operating Officer in 1987 and became
Chairman and Chief Executive Officer in 2008. Ms. Johnson
Rice is a director of Omnicom Group, Inc.
Public company boards served on since 2005: Bausch &
Lomb Incorporated (through October 2007), MoneyGram
International, Inc. (through March 2008) and Omnicom Group,
Inc.
Experience attributes: Ms. Johnson Rice
satisfies the financial literacy requirements of the NYSE, has
leadership experience as a chief executive officer, provides
diversity of background and viewpoint, has international
experience, and has marketing, compensation, governance and
public company board experience.
Marc J. Shapiro,
62,
Director since 2001
Retired Vice
Chairman, JPMorgan Chase & Co.
Mr. Shapiro retired in 2003 as Vice Chairman of JPMorgan
Chase & Co., a financial services company. Before
becoming Vice Chairman of JPMorgan Chase & Co. in
1997, Mr. Shapiro was Chairman, President and Chief
Executive Officer of Chase Bank of Texas, a wholly-owned
subsidiary of JPMorgan Chase & Co., from 1989 until
1997. He now serves as a consultant to JPMorgan
Chase & Co. as a non-executive Chairman of its Texas
operations. Mr. Shapiro is a member of the board of
directors of The Mexico Fund, and a trustee of Weingarten Realty
Investors. He also serves on the boards of M.D. Anderson Cancer
Center, Baylor College of Medicine, Rice University, BioHouston
and the Menninger Clinic.
Public company boards served on since 2005: Burlington Northern
Santa Fe Corporation (through February 2010), The Mexico
Fund (since March 2006) and Weingarten Realty Trust.
Experience attributes: Mr. Shapiro
satisfies the financial literacy requirements of the NYSE and
has a banking and finance background, has leadership experience
as a chief executive officer, provides diversity of background
and viewpoint, and has compensation, governance and public
company board experience.
|
|
G.
|
Craig Sullivan,
70,
Director since 2004
|
Retired Chairman
and Chief Executive Officer, The Clorox Company
Mr. Sullivan retired as Chairman and Chief Executive
Officer of The Clorox Company, a consumer products company, in
2003. He joined The Clorox Company in 1971 and held a number of
senior sales and management positions during his career,
culminating in his election as Chief Executive Officer and
Chairman of the Board in 1992. Mr. Sullivan also serves as
a director of Mattel, Inc., The Goodyear Tire & Rubber
Company and The American Ireland Fund. He also serves on the
capital campaign committee for St. Anthonys Foundation in
San Francisco and is a member of Hoover Institutions
Board of Overseers.
Public company boards served on since 2005: Mattel, Inc. and The
Goodyear Tire & Rubber Company (since April 2006).
Experience attributes: Mr. Sullivan
satisfies the financial literacy requirements of the NYSE, has
leadership experience as a chief executive officer, has
knowledge about our industries, has international experience and
experience with branded consumer packaged goods, and has
marketing, compensation, governance and public company board
experience.
Compensation of
Directors
Directors who are not officers or employees of the Corporation
or any of its subsidiaries, affiliates or equity companies are
Outside Directors for compensation purposes. Outside
Directors are compensated for their services under our Outside
Directors Compensation Plan, which we adopted in 2001. Our
objectives for Outside Director compensation are to remain
competitive with the compensation paid to
17
outside directors of comparable companies, to keep pace with
changes in practices in director compensation, to attract
qualified candidates for Board service and to reinforce our
practice of encouraging stock ownership by our directors. In
2008, to assist the Nominating and Corporate Governance
Committee in assessing and determining appropriate, competitive
Outside Director compensation, the Committee engaged Mercer, an
outside compensation consultant. Based on that assessment, in
2008 the Committee recommended to the Board, and the Board
approved, the Outside Director compensation for 2009 and 2010.
In 2009, each Outside Director received:
|
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|
|
An annual cash retainer of $85,000 payable quarterly in
advance; and
|
|
|
|
An annual grant of restricted share units with a value of
$140,000, effective the first business day of the year.
|
Outside Directors who join the Board during a calendar year
receive the full quarterly amount of the annual retainer for the
quarter in which they join the Board and each quarter
thereafter, and a pro-rated grant of restricted share units.
Outside Directors who were also chairmen of the Audit,
Management Development and Compensation and Nominating and
Corporate Governance Committees each received an additional
grant of restricted share units with a value of $20,000, and the
Lead Director received an additional grant of restricted share
units with a value of $30,000. In addition, we reimbursed
Outside Directors for expenses incurred as a result of attending
Board or committee meetings.
Restricted share units are not shares of our common stock.
Rather, restricted share units represent the right to receive an
amount, payable in shares of our common stock, equal to the
value of a specified number of shares of our common stock within
90 days following the restricted period. The restricted
period for the restricted share units begins on the date of
grant and expires on the date the Outside Director retires from
or otherwise terminates service on the Board. During the
restricted period, restricted share units may not be sold,
assigned, transferred or otherwise disposed of, or mortgaged,
pledged or otherwise encumbered. Outside Directors also receive
additional restricted share units equivalent in value to the
dividends that would have been paid to them if the restricted
share units granted to them were shares of our common stock.
2009 Outside
Director Compensation
The following table sets forth the compensation paid to each
Outside Director in 2009 for his or her service as a director:
|
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|
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|
|
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Fees
|
|
|
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All Other
|
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|
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Earned
|
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Stock
|
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Compen-
|
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or Paid in
|
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Awards
|
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sation
|
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Name
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Cash($)
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($)(1)(2)(3)
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($)(4)
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Total($)(5)
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John R. Alm
|
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85,000
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140,000
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|
|
0
|
|
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225,000
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Dennis R. Beresford
|
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85,000
|
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160,000
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|
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0
|
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245,000
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John F. Bergstrom
|
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85,000
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140,000
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10,000
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235,000
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Abelardo E. Bru
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85,000
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140,000
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10,000
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235,000
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Robert W. Decherd
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85,000
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140,000
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0
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225,000
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Mae C. Jemison, M.D.
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85,000
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140,000
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0
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225,000
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James M. Jenness
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85,000
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160,000
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10,000
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255,000
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Ian C. Read
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85,000
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140,000
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0
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225,000
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Linda Johnson Rice
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85,000
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160,000
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0
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245,000
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Marc J. Shapiro
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85,000
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170,000
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0
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255,000
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G. Craig Sullivan
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85,000
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140,000
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10,000
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235,000
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18
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(1) |
|
Amounts shown reflect the grant date fair value of those grants,
determined in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification
(ASC) Topic 718 Stock Compensation
(ASC Topic 718) for restricted share unit awards
granted pursuant to our Outside Directors Compensation
Plan. See Note 9 to our audited consolidated financial
statements included in our Annual Report on
Form 10-K
for 2009 for the assumptions used in valuing these restricted
share units. |
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(2) |
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Restricted share unit awards were granted on January 5,
2009. The number of restricted share units granted on this date
is set forth below. |
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Restricted Share
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Units
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Name
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Granted in 2009(#)
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John R. Alm
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2,610
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Dennis R. Beresford
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2,982
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John F. Bergstrom
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2,610
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Abelardo E. Bru
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2,610
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Robert W. Decherd
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2,610
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Mae C. Jemison, M.D.
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2,610
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James M. Jenness
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2,982
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Ian C. Read
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2,610
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Linda Johnson Rice
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2,982
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Marc J. Shapiro
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3,169
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G. Craig Sullivan
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2,610
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(3) |
|
As of December 31, 2009, Outside Directors had the
following stock awards outstanding: |
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Restricted
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Restricted
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Stock
|
Name
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Stock(#)
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Share Units(#)
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Options(#)
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John R. Alm
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0
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8,941
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0
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Dennis R. Beresford
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0
|
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16,888
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5,084
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John F. Bergstrom
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3,000
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15,168
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2,745
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Abelardo E. Bru
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0
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9,905
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0
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Robert W. Decherd
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3,000
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17,653
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8,236
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Mae C. Jemison, M.D.
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0
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15,168
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5,084
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James M. Jenness
|
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0
|
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7,013
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0
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Ian C. Read
|
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0
|
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5,502
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0
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Linda Johnson Rice
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3,000
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16,535
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5,084
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Marc J. Shapiro
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0
|
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17,080
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17,924
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G. Craig Sullivan
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0
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11,484
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0
|
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(4) |
|
All Other Compensation consists of charitable matching gifts
paid in 2009 under the Kimberly-Clark Foundations Matching
Gifts Program to a charity designated by the director. This
program is available to all employees and directors of the
Corporation. Under this program, the Kimberly-Clark Foundation
matches employees and directors financial
contributions to qualified educational and charitable
organizations in the United States on a
dollar-for-dollar
basis, up to $10,000 per person per calendar year. |
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(5) |
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During 2009, Outside Directors received credit for cash
dividends on restricted stock held by them. These dividends are
credited to interest bearing accounts maintained by us on behalf
of those Outside Directors with restricted stock. Earnings on
those accounts are not included in the Outside Director
Compensation Table because the earnings were not above market or
preferential. Also in 2009, Outside Directors received
additional restricted share units with a value equal to the
dividends paid during the year on our common stock on the
restricted share units held by them. Because we factor the |
19
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value of the right to receive dividends into the grant date fair
value of the restricted stock and restricted share units awards,
the dividends and dividend equivalents received by Outside
Directors are not included in the Outside Director Compensation
table. The dividends credited on restricted stock and additional
restricted share units credited in 2009 were as follows: |
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|
|
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|
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Number of
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Restricted
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Grant Date
|
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Dividends
|
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Share Units
|
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Fair Value of
|
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Credited on
|
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Credited for
|
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Restricted Share
|
Name
|
|
Restricted Stock($)
|
|
Dividends in 2009(#)
|
|
Units Credited($)
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|
John R. Alm
|
|
|
0
|
|
|
|
360.11
|
|
|
|
19,213
|
|
Dennis R. Beresford
|
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|
0
|
|
|
|
701.25
|
|
|
|
37,406
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John F. Bergstrom
|
|
|
7,140
|
|
|
|
630.61
|
|
|
|
33,638
|
|
Abelardo E. Bru
|
|
|
0
|
|
|
|
401.99
|
|
|
|
21,447
|
|
Robert W. Decherd
|
|
|
7,140
|
|
|
|
738.52
|
|
|
|
39,392
|
|
Mae C. Jemison, M.D.
|
|
|
0
|
|
|
|
630.61
|
|
|
|
33,638
|
|
James M. Jenness
|
|
|
0
|
|
|
|
272.34
|
|
|
|
14,533
|
|
Ian C. Read
|
|
|
0
|
|
|
|
210.73
|
|
|
|
11,248
|
|
Linda Johnson Rice
|
|
|
7,140
|
|
|
|
685.93
|
|
|
|
36,589
|
|
Marc J. Shapiro
|
|
|
0
|
|
|
|
707.60
|
|
|
|
37,746
|
|
G. Craig Sullivan
|
|
|
0
|
|
|
|
470.55
|
|
|
|
25,103
|
|
Other than the cash retainer, grants of restricted share units
and the other compensation previously described, no Outside
Director received any compensation or perquisites from us for
services as a director in 2009.
A director who is not an Outside Director does not receive any
compensation for services as a member of the Board or any
committee, but is reimbursed for expenses incurred as a result
of the services.
The Board of Directors unanimously recommends a vote FOR the
election of the twelve nominees for director.
PROPOSAL 2.
RATIFICATION OF AUDITORS
The Audit Committee of the Board of Directors has selected
Deloitte & Touche LLP as the independent registered
public accounting firm to audit our financial statements for
2010, subject to ratification by the stockholders. If the
stockholders do not ratify the selection of Deloitte &
Touche LLP, the selection of other independent auditors will be
considered by the Audit Committee. Deloitte & Touche
LLP have been our independent auditors since 1928.
Representatives of Deloitte & Touche LLP are expected
to be present at the Annual Meeting with the opportunity to make
a statement if they desire to do so and will be available to
respond to appropriate questions.
Principal
Accounting Firm Fees
The aggregate fees (excluding value added taxes) of the
Corporation and its subsidiaries with respect to the fiscal
years ended December 31, 2009 and 2008 by the
Corporations principal accounting firm,
20
Deloitte & Touche LLP, the member firms of Deloitte
Touche Tohmatsu and their respective affiliates (collectively,
Deloitte), were:
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|
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|
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2009
|
|
|
2008
|
|
|
Audit Fees(1)
|
|
$
|
10,260,000
|
|
|
$
|
9,959,000
|
|
Audit-Related Fees(2)
|
|
|
570,000
|
|
|
|
686,000
|
|
Tax Fees(3)
|
|
|
1,288,000
|
|
|
|
1,530,000
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(1) |
|
These amounts represent fees billed or expected to be billed for
professional services rendered by Deloitte for the audit of the
Companys annual financial statements for each of the
fiscal years ended December 31, 2009 and December 31,
2008, and the reviews of the financial statements included in
the Companys
Forms 10-Q
and for services that are normally provided by the independent
registered public accounting firm in connection with statutory
or regulatory filings or engagements for each of those fiscal
years. These amounts include fees for consolidated financial
audits, statutory audits, comfort letters, attest services,
consents, assistance with and review of SEC filings and other
related matters. These amounts also include an audit of internal
control over financial reporting pursuant to Section 404 of
the Sarbanes-Oxley Act of 2002. |
|
(2) |
|
These amounts represent aggregate fees by Deloitte for assurance
and related services reasonably related to the performance of
the audit or review of our financial statements for the fiscal
years ended December 31, 2009 and December 31, 2008,
that are not included in the audit fees listed above. These
services comprise engagements to perform required agreed upon
procedures. 2009 and 2008 fees include work with respect to
employee benefit plans, due diligence assistance and other
matters. |
|
(3) |
|
These amounts represent Deloittes aggregate fees for tax
compliance, tax advice and tax planning for each of the fiscal
years ended December 31, 2009 and December 31, 2008. |
Audit Committee
Approval of Audit and Non-Audit Services
All audit and non-audit services provided by Deloitte to the
Corporation are pre-approved by the Audit Committee using the
following procedures. At or before the first meeting of the
Audit Committee each year, our Vice President and Controller
prepares a detailed memorandum outlining the audit services to
be provided by Deloitte together with the related fees. In
addition, our business and staff units prepare individual
requests for non-audit services to be provided by Deloitte
during the year. These requests describe the services to be
provided, the estimated cost of these services, why the
requested service is not inconsistent with applicable auditor
independence rules and why it is appropriate to have Deloitte
provide such services. Our Vice President and Controller reviews
and summarizes the individual non-audit service requests and
fees (separately describing audit-related services, tax services
and other services) to be provided by Deloitte. Before each
subsequent meeting of the Committee, our Vice President and
Controller prepares an additional memorandum that includes
updated information regarding approved services and highlights
any new audit and non-audit services to be provided by Deloitte.
All new non-audit services to be provided are described in
individual requests for services. The Audit Committee reviews
these memoranda and the individual requests for non-audit
services and approves the services if acceptable to the
Committee.
To ensure prompt handling of unexpected matters, the Committee
delegates to the Chairman of the Audit Committee the authority
to amend or modify the list of audit and non-audit services and
fees between meetings, as long as the additional or amended
services do not affect Deloittes independence under
applicable rules. The Chairman reports action taken to the Audit
Committee at its next Committee meeting.
All Deloitte services and fees in 2009 and 2008 were
pre-approved by the Audit Committee.
The Board of Directors unanimously recommends a vote FOR
ratification of this selection.
21
Audit Committee
Report
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee assists the Board in fulfilling
its responsibility for oversight of the quality and integrity of
the accounting, auditing and financial reporting practices of
the Corporation.
In discharging its oversight responsibility as to the audit
process, the Audit Committee obtained from the independent
registered public accounting firm (the auditors) a
formal written statement describing all relationships between
the auditors and the Corporation that might bear on the
auditors independence, as required by Public Company
Accounting Oversight Board (PCAOB) Rule 3526,
Communication with Audit Committees Concerning
Independence, discussed with the auditors any relationships
that may impact their objectivity and independence and satisfied
itself as to the auditors independence. The Audit
Committee also discussed with management, the internal auditors
and the auditors the quality and adequacy of the
Corporations internal controls and the internal audit
functions organization, responsibilities and budget and
staffing. The Audit Committee reviewed with both the auditors
and the internal auditors their audit plans, audit scope and
identification of audit risks.
The Audit Committee discussed and reviewed with the auditors all
communications required by the auditing standards of the PCAOB,
including those required by PCAOB AU 380, Communications
with Audit Committees, and, with and without management
present, discussed and reviewed the results of the
auditors examination of the financial statements and the
Corporations internal control over financial reporting.
The Committee also discussed the results of the internal audit
examinations.
The Audit Committee discussed and reviewed the audited financial
statements of the Corporation as of and for the fiscal year
ended December 31, 2009, with management and the auditors.
The Audit Committee also reviewed managements assessment
of the effectiveness of internal controls as of
December 31, 2009 and discussed the auditors
examination of the effectiveness of the Corporations
internal control over financial reporting. Management has the
responsibility for preparing the Corporations financial
statements in accordance with accounting principles generally
accepted in the United States of America (GAAP) and for
establishing and maintaining the Corporations internal
control over financial reporting. The auditors have the
responsibility for performing an independent audit of the
Corporations financial statements and internal control
over financial reporting, and expressing opinions on the
conformity of the Corporations financial statements with
GAAP and the effectiveness of internal control over financial
reporting.
Based on the above-mentioned review and discussions with
management and the auditors, the Audit Committee recommended to
the Board that the Corporations audited financial
statements be included in its Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009, for filing
with the Securities and Exchange Commission. The Audit Committee
also has selected and recommended to stockholders for
ratification the reappointment of Deloitte & Touche
LLP as the independent registered public accounting firm for
2010.
AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
Dennis R. Beresford, Chairman
John R. Alm
John F. Bergstrom
Robert W. Decherd
Linda Johnson Rice
22
PROPOSAL 3. STOCKHOLDER
PROPOSAL REGARDING
SPECIAL SHAREHOLDER MEETINGS
Mr. Nick Rossi, P.O. Box 249, Boonville,
California 95415, owning 3,000 shares of our common stock,
has given notice that he or his designee intends to present for
action at the Annual Meeting the resolution set forth below. The
Board of Directors opposes this stockholder proposal for the
reasons set forth below the proposal.
Proxies solicited by management will be voted against the
stockholder proposal below unless stockholders specify a
contrary choice in their proxies.
Stockholder
Proposal
In accordance with applicable rules of the SEC, we have set
forth Mr. Rossis proposal below:
3
Special Shareowner Meetings
RESOLVED, Shareowners ask our board to take the steps necessary
to amend our bylaws and each appropriate governing document to
give holders of 10% of our outstanding common stock (or the
lowest percentage allowed by law above 10%) the power to call
special shareowner meetings. This includes a combination of
small shareowners who can combine their holdings to equal the
above 10% of holders. This includes that such bylaw
and/or
charter text will not have any exception or exclusion conditions
(to the fullest extent permitted by state law) that apply only
to shareowners but not to management
and/or the
board.
Special meetings allow shareowners to vote on important matters,
such as electing new directors, that can arise between annual
meetings. If shareowners cannot call special meetings investor
returns may suffer. Shareowners should have the ability to call
a special meeting when a matter merits prompt attention. This
proposal does not impact our boards current power to call
a special meeting.
This proposal topic won more than 60% support the following
companies in 2009: CVS Caremark (CVS), Sprint Nextel (S),
Safeway (SWY), Motorola (MOT) and R. R. Donnelley (RRD). William
Steiner and Nick Rossi sponsored these proposals.
Please encourage our board to respond positively to this
proposal which could exceed the outstanding 61%-support for this
topic at our 2008 annual meeting: Special Shareowner
Meetings Yes on 3.
Response of the
Corporation to Stockholder Proposal
The Board of Directors unanimously recommends a vote AGAINST
this proposal for the reasons set forth below.
The Board recommends a vote against this proposal because the
Corporations Certificate of Incorporation already permits
stockholders to request that a special meeting be called. In
2009, the Board recommended that stockholders approve an
amendment to the Corporations Certificate of Incorporation
to allow holders of 25 percent or more of the
Corporations shares to request that a special meeting of
stockholders be called, subject to the Corporations By-Law
procedures. That recommendation was made in response to a
previous proposal from Mr. Chris Rossi requesting that
holders of 10 percent to 25 percent of outstanding
stock be granted the right to call a special meeting.
Stockholders can read the Corporations Certificate of
Incorporation and By-Laws in the Investors section of our
website at www.kimberly-clark.com.
The Board believes that this ownership threshold of
25 percent to request a special meeting helps to ensure
that a significant number of stockholders considers a particular
matter important enough to merit a special meeting. The Board
believes that the proposals 10 percent threshold is
too low and creates the risk that a small minority of
stockholders could trigger a special meeting and the resulting
extraordinary financial and administrative expense of holding a
special meeting. We maintain governance mechanisms
23
that afford management and the Board the ability to respond to
proposals and concerns of all stockholders, regardless of the
level of share ownership.
As a result, the Board believes the current rights of
stockholders to call a special meeting respond to the essence of
the proposal.
The Board unanimously recommends that the stockholders vote
AGAINST the adoption of this proposal.
PART FOUR
OTHER IMPORTANT INFORMATION
SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of
December 31, 2009 regarding the number of shares of our
common stock beneficially owned by each director and nominee, by
each executive officer named in Executive
Compensation (collectively, the named executive
officers) and by all directors, nominees and executive
officers as a group.
|
|
|
|
|
|
|
Amount and Nature of
|
|
Name
|
|
Beneficial Ownership(1)(2)(3)(4)(5)
|
|
|
Robert E. Abernathy
|
|
|
591,596
|
(6)
|
John R. Alm
|
|
|
12,441
|
(7)
|
Dennis R. Beresford
|
|
|
23,472
|
(6)
|
John F. Bergstrom
|
|
|
33,914
|
(6)(8)
|
Robert W. Black
|
|
|
110,433
|
(6)
|
Abelardo E. Bru
|
|
|
9,905
|
|
Mark A. Buthman
|
|
|
370,782
|
(6)
|
Robert W. Decherd
|
|
|
49,139
|
(6)(9)
|
Thomas J. Falk
|
|
|
1,774,664
|
(6)(10)
|
Mae C. Jemison, M.D.
|
|
|
20,383
|
(6)
|
James M. Jenness
|
|
|
7,013
|
|
Anthony J. Palmer
|
|
|
75,065
|
(6)(11)
|
Ian C. Read
|
|
|
6,202
|
|
Linda Johnson Rice
|
|
|
26,919
|
(6)(12)
|
Marc J. Shapiro
|
|
|
45,005
|
(6)
|
G. Craig Sullivan
|
|
|
13,484
|
(13)
|
All directors, nominees and executive officers as a group
(21 persons)
|
|
|
3,759,659
|
(6)(14)
|
|
|
|
(1) |
|
Except as otherwise noted, the directors, nominees and named
executive officers, and the directors, nominees and executive
officers as a group, have sole voting and investment power with
respect to the shares listed. |
|
(2) |
|
Each director, nominee and named executive officer, and all
directors, nominees and executive officers as a group own less
than one percent of the outstanding shares of our common stock. |
|
(3) |
|
A portion of the shares owned by certain executive officers and
directors may be held in margin accounts at brokerage firms.
Under the terms of the margin account agreements, stocks and
other assets held in the account may be pledged to secure margin
obligations under the account. As of the date of this proxy
statement, none of the executive officers or directors has any
outstanding margin obligations under any of these accounts. |
|
(4) |
|
For each named executive officer, share amounts include
restricted share units granted under our 2001 Equity
Participation Plan (the 2001 Plan) as indicated
below. Amounts representing performance-based restricted share
units in the table below represent target levels for these |
24
|
|
|
|
|
awards. See Part Four Other Important
Information Executive Compensation
Outstanding Equity Awards for additional information
regarding these grants. |
|
|
|
|
|
|
|
|
|
|
|
Time-Vested
|
|
Performance-Based
|
|
|
Restricted Share
|
|
Restricted Share
|
Name
|
|
Units(#)
|
|
Units(#)
|
|
Robert E. Abernathy
|
|
|
19,072
|
|
|
|
59,920
|
|
Robert W. Black
|
|
|
12,278
|
|
|
|
36,338
|
|
Mark A. Buthman
|
|
|
16,920
|
|
|
|
47,575
|
|
Thomas J. Falk
|
|
|
79,247
|
|
|
|
205,013
|
|
Anthony J. Palmer
|
|
|
10,101
|
|
|
|
27,884
|
|
|
|
|
(5) |
|
For each director who is not an officer or employee of the
Corporation or any of its subsidiaries or equity companies,
share amounts include restricted share units and shares of
restricted stock granted under our Outside Directors
Compensation Plan. These awards are restricted and may not be
transferred or sold until the Outside Director retires from or
otherwise terminates service on the Board. See footnote
(3) to the 2009 Outside Director Compensation table for the
number of shares of restricted stock and restricted share units
that the Outside Directors had outstanding as of
December 31, 2009. |
|
(6) |
|
Includes shares of common stock held by the trustee of the
Incentive Investment Plan and the Retirement Contribution Plan
for the benefit of, and that are attributable to, the accounts
in the plans of, the named executive officers. Also includes the
following shares which could be acquired within 60 days of
December 31, 2009 by: |
|
|
|
|
|
|
|
Number of Shares That Could be Acquired
|
Name
|
|
Within 60 Days of December 31, 2009
|
|
Robert E. Abernathy
|
|
|
405,110
|
|
Dennis R. Beresford
|
|
|
5,084
|
|
John F. Bergstrom
|
|
|
2,745
|
|
Robert W. Black
|
|
|
59,174
|
|
Mark A. Buthman
|
|
|
245,316
|
|
Robert W. Decherd
|
|
|
8,236
|
|
Thomas J. Falk
|
|
|
1,148,400
|
|
Mae C. Jemison, M.D.
|
|
|
5,084
|
|
Anthony J. Palmer
|
|
|
31,251
|
|
Linda Johnson Rice
|
|
|
5,084
|
|
Marc J. Shapiro
|
|
|
17,924
|
|
All directors, nominees and executive officers as a group
(21 persons)
|
|
|
2,322,496
|
|
|
|
|
(7) |
|
Includes 3,500 shares held by the trustee of the
supplemental 401(k) plan maintained by Mr. Alms
former employer. |
|
(8) |
|
Includes 5,000 shares held by Bergstrom Investments L.P., a
partnership of which Mr. Bergstrom and his brother are
general partners and their respective children are limited
partners, and of which Mr. Bergstrom shares voting control. |
|
(9) |
|
Voting and investment power with respect to 23,250 of the shares
is shared with Mr. Decherds spouse. |
|
(10) |
|
Includes 39,207 shares held by TKM, Ltd. and
291,205 shares held by TKM II, Ltd. TKM, Ltd. is a family
limited partnership which is owned by (i) an entity owned
by a trust, controlled by Mr. Falk and his spouse as
general partner, (ii) a trust controlled by Mr. Falk
and his spouse as limited partners, and (iii) two family
trusts previously established for the benefit of
Mr. Falks child as limited partners. TKM II, Ltd. is
a family limited partnership which is owned by (i) an
entity owned by a trust, controlled by Mr. Falk and his
spouse as general partner, and (ii) a trust controlled by
Mr. Falk and his spouse as limited partners. Mr. Falk
shares voting control over the shares held by TKM, Ltd. and TKM
II, Ltd. |
25
|
|
|
|
|
TKM, Ltd. also has the right to acquire 33,775 shares
within 60 days of December 31, 2009. These
33,775 shares are included in the 1,148,400 shares
listed for Mr. Falk in footnote (6) above. |
|
(11) |
|
Does not include 2,492 phantom stock units held by
Mr. Palmer in the supplemental Retirement Contribution
Program. |
|
(12) |
|
Includes 300 shares held by a trust for the benefit of
Ms. Johnson Rices daughter and for which
Ms. Johnson Rice serves as a co-trustee and shares voting
and investment power. |
|
(13) |
|
Includes 2,000 shares held by a trust for the benefit of
Mr. Sullivans children and for which
Mr. Sullivan serves as the sole trustee. |
|
(14) |
|
Voting and investment power with respect to 407,165 of the
shares is shared. |
To further align managements financial interests with
those of the stockholders, the Corporation maintains stock
ownership guidelines for key managers, including the named
executive officers. See Part Four Other
Important Information Executive
Compensation Compensation Discussion and
Analysis Additional Compensation
Information Target Stock Ownership Guidelines.
In addition, our Corporate Governance Policies provide that,
within three years of joining the Board, all Outside Directors
should own an amount of the Corporations common stock or
share units at least equal in value to three times the annual
Board cash compensation. For the purpose of these stock
ownership guidelines, a director is deemed to own
beneficially-owned shares, as well as restricted stock and
restricted share units (whether or not any applicable
restrictions have lapsed), but not stock options (whether vested
or unvested). As of December 31, 2009, the stock ownership
levels specified by these guidelines had been met or exceeded by
each of the Outside Directors.
The following table sets forth the information, as of
December 31, 2009, regarding persons or groups known to us
to be beneficial owners of more than five percent of our common
stock.
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Percentage
|
|
|
of Common Stock
|
|
|
of Common
|
Name and Address of Beneficial Owner
|
|
Beneficially Owned
|
|
|
Stock Outstanding
|
|
BlackRock, Inc.(1)
40 East
52nd
Street
New York, NY 10022
|
|
|
28,868,164
|
|
|
6.95%
|
|
|
|
(1) |
|
The address and number of shares of our common stock
beneficially owned by BlackRock, Inc. are based on the
Schedule 13G filed by BlackRock, Inc. with the SEC on
January 29, 2010. According to the filing, BlackRock, Inc.
had sole voting and dispositive power with respect to
28,868,164 shares, and did not have shared voting or
dispositive power as to any shares. |
26
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This Compensation Discussion and Analysis is intended to provide
investors with an understanding of our compensation policies and
decisions regarding compensation for our named executive
officers for 2009. Our named executive officers are our Chief
Executive Officer, Chief Financial Officer and our three other
most highly compensated executive officers.
We will discuss and analyze the following topics in this
Compensation Discussion and Analysis:
|
|
|
|
|
|
|
|
|
Executive Summary
|
|
|
28
|
|
|
|
|
|
Committee Assessment of 2009 Performance
|
|
|
28
|
|
|
|
|
|
Establishment of 2009 Direct Annual Compensation
|
|
|
28
|
|
|
|
|
|
Overview of Annual Cash Incentive Paid for 2009
Performance
|
|
|
28
|
|
|
|
|
|
Other Key Actions Taken Regarding Executive
Compensation Program
|
|
|
28
|
|
|
|
|
|
Executive Compensation Objectives and Policies
|
|
|
29
|
|
|
|
|
|
Elements of Executive Compensation Program
|
|
|
30
|
|
|
|
|
|
Peer Groups for Executive Compensation Purposes
|
|
|
31
|
|
|
|
|
|
2009 Peer Groups
|
|
|
31
|
|
|
|
|
|
2010 Peer Group Review
|
|
|
32
|
|
|
|
|
|
Direct Annual Compensation
|
|
|
32
|
|
|
|
|
|
Process for Setting Direct Annual Compensation
|
|
|
33
|
|
|
|
|
|
Chief Executive Officer Direct Annual Compensation
|
|
|
33
|
|
|
|
|
|
Annual Cash Compensation
|
|
|
34
|
|
|
|
|
|
Base Salary
|
|
|
34
|
|
|
|
|
|
Annual Cash Incentives
|
|
|
34
|
|
|
|
|
|
Committee Assessment of 2009 Annual Cash Incentive
Performance
|
|
|
36
|
|
|
|
|
|
Payouts for 2009
|
|
|
37
|
|
|
|
|
|
Information Regarding Annual Cash Incentive Payouts
from 2005 through 2009
|
|
|
37
|
|
|
|
|
|
Long-Term Equity Incentive Compensation
|
|
|
37
|
|
|
|
|
|
Performance-Based Restricted Share Unit Awards
|
|
|
38
|
|
|
|
|
|
2009-2011 Performance-Based Restricted Share Unit
Goals and Targets
|
|
|
38
|
|
|
|
|
|
2006-2008 Performance-Based Restricted Share Unit
Goals and Targets
|
|
|
38
|
|
|
|
|
|
Stock Option Awards
|
|
|
39
|
|
|
|
|
|
Retirement Benefits
|
|
|
39
|
|
|
|
|
|
Pension Plans
|
|
|
39
|
|
|
|
|
|
Defined Contribution Plans
|
|
|
40
|
|
|
|
|
|
Other Compensation
|
|
|
40
|
|
|
|
|
|
Post-Termination Benefits
|
|
|
41
|
|
|
|
|
|
Severance Pay Plan
|
|
|
41
|
|
|
|
|
|
Executive Severance Plan
|
|
|
41
|
|
|
|
|
|
Executive Compensation for 2010
|
|
|
41
|
|
|
|
|
|
Base Salary
|
|
|
41
|
|
|
|
|
|
Annual Cash Incentives
|
|
|
41
|
|
|
|
|
|
Long-Term Equity Incentive Compensation
|
|
|
42
|
|
|
|
|
|
Additional Compensation Information
|
|
|
42
|
|
|
|
|
|
Use of Independent Compensation Consultant
|
|
|
42
|
|
|
|
|
|
Role of the Chief Executive Officer in Compensation
Decisions
|
|
|
43
|
|
|
|
|
|
Analysis of Risks Arising from Design of Executive
Compensation Program
|
|
|
43
|
|
|
|
|
|
Timing of Long-Term Equity Grants
|
|
|
43
|
|
|
|
|
|
Policy on Incentive Compensation Claw-back
|
|
|
44
|
|
|
|
|
|
Target Stock Ownership Guidelines
|
|
|
44
|
|
|
|
|
|
Tax Deduction for Executive Compensation
|
|
|
44
|
|
|
|
|
|
27
Executive Summary
The Management Development and Compensation Committee (the
Committee) authorized an executive compensation
program in 2009 that is designed to achieve our executive
compensation objectives described below. Consistent with our
pay-for-performance
objective, a significant portion of the 2009 annual cash
compensation and long-term equity incentive compensation for our
named executive officers was performance-based.
Committee Assessment of 2009 Performance. The
Committee believes that management delivered positive results in
2009, not only in terms of annual performance, as reflected in
the annual cash incentives paid for 2009 performance, but also
in terms of a foundation for long-term performance, as reflected
in enhancements to our Global Business Plan. The Committee
believes these results further support our
pay-for-performance
objectives.
Establishment of 2009 Direct Annual
Compensation. In February 2009, while
establishing 2009 direct annual compensation (which consists of
annual cash compensation and long-term equity incentive
compensation granted in 2009) for our named executive
officers, the Committee considered the overall economic
environment and its anticipated impact on the Corporation and
the executive compensation practices of our peer groups. As a
result, Mr. Falks 2009 direct annual compensation
target was 18.3 percent lower than his 2008 direct annual
compensation target. The 2009 targets for the other named
executive officers were, on average, 13.8 percent lower
than the targets for 2008. For more information regarding the
components of the direct annual compensation targets, see
Direct Annual Compensation below.
In response to market conditions, when establishing the value of
long-term equity incentive compensation awards in February 2009,
the Committee decreased the target value of these awards for
Mr. Falk by 25 percent from the 2008 target value of
these awards. The target value of these awards for the other
named executive officers decreased, on average, by
23.1 percent from the 2008 target value.
In addition, the Committee did not increase the base salaries of
any of the named executive officers in 2009.
Mr. Falks base salary did not increase from 2007
through 2009.
Overview of Annual Cash Incentive Paid for 2009
Performance. In 2009, we delivered substantial
improvements in our gross and operating margins, resulting in
earnings per share of $4.52 that were significantly above our
target of $4.14. These margin improvements, along with working
capital improvements, contributed to a Return on Invested
Capital (ROIC) of 15.7 percent, compared to our
target of 14.25 percent. These earnings per share and ROIC
results were offset somewhat by our 2009 net sales of
$19.1 billion, which were slightly less than our target of
$19.4 billion. As a result, consistent with our
pay-for-performance
philosophy described below, the Committee determined that the
corporate performance component of the annual cash incentives
for 2009 should be 165 percent of target. As a result,
Mr. Falks annual incentive payout for 2009 was
165 percent of target, and after applying business unit or
staff function performance, payouts for the other named
executive officers ranged from 152 to 162 percent of
target. See Annual Cash Compensation Committee
Assessment of 2009 Annual Cash Incentive Performance for
more information regarding target levels and our 2009
performance.
Other Key Actions Taken Regarding Executive Compensation
Program. As part of the Committees ongoing
review of our executive compensation program in comparison to
developing trends, as well as in response to economic
conditions, several changes were implemented to our executive
compensation program in 2009, including:
|
|
|
|
|
dividend equivalents are no longer paid on unvested
performance-based restricted share units granted to the named
executive officers as of February 2009 and thereafter; instead,
dividend equivalents on these units are accumulated and will be
paid in additional shares after the performance-based restricted
share units vest, based on the actual number of shares that vest,
|
|
|
|
adoption of a policy by the Committee in February 2009 providing
that executive officers will no longer receive tax reimbursement
and a related
gross-up for
perquisites (including personal use of corporate aircraft),
except for certain relocation benefits,
|
28
|
|
|
|
|
adoption of a policy by the Committee in February 2009 that
limits the personal use of corporate aircraft by the Chief
Executive Officer to an aggregate annual incremental cost to the
Corporation of $100,000, and generally prohibits the personal
use of corporate aircraft by other executive officers unless
there is no incremental cost to the Corporation for the use,
|
|
|
|
reduction by the Committee of the maximum payout for annual cash
incentives from 228 percent to 200 percent of the
target payment amount to align with the practices of our peer
groups,
|
|
|
|
compensation and benefit service is no longer accruing under our
defined benefit pension plans for our named executive officers,
as well as most of our U.S. employees, for plan years after
2009, and
|
|
|
|
a review of the peer groups used for executive compensation
purposes and the adoption in April 2009 of using only the
Consumer Goods Peer Group, instead of using the average of this
peer group and the General Industry Peer Group, beginning with
the 2010 executive compensation program.
|
The Committee believes these measures to be appropriate in light
of evolving executive compensation practices, while still
providing a competitive compensation package to our executive
officers.
Executive Compensation Objectives and Policies
The Committee is responsible for establishing and administering
our policies governing the compensation of our elected officers,
including our named executive officers. Consistent with its
charter, the Committee has adopted executive compensation
policies that are designed to achieve the following objectives:
|
|
|
|
|
Quality of Talent. Attract and retain
executives whose abilities are considered essential to our
long-term success.
|
|
|
|
Pay-for-Performance. Support
a performance-oriented environment that rewards achievement of
our financial and non-financial goals.
|
|
|
|
Focus on Long-Term Success. Reward executives
for long-term strategic management and stockholder value
enhancement.
|
|
|
|
Stockholder Alignment. Align the financial
interest of our executives with those of stockholders.
|
These compensation objectives and policies seek to align the
compensation of our elected officers, including our named
executive officers, with the objectives of our Global Business
Plan. Our Global Business Plan, established by our senior
management and the Board, is designed to make the Corporation a
stronger and more competitive company and to increase our total
return to stockholders.
29
Elements of Executive Compensation Program
For 2009, the Committee authorized an executive compensation
program to effect these objectives. The following table provides
additional information regarding how the program is designed to
achieve these objectives:
|
|
|
|
|
|
|
Element
|
|
Objectives Achieved
|
|
Purpose
|
|
Target Competitive Position
|
|
Base salary
|
|
Pay-for-performance
Quality of talent
|
|
Provide annual cash income based on:
level of responsibility, performance and experience
comparison to market pay information
|
|
Compared to median of peer groups
Actual base salary will vary based on the individuals performance and experience in the position
|
|
|
|
|
|
|
|
Annual cash incentive
|
|
Pay-for-performance
|
|
Motivate and reward achievement of the following annual performance goals:
corporate key financial goals
other corporate financial and strategic performance goals
performance of the business unit or staff function of the individual, as applicable
|
|
Target compared to median of peer groups
Actual payout will vary based on actual corporate and business unit or staff function performance
|
|
|
|
|
|
|
|
Long-term equity incentive
|
|
Stockholder alignment
Focus on long-term success
Pay-for-performance
Quality of talent
|
|
Provide an incentive to deliver stockholder value and to achieve our long-term objectives, through awards of:
performance-based restricted share units
stock option grants
|
|
Target compared to median of peer groups (adjusted in 2009 to reflect anticipated reduced award levels based on market and economic conditions not included in peer group data)
Actual payout of performance-based restricted share units will also vary based on actual corporate performance
Actual payout will vary based on actual stock performance
|
|
|
|
|
|
|
|
Retirement benefits
|
|
Quality of talent
|
|
Provide competitive retirement plan benefits through pension
plans,
401(k) plan and other defined contribution plans
|
|
Benefits comparable to those of peer groups
|
|
|
|
|
|
|
|
Perquisites
|
|
Quality of talent
|
|
Provide minimal additional benefits
|
|
Subject to review and approval by the Committee on a
case-by-case basis
|
|
|
|
|
|
|
|
Post-termination compensation (severance and change in control)
|
|
Quality of talent
|
|
Encourage attraction and retention of executives critical to our long-term success and competitiveness:
Severance Pay Plan, which provides eligible employees with payments and benefits in the event of certain involuntary terminations
Executive Severance Plan, which provides executives payments in the event of a qualified separation of service following a change in control
|
|
Subject to review and approval by the Committee on a
case-by-case basis
|
When setting compensation for our executive officers, the
Committee considers direct annual compensation, which consists
of the base salary, annual cash incentive, and long-term equity
incentive compensation elements described above. While the
Committee reviews each of these compensation elements, the
Committees decisions regarding a particular element are
not necessarily impacted by other elements, other than to the
extent that they affect direct annual compensation. See
Direct Annual Compensation.
30
Peer Groups for Executive Compensation Purposes
2009 Peer Groups. To ensure that our
compensation programs are reasonable and competitive in the
marketplace, the Committee compared our programs to those at
other companies. To facilitate this comparison, in 2009 the
Committee used, with respect to the named executive officers,
two peer groups, the Consumer Goods Peer Group and the General
Industry Peer Group:
Consumer Goods
Peer Group
|
|
|
|
|
Anheuser-Busch Companies, Inc.
Avon Products, Inc.
Bristol-Myers Squibb Company
Campbell Soup Company
The Clorox Company
The Coca-Cola Company
Colgate-Palmolive Company
|
|
ConAgra Foods, Inc.
General Mills, Inc.
The Hershey Company
H.J. Heinz Company
Johnson & Johnson
Kellogg Company
Kraft Foods, Inc.
|
|
Newell Rubbermaid Inc.
Novartis AG
PepsiCo, Inc.
Pfizer Inc.
The Procter & Gamble
Company
Sara Lee Corporation
|
General
Industry Peer Group
|
|
|
|
|
3M Company
Aetna Inc.
Alcoa Inc.
Amerada Hess Corporation
American Electric Power
Anheuser-Busch Companies, Inc.
CIGNA Corporation
Colgate-Palmolive Company
Deere & Company
E. I. du Pont de Nemours and Company
Eastman Kodak Company
Eli Lilly and Company
Emerson Electric Co.
|
|
Fluor Corporation
FedEx Corporation
General Dynamics Corporation
General Mills, Inc.
Halliburton Company
The Hartford Financial Services Group, Inc.
Honeywell International Inc.
Illinois Tool Works Inc.
International Paper Company
Johnson Controls, Inc.
Marriott International, Inc.
Masco Corporation
McDonalds Corporation
|
|
Medtronic, Inc.
NIKE, Inc.
Qwest Communications
Raytheon Company
Sara Lee Corporation
Staples, Inc.
Texas Instruments
Incorporated
Textron Inc.
The Travelers Companies, Inc.
U.S. Bancorp
Union Pacific Railroad Co.
Washington Mutual, Inc.
Wyeth
Xerox Corporation
|
The Consumer Goods Peer Group represents companies in our
industry, while the General Industry Peer Group consists of
companies that are similar in size to us and against which the
Committee believes we compete for executive talent. The
Committee averages the results of the two peer groups together
for the purposes of establishing comparative data.
The peer groups are developed without consideration of
individual company compensation practices, and no company has
been included or excluded from our peer groups because they are
known to pay above-average or below-average compensation. The
Committee and compensation consultants retained by the Committee
and us also periodically review the peer groups, and the peer
groups are revised as appropriate to ensure that they continue
to represent similar global organizations with which we compete
for executive talent in the marketplace. There were no changes
in the composition of either peer group from 2008 prior to our
analysis regarding 2009 compensation. Although Anheuser-Busch
Companies, Inc. was included in our peer group analysis in
connection with the determination of our 2009 compensation, it
has been acquired and will not be included in our peer group
analysis for our 2010 compensation. Washington Mutual, Inc. and
Wyeth were also acquired following our analysis regarding 2009
compensation.
31
The following table sets forth comparative data regarding the
peer groups, at the time our 2009 compensation and performance
objectives were determined:
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Individual
|
|
|
Median Annual Revenue
|
|
Company Revenues
|
|
Consumer Goods Peer Group
|
|
$
|
13.7 billion
|
|
|
$
|
4.9 billion to $83.5 billion
|
|
General Industry Peer Group
|
|
$
|
19.0 billion
|
|
|
$
|
10.3 billion to $38.1 billion
|
|
Our net sales for 2008 were $19.4 billion.
2010 Peer Group Review. In April 2009, the
Committee reviewed its practice of using two peer groups for
executive compensation benchmarking purposes for our named
executive officers. The review indicated that market data for
the two peer groups have converged recently, leading to only a
small difference between the data provided by the two groups.
The review also noted that most of our peers use a single peer
group comprised of companies in similar industries and that the
use of a single peer group simplifies data analysis. Based on
its review, the Committee adopted the use of only the Consumer
Goods Peer Group for executive compensation benchmarking
purposes, beginning with the 2010 executive compensation
program. The Committee believes that this peer group represents
the companies against which we compete for executive talent,
customers and stockholders and that the use of only this peer
group does not create a material difference from our current use
of two peer groups.
Direct Annual Compensation
In setting 2009 compensation for our executive officers,
including our Chief Executive Officer, the Committee focused on
direct annual compensation, which consists of annual cash
compensation (base salary and annual cash incentive) and
long-term equity incentive compensation (performance-based
restricted share units and stock options). The Committee
considered annual cash and long-term equity incentive
compensation both separately and as a package to help ensure
that our executive compensation objectives are met.
Consistent with its approach to direct annual compensation, the
Committee established 2009 direct annual compensation targets
for each of our named executive officers. These target amounts
formed the basis for the Committees compensation decisions
in 2009, and the Committee believes that the 2009 target amounts
it established were appropriate and consistent with our
executive compensation objectives. For 2009, the direct annual
compensation targets for our named executive officers were as
follows:
|
|
|
|
|
|
|
2009 Direct Annual
|
Name
|
|
Compensation Target
|
|
Thomas J. Falk
|
|
$
|
8,940,000
|
|
Mark A. Buthman
|
|
$
|
2,646,000
|
|
Robert E. Abernathy
|
|
$
|
3,056,250
|
|
Robert W. Black
|
|
$
|
2,161,000
|
|
Anthony J. Palmer
|
|
$
|
1,750,000
|
|
The 2009 direct annual compensation target amounts differ from
the amounts set forth in the Summary Compensation Table because:
|
|
|
|
|
Annual cash incentive compensation is included at the target
level, while the Summary Compensation Table reflects the actual
amount earned for 2009.
|
|
|
|
As described below under Long-Term Equity Incentive
Compensation Stock Option Awards, for
compensation purposes the Committee values stock options
differently than the way they are required to be reflected in
the Summary Compensation Table.
|
|
|
|
In setting direct annual compensation targets, the Committee
does not include increases in pension or deferred compensation
earnings or other compensation, while those amounts are required
to be included in the Summary Compensation Table.
|
32
As shown in the following charts, performance-based compensation
(annual cash incentive, performance-based restricted share units
and stock options) constituted a significant portion of our
named executive officers direct annual compensation
targets. Similarly, a large percentage of the direct
compensation targets was in the form of equity
(performance-based restricted share units and stock options).
|
|
|
|
|
|
|
|
|
|
Process for Setting Direct Annual
Compensation. In setting the direct annual
compensation of our executive officers, the Committee evaluates
both market data provided by the compensation consultants and
information on the performance of each executive officer for
prior years. In order to remain competitive in the marketplace
for executive talent, the target levels for the executive
officers compensation elements, including our Chief
Executive Officer, are compared to the median of the peer groups
described above. Because of the anticipated effects of market
and economic conditions that occurred after the market data was
gathered, for 2009 the Committee also compared these target
levels to the peer groups assuming a 20 percent reduction
in the peer groups long-term equity incentive compensation
component. As a result, although target direct annual
compensation for most of our named executive officers was at or
near the adjusted median of the peer group data, it was below
the actual median of the peer group data.
In order to reinforce a
pay-for-performance
culture, targets for individual executive officers may be set
above or below this median depending on the individuals
performance in prior years and experience in the position, as
well as any applicable retention concerns. The Committee
believes that comparing target levels to the median (as well as
the adjusted median, as discussed above), setting targets as
described above, and providing incentive compensation
opportunities that will enable executives to earn above-target
compensation if they deliver above-target performance on their
performance goals, are consistent with the objectives of our
compensation policies. In particular, the Committee believes
that this approach enables us to attract and retain skilled and
talented executives to guide and lead our businesses and
supports a
pay-for-performance
culture.
In setting compensation for executive officers who join us from
other companies, the Committee evaluates both market data for
the position to be filled as well as the officer
candidates compensation history at other companies. The
Committee recognizes that, in order to successfully recruit
candidates to leave their current position and to join us, the
candidates compensation package will likely have to exceed
their current compensation and may put an executives
compensation above the median of the peer groups.
Chief Executive Officer Direct Annual
Compensation. Mr. Falks direct annual
compensation is determined by the Committee in the same manner
as the direct annual compensation of the other named executive
officers, based on the policies and process described above.
Mr. Falks direct annual target
33
compensation is at or near the adjusted median (which reflects a
20 percent reduction in long-term equity incentive
compensation, as discussed above) of direct compensation for
chief executive officers of companies included in the peer group
comparison with comparable levels of responsibilities.
The difference between Mr. Falks compensation and
that of the other named executive officers reflects the
significant difference in their relative responsibilities.
Mr. Falks responsibilities for management and
oversight of a global enterprise are significantly higher than
those of the other executive officers. A contributing factor in
the disparity of responsibilities is that the Corporations
organizational structure does not include a Chief Operating
Officer. As a result, the market pay level for Mr. Falk is
substantially higher than the market pay for other officer
positions.
Annual Cash Compensation
In order to attract and retain high caliber executives, we pay
our executives an annual cash amount that is considered by the
Committee to be competitive in the marketplace. The cash
compensation is divided between base salary and an annual cash
incentive payment.
Base Salary. Salary ranges and individual
salaries for executive officers are reviewed annually, and
salary adjustments generally are effective on April 1 of each
year. In determining individual salaries, the Committee
considers the market levels of similar positions at our peer
group companies, as well as the individual executives
performance and experience in the position. Performance is based
on the executives individual performance during the prior
year against results-based objectives established at the
beginning of each year. In addition, the executives
leadership performance is measured against the following
behaviors viewed as describing an executive that is adept at
leading the strategic, operational and organizational aspects of
our global business:
|
|
|
|
|
strategic leadership
|
|
|
|
innovation focus
|
|
|
|
global operations focus
|
|
|
|
building talent
|
|
|
|
consumer/shopper/user focus
|
|
|
|
stakeholder relations focus
|
|
|
|
change leadership
|
|
|
|
personal effectiveness, including intellectual competence,
inspiration and passion, personal integrity, openness to
innovation and change, and emotional maturity
|
In addition, executives and other employees may receive an
additional increase if warranted because of promotion, retention
concerns, or market conditions. In general, an experienced
executive who is performing at a satisfactory level will receive
a base salary at or around the median of our peer group
companies. Executives may be paid above or below the median
depending on their experience and performance.
In 2009, the Committee did not increase our named executive
officers base salaries, in light of market and business
conditions in early 2009, as well as in response to anticipated
practices at peer group companies. Mr. Falks base
salary did not increase from 2007 through 2009.
The base salaries paid to our named executive officers in 2009
can be found in the Summary Compensation Table. As noted above,
salary adjustments for our named executive officers take place
on April 1 in years with increases. As a result, 2009 base
salary amounts reflected in the Summary Compensation Table for
our named executive officers (other than Mr. Falk) are
slightly higher than 2008 base salary amounts because of base
salary increases effective April 1, 2008.
Annual Cash Incentives. Consistent with our
compensation objective to support a performance-oriented
environment, our executive compensation program includes an
annual cash incentive program to motivate and reward executives
in achieving our annual performance objectives.
34
The target level for these annual payments is a percentage of
the executives base salary, and that target level is
compared to the median of the peer group comparison described
above and is set as described under Direct Annual
Compensation. The range of possible payouts is expressed
as a percentage of the target level and was determined based on
competitive factors and the goal of encouraging a
performance-oriented environment. In 2009, the Committee reduced
the maximum payout from 228 percent to 200 percent of
the target payment amount to align with the practices of our
peer groups. The target payment amounts and range of possible
payouts for 2009 were as follows:
|
|
|
|
|
|
|
Target Payment Amount
|
|
Possible Payout
|
|
Chief Executive Officer
|
|
140% of base salary
|
|
0% - 200% of
target payment amount
|
Other Named Executive Officers
|
|
85% of base salary
|
|
0% - 200% of
target payment amount
|
Under the program, a significant percentage of the annual cash
incentive is dependent on performance measured against corporate
goals and business unit or staff function goals established by
the Committee at the beginning of each year. These performance
goals, which are communicated to our executives at the beginning
of each year, are derived from the financial and strategic goals
stated in our Global Business Plan. The Committee has adjusted
in the past, and may adjust in the future, the calculation of
financial goals to eliminate the effect of items or events that
the Committee determines in its discretion should be excluded
for compensation purposes, such as the effect of extraordinary
gains or losses. Establishing performance goals and target
levels represents an exercise of discretion by the Committee
under this program to limit the amount of the incentive
payments, consistent with our
pay-for-performance
policy. In the absence of this exercise of discretion, each of
the executive officers would be entitled to an award equal to
0.3 percent of the Corporations earnings before
unusual items; however, the Committee has exercised its
discretion to limit the amount of the incentive payments each
year of the program, and this maximum award has consequently
never been paid to any of the executive officers.
For 2009, the Committee established the following performance
goals and relative weights for our named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J.
|
|
Mark A.
|
|
Robert E.
|
|
Robert W.
|
|
Anthony J.
|
|
|
Falk
|
|
Buthman
|
|
Abernathy
|
|
Black
|
|
Palmer
|
|
Corporate performance
|
|
|
100
|
%
|
|
|
70
|
%
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
70
|
%
|
Performance of business unit or staff function
|
|
|
|
|
|
|
30
|
|
|
|
50
|
|
|
|
50
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
Corporate performance consists of (i) corporate key
financial goals and (ii) other corporate financial and
strategic performance goals, with these components weighted
70 percent and 30 percent, respectively.
The Committee has established these allocations to strike an
appropriate balance between aligning the executives with our
overall corporate objectives and with individual performance
accountability for each executives area of responsibility.
Each year, the Committee determines the appropriate split
between corporate and business unit or staff function
performance goals based on its assessment of the appropriate
balance.
|
|
|
|
|
Corporate key financial goals
|
|
|
|
|
|
Net Sales. Net sales are a key indicator of
our overall growth and create an incentive to seek an increasing
role in the markets in which we compete.
|
|
|
|
EPS. Earnings per share consists of diluted
net income per share attributable to
Kimberly-Clark
Corporation.
|
35
|
|
|
|
|
ROIC. After EPS and net sales are determined
as described above, a multiplier based on return on invested
capital is applied to the result to determine the payout
percentage. ROIC indicates the return we earn on the capital
invested in our businesses, and it measures our efficiency in
allocating our capital and creates an incentive to maximize
returns on our capital. The formula we use to calculate ROIC can
be accessed under the Investors section of our website at
www.kimberly-clark.com.
|
|
|
|
|
|
Other corporate financial and strategic performance
goals. The Committee also established other corporate
financial and non-financial strategic performance goals that are
intended to challenge our executives and to incentivize them to
stretch to exceed our long-term objectives. These goals,
intended to further align compensation with achieving the goals
of our Global Business Plan, included:
|
|
|
|
|
|
Consolidated cash provided by operations.
|
|
|
|
Consolidated gross margin improvement.
|
|
|
|
Cash generation from competitive improvement initiatives and
cost savings programs, cash generation savings cash flow run
rate, and working capital improvement from 2008.
|
|
|
|
Margin-enhancing innovation measured by net sales from
innovation.
|
|
|
|
Brand equity attribute improvement in key categories and markets.
|
|
|
|
Diversity and inclusion achievements.
|
Actual performance in these areas is reviewed following the end
of the year, and the Committee determines a payout percentage
based on its assessment of the degree to which these goals are
achieved.
|
|
|
|
|
Performance of business unit or staff
function. Our Chief Executive Officer establishes
individual business unit or staff function performance goals
that are intended to challenge the executives to exceed the
objectives for that business unit or staff function. Following
the end of the year, the executives performance is
analyzed to determine whether performance for the goals was
above target, on target or below target. Following a
recommendation from our Chief Executive Officer, the Committee
then determines a payout percentage for the executive based on
this performance assessment.
|
Committee
Assessment of 2009 Annual Cash Incentive Performance.
|
|
|
|
|
Corporate key financial goals. In 2009, the
key financial goals at the corporate level, the potential
payouts for achieving these goals, and the actual 2009 results
as determined by the Committee, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payout as a Percentage of Target
|
|
|
|
|
0%
|
|
100%
|
|
200%
|
|
Actual
|
|
Net Sales (billions)
|
|
$
|
17.00
|
|
|
$
|
19.40
|
|
|
$
|
21.80
|
|
|
$
|
19.10
|
|
EPS
|
|
$
|
3.73
|
|
|
$
|
4.14
|
|
|
$
|
4.55
|
|
|
$
|
4.52
|
|
|
|
|
0.8 x
|
|
|
|
1.0 x
|
|
|
|
1.2 x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROIC multiplier (basis point (bps) improvement)
|
|
|
(26) bps
|
|
|
|
14 bps
|
|
|
|
54 bps
|
|
|
|
160 bps
|
|
Based on these results, the Committee determined that the payout
percentage for achieving the key financial goals should be
171 percent of target.
|
|
|
|
|
Other corporate financial and strategic performance
goals. The Committee also assessed performance
against the other financial and strategic performance goals
established at the beginning of 2009. Regarding these goals, the
Committee determined that in 2009 we significantly exceeded the
goals regarding consolidated cash provided by operations,
|
36
|
|
|
|
|
consolidated gross margin improvement and cash generation
improvement, and that we met the goals regarding
margin-enhancing innovation, brand equity attribute improvement
and diversity and inclusion achievements. On balance, the
Committee determined that the payout percentage for achieving
these other financial and strategic goals should be
150 percent of target.
|
|
|
|
|
|
Performance of business unit or staff
function. Our Chief Executive Officer provides
the Committee with an assessment of each individual business
units or staff functions performance against the
objectives for that business unit or staff function. In
determining the performance of Messrs. Abernathys and
Blacks respective business units, the Committee excluded a
charge related to the Corporations 2009 organization
optimization efforts, noting that the future benefits expected
to be achieved from these efforts will be taken into account in
setting future performance objectives of the business units. In
addition, in determining the performance of
Mr. Blacks business unit, the Committee also excluded
a benefit resulting from a favorable change due to the impact of
currency exchange. Based on performance of the business unit or
staff function, the Committee determined payout percentages for
business unit or staff function performance that, for our named
executive officers, ranged from 122 percent to
160 percent of target.
|
Payouts for 2009. The following table
summarizes the payout opportunities and shows the actual payout
of annual cash incentives for 2009 for our named executive
officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
Annual
|
|
2009 Annual
|
|
|
Incentive Target
|
|
Incentive Maximum
|
|
Incentive Payout
|
|
|
% of Base
|
|
|
|
% of
|
|
|
|
% of
|
|
|
Name
|
|
Salary
|
|
Amount($)
|
|
Target
|
|
Amount($)
|
|
Target
|
|
Amount($)
|
|
Thomas J. Falk
|
|
|
140
|
%
|
|
|
1,714,994
|
|
|
|
200
|
%
|
|
|
3,429,989
|
|
|
|
165
|
%
|
|
|
2,824,081
|
|
Mark A. Buthman
|
|
|
85
|
%
|
|
|
561,000
|
|
|
|
200
|
%
|
|
|
1,122,000
|
|
|
|
152
|
%
|
|
|
851,480
|
|
Robert E. Abernathy
|
|
|
85
|
%
|
|
|
531,250
|
|
|
|
200
|
%
|
|
|
1,062,500
|
|
|
|
160
|
%
|
|
|
850,219
|
|
Robert W. Black
|
|
|
85
|
%
|
|
|
476,000
|
|
|
|
200
|
%
|
|
|
952,000
|
|
|
|
162
|
%
|
|
|
773,109
|
|
Anthony J. Palmer
|
|
|
85
|
%
|
|
|
425,000
|
|
|
|
200
|
%
|
|
|
850,000
|
|
|
|
153
|
%
|
|
|
649,268
|
|
The cash incentive payments were paid to the executives in
February 2010 and are included in the Summary Compensation Table.
Information Regarding Annual Cash Incentive Payouts from 2005
through 2009. The following table sets forth
information regarding payouts for corporate goals (the
combination of corporate key financial goals and other corporate
financial and strategic performance goals), as well as the
average total payout percentages (including business unit or
staff function performance) for the current named executive
officers, from 2005 through 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
Average
|
|
Payout for Corporate Goals
|
|
|
165
|
%
|
|
|
55
|
%
|
|
|
170
|
%
|
|
|
97
|
%
|
|
|
90
|
%
|
|
|
115
|
%
|
Average Total Payout Percentages for Current Named Executive
Officers
|
|
|
158
|
%
|
|
|
75
|
%
|
|
|
163
|
%
|
|
|
100
|
%
|
|
|
96
|
%
|
|
|
118
|
%
|
From 2005 through 2009, total payout percentages (including
business unit or staff function performance) for the current
named executive officers ranged from 55 percent to
187 percent of the participants target award
opportunity. Generally, the Committee seeks to set the minimum,
target and maximum levels such that the relative difficulty of
achieving the target level is consistent from year to year.
Long-Term Equity
Incentive Compensation
The Committee awards long-term equity incentive grants to
executive officers as part of their overall compensation
package. These awards are consistent with the Committees
objectives of aligning our senior leaders with the financial
interests of our stockholders, focusing on our long-term
success, supporting our performance-oriented environment and
offering competitive compensation packages. When determining the
amount of long-term equity incentive plan awards to be granted
to executives, the Committee considered the following factors,
among others: the specific responsibilities and performance
37
of the executive, our business performance, our stock price
performance and other market factors. The 2009 long-term equity
incentive awards were granted to the named executive officers in
February 2009 based on an assessment of those factors at that
time. Because these awards are part of our annual compensation
program that compares direct annual compensation to the median
of our peer group comparison, adjusted as described under
Direct Annual Compensation, grants from prior years
were not considered when setting 2009 targets or granting awards.
For 2009, the Committee set the long-term equity incentive
compensation grant value for each executive based on first
comparing direct annual compensation to the median of our peer
groups, adjusted as described under Direct Annual
Compensation and reflecting the performance of the
executive officer. This grant value was then divided into two
grants, described in more detail below, consisting of:
|
|
|
|
|
Performance-based restricted share units and
|
|
|
|
Stock options.
|
Performance-Based Restricted Share Unit
Awards. In February 2009, executives received
awards of performance-based restricted share units with a value
equal to two-thirds of the target grant date value for long-term
equity incentive compensation. For this purpose,
performance-based restricted share units are valued on the basis
that one unit has the same value as one share of our common
stock on the date of grant.
2009-2011
Performance-Based Restricted Share Unit Goals and
Targets. For the performance-based restricted
share unit awards granted in 2009, the actual number of shares
to be received by the executives will range from zero to
200 percent of the target levels established by the
Committee for each executive, depending on the degree to which
the performance objectives are met. The Committee increased the
maximum payout for these awards in 2009 from 150 percent to
200 percent to align with the practices of our peer groups.
The performance objectives for the 2009 awards are based on
average annual net sales growth and the average ROIC for the
period January 1, 2009 through December 31, 2011, as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relative
|
|
Potential Payout as a Percentage of Target
|
Goal
|
|
Weight
|
|
0%
|
|
100%
|
|
200%
|
|
Annual Net Sales Growth
|
|
|
50
|
%
|
|
|
0.0
|
%
|
|
|
2.0
|
%
|
|
|
4.0
|
%
|
ROIC
|
|
|
50
|
%
|
|
|
13.4
|
%
|
|
|
14.4
|
%
|
|
|
15.4
|
%
|
The performance objectives attempt to balance our Global
Business Plan objectives, including annual net sales growth of
two percent and average ROIC improvement of approximately
15 basis points per year during this period, peer group
performance and our past and future performance. Information
regarding restricted share unit awards granted to our named
executive officers can be found under Summary Compensation
Table, Grants of Plan-Based Awards, and
Discussion of Summary Compensation and Plan-Based Awards
Tables.
2006-2008
Performance-Based Restricted Share Unit Goals and
Targets. In April 2009, the Committee determined
the results of the 2006 through 2008 performance period for the
performance-based restricted share units granted in 2006. The
performance objective for the 2006 awards was based on adjusted
ROIC for the period January 1, 2006 through
December 31, 2008. The average adjusted ROIC objective, the
potential payouts for achieving the objective and the actual
results for this period as determined by the Committee were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payout as a Percentage of Target
|
|
|
|
|
0%
|
|
50%
|
|
100%
|
|
150%
|
|
Actual
|
|
Adjusted ROIC
|
|
|
14.8
|
%
|
|
|
15.3
|
%
|
|
|
15.8
|
%
|
|
|
16.3
|
%
|
|
|
15.1
|
%
|
For purposes of calculating average adjusted ROIC, the impact of
the adoption of Financial Accounting Standards Board
Interpretation (FASB) No. 48, Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB Statement
109 (FIN 48), and the effect of an
extraordinary loss related to the
38
consolidation of certain financing entities and certain notes
receivable related to these financing entities were excluded
from the ROIC calculation.
Based on this review, the Committee determined that the payout
percentage should be 30 percent of target. The following
table includes information about the opportunities and payouts
regarding these grants to our named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 - 2008
|
|
|
|
|
|
|
Performance-Based
|
|
|
|
|
|
|
Restricted Share Unit
|
|
|
|
|
Maximum
|
|
Award (Paid in April 2009)
|
|
|
Target Amount
|
|
Amount of
|
|
% of
|
|
Amount of
|
Name
|
|
of Shares(#)
|
|
Shares(#)
|
|
Target
|
|
Shares(#)
|
|
Thomas J. Falk
|
|
|
43,987
|
|
|
|
65,981
|
|
|
|
30
|
%
|
|
|
13,196
|
|
Mark A. Buthman
|
|
|
9,649
|
|
|
|
14,474
|
|
|
|
30
|
%
|
|
|
2,895
|
|
Robert E. Abernathy
|
|
|
11,351
|
|
|
|
17,027
|
|
|
|
30
|
%
|
|
|
3,405
|
|
Robert W. Black
|
|
|
5,676
|
|
|
|
8,514
|
|
|
|
30
|
%
|
|
|
1,703
|
|
Anthony J. Palmer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
When these grants were made in 2006, Mr. Palmer was not
employed by the Corporation. The shares underlying these
performance-based restricted share unit awards were distributed
to our named executive officers in April 2009 and are included
in the Option Exercises and Stock Vested in 2009 table.
Stock Option Awards. In April 2009, executive
officers also received awards of stock options with a value
equal to one-third of the target grant date value for long-term
equity incentive compensation. For this purpose, stock options
are valued on the basis that one option has the same value as
20 percent of the price of one share of the
Corporations common stock on the date of grant. The value
we use for this purpose differs from, and in 2009 was higher
than, the value we use for financial statement purposes. The
Committee believes that this value is an appropriate way to
determine the number of options to be granted under the 2001
Plan because it provides more consistent application and is not
subject to the volatility inherent in the Black-Scholes-Merton
valuation method used for financial statement purposes. This
value was reduced from 20 percent to 15 percent in
November 2009, as a result of a review of the Corporations
Black-Scholes-Merton valuation of the previous five years. The
Black-Scholes-Merton valuation has declined from its 2005 level
and has remained at approximately ten percent for 2008 and 2009.
Due to this decline, the Committee believed it was appropriate
to adjust the value used for option grants. This reduced value
will apply to executives option grants beginning in 2010.
Information regarding stock options granted to our named
executive officers can be found under Summary Compensation
Table, Grants of Plan-Based Awards, and
Discussion of Summary Compensation and Plan-Based Awards
Tables.
Retirement Benefits
Our named executive officers participate in our defined benefit
pension plans and defined contribution plans. These plans are
consistent with those maintained by our peer group companies and
are therefore necessary in order to remain competitive with them
for recruiting and retaining executive talent. Additionally,
these plans help encourage retention of our senior executives
because their retirement benefits under these plans generally
increase for each year they remain employed by us. The Committee
believes that these retirement benefit and contribution plans
are important parts of our compensation program.
Pension Plans. We maintain a funded,
tax-qualified, non-contributing defined benefit pension plan for
employees, including named executive officers, who joined the
Corporation before January 1, 1997. We also maintain
supplemental pension plans that provide benefits to the
participants in the pension plan as are necessary to fulfill the
intent of our pension plan without regard to the limitations
imposed by the Internal Revenue Code on qualified pension plans.
We stopped accruing compensation and benefit service under these
plans for most of our U.S. employees, including named
executive officers, for plan years after 2009. These changes
will not affect benefits earned by participants prior to
January 1, 2010. For a more detailed explanation of our
pension plans, and the present value of the accumulated benefits
of our named executive officers, see Pension
Benefits.
39
Defined Contribution Plans. For employees who
joined the Corporation on or after January 1, 1997, or for
those employees who elected to opt out of continuing service
accruals in our pension plans, through December 31, 2009 we
maintained an additional tax-qualified defined contribution plan
(the Retirement Contribution Plan). In addition, we maintained
the Retirement Contribution Excess Benefit Program (the
supplemental Retirement Contribution Program), a
nonqualified defined contribution plan intended to provide
benefits to the extent necessary to fulfill the intent of the
Retirement Contribution Plan without regard to the limitations
imposed by the Internal Revenue Code. For a more detailed
explanation of the Retirement Contribution Plan and supplemental
Retirement Contribution Program, and the balance of amounts
contributed on behalf of our named executive officers who
participated in these plans, see Nonqualified Deferred
Compensation.
We also maintained through December 31, 2009 a
tax-qualified defined contribution plan (the Incentive
Investment Plan), which was a 401(k) plan that covered eligible
employees, including our named executive officers. For more
information, see Nonqualified Deferred
Compensation Overview of Qualified and Non-Qualified
Plans.
We discontinued all contributions and accruals to the Retirement
Contribution Plan and the Incentive Investment Plan, and
modified the accruals for the supplemental Retirement
Contribution Program, for plan years after 2009 for most of our
U.S. employees, including named executive officers.
Effective January 1, 2010, we adopted the Kimberly-Clark
Corporation 401(k) and Profit Sharing Plan (the 401(k)
Profit Sharing Plan), a new 401(k) profit sharing plan to
provide for a matching contribution of 100 percent of a
U.S. employees contributions to the plans, to a
yearly maximum of four percent of eligible compensation, as well
as a discretionary profit sharing contribution, in which
contributions will be based on our profit performance. Also
effective January 1, 2010, the supplemental Retirement
Contribution Program was renamed the Kimberly-Clark Corporation
Supplemental Retirement 401(k) and Profit Sharing Plan (the
Supplemental 401(k) Plan) and amended to provide
benefits to the extent necessary to fulfill the intent of the
401(k) Profit Sharing Plan without regard to the limitations
imposed by the Internal Revenue Code on qualified defined
contribution plans. Most U.S. employees investment
balances, including those of our named executive officers, in
the Incentive Investment Plan and Retirement Contribution Plan
were transferred to the new 401(k) Profit Sharing Plan.
Other
Compensation
We provide our executive officers with minimal perquisites. In
general, perquisites made up less than 0.4 percent of
aggregate total compensation for our named executive officers in
2009.
These perquisites include personal financial planning services
provided by an independent firm, an executive health screening
program where executives may receive comprehensive physical
examinations from an independent health care provider and
permitted personal use of corporate aircraft consistent with the
Corporations policy. The personal financial planning
program is designed to provide executives with access to
knowledgeable resources that understand our compensation and
benefit plans and can assist our executives in efficiently and
effectively managing their financial and tax planning issues.
Our Chief Executive Officer no longer receives personal
financial planning services pursuant to this program. The
executive health screening program provides executives with
additional services that help maintain their overall health. We
encourage our executives to take advantage of this service.
The Board of Directors has approved an executive security
program for our Chief Executive Officer. Under this program, our
Chief Executive Officer is required to use our corporate
aircraft for all business and personal travel, consistent with
the Corporations policy, and security services are
provided for him at all times, including at his office, other
company locations and his residences. Periodically, a security
assessment is conducted by an independent security consultant,
and the program is reviewed by the Board, to ensure that
security measures provided by us are appropriate. The Board
considers these security arrangements to be appropriate and
reasonable in light of the security risks identified in the
independent security assessment. In addition, if a corporate
aircraft is already scheduled for business purposes and can
accommodate additional passengers, executive officers and their
guests may, under
40
certain circumstances, join flights for personal travel. The
incremental cost to us of providing security services at
Mr. Falks residences, personal travel for our named
executive officers and their guests on our corporate aircraft
and any related tax reimbursements and
gross-ups is
included in All Other Compensation in the Summary
Compensation Table. In February 2009, the Committee adopted a
policy that limits the personal use of corporate aircraft by the
Chief Executive Officer to an aggregate annual incremental cost
to the Corporation of $100,000, and generally prohibits the
personal use of corporate aircraft by other executive officers
unless there is no incremental cost to the Corporation for the
use. In addition, the Committee adopted a policy in February
2009 providing that executive officers will no longer receive
tax reimbursement and a related
gross-up for
perquisites (including personal use of corporate aircraft),
except for certain relocation benefits.
Post-Termination
Benefits
We maintain several severance plans for our executive officers.
Benefits under these plans are payable only if the
executives employment terminates as specified in the
applicable severance plan. An executive officer may not receive
severance benefits under more than one severance plan. We
believe that our severance plans are consistent with those
maintained by our peer group companies and that they are
therefore important for attracting and retaining executives who
are critical to our long-term success and competitiveness. For
more information about these severance plans and their terms,
see Potential Payments on Termination or Change in
Control Severance Benefits.
Severance Pay Plan. Our Severance Pay Plan
provides severance benefits to most of our U.S. hourly and
salaried employees, including our named executive officers, who
are involuntarily terminated under the circumstances described
in the plan. The objective of this plan is to facilitate the
employees transition to his or her next position, and it
is not intended to serve as a reward for the employees
past service. See Potential Payments on Termination or
Change in Control Severance Benefits.
Executive Severance Plan. Our Executive
Severance Plan provides severance benefits to eligible
employees, including our named executive officers, in the event
of a qualified termination of employment (as defined in the
plan) in connection with a change in control. For an eligible
employee to receive a payment under this plan, both a change in
control must occur and the eligible employees employment
must be terminated (often referred to as a double
trigger). Each of the named executive officers has entered
into an agreement under the plan that expires on
December 31, 2011. The plan and the agreements were amended
in 2009 in order to comply with recent rulings regarding the tax
deductibility of payments under the plan and agreements, as well
as to eliminate benefits under the plan related to the
Corporations pension plans, supplemental pension plans,
the Retirement Contribution Plan and the supplemental Retirement
Contribution Program and to provide instead corresponding
benefits related to the new 401(k) Profit Sharing Plan and
Supplemental 401(k) Plan. See Potential Payments on
Termination or Change in Control Severance
Benefits.
Executive
Compensation for 2010
Base Salary. In February 2010, the Committee
approved the following base salaries for our named executive
officers, effective on April 1, 2010:
|
|
|
|
|
Name
|
|
Base Salary($)
|
|
|
Thomas J. Falk
|
|
|
1,300,000
|
|
Mark A. Buthman
|
|
|
725,000
|
|
Robert E. Abernathy
|
|
|
750,000
|
|
Robert W. Black
|
|
|
600,000
|
|
Anthony J. Palmer
|
|
|
525,000
|
|
Annual Cash Incentives. In February 2010, the
Committee also established objectives for 2010 annual cash
incentives payable in 2011 to our named executive officers.
Depending on actual performance
41
in 2010 against the financial and non-financial goals, 2010
incentive payments could range from zero to 200 percent of
the named executive officers target payments.
As discussed in Annual Cash Compensation
Annual Cash Incentives above, the Committee sets the
appropriate split among corporate key financial goals, other
corporate financial and strategic performance goals and business
unit or staff function objectives each year.
Incentive payments for 2010 will be based on the
Committees judgment regarding our corporate and the
executive officers performance in 2010 against those
objectives. The corporate key financial goals for 2010 are
designed to encourage a continued focus on executing our
long-term Global Business Plan objectives and include achieving
net sales, adjusted operating profit return on sales, and
adjusted earnings per share goals.
The Committee also established other corporate financial and
non-financial goals for 2010. These goals, intended to further
align compensation with achieving our Global Business Plan,
include:
|
|
|
|
|
Focusing on gross profit growth, brand building spending growth,
cost savings, and operating profit growth.
|
|
|
|
Focusing on brand equity and market performance.
|
|
|
|
Driving innovation.
|
|
|
|
Continuing progress in diversity and inclusion.
|
In addition, goals have been established for each named
executive officer, other than our Chief Executive Officer,
relating to his business unit or specific staff function.
Long-Term Equity Incentive Compensation. The
Committee granted performance-based restricted share units to
our named executive officers in February 2010. The performance
objectives for the performance-based restricted share unit
awards granted in 2010 are based on average annual net sales
growth and average adjusted ROIC for the period January 1,
2010 through December 31, 2012. The actual number of shares
to be received by our named executive officers will range from
zero to 200 percent of the target levels established by the
Committee for each executive, depending on the degree to which
the performance objectives are met.
Information regarding the performance-based restricted share
unit awards granted on February 22, 2010 to our named
executive officers is set forth below.
|
|
|
|
|
|
|
|
|
|
|
Performance-Based
|
|
|
Restricted Share Units
|
|
|
Target Amount
|
|
Maximum Amount
|
Name
|
|
of Shares (#)
|
|
of Shares (#)
|
|
Thomas J. Falk
|
|
|
83,472
|
|
|
|
166,944
|
|
Mark A. Buthman
|
|
|
17,807
|
|
|
|
35,614
|
|
Robert E. Abernathy
|
|
|
20,033
|
|
|
|
40,066
|
|
Robert W. Black
|
|
|
15,582
|
|
|
|
31,164
|
|
Anthony J. Palmer
|
|
|
9,460
|
|
|
|
18,920
|
|
In addition, on February 22, 2010, the Committee granted
Mr. Abernathy 8,347 shares of time-vested restricted
share units. This retention grant will vest in full on the third
anniversary of the date of grant. Dividend equivalents on these
units will be accumulated and paid in additional shares after
the
time-vested
restricted share units vest.
Additional
Compensation Information
Use of Independent Compensation Consultant. As
previously discussed, the Committee engaged The Delves Group as
its independent consultant to assist it in determining the
appropriate executive officer compensation in 2009 pursuant to
our compensation policies described above. Consistent with the
42
Committees policy in which its independent consultant may
provide services only to the Committee, The Delves Group had no
other business relationship with the Corporation and received no
payments from us other than fees for services to the Committee.
See Part Two Corporate Governance
Information Management Development and Compensation
Committee for information about the use of compensation
consultants.
Role of the Chief Executive Officer in Compensation
Decisions. Our Chief Executive Officer makes a
recommendation to the Committee each year on the appropriate
target direct annual compensation to be awarded to our executive
officers, excluding himself. The Committee makes the final
determination of the target direct annual compensation to be
awarded to each executive officer, including our Chief Executive
Officer, based on the Committees determination of how that
compensation will aid in achieving the objectives of our
compensation policies. While our Chief Executive Officer and
Chief Human Resources Officer typically attend Committee
meetings, none of the other executive officers is present during
the portion of the Committees meetings when compensation
for executive officers is set. In addition, our Chief Executive
Officer is not present during the portion of the
Committees meetings when his compensation is set.
Analysis of Risks Arising from Design of Executive
Compensation Program. The Committee, with the
assistance of its independent consultant and the
Corporations consultant, has reviewed an assessment of our
compensation programs, including our executive compensation
program. Based on this assessment, the Committee believes that
the design of our executive compensation program does not
encourage our named executive officers to take unnecessary and
excessive risks and that the risks arising from the design of
these programs are not reasonably likely to have a material
adverse effect on the Corporation. The Committee reached the
same conclusion for our other compensation programs. For a
discussion of the factors that contributed to the
Committees conclusions, see Analysis of Risks
Arising from Design of Compensation Programs.
Timing of Long-Term Equity Grants. Our
policies and the 2001 Plan require stock options to be granted
at no less than the closing price of our common stock on the
date of grant. The Committees practice is to award options
at its April Committee meeting. Committee meeting dates are set
by the Committee at least one year in advance. We do not have
any process or practice to time the grant of equity awards in
advance of our release of earnings or other material non-public
information.
In 2009, the Committee awarded performance-based restricted
share units to executive officers at its February Committee
meeting, and it intends to continue this practice. We believe
this practice is consistent with award practices at other large
public companies. Through 2008, the Committee had awarded
executive officers restricted share units at the same time it
granted stock options. Prior to 2004, restricted stock was
awarded at various meetings of the Committee for retention
purposes. Our executives are not permitted to choose the grant
date for their individual restricted stock or restricted share
unit awards.
The Committee administers our equity plans, which were approved
by our stockholders in 1992 and 2001. Two categories of stock
grants have been made under our equity plans: annual grants and
recruiting or retention grants. Annual grants are made each year
at a meeting of the Committee, as described above. Annual grants
have accounted for approximately 99.5 percent of all
options granted under these plans since 1993. Our executives are
not permitted to choose the grant date for their individual
stock option grants.
Our Chief Executive Officer has limited authority to grant
employee stock options, restricted stock and restricted share
units in connection with recruiting and special employee
recognition and retention matters. Any recruiting and retention
grants may not exceed 200,000 stock options, shares of
restricted stock or restricted share units, in the aggregate, in
any calendar year. These recruiting and retention grants are
made on a pre-determined date following the release of our
earnings during each quarter. Our Chief Executive Officer is not
permitted to make any recruiting and retention grants to any of
our executive officers. In 2009, our Chief Executive Officer
authorized recruiting and retention grants consisting of an
43
aggregate of 100,202 time-vested restricted share units,
performance-based restricted share units and stock options.
Policy on Incentive Compensation Claw-back. As
described above, a significant percentage of our executive
officer compensation is incentive-based. The determination of
the extent to which the incentive objectives are achieved is
based in part on the Committees discretion and in part on
our published financial results. The Committee has the right to
reassess its determination of the performance awards if the
financial statements on which it relied are restated. The
Committee has the right to direct the Corporation to seek to
recover from any executive officer any amounts determined to
have been inappropriately received by the individual executive
officer. In addition, the Sarbanes-Oxley Act of 2002 mandates
that the chief executive officer and the chief financial officer
reimburse us for any bonus or other incentive-based or
equity-based compensation paid to them in a year following the
issuance of financial statements that are later required to be
restated as a result of misconduct.
Target Stock Ownership Guidelines. We strongly
believe that the financial interests of our executives should be
aligned with those of our stockholders. Accordingly, the
Committee has established stock ownership guidelines for our
corporate officers, including our named executive officers.
All executive officers are expected to own our common stock in
an amount equivalent to three times their annual base salary.
The Chief Executive Officer is expected to own an amount of our
common stock which is six times his annual base salary. Failure
to attain targeted stock ownership levels within five years from
date of hire for, or appointment to, an eligible position can
result in a reduction in future long-term equity incentive
awards granted to the executive. In determining whether our
stock ownership guidelines have been met, any restricted stock
and time-vested restricted share units held are considered as
being owned and performance-based restricted share units are
excluded until they vest. Executive officer stock ownership
levels were reviewed in 2009 for compliance with these
guidelines. Based on our stock price as of the compliance date
for this review, the stock ownership levels specified by the
guidelines have been met or exceeded by each of our named
executive officers, other than Messrs. Black and Palmer,
who joined the Corporation in 2006 and who have less than five
years of service.
We have a policy requiring all executive officers to review
transactions involving our common stock or other securities
related to our common stock with our Legal Department prior to
entering into the transactions.
Although we do not have a formal policy prohibiting transactions
that hedge an executive officers economic risk of owning
shares of our common stock, an executive officer must obtain
prior clearance from our Legal Department prior to engaging in
any hedging transaction to ensure compliance with applicable
laws. Any shares an employee owns subject to a market put or
call option are excluded for purposes of determining compliance
with our stock ownership guidelines. None of our named executive
officers engaged in any hedging transactions in 2009.
Tax Deduction for Executive Compensation. The
United States income tax laws generally limit the deductibility
of compensation paid to the chief executive officer and each of
the three highest-paid executive officers (not including the
chief financial officer) to $1,000,000 per annum. An exception
to this general rule exists for performance-based compensation
that meets certain regulatory requirements. Several classes of
executive compensation including the option awards to executive
officers are designed to meet the requirements for
deductibility. Other classes of executive compensation including
the long-term equity grants as described above may be subject to
the $1,000,000 deductibility limit.
Although deductibility of compensation is preferred, tax
deductibility is not a primary objective of our compensation
programs. In our view and the view of the Committee, meeting the
compensation objectives set forth above is more important than
the benefit of being able to deduct the compensation for tax
purposes.
44
Management
Development and Compensation Committee Report
In accordance with its written charter adopted by the Board, the
Management Development and Compensation Committee has oversight
of compensation policies designed to align elected
officers compensation with our overall business strategy,
values and management initiatives. In discharging its oversight
responsibility, the Committee has retained an independent
compensation consultant to advise the Committee regarding market
and general compensation trends.
The Committee has reviewed and discussed the Compensation
Discussion and Analysis with our management, which has the
responsibility for preparing the Compensation Discussion and
Analysis. Based upon this review and discussion, the Committee
recommended to the Board that the Compensation Discussion and
Analysis be included in this proxy statement and incorporated by
reference in our Annual Report on
Form 10-K
filed with the Securities and Exchange Commission for the fiscal
year ended December 31, 2009.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE OF THE BOARD
OF DIRECTORS
James M. Jenness, Chairman
Abelardo E. Bru
Mae C. Jemison, M.D.
Ian C. Read
45
Summary
Compensation Table
The following table contains information concerning compensation
awarded to, earned by, or paid to our named executive officers
in the last three years. Our named executive officers include
our Chief Executive Officer, Chief Financial Officer and our
three other most highly compensated executive officers serving
as of December 31, 2009. Additional information regarding
the items reflected in each column follows the table.
Summary
Compensation Table
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Change in
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Pension
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Value and
|
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Nonqualified
|
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Non-Equity
|
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Deferred
|
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Name and
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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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Principal Position
|
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Year
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Salary($)
|
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Awards($)
|
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Awards($)
|
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Compensation($)
|
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Earnings($)
|
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Compensation($)
|
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Total($)
|
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Thomas J. Falk
|
|
|
2009
|
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|
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1,224,996
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|
|
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4,000,022
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|
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870,791
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|
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2,824,081
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|
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2,389,144
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|
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78,394
|
|
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11,387,428
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|
Chairman of the
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|
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2008
|
|
|
|
1,224,996
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|
|
|
5,333,311
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|
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1,293,953
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|
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943,247
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|
|
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1,276,613
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|
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103,896
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|
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10,176,016
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Board and Chief
|
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2007
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1,212,497
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|
|
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5,166,734
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|
|
|
1,611,527
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|
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|
2,498,992
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|
|
|
1,195,872
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|
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|
143,406
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|
|
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11,829,028
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|
Executive Officer
|
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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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Mark A. Buthman
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2009
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|
|
660,000
|
|
|
|
949,998
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|
|
|
206,811
|
|
|
|
851,480
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|
|
|
385,044
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|
|
|
85,193
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|
|
|
3,138,526
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|
Senior Vice President
|
|
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2008
|
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|
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645,000
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|
|
|
1,266,682
|
|
|
|
307,314
|
|
|
|
370,260
|
|
|
|
252,410
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|
|
|
114,775
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|
|
|
2,956,441
|
|
and Chief Financial
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|
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2007
|
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|
|
578,756
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|
|
|
1,066,699
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|
|
|
332,702
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|
|
|
734,400
|
|
|
|
221,778
|
|
|
|
88,087
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|
|
|
3,022,422
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Officer
|
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|
|
|
|
|
|
|
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Robert E. Abernathy
|
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2009
|
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|
|
625,000
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|
|
|
1,266,679
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|
|
|
275,750
|
|
|
|
850,219
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|
|
|
1,108,360
|
|
|
|
7,887
|
|
|
|
4,133,895
|
|
Group President
|
|
|
2008
|
|
|
|
606,249
|
|
|
|
1,533,328
|
|
|
|
372,010
|
|
|
|
349,745
|
|
|
|
433,139
|
|
|
|
100,337
|
|
|
|
3,394,808
|
|
North Atlantic
|
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2007
|
|
|
|
545,009
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|
|
|
1,266,669
|
|
|
|
395,085
|
|
|
|
822,794
|
|
|
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529,655
|
|
|
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11,250
|
|
|
|
3,570,462
|
|
Consumer Products
|
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|
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Robert W. Black
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2009
|
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|
560,000
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|
|
|
750,013
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|
|
163,274
|
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|
|
773,109
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|
|
|
0
|
|
|
|
101,002
|
|
|
|
2,347,398
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|
Group President
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2008
|
|
|
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549,999
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|
|
|
999,972
|
|
|
|
242,618
|
|
|
|
565,581
|
|
|
|
0
|
|
|
|
99,897
|
|
|
|
2,458,067
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|
K-C International
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2007
|
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|
|
514,997
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|
|
|
666,615
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|
|
|
207,934
|
|
|
|
616,715
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|
|
|
0
|
|
|
|
81,581
|
|
|
|
2,087,842
|
|
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Anthony J. Palmer(1)
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2009
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|
500,000
|
|
|
|
549,981
|
|
|
|
119,733
|
|
|
|
649,268
|
|
|
|
0
|
|
|
|
75,990
|
|
|
|
1,894,972
|
|
Senior Vice President
|
|
|
2008
|
|
|
|
491,250
|
|
|
|
733,325
|
|
|
|
177,917
|
|
|
|
284,750
|
|
|
|
0
|
|
|
|
93,459
|
|
|
|
1,780,701
|
|
and Chief Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
(1) |
|
Because Mr. Palmer became one of our three other most
highly compensated executive officers in 2008, his 2007
compensation is not included in this table. |
Salary. The amounts in this column represent
base salary earned during the year.
Stock Awards and Option Awards. The amounts in
these columns reflect the dollar value of restricted share unit
awards and stock options, respectively, granted under our
stockholder-approved 2001 Plan.
The restricted share unit awards either vest over time or based
on the achievement of performance-based standards.
The amounts for each year represent the grant date fair value of
the awards, computed in accordance with ASC Topic 718. See
Notes 9, 8 and 6 to our audited consolidated financial
statements included in our Annual Reports on
Form 10-K
for 2009, 2008 and 2007, respectively, for the assumptions we
used in valuing and expensing these restricted share units and
stock option awards in accordance with ASC Topic 718.
46
For awards that are subject to performance conditions, the value
is based on the probable outcome of the conditions at grant
date. The value of the awards at the grant date assuming the
highest level of performance conditions will be achieved is set
forth below:
|
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|
|
|
|
|
|
|
|
|
|
Stock Awards
|
Name
|
|
Year
|
|
($)
|
|
Thomas J. Falk
|
|
|
2009
|
|
|
|
8,000,044
|
|
|
|
|
2008
|
|
|
|
7,999,996
|
|
|
|
|
2007
|
|
|
|
3,875,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark A. Buthman
|
|
|
2009
|
|
|
|
1,899,995
|
|
|
|
|
2008
|
|
|
|
1,900,023
|
|
|
|
|
2007
|
|
|
|
800,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Abernathy
|
|
|
2009
|
|
|
|
2,533,358
|
|
|
|
|
2008
|
|
|
|
2,299,993
|
|
|
|
|
2007
|
|
|
|
950,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Black
|
|
|
2009
|
|
|
|
1,500,026
|
|
|
|
|
2008
|
|
|
|
1,499,958
|
|
|
|
|
2007
|
|
|
|
499,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony J. Palmer
|
|
|
2009
|
|
|
|
1,099,963
|
|
|
|
|
2008
|
|
|
|
1,099,988
|
|
Non-Equity Incentive Plan Compensation. The
amounts in this column are the annual cash incentive payments
described in Compensation Discussion and Analysis.
These amounts were earned during the years indicated and were
paid to the named executive officers in February of the
following year.
Change In Pension Value and Nonqualified Deferred
Compensation Earnings. The amounts in this column
reflect the aggregate change during the year in actuarial
present value of accumulated benefits under all defined benefit
and actuarial plans (including supplemental pension plans). With
respect to the supplemental pension plans, amounts have been
calculated to reflect an approximate
30-year
Treasury Bond rate to determine the amount of the earlier
retirement age lump sum benefit in a manner consistent with our
financial statements. We describe the assumptions we used in
determining the amounts and provide additional information about
these plans in Pension Benefits.
Messrs. Falk and Abernathy have deferred compensation in
prior years pursuant to the Deferred Compensation Plan. Earnings
on that deferred compensation are not included in the Summary
Compensation Table because the earnings were not above-market or
preferential. Messrs. Buthman, Black and Palmer
participated in the supplemental Retirement Contribution
Program, a non-qualified defined contribution plan. Earnings on
that plan are not included in the Summary Compensation Table
because the earnings were not above-market or preferential. See
Nonqualified Deferred Compensation for a discussion
of these plans and each named executive officers earnings
under those plans in 2009.
47
All Other Compensation. All other compensation
consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution
|
|
|
Tax
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
Plan Payments
|
|
|
Gross-Ups
|
|
|
Total
|
|
Name
|
|
Year
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
Thomas J. Falk
|
|
|
2009
|
|
|
|
71,044
|
|
|
|
7,350
|
|
|
|
0
|
|
|
|
78,394
|
|
|
|
|
2008
|
|
|
|
88,841
|
|
|
|
6,900
|
|
|
|
8,155
|
|
|
|
103,896
|
|
|
|
|
2007
|
|
|
|
114,960
|
|
|
|
6,750
|
|
|
|
21,696
|
|
|
|
143,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark A. Buthman
|
|
|
2009
|
|
|
|
2,175
|
|
|
|
83,018
|
|
|
|
0
|
|
|
|
85,193
|
|
|
|
|
2008
|
|
|
|
5,950
|
|
|
|
108,825
|
|
|
|
0
|
|
|
|
114,775
|
|
|
|
|
2007
|
|
|
|
7,777
|
|
|
|
79,101
|
|
|
|
1,209
|
|
|
|
88,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Abernathy
|
|
|
2009
|
|
|
|
305
|
|
|
|
7,350
|
|
|
|
232
|
|
|
|
7,887
|
|
|
|
|
2008
|
|
|
|
56,420
|
|
|
|
6,900
|
|
|
|
37,017
|
|
|
|
100,337
|
|
|
|
|
2007
|
|
|
|
4,500
|
|
|
|
6,750
|
|
|
|
0
|
|
|
|
11,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Black
|
|
|
2009
|
|
|
|
2,394
|
|
|
|
98,608
|
|
|
|
0
|
|
|
|
101,002
|
|
|
|
|
2008
|
|
|
|
7,023
|
|
|
|
92,874
|
|
|
|
0
|
|
|
|
99,897
|
|
|
|
|
2007
|
|
|
|
10,294
|
|
|
|
71,287
|
|
|
|
0
|
|
|
|
81,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony J. Palmer
|
|
|
2009
|
|
|
|
5,500
|
|
|
|
70,490
|
|
|
|
0
|
|
|
|
75,990
|
|
|
|
|
2008
|
|
|
|
8,000
|
|
|
|
85,459
|
|
|
|
0
|
|
|
|
93,459
|
|
|
|
|
(1) |
|
Perquisites. For a description of the perquisites we
provide executive officers, and the reasons why, see
Compensation Discussion and Analysis Other
Compensation. |
Except with respect to Messrs. Falk and Abernathy, amounts
shown as perquisites consist solely of amounts paid pursuant to
our Executive Financial Counseling Program and our executive
health screening program. Amounts shown as perquisites for
Mr. Abernathy for 2008 consist of $48,670 for reimbursement
of certain moving and related expenses and $7,750 paid pursuant
to our Executive Financial Counseling Program and for 2009
consist of $305 for reimbursement of certain moving and related
expenses. Perquisites for Mr. Falk included the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
|
Personal Use
|
|
|
|
Health
|
|
Travel to
|
|
|
|
|
of Corporate
|
|
Security
|
|
Screening
|
|
Board
|
|
|
|
|
Aircraft($)(a)
|
|
Services($)(b)
|
|
Program($)
|
|
Events($)(c)
|
|
Total($)
|
|
2009
|
|
|
32,277
|
|
|
|
36,695
|
|
|
|
2,072
|
|
|
|
0
|
|
|
|
71,044
|
|
2008
|
|
|
54,395
|
|
|
|
34,446
|
|
|
|
0
|
|
|
|
0
|
|
|
|
88,841
|
|
2007
|
|
|
45,320
|
|
|
|
56,120
|
|
|
|
0
|
|
|
|
13,520
|
|
|
|
114,960
|
|
|
|
|
(a) |
|
Our Chief Executive Officer is required to use our corporate
aircraft for personal travel pursuant to an executive security
program established by the Board. The amount shown for personal
use of our aircraft is our incremental cost of operating the
aircraft. The incremental cost of personal travel on our
corporate aircraft is based on our variable cost per hour of
operating the aircraft multiplied by the number of hours of
personal travel. Items included in calculating this variable
cost for 2009 are crew travel costs, crew meals, fuel, catering,
supplies, landing and parking fees, and maintenance costs.
Non-variable costs that would have been incurred regardless of
whether there was any personal use of the aircraft are excluded.
In February 2009, the Committee adopted a policy that limits the
personal use of corporate aircraft by our Chief Executive
Officer to an aggregate annual incremental cost to the
Corporation of $100,000, and generally prohibits the personal
use of corporate aircraft by other executive officers unless
there is no incremental cost to the Corporation for the use. |
|
(b) |
|
Personal security services provided as required by our chief
executive officer security program. |
48
|
|
|
(c) |
|
Incremental travel and related costs, including for
Mr. Falks spouse and child who accompanied him, in
connection with Board meetings and customer site visits in
Turkey and Russia in 2007. These meetings and visits continued a
long-standing practice of the Board to periodically visit our
important international markets and to be accompanied by
spouses/guests on these visits. |
|
|
|
(2) |
|
Defined Contribution Plan Payments. Matching
contributions were made under the Incentive Investment Plan for
all named executive officers. The value for Messrs. Black,
Buthman and Palmer also includes amounts contributed or
allocated to the Retirement Contribution Plan and supplemental
Retirement Contribution Program. Messrs. Buthman, Black and
Palmer are the only named executive officers who participated in
the Retirement Contribution Plan and supplemental Retirement
Contribution Program, which are described under
Compensation Discussion and Analysis
Retirement Benefits. |
|
(3) |
|
Tax
Gross-Ups. The
amounts shown in 2008 and 2009 for Mr. Abernathy reflect
tax reimbursement for moving and related expenses incurred for a
relocation in connection with his change in duties. For the
remaining named executive officers, amounts reflect tax
reimbursement and related
gross-ups
with respect to certain business and personal use of our
corporate aircraft. In addition, for Mr. Falk, the amounts
in 2007 reflect tax reimbursement and related
gross-up
with respect to (i) travel for Mr. Falks spouse
and child for the Board meetings and customer site visits in
Turkey and Russia described above and (ii) tour of
historical sites in Turkey for Mr. Falk, his spouse and
child. The Committee adopted a policy in February 2009 providing
that executive officers will no longer receive tax reimbursement
and a related
gross-up for
perquisites (including personal use of corporate aircraft),
except for certain relocation benefits. |
|
(4) |
|
Certain Dividends. The named executive
officers also receive dividends on restricted stock and dividend
equivalents on restricted share units held by them at the same
rate and on the same dates as dividends are paid to our
stockholders. Because we factor the value of the right to
receive dividends into the grant date fair value of the
restricted stock and restricted share units awards, the
dividends and dividend equivalents received by our named
executive officers are not included in the Summary Compensation
Table. The named executive officers received the following
dividends and dividend equivalents on the restricted stock, as
applicable, and restricted share units held by them: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
Name
|
|
Year
|
|
Received($)
|
|
Thomas J. Falk
|
|
|
2009
|
|
|
|
573,946
|
|
|
|
|
2008
|
|
|
|
630,171
|
|
|
|
|
2007
|
|
|
|
699,533
|
|
Mark A. Buthman
|
|
|
2009
|
|
|
|
127,008
|
|
|
|
|
2008
|
|
|
|
142,368
|
|
|
|
|
2007
|
|
|
|
137,057
|
|
Robert E. Abernathy
|
|
|
2009
|
|
|
|
149,737
|
|
|
|
|
2008
|
|
|
|
161,869
|
|
|
|
|
2007
|
|
|
|
145,403
|
|
Robert W. Black
|
|
|
2009
|
|
|
|
86,108
|
|
|
|
|
2008
|
|
|
|
73,162
|
|
|
|
|
2007
|
|
|
|
40,754
|
|
Anthony J. Palmer
|
|
|
2009
|
|
|
|
64,847
|
|
|
|
|
2008
|
|
|
|
67,500
|
|
Dividend equivalents are no longer paid on unvested
performance-based restricted share units granted to the named
executive officers as of February 2009 and thereafter; instead,
dividend equivalents on these units are accumulated and will be
paid in additional shares after the performance-based restricted
share units vest, based on the actual number of shares that
vest. The value of these accumulated dividend equivalents will
not be included in the table above until the underlying
performance-based restricted share units vest and the dividend
equivalents are paid in additional shares.
Under the terms of their letter agreements,
Mr. Blacks and Mr. Palmers dividend
equivalents on their respective restricted share unit awards
granted as part of their signing bonuses are reinvested in
49
additional restricted share units. The grant date fair value of
these reinvested dividend equivalents is reflected in the table
above.
Grants of
Plan-Based Awards
The following table sets forth plan-based awards granted to the
named executive officers during 2009 on a
grant-by-grant
basis.
Grants of
Plan-Based Awards in 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
or Base
|
|
Value of
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity
|
|
Estimated Future Payouts
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
|
|
|
|
Incentive Plan Awards(1)
|
|
Under Equity Incentive Plan Awards(2)
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Grant Type
|
|
Date(3)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)(4)
|
|
($/Sh)
|
|
($)(5)
|
|
Thomas J. Falk
|
|
Annual cash incentive award
|
|
|
|
0
|
|
|
1,714,994
|
|
|
3,429,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-based RSU
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
0
|
|
|
85,727
|
|
|
171,454
|
|
|
|
|
|
|
|
|
4,000,022
|
|
|
|
Time-vested stock option
|
|
4/29/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201,572
|
|
|
49.61
|
|
|
870,791
|
|
Mark A. Buthman
|
|
Annual cash incentive award
|
|
|
|
0
|
|
|
561,000
|
|
|
1,122,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-based RSU
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
0
|
|
|
20,360
|
|
|
40,720
|
|
|
|
|
|
|
|
|
949,998
|
|
|
|
Time-vested stock option
|
|
4/29/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,873
|
|
|
49.61
|
|
|
206,811
|
|
Robert E. Abernathy
|
|
Annual cash incentive award
|
|
|
|
0
|
|
|
531,250
|
|
|
1,062,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-based RSU
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
0
|
|
|
27,147
|
|
|
54,294
|
|
|
|
|
|
|
|
|
1,266,679
|
|
|
|
Time-vested stock option
|
|
4/29/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,831
|
|
|
49.61
|
|
|
275,750
|
|
Robert W. Black
|
|
Annual cash incentive award
|
|
|
|
0
|
|
|
476,000
|
|
|
952,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-based RSU
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
0
|
|
|
16,074
|
|
|
32,148
|
|
|
|
|
|
|
|
|
750,013
|
|
|
|
Time-vested stock option
|
|
4/29/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,795
|
|
|
49.61
|
|
|
163,274
|
|
Anthony J. Palmer
|
|
Annual cash incentive award
|
|
|
|
0
|
|
|
425,000
|
|
|
850,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-based RSU
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
0
|
|
|
11,787
|
|
|
23,574
|
|
|
|
|
|
|
|
|
549,981
|
|
|
|
Time-vested stock option
|
|
4/29/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,716
|
|
|
49.61
|
|
|
119,733
|
|
|
|
|
(1) |
|
Represents the potential annual performance-based incentive cash
payments each executive could earn in 2009. These awards were
granted under our Executive Officer Achievement Award Program
approved by stockholders in 2002. Actual amounts earned in 2009
were based on the 2009 objectives established by the Management
Development and Compensation Committee at its February 26,
2009 meeting. See Compensation Discussion and
Analysis Annual Cash Compensation Annual
Cash Incentives. At the time of the grant, the incentive
payment could range from the threshold amount to the maximum
amount depending on the extent to which the 2009 objectives were
met. The actual amounts paid in 2010 based on the 2009
objectives are set forth in the Summary Compensation Table under
the column entitled Non-Equity Incentive Plan
Compensation. |
|
(2) |
|
Performance-based restricted share units granted under the 2001
Plan to our named executive officers on February 26, 2009.
The number of performance-based restricted share units granted
in 2009 that will ultimately vest on February 26, 2012
could range from the threshold number to the maximum number
depending on the extent to which the average annual net sales
growth and average ROIC performance objectives for those awards
are met. See Compensation Discussion and
Analysis Long-Term Equity Incentive
Compensation Performance-Based Restricted Share Unit
Awards. |
|
(3) |
|
The grant date for each award is the same date that the
Committee took action to grant the awards. |
|
(4) |
|
Time-vested stock options granted under the 2001 Plan to our
named executive officers on April 29, 2009. |
|
(5) |
|
Grant date fair value is determined in accordance with ASC Topic
718 and, for performance-based restricted share units, is the
value at grant date based on the probable outcome of the
performance condition and is consistent with the estimate of
aggregate compensation cost to be recognized over the service
period determined as of the grant date, excluding the effect of
estimated forfeitures. See Notes 9, 8 and 6 to our audited
consolidated financial statements included in our Annual Reports
on
Form 10-K
for 2009, 2008 and 2007, respectively, for the assumptions used
in valuing and expensing these restricted share units and stock
option awards in accordance with ASC Topic 718. |
50
Discussion of
Summary Compensation and Plan-Based Awards Tables
Our executive compensation policies and practices, pursuant to
which the compensation set forth in the Summary Compensation
Table and the Grants of Plan-Based Awards in 2009 table was paid
or awarded, are described under Compensation Discussion
and Analysis.
In 2006, the Corporation and Mr. Black entered into a
letter agreement in connection with his hiring. Among other
things, the letter agreement provided for an initial grant of
stock options and restricted share units, as well as additional
severance protection for Mr. Black. See Potential
Payments on Termination or Change in Control
Severance Benefits Letter Agreement with
Mr. Black. Also in 2006, the Corporation and
Mr. Palmer entered into a letter agreement in connection
with his hiring. Among other things, the letter agreement
provided for an initial grant of stock options and restricted
share units, as well as additional severance protection for
Mr. Palmer. See Potential Payments on Termination or
Change in Control Severance Benefits
Letter Agreement with Mr. Palmer. Other than these
letter agreements and the executive severance plans described
below, none of our named executive officers has any employment
agreement with us. See Potential Payments on Termination
or Change in Control.
Executive officers may receive long-term equity incentive awards
of stock options, restricted stock or restricted share units, or
a combination of stock options, restricted stock and restricted
share units under the 2001 Plan, which was approved by
stockholders in 2001. The 2001 Plan provides the Committee with
discretion to require performance-based standards to be met
before awards vest. From 2004 through 2007, the Committee used a
combination of time-vested restricted share units,
performance-based restricted share units and stock options. In
2008 and 2009, the Committee did not award time-vested
restricted share units to our named executive officers. Each
named executive officer received grants of stock options and
performance-based restricted share units under the 2001 Plan in
2009.
For grants of stock options, the 2001 Plan provides that the
option exercise price per share shall be no less than the
closing price per share of our common stock at the grant date.
The term of any option is no more than ten years from the grant
date. Options granted in 2009 become exercisable in three annual
installments of 30 percent, 30 percent and
40 percent, beginning April 29, 2010; provided,
however, that all of the options become exercisable for three
years upon death or total or permanent disability, and for five
years upon retirement of the officer. In addition, options
generally become exercisable upon a termination of employment
following a change in control, and options granted to the named
executive officers are subject to our Executive Severance Plan.
See Potential Payments on Termination or Change in
Control. The options may be transferred by the officers to
family members or certain entities in which family members have
interests.
Performance-based restricted share unit awards granted in 2009
vest three years following grant in a range from zero to
200 percent of the target levels based on our average
annual net sales growth and average adjusted ROIC performance
during the three years. As of February 9, 2010, the
performance-based
restricted share units granted in 2009, 2008 and 2007 were on
pace to vest at the following levels: 151 percent for the
2009 award, 29 percent for the 2008 award and
60 percent for the 2007 award.
For restricted share units, during the restricted period an
executive who is awarded restricted share units is not entitled
to vote the units but, for units granted prior to 2009, receives
cash equal to dividends paid on our common stock (other than
Mr. Blacks and Mr. Palmers dividend
equivalents on their respective restricted share unit awards
granted as part of their signing bonuses, which are reinvested
in additional restricted share units). Dividend equivalents are
no longer paid on unvested performance-based restricted share
units granted to the named executive officers as of February
2009 and thereafter; instead, dividend equivalents on these
units are accumulated and will be paid in additional shares
after the performance-based restricted share units vest, based
on the actual number of shares that vest.
51
Outstanding
Equity Awards
The following table sets forth information concerning
outstanding equity awards for our named executive officers at
December 31, 2009. Option awards were granted for ten-year
terms, ending on the option expiration date set forth in the
table. Stock awards were granted as indicated in the footnotes
to the table.
Outstanding
Equity Awards as of December 31, 2009(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(2)(3)
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Market or
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
Plan Awards:
|
|
|
Payout Value of
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares
|
|
|
Number of
|
|
|
Unearned Shares,
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Units of
|
|
|
or Units of
|
|
|
Unearned Shares,
|
|
|
Units or Other
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Units or Other
|
|
|
Rights That
|
|
|
|
Grant
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Rights That Have
|
|
|
Have Not
|
|
Name
|
|
Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)(4)
|
|
|
Date
|
|
|
Vested(#)(5)
|
|
|
Vested($)(6)
|
|
|
Not Vested(#)(7)
|
|
|
Vested($)(8)
|
|
Thomas J. Falk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/29/09
|
|
|
|
0
|
|
|
|
201,572
|
|
|
|
49.61
|
|
|
|
4/29/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177,298
|
(9)
|
|
|
11,295,656
|
|
|
|
|
4/23/08
|
|
|
|
62,509
|
|
|
|
145,857
|
|
|
|
63.99
|
|
|
|
4/23/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/23/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,346
|
|
|
|
5,309,974
|
|
|
|
|
4/25/07
|
|
|
|
86,254
|
|
|
|
57,504
|
|
|
|
71.88
|
|
|
|
4/25/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,940
|
|
|
|
2,289,737
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,940
|
|
|
|
2,289,737
|
|
|
|
|
4/26/06
|
|
|
|
175,946
|
|
|
|
0
|
|
|
|
58.73
|
|
|
|
4/26/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/26/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,325
|
|
|
|
1,868,296
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/05
|
|
|
|
167,776
|
|
|
|
0
|
|
|
|
61.59
|
|
|
|
4/28/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,982
|
|
|
|
890,793
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/04
|
|
|
|
122,031
|
|
|
|
0
|
|
|
|
63.14
|
|
|
|
4/28/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/02
|
|
|
|
305,077
|
|
|
|
0
|
|
|
|
59.97
|
|
|
|
2/17/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/22/01
|
|
|
|
228,807
|
(10)
|
|
|
0
|
|
|
|
68.59
|
|
|
|
2/21/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark A. Buthman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/29/09
|
|
|
|
0
|
|
|
|
47,873
|
|
|
|
49.61
|
|
|
|
4/29/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,108
|
(9)
|
|
|
2,682,701
|
|
|
|
|
4/23/08
|
|
|
|
14,846
|
|
|
|
34,641
|
|
|
|
63.99
|
|
|
|
4/23/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/23/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,795
|
|
|
|
1,261,139
|
|
|
|
|
4/25/07
|
|
|
|
17,807
|
|
|
|
11,872
|
|
|
|
71.88
|
|
|
|
4/25/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,420
|
|
|
|
472,728
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,420
|
|
|
|
472,278
|
|
|
|
|
4/26/06
|
|
|
|
38,595
|
|
|
|
0
|
|
|
|
58.73
|
|
|
|
4/26/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/26/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,433
|
|
|
|
409,846
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/05
|
|
|
|
36,803
|
|
|
|
0
|
|
|
|
61.59
|
|
|
|
4/28/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,067
|
|
|
|
195,399
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/04
|
|
|
|
24,558
|
|
|
|
0
|
|
|
|
63.14
|
|
|
|
4/28/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/03
|
|
|
|
41,523
|
|
|
|
0
|
|
|
|
43.80
|
|
|
|
2/16/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/02
|
|
|
|
40,677
|
|
|
|
0
|
|
|
|
59.97
|
|
|
|
2/17/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/22/01
|
|
|
|
30,507
|
|
|
|
0
|
|
|
|
68.59
|
|
|
|
2/21/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Abernathy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/29/09
|
|
|
|
0
|
|
|
|
63,381
|
|
|
|
49.61
|
|
|
|
4/29/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,145
|
(9)
|
|
|
3,576,998
|
|
|
|
|
4/23/08
|
|
|
|
17,971
|
|
|
|
41,934
|
|
|
|
63.99
|
|
|
|
4/23/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/23/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,962
|
|
|
|
1,526,619
|
|
|
|
|
4/25/07
|
|
|
|
21,146
|
|
|
|
14,098
|
|
|
|
71.88
|
|
|
|
4/25/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,602
|
|
|
|
548,033
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,811
|
|
|
|
561,349
|
|
|
|
|
4/26/06
|
|
|
|
45,406
|
|
|
|
0
|
|
|
|
58.73
|
|
|
|
4/26/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/26/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,388
|
|
|
|
470,689
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/05
|
|
|
|
37,885
|
|
|
|
0
|
|
|
|
61.59
|
|
|
|
4/28/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,082
|
|
|
|
196,354
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/04
|
|
|
|
28,473
|
|
|
|
0
|
|
|
|
63.14
|
|
|
|
4/28/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/03
|
|
|
|
91,523
|
|
|
|
0
|
|
|
|
43.80
|
|
|
|
2/16/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/02
|
|
|
|
101,692
|
|
|
|
0
|
|
|
|
59.97
|
|
|
|
2/17/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/22/01
|
|
|
|
61,014
|
|
|
|
0
|
|
|
|
68.59
|
|
|
|
2/21/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(2)(3)
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Market or
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
Plan Awards:
|
|
|
Payout Value of
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares
|
|
|
Number of
|
|
|
Unearned Shares,
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Units of
|
|
|
or Units of
|
|
|
Unearned Shares,
|
|
|
Units or Other
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Units or Other
|
|
|
Rights That
|
|
|
|
Grant
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Rights That Have
|
|
|
Have Not
|
|
Name
|
|
Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)(4)
|
|
|
Date
|
|
|
Vested(#)(5)
|
|
|
Vested($)(6)
|
|
|
Not Vested(#)(7)
|
|
|
Vested($)(8)
|
|
Robert W. Black
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/29/09
|
|
|
|
0
|
|
|
|
37,795
|
|
|
|
49.61
|
|
|
|
4/29/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,244
|
(9)
|
|
|
2,117,975
|
|
|
|
|
4/23/08
|
|
|
|
11,720
|
|
|
|
27,349
|
|
|
|
63.99
|
|
|
|
4/23/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/23/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,627
|
|
|
|
995,596
|
|
|
|
|
4/25/07
|
|
|
|
11,129
|
|
|
|
7,420
|
|
|
|
71.88
|
|
|
|
4/25/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,637
|
|
|
|
295,423
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,637
|
|
|
|
295,423
|
|
|
|
|
4/26/06
|
|
|
|
36,325
|
|
|
|
0
|
|
|
|
58.73
|
|
|
|
4/26/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/26/06
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,857
|
(12)
|
|
|
245,729
|
|
|
|
|
|
|
|
|
|
|
|
|
4/26/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,784
|
|
|
|
241,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony J. Palmer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/29/09
|
|
|
|
0
|
|
|
|
27,716
|
|
|
|
49.61
|
|
|
|
4/29/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,378
|
(9)
|
|
|
1,553,122
|
|
|
|
|
4/23/08
|
|
|
|
8,595
|
|
|
|
20,055
|
|
|
|
63.99
|
|
|
|
4/23/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/23/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,460
|
|
|
|
730,117
|
|
|
|
|
4/25/07
|
|
|
|
11,129
|
|
|
|
7,420
|
|
|
|
71.88
|
|
|
|
4/25/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,637
|
|
|
|
295,423
|
|
|
|
|
|
|
|
|
|
|
|
|
4/25/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,637
|
|
|
|
295,423
|
|
|
|
|
1/31/07
|
|
|
|
6,916
|
|
|
|
4,611
|
|
|
|
69.40
|
|
|
|
1/31/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/07
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,464
|
(12)
|
|
|
348,111
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown reflect outstanding equity awards granted
under the 1992 Equity Participation Plan (the 1992
Plan) or the 2001 Plan (together, the Equity
Plans). Under the Equity Plans, an executive officer may
receive awards of stock options, restricted stock or restricted
share units, or a combination of stock options, restricted stock
and restricted share units. Only stock option awards are
currently outstanding under the 1992 Plan. Stock options,
time-vested restricted share unit and performance-based
restricted share unit awards are currently outstanding for the
named executive officers under the 2001 Plan. |
|
(2) |
|
Number and exercise price of stock options granted prior to
December 1, 2004 include mandatory adjustments to reflect
the change in capitalization due to the Neenah Paper, Inc.
spin-off. |
|
(3) |
|
Stock options granted under the Equity Plans become exercisable
in three annual installments of 30 percent, 30 percent
and 40 percent, beginning the first anniversary of the
grant date; provided that all of the options become exercisable
for three years upon death or total and permanent disability and
for five years upon retirement of the officer. In addition,
options generally become exercisable upon a termination of
employment following a change in control, and options granted to
the named executive officers are subject to our Executive
Severance Plan. See Potential Payments on Termination or
Change in Control. The options may be transferred by the
officers to family members or certain entities in which family
members have interests. |
|
(4) |
|
The Equity Plans provide that the option price per share shall
be no less than 100 percent of the closing price per share
of our common stock on the date of grant. |
|
(5) |
|
The amounts shown represent awards of time-vested restricted
share units granted to the named executive officers in April
2005, 2006 and 2007, as indicated. Subject to accelerated
vesting as described in Potential Payments on Termination
or Change in Control, time-vested restricted share unit
awards vest in one-third increments, beginning on the third
anniversary of the grant date (except as provided in footnotes
(11) and (13) below). Dividend equivalents on these
units are paid in cash on the number of restricted share units
at the same rate and on the same day as dividends are paid to
all our stockholders (except as provided in footnote
(12) below). |
|
(6) |
|
The values shown in this column are based on the closing price
of our common stock on December 31, 2009 of $63.71 per
share. |
53
|
|
|
(7) |
|
The amounts shown represent awards of performance-based
restricted share units granted to the named executive officers
in April 2007 and 2008 and February 2009. Subject to accelerated
vesting as described in Potential Payments on Termination
or Change in Control, performance-based restricted share
unit awards granted in 2007 and 2008 vest on April 25, 2010
and April 23, 2011, respectively, in a range from zero to
150 percent of the target levels indicated based on the
achievement of specific performance goals, and performance-based
restricted share unit awards granted in 2009 vest on
February 26, 2012 in a range from zero to 200 percent
of the target levels indicated based on the achievement of
specific performance goals. Based on the current vesting pace of
these awards, the amounts shown represent target levels for the
2007 and 2008 grants and the maximum level for the 2009 grant.
See Discussion of Summary Compensation and Plan-Based
Awards Tables. For performance-based restricted share
units granted prior to 2009, dividend equivalents are paid in
cash on the target number of restricted share units at the same
rate paid and on the same day as dividends are paid to all our
stockholders. Dividend equivalents are no longer paid on
unvested performance-based restricted share units granted to the
named executive officers as of February 2009 and thereafter;
instead, dividend equivalents on these units are accumulated and
will be paid in additional shares after the performance-based
restricted share units vest, based on the actual number of
shares that vest. |
|
(8) |
|
The values shown in this column are based on the target level of
performance-based restricted share units (or, for the February
2009 grant, the maximum level as described in footnote
(7) above) and the closing price of our common stock on
December 31, 2009 of $63.71 per share. |
|
(9) |
|
Includes the following amount of dividend equivalents on
performance-based restricted share units granted to the named
executive officers in February 2009, based on the maximum level
for the grant: 5,844 for Mr. Falk; 1,388 for
Mr. Buthman; 1,850 for Mr. Abernathy; 1,095 for
Mr. Black and 803 for Mr. Palmer. |
|
(10) |
|
Includes 33,775 options transferred to TKM, Ltd., a family
partnership established by Mr. Falk and his spouse. |
|
(11) |
|
Under the terms of Mr. Blacks letter agreement, these
time-vested restricted share units, granted as part of his
signing bonus, vest on April 26, 2011. |
|
(12) |
|
Includes the following amount of dividend equivalents on
time-vested restricted share units granted as part of
Mr. Blacks or Mr. Palmers signing bonus,
as applicable, that are reinvested in additional restricted
share units: 452 for Mr. Black and 1,464 for
Mr. Palmer. |
|
(13) |
|
Under the terms of Mr. Palmers letter agreement,
these time-vested restricted share units, granted as part of his
signing bonus, vested on January 31, 2010. |
54
Option Exercises
and Stock Vested
The following table sets forth information concerning stock
options exercised and stock awards vested during 2009 for our
named executive officers.
Option Exercises
and Stock Vested in 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Value
|
|
Shares
|
|
Value
|
|
|
Acquired on
|
|
Realized on
|
|
Acquired on
|
|
Realized on
|
Name
|
|
Exercise(#)
|
|
Exercise($)(1)
|
|
Vesting(#)
|
|
Vesting($)(2)
|
|
Thomas J. Falk
|
|
|
610,154
|
(3)
|
|
|
10,178,274
|
|
|
|
55,173
|
|
|
|
2,735,058
|
|
Mark A. Buthman
|
|
|
78,778
|
|
|
|
951,865
|
|
|
|
11,862
|
|
|
|
587,963
|
|
Robert E. Abernathy
|
|
|
71,184
|
|
|
|
722,696
|
|
|
|
13,909
|
(4)
|
|
|
696,899
|
|
Robert W. Black
|
|
|
0
|
|
|
|
0
|
|
|
|
3,595
|
|
|
|
177,269
|
|
Anthony J. Palmer
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
257,350
|
|
|
|
|
(1) |
|
The dollar amount reflects the total pre-tax value realized by
the named executive officers (number of shares exercised times
the difference between the closing price of our common stock on
the exercise date and the exercise price). It is not the grant
date fair value disclosed in other locations in this proxy
statement. Value from these option exercises was only realized
to the extent our stock price increased relative to the stock
price at grant (the exercise price). |
|
(2) |
|
The dollar amount reflects the final pre-tax value received by
the named executive officers upon the vesting of time-vested
restricted share units or performance-based restricted share
units (number of shares vested times the closing price of our
common stock on the vesting date). It is not the grant date fair
value disclosed in other locations in this proxy statement. |
|
(3) |
|
Includes 61,015 options exercised by TKM, Ltd. |
|
(4) |
|
Includes 464 time-vested restricted share units that were vested
and withheld to cover Mr. Abernathys applicable tax
withholding obligations arising when these time-vested
restricted share units became non-forfeitable. The underlying
time-vested restricted share units became non-forfeitable when
Mr. Abernathy turned age 55. |
Pension
Benefits
The following table sets forth information as of
December 31, 2009 concerning potential payments to our
named executive officers under our pension plan and supplemental
pension plans. Information about these plans follows the table.
2009 Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
|
|
Number of Years
|
|
Accumulated
|
Name(1)
|
|
Plan Name
|
|
Credited Service(#)
|
|
Benefit($)
|
|
Thomas J. Falk
|
|
Pension Plan
|
|
|
26.5
|
|
|
|
607,730
|
|
|
|
Supplemental Pension Plans
|
|
|
26.5
|
|
|
|
10,460,102
|
|
Mark A. Buthman
|
|
Pension Plan
|
|
|
15.2
|
(2)
|
|
|
304,184
|
|
|
|
Supplemental Pension Plans
|
|
|
15.2
|
|
|
|
1,617,728
|
|
Robert E. Abernathy(3)
|
|
Pension Plan
|
|
|
28.0
|
|
|
|
792,549
|
|
|
|
Supplemental Pension Plans
|
|
|
28.0
|
|
|
|
4,363,141
|
|
|
|
|
(1) |
|
Because Messrs. Black and Palmer joined the Corporation
after January 1, 1997, they are not eligible to participate
in our defined benefit pension plans. |
55
|
|
|
(2) |
|
Mr. Buthman has 27.6 years of actual service. As
described under Nonqualified Deferred Compensation,
in 1997 he elected to participate in our defined contribution
plans instead of accruing additional years of service under our
defined benefit pension plans. This election reduces his
benefits under our defined benefit pension plans and increases
his benefits under our defined contribution plans, in accordance
with the terms of those plans. |
|
(3) |
|
Mr. Abernathy is currently eligible for early retirement
under the plans and would be eligible to receive the reduced
benefits described in the table below. |
Employees who joined the Corporation prior to January 1,
1997 (and who have not elected to participate in our Retirement
Contribution Plan), including Messrs. Falk and Abernathy,
are eligible to participate in our pension plans, which provide
benefits based on years of service and pay (annual cash
compensation), integrated with social security benefits. Our
pension plans are comprised of the
Kimberly-Clark
Pension Plan and the Supplemental Benefit Plans.
We stopped accruing compensation and benefit service under our
pension plans for most of our U.S. employees, including our
named executive officers, for plan years after 2009. These
changes will not affect benefits earned by participants prior to
January 1, 2010.
The following is an overview of these plans, which are
applicable to our executives and active employees based in the
U.S. who joined the Corporation prior to January 1,
1997 (and who have not opted out of the plans).
|
|
|
|
|
|
|
Pension Plan
|
|
Supplemental Pension Plans
|
|
Reason for Plan
|
|
Provide eligible participants with a competitive level of
retirement benefits based on pay and years of service
|
|
Provide eligible participants with benefits as are necessary to
fulfill the intent of the pension plan without regard to
limitations imposed by the Internal Revenue Code
|
|
|
|
|
|
Eligible Participants
|
|
Salaried employees who joined the Corporation prior to January
1, 1997
|
|
Salaried employees impacted by limitations imposed by the
Internal Revenue Code on payments under the pension plan
|
|
|
|
|
|
Payment Form
|
|
Normal benefit:
|
|
Accrued benefits prior to 2005:
|
|
|
Single-life annuity payable
monthly
|
|
Monthly payments or a lump sum
after age 55
|
|
|
|
|
|
|
|
Other optional forms of benefit are available, including a joint
and survivor benefit
|
|
Accrued benefits for 2005 and after:
Lump sum six months after termination of employment
|
|
|
|
|
|
Retirement Eligibility
|
|
Full unreduced benefit:
|
|
|
|
|
Normal retirement age of 65
|
|
|
|
|
Age 62 with 10 years of
service
|
|
|
|
|
Age 60 with 30 years of
service
|
|
|
|
|
Disability retirement
|
|
|
|
|
|
|
|
|
|
Reduced benefit:
|
|
|
|
|
Age 55 with five years of service.
The amount of the benefit is reduced according to the number of
years the participant retires before the age he or she is
eligible for a full, unreduced benefit. The amount of the
reduction is based on age and years of vesting service
|
|
|
|
Benefits Payable
|
|
Depends on the participants years of service under our
plan and monthly average earnings over the last 60 months
of service or, if higher, the monthly average earnings for the
five calendar years in their last fifteen years of service for
which earnings were the highest
|
|
|
|
Benefit Formula for Salaried Employees (As of December 31,
2009) (Payable in the form of a single life annuity)
|
|
Unreduced monthly benefit = 1/12 of ((1.125% x final average
annual earnings (up to 2/3 of the Social Security Taxable Wage
Base)) + (1.425% x final average annual earnings (in excess of
2/3 of the Social Security Taxable Wage Base up to Taxable
Wage Base)) + (1.5% x final average annual earnings (over the
Social Security Taxable Wage Base))
|
56
|
|
|
|
|
|
|
Pension Plan
|
|
Supplemental Pension Plans
|
|
Pensionable Earnings
|
|
Annual cash compensation. Long-term equity compensation is not
included
|
|
|
|
|
|
Change in control or reduction in our long-term credit rating
(below investment grade)
|
|
Not applicable
|
|
Participants have the option of receiving the present value of
their accrued benefits prior to 2005 in the supplemental pension
plans in a lump sum, reduced by 10 percent and
5 percent for active and former employees, respectively
|
The estimated actuarial present value of the retirement benefits
accrued through December 31, 2009 appears in the 2009
Pension Benefits table. For purposes of determining the present
value of accumulated benefits, we have used the potential
earlier retirement ages as described above rather than the
normal retirement age under the plans, which is 65. For a
discussion of how we value these obligations and the assumptions
we use in that valuation, see Note 10 to our audited
consolidated financial statements included in our 2009 Annual
Report on
Form 10-K.
The calculation of actuarial present value generally is
consistent with the methodology and assumptions outlined in our
audited consolidated financial statements, except that benefits
are reflected as payable as of the date the executive is first
entitled to full unreduced benefits (as opposed to the assumed
retirement date) and without consideration of pre-retirement
mortality. Present values were calculated using projected
mortality. With respect to the supplemental pension plans, the
amount of the earlier retirement age lump sum benefit was
determined using an approximate
30-year
Treasury Bond rate of 4.50%, consistent with the methodology
used for purposes of our consolidated financial statements; any
actual lump sum benefit would be calculated using the
30-year
Treasury Bond rate in effect as of the beginning of the month
prior to termination. Present value amounts were determined
based on the financial accounting discount rate for United
States pension plans of 6.00% as of December 31, 2009.
The actuarial increase in 2009 of the projected retirement
benefits can be found in the Summary Compensation Table under
the heading Change in Pension Value and Nonqualified
Deferred Compensation Earnings (all amounts reported under
that heading represent actuarial increases in our pension
plans). No payments were made to the named executive officers
listed above under our pension plans during 2009. For
participants in the pension plans, the number of years of
credited service disclosed in the table equals an
executives length of service with Kimberly-Clark, except
for Mr. Buthman as described in footnote (2) to the
table above. Beginning in 2010, the number of years of credited
service will be frozen at the amounts set forth in the table
above, as a result of our ceasing accruing compensation and
benefit service under the plans.
While the supplemental pension plans remain unfunded, in 1994
the Board approved the establishment of a trust and authorized
us to make contributions to this trust in order to provide a
source of funds to assist us in meeting our liabilities under
our supplemental defined benefit plans. For additional
information regarding these plans, see Compensation
Discussion and Analysis Retirement Benefits.
57
Nonqualified
Deferred Compensation
The following table sets forth information concerning
nonqualified defined contribution and deferred compensation
plans for our named executive officers during 2009.
2009 Nonqualified
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Company
|
|
Aggregate
|
|
Balance at
|
|
|
Contributions
|
|
Earnings in
|
|
December 31,
|
Name
|
|
in 2009($)(1)
|
|
2009($)(2)
|
|
2009($)(3)
|
|
Thomas J. Falk
|
|
|
0
|
|
|
|
180,869
|
|
|
|
1,755,464
|
|
Mark A. Buthman
|
|
|
58,895
|
|
|
|
27,629
|
|
|
|
381,666
|
|
Robert E. Abernathy
|
|
|
0
|
|
|
|
2,728
|
|
|
|
12,478
|
|
Robert W. Black
|
|
|
72,648
|
|
|
|
54,061
|
|
|
|
233,896
|
|
Anthony J. Palmer
|
|
|
44,529
|
|
|
|
9,871
|
|
|
|
165,708
|
|
|
|
|
(1) |
|
Consist solely of contributions by the Corporation under the
supplemental Retirement Contribution Program. These amounts are
included in the Summary Compensation Table and represent a
portion of the Defined Contribution Plan Payments included in
All Other Compensation. |
|
(2) |
|
The amounts in this column show the changes in the aggregate
account balance for our named executive officers during 2009
that are not attributable to company contributions. There were
no withdrawals by or distributions to our named executive
officers during 2009. Aggregate earnings are not included in the
Summary Compensation Table because the earnings are not
above-market or preferential. |
|
(3) |
|
Balance includes contributions by the Corporation under the
supplemental Retirement Contribution Program (i) for
Mr. Buthman of $86,205 and $56,939 in 2008 and 2007,
respectively, (ii) for Mr. Black of $70,254 and
$51,750 in 2008 and 2007, respectively, and (iii) for
Mr. Palmer of $62,839 in 2008, that are reported in the
Summary Compensation Table as a portion of All Other
Compensation for those years. |
Amounts shown for Messrs. Falk and Abernathy represent
compensation deferred in prior years under our Deferred
Compensation Plan and accumulated earnings. Effective in 2005,
no further amounts may be deferred under this plan. Participants
in the Deferred Compensation Plan may elect to have deferrals
credited with yields equal to those earned on any of a subset of
funds available in the Incentive Investment Plan or 401(k)
Profit Sharing Plan, as applicable. Generally, benefits are
payable under the Deferred Compensation Plan in accordance with
the participants election in a lump sum or in quarterly
installments over a period between two and 20 years. If a
participant ceases his or her employment (other than as a result
of a total and permanent disability or death or on or after
age 55 with five or more years of service), the account
balance is paid in a lump sum. In the event of a change in
control or a reduction in our long-term credit rating (below
investment grade), currently-employed participants have the
option to elect an immediate lump-sum payment of their account
balance, less a 10 percent penalty.
The amounts shown for Messrs. Buthman, Black and Palmer
reflect 2009 contributions by the Corporation, earnings and
year-end balance for their respective accounts under the
supplemental Retirement Contribution Program. In 1997, pursuant
to a broad-based election offered to certain employees,
Mr. Buthman elected to no longer accrue any additional
years of benefit service under our defined benefit pension plans
and instead to participate in the Retirement Contribution Plan.
58
Overview of Qualified and Non-Qualified
Plans. The following is an overview of our
qualified and non-qualified plans that we offered to our named
executive officers as of December 31, 2009. As discussed
following the table below, we have discontinued all
contributions to our qualified plans and all accruals to the
supplemental Retirement Contribution Program for plan years
after 2009.
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Retirement
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Supplemental Retirement
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Incentive Investment Plan
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Contribution Plan
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Contribution Program
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Purpose
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To assist employees in saving for retirement
(401(k) plan)
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To assist employees in saving for retirement
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To provide benefits to the extent necessary to fulfill the
intent of the Retirement Contribution Plan without regard to the
limitations imposed by the Internal Revenue Code on qualified
defined contribution plans
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Eligible participants
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Most employees
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Most employees
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Salaried employees impacted by limitations imposed by the
Internal Revenue Code on the Retirement Contribution Plan
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Was the plan qualified under the Internal Revenue Code?
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Yes
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Yes
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No
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Could employees make contributions?
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Yes
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No
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No
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Did we make contributions or match employee contributions?
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We matched the first 2% of employee contributions at 75% and the
next 3% of employee contributions at 50%. Our maximum
contribution was $7,350 in 2009
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We contributed from 3.5% to 8.75% of the employees salary,
depending on compensation level and age. See the Retirement
Contribution Schedule below
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We provided credit to the extent contributions to the Retirement
Contribution Plan were limited by the Internal Revenue Code
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When did our contributions vest?
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Our contributions under these plans generally vested once the
participant completed at least three years of service
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How were contributions invested?
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Contributions were invested in certain designated investment
options selected by the participant
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When were account balances distributed?
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Distributions of the participants vested account balance
are only available after termination of employment. Loans,
hardship and certain other withdrawals are allowed prior to
termination of employment for certain vested amounts under the
Incentive Investment Plan
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59
Under the Retirement Contribution Plan, we provided monthly
contributions to a retirement contribution account based on the
participants age and eligible earnings, as shown in the
following schedule:
Retirement
Contribution Schedule
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Age
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(At Plan
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Percent of Base
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Percent of Excess
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Year End)
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Earnings(1)
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Earnings(2)
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Under 25
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3.50%
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5.75%
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25 - 29
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3.75%
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6.00%
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30 - 34
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4.00%
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6.25%
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35 - 39
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4.25%
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6.50%
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40 - 44
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4.50%
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6.75%
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45 - 49
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5.25%
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7.50%
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50 - 54
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6.00%
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8.25%
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55 and over
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6.50%
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8.75%
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(1) |
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Base Earnings are the amount of eligible earnings,
up to two-thirds of the taxable wages of an employee used for
purposes of calculating the non-Medicare portion of FICA taxes.
Eligible earnings include salary, bonus and incentive
compensation. |
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(2) |
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Excess Earnings are the amount of eligible earnings
above Base Earnings. |
We discontinued all contributions and accruals to the Retirement
Contribution Plan and the Incentive Investment Plan, and
modified the accruals for the supplemental Retirement
Contribution Program, for plan years after 2009 for most of our
U.S. employees, including our named executive officers.
Effective January 1, 2010, we adopted the 401(k) Profit
Sharing Plan, a new 401(k) profit sharing plan to provide for a
matching contribution of 100 percent of a
U.S. employees contributions to the plans, to a
yearly maximum of four percent of eligible compensation, as well
as a discretionary profit sharing contribution, in which
contributions will be based on our profit performance. Also
effective January 1, 2010, the supplemental Retirement
Contribution Program was amended to become the Supplemental
401(k) Plan and to provide benefits to the extent necessary to
fulfill the intent of the 401(k) Profit Sharing Plan without
regard to the limitations imposed by the Internal Revenue Code
on qualified defined contribution plans. Most
U.S. employees investment balances, including those
of our named executive officers, in the Incentive Investment
Plan and Retirement Contribution Plan were transferred to the
new 401(k) Profit Sharing Plan.
Potential
Payments on Termination or Change in Control
Our named executive officers are eligible to receive certain
benefits in the event of termination of employment, including
following a change in control. This section describes various
termination scenarios as well as the payments and benefits
payable under those scenarios.
Severance
Benefits
We maintain several severance plans for our executive officers,
depending on the circumstances that result in their termination.
Those plans include the Executive Severance Plan, which is
applicable when an executive officer is terminated following a
change in control, and the Severance Pay Plan, which is
applicable in the event of certain other involuntary
terminations. An executive officer may not receive severance
benefits under more than one of the plans described below.
Executive Severance Plan. We have agreements
under our Executive Severance Plan with each named executive
officer. The agreements provide that, in the event of a
Qualified Termination of
60
Employment (as described below), the participant will
receive a cash payment in an amount equal to the sum of:
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Two times the sum of annual base salary and the average annual
incentive award for the three prior fiscal years,
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The value of any forfeited awards, based on the closing price of
our common stock at the date of the participants
separation from service, of restricted stock, time-vested
restricted share units, performance-based restricted share units
granted before 2010 (at the greater of target or the attainment
of the performance goal as of the end of the prior year), and
certain unvested incentive stock options,
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The value of each forfeited grant of performance-based
restricted share units granted after January 1, 2009, based
on the average annual dollar amount paid to the participant for
the three prior fiscal years for performance-based restricted
share units,
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The value of any forfeited benefits under the new 401(k) Profit
Sharing Plan and Supplemental 401(k) Plan,
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The value of the employer match and assumed 3 percent
profit sharing contribution the named executive officer would
have received if he had remained employed an additional two
years under the new 401(k) Profit Sharing Plan and Supplemental
401(k) Plan, and
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Two years of COBRA premiums for medical and dental coverage.
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In addition, nonqualified stock options and certain incentive
stock options will vest and be exercisable within the earlier of
five years from the participants termination or the
remaining term of the option.
Under the terms of the agreements, in certain circumstances, if
the named executive officer incurs excise tax due to the
application of Section 280G of the Internal Revenue Code,
the named executive officer would be entitled to an additional
cash payment so that the participant will be in the same
position as if the excise tax were not applicable.
A Qualified Termination of Employment is a
separation of service within two years following a change of
control of the Corporation (as defined in the Plan) either
involuntarily without cause or by the participant with good
reason. In addition, any involuntary separation of service
without cause within one year before a change of control will
also be determined to be a Qualified Termination of Employment
if it is in connection with, or in anticipation of, a change of
control.
The Board has determined the eligibility criteria for
participation in the Plan. The Committee amended the Plan and
the related agreement on November 17, 2009 to provide that
(i) participants receive two times the average annual
incentive award for the three prior fiscal years, rather than
two times the target incentive award for that fiscal year, and
(ii) participants receive payouts for forfeited awards of
performance-based restricted share units (with a performance
period starting after January 1, 2009) based on the
average dollar amount paid to the participant for the three
prior fiscal years for performance-based restricted share units,
in order to comply with recent rulings regarding the tax
deductibility of these payments. In addition, the Committee
amended the Plan and agreements to eliminate benefits under the
Plan related to the Corporations pension plans,
supplemental pension plans, the Retirement Contribution Plan and
the supplemental Retirement Contribution Program and to provide
the benefits described above related to the new 401(k) Profit
Sharing Plan and Supplemental 401(k) Plan.
These amendments did not extend the date our current agreements
with each of our named executive officers expire, which is
December 31, 2011, unless extended by the Board.
Each named executive officers agreement under the
Executive Severance Plan provides that the executive will retain
in confidence any confidential information known to the
executive concerning the Corporation and its business so long as
such information is not publicly disclosed.
61
Severance Pay Plan. Our Severance Pay Plan
generally provides eligible employees (including our named
executive officers) severance payments and benefits in the event
of certain involuntary terminations. Under the Severance Pay
Plan, a named executive officer (employed for at least one year)
whose employment is involuntarily terminated would receive:
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Two times the sum of annual base salary and the average annual
incentive award for the three prior fiscal years,
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If the termination occurs after March 31, the pro-rated
current year annual incentive award based on actual performance,
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Six months of COBRA premiums for medical and dental
coverage, and
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Six months of outplacement services and three months of
participation in the employee assistance program.
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If the named executive officers employment is
involuntarily terminated within the first 12 months of
employment, the Severance Pay Plan provides that the named
executive officer would receive three months base salary.
Severance pay under the Severance Pay Plan will not be paid to
any participant who is terminated for cause (as defined under
the plan), is terminated during a period in which the
participant is not actively at work for more than 25 weeks
(except to the extent otherwise required by law), voluntarily
quits or retires, dies or is offered a comparable position (as
defined under the plan).
A named executive officer must execute a full and final release
of claims against us within a specified period of time following
termination to receive severance benefits under our severance
pay plans. Under the amended Severance Pay Plan, if the release
has been timely executed, severance benefits are payable as a
lump sum cash payment no later than 60 days following the
participants termination date. Any current year annual
incentive award that is payable under the amended Severance Pay
Plan will be paid at the same time as it was payable under the
Executive Officer Achievement Award Program, but no later than
60 days following the calendar year of the separation from
service.
The Committee amended the Severance Pay Plan on
November 17, 2009 to provide that participants receive two
times the average annual incentive award for the three prior
fiscal years, rather than two times the target incentive award
for that fiscal year, in order to comply with recent rulings
regarding the tax deductibility of these payments.
Letter Agreement with Mr. Black. In its
offer letter to Mr. Black, which was effective
April 10, 2006, the Corporation has agreed to provide
additional severance protection for him. If his employment is
involuntarily terminated by the Corporation for any reason other
than for cause (as described below), or by him for
good reason (as described below), during the first
five years of his employment, he will be entitled to receive a
lump sum severance amount equal to:
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One years base salary plus target annual incentive,
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The current value of unvested restricted share units and
unvested stock options granted as a signing bonus (including
unvested restricted share units accrued due to dividend
reinvestment),
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Pro-rata portion of the target annual incentive, and
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Any accrued but unpaid prior year annual incentive bonus (if the
termination is after the end of the calendar year but before
payment of the annual incentive bonus).
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In the letter agreement, cause, means
(1) habitual neglect of duty or misconduct in discharging
Mr. Blacks duties, (2) excessive, unexcused and
statutorily unprotected absenteeism, (3) failure or refusal
to comply with any lawful Corporation rule or policy, including
those rules set forth in our Code of Conduct, provided the rule
or policy is meaningful and substantive or the failure or
refusal to comply detrimentally harms the Corporations
business, (4) engaging in disloyal, dishonest or illegal
conduct relating to the Corporations business,
(5) engaging in theft, fraud, embezzlement or other
criminal activity involving the
62
parties employment relationship or (6) otherwise
engaging in improper conduct that the Corporation reasonably
determines to be meaningfully detrimental to its business.
In the letter agreement, good reason means
(1) a material reduction in Mr. Blacks title or
responsibilities that would ordinarily result in a reduction in
pay, or (2) a failure by the Corporation to make a payment
or grant to him as provided for in the letter agreement, unless
the Corporation cures either of these items within 30 days
after he provides notice.
To receive this severance benefit, Mr. Black must execute
the Corporations standard release agreement. This benefit
is in lieu of any benefit he would be entitled to under our
severance pay plans. If the benefit under these plans is greater
than the benefit under the letter agreement, he may elect to
receive the other benefit in lieu of the benefit under the
letter agreement.
Letter Agreement with Mr. Palmer. In its
offer letter to Mr. Palmer, which was effective
October 2, 2006, the Corporation has agreed to provide
additional severance protection for him. If his employment is
involuntarily terminated by the Corporation for any reason other
than for cause (as described below), or by him for
good reason (as described below), during the first
five years of his employment:
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He will be entitled to receive a lump sum severance amount equal
to one years base salary plus target annual incentive,
payable on the first day of the seventh month following the date
of his separation from service, and
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His unvested restricted share units granted as his signing bonus
will vest and be paid, in common stock, payable in conjunction
with his severance benefit.
|
In addition, if his termination is after the end of the calendar
year but before payment of the annual incentive bonus, he will
also receive any accrued but unpaid prior year annual incentive
bonus.
In the letter agreement, cause, means
(1) habitual neglect of duty or misconduct in discharging
Mr. Palmers duties, (2) excessive, unexcused and
statutorily unprotected absenteeism, (3) failure or refusal
to comply with any lawful Corporation rule or policy, including
those rules set forth in our Code of Conduct, provided the rule
or policy is meaningful and substantive or the failure or
refusal to comply detrimentally harms the Corporations
business, (4) engaging in disloyal, dishonest or illegal
conduct relating to the Corporations business,
(5) engaging in theft, fraud, embezzlement or other
criminal activity involving the parties employment
relationship or (6) otherwise engaging in improper conduct
that the Corporation reasonably determines to be meaningfully
detrimental to its business.
In the letter agreement, good reason means
(1) a material reduction in Mr. Palmers title or
responsibilities that would ordinarily result in a reduction in
pay, or (2) a failure by the Corporation to make a payment
or grant to Mr. Palmer as provided for in the letter
agreement, provided that he provides the Corporation
30 days notice of the reduction or failure by the
Corporation and the Corporation has not cured the reduction or
failure within 30 days after he provides notice.
To receive this severance benefit, Mr. Palmer must execute
the Corporations standard release agreement. This benefit
is in lieu of any benefit he would be entitled to under our
severance pay plans. If the benefit under these plans is greater
than the benefit under the letter agreement, he may elect to
receive the other benefit in lieu of the benefit under the
letter agreement.
2001 Plan. In the event of a Qualified
Termination of Employment (as described below) of a
participant in the 2001 Plan in connection with a change of
control, all of the participants options, restricted stock
and restricted share units would become fully vested (with any
restricted stock or performance-based restricted share units
vesting as described below). Unless otherwise governed by
another applicable plan or agreement, such as the terms of the
Executive Severance Plan, options in this event would be
exercisable for the lesser of three months or the remaining term
of the option. If any amounts payable under the 2001 Plan
constitute a parachute payment under Section 280G of the
Internal Revenue Code, the 2001 Plan provides that the amounts
will be reduced to the extent necessary to provide the
participant with the greatest aggregate net after tax receipt. A
Qualified Termination of Employment is a termination
of the participants employment within two years following
a change of control of the
63
Corporation (as defined in the 2001 Plan), unless the
termination is by reason of death or disability or unless the
termination is by the Corporation for cause or by the
participant without good reason.
The Committee amended the 2001 Plan on November 17, 2009 to
provide that, in connection with a Qualified Termination of
Employment, restricted stock or performance-based restricted
share units vest at the greater of the average incentive awards
for the three prior fiscal years or the number of shares that
would have vested based on the attainment of the applicable
performance goal as of the end of the prior calendar year.
The 2001 Plan provides that, if pending a change of control, the
Committee determines that the Corporations common stock
will cease to exist without an adequate replacement security
that preserves the economic rights and positions of the
participants in the 2001 Plan, then all stock options (other
than incentive stock options) will become exercisable, and the
restrictions on all restricted stock will lapse and the
restricted share units will vest. Each of these events would be
deemed to occur immediately prior to the consummation of the
change of control, in a manner deemed fair and equitable by the
Committee.
In the event of a termination of employment of a participant in
the 2001 Plan, other than a qualified termination of employment,
death, total and permanent disability or retirement of the
participant, the participant will forfeit all unvested
restricted stock and restricted share units, and any stock
options held by the participant will be exercisable for the
lesser of three months or the remaining term of the option.
Retirement, Death
and Disability
Retirement. In the event of retirement
(separation from service after age 55), our named executive
officers are entitled to receive:
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Benefits payable under our pension plans for eligible
participants (if the participant has at least five years of
vesting service) (see Pension Benefits for
additional information),
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Their account balance, if any, under the Retirement Contribution
Plan and supplemental Retirement Contribution Program (if the
participant has at least three years of vesting service),
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Their unvested employer contributions, if any, to the Incentive
Investment Plan,
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Their account balance, if any, under the Deferred Compensation
Plan,
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After December 31, 2009, their account balance under the
Supplemental 401(k) Plan (if the participant has at least two
years of vesting service),
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After December 31, 2009, their account balance under the
401(k) Profit Sharing Plan, including any unvested employer
contributions,
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Accelerated vesting of unvested stock options, and the options
will be exercisable until the earlier of five years or the
remaining term of the options,
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For units granted before 2008 and outstanding more than six
months after the date of grant, time-vested restricted share
units will be payable in full at the end of the restricted
period,
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For units outstanding more than six months after the date of
grant, performance-based restricted share units will be payable
based on attainment of the performance goal at the end of the
restricted period,
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Annual incentive award payment under the Executive Officer
Achievement Award Program as determined by the Committee in its
discretion,
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For participants with at least fifteen years of vesting service
and who joined the Corporation before January 1, 2004,
retiree medical credits based on number of years of vesting
service (up to a maximum of $104,500 in credits), and
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For participants with at least fifteen years of vesting service,
continuing group life coverage.
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64
Death. In the event of death while an active
employee, the following benefits are payable:
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50 percent of the benefits under our pension plans for
eligible participants, not reduced for early payment (if the
participant has at least five years of vesting service) (see
Pension Benefits for additional information),
payable under the terms of the plans to the participants
spouse or minor children,
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Their account balance, if any, under the Retirement Contribution
Plan and supplemental Retirement Contribution Program,
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Their unvested employer contributions, if any, to the Incentive
Investment Plan,
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Their account balance, if any, under the Deferred Compensation
Plan,
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After December 31, 2009, their account balance under the
Supplemental 401(k) Plan,
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After December 31, 2009, their account balance under the
401(k) Profit Sharing Plan, including any unvested employer
contributions,
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Accelerated vesting of unvested stock options, and the options
will be exercisable until the earlier of three years or the
remaining term of the options,
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For units outstanding more than six months after the date of
grant, time-vested restricted share units will be vested pro
rata, based on the number of full months of employment during
the restricted period prior to the participants
termination of employment, payable within 90 days following
the end of the restricted period,
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For units outstanding more than six months after the date of
grant, performance-based restricted share units will be vested
pro rata, based on attainment of the performance goal at the end
of the restricted period, payable within 70 days following
the end of the restricted period,
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Annual incentive award payment under the Executive Officer
Achievement Award Program as determined by the Committee in its
discretion, and
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Payment of benefits under the Corporations group life
insurance plan (which is available to all salaried employees in
the U.S.) equal to the participants annual pay, up to
$1 million (plus any additional coverage of two, three or
four times the participants annual pay, up to
$1 million, purchased by the participant at group rates).
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Disability. In the event of a separation of
service due to a total and permanent disability, as defined in
the applicable plan, our named executive officers are entitled
to receive:
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Benefits payable under our pension plans for eligible
participants, not reduced for early payment, if the participant
has at least five years of vesting service (see Pension
Benefits for additional information),
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Up to an additional 12 months of vesting service (but not
contributions) from the date of separation of service under, as
applicable, (i) the Incentive Investment Plan, the
Retirement Contribution Plan and the supplemental Retirement
Contribution Program or (ii) the 401(k) Profit Sharing Plan
and Supplemental 401(k) Plan,
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Their account balance, if any, under the Deferred Compensation
Plan,
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Accelerated vesting of unvested stock options, and the options
will be exercisable until the earlier of three years or the
remaining term of the options,
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For units outstanding more than six months after the date of
grant, time-vested restricted share units will be vested pro
rata, based on the number of full months of employment during
the restricted period prior to the participants
termination of employment, payable within 90 days following
the end of the restricted period,
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65
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For units outstanding more than six months after the date of
grant, performance-based restricted share units will be vested
pro rata, based on attainment of the performance goal at the end
of the restricted period, payable within 70 days following
the end of the restricted period,
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Annual incentive award payment under the Executive Officer
Achievement Award Program as determined by the Committee in its
discretion,
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For participants with at least fifteen years of vesting service
and who joined the Corporation before January 1, 2004,
medical credits based on number of years of vesting service (up
to a maximum of $104,500 in credits),
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Continuing coverage under the Corporations group life
insurance plan (available to all U.S. salaried employees),
with no requirement to make monthly contributions toward
coverage during disability, and
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Payment of benefits under the Corporations Long-Term
Disability Plan (available to all U.S. salaried employees).
Long-term disability under the plan would provide income
protection of monthly base pay, ranging from a minimum monthly
benefit of $50 to a maximum monthly benefit of $10,000. Benefits
are reduced by the amount of any other Corporation- or
government-provided income benefits received (but will not be
lower than the minimum monthly benefit).
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Potential
Payments on Termination or Change in Control Table
The following table presents the approximate value of
(i) the severance benefits for our named executive officers
under the Executive Severance Plan (as amended November 17,
2009) had a Qualified Termination of Employment under that
plan occurred on December 31, 2009; (ii) the severance
benefits for our named executive officers under the Severance
Pay Plan if an involuntary termination had occurred on
December 31, 2009; (iii) the benefits that would have
been payable on the death of our named executive officers on
December 31, 2009; (iv) the benefits that would have
been payable on the total and permanent disability of our named
executive officers on December 31, 2009; and (v) the
potential payments to Mr. Abernathy if he had retired on
December 31, 2009. If applicable, amounts in the table were
calculated using the closing price of our common stock on
December 31, 2009 of $63.71 per share.
The termination benefits provided to our executive officers upon
their voluntary termination of employment do not discriminate in
scope, terms or operation in favor of our executive officers
compared to the benefits offered to all salaried employees, so
those benefits are not included in the table below. Because none
of our named executive officers, other than Mr. Abernathy,
was eligible to retire as of December 31, 2009, potential
payments assuming retirement on that date are not included for
the other named executive officers.
The amounts presented in the table are in addition to amounts
each named executive officer earned or accrued prior to
termination, such as the officers balances under our
Deferred Compensation Plan, accrued retirement benefits
(including accrued pension plan benefits), previously vested
benefits under our qualified and non-qualified plans, previously
vested options, restricted stock and restricted share units and
accrued salary and vacation. For information about these
previously earned and accrued amounts, see the Summary
Compensation Table, Outstanding Equity Awards,
Option Exercises and Stock Vested, Pension
Benefits, and Nonqualified Deferred
Compensation.
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity with
|
|
Additional
|
|
Continued Benefits
|
|
|
|
|
Cash
|
|
Accelerated
|
|
Retirement
|
|
and Other
|
|
|
Name
|
|
Payment($)
|
|
Vesting($)
|
|
Benefits($)
|
|
Amounts($)
|
|
Total($)
|
|
Thomas J. Falk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of Employment
|
|
|
8,480,699
|
(1)
|
|
|
18,009,148
|
(2)
|
|
|
395,963
|
(3)
|
|
|
32,856
|
(4)
|
|
|
26,918,666
|
|
Involuntary termination(5)
|
|
|
8,480,699
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,714
|
(6)
|
|
|
8,495,413
|
|
Death
|
|
|
3,824,081
|
(7)
|
|
|
14,932,235
|
|
|
|
0
|
(8)
|
|
|
0
|
|
|
|
17,756,316
|
|
Disability
|
|
|
2,824,081
|
(7)
|
|
|
14,932,235
|
|
|
|
10,105,558
|
(9)
|
|
|
91,600
|
(10)
|
|
|
27,953,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark A. Buthman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of Employment
|
|
|
3,178,203
|
(1)
|
|
|
4,020,270
|
(2)
|
|
|
162,871
|
(3)
|
|
|
2,255,781
|
(4)
|
|
|
9,617,125
|
|
Involuntary termination(5)
|
|
|
3,178,203
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,714
|
(6)
|
|
|
3,208,185
|
|
Death
|
|
|
1,511,480
|
(7)
|
|
|
3,390,677
|
|
|
|
331,392
|
(8)
|
|
|
0
|
|
|
|
5,233,549
|
|
Disability
|
|
|
851,480
|
(7)
|
|
|
3,390,677
|
|
|
|
2,276,406
|
(9)
|
|
|
95,900
|
(10)
|
|
|
6,614,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Abernathy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of Employment
|
|
|
3,173,508
|
(1)
|
|
|
4,785,727
|
(2)
|
|
|
162,630
|
(3)
|
|
|
32,856
|
(4)
|
|
|
8,154,721
|
|
Involuntary termination(5)
|
|
|
3,173,508
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,714
|
(6)
|
|
|
3,226,732
|
|
Death
|
|
|
850,219
|
(7)
|
|
|
4,197,123
|
|
|
|
0
|
(8)
|
|
|
0
|
|
|
|
5,047,342
|
|
Disability
|
|
|
850,219
|
(7)
|
|
|
4,197,123
|
|
|
|
2,085,399
|
(9)
|
|
|
95,900
|
(10)
|
|
|
7,228,641
|
|
Retirement
|
|
|
850,219
|
(1)
|
|
|
6,903,664
|
|
|
|
537,243
|
|
|
|
95,900
|
(11)
|
|
|
8,387,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Black
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of Employment
|
|
|
2,947,973
|
(1)
|
|
|
2,690,135
|
(2)
|
|
|
152,240
|
(3)
|
|
|
2,263,837
|
(4)
|
|
|
8,054,185
|
|
Involuntary termination(12)
|
|
|
2,947,973
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,714
|
(6)
|
|
|
2,962,687
|
|
Death
|
|
|
773,109
|
(7)
|
|
|
2,521,725
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,294,834
|
|
Disability
|
|
|
773,109
|
(7)
|
|
|
2,521,725
|
|
|
|
0
|
|
|
|
0
|
(10)
|
|
|
3,294,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony J. Palmer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of Employment
|
|
|
2,515,501
|
(1)
|
|
|
2,353,456
|
(2)
|
|
|
130,636
|
(3)
|
|
|
1,582,447
|
(4)
|
|
|
6,582,040
|
|
Involuntary termination(12)
|
|
|
2,515,501
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,714
|
(6)
|
|
|
2,546,072
|
|
Death
|
|
|
1,649,268
|
(7)
|
|
|
2,034,569
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,683,837
|
|
Disability
|
|
|
649,268
|
(7)
|
|
|
2,034,569
|
|
|
|
0
|
|
|
|
0
|
(10)
|
|
|
2,683,837
|
|
|
|
|
(1) |
|
Assumes the Committee would approve full payment under the
Executive Officer Achievement Award Program for 2009; actual
amount that would be paid is determined by the Committee in its
discretion. |
|
(2) |
|
Under the terms of the 2001 Plan, if the Committee were to
determine that, pending a change in control, our common stock
will cease to exist without an adequate replacement security,
the payment of this amount would not be contingent upon the
Qualified Termination of Employment of the named executive
officer. This provision also applies to grants under the 2001
Plan to employees other than the named executive officers. |
|
(3) |
|
Includes the value of two additional years of employer
contributions under the 401(k) Profit Sharing Plan and
Supplemental 401(k) Plan, pursuant to the terms of the Executive
Severance Plan as amended November 17, 2009. |
|
(4) |
|
Includes an amount equal to twenty-four months of COBRA medical
and dental coverage with an estimated value of $32,856, as well
as an estimated additional cash payment to Messrs. Buthman, |
67
|
|
|
|
|
Black and Palmer of $2,222,925, $2,230,981 and $1,549,591,
respectively, to place them in the same position as if the
excise tax due to the application of Section 280G of the
Internal Revenue Code were not applicable. |
|
(5) |
|
Benefits payable under the Severance Pay Plan. For
Mr. Abernathy, does not include accelerated equity vesting
that occurred when he became retirement eligible at age 55.
See the benefits payable for Mr. Abernathy for retirement
for the amount of this accelerated equity vesting. |
|
(6) |
|
Includes six months of COBRA medical coverage and outplacement
services with an estimated value of $8,214 and $6,500,
respectively. |
|
(7) |
|
For death, includes the payment of benefits under the
Corporations group life insurance plan (which is available
to all U.S. salaried employees); Messrs. Abernathy and
Black have opted out of this benefit. For death and disability,
assumes the Committee would approve full payment under the
Executive Officer Achievement Award Program for 2009; actual
amount that would be paid is determined by the Committee in its
discretion. For disability, does not include benefits payable
under the Corporations Long-Term Disability Plan (which is
available to all U.S. salaried employees), the value of which
would be dependent on the life span of the named executive
officer and the value of any Corporation- or government-provided
income benefits received. |
|
(8) |
|
For Mr. Buthman, includes the excess of the estimated actuarial
present value of the pension benefits payable on death for each
named executive officer through December 31, 2009 over the
present value of the aggregate accumulated benefit set forth in
the Pension Benefits table. For Messrs. Falk and Abernathy, the
estimated actuarial present value of the pension benefits
payable on death is less than the present value of the aggregate
accumulated benefit set forth in the Pension Benefits table; as
a result, no incremental benefit as a result of their death is
included in the amount. |
|
(9) |
|
Includes the excess of the estimated actuarial present value of
the retirement benefits payable on disability for the named
executive officer through December 31, 2009 (assuming the
named executive officer elects to receive a continuing benefit
for his surviving spouse) over the present value of the
aggregate accumulated benefit set forth in the Pension Benefits
table. |
|
(10) |
|
Includes the value of retiree medical credits assuming total and
permanent disability on December 31, 2009 of the named
executive officers, other than Messrs. Black and Palmer.
The named executive officers would also be eligible for
continuing group life coverage assuming total and permanent
disability on December 31, 2009, which benefit does not
discriminate in scope, terms or operation in favor of our
executive officers compared to the benefits offered to all U.S.
salaried employees and is therefore not included in the table. |
|
(11) |
|
Includes the value of retiree medical credits assuming
Mr. Abernathys retirement on December 31, 2009.
Mr. Abernathy would also be eligible for continuing group
life coverage assuming total and permanent disability on
December 31, 2009, which benefit does not discriminate in
scope, terms or operation in favor of our named executive
officers compared to the benefits offered to all U.S. salaried
employees and is therefore not included in the table. |
|
(12) |
|
Benefits payable under the Severance Pay Plan, which are greater
than amounts payable under the letter agreements with
Messrs. Black and Palmer. |
Analysis of Risks
Arising from Design of Compensation Programs
The Committee, with the assistance of its independent consultant
and the Corporations consultant, has reviewed an
assessment of our compensation programs for our employees,
including our executive officers, to determine whether our
compensation systems could encourage behavior that exacerbates
business risks. Program design features that could have the
potential to encourage unnecessary and excessive risks include
unreasonably attainable performance targets, programs that
differ substantially from those of our peers, unbalanced
programs that overly rely on short-term incentives, incentive
programs that are largely uncapped, and misalignment between
program participants and stockholders.
68
Based on this assessment, the Committee believes that the design
of our compensation programs, including our executive
compensation program, does not encourage our executives or
employees to take unnecessary and excessive risks and that the
risks arising from these programs are not reasonably likely to
have a material adverse effect on the Corporation. Several
factors contributed to the Committees conclusion,
including:
|
|
|
|
|
The performance targets for annual cash incentive programs are
selected to ensure that they are reasonably attainable in a
manner consistent with our Global Business Plan without
encouraging executives or employees to take inappropriate risks.
|
|
|
|
An analysis by the Corporations consultant and the
Committees independent consultant indicated that our
compensation programs are consistent with those of our peer
groups. In addition, the target levels for direct annual
compensation are compared to the median of our peer groups.
|
|
|
|
The Committee believes the allocation among the components of
direct annual compensation provides an appropriate balance
between annual and long-term incentives and between fixed and
performance-based compensation.
|
|
|
|
Annual cash incentives and long-term performance-based
restricted share unit awards under our executive compensation
program are capped at 200 percent of the target award, and
all other material non-executive cash incentive programs are
capped at reasonable levels, which the Committee believes
protects against disproportionately large incentives.
|
|
|
|
The Committee believes the performance measures and the
multi-year vesting features of the long-term equity incentive
compensation component encourage participants to seek
sustainable growth and value creation.
|
|
|
|
The Committee believes inclusion of share-based compensation
through the long-term equity incentive compensation component
encourages appropriate decision-making that is aligned with the
long-term interests of stockholders.
|
|
|
|
The Committee believes the Corporation maintains a
values-driven, ethics-based culture supported by a strong tone
at the top.
|
|
|
|
Our stock ownership guidelines further align management with
stockholders and encourage management to consider our long-term
interests.
|
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,
executive officers and any person owning more than
10 percent of a class of our stock to file reports with the
SEC regarding their ownership of our stock and any changes in
ownership. The Corporation maintains a compliance program to
assist our directors and executive officers in making these
filings. We believe that our executive officers and directors
timely complied with their filing requirements for 2009.
TRANSACTIONS WITH
RELATED PERSONS
Policies and Procedures for Review, Approval or Ratification
of Related Person Transactions. The Board has
adopted written procedures regarding the review, approval or
ratification of transactions involving related persons that SEC
regulations require to be disclosed in proxy statements, which
are commonly referred to as related person transactions. A
related person transaction is any transaction between the
Corporation and any related person that requires disclosure
under the SECs rules regarding these transactions. A
related person is defined under the SECs rules and
includes our directors, executive officers and five percent
stockholders.
69
Under these written procedures, the Board has determined that:
|
|
|
|
|
The Nominating and Corporate Governance Committee is best suited
to review, approve and ratify related person transactions
involving any director, nominee for director, any five percent
stockholder, or any of their immediate family members or related
firms, and
|
|
|
|
The Audit Committee is best suited to review, approve and ratify
related person transactions involving executive officers (or
their immediate family members or related firms), other than any
executive officer who is also a Board member.
|
The Nominating and Corporate Governance Committee or the Audit
Committee may, in its sole discretion, refer consideration of
these transactions to the full Board.
Each director, director nominee and executive officer is
required to promptly provide written notification of any
material interest that he or she (or his or her immediate family
member) has or will have in a transaction with the Corporation.
Based on a review of the transaction, a determination will be
made whether the transaction constitutes a related person
transaction under the SECs rules. The Nominating and
Corporate Governance Committee or the Audit Committee will then
review the terms and substance of the transaction to determine
whether to ratify or approve the related person transaction.
In determining whether the transaction is in, or not opposed to,
the Corporations best interest, the Nominating and
Corporate Governance Committee or the Audit Committee may
consider any factors deemed relevant or appropriate, including:
|
|
|
|
|
Whether the transaction is on terms comparable to those that
could be obtained in arms length dealings with an
unrelated third party,
|
|
|
|
Whether the transaction constitutes a conflict of interest under
our Code of Conduct, the nature, size or degree of any conflict
and whether mitigation of any conflict is feasible,
|
|
|
|
The impact on a directors independence, if
applicable, and
|
|
|
|
Whether steps have been taken to ensure fairness to the
Corporation.
|
2009 Related Person Transactions. We share
aircraft hangar space, pilots and related services with
Bergstrom Corporation, an entity which is majority-owned by
Mr. Bergstrom. During 2009, Bergstrom Corporation paid us
$407,000 for its share of the costs associated with these
services. We believe this arrangement is fair and reasonable,
advantageous to the Corporation and consistent with national
benchmarking. Based on an analysis of the arrangement, we also
believe its terms to be comparable to those that could be
obtained in arms-length dealings with an unrelated third
party.
2011 STOCKHOLDER
PROPOSALS
Proposals by stockholders for inclusion in our proxy statement
and form of proxy for the Annual Meeting of Stockholders to be
held in 2011 should be addressed to the Secretary,
Kimberly-Clark Corporation, P.O. Box 619100, Dallas,
Texas
75261-9100,
and must be received at this address no later than
November 12, 2010. Upon receipt of a proposal, we will
determine whether or not to include the proposal in the proxy
statement and form of proxy in accordance with applicable law.
It is suggested that proposals be forwarded by certified mail,
return receipt requested.
ANNUAL MEETING
ADVANCE NOTICE REQUIREMENTS
Our By-Laws require advance notice for any business to be
brought before a meeting of stockholders. In general, for
business to be properly brought before an annual meeting by a
stockholder (other than in connection with the election of
directors; see Part Two Corporate
Governance Information Stockholder Nominations for
Directors), written notice of the stockholder proposal
must be received by the Secretary of the Corporation not less
than 75 days nor more than 100 days prior to the first
anniversary of the preceding years annual meeting. Certain
other notice periods are provided if the date of
70
the annual meeting is advanced by more than 30 days or
delayed by more than 60 days from the anniversary date.
Under our By-Laws, the stockholders notice to the
Secretary must contain certain information regarding the
stockholder and affiliates, including name and address, shares
held, derivative positions, dividend rights that are separate or
separable from the underlying shares and certain
performance-related fees. Stockholders must also provide
information regarding whether the stockholder or affiliates
intend to deliver a proxy statement or form of proxy regarding
the proposal, as well as information regarding the proposal and
information relating to the stockholder or affiliates required
to be disclosed in the proxy statement. Additional information
concerning the advance notice requirements and a copy of our
By-Laws may be obtained from the Secretary of the Corporation at
the address provided above.
OTHER
MATTERS
Our management does not know of any other matters to be
presented at the Annual Meeting. Should any other matter
requiring a vote of the stockholders arise at the meeting, the
persons named in the proxy will vote the proxies in accordance
with their best judgment.
By Order of the Board of Directors.
John W. Wesley
Vice President and Secretary
KIMBERLY-CLARK CORPORATION
P.O. Box 619100
Dallas, Texas
75261-9100
Telephone
(972) 281-1200
March 12, 2010
71
Invitation
to Stockholders
Notice
of 2010 Annual Meeting
Proxy
Statement
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Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose
one of the two voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW
IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received
by 1:00 a.m., Central Time, on April 29, 2010. |
|
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|
Vote by
Internet Log on to the
Internet and go
to www.envisionreports.com/kmb
Follow
the steps outlined on the secured website. |
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Vote by
telephone Call toll
free 1-800-652-VOTE (8683) within the
US, US territories and Canada any time on a touch
tone telephone. There
is NO CHARGE to you for the call. |
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Using a black
ink pen, mark your votes with an X as shown in this
example. Please do not write outside the designated areas. |
x |
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|
Follow the
instructions provided by the recorded message. |
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Annual Meeting Proxy Card |
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▼
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE,
FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
|
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A |
Election of Directors
The Board of Directors recommends a vote FOR the listed nominees (term to expire at 2011 Annual Meeting of Stockholders).
|
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1. |
Nominees: |
For |
|
Against |
|
Abstain |
|
For |
|
Against |
|
Abstain |
|
|
For |
Against |
Abstain |
+ |
|
|
|
|
|
|
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|
|
01 John R. Alm |
o |
|
o |
|
o |
02 Dennis R. Beresford |
o |
|
o |
|
o |
03 John F. Bergstrom |
|
o |
o |
o |
|
|
04 Abelardo E. Bru
|
o |
|
o |
|
o |
05 Robert W. Decherd
|
o |
|
o |
|
o |
06 Thomas J. Falk |
|
o |
o |
o |
|
07 Mae C. Jemison, M.D. |
o |
|
o |
|
o |
08 James M. Jenness |
o |
|
o |
|
o |
09 Ian C. Read |
|
o |
o |
o |
|
|
10 Linda Johnson Rice |
o |
|
o |
|
o |
11 Marc J. Shapiro |
o |
|
o |
|
o |
12 G. Craig Sullivan |
|
o |
o |
o |
|
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| |
B
|
Proposal
The Board of Directors recommends a vote FOR Proposal 2. |
|
C
|
Proposal
The Board of Directors recommends a vote AGAINST Proposal 3. |
|
|
|
For |
Against |
Abstain |
| | |
|
|
|
|
|
|
|
|
For |
Against |
|
Abstain |
2. Ratification of Auditors |
o |
o |
o |
| |
| |
3. Stockholder Proposal Regarding Special Shareholder Meetings |
o |
o |
|
o |
|
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Non-Voting Items |
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Change of Address Please print new address below. |
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Meeting Attendance Mark box to the right if
you plan to attend the Annual Meeting. |
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Authorized
Signatures
This section must be completed for your vote to be counted.
Date and Sign Below
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Please sign exactly as name(s) appears hereon.
Joint owners should each sign.
When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box. |
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Proxy Kimberly-Clark Corporation
Its a win-win solution! Reduce paper flow to your home and help the environment, too! If you
have access to the Internet, we encourage you to consider receiving Kimberly-Clarks future Annual
Reports and Proxy Statements in electronic format rather than in printed form. In electing to do
so, you conserve natural resources and save your company money! To sign up for electronic delivery
service, registered holders may go to our transfer agents website at
www.computershare.com/investor at any time and follow the instructions. Act Now!
▼ IF YOU HAVE
NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
Kimberly-clark Corporation |
Proxy/Voting Instructions for the Annual Meeting of Stockholders April 29, 2010
Solicited on Behalf of the Board of Directors
Thomas J. Falk, Thomas J. Mielke and John W. Wesley, or any of them, with full power of
substitution to each, hereby are appointed proxies and are authorized to vote, as specified on the
reverse side of this card, all shares of common stock that the undersigned is entitled to vote at
the Annual Meeting of Stockholders of Kimberly-Clark Corporation, to be held at the Four Seasons
Resort and Club, 4150 North MacArthur Boulevard, Irving, Texas on April 29, 2010 at 9:00 a.m. and
at any adjournment thereof. In their discretion, the proxies are authorized to vote on such other
business as may properly come before the meeting.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSAL 3. IF
YOU PREFER TO VOTE SEPARATELY ON INDIVIDUAL ISSUES YOU MAY DO SO BY MARKING THE APPROPRIATE BOXES
ON THE REVERSE SIDE.
This card also constitutes voting instructions to the trustees of the Corporations employee
benefits and stock purchase plans to vote whole shares attributable to accounts the undersigned may
hold under such plans. If no voting instructions are provided, the respective plan committees,
which are comprised of management personnel, will direct the trustees to vote the shares. Please
date, sign and return this proxy/voting instruction card promptly. If you own shares directly and
plan to attend the meeting, please so indicate in the space provided on the reverse side.
IMPORTANT: TO BE SIGNED AND DATED ON REVERSE SIDE.
PLEASE RETURN THIS CARD IN THE SELF-ADDRESSED ENVELOPE PROVIDED.